You are badly injured through the alleged negligence of others. If you win at trial you can get north of $400,000 in damages. If you lose you will literally lose your house to cover the costs of litigation. When faced with this stark reality a settlement offer that pays less than 1o cents on the dollar may very well be reasonable. The BC Court of Appeal released reasons for judgment today saying as much.
In today’s case (Deo v. Vancouver) the infant plaintiff suffered serious injuries leaving him partially blind while at school. He sued for damages and was largely unsuccessful on proving liability at trial. The Plaintiff’s lawyer valued the claim at over $400,000 but before the liability appeals could be heard a settlement of $35,000 was reached. The Plaintiff, being an infant, could not legally agree to any settlement and judicial permission was needed. The BC Court of Appeal noted that if the lawsuit ultimately proved unsuccessful the costs consequences would be so steep that the Plaintiff’s parents would likely need to sell their house. Appreciating this the risk-based settlement was reasonable and the Court approved it. In supporting the settlement the BC Court of Appeal provided the following reasons:
 Counsel assesses the quantum of damages for non-pecuniary loss in the range of $100,000 to $140,000 and for loss of future earnings in the range of $300,000 to $350,000. The estimate of an adverse costs award if the appeal is unsuccessful is in excess of $100,000.
 Isaac lives with his parents in a house in East Vancouver. If costs are awarded against him, they would have to sell the house to pay the costs. His father says that he has weighed the prospects of success of the appeal against the risk of losing the home and the impact that would have on Isaac and the rest of the family. He says he has concluded that it is in Isaac’s best interests to accept the settlement.
 The parties have consented to the trial judge approving the solicitor’s account without costs.
 Having read the materials provided, it is our view that the settlement is a prudent one, and is in Isaac’s best interests. As was noted in Lotocky, “it is… artificial and misguided to judge the merits of the appeal in isolation from the financial ramifications that would arise from an unsuccessful appeal”: para. 69. Counsel for Isaac acknowledges the “very real” risk that the appeal on liability will be unsuccessful. In light of the serious financial consequences that would flow from an unsuccessful appeal, we agree with the assessment of counsel and that it is in Isaac’s best interests to accept the settlement.
 The settlement is approved in the terms sought. The appeal and cross appeal are dismissed as abandoned on a without costs basis to any party. The matter is remitted to the Supreme Court to Justice Riley for approval of the solicitor’s account.
I have frequently highlighted BC’s loser pays system where a losing litigant is typically ordered to pay costs to the opposing side. Reasons for judgement were released this week by the BC Supreme Court, Vancouver Registry, demonstrating that this result can be harsh and is typically unyielding to factors such as sympathy and financial hardship.
In this week’s case (Laktin v. (Vancouver) City) the Plaintiff was shot three times by police officers rendering him paraplegic. He sued however his claim was ultimately dismissed following a 5 week jury trial. Vancouver sought their costs from the Plaintiff who opposed the application arguing financial hardship. Mr. Justice Pearlman noted the loser pays system does not yield to financial concerns in and of themselves. In awarding costs the Court noted as follows:
 The plaintiff says that the defendants should be denied their costs on the basis that his life was permanently and catastrophically altered by the event of January 21, 2006 and his future care and financial support are now in jeopardy. Mr. Laktin argues that the costs of a five-week trial will impose an onerous financial burden, which the plaintiff lacks the means to satisfy. I accept that Mr. Laktin is in difficult financial circumstances, and that an order requiring him to pay costs to the defendant will be a real and heavy burden for him. While I have a great deal of sympathy for the plaintiff, the case law clearly establishes that the unfortunate personal circumstances and financial hardship of a litigant are not, standing alone, factors warranting a departure from the general rule that costs follow the event: Morris at para. 36; Chen at para. 11;Vesuna v. British Columbia (Transportation), 2011 BCSC 1618 at para. 8.
 In Robinson v. Lakner (1998), 159 D.L.R. (4th) 191, the Court of Appeal, reversing the decision of the trial judge who had limited the costs payable to the successful defendant to $1,500 because the plaintiff was in difficult financial circumstances, held at para. 5, that “financial hardship in itself is not a sound basis for departing from the usual rule with respect to costs”.
 In Cowherd v. Fraser Valley Health Region et al, 2004 BCSC 698 at para. 5, Madam Justice Ballance cited Brown v. Blacktop Cabs Ltd. (1997), 43 B.C.L.R. (3d) 76 (C.A.); Zelenski Estate v. Fairway(1998), 60 B.C.L.R. (3d) 76 (C.A.); Churchland v. Gore Mutual Insurance Co. (unreported), September 23, 1999, No. S09912, Vancouver (S.C.); and Robinson for the principle that “in general, the unfortunate personal circumstances and characteristics of a litigant are not to be taken into account by the court in exercising its discretion in making an award of costs”.
 In Morris at para. 38, Madam Justice Ker concluded that the court is unable, on any principled basis to take the plaintiff’s financial circumstances into account in determining whether to award costs.
 At para. 39, Her Ladyship cited the following passage from the Reasons for Judgment of Greyell J. in Chen at para. 15:
 To do otherwise would lead to inconsistent and no doubt unreasonable results. As Greyell J. so eloquently noted in Chen at para. 15:
 To conclude otherwise would undermine the rationale underlying Rule 14-9 and would likely lead to the promotion of litigation rather than to promote the “winnowing” function described by Hall J.A. in Catalyst Paper. It would lead to a collapse of the general principle discussed in the authorities and result in the unacceptable proposition that costs in each case would be measured not by a party’s success but by the personal financial circumstances of the litigants.
 I conclude that the plaintiff’s difficult personal circumstances and financial hardship, standing alone, do not provide grounds for the Court to depart from the normal rule that costs should follow the event…
 I conclude that there are no special circumstances in this case that would warrant a departure from the general rule that costs should follow the event.
 Accordingly, the defendant, City of Vancouver, will have costs of this action at Scale B, together with its reasonable disbursements.
A short but interesting exchange can be found at the end of reasons for judgement recently published by the BC Supreme Court, Chilliwack Registry, discussing loser pays costs and a Plaintiff’s financial circumstances.
In the recent case (Hunstad v. Cormier) the Plaintiff was injured when her bicycle was involved in a collision with the Defendant’s vehicle. She sued for damages but her claim was dismissed at trial. The Defendant sought costs but the Court declined to award these given the Plaintiff’s financial circumstances. This is an interesting development because while the financial position of parties can be considered if a formal offer has been made, it has been held that it is an irrelevant consideration in the normal course. The below brief exchange, while arguably not conclusive as it is not a final order, can arguably be used to open the door to financial hardship as a factor when considering BC’s ‘loser pays’ costs consequences:
 MR. KENT-SNOWSELL: Costs, My Lord?
 THE COURT: I am not going to order costs because of Ms. Hunstad’s financial situation. If you want to make some submissions on that, I will consider it, but I don’t think they are appropriate in the circumstances.
 MR. KENT-SNOWSELL: I will seek instructions.
 THE COURT: Thank you.
Update – July 22, 2013 – the below action was overturned on appeal with the Defendant being ordered to pay general damages, punitive damages and special costs due to his “misconduct during the trial”
Earlier this year I highlighted a judgement addressing whether a litigant blogging about witnesses during the course of a trial, and referenceing ‘fat bottomed girls’ in the process, amounted to witness intimidation.
Reasons for judgement were released today (Mainstream Canada v. Staniford) by the BC Supreme Court, Vancouver Registry, dealing with the costs consequences following the underlying trial.
Ultimately the Plaintiff’s defamation claim against the Defendant was dismissed. The Defendant would ordinarily be awarded his costs and disbursements under the BC Supreme Court’s ‘loser pays’ system. Madam Justice Adair refused to follow this ordinary course, however, finding that the Defendant’s conduct during the trial was ‘deserving of rebuke‘ and ultimately stripped him of 75% of the costs he otherwise would be entitled to. In doing so the Court provided the following reasons:
 The general rule is stated in Rule 14-1(9) of the Supreme Court Civil Rules: “costs of a proceeding must be awarded to the successful party unless the court otherwise orders.” Thus, Rule 14-1(9) continues to confirm the residual discretion of the court to deny, on a principled basis, a successful party the costs to which it would otherwise be entitled: see LeClair v. Mibrella Inc., 2011 BCSC 533 (“LeClair”), at para. 9. Where the successful party has engaged in misconduct, the outcome of the litigation is irrelevant, and the court has the power to deprive the successful party of costs…
8] The discretion conveyed to a judge under Rule 14-1(9) is extremely broad: see LeClair, at para. 30…
 I described some of Mr. Staniford’s conduct in my Reasons for Judgment as follows, at paras. 88-92:
 . . . During the trial, Mr. Staniford relaunched the GAAIA website, this time using a service provider outside of Canada. During his cross-examination, Mr. Staniford proclaimed that he would not be stopped by an injunction pronounced in this action.
 Shortly before the trial, and after the witness lists had been exchanged, Mr. Staniford accused the Ahousaht First Nation of accepting “blood money” from Cermaq in one of his Facebook postings.
 Mr. Staniford looked on the trial as an opportunity to get his message out, and he did not hold back. For example, in Internet postings during the trial, Mr. Staniford demeaned and mocked the physical appearance of three of Mainstream’s witnesses, Mary Ellen Walling, Leanne Brunt and Dr. Gallo. Mr. Wotherspoon brought the comments concerning Ms. Walling and Ms. Brunt to my attention when court was convened the morning of January 26, 2012. The matter was discussed in court and was framed (appropriately) as an issue of Mr. Staniford victimizing Mainstream’s witnesses by his insulting comments. Mr. Staniford was present during the discussion. Despite that, Mr. Staniford then repeated his comments about Ms. Walling and Ms. Brunt outside court for an interview that was published on YouTube.
 During his testimony, Mr. Staniford attempted to justify his comments about Ms. Walling and Ms. Brunt as being “very complimentary,” and said he thought Ms. Walling should be “flattered” at being labelled a “fat-bottomed girl.” The notion that Mr. Staniford would ever pay a sincere compliment to Ms. Walling is, itself, laughable and entirely unbelievable.
 In another Facebook posting during the first week of the trial, he compared the trial to a kangaroo court….
 By engaging in the conduct I described, Mr. Staniford demonstrated his disrespect for witnesses and his disdain generally for the court and the judicial process.
 Mr. Staniford’s flagrant disregard of my comments during the discussion on January 26, 2012 concerning his victimization of witnesses and in my ruling (indexed at 2012 BCSC 1609) is particularly troubling. His YouTube interview shortly after my ruling is roughly equivalent to giving the court “the finger,” as he did to Mainstream and its lawyers in response to their demand letter. Mr. Staniford’s attitude (as expressed during his cross-examination) seemed to be that since Lord Denning’s comments (which I adopted) had been made in the early 1960s, they did not apply to him and he could ignore them. Once again, Mr. Staniford demonstrated that he is a bad listener. His repetition in court, and under oath, of his ridiculous justification for his sexist and puerile comments about Ms. Walling and Ms. Brunt – that the comments were complimentary and flattering – insulted the intelligence of anyone who had to listen to it. …
 Although I consider Mr. Staniford’s misconduct in connection with the trial to be serious and clearly deserving of censure, I think that depriving the defendants of all of their costs of the action is too severe, given the dollar amounts likely involved for a 20-day trial. I have concluded that an appropriate order is that the defendants have 25% of their assessed costs and disbursements. (There should be only one set of costs for both defendants.) Depriving the defendants of 75% of their assessed costs and disbursements, in my view, reflects appropriate condemnation of Mr. Staniford’s misconduct.
Update September 25, 2013 – The below decision was upheld by the BC Court of Appeal in reasons released today
I’ve written many times about the BC Supreme Court’s “loser pays” system which generally requires a losing litigant to pay for the winner’s costs and disbursements. If a lawsuit is started on a child’s behalf and on reaching adulthood they take over the claim themselves can the former litigation guardian still be exposed to loser pays costs consequences? The answer is yes as was demonstrated in reasons for judgement released this week by the BC Supreme Court, Vancouver Registry.
In this week’s case (McIlvenna v. Viebeg) a lawsuit was commenced on behalf of an infant plaintiff in 2003. By 2009 the Plaintiff was an adult and took over the prosecution of his claim himself by filing an affidavit of attainment of majority. The matter proceeded to trial and the claim was ultimately dismissed. The Defendant was awarded costs. An issue arose as to whether the Plaintiff or the previous litigation guardian were liable to pay these. The Court held that the Litigation Guardian was liable for costs up until the Plaintiff reached the age of majority and the Plaintiff was liable from that point onward. Mr. Justice Sigurdson provided the following reasons:
 Although Bird J.A.’s comments on the liability of litigation guardians for costs in Miller were dicta, they were considered dicta. Bird J.A. concluded that an infant ratifying the action after attaining the age of majority does not inherit and replace the litigation guardian’s liability for costs. I have seen nothing in the authorities that lends support to the position that a defendant’s possible entitlement to costs from a litigation guardian disappears when the infant reaches majority. I expect that subsequent to Miller, litigation guardians starting actions (and filing affidavits at the time) understood their potential liability for costs and the fact that it continued at least up to the infant’s majority. Rule 20-2(12) and (13) do not suggest that the filing an affidavit upon attaining the age of majority removes any possible past liability of the litigation guardian for costs.
 While it is true that a possible adverse costs order may deter a person from suing as a litigation guardian, there are also policy reasons that support awarding costs in favour of successful defendants. In any event, I think the underlying law has been clear for more the 50 years that a litigation guardian assumes potential liability for costs if he or she starts an action as a litigation guardian and is not successful.
 Accordingly, my conclusion is that Shawne McIlvenna, the plaintiff’s former litigation guardian, is responsible for the costs that I have already ordered, up to February 27, 2009, when the plaintiff filed his affidavit of majority. ..
As previously discussed, a Plaintiff’s financial circumstances is not relevant when assessing “loser pays” costs consequences following trial in the BC Supreme Court (subject to the different analysis that applies when pre-trial formal settlement offers have been made). Reasons for judgement were released last week by the BC Supreme Court, Vancouver Registry, demonstrating this.
In last week’s case (Staley v. Squirrel Systems of Canada Ltd.) the Plaintiff sued the Defendant for damages due to alleged wrongful dismissal. The claim was dismissed at trial. The Defendant applied for costs to be paid with the Plaintiff opposing arguing, in part, that his poor financial circumstances should preclude such a result. Mr. Justice Williams disagreed and ordered that the Plaintiff pay the Defendant’s costs. In doing so the Court provided the following reasons:
 Regrettably, I find myself unable to accede to the plaintiff’s submissions. The Rule with respect to costs is quite fundamental. While there is some latitude for judicial discretion, the authorities make abundantly clear that the discretion must be exercised in a principled and, I would conclude, cautious manner. Deviation from the basic principle that a successful litigant shall recover must necessarily be carefully constrained…
 The third basis for his application is that he is unemployed and experiencing difficult financial circumstances.
 While no evidence is before the Court to establish precisely what his present situation is, I will accept that it is not good. I have genuine sympathy for this plaintiff. I am sure that the requirement to pay costs to the defendant will be a real burden for him in his circumstances.
 Indeed, I expect that it is frequently the case that there are substantial discrepancies between the means of parties to litigation. Unsuccessful litigants are not infrequently in difficult financial straits, and orders for costs can exacerbate that situation.
 However, I am unable to conclude that an order requiring him to pay the defendant’s costs, in accordance with the relevant tariff, $11,000, would be so “unfair and inappropriately punitive” to make the order sought. There are no special circumstances in this case which warrant an order for reduced costs or relieving the plaintiff from paying the defendant’s costs.
As previously discussed, Section 10 of BC’s Workers Compensation Act operates to generally strip you of your right to sue if you are injured in the course of your employment by someone else in the course of their employment. If this defence is raised and succeeds in a personal injury lawsuit the claim will be dismissed exposing a Plaintiff to ‘loser pays’ costs consequences. Reasons for judgement were released this week by the BC Supreme Court, Victoria Registry, demonstrating this reality.
In this week’s case (McKay v. Marx) the Plaintiff was injured in a 2005 collision. His vehicle was rear-ended by a Fed Ex vehicle. The Plaintiff sued for damages. There was no dispute that the Defendant was in the course of employment when the crash happened. The defendant argued that the plaintiff was also a ‘worker’ and therefore his right to sue was stripped away. The issue was sent to WCAT for determination who ruled that the Plaintiff was indeed a worker.
Given WCAT’s findings the Plaintiff’s lawsuit was dismissed. The Defendant applied for costs and ultimately was successful. In doing so Madam Justice Dorgan provided the following reasons:
 The circumstances in which the plaintiff found himself are unfortunate and they garner some sympathy. However, the authorities explicitly prohibit this court from denying costs by exercising discretion out of a sense of fairness or sympathy or a comparison of the relative economic strength of the parties.
 In summary, the defendants successfully pled a s. 10 Workers Compensation Act defence and are thus the substantially successful party ?? the winner of the event. The evidence as presented falls short of demonstrating such reprehensible conduct on the part of the defendants that would allow the court, in the exercise of its discretion, to depart from the general rule. Accordingly, the defendants are entitled to costs.
Section 3 of BC’s Negligence Act reduces a Plaintiff’s entitlement to costs recovery to the same proportion as a Plaintiff’s degree of fault following a collision. Reasons for judgement were released last month by the BC Supreme Court, Vancouver Registry, addressing the factors a Court can consider in deviating from this typical result and further finding that pre-trial borrowing is irrelevant to the Court’s analysis.
In last month’s case (Gowler v. Ngo) the Plaintiff was injured in two motor vehicle collisions. Following a 13 day trial a Jury found the Plaintiff 50% at fault for the first of the collisions. Damages of $250,000 were assessed and these were cut in half to take the Plaintiff’s degree of fault into consideration. The Plaintiff’s costs for proceeding to trial were over $100,000. Neither party beat their pre-trial settlement offer leaving the Court to apply section 3 of the Negligence Act.
Madam Justice Gray found it would be unfair to strip the Plaintiff of 50% of his costs given their magnitude and instead reduced the Plaintiff’s entitlement by 35%. In doing so the Court provided the following reasons:
 The factors to take into account in considering the court’s discretion are discussed in my decision in Moses v. Kim, 2007 BCSC 1820. I will talk about the Court of Appeal decision in a moment, but I will ask that the reasons for judgment, if they are reproduced, will now include paragraph 13 of the Moses v. Kim decision.
 The authorities demonstrate many factors the court has considered in exercising this discretion. Among them are the following:
(a) the seriousness of the plaintiff’s injuries;
(b) the difficulties facing the plaintiff in establishing liability;
(c) the fact that in settlement negotiations the amount offered was substantially below the ultimate amount;
(d) whether the plaintiff was forced to go to trial to obtain recovery;
(e) the costs of getting to trial;
(f) the difficulty and length of the trial;
(g) whether the costs recovery available to the plaintiff, if costs are apportioned according to liability, will bear any reasonable relationship to the party’s costs in obtaining the results achieved;
(h) the positions taken by the parties at trial, in particular whether the positions taken were appropriate and reasonable in the circumstances;
(i) whether the defendants made any settlement offers;
(j) the ultimate result of the trial; and
(k) whether the plaintiff achieved substantial success that would be effectively defeated if costs were awarded pursuant to s. 3(1) of the Negligence Act…
 In my view, in this case the most important factors are the costs of proving damages for an injury of this type, the fact that there is a very significant claim for disbursements, and the fact that the amount of the award is $125,000 and the costs claimed are about $104,000.
 Mr. Mussio asked me to take into account some borrowing that Mr. Gowler did prior to the trial. In my view, that is not a factor I can take into account, nor can I take into account the legal fees, based on the decision of the Court of Appeal in the Moses v. Kim case.
 Looking at all the applicable factors, in my view it would be unjust to award the plaintiff only 50 percent of his costs. That is because his award would be so diluted by the need to pay his disbursements that he would not have a sufficient recovery. However, it is not a case where Mr. Gowler’s damages were so significant as in the Moses case.
 Looking at the cases and all the applicable factors, in my view, the appropriate award is that the plaintiff should recover 65 percent of his costs.
(Update February 9, 2012 – the below decision is under appeal with the BCCA granting leave to appeal on February 9, 2012)
Reasons for judgement were released this week by the BC Supreme Court, Vancouver Registry, confirming that Third Party’s are not immune from BC’s ‘loser pays’ system.
This week’s case (Danicek v. Alexander Holburn Beaudin & Lang) involved a highly publicized lawsuit where the Plaintiff lawyer was awarded damages after being injured in a dance floor incident. My previous posts can be accessed here for the full background. This week the Court finalized some of the costs consequences following the trial. In doing so Mr. Justice Kelleher provided the following comments adopting an Alberta judgement confirming that there is no reason why Third Party’s can’t be exposed to costs consequences following trial:
 The first issue is whether Lombard should be held liable to the plaintiff Ms. Danicek for the costs of the trial.
 There is no serious dispute that although Lombard was not a defendant but a third party, it may be liable in costs. It was put this way by Egbert J. in Sunburst Coaches Ltd v. Romanchuck;Ocean Accident and Guarantee Corporation Limited (Third Party) (1953) 9 W.W.R. (N.S.) 385 (Alta. S.C.) at 392, para. 19:
The third party, on its own application became a party to and actively defended the action, and by so doing made itself subject to the jurisdiction of this court as to costs. I see no reason why the plaintiff should not have judgment against the third party as well as against the defendants, for its costs computed in the manner aforesaid.
 Because of the other settlements in this action Lombard found itself the only party left to defend the claim. Although Mr. Poole had admitted liability, Lombard contested both the liability of Mr. Poole and damages. It was entitled to do so but faces the possibility of an award of costs either in its favour or against it, depending on the outcome of the lawsuit…
 The purpose of an award of costs is to indemnify successful litigants; deter frivolous proceedings and defences; encourage parties to deliver reasonable offers to settle; and discourage improper or unnecessary steps in litigation: see Skidmore v. Blackmore (1995), 122 D.L.R (4th) 330, at para. 37.
 My conclusion is that the plaintiff is entitled to her costs in respect to Phase 1 of the trial against Lombard. It was Lombard that decided to contest liability and quantum. Ms. Danicek’s position was upheld on each of these issues. Quantum far exceeded the settlements she had reached with Mr. Poole, Alexander Holburn and the other third parties.
 Lombard was not, ultimately, liable for the judgment against Mr. Poole. This was because of the conclusion reached in the second phase of the trial that the Lombard policy did not provide coverage. But that was not the issue in Phase 1 of the trial. (There was evidence relevant to the coverage issue adduced at trial. That is because witnesses were called at the first phase who had evidence to give in respect to the second phase.) The issues decided in Phase 1 were liability of Mr. Poole and quantum of damages.
 In my view having in mind the principle of an award of costs, costs should be awarded against Lombard in respect of Phase 1 from the time that it filed a statement of defence. The plaintiff was substantially successful on the issues involving Lombard in that part of the trial.
If a BC Supreme Court Judgement is silent with respect to costs following trial the default Loser Pays system kicks in as a result of Rule 14-1(9). Reasons for judgement were released last week by the BC Supreme Court, Vancouver Registry, discussing this default position.
In last week’s case (Habib v. Jack) the Plaintiff’s personal injury lawsuit was dismissed following trial. The trial Judge’s reasons did not set out any costs order. The Defendant sought their costs but the Plaintiff opposed this arguing that silence on costs in the trial judgement makes the issue ‘res judicata’. Madam Justice Ross disagreed and provided the following short but useful reasons:
 The plaintiff’s res judicata argument has previously been considered and rejected by this court. In Graham v. Great West Life et al., 2004 BCSC 1544, Sinclair Prowse J. considered the argument that silence in earlier reasons for judgment regarding costs is tantamount to an order that there will not be an order for costs. After reviewing the authorities she found that if reasons are silent, by operation of Rule 57(9), there is a presumption that costs will follow the event unless either party objects to the order being framed in that manner, in which case an application for costs should be made to the court. The present Rule 14-1(9) contains the same presumption.