B.C. – appeal court declines to re-assess success in appeal of award where court remits valuation matter to arbitrator – #487

In Nolin v. Ramirez, 2021 BCCA 191, B.C.’s Court of Appeal declined to modify a costs award issued in first instance, reiterating its deference to such discretionary orders.  The Court did acknowledge that it could modify a costs award “without undue deference to the views of the trial judge” if the Court on appeal had modified the amount granted in first instance for the merits of the dispute and where “the amount or nature of the award was a factor in the costs award below”.  Because the judge in first instance had remitted a valuation matter to the arbitrator, the Court held that “[t]here are still issues outstanding that have been referred to the arbitrator, and without a final decision with respect to those issues, it is difficult to assess substantial success”.

The Court of Appeal styled its most recent set of reasons in Nolin v. Ramirez, 2021 BCCA 191 as “Supplementary Reasons to Nolin v. Ramirez, 2020 BCCA 274”.  In its initial decision on the merits of the appeal, the Court did not speak to costs and Appellant applied to obtain further reasons which lead to the second or Supplementary Reasons.

Prior decisions on merits – For the earlier Arbitration Matters note on Nolin v. Ramirez, 2020 BCCA 274, see “B.C. – court qualifies parties’ agreement to require only summary reasons as “penny-wise and pound-foolish” – #381”. In that decision, the Court of Appeal set aside part of an arbitration award which rested on the arbitrator’s dismissal of a party’s evidence as suspicious in one context and reliance on it in another.  The handling of the evidence was so inconsistent that the Court found it “impossible to understand how the arbitrator came to his conclusion” on the related issues and the arbitrator provided no justification in the summary reasons agreed to by the parties.  Without more explanation in the brief reasons and unable to reconcile the findings and conclusions, the Court set aside that portion of the award related to the handling of that evidence.

The appeal to the Court of Appeal involved a challenge to two (2) of six (6) orders issued by the decision in first instance Nolin v. Ramirez, 2019 BCSC 934 which itself involved appeals of two (2) arbitration awards, a Property Award and a Parenting Award. For more background on the underlying dispute and the decision in first instance, see the earlier Arbitration Matters note “B.C. – agreement to accept summary reasons is not acceptance of insufficient reasons – #217”.  In the decision in first instance, Mr. Justice J. Christopher Grauer noted the parties’ agreement that the arbitrator provide only summary reasons but determined that the arbitrator’s brief reasons were insufficient to withstand review on a standard of reasonableness. Grauer J. held that even summary reasons require more than just a conclusion. Because he lacked jurisdiction to substitute his own decision for that of the arbitrator and, in the event, could not say that the arbitrator had gotten the issues wrong, he remitted the issues to the arbitrator for reconsideration. 

Supplementary appeal decision regarding costs – At para. 3 of its Supplementary Reasons, the Court listed the six (6) orders issued in first instance and reiterated that only two (2) were appealed.  The first order in that list, and among those not appealed, set aside a conclusion estimating the value of certain assets and remitted the matter to the arbitrator.

On the appeal of the two (2) orders, Respondent conceded one and Appellant prevailed on the other.  Appellant argued that he had been “substantially successful” and sought to appeal the judge’s determination in first instance that he had only “mixed success”.

The Court disagreed.  It first set out the applicable principles for reviewing costs awards which it noted involved the judge’s discretion and must involved an error in principle or be “plainly wrong”.  See Hamilton v. Open Window Bakery Ltd., 2004 SCC 9 (CanLII), [2004] 1 SCR 303, Elsom v. Elsom, 1989 CanLII 100 (SCC), [1989] 1 SCR 1367 and Hartshorne v. Hartshorne, 2011 BCCA 29.

The latter had particular application to the Court’s reasoning in the present matter given the pending determination of the valuation matter remitted to the arbitrator.  The Court noted that it had in the past reconsidered the costs award with “less deference” when (i) it modified the award on appeal and (ii) the amount or nature of the award was a factor in the costs award.

[24] Where this Court modifies an award at trial, as this Court has done in this case, the deference that must be afforded to the trial judge’s costs order is moderated to some degree. To the extent that the amount or nature of the award was a factor in the costs award below, this Court is entitled to reconsider the costs award without undue deference to the views of the trial judge. On the other hand, if the change in the amount or nature of the award does not affect the judge’s reasoning or was not a factor in the exercise of his or her discretion, deference should continue to be paid to the trial judge’s exercise of discretion”.

The Court gave two (2) reasons not to modify the costs award.  First, it noted that Appellant had prevailed on one of the two ground and that Respondent had conceded the other.  Second, it remarked that “[t]here are still issues outstanding that have been referred to the arbitrator, and without a final decision with respect to those issues, it is difficult to assess substantial success”.

urbitral notes – First, see Gerald W. Ghikas, Q.C., “Costs in Domestic Arbitration: Who Decides How to Decide What is Reasonable?”, the Advocate, Vol. 78, Part I, January 2020, pages 29-38. 

Second, for a sampling of treatment of costs awards in other jurisdictions, see the earlier Arbitration Mattes notes:

(i) “Alberta – costs are discretionary, not a discrete legal issue submitted to arbitrator, must be exercised judicially – #281” regarding Allen v. Renouf, 2020 ABQB 98. Mr. Justice C. Scott Brooker held that an arbitral party which ignores an opportunity to present its case cannot argue that it was treated manifestly unfairly.  Brooker J. dismissed Applicant’s attempt to challenge a costs award which he categorized as a discretionary decision but equally disagreed with Respondent’s argument that costs were a discrete legal issue expressly submitted to the arbitrator and shielded from appeal under section 44(3) of Alberta’s Arbitration Act, RSA 2000, c A-43. He did acknowledge that costs awards may raise a question of law if the discretion was not exercised judicially.  

(ii) “New Brunswick – detailed time summaries not a condition precedent to arbitrator’s ability to award costs – #340” regarding Jammin Rock Resources v. Dowd & Associates, et al., 2020 NBQB 102. Mr. Justice Daniel J. Stephenson denied leave to appeal a cost award which issued in favour of respondents further to their successful pre-hearing motion to determine that claimants’ arbitration was statute-barred.  Stephenson J. refused to characterize the arbitrator’s discretion on costs as equivalent to a taxation.  Despite objections to the summary evidence provided to and relied on by the arbitrator, Stephenson J. wrote that he was not aware of any jurisprudence mandating that arbitrators must have detailed time summaries as a condition precedent to their ability to award costs and that no provision of the Arbitration Act, RSNB 2014, c 100 mandates that an arbitrator must have detailed computer-generated time summaries prior to allocating costs.  The facts also confirmed the arbitrator’s authority to make a determination with final effect prior to the merits hearing and on documentary evidence.

(iii) “Ontario – costs of arbitration not recoverable as damages in litigation over breach of settlement arrived at during arbitration – #247” regarding Arista Homes (Kleinburg) Inc. v. Sarah Igbinedion, 2019 ONSC 7086. Madam Justice Margaret Eberhard held that the costs of an earlier arbitration could not be recovered in subsequent litigation involving breach of a settlement negotiated during that arbitration. Eberhard J. held that such costs had been spoken to by the parties in their settlement and were also not within the discretion of the court to award as costs of the court proceeding alleging breach of the settlement.

Third, for other decisions in B.C. addressing costs, see the earlier Arbitration Matters notes:

(i) “B.C. – upcoming legislation overrides determination that summary assessment of costs is arbitral error – #348” regarding Appleton & Associates v. Branch MacMaster LLP, 2020 BCCA 187. B.C.’s Court of Appeal held that a court’s discretion to refuse to set aside an award under section 30(1) of the Arbitration Act, RSBC 1996, c 55 upon a finding of arbitral error is “constrained by the parameters” in section 30(2).  The arbitral error consisted of making a summary assessment to determine costs.  However, going forward, section 50(2)(d) of B.C.’s new Arbitration Act (Bill 7 – 2020: Arbitration Act), in effect September 1, 2020, expressly authorizes an arbitrator to summarily determine the amount of costs.  In debating whether to set aside or remit the award, the Court observed that it is doubtful that a party can constrain the court’s discretion under section 30(1) to set aside the award or remit by limiting the requested relief to only one of the remedies.

(ii) “B.C. – no need to give reasons when not departing from normal rule on costs – #287”.   Though arbitrators should give reasons for departing from the “normal” costs rule, Madam Justice Lisa A. Warren in Goel v. Sangha, 2019 BCSC 1916 held that it does not follow that arbitrators must provide reasons for not departing from the normal rule.  Warren J. also held that an arbitrator cannot be faulted for following a process adopted by agreement of the parties and that, on appeal, absent further evidence, the court had no role in revisiting an arbitrator’s finding that such an agreement existed in fact.