Who Pays Legal Costs in a BC Lawsuit? Costs Awards and Offers to Settle

If you are thinking about suing, or you have been sued, one of the first questions is who will end up paying the lawyers. In BC the short answer is that the loser usually pays some of the winner's costs, but the details make a real difference to whether a case is worth pursuing.

This guide explains how costs are awarded in BC Supreme Court, why the amount recovered is usually less than the actual legal bill, how formal offers to settle can change the outcome, and how the Small Claims rules differ.

The basic rule: costs follow the event

In BC Supreme Court, Rule 14-1(9) of the Supreme Court Civil Rules says the costs of a proceeding must be awarded to the successful party unless the court orders otherwise. This is often called "loser pays", but that phrase oversimplifies it in two ways.

First, the court has discretion. It can depart from the usual rule, award costs for some steps and not others, or penalise a party for doing something improperly or unnecessarily (Rule 14-1(14) and (15)). Second, "costs" does not mean your whole legal bill. It usually means a fixed amount calculated under a tariff.

How much is recovered: the Appendix B tariff

Unless the parties agree on an amount or the court orders otherwise, costs are assessed as party and party costs under Appendix B of the Rules. The tariff gives each step in a case a number of units, and each unit has a dollar value based on the scale the court sets:

• Scale A: $60 a unit, for matters of little or less than ordinary difficulty.
• Scale B: $110 a unit, for matters of ordinary difficulty.
• Scale C: $170 a unit, for matters of more than ordinary difficulty.

The successful party also recovers reasonable disbursements, such as filing fees and the cost of reports the case needed, that were necessarily or properly incurred (Rule 14-1(5)). Appendix B itself says a costs award is not grossly inadequate merely because it differs from what a party actually spent on lawyers. In practice, tariff costs usually cover only part of the actual bill, so even a successful party normally pays some of its own legal fees.

Special costs

The court can instead order special costs, which are assessed on what was proper or reasonably necessary to conduct the case, looking at factors such as complexity, time spent and the conduct of the parties (Rule 14-1(3)). Special costs are exceptional and are not something to budget on.

Smaller claims in Supreme Court

The Rules discourage bringing small cases to Supreme Court. If a plaintiff recovers a sum within the Provincial Court's small claims jurisdiction, they are not entitled to costs other than disbursements, unless the court finds there was sufficient reason to sue in Supreme Court (Rule 14-1(10)).

For mid-sized cases, Rule 14-1(1)(f) applies the fast track costs provisions in Rule 15-1, unless the court orders otherwise, where the only relief is money or property and the judgment is $100,000 or less, or where the trial took 3 days or less. In those cases, costs are dealt with under those fast track provisions rather than the usual Appendix B assessment.

Formal offers to settle under Rule 9-1

A formal offer to settle is one of the most useful tools in a BC lawsuit. To count under Rule 9-1, the offer must be in writing, served on all parties of record, and contain a specific sentence reserving the right to bring it to the court's attention on costs after judgment. The court is not told about the offer until everything except costs has been decided.

If the case goes to judgment, the court may consider the offer and can:

• deprive a party of some or all of its costs for steps after the offer;
• award double costs for some or all steps after the offer;
• award a party the costs it would have received had the offer not been made; or
• where a defendant's offer was at least as good for the plaintiff as the judgment, award the defendant its costs for steps after the offer.

In deciding, the court may consider whether the offer ought reasonably to have been accepted when made or later, how its terms compare with the judgment, the parties' relative financial circumstances and any other factor it considers appropriate (Rule 9-1(6)). An offer does not lapse just because a counter offer is made. If a plaintiff accepts an offer for a sum within small claims jurisdiction, the costs restriction in Rule 9-1(7) applies.

The practical effect is that a reasonable offer puts pressure on the other side. Rejecting one can cost a party not only its own post-offer costs but double the other side's tariff costs.

Small Claims Court works differently

In Provincial Court small claims, there is no Supreme Court-style tariff. Under Rule 20, the unsuccessful party generally pays the successful party's filing and service fees and other reasonable expenses directly related to the case, and a judge may order up to 10% of the amount claimed against a party who went through trial with no reasonable basis for success.

Small claims has its own offer process in Rule 10.1. An offer is made on Form 18 and generally must be served within 30 days after the settlement conference or trial conference, whichever comes first; the other side has 28 days to accept. If the offer is rejected and the trial result is no better for the party who rejected it, the judge may order a penalty of up to 20% of the offer. The rule does not apply to simplified trials under Rule 9.1 or to claims that started at the Civil Resolution Tribunal. Our guide to what happens in Small Claims Court covers the rest of that process.

Thinking about costs from day one

Costs exposure should shape your strategy from the start: where to sue, how hard to push, and when to make or accept an offer. For an overview of each stage, see how a civil lawsuit works in BC Supreme Court.

Facing a lawsuit or an offer to settle? Know your costs exposure

Our litigation lawyers can assess your claim or defence, estimate the costs you may recover or owe, and prepare, review and respond to formal offers to settle at the right moments in your case.

Call 604-259-2844 or send us a message to arrange a consultation at our Vancouver office.