Court of Appeal Decision of the Week

Sometimes it’s The Company You Keep: Special Cost Awards and ‘Attacks’ on Reputation

Case: The Owners, Strata Plan LMS3259 v. Sze Hang Holding Inc., 2015 BCCA 424 (CanLII) 

Keywords: special cost award; attack on reputation; vexatious litigants; litigation tactics

Synopsis:

Special costs are awarded to the Respondents (The Owners, Strata Plan LMS3259, Hanson Laud, John Wong, Sammy Chung, Martin Li and Billy Chui) after the Appellants (Mr. Leon Lam, Sze Hang Holding Inc., Extra Gift Exchange Inc. and Richmond Liquidation Sales) resort to “attacks” on the reputation of their opponents.

The Appellants’ behaviour is such that, the Court of Appeal decides the matter has, “…reached the point where it must deal summarily with the litigation conduct”. In a separate matter, the litigants are described by Madam Justice Saunders as having been the architects of a “quagmire”.

In their submissions for special costs, the Respondents summarized the allegations and personal “attacks” made against them as follows:

  1. accusations that the Respondents are withholding material facts from the Court;
  2. that the condo council members lack integrity, are corrupt and continuously make misstatements and misrepresentations to the courts;
  3. that condo council members are using condo funds for their own personal benefit;
  4. that condo council members are colluding with the condo management agent and the developer of the condo corporation to protect the developer and also for personal financial gain;
  5. that condo council members have been supporting the fraudulent activities of the developer;
  6. that condo council members have “hijacked” the condo corporation using violent physical force paid for by condo funds; and
  7. that the Respondents are guilty of fraud, bribery and conspiracy.

The allegations made by the Appellants against counsel for the Respondents included:

  1. vague allegations that counsel had acted improperly in drafting court orders;
  2. allegations that counsel withheld material facts and made false and deceptive submissions to the courts; and
  3. allegations that counsel falsified court orders and defrauded the court.

The Appellants continued this behaviour despite prior special costs awards against them and warnings to desist.

For the Court of Appeal, Mr. Leon Lam’s answer (Mr. Lam represented the condo corporation; not a lawyer) to the application for special costs was twofold:

  • that Sze Hang Holding Inc. and Extra Gift Exchange Inc. (as co-litigants) did not make the accusations to which objection is taken because they were represented separately; and
  • that the above accusations made by himself and Richmond Liquidation Sales are justified on the record.

The Court of Appeal rejected both submissions and, applying the principles of Garcia v. Crestbrook Forest Industries Ltd. (1994), 9 B.C.L.R. (3d) 242 (C.A.) and Moon Development Corporation v. Pirooz, 2015 BCCA 213, held that Mr. Leon Lam produced “no effective answer to the allegation that he has engaged in reprehensible conduct deserving of the Court’s rebuke”.

Importance:

The Court expressed the view that self-represented litigants do not have licence to accuse others of dishonesty unless:

  • the accusations are grounded in evidence;
  • the accusations are relevant to the proceedings; and
  • they are responsibly made.

By setting out some minimum guidelines, the Court of Appeal confirms that courtrooms are not to be treated as a ‘free fire zone’ where anything goes and anything can be said. Instead, where allegations of serious impropriety are made against individuals, corporations, or their counsel, it is first necessary to consider the potential harm.

One pauses here to note the harm to consider is not simply the harm caused to parties opposite. Rather, before making accusations of dishonesty, it is necessary to consider the harm that could be done to one’s own reputation, and the reputation of one’s clients. Far from a ‘free fire zone’, participants in the legal process must be more precise.

The Court was careful to specify that Mr. Leon Lam was not required to pay for his courtroom behaviour alone – instead, Mr. Lam’s corporate associates and co-litigants are among those who will bear responsibility to pay the special costs awarded in this matter.

The Court found “all three parties associated with Mr. Lam linked armed in their relentless onslaught against the respondents”. A message to corporate solicitors and corporate legal divisions: abstain from vexatious litigation, and steer clear of counsel who are known to employ prolixity and confusion as a courtroom tactic. If not, you may be required to pay special costs.

Concluding Thoughts:

From a quote attributed to George Washington it is said: “associate with [people] of good quality if you esteem your own reputation; for it is better to be alone than in bad company”. It is important to note that, before this matter was decided, Donald J.A. of the Court of Appeal must have referred to the opinion of his colleague Madam Justice Saunders in The Owners, Strata Plan LMS3259 v. Sze Hang Holding Inc., 2012 BCCA 196 (CanLII). It is possible that, Judges talk to one another – and so it is vital for counsel to ensure they are saying the right things.

The Court also made explicit reference to the “prolix” and confusing style employed by the Appellants in both their pleadings and submissions. A crucial aspect of reputation in the courtroom stems from the power of the written word; taking the time to present an organized written argument makes all the difference – something our staff and colleagues at Supreme Advocacy do every day. To speak plainly, call/email us if we can write a factum for you.

Counsel for the Appellants: Leon Lam

Counsel for the Respondents: Jonathan Chatten (Lesperance Mendes, Vancouver)

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Posted: Wednesday, October 21, 2015