Decision Date: September 15, 2014

Panel: Robert Wickett, Q.C., Cindy Derkaz, Blair Lockhart

Keywords: Environmental Management Act – ss. 95(2)(a) and (b); costs; contaminated site; remediation order; expert witness; reprehensible conduct;

The Vancouver Fraser Port Authority (the “Port”), Fibreco Export Inc. and 602534 BC Ltd. (collectively “Fibreco”), and the Director, Environmental Management Act (the “Director”), each applied to the Board for an order for costs against the Appellant, Seaspan ULC (“Seaspan”). The costs applications relate to Seaspan’s appeals of two decisions issued by the Director in relation to a contaminated site.

One of Seaspan’s appeals concerned a remediation order (the “Order”) that identified Seaspan and Domtar Inc. as “responsible persons” under the Act, with respect to five contaminated parcels of land (the “Site”). The parcels of land are located on or near the Burrard Inlet, and are referred to in the decision as parcels A, B, C, D, and E.

Seaspan appealed the Order on multiple grounds, which changed and were modified over the course of the appeal process. One of these grounds stated that Seaspan was not a “responsible person” with respect to some or all of parcels B, D, and E, referred to collectively in the decision as the “Western Front”. In support of this position, Seaspan relied on an expert report.

When Seaspan’s expert was cross-examined, the expert made concessions, admitted errors, and changed his evidence such that his report was shown to be fatally flawed. After the second day of hearing, Seaspan elected not to re-examine its expert and largely abandoned its appeals. Following the abandonments, the costs applications were filed with the Board.

The Applicants sought costs on the grounds that the Seaspan’s appeals were manifestly deficient and without merit. They asserted that the meritless appeals, combined with the issues arising from the evidence of Seaspan’s expert, warranted an order of costs under section 95(2)(a) of the Act.

The Board first considered the applicable principles or legal parameters for an award of costs under section 95(2)(a). The Board found that its power to award costs under section 95(2)(a) is discretionary and will depend on the particular facts of the case. The Board reviewed its policy on costs and concluded that an order for costs in Board proceedings is punitive in nature, not compensatory. The objectives of the Board’s policy are to “encourage responsible conduct throughout the appeal process and to discourage unreasonable and/or abusive conduct”. Costs act as a disincentive to those who may bring meritless appeals or recklessly pursue appeals which turn out to have little prospect of success. However, when assessing whether or not to award costs, the Board provided that it will weigh the importance of ordering costs in the circumstances against the likelihood that such an award will have the unwanted “chilling effect” of deterring individuals with legitimate concerns from using the Board’s process.

The Board also considered the applicability of the law on special costs. Although the Board found that it does not have the jurisdiction to award special costs, it concluded that special costs principles may be relevant.

The Board then considered whether the facts in this case warranted an order for costs against Seaspan. It concluded that an order was justified in the circumstances.

The Board found that Seaspan had either advanced a theory that it knew lacked merit or, at least, had not undertaken a careful assessment of the strength or lack thereof of its case. The Board based this finding on Seaspan’s reluctance to clearly identify its position from the outset, its change of position over the years, and the flaws in its expert’s report.

The Board found that the flaws in Seaspan’s expert evidence reflected more than a mere error or “a bad day” on the witness stand. The expert report was found to be deceptive and fundamentally and irredeemably flawed such that the theory put forth by Seaspan crumbled almost immediately under cross-examination. The Board concluded that Seaspan’s case was more than doubtful, it was hopeless, and the theory advanced by Seaspan at the hearing should never have been pursued.

The Board found that concerns of the costs order giving rise to an unwanted “chilling effect” were not engaged because the parties to the appeal were sophisticated, and represented by experienced and knowledgeable counsel.

Concerning the quantum of costs awarded to the Applicants, the Board found that costs would be awarded at the Scale C.

The Board further provided that an order requiring Seaspan to pay the Board’s expenses under section 95(2)(b) of the Act could be engaged, and asked for submissions on this matter.

Accordingly, the applications for costs were allowed.