Among the other spoils of legal battle, cost awards are usually conferred by the decision-maker — whether a judge or quasi-judicial tribunal — on the victor in a legal dispute. British Columbia Provincial Small Claims Courts, however, rarely grant costs to the winning side. Arbitrators may also have discretion to award special costs, depending on the governing arbitration agreement.
These awards are usually a partial indemnification by the unsuccessful party for the successful party’s legal fees, typically covering about a third of that party’s total costs. Such awards are referred to as “party and party costs” or “ordinary costs” and are usually calculated based on tables set out in the British Columbia Supreme Court Civil Rules.
Courts also have discretion to award what are called “special costs” (they were known as “solicitor-and-client costs” until 1990). Special costs awards resemble actual legal costs more closely (typically about 90 per cent of actual costs) and are awarded when an opposing party, be it the winner or loser, has engaged in outrageous, scandalous or reprehensible conduct deserving rebuke from a court or tribunal.
Put otherwise, special costs are a vehicle that can be used to compensate parties for wrongs suffered during the litigation process that otherwise would not be compensable. A judge may also award them to punish parties that, through their conduct, have interfered with the proper administration of justice. This can, in some circumstances, include conduct that takes place during the pre-litigation stage.
The typical circumstance for which special costs are awarded is when there are unfounded allegations of morally dubious conduct, such as allegations of dishonesty or fraud that were shown to have no reasonable basis in fact. The potential consequences of calling someone on the other side a fraudster should always be kept in mind. Sometimes a less aggressive allegation, such as negligence, may be appropriate if the remedies remain the same, since there will be less risk of an adverse cost award.
Special costs can be awarded against a party to the litigation, the lawyer, or both. In particular, nondisclosure of documents, suppression of evidence and mischaracterization of evidence can attract special costs awards. Courts can, and often do, punish conduct that strikes at the fundamental tenets of our justice system, particularly those concerning honesty. Similarly, delays and unnecessary court time caused by vexatious or baseless lawsuits, or even applications within a lawsuit, can attract special costs — they can be awarded for all or just part of a proceeding.
Sometimes a special costs award may not be appropriate — for example, if a court has already determined aggravated or punitive damages in a case. Even in such cases, however, delays, dishonesty or other misbehaviour may lead to an entitlement to special costs if there is no other way for the victimized party to be compensated or if the court or tribunal wishes to demonstrate its disapproval.
While it is difficult to set out strict guidelines setting out what behaviour is “reprehensible”, a good rule of thumb is not to accuse the other side of morally questionable behaviour unless you are fairly certain you can demonstrate such behaviour on the facts. Parties to lawsuits should always take the procedural and substantive processes mandated for the administration of justice seriously and make a good-faith approach to litigation standard. Conversely, by keeping an eye out for questionable conduct by the other side, a greater recovery of your legal bill could be your reward.