Chemerinski v. Richter, 2011 ABQB 417

Court of Queen ’ s Bench of Alberta Citation: Chemerinski v. Richter, 2011 ABQB 417 Date: 20110630 Docket: 1103 03095 Registry: Edmonton Between: Anne Marie Chemerinski, Carson William Chemerinski and Anne Marie Chemerinski and Carson William Chemerinski, Administrators of the Estate of Carson Russell Chemerinski, Deceased for and on behalf of the Estate of Carson Russell Chemerinski Applicants - and - Calvin Richter and Susan M. Richter Respondents _______________________________________________________ Memorandum of Decision of the Honourable Madam Justice J.B. Veit _______________________________________________________

Summary [ 1 ] The Chemerinskis ask the court to remove a certificate of lis pendens placed on their lands by the Richters and to reverse the decision of an arbitrator who denied them arbitral costs. [ 2 ] Underlying litigation amongst the parties was compromised by way of a judicial dispute resolution meeting. The resulting

agreement was confirmed by a judgment of this court. However, the applicant Chemerinskis have not complied with the obligationsimposed upon them in that judgment; specifically, they have not done what they were required to do to facilitate the subdivision of thesubject lands, nor paid the Richters $50,000.00. Nevertheless, the Chemerinskis argue that, because of the existence of the judgment, theRichters no longer have an interest in the land that can support a certificate of lis pendens.

The respondent Richters argue that thesettlement referred not only to a payment of money by the Chemerinskis - which has not been paid - but also, and more importantly inthe context of a certificate which depends upon an interest in land, to a requirement to provide documentation allowing the subdivision oflands by the applicants.

In those circumstances, the Richters assert that the underlying proceedings have not been “finally disposed of” inthe words of s. 152(a)(ii) of the Land Titles Act. [3] The Chemerinskis have failed, without adequate explanation, to comply in a timely way with the judgment of Sanderman J.relating to the ownership of land. In those circumstances, the court exercises its discretion to decline to hear the Chemerinskis’application for the removal of a lis pendens on the subject land: the Chemerinskis’ inaction impedes the course of justice andundermines the court’s ability to enforce its own orders.

Nevertheless, because the application relating to the arbitral award arises out ofa separate, albeit related, proceeding, the court will hear the Chemerinskis’ application in relation to arbitration costs. [4] The parties, who had been in litigation for a long time, went to arbitration. The subject of the arbitration was theconfiguration of a 10 acre parcel of land that would be awarded to the Richters from the Chemerinski lands.

Before the arbitration wascompleted, the parties asked the arbitrator for a consent interim award, dated August 13, 2009, in which the parties agreed: theChemerinski plan was accepted as the configuration of the parcel that would go to the Richters; the parties would continue to work outthe terms of a lease which they said they were close to finalizing; and, the parties would submit written arguments on costs to thearbitrator. On August 18, 2009, the arbitrator issued her decision on costs: she found that each party should bear their own costs of thearbitration.

Leave to appeal the arbitrator’s award of costs was granted by this court on June 7, 2010. [5] The Chemerinskis’ appeal of the arbitrator’s costs award is denied: the appellants have not established that the arbitratorcommitted any error of law in coming to her decision. Cases and authority cited [6] By the Chemerinskis: Willick v. Willick (1994), (AB KB), 158 A.R. 52, 1994 CarswellAlta 477 (Q.B.);Pushpanathan v. Canada (Minister of Citizenship and Immigration), (SCC), [1998] 1 S.C.R. 982, 1998 CarswellNat830 (S.C.C.); Dr. Q. v.

College of Physicians and Surgeons of British Columbia, [2003] 1 S.C.R. 226, 2003 SCC 19, 2003 CarswellBC713 (S.C.C.); Dunsmuir v. New Brunswick, [2008] 1 S.C.R. 190, 2008 SCC 9, 2008 CarswellNB 124 (S.C.C.); Heredity Homes (St.Albert) Ltd. v. Scanga (2009), 79 C.L.R. (3d) 308, 2009 CarswellAlta 585, 2009 ABQB 237; J. Brian Casey & Janet Mills, Arbitration Law of Canada: Practice and Procedure (New York: Juris Publishing, 2005); Mahe v. Boulianne (2010), 21 Alta. L.R. (5th) 277, 2010CarswellAlta 396, 2010 ABCA 74; Canada Deposit Insurance Corporation v.

Canadian Commercial Bank (1989), (AB KB), 95 A.R. 1, 1989 CarswellAlta 325; Necrovore Inc. v. Andover Land Corp. (2007), 66 C.L.R. (3d) 252, 2007 CarswellOnt6372 (Ont.S.Ct.J.); Dickie v Dickie (ON CA), 206 O.A.C. 257, 2006 CarswellOnt 118; Paul Magder Furs Ltd. vOntario (Attorney General) (ON CA), 52 O.A.C. 151, 1991 CarswellOnt 403; Broda v Broda 2004 ABCA 73, 2004CarswellAlta 181; 732311 Alberta Ltd. v Paradise Bay Spa & Tub Warehouse Inc. 2003 ABQB 228, 2003 CarswellAlta 392; AlbertaRules of Court, Division 4, Rules 10.49 ff [7] By the Richters: Arbitration Act, RSA 2000, c. A-43, sections 44 to 46; Knox v.

Conservative Party of Canada, 2007CarswellAlta 1397, [2008] A.R. 29; Heredity Homes (St. Albert) Ltd. v. Scanga, 2009 ABQB 237, 2009 CarswellAlta 585, (2009) 79C.L.R (3d) 308; Babcock & Wilson Canada Ltd. v. Agrium Inc., 2005 ABCA 82 , 2005 ACA 82, 363 A.R. 103, 39 Alta. L.R. (4th) 197; Huang v. Drinkwater, 2005 ABQB 272, [2005] A.R. 297; Metcalfe v.

Metcalfe, (2006) 407 A.R. 103, 2006 ABQB 798;Broda v Broda, see citation above; Alberta (Director of Child Youth and Family Enhancement) v B.M. 2009 ABCA 258 at para.27;Bains Engineering Corp v 734560 Alberta Ltd. 2004 ABQB 780 at para. 14; E.F. v J.S.S. [1995] DRS 95-13811; Future InnsCanada v Labour Relations Board (Nova Scotia) 1996 NSCA 11 , (NS C.A.) at p. 7; Protect-a-HomeServices Inc. v Heber 2001 MBCA 171 at paras. 14 to 16; Larkin v Glase 2009 BCCA 321 at paras 31 to 36; Civil Procedure Guide1996, Rule 703, Commentary L [8] By the court: Boe v Hamilton [1988] B.C.J.

No. 2002 (C.A.); Hopper v Hopper 2011 NBCA 37, [2011] N.B.J. No. ; Kellyv Lyle 2003 YKSC 8, [2003] Y.J. No. 46 Appendix A: Arbitral award on costs

1. Background

a) Factual and procedural [ 9 ] The parties are all related by blood or by marriage. Legal proceedings were commenced by the parties against one another. The litigation is described in Richter v Chemerinski 2010 ABQB 302 , (paras. 1 , 2, and 3) a decision of Sanderman J. In May, 2008, the parties agreed to a judicial dispute resolution meeting with a judge of this court. It appeared that an agreement was reached by the parties at the JDR, and the agreement was reduced to writing. The essence of the settlement agreement is reproduced at para. 6 of the above- cited decision.

Included within those terms are the following: - the senior Chemerinskis would proceed forthwith with the subdivision of quarter 3, and would pay the Richters $50,000.00 upon the subdivision; - if the parties were unable to agree on the configuration of a 10 acre parcel which would become the property of the Richters, they would retain an arbitrator to settle the dispute. [ 10 ] Sanderman J. went on to grant

summary judgment in these terms: 25

Summary judgment is warranted and specific performance is ordered. The settlement agreement should be implemented in accordance with the following procedure. The [Richters] shall execute the following documents and provide them to the solicitor for the Defendants in trust that they may only be used in accordance with the terms of the Order. The documents that shall be provided include: (

a) An executed Lease to Calvin Richter in the form agreed upon by the parties and including all traditionally farmed land; (

b) All consents and other documents required by the Registrar of the North Alberta Land Registration District in connection with the subdivision of Quarter three; (

c) Transfer of Land of the balance of Quarter three following the subdivision from Susan Richter to Carson William Chemerinski and Anne Marie Chemerinski as joint tenants; (

d) Full and final Releases executed by the Plaintiffs with respect to the matters set out in Action 0203 23283, Action 0203 12358 and Action 0603 09853; (

e) Discontinuances of Action on a without costs basis including all claims and counterclaims of the above-noted actions. 26 The [Chemerinskis] shall execute the following documents: (

a) The Lease to Calvin Richter, in the form set out in the preceding paragraph; (

b) All consents and other documents required by the Registrar of the North Alberta Land Registration District in connection with the subdivision of Quarter three; (

c) Transfer of Land of the 10 acre subdivided parcel from Carson William Chemerinski and Anne Marie Chemerinski as joint tenants to Calvin Richter and Susan Richter as joint tenants; (

d) Full and final Releases executed by the [Chemerinskis] with respect to Action 0203 23283, Action 0203 12358 and Action 0603 09853; (

e) Discontinuances of Action on a without costs basis including all claims and counterclaims in relation to the three actions noted in the previous subparagraphs; (

f) Written direction by Anne Chemerinski to CIBC Woody Gundy relinquishing any claim to the trading account at issue in Action 0603 09853.

27 The [Chemerinskis] shall pay the sum of $50,000.00 into the trust account of their solicitor. The solicitor for the [Chemerinskis] shall submit the subdivision documents and the transfer documents for registration at the North Alberta Land Titles Office and shall submit the Discontinuances of Action for filing. 28 Upon successful registration of the subdivision documents and the transfer documents, the solicitor for the [Chemerinskis] shall forthwith provide the following to the solicitor for the [Richters]: (

a) The settlement funds in the amount of $50,000.00; (

b) Certified copy of title to the subdivided 10 acre parcel; (

c) Filed copies of the Discontinuances of Action; (

d) Fully executed copy of the Lease to Calvin Richter; (

e) Executed full and final Releases executed by the Plaintiffs with respect to the matters set out in Action 0203 23283, Action 0203 12358 and Action 0603 09853; (

f) Written direction by Anne Chemerinski to CIBC Wood Gundy relinquishing any claim to the trading account at issue in Action 0603 09853. 29 The Defendants shall pay the costs incurred by Gary Romanchuk in his capacity as Guardian Ad Litem for Anne Chemerinski in accordance with the Order of Master Breitkreuz in Action 0603 09853 and the Order of Madam Justice Trussler in Action 0203 23283.

Following the subdivision and transfers of land, the parties shall attend to removing and relocating any portion of their respective utility lines that encroach on the other party's land. 30 Following the subdivision and transfers of land, the parties acting reasonably, shall cooperate in the construction of a roadway of reasonable quality on the 10 acre parcel with the costs of this roadway to be paid by the Defendant Carson William Chemerinski. [ 11 ] The Chemerinskis have still not finalized the subdivision of quarter 3, although only a very small matter relating to confirmation of the sewage system used at the Chemerinski house impeded the granting of subdivision approval. [ 12 ] At the JDR, because the parties were unable to agree on the configuration of a 10 acre parcel, it was agreed that they would go to arbitration on that aspect of the dispute.

The parties accordingly retained an arbitrator to settle that issue; there was no special provision in the arbitration agreement dealing with appeals from the arbitral award, or with costs of the arbitration. After many problems, including an attempt by the Chemerinskis to have the arbitrator removed for alleged bias, the arbitration began on May 7 and continued on May 8, 2009. The parties then suspended the arbitration. They subsequently agreed to ask the arbitrator to issue an Interim Consent Award.

That award was issued by the arbitrator on August 13, 2009 as follows: During the hearing the parties began settlement discussions and subsequently reached a settlement of most of the items in the arbitration. They asked me to issue a consent award under

section 36 of the Alberta Arbitration Act reflecting their settlement terms. I therefore order: 1. Bill Chemerinski's survey prepared by Barlow Surveying bearing DWG No. 83-097T, dated June 27, 2008, will be the accepted configuration for the 10 acre parcel. 2. The parties will work towards finalizing a Lease for the Leased Lands. The discussions are at a very advanced stage and there is an agreement in principle over the terms of the Lease. Subject to final wordsmithing, a lease will be executed shortly. 3.

All three counsel that participated in the Arbitration Hearing, shall submit, no later than the end of business on Friday June 26, 2009, their written respective submissions on the issue of costs. No reply or rebuttal submissions will be permitted. The issue of entitlement to and apportionment of costs will be decided by the Arbitrator and incorporated into the final award.

[ 13 ] In September, 2009, the Richters issued a statement of claim asking for specific performance of the settlement agreement. In the judgment referred to above, Sanderman J. ordered specific performance of the settlement agreement, and set out a procedure by which the judgment should be implemented: para. 25.

Among many other detailed provisions, Sanderman J. ordered the Richters to forthwith provide all consents and other documents required by the Registrar of the North Alberta Land Registration District in connection with the subdivision of quarter 3 and to provide forthwith discontinuances of all claims and counterclaims, on a without costs basis, in the actions identified by Sanderman J.

The Richters have provided all the consents and other matters within their power with respect to the subdivision. [ 14 ] Sanderman J. ordered the Chemerinskis to provide all consents and other documents required by the Registrar of the North Alberta Land Registration District in connection with the subdivision of quarter 3, to provide full and final releases with respect to specified action numbers, and to provide discontinuances of action on a without costs basis of all claims and counterclaims found in the specified actions.

Sanderman J. also ordered the Chemerinskis to pay $50,000.00 into their lawyer’s trust account; upon successful registration of the subdivision documents, the solicitor was to provide, among other matters, the settlement funds in the amount of $50,000.00 to the Richters, along with the title to the 10 acre parcel which was to be transferred to them.

The Chemerinskis have not provided the consents necessary to complete the subdivision of the lands. [ 15 ] An unsuccessful appeal of Sanderman J.’s decision was undertaken by the Chemerinskis. [ 16 ] Anna Marie Chemerinski and Calvin Richter have both died since the commencement of this litigation, and no probate has been obtained by anyone in respect of their estates. [ 17 ] On June 10, 2010, Sanderman J. gave leave to the Chemerinskis to appeal the arbitrator’s award of costs: Chemerinski v Richter 2010 ABQB 388 . The following is an extract from that decision: The awarding of costs is discretionary.

Consequently, leave to appeal costs decisions should be granted sparingly and only in circumstances where there is an arguable case that the discretion was not exercised judicially. This statement of principle has particular application to the arbitration process which is geared to finding final solutions outside the traditional litigation process. [ 18 ] Sanderman J. concluded that s. 44(3) of the Arbitration Act did not apply to prevent the arbitral costs award from being appealed and that the amount of costs spent on the arbitration was clearly important to the parties.

Relying on a statement of principle to the effect that the award of costs by an arbitraror “may raise a question of law notwithstanding the award is discretionary”, Sanderman J. went on to find that an arguable point - that the arbitrator had considered extraneous facts - had been raised by Mr. Chemerinski and that leave should therefore be granted to appeal the arbitral award of costs.

b) Legislative [ 19 ] The relevant provisions of Alberta’s Arbitration Act read as follows: Remedies Appeal of award 44(1) If the arbitration agreement so provides, a party may appeal an award to the court on a question of law, on a question of fact or on a question of mixed law and fact.

(2) If the arbitration agreement does not provide that the parties may appeal an award to the court on a question of law, a party may

appeal an award to the court on a question of law with leave, which the court shall grant only if it is satisfied that (

a) the importance to the parties of the matters at stake in the arbitration justifies an appeal, and (

b) determination of the question of law at issue will significantly affect the rights of the parties.

(3) Notwithstanding subsections (1) and (2), a party may not appeal an award to the court on a question of law that the parties expressly referred to the arbitral tribunal for decision.

(4) The court may require the arbitral tribunal to explain any matter.

(5) The court may confirm, vary or set aside the award or may remit the award to the arbitral tribunal and give directions about the conduct of the arbitration.

(6) Where the court remits the award to the arbitral tribunal in the case of an appeal on a question of law, it may also remit to the tribunal the court’s opinion on the question of law. 1991 cA-43.1 s44 Setting aside award 45(1) On a party’s application, the court may set aside an award on any of the following grounds: (

a) a party entered into the arbitration agreement while under a legal incapacity; (

b) the arbitration agreement is invalid or has ceased to exist; (

c) the award deals with a matter in dispute that the arbitration agreement does not cover or contains a decision on a matter in dispute that is beyond the scope of the agreement; (

d) the composition of the arbitral tribunal was not in accordance with the arbitration agreement or, if the agreement did not deal with the matter, was not in accordance with this Act; (

e) the subject-matter of the arbitration is not capable of being the subject of arbitration under Alberta law; (

f) the applicant was treated manifestly unfairly and unequally, was not given an opportunity to present a case or to respond to another party’s case, or was not given proper notice of the arbitration or of the appointment of an arbitrator; (

g) the procedures followed in the arbitration did not comply with this Act or the arbitration agreement;

(

h) an arbitrator has committed a corrupt or fraudulent act or there is a reasonable apprehension of bias; (

i) the award was obtained by fraud.

(2) If subsection (1)(

c) applies and it is reasonable to separate the decisions on matters covered by the arbitration agreement from the impugned ones, the court shall set aside the impugned decisions and allow the others to stand.

(3) The court shall not set aside an award on grounds referred to in subsection (1)(

c) if the applicant has agreed to the inclusion of the matter in dispute, waived the right to object to its inclusion or agreed that the arbitral tribunal has power to decide what matters in dispute have been referred to it.

(4) The court shall not set aside an award on grounds referred to in subsection (1)(

h) if the applicant had an opportunity to challenge the arbitrator on those grounds under

section 13 before the award was made and did not do so or if those grounds were the subject of an unsuccessful challenge.

(5) The court shall not set aside an award on a ground to which the applicant is deemed under

section 4 to have waived the right to object.

(6) If the ground alleged for setting aside the award could have been raised as an objection to the arbitral tribunal’s jurisdiction to conduct the arbitration, the court may set the award aside on that ground if it considers the applicant’s failure to make an objection in accordance with

section 17 justified.

(7) When the court sets aside an award, it may remove an arbitrator or the arbitral tribunal and may give directions about the conduct of the arbitration.

(8) Instead of setting aside an award, the court may remit it to the arbitral tribunal and give directions about the conduct of the arbitration. . . . Costs 53(1) An arbitral tribunal may award the costs of an arbitration.

(2) The arbitral tribunal may award all or part of the costs of an arbitration on a solicitor-and-client basis, a party-and-party basis or any other basis but if it does not specify the basis, the costs shall be determined on a party-and-party basis.

(3) The costs of an arbitration consist of the parties’ legal expenses, the fees and expenses of the arbitral tribunal and any other expenses related to the arbitration.

(4) If the arbitral tribunal does not deal with costs in an award, a party may, within 30 days after receiving the award, request that it make a further award dealing with costs.

(5) In the absence of an award dealing with costs, each party is responsible for that party’s own legal expenses and for an equal share of the fees and expenses of the arbitral tribunal and of any other expenses related to the arbitration.

(6) If a party makes an offer, in writing, to another party to settle the matter in dispute or part of it, the offer is not accepted and the arbitral tribunal’s award is no more favourable to the party to which the offer was made than was the offer, the arbitral tribunal may take that fact into account in awarding costs in respect of the period from the making of the offer to the making of the award.

(7) The fact that an offer to settle has been made shall not be communicated to the arbitral tribunal until it has made a final determination of all aspects of the matters in dispute other than costs. 1991 cA-43.1 s53 2. Are the Chemerinskis entitled to bring their application relating to the land that was the subject of a judgment of this court? [ 20 ] The court exercises its discretion to decline to hear Mr. Chemerinski’s application relating to the removal of the certificate of lis pendens , but accepts the hearing of Mr.

Chemerinski’s application for costs. [ 21 ] As our Court of Appeal emphasized in Alberta (Director of Child Youth and Family Enhancement) a person who has been directed by a Court to do something must do that very thing: 27 But it is very different when a court judgment or order is given directing someone to do something. Then doing nothing is not an alternative. Simply doing nothing is itself contempt. Furthermore, it is not enough to take feeble and ineffective steps.

For example, to simply ask someone else to follow the order without sufficient steps to ensure that that person is reliable, understands the task, will give it sufficient priority, has sufficient resources and understanding, and so forth. In other words, negligent or inadequate attempts to obey the court order or to obey it in due course, are themselves contempt of court. Such a failure to obey by relying carelessly on others, is in no sense vicarious liability. The duty is that of the person commanded. [ 22 ] Here, the Chemerinskis have failed to do what Sanderman J. ordered.

Indeed, their initial response to the Richters was that, since a judgment has issued, the only recourse now available to the Richters is to cite the Chemerinskis in contempt for failure to obey Sanderman J.’s directives. [ 23 ] The Chemerinskis correctly state that there is no categorical rule concerning the right to bring further applications in the same proceedings even when a court order has not been met or has been breached.

Rather, courts have the discretion to refuse to hear from a defaulting party in the same proceedings if the court is satisfied that the action of the non-compliant party impedes the course of justice in the cause: Dickie . [ 24 ] However, the Chemerinkis incorrectly argue that unless and until a finding of contempt is made against them, the court is not in a position to exercise the discretion referred to above. The correct statement of principle on that issue was articulated by the British Columbia Court of Appeal in Boe where it said: Had Mr.

Fraser's preliminary objection been fully canvassed before hearing the appeal, the fact of a clear breach of the express terms of the order now under appeal might well have justified a refusal of audience.

The reasoning which would have supported that disposition could also support a refusal by this court, after hearing the appeal, to lend its assistance to the parties in default. (Emphasis added) [ 25 ] Earlier in its reasons, the Boe court expanded upon the reason why an actual finding of contempt was not necessary to the exercise by a court of its discretion to refuse an audience to a party who has not complied with a court order. The Boe decision is in line with the weight of the case law, as can be observed from the Civil Procedure Guide and its comment that “a party in breach of an order

is in a position almost the same as one in contempt”. [ 26 ] As a fall-back position to their argument on the necessity of a finding of contempt, the Chemerinskis argue that, in any event, they have shown the required degree of diligence in attempting to comply with Sanderman J.’s judgment. They note, first, that Sanderman J.’s order did not impose any specific deadlines. The Chemerinskis have failed to recognize that where no time limit on the completion of

an act has been imposed in an order, the order shall be interpreted to mean that the act shall be completed within a reasonable time. Given that Sanderman J.’s orders were made more than one year ago, the onus is on the Chemerinskis to prove that they have not had sufficient time to comply with the Sanderman judgment. They have failed to meet that burden. [ 27 ] Second, the Chemerinskis assert that there is no clear breach by them of Sanderman J.’s order because the Richters have themselves failed to comply with the terms imposed upon them by Sanderman J. I do not accept this argument.

In my view, Sanderman J.’s decision must be interpreted in the context of all the circumstances, including the predicate settlement agreement, and the steps taken by the Chemerinskis to put off the enforcement of the settlement agreement. For example, the death of some parties must be taken into account in determining whether the Sanderman orders have been complied with. Within the overall context, the main obligation in these proceedings was clearly on the Chemerinskis to attend to the subdivision of the land and to pay the Richters the required monies. Those tasks have not yet been completed.

In any event, it is not the Richters who are asking the court for assistance before they have completed the tasks set them by Sanderman J., it is the Chemerinskis; it is therefore the Chemerinskis who have the obligation of establishing that there is some good reason why they have not yet complied with the order. [ 28 ] Next, the Chemerinskis maintain that the non-cooperation by the Richters is evidenced by the latter’s failure to agree on the configuration of the 10 acre parcel.

With respect, that argument is irrelevant to the status of compliance as of the date of the application, given that the parties agreed to a configuration in August 2009, and that Sanderman J.’s decision was issued in May, 2010. The issue on this application is what the Chemerinskis have done since May 7, 2010 to comply with Sanderman J.’s order.

The Chemerinskis have not met the burden of establishing that they have done what they could to comply with the order. [ 29 ] Fourth, the Chemerinskis state that the parties were just in the process of negotiating a timetable for the steps set out in Sanderman J.’s order when this application was first brought before the court. Negotiations in April 2011 with a view to implementing an order made in May 2010 is, presumably, an advance over what had gone on during the previous year. Negotiations are, for example, an improvement over contempt proceedings.

However, the issue on this application is whether the Chemerinskis should be allowed to invoke the assistance of the court when they have not yet complied with an order of the court and have not adequately explained why they have not complied. [ 30 ] Lastly, the Chemerinskis argue that they should not be held in contempt.

As indicated above, it is not necessary to hold them in contempt in order to deny them the right to take further steps in this litigation until they have complied with an existing court order. [ 31 ] Overall, the Chemerinskis argue that the court’s discretion to refuse to hear their application should not be exercised here because they have not impeded the course of justice or undermined the court’s ability to enforce its own orders. With respect, I disagree.

Parties to litigation, and the public generally, should expect that court orders will be obeyed and that there will be consequences when orders are not complied with. The least of these consequences, one which is much less stigmatizing than contempt, is the refusal to hear from the party who has failed, without adequate explanation, to comply with an order of the court when that party brings a further application in the same proceedings. The propriety of imposing consequences is even greater where, as here, the granting of the requested order who imply that the court’s existing orders have been fully satisfied.

Controlling the right of audience is one, effective, and reasonable way in which the court can maintain its ability to enforce its own orders. [ 32 ] In light of the view which I have taken on the Chemerinskis’ right of audience on the application relating to the certificate of lis pendens , it is not necessary for me to go on to consider whether the issues in the predicate lawsuit have been “finally disposed of”. 3.

Did the arbitrator commit any error of law in making her costs decision? [ 33 ] As indicated above, the court concludes that the Chemerinskis’ failure to comply with the orders of Sanderman J. in a related, but separate, proceeding, should not affect the Chemerinskis right of audience with respect to the costs aspect of an arbitral award.

[ 34 ] An analysis of the Chemerinskis’ claim that the arbitrator’s award on costs begins with an assessment of the right of appeal or review of an arbitral decision.

a) Are the Chemerinskis entitled to appeal the arbitrator’s award? [ 35 ] The arbitration between the Chemerinskis and the Richters was a private consensual arbitration. Therefore, any review by the courts is limited by the provisions of the governing statute, here the Arbitration Act . [ 36 ] On this application, the Richters maintain that s. 44(3) of the Act prevents an appeal of the arbitral award. With respect, this argument should have been, and presumably was, made to Sanderman J. when the issue of an appeal was brought before him; Sanderman J.’s conclusion that s. 44(3) did not apply here and that leave to appeal should be granted cannot be reviewed by this court.

b) Did the arbitrator commit an error of law in the costs award by failing to exercise her discretion in a judicial manner? [ 37 ] I agree with Sanderman J.’s approach to the potential appeal of an arbitral award on costs, i.e. that such an appeal is not absolutely barred, and adopt the reasoning of Spiegel J. in Necrovore Inc. that: 22 However, where a court in the exercise of its discretionary power to award costs has proceeded on an erroneous principle of law, the exercise of its discretion can be overruled on appeal.

I see no principled reason why the same should not apply in the case of an arbitrator who exercises a judicial function. I adopt the statement in Commercial Arbitration in Canada at page 10-54: A question of law may also arise out of an arbitrator's award of costs against a party despite the fact that an arbitrator has discretion to the costs which he or she may award in a particular case.

As the arbitrator is required to exercise his or her discretion judicially and not take into consideration extraneous matters, failure to decide in accordance with law is an error of law. [ 38 ] That is, however, a different principle from the one which the Chemerinskis urge should be taken from Necrovore which they advance as “an arbitrator commits an error in law by not following the accepted principle that costs follow the event”.

As the detailed reasoning of Spiegel J. in that case illustrates, because there are many possible reasons why a court would not have costs follow the event, Spiegel J. undertook a careful review of the evidence to see if there could have been some valid basis for refusing to award costs to Necrovore.

Although, in the event, the judge’s analysis revealed no such basis, it was made clear that costs do not always follow the event. [ 39 ] Because I have not been referred to any decisions on the award of costs arising out of a consent order, I assume that there is relatively little law on the subject; usually, when the parties consent to an order, they also agree to a costs disposition as part of their overall consent.

One example of a situation where costs remained outstanding is Hopper . [ 40 ] The Chemerinskis argue that they are entitled to costs on a solicitor-and-client basis in the amount of $82,484.06, or, alternatively, on an elevated party-and-party scale, or, in the further alternative, on Column 3 of

Schedule C which would produce a costs award of $16,800.00. [ 41 ] Alberta law is clear that an indemnity of costs, or even an award of solicitor/client costs, is extraordinary; the arbitrator correctly stated the law on this topic at para. 16 of her decision. With respect, the Chemerinskis have not established egregious conduct by the Richters of the kind that would justify an award above party-and-party scale. The real issue on this application is, therefore, was it an error of law for the arbitrator to fail to award the Chemerinskis costs on a party-and-party scale? [ 42 ] The short answer to that question is, No.

[ 43 ] The two main arguments advanced by the Chemerinskis in support of their position that the arbitrator erred in law in failing to award them costs are, first, that the arbitrator failed to recognize that it was the Chemerinskis position that was adopted in the consent award and, second, that the arbitrator took into account extraneous and irrelevant factors in concluding that each party should bear their own costs. [ 44 ] As to the first argument, it is clear that the arbitrator recognized that costs typically follow the event; indeed, she explicitly alluded to that principle However, as she pointed out, in the circumstances here, there was no arbitration event because the parties reached a settlement and took the subject of their dispute away from the arbitrator.

As the arbitrator also noted, where there is a settlement between parties to a dispute, usually, each of the settling parties expects to gain something from the settlement; otherwise, they would simply allow the dispute to run its course to a decision. It is true that, in some situations, the court is able to make an assessment of the basis on which a settlement was made. It is not a perfect analogy, of course, but I give as an example the various weights that can be attributed to a guilty plea, which is a settlement of criminal proceedings.

In some situations, a guilty plea may be deemed to have not much mitigating value because the Crown has available admissible evidence to prove that the accused was caught red-handed. In other cases, where a guilty plea from a truly repentant wrongdoer solves a potentially fatal weakness in the Crown’s case, a guilty plea has substantial mitigating value. So it is with civil settlements: they can range from each party giving up something of value to one party admitting that they have nothing of value.

Here, the arbitrator did her best to determine what cards each of the parties was holding immediately prior to the consent arbitral award, but could not come to a conclusion on that issue because of the importance which the parties attached to the outstanding lease and the fact that the arbitrator was not privy to any of those negotiations. In

summary, the arbitrator outlined her reasons for not following the general principle in the situation before her; she acted judicially. [ 45 ] In addition to the arbitrator’s own justification for not awarding costs, I note that, insofar as the approach of the courts may be useful in guiding arbitrators, there are obviously situations where courts have not awarded costs where parties consent to an award but do not deal with costs: Kelly . [ 46 ] As to the second argument, it would, of course, be an error of law to take extraneous factors into account in making a costs award.

However, the reference to the lease negotiations was not, in my view, such an extraneous factor. On the contrary, in the very settlement agreement which produced the consent arbitral award, an important component was the anticipated lease agreement; indeed, the parties asked the arbitrator to include a reference to the lease negotiations in her interim award. A proper subject of an arbitral award cannot be extraneous to that arbitration. Therefore, consideration of the very lease that was a feature of the interim award was not, in the circumstances here, extraneous. [ 47 ] In

summary, the Chemerinskis have not proved that the arbitrator made any error of law in her costs award. [ 48 ] Although the Chemerinskis seek costs of the leave to appeal application, I have no jurisdiction to make a separate award in relation to that application since Sanderman J. made an award. The award made by Sanderman J. was to the effect that costs in the application before him would be not based on success on the application, but in the cause.

I presume, therefore, that it follows from Sanderman J.’s decision that the Chemerinskis are not entitled to costs on the leave application since they were not successful on the actual appeal. 4. Who has the responsibility of drawing the order resulting from these reasons? [ 49 ] The Richters have been successful on both of the Chemerinski applications. Therefore, the Richters will have the responsibility of drawing up the formal order that results from this decision. 5.

Costs of this hearing [ 50 ] If the parties are not agreed on costs of this hearing, I may be spoken to within 30 days of the release of this decision. Heard on the 28 th day of April and the 13 th day of May, 2011. Dated at the City of Edmonton, Alberta this 30 th day of June, 2011.

J.B. Veit J.C.Q.B.A. Appearances: Paul V. Stocco, Brownlee LLP for the Chemerinskis Phyllis Van Campenhout, Hall & Van Campenhout for the Richters APPENDIX A FINAL AWARD ON COSTS In the Matter of an Arbitration under the Alberta Arbitration Act : Between: Calvin & Susan Richter and Bill Chemerinski Appearances: For the Richter's: Phyllis Van Campenhout, counsel Calvin & Susan Richter For B. Chemerinski: Paul Stocco, counsel Bill Chemerinski For A. Chemerinski: Gary Romanchuk, counsel

Arbitrator: Deborah M. Howes Hearing Date(s): May 7 & 8, 2009 Hearing Location: Edmonton Award Date: August 13, 2009 [l] Further to the Interim Consent Award of August 13, 2009, the parties submitted their positions on costs. This decision deals with the costs. For the reasons set out below, I find the parties should bear their own legal fees and expenses of presenting their cases and should equally share the fees and costs of the arbitrator and the arbitration costs. The arbitration costs include Mr. Barlow's fees and expenses but not the court reporter's fees. Mr. and Mrs.

Richter's Position [2] Counsel for Mr. and Mrs. Richter argues the parties should equally share the costs of the arbitration. She relies on section 53(5) of the Act which she says suggests the default principle under the Act is that each party should bear its own legal expenses and equally share the costs of the arbitration, unless the arbitrator orders otherwise. [3] Counsel argues the parties have a long standing dispute including minutes of settlement from a JDR which resulted in this arbitration. She says Mr. and Mrs.

Richter had significant interests to protect and their attempts to discuss the survey or obtain details were ignored. She says the parties reached a package deal during the arbitration process, which involved a broader compromise, settling the boundaries of the parcel and an outstanding lease. As a result, no party could claim a greater degree of success in the arbitration. She seeks equal allocation of all arbitration costs including Mr. Barlow's invoice of $4768.57 for his attendance at the hearing. [4] Alternatively, counsel seeks party-and party costs in accordance with Column 1 of

Schedule C of the Rules of Court. [5] Finally, counsel disputes that the $584.00 costs of the court reporter are appropriate costs of the arbitration because the arbitrator had already directed that if Mr. Chemerinski wished a transcript he would bear that cost. She seeks an order directing Mr. Chemerinski to pay those costs. Mr. Chemerinski's Position [6] Counsel for Mr. Chemerinski asks me to view Mr. Chemerinski as the successful party and award costs on a solicitor and client basis for the following reasons. First, the settlement agreement adopted the Chemerinski survey.

Second, the original Richter survey, which crystallized the dispute, was wrong and could not be a possible remedy in the arbitration. Third, the Richter's instructed the surveyor to prepare a survey they knew was not contemplated by the Minutes of Settlement from the JDR, thereby acting in bad faith. Fourth, the Richter's amended survey was not part of the reference to arbitration and again not a possible remedy in the arbitration. [7] Alternatively, counsel seeks party-and-party costs at an elevated level on Column 3 of

Schedule C of the Rules of Court. [8] Finally, counsel argues Mr. Chemerinski should not share the costs of Mr. Barlow's attendance at the hearing as he was an expert retained by Mr. and Mrs. Richter. Reasons for Decision

[9]

Section 53 of the Act deals with costs; it states: 53(1) An arbitral tribunal may award the costs of an arbitration.

(2) The arbitral tribunal may award all or part of the costs of an arbitration on a solicitor-and-client basis, a party-and-party basis or any other basis but if it does not specify the basis, the costs shall be determined on a party-and-party basis.

(3) The costs of an arbitration consist of the parties' legal expenses, the fees and expenses of the arbitral tribunal and any other expenses related to the arbitration.

(4) If the arbitral tribunal does not deal with costs in an award, a party may, within 30 days after receiving the award, request that it make a further award dealing with costs.

(5) In the absence of an award dealing with costs, each party is responsible for that party's own legal expenses and for an equal share of the fees and expenses of the arbitral tribunal and of any other expenses related to the arbitration.

(6) If a party makes an offer, in writing, to another party to settle the matter in dispute or part of it, the offer is not accepted and the arbitral tribunal's award is no more favourable to the party to which the offer was made than was the offer, the arbitral tribunal may take that fact into account in awarding costs in respect of the period from the making of the offer to the making of the award.

(7) The fact that an offer to settle has been made shall not be communicated to the arbitral tribunal until it has made a final determination of all aspects of the matters in dispute other than costs. [10] The arbitration agreement between the parties did not deal with apportionment of costs. [11] I find this is an appropriate case to award costs on the formula in section 53(5) of the Act, specifically that each party is responsible for its own legal expenses and disbursements and for an equal share of the fees and expenses of the arbitral tribunal and of any other expenses related to the arbitration.

I explain my reasons and then deal with the specific claims about Mr. Barlow's expenses and the court reporter's fees. [12] First, in this case, there is no clear successful party because the parties settled the arbitration before I had to make a determination about the matters in dispute. The starting principle for costs in court is that the successful party in contested proceedings is usually entitled to an award of costs. Costs assist those who succeed by offsetting some of the expense of persevering and also deter those who are wrong to persist in their case.

The principle does not apply where there is no determination of success. [13] Second, if I accept the arguments of Mr. Chemerinski's counsel, I would be indirectly and post-settlement determining the very questions the parties removed from my consideration. The sole issue before me was the configuration of the 10 acre parcel to be subdivided out of the home quarter.

The parties had opposing positions on the ultimate configuration of the parcel, on whether the Richter's amended survey was properly part of the arbitration and on whether the arbitrator had to select between the parties' surveys or could consider another option. With the settlement agreement I did not have to decide any of those questions. [14] Third, the settlement addressed matters outside the scope of the arbitration.

When the parties reached a settlement agreement that they asked I incorporate into a consent award, they settled the configuration of the parcel, a lease (which was not part of the arbitration) and a process for dealing with costs. They included another item in the settlement (the lease) that was, as suggested by their counsel, of significant concern to Mr. and Mrs. Richter. I have no way of assessing the value of the lease to either party because it was not before me. Accordingly I must conclude each party received sufficient value in the settlement to prompt their agreement.

As a result, neither party can be viewed as being successful in the arbitration.

[15] Fourth, both parties raised interlocutory applications during the arbitration process. Mr. Chemerinski sought costs of expert fees thrown away because of the amended Richter survey. He sought a five week adjournment of the hearing. Mr. Chemerinski's position on the lease being negotiated by the parties simultaneously with this proceeding prompted resistance by the Richters to any adjournment, resulting in a conference call and directions. As a result of those directions, Mr. Chemerinski raised a challenge under section 13(3) of the Act on two grounds. The challenge then resulted in Mr.

Chemerinski's counsel filing a Notice of Motion to the court, a further conference call, a decision that I would include my decision on the challenge in the final award, and a one week adjournment of the hearing. Given the settlement terms reached by the parties, I will not be dealing with the challenge in this final award. Both parties also raised evidentiary questions during the pre-hearing stage. I ruled that any question of costs could be included in the final arguments and dealt with at the end rather than in any interim award.

No party was fully successful in all its interlocutory applications and both parties contributed to the increased costs of the arbitration. [16] Counsel for Mr. Chemerinski asked me to award either solicitor and client costs or elevated party and party costs. The Alberta Court of Appeal held that solicitor and client costs may only be ordered where justified on the basis of the conduct of a party during the proceedings". (Walsh v. Mobil Oil Canada, 2008 ABCA 268 at para. 112 , and Polar Ice Express Inc. v. Artic Glacier Inc., 2009 ABCA 20 at para. 21 cited in Waste Management of Canada Corporation v.

Thorhild (County), 2009 ABQB 157 at para. 13 ). The court has also said the threshold for that wrongdoing is very high, such as "reprehensible, scandalous or outrageous conduct on the party of one of the parties" ( Waste Management of Canada Corporation at para. 13 ). With the settlement, there are no findings in favour of either party and no determinations upon which to conclude wrongdoing by either party during the arbitration. I am unable to determine if one party held an improper position or engaged in improper conduct in the arbitration because the hearing ended before the evidence was completed.

I therefore do not grant counsel's request for solicitor and client costs. [17] Turning to the question of elevated party and party costs, I also refuse to grant these costs. First, there. is no successful party in this arbitration; both parties can argue some success from the settlement agreement. Second, I find the case falls short of the five tests outlined at para. 15 and 16 in Waste Management of Canada Corporation . The arbitration involved a single, well defined issue of limited complexity. The case appeared important to both parties, for different reasons.

The arbitration hearing was originally anticipated to be two days and ended early when both parties chose to engage in settlement discussions. The parties were both adversarial in their position and relationship and in their conduct prior to and during the arbitration, until the settlement discussions began. No party was defending his or her professional reputation and both parties incurred significant liability for legal counsel. Mr. Barlow's Expenses [18] I find Mr. Barlow's fees and expenses shall be shared equally by the parties as part of the costs of the arbitration. [19] The matter of Mr.

Barlow's attendance at the hearing was discussed in a pre-hearing teleconference call. On May 1, 2009 I directed as follows: 2. Mr. Warren Barlow, surveyor - you have agreed he is the surveyor noted on all the surveys and each of you may wish to question him about the various surveys and measurements. I may also have questions for him. You agreed Mr. Barlow will attend under

section 28 of the Arbitration Act , and each party will be able to cross-examine him and the costs of his attendance will be determined in the final award. Counsel will address his costs in their final arguments. [20] On May 4, 2009 counsel for the Richter's wrote to Mr. Barlow (copied to the arbitrator and counsel for Mr. Chemerinski) advising of his status as "friend of the court". [21]

Section 28 of the Act outlines the procedures that apply when the arbitrator appoints an expert witness. The parties agreed Mr. Barlow would be called under

section 28 of the Act and his invoice would be paid from the security deposits received by the arbitrator. As a result, Mr. Barlow moved from being an expert for one party and became a deemed "expert appointed by the arbitrator" with his fees and expenses then forming part of the arbitration costs. [22] In addition, Mr. Barlow's firm completed all the competing surveys for both parties. He is the surveyor of record on all the surveys. Shortly before the hearing Mr. Barlow visited the site with Mr. Chemerinski's expert, another employee in Mr. Barlow's firm. The hearing ended before Mr. Barlow testified.

As a result, I am unable to determine if his evidence would have demonstrated that he was an expert for one party alone. On the basis of the information provided to me during the pre-hearing conference call I conclude Mr. Barlow could have been the expert for either party because he prepared the competing expert reports for each party.

[23] Mr. Barlow's invoice will be paid from the security deposit paid by the parties after payment of the arbitrator's invoices for fees and disbursements. The remaining security deposit fund is not sufficient to pay Mr. Barlow's invoice and the parties will need to pay to the arbitrator an additional deposit of $1,228.78 each to pay Mr. Barlow's invoice. Court Reporter Fees [24] I find Mr.

Chemerinski should bear the full costs of the court reporter and transcripts because he agreed to do so before the hearing. [25] During the first pre-hearing teleconference call, I asked the parties if they wished a tape recording or transcript of the hearing but advised I do not normally provide either as a regular practice. They agreed not to have court reporter present. On April 27, 2009 counsel for Mr. Chemerinski advised he wanted a transcript; the Richter's did not want to bear the cost of a court reporter. After the call, counsel for Mr.

Chemerinski emailed the arbitrator and other party on April 27, 2009 stating in part: 2. I have confirmed with Bill that we will make arrangements to have a Court reporter present and that we will cover the costs of same and that the transcript will be available to all parties. [26] Mr. Chemerinski booked the court reporter and had the invoice directed to him or his counsel. Copies of the transcript were provided to the arbitrator and the Richter's counsel. Mr. Chemerinski now seeks to obtain partial payment from the Richter's, but his earlier agreement requires that he pay the full costs of the court reporter.

Order [27] I therefore order: 1. Each party is responsible for its own legal expenses and disbursements for the preparation and presentation of its case at the arbitration. 2. Each party is responsible for an equal share of the fees and expenses of the arbitrator and of any other expenses related to the arbitration. 3. Mr. Barlow's fees are expenses related to the arbitration and shall be shared equally by the parties. 4. Mr. Chemerinski.is solely responsible for the full amount of the court reporter's fees. 5.

Each party to pay to High Clouds Incorporated on or before August 21, 2009 the sum of $1,228.78 representing the outstanding funds required to pay Mr. Barlow's invoice over and above the security deposit paid by each party. 6. The arbitrator will pay Mr. Barlow's invoice 040-093 in the sum of $4768.57 after the arbitrator receives payment of $1,228.78 from each party. Dated at Edmonton on August 14, 2009.

"D Howes" Deborah M. Howes, C. Arb. Arbitrator