Every week, Bell Temple LLP selects and reports on interesting and relevant decisions from the Ontario Superior Court of Justice, Ontario Court of Appeal, and Supreme Court of Canada.
This week’s case reports are written by Joseph Yazdani
In this post, we examine a recent wrongful dismissal decision in which the court took into consideration the employer’s improper conduct on termination in awarding the plaintiff costs. The decision also highlights how surreptitious recordings of termination meetings can serve as pivotal evidence—offering a crucial reminder for employers to conduct these meetings with transparency and clarity.
Teljeur demonstrates that, absent a Rule 49 Offer, a party is generally entitled only to partial indemnity costs. However, in the absence of such an offer, an elevated award may be granted when a defendant’s conduct is sufficiently reprehensible—either in the circumstances giving rise to the cause of action or during the litigation—to warrant judicial chastisement. In Teljeur, the court concluded that while the defendants conduct during the proceedings did not justify an award of substantial indemnity costs, their underlying conduct during the course of terminating the plaintiff’s employment did. Although no single factor independently justified an elevated award, the cumulative impact of the following five factors did:
1. Lack of Written Notice:
The employer failed to provide written notice of termination as required by the Employment Standards Act (ESA), despite the Plaintiff’s repeated requests for written confirmation.
2. Delayed ESA Entitlement:
The employer did not deliver the Plaintiff’s ESA entitlement within the prescribed timeframe—either within seven days of termination or on the next pay day—in accordance with s. 11(5) of the ESA.
3. Misleading Severance Assurance:
Although the Plaintiff was assured of receiving eight weeks’ severance at the time of dismissal, the employer ultimately limited the payment to the minimum required by the ESA.
4. Unpaid Out-of-Pocket Expenses:
The Plaintiff was owed $16,680.03 for out-of-pocket expenses incurred on behalf of the employer prior to termination. This sum, representing approximately 23% of his annual income, imposed a significant financial burden—especially given his inability to secure alternate employment.
5. Withheld Payments:
The defendants deliberately withheld payments they knew were owed to the Plaintiff until compelled by judicial order, an act the court deemed entirely unjustified.
To further substantiate its decision, the court cited several key precedents. In Akagi v. Synergy Group (2000) Inc., the court held that costs may be elevated to a substantial or full indemnity basis to mark the court’s disapproval of a party’s conduct in litigation. Similarly, Net Connect Installation Inc. v. Mobile Zone Inc. clarified that such elevated awards are justified only in narrow circumstances—such as when a Rule 49 offer is not engaged or when the losing party’s conduct merits sanction—and that only egregious behavior justifies the highest scale of full indemnity costs. In addition, McBride Metal Fabricating Corp. v. H & W Sales Company Inc. reinforced that elevated costs should be ordered only in rare and exceptional cases where reprehensible conduct, whether in the underlying dispute or during the proceedings, justifies a punitive award.
This decision also provides a compelling illustration of how surreptitious recordings of termination meetings can be admitted as critical evidence in wrongful dismissal litigation.
In this case, the recording was instrumental in revealing that the employer engaged in untruthful, misleading, and insensitive conduct during the termination process—failing to provide written notice despite repeated requests, delaying mandated payments, and offering misleading assurances regarding severance. Such evidence significantly contributed to the finding that the employer’s actions caused substantial mental distress, thereby justifying an award of moral damages.
In summary, these cases collectively demonstrate that courts will grant substantial or full indemnity costs only in rare and exceptional circumstances—specifically when a party’s conduct, whether related to the underlying claim or during litigation, is so severe and unacceptable that it warrants a strong judicial reprimand and acts as a deterrent against future misconduct. By issuing such an award, the court not only compensates the successful party but also reinforces the principle that abusive or negligent behavior will not be tolerated. For employers, Teljeur serves as an important reminder to conduct termination meetings in a transparent and forthright manner, ensuring that all communications are clear and well- documented. This proactive approach can help prevent any behavior that might later be
captured on surreptitious recordings and used against them in litigation.
If you require assistance with the review of your employment contract (s) or if you require representation for your wrongful dismissal dispute, please contact our Partners Adrian Serpa and Lora Castellucci for expert guidance.
