Central Alberta Rural Electrification Association Ltd. v. FortisAlberta Inc., 2013 ABQB 191

Court of Queen ’ s Bench of Alberta Citation: Central Alberta Rural Electrification Association Ltd. v. FortisAlberta Inc., 2013 ABQB 191 Date: 20130327 Docket: 1201 02003 Registry: Calgary Between: Contract Policy Committee (Representing Central Alberta Rural Electrification Association Ltd. and South Alta Rural Electrification Association Ltd.) Applicant - and - FortisAlberta Inc. Respondent _______________________________________________________ Memorandum of Decision on Costs of the Honourable Madam Justice B.L.

Veldhuis _______________________________________________________ Introduction [ 1 ] The Contract Policy Committee (CPC) brought an application for leave to appeal an arbitral award in a dispute between it and FortisAlberta Inc. (Fortis). [ 2 ] On October 31, 2012 in Contract Policy Committee v FortisAlberta Inc , 2012 ABQB 653 , I released my decision, declining leave to appeal. I found that even if leave to appeal had been granted, I would not have reversed any of the decisions sought to be appealed. Following the receipt of written submissions from counsel, this is my decision on costs. Positions of the parties

[ 3 ] Fortis asks for costs on the basis of a multiple of 2 times Column 4 of the Alberta Rules of Court , Alta Reg 124/2010,

Schedule C, Division 2 [ Rules ]. It argues that costs relating to an appearance to argue before an appeal court should apply instead of item 8, which is the usual item for a chambers application requiring a written brief. [ 4 ] In support of its position, Fortis argues that it was successful on every aspect of the application. It says that the total installation cost of the electrical service at issue was between approximately $1.6 and $2.6 million.

While Fortis acknowledges that this was not the amount in dispute between the parties, it says these figures are helpful signposts for the significance of the dispute. [ 5 ] Fortis says that the legal issues were important. It further submits that while the underlying issues involved in the arbitration were not themselves complex, the volume and method of argument, akin to re-arguing the whole arbitration while describing issues in multiple ways, required a detailed response and favours increased costs along with the application of appeals costs. [ 6 ] CPC argues that costs should be awarded on Column 1.

It submits that there was no amount in issue between the parties and that the Rules ,

Schedule C, Division 1 s 1(4) provides that Column 1 is to be used in such circumstances. It argues that the $1.6 to $2.6 million figures were mere estimates and were not adjudicated. CPC submits that there is no ground for enhanced costs because this application is not distinguishable from other special chambers applications. Issues [ 7 ] I must determine quantum of costs to be allowed. To do so, I will consider: 1. which column of the Rules ,

Schedule C, Division 2 will apply; 2. whether to allow costs on the basis of argument before an appeal court; 3. whether to apply a multiple to the column chosen; and 4. the treatment of disbursements. Background [ 8 ] The Court has wide discretion in granting costs: Rule 10.31. In exercising that discretion, the factors in Rule 10.33 must be considered. They are: 1. the result of the action and the degree of success of each party; 2. the amount claimed and the amount recovered; 3. the importance of the issues; 4. the complexity of the action;

5. the apportionment of liability; 6. the conduct of a party that tended to shorten the action; and 7. any other matter related to the question of reasonable and proper costs that the Court considers appropriate. [ 9 ] The default rule is that the successful party is entitled to costs: Rule 10.29. In Northland Material Handling Inc v Parkland (County) , 2012 ABQB 586 at para 11 , Justice Veit of this Court gave the following

summary and guidance: As the wording of Rule 10.31 of the Rules of Court emphasizes, a court has discretion in the award of costs. Naturally, that discretion must be exercised judicially. In this context, judicial exercise means, in part, that a judge who determines that in a particular situation something other than the "usual" costs award is appropriate will give reasons for the choice. The "usual" award is determined either by the Rules of Court , e.g. the winner gets costs and the loser pays them forthwith - Rule 10.29(1), or by the weight of authority, e.g. the default costs regime is party/party costs as set out in

Schedule C of the Rules. [ 10 ] The Rules ,

Schedule C, Division 2 provides a table of amounts under five columns corresponding to different quanta of claims. Factors that must be considered [ 11 ] The underlying application was non-monetary, so there was no amount claimed or recovered, nor was there any apportionment of liability. [ 12 ] It is clear that Fortis was entirely successful in that no question sought to be appealed by the CPC was granted leave to be appealed.

Further, I determined that even if leave been granted for any question, the decision of the arbitral panel would not have been overturned. [ 13 ] The questions on which an appeal from the arbitral award was sought were important. In the reasons for judgment at para 93, I found that “the matters subject to arbitration are important to the parties not because of the significance of the five prospective clients, but because of the broader impact on the parties' understanding of their legal rights.” Effectively, this was a test case.

The decision on those questions could also have a significant impact on the distribution of electricity to the rural public along with both parties’ businesses. Importance will be discussed further in determining which Column is to be applied. [ 14 ] This application was complex. Fortis acknowledges that the matters underlying the arbitration itself were of fairly low complexity. Yet, for each of the 18 points sought to be appealed, I had to answer four underlying questions in determining whether to grant leave to appeal.

There was also a global question about the importance to the parties of the matters at stake in the arbitration. Further, I had to determine a standard of review for each point sought to be appealed and, finally, whether the decision of the arbitral panel should be upset. The result was that 109 different questions had to be answered.

Counsel for each party had to turn their mind to each of these questions for effective argument. [ 15 ] There is no obvious conduct that can be said to have shortened the action. [ 16 ] Rule 10.33 also requires me to consider “any other matter related to the question of reasonable and proper costs that the Court considers appropriate.” Under that branch, I consider that the decision to seek appeal from the arbitral award on 18 different grounds generated a significant application against which Fortis had to respond.

This was not a matter where one or two issues were selected - it is clear that the CPC tried to challenge the whole of the arbitral award. The cost for Fortis to defend against an application seeking to appeal that number of questions is undoubtedly higher than if one or two narrow issues had been chosen for appeal.

Which column of the Rules,

Schedule C, Division 2 will apply [ 17 ] The determination of which column applies is generally driven by the quantum of money in dispute. Where there is no money in dispute, the Rules ,

Schedule C, Division 1 s 1(4) suggests the use of Column 1. But that rule is subject to the Court’s direction otherwise. Courts in Alberta have often applied a different column when the significance of the dispute means its importance raises to the corresponding monetary threshold normally applicable. In effect, the monetary thresholds are signposts for the importance of a matter. [ 18 ] Fortis has argued that the $1.6 to $2.6 million installation value of the electrical services in dispute is a signpost for the significance of the dispute.

However, the real question is: what are these clients worth to either the rural electrification association, represented by the CPC, or Fortis? This is because that is what either party stood to lose or gain, at least directly. Answering this question might require an analysis of expected future electric distribution market conditions and discounted cash flows. No evidence was given in this regard. [ 19 ] Even then, importance may be understated if the impact of this litigation on the allocation of only the five clients is considered .

It is clear that the parties fought this dispute to determine their rights going forward - to determine the allocation of, potentially, many more than the five clients at issue in this case. As I said in the substantive decision at para 66: I am convinced that the matters at stake in this arbitration have a substantial impact on the parties. The answers to these questions decides who is entitled to serve different clients. The resolution of these questions could have an enormous impact on the parties including the continued viability of rural electrification associations.

The substance of this arbitration has a character that distinguishes it from an "ordinary" arbitration. [ 20 ] Indeed, for the CPC to have successfully argued leave to appeal, it had to argue that the matter was sufficiently important to the parties to justify an appeal and that the determination of the purported questions of law was significant enough to justify an appeal.

On these branches of the leave to appeal test, the CPC was largely successful. [ 21 ] In determining which Column to apply, I have considered the value that a favourable resolution of this dispute would have to either party as a rough analogy to the quantum of money in dispute. A favourable resolution was very valuable to either the CPC or Fortis. While it is tempting to place the matter in Column 5, given the limited evidence available, I am confident a favourable resolution in either party’s favour was worth at least $500,000. Thus, the appropriate column is Column 4.

Whether to allow costs on the basis of argument before an appeal court [ 22 ] While the matters underlying the arbitration were not themselves complex, the application seeking leave and a decision if leave was granted became complex. Counsel for Fortis had to prepare to argue both leave and the substance of each ground of appeal, a considerable task. This was not a simple matter requiring short briefs. A multi-day transcript of the arbitral proceedings was required. Fortis was represented by two counsel. [ 23 ] This matter had already been decided by an arbitral panel.

Thus, the nature of the hearing is one which is much more like an appeal than a typical chambers special. Given the complexity and nature of the application, a compelling analogy is that many matters before the Court of Appeal could require less preparation. [ 24 ] I am satisfied that the complexity of the matter justifies granting costs in the nature of an appearance before an appeal court. Whether to apply a multiple to the column chosen [ 25 ] Fortis has asked for a multiple of 2 to be applied to the column selected. In its draft bill, this is on top of appeal costs on

Column 4. There was no argument to support the multiple, beyond the obvious inference that the complexity of the matter justifies additional costs. [ 26 ] In this case, the complexity of the matter is accounted for by allowing costs in the nature of an appearance before an appeal court while the significance of the matter is accounted for by the choice of column.

To grant a multiple on top of it all would, in my view, give double compensation to Fortis. [ 27 ] Further, having considered the factors prescribed under Rule 10.33, I find no need for an upward or downward adjustment from the amount otherwise prescribed. Therefore, no multiple will be applied. The treatment of disbursements [ 28 ] In Fortis’ draft bill of costs, $561.25 is claimed as a “disbursement” for photocopies. No evidence was given as to whether this is a notional amount for internal photocopying, a true disbursement or a combination of both.

A true disbursement involves the actual payment of money to a third party. [ 29 ] In James Christensen & Joe Morin, Court of Queen ’s Bench Costs Manual : Costs Between Parties: Disbursements & Other Charges (2011) [unpublished], online: Alberta Courts <http://www.albertacourts.ab.ca>, the authors reviewed applicable Alberta jurisprudence and proposed allowing $0.15 per page for photocopying as a notional disbursement. For internal photocopies, a notional disbursement of $0.15 per page will be allowed.

For payments to a third party service provider, the reasonable amount actually paid for copy services will be allowed. [ 30 ] The $6.25 courier charge was not disputed and will be allowed. Conclusion [ 31 ] Party-party costs are allowed on Column 4 of the Rules ,

Schedule C, Division 2 with the chambers application treated as an appearance before an appeal court. To avoid any uncertainty over the allowable items, I set the amount allowed in relation to the

Schedule C items at $12,750.00. [ 32 ] In addition to this, $0.15 per page for photocopies or the reasonable amount actually paid to a third party for photocopying services is allowed. The $6.25 disbursement for courier service is allowed. [ 33 ] Should there be any dispute on the quantum of photocopies or any disbursement for photocopying, the matter may be resolved by a reference to a review officer. [ 34 ] Finally, I would like to thank counsel for their submissions. Application for leave to appeal and appeal heard on the 17 th day of May, 2012.

Reasons declining leave to appeal issued on the 31 st day of October, 2012. Decision on costs dated at the City of Calgary, Alberta this 27 th day of March, 2013.

B.L. Veldhuis J.C.Q.B.A. Appearances: James L. Lebo, Q.C./ Michael C. Barbero For the Applicant Clarke Hunter, Q.C./Scott Chimuk for the Respondent