Third Party's Can Be Exposed To "Loser Pays" Costs Consequences
(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.