Category: Employment Law

As a plaintiff, losing your court case is bad. Having to pay thousands of dollars for the defendant’s legal fees is much worse.

Part of the strategy in any litigation proceeding is weighing what your case is worth versus how much you might spend to prove that case. From a financial perspective, there is not much point proceeding to trial over a $1,000 loss if it will cost you $5,000 in legal fees by the end of trial. Many people believe that the loser in any court case automatically has to pay for the winner’s legal fees. This is partially true, but also misleading. In a typical court case, it is exceptionally rare to get 80-90% of your legal fees paid for, let alone 100%.  The amount of the winner’s legal fees that must be paid for by the losing party is called a “costs award”. Considering how much you will incur in legal fees plus the cost of the other side’s legal fees is something about which  any prudent lawyer would advise his client.

In Small Claims Court, costs awards work differently. The Courts of Justice Act places a cap of 15% of the amount claimed (up to $25,000 which is the limit of the Small Claims Court), plus disbursements, such as travel expenses. In rare circumstances, the judge can award additional costs to penalize a party for unreasonable behaviour. For a more detailed breakdown on how Small Claims Court works, there is helpful information available from the Ministry of the Attorney General.

Barton v Bowerman is one those rare circumstances where the judge awarded more than the 15% limit. The plaintiff was hired by the defendant to be an administrative assistant at their accounting firm, subject to a six month probation period. Within weeks of starting her new position, the plaintiff was fired. She sued the defendant for $25,000 claiming she was owed pay for the full six months of her probation. The court noted that the issue was not whether the plaintiff was wrongfully dismissed, but whether she was entitled to more pay in lieu of notice than the two weeks’ pay the defendant gave her. Given her six month probation period, she was not.

In the costs decision, the judge awarded the defendant-employer $7,500.00 in costs plus $500.00 in disbursements. This is double the traditional 15% limit. In his written reasons, Deputy Judge Lyon Gilbert wrote the plaintiff wasted a full day of the court’s time exploring evidence regarding just cause for her dismissal even though the defendant stated she was fired without cause. The plaintiff also amended her claim to include claims under the Human Rights Code, but never gave any evidence to support these claims. The defendants also made an offer to settle one year before the trial which would have given the plaintiff a better result than was obtained at the trial.  The plaintiff did not accept this offer. The plaintiff was also a sophisticated litigant: she had practiced as a paralegal and was represented by a retired litigation lawyer. All of these factors point to the conclusion that there was no reason for the plaintiff to have dragged out her issue as much as she did. You can read about the full costs award here.

This decision highlights the importance of presenting a clear case for the court to consider. While you may want to advance every possible cause of action in your claim, without the proper evidence to back up your claim, this could create a very costly detriment. While there are several self-represented litigants who are able to successfully argue their claim in court, a lawyer may be able to argue a small claims file in less time and for less money than one might expect. If you would like to discuss your small claims file, a member of the Devry Smith Frank LLP team would be pleased to assist you.

It has long been recognized by the courts that there is a power imbalance between employers and employees. Given the nature of the employer-employee relationship, one may be able to see why an employee may feel as though they are at the mercy of their employer. Luckily, there are statutory safeguards to place employees on an even playing field with their employer.

An employee will often rely on a employer to be paid for the work they perform, as well as any benefits to which they were entitled under the employment contract. After working for an employer for an extended period time, it is not unusual for an employee to become heavily dependent on the steady stream of income and benefits from their employer.

It would be understandable then that an employee, who showed up to work one day to find that their employer has gone bankrupt, would panic, and feel vulnerable and distraught. Such a scenario may evoke memories of the recent news that Target would be bowing out of the Canadian marketplace. Target, however, has not gone bankrupt in Canada – it has filed for creditor protection under the Companies’ Creditors Arrangement Act (CCAA), which is perhaps a topic for another blog. That being said, their current situation in Canada acts as a good starting point to discuss what employees can do in the case that their employer goes bankrupt. This was also recently discussed in another article in The Lawyers Weekly which you can find here.

Employees of a bankrupt employer are not entirely without the means to try to recover unpaid wages or termination and severance pay. One of the means an employee can use is the Wage Earner Protection Program (“WEPP”). According to Service Canada, the WEPP “compensates eligible workers for unpaid wages, vacation, severance and termination pay they are owed when their employer declares bankruptcy or becomes subject to a receivership under the Bankruptcy and Insolvency Act.”

WEPP is therefore an extremely valuable resource for an employee faced with a bankrupt employer. Employees’ claims for unpaid wages, termination pay etc., are equivalent to that of unsecured creditors. In other words, employees would be closer to the end of the line of creditors hoping to get whatever assets (liquidated or not) the company had remaining. This could mean that by the time it was the employees’ turn to collect on their unpaid wages or termination pay etc., the company may not have anything left to give. WEPP, however, is not paid out of the assets of the bankrupt company, but rather directly from Service Canada. This gives employees some certainty that, if they meet all the necessary criteria set out by WEPP, they will be able to recover some of the money their bankrupt employer owes them. If found to be eligible for WEPP, it appears that an individual can receive a maximum payment equaling up to four weeks of insurable Employment Insurance earning which in 2015 is $3,807.68.

Another place employees can look to for help when their employer is felled by bankruptcy is the Employment Standards Act, 2000 (“ESA”). Under section 81 of the ESA, directors of an employer can be liable for wages in a few instances, one of which is if, “the employer is insolvent, the employee has caused a claim for unpaid wages to be filed with the receiver appointed by a court with respect to the employer or with the employer’s trustee in bankruptcy and the claim has not been paid.” (s.81(1)(a)) This acts as a remedy for employees to seek compensation from directors in the case that after bankruptcy they have been unsuccessful in recovering unpaid wages. It is important to note that this remedy only applies to wages, and not termination or severance pay.

In short, while a bankrupt employer may mean the end of your employment, you are not entirely helpless and if you choose to avail yourself of some of the avenues explained above, you have a chance of recovering at least some of what you are owed.