B.C. – arbitrator’s decision on costs qualifies as an award enforceable as judgment/order of the court – #150

In Sangha v. Goel, 2018 BCSC 2267, Mr. Chief Justice Christopher E. Hinkson qualified a costs award as an “award” under B.C.’s Arbitration Act, RSBC 1996, c 55. The costs award issued as a distinct award following a partial award by the arbitrator and was based on a summary presentation of evidence based on an initial agreement by the parties but from which Respondents later unsuccessfully attempted to resile. Hinkson C.J. held that the delays and costs borne by Petitioners were significant reasons for granting Petitioners leave to enforce the award on arbitral costs but also refused to grant Petitioners their court costs due to their occasioning use of one (1) hour more than the time reserved because of same day filing of motion materials.

The parties were involved in a real estate joint venture and, further to an arbitration disputing, among other things, profits derived from land sales stemming their joint venture, an arbitrator ordered Respondents (the “Goel parties”) to pay the costs of the arbitration to the Petitioners (the “Sangha parties” and “Dhaliwal parties”).

Petitioners applied to have the court enforce the arbitrator’s costs award as a judgment or order of the court and for leave to file and enforce that costs award as an order of the court.

Respondents had earlier instituted a civil action but, in Goel v. Dhaliwal, 2015 BCSC 2305, the court had stayed the action further to sections 15(1) and 15(2) of the Arbitration Act and the parties arbitration agreement which read as follows:

All disputes hereunder between the parties shall be referred in the first instance in writing to David L. Worthington of McQuarrie Hunter and Richard Brooks of H.Y. Engineering Ltd. for determination. If either party is not satisfied with the determination so made, he may refer such dispute to arbitration conducted pursuant to the Commercial Arbitration Act (British Columbia),. Any judgment made in the course of such arbitration shall be final and binding upon the parties. It is agreed by the parties that all disputes will be settled by a single arbitrator and the costs shall be in the discretion of the arbitrator.

The arbitration agreement closed by confirming the parties’ agreement that the arbitrator had discretion regarding costs.

The arbitrator held a hearing on the merits of the claims made by Petitioners and, by way of partial award, (a) dismissed their claims for profits or losses in construction of homes on certain lots but (b) determined that the lots on which the homes were built were assets of the joint venture.

The arbitrator convened the parties’ counsel for a post-partial award case management call in order to determine the formality by which the arbitrator would hear evidence and determine the costs applicable to the phase leading up to the partial award. Though Petitioners and Respondents agreed to a summary approach based on affidavit material appending copies of their respective accounts and the related detail, Respondents resiled from their agreement and unsuccessfully applied for new approach. Hinkson C.J. reproduces the arbitrator’s comments on the change.

13. Mr. Gautam’s complaint about the procedure agreed to and directed at the August 10 procedural meeting was not raised in a timely fashion. If he reconsidered his agreement he should have made it known to the other parties and to this arbitrator before the other parties made their submissions. As set out in more detail below, I do not agree with Mr. Gautam’s submission that without production of the other parties’ lawyers’ files a determination of the reasonable legal fees cannot be made.

Hinkson C.J. summarized the arbitrator’s approach to his October 1, 2018 award on costs (“Costs Award”).

[16] Mr. Clemens said his costs award was an exercise of the discretion afforded to him pursuant to s. 41 of the Commercial Arbitration Act (now the Arbitration Act) and/or Rule 41 of the British Columbia International Commercial Arbitration Centre’s (“BCICAC”) Rules for Domestic Commercial Arbitration.  The costs were quantified by Mr. Clemens on a summary basis, over the objection of the Goel parties. On October 1, 2018, relying on affidavit evidence alone, Mr. Clemens assessed the costs payable to the Dhaliwal parties in the amount of $77,981.11, and the costs payable to the Sangha parties in the amount of $66,222.07. To both of these amounts, Mr. Clemens added interest to be calculated from September 24, 2018 pursuant to the Court Order Interest Act, R.S.B.C. 1996, c. 79.

Following the Costs Award, Petitioners on October 3, 2018 formally demanded Respondents to pay amounts ordered in the Costs Award. Through counsel, Respondents replied on October 5, 2018 that they would appeal the Costs Award but, as of the date of the hearing before Hinkson C.J., no appeal or stay of the Costs Award had been taken.

Petitioners applied for leave to enforce the Costs Award as judgment or order of the court. Respondents applied to adjourn Petitioners’ application but, applying Powerex Corp. v. Alcan Inc., 2004 BCSC 876, paras 24-26, Hinkson C.J. refused the adjournment for four (4) reasons stated at para. 22 of his reasons. The first pair of those reasons were: (a) Respondents had not sought a stay of the Costs Award; and, (b) the “considerable delays in the completion of the arbitration mitigated against the adjournment”.

Hinkson C.J. readily qualified the arbitrator’s Costs Award as an “award” for the purposes of section 1 of B.C.’s Arbitration Act which reads:

“award” means the decision of an arbitrator on the dispute that was submitted to the arbitrator and includes
(a) an interim award,
(b) the reasons for the decision, and
(c) any amendments made to the award under this Act

Referring to sections 29, 30 and 31 of the Arbitration Act, Hinkson C.J. held that granted leave to Petitioners to enforced the Costs Award in the same manner as a judgment or order of the court pursuant to section 29(1) and stated that he did so “for the same reasons I declined to adjourn [Petitioners’] applications”.

He referred to Hassall v. Children’s & Women’s Health Centre, 2001 BCSC 1399 which required that, to be enforceable, an award must be “clear and unambiguous”.

At para. 29, Hinkson C.J. excerpted the arbitrator’s own reasoning for granting costs in favour of Petitioners and confirming, at paras 30-31 of his reasons that the delays and costs associated with the arbitration and management of some of the real estate “created a financial hardship” for Petitioners.

Regarding an order of the court costs associated with the hearing on the applications, Hinkson C.J. declined to order costs. Though Petitioners estimated a hearing time of one (1) hour and 45 minutes, due to late filing of materials on the day of the hearing, the actual time was almost two (2) hours and 45 minutes “with the result that applications by other litigants could not be heard that day”.

[36] In these circumstances, I am prepared to award the costs of the preparation of their application to the Sangha parties, as they complied with the filing requirements of the Rules, but I am not prepared to award the costs of the preparation of their application to the Dhaliwal parties who did not comply with those filing requirements.

[37] Given the circumstances set out in para. 34 and 35 above, I decline to award the costs of the applications to any party. Counsel who underestimate the time required for the hearing of their applications in chambers at the expense of other counsel or litigants must be discouraged from so doing. It serves no one’s interests to terminate a hearing whose required time has been underestimated at the completion of that time estimate, and the only means by which such inaccuracy can be addressed is by refusing costs where such conduct occurs.