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Non Disclosure of Assets and Special Costs

Chapman v Chapman 2020 BCSC 1986 awarded special costs against a party who failed to disclose assets in a family case as is required.

Non-disclosure of assets and financial information, in particular, has been described as the cancer of family litigation and is viewed as being particularly egregious, potentially justifying an award of special costs: Leskun v. Leskun, 2006 SCC 25at para. 34, citing with approval Cunha v. Cunha (1994), 99 B.C.L.R. (2d) 93, [1994] B.C.W.L.D. 2804 (S.C.); Jin v. Cheng, 2019 BCSC 148at para. 59.

The same argument could be made against a party in an estate dispute, which would likely be against the executor/trustee.

Special costs are punitive and imposed to sanction a party’s reprehensible conduct during the litigation, conduct from which the court seeks to disassociate itself: Garcia v. Crestbrook Forest Industries Ltd. (1994), 119 D.L.R. (4th) 740 at 745, 9 B.C.L.R. (3d) 242 (C.A.) [Garcia]; R.A.C. v. V.L.C., 2009 BCSC 1207at para. 11.

The word “reprehensible” is broad and encompasses scandalous or outrageous conduct as well as milder forms of misconduct deserving of reproof or rebuke: Garcia at 746 — 747. Improper pre-litigation conduct is excluded from consideration: Smithies Holdings Inc. v. RCV Holdings Ltd., 2017 BCCA 177 at paras. 133 — 134.

In 567 Hornby Apartment Ltd. v. Le Soleil Restaurant Inc., 2020 BCCA 69, leave to appeal ref’d 39145 (1 October 2020)

The Court affirmed the purpose of special costs is to punish and deter litigation misconduct, not to compensate the other party: at paras. 40 — 42.

Special costs also enable a court to substantially indemnify a successful party: Everywoman’s Health Centre Soc. (1988) v. Bridges (1991), 54 B.C.L.R. (2d) 294 at 297, [1991] B.C.W.L.D. 816 (C.A.); Tanious v. The Empire Life Insurance Company, 2019 BCCA 329, leave to appeal ref’d 38924 (20 February 2020), at para. 49. The indemnification function is particularly relevant where one party has had to incur excessive costs due to misconduct on the part of the other party: D’Atri v. Gonzalez, 2017 BCSC 1244at para. 55 [D’Atri].

8 It is not necessary for the party’s conduct throughout the litigation to have been reprehensible to warrant an award of special costs for the entire action: Bradshaw Stenner, 2012 BCSC 237 at para. 9, leave to appeal ref’d 2012 BCCA 481. Nonetheless, while special costs are usually awarded for the whole proceeding, where such an award would be disproportionate, the court has the discretion to award special costs with respect to particular steps in the litigation: SCFR R. 16-1(1)(b)(ii); Gichuru v. Smith, 2014 BCCA 414at para. 91, leave to appeal ref’d 36221 (16 April 2015).

While not exhaustive, the types of conduct that may attract an award of special costs include delayed disclosure of or a failure to disclose documents, dissipating or not disclosing assets, depriving the other party of financial assets, disregarding the other party’s interest in family assets, pursuing meritless claims and being reckless with regard to the truth, improper allegations of fraud or conspiracy, or making the resolution of an issue far more difficult than it should have been: Hu v. Dickson, 2015 BCSC 218at para. 49; McIntyre v. McIntyre, 2018 BCSC 472at paras. 7 — 8; Mayer v. Osborne Contracting Ltd., 2011 BCSC 914 at para. 11; see also Westsea Construction Ltd. v. 0759553 B.C. Ltd., 2013 BCSC 1352 [Westsea] and D.G.S. v. J.D.S., 2014 BCSC 2183.

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