Court File and Parties

Newmarket Court File No.: FC-17-54359 and CV-22-3267-00

Date: August 22, 2025

Ontario Superior Court of Justice

Between:

Rae Marie Ierullo, Applicant

– AND –

Vito Ierullo, Respondent

– AND –

Mulberry Hills Realty Inc., Added Respondent

Vito Ierullo, Plaintiff

Rae Marie Ierullo and Forever Thyme Sanctuary, Defendants

Aeden Erica MacLean, Defendant

Counsel:

Martha McCarthy and Joy Casey, Counsel for the Applicant

Jaret Moldaver, Counsel for the Respondent

Christopher Gibson, Counsel for the Added Respondent in FC-17-54359 and CV-22-3267-00

Sean Zeitz and Trung Nguyen, Counsel for the Plaintiff Vito Ierullo in CV-22-3267-00

Joy Casey, Counsel for the Defendants Rae Marie Ierullo and Forever Thyme Sanctuary in CV-22-3267-00

Gwendolyn Adrian, Counsel for the Defendant Aeden Erica MacLean in CV-22-3267-00

Heard: In writing

Ruling on Costs

D.A. Jarvis, J.

Introduction

[1] This ruling deals with the costs of a combined family and civil trial for which Reasons for Decision were released on May 30, 2025. Counsel subsequently alerted the court to several calculation and factual errors. The court directed, and received, further submissions from the parties. A corrigendum was issued on July 22, 2025, and incorporated in the corrected Reasons.

[2] This was a complicated fourteen-day trial. Apart from determining which spousal party owed an equalization payment to the other and determining the amount owed (the parties differed by more than $10,500,000), unequal division was claimed, post-valuation date adjustments needed to be calculated, there were numerous sub-issues and consideration of the tolling of a limitation period was involved. In addition, the husband advanced claims of fraud and oppression against the wife, a company (Mulberry) in which he and the wife were equal shareholders, her daughter (MacLean) from a previous marriage and a horse sanctuary operated by the wife and daughter. Seven experts were involved. The husband also started a civil action against the wife and MacLean seeking relief for fraudulent conveyancing of realty by the wife and MacLean. There were numerous delays leading up to the trial, serial amendments (or efforts to amend) pleadings, and mid-trial rulings dealing with the admissibility of expert evidence and (at least) one witness.[^1]

[3] In the end, the husband was ordered to pay the wife an equalization payment of $1,054,267 and the wife was ordered to pay the husband $1,000,000 as compensation for oppression and punitive damages, a $54,267 difference. In addition, orders were made for the sale of jointly owned realty, one of which (a chalet owned by the wife) the husband was found to be a 50% beneficial owner.[^2] All other claims, including the husband's fraudulent conveyance action, were dismissed. Given the parties' divided success, I noted that I was disinclined to award costs but, if any party disagreed and was unable to resolve costs, directions were given for their submission. The parties were also directed to deliver one set of submissions for the combined proceedings.

[4] The parties were unable to resolve costs on all the disputed issues. With one exception, neither spousal party seeks costs with respect to the family component of the proceedings. MacLean seeks costs against the husband in the civil component.

Costs Claims

[5] The wife and the Forever Thyme Sanctuary ("FTS") seek costs from the husband in the amount of $64,114.11 on a full indemnity basis or, in the alternative, $48,703.74 on a partial indemnity basis ("the wife's claim"). She claims costs arising from a pre-trial Case Management Ruling (#4) dated August 11, 2023, relating to motions by the husband to further amend his family and civil pleadings, and for costs of a disclosure motion heard then too relating to the parties' professional wealth advisers and a wealth management company from whom the husband sought disclosure; costs were awarded to the wife to be determined after final disposition (the hearing was in writing). It is also her position that the civil action involving the farm (and other properties) could and should have been pursued in the matrimonial proceeding, that the husband had already made an oppression claim in that proceeding (in which he achieved some success) and that the action was unnecessary. The wife's claim is supported by a Bill of Costs' summary that sets out a brief description of the services rendered, Ms. Casey's time spent, her experience and the applicable partial indemnity and actual hourly rates charged. A statement of disbursements accompanied the Bill. It also recognizes (as the wife acknowledged) that it is impossible to neatly segregate the time spent on each of the combined actions such that the Bill claims no costs for the civil trial preparation, trial time or written closing arguments, except for preparation of the trial affidavit of the wife. As there was no reference to an offer to settle the civil action being made, none is assumed. If any such offer was made as part of the combined proceeding, likely it captured the civil action, but that is not being considered.

[6] Separately, MacLean seeks substantial costs of $219,805.24 against the husband. This comprises $184,632.98 for fees (on a substantial indemnity basis), $11,169.97 for disbursements and $24,002.29 for HST. She submits that she was the only party wholly successful in the litigation, that since the husband's claims alleging quasi-criminal behaviour such as fraud were dismissed, she is entitled to a higher-end costs award and that, in any event, she made and "beat" an offer to settle pursuant to Rule 49 of the Rules of Civil Procedure ("RCP") that she had made shortly after the husband named her as a party in his civil action. A Bill of Costs accompanies her submissions. It summarizes the services rendered at important steps in the case (i.e., pleadings, discovery, motions and trial) and includes disbursement statements associated with each of those steps. The lawyers and law clerk who worked on the file are identified, along with their statements of experience, a description of their time spent and their partial, substantial and actual hourly rates. An Offer to Settle dated November 29, 2022, was made. It proposed that the husband agree to dismiss his claim against her on a without costs basis if accepted by a deadline about ten days later. If not accepted by the deadline, the offer remained open for acceptance after that date if the husband paid MacLean one-half of her legal fees plus disbursements. The offer was open for acceptance after the trial began and was never withdrawn.

[7] The husband submits that no costs should be awarded to any party or, if costs are awarded, they should be awarded to him in the partial indemnity amount of $104,656.83 and that, in any event, the court should decline to award MacLean costs for several reasons including that she was an active and "willing participant" with her mother in the impugned transfer of the farm property to her for which her mother was found to have acted oppressively. He also alleges that the costs claimed are grossly excessive. The husband's Bill of Costs (subtitled "Oppression") was broken down into five categories: Initial File Review, Pleadings and Discovery; Injunction and CPL Motion; Interlocutory Hearings; Trial Preparation and Attendance at Trial; and Closing Submissions. A brief description preceded each category and each of the categories identified the lawyer who worked on the file, the time spent and the lawyer's partial, substantial indemnity and actual rates. Statements of experience were provided as was a disbursement summary. No reference was made in the husband's submissions to an offer to settle being made so none is assumed.

The Law/Guiding Principles

[8] Although the trial included the husband's civil claim, its genesis was the marital relationship between the spousal parties and while neither of them seeks costs relating to the family law part of the proceeding, the general principles applicable to costs in family law cases apply equally to costs in civil actions. Four fundamental purposes are served by an award of costs: (1) to partially indemnify successful litigants for the cost of litigation; (2) to encourage settlement; (3) to discourage and sanction inappropriate behaviour by litigants; and (4) to ensure that cases are dealt with justly.[^3] This means that a party must realistically assess the merits of their claims throughout a case and consider (or reconsider) how best they can achieve their desired outcome and at what cost or risk. As this court observed in Gibbons v. Mulock:[^4]

Litigants are responsible for their litigation conduct and strategy. At each important step in a case a litigant, whether or not legally represented, must realistically assess the merits of their case, how best their desired outcome can be achieved and at what cost or risk.

[9] Finally, and as observed by the Court of Appeal in Beaver v. Hill,[^5] reasonableness and proportionality frame the exercise of the court's discretion. The amount to be awarded is what the "court views as a fair and reasonable amount that should be paid by the unsuccessful [party]": Boucher v. Public Accountants Council for the Province of Ontario.[^6]

Discussion

The Husband's Costs Claim

[10] The civil action was unnecessary. While it was prompted by the wife's conduct that the court found oppressive dealing with the Mulberry farm, and MacLean's wilful participation in that scheme, there is no reason why the husband could not have moved in the family proceeding to amend his pleadings, even at the outset of the (anticipated) November 2022 trial. An outcome not unlike that ordered by Zarnett J.A. in the husband's appeal of a pleadings amendment ruling of this court made on the eve of trial would most likely have been the result.[^7] Moreover, not only was the factual situation not so complex as to warrant even further litigation between the parties, but the claim itself overreached in seeking declarations (among many other expansive grounds of relief) that the husband had proprietary interests over the personal and real property of the wife and MacLean who had received funds from Mulberry (timeframe not pleaded) and $250,000 in punitive, exemplary and aggravated and/or special damages. The effect of starting the action was, in my view, a strategic effort by the husband to have the November 2022 trial adjourned (whose start he opposed) and resulted in it being adjourned (the husband's desired outcome). The husband is not entitled to costs.

The Wife's Costs Claim

[11] Apart from the costs relating to CMH #4, I am not persuaded that the wife should be entitled to costs. Her behaviour in not informing Daurio J. on August 3, 2022, that Mulberry had already sold the farm to MacLean when the husband's motion to join the company to the family case was being argued was, in my view, egregious and deserving of censure. Whatever her thinking, the practical effect was a pretext given to the husband to delay the November 2022 trial (which he wanted) by starting his civil action, with the unintended consequence (to her) of that being the result (which she didn't want).

[12] As for the costs associated with CMH #4, Ms. Casey's statement of account records 8.1 hours (at $500 per hour) being spent on matters relating to the husband's proposed amendment of his civil pleadings and his disclosure motion between April 12, 2023, to June 27, 2023. No comparative information is readily discernible from the husband's Bill of Costs or supporting information. No Offer to Settle was made. This was not a situation warranting substantial indemnity costs. In my view, an award at Ms. Casey's partial indemnity rate ($375 per hour), or $3,000 plus HST, is a fair and reasonable amount to be paid by the husband.

MacLean's Costs Claim

[13] MacLean's claim for costs involves different considerations. While she was, as this court found, her mother's proxy for ensuring that the farm remained under her mother's control, (even if indirectly) and an active, and willing participant in concealing the transaction from her stepfather, she was (as she submits) "a minor fact witness in the matrimonial proceeding." The husband had no interest anyway in retaining the farm; he just wanted it sold to anybody but the wife and/or MacLean. In my view, MacLean is entitled to costs but not in the amount claimed.

[14] RCP Rule 49.10(1) sets out the cost consequences of a plaintiff's failure to accept an offer and Rule 57.01(1) frames the general principles for awarding costs in civil proceedings and sets out a non-exhaustive list of considerations for the court:

49.10 (1) Where an offer to settle,

(a) is made by a plaintiff at least seven days before the commencement of the hearing of the proceeding;

(b) is not withdrawn and does not expire before the commencement of the hearing of the proceeding; and

(c) is not accepted by the defendant,

and the plaintiff obtains a judgment as favourable as or more favourable than the terms of the offer to settle, the plaintiff is entitled to partial indemnity costs to the date the offer to settle was served and substantial indemnity costs from that date, unless the court orders otherwise.

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;

(h.1) whether a party unreasonably objected to proceeding by telephone conference or video conference under rule 1.08; and

(i) any other matter relevant to the question of costs.

[15] Two additional considerations apply. The first is that "allegations of fraud and dishonesty are serious and potentially very damaging to those accused of deception."[^8] They should not be made "unless there is every reasonable likelihood that they can be proved."[^9] The husband leaped to allege fraudulent conveyancing behaviour involving MacLean without adequate foundation. Ordinarily, but not invariably, unsuccessful allegations of fraud and dishonesty will lead to a solicitor and client award of costs. The second, principal consideration is MacLean's Offer. She did "beat" her Offer as it was served at the outset of the civil action, she demonstrated a willingness to settle, and the offer was open for acceptance at the start of trial. This also, and separately from the unsuccessful allegations involving fraudulent behaviour, entitles MacLean to consideration of an award at the higher end.

[16] The husband submits that:

(a) The presumptive cost consequences of RCP Rule 49 don't apply to MacLean. The husband relies on S & A Strasser Ltd. v. Richmond Hill (Town of)[^10] as authority for the proposition that if, like this case, the husband's action is dismissed then MacLean is restricted to partial, not substantial, indemnity costs. Without deciding whether the presumptive rule applies in the circumstances of this case where no offer was made by the husband, the rule also states, "unless the court orders otherwise."

(b) Even if the Rule 49 consequences apply, the "interests of justice" require a departure from them. The husband points to the court's finding that MacLean was far from an innocent participant in what he submits was a "conspiracy" between her and her mother. MacLean was a proxy for her mother. But most of the husband's submissions focus on the court's findings about the wife's misconduct. In my view, MacLean does bear a level of responsibility for her involvement in the transaction that led to her acquisition of the farm in circumstances where she knew that her stepfather was a shareholder in Mulberry, and she chose to tell him nothing about it. This will factor into a discount being applied to her costs.

Excessive Costs

[17] The husband submits that the every-day attendance of Ms. Adrian at trial was unnecessary because many days of the trial had nothing to do with MacLean (counsel could have been excused), the hours docketed were excessive (382 hours at $415 per hour), many of the services claimed could have been undertaken by lesser qualified individuals and that at least one disbursement ($8,098.75 for document imaging) was "excessive and unreasonable."

[18] In Miziolek v. Miziolek,[^11] A.J. Goodman J. observed that:

[32] There must be practical and reasonable limits to the amounts awarded for costs and those amounts should bear some reasonable connection to the amount that should reasonably have been contemplated. I note that it is not necessary for me to have to go through the hours, or disbursements, line by line, in order to determine what the appropriate costs are. Nor is the court to second-guess the amount of time claimed unless it is clearly excessive or overreaching. I must consider what is reasonable in the circumstances, and all the relevant factors. However, when appropriate and necessary, a court ought to analyze the Bill of Costs in order to satisfy itself as to the reasonableness of the fees and expenses submitted for consideration.

[19] In my view MacLean's claim is excessive for several reasons:

(a) Except for 14.6 hours spent on legal research by a newly called lawyer (2023) and 6.75 hours spent by a law clerk revising and compiling a joint document book, Ms. Adrian performed all other work for which compensation is claimed. This would include, for example (but without limiting), all drafting, preparation and drafting of an affidavit of documents and all document reviews. There was no information/explanation as to why so much of the pre-trial services for MacLean had to be performed by such a senior counsel as Ms. Adrian.

(b) A total of 382 hours (out of a total of 482.6 hours) was recorded for trial which included reviewing correspondence, exchanging emails with MacLean and counsel, reviewing caselaw, preparing and attending at trial and reviewing and drafting documents. As the trial was 14 days in length, this means that over 27 hours were spent for each day of trial. At least one, possibly two, trial days, did not involve the full day. No dockets were provided with which to better inform the court about what comprised the total recorded for trial. This is an example of when, as in Miziolek, the court would need to scrutinize the Bill of Costs more closely. Unfortunately, that information was not provided.

(c) Only one of the fourteen principal trial issues involved the farm. At the end of every day, the court canvassed with counsel the witness(es) proposed for the next day. Not all the trial days involved evidence or events impacting MacLean.

(d) No supporting information was provided with respect to MacLean's $9,267.39 claim for disbursements, which includes $8,098.75 for document imaging. There were thousands of documents imaged for the trial, a significant number of which were duplicated by the parties. I do not see why so great of a disbursement was needed by MacLean as claimed. There will be an award of $5,000 for this claim.

[20] It is not possible to dive more deeply into the finer points of MacLean's claim. I can only make a global award. In my view, a fair and reasonable amount to award her for fees and related non-disbursement services would otherwise be $100,000 plus $5,000 for disbursements, before HST. However, a discount is in order related to MacLean's actions associated with Mulberry's transfer of the farm to her in the circumstances described in the trial judgment. Her fees shall be reduced by an admittedly arbitrary factor of 25% to $75,000. Disbursements of $5,000 shall be added to that amount as well as HST of $10,400.