Peter J. Bishop

Following dismissal of a civil action arising from a business relationship dispute, the successful defendants sought costs on a substantial indemnity basis, arguing that the plaintiff advanced shifting legal theories and made a late allegation of fraud that was not proven.

The court reviewed the principles governing costs under Rule 57.01 of the Rules of Civil Procedure and the consequences of a rejected Rule 49 offer to settle.

Although unfounded fraud allegations can justify substantial indemnity costs for the entire proceeding, the court found the late fraud allegation was more a misguided attempt than bad faith litigation conduct.

The court therefore declined to award substantial indemnity costs for the entire action but applied the usual Rule 49 consequences.

Costs were fixed as partial indemnity up to the offer date and substantial indemnity thereafter.

The plaintiff alleged that he was induced to leave secure employment by fraudulent misrepresentations that he would become a partner in a siding installation business and share profits.

During trial the theory shifted to deceit and fraudulent misrepresentation, with the plaintiff claiming the defendants planned from the outset to terminate him after he secured new builder clients.

The court held the evidence did not support allegations of fraud, misrepresentation, or a partnership agreement.

The plaintiff was engaged as a commissioned salesperson entitled to a percentage of profits from business he personally generated.

Claims based on unjust enrichment also failed because obtaining new business was precisely the work for which the plaintiff was paid.