Court File and Parties

COURT FILE NO.: CV-11-440196 DATE: 20190116 SUPERIOR COURT OF JUSTICE – ONTARIO

RE: S & A DEVELOPMENTS LIMITED, ALEXANDER STRASSER and CAMPUS 2000 DEVELOPMENTS INC. personally and as general partner of the 1162185 LIMITED PARTNERSHIP, Plaintiffs

AND:

HENRY H. N. HUNG and DANIEL H. C. HUNG as trustees of THE HUNG RICHMOND HILL TRUST, SHIU PONG DEVELOPMENTS LIMITED, SHIU PONG ENTERPRISES (CANADA) LIMITED and SHIU PONG CONSTRUCTION LTD., Defendants

AND RE: HENRY H. N. HUNG and DANIEL H. C. HUNG as trustees of THE HUNG RICHMOND HILL TRUST, SHIU PONG DEVELOPMENTS LIMITED, SHIU PONG ENTERPRISES (CANADA) LIMITED and SHIU PONG CONSTRUCTION LTD.

AND:

S & A DEVELOPMENTS LIMITED, ALEXANDER STRASSER, S. & A. STRASSER LIMITED, JOHN DOE, JIM DOE AND JOE DOE

BEFORE: Stinson J.

COUNSEL: Adrienne Lei, for the plaintiffs William A. Chalmers, for the defendants

HEARD at Toronto: January 14, 2019

Endorsement

[1] This endorsement follows an attendance by counsel before me on January 14, 2019. On that date I signed a consent order. The purpose of this endorsement is to set out the background to that order, to explain the basis upon which it was made, and to provide my directions concerning the future course of these proceedings.

[2] The order disposed of a motion brought by the plaintiffs in this action (to whom I shall refer in the singular, since their interests are identical). The motion sought the withdrawal of admissions made in a pleading, admissions in a response to a request to admit and admissions in an agreed statement of facts. It also sought leave to rely on certain documents provided in a supplementary affidavit of documents.

[3] The plaintiff’s motion was brought mid-trial after the close of the plaintiff's case, but before the defendant had called any evidence. The reason for the timing of the motion was that only at that point did plaintiff's trial counsel (not Ms. Lei) discover that the case he had put in was based on a mistake as to a significant fact. Having discovered that mistake, he brought it to the court's attention and the trial was adjourned to allow the situation to be evaluated by both sides. Independent counsel was engaged by the plaintiff to deal with the problem and this motion followed.

[4] The defendant (to whom I shall also refer in the singular since all defendants are allied) opposed the plaintiff’s motion, citing prejudice to its position due to the lateness of the plaintiff's change of position. The defendant also brought a cross-motion for a mistrial in the event the relief sought by the plaintiff was granted.

The lawsuit

[5] The principal dispute underlying this case is whether an agreement between the parties that governed a "corporate divorce" between them, should be set aside or revisited due to an erroneous factual assumption. That agreement provided for the wind–up of a joint land development venture between the parties on the basis that each side would end up with ownership of part of the lands. So that the division would be financially fair, each of the two parcels was to be valued and the party retaining the more valuable parcel would compensate the other party by making an offsetting payment to the other party equal to 50% of the difference in value. This way, each side would end up with an equal net value in land and/or cash.

[6] According to the plaintiff, the valuation of its portion of the lands was based on an erroneous premise, namely, that all relevant development charges had been paid. As a result the value ascribed to the plaintiff's land was higher than it should have been. Based on that erroneous valuation, the plaintiff says the offsetting payment it made to the defendant was too high. In this lawsuit it seeks repayment of the excess.

[7] The plaintiff is the party who brought the land to the joint venture. It had assembled the land by way of a series of transactions over a period of years. Those transactions were documented in a series of complex agreements containing schedules and legal descriptions. At the pre-trial stages of the lawsuit, there was apparently no dispute over which lands the plaintiff contributed to the joint venture. What was disputed was whether the land kept by the plaintiff following the dissolution of the joint venture was incorrectly valued and, if so, whether the plaintiff could re-open the dissolution transaction and seek repayment of the excess payment made to the defendant.

The mistake

[8] The problem that resulted in the present motions relates to the correct legal description of the lands that the plaintiff brought to the joint venture. More specifically, the problem that arose mid-trial is that, in a series of steps in the litigation, the lands brought to the joint venture were incompletely or inaccurately described. Unaware of the inaccurate and incomplete legal descriptions, the plaintiff confirmed as correct the references to the lands contained in the pleadings, requests to admit and an agreed statement of facts. It now turns out that those descriptions wrongly excluded some of the lands brought into the joint venture by the plaintiff.

[9] The trial began on February 5, 2018 and continued sporadically on February 9, 12, 13, 14, 15 and 16, 2018. One of the reasons for the sporadic progress of the trial was that at the outset of the trial, as the trial judge, I questioned the plaintiff's trial counsel regarding the accuracy of the legal description of the lands brought into the joint venture by the plaintiff. I did so because I was having difficulty understanding and reconciling the legal descriptions, the agreements and the plans contained in the materials before me, including the pleadings, the response to the request to admit, and the agreed facts and books of documents. Plaintiff’s trial counsel was unable to resolve my difficulties, despite being granted time to do so. He ultimately (incorrectly, as it later turned out) confirmed that the pleadings, response to request to admit and agreed facts contained the correct legal description of the lands brought to the joint venture by the plaintiff.

[10] The trial proceeded through the plaintiff's case based on that erroneous belief. Most importantly, Alex Strasser, the plaintiff's principal witness, was examined and cross-examined against the backdrop of this erroneous information. He was unable to recall the details of the land assembly process that resulted in him controlling all of the lands. This was perhaps understandable, since these events took place in the early 1980s and they did not appear to be contentious at the trial. Nevertheless, the timing and circumstances of the land acquisition by the plaintiff do bear on the question whether they were subject to further land development charges. Mr. Strasser’s answers (or his inability to answer them or to explain the acquisition process) had an impact on my overall assessment of his evidence.

[11] Only after Mr. Strasser had been examined and cross-examined and the plaintiff's case was closed, did plaintiff’s trial counsel discover that the legal description he had believed to be accurate, was indeed erroneous. He felt obliged to draw this error to the court's attention, because it meant that the case he had lead and the examination and cross-examination of his client, had proceeded on a faulty premise, namely, the erroneous legal descriptions of the lands brought to the joint venture by the plaintiff as described in the pleadings, response to request to admit, and the agreed statement of facts.

[12] That the legal descriptions of the lands were erroneous was determined through further title searches conducted, documents obtained and surveyors consulted during the course of the trial. It was only once that information was assembled that the error in the admissions was brought to light. At that point the trial was adjourned indefinitely.

The motions and the consent order

[13] In light of the late discovery of the true state of affairs, once independent counsel for the plaintiff was engaged, the plaintiff brought the motion to withdraw the erroneous admissions, based on the fact that they do not accord with the truth. The motion also sought leave to rely on the late-assembled documentation and information.

[14] The defendant opposed the relief sought. The defendant also brought a cross-motion for a mistrial in the event the relief sought by the plaintiff was granted.

[15] Ultimately, the parties agreed to resolve their motions on the basis of the consent order that was presented to me for signature on January 14, 2019. That order provides as follows:

1. for the withdrawal of the inadvertent admissions;
2. for the declaration of a mistrial in connection with the trial before me;
3. for the lawyers to meet and attempt to reach agreement regarding the potential use at the new trial of the evidence that was presented before me, and if agreement cannot be reached for me to adjudicate the evidence issues;
4. for the second trial to be heard as quickly as possible following resolution of the evidence issues; and
5. for all costs questions to be reserved to the judge who hears the second trial.

[16] When I was presented with the consent order to be signed, I pointed out to counsel that I would not and could not be the trial judge who would hear the second trial, in light of the fact that I had already formed a view regarding the evidence of Mr Strasser, when he testified before me before the error was discovered. In light of that experience, it would not be fair for me to preside over the new trial.

[17] In relation to Item 3 (the proposed method to make use of some of the evidence from the first trial at the second trial), I suggested to counsel that they agree on uncontested facts to form the foundation for the new trial. With respect to the proposal that I be called upon to adjudicate unresolved evidence issues, I pointed out that since I would not be presiding at the new trial I could not bind the judge at that trial in relation to what evidence could or could not be admitted then. Nonetheless, I told counsel that I would be willing, by way of case conference, to assist them in arriving at a consensus regarding the future use of previous evidence or the topics to be included in an agreement as to uncontested facts, in order to facilitate the most efficient presentation of the case at the new trial.

[18] In relation to Item 4, once the parties wish to fix a date for the new trial, they should contact the short trial Trial Coordinator to arrange an appearance in TBST Court.

Stinson J. Date: January 16, 2019