Court File and Parties
COURT FILE NO.: CV-17-75-00 DATE: 20181210 SUPERIOR COURT OF JUSTICE – ONTARIO
RE: 772694 ONTARIO LIMITED o/a TFP STAIRS AND RAILINGS/OAKWOOD CLOSETS, Plaintiff AND: KEVIN GURNSEY, CLIFFORD PERRY and 2543727 ONTARIO LTD. o/a PREMIER STAIRS AND RAILINGS, Defendants
BEFORE: Mr. Justice Graeme Mew
COUNSEL: Kurt R. Pearson and Kalen Ingram, for the Plaintiff Sean J. O’Donnell, for the Defendant, Clifford Perry and 2543727 Ontario Ltd. o/a Premier Stairs and Railings Carol F. Q. Mackillop, for the Defendant, Kevin Gurnsey
HEARD: in writing
MEW J.
Costs Endorsement
[1] I heard two motions on 4 September 2018.
[2] The plaintiffs brought a motion to strike certain portions of the statement of defence and counterclaim delivered by the defendants, Clifford Perry and 2543727 Ontario Ltd. o/a Premier Stairs and Railings on the basis that the impugned portions were untenable in law, irrelevant to the causes of action pleaded or offensive, scandalous, vexatious and false. A decision on that motion was released on 20 September 2018 and reported at 772694 Ontario Limited v. Gurnsey, 2018 ONSC 5558.
[3] The other motion was brought by Mr. Perry and the numbered company seeking, among other things, a declaration that the plaintiff was in contempt of court. For oral reasons which I gave immediately following the hearing of that motion, I dismissed the motion.
[4] The parties have been unable to agree on the costs that should flow from these motions. I have, accordingly, now received their written submissions.
[5] The defendant, Kevin Gurnsey, was not a party to either of the motions. Nevertheless, the plaintiff seeks costs from all of the defendants in respect of the contempt motion because an affidavit was taken from Mr. Gurnsey in support of that motion.
[6] The plaintiff’s claim against the defendants is essentially contractual in nature. Mr. Perry had worked for the plaintiff, initially as a field consultant and then, for a little under two years, as general manager. After leaving the plaintiff, Mr. Perry started his own business in direct competition with the plaintiff. The plaintiff alleges that by doing so, Mr. Perry breached non-competition and non-solicitation clauses in his employment contract. The plaintiff abandoned a motion for an interlocutory injunction shortly before it was scheduled to be heard. The parties could not agree on the costs of that motion. They were subsequently fixed in a total amount, payable by the plaintiffs, of $36,000.
[7] Mr. Perry has filed a counterclaim. He seeks damages for: a. Breach of his contract of employment; b. Alleged violations of his human rights; c. Breach of a duty of good faith and fair dealings in regard to the manner of his termination; and d. Defamation arising from some internet postings on 4 April 2017.
[8] The internet posting was also the basis for the contempt motion.
[9] On 23 February 2017, Mr. Justice Tausendfreund made an order, on the consent of all parties, providing, among other things, a mutual disparagement clause requiring the parties to refrain from directly or indirectly, either orally or in writing, from making any comments of a negative or disparaging nature whatsoever about each other or any of their current or former employees, directors or officers.
[10] That order was breached when, on 4 April 2017, Brad Cole, an employee of the plaintiff and the son of one of its owners, posted the following on the internet: Me and my wife recently got stairs from premier stairs and railings. We were in straight shock at how rude both the staff and salesman we talked to were to us. Very bad customer support, the quality of the stairs were not good either. Don’t waste your time with his company.
[11] The plaintiff’s solicitors made Premier’s solicitors aware of this posting and it was removed almost immediately thereafter. When, a few months later, the plaintiff abandoned its injunction, the defendants sought substantial indemnity costs. The posting of Brad Cole’s message was one of the factors cited in support of their argument that costs should be on that basis.
[12] Although the costs awarded were not expressly awarded on a substantial indemnity basis, they were, by any yardstick, substantial.
[13] The contempt motion was brought after the plaintiff had moved to strike out portions of the counterclaim. The plaintiff alleges that the contempt motion was a retaliatory measure. Certainly, the timing of the contempt motion could give rise to that conclusion. There was not a whisper of any such motion being brought when, at a case conference in July 2017, there was a discussion of the plaintiff’s motion and the establishment of a timetable relating to the delivery of affidavits, cross examinations and the hearing of the motion. However, the defendants, Perry and Premier refute that, saying, among other things, that the timing of the delivery of their contempt motion was merely a reflection of the availabilities of their lawyer who was, at the time, facing some personal challenges which took him away from his work.
[14] I am prepared to accept the representation that the contempt motion was not retaliatory. It had, however, a very slim prospect of success. The party responsible for the breach was one of the plaintiff’s employees. Mr. Perry and Premier would have to have established the culpability of the plaintiff on the reasonable doubt standard. The evidence in that regard did not come close to meeting that standard of proof.
[15] Furthermore, the utility of such a motion, even if it had been successful, would have been marginal from the point of view of providing Mr. Perry and his company with relief. As was acknowledged when the motion was argued, Mr. Perry and his company wanted the court to impose a fine, payment of which would have inured to the benefit of the Province of Ontario. Additionally, a costs award which took into account Brad Cole’s internet posting had already been made. And there remains a counterclaim for defamation which, if successful, can remedy any reputational injury which is established with an award of damages.
[16] The portions of the statement of defence and counterclaim attacked by the plaintiff flow from claims of “significant stress and anxiety” and allege sexual harassment of Clifford Perry by Sharon Cole, the human resources manager of the plaintiff and the wife of one its owners, contrary to the Human Rights Act.
[17] The tawdry particulars of those claims are set out in paragraphs 15 and 16 of my reasons for decision on the motion to strike. I will not further dignify those allegations by repeating them again in these reasons. Suffice it to say that I concluded that, looking at the allegations in context and as a whole, my very firm impression was that the allegations were made to shock and to embarrass the plaintiff. I was not prepared to accept that the anxiety and stress claim was pleaded in good faith. I struck the offending paragraphs out without leave to amend.
[18] With respect to the sexual harassment claim, I concluded that the plaintiff could not, in law, be vicariously liable for the alleged harassment of Mr. Perry by Ms. Cole. The paragraphs advancing that part of the counterclaim were therefore also struck out.
[19] Pleadings are public documents. They enjoy the protection of absolute privilege (as do other statements made in the course and for the purpose of judicial proceedings), which confers an immunity against a claim of defamation: Fratesi v. Sims, [1996] O.J. No. 2524 (Ont. Ct. Gen. Div.).
[20] In some jurisdictions, parties are required to include in any pleading a statement of truth confirming that the facts stated in the pleading are true. See, for example, part 22 of the Civil Procedure Rules 1998 (England & Wales). While there is no such requirement in Ontario, it is an abuse of process to shield what might otherwise be actionable slurs by putting them in a pleading without a bona fide reason for doing so.
[21] Given my finding that Mr. Perry’s claim for sexual harassment against the plaintiff cannot be sustained in law, as well as the tone and content of the particulars pleaded, I am left in very little doubt about what is really going on here. The primary, if not sole, objective, as I have already said, was to inflict the maximum embarrassment possible on the plaintiff and the plaintiff’s principals.
[22] I agree with this submission, made by the plaintiff, that:
… the impugned paragraphs in the statement of defence and counterclaim contained extremely sensitive and personal allegations that were, for obvious reasons, significant to the plaintiff and associated family members. … [T]he impugned pleadings were intended to humiliate certain individuals associated with the plaintiff …
[23] The plaintiff seeks substantial indemnity costs of the contempt motion in the amount of $10,613.11 (inclusive of disbursements and H.S.T.). The partially indemnity calculation undertaken by the plaintiff for that motion amounts to $6,895.29 (inclusive of disbursements and H.S.T., but exclusive of the fee for counsel’s attendance on the motion which, if set at two hours at a partial indemnity rate of $231 per hour would be an additional $562 plus H.S.T.).
[24] Had Perry and Premier prevailed on the contempt motion, they would have sought costs, on a substantial indemnity basis, totaling $9,373.42 (inclusive of disbursements and H.S.T.). However, as the payor of costs, Perry and Premier submit that the parties should each bear their own costs of the motion. Alternatively, and in the worst-case scenario (from the perspective of Perry and Premier Stairs), they say that costs should be awarded on a partial indemnity basis.
[25] On the pleadings motion, the substantial indemnity costs claimed by the plaintiff are $15,536.38, inclusive of H.S.T. and disbursements. The partial indemnity claim is $9,927.29 (inclusive of H.S.T. and disbursements, but excluding a counsel fee for attendance on the motion).
[26] With respect to the motion to strike, had the defendants successfully defended that motion, they would have sought costs, again on a substantial indemnity basis, of $11,314.41.
[27] While Perry and Premier concede that the plaintiff should receive an award of costs on this motion, they submit that it should be on a partial indemnity basis. They say that the circumstances of this case are not such to make it one of the rare and exceptional cases where substantial indemnity costs are appropriate to mark the court’s disapproval of the conduct of the parties in the litigation.
[28] Interestingly, on behalf of Perry and Premier, it is submitted that “substantial indemnity costs are generally awarded only where there has been reprehensible, scandalous or outrageous conduct on the part of one of the parties and the fact that a proceeding has little merit is no basis for an award of such costs”.
[29] I agree with that submission. And in my view, as will be apparent from the comments that I have made about what I regard as the scandalous nature of the impugned paragraphs of the statement of defence and counterclaim and the redundancy of the contempt motion, the circumstances of this case do, in my view, make it one of those “rare and exceptional” cases.
[30] No issue is taken with the rates used in arriving at the amounts demanded. The reasonable expectations of the defendants Perry and Premier are reflected by the costs which they would have demanded if successful and correspond with the amounts claimed by the plaintiff with sufficient proximity that I do not consider appropriate to make any adjustment to the amounts awarded to the plaintiff to reflect reasonable expectations.
[31] For the foregoing reasons, I order that the defendants Clifford Perry and 2543727 Ontario Ltd. o/a Premier Stairs and Railings, shall pay to the plaintiff costs, on a substantial indemnity basis, fixed as follows: a. Contempt motion, $10,613.11 (inclusive of H.S.T. and disbursements); and b. Pleadings motion, $15,356.38 (inclusive of H.S.T. and disbursements);
[32] I see no basis for making a costs award against Mr. Gurnsey. Although he provided an affidavit to Mr. Perry and Premier Stairs in support of the contempt motion, that alone, in my view, justify the making of an award of costs against him.