Court File and Parties

Court File No.: CV-15-542738 Motion Heard: 2017-07-11 Superior Court of Justice - Ontario

Re: Jiaxing Economic Co-Operation Co. Ltd. and Jiaxing Shunxing Textile Chemicals Co. Ltd., Plaintiffs And: 2438866 Ontario Inc., Bo Shao and Yue Gu, Defendants

Before: Master Jolley

Counsel: Rebecca Huang, Counsel for the Moving Party Defendants Colin Holland, Counsel for the Responding Party Plaintiffs

Heard: 11 July 2017

Reasons for Decision

[1] The defendants bring this motion for an order that the plaintiffs post security for costs.

[2] The plaintiffs have conceded the appropriateness of security for costs in the circumstances so the issues before me are the quantum of security to be posted and the timing of that posting.

[3] The defendants have submitted a bill of costs indicating they expect to incur partial indemnity costs of $196,845 to defend this action. Unfortunately, there is little information before the court as to how they arrived at the assumptions built into that bill of costs, particularly at the trial preparation and trial stage.

[4] The defendants’ bill of costs references trial costs based on a 25 day trial (200 hours) and trial preparation of 150 hours. There is no information before me as to how many witnesses would be called. Defendants’ counsel did advise in her submissions that she anticipates the parties will together call 10-12 witnesses, including four experts. Plaintiffs’ counsel filed an affidavit deposing that he anticipates that there will be a total of only three witnesses at trial. I do accept that both parties are having to crystal ball what the trial will look like but I cannot say at this stage which party’s present view of the trial is more likely to be correct.

[5] The defendants argue that the amount sought is a small percentage of the total amount of the claim, which is for $6,303,396. I agree with the respondents that the amount sought is an unreliable indicator of the length or complexity of a trial.

[6] The length of the trial may also be impacted by the use to which the parties agree (or the court orders) that transcripts from the extensive cross examinations to date can be put. Each party has submitted lengthy materials on the merits of the action in respect of the plaintiffs’ motion to remove a certificate of pending litigation obtained by the defendants without notice and in respect of the defendants’ motion for a Mareva injunction and for a further certificate of pending litigation on another property and each has been cross examined.

[7] There is also insufficient information about the number of documents that still need to be translated. Plaintiffs’ counsel disagreed with the defendants’ assertion that that there remained more than 100 contracts to be translated. While defendants’ counsel need not have filed those contracts or any related documents with the court, a short affidavit indicating that there were 100 such documents would have assisted and would have been accepted as evidence for this motion, absent cross examination.

[8] The defendants estimate 60 hours to prepare for and conduct three days of discoveries and deal with any undertakings and refusals. The plaintiffs’ estimate is 45 hours. If the parties do not agree that each can use the transcripts to date as part of the discovery process, I find the defendants’ estimate to be reasonable, given the volume of materials in the court record. However, I also expect it is likely that those existing transcripts can be used and I encourage the parties to do so. I am of the view that posting security for costs for 45 hours of work should be sufficient to ensure the defendants’ interests are protected.

[9] The defendants estimate 30 hours for a mediation and pre-trial where the plaintiffs estimate 17 hours. I am of the view posting security for costs for 20 hours of work should be sufficient to protect the defendants.

[10] The Costs Subcommittee of Civil Rules Committee has published a guideline that provides for a maximum partial indemnity rate of $300 per hour (increased for inflation since 2005) for lawyers with 10-20 years of experience and $225 per hour for lawyers with 1-10 years of experience. Defendants’ counsel is an 11 year call. I have started with a rate of $275 per hour as appropriate and adjusted that to $300 to account somewhat for inflation.

[11] There is too much uncertainty at this stage to permit the court to predict the length of trial with any degree of accuracy. As a result, I order the plaintiffs to post security for costs in the following tranches:

(a) $13,500 (45 hours @ $300 per hour) + HST payable by 25 August 2017 for costs through to examinations for discovery and any motions arising therefrom;

(b) $4,000 for disbursements, inclusive of HST for the costs of transcripts, reporters and translators for the examinations for discovery by 25 August 2017;

(c) $6,000 (20 hours @ $300 per hour) + HST payable 90 days before the mediation date for costs of the mediation and pre-trial conference;

(d) $6,000 for disbursements, inclusive of HST for the costs of a mediator and mediation location.

[12] This order is without prejudice to the defendants’ right to return to seek security for costs for trial preparation and attendance when the length of trial can be better predicted.

[13] It is also open to either party to bring a motion to increase or decrease the amount of security once there is a decision on the use of the transcripts from the extensive cross examinations to date.

[14] Each party has filed a bill of costs. Parties may file any additional submissions on costs, not to exceed two pages, by 21 July 2017.

Master Jolley Date: 14 July 2017