Special Costs of $1.2 Million Awarded

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

The award of special costs was essentially an award of full indemnity to the applicant by reason of the conduct of her partner that resulted in the ward of special costs against him.

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: Grewal v. Sandhu, 2012 BCCA 26 at para. 106; 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 provide a much greater degree of indemnity than party and party costs. Rule 16-1(2) sets out matters that apply on an assessment of special costs:

(2) 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 family law 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 family law case;
(iv) the time reasonably spent in conducting the family law 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 family law 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;
(viii) Rule 1-3.

Special costs are fees a reasonable client would pay 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. That is because legal fees a lawyer can recover from a client are determined on a subjective standard, pursuant to the Legal Profession Act, whereas only fees that are objectively reasonable in the circumstances are recoverable as special costs: Gichuru, para. 155; Bradshaw Construction, para. 45.

The claimant’s lawyers’ handling of the file should be considered in the situation that prevailed at the time the fees were incurred. They encountered many difficulties when attempting to carry out the tasks required for the conduct of the case.

The test to be applied does not necessarily limit special costs to fees that would be charged by one lawyer only. Although counsel for Mr. Yehia correctly points out that the court in Bradshaw Construction, at para. 44, refers to fees a reasonable client would pay “…a reasonably competent solicitor”, the guideline must be applied in a modern context. It now is quite common for a 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, subject to the deduction set out in the last section of these reasons, are fees a reasonable client would pay reasonably competent counsel for the work done to conduct this case. They will not be reduced by a percentage discount.

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.

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