Can a court order costs in favour of the respondent against the respondent by counterclaim?

The recent case of Sandhu v. Sandhu, 2012 BCSC 1183 [Sandhu] is helpful in this regard. There, the trial judge made an order for costs in favour of the respondent against the claimant, and in favour of the respondent by counterclaim against the respondent. The claimant subsequently made an assignment into bankruptcy such that his liability under the costs order was to be extinguished. The court noted the result of the order without an amendment would be that the respondent would not receive any costs from the claimant, but would still have to pay the costs to the respondent by counterclaim. The respondent argued this upset the balance achieved by the overall award, and urged the court to use its inherent jurisdiction to amend the costs order by ordering the costs she owed to the respondent by counterclaim be set-off against the costs the claimant owed to her. At the hearing, the respondent had argued that an award of costs against her would be a hardship due to her modest income, the limited equity in her home, and the absence of any fund from which to pay the costs.