Date: 20080104
Docket: T-1826-06
Citation: 2008 FC 12
Halifax,
Nova Scotia, January 4, 2008
PRESENT: The Honourable Mr. Justice O'Keefe
BETWEEN:
ALLIANCE
PIPELINE LTD.
Appellant
and
VERNON JOSEPH SMITH
Respondent
REASONS FOR JUDGMENT AND JUDGMENT
O’KEEFE J.
[1]
This
is an appeal by Alliance Pipeline Ltd. (the appellant), pursuant to section 101
of the National Energy Board Act, R.S.C. 1985, c. N-7 (NEBA) from a
decision and award of the Pipeline Arbitration Committee (the PAC) dated
September 18, 2006.
[2]
The appellant
in its Memorandum of Fact and Law requests that the Court:
1. Set aside the portions of
the award related to the cost claims in their entirety; and
2. Grant costs of the
present appeal to the appellant.
[3]
The
respondent seeks an order dismissing the appeal, with costs of the appeal to
the respondent.
Background
[4]
In
1999, the appellant constructed a pipeline route across a portion of the
respondent’s farmland. Despite a series of agreements between the parties with
respect to the project, a dispute arose regarding the reclamation of a portion
of the land used for the pipeline. The appellant disputed the respondent’s
contention that it was necessary to apply manure to the entire right-of-way.
[5]
Despite
the disagreement, the respondent began the reclamation work and applied manure to
the right-of-way in June and July 2000. The respondent submitted an invoice to
the appellant for $9,829. The appellant rejected the invoice and made a
counter-offer of $2,500. The respondent rejected the counter-offer and sent the
appellant a second invoice on December 15, 2000 for $16,819. The respondent
also demanded that the appellant make additional payments in order to access
the right-of-way.
[6]
On
August 8, 2001, the respondent issued a notice of arbitration pursuant to
subsection 90(2) of NEBA, requesting compensation for the reclamation work performed
in June and July 2000. On September 24, 2001, the appellant served its reply to
the notice of arbitration, and argued that the damages claimed by the
respondent were covered by the release agreements entered into by the parties.
[7]
A
hearing was held before a Pipeline Arbitration Committee (the previous PAC) on
May 6, 2003, and the decision was held in reserve. The PAC lost quorum when Mr.
Justice John Gill was appointed to the Alberta Court of Queen’s Bench, and no
decision was ever rendered with respect to the first hearing. Meanwhile, on
July 10, 2003, the appellant filed a statement of claim in the Alberta Court of
Queen’s Bench seeking among other things:
1. An injunction against the
respondent from interfering with the appellant’s rights to unhindered access
onto the easement;
2. A declaration that the
releases entered into between the parties included any and all claims that the
respondent had against the appellant up to November 1, 1999; and
3. An order directing the
previous PAC not to render a decision until such time as the matter of the
releases could be determined.
[8]
The
application for an injunction was dismissed by Justice Nation, and party and
party costs of the injunction application were paid by the appellant to the
respondent. The appellant eventually discontinued the action in March 2005, and
paid the respondent’s party and party costs of the action. The respondent’s
counsel issued accounts totalling $20,788.54 with respect to the litigation.
The party and party costs paid by the appellant totalled $4,565.97, and the
amount of litigation costs at issue is $16,222.57.
[9]
A
second PAC was appointed in August 2005, and the respondent amended his notice
of arbitration on November 14, 2005 and again on January 20, 2006. The amended
notice of arbitration asserted the same claims that had been before the
previous PAC, together with additional relief. The additional relief claimed
included the costs of the previous hearing and costs of the action commenced by
the appellant in July 2003.
[10]
The appellant
served its amended reply on December 22, 2005, and the second hearing of the
PAC was held on March 22 to 24 and April 3 to 4, 2006. The decision of the PAC
was issued on September 18, 2006. This is the judicial review of certain
elements of the award portion of the PAC decision.
Reasons of the PAC
Jurisdiction
[11]
At
pages 3 and 4 of its decision, the PAC stated the following with respect to its
jurisdiction to determine compensation matters:
It
is clear from these provisions that once a Notice of Arbitration is served on a
Pipeline Arbitration Committee that Committee must determine all compensation
matters referred to in it. See section 91:
[…]
If
a party feels that the Minister has referred a Notice of Arbitration that
includes matters outside of the jurisdiction of a Pipeline Arbitration
Committee, the objecting party should seek judicial review. See: Balisky
v. Canada, infra, where a judicial review determined
whether a matter was appropriate for determination by a PAC.
Costs of Action
[12]
At
pages 24 and 25 of its decision, the PAC stated the following in considering
whether to award any costs with respect to the action commenced by the appellant
in 2003:
Before
this Committee, Mr. Smith is seeking his solicitor-client costs regarding the
injunction action and motion, net of recovered taxable costs.
Mr.
Smith’s claim can be regarded as one for compensation for damages (the
solicitor-client costs he incurred in his dealing with Alliance seeking compensation), or as a claim for costs.
The
Alliance Statement of Claim and interim injunction application arose out of Mr.
Smith’s denial of access across his non-PROW land. We conclude that he refused
access without advance compensation because of his experience with Alliance in attempting to obtain compensation for the cost of the
reclamation work he did. In that sense, and in any event, the legal actions are
directly related to Mr. Smith’s attempt to obtain compensation for Alliance’s
proposed activities directly related to the inspection, maintenance or repair
of the pipeline.
Mr.
Smith’s solicitor-client costs for the litigation are payable to him as
compensation for damages suffered as a result of the operations of Alliance and
it is proper and reasonable for this Committee to consider the expense and
inconvenience to which Mr. Smith was put in the circumstances.
[…]
Mr.
Smith’s out-of-pocket expense for legal fees is claimed in the Notice of
Arbitration. A Pipeline Arbitration Committee is required to determine all
compensation matters referred to in a Notice of Arbitration. In awarding Mr.
Smith compensation for his net out-of-pocket legal fees, this Committee
concludes that the expense made necessary by the operations of the company
amounts to “damages’ and is proper to consider in the circumstances. Indeed, S.
98(3) directs that we include provision in our award for the matters referred
to in S. 96 [sic] (2)(b) to (f). We are therefore required to make
provision for “compensation for all damages suffered as a result of the
operations of the company.” Clearly, the Alliance attempt to access the ROW across Mr.
Smith’s other land, and the resulting litigation, were the operations of the
company. Mr. Smith’s out-of-pocket expenses were part of the result.
Mr.
Smith is awarded $16,222.57 for his net legal fees, disbursements and GST.
Alternatively,
this Committee finds that Alliance must pay Mr. Smith’s solicitor-client
costs (net of taxable cost recoveries) for the litigation including the change
of venue and the interim injunction applications. We find that the costs were
reasonably incurred in asserting Mr. Smith’s claim for compensation. They are
therefore recoverable pursuant to s.99 which provides that “the company shall
pay all legal, appraisal and other costs determined by the Committee to have
been reasonably incurred by that person in asserting that person’s claim for
compensation.”
Alliance argued that the matter of costs was res
judicata, having been dealt with in the litigation itself. However, Nation J.
did not deal with the provisions for costs set out in the Act. Subsections (1)
and (2) of section 99 of the Act gives this Committee direction and discretion
regarding costs. Our award exceeds 85% of the amount of compensation offered by
Alliance, with the result that the Alliance must pay legal, appraisal and other costs determined by the
Committee to have been reasonably incurred by Mr. Smith in asserting his claim.
Even
if the compensation awarded to Mr. Smith did not exceed 85% of the Alliance offer, we would exercise our discretion and award the costs
claimed.
Costs of Previous Proceeding
[13]
At
pages 27 and 28 of its decision, the PAC stated the following in considering
whether to award any costs with respect to the previous proceeding:
Alliance
refers this Committee to the decision of the British Columbia Court of Appeal
in P.Z. Resort Systems Inc. v. Ian MacDonald Library Services Ltd.
(1987), 39 D.L.R. (4th) 626. […] The Court had to decide the consequence of
setting aside the award. The Court referred to leading texts concerning
commercial arbitration and concluded that there were three possible
consequences.
First,
the proceedings revert to a point immediately before the publication of the
award and parties continue with the arbitration from that point in time.
Second, the entire arbitration is frustrated and the process must start from
the very beginning and the parties have to re-engage the process. Third, the
parties’ agreement to arbitrate survives, but the actual arbitration must start
again.
[…]
The
distinction between the second and third option lies in the agreement to
arbitrate. If the agreement to arbitrate was a specific agreement to arbitrate
before a named arbitrator, then the entire proceedings are nullified including
the agreement to arbitrate. But, if it is general agreement to arbitrate, then
the agreement to arbitrate survives and the parties simply retrace the steps to
their position immediately prior to the nullified action.
In
the proceeding before the Previous PAC there was no award and that committee
lost its quorum and could not render a decision because section 93(1) of the
Act required three members of an Arbitration Committee to perform any function
of the committee. The Minister of Natural Resources appointed a new
arbitration committee. This Committee was supplied with the original Notice of
Arbitration and Reply to Notice of Arbitration. The parties submitted to this
Committee an Amended Notice of Arbitration and an Amended Reply to the Notice
of Arbitration.
This
Committee finds that the first proceeding is governed by the third option and
the portion of the proceeding which has been nullified was the involvement of
the Previous PAC.
Each
party must therefore absorb the costs of actual appearances before the Previous
PAC and correspondence with the Previous PAC.
Therefore,
Mr. Smith is not entitled to recover $5,000.00 of his counsel’s May 14, 2003
account. Mr. Smith’s claim for compensation for his time in attending the
hearing before the Previous PAC and travel time to attend the hearing is
denied.
Similarly,
legal fees and disbursements subsequent to the Previous PAC’s hearings dealing
specifically with Previous PAC will be deducted from the accounts dated
September 3, 2003, October 20, 2003, February 2, 2004, September 2, 2004, April
8, 2005 and May 20, 2005 in the total sum of $500.00.
[14]
At
page 29 of its decision, the PAC summarized the award, in part, as follows:
This
Committee awards to Mr. Smith the following amounts:
[…]
·
$1,800. for the
September 2000 trespass. (See page 17.)
[…]
·
$16,222.57 for his
net legal fees, disbursements and GST regarding the Queen’s Bench action and
injunction application. (See page 25.)
·
Legal fees and
disbursements of the arbitration proceedings, except for those directly related
to attendance at the first hearing and subsequent correspondence regarding the
status and effect of the first hearing after its loss of quorum. (See page 28.)
[…]
Issues
[15]
The appellant
submitted the following issues for consideration:
1. Did the PAC err in
finding that it had jurisdiction over the costs claims, and in failing to
strike the costs claims from the amended notice of arbitration?
2. If it had jurisdiction to
consider the costs claims, did the PAC err in law in awarding costs of the
action?
3. If it had jurisdiction to
consider the costs claims, did the PAC err in law in awarding costs of the
first hearing?
[16]
The
respondent submitted the following issue for consideration:
If the PAC had jurisdiction to
consider the costs claims, was its award reasonable in the circumstances?
[17]
I
would rephrase the issues as follows:
1.
Did
the PAC err in finding that it had jurisdiction to consider costs claims?
2.
If
the PAC had jurisdiction, did it err in awarding costs of the action?
3.
If
the PAC had jurisdiction, did it err in its determination regarding the costs
associated with the first hearing?
Appellant’s Submissions
Jurisdiction
[18]
The appellant
submitted that the PAC erred in finding that absent judicial review of the
Minister’s decision to refer the Notice of Arbitration to the PAC, the PAC was
effectively powerless to determine its own jurisdiction and was bound to
adjudicate any allegation contained in the notice of arbitration.
[19]
The appellant
submitted that Balisky v. Canada (Minister of Natural Resources),
[2003] F.C.J. No. 341, (2003) 239 F.T.R. 159, did not stand for the proposition
that the PAC could not consider its jurisdiction when adjudicating claims
raised in a notice of arbitration. It was submitted that the notion of summary
and expeditious process militated in favour of the determination of
jurisdictional issues in the first instance by the PAC, subject to a right of
appeal.
[20]
The appellant
submitted that the PAC’s view of the matter was inconsistent with section 101
of NEBA, which states that a decision of an arbitration committee on a question
of jurisdiction may be appealed to the Federal Court. While section 97 of NEBA
stated that the PAC must consider all compensation matters referred to in a notice
of arbitration, it was submitted that the provision should be read in light of
section 84, which defines the “compensation matters” to which the arbitration
provisions of NEBA apply.
[21]
The appellant
submitted that PAC’s view of the matter was inconsistent with Rules 22(b) and
41 of the Pipeline Arbitration Committee Procedure Rules, S.O.R./86-787
(the Rules). Rule 22(b) states that the PAC may direct the parties to consider
the necessity of amending the notice of arbitration. Rule 41 states that in
certain circumstances, the PAC may order an amendment to a pleading.
[22]
The appellant
noted that it had applied under the Rules to strike the costs claim. The PAC
did not consider the application as a preliminary matter, and deferred it to
the end of the hearing. The appellant submitted that the PAC erred in either
dismissing or failing to consider the application on the basis that it was
bound to adjudicate all of the claims in the amended notice of arbitration. The
appellant submitted that the PAC’s view was inconsistent with other PAC
decisions, which had addressed the issue of jurisdiction (see Piper v. Alliance
Pipeline Ltd. (5 September 2003), Pipeline Arbitration Committee).
Costs of Action
[23]
The appellant
submitted that the PAC had no statutory jurisdiction to award the costs of an
action conducted in the Court of Queen’s Bench of Alberta. Section 21 of the Court
of Queen’s Bench Act, R.S.A. 2000, c. C-31, gives the Court sole discretion
to award costs of any matter taken before it, subject only to a right of appeal
(see Rule 601 of the Alberta Rules of Court, Reg. 390/1968). The appellant
submitted that the expenses, charges and fees claimed by the respondent in
relation to the action were “costs” as defined by the Rules, and were within
the exclusive jurisdiction of the Alberta Court. It was submitted that the PAC
erred in awarding costs of the action: (1) as damages contemplated by
subsection 98(3) of NEBA; or (2) as costs “reasonably incurred in asserting the
respondent’s claim for compensation”, under section 99 of NEBA.
(i) Damages
[24]
The appellant
submitted that the PAC cited the wrong sections of NEBA in finding that the
amounts were compensable as damages (see subsection 98(3) and paragraphs
86(2)(b) to (f) of NEBA), since the provisions did not address claims for
compensation for damages. It was submitted that the sections addressed the
necessary provisions of any agreement to take land from a landowner, and
situations where a company has acquired land from a landowner where the amount
of compensation had not been agreed upon. It was submitted that these
provisions did not apply to the case at hand, since the parties had agreed on
the compensation to be paid for the easement and the temporary workspace.
[25]
The appellant
submitted that the PAC’s jurisdiction with respect to claims in the notice of arbitration
was set out in section 84 of NEBA. Section 84 was not considered in the PAC
decision. Paragraph 84(a) of NEBA states:
|
84. The provisions of this Part that
provide negotiation and arbitration procedures to determine compensation
matters apply in respect of all damage caused by the pipeline of a company or
anything carried by the pipeline but do not apply to
(a) claims
against a company arising out of activities of the company unless those
activities are directly related to
(i) the
acquisition of lands for a pipeline,
(ii) the
construction of the pipeline, or
(iii) the
inspection, maintenance or repair of the pipeline;
|
84.
Les procédures de négociation et d’arbitrage prévues par la présente partie
pour le règlement des questions d’indemnité s’appliquent en matière de
dommages causés par un pipeline ou ce qu’il transporte, mais ne s’appliquent
pas:
a)
aux demandes relatives aux activités de la compagnie qui ne sont pas
directement rattachées à l’une ou l’autre des opérations suivantes:
(i)
acquisition de terrains pour la construction d’un pipeline,
(ii)
construction de celui-ci,
(iii)
inspection, entretien ou réparation de celui-ci;
|
[26]
The appellant
submitted that the respondent incurred its costs in the defence of an action;
therefore section 84 precluded the award of the costs of the action. It was
submitted that it could not have been Parliament’s intent to create an
arbitration scheme whereby the costs of litigation between a company and a
landowner was compensable under NEBA.
(ii) Costs reasonably incurred in asserting the
claim for compensation
[27]
The appellant
noted that section 99 of NEBA defined the PAC’s ability to award costs:
|
99.(1) Where
the amount of compensation awarded to a person by an Arbitration Committee
exceeds eighty-five per cent of the amount of compensation offered by the
company, the company shall pay all legal, appraisal and other costs
determined by the Committee to have been reasonably incurred by that person
in asserting that person’s claim for compensation.
(2) Where the
amount of compensation awarded to a person by an Arbitration Committee does
not exceed eighty-five per cent of the amount of compensation offered by the
company, the legal, appraisal and other costs incurred by that person in
asserting his claim for compensation are in the discretion of the Committee,
and the Committee may direct that the whole or any part of those costs be
paid by the company or by any other party to the proceedings.
|
99.(1) Si l’indemnité accordée
par le comité d’arbitrage est supérieure à quatre-vingt-cinq pour cent de
celle qu’elle offre, la compagnie paie tous les frais, notamment de procédure
et d’évaluation, que le comité estime avoir été entraînés par l’exercice du
recours.
(2)
Si, par contre, l’indemnité accordée est égale ou inférieure à
quatre-vingt-cinq pour cent de celle offerte par la compagnie, l’octroi des
frais visés au paragraphe (1) est laissé à l’appréciation du comité; celui-ci
peut ordonner que les frais soient payés en tout ou en partie par la
compagnie ou toute autre partie.
|
[28]
It
was submitted that section 99 did not apply to the respondent’s costs of the
action because: (1) the respondent was not asserting any claim to compensation
in the action, he was the defendant and did not counterclaim; (2) section 99
speaks of costs incurred in advancing one’s claim for compensation, which could
only mean the claim for compensation made in the arbitration itself; (3) the
costs of the action were incurred in defending the action, and not in any
arbitration proceeding; and (4) the PAC did not hear the matters in respect of
which the costs were incurred and was not in a position to assess the
reasonableness of the costs.
[29]
In
the alternative, if the PAC had jurisdiction to award costs of the action, it
was submitted that the matter was res judicata and could not be
re-litigated.
Costs of First Hearing
[30]
The appellant
submitted that the PAC had no jurisdiction to award costs of the first
arbitration, and that its award of a portion of those costs was an error of
jurisdiction and law. The appellant noted that pursuant to section 99 of NEBA,
the power to award costs was premised upon the issuance of an award. It was
submitted that the loss of quorum in the case made the previous PAC unable to
render any award, and that the power to award costs of the hearing before the
previous PAC died with the quorum.
[31]
The appellant
noted that the PAC was not in a position to: (1) determine what award would
have been made by the previous PAC; (2) assess the reasonableness of the costs
claimed in light of all of the circumstances of the first hearing; or (3)
determine what, if any, exercise of discretion the previous PAC would have
implemented in considering the costs of the prior hearing.
[32]
The appellant
submitted that the PAC committed an error in law when it determined that “the
first proceeding [was] governed by the third option and the portion of the
proceeding which had been nullified was the involvement of the previous PAC”. It
was submitted that pursuant to P.Z. Resort Systems Inc. above, it was
the overall effect on the proceedings that determined whether or not a
“nullity” had resulted from the setting aside of the arbitral award.
[33]
The appellant
noted that in the case at hand, a new PAC was struck to re-hear the matter.
The arbitration process began afresh, with the filing of an amended notice of arbitration
that set out additional claims. It was submitted that the parties did not
derive any benefit from the first hearing, nor were the issues reduced during
the first hearing. In addition, all of the evidence was called afresh before
the new PAC. It was submitted that the parties were “left in the same position
as they were before the reference” and fought “the whole matter again from the
commencement” as described in P.Z. Resort Systems Inc. above.
Paralysis of Previous PAC
[34]
The appellant
noted the respondent’s allegation that the action had “paralyzed” the previous PAC. It was submitted that
this allegation was inconsistent with the correspondence received from the
remaining members of the previous PAC following Justice Gill’s judicial
appointment, which confirmed that the previous PAC was prepared to proceed, if
possible, to render a decision in the case. In addition, the previous PAC had
not rendered any decision with respect to 19 other landowners, and there was no
suggestion that there was any litigation between those landowners and Alliance
Pipeline Ltd.
Respondent’s Submissions
[35]
The
respondent conceded that the standard of review on questions of jurisdiction
was correctness, and that the appropriateness of the PAC’s award was subject to
review on the standard of patent unreasonableness (see Bue v. Alliance
Pipeline Ltd., 2006 FC 713). It was submitted that the PAC was correct in
finding that the cost claims were within its jurisdiction and that its award
was not patently unreasonable.
[36]
The
respondent reviewed the principles of statutory interpretation and noted that
the ordinary meaning of the words used by the legislators was to be preferred.
It was noted that the PAC had relied upon Balisky above, which set out
the purpose of the arbitration provisions of NEBA:
(a) providing a summary and
expeditious procedure for the determination of compensation to affected
landowners;
(b) providing for full
compensation to landowners for damages sustained, with the object of keeping
them whole; and
(c) providing an opportunity
for a full hearing of the issues between the parties.
Jurisdiction to Hear Cost Claims
[37]
The
PAC found that having been served with a notice of arbitration, it had to
determine all compensation matters referred to in the notice (see subsection
97(1) of NEBA). The PAC concluded that if a party felt that the Minister had referred
a notice of arbitration that included matters outside the jurisdiction of the
PAC, the objecting party should seek judicial review of the Minister’s referral
(see subsection 91(2) of NEBA). It was submitted that it was within the
jurisdiction of the PAC to determine the cost claims and that its
interpretation of the legislation was correct.
[38]
The
respondent noted the Court’s recognition that the Minister was a tribunal of
competent jurisdiction when making determinations pursuant to section 91 of the
NEBA. The Court also confirmed that: (1) section 91 imposed a requirement upon
the Minister to ascertain whether a claim was one for which compensation was
provided by statute; and (2) the Minister’s decision could be judicially
reviewed (see Maritimes and Northeast Pipeline Limited Partnership v. Elliott,
[2004] 3 F.C.R. 612, (2004) 238 D.L.R. (4th) 358 (F.C.) affirmed in 2005 FCA
229). The respondent submitted that Balisky and Bue above,
supported the PAC’s conclusion that it had jurisdiction to hear the cost
claims.
Costs of First Hearing
[39]
The
respondent submitted that the appellant had misstated the nature of the costs
awarded to the respondent as “costs of the first hearing.” It was submitted
that the PAC had parsed out those costs that related exclusively to the first
hearing and did not award such costs to the respondent. The respondent
submitted that the costs that were awarded recognized that the arbitration
process had been lengthy, and that reasonable costs of the process extended
from the formulation of the claim in 2000 to the 2006 hearing.
[40]
The
PAC’s summary of the award indicated that legal fees and disbursements of the
arbitration proceedings were awarded to the respondent, except for those
directly related to attendance at the first hearing, and subsequent
correspondence regarding the status and effect of the first hearing after its
loss of quorum. It was submitted that the award was consistent with NEBA and
the purpose of the statute.
[41]
The
respondent submitted that subsection 99(1) of NEBA referred to costs incurred
by a claimant in asserting his or her claim for compensation and did not limit
the costs to those of a single proceeding. The respondent noted that the PAC
was provided with detailed accounts of the respondent’s costs. The decision of
the PAC with respect to costs issued in November 2006 considered the accounts
and gave reasons for the award of costs to the respondent. It was submitted
that the award was not patently unreasonable.
Costs of the Action
[42]
The
respondent submitted that the Committee had the jurisdiction to award costs of
the action to the respondent, either as a component of the compensation award
or of the costs award.
(i) Costs of the Action as Damages
[43]
The
PAC found that the action was a direct result of Smith’s refusal to allow the appellant
access to the pipeline across his land without prior compensation. It was
submitted that the appellant’s actions on the land were directly related to the
maintenance of the pipeline. The respondent submitted that he had suffered a
loss in the form of legal expenses, which he would not have suffered otherwise,
and that the loss was compensable under NEBA.
[44]
The
respondent submitted that the PAC was entitled to consider relevant factors in
making a determination as to compensation (see Bue above). It was
submitted that the appellant’s purposes in commencing the action were relevant
considerations for the PAC in assessing the compensation claimed by the
respondent.
(ii) Costs Incurred in Asserting Respondent’s
Claim
[45]
In
the alternative, it was submitted that the PAC was correct in determining that
the respondent’s costs of the action could be treated as costs pursuant to
subsection 99(1) of NEBA.
[46]
The
respondent noted that in its plea for relief in the action, the appellant sought:
(a) an injunction against the respondent; (b) a declaration that Smith had
released the claims against the appellant; and (c) an order directing the PAC
not to render a decision. It was noted that the releases had been included in
the appellant’s reply to the respondent’s original notice of arbitration;
however, at the hearing before the previous PAC, the appellant’s counsel
abandoned the suggestion that the claims advanced by Smith were released and
withdrew all of paragraph 9 and the last sentence of paragraph 11 in reply.
[47]
The
respondent submitted that a finding by the Alberta Court of Queen’s Bench that
the claims argued before the previous PAC had been released by the respondent
would have rendered the arbitration process and first hearing moot. It was
submitted that in order to successfully assert his claim for compensation, the
respondent was forced to defend the action.
[48]
The
respondent submitted that he should not be held responsible for the fact that
no action was taken by the appellant in respect of these matters prior to the
discontinuance of the action in March 2005. It was submitted that in applying
section 99 of NEBA, arbitration committees and the Courts should seek to
prevent pipeline companies from holding landowners ransom by pursuing parallel
legal proceedings in the courts and attempting to circumvent the provisions of
NEBA.
[49]
The
respondent submitted that the award of the PAC was within its jurisdiction, and
that the amount was appropriate, as it was based upon evidence placed before
the PAC and was addressed by counsel.
Analysis and Decision
Standard of Review
[50]
As
instructed by the Federal Court of Appeal in Sketchley v. Canada (Attorney
General), [2005] F.C.J. No. 2056), a reviewing court must refrain from adopting
the standard of review used by other judges reviewing decisions of the
decision-maker under the same legislative provision. As such, I will begin my
analysis by engaging in my own assessment of the pragmatic and functional
analysis in order to determine the level of deference owed to the PAC in these
circumstances.
Privative Clause
[51]
Section
101 of NEBA provides a partial privative clause as only decisions involving
questions of law or jurisdiction can be appealed to the Federal Court within thirty
days of the decision.
Nature of the Question
[52]
The
appellant appears to have raised two separate questions. Firstly, the appellant
raised a question of jurisdiction that is whether or not the PAC erred in
finding that it had jurisdiction over the costs claims. Issues of jurisdiction
are questions of law, and merit the lowest level of deference. The second
question raised by the appellant was whether the PAC erred in its awarding of
costs. In the circumstances of this case, this question is one of mixed fact
and law because it involves the interpretation of sections 84 on compensation
and 99 on costs and their application to the facts of this case. Questions of
mixed law and fact warrant a mid-level of deference.
Relative Expertise
[53]
With
regards to the question of jurisdiction, this Court has greater expertise than
the PAC, I note that the PAC is an ad hoc committee and is not
specialized (Bue above at paragraph 5). With regards to appropriateness
of the cost awards, it is the PAC role to determine issues of compensation and
costs. As such, the PAC presumably has somewhat of an expertise in determining
cost awards.
Purpose of the
Legislation and Provision
[54]
At
the heart of this case is the interpretation of sections of the NEBA dealing
with award for compensation and costs. The purpose of these sections is to
allow PAC to settle disputes and make determinations on financial compensation.
[55]
In
conclusion, I am of the opinion that the appropriate standard of review for the
question of jurisdiction is one of correctness. As for the question of cost
awards, I believe that it is reviewable on a standard of reasonableness. I find
support for both of these determinations in Bue above at paragraph 5.
Issue 1
Did the PAC err in finding that it had
jurisdiction over the costs claims?
[56]
The
compensation, interest and costs requested by the respondent in his amended notice
of arbitration included: (1) costs of the action commenced by the applicant in
July 2003, and (2) costs of the hearing before the previous PAC. The PAC
reviewed the relevant sections of NEBA and found that once a notice of arbitration
was served on a PAC, that PAC was obligated to determine all compensation
matters set out therein (see subsection 97(1) of NEBA).
[57]
The
PAC also concluded that where a party felt that the Minister had referred a notice
of arbitration that included matters outside of the jurisdiction of a
Committee, the objecting party should seek judicial review of the Minister’s
referral. The PAC acknowledged the appellant’s application to strike the
disputed cost claims, and noted that the hearing proceeded without prejudice to
that application.
[58]
At
paragraph 25 of Bue above, Justice Campbell stated the following with
respect to the obligation of a PAC to deal with the compensation matters
referred to in a notice of arbitration:
Pursuant to s.97(1) of the NEB Act, the
Committee was required to deal with all compensation matters referred to in the
notices of arbitration served. By an Amended Notice of Arbitration each of the
Landowners stated the nature of the decision sought from the Committee as
follows:
[…]
[59]
Similarly,
in Balisky above, Justice Rothstein stated the following at paragraph
22:
Subsection 97(1) of the Act confers on an
arbitration committee the jurisdiction to determine all compensation matters
referred to in a notice of arbitration. In determining compensation matters,
the arbitration committee shall consider a number of listed factors where they
are applicable, as well as such other factors as it considers proper in the
circumstances […]
[60]
The
PAC also relied upon paragraph 91(2)(b) of NEBA in support of its position,
which provides that the Minister shall not take any action under subsection (1)
where the Minister is satisfied that the matter referred to in a notice of
arbitration served on the Minister is a matter to which the arbitration
procedures set out in Part 5 of NEBA do not apply. As a result, the PAC
concluded that an aggrieved party could seek judicial review of the Minister’s
referral of a notice of arbitration to a PAC.
[61]
In
my view, the PAC was correct in finding that it had jurisdiction to consider
whether to award the disputed cost claims. The legislation and case law
suggests that the PAC must consider all of the compensation matters set out in
the notice of arbitration. I believe that once the PAC considered the matters
in the notice of arbitration, it could then proceed to determine whether the
matters warranted relief.
Issue 2
If the PAC
had jurisdiction, did it err in awarding costs of the action?
[62]
Res
Judicata
[63]
The
appellant submitted that regardless of the PAC’s jurisdiction, the matter of
the costs of the action was res judicata, in that it had already been
decided by Justice Nation. The PAC addressed this argument as follows:
Alliance argued that the matter of costs was res
judicata, having been dealt with in the litigation itself. However, Nation
J. did not deal with the provisions for costs set out in the Act. Subsections
(1) and (2) of section 99 of the Act give this Committee direction and
discretion regarding costs. Our award exceeds 85% of the amount of compensation
offered by Alliance, with the result that Alliance must pay all legal, appraisal and other
costs determined by the Committee to have been reasonably incurred by Mr. Smith
in asserting his claim.
[64]
Given
the wording of section 99, it appears that the PAC may award all legal costs
that are reasonably incurred by an individual in asserting his or her claim for
compensation. However, the appellant argues that since Justice Nation issued an
order as to costs with respect to the litigation, the matter is subject to the
doctrine of res judicata. In my view, the matter was not necessarily res
judicata, given the authority of the PAC under section 99, and the limited
cost order issued by Justice Nation.
[65]
As
such, I will proceed to address the PAC’s award of the costs of the action to
the respondent. As noted above, the respondent’s counsel issued accounts
totalling $20,788.54 with respect to the litigation. The party and party costs
paid by the appellant totalled $4,565.97, and the amount of litigation costs at
issue is $16,222.57.
[66]
The
PAC determined, in the alternative to its award under section 84 that the costs
of the action could be awarded to the respondent as costs reasonably incurred
in asserting his claim for compensation. Pursuant to section 99 of NEBA:
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99.(1) Where
the amount of compensation awarded to a person by an Arbitration Committee
exceeds eighty-five per cent of the amount of compensation offered by the
company, the company shall pay all legal, appraisal and other costs
determined by the Committee to have been reasonably incurred by that person
in asserting that person’s claim for compensation.
(2) Where the
amount of compensation awarded to a person by an Arbitration Committee does
not exceed eighty-five per cent of the amount of compensation offered by the
company, the
legal,
appraisal and other costs incurred by that person in asserting his claim for
compensation are in the discretion of the Committee, and the Committee may
direct that the whole or any part of those costs be paid by the company or by
any other party to the proceedings.
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99.(1)
Si l’indemnité accordée par le comité d’arbitrage est supérieure à
quatre-vingt-cinq pour cent de celle qu’elle offre, la compagnie paie tous
les frais, notamment de procédure et d’évaluation, que le comité estime avoir
été entraînés par l’exercice du recours.
(2)
Si, par contre, l’indemnité accordée est égale ou inférieure à
quatre-vingt-cinq pour cent de celle offerte par la compagnie, l’octroi des
frais visés au paragraphe (1) est laissé à l’appréciation du comité; celui-
ci
peut ordonner que les frais soient payés en tout ou en partie par la
compagnie ou toute autre partie.
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[67]
The
applicant submitted that section 99 of NEBA did not apply to the costs of the
action, since the respondent was not asserting any claim to compensation in the
action. The respondent submitted that had the Alberta Court of Queen’s Bench
found that the claims argued before the previous PAC had been released; the
arbitration process and first hearing would have been moot. As a result, it
was submitted that in order to successfully assert his claim for compensation
in the context of the arbitration proceeding, the respondent had no choice but
to defend the action.
[68]
As
noted by the appellant, the respondent was not asserting a claim to
compensation in the context of the action, given that he was the defendant and
did not counterclaim. However, the respondent was placed in a position where he
had to defend the action, or else risk a finding by the Court that he had
released the claims argued before the previous PAC. As a result,
his participation in the litigation could be characterized as being reasonably
incurred in asserting his claim for compensation.
[69]
I
am of the opinion that the PAC did not err in allowing the respondent the
balance of his expenses in defending the action as I believe subsection 99(1)
of the Act applies on the facts of this case. The respondent “reasonably
incurred” this expense to make sure that he could continue with his claim for
compensation. If he did not defend the action, the Court could have declared
that he had released his claims for compensation. As such, I find nothing
unreasonable with the PAC’s award of costs.
[70]
Because
of my finding, I need not determine whether the costs of the action were
payable pursuant to section 84 of the Act.
Issue 3
If the PAC had
jurisdiction, did it err in law in its determination regarding the costs
associated with the first hearing?
[71]
The
PAC determined that the parties had to absorb the costs of actual appearances
before the previous PAC and correspondence with the previous PAC. The PAC
awarded the respondent “legal fees and disbursements of the arbitration
proceedings, except for those directly related to attendance at the first
hearing and subsequent correspondence regarding the status and effect of the
first hearing after its loss of quorum.”
[72]
As
noted by the applicant, the power of the PAC to award costs under section 99 is
premised upon the issuance of an award. The previous PAC lost quorum and did
not render an award with respect to the first hearing. As a result, the
arbitration process was a nullity. In my view, the award of the PAC reflects
the fact that the first proceeding resulted in a nullity, in that costs directly
related to attendance at the first hearing and subsequent correspondence with
respect to the first hearing after its loss of forum were explicitly excluded
from the award. I do not agree with the appellant’s argument on this issue.
[73]
The
appeal is therefore dismissed, with costs to the respondent.
JUDGMENT
[74]
IT
IS ORDERED that the appeal is dismissed, with costs to the respondent.
“John
A. O’Keefe”
ANNEX
Relevant
Statutory Provisions
The
relevant statutory provisions are set out in this section.
The Alberta Rules of Court, Reg. 390/1968:
601(1)
Notwithstanding anything in Rules 602 to 612, but subject to any Rule expressly
requiring costs to be ordered, the costs of all parties to any proceedings
(including third parties), the amount of costs and the party by whom or the
fund or estate or portion of an estate (if any) out of which they are to be
paid are in the discretion of the Court, and when deciding on costs the Court
may consider the result in the proceeding and
(a)
the amounts claimed and the amounts recovered,
(b)
the importance of the issues,
(c)
the complexity of the proceedings,
(d)
the apportionment of liability,
(e)
the conduct of any party that tended to shorten or to unnecessarily lengthen
the proceeding,
(f)
a party’s denial of or refusal to admit anything that should have been
admitted,
(g)
whether any step or stage in the proceedings was
(i)
improper, vexatious or unnecessary, or
(ii)
taken through negligence, mistake or excessive caution,
(h)
whether a party commenced separate proceedings for claims that should have been
made in one proceeding or whether a party unnecessarily separated their defence
from another party, and
(i)
any other matter relevant to the question of costs.
…
The Court of Queen’s Bench Act,
R.S.A. 2000, c. C-31.:
21
Subject to an express provision to the contrary in any enactment, the costs of
and incidental to any matter authorized to be taken before the Court or a judge
are in the discretion of the Court or judge and the Court or judge may make any
order relating to costs that is appropriate in the circumstances.
The National
Energy Board Act, R.S.C. 1985, c. N-7:
|
84. The
provisions of this Part that provide negotiation and arbitration procedures
to determine compensation matters apply in respect of all damage caused by
the pipeline of a company or anything carried by the pipeline but do not
apply to
(a) claims
against a company arising out of activities of the company unless those
activities are directly related to
(i) the
acquisition of lands for a pipeline,
(ii) the
construction of the pipeline, or
(iii) the
inspection, maintenance or repair of the pipeline;
(b) claims
against a company for loss of life or injury to the person; or
(c) awards of
compensation or agreements respecting compensation made or entered into prior
to March 1, 1983.
86.(1) Subject
to subsection (2), a company may acquire lands for a pipeline under a land
acquisition agreement entered into between the company and the owner of the
lands or, in the absence of such an agreement, in accordance with this Part.
(2) A company
may not acquire lands for a pipeline under a land acquisition agreement
unless the agreement includes provision for
(a)
compensation for the acquisition of lands to be made, at the option of the
owner of the lands, by one lump sum payment or by annual or periodic payments
of equal or different amounts over a period of time;
(b) review
every five years of the amount of any compensation payable in respect of which
annual or other periodic payments have been selected;
(c)
compensation for all damages suffered as a result of the operations of the
company;
(d)
indemnification from all liabilities, damages, claims, suits and actions
arising out of the operations of the company other than liabilities, damages,
claims, suits and actions resulting from
(i) in the Province of Quebec, the gross or intentional fault of the
owner of the lands, and
(ii) in any
other province, the gross negligence or wilful misconduct of the owner of the
lands;
(e)
restricting the use of the lands to the line of pipe or other facility for
which the lands are, by the agreement, specified to be required unless the
owner of the lands consents to any proposed additional use at the time of the
proposed additional use; and
(f) such
additional matters as are, at the time the agreement is entered into,
required to be included in a land acquisition agreement by any regulations
made under paragraph 107(a).
91.(1) Where
the Minister is served with a notice of arbitration under this Part, the
Minister shall,
(a) if an
Arbitration Committee exists to deal with the matter referred to in the
notice, forthwith serve the notice on that Committee; or
(b) if no
Arbitration Committee exists to deal with the matter, forthwith appoint an
Arbitration Committee and serve the notice on that Committee.
(2) The
Minister shall not take any action under subsection (1) where the Minister is
satisfied that the matter referred to in a notice of arbitration served on
the Minister is a matter
(a) solely
related to the amount of compensation that has been previously awarded by an
Arbitration Committee and that, under the award, the amount is not subject to
a review at the time the notice is served; or
(b) to which
the arbitration procedures set out in this Part do not apply.
(3) The
Minister may, of his own motion and without having been served with a notice
of arbitration referred to in subsection (1), appoint an Arbitration
Committee.
97.(1)
An Arbitration Committee shall determine all compensation matters referred to
in a notice of arbitration served on it and in doing so shall consider the
following factors where applicable:
(a) the market
value of the lands taken by the company;
( b) where
annual or periodic payments are being made pursuant to an agreement or an
arbitration decision, changes in the market value referred to in paragraph (a)
since the agreement or decision or since the last review and adjustment of
those payments, as the case may be;
(c) the loss
of use to the owner of the lands taken by the company;
(d) the
adverse effect of the taking of the lands by the company on the remaining
lands of an owner;
(e) the
nuisance, inconvenience and noise that may reasonably be expected to be
caused by or arise from or in connection with the operations of the company;
(f) the damage
to lands in the area of the lands taken by the company that might reasonably
be expected to be caused by the operations of the company;
(g) loss of or
damage to livestock or other personal property or movable affected by the
operations of the company;
(h) any
special difficulties in relocation of an owner or his property; and
(i) such other
factors as the Committee considers proper in the circumstances.
(2) For the
purpose of paragraph (1)( a), "market value" is the amount that
would have been paid for the lands if, at the time of their taking, they had
been sold in the open market by a willing seller to a willing buyer.
98 . . .
(3) Every
award of compensation made by an Arbitration Committee in respect of lands
acquired by a company shall include provision for those matters referred to
in paragraphs 86(2)(b) to (f) that would be required to be included in a land
acquisition agreement referred to in section 86.
99.(1) Where
the amount of compensation awarded to a person by an Arbitration Committee
exceeds eighty-five per cent of the amount of compensation offered by the
company, the company shall pay all legal, appraisal and other costs
determined by the Committee to have been reasonably incurred by that person
in asserting that person’s claim for compensation.
(2) Where the
amount of compensation awarded to a person by an Arbitration Committee does
not exceed eighty-five per cent of the amount of compensation offered by the
company, the legal, appraisal and other costs incurred by that person in
asserting his claim for compensation are in the discretion of the Committee,
and the Committee may direct that the whole or any part of those costs be
paid by the company or by any other party to the proceedings.
101. A
decision, order or direction of an Arbitration Committee may, on a question
of law or a question of jurisdiction, be appealed to the Federal Court within
thirty days after the day on which the decision, order or direction is made,
given or issued or within such further time as that Court or a judge thereof
under special circumstances may allow.
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84. Les
procédures de négociation et d’arbitrage prévues par la présente partie pour
le règlement des questions d’indemnité s’appliquent en matière de dommages
causés par un pipeline ou ce qu’il transporte, mais ne s’appliquent pas:
a)
aux demandes relatives aux activités de la compagnie qui ne sont pas
directement rattachées à l’une ou l’autre des opérations suivantes:
(i)
acquisition de terrains pour la construction d’un pipeline,
(ii)
construction de celui-ci,
(iii)
inspection, entretien ou réparation de celui-ci;
b) aux
demandes dirigées contre la compagnie pour dommages à la personne ou décès;
c) aux
décisions et aux accords d’indemnisation intervenus avant le 1er mars 1983.
86.(1) Sous réserve du
paragraphe (2), la compagnie peut acquérir des terrains par un accord
d’acquisition conclu avec leur propriétaire ou, à défaut d’un tel accord,
conformément à la présente partie.
(2) L’accord
d’acquisition doit prévoir:
a)
le paiement d’une indemnité pour les terrains à effectuer, au choix du
propriétaire, sous forme de paiement forfaitaire ou de versements périodiques
de montants égaux ou différents échelonnés sur une période donnée;
b)
l’examen quinquennal du montant de toute indemnité à payer sous forme de
versements périodiques;
c) le paiement
d’une indemnité pour tous les dommages causés par les activités de la
compagnie;
d) la garantie
du propriétaire contre les poursuites auxquelles pourraient donner lieu les
activités de la compagnie, sauf, dans la province de Québec, cas de faute
lourde ou intentionnelle de celui-ci et, dans les autres provinces, cas de
négligence grossière ou d’inconduite délibérée de celui-ci;
e)
l’utilisation des terrains aux seules fins de canalisation ou d’autres
installations nécessaires qui y sont expressément mentionnées, sauf
consentement ultérieur du propriétaire pour d’autres usages;
f)
toutes autres questions mentionnées dans le règlement d’application de
l’alinéa 107a) en vigueur au moment de sa conclusion.
91.(1) Dès qu’un avis
d’arbitrage lui est signifié, le ministre:
a)
si un comité d’arbitrage a déjà été constitué pour régler la question
mentionnée dans l’avis, signifie à celui-ci l’avis d’arbitrage;
b)
dans le cas contraire, nomme un comité d’arbitrage et signifie l’avis à
celui-ci.
(2)
Le paragraphe (1) ne s’applique pas dans les cas où le ministre est convaincu
que la question mentionnée dans l’avis d’arbitrage qui lui a été signifié:
a) soit ne
porte que sur le montant de l’indemnité accordé antérieurement par un comité
d’arbitrage, lequel montant n’était pas, aux termes de la décision,
susceptible de révision à la date de signification de l’avis;
b)
soit est exclue de la procédure d’arbitrage.
(3)
Le ministre peut constituer un comité d’arbitrage de sa propre initiative,
sans qu’aucun avis d’arbitrage ne lui ait été signifié.
97.(1)
Le comité d’arbitrage doit régler les questions d’indemnité mentionnées dans
l’avis qui lui a été signifié, et tenir compte, le cas échéant, des éléments
suivants:
a) la valeur
marchande des terrains pris par la compagnie;
b)
dans le cas de versements périodiques prévus par contrat ou décision
arbitrale, les changements survenus dans la valeur marchande mentionnée à
l’alinéa a) depuis la date de ceux-ci ou depuis leurs derniers révision et
rajustement, selon le cas;
c)
la perte, pour leur propriétaire, de la jouissance des terrains pris par la
compagnie;
d) l’incidence
nuisible que la prise des terrains peut avoir sur le reste des terrains du
propriétaire;
e) les
désagréments, la gêne et le bruit qui risquent de résulter directement ou
indirectement des activités de la compagnie;
f) les
dommages que les activités de la compagnie risquent de causer aux terrains de
la région;
g)
les dommages aux biens meubles ou personnels, notamment au bétail, résultant
des activités de la compagnie;
h)
les difficultés particulières que le déménagement du propriétaire ou de ses
biens pourrait entraîner;
i) les autres
éléments dont il estime devoir tenir compte en l’espèce.
(2)
Pour l’application de l’alinéa (1) a), la valeur marchande des terrains
correspond à la somme qui en aurait été obtenue si, au moment où ils ont été
pris, ils avaient été vendus sur le marché libre.
98
. . .
(3)
La décision du comité d’arbitrage accordant une indemnité pour des terrains
acquis par une compagnie doit renfermer des dispositions correspondant à
celles qui, aux termes des alinéas 86(2)b) à f), doivent être incorporées
dans un accord d’acquisition de terrains.
99.(1)
Si l’indemnité accordée par le comité d’arbitrage est supérieure à
quatre-vingt-cinq pour cent de celle qu’elle offre, la compagnie paie tous
les frais, notamment de procédure et d’évaluation, que le comité estime avoir
été entraînés par l’exercice du recours.
(2)
Si, par contre, l’indemnité accordée est égale ou inférieure à
quatre-vingt-cinq pour cent de celle offerte par la compagnie, l’octroi des
frais visés au paragraphe (1) est laissé à l’appréciation du comité; celui-ci
peut ordonner que les frais soient payés en tout ou en partie par la
compagnie ou toute autre partie.
101.
Appel d’une décision ou d’une ordonnance du comité d’arbitrage peut être
interjeté, sur une question de droit ou de compétence, devant la Cour
fédérale dans les trente jours du prononcé ou dans le délai ultérieur que le
tribunal ou un de ses juges peut accorder dans des circonstances spéciales.
|
The Pipeline
Arbitration Committee Procedure Rules, S.O.R./86-787:
|
22. A
Committee may direct the parties to a hearing or their counsel to appear
before three members of the Committee at a specified time and place for a
conference before or during the hearing or to make submissions in writing,
for the purpose of formulating issues and considering . . .
(b) the
necessity or desirability of amending the notice of arbitration or the reply
to clarify, amplify or limit the issues;
41. A
Committee may, on such terms as it considers advisable, order an amendment to
any pleading that, in the opinion of the Committee, may tend to prejudice or
delay a fair hearing of the case if, in the opinion of the Committee, the
amendment is necessary for the purposes of the hearing and for determining
the real question in issue between the parties to the hearing.
|
Le
comité peut ordonner aux parties ou à leur avocat de se présenter devant
trois membres du comité, au lieu, à la date et à l'heure précisés, pour
s'entretenir avec eux avant ou pendant l'audience ou faire des déclarations
écrites, dans le but de formuler les questions en litige et d'étudier . . .:
b)
la nécessité ou l'opportunité de modifier l'avis d'arbitrage ou la réponse,
de manière à les rendre plus clairs, plus complets ou plus concis;
41. Le comité
peut, selon les modalités qu'il juge à propos, ordonner la modification de
toute plaidoirie qui, à son avis, pourrait entraver ou retarder l'audience
s'il le juge nécessaire pour la conduite de l'audience ou pour la
détermination des véritables points en litige entre les parties.
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