Reasons for Decision

Court File No.: CV-23-00701762-0000
Date: 2025-03-04
Court: Superior Court of Justice - Ontario

Parties:
Baochong Liu, Yueming Qiao (also known as Mike Qiao), Yali Wang, Yinghui Zhu, Yanhui Liang and Viktoriia Jin, Plaintiffs
– and –
David Hao, David Hao Professional Corporation, Dongxia Zhao (also known as Helen Zhao), Suyun Lu, 2640353 Ontario Inc., Dunhua Yuan (also known as Donahue Yuan), Zijian Liu, Bao Ying Sun (also known as Baoying Sun), and Ping Yuan, Defendants

Before: Edward M. Morgan

Counsel:
Andrew Faith, Jeffrey Wang, and Yuliya Mykhaylychenko, for the Plaintiffs
Ran He, for the Defendant, 2640353 Ontario Inc.
Adam Pantel, for the Defendants, David Hao and David Hao Professional Corporation

Heard: February 25-26, 2025

I. The Plaintiffs’ Investment

[1] A solicitor’s mother, who was also the solicitor’s law clerk and office manager, hijacked his practice, had access to his trust account, and, together with her friend, a longtime mortgage broker working in the firm, defrauded the Plaintiffs – clients of the firm. Mother paid funds that the Plaintiffs placed in trust with the law firm to her and the broker’s family members and to a real estate company and its principals who the law firm also represented in an undisclosed conflict of interest with the Plaintiffs. The mother and the mortgage broker have now vanished.

[2] The Plaintiffs seek summary judgment and reimbursement/damages from the mother, the broker, the solicitor, and the law firm. They also seek payment from the real estate company and related parties who received the Plaintiff’s monies wrongfully and who profited from cooperation with the law firm.

[3] The solicitor himself contends that he had no personal involvement in the transactions. The other Defendants argue that the Court needs to hear from the missing culprits before all of the facts can be found and judgment granted.

[4] The Plaintiffs submit that whether the solicitor was involved or was absent from his law practice does not matter, as he is liable for the actions of his firm. They further submit that the misappropriation of trust funds and the trail of wrongful payments going to all of the Defendants speak for themselves in leading to judgment.

[5] The action revolves around the Plaintiffs’ claim of misuse of funds they invested in a real estate development project. The project aimed to build a gas station at 595 Bronte Road, Oakville, Ontario (the “Property”) owned by the Defendant, 2640353 Ontario Inc. (“264”).

[6] In early 2022, the Defendants, Suyun Lu (known as “Lulu”) and Helen Zhao (“Helen”), who were, respectively, office manager/law clerk and in-house mortgage broker for the Defendant, David Hao Professional Corporation (“DHPC”), a law firm owned and operated by the Defendant, David Hao, approached each of the Plaintiffs about an “investment opportunity”. The opportunity was described as a construction loan to 264, to be secured as a second mortgage on the Property.

[7] The arrangement called for DHPC to represent the Plaintiffs in securing the loan, documenting the transaction, registering it as a second mortgage on the Property, and administering the funds through its trust account. As indicated, the Property was owned by 264, whose directors and principals are the Defendants, Suyin Lu, Dunhua Yean (also known as Donahue Yuan), Yumin Su, Zijian Liu, Bao Ying Sun (also known as Baoying Sun), Ping Yuan, and Min Hui Zhou. Several of the individual Defendants are also guarantors of the loan to 264.

[8] Some of the Plaintiffs were former clients of David Hao and DHPC, having used them as solicitors on previous transactions. In February 2022, Lulu and Helen first recruited the Plaintiffs, Baochong Liu, Yali Wang, and Mike Qiao to contribute $2,000,000 towards the investment in 264. A month later, in March 2022, they recruited the Plaintiffs, Yinghui Zhu, Yanhui Liang, and Viktoria Jin to contribute an additional $650,000 towards 264’s development project, bringing the total to $2.65 million. All of the Plaintiffs were told that DHPC would be representing them in this investment and mortgage; in fact, evidence in the record establishes that they were instructed that DHPC was to be their only law firm representing them in respect of the loan to 264.

[9] David Hao and DHPC were also the solicitors who acted for 264 in securing the first mortgage on the Property. This conflict was not disclosed to any of the Plaintiffs.

[10] Lulu and Helen, as agents for DHPC, made a number of representations to the Plaintiffs. These include:

• the plaintiffs would provide construction financing by way of a secured loan to 264 to be overseen by the DHPC Defendants, with David Hao acting as trustee;
• the loan would be fully secured and entirely risk free;
• the loan would earn 12% interest with an initial three-month advance interest payment;
• the loan would be structured as a second mortgage on the Property;
• while there was a first mortgage on the Property, the plaintiffs’ loan would be fully secured by the value of the Property as well as by two additional properties owned by the Property Defendants at 66 Queensway Drive, Richmond Hill and 2150 Pear Tree Road, Mississauga;
• the Property Defendants had extensive experience building gas stations and had already built at least three in the past; and
• David Hao and DHPC would represent the plaintiffs in the transaction, act as trustee for the loan, and release the loan proceeds to 264 Ontario at established construction milestones to ensure that the Plaintiffs’ funds were deployed securely as the construction project progressed.

[11] The Plaintiffs’ investment in 264 was documented in two Mortgage Contracts entered into in the spring/summer of 2022. The Mortgage Contracts identified David Hao of DHPC as the solicitor for the Plaintiffs. They also named 264, as well as the principals of 264, the Defendants Donahue Yuan and Yumin Su, as the borrowers, and the Defendants, Min Hui Zhou, Ping Yuan, Bao Ying Sun, Donahue Yuan, Yumin Su, and Zijian Liu, as the guarantors. Under the Mortgage Contracts, the Plaintiffs’ loan was set to mature on February 21, 2023.

[12] The Plaintiffs paid their funds to DHPC, in trust, relying on the law firm to release those funds to 264 in accordance with the following agreed-upon stages of the project:

Lender	Principal	Stage
Yueming Qiao	$600,000.00	Completion of property construction
Baochong Liu	$500,000.00	Quotation and tanks on site/Excavation
Yali Wang	$300,000.00	Concrete has been poured
Baochong Liu	$600,000.00	Completion of the above work
Yanhui Liang/Yinghui Zhu	$200,000.00/$300,000.00	Renovation of convenience store
Viktoria Jin	$150,000.00	Renovation of restaurants

[13] After forwarding their initial funds, the Plaintiffs received three months’ interest in advance, and then monthly interest payments until December 2022. During this time, they collected the interest payments by cheque from the DHPC offices. Most of these cheques were signed by David Hao as trustee, although some were issued and signed by 264. DHPC did not provide any updates or ongoing accounting to the Plaintiffs as to the progress of the gas station’s construction, nor did DHPC advise the Plaintiffs that there were any difficulties in funding the construction.

[14] On December 28, 2022, when some of the Plaintiffs came to the DHPC offices to collect their monthly interest payment, Lulu advised them that the trust monies were spent. She stated that 264 and its principals did not have sufficient funds to make further interest payments or to return their principal, and that they were not able to complete the gas station construction.

[15] During the course of a number of meetings in early 2023 with Lulu, Helen, and some of the principals of 264, the Plaintiffs learned that the first mortgage was never properly registered on title to the Property. They also learned for the first time that David Hao and DHPC were the solicitors for 264 on the first mortgage transaction. In addition, they were told that $678,867.50 of their trust funds had been paid out to 264 not for the purposes of building the gas station, but rather for 264’s use in paying down and restructuring the first mortgage – i.e. the transaction on which David Hao had represented 264. In addition, they came to understand that Helen’s son, through his company Hillcrest Group Inc., was retained by 264 to do the construction work for the gas station on the property.

[16] Eventually, it was disclosed to the Plaintiffs that none of their funds had been paid out of the DHPC trust account in accordance with the stages of construction as provided in the Mortgage Contracts. Rather, the Plaintiffs’ funds were paid out to a combination of 264, its principals, DPHC and related persons, as well as to a number of persons or entities unknown to the Plaintiffs, as follows:

Date	Payee	Amount
March 2, 2022	Yi Zhou (first mortgagee’s lawyer)	$678,867.50
March 8, 2022	Alex Xinnan Yo	$12,056.13
March 9, 2022	Zhibin Zho	$10,000.00
March 10, 2022	2851932 Ontario Inc.	$82,400.00
March 10, 2022	Quingyan Wang	$10,000.00
March 25, 2022	DHPC	$11,427.42
March 28, 2022	JX Law P.C. (for Hillcrest Group)	$900,000.00
March 29, 2022	Reallink Law (for 264 director Ping Yang)	$401,667.03
March 29, 2022	Shumei Lu (David Hao’s aunt)	$25,750.00
March 29, 2022	Dongxia “Helen” Zhao	$5,750.00
March 29, 2022	Hillcrest Group Inc.	$300,000.00
May 17, 2022	DHPC (mortgage registration fee)	$472.74
May 17, 2022	LK Law (for 264)	$1,891.55
November 3, 2022	Junjui Hao (David Hao’s father)	$2,000.00
October 9, 2023	DHPC	$13,250.00

[17] It is noteworthy that the Statement of Claim in this action was served on the Defendants on June 6, 2023. Despite David Hao’s protestations that he knew nothing about his mother’s and Helen’s misrepresentations to the Plaintiffs and their use of the Plaintiff’s funds in his firm’s trust account, the final payment to his firm is four months after he was served with the Statement of Claim. He must have understood by that time that something was awry in his firm, but he saw fit to continue paying himself from the Plaintiffs’ trust funds. He has deposed that, in fact, his mother remained employed by DHPC and had full access to his trust account until November 2023.

II. The Property Owner’s Defense

[18] The Plaintiffs have presented an uncontroverted record evidencing conflict of interest and misdirected payments of their funds. With all of that, it is interesting to observe that it is 264 and the individual Defendants related to 264 who claim to be the victims of a fraud. They argue that since David Hao/DHPC was the Plaintiffs’ lawyer, everything he and his firm did – including sending the Plaintiffs’ funds to his own family members and to some of the 264 principals personally – was done as the Plaintiffs’ agent.

[19] By this logic, 264 argues that it is the Plaintiffs who deprived 264 of a significant portion of their promised investment. Counsel for 264 explain the point in their factum:

57. The Second Mortgage Commitment was structured to provide financing for the development of a gas station on the Property, with the funds to be advanced based on necessity and subject to [264] Inc.’s approval. However, the Plaintiffs, through their agents, unilaterally diverted the mortgage proceeds to third parties without notifying or obtaining consent from [264] Inc.

58. For example, Zhao [Helen] and Lu [Lulu] facilitated unauthorized payments, including: (a) $300,000 directly to Hillcrest, despite its demonstrated lack of qualifications to complete the project; (b) $900,000 advanced to JX Law, with no evidence that these funds were directed to Hillcrest or used for the benefit of [264] Inc.; and (c) At least $115,883.55 in payments made by Hao and DHPC to unrelated third parties with no involvement in the mortgage transaction.

59. These actions constitute a clear failure by the Plaintiffs to ensure the mortgage funds were allocated for their intended purpose. By allowing their agents to engage in such misconduct, the Plaintiffs are responsible for these breaches under the doctrine of agency.

[20] The argument by counsel for 264 is a clever one.

[21] It is generally the case that a solicitor of record has ostensible authority to bind the client and to advance funds from his or her firm’s trust account: Dick v. McKinnon, 2014 ONCA 784, para 4. It is also trite law that a solicitor, acting under authority from a client, is in the same position as an agent in conducting a commercial transaction on the client’s behalf: Felty v. Ernst & Young LLP, 2015 BCCA 445, para 38.

[22] Flowing from that, a solicitor, acting as agent, can bind the principal – i.e. the client – in respect of obligations to third parties: Scherer v. Palleta; Regional Group of Companies Inc. v. 1760452 Ontario Inc., 2015 ONSC 3514, para 74. The solicitor/agent, acting within their authority, is also liable for deceit or fraud on which a third party detrimentally relies: Straus Estate v. Decaire, 2011 ONSC 1157, para 65, aff’d 2012 ONCA 918.

[23] But with all of that, 264’s agency argument is in reality too clever by half.

[24] In the first place, a substantial amount of trust funds that were misdirected or misappropriated by DHPC were, in fact, misdirected away from the gas station project but for the benefit of 264 and its principals. For example, on March 29, 2022, $401,667.03 of the Plaintiffs’ funds were sent to pay off a mortgage on a property owned by Ping Yang, a director of 264. This payment misappropriated the Plaintiff’s funds for the benefit of Ms. Yang personally, and perhaps for the benefit of 264, but to the detriment of the Plaintiffs. It is self-evident that it was Ms. Yang and her company, 264, and not the Plaintiffs, that gave instructions to DHPC as to where to send these funds.

[25] This example flows directly from the fact that DHPC was in a conflict position, having been 264’s solicitors for the first mortgage on the Property and, apparently, still administering the second mortgage funds on 264’s and its principals’ behalf as well. Indeed, the very first payment out of the Plaintiffs’ funds – a payment of $678,867.50 on March 2, 2022 – went to pay down the first mortgage on the Property to the direct benefit of 264. This payment was not envisioned in the Mortgage Contracts entered into by the Plaintiffs, and did not fund the gas station construction project as intended by the Mortgage Contracts.

[26] This March 2, 2022 payment to the first mortgagee of the Property was wrongly paid by DHPC from the Plaintiffs’ trust funds; and this misappropriation of those funds was, quite obviously, done at the direction of DHPC’s other client, 264. The Plaintiffs were interested in getting the gas station built so that their mortgage loan could be serviced by 264; they had no interest in sending funds to service, or to restructure, the first mortgage on the Property. It does not lie with 264 to contend that it relied on DHPC’s ostensible authority to act on behalf of the Plaintiffs when DHPC was acting for 264’s benefit to the detriment of the Plaintiffs.

[27] The argument by 264 regarding the payments made to Hillcrest from the trust funds are also perplexing. Counsel for 264 makes the point that Hillcrest is owned by Helen’s son, and then goes on to argue that since Helen is, in effect, part of the in-house staff of DHPC, any payment to Hillcrest is a payment made both by and to DHPC on the Plaintiffs’ behalf. However, Hillcrest is a construction company retained for the gas station job by 264. The fact that it is owned by Helen’s son does, of course, suggest that it was Helen who recommended Hillcrest to 264, but that only underscores DHPC’s conflict of interest.

[28] Why, one might rhetorically ask, would a borrower embarking on a development project act on the advice of their lender’s law firm in retaining a building contractor? To ask the question is to already answer it: DHPC was 264’s lawyer and trusted advisor at the same time as it was counsel to the Plaintiffs and administering their trust funds. In fact, the record contains an affidavit of 264 director Ping Yang sworn in respect of proceedings by the Property’s first mortgagee, in which the affiant confirms that 264 was of the view that Helen and DHPC were at all relevant times acting as 264’s agent.

[29] Unfortunately for the Plaintiffs, DHPC was, once again, administering their trust funds not for their benefit, but for the benefit of 264. Counsel for 264’s attempt to use the law of agency in associating all of DHPC’s acts with the Plaintiffs is, to put it delicately, contrary to reality. No recitation of agency case law can obscure the fact that DHPC had two clients, and that it was taking money from one – the Plaintiffs – and using it, improperly, for the benefit of the other – 264.

[30] There may also have been self-dealing here on the part of Helen. That is, she had engineered the arrangement in a way that also benefitted her son as the principal of Hillcrest. I do note that it is 264’s view that Hillcrest was not up to the task of constructing the gas station on the Property, and that it should therefore never have been referred to it for the job in the first place.

[31] On the other hand, the record contains photographic evidence of the fact that Hillcrest did indeed build a large building on the Property. While 264 contends that the interior of the building was never finished, it is obvious from the photo in the record that an entire new building is now standing on the grounds of the Property. The evidence from 264 itself is that it never paid any of its own funds to Hillcrest, and so the building that was built must have been entirely funded by the payments by DHPC out of the Plaintiffs’ funds.

[32] The payments to Hillcrest were not made by DHPC in accordance with the Mortgage Contracts, as they did not follow the staged payment schedule as a security measure for the project. But they did enure entirely to the benefit of 264 as owner of the Property since they resulted in a substantial building being built on what had been empty land.

[33] Counsel have advised me that the Property has now been sold by the first mortgagee in exercise of its rights, but that the sale did not produce sufficient proceeds to pay the Plaintiffs’ second mortgage. I can only assume that the sale of the Property reflected the market value added by Hillcrest in constructing the building, even if the interior was not fully complete. Since 264 contributed none of its own funds to the construction of the building, that value was a result of the Plaintiffs’ funds being directed to Hillcrest.

[34] In short, there is no merit to 264’s defense based on the law of agency. It ignores the fact that DHPC was 264’s own agent at the same time as it was acting for the Plaintiffs and directing payments of the Plaintiffs’ trust funds. More importantly, it takes no account of the fact that 264 was itself a beneficiary of the misdirection of the Plaintiffs’ trust funds and that as such it was a participant in the misappropriation of those funds.

III. The Solicitor’s Defense

[35] As indicated at the outset of these reasons, David Hao’s defense is that he didn’t know what his mother/office manager, along with the mortgage broker who worked out of his office, were doing. Counsel for Mr. Hao and DHPC makes no excuses for the conduct of those two individuals in respect of the Plaintiffs and their funds; indeed, there can be no excuse for their manipulation of the Plaintiffs and the misappropriation and misdirection of their trust funds. However, counsel submits that the record contains no evidence of the solicitor’s own misconduct or of the standards that he allegedly fell below.

[36] Counsel for Hao/DHPC argues that given the state of the record, the Plaintiffs’ causes of action in negligence and breach of trust have not been made out:

4. While the plaintiffs allege that David Hao (‘Hao’) and David Hao Professional Corporation (‘DHPC’) were retained by the plaintiffs to act on their behalf in connection with the Loan, the uncontroverted evidence in this proceeding is that Hao was unaware of the Loan transaction that is a subject matter of this action, until having been sued in this action. The entire Loan transaction was completed by the defendants Suyum Lu (‘Lulu’) and Dongxia Zhao (‘Helen’), without Hao’s knowledge, consent or authorization.

5. It is Hao’s uncontroverted evidence is that he never authorized Lulu to accept a retainer on behalf of Hao or DHPC; had no knowledge or participation in the Loan transaction; had no knowledge of or participation in DHPC receiving the Loan proceeds from the plaintiffs in trust; and had no involvement or knowledge of the payout of the Loan funds from the trust account of DHPC.

6. [E]xpert evidence regarding the appropriate standard of proper supervision of staff, proper safeguards relating to his trust account, and Hao`s other alleged negligent actions are required. The plaintiffs have thus failed to put their best foot forward and have failed to establish that Hao is liable in negligence.

[37] As counsel for the Plaintiffs points out, the Supreme Court of Canada has articulated that the point of any expert evidence is to “provide the court with a ready-made inference which the judge and jury, due to the technical nature of the facts, are unable to formulate”: R v Mohan, quoting R v Abbey, at 49.

[38] With respect, no specialized knowledge is necessary for the Court to understand that David Hao’s own position is that he entirely neglected his responsibilities to his clients. He allowed his mother unfettered access to his law firm’s trust account, to his law firm’s offices, and to its letterhead. He claims not to have been aware that $2,650,000 flowed through his trust account until 18 months after the first deposit. He also maintains that he had no knowledge of numerous deposits, cheques, and transfers of funds during the entire period.

[39] His abdication of all control and responsibility for his law practice seems to have been complete. With due respect, this conduct is so far below the standard expected of a competent solicitor that no expert evidence is necessary to establish that a reasonable standard of care has not been met.

[40] The record also indicates that even after he acknowledged discovering his mother’s and Helen’s unauthorized dealings in his firm and their transactions in and out of his trust account, Mr. Hao made no effort to retrieve the Plaintiffs’ funds or to make them whole. He did not, for example, contact any of the recipients – including his father and his aunt – to request the return of the Plaintiffs’ misdirected funds. Rather, he apparently abandoned his law office, leaving the LSO to discover the problem and take trusteeship over his legal files.

[41] Mr. Hao’s behaviour in this regard is, again, “so egregious that it is obvious that his or her conduct has fallen short of the standard of care, even without knowing the precise parameters of the standard”: Mandozai v. Igbinosun, 2015 ONSC 2288, para 17, citing Krawchuk v. Scherbak, 2011 ONCA 352. No expert evidence or trial is needed to determine his negligence as a practicing lawyer.

[42] Furthermore, both David Hao and his professional corporation, DHPC, are named as Defendants. Pursuant to section 3.4(2) of the Ontario Business Corporations Act, RSO 1990, c B.16, actions of DHPC are deemed to be Mr. Hao’s own actions as shareholder and agent of DHPC. The Plaintiffs provided $2,650,000 to DHPC in trust, and Lulu, DHPC’s employee, deposited these funds into DHPC’s trust account and then distributed them to unauthorized individuals on DHPC cheques. DHPC’s breach of trust is clear on the face of this record and extends to Mr. Hao himself.

[43] In short, there is no merit to David Hao’s defense that he knew nothing of his mother’s and Helen’s misdeeds. The argument ignores the fact that he is liable for the acts of his professional corporation/law firm, and that there is no possible defense to the way in which the staff of his law firm mishandled the Plaintiffs’ legal affairs and their money.

IV. Damages

[44] Neither Lulu nor Helen have defended the action. They are in default of the claims against them for negligent misrepresentation and knowing assistance of DHPC’s breach of trust. Having been noted in default, Lulu and Helen are taken to admit the facts alleged in the statement of claim, including that they had a special relationship with the Plaintiffs that gave rise to a duty of care. They made a number of false and misleading representations to the Plaintiffs in carrying out their duty of care, and, as agents for DHPC, they acted negligently in their treatment of the Plaintiffs.

[45] Furthermore, the Plaintiffs reasonably and foreseeably relied, to their detriment, on the misrepresentations by Lulu and Helen to enter into the Mortgage Contracts. These representations included that they were retaining David Hao and DHPC as their lawyer with all of the duties of trust and care accompanying that relationship. These facts, and the overall relationship between Lulu and Helen as DHPC staff and the Plaintiffs as DHPC clients, clearly establish Lulu’s and Helen’s liability for negligent misrepresentation, as well as DHPC’s liability for negligence and breach of fiduciary duty to its clients: Doumouras v. Chander, 2019 ONSC 6056, para 25.

[46] As indicated above, David Hao himself is liable for all acts of DHPC pursuant to s. 3.4(2) of the OBCA. Further, David Hao is personally liable for negligence and for breach of fiduciary duties in the operation of his law practice and his trust account. He allowed Lulu and Helen to act on his behalf in a manner that breached his and his firm’s duty of care and fiduciary duties to the Plaintiffs as clients; this permissiveness, or willful blindness, with respect to Lulu and Helen’s wrongful conduct was itself a breach of duty by David Hao to the Plaintiffs as his and DHPC’s clients.

[47] As borrower, 264 and its principals are also liable for the return of the funds wrongfully advanced to them in a manner that was contrary to the terms of the Mortgage Contracts, together with the interest on those funds. The Mortgage Contracts specify that the borrowers must pay 12% per annum for the first twelve months of the mortgage term and at 18% per annum for every month thereafter.

[48] In addition, pursuant to the Mortgage Contract, the borrowers have also agreed to pay to the lender any “expenses of collecting any payments not received from the Borrower when due” and “any and all legal fees incurred by the Lender.” Furthermore, given the conflict of interest, with DHPC acting in the interest of 264 and its principals and preferring those interests to the interests of the Plaintiffs, it is evident from the record that all of the Defendants were working together to deprive the Plaintiffs of their funds. 264 and its principals are therefore jointly and severally liable for all of the breaches of duty and negligence of Lulu, Helen, David Hao, and DHPC toward the Plaintiffs.

[49] The damages calculation is:

Description	Amount
Total funds paid out of DHPC trust	$2,644,000
12% interest until Feb. 2023	$317,280
18% interest Feb. 2023 to Feb. 25, 2025	$951,840
Total expected principal and interest	$3,913,120
Less total interest received	$253,100
Total compensatory damages	$3,660,020

[50] Counsel for the Plaintiffs submit, and I would agree, that, “[t]he actions of these defendants are so malicious and outrageous that they are deserving of punishment on their own”: McCabe v. Roman Catholic Episcopal Corporation, 2019 ONCA 213, para 39. Punitive damages are appropriate in these circumstances where, to limit the Plaintiffs’ damages to the principal and interest under the Mortgage Contracts would amount to a “license fee” for the Defendants to engage in the exploitation of other lenders: see Whiten v. Pilot Insurance Co., 2002 SCC 18, para 32. The court cannot allow such conduct to go undeterred.

V. Disposition

[51] The Plaintiffs shall have an order granting summary judgment in the amount of $3,660,020 plus pre- and post-judgement interest from February 25, 2025 in the amount of 18%, jointly and severally as against all Defendants. The Defendants shall also, jointly and severally, pay punitive damages to the Plaintiffs in the amount of $100,000.

[52] The Plaintiffs also deserve their costs of this motion and of this action. Given that the Mortgage Contracts call for full indemnity, the Plaintiffs deserve an award of costs on at least a substantial indemnity basis as set out in their Bill of Costs. In any case, the Defendants have all put the Plaintiffs through relatively extensive litigation in a case where their liability was patent on the face of their dealings. The Plaintiffs deserve costs recovery that is adequate to the ordeal they have been put through.

[53] Including disbursements and tax, the Plaintiff’s cost request comes to $319,189.49. Under the circumstances, that is a reasonable request. Their counsel invested substantial time and effort in this matter, and that investment paid off with a successful result. I am inclined to exercise my discretion under section 139 of the Courts of Justice Act, RSO 1990, c C.43 to do no more than to adjust the Plaintiffs’ request with some minor rounding off to $319,000 for the sake of convenience.

[54] In sum, the Defendants shall, jointly and severally, pay the Plaintiffs $3,760,020 in damages, plus costs in the amount of $319,000, plus 18% interest thereon from February 25, 2025 to the date of payment.

Date: March 4, 2025
Edward M. Morgan