Court File and Parties

COURT FILE NO S.: CV-17-581137; CV-17-581395; CV-581395-00A1; CV-17-586026; CV-17-586026A1 MOTION HEARD: 2018-10-10 ENDORSEMENT RELEASED: 2018-10-12 SUPERIOR COURT OF JUSTICE – ONTARIO

BETWEEN:

GUI ZHAO and JUANLI LIU Plaintiffs

- and-

QING HUI a.k.a. VICKY HUI and ROYAL FAMILY REALTY INC. Defendants

BEFORE: MASTER M.P. McGRAW

COUNSEL: R. Huang and H. Biesterfeld E-mail: rhuang@rh-law.ca -for Juanli Liu and Gui Zhoa (the “Liu Parties”)

P. Smiley E-mail: psmiley@byldlaw.com -for Feng Zhang and Qing Hui (“Hui”) in the Knowles Action

A. Postelnik E-mail: aaron@ksalaw.com

• for Hui in the Liu Action

H. Perlis E-mail: harry.perlis@mbzlaw.com

• for Royal Family Realty Inc. (“RFR”)

S. Turney E-mail: sturney@fasken.com

• for the Plaintiffs in the Vander Ploeg Actions (the “Vander Ploeg Plaintiffs”)

ENDORSEMENT RELEASED: October 12, 2018

Actions: Zhao v. Hui (CV-17-581137)(the “Liu Action”); Knowles v. Liu (CV-17-581395) and Knowles v. Liu (CV-581395-00A1)(the “Knowles Actions”); Vander Ploeg v. Liu (CV-17-586026) and Vander Ploeg v. Liu (CV-17-586026A1)(the “Vander Ploeg Actions”)

ENDORSEMENT

Introduction

[1] Pursuant to my Order and Endorsement dated February 1, 2018, I am case managing the above 5 related actions (collectively, the “Actions”). The Actions arise from three real estate transactions which were not completed (the “Transactions”).

[2] Pursuant to my Endorsements dated April 23, 2018 and August 17, 2018, 5 motions were scheduled to proceed before me today for a full day. Since the most recent telephone case conference on August 16, 2018, the parties have unilaterally added 3 motions for a total of 8 motions. The 8 motions before me today are as follows:

i.) motions by RFR and Hui for consolidation of the Actions and/or that the Actions proceed together and be tried together or one after the other (the “Consolidation Motion”);

ii.) motions by RFR and Hui seeking security for costs from the Liu Parties (the “Security For Costs Motion”);

iii.) the Vander Ploeg Plaintiffs’ motion to compel the attendance of the Liu Parties in Toronto for examinations for discovery (the “Discovery Motion”);

iv.) the Vander Ploeg Plaintiffs’ motion to exclude Zhao from the examination for discovery of Liu in the Vander Ploeg Action (the “Exclusion Motion”);

v.) a motion by the Liu Parties to strike the Affidavit of Jonathan Lancaster affirmed June 14, 2018 filed by the Vander Ploeg Plaintiffs on the Discovery Motion (the “Affidavit Motion”);

vi.) a motion by Hui to dismiss the Liu Parties’ cross-claim in the Knowles Action (the “Motion to Strike”);

vii.) the Vander Ploeg Plaintiffs’ motion to compel the Liu Parties to deliver a further and better affidavit of documents (the “Production Motion”); and

viii.) the Liu Parties’ motion for approval of a discovery plan (the “Discovery Plan Motion”, collectively, the “Motions”).

[3] Given the number of parties and common interests, some of the Motions are brought on behalf of numerous parties.

[4] As set out below, substantially all of the Motions and disputed issues were resolved, at least in the interim, by agreement between the parties, case management, and directions. The only substantive issue in dispute for which reasons are provided is with respect to the quantum of security for costs to be paid by the Liu Parties for Hui in the Liu Action. While it was always contemplated that today’s attendance would proceed at least in part as a case conference, the willingness of the parties to agree on substantially all of the disputed has issues has permitted most of today’s attendance to do so.

[5] I conclude that the agreements, directions and orders set out below represent a reasonable, efficient and proportionate resolution to the Motions and related issues before me consistent with Rule 1.04 of the Rules of Civil Procedure which will permit the parties to move forward in these proceedings.

Consolidation Motion

[6] All parties either consent or are unopposed to the Consolidation Motion.

Security For Costs Motion

[7] The Liu Parties and RFR have agreed that the Liu Parties will pay $22,600 in trust to the Liu Parties’ counsel within 30 days representing security for costs for RFR up to and including examinations for discovery without prejudice to RFR’s rights to seek additional security for costs as the Actions proceed. Hui has agreed to the same terms, however, Hui and the Liu Parties cannot agree on the quantum to be posted. Hui submits that $40,000 is a fair and reasonable amount while the Liu Parties take the position that $10,000 is appropriate in the circumstances.

[8] The amount of security for costs should reflect a number that falls within the reasonable contemplation of the parties reflecting what the successful defendant would likely recover and the factors set out in Rule 57.01 of the Rules of Civil Procedure (720441 Ontario Inc. v. The Boiler et al, 2015 ONSC 4841 at para. 56; Marketsure Intermediaries Inc. v. Allianz Insurance Co. of Canada, 2003 CarswellOnt 1906 at paras. 17-20). In most cases, security for costs will be ordered on a partial indemnity scale (The Boiler at para. 58; Marketsure at paras. 17-18). It is appropriate in certain circumstances to order that security for costs be paid in tranches on a “pay as you go” basis by stages in the proceedings (Marketsure at paras. 13-15).

[9] Hui and the Liu Parties agree that the amount should be on a partial indemnity scale payable in tranches the same as security for costs for RFR.

[10] Hui submits, based on the Bill of Costs filed, that $40,000 is fair, reasonable and within the reasonable contemplation of the Liu Parties. Specifically, Hui argues that since this amount relates to Hui’s representation in the Liu Action, which relates to all of the Transactions, counsel will be required to participate in all of the Actions. The Liu Parties acknowledge that counsel’s participation is necessary, but submit that its efforts and the amount should be less than RFR’s counsel. The Liu Parties also submit that Hui has incorrectly calculated the partial indemnity rate used in the Bill of Costs.

[11] While I agree with Hui that $10,000 is insufficient, I am not satisfied that $40,000 is fair and reasonable in the circumstances, particularly given the overlapping nature of the Actions and claims. Taking into consideration all of the relevant factors and circumstances, I conclude that it is fair, reasonable and within the reasonable contemplation of the parties for the Liu Parties to pay security for costs in favour of Hui in the amount of $27,000 on the same terms as security for costs for RFR.

Discovery Motion, Exclusion Motion and Affidavit Motion

[12] The parties have agreed that the Discovery Motion and the Affidavit Motion will be adjourned sine die so that they can commence examinations for discovery of the Liu Parties by videoconference from China. These adjournments are without prejudice to any party’s rights to bring these motions back before the Court including to seek directions with respect to whether the examinations for discovery of the Liu Parties should continue to proceed by videoconference or whether they should be compelled to be examined in person.

[13] Any directions sought with respect to whether the examinations for discovery of the Liu Parties should continue by videoconference and/or these 2 adjourned motions shall not constitute a motion for directions under Rule 34.14 of the Rules of Civil Procedure, without prejudice to the rights of any party to bring a motion for directions under the enumerated grounds set out in Rule 34.14(1)(a)-(d). The parties have further agreed that the examinations for discovery of the Liu Parties shall be recorded and such recordings may be filed as evidence on any motion for directions brought before me.

[14] With respect to the Exclusion Motion, the Liu Parties and the Vander Ploeg Plaintiffs have agreed that Gui Zhao shall not attend the examination for discovery of Juanli Liu in the Vander Ploeg Actions.

Motion To Strike

[15] Hui submits that since the Consolidation Motion is being granted, the Liu Parties’ crossclaim in the Knowles Action should be dismissed as it is redundant and no longer necessary. Hui has not filed a Factum or Book of Authorities in support of the Motion To Strike. The Liu Parties oppose the Motion To Strike and submit that, among other things, their crossclaim in the Knowles Action does not completely overlap with Hui’s crossclaim.

[16] Given the opposition of the Liu Parties’ and the submissions which Hui wishes to make, it is necessary for Hui’s counsel to serve and file a Factum and a Book of Authorities. Counsel have also advised that they will have further discussions with a view to resolving this motion. Accordingly, I conclude that it is reasonable and appropriate in the circumstances to adjourn the Motion To Strike sine die without prejudice to Hui’s rights to bring it back before the Court.

Discovery Plan Motion and Production Motion

[17] The parties agree that a discovery plan is necessary and appropriate. Various drafts have been circulated however, no progress has been made, largely due to the outstanding issues on these motions. In my view, given the number of Actions and Transactions, it is imperative that a discovery plan be established, preferably on consent of the parties. I also conclude that the Production Motion should be dealt with as part of the discovery plan and/or the Discovery Plan Motion, particularly given that other parties have also indicated that additional production motions may be brought, including for the files of the Liu Parties’ counsel on the Transactions.

[18] In order to establish some initial timelines to keep the Actions moving forward, I have provided case management whereby the parties have agreed to the following timetable. This timetable is subject to any amendments made on consent of all parties, and acknowledging that counsel for the Plaintiffs in the Knowles Action did not appear today due to illness and has not had input:

i.) December 31, 2018: deadline for service of any outstanding Affidavits of Documents; ii.) June 30, 2019: deadline for completion of examinations for discovery.

[19] The parties will engage in further discussions with a view to agreeing on the terms of a discovery plan which can be approved by the Court at a future attendance. Barring agreement, I will provide further directions and in any event, the Discovery Plan Motion and the Production Motion are adjourned sine die without prejudice to the rights of any party to bring them back before the Court.

Order

[20] Order to go as follows:

i.) the Actions, including all counterclaims, crossclaims and Third Party Claims shall proceed together and shall be tried together, or one after another, subject to the discretion of the trial Judge;

ii.) the Liu Parties shall pay $22,600 and $27,000 in trust to the Liu Parties’ counsel within 30 days representing security for costs for RFR and Hui, respectively, up to and including examinations for discovery in the Actions without prejudice to RFR’s and Hui’s rights to seek additional security for costs as the Actions proceed which such funds shall be released from trust only on consent of the parties or further Order of the Court;

iii.) the Discovery Motion and the Affidavit Motion are adjourned sine die and the examinations for the discovery of the Liu Parties shall proceed by videoconference without prejudice to any party’s rights to bring these motions back before the court including to seek directions with respect to whether the examinations for discovery of the Liu Parties should continue to proceed by videoconference or whether they should be compelled to be examined in person;

iv.) any directions sought with respect to whether the examinations for discovery of the Liu Parties shall continue by videoconference and/or the 2 adjourned motions set out in paragraph 20(iii) above shall not constitute a motion for directions under Rule 34.14 of the Rules of Civil Procedure without prejudice to the rights of any party to bring a motion for directions under the enumerated grounds set out in Rule 34.14(1)(a)-(d);

v.) the examinations for discovery of the Liu Parties shall be recorded and such recordings may be filed as evidence on any motion for directions;

vi.) Gui Zhao shall not attend the examination for discovery of Juanli Liu in the Vander Ploeg Actions;

vii.) the Motion To Strike is adjourned sine die without prejudice to Hui’s rights to bring it back before the Court on proper notice to the Liu Parties and after service and filing by Hui of a Factum and Book of Authorities;

viii.) the Discovery Plan Motion and the Production Motion are adjourned sine die without prejudice to any party’s rights to bring them back before the Court and on condition that the parties shall adhere to the timetable set out in paragraph 18 above, subject to any amendments made on consent of all parties and that counsel engage in discussions with a view to bringing forward a discovery for court approval on consent.

[21] The costs of the Motions including today’s attendance are reserved to a future attendance.

[22] Counsel may schedule another telephone case conference with me when necessary.

Released: October 12, 2018 Master M.P. McGraw