Wrongful Dismissal Case Study
July 15, 2013 standa43_wp
The following case relates to wrongful dismissal. If you are facing the threat of being dismissed at your job for unfair reasons there is a likelihood that you have a case for wrongful dismissal in Alberta. If so, you need to contact a skilled and experienced wrongful dismissal lawyer who can help. Give our employment lawyers a call today at 1-780-666-8161.
Paul R. Love v. Acuity Investment Management Inc.
James Knight, for the Plaintiff
John Campbell and Stephanie Turnham,
for the Defendants
SITTING DATE:
MOORE J.:
REASONS FOR DECISION ON COSTS
[1] My disposition of Mr. Love's damages claims appears in my reasons for decision released on 2 June 2009. Left outstanding was the amount owing for pre-judgment interest and the matter of costs of the action. The parties have now agreed on the appropriate approach to quantifying interest and the amount of pre-judgment interest that Mr. Love's damages award should attract. The parties cannot agree on whether either plaintiff or defendants should be entitled to costs nor in what amounts. This endorsement will resolve those differences.
[2] In his submissions, Mr. Love acknowledges that his theory of his case was unsuccessful to a significant extent and he therefore asserts that he has been humbled and chastened by his experience. He adds that his claim to damages was successful in part and that even after the defendants paid him $180,000.00 less deductions in April 2008, both the length of the appropriate notice period in this wrongful dismissal action and the question of his claim to entitlement to hold and to enjoy the financial benefits of ownership of his share holdings in the defendant, Acuity Investment Management Inc. (Acuity) continued to be significant issues in dispute and were issues ultimately resolved in his favour.
[3] In these circumstances, Mr. Love asserts that he was entitled to his day in court and his decision to try this case was not unreasonable. He insists that the parties co-operated to the extent possible to expedite the trial process and that the trial could not have been made shorter than the 19 days it consumed.
[4] Mr. Love seeks an order that no costs be awarded to any party. In the alternative, he requests the court to look critically at and reduce the costs claimed by the defendants. In the event that the court decides to award costs to both sides, Mr. Love seeks an order offsetting his costs against any costs awarded to the defendants.
[5] The defendants seek an award of costs in the following amounts:
$232,797.50 – for fees
$ 11,639.88 – for 5% GST on fees
$126,609.96 – for taxable disbursements
$ 6,330.50 – for 5% GST
$ 183.00 – for non taxable disbursements.
[6] In addition, the defendants submit that Mr. Love's claims for costs should be dismissed entirely. They point out that Mr. Love made very serious allegations of inappropriate employer behaviour against the defendants and that those allegations were entirely rejected.
[7] The claims made for damages in the statement of claim totaled over $8,500,000.00 and those claims were increased by over $7,000,000.00 in the amended statement of claim. Of those amounts, Mr. Love recovered only $528,017.00.
[8] More importantly, the defendants point out that they delivered three offers to settle the action before trial and that the damages awarded fall far short of the amounts offered.
[9] By offer dated 24 January 2008, the defendants offered $1,100,000.00 less any statutory reductions required by law plus costs. That offer was reduced in April 2008 to reflect the payments made then to Mr. Love of $180,000.00 less deductions but the offer otherwise remained open for acceptance until the trial began.
[10] By offer dated 24 April 2009, the defendants increased their outstanding settlement offer to $1,250,000.00, an amount not to be reduced by the $180,000.00 paid to Mr. Love in April 2008.
[11] The defendants maintain that these offers were made pursuant to the provisions of rule 49.10 of the Rules of Civil Procedure and they seek costs from the date of the first offer forward through trial. The affidavit of service for that first offer is not before me but a copy of the offer bearing the fax header of WeirFoulds LLP is;[1] I shall treat the offer as having been served on the date and time referred to in the header.
[12] The defendants submit that the purpose of rule 49.10 is to promote settlement and to impose a burden of costs consequences upon parties who are not reasonable and who do not settle claims in the face of realistic, in this case generous, offers. They refer to and rely upon the reasoning of Morden J.A. in Niagara Structural Steel v W.D. Laflamme Ltd.[2] at 777:
The general or basic rule contained in rule 49.10(1) is intended to be an incentive to the settlement of litigation. …. It is reasonable to assume that the occasions for the application of the exception should not be so widespread or common that the result would be that the general rule is no longer, in fact, the general rule.
… it can be said that resort should only be had to the exception where, after giving proper weight to the policy of the general rule, and the importance of reasonable predictability and the even application of the rule, the interests of justice require a departure.
[13] In BLM Group Inc. v. IBIS International Business Intelligence Services Corp., [3] Glithero J. spoke to the purpose of rule 49 saying (at para. 9):
One should remember that the provisions of rule 49 are intended to apply so as to encourage settlements and thereby avoid unnecessary expenses for parties. The general rule is meant to be the norm, and the ability to "order otherwise" should be the exception. In my opinion, here, the plaintiffs offer to settle was realistic and contained an element of compromise that was commensurate with a realistic view of the case.
[14] The defendants assert that their three offers were each reasonable and contained an element of compromise that was commensurate with a realistic view of the case; I agree. Indeed, they observed that Mr. Love would have had to more than double the applicable notice period in order to achieve a damages award in an amount higher than the defendants' last pretrial offer.
[15] The defendants urge upon this court the approach adopted by Chapnik J. in Terham Management Consultants Ltd. v. OEB International Ltd.[4] of considering the settlement positions and offers made by the parties before trial before applying judicial discretion under rule 49 and ordering costs consequences. Chapnik J. stated (at paras. 20-22):
None of the offers made by the defendants in the spirit of compromise received a response from the plaintiff. It is clear that the plaintiff persisted in asserting its full claim, taking a fixed position of intransigence throughout.
The plaintiff effectively forced the defendants to proceed to trial. In the end, it achieved an award which it might well have accepted three years previously. In reality, it was the defendants who achieved substantial success at trial.
Parties may insist on having their day in court. If they do so in the face of reasonable offers to settle, they must reasonably expect to indemnify the other party for its costs.
[16] The defendants submit that not only did Mr. Love reject three reasonable defence offers but he failed to respond to those offers with reasonable counter offers aimed at resolving some or all of the many issues this case presented. Instead, Mr. Love offered to accept $9,769,926.00,[5] an offer made in a letter dated 18 December 2008 and an offer that expired on 25 February 2009. Mr. Love's offer contained this admonition to the defendants:
It is important to be clear about the expiry date for the offer. Mr. Love is completely unwilling to get into settlement discussions on the eve of trial. As such, I have to stress that the expiry date is a hard date and Mr. Love has been very clear that I should not expect to get settlement instructions after that date.
[17] Mr. Love wanted his day in court and; the defendants assert, and I agree, that he courted the risk of the very costs consequences that he now seeks to avoid. The defendants liken this case to the Springer case[6] where Newbould J. observed (at para. 18):
In considering the time spent on behalf of the defendants, it must be recognized that the attack in this case was on a group of professionals with whom the plaintiff had worked for some years and by whom the plaintiff had been handsomely rewarded. Much, although not all, of the case rested on an allegation that Ms. Harris, who was the managing partner at relevant times, made promises to Mr. Springer on behalf of the executive committee that were not kept…. Mr. Springer had to realize that the defendants would take steps to strongly oppose the claim and that it would take considerable work to do so.
[18] The defendants correctly conclude that Mr. Love's decisions to proceed to trial on all issues and in search of millions of dollars were both deliberate and unreasonable. The defendants were necessarily put to considerable expense in order to meet the many and serious allegations made against them, including allegations of personal impropriety leveled against Mr. Ihnatowycz. Mr. Love knew or ought to have known that the costs consequences of a lengthy trial could be substantial.
[19] In fixing costs, the court need not attempt a line by line analysis of the bill of costs under consideration but nor should the process become a mathematical exercise of applying hourly rates to docketed hours. There must be a balance achieved between recovery of a fair and reasonable amount for services rendered and disbursements incurred considered in the context of the particular case and the reasonable expectations of the party called upon to pay the amount to be fixed.
[20] The starting point for the process is Section 131 of the Courts of Justice Act, R.S.O. 1990, c.C.43 and the General Principles outlined in rules 49 and 57 of the Rules of Civil Procedure.
[21] The court may consider the outcome of the action, as I have done in this case. Mr. Love enjoyed mixed success when measured against the outcome sought. Further, it appears that he was offered three opportunities to resolve the case short of trial and that he chose not to involve himself in good faith negotiations aimed at narrowing or resolving his claims without need of a long, complicated and costly trial.
[22] As I stated in my reasons for decision, (at para. 168): "… I am strongly inclined to award no costs. If Mr. Ihnatowycz had been separately represented, I would award costs in his favor against Mr. Love but in the circumstances, I am inclined to the view that it is appropriate that no costs should be awarded."
[23] Having now enjoyed the benefit of reviewing the materials filed on behalf of the parties at the hearing on costs and of considering the submissions of counsel, my view has not changed. There will be no costs awarded to either side on account of fees or disbursements incurred before 28 January 2008. I select that date as it is the date set forth in the fax header on the defendants first settlement offer made pursuant to rule 49. I reject the view that the defendants' second offer revoked the first offer.
[24] In my view, the circumstances of this case require that rule 49 be read to entitle the plaintiff to costs before the date of an offer that the plaintiff fails to better at trial only if the plaintiff should otherwise be considered fairly entitled to costs. The instant case is not that case.
[25] In the unlikely event that Mr. Love did not consider the size and shape of the costs exposure he might face if he did not prevail at trial, surely he was aware of the growing size of his cost of pursuing the action to and through a trial. The extent to which his own litigation expense burden informed Mr. Love about the defendants' expenses is not before me but Mr. Love does not challenge the hourly rates of defence counsel or the time docketed by lawyers and other timekeepers as set out on the defendants' bill of costs.
[26] Mr. Love was headstrong and determined in the pursuit of his aspirations in this case but it must be remembered that he is a chartered accountant and an accomplished business executive. He has worked with and for government and private sector businesses at high levels of responsibility and for financial consideration that by any measure must be regarded as substantial. There can be no doubt but that Mr. Love knew full well what the financial consequences of winning and/or losing some or all of the issues he put in play at the trial of this action could be.
[27] I agree with many of the submissions of the defendants. I see no reason not to award costs to the defendants for fees and disbursements incurred from and after 28 January 2008. To the extent that hourly rates inform my assessment of costs, I am comfortable with the partial indemnity rates outlined in the defendants' bill of costs. For some timekeepers, I note that those rates are lower than rates charged by lawyers and others outlined in the plaintiff's bills of costs. As such, it seems to me that the defence rates must fall within the reasonable expectations of the paying party, in this case, Mr. Love.
[28] Hourly rates are, however, but one factor to be considered in arriving at a fair award of costs for it is important that all of the principles outlined in rule 57 be considered and that the award be fair to all parties involved. As stated by Armstrong J.A.[7] :
While it is important to do the costs grid calculation, it is also necessary to step back and consider the result produced and question whether, in all the circumstances, the result is fair and reasonable.
[29] In all of the circumstances, the fair and reasonable amount for fees, including GST thereon that Mr. Love should pay the defendants on a partial indemnity basis from and after 28 January 2008 is $200,000.00.
[30] I have taken a critical look at the defendants' claims for disbursements. Mr. Love raised no concern about these disbursements other than the disbursements for Navigant Consulting. As such, the claimed disbursements will be allowed but for the Navigant charges, which I will assess separately.
[31] Having accepted and valued the expert accounting evidence offered at trial by Mr. Cohen, I have no difficulty in awarding a fair figure for his services and those of his associates on this file at Navigant. I am concerned that six timekeepers at Navigant charged a total of 331.3 hours of time at rates running from a low of $265 per hour to a high of $595 per hour.
[32] I note that the time docketed by the timekeepers working at the Rosen firm on behalf of Mr. Love exceeded 300 hours and I conclude that the time spent by Navigant timekeepers, being of virtually the same order of magnitude, is both reasonable and within Mr. Love's reasonable expectations.
[33] While I don't profess to understand the full nature and level of expertise that these Navigant consultants brought to bear in this matter, I find it most difficult to credit that Mr. Love should be required to compensate these consultants based upon hourly rates of the magnitude charged. On a partial indemnity basis, lead counsel in this case will not recover even $350 per hour; it is simply not reasonable to allow Mr. Cohen's rate of $595 per hour to be visited upon Mr. Love nor to allow the rates of associates at Navigant to be charged through to Mr. Love at rates higher than those sought for junior counsel.
[34] In my view, the Navigant fees should be based upon an hourly rate for Mr. Cohen of $350.00 and for each of his five associates at $175 per hour. In the result, the total of Navigant fees payable as disbursements by Mr. Love is $67,042.50. In addition, Mr. Love will reimburse the defendants for the Navigant disbursements invoiced to the defendants in the sum of $520.00. Navigant fees and disbursements attract 5% GST of $3,378.14. The total amount of the Navigant related disbursements to be paid by Mr. Love therefore is $70,941.01.
[35] Having considered the positions of the parties and all relevant factors informing the fixing of costs in a matter such as this and having stepped back to consider the overall fairness of the costs to be awarded in the circumstances of this particular case, I fix costs as follows: the defendants shall recover costs of $278,548.66, including $200,000.00, inclusive of GST, for fee items of costs plus $78,365.66, inclusive of GST, for taxable disbursements plus $183.00 for non taxable disbursements.
[36] The defendants may set off their costs recovery against the judgment for damages and pre judgment interest awarded to Mr. Love.
Moore J.
Wrongful dismissal cases can be complex, and require the foresight of a seasoned employment lawyer who can help position and defend your rights as an employee. If you are dealing with an employer who is trying to terminate you without just cause, consult with our employment lawyers immediately. We can bring the experience and resources you need for challenging your employer in court. If you need a lawyer for a wrongful dismissal case, call us today at 1-780-666-8161.