Court Costs and Substantial Success

Court Costs and Substantial Success

When there is divided success between the parties after a trial, and a dispute arises as to entitlement to court costs, the courts often look to which party had to the “substantial success” as being the justification for an award of costs.

In Webber v Sullivan 2019 BCSC 1784, the court stated:

“Rule 14 –1(9) of the SCCR provides that the costs of the proceeding must be awarded to the successful party unless the court otherwise orders. When the litigation concerns multiple causes of action, it is appropriate to apply the “substantial success” to decide which party has been successful. The Owners, Strata Plan LMS3259 v Sze Hang Holdings Inc 2017 BCCA 34 at paragraphs 91 – 92.

“Substantial success” is determined by looking at the matters in dispute between the parties, assessing their importance to the parties, and doing a global determination of which party succeeded overall. Gagne v Sharp 2015 BCSC at 42.

The determination of substantial success is not require “meticulous mathematical calculation” of the precise amount of court time spent on various issues. Substantial success is measured in broad terms: Stearman v Powers 2017 BCCA 165 at para.65

No Special Costs Awarded in Lost Undue Influence Claim

Special Costs NOT Awarded in Losing Undue Influence Claim

In Webber v Sullivan 2019 BCSC 1784 the court declined to award special costs to a defendant who successfully defended a claim brought by plaintiff alleging undue influence on the part of the defendant.

The court instead awarded costs in favor of the defendant on a party and party basis, which is substantially a lesser amount of money.

For several years now the general rule of thumb with respect to the matter of undue influence allegations and costs, is while the court always has a discretion in the matter of costs, an allegation of undue influence was tantamount to that of fraud, and a failure to succeed at trial, often resulted in an award of special costs against the losing party.

There are plenty of cases to support that general proposition. ( see Stewart v McLean 2010 BCSC 64 for example)

The facts in this case were such that the court varied the will pursuant to the wills variation act portions of WESA ( S.60) , but dismissed the plaintiff application for a declaration that the inter vivos transfer of property by the testator, the party’s mother, was the result of undue influence of the defendant.

The defendant brought application for an award of special costs, but the losing plaintiff on the issue of undue influence successfully argued that special costs should not be awarded and the court agreed with the latter.

The Law

The court referred to in the decision of Allart Estate v Allart 2016 BCSC 768, where the court summarize the principles that guide court’s jurisdiction to award special costs:

15 “ The court is also empowered to order special costs in exceptional circumstances. In the leading decision of Garcia v. Crestbrook Forest Industries (1994) 9 BCLR (3d) 242 (CA) , the court established reprehensible as the single standard for the award of special costs. In recognition of the broad meaning of the word reprehensible, the court explained that in order for an award of special costs to be justified, “something more” is required, such as improper allegations of fraud, or an improper motive for bringing the proceedings, or improper conduct of the proceedings. An action that has little merit is not, without more, reason for awarding special costs (para.23)

Undue Influence and Special Costs

The party seeking special costs must demonstrate exceptional circumstances to justify a special costs order. The court should show restraint in awarding special costs. Westsea Construction LTD v 0759553 BC LTD 2013 BC SC 1352 at paragraph 73.

The court found that the plaintiff allegation of undue influence in this decision was tenuous, but that is different from saying it was bound to fail. The plaintiff did have reason to question the testator’s intent in transferring the apartment to the defendant. Given the statement in her will that she did not intend to create a joint tenancy with the defendant. This is not a case in which there was no evidence whatsoever to support the claim. The court also accepted that the plaintiff did not have improper or ulterior motives in advancing it.

The court merely criticized the plaintiff for bringing a weak claim and that they ought to have exercised greater caution in doing so, but bearing in mind the need to exercise restraint in an award of special costs, the court did not find that the plaintiff’s conduct in pursuing the claim of undue influence was sufficiently reprehensible to give rise to an award of special costs.

Cost Risk in Contested Committeeships

Cost Risk in Contested Committeeships

Ellis v. BC Public Guardian and Trustee 2019 BCSC 1006 is an example of the risk of cost awards to the losing party in a contested committeeship under the Patient’s Property Act being denied and the losing party  incurring personal costs .

There had long been a false notion that both the winning party and the losing litigant would both be awarded their costs on a special cost basis from the patient’s estate, but that never really was the case, and the Ellis case is an example of that risk. It ultimately depends if the litigation was in the best interests of the patient or not and was it necessary.

The petitioner had filed an application to be named the committeeship in the place of the Public Guardian and Trustee. The Public Guardian and Trustee did not oppose the application, but an estranged half-sister did.

The court found that both sisters were suspicious of the other’s motives for wanting to be the committee. The litigation became acrimonious and all parties ultimately consented to the appointment of the Public Guardian and Trustee as committee of both the affairs and person of the patient.

After reviewing the law on costs, the court concluded that the factual situation did not warrant a departure from the ordinary rule of costs, namely that the unsuccessful litigant should not be entitled to her costs from the estate, special or otherwise. Accordingly , the petitioners application for costs to be paid out of the estate was dismissed.

Law on Costs

Section 27 of the Patient’s Property act provides that the costs of all proceedings under the act are in the court’s discretion.

As set out in rule 14-1(9) of the Rules of Court, an unsuccessful party typically bears their own costs.

However, in probate litigation, the court may decide to order special costs be paid out of the estate to unsuccessful parties in committee disputes where they participated not to advance their own interests, but to protect the best interest of the patient.

For example, special costs were awarded to both parties seeking committeeship in Pritam Kaur Atwal 2005 BCSC 660 where the court followed Bush Estate (1995) 56 ACWS 589 at paragraph 24:

“ the master awarded special costs to the petitioners, who were unsuccessful in having their mother declared incapable of managing herself and her affairs. The intentions of the petitioners are thus described:

The petition was commenced not to advance the interests of the petitioners, but to protect the interest of the patient. The petitioners were not advancing some right, or some interest or even some perceived right or interest that had vested in them as would be the case in a wills variation application or in the case of interparty litigation. There was no benefit to be obtained by them at law. They were simply acting in what they perceived to be in the best interest of their mother, the proposed patient.

The court cited Royal Trust Corporation of Canada v . Clarke (1989) 35 BCLR 82 that found although the case concluded the successful petitioner for a committeeship should be awarded special costs, this ratio could also be extended to unsuccessful petitioners whose actions were motivated by concern for the best interest of the proposed patient. In the specific circumstances of that case, the special costs were limited in time to exclude certain expenses.

The court also referred to Re Sangha 2013 BCSC 1965 at paragraph 114 “ whether the unsuccessful party brought the petition in good faith for the benefit and in the best interests of the patient, and whether her conduct in doing so should be discouraged.”

Both parties relied upon Ng v Ng 2013 BCSC 1494 at paragraph 16 for the proposition that in considering whether costs are payable from the estate to an unsuccessful party, the court must consider whether the petitioner was forced into bringing the petition. In other words, was the petition necessary in any event? In Ellis the petition was not necessary.

Apportionment of Costs

Apportionment of Costs

Norkhum v Fletcher 2019 BCSC 922 -1(15) held that the court has a broad discretion to apportion costs to achieve a just result.

The factors to consider under rule 14 – 1(15) in apportioning costs were set out in Sutherland v Canada (Atty. Gen.) 2008 BCCA 27 at paragraph 29 – 31:

29) a plain reading of the rule appears to give the judge or broad discretion to award costs to an unsuccessful party, or to deny costs to a successful party, with respect to an identifiable issue are part of the proceeding. As with every discretionary power, it must be exercised on a principal basis.

30) British Columbia v . Worthington Canada is the leading case with respect to the application of rule 57 (15) (1988) 29 BCLR 145 BCCA at 169 . It affirms that under that rule, the court has full power to determine by whom the costs related to a particular issue are to be paid. As Worthington states the discretion of the trial judge under rule 57 (15) is very broad, and must be exercised judicially, not arbitrarily or capriciously. There must be circumstances connected with the case which render it manifestly fair and just to apportion costs.

(31) The test for the apportionment of costs under rule 57(15) , the predecessor of rule 14-1 (15) can be set out as follows:

1) The party seeking apportionment must establish that there are separate and discrete issues upon which the ultimately unsuccessful party succeeded at trial;
2) there must be a basis on which the trial judge can identify the time attributable to the trial of the separate issues;
3) it must be sure that apportionment would affect a just result..

The Norkhum decision went on to state that the apportionment of costs is not a regular part of litigation and is relegated to the relatively rare cases .

Probate Fees and Capital Gains Taxes

Probate Fees and Capital Gains Taxes | Disinherited Vancouver

Re the Estate of Wilma Bouma 2018 BCSC 1466 involved in application brought by the administrator of the estate of the deceased for an order pursuant to section 2(4) of the Probate Fee act to increase the declared value as of death from $211,300-$315,000.

The deceased had use the notice of assessment issued in 2016 that set the value of the property at $211,300, while a subsequent appraisal indicated that the value of the property as of death was in fact $315,000.

The court found that the notice of assessment while issued in 2016, really reflected the relevant time of value for the assessment as of July 1, 2015, and not 2016.

The court ordered that the value of the property as of the date of death was $315,000 and directed that the probate registry process the supplemental affidavit of assets and liabilities based on the larger amount.

The court stated as an aside that the real reason for the application was to not only reflect the true value as of the property as of the date of death, but that the purpose of same was to in effect reduce the amount of capital gains taxes that would be payable on the property.

The effect of the increased value substantially reduce the amount of capital gains taxes payable on the approximate difference of $100,000, while the additional probate fee would only be 1.4% of the additional value namely $1451.

Contesting Estate Legal Fees

Contesting Estate Legal Fees

Beneficiaries of an estate ordinarily have standing to contest legal bills if an executor seeks to be indemnified for the lawyer’s bill from the estate. See Chute Estate 2014 BCSC 344.

The decision Re Sangha 2018 BCSC 54 was such a situation, and the registrar of the court applied what is known as a “global approach” in assessing the appropriate amount of legal fees that were rendered pursuant to a total of nine invoices.

The jurisdiction of the registrar to take such a global approach was confirmed by the court in Hutchison v. Victoria Golf Club 2009 BCSC 644 where the court stated:

While the reasons do not provide a mathematical roadmap to the amount allowed, they provide a sound foundation upon which to understand the basis of the registrar’s decision.

In the BC Court of Appeal decision Walker v. Schober 2008 BCCA 19 the court reviewed the decision of the Supreme Court, and overturned a decision of the registrar that had reduced a bill from $21,000-$6000.

The registrar in that case, characterized his task as to include consideration in a global sense of the value of the services that have been rendered on the client’s behalf. The Court of Appeal took issue with there being a requirement on the registrar to address every item of evidence, and with this court. Failing to apply a deferential approach to the findings of the taxation officer at paragraph 36.

A review of the solicitors authority supports this global approach. Nathanson et al v. Inmet Mining Corporation 2007 BC SC 724. In that decision. The issue was whether the client should be premium build for a result beyond the amounts previously billed and paid. The court refused to allow a fee of an additional $10,000 as claimed by the law firm, and restricted restricted the fee to the amount already build and paid which included a premium of $5248. The appeal court found this was to be a fair fee.

There are many examples of registrars a pop applying such a global approach that have been affirmed on appeal see Davis and Co. v. Jiwan 2008 BCCA 658.

Section 71 of the Legal Professions act governs the amount executors and lawyers can charge for their legal fees and states that the matters to be considered by the registrar under review are as follows

S 71 (2) subject to the subsections four and five, the registrar must allow fees, charges and disbursements for the following services:

a) those reasonably necessary and proper to conduct the proceeding or business to which they relate;

b) those authorized by the client or subsequently approved by the client, whether or not the services were reasonably necessary and proper to conduct the proceeding or business to which they relate.

71(3) subject to subsection 4 and five, the registrar may allow fees, charges and disbursements for the following services, even if unnecessary for the proper conduct of the proceeding or business to which they relate:

a) those reasonably intended by the lawyer to advance the interests of the client at the time the services were provided;

b) those requested by the client. After being informed by the lawyer that they were unnecessary and not likely to advance the interests of the client.

71.(4) at a review of a lawyer’s bill, the registrar must consider all of the circumstances, including

a) The complexity, difficulty or novelty of the issues involved,

b) the skill, specialized knowledge and responsibility required of the lawyer,

c) the lawyer’s character and standing in the profession,

d) the amount involved,

e) the time reasonably spent,

f) if there has been an agreement that sets a fee rate that is based on an amount per unit of time spent by the lawyer, whether the rate was reasonable

g) the importance of the matter to the client was bill is being reviewed, and

h) the result obtained

7`(5) the discretion of the registrar under subsection 4 is not limited by the terms of an agreement between the lawyer and the lawyer’s client

Failed Undue Influence Claims and Special Costs

Failed Undue Influence Claims and Special Costs

Special costs are frequently awarded against failed litigants of undue influence claims, but this was not the case in our Allart estate v Allart 2016 BC SC 768.

There the judge declined to do so on the basis that the plaintiff had an honest belief that her case was meritorious and her failed allegations of undue influence and suspicious circumstances were not sufficiently reprehensible by themselves to give rise to special costs.

The Court distinguished the conduct  from  the leading BC case of Leung v Chang 2014 BCSC 1243., finding the  behaviour in Leung  was more egregious than that of the defendant. For example, Leung  the allegations were not supported by any evidence, or evidence was not led.

The evidence  in the Allart case in support of the position of the defendant was scant and ultimately was not persuasive, and it cannot be said that there was nothing to raise her suspicions.

Madam  Justice Dardi awa4ded special costs against a self represented  litigant and summarized the approach to failed allegations of undue influence in estate litigation and an award of special costs in Leung v. Chang, 2014 BCSC 1243:

[50]      Where an unsuccessful party has advanced but failed to prove allegations that a will was procured by undue influence, typically the usual rule will apply and costs will be assessed against that party: Maddess at para. 71; Mawdsley at para. 36. These are serious allegations which “stop just short of fraud”: Hamilton v. Sutherland, [1992] 5 W.W.R. 151 at 163 (B.C.C.A.). Whether a failed allegation of undue influence is sufficiently reprehensible that it warrants the court’s condemnation through a special costs award depends on the particular circumstances. The court frequently has found that unsubstantiated allegations of undue influence justified an award of special costs: Benekritis v. Gilbert Estate, [1998] B.C.J. No. 171 (S.C. [In Chambers]); Bates v. Finley, 2002 BCSC 159 ; Kouwenhoven Estate v. Kouwenhoven, 2001 BCSC 1402 ; Stanton v. Stanton Estate, 2008 BCSC 470 ; Maddess at para. 74.

[18]         Furthermore, the fact that a party is unrepresented is not itself a basis for declining special costs. A litigant must still comply with the rules and procedures of the court; failure to do so is not excused by one’s self-represented status: Leung at para. 66.

[19]         An award of special costs may be made against a litigant with indigent status in the proceeding: Sahyoun v. Ho, 2015 BCSC 392 at para. 157; Keremelevski v. V.W.R. Capital Corporation, 2013 BCSC 612 at para. 71; Leger v. Metro Vancouver YWCA, 2013 BCSC 2021 at para. 78.

Court Costs Summarized

Court Costs Summarized

LeClair v Mibrella Inc. 2011 BCSC 533  summarized the law of court costs  and it  was recently re cited in Parmar Estate v Tiwari 2016 BCSC 540:

  1. costs represent an important instrument by which courts can either promote or, conversely, sanction given conduct. Rule 14-1(9) provides one means of achieving this overarching object;
  2. the onus is on the person who seeks to displace the usual rule that costs follow the event though Rule 14-1(9) conveys a discretion to the court, that discretion is to be exercised in a principled way;
  3. the exercise of discretion must be connected to the conduct or misconduct of a party in the litigation;
  4. the conduct in question can arise either at trial or at some earlier stage in the proceeding
  5. costs are not to be used to sanction a party whose evidence was exaggerated or who gave evidence in error; and
  6. where a court concludes that a party has intentionally or deliberately sought to mislead the court, that party will normally be deprived of costs.

Apportionment of Court Costs

Mawdsley v Meshen 2011 BCSC 923 , at para. 44:

[44] An essential principle articulated by the Court of Appeal in Worthington and Sutherland, and recently endorsed in Lewis v. Lehigh Northwest Cement Limited, 2009 BCCA 424, at para. 36, is that because apportionment is an exception to the usual rule, it is to be confined to relatively rare cases. Consequently, it would be overly simplistic to approach apportionment as being a given in all cases where the party who has been successful overall has lost one or more issues, even discrete issues, in the proceeding. There is no automatic entitlement to apportionment despite the aforesaid outcome. At the end of the day, apportionment is meant to achieve fairness in the particular circumstances. For that reason, care must be taken so that an apportionment does not result in an unintended or plainly unfair set-off of costs to a plaintiff who has enjoyed substantial success. Of necessity, apportionment is a matter of judicial discretion.

Court Refuses Special Costs But Awards Increased Costs On Scale C

Court Refuses Special Costs But Awards Increased Costs On Scale C

In our previous blog we discussed the award of special costs made against an estate  administrator who breached his duties.

In  Antrobus v Antrobus  2012 BCSC 613, the Court declined an award of special costs but instead ordered costs to be increased under Tariff C of  The Rules of Court, rather than at the usual Tariff B.

The Court found that the behavior of the defendants, while unusual, was not reprehensible so as to warrant the punishment of special costs.

The terms “scandalous, outrageous or reprehensible” and “deserving of reproof or rebuke” are used to describe the conduct of a party that warrants special costs:  Camaso v. Egan, 2011 BCSC 954 at para. 6.

As stated in other cases, a special costs award goes beyond indemnity and enters the realm of punishment:  380876 British Columbia Ltd. v. Ron Perrick Law Corp., 2009 BCSC 1209 at para. 14, relying on Fullerton v. Matsqui (District) (1992), 74 B.C.L.R. (2d) 305 (C.A.) where evidence presented by one party was calculated to mislead the judge and jury.

Scale C costs are appropriate for matters of more than ordinary difficulty.

In Mort v. Board of School Trustees of School Board No. 63 (Saanich), 2001 BCSC 1473 at para. 6, the criteria to be considered were said to be:

(a)      the length of the trial;

(b)      the complexity of the issues involved;

(c)      the number and complexity of pretrial applications;

(d)      whether the action was hard-fought, with little or nothing conceded along the way;

(e)      the number and length of the examinations for discovery;

(f)       the number and complexity of experts’ reports; and

(g)      the extent of the effort required in the collection and proof of facts.

The Court found that due to the complexity of the issues, the novelty of the action, and the matter was bitterly fought, made it appropriate to increase the scale of costs to Scale C