Executive Summary: Key Legal and Evidentiary Issues

• One of the plaintiffs, K. Jekki Pharmaceuticals Ltd. (KJPL), obtained compensatory damages of $403,061.56 against two defendants, Dr. Lakshmikanth Challa and New Pitt Meadows Medical Clinic Ltd., for the premature termination of a sublease.

• The court relied on Rule 13-1(17) of the Supreme Court Civil Rules (the “slip rule”) to vary an already entered final order so it would include pre-judgment interest as required by the Court Order Interest Act.

• Because the damages award combined past and future losses, calculated over a period from June 18, 2018 to March 31, 2029, the court found it could not determine the precise amount of pre-judgment interest on the material before it and indicated the matter could go to the registrar if the parties could not agree.

• The plaintiffs’ request for double costs under Rule 9-1, based in part on a May 17, 2021 settlement offer, was rejected because the offer did not comply with the requirement that it be served on all parties of record and because the issues in dispute had changed by the time of trial.

• The court found that the action and the related petition were inextricably linked, with substantial overlap in issues and evidence, and ordered that KJPL receive 100% of its tariff costs at Scale “B” in the action against Dr. Challa and New Pitt Meadows Medical Clinic Ltd., and that the petition respondents receive 100% of their tariff costs at Scale “B” in the petition against Madhavi Challa.

• Although certain claims and a counterclaim were abandoned before trial, the court declined to reduce or apportion tariff costs, given the overlapping issues, the way both sides narrowed their cases, and the fact that each side was represented collectively by one law firm.

Facts of the case
On May 6, 2025, the court released a trial decision, indexed as 2025 BCSC 848, after hearing an action and a related petition. In that decision, two defendants in the action, Dr. Lakshmikanth Challa and New Pitt Meadows Medical Clinic Ltd. (NPMMC), were ordered to pay compensatory damages of $403,061.56 to one of the plaintiffs, K. Jekki Pharmaceuticals Ltd. (KJPL), for the premature termination of a sublease. The petition was dismissed, and the parties were given leave to seek a supplemental hearing on costs. On June 5, 2025, the defendants and the petitioner filed two appeals from the trial decision. On June 20, 2025, final orders were entered in both the action and the petition based on that decision.

Damages basis and interest issue
The damages award was based on the plaintiffs’ calculation of loss as the difference between rent and startup expenses paid as a result of the termination of the sublease, from June 18, 2018 to March 31, 2029, and the rent that would have been paid if the sublease had remained in effect. After applying a 24.5% discount reflecting petitioner Madhavi Challa’s shareholdings, the plaintiffs sought $806,123.15, consisting of discounted additional rent of $791,106.63 and discounted startup expenses of $15,016.52. The court reduced the net amount by 50% to reach the $403,061.56 award. Pre-judgment interest, although pleaded, had not been addressed before entry of the final orders. In the supplemental hearing, the plaintiffs asked to vary the final order under Rule 13-1(17) to add pre-judgment interest required by the Court Order Interest Act. The court accepted that pre-judgment interest was a matter that should have been but was not adjudicated upon and varied the final order to add pre-judgment interest at the registrar’s rate of prime less 2%, not compounded.

Calculation of interest and referral to registrar
The plaintiffs proposed to treat 63.83% of the damages period as past loss, applying that percentage to the $403,061.56 award to obtain $257,274.19 and then calculating pre-judgment interest of just over $42,000 on that figure. The court rejected this method, noting that the loss did not arise in a lump sum on June 18, 2018, that the additional rent component accrued in increasing monthly increments, and that part of the loss related to future obligations. The court concluded that it could not quantify the appropriate pre-judgment interest on the material before it. It ordered that, if the parties are unable to agree on the amount of pre-judgment interest, the matter must be referred to the registrar for determination in accordance with the trial decision and the supplemental reasons.

Costs, offers to settle and outcome on costs
The plaintiffs and petition respondents sought double costs under Rule 9-1, relying on offers made on November 23, 2018, October 11, 2019, and May 17, 2021, but ultimately relied on the May 17, 2021 offer. In that offer, they proposed to release the claims then advanced in exchange for $51,000 and the transfer of petitioner Madhavi Challa’s shares in KJPL, which the parties agreed were worth $51,000. The court held that this offer did not qualify as an “offer to settle” because it was served before the petition was filed on August 24, 2022 and was not served on all parties of record, including third parties. The court also stated that, even if technically compliant, it would not have awarded double costs because many claims, counterclaims and third-party claims present in May 2021 had been resolved or abandoned by trial and the petition had since been filed and joined with the action.

Final costs orders
On ordinary costs, the plaintiffs sought costs at Scale “B” as successful parties in both proceedings. The petitioner, Madhavi Challa, conceded that the petition respondents were entitled to 100% of their costs in the petition, but the defendants argued that success in the action was divided and that the plaintiffs should receive only 50% of their tariff costs. The plaintiffs responded that abandoned claims did not materially increase the cost of the litigation, that the defendants had abandoned a counterclaim on a “no costs” basis on February 7, 2025, and that the defendants had been represented by one law firm. The court found the action and petition were inextricably linked, with substantial overlap in issues and evidence, and that both sides were represented collectively and had narrowed the issues before trial. It ordered that, in the action, KJPL is entitled to 100% of its tariff costs at Scale “B” against Dr. Challa and NPMMC, and that, in the petition, the petition respondents are entitled to 100% of their tariff costs at Scale “B” against Ms. Challa.