COURT FILE NO.: CV-18-598494

DATE: 20191108

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Wayne Groves

AND:

UTS Consultants Inc.

BEFORE: Nishikawa J.

COUNSEL: Kumail Karimjee, for the Plaintiff

Orie Niedzviecki, for the Defendant

HEARD: In writing

costs endorsement

Overview

[1] On September 27, 2019, I granted summary judgment to the Plaintiff, Wayne Groves, in his action for wrongful dismissal against the Defendant, UTS Consultants Inc.: Groves v. UTS Consultants Inc., 2019 ONSC 5605. The parties subsequently made submissions on costs.

[2] The Plaintiff seeks $60,000 in costs on a partial indemnity basis, including disbursements of approximately $3,212.36 and HST. The Plaintiff’s bill of costs on a partial indemnity basis total $63,445.88, including HST and disbursements.

[3] The Plaintiff served an offer to settle approximately one month before the hearing of the summary judgment motion, on February 7, 2019. The offer was for $350,000.00. Plaintiff’s counsel advises that the total amount of damages for reasonable notice, benefits and lost bonus potential to December 2018, minus amounts already paid, is $347,682.46. As the Plaintiff is entitled to an amount for lost bonus potential for 2019, there is an amount that remains to be calculated.

[4] The Plaintiff takes the position that the damages award, once the 2019 bonus is included, will exceed the Rule 49 offer. However, the Plaintiff is not seeking his substantial indemnity costs from the date of the offer, which total $68,074.36. The Plaintiff is also not seeking costs for further submissions made on an issue that arose at the hearing. The Plaintiff’s position is that he should be entitled to $60,000.00 in costs including disbursements and HST, given the Rule 49 offer and the factors applicable to a costs determination under Rule 57.01.

[5] The Defendant submits that a more appropriate amount of costs is $39,519.26, including HST and disbursements. The Defendant’s own costs outline shows costs of $21,228.51 on a partial indemnity basis, and $31,426.41 on a substantial indemnity basis. Both amounts include the Defendant’s disbursements, which were $2,301.01. The Defendant’s view is that the Plaintiff’s costs are unreasonable because the hourly rate and number of hours spent by Plaintiff’s counsel are excessive.

Analysis

[6] Given that the Plaintiff is not seeking substantial indemnity costs from the date of the offer, I need to not determine whether the damages award exceeded the Rule 49 offer.

[7] Pursuant to the Courts of Justice Act, s. 131(1), the Court has broad discretion when determining the issue of costs. The overall objective of fixing costs is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the circumstances, rather than an amount fixed by actual costs incurred by the successful litigant: Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 CanLII 14579 (ON CA), 71 O.R. (3d) 291 (C.A.).

[8] Rule 57.01(1) of the Rules of Civil Procedure sets out the factors to be considered by the court when determining the issue of costs.

(1) In exercising its discretion under section 131 of the Courts of Justice Act to award costs, the court may consider, in addition to the result in the proceeding and any offer to settle or to contribute made in writing,

(0.a) the principle of indemnity, including, where applicable, the experience of the lawyer for the party entitled to the costs as well as the rates charged and the hours spent by that lawyer;

(0.b) the amount of costs that an unsuccessful party could reasonably expect to pay in relation to the step in the proceeding for which costs are being fixed;

(a) the amount claimed and the amount recovered in the proceeding;

(b) the apportionment of liability;

(c) the complexity of the proceeding;

(d) the importance of the issues;

(e) the conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding;

(f) whether any step in the proceeding was,

(i) improper, vexatious or unnecessary, or

(ii) taken through negligence, mistake or excessive caution;

(g) a party’s denial of or refusal to admit anything that should have been admitted;

(h) whether it is appropriate to award any costs or more than one set of costs where a party,

(i) commenced separate proceedings for claims that should have been made in one proceeding, or

(ii) in defending a proceeding separated unnecessarily from another party in the same interest or defended by a different lawyer; and

(i) any other matter relevant to the question of costs.

[9] I have considered these factors, as well as the principle of proportionality in R. 1.01(1.1) of the Rules of Civil Procedure, while keeping in mind that the court should seek to balance the indemnity principle with the fundamental objective of access to justice. Aside for the claim for punitive damages, the Plaintiff was successful on all issues raised in his claim. The proceeding was important to the Plaintiff, given his role in founding the defendant company. The matter was of moderate complexity but required a thorough review and analysis of the applicable case law on a range of issues related to wrongful dismissal.

[10] The Defendant submits that it is not possible to determine whether the partial indemnity rate is reasonable because Mr. Karimjee has not included his actual hourly rate. Mr. Karimjee’s costs are calculated based on a partial indemnity rate of $350 per hour. He has provided a substantial indemnity rate of $400 per hour. Mr. Niedzviecki’s partial indemnity rate is $292.50 per hour. Both counsel were called to the Bar in 1999.

[11] Partial indemnity costs are calculated at 55-60 percent of a reasonable actual rate…[.]” Inter-Leasing Inc. v. Minister of Revenue, 2014 ONCA 683, at para. 5. Working backwards, this would give an hourly rate of approximately $580 per hour. However, the difference between Mr. Karimjee’s partial indemnity rate and substantial indemnity rate is not in line with r. 1.03, which states that substantial indemnity costs are to be calculated at 1.5 times a partial indemnity rate. This leads me to believe that partial indemnity rate of $350 is somewhat high.

[12] In addition, Mr. Karimjee performed all of the work on the file, aside from those tasks completed by a law clerk. The Defendant might not reasonably expect that all of the many hours spent on the file would be billed at the senior counsel rate. The hours spent also strike me as high in the circumstances.

[13] Based on the foregoing considerations, I fix total costs of the motion and action on a partial indemnity basis at $50,000.00, inclusive of disbursements and HST. This includes costs incurred in the preparation of the costs submissions.

Nishikawa J.

Date: November 8, 2019