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Erik MagrakenThis Blog is authored by British Columbia ICBC injury claims lawyer Erik Magraken. Erik is a partner with the British Columbia personal injury law-firm MacIsaac & Company. He restricts his practice exclusively to plaintiff-only personal injury claims with a particular emphasis on ICBC injury claims involving orthopaedic injuries and complex soft tissue injuries. Please visit often for the latest developments in matters concerning BC personal injury claims and ICBC claims

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Posts Tagged ‘Rule 14-1(33)’

BC Court of Appeal Discusses When Special Costs Against Lawyers Personally Should be Ordered

September 19th, 2018

In exceptional circumstances lawyers can be ordered to be personally on the hook for costs when litigation goes awry.  Today the BC Court of Appeal discussed when such orders are warranted and when they are not.

In today’s case (Nuttall v. Krekovich) the Plaintiff was seriously injured in a hit and run accident.  A lawsuit was started suing ICBC as a nominal defendant pursuant to s. 24 of the Insurance (Vehicle) Act.  As the litigation progressed the Plaintiff’s lawyer came to believe that the Defendant may have been the driver and brought an application to add him to the lawsuit.  Shortly after obtaining this order the lawyer realized he was mistaken and discontinued the lawsuit against the Defendant.

The Defendant sought costs against the lawyer personally and the Chambers judge made such an order finding  the lawyers actions were “indefensible and an abuse of process meriting sanction in the form of an order of special costs payable by him personally”.

The lawyer successfully appealed the order with the BC Court of Appeal noting the chambers judge made several errors in ordering special costs against the lawyer.  In discussing the scope of special costs being ordered against a lawyer personally BC’s highest court provided the following reasons:

[25]         It is my view that the chambers judge made several errors that warrant intervention by this Court.

[26]         First, special costs have a punitive or deterrent element and are only appropriate where the conduct in issue is deserving of punishment or rebuke. This well-known principle stems from numerous cases, most recently enunciated in J.P. v. British Columbia (Children and Family Development), 2018 BCCA 325 at para. 28. The chambers judge erred in principle by failing to consider the cautious approach to an award of special costs against a lawyer personally, as well as the kind of reprehensible conduct that would justify such an award, mandated by the Supreme Court of Canada in Young v. Young, [1993] 4 S.C.R. 3 and more recently in Quebec (Director of Criminal and Penal Prosecutions) v. Jodoin, 2017 SCC 26.

[27]         In Young the court directed judges to be “extremely cautious” in awarding costs personally against lawyers given their duties to guard confidentiality of instructions and to bring forward with courage even unpopular causes:

… A lawyer should not be placed in a situation where his or her fear of an adverse order of costs may conflict with these fundamental duties or his or her calling.

[28]         In Jodoin, the court confirmed that the threshold for exercising the power to award costs against lawyers is high, such that there must be a finding of reprehensible conduct by the lawyer. Reprehensible conduct “represents a marked and unacceptable departure from the standard of reasonable conduct expected of a player in the judicial system” (at para. 27). Mr. Justice Gascon, for the majority, described the kind of conduct that would justify such an order at para. 29:

[29]      In my opinion, therefore, an award of costs against a lawyer personally can be justified only on an exceptional basis where the lawyer’s acts have seriously undermined the authority of the courts or seriously interfered with the administration of justice. This high threshold is met where a court has before it an unfounded, frivolous, dilatory or vexatious proceeding that denotes a serious abuse of the judicial system by the lawyer, or dishonest or malicious misconduct on his or her part, that is deliberate…

[29]         Consistent with these decisions, this Court has long held that such orders should be made only in “very special circumstances”, and not on the basis of mistake, error in judgment or even negligence: see Hannigan v. Ikon Office Solutions Inc. (1998), 61 B.C.L.R. (3d) 270 (C.A.); Pierce v. Baynham, 2015 BCCA 188 at para. 41.

[30]         Second, the chambers judge erred in concluding that Mr. Krekovic’s failure to disclose the entire circumstances of his investigation was in itself sufficient to justify an order for special costs. A special costs order is not justified only because counsel fails to disclose evidence that ultimately proves to be material or incorrect: see Pierce at para. 43. The chambers judge made no finding of dishonesty, accepting that Mr. Krekovic’s motivation to bring the application was “in pursuance of his duty to his client”. Given that, his failure to disclose more about his investigation does not constitute reprehensible conduct sufficient to justify an award of special costs. This is particularly so in the context of the evidence in the application that Mr. Krekovic clearly informed the court that his own investigation had not yielded any reliable information and he was relying only on information provided to him from another lawyer, the basis for which had not been disclosed.

[31]         Moreover, I cannot agree that disclosure of further information would necessarily have yielded a different outcome in the application. The chambers judge placed considerable importance on “the discrepancy between the date of birth that he had given for the Mr. Dhillon identified by Mr. Folick, and the date of birth of the Mr. Dhillon whom his investigation had previously identified as a potential defendant”. In fact, there was no discrepancy in the most recent date of birth provided by the investigator, Mr. Loncaric, and the date of birth later provided by Mr. Folick. The only discrepancy was with the earlier information Mr. Loncaric had given, which had not been confirmed. Had the application judge been informed of these or other details – such as the inconclusive information pointing to another Mr. Dhillon – the order may have nonetheless been granted. It is also important, in my view, that Mr. Dhillon did not attend himself to oppose the application. Instead, the application was opposed only by ICBC, who put the issue of the sufficiency of the information squarely before the court.

[32]         Additionally, Mr. Krekovic’s conduct after the order was granted demonstrates an effort to be prudent. He did not enter the order or serve the amended notice of civil claim without making further inquiries of Mr. Folick’s office about the reliability of the information, and as soon as he learned that the information was in fact incorrect, he advised Mr. Dhillon’s’ counsel that the action would be discontinued against him.

[33]         In my opinion, Mr. Krekovic’s conduct was far from being characterized as reprehensible.

[34]         Finally, the chambers judge referred to Rule 14-1(33) as allowing for an order for special costs. Rule 14-1(33) gives the court discretion to make various orders if it considers that a party’s lawyer “has caused costs to be incurred without reasonable cause, or has caused costs to be wasted through delay, neglect or some other fault”. One of those orders is that the lawyer “be personally liable for all or part of any costs that his or her client has been ordered to pay to another party”.

[35]         This rule, which does not distinguish between party and party costs and special costs, has expanded the scope of conduct which might support a costs order against a lawyer. As explained in Nazmdeh v. Spraggs, 2010 BCCA 131, there is no requirement for “serious misconduct” to justify an order that a lawyer pay party and party costs, but it is still necessary to find reprehensible conduct on the part of the lawyer to justify an order for special costs. Moreover, the lower standard mandated by Rule 14-1(33) must also be exercised with restraint, as the Court reasoned at paras. 103‒104:

[103]    The power to make an order for costs against a lawyer personally is discretionary. As the plain meaning of the Rule and the case law indicate, the power can be exercised on the judge’s own volition, at the instigation of the client, or at the instigation of the opposing party. However, while the discretion is broad, it is, as it has always been, a power to be exercised with restraint. All cases are consistent in holding that the power, whatever its source, is to be used sparingly and only in rare or exceptional cases.

[104]    The restraint required in the exercise of the court’s discretion is not to be confused with the standard of conduct which may support its use. Care and restraint are called for because whether the unsuccessful party or his lawyer caused the costs to be wasted may not always be clear, and lawyer and client privilege is always deserving of a high degree of protection.

[36]         In conclusion, it is my view that Mr. Krekovic’s conduct in making the application to add Mr. Dhillon as a defendant did not approach the kind of reprehensible conduct required to justify an order for special costs against him as counsel.

[37]         I would allow the appeal and set aside the order of the chambers judge that Mr. Krekovic personally pay the special costs of Mr. Dhillon. I would also award costs to the appellant of this appeal and for the application for special costs in the court below.


Lawyer Ordered to Pay Costs Personally for "Shoddy Piece of Counsel Work"

January 16th, 2013

In an illustration of a seldom used power, reasons for judgement were released this week by the BC Supreme Court, Victoria Registry, ordering a Plaintiff’s lawyer to pay costs to Defendants personally pursuant to Rule 14-1(33) after bringing an unsuccessful application to renew a lawsuit.

In this week’s case (Drover v. BCE Inc.,) the Plaintiff sued various Defendants challenging system access fees collected by cellular companies.   It was a proposed class action.  The lawsuit was filed in 2004 and various Defendants were served the lawsuit via fax.  Some Defendants questioned the propriety of fax service to which the Plaintiff’s lawyer responded “we believe the Court will accept service by Facsimile“.

No steps were taken to perfect service until 2012 when the matter was brought before the Court with the Plaintiff asking the Court to permit “the plaintiffs to serve the statement of claim”.  The Court refused noting that the Plaintiff’s lawyer “did not bother to consider the relief that might be available under the Rules.  Instead, he seemed to be content with putting a general concept in his application in the hope of attracting the court’s sympathy.”  The Court found this was “unacceptable” and dismissed the application after canvassing the factors under Rule 3-2(1).

Mr. Justice Weatherill awarded multiple Defendants costs and further ordered that the Plaintiff’s lawyer personally pay these.  In doing so the Court provided the following reasons:

[62]         In my view, this is an exceptional case.  The conduct of counsel for the plaintiffs has caused costs to be wasted through delay and neglect.  Plaintiffs’ counsel neglected this action for over 8 years.  When he got around to dealing with it by bringing this application, he failed to set out the proper relief.  Furthermore, the application was not supported by any evidence explaining either the delay or the failure to comply with the Rules regarding the need for an endorsement and proper service.  Moreover, the application was brought against defendants against whom there was no basis for the order(s) sought.  To say that this was and has from the outset been a shoddy piece of counsel work would be an understatement.

[63]         I am ordering that E.F. Anthony Merchant, Q.C. be personally liable for the foregoing awards of costs, payable forthwith.


Protection of the Public – Holding a Lawyer Personally Liable for Unnecessary Court Costs

March 17th, 2010

Can a lawyer be held personally liable to his client or to the opposing party for Court Costs incurred because of unreasonable steps taken in a lawsuit?  The answer is yes and today the BC Court of Appeal provided lengthy reasons addressing this important issue.

In today’s case (Nazmdeh v. Spraggs) the lawyer represented a client in a personal injury lawsuit.  A number of pre-trial applications for discovery were brought by the defence lawyer and these were resolved through Chambers Hearings.   One of the applications was for interrogatories and another demanded particulars.  The Court granted these motions and held that the lawyer for the Plaintiff “failed to comply with his independent obligations as counsel in response to the interrogatories and demand for particulars…..the lawyer had failed to take positive steps to meet his obligations“.

As a result the lawyer was ordered to personally pay costs to the Defendant.  This order was made under Rule 57(37) which holds as follows:

(37)  Where the court considers that a solicitor for a party has caused costs to be incurred without reasonable cause, or has caused costs to be wasted through delay, neglect or some other fault, the court may do any one or more of the following:

(a)        disallow any fees and disbursements between the solicitor and the solicitor’s client or, where those fees or disbursements have been paid, order that the solicitor repay some or all of them to the client;

(b)        order that the solicitor indemnify his or her client for all or part of any costs that the client has been ordered to pay to another party;

(c)        order that the solicitor be personally liable for all or part of any costs that his or her client has been ordered to pay to another party;

(d)        make any other order that the court considers appropriate.

The Plaintiff’s lawyer challenged this finding and the case was brought before the BC Court of Appeal.  He argued that a lawyer should only face such punishment if his/her conduct was “reprehensible“.

The case was argued before a 5 member panel of the BC High Court and even the Law Society of BC intervened arguing that the Chambers Judge was wrong in making such an order and that it would have a “chilling effect on litigation and on advocacy…and ultimately undermine collegiality“.

The Court of Appeal rejected these arguments and dismissed the appeal.  In doing so the BC High Court provided the following instructive reasons on when a lawyer can be personally responsible for Court Costs under Rule 57(37) for steps taken in a BC Supreme Court Lawsuit:

[101] Prior to the enactment of the Rules, the Supreme Court of British Columbia had power to make orders against lawyers to pay costs personally under the court’s inherent jurisdiction.  Such orders were generally made only in cases of “serious misconduct”. The Rules, particularly Rule 57(30) and its successor Rule 57(37), have, however, expanded the scope of conduct which might support costs orders against lawyers. The Court now has a discretion to order a lawyer to pay costs where he has “caused costs to be incurred without reasonable cause, or has caused costs to be wasted through delay, neglect or some other fault”.

[102] Under Rule 57(37), mere delay and mere neglect may, in some circumstances, be sufficient for such an order against a lawyer. Under the Rule there is no requirement for “serious misconduct”, the standard required under the court’s inherent jurisdiction. The requirement in Young and in Kent of “reprehensible” conduct applies only in cases of orders against a lawyer for special costs. Young and Kent are not authority for requiring such a standard when making an order for party and party costs against a lawyer. In such circumstances, the lower standard mandated by the Rule is sufficient.

[103] The power to make an order for costs against a lawyer personally is discretionary. As the plain meaning of the Rule and the case law indicate, the power can be exercised on the judge’s own volition, at the instigation of the client, or at the instigation of the opposing party. However, while the discretion is broad, it is, as it has always been, a power to be exercised with restraint. All cases are consistent in holding that the power, whatever its source, is to be used sparingly and only in rare or exceptional cases.

[104] The restraint required in the exercise of the court’s discretion is not to be confused with the standard of conduct which may support its use. Care and restraint are called for because whether the unsuccessful party or his lawyer caused the costs to be wasted may not always be clear, and lawyer and client privilege is always deserving of a high degree of protection.

[105] Nothing in these reasons is a comment upon the immunity of barristers for their conduct in court. This case is not about contempt, abuse of process or similar egregious conduct. It concerns only what a lawyer did or did not do in response to interrogatories and a demand for particulars.

[106] In my respectful view, the learned chambers judge did not err in interpreting the rule according to the plain meaning of its words.

Now to Cross-Reference:  Do the New BC Supreme Court Civil Rules which come into force change this judgment?  Probably not.  Rule 57(37) is reproduced with almost identical language and can be found at Rule 14-1(33) of the New Rules.

The ability of parties to use interrogatories as a means of pre-trial discovery has been restricted under the New Rules so this triggering event is unlikely to give rise to costs consequences however the test set out by the BC Court of Appeal will likely remain good law after the new Rules come into force.