Court File and Parties

COURT FILE NO.: CV-20-633736-0000 DATE: 20210317 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Sarah Nahum AND: Honeycomb Hospitality Inc.

BEFORE: J.T. Akbarali J.

COUNSEL: Stephen LeMesurier, for the Plaintiff Brett Moldaver, for the Defendant

HEARD: In writing

Endorsement

[1] On February 26, 2021, I released reasons in a summary judgment motion in which I found that the plaintiff was entitled to five months’ notice on dismissal from her employment with the defendant. Taking into account the salary and benefits she received during the five-month period, I calculated her damages at $34,194.87 plus pre-judgment and post-judgment interest.

[2] These reasons deal with costs of the plaintiff’s action.

[3] The plaintiff claims partial indemnity costs of $47,519.40 inclusive of HST and disbursements, arguing that she is the successful party. The defendant claims costs on a substantial indemnity scale of $12,500, or alternatively, costs of $9,000 on a partial indemnity scale, related to claims the plaintiff made for punitive, aggravated and moral damages, and for violations of the Human Rights Code, which were abandoned at civil practice court when the trial date was set.

[4] The three main purposes of modern costs rules are to indemnify successful litigants for the costs of litigation, to encourage settlement, and to discourage and sanction inappropriate behaviour by litigants: Fong v. Chan (1999), 46 O.R. (3d) 330, at para. 22.

[5] Subject to the provisions of an Act or the rules of court, costs are in the discretion of the court, pursuant to s. 131 of the Courts of Justice Act, R.S.O. 1990, c. C.43. The court exercises its discretion taking into account the factors enumerated in r. 57.01 of the Rules of Civil Procedure, including the principle of indemnity, the reasonable expectations of the unsuccessful party, and the complexity and importance of the issues. Overall, costs must be fair and reasonable: Boucher v. Public Accountants’ Council for the Province of Ontario, 71 O.R. (3d) 291, at paras. 4 and 38. A costs award should reflect what the court views as a fair and reasonable contribution by the unsuccessful party to the successful party rather than any exact measure of the actual costs to the successful litigant: Zesta Engineering Ltd. v. Cloutier, 2002 CarswellOnt 4020, 118 A.C.W.S. (3d) 341 (C.A.), at para. 4.

[6] The plaintiff argues that proportionality should not override other considerations regarding reasonable costs. Where a plaintiff’s recovery is “relatively lower,” it is more likely that the costs incurred will be high relative to the damages awarded, because there is a certain amount of work required whenever a matter proceeds to a hearing. The mere fact that costs exceed damages does not render such an award inappropriate: A & A Steelseal Waterproofing Inc. v. Kalovski, 2010 ONSC 2652, at para. 21.

[7] The defendant argues that the plaintiff’s recovery was within the jurisdiction of the Small Claims Court. It relies on T&C Holdings Limited v. Booster Juice Inc., 2020 ONSC 4887, at para. 9, where Stinson J. awarded no costs where the recovery was within Small Claims Court limits. He distinguished cases in which judgments within Small Claims Court limits have been granted, but Superior Court costs awarded despite r. 57.05(1). He found that, in cases where Superior Court costs were granted, complex issues of fact and law that required the processes of the Superior Court were important for ascertainment of the underlying evidence. The defendant argues no such processes were required here.

[8] Rule 57.05(1) provides that, where a plaintiff recovers an amount within the monetary jurisdiction of the Small Claims Court, the court may order that the plaintiff shall not recover any costs. Rule 29 of the Small Claims Court Rules limits the award of costs to 15% of the amount claimed.

[9] The plaintiff argues that it was not unreasonable for her to commence her claim in the Superior Court of Justice because there were grounds for her to advance her human rights claim.

[10] The defendant also relies on Liddle v. Corp. Municipality of Wawa, 2016 ONSC 4525, to argue that, where claims have been abandoned, it can be inferred that the allegations of impropriety are unfounded, and unfounded allegations of impropriety properly attract costs on a substantial indemnity scale. In Liddle, a self-represented applicant discontinued an application in its entirety the day before the application was returnable. The application had sought an order requiring the respondent to remove a law firm as counsel for respondent, alleging acts of impropriety on the part of members of the law firm, and against the respondent’s CAO/Clerk-Treasurer.

[11] The plaintiff argues that Liddle is distinguishable, and in any event, a party who narrows the issues before trial should not be punished by costs unless the defendant has been put to unnecessary expense in responding to those claims: Miller v. Her Majesty the Queen in Right of Canada, 2015 ONSC 2554, at para. 31. She argues there is no evidence that the defendant was put to unnecessary expense in answering the claims she abandoned.

[12] The plaintiff also relies on Sondhi v. Deloitte Management Services LP, 2018 ONSC 1504, at paras. 16-17, where Perell J., on a costs decision arising out of a certification motion, rejected the argument that the plaintiff’s claim for costs should be reduced to reflect the fact that the court disqualified the first proposed representative plaintiff, and ultimately certified a claim that was narrower than the one advanced. Justice Perell found that, based on the normal costs rules and normative principles, the successful party can expect to be indemnified for its reasonable costs that in the particular circumstances of the action reflect what the unsuccessful party could reasonably have expected to pay.

[13] The plaintiff is the successful party in the litigation.

[14] I find that the plaintiff is entitled to some measure of costs, notwithstanding the fact that her recovery was within the limits of the Small Claims Court jurisdiction. Here, from the outset, the parties raised multiple claims and defences, some of which were abandoned, but that made the decision to commence the action in Superior Court an appropriate one at that stage. However, the fact that the plaintiff’s recovery is within the Small Claims Court limits is relevant to proportionality and the quantum of costs.

[15] In my view, it makes no sense to make a cross-award for costs relating to the abandoned claims. They were never adjudicated. Claims may be abandoned for many reasons that have nothing to do with the likely result of their adjudication on the merits. I am not in a position to determine whether those claims lacked merit. Moreover, the factual narrative around the plaintiff’s hiring, work history with the defendant, and subsequent termination had to be explored in any event to determine the issues that I did adjudicate.

[16] It is more appropriate to consider costs remembering the principles I set out above, including proportionality, and the requirement that costs be fair and reasonable in all the circumstances.

[17] In determining the appropriate quantum of costs in this case, I note the following:

a. The plaintiff is the successful party and is entitled to some measure of indemnity;

b. Neither party made an offer to settle that was beaten;

c. The defendant filed a bill of costs in support of its claim to costs, but it had earlier delivered a more comprehensive bill of costs to the plaintiff, which she filed in her submissions. I presume the more comprehensive bill of costs reflects all the defendant’s costs, not just those related to the abandoned claims. Based on the comprehensive bill of costs, the defendant’s partial indemnity costs are $23,741.15 all inclusive, significantly less than the costs the plaintiff seeks.

d. The plaintiff claimed eight months’ notice at trial, and was awarded five months’ notice. Her recovery was modest, and within the Small Claims Court limits. The defendant’s position was that two months’ notice was generous;

e. The issues that eventually proceeded were factually straightforward, except for one issue of moderate complexity – whether, and if so how, to account for the plaintiff’s pregnancy at the time of her dismissal;

f. Neither party behaved unreasonably in the litigation. I am not prepared to conclude that the plaintiff’s abandonment of claims is an indication that she brought those claims unreasonably. Abandoning claims can be a reasonable step to take, especially in a case such as this one, where the plaintiff is relatively young, and had not long been employed with the defendant at the time of her dismissal;

g. The defendant, too, abandoned its defence that relied on the employment agreement the parties signed. The defendant argues it acted reasonably, because it abandoned its defence once jurisprudence was released from the Court of Appeal that made it clear that the contract violated the Employment Standards Act. The plaintiff argues that the contract contained many other violations of the Employment Standards Act. I am not prepared to conclude, without full argument on the issue, that the defendant’s position was untenable prior to the recent Court of Appeal jurisprudence. As with a plaintiff’s decision to abandon a claim, a defendant can reasonably re-evaluate its position and decide to abandon a defence.

h. Similarly, the fact that neither party made an offer in the range of damages that were actually awarded does not indicate that the parties did not, in good faith, try to resolve the dispute. Each party had a view about the impact, if any, of the plaintiff’s pregnancy on the notice period, and a trial was required to resolve the question.

[18] In these circumstances, I conclude that costs of $22,000, all inclusive, are fair and reasonable, having regard to the principles of indemnity, proportionality, and the reasonable expectations of the defendant. The defendant shall pay $22,000 in costs, all inclusive, to the plaintiff within thirty days.

J.T. Akbarali J. Date: March 17, 2021