Background Facts

[1] The applicant brought an application asking the court to determine if an employment termination clause was enforceable, and if not, what would constitute appropriate damages.

[2] I found the employment termination clause illegal and awarded the applicant common law notice damages: Lamontagne v. J.L. Richards & Associates Limited, 2021 ONSC 2133.

[3] On the topic of damages, the applicant argued that she was entitled to 15 months for pay in lieu of notice. The respondent argued that the applicant’s common law notice could not exceed six or seven months. I found that the appropriate period of reasonable notice was ten months and awarded the applicant damages in the amount of $40,273.07, plus small amounts for out-of-pocket expenses.

[4] The parties have been unable to agree on costs, and therefore, the issue of costs is left to be decided.

[5] The applicant seeks $74,524.59 for her costs:

a. $8,947.14, on a substantial indemnity basis, for the costs of the motion to amend;

b. $6,189.10, on a substantial indemnity basis, for the costs of the motion to compel; and

c. $59,388.35, on a substantial indemnity basis, for the costs for the application.

[6] The applicant argues that she was successful on the application and on each of the two motions outlined above. She also argues that one of her offers to settle should trigger the costs consequences of rule 49.10 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (“the Rules”). The applicant made an offer to settle for notice of 11 months and another offer for notice of 10 months. The court awarded 10 months; but in her offer, the applicant calculated her damages based on a three-year average and arrived at damages of $61,963, while I allowed $40,273.07. The applicant also argues that the respondent acted unreasonably, which she says should warrant costs payable on a substantial indemnity basis.

[7] The respondent argues that costs should be payable to the applicant on a partial indemnity basis in the amount of about $30,000. They say this is reasonable because one of their offers, at about $33,000, was closer to the result awarded; the applicant recovered less than 29% of what she claimed; proportionality supports such an award; and the applicant’s conduct in bringing a motion to amend at the last minute, refusing to agree on the amount of her monthly compensation, filing multiple factums, and raising multiple arguments that she later abandoned caused unnecessary delays. The respondent says that the applicant should not be awarded any costs for the above motions because these two motions resulted from the unreasonable conduct of the applicant. They say that the motion to amend was brought at the last minute forcing an adjournment, and that the motion to compel was required because the applicant inappropriately objected to questions at an ordered cross-examination and that the respondent would not have abandoned that motion had it not been forced by the court to choose between hearing that motion or adjourning the application.

Issue

[8] At issue is the amount of costs payable to the applicant.

Analysis

[9] The costs of and incidental to a proceeding or of a step in a proceeding are at the discretion of the court: s. 131 of the Courts of Justice Act. Rule 57 of the Rules provides for certain factors that the court may consider when determining costs.

[10] When determining costs, the overall objective is to fix an amount that is fair and reasonable for the unsuccessful party to pay, while also considering the other objectives of a costs award, including that of indemnity for the costs of litigation incurred by the successful litigant, that of encouraging settlements, and that of discouraging and sanctioning inappropriate behaviour by litigants.

[11] Rule 49.10 is not triggered for the applicant because the award of damages made by the court is less favourable than the terms of any of the applicant’s offers to settle. Rule 49.10 is also unavailable for the respondent because the applicant obtained a judgment more favourable than the terms of any of the offers made by the respondent.

[12] In the absence of some contractual or statutory disposition allowing for costs on a higher scale, costs on a substantial indemnity basis are otherwise awarded where there has been reprehensible, scandalous or outrageous conduct on the part of one of the parties. That is not the case here. The respondent contesting most issues, being difficult, filing voluminous materials, and abandoning a motion does not rise to that level.

[13] The applicant was the successful party on the application, on the motion to amend, and the motion to compel was abandoned by the respondent.

[14] The application was important to the parties and raised complicated issues. However, its fair and effective resolution did not require all the evidence and cases filed by the parties. Both parties filed unnecessary material, and both contributed, to varying degrees, to the high level of adversity.

[15] The motion to amend should have been brought earlier by the applicant. However, its timing should have made little difference because the amendments sought should have been consented to by the respondent. All amendments were allowed, and that outcome should have been apparent to the respondent considering that there was no non-compensable prejudice. Instead, the respondent forced the unnecessary hearing of a long motion to amend the application which also contributed to another adjournment of the application.

[16] Where a motion is abandoned, a responding party, on whom the notice of motion was served, is entitled to the costs of the motion unless the court orders otherwise: rule 37.09 (3). Some of the respondent’s arguments as to why the above presumption is inapplicable, assume that the applicant’s refusals would have been found by this Court to have been improper. I find such arguments without merit because the motion was not argued, and its outcome is unknown. Similarly, I find unconvincing the argument that the respondent abandoned that motion because the respondent did not wish to force another adjournment of the application. The timing was tight. Because of the tight timing, the respondent’s motion to compel was served less than two weeks before the scheduled date for the application. As a result, the probability that this motion could force another adjournment of the application should have been considered before the motion was served on the applicant. If the respondent did not require to proceed with its motion to compel answers if this required an adjournment of the application, I question why it brought the motion in the first place. A motion is either required or it is not. If it is not required, it should not be brought – bringing motions that are not really required is exactly what rule 37.09 (3) seeks to discourage.

[17] I therefore find the applicant entitled to her costs of this application and to her costs of the two motions, on a partial indemnity basis.

[18] The actual, partial, and substantial indemnity costs of the applicant for the motion to amend the application are, respectively, $9,941.27, $6,627.51, and $8,947.14. These amounts are reasonable considering how aggressively this issue was argued by the respondent. The applicant was entirely successful on that motion, and that motion should not have been opposed. I will allow the applicant, as a reasonable and fair compromise, $4,500 for her partial indemnity costs of bringing that motion because the applicant could have pled some of the amended relief at the outset or earlier than she did (which probably would have limited some of the costs), and in any event, she would have been required to prepare some of those motion materials in order to convince the respondent.

[19] The actual, partial, and substantial indemnity costs of the applicant to respond to the motion to compel are, respectively, $6,876.78, $4,584.52, and $6,189.10. This was not a complicated motion, and I find these amounts to be out of proportion. I will allow $2,500 as a fair and reasonable amount for the applicant’s partial indemnity costs of responding to that abandoned motion.

[20] The actual, partial, and substantial indemnity costs of the applicant for this application are, respectively, $65,987.06, $43,991.37, and $59,388.35. The applicant proceeded expeditiously by bringing this application, instead of an action. Although the costs incurred by the applicant initially appear somewhat out of proportion to the amounts recovered, that is not necessarily surprising considering the nature of this case and how vigorously this application was opposed.

[21] This was a complex wrongful dismissal case. In wrongful dismissal cases, notice damages are limited by the employment history. However, the complexity of the required litigation is not necessarily proportional to the length of the employment. This case is an apt example.

[22] As well, this case was strongly opposed by the respondent, which also limits the impact of their proportionality argument. Indeed, the applicant had to work hard in order to be successful.

[23] Furthermore, the respondent’s submissions that the applicant only received an award of $41,331.87, which is “less than 29%” of what was claimed at the outset is somewhat misleading. The applicant was awarded ten months pay in lieu of notice, totaling $91,696.40. The net amount awarded to the applicant is after subtracting the statutory amounts she received and the mitigation income that she earned (the latter amount was not known when the applicant brought this application).

[24] Both parties failed to make reasonable compromise and I cannot attribute the costs of some of the adjournments only on the applicant. These are extraordinary times, and if additional adjournments were required, the costs associated with these were within the reasonable expectations of the parties and are costs for which the successful party should nonetheless be indemnified.

[25] The rates and amounts sought by the applicant are reasonable and within the reasonable expectations of a reasonable unsuccessful party involved in such a complex and hard-fought application. The amounts incurred by the applicant are reasonable considering that the applicant had to demonstrate, and successfully demonstrated, that the termination clause was illegal and unenforceable.

[26] The respondent has not provided a bill of costs or other comments about the reasonableness of the applicant’s costs. Considering how vigorously the respondent opposed this matter, it seems likely that the respondent devoted as much time and money to the matter, and that the respondent had a reasonable expectation of costs in the range sought by the applicant.

[27] Consequently, considering all the circumstances of this matter and the arguments raised by both parties, I find that a reasonable and fair amount for the costs of this application is $40,000.

Conclusion

[28] The costs of this application and motions are therefore payable by the respondent to the applicant in the all-inclusive amount of $47,000.

Mr. Justice Pierre E. Roger

Released: April 27, 2021

COURT FILE NO.: CV-20-83037

DATE: 20210427

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

ANNICK LAMONTAGNE

Applicant

– and –

J. L. RICHARDS & ASSOCIATES LIMITED

Respondent

costs decision

Roger J.

Released: April 27, 2021

Lamontagne v. J.L. Richards & Associates Limited, 2021 ONSC 3083

Case Summary

Background Facts

Issue

Analysis

Conclusion

Judge

Counsel

Parties

Areas of Law

Fact Patterns

Financial Outcomes

Issues