Fermin v. Intact Financial, 2016 ONSC 6853

CITATION: Fermin v. Intact Financial, 2016 ONSC 6853 COURT FILE NO.: CV-15-542692 DATE: 2016-12-13

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Cherrie Fermin, Plaintiff AND: Intact Financial Corporation, Defendant

BEFORE: Mr. Justice A.J. O’Marra COUNSEL: Robert Lilly, for the Plaintiff Jennifer Heath, for the Defendant HEARD: In Writing

COSTS ENDORSEMENT

[1] The plaintiff, Cherrie Fermin, received summary judgment against the defendant, Intact Financial Corporation (Intact) for wrongful dismissal from her employment, November 24, 2015. (See reasons for judgment 2016 ONSC 5631).

[2] The plaintiff, aged 52, had been a claims adjuster with the defendant Intact, at the time of her dismissal. She had been in the employ of Intact for over 21 years and at the time of termination was earning $53,349 annually plus benefits. In the result, Ms. Fermin was awarded 16 months’ compensation in lieu of notice less payments received from the defendant under the Employment Standards Act, 2000. Further, in that there was a remaining 6 months in the notice period at the time of the award it was impressed with a trust in favour of the defendant, requiring the plaintiff to account to the defendant any earnings obtained from new employment within the notice period so as to reduce the defendant’s obligation to pay the plaintiff.

[3] The parties were directed to make written costs submissions if they were unable to agree as between themselves. I have received their respective submissions and bills of costs, and the following is my costs endorsement in the matter.

[4] The plaintiff seeks costs on a partial indemnity basis, as the successful party in the amount of $33,839.99. In response, the defendant asserts that the amount claimed by the plaintiff is excessive by comparison to its partial indemnity costs in the amount of $18,996.05 and as compared to cases of comparable complexity, which have resulted in partial indemnity costs in the range of $10,000 to $15,000.

[5] The successful party is entitled to reasonable costs however, the court should fix costs in an amount that is fair and reasonable for the unsuccessful party to pay. (See Boucher v. Public Accountants Council for the Province of Ontario, 2004 14579 (ON CA), [2004] O.J. No. 2634).

[6] This was a matter of limited complexity in which the only issues were:

i. The characterization of the plaintiff’s employment;

ii. The period of reasonable notice based on the employment characterization and the Bardal factors; and

iii. The method of adjusting the award, made before the expiry of the reasonable notice period, to fairly reflect the plaintiff’s duty to mitigate.

[7] Counsel engaged in a protracted exchange of supplementary costs submissions as to their relative positions on the issue of the characterization of the plaintiff’s position in the defendant’s employment structure before Justice Akhtar, May 31 and when the matter returned for the hearing July 7, 2016. Justice Akhtar directed that the parties return to court with an agreed statement of fact on the issue. Notwithstanding an agreed statement of fact, counsel contend each altered their positions resulting in the need to address the matter. The issue was engaged in oral argument and dealt with within the time allotted for the hearing. It did not unduly lengthen or complicate proceedings. In my view, the matter was of limited complexity and of no great significance with respect to determining the costs issue.

[8] However, offers to settle were made in this matter and consideration of Rule 49 is of greater significance. The defendant submits the court should apply sub-rule 49.10(2) in the amount of $12,295.05 from the date of a final offer to settle it made May 17, 2016, and to take into account under rule 49.13 of the Rules of Civil Procedure an earlier offer made January 11, 2016.

[9] Prior to exchanging facta for the hearing scheduled for May 31, 2016, Intact made an offer to settle of 16 months’ notice and $6,000 in legal fees as its final offer to the plaintiff. The plaintiff made a counter offer indicating she would accept the 16 months’ notice period, but wanted an additional $1,000 in legal fees, i.e. $7,000 as costs all inclusive. The defendant’s response was “Intact’s offer was and is final”. The plaintiff withdrew her counter offer and indicated that she would proceed with the motion.

[10] In terms of the other earlier offers; in response to the plaintiff’s demand letter of December 3, 2015, on December 15, 2015 Intact made an offer to settle of 15.5 months’ salary continuation plus $500 for legal fees. On December 16, 2015, counsel for the plaintiff declined the offer and sent an issued Statement of Claim. On January 11, 2016, the defendant finalized its offer of 15.5 months’ salary continuance and increased its contribution to legal fees to $3,000. The defendant’s offer with respect to the appropriate reasonable notice period was approximately $2,200 less than awarded. The plaintiff’s partial indemnity costs at that time was approximately $3,500.

[11] Rule 49.10(2) states:

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; and

(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.

[12] Under rule 49.13, despite rule 49.10, 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.

[13] In terms of the application of rule 49.10 to the defendant’s final offer to settle on May 17, 2016, the plaintiff argues that its terms were uncertain and unquantifiable and as a result not fixed, certain and understandable. (See Yepremian v. Weisz (1993), 1993 5483 (SCJ)).

[14] Further, counsel for the plaintiff argued that the offer although numerically as favourable as the court award, the 16 month salary continuation offer in the settlement offer contained a 50% claw back if the plaintiff found a job. Therefore the amount of the offer was dependent on a number of unknowable factors, “including when Fermin found a job, how much that job paid, and how long she maintained that job”.

[15] Counsel posited a number of speculative scenarios where the plaintiff’s income, would not have been protected under the offer to settle for 16 months, whereas the judgment did. For example, if she took a job that did not survive the probation period, or she took a short term contract to get her foot in the door but it was not renewed, or she became ill and was unable to work she would lose 50% and her benefits and pension would cease, all of which would render the offers lower than that awarded by the court. Accordingly, the award was more favourable and the rule should not apply.

[16] In response, Intact’s counsel argued that its offer to settle was both certain and quantifiable, and no less certain than the endorsement of the court, which included the trust and accounting approach to reduce the amounts paid to the plaintiff if she mitigated her loss.

[17] Further, the claw back condition included in Intact’s final offer did not reduce the value of Intact’s final offer in that the claw back would only have taken effect if the plaintiff found employment for which she earned at least 50% of her Intact salary. Consequently, if she earned less than 50% the claw back condition would not be triggered and would result in her being able to “double-dip”. If she earned more, she would receive 50% of her remaining severance entitlements and thereby receive a windfall. Intact’s counsel argued to that extent, the offer was more favourable than the award, which provided a one to one reduction for mitigation of earnings and thus no opportunity for a possible “windfall”.

[18] I agree with the submission of counsel for Intact that “Rule 49 should not be interpreted in a way that limits the creativity of the bar in fashioning offers to settle”: see Rooney (Litigation Guardian of) v. Graham (2001), 2001 24064 (OCA) at para. 44).

[19] The plaintiff submits that in considering the application of rule 49.10 all terms of an offer to settle, including any provision for costs must be compared with all terms of the judgment, ordinarily including the disposition of costs. For the purpose of comparing the offer with the judgment under rule 49.10 the court must compare the costs provisions in the offer with the court’s usual award of partial indemnity costs to the successful litigant. (See Rooney (Litigation Guardian of) v. Graham, supra, at para. 58).

[20] In the final offer made by the defendant, the plaintiff was offered $6,000 for legal fees. In the counter offer, which was declined, the plaintiff sought $7,000. In the submitted bills of costs the defendant cites partial indemnity costs to that point of $6,701, whereas the plaintiff asserted partial indemnity costs in the amount of $13,619.78. In my view, as recognized by the offers as of May 17, reasonable costs on a partial indemnity basis would have been in the order of $6,000 to $7,000. Accordingly, partial indemnity costs to the plaintiff up to the offer in that range would appear to be fair and reasonable for the defendant to pay.

[21] In this instance, I am satisfied that in an assessment of the defendant’s offer to settle and the result that the plaintiff obtained judgment as favourable as the terms of the offer to settle. The plaintiff is entitled to partial indemnity costs to the date the offer was served, whereas the defendant is entitled to partial indemnity costs from that date.

[22] The defendant seeks partial indemnity costs in the amount of $12,295.05 from the date of the May 17, 2016 offer to settle, less the plaintiff’s costs on a partial indemnity basis up to January 10, 2016 at the date of its initial offer, i.e. approximately $3,500.

[23] Counsel for Intact claimed that the increase to over $12,000 was due in part to preparation of the agreed statement of facts as to the characterization of the plaintiff’s employment and re-attending for the hearing of the motion July 7, 2016. As noted earlier, in other wrongful dismissal summary judgment motions of comparable complexity, the court has ordered costs in the range of $10,000 to $15,000 to the successful party.

[24] In my view, the appropriate award of partial indemnity costs to the defendant, following the offer to settle, to prepare and argue their differences as to the characterization of employment and other issues would also be in the range of $6,000 to $7,000.

[25] I make this parenthetic observation; this matter could have been resolved in May, 2016 without the parties having incurred additional costs as reflected in their respective bills of costs, but for the difference of $1000 for legal fees.

[26] In my view, as each party would be awarded partial indemnity costs in the same amounts, $6000 to $7000, this is one of those rare occasions where the parties shall be required to bear their own costs. Therefore, in the exercise of my discretion, I decline to make an order of costs.

A.J. O’Marra J.

Date: December 13, 2016