IN THE SUPREME COURT OF BRITISH COLUMBIA
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Citation: |
Old Abbey Ales Ltd. v. BC Packaging Service, |
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2017 BCSC 1877 |
Date: 20171020
Docket: S182950
Registry: New Westminster
Between:
Old Abbey Ales
Ltd. and
Donald Piccolo dba Magnum Trailers
Plaintiffs
And
BC Packaging
Service, Edward C. Galick,
April Galick, Jasmin Young
Defendants
Before: The Honourable Madam Justice Gropper
Reasons for Judgment on Special Costs
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Counsel for Plaintiffs: |
D. Magnus S. Barber (November 7, 2016) |
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Appearing on his own behalf as Plaintiff: |
David Piccolo (June 12, 2017) |
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Counsel for Defendants: |
G. Reeves |
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Place and Date of Trial/Hearing: |
Vancouver, B.C. November 7, 2016 and |
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Place and Date of Judgment: |
Vancouver, B.C. October 20, 2017 |
[1] The defendants seek special costs against the plaintiffs in respect of an ex parte proceeding heard August 25, 2016. I granted Old Abbey a Mareva injunction against the defendants, freezing all of their assets (the “Mareva order”) based on the Affidavit #1 of Donald Piccolo filed on August 25, 2016.
[2] The defendants applied to set aside the Mareva order on September 6, 2016.
[3] By the date of the hearing of the defendants’ application on November 7, 2016, the parties had agreed that the Mareva order would be set aside. The only issue remaining was special costs or in the alternative, costs of the application payable by the plaintiffs to the defendants forthwith. The parties were unable to conclude their submissions on November 7, 2016 and the next date available to continue the hearing was May 29, 2017. That hearing did not proceed and the matter was adjourned until June 12, 2017. Mr. Piccolo was unrepresented at that hearing and required more time to respond to the defendants’ application.
[4] I granted an adjournment to August 3, 2017. That hearing did not proceed because of Mr. Piccolo's illness. I invited written submissions from Mr. Piccolo on or before August 28, 2017. No further submissions were made by Mr. Piccolo.
[5] The defendants refer to the following problems in the Piccolo affidavit:
a. failing to disclose the relationship between the individuals receiving the impugned cheques and Old Abbey the fact that Mr. Piccolo signed cheques to many of those individuals at other times;
b. attaching unsigned 2016 Personal Tax Credit Returns purporting to be Mr. Galick’s and not identifying who prepared those returns;
c. swearing that Mr. Galick was “Manager of Sales” despite the fact that the attached business card describes him as “Operations Manager”;
d. failing to identify the identity of the individual who has informed him that accounting entries were allegedly deleted by April Galick and providing no documentary or other proof of same;
e. attaching typed and handwritten records without advising who prepared them;
f. failing to disclose or provide documentary evidence showing the recipients of the Electronic Funds Transfers; and
g. attaching a handwritten record of stolen equipment without advising who prepared it and in what circumstances.
[6] The defendants say that there have been clear and material non-disclosure of facts as set above, including:
a. The fact that nearly all of the individuals named on the cheques executed by Mr. Galick were employees of Old Abbey;
b. The fact that Mr. Galick had emailed him advising that he took the position they were business partners and Mr. Galick was not his employee;
c. The fact that Mr. Galick’s counsel from Greenway Legal Centre had sent him a letter confirming that Mr. Galick took the position that they were business partners;
d. The fact that Mr. Piccolo’s son, Dan Piccolo, executed cheques after Mr. Galick left his role as Operations Manager in Old Abbey Ales; and
e. That Mr. Galick has four children.
[7] The defendants assert that Mr. Piccolo mislead the court by:
a. stating that the “most” of the allegedly forged cheques were not made for business purposes of Old Abbey;
b. exaggerating the value of the allegedly stolen assets;
c. undervaluing the value of the assets seized by the Whatcom Sheriffs’ Office;
d. stating that “[t]he Defendants’[sic], April, Jasmin and Ed, were the only persons who had the opportunity to prepare the cheques” when other bookkeepers were employed by Old Abbey Ales during the relevant timeframe; and
e. misleading the Court as to the ownership of the allegedly stolen assets to Mr. Piccolo’s personal benefit.
[8] The defendants say that it should be inferred that Old Abbey and Mr. Piccolo intentionally misled the Court, did not make the full and frank disclosure required of a party seeking an ex parte order and misrepresented material facts that might be attributed to carelessness, although an inference of intent can be made.
[9] In Bernie's Ltd. v. Bykerk, 2009 BCSC 1028, Mr. Justice Williams addressed whether the defendant should be entitled to special costs where the ex parte orders made in favour of the plaintiffs were vacated.
[10] In addressing the matter of costs, Williams J. found that a considerable part of the evidence was improper and the evidence provided in support of the ex parte application was improper and inadmissible, including hearsay attributed to an unnamed source. Williams J. also found that counsel for the plaintiffs fell short of his duty of candour to the court. He also had presented the case of one of critical urgency, when it was not. Williams J. found that there was not full and frank disclosure of relevant facts as required. He suggested that counsel for the plaintiffs was at least careless in bringing the ex parte application (paras. 13 and 14).
[11] Mr. Justice Williams referred to the relevant principles found in Garcia v. Crestbrook Forest Industries Ltd. [1994], 9 B.C.L.R (3d) 242 (C.A.). In Garcia, Mr. Justice Lambert, writing for the court, determined that the threshold for awarding special costs is “reprehensible” conduct. Lambert J.A. recognized the meaning of reprehensible conduct was quite broad. He described when a special costs award is justified in paras. 23 and 25:
23 However, the fact that an action or an appeal "has little merit" is not in itself a reason for awarding special costs… Something more is required, such as improper allegations of fraud, or an improper motive for bringing the proceedings, or improper conduct of the proceedings themselves, before the conduct becomes sufficiently reprehensible to require an award of special costs.
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25 If the proceedings are taken, not in the reasonable expectation of a satisfactory outcome, but in order to impose the burden of the proceedings themselves on the opposing party in circumstances where one party is financially much stronger than the other, then the absence of merit, coupled with the improper motive, is in my opinion a combination which may well amount to reprehensible conduct sufficient to require an award of special costs.
[12] Mr. Justice Williams considered that an order awarding special costs where applicant’s conduct is reprehensible in a way that warrants the court disassociating itself from the conduct and is deserving of reproof or rebuke. He outlined the conduct of the applicant in that regard:
a. relied on improper, inadmissible or hearsay evidence;
b. failed to advise the court of the relationship between the parties or their relative positions regarding the relationship;
c. fails to disclose relevant and material evidence in its possession;
d. mischaracterizes material evidence or makes misleading statements of material fact to the court: at paras. 13 and 16-32.
[13] An order for special costs may be made even where the evidence does not establish that the party wilfully misled the Court, but where the party was careless in the face of its obligation of candour and full and frank disclosure to the court: Bank of Credit and Commerce International (Overseas) Ltd. v. Akbar et al, 2001 BCCA 204 at paras. 18-19.
[14] I find that this is a case where it should be inferred that Old Abbey and Mr. Piccolo intentionally misled the Court. It was not a situation of one or two instances of nondisclosure or representation of material facts. The totality of the nondisclosure raises an inference that intent can be made on the facts.
[15] I therefore order that the defendants be assessed special costs without referring the matter to the registrar.
[16] The defendants seek special costs of this application payable by the plaintiffs to the defendants forthwith on a full indemnity basis or in the alternative in the amount of $21,000 including costs, disbursements and applicable taxes. Because this matter continued beyond the first day of hearing and there was no response from the plaintiffs although accommodations were made to ensure that they had an opportunity to respond, I find that the amount of $27,500 inclusive of costs, disbursements and applicable taxes is appropriate.
“Gropper J.”