CASE UPDATE: SPECIAL COSTS ASSESSMENTS
In Price v. 481530 B.C. Ltd., 2020 BC 1806, the unsuccessful defendants in a wrongful dismissal action adopted an obstructive “scorched earth” approach and the plaintiff was awarded $384,602 plus special costs. At the Registrar’s hearing to assess the quantum of costs, the plaintiff presented a bill of $1,014,278. Registrar Nielsen confirmed that the successful party was only entitled to those fees and disbursements that were proper and reasonably necessary to the proceeding. After taking a global approach to assessment, the Registrar allowed costs of $660,000 plus taxes and most disbursements.
The factual background and procedural history of these proceedings is lengthy and complex and will not be addressed in this article. For further reading, the factual background of the issues arising in the case are described in Price v. 481530 BC Ltd., 2016 BCSC 1940 at paragraphs 1 through 14. The subsequent procedural history is described in detail in Price v. Robson, 2017 BCCA 419 at paragraphs 4 through 21.
An assessment of special costs is governed by SCCRs 14-1(3) and (5), which provide:
(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.
(5) When assessing costs under subrule (2) or (3) of this rule, a Registrar must
(a) determine which disbursements have been necessarily or properly incurred in the conduct of the proceeding, and
(b) allow a reasonable amount for those disbursements.
A party who has been awarded their special costs is only entitled to those costs which are objectively reasonable. The fact that a lawyer has billed a certain amount does not make that amount reasonable: Gichuru v. Smith, 2014 BCCA 414 at paras. 104, 105 and 155.
In Tanious v. The Empire Life Insurance Company, 2019 BCCA 329, the BCCA confirmed that, while there is a close relationship between special costs and actual legal costs, they are not the same. Further, special costs are not a substitute for damages or a means of ensuring the successful party is not put to any expenses whatsoever. Their purpose is to censure and deter litigation misconduct, not to compensate the plaintiff. The successful party is only entitled to those fees and disbursements that were proper and reasonably necessary to the proceeding.
In Price, the amount claimed in special costs totaled $1,014,278.92 in fees, disbursements and taxes. The Court factored into its assessment the following issues:
- The matter was complex and the defendants refused to participate in pre-trial proceedings until their application to strike was heard, which occurred on the eve of trial. As a result, the plaintiff went to great lengths in preparing for cross-examination during the trial. To add to the complexity, there was a flux in the law regarding the tort of conspiracy and unlawful means.
- During the course of the trial, the defendants persisted in their allegation of just cause and attempted to expand that allegation without any supporting evidence, which the plaintiff spent considerable time disproving.
- The case required a level of perseverance and tenacity that comes with experience, which was aptly displayed by counsel for the plaintiff throughout the proceeding.
- The Court awarded the plaintiff $384,602.33 in damages at trial. The plaintiff’s claim was $827,507.17. The importance of the amount to the plaintiff was substantial given that he was dying of cancer and it would be the last monies he would contribute to his family.
- The defendants took a scorched earth approach to their defence, which effectively drove up the costs of the litigation and turned what should have been a five-day trial into a thirty-one-day marathon.
- The defendants showed an animus towards the plaintiff throughout the course of the proceeding. There were unnecessary adjournment applications, unnecessary applications to amend the defendants’ pleadings both before and during the trial, frustration of pre-trial processes, persistent breaches of the Rules and a general abuse of the Court’s processes.
- Plaintiff’s counsel successfully navigated a very difficult case to a successful conclusion with special costs awarded for the proceeding. The plaintiff and his family clearly benefited from the skill and expertise of the lawyer in advancing a difficult and hotly contested case at every step.
In assessing the quantum of fees and disbursements paid by the plaintiff, the Court noted:
- When the plaintiff initially retained the lawyer, he had limited funds, given his dismissal from his employment and the loss of his investment in the business. The plaintiff’s partner did not work outside the home, and he had three dependant children, one of whom is severely disabled. There was never a guarantee that the lawyer would receive payment equal to her time invested in the proceeding. This risk was entirely assumed by the lawyer.
- Several areas of hourly billing were high. Fifteen hours were spent researching the issue of mitigation, twenty-two and a half hours were spent drafting the Notice of Civil Claim and a further twelve hours were spent revising it. Six further hours were spent preparing a history of the litigation.
- A total of 192 hours were spent in preparation of the special costs assessment, legal research and argument/hearing preparation. While counsel made use of juniors where appropriate, the hours billed by them were significant, as were the hours overall.
- The lawyer’s assistant did work on the file, including preparing charts for use at trial, which were not billed. Further, the plaintiff and his brother assisted with work on the file which was not billed.
- However, following the receipt of this written submission, plaintiff’s counsel listened to the entirety of the recording of the five days of the special costs assessment to satisfy herself that she had not sworn at the self-represented defendants. The plaintiff sought $34,918.41 in billable time as a result. This was not objectively reasonable in the circumstances. Counsel’s denial and confirmation by the presider was all that was needed.
- The plaintiff also sought the costs of execution proceedings totaling $42,157.78, and the amount obtained through the garnishment process totaled $45,043.10. The net result of this process was roughly $3,000 for an investment of $42,000 in fees and disbursements. This step did not fall under the ambit of the costs award, as it had yet to be taken.
Taking a global approach to the assessment of special costs, and considering all of the circumstances and the factors in SCCR 14-1(3), the Registrar allowed $660,000 in fees plus applicable taxes, $60,000 of which was attributable to the assessment before the Registrar.
The plaintiff also sought disbursements of $31,188.90 in document production, $25,000 of which was allowed. Support staff overtime ($4,996.09) as a result of a last-minute discovery and office stationary ($220.75) were both considered overhead and therefore non-recoverable.