The defendants in a wrongful dismissal and sexual harassment case in Ontario have been ordered to pay nearly $65,000 in legal costs on a substantial indemnity basis, with the court calling their conduct “unreasonable” and “reprehensible”, noting that it added unnecessary delay to the proceedings.
The plaintiff, a superintendent of a rental building, had been assaulted and sexually harassed by two tenants living in the building. Despite being made aware of these incidents, the defendants, who owned the building and employed the plaintiff, failed to protect her from further harm, leading to her eventual termination. This case, while rooted in wrongful dismissal, highlights significant issues surrounding employer liability for harassment and the duty to protect employees from harm.
At trial, the superintendent was awarded one month’s notice plus benefits, damages of $125,000, moral damages of $50,000, plus costs and interest.
Background
J.S. had been employed as a superintendent when she was assaulted and sexually harassed by two brothers who were tenants in the building. Despite notifying her employer, no action was taken to ensure her safety, and the harassment continued. As a result of the harassment and the defendants’ inaction, J.S. sought medical attention for mental distress and took several months off work.
The court’s ruling detailed that “while the defendants knew of her medical treatment, they did nothing to assist or protect her,” ultimately terminating her after four months. The defendants argued that the employment contract had been frustrated, but the court rejected this argument, finding that there was no frustration of contract.
Key findings
The court’s findings were particularly critical of the defendants’ conduct throughout the proceedings. There had been four different changes in legal representation on the defendants’ side, with the last lawyer retained less than one month before the trial. The defendants were also found to have caused unnecessary delays, with multiple adjournments prolonging the litigation for more than five years.
The court noted that the costs sought by the plaintiff were within reasonable expectations, especially given the complexity and importance of the issues at hand. The court stated: “The issues were of significant importance to the plaintiff who had been assaulted and sexually harassed in the context of her employment and had not been protected by her employer.”
Furthermore, the judge found that the proceeding was not overly complex, and the costs sought by the plaintiff were reasonable and necessary. The defendants’ refusal to settle under Rule 49.10 and their clear “reprehensible, scandalous or outrageous conduct” throughout the trial were key factors in awarding substantial indemnity costs. Substantial indemnity costs are awarded when there is such conduct or when a party fails to accept an offer to settle that would have been more favourable than the final judgment.
Substantial indemnity costs
Substantial indemnity costs are intended to compensate the successful party for the legal expenses incurred in bringing or defending a proceeding. While costs are generally awarded on a partial indemnity basis, certain conduct warrants a higher level of compensation. In this case, the conduct of the defendants met the threshold for substantial indemnity costs.
According to the court, “the proceeding has little merit and is no basis for awarding substantial indemnity costs.” However, the defendants’ conduct throughout the trial and their refusal to protect the plaintiff from harm despite their knowledge of the harassment were significant factors in the court’s decision.
The court’s analysis of the costs also considered the reasonable expectations of the parties, the complexity of the issues, and the overall fairness of the costs requested by the plaintiff. The judgment emphasized that the costs sought were in line with the standards set by the Rules of Civil Procedure and the Courts of Justice Act, reinforcing the plaintiff’s entitlement to full compensation for her legal fees.
The total award for legal costs in this case was $63,693.53 plus interest.
For more information, see Stride v. Syra Group Holdings et al, 2024 ONSC 5760.
