Plaintiff Wins Substantial Indemnity Costs of $175,000 for a 3 Day Summary Trial :

In Menard v The Centre for International Governance Innovation ( 2019 ONSC 2467 ) Justice Gray noted that the Plaintiff beat two his own Offers to Settle, one of which was made at the beginning of litigation.

The Plaintiff claimed substantial indemnity costs of $217,265 for two lawyers. The Defendant claimed its own substantial indemnity costs were only  $120,031.

This wasn’t the sort of case where the judge despised the defendant’s behaviour. In fact this is what the judge had to say about the Plaintiff:

” While I did not find that the plaintiff’s conduct to be sufficient to amount to cause for dismissal withoiut notice, neverthelessI I found that the plaintiff had committed serious misconduct , and wrote a letter before commencing proceedings to an attempt to blackmail the defendant ”

Lessons to be learnt :

  1. The cost to the defendant of this Trial was as follows:

Judgement of 12 months notice :  $175,000

Costs to Plaintiff                               $175,000

Defence Costs to Own Lawyer      $120,000

Total                                                   $470,000

We don’t know what the plaintiff’s very first offer was but it was less than $175,000. Thus the employer paid at least  $300,000 more than it could have if it had settled in the beginning.

2. If the plaintiff makes an early and sensible Rule 49 Offer to Settle, the payoff can be considerable. Making ridiculous offers does not offer that benefit .

So next time you are close to settling a case at mediation and your client says ” Forget it. I am not paying a dime more or I am not giving up a dime off my last offer . Lets go to Court ! ” , show him or her this case.

Plaintiff’s counsel was Andrew Monkhouse and Stephen Le Mesurier of Monkhouse Law.

 

 

 

 

Mutual Release Set Aside Due to Fraudulent Misrepresentation :

In Markicevic v York University  ( 2018 ONCA 813) The Ontario Court of Appeal upheld the lower courts’ decision  to set aside a settlement with its ex-employee to whom they had paid 36 months severance pay only to find out later than he had actually ripped them off for a million dollars.

As part of the deal the parties signed a mutual release.

York first became aware of the accusations of the Plaintiffs’ dishonesty before they terminated him and before they settled . Even though they had sworn statements from other employees about this dishonesty, they said they believed the Plaintiff when he denied the accusations.The Court held that  his protestations of innocence constituted a fraudulent misrepresentation. The York representative said that if he had known the true story at that time, he never would have paid the 36 month severance package.

After York paid the Plaintiff his huge severance they investigated the allegations and found them to be true .

The Court said:

” A contracting party who is induced to enter into a contract as a result of a fraudulent misrepresentation is entitled to rescission, and restoration of the benefits conferred on the other party to the contract. The question of whether a contracting party did in fact rely on the misrepresentation, at least in part, to enter into the contract is a question of fact to be inferred from all the circumstances of the case and evidence at the trial.”

“The trial judge’s finding that York was induced to enter into the severance agreement by the appellant’s fraudulent misrepresentation that he was innocent of any financial dishonesty is supported by the evidence and no palpable or overriding error has been shown. It is difficult to imagine circumstances in which an employer acting responsibly would pay three years severance pay to an employee it knew had misappropriated large sums of money from it.”

I have a lot of concerns about this case.

First of all why did York give a mutual release?

In most wrongful dismissal actions only the plaintiff releases the defendant. Only where there is a potential of a counterclaim is a mutual release used. In other words only where there is a real concern by the plaintiff that the employer may have a claim against him  does the plaintiff have the right to ask for a mutual release.

In this case therefore, by agreeing to sign a mutual release, York should or must have known that the Plaintiff was concerned that the employer may have a claim against him and thus would want that claim extinguished.

Secondly, in my 40 years of practice, I have rarely seen an employee accused of fraud do anything other than deny it when confronted by their employer. Only a complete idiot would admit to such a thing and only a fool would rely on this claim of innocence without first conducting a thorough investigation  before, not after, the settlement.

Thirdly, this was an extremely sophisticated employer, containing  the best law schools in Canada ( I went to OHLS) . The fact that for some inexplicable reason York decided to pay this guy way more than any Court would ever order ( 36 months severance !!!!) should not give them an out because they later determined that it was a dumb decision.

In my opinion this case will lessen the willingness of parties to settle actions because it takes away the certainty of a release. The whole point of a settlement  is that, having done their due diligence, both parties have agreed to stop looking to the past and focus only on the future.

Anything that deviates from that sacred principle will only harm the important societal interest in settling disputes.

5 Years Doing Zilch Gets Lawsuit Booted for Delay:

In Lippa v Advanced Software Concepts ( 2019 ONSC 1873) Master Muir dealt with a wrongful dismissal action where the employee was fired in 2011. The lawsuit was started in 2013, two days before the expiry of the limitation period. The pleading were completed within one year and then nothing happened until 2018 when the Registrar dismissed the case for delay .

The Master refused to set aside the dismissal for the following reasons.

1) Neither the plaintiff nor his lawyer had any acceptable rationale for the delay. The lawyer said that she forgot to put this case into her reminder system.

2) There was a presumption of prejudice which the plaintiff did not overcome.

3) As the employer was alleging just cause, and the plaintiff was alleging inducement and bad faith, merely preserving documents was not enough to overcome the presumption of prejudice.