Court File and Parties

Court File No.: CV-25-261 Date: 2026/02/20

Ontario Superior Court of Justice

Between:

Dale Glass, Applicant

– and –

Renzo Silveri and 1897840 Ontario Limited, Respondents

Counsel:

A. Maddeaux, Counsel for the Applicant

R. Shastri, Counsel for the Respondent Renzo Silveri

Heard: By written and oral submissions on February 6, 2026

Decision on Costs

D. J. Nadeau J.

[1] The Applicant Dale Glass ("Glass") commenced the within Application on December 24, 2025, seeking leave to commence a Derivative Action on behalf of 1897840 Ontario Limited ("189 Ltd.") against the Respondent, Renzo Silveri ("Silveri"). Silveri was served with the 106 page Application Record on December 31, 2025. The Application had a return date of January 16, 2026.

[2] On January 2, 2026, Counsel for Glass served a Confirmation of Application confirming that the Application to be heard on January 16, 2026 will proceed for a hearing of the following issues only:

a) An order for leave for derivative action made by the Applicant, Dale Glass, against the Respondents, Renzo Silveri and 1897840 Ontario Limited;

b) Pre-judgment interest and post-judgment interest on the amounts referred to above pursuant to section 128 and 129 of the Courts of Justice Act, RSO 1990 c.43. as amended;

c) Costs of this Application on a substantial indemnity basis plus applicable taxes; and

d) Such further and other relief as this Honourable Court deems just.

The time required for the Application will be thirty (30) minutes for the Applicant, and thirty (30) minutes for the Respondents, for a total of sixty (60) minutes.

[3] In the Notice of Intention to Commence Derivative Proceedings (the "Notice"), which was delivered to counsel for Silveri by email on August 26, 2025, Glass asserts that;

"Mr. Silveri's violations of the shareholders of 189 Ltd.'s reasonable expectations were manipulative, deceptive, and exploitative. Furthermore, these violations caused the shareholders to lose an opportunity to realize additional profits from the joint venture. Mr. Silveri's conduct was oppressive, unfairly prejudicial to, and unfairly disregarded the shareholders' interests, all of which was in breach of their reasonable expectations.

Demands for Action

To that extent, and without prejudice to my client's rights to bring a derivative action, Mr. Glass demands that you take the following immediate reasonable steps to minimize legal liabilities and mitigate further financial losses:

1. Mr. Silveri voluntarily resigns as a director of 189 Ltd.;

2. Mr. Silveri pays 189 Ltd. $5,500,000.00 in damages for breach of contract and unjust enrichment;

3. Mr. Silveri pays 189 Ltd. $4,000,000.00 in damages for lost profits;

4. Mr. Silveri surrenders his 15% share of PWN to 189 Ltd. in damages for breach of fiduciary duty; and

5. Mr. Silveri pays 189 Ltd. $2,450,000.00 in damages for shareholder oppression.

Please be advised that this letter serves as due notice of our client's intention to seek leave to bring a derivative action as set out in this letter if you refuse to comply with the demands outlined above...

This correspondence may be relied on in relevant legal proceedings."

[4] On January 12, 2026, Counsel for Silveri served the Applicant with their 130 page Responding Application Record as well as their Factum to the Application proper and also another Factum for their adjournment request. Counsel for Silveri also served an Amended Confirmation confirming a contested adjournment, and that this matter will require at a minimum a half day for argument.

[5] The Application of Glass to seek leave for derivative action against Silveri was abandoned on January 15, 2026 pursuant to Rule 38.08 of the Rules of Civil Procedure ("Rules"). Pursuant to Rule 38.08(3) of the Rules;

"Where an application is abandoned or is deemed to have been abandoned, a respondent on whom the notice of application was served is entitled to the costs of the application, unless the court orders otherwise."

[6] On January 16, 2026, the Motions Judge endorsed "The Applicant filed a Notice of Abandonment of the Application. That leaves the outstanding issue of costs." A timetable for written submissions was agreed to.

[7] Silveri seeks his costs of the Abandoned Application in accordance with R. 38.08(3) which costs should be payable on a full indemnity basis, fixed at $57,647.85, in accordance with their Costs Outline. In the alternative on a substantial indemnity basis fixed at $51,948.41, or in the further alternative, on a partial indemnity basis, fixed at $34,850.10.

[8] Glass submits that there are grounds to waive any costs incurred by Silveri prior to the abandonment of the Application. In paragraph 4 of their Costs Submissions, Counsel for Glass provides three authorities from this Court where discontinuing an action or abandoning an application on a without costs basis was granted. The most recent case authority, Morley et al. v. Morley et al. 2013 ONSC 1595, deals with the abandonment of an application and Rule 38.08(3) as I have here. In the alternative, Glass submits that the incurred costs of the Respondent in the preparation of responding materials in advance of this Application are patently unreasonable.

[9] The first issue here is whether Silveri is entitled to the costs of the abandoned Application or whether this Court "order otherwise". Secondly, if Silveri is entitled to costs, then on what scale?

[10] The Rule entitling the Respondent to costs where the Applicant elects to abandon an application is readily justifiable. A respondent is put to trouble and expense in responding to a claim. If the applicant then elects not to carry on with that claim, the respondent should be entitled to compensation for having been put to such trouble and expense. Such a result also accords with the general principle that costs should normally follow the event. In other words, a successful litigant should normally be entitled to compensation on some level for the costs incurred in either prosecuting or defending the litigation. The abandonment of a claim prima facie represents some measure of success for the respondent.

[11] Having said that, costs virtually always remain in the discretion of the Court and Rule 38.08(3) is no exception – the discretionary element of the rule is maintained by the phrase "unless the court orders otherwise". Accordingly, it remains open to the Court to examine the circumstances of the case and exercise its discretion so as to do justice to the facts of the particular case.

[12] The parties agree about the appropriate test to be applied by the Court in the exercise of its discretion to depart from the basic rule which, on its face, entitles the Respondent to their costs. From the abandonment of the application in the Morley decision;

"31 In Provincial Crane Inc. v. AMCA International Ltd. (1990), 44 C.P.C. (2d) 46, a case dealing with the former rule 23.05, Henry J. granted leave to the plaintiff to discontinue without costs:

The rule thus contemplates that, while the defendant will ordinarily be entitled to costs when the plaintiff discontinues the action, the court has a discretion to depart from the ordinary rule. That is a matter for the exercise of the court's discretion to be made in accordance with principle on the facts of the particular case.

In order to establish that it ought to be relieved of costs in the court's discretion it is my opinion that, at this early stage of the action, the plaintiff must satisfy the court that the material filed discloses a bona fide cause of action that is not frivolous or vexatious which the plaintiff has some justification to commence, having regard to the conduct of the defendant. Since the court cannot, at this early stage, make final findings of fact or credibility, the court is left to determine if, notwithstanding conflict, there is some evidence to justify the commencement of the action whether or not it can be said that the action may or may not ultimately succeed.

32 Each case is to be decided on its own facts, looking at the circumstances to determine whether it is appropriate to depart from the ordinary rule.

33 Exceptional circumstances are not necessarily required in order to depart from the ordinary rule. Rather, what is required is assessing the circumstances to determine, on a balance of probabilities, whether the plaintiff or applicant has satisfied the court that it had a bona fide cause of action that was not frivolous or vexatious and that there was some justification to commence the proceeding.

34 "Unless the court orders otherwise" requires the court to look at the circumstances and, in the exercise of its discretion over issues of costs, assess whether the plaintiff has established the above.

35 In assessing the circumstances, the court will as well assess the circumstances surrounding the abandonment. Why the proceeding was abandoned and in what circumstances, are relevant considerations."

[13] Counsel for the Applicant submits that Glass has established, on a balance of probabilities, that:

(1) Glass had a bona fide cause of action;

(2) there was justification for the commencement of the Application, regardless of its prospect for success; and

(3) the Application was not frivolous or vexatious.

[14] As outlined in paragraphs 6 through to 38 of their Cost Submissions dated January 26, 2026, Glass submits the test for waiving the costs of their abandoned Application has been satisfied. It is further submitted that costs should not be awarded against Glass for properly commencing an Application, when he was subsequently forced to abandon same in light of the Respondent's conduct in not agreeing to waive the limitation argument which was central to Silvani's defence.

[15] As outlined in paragraph 2 of Silveri's Reply Submissions on Costs of the Abandoned Application, Counsel for Silveri submits that there was no bona fide cause of action, the cause of action was stale-dated and statutorily deficient as well as being without justification primarily having regard to the expiration of the applicable limitation period. It is further submitted that this matter is in no way similar to the facts in Blenkhorn v. Mazzawi, 2010 ONSC 699.

[16] On this first issue of whether Silveri is entitled to the costs of the abandoned Application here, I essentially agree with these arguments of Silveri as outlined in their submissions and therefore I have not been satisfied to order "otherwise". Upon my review, especially in light of the limitation defence arguments, Glass has not established on a balance of probabilities that the material filed discloses a bona fide cause of action that is not frivolous or vexatious which the plaintiff had some justification to commence the Application whether or not it can be said that it may or may not ultimately succeed. Therefore Silveri is entitled to the costs of this abandoned Application, and the remaining issue is the quantum and at what scale should Silveri's costs be awarded.

[17] This Court's exercise of discretion for costs determinations is founded in s. 131 of the Court of Justice Act:

"the costs of and incidental to a proceeding or a step in a proceeding are in the discretion of the court, and the court may determine by whom and to what extent the costs shall be paid."

[18] Costs awards are "quintessentially discretionary.": Restoule v. Canada (Attorney General), 2021 ONCA 779, at para. 344, relying on Nolan v. Kerry (Canada) Inc., 2009 SCC 39, at para. 126.

[19] Traditionally, the purpose of an award of costs within our "loser pay" system was to partially or, in some limited circumstances, wholly indemnify the winning party for the legal costs it incurred. However, costs have more recently come to be recognized as an important tool in the hands of the court to influence the way the parties conduct themselves and to prevent abuse of the court's process. Specifically, the three other recognized purposes of costs awards are to encourage settlement, to deter frivolous actions and defences and to discourage unnecessary steps that unduly prolong the litigation: 1465778 Ontario Inc. v. 1122077 Ontario Ltd., 82 O.R. (3d) 757 (C.A.), at para. 26.

[20] In the civil law context, the relevant factors in that exercise of discretion to fix costs is outlined in Rule 57.01(1) as follows:

"57.01(1) Factors in discretion – 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 separated 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."

[21] Absent special circumstances, costs follow the event. "It is worth repeating that a costs award does not have to be measured with exactitude; rather, it should reflect a fair and reasonable amount that should be paid by the unsuccessful parties.": Butler v. Royal Victoria Hospital, 2018 ONCA 409, at para. 18.

[22] In exercising discretion, the "overriding principle" in fixing costs is to fix an amount that is "fair and reasonable": Boucher v. Public Accountants Council for the Province of Ontario (2004), 71 O.R. (3d) 291 (C.A.), at para. 24; see also, Zesta Engineering Ltd. v. David Cloutier, at para. 4; Coldmatic Refrigeration of Canada Ltd. v. Leveltek Processing LLC (2005), 75 O.R. (3d) 638 (C.A.), at para. 8.

[23] As recently outlined in Apotex Inc. v. Eli Lilly Canada Inc., 2022 ONCA 587;

"59 The relevant principles to be applied in a court's exercise of its discretion to award costs under s. 131 of the Courts of Justice Act, R.S.O. 1990, c. C.43 are well established. They include the myriad factors enumerated in rule 57.01(1) of the Rules of Civil Procedure, such as: the result achieved, the amounts claimed and recovered, the complexity and importance of the issues in the proceeding, as well as "any other matter relevant to the question of costs". This is not a mechanical exercise or a rubber stamp.

60 A proper costs assessment requires a court to undertake a critical examination of the relevant factors as applied to the costs claimed and then "step back and consider the result produced and question whether, in all the circumstances, the result is fair and reasonable": Restoule v. Canada (Attorney General), 2021 ONCA 779, 466 D.L.R. (4th) 2, at para. 356, citing Boucher v. Public Accountants Council (Ontario) (2004), 71 O.R. (3d) 291 (C.A.), at para. 24. However, as this court recently reiterated in Restoule, at para. 357, referencing Murano v. Bank of Montreal (1998), 163 D.L.R. (4th) 21 (Ont. C.A.), at para. 100, "this overall sense of what is reasonable 'cannot be a properly informed one before the parts are critically examined'".

61 The overarching objective is to fix an amount of costs that is objectively reasonable, fair, and proportionate for the unsuccessful party to pay in the circumstances of the case, rather than to fix an amount based on the actual costs incurred by the successful litigant: Boucher, at para. 26.

62 While the reasonable expectation of the parties concerning the amount of a costs award is a relevant factor that informs the determination of what is fair and reasonable, it is not the only, determinative factor and cannot be allowed to overwhelm the analysis of what is objectively reasonable in the circumstances of the case. To hold otherwise would result in the means of the parties artificially inflating costs with the concomitant chilling effect on access to justice for less wealthy parties. As this court cautioned in Boucher, at para. 37: The failure to refer, in assessing costs, to the overriding principle of reasonableness, can produce a result that is contrary to the fundamental objective of access to justice. The costs system is incorporated into the Rules of Civil Procedure, which exist to facilitate access to justice. There are obviously cases where the prospect of an award of costs against the losing party will operate as a reality check for the litigant and assist in discouraging frivolous or unnecessary litigation. However, in my view, the chilling effect of a costs award of the magnitude of the award in this case generally exceeds any fair and reasonable expectation of the parties."

[24] Fixing the appropriate costs award requires a two-part analysis. Firstly, I must undertake a critical analysis of the relevant factors in exercising my discretion including relative success or failure, Rule 57.01(1), and any other matter relevant to the question of costs claimed. Secondly, and only then, am I to "step back and consider the result produced and question whether, in all the circumstances, the result is fair and reasonable." And in this two-part analysis, the failure to consider and undertake a critical analysis of the relevant factors before "stepping back" is an error.

[25] As indicated earlier and from their Costs Outline, Silveri seeks his costs payable on a full indemnity basis fixed at $57,647.85. Counsel for Silveri submitted the following;

"The Applicant sought to commence a claim against Silveri valued at in excess of $11,950,000. Faced with such an illegitimate claim, Silveri had no option other than to marshal the best defence available to him. That defence, as evidenced by his substantial materials ultimately resulted in the abandonment of the proceeding launched against him. Silveri was totally successful."

[26] The following was also submitted;

"In the within circumstances, not only did Silveri need to initially address an improperly constituted Application brought without authority but also responded forcefully in a compressed duration to Glass' purported Application for leave. Where an initiating party cranks up the "war machine" and then abandons that proceeding on the eve of the hearing date, it should be responsible for full indemnity costs arising from its misadventure."

[27] Counsel for Glass submitted the following;

"43. In the alternative, Mr. Glass submits that the incurred costs of the Respondent in the preparation of responding materials in advance of the Application are patently unreasonable. Mr. Silveri maintains that he has expended resources in excess of fifty thousand (50,000) dollars.

44. The discontinued Application did not proceed to a hearing on the merits, did not involve examinations, an evidentiary record, and was resolved at an early procedural stage before this Honourable court rendered any judgment or decision in respect of the issues contained therein.

45. In Apotex Inc. v. Eli Lilly Canada Inc., 2022 ONCA 587 the Court explained:

"Costs that are reasonable, fair, and proportionate for a party to pay in the circumstances of the case should reflect what is reasonably predictable and warranted for the type of activity undertaken in the circumstances of the case, rather than the amount of time that a party's lawyer is willing or permitted to expend ... [t]he party seeking costs bears the burden of proving them to be reasonable, fair, and proportionate ... The material provided for the assessment must allow the court to come to a conclusion as to the amount of time reasonably required by the party seeking costs to deal with all aspects of the proceedings for which costs are claimed, including whether there was over-lawyering or unnecessary duplication of legal work".

46. The work undertaken by the Respondent's counsel was largely confined to;

a. procedural correspondence;

b. adjournment positioning;

c. limitation-period arguments raised in anticipation rather than response; and

d. defensive preparations that were neither tested nor required by the Court.

47. In these circumstances, the quantum claimed is disproportionate to the procedural complexity, scope, and duration of the Application.

48. The Respondent has failed to demonstrate that the fees claimed were reasonably incurred or necessary in light of the procedural posture of the matter and its extremely early discontinuance.

49. The Applicant submits that awarding costs on the basis of such an inflated claim would be inconsistent with the principles of proportionality, reasonableness, and fairness. Moreover, an awarding of the excessive costs sought in the present matter would be to reward over lawyering, which the Courts are careful to discourage."

[28] From Apotex, Counsel for Silveri responded as follows;

"[71] In assessing what was reasonable, fair, and proportionate for the losing party to pay in the particular circumstances of this case, the motion judge properly considered the relevant factor of the reasonable expectations of the parties. He also noted that Apotex had not revealed costs it had incurred and inferred from this that its legal fees were similar to those incurred by Eli Lilly. While the lack of disclosure of Apotex's costs is not dispositive of the issue of reasonableness, the amount of its own costs is nevertheless a relevant factor that informs the reasonableness of the parties' expectations as to the amount the losing party could reasonably be expected to pay."

[29] The Ontario Court of Appeal in Bondy-Rafael v. Potrebic, 2019 ONCA 1026, indicated at paragraph 57:

"[P]artial indemnity fees are not defined in terms of an exact percentage of full indemnity fees under the Rules of Civil Procedure. While representing a portion of full indemnity costs, that portion has never been defined with mathematical precision but generally amounts to a figure in the range of more than 50 percent but less than 100 percent. This is as it should be given the myriad factors that the court must consider in the exercise of its discretion in fixing costs."

[30] The Court of Appeal for Ontario's decision in Whitfield v. Whitfield, 2016 ONCA 720 is instructive in this regard as follows:

"[22] We agree with the respondent's submission. Unless full indemnity costs are warranted, it would be an error in principle to grant an award of costs said to be on a partial indemnity basis that is virtually the same as an award on a substantial or full indemnity basis. The appellant's argument has been previously rejected by this court: see Boucher v. Public Accountants Council for the Province of Ontario (2004), 71 O.R. (3d) 291, [2004] O.J. No. 2634 (C.A.), at para. 36; Wasserman, Arsenault Ltd. v. Sone, [2002] O.J. No. 3772, 164 O.A.C. 195 (C.A.), at para. 4; 790668 Ontario Inc. v. D'Andrea Management Inc., [2015] O.J. No. 4018, 2015 ONCA 557, 336 O.A.C. 383, at paras. 21-23.

[23] To order otherwise would remove the distinction between partial indemnity and substantial or full indemnity costs and overcompensate the appellant. Partial indemnity costs are simply that: partial and not full compensation for a party's costs. Substantial indemnity provides far greater compensation and full indemnity results in complete reimbursement for costs. As a result, absent applicable settlement offers, substantial and full indemnity costs are reserved for rare and exceptional cases."

[31] Upon my close examination of these specific circumstances and Counsel for Silveri's Costs Outline, I do not see this abandoned Application to be one of those rare and exceptional cases where substantial or full indemnity costs of this amount are justified. The Whitfield decision provides this guidance on the question of quantum and what amount of partial indemnity costs should be awarded:

"[29] What discount should be applied is within the discretion of the court and not a matter of a precise mathematical calculation. As this court noted in Wasserman, at para. 5: The degree of indemnification intended by an award of partial indemnity has never been precisely defined. Indeed, a mechanical application of the same percentage discount in every case where costs are awarded on a partial indemnity scale would not be appropriate. In fixing costs, courts must exercise their discretion, with due consideration of the factors set out in rule 57.01(1), in order to achieve a just result in each case."

[32] I agree that a costs award should follow the overall outcome of a hearing. I have also not been made aware of any offer to settle this abandoned Application. I have also considered the principle of indemnity including 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, the amount of costs that an unsuccessful party could reasonably expect to pay in relation to this step in the proceeding, the complexity of the proceeding, and the importance of the issues as well as the conduct of any party.

[33] Having undertaken my critical analysis of the relevant factors here as applied to the costs claimed, and then stepping back and considering the result produced as well as the application of the principle of proportionality and questioning whether, in all these circumstances, the result is fair and reasonable, I have been satisfied to fix an award of costs for this abandoned Application in the amount of $30,000, all-inclusive of fees, disbursements and HST, to be payable by the Applicant to the Respondent Renzo Silveri within 30 days.

The Honourable Justice David Nadeau

Released: February 20, 2026