The Court of Appeal this week released a decision, which amongst other important issues, upheld a rare trial award which required an apparently successful plaintiff to pay the costs of the employer whom she sued.[1]

The Facts

The case was unusual. The plaintiff had alleged that she had been constructively dismissed when the employer re-hired a person whom she had accused of sexual harassment many years earlier. This was one of several reasons which had led to his then termination.

She alleged that the decision to re-employ this person caused her termination.

The trial judge[2] found in the plaintiff’ favour on her argument of constructive dismissal. She was awarded 12 months pay, less disability insurance sums[3] and also was allowed $100,000 as aggravated damages. Her claim for the intentional infliction of emotional distress damages failed.

The Costs Award at Trial

The trial judge awarded costs of the 13 day trial in the total sum of $200,000 to the two defendants. He did not do so based on the usual argument of a defence Offer to Settle which was not exceeded by the plaintiff.[4]

The trial judge ordered these costs because:

…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.

It was not stated in this Court of Appeal reference as to what sums the plaintiff had sought as damages.

The trial judge also stated he would determine the quantum of these costs based on the following principles:

… 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.[5]

The specific terms of the Offers to Settle were not before the Court of Appeal. Judging by the employee’s submissions, it would appear that one issue was that the first Offer to Settle was stated to be “without admission of liability”. The employee argued that vindication was important to her and that this factor ought to have influenced the costs award to her favour.

A second argument was made by the employee with respect to the tax consequences of either Offer. Again it is not clear what the Offers specifically stated.

The argument on costs alone requires “leave” or permission to have this argument presented to the Court of Appeal. It is a strict test and failed in this instance.

Bigger Issue

The important aspect of this decision is that the successful plaintiff was not only denied her costs at any time through the litigation, but also was ordered to pay the defence costs, even though patently successful, based on the sum of damages sought and the result achieved.

Employers’ View

The employer defence will have yet another argument to cast fear into the plaintiff employee based on this comparative argument of “what did you sue for” and “what did you get”. This does not mean the formal Offers to Settle have no utility. They remain a formidable weapon,

Employees’ View

Civil litigation costs are typically a restraint on pushing a case. The thought of winning a case on the merits and still facing a costs argument will militate against unreasonable claims.

More significantly, employees must consider other means of relief such as human rights claims in the pure sense. Costs in the Human Rights Tribunal are not ordered to the successful employee. Perhaps even now more significantly, costs cannot be awarded against an unsuccessful employee or for that matter, a successful one.

Get Advice and Know Your Rights

Costs are a tricky and important issue. For advice on this issue and all employment law matters, contact the offices of Toronto employment lawyers Grosman Gale Fletcher Hopkins. We regularly advise workplace parties on a wide range of legal workplace issues. Contact us online or by phone at 416 364 9599 to schedule a consultation.

[1] Colistro v Tbaytel and City of Thunder Bay

[2] Colistro trial decision

[3] Often there is no deduction for disability sums where the plaintiff contributes directly or indirectly to the premiums. No argument was made on this question.

[4] The plaintiff is typically ordered to pay defence costs from the date of the Offer forward where they do not obtain a result greater than the Offer to Settle. Usually the plaintiff is awarded costs to the date of the Offer. There were two such Offers in this case. Rule 49.10(2) is the relevant rule which was not specifically used.

[5] This is a passage from the Court of Appeal decision. The costs endorsement is not on line.