Court File Numbers

CV-13-00002155
CV-24-00001793

Date

2025-07-18

Court

Ontario Superior Court of Justice

Parties

Between:

The Estate of Sulochana Shanthakumar by her estate trustee, Santha Kumar Mylabathula
Plaintiff
Counsel: Peter M. Callahan (pcallahan@pmclaw.ca)

- and -

Royal Bank of Canada, Siva Gurrappadi, William Sykes, Usha Radhakrishan, Sheila Wilson, Attorney General of Canada, Phillip Carver, Albert Yang, and the Attorney General for the Province of Ontario
Defendants
Counsel for Royal Bank of Canada, Siva Gurrappadi, William Sykes, Usha Radhakrishan, and Sheila Wilson: Gregory W. Bowden (gwb@lbnfirm.com)
Counsel for Attorney General of Canada, Phillip Carver, and Albert Yang: Karen Watt (karen.watt@justice.gc.ca)
Counsel for interested party (not appearing): Niki Manwani, LD Law LLP (nmanwani@kmlaw.ca)

Reasons for Judgment

Heard: In Writing
Released: July 18, 2025
Judge: Robert Smith LeMay

Introduction

[1] This is the last in a series of decisions in respect of this action. The parties have resolved the matter except for the issue of costs. This action has a long history that was most recently outlined in reasons reported at 2024 ONSC 7253.

[2] At that point, the action had progressed to the point where RBC had advanced claims of fraudulent conveyance against Mr. Mylabathula as the Estate Trustee. Mr. Mylabathula had brought a counter-claim on both his own behalf and on behalf of the Estate seeking damages for various torts. I struck all of the claims against Mr. Bowden and the claims that Mr. Mylabathula had brought against RBC on behalf of the Estate without leave to amend. I also struck Mr. Mylabathula’s claims against RBC, but with leave to amend. I ordered costs of that motion in February of this year.

[3] Since then, the parties ultimately have resolved the underlying issues, except for one. The one unresolved issue is the costs that remain unassessed. In order to understand the scope of those costs, I will briefly review the costs awards in this case. I will then outline the principles that apply to the costs award in this case and apply them to arrive at a decision on the costs that have not already been assessed.

The Costs History

[4] The original action in this case has been ongoing since 2014. It was a claim by Sulochana Shanthakumar, the wife of Mr. Mylabathula, of unlawful arrest and a number of other torts. Unfortunately, Ms. Shanthakumar passed away in August of 2021. The action continued for some time thereafter, and there were a number of interlocutory motions, both before me and before the Divisional Court.

[5] Since I have been case-managing this action, there have been a number of costs awards flowing from the interlocutory proceedings. In September of 2023, I am given to understand that the outstanding costs awards were paid. However, in the summer of 2023, as the case management judge, I placed a summary judgment motion and motion to strike before Ricchetti R.S.J. (as he then was). In October of 2023, Ricchetti R.S.J. issued reasons (2023 ONSC 6100) in which he brought the original action to an end. He then issued a costs endorsement, granting RBC and the RCMP significant costs of the original action: 2023 ONSC 7263.

[6] Before the original action had been brought to an end, Mr. Mylabathula (as Estate Trustee) had transferred the matrimonial home, which had been in the name of Ms. Shanthakumar, to the Estate and then to himself. RBC challenged this transfer on the basis that it was a fraudulent transfer that had been made knowing that there were outstanding costs awards and with the intention of avoiding paying those costs awards. As a result, RBC sought to require Mr. Mylabathula to pass the accounts of the Estate.

[7] There were various interlocutory motions in respect of the alleged fraudulent transfer, and costs were addressed at the conclusion of the various motions. The last one was the motion in December, striking the counterclaims against RBC and Mr. Bowden. I provided a costs award in that matter in February of this year (2025 ONSC 1003). In that decision, I awarded costs on a partial indemnity basis. However, those costs addressed a significant part of the litigation since the award of Ricchetti J.

[8] I am not revisiting or modifying any previous costs awards that may have been made in this case. Those awards stand, and I understand that there is an agreement between Mr. Mylabathula, RBC and the RCMP that those costs awards (which I understand are $157,000) are going to be paid in full. As a result, I am only fixing the costs of proceedings since the Order of Ricchetti R.S.J. dismissing the action in December of 2023 that were not covered by my previous costs award.

The Arguments of the Parties

[9] RBC argues that it should be entitled to additional costs on a substantial indemnity basis in the sum of $45,135.83 including HST and disbursements. It advances this argument on the following grounds:

a) That neither Mr. Mylabathula nor Mr. Callahan, his counsel, followed my December 2024 decision. Instead, Mr. Mylabathula did not pay the costs award I made and Mr. Callahan continued to act for Mr. Mylabathula in spite of the fact that I removed Mr. Callahan from the record.

b) That Mr. Mylabathula engaged in obstructive conduct and intended to continue the action, requiring counsel for RBC to bring a motion to quash the appeal filed by Mr. Callahan, a motion to remove Mr. Mylabathula as estate trustee for misconduct and a motion to have Mr. Callahan’s file produced.

c) That Mr. Mylabathula’s conduct throughout the litigation was aggressive, uncompromising and attracted the criticism of more than one judge.

d) That Mr. Mylabathula is a professional litigant, and should have been aware of the expectation that RBC would ask him to pay substantial indemnity costs.

[10] Mr. Mylabathula, on the other hand, is advancing the following arguments against paying costs:

a) He has already paid $31,000 in costs to RBC and the RCMP in this action.

b) He is a poor, elderly pensioner who does not have much income. He has also experienced hardship because his wife died in August of 2021 and his daughter died in March of 2024.

c) Mr. Bowden and RBC are attempting to overcharge him.

d) Mr. Mylabathula and his family have been through many difficulties as a result of this case over the last few years.

[11] These issues raise questions of both the scale and quantum of costs. I will deal with each issue in turn.

The Scale of Costs

[12] An award of costs on a substantial indemnity basis is the exception rather than the rule. Indeed, the Courts have found that, unless the costs consequences of Rule 49 are triggered, substantial indemnity costs are only awarded in cases where there has been reprehensible, scandalous or outrageous conduct on the part of one of the parties: Young v. Young, [1993] 4 S.C.R. 3, at p. 134; Davies v. Clarington (Municipality) et al., 2009 ONCA 722, 100 O.R. (3d) 66, at paras. 28-31.

[13] The question is whether the conduct before me since Ricchetti R.S.J.’s decision meets this very high test. The starting point in that analysis is the fact that Ricchetti R.S.J. concluded that the conduct of the litigation by Mr. Mylabathula and his wife was so outrageous as to justify substantial indemnity costs.

[14] This brings me to Mr. Mylabathula’s argument that “myself and my late wife and children went through a lot of difficulties for the last so many years with this case”. I have sympathy for Mr. Mylabathula because of the passing of his wife and daughter. However, I do not have any sympathy for the difficulties that Mr. Mylabathula has had with this litigation. Both my recollections as case management judge, and paragraph 13 of Ricchetti R.S.J.’s costs endorsement leave me convinced that the tortuous litigation history in this case is primarily, if not exclusively, the result of the conduct of Mr. Mylabathula, the Estate, his wife and their counsel. This is not an argument that supports, in any way, a reduction in costs. Indeed, the conduct of the litigation as a whole amply supported an award of substantial indemnity costs, which is why Ricchetti R.S.J. ordered substantial indemnity costs in favour of RBC.

[15] However, in my costs endorsement in February of 2025, I determined that substantial indemnity costs were not quite justified in this matter at that point, primarily because I did not have to make a finding on the merits of Mr. Mylabathula’s claims and that it was still open to advance those claims. As a result, I did not find that substantial indemnity costs were justified on the basis of Mr. Mylabathula’s conduct between December 31, 2023, and December 31, 2024.

[16] The only basis, therefore, to found an award of substantial indemnity costs for the work since December 31, 2024 is the conduct since that date. Since December 31, 2024, I understand that:

a) Mr. Mylabathula has improperly sought to personally represent the Estate in Court.

b) Mr. Mylabathula’s counsel has improperly launched an appeal against my December 31, 2024 order removing him as counsel of record.

[17] This conduct is concerning to the Court. However, I have to balance it against the fact that, ultimately, Mr. Mylabathula agreed to resolve the matter with RBC and the fact that it is not entirely clear to me that Mr. Callahan was acting on instructions when he launched the appeal with the Court of Appeal. The fact that Mr. Mylabathula was ultimately willing to resolve the matter is a significant factor against awarding substantial indemnity costs.

[18] In these circumstances, I am not persuaded that costs of this part of the action should be on a substantial indemnity basis. The additional costs that RBC incurred can be addressed through the award of partial indemnity costs. I now turn to the quantum of costs.

Quantum of Costs

[19] The factors that the Court considers in assessing the reasonableness of costs awards are set out in Rule 57.01. The most significant of those factors in this case are:

a) The complexity of the action.

b) The conduct of any party that tended to shorten or lengthen the proceedings.

c) The reasonable expectations of the parties

[20] Before addressing these factors, however, I should also briefly mention the issue of who the successful party was. Normally, where a matter was settled, I would be strongly inclined not to award any costs as the parties had resolved the matter and that compromises are to be encouraged. However, in this case, the conduct after December 31, 2023, while not attracting an award of substantial indemnity costs, is certainly enough to justify an award of partial indemnity costs. It was conduct that lengthened the proceedings and made the matter more complex.

[21] This brings me to the question of whether the costs incurred are reasonable and within the reasonable expectations of the parties. Mr. Mylabathula has claimed that RBC’s counsel is overcharging him. I disagree for two reasons. First, the fact that costs are on a partial indemnity basis will address any concerns about counsel’s rate. Second, the work that had to be done by RBC’s counsel since December 31, 2024, was both unique and significant. A significant award of costs is supported in this case.

[22] That being said, there are some notations on the bill of costs that I view as being part of the motion that I decided in December of 2024. Specifically, there are charges for the preparation of the bill of costs and the costs submission for that motion. I have factored in a reduction for that time from the award I am making in these circumstances.

[23] This brings me to the reasonable expectations of the parties. Mr. Mylabathula has already had numerous costs awards made against him in this matter. In addition, as counsel for RBC noted, Mr. Mylabathula has engaged in approximately thirty court cases over the last twenty-five years or so. He is well aware of the potential for cost consequences, and that those cost consequences can be significant.

[24] This brings me to the final point I must address, which is Mr. Mylabathula’s claim that he is a pensioner on a small income. There are two problems with that submission. First, there is no evidence as to what the quantum of the “small” pension is. Second, there is no evidence as to whether Mr. Mylabathula has assets beyond his house that he can use to satisfy these costs.

[25] On a related point, I note the fact that Mr. Mylabathula has already paid significant costs to RBC is not relevant to the decision I am making at this point. The costs have been incurred for all parts of the action, and RBC is entitled to be compensated for those costs.

[26] For all of these reasons, I conclude that Mr. Mylabathula should pay the sum of $25,000.00 inclusive of HST and disbursements for the costs of the steps between December 31, 2024 and the resolution of this matter.

Conclusion

[27] For the foregoing reasons, I order Mr. Mylabathula to pay the all-inclusive sum of $25,000 to RBC on account of the costs of this action between December 31, 2024 and the conclusion of the action.

Released: July 18, 2025

Robert Smith LeMay