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

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.

bc court of appeal, court costs, Lawyer Responsible for Court Costs, Nazmdeh v. Spraggs, New BC Supreme Court Civil Rules, New BC Supreme Court Rules, Rule 14-1(33), Rule 57(37), Unnecessary steps in litigation

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