Unreported reasons for judgement were recently provided to me confirming that, where a party receives substantially less at trial than they were seeking, that is not a reason in and of itself to deprive the successful party costs.
In the recent case (Fadai v. Cully) the Plaintiff was injured in a collision and sued for damages. At trial the Plaintiff was awarded damages but these “were substantially lower than he had claimed“. The trial judge initially awarded the Plaintiff only 75% as a result of this. The Court was asked to reconsider and after reviewing Loft v. Nat the Court reconsidered and awarded the Plaintiff full costs. In reaching this decision Mr. Justice Schultes provided the following reasons: [4] When I look at the decisions that I have been provided…it is clear that a difference between the amounts claimed and those awarded is not, in itself, a reason for depriving a successful party of their costs. [5] A proper allication of the law should lead Mr. Fadai receiving his costs of this trial, and not only the portion of them that I tentatively awarded him.
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: [24] 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. [25] 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”. [26] 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”. [27] 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. [28] At para. 39, Her Ladyship cited the following passage from the Reasons for Judgment of Greyell J. in Chen at para. 15: [39] To do otherwise would lead to inconsistent and no doubt unreasonable results. As Greyell J. so eloquently noted in Chen at para. 15: [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. [29] 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… [49] 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. [50] Accordingly, the defendant, City of Vancouver, will have costs of this action at Scale B, together with its reasonable disbursements.
Reasons for judgement were released last week by the BC Court of Appeal confirming that a party who is awarded damages below the amount sought, even if significantly so, is not a reason in and of itself for depriving the party of costs.
In last week’s case (Loft v. Nat) the Plaintiff was injured in a motor vehicle collision and sued for damages. At trial the Plaintiff sought substantial damages of over $1.8 million. The Plaintiff’s claims were largely rejected with damages just over $60,000 being awarded. The trial judge found that the Defendants had been largely successful and ordered that the Plaintiff pay the Defendants costs. The Court of Appeal found this was plainly an error. In reaching this conclusion the Court provided the following reasons: [46] Pursuant to Rule 14-1(9), costs in a proceeding must be awarded to the successful party unless the court otherwise orders. At its most basic level the successful party is the plaintiff who establishes liability under a cause of action and obtains a remedy, or a defendant who obtains a dismissal of the plaintiff’s case: Service Corporation International (Canada) Ltd. (Graham Funeral Ltd.) v. Nunes-Pottinger Funeral Services & Crematorium Ltd., 2012 BCSC 1588, 42 C.P.C. (7th) 416. [47] In this proceeding Mr. Loft was awarded damages for injuries he had suffered in the motor vehicle accident. The respondents had denied liability until shortly before trial. Although the damage award was far less than sought, Mr. Loft was the successful party. The fact that he obtained a judgment in an amount less than the amount sought is not, by itself, a proper reason for depriving him of costs: 3464920 Canada Inc. v. Strother, 2010 BCCA 328, 320 D.L.R. (4th) 637. [48] The trial judge’s stated reason for awarding costs to the respondents was that the respondents had been largely successful in all areas of the claim. With respect, that decision is wrong in principle and cannot stand. I note that on the hearing of the appeal the respondents did not suggest otherwise. [49] The fact that a party has been successful at trial does not however necessarily mean that the trial judge must award costs in its favour. The rule empowers the court to otherwise order. The court may make a contrary order for many reasons. One example is misconduct in the course of the litigation: Brown v. Lowe, 2002 BCCA 7, 97 B.C.L.R. (3d) 246. Another is a failure to accept an offer to settle under Rule 9-1. A third arises when the court rules against the successful party on one or more issues that took a discrete amount of time at trial. In such a case the judge may award costs in respect to those issues to the other party under Rule 14-1(15): Lee v. Jarvie, 2013 BCCA 515. Such an order is not a regular part of litigation and should be confined to relatively rare cases: Sutherland v. Canada (Attorney General), 2008 BCCA 27, 77 B.C.L.R. (4th) 142; Lewis v. Lehigh Northwest Cement Limited, 2009 BCCA 424, 97 B.C.L.R. (4th) 256. Whether a judge will order otherwise in any particular case will be dependent upon the circumstances of that individual action. [50] Costs are very much a matter of the trial judge’s discretion. In the circumstances of this case, the basis upon which that discretion was exercised was in error. That said, the trial judge remains in the best position to determine the proper costs order and to what extent, if any, the offer to settle that was made in this case should impact on costs. On the hearing of the appeal both parties suggested that if the costs appeal was allowed, costs should be referred back to the trial judge. [51] I would allow the costs appeal and refer the matter of costs back to the trial judge for a further determination.
Reasons for judgement were released today by the BC Court of Appeal addressing the discretion of judges in making costs awards following trial under the new Rules of Court.
In today’s case (Lee v. Jarvie) the Plaintiff was involved in a rear-end collision in 2004. Fault for the crash was admitted. At trial the Plaintiff sought substantial damages in the range of $800,000. Much of the Plaintiff’s claim was rejected at trial but damages of just over $50,000 were assessed.
Following trial the Court awarded each party 50% of their costs to be set off against one another and denied many of the Plaintiff’s disbursements. The Plaintiff appealed arguing the Court did not have the authority to make such a costs order under the new rules of Court. The BC Court of Appeal disagreed and found that a trial judge’s discretion with respect to costs is “at least as broad” as it was under the former rules. In reaching this decision the Court provided the following reasons: [37] Interpreting Rule 14-1(15) as only allowing costs to be awarded in respect of specific procedures would run afoul of the principle that Newbury J.A. identified in the opening of her reasons for judgment inGreater Vancouver Regional District v. British Columbia (Attorney General), 2011 BCCA 345: [1] One of the well-known rules that guide Canadian judges in the interpretation of statutes is that wherever possible, the court should strive to give meaning and effect to every word used in an enactment. As stated in Maxwell on the Interpretation of Statutes (12th ed., 1969), “It is a principle of statutory interpretation that every word of a statute must be given meaning: ‘A construction which would leave without effect any part of the language of a statute will normally be rejected.” (See also Communities Economic Development Fund v. Canadian Pickles Corp. [1991] 3 S.C.R. 388 at 408; R. v. Kelly [1992] 2 S.C.R. 170 at 188; Hosseini v. Oreck Chernoff 1999 BCCA 386, 65 B.C.L.R. (3d) 182, at para. 27.). [38] The words “application” and “step” cover all procedural fragments of a proceeding. If “matter” were intended to be confined to a procedural event in litigation, it would cover no ground not already covered by “application” and “step”. I am therefore not persuaded that a “matter” must be a discrete procedure. [39] In my view, the canons of construction referred to by the plaintiff do not cast doubt on the conclusion that Rule 14-1(15) allows a judge to award costs in respect of a discrete issue in litigation. [40] I am satisfied that the discretion to award costs with respect to an issue in a proceeding is at least as broad under Rule 14-1(15) as it was under former Rule 57(15). Under that rule, the discretion was governed by the principles discussed by Finch C.J.B.C. in Sutherland v. Canada (Attorney General), 2008 BCCA 27 at paras. 30 and 31: [30] British Columbia v. Worthington (Canada) Inc.is the leading case with respect to the application of Rule 57(15). It affirms that under Rule 57(15) the Court has full power to determine by whom the costs related to a particular issue are to be paid. As Esson J.A. states in Worthington, the discretion of trial judges under Rule 57(15) is very broad, and must be exercised judicially, not arbitrarily or capriciously. There must be circumstances connected with the case which render it manifestly fair and just to apportion costs. [31] The test for the apportionment of costs under Rule 57(15) can be set out as follows: (1) the party seeking apportionment must establish that there are separate and discrete issues upon which the ultimately unsuccessful party succeeded at trial; (2) there must be a basis on which the trial judge can identify the time attributable to the trial of these separate issues; (3) it must be shown that apportionment would effect a just result. [41] The trial judge explicitly addressed each of the three factors in Sutherland, and I am substantially in agreement with his analysis. [42] The issues upon which he awarded costs to the defendants were distinct issues in the litigation. While I acknowledge the appellant’s argument that there was some minor overlap between evidence going to general damages and evidence going to loss of income, this did not prevent the issues from being “separate and discrete” issues in the litigation. They were appropriately compartmentalized by the judge. [43] The judge identified the time attributable to the separate issues at trial at paragraphs 68-71 of his costs reasons. There is no basis for interfering with his findings in those paragraphs. [44] Finally, on the issue of whether the costs award is a “just result”, the trial judge comprehensively dealt with problems with the evidence in his trial judgment. He further dealt with the factors that led to the length of the trial in his costs judgment. The trial judge identified the factors that led him to find his costs award to be a just result. The reasons are cogent, and I would not interfere with his decision.
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:
[86] MR. KENT-SNOWSELL: Costs, My Lord? [87] 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. [88] MR. KENT-SNOWSELL: I will seek instructions. [89] THE COURT: Thank you.
When an ICBC insured Defendant is awarded costs following successfully defeating a BC Supreme Court lawsuit, do the costs get paid to the litigant or to the insurer? To date there are contradictory authorities addressing this (you can click here to read a case awarding costs to the party and here for a case awarding them to ICBC).
Adding to the uncertainty, reasons for judgement were released this week by the BC Supreme Court, Vernon Registry, indicating that the personal defendant gets the benefit of the costs payment.
In this week’s case (Nadeau v. Okanagan Urban Youth & Cultural Association) the Plaintiff was injured when struck by a vehicle. He sued a personal defendant arguing he was the driver and also ICBC arguing that they were liable in the event that the personal defendant was not the driver. The Claim against the personal driver was ultimately dismissed and the claim against ICBC succeeded.
The Defendant was awarded costs, however, Mr. Justice Powers found that a ICBC should be responsible for payment of the costs to the personal Defendants. In doing so the Court provided the following reasons: [135] . I order that the plaintiff recover 85 percent of his costs from the defendant, ICBC, at Scale B. I also order that the plaintiff recover the costs he is required to pay to Mr. Usseni and James Mugambi and James Kibigi from the defendant, ICBC. I am satisfied that this is one of those cases which fall within Rule 14-1(8) of the Civil Rules, where the plaintiff should recover the costs it pays to those defendants as a disbursement in its bill of costs against the defendant, ICBC. [136] The central issue in this proceeding on liability was which vehicle struck the plaintiff and who was operating that vehicle. If it was not the vehicle owned by Ms. Mutanda and driven by Mr. Usseni, then it would be a vehicle operated by an unidentified driver. The only question with regard to liability of the defendant, ICBC, for the unidentified driver, was whether the accident occurred on a highway so that s. 24 of the Act applied. Of course, the extent of the negligence of the operator and of Mr. Nadeau were also in issue, but those were in issue in any event. [137] In this case, not only was it reasonable for the plaintiff to bring its action against Mr. Usseni and Ms. Mutanda, James Kibigi and James Mugambi, as well as ICBC pursuant to s. 24 of the Act, it was the only course available to the plaintiff. There were real and legitimate issues of fact as well as issues of law that could not be resolved without a proper trial. The cause of action against each defendant was the same. The only issue was which defendant was liable depending on findings of fact. [138] In my opinion, it would be unfair to require the plaintiff to pay the costs of Mr. Usseni, Ms. Mutanda, James Kibigi and James Mugambi, without the ability to recover those costs from the unknown driver, or in this case, ICBC, pursuant to their liability under s. 24 of the Act.
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”
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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: [5] 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… [12] I described some of Mr. Staniford’s conduct in my Reasons for Judgment as follows, at paras. 88-92: [88] . . . 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. [89] 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. [90] 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. [91] 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. [92] In another Facebook posting during the first week of the trial, he compared the trial to a kangaroo court…. [15] 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. [16] 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. … [20] 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 January 16,2013 – the Court of Appeal granted leave to appeal the below costs award. Once the final decision is released I will further update this post). (Update December 10, 2013 – today the BC Court of Appeal dismissed the appeal of the below decision)
I have spent much time highlighting costs consequences plaintiff’s face under BC’s loser pays system and perhaps even more time discussing the further costs consequences that can flow from failing to beat a defence formal settlement offer at trial.
A less judicially considered area of the law relates to costs consequences where a plaintiff is awarded damages at trial far below the recovery sought where no defence formal settlement offer was in place. The starting point in such cases is that a Plaintiff is generally entitled to costs provided the awarded damages exceed $25,000. The court retains a discretion, however, to move away from this default position in “relatively rare cases”. Such a result was demonstrated in reasons for judgement released this week by the BC Supreme Court, New Westminster Registry.
In this week’s case (Lee v. Jarvie) the Plaintiff was involved in a rear-end collision in 2004. Fault for the crash was admitted. At trial the Plaintiff sought substantial damages in the range of $800,000. Much of the Plaintiff’s claim was rejected at trial but damages of just over $50,000 were assessed.
The Defendant apparently did not provide a pre-trial formal settlement offer. As a result the default position of Rule 14-1(9) was triggered with the Plaintiff presumably being entitled to costs. The Defendant argued that the Defendant was largely the victor at trial, at least insofar as the most substantial alleged damages were concerned, and that the Court should exercise its discretion to apportion costs pursuant to Rule 14-1(15). Mr. Justice Gaul agreed it was appropriate to do so and stripped the Plaintiff of significant costs and disbursements. In doing so the Court provided the following reasons: [12] The issues of apportioning costs between parties under Rule 57(15) of the former Rules of Court was addressed and considered in British Columbia v. Worthington (Canada) Inc. et al(1988), 32 C.P.C. (2d) 166, 29 B.C.L.R. (2d) 145 (C.A) and more recently in Sutherland v. Canada (Attorney General), 2008 BCCA 27. From these cases, I have drawn the following guiding principles relating to the apportionment of costs: 1) Applications to apportion costs should be the exception and not the norm in civil litigation, and they should be limited to “relatively rare cases”. 2) The power to apportion costs is a discretionary one that “must be exercised judicially, not arbitrarily or capriciously”. 3) The exercise of discretion must be connected to circumstances of the particular case “which render it manifestly fair and just to apportion costs”. [13] In addition to these principles, I am also guided by the test Finch, C.J.B.C. articulated in Sutherland at para. 31: [31] The test for the apportionment of costs under Rule 57(15) can be set out as follows: (1) the party seeking apportionment must establish that there are separate and discrete issues upon which the ultimately unsuccessful party succeeded at trial; (2) there must be a basis on which the trial judge can identify the time attributable to the trial of these separate issues; (3) it must be shown that apportionment would effect a just result… [38] The apparent divergence of judicial approaches to the question of apportioning costs in personal injury cases appears to hinge on the determination of the degree of success the plaintiff enjoyed at trial and whether the trial was unnecessarily prolonged by the pursuit of inflated or unrealistic claims. Where the court finds the plaintiff was substantially successful at trial and there was no pursuit of exaggerated claims, then apportionment of costs will less likely be granted. However, where the court determines there was divided success, or finds there was a distinguishable portion of the plaintiff’s claim that was unrealistically pursued resulting in a more protracted proceeding, then subject to the guiding principles articulated in Worthington and Sutherland, apportionment of costs is a legitimate consideration… [82] In my opinion, the particular circumstances of this case permit the court to consider the plaintiff’s claims for loss of past opportunity to earn income, loss of future earning capacity and cost of future care as separate and discrete issues. Moreover, there is a clear basis upon which to calculate the amount of trial time, including argument, that was devoted to these issues. Finally, apportionment of costs would, given the divided success at trial and the plaintiff’s pursuit of inflated, exaggerated or unrealistic claims, affect a just result between the parties. I therefore find the case at bar falls into that category of “relatively rare cases” where apportionment of costs is appropriate. [83] What was to have been, and in my respectful view should have been, a 5?day trial, practically tripled in length, and much of that is attributable to the plaintiff and the nature of the evidence he led at trial. I rejected a significant portion of the plaintiff’s testimony. He was a poor historian of the facts and was at times deliberately evasive in answering questions. As I noted at para. 46 of my Reasons for Judgment, but for the detailed and probing cross-examination of the plaintiff, “…the court would have been left with an inaccurate impression and understanding of Mr. Lee’s situation and condition.” There were also significant deficiencies in the evidence of the plaintiff’s expert witnesses, Mr. Worthington-White, Ms. Quastel, Mr. Benning, Dr. Lee, Dr. Kokan and Dr. Hershler that only came to light during the course of extensive cross-examination. [84] The facts in the case at bar, as they relate to costs are, in my view, similar to those found in Bailey, Plackova, Berston, Shearsmith and Heppner, in that an inordinate and unreasonable amount of trial time was consumed by the plaintiff’s pursuit of exaggerated claims that were eventually rejected. The length of the trial was also made more difficult and prolonged as a result of the plaintiff’s credibility issues and his failure to fully and frankly disclose relevant information to his medical experts.
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: [17] 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. [18] 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. [19] 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: [17]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…
[21]The third basis for his application is that he is unemployed and experiencing difficult financial circumstances.
[22]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.
[23]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.
[24]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.
