In British Columbia, the unsuccessful party in a lawsuit has to pay a portion of the other side’s legal fees, which is called “costs.” Costs compensation is common in the British common law system, including BC and most Canadian provinces, although the application varies. Different provinces assess costs differently and use different terms for different types of costs order. The overarching principles are the successful party shouldn’t have to bear all their legal costs to assert their right, but the risk of a devastating costs order should not act as a barrier to bringing meritorious but uncertain lawsuits (especially as there is always a degree of uncertainty about the outcome at any trial). That being said, costs are available to the successful party even if they did not have a lawyer! Costs is one of the most contentions pieces of litigation, there have been hundreds of reported decisions in BC on a wide variety of costs issues. This article only provides a general overview of what the types of costs are.
Exceptions to the general rule
The Supreme Court Civil Rules and the law applying those rules enumerate a number of different exceptions to the basic rule, that the successful party gets their costs. The court can award one party costs of part of the lawsuit regardless of who wins the lawsuit, and the court can make different costs orders if one side makes a formal offer to settle (which requires specific language to be used) and does better than that offer. If a plaintiff offered to settle the case for less money than the award, they might get more costs compensation after the date of the formal offer; if a defendant offered to settle the case for more money than the award, they might get compensation for their costs after the formal offer, or they may not have to compensate the plaintiff for their costs after the formal offer. If you are representing yourself in a court case, you should still seek legal advice about potential cost issues and exceptions specific to your case.
Types of Costs
Generally, though, there are three basic types of costs orders in BC: party-party costs, uplift costs, and special costs. I will explain all of them shortly. In all cases, the successful party is entitled to the bulk of their disbursements, i.e. the out-of-pocket expenses incurred by the lawyer related to the case.
Party-Party Costs
Usually, costs in British Columbia are assessed as party-party costs based on a Tariff which is found in Appendix B of the BC Supreme Court Civil Rules. The Tariff for most civil matters is fairly complicated and involves basic algebra. You must determine the number of units you are claiming and multiple that by the appropriate rate, called “scale.” I will explain.
The tariff for civil matters lists forty-eight different steps (called “items”) that may be taken in a lawsuit; it is up to the party who is entitled to costs to choose which steps they think apply. Some of the items have a set number of units, while others have a range of units you choose from. Once you have chosen the steps you think apply and the amount of units you want to claim, you add up the total units claimed.. Then you multiply the number of units by the appropriate scale, i.e. rate, to get the amount of your claim for costs.
The tariff for civil matters specifies three scales or rates: Scale A is for matters of little or less than ordinary difficulty, Scale B is for matters of ordinary difficulty (and is he default scale absent court order to the contrary), and Scale C is for matters of more than ordinary difficulty. The rate for each scale is defined in the rules; the rate for Scale B is $110 per unit. The scale is not dependant on what your lawyer’s fee was. The various rates has not been adjusted since 2010 (despite about 40% inflation since 2010).
The tariff in family law is much simpler: it has nine items and set dollar values for each of those nine items. Some but not all the items have different scales for costs.
The tariff of costs does not apply in Fast Track matters, which are matters where the amount in issue is less than $100,000 or the trial takes three or fewer days. In that case, the Supreme Court Civil Rules provide fixed amounts for costs based on the number of days of trial, with some room to negotiate if the matter settles before trial.
Uplift costs
Uplift costs, formerly known as increased costs, are the least common of the three types of costs. Uplift costs arise when an order for special costs is not appropriate, but the court finds that, because of unusual circumstances, an award of costs on the otherwise appropriate scale would be grossly inadequate or unjust. In Best v. Thomas 2014 BCSC 2487 Justice Duncan identified the four factors that would justify uplift or increased costs, “(a) the serious nature of the allegations; (b) the complexity or difficulty of the issues in the litigation; (c) the importance of the litigation to the parties or to the development of the law; and (d) misconduct by the unsuccessful party to the litigation.” [para 39]. Uplift costs are rarely ordered.
Special Costs
The most contentious type of costs award is special costs, formerly known as solicitor-client costs. Special costs are typically awarded when one party is guilty of misconduct which the court wants to disassociate itself from in their conduct of the litigation. The leading civil case in BC is Garcia v. Crestbrook Forest Industries Ltd. (1994), 9 BCLR (3d) 242, 45 BCAC 222, a wrongful dismissal matter. Special costs were sought with respect to the appeal on the basis the appeal lacked merit, the employer had failed to pay Employment Standards Act minimum pay, and the employer failed to make any payment beyond those minimums in the course of negotiating a potential settlement. The court awarded special costs, and in doing so enunciated the commonly accepted test for special costs in British Columbia as follows:
The single standard for the awarding of special costs is that the conduct in question properly be categorized as "reprehensible". As Chief Justice Esson said in Leung v. Leung, the word reprehensible is a word of wide meaning. It encompasses scandalous or outrageous conduct but it also encompasses milder forms of misconduct deserving of reproof or rebuke. Accordingly, the standard represented by the word reprehensible, taken in that sense, must represent a general and all encompassing expression of the applicable standard for the award of special costs. [para 17]
Special costs have been awarded without reprehensible conduct in public interest litigation, estate litigation, and “duty to defend” cases (where a party is seeking a declaration their liability insurer has to provide a legal defence in a liability claim). In Tanious v. Empire Life Insurance Company 2019 BCCA 329, the Court of Appeal held,
“However, in exceptional cases special costs may be awarded for non-punitive purposes in the interests of justice to provide a higher degree of indemnification to the successful party. When deciding whether to award special costs, a judge should exercise his or her discretion based on established principles and consider the nature and conduct of the litigation, bearing in mind the purposes and objectives of the costs regime, any salient policy considerations and the relevant facts as established by the evidence.”
Special costs are meant to be close to full compensation for legal fees, and are assessed based on the complexity of the proceeding and the difficulty or the novelty of the issues involved; the skill, specialized knowledge and responsibility required of the lawyer; the amount involved in the proceeding; the time reasonably spent in conducting the proceeding; the conduct of any party that tended to shorten, or to unnecessarily lengthen, the duration of the proceeding; the importance of the proceeding to the party whose bill is being assessed, and the result obtained; the benefit to the party whose bill is being assessed of the services rendered by the lawyer; and Rule 1-3 and any case plan order.
Conclusion
The law surrounding costs in legal proceedings is complicated. Briefly, the successful party usually gets at least some costs compensation to cover off a portion of their legal fees, but there are exceptions; and the amount of compensation depends on a wide variety of factors. If you are entitled to costs from a lawsuit, or you think you should be entitled to costs arising from a lawsuit, you should contact one of our commercial litigation lawyers!