SUPERIOR COURT OF JUSTICE - ONTARIO
RE: 2025925 ONTARIO INC. and FIORENZO DI BIASE, Plaintiffs
AND:
MARAMUSCHE HOLDINGS INC., MARANDO PAINTING LTD., SALVATORE MARANDO and MARIA TERESA MARANDO, Defendants
AND RE: MARAMUSCHE HOLDINGS INC., MARANDO PAINTING LTD., SALVATORE MARANDO and MARIA TERESA MARANDO, Plaintiffs by Counterclaim
AND:
2025925 ONTARIO INC., FIORENZO DI BIASE, ADM ENTERPRISES INC., 2596678 ONTARIO INC., VERA MANI, ROBERT DARDENGO, MERITVIEW DECORATING LTD. and ALLU HOLDINGS INC., Defendants to the Counterclaim
BEFORE: VERMETTE J.
COUNSEL: Michael Binetti and Adam Casey, for the Plaintiffs and for the Defendants to the Counterclaim 2025925 Ontario Inc., Fiorenzo Di Biase, ADM Enterprises Inc. and 2596678 Ontario Inc.
David Nuri, for the Defendants and Plaintiffs by Counterclaim Maramusche Holdings Inc., Marando Painting Ltd. and Salvatore Marando
James Zibarras, for the Defendant and Plaintiff by Counterclaim Maria Teresa Marando
Allen Gerstl, for the Defendant to the Counterclaim Vera Mani
HEARD: In writing
ENDORSEMENT AS TO COSTS
1On May 19, 2023, I released Reasons for Judgment dismissing the claim and granting the counterclaim in part.
2The parties were not able to agree on costs and have delivered costs submissions.
A. Positions of the parties
1. Submissions of the Defendants and Plaintiffs by Counterclaim Maramusche Holdings Inc., Marando Painting Ltd. and Salvatore Marando (“Maramusche Defendants”)
3The Maramusche Defendants seek costs on a substantial indemnity basis in the amount of $432,611.59. The corresponding figure on a partial indemnity basis is $294,099.07.
4The Maramusche Defendants state that they are presumptively entitled to costs because they were wholly successful in defending the action commenced by the Plaintiffs and were successful in their counterclaim.
5The Maramusche Defendants refer to the letter dated November 4, 2020 that was sent to the Plaintiff Fiorenzo Di Biase and note that many of the items identified in that letter were echoed in their counterclaim. The Maramusche Defendants submit that they were subsequently successful on these items at trial and that, had Mr. Di Biase taken a more reasonable approach to the letter, none of these claims had to go to trial or even to court.
6The Maramusche Defendants argue that Mr. Di Biase engaged in conduct that was reprehensible, scandalous, outrageous and deserving of sanction and, as a result, this is an appropriate case for costs on a substantial indemnity scale. They point out that a finding of oppression, by itself, has often justified an award of costs on a higher scale.
7The Maramusche Defendants note that it is Mr. Di Biase who brought this action to court under urgent circumstances, pretending to be a victim of oppression, even though he eventually admitted to withdrawing cash, redirecting rebates and removing profits. They submit that Mr. Di Biase refused to admit simple facts that were obvious and mischaracterized fiduciary principles.
8The Maramusche Defendants’ position is that the Defendant to the Counterclaim Vera Mani is not entitled to costs, even though the claims against her were dismissed. According to the Maramusche Defendants, Ms. Mani did not participate in the action in good faith, she withheld productions and her counsel was not present for most of the trial.
2. Submissions of the Defendant and Plaintiff by Counterclaim Maria Teresa Marando
9Ms. Marando requests costs on a substantial indemnity basis in the amount of $542,233.21. The corresponding figure on a partial indemnity basis is $364,292.96.
10Ms. Marando’s position is that she is entitled to costs. She points out that each and every one of the Plaintiffs’ claims against her were dismissed and she was successful on her counterclaim.
11Ms. Marando points out that cases where an award of punitive damages is made often carry an award of costs on a substantial indemnity basis because the same conduct that grounds punitive damages also grounds substantial indemnity costs. She submits that the same rationale that supported an award for punitive damages in this case supports an award of costs on a substantial indemnity basis.
12Ms. Marando argues that the misappropriation and diversion of company funds by Mr. Di Biase constitutes fraud, attempted fraud or fraudulent behaviour, and that this justifies an award of costs on an elevated scale despite the absence of a specific finding of civil fraud.
3. Submissions of the Plaintiffs and Defendants to the Counterclaim 2025925 Ontario Inc., Fiorenzo Di Biase, ADM Enterprises Inc. and 2596678 Ontario Inc. (“Plaintiffs”)
13The Plaintiffs seek costs on a partial indemnity basis in the amount of $459,540.36.
14The Plaintiffs argue that the Defendants, in effect, lost at trial. The Plaintiffs state that “[m]ost of the trial was spent on the frivolous accusations contained within their counterclaim other than on those matters to which Fiorenzo Di Biase admitted earlier in the proceedings (e.g. cash job, rebates) and long before trial.” The Plaintiffs note that the Defendants were unsuccessful in proving those other claims against Mr. Di Biase. Their position is that this is an appropriate case for the Court to exercise its discretion under Rule 57.01(2) and order the Defendants to pay costs to the Plaintiffs.
15The Plaintiffs submit that it was obvious long before trial that the Defendants’ counterclaim was dubious. They point out that the Defendants failed to prove the claim for spoliation for $2 million that they added at trial. The Plaintiffs state that this was a transparent attempt to supplement the Defendants’ otherwise deficient evidence at trial.
16In the alternative, the Plaintiffs rely on an offer to settle that they made on February 3, 2022. They submit that the Defendants should at least pay the Plaintiffs’ partial indemnity costs from the date of the offer to settle, i.e., $218,505.12. The Plaintiffs submit that the offer was far more generous than what the Defendants achieved at trial and would have separated the parties once and for all.
17The offer to settle is approximately four pages long and contains the following terms, among others:
a. Assignment of Mr. Di Biase’s shares in 2025925 Ontario Inc. (“202”) to Ms. Marando.
b. Assignment of Mr. Di Biase’s interest in the “tree farm” to Ms. Marando.
c. Assignment of Mr. Di Biase’s interest in a margin account jointly held with Ms. Marando currently valued at $100,000.
d. The sale of the matrimonial home, with the portion of the net proceeds of the sale that would otherwise be payable to Mr. Di Biase being used to repay Marando Painting Limited for “ineligible” business expenses incurred by Mr. Di Biase.
e. Repayment by Mr. Di Biase to 202 of funds used for an investment in Kronicrelief in the amount of $125,000.
f. Direction by Mr. Di Biase to any entity in which current investments in real estate were made with funds derived from 202 that such investments be held in trust for the three children of Mr. Di Biase and Ms. Marando on terms and conditions either as agreed by the parties, agreed upon through mediation, as reached by way of mediation-arbitration, or as directed by the Court.
g. Various releases related to the matrimonial proceeding between Mr. Di Biase and Ms. Marando.
18The Plaintiffs state that the offer to settle addresses most of the damages that were awarded in the final judgment. They point out that because the offer includes Mr. Di Biase divesting his interest in 202 and, consequently, Marando Painting Ltd., the actual value of the amounts in the offer are greater than the dollar figures suggest because Ms. Marando will be getting 100% of the payments as opposed to Mr. Di Biase and Ms. Marando each getting 50%.
19The Plaintiffs refer to the joint offer to settle made by the Defendants on February 7, 2022, which required the Plaintiffs to make payment to Marando Painting Ltd. in the global sum of $4 million and pay 50% of the Defendants’ costs of the action. The Defendants’ offer specified that the $4 million payment had to be made through specific transfers of property, including the matrimonial home, and that all transfers to Ms. Marando had to occur under a separation agreement “so that the transfers happen on a tax-free basis”. The Plaintiffs describe the Defendants’ offer as vindictive as it required Mr. Di Biase to dispose of nearly all his assets.
20In the further alternative, the Plaintiffs argue that the parties should bear their own costs because the Defendants’ award was much lower than what they were seeking, and the ultimate result could be viewed as being a divided success. According to the Plaintiffs, to award costs to the Defendants would be akin to rewarding the Defendants for the most expensive determination of this civil proceeding on its merits and for their litigation strategy at trial which was to litigate every point, no matter how unlikely they were to prove it.
21The Plaintiffs submit that the Defendants’ bills of costs are excessively high. They point out that, together, the Defendants’ partial indemnity costs are $658,392.03, which is approximately 40% higher than Mr. Di Biase’s. They argue that it would be unjust to require the Plaintiffs to pay that quantum of costs in the circumstances of this case. They also refer to duplication between both sets of counsel for the Defendants.
4. Submissions of the Defendant to the Counterclaim Vera Mani
22Ms. Mani requests costs on a full indemnity basis in the amount of $41,436.55.
23Ms. Mani states that she was wholly successful in her defence to the counterclaim.
24Ms. Mani points out that the allegations against her included allegations of conspiracy to commit a breach of fiduciary duty and misappropriation and diversion of corporate funds. She argues that costs on a substantial indemnity basis are appropriate when a defendant successfully defends this kind of allegations.
25Ms. Mani relies on an offer to settle that she served on February 14, 2022 which provided that the claim against her would be dismissed “with our costs” on a with prejudice basis. She submits that an award of costs on a substantial indemnity basis from the date of the offer to settle would be appropriate.
26Ms. Mani notes that because of her modest means, her counsel attempted to limit the time spent on her behalf at trial. She submits that, as a result, the amount of costs claimed is modest.
5. Responding submissions of the Maramusche Defendants
27The Maramusche Defendants disagree with the Plaintiffs’ assertions that, in effect, the Defendants lost at trial or that success was divided. They state that the Plaintiffs are not entitled to costs and note that the Plaintiffs have not referred to any cases where parties were awarded costs despite engaging in oppression, breaching fiduciary duties and triggering punitive damages. They point out that if the Plaintiffs were to receive $459,530.36 in costs, this would render meaningless the equitable relief granted at trial.
28The Maramusche Defendants submit that the Plaintiffs did not make an offer that triggered the costs consequences of Rule 49 of the Rules of Civil Procedure. They point out that the Plaintiffs’ offer to settle was directed to Ms. Marando and proposed effectively nothing to Salvatore Marando. They state that most of the provisions of the Plaintiffs’ offer to settle had little relevance to the issues that the Maramusche Defendants addressed at trial, including clauses relating to the matrimonial dispute between Ms. Marando and Mr. Di Biase.
29The Maramusche Defendants also submit that Rule 49 cannot be triggered because the amount offered by the Plaintiffs is ambiguous and, as a result, it is unclear whether the Plaintiffs’ offer was more favourable to the Maramusche Defendants than the outcome at trial. They note as well that the outcome at trial contained orders the value of which is uncertain. In addition, the Maramusche Defendants argue that a finding of oppression, fiduciary duty and punitive damages constitute an exceptional basis to warrant a departure from any costs consequences under Rule 49.10.
6. Responding submissions of Ms. Marando
30Like the Maramusche Defendants, Ms. Marando disagrees with the Plaintiffs’ assertions that, in effect, the Defendants lost at trial or that success was divided.
31Ms. Marando argues that her motives are not a factor to consider in determining costs.
32Ms. Marando submits that the Plaintiffs’ offer to settle was not more favourable than the result obtained. She points out that in order to be accepted, the Plaintiffs’ offer to settle required that issues relating to the ongoing matrimonial dispute be resolved. She argues that the terms of the proposed resolution were highly unfavourable to her, including the forced sale of the matrimonial home and the release of all claims for spousal support and for equalization of net family property. Ms. Marando notes that there is no dollar value associated with the release of these claims and, consequently, there is no evidence that the Plaintiffs’ offer was more generous or favourable. She states that the burden of proving that the judgment was less favourable than the terms of the offer was on the Plaintiffs and they failed to discharge it. She also argues that Rule 49.10 is not available to the Plaintiffs as they were not successful at trial.
33In the alternative, Ms. Marando submits that the Court retains discretion under Rule 49.13 and 57.01 to decline to award substantial indemnity costs even where Rule 49.10 applies.
34Ms. Marando submits that Ms. Mani is not entitled to full indemnity costs because such costs are reserved for rare and exceptional cases. She also submits that any costs awarded to Ms. Mani should be reduced on the basis that she caused delays in the litigation and at trial, failed to produce required documents, and failed to comply with timetables and deadlines. Ms. Marando argues that this conduct caused unnecessary costs and expenses which should not have been incurred.
7. Responding submissions of the Plaintiffs
35The Plaintiffs argue that the Defendants’ assertion that they are presumptively entitled to costs is wrong. They repeat that the trial was a failure for the Defendants on all aspects of their counterclaim where they asserted facts other than those that Mr. Di Biase admitted long before trial. The Plaintiffs agree with the Defendants that none of the claims had to go to trial, and they state that a costs award should reflect that the trial was unnecessary.
36While the Plaintiffs acknowledge that successful parties are usually entitled to costs, they state that the Defendants’ request for costs ignores the fact that they were awarded far less than they sought, and such small success merits that each party should bear their own costs.
37The Plaintiffs argue that in no case the Defendants should be awarded costs on a substantial indemnity basis. They submit that an award of costs on an elevated scale is unnecessary to meet the objective of punishing Mr. Di Biase for his actions as he has already been punished by punitive damages. The Plaintiffs state that a substantial indemnity costs order would be unnecessary further punishment and would also be unjust in this case because Mr. Di Biase made a good faith effort to settle the dispute and avoid a trial. According to the Plaintiffs, the Defendants’ offer to settle was unreasonable and further undermined any bona fides they had in relation to settling the dispute.
38The Plaintiffs submit that Ms. Marando wrongly argues that Mr. Di Biase should be punished for committing fraud as there has been no finding of civil fraud against anyone in this case. The Plaintiffs’ position is that the cases cited by Ms. Marando on this point are inapplicable.
39The Plaintiffs disagree with the Defendants’ submission that the Plaintiffs took meritless and absurd positions, and they give some examples of meritless and absurd positions that they say the Defendants took.
40The Plaintiffs submit that the Defendants abused the court’s process through their reluctance to settle and their insistence on litigating several accusations for which they had no evidence. The Plaintiffs state that the Defendants’ frivolous claims based on speculation rather than evidence, their refusal to settle on realistic terms, and their obvious vindictiveness throughout the proceedings resulted in a less satisfactory (and much more expensive) outcome for all parties involved.
41Ms. Mani did not file responding submissions.
B. Discussion
1. Entitlement to costs
42Ms. Mani is entitled to her costs of the action. There is no basis for the Defendants’ allegations that she did not participate in the action in good faith or that she caused unnecessary and meaningful delay, costs or expenses. The fact that her counsel was not present for most of the trial was authorized by the Court and, ultimately, is beneficial to the Defendants as this reduces her costs. As for the allegation of non-production, it is addressed in paragraph 154 of my Reasons for Judgment.
43I also find that the Maramusche Defendants and Ms. Marando are entitled to costs. They were successful in having the Plaintiffs’ claims dismissed and they were partially successful in their counterclaims. The litigation was commenced by the Plaintiffs and the Defendants had to respond to it. While Mr. Di Biase ultimately made significant admissions, they were made in the context of ongoing litigation, not before the litigation. Looking at the litigation in its entirety, this is not an appropriate case to grant costs to Mr. Di Biase, who was the unsuccessful party and the only party against whom relief was granted.
44However, I agree with the Plaintiffs that: (a) most of the Defendants’ success on their counterclaim was based on admissions made by Mr. Di Biase prior to the trial, and (b) the Defendants were largely unsuccessful on the other allegations, i.e., the allegations that Mr. Di Biase did not admit prior to trial. A very significant portion of the trial was spent on the unsuccessful allegations and, as repeatedly noted in my Reasons for Judgment, the evidence on these allegations was either non-existent or severely deficient. Given this, it is my view that the Defendants’ costs for trial preparation, attendance at trial and preparation of closing submissions should be significantly discounted. I find that the appropriate discounts are 60% for trial preparation and preparation of closing submissions, and 70% for attendance at trial.
2. Offers to settle
45I reject Ms. Marando’s argument that Rule 49.10 could not apply to this case because the Plaintiffs did not obtain a judgment. Rule 49.10(2) could apply as Mr. Di Biase was a Defendant with respect to the Defendants’ counterclaim and his offer to make various payments to the Defendants was in relation to the counterclaim, not his own claim.
46While Rule 49.10(2) could apply to this case, I find that it does not apply as I am unable to determine whether the Plaintiffs’ offer to settle was as favourable or more favourable than the judgment obtained by the Defendants. In particular, I have no information about Ms. Marando’s claims in the matrimonial proceeding and the “value” of the claims that she was asked to release (equalization of net family property, spousal support, etc.).
47I also decline to apply Rule 49.10 to the offer to settle served by Ms. Mani. While this may be a typo, Ms. Mani’s offer is for a dismissal of the action against Ms. Mani “with our costs”, not “without costs”. The real intention behind Ms. Mani’s offer to settle is unclear as the offer to settle is only discussed very briefly in Ms. Mani’s costs submissions and the actual terms of the offer are not mentioned in the submissions (although the offer is attached to the submissions). I note that an offer to have an action dismissed with costs does not contain any compromise, especially if no scale of costs is specified.
48An offer to settle need not contain an element of compromise to qualify as an offer that will attract costs consequences under Rule 49.10 of the Rules of Civil Procedure. However, the court has a very narrow discretion to deny the costs consequences of this Rule and may consider the absence of compromise together with other factors when considering whether to depart from the normal rule imposing costs consequences. See OPB Realty Inc. v. Canada International Medical Suppliers Company Limited, 2015 ONSC 6 at para. 7 and Walker Estate v. York Finch General Hospital (1999), 1999 CanLII 2158 (ON CA), 43 O.R. (3d) 461 (C.A.).
49In the present case, I exercise my discretion to deny any costs consequences that would be applicable under Rule 49.10 given the absence of any compromise and the fact that the offer was only served one day before the beginning of the trial.
3. Scale of costs
50As has been observed in many cases, costs on an elevated scale are exceptional and are reserved for those situations when a party has displayed reprehensible, scandalous or outrageous conduct: see Quickie Convenience Stores Corp. v. Parkland Fuel Corporation, 2021 ONCA 287 at para. 4. Thus, costs on an elevated scale usually have a punitive element: see Pate Estate v. Galway-Cavendish and Harvey (Township), 2013 ONCA 669 at para. 215 (“Pate Estate”). The reprehensible conduct can have taken place either prior to the litigation or during the litigation itself: see Oz Optics Limited v. Timbercon, Inc., 2012 ONCA 735 at para. 16. However, when the pre-litigation conduct in issue is compensable in damages and awarding costs on a substantial indemnity scale would compensate the injured parties twice for the same wrongdoing, costs on a substantial indemnity scale should not be awarded: see Hunt v. TD Securities Inc., 2003 CanLII 3649 at paras. 130-131 (Ont. C.A.) (“Hunt”) and Extreme Venture Partners Fund I LP v. Varma, 2020 ONSC 651 at para. 11.
51The interplay between an award of punitive damages and an award of costs on an elevated scale is raised in this case. The Court of Appeal recently stated that the purpose of punitive damages and full indemnity costs differ, and that there is no bar to a judge deciding that both are appropriate in the circumstances: see NDrive, Navigation Systems S.A. v. Zhou, 2022 ONCA 602 at para. 47. While this case was dealing with full indemnity costs, the Court of Appeal previously recognized that an award of substantial indemnity costs may be appropriate in a case where punitive damages are also awarded: see Pate Estate at para. 217.
52The issue in Pate Estate was whether the amount of punitive damages awarded by the trial judge was appropriate in light of the total compensation and costs already awarded to the plaintiff. This case is unusual in that the quantification of punitive damages took place after costs awards had already been made. Cronk J.A. (for the majority) stated the following:
235And, as I have earlier indicated, the trial judge explicitly justified his awards of substantial indemnity costs and a significant costs premium in part on the basis of the need to address the Township’s wrongful conduct in its dismissal of Mr. Pate and its conduct of the litigation. To this extent, therefore, these awards also contemplated denunciation of the Township’s past conduct and deterrence.
236As is apparent, there was considerable duplication or overlap among the considerations factored by the trial judge into his calculus of compensatory damages, costs and punitive damages. Consequently, in my view, the quantum of punitive damages to be awarded should have been materially discounted to avoid the risk of an inordinately high award and “double-compensation” to Mr. Pate, having regard to the punitive elements of the penalties already imposed on the Township: see Honda, at para. 60.
238The task of a trial judge in quantifying a punitive damages award is not an easy one. It is far from an exact science. It must be guided, however, by the Supreme Court’s repeated cautions to avoid “double-compensation” and that court’s clear warning that, in most cases, a moderate award will generally suffice to adequately punish a defendant for its misconduct. This is especially so where, as here, the total penalties otherwise imposed on a defendant have a clear punitive component: Whiten, at para. 94; Honda, at paras. 60 and 69.
53While the situation before me is the reverse of the situation in Pape Estate – i.e., I am asked to make a costs award on a substantial indemnity scale after an award of punitive damages has been made, it is my view that the principles set out in the majority’s decision in Pate Estate are relevant to the analysis that must be undertaken in this case. Based on Pate Estate, I find that a costs award on an elevated scale should not, after the fact, render a prior award of punitive damages inappropriate and result in double compensation. Thus, the prior award of punitive damages in this case is a factor that I need to consider in exercising my discretion on costs. As stated above, I should also not use a costs award on an elevated scale to compensate the parties twice for the same wrongdoing if damages have already been awarded for the same conduct: see Hunt at para. 130.
54In light of the principles set out above and the compensatory and punitive damages that have already been ordered in this case, I conclude that the pre-litigation conduct of Mr. Di Biase does not justify an award of costs on an elevated scale. Damages and disgorgement have been ordered to compensate the Defendants with respect to Mr. Di Biase’s oppressive conduct and breaches of fiduciary duty. In my view, there is no aspect of the conduct that is not addressed through damages and disgorgement: see Hunt at para. 131. I also note that the pre-litigation conduct of Mr. Marando and Ms. Marando in relation to Marando Painting Ltd. was far from being irreproachable. As stated in my Reasons for Judgment, Ms. Marando and Mr. Marando used Marando Painting Ltd. as if it were their own personal wallet while they owed fiduciary duties to the corporation.
55In my Reasons for Judgment, I determined that an appropriate quantum of punitive damages in this case was $75,000.00. If I were to order the substantial indemnity costs requested by the Defendants – for a total of $974,844.80, this would result in the Plaintiffs having to pay $316,452.77 more in costs to the Defendants than if they were ordered to pay costs on a partial indemnity basis (given that the Defendants’ costs on a partial indemnity basis total $658,392.03). This difference is out of proportion with the award of punitive damages that I made, i.e., more than four times the amount of punitive damages. In my view, ordering substantial indemnity costs in this case based solely on the Plaintiffs’ pre-litigation conduct would render my prior award of punitive damages inappropriate and result in double compensation.
56I also find that the Plaintiffs’ conduct during the litigation does not justify an award of costs on a substantial indemnity scale. In my Reasons for Judgment, I found that both sides had engaged in non-compliant conduct with respect to production issues: see para. 154. Justice Lederer also found that the Defendants had failed to comply with a court order earlier in the litigation: see para. 123 of my Reasons for Judgment. Given that the Defendants’ own conduct during the litigation was problematic, I decline to exercise my discretion to grant them costs on a substantial indemnity scale based on conduct that took place during the litigation.
57I reject Ms. Marando’s submission that an award of costs on a substantial indemnity basis is appropriate in this case because of Mr. Di Biase’s “fraudulent behaviour”. No finding of fraud or attempted fraud was made against Mr. Di Biase in this case. Among other things, there was no finding regarding the specific elements of the tort of civil fraud: see Bruno Appliance and Furniture, Inc. v. Hryniak, 2014 SCC 8 at para. 21. Oppression and breach of fiduciary duty can be established without any proof of an intention to defraud. The cases relied upon by Ms. Marando are distinguishable given the absence of any finding that there was an intention to defraud.
58I also reject the Maramusche Defendants’ submission that a finding of oppression, by itself, can justify an award of costs on a higher scale. Costs on a substantial indemnity scale are exceptional and are not granted in every oppression case. A decision to grant costs on an elevated scale is based on the particular facts of the case.
59Accordingly, I find that the appropriate scale for the costs to be paid by the Plaintiffs to the Defendants is partial indemnity.
60However, I find that the appropriate scale for the costs to be paid by the Defendants to Ms. Mani is substantial indemnity. In their counterclaim, the Defendants alleged a number of causes of action against Ms. Mani and the other Defendants to the Counterclaim, including breach of trust, fraud, fraudulent misrepresentation and conspiracy. In my Reasons for Judgment (at paras. 268-269), I addressed the Defendants’ allegation that Ms. Mani committed the tort of knowing assistance in a breach of fiduciary duty, which tort includes the following two essential elements, among others: (a) the “assistant” (here, Ms. Mani) must have had actual knowledge of both the fiduciary relationship and the fiduciary’s fraudulent and dishonest conduct; and (b) the assistant must have participated in or assisted the fiduciary’s fraudulent and dishonest conduct. Ultimately, I found that none of the claims against Ms. Mani had been established and the counterclaim was completely dismissed as against her.
61It is a well-established common law principle that a party must only plead fraud when they can substantiate the claim, or risk an award of substantial indemnity costs: see Kaynes v. BP p.l.c., 2021 ONCA 36 at para. 63 and Unisys Canada Inc. v. York Three Associates Inc., 2001 CanLII 7276 at para. 15 (Ont. C.A.). Unproven allegations of fraud and similar conduct are a recognized basis upon which to award costs on a substantial indemnity basis: see Catford v. Catford, 2013 ONCA 58 at para. 4. In my view, the claims against Ms. Mani were without merit and, in light of the very serious allegations that were made against her, an award of substantial indemnity costs is appropriate in the circumstances. However, I decline to order costs on a full indemnity basis as Ms. Mani has not articulated a basis for such an exceptional award.
4. Quantum
62I have reviewed Ms. Mani’s costs outline and I find that her counsel’s hourly rate and time spent are fair and reasonable. I have adjusted the amount claimed so that it reflects costs on a substantial indemnity basis (90% of actual costs) instead of costs on a full indemnity basis. I find that the appropriate quantum is $37,000.00.
63When applying the discounts set out in paragraph 44 above, the Maramusche Defendants’ claim for costs on a partial indemnity basis is reduced to $212,956.67, and Ms. Marando’s claim for costs on a partial indemnity basis is reduced to $244,904.95.
64In my view, it would not have been within the reasonable expectations of the Plaintiffs that they would have to pay a higher amount of costs to Ms. Marando in her personal capacity than to the Maramusche Defendants. While counsel for Ms. Marando and counsel for the Maramusche Defendants made some efforts at trial to avoid overlap and duplication, Ms. Marando’s counsel was actively involved in all issues, even though some of them were issues pertaining to Marando Painting Ltd. and not Ms. Marando personally.
65I conclude that it is appropriate to apply a further reduction to the amounts sought by the Defendants to take into account the duplication of work between the timekeepers involved across the Defendants’ legal teams, and to ensure that the overall time and amounts claimed are reasonable in light of all the circumstances of this case. I find that the appropriate quantum of costs for the Maramusche Defendants is in the all-inclusive amount of $210,000.00 and that the appropriate quantum of costs for Ms. Marando is in the all-inclusive amount $190,000.00.
C. CONCLUSION
66Taking the foregoing into account, as well as the factors set out in Rule 57.01(1) of the Rules of Civil Procedure and the reasonable expectations of the parties, I find as follows:
a. The fair and reasonable award of costs in favour of the Defendant to the Counterclaim Vera Mani is on a substantial indemnity basis in the all-inclusive amount of $37,000.00. The costs are to be paid by the Defendants within 30 days.
b. The fair and reasonable award of costs in favour of the Maramusche Defendants is on a partial indemnity basis in the all-inclusive amount of $210,000.00. The costs are to be paid by Mr. Di Biase within 30 days.
c. The fair and reasonable award of costs in favour of Ms. Marando is on a partial indemnity basis in the all-inclusive amount of $190,000.00. The costs are to be paid by Mr. Di Biase within 30 days.
Vermette J.
Date: August 23, 2023