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A Lesson in Costs: Giacomodonato v. PearTree Securities Inc.

One aspect of litigation that often causes equal parts apprehension and confusion, especially for employees with little experience with the Court system, is cost awards, colloquially known as “costs.” While there have been many attempts to clarify what costs are to help those entering litigation better understand the risks, the discretionary nature means that some uncertainty is built in.

Employees seeking to bring a wrongful dismissal suit are often understandably frightened by the mere existence of costs. Indeed, for an employee who made under $60,000 per year, the mere thought of having to pay even a portion of the actual legal costs of a large corporation is a nightmare. In many cases, the employee cannot even play for their own legal lawyer upfront, hence the need for a contingency fee retainer. In practice, however, costs tend to be the boogeyman of many employers.

Why Award Costs

To make sure the winning side actually wins, the Ontario Court of Appeal set out the principles of costs awards as follows:

  1.    to indemnify successful litigants for the costs of litigation, although not necessarily completely; This means that some of your legal fees are refunded by the other side being forced to pay them.
  2.    to facilitate access to justice, including access for impecunious litigants; The goal is that poor litigants should not be prevented from bringing valid claims due to cost.
  3.    to discourage frivolous claims and defences; No one should be wasting court resources on worthless or malicious claims or defences, forcing the other side to incur increasing legal fees in order to respond.
  4.    to discourage inappropriate behaviour by litigants in their conduct of the proceedings; and If you do not act appropriately in how you litigate, the Court will punish that behaviour through a monetary penalty and compensate the victims of your conduct.
  5.    to encourage settlements. Court resources are scarce and limited, and parties should act in good faith to settle matters. Failing to accept a good offer (i.e., one equal to or less than the result at trial) can drastically affect the amount or to whom the costs are awarded.

All of these principles are interpreted through all of the circumstances of the case to set an award of costs that is reasonable, fair, and proportionate to those being forced to pay it.

How this can play out

The case of Giacomodonato v. PearTree Securities Inc. should have been a standard wrongful dismissal case for a senior executive. The actions of the Defendant made it anything but.

In January 2018, Mr. Giacomodonato was terminated without cause. In February 2018, PearTree demanded that Mr. Giacomodonato sign a certificate of compliance regarding the non-competition clauses in his contract despite this requirement not being in any previous documents. After Mr. Giacomodonato refused, PearTree immediately decided that this refusal meant that he had breached these clauses, stopped the payments owed to him, and deducted the amounts already paid from the balance of other amounts payable.

Mr. Giacomodonato found new employment in September 2018. Upon learning of this, PearTree took no action.

It was only in response to the claim for wrongful dismissal and amounts owed that PearTree brought a counterclaim against Mr. Giacomodonato for 2.599 million dollars. It maintained this counterclaim until midway through the trial. This meant Mr. Giacomodonato’s lawyers undertook hundreds of hours of legal work in response to the meritless counterclaim.

The Court was understandably not pleased with these types of litigation tactics. The Judge ruled that PearTree’s counterclaim had no merit.

The Judge awarded Mr. Giacomodonato $ 718,103.05 for his claims. However, the Judge further awarded $830,761.75 in costs due to PearTree’s litigation strategy. In the words of the Judge,

Having presided over this ten-day trial, however, certain things are crystal clear to me. PearTree invited this litigation. PearTree conducted this litigation in an unforgiving, scorched earth, and bare-knuckle manner. It missed no opportunity to malign Mr. Donato. PearTree’s decision to pursue a counterclaim and punitive damages of so little merit leaves me to infer that those claims were advanced only for tactical reasons and in an attempt to dissuade Mr. Donato from pursuing the money PearTree owed to him. PearTree’s attempt to now claim that this action “was an unexceptional employment action” is entirely inconsistent with its own approach to this litigation. In my view, and in light of the choices it made in the conduct of this litigation, it should have reasonably expected to face a costs order of this magnitude.

Takeaways for Employees

  1. Don’t be afraid of cost awards. The purpose is to set a reasonable, fair, and proportionate cost award. This would likely be very different for an employee and a multi-million-dollar corporation.
  2. Don’t be afraid of Counterclaims. In most cases, this is the employer handing you leverage in settlement and a much higher cost award at trial. Many employers will become desperate to settle once they realize exactly how much trouble they are in.
  3. Choose a lawyer you trust will help you stand your ground. Defending against a counterclaim or bad faith litigation tactics can be emotionally difficult. You want someone you know will take on that stress and get you what you deserve.

We at De Bousquet PC pride ourselves in our client-focused approach and empathetic commitment to your case. We understand that beyond excellent legal advice, terminated employees need an advocate who is there for them. We do not pass off consultations to staff to offer “free” services or bounce your file between uncaring hands. The lawyer you have the consultation with is the lawyer who will take the case from the first word of the demand letter to the last submission at trial. Contact us today.

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