Bank of Montreal v. Peri Formwork Systems Inc., 2012 BCCA 252

In Bank of Montreal v. Peri Formwork Systems Inc., the British Columbia Court of Appeal was required to rule on two issues raised in an application brought by the appellants, Peri Formwork Systems Inc.: 1) settling the terms of a court order and 2) special costs in cases of a complicated appeal. The BCCA ordered that the appellant builder’s lien claim be restored to priority over the Bank of Montreal Receiver’s Borrowing Charge and over all security to which the Receiver’s Borrowing Charge has priority. Secondly, the Court ruled that it has the authority to award increased costs in accordance with Rule 60 of the Court of Appeal Rules when there is a significant discrepancy between the legal fees incurred as a result of a long and complicated legal process and the amount recoverable through an award of ordinary costs. Although the normal rule for awarding increased costs requires proof of not merely a significant discrepancy between costs incurred and ordinary costs but also an additional factor such as party conduct, the Court ruled that departure from the normal rule was merited in the interests of justice. 

Peri Formwork Systems Inc., a builder company, obtained a lien against title to Coastal Village’s property and was granted priority on this lien over all others, including a Bank of Montreal Receiver’s Borrowing Charge. As a result of an error in statutory interpretation by Rice, J. (Supreme Court of British Columbia), the parties were required to seek further appeals to determine who was entitled to lien priority. The lengthy and complicated appeals process resulted in Peri Formwork Systems incurring substantial costs to settle the terms of the court order. The BCCA determined that Rule 60 of the Court of Appeal Rules, a rule allowing the Court to order increased costs to avoid creating an “unjust result”, applies in the case of Peri Form. The Court ruled that Peri Form faced many challenges in bringing its case and application, including the application to settle the terms of the order, and that a failure to order increased costs would not be in the interests of justice. A refusal to order additional costs in complicated cases would act to prevent the hearing of important legal issues. The Court ordered increased costs for the appeal process and costs at Scale C in the court below payable by the Bank of Montreal to the appellants; the Court also ruled that the appellants were only entitled to one set of costs and therefore could not collect costs from the Receiver (Brown Group Inc.). 

Link to Decision

Elizabeth Severinovskaya 

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