A couple of days ago the Supreme Court of Canada released its decision inSmith v. Alliance Pipeline Ltd., a judicial review arising out of decisions of arbitration panels under the National Energy Board Act and related court proceedings.
The pipeline company failed to perform agreed-upon reclamation work in connection with a pipeline. The landowner then did the work himself, but the pipeline company only paid part of the invoice. The dispute went to arbitration under the NEBA. The dispute resolution under that act is supposed to be an expeditious and inexpensive process. What followed was anything but. A first arbitration panel failed to decide the matter because a member was appointed to the bench. In the meantime, the pipeline company commenced court proceedings before the Queen’s Bench, which it later discontinued. The landowner recovered only a portion of its court costs. The second arbitration panel awarded costs to the landowner on a client-solicitor basis, including the costs incurred in the process before the court. The Federal Court of Appeal set aside the decision.
The Supreme Court of Canada restored award of the second arbitration panel. The first issue in a judicial review is to decide the standard of review, or, in other words, when is a court going to interfere in a decision of an administrative tribunal? In some instances, the decision must be correct (for example, on constitutional issues), in other, not unreasonable (Dunsmuir v. New Brunswick)? In this case, the panel’s decision was subject to review only if it was found to be unreasonable. First, the panel interpreted the cost provision of the NEBA, its home statute. Second, Parliament endowed the panel with wide discretion to award costs. Third, the exercise of that discretion raises questions where legal issues cannot be easily separated from factual issues.
The Supreme Court found that the panel’s award of costs was justified. First, the statute provided that panel could award costs for “all legal, appraisal and other costs.” In the context of modern law of expropriation, costs should generally be awarded on a client-solicitor basis. Second, a cost award on that basis is consistent with the purpose of the NEBA. Third, on the facts in the case at hand, justice can only be done by complete indemnity. The Court noted that the landowner had spent an inordinate amount of money in what should have been an expeditious process.