Costs Against a Non-Party

At the end of any lawsuit, comes the time for the Court to settle the bill and award money to one or more of the parties. Basically, costs (as these payments are known) are given to compensate the winners for some of their legal costs and to punish the losers. Where a party has brought a lawsuit that is particularly frivolous, or where they have delayed the proceedings, or have behaved in a reprehensible manner, that party may have to pay “special” or “punitive” costs to the other party or parties. At the end of almost all cases, one party is going to pay some money to the other party.

But sometimes there are rare circumstances where the Court will order that costs be paid by someone who wasn’t even a party to the proceedings. Fear not, it isn’t innocent bystanders who get stuck picking up the tab for a meal at which they didn’t even attend. No, the non-parties who are ordered to pay costs are more like puppet masters or fraudsters. So, if you are involved in a trial and you want to try to get costs against a non-party, here’s what you need to know.

This sort of an award of costs is very rare. The Court will only order it in exceptional circumstances where it appears that the “real” party to the proceedings was a non-party, or where a non-party acted through a party in order to commit s fraudulent act. Here are some examples of when the Court saw fit to award costs against a non-party.

Oasis Hotel v. Zurich Insurance Co. 1981 28 B.C.L.R. 230: A man was the shareholder/director/officer of a company that owned a hotel. The man intentionally set his hotel on fire and then the man’s company sued the insurance company. The Court noted that the man had committed a fraudulent act and was using the court system to profit from it. To punish the man for his “duplicity and abuse of the court”, costs were awarded against the individual, non-party, swindler/arsonist and not against his company. The judge commented dramatically: “…in such cases the individual who conceives and carried out the fraud cannot shield behind a corporation he controls”.

Dempsey v. Envision Credit Union, 2006 BCSC 1324:  A non-lawyer rounded up a bunch of individuals and commenced a class action lawsuit against a bank. Despite warnings from the Law Society to the contrary, the man acted as counsel, but was not a party himself. The man behaved badly, deliberately frustrating the litigation, filing “nonsensical” documents, and generally making a mockery of the court process. The Court found that the man, although not a lawyer, was engaging in the sort of misconduct that, were he a lawyer would warrant an order of special costs against him, so they found him liable for costs, even though he was neither a party nor a lawyer.

Lawson v. British Columbia (Solicitor General), 1992 CarswellBC23, 63 B.C.L.R. (2d) 334: A man’s wife was giving birth. Something went wrong and she needed a blood transfusion. She was a Jehovah’s Witness, so she declined the blood on religious grounds and promptly died. A lawsuit arose over an inquest into the woman’s death; the parties to the proceedings being the dead woman’s husband (a Jehovah’s Witness) and her mother (not a Jehovah’s Witness). The Court awarded costs against a Jehovah’s Witness organization, since they found that the organization was the “real litigant”, and not the husband.  The Jehovah’s Witnesses’ organization were apparently funding the case and pursuing it in the interest of promoting their beliefs and agenda, so they were found to be a de facto party to the proceedings, and the mother received costs from them and not the impecunious and innocent husband.

Essentially, to be successful in such an application, you have to show that someone else is the real party, using a straw man to act in their stead, or that someone is hiding behind their company in order to commit or conceal a fraudulent act. If the actual party is penniless and the non-party who is pulling the strings is funding the proceedings or using the named party to protect their interests, then you might have the basis for a claim for costs against the non-party in question. It is a difficult standard to meet, but in the rare, applicable circumstances, a litigant can seek and win costs against a non-party.

Blog Attachment
  • books-pen-aarson-burden

Related Posts