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.

Plaintiff Wins $114,082 but Pays Costs to the Defendant of $200,000:

In Colistro v Tbaytel ( 2019 ONCA 197) the Ontario Court of Appeal dismissed both the appeal and the cross appeal in the case of a plaintiff who was constructively dismissed when her employer rehired a manager who had sexually harassed her 11 year before.

She was awarded 12 months notice but because she had been on STD and LTD during this same period, her actual damages were only $14,082 . She was also awarded Honda or moral damages of $100,000.

Most plaintiffs’ counsel would have thought that an out come like this was a great win .

Not this plaintiff.

This is what the trial judgement said the Plaintiff was seeking :

  1. For constructive dismissal from employment $100,000.00, being 18 months’ salary,  plus “Wallace” damages of $250,000.00;

2.  For the intentional infliction of mental suffering:

                                i.            general damages of $1,000,000.00;

                              ii.            damages for past economic loss of $401,567.64;

                           iii.            damages for future economic loss of $680,666.25;

                           iv.            damages for past loss of housekeeping value of $64,533.70;

                              v.            damages for future loss of housekeeping value of $85,834.23;

                           vi.            aggravated damages of $500,000.00;

                          vii.            punitive damages of $300,000.00; and,

This totals $3,381,000 and change. As she recovered only $114,082, her recovery was about 3.3 % of what she was seeking.

When it came to costs, the OCA set out what the trial judge said .

      The trial judge held that, given the damages sought at trial by the appellant and the result achieved after trial, it was obvious that Tbaytel and the City were the substantially successful parties to the litigation, and were therefore entitled to an award of costs. While the appellant’s judgment was less favourable on its face than the financial terms of Tbaytel and the City’s 2015 and 2016 offers to settle, the trial judge chose not to invoke the cost consequences of r. 49.10(2) of the Rules of Civil Procedure. Instead, he chose “to fix costs in an amount which partially indemnified the defendants and which [he found] to be fair and reasonable taking into account all parties’ Bills of Costs, the terms of the 2015 and 2016 offers” and other relevant factors: costs endorsement, para. 36.

[63]      By order dated January 26, 2018, the trial judge ordered the appellant to pay costs to Tbaytel in the amount of $150,000 and to the City in the amount of $50,000.

The Court of Appeal, in refusing to overrule the trial judge on costs said as follows:

   The test for leave to appeal an order as to costs is stringent. Leave to appeal will not be granted save in obvious cases where the party seeking leave convinces the court there are strong grounds upon which the court could find that the judge erred in exercising his discretion: Carroll v. McEwan, 2018 ONCA 902 (CanLII), 34 M.V.R. (7th) 1, at paras. 58-59, application for leave to appeal to S.C.C. pending, 38514 (February 4, 2019).

[66]      I am not persuaded that the appellant has met this stringent test and would deny leave to appeal the costs order.

[67]      The appellant’s submissions suggest that the trial judge determined that she was entitled to her costs, subject to the application of r. 49.10(2). But he did not. He proceeded on the basis that Tbaytel and the City were the substantially successful parties and entitled to costs. Further, the record on appeal does not contain the settlement offers. The trial judge’s endorsement on costs suggests that Tbaytel’s second settlement offer did not include a “no admission of liability” clause. Finally, the trial judge acknowledged that the appellant argued that some of the amount of the settlement would have been taxable, but it is not clear that she quantified or substantiated that assertion and she does not do so before us.

My Comments :

In the past, there has rarely been a downside to reaching for the stars when claiming damages. It costs as much to issue a claim for $4,000,000 as it does for $40,000.

This case may stand for the proposition that there is a real risk to  seeking millions when the case is worth only thousands.

I have often thought that there should be a sliding fee scale for issuing a claim based on how much money the claim seeks. This might lessen the effect making million dollar claims in cases worth only thousands.

12 Year Office Manager Gets 24 Months Notice in Default Judgement :

In Saiklay v Akman Construction ( 2019 ONSC 799) Justice Corthorn award 24 months notice to a 60 year old office manager making $69,000 with 12 years service.

Regarding the issue of older workers. the judge said the following :

[27] At para. 11 of the 2006 decision in Lowndes v. Summit Ford Sales Ltd. (2006), 2006 CanLII 14 (ON CA), 206 O.A.C. 55, the Ontario Court of Appeal concluded that (a) there is no upper limit for the number of months that constitute reasonable notice, and (b) generally, only in exceptional circumstances will a reasonable notice period exceed 24 months.

[28] For an individual at or over the age of 60, a notice period in excess of 30 months might be reasonable (Abrahim v. Sliwin, 2012 ONSC 6295 (CanLII), 2013 C.L.L.C. 210-004, at para. 25). It is not uncommon for individuals over the age of 62 and/or terminated from senior level positions to be entitled to 24 months’ notice. (See: Dawe v. Equitable Life Insurance Company, 2018 ONSC 3130 (CanLII); and Bovin et al v. Over the Rainbow Packaging Services Inc., 2017 ONSC 1143 (CanLII).)

[29] As the Office Manager of a construction company, Mr. Saikaly did not hold as high a level of position as did some of the plaintiffs in either of the two cases cited immediately above. Mr. Saikaly does not have the length of service that some of the plaintiffs in the cases cited above had. The plaintiff in Dawe was a Senior Vice President with 37 years of service. He was 62 years old when his employment was terminated. In Bovin, one of the plaintiffs was the General Manager-Controller with 20 years of service. She was in her mid-forties when her employment was terminated.

[30] I am satisfied that the nature and longevity of Mr. Saikaly’s employment with the defendant, his dedication to the defendant’s financial well-being, his age, and his lack of formal training support a 24-month notice period.

My Comments :

This is another high water mark in notice periods. However it should be emphasized that the case was undefended and thus maybe of less precedent value than it it had been  defended.

Misleading an Employee Regarding a LOA is Bad Faith:

In Jonasson v Nexen Energy ( 2018 ( ABQB 598 ) Justice Antonio had a case where the plaintiff with 22 years service requested a leave of absence. He signed an agreement which indicated that there was no guarantee that when he came back there would be a job waiting for him, only that the employer would make reasonable efforts to find him one. If a new job could not be found then he was deemed to have resigned.
However management knew at the time that there was no prospect of a job at the end of leave as the plaintiff was already on a potential layoff list. While he was on leave his position was eliminated. The employer declared that he had quit pursuant to the LOA agreement.
The Court found that the actions of the employer amounted to bad faith. He was awarded 22 months notice for wrongful dismissal and awarded $20,000 in punitive damages because they ” displayed an outrageous degree of negligence towards him ” by taking the position that he resigned when they essentially lied to him about his prospects of reemployment after the leave was over.

Cannot Contract Out Of Continuous Service Provision in the ESA:

The Ontario Court of Appeal in Kerzner v American Iron & Metal Co. ( 2018 ONCA 989) had a situation where an employee (who was also a 1/3 owner of the vendor ) sold his shares to a new owner and signed a release in favour of the new owner. He went onto to be employed under a new written contract of employment for 7 more years.

The new employment contract had a termination clause requiring 26 weeks notice. The Court held that under the ESA his seniority goes back to 1980 when he joined the vendor and that the parties could not agree otherwise as this would be an illegal attempt to contract out of the Act. As under the Act his entitlement to both termination and severance pay was 34 weeks, the 26 week termination clause was illegal.

However because the release was still valid, in considering his common law entitlement to reasonable notice, his service was from the time of the sale, a mere 7 years. He was awarded 7 months notice, even though he was age 58 and held a senior position. The Court noted that he got a new job within 2 months.

Slap Across the Face Gets Plaintiff $65,000

In Bassanese v German Canadian News Company ( 2019 ONSC 1343) Justice Soosin, in a motion for default judgement, had the following fact situation:

The Plaintiff, a 73 year old female clerk with 19 years service, was verbally harassed by a male co-worker on a number of occasions. Twice she complained to her employer, who did zilch.

One day the co-worker slapped the plaintiff in the face three times. The Plaintiff complained to her employer an filed a police report.

The employers’ response?

She was fired the same day and given no notice.

The judge awarded $15,000 for the assault under the doctrine of vicarious liability.

The judge went on to award $50,000 aggravated  damages because the employer ignored her prior complaints, failed to investigate the assault or take steps to discipline her abusive co-worker.

Interestingly, the judge did not seem to rely on what I see as the most obnoxious behaviour of the employer, which was to fire her, rather than her abuser.

The plaintiff was also awarded notice of 19 months.

The total award, with costs,  came to $204,433.

Counsel for the Plaintiff was Maria Esmatyar of Lecker & Associates. My son, Matthew Fisher, is a partner at this firm but he had nothing to do with this file.

Frustration of Employment Contract Can be Plead by the Employee or the Employer :

In Hockstra v Rehability Occupational Therapy ( 2019 ONSC 562) Justice Mitchell had a case where the plaintiff had been off on disability for 8 years and had no hope of returning to work. This judgement confirmed that the doctrine of frustration is a matter of law, thus either party can claim that the employment contract has been frustrated.
In most cases the employer wants to rely on frustration, as under the common law, no notice is required. However in this case the plaintiff wanted to rely on the doctrine because upon a finding of frustration he was entitled to both termination and severance pay under the Employment Standards Act of Ontario.

Timing Of Stock Options in Notice Period can Make Huge Difference :

In O’Reilly v Imax Corp ( 2019 ONSC 1239) Justice Faieta found that the plaintiff was entitled to payment for the RSU’s that would have vested over the 24 month notice period. However the issue remained as to when to value those RSUs as presumably the price varied over the period . The Plaintiff said that he would have exercised them as soon as they were vested . The Defendant said that they should replicate what he had done in the past, which was to exercise the RSUs about 13 months after they vested. The judge ruled that the best indicator of what he would have done and he been given reasonable notice was to see what he actually did with the RSU’s that were vested but not sold during the notice period. This led the judge to determine the relevant date as being 5 months from vesting date .

I have two comments:

One : 5 is more or less the midpoint between 0 and 13.

Two: Clearly the value of the RSU’s declined over the notice period. I suspect the legal arguments would have been reversed had the value gone up over the same period.