Court File and Parties

NEWMARKET COURT FILE NO.: CV-08-088632-00 and CV-09-094857-00 DATE: 20160526 SUPERIOR COURT OF JUSTICE – ONTARIO

RE: HELEN KILITZOGLOU, the Applicant and TANYA CURÉ and SHANNON CURÉ, ESTATE TRUSTEES FOR THE ESTATE OF ALBERT CURÉ, DECEASED, the Respondents and HELEN KILITZOGLOU and LIFE LINE MANUFACTURING INC., the Plaintiffs and SHANNON CURÉ and TANYA CURÉ personally and as ESTATE TRUSTEES OF THE ESTATE OF AL CURÉ, deceased, ANTHONY DiLENA personally and as ESTATE TRUSTEE OF THE ESTATE OF AL CURÉ, deceased, MARVIN ROTENBERG, SEGAL & PARTNERS INC., MARTIN SOLE and VYKUNTHAVASAM SAMBASIVAN and 2142638 ONTARIO INC. o/a SAM BROTHERS FURNITURE MFG ., the Defendants

BEFORE: The Honourable Mr. Justice M.K. McKelvey

COUNSEL: Leo Klug, for the Applicant/Plaintiff Margaret Rintoul, for the Defendants/Respondents

HEARD: January 4, and 28, 2016

Costs ENDORSEMENT

MCKELVEY J.:

Introduction

[1] Albert Curé was a successful businessman who controlled a number of corporations. Through these corporations Mr. Curé operated his business which manufactured furniture. Primarily Mr. Curé was involved in the production and sale of wood laminate bedroom furniture. Unfortunately Mr. Curé died suddenly on the night of Easter Monday, April 9/10, 2007. Following his death a variety of legal proceedings were commenced and which were ordered to be tried together.

[2] All of the actions were tried together between May 2012 and July 2013. The trial itself was lengthy and took 35 days. Written Reasons for Judgement were released on February 14, 2014.

[3] Subsequent to the release of the written reasons for judgement Ms. Kilitzoglou brought a motion to re-open the evidence at trial to permit further evidence to be adduced. A similar motion was brought by Tanya and Shannon Curé as well as the Estate of Albert Curé. Both these motions were heard on January 14 and 15, 2015. Both motions were dismissed by me. Costs of those motions were left to be addressed as part of the consideration in assessing the costs of the action.

[4] The cost issues between Ms. Kilitzoglou and her company Life Line Manufacturing Inc. in connection with the claims brought by and against Shannon Curé and Tanya Curé and the Estate of Albert Curé could not be resolved. As a result the parties re-attended before me to make submissions with respect to costs.

The Parties Positions

[5] Shannon Curé, Tanya Curé and the Estate of Albert Curé take the position that they are entitled to substantial indemnity costs. Ms. Kilitzoglou and Lifeline Manufacturing Inc. argue that in light of divided success in the litigation there should be no order as to costs.

Background

[6] Three legal actions proceeded to trial. A fourth action involving Mr. Ray White was settled just at the outset of trial. A summary of the actions which proceeded to trial is set out below:

(a) Application, dated November 8, 2007 (CV-07-086409-00)

1. Tanya Curé commenced an application on November 8, 2007 seeking a declaration that she and the CIBC were the beneficiaries under a Transamerica life insurance policy. The face value of the policy was $600,000. The issue related to the validity of a change in beneficiary form which changed the beneficiary designation under the policy from Ms. Kilitzoglou to Tanya Curé and CIBC.

(b) Application dated April 2, 2008 (CV-08-088632-00)

2. On April 2, 2008, Helen Kilitzoglou commenced an application seeking financial remedies under the Succession Law Reform Act and other relief relating to her common-law relationship with Mr. Curé. Numerous heads of relief were claimed in the application including: support, an order transferring Mr. Curé’s interest in a residential property in Vaughn to Ms. Kilitzoglou or alternatively the right to partition and sell the property, an order that the proceeds of the Transamerica Life Insurance policy be paid to Ms. Kilitzoglou, an order to determine the validity of deceased’s last Will, an order removing Tanya and Shannon Curé as estate trustees of Mr. Curé, a declaration that the cohabitation agreement signed by the parties was void, as well as a number of other claims.

I was advised by counsel that prior to the trial in this matter Ms. Kilitzoglou withdrew any claims for support or a declaration that the cohabitation agreement was not legally binding. As a result the only issues to be decided pursuant to this application related primarily to the family home including:

i) Did Ms. Kilitzoglou have the right to purchase the home;

ii) In the alternative did Ms. Kilitzoglou have the right to continue living in the home; and

iii) Who was responsible for certain expenses associated with the home.

(c) Civil Action by Helen Kilitzoglou and Life Line (CV-09-094857-00)

1. This action was commenced by Helen Kilitzoglou and Life Line by way of a Notice of Action on June 4, 2009. The defendants were Shannon and Tanya Curé personally and as estate trustees of the Estate of Albert Curé, Anthony DiLena personally and as estate trustee of the Estate of Albert Curé, Marvin Rotenberg, Segal and Partners Inc., Martin Sole and Vykunthavasam Sambasivan.

[7] In the Kilitzoglou civil action the plaintiffs claimed damages in the sum of $7,500,000 for trespass, conversion and loss of profits arising out of “the defendants actions in attempting to destroy and shut down the business of Life Line Manufacturing” as well as damages for “civil conspiracy arising out of their actions, jointly and closing down and intentionally harming the plaintiffs’ in their business, Life Line Manufacturing Inc”. The plaintiffs also claimed damages against the defendants Tanya Curé, Shannon Curé and Anthony DiLena, both personally and as estate trustees of the Estate of Mr. Curé arising out of their alleged breach of contract of an agreement between Mr. Curé and Ms. Kilitzoglou dated December 30, 2006. This agreement dealt with the leasing of the premises on Clayson Road together with use of the equipment at those premises.

[8] In November 2010, Ms. Kilitzoglou brought a motion dated November 23, 2010, seeking to add additional claims in her civil action. The proposed amendments claimed that a dividend in the sum of $800,000 declared by the board of directors of Alca on November 29, 2002, contravened s. 38(3) of the Business Corporations Act of Ontario, RSO 1990, chapter B.16 and that as a result the general security agreement made in favour of a limited company controlled by Mr Curé was null and void and should be expunged from the registration under the Personal Property Security Act. In addition, damages in the sum of $800,000 were claimed against the Estate of Mr. Curé, Anthony DiLena and Marvin Rotenberg, arising out of their alleged “fraud, conspiracy and creating an artificial dividend”. Further, damages in the sum of $800,000 against Marvin Rotenberg and Shannon Curé and Tanya Curé, Segal and Partners and Martin Sole were sought for alleged “fraud and conspiracy arising out of the improper appointment of the receiver manager in June of 2007, and consequential improper realization of assets arising out of that appointment”.

[9] The motion to amend the plaintiffs’ statement of claim was heard by Justice Lauwers on January 28, 2011. Justice Lauwers granted leave to amend the pleadings without prejudice to the right of the defendants to plead and rely on a limitation defence.

[10] Also in the civil action by Helen Kilitzoglou a counterclaim was brought by the defendant Shannon Curé and Tanya Curé against the plaintiffs in that action. It was alleged in the counterclaim that the actions of Helen Kilitzoglou interfered with the ability of the estate as well as corporations controlled by the estate to collect receivables, thereby reducing the overall value of the estate.

[11] Anthony DiLena did not defend the action against him. The action against the defendants Marvin Rotenberg, Segal and Partners and Martin Sole were all dismissed in my judgement of February 14, 2014. The action against Vykunthavasam Sambasivan was dismissed on consent by the parties at the end of the trial. The issue of costs by the defendant Marvin Rotenberg has been settled. I am advised that the plaintiffs have agreed to an order for payment of his costs in the sum of $169,500. I am also advised that the plaintiff has settled the issue of costs with the defendants Segal and Partners and Martin Sole. In this regard the plaintiffs have agreed to an order for $225,000, payable to those defendants. This leaves the obligation, if any, of the plaintiffs/applicants Helen Kilitzoglou and Life Line Manufacturing Inc. (who I will refer to collectively as “Life Line”) to pay costs to the defendants/respondents Tanya and Shannon Curé and the Estate of Albert Curé (who I will refer to collectively as “Estate of Albert Curé”).

Agreements Between the Parties

[12] At the hearing for costs the following issues were agreed upon by the parties:

(a) It was noted that subsequent to my judgement a further action has been commenced between the parties. My decision with respect to costs deals only with the actions which were tried before me and the subsequent motions which were argued in January 2015. These reasons do not deal with any costs which may be incurred in any other action which has been commenced subsequent to the release of my decision.

(b) The Estate of Albert Curé advised in their submissions that they may be seeking an order that any costs granted to them be offset by any money owed by them to Helen Kilitzoglou. However, it was acknowledged that such an order could affect other creditors of Helen Kilitzoglou. As a result this issue will be dealt with by way of a separate motion, if necessary, with notice to all of the parties who might be affected by the order.

(c) As all of the actions were tried together the parties agreed that I should give a global decision on costs taking into account all of the proceedings which were tried before me and that it is not necessary to specifically apportion the costs as between the various proceedings.

Assessment of the Estate’s Costs on Various Scales

[13] The total amount charged by counsel for the Estate of Albert Curé for representation in all of the proceedings before me is $344,532 plus HST and disbursements. The full indemnity rate charged by senior counsel, Ms. Rintoul, averaged $475. The amount charged for representation on the motions in January 2015 was $12,345 plus HST plus disbursements.

[14] For purposes of assessing substantial and partial indemnity claims for costs, Life Line objected to the inclusion of student and law clerk time. For purposes of assessing those substantial and partial indemnity costs the Estate of Albert Curé agreed to remove the student and law clerk time. For purposes of assessing substantial indemnity costs the estate used 70 percent of the full indemnity rate which would be $332.50 per hour. For purposes of the partial indemnity rate the figure of 40 percent of the full indemnity rate was used or a figure of $190 per hour. There was no objection to these rates by Life Line and I find that they are reasonable for calculating both the substantial and partial indemnity rates

[15] On a substantial indemnity basis in claiming only for the lawyer time involved, the Estate of Albert Curé calculated substantial indemnity costs as follows:

ACTION	COUNSEL FEE	HST	DISBURSEMENTS
Costs of the civil action	152,950.00	plus HST	13,906.00
Costs of the applications	56,829.50	plus HST	2,833.01
Costs of the January 2015 motions	9,901.00	Plus HST	663.60
TOTAL for substantial indemnity costs	$219,680.50	plus HST	$17,402.61

[16] For partial indemnity costs the Estate of Albert Curé calculates its assessment based on only lawyer time as follows:

ACTION	COUNSEL FEE	HST	DISBURSEMENTS
Costs of the civil action	87,400.00	plus HST	13,906.00
Costs of the applications	32,474.00	plus HST	2,833.01
Costs of the January, 2015 motions	5,274.00	plus HST	663.60
TOTAL for partial indemnity costs	$125,148.00	plus HST	$17,402.61

[17] The figures noted above include costs associated with a total of 6 pre-trial motions. In only one of the pre-trial motions were costs reserved to the trial judge. As a result the Estate of Albert Curé agreed that 5/6 of the amounts referable to these motions should be subtracted from the above figures for substantial and partial indemnity costs. No serious objection to this was raised by the defence and I have concluded that it is a reasonable approach. Thus the Estate of Albert Curé should be able to claim for 1/6 th of the costs of the six motions in calculating its substantial and partial indemnity costs.

[18] A total of 43.5 hours were spent by counsel on the six motions. The substantial indemnity costs claimed for the motions was $14,463. The partial indemnity costs claimed for the motions totalled $8,265. Five sixths of those amounts total $12,052 on account of substantial indemnity costs and $7,187 on account of partial indemnity costs. In addition, it was agreed that the sum of $1,223.62 relating to a disbursement payable to the law firm of Fluxgold Iszak Jaeger related to a disbursement for a motion which was not properly chargeable in the application. As a result this amount should be subtracted from the disbursements charged in the application.

[19] There was also a dispute over the disbursements claimed in the civil action. Following discussion between counsel it was agreed that the disbursements in the action should be reduced from $13,906 to $12,600.

[20] With these revisions the substantial indemnity costs which are claimable for the action, the applications and the January 2015 motions would be reduced to $207,628.50 plus HST plus disbursements of $14,872.99

[21] During the course of argument, the parties agreed that partial indemnity costs would properly be assessed as follows:

ACTION	COUNSEL FEE	HST	DISBURSEMENTS
Costs of the civil action	80,213.00	plus HST	12,600.00
Costs of the application	32,474.00	plus HST	1,609.39
Costs of January 2015 motions	5,274.00	Plus HST	663.60
TOTAL for partial indemnity costs	117,961.00	Plus HST	14,872.99

[22] I am grateful to counsel for their co-operation in reaching agreement on many issues relating to the quantification of costs and in particular to their agreement on the partial indemnity costs of the Estate of Albert Curé. What remains for consideration is what amount, if any, should be ordered to be paid by Life Line.

The Motions Argued in January 2015

[23] Both Helen Kilitzoglou and the Estate of Albert Curé brought motions which were argued before me subsequent to release of my judgment on January 14 and 15, 2015. Helen Kilitzoglou brought a motion seeking an order to re-open the evidence at trial to permit further evidence and to vary the reasons for judgment so as to allow expenses which were not previously claimed. Similarly the Estate of Albert Curé brought a motion to define the amount owed by Helen Kilitzoglou to the estate. The estate argued that it needed to address the issue of how much the applicant, Helen Kilitzoglou, owed the estate on account of home expenses and to order a set-off of these amounts against money owed by the applicant to the estate. It was acknowledged it was not possible to determine from the exhibits at trial or the evidence the actual amount and the time the expenses were incurred. The estate therefore also sought to adduce further evidence regarding the expenses it had paid.

[24] As both of the motions were dismissed, it would appear that the January motions represent a case of divided success where I would not be inclined to make any order for costs. The Estate of Albert Curé argues, however, that they were obliged to bring their motion in response to the motion brought by Helen Kilitzoglou to re-open the case to adduce further evidence of the expenses she had incurred. They therefore seek their costs of their attendance on the motions. I do not agree with that submission. The motion brought by the Estate of Albert Curé sought to advance its own interest in obtaining a set-off for expenses that it asserted had been paid by the estate and for which credit should be received in the action. For that reason I have concluded that neither Helen Kilitzoglou nor the Estate of Albert Curé should receive costs for the motions argued on January 14 and 15, 2015. I have therefore reduced the claim for substantial indemnity costs and partial indemnity costs of the Estate of Albert Curé accordingly. This reduces the claim for substantial indemnity costs to $197,727.50 plus HST plus disbursements of $14,209.39.

[25] It correspondingly reduces the partial indemnity costs to $112,687 plus HST plus disbursements of $14,209.39.

Is there a basis for an award of costs on a substantial indemnity scale?

[26] The Estate of Albert Curé argues it should be entitled to substantial indemnity costs on the basis of offers to settle which it delivered prior to the commencement of trial. Further it argues that the allegations of fraud and conspiracy justify a substantial indemnity costs award.

[27] The Estate of Albert Curé made a series of four offers prior to trial. None of these offers would meet the criteria for costs consequences as set out in Rule 49.10(2) of the Rules of Civil Procedure which require that the plaintiff obtain a judgment as favourable or less favourable than the terms of the defence offer to settle. In the first offer, dated July 28, 2008, the Estate of Albert Curé offered to pay to Helen Kilitzoglou the home expenses required under the cohabitation agreement and to pay all amounts required by the cohabitation agreement for a period of three years from the death of Mr. Curé. As of April 10, 2010, Ms. Kilitzoglou was required to agree that the home in Vaughn would be sold and the proceeds divided into two equal shares. The offer remained open for acceptance only until the beginning of mediation or cross-examination on the affidavits filed in the application, whichever occurred first. This offer precluded Helen Kilitzoglou from remaining in the home after the expiry of three years, a right which was clearly given to her under the cohabitation agreement and which is reflected in my judgment.

[28] The second offer from the Estate of Albert Curé is dated September 30, 2010. Under the terms of this offer Helen Kilitzoglou was to be given the estate’s interest in the home in Vaughn. However, she was required to assume responsibility for the remaining balance on the mortgage. This term is clearly inconsistent with the obligation of the Estate of Albert Curé as ordered in my judgment. In addition, Helen Kilitzoglou was required to dismiss her action for damages. Under the terms of my judgment Helen Kilitzoglou was given an award in that action of $75,520.

[29] There were two subsequent offers dated May 6, 2011 and November 7, 2011. These offers also fell below or did not adequately address Helen Kilitzoglou’s entitlement as found at trial.

[30] The Estate of Albert Curé acknowledges that its offers to settle would not, based on their terms, attract any cost consequences under Rule 49.10(2). However the estate argues that the offers represented a serious attempt to resolve issues prior to trial. While it is agreed that the offers do not meet the requirements of Rule 49 they argue that the offers can be considered under Rule 57.01 which provides that the court may consider a list of factors, “in addition to the result in the proceeding and any offer to settle or to contribute made in writing”. (emphasis added)

[31] In my view the reference to offers to settle under Rule 57.01 is not an invitation to ignore the principles set out in Rule 49. Rule 49 is a comprehensive set of rules which provide well defined cost consequences for offers to settle. It also provides a degree of flexibility under Rule 49.13 to take into account any offer to settle made in writing and its terms. I am of the view the underlying principle of Rule 49 is that offers to settle should not attract cost consequences unless the party making the offer achieves a result at trial at least as favourable or more favourable than their offer. It is clear that the estate’s offers in this case were not comparable to the result at trial. Nor could these offers be considered more favourable for the plaintiffs than the outcome at trial. To accept the estate’s argument that a court should consider any offer which is a “serious attempt to resolve issues” but which is not at least comparable or more favourable than the result obtained by the opposing party would lead to considerable uncertainty in how offers are treated and result in inconsistent costs awards between cases, which in my view is undesirable in the context of civil actions. Such an approach would also largely render the costs sanctions under Rule 49 redundant.

[32] This conclusion is supported by the comments of the Court of Appeal in Davies v. Clarington (Municipality), 2009 ONCA 722 where the court states at para. 40 that “Apart from the operation of Rule 49.10 elevated costs should only be awarded on a clear finding of reprehensible conduct on the part of the party against which the cost award is being made”.

[33] In the Court of Appeal decision Elbakhiet v. Palmer, 2014 ONCA 544 (Leave to Appeal to SCC refused [2014] SCCA 427) an issue arose as to whether an offer made by the defendant in a motor vehicle action entitled the defendant to costs under Rule 49.10. In that case there was some uncertainty as to the amount of prejudgment interest which was payable under the defence offer to settle. One of the arguments presented by the defendants/appellants was that the trial judge erred in failing to take into account that the judgment was very close to the appellant’s offer and that this “near miss” should have been considered as required by Rules 49.13 and 57.01. The court stated,

I agree with the respondents that there is no ʽnear missʼ policy. A party that comes close to meeting the judgment is not thereby entitled to an award of coasts as if they did provide a successful offer. This point was made clear in Premd Inc. v. Olgavy Renault LLP., 2013 ONCA 412 where the court applied the reasoning of Niagara Structural Steel and held, para. 106, “a court should depart from Rule 49.10 only in exceptional circumstances, where ʽthe interests of justice require a departureʼ.

[34] The court pointed out, however that under Rule 49.13 the court is not concerned with technical compliance with the requirements of Rule 49.10. Rather it “calls on the judge to take a more holistic approach”. The court goes on to note that the appellant’s in that case complied “with the spirit of Rule 49 even if they failed for technical reasons to provide an offer to settle that exceeded the judgment”. The court held that this was the type of offer that ought to have been given considerable weight in arriving at a costs award. However, the context of the court’s decision in the Elbakhiet case involved a situation where there was some uncertainty as to whether the defence offer was as favourable or more favourable than the result at trial. Nevertheless the defence offer was comparable to the result at trial. The court noted that the appellants, “complied with the spirit of Rule 49 even if they failed for technical reasons to provide an offer that exceeded the judgement”.

[35] In an earlier Court of Appeal decision in Lawson v. Viersen, 2012 ONCA 25 the Court of Appeal noted that at para. 21 that, “costs consequences are result oriented”.

[36] The Estate of Albert Curé referred to the decision of Justice Strathy (as he then was) in Richardson Estate v. Mew. In that case the dispute concerned an insurance policy for $100,000. The respondent was the former wife and named beneficiary of an insurance policy. The court ordered that the proceeds of the policy be paid to the respondent. In that case the respondent had earlier delivered an offer to settle agreeing to a split which would have resulted in a payment of $40,000 from the insurance policy being paid to the applicant. It is apparent that the respondent achieved a result at the hearing which was significantly better than their offer to settle. The issue really focussed on whether the terms of what was considered a very generous offer justified departure from the usual rule that a respondent/defendant is only entitled to their partial indemnity costs of the action. The court decided in Richardson that it was reasonable to award a modest bonus to the respondent in the sum of $3,500.

[37] I have not been referred to any authority where the terms of an offer made by a defendant or a respondent is used to increase the costs payable to a respondent or defendant where the plaintiff or applicant achieves a result which is significantly better than the offer to settle. In my view in order to have any significant costs consequences a defendant or respondent must have submitted an offer to settle which is at least comparable or better than the recovery of the plaintiff or applicant at trial. That is not the case here and as a result I decline to award substantial indemnity costs based on the Estate’s offers to settle.

[38] The Estate of Albert Curé also argues that it should be entitled to substantial indemnity costs on the basis that Helen Kilitzoglou alleged civil conspiracy and fraud in her claims against the Estate of Albert Curé.

[39] The case law makes it clear that allegations of fraud are treated seriously by a court and can result in an increased award for costs. In the Supreme Court of Canada decision in Hamilton v. Open Window Bakery Ltd., 2004 SCC 9 the court commented on the potential for substantial indemnity costs in cases where allegations of scandalous or egregious conduct is alleged but not proved. The court stated,

In Young v. Young, [1993] 4 SCR 3 at p. 134, McLachlin, J (as she then was) for a majority of this court held that solicitor and client costs “are generally awarded only where there has been reprehensible, scandalous or egregious conduct on the part of one of the parties”. An unsuccessful attempt to prove fraud or dishonesty on a balance of probabilities does not lead inexorably to the conclusion that the unsuccessful party should be held liable for the solicitor and client costs, since not all such attempts will be correctly considered to amount to “reprehensible, scandalous or egregious conduct”. However allegations of fraud and dishonesty are serious and potentially very damaging to those accused of deception. When as here, a party makes such allegations unsuccessfully at trial and with access to information sufficient to conclude that the other party was merely negligent and neither dishonest nor fraudulent (as Wilkins, J found), costs on solicitor and client scale are appropriate.”

[40] In the present case Lauwers J. dealt with one of the pre-trial motions and correctly in my view stated, “this is a high-conflict case”.

[41] In my judgment I commented on the relationship between Mr. Curé and Helen Kilitzoglou. I noted that the relationships which developed between the various parties have had a very significant impact on the nature of the litigation which emerged. I stated,

It was apparent that at the time of trial (and probably much earlier) there was a high degree of conflict between the various parties. This limited the ability of the parties to reach agreement on outstanding issues or to narrow the issues which needed to be adjudicated.

[42] I further commented that my conclusion from the evidence is that for some time before Mr. Curé’s death the relationship between Ms. Kilitzoglou and Mr. Curé was strained. I also concluded that the children were well aware of the conflict and started to align themselves with their respective parent. Thus, well prior to the litigation there was some considerable tension between Helen Kilitzoglou and Tanya and Shannon Curé who were the children of Albert Curé and the trustees of his estate.

[43] In my judgment I also referred to some actions which likely led Helen Kilitzoglou to believe that Shannon and Tanya Curé were demonstrating some malicious intent towards her. The most serious event in this regard occurred on June 20, 2007 and is summarized in my judgment. On this date Helen Kilitzoglou had not been allowed to enter into the business premises of the company. However she gained entrance to the business through the back of the premises and removed a computer from her office. She then put the computer into the trunk of her daughter’s car and sent her daughter away in the vehicle. The police were called and demanded that Ms. Kilitzoglou either return the computer or go to jail. Ms. Kilitzoglou refused and was subsequently arrested by the police and criminal charges were laid. These criminal charges were subsequently dropped once Ms. Kilitzoglou was able to prove the computer was her property. I noted in my judgment that it was apparent this incident contributed to a deteriorating relationship between Ms. Kilitzoglou and Mr. Curé’s daughters.

[44] In my judgment I concluded that with more diligence the proper ownership of the computer could have been identified quite promptly. However, the actions of Ms. Kilitzoglou in essentially taking matters into her own hands created a situation in which both parties acted precipitously. The net result is that Ms. Kilitzoglou was arrested on a charge which was later dropped and was totally unfounded. I accepted in my judgment that the actions of Shannon and Tanya Curé did not result from any malicious intent on their part nor did I find that their conduct was unlawful given that Segal and Partners had lawful control of the premises at the time. In the circumstances I concluded that if there was any unlawful act it was the conduct of Ms. Kilitzoglou who entered the premises to remove the computer without authorization. Having said that, however I believe and attempted to reflect in my judgment that both parties shouldered some responsibility for what happened. It is significant to note that the incident occurred after Ms. Kilitzoglou was prevented from entering the premises, even though other tenants were allowed in.

[45] From the perspective of Helen Kilitzoglou this incident, as well as possibly others, likely led her to the belief that there was a conspiracy against her and heightened the high- conflict nature of this litigation.

[46] Thus, while the allegations of conspiracy were not established at trial there was a reasonable basis for the Helen Kilitzoglou to be concerned about the bonafides of the actions of Shannon and Tanya Curé. Taking into account the high conflict nature of the litigation and the conduct of both parties which led to this situation developing I decline to make an award of substantial indemnity costs based on the conspiracy allegations asserted by the plaintiff against the estate and the Curés. Those allegations evolved from a toxic relationship between the parties. All of the parties bear some responsibility for the development of this situation. It would be unfair to single out the conduct of Ms. Kilitzoglou only as being reprehensible and deserving of sanction in these circumstances.

[47] I have concluded, however, that some account needs to be taken with respect to the claims of fraud in connection with allegations that an artificial dividend in the sum of $800,000 was declared by the board of directors of Alca and for the alleged fraud and arising out of the alleged improper appointment of the receiver manager in June of 2007. No credible evidence was adduced to support the allegations of fraud and in my view these allegations of fraud should have been abandoned when it was recognized there was no reasonable foundation to pursue them. These allegations were for the most part superfluous to the relief sought by Ms. Kilitzoglou in any event. I therefore consider that pursuing these allegations of fraud was reprehensible as the allegations were made without any credible foundation. Ms. Kilitzoglou argues correctly that the issues relating to the declaration of the dividend and the appointment of the receiver did not take up a large amount of court time. I accept that these issues were relatively modest in the overall context of the litigation. For this reason I do not believe it is appropriate to award substantial indemnity costs generally throughout the action. I conclude that partial indemnity costs should be awarded. However, in light of the allegations of fraud I conclude that a modest premium should be added to the partial indemnity costs to account for the serious allegations of fraud which were advanced against the Estate of Albert Curé.

Other factors Relating to Costs

[48] Rule 57.01 sets outs the criteria which a court should consider in awarding costs. The particular factors which appear to be most relevant in this case are as follows:

i) The result of the proceeding; ii) The amount of costs that the unsuccessful party could reasonably expect to pay; iii) The amount claimed and the amount recovered in the proceeding; iv) The complexity of the proceeding; v) The importance of the issues.

[49] With respect to the result in the proceeding it is apparent that this is a case of divided success. The Estate of Albert Curé was successful on the following claims which were advanced in the litigation:

1. Tanya Curé was successful in establishing the validity of the change of beneficiary designation for the Transamerica policy and her entitlement together with the CIBC to the proceeds of the policy;
2. The Estate of Albert Curé was successful in upholding the validity of the dividend of $800,000 which was declared by the board on November 29, 2002, and denying the claim of Helen Kilitzoglou for damages in the sum of $800,000;
3. The Estate of Albert Curé was successful in denying the claims for conspiracy, unlawful interference with economic relations and the action for trespass and conversion. All these claims were dismissed;
4. The Estate of Albert Curé was successful in denying the plaintiff’s right to purchase the residence in Vaughn as the time limit under the cohabitation agreement had expired.

[50] Life Line was successful with respect to the following claims in the litigation:

1. Life Line succeeded in establishing a breach of contract against the Estate of Albert Curé. Damages in the sum of $72,520 were awarded;
2. Helen Kilitzoglou was successful in successfully defending the counterclaim by the estate for interference relating to the inability of the estate to collect its receivables.
3. Helen Kilitzoglou was successful in establishing her right to expenses and continue living in the home in Vaughn pursuant to the terms of the cohabitation agreement;
4. Helen Kilitzoglou successfully defended the claim by the estate to a partition and sale of the home in Vaughn;
5. Helen Kilitzoglou successfully established her entitlement for reimbursement for the burial plot which was agreed to on consent during the course of the trial;
6. Helen Kilitzoglou successfully obtained judgment in the sum of $84,106.25 relating to the costs of maintaining the home in Vaughn.

[51] The most serious issue at trial was Life Line’s claim in the civil action that the Estate of Albert Curé had participated in a conspiracy to destroy and shut down the business of Life Line Manufacturing. This consumed by far the most trial time and threatened, if successful, to impose personal liability on both Shannon and Tanya Curé. This claim was dismissed in its entirety against all defendants. In the end Life Line Manufacturing Inc. was only successful on a breach of contract claim against the estate. A number of claims where Ms. Kilitzoglou was successful were not seriously pursued against her or were dealt with on consent. For example the counter claim asserted by the estate for interference relating to the inability of the estate to collect its receivables was not seriously pursued and was the subject of only passing reference in the evidence. When the question of Ms. Kilitzoglou’s entitlement for reimbursement for the burial plot was raised in the evidence the Estate of Albert Curé promptly agreed that Ms. Kilitzoglou should be entitled to reimbursement for the plot provided that ownership of the plot was transferred to the estate.

[52] Further, in the claims where Life Line was successful, the recovery was a small fraction of the amount claimed. This reinforces my view that in terms of relative success the Estate of Albert Curé was substantially more successful than Life Line.

[53] A distributive order for costs is one in which the issues in the case are identified and the costs are apportioned based on the time and expense attributable to that issue and to the extent to which each party was successful on the various issues. It is noted in the Ontario Court of Appeal decision in Eastern Power Ltd. v. Ontario Electricity Financial Corp., 2012 ONCA 366, Ontario Courts have restricted the use of distributive costs awards to only, “ the rarest of cases”. However, it is noted in the Eastern Power decision,

The unavailability of a distributive costs award does not preclude the court from considering Eastern Powers Ltd. success. Indeed, the general principles that govern costs decisions require us to consider the particular features of a given case.

[54] While it is correct that both parties achieved some success on different issues in the litigation, I would consider on balance that the Estate of Albert Curé was substantially more successful than Life Line in the litigation.

[55] In summary, Life Line sought to establish damage claims of $7,500,000 arising out of the actions of the defendants in attempting to destroy and shut down the business of Life Line Manufacturing Inc. This was the dominant issue which consumed the greatest amount of trial time. All of the claims for conspiracy, unlawful interference with economic relations were dismissed and Life Line was left with a modest recovery of $72,520 against only the estate for breach of the agreement for rental of the Clayson Road premises and the agreement to provide the existing machinery in those premises. No award was made against Tanya or Shannon Curé personally. While both sides achieved some success in the litigation I conclude that the Estate of Albert Curé achieved a far better result than Life Line. This leads me to conclude that the Estate of Albert Curé should be entitled to an award of costs in this case.

[56] I accept that the proceedings themselves were complex. The trial was a very lengthy one and involved the adjudication of numerous claims contained in three separate pieces of litigation.

[57] Finally I accept the position of the Estate of Albert Curé that the issues litigated were extremely important. Had the plaintiff been successful in the claims which were dismissed it would almost certainly have led to the bankruptcy of the Estate of Albert Curé and probably personal bankruptcy for Shannon and Tanya Curé as well.

[58] The Estate of Albert Curé argues that the conduct of Helen Kilitzoglou unnecessarily lengthened the proceedings. I do not accept this assertion. In light of the amounts claimed and the complexity of the proceeding I conclude that the length of the proceeding was consistent with importance and the complexity of the various claims that were tried.

[59] A final and important fact to consider is the amount of costs that an unsuccessful party could reasonably expect to pay in relation to these proceedings. As noted in Boucher v. Public Accountants Council (Ontario), [2004] 71 OR (3 rd ) 291,

The expressed language of Rule 57.01(3) makes it clear that the fixing of costs is not simply a mechanical exercise. In particular, the rule makes it clear that the fixing of costs does not begin and end with the calculation of hours, times, rates. The introduction of a costs grid was not meant to produce that result, but rather to signal that this is one factor in the assessment process, together with the other factors in Rule 57.01. Overall, as this court has said, the objective is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular proceeding, rather than an amount fixed by the actual costs incurred by the successful litigant.

[60] As noted previously I accept that the figure of $112,687 plus HST plus $14,209.39 in disbursements represents a reasonable assessment of partial indemnity costs of the Estate of Albert Curé, excluding the costs of the motions in January, 2015. However, I have also concluded that this figure should be reduced to reflect the fact that this was clearly a case of divided success. Having considered the respective degrees of success in the various claims as outlined above I conclude that the Estate of Albert Curé should be entitled to 50 percent of its partial indemnity costs. This results in a claim of $56,343 to which I would add a premium of $5,000 in recognition of the allegations of fraud made against the estate. I therefore award the Estate of Albert Curé and Shannon and Tanya Curé costs in the sum of $61,343 plus HST plus disbursements of $14,209.39 to be paid by Helen Kilitzoglou and Life Line Manufacturing Inc.

Justice M.K. McKelvey Released: May 26, 2016