Nature of the Action

[1] The plaintiff commenced an action seeking approximately $2.3 million in damages for various claims stemming from the abusive treatment he endured during and at the end of his employment with the defendant Universal Structural Restorations Ltd. (“USRL”).

[2] On December 9, 2022, I released Reasons for Decision following a three-week trial of this matter. As set out in those reasons, I granted judgment in favour of the plaintiff, as follows:

a. General damages of $100,000 jointly and severally between the defendants for the tort of battery;

b. Punitive damages of $25,000 for the tort of battery against Mr. De-Almeida alone;

c. General damages of $10,000 jointly and severally between the defendants for the tort of assault;

d. Damages of $50,000 against USRL for violations of the Human Rights Code;

e. Damages of $4,364.70 which is equal to four months’ wages, less applicable mitigation for wrongful dismissal;

f. Aggravated or moral damages of $75,000 and punitive damages of $25,000 for wrongful dismissal; and,

g. Unpaid wages of $5,794.

[3] In those reasons, I also dismissed the following claims by Mr. Osmani:

a. The tort of intentional infliction of mental suffering;

b. The tort of human trafficking;

c. Inconvenience damages for the late delivery of the Record of Employment (“ROE”); and,

d. The claim for unpaid vacation pay during the period of employment.

[4] The parties have since filed written submissions on costs which I have considered. I now provide my decision on costs and the reasons therefore.

Legal Principles on Costs

[5] Section 131 of the Courts of Justice Act confers a broad discretion to award costs. Pursuant to Rule 57.01(2) of the Rules of Civil Procedure, a presumption exists that costs should be awarded to the successful party. Rule 57.01(1) sets out factors the court may take into consideration when the court exercises its discretion to award costs. It states:

57.01 (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;

(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;

(h.1) whether a party unreasonably objected to proceeding by telephone conference or video conference under rule 1.08; and

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

[6] In Serra v. Serra, 2009 ONCA 395, the Court of Appeal confirmed that the modern costs rules are designed to encourage and foster three fundamental purposes; namely, to partially indemnify successful litigants for the costs of litigation, to encourage settlement and to discourage and sanction inappropriate behaviour by litigants, bearing in mind that the award should reflect what the court views as a fair and reasonable amount that should be paid by the unsuccessful party, see also British Columbia (Minister of Forests) v. Okanagan Indian Band, 2003 SCC 71 at paras. 25-26.

[7] Further, in Boucher et al. v. Public Accountants Council for the Province of Ontario et al., 2004 CanLII 14579 (ON CA), 71 O.R. (3d) 291, at para. 26, the Court of Appeal explained:

The express language of rule 57.01(3) makes it clear that the fixing of costs is not simply a mechanical exercise. In particular, the rule makes clear that the fixing of costs does not begin and end with a calculation of hours times rates. The introduction of a costs grid was not meant to produce that result, but rather to signal that this is one factor in the assessment process, together with the other factors in rule 57.01. Overall, as this court has said, the objective is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular proceeding, rather than an amount fixed by the actual costs incurred by the successful litigant.

[8] Ultimately, the fixing of costs is an exercise to be guided by the application of reasonableness and principled proportionality having regard to the specific circumstances of the case, see Aacurate v. Tarasco, 2015 ONSC 5980, at paras. 13-17.

[9] In considering the scale of costs, I note that the usual position is that costs are payable on a partial indemnity basis unless circumstances support a higher scale of costs. In this regard, I am guided by the summary of applicable principles set out by Glustein J. in Hordo v. Zweig, 2021 ONSC 2244 at para. 19, wherein he states:

(i) Substantial indemnity costs should be ordered “only where there has been reprehensible, scandalous or outrageous conduct on the part of one of the parties”, “either in the circumstances giving rise to the cause of action, or in the proceedings, which makes such costs desirable as a form of chastisement”: Davies v. Clarington (Municipality), 2009 ONCA 722, 100 O.R. (3d) 66, at paras. 29-30, quoting Young v. Young, 1993 CanLII 34 (SCC), [1993] 4 S.C.R. 3, at p. 134 and Mortimer v. Cameron (1994), 1994 CanLII 10998 (ON CA), 17 O.R. (3d) 1 (C.A.), at p. 23;

(ii) I adopt the conclusion of the Master, at para. 8 of his costs reasons, that “[s]ubstantial indemnity costs may be appropriate in situations where a party alleges but fails to prove allegations of fraud, criminal conduct, dishonesty or other reprehensible conduct”: see also Lyons v. Todd, 2019 ONSC 2269, at para. 30; Investment Administration Solutions Inc. v. Pro-Financial Asset Management Inc., 2018 ONSC 2589, at para. 14;

(iii) Substantial indemnity costs have been ordered where (a) one party to the litigation has behaved in an abusive manner, brought proceedings wholly devoid of merit, and unnecessarily run up the costs of the litigation; (b) such a costs award is needed to sanction a party’s vexatious, contumelious or oppressive conduct of the whole litigation or a step in it; (c) a claim has been dismissed as an abuse of process, in particular where a defendant has been forced to respond to a plaintiff’s attempt to relitigate claims; (d) a plaintiff has made unfounded allegations of improper conduct that were seriously prejudicial to the character and reputation of the defendants; and (e) unsubstantiated allegations of dishonesty, illegality and conspiracy are advanced without merit: Best v. Lancaster, 2015 ONSC 6269, at para. 142;

(iv) “[M]alicious counter-productive conduct” or the “harassment of another party by the pursuit of fruitless litigation” may merit an award of costs on an elevated scale: Davies, at para. 45; and

(v) Striking at the integrity of a professional recklessly is a serious matter which can lead to the court ordering costs on a substantial indemnity scale: Mele v. Thorne Riddell (1997), 1997 CanLII 12124 (ON SC), 32 O.R. (3d) 674 (Gen. Div.).

[10] While as a general rule of thumb partial indemnity costs will often be fixed or assessed in an amount that is roughly 60%-65% of full indemnity costs, this is not invariably the case. In determining how much to award for partial indemnity costs, a court must balance the factors set out in Rule 57.01(1) and ultimately arrive at an amount that is reasonable and fair in the circumstances.

Positions of the Parties

[11] The plaintiff argues that this is an appropriate case for substantial indemnity costs in the amount of $122,399.14, with 75% apportioned to USRL and 25% apportioned to Mr. De-Almeida.

[12] Counsel arrives at the substantial indemnity rate by applying a multiplier of 1.5 to the partial indemnity amount of $81,599.42 all inclusive. The partial indemnity amount is calculated as 65% of the plaintiff’s full costs which are $125,537.58, based on a contingency fee of 33% of the damages awarded, plus disbursements and HST.

[13] Counsel has not provided her normal hourly rates. She indicates that she has dedicated approximately 450 hours to the file. In view of the contingency fee agreement, her effective hourly rate is approximately $220 per hour.

[14] The plaintiff argues that substantial indemnity costs are warranted because the plaintiff was substantially successful on the action, the costs incurred are very reasonable given the amount of time dedicated to the file, and the defendants’ failure to resolve the matter early before costs mounted.

[15] The plaintiff also seeks pre- and post-judgment interest at an enhanced rate of 10% per annum based on the defendants’ refusal to settle the matter in advance of trial. The plaintiff also asserts that in or around September 2022, he received numerous threats by telephone by an anonymous caller. His counsel advises that the plaintiff believes the threats were perpetrated by one or both of the defendants and suggests that the plaintiff will have trouble collecting on the judgment. There is no evidence linking the calls to the defendants.

[16] USRL submits that no costs or, in the alternative, nominal costs should be awarded. USRL argues that success at trial was divided and significant time was dedicated to prosecuting claims relating to human trafficking and intentional infliction of mental suffering, which were claims obviously lacking in evidentiary support. As well, USRL notes that Mr. Osmani received judgment against USRL on an amount far lower than he initially claimed.

[17] Mr. De-Almeida also submits that no costs or nominal costs should be awarded. He bases this position on the fact that success was substantially divided and that the amount ultimately awarded in damages is far lower than that originally claimed. He further notes that the amount awarded is within the jurisdiction of the Simplified Procedure under Rule 76 and that as a result, the court has the discretion to order no costs under Rule 76.13(2) and (3). Mr. De-Almeida argues that the proceeding was unnecessarily lengthened and complicated by the nature of the claims advanced by Mr. Osmani and the time taken to present the plaintiff’s case.

Offers to Settle

[18] Prior to the action being commenced, the plaintiff offered to settle his claims against Mr. De-Almeida for $75,000 and against USRL for $100,000. The offers were not accepted.

[19] Once the action was commenced, the plaintiff offered to have the matter submitted to voluntary mediation. The defendants declined.

[20] Formal Rule 49.10 offers to settle were served on each defendant on October 21, 2021. The offer served on Mr. De-Almeida was for $200,000 plus costs to be agreed upon or assessed. The offer served on USRL was for $300,000 plus costs to be agreed upon or assessed.

[21] The specific costs provisions of Rule 49.10(2) do not apply as the plaintiff did not obtain a judgment as or more favourable than the terms of the offer to settle. That said, it remains open to the court to consider the offers to settle in accordance with Rule 49.13.

Findings and Analysis

[22] In order to assess what is fair and reasonable in this action, I must consider whether costs should be ordered, the appropriate scale of costs, the quantum of costs and the apportionment of costs. The plaintiff also seeks a higher rate of pre- and post-judgment interest which I consider below.

Should Costs be Ordered?

[23] I start by considering whether this is an appropriate case in which I should decline to order costs in favour of the plaintiff. Both defendants argue that success was divided and that the damages ultimately awarded are significantly lower than those claimed at the outset. They rely on Colistro v. Tbaytel, 2017 ONSC 2731, aff’d 2019 ONCA 197, as the authority for the proposition that costs may be awarded against a party who only recovers a small amount compared to the original amount claimed.

[24] In Colistro, the trial judge dismissed the bulk of the claim advanced by the plaintiff, though found that she had been wrongfully dismissed. In addressing costs, the trial judge found that the defendants were the substantially successful parties in the action and were therefore entitled to costs. On appeal, the Court of Appeal denied leave on the costs decision.

[25] In my view, this is not a case like Colistro. I am not prepared to find that the defendants were “substantially successful” in this action. While some of the claims were not proven and while the ultimate amount of damages is substantially lower than that initially claimed, the plaintiff succeeded on the core aspects of the action. In particular, the plaintiff was successful in proving the factual narrative underlying essentially all of the claims. That factual narrative was hotly contested and the subject of conflicting and contradictory evidence.

[26] As such, I see no reason why the defendants should be viewed as the substantially successful parties, which would presumptively entitle them to costs. I also see no reason why I should invoke my discretion under Rule 57.01(2) to order costs against the plaintiff despite his substantial success on the action. That said, a comparison of the amount claimed and the amount recovered is a factor to be considered in assessing the quantum of costs.

Appropriate Scale of Costs

[27] I turn next to the scale of costs sought. In my view, there is no reason in this case to award costs on a substantial indemnity basis. The costs implications of Rule 49 offers are not in play as the plaintiff did not do better than the offers to settle after trial. While the plaintiff did make an offer to settle prior to commencing litigation, I am not prepared to find that the defendants’ failure to take that offer at that stage in the proceedings now justifies the imposition of costs on a higher scale.

[28] In addition, none of the other factors that support the imposition of substantial indemnity costs apply. The defendants did not engage in any unwarranted, malicious or inappropriate conduct in terms of the manner in which they defended the case.

[29] I place no weight on the allegations relating to the threatening telephone calls. The allegations are unsupported by any evidence. They were first advanced through the costs submissions of counsel and have not been tested in court.

[30] I also decline to order costs on a substantial indemnity basis based on the mere fact that the plaintiff was mainly successful and the quantum of costs he incurred is reasonable. While these factors inform the quantum of costs I will order, they do not inform the scale.

[31] As such, I am satisfied that costs should be awarded on a partial indemnity basis.

Quantum of Costs

[32] In considering the quantum of costs, I make the following findings and reach the following conclusions:

a. The plaintiff was substantially successful on the action. He succeeded in proving the core narrative of events that underpinned the claims advanced.

b. The plaintiff recovered approximately $290,000 on an initial claim of approximately $2.3 million.

c. The plaintiff was unsuccessful on claims of human trafficking and intentional infliction of mental suffering. These claims added to the complexity of the proceeding.

d. The costs implication of Rule 49 offers to settle are not engaged.

e. I am not prepared to find that the defendants acted unreasonably in failing to avail themselves of the pre-statement of claim offer to settle or the offer to enter voluntary mediation.

f. Counsel for Mr. Osmani has not indicated what her regular hourly rate is. Given her years at the bar, I assume it is higher than $220 (which is the effective hourly rate in view of the contingency fee agreement). I note that ss. 20 and 20.1 of the Solicitor’s Act address the impact of a contingency fee agreement on a costs award. I also note that in 790668 Ontario Inc. v. D'Andrea Management Inc., 2015 ONCA 557 at para. 23, the Court of Appeal held that it is an error to award partial indemnity costs in the full amount of the costs paid or incurred.

g. Counsel for USRL has filed a Bill of Costs with a partial indemnity rate of $134.75, based on an actual hourly rate of $245.00 (55% of actual rate). The partial indemnity amount is $57,922.58, inclusive of HST but exclusive of any disbursements.

h. Counsel for Mr. De-Almeida has filed a Bill of Costs with a partial indemnity rate of $200.00, based on an actual hourly rate of $400.00-$425.00 (47%-50% of actual rate). The partial indemnity amount is $72,274.80, inclusive of HST but exclusive of any disbursements.

i. I note that the partial indemnity rates used by the defendants are low as a percentage of their normal hourly rates. That said, once adjusted to a more appropriate percentage, those figures provide a clear view of what the defendants might have reasonably anticipated costs to be.

j. I find that the hours dedicated to the matter by all parties are fair and reasonable given the length of the trial, the complexity of the issues raised and the importance of the matter to the respective clients.

k. Lastly, I note that the principles of proportionality and reasonableness, act to moderate the quantum of costs sought.

[33] When I consider all of the foregoing, I order costs paid to the plaintiff by the defendants in the amount of $80,000 inclusive of HST and disbursements.

Apportionment of Costs

[34] In terms of apportioning the costs as between the defendants, the plaintiff submits that the costs should be split 75%-25% between USRL and Mr. De-Almeida. There is no request by the plaintiff that any costs awarded against Mr. De-Almeida be borne jointly and severally by USRL.

[35] The defendants make no specific submissions addressing the proposed apportionment of costs.

[36] There is no fixed legal rule that costs are to be apportioned according to the degree of liability, though it is an available option often resorted to after a trial, see Mortimer v. Cameron, 1994 CanLII 10998 (ON CA) and Bondy-Rafael v. Potrebic, 2019 ONCA 1026 at paras. 37-40.

[37] In my view, the proposed apportionment falls roughly in line with the damages ordered, accounting for an even split on the portions that are joint and several. In the absence of any submissions opposing the proposed split, I am satisfied that it is fair in the circumstances.

[38] As such, USRL will owe Mr. Osmani $60,000 in costs and Mr. De-Almeida will owe $20,000 in costs.

Claim for Interest

[39] I turn lastly to the request for pre- and post-judgment interest at 10% per annum, which is a rate higher than the standard rate provided for in the Courts of Justice Act. Section 130 of the Courts of Justice Act grants a wide discretionary power to order a rate of interest that is higher or lower than the rate that is payable under sections 128 or 129 of the Act, see Stellarbridge Management Inc. v. Magna International Canada Inc., 2004 CanLII 9852 (ON CA) at para. 85.

[40] In exercising that discretion, the court should consider the factors listed in s. 130(2) of the Courts of Justice Act, which include the circumstances of the case and the conduct of any party that tended to shorten or lengthen unnecessarily the duration of the proceedings.

[41] The plaintiff bases his request on two grounds: (1) the defendants’ “refusal over the course of 1.5 years to even entertain resolving” the claim; and, (2) the allegations relating to the anonymous threatening phone calls received by the plaintiff. The plaintiff submits that a higher than normal interest rate is required to reflect the fact that the plaintiff is likely going to have difficulty collecting on the judgment. The higher than normal rate is required in order to incentivize quick satisfaction of the judgment, compensate the plaintiff for his losses and express the court’s disapproval of the defendants’ conduct.

[42] I disagree. While this is a matter that could have settled before trial, I do not view the defendants’ failure to resolve the matter as demonstrative of unreasonableness. Indeed, they did better after trial than if they had accepted the Rule 49 offers. In addition, as indicated earlier, I place no weight on the alleged harassing telephone calls. Ultimately, I see no basis on which to exercise my discretion to increase the interest rate that applies on the judgment. The standard rate will apply as provided in the Courts of Justice Act.

Order

[43] Orders to go in accordance with my findings on quantum of costs, apportionment of costs and the rates for pre- and post-judgment interest set out above.

J. Di Luca J.

Released: February 14, 2023

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

REZART OSMANI

Plaintiff

– and –

UNIVERSAL STRUCTURAL RESTORATIONS LTD. and LUDGERO DE-ALMEIDA

Defendants

DECISION ON COSTS

The Honourable Justice J. Di Luca

Released: February 14, 2023

Osmani v. Universal Structural Restorations Ltd. et al., 2023 ONSC 1041

Case Summary

Nature of the Action

Legal Principles on Costs

Positions of the Parties

Offers to Settle

Findings and Analysis

Should Costs be Ordered?

Appropriate Scale of Costs

Quantum of Costs

Apportionment of Costs

Claim for Interest

Order

Judge

Counsel

Parties

Areas of Law

Fact Patterns

Financial Outcomes

Issues

Statutory Provisions 4

Legal Tests 1

Legislation 1