Ottawa’s decision to appoint a third-party manager to the northern Ontario reserve of Attawapiskat was “unreasonable in all circumstances,” Federal Court ruled Wednesday.

In its written decision, the national trial court found that the federal government’s decision to ask a third-party manager to handle Attawapiskat’s finances as the community grappled with a housing crisis was not an appropriate way to respond to the reserve's problems.

The court noted, however, that there’s no evidence that Prime Minister Stephen Harper or his cabinet made the decision with the intent of embarrassing Attawapiskat First Nation.

“The problem in this case does not lie at the feet of the political masters but in the hands of the bureaucracy,” the court concluded in its written decision.

Attawapiskat declared a state of emergency in October 2011 after a severe housing shortage in the community of about 2,000 people became public knowledge.

Outrage followed the discovery that more than two dozen families had been forced to live in temporary shelters, many of which were unsanitary and lacked insulation.

Aboriginal Affairs Minister John Duncan appointed outside manager Jacques Marion following suggestions from Prime Minister Stephen Harper that the local band was mishandling its finances. Marion’s arrival came at a price for Attawapiskat, with his $1,300-a-day fee coming out of the band’s budget.

However, Federal Court ruled Wednesday that it has found no evidence Attawapiskat spent its money incorrectly.

A spokesperson for Duncan said the minister is “disappointed with the Court’s decision” and intends to review it before deciding to move forward.

“Since 2006 our government has spent over $90 million on the Attawapiskat First Nation,” Aboriginal Affairs communications director Jason MacDonald said in a statement.

“Aboriginal Affairs and Northern Development Canada will continue to work with the First Nation to develop long-term solutions to broader challenges, including the development of a housing strategy and updating its emergency plan.”

Band officials had vehemently resisted Ottawa’s November 2011 decision to send Marion, unsuccessfully seeking a temporary injunction against his appointment.

When Marion was pulled from the First Nation in April, federal officials insisted it was not because of opposition or his performance, but because Attawapiskat managed to improve health and safety conditions for its residents.

Federal Court found that although federal officials demonstrated that they were concerned about the crisis in Attawapiskat, there appears to have been a disconnect when it came to actually addressing the situation.

“The problem seems to have been a lack of understanding of the AFN’s actual needs and an intention on the part of officials to be seen to be doing something,” read the court’s written decision.

Federal Court concluded that Ottawa “misunderstood the nature of the problem” and dispatched a third-party financial manager for what was, in essence, an operational problem.

“What they lacked was not the ability to manage their finances, in which case a (third-party manager) may have been an appropriate and reasonable remedy, but the material means to do so,” the court found.