Court and Parties

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

MICHAEL CHU, Plaintiff – and – THI THU LEE also known as BRENDA LE, DORINDA L. CHIANG, MCMASTER, MCINTYRE & SMITH LLP., KEN CHONG, CONG TOAN TRAN, 2506275 ONTARIO LTD., BRISTOL GREEN CORP. LTD., and JOHN DOE, Defendants

Counsel: Mr. A. Meringolo, Counsel for the Plaintiff Mr. B. Phillips, Counsel for the Defendant

Heard: Via Written Submissions

Costs Endorsement

McCARTHY, J.

Background

[1] The Plaintiff seeks costs at this interlocutory stage of the proceeding against the Defendant Thi Thu Lee also known as Brenda Le (“Le”).

[2] The action arises out of alleged fraudulent transactions and breach of trust/ fiduciary duty in respect of properties owned or controlled by the Plaintiff.

[3] To date this matter has featured a series of motions and appearances beginning with the Plaintiff’s original ex parte motion seeking a Mareva Injunction on April 12, 2023. The Plaintiff was successful on the motion.

[4] There followed a string of appearances featuring: unsuccessful motions by the Defendant Le to set aside and dismiss the Mareva Order (April 25, 2023 and May 12, 2023); a re-appearance seeking clarifications and directions on April 27, 2023; a motion by the Plaintiff for leave to amend its claim (successful); and to have $500,000 funds payable into court (opposed and successful); a fulsome rule 39 cross-examination in the context of the motions to set aside the Mareva order; and a case conference on May 26, 2023 which resulted in the court appointing an administrator of property pending litigation. There has been all manner of filings including records, affidavits, transcripts, supplementary affidavits, financial statements, and factums.

Positions of the Parties

[5] The Plaintiff now seeks costs of these steps in the proceeding in the amount of either $43,071.37 on a partial indemnity basis or $59,209.18 on a substantial indemnity basis. Both of these sums include disbursements of $452 as well as HST.

[6] The Defendant Le argues that since the fundamental issue in the case remains to be decided (i.e., did the Plaintiff have capacity at the time he personally signed off on the subject transactions), that costs should be dealt with upon the ultimate determination of that issue. Moreover, the outcome of the various appearances has seen a relaxation of the injunction not a tightening of it; there has been some divided success to date as well as consent orders for cross-examinations and the appointment of an administrator.

[7] Alternatively, the Defendant contends that the amounts sought by the Plaintiff are excessive and should not be payable by Le alone. The costs pertaining to the Mareva injunction only should be payable at this time and only in the more modest range of $15,000 to $20,000.

Analysis

[8] Costs of and incidental to a proceeding or to a step in a proceeding are in the discretion of the court, and the court may determine by whom and to what extent the costs shall be paid: s.131(1) of the Courts of Justice Act, R.S.O. 1990, c. C.43.

[9] The general principles applicable to the exercise of the court’s discretion are set out at rule 57.01 of the Rules of Civil Procedure. The overriding principles of reasonableness, fairness, and proportionality must also govern the court’s determination: see Bailey v. Barbour, 2016 ONCA 334, [2016] O.J. No. 2352 at para. 9.

[10] Absent special circumstances, costs follow the event: see Bell Canada v. Olympia & York Developments Ltd., [1994] O.J. No. 343 (Ont. C.A.) at para. 21.

[11] Costs following the event should not be departed from except for very good reasons: see Gonawati v. Teitsson, [2002] O.J. No. 1340 (Ont. CA.).

[12] I agree with the Plaintiff that the matter to date has been highly complex and contentious. The materials have been voluminous. The issues have been of great importance and have involved a bevy of properties, numerous parties and actors, interested non-parties, secured lenders, corporate entities, tenants, allegations of fraud, a series of related but separate transactions, administration of the subject properties, trust documents, estate plans and powers of attorney, and the capacity/incapacity of the Plaintiff. The parties have each been represented by experienced and able counsel.

[13] The Plaintiff has been largely successful to date. He sought and obtained a Mareva injunction, the reconveyance of legal title to four properties to the Plaintiff and the payment of $500,000 of contested funds into court. The contentious issue of the Plaintiff’s capacity, breach of fiduciary duty, breach of trust and damages remain to be determined. The Defendant Le’s success in relaxing the Mareva injunction was quite limited.

[14] The value of the properties in question run into the millions of dollars. The importance to the Plaintiff of freezing these assets and preventing them from being alienated, conveyed, encumbered pending the adjudication of the matter on its merits cannot be overstated. The initial prospect of the assets being put beyond the reach of the Plaintiff for recovery or to serve as satisfaction for a judgment must weigh heavily upon the court’s consideration of proportionality.

[15] The Plaintiff is most certainly entitled to costs of the proceedings to date. To deprive him of costs at this juncture would both offend the principle of indemnity and ignore the reality on the ground, which is that the assets in dispute have been preserved and safeguarded.

[16] I would stop short of awarding costs on a substantial indemnity basis. There has been no adjudication of the capacity of the Plaintiff at the material time of the transactions; nor has the Plaintiff proven any breach of trust, fraud or breach of fiduciary duty. In my view, the Plaintiff would need to prevail on those issues before being awarded costs on that scale.

[17] The Plaintiff’s bill of costs is detailed and transparent. I disagree with the Defendant Le that the costs related to the statement of claim, the amendment of the claim, the attendance at the examination of the Plaintiff and the case conferences should not be determined at this stage. These were all necessary steps in the proceedings that brought the parties to the present juncture. All were reasonable, proportional, and essential to obtaining and maintaining the Mareva injunction along with subsequent and accompanying relief.

[18] I conclude that the Plaintiff is entitled to his costs of the events to date on a partial indemnity basis. I would fix those costs in accordance with the amount calculated, detailed, and proposed by the Plaintiff: $43,071.37 inclusive of HST and disbursements.

[19] There remains the question of whether Le should bear the costs herself. The Plaintiff does not address that question in her submissions. None of the other Defendants have filed responding submissions on the issue. I am not aware that it has been canvassed by the parties or conceded by Le. Indeed, Le’s submissions at page 3 appear to raise the issue of whether costs should, “…be payable by Le alone.”

Summary

[20] The Plaintiff is entitled to recover costs of the events to date in the amount of $43,071.37.

[21] The question of by whom those costs are payable remains to be determined. I invite all parties to provide the court with further submission on the issue either by way of written submissions limited to 3 pages per party on or before October 15, 2023, or by way of oral submissions at the next appearance before me. Supplementary reasons on costs will follow in due course.

[22] A formal costs order must therefore await further adjudication.

McCARTHY J.

Released: September 12, 2023