ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: 606/11 SR; 637/11 SR; 645/11 SR and 687/11 SR

DATE: 2014 04 23

B E T W E E N:

HUY VU, GORDON WALKER,
JAY THAKER & KULWANT SINGH

Robert W. Dowhan, for the Plaintiffs

Plaintiffs

• and -

AFFINIA CANADA ULC

Christopher A. Chekan, for the Defendant

Defendant

Costs Endorsement

Price J.

NATURE OF PROCEEDING

[1] Affinia Canada ULC (“Affinia”) dismissed its employees, Huy Vu, Kulwant Singh, Jay Thaker and Gordon Walker, (“the plaintiffs”) without giving them reasonable notice of their dismissal or payment in lieu of reasonable notice, as required. Each of the plaintiffs commenced an action against Affinia to recover damages for wrongful dismissal. The four actions were eventually settled on terms set out in Minutes of Settlement which Affinia prepared, and which the plaintiffs signed. The Minutes provide that if the parties do not agree on costs by June 14, I would determine the costs based on written costs submissions that the parties would file by that date.

[2] I have reviewed the parties’ costs submissions, and these reasons follow from those submissions. This costs endorsement shall apply to all of the actions, namely:

a) Gordon Walker v. Affinia Canada ULC, File No. 637/11 SR

b) Jay Thaker v. Affinia Canada ULC, File No. 645/11 SR

c) Huy Vu v. Affinia Canada ULC, File No. 606/11 SR

d) Kulwant Singh v. Affinia Canada ULC, File No. 687/11 SR

ISSUE

[3] The court must assign responsibility for the costs of the proceeding and determine the amount of costs to be paid.

POSITIONS OF THE PARTIES

[4] The plaintiffs seek their costs on a partial indemnity scale, in the amount of $8,000 each, inclusive of disbursements (amounting to $907.98 for each plaintiff) and H.S.T., based on Bills of Costs which they have filed. The plaintiffs argue that they were successful in recovering their damages and that they are presumptively entitled to their costs on a partial indemnity scale.

[5] The plaintiffs advised Affinia at a second pre-trial conference, held on April 23, 2013, that they were willing to settle their costs in the amount of $5,000.00 each, and later delivered written offers dated May 28, 2013, to which Affinia did not respond. They submit that Affinia’s conduct delayed the resolution of the action and resulted in unnecessary steps, including two examinations of the plaintiffs, notwithstanding that no issue was raised as to whether there was any cause for their dismissals. They further argue that Affinia’s failure to attend the first pre-trial conference on March 14, 2013, which necessitated a further conference on April 23, 2013, and its failure to accept the plaintiffs’ offers to settle their costs, further lengthened the proceeding and increased the costs.

[6] Affinia argues that the court should award Affinia its costs and deny the plaintiffs their costs. It submits that the minutes of settlement were more favourable to Affinia than the plaintiffs’ offers to settle and that the plaintiffs conduct was unreasonable, and should disentitle them to costs.

ANALYSIS

General Principles

[7] As a general principle, costs are in the discretion of the court.[^1] Determining costs is not a mechanical exercise. The overall objective is “to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular proceeding, rather than an amount fixed by the actual costs incurred by the successful litigant.”[^2] This is a “fundamental concept in fixing or assessing costs.”[^3]

[8] The Court of Appeal in Boucher v. Public Accountants Council for the Province of Ontario articulated the principles that govern costs assessments. Armstrong J.A. stated: “When the court awards costs, it shall fix them in accordance with sub-rule 57.01(1) and the Tariffs…Subrule (1) lists a broad range of factors that the court may consider in exercising its discretion to award costs under s. 131 of the Courts of Justice Act.”[^4]

[9] The Court must, first and foremost, be fair and reasonable when exercising its discretion to award costs. As Armstrong J.A. noted in Boucher, the parties’ expectation concerning the amount of a costs award is a relevant factor to be considered. Armstrong J.A. refrained from attempting to articulate a more detailed or formulaic approach, noting that the notions of fairness and reasonableness are embedded in the common law which judges have been applying for centuries to the facts of particular cases.[^5]

Factors to be Considered when Assessing Costs

[10] Rule 57.01(1) contains a non-exhaustive list of factors that guide the Court in its reasoning when awarding costs in the exercise of its discretion under section 131 of the Courts of Justice Act. It provides, in part:

57.01(1) In exercising its discretion under section 131 of the Courts of Justice Act to award costs, the Court may consider…

(0.a) the principle of indemnity, including, where applicable, the experience of the lawyer for the party entitled to the costs as well as the rates charged and the hours spent by that lawyer;

(0.b) the amount of costs that an unsuccessful party could reasonably expect to pay in relation to the step in the proceeding for which costs are being fixed;

(a) the amount claimed and the amount recovered in the proceeding;

(c) the complexity of the proceeding;

(d) the importance of the issue;

(e) the conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding;

(f) whether any step in the proceeding was

(i) improper, vexatious or unnecessary, or

(ii) taken through negligence, mistake or excessive caution;

(i) any other matter relevant to the question of costs. [Emphasis added.]

[11] I will review the factors that I consider most relevant in arriving at the appropriate costs order in the present case.

a) Indemnity

[12] Costs normally follow the event, meaning that the court orders the unsuccessful party to pay the costs of the successful party on a partial indemnity scale.[^6] The plaintiffs were successful in recovering the amount set out in the Minutes of Settlement, and they should be indemnified for their costs.

b) Hourly Rates and Experience

[13] The plaintiffs’ lawyer, Robert Dowhan, was called to the Bar in 2001 and had been practicing law for 12 years when the action was settled. He claims hourly rates of $370 and $300 for the services he provided. He was assisted by Chelsea Harron, who was called to the Bar in 2011 and had been practicing law for 2 years when the action was settled. She claims hourly rates of $200 and $175 for her services. Mr. Dowhan and Ms. Harron were assisted by law clerks and claim between $75 and $140 per hour for their time.

[14] The “Information for the Profession” bulletin from the Costs Sub-Committee of the Rules Committee (the “Costs Bulletin”) suggests maximum hourly rates (on a partial indemnity scale) of $80 for law clerks, $225 for lawyers of less than 10 years’ experience, $300 for lawyers of between 10 and 20 years’ experience, and $350 for lawyers with 20 years’ experience or more.[^7] These limits, which were generally intended for the most complex and important of cases, have become dated and must be adjusted for the inflation that has ensued in the years since 2005, when the Costs Bulletin was issued.

[15] According to the Costs Bulletin, Mr. Dowhan’s partial indemnity rate is $300, as he has practiced law for between 10 and 20 years. The Bank of Canada inflation calculator converts $300 in 2005 to $352.22 in 2014.

[16] The partial indemnity hourly rate for Chelsea Harron, who has practiced for less than 10 years, is $225, according to the Costs Bulletin. This converts to $264.17 in 2014. The Bulletin recommends an hourly rate of $80 for Law Clerks, which converts to $93.93 in 2014.

[17] Affinia’s lawyer, Christopher Chekan, was called to the Ontario Bar in 1998 and to the Michigan and Illinois State Bars in 1996 and 1995, respectively. He had been practicing law for 16 years in Ontario, and longer in the U.S., when this action was settled. He claims a partial indemnity rate of $200. Although he does not disclose the rate he charged his client, he is entitled to a partial indemnity rate of $352.22 according to the Costs Bulletin. This is proportional to the partial indemnity rate I propose to allow the plaintiffs’ lawyers. The rate that Mr. Chekan charged Affinia, or is entitled to claim on a partial indemnity scale, should reasonably have informed Affinia’s expectation as to the costs it might be required to pay if unsuccessful in the action.

[18] Based on the foregoing, I am allowing Mr. Dowhan’s time at $350 per hour on a partial indemnity scale, Ms. Harron’s time at $250 per hour, and their law clerks’ time at $90 per hour.

c) Hours Spent

[19] The plaintiffs’ lawyers were required to draft their clients’ statements of claim, Affidavit of Documents, and Motion for Summary Judgment, including motion record, factum, and brief of authorities. They were required to attend twice for Affinia’s examinations of the plaintiffs, and to attend at Assignment Court on April 23 and August 27, 2012, and at pre-trail conferences on March 14 and April 23, 2013.

[20] Affinia has not directly challenged the hours that the plaintiffs’ lawyers claim to have spent, or argued that the time was unreasonably spent. I have nevertheless compared their respective Bills of Costs with a view to assessing the reasonableness of the hours the plaintiffs’ lawyers say they spent.

[21] The plaintiffs’ lawyers have submitted four identical Bills of Costs, one for each plaintiff, and apparently allocate ¼ of the total time spent on each task that was performed on behalf of all of the plaintiffs to each of their Bills of Costs. This is evident from the following:

a) The plaintiffs’ lawyers record .50 hours in each of their Bills of Costs, under April 23, 2012, for attending Assignment Court. The total time spent was likely 2.00 hours, as appears from Affinia’s Bill of Costs, which records 2.50 hours spent on the same date, described as “Pre-Trial before Herold J. and obtain order traversing actions to Assignment court in Guelph.”

b) The plaintiffs’ lawyers record 2.50 hours in each Bill of Costs, under June 11, 2012, for “Prep and attend discoveries.” They do not record any time spent on June 12, 2012. The total time spent was likely 8.00 hours, as appears from Affinia’s Bill of Costs, which records 4.00 hours on June 11, 2012, for “Attend Examination for Discovery Vu & Walker”, and 4.00 hours on June 12, 2012, for “Attend Examination for Discovery Thaker & Singh.” The plaintiffs’ lawyers appear to have added 2.00 hours for preparation, for a total of 10.00 hours recorded for this session of examinations.

c) The plaintiffs’ lawyers record 1.00 hour in each Bill of Costs under February 12, 2013, for “Attend discoveries.” They do not record any time for discoveries on February 13, 2013. The total time spent was likely 4.00 hours, as appears from Affinia’s Bill of Costs, which records 4.00 hours on February 13, 2013, for “Attend discoveries of Thaker, Singh and Walker” and no time on February 12, 2013.

[22] Affinia has not included any time in its Bill of Costs past March 6, 2013, and there are gaps in the plaintiffs’ and Affinia’s Bills of Costs for earlier dates, which makes an exact concordance between the Bills of Costs impossible. For example, the plaintiffs record 1.20 hours for each plaintiff on April 23, 2012, to “Attend Motion” but Affinia’s lawyer has omitted the time he spent for this attendance.

[23] If the 46.9 hours recorded in the Bills of Costs of each plaintiff are totaled, the combined time spent for all the plaintiffs is 187.60 hours (46.9 hours x 4). Of these hours, Mr. Dowhan spent 47.6 hours (11.9 hours x 4), Ms. Harron spent 94.8 hours (23.7 hours x 4), and their law clerks spent 45.2 hours (11.3 hours x 4). Affinia’s lawyer spent 118 hours, all of them by Mr. Chekan himself. The plaintiffs’ lawyers, collectively, record 69.6 hours for the entire period they were engaged, which represents 59% more than the time that Affinia’s lawyer records up to March 6, 2013, but Mr. Dowhan delegated ¾ of the work performed by the plaintiffs’ lawyers to his associate, Ms. Harron, who had an hourly rate only 72% as high as his own ($250 instead of $350), and to his law clerks, whose rate is 25% that of Mr. Dowhan’s.

[24] In total, the plaintiffs spent 137.6 hours (34.4 hours x 4) up to March 6, 2013, the last date for which both the plaintiffs’ lawyers and Affinia’s lawyer record their time. Affinia’s lawyer spent 118 hours during the same period. That is, for the comparable period, the plaintiffs’ lawyers spent 16.6% more hours than Affinia’s lawyer and most of this, as mentioned above, was delegated to Ms. Harron and the law clerks at lower hourly rates. I conclude from this comparison that the time spent by the plaintiffs’ lawyers was reasonable.

d) Complexity

[25] Actions for wrongful dismissal are not, in general, very complex. The present action was made more complex by the issues Affinia raised, including the set-off Affinia claimed for the amount it paid the plaintiffs pursuant to the Employment Standards Act, the issue of whether the plaintiffs had mitigated their loss, and whether the plaintiffs were entitled to base their loss of earnings, in part, on the amount they had earned for overtime worked.

e) Importance of the Matter

[26] What was at stake in the action and motion was the plaintiffs’ right to compensation for their dismissals and the appropriate amount of compensation to be paid. Had the plaintiffs been unsuccessful in the action, they would have lost that right. Mr. Singh claimed $98,000 and recovered $39,731.38, Mr. Walker claimed $88,350.21 and recovered $40,622.13, Mr. Thaker claimed $86,000 and recovered $34,911.59, and Mr. Vu claimed $70,000 and recovered $22,932.57.

[27] I find the amounts the plaintiffs claim for costs to be proportional to the amounts at stake and the importance of the compensation to them.

f) Improper or Unnecessary: The Scale of Costs

[28] I must consider whether there was some fault on the part of Affinia or other factor that would justify a high award of costs against it. In the normal course, costs are awarded to a successful party on a partial indemnity scale; however, the court has the discretion to order costs payable on a substantial indemnity scale in exceptional cases.[^8]

[29] The 2010 amendment of Rule 20.06 shifted the burden in a motion for summary judgment to the successful party (whether it be the moving party or the party resisting the motion), who now must demonstrate that costs on a substantial indemnity scale are justified. Rule 20.06 now provides:

20.06 The court may fix and order payment of the costs of a motion for summary judgment by a party on a substantial indemnity basis if,

(a) the party acted unreasonably by making or responding to the motion; or

(b) the party acted in bad faith for the purpose of delay. [Emphasis added]

[30] In the present case, the action was settled before the motion for summary judgment was determined and, indeed, before the motion was heard. In these circumstances, it would not be appropriate for me to conclude that either party stood virtually no chance of success, or that it was unreasonable for the plaintiffs to bring the motion, or for Affinia to oppose it.

[31] Each of the parties argue that the other’s conduct was unreasonable. In particular:

a) The plaintiffs assert that Affinia delayed delivery of its Notice of Intent to Defend in Mr. Singh’s action until after it was noted in default. Affinia argues that the Statement of Claim was improperly served on Raj Singh, who was neither an officer nor director of Affinia, which it says resulted in the claim not reaching Affinia’s outside counsel for two months.

b) The plaintiffs assert that they were reasonable in their overall settlement positions and that Affinia should have settled earlier. They note that Mr. Huy offered to accept compensation based on 8 months’ notice, and settled for 10; Mr. Thaker offered to accept compensation based on 12 months, and settled for 15; Mr. Singh offered to accept compensation based on 11 months, and settled for 16; and Mr. Walker offered to accept compensation based on 11 months, and settled for 12. Affinia relies on the fact that the plaintiffs ultimately agreed not to base their compensation on their T4 income of the previous year, which included overtime, and that the plaintiffs initially gave Affinia credit for working notice in their calculation of their entitlement but not for ESA notice or severance paid. The plaintiffs argue that Affinia failed until the initial Pre-Trial Conference to raise any issue as to whether the calculation of the plaintiffs’ entitlement should be based on their T4 income, which included overtime.

c) The plaintiffs argue that Affinia delayed delivering its affidavit of documents; Affinia argue that within two months of delivering its defences, it retrieved documents relevant to the plaintiffs’ claims from outside storage and reviewed the documents to ensure that it was producing all relevant documents to the plaintiffs and that the plaintiffs never objected to its productions.

d) The plaintiffs argue that Affinia unreasonably delayed settlement, and failed to arrange a resumption of its examination of the plaintiffs promptly, thereby necessitating the plaintiffs’ motions for summary judgment, and that Affinia then insisted on adjourning the motions in order to conduct its second examination of the plaintiffs on the issue of mitigation. Affinia argues that the plaintiffs brought their motions prematurely, before Affinia had completed its examination for discovery of them. Affinia notes that the plaintiffs later agreed to adjourn the examinations, and to re-attend after they had complied with their undertakings, and that Fitzpatrick J. adjourned the motions for this purpose, and struck inadmissible evidence from the plaintiffs’ motion records.

e) The plaintiffs argue that Affinia unreasonably disputed their efforts to mitigate and offered no evidence to support its position, although the burden of proof on this issue was on it. Affinia argues that the plaintiffs failed to produce evidence of their efforts to mitigate until after Affinia’s first examination of them, which necessitated the second attendance, and that they should have produced all their relevant documents within ten days after the close of pleadings, as required by the Rules of Simplified Procedure.

f) The plaintiffs note that Affinia failed to attend at the initial Pre-Trial Conference, and did not prepare a chart of comparable decisions involving the range of reasonable notice periods, which necessitated a second conference, and that Affinia later failed to settle the issue of costs in a timely manner.

g) Affinia submits that the terms of its minutes of settlement are more favourable to it than the plaintiffs’ offers to settle, delivered six months into the litigation.

[32] Had the parties made more timely efforts to settle the actions, and their counsel employed more effective and less combative communication, accompanying their offers or responses to offers with their calculations of the plaintiffs’ entitlement and the evidence and jurisprudence they relied on, the costs of the action could have been substantially reduced. The conduct of each of the parties could, in this sense, be said to have been unreasonable.

[33] Affinia argues that its failure to serve an offer to settle on the plaintiffs does not entitle the plaintiffs to its costs.[^9] It is true that not every instance of unreasonable conduct attracts an order that costs be paid on a substantial indemnity scale. Substantial indemnity costs, like their predecessor, solicitor and client costs, are exceptional. Mark M. Orkin, in The Law of Costs,[^10] cites the Supreme Court in Young v. Young, in this regard: “Solicitor and client costs are generally awarded only where there has been reprehensible, scandalous, or outrageous conduct on the part of one of the parties.”[^11]

[34] In Empire Life Insurance Co. v. Krystal Holdings Inc., Archibald J. stated: “Substantial indemnity costs are an exceptional award, saved for extenuating circumstances such as situations where there has been egregious conduct … or where a motion has been brought unreasonably”[^12]

[35] The plaintiffs should not be deprived of their costs, on a partial indemnity scale, which they are presumptively entitled to by reason of the damages they have recovered. Affinia’s conduct is not so unreasonable as to attract an award of costs against it on a higher scale, but it also is not so reasonable, nor the conduct of the plaintiffs so unreasonable, as to justify departing from the presumptive rule that the successful party is entitled to its costs on a partial indemnity scale.

g) Reasonable Expectation of Unsuccessful Parties

[36] A costs award must be within the reasonable expectation of the unsuccessful parties in order to preserve access to justice. Armstrong J.A. explained the rationale for this principle in Boucher:

The failure to refer, in assessing costs, to the overriding principle of reasonableness, can produce a result that is contrary to the fundamental objective of access to justice. The costs system is incorporated into the Rules of Civil Procedure, which exist to facilitate access to justice….

In deciding what is fair and reasonable, as suggested above, the expectation of the parties concerning the quantum of a costs award is a relevant factor.[^13]

[37] I adopt Campbell J.’s statement in Jhaj v. York University, in this regard:

In my view, the awarding of costs, particularly on a motion, should reflect some basis of continuity between similar kinds of motions and not be determined only on the basis of the number of hours involved.[^14]

[38] In reviewing a claim for costs, I need not undertake a line by line analysis of the hours claimed, nor should I second guess the amount claimed unless it is clearly excessive or overreaching. I must consider what is reasonable in the circumstances and, after taking into account all of the relevant factors, award costs in a global fashion.[^15] I do not find the plaintiffs’ claim for costs to be clearly excessive or overreaching.

h) Proportionality

[39] I have considered the principle of proportionality as expressed in the interpretive provisions of Rule 1.04 (1.1):

1.04 (1.1) In applying these rules, the court shall make orders and give directions that are proportionate to the importance and complexity of the issues, and to the amount involved, in the proceeding.[^16]

[40] The costs to be imposed on Affinia, amounting in total to approximately $32,000, are not disproportionate to the amounts that were at stake in the actions. The plaintiffs, in the Minutes of Settlement they signed, have collectively recovered damages in the amount of $138,197.67.

[41] I must, at this point, “step back and examine the overall award with a view to determining whether it is ‘fair and reasonable’ for the kind of matter involved.” In determining what is fair and reasonable, I take into account the reasonable expectation of the parties concerning the amount of costs.[^17]

[42] As I noted in MCAP Leasing v. Lind Furniture, the amount of costs on a motion for summary judgment varies widely depending on the circumstances, including the complexity of the issue, the complexity of facts, and the witnesses from whom evidence is required. There are no “standard costs” in such motions.[^18]

[43] I have considered the following decisions awarding costs on a partial indemnity scale in motions for summary judgment involving claims for damages for wrongful dismissal made in actions brought under the Simplified Procedure Rule:

(a) In Adjemian v. Brook Crompton North America, Perrell J. awarded partial indemnity costs in the amount of $14,157.64 after awarding summary judgment for $50,000.[^19]

(b) In Moldovanyi v. Canac Kitchens Ltd. (Kohler Ltd.), D.M. Brown J. awarded partial indemnity costs of $9,500.00 after awarding summary judgment for $27,422.46.[^20]

(c) In Kotecha v. Affinia, Hambly J. awarded partial indemnity costs of $21,000 after awarding summary judgment for $69,139.03 in an action for damages for wrongful dismissal, in which no examinations for discovery were held.[^21]

[44] While costs are not arrived at by applying mathematical formulae, the range of costs awarded in similar motions are one basis upon which parties form their reasonable expectation as to the costs they may be ordered to pay if unsuccessful in the motion. Affinia’s reasonable expectation as to its potential costs liability in the plaintiffs’ motion for summary judgment should be based, in part, on the range of costs awarded in similar motions.

[45] In all of the circumstances, Affinia shall pay the plaintiffs their costs of the settled action in the amount of $8,000 each, inclusive of disbursements and H.S.T.

Order

[46] Based on the foregoing, it is ordered that:

1. Affinia shall pay to the plaintiffs their costs on a partial indemnity scale in the amount of $8,000.00 inclusive of fees, disbursements and H.S.T., as follows:

(a) Gordon Walker (File No. 637/11 SR): $8,000.00

(b) Jay Thaker (File No. 645/11 SR): $8,000.00

(c) Huy Vu (File No. 606/11 SR): $8,000.00

(d) Kulwant Singh (File No. 687/11 SR): $8,000.00

TOTAL: $32,000.00

Price J.

Released: April 23, 2014