CITATION: Lancia v. Park Dentistry, 2018 ONSC 1922

COURT FILE NO.: 16-59020

DATE: 2018-03-23

SUPERIOR COURT OF JUSTICE – DIVISIONAL COURT OF ONTARIO

RE: Michele Lancia (Plaintiff)

• and –

Park Dentistry Professional Corporation (Defendant)

BEFORE: A. J. Goodman J.

COUNSEL: Z. Lakhani, for the Plaintiff

P. Latimer, for the Defendant

DATE: In chambers

C O S T S E N D O R S E M E N T

1. On February 7, 2018, in Reasons for Judgment provided to the parties, the defendant’s motion for summary judgment was granted. Although the plaintiff was entitled to some nominal relief, overall, the defendant was primarily successful in the motion.

2. The defendant says that the plaintiff commenced an action falsely claiming to have been sexually harassed. This brazen attempt to bolster her claim for constructive dismissal by recklessly besmirching Dr. Park’s personal and professional reputation was rejected by this Court.

3. The defendant seeks costs on a substantial indemnity basis of $119,319.33, in accordance with the Bill of Costs. In the alternative, the defendant seeks costs on a partial indemnity scale of $87,851.65.

4. The plaintiff submits that she was well aware of the consequences of her assertions that she endured sexual harassment in the work environment and that she would be vigorously cross-examined on these issues. In fact, her initial objection to proceeding by way of a summary judgment motion as it relates to the sexual harassment allegations was so that she could proceed to a normal discovery process and have a court conduct a full hearing on such issues. These are not the characteristics of someone who believes that their claims are without merit, let alone made vexatiously.

5. Further, the plaintiff submits that there would be a chilling or deterring effect on litigants, predominately women, to bring forward these types of allegations on the risk of having to pay costs on a substantial indemnity basis should they be unsuccessful in advancing such claims.

6. The plaintiff submits that the defendant’s request for substantial indemnity costs is unreasonable and not just or fair. Further, the actual time spent by defendant’s counsel is excessive. For all of these reasons, and as success was divided, the defendant is not entitled to costs of the summary judgment motion on either a partial or substantial indemnity basis.

7. In response to the plaintiff’s submissions, the defendant says that an award of costs will not have a chilling effect on women who actually have credible complaints of sexual harassment. The plaintiff’s allegations of sexual harassment have been misrepresented in an attempt to bolster her claim for constructive dismissal, rather than the reasons contained in her own resignation letter.” In light of the above, an award of costs on a substantial indemnity basis is an appropriate caution to those who wish to “misrepresent”, “mischaracterize” or “manipulate” allegations of sexual harassment to bolster a claim for constructive dismissal.

General Principles:

8. As a general principle, costs are in the absolute discretion of the court. The fixing of costs is not simply a mechanical exercise. The overall objective is “to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular proceeding, rather than an amount fixed by the actual costs incurred by the successful litigant.

9. The Court of Appeal, in Boucher v. Public Accountants Council for the Province of Ontario, 2004 14579, (2004) 71 O.R. (3d) 291, articulated the principles that govern costs assessments. In that case, Armstrong J.A. noted that Rule 57.01(3) provides: “When the court awards costs, it shall fix them in accordance with subrule (1) and the tariffs.” He continued: “…Subrule (1) lists a broad range of factors that the court may consider in exercising its discretion to award costs under s. 131 of the Courts of Justice Act, R.S.O. 1990, c. C.43.”

10. The defendant was ultimately successful in this motion wherein I dismissed the plaintiff’s claim for constructive dismissal. It is a well-settled principle that the successful party should have its costs and there is no good reason in the present circumstances to depart from this legal principle.

11. The court must, first and foremost, be fair and reasonable when exercising its discretion to award costs. Proportionality is of fundamental import.

Factors to be considered in Fixing Costs:

12. Rule 57.01(1) contains what amounts to a non-exhaustive checklist of factors that should guide the court in its reasoning when awarding costs in the exercise of its discretion under section 131 of the Courts of Justice Act. Rule 57.01(1) provides, in part:

In exercising its discretion under section 131 of the Courts of Justice Act to award costs, the court may consider…

(0.a) the principle of indemnity, including, where applicable, the experience of the lawyer for the party entitled to the costs as well as the rates charged and the hours spent by that lawyer;

(0.b) the amount of costs that an unsuccessful party could reasonably expect to pay in relation to the step in the proceeding for which costs are being fixed;

(a) the amount claimed and the amount recovered in the proceeding;

(c) the complexity of the proceeding;

(d) the importance of the issue;

(e) the conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding;

(f) whether any step in the proceeding was

(i) improper, vexatious or unnecessary, or

(i) any other matter relevant to the question of costs.

13. The amount of costs on a motion varies widely depending on the circumstances, including the complexity of the issue, of facts, and the witnesses from whom evidence is required.

14. Awards of substantial indemnity costs are the exception, not the rule. An award of costs on a substantial indemnity basis has traditionally been reserved for cases in which the court wishes to display its express disapproval of a parties’ conduct. One of the principal factors that underlies this determination is that the successful party ought not to be put to any expense for having to litigate an unmeritorious, or vexatious issue.

Discussion:

15. In written argument, the defendant submits that with respect to the sexual harassment portion of the summary judgment motion, plaintiff’s counsel submitted in its motion record and oral submissions that the defendant’s motion for summary judgment sought to dismiss the “entirety” of this action when this would not be possible without a Court's assessment of credibility through viva voce evidence. However, in seeking to minimize costs for both parties and in keeping with the principles of Rule 57.01, the plaintiff supported and conceded to His Honour's suggestion to call limited viva voce evidence on the specific claim related to sexual harassment. In summary, although the plaintiff expressed in the motion record that a summary judgment motion was the incorrect forum for the defendant to proceed on issues related to sexual harassment, she consented to this process in the interest of alleviating the costs of all parties and to also expedite the completion of this matter as a whole.

16. I agree entirely with the defendant’s aforementioned characterization or the proceedings as reflecting the true state of affairs in this litigation.

17. In support of its costs submission, the defendant says that in a demand letter dated May 31, 2016, Ms. Lancia claimed she was constructively dismissed as a result of the vacation pay issue. The Demand Letter made no allegation of a toxic work environment, nor did it refer to any allegation of sexual harassment during Ms. Lancia’s employment at Park Dentistry. She sought compensation in excess of $154,000.

18. In response to the Demand Letter, counsel for Park Dentistry denied that the vacation pay issue amounted to constructive dismissal, but offered to reimburse Ms. Lancia $3,200 for the recovery of her vacation pay, in addition to $1,500 plus HST for her legal fees.

19. In a letter dated April 18, 2017, counsel for the defendant outlined in detail that the plaintiff’s claim was doomed to fail in the face of well-settled law. Counsel advised that Park Dentistry would move for summary judgment and warned of the cost consequences of proceeding when there was not a “scintilla of merit” to the claim. The defendant offered to settle for $4,400. The offer was time sensitive, in order to settle the matter before the parties incurred the considerable costs of a summary judgment motion. Again, the offer was rejected.

20. Park Dentistry relies on Rule 57.01 factors in requesting an award of costs on a substantial indemnity basis. The claim was for $154,000 plus special damages to be determined, a significant amount that required a vigorous defence and resulted in an award of only $3,763. The plaintiff's success on the sole issue of vacation pay ought not to result in a reduction of the costs award in the defendant's favour, for the following reasons: Park Dentistry offered to repay the vacation pay as soon as it received the Demand Letter and again after the Statement of Claim was filed; As a percentage of the amount claimed, the award of $3,763 is nominal; and the time spent on the vacation pay issue was minimal and the bulk of the motion was spent dealing with the allegations of sexual harassment and a toxic work environment, issues that Park Dentistry successfully defended.

21. The defendant submits that the plaintiff’s decision to make baseless claims of sexual harassment (based in large part on ineligible post-resignation events) unnecessarily complicated what ought to have been a straightforward contractual issue based on well-settled law.

22. The defendant also points out their attempt to reduce costs by seeking summary judgment rather than proceeding with discoveries and a trial; along with the need for viva voce evidence to defend the allegations of sexual harassment added to the length and complexity of the motion and increased the parties’ costs. The defendants also attempted to reduce costs by agreeing to written submissions rather than seeking a third hearing date.

23. The defendant says that it made a reasonable effort to settle this issue of costs regarding the plaintiff’s claim. The defendant also relies on an offer to settle made on the issue of vacation pay in the amount of $4,400 given that their initial offer was for $3,200.

24. The plaintiff submits that even the partial indemnity scale requested by the defendant of approximately $88,000 is excessive and not justifiable for the work required in light of the complexity of the proceedings that were addressed through the expedited process of a summary judgment process.

25. Although the Court has ordered repayment of the improperly withheld vacation pay in the amount $3,763, the plaintiff submits that the court must recognize that the final offer to settle made by Park Dentistry in the amount of $4,400 was well after Ms. Lancia had already spent considerable legal fees in order to recapture this valid entitlement. As such, the amount offered by the defendant was well below the legal costs she expended in order to recoup the loss of the vacation pay amount ordered by His Honour.

26. In accordance with Rule 57.01 (1) (b), the Court may consider the apportionment of liability in determining costs. The Court of Appeal has stated that, in appeal matters, the general rule is that where success on appeal is substantially divided, an award of costs of the appeal will not be made (Lowndes v. Summit Ford Sales Limited et al., 2006 11654 (ON CA)). The Plaintiff, Michele Lancia, submits that that principle be applied to divided success on this Motion.

27. Contrary to the plaintiff’s position, success was not “substantially divided” such that no costs should be awarded. The plaintiff’s claim was for $154,000 plus special damages to be determined, but she was awarded only $3,763. This amounts to a mere 2.45% of her claim; less if one accounts for the “special damages to be determined.” This nominal amount should have no impact on the costs award in favour of Park Dentistry.

28. However I am not persuaded that a valid Rule 49 offer is applicable. Both parties attempted to reduce costs by addressing the claim in the summary judgment motion with limited viva voce evidence. At the outset, there was a triable issue. While it may be arguable that the plaintiff’s claim for sexual harassment was a non-starter under the guise of constructive dismissal, it was only after the fullness of time and hearing the witnesses that the plaintiff’s claim was doomed to fail. Based on the grounds provided in support of the defendant’s request, I do not find that this is an appropriate case for the awarding of costs on a substantial indemnity basis.

Bill of Costs

29. It is widely accepted that the appropriate quantum of costs is not determined by multiplying hours by rates. Rather, “the objective is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular proceeding, rather than an amount fixed by the actual costs incurred by the successful litigant.”

30. There must be practical and reasonable limits to the amounts awarded for costs and those amounts should bear some reasonable connection to the amount that should reasonably have been contemplated. I note that it is not necessary for me to have to go through the hours, or disbursements, line by line, in order to determine what the appropriate costs are. Nor is the court to second-guess the amount of time claimed unless it is clearly excessive or overreaching. I must consider what is reasonable in the circumstances, and all the relevant factors. However, when appropriate and necessary, a court ought to analyze the Bill of Costs in order to satisfy itself as to the reasonableness of the fees and expenses submitted for consideration. That presupposes that a party has filed a detailed Bill of Costs to be analyzed.

31. The defendant submits that this is a case in which costs on a substantial indemnity scale are warranted. The bill of costs is reasonable and fairly represents the appropriate costs to be awarded in this matter. The costs are commensurate with the serious nature of the claim against Dr. Park and Park Dentistry and reflect the high quality of the oral and written submissions that were prepared and presented to the court.

32. The plaintiff says that both Ms. Tobin and Ms. Latimer spent an inordinate amount of time researching the law for the factum and preparation for the substantial issues and the motion, which are excessive. The plaintiff submits the time spent by counsel is manifestly unreasonable and their Bill of Costs should be scrutinized by the Court.

33. From the written submissions I can glean that the plaintiff’s position is that the award ought to reflect the most just and reasonable costs and one which could have reasonable foreseen. The calculation of expected fees should be in an amount the plaintiff could reasonably expect to pay.

34. As mentioned, the defendant’s Bill of Costs regarding amounts claimed for fees and disbursements identifies a substantial indemnity total of $119,464.61 and a partial indemnity total of $87,996.93. The overall work performed by the defendant as it relates to the various stages of this matter essentially mirrors similar work performed by the various lawyers and law clerks for the plaintiff. For similar work and recognizing the complexity of the proceedings, the plaintiff’s substantial indemnity fees total $44,758.41 and her partial indemnity fees total $30,688.72.

35. I reject the plaintiff’s submissions that no costs ought to be awarded. Essentially I am in agreement with the defendant that the plaintiff’s award reflect but a fraction of the claim and the defendant had to vigourously defend the action.

36. I agree that the underlying motions were somewhat complex and involved multiple appearances for evidence and oral argument. The fees in this claim were exacerbated with the additional claim of sexual harassment and a toxic work environment and required limited viva voce evidence. It did require several attendances in order for the evidence to be adduced. The motion had a significant impact on the entire litigation. Defendant’s counsel is competent with years of experience.

37. While I am not inclined to award substantial indemnity costs, in my view, the defendant had made an effort to avoid unnecessary litigation and to settle the contested issues. Overall, it may be that the plaintiff has maintained a rigid and unreasonable approach to the entire litigation.

38. That said, I agree with the plaintiff in that the fees and hours expended on preparation and research for the summary judgment motion and for the hearing are excessive. This, in my view, requires significant adjustment.

39. In my review of the Bill of costs filed, I am not persuaded that the actual hours allocated; namely, 76.7 hours for Ms. Tobin’s preparation and attending cross-examinations; and Ms. Latimer’s 133 hours for the activity related to the summary judgment motion are reasonable for this motion. Rather than get into microscopic details of the hours expended, in the interests of fairness and practicality, I have halved the hours and fees incurred for both Ms. Tobin and Ms. Latimer accordingly.

Conclusion:

40. The costs award should be fair, proportionate and tailored to the circumstances of the case. In the exercise of my discretion under Rule 57.01 and the relevant authorities, it is ordered that the plaintiff pay costs in favour of the defendant on a partial indemnity basis fixed at $45,150.00 for fees plus applicable HST, and $1,331.58 for disbursements (all inclusive), all payable within 30 days.

Justice A. J. Goodman

Date: March 23, 2018