Executive Summary: Key legal and evidentiary issues

• Defendants were awarded judgment of US $400,000 plus CA $12,700 on their counterclaim after the plaintiff discontinued his claims at the commencement of trial, with special costs later granted for the plaintiff's discontinued action.

• Protracted non-compliance by the defendants with Registrar Gaily's document production order — first made October 31, 2023, and reiterated multiple times — has stalled the assessment of approximately $310,000 in special costs.

• Claims of solicitor-client privilege, litigation privilege, and irrelevance were asserted over 13,824 previously undisclosed records, but the Registrar found the evidentiary basis for those claims to be unsatisfactory.

• Dr. Pourtaghi was found to have falsely deposed in multiple affidavits that the Registrar had confirmed her compliance with the production order, even after being advised the transcripts did not support those statements.

• Justice Veenstra declined to permanently stay the special costs assessment, characterizing it as a draconian remedy, but warned the defendants that without significant forward progress on production, they are at risk of a further application of the same nature.

• Post-judgment interest on the underlying award was set at the Royal Bank of Canada's prime lending rate — above the standard Registrar's rate — to encourage Mr. Nouhi to meet his financial obligations to Dr. Pourtaghi.

The underlying dispute and the trial outcome

The litigation between Massimo Aki Nouhi and his niece, Dr. Nahid Pourtaghi, together with her company Naki Enterprises Inc., arose from an alleged profit-sharing agreement regarding a collection of several properties known as the "Book Tower" project. The action was commenced in April 2018, with the defendants filing a counterclaim later that year. When the matter went to trial before Justice Harvey commencing on October 4, 2021, Mr. Nouhi filed a discontinuance of his claims. The trial then proceeded solely on the defendants' counterclaim. In his May 2022 judgment (2022 BCSC 807), Justice Harvey found in favour of Dr. Pourtaghi on her alternative claim of unjust enrichment, awarding her US $400,000 plus CA $12,700. Justice Harvey described Mr. Nouhi as a very wealthy man who resides primarily in Europe and stated in the 2022 judgment that Mr. Nouhi had "weaponized litigation" against Dr. Pourtaghi. Despite having the ability to pay the judgment, Mr. Nouhi has not made any payment on it.

The costs judgment and the referral to the Registrar

Following the trial, Justice Harvey addressed the question of costs in reasons for judgment released on March 2, 2023 (2023 BCSC 306). He awarded the defendants special costs for the plaintiff's claims (other than with respect to one application as to which costs had already been fixed), increased party-and-party costs (Scale B times 1.5) for the counterclaim, and party-and-party costs at Scale B for the costs hearing. The defendants asked Justice Harvey to summarily assess the special costs, arguing that the total sum claimed — approximately $500,000 — was reflective of the value of the work performed by their solicitors. Justice Harvey declined, concluding at paragraph 125 of the Costs Judgment that the Registrar is in the best position to assess costs in this matter, as there was insufficient affidavit evidence before him to carry out such an assessment.

The production order and the defendants' resistance

On October 4, 2023, Dr. Pourtaghi — now self-represented — filed an appointment to assess the defendants' costs. Registrar Gaily, who seized herself of the matter and presided at all the pre-hearing conferences, ordered on October 31, 2023, that the defendants produce the files of their former lawyers, relying on the Court of Appeal's guidance in Gichuru v. Smith, 2014 BCCA 414, which discussed how it was difficult to conceive how a proper examination of a party's reasonably incurred legal fees can be made without disclosure of the party's file. Dr. Pourtaghi resisted, asserting solicitor-client privilege as a bar to production. At a second pre-hearing conference on January 11, 2024, Registrar Gaily reiterated her order, pointing out that the defendants' remedy was to appeal rather than simply refuse to comply. The defendants never appealed the production order. On January 19, 2024, one of the defendants' former lawyers, Dale Lysak, provided a USB stick containing nearly 900 documents, but plaintiff's counsel identified significant gaps including the absence of correspondence between client and counsel, email correspondence, separate time-keeping and accounting records, and pre-bills.

The escalating dispute over privilege and compliance

Subsequent pre-hearing conferences on July 5 and September 11, 2024, saw continued disagreement. On July 5, 2024, Registrar Gaily ordered affidavits from the defendants' former counsel — Donald Sorochan K.C. and Dale Lysak — to attest to whether additional materials existed in their files, whether privilege was claimed, and the basis for any such claim. Both lawyers filed affidavits in August 2024 asserting that solicitor-client privilege applied as a constitutionally protected right, though Justice Veenstra later noted it seemed doubtful that either lawyer was aware that Registrar Gaily had already made an order for production of the solicitors' files. Critically, Registrar Gaily did not have the lawyers' affidavits before her at the September 11, 2024 pre-hearing conference, which made it impractical for her to gauge whether there had been proper compliance with her orders.

Justice Veenstra's first decision — the adjournment

On January 30, 2025, Mr. Nouhi filed an application seeking an order to stay the assessment of the defendants' costs until they complied with the production order. Justice Veenstra heard the matter on February 20, 2025 and, in his reasons released February 25, 2025 (2025 BCSC 327), acknowledged the complexity of the assessment — spanning a 3½-year period of concurrent work on both the claim and counterclaim, with fees intermingled with litigation in Ontario, Michigan, and Switzerland. While agreeing that the unappealed production orders should not be subject to collateral attack, Justice Veenstra concluded that a stay was not appropriate at that point because there had been no judicial determination as to whether the defendants had complied with Registrar Gaily's order, and that was something properly done by the Registrar. He referred the matter back to Registrar Gaily for a further pre-hearing conference, directing that all affidavits and transcripts be provided to her.

The compliance hearing and Registrar Gaily's finding of non-compliance

After further proceedings, including a pre-hearing conference on August 11, 2025, at which Registrar Gaily adopted the "tailored disclosure" approach from De Angelis v. Siermy, 2025 BCSC 1031, the defendants provided a list of 13,824 additional records in August 2025. Of these, 4,784 were identified as subject to solicitor-client privilege, 43 as subject to litigation privilege, and 8,997 as irrelevant — meaning none of the newly listed documents were considered producible. There was no evidence before the Registrar confirming who prepared the list or providing further evidence on which the claims of privilege and relevance were based. The Registrar found the descriptions accompanying these claims wholly unsatisfactory, noting that records were routinely labelled with boilerplate phrases such as "email correspondence presumed privileged unless otherwise shown" and "non-email document, not relevant to BC special costs" without any further explanation. In her reasons released February 12, 2026 (2026 BCSC 246), Registrar Gaily formally determined that the defendants had not complied with the production order. She also made a serious finding regarding Dr. Pourtaghi's affidavits: Dr. Pourtaghi had repeatedly deposed under oath that the Registrar had made findings confirming her compliance and quoted the Registrar to that effect, when in fact no such findings were ever made. Dr. Pourtaghi had possessed official transcripts of the proceedings confirming her statements were not true, as well as the reasons for judgment of Justice Veenstra. The Registrar rejected Dr. Pourtaghi's explanation that this was a good-faith "misunderstanding," finding that in her affidavits she falsely deposed that the Registrar had made findings in her favour.

Justice Veenstra's second decision — dismissal of the stay application with a warning

Mr. Nouhi brought his stay application back before Justice Veenstra, who heard it on April 2, 2026, and released reasons on April 7, 2026 (2026 BCSC 624). Mr. Nouhi sought either a permanent or temporary stay of the special costs award, arguing that the prolonged non-compliance coupled with the misleading affidavits justified this remedy. Justice Veenstra reviewed the well-established framework for striking proceedings under Rule 22-7, noting that such relief is reserved for the most egregious cases and that parties are generally entitled to a "second chance." He found that Dr. Pourtaghi's production of the August 2025 list, while by no means reflecting compliance with Registrar Gaily's orders, represented at the very least a partial step in the right direction. He also acknowledged that Dr. Pourtaghi had been regrettably slow to depart from initial advice she received without full appreciation of the circumstances. Ultimately, Justice Veenstra dismissed the application, concluding that Dr. Pourtaghi requires a further chance to provide the sort of disclosure that is required. However, he issued a strong caution: if she is unable or unwilling to comply with Registrar Gaily's orders, she should be carefully considering Mr. Dennis' proposal that the costs of the discontinued claim be assessed as party-and-party costs rather than as special costs. Each party was ordered to bear their own costs, with the defendants deprived of costs they would ordinarily have been entitled to as the successful party on the application.

The interest decision

In a separate decision released May 1, 2024 (2024 BCSC 718), Justice Harvey addressed pre-judgment and post-judgment interest on the underlying award. He ordered that pre-judgment interest be calculated at the standard Registrar's rates, spread incrementally over the nine-year period of Dr. Pourtaghi's engagement — commencing with the beginning of her engagement with Mr. Nouhi in 2008 to the completion of the Book Tower project in 2016 — and thereafter on the full amount until the date of judgment, finding no commercial relationship as contemplated in Le Soleil warranting a departure from the default rate. For post-judgment interest, however, Justice Harvey exercised his discretion under section 8 of the Court Order Interest Act to set the rate at the Royal Bank of Canada's prime lending rate, calculated in six-month increments from the date of the judgment. He reasoned that by not paying the judgment to Dr. Pourtaghi, Mr. Nouhi is in effect borrowing from her, and that an enhanced interest rate was a legitimate tool to encourage Mr. Nouhi to meet his financial obligations. Justice Harvey noted that Mr. Nouhi has the ability to pay the judgment but has chosen not to. Each party was ordered to bear their own costs of the interest application, as success was divided.