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committed an “arbitral error” by failing to grant its request that the claimant
be compelled to produce “particulars of the work done” by claimant’s counsel.
The court found that there had been a denial of natural justice, set aside
the award and remitted the matter to the arbitrator. In arriving at this decision,
the court followed its earlier judgment in Williston Navigation Inc. v.
BCR Finav No. 3 et al.3 There, the court stated:
49 Natural justice requires an arbitrator to act with a certain level of
procedural fairness. The rules of natural justice and the duty of fairness
are variable. Their content is to be decided in the specific context of each case
and will depend on the circumstances of the case, the statutory provisions and
the nature of the matter to be decided: Knight v. Indian Head School Division
No. 19, 1990 1 S.C.R. 653; Syndicat des employés de production du Québec
et de l’Acadie v. Canada (Human Rights Commission), 1989 2 S.C.R. 879.
The failure of an arbitrator to give the parties a fair opportunity to argue
costs has been held to be a denial of natural justice: Ridley Terminals Inc.
v. Minette Bay Docking Ltd. (1989), 40 B.C.L.R. (2d) 115 (S.C.), aff’d on
other grounds (1990), 45 B.C.L.R. (2d) 367 (C.A.).
50 Pursuant to s. 11(2) of the Act, the Arbitrator may specify that
costs include the actual reasonable legal fees incurred by a party. The
present issue is not the Arbitrator’s jurisdiction to make such an award
but whether he followed the rules of natural justice in making his
51 BC Rail is not entitled to recover more than its objectively reasonable
legal fees. The fact that a solicitor has billed a certain sum does not
necessarily make the fee reasonable. This is of particular importance
when the other party to the litigation is paying the bill. As noted by
Seaton J. A. in Royal Trust Corporation of Canada v. Clarke (1989), 35
B.C.L.R. (2d) 82 (C.A.) at 88:
The party who made that arrangement, the successful party in the litigation,
might have made a very poor bargain. The bill rendered pursuant
to the agreement might be justifiable between the solicitor and
his client but thoroughly unjustifiable to impose on another. The
client might have demanded more work to be done than was appropriate
in the circumstances, or more lawyers and more expensive
lawyers to be retained than were appropriate in the circumstances. Of
course, at the taxation, if the other litigant is paying the bill the client
will be particularly pleased to see that the bill is as high as possible.
52 In order to determine if the legal fee is objectively reasonable a party
must know the particulars of what the solicitor did. This requires an examination
of the lawyer’s work and disclosure of their file. I adopt the comments
of Kirkpatrick J., (as she then was), in Canadian National Railway Company
et al v. A.B.C. Recycling Ltd. (2005), 2005 BCSC 1559, 47 B.C.L.R. (4th)
185 (S.C.) at ¶ 28:
… I cannot conceive that a proper examination of CN’s reasonably
incurred legal costs could be made without disclosure of CN’s file and
examination of lawyers in respect of the file and matters arising therefrom.
The simple presentation of a clients’ bill to the Trial Judge (as