Cohabitation Agreement Upheld- S. 93 Family Law Act

In Hudema v Moore 2021 BCSC 587 the parties signed a cohabitation  agreement between themselves that while they cohabited, the relationship would NOT be defined as marriage like, the court reviewed S. 93 Family law act and  upheld the agreement.

The male partner had brought an action under section 93 (3) and 93 (5) of the Family Law Act based on unfairness and misrepresentation of the “true” purpose of the agreement.

The court held that the Agreement was not substantively unfair, and there was no basis to set it aside under s. 93(5) of the FLA

 

S. 93 Family Law Act

 

(3) On application by a spouse, the Supreme Court may set aside or replace with an order made under this Part all or part of an agreement described in subsection (1) only if satisfied that one or more of the following circumstances existed when the parties entered into the agreement:

(a)a spouse failed to disclose significant property or debts, or other information relevant to the negotiation of the agreement;
(b)a spouse took improper advantage of the other spouse’s vulnerability, including the other spouse’s ignorance, need or distress;
(c)a spouse did not understand the nature or consequences of the agreement;
(d)other circumstances that would, under the common law, cause all or part of a contract to be voidable.

(4)The Supreme Court may decline to act under subsection (3) if, on consideration of all of the evidence, the Supreme Court would not replace the agreement with an order that is substantially different from the terms set out in the agreement.

(5)Despite subsection (3), the Supreme Court may set aside or replace with an order made under this Part all or part of an agreement if satisfied that none of the circumstances described in that subsection existed when the parties entered into the agreement but that the agreement is significantly unfair on consideration of the following:

(a)the length of time that has passed since the agreement was made;

(b)the intention of the spouses, in making the agreement, to achieve certainty;

(c)the degree to which the spouses relied on the terms of the agreement.

 

Mr. Hudema voluntarily chose to sign the Agreement and was not coerced into doing so. While there was no certificate of independent advice signed, Mr. Hudema did have an opportunity to consult with a lawyer before signing. His decision to sign the Agreement was an informed one.

The court concluded there was no procedural unfairness in the process by which the Agreement was signed, and no basis to set aside the Agreement, in whole or part, on any of the grounds listed in s. 93(3) of the FLA.

Unfairness

Mr. Hudema alternatively argues that the Agreement should be set aside pursuant to s. 93(5) because it is significantly unfair in its terms. The issue of whether the terms of the Agreement are significantly unfair turns on a consideration of the factors listed in s. 93(5)(a)-(c) of the FLA, including the length of time that has elapsed, the intentions of the spouses in making the agreement, and their reliance on the terms of the Agreement.

This is not a case where circumstances have changed since the making of the Agreement such as to undermine the parties’ intentions in signing it. The parties’ relationship ended just over a year after the signing of the Agreement.

There is no evidence that their financial circumstances substantially changed over the course of that year. Mr. Hudema simply regrets his agreement and wants to be released from it.

What Debts Survive Bankruptcy

Re Poonian 2021 BCS555 reviewed the law as to what debts survive an order of bankrupty and thus cannot be avoided.

 

In Cruise Connections Canada v. Szeto, 2015 BCCA 363 at para 14, our Court of Appeal endorses the description of the purpose and principles of the BIA in general and s 178 in particular as set out by Blair J (then serving ad hoc on the Ontario Court of Appeal; later JA) in Simone v. Daley (1999), 170 DLR (4th) 215 (ONCA):

 

An important purpose of bankruptcy legislation is to encourage the rehabilitation of an honest but unfortunate debtor, and to permit his or her re-integration into society – subject to reasonable conditions – by obtaining a discharge from the continued burden of crushing financial obligations which cannot be met.

Debts which survive a bankruptcy as a result of the provisions of subsection 178(1), therefore, are exceptions to the overriding principle, and should be addressed accordingly.

 

An analysis of the provisions of subsection 178(1) shows that the types of debt which survive a bankruptcy may be divided into four overall categories, namely,

 

(1) those which have been imposed by a court in the form of a fine or some other penalty for an offence against the state (paragraph (a));
(2) those which reflect the legislative policy decision to protect spouses and children requiring support (paragraphs (b) and (c));
(3) those arising out of acts of fraud, dishonesty, or misconduct while acting in a fiduciary capacity (paragraphs (d) and (e)); and finally,
(4) those which, if discharged, would undermine the integrity of the bankruptcy process itself (paragraph (f)).

 

In Jerrard v. Peacock [(1985), 57 C.B.R. (N.S.) 54 (Alta. Q.B.)], Master Funduk—an experienced official in matters of this nature—subjected section 178 to the following analysis, which in my opinion is an accurate one. At pp. 62–63 he said:

Considering the new start object ingrained in the Act, the logical interpretation of the two subsections in question is that subs. (2) creates the general principle (being a release of all debts) with subs. (1) being an exception to the general principle. [Subsection (1)] establishes exceptions, not the principle, and must be viewed in that light.

 

It is as if the section literally reads that the order of discharge releases the bankrupt from all claims provable in bankruptcy “except the following” and then lists the seven (now six) categories in subs. (1).
. . .
All of the exceptions in the section are based on what might be classed as an overriding social policy. In other words, they are the kinds of claims which society (through the legislators) considers to be of a quality which outweighs any possible benefit to society in the bankrupt being released of these obligations.
. . .
Paragraphs (d) and (e) are morality concepts which look at conduct. These kinds of conduct are unacceptable to society and a bankrupt will not be rewarded for such conduct by a release of liability.

 

[ The intention of Parliament in enacting s 178 is to prevent a bankrupt from using the statutorily-bestowed shield of bankruptcy to avoid the payment of debts arising from intentionally bad conduct: Martin v. Martin, 2005 NBCA 32 at para 11; Mutual Transportation Services Inc. v. Saarloos, 2020 NSSC 198 at para 14.

 

Courts accordingly “take a purposive approach to interpreting s. 178(1)(d) and (e) to ensure that debtors do not benefit from their dishonesty”: HY Louie Co. Limited v. Bowick, 2015 BCCA 256 at para 41.

[ The creditor seeking to have the debt or liability survive the discharge bears the onus of establishing that one of the provisions of s 178(1) apply: Toronto-Dominion Bank v. Merenick, 2007 BCSC 1261 at para 48; Gray (Re), 2014 ONCA 236 at para 24.

Lawyer Negligence

Tellini v Grewal and Bell Alliance 2021 BCS549 discussed the standard of care upon a lawyer who for negligence.

The law is clear with respect to the standard of care required :

A leading case is Central Trust Co. v. Rafuse, [1986] 2 S.C.R. 147 at paras. 58 and 59 [Central Trust]:

 

1. A solicitor is required to bring reasonable care, skill and knowledge to the performance of the professional service which he has undertaken. See Hett v. Pun Pong (1890), 18 S.C.R. 290 at 292 (S.C.C.). The requisite standard of care has been variously referred to as that of the reasonably competent solicitor ( lawyer), the ordinary competent solicitor and the ordinary prudent solicitor.

2. A solicitor is not required to know all the law applicable to the performance of a particular legal service, in the sense that he must carry it around with him as part of his “working knowledge”, without the need of further research, but he must have a sufficient knowledge of the fundamental issues or principles of law applicable to the particular work he has undertaken to enable him to perceive the need to ascertain the law on relevant points.

3. “An attorney is expected to possess knowledge of those plain and elementary principles of law which are commonly known by well informed attorneys, and to discover those additional rules of law which, although not commonly known, may readily be found by standard research techniques.

 

The law with respect to the standard of care required of lawyers was discussed in in Newton v. Marzban, 2008 BCSC 328 at paras. 605-609 [Newton].

At para. 605 she referred to Millican v. Tiffin Holdings Ltd. (1964), 49 D.L.R. (2d) 216 at 219 (Atla. T.D.), aff’d [1967] S.C.R 183 for this list of a lawyer’s obligations:

(1) To be skilful and careful.
(2) To advise his client on all matters relevant to his retainer, so far as may be reasonably necessary.
(3) To protect the interests of his client.
(4) To carry out his instructions by all proper means.
(5) To consult with his client on all questions of doubt which do not fall within the express or implied discretion left to him.
(6) To keep his client informed to such an extent as may be reasonably necessary, according to the same criteria.

Millican referred at paras. 607 and 608 to the lawyer’s duty to inform a client of all relevant matters, and to warn of risks that accompany a proposed course of action, relying on Girardet v. Crease & Co. (1987), 11 B.C.L.R. (2d) 361 (S.C.)

Fiduciary Obligations of a Power of Attorney

Sarzynick v Skwarchuk 2021 BCSC 443 discussed the fiduciary obligations that an ad hoc fiduciary attorney under a power of attorney would owe in equity that have largely been codified in the Power of Attorney Act, R.S.B.C. 1996, c.370 (“PAA”):

For example, s. 19(1) of the PAA now mandates that an attorney must “act honestly and in good faith” and “exercise the care, diligence and skill of a reasonably prudent person”.

Moreover, s. 19(1)(d) requires that an attorney “keep prescribed records and produce the prescribed records for inspection and copying at the request of the adult.”
An attorney is required to act in the “adult’s best interest’s” when managing and making decisions about the adult’s financial affairs: PAA, s. 19(2).

Finally, pursuant to s. 19(4) of the PAA, an attorney must keep their own property separate from the donor’s property.

In a similar vein, the Power of Attorney Regulation, B.C. Reg. 20/2011 (“Regulation”) imposes further obligations on attorneys.

Section 2(1) mandates that an attorney acting under an enduring power “must make a reasonable effort to determine the adult’s property and liabilities as of the date on which the attorney first exercises authority on the adult’s behalf” and “maintain a list of that property and those liabilities.”

 

Further record keeping obligations are imposed under s. 2(2) of the Regulation, which provides as follows:

(2) An attorney acting under an enduring power of attorney must keep the following records in relation to the period for which the attorney is acting:
(a) a current list of the adult’s property and liabilities, including an estimate of their value if it is reasonable to do so;
(b) accounts and other records respecting the exercise of the attorney’s authority under the enduring power of attorney;
(c) all invoices, bank statements and other records necessary to create full accounts respecting the receipt or disbursement, on behalf of the adult, of capital or income.
In short, the Regulation imposes fairly robust record keeping obligations on those acting under an enduring power of atto
The standard of care for an attorney, which has now been codified under s. 19(1) of PAA, was well-established in the case law by 2008.
For example, in Andreasen v. Daniels-Ferrie, 2001 BCSC 1503 at para. 27, the requisite standard of care for a fiduciary acting under a power of attorney was described as follows:
even where the attorney acts gratuitously he or she has a duty to account, to exercise reasonable care as would a typically prudent person managing his or her own affairs, and not act contrary to the interests of the donor.

Principles of Contract Interpretation

 

Principles of Contractual Interpretation

 

  1. The goal is to ascertain the objective intentions of the parties
  2. A practical, common sense approach is required;
  3. The court is to look to the contract as a whole and give effect to all provisions (i.e., provisions should not be read as standing alone but in light of the contract as a whole);
  4. Words used must be given their ordinary and grammatical meaning, consistent with the surrounding circumstances known to the parties at the time;
  5. Contextual evidence must not be permitted to overwhelm the wording of the agreement);
  6. Contractual provisions should be interpreted in the context of the objective intention of the parties as evidenced by the contract as a whole;
  7. It should be presumed that the parties meant what they said in the contract; and
  8. The contract’s interpretation should accord with sound commercial principles and good business sense. It is important to consider the purpose and nature of the relationship established by the contract,

(Sattva Capital Corp. v. Creston Moly Corp. 2014 SCC 53).

 

Courts seek to discover what the parties intended, not what a court thinks reasonable.

In determining the intention of the parties, and where appropriate, the court has the ability to imply terms even if the parties did not put them in writing. A term cannot be implied simply on the ground of fairness. There has to be strong evidence to support the conclusion that the implication of a term is permissible in the circumstances: Fridman, G.H.L., The Law of Contract in Canada, 6th Ed. (Toronto: Thomson Reuters, 2011) at 463–64.

 

Ultimately, a term can be implied into a contract in one of three general scenarios:

  1. Where custom and usage necessitates the implication of the term;
  2. Where a term is necessary to give business efficacy to a contract by implying terms that the parties would have obviously assumed; and
  3. Where the proposed term is implied by law;

(see M.J.B. Enterprises Ltd. v. Defence Construction (1951) Ltd., [1999] 1 S.C.R. 619 at 634–635 [M.J.B.]; Machtinger v. HOJ Industries Ltd., [1992] 1 S.C.R. 986 at 1009–1010, per McLachlin J., as she then was; Union Road Properties Ltd. v. British Columbia, 2019 BCCA 302 at para. 18).

[        In considering whether certain terms of a settlement contract were implied, the court will look at the settlement discussions and the documentation and correspondence in the context of normal business and common sense: Urban Handyman Inc. v. Should I stay or Should I Go West Productions Inc., 2015 BCSC 1780 at para. 56, quoting Cellular Rental Systems Inc. v. Bell Mobility Cellular Inc., [1995] O.J. No. 721 (Gen. Div.).

 

When considering whether an implied term is necessary, the court must not slip into a determination of the intention of reasonable parties; the term must have “a certain degree of obviousness to it” that the actual parties would have intended at the time of contract formation: M.J.B., at 635; Illidge v. Sona Resources Corporation, 2019 BCCA 89 at para 23, quoting Moulton Contract Ltd. v. British Columbia, 2015 BCCA 89 at paras. 55, 58.

 

Equity Demands “Clean Hands”

The equity demands  “clean hands” doctrine was discussed in Wang v. Wang, 2020 BCCA 15.

The clean hands doctrine decrees that “[h]e who comes to equity must come with clean hands”: Mayer v. Mayer, 2012 BCCA 77.

The doctrine is narrowly applied, however, and does not entitle a court to canvass all aspects of the party’s behaviour known to the court. Its use must be kept to the circle of behaviour related to the relief sought.

In DeJesus v. Sharif, 2010 BCCA 121 at para. 85 the court stated:

“The maxim … must not be taken too widely; ‘Equity does not demand that its suitors shall have led blameless lives.’ What bars the claim is not a general depravity but one which has ‘an immediate and necessary relation to the equity sued for,’ and is not balanced by any mitigating factors.”

The Principles of Equitable Remedies, 6th ed. (UK: Sweet & Maxwell, 2001) at 169-170:

… it must be shown, in order to justify a refusal of relief, that there is such an “immediate and necessary relation” between the relief sought and the delinquent behaviour in question that it would be unjust to grant that particular relief. …

So it was once emphasised “that general fraudulent conduct signifies nothing; that general dishonesty of purpose signifies nothing; that attempts to overreach go for nothing; that an intention and design to deceive may go for nothing, unless all this dishonesty of purpose, all this fraud, all this intention and design, can be connected with the particular transaction, and not only connected with the particular transaction, but must be made to be the very ground upon which the transaction took place, and must have given rise to this contract”.

[

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