Craigdarloch Holdings Ltd. v. Syscon Justice Systems Canada Ltd.

2001 BCSC 1712 Craigdarloch Holdings Ltd. v. Syscon Justice Systems Canada Ltd.

IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: Craigdarloch Holdings Ltd. v. Syscon Justice Systems Canada Ltd., 2010 BCSC 1712 Date: 20101202 Docket: S075894 Registry: Vancouver Between: Craigdarloch Holdings Ltd. Plaintiff And Syscon Justice Systems Canada Ltd., Syscon Holdings Ltd., 0787223 B.C. Ltd., Floyd Sully, Mark Boyle, Syscon Group Partnership, Syscon Systems International Limited, 661603 B.C. Ltd., 632436 B.C. Ltd., Justice Knowledge Solutions Inc., Syscon Justice Systems Limited, Syscon Systems International Pty Ltd. Defendants Before: The Honourable Mr. Justice Hinkson Supplementary Reasons to: A Decision from the Supreme Court of British Columbia, dated August 23, 2010, (Craigdarloch Holdings Ltd. v. Syscon Justice Systems Canada Ltd.), 2010 BCSC 1186, Docket #S075894 Supplementary Reasons for Judgment Counsel for Plaintiff: Robert Millar Lisa Sulek Counsel for the Defendants Syscon Justice Systems Canada Ltd., Syscon Justice Systems Limited, Syscon Systems International Limited, Syscon Systems International Pty and Syscon Holdings Ltd.: James Sullivan Sean Boyle Laura Cundari Counsel for the Defendants 0787223 B.C. Ltd. and Floyd Sully: R.J. Randall Hordo, Q.C. Sandra Foweraker Place and Date of Trial: Vancouver, B.C. November 23-27 and 30, December 1-4, 7-11, 14-18, 2009, January 18, 20-22, 25-29, February 1-5, 8, 10, March 16-19, 24 and April 6-8,

2010 Place and Date of Judgment: Vancouver, B.C. December 2, 2010 [1] On August 23, 2010, I delivered reasons for judgment in this case, indexed as 2010 BCSC 1186. In those reasons for judgment, I directed the parties to make submissions in writing with respect to costs. I have now received those submissions, but on September 10, 2010, I also received a request from counsel for what I have referred to in my earlier reasons for judgment as the Sully defendants, to adjudicate their counterclaim. The Counterclaim of the Sully Defendants [2] In their pleadings, both the plaintiff and the Sully defendants pleaded that what I have described as the Faulkner debt should be set-off against any amount owing by the Sully defendants to the plaintiff as a result of the sale of the Syscon Enterprise. [3] It is perhaps simplest to set out that portion of my earlier reasons for judgment where I addressed what I referred to as the counterclaim of the Sully defendants at para.s 213-222: 213 The result of Floyd Sully's agreement [of May 29, 2007 for himself and 0787223 B.C. Ltd. for the benefit of Faulkner] to pay out Faulkner directly from the funds received from the sale of the Syscon Enterprise was that this loan payoff became part of the consideration to Craig Watson (and the plaintiff) for his efforts to sell the Syscon Enterprise. 214 In August 2007, rather than paying the amount set out in

the direction, Floyd Sully purchased an assignment of Craig Watson's debt to Faulkner for the sum of US $1,053,345.57. I find that Faulkner was prepared to accept a discount of 15% of Craig Watson's indebtedness to it in exchange for that payment in August 2007. Whether it would have accepted that sum from Craig Watson or the plaintiff as satisfaction of that debt is another matter. I am unable to conclude that it would have done so. Faulkner had experienced significant difficulty in recovering on the debt. While it was prepared to discount the debt to put it behind it, I see no reason why, if Craig Watson had been in funds in excess of that amount, as he says he should have been, Faulkner would have extended him the same or any discount. 215 Floyd Sully indicated to both Faulkner and Craig Watson that the debt would be retired upon his lawyers' receipt of the funds from the sale of the Syscon Enterprise. As of June 29, 2007, when those funds were received, the debt owing by Craig Watson to Faulkner amounted to US $1,220,887.81. This amount represents the original US $1,194, 609.88, with daily interest thereon of US $417.11 starting from April 27, 2007. Had this amount been paid to Faulkner upon receipt of the funds, interest on the Faulkner debt would have ceased to accrue. 216 Instead of making this payment, Floyd Sully purchased an assignment of the debt. The assignment was

then further assigned to Regal Pacific Mortgage Corporation, a non-party to this litigation. The parties assert that the debt has since been assigned to 0787223 B.C. Ltd. 217 Both parties argued that the Faulkner debt should be dealt with by way of equitable set off; however, they disagree as to the appropriate amount that should be set off against the plaintiff's fee entitlement. I am not prepared to deal with the Faulkner debt by way of equitable set off. Once the debt was assigned to a non-party to this litigation it severed the connection it had with the demand of the plaintiff in this action. I find, therefore, that it is reasonable to award the plaintiff pre-judgment interest on $1,220,887.81 of the plaintiff's fee entitlement, at the same rate as is payable on the Faulkner debt from June 29, 2007, until the date of judgment. This is the portion of the plaintiff's fee entitlement representing the Faulkner debt that should have been paid by the Sully defendants as part of the plaintiff's compensation. Interest 218 The Fee Agreement entitled the plaintiff to compound interest on whatever fee was owing to it. As I have found that the Fee Agreement was terminated, the plaintiff's claim for compound interest is dismissed. The plaintiff will be entitled to interest pursuant to the Court Order Interest Act, R.S.B.C. 1996, c. 79 on the remaining $2,059,112.19 of its fee

entitlement as I have calculated a different interest rate for the balance as discussed above. Counterclaim for Prior Payments by Floyd Sully to the Plaintiff 219 It is clear from the evidence that the plaintiff received various payments from Floyd Sully or one of the Syscon companies prior to the sale of the Syscon Enterprise. The Sully defendants argued that these payments, or at least those after June 29, 2006, should be set off against any fee entitlement as a result of the sale of the Syscon Enterprise. I disagree. 220 The June 29, 2006 letter to Craig Watson from Floyd Sully referred to "payment for your services in respect of business development for Syscon Holdings" for a monthly fee of $10,000.00. I find that this was the fee that Floyd Sully was prepared to pay for work that the plaintiff agreed to, and did perform after that date, exclusive of its efforts to bring about a sale of the Syscon Enterprise. That is how the payments were treated by the Syscon companies for tax purposes, and how they should be treated in the context of this case. 221 This view is also supported by Floyd Sully's preceding e-mail to Mr. MacKay of June 27, 2006, where he said of the proposed Brax agreement: The exclusive nature of this agreement would require setting aside Craig's agreement. I have a verbal agreement with Craig that the agreement we have is no longer in force and that I will

pay him $10k monthly for consulting services. In the event that the company is sold I said I would make it right by him. In my mind this means a commission of 10% or 8% given the 2% that is represented in this contract ... 222 In the result, I dismiss the Sully defendants' counterclaim. [4] I should clarify that the dismissal of the Sully defendants' counterclaim referred to in para. 222 of my August 23, 2010 reasons for judgment was intended to refer only to what I described as the counterclaim for prior payments by Floyd Sully to the plaintiff. Counsel have correctly pointed out that the claim respecting the prior payments by Floyd Sully was not a matter raised in the counterclaim of the Sully defendants, but rather was raised as a defence to the plaintiff's quantum meruit claim, and thus should not have been referred to as the counterclaim. [5] Regardless of the mistaken description of the nature of the pleading regarding the prior payments, the counterclaim for a set-off for the Faulkner debt was intentionally left unresolved. [6] On October 12, 2010, counsel confirmed that no order arising from my reasons for judgment had been entered. I heard submissions that day from counsel with respect to the request from the Sully defendants, and advised them at that time that I had not resolved the matter of the counterclaim relating to the Faulkner debt in my reasons for judgment

because of my concern that Craig Watson might be exposed to a claim by a non-party to the litigation who had held an assignment of the Faulkner debt at some time before it was assigned to 0787223 B.C. Ltd. [7] I advised counsel that: I think I made it clear that I wasn't deciding that Mr. Watson didn't owe some money to somebody on the debt. I wasn't satisfied who, and it was for that reason that I gave him the interest I gave him on the portion that would represent the debt. What I wanted to do was make sure that he didn't get the judgment and have interest accruing on a debt that he owed to somebody at greater interest rates than he would get on the judgment. So it wasn't that I was ignoring the counterclaim, I was trying to avoid penalizing Mr. Watson in some way in the event that whoever inherited or received the assignment of that debt went after him for it. [8] Counsel for both the plaintiff and the Sully defendants reiterated their positions that the Faulkner debt was appropriately a set-off against the plaintiff's claim, but differed as to how much should be set-off, and at what date. Jurisdiction to resolve the Counterclaim of the Sully Defendants [9] It is beyond question that a judge of the Supreme Court of British Columbia has jurisdiction to reconsider or revise any aspect of his or her decision prior to the entry of an order arising from his or her reasons for

judgment in order to ensure that a miscarriage of justice does not occur; see Clayton v. British American Securities Ltd. (1934), 49 B.C.R. 28 (C.A.) at 66-67. [10] As Mr. Justice Goepel explained in Bronson v. Hewitt, 2010 BCSC 871 at para. 26: New evidence is not an essential prerequisite to a reconsideration application. A judge may properly reopen if satisfied, either because of the argument of one of the parties, or on the basis of his or her own reconsideration of the record, that the original judgment was in error because it overlooked or misconstrued material evidence or misapplied the law: Sykes v. Sykes (1995), 6 B.C.L.R. (3d) 296 (C.A.) at para. 10. [11] I consider that the same reasoning applies where, prior to the entry of an order, a judge is satisfied that an issue was not adjudicated upon that ought to have been. Here, there is no need for further evidence, only the matter of whether or not I am satisfied that it is appropriate to resolve the counterclaim of the Sully defendants with respect to the Faulkner debt, despite the fact that it was assigned to a non-party to this litigation before it was reassigned to 0787223 B.C. Ltd. [12] Given that both the plaintiff and the Sully defendants wish the matter resolved by me, and the fact that counsel for the plaintiff has advised me that he is not concerned about the prospect of any non-party to the litigation

commencing proceedings on the debt, I am prepared to resolve the counterclaim, even though that will require some modification of my reasons for judgment of August 23, 2010. The Faulkner Debt [13] As I have previously found, Mr. Sully agreed to pay out the Faulkner debt directly from the funds received from the sale of the Syscon Enterprise and that agreement to pay that debt became part of the consideration to Craig Watson (and the plaintiff) for Craig Watson's efforts to sell the Syscon Enterprise. The funds were received by Mr. Sully's lawyers on June 29, 2006, but rather than making immediate payment to Faulkner, Mr. Sully proceeded as I described in para. 216, which is set out above, with one correction. The initial assignment of the Faulkner debt was not to Mr. Sully, but rather, at Mr. Sully's request was made by Faulkner to Mark Boyle, Mr. Sully's Chief Operating Officer, who in turn assigned the debt to Regal Pacific Mortgage Corporation, followed by the other assignments referred to in para. 216. [14] Given the position of counsel for both the plaintiff and the Sully defendants that the Faulkner debt was appropriately a set-off against the plaintiff's claim, and the representation by counsel for the plaintiff that he is not concerned about the prospect of any non-party to the litigation proceedings against Craig Watson or the plaintiff on the debt, I am prepared to

set-off the Faulkner debt against the plaintiff's claim for a fee for the work it did to assist in the sale of the Syscon Enterprise. [15] I am not prepared to revisit my conclusion in para. 214 that although Faulkner was prepared to accept a discount of 15% of Craig Watson's indebtedness to it in exchange for payment in August 2007 by Mr. Sully, it would not have accepted that sum from Craig Watson or the plaintiff as satisfaction of that debt or extended him the same or any discount. [16] I therefore find that the Sully defendants are entitled to a set-off of U.S. $1,220,887.81, being the sum owing by Craig Watson and the plaintiff to Faulkner as of June 29, 2006, and that that set-off satisfies the assigned Faulkner debt and any interest thereon as against both Craig Watson and the plaintiff. In the result, the plaintiff's damages ordered in my earlier judgment are reduced by U.S. $1,220,887.81. [17] I will also vary the conclusion reached in my earlier reasons for judgement of August 23, 2010 at para.

217. Although the plaintiff argued that the set-off for the Faulkner debt should still include pre-judgment interest at the Faulkner contract rate until August of 2007 when 85% of it was paid by Mr. Sully in full satisfaction of the Faulkner debt claim, I do not agree. As the debt was to have been paid when Mr. Sully's lawyers received the funds for the sale of the Syscon Enterprise, the debt should have been retired on June 29, 2007 when the funds were received. As I have found that the amount owing on June 29, 2006 was U.S. $1,220,887.81, and that that set-off satisfies the Faulkner debt and any interest thereon, I see no basis upon which to continue any interest entitlement to the plaintiff on that sum thereafter. In the result, I also find that there is no need to award the plaintiff any pre-judgment interest on the sum of $1,220,887.81, as I had ordered in para. 218 of my earlier reasons and that award of pre-judgment interest will be set aside. Costs Arising from the Plaintiff's Claim a) The Applicable Rules of Court [18] After forty-four days of trial, the arguments of the parties in this case were completed on April 8, 2010. On July 1, 2010 the Supreme Court Rules, B.C. Reg. 221/90 were replaced by the Supreme Court Civil Rules, B.C. Reg. 168/2009. [19] Appendix B to the Supreme Court Civil Rules provides in s. 10 that Appendix B of the Supreme Court Rules, as it read

on June 30, 2010 applies to orders for costs made after December 31, 2006 and before July 1, 2010. No counsel for any party made any submissions suggesting that the Rules in force prior to July 1, 2010 should be applied, and I therefore need not consider the approach taken by Mr. Justice Ralph in McPhee v. British Columbia (Ministry of Transportation and Highways), 2007 BCSC 1354 after Appendix B to the Supreme Court Rules was amended effective January 1, 2007, and will consider the issue of costs in this case under the Supreme Court Civil Rules. b) The Syscon Defendants [20] The Syscon defendants, as they were described in my earlier reasons for judgment, were successful in their defence of the plaintiff's claim against them. While they were unsuccessful on a no evidence motion (indexed as 2010 BCSC 46) at the close of the plaintiff's case, their lack of success at that time was essentially for two reasons; first, that at that stage of the case, based upon the evidence before me, there was at least an arguable case against the Syscon defendants on both of the plaintiff's breach of contract and quantum meruit claims, and second, that allowing a non-suit based on no evidence had the potential to prejudice the plaintiff's case by limiting the plaintiff's claim against Floyd Sully and his company on the one hand, and limiting the prospect of a greater recovery against all of the

Syscon defendants on the other hand. [21] Neither of these concerns survived the full trial. Rule 14-1(12)(b) of the Supreme Court Civil Rules provides that unless the court hearing the motion otherwise orders, the party making a motion that is refused is not entitled to costs as costs in the cause, but the party opposing it is entitled to costs in the cause. [22] At para. 61 of my reasons for judgment on the no evidence motion I ordered that the costs associated with that motion could be addressed by the parties once the trial concluded. The Syscon defendants argue that the costs of that motion should not flow to either party. Although I dismissed the motion, I do not consider that it was without merit, nor do I consider that the Syscon defendants should be penalized in costs for bringing the motion. As the Syscon defendants seek no more than an order that they and the plaintiff bear their own costs of the motion, I will make that order. [23] The Syscon defendants seek costs for all other aspects of the proceedings at Scale C of the Supreme Court Civil Rules. [24] Rule 14-1(1) of the Supreme Court Civil Rules provides that where costs are payable to a party under these rules or by order they shall be assessed as party and party costs in accordance with Appendix B, unless circumstances which do not pertain to this case exist. [25] Sections 2(1) to 2(3) of Appendix B to the

Supreme Court Civil Rules state: (1) Where a court has made an order for costs, it may fix the scale, from Scale A to Scale C in subsection (2), under which the costs will be assessed, and may order that one or more steps in the proceeding be assessed under a different scale from that fixed for other steps. (2) In fixing the scale of costs the court shall have regard to the following principles: (a) Scale A is for matters of little or less than ordinary difficulty; (b) Scale B is for matters of ordinary difficulty; (c) Scale C is for matters of more than ordinary difficulty. (3) In fixing the appropriate scale under which costs will be assessed, the court may take into account the following: (a) whether a difficult issue of law, fact or construction is involved; (b) whether an issue is of importance to a class or body of persons, or is of general interest; (c) whether the result of the proceeding effectively determines the rights and obligations as between the parties beyond the relief that was actually granted or denied. [26] Counsel for the plaintiff argued that while the case as between his client and the Sully defendants was one of more than ordinary difficulty, the case as between the plaintiff and the Syscon defendants was one of only ordinary difficulty. I disagree. I have no hesitation in finding that the factual and legal issues in this case against the Syscon

defendants were of more than ordinary difficulty, and made even more so by manner in which the case was presented. In saying that I do not wish to be heard to criticize any of the counsel involved; only to recognize that the case was hard fought and that little was conceded by any party. [27] In Mort v. Saanich School Board No. 63, 2001 BCSC 1473 at para. 6, Mr. Justice R.D. Wilson listed a number of factors to be considered when determining the level of difficulty of a proceeding under the predecessor Supreme Court Rules: (a) the length of the trial; (b) the complexity of the issues involved; (c) the number and complexity of pre-trial applications; (d) whether or not the action was hard fought with little or nothing being conceded along the way; (e) the number and length of Examinations for Discovery; (f) the number and complexity of Experts' Reports; and (g) the extent of the effort required in the collection and proof of facts. [28] The list is not exhaustive, nor is any one factor determinative. In my view the list remains applicable under the Supreme Court Civil Rules, and when applied in this case results in the following observations: (a) the trial was originally set for something in the range of 20 days, but took 44 days to complete; (b) a number of the issues in the case were clearly complex; (c) there were a number of pre-trial appearances; (d) as I have already said,

the action was hard fought; (e) there were apparently four examinations for discovery, two of which were lengthy; (f) there were two expert reports with respect to remuneration for brokerage services, although they were not overly complex; and (g) there was voluminous documentary evidence tendered, although, in my view greater cooperation between counsel could have reduced the volume. Even with greater cooperation, however, the volume would still have been considerable. [29] I am quite satisfied that the appropriate scale of costs as between the plaintiff and the Sully defendants is Scale C of Appendix B of the Supreme Court Civil Rules. [30] The plaintiff argued that any award of costs to the Syscon defendants should be the subject of either a so-called Sanderson or a so-called Bullock order. Clearly Rule 14-1(18) of the Supreme Court Civil Rules permits the court the discretion to make either order. I will address this argument after dealing with the costs of the plaintiff. c) The Plaintiff [31] The plaintiff seeks an order for its costs for all aspects of the proceedings against the Sully defendants at the same scale as that claimed by the Syscon defendants. [32] The Sully defendants argued that the plaintiff was unsuccessful on most of the aspects of its claim, and achieved only a partial recovery of what it claimed in the action. They say that they and the plaintiff should

bear their own costs. Their submission requires an inquiry into the degree of the plaintiff's success. [33] I begin this part of my reasons for judgment by reminding myself that both Craig Watson and Floyd Sully were found to have credibility problems, albeit for different reasons. I see those problems as offsetting factors when assessing entitlement to costs. [34] Rule 14-1(9) of the Supreme Court Civil Rules is found under the heading "Costs follow the event" and provides: Subject to subrule (12), costs of a proceeding must be awarded to the successful party unless the court otherwise orders. [35] In Gold v. Gold (1993), 82 B.C.L.R. (2d) 180, 32 B.C.A.C. 287 at paras. 20-22, it was held to be a necessary and sufficient condition for an award of costs under Rule 57(9) that success in the outcome of the trial is "substantial". [36] The wording of Rule 57(9) of the Supreme Court Rules differed somewhat from the wording of Rule 14-1(9) of the Supreme Court Civil Rules set out above. Rule 57(9) provided: Subject to subrule (12), costs of and incidental to a proceeding shall follow the event unless the court otherwise orders. [37] The plaintiff argues that the omission of the reference to "follow the event" has eliminated the requirement for "substantial success" discussed in Gold. As I will explain in the reasons that follow, I find that the plaintiff did enjoy substantial

success, and it is thus it unnecessary for me to decide that issue. [38] In Fotheringham v. Fotheringham, 2001 BCSC 1321, (appeal to C.A. refused 2002 BCCA 454), Mr. Justice Bouck stated at para. 45: Gold now seems to say that substantial success in an action should be decided by the trial judge looking at the various matters in dispute and weighing their relative importance. The words "substantial success" are not defined. For want of a better measure, since success, a passing grade, is around 50% or better, substantial success is about 75% or better. That does not mean a court must descend into a meticulous mathematical examination of the matters in dispute and assign a percentage to each matter. Rather, it is meant to serve as a rough and ready guide when looked at all the disputed matters globally. [39] At para. 46, Bouck J. then set out a four step test to determine whether or not to award costs after a trial pursuant to Rule 57(9) of the Rules of Court: 1. First, by focusing on the "matters in dispute" at the trial. These may or may not include "issues" explicitly mentioned in the pleadings.

2. Second, by assessing the weight or importance of those "matters" to the parties.

3. Third, by doing a global determination with respect to all the matters in dispute and determining which party "substantially succeeded," overall and therefore won the event.

4. Fourth, where one party "substantially succeeded," a consideration of whether there are reasons to "otherwise order" that the winning party be deprived of his or her costs and each side then bear their own costs. [40] Despite the difference in the language of Rule 14-1(9) of the Supreme Court Civil Rules and that in Rule 57(9) of the Rules of Court, Fotheringham remains a useful guide. [41] In terms of the first two steps referred to in Fotheringham, there were many issues that were disputed, but the real "matter" was the plaintiff's entitlement to payment, on some basis, for the work it did to bring about a sale of the Syscon Enterprise. That was clearly a matter of importance to each party. [42] With respect to the third and fourth steps referred to in Fotheringham, the Sully defendants relied upon Grape Expectations Wine Emporium Inc. v. Baker Estate, 20-10 BCSC 1069 and Horn v. Ikon Office Solutions Inc., 2003 BCSC 474. In both of these cases the parties were ordered to bear their own costs where they were not entirely successful. In Grape Expectations, Mr. Justice Halfyard found that neither party was substantially successful, and in Horn, Mr. Justice Wilson found that success was divided between the parties. [43] In terms of success, the Sully defendants say that there were three main matters in dispute in this case; contractual entitlement to compensation, entitlement

to a fee in quantum meruit, and the amount of the plaintiff's fee entitlement. [44] The Sully defendants rely upon comments found in the reasons for judgment in Gould v. Gould Estate (Trustee of), 2010 BCSC 16, McDermott v. Rebuck, 2009 BCSC 526 and McIsaac v. Healthy Body Services Inc., 2010 BCSC 1033 for this aspect of their submissions. [45] In Gould at paras. 17 and 18, Mr. Justice Pearlman found divided success where: ... The "matters in dispute" involved both the plaintiff's Wills Variation Act claim and her discrete claim for unjust enrichment. Both issues were important to the parties, but the Wills Variation Act claim occupied the greater part of the time at trial and constituted the larger monetary component of the plaintiff's claims in this action. The plaintiff claimed over $400,000 but recovered judgment for $75,000, representing less than 25% of her total claim. There was no variation of the Will. In this case, the personal defendants successfully defended the Wills Variation Act claim while the plaintiff achieved success on the discrete issue of unjust enrichment. [46] In McDermott, Mr. Justice A.F. Wilson discussed substantial success at paras. 5 and 6, stating in part: ... The plaintiffs have thus been successful in part in their claim, but to the extent of less than 20%. ... The defendants, while not totally successful in their claims, were thus substantially

successful in both defending the plaintiffs' claims and pursuing their own. [47] In McIsaac, at paras. 45-47, Mr. Justice Pearlman found divided success where the plaintiff recovered only some 18% of his past income loss and only approximately 2.9% of his total claim. [48] Despite Gould, McDermott and McIsaac, generally speaking, a successful plaintiff is entitled to an order for costs even where he or she did not succeed on every issue: see Kemp v. Wittenberg, [1999] B.C.J. No. 1302 (B.C.S.C.); Dinyer-Fraser v. Laurentian Bank, 2005 BCSC 1432. It is worthwhile, in this context, to refer to the observation of Mr. Justice McKenzie in Sigurdson v. Fidelity Insurance Company of Canada et al. (No. 2), [1977] 6 W.W.R. 451 where he said at para. 16: Perhaps no purpose will be served by multiplying comparisons, but an "issue" appears to me to be equal to a battle and the "event" to the war. [49] As Mr. Justice Metzger stated in Aschenbrenner v. Yahemech, 2010 BCSC 1541 at para. 17: Substantial success is not determined by counting up the number of issues and allocating success on each, or by comparing the dollar amounts, but by assessing success in the major issues of substance (Cohen v. Cohen, 1995 Carswell 608, 15 R.F.L. (4th) 84 (B.C.C.A.) at para. 4; Reilly v. Reilly, [1996] B.C.J. No. 1244 (S.C.); Rattenbury v. Rattenbury, 2001 BCSC 593, [2001] B.C.J. No. 889 at paras. 22-24,

33). Substantial success means success on 75% of the matters globally taking into account the weight of the issues and their importance to the parties. A court should compare the pleadings and the submissions with the actual results obtained by the parties (Rattenbury at para. 24.). [50] Here, the plaintiff's claims for a fee entitlement were framed alternatively in contract or in quantum meruit, and I think properly so. While the plaintiff did not succeed to the extent that it claimed, the Sully defendants denied any liability for any fee to the plaintiff. The plaintiff recovered a fee in excess of $2 million exclusive of the Faulkner debt, which in my view represents a substantial recovery. Although a substantial recovery is not necessarily the equivalent of substantial success, I find that the recovery in this case, in the face of a denial of any fee entitlement by the Sully defendants, represents a substantial success in the "event". As Mr. Justice Halfyard explained in Hall v. Becker, 2009 BCSC 1796 at para. 10, success on an issue is not necessarily to be determined by measuring the monetary amount claimed against the amount recovered. [51] For the same reasons I have expressed above with respect to the case between the plaintiff and the Syscon defendants, I find that the issues in the case against the Sully defendants were of more than ordinary difficulty, and make the

same observation with respect to the manner in which the case was presented, with the same qualification; that I do not wish to be heard to criticize any of the counsel involved; only to recognize that the case was hard fought and that little was conceded by any party. [52] I will not repeat my comments above respecting the appropriate scale of costs, but I am quite satisfied that the appropriate scale of costs as between the plaintiff and the Sully defendants is Scale C of Appendix B of the Supreme Court Civil Rules. d) Limitation on the Number of Trial Days that can be Claimed for Costs Purposes [53] The Sully defendants have argued that if costs are to be awarded to the plaintiff, they should be limited to only thirty-three days, because some of the trial time was devoted to issues that were unique to the case that is referred to in my earlier reasons for judgment as the Brax case. Although the two actions were not consolidated, that case was heard together with this one by consent of all of the parties in both actions. [54] The only common party in the two actions was Mr. Sully's company 0787223 B.C. Ltd. I see no reason for the plaintiff or the Syscon defendants, having had to attend all forty-four days of trial to be denied its costs because some of the time spent before me related to the issues in the Brax case. I therefore reject the Sully defendants' submissions that

the number of trial days for which the plaintiff or the Syscon defendants can claim costs be limited to less than forty-four days. e) Liability for the Costs of the Syscon Defendants [55] A Sanderson order is so named as it is a type of order granted in the case of Sanderson v. Blyth Theatre Co., [1903] 2 K.B. 533 (C.A.). Such an order provides that where a plaintiff succeeds against one or more defendants, but not against all defendants, the costs of the defendant or defendants against whom the plaintiff does not succeed, can be ordered to be paid directly by the unsuccessful defendant or defendants, rather than by the plaintiff. [56] A Bullock order is so named as it is a type of order granted in the case of Bullock v. London General Omnibus Co. (1907), 1 K.B. 264 (C.A.). Such an order provides that where a plaintiff succeeds against one or more defendants, but not against all defendants, the costs that the plaintiff is liable to pay to the defendant or defendants against whom it did not succeed are recoverable by the plaintiff as disbursements against the defendant or defendants against whom the plaintiff did succeed. [57] Both a Sanderson order and a Bullock order are contemplated by Rule 14-1(18) of the Supreme Court Civil Rules: If the costs of one defendant against a plaintiff ought to be paid by another defendant, the court may order payment to be made by one defendant

to the other defendant directly, or may order the plaintiff to pay the costs of the successful defendant and allow the plaintiff to include those costs as a disbursement in the costs payable to the plaintiff by the successful defendant. [58] The threshold for establishing entitlement to either a Sanderson or a Bullock order is whether it was reasonable for the plaintiff to have joined the successful defendant in the action: Robertson v. North Island College Technical and Vocational Institute, [1980] B.C.J. No. 1206 per Mr. Justice Lambert at para.

22. The Sully defendants denied an obligation to pay any amount to the plaintiff with respect to the sale of the Syscon Enterprise. In this sense, they left the plaintiff with no choice, but to include the Syscon defendants in its claim, a circumstance not unlike that which was seen in Busnex Business Exchange Ltd. v. Creston Builders Supply Ltd., [1999] B.C.J. No. 1503, where the unsuccessful defendants could have been extricated from the action had the unsuccessful defendants acknowledged their obligations to the plaintiff. [59] One of the Sully defendants' arguments at trial was that if the plaintiff had a contractual entitlement to any fee, it was limited to a fee based only upon that part of the sale of the Syscon Enterprise respecting Syscon Justice Systems Ltd., as that was the only one of the Syscon companies that made up the Syscon Enterprise with whom it had a contract. [60] One of the reasons that I dismissed the no evidence motion of the Syscon defendants was because allowing such a motion had the potential to prejudice the plaintiff's case by limiting the plaintiff's claim against Floyd Sully and his company on the one hand, and limiting the prospect of a greater recovery against all of the Syscon defendants on the other hand. It follows from that reasoning that I find it was reasonable for the plaintiff to have joined the Syscon defendants as defendants in the

first place. [61] I find that the Sully defendants' complete denial of any liability for any fee to the plaintiff made it necessary for the plaintiff to bring the Syscon defendants into the litigation, meeting the requirement discussed by Madam Justice Southin at para. 33 in Grassi v. WIC Radio Ltd. (c.o.b. CKNW/98), 2001 BCCA 376. [62] In Home Equity Development Inc. v. Crow, 2005 BCSC 743, Mr. Justice Davies considered whether to exercise his discretion to grant either a Sanderson or a Bullock order. At para. 95, recognizing one factor to be considered in choosing between the two different orders, he concluded: I am satisfied that in those circumstances it would be manifestly unfair to require the successful defendants (who also acted reasonably by discontinuing their counterclaims almost one year before the trial) to bear the risk of any inability of the unsuccessful defendants to pay the costs of the plaintiffs under a Sanderson order. [63] While there may be no difficulty with the liquidity of the Sully defendants, like Davies J., I see no reason to require the Syscon defendants to bear any risk that the Sully defendants will be unable or unwilling to pay their costs, and thus order that the costs of the Syscon defendants be paid to them by the plaintiff, but I will exercise my discretion to grant the plaintiff a Bullock order respecting those costs, and order that those

costs are recoverable by the plaintiff as disbursements against the Sully defendants. Costs Arising from the Counterclaim of the Sully Defendants [64] The entitlement of the Sully defendants to a set-off for the payment of the Faulkner debt was uncontested by the plaintiff. The role of the Faulkner debt in the dealings between Craig Watson and the plaintiff on the one hand, and Floyd Sully and his company on the other hand were necessarily canvassed in the trial of this matter, but due to the position taken by the plaintiff, did not protract the proceedings. [65] I consider that the plaintiff and the Sully defendants should each bear their own costs relating to the counterclaim, and so order. Conclusion [66] The Syscon defendants will recover their costs of all but their no evidence motion from the plaintiff at Scale C of the Supreme Court Civil Rules. [67] The plaintiff will recover the costs of its claim from the Sully defendants at Scale C of the Supreme Court Civil Rules. [68] The plaintiff will recover the costs for which it is liable to the Syscon defendants from the Sully defendants as disbursements. [69] The plaintiff and the Sully defendants will each bear their own costs of the Sully defendant's counterclaim. "Hinkson J."