10.33: Court considerations in making costs award

Case Summary

The Plaintiff was the president and CEO of the Defendant company. He commenced an Action against his former employer claiming wrongful dismissal. Verville J. heard the Trial of the Action and issued a Memorandum of Decision in which the Plaintiff was granted damages. The parties returned to seek direction with respect to Costs.

The Defendant made an informal offer that exceeded the Plaintiff’s entitlement under the Judgment, and a Formal Offer which fell just short. With respect to Costs, Verville J. observed that Rule 10.33 provided the Court considerable discretion in making a Costs award. While the Plaintiff was successful, his total entitlement was around 20% of what he claimed. Justice Verville commented that the impact offers have with respect to Costs should be measured on a continuum. Within the continuum there are oral offers, without prejudice offers, with prejudice offers, and Formal Offers made pursuant to the Rules of Court in effect at the time they are made. Where a Formal Offer pursuant to the Rules of Court is made, counsel has an obligation to advise the client that the repercussions are severe if the judgment received is less than the amount offered. With less-formal offers, the repercussions may, depending on the facts, be less serious. His Lordship stated that all forms of settlement offers are to be encouraged.

The Defendant argued that the Plaintiff should be deprived of Costs because of a without prejudice offer that had been made over 14 years before. While the Plaintiff did not accept the informal offer, Verville J. noted that the Defendant had years to formalize it but failed to do so. Verville J. noted further that Formal Offers which fall short, but are close to the Court’s award, are properly considered in relation to Costs. In this case, because the Defendant’s Formal Offer fell short of the Plaintiff’s entitlement by about $61,000, Justice Verville concluded that the Plaintiff should be awarded 80% of his Costs and Disbursements.

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