SUPERIOR COURT OF JUSTICE - ONTARIO
COURT FILE NO.: 10-48766
RE: Donald Middleton, Plaintiff
– and –
Municipality of Highlands East, David Burton, James Mackie, Gary Stoughton and The Bancroft Times Ltd., Defendants
BEFORE: Mr. Justice James E. McNamara
COUNSEL: R. Steven Baldwin for the Plaintiffs,
John Ewart for the Defendant Highlands,
William D. Watson for the Defendants James Mackie and David Burton,
John Bonn for the Defendant Gary Stoughton
HEARD: September 17–21, 24-25, and
December 17–19, 2012 (in Belleville)
decision on COSTS
[1] This wrongful dismissal action was tried before myself in Belleville over a period of 10 days. I awarded 10 months in lieu of notice in the amount of $72,218.30, aggravated damages in the amount of $30,000.00, and vehicle restoration costs of $5,600.00. The total amount of the judgment was, then, $107,728.30 plus pre-judgment interest. The Defendant municipality was found liable for those damages and the Plaintiff’s claims against the individual named Defendants were dismissed.
[2] In my Reasons I also directed that if counsel were unable to agree on costs they should make written submissions. They apparently were not able to agree and I have received and reviewed extensive submissions. My ruling on costs follows.
(A) Plaintiff’s costs
[3] There is no issue, in my view, that the Plaintiff is entitled to his costs. The issues that need to be determined are a scale of costs to be applied, and the quantum of same. Firstly as to the scale of costs, both sides made offers to settle. The Plaintiff offered to settle the proceeding in writing by letter dated January 28th, 2011 for the principle amount of $100,000.00 plus pre-judgment interest and costs. Just slightly less than the amount awarded after trial. The Defendant municipality apparently made a verbal offer on July 17th, 2012 in the all inclusive amount of $35,000.00, followed by a written offer to settle on September 7th, 2012, the eve of trial, in the all inclusive amount of $100,000.00. In my view the Plaintiff’s recovery was generally more favourable then the terms of the offer and pursuant to rule to 49.10(1) the Plaintiff is entitled to partial indemnity costs to the date of the offer, and substantial indemnity costs thereafter. I am not persuaded that in the circumstances of this case there is any reason to deviate from the general direction given by the rule.
[4] The Plaintiffs’ costs outline delivered with his written materials and seeks fees, calculated on the basis of partial indemnity to the date of the offer and substantial indemnity thereafter, of $137,486.41.
[5] In exercising my discretion in terms of fixing appropriate partial and substantial indemnity rates, I am, of course, mindful of my obligation to take into account all of the factors enumerated in rule 57.01(1), and I have done so. In fixing an appropriate rate, at the end of the day, quantum must be guided by overriding principles of reasonableness, that is, the reasonable expectation of both parties. In his materials Mr. Baldwin indicates that his full indemnity rate is $425.00 per hour. Principles of fairness would dictate that the parties would expect that things like hourly rates would bear some resemblance to what would be considered reasonable in the area where the case was tried. All counsel involved in this matter practice in the Belleville area. Mr. Ewart, counsel for the municipality, is slightly senior to Mr. Baldwin and his full indemnity rate is $300.00 per hour. The same hourly rate is used by Mr. Bonn counsel for the Defendant Stoughton, who is admittedly somewhat junior to Mr. Baldwin. Mr. Watson, who is considerably senior to all the other counsel, has a full indemnity rate of $350.00 per hour. In my view, allowing the Plaintiff’s counsel an hourly rate on a full indemnity basis of $350.00 per hour would be reasonable and within the expectations of the parties.
[6] Partial indemnity is roughly 60% of full indemnity. That translates into an hourly rate, on a partial indemnity basis, of $210.00. Substantial indemnity under the Rules is 1.5 times partial indemnity, or approximately 90% of full indemnity. That makes Mr. Baldwin’s hourly rate on a substantial indemnity basis for purposes of these calculations, $315.00 per hour. Those rates will be applied to the times claimed in the costs outline on a partial indemnity basis to January 28th, 2011 and on a substantial indemnity basis thereafter.
[7] The Plaintiff’s costs outline also claims 223.8 hours at a rate of $235.00 per hour for the assistance of a paralegal. While I am satisfied that some paralegal assistance would be required by counsel in a case of this nature, I find the hours claimed and the hourly rate, excessive.
[8] It is not clear what services were rendered by the paralegal, but it would appear from a review of the description of services appended to the costs outline that of the 157.8 hours claimed for the paralegal subsequent to the date of the written offer, a very significant portion of that time related to while the trial was on and the paralegal, Ms. Thomson, was in attendance taking notes. While certainly there is nothing wrong with having someone take notes, principles of fairness would dictate that it be done at a reasonable rate.
[9] I find on a full indemnity basis an appropriate rate for a paralegal in the area would be $150.00 per hour. That translates into a partial indemnity rate of $90.00 an hour and a substantial indemnity rate of $135.00 per hour. I will allow the time claimed in full to the date of the written offer of 66 hours at the partial indemnity rate, but in terms of the hours subsequent to that I would reduce them by 50%. That is then, at a substantial indemnity rate, I will allow 78.9 hours at $135.00 an hour.
[10] Two junior lawyers did some work on the file prior to the date of the offer and nothing thereafter. The amounts claimed seem fair and what would be expected in a case of this nature. Those times are allowed after applying the 60% factor to each counsel’s full indemnity rate.
[11] I am not prepared to allow the amounts claimed for the services of law clerks. In my view an unsuccessful Defendant would, quite properly, not reasonably expect to pay those administrative costs in addition to costs for lead counsel, junior counsel and a paralegal. The Plaintiff is also, of course, entitled to appropriate HST on those costs plus disbursements. In my view approaching costs on this basis is reasonable and fair and also has regard to principles of proportionality.
(B) Costs of the successful Defendants
[12] First and foremost I am persuaded that having successfully defended their clients, Mr. Watson on behalf of the Defendants Mackie and Burton, and Mr. Bonn on behalf of the Defendant Staughton are entitled to an award of costs.
[13] As to the scale of those costs, the case law that has developed on this issue has repeatedly stated that elevated costs are warranted in only two circumstances. The first involves the operation of an offer to settle under rule 49.10 where substantial indemnity costs are explicitly authorized. The other circumstance is where the losing party has engaged in behaviour worthy of sanction. Neither of those circumstances apply in this case so the proper rate is partial indemnity. In Mr. Bonn’s case 60% of his full indemnity rate is $180.00 per hour and in Mr. Watson’s case his partial indemnity rate would be $210.00 per hour. Mr. Bonn was also assisted by his law student at various points as indicated in the bill of costs. The full indemnity rate for that student is $90.00 which translates into an hourly rate of $54.00 on a partial indemnity basis.
[14] In terms of the times claimed by both Mr. Bonn and Mr. Watson, it is common ground that it is not for this court, save in exceptional circumstances, to second guess successful counsel on the time spent on a case. The times as claimed are allowed.
[15] That then leaves the issue of who should be ordered to pay those costs.
[16] The Defendants suggest that the costs are the Plaintiff’s responsibility while the Plaintiff counters that in the circumstances of this matter a Sanderson Order ought to be made.
[17] The usual test for determining whether a Sanderson Order is appropriate has two steps. The threshold question is whether it was reasonable to join the several Defendants together in the one action. If the answer is yes, then I must use my discretion to determine whether a Sanderson Order would be just and fair in the circumstances.
[18] I am satisfied that it was reasonable, in all the circumstances, to join all these Defendants together in one action. Aspects of the facts of this matter as outlined in my Decision are, to put it mildly, unusual. From the Plaintiff’s perspective he was getting along famously with his employer, there is an election where the three individual Defendants join council, there had been comments made during the election campaign negative to him, and suddenly he was let go. No explanation or discussion of issues ever takes place. I found after hearing all the evidence that the manner of dismissal was unfair and caused the Plaintiff mental distress. That conduct, at least in part, occurred because returning councillors of the Defendant and municipal staff were not completely candid with the three individual Defendants as to certain things that had transpired prior to those Defendants becoming members of council. At least one of the individual Defendants during the course of his evidence went so far as to indicate that during the trial itself he was hearing things from municipal staff of which he had not been previously aware.
[19] The facts as to who did what and why were confusing and unusual and justified the joining of the several Defendants. Furthermore, again keeping in mind the factual backdrop to this case, making a Sanderson Order would be just and fair in the circumstances. The costs of the successful Defendants together with HST and disbursements will be paid directly by the Defendant municipality.
[20] Obviously counsel will need to put their heads together and recalculate costs in light of my ruling. That should be a reasonably straightforward exercise following this template, but if there are any issues I can be spoken to, perhaps by way of conference call.
[21] I do not intend to make any order of costs relating to the Costs Submissions.
McNamara, J.
Date: April 9th, 2013
COURT FILE NO.: 10-48766
ONTARIO
SUPERIOR COURT OF JUSTICE
RE: Donald Middleton, Plaintiff
– and –
Municipality of Highlands East, David Burton, James Mackie, Gary Stoughton and The Bancroft Times Ltd., Defendants
BEFORE: Mr. Justice James E. McNamara
COUNSEL: R. Steven Baldwin for the Plaintiffs,
John Ewart for the Defendant Highlands,
William D. Watson for the Defendants James Mackie and David Burton,
John Bonn for the Defendant Gary Stoughton
DECISION ON COSTS
McNamara, J.
Released: April 9th, 2013