On September 15, 2014, the British Columbia Environmental Appeal Board (Board), in a rare exercise of its powers, awarded costs against an appellant in Seaspan ULC v. Director, Environmental Management Act, Decision Nos. 2010-EMA-005(c) and 2010-EMA-006(c). In a comprehensive 43-page decision, the Board did not mince words in describing how the Appellant’s conduct fell “far short of the standard of practice which the Board wishes to encourage” and was “deserving of reproof or rebuke.”
Cost Awards Before the Board
While the Board is expressly empowered to issue orders for costs under section 95(2)(a) of the Environmental Management Act, S.B.C. 2003, c. 53 (EMA), it seldom does so.
The Board’s published Procedure Manual states the following:
The Board has not adopted a policy that follows the civil court practice of “loser pays the winner’s costs.” The objectives of the Board’s costs policy are to encourage responsible conduct throughout the appeal process and to discourage unreasonable and/or abusive conduct. Thus, the Board’s policy is to award costs in special circumstances. …
The Board sees cost awards as being punitive in nature and not compensatory. As a result, the Board has set a high bar for justifying an award of costs.
The “special circumstances” justifying an award of costs require a party’s behaviour to be reprehensible. Such conduct encompasses “scandalous or outrageous conduct but also encompasses milder forms of misconduct deserving of reproof and rebuke.”
Findings of Board
In Seaspan, the Board was faced with circumstances in which, three days into a four-week hearing, the Appellant unexpectedly abandoned its appeals after its first witness was cross-examined. After hearing submissions on the question of costs, the Board reserved and, in a very strongly worded decision, ordered the Appellant to pay the Respondent and Third Parties their costs. In doing so, the Board held, among other things, that the Appellant’s expert:
- tendered a report (Report) that was completely discredited in cross-examination; and
- on the direction of counsel, purposefully omitted dealing with evidence that was contrary to his opinion.
- The Board concluded that the expert’s evidence reflected “something more than a mere error or a ‘bad day’ on the witness stand.”
The Board then went on to find that:
- the Appellant “knew or ought to have known that the Report was fatally flawed” and could not support the conclusions for which it was tendered;
- the Appellant had “advanced a position that was fundamentally unsound from the outset”;
- the “underlying theory of its case … was so ill conceived that it crumbled almost immediately under cross-examination”: it was “preposterous”; and
- “the theory advanced at the hearing should never have been pursued” and the Appellant, a sophisticated party, had “clogged the system with an ill-founded appeal.”
At the close of its decision, the Board directed the Appellant to make submissions as to whether it should also pay the expenses of the Board in respect of the abandoned appeals.
The appeals arose out of a February 16, 2010, remediation order (Order), and ancillary orders, issued by the Director under the EMA. The Order concerned a multi-property contaminated site in North Vancouver. The primary sources of contamination at the site are creosote, from wood treating operations carried out from 1923 to 1965, and tributyltin, from the use of defoliant paints from 1965 to the present.
The Ministry of Environment (Ministry) first identified contamination at the site as early as 1995. Over the ensuing 15 years, the Ministry attempted to cause responsible parties to voluntarily clean up the site and “encouraged” the parties to do so through the issuance of two draft remediation orders. A voluntary remediation was not to be, so on February 16, 2010, the Director issued the Order.
The Appellant appealed the Order, citing numerous grounds, including that it was not a “responsible person” under the EMA with respect to “all or some of the 5 parcels” that made up the contaminated site. Some of these parcels were owned by others, who were added as third parties in the appeals.
After several adjournments made at the request of the Appellant, the appeals were set to be heard at the same time, at a four-week hearing scheduled to commence on September 30, 2013.
The Appellant’s first witness was an expert who proffered an opinion that the contamination on the properties to the west of the Appellant’s property (an area referred to in the appeal as the Western Front) was not connected with the contamination on the Appellant’s property, and that, more probably than not, the contamination on the Western Front was caused by the storage of creosote-treated logs thereon. The Appellant tendered this evidence to avoid liability for the properties that made up the Western Front.
Cross-examination of the Appellant’s expert finished on the afternoon of the second day of the hearing. Several hours later, the Appellant notified the other parties that it was abandoning all of its appeals, except for its ground of appeal about the appropriateness and form of the security that was required to be posted under the Order.
On the third day of the hearing, the Appellant formally abandoned its appeals.
In light of the sudden collapse of the Appellant’s appeals, a number of the Third Parties and the Respondent advised the Board that they would be seeking costs from the Appellant. In addition, with a view to determining how the Appellant’s case could collapse so readily, one of the Third Parties sought, and obtained, an order compelling the expert and the Appellant’s counsel to disclose the entirety of the Appellant’s expert’s files and all communications between the expert and counsel. Three days of argument, 11 months and 34 pages later, the Respondent and Third Parties were awarded costs against the Appellant.