Wednesday, 4 April 2012

Special Costs for Failure to Dismiss after Settlement

It is well accepted that terms of a settlement may be enforced in a separate action, in an application in the action that was settled, or by claiming the settlement as a defence to new claims.  The question sometimes arises, however, what is the proper remedy against a party who is refusing to live by the settlement and fails to dismiss existing claims or brings a new action for claims that have been settled.  

In Chemainus First Nation v. Bullock Baur Associates Ltd., 2012 BCSC 479, the court confirmed that the proper remedy in such circumstances, in addition to ordering the dismissal of the action, is special costs.  In particular, the court relied on Ring Contracting Ltd. v. B & G Logging Ltd., (1998), 119 B.C.A.C. 166 to find that:
  1. although the settlement agreement did not expressly state that the parties will sign a CDO, "this would be the effect of their agreement to its terms"; and
  2. special costs are a proper remedy to failure to sign the CDO:
    The reasoning from Ring once a party has agreed to settle a cause of action, continued pursuit of that cause of action is reprehensible conduct.  It does not matter whether such pursuit is via a new claim based on the same cause of action or by pursuing the very claim a party agreed to settle.  Based on the principle from Ring, having found that there was a valid settlement of causes of action arising out of the original construction of the CFN sewer system, WIC’s refusal to consent to a release of the claims under the Action amounts to reprehensible conduct deserving of rebuke via an order for special costs.