Costs at the Small Claims Court

Deputy Judge Cleghorn recently released a costs decision in the case of Pilling v. Lowerys Limited, a wrongful dismissal case in Thunder Bay.

The decision on the merits doesn't appear to have been published - I would be interested in seeing a copy if any readers happen to have one - but the claim was for $22,744, and the judgment was for $1,724.65.  (I can glean from the costs decision that the defendant had alleged cause, an allegation the Deputy Judge considered not only to be unsubstantiated but actually "inappropriate".)  The Plaintiff had offered to settle on the basis of payment of $22,500 - not a huge discount from the amount claimed, but it would have been inclusive of costs and interest.  The Defendant, by contrast, had offered $2,500, all-inclusive, a week before trial.

Rule 14

The importance of offers to settle is this:  Rule 14 of the Small Claims Court Rules provides for 'double costs' to a party who made an offer, and then beat their offer at trial, under certain circumstances.  Obviously, the plaintiff didn't beat his offer to settle, but an effective defendant's offer could reverse the costs entirely - i.e. if Rule 14 doesn't apply to the defendant's offer, the plaintiff can get a contribution to his costs; if it does apply, the plaintiff has to pay the defendant an elevated costs award.

Fortunately for the plaintiff, the defendant's offer was too late to trigger Rule 14 - it has to be made at least 10 days before trial, and that offer wasn't.

But what's far more interesting is the Deputy Judge's analysis of whether or not the defendant beat their offer anyways:  He builds the costs presumption into the analysis, concluding that $2,500 isn't more than what the plaintiff ostensibly obtained, being $1,724.65 plus costs.

Rule 14 Commentary

That strikes me as an awkward analysis in the context of the Small Claims Court:  The entitlement to a representation fee, at Small Claims Court, is prompted by representation at a hearing.  If the matter hasn't gone to trial with a licensed representative, there's no ostensible entitlement to a representation fee.

To require an offer, prior to the trial, to account for trial costs would be strange, because the effect is that such a settlement would effectively compensate the plaintiff for costs not yet incurred.  The very point of an offer to settle is to avoid the costs associated with a trial.

By contrast, consider offers in the Superior Court context, where compensable costs accrue through the litigation:  As a defendant, I would make an offer that includes costs up to the date of the offer, but which thereafter either provides for no costs, or else provides for me to be compensated for my own costs.

In the Small Claims Court context, one might easily think that eligible disbursements up to the date of the offer should count, but those will typically be relatively modest.

Assessment of Costs

It appears that the Deputy Judge was looking for more details and argumentation:  The plaintiff sought a representation fee of $3,411.60, but with no breakdown of hours, hourly rates, or the experience level of counsel.

(Consider, by contrast, Deputy Judge Branoff's commentary in Fournier v. Cartier a little over a year ago:  "The Small Claims Court is therefore not as concerned with the number of hours spent and the hourly rate charged by the representative based on the years of experience.")

The Deputy Judge tried to evaluate, in a manner he considered 'arbitrary', the "acceptable amount to be paid to a lawyer to prosecute a Small Claims Court wrongful dismissal matter to the conclusion of a one-day trial."  He appears to have accepted the Defendant's figure of $2000 for this, and then reduced that on the basis of his discretion in light of the offers to settle.

He also declined to award travel costs - the plaintiff had retained Sean Bawden of Kelly Santini in Ottawa, who had to travel to Thunder Bay for the trial - on the basis that there was no explanation put forward for the necessity of retaining a lawyer from out of town.

Commentary

Some (not all) Deputy Judges are very restrained in their costs award.  Even operating within the 15% cap, the assessment of a 'reasonable' representation fee often seems pretty low-ball.

Mr. Bawden may not have told the Deputy Judge that he is specifically an employment lawyer with 6 years at bar, but surely the Deputy Judge would have been able to ascertain with reasonable certainty that he was not a new call.

It's generally accepted that a day of trial requires 1.5 to 2 days of preparation - it's a rule of thumb that's 'close enough' to be of some use in evaluating such things.  You expect an element of proportionality, of course - you wouldn't usually want a high-priced Bay Street lawyer spending 20 hours preparing for a trial on a $2,000 claim - but on a claim over $20,000, it's reasonable to expect a lawyer to do his due diligence.  In that light, even if one assumes that time prior to trial prep (i.e. productions, settlement conference, etc.) does not fall within the purview of the reasonable representation fee, I would still argue that the amount sought by the plaintiff for costs - while, yes, some detail wouldn't have hurt - would be inherently reasonable.  (Even at a low-end billing rate, it's certainly in the ballpark.)

As for travel expenses, it's actually quite common for employment lawyers to have to travel.  I have a number of files from various different parts of the Province.  The more remote the community, the less likely you are to find experienced employment lawyers.  I've talked before about the importance of hiring an experienced employment lawyer - it's a niche area of law, and there's a lot of value in having a lawyer who is familiar with all the core concepts, and up-to-date with the most recent developments in the law.

*****

This blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.

The author is a lawyer practicing in Newmarket, primarily in the areas of labour and employment law and civil litigation. If you need legal assistance, please contact him for information on available services and billing.