Ontario – overlapping cost applications result in denial of most of costs claimed

In Iqbal v. Mansoor, 2019 ONCA 110, Ontario’s Court of Appeal declined to hear an appeal of a costs order, holding that appellant had refused to seek the required leave to appeal such an order.  Regarding the substance of appellant’s claim, the Court observed how the Superior Court had already dealt with costs in an earlier order.  The various reasons in the sequence of decisions identify opportunities for arbitral parties to either reserve or clarify the issue of costs incurred up to each phase of their dispute resolution.

The underlying contract between Mr. Musharraf Iqbal (“Mr. Iqbal”) and Mr. Sohail Khawaja Mansoor (“Mr. Mansoor”) and their arbitration clause do not appear in reasons posted online.  The Ontario Superior Court did, on consent, issue a June 15, 2018 order (not available online) referring the parties to arbitration.

Following the arbitration process, the arbitrator issued a January 25, 2017 award (“Award”), ruling in favour of Mr. Iqbal.  Having invited submissions on costs, the arbitrator granted costs in favour of Mr. Iqbal in the amount of $20,000.00.

Mr. Mansoor applied for leave to appeal the Award and Mr. Iqbal applied to recognize and enforce the Award under section 50 of the Arbitration Act, 1991, SO 1991, c 17.  In his February 5, 2018 decision in Mansoor v. Iqbal, 2018 ONSC 884,, Mr. Justice Gregory M. Mulligan (i) dismissed Mr. Mansoor’s application for leave to appeal, (ii) granted Mr. Iqbal’s application to recognize and enforce the Award and (iii) invited submissions on costs.

Having received submissions on costs, Mulligan J. in a March 14, 2018 decision (not available online) awarded Mr. Iqbal $2,500.00 in costs for the motions before him.  Mulligan J. spoke to Mr. Iqbal’s claim for costs.

[4] The Arbitrator Donald R. Cameron, Q.C. made an award January 25, 2017.  After hearing submissions from Mr. Iqbal, then represented by counsel, made an award of $20,000 for costs.  The matter has been referred to arbitration, on consent of all parties, by the order of Justice Sutherland.  Justice Sutherland did not reserve the issue of costs. 

[6] In my view the issue of costs with respect to any of the previous proceedings was squarely before the Arbitrator.  Upon receiving submissions he made a final award of $20,000 to Mr. Iqbal.  Based on Mr. Iqbal’s representations leave to appeal the arbitration award was not granted therefore the award was final.  I am satisfied that that award fully dealt with any costs considerations up to and including the Arbitrator’s decision.

Mr. Iqbal did not seek leave to appeal the Award regarding the disposition on costs.

Following the March 14, 2018 decision by Mulligan J., Mr. Iqbal obtained an April 3, 2018 e-mail from the arbitrator who had issued the Award.  In the e-mail, the arbitrator declined to hear Mr. Iqbal’s application for an order for additional costs.

I awarded costs of $20,000 on March 29, 2017.  I have no further jurisdiction.  I cannot award costs for any efforts prior to the arbitration, nor can I award costs for the appeal.

Mr. Iqbal then re-applied to the Superior Court for an order granting him costs for the entire proceeding which he had commenced in February 2004, seeking $107,317.00. He had already applied to Mulligan J. for $109,817.00 but reduced his clam by $2,500.00 as awarded in the March 14, 2018 decision.

In his June 22, 2018 decision in Iqbal v. Mansoor, 2018 ONSC 3949, Mulligan J. dismissed Mr. Iqbal’s application for costs.  Mulligan J. held that he did not have jurisdiction to deal with costs as he had already dealt with the issue in his earlier March 14, 2018 decision, referring to sections 132 and 133 of Ontario’s Courts of Justice Act, RSO 1990, c C.43.  He viewed Mr. Iqbal’s application as an attempt to appeal the costs award Mulligan J. had already heard.  Mulligan J. also observed that the contents of the arbitrator’s e-mail had been available to Mr. Iqbal before his application to Mulligan J. and that evidence could have been filed earlier with the court.

[10] I am satisfied that I do not have jurisdiction to deal with costs.  The issue has been dealt with by me.  Mr. Iqbal’s costs award from the arbitrator was upheld.  He did not seek leave to appeal that costs award.  Then he received a further costs award with respect to the respondents’ unsuccessful motion to seek leave to appeal the arbitrator’s award.

Mulligan J. dismissed Mr. Iqbal’s application and fixed costs against him in the amount of $2,500.00.

Mr. Iqbal sought to appeal that June 22, 2018 decision.

The Court summarized the procedural history of the arbitration and court litigation.  (Note: In his June 22, 2018 reasons, Mulligan J. refers to his earlier decision as dated “March 14” whereas the Court of Appeal refers to it as being dated “March 4”).  Despite Mr. Iqbal’s submissions, the Court did not consider that Mulligan J. had refused to hear Mr. Iqbal’s application because it was an appeal of Mulligan J.’s own, earlier order.  Rather, the Court considered that Mulligan J. had heard Mr. Iqbal’s follow up application and that there was no reason for Mulligan J. not to hear the application.

The Court also set out exchanges between the Court’s Senior Legal Officer and Mr. Iqbal regarding the nature of the order in first instance (a costs order) and the procedural requirement to seek leave to appeal.  Despite the Senior Legal Officer’s advisement, Mr. Iqbal did not apply for leave to appeal. 

[11] In our view, the appellant was in error. An appeal of a costs decision requires leave. In spite of being advised of this deficiency, the appellant chose to proceed. In the absence of leave, this court has no jurisdiction and the appeal is quashed.

The Court quashed the appeal and ordered Mr. Iqbal to pay $2,500.00 as costs for the appeal to that Court.

urbitration : The reasons identify three (3) points at which the issue of costs – before or after the arbitration – could have been made the express mention of a either a reserve for a later date or decision or at least a clarification. 

First, the court’s June 15, 2016 referral to arbitration on consent contained no mention offered by the parties to that consent of any reserve of costs by the court.  

Second, Mulligan J. at para. 5 of Iqbal v. Mansoor, 2018 ONSC 3949 observed that it “is unclear what submissions he had made to [the arbitrator]”.   The scope of those submissions might have shed light onto whether the pre-arbitration costs had been before the arbitrator or not.

Third, Mr. Iqbal omitted to provide Mulligan J. with the information given by the arbitrator in his April 3, 2018 e-mail regarding the non-existent jurisdiction for additional costs. 

Each of these points presented an opportunity to address or clarify the issue of costs leaving the parties to dispute the $107,317.00 which Mr. Iqbal argued had not been addressed by either the arbitrator or the court.