



COURT 
    OF APPEAL FOR BRITISH COLUMBIA




Citation:


Catalyst 
          Paper Corporation v. Companhia de Navegação Norsul,







2009 
          BCCA 16



Date: 20090120

Dockets: CA035088; CA035494

Between:

Catalyst 
    Paper Corporation

Respondent

(
Plaintiff
)

And

Companhia 
    de Navegação Norsul

Appellant

(
Defendant
)

Supplementary Reasons 
    on Costs




Before:


The 
          Honourable Mr. Justice Hall




The 
          Honourable Mr. Justice Smith




The 
          Honourable Mr. Justice Chiasson








M.L. 
          Smith


Counsel for the Appellant




G.C. 
          Weatherill


Counsel for the Respondent




Place 
          and Dates  of Hearing:


Vancouver, British Columbia




22 and 23 May 2008




Place 
          and Date of Judgment:


Vancouver, British Columbia




2 September 2008




Written 
          Submissions on Costs Received:


9, 27 and 30 October 2008




Date 
          of Supplementary Judgment:


20 January 2009








Supplementary 
    Reasons for Judgment of the Honourable Mr. Justice Hall:

[1]

In my reasons for judgment dated 2 September 2008, I requested submissions 
    from the parties concerning entitlement to costs in this Court and in the 
    Supreme Court of British Columbia.  The plaintiff succeeded in its claim for 
    breach of contract at trial but that verdict was reversed in this Court.  
    Costs should normally follow the event (R. 57(9) of the
Rules of Court
) 
    and be payable to the successful appellant unless there is some principled 
    basis for departure from that normal rule.  Section 9(1)(a) of the
Court 
    of Appeal Act
,
R.S.B.C. 1996, c. 77, permits this Court to 
    make any order that could have been made by the trial court.

[2]

In
Grassi v. WIC Radio Ltd
.
, 2001 BCCA 376, 89 
    B.C.L.R. (3d) 198, 5 C.P.C. (5th) 94, Southin J.A., for the court, gave a 
    concise history of the courts discretion in making an order for costs:

[18]      
    British Columbia, from 1st July, 1970, to 1st July, 1990, but neither before 
    the former nor since the latter date, had an express provision as to the court's 
    discretion as to costs, which was understood to give the same wide discretion 
    as that conferred by s. 5 of the
Judicature Act, 1890
, although 
    the judges here did not express the ambit of the discretion by reference to 
    s. 5.  See, for instance,
Peters v. Davidson
(1982), 41 B.C.L.R. 
    330 (C.A.), and
Landry v. Bridgestone Tire Co. Ltd.
(1975), 66 D.L.R. 
    (3d) 408 (B.C.S.C., Craig J., as he then was).  The provisions to which I 
    refer were these:

S.B.C. 
    1969, c. 38, s. 14
, proclaimed in 
    force 1st July, 1970, added to the
Supreme Court Act
, R.S.B.C. 1960, 
    c. 374, this:

80. 
    ...

(2) 
    Subject to subsection (1), a Judge may, in his discretion, award or refuse 
    to award costs to any litigant in any civil proceeding in the Court.

S.B.C. 
    1976, c. 33, s. 146
, amending s. 
    80(2) to read:

80. 
    ...

(2) 
    Subject to subsection (1), the Court may, in its discretion, award or refuse 
    to award costs to any party in any civil proceeding in the Court.

R.S.B.C. 
    1979, c. 397
, amended s. 80(2) and 
    renumbered it s. 63(2):

63. 
    ...

(2) 
    ... the court may, in its discretion, award or refuse to award costs to a 
    party in civil proceedings in the court.

[19]      
    I suspect that the change said to have been made in 1979 was made by the revisers 
    of the Statutes and did not have any express legislative warrant.

[20]      
    On 1st July, 1990, the present Rules came into force and s. 63(2) was 
    dropped from the
Supreme Court Act
.

[21]      
    Cases on costs decided in this Court when s. 63(2) or one of its predecessors 
    was applicable must be scrutinized in order to determine whether the statutory 
    provision was material to the reasoning.

[22]      
    One discretion which now exists is that of Rule 57(9), unless the court otherwise 
    orders.

[Emphasis in original]

[3]

Shortly after the adoption of the new R. 57(9) of the
Rules of 
    Court
, Lambert J.A., in
Claessins v. Wice
(1991), 56 
    B.C.L.R. (2d) 110 (C.A.), without referring to R. 57, said at para. 9:

The 
    cases in British Columbia indicate that the trial judge has a wide discretion 
    in deciding whether to decline to award costs in favour of the successful 
    party.  I refer particularly to
Landry v. Bridgestone Tire Co.
(1975), 
    [1976] 3 W.W.R. 160, 66 D.L.R. (3d) 408 (B.C.S.C.);
Peters v. Davidson
(1981), 22 C.P.C. 246, 125 D.L.R. (3d) 753, affirmed (1982), 41 B.C.L.R. 
    330, 32 C.P.C. 210, 141 D.L.R. (3d) 763 (C.A.); and
Steinhauser v. Robinson
(1983), 49 B.C.L.R. 333 (S.C.).

[4]

In
Moore v. Dhillon
(1993), 85 B.C.L.R. (2d) 69 (C.A.), 
    Taylor J.A., for the court, opined that R. 57(9) did not alter the discretion 
    of the trial judge that existed under s. 80(2).  He said at paras. 7-8:

Before 
    us it is asserted for the defendants on their cross-appeal that the reasoning 
    followed in
Peters v. Davidson
ought no longer to be followed.  Counsel 
    points out that the words of s. 80(2) introduced into the
Supreme Court 
    Act
in 1969 were removed when the statute was recast in 1989 in the present 
    much abbreviated form (S.B.C. 1989, c. 40).  There is now no reference 
    in the statute to discretion to grant or refuse costs.

By 
    the time that this statutory change came into effect, however, the
Supreme 
    Court Rules
had also been recast.  The matter of costs was dealt with 
    by Rule 57(4) (now 57(9)) which says:

Subject 
    to subrule (12), costs of and incidental to a proceeding shall follow the 
    event unless the court otherwise orders.

Since 
    subr. (12) relates only to motions, R. 57(9) seems to grant unqualified discretion 
    to depart from the prima facie rule which it provides in the matter awarding 
    costs at trial.  The
Supreme Court

Rules
, including R. 57, were 
    confirmed and validated by the
Court Rules Act
, S.B.C. 1989, c. 22. 
     It seems to me that omission of the phrase for good cause which had previously 
    been included in M.R. 976 shows an intention that the new rule as to costs 
    be consistent with s. 80(2) of the
Supreme Court Act
, as it stood at 
    the time the Rules were recast.  The elimination thereafter of what was previously 
    s. 80(2) from the Act could have no effect, therefore, so far as the discretion 
    of the Court is concerned in the matter of awarding or denying costs at trial.

[5]

In
Grassi
, Southin J.A. commented on the decision in
Moore
with respect to possible alteration of the law arising 
    from the replacement of s. 63(2) of the
Supreme Court Act
, R.S.B.C. 
    1979, c. 397, with R. 57(9) of the
Rules of Court
when she said:

[24]      
    I would not myself go so far as did Taylor J.A. because, in my opinion, the 
    change from s. 63(2) to Rule 57(9) has made a subtle change in emphasis.  I 
    would say that the subtle change of emphasis is that the person who seeks 
    to displace the usual rule has the burden of persuading the judge that the 
    rule should be displaced, but even if the discretion is the same under both 
    the statutory provision and the present rule, it is nonetheless a discretion 
    to be exercised on a principled basis.

[6]

This Court has had occasion to consider the exercise of discretion 
    of the Supreme Court in awarding costs to or imposing costs on a successful 
    litigant in the cases of
Rossmo v. Vancouver Police Board
, 2003 
    BCCA 677, 21 B.C.L.R. (4th) 68, and
Brito (Guardian ad litem of) v. 
    Woolley
, 2007 BCCA 1, 63 B.C.L.R. (4th) 139, 36 C.P.C. (6th) 41.

[7]

In
Rossmo
, the background circumstances were thus narrated 
    by Donald J.A., writing for the court:

[1]        
    The plaintiff, Dr. Kim Rossmo, sued the Vancouver Police Board (the Board) 
    for wrongful dismissal and Deputy Chief Constable John Unger for interference 
    with contractual relations and inducing breach of contract in a matter arising 
    from the Board's decision in October 2000 not to renew the plaintiff's five-year 
    contract as head of the Geographic Profiling Unit (GPU).

[2]        
    In reasons for judgment delivered on 19 December 2001, Madam Justice Allan 
    dismissed the action.  She denied costs to the defendant Unger because of 
    what she found to be inappropriate behaviour in his dealings with the plaintiff's 
    employment: 2001 BCSC 1775.

[8]

The plaintiff Rossmo appealed to this Court from the dismissal of his 
    action and the individual defendant cross appealed the decision of the trial 
    judge denying him his costs.  This Court dismissed the appeal of the appellant 
    and allowed the cross appeal of the individual defendant on the costs issue.  
    Although Donald J.A. found there to be some basis in the evidence for the 
    trial judges criticism of the conduct of the individual defendant vis-à-vis 
    the plaintiff including his apparent alacrity in getting rid of the plaintiff 
    when he had the chance (para. 53), he found the judge had erred in refusing 
    to award costs to this defendant.  He noted that while costs are discretionary, 
    the discretion must be exercised on a principled basis having regard for the 
    general rule that costs follow the event as provided for in R. 57(9).  He 
    found that the judge erred when she denied the successful party costs based 
    on conduct that was prior to and outside the litigation process.  He concluded 
    on this matter by saying:

[62]      
    I conclude that the trial judge erred in principle by basing her decision 
    on pre-litigation conduct.  The very purpose of the litigation was to determine 
    whether the impugned conduct supported a cause of action leading to a judgment 
    in damages.  The trial judge found no liability against DCC Unger.  Costs 
    should follow that determination.  The order denying him costs amounts to 
    a finding of quasi-liability and cannot be sustained.

[9]

More recently, in
Brito
, this Court reversed the decision 
    of a trial judge in a medical malpractice case awarding costs of the action 
    to the unsuccessful plaintiffs.  The trial judge observed that the onus was 
    on the unsuccessful plaintiffs to demonstrate that a departure from the ordinary 
    costs rule was justified, citing
Grassi
, but elected to depart 
    from the ordinary rule because, on her view of the evidence, all of the defendants 
    were reckless with respect to the manner in which they prepared the medical 
    records that it was their duty to prepare, and because all but one of the 
    defendants were negligent with respect to the care they provided to the plaintiffs 
    (although the defendants were not liable in negligence for the plaintiffs 
    failure to prove causation).

[10]

Saunders J.A., following the earlier decision of
Rossmo
, 
    found that the trial judge had erred in her disposition of costs.  She said:

[27]      
    For the reasons that follow, I have concluded that the order of the trial 
    judge as to costs must be set aside, and the usual order issued.  In my view, 
    the trial judge did not follow, in the words of this Court in
Stiles v. 
    B.C. (W.C.B)

(1989), 38 B.C.L.R. (2d) 307 (C.A.) at 310, the principles 
    [that] have developed which guide the exercise of the discretion of a judge 
    with respect to costs.  In particular, the trial judge based her order upon 
    two features of the case which, in my view, do not support the sanction imposed.  
    First, she referred to the state of the records created at the time of the 
    events in issue, or shortly after, which was a time long before the litigation 
    commenced, and did so in circumstances in which no liability attaches in the 
    action for the delict of poor record keeping, and in circumstances in which 
    there was not even a whiff of bad faith.  Second, she referred to the tortious 
    conduct of the defendants, when in fact no liability attached to them because 
    the entire tort of negligence was not proved.  I do not consider that the
Rules of Court
permit the sanction imposed, in these circumstances.

***

[32]      
    In this case the deficiencies in the record keeping were well known to the 
    plaintiffs prior to trial.  There was, as I understand the reasons for judgment 
    of the trial judge, no serious backtracking from the evidence the defendants 
    gave at their examinations for discovery, and inconsistencies in the evidence 
    was in the nature of those often discovered as a product of the trial process, 
    but were not created through dishonesty of the defendants.

[33]      
    Likewise, it was error, in my view, to base the costs order upon a finding 
    that most of the defendants were found to have failed to comply with their 
    duties to the plaintiffs (I observe that this does not include Nurse Omstead).  
    More than this failure is required to establish an entitlement to costs.  
    The case was defended not just on the issue of compliance with the standard, 
    but also on the issue of causation.  The plaintiffs were required to succeed 
    on the causation issue in order to obtain an order in their favour.  They 
    did not.

[11]

She found there existed no sound basis in that case to deny the successful 
    defendants their costs and she ordered costs in their favour.

[12]

Both
Rossmo
and
Brito
involved tort claims.  
    It seems to me that this Court was concerned that the disposition of costs 
    made at trial in both of those proceedings could be perceived as what Donald 
    J.A. referred to in
Rossmo
as a finding of quasi-liability 
    (para. 62) when, in fact, no liability had been found against the successful 
    defendants.  The successful appellant here submits that there should be no 
    distinction drawn between a plaintiff failing to make out a claim in tort 
    as opposed to a claim in contract.  It submits that to sanction a party for 
    conduct that is not actionable is to create some species of quasi-liability 
    which would not be an appropriate or a principled application of the costs 
    rules.

[13]

A number of cases in this Court have made the point that the costs 
    rules should be seen as having a purpose beyond indemnification of the successful 
    party in the litigation.  In
Houweling Nurseries Ltd. v. Fisons Western 
    Corp
. (1988), 37 B.C.L.R. (2d) 2 at 25, 29 C.P.C. (2d) 168 (C.A.), 
    leave to appeal refd [1988] S.C.C.A. No. 200, McLachlin J.A. (as she then 
    was) noted that the costs rules, beyond indemnity, serve the purpose of deterring 
    frivolous actions or defences.  She said, Parties, in calculating the risks 
    of proceeding with a particular action or defence, should be able to forecast 
    with some degree of precision what penalty they face should they be unsuccessful.

[14]

In
Skidmore v. Blackmore
(1995), 2 B.C.L.R. (3d) 201 
    at para. 28, 35 C.P.C. (3d) 28 (C.A.), Cumming J.A. observed that while costs 
    are awarded to indemnify a successful litigant for fees and disbursements 
    incurred in the litigation process, costs are also awarded to encourage or 
    deter conduct on the part of litigants.

[15]

In the recent case of
Bedwell v. McGill
, 2008 BCCA 526, 
    a case dealing with a particular aspect of costs not relevant to this appeal, 
    Newbury J.A., for the court, at para. 33, noted the purpose of former R. 37(24) 
    as being aimed at encouraging litigants to settle wherever possible, thus 
    freeing up judicial resources for other cases.

[16]

It seems to me that the trend of recent authorities is to the effect 
    that the costs rules should be utilized to have a winnowing function in the 
    litigation process.  The costs rules require litigants to make careful assessments 
    of the strength or lack thereof of their cases at commencement and throughout 
    the course of litigation.  The rules should discourage the continuance of 
    doubtful cases or defences.  This of course imposes burdens on counsel to 
    carefully consider the strengths and weaknesses of particular fact situations.  
    Such considerations should, among other things, encourage reasonable settlements.

[17]

I must say that in this particular case, I have been moved to a degree 
    of sympathy for the position of the ultimately unsuccessful plaintiff.  That 
    is so because of the statement of Mr. Baroncini in December 2003 that in effect, 
    the parties were agreed on a new contract.  However, on reflection, I consider 
    it was becoming clearer as the process of reducing matters to writing went 
    forward in early 2004 that there had been no consensus reached between the 
    parties on the vital issue of responsibility for freight damage.

[18]

The discovery process should have also placed this into sharper relief.  
    I have considered whether in light of the pronouncement of Mr. Baroncini in 
    December 2003, some apportionment of trial costs ought to be ordered.  I have 
    concluded that such an order would tend to create uncertainty in the law relating 
    to costs and therefore I would not be disposed to so order.  As to any suggestion 
    that perhaps some distinction might be made between this case (a contract 
    case) and the cases of
Rossmo
and
Brito
(tort 
    cases), I am not of the view that differing causes of action mandate a different 
    approach to the usual costs rules.

[19]

Ultimately, I am not persuaded that this Court should countenance any 
    departure from the usual rule that costs should follow the event in this Court 
    and in the trial court.  This result seems to me consistent with the reasoning 
    in the cases of
Rossmo
and
Brito
.  Accordingly, 
    I would order costs in favour of the defendant appellant in this Court and 
    in the Supreme Court of British Columbia.

The Honourable Mr. Justice Hall

I 
    agree:

The 
    Honourable Mr. Justice Smith

I 
    agree:

The 
    Honourable Mr. Justice Chiasson


