Court File and Parties
Court File No.: CV-19-82300 Date: 2022/05/03 Superior Court of Justice - Ontario
Re: Sujoy Brahma, Plaintiff And: HR Employee Services Inc., Defendant
Before: The Honourable Mr. Justice Marc Smith
Counsel: Justin Villeneuve, Counsel for the Plaintiff Alex Treiber, Counsel for the Defendant
Heard: March 24, 2022, by video conferencing
Reasons for Decision
M. Smith J
[1] This matter deals with the costs consequences of discontinuing an action.
[2] The Plaintiff seeks leave to discontinue his action pursuant to r. 23.01(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (the “Rules”). The Plaintiff seeks his costs for this motion.
[3] The Defendant submits that the court should grant leave to the Plaintiff with two conditions: (a) the first is that leave be granted with prejudice to the Plaintiff in bringing a subsequent action; and (b) the second is that costs of the action and the motion be awarded to the Defendant on an elevated scale.
Background
[4] The Plaintiff is a resident of the United States of America.
[5] On or about April 18, 2018, the Defendant offered the Plaintiff employment as Vice-President of Non-Gaming Operations at the Rideau Carleton Casino in Gloucester, Ontario.
[6] On or about September 11, 2019, the Plaintiff’s employment with the Defendant was terminated.
[7] On December 17, 2019, the Plaintiff commenced legal proceedings in Ottawa, Ontario against the Defendant seeking damages for wrongful dismissal and breach of contract (“Canadian action”). The Plaintiff says that the Defendant carried on business as a branch of the global restaurant, hotel, and casino chain publicly known as Hard Rock Café.
[8] On February 7, 2020, the Defendant delivered its Statement of Defence.
[9] On or about December 18, 2020, Associate Justice Kaufman issued an endorsement setting out a timetable requiring the parties to exchange Affidavits of Documents by January 31, 2021, complete discoveries by February 28, 2021, and complete mediation by April 30, 2021.
[10] The Plaintiff served his Affidavit of Documents on January 28, 2021. The Defendant served the Plaintiff with its Affidavit of Documents on January 29, 2021.
[11] On February 9, 2021, the Plaintiff commenced legal proceedings in the Circuit Court of the 17th Judicial Circuit in and for Broward County, Florida, against Hard Rock Café International (USA), Inc., and two of its officers (“Florida action”). The complaint was brought for violations of the private-sector whistle-blower legislation and tortious interference.
[12] In February 2021, counsel for the Defendant wrote to counsel for the Plaintiff on a few occasions accusing the Plaintiff of breaching the deemed undertaking rule, as set out in r. 30.1.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. Specifically, the Defendant alleged that the Plaintiff improperly used a document that was found in the Affidavit of Documents of the Canadian action for the purposes of the complaint in the Florida action.
[13] On March 30, 2021, the defendants in the Florida action brought a motion to dismiss. The motion was heard by Judge David A. Haimes on May 25, 2021.
[14] On August 12, 2021, Judge Haimes denied the defendants’ motion, but ordered as follows: “The Court’s ruling is subject to the Plaintiff dismissing his separate lawsuit in Canada.”
[15] On October 13, 2021, counsel for the Plaintiff wrote to counsel for the Defendant, advising that his motion materials for the discontinuance were drafted and ready to be filed. It was proposed by the Plaintiff that the costs of the Canadian action be reserved for dispute in the Florida action.
[16] On October 15, 2021, counsel for the Defendant advised counsel for the Plaintiff that the proposal was unacceptable. Rather, the Defendant would be prepared to consent to a dismissal if the Plaintiff paid the Defendant costs in the amount of $15,000, together with H.S.T.
[17] On October 19, 2021, the Plaintiff served his motion to discontinue the Canadian action. That same day, counsel for the Defendant wrote to counsel for the Plaintiff advising that if the issues of costs was not settled before October 28, 2021, the Defendant would ask the court to award costs as a condition of the order discontinuing the action.
[18] On November 2, 2021, the Plaintiff served the following offer to settle to the Defendant:
“1. The parties agree to discontinue this action without prejudice to pursue it in Florida under the Order of the Circuit Court for the Seventeenth Judicial Circuit in and for Broward County, Florida, Case Number CACE-21-002725 (Florida Action), dated August 12, 2021, a copy of which is attached as Exhibit “A”. 2. The parties will reserve costs submissions for the Florida Action or, in the alternative, either party may bring a motion for costs in accordance with the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 once this action is discontinued; and 3. This Offer to Settle expires one (1) minute after the commencement of the plaintiff’s motion to discontinue this action.”
[19] The defendants in the Florida action brought further motions against the Plaintiff. On December 27, 2021, Judge Haimes granted some motions but denied others. Importantly, Judge Haimes ordered as follows: “Plaintiff may not proceed against the two named but as yet unserved Canadian defendants until Plaintiff’s Canadian action has been discontinued.”
[20] On March 15, 2022, counsel for the Defendant wrote to counsel for the Plaintiff, stating the following: “Defendant’s position with respect to the motion is that the Court should grant leave to discontinue the action with terms, including (i) with prejudice to Plaintiff’s ability to bring a subsequent action in Ontario and (ii) Defendant should be awarded its costs for the motion and its defence of the action over the last 2.5 years.”
Issues
[21] The issues to be determined are:
a. What amount of costs should be awarded to the Defendant for the Canadian action? b. Should the Plaintiff or the Defendant be awarded costs for the motion?
Legal principles
[22] Rule 23.01(1)(b) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 states that, after the close of pleadings, a plaintiff may discontinue all or part of an action against any defendant, with leave of the court.
[23] Rule 23.05(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 provides that if all or part of an action is discontinued, any party to the action may, within thirty days after the action is discontinued, make a motion respecting the costs of the action.
[24] Costs are at the discretion of the court: Courts of Justice Act, R.S.O. 1990, c. C.43, s. 131(1).
[25] Rule 57.01(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 sets out the factors that a court may consider when deciding on a cost award.
[26] Where a plaintiff discontinues an action, the defendants are presumptively entitled to recover their costs. The court retains its discretion to award costs. In determining if it is appropriate to award costs, the court can consider additional factors such as: (i) the plaintiff had a bona fide cause of action; (ii) it was not frivolous or vexatious; and (iii) there was some justification for the commencement of the claim: 1623242 Ontario Inc. v. Great Lakes Cooper Inc., 2016 ONSC 1002, 55 C.L.R. (4th) 99, at paras. 60-63.
[27] The overriding principles of fairness and reasonableness must be applied to each individual case: Boucher v. Public Accountants Council (Ontario) (2004), 71 O.R. (3d) 291 (C.A.).
[28] Partial indemnity is commonly awarded unless there are compelling reasons to justify an award at a higher scale.
[29] Principles of fairness dictate that parties would expect that hourly rates would bear some resemblance to what would be considered reasonable in the area where the case was tried: Middleton v. Municipality of Highlands East, 2013 ONSC 2027, 10 C.C.E.L. (4th) 275, at para. 5.
[30] Rates used for the purpose of fixing costs should have regard to what clients typically pay, which will vary, amongst other things, with the type of work, the geographic location, and the type of client: Canfield v. Brockville Ontario Speedway, 2018 ONSC 3288, 24 C.P.C. (8th) 133, at para. 23.
[31] Although the cost grid developed by the Civil Rules Committee needs updating, it is still a factor to consider when assessing partial indemnity costs: Maginnis and Magnaye v. FCA Canada et al, 2020 ONSC 6498, at paras. 9, 11.
[32] An award of elevated costs usually involves cases where there are findings of malicious or reprehensible conduct warranting “rebuke from the court”: R.C. and J.M. v. Western Assurance Company, 2022 ONSC 899, at para. 6.
Issue #1 – What amount of costs should be awarded to the Defendant for the Canadian action?
[33] On the day of the motion, counsel for the Plaintiff agreed that the order discontinuing the Plaintiff’s Canadian action can be made with prejudice.
[34] Counsel for the Plaintiff explained that his client never had any intentions of pursuing another action in Ontario and, in any event, the limitation period had expired. It is noted that the Defendant’s request that it be discontinued with prejudice was only made approximately one week before the motion being heard.
[35] On consent, leave is granted to the Plaintiff to discontinue the Canadian action, with prejudice to the Plaintiff’s ability to bring a subsequent action related to the same issues and facts in Ontario.
Position of the parties
[36] The Defendant argues that it should be entitled to its costs on an elevated basis. The Defendant seeks $56,241.68 in costs for the Canadian action and the motion. According to my extrapolated calculations, the Defendant is seeking costs of approximately $25,900, inclusive of taxes and disbursements, for the discontinuance of the Canadian action and the approximate balance of $30,340, inclusive of taxes, for the costs of the motion.
[37] The Defendant submits that an elevated costs award is warranted because the Plaintiff’s pleading did not disclose a bona fide cause of action. The Defendant says that because of the clear and unambiguous contractual language of the employment agreement that limits the Plaintiff’s entitlement upon termination, the Plaintiff was unjustified in bringing a lawsuit seeking a common law reasonable notice of 18 months and other unspecified damages. Moreover, the Defendant claims that the Plaintiff made several improper allegations of serious criminal wrong-doing and breaches of the gaming regulatory framework that applies to the Defendant’s operations.
[38] The Defendant submits that another reason to award elevated costs is because of the Plaintiff’s own admission that he violated the deemed undertaking rule when he used evidence disclosed to him in the Canadian action and shared it with counsel in the Florida action. It is submitted that the Plaintiff’s conduct was improper, and it is an egregious violation of the deemed undertaking rule.
[39] The Plaintiff acknowledges that the Defendant is entitled to costs for the discontinued Canadian action. However, the Plaintiff argues that the Defendant should only recover costs for the following steps taken in the proceedings: (i) prepare response to demand letters; (ii) prepare statement of defence; (iii) prepare affidavit of documents; and (iv) prepare for examinations for discovery.
[40] The Plaintiff argues that the hourly rates claimed by the Defendant are grossly excessive. The Plaintiff submits that the court should rely upon the cost grid that was developed by the Civil Rules Committee when fixing partial indemnity costs. The Plaintiff provided an updated grid, indexed for inflation to 2022:
| Category | Maximum (established July 1, 2015) | Indexed for inflation to 2022 |
|---|---|---|
| Law Clerks | $80.00 per hour | $93.65 |
| Student-at-law | $60.00 per hour | $70.24 |
| Lawyer (less than 10 years) | $225.00 per hour | $263.40 |
| Lawyer (10 or more but less than 20 years) | $300.00 per hour | $351.20 |
| Lawyer (20 years and over) | $350.00 per hour | $409.73 |
[41] The Plaintiff suggests that a costs award to the Defendant should be approximately $6,500, representing about 18 hours of time spent, at the updated grid rates.
Analysis
[42] Elevated costs are not warranted.
[43] The Defendant relies upon the restrictive terms of the employment contract in support of its position that the Plaintiff’s claim is without merit. However, the Plaintiff alleges that the Defendant fundamentally breached the terms of the employment contract, and he was terminated without cause. Also, there are circumstances where a court may refuse to enforce contractual terms of an employment agreement. On the facts before me, I am satisfied that the commencement of the Plaintiff’s action was justified, and he has a bona fide cause of action.
[44] The Plaintiff’s breach of the deemed undertaking rule does not, in my view, automatically attract an award of elevated costs. It turns on the particular facts of each case. The Plaintiff’s counsel was unaware that any information was provided to his counterparts in the Florida action. The evidence before me regarding the breach is limited to correspondence between counsel and the extent of the breach is unknown. Pursuant to r. 30.1.01(8) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, the court may find that the deemed undertaking does not apply because the court is satisfied that the interest of justice outweighs any prejudice that would result to a party who disclosed evidence, especially if it was disclosed in related proceedings, such as is the case here. On the evidence before me, I am unable to determine if the deemed undertaking would apply in these circumstances. Regardless, I am not persuaded that the Plaintiff engaged in conduct that was egregious, deserving of being rebuked by the court.
[45] I am of the view that the partial indemnity rates should apply.
[46] The Defendant argues that the Plaintiff should have reasonably expected to pay the Defendant’s costs. I agree that there should have been an expectation that some costs would be paid. However, the Plaintiff should not have reasonably expected to pay approximately $25,000 in costs, when the parties only exchanged pleadings and affidavits of documents. To me, that is an unreasonable expectation.
[47] The Defendant’s counsels docketed 28.3 hours of time over two years. Approximately 37 percent of that time dealt with the Florida action. The details of the work by Canadian lawyers on the Florida action was not provided. I can appreciate that when there are two related proceedings issued by the Plaintiff, in two different countries, it is expected that counsel for the Defendant would have to deal with counsel that have been retained to defend the Florida action. But 37 percent seems somewhat excessive.
[48] I am concerned with the Defendant’s actual rates. The rates charged by counsel for the Defendant ranges between $954 per hour for senior counsel to a $346.50 hourly rate for an articling student. It is noted that counsel for the Defendant work in the City of Toronto. In my opinion, these actual rates are excessive and unreasonable, in our geographic location. There are seasoned and experienced counsel practicing in the City of Ottawa that are charging less than the articling student’s hourly rate.
[49] The Defendant retained lawyers who are based in the City of Toronto, and that is their choice. However, if that selection takes them out of the jurisdiction where the matter is heard, it is not reasonable to expect that the unsuccessful party pay hourly rates from another geographic location. I do not accept that a reasonable person would expect to pay the actual hourly rates of counsel for the Defendant, considering that its a wrongful dismissal case and it was commenced in the City of Ottawa.
[50] I believe that in the circumstances of this case, the cost grid, indexed for inflation to 2022, is more reflective of what a party would reasonably be expected to pay on a partial indemnity basis.
[51] The Defendant argues that on October 15, 2021, it made a “more than reasonable” offer to settle. I disagree. To suggest that the Plaintiff should have paid $15,000 for less than 30 hours of work, when the proceedings have not reached the discovery phase, is not reasonable.
Disposition
[52] In exercising my discretion, I believe that a fair and proportionate award of costs to the Defendant, for the Plaintiff’s discontinuance of the action, is $7,500, all inclusive.
Issue #2 - Should the Plaintiff or the Defendant be awarded costs for the motion?
Position of the parties
[53] The Plaintiff argues that he is entitled to costs of this motion, on a substantial indemnity basis, in the approximate amount of $10,000, based on 29 hours of work.
[54] The Plaintiff submits that on November 2, 2021, he served a formal r. 49 offer to settle, pursuant to the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. The Plaintiff says that the Defendant did not respond to this offer or attempt to negotiate terms.
[55] The Defendant argues that they did not want to proceed with this motion. They attempted to resolve the matter on October 15, 2021, namely by offering that the action be dismissed in exchange for a $15,000 payment. The Plaintiff did not respond to the Defendant’s offer to settle. Then, on March 15, 2021, counsel for the Defendant wrote to counsel for the Plaintiff stating that the discontinuance of the action should be made on a with prejudice basis and that the Defendant be awarded its costs of the motion and action.
[56] The costs being sought by the Defendant for this motion are approximately $30,340, based on 38.2 hours of work.
Analysis
[57] A motion for leave to discontinue the action should usually be a simple, procedural, and non-contentious motion. The approach to be taken in these types of motion was accurately articulated by Master Haberman in the case of [Anand v. State Farm, [2007] O.J. No. 1256 (S.C.), at para. 19](Anand v. State Farm, [2007] O.J. No. 1256 (S.C.)):
It seems to me that this is the type of relief the court should ordinarily be prepared to grant, subject to a cost order where appropriate, unless there is a real concern of abuse or of substantial prejudice. Each of those potential scenarios would require compelling evidence from the party opposing the relief. In my view, this is the most appropriate way to approach the issue as it should be up to a party to decide against whom to initiate its action and against whom to continue it. Other parties can protect themselves by crossclaiming and by adding others by way of a third party claim. I note that State Farm has advanced a crossclaim against Tolland, though it appears they have taken no steps to serve it.
[58] If a defendant in an action wishes to seek costs for the discontinuance of the action, the defendant can, pursuant to r. 23.05(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, make a motion within 30 days after the discontinuance of the action.
[59] In this case, the Defendant refused to consent to the Plaintiff’s motion for leave to discontinue the action, unless the Plaintiff agreed to the payment of costs and that the discontinuance be made with prejudice. The requirement that it be discontinued with prejudice was communicated to the Plaintiff approximately one week before the hearing of this motion.
[60] Judge Haimes’ orders in the Florida action first required that the Canadian action be dismissed, but it was later changed to a discontinuance in late December 2021.
[61] Was it reasonable for the Defendant to demand that the action be discontinued with prejudice or that the issue of costs be settled before proceeding to the motion for leave to discontinue the Plaintiff’s Canadian action? The answer is no.
[62] The Canadian action was statute-barred. Once the action was discontinued, the Plaintiff was barred from commencing any new legal proceedings on the same facts as the Canadian action. There was no prejudice to the Defendant to consent to the Plaintiff’s request to discontinue the Canadian action.
[63] In my view, the proper approach for the Defendant would have been to consent to the Plaintiff’s motion for leave to discontinue the Canadian action and bring a motion for costs, pursuant to r. 23.05(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. The Defendant was not interested in following this procedure. On October 19, 2021, counsel for the Defendant wrote to counsel for the Plaintiff and stated the following: “That is not acceptable. If your client will not settle the issue of costs in advance of October 28, 2021, we will attend the motion ask the Court to award costs as a condition of the Order discontinuing the action. You are not to speak to this issue on our client’s behalf.”
[64] The Defendant was in error. The Plaintiff’s request for leave to discontinue the Canadian action should not have been contingent upon the payment of costs. While the Defendant was entitled to its costs of the action, this was not a case where the court would only grant leave upon the payment of costs. Leave to discontinue the Plaintiff’s Canadian action, without terms, was appropriate.
[65] Although the Defendant should have followed the procedure set out in r. 23.05(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 and bring its own motion for costs, in the interest of justice and expediency, I agreed to hear the Defendant’s submissions regarding its request to be awarded costs of the action. The Defendant was successful.
[66] For the following reasons, I find that no costs should be awarded for the motion and the parties should bear their own costs.
[67] First, each party was partially successful in their motions. The Plaintiff was granted leave to discontinue his action. Even if the Plaintiff agreed during this motion that the action be discontinued with prejudice, this was not a reasonable request by the Defendant. Regarding the costs of the action, the Defendant was awarded a fraction of the costs being sought in this motion.
[68] Second, the amount of time spent by counsel to deal with this motion was unnecessary. The issues were not complex. With respect to the time spent by counsel for the Defendant, the preparation of the motion materials involved two lawyers and one articling student. Invariably, there would be some duplication of work which would increase the costs.
[69] Third, the Plaintiff’s r. 49 offer to settle dated November 2, 2021, was reasonable and should have been accepted by the Defendant. However, the Plaintiff should have engaged the Defendant in settling their costs of the action, despite the Defendant’s offer to settle dated October 15, 2021, being unreasonable. In my opinion, this was clearly a case where the Defendant would be entitled to some costs and the Plaintiff should have made some efforts to resolve the issue of costs.
[70] Fourth, the Defendant’s behaviour was inappropriate because:
a. The Defendant should have consented to the discontinuance of the Plaintiff’s Canadian action. The request that the discontinuance be conditional upon terms was not reasonable. The Defendant’s demand that the Canadian action be discontinued with prejudice was only communicated to the Plaintiff approximately one week before the motion. b. The Defendant should have engaged in reasonable settlement discussions, as opposed to seeking costs demands that do not fall within the reasonable expectation of the parties. c. The Defendant should have followed the procedure set out in the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 regarding its request to be awarded costs in the action.
[71] It strikes me that this simple and non-complex procedural motion could have been avoided if both parties and/or their respective counsels would have simply increased their communication with one another and advanced more reasonable positions.
Disposition
[72] The parties shall bear their own costs.
CONCLUSION
[73] The Plaintiff’s motion for leave to discontinue the Canadian action is granted, with prejudice.
[74] There shall be no costs for this motion.
[75] The costs of the action are fixed at $7,500, all inclusive. The Plaintiff shall pay these costs to the Defendant within 60 days of these Reasons for Decision.
M. Smith J Released: May 3, 2022