Citation: Di Battista et al v. Di Battista et al, 2016 ONSC 7592

COURT FILE NO.: CV-16-11360-00CL

DATE: 20161214

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Giovanni Di Battista, Marco Di Battista in his capacity as the Estate Trustee of the Estate of Anna Maria Di Battista, Marco Di Battista, Fernando Di Battista, John Peter Di Battista, Batmar Inc., D.B.F. Investments Inc., D.B.T. Investments Inc., 534705 Ontario Limited, 534706 Ontario Limited, J.P.D.B. Consultants Inc., 802431 Ontario Inc. and 790126 Ontario Inc., Applicants

AND:

Nicola Di Battista, Anthony Di Battista, Clearway Holdings Ltd., 1157420 Ontario Limited, Clearway Group Inc., Clearway Amelioration Inc., Clearway Rentals Inc., Clearway Investments Inc., Clearway Construction Inc., Clearway Equipment Limited, Signature Communities Inc., Synrggroup Construction Partners Inc., Sterling Haulage Ltd., Terra Infrastructure Inc., Clearway Payroll Management Inc., Clearway Utilities Inc., Best Concrete Forming Inc., 534707 Ontario Limited, 2372639 Ontario Inc., DIBA Consultants Inc., DIBA Contractors Inc., 1273174 Ontario Limited, 1848843 Ontario Inc., G.B.D. Holdings Inc., 2372659 Ontario Inc., Clever Holdings Inc., Di Battista Farms Ltd., Dufferin Heights Estates Inc., Signature 153 16TH Inc., Bowes 491 Inc., Signature Tao Inc., Signature Tao Limited Partnership, East Gwillimbury Holdings (2007) Inc., East Gwillimbury Holdings (2008) Inc., East Gwillimbury Holdings (2009) Inc., Gear Equipment Inc., 845947 Ontario Limited, Tony Di Battista, Giulio Di Battista, Lisa Bonomo, Laura Di Battista, Paula Di Battista, Emilia Di Battista, Nicola Di Battista and Laura Di Battista in their capacities as the Trustees of the Di Battista Family Trust, 2026496 Ontario Limited, 1442422 Ontario Limited, 1442423 Ontario Limited, 1161112 Ontario Inc., 515476 Ontario Limited, 1792829 Ontario Inc., Pat Viele, Alvin Chan, Domenic Villani, Mark Meyers and Carlo Zappavigna, Respondents

BEFORE: Mr. Justice H.J. Wilton-Siegel

COUNSEL: Dominique Michaud, for the Applicants

Stephen Schwartz for the Di Battista Respondents

Marco Drudi, for the non-Di Battista Respondents

HEARD: November 28, 2016

SUPPLEMENTARY ENDORSEMENT

[1] On November 28, 2016, the Court heard an amended motion of the applicants and released an endorsement dated the same date dealing with two substantive matters (the "Endorsement"). The Court reserved two costs issues, which are the subject of this supplementary endorsement. I will summarize the procedural history of this litigation and then address each cost issue in turn.

Procedural History

[2] The following brief summary of the litigation is based only on a review of the record before the Court, given that the Court has had no prior involvement in this litigation.

[3] The applicants started this application on April 21, 2016 seeking a compulsory purchase of their interests in, or a winding up of, the Clearway companies as well as considerable additional and ancillary relief that is not relevant for present purposes. At the same time, the applicants brought a motion seeking, as interim relief, the appointment of an interim receiver over the Clearway operating companies and an interlocutory injunction restraining the Clearway companies from funding the respondents' expenses of this litigation and restraining payments from one co-investment, the Bayview Tao Limited Partnership (the "LP").

[4] Pursuant to the Business Corporations Act, R.S.O. 1990, c. B.16 (the "OBCA"), the applicants are entitled to annual financial statements of the companies of which they are shareholders. A unanimous shareholders agreement may also have broadened that right to include audited financial statements of certain Clearway companies of which the applicants are not direct shareholders as well as quarterly reports and an annual budget/forecast for those companies. It appears that the applicants had been receiving these statements and certain other reports until 2015.

[5] In July 2016, after commencement of the litigation, the respondents provided extensive financial disclosure, which is reflected in their responding materials. In those materials, the respondents also addressed, among other things, distributions from the LP.

[6] The applicants then proceeded with cross-examinations of Anthony Di Battista ("Anthony") and Nick Di Battista ("Nick"). The respondents cross-examined Marco Di Battista ("Marco") and Fernando Di Battista. In addition, answers to undertakings of Anthony were provided.

[7] On October 17, 2016, the applicants served an amended notice of motion in which they abandoned the relief previously sought and, instead, sought the appointment of an inspector and a mandatory order regarding a distribution by Clearway Holdings Ltd. ("Holdings") of funds derived from the LP.

[8] The applicants say that they decided to abandon the requested relief in the initial motion after receiving the financial information from the respondents delivered in July 2016. In response to the respondents' submission that they should have withdrawn their initial motion before, rather than after, the cross-examinations, the applicants say that they required the cross-examinations to be able to assess the information provided.

[9] The amended motion was scheduled to be heard on October 26, 2016. On that date, a consent order was granted in respect of another issue between the parties, the costs of which are not at issue on the present motion. The amended motion was otherwise adjourned to be heard on November 28, 2016, with the issue of any costs thrown away as a result of the applicant's amendment of its initial motion to be addressed by the Court on that day.

[10] In connection with the amended motion, the respondents served a supplementary affidavit of Anthony opposing the appointment of an inspector and the mandatory distribution order. The applicants served a third supplementary motion record in support of the amended motion. This was followed by further cross-examinations of Anthony and Marco.

[11] After the respondents served their factum proposing a disclosure protocol and a distribution from Holdings of $1.6 million, the applicants served a supplementary factum. In this supplementary factum, the applicants abandoned the request for an inspector and sought updated disclosure of the LP as described in the Endorsement, which had not previously been sought in the amended notice of motion. They also maintained their request for a mandatory distribution order directed against Holdings in a larger amount than the $1.6 million proposed by the respondents.

[12] The applicants say that their decision to seek different relief in their supplementary factum from that sought in the amended notice of motion was based on concessions and admissions of the respondents in their factum. In addition, they say that the respondents committed to providing the requested information without a firm date. The applicants therefore decided to seek a firm date for delivery of this information and to abandon the request for an inspector. I would note, however, that the applicants are unable to demonstrate that they are in fact entitled to the requested information under the OBCA or the shareholders agreement. In addition, there do not appear to be any concessions or admissions in the respondents' factum relating to the amended motion unless the disclosure protocol and distribution of $1.6 million are so treated.

[13] In summary, on two occasions, the applicants sought draconian relief — in one case, appointment of a receiver and, in the other, appointment of an inspector — only to withdraw or abandon their motion on an informal basis in favour of different relief. They submit that it was necessary to bring the motions to get the financial disclosure that the respondents subsequently provided. The applicants describe their actions as "being flexible" and "practical". However, quite apart from the legitimate question of the applicants' entitlement to the disclosure which they sought, which the Court cannot determine on this motion, I do not see why the applicants were any less likely to have received the financial disclosure they sought if they had limited the relief sought on the initial motion and the amended motion to such disclosure.

Costs Thrown Away

[14] The first costs issue pertains to the respondents' argument that they are entitled to costs thrown away as a result of the applicants' withdrawal or abandonment of their initial motion for an interim receivership order and an injunction regarding the use of funds for legal fees. As discussed, the applicants effectively withdrew this motion in favour of an amended motion seeking the appointment of an inspector. This issue pertains to costs incurred up to October 26, 2016. The Di Battista respondents seek costs of $40,000. The non-Di Battista respondents seek costs of $20,000 and argue that they may no longer be involved in this litigation.

[15] I think the respondents are entitled to some costs thrown away, given the circumstances described above. If the applicants had wanted financial disclosure, they should have limited the relief sought in the notice of motion to such disclosure. By invoking the specter of very different and more consequential relief, the applicants undoubtedly required the respondents to engage in legal work that was ultimately unnecessary on the motion and, probably, at least to a certain extent, on the application itself. I do not think this approach to litigation should be encouraged. It is certainly neither "practical" nor "flexible".

[16] However, as mentioned, given the status of this litigation as well as the Court's limited involvement to date, it is not possible to fix such costs with any fairness. I therefore adopt the approach of Campbell J. in Mountell Investments Limited (Re), 2008 CanLII 39958 (Ont. S.C.) and award the Di Battista respondents $25,000 "on account" of costs thrown away, representing costs that it appears would be recoverable after a full examination is made. This will allow the parties to argue the full entitlement to costs thrown away at the end of the litigation. Similarly, I award the non-Di Battista respondents $15,000 "on account" of costs thrown away.

Costs of the Amended Motion

[17] In addition, the respondents seek their costs of the amended motion from October 26, 2016 to the hearing of the motion. The respondents were substantially successful on the two principal matters before the Court and were partially successful on the issue of costs thrown away. Accordingly, they are entitled to their costs of this motion.

[18] The Di Battista respondents seek costs of $18,877.12 on a partial indemnity basis. The non-Di Battista respondents seek costs on the same basis of $1,000. The applicants' costs outline does not separate the applicants' costs of this motion from their costs in respect of their initial motion. There is, therefore, no evidence of their reasonable expectations regarding the costs of this motion. However, the issues were important to the parties. There is no suggestion of any duplication of effort between the two groups of respondents. Further, the nature of the relief sought by the applicants increased the costs of the Di Battista respondents relative to what would have been reasonable costs in respect of the relief ultimately sought in the applicants' supplementary factum.

[19] Based on the foregoing, I find fair and reasonable costs to be $18,500 in favour of the Di Battista respondents and $1,000 in favour of the non-Di Battista respondents, payable forthwith by the applicants.

Wilton-Siegel J.

Date: December 14, 2016