Court File and Parties

Court File No.: CV-15-539858 Date: 2017-05-29 Superior Court of Justice - Ontario

Re: Bertram Thambapillai, Plaintiff And: Labrash Security Services Ltd., Defendant

Before: R.F. Goldstein J.

Counsel: Bruce Baron, for the Plaintiff Kevin Power, for the Defendant

Heard: In Writing

Endorsement

[1] The Plaintiff sued the Defendant for wrongful dismissal. He is a security guard. He worked for the Defendant employer for 12 years. At the time of his dismissal he made $24,000 per year. The Plaintiff moved for summary judgment. He achieved complete success on the motion. I found that the Defendant had simply treated the Plaintiff unfairly. I awarded him $7,500.00 for mental distress. I also awarded him $17,576.00 for breach of the employment contract for a total of $24,576.00: Thambapillai v. Labrash Security Services, 2016 ONSC 6068.

[2] The Plaintiff now seeks substantial indemnity costs in the amount of $35,000.00.

[3] On May 27, 2016 the Plaintiff offered to settle the matter on the following terms:

• $17,076.00 paid by the Defendant in lost salary (less withholdings);
• $2,500.00 in general damages for mental suffering;
• $10,000.00 in costs, interest, and assessable disbursements; and
• Partial indemnity costs paid by the Defendant from the day of the offer to the day of acceptance.

[4] On July 18, 2016 the Plaintiff made a revised offer to settle on the following terms:

• $17,000.00 paid by the Defendant in lost salary (less withholdings);
• $10,000.00 in costs, interest, and assessable disbursements; and
• Partial indemnity costs paid by the Defendant from the day of the offer to the day of acceptance.

[5] The Defendant refused all offers. Instead, the Defendant offered to settle the case on the following terms:

• $17,000 paid by Defendant as a lump sum including apportionment for costs and withholdings;
• Partial indemnity costs paid by the Plaintiff from the day of the offer to the day of acceptance.

[6] The Plaintiff’s position is simple: The usual rule is that where a party does better than a refused settlement offer, it is entitled to substantial indemnity costs. The Defendant refused a reasonable settlement offer and refused to mediate. The Plaintiff did better on the motion than he would have if the settlement offer had been accepted. The Plaintiff’s bill of costs is $40,099.25. The substantial indemnity costs it seeks are therefore $35,000.00 all in.

[7] The Defendant’s position is that the Plaintiff’s Bill of Costs is inflated. The Defendant also argues that the principle of proportionality applies: Pitney Bowes Canada v. Noia, 2009 ONSC 6400. The costs are completely disproportionate to the amount sought in damages. Rather, costs should be awarded on the Small Claims Court scale. The case could have been continued in the Small Claims Court. The Defendant’s position is that I should award $5000.00 in costs.

[8] I disagree with both of the Defendant’s arguments.

[9] This matter was conducted by way of the simplified procedure. The original claim was premised on the inability of the 72 year-old Plaintiff to easily mitigate his damages. The fact that he did so did not change the amount of time and energy that his counsel required to litigate the case. Ultimately, costs are within the discretion of the court. Proportionality is just one factor that a court awarding costs may take into account. Proportionality is important, but a just result is more important. I do not find that the amount claimed is disproportionate.

[10] I turn now to the Defendant’s Small Claims Court argument. After the Plaintiff mitigated, the Defendant argued that the monetary amount sought was within the monetary jurisdiction of the Small Claims Court and should be transferred there rather than continuing on by way of summary judgment. I specifically rejected that argument:

… It would be unfair to the Plaintiff to send this matter to the Small Claims Court at this point. It would effectively penalize him for mitigating his damages by finding a new job. It would deprive the Plaintiff of his ability to seek costs beyond the scale sought in the Small Claims Court tariff. I agree as well it would put a chilling effect on terminated employees. What incentive would they have to go looking for a new job and mitigate?

Furthermore, I am satisfied that I can decide the case in a summary way. It would not be in the interests of justice to have the parties re-start the proceedings in a different court when this court can decide the matter on the basis of the filed material. It would drive up costs for both parties -- costs that the Plaintiff could not recover based on the tariff. I will not exercise my discretion and transfer the case.

[11] I saw no reason at the time why the matter should have been transferred to the Small Claims Court. One of my reasons for rejecting the move was that the costs jurisdiction would be limited in the Small Claims Court.

[12] In my view the Defendant should pay substantial indemnity costs to the Plaintiff. Rule 49.10 of the Rules of Civil Procedure states:

49.10 (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; and

(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.

[13] The Plaintiff relies on Paes v. Cascades Canada, 2015 ONSC 8031. That was also a wrongful dismissal case where the Plaintiff was successful. In that case the Plaintiff served an offer to settle that did not formally comply with Rule 49. The Defendant did not accept it. Faieta J. took the offer into account. Although he did not award substantial indemnity costs, he still awarded more than the Plaintiff more than partial indemnity costs. He also noted that a costs award should reflect what the losing party could reasonably expect to pay, rather than the costs actually incurred by the winning party: Davies v. Clarington (Municipality), 2009 ONCA 722.

[14] The Defendant takes the position that the Plaintiff did not, in fact do better than on the offers to settle. I disagree with that position as well. Each of the offers to settle contained a term that $17,000.00 would be paid by the Defendant on account of salary less withholdings. My judgment awarded more than $17,000.00. Furthermore, the Plaintiff’s first offer to settle was for $2,500.00 in general damages for mental distress. The Plaintiff’s second offer to settle did not include an amount for general damages. I eventually awarded $7,500 for mental distress. Obviously the Plaintiff did better than the offers. Even on the Defendant’s math, where the final offer was $22,500.00 in damages and costs, the Plaintiff did better.

[15] I have reviewed the two costs outlines. According to the costs outlines, the Plaintiff incurred considerably more in actual costs than the Defendant – almost twice as much. That said, although the amount is high, it does not seem unreasonable for an experienced counsel on a motion of great significance to his client. I agree with the following comments made by Myers J. in Fimax Investments Group Ltd. v. Grossman, 2015 ONSC 2048 at para. 6:

… The defendant challenges the quantum of the fees claimed by the plaintiff. I have reviewed the plaintiff's Costs Outline. The rates charged by the plaintiff's counsel are very reasonable. The hours are claimed to be high especially for experienced counsel. I am hesitant to criticize counsel who prepare for a hearing and are successful. Courts frequently lament the lack of preparation by counsel. Moreover, every litigation skills course emphasizes that the single-most important element of presenting a case in court is preparation. In my view, absent very obvious abuse or unreasonableness, I am disinclined to measure too closely the time of counsel whose preparation led to success.

[16] I found that the Defendant treated the Plaintiff – an elderly immigrant of very limited means and sophistication – unfairly. The Defendants then played hardball litigation. They are entitled to do that and it is not necessarily unethical or immoral. But it is expensive. When I take into account the offer to settle and the manner in which the case was litigated, I agree that $35,000.00 in substantial indemnity costs, all-inclusive, payable to the Plaintiff, is appropriate.

R.F. Goldstein J. Date: May 29, 2017