Failing to Prove Allegations of Undue Influence Can Lead to Special Costs awarded against the plaintiff as the courts view claims of undue influence seriously as it is a form of civil fraud.
Special costs may be awarded as a means of discouraging and chastising a litigant whose conduct is considered by the Court to be reprehensible: Stiles v. B.C. (W.C.B.) (1989), 38 B.C.L.R. (2d) 307, 39 C.P.C. (2d) 74 (C.A.).
Reprehensible conduct is broadly defined. It encompasses within its scope a range of misconduct from scandalous and outrageous at one extreme, to milder forms of misconduct warranting judicial rebuke: Garcia v. Crestbrook Forest Industries Ltd. (1994), 119 D.L.R. (4th) 740, 9 B.C.L.R. (3d) 242 (C.A.).
An allegation of fraud in a civil lawsuit carries connotations of criminal-like deceit, trickery and dishonesty. The potential for harm to one’s reputation that such an accusation carries cannot be overstated. It is a most serious claim.
For these reasons, a failed allegation of fraud will more readily justify an award of special costs against the maker than other types of unproven allegations. Still, the one does not automatically follow the other. Whether unfounded accusations of fraud amounts to sufficiently reprehensible conduct inviting chastisement by the court depends on the particular circumstances: 307527 B.C. Ltd. v. Langley, 2005 BCCA 161; International Hi-Tech Industries Inc. v. FANUC Robotics Canada Ltd.,  B.C.J. No. 2541, 49 C.P.C. (6th) 233 (S.C.).
A party who fails to prove a claim of undue influence may also be at risk of being ordered to pay the special costs of the other parties on the reasoning that undue influence stops “just short of fraud”: Hamilton v. Sutherland,  5 W.W.R. 151, 68 B.C.L.R. (2d) 115 (C.A.); Bates; Sanguinetti v. Korpiel,  B.C.J. No. 2669 (S.C.); Kouwenhoven; McLean v. Gonzalez-Calvo, 2007 BCSC 648; Stanton.
That risk may also present itself to a plaintiff who pursues unsubstantiated and unfounded allegations of lack of capacity: Benekritis v. Benekritis,  B.C.J. No. 171. In fact, the two often appear as twin allegations in probate litigation aimed at invalidating a will.
The test of “reprehensible conduct” for an award of special costs was stated by Lambert J.A. in Stiles v. British Columbia (Workers’ Compensation Board) (1989), 38 B.C.L.R. (2d) 307 at 311 (C.A.):
The principle which guides the decision to award solicitor-and-client costs in a contested matter where there is no fund in issue and where the parties have not agreed on solicitor-and-client costs in advance, is that solicitor-and-client costs should not be awarded unless there is some form of reprehensible conduct, either in the circumstances giving rise to the cause of action, or in the proceedings, which makes such costs desirable as a form of chastisement. The words “scandalous” and “outrageous” have also been used.