Hardball Tactics by Employer Results in Significant Costs Awards
April 6, 2015
An employee sued for wrongful dismissal alleging he had been terminated without cause and that he had a 5 year minimum term contract guarantee. The employer denied any such guarantee existed and alleged the employee had resigned.
The trial judge found the employee to have been terminated, but that no 5 year minimum guarantee existed. The mention of 5 years was found to be outside of and after agreement was reached on the contract terms, and in the context of assisting the employee to secure a mortgage. The judge concluded there was no reason to think a jewelry salesman was “in the category of professional athletes, actors and similar roles” associated with typical minimum contract guarantees.
The trial judge found the reasonable notice period to be only 2 months, amounting to $13,520, which falls under the small claims court monetary jurisdiction (under $25,000). The employer took the position that the employee should not receive his costs, and be ordered to pay the employer’s costs which after a 7 day trial were $140,000 on a substantial indemnity basis.
The trial judge concluded it was not unreasonable for the employee to bring his claim under the ordinary Superior Court procedure rather than in the small claims court. If persuaded of the existence of a 5 year guarantee, damages would have been assessed at $175,000. The trial judge went on to criticize the employer for failing to make any reasonable offer to settle (it had only offered $3,000 inclusive of interest and costs). The employer was characterized as having ‘played hardball throughout the litigation’ including bringing a motion for security for costs.
The trial judge awarded the employee costs in the total sum of $92,030.98.
This decision should stand as a serious warning to employers that a failure to be reasonable can be costly.
Tossonian v. Cynphany Diamonds Inc., o/a Symphony Diamonds, 2014 ONSC 7484, costs at 2015 ONSC 766.