Battison v. Microsoft Canada Inc., 2021 ONSC 1341

Full Decision

Refusal to provide ‘costs estimate’ with R. 49 Offer to Settle under the Rules of Civil Procedure, disentitled plaintiff to Substantive Costs Award post-trial-victory. 

Material Facts
This is a Costs decision following the plaintiff’s success at trial reported at Battiston v. Microsoft Canada Inc., 4286. The plaintiff was employed with the defendant for roughly 23 years until he was dismissed without cause, in June of 2018. In addition to his base salary, he was entitled to annual increases, cash bonuses, benefits, and stock awards.

At trial, the Court ordered as follows:

  • The plaintiff was granted 23.75 months of pay in lieu of notice;
  • The plaintiff was awarded base salary during the notice period, less $238,306 already paid;
  • The merit increase claim for year 2018 was dismissed;
  • The Cash Bonus and Merit Increase for year 2018 dismissed;
  • The Cash Bonus award of $12,100 during the notice period and 0.7% annual merit increase during the notice period was awarded;
  • The plaintiff was awarded damages for the stock awards that would have vested during the notice period, had employment not be terminated – to be assessed based on stock prices on close of market prices for those dates;
  • The plaintiff was awarded $2,000 per year in lieu of health and dental care benefits during the notice period; and
  • The plaintiff was awarded up to $6,250 per year for his contributions to an RRSP during the notice period.

Total: $567,977.30 minus $238,306 paid, equaling $329,671.30 owing    

The plaintiff seeks costs of $162,504.90 based on his partial indemnity costs up to April 16, 2020, being the date of the first offer to settle, and his substantive costs thereafter. The defendant argues proportionate success at trial and non-compliance with the plaintiff’s R. 49 Offer to Settle to rebut the costs sought.   

Brief Answer
The plaintiff was awarded partial indemnity costs of $120,000 inclusive of disbursements and taxes, and zero for substantive indemnity costs.

In commencing the costs analysis, M. Faieta J., cited the Ontario Court of Appeal in DBDC Spadina Ltd. v. Walton, 2018 ONCA 232 at [4]:

Costs are in the discretion of the court. The factors relevant to the exercise of discretion are set out in Rule 57.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. They include the result and relative success of each party, the complexity of the proceeding, the importance of the issues and the conduct of any party that impacted the duration of the proceeding. The court must consider the purposes of costs, which include both the indemnification of successful litigants for costs of the litigation and the facilitation of access to justice: Boucher v. Public Accountants Council (Ontario) (2004), 2004 CanLII 14579 (ON CA), 71 O.R. (3d) 291 (C.A.), at paras. 35-37.

The defendant argues that the plaintiff’s costs ought to be reduced by 20% reflecting the proportionate success on the issues at trial. M. Faieta J., gave no merit to this argument at [10] noting that practically there was no divided success as the amount awarded by the Court exceeded the plaintiff’s offer to settle.

In weighing the reasonableness of the plaintiff’s costs outline, the defendant argued duplicity of trial costs by noting that three counsel of the plaintiff called respectively in 2013, 2015, and 2017 were unnecessary for a 3-day summary trial.

M. Faieta J., at [12] citing former Chief Justice Winkler in Risorto v. State Farm Mutual Automobile Insurance Co. (2003), 64 O.R. (3d) 135 (Ont. S.C.J.) at [9] as applicable:

. . . courts have repeatedly stated that the role of the court on a costs disposition is not to second-guess successful counsel on the amount of time spent on the case or the allocation of counsel to the tasks at hand. (See Tri-S Investments Ltd. v. Vong, [1991] O.J. No. 2292 (Quicklaw) (Gen. Div.); Lawyers’ Professional Indemnity Co. v. Geto Investments Ltd., [2002] O.J. No. 921 (Quicklaw), 17 C.P.C. (5th) 334 (S.C.J.).) This was a hard-fought motion which, if the defendant were successful would have terminated the proceeding short of a trial. Its importance cannot be discounted after the fact. 

Also noting at [11] the defendants challenge the plaintiff’s reasonable costs, but failed to submit their own Bill of Costs to illustrate what amount it would have reasonably expected to have incurred, citing Smith Estate v. Rotstein, 2011 ONCA 491, at [50]: The failure by the defendants to deliver it’s own Bill of Costs is, in opposing costs, ‘no more than an attack in the air’.

The plaintiff made two R. 49 Offers to Settle. The first dated April 16, 2019, with a second on November 4, 2019, and was written as follows:

The plaintiff offers to settle this proceeding with the defendant on the following terms:

1. The defendant pay to the plaintiff the amount of $530,000 minus regular statutory deduction and minus amounts paid to date;

2. The defendant shall pay to the plaintiff the costs, plus disbursements, for the action on a partial indemnity basis as agreed or as assessed by a judge of the Superior Court;

3. The action shall be dismissed; and

4. This offer is open to acceptance until five (5) minutes after the commencement of the hearing of the summary judgment motion in connection with this matter. 

The defendants argue that the plaintiff’s offer to settle was rendered improper as a result of the plaintiff’s refusal to provide an estimate of its costs. The parties discussed providing estimates of the partial indemnity costs on or after November 29, 2019, however the defendant refused and non were exchanged.

Citing the Ontario Court of Appeal in Rooney (Litigation Guardian) v. Graham (2001) 53 O.R. (3d) 685 at [19], M. Faieta J., took notice that:

[19] In Rooney (Litigation Guardian) v. Graham (2001), 53 O.R. (3d) 685 the Ontario Court of Appeal concluded that an offer to settle was a valid Rule 49 offer even though its terms included a provision for ongoing partial indemnity costs that introduced “some measure” of uncertainty. However, the court stated, at para. 51, that:

A party to whom an offer is made must be able to evaluate the offer at any time after it is made in order to decide whether to accept it. Thus, the party making the offer must be forthright and candid in disclosing the amount of solicitor- and-client costs incurred. A failure to cooperate may be dealt with by the trial judge’s overall discretion on costs.

On this basis, M. Faieta J., found that the plaintiff failed to be forthright when asked to disclose costs under their R. 49 Offer to Settle, and did not order substantive costs citing ‘conduct which does not promote settlement and this is inconsistent with the purpose of a R. 49 Offer’.        

Written by

Antonio is a litigator with Lemieux Law. His practice focuses on motor vehicle accidents, accident benefits, occupiers’ liability, personal injury, long-term disability, wrongful & constructive dismissal, CPP disability, human rights, general litigation and WSIA Appeals. When Antonio is not practicing law, he enjoys playing hockey, working on cars, and visiting family in southern Italy.