Court File and Parties

COURT FILE NO.: CV-18-00609626 MOTION HEARD: 20211207

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: 2424355 Ontario Ltd, 2436440 Ontario Ltd., 2479822 Ontario Ltd., Jing Yuan and Yanwu Sun, Plaintiffs (Defendants by Counterclaim)

AND:

Dian Cui, Northern Square Property Management Inc., 2503580 Ontario Inc. Chen Chen, and DP Property Consulting Inc., Defendants (Plaintiffs by Counterclaim)

BEFORE: Associate Justice L. La Horey

COUNSEL: Leon Li, Counsel for the Moving Party Defendants Gwendolyn Adrian, Counsel for the Responding Party Plaintiffs

HEARD: December 7, 2021 by videoconference

Reasons for Decision

[1] The defendants bring this motion seeking leave to amend their statement of defence and counterclaim in the form of a fresh as amended statement of defence and counterclaim (the “Amended Pleading”). The plaintiffs consent to the Amended Pleading save and except for the wording set out in Schedule C to their factum, which they say has the effect of withdrawing admissions. As a term of the amendment, the plaintiffs seek costs on a substantial indemnity basis for costs thrown away in drafting a reply to the original statement of defence and counterclaim and having completed documentary disclosure.

Background

[2] This action was commenced on November 27, 2018. In broad terms, the plaintiffs’ claim is for mismanagement of their assets and misappropriation of funds by the defendant Dian Cui and the three corporate defendants. They allege that Mr. Cui was employed by the plaintiffs and entrusted with the care and management of real property assets in Ontario. They plead that during the course of his employment, he mismanaged the properties and misdirected or misappropriated significant assets for his personal use and benefit or for the benefit of corporations owned and controlled by him.

[3] The plaintiff Jin Yuan (“Ms. Yuan”) is a director of the plaintiff corporations (collectively referred to as the “Sun Corporations”). Her son, the plaintiff Yanwu Sun (“Mr. Sun”), is also a director of the Sun Corporations. The Sun Corporations are the registered owners of income producing real property in Ontario. 2424355 Ontario Limited (“242”) is the registered owner of a shopping plaza (the “Plaza”), 2436440 Ontario Limited is the registered owner of an office building, and 2479822 Ontario Limited is the registered owner of a residential rental property.

[4] Ms. Yuan is also the chairperson of Suzhou Chunxing Precision Mechanical Co. Ltd. (“Chunxing”) which is a publicly-traded corporation operating in the People’s Republic of China. Ms. Yuan and her husband are the principal shareholders in Chunxing. It does not appear to be contentious that Mr. Cui was employed by Chunxing from 2013 to 2018.

[5] The plaintiffs plead that as the Sun Family travelled frequently between Canada and China, and had many responsibilities relating to Chunxing, they were not able to personally manage 242 but rather required a trusted manager to do so on their behalf. They plead that Mr. Cui agreed to go to Canada and take care of the management of 242 and such other Canadian business ventures that the Sun Family might undertake. They plead that throughout his posting in Canada, Chunxing continued to pay Mr. Cui his regular salary, notwithstanding that his assigned duties pertained primarily to the Sun Corporations and the personal affairs of the Sun Family in Canada.

[6] The plaintiffs claim that Mr. Cui breached contractual and fiduciary duties to them and mismanaged the affairs of the Sun Corporations. They claim that he engaged in self-dealing and misappropriated funds. The plaintiffs allege that the corporate defendants, Northern Square Property Management Inc. (“Northern Square”), DP Property Consulting Inc. (“DP”), and 2503580 Ontario Inc. (“250”), are corporate alter egos of Mr. Cui and were used by him as corporate vehicles to aid and abet his breaches of contract and fiduciary duties.

[7] The defendants delivered a statement of defence and counterclaim dated December 26, 2018 (the “Original Pleading”) that was prepared by Mr. Cui on behalf of the defendants. The defendants were not then represented by counsel. The Original Pleading denies wrongdoing on the part of the defendants and in their counterclaim, seeks damages for defamation, albeit without using the term defamation.

[8] The plaintiffs severed (but did not file) a reply and defence to counterclaim on January 9, 2019.

[9] On June 4, 2019, the plaintiffs obtained an ex parte Mareva injunction from Justice Cornell. The defendants had by this time retained counsel, who appeared on the return of the Mareva injunction on June 14, 2019. On that day a hearing was set for September 9, 2019 for the defendants’ motion to set aside the injunction. Mr. Cui swore an affidavit on August 8, 2019 in support of that motion. The plaintiffs ultimately consented to an order setting aside the Mareva injunction.

[10] The plaintiffs amended their statement of claim on September 13, 2019 to add Mr. Cui’s wife, Chen Chen, as a party defendant. The plaintiffs allege that Ms. Chen knowingly received and enjoyed the benefit of a portion of misappropriated funds. The amendments to the claim consist almost entirely of allegations against Ms. Chen.

[11] In December 2019, the plaintiffs advised the defendants that they may seek to further amend the claim. In October 2020, the plaintiffs confirmed that they were not seeking to amend their claim at this time and asked that the defendants plead to the amended claim served in September 2019.

[12] The defendants delivered the Amended Pleading which is the subject of this motion on November 26, 2020.

Positions of the Parties

[13] The defendants say that they are entitled to amend their pleading pursuant to Rule 26.01 of the Rules of Civil Procedure as there is no non-compensable prejudice. They deny that the Amended Pleading withdraws any admissions. Even if an admission has been withdrawn, the defendants say that the test for withdrawal of an admission has been met, namely: (1) the amendments raise a triable issue; (2) there is a reasonable explanation for the change of position; and, (3) there is no prejudice to the plaintiffs that cannot be compensated for by costs or an adjournment.

[14] With respect to the second part of the test, the defendants say that they have provided a reasonable explanation, in that the Original Pleading was prepared by Mr. Cui, who is not a native English speaker and who did not have the assistance of counsel when he prepared the pleading. The defendants submit that any admissions were inadvertent and resulted from Mr. Cui’s lack of English language proficiency and legal knowledge.

[15] The plaintiffs consent to the amendments except for one full paragraph and portions of 25 other paragraphs. Their position is that the amendments withdraw admissions in the Original Pleading that Mr. Cui was employed by the Sun Corporations and was entrusted with the care and management of the Sun Corporations.

[16] The plaintiffs do not dispute that the amendments raise a triable issue. However, they disagree that the defendants have provided a reasonable explanation for the withdrawal of any admissions. They also argue that the defendants have failed to adduce any evidence that the plaintiffs are not prejudiced.

Law and Analysis

[17] Rule 26.01 of the Rules of Civil Procedure mandates that leave be granted to amend a pleading on such terms as are just, unless there is non-compensable prejudice. Here there is no non-compensable prejudice. The only prejudice to the plaintiffs is in the form of costs thrown away.

[18] Therefore, the issue is whether the defendants have withdrawn any admissions, and if so, whether leave should nonetheless be granted.

[19] The plaintiffs raise a preliminary issue: whether certain paragraphs of Mr. Cui’s affidavit filed in support of this motion should be struck out or given no or low evidentiary weight given his refusal to answer questions posed on cross-examination. The impugned paragraphs relate to the second element of the test for the withdrawal of an admission, namely whether there is a reasonable explanation. As I have concluded that the impugned portions of the Amended Pleading do not withdraw any admissions, it is not strictly necessary for me to address this issue. However, as I also go on to consider whether the test for the withdrawal of an admission has been met, I will first address the issue of the impugned paragraphs in the affidavit.

Should portions of the Cui Affidavit be struck or given no or low weight?

[20] On this motion the defendants have filed Mr. Cui’s affidavit sworn July 30, 2021. He was cross-examined on this affidavit, and cross-examined a second time after written answers to undertakings and some of the questions initially refused were provided to the plaintiffs.

[21] The plaintiffs say that I should give no or little weight to certain paragraphs in Mr. Cui’s affidavit on the basis of questions refused during cross-examination. The impugned paragraphs are set out below:

a. “I am not a native English speaker and my mother tongue is Chinese/ Mandarin. When I drafted the Statement of Defence and Counterclaim in December 2018, I did not have the assistance of a lawyer, and I did not fully understand what facts needed to be pleaded to respond to the Plaintiff's claim and how they should be pleaded” (paragraph 14 – the plaintiffs object to the first sentence but not the second)

b. “The reason for the amendments in the Draft Amended Pleadings are due to my deficient English proficiency and my lack of legal skills. Specifically, I did not appreciate the full extent of the claims pleaded in the Statement of Claim, and I did not have the english-language skills and legal skills necessary to properly plead the facts in my Statement of Defence and Counterclaim.” (paragraph 26)

c. “I do not believe that the Draft Amended Pleadings contain any withdrawn admissions. Even if there were withdrawn admissions, it was caused by my deficient English proficiency and lack of legal skills when I drafted the Statement of Defence and Counterclaim without the assistance of a lawyer. (paragraph 32)

[22] Mr. Cui answered a number of questions about his experience using English in his cross-examination on the affidavit that he swore in support of the motion to set aside the Mareva injunction and in his cross-examination on his affidavit filed on this motion. He testified each time through a Mandarin interpreter. He obtained an undergraduate degree from Dalhousie University where assignments, classes, and examinations were in English. He worked for two Canadian companies for a number of years, during which time he provided both oral and written reports to his employers in English. He took the job with Chunxing so that he could utilize his English. His duties there included translating non-technical documents between English and the Chinese language.

[23] Mr. Cui was also cross-examined about his familiarity with legal documents. He admitted that he reviewed English documents with Ms. Yuan, explaining the “gist” of the documents in English. He has also prepared two documents in English for Ms. Yuan to sign. These were a management agreement between 242 and Northern Square and a listing agreement for the Plaza. Mr. Cui testified that one of the documents was prepared using a template but was not asked if he used a precedent or template for the other agreement.

[24] On cross-examination Mr. Cui refused to answer a number of questions regarding his proficiency with English.

[25] Mr. Cui’s affidavit on this motion is in English and it was not translated by a translator. His evidence was that the lawyer who commissioned the affidavit speaks Mandarin and assisted in explaining the affidavit to him. However, he refused to answer which terms in the affidavit were translated to him. Other similar relevant questions were refused. Mr. Cui put his language skills in issue and the plaintiffs’ lawyer was entitled to test that on cross-examination. As a result, I accept the plaintiffs’ position that I should give very little weight to those portions of Mr. Cui’s affidavit regarding his English skills.

[26] In any event, on Mr. Cui’s own evidence, he worked in English and had some proficiency in English. Further, he admitted that he has some familiarity with legal documents and worked with contracts in English, at least in the area of real estate.

[27] However, it is not disputed that Mr. Cui is not a lawyer and he does not have legal training. It was not disputed that he drafted the Original Pleading without the assistance of lawyer. It is apparent from reading the Original Pleading that it was drafted by someone who has some knowledge of legal concepts and has some facility in English. It is equally clear from the face of the Original Pleading that it was not drafted by a lawyer.

Does the Amended Pleading withdraw admissions?

[28] Rule 51.05 of the Rules of Civil Procedure provides that “an admission in a pleading may be withdrawn on consent or with leave of the court.”

[29] An admission contemplated by Rule 51.05 of the Rules of Civil Procedure is an unambiguous, deliberate and intentional concession to the opposing party. See also: Yang (Guardian of) v Simcoe (County), 2011 ONSC 6405 (SCJ) at para 46, Hughes v Toronto Dominion Bank, [2002] OJ No 2145 (Master) at paras 9 - 10; Belsat Video Marketing Inc. v Zellers Inc., [2003] OJ No 3168 at para 13 (Master).

[30] The plaintiffs state that paragraph 42 of the Amended Pleading amounts to a withdrawal of an admission. It provides:

42. Contrary to paragraphs 17 to 19 of the Statement of Claim, Cui’s job position was limited to Chunxing. Cui was assigned no duties to the Sun Corporations or the Sun Family under the Employment Contract. Cui’s assistance to the Sun Corporations and the Sun Family, including the maintenance and leasing of the North Ridge Property, was beyond the scope of Cui’s employment with Chunxing, for which Cui was not compensated.

[31] The plaintiffs also object to the characterization in the Amended Pleading that Mr. Cui provided assistance to the Sun Corporations and the Sun Family “without compensation” and as a “personal favour”. They object to statements that Mr. Cui was not employed by the Sun Corporations.

[32] They contend that these pleadings withdraw admissions made in the Original Pleading. Specifically that:

a. “Mr. Cui continuously worked hard and for the best interest of Ms. Yuan’s family on all their personal matters, Canadian real estate investments, as well as business operation and development for Chunxing” (paragraph 3 of the Original Pleading).

b. “Mr. Cui was given authority by Ms. Yuan to oversee the operation of the property manager, and to deal with all non-property management issues, such as public relation, seeking professional service provider for business leasing operation, conducting future development feasibility analysis, looking for potential buyers, etc. (portion of paragraph 5 of the Original Pleading).

c. Mr. Cui was responsible for overseeing the operation of Ms. Yuan’s business , however Mr. Cui is neither an expert nor professional in accounting and taxation, he strongly depending on the findings and advises from third-party consultants.” (portion of paragraph 23 of Original Pleading with the alleged admission underlined).

d. Mr. Cui was consistently working at the Ms. Yuan, Mr. Sun and Sun Corporation’s best interests. All business situations were communicated and reported, and all decisions were made or acknowledged by Sun Corporation, and carried out by Mr. Cui. (paragraph 29 of Original Pleading)

[33] The defendants take the position that the Original Pleading, although not perfectly pleaded, clearly indicates the defendants’ position that Mr. Cui’s services to the plaintiffs were provided either through his companies, Northern Square and DP, or were provided without compensation.

[34] In particular, they refer to the following in the Original Pleading:

a. With respect to 242 and the Plaza the defendants plead that: “Mr. Cui formed the Northern Square Property Management Company, and hired the dedicated property manager Bell Wong to specifically manage the property, with the believe of acting on the best interest of Ms. Yuan.” (portion of paragraph 5 of the Original Pleading)

b. “Mr. Cui’s primary occupation is real estate investment consultant, to provide service in real estate field. After acquisition of the Plaza, DP Consulting (“DP”) was formed to specifically serving the leasing/real estate needs of properties related to Ms. Yuan , for the purposes of better management, dedicated marketing resource, easier referral arrangements, better presence/image of leasing service provider within Plaza, etc. At the time Mr. Cui and Ms. Yuan signing the service contract, Mr. Cui specifically indicated the role and responsibility involved with the newly proposed real estate consulting company, including his involvement within this company , however other details were not discussed as Mr. Cui was not the sole director of the company. Throughout time, Mr. Cui conducts the leasing operation honestly and acts on the best interest of Ms. Yuan, including negotiating for the highest rent possible; marketing with most effective channels with lowest cost possible; endless effort of seeking potential buyers; etc. all with agreed fair market commission standard.” (paragraph 6 of the Original Pleading, emphasis added)

c. “The management of the Rental House was not under any service agreement. The time spent and management services provided were paid by Mr. Cui out of kindness, and for the best interest of Ms. Yuan. Residential property management is a more restricted area of service… (portion of paragraph 19 of the Original Pleading)

d. “Mr. Cui was consistently working at the Ms. Yuan, Mr. Sun and Sun Corporation’s best interests. During initial business/service proposals and throughout times, Mr. Cui indicated the role and responsibility involved with each of the proposed service providers, including Mr. Cui’s involvement within these companies , certain non-relevant details were not discussed as Mr. Cui was not the sole director of the companies, for instant, time of the company established, other shareholder/director information, etc. All service agreements were discussed and agreed based on fair market standard. (paragraph 31 of the Original Pleading, emphasis added)

[35] Having reviewed the pleadings, I come to the conclusion that the impugned portions of the Original Pleading do not withdraw admissions.

[36] The purported admissions are not unambiguous, deliberate and intentional concessions. I accept that the Original Pleading takes the position that Mr. Cui’s services were being provided through his companies in some instances, and at other times he was providing services without charge.

[37] The plaintiffs engage in a close reading of the Original Pleading as would be appropriate for an exercise in statutory interpretation or in an analysis of contractual terms in support of their argument that the Original Pleading admits that Mr. Cui was employed directly by the Sun Corporations. A few examples will suffice.

[38] The plaintiffs rely on paragraph 3 of the Original Pleading which states that: “Mr. Cui continuously worked hard and for the best interest of Ms. Yuan’s family on all their personal matters, Canadian real estate investments, as well as business operation and development for Chunxing.” The plaintiffs say this is inconsistent with the contention in the Amended Pleading that Mr. Cui was not directly employed by the Sun Corporations. I do not see paragraph 3 as being inconsistent. The thrust of the statement of claim is that Mr. Cui engaged in self-dealing and committed acts of mismanagement and the focus of the Original Pleading is to deny wrongdoing. A more precise pleading might indicate in what capacity Mr. Cui was working hard and acting in the best interests of the Sun Family. But the paragraph does not clearly and unequivocally concede that Mr. Cui was employed by the Sun Corporations and /or the Sun Family. Moreover, the preceding paragraph of the Original Pleading states that Mr. Cui “entered into the employment” of Chunxing. This is the only time the word “employment” is used in the Original Pleading. There is no statement in the Original Pleading that Mr. Cui entered into the employment of the Sun Family or the Sun Corporations.

[39] Paragraph 23 of the Original Pleading responds to paragraph 37 of the original statement of claim, which alleges that Mr. Cui retained four separate accountants to perform isolated tasks for the Sun Corporations, and instructed the accountants not to speak to each other, so as to ensure that the overall finances of the Sun Corporations would not be subjected to scrutiny by a qualified professional. Paragraph 23 states: “Mr. Cui was responsible for overseeing the operation of Ms. Yuan’s business, however Mr. Cui is neither an expert nor professional in accounting and taxation, he strongly depending on the findings and advises from third-party consultants.” The plaintiffs say that “responsible for overseeing” is an admission of employment. However, the statement “Mr. Cui was responsible for overseeing” the business is not clearly inconsistent with Mr. Cui acting through his companies or acting voluntarily as a friend. Moreover, the thrust of paragraph 37 is that Mr. Cui was acting improperly, not that he was directly employed by the Sun Corporations.

[40] The plaintiffs also say that this language of being “responsible for overseeing” in paragraph 23 of the Original Pleading (as well as in paragraph 5) should be contrasted with paragraph 19 when it refers to the time spent by Mr. Cui “out of kindness” with respect to the Rental House, where it is clear that he is acting voluntarily. However, as noted above, in order for there to be an admission as contemplated Rule 51.05 of the Rules of Civil Procedure there must an unambiguous, deliberate and intentional concession. In this context, it is not appropriate to undertake the same rigorous textual analysis as is required to interpret a statute or contract. This applies with even more force when the pleading is drafted by a self-represented litigant.

[41] In sum, I find that there was no clear intention in the Original Pleading to admit that Mr. Cui was employed directly by the Sun Family or Sun Corporations. The Amended Pleading does not withdraw any admissions, and therefore leave shall be granted subject to any terms to address prejudice, considered below.

If the Amended Pleading withdraws an admission, should leave be granted?

[42] In case I am wrong in my analysis on whether the Amended Pleading withdraws an admission, I go on to consider whether the leave should be granted.

[43] The parties are in agreement on the relevant test, which is the three-part test in Antipas v Coroneos, [1988] OJ No 137. In Vassos v Enterra, 2019 ONSC 661 at paras 12 - 13, Master Graham (as his title then was) referred to the test in Antipas and summarized the law as follows:

12 The parties agree that the test with respect to the granting of leave to withdraw an admission is as set out in Antipas v. Coroneos, [1988] O.J. No. 137 (para. 14 ), cited with approval in numerous subsequent authorities including Szelazek Investments Ltd. v. Orzech (1996), 44 C.P.C.(3d) 102 (C.A.), Hughes v Toronto Dominion Bank, [2002] OJ No 2145 (Master), and Kostruba and Sons Inc. v. Pervez, [2011] O.J. No. 3729 (para. 39). The three requirements of the test are:

(1) The proposed amendment raises a triable issue. As stated in Phillips v. Disney, [2018] O.J. No. 833 (para. 25): "[T]he requirement to demonstrate a 'triable issue' requires the moving party to demonstrate that the proposed amendments raise an arguable case on the merits."

(2) The admission was inadvertent or resulted from wrong instructions. This branch of the test should be given a liberal interpretation. As stated in Hughes, supra (para. 8): "In a perfect world, all documents would be reviewed and all witnesses interviewed before the pleadings were crafted but that is not the reality of practice. The governing principle of our rules as set out in Rule 1.04(1) of the Rules of Civil Procedure is not furthered if parties are not allowed to correct mistakes in pleading if a full exploration of the facts and documents reveals them. As stated by Saunders J. in Antipas, supra 'if there is a triable issue, a party should be able to withdraw an admission upon furnishing a reasonable explanation for the change in position'."

(3) The withdrawal will not result in any prejudice that cannot be compensated for in costs. As stated in Kostruba, supra (para. 42), "Of the three criteria, prejudice is obviously the most significant. However, as noted by Saunders J. in Antipas, the onus is on the moving party to show that the opposite party will not be prejudiced, rather than the reverse as is the case under Rule 26.01 of the Rules of Civil Procedure".

13 With respect to the issue of prejudice, the following passage from Kostruba (para. 43) is also significant:

43 The stage of the action at which the withdrawal of the admission is requested is relevant. Early on in the action, the reliance of the opposite party on the admission will not be as great. It will not be as difficult for the opposite party to reformulate its case. Later, after discoveries have been held and evidence for trial has been marshalled, it will be more difficult. Prejudice will be more apparent.

[44] The plaintiffs agree that the proposed amendments raise a triable issue.

[45] I am satisfied that even if the defendants admitted that the Mr. Cui was employed by the Sun Corporations, the admission was inadvertent and the defendants have provided a reasonable explanation. Even if I disregard Mr. Cui’s statements in his affidavit as to his lack of proficiency with the English language, it is not disputed that Mr. Cui is not a lawyer and that he was not represented or assisted by counsel when he drafted the Original Pleading.

[46] It is apparent on its face that the Original Pleading was not drafted by a lawyer. An example is the misunderstanding of the term “corporate vehicle” in the original statement of claim. The claim pleads that Northern Square, DP Consulting and 250 were used by Mr. Cui as “corporate vehicles” to aid and abet his breaches of contract and fiduciary duties. From paragraph 30 of the Original Pleading it is clear that the drafter has misunderstood “corporate vehicles” as referring to company cars, as the pleading states that Mr. Cui only used company vehicles for business activities.

[47] In oral submissions, Ms. Adrian said that she was not aware of any case where leave to withdraw an admission was refused in a case where the pleading was prepared by a self-represented litigant. While there may be situations in which it is appropriate to refuse leave to a self-represented litigant to withdraw an admission for failing to provide a reasonable explanation, this is not one of them.

[48] I cannot find any prejudice that cannot be compensated by costs. The stage of the action is relevant to the issue of prejudice. Although affidavits of documents have been exchanged in this action, no oral discoveries have taken place. Moreover, the defendants knew in August 2019 when they received Mr. Cui’s extensive affidavit (it is 231 paragraphs) in support of the motion to set aside the Mareva injunction, that the defendants were going to take the position that Mr. Cui was not employed by the plaintiffs, although he provided some services without compensation to the Sun Family. Mr. Cui provided gratuitous services to the Sun Family prior to his employment at Chunxing in the hopes of securing a job with Chunxing. After he obtained a position with Chunxing, he felt he had to continue to provide services to the Sun Family and without compensation to keep his job at Chunxing. The August 2019 affidavit also takes the position that Mr. Cui provided assistance through his corporations.

[49] This is not a case where there was a change of position where there was a pending summary judgment motion. As in Metro Ontario Real Estate v Hillmond Investments Ltd., 2017 ONSC 3518. This is not a case where a party seeks to withdraw an admission on the eve of trial. There is no prejudice that is not compensable in costs.

[50] Accordingly, even if I had concluded that the Amended Pleading withdraws an admission, I would have granted leave on terms.

Terms

[51] The plaintiffs have claimed costs thrown away on a substantial indemnity basis of approximately $20,000.

[52] In the circumstances of this case it is appropriate that the plaintiffs be compensated on a substantial indemnity basis for wasted costs. See Belsat Video Marketing Inc. v Zellers Inc. at para 29. They are entitled to be compensated for the time spent in preparing the reply and defence to counterclaim which will have to be redone. I also accept that the plaintiffs’ productions will have to be reviewed again to ensure that all documents relevant to the issue of whether Mr. Cui was employed by the plaintiffs have been produced and that some of the time spent in regards to initial document production was wasted.

[53] In support of their claim for costs thrown away, the plaintiffs have put in the heavily redacted accounts of their former counsel. They have also provided a cost outline which claims a bulk amount of 74.35 hours of time of their former counsel at an actual rate of $300.00 for “review of documents, preparation of pleadings, preparation of affidavit of documents and correspondence.” Time is claimed from December 28, 2018 (when the Original Pleading was delivered) to April 16, 2019.

[54] Mr. Li says that the most that would be appropriate would be costs from December 28, 2018 when the Original Pleading was served, to January 9, 2019 when the reply and defence to counterclaim was delivered. This amounts to $705 at an actual rate of $300 per hour. The defendants argue that the costs to prepare the affidavit of documents are not costs thrown away. However, I accept that some files will have to be gone through a second time to ensure that all relevant documents are included.

[55] The defendants also suggest that some time claimed would include time spent preparing for the Mareva injunction which should not be included. If true, this would not be compensable.

[56] The plaintiffs have not provided enough information for me to properly assess the costs thrown away. The block of 74.35 hours is not broken down. However, based on the limited information before me, I am satisfied that the plaintiffs have incurred costs thrown away in the sum of $3,500 on a substantial indemnity basis. The trial judge may further adjust the costs if it appears that this is insufficient to indemnify the plaintiffs for wasted costs when the matter comes to trial. This is the solution reached by Master McLeod in Belsat Video Marketing Inc. v Zellers Inc. at para 29. These costs may be set off against any cost award in favour of the defendants for their success on the motion.

Costs

[57] Both sides agreed that the sum of $16,000 (all inclusive) is an appropriate amount for costs of the motion on a partial indemnity basis. However, the parties asked for the opportunity to make written submission as to the scale of costs after receiving my decision in this matter.

[58] If the parties cannot agree on the costs of this motion, they may file written costs submissions not to exceed three pages (double-spaced) excluding costs outlines. The defendants shall deliver their costs submissions by January 31, 2022, and the plaintiffs shall deliver their costs submissions within two weeks thereafter.

Disposition

[59] The defendants’ motion to amend the statement of defence and counterclaim in the form of the fresh as amended statement of defence and counterclaim filed with the motion is allowed.

[60] The plaintiffs are entitled to costs thrown away fixed in the sum of $3,500 (all inclusive) on a substantial indemnity basis and payable within 30 days following the determination of the costs of this motion, subject to further adjustment by the trial judge.

La Horey, A.J.

Date: January 10, 2022