COURT FILE NO.: CV-16-11658-00CL
DATE: 20220531
ONTARIO
SUPERIOR COURT OF JUSTICE
COMMERCIAL LIST
BETWEEN:
Bertha Aiello, Floriri Village Investments Inc. and the Bleta Family Trust
Plaintiffs
– and –
Leroy Bleta, Niazi Holdings Incorporated and Korce Group Ltd.
Defendants
COUNSEL:
Elaine S. Peritz and Sean Graham, for the Plaintiffs
David M. Lobl and Kira Domratchev, for the Defendants
HEARD: November 29, 30, December 1-3, 6-10, 14-15, 2021. Oral argument heard April 4, 2022.
ENDORSEMENT ON COSTS
C. Gilmore, J.
INTRODUCTION
[1] After years of litigation and a lengthy trial, the Plaintiff (“Ms. Aiello”) was successful in proving that she and her brother Mr. Bleta had entered into a contract in the fall of 2014 such that she became the owner of Floriri Village Investments Inc. (“Floriri”) and Mr. Bleta became the owner of the assets of the Bleta Family Trust (“the BFT”).
[2] Ms. Aiello seeks her trial costs of $1,571,457.98. Those costs are comprised of partial indemnity costs of $907,057.00 up to November 22, 2021, substantial indemnity costs of $398,232.21 for the period of November 23, 2021 to March 30, 2022, disbursements of $285,168.77, $20,000 for the costs of preparing her costs submissions and a deduction of $41,000 related to costs awarded to Ms. Aiello in relation to prior endorsements.
[3] Mr. Bleta’s partial indemnity costs were $1,234,844.18. He concedes that Ms. Aiello is entitled to costs given her success at trial but submits that such costs are subject to the principles of reasonableness and proportionality and should be reduced accordingly.
THE OFFERS
[4] The trial commenced on November 29, 2021. On November 17, 2021 Mr. Bleta offered to allow his sister to dismiss her action without costs if his Offer was accepted by November 22, 2021. If accepted after November 22, 2021, Ms. Aeillo would pay Mr. Bleta’s costs to the date of acceptance less $10,000. Mr. Bleta advised his sister’s counsel that his total costs as of November 17, 2021 were $1.9M plus disbursements and HST.
[5] I note that my interpretation of Mr. Bleta’s Offer may not be correct as, frankly, the Offer was not clear as to what amount Ms. Aiello was to pay after November 22, 2021 if she did not accept the Offer. Whatever the amount, she was offered a small discount of only $10,000 on either $1.9M, or the partial indemnity portion of $1.9, plus any costs to the date of acceptance of the Offer.
[6] On November 22, 2021 Ms. Aiello offered to settle all matters as follows:
a. Mr. Bleta’s common shares in Floriri were agreed to have been transferred to his sister as of October 1, 2014.
b. Ms. Aiello would assign her preference shares in Niazi to her brother and he would assign his preference shares in Floriri to his sister.
c. All intercorporate loans between Floriri and either of Niazi and Korce to be forgiven.
d. Ms. Aiello would forgo any equalization payment owed to her;
e. The within action, the loans action and the negligence actions would all be dismissed without costs and mutual releases exchanged.
[7] Mr. Bleta concedes that an Offer was served but submits that it was served less than seven days prior to trial. As the Offer was served on November 22, 2021 and the trial commenced on November 29, 2021, Mr. Bleta submits the Offer was not served within the seven-day time period under the Rules. Mr. Bleta relies on Rule 3.01(b) which provides that “where a period of seven days or less is prescribed, holidays shall not be counted.”
[8] Ms. Aiello clearly did better than her offer. The intercorporate loans owed by Niazi were approximately $1.995M as of October 1, 2014. The equalization payment was approximately $1.23M as of the same date. Ms. Aiello was therefore forgoing a payment of $872,000 plus the cost of her preference shares in Niazi which she submits is $1M.
Rule 57 Considerations
Ms. Aiello
[9] Ms. Aiello submits that her costs request is reasonable and clearly within Mr. Bleta’s expectations given that his disclosed costs to November 17, 2021 were over $1.9M. Ms. Aiello’s total costs request post trial is just over $1.5M.
[10] Given the experience of the lawyers acting for Ms. Aiello, Ms. Peritz’s hourly charged at $475 and $500 (after June 1, 2021) and Mr. Graham at $575 are reasonable.
[11] The case was quite complex and involved properties worth millions of dollars as well as expert evidence. Much was at stake for each party. There was an extensive litigation history over a period of seven years which included multiple court appearances, examinations and mediation.
[12] Ms. Aiello submits that there were several steps in the litigation which should not have been necessary and thereby increased costs. This included her motion to compel her brother to follow a court-ordered litigation timetable, his delivery of thousands of pages of undertakings on the eve of trial, his motion at the commencement of trial to substantially amend his pleadings, his in-trial productions including his diaries, and her motion in 2021 to amend her pleadings after Mr. Bleta refused to consent.
[13] Ms. Aiello’s counsel conceded that it was difficult to parse out the costs of the various different pieces of litigation involving these parties but estimates that if the Court requires it, the costs of the negligence matter to date are approximately $214,700. As well, the costs for Mr. Bleta’s unsuccessful motion to amend his pleadings are subsumed in the amount sought and on a substantial indemnity scale since the motion occurred after the date of the Offer to Settle.
Mr. Bleta
[14] Mr. Bleta submits that, while it is true that his costs up to November 2021 were over $2M, that included his costs of the Corporate Action and the Loan Action which were not part of this trial.
[15] Mr. Bleta further submits that Ms. Aiello’s costs are not reasonable as the costs claimed by Ms. Aiello’s counsel include fees for the Loans Action and the Negligence Action. Indeed, Ms. Aiello’s counsel concedes as much by suggesting that some $214,700 of the costs claimed relate to the Negligence Action. This amount should be deducted from the Graham Estate Law claim bringing that quantum down to $414,368.00. However, Mr. Bleta goes further and suggests that this amount be reduced by a further 25% to account for costs which may have reasonably applied to the Corporate Action and $50,000 for the Loans Action. This would bring the Graham Estate Law claim down to full indemnity costs of $230,776.00. At a 60% rate for partial indemnity, the total would be $156,465 inclusive of HST but not disbursements.
[16] Applying similar discounts to the fees claimed by Ms. Peritz, her costs should reasonably be in the range of $586,488 inclusive of HST but exclusive of disbursements.
[17] The disbursements claimed by both Graham Estate Law and Ms. Peritz should also be reduced to account for disbursements incurred in the Negligence and Loans Actions being the sum of $204,855.
[18] Mr. Bleta submits that an overall further discount of 25% should be applied to Ms. Aiello’s costs claim because there are numerous dockets produced which refer to unrelated matters such as her late mother’s guardianship proceeding and the passing of accounts in relation to her father’s estate. Applying the further discount would result in total costs payable of $682, 827. Mr. Bleta submits that this is a fair and reasonable amount in the circumstances.
Analysis and Ruling
[19] Ms. Aiello’s Offer was reasonable and should have been accepted thereby avoiding the entire trial. I agree with Ms. Aiello’s counsel’s submission that even if her Offer was slightly out of time, the Court may consider it pursuant to its discretion under Rule 57.01.
[20] I rely as well on the reasoning in LSUC v. Mazzucco, 2009 CanLII 30679 (ON SC) as follows:
The offer was a very reasonable one, made by one commercial party to another. In fixing costs courts should give due recognition to reasonable efforts by parties to settle a dispute. In the circumstances of this case, I find that the Financial Institutions are entitled to substantial indemnity costs incurred following the service of their April 20 offer to settle, not as the result of the operation of Rule 49, but in the exercise of my discretion under Rule 57.01.
[21] In contrast, Mr. Bleta’s Offer was entirely unreasonable and offered nothing to Ms. Aiello by way of compromise. As such, I find that Ms. Aiello is entitled to her substantial indemnity costs after the date of the Offer.
[22] Mr. Bleta’s history of costs claimed is difficult to follow. At the time of offering to settle the trial in November 2021 he claimed that his costs were $1.9M. He now claims that his full indemnity costs are $1.7M following a lengthy trial and without the production of dockets.
[23] Mr. Bleta’s request for a discount of 25% in Ms. Aiello’s costs because the trial dealt with a discrete issue is misplaced. It may well have been a discrete issue but the evidence on that issue took 11 days. Mr. Bleta cannot have it both ways.
[24] I also find that Mr. Bleta took certain steps that unnecessarily increased Ms. Aiello’s costs including delivering thousands of pages of documents on the eve of trial, attempting to substantially amend his pleadings at the commencement of trial and introducing documents (such as his diaries) during the course of the trial.
[25] Further, I do not agree that Ms. Peritz’s costs are unclear. They are succinctly set out in the costs submissions.
[26] As for any deductions related to work done on the Negligence and Loans matters, it is understandable how it is difficult to extract those dockets when those matters and this matter were worked on together until Justice McEwen ordered that only the issues related to the division of ownership were to be tried. As such, the costs of the Negligence matter up to September 24, 2021 in the amount of $214,700 and costs of $50,000 in the Loans matter must be deducted from the amounts sought, but may be claimed by Ms. Aiello on either the settlement or disposition of those matters.
[27] Those deductions result in a total amount of costs owed to Ms. Aiello of $1,306,757.90. That amount is reasonable, proportionate and certainly within the realm of what Mr. Bleta would expect to pay given his own costs. The costs also reflect Ms. Aeillo’s success at trial and the benefit of her very reasonable Offer to Settle.
[28] Given all of the above, I make the following Orders:
a. Mr. Bleta shall pay to Ms. Aiello the sum of $1,306,757.90 in costs forthwith for the within trial.
b. Costs of $214,700 and $50,000 may be claimed by Ms. Aiello in relation to the Negligence and Loans actions as set out above.
c. The parties are to convene a one-hour case conference before me as soon as reasonably possible in order to discuss a settlement of the outstanding litigation.
GILMORE J.
Date: May 31, 2022