SCC affirms Pipeline Arbitration Committee's discretion in awarding costs

February 22, 2011

In Smith v. Alliance Pipeline Ltd., the Supreme Court of Canada upheld a Pipeline Arbitration Committee (Committee)'s award of costs for the proceedings before it, as well as the costs incurred by a landowner in prior arbitration proceedings and a related Alberta Court of Queen's Bench action.

The case arose from a dispute regarding compensation to a landowner for reclamation work that he completed, but which a pipeline company was obligated to perform. The dispute, which continued for over ten years, resulted in two Pipeline Arbitration Committee proceedings and a discontinued Queen's Bench action that was commenced by the pipeline company.

The Committee determined that the costs from the other proceedings "all related to a single claim for compensation in respect of a single expropriation by a single expropriating party." The SCC held that this was a reasonable interpretation and exercise of Section 99(1) of the National Energy Board Act (NEBA), a provision that requires an expropriating company to pay all "legal, appraisal and other costs" reasonably incurred by a party in asserting their claim for compensation.

Writing for the unanimous court (with concurring reasons also written by Madam Justice Deschamps), Justice Fish mentioned that the Committee's decision was consistent with Section 75 of NEBA, which expresses the principle that parties should be made "economically whole" for all damages sustained by reason of expropriation.

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