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News and Views — Comment on Gichuru v Smith

Gichuru v. Smith |

2014 CarswellBC 3169 

British Columbia Court of Appeal

In Gichuru v, Smith, the British Columbia Court of Appeal examined the ways in which special costs may be set by a judge.  Noting that “While R. 14-1(15) authorizes a judge to assess costs, the Rules are silent as to when and how a judge should exercise that authority”, the court eliminated one of the methods for arriving at a quantum of costs.

The plaintiff was an articling student in British Columbia who was terminated for insubordinate behavior and not making himself available to receive communications.  He brought an action for wrongful dismissal which was itself dismissed.  On appeal, it was confirmed that the defendant had more than just cause to dismiss the plaintiff.  However, at trial, the defendant had been awarded special costs, which were assessed by the trial judge herself using a “rough and ready” methodology.  Harris J.A. and Goepel J.A., writing for a court which also included Stromberg-Stein J.A., upheld the reasoning underlying a finding of special costs.  The plaintiff’s sustained attack on the professional honesty and integrity of his articling principal invited a higher costs award.  However, the appellate court objected to the rough and ready system employed, finding that special costs assessments required more scrutiny. 

The Court stated that judges should exercise caution in allowing costs to be assessed under R. 14(15) of the Supreme Court Civil Rules, and should do so sparingly.  Even where the court has been involved in the proceedings, the expertise of the registrar should be deferred to.  In order to assess costs herself, a judge should be extensively familiar with the proceedings, or the time and cost of referring the matter to the registrar must not be worthwhile.  Evidence must be provided regarding fees charged and at least a description of services must be provided.  Doing otherwise, the court found, would be contrary to the Rules and to natural justice.  A judge who elects to fix special costs must consider all the relevant circumstances, and the “rough and ready” method of setting costs was described as the “antithesis” of this principle.  A successful party is entitled to indemnification only, rather than a windfall.  

This conclusion was reached with full knowledge that British Columbia courts have had little problem using summary methods to determine costs.  Several cases from the past three years were addressed, in each of which the British Columbia Superior Court had noted the practice of fixing special costs using the rough and ready summary approach.  The Court suggested that many cases had been improperly relying on the Court of Appeal’s judgment in Interclaim Holdings Ltd.  v. Down, a case which did not deal with special costs, and in which the costs awarded, on a summary basis, were only a fraction of those claimed.  In only one case referred to had the judge analyzed the justification for using the rough and ready approach.  Harris and Goepel JJ.A. found the principles of convenience expressed in that judgment could not be used to ignore the requirements of the Rules themselves.  Cases that had applied the rough and ready treatment were declared to be wrongly decided. 

While party and party costs are certainly the norm, the BC courts have seen their share of special costs awards, oft times fixed by the courts rather than the registrar.  In the short time since Gichuru v. Smith  has been available, it has been followed at least once, albeit by an appellate court comprised of the exact same members who decided Gichuru. (See Herbison v. Canada, 2014 CarswellBC 3482, 2014 BCCA 461)  Nevertheless, Gichuru is a ruling from the appellate court and lower courts will have little choice but to adjust to this noteworthy change. 

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