Court File and Parties

Citation: Williams v. Vogel of Canada, 2016 ONSC 2264 Court File No.: CV-12-467656 Date: 2016-04-05 Superior Court of Justice - Ontario

Re: The Estate of Derrick Williams (Deceased) by its Estate Administrator Beverley Williams, Plaintiff And: Vogel of Canada Ltd., Defendant

Before: Mr. Justice Stephen Firestone

Counsel: James Jagtoo and Frances Jagtoo, for the Plaintiff Christian R. Riveros, for the Defendant

Heard: In Writing

Costs Endorsement

[1] The trial of this wrongful dismissal action proceeded before me for five days. The plaintiff was successful and was awarded wrongful dismissal damages equivalent to 23 months notice based on an annual income of $28,008.86 less credit for other employment income received. Applicable interest was ordered. In addition, the plaintiff was awarded damages under section 5(1) of the Ontario Human Rights Code in the amount of $5,000. In my reasons for judgment I indicated that if the parties were unable to agree on the issue of costs, submissions were to be delivered in accordance with the timetable set.

[2] The plaintiff’s cost submissions were received on February 10, 2016. The defendant’s cost submissions were received on February 25, 2016. The plaintiff’s reply cost submissions were received on February 29, 2016.

[3] On March 22, 2016, plaintiff’s counsel provided the court with correspondence advising that he had just been notified by the trustee in bankruptcy that the defendant had made a voluntary assignment into bankruptcy March 11, 2016. On March 23, 2016, defence counsel wrote to the court indicating that he was first advised of his client’s assignment into bankruptcy on March 11, 2016 when he received plaintiff’s counsel’s correspondence.

[4] The plaintiff does not have to seek an order lifting any deemed stay under the Bankruptcy and Insolvency Act, R.S.C. 1985, c.B-3 as a prerequisite to obtaining a costs order where judgment was rendered prior to assignment into bankruptcy and the assignment occurred following receipt of the parties cost submissions. See: Houlden and Morawetz, Bankruptcy and Insolvency Law of Canada, 3rd ed., at page 3-143; Pasichnyk v. Pasichnyk, 2005 ONSC 46745 (ONSC) paras 11-12 and Nouri v. Negravi, 2015 ONSC 5695 (ONSC).

[5] The plaintiff seeks costs on a full indemnity basis in the all-inclusive amount of $232,527.23 plus interest. In the alternative, it seeks costs on a partial indemnity basis to the date of their offer to settle of $22,347.50 and on a full indemnity basis thereafter in the amount of $195,419.16. In addition it seeks payment of their disbursements in the amount of $5,183.07 for a total of $222,949.73 plus interest.

[6] The defendant submits that no costs ought to be awarded to the plaintiff, or in the alternative such costs ought to be significantly reduced well below the amount awarded to the plaintiff at trial.

Analysis

[7] Section 131(1) of the Courts of Justice Act provides as follows:

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 costs shall be paid.

[8] Rule 57.01 of the Rules identifies the factors a court may consider when exercising its discretion to award costs:

(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.

[9] Rule 49.10 limits to some extent the court’s discretion on costs in certain circumstances when there has been a qualifying offer to settle:

(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;

(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.

(2) Where an offer to settle,

(a) is made by a defendant at least seven days before the commencement of the hearing;

(b) is not withdrawn and does not expire before the commencement of the hearing;

(c) is not accepted by the plaintiff,

and the plaintiff obtains a judgment as favourable as or less favourable than the terms of the offer to settle, the plaintiff is entitled to partial indemnity costs to the date the offer was served and the defendant is entitled to partial indemnity costs from that date, unless the court orders otherwise.

[10] Rule 49.13 provides as follows:

Despite rules 49.03, 49.10 and 49.11, 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.

[11] The plaintiff delivered an offer to settle this action on October 29, 2013 for the payment of eighteen months of pay in the amount of $42,194.32 plus costs of $10,000. At trial the plaintiff beat its offer to settle. It obtained judgment in the amount of 23 months notice based on an annual salary of $28,008.86 for a total of $53,683.61 less amounts earned in the sum of $384 plus applicable interest. In addition, Ontario Human Rights Code damages in the sum of $5,000 were awarded.

[12] The defendant argues that the plaintiff was only partially successful at trial given that 23 months rather than the 30 months claimed by the plaintiff was awarded. The defendant further argues that $5,000 rather than the $50,000 claimed for Ontario Human Rights Code damages was awarded. In addition, nothing was awarded for mental distress, breach of the duty of good faith and fair dealing, aggravated or punitive damages or recovery of life insurance proceeds.

[13] The defendant submits that there should be no order as to costs given that this action should have been commenced and continued under the simplified procedure. It relies on Rule 76.13 (2) in support of its submission that no costs should be payable given that judgment was obtained in an amount less than $100,000, exclusive of interest and costs.

[14] In Agius v. Home Depot Holdings Inc., 2011 ONSC 5272, the court set forth the general principles to be applied in fixing costs, at paras. 10-12:

Cumming J. in DUCA Financial Services Credit Union Ltd. v. Bozzo, 2010 ONSC 4601 at para. 5, described the “normative approach” to an application for costs:

Costs are in the discretion of the Court: s. 131, Courts of Justice Act, R.S.O. 1990, c. C.43 and Rule 57.01 of the Rules of Civil Procedure. In Ontario, the normative approach is first, that costs follow the event, premised upon a two-way, or loser pay, costs approach; second, that costs are awarded on a partial indemnity basis; and third, that costs are payable forthwith, i.e. within 30 days. Discretion can, of course, be exercised in exceptional circumstances to depart from any one or more of these norms.

Fixing of costs is not merely a mechanical exercise in reviewing the receiving party’s Cost Outline. In Andersen v. St. Jude Medical Inc. (2006), 2006 ONSC 85158 (ON SCDC), 264 D.L.R. (4th) 557, the Divisional Court set out several principles to be considered in making an award of costs:

1. The discretion of the court must be exercised in light of the specific facts and circumstances of the case in relation to the factors set out in rule 57.01(1): Boucher [Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 ONCA 14579, 71 O.R. (3d) 291], Moon [Moon v. Sher (2004), 2004 ONCA 39005, 246 D.L.R. (4th) 440], and Coldmatic Refrigeration of Canada Ltd. v. Leveltek Processing LLC (2005), 2005 ONCA 1042, 75 O.R. (3d) 638 (C.A.).

2. A consideration of experience, rates charged and hours spent is appropriate, but is subject to the overriding principle of reasonableness as applied to the factual matrix of the particular case: Boucher. The quantum should reflect an amount the court considers to be fair and reasonable rather than any exact measure of the actual costs to the successful litigant: Zesta Engineering Ltd. v. Cloutier (2002), 119 A.C.W.S. (3d) 341 (Ont. C.A.), at para. 4.

3. The reasonable expectation of the unsuccessful party is one of the factors to be considered in determining an amount that is fair and reasonable: rule 57.01(1)(0.b).

4. The court should seek to avoid inconsistency with comparable awards in other cases. “Like cases, [if they can be found], should conclude with like substantive results”: Murano v. Bank of Montreal (1998), 1998 ONCA 5633, 41 O.R. (3d) 222 (C.A.), at p. 249.

5. The court should seek to balance the indemnity principle with the fundamental objective of access to justice: Boucher.

The Court of Appeal has identified the overriding principle to be that the amount of costs awarded be reasonable in the circumstances. In Davies v. Clarington (Municipality) (2009), 2009 ONCA 722, 100 O.R. (3d) 66 Epstein J.A. stated at paras. 51-52:

As can be seen, the overriding principle is reasonableness. If the judge fails to consider the reasonableness of the costs award, then the result can be contrary to the fundamental objective of access to justice. Rather than engage in a purely mathematical exercise, the judge awarding costs should reflect on what the court views as a reasonable amount that should be paid by the unsuccessful party rather than any exact measure of the actual costs of the successful litigant. In Boucher, this court emphasized the importance of fixing costs in an amount that is fair and reasonable for the unsuccessful party to pay in the particular proceeding at para. 37, where Armstrong J.A. said “[t]he failure to refer, in assessing costs, to the overriding principle of reasonableness, can produce a result that is contrary to the fundamental objective of access to justice.”

[15] In addition to the result achieved and offers to settle, I may consider the factors enumerated in rule 57.01(1) when exercising my discretion under s. 131 of the Courts of Justice Act.

[16] Costs are in the absolute discretion of the court. A successful litigant has no right to costs, but only a reasonable expectation of costs. The plaintiff’s position is that the defendants should be denied their costs, or in the alternative, that any costs payable by the plaintiff should be significantly reduced.

[17] In Yelda v. Vu, 2013 ONSC 5903 (leave to appeal denied, 2014 ONCA 353) at para. 11, Arrell J.A. confirmed the long-standing principle that a successful party is entitled to costs except for good reason. He states as follows:

The principle that costs follow the event should only be departed from for very good reasons such as misconduct of the party, miscarriage in procedure, or oppressive or vexatious conduct of proceedings.

[18] Absent special circumstances, a successful party is entitled the costs: Bell Canada v. Olympia & York Developments Ltd. (1994), 1994 ONCA 239, 17 O.R. (3d) 135 (C.A.) In this case the defendants were successful and are entitled to their costs. However, the amounts requested are excessive. In addition, there is no basis to award such costs on substantial indemnity scale.

[19] In considering the complete factual matrix of this case and the heads of damages claimed, I find in accordance with Rule 76.13(3)(b) that it was reasonable for the plaintiff to have commenced and continued this action under the ordinary procedure. At no time was objection taken to the ordinary procedure.

[20] Section 131 of the Courts of Justice Act affords the court discretion to determine the amount of costs to be paid.

[21] The overall objective of fixing costs is to arrive at an amount that is fair and reasonable, rather than to reflect the amount of actual costs incurred by the successful litigant: Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 ONCA 14579, 71 O.R. (3d) 291 (C.A.), at para. 16.

[22] In Haufler v. Hotel Riu Palace Cabo San Lucas, 2014 ONSC 2686 at para. 11, Quigley J. confirmed the principle, increasingly recognized by the courts, that an hourly approach to determining costs awards is a problematic element of litigation. (See also Brady v. Lamb, 14 C.C.L.I. (4th) 285, 2004 ONSC 27491 at para. 29).

[23] This concern was aptly expressed in Independent Multi-Funds Inc. v. Bank of Nova Scotia, 2004 ONSC 18796 at para. 23:

As between a lawyer and a client, this approach may be acceptable; certainly it is now almost universal, but the client, unlike the opposite party, has the option of seeking a less expensive lawyer. Combined with our system of requiring the loser to pay costs to the winner, measured by what the winner has spent, this approach is proving an enormous obstacle to access to justice in our courts. What middle class person would dream of financing an action, however meritorious, against an opponent capable of spending the sums illustrated by the Bill of Costs of the Bank, when the penalty for losing is financial disaster? It is time for this ruinous system to be revisited. Many jurisdictions do without costs altogether. Perhaps Ontario should join them. As a start, we could stop measuring costs by what the winner has spent, and move to a predictable fixed fee system.

[24] In accordance with the principles I have outlined I do not intend to engage in a purely mathematical exercise of reviewing the time spent in order to arrive at an appropriate amount to be paid in costs. The court’s role is to fix a reasonable amount to be paid by the unsuccessful party (in this case, the defendant). It is not the court’s role to conduct an exact mathematical calculation of the successful litigant’s actual costs.

[25] The rate charged per hour is an appropriate consideration. However, it is subject to the overriding principle of reasonableness as applied to the factual matrix of a particular case.

[26] I have reviewed the cost outline of the plaintiff and other relevant material in the record. I have considered the appropriate legal principles as they apply to the factual matrix of this case as well as the written submissions of counsel.

[27] The plaintiff’s costs are fixed in the amount of $73,000 inclusive of fees, disbursements and HST to be paid by the defendant to the plaintiff.

Firestone J.

Date: April 5, 2016