When is a win not a win? When the winner has to pay the losing side’s legal expenses.
In a recent decision from the Ontario Superior Court in Ottawa, Goulding v. Street Motor Sales, 2013 ONSC 1904 (CanLII), the Honourable Justice Robert N. Beaudoin held that notwithstanding the plaintiff’s success in his wrongful dismissal case, because he brought the case in the wrong court, he would have to pay the losing side’s costs. Ouch.
Justice Beaudoin establishes the facts for his costs decision as follows:
Following a two-day trial of this wrongful dismissal action heard on Feb 11 and 12th, 2012, [sic, I assume His Honour means 2013] I granted judgment in favour of the plaintiff Donald Goulding in an amount equivalent to three month’s salary; namely $15,000 less amounts already paid. Judgment was granted against the Defendant Street Motor sales Ltd. (”Street Motors”). I dismissed the claims against 1514915 Ontario limited and Beverly Wayne Street at the outset of the trial as there was no clear and separate cause of action against these parties set out in the statement of claim. As the total recovery was below the amount that would be recoverable in Small Claims Court [that is, it was less than $25,000], I directed counsel for the Plaintiff to address Rule 57.05(1) in his cost submissions.
Rule 57.05(1) of the Rules of Civil Procedure says: "If a plaintiff recovers an amount within the monetary jurisdiction of the Small Claims Court, the court may order that the plaintiff shall not recover any costs."
In deciding that the plaintiff would not be awarded any costs Justice Beaudoin wrote:
 The main thrust of the plaintiff’s claims consisted of a wrongful dismissal claim to which he added vague allegations of conspiracy and of inducement. These allegations were made recklessly without any factual or legal basis. He named three Defendants where no clear cause of action was pleaded against two of them.
 It should have evident to Plaintiff’s counsel that the claim for inducement was totally without merit and was fatally undermined by his client’s letter of resignation from his previous employer where he claimed to have been constructively dismissed. The Plaintiff then pursued his previous employer and recovered damages as a result of the termination from his previous employment. Those facts were known well before these proceedings were commenced. Moreover, the Plaintiff offered no compelling evidence of inducement at trial. His claim of inducement would have failed in any event. This was a simple wrongful dismissal action that could and should have been brought in Small Claims Court. Instead, inflammatory pleadings were drafted to expand the issues and drive up costs unnecessarily.
 Even though the Defendants did not beat their Rule 49 offer to settle, the existence of an offer is factor I can consider under Rule 57.01(1). Had the Plaintiff accepted the Defendants’ alternate January 4th offer to transfer the matter to Small Claims Court, he would have kept the $1,153.00 that had been paid and would have been able to claim an additional $25,000 which would have represented five months’ notice. That was well within the range of damages he could have realistically expected at trial. Given that the Defendants were waiving any claim for costs incurred to that date, the value of that offer was significant.
 Rule 57.01(2) allows for an award of costs against a successful party “in a proper case”. This is such a case. The Defendants were put to unnecessary expense by an ill-conceived claim. Their claim for costs is reasonable, especially when one considers the amounts claimed by the Plaintiff. Therefore I order the Plaintiff to pay to the Defendants the sum of $10,000 plus HST of $1,300 and their disbursements which I fix in the amount of $271.12 for a total of $11,571.20.
Adding the two decisions together, the net result to the plaintiff (not taking into account taxes, any repayment of EI that he may have received, and what he may have paid his lawyer) the employee was awarded almost nothing. I suspect he brought came out behind, notwithstanding his success.
The case should stand as an important reminder to plaintiff’s lawyers to be careful in their selection of venue.
More importantly, the case addresses the common misconception that if someone wins in court the other side will have to pay all their legal costs. That belief is - typically - simply not true. (I say typically because there are occasions where the court will award full costs to a successful plaintiff, but those cases are few and far between.) In most cases, the court will award the successful party a percentage of what he or she has paid his or her lawyer - the percentage will vary depending on a host of factors will beyond the scope of this post.
Unsure Where to Start?
If you are in Ontario, are considering a wrongful dismissal case, and if you are unsure where to start, (did you know there are three different levels of court in Ontario?) it may be a good idea to seek professional legal advice. I would be happy to help you and can be reached at email@example.com or 613.238.6321.
As always, everyone’s situation is different. The above is not intended to be legal advice for any particular situation and it is always prudent to seek professional legal advice before taking any decisions on one’s own case.
Sean P. Bawden is an Ottawa, Ontario employment lawyer and wrongful dismissal lawyer practicing with Kelly Santini LLP, and part-time professor at Algonquin College teaching Trial Advocacy for Paralegals. He is a trustee of the County of Carleton Law Association for 2013.