COURT FILE NO.: CV-18-605527 DATE: 20210308 SUPERIOR COURT OF JUSTICE - ONTARIO
RE: FRANSIC BATTISTON, Plaintiff AND: MICROSOFT CANADA INC., Defendant
BEFORE: Mr. Justice M. Faieta
COUNSEL: Andrew Monkhouse, for the Plaintiff Thomas Gorsky, for the Defendant
HEARD: In Writing
Costs Endorsement
[1] The background facts are described in Battiston v Microsoft Canada Inc., 2020 ONSC 4286.
[2] The Plaintiff, Fransic Battiston, (“Battiston”) was employed by the defendant Microsoft Canada Inc. (“Microsoft”) for almost 23 years until his termination, without cause, on August 10, 2018. In addition to his base salary, every year Battiston received benefits, including merit increases, cash bonus and stock awards under Microsoft’s Rewards Policy. These bonus payments constituted about 30% of Battiston’s total compensation. The Policy provides that such rewards reflect an employee’s impact on team, business and customer results over the last year. Battiston was terminated shortly after Microsoft’s 2018 fiscal year, which ended June 30, 2018. He was advised that he would receive no merit increase and no cash bonus for the 2018 fiscal year. Microsoft also takes the position that following his termination, Battiston was no longer entitled to the vesting of any granted but unvested stock awards.
[3] At trial, the main issues addressed by the parties were: 1) the appropriate length of the notice period; 2) whether Battiston was entitled to cash bonus for his work during fiscal year 2018 as well as during the notice period; 3) whether Battiston was entitled to the vesting of his previously award stock bonuses during the notice period.
[4] Judgment was granted to Battiston on the following terms:
(1) Battiston was granted notice of termination of 23 3/4 months. (2) Battiston was awarded base salary during the notice period less $238,306.00 already paid and less any amounts received by way of his mitigation efforts which has been nil. (3) Battiston’s claim for a cash bonus and merit increase for Fiscal Year 2018 was dismissed. (4) Battiston was awarded an annual cash bonus of $12,100 during the notice period and an annual merit increase of 0.7% during the notice period. (5) Battiston was awarded damages for the granted stock awards that would have vested during the notice period had his employment not been terminated. Such damages are to be assessed as of the date of the breaches using the closing market price for the stock on those dates. (6) Battiston is awarded $2,000 per year in lieu of health and dental care benefits during the notice period. (7) Battiston is awarded up to $6,250 per year for his contributions to an RRSP during the notice period.
[5] The parties have agreed that the value of the award is $567,977.30. The defendant has already paid the sum of $238,306.00 and thus the amount owing remains $329,671.30 plus interest and costs.
[6] The plaintiff seeks costs of $162,504.90 based on his partial indemnity costs to April 16, 2020, being the date of the first offer to settle, and his substantial indemnity costs thereafter.
Analysis
[7] The principles related to the award of costs in a civil proceeding were summarized by the Ontario Court of Appeal in DBDC Spadina Ltd. v. Walton, 2018 ONCA 232, at para. 4, as follows:
Costs are in the discretion of the court. The factors relevant to the exercise of discretion are set out in Rule 57.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. They include the result and relative success of each party, the complexity of the proceeding, the importance of the issues and the conduct of any party that impacted the duration of the proceeding. The court must consider the purposes of costs, which include both the indemnification of successful litigants for costs of the litigation and the facilitation of access to justice: Boucher v. Public Accountants Council (Ontario) (2004), 71 O.R. (3d) 291 (C.A.), at paras. 35-37.
Who was the Successful Party?
[8] A successful party is presumed to be entitled to their costs.
[9] The defendant submits that costs awarded to the plaintiff should be reduced by 20% as it was successful on some of the issues – namely, the issue of the plaintiff’s bonus, merit increase and performance incentives issued in the final year of his employment as well as the valuation of the plaintiff’s bonus and merit increase during the notice period.
[10] In my view, it makes little sense to find that success was divided when the amount awarded by this court exceeded the offers to settle made by the plaintiff.
Are the Costs Claimed by the Plaintiff Reasonable?
[11] The defendant submits that a combined 277.9 hours spent for three lawyers with relatively similar years of call (2013, 2015 and 2017) in respect of this three day summary trial is duplicative and unreasonable.
[12] Given the issues at stake, I do not think that it fairly rests with the defendants to question whether the plaintiff spent more time than needed to advance his case. The views expressed by former Chief Justice Winkler in Risorto v. State Farm Mutual Automobile Insurance Co. (2003), 64 O.R. (3d) 135 (Ont. S.C.J.), para. 9, are applicable:
... courts have repeatedly stated that the role of the court on a costs disposition is not to second-guess successful counsel on the amount of time spent on the case or the allocation of counsel to the tasks at hand. (See Tri-S Investments Ltd. v. Vong, [1991] O.J. No. 2292 (Quicklaw) (Gen. Div.); Lawyers’ Professional Indemnity Co. v. Geto Investments Ltd., [2002] O.J. No. 921 (Quicklaw), 17 C.P.C. (5th) 334 (S.C.J.).) This was a hard-fought motion which, if the defendant were successful would have terminated the proceeding short of a trial. Its importance cannot be discounted after the fact.
[13] Similarly, although there is no obligation to do so, the defendant did not file its own Bill of Costs to illustrate what amount of costs it would have reasonably expected to have been incurred by the plaintiff: as necessary to incur to respond to this claim: Smith Estate v. Rotstein, 2011 ONCA 491 (Ont. C.A.), para. 50. Given its failure to deliver its own bill of costs, the Applicant’s challenge regarding the amount of costs claimed by the Respondent is “no more than an attack in the air”, as former Chief Justice Winkler stated in Risorto, at para. 10.
The Behaviour of a Party that Lengthened or Shortened the Proceeding
[14] The claim largely concerned the plaintiff’s claim to bonus, merit increase and stock options. These claims turned in part on his job performance. Given that the plaintiff disputed the defendant’s performance evaluations, the parties agreed that the plaintiff’s claim should be determined by a summary trial rather than a summary judgment motion. In my view, there is some merit to this submission, however there is nothing before me which suggests that the the defendant objected to these claims being adjudicated by summary judgment motion.
Should Substantial Indemnity Costs Be Awarded?
[15] The plaintiff made two Rule 49 offers.
[16] The first Rule 49 offer was made on April 16, 2019. It states:
The plaintiff offers to settle this proceeding with the defendant on the following terms:
- The defendant pay to the plaintiff the amount of $530,000 minus regular statutory deduction and minus amounts paid to date;
- The defendant shall pay to the plaintiff the costs, plus disbursements, for the action on a partial indemnity basis as agreed or as assessed by a judge of the Superior Court;
- The action shall be dismissed; and
- This offer is open to acceptance until five (5) minutes after the commencement of the hearing of the summary judgment motion in connection with this matter.
[17] The same Rule 49 offer was made once again on November 4, 2019 with the phrase “summary judgment motion” in paragraph 4 replaced with the phrase “summary trial”.
[18] The defendant submits that the Rule 49 offers to settle were “rendered improper” as a result of the plaintiff’s refusal to provide an estimate of its costs. On November 28, 2019, Ms. Lucifora advied Mr. Gorsky that their Rule 49 was still open for acceptance and offered to provide a quote for their legal fees. Mr. Gorsky requested that information. On the following day, Mr. Monkhouse responded that both parties exchange their current partial indemnity costs. Mr. Gorsky refused to provide such information. The plaintiff did not provide its costs to Mr. Gorsky.
[19] In Rooney (Litigation Guardian) v. Graham (2001), 53 O.R. (3d) 685 the Ontario Court of Appeal concluded that an offer to settle was a valid Rule 49 offer even though its terms included a provision for ongoing partial indemnity costs that introduced “some measure” of uncertainty. However, the court stated, at para. 51, that:
A party to whom an offer is made must be able to evaluate the offer at any time after it is made in order to decide whether to accept it. Thus, the party making the offer must be forthright and candid in disclosing the amount of solicitor- and-client costs incurred. A failure to cooperate may be dealt with by the trial judge's overall discretion on costs.
[20] I find that the plaintiff failed to be forthright when asked to disclose the amount of costs requested under the plaintiff’s Rule 49 offer. Such conduct does not promote settlement and thus is inconsistent with the purpose of a Rule 49 offer. In the circumstances, it would not be advancing the interests of justice to award substantial indemnity costs to the plaintiff in respect of either Rule 49 offer.
Conclusions
[21] I find that it is fair and reasonable for the defendant to pay partial indemnity costs of $120,000.00, inclusive of disbursements and taxes, to the plaintiff.
Mr. Justice M. Faieta Date: March 8, 2021