Olesiuk v Hilltop Water Service, 2016 ONSC 4548
Court File and Parties
COURT FILE NO.: 12424/09 DATE: 2016/07/12
ONTARIO SUPERIOR COURT OF JUSTICE
B E T W E E N:
John Olesiuk, Fay Olesiuk and Christina Olesiuk by her Litigation Guardian, Fay Olesiuk Plaintiffs
Margaret A. Hoy, for the Plaintiffs
- and -
Hilltop Water Service, Charles Elston Vaughan and Shelly Vaughan Defendants
Kimberly A. Jossul, for the Defendants
HEARD: June 5, 2016 The Honourable Justice P. R. Sweeny
Endorsement
[1] The issue on this motion is the extent to which the defendants can recover their costs of this action which has been dismissed on consent because the plaintiffs’ right of action is taken away pursuant to s. 28 of the Workplace Safety and Insurance Act, S.O. 1997, c. 16 (“the WSIA”). The defendants claim the costs associated with defending the action and costs associated with the hearing before the Workplace Safety Insurance and Appeals Tribunal (“WSIAT”). The plaintiffs assert that the costs should be referred for assessment and not fixed by me. In any event, the plaintiffs say the defendants should not recover costs because (1) the WSIAT does not award costs; and/or (2) the defendants’ conduct disentitles them to costs.
Background
[2] The defendant Hilltop Water Service (“Hilltop”) is a sole proprietorship owned by the defendant Charles Elston Vaughan. Mr. Vaughan and his wife, Shelly, manage the day-to-day operations of Hilltop.
[3] This claim arises out of alleged personal injury suffered by the plaintiff John Olesiuk while painting a truck owned by the defendants on October 24, 2008. The plaintiff was treated as an independent contractor by Hilltop. Hilltop never reported to the Workplace Safety and Insurance Board (“WSIB”). After the accident and a subsequent Board investigation, it was determined that Hilltop ought to have reported. It was retroactively assessed for significant premiums.
[4] The claim was issued September 17, 2009. The Statement of Defence was delivered February 4, 2010. The defence pleaded that the claim was barred by s. 28 of the WSIA. The defendants assert that examinations for discovery were necessary, prior to proceeding with the WSIAT application, in order to gather information and documentation with respect to the nature of the employment relationship between the defendants and the plaintiff. The examinations for discovery were completed on February 22, 2011. The plaintiff listed the matter for trial on May 9, 2012. The pretrial was held on January 8, 2013.
[5] The WSIAT application was commenced in February 2013. The hearing started on June 18, 2014. It was not completed on that date and continued on March 24, 2015. The decision was released on July 3, 2015. At the hearing, the real issue was whether or not Mr. Olesiuk was an employee. After reviewing the relevant factors, the WSIAT determined that he was an employee.
[6] The WSIAT concluded that the plaintiff had no right of action against the defendants because at the time of the accident in October 2008, the plaintiff was a worker of a Schedule 1 employer who was injured in the course of his employment. His right to sue his employer and the Vaughans was taken away by s. 28 of the WSIA.
Issues
[7] The issues are:
(1) Should the costs be fixed by me on this motion? (2) Is the WSIAT proceeding incidental to the action? (3) What impact, if any, does the conduct of the defendants have on the entitlement to costs?
(1) Should the Costs be Fixed by Me on this Motion?
[8] I am satisfied that it is appropriate for me to fix costs in this matter. This is a Superior Court action. It has been dismissed on consent and the issue is costs.
[9] In fixing costs, under s. 131 of the Courts of Justice Act, R.S.O. 1990, c.C. 43, the costs of and incidental to a proceeding or a step in a proceeding are in the discretion of the court and the court may determine by whom and to what extent costs shall be paid.
[10] In the normal course, costs follow the event and only in rare circumstances should a successful party be deprived of the costs. The discretion of the court to deprive a successful litigant of his or her costs must be exercised judicially and upon proper material connected with the case, and the judge’s reasons for departing from the general rule should be shown on the record (see Bardoscia v. Niagara Regional Police Services Board, 2005 CarswellOnt 3188, at para. 13).
(2) Is the WSIAT Proceeding Incidental to the Action?
[11] The defendants refer to Boyd v. Taj Mahal Stables Inc., in support of their position that the costs with respect to the WSIAT were properly recoverable in the action. In that case, the plaintiff’s solicitors made inquiries of the WSIB and learned that the named defendants were not registered. A Statement of Claim was issued. The Statement of Defence pleaded as a defence that the action was barred because the plaintiff was a worker. The defendant consistently denied he was insured. I note this is similar to the position taken by the defendants in this case that the plaintiff was not an employee but an independent contractor. In Boyd, there was a more than two-year delay in commencing the application to the WSIAT. The hearing took place more than three years after the claim was issued. The decision holding that the plaintiff had no right of action was rendered four years after the claim was issued. The court noted that no costs are ordered in proceedings before the WSIAT.
[12] In that case, the defendants sought $29,519.11 less $11,000 for an unsuccessful motion for security for costs for a net of $18,519.11. The legal fees in connection with the application to the WSIAT were in the amount of $9,527.67 for a total of $18,046.70. (I note that this must be an error because the number should be $28,046.70.) The court then noted that the insurer sought partial indemnity costs at 70% for a total of $12,632.75 based on the $18,046.70 error noted above. Ultimately, the court awarded $5,000 to the defendants on a partial indemnity basis. $5,000 is only 18% of the actual costs which were requested.
[13] In exercising his discretion, Ray J. observed that the defendants ought to have proceeded with their application to the WSIAT promptly and, had they done so, expenses would have been avoided. In addition, he did not accept that they had to wait for the plaintiffs’ discovery evidence.
[14] A different analysis of this issue is found in Boyd v. Cooper, 2011 ONSC 1869, [2011] O.J. No. 1893, where O’Connell J. refused to order costs incurred with respect to a WSIAT hearing. O’Connell J. noted that the WSIAT has no authority to award costs against another party under the WSIA. After setting out the WSIAT Practice Direction and reviewing the relevant statutory provisions, O’Connell J. held:
There is no valid reason to end run the clear rule of the WSIA, The WSIAT engaged its jurisdiction. It resulted in a cessation of the action. [para. 44]
No costs were allowed with respect to the WSIAT hearing, which were the only costs claimed by the intervener insurer in that case.
[15] The decision of O’Connell J. is consistent with the decision of D.S. Ferguson J. in Cantlon v. Timmins (City). In that case, after trial, the plaintiff claimed costs associated with a WSIAT hearing (which must have allowed the action to proceed). The defendants objected to any costs with respect to the WSIAT hearing on the basis that it is not part of the action. D.S. Ferguson J. agreed and declined to award any costs associated with the hearing.
[16] I am persuaded by the reasoning of O’Connell J. that costs with respect to a WSIAT hearing are not properly recovered in an action. There is a rationale behind the no costs regime for the WSIAT and the defendant ought not to be able to make an end run around that regime. Therefore, the defendants are not entitled to recover the $14,4491.80 in costs associated with the WSIAT hearing.
(3) The Defendants’ Conduct
[17] With respect to the costs of the action, the facts of this case are similar to Boyd v. Taj Mahal Stables Inc. Mr. and Mrs. Vaughan denied that the plaintiff was an employee. Hilltop was not registered with the WSIB. As a result of investigation, it was registered and ordered to pay significant arrears. In this case there was a delay in bringing the application.
[18] The defendants provided a costs outline showing costs of $62,733.46 actually incurred, and $33,358.67 on a partial indemnity basis. This includes costs of pleadings, discoveries, pretrial, the WSIAT application, and the costs of this motion. As I have said, the costs of the WSIAT hearing are not recoverable. The costs of this motion will be dealt with later. This leaves the costs associated with the pleadings, the examination for discovery, and the pretrial.
[19] With respect to the costs associated with the pretrial, had the defendants brought the application more quickly, the costs would not have been incurred with respect to a pretrial. Accordingly, in my view, it is not appropriate to award the defendants costs of attendance at the pretrial.
[20] The defendants assert that the examinations for discovery were necessary to gather information for the purposes of the right to sue application. The right to sue application is a hearing. The WSIAT does not provide for examinations for discovery. Therefore, it cannot be necessary to have examinations for discovery in order to have the hearing. While the information alleged at the discovery may have been useful at the hearing, the discovery was not necessary. In my view, the costs associated with the discovery were unnecessarily incurred and I decline to award costs associated with it.
[21] The plaintiff chose to issue a Statement of Claim to pursue a claim for damages and not apply for worker’s compensation benefits. Had the matter proceeded efficiently, there would only be modest costs incurred by the defence related to the delivery of the Statement of Defence. The balance of the costs was incurred in pursuit of the successful WSIAT application.
[22] The defendants claim $7,378.82 on a partial indemnity basis for the costs related to the assessment of the file, report to client, and pleadings. These costs are high. I am mindful that the overall objective in fixing costs is to fix an amount that is fair and reasonable for an unsuccessful party to pay in the particular circumstances, rather than an amount fixed by actual costs incurred by the successful litigant.
[23] In the circumstances of this case, I fix the party and party costs of the action, payable by the plaintiffs to the defendants, in the amount of $3,000.00 all inclusive.
Costs of the Motion
[24] I would encourage the parties seek to agree to the costs of the motion. If the parties are unable to agree, costs submissions shall be made in writing addressed to me at my chambers in Welland. The costs submissions of the defendants, limited to 3 pages, together with Bill of Costs and any offers to settle, shall be delivered within 7 days of the release of this decision. The plaintiffs shall have 7 days to respond, limited to 3 pages, with a Bill of Costs.