Untruthful Discovery Evidence and the Special Costs Threshold in a BC Family Proceeding

The Dispute

The claimant had already been through a full trial and a subsequent appeal that varied part of the original order. The proceeding did not end there. A long run of further applications followed, each one adding legal fees to a file that had been running for years. By the time a further multi-day hearing concluded, the cost of the litigation had itself become the practical problem, and the claimant asked the court to shift part of that burden onto the other side.

The Parties’ Positions

The claimant sought special costs. The basis advanced was that the respondent had acknowledged at trial having been untruthful at her examination for discovery, and that court time had been wasted as a result. In the alternative, the claimant sought costs as the substantially successful party, pointing to the volume of interlocutory activity the proceeding had generated. Where the respondent raised an inability to pay, the claimant answered that she had recently sold the former family home and received substantial net proceeds, and that funds she had since lent to a relative remained available to her.

The respondent did not dispute that the claimant had been substantially successful. She resisted any order for costs on the discretionary factors the authorities recognize: hardship, earning capacity, and the importance of not upsetting the balance the court had already reached on the substantive issues. Her income was modest, and an order for costs would in her submission undo that balance and create hardship in her household. She asked that each party bear their own costs.

The question for the court was whether the acknowledged untruthfulness amounted to the reprehensible conduct that an award of special costs requires, and, if it did not, whether anything justified departing from the usual rule that costs follow the event.

The Court’s Decision

The court refused special costs. While declining to condone the conduct at the discovery, it held that the areas in which the respondent’s evidence was shown to be untrue did not go to the heart of the issues before it, and so did not meet the standard of reprehensible conduct that special costs require. On ordinary costs, the court found the claimant substantially successful, a point neither party contested. It held that the respondent bore the onus of persuading it to depart from the usual rule and had not discharged that onus, since a usual award would not alter the balance reached on the substantive issues in an unacceptable manner or create financial hardship. The claimant was awarded the costs of the trial. The practical effect was partial recovery: an award at the ordinary scale returns a portion of the fees actually incurred rather than all of them, so the claimant carried the balance of the cost of a hearing it had won.

Key Lessons for Separating Spouses in Prolonged Litigation

• Untruthful evidence at a discovery supports special costs only where it goes to the heart of the issues in dispute. An acknowledgement of untruthfulness is not on its own the reprehensible conduct the threshold requires, and a costs application built on one carries the work of showing what the untruth actually affected.
• Financial hardship on its own does not displace the rule that costs follow the event. The party asking the court to order otherwise carries the onus, and hardship sits among several discretionary factors rather than answering the question by itself.
• The disposition of a large receipt is worth documenting at the time it is made. Here a recent sale of the family home, and a loan of the proceeds to a relative, featured in the submissions on ability to pay, and the court was not persuaded that an order for costs would create financial hardship.
• The volume of interlocutory activity a proceeding generates bears on how a court approaches costs. Costs work to discourage conduct that lengthens and expands litigation and to encourage a continuing assessment of the strength of a case, so each further application carries a costs exposure of its own.

The outcome of this matter turned on the conduct of the proceeding and the evidence before the court on the costs application. A similar application may resolve differently.

ATAC LAW acts for parties in family litigation and in the costs applications that arise from it.

Dan H. Griffith acted for the claimant in this matter. Dan H. Griffith is a partner, lawyer, mediator and arbitrator at ATAC LAW.