Court File and Parties

COURT FILE NO.: CV00000732-0000

DATE: 20210317

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

NDRIVE, NAVIGATION SYSTEMS S.A.

Plaintiff

– and –

SI ZHOU (aka SI (SILAS) ZHOU aka SILAS ZHOU), AGUAZION INC., HAKEMI & RIDGEDALE LLP and TOM HAKKEMI

Defendants

R. Gillilland and C. Groper, for the Plaintiff

N. Emblem and M. Bacal, for the Defendants Zhou and Aguazion Inc

AND BETWEEN:

SI ZHOU (aka SI (SILAS) ZHOU aka SILAS ZHOU), AGUAZION, INC. And AQUA LATITUDE INTERNATIONAL LIMITED

Plaintiffs by Counterclaim

– and –

NDRIVE, NAVIGATION SYSTEMS S.A., JOAO FILIPE DOS SANTOS TEIXERA NETO, ANDREIA SUSANA DIAS and EDUARDO AUGUSTO DE SOUSA CARQUEJA

Defendants by Counterclaim

N. Emblem and M. Bacal, for Zhou and Aguazion Inc., Plaintiffs by Counterclaim

R. Gillilland and C. Groper, for the Defendants by Counterclaim

HEARD: March 12, 2021

ENDORSEMENT

McCarthy J.

[1] The Plaintiff brings a motion in writing under Rules 57.03(2) and 60.12 for an order striking out the statement of defence and dismissing the counterclaim of the Defendants, Silas Zhou (“Zhou”) and Aguazion, Inc. (“Aguazion”). The basis for that request is the assertion that the Defendants have failed to abide by an order of the court: namely the payment of a costs order of $52,415.07. The court also heard brief supplementary oral submissions from the parties.

[2] This court granted the Plaintiff a Mareva injunction on May 7, 2020. On May 22, 2020, the parties agreed to a consent order (“the consent order”) under which, inter alia, the injunction would be lifted upon payment of security by the Defendants in the amount of $1,186,735.62. This payment of security has been generally referred to as the Alternative Payment of Security Option (“APSO”).

[3] The Plaintiff brought a motion before me to vary the consent order on June 19, 2020 (“motion to vary”). I allowed the motion and varied the consent order by increasing the APSO by a further $368,113.00 (“the variation order”).

[4] In addition, paragraph 9 of the variation order required the Defendants to transfer all their available funds, up to the amount of the increased APSO, to the Plaintiff’s lawyers’ trust account within five business days. That paragraph read as follows:

THIS COURT ORDERS that in compliance with paragraph 6 herein, the Respondents shall forthwith, within five (5) business days of the date of this Order, cause all assets and funds currently held in any accounts owned by the Respondents [hereinafter collectively referred to as the ”Available Funds”], to be paid to DMG Advocates LLP in Trust, by providing the necessary instructions and/or approvals to the Bank, in accord with paragraph 7 herein.

[5] The Defendants made no payments within the five business days stipulated. On July 24, 2020, their former lawyer advised Plaintiff’s counsel that although the Defendants had more than $90,599.63 in a CIBC account, because of alleged amounts owing on the Defendant Zhou’s credit cards, only $49,120.30 remained to be transferred pursuant to paragraph 9 of the variation order. Defendant Zhou’s lawyer directed CIBC to transfer that amount to the trust account of Plaintiff’s counsel at 6:45 a.m. on July 27, 2020. The funds arrived in that trust account on July 28, 2020 (“the first transfer”). A further transfer of $3,294.77 arrived in that trust account the next day (July 29, 2020) (“the second transfer”).

[6] On July 27, 2020 I ordered costs to be paid by the Defendants to the Plaintiff as follows: (a) $31,000 for the original Mareva injunction motion and (b) $52,415.07 as costs for the motion to vary. Paragraph 16 of that costs award read as follows:

[16] If the Defendants have opted not to make the second APSO payment, I order that the Defendants shall pay the sum of $52,415.07 to the Plaintiff as costs of the second motion forthwith. However, in the event that the Defendant has made the second APSO payment or does so within 30 days of the date of this order, then payment of the costs shall be made out of the APSO fund in satisfaction of this order.

[7] The Plaintiff takes the position that the costs award for the motion to vary remains outstanding. The Defendant argues that it paid that costs award in full on July 29, 2020 by way of the two CIBC transfers.

[8] For the following reasons, I find that the costs award for the motion to vary remains outstanding.

[9] One, a plain reading of the July 27, 2020 order makes it abundantly clear that the intention was that the costs of the motion to vary would be paid out of the APSO only if the second APSO payment of $368,113.00 had been made or was made within 30 days of the costs award. Clearly, the second APSO payment was not made even though the first transfer was made towards it. The order did not leave it open for costs of the motion to be paid out of anything less the full amount of the APSO.

[10] Two, it is clear from the timing, context and content of the July 24, 2020 correspondence that the first transfer was intended as a payment towards the APSO. No costs award had yet been made by the court at either the time of the July 24, 2020 correspondence or at time the Defendants’ then-lawyer directed CIBC to make the first transfer on July 27, 2020. The costs decision was not released to the parties until the late afternoon of that same day. In short, at the time of the first transfer there was no costs award for the Defendants to pay.

[11] Three, almost immediately following the release of my costs award decision, the Defendants effected the second transfer in the amount of $3,294.77. This I find was done with the intention of perfectly matching the sum of the two transfers with the amount of the costs award recently granted. I would infer that this was nothing more than a rather poorly veiled attempt to reclassify the two transfers together as satisfactory of the costs award.

[12] It is for these reasons that I find that the costs award on the motion to vary remains outstanding. By failing to pay that costs award, the Defendants are in breach of a court order. I order the Defendants to comply with this court’s order of July 27, 2020 by paying to the Plaintiffs the outstanding amount of $52,415.07 by no later than Friday March 26, 2021 at 4 p.m. If the Defendants fail to make that payment, the Plaintiffs may return the balance of the motion to me in writing without notice for further relief. Should the Defendants make the payment within the prescribed time, either party may return the balance of the motion to me on notice and on a date to be provided by the trial coordinator at Barrie. At that time, the court will address any outstanding issues including costs.

[13] Order to go accordingly.

Justice J. R. McCarthy

Released: March 17, 2021