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

Special Costs In S 58 WESA Application

Special Costs in S 58 WESA Application | Disinherited

Re: Hadley Estate 2017 BCCA 311 the BC Appeal court upheld the principle of costs in estate litigation where the litigation is necessary due to the conduct of the deceased, then each party will normally be entitled to have their legal fees paid for from the estate as special costs. In Hadley the document in question was found not to be a will but it was reasonable for the parties to ask the court for a determination as to whether or not the document was a will:

What costs order should be made on the appeal?

[47] In estate litigation, courts commonly award special costs payable out of the estate to all parties. This practice is based on the principle that where an estate issue must be litigated to remove any doubts, all interested parties must be joined and all are entitled to be heard. In such circumstances, they should not be out of pocket if, in the result, the litigation does not conclude in their favour. The central question as to costs is whether the contested issue arises from the conduct of the deceased or the conduct of another. In the case of the former, an award of special costs from the estate will usually be made: Milwarde-Yates v. Sipila, 2009 BCSC 277 at paras. 81–82.

[48] The judge awarded special costs payable out of the estate to all parties. Her costs award has not been challenged and, in my view, the same costs award is appropriate on appeal. All parties to the appeal were drawn into the litigation because Ms. Hadley wrote the 2014 Will and provided it to Ms. McDermott for safe-keeping. The appeal concerned its validity and legal implications and, while ultimately unsuccessful, was not brought unreasonably

The Proportionality Principle

The Proportionality Principle

Campoli Electric Ltd v Georgian Clairlea Inc 2017 ONSC 4898 commented on the proportionality principle that is emerging in litigation- the quest for a cultural change to best promote the most expeditious and least expensive determination of every proceeding on its merits. attempts to utilize the mediation process as much as possible as it is fast, inexpensive and results in settlements in over %90 of the cases that utilize it.

Abrams v. Abrams, 2010 ONSC 2703:

“Proportionality signals that the old ways of litigating must give way to new ways which better achieve the general principle of securing the ‘just, most expeditious and least expensive determination of every proceeding on its merits.’ ”

In Hryniak v. Mauldin, 2014 SCC 7, Justice Karakatsanis was discussing the test for summary judgment, but what she had to say is thematically applicable to lifting these stays. At paragraphs 27 and 28 of her judgment at the Supreme Court of Canada, she stated:

There is growing support for alternative adjudication of disputes and a developing consensus that the traditional balance struck by extensive pre-trial processes and the conventional trial no longer reflects the modern reality and needs to be re-adjusted. A proper balance requires simplified and proportionate procedures for adjudication, and impacts the role of counsel and judges. This balance must recognize that a process can be fair and just, without the expense and delay of a trial, and that alternative models of adjudication are no less legitimate than the conventional trial.

This requires a shift in culture. The principal goal remains the same: a fair process that results in a just adjudication of disputes. A fair and just process must permit a judge to find the facts necessary to resolve the dispute and to apply the relevant legal principles to the facts as found. However, that process is illusory unless it is also accessible – proportionate, timely and affordable. The proportionality principle means that the best forum for resolving a dispute is not always that with the most painstaking procedure. [my emphasis]

Amending Pleadings

Amending Pleadings

The Law regarding Amending pleadings was discussed in Director of Civil Forfeiture v Sanghera 2017 BCSC 863 where the director applied to amend the notice of claim which was opposed by the defendant.

[18]         Mr. Justice Davies clearly set out the law regarding amendments and pleadings commencing at para. 39 in British Columbia (Director of Civil Forfeiture) v. Violette, 2015 BCSC 1372 [Violette]:

[39]         In Mayer v. Mayer, 2012 BCCA 77 at para. 215, the Court of Appeal affirmed that the fundamental purpose of pleadings is to define the issues to be tried with clarity and precision, to give the opposing parties fair notice of the case to be met, and to enable all parties to take effective steps for pre-trial preparation.

[40]         Applications for leave to amend pleadings are considered on the same basis as applications to strike pleadings with the question being whether it is plain and obvious that the proposed amendments are bound to fail. In assessing that question, it is not determinative that the law has not yet recognized a particular claim. In its analysis, the court must be generous and err on the side of permitting an arguable claim to proceed to trial. See: McMillan v. McMillan, 2014 BCSC 546 at paras. 13-14, and cases cited therein.

[41]         In Peterson v. 446690 B.C. Ltd., 2014 BCSC 1531 at para.37, this Court summarized the general principles arising on an application to amend pleadings as follows:

[37]      Finally, the general principles arising on an application to amend pleading can be summarized as follows:

(a) Amendment to pleadings ought to be allowed unless pleadings fail to disclose a cause of action or defence: McNaughton v. Baker, [1988] 24 B.C.L.R. (2nd) 17 [(C.A.)].

(b) Amendments are usually permitted to determine the issues between the parties and ought to be allowed unless it would cause prejudice to party’s ability to defend an action: Levi v. Petaquilla Minerals Ltd., 2012 BCSC 776.

(c) The party resisting an amendment must prove prejudice to preclude an amendment, and mere, potential prejudice is insufficient to preclude an amendment: Jones v. Lululemon Athletica Inc., 2008 BCSC 719.

(d) Costs are the general means of protecting against prejudice unless it would be a wholly inadequate remedy.

(e) Courts should only disallow an amendment as a last resort: Jones, McNaughton, Innoventure S & K Holdings Ltd. et al. v. Innoventure (Tri-Cities) Holdings Ltd. et al., 2006 BCSC 1567.

Power of Attorney Compensation

Power of Attorney Compensation

An attorney under a power of attorney in British Columbia cannot be compensated for services provided unless the document expressly provides for same.

The attorney may however be reimbursed from the adult’s property for reasonable expenses incurred.

The Act states:

Payment and Expenses of Attorney

24  (1) An attorney must not be compensated for acting as an adult’s attorney unless the enduring power of attorney expressly authorizes the compensation and sets the amount or rate.

(2) An attorney may be reimbursed from an adult’s property for reasonable expenses properly incurred in acting as the adult’s attorney.

Many other provinces in Canada have similar legislation.

Executor Personally Liable for Court Costs

Executor Personally Liable for Court Costs

Craven v Osdacz 2017 ONSC 4396 held an executor of an estate personally liable for costs totalling about $150,000 for reckless and unreasonable behaviour that amounted to reprehensible for opposing a plaintiff’s court action for no valid reason other than to frustrate and delay the court proceeding.

The executor was acting not as estate trustee but personally in carrying out vendetta against plaintiff to limit any compensation she received from estate where liability was clear virtually from start. The groundless defences raised by the executor were designed to ensure that plaintiff would see little or no estate benefits.

The executor occupied a position of fiduciary as estate trustee and used that position and estate assets to conduct litigation in way amounting to harassment of plaintiff to protect his own position. The plaintiff was successful on every major issue raised at trial including issue of trustees’ improper payment of legal fees from estate assets . The only area where the plaintiff was not wholly successful was concerning quantum of repayment of dissipated legal fees to estate, but she was substantially successful on this issue.

The executor’s reckless, totally irrational and totally unreasonable conduct rose to level of reprehensible conduct and personal confrontations with plaintiff rose to level of reprehensible conduct worthy of sanction in form of imposition of solicitor and client costs.

19 Michael Osidacz was acting not as estate trustee but personally in carrying out a vendetta against Julie Craven in order to limit any compensation she received from the estate where liability was clear, virtually from the start and it was obvious that she was entitled to substantial damages that would exceed the value of the estate.

20 I have found that Michael Osidacz advanced “speculative and groundless defences” and acted in a manner that was “anything but reasonable, prudent or appropriate”. I have found that Michael Osidacz raised the estate’s defence on “virtually no evidence” and was totally irrational and reckless in his conduct as Estate Trustee amounting to a dissipation of assets of an overall modest sized estate. I have also found that the groundless and frivolous defences raised by Michael Osidacz were designs to ensure that Julie Craven would see little or no benefits from the estate.

22 Michael Osidacz resisted Julie Craven’s obvious and lawful claims for 10 years until shortly before trial. His actions went far beyond “mis-guided litigation” and amounted to harassment of another party by pursuit of “fruitless litigation”. In the end, the plaintiff was successful on every major issue raised at trial including the issue of the trustees’ improper payment of legal fees from the assets of the estate. The only area where the plaintiff was not 100 percent successful is concerning the quantum of repayment of dissipated legal fees to the estate. Even on this issue, the plaintiff was substantially successful.

23 Based on the foregoing, reckless and egregious conduct on the part of Michael Osidacz, the plaintiff’s position is that “the loser pays” should apply in this case against Michael Osidacz and he should be required to pay her costs personally on an elevated basis, in this case, complete indemnity, except as set out below. I find that his reckless, totally irrational and totally unreasonable conduct and personal confrontations with the plaintiff rise to the level of “reprehensible” conduct in accordance with the case law and is worthy of sanctions as a form of chastisement justifying the imposition of solicitor and client costs.

24 If elevated costs are not awarded to the plaintiff, she would have to spend a substantial amount of her damages judgment on elevated legal fees caused by the conduct of Michael Osidacz, thereby allowing him to achieve his objective of seeing to it that she obtains as little of the assets of the estate as possible.

Offers to Settle and Double Costs

Offers to Settle and Double Cost Awards

Connor Estate 2017 BCSC 1341 dealt with the issue of whether the plaintiff should be  awarded double costs after the filing of an offer to settle that the plaintiff beat at the trial.

The issue was whether the plaintiff Chambers was a spouse of the deceased even though they never lived together and that he should inherit her entire estate as a spouse on an intestacy.

He had offered her 5 step siblings the sum of $10,000 each plus each party bear their own costs.

At trial he was declared her spouse and was entitled to her entire estate of $2 million. His offer to settle represented %2 of the entire estate.

6      The offer contained the language mandated by subrule 9-1(1)(c)(iii), i.e., that Mr. Chambers was “reserv[ing] the right to bring this offer to the attention of the court for consideration in relation to costs after the court has pronounced judgment on all other issues in this proceeding”.

The Court declined to award double costs and instead awarded costs on scale B.

Law re: Costs

10      Rule 14-1 addresses costs. Subrule 14-1(1)(9) provides that, generally speaking, “costs of a proceeding must be awarded to the successful party unless the court otherwise orders”.

11      Success has been equated to “substantial success”. In Fotheringham v. Fotheringham, 2001 BCSC 1321, the court held that, as a rule of thumb, substantial success occurs when the prevailing party succeeds on 75% of the matters in dispute, considered globally.

12      Offers to settle are not considered in determining substantial success. That is because substantial success is determined by comparing the positions taken by the parties at the trial or the hearing against the end result. The position taken by a party at this later date may be substantially different than that set out in any earlier offer to settle.

13      Another reason why the court initially considers costs without reference to an offer to settle is that implementation of the costs options found in the offer to settle rules depend upon the initial cost order. Rule 9-1 governs offers to settle. Subrules 9-1(5) and (6) provide:

Cost Options

(5) In a proceeding in which an offer to settle has been made, the court may do one or more of the following:

(a) deprive a party of any or all of the costs, including any or all of the disbursements, to which the party would otherwise be entitled in respect of all or some of the steps taken in the proceeding after the date of delivery or service of the offer to settle;

(b) award double costs of all or some of the steps taken in the proceeding after the date of delivery or service of the offer to settle;

(c) award to a party, in respect of all or some of the steps taken in the proceeding after the date of delivery or service of the offer to settle, costs to which the party would have been entitled had the offer not been made;

(d) if the offer was made by a defendant and the judgment awarded to the plaintiff was no greater than the amount of the offer to settle, award to the defendant the defendant’s costs in respect of all or some of the steps taken in the proceeding after the date of delivery or service of the offer to settle.

Considerations of Court

(6) In making an order under sub-rule (5), the court may consider the following:

(a) whether the offer to settle was one that ought reasonably to have been accepted, either on the date that the offer to settle was delivered or served or on any later date;

(b) the relationship between the terms of settlement offered and the final judgment of the court;

(c) the relative financial circumstances of the parties;

(d) any other factor the court considers appropriate.

14      In the often cited case of Hartshorne v. Hartshorne, 2011 BCCA 29, the Court of Appeal provided some guidance concerning the cost consequences of offers to settle. At para. 25 the court stated:

An award of double costs is a punitive measure against a litigant for that party’s failure, in all of the circumstances, to have accepted an offer to settle that should have been accepted. Litigants are to be reminded that costs rules are in place “to encourage the early settlement of disputes by rewarding the party who makes a reasonable settlement offer and penalizing the party who declines to accept such an offer” (A.E. v. D.W.J., 2009 BCSC 505, 91 B.C.L.R. (4th) 372 at para. 61, citing MacKenzie v. Brooks, 1999 BCCA 623, Skidmore v. Blackmore (1995), 2 B.C.L.R. (3d) 201 (C.A.), Radke v. Parry, 2008 BCSC 1397). In this regard, Mr. Justice Frankel’s comments in Giles are apposite:

[74] The purposes for which costs rules exist must be kept in mind in determining whether appellate intervention is warranted. In addition to indemnifying a successful litigant, those purposes have been described as follows by this Court:

“[D]eterring frivolous actions or defences”: Houweling Nurseries Ltd. v. Fisons Western Corp. (1988), 37 B.C.L.R. (2d) 2 at 25 (C.A.), leave ref’d, [1988] 1 S.C.R. ix;

 “[T]o encourage conduct that reduces the duration and expense of litigation and to discourage conduct that has the opposite effect”: Skidmore v. Blackmore (1995), 2 B.C.L.R. (3d) 201 at para. 28 (C.A.);

“[E]ncouraging litigants to settle whenever possible, thus freeing up judicial resources for other cases: Bedwell v. McGill, 2008 BCCA 526, 86 B.C.L.R. (4th) 343 at para. 33;

“[T]o have a winnowing function in the litigation process” by “requir[ing] litigants to make a careful assessment of the strength or lack thereof of their cases at the commencement and throughout the course of the litigation”, and by “discourag[ing] the continuance of doubtful cases or defences”: Catalyst Paper Corporation v. Companhia de Navega Norsul, 2009 BCCA 16, 88 B.C.L.R. (4th) 17 at para. 16.

15      The first factor to be considered respecting any double costs application is whether the offer to settle ought reasonably to have been accepted. Here, two philosophically divergent views emerge. One school of thought is that a party should not be penalized for declining an offer that did not provide a genuine incentive to settle. The other is that an offering party should not be required to compromise beyond its own objective assessment of the case in order to obtain the benefit of an offer to settle.

16      From an objective perspective both viewpoints have much to recommend. Why should a party be penalized for not accepting an offer which does not provide an incentive to settle? On the other hand, why should a party be forced to pay more or accept less than a claim is actually worth? How this conflict plays out can sometimes depend on the nature of the claims and dispute.

Analysis and Application

20      There is, however, more to be said in favour of refusing double costs.

21      First one must bear in mind that the reasonableness of any acceptance or rejection of a settlement offer is not to be assessed in light of the actual outcome. Rather, it is to be assessed in light of the circumstances existing between the date of the offer and the ultimate trial or hearing. As stated by the Court of Appeal in Meghji v. British Columbia (Ministry of Transportation and Highways), 2014 BCCA 105at para. 112:

The reasonableness of the offer must be assessed at the time the offer was made and thereafter. The court should look at the circumstances as they stood at the time the offer was made, and since, and should bear in mind information in the hands of the parties at the relevant times. The reasonableness of the acceptance or rejection of the settlement offer is not to be judged in retrospect, in light of the judgment at trial.

22      Second, while consideration of the final outcome is not permitted, the nature of the dispute is nonetheless a factor in assessing the reasonableness of any offer to settle and response to same. Here, the amount of money at stake is a valid consideration; the estate is worth in excess of $2 million and the offer of settlement represented a little more than 2% of that value.

Summary of Special Costs

Summary of Special Costs Awarded by the Court

When one litigant is ordered to pay all or most of the other  litigants legal fees it is an award of special costs, and Siemens v Howard 2017 BCSC 1193 is a good summary of when the court will award special costs.

The single standard for the awarding of special costs is that the conduct in question properly be categorized as “reprehensible.” The basic principles are conveniently summarized by N. Smith J. in Gill v. Bassi 2016 BCSC 754, at paras. 9-16:

[9] An award of special costs is intended to chastise a party for reprehensible, scandalous or outrageous conduct, either in the circumstances giving rise to the cause of action or in the course of the litigation: Bradshaw v. Stenner 2012 BCSC 237at para. 9, leave to appeal ref’d 2012 BCCA 481.

. . .

[11] The circumstances under which special costs may be ordered were summarized in Mayer v. Osborne Contracting Ltd., 2011 BCSC 914 at para. 11:

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

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

(c) where a party has displayed “reckless indifference” by not recognizing early on that its claim was manifestly deficient;

(d) where a party made the resolution of an issue far more difficult than it should have been;

(e) where a party who is in a financially superior position to the other brings proceedings, not with the reasonable expectation of a favourable outcome, but in the absence of merit in order to impose a financial burden on the opposing party;

(f) 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;

(g) where a party brings a proceeding for an improper motive;

(h) where a party maintains unfounded allegations of fraud or dishonesty; and

(i) where a party pursues claims frivolously or without foundation.

. . .

[14] . . . Special costs are not awarded based on the acceptance or rejection of testimony. “If it were otherwise, instead of being an extraordinary measure, special costs could be imposed whenever credibility was in issue”: Grewal v. Sandhu, 2012 BCCA 26at para. 107, leave to appeal ref’d 2012 CarswellBC 1815 (S.C.C.).

[15] Even if one assumes the plaintiffs’ evidence was dishonest as opposed to merely unreliable  and I made no explicit finding on that point dishonest testimony alone is not sufficient to warrant an order for special costs. There must be something more egregious in the impugned conduct for it to be considered reprehensible: Schwabe Estate v. Lisinski, 2005 BCSC 1284at para. 26; Mayer, at para. 13; 380876 British Columbia Ltd. v. Ron Perrick Law Corp., 2009 BCSC 1209at para. 25.

[16] There is a difference between a party who deliberately attempts to mislead the court and a party who fails to prove a case on a balance of probabilities because his or her evidence is not accepted . . .

9      The court must exercise restraint in awarding specials costs, and the party seeking special costs must demonstrate exceptional circumstances to justify an order for special costs: see Westsea Construction Ltd. v. 0759553 B.C. Ltd., 2013 BCSC 1352, at para. 73.

Petition or Notice of Claim?

Is it a Petition or Notice of Claim?

Litigators must choose the appropriate forum to commence a court action: a petition or notice of claim.

Most cases are commenced by the use of a notice of claim while certain types of cases may or must be commenced by petition.

Carphin v Braich Estate et al 2017 BCSC 1140 dismissed the Petitioner’s claim for bringing the court action in the form of a petition rather than using a notice of claim and sets out the criteria for using a petition.

A former lawyer had without having a judgement or having passed his accounts commenced an action to attempt to recover substantial legal fees and accrued interest by proceeding against  estate assets.

The Appropriate Form of Proceeding

[75]  The respondent administrators argue that a threshold issue in this matter is whether the petition is suitable for a proceeding under Rule 2-1 of the Supreme Court Civil Rules and rely on McDonald v. Lau, 2016 BCSC 1651 at para.39:

As a threshold issue, the Court must determine whether it was appropriate for the petitioner to bring this matter by way of petition. If it was not, then the matter must be converted into an action.

[76]  Rule 2-1(1) directs that every proceeding is to be begun by notice of civil claim unless an enactment or the Rules themselves provide otherwise and then sets out a list of circumstances in Rule 2-1(2) which will require a proceeding to be begun by way of petition. The potentially applicable circumstances are as follows:

(2) To start a proceeding in the following circumstances, a person must file a petition or, if Rule 17-1 applies, a requisition:

(c) the sole or principal question at issue is alleged to be one of construction of an enactment, will, deed, oral or written contract or other document;

(d) the relief, advice or direction sought relates to a question arising in the execution of a trust, or the performance of an act by a person in the person’s capacity as trustee, or the determination of the persons entitled as creditors or otherwise to the trust property;

The relief sought here extends far beyond simple questions arising in the execution of a trust or determination of a creditor.

[77] The argument of the respondent administrators is that the petitioner is seeking to enforce a debt claim against Herman Braich Jr. on the basis of the retainer, written and oral, by way of an originating application.

[78]  The respondent administrators argue that it is ill-conceived to bring this matter by way of petition given that a proceeding begun by petition can involve interpretation of a contract but not the enforcement of it: see Yates v. Air Canada, 2001 BCSC 127 at para. 36; McDonald at para. 51.

[79]  The respondent administrators further argue that, while letters have been placed into evidence, there is no formal written retainer agreement put forward by the petitioner.  Given that the onus remains on the solicitor to prove the retainer contract where there is a dispute, there must be evidence of the retainer put forward by the lawyer: see Cox Taylor v. Cochrane, 2007 BCSC 432; Walker v. Takhar, 1994 CanLII 697 (B.C.S.C.).

[80]  Accordingly, the onus is on the petitioner to prove his retainer contract with Herman Braich Jr. The respondent administrators caution that, given that Herman Braich Jr. is deceased, the retainer agreement must be examined with some care and scepticism, relying on Johl Estate v. Purewal, 2015 BCSC 2331 at para. 28; Hunt v. Kazmer, 2005 BCSC 1815 at para. 21.  While Johl Estate was brought by petition, that case involved only the retainer agreement and not the enforcement of it or all the ancillary matters sought here by the petitioner.

[81]  Given that a declaratory judgment would not resolve all the issues between the parties, I find that proceeding by way of petition is inappropriate and agree with the argument of the respondent administrators in this regard: see also Yates at paras. 35-39, when BaumanJ., as he then was, reviewed this point:

[35]As to Rule 10(1)(b), Justice Skipp’s decision in Three Stars Investments Ltd. v. Narod Developments Ltd. (1981), 33 B.C.L.R. 164, is cited.

[36]  After reviewing the law Justice Skipp concluded:

From these cases it can be concluded that the R. 10(1)(b) petition is inappropriate where:

(1)   Serious questions of law or fact are raised;

(2)  A decision will not end the matter, but requires further proceedings to be pursued;

(3)  The application involves not the interpretation but enforcement of a contract.

The petitioner has used an inappropriate procedure in its use of a petition. The role of declaratory judgments, as provided for under R.10, was commented upon by Dickson J. in Solosky v. R. (1979), 16 C.R. (3d) 294, 50 C.C.C. (2d) 495, 105 D.L.R. (3d) 745, 30 N.R. 380 (S.C.C.). In that case he adopted the view which asserted that the declaratory action is discretionary and should not be granted if it will not settle the questions at issue between the parties.

In the present case, a declaratory judgment on the construction of the contract will not settle all issues between the parties. They must still proceed to trial to enforce whichever construction is presented. On that ground alone the R.10(1) petition is inappropriate.

[39] He concluded (at 4):

In my view, the test laid down in Three Stars still applies on a Rule 10 application. However, after Douglas Lake, the existence of disputed questions of fact alone will not defeat the application. If disputed questions of fact can be satisfactorily resolved by reference of the documentation between the parties such that the court can concluded that the respondent would be bound to lose if the matter went to trial, then the application can be allowed, provided it still meets the Three Stars test. In Douglas Lake, the issue was one solely of contractual interpretation and the decision on that point ended the matter.

In this case, the respondent advances a misrepresentation claim in the approximate sum of $2,722,000. An interpretation of the contract will not end the mater [sic] and in my view further proceedings will have to be pursued. Finally, it is clear that the petitioner is seeking not only an interpretation of the purchase contract but also the enforcement of the promissory note free of any set-off claim. In my view, this does not fall within the purview of Rule 10 and this matter should be pursued by way of writ and statement of claim.

Accordingly, given the relief sought, I find that proceeding by petition is ill-conceived for the case before me, which will not resolve all the issues between all these parties.  No application or submission was made to the Court about converting this matter to an action and, as a result, in these circumstances, it would be inappropriate for the Court to do so pursuant to Rule 16-1(18).

Ordering Court Costs Against a Non-Party

Ordering Court Costs Against a Non-Party

Hollander v Mooney 2017 BCCA 238 discussed the Court’s jurisdiction to order costs against a non-party and held that it 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 771at para. 21; Perez v. Galambos, 2008 BCCA 382at paras. 17 — 18; and Animal Welfare at paras. 53 — 58.

55      This Court summarized the jurisdiction to award costs against a non-party in Perez, where Madam Justice Rowles said:

[17] The court does have jurisdiction to order costs against a non-party: Oasis Hotel Ltd. v. Zurich Insurance Co. (1981), 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.

[18] “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”: Anchorage.

56      More recently, the Court in Animal Welfare applied Anchorage Management and Perez in setting aside an award of costs against the principal of a litigant company. 

Anchorage management Services Ltd v 465404 BC Inc. 1999 BCCA 771 stated interia:

21      That the court has an inherent jurisdiction to impose costs to achieve justice between parties is undeniable but the imposition of costs upon non-parties is an unusual event and such a costs order should, I venture to suggest, be made only in special circumstances. Such an order is very much an exception to the usual rules governing costs. In the Sturmer case, a case challenging a local option by-law, the court upheld Chancellor Boyd’s order for costs against non-parties who were found to have put up “a man of straw” in whose name the litigation would be carried on so as to avoid anticipated liability for costs upon dismissal of the action. The court agreed with Chancellor Boyd that the proceedings were in the nature of an abuse of the process of the court. Middleton J. in the Divisional Court put it this way:

Can there be a fraud which this court ought to visit more strongly than the conduct pursued in this case in which in order to avoid the payment of the costs of a doubtful litigation to which the plaintiff might be made liable, the real plaintiff procures a pauper to become the nominal plaintiff?