Court File and Parties

COURT FILE NO.: CV-17-589284 DATE: 2020-01-28 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: THE ESTATE OF DR. GEORGE PAUL ZACHARIADIS, DECEASED, by his Estate Trustees ALESSANDRA SACCAL and ROMINA SACCAL, Plaintiff/Applicant

AND:

DESPINA GIANNOPOULOS, also known as DESPINA GIANNOPPOULOS, also known as DEBBIE GIANNOPOULOS, also known as DEBBIE GIANNOPPOULOS, DR. ARIS GIANNOPOULOS, JOHN DOE, JANE DOE and DOE CORPORATION, Defendants/Respondents

BEFORE: Koehnen J.

COUNSEL: Justin W. de Vries and Diane A. Vieira for the defendants Norman Groot, Geoff Keeble for the Plaintiffs

HEARD: Written submissions received December 3, 20, 2019, January 7, 14, 15, 2020

costs ENDORSEMENT

[1] In reasons released November 13, 2019, reported at 2019 ONSC 6505, I dismissed the plaintiffs’ claim on a motion for summary judgment. The defendants claim costs of the action on a substantial indemnity scale which they ask me to fix at $$218,212.15 inclusive of HST and disbursements. In addition, the defendants ask to make the costs award against both the plaintiff estate and against Alessandra Saccal and Romina Saccal personally as estate trustees.

[2] The plaintiffs submit that the costs award should be on a partial indemnity scale, fixed at $40,000 or less and, if made at all, be awarded only against the estate.

[3] I fix costs at $199,602.46 on a substantial indemnity scale payable by both the estate and Alessandra Saccal and Romina Saccal personally. I order counsel to confer amongst themselves and agree upon a date for a conference call with me to address the manner in which to resolve allegations that Romina Saccal transferred title to her home at 83 Banbury Road, Toronto from her name alone to her husband’s name alone. The call with me should occur within 1 week of releasing these reasons. I order that no further transfer of or encumbrance on 83 Banbury Rd. be made until the issue of the fraudulent conveyance has been determined or further order of this court.

[4] The underlying litigation was an attempt by the estate to recover $700,000 that the deceased, George Zachariadis, had given to his long-term romantic partner Despina Giannopoulos. The statement of claim makes allegations of fraud against Despina and against her son, Dr. Aris Giannopoulos. George treated Dr. Giannopoulos like a son as a result of his relationship with Despina.

[5] Alessandra and Romina were George’s daughters from a previous marriage. They had been estranged from George for decades as a result of the breakdown of his marriage with their mother. They did not invite him to their weddings or to the christenings of their children. They had not seen George for decades before his death.

Principles Applicable to Costs Awards

[6] Modern cost rules are intended to serve three purposes:

(a) To indemnify successful litigants for the costs of litigation;

(b) To encourage settlement; and

(c) To discourage and sanction inappropriate behavior by litigants: Fong v. Chan, (1999), 1999 2052 (ON CA), 46 OR (3d) 330, (ONCA) at para. 22.

[7] The relevant factors to take into account are set out in Rule 57.01 of the Rules of Civil procedure and include conduct of any party that tended to lengthen unnecessarily the duration of the proceeding.

[8] As a general rule, unsupported allegations of fraud warrant a costs award on a substantial indemnity scale: Mele v. Riddell, 1997 12124 (ON SC), 1997 CarswellOnt 206 (Ont. Gen. Div) at para. 5, Millson v. 1156653 Ontario Limited, 2007 48657 (ONSC) at para. 35.

[9] Courts have recognized the unique circumstances of estate litigation have a bearing on costs awards. By way of example, in Salter v Salter Estate, (2009), 2009 28403 (ON SC), 50 ETR (3d) 227, 2009 at para. 6 Justice Brown (as he then was) held:

Given the charged emotional dynamics of most pieces of estates litigation, an even greater need exists to impose the discipline of the general costs principles of “loser pays” in order to inject some modicum of reasonableness into decisions about whether to litigate estate-related disputes.

[10] Courts have also been willing to make cost awards against estate trustees personally in appropriate circumstances: Tierney (Estate) v. Brown, 2015 ONSC 6949 at paras. 6-7; Newlands Estate, 2018 ONSC 2952, paras. 33, 39 or to make blended awards against both the estate and the trustees: Sawdon Estate v. Sawdon, 2014 ONCA 101at paras. 94-108.

Application of the Principles to This Case

[11] The plaintiffs submit that an unsuccessful fraud claim “does not lead inexorably to the conclusion that the unsuccessful party should be held liable for substantial indemnity costs: Millson v. 1156653 Ontario Limited, 2007 48657 (ONSC), at para. 33.

[12] I agree. Here, however the circumstances warrant an award on a substantial indemnity scale.

[13] The fraud allegations in the underlying claim were unsupported but pursued to the end. Moreover, it was not necessary for the plaintiffs to plead fraud. The claims could also have been restricted to constructive trust or resulting trust. The plaintiffs chose to base the claim on fraud.

[14] Throughout the litigation, in my view, the plaintiffs tended to pursue an unnecessarily aggressive approach. By way of example, they served the amended statement of claim on Aris at his medical practice even though he was represented by counsel. They brought an unnecessary motion to have the $700,000 paid into court when Despina had already promised to preserve the money where it was until the litigation was resolved.

[15] Despina made two settlement offers. Although neither was a formal offer under the Rules, I am nevertheless entitled to take the offers into account in assessing the reasonableness of each party: Newlands Estate, 2018 ONSC 2952 at para. 24.

[16] On October 26, 2018, before initiating their summary judgment motion, Despina and Aris offered to settle the litigation by paying the Saccals $100,000.

[17] The plaintiffs claim they were motivated by a public interest desire to ensure that the estate had enough funds to pay a tax liability to CRA that arose out of an assessment of one of George’s prior tax years. Their conduct suggests otherwise. On August 14, 2019 the defendants offered to pay CRA directly up to $190,000 for the Estate’s outstanding tax liability. This equaled the estimated outstanding liability at the time. In addition, Despina and Aris offered to pay each of the Saccals’ children (i.e. George’s grandchildren) $10,000. That too was rejected.

[18] The plaintiffs’ conduct before me was consistent with conduct that was disproportionate and tended to lengthen the litigation. As set out in my reasons at 2019 ONSC 6505, shortly before the summary judgment motion was scheduled to be heard, the plaintiffs moved to adjourn it. The adjournment was necessary because of their own conduct, not that of the defendants. On the motion before me they once more moved to adjourn in order to conduct 8 non-party examinations which I declined. They also filed two affidavits at the last minute on the summary judgment motion.

[19] Their materials were unnecessarily long and consistently violated page limits on submissions. Instead of providing double spaced submissions they provided 1.5 spaced submissions which, even then exceeded page limits. Even that was insufficient, the plaintiffs then added a lengthy schedule of facts to their factum on the motion, much of it single spaced.

[20] The plaintiffs’ materials on the costs submissions were similar in character: 36 pages of 1.5 spaced submissions, plus a 5 page single spaced letter dealing with the bill of costs, plus a 1 page single spaced letter seeking clarifications to my reasons, plus a 600 page compendium.

[21] The plaintiffs’ conduct seemed to be characterized by needless lack of cooperation including directing the defendants to hundreds of pages of bank account statements to enable the defendants to determine what remained in the Estate as opposed to providing an accounting of some sort; failing or refusing to provide a copy of the Estate’s probate application thereby forcing the defendants to obtain a copy from the court; forcing the defendants to address adjournments on the summary judgment motion, frequently filing materials out of time; failing or refusing to file a notice of discontinuance against Aris after they had agreed to discontinue the claim against him.

[22] The Saccals engaged in this conduct and lengthy litigation for an estate that had no material assets and which they admit has no assets left. I find it difficult to believe that they were doing so all because of their concern that the estate have funds to pay any liabilities it owed to CRA. If that had been their true motivation, they could simply have turned the estate over to the CRA and assigned to the CRA some or all of the claim to the $700,000 that George gifted to Despina.

Quantum of Costs Award

[23] It does not appear that the parties are far apart on the reasonableness of the costs the defendants incurred. Shortly before the summary judgment motion was argued, the plaintiffs told the defendants that their full indemnity costs were approximately $200,000. The plaintiffs filed a partial bill of costs on this determination which either approximates or exceeds the defendants’ costs for similar steps. The plaintiffs’ costs for the summary judgment motion at full indemnity are $105,000; defence costs at full indemnity are $117,000. The plaintiffs’ costs of a refusals and preservation of property motion are $42,878 at full indemnity; the defendants record $25,000 at full indemnity.

[24] I have nevertheless reviewed the defendants bill of costs in some detail. It did strike me that there was probably some duplication between the work done by defence counsel. Generally, 3 lawyers worked on the matter. They were called to the bar in 1993, 2006 and 2016. While Mr. De Vries, the 1993 call, had the least number of hours, the hours of the 2006 and 2016 calls on the same tasks were often fairly similar. To avoid the potential duplication within that I have reduced the costs the defendants claim by 10% from 208,696.88 to 187,827.19 plus disbursement of $9,515.27 for a total of 197,342.46.

[25] In paragraph 51 of their reply submissions, the defendants seek $11,300 including HST for preparing their original cost submissions, reviewing he plaintiffs’ submissions and preparing their reply.

[26] The defendants resist, pointing to Moodie-Meritt v Toronto Transit Commission, 2015 ONSC 7001 where Lederer J. held that costs of a separate proceeding to determine costs of an earlier proceeding would only be awarded in an unusual case. The situation here is different. This is not a separate proceeding but simply the costs phase of the same proceeding. It is relatively common to award a party an amount to prepare their costs submissions.

[27] I note, however, that the defendants’ original cost submissions included an amount of $4,320 for preparation of the bill of costs. That amount is therefore already embedded in the $11,300 they now seek. In effect they are seeking an additional $6,980 for their reply.

[28] The submissions of the plaintiffs in response to the defendants’ request for costs were difficult to deal with. As noted earlier, they did not comply with the rules, were unnecessarily long and were prepared in a way that made the point difficult to grasp. This is more than what a party seeking costs would ordinarily anticipate in response. Some additional amount is warranted. I would add $2,260 (including HST) to the costs award to compensate for this additional time. That brings the total award to $199,602.46.

[29] In a letter dated December 30, 2019, plaintiffs’ counsel raised a number of issues that he says are unclear in my reasons and which have a bearing on costs. Plaintiffs’ counsel asked for an addendum to my reasons. I declined to do so but indicated that I would address the issues in my costs endorsement.

[30] First, plaintiffs’ counsel questions whether the defendants should be entitled to costs of the Rule 21 motion because it “does not appear that the court granted Ms. Giannopoulos’s motion pursuant to Rule 21.” This is of no moment. While I did not specifically refer to Rule 21 in my reasons, the Rule 21 issues were bound up with the summary judgment issues. By way of example, the limitations issue may have fallen within a Rule 21 motion. I addressed the limitations issue and found in the defendants’ favour. Whether the limitations issue is considered under Rule 21 or by way of summary judgment makes no difference. The work required for the issue is the same.

[31] Second, the plaintiffs submit that the defendants seek costs for a motion to strike the affidavits of Romina Saccal when it does not appear that I granted the motion to strike the affidavits. The defendants are entitled to their costs of preparing the motion to strike even though I took the affidavits into account on the hearing. The affidavits were clearly out of time and were subject to challenge on that basis. I nevertheless granted the plaintiffs leeway and considered them. The only mention in my reasons of the affidavits is in paragraph 22 in connection with the summonses to witness that the plaintiffs sought to use to adjourn the summary judgment motion. I nevertheless dismissed the plaintiffs request for an adjournment. In my view it was reasonable for the defendants to have moved to strike the affidavits. The fact that I did not strike the affidavits does not reflect any weakness in the defence position nor does it reflect favourably on the plaintiffs’ conduct in serving them late. It more accurately reflects the court’s desire to move the matter forward on a practical footing and avoid further delay.

[32] Third, the plaintiffs note that the defendants seek costs of a motion before Master Mills for a preservation order. The plaintiffs say they were successful on the motion because the Master ordered the funds to remain in the account in which they were at the time. The Master did not address costs but adjourned the matter to a later date. The later hearing never occurred. This, say the plaintiffs, means that the defendants should not be awarded costs of that motion or, in the alternative, that I should direct the matter back to the Master for determination. I am not inclined to do so. The “success” the plaintiffs claim is illusory. The defendants had proposed the same solution before the motion, thereby rendering that part of the motion needless. Although there was a refusals component to the motion on which the plaintiffs were successful, it strikes me that the lion’s share of the work on that motion was for the preservation order, not the refusals.

[33] Fourth, the plaintiffs point to a typographical error in para. 75(g) of my reasons where the reference to July 2015 should be to July 2014. They are correct in that. I will issue a new version with the correction made.

Conveyance of 83 Banbury Road

[34] Shortly before the motion for summary judgment was scheduled to be argued, Romina transferred title to her home at 83 Banbury Road, Toronto from her name alone to her husband’s name alone (Dean Nellis) for no consideration. Romina had held title to 83 Banbury Road in her name alone since April 17, 2009. The defendants say this amounts to a fraudulent conveyance designed to render Romina judgment proof against any costs order.

[35] The defendants say there was a reason for the transfer and that I cannot determine the issue on a costs award. Instead of subjecting the parties to another round of lengthy litigation, I will determine whether the property should be conveyed back to Romina in a proceeding that will be designed to resolve the issue in a matter of weeks. Both counsel should confer and advise me of dates that they are available for a conference call to work out that procedure. The call should occur within one week of releasing these reasons.

[36] There shall be no further transfer of or encumbrance on 83 Banbury Road until further order of this court. If there has been any encumbrance placed on or transfer of the property since the transfer to Dean Nellis, I should be advised of that during or before the conference call referred to in the preceding paragraph.

Koehnen J.

Date: January 28, 2020