Canadian Employment Law Today

November 17, 2021

Focuses on human resources law from a business perspective, featuring news and cases from the courts, in-depth articles on legal trends and insights from top employment lawyers across Canada.

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Canadian Employment Law Today Canadian Employment Law Today | | 3 Cases and Trends Cases and Trends Canadian HR Reporter, 2021 CLAIMS FOR wrongful dismissal may have become even more expensive and risky for employers thanks to a recent Ontario Superior Court of Justice decision, Goruk v. Greater Bar - rie Chamber of Commerce. Despite the former employee losing at trial and the court finding that there was just cause to terminate, the court nevertheless reduced the cost award against the employee by $35,000 (about 22 per cent) be - cause her wrongful dismissal claim was "rea- sonable." The decision is another in a long line of employee-friendly decisions from Ontario courts. Whether it will be appealed or spark a trend in employment litigation remains to be seen. Until there is clarity, employers should take heed. Sybil Goruk worked for the Greater Barrie Chamber of Commerce from 1997 until she was terminated for cause in 2014 for taking unauthorized vacation, granting herself an unauthorized pay raise, awarding contracts to her sons without following protocol, and reimbursing herself for charges on a personal credit card. Goruk sued for wrongful dismissal and sought damages of more than $800,000. The trial judge found the employer had just cause to terminate Goruk's employment and dismissed her claim. In terms of the cost award, the court started from the proposition that the employer had been successful and was entitled to its costs. Given Goruk had claimed nearly $1 million in damages, the trial took 13 days to complete and neither party acted unreasonably, the em - ployer argued its $160,000 legal bill was a fair, proportionate and reasonable amount. Not surprisingly, Goruk disagreed. She argued the cost award should be in the range of $25,000 to $30,000, for four reasons: • She was a partial winner at trial. • The employer unnecessarily lengthened the proceeding. • The costs awarded were disproportionate. • Her claim was reasonable. The court dismissed the first three argu- ments because it found the employer was the clear winner, the employer did not unneces- sarily lengthen the proceeding, and $160,000 was not disproportionate. However, the court agreed with Goruk on the last point — that her claim was reason - able and that this should be a basis to adjust the cost award against her. In reaching this decision, the court expressed concern for the potential impact on access to justice if a large costs award was made against an employee who had advanced a reasonable, albeit losing, case: "The plaintiff advances, in mitigation of the quantum of any costs awarded, the argument that her claim, while unsuccessful, was never - theless reasonable. I agree. As I have said, this was a close call. Her case, though unsuccessful in the end, was a reasonably compelling one. "In my view, the reasonableness of the plaintiff's position in this case is a relevant factor, because it touches on access to justice issues. "This is a wrongful dismissal action. There is almost always a power imbalance in em - ployment cases in favour of the employer… [which] raises a heightened concern about access to justice. Future dismissed employees may look to cases like this one and be scared away from advancing legitimate claims due to the risk of facing a crushing costs award in the event of a loss." In the end, the court balanced the compet - ing interests to the benefit of the employee and determined the fair, reasonable and pro- portionate cost award for the employer was $125,000, plus disbursements and taxes. However, it noted that "litigation is an expen- sive business" and normally losers pay a "sig- nificant portion" of the winners' costs, which Goruk knew when she filed her suit. "The [employer] was successful and is enti- tled to an award of costs… [and] ought not to have to pay the price for any under-estimation of risk on the part of the [employee]," said the court. "At the same time, I am prepared to take into consideration the negative impact that crushing costs awards may have on access to justice. Factoring in the reasonableness of the [employee's] claim results, in my view, in a modest reduction in the amount to be awarded in all the circumstances of this case." Takeaways for employers Goruk is noteworthy because it appears to de - part from long-standing principles regarding costs, by taking into consideration the reason- ableness of the losing party's claim as a stand- alone factor. It will be interesting to see if this decision is followed by other courts. Perhaps more importantly, will "reason- ableness" be considered equally for employ- ers? In other words, if an employer alleges cause, loses at trial, but it was "a close call," will the employer be given the same break on costs as was the employee in Goruk? This seems unlikely, particularly given the court's comments about power imbalance (even in this case, where the employee was represented by experienced counsel) and the potential im - pact a large cost award could have on access to justice. For more information, see: • Goruk v. Greater Barrie Chamber of Commerce, 2021 ONSC 6290 (Ont. S.C.J.). BY DANIEL HEATH Wrongful dismissal claim unsuccessful, but reasonable Ontario court reduces cost award against terminated employee because it was 'close call' ABOUT THE AUTHOR Daniel Heath Daniel Heath is a lawyer with Sherrard Kuzz LLP, a management-side employment and labour law firm in Toronto. Dan can be reached at (416) 603-0700 (Main), (416) 420-0738 (24 Hour) or by visiting www.sherrardkuzz.com. The employees were aware of the severance policy but none signed an agreement adding it to their contracts. CREDIT:JOSHLAVERTY iSTOCK

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