CITATION: Dan Lawrie Insurance v. White, 2015 ONSC 4038
COURT FILE NO.: 07-30337
DATE: 2015-06-25
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
DAN LAWRIE INSURANCE BROKERS
Richard D. Simmons, for the Plaintiff
Plaintiff
- and -
MONICA WHITE and HARGRAFT SCHOFIELD LP
Robert H. Rogers, for the Defendant, Monica White
Defendants
AND BETWEEN:
MONICA WHITE
Plaintiff by Counterclaim
- and -
Robert H. Rogers for the Plaintiff by Counterclaim
DAN LAWRIE INSURANCE BROKERS and DAN LAWRIE INSURANCE BROKERS LTD.
Defendants by Counterclaim
Richard D. Simmons, for the Defendants by Counterclaim
HEARD: June 24, 2015 in chambers
The Honourable Justice C.D. Braid
COSTS JUDGMENT
[1] The trial in this matter was held before Justice Cavarzan in January of 2012. The Defendant (Plaintiff by counterclaim) Monica White (“the Defendant”) was awarded $42,281.33 plus pre-judgment interest. The trial judge also found in favour of the Plaintiff (Defendant by counterclaim) (“the Plaintiff”), but that portion of the decision was overturned on appeal. The parties now ask the court to determine the costs of the trial.
Nature of the Action
[2] The Defendant resigned from her employment with the Plaintiff insurance brokerage and went to work for a competitor. Some of the customers that the Defendant had served while employed by the Plaintiff moved their business with the Defendant to her new employer.
[3] A few weeks later, the Plaintiff sued the Defendant for breach of contract, breach of fiduciary duty and tortious interference with economic relations. The Plaintiff also claimed against the Defendant’s new employer, Hargraft Shofield LP. However, the claim against Hargraft Shofield LP was resolved before trial.
[4] The Defendant defended the claim and served a Counterclaim in which she sought recovery from the Plaintiff of amounts that it had unilaterally deducted from her earnings as a result of customers failing to pay their premiums.
[5] Each of the parties claimed damages from the other for breach of contract. The trial proceeded over four days in January 2012. There were 35 exhibits at trial.
[6] The Defendant was successful in her counterclaim. The trial judge held that, in requiring the practice of charging back unpaid premiums to the Defendant employee, the Plaintiff took advantage of its superior bargaining position. The trial judge therefore concluded that the imposition of the chargeback policy in this case amounted to a breach of contract. The Defendant was awarded $42,281.33, which was 100% of the outstanding deductions.
[7] The trial judge also found that the Plaintiff had a valid and enforceable claim in damages for the commission payments. The Plaintiff was awarded $34,289.50, which was the total commission payments received by the Defendant from her new employer as a result of the Plaintiff’s former clients transferring their business to the new brokerage.
[8] Both parties filed a Notice of Appeal. The Divisional Court overturned the portion of the decision that ordered the Defendant to pay damages. The Appeal Court found that the Defendant was entitled to her costs of the appeal on a partial indemnity basis, but that the costs claimed were disproportionately high in relation to the amount in issue and the reasonable expectations of the losing side. Costs of the appeal were fixed at $17,500 all inclusive. The court declined to exercise its jurisdiction to make an order for costs of the trial, and asked that costs be determined by the trial judge or an assessment officer.
[9] Justice Cavarzan, the trial judge, has now retired. The only issue remaining from the trial was costs. I have received written submissions of the parties on the issue of costs and have considered those submissions in chambers.
Offers to Settle
[10] On September 28, 2009, the Defendant served an Offer to Settle. The following is a summary of the terms of the Offer:
Plaintiff to pay the Defendant $40,000 plus pre-judgment interest, in satisfaction of all claims.
Plaintiff to pay costs on a partial indemnity basis.
Defendant to provide a full and final release.
Plaintiff to provide a full and final release.
Consent to dismissal of other claims.
The parties agree that “the Producer’s Agreement, dated January 19, 2004 is terminated as of the date of the Defendant’s resignation on January 22, 2007 and is thus null and void against the parties.”
The provisions of the Offer are non-severable.
The Plaintiff “shall have 45 days to respond to this formal Offer to Settle.” In the event that the Plaintiff does not take steps as set out in paragraphs 1, 2 and 3 of the Offer, the Defendant “will seek costs pursuant to Rule 49 of the Rules of Civil Procedure on a substantial indemnity basis from the date of this formal Offer to Settle”.
This Offer expires upon the calling of the first witness at trial, unless withdrawn earlier in writing.
[11] The Plaintiff did not file any Offers to Settle.
Position of the Parties
[12] The Defendant was the successful party in the litigation. She seeks her costs on a partial indemnity basis to the date the Offer to Settle was served and substantial indemnity costs thereafter. Her total Bill of Costs claimed is $71,836.47.
[13] On the other hand, the Plaintiff submits that there are special circumstances in this case, including the Defendant’s failure to answer a significant undertaking given by her on discovery. In addition, the Plaintiff says that the Defendant’s Offer to Settle does not comply with Rule 49 of the Rules of Civil Procedure and that the costs claimed are disproportionate and unreasonable. The Plaintiff states that if costs are awarded to the Defendant, they ought to be in the range of $25,000.
Analysis
[14] Section 131 of the Courts of Justice Act provides that “costs of and incidental to a proceeding are in the discretion of the court, and the court may determine by whom and to what extent the costs shall be paid.” Rule 57.01 of the Rules of Civil Procedure enunciates the general factors to be considered by the court in exercising its discretion in relation to costs. I have considered those factors.
[15] As noted by the Ontario Court of Appeal in Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 CanLII 14579 (ON CA), 71 O.R. (3rd) 291, the fixing of costs involves more than merely a calculation using the hours docketed and the cost grid. The costs award should reflect what the court views as a fair and reasonable amount that should be paid by the unsuccessful parties rather than any exact measure of the actual costs to the successful litigant.
[16] The determination of costs must be proportionate with the Order sought and within the reasonable expectations of the unsuccessful party (see Moon v. Sher (2004), 2004 CanLII 39005 (ON CA), 246 DLR (4th) 440 (Ont.C.A.); Cosentino v. Roiatti, [2007] O.J. No.56 (Ont.S.C.J.)).
[17] The Plaintiff states that the parties agreed that no costs for the trial would be sought. I am not satisfied that there was such an agreement.
[18] The Plaintiff states that the Defendant failed to answer an undertaking, and that should be taken into consideration when assessing costs. There is no suggestion that the failure to answer the undertaking impacted or prolonged the litigation. As a result, I give this factor no weight in the determination of costs.
[19] The most significant issue on the determination of costs is the Offer to Settle. The Plaintiff states that the Offer to Settle was not in strict compliance with Rule 49.10(1), which states the cost consequences of failure to accept an offer to settle in the circumstances of this case:
49.10(1) Where an offer to settle,
(a) is made by a plaintiff at least seven days before the commencement of the hearing;
(b) is not withdrawn and does not expire before the commencement of the hearing; and
(c) is not accepted by the defendant,
and the plaintiff obtains a judgment as favourable as or more favourable than the terms of the offer to settle, the plaintiff is entitled to partial indemnity costs to the date the offer to settle was served and substantial indemnity costs from that date, unless the court orders otherwise.
(3) The burden of proving that the judgment is as favourable as the terms of the offer to settle, or more or less favourable, as the case may be, is on the party who claims the benefit of subrule (1) or (2).
[20] The Plaintiff argues that term #6 of the Offer to Settle (requiring an agreement that the 2004 Agreement be treated as terminated and thus null and void) was not a finding made by the trial judge. However, the reasonable interpretation of this term of the Offer to Settle was that the Defendant sought a full and final release of any rights that either party may seek to enforce arising out of the 2004 Agreement. This request was not unreasonable in the circumstances of this case, and was an appropriate term for a s.49.10 Offer to Settle.
[21] The Plaintiff also argues that term #8 of the Offer to Settle created a requirement that the Plaintiff respond to the Offer to Settle. The Plaintiff argues that this is not required by the Rules cannot be ordered by the court. In my view, term #8 does not compel the Plaintiff to respond. It simply created an inducement to the Plaintiff to settle early before additional costs were incurred.
[22] I am satisfied that the judgment is more favourable to the Defendant than the terms of the Offer to Settle.
[23] Finally, the Plaintiff argues that the Defendant’s costs are excessive. The Plaintiff’s actual trial fees were $41,206.25 while the Defendant’s actual trial fees were $71,588.50. In my view, the Defendant’s hours spent and trial fees are disproportionately high in relation to the amount in issue and reasonable expectations of the losing side.
Conclusion
[24] In all of the circumstances, I find that $55,000 is a “fair and reasonable” assessment of the Defendant’s costs. This figure takes into account the nature of this litigation and what the unsuccessful parties could reasonably have expected to pay. The Plaintiff, Dan Lawrie Insurance Brokers, shall pay costs to the Defendant, Monica White, for the trial proceedings in the amount of $55,000 inclusive of disbursements and HST. The costs are payable forthwith.
Braid J.
Released: June 25, 2015
CITATION: Dan Lawrie Insurance v. White, 2015 ONSC 4038
COURT FILE NO.: 07-30337
DATE: 2015-06-25
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
DAN LAWRIE INSURANCE BROKERS
Plaintiff
- and -
MONICA WHITE and HARGRAFT SCHOFIELD LP
Defendants
AND BETWEEN:
MONICA WHITE
Plaintiff by Counterclaim
- and -
DAN LAWRIE INSURANCE BROKERS and DAN LAWRIE INSURANCE BROKERS LTD.
Defendants by Counterclaim
COSTS JUDGMENT
Released: June 25, 2015