Request denied for specific category of costs for allegedly reprehensible conduct of past legal counsel in China
In a case where the plaintiff requested the enforcement of Chinese commercial judgments in the Supreme Court of British Columbia, the judge doubled certain costs owed by the plaintiffs to the defendants.
The plaintiffs sought the recognition and enforcement of two commercial judgments that they obtained in the Intermediate People’s Court of Longyan City in China against the defendants, retired individuals who resided in British Columbia. The underlying case involved amounts owing under a distribution agreement.
Last January, the BC court dismissed the plaintiffs’ action due to concerns over credibility and procedural fairness. After this ruling, the parties could not agree on costs.
The plaintiffs argued that each party should bear their own costs or that the court should offset any costs awarded to the defendants against the amount that the defendants owed to the plaintiffs under the Chinese judgments.
On the other hand, the defendants asked for special costs on the basis that the plaintiffs engaged in reprehensible conduct during the litigation. Alternatively, they requested double costs for all steps taken after Nov. 15, 2019, the date of a formal settlement offer.
In Lonking (China) Machinery Sales Co. Ltd. v Zhao, 2024 BCSC 1437, the British Columbia Supreme Court ordered the plaintiffs, on a joint and several basis, to pay the defendants standard costs for all steps taken until Nov. 15, 2019 and double costs for all steps taken after that date.
The court denied the defendants’ request for special costs based on the allegedly reprehensible conduct of the plaintiffs’ former external legal counsel in China. While the court found counsel’s evidence troubling in terms of reliability and credibility, it decided that this did not amount to reprehensible behaviour that justified an award of special costs.
However, the court found the defendants entitled to double costs under r. 9-1 of the Supreme Court Civil Rules, BC Reg 168/2009, given that the plaintiff rejected numerous reasonable settlement offers made by the defendants and instead advanced their case to trial.
The court called attention to the disparity in the parties’ financial circumstances. “The defendants are retired individuals facing protracted and expensive litigation,” wrote Justice Sandra Wilkinson for the court. “The plaintiffs are a very large, international, publicly traded conglomerate and could afford to take the risks associated with losing claims of this size.”
