Walsh v. Muirhead

2020 BCCA 225 Walsh v. Muirhead

COURT OF APPEAL FOR BRITISH COLUMBIA Citation: Walsh v. Muirhead, 2020 BCCA 225 Date: 20200807 Docket: CA45291 Between: Moira Eleanor Walsh Respondent (Plaintiff) And Stephen Kerry Walsh and Ronald Stewart Walsh, also known as Ronald Steward Walsh, Executors of the Estate of Lindsay Clinton Walsh, Lynda Gail Walsh, Stephen Kerry Walsh and Dana Leanne Miller Respondents (Defendants) And: Jacy Wingson Respondent And Nathan Muirhead Appellant Before: The Honourable Chief Justice Bauman The Honourable Mr. Justice Harris The Honourable Madam Justice DeWitt‑Van Oosten On appeal from: An order of the Supreme Court of British Columbia, dated April 17, 2018 (Walsh v. Walsh, 2018 BCSC 617, New Westminster Docket S138489). Counsel for the Appellant (via videoconference): J.S. Forstrom Counsel for the Respondent Jacy Wingson (via videoconference): V. Anderson The Respondent Dana Miller, appearing in person (via videoconference) D. Miller Place and Date of Hearing: Vancouver, British Columbia July 8, 2020 Place and Date of Judgment: Vancouver, British Columbia August 7, 2020 Written Reasons by: The Honourable Madam Justice DeWitt‑Van Oosten Concurred in by: The Honourable Chief Justice Bauman The Honourable Mr. Justice Harris Summary: The lawyer appellant was ordered to pay special costs after an application brought by his clients was dismissed as "unnecessary" and "misconceived". He

appealed the order, submitting that it was procedurally unfair and that the chambers judge did not apply the correct legal test for special costs against a lawyer. Held: The appeal is allowed and the order is set aside. The judge made the order without notice to the appellant, unfairly depriving him of an opportunity to make submissions on whether he should be personally responsible for special costs. Rather than remit the issue back to the Supreme Court for reconsideration, it is in the interests of justice to order that costs for the dismissed application be paid by the appellant's clients on a party and party basis. Reasons for Judgment of the Honourable Madam Justice DeWitt‑Van Oosten: Introduction [1] The lawyer appellant, Nathan Muirhead, seeks to overturn an order that he pay special costs for an unsuccessful application brought by his clients in the context of acrimonious estate litigation. [2] The appellant says the order was procedurally unfair. He also contends that the chambers judge erred in principle by failing to apply the correct legal test for special costs against a lawyer, including the requirement for a finding of "reprehensible" conduct. [3] For the reasons that follow, I agree the order was procedurally unfair. On that basis, I would allow the appeal and set aside the special costs award. Background [4] It is not necessary to detail the history of the

estate litigation. [5] Instead, for purposes of this appeal, it is sufficient to note that the appellant acted as legal counsel for the executors of a contested estate in respect of which the parties reached a mediated settlement in 2013, resulting in a redistribution of benefits. Problems arose with execution of that agreement and, more importantly, with the completion of ancillary documentation and steps necessary to give effect to the settlement. Eventually, the death of one of the affected parties (the plaintiff spouse of the deceased), disagreement on outstanding issues, and intransigence culminated in multiple court applications that proceeded together in Supreme Court chambers. [6] One of these applications was brought by the executors of the estate and sought the destruction of certain affidavits. The respondents, Jacy Wingson Q.C., and Dana Miller (a contingent beneficiary under the estate) both attached copies of the executed settlement agreement to affidavits filed in support of requests for court‑ordered relief relevant to implementation of the settlement. The executors took issue with the propriety of using the signed agreement for that purpose and wanted the impugned affidavits removed from the court file(s) and destroyed. If successful on their application, the executors sought costs against Ms. Wingson and Ms. Miller. [7] Ms. Wingson represented the plaintiff

spouse at the time of the mediated settlement. The context surrounding the application for the destruction of affidavits included an allegation that in her role as counsel, Ms. Wingson breached an undertaking to not "release" or "deal" with the settlement agreement except for the limited purpose of having the agreement executed by Ms. Wingson's client and Ms. Miller. In light of the undertaking, the executors took the position that attaching copies of the signed agreement to affidavits was improper. [8] The executors' application was heard on September 1, 2016. By that time, Ms. Wingson had consented to destruction of the affidavit filed in the matter over which she had conduct. As such, the only relief sought in relation to Ms. Wingson was an order for costs. The executors asked to have Ms. Wingson pay those costs personally because her client (the plaintiff spouse) had passed away. Ms. Miller did not agree to destroy the affidavit filed in her application for relief. As such, whether she had an obligation to do so because of the undertaking remained a live issue in the executors' application. [9] The chambers judge summarily dismissed the application for destruction, "with costs": THE COURT: Mr. Muirhead, with respect, it seems to me your -- your whole submission rests here on a very, very fine point. Ms. Miller, you've conceded, could have attached to her affidavit a -- an

unexecuted copy of the settlement agreement. She could have deposed in her affidavit that this settlement agreement reflected the settlement of all -- or the terms concluded by all parties that they'd agreed to, and she could have testified, "I have seen with my own two eyes an original of the settlement agreement signed by Stephen Walsh and Ronald Walsh." She could have done all that. So what does it matter that she actually attaches a copy of the document that demonstrates all those things? THE COURT: Mr. Muirhead, I'm sorry. This application is misconceived, and I am dismissing the application with costs. [Emphasis added.] [10] The chambers judge did not specify who would be responsible for those costs. In discussion with counsel, he described the undertaking said to have been breached as one that Ms. Wingson "never should have accepted". The undertaking was poorly drafted and had no end date. The judge thought the appellant should not have asked Ms. Wingson to agree to it. Furthermore, from the judge's perspective, the executors should not have taken formal action to enforce the undertaking. The judge found it "appalling" that they did so. [11] Before the chambers judge, the appellant took personal responsibility for the undertaking, saying "It [was] entirely an error of judgment on [his] part". He also accepted that any breach of the undertaking by Ms. Wingson was

"inadvertent". The judge noted that in advancing the application, the appellant did not allege fraud or dishonesty by Ms. Wingson. [12] Following the September hearing, the parties to the various chambers matters provided written submissions on costs (over the lunch recess, they resolved the remainder of the substantive matters set for hearing that same day). Although they spoke to costs before the chambers judge, he asked the parties to provide a written summary of their respective positions and reserved his decision on costs pending receipt of those submissions. [13] In April 2018 (after further developments and court appearances in the estate file), the chambers judge released his decision on costs, including costs specific to the application for the destruction of affidavits. He determined that costs on that application, referred to in his reasons as the "Undertaking Application", would consist of special costs paid personally by the appellant. Reasons of Chambers Judge [14] The judge's reasons on costs are indexed as Walsh v. Walsh, 2018 BCSC 617. The rationale provided for special costs paid by the appellant is briefly stated: [22] In dismissing the Undertaking Application, I stated: Mr. Muirhead, the undertaking you put Ms. Wingson on ought never to have been accepted by her, because it was an undertaking that had no end date to it. On its face, it would still be in

effect today. She would still require your consent to be dealing with the settlement agreement in any way. That can't possibly be right. That can't possibly be what was intended by her. It was an undertaking she never should have accepted, but at the same time, Mr. Muirhead, it was an undertaking you never should have put a fellow counsel under an obligation to accept. And it was never an undertaking you should have sought to enforce. I remarked that I was appalled by the attempt to enforce the undertaking and seek costs against Ms. Miller and against Ms. Wingson personally. [23] Mr. Muirhead apologized for the undertaking, saying that it was entirely an error of judgment on his part, for which he took full responsibility, and that it was through no fault on the part of his clients. [24] I find that the costs awarded to Ms. Wingson and Ms. Miller in respect of the Undertaking Application should be paid by Mr. Muirhead personally. [25] I further find that those costs should be assessed as special costs. Contrary to Ms. Wingson's submissions, I do not do so on the basis that the Undertaking Application, in seeking costs against her personally, was an attack on her professionalism. Clearly, the Undertaking Application sought costs against Ms. Wingson personally only because her client was deceased, and there was no other person to whom a costs order against the plaintiff could

attach. Ms. Wingson had acted without instructions, putting herself in a position where she had to expect to be found personally responsible for costs, were the Walsh Defendants successful on the Undertaking Application. [26] I do find, however, that the allegation of breach of undertaking, and in particular the steps taken to enforce an undertaking that never should have been sought in the first place, is conduct deserving of rebuke. Mr. Muirhead's clients were not prejudiced in any manner by the executed 2013 Settlement Agreement having been attached to the affidavits. The application was entirely unnecessary and misconceived. [Emphasis added.] [15] The special costs order reads as follows: Nathan Muirhead, counsel for the Walsh Defendants, shall personally pay to Jacy Wingson, Q.C. and Dana Leanne Miller, their costs of the notice of application filed on May 27, 2016, assessed as special costs. Leave to Appeal [16] The appellant sought leave to appeal the special costs award. Leave was granted on two issues: (1) the identity of the payor of costs; and (2) if the appellant should be liable to pay costs, whether the court below erred in granting special costs (Walsh v. Muirhead, 2018 BCCA 345). [17] Although aware of the appeal, the executors did not participate in the application for leave. Nor have they participated in the appeal. [18] Ms. Wingson and Ms. Miller both

responded to the appeal. Ms. Miller represented herself. She prepared written submissions, and, although produced outside the prescribed timelines, the Court exercised its discretion to consider Ms. Miller's submissions to the extent that they addressed issues properly before the Court: Rule 52, Court of Appeal Rules, B.C. Reg. 297/2001. Issues on Appeal [19] The appellant challenges the special costs award on two bases: (1) he says it was procedurally unfair to order special costs against him without notice and without an opportunity to make submissions; and (2) in any event, the judge erred in principle by not applying the correct legal test for special costs against counsel, including the requirement for a finding of "reprehensible" conduct. Standard of Review [20] The parties agree that a costs award, including special costs, involves an exercise of discretion. As such, a deferential standard of review applies. However, where the process leading to the award was demonstrably unfair, the award resulted from an error in principle, or it is manifestly unjust, the appeal court may intervene: Gichuru v. Pallai, 2018 BCCA 78 at paras. 85-90; Hollander v. Mooney, 2017 BCCA 238 at paras. 22-23; Quebec (Director of Criminal and Penal Prosecutions) v. Jodoin, 2017 SCC 26 at para. 52 [Jodoin]. Discussion Fresh Evidence Application [21] The appellant applied to tender an affidavit in

the appeal deposing that had he been aware of the possibility of a costs award against him, he would have retained legal counsel. The affidavit also attaches various documents relating to the undertaking at issue in the court below, a full transcript of the chambers hearing, and copies of the written submissions that were prepared post‑hearing at the request of the chambers judge. [22] Ms. Wingson opposes the fresh evidence application, except for the appellant's assertion that had he known he might be subject to an order for special costs, he would have retained legal counsel. [23] In my view, the affidavit is admissible as fresh evidence. The contents, including the written submissions filed in the court below, are relevant to the issue of procedural fairness raised by the appellant and the integrity of the process followed by the chambers judge. In that specific context, the Court generally adopts a more flexible approach to the admissibility of fresh evidence: J.P. v. British Columbia (Children and Family Development), 2017 BCCA 308 at para.

194. General Principles on Costs against Lawyers [24] Superior courts unquestionably have the power to order that a lawyer personally pay the costs that flow from an unsuccessful application brought on behalf of their client(s). [25] Indeed, Rule 14‑1(33) of the Supreme Court Civil Rules, B.C. Reg. 168/2009 [the Rules], specifically authorizes this type of order: (33) If the court considers that a party's lawyer has caused costs to be incurred without reasonable cause, or has caused costs to be wasted through delay, neglect or some other fault, the court may do any one or more of the following: (c) order that the lawyer be personally liable for all or part of any costs that his or her client has been ordered to pay to another party; [Emphasis added.] [26] The predecessor to Rule 14‑1(33) was considered by a five-member division of this Court in Nazmdeh v. Spraggs, 2010 BCCA 131. The Court held that what was then Rule 57(37) allowed for costs against counsel in the form of special costs or costs assessed on a party and party basis (at para. 42). Moreover, using substantially the same language as 14‑1(33), the predecessor Rule "expanded" the scope of conduct that was previously available to justify a costs award against a lawyer: [101] Prior to the enactment of the Rules, the Supreme Court of British Columbia had power to make orders against lawyers to pay costs personally under

the court's inherent jurisdiction. Such orders were generally made only in cases of "serious misconduct". The Rules, particularly Rule 57(30) and its successor Rule 57(37), have, however, expanded the scope of conduct which might support costs orders against lawyers. The Court now has a discretion to order a lawyer to pay costs where he has "caused costs to be incurred without reasonable cause, or has caused costs to be wasted through delay, neglect or some other fault". [102] Under Rule 57(37), mere delay and mere neglect may, in some circumstances, be sufficient for such an order against a lawyer. [Per Finch J.A.; emphasis added.] See also Nuttall v. Krekovic, 2018 BCCA 341 at paras. 34-35. [27] An order for costs against a lawyer who is not a party to an action is also available under a superior court's inherent authority to supervise the conduct of the lawyers who appear before it. As explained by Gascon J., writing for the majority in Jodoin: [16] The courts have the power to maintain respect for their authority. This includes the power to manage and control the proceedings conducted before them (R. v. Anderson, 2014 SCC 41, [2014] 2 S.C.R. 167, at para. 58). A court therefore has an inherent power to control abuse in this regard (Young v. Young, [1993] 4 S.C.R. 3, at p. 136) and to prevent the use of procedure "in a way that would be manifestly unfair to a party to the litigation before it or would in some other way bring the administration of justice into disrepute": Canam Enterprises Inc. v. Coles (2000), 51 O.R. (3d) 481 (C.A.), at para. 55, per Goudge J.A., dissenting, reasons approved in 2002 SCC 63, [2002] 3 S.C.R.

307. This is a discretion that must, of course, be exercised in a deferential manner (Anderson, at para. 59), but it allows a court to "ensure the integrity of the justice system" (Morel v. Canada, 2008 FCA 53, [2009] 1 F.C.R. 629, at para. 35). [17] It is settled law that this power is possessed both by courts with inherent jurisdiction and by statutory courts (Anderson, at para. 58). It is therefore not reserved to superior courts but, rather, has its basis in the common law: Myers v. Elman, [1940] A.C. 282 (H.L.), at p. 319; M. Code, "Counsel's Duty of Civility: An Essential Component of Fair Trials and an Effective Justice System" (2007), 11 Can. Crim. L.R. 97, at p. 126. [18] There is an established line of cases in which courts have recognized that the awarding of costs against lawyers personally flows from the right and duty of the courts to supervise the conduct of the lawyers who appear before them and to note, and sometimes penalize, any conduct of such a nature as to frustrate or interfere with the administration of justice: Myers, at p. 319; Pacific Mobile Corporation v. Hunter Douglas Canada Ltd., [1979] 1 S.C.R. 842, at p. 845; [Attorney‑General of Quebec et al. v. Cronier (1981), 63 C.C.C. (2d) 437 (Que. C.A.)] at p. 448; Pearl v. Gentra Canada Investments Inc., [1998] R.L. 581 (Que. C.A.), at p.

587. As officers of the court, lawyers have a duty to respect the court's authority. If they fail to act in a manner consistent with their status, the court may be required to deal with them by punishing their misconduct (M. Code, at p. 121). [Emphasis added.] [28] It is not apparent from the reasons of the chambers judge whether he relied on Rule 14‑1(33)(c) to order special costs against the appellant or the court's inherent authority. At the hearing of the appeal, the question arose as to whether Rule 14‑1(33) has subsumed the common law on costs against a party's lawyer, thereby restricting a judge in civil cases to the specific orders enumerated therein (see, for example, the Court's comments in Gichuru v. Smith, 2014 BCCA 414 at para. 84). [29] In my view, it is not necessary to resolve that question on the appeal. Under both scenarios: a judge must exercise restraint when ordering costs against a lawyer; the same test applies for imposing special costs; and the lawyer must receive notice of the potential for a personal costs award and be given an opportunity to be heard. [30] In Nazmdeh, the Court described the power to order costs against legal counsel as one that must be used "sparingly": [103] The power to make an order for costs against a lawyer personally is discretionary. As the plain meaning of [now Rule 14‑1(33)] and the case law indicate, the power can be

exercised on the judge's own volition, at the instigation of the client, or at the instigation of the opposing party. However, while the discretion is broad, it is, as it has always been, a power to be exercised with restraint. All cases are consistent in holding that the power, whatever its source, is to be used sparingly and only in rare or exceptional cases. [per Finch J.A.; emphasis added.] See also Pierce v. Baynham, 2015 BCCA 188 at paras. 41-42; Young v. Young, [1993] 4 S.C.R. 3 at p. 136. [31] The need for "restraint and caution" was similarly emphasized in Jodoin, albeit in the context of a criminal proceeding: [26] The type of conduct that can be sanctioned [through an order for costs] was analyzed in depth in [Attorney‑General of Quebec et al. v. Cronier (1981), 63 C.C.C. (2d) 437 (Que. C.A.)]. L'Heureux‑Dubé J.A. concluded after reviewing the case law that the courts are justified in exercising such a discretion in cases involving abuse of process, frivolous proceedings, misconduct or dishonesty, or actions taken for ulterior motives, where the effect is to seriously undermine the authority of the courts or to seriously interfere with the administration of justice. She noted, however, that this power must not be exercised in an arbitrary and unlimited manner, but rather with restraint and caution. The motion judge in the case at bar properly relied on Cronier, and

the Court of Appeal also endorsed the principles stated in it. [Emphasis added.] [32] As a matter of settled principle, an order for special costs against a party's lawyer attracts a particularly stringent threshold. Nazmdeh makes clear that ordering counsel to personally pay special costs under Rule 14‑1(33), as opposed to party and party costs, requires a finding of "reprehensible" conduct (at para. 102). Consistent with the rationale underlying the need for restraint in awarding costs against counsel, generally, the stringent test for special costs respects the duties of lawyers to protect the confidentiality of their clients and to advocate with courage (Nuttall at para. 27, citing Young at p. 136). It also takes into consideration the uniquely punitive nature of the award. [33] In Nuttall, the meaning of "reprehensible" conduct in the context of special costs against a lawyer was explained through reference to the "high threshold" articulated for a costs award in Jodoin. There, Justice Gascon noted that: [29] an award of costs against a lawyer personally can be justified only on an exceptional basis where the lawyer's acts have seriously undermined the authority of the courts or seriously interfered with the administration of justice. This high threshold is met where a court has before it an unfounded, frivolous, dilatory or vexatious proceeding that denotes a serious

abuse of the judicial system by the lawyer, or dishonest or malicious misconduct on his or her part, that is deliberate. Thus, a lawyer may not knowingly use judicial resources for a purely dilatory purpose with the sole objective of obstructing the orderly conduct of the judicial process in a calculated manner. [Emphasis added.] [34] As such, in this province, a special costs award against a lawyer, whether grounded in Rule 14‑1(33)(c) or the superior courts' inherent authority, requires a finding of "reprehensible" conduct that amounts to a "serious abuse of the judicial system by the lawyer, or dishonest or malicious misconduct on [their] part, that is deliberate" (Jodoin at para. 29). An order for the personal payment of special costs cannot be justified on a "mistake, error in judgment or even negligence" (Nuttall at para. 29). Instead, there must be a "marked and unacceptable departure from the standard of reasonable conduct expected of a player in the judicial system" (Jodoin at para. 27, quoted with approval in Nuttall at para. 28). Was the special costs order procedurally unfair? [35] In this case, the appellant appropriately does not contest the power to order that a lawyer pay special costs. Instead, he complains that the manner in which the chambers judge exercised that authority was procedurally unfair. [36] In support of his position, the appellant emphasizes the

relationship between procedural fairness and the punitive nature of a special costs award. In Gichuru v. Pallai, the punitive aspect of special costs, even as applied against parties to an action, was held to raise procedural fairness concerns: [88] the punitive nature of special costs demands some degree of procedural fairness. An opportunity to respond to a claim for special costs must generally be provided. This Court has already held that the assessment of special costs, absent consent, "requires a certain level of procedural fairness": Smith at para.

103. As Justices Harris and Goepel stated in Smith, this typically means providing the party against whom costs are awarded the opportunity to test the reasonableness of the fees underlying the award. I see no principled reason why the fairness that applies to the assessment of special costs should not apply to an award of the same. [Per Kirkpatrick J.A.; emphasis added.] The appellant says that when special costs are contemplated to censure a lawyer's conduct, procedural fairness takes on even greater importance. [37] Rule 14‑1 explicitly embodies a procedural fairness requirement specific to costs ordered against counsel. Under Rule 14‑1(35), an order that a party's lawyer be personally responsible for all or part of that party's costs, whether assessed as special costs or party and party, "must not be made unless the lawyer is present or has been given notice". In Jodoin, notice of the potential for a personal costs award against a lawyer was held to be necessary to enable the lawyer adequate opportunity to prepare a response, including calling evidence relevant to the issue where appropriate. [38] In my view, the procedural fairness mandated by Rule 14‑1(35) should be approached in a manner consistent with the fairness requirements at common law, discussed in Jodoin. Moreover, this should be the case whether the potential for a costs award against counsel arises before,

during or after the proceeding at issue: [35] a court obviously cannot award costs against a lawyer personally without following a certain process and observing certain procedural safeguards (Y.‑M. Morissette, "L'initiative judiciaire vouée à l'échec et la responsabilité de l'avocat ou de son mandant" (1984), 44 R. du B. 397, at p. 425). However, it is important that this process be flexible and that it enable the courts to adapt to the circumstances of each case. [36] Thus, a lawyer upon whom such a sanction may be imposed should be given prior notice of the allegations against [them] and the possible consequences. The notice should contain sufficient information about the alleged facts and the nature of the evidence in support of those facts. The notice should be sent far enough in advance to enable the lawyer to prepare adequately. The lawyer should, of course, have an opportunity to make separate submissions on costs and to adduce any relevant evidence in this regard. Ideally, the issue of awarding costs against the lawyer personally should be argued only after the proceeding has been resolved on its merits. [Emphasis added.] [39] The appellant says he did not receive notice of the potential for a special costs award, whether as contemplated by Rule 14‑1(35) or Jodoin. [40] On dismissal of the Undertaking Application, none of the parties sought costs against the appellant

personally. Ms. Wingson concedes this point on the appeal. It is confirmed by a review of the record. [41] At the September 2016 hearing, counsel for Ms. Wingson was asked by the chambers judge whether Ms. Wingson was "seeking special costs simply against the litigants or against Mr. Muirhead personally". Counsel responded, "Simply against the litigants". In his post‑hearing submissions on the Undertaking Application, counsel for Ms. Wingson described the executors as "recklessly indifferent" to the deficiencies in the "misconceived application" and sought an award of special costs for their conduct. The written submissions for Ms. Miller sought special costs against the executors and other beneficiaries of the estate "personally". No mention was made of a possible award against the appellant. [42] The appellant's post‑hearing submissions evince an understanding on his part that costs on the Undertaking Application had been ordered against his clients and that the only issue left for him to address on the matter was whether those costs should be assessed as special costs or party and party. He argued in favour of party and party costs, assessed on Scale B: Undertaking Application · This application has been dismissed with costs against the Walsh Executors · Although the application was ill‑conceived, it was brought in good faith in the context of litigation that has been hard

fought on all sides · No allegation of fraud or dishonesty was made - there is an evidentiary basis to the allegation Ms. Wingson breached an undertaking through inadvertence · Costs should be at Scale B [43] In my view, the appellant's understanding of what was required of him was reasonable in light of the fact that none of the parties sought costs against him personally. I also note that during an exchange with the chambers judge, the appellant referenced the order for costs on the Undertaking Application as an award made against his clients and the judge did not take issue with that characterization: MR. MUIRHEAD: Well, you've already awarded costs against my client -- the executors -- THE COURT: Yes. MR. MUIRHEAD: -- for the application they brought, and in my submission, those costs should be at Scale B. It was an error in judgment and an incorrect application, ultimately, that was not allowed, but in my submission, isn't the sort of reckless application that results -- that ought to result in an order of special costs. [Emphasis added.] [44] Rule 14‑1(35) and Jodoin make clear that lawyers facing a costs sanction in their role as counsel "should be given prior notice of the allegations and the possible consequences" (Jodoin at para. 36). That did not occur here, and it rendered the process leading to the order for special costs against the appellant procedurally unfair.

I reach this conclusion appreciating that, as noted in Jodoin, procedural fairness requirements are flexible and contextually applied. In deciding whether a procedure was unfair, relevant considerations might include: the type of costs at issue; the extent to which the potential for a personal award would have been apparent from the parties' materials or discussion before the presider; the nature and scope of the impugned conduct; the complexity of the litigation; and the circumstances surrounding the behaviour under review. These, as well as other factors not contemplated here, may logically inform the degree of notice and preparation reasonably required by the lawyer to respond to the potential for a personal costs award. Allowing context to inform the analysis invariably means that what might be required to ensure a fair process in one case will not necessarily be the same for another (Jodoin at para. 35). [45] Because of the lack of notice, the appellant was deprived of an opportunity to make submissions on whether an order for costs (let alone special costs) should be made against him personally. Instead, he was left with the understandable impression that any additional submissions on costs specific to the Undertaking Application should focus on the difference between special costs and party and party costs as they related to his clients. [46] Ms. Wingson contends that

notwithstanding the way in which things unfolded at the hearing, the appellant ought to have realized that the chambers judge might contemplate an order that he pay special costs. The respondent Dana Miller makes a similar argument on the appeal. From their perspective, it was abundantly clear that the chambers judge had serious concerns about the manner in which the appellant advanced the Undertaking Application. [47] With respect, on the record in this case, that contention is without merit. The chambers judge provided no indication that he was considering a personal award against the appellant; no one was asking for that type of an order; and, objectively, the appellant's take on the matter post‑hearing was reasonable. This is the way the judge himself framed the outstanding issue on the Undertaking Application before sending the parties away to provide written submissions: THE COURT: Okay. So somebody help me here summarize the issues that I have to decide. It's the question, first, of Ms. Wingson seeking special costs against Mr. Muirhead's clients in respect of the application I dismissed this morning regarding the settlement agreement. [Emphasis added.] [48] Counsel for Ms. Miller subsequently clarified for the judge that his client was also seeking special costs on the Undertaking Application. However, in so doing, he did not ask that the judge consider anyone other

than "Mr. Muirhead's clients" as the payors: Mr. JOSEPHSON [Counsel for Ms. Miller]: So with respect to the applications before Your Lordship, My Lord, the one forwarded by Mr. Muirhead, special costs in favour of Ms. Wingson for the reasons that have been described, special costs in favour of Ms. Miller for the reasons that have been described. THE COURT: So special costs in favour of Ms. Miller on Mr. Muirhead's application -- MR. JOSEPHSON: Yes. THE COURT: -- and on your application? MR. JOSEPHSON: Exactly. [49] In her factum, Ms. Wingson further contends that the costs outcome on the Undertaking Application was substantively fair, despite there being no notice of a potential order for personal payment. She says the issue of costs against legal counsel was "front and centre" at the hearing because of the executors' request for costs against Ms. Wingson. There was also discussion of the legal test for special costs, as Ms. Wingson and Ms. Miller both sought special costs against the executors on dismissal of the Undertaking Application, as well as in their applications for relief related to implementation of the settlement agreement. Ms. Wingson says that the hearing transcript makes it clear the judge understood that an order for special costs requires a finding of "reprehensible" conduct and that he would have brought this understanding to bear in reaching his determination

vis‑à‑vis the appellant. Most importantly, the appellant was present at the hearing and "unconditionally took full responsibility" for the Undertaking Application. By doing so, he effectively "invited [the chambers judge] to make any costs award against him personally". [50] I do not find that submission persuasive. It is correct that there was discussion of principles relevant to a special costs award. However, the focus was not on how those principles might apply to the appellant's personal conduct in respect of the undertaking, justifying an award against him as counsel. Furthermore, on my reading of the transcript, the appellant accepted responsibility for an "inappropriate" undertaking, describing it as an "error in judgment". I agree with appellant's counsel that he apologized to the chambers judge for that error. He did not accept responsibility for conduct sufficient to ground personal liability for special costs. [51] An order that legal counsel pay special costs is a serious matter. The judge was understandably frustrated with the decision to advance the Undertaking Application. He thought the application was "unnecessary" and "misconceived". It is also apparent from the transcript that he was concerned about intransigence among counsel, generally, and the aggressiveness of positions taken in respect of each other's conduct. This included the appellant. At one point,

the judge chided the lawyers for "slinging mud" at each other. In his reasons on costs, he expressed the view that counsel for all sides in the estate litigation may have lost sight of the bigger picture, becoming "too focused at times on asserting the technical correctness of their positions on matters of procedure". [52] Nonetheless, before deciding that the appellant should personally pay special costs, the judge was obliged to make him aware of the potential for that ruling in light of the significant consequences. The appellant was entitled to an audience on that issue and he was deprived of the opportunity. In the particular circumstances of this case, I find the failure to give the appellant notice of the potential for personal payment resulted in an unfairly imposed sanction. Was there an error in principle? [53] In light of my conclusion on the first ground of appeal, it is not necessary to determine whether the chambers judge applied the correct legal test for special costs against the appellant, as set out earlier in these reasons. The order cannot stand because it was procedurally unfair. What is the appropriate remedy? [54] Rule 14‑1(33)(c) allows a lawyer to be held "personally liable for all or part of any costs that his or her client has been ordered to pay to another party" (emphasis added). Consistent with this language, and for the benefit of possible

appellate review, a superior court that orders costs against legal counsel in a civil case should: a) specify that there has been an order for costs in favour of one or more parties; b) specify the nature of those costs (special or party and party); and, c) if the payor of the costs will be a party's lawyer, identify the lawyer and indicate whether they are personally responsible for all or only part of the costs. [55] To exemplify, this was the approach taken in Hannigan v. IKON Office Solutions Inc./Bureau‑Tech IKON Inc. (1997), 70 A.C.W.S. (3d) 25 (B.C.S.C.). There, relying on his inherent jurisdiction (see Nazmdeh at para. 90), the chambers judge ordered that the defendant's lawyer pay special costs in a wrongful dismissal action for an application to set aside subpoenas. The judge granted costs to the applicants, directed that they be assessed as special costs, and then ordered that the defendant's lawyer be "personally liable for all such costs" (at para. 37). The special costs award was appealed. This Court upheld the special costs assessment. However, it determined that the defendant's lawyer had been erroneously ordered to pay those costs and set aside that part of the order, leaving the remainder of the costs award intact: Hannigan v. IKON Office Solutions Inc./Bureau‑Tech IKON Inc. (1998), 61 B.C.L.R. (3d) 270 (C.A.) at paras. 2, 21. [56] Here, the order below

provided only for special costs payable by the appellant. As a result, once that order is set aside, it leaves only the pronouncement at the September 2016 hearing that the Undertaking Application was dismissed, "with costs". There is no order designating the payor of those costs or directing that they be assessed as special costs. [57] Both Ms. Wingson and Ms. Miller submit that if the appeal is allowed, the executors should be ordered to pay special costs, consistent with the positions these respondents advanced in their written submissions after the chambers hearing. They are each of the view that the executors have taken unreasonable positions in the estate litigation, have purposefully delayed the resolution of contested issues, and that as a result of their conduct, the affected parties have had to expend wasted resources. They contended below, and again in the appeal, that the Undertaking Application formed but one part of a long‑standing pattern of obstructive tactics. [58] As an alternative position, Ms. Wingson says the appellant should be ordered to pay special costs, based on his role as counsel in bringing the Undertaking Application and his admission of responsibility at the chambers hearing. Ms. Miller supports this position. [59] Counsel for the appellant accedes that if the special costs award is set aside, this Court has jurisdiction to make its own assessment

of the record and determine whether a special costs award is justified, against the executors or the appellant. By virtue of the appeal, the appellant has now had a full opportunity to respond to the possibility of a costs award against him. However, his counsel strenuously argues that at worst, the Undertaking Application reflected an error in judgment and did not come close to the type of conduct required to meet the test for reprehensibility. As a result, the only costs appropriately payable on the Undertaking Application are party and party costs against the executors, consistent with what would ordinarily flow under the Rules with dismissal of their application. [60] In my view, this Court should not stand as a court of first instance on the question of whether costs for the Undertaking Application should be assessed as special costs, and, if so, who should pay them. The executors did not participate in the appeal. Without their participation, the Court is deprived of the ability to fairly assess their role in advancing the Undertaking Application, its motivation, or whether the steps taken by the appellant in carrying out his instructions and his overall approach were consistent with the executors' intent. We do not have the benefit of an assessment or findings by the chambers judge on these or other potentially relevant issues. [61] At the same time, I do not consider it

in the interests of justice to remit this matter back to the Supreme Court for another hearing on costs. Doing so will further delay finality in the estate litigation and require the expenditure of additional resources by the affected parties. It is readily apparent from Ms. Miller's compelling submissions on the appeal that the litigation has taken both an emotional and financial toll on her. A further hearing on costs will only exacerbate that situation. [62] Accordingly, I consider it appropriate that the Court exercise its discretionary authority under s. 9(1)(a) of the Court of Appeal Act, R.S.B.C. 1996, c. 77, to make the order that, in the absence of a special costs assessment and a Rule 14‑1(33)(c) determination, would have ordinarily resulted from dismissal of the Undertaking Application, namely, party and party costs payable by the executors. Disposition [63] For the reasons provided, I would admit the fresh evidence, allow the appeal and set aside the order for special costs against the appellant. [64] Applying Rule 14‑1(12) of the Supreme Court Civil Rules, I would order that costs on the Undertaking Application flow to Ms. Wingson and Ms. Miller, payable forthwith by the executors as party and party costs, assessed on Scale B. [65] Finally, the appellant seeks his costs on the appeal. The chambers judge imposed the special costs award of his own initiative. Ms.

Wingson and Ms. Miller did not seek that order. The order has been set aside for procedural unfairness, a matter not within their control. In light of the circumstances, I do not consider it appropriate that Ms. Wingson and Ms. Miller be responsible for the appellant's costs. As such, I would order that each party bear their own costs on the appeal. "The Honourable Madam Justice DeWitt‑Van Oosten" "The Honourable Chief Justice Bauman" "The Honourable Mr. Justice Harris"