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Does a Party’s Participation in a Costs Proceeding Estop them from Claiming that the Time Period for Determining Costs has Expired?

In Meszaros v 464235 BC Ltd, 2021 BCSC 2012 (“Meszaros”)[1], Justice MacDonald of the Supreme Court of British Columbia declined to set aside an arbitrator’s decision that a responding party to a costs application, having participated in the proceeding, was precluded, or estopped, from asserting that the application for costs was out of time. However, Justice MacDonald did find an arguable point of sufficient substance was raised to warrant leave to appeal.

Why This Decision Matters 

This decision addresses whether the doctrine of estoppel can be used to effectively extend a statutorily imposed 30-day time period for seeking costs of an arbitration where the responding party participates in the costs proceedings.

The Legal Framework

Pursuant to sections 11(5) and 11(6) of the Arbitration Act[2]if an award issued by the arbitrator does not include an order with regards to costs, a party can apply to the arbitrator within 30 days of being notified of the award, for an order for costs. If no application is made, each party bears their own costs. The 30-day time period under section 11 is not absolute. Section 43 permits the court to extend any time period in the Act.[3] However, the statute is silent on whether an arbitrator has the ability to extend the time period.

Background of the Arbitral Award and the Application to Dismiss the Costs Award  

In July 2017, the arbitral award (the “Award”) was released. While the Award did not contain a cost order, the arbitrator informed the parties they could make submissions on the calculation of interest and costs but did not set out a timetable for the submissions.

Sixty-two days after the Award was released, the respondent, 464235 BC Ltd. (the “Respondent”) sent a letter to the petitioner, Mr. Meszaros, (the “Petitioner”) seeking to establish a timetable for the interest and costs submissions. An agreement was reached on consent. The Respondent delivered its submissions. The Petitioner then requested an adjournment pending its application for leave to appeal the Award.

The Petitioner’s application for leave to appeal the Award was denied on November 20, 2018. Consequently, the Petitioner delivered his responding material on the costs issue. The Respondent then delivered reply submissions.

Only after this exchange of materials did the Petitioner bring a notice of objection on the basis that the Respondent sought its costs more than 30-days after the Award was released.

The parties argued the objection before the arbitrator, who decided that the Petitioner was estopped by his conduct from opposing the Respondents efforts to seek its costs (the “Objection Award”). Shortly after that, the arbitrator issued a Costs Award.

Issues Before the Court  

There were two issues before the Court: 

  1. Whether the arbitrator had the jurisdiction to hear an application for costs after the expiration of the 30-day time period prescribed by statute;
  2. Assuming the arbitrator had jurisdiction, did the arbitrator err in the law by applying the principle of estoppel to extend the 30-day time period. 

The Court’s Decision  

The Petitioner argued that the Arbitration Act is a complete code for domestic arbitrations and any relief from the 30-day time period must be found within the provisions of the Act. As the Act only expressly refers to the court’s ability to vary the timeline, it follows that an arbitrator lacks the jurisdiction to do so.

However, the Court determined that the Act serves a private purpose, given that the parties can contract out of s. 11 of the Act. In such cases, the rights afforded under the Act are permissive and subject to the doctrine of estoppel. Consequently, the Court concluded that the arbitrator did not exceed his jurisdiction effectively extending the 30-day time period, and therefore, the Objection Award should not be set aside.

After concluding that the arbitrator had sufficient jurisdiction, the Court was tasked with determining whether the arbitrator erred in determining that estoppel could be applied. The Petitioner argued that estoppel requires a clear and unambiguous representation, and that the Petitioner’s participation in the proceeding did not rise to that level.

Although the Court declined to set aside the Objection Award at this time, it determined that the Petitioner had raised an arguable legal issue, and therefore leave was granted to appeal the Costs Award.

Don’t Be Late

Interestingly, the Court noted that it was not presented with case law where participating in a proceeding was determined to be conduct sufficient to ground a finding of estoppel. That issue will be addressed on appeal.

However, there is one sure-fire way to avoid a dispute over the applicability of the doctrine of estoppel when seeking relief under domestic and international arbitration legislation – abide by the timelines. 

[1]Meszaros v 464235 BC Ltd, 2021 BCSC 2021.

[2]Arbitration Act, RSBC 1996 c 55, ss. 11(5) & 11(6). Notably, the version of the Act before the court in this matter has since been replaced by the Arbitration Act, SBC 2020 c 2.[2] Under this new Act, the ability for an award to be set aside due an arbitral error no longer exists. However, questions of law can still be appealed.

[3] Ibid, s. 43.

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