Costs Endorsement

Court File No.: CV-23-00701397
Date Heard: 2025-01-05
Date Released: 2025-05-01
Ontario Superior Court of Justice
Between:
John Zanini, Dunpar Developments Inc. and 1609514 Ontario Inc., Plaintiffs
– and –
Michael DiPasquale and Andrea Cheng, Defendants

Appearances:
Roshni Khemraj, for the Plaintiffs
Niklas Holmberg, for the Defendants
Heard: In writing

Papageorgiou J.

Overview

[1] The plaintiffs brought a motion to amend. The defendants opposed the motion on the basis that the Amended Statement of Claim improperly sought to withdraw admissions. The defendants also brought a motion to strike on that basis. The plaintiffs also brought a motion to strike an allegation of similar fact evidence.

[2] I granted the motion to amend and dismissed the motion to strike. The defendants voluntarily agreed to withdraw the allegation of similar fact evidence.

[3] The plaintiffs seek substantial indemnity costs in the amount of $23,401.07 on a substantial indemnity basis or alternatively.

Decision

[4] For the reasons that follow:

Analysis

[5] Pursuant to s. 131(1) of the Courts of Justice Act, RSO 1990, c C.43, costs are in the discretion of the court. Rule 57 of the Rules of Civil Procedure, RRO 1990, Reg 194 sets out the factors which courts should have regard to when awarding costs. The overall 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”: Zesta Engineering Ltd. v. Cloutier, para 4; Boucher v. Public Accountants Council for the Province of Ontario, para 26; Clarington (Municipality) v. Blue Circle Canada Inc., 2009 ONCA 722, para 52; and G.C. v. Ontario (Attorney General), 2014 ONSC 1191, para 5.

[6] The plaintiffs, as the successful party, are presumptively entitled to their costs.

Conduct that Tended to Lengthen the Proceeding

[7] The lawsuit was commenced in June 2023. In the claim, the plaintiffs claimed that the defendants had improperly stole, misappropriated and converted $400,000 from a sale that Mr. DiPasquale had effected in 2021.

[8] After receipt of the Statement of Claim, the defendants transferred the $400,000 to Mr. Zanini. They took the position that they had held back these funds to satisfy a potential tax liability. After this payment, the plaintiffs delivered an Amended Statement of Claim where they acknowledged the amount had been repaid and added claims for additional amounts including commission paid to Mr. DiPasquale as well as repayment of bonuses in 2019 and 2020 as a result of his breach of duty.

[9] The defendants then sought to schedule a motion to strike the claims of Dunpar and the numbered company on the basis that the property that was sold was Mr. Zanini’s and that whatever Mr. DiPasquale did related to this could not have breached any fiduciary duties to Dunpar even though he had been employed by Dunpar. As noted in the decision, Dunpar is owned by Mr. Zanini and the evidence is that this was a land assembly and that Dunpar often does land assemblies by purchasing them through other parties because it would drive up the purchase price if property owners knew that a land assembly was in play.

[10] The matter was sent to a number of case conferences and the defendants were not satisfied with this explanation. As of July 2024, the defendants had still not delivered a defence. Once they were advised that the defendants would be bringing a motion to provide additional clarification on the involvement of the corporate plaintiffs, the defendants suddenly delivered a defence. I found that they did this presumably to foreclose the argument made at the case conference that since pleadings were not closed, the plaintiffs could amend as of right.

[11] The plaintiffs continued to make significant informal efforts to resolve this matter without success.

[12] Then, with respect to the plaintiffs’ motion to strike the similar fact evidence in the defence that Mr. Zanini “routinely uses the courts to punish and intimidate those who he considers to have crossed him” the defendants disagreed that it could be heard at the same time as the defendants’ motions, even though the plaintiffs said it would only take 15 minutes. After several emails and the court’s direction at a case conference, the defendants finally agreed to have them heard together. Then, on November 14, 2024, four days before the return of the motion the defendants advised they would amend the impugned statement from their defence.

Offer to Settle

[13] On October 18, 2024, the plaintiffs made two r. 49.10 offers.

[14] The first was in respect of the motion to strike the similar fact evidence pleading in the defence. The defendants responded immediately but there were issues with whether the defendants would pay costs. Ultimately the defendants offered to withdraw the similar fact evidence allegation and argue the issue of costs.

[15] The second offer was in respect of the defendants’ motion to strike. However, this offer does not engage 49.10 because the Amended Statements of Claim attached to it was not the version of the Amended Statement of Claim ultimately presented and argued and for which leave was granted. Furthermore, it was withdrawn on November 1, 2024. I disagree that the court’s discretion should be exercised in this case to award substantial indemnity costs taking into account the “spirit” of r. 49: Elbakhiet v. Palmer, 2014 ONCA 544, para 33. The “spirit” of r. 49 is that where a party seeks to reasonably resolve a matter with an offer and beats that offer, the other side should have to pay elevated costs because they have wasted everyone’s time. The purpose is to encourage settlement where a reasonable offer is made. This simply does not apply where the offer is withdrawn.

Substantial Indemnity Costs

[16] The court also has the discretion to award substantial indemnity costs, but such costs are “rare and exceptional” and only warranted where there has been reprehensible, scandalous or outrageous conduct on the part of a party: see DUCA Financial Services Credit Union Ltd. v. Bozzo, 2010 ONSC 4601, para 5; Foulis v. Robinson; and most recently Mars Canada Inc. v. Bemco Cash & Carry Inc., 2018 ONCA 239, para 43.

[17] The defendants' conduct here does not rise to the level required for substantial indemnity costs.

The Plaintiffs’ Own Conduct

[18] The reason why the defendants brought the motion and why the plaintiffs needed to amend was because of sloppy drafting.

[19] Additionally, the plaintiffs did not bring their motion to amend initially, which resulted in adjournment of the motion to strike based upon Koehnen J’s decision in Vale Canada Limited v. Solway Investment Group Limited, 2021 ONSC 7562, para 8. Then, prior to the motion, the plaintiffs delivered a proposed new Amended Amended Statement of Claim which led to an adjournment.

Importance of the Matter

[20] The defendants also point out that the matter was important to the defendants because although unsuccessful, the motion had the chance of meaningfully reducing the defendants’ liability.

Quantum

[21] The total partial indemnity costs for all the motions sought by the plaintiffs is $15,876.28 based upon the schedule to the cost submission. This does not entirely accord with what is in the submission, but I am using the schedule because it is where the time and cost is broken down.

[22] The defendants' own bill of costs outline shows $39,906.74 on a partial indemnity basis and $59,860.11 on a substantial indemnity basis. The plaintiffs’ request is considerably lower; therefore, the costs sought by the plaintiffs are within the reasonable expectation of the defendants.

[23] However, taking into account the concerns raised by the defendant, the sloppy drafting that led to the motion, and the plaintiffs’ own conduct that resulted in an adjournment and waste of time, I reduce the costs claim and award $10,000 on a partial indemnity basis.

Papageorgiou J.
Released: May 1, 2025