COURT FILE NO.: 3979/2011
DATE: 20141001
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Heather Campbell (Plaintiff)
- and -
James Norbury & The Brick Warehouse LP, carrying on business as The Brick (Defendants)
BEFORE: Justice A. K. Mitchell
COUNSEL: O. Sabo, for the plaintiff
M. Seal, for the defendants
HEARD: August 25, 2014
ENDORSEMENT on costs
[1] This action was commenced by statement of claim issued on April 21, 2011.
[2] The plaintiff, Heather Campbell (the “plaintiff”) claims damages arising from her alleged wrongful dismissal by her former employer, The Brick Warehouse LP, carrying on business as The Brick (“The Brick”). The plaintiff also claims damages for intentional infliction of mental distress arising from alleged harassment by the defendant, James Norbury (together with The Brick, the “defendants”), the plaintiff’s former supervisor at The Brick, contrary to The Brick’s internal policies.
[3] The plaintiff claimed damages in the aggregate amount of $1,000,000, including a claim for punitive damages in the amount of $250,000, together with pre and post judgment interest and costs of the action.
[4] The defendants defended the action.
[5] Discoveries were conducted and the matter was set down for trial and a pretrial scheduled to take place May 23, 2014. On April 29, 2014, the defendant served the plaintiff with an offer to settle the action (the “Offer”).
[6] The Offer contains the following terms:
The Defendants shall pay to the Plaintiff the sum of $15,000.00 (fifteen thousand dollars), plus pre-judgment interest pursuant to the Courts of Justice Act, R.S.O. 1990, c. C. 43, calculated from April 21, 2011, to the date of payment;
The Defendants shall pay to the Plaintiff her disbursements and costs of this Action in an amount to be assessed or agreed, pursuant to the Rules of Civil Procedure;
If not previously withdrawn, this Offer shall remain open for acceptance until one minute after the commencement of Trial; and
This Offer to Settle supercedes, but does not withdraw, rescind or in any other way alter, any previous Offer to Settle which was made by the Defendants.
[7] The pretrial was conducted on May 23, 2014.
[8] The Offer was accepted by the plaintiff on May 26, 2014.
[9] Disagreements between the parties as to the appropriate allocation of the settlement amount arose and was determined on motion for judgment brought by the plaintiff on June 27, 2014. With my consent having pre-tried the matter, the parties appear before me for purposes of assessing or fixing costs since the parties have been unable to agree on costs as provided for in paragraph 2 of the Offer.
[10] The plaintiff has filed a Bill of Costs[^1] seeking $22,741.31 for costs of the action on a partial indemnity basis. This amount is comprised of $15,110 for fees, $1,964.30 for HST on those fees and $6,685.49 for disbursements (inclusive of HST).
[11] The defendants did not file a Bill of Costs for comparison purposes to assist me in determining the reasonableness of the amounts claimed by the plaintiff.
Position of the Parties
[12] In her submissions on costs, the plaintiff refers me to Rule 58.06 of the Rules of Civil Procedure (the “Rules”) and cites the factors which the court must consider in the exercise of its discretion to award costs where a proceeding is settled on the basis that a party shall pay or recover costs; however, the amount of costs has not been determined or agreed by the parties.[^2]
[13] In their submissions on costs, the defendants refer me to Rule 57 of the Rules and cite those factors as ones which the court must consider in the exercise of its discretion to award costs.
[14] I find that the applicable rule in circumstances where an offer providing for the payment of costs, but the amount of those costs is not agreed, is Rule 58.06. In effect, I stand in the shoes of an assessment officer under Rule 58. I note that a number of the factors to be considered by an assessment officer on a costs assessment under rule 58.06 are similar to those contained in Rule 57.
Plaintiff’s Position
[15] The plaintiff urges me to allow partial indemnity costs in the full amount under Rule 58 claimed for the following reasons:
At the time the claim was commenced, the amount of damages claimed was justified in the circumstances.
The plaintiff did settle the claim for the sum of $15,000 plus costs – the plaintiff was, therefore, successful.
The issues were of great importance to the plaintiff and the conduct complained of was extremely sensitive in nature.
The legal issues were complicated. This was not a straightforward claim for wrongful dismissal.
It was reasonable for the plaintiff to have retained an expert to address the issues given the complexity of the issues.
Defendants’ Position
[16] The defendants submit that the plaintiff should bear her own costs of the action and no costs should be paid, let alone assessed. In support of this position, the defendants submit as follows:
(a) The plaintiff accepted an offer for an amount well below the threshold for claims subject to the Rules of Simplified Procedure. Therefore, the claim should have been commenced as one subject to the Simplified Rules or should have been converted to one subject to the Simplified Rules when it became apparent that the provable damages were far less than the amount claimed.
(b) Rule 1.04(1.1) of the Rules requires the court to make orders that are proportionate to the importance and complexity of the issues and to the amount involved in the proceeding. The amount claimed for costs far exceeds the damages amount to be paid by the defendants pursuant to the Offer.
(c) The costs claimed are not proportional to the damages payable by the defendants. The defendants point out that pursuant to the employment contract, the plaintiff could recover damages for wrongful dismissal in the amount of $1,100, at best.
[17] Should the court determine the plaintiff is entitled to some amount of costs, the defendants do not dispute the reasonableness of the hourly rates charged by counsel for the plaintiff or the time spent on each of the steps in the proceeding in respect of which a claim for partial indemnity costs is being advanced.
[18] With respect to the issue of quantum, the defendants state that the amount claimed must be reduced by the following amounts:
(a) The amendments to the statement of claim in the amount of $1,285.50 since such amendments plead additional causes of action not found in law. Ultimately, the amended claim was never issued.
(b) The disbursements in respect of the expert report in the amount of $1,236. The expert was retained to provide opinion evidence on the very issues which the trial judge and jury are to decide and, therefore, such report would not be proper or admissible at trial in any event.
(c) Medical record transcription in the amount of $337. A cheque in the amount of $250 was paid on account of medical record transcription and thus the plaintiff has been reimbursed its costs.
(d) On-line research in the amount of $357.97. Free services are available on-line. Regardless, research properly forms part of the overhead of a firm and is not a separate disbursement.
(e) The pretrial conference in the amount of $4,102.50. The Offer was presented in advance of the pretrial conference despite the date of its acceptance. Accordingly, the plaintiff is not entitled to the costs of the action following the date of the Offer, including the costs of the pretrial.
(f) Costs of the motion for judgment in the amount of $769.50 were awarded in respect of the motion for judgment and have already been paid by the defendants to the plaintiff. The plaintiff cannot recover twice.
The Law
[19] As noted above, Rule 58 is the applicable rule. Rule 58.06(1) of the rules provides as follows:
58.06(1) In assessing costs, the assessment officer may consider,
(a) the amount involved in the proceedings;
(b) the complexity of the proceeding;
(c) the importance of the issues;
(d) the duration of the hearing;
(e) the conduct of any party that tended to shorten or lengthen unnecessarily the duration of the proceedings;
(f) whether any step in the proceeding was:
Improper, vexatious, or unnecessary, or
Taken through negligence, mistake or excessive caution;
(g) a party’s denial or refusal to admit anything that should have been admitted; and
(h) any other matter relevant to the assessment of costs.[^3]
Analysis
[20] The parties are proceeding in a manner which suggests there has been a trial of the issues and the plaintiff has been granted judgment in the amount of $15,000.
[21] In that scenario, the trial judge would be asked to award costs and exercise his or her discretion pursuant to section 131 of the Court of Justice Act and Rule 57 of the Rules. That is not the scenario with which I am faced. The situation before me involves an accepted Offer to Settle which expressly provides that the plaintiff is entitled to her costs.
[22] I am not being asked to award costs of the proceeding. The parties have agreed as between them that the plaintiff is entitled to her costs of the action as agreed or as assessed/fixed.
[23] The only issue remaining to be decided is the quantum of those costs, assessed on a partial indemnity basis, to be paid by the defendants to the plaintiff. The defendants urge me to consider Rule 76 being the rule governing actions governed by the Simplified Rules. Rule 76.13.3 applies only where judgment has been granted following a trial of the issues. There has been no trial. The matter has been settled through the acceptance of the Offer.
[24] The reasons for the plaintiff accepting the Offer are unknown. Offers are accepted for a whole host of reasons – usually a combination of objective and subjective factors. Undoubtedly, the acceptance of the Offer relieves the parties of participating in an expensive and uncertain trial process.
[25] The circumstances of this particular case are one which take it out of the realm of a simple claim for wrongful dismissal. In the face of the employment agreement, it is doubtful that but for the conduct of the defendants in dealing with the complaints of the plaintiff, this action would ever have been pursued. Without the benefit of a trial on a proper evidentiary record, I find it was reasonable in the circumstances for the plaintiff to have commenced and continued the action under the ordinary procedure.
[26] Moreover, I do not accept the defendants’ position that the plaintiff is entitled to no fees in connection with these proceedings for failing to commence and continue the action under Rule 76. This position flies in the face of the terms of the Offer which are clear.
Findings
[27] The claim was for mental distress and wrongful dismissal. The claim was of moderate complexity.
[28] Certain steps were taken which should not have been pursued. Other amounts claimed have already been reimbursed or are excessive. These are:
a) Proposed amendments to the claim. The amendments appear tactical at best and were never pursued.
b) Retaining an expert on matters of law. Aside from cases of a solicitor’s negligence, I am unaware of a case where it is appropriate to retain an expert to advise a judge or judge and jury on the state of the law. The trial judge is presumed to know the law.
c) The plaintiff has been reimbursed its costs of the motion for judgment.
d) The plaintiff has been reimbursed the amount of the medical reports transcription.
e) Online research is subsumed within general overhead which is reflected in the hourly rate recovery.
[29] The costs consequences of a Rule 49 Offer do not apply. Accordingly, it is appropriate that some amount be reimbursed to the plaintiff for the significant time spent preparing for the pretrial and attending at the pretrial. That attendance ultimately led to acceptance of the Offer saving both parties significant time and money. That said, the amount I am prepared to award relative to the recovery in this action is far less than that claimed and find that the plaintiff is entitled to $2,000 on account of preparation and attendance at pretrial.
[30] I am not persuaded that the issues in the action were of such general importance that this factor materially bears on the plaintiff’s entitlement to an increased amount for costs.
[31] The defendants presented the Offer which includes a term entitling the plaintiff to its costs of the action to be agreed or assessed/fixed. The defendants drafted this term and had they wanted to fix an amount commensurate or proportional to the damages amount offered, they could have done so. Instead, they chose not to include a fixed amount for costs; rather, were prepared to have the quantum assessed/fixed. I find it disingenuous to now suggest that the plaintiff is entitled to no costs.
[32] There is a reasonable assumption that the plaintiff would receive an additional amount on account of her costs based on the wording of the Offer, and having been successful. Such term was an incentive to accept the Offer. The defendants cannot now claim that entitlement remains an issue. I suspect that had the defendants reserved the issue of entitlement, the plaintiff may very well have proceeded to trial.
[33] Aside from the reductions already made, I am not persuaded that the principle of proportionality has much bearing on the assessment of costs flowing from an accepted Offer to Settle.
[34] The plaintiff was successful and is entitled to her reasonable costs of the action.
[35] For the reasons set forth above, the plaintiff is entitled to her costs of the action in the amount of:
$9,716.50 plus HST and disbursements of $2,003.80 plus HST, as applicable.
[36] The plaintiff is entitled to costs of the assessment in the amount of $500.00 inclusive of disbursements and HST on account of the substantial reduction in costs as claimed.
“Justice A.K. Mitchell”
Justice A. K. Mitchell
Date: October 01, 2014
[^1]: Exhibit C, affidavit of Paul Ledroit sworn August 18, 2014. [^2]: Rule 57.04 [^3]: RRO 1990, Reg. 194.