Superior Court of Justice - Ontario

DATE: 20210326

RE: Nancy Wu, Applicant

AND:

Anthony Di Iorio, 8821488 Canada Ltd. and Decentral Inc. Respondents

BEFORE: Kiteley J.

COUNSEL: Ilana Zylberman Dembo, Aaron M. Franks, and Adam Prewer, counsel for the Applicant Harold Niman and Richard Niman, counsel for the Respondent Di Iorio Jorge Cartaya, counsel for the Respondent Di Iorio Duncan Boswell, counsel for the Respondents 8821488 Canada Ltd. and Decentral Inc.

HEARD: in writing

ENDORSEMENT AS TO COSTS ARISING FROM MOTION HEARD AUGUST 27, 2020

[1] On August 27, 2020, I heard submissions with respect to the Applicant’s motion for interim spousal support and disclosure. I released an endorsement dated December 10, 2020[^1]. I have received written submissions as to costs as follows:

(a) submissions of the Applicant dated January 11, 2021 with a copy of her offer to settle dated August 18, 2020 and a copy of the offer to settle by the Respondent Di Iorio dated August 26, 2020; the Applicant’s bill of costs;

(b) submissions of the Respondent Di Iorio dated January 18, 2021 with a copy of the offers to settle and a bill of costs of the firm Niman Mamo LLP and a bill of costs of the Cartaya Law Office;

(c) submissions of the Corporate Respondents dated January 18, 2021;

(d) reply Submissions of the Applicant dated January 25, 2021.

Positions of the Parties

[2] The Applicant’s bill of costs for three lawyers and one law clerk totals $119,197 for fees with HST in the amount of $15,495, for a total of $134,692. The disbursements total $4,146 plus HST of $539. The total fees and disbursements are $139,378. On a substantial recovery basis (75%), the amount claimed is $104,533. On a partial recovery basis (60%) the amount claimed is $83,627. The Applicant asks for an order that the Respondent pay costs in the amount of $104,533.

[3] Two bills of costs have been submitted on behalf of the Respondent. The first is the bill of costs by Niman Mamo for three lawyers and one law clerk totals $53,875 for fees with HST in the amount of $7,003 for a total of $60,879. The disbursements total $1,470 plus HST in the amount of $191. On a full indemnity basis, the total fees and disbursements are $62,541. On a partial indemnity basis, they are $41,277. The second bill of costs is submitted by Cartaya Law Office for one lawyer and it totals $19,043 for fees, $500 for disbursements, HST of $2,540 for a total on a full indemnity basis in the amount of $22,084. On a substantial indemnity basis (80%), the amount is $17,667. On a partial indemnity basis (60%), the amount of $13,250. The total costs submitted are approximately $65,000.

[4] The Respondent implicitly concedes that the Applicant is entitled to costs but takes the position that her bill of costs is excessive, relative to his costs. After reductions as he suggested in paragraph 6(a), (b) and (c) of his factum, he takes the position that any costs payable should at most be at a partial indemnity rate of 60%.

[5] On behalf of the Corporate Respondents, the bill of costs by Gowling WLG for one lawyer and one law clerk totals $37,621 for fees with HST in the amount of $4,890 for a total of $42,511. On a substantial indemnity basis, the total is $38,261. The Corporate Respondents ask for costs on a partial indemnity basis (at 60%) in the amount of $25,507.

Issues in the motion and success

[6] The Applicant asked for an order for temporary spousal support in the amount of $150,000 per month retroactive to the date of separation October 4, 2017. The order required the Respondent to pay temporary spousal support in the amount of $100,000 per month commencing December 1, 2020. In paragraphs 72-73 of the December decision, there is an explanation for the payment commencing December 1, 2020 and in paragraph 109, an order that that payment was without prejudice to either party. That outcome was suggested by the Respondent during submissions. The Applicant was successful.

[7] The Applicant asked for an order that the Respondent make a further payment of interim disbursements in the amount of $250,000. On the morning of the hearing, the Respondent agreed to pay $100,000. The Applicant was partly successful.

[8] The Applicant asked for disclosure by the Respondent of the complete PWC report with attachments and a complete copy of the scope of review documents relied on by Marmer Penner. Neither of those were argued because the Respondent had complied. The Applicant was successful.

[9] The Applicant asked for copies of the documents relating to the Respondent’s cryptocurrency holdings in their native file formats. The Applicant was successful.

[10] The Applicant asked for an order that all Respondents provide an electronic copy of the Decentral server containing any and all electronic files and documents as of the date of the Notice of Motion. The Applicant was not successful.

[11] The Applicant asked for an order that all Respondents provide a complete copy of the legal files of Addison Cameron Huff for all of the Respondents. As indicated in paragraphs 98 to 105 and paragraph 113, counsel made preliminary submissions but that motion was adjourned to be heard in writing. No party was successful.

[12] The Applicant asked for an order that all Respondents provide a complete affidavit of documents within 30 days. As indicated in paragraphs 106 to 108 and paragraph 114, that motion was not considered. No party was successful.

[13] The Applicant asked for a restraining and non-depletion order involving three real properties and involving the Respondent’s cryptocurrency holdings. On the morning of the hearing, The Respondent agreed to an order with respect to the real estate but not the cryptocurrency holdings. The Applicant was partly successful.

[14] On the basis of the submissions made on August 27, 2020 in comparison with the order made, the Applicant was successful on the spousal support issue and the native file formats. The Respondents were successful on the Decentral server issue.

Offers to settle

[15] The Applicant’s severable offer was served August 18, 2020. She offered to resolve temporary spousal support on the basis of $75,000 per month commencing September 1, 2020 without prejudice to future claims for retroactive spousal support. On the issue of interim disbursements, she offered to accept the amount of $150,000. On the disclosure issue, she proposed that the Respondents would provide the native file formats relating to the Respondent’s cryptocurrency holdings and a mirror of the Decentral serve, as well as a copy of Mr. Addison Cameron-Huff’s files. She proposed that the Respondents provide “complete” affidavits of documents within 30 days. In respect of the preservation order, the offer provided that the Respondent not sell or encumber three condominium units without providing reasonable notice in writing and not sell or transfer any cryptocurrency in an amount of $100,000 without providing notice.

[16] The Applicant’s offer was served at least 8 days before the hearing of the motion. Pursuant to rule 18(14), comparing her offer to the outcome, the order was greater than the amount of temporary spousal support in the offer. The motion was heard on August 27, 2020 and the decision was released December 10, 2020. For the reasons indicated, the temporary order for spousal support took effect December 1. The Applicant’s offer as to commencement date was as favourable as the order. The native file format order was as favourable as her offer to settle. On those issues, the Applicant is entitled to costs. The order with respect to the Decentral server was less favourable than her offer to settle.

[17] The Respondent’s offer to settle was dated August 27, 2020 and was served the day before the hearing of the motion. He offered to pay temporary spousal support in the amount of $60,000 per month commencing September 1, 2020. He offered to pay interim disbursements in the amount of $100,000, half within 5 days and the balance by September 30, 2020. He agreed not to sell or encumber the same three properties unless he gave notice but he did not agree with a similar notice requirement for his cryptocurrency. He offered to arrange for a further search of the Decentral server on receipt of the Applicant’s search terms.

[18] The Respondent takes the position that he was successful on at least five issues: preservation order, interim disbursements, particularized affidavit of documents, release of the Decentral server and start date for interim spousal support. On the other hand, he asserts that the Applicant was successful on only two issues: the amount of temporary spousal support and the native file format disclosure.

[19] The Respondent does not rely on rule 18(14) in that he is not asking for costs. He relies on the content of his offer to reduce the costs claimed by the Applicant.

[20] The Respondent’s offer on the issue of the Decentral server was as favourable as the order made. With respect to the modification to the preservation order and the reduced amount of interim disbursements, the Respondent finally entered into negotiations 24 hours before the hearing, 7 days after the Applicant’s offer, and months after the motion was originally served in January, 2020. As indicated above, the start date of the temporary spousal support was related to the timing of the release of the decision and adopted his counsel’s suggestion to leave the start date to the trial judge. The motion with respect to the Cameron-Huff file was adjourned. I made no order with respect to the affidavit of documents. In comparing his offer with the order, he succeeded only on the Decentral server issue.

Entitlement

[21] Pursuant to rule 24(1) the Applicant is presumptively entitled to costs because she succeeded on the motion vis-à-vis temporary spousal support and native file format.

[22] The Applicant exceeded her offer with respect to temporary spousal support and met her offer with respect to native file format. Pursuant to rule 18(14), the Applicant is entitled to costs to the date the offer was served and full recovery of costs from that date.

[23] The Respondents were successful on the Decentral server and, pursuant to rule 24(1), they are presumptively entitled to costs of that issue.

Amount of costs

[24] The issue of temporary spousal support was the most consuming in terms of documents prepared and served, factum and authorities, and preparation. It was of great significance to both parties. As paragraph 20 of the December decision indicates, the parties had agreed in November 2018 that the Respondent would pay temporary spousal support but the amount would not be disclosed to the court. I have no information as to the extent to which the amount ordered represented an increase.

[25] This motion for temporary spousal support had unique features. The Respondent conceded that the Applicant was entitled to temporary spousal support but insisted it was only on a needs basis. The evidence and submissions involved a detailed analysis of where they lived and what they did during the 14.5 years that the Respondent agreed that they cohabited. The Respondent insisted that the Applicant attend for questioning and she did. Between the transcript and the affidavit and the financial statements that the Applicant had been prepared, the submissions on behalf of the Respondent dealt with individual items in the Applicant’s budget in order to diminish her “reasonable needs”. Because that budget was prepared during the pandemic when spending was curtailed, it led to submissions that she was claiming for expenditures that she was not making. The Respondent insisted that the amount of temporary spousal support should be consistent with how he described their lifestyle prior to the separation. To support that submission, on July 31, 2020, he served the report of Mr. Ranot that required attention to detail by the Applicant’s lawyers because of the significance attributed to it by the Respondent. As indicated in paragraphs 27 to 34 and 46, I rejected that report. From the outset of the case, the Respondent’s income was important. Indeed he had retained Steve Ranot to prepare income reports that were challenged by the Applicant, and in one respect at least, had to be changed. As indicated in paragraph 49 of the December decision, the Respondent conceded that the amount of his income was not an issue for the hearing of the temporary spousal support, yet it figured in the lifestyle argument he made. Furthermore, since his reported income in 2018 was $33 million, it led to submissions as to whether the Applicant was entitled to establish need in relation to the post-separation increase in income. The Respondent took the position that the court should impute income to the Applicant, a submission which I rejected outright as indicated in paragraphs 47 and 56 of the December decision.

[26] Based on my review of the record and on the submissions, I am satisfied that at least 75% of the services rendered on behalf of the Applicant were related to the question of temporary spousal support which was a very important issue, particularly in light of the threats of the Respondent as indicated in paragraph 63 of the December decision. Furthermore, as indicated in paragraphs 17 and 71 of the December decision, that temporary order is likely to apply for many months.

[27] With respect to the remaining costs incurred by the Applicant, she was successful on the native file format issue. The record on which she relied was clear both as to the reason and the specific order. Yet, as indicated in paragraph 79, of the December decision, the Respondent insisted it was “vague” and it was “unclear what she wanted”. The Respondent’s cryptocurrency holdings are crucial to the claims made by the Applicant. It was important to the Applicant that she have as much reliable documentation as possible and she was successful.

[28] Comparing the total costs incurred by the Applicant ($139,378) to the total costs incurred by the Respondents ($127,136), there is a difference of approximately $12,000. Because they are in the same range, I do not intend to micro-analyze the details of the bills of costs. I observe however, that the costs incurred on behalf of the Respondent are likely under-reported. I infer that he spent 10’s of thousands of dollars on the income reports and the lifestyle report that were of no consequence to the result of the motion. Yet both contributed to the costs the Applicant incurred.

[29] In my view, the applicant is entitled to 75% of the costs on a substantial recovery basis, or $104,533.

[30] I turn to the costs claimed by the Respondents with respect to the Decentral server issue. The Respondent takes credit for succeeding on this issue but he does not ask for costs. In any event, it was properly an issue for the Corporate Respondents, not for the Respondent.

[31] According to the bill of costs of the Corporate Respondents Mr. Boswell was engaged for 27.5 hours plus 10 hours for attendance. His factum addresses both the Decentral and the Cameron-Huff issue. The latter was postponed and dealt with in-writing and those costs will be addressed separately. The costs of concern at this point are only with respect to the Decentral server. In the absence of any other suggested breakdown, I assume that 50% of the services reflected in the bill of costs are attributable to the Decental server issue, or 50% of the actual amount of $42,511, namely approximately $21,000. This was a matter of importance to the Corporate Respondents and they were successful. However, this was not a complex issue. Mr. Boswell’s factum is 6 pages covering both the issues. It appears that he reviewed an affidavit of Mr. Di Iorio and suggested changes but he did not file any evidence. I agree that the Corporate Respondents are entitled to recovery on a partial indemnity basis at the rate of 60% of $21,000 or $12,600.

[32] None of the submissions address the terms of payment of costs. Given the close relationship between Mr. Di Iorio as controlling shareholder and the Corporate Respondents, I consider it reasonable that the Applicant pay the costs she owes to the Corporate Respondents out of the costs the Respondent is required to pay to her.

ORDER TO GO AS FOLLOWS:

[33] By April 30, 2021, the Respondent Anthony Di Iorio shall pay costs to the Applicant in the amount of $104,533.

[34] Within 7 business days of the Applicant receiving the costs from the Respondent, the Applicant shall pay costs to Decentral Inc. in the amount of $12,600.

[35] This order takes effect immediately without a formal order being signed and entered.

Kiteley J.

Date: March 26, 2021

[^1]: 2020 ONSC 7646 (the December decision)