RECOVERING COSTS: DETERMINING THE SUCCESSFUL PARTY
As a litigant, you are concerned about the mounting legal bills that you’ve been paying throughout the course of your proceeding. You wonder if there is any chance of recovering legal expenses from your opponent’s pocket after the trial is over.
The good news is that the Supreme Court of British Columbia has a system in place to allow successful parties the opportunity to recover legal costs. Rule 14-1(9) of the Supreme Court Civil Rules provides that the “costs of a proceeding must be awarded to the successful party unless the court otherwise orders.” This rule seems simple enough, but with cases that involve a number of issues and claims, mixed success is likely, and the “successful party” can be hard to identify.
The Successful Party
“Success” for costs purposes has long been defined to mean “substantial success”: Gold v. Gold (1993), 82 B.C.L.R. (2d) 180 (C.A.). Generally, a party that succeeds on 75% of the issues will be considered substantially successful: Fotheringham v. Fotheringham, 2001 BCSC 1321 at para. 45.
However, in determining substantial success, the court need not “descend into a meticulous mathematical examination of the matters in dispute”: Gagne v. Sharpe, 2015 BCSC 154. Rather, the court ought to:
- focus on the matters in dispute, which may or may not include issues mentioned explicitly in the pleadings;
- assess the weight or importance of these matters to the parties;
- globally determine which party substantially succeeded overall; and
- where one party achieved substantial success, consider whether there are reasons to otherwise order.
The purposes for which costs rules exist also factor into the judge’s decision as to who is awarded costs. In addition to indemnifying a successful party, those purposes have been described as follows:
- deterring frivolous actions or defences;
- encouraging conduct that reduces the duration and expense of litigation and discouraging conduct that has the opposite effect;
- encouraging litigants to settle whenever possible, thus freeing up judicial resources for other cases; and
- encouraging 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 discouraging the continuance of doubtful cases or defences.
Finally, there are many reasons why a court may deny costs to a substantially successful party. These include misconduct in the course of litigation, and the substantially successful party failing on one or more issues that took a discrete amount of time. It is therefore important to keep in mind the purposes of the costs rules, including encouraging conduct that reduces the duration and expense of litigation and discouraging conduct that has the opposite effect.
When assessing the potential risks and rewards of marching off to trial, litigants must consider whether costs could be awarded to them or against them. Litigants should ask themselves:
- Who is likely to be successful on the major issues of high weight or importance?
- Are there issues that you should concede to reduce the duration of the trial?
- Are all of your witnesses listed in your Trial Brief and can you avoid calling any of them?
- Have either of the parties engaged in misconduct or less-than-desirable behavior?
- Can the matter be resolved?
For further reading, see the following cost entitlement decisions for construction disputes: