The subject of “costs” in court cases is often an enigma to clients. What are costs? When will you have to pay the opposing party’s costs?, and other similar questions.
Costs are awarded to the substantially successful party in civil and family court cases. Judges have determined that substantial success amounts to success on 70% of the legal issues decided by the court. For example, if you go to court seeking child support, spousal support, occupation of the family home, and a restraining order and are successful on three out of the four issues, you will likely receive costs.
These costs are called “party-party” costs and are not equal to the legal fees you have expended, but rather are a contribution by the losing party to the winner, usually representing about 30% of actual fees.
Costs are also not required to be paid during the litigation process, but are calculated according to a schedule in the Rules of Court and payable at the conclusion of a lawsuit.
Where a litigant’s behaviour in the litigation is deserving of punishment or rebuke, the court can order the litigant to pay “special costs” to the opposing party. Special costs are usually about 90% of the successful party’s legal fees. The kind of behaviour that attracts special costs is conduct described as “outrageous, high-handed,and reprehensible”.
In a few rare cases judges have ordered a litigant’s lawyer to pay costs to the opposing party.
The recent case of Nuttal v. Krekovic 2018 BCCA 341 is an example of such a case. Mr. Krekovic was acting for a client who was injured in a hit and run motor vehicle accident outside a local pub. His client suffered significant injuries. Unfortunately, after an exhaustive RCMP investigation the driver of the vehicle, who fled the scene, could not be identified.
Mr. Krekovic hired several private investigators but nothing further turned up. After two years of inquiries, Mr. Krekovic received vital information from a lawyer who represented the bar where the accident took place. This lawyer provided Mr. Krekovic with the name and birthdate of the alleged driver. Mr. Krekovic recognized the name of the alleged driver as it had come up during earlier investigation. After further inquiries it became obvious that the alleged driver had a common surname in the East Indian community, Dhillon, and there was some concern to identify the correct man.
Once Mr. Krekovic was satisfied that he done all the due diligence he could, he applied to the court for an order to add Dhillon’s name as a respondent in the lawsuit. He served the alleged driver with the court order and also informed the RCMP so they could re-open their investigation. Shortly after serving Dhillon, his lawyer contacted Mr. Krekovic and advised he had the wrong man. This was followed by a phone call from counsel for the bar who said he had made a mistake. Mr. Krekovic immediately advised Dhillon’s lawyer that he would discontinue the action against his client.
Mr. Krekovic offered to have his client pay party-party costs to Mr. Dhillon, but Dhillon wanted more. He sued Mr. Krekovic for special costs and convinced a judge that his actions were “indefensible and an abuse of process meriting sanction in the form of an order of special costs payable by him personally”.
The judge found that had the judge who made the order adding Dhillon as a party to the lawsuit known there was a possibility of multiple persons with the same name and similar birthdates, she would not have made the order.
Mr. Krekovic appealed the special costs order to the Court of Appeal, who allowed his appeal and revoked the special costs order. The Appeal Court said:
“…an award of costs against a lawyer personally can be justified only on an exceptional basis where the lawyer’s acts have seriously undermined the authority of the courts or seriously interfered with the administration of justice. This high threshold is met where a court has before it an unfounded, frivolous, dilatory or vexatious proceeding that denotes a serious abuse of the judicial system by the lawyer, or dishonest or malicious misconduct on his or her part, that is deliberate…”
In my view, Mr. Krekovic did everything he could do to identify the correct driver, and when notified of the error, he immediately took steps to terminate the court action against him. His unintentional mistake should never have resulted in an order for costs. It has been said that to penalize lawyers for mistakes, errors, or even negligence by way of special costs would undoubtedly put a damper on lawyers zealously representing their clients.
Lawdiva aka Georgialee Lang
Lawdiva's Blog 
If “party – party” costs only represent about 30% of what Mr. Dhillon actually spent, it seems to me that the honourable thing for Mr. Krekovic – would have been to cover 100% of Mr. Dhillon’s costs. As I read it, Mr. Dhillon, through no fault of his own, was forced to pay 70% of his legal fees arising from Mr. Krekovic’s mistake – to “prove his innocence”. While I am sure Mr. Krekovic had no bad faith – the smarter business decision would have been to cover all Mr. Dhillon’s costs and avoid the need to attend the BCCA at all. Smart lawyers don’t litigate everything. I would have apologized, paid all his costs and sent him a bottle, but that’s just me.