Executive Summary: Key Legal and Evidentiary Issues

• Ownership of tour boats and related assets was central to the dispute between the parties.

• Defendants made false and defamatory statements, triggering claims for reputational harm and regulatory interference.

• Injunctive relief was pursued, with related costs later awarded due to the defendants’ litigation conduct.

• Plaintiffs sought substantial indemnity costs based on alleged egregious and dishonest behaviour by the defendants.

• The court balanced previous misconduct with awarded punitive damages when assessing appropriate cost levels.

• Costs were awarded partially on a substantial indemnity basis due to litigation-related misconduct by the defendants.

Facts and outcome

The plaintiffs, 12563789 Canada Inc., Amanda Mazzotta, and Guy Patric Charrier, initiated legal proceedings against Tiki Tours International Corp., Michael Karpishka, and Gabriela Hernandez Saucedo. The dispute centered on the ownership of “Tiki boats” and allegations that the defendants had engaged in conduct damaging to the plaintiffs’ business interests and reputation.

In a prior decision from March 2025, Justice Schabas found in favor of the plaintiffs, ruling that they owned the boats in question and awarding $90,000 in damages, including punitive damages. The defendants’ counterclaim was dismissed. Following the ruling, the court received written submissions on the matter of costs.

The plaintiffs sought costs of the entire action on a substantial indemnity basis, claiming over $150,000, or alternatively on a partial indemnity basis. They also requested costs for a prior motion for injunctive relief, which had been reserved for the trial judge’s determination. The defendants opposed the elevated costs, arguing for partial indemnity only and proposing a total not exceeding $50,000.

The court reviewed the principles governing costs, emphasizing that cost awards serve to indemnify successful parties, promote settlement, and deter inappropriate conduct. While costs are generally at the court’s discretion, substantial indemnity is reserved for exceptional circumstances involving misconduct that is egregious or deserving of sanction.

In reviewing the facts, the court found that the defendants had engaged in serious misconduct, including making false and defamatory statements, misrepresentations to Transport Canada, and violating a court order. While these acts justified punitive damages—which had already been awarded—the judge considered whether they also warranted costs on a higher scale.

Justice Schabas concluded that although the misconduct was serious, substantial indemnity costs for the entire proceeding were not appropriate given the prior award of punitive damages. However, he found it justifiable to award substantial indemnity costs for the 2024 injunctive relief motion specifically, which had been triggered by the defendants’ litigation conduct. For the broader proceeding, partial indemnity costs were deemed sufficient and proportionate.

Ultimately, the plaintiffs were awarded $115,792.20 in costs for the action on a partial indemnity basis, and $36,817.47 in substantial indemnity costs for the 2024 motion. The court noted the matter’s complexity, significance to the plaintiffs’ business, and the reasonableness of the amounts claimed, rejecting the defendants’ suggestion that the action should have proceeded under the simplified procedure. The costs award reflected both the outcome of the trial and the defendants’ conduct during litigation.