CITATION: Dunsmuir v. Royal Group, Inc., 2017 ONSC 5738
COURT FILE NO.: CV-17-11687-00CL
DATE: 201700927
ONTARIO SUPERIOR COURT OF JUSTICE (Commercial List)
B E T W E E N:
DOUGLAS DUNSMUIR and RONALD J. GOEGAN
Plaintiffs
– and –
ROYAL GROUP, INC.
Defendant
Brian H. Greenspan, Richard P. Quance, Jorge Pineda, Michelle M. Biddulph, and Rand Salih, counsel for the plaintiff Ronald J. Goegan
Nigel Campbell, Kent E. Thomson, Doug McLeod, and Steven G. Frankel counsel for the defendant
READ: September 26, 2017
F.L. Myers J.
The Claim and Outcome
[1] The defendant was completely successful at trial. I dismissed the claim by the remaining plaintiff Ronald Goegan for wrongful dismissal. I ruled that the defendant had just cause to dismiss Mr. Goegan from his employment due to Mr. Goeagan’s breaches of his fiduciary duties and his duty of fidelity, among others.
[2] There is no dispute that Mr. Goegan should pay costs. There is no basis to depart from the normative approach in Ontario under which costs follow the event. The defendant seeks costs of the proceeding of about $750,000. Mr. Goegan argues that costs of $500,000 is appropriate.
[3] The scale of costs is also not in issue. While the defendant has some grounds to claim costs on a substantial indemnity basis, it does not advance that claim. Rather, it is content with the calculation of its claim of $750,000 on a partial indemnity basis.
[4] The fixing of costs is a discretionary decision under section 131 of the Courts of Justice Act. That discretion is generally to be exercised in accordance with the factors listed in Rule 57.01 of the Rules of Civil Procedure. These include the principle of indemnity for the successful party (57.01(1)(0.a)), the expectations of the unsuccessful party (57.01(1)(0.b)), the amount claimed and recovered (57.01(1)(a)), and the complexity of the issues (57.01(1)(c)). Overall, the court is required to consider what is “fair and reasonable” in fixing costs, and is to do so with a view to balancing compensation of the successful party with the goal of fostering access to justice: Boucher v Public Accountants Council (Ontario), 2004 CanLII 14579 (ON CA), (2004), 71 O.R. (3d) 291, at paras 26, 37.
[5] The trial was conducted electronically. All evidence-in-chief was presented by affidavits. Documents were presented on iPads and projected onto screens in the courtroom. Real time transcription services were provided. This all had the effect of greatly reducing the time wasted while the court, counsel, and witnesses fumbled through volumes to find a particular document. Preparation and judgment writing tasks were much simplified for me for which I am grateful to the parties and counsel. The electronic presentation made the trial process much more efficient, easier to follow, and more convenient. I commend counsel for adopting and utilizing the technology and I recommend it heartily.
[6] But. The fact that documents could be accessed faster and more readily may have also had an unintended side effect. It was so easy to move from document to document that it became simpler for counsel to examine on a topic leaving no document unconsidered. Instead of picking the main document and questioning on it, the ease of access and transport through a pile of documents seems to have created an incentive for overkill.
[7] The case was for wrongful dismissal. While cause cases always require proof, there was nothing new or unique about the case. The employer alleged theft of corporate opportunities and corporate property. The employee claimed that everything he did was done openly, approved by his superiors, and was ignored by a lax board of directors. The issues became clear very quickly on review of very few documents on each of the two main allegations. Like most cases, the outcome turned on an analysis of a small handful of documents and credibility. The fact that the trial took almost three weeks was, frankly, overkill and reflected a refusal by both sides to exercise the judgment required to focus the case on the main facts and the most cogent evidence.
[8] This events that comprised the case involved a public corporation and were the subject of unsuccessful criminal prosecution a decade ago. The initial events and the criminal prosecution attracted much publicity in its day. While the plaintiff sought sizeable damages in the statement of claim, at trial, the damages were treated as an afterthought with no effort made to prove the plaintiff’s entitlement to the vast bulk of the heads of damages claimed. That is not intended as a criticism. Pleadings contain broad claims for discovery purposes. It is common that not all claims pleaded make it to the trial, Rather, the point is that the case ultimately came down to assessing cause and the reasonable notice period. That is the standard fare of wrongful dismissal.
[9] The fact that a wrongful dismissal trial needed ten years, three weeks of trial, and two law firms for each party is troubling. That can hardly be said to be efficient, affordable, or proportional civil justice. There are reasons for the outcome to be sure. Mr. Greenspan was counsel at the criminal trial and had cross-examined some of the witnesses previously. It made good sense for Mr. Greenspan to conduct the cross-examinations of those witnesses at this trial. On the defendant’s side, there were two firms involved because originally there were two plaintiffs. Each firm defended the claims of one plaintiff. But, the case brought by Mr. Dunsmuir settled shortly before the trial. By then the two firms had divvied up trial duties so as to avoid overlap and make a two-plaintiff trial more efficient. Once Mr. Dunsmuir’s case settled, for the Goegan defence team to pick up all of the tasks already performed by the other firm would have been duplicating the same work.
[10] The bottom line is that the parties are generally masters of their litigation. The court can and will assist and manage processes to try to encourage efficiency, affordability, and proportionality. The court has a duty to preserve scarce resources as well. It cannot allow one case to utilize an unreasonable share of resources and impair the efficiency and affordability of other cases in the system. But here, the parties treated this as a major case despite the 20/20 hindsight that I can now bring to bear.
[11] One lesson learned here is that while technology can provide some excellent enhancements toward efficiency, nevertheless, it is not a substitute for human judgment as to the scope of the use of the technology. Just because one can cut through paper faster does not mean that one needs to fill the time saved with more paper of far less import for example. In addition, even where parties and counsel turn their minds to desirable efficiencies, sometimes the best laid plans of mice and men…Here both sides had two sets of counsel each for good, efficient reasons. But, at the end of the day, both incurred very substantial costs and seemed to be heavily over-represented at the trial. This applies to both sides.
[12] As to quantum, the defendants carried the burden of disclosure of documents far more so than the plaintiff. Even without criticizing Mr. Goegan’s obvious documentary omissions, it is expected that the employer will have the files to document the issues in the main. Document assembly and production for 20 year old transactions was a formidable and expensive task.
[13] Overall, the time taken at trial is just the most visible issue to the judge. The fact remains that the defendant was required to produce all relevant documents. Moreover, discovery is the time to explore the breadth of the issues so that I am not critical at all of the scope of the case being broader at an earlier stage. The fact that it was kept broad at trial perhaps added a few hours to the length of the trial which is a trifling issue from a costs perspective at the end of the day.
[14] Counsel have used billing rates that are within the costs grid for the purposes of calculation of their costs as claimed. These rates are very reasonable for some and, in my respectful view, unreasonably low for the senior counsel involved in this matter.
[15] Both sides were guilty of overkill. I suspect as well that since Mr. Goegan is the last man standing, he may be bearing the brunt of costs which may have been more readily incurred earlier on when Mr. Dunsmuir was claiming even more than Mr. Goegan claimed. Having said that, Mr. Goegan decided to gamble rather than settling and I have no doubt that he fully understood the financial risks. Mr. Goegan has lived this case more than anyone for the past decade. He knew the effort and costs being incurred on his side and readily saw the phalanx of top-notch talent brought to bear by the other side. While the costs claimed are a significant number, they actually are quite reasonable for a two-plus week trial. I shudder to think of the numbers had the defendant sought costs on a substantial indemnity basis calculated off counsels’ actual rates and hours. In all, a reduction of the fees claimed by $25,000 to account for extra juniors and some extra time at trial is more than fair. The plaintiff is therefore liable to the defendant and shall pay it costs on a partial immunity basis of $725,651.30 all-inclusive within 30 days.
F.L. Myers J.
Released: September 27, 2017
CITATION: Dunsmuir v. Royal Group, Inc., 2017 ONSC 5738
COURT FILE NO.: CV-17-11687-00CL
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
DOULGAS DUNSMUIR and RONALD J. GOEGAN
Plaintiffs
– and –
ROYAL GROUP, INC.
Defendant
REASONS FOR JUDGMENT FOR COSTS
F.L. Myers J.
Released: September 27, 2017