2022 ONSC 4097

COURT FILE NO.: CV-19-133

DATE: 20220712

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Shelley Nicholas, Plaintiff

AND:

Dr. Edyta Witulska Dentistry Professional Corporation, Defendant

BEFORE: Justice D.A. Broad

COUNSEL: Derek Sinko, for the Plaintiff

Michael R. White, for the Defendant

costs endorsement

[1] By Reasons for Decision released May 18, 2022 I granted the plaintiff’s motion for summary judgment seeking dismissal of the defendant’s counterclaim and the defendant’s motion for summary judgment seeking dismissal of the plaintiff’s action. This disposition brought the entire proceeding to an end, subject to the issue of costs.

[2] In my Reasons I observed that, without having the benefit of counsel’s submissions, it appeared that there should be no order as to the costs of the proceeding but permitted either party seeking an award of costs to deliver written submissions, to be followed by the opposing party’s written responding submissions.

[3] The defendant delivered written submissions seeking an award of substantial indemnity costs from the date of its two Offers to Settle dated March 26, 2021 in the sum of $54,421.04 in respect of fees, HST thereon in the sum of $7,074.73 and disbursements in the sum of $4,044.84 inclusive of HST on taxable disbursement, for a total of $65,540.61.

[4] The plaintiff, in her responding submissions, disputed the defendant’s claim for costs, arguing that, if any costs award is made, she ought to be awarded costs payable by the defendant in the sum of $13,569.85 plus HST thereon, being her counsel’s partial indemnity fees referable to the counterclaim set-off by the much lower partial indemnity fees referable to the main action.

[5] The plaintiff’s action, commenced under the Simplified Procedure in rule 76 of the Rules of Civil Procedure, sought damages for constructive dismissal from her employment as a dental hygienist with the defendant as well as human rights damages totalling the sum of $100,000 while the defendant’s counterclaim sought damages against the plaintiff in the amount of $200,000 for breach of a non-solicitation and a non-competition covenant in the written contract of employment between the parties. I found that there were no issues requiring a trial that the plaintiff was liable under the two restrictive covenants and no issues requiring a trial that the plaintiff had been constructively dismissed.

[6] The following summarizes the offers to settle which were exchanged by the parties in the course of the proceeding:

Date

Offeror

Terms

August 28,2019

Plaintiff

Payment by the defendant of $35,000 less statutory deductions. Defendant to pay partial indemnity costs if the offer is accepted after 30 days from the date of the offer.

December 4, 2019

Defendant

Dismissal of the plaintiff’s action and the plaintiff would be required to undertake not to perform hygiene services within 3 kilometres of the defendant’s location in Brantford for the balance of the two-year non-competition period, Plaintiff to pay the defendant’s costs incurred following December 11, 2019.

March 24, 2021

Defendant

Plaintiff’s motion for partial summary judgment and the defendant’s counterclaim dismissed without costs if the offer is accepted prior to April 7, 2021. Open for acceptance until one minute after commencement of motion April 7, 2021

March 24, 2021

Defendant

Payment by the defendant to the plaintiff of two (2) weeks remuneration, subject to statutory deductions. Payment by plaintiff of defendant’s partial indemnity costs incurred after April 15, 2021.

December 10, 2021

Defendant

Payment by the defendant to the plaintiff of $20,000 inclusive of claim, interest and costs, subject to statutory deductions. Open for acceptance until December 16, 2021.

[7] The defendant relies upon its second Offer to Settle dated March 24, 2021 (providing for payment to the plaintiff of two weeks’ remuneration, subject to statutory deductions) making reference to rule 49.13 of the Rules of Civil Procedure which reads as follows:

49.13 Despite rules 49.03, 49.10 and 49.11, the court, in exercising its discretion with respect to costs, may take into account any offer to settle made in writing, the date the offer was made and the terms of the offer.

[8] It is not evident from the defendant’s submissions on costs that it places any reliance on rule 49.10.

[9] It is not disputed that rule 49.13 confers on the court a discretion to take any offer to settle made in writing into account in exercising its discretion under s. 131 of the Courts of Justice Act R.S.O. 1990, c. C-43 and rule 57.01. However, I am not persuaded that the defendant’s second offer to settle dated March 24 2021, providing for payment to the plaintiff of two weeks’ remuneration, should lead the court to exercise its discretion to award costs to the defendant in the circumstances of this case.

[10] It is noted that the offer to settle under consideration made no provision for disposition of the counterclaim. On its face, if the offer were accepted by the plaintiff, she would receive two weeks remuneration, less statutory deductions, and would be left to defend the defendant’s counterclaim for enforcement of the non-solicitation and non-competition covenants in the written employment contract.

[11] Even if the dismissal of the counterclaim might be implied into the offer by the preamble “the Defendant (Plaintiff to the Counterclaim) … offers to settle this proceeding on the following terms” I am still not persuaded that the offer should be taken into account in the exercise of the court’s discretion on costs as it did not contain the requisite element of compromise. Lederer, J. put it this way in the case of Living Water (Pressure Wash Services Ltd. v. Dyballa, 2011 ONSC 6741 (S.C.J.) at para 8:

The costs consequences of an offer made pursuant to Rule 49 of the Rules of Civil Procedure are meant to encourage settlement. This was not an offer to settle. It was an invitation to capitulate.

(see also Haufler (Litigation Guardian of) v Hotel Riu Palace San Lucas, 2014 ONSC 2686 at paras. 19-20 per Michael G. Quigley, J.)

[12] The defendant’s offer was served after affidavits of documents had been exchanged, examinations for discovery completed and the plaintiff had served her motion for partial summary judgment. The offer made no provision for the payment of any part of the plaintiff’s costs in addition to two weeks’ remuneration. The plaintiff submitted that the offer was for less than the disbursements that she had already incurred to that date. Regardless of whether this assertion has been supported, I can take judicial notice that by the time the offer was served, the plaintiff had incurred substantial legal costs which outweighed the amount offered. In my view the offer to settle upon which the defendant relies was an invitation to the plaintiff to capitulate. It would be manifestly unfair to saddle the plaintiff with the amount of costs sought by the defendant as a consequence of failing to accept the defendant’s unreasonable offer to settle.

[13] I am likewise not persuaded by the plaintiff’s submission that costs should be awarded to her on the basis that she expended much more time defending the counterclaim than prosecuting her action. No authority for this proposition was cited by the plaintiff.

Disposition

[14] The fair and appropriate disposition is that each party should bear their own costs of the litigation.

D.A. Broad, J.

Date: July 12, 2022