Citation:

Hull Limited v. Vancouver Career College

(Burnaby) Inc.,
2014 BCSC 757
Date: 20140502
Docket: S130064
Registry: Vancouver

Between:
Hull Limited
Plaintiff
And
Vancouver Career College (Burnaby) Inc.
Defendant

Before: The Honourable Mr. Justice Pearlman

Reasons for Judgment

on Special Costs
Counsel for the Plaintiff:

Gordon G. Plottel

Counsel for the Defendant:

Kevin A. McLean

Written Submissions Received

from Plaintiff:

March 17,
& March 28, 2014

Written Submissions Received

from Defendant:

March 25, 2014

Place and Date of Judgment:

Vancouver, B.C.
May 2, 2014

2014 BCSC 757 (CanLII)

IN THE SUPREME COURT OF BRITISH COLUMBIA

Hull Limited v. Vancouver Career College (Burnaby) Inc.

Page 2

INTRODUCTION
[1]

On February 20, 2014, by written Reasons for Judgment indexed at 2014

Limited judgment against the defendant, Vancouver Career College (Burnaby) Inc.
(VCC), in the amount of $157,273.99.
[2]

[3]

In granting judgment for the plaintiff, the Court made the following findings:
(a)

Mr. Anthony Hull, who is a Director of Hull Limited, loaned

$125,000 to LearningWise Inc. (LINC) before October 2008,
when VCC acquired the majority of shares in LINC;

(b)

by a novation agreement made in writing on November 18,

2008, the defendant, for good consideration, assumed LINCs
obligation to repay the loan;

(c)

on April 30, 2010, Mr. Hull made an absolute assignment of his

interest in the loan to the plaintiff;

(d)

on August 18, 2011, the defendant, by its Vice President and

Senior Counsel, confirmed receipt of notice of the assignment of
the loan to Hull Limited;

(e)

on November 29, 2012, the defendant, through its in-house

counsel, confirmed and acknowledged the debt owed to Hull
Limited;

(f)

the defendant failed to repay the loan when it came due on

November 30, 2012, and made no payment of principal or
interest in response to the plaintiffs demand for repayment of
the loan; and

(g)

shortly before the plaintiff commenced this action, the defendant

through its in-house counsel, requested an extension of time for
repayment of the debt, which the plaintiff declined.

Following release of the Reasons for Judgment and before entry of the

Courts order, counsel for the plaintiff requested leave to make submissions on
special costs. I granted counsels request and have now received written
submissions from the parties.

2014 BCSC 757 (CanLII)

BCSC 277, this Court, on the summary trial application of the plaintiff, granted Hull

Hull Limited v. Vancouver Career College (Burnaby) Inc.

Page 3

POSITIONS OF THE PARTIES

[4]

The plaintiff seeks special costs on the basis that the defendants conduct

defendant showed reckless indifference to the manifest deficiency in the merits of

its position, and used the litigation process as an improper means of delaying
repayment of the debt it had previously admitted was owed to the plaintiff.
[5]

The defendant submits that it is not reprehensible for a party with a weak

case to raise the defences available to it. Counsel for VCC argues that his client
had legitimate grounds to contest both the summary trial application as well as an
earlier, unsuccessful summary trial application heard on August 6, 2013.
[6]

In his Affidavit #1 sworn in support of the plaintiffs first summary trial

application, Mr. Hull deposed that he had arranged for Hull Limited to make the loan
of $125,000 to LINC. However, some of the documents attached as exhibits to
Mr. Hulls affidavit referred to repayment of the loan to Mr. Hull personally, rather
than to Hull Limited. The defendant argued that the plaintiff had failed to prove
whether the lender was Mr. Hull or Hull Limited, and that the case was not suitable
for disposition by summary trial where there was no evidence of any assignment of
the loan from Mr. Hull to the plaintiff.
[7]

After counsel completed their submissions on August 6, 2013, when the Court

reconvened for delivery of oral Reasons for Judgment, defence counsel produced,
from documents provided to him by his client, a copy of a document dated April 30,
2010, purporting to be an assignment of the loan from Mr. Hull to the plaintiff.
Neither party had previously listed the assignment agreement. The document was
not before the Court as an exhibit to an affidavit. Accordingly, I determined that the
parties should have the opportunity to investigate the circumstances in which that
document came into existence, and its validity. The Court dismissed the plaintiffs
first summary trial application, with liberty to reapply.

2014 BCSC 757 (CanLII)

during the course of the litigation was reprehensible. The plaintiff submits that the

Hull Limited v. Vancouver Career College (Burnaby) Inc.

[8]

Page 4

The plaintiff determined that Mr. Hull had in fact made the assignment of the

loan to Hull Limited and amended its Notice of Civil Claim accordingly. Hull Limited
then filed its second application for summary trial on September 30, 2013. The

reasons for which the plaintiff bears no responsibility, the second summary trial
application was adjourned twice, and was not heard until February 12, 2014.
[9]

On the second summary trial application, the defendant acknowledged that it

had received notice in writing of the assignment of the debt to Hull Limited, but
argued that the plaintiffs failure to produce any document or instrument showing that
Mr. Hull had actually loaned $125,000 to LINC precluded the plaintiff from obtaining
judgment by summary trial on the debt. The Court determined that on the summary
trial of a claim in debt where a written loan agreement was not produced, it had to be
satisfied on all of the evidence that it would be able to find the material facts
establishing the debt alleged, that there was reliable supporting evidence for the
loan, and that any conflicts in the evidence could be resolved without crossexamination or a conventional trial.
[10]

In the result, on the whole of the evidence, including Mr. Hulls affidavit

evidence on the second application that he loaned $125,000 to LINC, VCCs

assumption of the obligation of LINC to repay the loan to Mr. Hull by the novation
agreement of November 18, 2008, the assignment of the loan and its
acknowledgment by VCC, and the defendants several confirmations of the debt, the
Court was satisfied on the balance of probabilities that Mr. Hull had loaned $125,000
to LINC.
[11]

The defendant submits that even if its defence lacked merit, there was no

element of misconduct on its part that should attract an order for special costs.

2014 BCSC 757 (CanLII)

plaintiff set that application down for hearing on November 21, 2013. However, for

Hull Limited v. Vancouver Career College (Burnaby) Inc.

Page 5

DISCUSSION

[12]

Special costs are awarded to sanction reprehensible conduct, which

encompasses both scandalous or outrageous conduct as well as milder forms of

misconduct deserving of the Courts reproof or rebuke: Garcia v. Crestbrook Forest
Industries Ltd. (1994), 9 B.C.L.R. (3d) 242 at para. 17 (C.A.). In Garcia, the Court
held at para. 23 that the fact that an action or appeal has little merit is not in itself a
reason for awarding special costs. Something more is required, such as improper
allegations of fraud, an improper motive for bringing the proceedings, or improper
conduct of the proceedings.
[13]

In his written submissions, counsel for the defendant referred to Olive

Hospitality Inc. v. Woo, 2008 BCSC 615, Vondella Mechanical 2000 Ltd. v. Crerar,
2008 BCSC 789, and Shandro Dixon Edgson v. Kedia, 2008 BCSC 69, each of
which involved a fact-specific application of the principle that something more than
the mere pursuit of a weak case is required to warrant an award for special costs.
[14]

In Genesee Enterprises Ltd. v. Rached, 2001 BCSC 1172 at para. 21, the

court found that the defendants conduct throughout the proceedings showed that
they sought to delay and hinder the plaintiff from recovering on its claim. The Court
held that conduct, together with the defendants improper allegations of fraud,
conspiracy and criminal misconduct, and its improper motive for bringing the
proceedings, cumulatively warranted an order for special costs.
[15]

Special costs may be ordered where a party has displayed reckless

indifference by not recognizing early on that its claim was manifestly deficient:
Mayer v. Osborne Contracting Ltd., 2011 BCSC 914 at para. 11. In Wood Atkinson
v. Murphy, 2011 BCSC 1766 at para. 21, the Court held that reckless indifference
to the manifest deficiency of a partys claim can warrant special costs, but
emphasized that the determination of whether an award for special costs is
appropriate is case-specific and fact driven.

2014 BCSC 757 (CanLII)

Special Costs: Legal Principles

Hull Limited v. Vancouver Career College (Burnaby) Inc.

[16]

Page 6

In FFS HK Ltd. v. P.T. 25 (Ship), 2011 BCSC 1418, Wedge J. discussed

reckless indifference to the merits of a case as a ground for awarding special costs

[10] Most decisions involving special costs awards are not particularly helpful
because they are fact driven. However, Concord Industrial Services Ltd. v.
371773 B.C. Ltd., 2002 BCSC 900, is instructive. Special costs were ordered
where a party displayed reckless indifference by failing to acknowledge
early on that its claim was manifestly deficient. The Court held at para. 27
that the plaintiffs failure to come to terms with that manifest deficiency at an
early stage of the proceedings constituted the sort of reckless indifference to
the legitimate interests of the defendant as is envisioned by the authorities
which cite reprehensible conduct as a basis for awarding special costs.
[11] I also find instructive the comment of Hall J.A. in Catalyst Paper
Corporation v. Companhia de Navegao Norsul, 2009 BCCA 16 at para. 16
concerning the function of costs in the litigation process:
[16] It seems to me that the trend of recent authorities is to the effect
that the costs rules should be utilized to have a winnowing function in
the litigation process. The costs rules require litigants to make careful
assessments of the strength or lack thereof of their cases at
commencement and throughout the course of litigation. The rules
should discourage the continuance of doubtful cases or defences.
This of course imposes burdens on counsel to carefully consider the
strengths and weaknesses of particular fact situations. Such
considerations should, among other things, encourage reasonable
settlements.

[17]

FFS HK Ltd. involved an apportionment of liability between the plaintiff and

the defendants for a marine oil spill. At paras. 35 and 36, the Court held that the
defendants showed reckless indifference to the merits of their case by adopting an
employees version of events which they must have known to be manifestly
unreliable, and by persisting in denying liability when they had no reasonable basis
for doing so on any version of the events offered by their employee.
[18]

As counsel for the plaintiff submits, although lack of merit alone will not found

an award of special costs, reckless indifference to the merits of a partys case will
support the exercise of the Courts discretion to award special costs.

2014 BCSC 757 (CanLII)

at paras. 10 and 11:

Hull Limited v. Vancouver Career College (Burnaby) Inc.

Page 7

Application of Principles
[19]

Here, the defendant, by its officers and in-house counsel, admitted VCCs

action. Most recently, on December 19, 2012, VCC admitted that it was liable to Hull
Limited for the full amount of the debt.
[20]

Notwithstanding that admission, when the defendant filed its Response to

Civil Claim approximately two months later, it pleaded multiple defences to the
plaintiffs claim. Those defences included allegations that the Notice of Civil Claim
disclosed no reasonable claim, was frivolous or vexatious and was an abuse of
process of the court. The defendant must have known that pleading had no merit.
The defendant also pleaded that the novation agreement failed to state whether it
was the entire agreement made between the parties, failed to specify the governing
jurisdiction, was made without consideration and was unconscionable. The
defendant alleged that it was denied its right to independent legal advice, and
pleaded duress.
[21]

However, the defendant did not adduce any evidence in support of those

defences.
[22]

The defendant further pleaded that Hull Limited, which is a corporation

registered in Guernsey, in the Channel Islands, had failed to plead the jurisdiction in
which it was incorporated, and that the plaintiff was not a proper legal entity.
[23]

After the plaintiff served its Amended Notice of Civil Claim and its second

summary trial application, it gave VCC notice of its position that the defendant had
raised no substantive defence to the claim, had provided no evidence on the merits,
was improperly using procedural tactics to delay the plaintiff, and that accordingly
the plaintiff intended to claim special costs.
[24]

The defendant filed no evidence on the merits until two days before the

hearing of the second summary trial application. That evidence was a six paragraph
affidavit sworn by Mr. Peter Chung, the defendants Chairman.

2014 BCSC 757 (CanLII)

liability for the debt on at least four occasions before the plaintiff commenced this

Hull Limited v. Vancouver Career College (Burnaby) Inc.

[25]

Page 8

The Court considered Mr. Chungs evidence at paras. 46 - 53 of the Reasons

[46] In response to the plaintiffs second application for judgment, the

defendant filed the affidavit of Mr. Peter Chung, made November 18, 2013.
At paragraph 3 of his affidavit, Mr. Chung agreed that VCC acquired a
controlling interest in LINC by way of certain transactions. Mr. Chung
recalled that during those transactions he spoke by telephone with Mr. Hull
who told him that he had personally loaned $125,000 to LINC, and that the
loan formed part of a group of investor loans. Mr. Chung has sworn that
VCC's takeover of LINC occurred within one week and that the defendant did
not receive many of the closing documents from LINC that would have
provided evidence of loans allegedly made to LINC.
[47] Referring the Novation Agreement of November 18, 2008, Mr. Chung
deposed at paragraph 4 of his affidavit:
I have reviewed Exhibit "B", page 11, of Mr. Hull's Affidavit #1 and I
confirm that is my letter and signature. I do not have any saved
emails in this regard but I spoke with Mr. Hull and he represented to
me that he had loaned $125,000 to LINC and I accepted his
representation that he had loaned the $125,000. As a result of a time
pressure, I did not fully investigate if the money was, in fact, loaned to
LINC by Mr. Hull but sent the letter on my belief that Mr. Hull was
being truthful about this $125,000 loan.
[48] At paragraphs 5 and 6 of his affidavit, Mr. Chung stated:
During recent investigation by me and my employees, the Defendant
has realized that we have no evidence or proof that Mr. Anthony Hull
ever loaned monies. The Defendant has not gained the benefit of Mr.
Hull's alleged loan that apparently occurred sometime prior to October
2008. Mr. Hull's alleged loan that formed part of the Investor Loans,
as defined in the September 19, 2008 Letter Agreement which is not
in his affidavit, has never been accounted for financially.
I have learned that Mr. Hull claims that his company, Hull Limited,
loaned the $125,000 which is not what he told me prior to my drafting
and sending the letter referred to in Exhibit "B" of his Affidavit.
[49] Mr. Chung drafted the Novation Agreement some 18 months before Mr.
Hull assigned all of his interest in the loan to the plaintiff.
[50] I find the defendants assertion, through the affidavit of Mr. Chung, that it
has no record of Mr. Hull making the loan of $125,000 to LINC to be an
unsatisfactory answer to the plaintiffs claim. For over four years, from
November 2008 through December 19, 2012, VCC repeatedly acknowledged
that it was indebted, initially to Mr. Hull, and later to Hull Limited, in the
amount of $125,000.
[51] When Mr. Chung sent the Novation Agreement to Mr. Hull on November
18, 2008, confirming that VCC had agreed to assume LINCs obligations to
repay $125,000 to Mr. Hull, he did so almost a month after he had sought and
obtained Mr. Hulls agreement to transfer his shares in LINC. The purchase

2014 BCSC 757 (CanLII)

for Judgment:

Hull Limited v. Vancouver Career College (Burnaby) Inc.

Page 9

[52] Mr. Chung provides no details of the scope or nature of his recent
investigation. The defendant has provided no evidence about what inquiries,
if any, Mr. Chung made of Mr. Kriznic, Mr. Lawrenson, or Mr. Anderson
regarding their various acknowledgments of the debt. None of those
individuals have sworn affidavits controverting their admissions of the debt on
behalf of VCC.
[53] Mr. Lawrenson, the lawyer who took Mr. Chung's affidavit is also the
defendants Vice President and General Counsel who either authored, or was
copied on, four of the e-mails by which VCC acknowledged the debt. Mr.
Chung now says that the defendant cannot find any evidence that Mr. Hull
ever loaned monies to LINC, despite Mr. Lawrenson's advice of August 18,
2011 that VCC had received notice of the assignment of the loan to Hull
Limited and had modified its records to reflect that assignment. Further,
when Mr. Hull made inquiries of the defendant's Chief Financial Officer
respecting the debt, VCC was able to provide Mr. Hull with information
confirming the principal amount, the interest rate and the date when payment
was due.

[26]

It is noteworthy that Mr. Chungs affidavit did not deny the loan, but rather

asserted that the loan had never been accounted for financially by the defendant,
despite VCCs repeated acknowledgments of the debt through its officers and inhouse counsel.
[27]

At para. 6 of his affidavit, Mr. Chung referred to a discussion with Mr. Hull in

November 2008, when VCC acquired LINC. Mr. Chung implied that Mr. Hull
incorrectly referred to himself as the lender in 2008. However, Mr. Hull did not
assign the loan to Hull Limited until April 2010. The defendant must have known
that Mr. Chungs evidence of this conversation with Mr. Hull in 2008 could not
support the allegation of misrepresentation made by VCC in its Amended Response
to Civil Claim.
[28]

After the plaintiff refused the defendants request for an extension of time for

repayment of the loan and commenced these proceedings, the defendant engaged
in conduct calculated to delay the plaintiff from obtaining judgment.

That conduct

included pleading affirmative defences of unconscionability and duress for which

2014 BCSC 757 (CanLII)

of Mr. Hulls shares formed part of the transaction by which VCC acquired
LINC. While Mr. Chung has deposed that VCCs acquisition of LINC
occurred within the space of a week, he has provided no satisfactory
explanation about why he allegedly failed to inform himself about whether Mr.
Hull had made the loan to LINC before he prepared the Novation Agreement.

Hull Limited v. Vancouver Career College (Burnaby) Inc.

Page 10

VCC offered no supporting evidence. In addition, on June 25, 2013, the defendant
requested and obtained an adjournment of the plaintiffs first summary trial
application in order to file responsive affidavit materials. Despite its commitment to
affidavit evidence in response to the plaintiffs first summary trial application.
Instead, on July 5, 2013, six months after the plaintiff had commenced this action,
the defendant filed an application for security for costs, returnable on the hearing of
the plaintiffs first summary trial application. Again, the timing of the defendants
application for security for costs suggests that the defendants objective in bringing
that application was only to delay the hearing of the plaintiffs summary trial
application.
[29]

The defendant knew that its officers and in-house counsel had repeatedly

acknowledged and confirmed the debt. The defendant also knew that Mr. Chung
had negotiated terms, which he incorporated into the novation agreement, to extend
the time for repayment of the loan to November 30, 2012. The defendant also knew
that less than two months before the plaintiff commenced this action, VCC by its inhouse counsel had acknowledged that the debt was owed to Hull Limited. In all of
these circumstances, I find that the defendant showed reckless indifference to
manifest deficiencies in its case and persisted in resisting the plaintiffs claim when it
must have known that it had no reasonable basis for doing so.
[30]

Accordingly, the plaintiff is entitled to special costs of the summary trial heard

on February 12, 2014. To be clear, this award of special costs does not include the
costs of preparation for and attendance of the summary trial hearing on August 6,
2013. The plaintiff brought that application on affidavit evidence that was in part
inaccurate, and which it subsequently corrected after the defendant produced the
assignment agreement. Each party bears their own costs of the hearing on August
6, 2013.

PEARLMAN J.

2014 BCSC 757 (CanLII)

deliver its responsive materials by July 12, 2013, the defendant did not file any