COURT FILE NO.: CV-19-00000639-0000
DATE: 2022 05 11
ONTARIO
SUPERIOR COURT OF JUSTICE
A proceeding under the Business Corporations Act, R.S.O.1990, c. B.16
BETWEEN:
ANGELIKI CORMPILAS and ANGELIKI CORMPILAS AS AN ESTATE TRUSTEE FOR THE ESTATE OF BARBARA IOANNIDIS
Plaintiffs
and
1490565 ONTARIO LIMITED, 1490804 ONTARIO LIMITED,
762519 ONTARIO LIMITED, MASTER STEAKS LIMITED,
2009270 ONTARIO LTD., BILL IOANNIDIS, JOHN IOANNIDIS, and PETER IOANNIDIS
Defendants
HEARD: In Writing.
RSJ RICCHETTI
C O S T S E N D O R S E M E N T
Introduction
[1] There were two motions. The detailed facts, analysis and determinations are set out in Cormpilas v. 1490565 Ontario Limited, 2022 ONSC 119.
[2] Costs were reserved.
[3] Both parties were given an opportunity to make written submissions. Written submissions were received from both parties. Unfortunately, as happens all to frequently, counsel for the Defendants, while complying with the 10-page limit, saw fit to disregard the Rule 4.01 by reducing the line spacing. This is not a "game" to try to circumvent the Rules in a way that hopefully no one notices. In the future, strict compliance with the Rules will be required or the document will not be accepted for filing or be considered by the court.
Cost Outlines Filed on the Motion
[4] Shortly after the conclusion of the motions (and before the court's decision), the Defendants filed a Cost Outline. In it, the Defendants sought costs of $80,542.92 (all inclusive) on a partial indemnity basis; $118,593.12 (all inclusive) on a substantial indemnity basis; and $131,276.53 (all inclusive) on a full indemnity basis.
[5] After the conclusion of the motions (and before the court's decision), the Plaintiffs filed a Cost Outline. In it, the Plaintiffs sought costs of the motions, sought costs of $103,000.95 (all inclusive) on a partial indemnity basis; $160,221.06 (all inclusive) on a substantial indemnity basis; and $177,773.80 (all inclusive) on a full indemnity basis.
Overview of the Facts
[6] As set out in my reasons, the two primary issues, on which the vast majority of the materials and submissions related to, were the validity of the Master Steaks estate freeze and the distribution of Truckers Haven's VTB. The Defendants were entirely successful on these two issues.
[7] There were other issues, important but less so and less time consuming (both in materials and in submissions). Some of these were decided in favour of the Defendants; others in favour of the Plaintiffs.
[8] The fact that the Plaintiffs were successful on some issues is a factor to be considered in determining the quantum of costs although it is not the responsibility of this court to parse which issues each party won.
[9] The Court must look at which party was substantially successful in the motion(s). In this case, it was clearly the Defendants.
Position of the Parties
[10] The Defendants seek costs, on a substantial indemnity basis, of the motion and the action in the amount of $163,977.88 all inclusive. The Defendants also seek to recover costs of these submissions ($7,500) and the invoice of Mr. Stamatopoulos of $22,600. The total amount sought by the Defendants is $200,100 all inclusive.
[11] The Defendants submit that Angie Cormpilas bear all the costs as the real beneficiary and instigator of the dismissed claims.
[12] The Plaintiffs do not specifically attack the amount claimed but instead make a number of submissions:
a) Substantial indemnity costs are not warranted in the circumstances;
b) Angie Cormpilas is entitled to indemnification as Barbara's estate trustee;
c) There should be a 20% reduction because the Defendants refused to call a shareholders meeting;
d) Mr. Stamatopoulos' invoice is not a proper disbursement;
e) The Estate should be responsible for 40% of the ultimate costs award;
f) The court should consider that Angie Cormpilas is a 25% shareholder in Truckers Haven Holdco which has paid some of the legal and accounting fees; and
g) Angie Cormpilas' unpaid dividend in her dividend account should be set-off against any costs.
[13] The Plaintiffs do not dispute that costs of the action are also appropriate to fix at this stage.
[14] The Plaintiffs conclude that an appropriate and reasonable total cost award is $100,000 on a partial indemnity basis.
Unpaid Dividends
[15] The Defendants sought and were granted leave to file a brief reply submissions on one issue – a claim by Angie Cormpilas to a set-off against unpaid dividends from her "dividend account" she claims is owing to her from Truckers Haven Holdco.
[16] In this court's decision, the court denied Angie Cormpilas' claim to those monies from the VTB distribution but, instead, the court concluded that unpaid dividend accounts should be dealt with by the corporation in accordance with the company's articles, by-laws and the law generally.
[17] The Defendants now take the position that the amount of Angie's dividend account should be one of the issues left to be determined at the trial.
[18] This is surprising since, the Plaintiffs specifically advanced this claim (para 1(jj), the Defendants didn't deal with this issue specifically in the pleading, the Defendants sought a dismissal of all the Plaintiffs claims in its motion, the Defendants included evidence that Angie knew that certain declared dividends would not be paid immediately to her or her brothers, the Defendants failed to specifically deal with Angie's claim for unpaid dividend account in its motion materials (although admitting that declared dividends were not paid for a number of years at para 187 of Peter Ioannidis affidavit), factum or in counsel's submission.
[19] I am not prepared to revise my reasons for judgment but continue to be of the view that Angie Cormpilas' unpaid dividend account, whatever that amount is shown in the corporate books, should be dealt with as stated above and not as part of a set off in this cost award.
Entitlement to Costs
Costs of the Action?
[20] I accept that costs of the action with respect to the issues decided on a final basis should be assessed by this court, to the extent that it can.
[21] The Defendants provided two Cost Outlines dated September 22, 2021 – one from the commencement of the action to the summary judgment motions and a second one strictly for the summary judgment motions.
[22] The difference is approximately $30,000 on a partial indemnity basis and approximately $45,000 on a substantial indemnity basis.
[23] The filed Discovery Plan confirmed the extensive legal services to get to the stage of the proceedings when these motions were brought. The parties had completed pleadings and exchanged Affidavits of Documents with extensive documents.
[24] I consider the amount of $30,000 on a partial indemnity basis as reasonable costs of the action prior to the costs incurred for these motions. However, I must and will taken into account that portions of the Plaintiffs' claim in the action will continue.
Costs of the motions
Entitlement
[25] There is no real dispute that the Defendants are entitled to costs of the motions. The issue issues are scale and quantum.
Scale of Costs
[26] I will not repeat this courts findings but, there was no merit with respect to the Plaintiff's Master Steaks estate freeze claim. It was frivolous and an obvious attempt to re-write history, make unfounded and untrue allegations, solely for Angie's financial gain. And without regard to the intentions, actions and wills of both her parents. I reject that this claim was advanced for the benefit of Barbara's estate.
[27] As for the Truckers Haven's VTB issue, Angie Cormpilas created and advanced various unfounded allegations both in terms of advancing historical, statute barred claims (in some cases entirely inconsistent with her own prior authored documents) all to seek a distribution that would favour her without regard to the corporate books and shareholding. Much of Angie's position was her blinded and mistaken belief that her parents would not have "cut" her out of the Master Steaks business and her zealousness to "even things out" with her brothers.
[28] The portion of the motion to remove Plaintiffs' counsel was entirely misconceived and an obvious litigation tactic. It should be noted that, not only were statements made that alleged serious impropriety against the Defendant's counsel, but similar allegations were also made against other counsel who was not a party to the litigation.
[29] But it wasn't just allegations of fraud or complicity against lawyers, there were similar allegations against a number of persons without foundation or regard to the potential impact on the persons against who these allegations were levelled at.
[30] Much of the "oppression relief" sought was to have this court, do what Angie Cormpilas could and should have done through her own forensic accountant at her costs with the productions or through the Discovery Plan that had been put into place. As stated in the Plaintiffs' materials, much of this relief was sought with the hope that improprieties would be found. Instead of retaining her own forensic accounting expert, she chose to make allegations, strong allegations, to obtain this relief which would save her considerable money and would cost her brothers considerable money.
[31] I acknowledge that the reaction of Peter, Bill and John refusing to call annual meetings and appoint an auditor was entirely inappropriate. This is a factor to be taken into account in assessing the reasonable costs of the motions.
[32] I recognize that substantial indemnity costs should only be granted where there is reprehensible, scandalous or outrageous conduct deserving sanctions by the court.
[33] I accept that failed allegations of fraud do not necessarily raise the scale of costs. However, it is on factor. When those allegations are entirely unfounded, that is a significant factor in the exercise of the court's discretion. When those unfounded allegations are widespread and include litigation counsel and the party's prior counsel, that too is a significant factor in the exercise of the court's discretion. Particularly, where these allegations were made for tactical reasons.
[34] Such unfounded allegations and conduct is deserving of the court's sanction by a punitive cost award.
[35] The Plaintiff submits that the allegations were misguided and not deserving of the court's sanction. In this case, there were numerous written documents by Angie Cormpilas that were entirely and diametrically opposite her position, acknowledgement of certain states of fact and she nevertheless denied the facts and alleged fraud by others. That is not just misguided. It is deliberate and malicious. Her pursuit of the claim to set aside the Master Steaks estate freeze, by far the most significant of claims made, in the circumstances of the events of 2012, was indeed fruitless, reckless and unwarranted deserving of this court's sanction.
[36] I am satisfied that substantial indemnity costs should be awarded for the motions, to the extent of the dismissed claims.
Quantum of Costs
[37] The Plaintiffs do not raise any objection or issue with the quantum claimed for substantial indemnity costs of the action. Nor could the Plaintiffs reasonably do so given the amount claimed by the Plaintiffs for the motions alone.
[38] I will proceed in the manner advanced by the Plaintiffs in their cost submissions, namely to deal with the additions sought by the Defendants and deductions sought by the Plaintiffs from $163,977.88 (all inclusive) claimed by the Defendants.
Mr. Stamatopoulos' Invoice
[39] The Defendants seek to add $22,600 (all inclusive) being Mr. Stamatopoulos' invoice for the accounting work performed by him.
[40] Mr. Stamatopoulos was a witness. He is also the accountant for the various companies. He is paid to do the accounting for the various Defendant companies. He was also a fact witness testifying to the events in early 2003 and his discussions with Barbara and Gregory.
[41] Mr. Stamatopoulos was not qualified as an expert witness.
[42] There is no basis to pay a non-expert witness' invoice as part of the substantial indemnity costs.
[43] To the extent that his accounting work was required, then it should be shared by all the shareholders, being what would naturally occur as Mr. Stamatopoulos was paid by the companies employed by him.
Angie Cormpilas' claim to indemnification as Barbara's estate trustee
[44] I reject this submission entirely.
[45] Adding Barbara's estate was solely a mechanism to give Angie standing and a basis to attack the Master Steaks estate freeze.
[46] This attack on the Master Steaks estate freeze was solely for Angie's benefit, especially after the events of 2012 acknowledged even by Angie.
[47] I reject the submission that Angie had "an obligation to Barbara's estate to pursue the claims". She conducted her investigations after Barbara's death and concluded that Master Steaks estate freeze had occurred without her participation.
[48] In any event, in 2019 Angie could have and should have brought the intended claims to her brothers and if/when they rejected proceeding with the claim, Angie could have proceeded with remedies under the Trustees Act.
[49] I also note that Angie could have also sought to bring a derivative action against the companies but again she decided not to.
[50] Instead, Angie knew that she didn't have the authority to bring this claim on behalf of Barbara's estate as she was only one estate trustee and the other two were her brothers against whom Angie brought this claim. Angie took her chances. And she failed.
[51] The submission that the Estate should bear 40% of the cost award is simply another attempt by Angie to minimize her financial liability and transfers it to her brothers.
[52] While the Defendants knew that Angie brought this proceeding allegedly in a representative capacity, it does not insulate Angie from costs associated with the unsuccessful litigation.
[53] Besides, this proposed submission is just a mechanism whereby Angie Cormpilas seeks to have her brothers, the very Defendants she sued unsuccessfully, to pay a very large portion of any cost award.
[54] Lastly, I reject that the claim by the estate was also for Bill's benefit, when Angie Cormpilas and Barbara's estate (by Angie Cormpilas) advanced claims against Bill.
Angie Cormpilas has already paid 25% being a shareholder of Truckers Haven Holdco.
[55] First of all, the Truckers Haven Holdco was only one of the issues. The more significant (long term and valuable one) was the Master Steak issue.
[56] I agree that some of the accounts/expenses associated with this proceeding were paid by Truckers Haven Holdco and, therefore, reduces the amount of available profits to distribute to the shareholders. However, Angie Cormpilas knew that by suing the companies and the directors and officers (her brothers), the companies would be incurring expenses including expenses associated with the directors and officers' indemnification from the companies. It should also be remembered that 75% of the common shareholders are Angie Cormpilas' brothers but 87.5% of the preference shareholders are Angie Cormpilas' brothers (which preference shares are entitled to priority over the distributions).
[57] I see no reason why any of the costs payable should be reduced by expenses incurred by the companies. Any costs received by Truckers Haven Holdco, will be part of the income available in Truckers Haven Holdco to be distributed in accordance with its articles and by-laws.
Reduction due to some success by the Plaintiffs
[58] The Plaintiffs seek a reduction of 20% because the Individual Defendants "refused to call shareholders meetings".
[59] In my view, a 20% reduction would be excessive. The circumstances, including the threats and inconsistent positions taken by Angie Cormpilas, gives some context, although doesn't excuse the failure, for not calling shareholders meetings or appoint an auditor. But essentially, these are the only two successes by Angie in this proceeding.
[60] In my view, a reasonable reduction is 10% for the refusal to call a shareholders meeting, failure to appoint an auditor and other areas where the Plaintiffs had success or potential success.
Set Off for Angie's Unpaid Declared Dividend Account
[61] Angie claims that she has an unpaid declared dividend account in the amount of $46,950 and she claims a set off for this amount from any cost award.
[62] I do not accept this submission.
[63] Accepting this submission would in essence allow Angie to take her unpaid declared dividends, whatever amount they may be, to be paid in priority to her brother's unpaid dividends.
[64] In any event, the exact status of Trucker Haven's unpaid dividend accounts is unknown.
[65] The court should not intervene in this fashion, potentially altering rights between shareholders.
[66] Angie Cormpilas' right to be paid the amount from her unpaid declared dividend account in accordance with corporate law and the companies by-laws and finances remains preserved.
Proportionality
[67] The Plaintiffs point to the principle of proportionality and suggest that the cost award should be reduced to $100,000.
[68] I disagree with the Plaintiffs' submission. There were numerous issues, complex issues, voluminous documents, extensive cross examinations and the amounts at issue were in the millions of dollars. The expense to Master Steaks and Truckers Haven, if Angie Cormpilas had been successful, would have been enormous – redoing and refiling tax returns and corporate documents going back 20 years.
[69] Besides, where was the principle of proportionality when the Plaintiffs submitted their Cost Outline. The amount of substantial indemnity costs awarded here for the motions and the action is significantly less than the amount the Plaintiffs' spent on the motions alone.
Angie Personally Liable for All the Costs
[70] The Defendants submit that Angie Cormpilas should be personally liable for all costs.
[71] I agree with this submission.
[72] The overwhelming and only evidence was that Angie Cormpilas was trying to undo what her mother Barbara wanted/did and what her father wanted/did. Angie was trying to undo what she did in 2012/2013.
[73] It would be inequitable to now make Barbara's estate pay any portion of the costs. Besides, any costs paid by the Estate, would result in 75% being paid by Peter, John and Bill as they inherited 75% of Barbara's estate.
[74] In my view, Angie Cormpilas was the moving force, principal and real beneficiary of the unsuccessful claims advanced.
[75] I conclude, the costs should be paid entirely by Angie Cormpilas.
Costs of the Submissions
[76] The Defendants seek costs of the submissions at $7,500.
[77] The Plaintiffs submit that none should be paid as there is "no evidence or information to base this award".
[78] In my view, the written submissions were limited to 10 pages. In these circumstances, costs of the submission are fixed at $2,500.
Conclusion
[79] Costs are payable by Angie Cormpilas in the amount of $150,080.01 (being $163,977.88 less 10% plus $2,500) all inclusive.
RSJ RICCHETTI
DATE: May 11, 2022
COURT FILE NO.: CV-19-00000639-0000
DATE: 2022 05 11
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: ANGELIKI CORMPILAS v. 1490565 ONTARIO LIMITED
COUNSEL: T. Evangelidis, for the Plaintiffs
C. Tonks, for the Defendants
COSTS ENDORSEMENT
RSJ RICCHETTI
DATE: May 11, 2022