D’Addario v Smith, 2016 ONSC 4690

COURT FILE NO.: 06-CV-35434 DATE: 20160722 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

FRANK D’ADDARIO Responding Party/Plaintiff – and – BETTY SMITH and CHRIS NAPIOR Moving Party/Defendants

COUNSEL: Joseph Griffiths, for Responding Party/Plaintiff; Responding Parties/Defendants by Counterclaim Ronald Caza/Jeff Saikaley, for the Moving Parties/Defendants; Moving Parties/Plaintiffs by Counterclaim

– and between –

BETTY SMITH and CHRIS NAPIOR Moving Parties/Plaintiffs by Counterclaim – and – FRANK D’ADDARIO and FERNE D’ADDARIO Responding Parties/Defendants by Counterclaim

HEARD: By written submissions

Beaudoin J.

DECISION ON COSTS

[1] On October 26, 2015, at the conclusion of the evidence in a six week jury trial, I granted Betty Smith and Chris Napior’s motion for a non-suit and I dismissed Frank D’Addario’s claim for damages for malicious prosecution. On November 3, 2015, the jury dismissed Betty Smith’s counterclaim for damages for sexual assault and awarded Chris Napior $25,000 in damages for defamation against Frank and Ferne D’Addario. By that time, the parties had been litigating their respective claims for over nine years, and the continued animosity between these former friends was clearly evident throughout the trial.

[2] Costs submissions were received in February 2016. Betty Smith and Chris Napior, (Smith/Napior”) the Defendants and Plaintiffs by counterclaim, now seek costs in the total amount of $927,584 plus HST along with disbursements of $41,238.08. The D’Addarios argue that there should be no order as to costs or that costs be limited to no more than 5% of the amount claimed by Chris Napior after deductions for duplication, alleged over lawyering, improper delegation and related issues. They add that there should be no claim for costs since it was Smith/Napior’s own behaviour that provoked the litigation in the first place. There is no question that the Smith/Napior claim for costs greatly exceeds any amount that any of the parties could have expected to receive at trial.

[3] In arriving at this decision, I need to consider the Court’s overall discretion as set out in section 131 of the Courts of Justice Act, R.S.O. 1990, c. C. 43, the factors set out in Rule 57 of the Rules of Civil Procedure, R.S.O. 1990, Reg. 194, the principle of proportionality, the implications of rule 23.05(1) in relation to the claims abandoned by the Plaintiff before trial as well as the offers to settle and the application of Rule 49.

[4] In my view, the first consideration is the result obtained at trial. All parties claim success. The Plaintiff, Frank D’Addario was wholly unsuccessful on the only claim that he advanced at trial; namely, a claim for damages for malicious prosecution. His counsel submits that this was as a result of not meeting one technical legal aspect of his claim. That submission ignores the fact that the Plaintiff had to prove that Betty Smith and Chris Napior had initiated the criminal proceedings against him. The Plaintiff’s claim was undone by the evidence he called at trial. His own witness, Constable McRoberts, testified that she had full discretion to lay the charge against the Plaintiff and I concluded that this evidence was fatal to his claim. Moreover, the Plaintiff also called, as his own witness, one Roberto Sansone, who changed his evidence in cross-examination and testified that the alleged sexual assaults did take place.

[5] On the other hand, the jury did not believe that the sexual assaults took place and dismissed Betty Smith’s claim for damages. Only Chris Napior was successful on his claim for defamation against Frank and Ferne D’Addario. There is no question that the overwhelming majority of the trial time was spent on the issue of whether or not the sexual assaults took place and the reporting of those charges to the police.

[6] Both sides spent a significant amount of time on background evidence with respect to the parties’ previous involvement in a business venture known as EMS/EnGlobe. While Plaintiff’s counsel objected at one point during the trial as to the relevance of this evidence, this background played a prominent role in the pleadings and Plaintiff’s counsel introduced this background in his opening statement to the jury. I conclude that it was in the interests of all of the parties to have this background fully explored at trial. It was relevant to Frank D’Addario’s claims that his reputation had been damaged by Betty Smith’s allegations and it was also relevant to his allegations that Betty Smith and Chris Napior fabricated the allegations of sexual assault as a result of their unhappiness with what had transpired at EMS. That evidence leads me to reject the D’Addarios’ claims that it was the Defendants’ behaviour that provoked the litigation.

[7] If the costs analysis was limited solely to the results obtained at trial, any costs award would be modest and would be limited to success obtained by Chris Napior. Having said that, other factors come into play.

[8] This action was commenced by Frank D’Addario on July 28, 2006. In that Statement of Claim, he sought general damages in the amount of $10 million, special damages in the amount of $500,000 and punitive and aggravated damages in the amount of $2 million. His pleading claims that Betty Smith and Chris Napior had maliciously given false statements to the police for an improper purpose; that they had conspired to cause a false criminal charge to be laid against the Plaintiff upon perjured testimony and fabricated evidence for proper purposes, that they had published defamatory statements on a Stockhouse website, and further claimed damages for abuse of process.

[9] On June 16, 2009, Frank D’Addario amended his Statement of Claim by increasing his claim for punitive and aggravated damages to the amount of $4 million, adding the claims of intentional and/or negligent infliction of mental suffering and malicious prosecution. All of these claims save and except for the claim for malicious prosecution, were abandoned by the Plaintiff before trial. At no time did the Plaintiff reduce his claim for $14.5 million in damages.

[10] Rule 23.5 provides:

23.05 (1) If all or part of an action is discontinued, any party to the action may, within thirty days after the action is discontinued, make a motion respecting the costs of the action.

[11] Smith/Napior submit that a considerable amount of time was invested by them in defending the various causes of action alleged by the Plaintiff since 2006. They submit that a lot of time in particular was invested in defending the causes of action in defamation for having reported the sexual assaults to the police and having made postings on the Stockhouse website.

[12] The claim for defamation regarding the communication of the allegations of sexual assault to the police was the subject of a motion by the Defendants to have the claim dismissed on the basis of absolute privilege. The Defendants lost that motion as well as the subsequent appeal. Those costs have already been determined by the Court. Nevertheless, the Defendants maintain that they had to continue to defend that claim until it was abandoned.

[13] In this case, rather than the Defendants bringing a motion on costs of the event claims within 30 days, the parties agreed to the costs of the abandoned claims being determined by the trial judge at the same time as the determination of all other cost matters flowing from the trial.

[14] The defamation claims relating to the Stockhouse postings were abandoned on October 30th, 2014. The claims for abuse of process, conspiracy, intentional and or negligent infliction of mental suffering, and defamation relating to the reporting of the sexual assaults were not abandoned until September 15, 2015 which commenced on September 21, 2015.

[15] With the exception of the defamation claims relating to the Stockhouse postings, I conclude that all of the other causes of action were linked to the allegations that the Defendants had conspired to make false allegations of sexual assault to the police and the evidence applicable to the claim of malicious prosecution would have applied, for the most part, to these other causes of action as well.

[16] The Plaintiff had made significant amendments with respect to defamation claims arising from the Stockhouse postings in their Amended Amended Statement of Claim dated January 29, 2007, and the added a claim of intentional and or negligent infliction of emotional suffering in relation to the postings.

[17] While the Plaintiff should be given some credit with narrowing the issues for trial, I conclude that the abandoned causes of action were aggressively pursued over a period of 8 years, and I conclude that the Defendants are entitled to their costs for those abandoned claims. Smith/Napior claim 33% of costs of $261,391.25 for the period prior to October, 30, 2014 and 14.9% of costs of $301,760.64 incurred between October 30, 2012 and September15, 2015. They claim $131,221.45 plus HST on a partial indemnity basis.

[18] The D’Addarios did not directly address this issue in their costs submissions nor did their counsel provide any evidence of their own costs in pursuing those claims. An e-mail from their former counsel dated November 7, 2014 indicates that the D’Addarios were seeking their own costs in the amount of $200,000 on a partial indemnity basis at that time. This amount is comparable to the costs incurred by Smith/Napior.

[19] I conclude that most of the costs of the abandoned claims were incurred prior to October 30, 2014. It is difficult to calculate a reliable percentage of the costs incurred between October 30, 2014 and September 15, 2015 since so much of the evidence relating to the subsequently abandoned claims is linked to the claim of malicious prosecution. I accordingly award Smith/ Napior the amount $75,000 plus HST on account of the claims that were abandoned.

The Offers to Settle

[20] Offers to settle are a relevant factor under Rule 57.01(1), but offers to settle pursuant to Rule 49 can trigger more significant consequences. Rule 49:10 provides:

49.10 (1) Where an offer to settle,

(a) is made by a plaintiff at least seven days before the commencement of the hearing;

(b) is not withdrawn and does not expire before the commencement of the hearing; and

(c) is not accepted by the defendant,

and the plaintiff obtains a judgment as favourable as or more favourable than the terms of the offer to settle, the plaintiff is entitled to partial indemnity costs to the date the offer to settle was served and substantial indemnity costs from that date, unless the court orders otherwise.

Defendant’s Offer

(2) Where an offer to settle,

(a) is made by a defendant at least seven days before the commencement of the hearing;

(b) is not withdrawn and does not expire before the commencement of the hearing; and

(c) is not accepted by the plaintiff,

and the plaintiff obtains a judgment as favourable as or less favourable than the terms of the offer to settle, the plaintiff is entitled to partial indemnity costs to the date the offer was served and the defendant is entitled to partial indemnity costs from that date, unless the court orders otherwise.

[21] While there were a number of offers made over the course of the litigation, the following offers are relevant. On October 31, 2014, the Plaintiffs by counterclaim offered to settle the action for $10,000 damages, plus costs as agreed to or as assessed. That offer was never accepted.

[22] On or about October 25, 2012, Frank D’Addario offered to dismiss the litigation without costs payable by either side. That part of the offer was open until November 30, 2012 and thereafter, with costs in an amount to be agreed upon or assessed. Although that offer was not accepted, it remained open for acceptance until trial.

[23] On August 4, 2015, the D’Addarios made an offer to pay the Defendants the total sum of $100,000 in settlement of all claims, interest and costs. That offer was rejected.

[24] On August 26, 2015, Ferne D’Addario advanced a separate offer to settle in the all-inclusive amount of $10,000. That offer was rejected.

[25] Since Chris Napior recovered $25,000, the Plaintiffs by counterclaim maintain that they are entitled to substantial indemnity costs thereafter in the amount of $615,505 plus HST.

[26] The D’Addarios submit that Chris Napior did not get a better result than the $100,000 offer made by them August 2015 and that he should not be entitled to any cost for time spent after that date.

[27] They further submit that the offer made by Smith/Napior for $10,000 plus costs as agreed upon or as assessed cannot be properly characterized as a Rule 49 offer since there were distinct and independent causes of action against separate litigants that had been joined in one action. They cite case law [1] in support of their position that separate offers are required in order to gain the benefit of Rule 49.

[28] Ferne and Frank submit that the issue is clouded, even further, by the fact that this litigation involved two Plaintiffs by counterclaim and two Defendants by counterclaim each with their own cause of action and potential liability. They argue that it was impossible for them to assess their own liability and the merits of the Smith/Napior offers, but it is also impossible to discern whether Smith/ Napior “beat” that offer which is a fundamental requirement in applying Rule 49.

[29] I conclude that a global offer to multiple defendants can meet the requirements of Rule 49 so long as the offer is clear. As my colleague Justice Rutherford held in Carleton Condominium Corp. No. 97 v. Coscan Development Corp. (1996), 1996 CarswellOnt 4639, 19 O.T.C. 364 (Ont. Gen. Div) [2]:

I think Rule 49 permits a plaintiff to make a global offer to multiple defendants putting the onus on them to come up with a method of sharing the burden of accepting the offer or risking the burden of solicitor-client costs if the offer is not accepted and, overall the result is more favourable to the plaintiff.

[30] The IBM decision cited by the D’Addario’s is distinguishable. In that case, the plaintiff’s global offer was made to two separate defendants represented by separate counsel and the claims were distinct and separate. Here, the D’Addarios were represented by the same counsel, and in their own submissions, they argue that Chris Napior’s claims were “inextricably linked to the overall claim of sexual assault.” Moreover, the D’Addarios’ own offers were made jointly and to both Smith and Napior. Neither party attempted to break their offers into separate claims.

[31] In Fragomeni v. Ontario Corp. 1080486, (2006), 81 O.R. (3d) 577 (Ont. S.C.J.), the Court found that a global offer made to multiple plaintiffs that are family members represented by the same counsel was compliant with Rule 49.

[32] In Peter Lombardi Construction Inc. v. Colonnade Investments Inc., (2000), 51 O.R. (3d) 551, the Court concluded that an offer for an amount, plus assessed party and party costs, the assessed costs are not included as part of the comparison between the offer and judgment.

[33] For these reasons, I conclude that the Smith/Napior offer was Rule 49 compliant, but the costs consequences are still in the discretion of the Court. In this case, I note that the D’Addarios made an offer to settle the Smith/Napior claims for the all-inclusive sum of $100,000 on August 4, 2015. While that offer may seem reasonable having regard to the amount recovered, in November of 2014, the D’Addarios’ former counsel was seeking costs of $200,000 on a partial indemnity basis as part of an offer to settle that called for dismissals all around. It is not surprising that Smith and Napior declined the offer that was made to them one year later for one half of that amount. I conclude that this offer was not better than the result obtained at trial since the costs of the previously abandoned claims were not addressed.

[34] Smith and Napior now seek their solicitor client costs for the entire trial even though Betty Smith was completely unsuccessful. In my view, any entitlement to costs on a solicitor-client scale can only be considered in relation to Chris Napior’s successful defamation claims and no more than roughly 10% of the of the entire trial and trial preparation costs. There was an unsuccessful motion by the D’Addarios to seek the defence of qualified privilege with respect to their communications with Father Kerslake and there was a further motion with respect to the joint liability of Ferne D’Addario for the statements made. The nature of the allegations required detailed jury instructions and and questions. There had been multiple trial adjournment requests by the D’Addarios which required repeated trial preparations.

[35] As noted earlier, the D’Addarios’ claim that the quantum of costs claimed by Smith and Napior is excessive, but have not produced their own dockets. As a result, it can be inferred that they devoted as much time and money as their opponents. [3] Prior to the November 14th trial date, the D’Addarios were seeking costs in the amount of $200,000 on a partial indemnity basis which is an amount that is comparable to the Smith/Napior costs at that time.

[36] I note that there were three lawyers, an articling student and support staff at trial acting for Smith and Napior at trial and I agree that this represents an element of over-lawyering. There also appears to be excessive amounts of dockets for internal communication and $16,500 billed for legal research. With that in mind, I conclude that the amount of $55,000.00 plus HST is a reasonable sum for Chris Napior’s costs. I limit his recovery for disbursement to approximately 10% of the amount claimed, namely $4,000.

[37] Finally, there is the motion to lead evidence with respect to the Deerhurst incidents. The Defendants were successful and the costs were reserved for trial. The Plaintiff’s arguments that the jury would consider that evidence as similar fact evidence proved to be unfounded. The Defendants are entitled to their costs of that motion which I fix at $5,000 plus HST.

[38] In summary, the Defendants, Betty Smith and Chris Napior, are entitled to $75,000 plus HST for their defence of the abandoned claims and additional $5,000.00 for the costs of the pre-trial motion.

[39] Chris Napior, as Plaintiff by counterclaim, is entitled to $55,000 plus HST and $4,000 in disbursements for his costs in pursuing his defamation claims.

Mr. Justice Robert N. Beaudoin Released: July 22, 2016

COURT FILE NO.: 06-CV-35434 DATE: 20160722 ONTARIO SUPERIOR COURT OF JUSTICE BETWEEN: FRANK D’ADDARIO Responding Party/Plaintiff – and – BETTY SMITH and CHRIS NAPIOR Moving Party/Defendants -and between- BETTY SMITH and CHRIS NAPIOR Moving Parties/Plaintiffs by Counterclaim -and- FRANK D’ADDARIO and FERNE D’ADDARIO Responding Parties/Defendants by Counterclaim decision on costs Beaudoin J. Released: July 22, 2016

Footnotes

[1] Malik v. Sirois; Sommerard v. IBM Canada Ltd. et al.; Tuffhide Products, LLC et al v. Rhino Systems of Canada Inc. et al; Onisforou et al v. Rose et al., (1998), 41 O.R. (3d) 737 (Ont. C.A.)

[2] Cited with approval in Wright v. Walmart Canada Corp., 2010 ONSC 2936 at para. 63

[3] Williams Estate v. Carleton Condominium Corporation No. 66, 2016 ONSC 786 at para. 14