Court File and Parties

COURT FILE NO.: CV-20-641339-00CL DATE: 20230323 SUPERIOR COURT OF JUSTICE – ONTARIO (COMMERCIAL LIST)

B E T W E E N:

EZEKIEL RIMON, EMTI MANAGEMENT INC., MYTAM HOLDING LTD., and THE PLANNING MANAGEMENT GROUP LIMITED Plaintiffs

AND

CBC DRAGON INC., CHARLES CHAN, KBIJ CORPORATION, DEREK LEE, SUN AND PARTNERS PROFESSIONAL CORPORATION, AN-DAK TRADING COMPANY LTD., and AN YUAN LIN Defendants

BEFORE: Osborne J.

COUNSEL: Jasdeep Bal, on behalf of the Plaintiffs Michael Freeman, on behalf of the Defendants, CBC Dragon Inc. and Charles Chan

HEARD: March 23, 2023

Endorsement

JUSTICE OSBORNE:

[1] The Plaintiffs seek an order striking out the Statement of Defence and Counterclaim of the Defendants CBC Dragon Inc. (“CBC Dragon”), Charles Chan (“Chan”), KBIJ Corporation (“KBIJ”), An-Dak Trading Co. Ltd., and An Yuan Lin, the remaining Defendants against whom the action has not been dismissed (collectively, the “Defendants”), for their failure to answer undertakings, produce relevant documents, and abide by successive orders of this Court.

[2] This motion was originally returnable before Kimmel J. on October 3, 2022, but was adjourned to give the Defendants “one more chance and grant their adjournment request”, on terms.

[3] The motion material is voluminous and lengthy. Regrettably, as well as contrary to the Commercial List Practice Direction, none of the motion material is hyperlinked, or even bookmarked, with the result that it is unnecessarily time-consuming to navigate through it all.

[4] This Action was commenced by Statement of Claim issued on May 21, 2020. By Amended Statement of Claim dated September 24, 2020, the Plaintiffs claim various heads of relief as against the Defendants. They allege, generally, that they advanced over $1.1 million to Chan and his company, CBC Dragon, with some funds going to another company of Chan, KBIJ, all to fund the development of a subdivision in Toronto. The main allegation is that the Defendants used the funds for purposes other than those for which they were intended and the money advanced has disappeared without explanation or accounting.

[5] The Defendants deny the allegations, and assert a counterclaim seeking declaratory relief, damages and other relief.

[6] As a result, much of the dispute centres around banking records and evidence relating to various transactions and the flow of funds in and out of various bank accounts controlled by the Defendants largely at CIBC.

[7] Early on in this litigation, and by Amended Notice of Motion dated September 3, 2020, the Plaintiffs moved for an injunction against Chan, particulars of banking transactions relating to CBC Dragon, and leave to issue a certificate of pending litigation (“CPL”) against title to a property at 25 Glen Watford Drive, Scarborough, ON, owned by KBIJ.

[8] Chan, on his own behalf and on behalf of the responding Defendants, was cross-examined on October 19 and 21, 2020, during which he gave various undertakings largely related to the transaction particulars and documents described above.

[9] Subsequent attempts by the Plaintiffs to get responses to the undertakings were unsuccessful. They then brought a motion to compel answers to the undertakings originally returnable on December 14, 2020. That motion was adjourned by Cavanagh J., on consent terms which included a revised deadline for answers. That deadline was missed and the answers to undertakings were not provided.

[10] Then, part of the motion (the request for relief in terms of the CPL) was heard by Dunphy J. on June 3, 2021. In his Endorsement of June 6, 2021, Dunphy J. observed (at para. 13):

I am by no means impressed with the stonewalling efforts of Mr. Chan and my observations of his obstructive behaviour in respect of this motion explain why I have declined to make any order as to costs. The fact that one disagrees with the motion is no reason to decline to answer legitimate questions or answer undertakings.

[11] As noted by Kimmel J. in her Endorsement of October 3, 2022, by consent order dated January 28, 2022, McEwen J. ordered the Defendants to provide particulars of the 192 banking transactions of CBC Dragon listed in Schedule C to that order, and also to answer all outstanding undertakings from the Chan cross-examination of October 19 and 21, 2020, by no later than March 31, 2022. That deadline, too, was missed in that although some answers and information were provided, a significant number of the undertakings remained unanswered.

[12] In her Endorsement, Kimmel J. referenced the observations of Dunphy J. reproduced above, and was equally clear with respect to the conduct of the Defendants:

The conduct of Mr. Chan and the Defendant since the consent order of McEwen J in respect of the same outstanding undertakings, including the particulars of the banking transactions that were ordered by Cavanagh, J to be treated as undertakings is one of the terms of the adjournment he granted on December 14, 2020, is equally unimpressive.

[13] As further observed by Kimmel J., the Plaintiffs advised in early June 2022 that they were not satisfied with the answers that had been delivered by the Defendants on March 31, 2022 and indicated they would be scheduling a motion to strike the pleadings of the Defendants.

[14] Counsel for the Defendants stated at the original return of this motion before Kimmel J. that they unfortunately did not advert to an email sent to him on June 30, 2022, advising that the Plaintiffs would be scheduling a motion to strike the Defendants’ pleadings for failure to remedy the deficiencies. The motion hearing request form was copied to counsel for the Defendants and filed in August 2022, seeking the hearing date before Kimmel J. on October 3, 2022, as one of a few possible return dates. As further noted by Kimmel J., the motion record and factum of the Plaintiffs were served within the time prescribed under the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, for the motion returnable before her.

[15] At that hearing on October 3, 2022, counsel for the Defendants requested an adjournment and advised that additional time was required by the Defendants to address the deficiencies still outstanding. Justice Kimmel noted particular and important undertakings that remained outstanding (numbers 3, 4, 17 and 18) together with the complete particulars the Defendants were to provide of the 192 banking transactions including, without limitation, the identity and connection of the payee and supporting documents and explanations, which had not yet been provided. As observed by Kimmel J., no compelling explanation was offered as to why those obvious deficiencies had not been addressed in the intervening six months since those exact deficiencies were complained about by the Plaintiffs in June 2022.

[16] Justice Kimmel went on to observe in her Endorsement:

The court is not particularly sympathetic to the Defendants’ request, nor impressed by their lack of compliance, or any demonstrated efforts to comply, with their outstanding undertakings and courts previous order(s). That said, the court’s preferences for matters to be heard on the merits rather than dismiss summarily. Counsel for the defendants has indicated that they will revisit their responses but require some additional time.

There comes a time when parties who are repeatedly delinquent in complying with their obligations under the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 and Court orders will be given no more chances by the court. The defendants in this case have almost reached that point, but I have decided to give them one more chance and grant their adjournment request, on the following terms that are ordered pursuant to Rule 37.13… .

[17] Justice Kimmel then set out the terms to which she had referred and pursuant to which she adjourned the motion, peremptory to the Defendants, to the date it was heard before me. The terms included a schedule pursuant to which the Plaintiffs were to provide the Defendants with a list of undertakings including but not limited to which banking transaction particulars remained deficient, and the defendants were to provide their updated and complete responses, no later than October 31, 2022. The Plaintiffs would then serve a supplementary motion record focusing on the remaining deficiencies together with a new factum, and the Defendants had an opportunity to respond. I am paraphrasing those terms, but they are fully set out in Kimmel’s J. Endorsement.

[18] The Plaintiffs complied with the adjournment terms and delivered a revised list of remaining deficiencies and outstanding responses required, all by October 11 as ordered. The work of the Plaintiffs was comprehensive. All of the deficient undertakings were organized into a single chart which, for completeness, also included the answers provided to date by the Defendants, the position of the Plaintiffs on the nature of the continuing deficiency, and a suggestion for how the Defendants could satisfy the undertaking. That material, delivered by October 11, is attached to the Affidavit of Daniel Perlin sworn November 24, 2022 as Exhibit A (the “Perlin Affidavit”).

[19] On October 31, 2022, the very day their responses were due pursuant to the Endorsement of Kimmel J., counsel to the Defendants advised counsel to the Plaintiffs that the undertakings would not be answered in time but suggested that the answers would be forthcoming.

[20] The email from counsel to the Defendants (attached as Exhibit B to the Perlin Affidavit) was sent just before noon (at 11:54 AM) and begins by counsel stating: “I am writing relatively early in this day, because it’s evident to me that these undertakings are not going to be fully answered today; and it is not yet clear just what will be answered by close of business.”

[21] The email goes on to advise, in effect, that the Defendants had just received additional information from Chan and while the Defendants would try to have the responses provided as soon as possible, counsel doubted that would be completed that day. It included an email thread seemingly between Chan and his bookkeeper, presumably intended to demonstrate good faith efforts to comply with the order of Kimmel J.

[22] Counsel for the Defendants then sent an email to counsel for the Plaintiffs on November 4, 2022, purporting to answer the balance of the undertakings (see Exhibit C to the Perlin Affidavit).

[23] It is the position of the Plaintiffs that the November 4 email and attachments do not materially change their position that there are significant and fundamental deficiencies in the undertakings. Their position is that the Defendants, by the email from counsel of November 4, answer only undertakings 17, not centrally relevant to the issue of what happened to the funds advanced by the Plaintiffs, and provide only partial answers in respect of the questions relating to the banking transactions that have been the central focus of the efforts of the Plaintiffs as to the transfers of the funds at issue, literally since December 2020.

[24] Specifically, the Plaintiffs take the position that the following undertakings remained outstanding “in that they have not been answered or updated all following the deficiency being identified on October 11, 2022: 2, 3, 4, 5, 9, 10, 11, 12, 13, 16, 18, 19, 20, 21, 22 and 24.” Further, the Plaintiffs maintain the position that the banking transaction particulars relating to the 192 transactions are only partially provided and therefore remained outstanding “in material ways”. Attached to the Perlin Affidavit as Exhibit C is an updated chart setting out the deficient and outstanding undertakings.

[25] I pause to observe that this list of outstanding undertakings includes, among others, three of the specific four undertakings referenced in the Endorsement of Kimmel J., which are particularly important undertakings that had not been answered (Nos. 3, 4 and 18). Nos. 3 and 4 were not answered at all. The answer to No. 18 as set out in the chart attached to the Perlin Affidavit as Exhibit A, is clearly materially deficient.

[26] The email from counsel to the Defendants of November 4 includes a statement from counsel that: “I must say that this point it is not crystal clear to me (despite my attempts and those of Mr. Bertulli) that Ms. [sic] Chan actually understands what he is expected to do. I say that not as an excuse-just as my own observation-because from what I can tell he seems to have been trying, and I otherwise cannot explain the lack of those documents.”

[27] In submissions, counsel for the Plaintiffs urged me to strike the pleadings of the Defendants. They emphasize that this action had been commenced approximately two and a half years ago, that no responses to undertakings or transaction particulars whatsoever had been delivered until March 31, 2022, and that even following Kimmel J.’s clear and unequivocal Endorsement giving the Defendants one last chance, their answers were still materially deficient without any credible explanation.

[28] The Defendants have not provided any explanation as to why the information and documents have not been provided. Mr. Chan admitted on cross-examination that the funds were intended to be used for the project described above, that he was not permitted to use the funds for any purpose unrelated to the project and that he controlled CBC Dragon (Q475-488).

[29] Finally, counsel for the Plaintiff submits that the Defendants advanced, at the hearing of the motion and for the first time, the proposition suggested in the email of November 4 excerpted above to the effect that the Defendants did not understand their production obligations. That stands in complete contrast to the position they have maintained throughout over the last period of approximately two years, to the effect that they understood exactly what was required and were working diligently on it, but simply required more time.

[30] In argument before me on the motion, counsel for the Defendants readily and candidly admitted that there remain “gaps” in the productions of the Defendants related to the key transactions and the responses to the undertakings. Counsel submitted, however, that there remained viable alternatives to striking the Pleadings, particularly since in his submission, very little of substance has occurred in the action. Affidavits of Documents have not been scheduled and examinations for discovery have not been conducted.

[31] While the focus of the motion is, understandably, on the failure of the Defendants to produce relevant documents which they agreed to produce as a term of the adjournment of the original motion, they observe that the Plaintiffs have not produced any documents to support the claim.

[32] Counsel submitted that the Defence is real, there was no Reply and that the amount at stake is very material with the result that the case ought to be decided on its merits and an order striking the Pleadings would be a disproportionate remedy.

[33] Counsel for the Defendants proposed a new timetable, the payment of some costs to the Plaintiffs and a term to the effect that if the Defendants default on their production obligations by the agreed dates, or their responses are insufficient, a seven-day cure period would apply, and if the deficiencies were not remedied within that period, the Plaintiffs could move to strike their pleadings without notice.

[34] Counsel for the Plaintiffs submitted that this Court ought not to entertain a new timetable as that is precisely what was ordered by Cavanagh J. almost two years ago and the offer is simply a “last-ditch” effort to avoid what should be the result of this motion.

[35] The Plaintiffs rely on rr. 30.08(2), 34.15(1) and 60.12 in support of their request that the pleadings be struck. In my view, r. 34 relates to sanctions for default in respect of examinations and does not assist me here.

[36] The leading authority on the factors to be considered on a motion to strike a defence for failure to make proper production is Falcon Lumber Limited v. 2480375 Ontario Inc. (GN Mouldings and Doors), 2020 ONCA 310. Justice Brown, writing for a unanimous Court of Appeal, began his analysis with a reminder of the fundamental importance of production in any action, at para. 41:

At the heart of the rules governing actions in the Superior Court of Justice lie the obligations of every party to an action to disclose every document relevant to any matter in issue in an action that is or has been in its possession, control or power, whether or not privilege is claimed in respect of a document, and to produce all such documents, unless privilege is claimed in respect of a document.

[37] Justice Brown went on to note that three requirements imposed by the Rules emphasize the importance of the obligation to disclose and produce relevant documents to the proper and fair functioning of the civil litigation process. Justice Brown observed that: “these key rules are designed to ensure that parties make full disclosure of all relevant documents and production of all relevant non-privileged documents well in advance of the examinations for discovery”, all of which is consistent with the goal of Ontario’s civil justice system to provide the public with the just, most expeditious and least expensive determination of every civil proceeding on its merits (at paras. 42, 43).

[38] Justice Brown then concluded his consideration of the governing principles by observing the following, which is particularly applicable in the present case, at para. 48:

However, each time a party defaults on its disclosure and production obligations and requires the opposite party to seek the court’s assistance to remedy the default, two things happen. First, the cost of the litigation increases. Motions are not cheap; they add significantly to the overall costs of a civil case. Second, the final determination of the case on its merits gets pushed back, delayed by the need to bring a defaulting party into compliance with its disclosure obligations.

[39] Noting that there was limited jurisprudence on the issue of when it is appropriate to strike out the party’s pleading under r. 30.08(2) for breach of documentary disclosure and production obligations, Brown J.A. agreed that “the scope of the remedy is one within the discretion of the Court, to be determined in the context of that particular case” (at para. 49, citing with approval Wein J. in Newlove v. Moderco Inc., at para. 21).

[40] The Court set out the principles which ought to guide the exercise of that discretion as follows, at paras. 50-57:

a. the striking of a pleading is not restricted to “last resort” situations, in the sense that it must be preceded by a party breaching a series of earlier orders that compelled better disclosure or production. However, courts usually want to ensure that a party has a reasonable opportunity to cure its non-compliance before striking out its pleading;

b. a court should consider a number of common sense factors including: (i) whether the party’s failure was deliberate or inadvertent; (ii) whether the failure is clear and unequivocal; (iii) whether the defaulting party can provide a reasonable explanation for its default, coupled with a credible commitment to cure the default quickly; (iv) whether the substance of the default is material or minimal; (v) the extent to which the party remains in default at the time of the request to strike out its pleading; and (vi) the impact of the default on the ability of the court to do justice in the particular case;

c. although a court may consider the merits of the parties claim or defence, as it does under r. 60.12 dealing with the failure to comply with an interlocutory order [which is also relevant to the present case], this factor may play only a limited role where breaches of production obligations are alleged as one would reasonably expect a party with a strong claim or defence to comply promptly with its disclosure and production obligations; and

d. a court must consider whether an order to strike out a pleading would constitute a proportional remedy that is consistent with the recent calls of the Supreme Court of Canada to alter the Canadian litigation culture, and the court should consider the extent to which the defaulting party’s conduct has increased the non-defaulting party’s costs of litigating the action, including the proportionality of those increased costs to the amount actually in dispute in the proceeding; and to what extent the defaulting party’s failure to comply with its obligation to make automatic disclosure and production of documents has delayed the final adjudication of the case on its merits, taking into account the simplicity (or complexity) of the claim and the amount of money in dispute.

[41] Applying those principles to the present case, I note that the observation of Brown, J.A. about the fundamental importance of documentary production in any action is particularly apt here, where the documents that are the subject of the outstanding production requests, and multiple court orders, go to the very heart of the issues in this action on the merits.

[42] As noted above, at their highest level, the allegations of the Plaintiffs are simple enough: the Plaintiffs advanced funds - significant funds in the amount of over $1.1 million - to the Defendants to fund the development of a subdivision of some 20 lots in Toronto. The development was never completed, the funds are gone, and the Plaintiffs want them accounted for.

[43] The outstanding responses to undertakings, and the outstanding particulars of the 192 transactions specifically enumerated in the charts, related entirely unsurprisingly to the obvious inquiries that flow from the main allegations: what happened to the money that was advanced by the Plaintiffs, as is admitted by the Defendants, where did it go, and for what purpose?

[44] Answers to the questions, already undertaken to be answered and then subsequently ordered to be answered, ought to have been made by now. To be clear, if the responses are to the effect that all appropriate searches have been made, and no documents exist or none can be located, such responses could equally have been given.

[45] Application of the first principle does not assist the Defendants here. While the striking of a pleading is not restricted to circumstances where such must be preceded by a party breaching a series of earlier orders that compelled better disclosure or production, that is precisely the circumstance here. The information responses were ordered by Cavanagh, J. in December 2020 (as a consent term of the adjournment of the motion), again by McEwen J. in December 2021 (as a further term of an adjournment), and yet again by Kimmel J. in October, 2022. Accordingly, the present situation is in fact a situation where the motion to strike is preceded by a party breaching a series of earlier orders that compelled better disclosure or production.

[46] As to the second principle, I am satisfied that the failure to make production is clear and unequivocal; indeed, it is expressly admitted by counsel for the Defendants who request more time and propose yet another timetable. As to whether the failure to make production so far is deliberate or inadvertent, and whether a reasonable explanation for the default has been provided, I cannot conclude on the record before me that it has been inadvertent or that a reasonable explanation has been provided.

[47] There has been no suggestion, until the email from counsel for the Defendants of November 4, 2022 that perhaps the Defendants (or the individual principals) did not understand their obligations. On the contrary, their position for the period of almost two years before that was to the effect that they were working diligently on producing exactly what had been undertaken, and then ordered, to be produced or answered.

[48] Moreover, I cannot accept the submission that the Defendants have not understood their obligations. They have been represented by counsel throughout, who are well aware of the obligations, and in any event as noted above the requests are plainly and obviously relevant to the central issues in the action.

[49] It follows that the substance of the default cannot be said to be immaterial or minimal and clearly has an impact on the ability of the court to do justice in this particular case. The documents and information at issue are centrally and obviously relevant to the main issue of what happened to the money.

[50] This point leads directly to the third principle noted by Brown J.A. that the merits of the party’s defence may play only a limited role, since one would reasonably expect a party with a strong defence to comply promptly with its disclosure and production obligations. First, I note, as did Brown J.A. that the court may consider the merits of a defence under r. 60.12 which is relevant here given the earlier orders, though it was not a factor in Falcon Lumber.

[51] I recognize in this case, as did Dunphy J. in his decision dismissing the motion for a CPL referred to above, that there may be real issues about the extent to which the Plaintiffs consented to or acquiesced in the use of funds for purposes other than that development of the subdivision project, and it could be that the payment of expenses or other transfers of funds by the Defendants were proper or otherwise would not constitute the breach of any duty owed by the Defendants to the Plaintiffs.

[52] However, in my view, the present case is an example of exactly what Brown J.A. observed: the Defendants have now had over two years to produce the documents and answers to these questions; one would reasonably have expected them to do so if indeed they had documents that supported their position in the litigation.

[53] I note that the Defendants have not put forward any evidence of good faith efforts and due diligence to obtain, for example, documents from third parties such as banks or other financial institutions. One would have expected that.

[54] In addition, I agree with the submission of the Plaintiffs that the Statement of Defence itself puts in issue the very subject matter of the undertakings outstanding on this motion: see, for example, the allegations in the following paragraphs of the Statement of Defence: 10, 11, 16, 20, 27, 42, 50, 51, 56 and 79.

[55] It is important to note that, by their own admission, the Defendants remain in default of their obligations, and the previous orders, as of the hearing of this motion. While I acknowledge that the Defendants have made a commitment to cure the default quickly (in the form of the timetable, with consequences, proposed by counsel for the Defendants at the hearing of this motion), I have no basis upon which I can conclude that they are any more likely to comply with that timetable than the timetable originally set by Cavanagh J. two years ago.

[56] Nor are they any more likely to comply with that timetable than they are to comply with the deadlines fixed by Kimmel J. last October. Justice Kimmel could not have been clearer in the language of her Endorsement that the Defendants were receiving “one last chance” and that, yet again, a judge of this Court was unimpressed with their failure to fulfil their obligations. I should also note that I appreciate that

[57] I should also note that I appreciate that the discovery process in the ordinary course exchange of documents has not yet occurred in this case. In my view, however, the above analysis still applies clearly to this case. While the action was “front-end loaded” in the sense that a significant motion was brought early on, the Defendants have still had a very significant period of time to produce the relevant documents as they were, given the terms of the adjournment of the motion as originally ordered by Cavanagh, J., clearly aware of their obligations, there were successive orders directing them to comply with their obligations, and yet they have still not done so. The Falcon Lumber analysis applies in the circumstances.

[58] Finally, I must consider whether an order to strike a pleading would constitute a proportional remedy in the sense that the Supreme Court required, in Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87: a civil justice system that not only provides a fair process that results in the just adjudication of disputes, but also is “accessible - proportionate, timely and affordable” for without an accessible process, a fair process is illusory (Falcon Lumber, at para. 54, citing Hryniak, at para. 28).

[59] Justice Brown stated that orders to strike pleadings are one means by which to ensure that the civil justice process delivers justice that is proportionate, timely and affordable (Falcon Lumber, at para. 55). I am satisfied in the present case that the conduct of the Defendants has increased the costs of the non-defaulting parties, the Plaintiffs, particularly when I consider the costs of the successive motions, the preparation of the extensive (and helpful) charts of the outstanding undertakings and relevant transactions, the cross-examination of the principal Defendant, Chan, and the repeated and continued efforts to follow-up on these defaults over a two‑year period.

[60] For the same reasons, it is obvious to me that the failure by the Defendants to comply with their obligations has delayed the final adjudication of the case on its merits, again taking into account the amount of money in dispute. While the amount (approximately $1.1 million) is material, it is apparent to me that the costs of litigating this dispute will soon represent, if they have not already, a proportion of the amount in dispute that cannot be dismissed as being immaterial.

[61] I also observe that, while the nature of the dispute is not a formal factor, in my view it could be relevant to the analysis of proportionality required by dispute about the investment and use of funds for a real estate development. It is not, for example, a family law dispute where issues of child custody are at play, nor is it a matter where there are significant third-party interests not represented before the court, or a case involving matters that go to the dignity of the parties or others. Rather, it is a dispute about money. In cases where the nature of the dispute relates to the use and, effectively, the tracing of funds, sophisticated commercial parties represented by counsel on the Commercial List should expect to produce, on a timely basis, the documents relevant to the key issues.

[62] The Commercial List is designed to operate, and does operate, to address, as expeditiously as possible and in an orderly manner, significant commercial disputes. While this often involves active and ongoing case management, that should not be interpreted to mean that in a relatively straightforward commercial case, multiple court appearances are required to wrestle a case into a form such that it is amenable to a timely disposition.

[63] This is particularly so when the issues addressed on those multiple court appearances ought not to have required the intervention of the court once, let alone repeatedly: parties availing themselves of the resources of the Commercial List are expected to reciprocate by fulfilling their ordinary course obligations in litigation in accordance with the Rules. That ought not to require a court appearance, let alone multiple orders of this Court. The failure of parties to comply with their obligations in a timely manner, or at all, impacts not only the just and expeditious determination of the present case, but indeed has implications for all matters pending on the Commercial List.

[64] I cannot conclude without noting the observations of Ricchetti J. in his disposition of the motion in Falcon Lumber Limited v. 24803375 Ontario Inc., 2019 ONSC 4280, at para. 5, aff’d 2020 ONCA 310, at first instance prior to the decision of the Court of Appeal referred to above, and which in my view are equally applicable to the present case:

To permit the Defendants to conduct themselves in this manner, without judicial intervention by the striking of their pleadings, despite the severity of such an order, would encourage other defendants to undertake similar conduct thereby bringing the administration of justice into disrepute and the end of compliance with the Rules of Civil Procedure.

[65] For all of these reasons, the statement of defence and counterclaim of the Defendants is struck without leave to amend.

[66] The Plaintiffs seek their costs of this motion. In submissions, counsel sought costs in the range of $20,000 to $25,000, all-inclusive. In his submissions, counsel for the Defendants agreed that costs ought properly to be payable (though I observe that the concession was made in the context of proposing a further timetable and not as any concession that the pleadings ought to be struck), and suggested that costs be ordered in the range of $5000 to $7000.

[67] My discretion to award costs flows from s. 131 of the Courts of Justice Act, R.S.O. 1990, c. C.43. Applying the principles and factors set out in r. 57.01, and observing that the Plaintiffs have not submitted an itemized Bill of Costs, but considering all of the factors as against the chronology and circumstances of the present case, I fix costs in the amount of $11,000, inclusive of fees, disbursements and taxes.

[68] Order to go in accordance with these Reasons.

Osborne J. Date: March 23, 2023