Court File and Parties

COURT FILE NO.: CV-16-549585 DATE: 20160829 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

ILDA LEOPOLDINO Applicant – and – JOSE LEOPOLDINO and EXPO 2000 AUTOBODY INC. Respondents

Counsel: Mark A. Ross and Emily J. Pinckard for the Applicant Fernando Teixeira for the Respondent Jose Leopoldino

IN THE MATTER OF EXPO 2000 AUTOBODY INC. and the Business Corporations Act, R.S.O. 1990, c. B.16

HEARD: In writing

PERELL, J.

REASONS FOR DECISION - COSTS

[1] The Applicant Ilda Leopoldino and her husband Jose Leopoldino are joint owners of a family business incorporated as Expo 2000 Autobody Inc. Mrs. Leopoldino was the business manager and Mr. Leopoldino was the mechanic, who, along with others, serviced the clientele. Their business and matrimonial relationship has fallen apart, and the Leopoldinos accuse each other of siphoning funds and misappropriating property. In competing applications, the Leopoldinos sought to wind-up the corporation and an accounting between the shareholders. They agreed that the business should be sold as a going concern, but they disagreed about the conduct of the sale including who shall be permitted to purchase the business.

[2] Justice McEwen made an interim order dated April 11, 2016, and the competing applications came on before me on July 29, 2016, at which time I made the following Order:

(1) that Expo 2000 Autobody Inc. be wound up and its business be sold as a going concern;

(2) that Mrs. Leopoldino have 20 days to designate a business evaluator to provide an opinion of the fair market value of Expo 2000 Autobody Inc. as a going concern. The evaluator’s fees shall be paid by Expo 2000 Autobody Inc.

(3) that if Mr. Leopoldino opposes the business evaluator selected by Mrs. Leopoldino, then Mr. Leopoldino shall have 20 days to bring a motion to have the court appoint an evaluator whose fees shall be paid by Expo 2000 Autobody Inc.;

(4) that after the evaluator has delivered his or her report, that the business be listed for sale at the fair market value determined by the evaluator or as determined by the court by motion by either party to fix the listing price;

(5) Mrs. Leopoldino and Mr. Leopoldino may submit offers to purchase the business which is to be sold to the highest bidder;

(6) there shall be an accounting of the affairs of the business by reference to a Master of this Court;

(7) in that accounting, Mrs. Leopoldino shall be the plaintiff in the trial of the issues and shall deliver a statement of claim and Mr. Leopoldino shall deliver a statement of defence and counterclaim;

(8) as an alternative to the reference before the Master, the parties may agree to binding arbitration under the Arbitration Act;

(9) in the interim pending the sale of the business, it shall be managed by Mrs. Leopoldino and the order of Justice McEwen shall be continued;

(10) these directives are subject to further Order of this Court (I am not seized of the matter), including by the Master conducting the reference.

[3] In my endorsement, I directed that if the parties could not agree about the matter of costs, they could make submissions in writing beginning with Mrs. Leopoldino’s submissions within 10 days followed by Mr. Leopoldino’s submissions within a further 10 days.

[4] The parties could not agree about costs, and Mrs. Leopoldino requests costs of $50,202.35 on a substantial indemnity basis.

[5] Mrs. Leopoldino submits that she was the successful party and that the outcome of the motion matched a settlement offer she made near the outset of the litigation. She submits that Mr. Leopoldino reneged on positions he took in the run up to the hearing of the applications and attempted to delay the hearing of the applications by a lack of co-operation in agreeing to dates for cross-examinations notwithstanding having consented to the timetable for the applications. The result, she says, were numerous and arguably unnecessary court attendances and unnecessarily increased legal expenses.

[6] The parties were in practice court on April 4, April 11, and July 5, 2016. Mrs. Leopoldino submits that although Mr. Leopoldino consented to the timetable, he would not co-operate in scheduling dates for the cross-examinations; he sought adjournments instead, and he complicated matters by unnecessarily serving summonses to examine five deponents over four separate days necessitating the cost of expedited transcripts.

[7] Mrs. Leopoldino submits that the cross-examinations were unduly lengthened by Mr. Leopoldino’s counsel persisting in requesting undertakings for matters that were irrelevant and unnecessary for the pending hearing.

[8] For his part, Mr. Leopoldino says that he was the successful party on the applications and he seeks costs on a partial indemnity scale of $17,243.58. He denies that he was responsible for any delay or wasted expense, and he finds fault in how Mrs. Leopoldino complied with Justice McEwen’s interim order.

[9] As I view the matter, success was divided on the applications and there is little in the circumstances that would justify a punitive costs award.

[10] Despite Mrs. Leopoldino’s protestations and however reasonable her early offer to settle may have been, particularly with the benefit of hindsight, Mr. Leopoldino was entitled to his day in court and to test her case by cross-examinations.

[11] From what I can gather from the record, there was some dithering by Mr. Leopoldino and some mutual lack of co-operation in the run up to the hearing of the applications, but each party was making very serious allegations of impropriety and nevertheless their anger and the frustration ultimately did not prevent the applications being heard in a timely way.

[12] It is true that acting reasonably the parties could and perhaps ought to have come to their litigation senses and had they done so, they might have spared themselves or reduced their respective legal expenses, but it appears to me that a contested court hearing was inevitable given the deterioration of the relationship, the serious allegations of impropriety, and the unlikelihood they could ever agree without the impetus of a court order on the details of the sale of Expo 2000 Autobody Inc. as a going concern.

[13] In my opinion, the appropriate order to make in this case is to fix the costs of the applications to date at $25,000 and make them in the cause of the accounting or arbitration if that is the route the parties should decide to pursue.

[14] Order accordingly.

Perell, J. Released: August 29, 2016