COURT FILE NO.: CV-21-76264 DATE: 2023/03/17
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Kathy Ann Di Silvestro and Kandis Developments Limited, Plaintiffs/Moving Parties AND: Laura Marie Di Silvestro, Matthew Dennis Di Silvestro, Anthony Di Silvestro, Marie Frances Di Silvestro, 547955 Ontario Limited and Adisco Limited, Defendants/Responding Parties
BEFORE: Justice L. Sheard
COUNSEL: Shaun Laubman and Harold Niman, for the Plaintiffs/Moving Parties Derek Bell and Katelyn Ellins, for the Defendants/ Responding Parties Tsvetomira Niklin for the Defendant, Anthony John Di Silvestro, Litigation Guardian for Marie F.T. Di Silvestro Kathleen Lindsay, for the Public Guardian and Trustee
HEARD: In Writing
COSTS DECISION: MOTION TO APPOINT LITIGATION GUARDIAN FOR ANTHONY DI SILVESTRO SR.
[1] Members of the Di Silvestro family are engaged in litigation. One daughter, Kathy Di Silvestro (“Kathy”)[^1], and her corporation (collectively “Kathy”), has brought two proceedings. In this action, Kathy has asserted that two of her siblings, Laura Marie Di Silvestro (“Laura”) and Matthew Dennis Di Silvestro (“Matthew”), have improperly influenced and taken financial advantage of their parents, Anthony Di Silvestro Sr. (“Tony Sr.”) and Marie Di Silvestro (“Marie”). Tony is in his mid-90s and Marie is approaching 90 years of age.
[2] At the outset of this litigation, Tony Sr. had been acting as Litigation Guardian (“LG”) for Marie, who has been incapable for some time. In the summer of 2022, concerns arose that Tony Sr. had also become incapable and could no longer act as Marie’s LG and that an LG also needed to be appointed for him.
[3] There is a fourth Di Silvestro child, Anthony John Di Silvestro (“Tony Jr.”), who, although potentially affected by the outcome of this litigation, was not named as party.
[4] In December 2021, Kathy brought a motion to have LGs appointed for both parents. In October 2022, on consent, Tony Jr. was appointed as Marie’s LG. However, there was no agreement as to who should act as LG for Tony Sr. and Kathy’s motion to appoint an LG for Tony Sr. was argued on December 2, 2022.
[5] The allegations raised in this litigation include that Laura and/or Matthew exerted undue or improper influence over Tony Sr., causing him to change his long-standing business and estate plans and to use his authority as Marie’s attorney for property to make financial gifts/loans and property transfers that benefitted Laura and Matthew, to the detriment of Kathy and Marie.
[6] Laura, Matthew, Tony Sr. and Marie, all represented by one law firm, defended Kathy’s action.
[7] On her motion to appoint an LG for Tony Sr., Kathy asserted that the interests of Laura and Matthew conflicted or interfered with their ability to discharge their duties as Tony Sr.’s LG.
[8] Laura and Matthew disputed that there was a conflict and asserted that Laura should stay on as Tony Sr.’s LG. Tony Sr. had named Laura as attorney for property and LG in the Power of Attorney (“POA”) he executed in 2020. Indeed, after Kathy had served her motion, but before the motion was argued, Laura filed an affidavit with the court to be appointed as Tony Sr.’s LG.
[9] In the other proceeding brought by Kathy, among other things, she challenges the validity of Tony Sr.’s 2020 POA.
[10] Laura and Matthew submitted that, as an alternative to Laura, Matthew should be appointed as Tony Sr.’s LG as Matthew had been named as an alternate attorney pursuant to a POA signed by Tony Sr. years earlier, the validity of which is not challenged. As a final alternative, Laura and Matthew proposed that Nick Mastroluisi be appointed as Tony Sr.’s LG. Mr. Mastroluisi is an accountant and had done work for Tony Sr. over the years and had some familiarity with the issues in litigation.
[11] Kathy’s position was that none of Laura, Matthew or Mr. Mastroluisi were independent and, for that reason, were not proper choices to act as Tony Sr.’s LG.
[12] Kathy asked the court to note that Mr. Mastroluisi, or his accounting firm, had done work for Laura and had given advice to Laura and Matthew about this litigation. As a result, Kathy’s position was that Mr. Mastroluisi could not be considered to be fully independent. A second concern was that Mr. Mastroluisi had stated that if he was appointed as Tony Sr.’s LG, he was not certain that he would seek independent representation and considered maintaining the retainer with the same law firm representing Laura and Matthew.
[13] Kathy put forth Bryan Gelman, an insolvency trustee, to act as LG for Tony Sr. Mr. Gelman had no connection with any of the parties to the litigation. Laura and Matthew opposed Mr. Gelman’s appointment on the basis that Tony Sr. had no prior connection to Mr. Gelman, and that significant costs would be incurred firstly, to bring Mr. Gelman current on the Di Silvestro family businesses and finances, and secondly, to pay for his counsel to be brought up to speed on the issues.
[14] A final alternative was the appointment of the Public Guardian and Trustee (the “PGT”). However, that option was not vigorously pursued. Also, so long as there were suitable alternates available, the PGT was not agreeable to being appointed.
[15] In Reasons for Decision dated January 10, 2023, I concluded that Mr. Gelman was the only person put forward “who appears to be truly independent of the parties, unfettered by any bias, pre-existing relationships, or other improper considerations” and that Mr. Gelman’s intention to retain independent counsel addressed any concerns respecting the continued joint retainer of counsel for Laura, Mathew, and Tony Sr. As a result, Mr. Gelman was appointed as LG for Tony Sr.
[16] The parties were unable to agree on costs and were permitted to make written costs submissions.
[17] This costs decision follows my receipt and review of the parties’ written costs submissions.
Positions of the Parties
[18] Having succeeded on her motion to appoint Mr. Gelman as LG for Tony Sr., Kathy submits that she is entitled to her costs of the motion. Kathy asks for the costs to be awarded to her on a partial indemnity scale to the date she served a rule 49 offer to settle and substantial indemnity costs after that date. She seeks costs in the total amount of $83,462.48.
[19] Kathy also asks for an order that the costs be paid by Laura and Matthew personally, rather than by all the defendants, which would include Tony Sr. and the corporate defendant, 547955 Ontario Limited, which owns the other corporate defendant, Adisco Limited. Kathy submits that, given the shareholding structure of the corporate defendants, 20% of any costs awarded will, in essence, come from each of Kathy, Tony Jr., and Marie.
[20] The defendants submit that, given that the outcome of the litigation is unknown, the costs of Kathy’s motion should be reserved to the trial judge or should be in the cause. Alternatively, if costs are to be paid now, they should be paid by Tony Sr., as this motion was “all about his best interests, and there were no findings of any personal interests by any of the Respondents in play on the motion”. Finally, they submit that costs should be fixed at no more than $50,000, as there is no basis for an elevated scale of costs and that “in the circumstances, visiting more than $80,000 in costs on any party is excessive”.
The Law
[21] Section 131(1) of the Courts of Justice Act, R.S.O. 1990, c. C.43, as amended, (the “CJA”) gives the court the discretion to determine by whom and to what extent costs are to be paid.
[22] In civil litigation, costs usually follow the event.
[23] Costs are discretionary and, in the exercise of that discretion, the court is to consider the factors set out in r. 57.01, which reads as follows:
57.01 (1) In exercising its discretion under section 131 of the Courts of Justice Act to award costs, the court may consider, in addition to the result in the proceeding and any offer to settle or to contribute made in writing,
(0.a) the principle of indemnity, including, where applicable, the experience of the lawyer for the party entitled to the costs as well as the rates charged and the hours spent by that lawyer;
(0.b) the amount of costs that an unsuccessful party could reasonably expect to pay in relation to the step in the proceeding for which costs are being fixed;
(a) the amount claimed and the amount recovered in the proceeding;
(b) the apportionment of liability;
(c) the complexity of the proceeding;
(d) the importance of the issues;
(e) the conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding;
(f) whether any step in the proceeding was,
(i) improper, vexatious or unnecessary, or
(ii) taken through negligence, mistake or excessive caution;
(g) a party’s denial of or refusal to admit anything that should have been admitted;
(h) whether it is appropriate to award any costs or more than one set of costs where a party,
(i) commenced separate proceedings for claims that should have been made in one proceeding, or
(ii) in defending a proceeding separated unnecessarily from another party in the same interest or defended by a different lawyer; and
(i) any other matter relevant to the question of costs.
[24] In 394 Lakeshore Oakville Holdings Inc. v. Misek, 2010 ONSC 7238, [2010] O.J. No. 5692 (Ont. S.C.J.), Perell J. reformulated the purposes of the modern costs rules, at para. 10, as follows:
(1) to indemnify successful litigants for the costs of litigation, although not necessarily completely; (2) to facilitate access to justice, including access for impecunious litigants; (3) to discourage frivolous claims and defences; (4) to discourage the sanctioning of inappropriate behaviour by litigants in their conduct of the proceedings; and (5) to encourage settlements.
[25] Overall, the objective is to fix an amount that is fair and reasonable, having regard for, among other things, the expectations of the parties concerning the quantum of costs: Boucher v. Public Accountants Council for the Province of Ontario (2004), 71 O.R. (3d) 291 (C.A.) at paras. 26 and 38.
[26] A costs award should reflect what the court views as a fair and reasonable contribution by the unsuccessful party to the successful party rather than any exact measure of the actual costs to the successful litigant: Zesta Engineering Ltd. v. Cloutier, 2002 CarswellOnt 4020, 118 A.C.W.S. (3d) 341 (C.A.), at para. 4: Fehr et al. v. Sun Life Assurance Company of Canada, 2021 ONSC 8368, at para. 83.
Amount of costs
[27] The parties’ submissions have informed the court of their expectations concerning the quantum of costs. That becomes the reference point for the determination of an amount that this court views to be fair and reasonable.
[28] The Bills of Costs filed by the parties show that the costs incurred by each side on this motion were comparable: Kathy’s actual costs totaled $111,970.01 and the Bill of Costs submitted by Laura et al., after a 10% discount ($13,339.50), totalled $116,620.80.
[29] By any measure, the costs incurred on this motion were significant and, but for the fact that both sides spent similar amounts, in my view, utterly disproportionate.
[30] However, applying the principles that guide this costs award, I accept that the costs sought by Kathy is within the parties’ reasonable expectations of the amount that might be claimed by the successful parties, and payable by the unsuccessful parties.
Scale of costs
[31] As noted above, Kathy asks for partial indemnity costs to the date she served an offer to settle and thereafter, that her rule 49 offer entitles her to substantial indemnity costs. In her offer, Kathy offered to settle her motion, without costs, if the defendants would agree to appoint Mr. Gelman as Tony Sr.’s LG. She attached Mr. Gelman’s proposal to the offer, which terms were substantially in keeping with those imposed by this court in the Reasons for Decision.
[32] Laura submits that Kathy’s offer did not represent a “genuine compromise” but was an offer for the defendants “to capitulate”. I disagree.
[33] Kathy’s offer to withdraw her motion on a without costs basis (provided the offer was accepted within 48 hours), represented a significant financial compromise. Moreover, there was no other “compromise” available to Kathy unless she were to “capitulate” to the appointment of one of the persons put forth by the defendants.
Disposition: Amount of award
[34] As noted above, Kathy seeks costs in the total amount of $83,462.48.
[35] I have considered the applicable principles referenced above and Kathy’s offer to settle, which I find to be relevant to the question of costs and fix Kathy’s costs of this motion at $80,000, inclusive of fees, disbursements, and taxes.
Who should pay costs?
[36] Laura submits that, should this court award costs, they should be payable by Tony Sr. and not by Laura and Matthew personally. Her position is that they put their names forward as LG in order to defend and respect Tony Sr.’s wishes, expressed in two POAs signed by Tony Sr.
[37] Laura refers to a number of decisions to support her position: Sach v Viola, 2017 ONSC 5202, in which the court cited a practice note in the 2016 text, Ontario Superior Court Practice (Archibald et al.) that stated that the costs of removing an LG due to conflict of interest are not borne by the LG personally; Gronnerud v Gronnerud, 2002 SCC 38, at para. 45, in which costs were ordered to be paid by the estate; and, Ziskos v Mikshe at paras. 56, 254, in which costs were ordered to be paid by the incapable party, finding that the LG was motivated by the best interests of the incapable person and acted reasonably.
[38] I accept those submissions to a degree: that is, that Laura and Matthew had a basis upon which to defend the appointment of one of them as LG, because they had been named by Tony Sr. in a POA.
[39] I do not, however, fully agree. It was clear, based on Kathy’s pleadings, that she is challenging the validity of Laura’s appointment under Tony’s POA, and raising other issues concerning Laura’s alleged undue influence over Tony Sr., which are to be determined in the litigation. It is difficult, therefore, to accept Laura’s position that, in putting her name and Matthew’s names forward, she was simply acting on Tony Sr.’s wishes, without ignoring the significant conflict of interest that would be created were either of them to act as Tony Sr.’s LG.
[40] Likewise, Laura and Mathew’s decision to put Mr. Mastroluisi forward as a possible LG was ill-conceived in the circumstances, given his prior involvement in the litigation. The fact that Mr. Mastroluisi was acting in good faith is beside the point; Laura and Matthew should have recognized at the outset that he would not be an appropriate choice. Furthermore, it was Laura and Matthew who put forth Mr. Mastroluisi; he was their choice, not that of their father, who had not spoken to Mr. Mastroluisi in years.
Disposition: Who should pay costs.
[41] For the reasons above, I conclude that 50% of the costs awarded to Kathy on this motion should be paid by Tony Sr., personally.
[42] I conclude that the other 50% of the costs payable to Kathy should be paid by Laura and Matthew, personally.
[43] My reasoning for determining that Laura and Matthew, jointly and severally, should pay the other 50% of the costs is that they pursued the appointment of Laura in the face of the allegations against her, all of which put her appointment under the more recent POA into question. They also pursued the appointment of Mr. Mastroluisi, with whom they had a business relationship and who had offered advice to them in this litigation and for those reasons, should have been recognized by them as an inappropriate choice as LG for Tony Sr.
L. Sheard J.
Date: March 17, 2023
[^1]: For ease of reference only, and without intending any disrespect, I refer to the Di Silvestro family members by their first names.