The federal government has already provided over one million documents to the Truth and Reconciliation Commission. Here, Aboriginal Affairs Minister John Duncan points to the location of the stained glass window commemorating the legacy of Indian Residential Schools. (Sean Kilpatrick/Canadian Press)

The Canadian government cannot be allowed to renege on a legal deal with its aboriginal people simply because sticking to the terms would cost too much, an Ontario court heard Thursday.

At issue, a lawyer for the Truth and Reconciliation Commission said, is the government's refusal to organize and turn over millions of records related to what he called "the highest level of human tragedy" — the Indian residential school system.

Those records, lawyer Julian Falconer told Justice Stephen Goudge, go to the commission's core mandate of creating a comprehensive and lasting account of the shameful century of abuse.

"One day the light switch went on that this was a really expensive obligation, so history gets changed," Falconer said. "It's all about money."

The commission is asking the courts to clarify the government's obligations under the multibillion-dollar settlement reached in 2007 with victims of the Indian residential school system.

Terms of the settlement included creation of the truth commission now led by Justice Murray Sinclair.

Part of the commission's mandate is to help in a process of reconciliation, while yet another is the "creation of a legacy" that includes collection of records, taking statements from those involved, and classifying and preserving the materials.

"This was always meant to create a sense of preservation about the past that wasn't simply about having to trust the agent of oppression," Falconer said.

One million documents already given

At first, the federal government repeatedly acknowledged its legal obligation to give relevant records in its possession — as many as five million of them — to the commission.

While Ottawa has turned over about one million documents to date, 23 of 24 government departments have now refused to provide the materials and millions of records remain outstanding.

"Pure and simple, that can't be right," Falconer told Ontario Superior Court.

"You can't have a sharing of common experiences when you take a big piece of the story and control it when you weren't meant to."

The commission worries that Ottawa's intransigence will make it impossible to complete its work as required by July 1, 2014, and within budget.

Goudge repeatedly asked what documents are "relevant," and about the limits of Ottawa's legal duty to provide them.

Falconer said the obligation was to provide enough documents to allow the commission to create a "reasonable" record.

"It can't be a shadow of what is a reasonable record," he said. "The limit can't be decided on Canada's whim because the obligation became inconvenient."

Costs could exceed budget

Some estimates peg the cost of organizing and turning over the records at more than $100 million — far in excess of the commission's budget.

The Indian residential school system, which ran from the 1870s until the 1990s, saw about 150,000 aboriginal children taken from their families and sent to church-run schools under a deliberate policy of "civilizing" First Nations.

Many students were physically, mentally and sexually abused. Some committed suicide. Mortality rates reached 50 per cent at some schools.

In the 1990s, thousands of victims sued the churches that ran the schools, and the Canadian government. The suits were settled in 2007 and the Truth and Reconciliation Commission was set up. A national research centre was also to be set up as a permanent archive.

Earlier Thursday, a government lawyer argued the commission had no authority to take its case to court given that it is simply a "department" of government.

Nothing in the settlement gave the commission the capacity to conduct litigation "on behalf of the Crown or against the Crown," Catherine Coughlan said, adding that would be the exclusive purview of the attorney general.

The lawyer also said the commission was not a separate legal entity and had no legal personality.

"It is not a commission of inquiry," Coughlan said. "It is expressly prohibited by its terms against acting as an inquiry."

Before the proceedings got underway, aboriginal elder Vernon Nelson shared a prayer, with the judge's blessing.

The hearings continue into Friday.