A former worker at Gibson Building Supplies has been awarded $6,000 in legal costs by the Ontario Superior Court of Justice following a wrongful dismissal case.
This decision follows an earlier ruling where the worker — B.W. — secured damages for wrongful dismissal and punitive damages, totaling $19,923.85. The court’s final determination on costs reflects both the successes and limitations of B.W.’s claims.
She had originally sought $37,895.22 in costs on a substantial indemnity basis, or alternatively, $31,751.18 on a partial indemnity scale. She argued that she was the successful party in what she described as an unnecessarily hard-fought legal battle. However, Justice Vermette found that, while B.W. was entitled to some costs, the award should be limited, given that the matter should have been pursued in Small Claims Court rather than Superior Court.
Initial ruling and plaintiff’s claims
In the June ruling, B.W. was awarded $9,923.85 in damages for wrongful dismissal and $10,000 in punitive damages. Her claims had included demands for lost earnings, unpaid wages, unpaid vacation pay, and damages for mental distress. She had also made a Rule 49 offer to settle the case in December 2021, proposing total damages of $17,889.23 plus costs.
The court, in its earlier endorsement, found in favour of B.W. regarding the wrongful dismissal and punitive damages but rejected her claims for mental distress damages. It also ruled that the appropriate notice period for B.W.’s dismissal was two months, not the five months she had sought. These rulings set the stage for the costs determination, as both parties disagreed on who should bear the legal costs and to what extent.
The issue of costs
B.W. sought to have her costs covered on a substantial indemnity basis, citing the high costs of the litigation and the defendant’s conduct during the proceedings. She argued that Gibson Building Supplies had engaged in unreasonable litigation behaviour, driving up her legal costs by delaying and complicating the process. As such, B.W. argued that she was entitled to elevated costs, which would reflect the three main purposes of costs awards: indemnifying the successful litigant, encouraging settlement, and discouraging inappropriate litigation conduct.
Conversely, Gibson Building Supplies argued that the plaintiff’s recovery was within the monetary jurisdiction of the Small Claims Court, where the cap is $35,000. The company pointed out that she only recovered approximately 38% of the total damages she claimed. Gibson also noted that it had made an offer to settle the case for $20,000 the day before the hearing, an offer that B.W. declined.
Court’s findings
Justice Vermette found that B.W. should have commenced her case in Small Claims Court, as the amount recovered was well within that court’s monetary jurisdiction. At the time the case was initiated, Small Claims Court had a jurisdictional limit of $35,000. Wilds’ total recovery of $19,923.85, according to the ruling, constituted only 57% of that limit.
However, despite this finding, Vermette rejected Gibson’s argument that she should receive no costs. “The reprehensible conduct of Gibson in failing to comply with its legal obligations as an employer led to an award of punitive damages,” Vermette wrote. Therefore, the court found it fair to award B.W. some costs but limited them to reflect the fact that she could have pursued the case in a lower court.
The judge also emphasized the principle of proportionality in determining costs, noting that the plaintiff’s request for elevated costs was excessive given the relatively straightforward nature of the case. Vermette wrote, “The fair and reasonable award of costs in the circumstances of this case is $6,000.00, which reflects a reduction of approximately 25%.”
Impact of the offers to settle
B.W.’s offer to settle in December 2021 and Gibson’s last-minute offer to resolve the matter for $20,000 were also significant considerations in the costs determination. B.W. had argued that her offer was more favourable than the outcome of the case, as the damages she was awarded exceeded her settlement offer by $2,034.62.
However, the court disagreed with this assessment, finding that she did not meet the criteria under Rule 49.10(1) of the Ontario Rules of Civil Procedure to trigger automatic costs consequences. Vermette ruled that B.W. did not obtain “a judgment as favourable as or more favourable than the terms of the offer to settle,” particularly when considering the breakdown of her claims and the corresponding legal costs.
Furthermore, Gibson’s offer to settle the night before the hearing was dismissed by the court as non-compliant with Rule 49, which governs formal offers to settle. “It is my view that it is not appropriate to give any weight to the Defendant’s offer to settle,” Vermette noted, as the timing and structure of the offer did not meet the rule’s requirements.
Conclusion
Ultimately, the court ruled that B.W. was entitled to a costs award of $6,000, significantly lower than the amount she sought but reflective of her partial success in the case. Gibson Building Supplies was ordered to pay the costs within 30 days.
For more information, see Wilds v. 1959612 Ontario Inc., 2024 ONSC 4632 (CanLII).
