Inflating a Wrongful Dismissal Claim May Cost You

It has been a common practice among some lawyers to "inflate" claims when filing pleadings in court. This questionable practice, however, has come under increasing scrutiny in a series of decisions that have imposed significant cost consequences against even a "successful" Plaintiff for improperly inflating their claim.

In Colistro v. Tbaytel, 2019 ONCA 197, the Plaintiff worked for Tbaytel for nearly twenty years. Tbaytel then hired a new VP of Business Consumer Markets. This deeply upset the Plaintiff as she alleged that the new VP had previously sexually harassed her. While Tbaytel took the allegations seriously, the Plaintiff went off work and then commenced a civil action for intentional infliction of mental suffering and wrongful dismissal. She sought damages in excess of $3 million, but was ultimately only successful in recovering $114,082.00 in the action. On the issue of costs, the interesting thing that the trial judge did was consider the degree of success that the Plaintiff ultimately had in comparison to damages she sought in the claim. On this point, the trial judge found that the Defendant was the "substantially successful" party in the action given that the vast majority of the Plaintiff's claim was dismissed. As a result, the trial judge ordered the Plaintiff to pay $200,000.00 in costs to the Defendant.

In another recent wrongful dismissal decision, the Plaintiff in Covenoho v. First Data, 2019 ONSC 2346 was a six month employee who was terminated without cause. In her claim, she sought 18 months' pay in lieu of notice as well as "millions of dollars in punitive damages". The trial judge, however, found that there was no basis to award "any exemplary, moral, punitive, or any other damages in respect of the allegations of improper conduct by the Defendant" and went on to find that the reasonable notice period for the Plaintiff was only 5 weeks. The trial judge then went on to comment that while the Plaintiff was successful in so far as she established that she was dismissed without adequate notice, the claim was "in effect buried in a large number of unsuccessful claims asserting other types of unproven wrongful conduct" and that the Defendant was successful in having those other claims dismissed. As a result, the trial judge found that there was no basis to award costs for or against either party.

The takeaway from these cases is that Plaintiffs' (and their counsel) need to put careful consideration into the drafting of their pleadings and have a reasonable basis to seek the damages that they are asking for. Where a Plaintiff is unwilling to compromise with respect to large damage claims, and further fail to make proper Offers to Settle, there is an added incentive for Defendants to litigate as their costs may ultimately be recoverable against the judgment itself.