Administrative law – Decisions of administrative tribunals – Arbitration Board – Expropriation – Judicial review – Compliance with legislation – Costs – Standard of review – Reasonableness simpliciter
Smith v. Alliance Pipeline Ltd.,  S.C.J. No. 7, 2011 SCC 7, Supreme Court of Canada, February 11, 2011, McLachlin C.J. and Binnie, LeBel, Deschamps, Fish, Abella, Charron, Rothstein and Cromwell JJ.
In 1998, the respondent, Alliance Pipeline Ltd (“Alliance”), obtained approval from the National Energy Board to build a pipeline that would cross a portion of the farmland of the appellant (the “landowner”). As directed by the National Energy Board Act, R.S.C. 1985, c. N-7 (“NEBA”), the parties entered into an easement agreement. Contrary to the agreement, Alliance failed to reclaim the land in a timely manner and refused to fully compensate the landowner for having done so in its stead. Accordingly, the landowner incurred the costs for the reclamation and turned to statutorily mandated arbitration, pursuant to the NEBA, to recover his incurred costs.
After the arbitration hearing took place but before the arbitration panel rendered its decision, Alliance instituted a proceeding before the Alberta Court of Queens Bench for: (1) unhindered access to the landowner’s land; (2) a declaration that the landowner’s compensation claim before the arbitration panel was precluded by the parties’ releases under the agreement and (3) an order that the arbitration panel not render its decision until the Court resolved this action. Ultimately, Alliance discontinued this action and the Court awarded the landowner costs on a party and party basis in regard to the court action.
The proceedings that occurred before the initial arbitration panel were aborted for various reasons and a new committee (the “second committee”) was appointment. After a five-day hearing, the second committee awarded the landowner a portion of his costs from the original arbitration proceeding and the balance of his solicitor-client costs on the action and motion before the Alberta Court of Queens Bench. These awards were upheld by the Federal Court but were set aside by the Federal Court of Appeal.
The landowner appealed the decision of the Federal Court of Appeal and the Supreme Court of Canada restored the second committee’s finding.
The Supreme Court of Canada held that the governing standard of review for the second committee’s cost decision was “reasonableness”, as opposed to “correctness” because, inter alia, the second committee was interpreting its “home statute”.
The Supreme Court of Canada awarded the landowner costs throughout on a solicitor-client basis reasoning:
(1) the NEBA, like various expropriation statutes, authorizes awards of “all legal, appraisal and other costs” (see s. 99(1) of NEBA);
(2) the award accords well with the object and purpose of NEBA, as reflected in s. 75 of NEBA which states that expropriating parties should be made economically whole for “all damages sustained by them by reason of [the expropriation]”;
(3) justice could only be done by a complete indemnification for costs considering the inordinate amount of money and time the landowner had to invest in what should have been an expeditious process; and
(4) the landowner ought not be made to bear the costs of what the Court found was “clearly a test case” for Alliance.
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