Doucet and Dauphinee v. Spielo Manufacturing Incorporated and Manship, 2011 NBCA 44

In Doucet and Dauphinee v. Spielo Manufacturing Incorporated and Manship, the New Brunswick Court of Appeal provided an overview of jurisprudence and principles related to the award of costs according to the New Brunswick Tariff "A", under Rule 59 of the Rules of Court.  Robertson J.A., writing for the Court, held that, although the purpose of awarding party-and-party costs in New Brunswick is not to provide substantial indemnification, but to foster access to justice, actions of one party that cause proceedings to be "unnecessarily complex" may justify awarding costs based on a higher scale of compensation.

The case under appeal involves a complex series of arguments on the part of the appellants, who claimed wrongful termination resulting from oppressive conduct designed to deprive appellant of the full value of shares held in Spielio Inc.. After termination of employment with notice and severance pay, the appellants' shares were surrendered for compensation at net book value, as per the employment contract. One year later, the shares were worth significantly more as a result of a sale of the company. Robertson J.A. affirmed the trial judge's factual findings that there was little or no evidence to support the appellant's "conspiracy theory" that an impending sale motivated termination of employment in order to force appellants to return shares at a lower value that that to be received at sale.

Justice Robertson found that the appellant's repeated "fishing expeditions" during discovery caused the case to be "unnecessarily complex", which justified the trial judge's award based on the highest Tariff scale available. He agreed with the trial judge in NB Power v. Westinghouse, released a few weeks after the lower court's decision in this case, that the purpose of awarding party-and-party costs is not to provide substantial indemnification, but dismissed the appellant's request for a lowered costs award. Robertson J.A. found that an award that provides substantial indemnity is still possible through the proper exercise of judicial discretion and the application of the Tariff. He concluded that "Rule 59.01 has been drafted in the broadest of terms to preserve the discretion of trial judges when it comes to the task of fixing costs, so long as that discretion is exercised in a principled manner."  He overruled Westinghouse for failing to follow Tariff guidelines and providing a lump sum award without sufficient reasons.  He reduced the award from $838,490.62 to $745,325, removing costs awarded against the appellant for refusing a settlement offer that was substantially low in comparison to the claims that warranted consideration. This is the largest cost award to have issued out of the Court of Queen's Bench of New Brunswick to date.

May 12, 2011
http://www.gnb.ca/cour/03COA1/Decisions/2011/May/20110512Spielo2011NBCA%2044.pdf

Webnesh Haile & Minsuk Kim