COURT FILE NO.: 105/05

DATE: 20071023

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

lane, kiteley and swinton jj.

B E T W E E N:

DE ROSE & ASSOCIATES

Plaintiff (Appellant)

• and -

VENERE CARIATI, also known as VENUS CARIATI, ADOLFO CARIATI, MARIA BRUGNANO, also known as MARY BRUGNANO, MICHAEL KRYLOV and FRANK SABETTI

Defendants (Respondents)

R. Donald Rollo and Lucie Pivrnec, for the Plaintiff (Appellant)

M. Michael Title, for the Respondents (Defendants)

HEARD at Toronto: October 23, 2007

SWINTON J.: (Orally)

1The appellant submits that the trial judge erred in failing to order a reference, in which Mr. Krylov would be required to disgorge one hundred percent of the fees billed in the contested files, net of disbursements.

2The trial judge made no finding of direct liability against Mr. Krylov. Having found a breach of fiduciary duty by Ms. Cariati, the trial judge had a discretion to choose the appropriate remedy. He had limited evidence on damages before him and no evidence of loss of profits from the appellant. In our view, he made no error in calculating damages on the basis of the likely loss to the appellant based on the appellant’s bills for work done in accordance with the retainer agreement.

3The appellant has not established that the trial judge erred in refusing to award punitive damages, given his findings of fact.

4The trial judge declined to order costs in favour of the appellant because the action should have proceeded under the Simplified Rules. He held that discovery was neither necessary nor justified. He observed that much of the documentation was produced in the days leading up to the trial. He relied on Rule 76.13(3), which states the costs consequences where the plaintiff recovers less than $50,000.00:

The plaintiff shall not recover any costs unless,

(a) the action was proceeding under this Rule at the commencement of the trial; or

(b) the court is satisfied that it was reasonable for the plaintiff,

(i) to have commenced and continued the action under the ordinary procedure or under Rule 77, as the case may be, or

(ii) to have allowed the action to be continued under the ordinary procedure or under Rule 77, as the case may be, by not abandoning claims or parts of claims that do not comply with subrule 76.02(1), (2) or (2.1).

5Leave is granted to appeal the costs order. In our view, the trial judge erred in failing to award costs because of Rule 76.13(3).

6Pursuant to Rule 76.02(1), the simplified procedure shall be used in an action if the plaintiff’s claim is exclusively for one or more of money, real property or personal property and the total of the amounts claimed is $50,000 or less, exclusive of interest and costs. Here, there was a claim in the Statement of Claim for relief other than monetary - for example, a request for injunctive relief was included and a request for a declaration of trust. Therefore, the action was appropriately started under the regular rules.

7Rule 76.13(5) provides that subrule (3) does not apply if this rule was unavailable because of the counterclaim, crossclaim or third party claim of another party. A substantial counterclaim was issued claiming well in excess of $50,000. That counterclaim was not withdrawn until the first day of trial. It was then too late to expect a conversion to the simplified procedure.

8It is the case that by the start of the trial the bills totalled only $38,000, but the causes of action were complex. We observe that the trial judge’s finding that the discovery was neither necessary nor justified is in conflict with earlier passages in his reasons where he clearly relied on the inconsistencies between discovery and trial in reaching important conclusions as to Ms. Cariati’s credibility.

9We are of the view that the trial judge erred in not applying the usual rule that a successful party should recover costs. However, we are in no position to fix costs of the trial.

10Therefore, the appeal is allowed in part. The appellant shall have costs of the trial on a partial indemnity basis.

LANE J.

11I endorse the Record, “The appeal is dismissed as to the damages awarded. Leave is given to appeal the costs order and the appeal on costs is allowed for reasons delivered orally by Swinton J. On consent the costs of the trial are referred for assessment. We have received submissions as to the costs of the appeal. In our view, success was very much divided and there should be no costs save that the respondent should pay to the appellant the sum of $2,500 plus GST as a partial payment towards the transcript costs.”

LANE J.

KITELEY J.

SWINTON J.

Date of Reasons for Judgment: October 23, 2007

Date of Release: November 5, 2007

COURT FILE NO.: 105/05

DATE: 20071023

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

lane, kiteley and swinton jj.