The Canadian government says a law firm that represented thousands of residential school survivors should have to pay back legal fees because it inflated its billings.

Arguments were made today in the Saskatchewan Court of Appeal, where lawyers for the Canada's attorney general accused the Merchant Law Group of fraud, deceit and fraudulent misrepresentation.

The government says it wouldn't have entered into an agreement a decade ago to pay Merchant Law Group $25 million if it had known there were concerns about how much time the company spent working on residential school claims.

Merchant's lawyer says the government knew there were concerns about billing and went into negotiations with its eyes wide open.

This the fourth time the case has been heard in court.

Merchant's lawyer says previous courts, including the Saskatchewan Court of Appeal, approved the payment and bringing the case to court again is an abuse of power.