WILLS & ESTATES
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Special Costs 2021 Trevor Todd
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t is a common public belief that the losing party in litigation pays the winning parties’ legal fees, but that is not the case unless the Court makes an extraordinary award of special costs. The usual award of costs is to the winning party on a “party and party” basis tied to a scale of units in the Supreme Court Rules for steps in the litigation process that essentially awards only a portion of the actual legal fees. Special costs provide a much greater degree of indemnity than the usual award of costs. In Negas v. Yehia 2021 BCSC 254, the Court awarded approximately $1.2 million in legal fees against the respondent in a protracted family case concerning $19 million assets that lasted 7 years. The award of special costs was essentially an award of full indemnity to the wife of her legal fees by reason of the “reprehensible conduct” of her partner during the course of the litigation that resulted in the award of special costs against him. What Are Special Costs? The nature and purpose of special costs were described by our Court of Appeal in 567 Hornby Apartment Ltd. v. Le Soleil Restaurant Inc., 220 BCCA 69 (“Le Soleil”). Volume 30 Number 1 Spring 2021
“Special costs are not compensatory; they are punitive: Smithies Holdings Inc. v. RCV Holdings Ltd., 2017 BCCA 177 at para. 56. The purpose of special costs is to censure and deter litigation misconduct, not to compensate the plaintiff: Tanious v. The Empire Life Insurance Company, 2019 BCCA 329 at para. 53.”
Special costs are not generally awarded unless the parties’ conduct has been reprehensible during the course of the trial… “Special costs are fees a reasonable client would pay a reasonably competent solicitor to do the work described in the bill: Bradshaw Construction Ltd. v. Bank of Nova Scotia (1991), 54 B.C.L.R. (2d) 309 (S.C.), para. 44. A special costs award is to provide an indemnity to the successful party, but not a windfall; Gichuru v. Smith, 2014 BCCA 414, at para. 155. Although there may be a close relationship between actual legal expenses and special costs, they are not necessarily the same: Tanious v. The Empire Life Insurance Company, 2019 BCCA 329, para. 49. That is because legal fees a lawyer can recover from a client The Scrivener | www.bcnotaryassociation.ca
are determined on a subjective standard, pursuant to the Legal Professions Act, whereas only fees that are objectively reasonable in the circumstances are recoverable as special costs: Gichuru, para. 155.” REPREHENSIBLE CONDUCT Special costs are not generally awarded unless the parties’ conduct has been reprehensible during the course of the trial, including conduct that is scandalous, outrageous, or other forms deserving of rebuke. In Mayer v. Osborne Contracting Ltd. 2011 BCSC 914 at para. 11, the Court set out those circumstances that warranted the attraction of special costs: 1) where a party pursues a meritless claim and is reckless with regard to the truth; 2) where a party makes improper allegations of fraud, conspiracy, fraudulent misrepresentation, or breach of fiduciary duty; 3) where a party has displayed reckless indifference by not recognizing early on that its claim was manifestly deficient; 4) where a party made the resolution of an issue, far more difficult than it should have been; 5) where a party in a financially superior position to others brings proceedings, not with a reasonable expectation of TABLE OF CONTENTS
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