Court File and Parties

COURT FILE NO.: 58/15 DATE: 2016/10/14 SUPERIOR COURT OF JUSTICE – ONTARIO

RE: Tammy Caskanette (Appellant) AND: Bong-Keun Choi Dentistry Professional Corporation, Bong-Keun Choi and Hailey Choi (Respondents)

COUNSEL: P. Brooks, for the Appellant P. Krauss, for the Respondents

BEFORE: Justice A. K. Mitchell HEARD: In writing.

COSTS ENDORSEMENT

Overview

[1] The appellant, Tammy Caskanette, appealed from the decision of the Honourable Deputy Judge Davies of the Superior Court of Justice – Small Claims Division made in Court File No.: 386/13 on February 6, 2015.

[2] The appellant’s action against the respondents for wrongful dismissal was dismissed following a two-day trial. The trial judge found there was cause for the appellant’s dismissal from her employment with the respondent corporation. Independent of that finding, the trial judge proceeded to assess the appellant’s damages had she been successful, equal to four months’ pay in lieu of notice or $7,575.00. The trial judge did not award aggravated, exemplary or punitive damages for harassment or mental distress as claimed.

[3] In addition to the cost award in favour of the respondent corporation, the trial judge awarded costs to the individual respondents in the aggregate amount of $2,500.00.

[4] The appellant appealed all aspects of the decision including the cost award in favour of the individual respondents against whom the appellant’s claim had been dismissed prior to the commencement of the trial.

[5] The appeal was heard on September 1, 2016 and my decision on the appeal was released on September 8, 2016.

The Decision on Appeal

[6] In summary, I set aside the trial judge’s finding that the respondent corporation established cause for dismissal and I awarded damages for the appellant’s wrongful termination equal to four months’ salary totaling $7,575.00 as determined by the trial judge.

[7] The balance of the appeal based on numerous other grounds was dismissed.

[8] On agreement of counsel, I ordered that costs of the appeal should follow success. The appellant was the predominantly successful party and is therefore presumptively entitled to her costs of the appeal. Pursuant to my endorsement, I invited the parties to make written costs submissions if an agreement could not be reached.

[9] An agreement was not reached and written submissions were received. I have reviewed the appellant’s cost submissions received September 23, 2016, the respondent’s cost submissions received October 6, 2016 and the appellant’s reply submissions and the respondents’ sur-reply submissions received October 13, 2016.

Positions of the Parties

[10] Relying on a purported offer to settle made April 8, 2015 concurrent with service of the notice of appeal (the “Offer”), the appellant seeks her costs of the appeal on a substantial indemnity basis in the amount of $56,320.96 [1] inclusive of disbursements and HST. The appellant’s aggregate costs are supported by a Costs Outline and comprised of the following:

(a) $46,751.28 on account of fees; (b) $6,077.67 for HST on fees; (c) $3,120.10 on account of disbursements; and (d) $371.91 for HST on disbursements.

[11] In support of her claim for substantial indemnity costs, the appellant relies on her level of perceived success on the appeal and r. 49.10 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (the “Rules”) and the costs consequences flowing from the respondents’ failure to accept the Offer.

[12] The respondents did not serve an offer to settle the appeal.

[13] The respondents submit that based on the divided success of the parties on the appeal, no costs should be awarded to the appellant. However, if the court concludes that the appellant is entitled to an award of costs, the amount claimed is grossly disproportionate to the amount awarded on appeal for damages ($7,575.00) as compared to the amount claimed ($25,000.00) and is neither fair nor reasonable having regard to all of the circumstances.

[14] With regards to the Offer, the respondents submit that it is not an offer which attracts the cost consequences pursuant to r. 49.

[15] The respondents point out that the quantum of costs claimed is more than twice the Small Claims Court monetary jurisdiction of $25,000.00 and more than seven times the amount of the damages awarded. The respondents submit, therefore, that the amount claimed is patently unfair and unreasonable. If the court decides to award costs in favour of the appellant, a fair and reasonable amount is $4,000.00 plus disbursements and HST.

[16] For comparison purposes, the respondents provided their bill of costs of the appeal in the amount of $19,011.17 [2] inclusive of disbursements and HST.

[17] In her reply submissions, the appellant raised a new issue, namely, the conduct of the respondents in attempting to garnish the appellant’s wages to satisfy payment of the costs award after the notice of appeal had been issued. Whether and to what extent the respondents were entitled to issue the notice of garnishment is not an issue before the court. Aside from the bald allegations of abuse of process and bad faith contained in the reply submissions, there is no evidence properly before the court to support these allegations. In their sur-reply submissions, the respondents flatly deny any bad faith or mal-intent. Therefore, I have disregarded that portion of the reply submissions relating to the garnishment proceedings as being irrelevant.

[18] Also in her reply submissions, the appellant argues she is entitled to an enhanced cost award on the basis the defendants/respondents unsuccessfully and unreasonably pursued issues at trial and on appeal. This argument is not persuasive. The respondents defended the plaintiff’s claims as they were entitled to do. The respondents responded to the grounds of appeal as they were entitled to do. The respondents did not cross-appeal the trial judge’s calculation of damages. Their conduct was entirely appropriate and reasonable throughout.

Analysis

[19] The court has a very broad discretion to award the costs of and incidental to a proceeding. The basic provision is in s. 131(1) of the Courts of Justice Act, R.S.O. 1990, c.C-43 (the “CJA”):

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 the costs shall be paid.

[20] Although not applicable to costs on appeals, to guide its discretion, the court may wish to consider r. 57.01(1) of the Rules. Rule 57.01(1) provides that, in addition to the result in the proceeding and any offer to settle or to contribute made in writing, the court may consider:

(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, (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.

[21] Of course, the primary and overriding guiding principle is whether the costs are fair and reasonable in the circumstances: see Boucher v. Public Accountants Council for the Province of Ontario (2004), 71 O.R. (3d) 291 (C.A.).

[22] While the “winner” (having been successful on the most significant ground of appeal [3]), the appellant was unsuccessful in setting aside the trial judge’s calculation of damages for wrongful dismissal (having abandoned that ground of appeal at time of the appeal), the trial judge’s dismissal of the appellant’s claim for punitive, aggravated and exemplary damages, the trial judge’s dismissal of the appellant’s claim for damages related to an alleged violation of the Human Rights Code, the appellant’s allegation of judicial bias and the costs award in favour of the individual respondents. The appellant’s lack of success on these less significant grounds of appeal is a factor which must be considered since the respondents were required to prepare and respond to all grounds of appeal.

[23] The fees of $46,751.28 represent 87.6 hours of time spent by Mr. Brooks who is a 1985 call and who claims an average hourly rate of $434.40 on a substantial indemnity basis. The balance of the fees claimed is comprised of time spent by various law clerks (20.5 hours), charged at the average rate of $139.54 per hour and time spent by two law students, charged at the rate of $148.75 per hour.

[24] The appellant did not provide authority for the application of r. 49.10 to Small Claims Court appeals. Rule 49.02(2) extends the rule’s application only to motions in the context of an action or application. I note that r. 14.07 of the Small Claims Court Rules permits the court to award the plaintiff an amount not exceeding twice the costs of the action if the plaintiff obtains a judgment as favourable as or more favourable than the terms of the offer, the offer was made at least seven days before the trial, is not withdrawn and does not expire before the trial and was not accepted by the defendant. Unlike r. 49.10, this rule does not provide for costs on an enhanced scale from the date of the offer. Moreover, this rule is silent as to its application to appeals.

[25] The Ontario Court of Appeal in Niagara Structural Steel (St. Catharines) Ltd. v. W.D. LaFlamme Ltd. [4] makes it clear that r. 49.10 has no application to appeals. By logical extension, this prohibition extends to Small Claims Court appeals.

[26] At best, the Offer may be considered under the “catch-all” provided by sub-rule 57.01(1) (0.b)(i) as being a “matter relevant to the question of costs”. The Offer provides that the appellant would not pursue the appeal provided the respondents abandoned collection of the trial costs. The Offer is conspicuously silent as to the length of time it remained open for acceptance. Not surprisingly, the appellant takes the position the Offer remained open for acceptance until the commencement of the appeal believing (erroneously) the costs consequences of r. 49 applied.

[27] From its terms, it may be inferred that the Offer was not open for acceptance at the commencement of the appeal. The Offer does not provide for a period of acceptance and it can be implied that once costs of the appeal were incurred by the appellant, the Offer was no longer capable of acceptance. The Offer was premised on the appellant not having to spend further money. It should be noted that no further offer was forthcoming from the appellant during the course of the appeal proceedings spanning approximately 17 months.

[28] There is no question the result on the appeal was more favourable to the appellant than the terms of the Offer. This is one factor to consider but as noted above no presumptive or any entitlement to substantial indemnity costs arises. I find that the making of the Offer and the defendants’ failure to accept the Offer, bears little weight on my analysis.

[29] I find the hourly rate claimed by Mr. Brooks on a partial indemnity basis is fair and reasonable. [5] So, too, are the hourly rates charged for the clerks’ and students’ time. However, the amount of time spent by Mr. Brooks on this relatively straightforward appeal involving uncomplicated issues of law, the amount in issue and ultimately awarded for damages, the action being subject to the jurisdiction of the Small Claims Court (where damages are capped at $25,000.00) cannot justify approximately 90 hours of time being spent by a lawyer having 31 years’ experience.

[30] The appellant elected to proceed with her action within the jurisdiction of the Small Claims Court. By doing so, it was reasonable for the respondent corporation as the losing party on the appeal, to have lower expectations as to the costs which might be awarded following a successful appeal of that Small Claims Court decision. [6]

[31] Boucher requires me to fix an amount of costs that is fair and reasonable for the unsuccessful party, rather than simply award an amount fixed by the actual costs incurred by the successful party. The amount awarded must be proportionate to the amount at stake and the amount awarded, the level of success on the appeal, and the reasonable expectation of the parties on a matter within the jurisdiction of the Small Claims Court.

[32] I note that the respondent corporation successfully defended all of the appellant’s claims at trial and was awarded its costs of trial in the amount of $8,325.00 plus HST of $1,082.25. The appeal does not raise novel issues. Aside from judicial bias which was not pursued on appeal, the issues raised on the appeal were the same as those raised at trial.

[33] Section 29 of the Courts of Justice Act is instructive and reads:

An award of costs in the Small Claims Court, other than disbursements, shall not exceed 15 per cent of the amount claimed or the value of the property sought to be recovered unless the court considers it necessary in the interests of justice to penalize a party or a party’s representative for unreasonable behavior in the proceeding.

Had the appellant been entirely successful at trial, she would have been entitled, absent conduct of the respondents requiring censure, to a maximum cost award of $3,750.00 plus disbursements and HST.

[34] After taking into account the r. 57.01(1) factors including a lack of success on the numerous grounds of appeal and the unreasonable amount of time and unnecessary expertise spent on this straightforward Small Claims Court appeal, I find it fair and reasonable to award the appellant her costs of the appeal, in the amount of $10,000.00 inclusive of disbursements on appeal and at trial and HST.

Disposition

[35] The respondent corporation shall pay to the appellant her costs of the appeal fixed in the amount of $10,000.00.

“Justice A. K. Mitchell” Justice A. K. Mitchell Released: October 14, 2016

[1] See para. 19 of the appellant’s cost submissions. Yet para. 2 of those same submissions seeks costs totaling $57,183.06 inclusive of disbursements and HST. I have utilized the lower amount being supported by the costs outlined at Tab B.

[2] An amended Bill of Costs including time to prepare responding costs submissions was submitted in the amount of $20,663.63.

[3] Whether the trial judge erred in finding just cause for the appellant's dismissal.

[4] 1987 CarswellOnt 440 (C.A.) at paras. 21 and. 27.

[5] See J.M.B. Cattle Corp. v. 2144032 Ontario Inc., 2016 ONSC 2150 at paras. 20 and 33.

[6] South Works Outlet Mall Inc. et al. v. Bradley et al, (2009), 97 O.R. (3d) 796 (S.C.J.) at para. 20.