IN THE SUPREME COURT OF BRITISH COLUMBIA

Citation:

Bentley v. Hansen,

 

2018 BCSC 2008

Date: 20181114

Docket: S110278

Registry: Kelowna

Between:

Scott Gordon Bentley

Plaintiff

And

Dean Hansen and S.G. Bentley Motorrad Inc.

Defendants

Before: The Honourable Madam Justice Marzari

Reasons for Judgment
Re: Costs

Counsel for the Plaintiff:

E.C.H. Ledding

Counsel for the Defendants:

T. Fulkerth

Written Submissions of the Plaintiff

September 21, 2018

Place and Date of Judgment:

Kelowna, B.C.

November 14, 2018


 

[1]             Oral reasons for judgement in this claim were issued on August 24, 2018 and are indexed at 2018 BCSC 1844. The plaintiff, Mr. Bentley, was successful.

[2]             As a result of his success in the claim, Mr. Bentley sought costs. At the time of issuance of the oral reasons for judgment, Mr. Bentley sought double costs in relation to a formal offer to settle made on June 4, 2018, and costs of defending a counterclaim that was discontinued shortly before trial. Counsel for the defendants did not agree with the foundation or the extent of the costs sought, and I directed written submissions and materials be filed on the following schedule:

a)    The plaintiff to file all materials and submissions in support of his claim for costs on or before September 21, 2018;

b)    The defendants to file all materials and submissions in response to the plaintiff’s claim for costs on or before October 5, 2018; and

c)     The plaintiff to file any brief reply submissions or materials on or before October 12, 2018.

[3]             In accordance with these directions, the plaintiff filed submissions and an affidavit with respect to his claims for costs on September 21, 2018. No materials were filed by the defendants in response, and on October 12, 2018, counsel for the plaintiff requested that I proceed to determine the cost issues as between the parties.

[4]             After review of the materials I have determined that no further hearing is required. These are my reasons on costs.

[5]             The plaintiff seeks costs as follows:

a)    Ordinary costs of the plaintiff’s claim as the successful party in the action, subject to double costs in relation to the claim from the date of the plaintiff’s formal offer to settle on June 4, 2018 to the conclusion of the trial, or such other dates as the court may determine; and

b)    Ordinary, double or increased costs with respect to the defendants’ counterclaim until the date of the notice of discontinuance on August 1, 2018 pursuant to Rules 9-1, 9-8 and 14-1.

[6]             I will address each in turn.

Costs of the Claim

[7]             The plaintiff was successful at trial with respect to his claim. There is no suggestion or indication that the plaintiff engaged in misconduct in the course of the litigation, that the plaintiff failed to accept a formal offer to settle, or that the defendant succeeded on any key issues at trial. There is no reason to depart from the rule that the plaintiff is entitled to his costs pursuant to Rule 14-1(9) at the ordinary scale.

[8]             The evidence establishes that on or about June 4, 2018 counsel for the plaintiff made a formal offer to settle both the claim and the counterclaim for the sum of $60,728.82 in damages, plus taxable costs. The offer had no deadline or withdrawal date.

[9]             Rule 9-1 provides that the court may consider an offer to settle when exercising its discretion in relation to costs, and specifically may award double costs of all or some of the steps taken in the proceeding after the date of delivery or service of the offer to settle. Rule 9-1(6) sets out the considerations of the court in making any such award:

Considerations of court

(6)     In making an order under subrule (5), the court may consider the following:

(a)     whether the offer to settle was one that ought reasonably to have been accepted, either on the date that the offer to settle was delivered or served or on any later date;

(b)     the relationship between the terms of settlement offered and the final judgment of the court;

(c)     the relative financial circumstances of the parties;

(d)     any other factor the court considers appropriate.

[10]         The evidence establishes that the formal offer to settle was preceded by a detailed settlement proposal detailing the evidence and law in relation to the claim based on a Quistclose trust. That letter summarizes the relevant documents in relation to the payments made by the plaintiff said to be subject to a trust, the evidence that the plaintiff would provide in relation to his intention and conduct prior to the share purchase, and the relevant legal principles and test to establish such a trust with specific reference to the case of Alta West Mortgage Capital Corp. v. Strege, 2016 BCSC 127. The evidence also establishes that the defendants had access to all the employees of the defendant to canvas lay witness evidence, as well as to corporate and banking documents. Examinations for discovery had already completed. The terms of the settlement offer was almost 40% less than the final award. In all the circumstances, I find that this offer to settle was one that the defendants ought reasonably to have accepted in relation to the claim.

[11]         However, some time must be allowed for the defendant to consider this offer. The plaintiff will therefore have double costs of steps in the litigation from July 5, 2018 to the conclusion of the trial on August 10, 2018.

Costs of the Counterclaim

[12]         The defendants initiated their counterclaim on December 14, 2017, one day before the notice of trial was filed. They filed a discontinuance of the counterclaim on August 1, 2018, less than one week before the commencement of the trial. That discontinuance was filed with the consent of the plaintiff (as required by Rule 9-8(2)) subject to the plaintiff’s ability to seek costs of the counterclaim up to the date the discontinuance was filed.

[13]         The plaintiff now seeks those costs pursuant to Rule 9-8(4), which provides that a person wholly discontinuing an action “must pay the costs of that party to the date of service of the notice of discontinuance.” Rule 9-8(9) clarifies this rule applies equally to the discontinuance of a counterclaim.

[14]         I find that the plaintiff is entitled to his costs of defending the counterclaim from from the date it was filed up to the date of discontinuance.

[15]         The plaintiff also seeks double costs of defending the counterclaim as a result of the formal offer to settle. The evidence does not disclose any litigation steps subject to the tariff that occurred between July 5, 2018 and the discontinuance of the counterclaim.  In these circumstances do not consider the double costs are warranted with respect to the counterclaim pursuant to Rule 9-1.

[16]         Finally, the plaintiff seeks special or increased costs in relation to the counterclaim. In this respect, the plaintiff has submitted approximately 150 pages of affidavit materials setting out the circumstances that they say warrant such costs. The conduct that they say requires such an award includes allegations of delay in providing discovery and access to witnesses, changes in the defendants allegations of fact, failure to produce key documents, and the aggressive pursuit of a meritless claim.

[17]         The difficulty with this costs position is that the counterclaim was not before the court, and none of the allegations put forward in relation to the counterclaim or the conduct of it by the defendants were the subject of my determination in the course of the trial. This is because the counterclaim was discontinued by the defendants prior to trial.

[18]         The counterclaim did not relate to the allegations of the plaintiff regarding the existence of a Quistclose trust or to the funds at issue in the claim. The counterclaim related to an entirely separate transaction about which this Court made no findings and heard no argument. In discontinuing the counterclaim, the defendants acknowledged any weakness in the claim. I also note that in consenting to the discontinuance less than a week before trial and reserving the right to seek costs, the plaintiff apparently did not raise the issue of special or increased costs.

[19]         In my view, a costs application in a trial is not the appropriate forum to determine controversial allegations with respect to a counterclaim that did not proceed to trial, and about which no findings have been made by this Court. Despite the lengthy affidavit material filed by the plaintiff, I am not in a position to make rulings with respect to what the defendant should or should not have done with respect to the counterclaim. That issue was resolved by the discontinuance, and in my view the costs liabilities were equally resolved by the discontinuance in this case.

[20]         Those costs are to be assessed by the Registrar as the ordinary costs of defending the counterclaim from the date of filing to the date of discontinuance pursuant to Rule 9-8.

Procedural Issue

[21]         After the close of submissions on costs, I was provided with a copy of a letter dated October 15, 2018 from counsel for the defendants requesting that registry staff reschedule the submissions on costs until a transcript of the oral reasons for judgment was made available. The letter set out the effort made by the defendants to obtain a transcript in this regard. No explanation was provided as to why the transcript might be of assistance with respect to the costs issues. The request to Registry staff was made after close of submissions on costs and ten days after the defendants’ submissions were required to be submitted pursuant to my directions.

[22]         Counsel for the plaintiffs did not consent to this request. In response, I was provided with correspondence between the parties indicating that counsel for the defendants first requested counsel for the plaintiff to consent to an extension on October 9, 2018. Counsel for the plaintiff did not consent in part because the costs issue did not turn on any matter in which a transcript of the reasons might assist.

[23]         I have reviewed the correspondence to the Registry and the plaintiff’s cost submissions. I agree with the plaintiff that nothing in their costs claim or submissions relates to or turns on the reasoning in the trial decision. The basis for their claim in costs is related to the plaintiff’s success at trial, an offer to settle, and the discontinuance of the defendants’ counterclaim prior to trial. The reasons for judgement have no bearing on the offer to settle or the counterclaim. The fact of the plaintiff’s success at trial would have been readily apparent to the defendants on August 24, 2018 when the decision was rendered orally. I therefore agree with the plaintiff that receipt of a transcript of the oral reasons was irrelevant to the defendants’ ability to comply with the court’s direction to file response submissions on costs by October 5, 2018.

[24]         Furthermore, the transcript of the oral reasons in this trial were released to the parties on October 22, 2018. To date, the defendants have not filed any submissions on costs, late as they might be, nor any other proper application or request to extend the deadline to provide their submissions on costs based on the provision of the transcript or otherwise.

[25]         Costs would ordinarily be determined upon conclusion of the trial and receipt of the oral judgement. The defendants have had more than two months to digest the results of the trial, and many weeks to consider the specific submissions of the plaintiff with respect to their entitlement to costs. The defendants have now had three weeks to review those transcripts and have not made any submissions in relation to their bearing on the costs decision or with respect to the costs issues themselves. I have therefore determined that it is appropriate to release my reasons for costs at this time.

“Marzari J.”