Overplaying Your Hand: Risking Special Costs

When commencing a claim or a counterclaim, there is a temptation to throw every allegation at the wall just to see what sticks. This is often done in the hopes that, by increasing the number of allegations, a better outcome may be achieved than taking a more reasoned and focused approach.

While it is prudent and generally considered practical to preserve and pursue claims which can be supported on the facts, parties risk the scorn of the Court when they unreasonably commence or maintain claims which are not supported by the facts or, when confronted with clear evidence that an allegation is not supported, continue to maintain rather than withdraw such allegations.

The push and pull of vigorously pursuing a case, but not overplaying your hand, is reflected in the Code of Professional Conduct for BC which governs the conduct of lawyers. In the Code lawyers are reminded that their responsibility to their client includes “…endeavour[ing] by all fair and honourable means to obtain for a client the benefit of any and every remedy and defence that is authorized by law.” On the other hand, lawyers are also reminded that they “…should bear in mind that seldom are all the law and facts on the client’s side, and that audi alteram partem (hear the other side) is a safe rule to follow.”

In the recent case of Raven v. A&W Ranching Limited, 2016 BCSC 2009 (CanLII), the Plaintiff sought an order that the Defendant compensate him for assets sold, money loaned and services provided to the Defendant. The Defendant denied that money was owed for the sale of assets, denied that money was loaned and denied that services were provided at all or were provided gratuitously. The Defendant went further and counterclaimed for conversion (similar to theft) and trespass and sought the return of money it alleged the Plaintiff received that belonged to the Defendant.

Judgment was granted in favour of the Plaintiff and the counterclaim of the Defendant was dismissed. Based on the findings after trial, the Plaintiff sought costs of the trial on a special costs basis. Special costs are substantially higher than costs that a party is normally entitled to and generally entail a party being entitled to recover all reasonably incurred costs from the losing side including legal fees and disbursements.

In its separate reasons for judgment on costs, the Court noted the oft-cited notion that special costs are to address reprehensible, scandalous or outrageous conduct on the part of a litigant,; although case law tends to give wide meaning to the notion of reprehensible.

In respect of the Defendant’s claims, the Court observed, among other things, that:

  • broader allegations of conversion were maintained throughout and a more narrow allegation was only made in closing submissions;
  • the allegations of conversion were contrary to the Defendant’s own financial records and flew in the face of other evidence;
  • allegations against the reliability and biased nature of the Plaintiff’s bookkeeper were unfounded and untrue;
  • trespass was alleged, but no particulars were pled or advanced;
  • a claim for conversion of $18,000.00 of seed was not borne out.

In the result the Court found that the alleged acts of dishonesty were found to have been untrue and overshadowed all of the Plaintiff’s claims. Accordingly, the Defendant’s conduct was found to be either reprehensible, scandalous or outrageous and special costs were awarded as a result.

The lesson to be learned from Raven is that a party should not lightly make allegations of serious wrongdoing without having the facts and evidence to support those claims. Courts can and do slap down parties who accuse others of very serious and dishonest misconduct. This is especially so where the allegations are unfounded, made to threaten or intimidate or are otherwise pursuit without any reasonable prospect success.

Readers are well-cautioned that self-represented litigants are not immune to being sanctioned by a special costs order and that such litigants must tread just as carefully with serious allegations. Not every case or litigant can financially bear full legal representation, but all litigants should consider at least obtaining competent legal advice in formulating a strategy for formulating their claims and/or defences in any prospective or actual litigation.

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