Law Times

April 25, 2016

The premier weekly newspaper for the legal profession in Ontario

Issue link: http://digital.lawtimesnews.com/i/670066

Contents of this Issue

Navigation

Page 1 of 19

Page 2 April 25, 2016 • lAw Times www.lawtimesnews.com was worthwhile and benefited Bronstein's clients and the pub- lic. However, some costs of the investigation went beyond what was expected at the outset and beyond what can be termed rea- sonable and proportionate at the conclusion," Brown wrote. The bulk of the reduction to Crawford's expenses related to its outside counsel, How- ard Drabinsky, a McMillan LLP partner in Toronto whose $800-per-hour rate was $200 above any other lawyer involved in the case. Brown deducted almost $700,000 from his $1.2-mil- lion legal bill in her decision, explaining that it was not clear why his presence was reason- ably necessary at the examina- tion, interlocutory application, and substantive hearing related to the matter, when as a com- mercial solicitor, he did not speak at any of the appearances, "draft any court documents, conduct the examination of Mr. Bronstein or assist in obtaining evidence for the hearings." Crawford claimed there were no B.C. counsel that could match his experience in class action settlement adminis- tration, but Brown said that missed the point: "While Mr. Drabinsky may be experienced in the adminis- tration of class actions, this was not a skillset that was necessary in the Bronstein matter. This was an investigation of a law- yer's practice. Nothing in Mr. Drabinsky's background sug- gests that he had the necessary investigatory experience to be of assistance in this regard," she wrote. "Given his skillset, his hourly rate and his base in To- ronto, Mr. Drabinsky's involve- ment should have been limited to consulting from time to time rather than acting as co-coun- sel throughout the Bronstein review." Brown also sliced $180,000 off Crawford's internal costs, representing a quarter of the monitor's accounts as unneces- sary, redundant, or duplicative. She took issue with the amount billed by the company's vice- president, Michael Mooney, for attendance at court, as well as for analysis and reporting. "It is not clear why such an amount of analysis would have been necessary," considering the firm's in-house counsel was billing for similar activities, Brown wrote. Both Drabinsky and Mooney declined opportunities to com- ment for this story. After Brown's findings, the federal government sought the return from Crawford of all the costs that she found unreason- able and unnecessary. Crawford argued the summary nature of her assessment was insufficient to support reimbursement, and she claimed it would be unfair to retroactively apply a new re- view to accounts the company had been submitting for years. A procedure had been estab- lished for the review and assess- ment of Crawford's accounts by a judge under the class action settlement agreement, but nei- ther Crawford nor the federal government had ever used it. "Ultimately, I am uncon- vinced that any injustice or un- fairness is caused by requiring Crawford to repay unreason- ably charged amounts. Particu- larly when Crawford never pre- viously brought these accounts forward to be assessed, as it was obliged to do," Brown wrote in her April 8 judgment. Brown also set a procedure for the assessment of Craw- ford's outstanding accounts, based on her own previous de- cision. "The accounts must be rea- sonable and necessary in or- der to be approved," she wrote. "Crawford cannot expect re- imbursement for undertak- ing unnecessary, redundant or duplicative tasks. Payment for unnecessary or redundant tasks could never be reason- ably expected; however, this is particularly the case when the proposed payee would receive the amounts from public funds in the context of a process in- tended to address truth, rec- onciliation and assistance for historical wrongs committed against the aboriginal peoples of this country." Radnoff says the unique facts of this case make it "a bit of an outlier," but adds that judges do appear more willing than in the past to question the ac- counts of monitors appointed by the court in bankruptcy and receivership cases, where they appear most often. "I think when courts see very significant amounts, they are being a bit more careful these days," Radnoff says. "They do have a gatekeeper function and they want to exercise it prop- erly." LT to bargaining," says Wozniak. "So when you go work for someone, somebody gives you an annual contract and says, 'You want to work for me, here are the terms.' The employee has very little le- verage." The lower-court judge, how- ever, acknowledged the intent to limit damages, so he ordered a mini-trial to determine appropri- ate severance based on common- law precedents and Howard's ef- forts to look for another job. That decision — to revert to a common-law assessment of damages — was found errone- ous by the appeal court, which ruled that Howard and his em- ployer had committed to a cer- tain outcome when they entered into the contract. If that contract contained poorly worded and unenforce- able provisions, Benson Group, which drafted the contract, had only itself to blame. "The respondent is not an unsophisticated party," Justice Miller writes in his decision. ". . . if an employer does not use unequivocal, clear language and instead drafts an ambiguous or vague termination clause that is later found to be unenforceable, it cannot complain when it is held to the remaining terms of the contract." The appeal court's decision re- lies on the 2012 ruling in Bowes v. Goss Power, which also in- volved a without-cause dismissal. In that case, the Ontario Court of Appeal ruled that, where parties had agreed to a fixed period of notice, the employee had no obli- gation to mitigate. Justice Miller found that, in Howard's case, the parties had similarly negotiated for certainty, and that it would be unfair to subject Howard to litigation and a common-law assessment when the parties had expressly bar- gained outside the common law. As the decision states, "In my view, the parties did bargain for certainty when they entered a fixed term contract. . . . There is no reason to depart from the rule in Bowes that there is no duty to mitigate where the contract specifies the penalty for early ter- mination." For Wozniak, it all amounts to a very expensive lesson for Ben- son Group — and a case study for employers who make use of fixed-term contracts. "The courts have consistently said that, if [an early-termination] clause fails to include a provision that preserves the employee's en- titlements to benefits, then it's un- enforceable," he says. "Had employer done so in this case, our client would have received two weeks' pay. Now, instead of paying two weeks, the employer has to pay 37 months as a consequence for failing to draft an enforceable termination clause. . . . If you run the numbers, Benson is going to have to pay this guy over $200,000." Wozniak says companies must be extremely careful when draft- ing early-termination provisions. And for companies currently en- gaged with fixed-term employees, they may have to come to terms with the fact that these employees cannot be laid off without incur- ring full damages. "They're going to be stuck with an inability to terminate without having to pay the employee all of the amounts owing on the unex- pired term of the contract." Albert Campeas, who repre- sented Benson Group, declined comment for this story. He noted, however, that his client was currently considering an appeal. LT NEWS Continued from page 1 Continued from page 1 I think when courts see very significant amounts, they are being a bit more careful these days. They do have a gatekeeper function and they want to exercise it properly. Brian Radnoff Fixed-term contracts case study Ruling reduces legal bill THIS PROGRAM CONTAINS 3 PROFESSIONALISM HOURS INFORMATION TECHNOLOGY LAW SPRING FORUM 2016 CHAIRED BY Lisa R. Lifshitz, Partner, Torkin Manes LLP Cory Freed, Senior Legal Counsel, Microsoft Canada Inc. St. Andrew's Club & Conference Centre 150 King Street West 16th Floor, Toronto ON, M5H 1J9 MAY 16, 2016 | WWW.IT-CONFERENCE.CA Powered by Untitled-3 1 2016-04-20 2:42 PM encourages readers to send us letters, but will edit them for space, taste, and libel consideration. Please provide your name, address and contact number and send all letters to: Law Times, 2075 Kennedy Rd., Toronto, Ont. M1T 3V4 E-mail: glenn.kauth@thomsonreuters.com

Articles in this issue

Links on this page

Archives of this issue

view archives of Law Times - April 25, 2016