Court File and Parties

Court File Nos.: CV-17-5302 and CV-17-1481

Date: October 17, 2025

Ontario Superior Court of Justice

Between:

Aleardo Caroti, Jacinta Caroti, Ian Grounds, Moraig Grounds, Nancy Kostelac, Brian McDowell, Biljana Nizalek, Marielle Pelchat-Morris, Wilma Jesus, Monica Savona and Mike Klecina in his capacity as Estate Trustee of the Estate of Boris Klecina (also known as Borislav Klecina), Plaintiffs

And:

Anthony Vuletic, John Vuletic, Mira Vuletic, Embleton Properties Corp., 1857325 Ontario Ltd., and Brampton G&A Holdings Inc., Defendants

And Between:

Anthony Vuletic, John Vuletic, Mira Vuletic, Embleton Properties Corp. and 1857325 Ontario Ltd., Plaintiffs by Counterclaim

And:

Aleardo Caroti, Jacinta Caroti, Ian Grounds, Moraig Grounds, Nancy Kostelac, Brian McDowell, Biljana Nizalek, Marielle Pelchat-Morris, Wilma Jesus, Monica Savona, Milena Boland, Frank Demaria, Jurica Biondic, Renato Biondic, Roberta Biondic, Mike Klecina in his capacity as Estate Trustee of the Estate of Boris Klecina (also known as Borislav Klecina), Anna Bilich, Emma Faria, Katarina Granic, Anton Granic, Marianne Martinovic, Frank Samardzic and Robert Sokic, Defendants by Counterclaim

And Between:

Milena Boland, Frank Demaria, Jurica Biondic, Renato Biondic and Roberta Biondic, Defendants by Counterclaim

And:

Anthony Vuletic, John Vuletic, Mira Vuletic, Embleton Properties Corp. and 1857325 Ontario Ltd., Defendants by Counterclaim

And Between:

Peter Pichelli, Todd Leslie, Frank Toth and 958041 Ontario Limited, Plaintiffs and Defendants by Counterclaim

And:

Ante Kegalj, Anthony Vuletic, John Vuletic, Embleton Properties Corp., 1857325 Ontario Ltd. and Brampton G&A Holdings Inc., Defendants

Before: M.T. Doi J.

Counsel:

Alfred J. Esterbauer, Agents for Clyde & Co., Lawyers of Record for Milena Boland, Frank Demaria, Jurica Biondic, Renato Biondic and Roberta Biondic, and Agents for Davis Webb LLP, Lawyers of Record for Robert Sokich and Jose Faria

Asher G. Honickman, for Anton Granic and Katarina Granic

Caroline Abela, for Aleardo Caroti, Jacinta Caroti, Ian Grounds, Moraig Grounds, Nancy Kostelac, Brian McDowell, Biljana Nizalek, Marielle Pelchat-Morris, Wilma Jesus and Monica Savona

Andrew J. MacDonald, for Anna Bilich

Douglas M. Cunningham, for Peter Pichelli, Todd Leslie, Frank Toth and 958041 Ontario Limited

Heard: In Writing

Costs Endorsement

(for Distribution Motion heard June 18, 19 and 20, 2024)

Overview

[1] On December 6, 2024, I released my decision for the distribution motion heard on June 18, 19 and 20, 2024 to determine the allocation of competing claims over preserved funds that were paid into court: Caroti v. Vuletic, 2024 ONSC 6776. The preserved funds were subject to equitable lien claims by the parties who settled their claims before trial (the "Settling Parties"), as well as constructive and resulting trusts granted to the parties who took their claims at trial (the "Trial Parties"). In deciding the motion, I granted judgment to the Settling Parties and priority over the distribution of the preserved funds to the Trial Parties. Following a case conference, the parties delivered written submissions on costs. This is my decision on costs for the distribution motion.

Legal Principles

[2] The court has broad discretion in deciding costs: s. 131(1) of the Courts of Justice Act, RSO 1990, c. C.43. Rule 57.01(1) sets out the factors for the court to consider in exercising its discretion to award costs: Ontario v. Rothmans Inc., 2013 ONCA 353 at para. 134. Awarding costs is intended to promote three primary objectives: (1) to indemnify successful litigants for the cost of litigation; (2) to encourage settlement; and (3) to discourage and sanction inappropriate behaviour by litigants: Fong v. Chan at para. 22.

[3] The awarding of costs is not an exact science. The overarching principle is that costs must be fair, reasonable and proportionate to the issues, complexity, conduct of the parties, and result achieved: Boucher v. Public Accountants Counsel for Ontario at paras. 35, 37-38; Davies v. Clarington (Municipality), 2009 ONCA 722 at para. 52; Rule 1.04(1.1); NDrive, Navigation Systems v. Zhou, 2021 ONSC 7772 at paras. 7-10. The court may appropriately consider the experience of counsel, the rates charged, and the hours spent on a case, subject to the overriding principle of reasonableness in the circumstances of a particular case: Davies at para. 51. Rather than embody a purely mathematical exercise, an award of costs is to reflect a fair and reasonable amount that an unsuccessful party should pay instead of any measure of actual costs that a successful party incurred: Davies at para. 52; Pye v. Di Trapani, 2025 ONCA 355 at para. 3.

The Motion

[4] In this case, the distribution motion involved multiple parties and submissions presented by several counsel on complicated issues that were vigorously contested.

[5] After a lengthy trial from mid-September 2021 to mid-January 2022, the Trial Parties succeeded with their fraud, breach of fiduciary duty, conspiracy, and unjust enrichment claims against the Defendants. The total judgment awarded for the trial, together with costs and interest, came to over $17.5 million that will not be satisfied by the over $11.2 million in funds that were paid into court and preserved with accrued interest.

[6] The Settling Parties, like the Trial Parties, were investors who gave funds to the Defendants for a land development project. The Defendants defrauded both groups of parties who lost their investments in the project.

[7] The Settling Parties reached settlement agreements with the Defendants for the payment of fixed amounts and brought post-trial distribution claims to recover their respective settlements from the preserved funds. Collectively, the Settling Parties sought over $2.4 million plus interest (i.e., for a total approaching $2.8 million) from the preserved funds that would have significantly reduced the Trial Parties' share of their recovery while allowing the claims arising from the settlement agreements to be substantially recovered. [1] Given the amounts at stake, the distribution motion was very important to all parties who fully argued the motions. The Trial Parties faced a significantly diminished victory if they lost the distribution motion after seven years of arduous and expensive litigation. For their part, the Settling Parties faced the prospect of not realizing on their substantial settlements with the Defendants.

[8] Given my decision on the distribution motion, the Settling Parties successfully obtained judgment against the Defendants under their respective settlement agreements. However, they did not obtain equitable liens over the preserved funds that were ordered to be paid to the Trial Parties on a proportional or pro rata basis: Caroti at para. 140. [2]

[9] The distribution motion comprised several motions by the Settling Parties (i.e., with each based on different facts that applied to each party's case) for relief that included: a) declarations that the Settling Parties had equitable liens, constructive trusts, and purchase money resulting trusts over the preserved funds; b) declarations that the equitable interests of the Settling Parties stood in equal or higher priority to the Trial Parties; and c) payouts from the preserved funds to satisfy the Settling Parties' settlements with the Defendants. Among other things, the Biondic Group and the Granics sought substantial indemnity costs on their motions.

[10] The distribution motion was complex. The Settling Parties raised claims based on pre-trial allegations against the Defendants, sought evidentiary findings for themselves based on findings made at trial in favour of the Trial Parties, and relied on legal determinations in the trial judgment to argue that the judgment left open the possibility for them to claim a constructive trust and/or equitable relief over the preserved funds. The claims raised on the motion by the Settling Parties caused the Trial Parties to expend considerable time and resources in responding to the claims that ultimately were dismissed. In addition to dealing with multiple motions and different facts related to each of the many parties, seven years of litigation history were distilled in the record for the distribution motion that included 21 volumes with over 6,000 pages, 11 facta, over 900 pages of transcripts for the cross-examinations of 10 deponents held over five days, and over 500 pages of answers to undertakings including some that were produced after the brief of answers was filed. Although the Trial Parties filed more material than the Settling Parties, their record was organized and helpful in considering the extensive evidence and law required to properly decide the issues on the motion given the length and complexity of this matter. I add that both sides tried to realize efficiencies, avoid duplication, and facilitate the navigation of the record for the motion. That said, I am persuaded that the Trial Parties reasonably asked to conduct oral examinations (i.e., in lieu of written interrogatories, as the Settling Parties had suggested) to compile the evidentiary record for the motion to avoid inefficiencies associated with clarifying interrogatories and answers given the anticipated nature of the evidence for the motion.

[11] I find that the Settling Parties lengthened the distribution motion by pleading Rule 20 and seeking post-trial summary judgment relief on equitable grounds that was not solely based on their respective settlement agreements, instead of simply seeking to enforce their settlements. Among other things, the Settling Parties collectively ignored or exceeded the terms of their settlements by claiming a constructive trust over the preserved funds even though their settlements provided for equitable liens. They also proceeded despite the fact that the Defendants lacked authority to grant an equitable lien over the preserved funds when the settlements were reached. I accept that the lack of clarity surrounding the positions of the Settling Parties on the distribution motion and their efforts to seek relief by assuming the same position as that of the Trial Parties (i.e., as opposed to parties simply seeking to enforce settlements) led to further complexity and expense.

[12] Given how events unfolded, I find that the distribution motion likely had to be brought to determine the payout of the preserved funds in relation to the Settling Parties and the Trial Parties, respectively. That said, I accept that the Settling Parties settled on terms that essentially required the Defendants to successfully win funds at trial for the Settling Parties to recover settlement funds. In effect, the Settling Parties settled for the payment of funds the Defendants did not own when the settlements were made. Moreover, instead of arguing a distribution motion in 2020 as initially contemplated, the Settling Parties refrained from moving against the Defendants' personal assets to realize or secure their settlements. [3] Instead, the Settling Parties waited until after the Defendants lost a motion to stay the Caroti Group's action (i.e., that would have entitled them to the preserved funds), lost at trial, and then had their appeals from the trial judgment dismissed before pursuing claims against the preserved funds. Had the Settling Parties diligently moved to protect or enforce their settlements before trial, they may well have successfully enforced the settlements against the Defendants' personal assets, including a property located on Grandview Court and the Dorham-related interests that were not fully encumbered nor subject to a constructive trust at that time: Caroti at paras. 57 and 75. That would have left the Settling Parties with no need to target the preserved funds paid into court. Even after trial, the Settling Parties did not diligently enforce their settlements. In turn, the Defendants further encumbered the Grandview property and dissipated assets including $1.2 million in Dorham funds that likely were sent abroad to Croatia. In my view, the Settling Parties chose to delay the distribution motion to see whether the Defendants would succeed on the stay motion, prevail at trial, or win on appeal, before bringing the distribution motion to enforce their settlements against the preserved funds. In doing so, the Settling Parties sought to shift the consequences of their imprudent pre-trial settlements and delayed enforcement efforts onto the Trial Parties by encroaching on the preserved funds.

[13] Ultimately, in arguing the distribution motion, the Settling Parties sought to stand in the same position as the Trial Parties and use the findings from trial to their benefit without shouldering any of the burdens or costs of going to trial.

[14] The Granics made an impracticable offer to settle as it required all parties to accept the terms by which they would access preserved funds and Lot-related funds after the Trial Parties had obtained constructive trusts over the funds. A settlement was only possible if all parties to the distribution motion reached an agreement, but the Settling Parties made no global offers to settle.

Discussion

[15] The Trial Parties were successful on the distribution motion and are entitled to costs.

[16] The Caroti Group seeks costs of the distribution motion in the amount of $326,848.65 on a partial indemnity basis, the Pichelli Group seeks partial indemnity costs of $160,130.74, and Anna Bilich seeks partial indemnity costs of $41,509.14. By comparison, the partial indemnity costs for Sokich and Faria amount to $53,954.04, and the Biondic Group's partial indemnity costs come to $92,837.18 for the motion.

[17] As the decision for the distribution motion left the Settling Parties unable to recover any amounts under their settlements, they submit that the court should order the Trial Parties' costs to be paid by the Defendants whose fraudulent conduct caused loss to all investors. They also submit that it was the Defendants who initially took steps to bring the distribution motion before trial but did not ultimately pursue the motion to fund the settlements from the preserved funds. In the alternative, the Settling Parties submit that there should be no costs of the distribution motion as it presented novel or unsettled issues. In the further alternative, the Settling Parties submit that the quantum of costs sought by the Trial Parties should be substantially reduced due to the novelty of the central issues on the motion, the Trial Parties actions that unduly increased the complexity and length of the distribution motion, and the divided success on the distribution motion. The Settling Parties further submit that awarding costs against them would cause undue hardship and, therefore, be unfair and inequitable to them in circumstances where they, like the Trial Parties, are innocent investors who were defrauded by the Defendants and are unlikely to recover from the guilty parties.

[18] Given that the Settling Parties intentionally chose to delay enforcement of their settlement agreements before seeking post-trial equitable relief against the Trial Parties, I find that they should bear the financial responsibility for their litigation strategy. By choosing to pursue relief on the distribution motion (i.e., after deferring their recovery efforts when the Defendants were known to hold substantial assets for enforcement purposes), I accept that the Settling Parties caused the Trial Parties to incur significant time and expenses in responding to the motion in which the Settling Parties tried to prioritize their recovery at the Trial Parties' expense. In my view, it would be unfair to allow the Settling Parties, who lost the distribution motion, to saddle the Trial Parties with their costs for the motion by asking for the Defendants to pay them knowing that the likelihood for any recovery is slim at best for now, even though it remains to be seen whether other assets owned by the Defendants are uncovered and become the subject of any future claims.

[19] Although I accept that the facts of this case called for novel applications of legal principles, I am satisfied that the underlying equitable and contractual principles are well-established and fall outside the sort of unprecedented case where a successful party should be deprived of their costs: Tanner v. Clark, 2002 ONSC 34779 (Div. Ct.) at para. 4; affirmed ; leave to appeal denied [2003] SCR viii. Here, there were no constitutional or public interest issues nor a public institution involved that would otherwise justify ordering no costs: Yorkwest Plumbing Supply Inc. v. Nortown Plumbing (1998) Ltd. et al., 2014 ONSC 6825 (Div. Ct.) at para. 10; Bilodeau v. Ontario (Minister of Natural Resources), 2022 ONSC 4275 (Div. Ct.) at paras. 4-5.

[20] I have sympathy for the Settling Parties who were defrauded by the Defendants and clearly wanted to resolve their claims. It must not be forgotten, however, that the Settling Parties could have enforced their settlements against the Defendants and their known assets but deliberately chose not to pursue this course of action. In the circumstances, I find that any injustice associated with their inability now to obtain full recovery of their settlements is at least in part due to their own choices. I add that there is no evidence that the Settling Parties are of "modest" means or will not pursue the Defendants' other assets (i.e., such as the Dorham-related funds). On this point, I would note that the Caroti Group consists largely of working-class retirees. In any event, a party cannot expect to be immune from an order of costs based on their limited financial resources, as this would leave them free to conduct litigation as they wished without fear of costs consequences which would be contrary to the principles underlying our adversarial legal system: Weidenfeld v. Parikh-Shah, 2017 ONSC 2145 at para. 20. A party who chooses to "roll the dice" on a motion and loses must bear the adverse cost consequences of their decision: Ibid.

[21] The Trial Parties were largely but not wholly successful on the distribution motion. They successfully opposed the Settling Parties' request for equitable liens against the preserved funds, which was the central issue in dispute on the motion. However, they were unsuccessful in arguing that the Settling Parties' motions for judgment were statute-barred (i.e., as they lacked standing to raise these defences), or were a collateral attack on preservation orders granted in the actions (i.e., as the settlements clearly contemplated leave of the court being sought to affirm the settlement terms, including the equitable interests in the agreements). In addition, the Trial Parties did not prevail in arguing that the constructive and resulting trusts awarded to them at trial barred the Settling Parties from having an equitable interest in the preserved funds (i.e., as the constructive and resulting trusts did not confer complete ownership over the funds to extinguish the equitable interests claimed by the Settling Parties). Furthermore, the Trial Parties did not prevail in arguing that the Defendants' failure to formally acknowledge the equitable interests claimed by the Settling Parties under the settlements prejudiced these claims (i.e., as all parties knew of the settlement terms and the intention of the Settling Parties to seek equitable interests after the Trial Parties' interests were decided at trial), or that the Settling Parties had an obligation to intervene at the Court of Appeal (i.e., as case management orders undercut this position).

[22] The Caroti Group tried to admit and use a settlement-privileged communication that was disallowed on well-established principles that prevent the disclosure of this kind of privileged communications. The Pichelli Group unsuccessfully argued that the settlement agreements were unjust preferences as the settlements were made without prejudice to the rights of the Trial Parties or others and, therefore, did not unjustly prefer the Settling Parties. Ms. Bilich unsuccessfully argued that the Settling Parties sought to have sought a stop order under Rule 72.05 (i.e., as it was found that a stop order was not required as the issue of entitlement to the preserved funds was addressed on notice to all parties). Finally, the court denied the Caroti Group's motion for a $120,000.00 payment from the preserved funds on a quantum meruit basis for their motion to preserve the Dorham funds as the Court of Appeal previously awarded them costs for the motion.

[23] In responding to the distribution motion, the Trial Parties largely worked collaboratively to achieve efficiencies in preparing the record and streamlining and coordinating their submissions. The Caroti Group's unsuccessful quantum meruit claim represented a significant exception to this collaborative approach.

[24] I find that the costs claimed by the Pichelli Group and Ms. Bilich should not be awarded due to the mixed success of their competing claims on the distribution motion. The Pichelli Group lost the broader argument that the costs judgment should not be recovered from the preserved funds, and lost the argument that they should recover from Mira Vuletic's funds (n.b., this argument was first raised on the distribution motion and was later the subject of a further motion). After the distribution motion was decided, the Pichelli Group did not agree on the form of the order for the motion as they did not acknowledge the findings in the decision. I accept that it was not unreasonable for the Caroti Group to bring its unsuccessful quantum meruit claim on the distribution motion. The Pichelli Group did not formally move to secure any Dorham Funds yet wished, like the other parties, to avail themselves of these funds that the Caroti Group secured by bringing a motion and assuming the risk of adverse cost consequences if unsuccessful. In addition, the Pichelli Group used George JA's findings on the motion in the Caroti Group's favour to extinguish an appeal against them. Furthermore, I am satisfied that the Pichelli Group's request for costs against the Caroti Group is disproportionate to their share of the $120,000.00 amount that the Caroti Group sought in bringing its quantum meruit claim. The Pichelli Group's share of the $120,000.00 may be determined by applying their 21.87% pro rata share of the judgment to one-half of this amount (i.e., based on John Vuletic's 50% share of the Dorham Funds over which the Pichelli Group is entitled to collect on their damages), that amounts to $13,119.73. Accordingly, had the Caroti Group succeeded with the $120,000.00 quantum meruit claim, the amount that would have been payable by the Pichelli Group from their share of the Dorham Funds would have been about $13,119.73. As a result, I find the Pichelli Group's claim for $32,000.00 in partial indemnity costs (i.e., based on their 20% estimate of their total costs claim on the distribution motion) against the Caroti Group is disproportionate to their stake if they had lost this point on the distribution motion. Having regard to the divided success between the Pichelli and Caroti Groups on the distribution motion, I find that their competing costs claims are offset with the result that no costs should be awarded as between these groups for the motion.

[25] As Mr. Klecina was formerly a member of the Caroti Group before settling his claim with the Defendants shortly before trial, he argued that his former Caroti Group co-plaintiffs were obliged to pay the settlements amounts that the Defendants owed him. He did not seek to recover from the preserved funds but instead claimed $700,000.00 against only the Caroti Group's share of the preserved funds (i.e., without seeking anything from the Pichelli Group or Ms. Bilich) by asserting equitable remedies even though no such terms were included in his settlement with the Defendants. However, by settling with the Defendants, Mr. Klecina knew that he was no longer part of a lawsuit going to trial and was binding only himself and no other party to the settlement. Like other Settling Parties, he took no steps before the distribution motion to enforce his settlement with the Defendants and did not pursue their assets when they breached their settlement with him.

[26] Taking everything into account, I am satisfied that the Trial Parties should have their partial indemnity costs for the distribution motion on the following basis, with all figures including taxes and disbursements: a) $180,000.00 to the Caroti Group; b) $80,000.00 to the Pichelli Group; and c) $26,000.00 to Ms. Bilich. In my view, it is just and proportional for the Settling Parties to pay these costs on the allocations set out below based on the work product from each group or party, their positions and claims against the preserved funds on the distribution motion, and the nature and length of their submissions at the hearing, respectively.

[27] To this end, I am satisfied that the Caroti Group's costs should be paid as follows: 41% by the Biondic Group (i.e., by Jurica Biondic, Renato Biondic, Roberta Biondic and Milena Boland) on a joint and several basis; 17% by Anton Granic and Katarina Granic on a joint and several basis; 22% by Robert Sokich and Jose Faria on a joint and several basis; 19% by Mike Klecina, as Estate Trustee of the Estate of Boris Klecina; and 1% by Frank Samardzic.

[28] In addition, I am satisfied that the costs of the Pichelli Group and Ms. Bilich should be paid on the following allocations: 53% by the Biondic Group on a joint and several basis; 23% by Anton Granic and Katarina Granic on a joint and several basis; 23% by Robert Sokich and Jose Faria on a joint and several basis; and 1% by Frank Samardzic.

[29] In my view, the foregoing awards of costs reflects amounts that the Settling Parties should reasonably have expected to pay for the distribution motion in the circumstances of this case.

Date: October 17, 2025

M.T. Doi J.

Footnotes

[1] One of the Settling Parties, Mr. Klecina, confirmed before the distribution motion was heard that he was seeking payment on his settlement agreement from the Caroti Group's share of the preserved funds awarded by the judgment released on August 15, 2022. Mr. Klecina had been part of the Caroti Group until shortly before trial in September 2021 when he negotiated a settlement with the Defendants as later reflected in an executed agreement in June 2022.

[2] The order for a proportional distribution to the Trial Parties was subject to the Pichelli Group not collecting on the assets of the Defendant Mira Vuletic (i.e., as they did not sue her), and further subject to Ms. Bilich collecting only her costs judgment against Ms. Vuletic's assets.

[3] Thereafter, when the court asked the Settling Parties whether they would be moving for a distribution of the preserved funds before trial, the Settling Parties advised that they would not be bringing any such motion.