Court File and Parties

Court File No.: 11-31280 Date: 2016-04-20 Ontario Superior Court of Justice

Between: Nancy Guzzo on her own behalf and on behalf of ALL MEMBERS OF LABOURERS INTERNATIONAL UNION OF NORTH AMERICA, LOCAL 1110, Plaintiffs

– and –

Paula Randazzo, Kim Boyle, Kim LeBlanc, Diane Taylor, Tony Iannuzzi on his own behalf and on behalf of ALL MEMBERS OF THE CARPENTERS’ DISTRICT COUNCIL OF ONTARIO, UNITED BROTHERHOOD OF CARPENTERS AND JOINERS OF AMERICA and John Moszynski, Defendants

Counsel: Michael D. Wright, Amanda Darrach, and Mariam Moktar, for the Plaintiffs Dan Shields, Hendrik Nieuwland, and Stephanie Brown, for the Defendants

Judgment Released (Main Action): December 9, 2015

Costs Judgment

Whitten J.

[1] This action against former employees/members of Local 110 Liuna (referred to as the HOPE defendants in the cost submissions) and officers of and on behalf of the Carpenters was based on allegations of breach of fiduciary duty by the HOPE defendants (principally Paula Randazzo) and interference with economic interests by the Carpenter defendants. The plaintiffs sought $6.53 million in damages founded on the loss of Local 1110’s certification as the bargaining agent for the workers of six nursing homes/long term care facilities.

[2] The judgment released December 9, 2015 found that the HOPE defendants were not fiduciaries but they had breached a duty of loyalty owed to their employer by a failure to provide notice and by competing with their employer during their employment, by taking steps before their departure to establish a competing local of a different union (the Carpenters) for the bargaining units in question. Damages were assessed against Randazzo in the amount of $15,000 and $7,500 for each of her colleagues.

[3] The claim against the Carpenter defendants was dismissed in its entirety.

[4] Costs submissions have now been received.

The Cost Position of the Plaintiffs

[5] The plaintiffs recognized the lack of success with respect to the Carpenter defendants but emphasize the partial success achieved with respect to the HOPE defendants. The Plaintiff seeks costs in the amount of $283,693.95.

[6] Counsel understandably refers to the factors set out in Rule 57.01 (which will be set out) with emphasis on: the results and apportionment of liability, the complexity of the proceeding, the importance of the issues, and indemnity rates and experience.

The Cost Position of the Defendants

[7] The defendants given the exoneration (in the sense of a finding of no liability) of the Carpenter defendants suggest that the plaintiffs pay $84,335.00 representing 30% of the total costs of the defendants collectively on a partial indemnity basis.

[8] Counsel emphasizes the failure of the claim for interference with economic interest/contractual relations (as Justice Cromwell noted in A.I. Enterprises this tort goes by a variety of names).

[9] Each counsel has specific objections with the claim of the other and both appeal for an award which is both fair and proportionate.

[10] Counsel for the defendant proposes alternatively that each party bear their own costs.

Applicable Law

[11] In the opening remarks of the judgment of the Supreme Court, penned by Justice Karakatsanis in Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. page 87, Her Honour noted:

Ensuring access to justice is the greatest challenge to the rule of law in Canada today. Trials have become increasingly expensive and protracted. Most Canadians cannot afford to sue when they are sued, and cannot afford to go to trial. Without an affective and accessible means of enforcing rights, the rule of law is threatened. Without public adjudication of civil cases, the development of the common law is stunted.

(Para. 1)

[12] Granted these remarks are in the context of simplifying pretrial procedures and a direction of emphasis away from the traditional trial. These remarks are particularly apt when it comes to parties of disparate economic strength. The fear is that person with limited resources and yet meritorious causes, would be motioned to death or simply not proceed. There are unfortunately the David and Goliath scenarios spoken of by Justice Haines in Krouse v. Chrysler Canada Ltd. et al., [1972] 2 O.R. 133-154 or “the paradigm libel case” identified by Lord Justice Jackson where the claimant is an individual of modest means and the defendant is a “well resourced media organization” (referred to by Mew J. in Bernstein v. Poon, 2015 O.J. No. 1741).

[13] At first blush one would think that this concern for economic imbalance is not applicable in the case at hand. Superficially the action represents as a union versus union conflict. The fact that counsel for the Carpenters represented the HOPE defendants would contribute to this impression. But the damage award was made against the HOPE defendants as individuals versus as agents for the Carpenters. So the notion of a cost award against the individual HOPE defendants of $283,693.95 sounds staggering given what was accomplished in the suit. In a way the HOPE defendants would be bearing the cost of the suit against the Carpenters who successful avoided liability. The comeback to this assertion may be that the court assume that the Carpenters would cover the damage award and the costs award of the HOPE defendants, but there’s no evidence to make such an assumption.

[14] The basic rule is that the costs follow the event which can translate out “to the winner” goes the costs. The granting of costs is still a discretionary exercise pursuant to s. 131(1) of the Courts of Justice Act, R.S.O., C.43.

[15] As with all of the Rules of Civil Procedure there is the theme of proportionality (Rule 1.04(1.1)).

[16] Flags as to a lack of proportionality arise as a consequence of the disparate positions of the two groups of defendants and the fact that the Carpenters were successful in defending as against a potential major blow in the struggle between unions in the representation of identifiable worker groups. Obviously if competing unions faced the possibility of liability for the loss of union dues over the life of a contract, an element would be added which would impact upon what is acceptable to date: i.e. raiding. To some extent that would detract from the analysis of what is fair practice for unions conducted by the Labour Relations Board.

[17] This discussion touches upon the factors enumerated in Rule 57.01(1).

Rule 57.01(1)

Rule 57.01(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, as amended, lists almost all of the factors that a court should consider when exercising its jurisdiction under s. 131 of the Courts of Justice Act, R.S.O. 1990, Chap. C.43, as amended:

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.

[18] The factors listed in this rule are to be “fleshed out” as it were in the particular case. The backdrop dynamic in this case was commented upon in paragraphs 207-208 in the judgment itself. As Justice Mew noted in Bernstein v. Poon, 2015 O.J. No. 1741 “this case involved two competitors, a turf warfare”. The unions themselves are seasoned, sophisticated litigants. In a way, one would not want the HOPE defendants to become disproportionately liable for the costs of this particular conflict between titans.

[19] Counsel for the defendants, not surprisingly, makes reference to the dollar amount accomplished against the HOPE defendants. The reference being that these are within the Small Claims Court or Simplified Rules territory. The idea being that if you had achieved these results in either court or procedure, the costs awards would have been far less than $283,000.00. That suggestion dovetails with what was stated above, that this would be a “staggering” possibility. Inevitably there is a link between how much is accomplished versus the costs associated. If you had a costs award almost seven times what was rewarded, an objective observer would wonder whatever happened to fairness and proportionality.

[20] This case was not of the ilk before Quinn J. in Hearing Clinic (Niagara Falls) Inc. v. 866073 Ontario Ltd, 2015 O.J. No. 840 in which costs were awarded of $1,191,184.00 in favour of the defendants. The defendants had been found liable for damages fixed at $423.00. A success described in paragraph 50 as “statistically insignificant”. Justice Quinn had reviewed all of Rule 57.01 factors individually and concluded that the behaviour of the plaintiffs was clearly sanctionable. Adjectives such as “vexatious, improper, and fraudulent” were employed by His Honour.

[21] In the matter at hand, the plaintiff did have a valid complaint against the breaches of loyalty of the former employee/members. To attempt to claim them as “fiduciaries” was a reach. The validity of that complaint produced specific damage awards against the HOPE defendants, which reflected their level of remuneration and what would have been considered appropriate notice. That notice was in the context of the harsh competitive realities that exists in the world of union representation. This is not in the context of a “tea party”. It is a culture as mentioned before tantamount to a turf war, a culture in which playing “hard ball” is the norm.

[22] The claim against the Carpenters for interference with economic interest was a major reach. The role of the Carpenter officials was found to be passive, essentially of that of an employer approached by a disgruntled employee seeking a new opportunity. Fairness and proportionality merits the Carpenters be compensated in costs for successfully defending this onslaught. That being said, the Carpenters benefited immensely by the personal delict of the HOPE defendants. Although the suggestion of costs to the Carpenters in the amount of $84,335.00 has some appeal, the fall back suggestion that each party bear their own costs has a greater appeal to fairness and proportionality. Accordingly, each party shall bear their own costs and given this finding it is not necessary to assess either claim for costs in terms of quantity and level.

Whitten, J. Released: April 20, 2016