Court File and Parties

COURT FILE NO.: CV-18-00606586-0000 DATE: 20240429 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: BIRGIT RATZ-CHEUNG, Plaintiff AND: BMO NESBITT BURNS INC., Defendant

BEFORE: VERMETTE J.

COUNSEL: Mick Hassell and Daniel Hassell, for the Plaintiff Matthew P. Sammon, Aoife Quinn and Sam Hargreaves, for the Defendant

HEARD: In writing

Endorsement as to Costs

[1] On January 8, 2024, I released Reasons for Judgment (2024 ONSC 161) granting this action in part, and ordering the Defendant to pay to the Plaintiff damages in the amount of $240,091.00, with prejudgment interest from February 20, 2020 to the date of the judgment.

[2] The parties were not able to agree on costs and have delivered costs submissions.

Offers to settle

[3] The parties served the following offers to settle:

a. On November 19, 2019, the Defendant served an offer in the amount of: (i) $240,000.00, subject to applicable withholding, plus (ii) prejudgment interest assessed from the date of termination to the date of the offer to settle, subject to applicable withholding, plus (iii) costs on a partial indemnity basis to the date of the offer, in an amount to be agreed upon or assessed. The offer also required the Plaintiff to provide a full and final release to the Defendant in a mutually acceptable form, all parties acting reasonably.

b. On March 24, 2023, the Plaintiff served an offer in the amount of $1,250,000.00 (inclusive of prejudgment interest), plus costs on a partial indemnity basis in an amount to be agreed upon or assessed to the earlier of the acceptance of the offer or 10 calendar days prior to the start of trial.

c. On May 4, 2023, the Plaintiff served an offer in the amount of $950,000.00 (inclusive of prejudgment interest), plus costs on a partial indemnity basis in an amount to be agreed upon or assessed to the earlier of the acceptance of the offer or 10 calendar days prior to the start of trial.

d. On May 10, 2023, the Defendant made a time-limited offer that was open to acceptance until 5 p.m. on May 12, 2023, and expressly did not withdraw the offer made on November 19, 2019. The Defendant offered to pay the all-inclusive amount of $350,000.00, subject to withholding. The offer also required the Plaintiff to provide a full and final release to the Defendant in a form acceptable to the Defendant, acting reasonably.

Positions of the parties

a. Position of the Plaintiff

[4] The Plaintiff’s position is that she is entitled to costs. She requests three quarters of her partial indemnity costs, i.e., $195,483.46, in light of her partial success at trial, the uncompromising offers by both sides, and the Defendant’s unforgiving approach to litigation in the context of a power imbalance.

[5] The Plaintiff points out that she was successful on the following points: (a) no after-acquired cause, a point which consumed a lot of time; (b) 24-month notice period and commissions; (c) establishing a legal entitlement to the loss of opportunity to sell her book of business, which was qualitatively significant; and (d) valuation of the book of business, which involved duelling experts. In contrast, the Defendant was successful on the following points: (a) no damages for the loss of opportunity to sell the book of business, which was quantitatively significant; and (b) no bad faith damages, which was a minor issue.

[6] The Plaintiff’s position is that none of the offers to settle made by the parties engage the costs consequences of Rule 49.10. The Plaintiff submits that a “near miss” offer does not attract costs consequences. She notes that the prejudgment interest in the judgment is greater than the prejudgment interest in the Defendant’s offer dated November 19, 2019, both in the number of days and in the interest rate. The Plaintiff also points out that a full and final release in a mutually acceptable form was required by the Defendant’s offer, which would have necessitated negotiations and was not ordered by the Court. The Plaintiff argues that the release provision in the Defendant’s offer lacks clarity.

[7] The Plaintiff states that there was a power imbalance between her and the Defendant and that the issue of costs is far more important to her. She points out that qualitatively speaking, she had success on many legal issues, as reflected in the language of the judgment. She also points out that she paid to acquire an investment advisor’s book of business, she did not get paid for her book of business, and the Defendant sold her book for an undisclosed sum to yet another investment advisor.

b. Position of the Defendant

[8] The Defendant submits that its offer to settle dated November 19, 2019 had a greater economic value than the trial judgment of $240,091.00 because the offer accrued prejudgment interest from February 20, 2018 and the judgment accrued prejudgment interest from February 20, 2020. The Defendant states that had the offer been accepted, it would have made the Plaintiff whole on her wrongful dismissal claim over four years ago and avoided the subsequent years of litigation and significant costs. The Defendant’s position is that Rule 49.10 is engaged, the Plaintiff is entitled to her partial indemnity costs to the date of the offer, and the Plaintiff is obligated to pay the Defendant its partial indemnity costs thereafter. The Defendant seeks a net costs award in its favour in the range of $275,000.00, and asks that any costs award in its favour be set off against the judgment.

[9] The Defendant argues that the release provision did not render the offer unclear as it is well-established that any litigation settlement implies an obligation to provide a release. The Defendant states that where a settlement is silent on the contents of the release, the court will imply that the parties agree to sign a standard form release consistent with the settlement. The Defendant also argues that the reference to “applicable withholding” in the offer is standard language in employment settlements because judgments and settlements in wrongful dismissal cases are subject to mandatory withholding under the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.).

[10] The Defendant submits that its offer to settle was not a “near miss”, as argued by the Plaintiff, because its offer was superior to the judgment. The Defendant states that when comparing a Rule 49 offer to a judgment, the relevant date for comparison is the date of the offer, not the date of the judgment. According to the Defendant, the court is to assess the judgment plus prejudgment interest and compare it to the offer as of the date of the offer.

[11] The Defendant points out that this Court assessed damages as of February 20, 2020, the valuation date adopted by the Plaintiff’s expert, and awarded prejudgment interest from February 20, 2020 onward. The Defendant states that this means that as of November 19, 2019 (the date of the Offer), there would have been no prejudgment interest accruing on the trial judgment amount. The Defendant also argues that given the time value of money, if the Court had adopted an earlier valuation date (i.e., February 20, 2018), the trial judgment would necessarily have been lower than $240,091.00.

[12] According to the Defendant, its offer to settle had a value of $240,000.00 plus prejudgment interest of $7,539.28 as of November 19, 2019, which is higher than the trial judgment as of that date. It states that there is no question that the Plaintiff would have achieved a better economic result in November 2019 than she did at trial had she accepted the offer at the time it was made. Therefore, the judgment was less favourable than the offer.

[13] The Defendant submits that it did not engage in “scorched earth” litigation, as the Plaintiff asserts. The Defendant points out that it paid the Plaintiff her entitlements under the Employment Standards Act, 2000, S.O. 2000, c. 41, and then sought repeatedly to settle the case with her. The Defendant states that it ultimately advanced an available and viable defence of after-acquired cause, but it did not commence a counterclaim against the Plaintiff or seek any damages against her. The Defendant notes that although this Court did not find just cause, it did find that the Plaintiff breached the BMO Code of Conduct.

[14] The Defendant argues that the prima facie consequences of Rule 49.10 should be applied in the vast majority of cases. It submits that the purposes of Rule 49.10 cannot be achieved if litigants like the Plaintiff can simply point to an alleged power disparity between themselves and their former employers to avoid the effects of the Rule.

[15] The Defendant’s partial indemnity costs from November 19, 2019 onwards are $348,374.07. The Defendant estimates the Plaintiff’s partial indemnity costs to the date of the offer to settle, which was just before the examinations for discovery, at $40,000.00. The Defendant submits that a net costs award in its favour in the range of $275,000.00 is fair and within the Plaintiff’s reasonable expectations. The Defendant points out that the Plaintiff’s own partial indemnity costs, prior to any discount for divided success, are $260,000.00.

[16] In the alternative, if this Court accepts the Plaintiff’s submission that the Defendant’s offer to settle does not invoke Rule 49.10, the Defendant submits that this Court should still consider the offer when assessing costs pursuant to Rule 49.13. The Defendant further submits that this Court also ought to consider the fact that there was significant divided success, given that the most significant component of the Plaintiff’s claim was dismissed. In light of these factors, the Defendant argues that the Plaintiff should bear her own costs throughout.

c. Plaintiff’s reply

[17] The Plaintiff submits that the Defendant has not met its burden under Rule 49.10(3) to prove that the consequences of Rule 49.10 apply, even if the relevant date for comparing the judgment to the offer is the date of the offer.

[18] The Plaintiff argues that the Defendant’s calculation of prejudgment interest is incorrect. She submits the following:

a. No prejudgment interest could be assessed as accruing from the date of termination to the end of the period of biweekly instalments from the Defendant for pay in lieu of notice and severance pay.

b. The Plaintiff began mitigating her damages from October 1, 2018 onwards, which further reduces the amount of prejudgment interest that could be assessed.

c. Paragraph 2 of the Defendant’s offer indicates that prejudgment interest is to be paid “on the foregoing sum, subject to applicable withholding”. It is unclear as to whether prejudgment interest is calculated on installments gross or net of applicable 30% withholding.

d. In any event, this Court ordered prejudgment interest from February 20, 2020 onwards and, therefore, no prejudgment interest was assessed for the period prior to the Defendant’s offer to settle.

[19] In the alternative, if this Court finds that Rule 49.10 could be engaged, the Plaintiff submits that this Court should depart from Rule 49.10 because of exceptional circumstances and the interests of justice require a departure. According to the Plaintiff, an exceptional circumstance is that the Defendant seeks to leverage an incorrect, nominal prejudgment interest calculation to create hardship for the Plaintiff.

[20] The Plaintiff maintains her position that she ought to be entitled to costs in the amount of $195,483.46. Alternatively, she submits that she ought to be entitled to costs between $86,910.82 (representing $40,000.00 partial indemnity costs to November 19, 2019 plus $46,910.82 inclusive of HST ($41,514.00 + HST) for the Plaintiff’s expert, whose evidence was preferred at trial) and $195,483.46, in the Court’s discretion.

Discussion

a. Offers to settle

[21] I first discuss whether the Defendant’s offer to settle dated November 19, 2019 triggers the costs consequences set out in Rule 49.10 of the Rules of Civil Procedure.

[22] In D’Anscenzo v. Nichols, 2018 ONSC 7760 (“D’Anscenzo”), it was found that the insertion of a requirement for a release to be negotiated and agreed upon in the future as a term of an offer to settle introduced a future unknown beyond the control of the offeree. Kane J. stated that the issue before him was not the enforceability of a settlement, and that the case law dealing with releases not agreed upon as part of a settlement did not diminish the need for certainty under Rule 49.10 as to whether an offer attracts the higher scale of costs. He ultimately concluded that the release condition in the offer to settle prevented the offer from qualifying as a Rule 49.10 offer: see D’Anscenzo at paras. 27-28, 38-40. See also Skafco Limited v. Abdalla, 2020 ONSC 5437 at para. 2 and Zou v. Sanyal, 2019 ONSC 1661 at paras. 7-10.

[23] Given the doctrine of horizontal stare decisis, I cannot depart from the decision in D’Anscenzo: see R. v. Sullivan, 2022 SCC 19 at paras. 73-75. Consequently, I conclude that the release condition in the Defendant’s offer dated November 19, 2019 prevents this offer from qualifying as a Rule 49.10 offer.

[24] Nevertheless, I may take into account the Defendant’s offer to settle dated November 19, 2019, as well as the other offers to settle served by the parties, in exercising my discretion with respect to costs in this case. See Rule 49.13 of the Rules of Civil Procedure.

b. Entitlement to costs

[25] As both parties acknowledged in their respective submissions, there was divided success in this case. However, it is my view that, despite the divided success, the Plaintiff still emerges as the successful party. Her action was granted in part, and she was awarded damages. In particular, she was successful on the issues of after-acquired cause and notice period.

[26] Nevertheless, I find that a significant reduction to the Plaintiff’s costs is warranted given the divided success, in particular the fact that the Plaintiff was unsuccessful in establishing damages for the loss of opportunity to sell her book of business, for which very significant damages were sought and a significant amount of trial time was spent. Further, the Plaintiff chose not to accept the Defendant’s offer to settle dated November 19, 2019, which almost mirrored the ultimate result. Had the Plaintiff accepted the Defendant’s offer to settle, she would very likely be in a better position than she is now, four years later, after spending considerable time on the litigation and incurring significant costs.

[27] I do not accept the Plaintiff’s submission that the Defendant engaged in conduct during the litigation that should have an impact on costs.

[28] In light of the foregoing, I conclude that the Plaintiff is entitled to 30% of her costs on a partial indemnity basis.

c. Quantum

[29] The Defendant has not criticized the amount sought by the Plaintiff, probably because the bill of costs of the Defendant reflects a higher amount than the bill of costs of the Plaintiff. This is a strong indication that the amount sought by the Plaintiff is within the Defendant’s reasonable expectations. Despite this, this Court must be satisfied that the costs sought are fair and reasonable.

[30] I have reviewed the Plaintiff’s bill of costs. In my view, the lawyers’ rates are reasonable. However, I note that a number of lawyers were involved and the time spent by each lawyer is not shown in the bill of costs. The only information included in the bill of costs is the total amount of fees for each category of tasks, without indicating the specific lawyers who did the work and the time that they spent. For some categories, a round number is used, without any explanation. Given the missing information, it is difficult for this Court to be satisfied that the costs sought are fair and reasonable. As a result, it is appropriate to apply a small reduction to the amount of costs.

Conclusion

[31] Taking the foregoing into account, as well as the factors set out in Rule 57.01(1) of the Rules of Civil Procedure and the reasonable expectations of the parties, I find that the fair and reasonable award of costs in favour of the Plaintiff is on a partial indemnity basis in the all-inclusive amount of $72,000.00. The costs are to be paid by the Defendant to the Plaintiff within 30 days.

Vermette J. Date: April 29, 2024