Court File and Parties

COURT FILE NOS.: CV-21-00662366-0000 CV-22-00684712-0000 DATE: 20230509 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: SILVEROAK WEALTH MANAGEMENT and RICK UMBRIO, Applicants AND: SANDRA LEONARDELLI and LEONARDELLI WEALTH MANAGEMENT, Respondents

AND BETWEEN: SANDRA LEONARDELLI and LEONARDELLI WEALTH MANAGEMENT, Applicants/Cross-Respondents AND: SILVEROAK WEALTH MANAGEMENT and RICK UMBRIO, Respondents/Cross-Applicants

BEFORE: Cavanagh J.

COUNSEL: Daniel Camenzuli and Julia Cecchetto, for the Applicants/Cross-Respondents Gregory Sidlofsky, for the Respondents/Cross-Applicants

HEARD: In Writing

Costs Endorsement

[1] On April 4, 2023, I released an endorsement with my decision on two separate applications.

[2] The first application was brought by Silveroak Wealth Management and Rick Umbrio (the “Umbrio Parties”) as applicants against Sandra Leonardelli and Leonardelli Wealth Management (the “Leonardelli Parties”) as respondents by a Notice of Application (that was amended).

[3] The second application was brought by the Leonardelli Parties as applicants against the Umbrio Parties as respondents by an originating process called Notice of Cross-Application.

[4] Both applications were heard together because they involved related and overlapping issues.

[5] The Umbrio Parties were partially successful on their application in respect of their claim for a post-closing adjustment to the total consideration paid under a Letter Agreement made by the parties. The Umbrio Parties were unsuccessful in respect of their claims in relation to (i) a sublease of a portion of the space leased by Silveroak, and (ii) reimbursement of expenses.

[6] In response to the application, the Leonardelli Parties, in addition to contending that the post-closing adjustment provision in the Letter Agreement should be interpreted differently than the interpretation advanced by the Umbrio parties, sought reduction of any amount awarded to the Umbrio Parties in respect of the post-closing adjustment to account for (i) an equal share of the amount in the bank account of Silveroak, and (ii) reimbursement of commissions claimed to be owed to Ms. Leonardelli. The Leonardelli Parties were successful in respect of these issues, the effect of which was to reduce the net amount to be paid to the Umbrio Parties to $69,256.

[7] The Umbrio Parties seek costs of their application on a substantial indemnity scale in the amount of $62,705.37. In the alternative, they seek costs of their application on a partial indemnity scale in the amount of $48,226.42. In the further alternative, the Umbrio Parties submit that the parties’ substantial indemnity costs should be set off against each other with the result that the Umbrio Parties are awarded costs of $29,163.10.

[8] The Leonardelli Parties submit that there was divided success in the litigation. They seek costs of the applications in the amount of $30,000. In support of this submission, they rely on an Offer to Settle made by which they offered to pay a net amount of $60,447 to the Umbrio Parties. The Leonardelli Parties acknowledge that the net amount awarded to the Umbrio Parties exceeds the amount offered, but they submit that the offer came close to the amount awarded and that it should be taken into account pursuant to rule 49.13 of the Rules of Civil Procedure to justify a costs award in favour of the Leonardelli Parties. In the alternative, the Leonardelli Parties submit that, given the divided success, no costs should be awarded.

[9] Although the Leonardelli Parties were successful on some issues raised on the application by the Umbrio Parties, they were unsuccessful on the most significant issue which involved interpretation of the post-closing adjustment provision in the Letter Agreement. As a result, Ms. Leonardelli was ordered to pay to Mr. Umbrio the amount of $104,609 (representing reimbursement of the overpayment towards total consideration under the Letter Agreement). The net amount found to be owing to the Umbrio Parties was $69,256.

[10] I do not agree that costs of the Umbrio Parties’ application should be determined on an issue by issue basis. Given that the Umbrio Parties were successful in obtaining an order for payment of money to them, the Umbrio Parties are the successful parties on their application. The difference between the net amount awarded and the amount of the offer to settle is almost $9,000. This is sufficiently material that, in my view, rule 49.13 should not be applied to deprive the Umbrio Parties of costs.

[11] In the further alternative, the Leonardelli Parties submit that the Umbrio parties should be awarded costs of their application on a partial indemnity scale and not on a substantial indemnity scale. They also submit that the amount claimed is unreasonably high because (a) too may timekeepers were used with the result that there was duplicative work; (b) the approach of the Umbrio Parties to the evidence and their calculations kept changing; and (c) their factum included unnecessary and irrelevant content and was too long.

[12] As the successful parties on their application, the Umbrio Parties are entitled to costs. Although the Umbrio Parties claim costs on a substantial indemnity scale, they do not advance a reason for this claim other than the complexity of the Application. I do not accept the submission by the Umbrio Parties that mere complexity of litigation provides a basis for an award of costs on a substantial indemnity scale. Costs of the Umbrio Parties’ application should be on the usual partial indemnity scale.

[13] On their cross-application, the Leonardelli Parties raised some of the same issues that they raised in opposition to the application by the Umbrio Parties, including a claim for payment of an amount equal to one-half of the amount in Silveroak’s bank account and reimbursement of commissions. The Leonardelli Parties were successful on these issues, although they were not successful on the interpretation issue in relation to post-closing adjustment of the total consideration under the Letter Agreement with the result that they did not succeed in obtaining their requested order for payment of a net amount of money to them. In addition, the Leonardelli Parties unsuccessfully sought a declaration that the Umbrio Parties breached a sublease agreement, damages for breach of the sublease, and punitive damages. The claims for damages were not pursued at the hearing of the applications.

[14] I conclude that neither party had overall success on the cross-application and that there should be no costs of the cross-application.

[15] The Umbrio Parties claim costs of their application on a partial indemnity scale in the amount of $48,226.42 including HST and disbursements.

[16] The Costs Outline of the Leonardelli Parties shows a claim for costs on a partial indemnity scale for both applications in the amount of $39,887.30 plus HST.

[17] In Boucher v. Public Accountants Council for the Province of Ontario, [2004] O.J. No. 2634 (C.A.), the Court of Appeal for Ontario, at para. 26, held that the fixing of costs does not begin and end with a calculation of hours times rates and, overall, the objective is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular proceeding, rather than an amount fixed by the actual costs incurred by the successful litigant.

[18] In my review of the Bill of Costs of the Umbrio Parties and their submissions in respect of costs, I have considered this principle from Boucher as well as the factors in rule 57.01 of the Rules of Civil Procedure.

[19] I conclude that it would be fair and reasonable and, having regard to the amounts in dispute and the result, within the reasonable expectations of the Leonardelli Parties, that the Umbrio Parties be awarded costs of their application fixed in the amount of $40,000 inclusive of HST and disbursements. I so order.

Released: May 09, 2023 Cavanagh J.