Court headnote

Smith v. Alliance Pipeline Ltd.
Collection
Supreme Court Judgments
Date
2011-02-11
Neutral citation
2011 SCC 7
Report
[2011] 1 SCR 160
Case number
33203
Judges
McLachlin, Beverley; Binnie, William Ian Corneil; LeBel, Louis; Deschamps, Marie; Fish, Morris J.; Abella, Rosalie Silberman; Charron, Louise; Rothstein, Marshall; Cromwell, Thomas Albert
On appeal from
Federal Court of Appeal
Subjects
Administrative law
Notes
SCC Case Information: 33203
Decision Content
SUPREME COURT OF CANADA
Citation: Smith v. Alliance Pipeline Ltd., 2011 SCC 7, [2011] 1 S.C.R. 160
Date: 20110211
Docket: 33203
Between:
Vernon Joseph Smith
Appellant
and
Alliance Pipeline Ltd.
Respondent
- and -
Arbitration Committee, appointed pursuant to the National Energy Board Act ,
R.S.C. 1985, c. N-7 , Part V
Intervener
Coram: McLachlin C.J. and Binnie, LeBel, Deschamps, Fish, Abella, Charron, Rothstein and Cromwell JJ.
Reasons for Judgment:
(paras. 1 to 77)
Concurring Reasons:
(paras. 78 to 111)
Fish J. (McLachlin C.J. and Binnie, LeBel, Abella, Charron, Rothstein and Cromwell JJ. concurring)
Deschamps J.
Smith v. Alliance Pipeline Ltd., 2011 SCC 7, [2011] 1 S.C.R. 160
Vernon Joseph Smith Appellant
v.
Alliance Pipeline Ltd. Respondent
and
Arbitration Committee, appointed pursuant
to the National Energy Board Act ,
R.S.C. 1985, c. N-7 , Part V Intervener
Indexed as: Smith v. Alliance Pipeline Ltd.
2011 SCC 7
File No.: 33203.
2010: October 5; 2011: February 11.
Present: McLachlin C.J. and Binnie, LeBel, Deschamps, Fish, Abella, Charron, Rothstein and Cromwell JJ.
on appeal from the federal court of appeal
Administrative law — Judicial review — Standard of review — Land expropriated by pipeline company pursuant to agreement — Expropriated party not fully compensated and Pipeline Arbitration Committee appointed pursuant to National Energy Board Act — Queen’s Bench action commenced by company and then discontinued — First committee aborted and a second committee appointed — Second committee awarding costs for proceedings before both committees and for court action — Whether standard of reasonableness applicable to second committee’s decision on costs — National Energy Board Act, R.S.C. 1985, c. N‑7, ss. 75 , 99(1) .
Administrative law — Boards and Tribunals — Jurisdiction — Costs — Land expropriated by pipeline company pursuant to agreement — Expropriated party not fully compensated and Pipeline Arbitration Committee appointed pursuant to National Energy Board Act — Queen’s Bench action commenced by company and then discontinued — First committee aborted and a second committee appointed — Second committee awarding costs for proceedings before both committees and for court action — Whether tribunal having jurisdiction to order such costs — National Energy Board Act, R.S.C. 1985, c. N‑7, ss. 75 , 99(1) .
In 1998, the respondent, A, obtained approval from the National Energy Board to build a pipeline that would cross the farmland of S. A completed the pipeline in 1999, but failed to perform the agreed-upon reclamation work on the easement the following spring. S proceeded to do so on his own. A offered to pay only part of the invoice submitted by S. S filed a Notice of Arbitration, and a hearing took place before the first Pipeline Arbitration Committee. Before a decision was rendered, A decided to perform maintenance work on its easement and asked S for permission to use a portion of his private property that lay outside the company’s right-of-way. S asked for prior compensation before giving his approval, and in response, A instituted proceedings before the Alberta Court of Queen’s Bench seeking, among other things, unhindered access to S’s land and an order that the first committee not render its decision until the Queen’s Bench action was resolved. A eventually discontinued its action and ultimately paid less than one quarter of the fees and disbursements S had by then incurred in defending the action. Meanwhile, the arbitration proceedings failed to get resolved because one of the members of the first Arbitration Committee was elevated to the bench. A second Arbitration Committee was appointed and in his amended Notice of Arbitration, S sought compensation for his reclamation work as well as his costs before the first Arbitration Committee and for $16,222.57 in solicitor‑client costs which was the balance of his legal expenses resulting from the discontinued Queen’s Bench action. The second Arbitration Committee awarded him a portion of his costs from the first Arbitration Committee proceedings and the balance of his solicitor-client costs on the action and motion before the Court of Queen’s Bench. On appeal by A, the Federal Court concluded that this decision was reasonable but on further appeal, the Federal Court of Appeal concluded that the second Arbitration Committee had erred.
Held: The appeal is allowed and the decision of the second Arbitration Committee is restored with costs to S throughout, on a solicitor‑client basis.
Per McLachlin C.J. and Binnie, LeBel, Fish, Abella, Charron, Rothstein and Cromwell JJ.: Applying the analytical framework of Dunsmuir, it is clear that the governing standard of review is reasonableness. The second committee was interpreting its home statute which usually attracts a reasonableness standard of review. Moreover, the committee was interpreting s. 99(1) of the National Energy Board Act (“NEBA ”), a provision of its home statute regarding awards for costs. Awards for costs are invariably fact-sensitive and generally discretionary. The statutory language involved reflects a legislative intention to vest in arbitration committees sole responsibility for determining the nature and the amount of the costs to be awarded in the disputes they are bound under the NEBA to resolve. In discharging that responsibility, committees must interpret s. 99(1) in order to apply it in accordance with their statutory mandate. These considerations all fall within categories which according to Dunsmuir generally attract the standard of reasonableness. Cumulatively considered, they point unmistakably to that standard.
The impugned decision of the second committee satisfies that standard. The second committee reasonably found that it was entitled under s. 99(1) of the NEBA to make the impugned awards on costs. The committee’s reasoning in interpreting and applying this provision is coherent. It acknowledged that it had awarded S compensation exceeding eighty‑five percent of the amount offered by A, thereby triggering the application of s. 99(1) . The reasonableness of the second committee’s conclusion that s. 99(1) of the NEBA merits a broad reading accords with the plain words of the provision, its legislative history, its evident purpose, and its statutory context. Moreover, it rests comfortably on the foundational principle of full compensation that animates both the NEBA and expropriation law generally.
It is not open to dispute that S, as a matter of fact, incurred all of the costs he was awarded by the committee. The committee found those costs to have been reasonably incurred. The committee concluded, again reasonably, that S’s costs before both arbitration committees and in the Queen’s Bench all related to a single claim for compensation in respect of a single expropriation by a single expropriating party.
In allowing the appeal and restoring the second committee’s decision, S is also awarded his costs throughout, on a solicitor‑client basis. In the context of modern expropriation law, where statutes authorize awards of “all legal, appraisal and other costs”, Canadian jurisprudence and doctrine demonstrate that costs on a solicitor‑and‑client basis should generally be given. Awarding costs on a solicitor-client basis accords well with the object and purpose of the NEBA . Only this type of award can indemnify S as best one can for the inordinate amount of money — to say nothing of time — he has had to invest in what should have been an expeditious process. Lastly, S should not be made to bear the costs of what is clearly a test case for A.
Per Deschamps J.: While it is agreed that the proper standard of review in this case is reasonableness and that the decision of the second committee in making the costs award to S satisfied that standard, the same cannot be said for the proposition that an administrative decision‑maker’s interpretation of its home statute, absent indicia of its particular familiarity with the statute, attracts deference unless the question raised is constitutional, of central importance to the legal system or concerned with demarcating one tribunal’s authority from another. On the contrary, principles of administrative law, jurisprudence and commentary support the position that according deference to an administrative decision-maker’s interpretation of its home statute is anchored in the need to respect legislative intent to leave these interpretative issues to certain decision-makers when there is good reason to do so. Most of the time, the reason is that the decision-maker possesses expertise or experience that puts it in a better position to interpret its home statute relative to a court. There is no presumption of expertise or experience flowing from the mere fact that an administrative decision-maker is interpreting its enabling statute.
In Dunsmuir, various categories of question were articulated based on pre-existing jurisprudence in order to assist in resolving the standard of review. Dunsmuir does not, however, recognize a broad home statute category, but rather a category grounded in the relative expertise or experience of the decision‑maker. According deference to an administrative decision‑maker merely for the reason that it is interpreting its home statute and no constitutional question, centrally important legal question, or question about the limits of its authority vis‑à‑vis another tribunal is incomplete. Such a position is purely formalistic and loses sight of the rationale for according deference to an interpretation of the home statute that has developed in the jurisprudence: namely, that the legislature has manifested an intent to draw on the relative expertise or experience of the administrative body to resolve the interpretative issues before it. Such intent cannot simply be presumed from the creation of an administrative body by the legislature. Provided that no other category of question for resolving the standard of review is engaged and absent indicia of the decision-maker’s familiarity with its home statute, courts should move to the second step of Dunsmuir and consider the contextual factors.
In the case at bar, there is no indication that Parliament intended the arbitration committee to have particular familiarity with its home statute, the NEBA . Arbitration committees are appointed ad hoc under the NEBA and while they may include practising lawyers, there is nothing to suggest — in the legislative scheme or otherwise — that they hold any sort of expertise or experience relative to a court when it comes to interpreting the NEBA . Though decisions of arbitration committees are subject to review on questions of law or jurisdiction, it is notable that Parliament grants a right of appeal from a committee decision to the Federal Court. In this appeal, deference should be accorded to the second committee, not because it interpreted its home statute, but because it exercised its statutorily conferred discretion to make an award of costs. Dunsmuir recognized that for matters of discretion, “deference will usually apply automatically”. This, and not the mere fact that the second committee was interpreting its home statute, militates in favour of according deference.
Cases Cited
By Fish J.
Applied: Dunsmuir v. New Brunswick, 2008 SCC 9, [2008] 1 S.C.R. 190; referred to: Toronto (City) v. C.U.P.E., Local 79, 2003 SCC 63, [2003] 3 S.C.R. 77; Celgene Corp. v. Canada (Attorney General), 2011 SCC 1, [2011] 1 S.C.R. 3; Canadian Union of Public Employees, Local 963 v. New Brunswick Liquor Corp., [1979] 2 S.C.R. 227; Re Conger Lehigh Coal Co. and City of Toronto, [1934] O.R. 35; Diggon‑Hibben, Ltd. v. The King, [1949] S.C.R. 712; Irving Oil Co. v. The King, [1946] S.C.R. 551; Toronto Area Transit Operating Authority v. Dell Holdings Ltd., [1997] 1 S.C.R. 32; Ian MacDonald Library Services Ltd. v. P.Z. Resort Systems Inc. (1987), 14 B.C.L.R. (2d) 273; Christian & Missionary Alliance v. Municipality of Metropolitan Toronto (1973), 3 O.R. (2d) 655; ATCO Gas and Pipelines Ltd. v. Alberta (Energy and Utilities Board), 2006 SCC 4, [2006] 1 S.C.R. 140; Danyluk v. Ainsworth Technologies Inc., 2001 SCC 44, [2001] 2 S.C.R. 460; Campbell River Woodworkers’ & Builders’ Supply (1966) Ltd. v. British Columbia (Minister of Transportation & Highways), 2004 BCCA 27, 22 B.C.L.R. (4th) 210; Thoreson v. Alberta (Minister of Infrastructure), 2007 ABCA 272, 79 Alta. L.R. (4th) 75; Town of Mahone Bay v. Lohnes (1983), 59 N.S.R. (2d) 68, aff’d (1983), 59 N.S.R. (2d) 65; Lohnes v. Town of Mahone Bay (1983), 28 L.C.R. 338; McKean v. Ontario (Ministry of Transportation) (2008), 94 L.C.R. 185; Bayview Builder’s Supply (1972) Ltd. v. British Columbia (Minister of Transportation & Highways), 1999 BCCA 320, 67 B.C.L.R. (3d) 312; Holdom v. British Columbia Transit, 2006 BCCA 488, 58 B.C.L.R. (4th) 207; Hill v. Nova Scotia (Attorney General)(No. 2) (1997), 155 D.L.R. (4th) 767 (S.C.C.); Foulis v. Robinson (1978), 92 D.L.R. (3d) 134.
By Deschamps J.
Referred to: Dunsmuir v. New Brunswick, 2008 SCC 9, [2008] 1 S.C.R. 190; Canadian Broadcasting Corp. v. Canada (Labour Relations Board), [1995] 1 S.C.R. 157; Toronto (City) Board of Education v. O.S.S.T.F., District 15, [1997] 1 S.C.R. 487; Canadian Union of Public Employees, Local 963 v. New Brunswick Liquor Corp., [1979] 2 S.C.R. 227; U.E.S., Local 298 v. Bibeault, [1988] 2 S.C.R. 1048; Canada (Director of Investigation and Research) v. Southam Inc., [1997] 1 S.C.R. 748; Pushpanathan v. Canada (Minister of Citizenship and Immigration), [1998] 1 S.C.R. 982; Barrie Public Utilities v. Canadian Cable Television Assn., 2003 SCC 28, [2003] 1 S.C.R. 476; Dr. Q v. College of Physicians and Surgeons of British Columbia, 2003 SCC 19, [2003] 1 S.C.R. 226; Association des courtiers et agents immobiliers du Québec v. Proprio Direct inc., 2008 SCC 32, [2008] 2 S.C.R. 195; Canada (Citizenship and Immigration) v. Khosa, 2009 SCC 12, [2009] 1 S.C.R. 339; Nolan v. Kerry (Canada) Inc., 2009 SCC 39, [2009] 2 S.C.R. 678; Celgene Corp. v. Canada (Attorney General), 2011 SCC 1, [2011] 1 S.C.R. 3.
Statutes and Regulations Cited
Act to amend the National Energy Board Act, S.C. 1980-81-82-83, c. 80.
Alberta Rules of Court, Alta. Reg. 390/68, r. 601(2)(d)(ii).
Financial Services Commission of Ontario Act, 1997, S.O. 1997, c. 28, ss. 6(4), 7(2).
National Energy Board Act, R.S.C. 1970, c. N‑6, s. 75 .
National Energy Board Act, R.S.C. 1985, c. N‑7, ss. 3 , 22(1) , 23(1) , 75 , 99(1) , 101 .
Railway Act, R.S.C. 1970, c. R‑2, ss. 145 to 184, 186.
Supreme Court Act, R.S.C. 1985, c. S‑26, s. 47 .
Authors Cited
Boyd, Kenneth J. Expropriation in Canada: A Practitioner’s Guide. Aurora, Ont.: Canada Law Book, 1988.
Canada. House of Commons. House of Commons Debates, vol. VII, 1st Sess., 32nd Parl., March 6, 1981, p. 8006.
Canada. Law Reform Commission. Working Paper 9. Expropriation. Ottawa: Information Canada, 1975.
Dyzenhaus, David. “The Politics of Deference: Judicial Review and Democracy”, in Michael Taggart, ed., The Province of Administrative Law. Oxford: Hart Publishing, 1997, 279.
Jacobs, Laverne. “Developments in Administrative Law: The 2007‑2008 Term — The Impact of Dunsmuir” (2008), 43 S.C.L.R. (2d) 1.
Macaulay, Robert W., and James L. H. Sprague. Practice and Procedure Before Administrative Tribunals, vol. 3. Toronto: Carswell, 2004 (loose‑leaf updated 2010, release 8).
McLachlin, Beverley. “The Roles of Administrative Tribunals and Courts in Maintaining the Rule of Law” (1998), 12 C.J.A.L.P. 171.
Sullivan, Ruth. Sullivan on the Construction of Statutes, 5th ed. Markham, Ont.: LexisNexis, 2008.
Todd, Eric C. E. The Law of Expropriation and Compensation in Canada, 2nd ed. Scarborough, Ont.: Carswell, 1992.
APPEAL from a judgment of the Federal Court of Appeal (Noël, Nadon and Pelletier JJ.A.), 2009 FCA 110, 389 N.R. 363, 42 C.E.L.R. (3d) 1, [2009] F.C.J. No. 407 (QL), 2009 CarswellNat 836, reversing a decision of O’Keefe J., 2008 FC 12, 34 C.E.L.R. (3d) 138, 318 F.T.R. 100, [2008] F.C.J. No. 28 (QL), 2008 CarswellNat 35, which upheld a decision of the second Pipeline Arbitration Committee. Appeal allowed.
Richard C. Secord, Meaghan M. Conroy and Yuk‑Sing Cheng, for the appellant.
Munaf Mohamed and Jillian Strugnell, for the respondent.
No one appeared for the intervener the Arbitration Committee, appointed pursuant to the National Energy Board Act, R.S.C. 1985, c. N‑7 , Part V.
The judgment of McLachlin C.J. and Binnie, LeBel, Fish, Abella, Charron, Rothstein and Cromwell JJ. was delivered by
Fish J. —
I
[1] The seeds of this dispute were sown in a thin layer of manure spread by the appellant on a strip of his land that the respondent was obliged to reclaim.
[2] Pursuant to an expropriation agreement, the respondent had obtained a right-of-way over the land in question. The respondent failed to reclaim the land in a timely manner, as required by the agreement, and refused to fully compensate the appellant for having done so in its stead. The appellant turned to statutorily mandated arbitration for what was meant to assure an expeditious resolution of the dispute.
[3] What ensued was anything but: Two Arbitration Committee hearings, one Court of Queen’s Bench action, one judicial review, one appellate review proceeding, and thousands of dollars later, the appellant has only now reached the end of what should have been a short road to full compensation.
[4] Proceedings before the first Arbitration Committee were aborted and a second Committee was appointed. The second Committee awarded the appellant the costs he had incurred in asserting his claim before it. In addition, it awarded the appellant most of his costs on the proceedings before the first Arbitration Committee and the costs he had incurred in defending related proceedings instituted by the respondent in the Court of Queen’s Bench. These awards were upheld by the Federal Court on judicial review, but set aside by the Federal Court of Appeal.
[5] In my view, the decision of the second Arbitration Committee should be restored. As we shall see, it was subject to intervention on judicial review only if it was found to be unreasonable.
[6] I believe, on the contrary, that the Committee’s decision is set out coherently and that its conclusions are entirely consistent with the statutory provisions it was bound to apply, notably ss. 75 and 99(1) of the National Energy Board Act, R.S.C. 1985, c. N-7 (“NEBA ”). Section 75 expresses in statutory form the well-established principle that expropriating parties should be made economically whole “for all damage sustained by them by reason of [the expropriation]”. In the same vein, s. 99(1) vests in Arbitration Committees a broad discretion in determining the incidental components of full compensation, which include “all legal, appraisal and other costs determined by the Committee to have been reasonably incurred [by the expropriated party] in asserting that person’s claim for compensation”.
[7] I see no basis for interfering with the Committee’s application of these and other relevant provisions of the NEBA to the facts as it found them.
[8] For these reasons, and the reasons that follow, I would therefore allow the appeal and restore the Arbitration Committee’s award, with costs throughout on a solicitor-client basis.
II
[9] In 1998, the respondent, Alliance Pipeline Ltd. (“Alliance”), obtained approval from the National Energy Board to build a pipeline that would cross the farmland of the appellant. As directed by the NEBA , the parties concluded easement agreements, which provided compensation for the expropriated land. They also signed releases which are not in issue before us.
[10] Alliance completed the pipeline in 1999, but failed to perform the agreed-upon reclamation work on the easement the following spring, as Mr. Smith thought necessary. Mr. Smith thus proceeded to do so on his own. He submitted a $9,829 invoice to Alliance. Alliance offered to pay only $2,500.
[11] Mr. Smith filed a Notice of Arbitration in August 2001, pursuant to Part V of the NEBA . A hearing took place on May 6, 2003, before a three-member Pipeline Arbitration Committee (the “First Committee”) appointed by the Minister of Natural Resources (“Minister”), and the Committee reserved judgment.
[12] In early June 2003, Alliance decided to perform maintenance work on its easement, pursuant to urgent recommendations of an assessment the company had commissioned a year earlier (but whose conclusions it had previously ignored). In order to access its easement, Alliance asked Mr. Smith for permission to use a 100-foot portion of his private property that lay outside the company’s right-of-way. Frustrated by the respondent’s unwillingness to pay his previous claim, Mr. Smith asked for prior compensation before giving his approval. During the ensuing disagreement, Mr. Smith expressed his exasperation with Alliance employees in angry and threatening terms. A company land agent notified the RCMP, but after speaking with Mr. Smith, the police refused to lay charges.
[13] Alliance then instituted proceedings before the Alberta Court of Queen’s Bench. In its statement of claim, Alliance sought; (1) unhindered access to Mr. Smith’s land; (2) a declaration that Mr. Smith’s compensation claim before the First Committee was precluded by the parties’ releases; and (3) an order that the First Committee not render its decision until the Queen’s Bench action was resolved.
[14] On August 7, 2003, Alliance filed a notice of motion seeking two interim injunctions: one to stay the First Committee proceedings, and another to compel Mr. Smith to give Alliance access to the easement. Madam Justice Nation dismissed Alliance’s motion in October 2003 (2003 ABQB 843 (CanLII)) and awarded Mr. Smith party and party costs, which Alliance paid (A.R., vol. III, at pp. 59-62).
[15] Alliance waited a year and a half before discontinuing its Queen’s Bench action on March 17, 2005, in respect of which it paid Mr. Smith $4,565.97 in party and party costs, less than one quarter of the $20,788.54 in fees and disbursements he had by then incurred in defending the action.
[16] Meanwhile, the arbitration proceedings failed to get resolved. On February 1, 2005, almost two years after the hearing but before any decision was rendered, the parties learned that one of the three members of the First Committee, Mr. John Gill, had been elevated to the bench. The First Committee thereby lost its quorum and the proceedings, in this matter and in 19 companion cases against Alliance, were thereupon aborted.
[17] The Minister appointed a new Arbitration Committee (the “Second Committee”) on August 11, 2005. In his amended Notice of Arbitration, Mr. Smith again sought compensation for his reclamation work. However, he added claims for his costs before the First Committee and for $16,222.57 in solicitor-client costs — the balance of his legal expenses following Justice Nation’s ruling.
III
[18] After a five-day hearing, the Second Committee allowed most of Mr. Smith’s claims. It also awarded him a portion of his costs from the First Committee proceedings and the balance of his solicitor-client costs on the action and motion before the Court of Queen’s Bench.
[19] On an appeal by Alliance to the Federal Court, pursuant to s. 101 of the NEBA , Justice O’Keefe concluded that the Second Committee’s award of part of the costs incurred by Mr. Smith before the First Committee was reasonable. He also found that since Mr. Smith was forced to defend the action in order to preserve his claim before the Committee, his participation in the action was part and parcel of his claim for compensation pursuant to the NEBA and it was equally reasonable to award him his costs pursuant to s. 99(1) (2008 FC 12, 34 C.E.L.R. (3d) 138).
[20] On a further appeal by Alliance to the Federal Court of Appeal, the court concluded that the Second Committee had erred in awarding Mr. Smith his costs before the First Committee and on the Queen’s Bench action (2009 FCA 110, 389 N.R. 363). Speaking for the court on this point, Nadon J.A. found it unnecessary to determine whether reasonableness or correctness was the appropriate standard of review, since he would have set aside the Second Committee’s decision no matter which standard of review he applied.
[21] In short concurring reasons, Justice Pelletier reprimanded Alliance for its delaying tactics. He explained disapprovingly that it was Alliance who asked the First Committee “to refrain from deciding Mr. Smith’s claim until the [action was] completed” (para. 70) and who “effectively stonewall[ed] Mr. Smith by reneging on its earlier position and commencing [an action before the Court of Queen’s Bench]” (para. 72). In his opinion, Alliance could and should have left the issue of the releases to be determined by the First Committee.
IV
[22] The overarching question before the Second Committee was whether “costs” in s. 99(1) of the NEBA refers solely to expenses incurred by an expropriated owner in the proceedings before it. On Alliance’s appeal to the Federal Court, the reviewing judge was required to determine, as a threshold question, whether to apply the standard of correctness or the less demanding standard of reasonableness in scrutinizing the Committee’s decision.
[23] In this context, I think it important to reiterate here that the extensive and formulaic inquiries of the past have now been replaced by the broader and less cumbersome approach set out by the Court in Dunsmuir v. New Brunswick, 2008 SCC 9, [2008] 1 S.C.R. 190.
[24] Pursuant to Dunsmuir:
. . . the process of judicial review involves two steps. First, courts ascertain whether the jurisprudence has already determined in a satisfactory manner the degree of deference to be accorded with regard to a particular category of question. Second, where the first inquiry proves unfruitful, courts must proceed to an analysis of the factors making it possible to identify the proper standard of review. [para. 62]
Even when resort to these factors is required, it may not be necessary to consider them all (para. 64).
[25] Accordingly, reviewing judges can usefully begin their analysis by determining whether the subject matter of the decision before them for review falls within one of the non-exhaustive categories identified by Dunsmuir. Under that approach, the first step will suffice to ascertain the standard of review applicable in this case.
[26] Under Dunsmuir, the identified categories are subject to review for either correctness or reasonableness. The standard of correctness governs: (1) a constitutional issue; (2) a question of “general law ‘that is both of central importance to the legal system as a whole and outside the adjudicator’s specialized area of expertise’” (Dunsmuir, at para. 60 citing Toronto (City) v. C.U.P.E., Local 79, 2003 SCC 63, [2003] 3 S.C.R. 77, at para. 62); (3) the drawing of jurisdictional lines between two or more competing specialized tribunals; and (4) a “true question of jurisdiction or vires” (paras. 58-61). On the other hand, reasonableness is normally the governing standard where the question: (1) relates to the interpretation of the tribunal’s enabling (or “home”) statute or “statutes closely connected to its function, with which it will have particular familiarity” (para. 54); (2) raises issues of fact, discretion or policy; or (3) involves inextricably intertwined legal and factual issues (paras. 51 and 53-54).
[27] Applying this analytical framework here, I am satisfied that the governing standard of review is reasonableness.
[28] In this case, the Committee was interpreting its home statute. Under Dunsmuir, this will usually attract a reasonableness standard of review (ibid. at para. 54). And nothing in these reasons or in Celgene Corp. v. Canada (Attorney General), 2011 SCC 1, [2011] 1 S.C.R. 3, recently decided, represents a departure from Dunsmuir.
[29] Any doubt whether reasonableness is the applicable standard here can be comfortably resolved by other considerations.
[30] First, the Committee was interpreting s. 99(1) of the NEBA , a provision of its home statute regarding awards for costs. Awards for costs are invariably fact-sensitive and generally discretionary.
[31] Second, and more specifically, in fixing the costs that must be paid by expropriating parties, the Committee has been expressly endowed by Parliament with a wide “margin of appreciation within the range of acceptable and rational solutions” (Dunsmuir, at para. 47): the only costs that must be awarded under s. 99(1) are those “determined by the Committee to have been reasonably incurred”. This statutory language reflects a legislative intention to vest in Arbitration Committees sole responsibility for determining the nature and the amount of the costs to be awarded in the disputes they are bound under the NEBA to resolve.
[32] Third, in discharging that responsibility, Committees must interpret s. 99(1) in order to apply it in accordance with their statutory mandate, a process that will frequently raise “questions where the legal issues cannot be easily separated from the factual issues” (Dunsmuir, at para. 51).
[33] These considerations all fall within categories which according to Dunsmuir generally attract the standard of reasonableness. Cumulatively considered, they point unmistakably to that standard.
[34] Conversely, it is clear that this case does not fall within any of the categories which, under Dunsmuir, attract a standard of correctness. The Committee’s decision involved no constitutional matter or issue of general law “of central importance to the legal system as a whole and outside the adjudicator’s specialized area of expertise” (para. 60, citing Toronto (City) v. C.U.P.E., at para. 62), nor did it purport to draw jurisdictional lines between two or more competing specialized tribunals (Dunsmuir, at para. 61).
[35] Alliance nonetheless submits that the decision of the Arbitration Committee is subject to review for correctness on two grounds: first, because it involves a true question of jurisdiction; second, because it raises an issue of law to which deference does not apply.
[36] The jurisdictional ground is without merit. NEBA Arbitration Committees doubtless have “the authority to make the inquiry” whether “costs” under s. 99(1) refer solely to costs incurred in the proceedings before them, a determination that plainly falls within their “statutory grant of power” (Dunsmuir, at para. 59). I reiterate in this context the caution that courts should not “brand as jurisdictional, and therefore subject to broader curial review, that which may be doubtfully so” (Dickson J. in Canadian Union of Public Employees, Local 963 v. New Brunswick Liquor Corp., [1979] 2 S.C.R. 227, at p. 233, cited in Dunsmuir, at para. 35).
[37] Characterizing the issue before the reviewing judge as a question of law is of no greater assistance to Alliance, since a tribunal’s interpretation of its home statute, the issue here, normally attracts the standard of reasonableness (Dunsmuir, at para. 54), except where the question raised is constitutional, of central importance to the legal system, or where it demarcates the tribunal’s authority from that of another specialized tribunal ― which in this instance was clearly not the case.
[38] Finally, on this branch of the matter, Alliance argues that adoption of the reasonableness standard would offend the rule of law by insulating from review contradictory decisions by Arbitration Committees as to the proper interpretation of s. 99(1) of the NEBA . I am unable to share the respondent’s concern. In Dunsmuir, the Court stated that questions of law that are not of central importance to the legal system “may be compatible with a reasonableness standard” (para. 55), and added that “[t]here is nothing unprincipled in the fact that some questions of law will be decided on [this] basis” (para. 56; see also Toronto (City) v. C.U.P.E., at para. 71).
[39] Indeed, the standard of reasonableness, even prior to Dunsmuir, has always been “based on the idea that there might be multiple valid interpretations of a statutory provision or answers to a legal dispute” such that “courts ought not to interfere where the tribunal’s decision is rationally supported” (Dunsmuir, at para. 41).
[40] For the reasons explained, the governing standard in this case was reasonableness, not correctness. And I turn now to consider in this light whether the impugned decision of the Second Committee satisfies that standard.
V
[41] As mentioned at the outset, the decisive issue on this appeal is whether the Second Committee could reasonably find that it was entitled under s. 99(1) of the NEBA to make the impugned awards on costs.
[42] Section 99(1) reads:
99. (1) [Costs] 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.
[43] The Committee’s reasoning in interpreting and applying this provision is coherent. In granting Mr. Smith the disputed costs, it first acknowledged that it had awarded Mr. Smith compensation exceeding eighty-five percent of the amount offered by Alliance, thereby triggering the application of s. 99(1) . Having identified a proper source of authority, it then assessed whether Mr. Smith had “reasonably incurred” the costs “in asserting [his] claim for compensation”.
[44] The Committee first found that the Court of Queen’s Bench action was directly related to Mr. Smith’s attempt to obtain compensation from Alliance, concluding that Mr. Smith had therefore incurred these costs reasonably. The Committee’s conclusion flows logically from its findings of fact.
[45] Second, the Committee decided that the first panel’s loss of a quorum resulted in the nullification of some but not all of the original proceedings. On the one hand, it reasoned that the filings and legal work that retained their relevance during the second proceedings, such as the original Notice of Arbitration and reply, were proper bases for an award of costs. On the other hand, the Committee ruled that each party must absorb the costs of actual appearances before and correspondence with the first panel. The Second Committee’s logic in awarding Mr. Smith a portion of the costs he incurred during the first arbitral proceedings is consistent with the record. It is not unreasonable.
[46] The reasonableness of the Second Committee’s conclusion that s. 99(1) of the NEBA merits a broad reading accords, in my view, with the plain words of the provision, its legislative history, its evident purpose, and its statutory context. Moreover, it rests comfortably on the foundational principle of full compensation that animates both the NEBA and expropriation law generally.
[47] The relevant words of s. 99(1) make it plain that the Committee was thus entitled ― indeed bound ― to order Alliance to pay Mr. Smith “all legal, appraisal and other costs determined by the Committee to have been reasonably incurred by [Mr. Smith] in asserting [his] claim for compensation”.
[48] It is not open to dispute that Mr. Smith, as a matter of fact, incurred all of the costs he was awarded by the Committee. The Committee found those costs to have been reasonably incurred. As mentioned earlier, the Committee concluded, again reasonably, that Mr. Smith’s costs before both Arbitration Committees and in the Queen’s Bench all related to a single claim for compensation in respect of a single expropriation by a single expropriating party. On a plain reading of s. 99(1) , it was therefore open to the Committee to find that Mr. Smith was entitled to recover “all [of his] legal, appraisal and other costs” in asserting that claim.
[49] The Committee’s decision, moreover, is firmly rooted in the legislative evolution and history of the NEBA . In modern times, it is generally accepted that this is a relevant consideration in interpreting legislative intent (see R. Sullivan, Sullivan on the Construction of Statutes (5th ed. 2008), at pp. 280, 577-78, 587-89 and 599-603). A brief overview of the NEBA ’s statutory antecedents is not only appropriate, but particularly instructive.
[50] The goal of complete indemnification first appeared in the NEBA in 1981, when Parliament amended the statute to introduce most of what now constitutes Part V (An Act to amend the National Energy Board Act, S.C. 1980-81-82-83, c. 80). Prior to these amendments, ss. 145 to 184 and 186 of the Railway Act, R.S.C. 1970, c. R-2, were imported directly into the NEBA (R.S.C. 1970, c. N-6, s. 75). Under those provisions, “[t]he costs of the arbitration” were in the discretion of the arbitrator and could be ordered against either party (Railway Act, s. 164(1); see Re Conger Lehigh Coal Co. and City of Toronto, [1934] O.R. 35 (H.C.J.), at pp. 43-44).
[51] The 1981 amendments to the NEBA were inspired by the Law Reform Commission of Canada’s review, in 1975, of expropriation in the federal context in its Working Paper 9, Expropriation. This was expressly acknowledged by the Minister who introduced the amendments. The proposed legislation, he told Parliament, “substantially incorporates all the major recommendations of the Law Reform Commission of Canada expressed in its 1975 working paper” (House of Commons Debates, vol. VII, 1st Sess., 32nd Parl., March 6, 1981, at p. 8006).
[52] One of the Commission’s recommendations was that owners not be precluded from receiving the compensation to which they were entitled by the financial burden of litigation. Ideally, said the Commission, expropriated owners should receive “full indemnity for all such costs” (p. 73). It also found that the Railway Act regime did not provide adequate compensation because “[b]y a quirk in the law, the word ‘costs’ in the Railway Act, as in many other acts, does not mean exactly what it says[; it] does not mean ‘full costs’” (p. 74).
[53] Today, the principle of full indemnification appears explicitly in s. 75 of the NEBA , which provides, as I noted earlier, that a company “shall make full compensation . . . for all damage sustained” by the expropriated owner. Parliament adopted this more comprehensive approach to indemnification by broadening the language of s. 99(1) from “costs of the arbitration” to “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”.
[54] This amendment must be presumed to signify a clear and considered decision by Parliament to allow Arbitration Committees to exercise their full discretion in seeking to make expropriated owners whole (Sullivan, at pp. 579-82), and the historical context validates this presumption.
[55] Moreover, the NEBA operates within the broader context of expropriation law, both federal and provincial. As early as 1949, this Court acknowledged the vulnerable position of expropriated owners. In Diggon-Hibben, Ltd. v. The King, [1949] S.C.R. 712, at p. 715, Rand J. (Taschereau J. concurring) stated that no one should be “victimized in loss because of the accident that his land [is] required for public purposes”. In the same case, Estey J., citing with approval the earlier reasons of Rand J. in Irving Oil Co. v. The King, [1

Court headnote

Smith v. Alliance Pipeline Ltd. Collection Supreme Court Judgments Date 2011-02-11 Neutral citation 2011 SCC 7 Report [2011] 1 SCR 160 Case number 33203 Judges McLachlin, Beverley; Binnie, William Ian Corneil; LeBel, Louis; Deschamps, Marie; Fish, Morris J.; Abella, Rosalie Silberman; Charron, Louise; Rothstein, Marshall; Cromwell, Thomas Albert On appeal from Federal Court of Appeal Subjects Administrative law Notes SCC Case Information: 33203 Decision Content SUPREME COURT OF CANADA Citation: Smith v. Alliance Pipeline Ltd., 2011 SCC 7, [2011] 1 S.C.R. 160 Date: 20110211 Docket: 33203 Between: Vernon Joseph Smith Appellant and Alliance Pipeline Ltd. Respondent - and - Arbitration Committee, appointed pursuant to the National Energy Board Act , R.S.C. 1985, c. N-7 , Part V Intervener Coram: McLachlin C.J. and Binnie, LeBel, Deschamps, Fish, Abella, Charron, Rothstein and Cromwell JJ. Reasons for Judgment: (paras. 1 to 77) Concurring Reasons: (paras. 78 to 111) Fish J. (McLachlin C.J. and Binnie, LeBel, Abella, Charron, Rothstein and Cromwell JJ. concurring) Deschamps J. Smith v. Alliance Pipeline Ltd., 2011 SCC 7, [2011] 1 S.C.R. 160 Vernon Joseph Smith Appellant v. Alliance Pipeline Ltd. Respondent and Arbitration Committee, appointed pursuant to the National Energy Board Act , R.S.C. 1985, c. N-7 , Part V Intervener Indexed as: Smith v. Alliance Pipeline Ltd. 2011 SCC 7 File No.: 33203. 2010: October 5; 2011: February 11. Present: McLachlin C.J. and Binnie, LeBel, Deschamps, Fish, Abella, Charron, Rothstein and Cromwell JJ. on appeal from the federal court of appeal Administrative law — Judicial review — Standard of review — Land expropriated by pipeline company pursuant to agreement — Expropriated party not fully compensated and Pipeline Arbitration Committee appointed pursuant to National Energy Board Act — Queen’s Bench action commenced by company and then discontinued — First committee aborted and a second committee appointed — Second committee awarding costs for proceedings before both committees and for court action — Whether standard of reasonableness applicable to second committee’s decision on costs — National Energy Board Act, R.S.C. 1985, c. N‑7, ss. 75 , 99(1) . Administrative law — Boards and Tribunals — Jurisdiction — Costs — Land expropriated by pipeline company pursuant to agreement — Expropriated party not fully compensated and Pipeline Arbitration Committee appointed pursuant to National Energy Board Act — Queen’s Bench action commenced by company and then discontinued — First committee aborted and a second committee appointed — Second committee awarding costs for proceedings before both committees and for court action — Whether tribunal having jurisdiction to order such costs — National Energy Board Act, R.S.C. 1985, c. N‑7, ss. 75 , 99(1) . In 1998, the respondent, A, obtained approval from the National Energy Board to build a pipeline that would cross the farmland of S. A completed the pipeline in 1999, but failed to perform the agreed-upon reclamation work on the easement the following spring. S proceeded to do so on his own. A offered to pay only part of the invoice submitted by S. S filed a Notice of Arbitration, and a hearing took place before the first Pipeline Arbitration Committee. Before a decision was rendered, A decided to perform maintenance work on its easement and asked S for permission to use a portion of his private property that lay outside the company’s right-of-way. S asked for prior compensation before giving his approval, and in response, A instituted proceedings before the Alberta Court of Queen’s Bench seeking, among other things, unhindered access to S’s land and an order that the first committee not render its decision until the Queen’s Bench action was resolved. A eventually discontinued its action and ultimately paid less than one quarter of the fees and disbursements S had by then incurred in defending the action. Meanwhile, the arbitration proceedings failed to get resolved because one of the members of the first Arbitration Committee was elevated to the bench. A second Arbitration Committee was appointed and in his amended Notice of Arbitration, S sought compensation for his reclamation work as well as his costs before the first Arbitration Committee and for $16,222.57 in solicitor‑client costs which was the balance of his legal expenses resulting from the discontinued Queen’s Bench action. The second Arbitration Committee awarded him a portion of his costs from the first Arbitration Committee proceedings and the balance of his solicitor-client costs on the action and motion before the Court of Queen’s Bench. On appeal by A, the Federal Court concluded that this decision was reasonable but on further appeal, the Federal Court of Appeal concluded that the second Arbitration Committee had erred. Held: The appeal is allowed and the decision of the second Arbitration Committee is restored with costs to S throughout, on a solicitor‑client basis. Per McLachlin C.J. and Binnie, LeBel, Fish, Abella, Charron, Rothstein and Cromwell JJ.: Applying the analytical framework of Dunsmuir, it is clear that the governing standard of review is reasonableness. The second committee was interpreting its home statute which usually attracts a reasonableness standard of review. Moreover, the committee was interpreting s. 99(1) of the National Energy Board Act (“NEBA ”), a provision of its home statute regarding awards for costs. Awards for costs are invariably fact-sensitive and generally discretionary. The statutory language involved reflects a legislative intention to vest in arbitration committees sole responsibility for determining the nature and the amount of the costs to be awarded in the disputes they are bound under the NEBA to resolve. In discharging that responsibility, committees must interpret s. 99(1) in order to apply it in accordance with their statutory mandate. These considerations all fall within categories which according to Dunsmuir generally attract the standard of reasonableness. Cumulatively considered, they point unmistakably to that standard. The impugned decision of the second committee satisfies that standard. The second committee reasonably found that it was entitled under s. 99(1) of the NEBA to make the impugned awards on costs. The committee’s reasoning in interpreting and applying this provision is coherent. It acknowledged that it had awarded S compensation exceeding eighty‑five percent of the amount offered by A, thereby triggering the application of s. 99(1) . The reasonableness of the second committee’s conclusion that s. 99(1) of the NEBA merits a broad reading accords with the plain words of the provision, its legislative history, its evident purpose, and its statutory context. Moreover, it rests comfortably on the foundational principle of full compensation that animates both the NEBA and expropriation law generally. It is not open to dispute that S, as a matter of fact, incurred all of the costs he was awarded by the committee. The committee found those costs to have been reasonably incurred. The committee concluded, again reasonably, that S’s costs before both arbitration committees and in the Queen’s Bench all related to a single claim for compensation in respect of a single expropriation by a single expropriating party. In allowing the appeal and restoring the second committee’s decision, S is also awarded his costs throughout, on a solicitor‑client basis. In the context of modern expropriation law, where statutes authorize awards of “all legal, appraisal and other costs”, Canadian jurisprudence and doctrine demonstrate that costs on a solicitor‑and‑client basis should generally be given. Awarding costs on a solicitor-client basis accords well with the object and purpose of the NEBA . Only this type of award can indemnify S as best one can for the inordinate amount of money — to say nothing of time — he has had to invest in what should have been an expeditious process. Lastly, S should not be made to bear the costs of what is clearly a test case for A. Per Deschamps J.: While it is agreed that the proper standard of review in this case is reasonableness and that the decision of the second committee in making the costs award to S satisfied that standard, the same cannot be said for the proposition that an administrative decision‑maker’s interpretation of its home statute, absent indicia of its particular familiarity with the statute, attracts deference unless the question raised is constitutional, of central importance to the legal system or concerned with demarcating one tribunal’s authority from another. On the contrary, principles of administrative law, jurisprudence and commentary support the position that according deference to an administrative decision-maker’s interpretation of its home statute is anchored in the need to respect legislative intent to leave these interpretative issues to certain decision-makers when there is good reason to do so. Most of the time, the reason is that the decision-maker possesses expertise or experience that puts it in a better position to interpret its home statute relative to a court. There is no presumption of expertise or experience flowing from the mere fact that an administrative decision-maker is interpreting its enabling statute. In Dunsmuir, various categories of question were articulated based on pre-existing jurisprudence in order to assist in resolving the standard of review. Dunsmuir does not, however, recognize a broad home statute category, but rather a category grounded in the relative expertise or experience of the decision‑maker. According deference to an administrative decision‑maker merely for the reason that it is interpreting its home statute and no constitutional question, centrally important legal question, or question about the limits of its authority vis‑à‑vis another tribunal is incomplete. Such a position is purely formalistic and loses sight of the rationale for according deference to an interpretation of the home statute that has developed in the jurisprudence: namely, that the legislature has manifested an intent to draw on the relative expertise or experience of the administrative body to resolve the interpretative issues before it. Such intent cannot simply be presumed from the creation of an administrative body by the legislature. Provided that no other category of question for resolving the standard of review is engaged and absent indicia of the decision-maker’s familiarity with its home statute, courts should move to the second step of Dunsmuir and consider the contextual factors. In the case at bar, there is no indication that Parliament intended the arbitration committee to have particular familiarity with its home statute, the NEBA . Arbitration committees are appointed ad hoc under the NEBA and while they may include practising lawyers, there is nothing to suggest — in the legislative scheme or otherwise — that they hold any sort of expertise or experience relative to a court when it comes to interpreting the NEBA . Though decisions of arbitration committees are subject to review on questions of law or jurisdiction, it is notable that Parliament grants a right of appeal from a committee decision to the Federal Court. In this appeal, deference should be accorded to the second committee, not because it interpreted its home statute, but because it exercised its statutorily conferred discretion to make an award of costs. Dunsmuir recognized that for matters of discretion, “deference will usually apply automatically”. This, and not the mere fact that the second committee was interpreting its home statute, militates in favour of according deference. Cases Cited By Fish J. Applied: Dunsmuir v. New Brunswick, 2008 SCC 9, [2008] 1 S.C.R. 190; referred to: Toronto (City) v. C.U.P.E., Local 79, 2003 SCC 63, [2003] 3 S.C.R. 77; Celgene Corp. v. Canada (Attorney General), 2011 SCC 1, [2011] 1 S.C.R. 3; Canadian Union of Public Employees, Local 963 v. New Brunswick Liquor Corp., [1979] 2 S.C.R. 227; Re Conger Lehigh Coal Co. and City of Toronto, [1934] O.R. 35; Diggon‑Hibben, Ltd. v. The King, [1949] S.C.R. 712; Irving Oil Co. v. The King, [1946] S.C.R. 551; Toronto Area Transit Operating Authority v. Dell Holdings Ltd., [1997] 1 S.C.R. 32; Ian MacDonald Library Services Ltd. v. P.Z. Resort Systems Inc. (1987), 14 B.C.L.R. (2d) 273; Christian & Missionary Alliance v. Municipality of Metropolitan Toronto (1973), 3 O.R. (2d) 655; ATCO Gas and Pipelines Ltd. v. Alberta (Energy and Utilities Board), 2006 SCC 4, [2006] 1 S.C.R. 140; Danyluk v. Ainsworth Technologies Inc., 2001 SCC 44, [2001] 2 S.C.R. 460; Campbell River Woodworkers’ & Builders’ Supply (1966) Ltd. v. British Columbia (Minister of Transportation & Highways), 2004 BCCA 27, 22 B.C.L.R. (4th) 210; Thoreson v. Alberta (Minister of Infrastructure), 2007 ABCA 272, 79 Alta. L.R. (4th) 75; Town of Mahone Bay v. Lohnes (1983), 59 N.S.R. (2d) 68, aff’d (1983), 59 N.S.R. (2d) 65; Lohnes v. Town of Mahone Bay (1983), 28 L.C.R. 338; McKean v. Ontario (Ministry of Transportation) (2008), 94 L.C.R. 185; Bayview Builder’s Supply (1972) Ltd. v. British Columbia (Minister of Transportation & Highways), 1999 BCCA 320, 67 B.C.L.R. (3d) 312; Holdom v. British Columbia Transit, 2006 BCCA 488, 58 B.C.L.R. (4th) 207; Hill v. Nova Scotia (Attorney General)(No. 2) (1997), 155 D.L.R. (4th) 767 (S.C.C.); Foulis v. Robinson (1978), 92 D.L.R. (3d) 134. By Deschamps J. Referred to: Dunsmuir v. New Brunswick, 2008 SCC 9, [2008] 1 S.C.R. 190; Canadian Broadcasting Corp. v. Canada (Labour Relations Board), [1995] 1 S.C.R. 157; Toronto (City) Board of Education v. O.S.S.T.F., District 15, [1997] 1 S.C.R. 487; Canadian Union of Public Employees, Local 963 v. New Brunswick Liquor Corp., [1979] 2 S.C.R. 227; U.E.S., Local 298 v. Bibeault, [1988] 2 S.C.R. 1048; Canada (Director of Investigation and Research) v. Southam Inc., [1997] 1 S.C.R. 748; Pushpanathan v. Canada (Minister of Citizenship and Immigration), [1998] 1 S.C.R. 982; Barrie Public Utilities v. Canadian Cable Television Assn., 2003 SCC 28, [2003] 1 S.C.R. 476; Dr. Q v. College of Physicians and Surgeons of British Columbia, 2003 SCC 19, [2003] 1 S.C.R. 226; Association des courtiers et agents immobiliers du Québec v. Proprio Direct inc., 2008 SCC 32, [2008] 2 S.C.R. 195; Canada (Citizenship and Immigration) v. Khosa, 2009 SCC 12, [2009] 1 S.C.R. 339; Nolan v. Kerry (Canada) Inc., 2009 SCC 39, [2009] 2 S.C.R. 678; Celgene Corp. v. Canada (Attorney General), 2011 SCC 1, [2011] 1 S.C.R. 3. Statutes and Regulations Cited Act to amend the National Energy Board Act, S.C. 1980-81-82-83, c. 80. Alberta Rules of Court, Alta. Reg. 390/68, r. 601(2)(d)(ii). Financial Services Commission of Ontario Act, 1997, S.O. 1997, c. 28, ss. 6(4), 7(2). National Energy Board Act, R.S.C. 1970, c. N‑6, s. 75 . National Energy Board Act, R.S.C. 1985, c. N‑7, ss. 3 , 22(1) , 23(1) , 75 , 99(1) , 101 . Railway Act, R.S.C. 1970, c. R‑2, ss. 145 to 184, 186. Supreme Court Act, R.S.C. 1985, c. S‑26, s. 47 . Authors Cited Boyd, Kenneth J. Expropriation in Canada: A Practitioner’s Guide. Aurora, Ont.: Canada Law Book, 1988. Canada. House of Commons. House of Commons Debates, vol. VII, 1st Sess., 32nd Parl., March 6, 1981, p. 8006. Canada. Law Reform Commission. Working Paper 9. Expropriation. Ottawa: Information Canada, 1975. Dyzenhaus, David. “The Politics of Deference: Judicial Review and Democracy”, in Michael Taggart, ed., The Province of Administrative Law. Oxford: Hart Publishing, 1997, 279. Jacobs, Laverne. “Developments in Administrative Law: The 2007‑2008 Term — The Impact of Dunsmuir” (2008), 43 S.C.L.R. (2d) 1. Macaulay, Robert W., and James L. H. Sprague. Practice and Procedure Before Administrative Tribunals, vol. 3. Toronto: Carswell, 2004 (loose‑leaf updated 2010, release 8). McLachlin, Beverley. “The Roles of Administrative Tribunals and Courts in Maintaining the Rule of Law” (1998), 12 C.J.A.L.P. 171. Sullivan, Ruth. Sullivan on the Construction of Statutes, 5th ed. Markham, Ont.: LexisNexis, 2008. Todd, Eric C. E. The Law of Expropriation and Compensation in Canada, 2nd ed. Scarborough, Ont.: Carswell, 1992. APPEAL from a judgment of the Federal Court of Appeal (Noël, Nadon and Pelletier JJ.A.), 2009 FCA 110, 389 N.R. 363, 42 C.E.L.R. (3d) 1, [2009] F.C.J. No. 407 (QL), 2009 CarswellNat 836, reversing a decision of O’Keefe J., 2008 FC 12, 34 C.E.L.R. (3d) 138, 318 F.T.R. 100, [2008] F.C.J. No. 28 (QL), 2008 CarswellNat 35, which upheld a decision of the second Pipeline Arbitration Committee. Appeal allowed. Richard C. Secord, Meaghan M. Conroy and Yuk‑Sing Cheng, for the appellant. Munaf Mohamed and Jillian Strugnell, for the respondent. No one appeared for the intervener the Arbitration Committee, appointed pursuant to the National Energy Board Act, R.S.C. 1985, c. N‑7 , Part V. The judgment of McLachlin C.J. and Binnie, LeBel, Fish, Abella, Charron, Rothstein and Cromwell JJ. was delivered by Fish J. — I [1] The seeds of this dispute were sown in a thin layer of manure spread by the appellant on a strip of his land that the respondent was obliged to reclaim. [2] Pursuant to an expropriation agreement, the respondent had obtained a right-of-way over the land in question. The respondent failed to reclaim the land in a timely manner, as required by the agreement, and refused to fully compensate the appellant for having done so in its stead. The appellant turned to statutorily mandated arbitration for what was meant to assure an expeditious resolution of the dispute. [3] What ensued was anything but: Two Arbitration Committee hearings, one Court of Queen’s Bench action, one judicial review, one appellate review proceeding, and thousands of dollars later, the appellant has only now reached the end of what should have been a short road to full compensation. [4] Proceedings before the first Arbitration Committee were aborted and a second Committee was appointed. The second Committee awarded the appellant the costs he had incurred in asserting his claim before it. In addition, it awarded the appellant most of his costs on the proceedings before the first Arbitration Committee and the costs he had incurred in defending related proceedings instituted by the respondent in the Court of Queen’s Bench. These awards were upheld by the Federal Court on judicial review, but set aside by the Federal Court of Appeal. [5] In my view, the decision of the second Arbitration Committee should be restored. As we shall see, it was subject to intervention on judicial review only if it was found to be unreasonable. [6] I believe, on the contrary, that the Committee’s decision is set out coherently and that its conclusions are entirely consistent with the statutory provisions it was bound to apply, notably ss. 75 and 99(1) of the National Energy Board Act, R.S.C. 1985, c. N-7 (“NEBA ”). Section 75 expresses in statutory form the well-established principle that expropriating parties should be made economically whole “for all damage sustained by them by reason of [the expropriation]”. In the same vein, s. 99(1) vests in Arbitration Committees a broad discretion in determining the incidental components of full compensation, which include “all legal, appraisal and other costs determined by the Committee to have been reasonably incurred [by the expropriated party] in asserting that person’s claim for compensation”. [7] I see no basis for interfering with the Committee’s application of these and other relevant provisions of the NEBA to the facts as it found them. [8] For these reasons, and the reasons that follow, I would therefore allow the appeal and restore the Arbitration Committee’s award, with costs throughout on a solicitor-client basis. II [9] In 1998, the respondent, Alliance Pipeline Ltd. (“Alliance”), obtained approval from the National Energy Board to build a pipeline that would cross the farmland of the appellant. As directed by the NEBA , the parties concluded easement agreements, which provided compensation for the expropriated land. They also signed releases which are not in issue before us. [10] Alliance completed the pipeline in 1999, but failed to perform the agreed-upon reclamation work on the easement the following spring, as Mr. Smith thought necessary. Mr. Smith thus proceeded to do so on his own. He submitted a $9,829 invoice to Alliance. Alliance offered to pay only $2,500. [11] Mr. Smith filed a Notice of Arbitration in August 2001, pursuant to Part V of the NEBA . A hearing took place on May 6, 2003, before a three-member Pipeline Arbitration Committee (the “First Committee”) appointed by the Minister of Natural Resources (“Minister”), and the Committee reserved judgment. [12] In early June 2003, Alliance decided to perform maintenance work on its easement, pursuant to urgent recommendations of an assessment the company had commissioned a year earlier (but whose conclusions it had previously ignored). In order to access its easement, Alliance asked Mr. Smith for permission to use a 100-foot portion of his private property that lay outside the company’s right-of-way. Frustrated by the respondent’s unwillingness to pay his previous claim, Mr. Smith asked for prior compensation before giving his approval. During the ensuing disagreement, Mr. Smith expressed his exasperation with Alliance employees in angry and threatening terms. A company land agent notified the RCMP, but after speaking with Mr. Smith, the police refused to lay charges. [13] Alliance then instituted proceedings before the Alberta Court of Queen’s Bench. In its statement of claim, Alliance sought; (1) unhindered access to Mr. Smith’s land; (2) a declaration that Mr. Smith’s compensation claim before the First Committee was precluded by the parties’ releases; and (3) an order that the First Committee not render its decision until the Queen’s Bench action was resolved. [14] On August 7, 2003, Alliance filed a notice of motion seeking two interim injunctions: one to stay the First Committee proceedings, and another to compel Mr. Smith to give Alliance access to the easement. Madam Justice Nation dismissed Alliance’s motion in October 2003 (2003 ABQB 843 (CanLII)) and awarded Mr. Smith party and party costs, which Alliance paid (A.R., vol. III, at pp. 59-62). [15] Alliance waited a year and a half before discontinuing its Queen’s Bench action on March 17, 2005, in respect of which it paid Mr. Smith $4,565.97 in party and party costs, less than one quarter of the $20,788.54 in fees and disbursements he had by then incurred in defending the action. [16] Meanwhile, the arbitration proceedings failed to get resolved. On February 1, 2005, almost two years after the hearing but before any decision was rendered, the parties learned that one of the three members of the First Committee, Mr. John Gill, had been elevated to the bench. The First Committee thereby lost its quorum and the proceedings, in this matter and in 19 companion cases against Alliance, were thereupon aborted. [17] The Minister appointed a new Arbitration Committee (the “Second Committee”) on August 11, 2005. In his amended Notice of Arbitration, Mr. Smith again sought compensation for his reclamation work. However, he added claims for his costs before the First Committee and for $16,222.57 in solicitor-client costs — the balance of his legal expenses following Justice Nation’s ruling. III [18] After a five-day hearing, the Second Committee allowed most of Mr. Smith’s claims. It also awarded him a portion of his costs from the First Committee proceedings and the balance of his solicitor-client costs on the action and motion before the Court of Queen’s Bench. [19] On an appeal by Alliance to the Federal Court, pursuant to s. 101 of the NEBA , Justice O’Keefe concluded that the Second Committee’s award of part of the costs incurred by Mr. Smith before the First Committee was reasonable. He also found that since Mr. Smith was forced to defend the action in order to preserve his claim before the Committee, his participation in the action was part and parcel of his claim for compensation pursuant to the NEBA and it was equally reasonable to award him his costs pursuant to s. 99(1) (2008 FC 12, 34 C.E.L.R. (3d) 138). [20] On a further appeal by Alliance to the Federal Court of Appeal, the court concluded that the Second Committee had erred in awarding Mr. Smith his costs before the First Committee and on the Queen’s Bench action (2009 FCA 110, 389 N.R. 363). Speaking for the court on this point, Nadon J.A. found it unnecessary to determine whether reasonableness or correctness was the appropriate standard of review, since he would have set aside the Second Committee’s decision no matter which standard of review he applied. [21] In short concurring reasons, Justice Pelletier reprimanded Alliance for its delaying tactics. He explained disapprovingly that it was Alliance who asked the First Committee “to refrain from deciding Mr. Smith’s claim until the [action was] completed” (para. 70) and who “effectively stonewall[ed] Mr. Smith by reneging on its earlier position and commencing [an action before the Court of Queen’s Bench]” (para. 72). In his opinion, Alliance could and should have left the issue of the releases to be determined by the First Committee. IV [22] The overarching question before the Second Committee was whether “costs” in s. 99(1) of the NEBA refers solely to expenses incurred by an expropriated owner in the proceedings before it. On Alliance’s appeal to the Federal Court, the reviewing judge was required to determine, as a threshold question, whether to apply the standard of correctness or the less demanding standard of reasonableness in scrutinizing the Committee’s decision. [23] In this context, I think it important to reiterate here that the extensive and formulaic inquiries of the past have now been replaced by the broader and less cumbersome approach set out by the Court in Dunsmuir v. New Brunswick, 2008 SCC 9, [2008] 1 S.C.R. 190. [24] Pursuant to Dunsmuir: . . . the process of judicial review involves two steps. First, courts ascertain whether the jurisprudence has already determined in a satisfactory manner the degree of deference to be accorded with regard to a particular category of question. Second, where the first inquiry proves unfruitful, courts must proceed to an analysis of the factors making it possible to identify the proper standard of review. [para. 62] Even when resort to these factors is required, it may not be necessary to consider them all (para. 64). [25] Accordingly, reviewing judges can usefully begin their analysis by determining whether the subject matter of the decision before them for review falls within one of the non-exhaustive categories identified by Dunsmuir. Under that approach, the first step will suffice to ascertain the standard of review applicable in this case. [26] Under Dunsmuir, the identified categories are subject to review for either correctness or reasonableness. The standard of correctness governs: (1) a constitutional issue; (2) a question of “general law ‘that is both of central importance to the legal system as a whole and outside the adjudicator’s specialized area of expertise’” (Dunsmuir, at para. 60 citing Toronto (City) v. C.U.P.E., Local 79, 2003 SCC 63, [2003] 3 S.C.R. 77, at para. 62); (3) the drawing of jurisdictional lines between two or more competing specialized tribunals; and (4) a “true question of jurisdiction or vires” (paras. 58-61). On the other hand, reasonableness is normally the governing standard where the question: (1) relates to the interpretation of the tribunal’s enabling (or “home”) statute or “statutes closely connected to its function, with which it will have particular familiarity” (para. 54); (2) raises issues of fact, discretion or policy; or (3) involves inextricably intertwined legal and factual issues (paras. 51 and 53-54). [27] Applying this analytical framework here, I am satisfied that the governing standard of review is reasonableness. [28] In this case, the Committee was interpreting its home statute. Under Dunsmuir, this will usually attract a reasonableness standard of review (ibid. at para. 54). And nothing in these reasons or in Celgene Corp. v. Canada (Attorney General), 2011 SCC 1, [2011] 1 S.C.R. 3, recently decided, represents a departure from Dunsmuir. [29] Any doubt whether reasonableness is the applicable standard here can be comfortably resolved by other considerations. [30] First, the Committee was interpreting s. 99(1) of the NEBA , a provision of its home statute regarding awards for costs. Awards for costs are invariably fact-sensitive and generally discretionary. [31] Second, and more specifically, in fixing the costs that must be paid by expropriating parties, the Committee has been expressly endowed by Parliament with a wide “margin of appreciation within the range of acceptable and rational solutions” (Dunsmuir, at para. 47): the only costs that must be awarded under s. 99(1) are those “determined by the Committee to have been reasonably incurred”. This statutory language reflects a legislative intention to vest in Arbitration Committees sole responsibility for determining the nature and the amount of the costs to be awarded in the disputes they are bound under the NEBA to resolve. [32] Third, in discharging that responsibility, Committees must interpret s. 99(1) in order to apply it in accordance with their statutory mandate, a process that will frequently raise “questions where the legal issues cannot be easily separated from the factual issues” (Dunsmuir, at para. 51). [33] These considerations all fall within categories which according to Dunsmuir generally attract the standard of reasonableness. Cumulatively considered, they point unmistakably to that standard. [34] Conversely, it is clear that this case does not fall within any of the categories which, under Dunsmuir, attract a standard of correctness. The Committee’s decision involved no constitutional matter or issue of general law “of central importance to the legal system as a whole and outside the adjudicator’s specialized area of expertise” (para. 60, citing Toronto (City) v. C.U.P.E., at para. 62), nor did it purport to draw jurisdictional lines between two or more competing specialized tribunals (Dunsmuir, at para. 61). [35] Alliance nonetheless submits that the decision of the Arbitration Committee is subject to review for correctness on two grounds: first, because it involves a true question of jurisdiction; second, because it raises an issue of law to which deference does not apply. [36] The jurisdictional ground is without merit. NEBA Arbitration Committees doubtless have “the authority to make the inquiry” whether “costs” under s. 99(1) refer solely to costs incurred in the proceedings before them, a determination that plainly falls within their “statutory grant of power” (Dunsmuir, at para. 59). I reiterate in this context the caution that courts should not “brand as jurisdictional, and therefore subject to broader curial review, that which may be doubtfully so” (Dickson J. in Canadian Union of Public Employees, Local 963 v. New Brunswick Liquor Corp., [1979] 2 S.C.R. 227, at p. 233, cited in Dunsmuir, at para. 35). [37] Characterizing the issue before the reviewing judge as a question of law is of no greater assistance to Alliance, since a tribunal’s interpretation of its home statute, the issue here, normally attracts the standard of reasonableness (Dunsmuir, at para. 54), except where the question raised is constitutional, of central importance to the legal system, or where it demarcates the tribunal’s authority from that of another specialized tribunal ― which in this instance was clearly not the case. [38] Finally, on this branch of the matter, Alliance argues that adoption of the reasonableness standard would offend the rule of law by insulating from review contradictory decisions by Arbitration Committees as to the proper interpretation of s. 99(1) of the NEBA . I am unable to share the respondent’s concern. In Dunsmuir, the Court stated that questions of law that are not of central importance to the legal system “may be compatible with a reasonableness standard” (para. 55), and added that “[t]here is nothing unprincipled in the fact that some questions of law will be decided on [this] basis” (para. 56; see also Toronto (City) v. C.U.P.E., at para. 71). [39] Indeed, the standard of reasonableness, even prior to Dunsmuir, has always been “based on the idea that there might be multiple valid interpretations of a statutory provision or answers to a legal dispute” such that “courts ought not to interfere where the tribunal’s decision is rationally supported” (Dunsmuir, at para. 41). [40] For the reasons explained, the governing standard in this case was reasonableness, not correctness. And I turn now to consider in this light whether the impugned decision of the Second Committee satisfies that standard. V [41] As mentioned at the outset, the decisive issue on this appeal is whether the Second Committee could reasonably find that it was entitled under s. 99(1) of the NEBA to make the impugned awards on costs. [42] Section 99(1) reads: 99. (1) [Costs] 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. [43] The Committee’s reasoning in interpreting and applying this provision is coherent. In granting Mr. Smith the disputed costs, it first acknowledged that it had awarded Mr. Smith compensation exceeding eighty-five percent of the amount offered by Alliance, thereby triggering the application of s. 99(1) . Having identified a proper source of authority, it then assessed whether Mr. Smith had “reasonably incurred” the costs “in asserting [his] claim for compensation”. [44] The Committee first found that the Court of Queen’s Bench action was directly related to Mr. Smith’s attempt to obtain compensation from Alliance, concluding that Mr. Smith had therefore incurred these costs reasonably. The Committee’s conclusion flows logically from its findings of fact. [45] Second, the Committee decided that the first panel’s loss of a quorum resulted in the nullification of some but not all of the original proceedings. On the one hand, it reasoned that the filings and legal work that retained their relevance during the second proceedings, such as the original Notice of Arbitration and reply, were proper bases for an award of costs. On the other hand, the Committee ruled that each party must absorb the costs of actual appearances before and correspondence with the first panel. The Second Committee’s logic in awarding Mr. Smith a portion of the costs he incurred during the first arbitral proceedings is consistent with the record. It is not unreasonable. [46] The reasonableness of the Second Committee’s conclusion that s. 99(1) of the NEBA merits a broad reading accords, in my view, with the plain words of the provision, its legislative history, its evident purpose, and its statutory context. Moreover, it rests comfortably on the foundational principle of full compensation that animates both the NEBA and expropriation law generally. [47] The relevant words of s. 99(1) make it plain that the Committee was thus entitled ― indeed bound ― to order Alliance to pay Mr. Smith “all legal, appraisal and other costs determined by the Committee to have been reasonably incurred by [Mr. Smith] in asserting [his] claim for compensation”. [48] It is not open to dispute that Mr. Smith, as a matter of fact, incurred all of the costs he was awarded by the Committee. The Committee found those costs to have been reasonably incurred. As mentioned earlier, the Committee concluded, again reasonably, that Mr. Smith’s costs before both Arbitration Committees and in the Queen’s Bench all related to a single claim for compensation in respect of a single expropriation by a single expropriating party. On a plain reading of s. 99(1) , it was therefore open to the Committee to find that Mr. Smith was entitled to recover “all [of his] legal, appraisal and other costs” in asserting that claim. [49] The Committee’s decision, moreover, is firmly rooted in the legislative evolution and history of the NEBA . In modern times, it is generally accepted that this is a relevant consideration in interpreting legislative intent (see R. Sullivan, Sullivan on the Construction of Statutes (5th ed. 2008), at pp. 280, 577-78, 587-89 and 599-603). A brief overview of the NEBA ’s statutory antecedents is not only appropriate, but particularly instructive. [50] The goal of complete indemnification first appeared in the NEBA in 1981, when Parliament amended the statute to introduce most of what now constitutes Part V (An Act to amend the National Energy Board Act, S.C. 1980-81-82-83, c. 80). Prior to these amendments, ss. 145 to 184 and 186 of the Railway Act, R.S.C. 1970, c. R-2, were imported directly into the NEBA (R.S.C. 1970, c. N-6, s. 75). Under those provisions, “[t]he costs of the arbitration” were in the discretion of the arbitrator and could be ordered against either party (Railway Act, s. 164(1); see Re Conger Lehigh Coal Co. and City of Toronto, [1934] O.R. 35 (H.C.J.), at pp. 43-44). [51] The 1981 amendments to the NEBA were inspired by the Law Reform Commission of Canada’s review, in 1975, of expropriation in the federal context in its Working Paper 9, Expropriation. This was expressly acknowledged by the Minister who introduced the amendments. The proposed legislation, he told Parliament, “substantially incorporates all the major recommendations of the Law Reform Commission of Canada expressed in its 1975 working paper” (House of Commons Debates, vol. VII, 1st Sess., 32nd Parl., March 6, 1981, at p. 8006). [52] One of the Commission’s recommendations was that owners not be precluded from receiving the compensation to which they were entitled by the financial burden of litigation. Ideally, said the Commission, expropriated owners should receive “full indemnity for all such costs” (p. 73). It also found that the Railway Act regime did not provide adequate compensation because “[b]y a quirk in the law, the word ‘costs’ in the Railway Act, as in many other acts, does not mean exactly what it says[; it] does not mean ‘full costs’” (p. 74). [53] Today, the principle of full indemnification appears explicitly in s. 75 of the NEBA , which provides, as I noted earlier, that a company “shall make full compensation . . . for all damage sustained” by the expropriated owner. Parliament adopted this more comprehensive approach to indemnification by broadening the language of s. 99(1) from “costs of the arbitration” to “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”. [54] This amendment must be presumed to signify a clear and considered decision by Parliament to allow Arbitration Committees to exercise their full discretion in seeking to make expropriated owners whole (Sullivan, at pp. 579-82), and the historical context validates this presumption. [55] Moreover, the NEBA operates within the broader context of expropriation law, both federal and provincial. As early as 1949, this Court acknowledged the vulnerable position of expropriated owners. In Diggon-Hibben, Ltd. v. The King, [1949] S.C.R. 712, at p. 715, Rand J. (Taschereau J. concurring) stated that no one should be “victimized in loss because of the accident that his land [is] required for public purposes”. In the same case, Estey J., citing with approval the earlier reasons of Rand J. in Irving Oil Co. v. The King, [1

Smith v. Alliance Pipeline Ltd.

Court headnote

Full judgment (source text)

Klouvi c. Canada (Procureur général)

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Klouvi c. Canada (Procureur général)

Dunsmuir v New Brunswick

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Smith v. Alliance Pipeline Ltd.

Court headnote

Full judgment (source text)

Klouvi c. Canada (Procureur général)

Related cases

Klouvi c. Canada (Procureur général)

Dunsmuir v New Brunswick

Exam & revision prep