Executive Summary: Key Legal and Evidentiary Issues

• Court treated the plaintiffs’ use of fictitious, AI-generated case law without independent verification as serious litigation misconduct warranting costs consequences.
• Despite the plaintiffs being technically successful in resisting a strike application, late abandonment of numerous claims and discontinuance of a second action led to costs being awarded to the defendants.
• The judge held the matter was of ordinary difficulty, fixing costs at Scale B but with a 1.5x uplift due to “unusual circumstances” under Appendix B, s. 2(5).
• Defendants’ request for a $10,000 lump-sum costs award was rejected in favour of a Registrar’s assessment under the tariff, reflecting restraint in using summary cost-fixing powers.
• The costs award is confined to the defendants’ costs of the strike applications only; broader costs of defending the main actions and the discontinued proceeding were refused.
• Costs are ordered payable forthwith, in any event of the cause, to deter similar misconduct and recognize that the strike applications involved discrete, severable issues.

Background and parties

The proceedings arise from a dispute between neighbours involving real property in British Columbia. The plaintiffs, Svetlana Krivaia and Sergei Krivoi, brought claims against their neighbours, the defendants Stephanie and Andrew Hungerford. The underlying dispute is characterized by the plaintiffs as a genuine property dispute, and the court’s earlier reasons refer to potentially viable claims in trespass or encroachment, suggesting that the core controversy concerns land use or boundary issues rather than contractual or personal injury claims. Two related proceedings were commenced: a “First Action” in which both plaintiffs sued the defendants, and a “Second Action” brought by Mr. Krivoi alone. The defendants applied under Rule 9-5(1) of the Supreme Court Civil Rules to strike the plaintiffs’ claims as an abuse of process (the “Strike Applications”).

Procedural history and the strike applications

The strike applications targeted a wide range of causes of action and allegations advanced by the plaintiffs. During the hearing of those applications, and after the defendants had invested time and resources to meet the full scope of the pleadings, the plaintiffs substantially altered their position. They abandoned numerous claims in mid-hearing and ultimately discontinued the Second Action altogether. This meant that the plaintiffs were technically successful in resisting some aspects of the strike applications, largely because they withdrew the impugned claims before the judge was required to rule on them. However, the First Action still required substantial further amendment to comply with the Rules, and the litigation as a whole remained ongoing in a narrower form. In March 2026, the court issued primary reasons on the strike applications (2026 BCSC 408). In those reasons, the judge held that, even though the plaintiffs could continue with a pared-down version of their property claims, their conduct in the litigation raised serious concerns and warranted an adverse costs order in favour of the defendants.

Misconduct involving fictitious AI-generated authorities

A central evidentiary and ethical issue in this case was the plaintiffs’ reliance on non-existent legal authorities generated by artificial intelligence. In their pleadings and supporting materials, the plaintiffs cited case law that later turned out to be fictitious—“AI-hallucinated”—and had not independently verified the authenticity of these authorities before filing them with the court. The judge emphasized that filing a court document that relies on fictitious cases is a serious affront to the administration of justice. Even accepting that the self-represented plaintiffs did not intend to mislead the court and believed they were acting in good faith, the failure to check and confirm the existence and accuracy of the cited decisions was found to be a significant departure from acceptable litigation standards. The court expressly described this conduct as “misconduct worthy of rebuke.” This misconduct was sufficient, on its own, to deprive the plaintiffs of any entitlement to their own costs and to justify awarding costs to the defendants arising from the strike applications.

Late abandonment of claims and its impact on costs

The court also focused on the plaintiffs’ litigation strategy and timing. Multiple claims and theories were pressed by the plaintiffs throughout the lead-up to the strike applications, requiring the defendants to respond on a broad front. Yet, only after the hearing had begun—and after substantial defence work had been completed—did the plaintiffs significantly narrow their case, abandoning many challenged claims and discontinuing the Second Action. While refining pleadings and narrowing issues can be proper, the court found that doing so only once substantial resources had already been expended materially increased the cost and complexity of the applications. These late changes, taken together with the use of fictitious authorities, were treated as unusual and problematic litigation conduct. The judge concluded that these circumstances distinguished the case from one where simple equity might suggest that each party should bear its own costs, despite some mixed or technical success on discrete issues.

Entitlement to costs and applicable scale

Against that background, the plaintiffs argued that they had acted in good faith, that they had not intended to mislead the court, and that the underlying property dispute was genuine. They contended that, in the circumstances, each party should bear its own costs or, at most, that any costs ordered should be modest and on the ordinary scale. The court rejected this position, noting that the plaintiffs had not identified any error in the earlier costs analysis and had not presented new facts justifying a departure from the prior indication that the defendants would receive their costs of the applications. Under Rule 14-1(9), costs normally follow the event and go to the “successful party,” and the judge held that, for purposes of the strike applications and related costs issues, the defendants were the substantially successful parties. Regarding the scale of costs, the court applied the default position under Rule 14-1 and Appendix B: costs are assessed at Scale B (matters of ordinary difficulty) unless a higher scale is specifically justified. While the hearing had been time-consuming and involved numerous causes of action and procedural questions, the judge concluded that the issues were not unusually complex and that the defendants had not met the burden for Scale C (matters of more than ordinary difficulty). Accordingly, the baseline scale was fixed at Scale B.

Uplift costs under Appendix B and rejection of special costs

The defendants sought what they called an “elevated” or uplifted award of costs, in lieu of special costs, initially proposing that the court fix a lump-sum award of $10,000 payable forthwith. The court reviewed the distinction between special costs and uplift (or enhanced) costs. Special costs are punitive in nature and are awarded where a party’s conduct is “reprehensible” or deserving of strong reproof, with the goal of both deterring misconduct and disassociating the court from it. By contrast, uplift costs under Appendix B, s. 2(5) are primarily compensatory; they can be ordered if, due to “unusual circumstances,” an ordinary tariff award would be grossly inadequate or unjust. The judge noted that not all misconduct rises to the level of reprehensibility required for special costs, but conduct that still warrants rebuke may qualify as an “unusual circumstance” justifying uplift. The plaintiffs maintained that absent bad faith, dishonesty, or abuse of process, no elevated costs should be ordered, particularly in a case involving self-represented litigants and an underlying dispute with arguable merit. The court disagreed with the idea that the absence of an intention to mislead insulated the plaintiffs from any form of enhanced costs. The plaintiffs’ unverified reliance on fictitious authorities, together with their late-stage abandonment of numerous claims and the discontinuance of the second proceeding after significant preparatory work by the defendants, was treated as a serious departure from acceptable standards that had materially increased the defendants’ costs. These features were found to constitute “unusual circumstances” within the meaning of s. 2(5) of Appendix B and to justify an uplift. As a result, the court ordered that the defendants’ costs of the strike applications be assessed at Scale B but with each unit valued at 1.5 times the ordinary tariff. This approach was expressly described as compensatory rather than punitive: it sought to more fairly indemnify the defendants for the unnecessary expense caused by the plaintiffs’ conduct, while stopping short of the more severe remedy of special costs.

Scope, manner, and timing of the costs award

The defendants further sought to broaden the award to include their costs of defending the First Action as a whole and the discontinued Second Action. The court refused this request. It held that the costs issue before it related only to the specific Rule 9-5(1) strike applications, not the overall disposition of the actions. Costs of the main action are typically determined once that action has concluded, and the costs consequences of a discontinued proceeding require their own, separate analysis. Folding those wider costs into this decision would risk duplication, prejudice later costs assessments, and conflict with principles of proportionality. Consequently, the costs award was confined to the strike application hearings alone. On the question of method, the judge declined to fix a lump-sum award of $10,000. Citing authority on Rule 14-1(15), the court noted that judicial summary assessment of costs should be used sparingly and that registrars are better placed to assess accounts under the tariff in most cases. There was no special familiarity or exceptional circumstance here to justify bypassing the ordinary process. The matter was therefore remitted to the Registrar for assessment of tariff costs at the uplifted (1.5x) rate. Finally, the court addressed when and on what basis the costs would be payable. Although costs are generally payable at the end of a proceeding, the judge considered factors including the need to deter unreasonable litigation conduct and the fact that the strike applications dealt with discrete, severable issues. On this basis, the court ordered that the defendants’ uplifted costs of the strike applications be payable “forthwith” after the Registrar’s assessment, and “in any event of the cause”—meaning that the defendants remain entitled to those costs regardless of how the remaining property claims are ultimately resolved at trial. In this costs decision, the successful parties are the defendants, Stephanie and Andrew Hungerford. They are awarded their costs of the strike applications at 1.5 times the applicable tariff at Scale B, to be assessed by the Registrar and payable forthwith in any event of the cause. The court did not fix a dollar amount, expressly refusing the defendants’ $10,000 lump-sum proposal, so the total monetary amount of costs in favour of the defendants cannot be determined from this decision alone.