New Rules Caselaw Update: Costs and "Substantial Success" in the BC Supreme Court
The New BC Supreme Court Rule 14-1(9) states that a successful party in a proceeding “must be awarded” costs unless the court otherwise orders. The former Rule 57(9) dealt with this issue although it had slightly different wording.
Today reasons for judgement were released, for what I believe is the first time, dealing with and interpreting the new rule.
In today’s case (Aschenbrenner v. Yahemich) the Plaintiffs sued the Defendants for trespass, nuisance, defamation and other matters. Ultimately they succeeded in some of their claims and were awarded just over $5,500 in total damages. The Plaintiffs applied for an order of costs. The Defendant opposed arguing that the costs award would be worth more than the awarded damages.
Ultimately Mr. Justice Metzger sided with the Plaintiffs and awarded them most of their costs. In doing so the Court adopted authorities developed under the former rules. Mr. Justice Metzger provided the following reasons discussing when a party is entitled to costs under Rule 14-1(9):
[12] Rule 14-1(9) of the Supreme Court Civil Rules states that:
(9) Subject to subrule (12), costs of a proceeding must be awarded to the successful party unless the court otherwise orders.
[13] While the Rule itself does not include the term “substantial success” under the former Rule 57(9), it was held to be a necessary and sufficient condition for an award of costs under Rule 57(9) that success in the outcome of the trial be “substantial”: see Gold v. Gold, 82 B.C.L.R. (2d) 180, 32 B.C.A.C. 287.
[14] In Fotheringham v. Fotheringham, 2001 BCSC 1321 at para. 18, 108 A.C.W.S. (3d) 786, appeal to C.A. refused, 2002 BCCA 454, 172 B.C.A.C. 179, Bouck J. stated that a trial judge has absolute and unfettered discretion with respect to costs, but it ought not to be exercised against a successful party except for some good reason in connection with the case.
[15] Mr. Justice Bouck canvassed the factors to be considered with respect to Rule 57(9), and at para. 45 stated:
[45] Gold now seems to say that substantial success in an action should be decided by the trial judge looking at the various matters in dispute and weighing their relative importance. The words “substantial success” are not defined. For want of a better measure, since success, a passing grade, is around 50% or better, substantial success is about 75% or better. That does not mean a court must descend into a meticulous mathematical examination of the matters in dispute and assign a percentage to each matter. Rather, it is meant to serve as a rough and ready guide when looked at all the disputed matters globally.
[16] Mr. Justice Bouck then sets out a four step inquiry to determine whether or not to award costs after a trial at para. 46:
1. First, by focusing on the “matters in dispute” at the trial. These may or may not include “issues” explicitly mentioned in the pleadings.
2. Second, by assessing the weight or importance of those “matters” to the parties.
3. Third, by doing a global determination with respect to all the matters in dispute and determining which party “substantially succeeded,” overall and therefore won the event.
4. Fourth, where one party “substantially succeeded,” a consideration of whether there are reasons to “otherwise order” that the winning party be deprived of his or her costs and each side then bear their own costs.
(See also: Citta Construction v. Elizabeth Lane Holdings Ltd., 2004 BCSC 280, 129 A.C.W.S. (3d) 46 at para. 7.)
[17] Substantial success is not determined by counting up the number of issues and allocating success on each, or by comparing the dollar amounts, but by assessing success in the major issues of substance (Cohen v. Cohen, 1995 Carswell 608, 15 R.F.L. (4th) 84 (B.C.C.A.) at para. 4; Reilly v. Reilly, [1996] B.C.J. No. 1244 (S.C.); Rattenbury v. Rattenbury, 2001 BCSC 593, [2001] B.C.J. No. 889 at paras. 22-24, 33). Substantial success means success on 75% of the matters globally taking into account the weight of the issues and their importance to the parties. A court should compare the pleadings and the submissions with the actual results obtained by the parties (Rattenbury at para. 24.).
[18] In cases where one party achieves substantial success, the courts may award a portion of the substantially successful party’s costs. For example, in Newstone v. Newstone, [1994] B.C.J. No. 139, 2 R.F.L. (4th) 129 (C.A.), an award of one-half costs to a party was upheld where “[s]uccess, if it could be called that, lay more with the wife than with the husband …” One-half costs were also upheld in Rolls v. Rolls, [1996] B.C.J. No. 292, 20 R.F.L. (4th) 232 (C.A.), on the ground that such an award would not create an imbalanced judgment as much as would a full award. InCohen v. Cohen, a spouse was awarded 75% of her costs after success on her reapportionment claim, which was the largest and most time-consuming issue.
[19] The four step test identified by Bouck J. applies not only to matrimonial cases, but also to all types of cases where Rule 14-1(10) has application (Chaster (Guardian ad litem of) v. LeBlanc, 2008 BCSC 47, 164 A.C.W.S. (3d) 43 at para. 34).
[20] Where success is divided such that there is no substantially successful party, the parties may have to bear their own costs (Mari v. Mari, 2001 BCSC 1848, [2001] B.C.J. No. 2979).
[21] On a global view of the outcome of this litigation I find that the plaintiffs were substantially successful.