Cost Consequences: Specific Cases

*Article written by Hannah Goranson

As discussed in our last article, Cost Consequences, An Overview, it is important to understand how the costs of litigation will be paid and who will pay them. Past cases can provide good examples of how the Court decides who has to pay these costs, and how much to make them pay, such as the following recent Ontario decisions where cost awards were in dispute.

Ruston v. Keddco Mfg (2011) Ltd., 2018 ONSC 5022:

In August 2018, the Superior Court ordered that an employer pay approximately $500,000 in costs to an employee in the wrongful dismissal case of Ruston v. Keddco Mfg (2011) Ltd., 2018 ONSC 5022. This order of costs was in addition to the approximately $600,000 in damages that the employer had to pay the wrongfully dismissed employee. The employer's counter-claim for $1.75 million was unsuccessful.

The employer challenged this $500,000 cost award.

The Court rejected the employer's challenge. The Court held the cost award was fair and reasonable. In reaching this conclusion, the Court found the award to be proportionate to the total value of the claim and unsuccessful counter-claim.

Importantly, the Court, in upholding the award, emphasized the employer's poor conduct throughout the litigation. The employer had rejected a reasonable R 49 Offer to Settle. Additionally, the employer had brought unfounded claims, refused to admit facts, and generally made the claim complicated and costly.

The end result was that it was fair to make the unsuccessful employer pay the substantial portion of the successful employee's costs.

Colistro v Tbaytel, 2019 ONCA 197:

In March 2019, the Court of Appeal in Collistro v Tbaytel, 2019 ONCA 1917 rejected an appeal to a costs award.

An employee had claimed over $3,380,000 in damages for constructive dismissal from her employer. The employee was successful in her claim but was only awarded a small portion of the damages, approximately $115, 000.

Interestingly, the trial judge ordered that the employee had to pay some of the employer's costs. The trial judge ruled that as the employee only received a small portion of the damages, the employer was in fact the largely successful party. This meant the employer should have some of its costs paid.

Prior to trial, the employer had made a R 49 Offer to Settle that was more favourable to the employee than the actual judgement. The trial judge, however, declined to apply the cost consequences. Instead, he fixed the costs at a level he thought to be fair and reasonable.

Similarly to Ruston v Keddco Mfg, the Court's primary concern here was the fairness of the award in the circumstances.

Key Takeaways

These decisions provide good examples of the factors the Court considers when making cost awards. The Court's key concern is what is fair and reasonable. Generally, cooperation and steps taken to speed up the litigation are viewed favourably. Conduct that delays the litigation or increases the costs is frowned upon. It is important to for employees and employers to keep these cost consequences in mind from the beginning of litigation.