Court File and Parties

Chatham Court File No.: CV-17-6631 Date: 2019-06-14 Superior Court of Justice - Ontario

Re: Kimberly Wilkinson-Moore, Plaintiff And: 1015081 Ontario Inc., carrying on business as “United Floors,” Defendant

Before: Howard J.

Counsel: James E.S. Allin, for the Plaintiff David J. Kirwin, for the Defendant

Heard: Written submissions

Costs Endorsement

Overview

[1] The plaintiff, a 60-year-old female retail sale representative previously employed with the defendant for some five-and-a-half years, commenced an action for wrongful dismissal and mental distress pursuant to the simplified procedure under Rule 76 of the Rules of Civil Procedure.

[2] The statement of claim was issued on January 23, 2017. The plaintiff claimed damages in the amount of $50,000 for wrongful dismissal and an additional $50,000 for mental distress. The defendant’s pleading, delivered April 6, 2017, alleged that the plaintiff voluntarily resigned and, in the alternative, that the employer had just cause for dismissal. Further, the defendant employer advanced a counterclaim for $75,000, alleging the plaintiff was negligent in the performance of her duties.

[3] By written offer to settle dated October 5, 2017, the defendant offered to resolve the proceeding on the basis of an all-inclusive payment of $7,500 to the plaintiff. The defendant’s offer was not accepted.

[4] By written offer to settle dated December 18, 2018, which was delivered about a month before trial, the plaintiff offered to settle the proceeding on the basis that the defendant would pay to the plaintiff:

a. the sum of $35,000 for all her claims for damages; b. prejudgment interest in accordance with the Courts of Justice Act; and c. “costs of this action in an amount to be agreed upon by the parties or as fixed by a Justice of this Court.”

[5] The action was settled on the morning of the first day of trial.

[6] The trial of the action had been scheduled to commence on Monday, January 14, 2019, and was expected to require five days for trial. On that Monday morning, the office of counsel for the defendant delivered to the office of plaintiff’s counsel an acceptance of the offer to settle of the plaintiff dated December 18, 2018. The acceptance of offer was delivered by fax, which was sent at 9:11 a.m. that Monday morning, by which time counsel for the plaintiff had already left for the courthouse to attend to the trial.

[7] Later that same Monday morning, counsel for both parties attended before me to advise that they had resolved all substantive issues except for the question of costs. Counsel asked for some time to discuss the question of costs between themselves and, if they were unable to resolve the issue, they would contact the Trial Coordination Office to arrange for a time later that same week to re-attend before me to address the issue.

[8] Contrary to their joint expectations, counsel were unable to resolve the question of costs.

[9] Accordingly, on Tuesday, January 15, 2019, an attendance back before me was scheduled by Trial Coordination for the afternoon of Wednesday, January 16, 2019. The attendance on Wednesday afternoon was confirmed by Trial Coordination by email to both counsel.

[10] However, Mr. Kirwin for the defendant was not able to attend in court on the Wednesday afternoon. I was advised that Mr. Kirwin was out of the office Tuesday and did not see the email correspondence from the Trial Coordination Office or other correspondence sent to him Tuesday afternoon by counsel for the plaintiff and that, further, he was not alerted to these communications by his office staff.

[11] Moreover, the information before me on Wednesday afternoon was that Mr. Kirwin was unable to attend in court on Wednesday because he had scheduled, in the interim, some “urgent appointments” and, in any event, he had not yet had an opportunity to review the plaintiff’s bill of costs with his client.

[12] In fairness to Mr. Kirwin, he explained, in para. 13 of the defendant’s cost submissions, that “I specifically indicated [in court on Monday, January 14th] that I was back in Chatham on Thursday, January 17 and anticipated that we could speak to the matter of costs at that time.” Respectfully, that is not my recollection of the matter. It may well be that counsel had another attendance in Chatham on Thursday, January 17th and was expecting to deal with the costs issue then; I do not dispute that. However, contrary to counsel’s recollection, that was not communicated to the court on Monday, January 14th. In this regard, I have reviewed the digital audio recording of the court proceedings on that Monday morning, and counsel is not heard to advise the court or request that the matter return on Thursday, January 17th because of the fact that counsel was expected to be back in Chatham that day. Rather, counsel is heard to suggest that counsel for the parties could return to court “whether later today [i.e., that Monday] or some, perhaps a 9:30 appointment later this week, if there is an issue.”

[13] That said, I accept without question Mr. Kirwin’s submission that his failure to attend in court on that Wednesday afternoon was not intentional. In any event, counsel’s failure to attend court that Wednesday has played no role in my consideration of the costs issue.

[14] Given the absence of Mr. Kirwin on that Wednesday, I ordered that, in the circumstances, the question of costs would be addressed through written submissions, according to the following schedule:

a. the plaintiff shall deliver her written submissions on or before Friday, January 25, 2019, which shall not exceed five pages in length (exclusive of any bill of costs, offers to settle, dockets, authorities, or other similar supporting material); b. the defendant shall deliver its written submissions on or before Friday, February 1, 2019, which shall not exceed five pages in length (exclusive of the same supporting material); c. the plaintiff shall deliver her reply, if any, by Wednesday, February 6, 2019, which shall not exceed three pages; d. if any party fails to abide by this schedule, they shall be taken to have waived their rights on the issue.

[15] In accordance with the prescribed schedule, the plaintiff delivered her costs submissions on January 25, 2019, the defendant delivered its responding submissions on February 1, 2019, and the plaintiff delivered reply submissions on February 4, 2019.

[16] I have read and considered all the submissions received.

[17] Although the monetary claim of the plaintiff is neither expressly nor clearly set out in her submissions in the main, the bill of costs delivered on behalf of the plaintiff appears to claim costs of the action on a partial indemnity basis in the amount of $29,409.81 for fees (inclusive of HST), together with disbursements of $3,750.38 (inclusive of HST), for a total amount of $33,160.19. Paragraph 13 of the plaintiff’s reply submissions confirms that the plaintiff is asking this court to fix her costs in the amount of $33,160.19.

[18] The defendant maintains that, as the action was commenced pursuant to the simplified procedure under Rule 76, the appropriate and proportionate costs recovery of the plaintiff in this simplified procedure case is $12,000 on account of fees (exclusive of HST) and $2,500 on account of disbursements (exclusive of HST). If one includes the HST amounts on fees and disbursements, the defendant’s position is that the court should fix the plaintiff’s total recovery of costs in the amount of $16,385, all inclusive. In other words, the defendant’s position is that the plaintiff should recover less than half of the amount claimed by the plaintiff.

Governing Legal Principles

[19] In Ontario, cost awards in civil law matters are governed by section 131 of the Courts of Justice Act and, in most cases, rule 57.01 of the Rules of Civil Procedure.

[20] Subsection 131(1) of the Courts of Justice Act confers upon the court a general discretion to determine costs, in the following terms:

Subject to the provisions of an Act or rules of court, 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 the costs shall be paid.

[21] It has been said that making an award of costs is inherently an exercise of judicial discretion. Indeed, the Supreme Court of Canada and our Court of Appeal has said that, “costs awards are ‘quintessentially discretionary.’” (Kerry (Canada) Inc. v. Ontario (Superintendent of Financial Services), 2009 SCC 39, at para. 126; See also Hamilton v. Open Window Bakery Ltd., 2004 SCC 9, at para. 27; Mars Canada Inc. v. Bemco Cash & Carry Inc., 2018 ONCA 239, at para. 43; and Fielding v. Fielding, 2015 ONCA 901, at para. 67).

[22] That said, the discretion conferred by s. 131(1) of the Courts of Justice Act is expressly made subject to the “rules of court.” Rule 57 of the Rules of Civil Procedure deals with the awarding and fixing of costs in civil proceedings and provides guidance in the exercise of the court’s discretion by enumerating circumstances and factors that the court may consider when determining costs. In this regard, subrule 57.01(1) provides that:

57.01 (1) In exercising its discretion under section 131 of the Courts of Justice Act to award costs, the court may consider, in addition to the result in the proceeding and any offer to settle or to contribute made in writing,

(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;

(b) the apportionment of liability;

(c) the complexity of the proceeding;

(d) the importance of the issues;

(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

(ii) taken through negligence, mistake or excessive caution;

(g) a party’s denial of or refusal to admit anything that should have been admitted;

(h) whether it is appropriate to award any costs or more than one set of costs where a party,

(i) commenced separate proceedings for claims that should have been made in one proceeding, or

(ii) in defending a proceeding separated unnecessarily from another party in the same interest or defended by a different lawyer; and

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

[23] The indemnification of the successful party is a paramount objective – but not the only one – to be served by a costs order. (Watterson v. Canadian EMU, 2018 ONSC 301, at para. 8). Our Court of Appeal has recognized that: “[m]odern costs rules are designed to foster three fundamental purposes: (1) to partially indemnify successful litigants for the cost of litigation; (2) to encourage settlement; and (3) to discourage and sanction inappropriate behaviour by litigants.” (Serra v. Serra, 2009 ONCA 395, at para. 8, citing Fong v. Chan (1999), 46 O.R. (3d) 330 (C.A.), at para. 22. See also 1465778 Ontario Inc. v. 1122077 Ontario Ltd. (2006), 82 O.R. (3d) 757 (C.A.), at para. 26. Five broad purposes were identified by Perell J. in Sheppard v. McKenzie, [2009] O.J. No. 3677, 2009 ONSC 46175, at para. 17).

[24] In DUCA Financial Services Credit Union Ltd. v. Bozzo, 2010 ONSC 4601, Cumming J. described the “normative approach” to costs awards in Ontario as follows:

… first, that costs follow the event, premised upon a two-way, or loser pay, costs approach; second, that costs are awarded on a partial indemnity basis; and third, that costs are payable forthwith, i.e. within 30 days. Discretion can, of course, be exercised in exceptional circumstances to depart from any one or more of these norms. (DUCA Financial Services Credit Union Ltd. v. Bozzo, 2010 ONSC 4601, at para. 5).

[25] In fixing the amount of costs to be awarded, the court’s objective is not to reimburse a litigant for every dollar spent on legal fees. Rather, in exercising its discretion, a court must produce a result that is fair and reasonable in all the circumstances. (DUCA Financial Services Credit Union Ltd. v. Bozzo, 2010 ONSC 4601, at para. 7. See also Kuzev v. Roha Sheet Metal Ltd., 2007 ONSC 25656, at para. 6, citing Murano v. Bank of Montreal (1998), 41 O.R. (3d) 222, at p. 247 per Morden A.C.J.O., and Zesta Engineering Ltd. v. Cloutier, 2002 ONCA 25577, at para. 4, and quoting Moon v. Sher, 2004 ONCA 39005, at para. 30 per Borins J.A.). The “overriding principle is reasonableness.” (Davies v. Clarington (Municipality), 2009 ONCA 722, at para. 52).

[26] As the Ontario Court of Appeal observed in its leading decision in Boucher v. Public Accountants Council (Ontario) (2004), 2004 ONCA 14579, at para. 26: “[o]verall, as this court has said, 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.”

[27] The court should also consider the totality of the costs award to ensure that it is not disproportionate to the amount recovered. (R & G Draper Farms (Keswick) Ltd. v. Nature’s Finest Produce Ltd., 2016 ONCA 626, at para. 23). That is consistent with the directive of subrule 1.04(1.1) of the Rules of Civil Procedure that in applying the rules, “the court shall make orders and give directions that are proportionate to the importance and complexity of the issues, and to the amount involved, in the proceeding.”

[28] I am guided by these governing principles here.

Preliminary Objection

[29] The reply submissions of the plaintiff ask this court to fix the plaintiff’s costs without regard for the defendant’s submissions and, more particularly, to find that, in accordance with my endorsement of January 16, 2019, the defendant should be deemed to have waived its rights on the issue of costs because it failed to comply with my order that the defendant deliver its costs submissions by Friday, February 1, 2019.

[30] The main argument of the plaintiff in support of its request is that the submissions of the defendant were delivered by email sent on Friday, February 1, 2019, at 5:29 p.m. Counsel relies on clause 16.05(1)(f) of the Rules of Civil Procedure, which provides that where a document is served on a lawyer of record of a party by email after 4:00 p.m., service is deemed to have been made the following day. It follows, counsel argues, that since the defendant’s costs submissions were delivered at 5:29 p.m. on February 1st, they were past the 4:00 p.m. deadline under clause 16.05(1)(f) and are thus deemed to have been served on February 2nd, contrary to the February 1st deadline set by my endorsement.

[31] I do agree with the implicit assumption in counsel’s submission that my endorsement of January 16th should be read in the context of the Rules of Civil Procedure, that is, that the Rules apply to my endorsement.

[32] As such, I exercise my discretion under subrule 3.02(1) nunc pro tunc to extend the time for delivery of the defendant’s submissions to February 1, 2019, at 5:30 p.m.

[33] I do so for the following reasons. The general principle of interpretation of the Rules of Civil Procedure is set out in subrule 1.04(1), which provides that:

These rules shall be liberally construed to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits. [Emphasis added.]

[34] I appreciate that a strict interpretation of the Rules supports the technical point advanced in the plaintiff’s reply submissions. However, in keeping with the general interpretative principle codified in subrule 1.04(1), I prefer to determine the question of costs based on the merits of the parties’ respective submissions and not because of some technical late compliance with my delivery schedule.

[35] Further, this is not a case where the defendant was late in its delivery by days or weeks or wholly ignored the deadline. The defendant’s submissions were delivered on February 1st but were received 89 minutes after the time contemplated by clause 16.05(1)(f). I would not have the determination of the costs issue made in the absence of any consideration for the merits of the defendant’s submissions for the sake of a mere 89 minutes.

[36] Finally, in my view, it does not lie in the plaintiff’s mouth to complain of the defendant’s technical non-compliance with my endorsement when the plaintiff herself has not acted in strict compliance with my endorsement or the Rules either.

[37] My endorsement of January 16th provided that the costs submissions of the plaintiff in the main were not to exceed five pages in length.

[38] The much-overlooked provisions of subrule 4.01(1) of the Rules of Civil Procedure set out certain formatting standards for documents filed in a court proceeding. Paragraph 1 of that subrule requires that a document filed in a proceeding “shall” have double spaces between the lines of text. The standard is both mandatory and, as I have suggested, often overlooked.

[39] The costs submissions of the plaintiff delivered both in the main and in reply are not double-spaced but are single-spaced, in contravention of my endorsement and para. 1 of subrule 4.01(1).

[40] In this case, compliance with the formatting standards under the Rules is not a matter of trifles. There is a very real substantive impact of the plaintiff’s seemingly technical non-compliance with subrule 4.01(1). I had ordered that the parties’ submissions in the main should not exceed five pages. By delivering her single-spaced submissions in contravention of subrule 4.01(1), the plaintiff has, in effect, delivered submissions that are ten pages in length, not five. The defendant complied with the five-page limit under my order; the plaintiff did not. Thus, non-compliance with formatting standards can give rise to concerns of procedural unfairness. It is akin to imposing time-limits on counsel’s oral argument, but then allowing one party to make submissions for 30 minutes while restricting the other party to only 15 minutes.

[41] In the circumstances, I dismiss the plaintiff’s request to ignore the defendant’s submissions altogether because they were emailed some 89 minutes late.

Analysis

The cost consequences under rule 49.10

[42] Subrule 49.10(1) of the Rules of Civil Procedure provides that:

Where an offer to settle,

(a) is made by a plaintiff at least seven days before the commencement of the hearing;

(b) is not withdrawn and does not expire before the commencement of the hearing; and

(c) is not accepted by the defendant,

and the plaintiff obtains a judgment as favourable as or more favourable than the terms of the offer to settle, the plaintiff is entitled to partial indemnity costs to the date the offer to settle was served and substantial indemnity costs from that date, unless the court orders otherwise.

[43] The plaintiff claims that she is entitled to the benefit of the cost consequences provided by subrule 49.10(1) because by reason of the defendant’s acceptance of her offer to settle of December 18, 2018, she obtained a judgment “as favourable” as the terms of her offer. As a result, the plaintiff claims substantial indemnity costs from the date of her offer.

[44] There is no merit to this argument.

[45] On a plain reading of subrule 49.10(1), the costs consequences provided thereunder apply only where, pursuant to clause (c), the plaintiff’s offer to settle is not accepted by the defendant. That is manifestly not the case here. The plaintiff’s offer to settle of December 18th was accepted by the defendant on January 18, 2019.

[46] Further, in the circumstances of the instant case, the plaintiff did not obtain “a judgment as favourable” as her offer to settle within the meaning of subrule 49.10(1). The plaintiff’s offer to settle was accepted by the defendant by its notice of acceptance of offer delivered on January 14, 2019, at 9:11 a.m. As such, as of the time of that acceptance, the plaintiff was then entitled, under the terms of her offer to settle, to her costs as agreed or fixed by this court. That is, the plaintiff’s entitlement to costs crystallized as at 9:11 a.m. on January 14, 2019. However, as of January 14, 2019, at 9:11 a.m., the plaintiff had obtained no judgment at all and certainly no “judgment” for the purposes of rule 49.10.

[47] Further, where “the plaintiff obtains a judgment” for the purposes of subrule 49.10(1), the “judgment” obtained is a judgment obtained after the trial of the action or the hearing of the proceeding. (Campbell v. Norbury, 2014 ONSC 5168, at para. 23). That interpretation is consistent with the purpose of rule 49.10, in which regard it has long been held that the purpose of the rule is to provide an incentive to the settlement of litigation (Jarbeau v. McLean, 2017 ONCA 115, at para. 82, citing Niagara Structural Steel (St. Catharines) Ltd. v. W.D. LaFlamme Ltd. (1987), 58 O.R. (2d) 773 (C.A.), at p. 777) – that is, the avoidance of trials. Indeed, as Anderson J. expressly held in Jacuzzi Canada Ltd. v. A. Mantella & Sons Ltd. (1988), 31 C.P.C. (2d) 195 (Ont. H.C.J.), at p. 196, the intent underlying the costs consequences provided by rule 49.10 that attach to written offers to settle is “to induce settlements and avoid trials.”

[48] In the instant case, the plaintiff obtained no judgment after trial – precisely because there was no trial at all. The defendant accepted the plaintiff’s offer before the trial began. Indeed, that whole line of cases that has developed around the meaning to be given to the term “the commencement of the hearing” for the purposes of clause 49.10(1)(a) – in respect of which our Court of Appeal has held that, in general, a “civil trial therefore commences within the meaning of Rule 49 when evidence has been heard” (Elbakhiet v. Palmer, 2014 ONCA 544, at paras. 16-20) – amply demonstrates that in order to invoke the cost consequences provided by rule 49.10, there must be, generally speaking, some evidence led at a trial (or the hearing of some other proceeding).

[49] Again, in the instant case, there was no trial held, and there certainly was never any evidence heard at trial. There was no determination of the issues at trial; the matter was resolved by the defendant’s acceptance of the plaintiff’s offer before the trial began.

[50] Subrule 49.10(1) simply does not apply in the circumstances of the instant case. I conclude there is no basis to award the plaintiff costs on a substantial indemnity scale.

The scale of the award

[51] As I have found that the cost consequences under subrule 49.10(1) have no application in this case, I find no other basis to consider making an award on a substantial indemnity basis or any other elevated scale.

[52] As Leach J. explained in his recent decision in Snowden v. The Corporation of the Township of Ashfield-Colborne-Wawanosh, 2018 ONSC 10, at para. 30, although the court has a broad discretion in relation to costs, our appellate courts have repeatedly emphasized that an award of costs on a partial indemnity basis generally strikes the proper balance between the cost benefits to be enjoyed by the successful litigant and the cost burdens to be borne by the unsuccessful party, and that elevated cost awards should be reserved for “rare and most exceptional” cases where the conduct of a litigant warrants condemnation by the courts. (citing Foulis v. Robinson (1978), 21 O.R. (2d) 769 (C.A.), and Isaacs v. MHG International Ltd. (1984), 45 O.R. (2d) 693 (C.A.)).

[53] In its 2018 decision in Mars Canada Inc. v. Bemco Cash & Carry Inc., 2018 ONCA 239, at para. 43, our Court of Appeal again affirmed that “costs on a substantial indemnity basis should only be awarded ‘where there has been reprehensible, scandalous or outrageous conduct on the part of one of the parties’.” (citing Young v. Young, 1993 SCC 34, at p. 134).

[54] The plaintiff here does not allege that the defendant engaged in any reprehensible, scandalous, or outrageous conduct as might warrant an award of costs on an elevated scale. On the material before me, I find there is no basis to make such an award. The costs of this action should be fixed on the partial indemnity scale.

The factors under subrule 57.01(1)

[55] I have considered all of the factors enumerated in subrule 57.01(1) of the Rules of Civil Procedure, not all of which are equally relevant in the instant circumstances (or at all). As such, I do not propose to specifically address each and every factor below. That said, I would highlight the following considerations.

The principle of indemnity: clause 57.01(1)(0.a)

[56] Clause 57.01(1)(0.a) of the Rules provides that the court may consider “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.”

[57] Counsel for the plaintiff claims a partial indemnity rate of $275 per hour and a substantial indemnity rate of $412.50 per hour.

[58] As I have found above, there is no basis to make an award on a substantial indemnity basis or any elevated costs basis in this case.

[59] Mr. Allin has been practising for 39 years. Given counsel’s experience, I do not think there can be any reasonable objection to an hourly rate of $275 on a partial indemnity basis, and I do not understand the defendant’s submissions to make any such objection. I find that the $275 hour rate on a partial indemnity basis is fair and reasonable.

[60] The plaintiff’s bill of costs claims a total of 63.33 hours for work spent on the proceeding. The total dollar value of the fees claimed is $26,026.38.

[61] I have some difficulty with some aspects of the plaintiff’s bill of costs.

[62] The plaintiff’s bill of costs advances a claim for work performed on January 14, 15, and 16, 2019, regarding the issue of costs. The total value of the work claimed is $4,443.75. In my view, it is not appropriate to make a claim for the time spent on the issue of costs, given that the court has not made any determination on entitlement to such costs. The present exercise involves only fixing the costs of the action pursuant to para. 3 of the plaintiff’s bill of costs dated December 18, 2018. Paragraph 3 does not speak to the costs of the determination of costs. They are separate questions. That is, for example, a plaintiff may be successful at trial and awarded her costs of the action, to be assessed through the assessment office if the parties were unable to agree. If the parties were required to proceed with an assessment through the assessment office, the costs of that assessment process would raise a separate question than the successful plaintiff’s costs of the action. Indeed, the successful plaintiff might adopt an unreasonable position on the costs assessment and may be denied the costs of the assessment.

[63] There has been no such determination of entitlement at this point. It is therefore inappropriate for the plaintiff to claim $4,443.75 for what, in truth, amounts to time that was almost exclusively spent on the question of costs. Deducting the amount of $4,443.75 spent on the costs issues from the total claim of $26,026.38, one is left with $21,582.63. Thus, in my view, even if the plaintiff were entirely successful on all other points, the amount awarded for fees ought not to exceed $21,582.63 (exclusive of HST).

[64] Secondly, given that the plaintiff’s bill of costs claims a total amount for fees of $26,026.38 and a total of 63.33 hours incurred, it will be seen that the effective hourly rate utilized in the bill of costs is actually $410.96. That effective hourly rate is much closer to counsel’s substantial indemnity hourly rate of $412.50 – which, I have held, is not appropriate here – than it is to the $275 partial indemnity hourly rate.

[65] In other words, the bill of costs essentially advances the claim that some work should be charged at counsel’s partial indemnity rate and other work should be charged at the substantial indemnity rate. To that end, it is plain that all of the trial preparation work that was performed in December 2018 is claimed at the $275 partial indemnity rate in the bill of costs. For example, one hour of trial preparation is claimed on December 13, 2018, and the dollar value of the claim is $275. On December 5, 2018, 3.17 hours of trial preparation is claimed, at a dollar value of $871.75 – clearly, the work performed on December 5th is claimed at $275 per hour. The same is true for the time spent on trial preparation on December 10 and 17, 2018. All of the trial preparation work performed in December 2018 is charged at $275 per hour in the bill of costs.

[66] However, all of the trial preparation work performed in January 2019 is charged at the $412.50 substantial indemnity rate. That is clear from a review of hours recorded and the dollar value claimed for each of the six entries relating to trial preparation on January 2, 3, 4, 11, 12, and 13, 2019.

[67] It is not clear why trial preparation work should be claimed in the bill of costs at $275 for work performed in December 2018 but at the rate of $412.50 for trial preparation work performed a few short weeks later in January 2019.

[68] By my calculation, this amounts to a discrepancy of $2,069.35. That is, if one were to re-calculate the total hours incurred for trial preparation work in January 2019 (15.05 hours) at the partial indemnity rate of $275 per hour, the total value of that work would be $4,138.75, and not the amount of $6,208.13, as claimed in the plaintiff’s bill of costs.

[69] In the same vein, if one accepts the bill of costs’ claim that a total of 63.33 hours incurred in this action (and we know that some of that 63.33 hours was spent on work performed on January 14, 15, and 16, 2019, regarding the issue of costs), and then re-calculates all of that 63.33 hours at the partial indemnity rate of $275, the total amount for fees would be $17,415.75.

[70] Turning to the disbursements, I find most of the items claimed are fair and reasonable; however, I have a concern regarding the amount claimed for photocopying. The plaintiff claims a total of $3,425.91 (exclusive of HST) for disbursements. Of that total amount, there are eight items claimed for “Photocopy Recovery” over the course of the proceeding, the total for which is $960.75 (exclusive of HST). In other words, almost 30 per cent of the total amount claimed for disbursements is said to have been expended on account of photocopying.

[71] As the defendant’s submissions explain, there were only 21 documents disclosed in the plaintiff’s original affidavit of documents, plus an additional 12 documents in the plaintiff’s supplementary affidavit of documents, for a total of 33 productions for the plaintiff. The defendant’s productions totalled 16. As such, the total productions of both parties in the action totalled 51. To be sure, this was certainly not a high volume documents case.

[72] In such circumstances, and without any breakdown in the bill of costs as to total pages copied and unit cost per page, I do not accept the claim that $960.75 is a fair and reasonable amount for photocopying expenses.

The complexity of the proceedings: clause 57.01(1)(c)

[73] On my review of the parties’ cost submissions, it appears that the sharpest disagreement between the parties concerns the degree of complexity of the proceeding.

[74] The defendant argues that the matter was straight-forward, given that the action was litigated pursuant to the Simplified Procedure under Rule 76, and it involved only 51 productions, four hours collectively of examinations for discovery on August 14, 2017, and a two-hour pretrial conference on September 18, 2018.

[75] For her part, the plaintiff maintains that the proceeding was not “a garden variety wrongful dismissal action.” The costs submissions of the plaintiff highlight certain features of her claim for mental distress, and attached to her costs submissions is the plaintiff’s medical brief, which is some 20 pages in length.

[76] The action here was for wrongful dismissal and mental distress. In my view, the claim was of moderate complexity.

The amount claimed and the amount recovered: clause 57.01(1)(a)

[77] The factor set out in clause 57.01(1)(a) addresses the amount claimed and the amount recovered in the proceeding.

[78] The amount claimed by the plaintiff for damages in her statement of claim was $100,000. By the defendant’s acceptance of the plaintiff’s offer to settle, the plaintiff will recover $35,000 in damages (exclusive of interest and costs). In that context, one must assess the plaintiff’s request that this court fix her costs in the total amount of $33,160.19.

[79] Paragraph 6 of the defendant’s cost submissions makes the point that the principle of proportionality “is a key consideration when dealing with the issue of costs.” However, the defendant does not develop or pursue the point in its written submissions.

[80] By reason of the express references to the concept of proportionality in paras. 22, 25, 27, and 28 of the plaintiff’s submissions, it is fair to say that the plaintiff herself acknowledges that proportionality is a relevant consideration.

[81] The concern here, of course, is that the plaintiff will recover $35,000 by way of an accepted offer to settle – that is, without a trial – but her claim for costs in the total amount of $33,160.19 approaches the total amount of her recovery in the action.

[82] I appreciate that the plaintiff has provided at least two examples of cases where the amounts awarded for costs approach the amounts recovered or in issue in the action. In Campbell v. Norbury, 2014 ONSC 5168, at para. 35, the plaintiff recovered $15,000 by way of an accepted offer to settle, and the court awarded costs of more than $13,000. In 2395446 Ontario Inc. v. King’s & Queen’s Custom Homes Inc., 2016 ONSC 8104, the plaintiff claimed $50,000 in a Rule 76 simplified proceeding. The defendants brought a motion for summary dismissal, which was allowed and the action was dismissed, and the defendants recovered $22,500 in partial indemnity costs.

[83] The decision in 2395446 Ontario Inc. v. King’s & Queen’s Custom Homes Inc., 2016 ONSC 8104 was overturned on its merits by the Court of Appeal, and both the orders for summary judgment and costs were set aside (2395446 Ontario Inc. v. King’s & Queen’s Custom Homes Inc., 2017 ONCA 782). I need not say anything further about reliance on that authority.

[84] Paragraph 6 of the plaintiff’s submissions appear to rely on the decision in Campbell v. Norbury, 2014 ONSC 5168, at para. 14 for the proposition that where an offer to settle is accepted prior to trial, the traditional factors used in fixing costs under subrule 57.01(1) do not apply. The plaintiff submits that in Campbell, the court found that the applicable rules are contained in Rule 58, and in those circumstances, the judge determining the question of costs essentially steps into the shoes of an assessment officer conducing an assessment of costs under Rule 58.

[85] In my view, one must be sensitive to the particular factual context before the court and the authority upon which the court is determining the question of costs. In Campbell v. Norbury, 2014 ONSC 5168, the offer to settle that was ultimately accepted contained the following term regarding costs: “[t]he Defendants shall pay to the Plaintiff her disbursements and costs of this Action in an amount to be assessed or agreed, pursuant to the Rules of Civil Procedure.” [Emphasis added.]

[86] That language is conceptually distinct from the language of para. 3 of the offer to settle in the instant case, which, as I have noted, expressly provides that the defendant shall pay to the plaintiff her “costs of this action in an amount to be agreed upon by the parties or as fixed by a Justice of this Court.” [Emphasis added.]

[87] There is a difference between an assessment of costs conducted under Rule 58 and the fixing of costs under Rule 57. The Rules of Civil Procedure give primacy to the fixing of costs under Rule 57. In this regard, subrule 57.01(3) provides that: “[w]hen the court awards costs, it shall fix them in accordance with subrule (1) and the Tariffs.” Indeed, the Rules make clear that the court is to refer the question of costs to the assessment process under Rule 58 only in exceptional cases. Hence, subrule 57.01(3.1) expressly provides that: “[d]espite subrule (3), in an exceptional case the court may refer costs for assessment under Rule 58.”

[88] In the instant case, the court derives its authority to fix costs by the agreement of the parties, that is, by the express terms of the plaintiff’s offer to settle as accepted by the defendant through its notice of acceptance. Paragraph 3 of the offer to settle expressly provides that the costs shall be “fixed” by a judge of the court, using language that contemplates the direction in subrule 57.01(3). In my view, the express language of para. 3 of the offer to settle here leaves no room for the notion that costs are to be assessed under Rule 58 by a judge stepping into the shoes of an assessment officer.

[89] As such, the ruling in Campbell v. Norbury, 2014 ONSC 5168 does not apply to the instant case and is distinguishable given the significantly different language of the offer to settle in that case. (I note that the reasoning in Campbell was followed in Gupta v. Singh, 2017 ONSC 2406, at paras. 31-33. I also note that the offer to settle in Gupta again used language that connoted an assessment, providing that costs would be paid in “an amount to be agreed upon or assessed.” As such, the court expressly noted, at para. 5, that the task before the court was “to assess costs pursuant to the terms of the accepted Offer to Settle of the defendants.”).

[90] Thus, while I appreciate that Mitchell J. in Campbell also held that she was “not persuaded that the principle of proportionality has much bearing on the assessment of costs flowing from an accepted Offer to Settle,” in my view, whatever the merits of the observation in the context of an assessment of costs under Rule 58, it has no application to the fixing of costs under Rule 57 where an offer to settle is accepted. Indeed, it is well established that the principle of proportionality is an important part of the fixing of costs under Rule 57.

The unsuccessful party’s expectations: clause 57.01(1)(0.b)

[91] While clause 57.01(1)(0.b) of the Rules of Civil Procedure provides that the court may consider “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,” I do not have any direct information from the defendant as to what amount the unsuccessful defendant may have reasonably expected to pay on account of the plaintiff’s costs of the action.

[92] That said, I appreciate that because the action proceeded under the Simplified Procedure, that alone may have reasonably lowered the expectations of the defendant as to the costs that might be awarded. (Southworks Outlet Mall Inc. v. Bradley (2009), 2009 ONSC 55323, at para. 20).

[93] However, the defendant did not append its own lawyer’s bill of costs or any indication of its costs of the proceeding or any direct information as to what was its reasonable expectation concerning the costs of the action.

[94] In the absence of any such information from the defendant, it is difficult to give significant weight to the consideration contemplated by clause 57.01(1)(0.b).

The conduct of any party that tended to lengthen the proceedings: clause 57.01(1)(e)

[95] The last factor I would address, under clause 57.07(1)(e), is the conduct of any party that tended to shorten or lengthen unnecessarily the duration of the proceeding.

[96] I am not satisfied that the defendant here engaged in the same type of “scorched earth” defence litigation strategy that attracted the criticism of the trial judge and Court of Appeal in Labanowicz v. Fort Erie (Town), 2018 ONCA 343, at paras. 24-27, as the plaintiff submits in paras. 29-32 of her costs submissions.

[97] As described by the Court of Appeal, the defendant/appellant in Labanowicz v. Fort Erie (Town), 2018 ONCA 343, at para. 26 conducted the type of defence strategy “where no issue was conceded and every possible legal argument, no matter how tenuous, was advanced.” I am not convinced that is the case with the defendant here. The employer here maintains that there was a genuine issue regarding whether or not the plaintiff had resigned from her employment; it points to the doctor’s note that was provided to the employer when the plaintiff went on leave, which apparently stated that the plaintiff was unable to work due to “non-occupational acute medical illness.”

[98] Moreover, I note that Labanowicz was a case that proceeded to trial, where the conduct of the parties and their counsel was open to close scrutiny by the trial judge. That is definitely not the case here.

[99] That said, I have some questions as to the timing of the defendant’s acceptance of the plaintiff’s offer to settle.

[100] Again, the offer to settle was dated December 18, 2018, and was delivered about a month before trial. By that point, plaintiff’s counsel had engaged in some initial trial preparation earlier in December, but the work did not exceed more than seven-and-a-half hours. The more significant trial preparation work was expended by plaintiff’s counsel between January 2 and 13, 2019. As I have said, the defendant faxed through its notice of acceptance of the plaintiff’s offer at 9:11 a.m. on the Monday morning that the trial was scheduled to commence, by which time plaintiff’s counsel had already left for the courtroom.

[101] The reasons of the defendant for accepting the plaintiff’s offer on the morning of the first day of trial, with the commencement of the hearing less than an hour away, are unknown. Parties accept offers to settle for a whole host of reasons.

[102] What is curious about the timing of the acceptance in the instant case is that it does not appear to be correlated to any significant event in the litigation. That is, sometime cases resolve upon the defendant’s receipt of the initial demand letter from plaintiff’s counsel, (ideally) before the litigation is even commenced. Some resolve after the discoveries are completed, when the parties have obtained a better understanding of the case for the opposing litigant and of their own. Many cases are settled at or about the time of the pretrial conference, where the parties may have received the benefit of a judicial opinion – as, for example, occurred in the Campbell case relied upon by the plaintiff here, where the defendant’s offer to settle was accepted by the plaintiff three days after the pretrial.

[103] None of that occurred in the case at bar. Here there is no obvious correlation between the employer’s acceptance of the offer and any significant development in the litigation. It is not at all clear what may have changed from the defendant’s perspective from December 18th when the plaintiff’s offer to settle was delivered until the morning of trial on January 14th when the defendant decided to accept it. And the defendant has not offered any explanation for its acceptance of the offer at the very last moment. I do not say that a defendant is under a positive obligation to explain its decisions in any given case. However, the unmistakable effect of the decision of the defendant in this case not to accept the plaintiff’s offer until the very last hour before trial is that the plaintiff was thus forced to incur significant costs for trial preparation – indeed, the bulk of the trial preparation expense – in the two weeks leading up to trial.

[104] Just as much as the defendant might reasonably expect that the amount of costs awarded to the plaintiff might be lessened in a Simplified Procedure action, the same defendant also must surely be taken to reasonably expect that the plaintiff will have incurred significant trial preparation costs where the defendant decides to settle the case an hour before the trial starts.

[105] In other words, the defendant certainly would have presented a much more compelling case for containment of the plaintiff’s costs on account of factors such as proportionality and the procedurally uncomplex nature of actions under the Simplified Procedure had the defendant accepted the plaintiff’s settlement offer in December 2018 or at least some time before the morning of trial.

[106] For all of the reasons set out above, and having considered, inter alia, the submissions of the parties and the bill of costs of the plaintiff, the relevant factors enumerated in subrule 57.01(1) of the Rules of Civil Procedure, and the principles that should guide the court’s exercise of its discretion under s. 131 of the Courts of Justice Act to award costs, I find that the amounts of $16,000 on account of fees (exclusive of HST) and $2,800 on account of disbursements (exclusive of HST) represents a fair, reasonable, and proportionate costs award in the circumstances of the instant case.

[107] Accordingly, I fix the plaintiff’s costs of the action, on a partial indemnity basis, in the total amount of $21,244, as follows:

i. Total Fees $16,000.00 ii. Disbursements 2,800.00 iii. Subtotal 18,880.00 iv. HST on Fees 2080.00 v. HST on Disbursements 364.00 vi. Total $21,244.00

[108] I make no award for the costs of preparation of the parties’ costs submissions. The costs award I have made reflects a significant reduction from the amount sought by the plaintiff, and the defendant is not entitled to its costs for the reasons set out above.

Conclusion

[109] Therefore, an order shall go for the payment by the defendant to the plaintiff of her costs of this action, on a partial indemnity basis, fixed in the total amount of $21,244 (inclusive of fees, disbursements, and HST), payable within 30 days.

Original signed by Justice J. Paul R. Howard

J. Paul R. Howard Justice

Date: June 14, 2019