A recent decision from the Ontario Superior Court provides a word of caution to employees who bring questionable wrongful dismissal claims.
In Goruk v Greater Barrie Chamber of Commerce, the plaintiff Ms. Goruk was terminated from her employment with cause and she brought a claim for wrongful dismissal, seeking a damage award equal to two years’ salary. In a separate written decision, Justice Boswell concluded that the Defendant employer did, in fact, have just cause to terminate Ms. Goruk’s employment based on several incidents of misfeasance and poor judgment. As her claim was therefore unsuccessful, the litigation then moved on the final stage—assessing the amount of costs to be paid.
The law of costs can generally be summarized as “loser pays”, although in practice the assessment of costs is much more nuanced and takes into account several different factors, including the complexity of the proceedings, the importance of the issues, any unnecessary delay caused by either party, and offers to settle made by either side.
Many litigants are often surprised to learn that the successful party does not have all their costs reimbursed. The general rule of thumb is an award equal to 40-50 percent of the successful party’s actual costs. However, costs awards are not required to follow any set formula and they are largely subject to the discretion of the presiding judge, within the confines of the applicable rules of court and having regard to what is fair, proportionate, and reasonable.
In employment cases specifically, courts are often hesitant to award high costs against employees for at least two reasons: (1) the imbalance of bargaining power and financial means between an employee and an employer; and (2) the risk of dissuading employees from bringing legitimate claims, thus posing an acute access to justice issue.
In Goruk, the action lasted a total of seven years and the trial itself took 13 days. The gross expenses of the Defendant alone amounted to approximately $257,000, with the Defendant seeking to recover $183,000 in costs. The costs award sought by the Defendant was particularly high because they had made an offer to settle for $25,000 before trial, which was declined by the Plaintiff. Because the Plaintiff’s result at trial was worse than the $25,000 offer, the Defendant was entitled to claim increased costs for every stage of the litigation taking place after the offer was refused.
Perhaps most notable in this case was how the Court received the Plaintiff’s arguments relating to impecuniosity and the reasonableness of her claim. Ms. Goruk argued that costs should not be awarded because of her dire financial circumstances (she had to sell her house to fund the litigation). She also argued that although she was ultimately unsuccessful, her claim was nevertheless a reasonable one.
Justice Boswell did sympathize with Ms. Goruk’s financial state, and he also agreed that her claim was reasonably compelling (he called it a “close call”). However, because she was unsuccessful, there was no basis in law to decline to order costs.
Justice Boswell’s assessment concluded with these words:
“[L]itigation is an expensive business. It is not for the risk-averse or the faint of heart. There are winners and there are losers. And it is a well-established convention in our civil justice system that losers pay the winners a significant portion of their costs. Ms. Goruk knew that going into this case.”
Although Justice Boswell was clearly attuned to the implications of his decision for access to justice, he was nevertheless required under the law to order a substantial costs award. Factoring in a modest reduction based on the reasonableness of Ms. Goruk’s claim, Justice Boswell settled on an award of $143,978 (approximately 56% of the Defendant’s total costs).
This decision is somewhat unusual in the high quantum of costs awarded, but it does convey a word of warning to prospective plaintiffs who may have precarious legal claims. Even though workers typically elicit greater sympathy from courts when facing off against organizations with greater economic means, advancing shaky claims to the end of trial will result in significant costs consequences if the claim is ultimately unsuccessful.
Author: Colby Georgsen