Michael M. Title

The appellant, Gerard Lee, former CEO of Lalu Canada Inc., appealed the dismissal of his application for advance funding of legal costs to defend a fraud action.

The application judge denied funding, finding a strong prima facie case of fraud against Lee regarding "acquisition fees" he had received.

The Court of Appeal dismissed the appeal, upholding the application judge's interpretation of the consulting agreement and assessment of evidence regarding concealment.

The court also affirmed the application judge's application of the "strong prima facie case" test for denying advance funding, finding it commensurate with the stringent standard required.

The plaintiff, Hakim Optical Co. Limited, sought costs on a substantial indemnity basis after being wholly successful in a prior motion.

The court reviewed the submitted bill of costs, found it reasonable and proportionate, and awarded partial indemnity costs of $10,821.31 to Hakim Optical Co. Limited, payable forthwith by the defendant, Helen Phillips, after considering Rule 57.01 of the Rules of Civil Procedure.

The plaintiff moved for an order for payment out of court of monies paid by the deceased defendant, including costs and interest, and for a finding that the default judgment stands due to the defendant's dilatory conduct.

The defendant's representatives sought an adjournment to contest the original service from 2005 and to regularize the action.

The court denied the adjournment, finding the defendant had ample opportunity to challenge the default judgment and service over 12 years.

The court exercised its discretion under Rule 9.03(6) to permit payment out despite the lack of a formal Order to Continue for the deceased defendant's estate.

The default judgment was affirmed, and the plaintiff was granted payment of all outstanding costs and the monies held in court.