Summers v. OZ Optics Limited, 2023 ONSC 723

Court File and Parties

COURT FILE NO.: CV-22-89356

DATE: 2023/01/30

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Paul Summers, Applicant

AND

Oz Optics Limited, Respondent

BEFORE: The Honourable Justice C.T. Hackland

COUNSEL: Kyle Van Schie, counsel for the Applicant

Justine Villeneuve, counsel for the Respondent

HEARD: In writing

ENDORSEMENT on costs

1The Applicant brought a motion for summary judgement arising out of the termination of his employment by the Respondent. The issues were: (1) did the termination provision of his employment agreement apply to the termination or was he entitled to common law notice and (2) to what amount was he entitled by way of damages in lieu of common law notice and (3) did he fail to mitigate his damages. The Applicant was successful on all of these issues, and he is clearly entitled to his costs of the application. For the court’s reasons on the application, see Summers v. Oz Optics Limited, 2022 ONSC 6225.

2Both parties submitted written costs submissions, which have been considered by the court.

Scale of Costs

3The court awarded damages in the lieu of notice in the sum of $35,743.13 which reflects a notice period of six months, after crediting the Respondent with the termination payments it has made to the Applicant.

4On the date the Notice of Application was issued, June 7, 2022, the Applicant served a Rule 49 offer to settle for four months pay and benefits less amounts already paid by the employer and less any mitigating income earned in the four-month period. Costs were to be on a partial indemnity basis as agreed or as assessed and the offer was open for acceptance to the commencement of the application. I accept that the June 7 offer was a valid offer under Rule 49. It was not withdrawn prior to the argument of the application and was never accepted by the Respondent. The damages awarded to the Applicant substantially exceeded his Rule 49 offer, thus triggering Rule 49.10(1)(c). Accordingly, the Applicant is entitled to his partial indemnity costs up to the time of the June 7, 2022 Rule 49 offer and to costs on a substantial indemnity basis thereafter. The Respondent says in its costs submission that it made a Rule 49 offer on April 19, 2022 for $14,000 which was said to be about 3.5 months’ salary (presumably when added to the amount paid on termination). This was said to be attached as tab.2 to the costs submission but was in fact not attached. In any event, it was not accepted and was substantially less than the Applicant’s ultimate recovery.

Quantum of Costs

5The Applicant seeks his partial indemnity costs of $3,685.61 up to June 7, 2022 and his substantial indemnity costs thereafter in the amount of $24,913.50, for a total of 28,599.11.

6Rule 57 provides that in exercising its discretion as to costs the court may consider, in addition to the result in the proceeding and any offer to settle, certain enumerated factors, several of which are of particular relevance to this case.

(a) Importance of the issues to the parties – Rule 57.01(1)(d). The courts have recognized the important role employment plays in a person’s sense of self-worth and their concerns with their economic security. These observations apply to the Applicant.

(b) Refusal to admit anything that should have been admitted – Rule 57.01(1)(g). The Respondent flatly refused and continues to refuse to acknowledge the application of the Court of Appeal judgement in Waksdale v. Swegon North America Inc. 2020 ONCA 391 (and subsequent appellate and trial decisions discussed in the court’s reasons herein), to the issue of the validity of the termination clause in its employment agreement. The Respondent continues to insist its’ termination clause is valid and enforceable. Even in the Respondent’s costs submission, it is contended, with respect to this termination provision, “a virtually identical provision in Alarashi v Bis Brothers Big Sisters of Toronto, 2019 ONSC 4510, decided after Waksdale was found to be compliant with the ESA”.

However, in point of fact, the Alarashi decision was released in July of 2019, a year before the Court of Appeal released Waksdale (on June 24, 2020). The Alarashi decision is no longer good law to the extent it upholds the validity of a termination provision that purports to not require payments in lieu of notice in termination for cause situations. According to our Court of Appeal, such a provision is void at the time the agreement is entered into, because it constitutes an attempt to contract out of the employer’s obligations under the Employment Standards Act. That is the law whether the Respondent likes it or not.

(c) Unnecessarily lengthening the duration of the proceedings – Rule 57.01(1)(e) and any step in the proceeding that was improper, vexatious or unnecessary – Rule 57.01(1)(f). The Respondent’s argument that the Applicant had failed to mitigate his damages by taking reasonable steps to secure new employment, an issue on which the Respondent had the burden of proof, was raised gratuitously and without any evidentiary basis. This was in the face of the Respondent doing nothing to assist the Applicant’s re-employment efforts-no letter of reference, no career transition counselling, and a summary dismissal in front of other employees. The mitigation issue served to unnecessarily lengthen and complicate the proceedings and led to the Respondent improperly late serving affidavits on this issue, after the cross-examinations had concluded.

7The Respondent submits the damages award was miscalculated in that the credit to the employer for amounts paid on termination did not include any amount for benefits. If a 10% credit or gross up to the employer’s credit were to be assumed, the damages due to the Applicant would be reduced to just under the Small Claims Court limit of $35,000, with the result that any costs awarded should be on the Small Claims Court scale. I reject this argument on the basis that no evidence was put forward in this application that any benefits were kept in force subsequent to the to the Applicant’s termination. Further, the Respondent made no attempt to address this point when the application was argued, nor was it addressed as a calculation error, as invited in paragraph 24 of the court’s reasons.

8I have reviewed the Applicant’s bill of costs and find it to be generally reasonable. Unfortunately, page 3 of the bill of costs is missing as is any total of the number of hours spent by Applicant’s counsel. From what has been provided, I can see the hourly rate charged is $300. The Respondent submits a 25-30% reduction to the Applicant’s suggested fees is in order and advises its own bill of costs records about 66 hours and that this would be billed on a partial indemnity scale at about $15,356 (their full indemnity fees are $25,905). Applicant’s counsel’s billing rate is $225 per hour. The hourly rates of both counsel are reasonable in my view.

9As noted previously, the Applicant claims partial indemnity costs of $3685.61 to the date of their Rule 49 offer and substantial indemnity costs thereafter in the sum of $24,913., for a total of $ 28,599.11. The Applicant’s recovery was $35,743.13. Proportionality considerations arise in a modest claim such as this. Regrettably the matter was not resolved early on in the proceeding when the parties were apparently only a few thousand dollars apart in terms of their respective Rule 49 offers. I also must consider what a reasonable Respondent would expect to pay in costs if unsuccessful in the application.

10After consideration of the foregoing factors, the court awards costs of the application to the Applicant fixed in the sum of $25,000 inclusive of damages, interest and disbursements. The Respondent will also pay applicable HST on these amounts. These sums are to be paid by the Respondent to the Applicant, forthwith.