Quantifying Special Costs and Contingency Fees

Quantifying Special Costs and Contingency Fees

Norris v Burgess 2016 BCSC 1451 stated the law for quantifying special costs and then applied that amount towards the plaintiff’s contingency fees.

Norris was an ICBC case where the judge in a Jury trial found fault on the insurer for the late production of a video and photos and awarded special costs in the same amount as the plaintiff’s entire %30 contingency fee , amounting to $155,340 plus out of pocket expenses for the court action ( disbursements).

The same reasoning should apply to estate litigation cases where the opposing party is awarded special costs against them in the same amount as the plaintiff’s legal fees work out to be on a contingency fee basis between the client and the lawyer.

[79]         Rule 14-1(3) of the Rules of Court refers to “special costs” as “those fees that were proper or reasonably necessary to conduct the proceeding”. In its entirety, R. 14-1(3) reads:

(3) On an assessment of special costs, a registrar must

(a)   allow those fees that were proper or reasonably necessary to conduct the proceeding, and

(b)   consider all of the circumstances, including the following:

(i)               the complexity of the proceeding 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 proceeding;

(iv)            the time reasonably spent in conducting the proceeding;

(v)             the conduct of any party that tended to shorten, or to unnecessarily lengthen, the duration of the proceeding;

(vi)            the importance of the proceeding 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 and any case plan order.

[80]         In Gichuru, our Court of Appeal summarizes the general principles related to the assessment of costs by a judge:

[154]    We would briefly summarize the principles as discussed above. The decision to fix the quantum of costs under R. 14-1(15) is a matter of judicial discretion that should be sparingly exercised. The court officer best placed to conduct an assessment is usually the registrar, whose knowledge and experience in assessing legal bills is extensive and seldom matched by that of a trial judge. An exception may arise in cases when the judge is intimately familiar with the litigation or the time and cost of a registrar’s hearing cannot be justified or where the parties consent. The fact that a judge has heard the trial does not necessarily lead to the conclusion that the best use of judicial resources is for the judge to assess costs. A concern that a party who might have to pay costs will prolong the costs assessment by requiring a microscopic review of the services provided by counsel must be balanced against the right of that party to challenge the reasonableness of the proposed costs.

[155]    When assessing special costs, summarily or otherwise, a judge must only allow those fees that are objectively reasonable in the circumstances. This is because the purpose of a special costs award is to provide an indemnity to the successful party, not a windfall. While a judge need not follow the exact same procedure as a registrar, the ultimate award of special costs must be consistent with what the registrar would award in similar circumstances. Thus, a judge must conduct an inquiry into whether the fees claimed by the successful litigant were proper and reasonably necessary for the conduct of the proceeding as set out in R. 14-1(3)(a), taking into account all of the relevant circumstances of the case and with particular attention to the non-exhaustive list of factors in R. 14-1(3)(b).

[156]    A special costs assessment, whether before a judge or a registrar, cannot proceed in absence of evidence of the amount of legal fees incurred. Usually this will be provided in the same form as a bill between a solicitor and client under the Legal Profession Act. This is necessary to allow a court to inquire as to the objective reasonableness of the fees claimed by a litigant, as the fact that a solicitor has billed a certain sum does not necessarily make the fee reasonable. Where production of a bill of special costs would lead to a loss of solicitor-client privilege, the party seeking special costs must either waive privilege or can elect to preserve privilege by having its costs assessed after all appeals are exhausted.

Special Costs and Contingency Fees

[1]             The plaintiff was successful at trial with the jury awarding her $462,374 in damages resulting from a June 2, 2010 motor vehicle accident. The Insurance Corporation of British Columbia (“ICBC”) had conduct of the defence.

[2]             The defendants elected a jury trial. The plaintiff applied unsuccessfully to strike the jury: Norris v. Burgess (14 October 2015), Vancouver M123216 (B.C.S.C.)

[3]             On October 23, 2015, the defendants made an offer to settle for $678,500 which complied with R. 9-1 of the Supreme Court Civil Rules, [Rules of Court]. The plaintiff did not accept the offer.

[4]             The defendant admitted liability just before the commencement of the scheduled 20-day trial, which began on November 16, 2015.

[5]             The defendants now seek to be awarded costs at Scale B, Appendix B of the Rules of Court, from the date of the offer until the start of trial, and special costs for the trial as a result of the late disclosure of various photographs and copies of some hunting licences. In the alternative, for the trial, the defence seeks costs at Scale C, Appendix B of the Rules of Court. In either case, the plaintiff would have her costs prior to the date of the offer at Scale B.

[6]             The plaintiff states that the Court should not consider the defendants’ offer in exercising its discretion in relation to costs.

[7]             The plaintiff seeks special costs for the entire proceeding, equalling plaintiff’s counsel’s contingency fee. In the alternative, the plaintiff seeks costs at Scale B until the start of the trial and at Scale C for the trial.

[8]             The plaintiff’s basis for seeking special costs is the timing of ICBC’s disclosure of surveillance video for 2015 (“2015 Video”). By an October 20, 2015 Court Order, the defendants were required to list any surveillance video on or before October 23, 2015 (approximately three weeks before the scheduled trial). The 2015 Video was not disclosed until after the third week of trial.

[9]             Prior to the October 20, 2015 Court Order, surveillance videos for 2013 and 2014 had been disclosed.

[10]         For the reasons that follow, the plaintiff is awarded the special costs she seeks as a result of ICBC’s late disclosure of the 2015 Video.

 

Settlement Offers and Court Costs

Settlement Offers and Court Costs

Norris v Burgess 2016 BCSC 1451 deals with settlement offers and court costs, that is how courts adjust cost upwards or downwards either in favour of one party or against the other party depending on the parties conduct and the terms of any formal offers to settle made in accordance with the rules.

Costs are increasingly being awarded against unsuccessful estate litigants on a personal basis and the amount of them has escalated over the years almost like property prices in the lower mainland.

In writing for our Court of Appeal in C.P. v. RBC Life Insurance Company, 2015 BCCA 30, leave to appeal ref’d [2015] S.C.C.A. No. 136, Justice Goepel, in considering a trial award of double costs, sets forth generally the purpose of the costs rules related to settlement offers:

[94]      The underlying purpose of the offer to settle rule was set out in Hartshorne:

[25] 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 Navegaçao Norsul, 2009 BCCA 16, 88 B.C.L.R. (4th) 17 at para. 16.

[95]      A plaintiff who rejects a reasonable offer to settle should usually face some sanction in costs. To do otherwise would undermine the importance of certainty and consequences in applying the Rule: Wafler v. Trinh, 2014 BCCA 95 at para. 81. The importance of those principles was emphasized by this Court in A.E. Appeal at para. 41:

[41] This conclusion is consistent with the importance the Legislature has placed on the role of settlement offers in encouraging the determination of disputes in a cost-efficient and expeditious manner. It has placed a premium on certainty of result as a key factor which parties consider in determining whether to make or accept an offer to settle. If the parties know in advance the consequences of their decision to make or accept an offer, whether by way of reward or punishment, they are in a better position to make a reasoned decision. If they think they may be excused from the otherwise punitive effect of a costs rule in relation to an offer to settle, they will be more inclined to take their chances in refusing to accept an offer. If they know they will have to live with the consequences set forth in the Rule, they are more likely to avoid the risk.

[40]         With respect to the first factor in R. 9-1(6), whether the offer ought reasonably to have been accepted, Goepel J.A. in C.P. states:

[97]      Whether an offer to settle is one that ought reasonably have been accepted, is assessed not by reference to the award that was ultimately made, but under the circumstances existing when an offer was open for acceptance: Bailey v. Jane, 2008 BCSC 1372 at para. 24 and Hartshorne at para. 27. This factor is considered from the perspective of the person receiving the offer. It has both a subjective and objective component. The court is entitled to take into account the reasons why a party declined to accept an offer to settle. The court must consider whether those reasons are objectively reasonable.

[41]         I emphasize that R. 9-6(1)(a) uses the word, ought. “Ought” is defined in The Oxford English Dictionary, 2d ed. as follows:

b. In present sense: = Am (is, are) bound or under obligation: you ought to do it = it is your duty to do it; it ought to be done = it is right that it should be done, it is a duty (or some one’s duty) to do it. (The most frequent use throughout. Formerly expressed by the pres. t., OWE v. 5.)

[42]         The use of the word “ought” in R. 9-6(1)(a) evinces a legislative intent that the court may consider whether the offer was one that the offeree should have accepted. Where the offeror is the plaintiff, this wording encourages an offer that falls at the low end of the range of potential trial awards the plaintiff is anticipating. Where the offeror is the defendant, it encourages an offer that falls at the high end of the range of potential trial awards the defendant is anticipating. In short, the word “ought” brings the respective positions of the parties closer, with the object of reaching an agreement and conserving judicial and other resources.

Estoppel By Convention

estoppel

Estoppel By Convention.

The Supreme Court of Canada has set out the criteria as to what establishes estoppel by convention in Ryan v. Moore, 2005 SCC 38, [2005] 2 S.C.R. 53. In paragraphs 53 and 54, the Court sets out how the forms of estoppel have been established in law.

 

An estoppel by convention,  is an estoppel by representation of fact, a promissory estoppel or a proprietary estoppel, in which the relevant proposition is established, not by representation or promise by one party to another, but by mutual, express or implicit, assent. This form of estoppel is founded, not on a representation made by a representor and believed by a representee, but on an agreed statement of facts, or law, the truth of which has been assumed, by convention of the parties, as a basis of their relationship. When the parties have so acted in their relationship upon the agreed assumption that the given state of facts or law is to be accepted between them as true, that it would be unfair on one for the other to resile from the agreed assumption, then he will be entitled to relief against the other according to whether the estoppel is as to a matter of fact, or promissory, and/or proprietary.

 

57      The Court, then, in para. 59, said that the following criteria form the basis of the doctrine of estoppel by convention:

 

(1) The parties’ dealings must have been based on a shared assumption of fact or law: estoppel requires manifest representation by statement or conduct creating a mutual assumption. Nevertheless, estoppel can arise out of silence (impliedly).

(2) A party must have conducted itself, i.e. acted, in reliance on such shared assumption, its actions resulting in a change of its legal position.

(3) It must also be unjust or unfair to allow one of the parties to resile or depart from the common assumption. The party seeking to establish estoppel therefore has to prove that detriment will be suffered if the other party is allowed to resile from the assumption since there has been a change from the presumed position.

 

58      With respect to estoppel by representation, the Supreme Court of Canada’s decision in Canadian Superior Oil Ltd. v. Hambly, [1970] S.C.R. 932, [1970] S.C.J. No. 48, which set out in para. 19, the factors giving rise to estoppel.

They are:

(1) A representation or conduct amounting to a representation intended to induce a course of conduct on the part the person to whom the presentation is made;

(2) An act or omission resulting from the representation, whether actual or by conduct, by the person to whom the representation is made;

(3) Detriment to such person as a consequence of the act of omission.

 

59      It is to be noted, however, that estoppel by representation cannot arise from silence unless a legal duty is owed by the representor to the representee to make the disclosure. See: Ryan v. Moore, 2005 SCC 38at para. 76.

 

62      Blake therefore accepted the terms of the Wills and acted upon those terms, not just once but 4 times, when he sold the house, sold the California condo, took the art he wanted, and divided various household goods and personal effects, and signed the corporate documents. Thus, all the parties involved took steps based on the shared assumption that the Wills were valid. Their mutual conduct shows this. Blake was silent about litigating anything in connection with the Wills until September 2013, although his lawyer had contacted the Estate Trustees in early February 2012. The Estate Trustees acted in reliance of this shared assumption, paid the taxes, and did not apply for an Income Tax Clearance Certificate, as there were still unadministered corporate assets to be divided between Blake and Cody under the Wills.

 

63      Blake should not be allowed now to resile from all of the actions he took during the two-year period after Eleanor’s death. As Mr. Justice Brown said, in Lawless, supra, a prospective litigant cannot wait until he or she determines that a claim is winnable or viable.

 

64      Blake’s conduct, in my view, induced the Estate Trustees to continue the administration of the Estate, since they had no legal document to show that Blake was in any way objecting. They organized the payment to CRA to stop any penalties and interest from running on the amount owing. They placed themselves in a precarious position, not knowing that Blake would later want Orders removing them as Estate Trustees, accusing them of improper conduct and accusing Ms. Rintoul of negligence. They took a course of making distributions to Blake out of the Estate before receiving an Income Tax Clearance Certificate, for which they possibly could be personally liable.

65      In Hayes v. Montreal Trust Co., 1977 CarswellBC 69 (B.C.S.C.), the Court said in para.8, that a plaintiff:

… accepted what was done and co-operated with the executor for over a year in administering the estate in according with the will to the point where all legacies have been paid, the life interest has terminated and all that remains is distribution to the residual beneficiaries.

 

66      Blake took no steps until September 2013 to challenge the Will. He co-operated with the Estate Trustees in administering the Estate for over 2 years to the point where all that remains to be done is to divide the residue between him and Cody, which he now opposes.

 

67      In my view, whether one says that Blake is estopped from taking the position he now has by estoppel by convention or estoppel by representation, he falls within both categories, given the facts of this case. Blake had counsel in February 2012, who stated there was an issue regarding Eleanor’s capacity to make the 2011 Wills but never took the legal step to go forward with any challenge. Is this silence? Did Blake receive legal advice that he should or should not move forward? The fact remains that nothing happened and the administration of the Estate continued in legal silence until the Application was finally made.

 

Mutual Release

mutual release 2At the end of each court case, the lawyers generally have each party sign a Mutual release that in layman’s terms means they will never sue each other for the same matter again, it being a final settlement.

The mutual release signed by the parties as part of their all-inclusive settlement of the prolonged estate litigation is a valid contract.

Accordingly, like any other contract, the parties are bound by the terms to which they have agreed.

A valid mutual release typically releases the other parties to the agreement from any subsequent claims related to the claims that have been released in exchange for valuable consideration.

Such releases are executed by the parties when litigation claims are settled in order to give the parties peace from potential liability from the claims and to avoid any further proceedings that might flow from the claims released.

Such releases operate as a legal bar to the pursuit of any subsequent claim that purports to raise an issue that has already been extinguished by the release.

See: Browne v. McNeilly, [2001] O.J. No. 970 (Ont. S.C.J.), at paras. 9, 13; Sinclair-Cockburn Insurance Brokers Ltd. v. Richards (2002), 61 O.R. (3d) 105, [2002] O.J. No. 3288 (Ont. C.A.), at paras. 14-16; Marjadsingh v. Walia, 2012 ONSC 6659, [2012] O.J. No. 5788 (Ont. S.C.J.), at paras. 16-18.

 

Credibility – Who Is Believed Wins

True or falseCredibility  is whoever is believed , usually wins the case.One can have the best of court cases, but if the Judge does not believe your client’s testimony, as  there is no witnesses credibility, usually results in a lost trial.

The BC  Court of Appeal in Faryna v. Chorney, [1952] 2 D.L.R. 354 (B.C.C.A.), . stated at page 357:

The credibility of interested witness,particularly in cases of conflict of evidence, cannot be gauged solely by the test of whether the personal demeanour of the particular witness carried conviction of the truth.

The test must reasonably subject his story to an examination of its consistency with the probabilities that surround the currently existing conditions.
In short, the real test of the truth of the story of a witness in such a case must be its harmony with the preponderance of the probabilities which a practical and informed person would readily recognize as reasonable in that place and in those conditions. …

 

 

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Abuse of Process: Misusing the Court’s Process for Ulterior Purpose

Abuse of Process: Misusing the Court's Process for Ulterior Purpose

The tort of abuse of process is made out when a party shows a misuse or perversion of the Court’s process for an exterior or ulterior purpose.

In other words, using a certificate of pending litigation to tie up a property and prevent it being sold to anyone else as a negotiation tactic regarding an unrelated agreement would be an abuse of process:

In D.K. Investments Ltd. v. S.W.S. Investments Ltd., [1984] 59 B.C.L.R. 333 (S.C.), aff’d [1986] 6 B.C.L.R. (2d) 291 (C.A.) it was held:

In the plaintiff’s action for specific performance arising out of an agreement for the purchase and sale of real estate, the defendant counterclaimed for damages for abuse of process in bringing the action, in filing a lis pendens and caveat on false grounds, in swearing a false affidavit and in producing a fabricated letter in court. The trial judge gave judgment on the counterclaim, awarding $75,000 damages for abuse of process and exemplary damages of $15,000. The plaintiff appealed the award of damages for abuse of process, but it was dismissed.

For the tort of abuse of process, damages are at large. Thus the award is not limited to the pecuniary loss than can be specifically proved. As in defamation and in malicious prosecution cases, the injured party may have considerable difficulty in leading evidence to show the full extent of his loss. Frequently, it will be a matter of great difficulty for the trial judge. However, upon taking into account all the circumstances, including but not limited to the pecuniary loss proved, he will be in a position to make an appropriate award. In this case, the trial judge considered especially not only the manner in which the plaintiff had prolonged the litigation by use of the fabricated letter, but the effort to push the defendant to the brink of financial disaster in order to gain the advantage which it sought. The award of $75,000 was appropriate in the circumstances.

The Courts Power to Amend Pleadings

Rules

It is frequent in estate litigation that new facts arise and the claim must be amended to provide for the adequate remedy.

This blog is a summary of the courts power to make such an order.

Rule 6-1(1) of the Supreme Court Rules provides that a court may grant leave to amend the whole or any part of a pleading filed by the party.

Discretion to permit amendments is unfettered, subject only to the general rule that it be exercised judicially.

Considerations are: the length of the delay, reasons for the delay; prejudice to the defendants and the overriding question of what is “just and convenient”?

Teal Cedar Products v Dale Intermediaries Ltd ( 1996) 19 BCLR (3d) 282

16. Amendments should be allowed unless actual prejudice can be demonstrated by the opposing
party or the amendment would be useless.

Langret Investments S.A. v. McDonnell (1996), 21 B.C.L. R. (3d) 145,  at paras. 34.

  1. Potential prejudice is not enough to defeat an application for amendment of the pleading: Langret, supra, at para 43.
  2. There is a wide discretion in the court to determine what is in the interests of justice and to do what is just and convenient between the parties. Prejudice to the respondents can be dealt with in costs. In Jones, the court found actual prejudice arising from the amendment of the pleading, which would cause the respondent’s re-evaluation of his entire case, but the court found that this prejudice could be compensated with costs:

Jones v. Lululemon Athletica Inc., 2008 BCSC 719,

Victoria Grey Metro Trust Company v. Fort Gary Trust Company (1982), 30 B.C.L.R. (2d)
45, Mclaughlin J. (as she then was)  nicely brings together other considerations regarding the test to amend a
pleading:

“Before addressing the proposed pleadings, I refer to the principles which govern the granting of amendments to pleadings. The basic rule, set out expressly in the former rules and no doubt still applicable, is that such amendments should be permitted as are necessary to determine the real question in issue between the parties. Rule 1(5) requires an interpretation of the rules which permit the just and speedy determination of the dispute on its merits. Similarly, the Law and Equity Act, R.S.B.C. 1979, c. 224, s. 10, requires the court to grant all such remedies as any of the parties may appear to be entitled to “so that, as far as possible, all matters in controversy between the parties may be completely and finally determined …” These provisions arguably support a generous approach to the question of amendments. However, the court will not allow useless amendments: Gesman v. Regina (City) (1907). 1 Sask. L.R. 39. 7 W.L.R. 307: Hubbuck & Sons Ltd. v. Wilkinson, Heywood & Clark Ltd.. 11899) 1 Q.B. 86 (C.A.). Similarly, it seems to me obvious that the court will not give its sanction to amendments which violate the rules which govern pleadings. These include the requirements relating to conciseness (R. 19(1)); material facts (R. 19(1)); particulars (R. 19(11)); and the prohibition against pleadings which disclose no reasonable claim or are otherwise scandalous, frivolous or vexatious (R. 19(24)). With respect to the latter, it may be noted that it is only in the clearest cases that a pleading will be struck out as disclosing no reasonable claim; where there is doubt on either the facts or law, the matter should be allowed to proceed for determination at trial: Mimes v. Minnes (1962). 39 W.W.R. 112. 34 D.L.R. (2d) 497 (B.C.C.A.); B.C. Power Corp. v. A.G.B.C (1962), 38 W.W.R. 577, 34 D.L.R. (2d) at 211 (B.C.C.A.). If there is any doubt, it should be resolved in favour of permitting the pleadings to stand: Winfieldv. Interior Ener. Services Ltd. (1969). 68 W.W.R. 383. 4 D.L.R. (3d) 71 (B.C.S.C). While these cases deal with striking out claims already pleaded, consistency demands that the same considerations apply to the question of amendment to permit new claims.”

 

 

The Implied Confidentiality of Documents In Litigation

Implied Confidentiality

deals with the issue of confidentiality of document exchange in litigation relating to the disclosure of documents to non-parties to the litigation, without the consent of the actual parties to the litigation.

The court held that to disclose discovery information by the parties to nonparties, constitutes a breach of the implied undertaking of confidentiality which attaches to information obtained through discovery.

This rule will not be affected by the introduction of the new WESA legislation.

The Court of Appeal in Hunt v. T&N plc (1995), 4 B.C.L.R. (3d) 110 at paragraph 64 applies in British Columbia:

“Accordingly, we would uphold the obligation which the law has generally imposed upon a party obtaining discovery of documents, and we would require such party, in appropriate cases, to obtain the owner’s permission or the court’s leave to use the documents other than in the proceedings in which they are produced.”

The court in Sovani went on to discuss, apparently without the argument of counsel, that the matter would also be given the force of law by the freedom of information and protection of privacy act:(FIPA)

Use of personal information
32 A public body must ensure that personal information in its custody or under its control is used only
(a) for the purpose for which that information was obtained or compiled, or for a use consistent with that purpose (see section 34),
[35] Section 33 provides:
Disclosure of personal information
33 A public body must ensure that personal information in its custody or under its control is disclosed only as permitted under section 33.1 or 33.2.
[36] Section 33.1 (1 )(j)(i) & (ii) provide:
Disclosure inside or outside Canada

http://www.courts.gov.bc.ca/jdb-txt/sc/07/04/2007bcsc0403.htm

17/03/2014

2007 BCSC 403 Sovani v. Gray et al; Jampolsky v. Shattler et al

33.1 (1) A public body may disclose personal information referred to in section 33 inside or outside Canada as follows:

0) in the case of the Insurance Corporation of British Columbia, if
(i) the information was obtained or compiled by that public body for purposes of insurance provided by the public body, and
(ii) disclosure of the information is necessary to investigate, manage or settle a specific insurance claim;

[37] Section 34 provides:

Definition of consistent purposes

34 (1) A use of personal information is consistent under section 32 or 33.2 with the purposes for which the information was obtained or compiled if the use

(a) has a reasonable and direct connection to that purpose, and
(b) is necessary for performing the statutory duties of, or for operating a legally authorized program of, the public body that uses or discloses the information or causes the information to be used or disclosed.

[38] Assuming, without deciding, that information obtained through the litigation discovery process by counsel retained by ICBC to represent insured parties is thereby “in the custody and control” of ICBC, the combined effect of these sections appears to be that such information may be disclosed to a non party to the litigation only where that is “necessary to investigate, manage or settle a specific insurance claim”, again assuming, without deciding, that litigation is comprehended by those words.

[39] It is therefore arguable that the disclosure of the fruits of discovery in these two cases to non parties by the defendants’ counsel, in the process of further discovery, was not necessary to obtain non party discovery and therefore not “necessary” under s. 33.1(1)(j) and accordingly not permitted under sections 32 and 33.
[40] If disclosure was not “necessary” under s. 33.1 (1 )(j), a point I need not decide, then the plaintiffs have whatever remedies, if any, are available to them under FIPA, which may impose on the defendants in the case before the court a higher obligation to limit disclosure of the fruits of discovery to non parties than the implied undertaking as to confidentiality imposes on litigants generally.

[41] The effect of the plaintiffs’ submission is to invite the court to expand the scope of the implied undertaking to comprehend the policy as stated in s. 8.3.2 of the Manual.

[42] I decline to do so for the following reasons.

[43] The implied undertaking applies to all litigants, not just those insured and represented by ICBC. It is not self-evident that the policy adopted by a public body, ICBC, in response to FIPA should determine or inform the common law as developed by the courts in respect of the scope of the implied undertaking.

[44] It is a matter of judgment to be exercised by counsel what information obtained by parties through the litigation discovery process needs to be disclosed to non parties in furtherance of the litigation in which that information has been obtained.

Court of Appeal Rules on Res Judicata, Abuse of Process and Estoppel

Bronson v. Tompkins Ranching Ltd., 2013 BCCA 477

The Beneficiaries of a trust obtained a judgment against the trustee for a breach of trust in relation to the sale of shares by the trust. They then commenced a second action, against the recipient of the shares, seeking the return of property to the trust.

On an application in the second action, the defendant purchaser of the trust’s shares sought confirmation that the plaintiff could not rely on findings of fact made by the trial judge in the first action.

The chambers judge held that the purchaser was not bound by those findings of fact.

On appeal the beneficiaries argued the purchaser was seeking to re-litigate the first action and ought to be barred from doing so, relying on the principles of res judicata and abuse of process. Before the hearing of the appeal the judgment in the first action had been overturned on appeal.

Held: appeal dismissed. The chambers judge appropriately considered whether the issues in question were res judicata and there is no basis upon which to interfere with this conclusion.

(i) Jurisprudence

[31] This Court has recently canvassed the circumstances in which a plea may be barred by the application of the doctrine of res judicata or as an abuse of process of the court, in Cliffs Over Maple Bay (Re), 2011 BCCA 180 (CanLII), 2011 BCCA 180; and again in Erschbamer v. Wallster, 2013 BCCA 76 (CanLII), 2013 BCCA 76.

[32] In the latter case, the principles were summarized as follows:

[12] The general principles of the doctrine of res judicata were reviewed by this Court relatively recently in Cliffs Over Maple Bay. The doctrine has two aspects, issue estoppel and cause of action estoppel. In brief terms, issue estoppel prevents a litigant from raising an issue that has already been decided in a previous proceeding. Cause of action estoppel prevents a litigant from pursuing a matter that was or should have been the subject of a previous proceeding. If the technical requirements of issue estoppel or cause of action estoppel are not met, it may be possible to invoke the doctrine of abuse of process to prevent relitigation of matters.

[13] In Cliffs Over Maple Bay, Madam Justice Newbury set out the requirements of issue estoppel at para. 31 (from Carl Zeiss Stiftung v. Rayner & Keeler Ltd. (No. 2), [1967] 1 A.C. 853 at 935, as quoted with approval in Angle v. Minister of National Revenue, 1974 CanLII 168 (SCC), [1975] 2 S.C.R. 248 at 254):

(1) that the same question has been decided;

(2) that the judicial decision which is said to create the estoppel was final; and,

(3) that the parties to the judicial decision or their privies were the same persons as the parties to the proceedings in which the estoppel is raised, or their privies. …

[14] With respect to cause of action estoppel, Newbury J.A. quoted, at para. 13, from the seminal case of Henderson v. Henderson (1843), 3 Hare 100, 67 E.R. 313 at 319 (Ch.):

In trying this question, I believe I state the rule of the Court correctly when I say that, where a given matter becomes the subject of litigation in, and of adjudication by, a Court of competent jurisdiction, the Court requires the parties to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of matter which might have been brought forward as part of the subject in contest, but which was not brought forward, only because they have, from negligence, inadvertence, or even accident, omitted part of their case. The plea of res judicata applies, except in special cases, not only to points upon which the Court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time.

She noted, at para. 14, that this language has been somewhat narrowed by the decision in Hoque v. Montreal Trust Co. of Canada, 1997 NSCA 153, 162 N.S.R. (2d) 321, where Mr. Justice Cromwell stated that the doctrine should apply to “issues which the parties had the opportunity to raise and, in all the circumstances, should have raised” (para. 37).

[15] Madam Justice Newbury set out the requirements of cause of action estoppel at para. 28 (from Grandview v. Doering, 1975 CanLII 16 (SCC), [1976] 2 S.C.R. 621, as summarized in Bjarnarson v. Manitoba reflex, (1987), 38 D.L.R. (4th) 32 (Man. Q.B.) at 34, aff’d reflex, (1987), 45 D.L.R. (4th) 766 (Man. C.A.)):

1. There must be a final decision of a court of competent jurisdiction in the prior action [the requirement of “finality”];

2. The parties to the subsequent litigation must have been parties to or in privy with the parties to the prior action [the requirement of “mutuality”];

3. The cause of action in the prior action must not be separate and distinct; and

4. The basis of the cause of action and the subsequent action was argued or could have been argued in the prior action if the parties had exercised reasonable diligence.

[16] Although it is referred to as cause of action estoppel, the principle applies to defences as well as claims. This is explained in Donald J. Lange, The Doctrine of Res Judicata in Canada, 3d ed. (Markham, Ontario: LexisNexis, 2010) at 137-38:

While the plaintiff may not split a cause of action or pursue litigation by instalments, the defendant may not split the defence by turning around and, as the plaintiff in a subsequent action, sue on an issue which, if successful, would challenge the integrity of the previous judgment. This is what was attempted in Henderson.

* * *

In other words, a cause of action in a second action which could have been a defence in the first action, but was not raised, is barred … The cloak of cause of action estoppel is woven the same for both the plaintiff and the defendant in subsequent proceedings.

[Footnotes omitted.]

[33] Although the Court in Erschbamer found the issue in question was res judicata, it also addressed the abuse of process argument:

[29] Even if cause of action estoppel is not technically available in the circumstances of this situation, it was nevertheless open to the chambers judge to strike para. 3 of Part 1, Division 2, of the amended response as being an abuse of process. In his reasons, the judge referred to Toronto v. C.U.P.E., the decision of the Supreme Court of Canada which held that the doctrine of abuse of process is available to prevent the relitigation of an issue in circumstances where the technical requirements of issue estoppel had not been met because the parties to the two proceedings were different.

[30] Lange refers to the doctrine in this context as “abuse of process by relitigation”. He confirms that, in addition to issue estoppel, it may be employed when the technical requirements of cause of action estoppel have not been met (at 215-16):

Abuse of process by relitigation applies to proceedings which would normally be governed by cause of action estoppel and to proceedings which do not meet the technicalities of that doctrine. As with cause of action estoppel, abuse of process by relitigation has sometimes been described as a rule against litigation by instalment, or the rule in Henderson. To breach the rule in Henderson, even though the parties are not the same, is an abuse of process. In applying abuse of process by relitigation, the courts have taken a stern view of raising in new proceedings issues that ought reasonably to have been raised in earlier proceedings.

[Footnotes omitted.]

(ii) Res Judicata

[34] The appellants rely primarily upon the doctrine of abuse of process, recognizing that it is difficult to bring the respondents (as non-parties to the First Action) within the strict technical confines in which the doctrine of res judicata is applicable. That doctrine would only have an application to the case if the appellants could establish privity between the beneficiaries and trustee, defendants in the First Action, and the purchaser of the trust shares, TRL, the defendant in the Second Action.

[35] Such privity, the appellants argue, may arise from active participation in the previous proceedings or actual benefit from them.

[36] The appellants say TRL was aware of the first proceedings, was aware of the issues being litigated, had an interest in those issues, could have applied to be joined in the action, and chose not to do so. The chambers judge considered and rejected these arguments. There is ample basis, in my view, upon which she could reasonably conclude that the respondents had not become so identified with the defendants in the First Action as to be bound by findings fact in that case. The plaintiffs could not establish the requisite “mutuality” between the beneficiary defendants in the First Action and TRL. The lengthy argument in the appellants’ factum and before us, to the effect that TRL stood by and watched the First Action being fought out and gave evidence and documents in support of the trustee, amounts to nothing more than a restatement of the case before the chambers judge.

[37] There is, in my view, no basis upon which it can be found that the chambers judge applied an inappropriate test or gave no weight, or no sufficient weight, to relevant considerations in relation to the argument that the issues in question are res judicata. In my view, there is no basis upon which we can, or should, interfere with that assessment of the case by the chambers judge.

(iii) Abuse of Process

[38] The more substantial argument advanced by the appellants is that it would amount to an abuse of process to permit the defendants in the Second Action to argue that the trustee had the power to sell the shares or the shares were not sold at an undervalue. In addressing these questions, the appellants say the chambers judge failed to consider whether the doctrine of abuse of process, as described in Toronto (City) v. C.U.P.E., Local 79, 2003 SCC 63 (CanLII), 2003 SCC 63, “was or could be engaged.”

[39] The appellants say whenever a litigant seeks to have a court make findings directly contrary to findings of a trial judge in prior litigation, the integrity of the judicial process is challenged and the court must consider whether the litigation amounts to an abuse of process. In such circumstances, the court must determine whether permitting issues to be twice-litigated would violate the principles of judicial economy, consistency, finality, and the integrity of the administration of justice. The appellants say permitting re-litigation of the two identified issues in this case would diminish public respect for the judicial process.

[40] In exercising its discretion to permit issues to be re-litigated, the appellants say, the Court must consider whether the First Action is tainted by fraud or dishonesty, whether there is new, previously unavailable evidence that conclusively impeaches the original results, and whether fairness dictates the original results should be binding in the new context. The appellants say the chambers judge failed to engage in that analysis. Further, the appellants say the trial judge failed to consider that the primary focus of the doctrine of abuse of process is the integrity of the adjudicative functions of the court and not principally the interests of the parties.

[41] The chambers judge expressly considered the C.U.P.E. decision and cited the following passage from it at para. 24 of the reasons:

[37] In the context that interests us here, the doctrine of abuse of process engages “the inherent power of the court to prevent the misuse of its procedure, in a way that would . . . bring the administration of justice into disrepute” (Canam Enterprises Inc. v. Coles 2000 CanLII 8514 (ON CA), (2000), 51 O.R. (3d) 481 (C.A.), at para. 55, per Goudge J.A., dissenting (approved 2002 SCC 63 (CanLII), [2002] 3 S.C.R. 307, 2002 SCC 63)). Goudge J.A. expanded on that concept in the following terms at paras. 55-56:

The doctrine of abuse of process engages the inherent power of the court to prevent the misuse of its procedure, in a way that would be manifestly unfair to a party to the litigation before it or would in some other way bring the administration of justice into disrepute. It is a flexible doctrine unencumbered by the specific requirements of concepts such as issue estoppel. See House of Spring Gardens Ltd. v. Waite, [1990] 3 W.L.R. 347 at p. 358, [1990] 2 All E.R. 990 (C.A.).

One circumstance in which abuse of process has been applied is where the litigation before the court is found to be in essence an attempt to relitigate a claim which the court has already determined.

 

Cost Awards in BC Estate Litigation

Cost Awards in Estate Litigation

INTRODUCTION

Cost awards are the amount of monies that a Court awards one litigant against another as a contribution towards legal fees incurred.

Until recent years, practitioners in estate litigation , had little to fear with respect to costs awards. Win or lose, the costs of the court action were usually paid out of the estate.

In the last ten years however, the courts have shown a growing inclination to let costs follow the event. This means that one litigant, usually the successful one is awarded party and party costs against the other. In real terms this amounts to a contribution of about 20% of the actual legal fees incurred.

More recently, in some circumstances judges are allowing full indemnity for or nearly full indemnity for legal fees. This paper will attempt to provide an overview of some the principles emerging in the law of costs.

1. SOME GENERAL PRINCIPLES

In some respects, cost awards in estate litigation are different from such awards in most other types of litigation. A number of factors contribute to this distinction, including the following:

(i) the litigation may arise as a result because of the actions of the testator or the residuary beneficiaries. For example, the will may be ambiguous and thus require interpretation by the court. In such situations the court will generally order that costs be paid out of the estate;

(ii) executors and trustees are usually entitled to be indemnified for all costs that they have reasonably incurred, including the cost of legal proceedings. Courts generally regard this approach as necessary in order not to discourage executors and trustees from carrying out their duties;

(iii) in some cases there may be good cause to question matters such as the capacity of the testator or the execution of the will. In such cases the court may feel the litigation was justified and thus not order costs against the unsuccessful parties;

The principles to be applied in relation to estate and estate trust litigation were summarized in Turner v. Telecommunications Workers’ Pension Plan, [2001], 197 D.L.R. (4th) 533 (B.C.C.A.).

(i) “an application made by trustees of the will or settlement, asking the court to construe the trust instrument for their guidance; to ascertain the interest of the beneficiaries; or to answer a question which arises in the administration of the trusts. In such instances, the costs of all parties, which are necessarily incurred for the benefit of the estate, should be taxed as between solicitor and client and paid out of the estate;

(ii) an application made by the beneficiaries as a result of difficulty of construction or administration of the trust which would have justified an application by the trustees. Again the application is necessary for the administration of the trust and the costs of all parties, which are necessarily incurred for the benefit of the estate, are paid out of estate;

(iii) an application made by the beneficiaries who make claims adverse to other beneficiaries. Such litigation is adversarial in nature and, subject to the court’s discretion, the unsuccessful party bears the costs of those whom he or she brings to court.

Subject to the above, in most cases the costs of litigation will follow the event, unless the court directs otherwise. In other words, the winning party will generally be awarded costs against the losing party. These costs are usually awarded on scale three of a tariff, with each unit awarded representing $80. Unfortunately, the amount of costs awarded is usually in the range of 20-25% of the actual amount of legal fees incurred.

On the one hand, the courts are showing an increasingly willingness to punish frivolous or vindictive litigation by imposing special costs against the unsuccessful party.

Conversely, the courts do not wish to discourage legitimate court actions, particularly those brought by the executor or trustee.

Given these competing concerns with respect to costs, there is a great variation in awards given.

2. INHERENT JURISDICTION OF COURT

Despite the Rules of Court dealing with costs, the court retains inherent jurisdiction with respect to costs.

As Justice Lambert said in Oasis Hotel Ltd. and others v. Zurich Insurance Company and others, (1981) 28 B.C.L.R. 230 (C.A.) at page 232:

“The full powers of the high court of Chancery in the ancient courts of common law have descended to us unimpaired.”

In Oasis, the court invoked inherent jurisdiction to award costs personally against the principal of an insolvent company. He was found to have abused the court to attempt to perpetrate a fraud.

The existence of inherent equitable jurisdiction, independent of the rules of court, was reiterated in Baart v. Kumar, (1985) 21 D.L.R. 4th 706 B.C.C.A. and Moore v Dhillon, (1993) 85 B.C.L.R. (2d) 69 (C.A.).

Although the court has a wide discretion in relation to costs, that discretion must be exercised judicially and with due regard to accepted legal principles.

3. SPECIAL COSTS

The law relating to special costs in estate litigation has evolved greatly in the last ten years. The cases show an increasing willingness by the courts to award special costs, particularly where the behaviour of the plaintiff warrants rebuke.

(A) WHAT ARE SPECIAL COSTS:

Special costs are where one party is ordered to pay the entire legal fees of the other party. They were formerly called solicitor and client costs.

A primary function of special costs awards is to provide a penalty as a deterrent for conduct worthy of rebuke.

In the leading case of Bradshaw Construction Ltd. v. Bank of Nova Scotia, (1991) 48 C.P.C. (2d) 74, Bouck J. states that special costs are more or less the old solicitor and client costs as described in the 1989 rules, Rule 51(1); Appendix C.

When taxing special costs there is no detailed scale corresponding to the scale that applies to ordinary costs and Appendix B. Instead those fees that the Registrar considers were properly and reasonably necessary to conduct the proceeding to which the fees relate are allowable at a special costs assessment.

This analysis of Bouck J. in Bradshaw was adopted by the Court of Appeal in Laye v. College of Psychologists of British Columbia, Vancouver Registry Docket C.A. 024099, March 19, 1998.

Rule 57(3) covers special costs and is stated as follows:

57(3) Where the court orders that costs be assessed as special costs, the registrar shall allow those fees that the registrar considers were proper or reasonably necessary to conduct the proceeding to which the fees relate, and, in exercising that discretion, the registrar shall consider all of the circumstances, including,

(a) the complexity of the proceeding and the difficulty or the novelty of the issues involved,
(b) the skill, specialized knowledge and responsibility required of the solicitor,
(c) the amount involved in the proceeding,
(d) the time reasonably expended in conducting the proceeding,
(e) the conduct of any party that tended to shorten, or to unnecessarily lengthen, the duration of the proceeding,
(f) the importance of the proceeding to the party whose bill is being assessed, and the result obtained, and,
(g) the benefit to the party whose bill is being assessed of the services rendered by the solicitor.

In fact an award of special costs or solicitor and client costs may be made even if the award will extend beyond indemnity of the successful party.

In Fullerton v. Matsqui, 1992, 74 B.C.L.R. (2d) 311, the Court of Appeal held that unlike party and party costs, which are designed to indemnify, special costs or costs awarded on a solicitor and client basis may be awarded on a higher scale as a penalty or deterrent for certain conduct” (page 316), and when the court “seeks to disassociate itself from some misconduct” (page 318). In such circumstances the award may go beyond indemnity and into the realm of punishment.

(B) SPECIFIC EXAMPLES OF SPECIAL COST AWARDS:

(i) REPREHENSIBLE CONDUCT

In Hicks v. Hicks, 16 E.T.R. (2d) 179, Mr. Justice Shaw awarded full indemnity for costs against the defendant, as a result of his reprehensible conduct in exercising undue influence over his elderly mother. The costs in that case were approximately $70,000.

In doing so, Justice Shaw stated as follows:

“In my opinion, the surreptitious and dishonest conduct of Edward was so highly reprehensible as to warrant an award of full indemnity, that is, solicitor and own client costs. I make this order under the inherent jurisdiction of the court.”

In Stiles v. Workers Compensation Board of British Columbia (1989), 38 B.C.L.R. (2d) 307 (C.A.) Justice Lambert stated that full indemnity for legal fees should not be awarded unless there is some form of reprehensible, scandalous or outrageous conduct in the circumstances giving rise to the cause of action, or in the proceedings themselves that warrants chastisement.

(ii) LACK OF BONA FIDES

In Louie v Louie Estate, Unreported, Vancouver Registry No. A971301, September 3, 1998, Boyd J., the court awarded special costs against the plaintiff in a Wills Variation action. She did so because she found that the action “was not brought bona fides, but rather as a vehicle to force or coerce the other beneficiaries of the estate to bend to the plaintiff’s will”. The court found that the plaintiff had been relentless in his campaign of making outrageous false allegations and attacking the moral turpitude and professionalism of the defendant lawyer.

(iii) CONDUCT WORTHY OF REPROOF OR REBUKE

In Fong v. Lee, 2002 B.C.S.C. 678 – Mr. Justice Hood ordered special costs against defendant executors on the basis that their conduct deserved reproof or rebuke.

Mr. Justice Hood made the following comments:

“The test I proposed to apply is that stated by Chief Justice Esson of this court, and which was adopted by the Court of Appeal in Laye v College of Psychologists (British Columbia, (1999), 59 B.C.L.R. 3d) 349 (C.A.) at p. 355. Can the conduct of the defendant brothers be described as misconduct deserving of reproof or rebuke? The answer without question is in the affirmative.

The Court of Appeal has stated that the general rule is that special costs are awarded only for misconduct in the proceedings in which the costs order is made. See Laye and the cases at page 355. The court also stated earlier in Stiles v. Workers Compensation Board of British Columbia, (1989), 38 B.C.L.R. (2d) 307 (C.A.) at p. 311 that special costs should not be awarded unless there is some form of reprehensible conduct, “either in the circumstances giving rise to the cause of action, or in the proceeding, which make such costs desirable as a form of chastisement.

Without doing a detailed analysis of the cases, I have concluded that the general rule that special costs are ordered only for misconduct in the proceeding is not absolute, although it would follow that pre-litigation conduct alone is not a basis on which to award special costs. This was the conclusion reached by my brother Cohen J. in Okanagan Similkameen (Regional District) v. Blackwell Stores Ltd., (1998) 15 C.P.C. 68 (B.C.S.C.) at p. 73.”

Mr. Justice Hood awarded special costs on the basis of both pre-litigation misconduct as well as continuing misconduct throughout the proceedings

See also Ram v. Prasad, 1999, 28 E.T.R. (2d) 140, where the B.C. Court of Appeal upheld the trial judge who awarded special costs against the defendant. In that case the defendant improperly backdated a document and propounded a purported will that was executed before the deceased was admitted to hospital in a paranoid, confused, agitated, and suicidal state.

(iv) UNFOUNDED SERIOUS ALLEGATIONS

There is an increasing trend by the courts to award special costs if the allegations of fraud, undue influence, or other unfounded serious allegations are not proved. Litigators who routinely allege undue influence should pay heed.

In Kouwenhoven Estate v. Kouwenhoven, 2001 B.C.S.C. 1402, Vickers J., an award of special costs was made against three sons who brought an action for fraud and undue influence against their deceased father’s second wife. The action was dismissed as being founded on speculation and innuendo, and special costs were ordered. Special costs were ordered at a rate of 100% of the actual legal fees. This order, made pursuant to Rule 57(3) of the Rules of Court, was made both against the estate and personally against the executor who had initiated the action.

See also Danchuk v. Calderwood, 1996, 58 E.T.R. (2d) 193, (see additional Reasons for Judgement dated June 16, 1997). In that case Justice Harvey concluded that the plaintiff exercised undue influence upon the deceased testator and that the circumstances surrounding the preparation of the will were suspicious. The plaintiff’s application for costs was dismissed, however the defendant’s application for special costs was granted. These awards were made on the basis of the plaintiff’s reprehensible conduct.

(v) BRINGING A DEFECTIVE APPLICATION FOR AN EX PARTE ORDER

In British Columbia (Public Trustee) v Batiuk, 14 E.T.R. (2d) 18, Vickers, J. set aside an ex parte order obtained by the Public Trustee that required a patient to submit to examination by a geriatric psychiatrist. The court found, inter alia, that the Public Trustee had failed to disclose all relevant information and had provided incorrect information to the court.

The court awarded special costs against the Public Trustee even though it was found that the Public Trustee made the application in good faith.

4. PARTIAL SPECIAL COSTS

If the court does not wish to punish a party on the basis of full indemnity for costs, it may still award a certain percentage of special costs.

Examples of awards of a partial percentage of full indemnity for costs include the following:

(i) In Shipp v. Tremblay, June 26, 1998, Macaulay J. awarded 80% of special costs where the plaintiff succeeded in an action to recover essentially all of his assets that were transferred to the defendant through undue influence. The court refused to consider the plaintiff’s claim at trial for punitive damages under the guise of the claim for special costs. The court found that the actual legal fees incurred were approximately $165,000, while costs at scale 3 awarded only $36,300, and costs at scale 4 ( now abolished) only $45,250.

The judge found that to award ordinary costs would amount to an unjust result, and accordingly awarded $131,000, which represented 80% of special costs.

(ii) In Re Woodward Estate, 40 E.T.R. (2d) 306, Mr. Justice Edwards proposed 75% of special costs against the petitioner for advancing a mischievous claim against an estate. The petition had been brought by an executor, and the court held that there was no question as to the validity or the meaning of the will or the capacity of the testator. Accordingly the special costs at 75% in favour of both the estate executors and the residuary beneficiary were awarded.

(iii) Easton v. Easton, 2002 B.C.S.C. 1076, District Registrar Bouck assessed 60% of special costs in favour of the petitioner. An order had been obtained that the respondent be passed over as executor. The main issue was whether the petitioner, himself a lawyer during most of the litigation, was entitled to charge for his time and disbursements. He had initially acted on his own, but later hired other counsel and assisted them throughout.

The court held that a solicitor who acts for him or herself is nonetheless entitled to all necessary costs as assessed in the ordinary way. Most services however could not be claimed during times when the petitioner was represented by other counsel. The amount allowed had to be moderate and reasonable.

5. SPECIAL COSTS IN WILLS VARIATION CASES

In Clucas v. Clucas Estate, Unreported, Vancouver Registry No. A973288,October 15, 1999, Madam Justice Satanove, made the following statement:

“Before the advent of special and increased costs, successful plaintiffs in wills variation actions were often indemnified at least in part, by an order of solicitor/client costs. The reason appeared to be that where widows (and children) had to proceed to trial to obtain what should have been given to them, then they should not be expected to pay the costs of the proceedings or to suffer financially because of it.” See Campbell v. Campbell 1986 B.C. J. No. 1221 (S.C.)

In Clucas, Madam Justice Satanove awarded increased costs on the basis of 70% of special costs to avoid the unjust result which would otherwise result.

In Rampling v Nootebas, 2003, B.C.S.C. 1225, August 5, 2003, Mr. Justice Truscott in a Wills Variation action, exercised his discretion and awarded special costs out of the estate to both the plaintiffs and the executrix.

In Chan v. Lee Estate, 2003 B.C.S.C. 513, Mr. Justice Hood awarded successful plaintiffs in a wills variation action against their brothers, special costs. The plaintiffs were entitled to special costs against the brothers in view of the brothers’ pre-action conduct, which they carried over throughout the trial.

6. SPECIAL COSTS REFUSED

In Tamboline v. Dobbs Estate, Unreported Vancouver Registry No. A951001, January 31, 1997, Mr. Justice Dross refused to award special costs where the applicant unsuccessfully sought to remove an executor for alleged improper conduct. The court did not find that the allegations advanced were so reprehensible or seriously prejudicial to the executor so as to warrant special costs, and accordingly the court awarded only scale 3 costs against the applicant.

7. SPECIAL COSTS TO BE PAID OUT OF THE ESTATE

In Schippmann Estate v. Schippmann, 38 E.T.R. (2d) 96, the Court of Appeal dealt with an appeal between an estate beneficiary and the executrix beneficiary, disputing their responsibility for an anticipated tax liability.

The court found that neither party had any complete success on the appeal, and held that the beneficiary and the executrix beneficiary should be awarded special costs to be paid out of the estate.

The court essentially determined that the application was made in the context of an application to pass accounts.

The court followed Re Kanee Estate (1992), 69 B.C.L.R. (2d) 89, where the majority of the B.C. Court of Appeal stated as follows:

“Thus, in my view, the statutory scheme mandates that the costs of these remuneration proceedings, being non-contentious (although opposed) should be assessed as special costs unless the court otherwise orders. In fact … the Rule makes special costs in these circumstances the “normative” assessment.”

8. INCREASED COSTS

A significant development occurred here when by order in council effective July 1,2002 increased costs were abolished.

This development is unfortunate in that the Courts now have one less discretionary tool with which to fashion cost awards that approach the appropriate level of indemnity for legal fees incurred.

9. REDUCED COSTS

In Behnsen Estate v Behnsen, Unreported, Victoria Registry No. 4993/99, December 14, 1999, Mr. Justice Wilson dealt with a plaintiff executor who brought an action to resolve a simple property dispute with the defendant.

The judge was critical of the procedure followed by the plaintiff, and found that the plaintiff should have applied to strike out the relevant portions of the defendant’s materials. The plaintiff instead responded to the defendant’s irrelevant materials with further disputatious affidavits, said to be necessary to counter the defendant’s assertion of good character.

The court disallowed the plaintiff his costs of those latter affidavits, and the defendant was directed to pay all remaining costs of the action on a scale 1.

10. COSTS AWARDED AGAINST THE EXECUTOR PERSONALLY

In Stangland v.Wiebe, Unreported, New Westminster Registry No. S046956, November 19, 1998, Madam Justice Martinson ratified her previous award of special costs to an estate beneficiary, by making those costs payable by the executor personally, rather than by the estate. The basis for purportedly making this change was that there were not funds left in the estate. The dispute centered over monies which the beneficiary alleged were owing to her, while the executor took the position that the monies were his. The court found that the money belonged to the beneficiary.

The general rule is that, in the absence of misconduct, a trustee should be reimbursed for his or her costs, charges and expenses out of the trust estate, even in cases of unsuccessful litigation.

There is ample authority, however for the principle that an executor should be personally liable for costs where he or she institutes proceedings that are entirely without merit, and the executor may be required to indemnify the estate for such costs where they have been paid out of the estate.

For example in Re Preymak, (1964), 45 D.L.R. (2d) 554, an administrator who brought a motion for construction of a will, and circumstances were the wording of the will was clear, was ordered to pay not only his own costs, but also those of the successful applicant.

In Re Olenchuk Estate (1991) 43 E.T.R. 146, an executor who proceeded on the issue of undue influence to trial, without having any appropriate grounds to do so, was ordered to be personally liable for costs.

11. COSTS PAYABLE PERSONALLY BY THE SOLICITOR

In Jones and The Public Trustee for the Province of British Columbia v. Humeston, Unreported , Kelowna Registry No. 3/1999, Madam Justice Beames dealt with an estate litigation matter arising out a motor vehicle accident. There appeared to a mix-up between the instructions given by the Public Trustee’s office to the lawyer for three infant plaintiffs.

The court found that the lawyer allowed himself to become too close to the proceedings, and failed in his obligations as a lawyer, to ensure that he was receiving instructions, from someone capable of providing instructions to bring the matter to court. The court awarded the defendant’s costs up to March of 1995, and the plaintiff’s counsel was ordered to pay the defendants’ costs incurred thereafter.

In Johnson v. Pelkey, 1999 B.C.C.A. 348, the Court of Appeal declined to interfere in the trial judge award of special costs against the solicitor and one defendant who supported the will. It was determined that the solicitor who drafted the testator’s will, and who was named the executor of his estate, and who applied unsuccessfully for an order upholding the validity of the will, should have to pay 60% of the defendant’s special costs. The facts of this case are somewhat unsual.

12. COSTS PAYABLE PERSONALLY BY A TRUSTEE IN BANKRUPTCY

In Carpe Investments Corporation v. Creative Prosperity Capital Corporation and others, Unreported, Vancouver Registry C974863, November 18, 1998. In this case Mr. Justice Tysoe dismissed proceedings brought on behalf of the petitioner by its trustee in bankruptcy.

The court awarded costs personally against the trustee in bankruptcy at scale 4. The court found that as general proposition, trustees in bankruptcy should not be allowed to pursue litigation with immunity against personal liability for costs in the circumstances where there is no statutory duty to prosecute a litigation and the trustee knows or ought to know that there will likely be insufficient assets in the estate to satisfy an award of costs in the event the litigation fails.

13. COSTS FOLLOW THE EVENT

Generally speaking, estate litigation cases will now follow the general rule that costs follow the event. The general rule as found in Rule 57(9) is that costs follow the event unless the court otherwise orders.

In Romaine v. Romaine, the trial judge, Madam Justice Smith, dealt with the issue of costs at 35 E.T.R. (2d) 218. The action involved that of a donor making an apparent gift of property to the defendant, and then suing to set aside the transfer. The donor died before the conclusion of the action and his estate carried it forward to a successful conclusion. The Court of Appeal reversed the trial judge’s decision as to the result of the outcome, but the trial judge held that the cause of the litigation may have been the uncertainty of the donor’s intention, but the object of that was uncertainty was his alleged inter vivos gift and not his will, and that accordingly the general rule had to prevail that costs should follow the event.

In Perry, Executrix of the Estate of Margaret Hall v. Marshall, Unreported, Vancouver Registry A992882, January 29, 2001, Mr. Justice E.R.A. Edwards dismissed the plaintiff’s claim involving an alleged inter vivos transaction, and awarded the defendant costs on scale 3. The plaintiff proposed that there be no order as to costs. The court held that the plaintiff proceeded to trial on a good or arguable point, but found that the fact that the plaintiff proceeded to trial on a good or arguable point is not a proper basis for depriving the defendant of costs. The court followed Pierce, Van Loon v. Davro Investments Ltd. et al C.A. 19833, May 7, 1996 B.C.C.A.

14. COSTS WHERE EXECUTOR IS ALSO A BENEFICIARY

Generally speaking, where a matter becomes contentious such that there is potential liability for the trustees, the courts have held that the trustee should pay their legal expenses personally with later indemnification by the estate, if appropriate. The courts are not willing to permit estate trustees to finance their personal legal expenses out of the estate, while the beneficiaries are obliged to fund their own expenses until judgment.

Thus in Wilcox v. Wilcox, 2002 B.C.C.A. 574, the Court of Appeal dealt with a situation where the executor was joined in the court action both as an executor and as a beneficiary. The court found that under the Wills Variation Act, it was necessary for the executor to be made a party to the action, and was expected to play a neutral role in the litigation. As a result of having to play a neutral role, an executor would generally receive special costs from the estate. However the executor was also a beneficiary and the court held that the costs must be separated. The court followed Ewasew v. Ewasew 1996, 11 E.T.R. (2d) 309.

The court held that the executor/beneficiary performed two separate functions. One was bringing the will forward on behalf of the estate for the assistance of the court. The other was representing her own interests as a beneficiary.

The court held that it is necessary to break out whatever part of the costs were attributable to the executrix’s duties as executrix, as opposed to her actions as a defending beneficiary.

15. NO COSTS AWARDED

In O’Hagan v. O’Hagan, Unreported, Vancouver Registry No. A940325, April 26, 1999, Mr. Justice Henderson declined to make any award for costs where the Public Trustee had asked for special costs payable from the estate, where a novel application had been made and presented to the court that was something akin to a “test case”. The court followed the B.C. Court of Appeal case of The Public Trustee v. Macht (1991) 53 B.C.L.R. (2d) 390.

In Singh v. Bhandar, Unreported, Victoria Registry No. 99/5629, March 15, 2001, Mr. Justice E.R.A. Edwards declined to make an order for any costs to either party, where both parties had sought an order for special costs. The court found that if special costs were awarded, there would be no monies left in the estate for the beneficiary. The court found that all parties involved in the court application were acting in what they believed was the petitioner’s best interests.

16. DIVIDED SUCCESS

In 2002 B.C.S.C. 1128, Mr. Justice Sigurdson handed down supplementary reasons for judgment dealing with the matter of costs concerning litigation between a lawyer and his former client.

The court found that both parties were successful. The lawyer was awarded $275,000 legal fees from his initial claim of $778,000. The client defendant in turn had argued that the lawyer was not entitled to any fees because the services rendered were valueless.

The court ordered that the lawyer was to receive 70% of his costs and the client received 30% of his costs, and that the costs would be set off against each other.

In Walter v. Crum, Unreported, New Westminster Registry No. S018935, July 31, 1998, Mr. Justice Collver. The court dealt with some rather unusual circumstances in this estate litigation dispute. The court awarded the plaintiff scale 3 costs up to the date of trial, and then awarded the defendant scale 3 costs of the actual trial.

In Hadlen v. Boose, 2001 B.C.S.C., 1792, Mr. Justice Williamson in a wills variation action, found that as both parties had a divided success, they should each therefore bear their own costs.

17. PROSPECTIVE (PREMPTIVE) COSTS

Applications for prospective costs in British Columbia are being made more frequently than in the past. In England there is more jurisprudence directly on point. The applications are usually made where there is a large fund of monies and the applicant will try to have use of the funds to pay for the litigation. The application is usually based on the principle that the application is being made to ascertain the interests of the beneficiaries, or to answer a question which arises in the administration of a trust, or for the Court to construe a document, or the like. Generally there will not be an award for prospective costs when the nature of the proceedings is truly adversarial.

However, it is often not clear if the nature of the proceedings is truly adversarial or whether it can be more characterized as necessarily incurred for the benefit of the estate so as to warrant that the entire fees should be paid out of the estate.

I expect that there will be an increasing number of such applications in the future.

In Turner v. Andrews, the Court of Appeal upheld the dismissal of an application for prospective costs brought by approximately 189 members out of some 14,000 to 15,000 employees against the trustees of their pension plan. The members alleged that the surpluses were distributed in a manner so that the plaintiffs did not receive their fair share. Because the litigation was expensive, and involved extensive expert evidence and legal fees, the plaintiff applied for the award of prospective fees and disbursements from the pension plan trust fund.

Both the trial judge and the Court of Appeal held that the case was adversarial, and was not being brought for the benefit of or in the interests of the plan as a whole, but for the particular class of plan members representative by the plaintiffs. Accordingly the application for prospective costs was dismissed.

The Court of Appeal reasons for judgment are Unreported, Vancouver Registry No. CA 026505, February 6, 2001.

The reasons for judgment of the Supreme Court Chambers application are found at 1999, 30 E.T.R. (2d) 126.

A more recent case heard on September 3.03, dealing with prospective costs is The Bank of Nova Scotia Trust Company, executor of the estate of Harry Mudrie, deceased v. Powlik and others unreported 2003 BCSC 1382, where Justice Rogers dismissed an application by the executor bank for payment of past and future legal fees in litigation between the parties involving two conflicting wills prepared by the deceased. The bank sought access to the deceased’s monies to fund the litigation on the basis that the executor had a duty to protect the estate and its proper beneficiaries and because there were tow wills, with testamentary capacity in issue, then it was proper for the estate to indemnify the executor for their legal fees.

The Court rejected this argument and applied the criteria as stated in Alsop Wilkinson v. Neary (1996) 1 W.L.R. 1220 (Ch.) as follows:

(1) the strength of the party’s case;
(2) the likely order as to costs at the trial;
(3) the justice of the application; and
(4) any special circumstances.

The Court reviewed the evidence as it related to each of the criteria and refused the application. The Court stated :

“ The BNS is an amply solvent litigant. Its desire for indemnity is not motivated by concern its limited resources will prevent an important question form being tried, but rather by a desire to avoid the risk of [paying its lawyers out of its own pocket rather than out of the estate. The relief the BNS seeks is so unusual, so extraordinary, so out of the realm of the usual that the court should grant it only in the most narrow and deserving of circumstances. An order for prospective costs might go in a different case on a different set of facts, but it cannot go in this case on these facts.”

For other cases dealing with prospective costs, I refer you to:

(a) Discovery Enterprises Inc. v. Ebco Industries Ltd. (1999) 70 B.C.L.R. (3d) 299

(b) In the matter of Westar Mining Retirement Plan, (Vancouver Registry No. A92477, April 8, 1994,

(c) Bentall Corp. v. Canada Trust Company, 1996, 26 B.C.L.R. (3d) 181.

(d) McDonald v. Horn (1995) 1 All E.R. 961 ( C.A.)

CONCLUSION

Clearly there are valid social policy reasons for the historic approach of the courts to cost awards in estate litigation. Accordingly in many estate litigation cases, the court will continue to grant costs out of the estate, even to an unsuccessful litigant.

It is clear however from a review of the case law over the last ten years, that the courts are increasing letting costs follow the event.

Accordingly, the financial stakes in estate litigation have increased significantly. Not unlike family litigation, parties in estate litigation cases are often emotionally charged. If the conduct of a party is such as to warrant rebuke by the Court, then the unsuccessful party runs a significant risk of having special costs awarded against him or her. The amount of special costs can be very substantial. The courts have become far less hesitant to award personal costs against executors, solicitors, trustees in bankruptcy, and the Public Guardian, for conduct which the court finds is inappropriate.

Litigators routinely proceeding to trial with serious allegations, such as undue influence, run the risk of an award of special costs being made against their client, should such allegations be unproved.

Counsel would be well advised to ask for special costs, or increased costs, where the nature of the case, or the conduct of the parties, might lead the court to exercise its discretion to award same. It is increasingly necessary to provide evidence to the court as to the amount of the actual legal fees, versus what ordinary costs would amount to, so as to persuade the court that it may be unjust if special costs or increased costs were not awarded.