The Equitable Principle of Disgorgement

Disgorgement is the giving up of funds by a fiduciary where a breach of fiduciary duty was involved. They typically involve the restitution remedy of recovering ill-gotten profits made by the fiduciary.

There is a large degree of discretion in ordering disgorgement: Strother v. 3464920 Canada Ltd., 2007 SCC 24 at para. 74; Wang v. Wang, 2020 BCCA 15 at para. 59.

As Justice Cromwell notes in Kerr v. Baranow, 2011 SCC 10, all equitable remedies are characterized by the necessity of designing them to be responsive to the particular facts of each case:

This public interest aspect is served by the prophylactic purpose of disgorgement.

Disgorgement of a gain obtained in a breach of a fiduciary duty, irrespective of the plaintiff’s loss, “teaches faithless fiduciaries that conflicts of interest do not pay. The prophylactic purpose thereby advances the policy of equity, even at the expense of a windfall to the wronged beneficiary”: Strother at para. 77 [emphasis in original].

However, there are limits to prophylactic disgorgement    -Pirani v Pirani, [2021] BCJ No 1725, 2021 BCSC 1530

Sarzynick v Skwarchuk 2021 BCSC 443 reviewed the remedies available for a breach of fiduciary duty including the equitable principle of disgorgement.

The equitable remedy of disgorgement serves two purposes:

One is restitutionary and the other prophylactic: Strother, at paras. 75–77. The restitutionary component of disgorgement aims to restore to the aggrieved party the benefits that they otherwise would have enjoyed, such as when a fiduciary usurps a business opportunity or purchases a property that otherwise would have gone to the beneficiary

Two- The prophylactic rationale aims to deter faithless behaviour and preserve the sanctity of fiduciary relationships by forcing the fiduciary to disgorge all profits obtained from their breach.

Prophylactic disgorgement arises even in circumstances where the beneficiary has suffered no loss. This can often result in a windfall for the plaintiff.

Where a fiduciary has retained profits by breaching their fiduciary obligations, they can be disgorged of their profits in one of two ways:

(1) by imposing a personal debt on the fiduciary, thereby requiring them to repay the unjustified gain; or
(2) by imposing a constructive trust requiring the fiduciary to transfer the gain to the aggrieved party (Kyle Estate v. Kyle, 2017 BCCA 329 at para. 37).

The use of remedial constructive trusts for disgorgement in the breach of fiduciary duty context is well-established:
in The Law of Restitution, loose-leaf (Toronto: Tomson Reuters, 2020) at 27:500, “a principal may assert a proprietary claim not only for misappropriated assets, but for property…and opportunities which the fiduciary has deflected and captured for personal benefit.”

Multiple Actions Heard At The Same Time

Li v Liang 2021 BCSC 1856 dealt with the legal procedural issue of whether two family cases involving the same parties should be tried together .

The court reviewed the seven criteria discussed in Merritt v Imasco Enterprises Inc (1992) BCJ 160 and Beazley v ICBC 2004 BCSC 1094 and held that the two claims did not have common claims or disputes that would require them to be either consolidated or tried at the same time. The two actions were not so interwoven as to make separate trials undesirable. There would also be prejudice to the plaintiff that would outweigh any potential benefit.

These applications are common in multi motor vehicle claims for example but I opine could be used in estate litigation situation such as the law as set out in Johnston v Johnston that claims involving both the validity of the will and the wills variation claims should not be heard together as the validity of the will should firstly be determined .

For example It would make procedural sense to have the wills variation claim tried right after the validity claim if the will is found to be valid as it is the same parties and the same evidence. I am not aware if this has been done to date.

THE LAW ( Rule 22-5(8) 

The application seeks to have a civil action consolidated with or tried at the same time as a family law case. It must be considered under Rule 22-5(8) of the Supreme Court Rules.

That rule applies to proceedings, which include a Supreme Court civil action and any other suit, cause or matter.

It provides:

(8) Proceedings may be consolidated at any time by order of the court or may be ordered to be tried at the same time or on the same day.

The matters the court is to consider on an application pursuant to Rule 22-5(8) are set out in cases that considered the previous rule (Rule 5(8)),
which was identical to the present rule. In Merritt v. lmasco Enterprises Inc.,[1992] B.C.J. No. 160

“ I accept that the foundation of an application under R. 5(8) is, indeed, disclosed by the pleadings. The examination of the pleadings will answer the first
question to be addressed: do common claims, disputes and relationships exist between the parties?

But the next question which one must ask is: are they “so interwoven as to make separate trials at different times before different judges
undesirable and fraught with problems and economic expense”? Webster v.Webster (1979), 12 B.C.L.R. 172 at 182, 10 R.F.L. (2d0 148, 101 D.L.R. (3d) 248(C.A.).

That second question cannot, in my respectful view, be determined solely by reference to the pleadings. Reference must also be made to matters disclosed
outside the pleadings:

(1) Will the order sought create a saving in pre-trial procedures, (in particular, pre-trial conferences)?

(2) Will there be a real reduction in the number of trial days taken up by trials being heard at the same time?

(3) What is the potential for a party to be seriously inconvenienced bybeing required to attend a trial in which that party may have only amarginal interest?

(4) Will there be a real saving in experts’ time and witness fees?

In Beazley v. Insurance Corp. of British Columbia, 2004 BCSC 1091, at paras. 12-13, Madam Justice Kirkpatrick, then a Judge of the Supreme Court
of British Columbia, added the following three factors to the four factors set out Merritt

(5) Is one of the actions at a more advanced stage than the other? . .

.
(6) Will the order result in a delay of the trial of one of the actions and, if so, does any prejudice which a party may suffer as a result of that delay
outweigh the potential benefits which a combined trial might otherwise have?

(7) Is there a substantial risk that separate trials will result in inconsistent
findings on identical issues?

In both Merritt (at para. 19) and Beaziey (at para. 12) the Court indicated that the factors listed above are not intended to be an exhaustivelist, but are to be regarded as some matters to be considered before making an order under the rule. The order should make sense in the overall circumstances of the litigation.

Unjust Enrichment- Joint Mortgage Debt After Death

Parrott-Ericson v Ericson Estate 2006 BCSC 1409 relied upon the law of unjust enrichment to hold that the surviving joint tenant of property with a mortgager takes both the property and the entire mortgage debt as the surviving joint tenant would be unjustly enriched if the estate had to pay one half of the mortgage debt as the petitioner sought.

The surviving spouse of the joint tenancy property brought a petition for an order that the deceased’s estate was liable to the surviving joint tenant to pay one half of the $400,000 mortgage on the property.

The parties were jointly and severally liable under lines of credit secured by way of mortgage is a gift to the strata properties.

After the death the wife took sole title to strata lots and the estate refused to pay one half of the loan.

The court dismissed the petition as the wife’s claim for contribution arose in equity, and was based on unjust enrichment. The wife had by operation of survivorship receive the entire interest in secured the joint and several obligations.

In the circumstances the wife could not equitably be entitled to call in the estate to pay half of the debt.

The mortgage debt in land were clearly connected. The loan was based upon which the property was acquired. No arrangement was made that the estate would be liable for one half of the debt.

As the wife received the land entirely should be unjustly enriched as the estate had to pay one half of the debt.

The children of the deceased had brought a wills variation claim.

The court found that the joint debt was used to acquire the land and the petitioner received the land entirely, and thus would be just unjustly enriched if the estate had to pay one half of the debt .

The court followed the decision of Cunningham Reid v Public Trustee (1944) 1 KB 602 held it is a principle of equity that a joint tenant, it takes the entire benefit of an interest in real property through a survivorship must take the burden associated with the benefit, particularly were in that joint debt has been used to acquire the real property.

In equity the claim to contribution in such circumstances must fail.

Gifts to Witnesses of a Will ( S. 43 WESA)

Wolk v Wolk 2021 BCSC 1881 reviewed the law of witnesses to a will receiving a gift under and the effect of S. 43 (4) of WESA .

A gift to a signatory witness is automatically void by statute, but the court may declare such a gift valid on application. The present application seeks a declaration that the gift of the estate to Michael and Lynda take effect.

Section 43 of WESA includes the following:

(1) Unless a court otherwise declares under subsection (4), a gift in a will is void if it is to
(a) a witness to the will-maker’s signature or to the spouse of that witness,
. . .
(3) If a gift is void under subsection (1), the remainder of the will is not affected.

(4) On application, the court may declare that a gift to a person referred to in subsection (1) is not void and is to take effect, if the court is satisfied that the will-maker intended to make the gift to the person even though the person or his or her spouse was a witness to the will.

(5) Extrinsic evidence is admissible for the purposes of establishing the will-maker’s intention under subsection (4).

Absent a declaration of validity under s. 43(4), there will be a partial intestacy under s. 25 of WESA. Here, a partial intestacy would lead to Dawson’s entire estate being distributed in accordance with s. 23 of WESA. Section 23 governs distribution where a deceased dies intestate and without a spouse, but with a “descendant” as defined by WESA.

Section 43(4) is centrally concerned with testamentary intent: Bach Estate, 2017 BCSC 548 at para. 54.

The Court found that the deceased wanted the witnesses to receive the bequests as a gift and allowed such under Rule 43(4)

Wills Variation ( S 60 WESA) Is Discretionary

Kish v Sobchak 2016 BCC65 discussed how the claim of wills variation is discretionary top the trial judge and how the appeal court should deal with such.

The entire jurisdiction of the trial judge under this statute is discretionary in character. The relief which may be granted under it is completely dependent on his opinion, first, as to whether adequate provision for proper maintenance and support has been provided for the spouse and children under the will, and second, if adequate provision is not thought to be made, as to what provision should be made.

 

. This being so, that Court has the power and the duty to review the circumstances and reach its own conclusion as to the discretion properly to be exercised.

 

According to my definition, an issue falls within a judge’s discretion if, being governed by no rule of law, its resolution depends on the individual judge’s assessment (within such boundaries as have been laid down) of what it is fair and just to do in the particular case. He has no discretion in making his findings of fact. He has no discretion in his rulings on the law. But when, having made any necessary finding of fact and necessary ruling of law, he has to choose between different courses of action, orders, penalties or remedies he then exercises a discretion. It is only when he reaches the stage of asking himself what is the fair and just thing to do or order in the instant case that embarks on the exercise of a discretion.

The standard of review applicable in Canada to the exercise of judicial discretion is found in Friends of the Oldman River Society v. Canada (Minister of Transport) [1992] 1 S.C.R. 3. There La Forest J. wrote for the majority:

Stone J.A. cited Polylok Corp. v. Montreal Fast Print (1975) Ltd., [1984] 1 F.C. 713 (C.A.), which in turn approved of the following statement of Viscount Simon L.C. in Charles Osenton & Co. v. Johnston, [1942] A.C. 130, at p. 138:

The law as to the reversal by a court of appeal of an order made by the judge below in the exercise of his discretion is well-established, and any difficulty that arises is due only to the application of well-settled principles in an individual case. The appellate tribunal is not at liberty merely to substitute its own exercise of discretion for the discretion already exercised by the judge. In other words, appellate authorities ought not to reverse the order merely because they would themselves have exercised the original discretion, had it attached to them, in a different way. But if the appellate tribunal reaches the clear conclusion that there has been a wrongful exercise of discretion in that no weight, or no sufficient weight, has been given to relevant considerations such as those urged before us by the appellant, then the reversal of the order on appeal may be justified.

That was essentially the standard adopted by this Court in Harelkin v. University of Regina, [1979] 2 S.C.R. 561, where Beetz J. said, at p. 588:

Second, in declining to evaluate, difficult as it may have been, whether or not the failure to render natural justice could be cured in the appeal, the learned trial judge refused to take into consideration a major element for the determination of the case, thereby failing to exercise his discretion on relevant grounds and giving no choice to the Court of Appeal but to intervene. [At 76-7; emphasis by underlining added.]

This standard was affirmed and supplemented more recently in Penner v. Niagara (Regional Police Services Board) 2013 SCC 19, where the Court stated:

A discretionary decision of a lower court will be reversible where that court misdirected itself or came to a decision that is so clearly wrong that it amounts to an injustice: Elsom v. Elsom, [1989] 1 S.C.R. 1367, at p. 1375. Reversing a lower court’s discretionary decision is also appropriate where the lower court gives no or insufficient weight to relevant considerations: Friends of the Oldman River Society v. Canada 

        Well before Tataryn was decided (but after Swain v. Dennison), summary trial procedures had of course been introduced in British Columbia and elsewhere. It was clear, certainly in this province, that summary trials were not limited strictly to cases in which there were no conflicts in the evidence. In Orangeville Raceway Ltd. v. Wood Gundy Inc. [1995] 6 B.C.L.R (3d) 391 (C.A.), which was not a WVA case, this court discussed the standard of review on appeals from summary trial judgments. At para. 44, the Court considered whether it was entitled to set aside the judgment below and substitute its own views for those reached by the chambers judge “simply because he did not have the advantage of observing the witnesses as their testimony was tested by cross-examination”. Mr. Justice Goldie for the Court answered this question in the negative, adopting the comments of Mr. Justice Taylor in an earlier case as follows:

So far as findings of fact are concerned, the onus on the appellant in an appeal against a summary disposition of issues made without oral testimony under R. 18A, cannot be merely to persuade the appeal court to a different view of the evidence. The appellant must show that the chambers judge reached a conclusion which cannot reasonably be supported. That is a heavier burden than merely to establish that the appeal court would have made different findings, or have drawn different inferences. [At para. 45; emphasis added.]

 

It has been said that an appellate court is in as good a position to draw inferences from proven facts as the trial judge. But this states only half the equation. The appellate court may be in as good a position but the burden is still on the appellant to demonstrate error, that is to say, that the position reached below after a summary trial cannot reasonably be supported.

 

 

Typical Signs of Dementia

Typical Signs of Dementia

1. Short Term Memory Loss:

Everyone nervously laughs when they walk into a room and can’t remember the reason for doing so, but short-term memory loss is a far different matter and is a telltale indication of possible dementia.

Short-term memory loss is typically the first symptom that others pick up on and typically relates to items such as:

• Repeatedly asking the same question
• repeatedly telling the same story or joke
• seemingly having a long-term memory, but subject to verification.

 

2. Depression

• Many seniors suffer from depression and the difficulty with a demented person is that they may not realize they are depressed. Signs of depression can be loss of interest in activities, hobbies, and other people, trouble concentrating, isolation and general apathy.

 

3. Anxiety

Anxiety and general agitation can be caused by a number of different medical conditions, but anyone who is suffering from dementia is experiencing a profound loss of their ability to understand and function properly, and thus it can be frightening and anxiety provoking. Changes in residences, environment, caregiver arrangements, and other related matters can cause confusion and anxiety.

 

4. Difficulty Finding Words or Communicating

• People with the most common types of dementia, such as Alzheimer’s disease and vascular dementia often have aphasia, which can cause difficulty in finding words, and remembering the names of people they know well.

5. Reasoning and Problem Solving

• The accumulated effect of the decline in communication, learning, remembering, and problem solving may occur either quickly or very slowly over time depending on which area of the brain is affected.

6. Difficulty Performing Common Tasks

• having dementia can make many everyday tasks increasingly problematic. This can range from everything from choosing your clothing and dressing oneself to using a coffee machine and everything in between. After having performed many of these tasks innumerable times, it suddenly becomes problematic, and many people begin to hide their problems at this point.

7. Coordination and Motor Impairment

• similarly, many common tasks such as buttoning a button, removing the lid, or even chewing and swallowing can become increasingly difficult

 

8. Confusion and Disorientation

 

• In the earlier stages, the confusion and disorientation may be quite mild, but will typically become more severe over time, so that it can become difficult and recalling recent events, making decisions or understanding what others have stated.

 

9. Personality Changes

It is not uncommon for passive people to become more violent or other such notable significant personality changes.

 

10. Inappropriate Behavior

It is not uncommon for demented people to act or talk inappropriately, such as saying hurtful things to loved ones .

11 Paranoia

It is not uncommon for demented people to become suspicious of those around them, and accuse them of theft of items such as a saucer or cup, or alleging infidelity or other improper behavior.

12. Spatial Problems

• Getting lost while driving is often an indication of a confused mind. The degree of the demented is probably worse if one becomes lost in their own neighborhood

Trustee Must Follow Terms of Trust

A trustee is obliged to follow the terms of the trust – McLeod v. McLeod, 2011 BCSC 1942.

The trustee is obliged to follow the terms of the trust. The principle is so basic that it does not need authority; however, it is described succinctly in Merrill Petroleum Ltd. v. Seaboard Oil Co. (1957), 22 W.W.R. 529 at 557 (Alta. S.C.):

… While it is also true that there are certain general obligations imposed by law on any trustee (e.g., the duty not to profit from the trust at the expense of the beneficiaries) the more specific obligations and duties of a trustee are set forth in the instrument creating the trust – in other words, except for those general duties imposed by law on all trustees, the terms of a trust are to be found within the four corners of the trust instrument. … In other words, the first duty of this trustee (as of all trustees) was to follow implicitly the terms of the trust instrument, and, secondly, to observe those general principles of trustee law which did not run counter to the express terms of the trust.

Where the text of the trust instrument is not ambiguous, it is inappropriate to consider surrounding facts and circumstances.

The settlor’s intention is to be discerned primarily from the text of the trust instrument: TLC The Land Conservancy of British Columbia v. The University of British Columbia, 2014 BCCA 473 at paras. 45–47;

A trustee’s exercise of wide discretion under the express terms of a trust will rarely be interfered with by a court.

 

Court Intervention

There are grounds that may justify the court’s interference in the exercise of a trustee’s discretion.

 

The court may interfere in the exercise of discretion by a trustee where:

 

a) the decision is so unreasonable that no honest or fair dealing trustee could have come to that decision;
b) the trustees have taken into account considerations which are irrelevant to the discretionary decision they had to make; or
c) the trustees, in having done nothing, cannot show that they gave proper consideration to whether they ought to exercise the discretion.

(Donovan W.M. Waters, Mark R. Gillen & Lionel D. Smith, Waters’ Law of Trusts in Canada, 4th ed (Toronto: Carswell, 2012))

These situations have long been recognized as appropriate circumstances for court intervention: Boe v. Alexander (1987), 41 D.L.R. (4th) 520 at paras. 20–21 (B.C.C.A.);

An example of a trustee’s extraneous consideration is a consideration that is not concerned with the welfare or benefit of the beneficiary of the trust, but with something else, such as disapproval of the beneficiary’s choice of spouse for racial or religious reasons

Special Costs 2021

It is a common public belief that the losing party in litigation pays the winning parties legal fees, but that is not the case unless the court makes an extraordinary award of special costs.

The usual award of costs is to the winning party on a “party and party” basis tied to a scale of units in the Supreme Court Rules for steps in the litigation process that essentially awards only a portion of what the actual legal fees.

Special costs provide a much greater degree of indemnity than the usual award of costs .

In Negas v Yehia 2021 BCSC 254 the court awarded approximately $1.2 million dollars in legal fees against the respondent in a protracted family case that lasted 7 years concerning $19 million assets.

The award of special costs was essentially an award of full indemnity to the wife of her legal fees by reason of the “ reprehensible conduct” of her partner during the course of the litigation that resulted in the award of special costs against him.

 

What Are Special Costs?

 

The nature and purpose of special costs were described by our Court of Appeal in 567 Hornby Apartment Ltd. v. Le Soleil Restaurant Inc., 220 BCCA 69 (“Le Soleil”):
“Special costs are not compensatory; they are punitive: Smithies Holdings Inc. v. RCV Holdings Ltd., 2017 BCCA 177 at para. 56.
The purpose of special costs is to censure and deter litigation misconduct, not to compensate the plaintiff: Tanious v. The Empire Life Insurance Company, 2019 BCCA 329 at para 53”

Special costs are fees a reasonable client would pay a reasonably competent solicitor to do the work described in the bill: Bradshaw Construction Ltd. v. Bank of Nova Scotia (1991), 54 B.C.L.R. (2d) 309 (S.C.), para. 44.

A special costs award is to provide an indemnity to the successful party, but not a windfall; Gichuru v. Smith, 2014 BCCA 414, at para. 155.

Although there may be a close relationship between actual legal expenses and special costs, they are not necessarily the same: Tanious v. The Empire Life Insurance Company, 2019 BCCA 329, para. 49.

This is because legal fees that a lawyer can recover from a client are determined on a subjective standard, pursuant to the Legal Professions Act, whereas only fees that are objectively reasonable in the circumstances are recoverable as special costs: Gichuru, para. 155;

 

REPREHENSIBLE CONDUCT

Special costs are not generally awarded unless the parties conduct has been reprehensible during the course of the trial, including conduct that is scandalous, outrageous, or other forms deserving of rebuke.

In Mayer v Osborne Contracting Ltd 2011 BCSC 914 at para. 11 the court set out those circumstances that warranted the attraction of special costs:

1) where a party pursues a meritless claim and is reckless with regard to the truth;

2) where a party makes improper allegations of fraud, conspiracy, fraudulent misrepresentation, or breach of fiduciary duty;

3) Where a party has displayed reckless indifference by not recognizing early on that it’s claim was manifestly deficient;

4) Where a party made the resolution of an issue, far more difficult than it should have been;

5) Where a party in a financially superior position to others brings proceedings, not with a reasonable expectation of affairs are favorable outcome, but in the absence of merit in order to impose a financial burden on the opposing party;

6) Where a party presents a case so weak that it is bound to fail and continues to pursue its meritless claim after it is drawn to its attention that the claim is without merit;

7) Where a party brings a proceeding for an improper motive;

8) Where a party maintains unfounded allegations of fraud or dishonesty ( include undue influence);

9) Where a party pursues claims frivolously or without foundation.

Smithies Holdings Inc. v RCV Holdings Ltd 2017 BCCA 177 held that special costs should only be awarded to punish reprehensible conduct in the course of the litigation, and should not be awarded for pre-litigation conduct.

The court also noted however that there may arise circumstances where special costs may be awarded because of reprehensible conduct giving rise to the litigation, particularly where the fruits of the litigation do not provide any appropriate compensation in relation to the reprehensible conduct.

Allegations of pre litigation fraud or undue influence where there is scant evidence have been known to incur awards of special costs.

In Wilson v Lougheed 2012 BCSC 1166 the court awarded special costs for four of the 14 day trial against an executor who crossed the line in a highly charged wills variation case advanced by his daughter.

 

Registrar’s Criteria In Assessing Special Costs

Generally speaking the trial judge will not specify the amount of special costs and will instead refer the matter to a registrar to conduct a hearing. Registrars develop knowledge and skill in the assessment of legal bills and court costs that is seldom matched by that of a trial judge. It is however within the jurisdiction of a trial judge to assess the amount of costs.

Rule 16-1(2) sets out matters that apply on an assessment of special costs:

On an assessment of special costs, a registrar must

(a) allow those fees that were proper or reasonably necessary to conduct the family law case, and

(b) consider all of the circumstances, including the following:

(i) the complexity of the case and the difficulty or the novelty of the issues involved;

(ii) the skill, specialized knowledge and responsibility required of the lawyer;

(iii) the amount involved in the case;

(iv) the time reasonably spent in conducting the case;

(v) the conduct of any party that tended to shorten, or to unnecessarily lengthen, the duration of the family law case;

(vi) the importance of the case to the party whose bill is being assessed, and the result obtained;

(vii) the benefit to the party whose bill is being assessed of the services rendered by the lawyer;

 

Applies to a Team of Lawyers

The test to be applied does not necessarily limit special costs to fees that would be charged by one lawyer only.

It now is quite common for a law firm to have more than one lawyer work on a file. Delegating some of the work to a competent lawyer who bills at a lower hourly rate than the lead lawyer can benefit the client by reducing overall legal fees.

When assessing special costs the overall handling of the file is to be considered to determine if the fees claimed as special costs are objectively reasonable in all the circumstances.

That standard applies whether one lawyer or more than one lawyer performs the legal services claimed as special costs.

The fees charged by the claimant’s lawyers are fees a reasonable client would pay reasonably competent counsel for the work done to conduct this case.

When a trial judge orders special costs of a proceeding, the award of special costs includes the cost of any special costs application and any subsequent proceedings to assess costs unless the court otherwise orders.

 

FIDUCIARIES

Special costs are routinely awarded to a party who is a fiduciary in circumstances where there has been no reprehensible conduct by that party or any other litigant. Mawdsley v Meshen 2011 BCSC 923.

For example an executor/trustee , in the absence of misconduct, is ordinarily entitled to recoup from the estate the legal costs reasonably incurred in litigation such as in a wills variation claim where the executor must be named as a party.

In Re Campbell Estate 2015 BCSC 774 an administrator was removed and ordered to pay special costs of the application on the basis that his conduct throughout was reprehensible and called for rebuke.

 

CONTINGENCY FEE

 

In an ICBC case Norris v Burgess Oct.14, 2015 Vancouver registry M123216 BCSC the plaintiff was awarded special costs for a 20 day jury trial in the amount of the plaintiff’s contingency fee based on the award of $462,000 in damages. We don’t know the percentage of the fee agreement but it is likely in the range of %25-331/3.

The defendant insurance company had produced videotapes of the plaintiff in 2013 and 2014, but contrary to a court order to disclose all surveillance videos on or before October 23, 2015, a video from 2015 was not disclosed until after the third week of trial.

 

SUMMARY OF APPLICSABLE PRINCIPLES

In Westsea Construction Ltd. 0759553 BC ltd 2013 BCSC 1352 stated:

1) the court must exercise restraint in awarding special costs;

2) The party seeking special costs must demonstrate exceptional circumstances to justify a special costs order;

3) Simply because the legal concept of reprehensible and he captures different kinds of misconduct does not mean that all forms of misconduct are encompassed by this term;

4) Reprehensible conduct will likely be found in circumstances where there is evidence of improper motive, abuse of the court’s process, misleading the court and persistent breaches of the rules of professional conduct and the Rules of Court that prejudice the applicant;

5) Special costs can be ordered against parties and non parties alike; and

6) the successful litigant is entitled to costs in accordance with the general rule that costs follow the event. Special costs are not awarded to a successful party as a bonus for further compensation for that success.

The question in every case is whether on a consideration of the substandard conduct of the party making the allegation and the conduct of the litigation itself, the person or persons against whom the order is sought has acted in a manner that is sufficiently reprehensible to a warrant chastisement of the court.

 

 

CONCLUSION

Two trends have emerged with respect to the issue of court costs in estate litigation over the last 20 years:

1) the usual rule that costs follow the event, as opposed to the estate paying all the parties costs has become the norm. Exceptions occur such as when the litigation is as a result of the testator’s actions.

2) the increased willingness of the court to award special costs as a means of discouraging and chastising a litigant whose conduct is considered by the court to fall within the classification of reprehensible. Reprehensible conduct is defined broadly and encompasses misconduct ranging from scandalous and outrageous at one extreme, to milder forms of misbehavior warranting judicial rebuke at the other.

Stated bluntly, the courts are extremely busy and a litigant who wastes the court’s time runs a significant risk of having to pay the other parties legal fees by an award of special costs.

Cost Awards Against Non Parties

The BC Court of Appeal in Hollander v Mooney 2017 BCCA 238 discussed the rare circumstances where the court may award costs against  non parties.

One or more of the circumstances that might warrant an award of costs against a non party are occasionally seen in estate litigation

The Court’s jurisdiction to order costs against a non-party is limited to special circumstances such as:

– fraudulent conduct,
– abuse of process,
– gross misconduct,
– or circumstances where the non-party is the “real litigant”

Anchorage Management Services Ltd. v. 465404 B.C. Inc., 1999 BCCA 771 at para. 21; Perez v. Galambos, 2008 BCCA 382 at paras. 17–18; and Animal Welfare at paras. 53–58.

The previous appeal decision Perez v Galambos summarized the jurisdiction to award costs against a non-party:

“ The court does have jurisdiction to order costs against a non-party: Oasis Hotel Ltd. v. Zurich Insurance Co. (1981), 1981 CanLII 433 (BC CA), 28 B.C.L.R. 230 (C.A.).

However, an award of costs against a non-party is unusual and exceptional, and should only be made in “special circumstances”: Anchorage Management Services Ltd. v. 465404 B.C. Inc., 1999 BCCA 771, 72 B.C.L.R. (3d) 389, at para. 21.

“Special circumstances” have been held to include situations where the non-party has engaged in fraudulent conduct, an abuse of process, or gross misconduct in the commencement and/or conduct of the litigation, or when the non-party is the “real litigant”:

Executor Remuneration When Stipulated

The Supreme Court of British Columbia has no inherent jurisdiction to award or vary  remuneration to an executor/ trustee where the remuneration is agreed to or stipulated  in the trust agreement or  in a will. Re Edy 1982 CarswellBC 311.

The court’s power to fix the remuneration of a trustee is statutory under the Trustee act.

The court found it significant that the provisions of section 90 of the Trustee act RSBC, the section which provides that it is lawful for the Supreme Court to allow a trustee, a fair and reasonable allowance, not exceeding 5% of the gross aggregate value, including capital and income of all of the assets of the estate, by way of remuneration for the trustees care, pains, trouble and time expended in or about the trusteeship.

The court held that it was bound by the previous decision of re Holmes (1916) 10 OWN 354 and re Robertson 1949 OWN 390 to mean that there is no inherent jurisdiction in the Supreme Court to increase the remuneration to a trustee, where the remuneration has been agreed to in the trust agreement.

The same reasoning would likely apply to the trustee of a will