Executive Summary: Key Legal and Evidentiary Issues

• The case concerned a wrongful dismissal under Ontario’s simplified procedure rules, involving disputed termination and notice entitlements.

• The plaintiff succeeded in obtaining damages for common-law notice but was denied bad faith, aggravated, or punitive damages.

• Despite lower damages than initially claimed, the plaintiff beat two reasonable offers to settle, triggering cost consequences under Rule 49.

• The defendant’s position that the plaintiff resigned and failure to admit constructive dismissal were found unreasonable and unsupported by evidence.

• The court criticized the defendant’s hardline litigation stance and failure to settle reasonably, which led to unnecessary trial costs.

• Costs were awarded to the plaintiff at the maximum permitted under the simplified procedure: $62,699.16.

Background and dispute

In Lachapelle v. St. Laurent Automotive Group Inc., 2025 ONSC 2879, the Ontario Superior Court addressed costs following a wrongful dismissal action tried under the simplified procedure in Rule 76. Jesse Lachapelle sued his former employer, St. Laurent Automotive Group Inc., seeking damages for wrongful dismissal, bad faith, and unpaid compensation.

The trial was held over five days across January and February 2025, and the court issued its main decision in March 2025 (2025 ONSC 1956). The plaintiff was awarded $65,610.02 in damages for common-law notice over a seven-month period, plus $6,561 for benefits. His claims for bad faith, aggravated, and punitive damages were dismissed, as was a claim for an unpaid bonus.

Dispute over costs

The parties could not agree on the amount of costs to be paid. The plaintiff sought $62,699.16, representing the cap under Rule 76.12.1 ($50,000 for fees plus HST and $6,199.16 in disbursements). The defendant countered with a proposed $30,000 all-inclusive award, arguing that the case lacked the complexity to justify maximum costs and that the plaintiff had advanced excessive claims.

Justice Pierre E. Roger rejected the defendant’s position. He emphasized that the plaintiff had made two reasonable offers to settle—$60,000 plus $15,000 in costs in 2021, and an all-inclusive $40,000 offer in 2023. Both offers were more favourable to the defendant than the final trial judgment. By contrast, the defendant offered only $4,000, and maintained that the plaintiff had not been terminated, despite evidence to the contrary.

Court’s analysis and outcome

The court found the defendant’s positions to be unreasonable, including its denial of termination and constructive dismissal, and its failure to produce relevant documents during discovery. As a result, the plaintiff was entitled to substantial indemnity costs under Rule 49.10(1) from the date of his first offer. The matter was found to be of moderate complexity, and the need for a full five-day trial was attributed largely to the defendant’s litigation strategy.

Justice Roger affirmed the principle that proportionality is key in cost awards, but also acknowledged that in certain cases—like this one—fairness required awarding the maximum costs available under the simplified procedure. He noted that even if partial and substantial indemnity rates were applied to reduced actual legal fees, the cost award would still exceed the Rule 76.12.1 cap. Thus, while the cap limited what could be ordered, the plaintiff’s claim for $62,699.16 was reasonable and proportionate.

Final decision

The court ordered the defendant to pay the plaintiff costs in the all-inclusive amount of $62,699.16, finding that a lower award would undermine the cost consequences designed to encourage early settlement and penalize unreasonable litigation conduct.