CITATION: PHANLOUVONG v. NORTHFIELD METAL PRODUCTS (1994) LTD. et al, 2015 ONSC 33
COURT FILE NO.: 11-4508-SR
DATE: 2015/01/05
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: PHAYTOUNE PHANLOUVONG, Plaintiff
AND:
NORTHFIELD METAL PRODUCTS (1994) LTD. and JOHN BAILEY, Defendants
BEFORE: The Honourable Justice D.A. Broad
COUNSEL: J. Sebastian Winny, for the Plaintiff
Darrell N. Hawreliak, for the Defendants
ADDENDUM AND COSTS ENDORSEMENT
A - Pre-judgment interest rate
[1] In my Reasons for Judgment released November 17, 2014 I awarded judgment to the plaintiff for wrongful dismissal in the sum of in the sum of $45,166 plus pre-judgment interest thereon pursuant to the Courts of Justice Act, R.S.O. 1990, c. C. 43, as amended (the “Act”), calculated from October 6, 2010. The applicable rate of interest under the Act was not addressed by counsel in final submissions. In my Reasons for Judgment I set the rate at 3% per annum. As pointed out by counsel in their costs submissions, this was an error. Three percent is the applicable post-judgment interest rate under the Act. The applicable pre-judgment interest rate under the Act is 1.3%. My intention was to award pre-judgment interest to the plaintiff at the pre-judgment interest rate pursuant to the Act. The Reasons for Judgment are therefore revised to change the pre-judgment interest rate from 3% per annum to 1.3% per annum.
B - Costs
(a) Position of the Plaintiff
[2] The plaintiff seeks costs on a substantial indemnity basis in the sum of $47,000.00, inclusive of fees, disbursements and HST pursuant to rule 49.10(1), based on offers to settle served prior to trial. In the alternative, he seeks partial indemnity costs of $33,500.00 plus an amount that is reflective of his offers to settle, based on rule 49.13. He says that this should result in an increase of $10,000.00 to the partial indemnity figure for a total of $43,500.00.
[3] The plaintiff points to two offers to settle served by him. The first was dated February 14, 2013 and remained open for acceptance until following the commencement of the trial. The offer provided for payment by the defendants of the sum of $50,000. By operation of sub-rule 49.07(5)(b), this meant that figure plus costs to the date of acceptance. The second offer to settle was dated November 15, 2013 and was open for acceptance until November 19, 2013. It provided for payment by the defendants of the sum of $45,000 all inclusive, allocated between pay in lieu of notice, aggravated damages, damages for assault, pre-judgment interest and costs.
[4] The plaintiff’s submission respecting the application of rule 49.10 is predicated on the pre-judgment interest rate being 3% per annum as (erroneously) provided in my Reasons for Judgment. He acknowledges that, with the pre-judgment interest rate set at 1.3% as provided for in the Act, the judgment obtained was not as favourable as, or more favourable than the first offer to settle. As the second offer to settle was not open for acceptance until the commencement of trial, rule 49.10 would have no application to it.
[5] Notwithstanding that rule 49.10 has no application, the plaintiff submits that his offers to settle should be taken into account pursuant to rule 49.13. He cites the recent case of Elbakhiet v. Palmer (2014) 2014 ONCA 544, 121 O.R. (3d) 616 (C.A.) in support of the proposition that even “near miss” offers can justify cost consequences under rule 49.13 that are effectively the same as the consequences which would obtain under rule 49.10.
[6] The plaintiff also submits that certain conduct of the defendant, Northfield, in the conduct of the litigation should result in costs consequences. In this respect, he points to production by Northfield of new documentation within days of the start of trial which was relevant and material to the issue of just cause for dismissal and which had not been disclosed in its Affidavit of Documents. He also points to Northfield’s failure to list in Schedule C of its Affidavit of Documents the statement given by Mr. Bailey at the first aid station which had been lost according to the evidence at trial.
(b) Position of the Defendants
[7] The defendants submit that success in the action was divided. The defendant, John Bailey, was entirely successful. Although he is an undischarged bankrupt and no costs are claimed by him, the defendants submit that his success in defending the claims against him should be reflected in the costs disposition. Moreover, the defendants submit that, with the exception of the claim for wrongful dismissal, all claims were dismissed against Northfield. They say that costs have been used by the courts to discourage unproven allegations of misconduct against those with whom one is on conflict and to mark the court’s disapproval of the conduct of a party during litigation. They submit that the plaintiff should be held accountable for the scandalous, unfounded and unproven allegations made by the him against them.
[8] The defendants submit that their failure to make an offer to settle until the morning of trial does not warrant an award of substantial indemnity costs. They assert that they were entitled to defend the action and are not required to settle it, citing the case of Mortimer v. Cameron (1994) 1994 10998 (ON CA), 17 O.R. (3d) 1 (C.A.) at p.15.
[9] The defendants acknowledge that, although the action was dismissed against the defendant John Bailey, no award of costs may be made in his favour as he is an undischarged bankrupt.
[10] The defendants submit that the plaintiff should be awarded no costs or, in the alternative, costs limited to the sum of $16,500 inclusive as against Northfield, representing one-half of the partial indemnity costs sought by the plaintiff.
(c) Governing Principles
[11] Section 131(1) of the Courts of Justice Act, R.S.O. 1990, c. C.43, as amended, provides that "subject to the provisions of an Act or rules of court, the costs of and incidental to a proceeding or a step in a proceeding are in the discretion of the court, and the court may determine by whom and to what extent the cost shall be paid."
[12] The factors to be considered by the court, in the exercise of its discretion on costs, are set forth in subrule 57.01(1), as follows:
57.01 (1) In exercising its discretion under section 131 of the Courts of Justice Act to award costs, the court may consider, in addition to the result in the proceeding and any offer to settle or to contribute made in writing,
(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;
(b) the apportionment of liability;
(c) the complexity of the proceeding;
(d) the importance of the issues;
(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;
(g) a party’s denial of or refusal to admit anything that should have been admitted;
(h) whether it is appropriate to award any costs or more than one set of costs where a party,
(i) commenced separate proceedings for claims that should have been made in one proceeding, or
(ii) in defending a proceeding separated unnecessarily from another party in the same interest or defended by a different lawyer; and
(i) any other matter relevant to the question of costs.
[13] The Court of Appeal has observed that modern costs rules are designed to foster three fundamental purposes: (1) to indemnify successful litigants for the cost of litigation; (2) to encourage settlements; and (3) to discourage and sanction inappropriate behavior by litigants (see Fong v. Chan (1999) O.J. No. 3707 (CA) at para. 24).
[14] It is well known that the overall objective in dealing with costs is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular circumstances of the case, rather than an amount fixed by the actual costs incurred by the successful party. The expectation of the parties concerning the quantum of costs is a relevant factor to consider. The court is required to consider what is "fair and reasonable" having regard to what the losing party could have expected the costs to be (see Boucher v. Public Accountants Council (Ontario), 2004 14579 (ON CA), [2004] O.J. No. 2634 (Ont. C.A.) at para. 26 and Coldmatic Refrigeration of Canada Ltd. v. Leveltek Processing LLC, 2005 1042 (ON CA), [2005] O.J. No. 160 (Ont. C.A.)).
[15] The usual rule in civil litigation is that costs follow the event and that rule should not be departed from except for very good reasons (see Gonawati v. Teitsson 2002 41469 (ON CA), [2002 CarswellOnt 1007 (Ont. C.A.)], 2002 41469 and Macfie v. Cater, 1920 401 (ON SC), [1920] O.J. No. 71 (Ont. H.C.) at para 28).
(d) Analysis
[16] I would not give effect to the plaintiff’s submission that his offers to settle, although not satisfying the requirements of rule 49.10, should be accorded the same or similar effect on the costs award as would be applicable under that rule by the application of rule 49.13. Although the plaintiff’s offer to settle of February 14, 2013, which was not time-limited, came close to the amount awarded at trial and would ordinarily attract consideration for an elevated award of costs based on the principles in Elbakhiet v. Palmer, there are other countervailing factors to be considered in the present case.
[17] The plaintiff made serious allegations against Northfield on which he failed at trial, including claims that the plaintiff was subjected to racial discrimination in the workplace, breach of the Ontario Human Rights Code and for punitive and aggravated damages. The plaintiff claimed in excess of $100,000 in damages and recovered less than half that amount. Importantly, the plaintiff claimed damages for assault as well as damages for breach of the Ontario Human Rights Code as against John Bailey, which were entirely unsuccessful. Although no award of costs in favour of Mr. Bailey may be made in the circumstances, consideration should be given to the time taken both at trial and in pre-trial preparation to prosecute these unsuccessful claims in determining an appropriate award of costs.
[18] I am required by the direction given by the Court of Appeal in Elbakhiet v. Palmer to consider the applicability of rule 49.13. I am also obliged to consider the factors set out in sub-rule 57.01(1), including the result in the proceeding, the amount claimed and the amount recovered in the proceeding, and the conduct of any party that tended to lengthen unnecessarily the duration of the proceeding.
[19] In the circumstances, I would not give effect to the plaintiff’s submission that costs consequences should flow from the defendants’ failure to make timely documentary disclosure. Although factors of this nature may be considered on the question of costs in an appropriate case, in my view, the defendants’ conduct in the present case did not represent a deliberate or persistent disregard of their obligations under the Rules of Civil Procedure.
[20] The plaintiff’s Bill of Costs discloses partial indemnity costs of $33,470.36, comprised of fess of $26,324.00, HST of 3,422.12 and disbursements of $3,724.24.
[21] The defendants do not take issue with the time spent by plaintiff’s counsel, nor the hourly rates utilized in the Bill of Costs, but do take issue with the claimed disbursements for an interpreter in the sum of $296.63 and for parking in the sum of $101.50. I would deduct these disbursements. There was no interpreter utilized at trial, and I would not regard parking charges to be reasonably necessary for the conduct of the proceeding. I would also eliminate the claimed cost of the report of Dr. Bambrick in the sum of $1,582.00, which was only relevant to the unsuccessful claim for aggravated damages.
[22] I would also reduce the fee component of the plaintiff’s claim for partial indemnity costs by 25% to account for the unsuccessful claims which were advanced by the plaintiff which utilized preparation and court time. In arriving at this reduction, I apply rule 49.13 to give recognition to the plaintiff’s offers to settle, in order to mitigate the amount of the reduction which would otherwise be 40%.
[23] The partial indemnity costs to which the plaintiff is therefore entitled as against the defendant Northfield is therefore:
Fees
$19,743.00
HST on Fees
$2,566.59
Disbursements
$1,744.11
TOTAL
$24,053.70
(e) Disposition
[24] It is ordered that the defendant Northfield Metal Products (1994) Ltd. pay to the plaintiff costs fixed in the sum of $24,053.70. There shall be no award of costs for or against the defendant John Bailey.
D.A. Broad
Date: January 5, 2015