ONTARIO SUPERIOR COURT OF JUSTICE
COURT FILE NO.: 10-CV-47795
DATE: 2013-04-02
BETWEEN:
DONALD GOULDING
Plaintiff
– and –
STREET MOTOR SALES LTD., 1514915 ONTARIO LIMITED AND BEVERLY WAYNE STREET
Defendants
Tim Sullivan, for the Plaintiff
Richard T. Knott, for the Defendants
By written submissions
endorsement on costs
beaudoin j.
Introduction.
[1] Following a two-day trial of this wrongful dismissal action heard on Feb 11 and 12th, 2012, I granted judgment in favour of the plaintiff Donald Goulding (“Goulding”) in an amount equivalent to three month’s salary; namely $15,000 less amounts already paid. Judgment was granted against the Defendant Street Motor sales Ltd. (”Street Motors”). I dismissed the claims against 1514915 Ontario limited and Beverly Wayne Street at the outset of the trial as there was no clear and separate cause of action against these parties set out in the statement of claim. As the total recovery was below the amount that would be recoverable in Small Claims Court, I directed counsel for the Plaintiff to address Rule 57.05(1) in his cost submissions.
Plaintiff’s position
[2] The Plaintiff seeks an order of costs against the Defendant Street on a partial indemnity basis in the amount of $23,200.89. He notes the permissive language in Rule 57.05(1) and submits that damages were arguably above the jurisdiction of the Small Claims Court. In support of that argument, he cites case law where it could not reasonably be known until the conclusion of the matter that damages would be within a lesser jurisdiction.[^1]
[3] He argues that damages remained unclear until judgment. Had he been successful on the inducement argument, additional claims over the small claims court limit of $25,000.00 contributed nothing more to the ultimate costs of the action. He maintains that no step was taken, no expense incurred that would have been incurred had small Claims Court been chosen, except for examinations for discovery, the production of a transcript and mediation. There was a motion regarding answers to undertakings where the plaintiff was successful and was awarded costs.
[4] The Plaintiff further argues that the Defendant cannot rely on the costs Rule 57.05 while they have not paid the costs ordered on August 23, 2011 until after the trial. He argues that the Defendants’ poor paperwork caused additional costs to be incurred. He adds that the additional clarity achieved through discoveries may have shortened the trial. He concludes that if the damages are used to pay his own legal costs, there will be no ability on his part to mitigate the damages for the wrongful dismissal which was to found to have occurred.
[5] As to the factors set in Rule 57.01(1), the Plaintiff notes his success; that neither party did better than their respective offers to settle. He also argues that the defendants’ offer to transfer the proceedings to Small Claims did not particularize which geographical jurisdiction was appropriate. The issues were of importance to the plaintiff. He complains that the Defendants did not complete a proper schedule “D” to their affidavit of documents and that he could not adequately prepare to examine that witness. On this last point, that objection was made at trial and I found it to be completely without merit.
[6] In the alternative, the Plaintiff seeks costs in accordance with the Small Claims Rules which he calculates at 15% of the amount claimed in his statement of claim resulting in an even higher claim for costs in the amount of $28,101.47 or, in the alternative, 15% of the Small Claims monetary jurisdiction; namely, $6,913.97.
The Defendants’ position
[7] The Defendants rely on Rules 49 and 57 and maintain that there should be no order as to costs up to January 4th, 2013 and that costs thereafter should be payable to them on partial indemnity basis in the amount of $10,000.
[8] The Defendants submit that the Plaintiff unreasonably escalated the costs of this action by claiming damages in the amount of $150,000. They argue that the Plaintiff had a simple wrongful dismissal case that could have been argued in Small Claims Court in Perth, Lanark County. Instead, they say that the Plaintiff took a simple action and attempted to turn it into an enticement case with allegations of conspiracy and spoilage of evidence.
[9] Three defendants were named when it should have been quickly apparent to the plaintiff that the only claim was against Street Motors and they note that the claims against the other defendants were summarily dismissed by me at the outset of trial. By commencing an action on the Superior Court in Ottawa even though all the Plaintiff was originally from Smiths Falls and all the other Defendants were from that area, the Defendants had to travel to Ottawa for mediation, examinations for discovery, a motion with respect to undertakings, a judicial pre-trial and the trial; for a total of 6 days.
[10] They note that this was not a complicated matter. The plaintiff was terminated after less than a year for employment and they argue that the pleadings made wild and unsubstantiated claims. Given the parties were so far apart, mediation failed. The Defendants argue that the Plaintiff made unjustified claims of privilege concerning his settlement with his previous employer but they chose not to challenge that claim in order to keep the costs down.
[11] As for the motion for better answers to undertakings, they say this was just another attempt to incur additional legal costs. Similarly, plaintiff’s counsel went to great lengths to find the original contract concerning the incentive agreement, even though there was no dispute as to its terms and that the contract was signed.
[12] They say that payment of the modest cost award for the motion was overlooked and that plaintiff’s counsel did not press the issue until the Thursday before the trial was to start. In the meantime, he had filed writs against the Defendants.
[13] As to offers to settle, the Defendants offered two months’ notice inclusive which was closer to result obtained. The Plaintiff’s lowest offer to settle was for $40,000.0 and this expired before trial. The only existing offer from the Plaintiff at trial was for $50,000.00. The Defendants had also offered to transfer the claim to Small Claims Court with a waiver of any costs incurred by them in the Superior Court. Had the Plaintiff accepted this offer, the Defendants would have been able to defend the action on their own and limit their own legal costs.
[14] The Defendants say that they did not get the Plaintiff’s list of witnesses until February 5th, 2013. They received drafts from two potential witnesses which their counsel was asked to admit. One of these made derogatory statements about the Defendant Bev Street. Defence counsel sought amendments and indicated that he wished to cross-examine the one witness but he didn’t learn who the Plaintiff was calling as a witness until the morning of the trial.
[15] At trial, Plaintiff’s counsel objected to the admission of the spreadsheet of sales from Street Motors on the basis of lack of notice under the Evidence Act even though the plaintiff had a copy of it in his own productions. That objection was also summarily dismissed. The Defendants maintain that the enticement/inducement claim required more research and preparation. The Defendants say the outlandish claims made the action difficult to settle and cite as example, this allegation that the Defendants “used the Plaintiff as their agent or puppet as a tool to damage the competitor and once Mr. Golding use to fulfill that propose had been completed, he as dismissed in a high handed disregard for his rights and want in disregard of all commercial reality”
[16] The Defendants rely on Gingerich v. Kobe Sportswear, [2008] O.J. No. 543, where Justice Low awarded a Plaintiff $9,166.67 after a two day wrongful dismissal trial. He stated at paras 5, 6 and 7:
In my view, this case is one where it would be appropriate not to award costs to the plaintiff. There is nothing exceptional about the claim. There were no complexities of fact or of law.
I do not accede to the plaintiff's argument that because there was uncertainty in that the range of possible recovery could have taken the award out of the Small Claims jurisdiction that it is therefore unfair not to award costs. Rule 49 carries potentially severe costs consequences in cases where there is a range of possible recovery-for example, in actions for general damages. Both in the case of Rule 49 offers and in cases where there is a potential under Rule 57.05(1) for no costs to be awarded to a successful plaintiff, the Rules require litigants to take a realistic look at the merits of their respective cases.
There is a supplementary reason why costs ought not to be awarded in this case. A significant portion of the time and effort was attributable to the plaintiff's claim for the expenses of starting up and of carrying on his business. There was neither proper nor timely documentary disclosure of this aspect of the action on the plaintiff s part and it was unmeritorious in any case.
Analysis and Conclusion
[17] I conclude that the Plaintiff is not entitled to any costs in this action notwithstanding his modest success at trial and the only issue is whether to award any costs to the Defendants.
[18] The main thrust of the plaintiff’s claims consisted of a wrongful dismissal claim to which he added vague allegations of conspiracy and of inducement. These allegations were made recklessly without any factual or legal basis. He named three Defendants where no clear cause of action was pleaded against two of them.
[19] It should have evident to Plaintiff’s counsel that the claim for inducement was totally without merit and was fatally undermined by his client’s letter of resignation from his previous employer where he claimed to have been constructively dismissed. The Plaintiff then pursued his previous employer and recovered damages as a result of the termination from his previous employment. Those facts were known well before these proceedings were commenced. Moreover, the Plaintiff offered no compelling evidence of inducement at trial. His claim of inducement would have failed in any event. This was a simple wrongful dismissal action that could and should have been brought in Small Claims Court. Instead, inflammatory pleadings were drafted to expand the issues and drive up costs unnecessarily.
[20] The Defendants were dragged to Ottawa when this action could have easily been commenced in Lanark County. Because the action was commenced in Superior Court, they were forced to hire counsel for the corporate defendants and had to bear the costs of discoveries and of a referral to mediation. At trial, Plaintiff’s counsel made technical arguments attempts to limit their ability to introduce evidence or to call a witness even though there was ample notice and no prejudice whatsoever. This completely undermines the Plaintiff’s claims that discoveries may have shortened the proceedings. The Plaintiff called no evidence to support his vague allegations of conspiracy. There was no evidence that the manner of the dismissal was unduly harsh.
[21] Even though the Defendants did not beat their Rule 49 offer to settle, the existence of an offer is factor I can consider under Rule 57.01(1). Had the Plaintiff accepted the Defendants’ alternate January 4th offer to transfer the matter to Small Claims Court, he would have kept the $1,153.00 that had been paid and would have been able to claim an additional $25,000 which would have represented five months’ notice. That was well within the range of damages he could have realistically expected at trial. Given that the Defendants were waiving any claim for costs incurred to that date, the value of that offer was significant.
[22] Rule 57.01(2) allows for an award of costs against a successful party “in a proper case”. This is such a case. The Defendants were put to unnecessary expense by an ill-conceived claim. Their claim for costs is reasonable, especially when one considers the amounts claimed by the Plaintiff. Therefore I order the Plaintiff to pay to the Defendants the sum of $10,000 plus HST of $1,300 and their disbursements which I fix in the amount of $271.12 for a total of $11,571.20.
Mr. Justice Robert N. Beaudoin
Released: April2, 2013
COURT FILE NO.: 10-CV-47795
DATE: 2013-04-02
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
DONALD GOULDING
Plaintiff
– and –
STREET MOTOR SALES LTD., 1514915 ONTARIO LIMITED AND BEVERLY WAYNE STREET
Defendants
REASONS FOR DECISION
Beaudoin J.
Released: April 2, 2013
[^1]: Wicken (Litigation Guardian of) v. Harsar, 2002 O.J. No. 2843; affd 2004 18856 (ON SCDC), 49 C.P.C. (5th) 76 (Div. Ct) and Hunt v. Td Securities Inc. {2003} O.J. No. 4868 ( Ont. C.A.)