An Arbitration determination was recently released addressing the jurisdiction of an UMP Arbitrator to award disbursements for expenses for items initially used in a tort trial then subsequently used in an UMP Arbitration. In short Arbitrator Camp held that there is jurisdiction for recovery of such costs provided they were reasonably incurred.
In the recent case (Undisclosed v. ICBC) the claimants were awarded damages in a Washington State trial. The Defendant was underinsured. When the Claimants applied to ICBC for payment they needed to re-try the value of their cases pursuant to BC law. Although their damages were assessed at a far lesser value than they were in the Washington State trial, they nonetheless were successful in proving their damage claims. The Claimants relied on much of the same evidence in the ICBC UMP hearing as they did in the initial trial.
Following arbitration the Claimants applied for an order that ICBC pay for their disbursements incurred in proving their damages claim. ICBC opposed arguing that the arbitrator “has no jurisdiction to award costs that would include legal fees ad disbursements in the Washington State action“. While arbitrator Camp agreed “with this bald assertion” he went on to find that he could award disbursements even for items initially used in the Washington State trial. In so concluding Arbitrator Camp provided the following reasons:
19. Dealing first with the issue of the nature of costs that I can properly award, I find that as a result of section 148.2(2) and section 148.2(3) of the Regulation, I am constrained to only awarding party and party costs and I am not permitted to award actual reasonable legal fees as specified in section 11(2)(a) of the Commercial Arbitration Act. The parties agreed that the jurisprudence stemming from the Rules pertaining to costs (now Rule 14) ought to be applied mutatis mutandus to the UMP arbitration process…
31. …An UMP arbitrator has a broad discretion to award party and party costs including reasonable disbursements that are utilized in the subject UMP arbitration process. This is the approach I adopt for the reasons that follow. The reasonable disbursements that I find are recoverable in these UMP proceedings find their genesis in the MVA which eventually gave rise to these arbitration proceedings. Yes many of these reasonable disbursements were used in the Washington State trial but they were also necessary and used in these UMP arbitration proceedings. There is no risk that there is any chance for double recovery of these disbursements by these claimants and I reiterate they are subject to the test of reasonableness.
32. Finally, Mr. Mersey made the argument that any award of party and party costs and reasonable disbursements are governed by Washington State law which, as noted above, severely restrains recoverable costs and disbursements relative to the law of British Columbia. I disagree. In my view there is no connection between entitlement of UMP claimants to party and party costs and reasonable disbursements pursuant to the British Columbia provisions of the Regulation and the Commercial Arbitration Act and the Rules of Procedure for Domestic Commercial Arbitration, and the provisions of Washington State law which severely restrains recoverable costs and disbursements. I am bound to adhere to the former.