Lutz v Fabian Seeds Farms Inc., 2023 ABCJ 109 (Maxwell), is a new Alberta Court of Justice (small claims) case where an employee sued an employer for unpaid wages and the employer counter-sued the employee and the employee’s husband for allegedly defrauding the employer.
This case is important because it should serve as a lesson to lawyers and their clients that being rude in Court can have a price tag.
Facts
The following are the pertinent facts summarized by the Alberta Court of Justice:
- The plaintiff employee Linda Lutz had worked for Fabian Seeds Farms as a bookkeeper
- Prior to bringing Ms. Lutz’ on as a bookkeeper, Fabian Seeds Farms had many problems in its bookkeeping and decided it needed a bookkeeper
- In evidence in trial, there were many examples of invoices being changed or dates being changed, and usually Ms. Lutz had an explanation for the changes but not always. Where she did not have an explanation, she just noted that she believed she had the owner’s approval in each case
- Ms. Lutz made numerous errors in her bookkeeping, and the accountants that had to sort it out after her termination of employment testified that there was a higher number of errors than was typical, and it cost more for them to correct it than it normally does
- Ms. Lutz’ husband was Leo Lutz. The case is not entirely clear on Mr. Lutz’ role, but he was involved somehow in Fabian Seeds Farms’ business, and was alleged to have been defrauding Fabian Seeds Farms – either alone or in concert with Ms. Lutz- of product
- There was evidence that there had been some product lost to spillage
- There was evidence in general that the business practices and record keeping of Fabian Seeds Farms were “very loose”
- Ms. Lutz had been paid $600 per week for the first few months she worked for Fabian Seeds Farms, and was not paid for the last few months
Analysis / Conclusion
The Honourable Judge Maxwell of the Alberta Court of Justice found that although Ms. Lutz had made many errors in bookkeeping, there was no evidence of fraud by her or Mr. Lutz.
The Court found that there had been an agreement between Fabian Seeds Farms and Ms. Lutz to pay her $600 per month, but that had only happened for the first few months. The total discrepancy owed to Ms. Lutz was $4,200.
However, the Court also found that Ms. Lutz had made significant bookkeeping errors with a cost to Fabian Seeds Farms to correct of $2,712.94. The Court chose to “set off” the cost of the mistakes against the unpaid wages, leaving Ms. Lutz with a judgment of $1,487.06.
The Court then went on to consider “costs”.
“Costs” is an amount ordered by a court for the unsuccessful party to pay to the winner in a lawsuit. The amount can vary wildly from case to case, but where a party has a lawyer it tends to be somewhere in the ballpark of 20% to 50% of their legal fees. If it is a case of “mixed success” where each party is successful on something, the costs award will tend to be smaller or non-existent depending on relative success. Even if the winner does not have a lawyer, they are presumed to be entitled to some amount of costs.
In this case, the employer had been successful in getting some of the amount it owed the plaintiff reduced, but they unsuccessfully alleged fraud against the plaintiff and her husband. Fraud is a very serious allegation that should not be made lightly. There have been numerous cases where alleging fraud unsuccessfully has resulted in a higher costs award against the unsuccessful party than would otherwise have been awarded.
However, in this case the Judge was annoyed with the way all the parties behaved at trial, and decided not to make any award of costs. Here are Judge Maxwell’s comments about the parties’ behavior:
[23] One of the factors affecting a court’s willingness to exercise its discretion in choosing to award costs or not, is the manner in which a party advances its claim and the way the parties conduct themselves in the trial. In considering this factor, I find that all three parties conduct before the Court was problematic. They chose to argue with each other and continued that even after being directed to stop. It was apparent that this was a very personal matter to all parties and emotions dictated behaviour far more often than careful consideration. At times, the Court was simply unable to control its own process.
[24] These parties were clearly friends and that relationship, and its ultimate deterioration, meant that at the end of the day, none of the parties were winners. That friendship and trust may well have led to some of the “loose” practices employed but also leads me to conclude that the Court’s discretion is best exercised by choosing not to award costs as against any party.
My Take
I am surprised there was no costs award in this case given the unsuccessful allegations of fraud.
This case should serve as example to the public to be respectful in court, and as an example to lawyers that courtroom decorum is important.
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