Costs in the SDRCC Regime: To The Victor Go The Spoil?
by Leanne E. Standryk

An overview of Costs  
Costs or “court costs” in a matter of civil litigation sometimes causes confusion or misunderstanding. Costs are an amount required to be paid by one party to the successful party to defray or cover a portion of the successful party’s legal expenses. If awarded by a court, costs may be on one of two scales:

• partial indemnity costs which will cover only a portion of a Party’s actual bill for legal fees, or

• substantial indemnity costs which are intended to cover most, but not all, of a Party’s bill for legal fees.

In civil matters a list of factors to consider in awarding costs is outlined in Rule 57 of the Rules of Civil Procedure, which was recently expanded to take into consideration the principles of indemnity and reasonable expectations of the parties.   Rule 57 (Endnote 1) was amended to make it clear that the court may award costs in an amount which represents full indemnity (although rarely applied).  In general the Court has absolute discretion in award the amount of costs (Endnote 2) but must do so with regard to the factors set out in Rule 57.01.  The overall principle in the determination of costs is whether they are “fair and reasonable” in the circumstances. (Endnote 3)

Two additional factors have been added to Rule 57.01 as considerations in determining costs:

• The principle of indemnity: including where applicable the experience of the lawyer for the party entitled to costs as well as the rates charged and the hours spent by the lawyer; and
• The expectations of the unsuccessful party; the amount of costs that an unsuccessful party could reasonably expect to pay in relation to the proceeding

The general rule of thumb is for Courts to award costs on a partial indemnity costs scale to a successful party.  Costs are awarded on a substantial indemnity basis only in exceptional cases -  for example, where the conduct of a party has unduly delayed the length of the proceeding or the complexity of the case, a party has acted in an unprofessional manner, has taken a step in a proceeding that was considered improper, vexatious or unnecessary, or where a losing party has refused reasonable offers to settle etc. (Endnote 4)

Costs in Sport Related Disputes: the SDRCC Regime

In sports related disputed before the SDRCC, there are no specific tariffs that specify the amount of costs that may be reasonable.  It is a matter of discretion solely within the authority of the arbitrator deciding the matter.  The trend in awarding costs has been to focus on the mandate of the SDRCC which is to ensure access to independent alternative dispute resolution for all participants in the Canadian sport system at the national level which is fair and equitable for all and offers a low-cost mechanism throughout Canada in both official languages. Costs awards under the SDRCC regime typically fell within the range of $1,000.00 to $3,000.00; however, recently this seems to have changed.  The recent decision of Arbitrator Picher in Poss v. Synchro Canada et al (Endnote 5) appears to be a marked departure from the norm in cost awards before the SDRCC requiring the Respondent NSO to pay 66 2/3% of the Claimant’s costs despite an award dismissing her appeal to the SDRCC. 
Perhaps Arbitrator Picher is taking a step towards bringing cost awards in sports related disputes in line with those awarded by courts in civil proceedings.  No matter the objective or rationale behind the award, it will have serious consequences for NSO’s and will change the landscape of cost awards within the SDRCC regime.   

The Jurisdiction to Award Costs

Key Provisions

Proceedings before the SDRCC are governed by the Canadian Sport Dispute Resolution Code (the “Code”) and, the laws of the Province of Ontario.  The arbitrator derives his/her jurisdiction and authority from the Code and the Ontario Arbitration Act, 1991 S.O. 1991, C.17.

The Code provides the following provision with respect to costs giving the Arbitrator discretion to consider and award costs:

Section 6.23 Costs

• Subject to Subsection 6.23(b) below, each Party shall be responsible or his or her own costs and that of his or her witnesses.  A party is entitled to French/English interpreter for Arbitration.  Any interpreter requested for Arbitration shall be selected and paid for by the SDRCC.
• The Panel shall determine whether there is to be any award of costs and the extent of any such award.  When making its determination, the Panel shall take into account the outcome of the proceedings, the conduct of the Parties and their respective financial resources, intent, settlement offers and each Party’s willingness in attempting to resolve the dispute prior to Arbitration.
• The filing fee retained by the SDRCC can be taken into account by a Panel if any costs are awarded.

In addition to Subsection 6.23, further guidance may be taken from the provisions of the Arbitration Act as follows:

Power to award costs
54.  (1)  An arbitral tribunal may award the costs of an arbitration.
What constitutes costs
(2)  The costs of an arbitration consist of the parties’ legal expenses, the fees and expenses of the arbitral tribunal and any other expenses related to the arbitration.

The provisions in both the Code and the Act are not intended to provide the Parties with an exhaustive list of factors that an Arbitrator will consider.  In addition to the considerations outlined in the Code and the Arbitration Act, arbitrators will refer to the general principles of law, bearing in mind the purpose for which the Code has been adopted, namely for application in sport-related disputes in Canada (Endnote 6) maintaining focus on the cost effectiveness of and accessibility to the SDRCC program.

Who May be entitled to an award of Costs?

Who then is entitled to costs?  Subsection 6.23 is silent on who is entitled to an award of costs; however, the general rule of thumb is that any Party may request costs of the proceeding.  Party and/or Parties is defined in Article 1 subsection 1.1(bb) of the Code as follows:

(bb) “Party or Parties” << PArtie ou Parties >> means:

• Any Person or NSO participating in a Mediation, Arbitration or Med/Arb;
• Any Member or NSO using the services of the Resolution Facilitator to help resolve a dispute;
• Any Person who is accepted by the Panel as an Intervenor or Affected Party;
• In connection with Doping Disputes or Doping Appeals, (A) the Member whom the CCES asserts to have committed a violation of the Anti-Doping Program, (B) the CCES, (C) the Governmen of Canada, (D) the relevant international federation, (E) the World Anti-Doping Agency (“WADA”), or (F) an applicant for a Therapeutic Use Exemption (“TUE”), as applicable;
• The Government of Canada, in connection with Sports related dispute related to the application of the Athlete Assistance Program (“AAP”) managed by Sport Canada.

(cc) “Person” << Personne>> means a natural person or an organization or other entity.
The Code therefore defines Party broadly and therefore a cost award could be requested and granted to any Party involved in the sports-related dispute.  This is significant - consider the potential impact in a selection or carding matter where the dispute may involve not only the two main parties but a multitude of Affected Parties, particularly in a team sport.

A Practical Look at the Key Provisions

The general principle under the Code, subsection 6.23(a) is that each party should be responsible for his or her own costs. (Endnote 7) However the subsection must be read in its entirety.  The language outlined in Subsection 6.23(b), “the Panel shall determine” is mandatory language requiring, through the use of the word “shall”, the Panel to determine whether there is to be an award of costs.  Therefore the presumption set out in 6.23(a) that each party shall be responsible for his or her own costs is a rebuttable presumption requiring each party to prove their own entitlement to cost taking into consideration those factors set out in the Code and the applicable case law.

Arbitrator Pound considered the application of 6.23 in its entirety stating:

I think that the article must be read in its entirely and in the context of its purpose, which is to provide an easily accessible means to resolves port related disputes, many (if not most) of which will involve athletes.  The overwhelming number of cases can be readily resolved by sport related individuals in the presence of an independent arbitrator.  In such cases, the costs should not be significant and there has been a tendency on the part of arbitrators under the Code and its predecessor not to award costs, particularly when the athletes are the losing parties.  I think that is generally a reasonable approach and it is certainly one that I have favoured in the great majority of cases in which I have acted as arbitrator.
But there are cases in which sport organizations have acted in ways that have financially prejudices athletes and in which it is appropriate that they assume some of the financial responsibilities for those actions.  There has to my knowledge been a case in which the position taken by one athlete with respect to two others had been found to have been entirely without merit and which had caused financial prejudice to the other athletes.  There it was appropriate that some contribution to the resulting expenses be assessed against the athlete that caused the problem. (Endnote 8)
Accordingly, costs are not awarded as a matter of right. A party wishing to pursue an award of costs must specifically request costs and provide evidence and/or factual support to the arbitrator on each of the factors s/he must consider relevant to the determination.  Keep in mind that the determination of the issue is carried out on a case by case basis, referencing factors outlined specifically in subsection 6.23(b), section 54 of the Arbitration Act and the case law that has developed on point and that may be similar in fact and nature. 

•  The overall principle in the determination of costs is whether they are “fair and reasonable” in the circumstances. (Endnote 9)  In determining what is fair and reasonable the Ontario Court of Appeal in Boucher stated that “the expectation of the parties concerning the quantum of a cost aware is a relevant factor.” (Endnote 10)  The Court declined to elaborate further on what is “fair and reasonable” by adding:

•  I refrain from attempting to articulate a more detailed of formulaic approach.  The notions of fairness and reasonableness are embedded in the common law.  Judges have been applying these notions for centuries to the factual matrix of particular cases.

This statement provides us with little or no guidance and may, taking the liberty to paraphrase the comments of the Honourable Justice Armstrong in Boucher, be likened to the U.S. Supreme Court’s definitional treatment of “obscenity” - “you cannot define it but you know it when you see it”.  This definitional approach may be of assistance to those individuals and their counsel who find themselves litigating within the formal trappings of the civil courts before Judges that have a wealth of experience in determining what is or is not reasonable in any given circumstances.  However this general principle which has been applied in the sport dispute arena provides little guidance to those parties before the SDRCC and what is fair and reasonable.  How can we resolve this ambiguity? 
The principle enunciated in Boucher was applied by Arbitrator Pound in the Hyacinthe case.  Arbitrator Pound was requested to consider a cost award made on behalf of the Claimant for substantial indemnity costs.  The Claimant had incurred approximately $30,000.00 in legal fees.  In considering an appropriate award, the adjudicator confirmed that substantial indemnity costs are awarded in exceptional circumstances.  The adjudicator also states that consideration of what is fair and reasonable must also focus on the mandate and purpose of the SDRCC.  Arbitrator Pound concluded that the Claimant was entitled to an award of costs in the sum of $2,500.00.

In the case of Zeilstra v. Softball Canada (Endnote 11), Arbitrator Smith awarded the Applicant “her costs, properly documented, relating to this proceeding in the amount not to exceed $2,500.00”.
In Wilton v. Softball Canada (Endnote 12), Arbitrator Smith awarded costs in an amount not to exceed $500.00 for each affected party but make it very clear at paragraph 16 that “this would include only legal fees and disbursements related to the preparation for and attending the Arbitration.  If the Parties did not incur such costs, no costs are payable.”

Against this backdrop of determining what is fair and reasonable in the circumstances we turn now to the February 2008 decision of Arbitrator Michel Picher in Poss v. Synchro Canada, referred to earlier.  As previously indicated, despite its success in having the Claimant Poss’s application to SDRCC dismissed, Arbitrator Picher awarded the Respondent to pay 66 2/3% of the Claimant’s “reasonable costs” and 100% of the Affected Parties “reasonable costs”. Remember that although costs are not an automatic entitlement that generally the successful party should be awarded its costs.

The decision in Poss has the potential to open the floodgates of increased liability for cost awards against national sport organizations, the Party perceived through natural assumption to have deeper pockets and the ability to pay despite the reality that none of the parties involved in sport disputes at the amateur level have significant discretionary funds available to satisfy an award of costs.  At the time of writing this paper the issue of costs in the Poss decision were still outstanding however the following is offered as guidance to NSO’s in arguing what is reasonable: 

• Where counsel is involved, consider requesting disclosure of the lawyers account including a detailed account of the amount of time spent with respect to each docket entry together with counsel’s hourly rate and year of call, and the hourly rates and experience of any law clerk and/or assistant who may have docketed time to the file;
• Review the account to ensure that the time charged and included in the account relates only to the Arbitration before the SDRCC and not to any internal appeal that may have taken place pursuant to the NSO’s internal appeal policy (Endnote 13);
• Ensure that there is no duplication in the dockets/time entries. Several amateur athletes seek the support and assistance of family members who may be involved in instructing counsel.  Time and/or entry’s may show that counsel has had to explain or discuss matters with several individuals other than the client;
• Dockets must be accurate. Review each docket or time entry to ensure that there is sufficiently precise description of the task performed.  If counsel has not taken care to ensure that his/her dockets are accurate the claim of what is “reasonable” should diminish accordingly.  Carefully scrutinize the dockets and challenge vague descriptions;
• Watch for double docketing of time.

When requesting costs payable by an unsuccessful party, maintain the above-noted points in mind.  Be prepared to address how much you will claim, the conduct of any party that tended to shorten the duration of the proceeding or that may have exacerbated the potential for settlement or diminished the standard of professionalism between the parties and their counsel.  Consider whether any of the parties were in breach of the rule of confidentiality of proceeding as required by the Code.

What one must also consider is that despite the mission of the SDRCC, to provide a cost-effective mechanism for resolving sports disputes in Canada, legal counsel is increasingly involved in advocating on behalf of the parties.  Parties are more sophisticated, recognizing their entitlement to seek counsel in light of the significant consequences and/or impact of the tribunal award.  Various cases are now requiring parties to make submissions concerning the application of the subsections of the Code, evidentiary issues that arise during the course of the hearing, questions regarding disclosure of relevant documents etc.  Several of the principles relevant to argument on these issues deal with rules and principles of law that are outside the expertise of the general lay person.

Accordingly, although the SDRCC process has the capability to and does achieve, in most cases, the mission of affordable dispute resolution, thereto is the very real potential that the expenses associated with resolving a dispute can escalate.  As a result, the best offence on the issue of costs is ensuring that you come to the SDRCC prepared to prove what is fair and reasonable in the circumstances of your particular case.

Endnotes