Court File and Parties
Court File No.: CV-12-1240 Date: 2017-03-07 Ontario Superior Court of Justice
Between: MARY PALMIERI and ANTONIO PALMIERI a.k.a. TONY PALMIERI, Applicants – and – GIUSEPPE ALAIMO, Respondent
Counsel: Eric Gionet, for the Applicants Igor Ellyn, for the Respondent
Heard: In Writing
Court File No.: CV-13-0263 Ontario Superior Court of Justice
Between: GIUSEPPE ALAIMO, Applicant – and – MARY PALMIERI and TONY PALMIERI, Respondents
Counsel: Igor Ellyn, for the Applicant Eric Gionet, for the Respondents
Heard: In Writing
Reasons for Decision on Costs
VALLEE J.
[1] Mary Palmieri is Giuseppe Alaimo’s daughter. This matter concerned a dispute over a house that the Palmeiris built on Mr. Alaimo’s property. The parties, who both had counsel, agreed to submit the dispute to arbitration. Their counsel prepared the arbitration agreement. It did not set out a typical arbitration process. Rather, the parties agreed on a quantity surveyor who was to act as an arbitrator and to determine the fair and reasonable cost to build the house. The agreement stated that Mr. Alaimo would pay to the Palmieris the difference between the fair and reasonable cost of construction and the amount outstanding on the mortgage at the time in order to resolve the dispute.
[2] After the quantity surveyor prepared his draft reconstruction estimate and provided it to the parties for comment, Mr. Alaimo terminated his counsel, retained a new one and took the position that he was not bound by the arbitration agreement. The Palmieris commenced an application in which they stated that the arbitration award ought to be enforced. Mr. Alaimo commenced a separate application in which he stated that he was not bound by the arbitration award.
[3] The Palmieris were successful on their application and in defending Mr. Alaimo’s application.
[4] Rule 57.01(e) and (f)(i) state that in exercising its discretion, the court may consider the conduct of any party that tended to lengthen unnecessarily the duration of the proceeding and whether any step in the proceeding was improper, vexatious or unnecessary.
[5] I made four orders regarding these applications as set out below.
[6] The Palmieris brought a motion in July, 2013, for an order that Mr. Alaimo’s former counsel, Mr. Rovazzi, re-attend a cross-examination and answer his undertakings and refusals. On the day prior to the motion, Mr. Alaimo’s counsel provided written answers. I ordered Mr. Rovazzi to attend at the continuation of his cross-examination to give his answers to the undertakings and refusals under oath. My order permitted counsel for the Palmieris to ask follow-up questions relating to the answers. The costs of this motion were reserved to the applications judge.
[7] Despite this order, on April 29, 2014 the Palmieris had to bring a second motion for essentially the same relief. In a similar manner, on the day prior to the cross-examination re-attendance, Mr. Alaimo’s counsel provided written answers to the questions. Counsel for the Palmieris was satisfied with the answers; however, the issue of the costs of the motion remained. In my ruling dated April 30, 2014, I stated that Mr. Alaimo’s conduct regarding both of the motions suggested a litigation strategy pattern which could not be condoned. Costs were awarded to the Palmieris.
[8] The first part of the parties’ applications was heard on February 25 and April 9, 2015. The Palmieris requested in order to enforce the arbitration award. Mr. Alaimo stated that he was not bound by the arbitration agreement, the reproduction estimate or the award for various reasons, including an allegation of bias against the arbitrator. Mr. Alaimo requested an order that the arbitration award be set aside.
[9] In my ruling, I determined that Mr. Alaimo’s position was not supported. His allegation of bias was an opportunistic tactic. Nevertheless, the award was deficient in that it did not state the reasons upon which it was based. There was no reference to the reproduction estimate or location where the award was made.
[10] I remitted the award back to the arbitrator with directions. I also stated that if the parties had any concerns regarding whether a subsequent award was enforceable, they could attend again before me.
[11] The arbitrator issued an amended arbitral award dated July 27, 2015.
[12] At some point in these proceedings, Mr. Alaimo transferred the subject property to his other children without advising the Palmieris. When the Palmieris discovered this, they commenced an action for fraudulent conveyance and brought a motion for certificate of pending litigation.
[13] The second part of the parties’ applications was heard on June 3, 2016. Pursuant to the arbitration agreement, the Palmieris requested an order that Mr. Alaimo pay them $257,509.32 being the difference between the reproduction estimate and the value of the mortgage registered against the property at the time. The Palmieris also requested an order that Mr. Alaimo pay $5,232.15 being the costs fixed by the arbitrator with respect to the arbitration. Mr. Alaimo opposed this and stated that the arbitration agreement did not contain a payment order. He stated that the Palmieris had made their full case on the previous court attendance and did not indicate that there would be an enforcement issue. He further stated that a trial was required to determine the amount payable because the court ought to hear evidence from the parties with respect to the calculation of the mortgage amount. He suggested that there had been some fraudulent activity connected with the Palmieris’ use of the mortgage funds.
[14] In my ruling, I determined that a trial was not required to reach a fair and just determination of the contractual issue. I ordered Mr. Alaimo to pay $257,509.32 together with $5232.15 to the Palmieris in accordance with the amended arbitral award.
[15] The Palmieris have been successful and are entitled to costs.
[16] In considering Rule 57.01(e) and (f)(i), I find that Mr. Alaimo’s conduct lengthened unnecessarily the duration of the proceeding. He took steps that showed a litigation pattern strategy that cannot be condoned. Mr. Alaimo’s former counsel, Mr. Rovazzi, should have answered the undertakings, refusals with respect to his cross-examination and should have answered follow-up questions without the Palmieris’ having to bring two motions to require him to do so.
[17] The positions advanced by Mr. Alaimo in support of his argument that he was not bound by the arbitration agreement had no merit. Mr. Alaimo’s allegations, and in particular, the allegation of bias against the arbitrator, constituted an opportunistic tactic to de-rail the arbitration because Mr. Alaimo was dissatisfied with the amount calculated in the reproduction estimate, despite the fact that the process agreed to by the parties provided him with an opportunity to make submissions on the draft report. The purpose of his application was to bring the arbitration to an end.
[18] Mr. Alaimo’s subsequent position was that he should not be required to pay the amount of the amended arbitral award because the arbitration agreement did not contain a payment order and a trial was necessary to determine the mortgage amount. These positions were similarly without merit. In the recitals of the arbitration agreement, paragraph three stated that the principal amount of the mortgage shall be deducted from the fair value of construction of the dwelling and the respondent, Mr. Alaimo, will pay to the claimant, the Palmieris, the difference between the two within 30 days from the arbitral award. Both parties had counsel when the arbitration agreement was drafted. They agreed to the terms.
[19] In their bill of costs, the Palmieris actual legal fees are shown to be $72,170.85. They request costs on a substantial indemnity basis of $64,953.77 (based on 90 percent of the actual fees) and $54,128.14 on a partial indemnity basis (based on 75 percent of the actual fees) together with disbursements $4,738.61.
[20] I agree with Mr. Alaimo’s position that partial indemnity fees are typically two thirds of substantial indemnity fees. Accordingly, the Palmieris’ partial indemnity fees would be approximately $42,870.
[21] Regarding the disbursements, I also agree with Mr. Alaimo’s position that software charges in the amount of $169.50 are not an appropriate disbursement. A disbursement described as “Services” in the amount of $265.55 is claimed; however, due to the vague description, I cannot determine what this is. Both of these amounts are not allowed.
[22] The Palmieris served and filed numerous volumes of materials which were necessary to support their application and to defend Mr. Alaimo’s application. I have reviewed the hours spent by the Palmieris’ counsel, his rate and the rates of others working under his supervision. I find them to be reasonable.
[23] After considering Mr. Alaimo’s conduct and the principles of fairness and reasonableness as set out in Boucher v. Public Accountants Council for the Province of Ontario, 71 O.R. (3d) 291, I find that a fair, reasonable and proportionate costs award for these proceedings is $57,800 all-inclusive, which Mr. Alaimo shall pay to Mary and Antonio Palmieri within 30 days.