CITATION: Saggi v. Grillone, 2021 ONSC 2359
COURT FILE NO.: CV-19-627474
DATE: 20210329
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
MANDEEP SAGGI, NEELAM SAGGI, SUCHA SAGGI
Plaintiffs
– and –
SERGIO GRILLONE, GRILLONE LAW FIRM, GRILLONE BEKIARIS LLP, GEORGE BEKIARIS, 1894931 ONTARIO LIMITED, LISA ROBERTA GATTO
Defendants
COUNSEL:
Allan Rouben, for the Plaintiffs (appearing on both motions)
Jillian Van Allen, for the Defendants Sergio Grillone and the Grillone Law Firm (appearing on both motions) Sergio Grillone appearing for purposes of costs
William Gilmour, for the Defendant Lisa Roberta Gatto (appearing only at the January 14, 2020 hearing of the Mareva Injunction Motion)
The defendant 1894931 Ontario Limited having been noted in default
No one appearing for the other defendants
HEARD: Motion for Mareva Injunction heard January 14, 2020 and Motion for Leave to introduce Fresh Evidence heard October 1, 2020 (Supplementary written submissions as to costs dated December 7, 2020, December 23, 2020, January 15, 2021, February 1, 2021 and February 4, 2021)
COSTS ENDORSEMENT (PLAINTIFFS’ FRESH EVIDENCE AND MAREVA INJUNCTION MOTIONS)
KIMMEL J.
The Motions for Which Costs Are Sought and Procedural History
[1] This costs endorsement deals with the costs of the plaintiffs’ two motions, for a Mareva Injunction and for leave to file fresh evidence on that motion.
[2] In reasons for decision released October 20, 2020, I granted the plaintiffs’ request for a Mareva Injunction (and various related relief) against the Grillone Defendants (the “Mareva Injunction Motion”), after having granted leave (in that same decision) to the plaintiffs to file certain fresh evidence following the initial hearing of that motion (the “Fresh Evidence Motion”): Saggi v. Grillone, 2020 ONSC 6351. The Mareva Injunction Motion was originally returnable November 28, 2020 and was adjourned and heard on January 14, 2020. The Fresh Evidence Motion was served on January 28, 2020 but, due to various scheduling delays, the most significant of which related to the COVID-19 pandemic, the Fresh Evidence Motion was not heard until October 1, 2020. The fresh evidence for which leave was granted was received and considered in my October 20, 2020 decision to grant the Mareva Injunction.
[3] Previously, in a decision dated July 3, 2020, at the request of the defendant Lisa Gatto on an urgent motion brought by her, I discharged a certificate of pending litigation (“CPL”) that the plaintiffs had registered against a property on Dickson Park Crescent that she owned at the time in respect of which a sale was pending: Saggi v. Grillone, 2020 ONSC 4140. That CPL had been registered by a Master’s order granted ex parte to the plaintiffs on September 30, 2019.
[4] Following the release of my reasons for decision in October 2020 on the Mareva Injunction and Fresh Evidence Motions, various directions were provided regarding the parties’ cost submissions for those motions. The parties made various filings in accordance with those directions. The plaintiffs were initially claiming costs personally against the solicitor who had been representing the Grillone Defendants throughout the proceedings before me, which led to that counsel getting off the record. Mr. Grillone took over the representation of the Grillone Defendants at that time. The matter of costs sought by the plaintiffs as against the former solicitor for the Grillone Defendants was subsequently settled, but Mr. Grillone has continued to self-represent the Grillone Defendants.
[5] Mr. Grillone has self-represented the Grillone Defendants for purposes of their costs submissions on the Mareva Injunction and Fresh Evidence Motions as well as on a new Rule 59.06 motion that was heard on March 18, 2021. My cost decision was held in abeyance pending the outcome of the Grillone Defendants’ Rule 59.06 motion. My decision on that Rule 59.06 motion is being released contemporaneously with this costs endorsement. (See Saggi v. Grillone, 2021 ONSC 2276).
The Outcomes of the Motions for Which Costs are Sought
Mareva Injunction Motion as against Lisa Gatto
[6] I found on the CPL Discharge Motion that no triable issue had been raised of a reasonable claim by the plaintiffs to an interest in the Dickson Park Property owned by Ms. Gatto (by constructive or resulting trust or otherwise). For reasons indicated in that decision, I did not award either party their costs of the CPL Discharge Motion.
[7] The plaintiffs subsequently advised that they were no longer seeking a Mareva injunction against Ms. Gatto (the Mareva Injunction Motion had, by that time, been argued and my decision was being held under reserve pending the hearing of the Fresh Evidence Motion).[^1]
The Plaintiffs’ Fresh Evidence and Mareva Injunction Motions as Against the Grillone Defendants
[8] I granted the plaintiffs’ leave to file some, but not all, of their proposed fresh evidence. I concluded that the fresh evidence that I admitted enhanced the evidentiary foundation and grounds for, among other things, the plaintiffs’ belief that the Grillone defendants had undisclosed assets and that there was a real risk of those assets being disposed of within the jurisdiction or otherwise dealt with so that the plaintiffs would be unable to satisfy a judgment if awarded in their favour. Correspondingly, the responding “fresh” evidence of Mr. Grillone contained in his March 5, 2020 affidavit is also admitted and was considered.
[9] After considering the totality of the evidence, including the admitted “fresh” evidence, the plaintiffs’ motion for a Mareva Injunction against the Grillone Defendants was granted in part, with various ancillary relief. Certain other relief sought by the plaintiffs was not granted, as follows:
a. The plaintiffs’ request for an accounting of the use and disposition of the plaintiffs’ loan monies and for the production of banking and financial records, tax returns, general ledgers and credit card statements from the Grillone defendants was dismissed, without prejudice to their right to renew this request in the normal course of their prosecution of this action having regard to the relief sought in their statement of claim; and
b. The plaintiffs’ request for disclosure of the number, identity and current location of the client files of the Grillone Law Firm was dismissed.
[10] At the conclusion of my reasons for decision on the Fresh Evidence and Mareva Injunction Motions I encouraged the parties to try to reach an agreement on costs, having regard to the mixed outcome of these motions and the procedural history.
The Positions of the Parties and the Court’s Analysis and Decision on Costs
Costs of The Withdrawn Mareva Injunction Motion Against Lisa Gatto
[11] The plaintiffs argue that there should be no award as to costs in respect of the Mareva Injunction Motion as it relates to Lisa Gatto. They argue that there was divided success on certain issues that were argued on this motion as well as on the CPL Discharge Motion, concerning the sufficiency of the plaintiffs’ evidence[^2], that were factored into the court’s decision not to award any costs of the CPL Discharge Motion and should be similarly considered in the costs assessment of the Mareva Injunction Motion. They also rely on the court’s rejection of the argument advanced by Ms. Gatto regarding the sufficiency of the plaintiffs’ undertaking as to damages for the Mareva Injunction Motion, which the court did not accept.
[12] The plaintiffs argue that there was divided success in the time and resources devoted to the issues that Ms. Gatto raised and did not succeed on. They also argue that they acted reasonably in withdrawing the Mareva Injunction Motion upon receipt of the court’s decision on the CPL Discharge Motion. The plaintiffs further submit that any costs ordered payable to Ms. Gatto should be paid by Mr. Grillone and/or set off against any costs award made in favour of the plaintiffs against the Grillone Defendants on the basis that it was their conduct that was at issue, and only the coincidental conduct of Ms. Gatto regarding the dealings with the family home in her name that resulted in her being drawn in.
[13] Ms. Gatto seeks her costs of the Mareva Injunction Motion. She responded to it and it was only withdrawn after the plaintiffs unsuccessfully defended the CPL Discharge Motion. Ms. Gatto did not participate in the Fresh Evidence Motion as it related to Mr. Grillone’s conduct and dealings with a different property at 5155 Spectrum Way, Unit 8, Mississauga Ontario (the “Spectrum Way Property”), owned by the defendant 1894931 Ontario Limited (“189”) a company in which Mr. Grillone was, until recently, an indirect 50% shareholder through another holding company, 2390215 Ontario Inc. (“239”).
[14] Ms. Gatto submits that the plaintiffs’ request for a Mareva Injunction against her had significant and important consequences that warranted a full and complete response. The plaintiffs withdrew their request for this relief only after it had been responded to and argued. She asks for an award of her full indemnity costs of the Mareva Injunction Motion, based on certified legal fees of $17,527.50 plus HST and claimed disbursements of $1,658.70 (which are not stated, but are presumed, to be inclusive of HST). Her partial indemnity costs of the Mareva Injunction Motion would be based on the lower claimed fees of $10,516.50 (according to the costs outline filed, this is roughly 50% of the actual hourly rate of her counsel).
[15] When I released my decision on the Mareva Injunction Motion I noted that this change in position of the plaintiffs in relation to the Mareva Injunction that they had originally sought against Ms. Gatto was consistent with my finding on the CPL Discharge Motion that the plaintiffs had not established a serious issue to be tried in respect of their claims against her, which would render it difficult for them to meet the higher onus of a strong prima facie case that they would have had to satisfy to obtain a Mareva injunction against Ms. Gatto. I agree that the plaintiffs acted reasonably in withdrawing their request for a Mareva Injunction as against her after receiving that decision and the reasons for it.
[16] I also find that it was not unreasonable for the plaintiffs to have sought the relief against Mr. Grillone’s wife and in respect of his family residence at the outset. There was sufficient reason for the plaintiffs to be concerned, having regard to the timing of various steps taken by Ms. Gatto in furtherance of the sale of the family home coincidental with steps being taken by the Grillone Defendants in respect of the Spectrum Way Property and the winding down of the Grillone Law Firm practice when their creditors were closing in.
[17] That said, the plaintiffs’ concerns as they related to Ms. Gatto and the property she owned were not substantiated. It is appropriate for a successful defendant on a Mareva Injunction Motion to be awarded some costs. I have not been presented with any compelling argument for an award of full or substantial indemnity costs in Ms. Gatto’s favour. I find that Ms. Gatto is entitled to some award of costs on a partial indemnity scale. She claims $10,516.50 in partial indemnity costs but that is based on a high end of approximately 50% of her counsel’s hourly rate for fees.
[18] This amount of partial indemnity costs claimed by Ms. Gatto is not justified or proportionate or appropriate in the circumstances of this case. In addition to falling at the high end of the range for partial indemnity fees, it does not account for the fact that Ms. Gatto did not succeed on some of the arguments she raised that contributed to the length of the hearing. Much of her own written and oral submissions, and therefore claimed fees, were devoted to those points (regarding, for example, the sufficiency of certain exhibits and the plaintiffs’ undertaking as to damages). Further, Ms. Gatto’s costs should be evaluated based on the costs outline that was presented at the January 14, 2020 hearing, not the one that was presented in December 2020 that had additional time added for the hearing and preparation and a further disbursement for legal research.
[19] The plaintiffs’ alternative position is that an appropriate award of costs in favour of Ms. Gatto would be $2,500.00, based on the $2,000.00 hearing attendance fee that she claimed in her original costs outline submitted at the January 14, 2020 hearing. I do not consider that figure to be sufficient in that it does not account for any preparation time. Some is warranted. In the exercise of my discretion under s. 131 of the Courts of Justice Act, R.S.O. 1990, c. C-43, and having regard to the factors under Rule 57.01, I am awarding the defendant Lisa Gatto her partial indemnity costs of the Mareva Injunction Motion in the amount of $7,500.00, inclusive of all fees, disbursements and applicable taxes) payable by the plaintiffs.
[20] I am sympathetic to the plaintiffs concern that they be required to pay costs to Ms. Gatto if they are unable to collect their costs from the Grillone Defendants. I agree with the plaintiffs that the involvement of Ms. Gatto can be traced back to the originating actions of the Grillone Defendants and their dealings with the Spectrum Way Property, and the coincidence of the timing of those dealings with the sale of the family home owned by Ms. Gatto. The plaintiffs have suggested that the court can require the Grillone Defendants to pay Ms. Gatto’s costs by a “Sanderson” order. (See Rooney v. Graham, (2001) 53 O.R. (3d) 685 (C.A.), 2001 CanLII 24064, at para. 8).
[21] I do not consider the attempted analogy to a “Sanderson-type” order to stand as authority for me to order that the costs awarded payable by the plaintiffs to Ms. Gatto be paid directly by the Grillone Defendants to Ms. Gatto. Ms. Gatto has not claimed costs against the Grillone Defendants. She may be the spouse of Mr. Grillone but she has her own property and has incurred her own legal expenses on a motion brought against her by the plaintiffs that was ultimately determined not to be viable. Her entitlements must be assessed independently of the Grillone Defendants, even if those defendants are ultimately to be held responsible to the plaintiffs.
[22] I am prepared to add the costs that I have ordered the plaintiffs to pay Ms. Gatto to the award of costs payable by the Grillone Defendants to the plaintiffs. These now effectively form part of the plaintiffs’ costs of the Mareva Injunction Motion. Although this does not address the cash flow concern of the plaintiffs, in having to pay costs to Ms. Gatto even if they have not received the amounts they are owed from the Grillone Defendants, it affords them some relief against the ultimate burden of the costs award against them if they are able to eventually collect from the Grillone Defendants.
Costs of the Fresh Evidence and Mareva Injunction Motions Against the Grillone Defendants
[23] Having regard to the findings of the court that led to the granting of the Mareva Injunction Motion as against the Grillone Defendants, the plaintiffs seek their full indemnity costs of these motions from the Grillone Defendants. The total full indemnity costs sought (inclusive of all fees, disbursements and applicable taxes) are $73,722.77.
[24] The plaintiffs rely, in particular, on the following findings from my October 20, 2020 reasons for decision that:
a. the sale of the Spectrum Way Property made by Mr. Grillone ought to have been disclosed to the Court (para. 32);
b. the withholding of the information could not be condoned and put the integrity of the Court's process at risk (para. 32);
c. part of the affidavit of Mr. Grillone dated January 8, 2020 was misleading (para. 36);
d. part of the factum filed on behalf of Mr. Grillone on the original hearing was contradicted (para. 37);
e. Mr. Grillone gave untruthful answers concerning the intentions regarding the Spectrum Way Property on the cross-examination of November 11, 2019 (paras. 30, 43, 53);
f. Mr. Grillone tried to resile from an undertaking given to the Court in his March 5, 2020 affidavit (paras. 35, 43, 53);
g. Mr. Grillone attempted to avoid disclosure of the sale of the Spectrum Way Property, the sale of his indirect interest in the property and to keep the proceeds of sale away from creditors (para. 36);
h. there was an inference that Mr. Grillone had been trying, and would continue to try, to take assets out of reach of creditors (paras. 38, 53);
i. Mr. Grillone refused to provide any disclosure about his assets (paras. 54-56); and
j. there was support for an inference that monies were being diverted out of Grillone Law Firm by Mr. Grillone for other purposes (para 69).
[25] The plaintiffs rely on the case of Net Connect Installation Inc. v. Mobile Zone Inc., 2017 ONCA 766, at paras. 8-9, in which the Court of Appeal noted the difference between substantial and full indemnity costs and stated that the "conduct worthy of sanction would have to be especially egregious to justify the highest scale of full indemnity costs." In that case, the findings that the defendant had moved funds out of the country in an effort to put them out of reach of the plaintiff and instances of fabricated evidence justified the full indemnity costs award. They also rely on Mars Canada Inc. v. Bemco Cash & Carry Inc., 2018 ONCA 239, at para. 42, for the proposition that findings of dishonourable conduct are deserving of the court’s censure and should carry costs consequences (in that case, the court awarded substantial indemnity costs).
[26] The plaintiffs’ partial indemnity costs of the Mareva Injunction Motion, as disclosed in their costs outline, totalled $25,358.77 (inclusive of $20,000.00 in fees, $2,758.77 in disbursements and $2,600.00 for HST). On a full indemnity basis, their claimed costs of that motion are $32,138.77 (the difference being an extra $6,000.00 in fees plus HST). The plaintiffs partial indemnity costs of the Fresh Evidence Motion, as disclosed in their costs outline, totalled $31,188.00 (inclusive of $27,000.00 in fees plus HST). On a full indemnity basis, their claimed costs of that motion are $41,584.00 (the difference being an extra $9,200.00 in fees plus HST).
[27] The plaintiffs’ costs outline does not indicate a substantial indemnity costs amount. However, based on the disclosed hourly rates, the amounts indicated for partial indemnity costs are actually more consistent with substantial indemnity fee rates. Based on the tariffs, and even if the court were to exercise some discretion, Mr. Rouben’s actual hourly rate of $800.00 would not translate into a partial indemnity hourly rate of $600.00 as has been claimed.
[28] The Grillone Defendants have not made in depth submissions on the entitlement, scale or quantum of costs. Their costs submissions were tied to their Rule 59.06 motion and request for the court to stay or dismiss the Mareva Injunction Motion, and order not costs for either motion. For reasons indicated in a contemporaneous endorsement released today, I have dismissed that Rule 59.06 motion.
[29] The entitlement of the plaintiffs to their costs is not open for debate. They brought two motions and succeeded in the primary relief sought on both. The findings of the court that led to the granting of that relief (as outlined above from my October 20, 2020 reasons for decision) were based on dishonourable conduct of Mr. Grillone that is deserving of censure, consistent with the court’s approach in Mars Canada. That warrants an award of substantial indemnity costs. I do not consider the conduct to have been so grave as to warrant an award of full indemnity costs. As I have indicated above, I consider the amounts indicated by the plaintiffs as their partial indemnity costs to be equivalent to what I would expect to see on a substantial indemnity scale. Thus, I will use those as the substantial indemnity amounts from which to work.
[30] I will turn now to the quantum of costs to award to the plaintiffs. There were aspects of relief sought by the plaintiffs on both motions that were denied. These considerations justify a reduction in the quantum of the substantial indemnity costs claimed by the plaintiffs. In the exercise of my discretion under s. 131 of the Courts of Justice Act, and having regard to the factors under Rule 57.01, I am reducing the amounts claimed by the plaintiffs on each motion by approximately one-third.
[31] I am thus awarding the plaintiffs their costs of the Mareva Injunction Motion in the all inclusive amount of $17,000.00. Added to their costs of the Mareva Injunction Motion are the costs that the plaintiffs have been ordered to pay Ms. Gatto, in the amount of $7,500.00 (for the reasons indicated earlier in this endorsement). I am awarding the plaintiffs their costs of the Fresh Evidence Motion in the all inclusive amount of $20,000.00. All of these amounts are ordered payable by the Grillone Defendants to the plaintiffs forthwith.
[32] The plaintiffs have asked that any costs awards in their favour against the Grillone Defendants be ordered payable notwithstanding the Mareva Injunction that restrains the use or dissipation of the Grillone Defendants’ assets, because of the consideration expense and effort that they have been put to obtain that order which potentially benefits all creditors of the Grillone Defendants. My Reasons for Decision on the Mareva Injunction Motion allowed for the Grillone Defendants to apply to the court for leave to access their assets made subject to the freezing order to fund their expenses for legal advice and representation. Consistent with the concept of exceptions for legal expenses, I am prepared to grant leave for the costs awards against the Grillone Defendants to be paid out of their frozen assets, if they otherwise have access to those assets. To be clear, this is not intended to override any other orders or undertakings concerning those assets and is an exception only to my order on the Mareva Injunction Motion.
Final Disposition on Costs and Implementation
Summary of Orders as to Costs
[33] The following costs orders are made:
a. Lisa Gatto is awarded her costs of the Mareva Injunction Motion as against her, fixed in the all-inclusive amount of $7,500.00 and payable by the plaintiffs;
b. The plaintiffs are awarded the following costs payable by the Grillone Defendants forthwith:
i. Their costs of the Mareva Injunction Motion fixed in the all-inclusive amount of $17,000.00, plus the amount of $7,500.00 on account of the costs they have been ordered to pay to Lisa Gatto, for an all-inclusive total of $24,500.00; and
ii. Their costs of the Fresh Evidence Motion fixed in the all-inclusive amount of $20,000.00.
c. The plaintiffs may recover the costs awarded in their favour and payable by the Grillone Defendants from the frozen assets of the Grillone Defendants, notwithstanding the Mareva Injunction that restrains the dissipation and use of their assets.
Implementation
[34] Notwithstanding Rule 59.05, this costs decision and the orders and directions herein are effective from the date indicated below and are enforceable without any need for formal issuance, entry and filing.
Kimmel J.
Released: March 29, 2021
CITATION: Saggi v. Grillone, 2021 ONSC 2359
COURT FILE NO.: CV-19-627474
DATE: 20210329
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
MANDEEP SAGGI, NEELAM SAGGI, SUCHA SAGGI
Plaintiffs
– and –
SERGIO GRILLONE, GRILLONE LAW FIRM, GRILLONE BEKIARIS LLP, GEORGE BEKIARIS, 1894931 ONTARIO LIMITED, LISA ROBERTA GATTO
Defendants
COSTS ENDORSEMENT (PLAINTIFFS’ FRESH EVIDENCE AND MAREVA INJUNCTION MOTIONS)
Kimmel J.
Released: March 29, 2021
[^1]: The plaintiffs’ request for a Mareva Injunction as against 189 was also noted to be withdrawn, in light of the fresh evidence and payment into court of 239’s share sale proceeds. The plaintiffs’ requests for a Mareva Injunction against the remaining defendants (Grillone Bekiaris LLP and George Bekiaris) was not pursued or responded to and is noted to have been withdrawn. No costs have been sought in respect of the plaintiffs’ claims against these other defendants.
[^2]: This was largely focused on the manner in which the exhibits to the plaintiffs’ supporting affidavit were identified and commissioned.