COURT FILE NO.: CV-11-168 DATE: 2019 02 20
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: CRAIG JOHNSTON, Plaintiff AND: THE CORPORATION OF THE MUNICIPALITY OF ARRAN-ELDERSLIE, Defendant
BEFORE: Conlan J.
COUNSEL: Brian Barrie, Counsel for the Plaintiff John Gilbert, Counsel for the Defendant
ENDORSEMENT ON COSTS
I. Introduction
[1] The Plaintiff, Craig Johnston (“Johnston”), was the Chief Building Official (“CBO”) for the Defendant, the Corporation of the Municipality of Arran-Elderslie (“Municipality”), headquartered in Chesley, Bruce County.
[2] On June 25, 2009, Johnston’s employment was terminated, effective immediately, without notice and without any pay in lieu of notice. There was a signed employment contract in place at the time which did not expire until June 2016, which contract contained a six-month notice clause in the event of termination.
[3] Johnston sued the Municipality. The issue at trial, which lasted 16 days in November and December 2018 in Owen Sound, was whether the Municipality had just cause to terminate Johnston’s employment.
[4] In Reasons for Judgment dated December 19, 2018, reported at 2018 ONSC 7616, Johnston was successful. This Court concluded that Johnston’s employment was wrongfully terminated. Set out below is paragraph 148 of the Reasons for Judgment.
[148] Having found that there was a conflict of interest, but no deceit or fraud or breach of Johnston’s alleged “duty of fidelity” owed to the Municipality, and having concluded that the Municipality is estopped from relying upon the conflict of interest to justify Johnston’s dismissal, and there being no other ground for termination advanced that is capable of amounting to just cause for dismissal, this Court holds that the termination of Johnston’s employment was wrongful.
[5] Johnston was awarded damages for breach of contract in the amount of $70,860.05, plus punitive damages in the amount of $200,000.00, plus aggravated damages in the sum of $100,000.00, plus interest.
[6] The parties have not been able to resolve the issue of costs, and thus, written submissions have been filed. I have reviewed those submissions as well as the attachments and case law that accompanied them.
II. The Positions of the Parties on Costs
[7] Johnston seeks costs on a substantial indemnity scale in the total all-inclusive amount of $259,301.63 ($247,862.12 being for fees).
[8] The Municipality, quite responsibly, does not dispute Johnston’s entitlement to costs but makes two submissions. First, on a full recovery basis, $60,000.00 plus tax would be reasonable in all of the circumstances of this case. Second, Johnston should receive less than full recovery and less than substantial recovery; he should receive his costs on a partial indemnity basis.
III. Decision
[9] In terms of the basic legal principles related to costs, they are well known. The objective is to make an award that is just, fair and reasonable. All of the circumstances of the case ought to be considered, as well as the factors outlined in Rule 57, particularly 57.01(1), of the Rules of Civil Procedure. The reasonable expectations of the losing side should be taken into account. Proportionality is key, both in relation to the result achieved and the time and effort expended.
[10] In my opinion, it is not reasonable for the Municipality to expect that Johnston’s total legal fees for a 10-day trial (assuming that the hearing lasted that long, which the Municipality submits ought to have been the case but which was not the case), plus all of the preparation for the hearing, would be around $50,000.00, as submitted by the Municipality.
[11] Further, there is no reason to punish Johnston for the length of the trial. I find no justification for concluding that Johnston and/or his counsel caused, unreasonably, the trial to take longer than it should have.
[12] In fact, the evidence establishes that before the trial even started, Johnston, much more so than the Municipality, tried to settle the case. On February 22, 2018, many months before the trial started, Johnston offered to settle the action for $109,795.55 plus costs. That offer was open for acceptance until mid-way through the trial.
[13] Clearly, Johnston did better after trial than what he would have received under the terms of that offer to settle.
[14] This Court is not aware of the Municipality having made any reasonable offer to settle the litigation before the trial started or during the trial, or any settlement offer at all.
[15] The Municipality’s second submission, that partial indemnity recovery is appropriate here, is also an argument that does not find favour with this Court.
[16] Mr. Gilbert, in his usual candid and professional manner, concedes in the Municipality’s written submissions on costs that there is much authority in the jurisprudence, including wrongful dismissal cases, to award substantial indemnity costs where punitive damages have been granted to the dismissed employee.
[17] Mr. Gilbert is also correct that there are decisions where substantial indemnity costs were refused on the ground that the same conduct that justified the award of punitive damages ought not to be resorted to in order to punish the employer again for the same thing by way of a higher scale of costs.
[18] That is not our situation, however, as substantial indemnity costs in Johnston’s favour are grounded, principally, on the settlement factor discussed above. It must be remembered that encouraging parties to settle disputes is one of the main objectives of modern costs awards in civil litigation.
[19] Thus, I have concluded that Johnston ought to receive his costs on a substantial indemnity basis, at least for the time period following the date of his February 2018 offer to settle.
[20] I see nothing unreasonable about the time spent or the hourly rates charged by Mr. Barrie and other personnel in his office. Similarly, the disbursements all appear to be regular.
[21] I am concerned, however, that $260,000.00, approximately, is disproportionate given the quantum of damages awarded to Johnston, especially considering that the non-exemplary damages totalled less than $71,000.00.
[22] Really, I think that $260,000.00, approximately, would be more in line with full recovery costs in favour of Johnston, and perhaps that is what was intended to be stated more clearly in the written costs submissions filed on behalf of Johnston.
[23] There is no reason to award to Johnston his costs on a 100% recovery scale.
[24] In the end, I exercise my discretion to reduce the quantum sought by Johnston to $160,000.00, all-inclusive. That is a little less than two-thirds of the figure suggested by Johnston’s counsel, but in my view it remains a fair, just and reasonable amount.
[25] This Court orders that the Municipality pay to Johnston costs in the total amount of $160,000.00.
Conlan J. Date: February 20, 2019