COURT FILE NO.: CV-23-711126

Date: March 18, 2025

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: 2698368 Ontario Inc. v. Capitalplus Development Group Ltd.

Before: Associate Justice C. Wiebe

Counsel:
Allen Chao-Ho Chang for Capitalplus Development Group Ltd.
Ran He for 2698368 Ontario Inc.

Ruling: February 24, 2025

Costs Decision

Background

[1] The defendant, Capitalplus Development Group Ltd. (“Capitalplus”), brought this motion for an order discharging the claim for lien registered by 2698368 Ontario Inc. (“269”) and dismissing this action. On February 24, 2025, I ruled that 269 did not have a lien and that the security posted by Capitalplus for the 269 claim for lien be returned to Capitalplus. However, I also ruled that the remainder of the motion was dismissed.

[2] The issue now is the costs of this motion. At the argument, the parties filed costs outlines. The Capitalplus costs outline showed $21,778.41 in partial indemnity costs, $32,050.11 in substantial indemnity costs and $35,474.01 in full indemnity costs. The 269 costs outline showed $11,996.65 in partial indemnity costs and $19,093.05 in actual costs.

[3] As directed in my reasons, the parties served and filed written submissions on costs. Given the result, Capitalplus seeks its full indemnity costs of $35,474.01 as against not only 269, but its principal, Yang Yu, and her son, Dylan Yu. On the other hand, 269 argues that Capitalplus should get no more than between $7,500 and $10,000 in partial indemnity costs and only as against 269.

[4] Having considered the submissions, the evidence and my ruling, I have decided to award Capitalplus $25,000 in substantial indemnity costs to be paid jointly and severally by 269 and Ms. Yang in thirty (30) days. The following are my reasons.

Reasons for Costs Award

[5] First, Ms. Yang acted reprehensively by registering a claim for lien and starting a lien action when she obviously knew all along that she was a partner with Capitalplus in purchasing, refurbishing and selling the subject lot, namely she knew or should have known 269 was an “owner” and had no lien. This knowledge she made clear at her cross-examination on February 7, 2024. She had a lawyer at this time. Yet, instead of agreeing to vacate the 269 claim for lien, as she should have done, she forced Capitalplus to the cost of posting security, obtaining a vacating order and bringing this motion. She should have to pay the elevated level of costs on account of this conduct.

[6] Second, Ms. Yang should be personally liable to pay these costs. The evidence shows that Ms. Yang dominates 269, her company, and caused it to act in this reprehensible manner. As a result, she should not be allowed to escape the consequences of her actions by hiding behind the corporate veil. The corporate veil needs to be pierced in the same way it was pierced in my decision 2708320 Ontario Ltd. cob Viceroy Homes v Jia Development Inc, 2023 ONSC 3361, para 20. On the other hand, I am not prepared to impose such personal liability onto Dylan Yang as it was not clear to me from the evidence that he had such a dominant role in the company.

[7] Third, 269 and Ms. Yang should not have to pay the claimed full indemnity costs or substantial indemnity costs as Capitalplus was not successful in obtaining a dismissal of the action. I found that there was sufficient evidence of a triable issue as to whether Capitalplus must pay 269 for its construction costs under the RPA. As a result, there must be a real discount in the award due to Capitalplus’ failure on this issue, albeit without detracting from the deterrence intended by the award.

[8] Fourth, I am not persuaded by Mr. He’s argument that the 269 costs outline represents a fair reflection of what 269 and Ms. Yang should reasonably expect to pay in the event of a defeat. The evidence satisfied me that given the amount of its security in court, Capitalplus understandably viewed this motion as being quite important and invested resources into it accordingly. It had the initial onus of proof after all. 269 conducted more for a defensive strategy with less of an investment of resources.

[9] Fifth, the quantum of the Capitalplus costs outline was not questioned. It contains the costs of the section 40 cross-examination as well as the motion. I do not find this objectionable as the motion very much relied upon the cross-examination. I also do not find the other aspects of the Capitalplus costs outline objectionable.

Disposition

[10] Therefore, I reiterate. I rule that 269 and Ms. Yang are jointly and severally liable to pay Capitalplus $25,000 for the costs of this motion and must do so in thirty (30) days from today.

Date: March 18, 2025

Associate Justice C. Wiebe