SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Han v. Li, 2013 ONSC 5691

COURT FILE NO.: CV-12-456870

BEFORE: MASTER R.A. MUIR

COUNSEL: S. Tock for the plaintiffs

C. Goldson for the defendants Li, Nissan, 1856257 Ontario Inc. and 2302344 Ontario Inc.

E. Pleet for the defendant Gang Wu

HEARD: August 8, 2013

ENDORSEMENT - COSTS

[1] This costs endorsement is in respect of a motion brought by the plaintiffs for the following relief:

(a) an order that they be granted leave to amend their amended statement of claim to add a new defendant;

(b) an order that the defendants Li, Nissan, 1856257 Ontario Inc. and 2302344 Ontario Inc. (the “Li Defendants”) serve further and better affidavits of documents; and,

(c) an order that the defendant Wen Wu produce certain documents set out in Schedule B to his affidavit of documents (the “Privilege Issue”).

[2] On August 13, 2013 I released my endorsement. I made an order on consent granting the plaintiffs leave to amend their statement of claim as requested.

[3] In addition, I partially granted the relief sought by the plaintiffs with respect to the production of documents. I made an order that the Li Defendants serve a supplementary affidavit of documents and copies of additional productions which would include all bank statements, copies of cancelled cheques and any other documents evidencing the transfer of funds by the defendant corporations, between January 2011 and June 21, 2012, relevant to the transactions in issue in this proceeding. I refused to grant the relief sought by the plaintiffs in respect of the Privilege Issue.

[4] The plaintiffs take the position that the costs of this motion should be in the cause or that no order for costs should be made. They argue that success on this motion was divided. They also take the position that the court did not completely reject the plaintiffs’ position on the Privilege Issue. Rather, the court ruled that the plaintiffs’ request was premature given the state of the evidence with respect to the plaintiffs’ fraud allegations. Finally, the plaintiffs point to the fact that they are alleging fraud against the Li Defendants and it would be unjust to order costs against the plaintiffs for this motion if their fraud allegations are ultimately proven at trial.

[5] The Li Defendants accept that success on the motion was divided but argue that they were successful on the Privilege Issue which occupied the bulk of the time spent in connection with the motion. The Li Defendants also point to an offer to settle the motion contained in a letter from counsel dated July 31, 2013. The Li Defendants offered to consent to the amendments to the statement of claim and agreed to make a further review of their records to determine whether any further relevant documents were in their possession. For these reasons, the Li Defendants take the position that they are entitled to costs on a substantial indemnity basis. Their costs outline identifies substantial indemnity costs of $9,414.32. With a reduction for the lack of complete success, the Li Defendants seek costs of $6,500.00, inclusive of HST and disbursements.

[6] The court’s general authority to award costs as between parties to litigation is found in section 131(1) of the Courts of Justice Act, R.S.O. 1990, c. C.43, which provides that costs are in the discretion of the court. Rule 57.01(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (the “Rules”) sets out a non-exhaustive list of factors the court is to consider when awarding costs. Rule 1.04(1.1) is also applicable. It requires the court in applying the Rules to make orders that are proportionate to the importance and complexity of the issues and to the amount involved in the proceeding.

[7] When dealing with costs, the overall objective for the court is to fix an amount that is fair and reasonable for the unsuccessful party who generally must pay the costs of the successful party. See Zesta Engineering Ltd. v. Cloutier, 2002 25577 (ON CA), [2002] O.J. No. 4495 (C.A.) at paragraph 4 and Boucher v. Public Accountants Council for the Province of Ontario, 2004 14579 (ON CA), [2004] O.J. No. 2634 (C.A.) at paragraph 26. In Clarington (Municipality) v. Blue Circle Canada Inc., 2009 ONCA 722 the Court of Appeal stated as follows at paragraph 52:

Rather than engage in a purely mathematical exercise, the judge awarding costs should reflect on what the court views as a reasonable amount that should be paid by the unsuccessful party rather than any exact measure of the actual costs of the successful litigant.

[8] These are the factors and principles I have considered and applied in determining the costs issues on this motion.

[9] In my view, the Li Defendants were successful on the main issue argued on this motion and are entitled to a portion of their costs. The Privilege Issue was central to the parties’ submissions and occupied the vast majority of court time. I do not view the fact that the plaintiffs may ultimately succeed against the Li Defendants in respect of their fraud claim as germane to the costs of this interlocutory motion. None of the allegations against the Li Defendants have been proven. In my view, it was premature for the plaintiffs to have raised and pursued the Privilege Issue at this time, given the state of the evidence.

[10] However, I see no basis for substantial indemnity costs. In my view, the Li Defendants did not obtain a result more favourable than their offer to settle. The offer to settle included very vague language about the Li Defendants reviewing their recollections and records and producing any additional documents that they may find. The plaintiffs were seeking very specific financial documents that were obviously within the power, possession or control of the Li Defendants and should have been included in their initial affidavit of documents. The plaintiffs should not have been forced to bring this motion in order to obtain that production.

[11] In addition, it is my view that the costs requested by the Li Defendants are excessive for a straightforward motion of this nature. The Privilege Issue was not complex from either a factual or legal perspective, although I do accept that this issue was important to the Li Defendants. However, it is my view that the time devoted by the Li Defendants to responding to the plaintiffs’ request was excessive in the circumstances.

[12] The defendant Gang Wu played only a minor role on this motion. There will be no costs order for or against Gang Wu.

[13] For these reasons, it is my view that it is fair and reasonable that the plaintiffs pay the Li Defendants their costs of this motion on a partial indemnity basis fixed in the amount of $2,500.00, inclusive of HST and disbursements, payable within 30 days.

Master R.A. Muir

DATE: September 10, 2013