Superior Court of Justice - Ontario

DATE: 20151208

RE: Francois Oudin, Plaintiff/Moving Party

AND:

Le Centre Francophone de Toronto, Inc., Defendant/Responding Party

BEFORE: Sean F. Dunphy J.

COUNSEL:
S. Moreau, for the Plaintiff/Moving Party
D. Girlando, for the Defendant/Responding Party

HEARD: October 15, 2015

COSTS ENDORSEMENT

[1] This is my costs endorsement arising out of my decision (reported at Oudin v Le Centre Francophone de Toronto, 2015 ONSC 6494) dismissing the plaintiff’s claim for summary judgment in a wrongful dismissal matter. While the motion was that of the plaintiff, the result of the motion has entirely disposed of the action with the exception of the plaintiff’s reserved claim to seek to amend its existing Statement of Claim to assert a further claim for unpaid commissions in prior years[^1]. Such claims are unrelated to the wrongful dismissal claim and have yet to be advanced. For all intents and purposes, the action as it currently stands has thus been entirely dismissed.

[2] In my ruling, I found that the written employment contract limiting the amount of notice of termination of employment required to the statutory amount was enforceable and that the plaintiff had thus received all that he was entitled to receive. In the alternative, I went on to fix the period of reasonable notice the plaintiff would have been entitled to absent the disputed contractual limitation at 38 weeks (17 weeks longer than the 21 weeks already paid).

[3] The parties have now filed their costs submissions. Included in these submissions was an offer to settle made by the defendant. While expressed in dollar terms ($23,583.28) plus pre-judgment interest and partial indemnity costs to the date of the offer, this amount (when added to the 21 weeks already paid) is almost precisely equal to the alternative 38 week notice period finding that made by me. In other words, the defendant met or beat its own offer based on my primary finding and my alternative finding as to what notice would have been required at common law had the contractual limitation been found inapplicable.

[4] It has often been remarked upon that Rule 49.10 of the Rules of Civil Procedure provides little costs incentive to a successful defendant who makes a bona fide effort to curtail litigation. The costs consequences of Rule 49.10(2) only apply to a successful plaintiff who has failed to exceed the defendant’s offer. However, even where the explicit costs consequences of Rule 49.10(2) are not applicable, there remains a general discretion to consider such matters. Rule 49.13 provides that “the court, in exercising its discretion with respect to costs, may take into account any offer to settle made in writing, the date the offer was made and the terms of the offer”. Rule 57.01 essentially repeats this common-sense admonition by listing a written offer to settle among the factors to be considered in exercising the court’s discretion under s. 131 of the Courts of Justice Act in assessing costs.

[5] There is thus scope for judicial discretion preserved in Rule 49.13 and Rule 57.01 to consider what effect if any to give to the written settlement offer made by the successful defendant. While a nominal “nuisance offer” made by a successful defendant may not attract much attention when it comes time to fix costs, a substantial, bona fide offer merits further attention. Where a defendant has made a bona fide and reasonable offer that, if accepted, would have avoided future costs for both parties, the court is entitled to take that circumstance into account, along with the other factors in Rule 57.01 in assessing costs: Re Richardson, 2008 68191 (ON SC) per Strathy J. (as he then was) at para. 22.

[6] In the present case, the defendant made a serious and substantive offer to pay a further amount of money equivalent to approximately 17 weeks of salary in addition to the 21 already paid. The defendant has been successful in having the entire action dismissed with no additional payment. The defendant’s offer was clearly much more favourable to the plaintiff than the outcome achieved. It also exceeded the amount it would have been ordered to pay had its principal argument regarding the enforceability of the employment contract failed.

[7] The plaintiff submits that I ought not to take the defendants’ offer into account at all. The offer was in respect of the entire action and not one in respect of the plaintiff’s motion for summary judgment only. Such narrow distinctions are artificial in a case such as this. The plaintiff brought a motion for summary judgment. The defendant answered it with evidence and argument that resulted in the entire defeat of the plaintiff’s claim (as presently pleaded at least). There remains nothing of the plaintiff’s case beyond what additional and essentially unrelated claim might hereafter be advanced for allegedly unpaid commissions some years in the past. Even that claim appeared to have been abandoned in the course of argument, although I made no finding upon it.

[8] The task of fixing costs is a discretionary one. Discretion is not better exercised by closing ones eyes and ears to plainly relevant factors. The plaintiff is quite correct in arguing that Rule 49 does not require me to account for the defendant’s offer to settle the action in fixing costs of a single motion. However, motions for summary judgment are not like other motions. The entire fate of the proceeding is usually on the line. In my view, it is plainly relevant to have regard to a written offer to settle the entire action made by the successful party as a factor to be considered in fixing costs arising from the disposition of a motion for summary judgment.

[9] There is another factor to be taken into account here and that is Rule 76.13 of the Rules of Civil Procedure. Even if successful in invalidating the employment contract, the plaintiff’s claim for reasonable notice would have come in well below the $100,000 Rule 76 threshold for mandatory implementation of the simplified procedure. M. Oudin was earning a base salary of $50,000 plus a $20,000 commission (paid by the defendant even though unearned in fact in the last few years of employment). Having been paid almost five months salary in lieu of notice, M. Oudin would have had to have succeeded in asserting a claim for a further 15 months or more in order to have had a claim beyond the threshold for Rule 76. A notice period in excess of 20 months for an employee in these circumstances could not objectively be considered other than as something on the extreme limits of the jurisprudence applicable to his case. Proceeding under Rule 76 would have offered both sides a more expeditious and less expensive route to a determination of their issues.

[10] A successful plaintiff who failed to employ the simplified procedure may be deprived of costs or ordered to pay those of the defendant including on a substantial indemnity basis: Rule 76.13(6) of the Rules of Civil Procedure. The rule is not explicitly applicable where a claim is dismissed and no damages are awarded at all. However, the motion required me to decide the narrow legal issue (applicability of the employment contract limiting the required notice) as well as to fix the common law notice in the alternative. As I have noted, even if the plaintiff had been successful, its claim would have been fallen well within the $100,000 threshold for Rule 76. In this circumstance at least, I am of the view that the failure of the plaintiff to employ the simplified procedure rules remains a factor that I may take into account in exercising my discretion to award costs. I attach particular significance to the failure to have adopted a more realistic view of the claim at the outset with a view towards ensuring the overall costs of the proceeding remained proportional to the stakes in line with the objectives of Rule 1.04(1) and (1.1) of the Rules of Civil Procedure.

[11] Plaintiffs are entitled to seek to “aim high” in commencing a claim, but aiming too high can have consequences. Inflated or overly-optimistic claims seldom awe defendants into settlement but can instead sometimes operate to create obstacles to early settlement. Where the result is the avoidance of the available simplified procedure mechanism of Rule 76, the practice may also impose higher litigation costs and more delay on all parties. Neither outcome is desirable.

[12] The defendant’s efforts to secure a compromise that would have avoided some or all of the cost of litigation coupled with the plaintiff’s insistence on taking a chance by commencing proceedings outside of the simplified rules pursuant to Rule 76 both suggest that I exercise my discretion to allow the successful defendant a higher rate of costs than simple partial indemnity costs alone.

[13] These two factors suggest to me that some “bonus” over and above ordinary partial indemnity costs ought appropriately to be considered in this case. In my view, it would be appropriate in this case for the defendant to be awarded partial indemnity costs up until the time of its settlement offer and substantial indemnity thereafter. In so doing, I am following the approach adopted by Strathy J. (as he then was) in Re Johnson (supra).

[14] Determining the scale of costs to be awarded is not the entire exercise. As judges of this court have often repeated, the fixing of costs is not a simple mathematical exercise performed by multiplying certified hours against an appropriate grid of rates. The non-exhaustive criteria in Rule 57.01 must be considered. These require an assessment of the factors including the reasonableness of the time spent, the importance and complexity of the issues, the conduct of the parties and the amount that the losing party ought reasonably expect to be at risk of being ordered to pay.

[15] As a motion for summary judgment, the issues on the motion were obviously crucial to the litigation. Indeed, they were dispositive of it. While there were a number of issues raised, they were not unduly complex. The issues were of fairly routine complexity, all things considered. However, I agree with the defendant’s costs submissions that the plaintiff raised a large number of issues that turned out to be dead ends, were dropped at the hearing or otherwise proved distractions that the defendant nevertheless was required to respond to at some considerable expense. The defendant referred to this as an attempt to raise a “kitchen sink” of issues and I am inclined to agree.

[16] The plaintiff takes issue with the number of hours spent by Mr. Girlando on the motion as well as with the rates claimed for his time.

[17] Mr. Girlando’s hours may well have exceeded those claimed by the plaintiff and for valid reasons. Mr. Girlando was required to respond to a “kitchen sink” of issues raised by the plaintiff, many of which were either dropped or not pursued at the hearing. The plaintiff has the luxury of deciding what issues to pursue; the defendant must be prepared to meet all of them. I take no issue with the time spent by Mr. Girlando. I find it to have been reasonable in the circumstances.

[18] As for the rates claimed, it is worth reminding the parties that the grid of recommended fees was established in 2005 and is subject to adjustment for inflation since that time. Inflation in the Toronto area from 2005 until 2015 would add approximately 20% to the 2005 grid of rates. When adjusted for inflation, Mr. Girlando’s claimed rate places him comfortably below the top end of the grid for his experience level. I find the rates and hours claimed for Mr. Girlando to be proportional and reasonable with one adjustment.

[19] Mr. Girlando’s full rate as charged to his client was $320/hr and this same rate was used as the substantial indemnity rate in the defendant’s outline of costs. This is within the ratio of 150% of partial indemnity rates that I have allowed at $225/hr for him in this case. However, I think it appropriate that substantial indemnity rates should reflect some discount from full rates unless other factors are at play (such as a special negotiated discount from regular rates, for example). Accordingly, I would reduce the amount claimed for fees at the substantial indemnity rate by $20/hr (or $1,254 including HST for the 55.5 hrs claimed by Mr. Girlando post-offer).

[20] In the circumstances, I find the hours and rates claimed by the defendant to be reasonable subject to this one adjustment.

[21] I do note that some small amount of time was claimed for more senior counsel who did not appear at the motion. Their charged time was quite negligible and is indicative of sound time management not over-staffing in my view. Other than Mr. Girlando who did a commendable job of presenting his client’s case, the only material time recorded was that of an articled student performing a modest amount of legal research. Given other adjustments downwards that I have made, I don’t propose to undertake any surgery in excising hours of senior counsel advising junior counsel on strategy and direction.

[22] The “bonus” claimed by the defendant in this case (being the difference between partial indemnity and substantial indemnity costs after the date of the offer) is about $7,000 after HST or about 26%. The defendant’s outline of costs claims $27,049.54 in partial indemnity costs including HST and $34,200.74 including HST if substantial indemnity costs are awarded after the date of the offer (actual costs were $40,428.17). Having regard to the amounts at issue and the reasonable expectations of the unsuccessful party, I view the $1,254.00 downward adjustment already made as producing a reasonable result overall and I shall make no further adjustment to it.

[23] I would therefore reduce the claimed amount of $34,200.74 (including HST) to an all-inclusive amount of $32,946.74. This amount, in my view, gives adequate weight to the written offer made by the defendant as well as, to some lesser degree, the failure of the plaintiff to have proceeded under the simplified procedure. It is also a figure that I am satisfied is reasonable having regard to the expectations of the losing party, the principle of indemnity and proportionality relative to the amounts at issue.

[24] I therefore order the plaintiff to pay the defendant’s costs of the summary judgment motion that I have fixed at $32,946.74 including tax and disbursements.

Sean F. Dunphy, J.

Date: December 8, 2015

[^1]: The parties had also agreed to reserve the issue of mitigation of damages to another day and this was not argued on the motion for summary judgment. In view of my findings, however, the issue is moot.