“Shadow Trial” Argument Rejected in Special Costs Appeal

Berthin v. Berthin 2020 BCCA 376 is another high-conflict case described by the chambers judge as an “unenvious litigation odyssey”, an apt characterization considering the court action was commenced in 2011 and led to 19 reported decisions in the BC courts. Ten of the court’s judgments related to the sale of a property owned by the parties, an order sought by Mr. Berthin and then mightily resisted by him.

The latest foray in the appeal court was a leave to appeal application brought by Mr. Berthin as a result of a special costs order based on allegations of fraud advanced by him against his former spouse and the purchasers of said property.

In his application for leave, Mr. Berthin contended that the chambers judge erred by conducting a “shadow trial” and adjudicated the substantive issues as though there was a trial on the merits.

The appeal panel agreed that in most cases, when special costs are awarded, they will be ordered at the conclusion of a trial or hearing. In the case at bar, Mr. Berthin argued that he abandoned his case before the trial and consented to a dismissal of his action.

Relying on Lim v. Zhu 2019 BCSC 88 he submitted that the costs award was improper as the matter had settled without a hearing or trial. The relevant passage from Madam Justice Adair’s decisions in Lim v. Zhu was the foundation for Mr. Berthin’s appeal:

 “Because the parties settled, there will never be an adjudication of the facts, or findings about which party’s evidence was credible and reliable, or about whether parties conspired with one another, or a determination about whether a particular remedy was (or was not) justified. … The court should not now be expected to conduct a shadow trial to declare winners and losers for the purposes of a costs award.”

Unfortunately for Mr. Berthin, the appeal court distinguished Judge Adair’s case finding that Mrs. Berthin and the purchasers of the property declined to settle, and the cased was simply dismissed, “at which point the defendant’s entitlement to costs was triggered”, according to the Court of Appeal.

As well, in Lim v. Zhu some of the parties sought leave to discontinue before the trial and the remaining parties arrived at a settlement just before the trial commenced:

“There was, accordingly, no adjudication on the facts…but the settlement included a provision for costs to be “awarded upon application”.

Justice Adair declined to order costs against the settling parties but ordered costs payable by the discontinuing parties based on Ontario jurisprudence, citing Waterloo North Condominium Corp. v. Redmond 2017 ONSC 1304.

Finally, in dismissing the leave application the court remarked that Mr. Berthin’s case more resembled the facts in O’Connell Electric Ltd. v. BC Hydro 2006 BCSC 1632 where Mr. Justice Myers awarded special costs against a plaintiff who discontinued his action in unlawful conspiracy some five years after he started it. The judge considered the threshold issue: did the plaintiff have a sufficient factual basis upon which he could reasonably make allegations of conspiracy and dishonesty? Myers J. concluded that there was no proper evidentiary basis to do so and awarded special costs. The plaintiff’s appeal of the costs order was dismissed as was Mr. Berthin’s.

Lawdiva aka Georgialee Lang

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