Tossonian v. Cynphany Diamonds, 2015 ONSC 766

COURT FILE NO.: CV-12-454589

DATE: 20150203

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: RAZMIG TOSSONIAN, Plaintiff

AND:

CYNPHANY DIAMONDS INC., o/a SYMPHONY DIAMONDS, Defendant

BEFORE: Mr. Justice Graeme Mew

COUNSEL: Andrew Wray, Christian Vernon and Niiti Simmonds, for the Plaintiff

William Chalmers, for the Defendant

HEARD: In Writing

COSTS ENDORSEMENT

[1] There were two issues in this wrongful dismissal trial which was heard over seven days in October and December 2014 (2014 ONSC 7484), namely:

(a) Did the plaintiff’s contract of employment with the defendant provide for a fixed term of five years employment? and

(b) Was the plaintiff dismissed or did he resign?

[2] I concluded that the plaintiff did not have a fixed term contract of employment, but that he was dismissed and, accordingly, was entitled to two months’ notice of the termination of his employment. He was awarded damages of $13,520 plus pre-judgment interest. The amount of damages awarded to him would have been within the Small Claims Court’s monetary jurisdiction of $25,000.

[3] The plaintiff acknowledges that, as a result of recovering an amount within the monetary jurisdiction of the Small Claims Court, it is open to the court to order that the plaintiff shall not recover any costs of this action: rule 57.05(1).

[4] The defendant argues that not only should the plaintiff be awarded no costs, he should be ordered to pay the defendant’s costs because of unwarranted and ultimately abandoned allegations of false statements and bad faith on the part of the defendant.

[5] I have concluded that it was reasonable for the plaintiff to bring his action in the Superior Court, and that, accordingly, he is prima facie entitled to costs of the action. Those costs should include the costs of an unsuccessful motion for security for costs which the defendant brought a few months before trial (the costs of which were reserved to the trial judge by Master Hawkins, who heard the motion).

[6] While the plaintiff claimed general damages for wrongful dismissal in the amount of $403,520 and damages for “bad faith in dismissal” in the amount of $23,280, in his opening statement at the trial, counsel for the plaintiff advised that the claim for damages for wrongful dismissal was limited to $174,382.73 (the difference between what the plaintiff would have earned during the balance of the five year contract which he asserted he had and what he actually earned and was projected to earn during that period). The claim for “bad faith” damages was abandoned by the time counsel gave his closing speech at the end of the trial.

[7] Although the defendant complains that the plaintiff’s inflated claim for $403,520 was still extant at the beginning of trial, it would have been plain and obvious that the most the plaintiff could obtain by way of general damages was what he would have earned during the five year contract, if one had been found to exist, and what he had actually earned (would earn) during that same period. All of the information necessary to make that assessment was in the possession of the parties.

[8] The allegations of bad faith attracted a minimal amount of additional time at trial beyond dealing with the other damages issues and did not, in my view, result in any significant waste of time or effort on the part of counsel.

[9] The claim was properly brought in the Superior Court because, as described in the reasons for judgment, there were at least two documents, signed by the principal of the defendant, which supported the plaintiff’s claim that he had a five year fixed term contract. While I ultimately found that there had not been a meeting of minds on the existence of a five year contract, the defendant’s position would have been considerably stronger if its principal had not signed these documents (which I found were signed in order to assist the plaintiff obtaining a mortgage).

[10] A commercially astute party in the position of the defendant would have made a reasonable offer to settle. The defendant did not. It offered $3,000 inclusive of interest and costs on 19 June 2014. Indeed, the defendant seems to have played hard ball throughout the litigation. It brought a motion for security for costs despite the fact that the plaintiff now lives in British Columbia, a reciprocating jurisdiction under the Reciprocal Enforcement of Judgments Act, R.S.O. 1990, c. R. 5.

[11] Although the issues in the case were not particularly complex, if the plaintiff had succeeded in persuading me that he had a five year fixed term contract of employment, he could reasonably have expected to recover damages in the range of $175,000. Accordingly, it was appropriate, in my view, for him to have utilized the ordinary procedure, rather than the simplified procedure or the pursuit of his claim in the Small Claims Court.

[12] I would also observe that although there was some non-compliance by both parties with the directions given at the pre-trial conference, the defendant’s degree of non-compliance was significant. At the opening of trial, for example, the defendant moved for the issuance of an inter-provincial summons to witness directed at the plaintiff’s wife (a resident of British Columbia). When that motion was denied, the defendant sought, and was refused, an adjournment. There were then a steady flow of largely unmeritorious evidentiary and procedural objections which ultimately resulted in what was listed as a four to five day trial taking seven days. While the defendant will no doubt say some of these tactics were ultimately vindicated by the result (which turned, to some degree, on the evidence of a witness who was summoned shortly before the sixth day of trial) the defendant has to take a significant share of the responsibility for the length of the trial and, as a result, the expense that was incurred.

[13] The plaintiff seeks partial indemnity costs of $88,450.98 inclusive of disbursements and HST plus another $3,500 in respect of the costs of the security for costs motion.

[14] Most of the work undertaken on behalf of the plaintiff was by two fee-earners, the most senior of whom claimed a partial indemnity rate of $300 per hour with 12 years of experience at the bar.

[15] The defendants claim for its own costs is $140,000, inclusive of disbursements and HST on a substantial indemnity basis and $100,000 all-inclusive on a partial indemnity basis. Having regard to the expectations of the party paying costs, the amount claimed by the plaintiff for its partial indemnity costs would not, accordingly, be surprising, from the defendants’ perspective.

[16] The defendant makes reference to the plaintiff’s disclosure (in connection with the security for costs motion) that he and his lawyers were operating under a contingency agreement. That agreement has not been produced. Accordingly, the defendants argue, there is essential evidence lacking regarding the costs equation. Reference is made by the defendant to cases in which the court has declined to award costs in excess of fees and disbursements actually charged to the party claiming costs.

[17] The defendants’ submissions ignore the fact that contingency fee agreements are ubiquitous in modern litigation particularly in personal injury and many wrongful dismissal cases. Counsel have not directed my attention to any case in which the disclosure of a contingency fee agreement has been held to be a pre-requisite of a plaintiff’s entitlement to recover partial indemnity costs of a proceeding. In the circumstances, the fact that the plaintiff had a contingency fee agreement with his lawyers is not a sufficient reason for not awarding him costs in this case.

[18] Finally, although I have already alluded to the defendants’ own expectations of the costs that it might be faced with (having regard to the costs which the defendants sought to recover himself), it does need to be recognised that this is one of those unfortunate cases where the costs incurred greatly exceed the amount of damages recovered by the plaintiff. That is not, in and of itself, a reason to decline to award the plaintiff his reasonable costs: Steelseal Waterproofing Inc. v. Kalovski, 2010 ONSC 2652 at para. 21.

[19] For the foregoing reasons, I would exercise my discretion to award the plaintiff his partial indemnity costs of the trial, which I fix at $88,450.98 (inclusive of disbursements and HST) plus $3,500 for the costs of the motion for security for costs. This results in a total costs award in favour of the plaintiff of $92,030.98.

Mew J.

Date: 3 February 2015