CITATION: Michaud et al v. Li, 2026 ONSC 4451

COURT FILE NO.: SC-21-159048

DATE: 2026/07/31

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Denis Michaud and Dean Michaud, Plaintiffs/Responding Parties

AND:

Hui Ling Li, Defendant/Moving Party

BEFORE: Rees J.

COUNSEL: K. Wylie, for the Plaintiffs/Responding parties

Ms. Li, self-represented, Defendant/Moving party

HEARD: June 15, 2026

Reasons for Decision

Overview

[1] Hui Ling Li brings this motion under r. 59.06(2)(a) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, to set aside or vary my May 27, 2024 costs order. She alleges that Denis and Dean Michaud and their lawyers obtained the costs order by fraud.

[2] The original proceedings began when the Michauds started a small claims action against Ms. Li for defamation. Ms. Li then brought an anti-SLAPP motion in the Superior Court of Justice and brought a motion to transfer the underlying action from the Small Claims Court to the Superior Court of Justice. I dismissed Ms. Li’s anti-SLAPP motion and the motion to transfer. I awarded the Michauds $55,000, all inclusive, in costs.

[3] Ms. Li sought leave from the Court of Appeal to appeal my costs order. The Court of Appeal dismissed Ms. Li’s motion for an extension of time to file a notice of appeal because it was not persuaded that the justice of the case warranted an extension. The Court of Appeal also dismissed Ms. Li’s motion for leave to appeal from my costs decision.

[4] The Michauds have since discontinued their small claims action.

Principles applicable to a r. 59.06(2)(a) motion

[5] Rule 59.06(2)(a) provides a narrow jurisdiction that permits the court to set aside or vary an order obtained by fraud. When considering whether to set aside or vary an order under r. 59.06(2)(a), the court must consider the following factors:

a. The fraud alleged must be proved on a balance of probability;

b. The fraud must be material and go to the foundation of the order;

c. The evidence of fraud must not have been known to the moving party at the time of the original proceeding;

d. The moving party applied reasonable or due diligence at the original hearing to obtain the evidence. Applying an objective test: what did the moving party know, and what ought the moving party reasonably have known?; and

e. The motion to set aside must be brought without delay.

International Corona Resources Ltd. v. LAC Minerals Ltd. (1988), 1988 CanLII 4534 (ON HCJ), 66 O.R. (2d) 610 (H.C.), at pp. 622-23; Lam v. Chen, 2019 ONSC 2510, at para. 22; Active Security and Cable Inc. v. Rogers Communications Canada Inc., 2022 ONSC 5844, at para. 10; Maguire v. His Majesty the King et al., 2024 ONSC 2392, at para. 15.

[6] “Fraud” within the meaning of 59.06(2)(a) is “a false representation made either knowingly, or without belief in its truth or else recklessly, careless as to whether it is true of false”: Lam, at para. 24; JV Mechanical v. Steelcase, 2010 ONSC 1443, at para. 24.

[7] The court will generally only exercise its discretion under this rule in “exceptional circumstances”, “sparingly” and “with the greatest of care”: Huron-Perth Children’s Aid Society v. R.C.K. et al., 2015 ONSC 5023, at para. 56. This is because of the important public policy goal of finality in litigation: Active Security, at para. 16.

Ms. Li’s position

[8] Ms. Li initially raised several issues on her motion. These were narrowed when the motion first came before me on May 21, 2025. Only Ms. Li’s request to vary my May 27, 2024 costs order remained.

[9] Ms. Li’s arguments are effectively twofold:

a. the Michauds were not billed and never paid legal fees claimed on the anti-SLAPP motion; and

b. certain amounts in the Michauds’ bill of costs dated January 24, 2024 (“Bill of Costs”) were not actually incurred on the anti-SLAPP motion, and that their Bill of Costs included amounts unrelated to the anti-SLAPP motion and amounts which were grossly inflated.

[10] These arguments are grounded on an allegation that the Michauds and their lawyers misrepresented the costs incurred and obtained the May 27, 2024 costs order by fraud.

[11] Ms. Li also argues that the Michauds and their lawyers made other misrepresentations to the court in the course of litigation – for example, claiming that they would pursue the small claims action when they intended to discontinue it, and that they disbursed Ms. Li’s payment of the costs award on account of the Michauds following the exhaustion of Ms. Li’s appeal rights.

Analysis

[12] The motion returned before me on June 15, 2026. The motion was hard fought. There was extensive affidavit material filed by the parties, transcripts of cross-examinations, transcripts of examinations of the Michauds, and written submissions.

[13] At the hearing, counsel for the Michauds advised the court that there is no written retainer agreement between Vice Hunter LLP and the clients with respect to the payment of fees in this matter, but the arrangement is that the clients will pay for all legal fees at the conclusion of the file. Counsel advised that the clients have made payments to date for certain disbursements and paid $20,000 in legal fees in April 2026. Counsel confirmed that the clients are obliged to pay the firm’s account on the anti-SLAPP motion.

[14] Given that I did not have evidence in the appropriate form, I directed the senior lawyer on the file to file a further affidavit setting out the terms of the financial arrangement with the Michauds on the anti-SLAPP motion and information regarding any part payment of invoices for legal fees and disbursements on the anti-SLAPP motion. Because Ms. Li has raised sufficient questions regarding whether certain amounts claimed were actually incurred on the anti-SLAPP motion, I also required the senior lawyer on the file to provide a reconciliation between the dockets produced on the r. 59.06(2) motion and the Bill of Costs.

[15] Further to my direction, senior counsel filed an affidavit. It set out the terms of the financial arrangement with the Michauds on the anti-SLAPP motion and a reconciliation.

The Michauds were billed and are liable to pay legal fees and disbursements on the anti-SLAPP motion

[16] Ms. Li argues that the Michauds were not billed and never paid legal fees claimed on the anti-SLAPP motion. There is no merit to this argument.

[17] Senior counsel’s evidence, which I accept, is that there is no written retainer agreement with the Michauds. He has a deferred payment arrangement with the Michauds, whereby all amounts will be paid by the Michauds at the conclusion of the litigation. The Michauds have nevertheless made some partial and periodic payments for disbursements and were billed $20,000 in fees and disbursements in May 2026, which they paid.

[18] Senior counsel’s evidence is consistent with the evidence of his client, Dean Michaud, who testified on examination that “the remainder of the funds will most likely be paid at the end of this matter when everything has been settled, and that’s how we agreed to make payment on this file. But I do know that all of this will be paid eventually. It’s simply that we’ve decided with the firm that this was going to be paid at the end of the matter.”

[19] It is axiomatic that a costs award is “is intended to indemnify a party, in whole or in part, for costs which that party has incurred or is obliged to incur to their solicitors” (emphasis added): Lawyers’ Professional Indemnity Co. v. Geto Investments Ltd. (2002), 17 C.P.C. (5th) 334 (Ont. S.C.J.), at para. 14 [LPIC]. As a result of the indemnity principle, “it is not appropriate for counsel to seek payment at rates that are over and above those that are actually being charged to the client”. There is a corresponding duty on counsel “who are operating under a special arrangement regarding their fees, to reveal that special arrangement to the court”. This duty is a “positive obligation”: LPIC, at para. 17.

[20] Although it may have been prudent for senior counsel to have disclosed his clients’ deferred payment arrangement to the court when they sought costs on the anti-SLAPP motion, he was not under a duty to do so because they sought costs which they owed their lawyers and disbursements that they had incurred. In other words, while the Michauds deferred payment of their lawyers’ legal fees, they remained obligated to pay them at the end of the day. The indemnity principle was respected: the costs sought did not exceed the amount of the Michauds’ obligation to their lawyers.

[21] Therefore, I find that the Michauds were billed and are liable to pay their legal fees and disbursements on the anti-SLAPP motion.

Although there were errors in the amounts claimed on the anti-SLAPP motion, these were not deliberate and ultimately do not impact the costs order

[22] Ms. Li argues that certain amounts in the Michauds’ Bill of Costs were not actually incurred on the anti-SLAPP motion, and that the Bill of Costs included amounts unrelated to the anti-SLAPP motion and amounts which were grossly inflated.

[23] As the reconciliation provided by senior counsel sets out, there were amounts incorrectly claimed in the Michauds’ Bill of Costs on the anti-SLAPP motion. I accept senior counsel’s evidence that this was the result of administrative error. Ultimately, $3,014.50 was claimed due to administrative error. I find that there was no attempt to deceive the court.

[24] There were also dockets claimed which the Michauds characterize as incidental to the anti-SLAPP motion, which include responding to case conferences sought by Ms. Li as the Michauds sought to discontinue their small claims action and attempted to schedule, without success, a dismissal of her anti-SLAPP motion. I had reviewed these as part of the dockets at the time of my May 2024 costs decision. I was not misled by them. My May 2024 costs decision must speak for itself. I will not add to it here. I simply observe that, although I did not spell out every deduction I made for each item claimed, I held that “much of the costs incurred by the Michauds were reasonable to defend against the motion” (at para. 25). I did not hold that every amount claimed was reasonably incurred on the anti-SLAPP motion.

[25] The fixing of costs is intended to be a summary process. Rule 57.01(7) directs that the “court shall devise and adopt the simplest, least expensive and most expeditious process for fixing costs”. The court obviously depends on counsel to submit an accurate bill of costs. Still, I accept that through inadvertence, mistakes can happen. Not every mistake entitles a party to have a costs award set aside or varied under r. 59.06(2)(a). There is a strong interest in finality.

[26] Here, we are a long way from the Michauds’ lawyers having committed a fraud on the court. Although they have identified administrative errors in the amounts claimed, they are ultimately of no moment. Their detailed reconciliation demonstrates that there were amounts which they could have claimed but through oversight did not. Had the Michauds’ Bill of Costs been fully accurate, they could have claimed $71,561 in costs related to the anti-SLAPP motion, exclusive of HST, which was greater than the $67,291 claimed in their Bill of Costs.

[27] More importantly, as I explained in my costs decision, I assessed the overall costs claimed and reduced them for reasonableness. I also made a significant deduction for overall reasonableness in the context of an anti-SLAPP motion which arose from a small claims action. I also made a deduction because of the conduct of senior counsel. I departed from the usual cost consequences in r. 49.10.

[28] I find that the Michauds and their lawyers did not deliberately misrepresent the costs claimed in their Bill of Costs. Nor did they grossly inflate their costs, as Ms. Li contends. There was no fraud on the court. Although they made some errors in their Bill of Costs, these were inadvertent and ultimately had no impact on the costs actually awarded.

[29] Accordingly, I do not give effect to this argument for setting aside or varying my May 2024 costs order.

[30] Ms. Li raised a number of other arguments, which I need not address, as they have no merit and do no impact on my May 2024 costs award.

Disposition

[31] Ms. Li’s motion is dismissed.

Costs

[32] In their costs outline of June 29, 2026, the Michauds seek actual costs of $77,177.24, inclusive of HST and disbursements. Senior counsel’s affidavit discloses that the amount incurred by the responding parties in responding to Ms. Li’s r. 59.06(2) motion is in fact higher, being $107,129.90.

[33] This is astonishing. These proceedings have been a perfect storm. On the one hand, Ms. Li’s motion was vexatious and abusive. As discussed above, not every mistake in preparing a bill of costs is a fraud. Instead, Ms. Li levelled serious allegations of fraud against the responding parties and senior counsel. Although self-represented, Ms. Li has a law degree and is licensed by the Law Society of Ontario as a non-practicing lawyer. The motion wasted scarce judicial resources. The impact was also borne by other litigants in the court system. Every time the court must address vexatious litigation, it causes delays for other members of the public who await their day in court.

[34] Such conduct, particularly unsubstantiated allegations of fraud, is deserving of sanction and may attract an elevated costs award: see The Catalyst Capital Group Inc. v. Moyse, 2018 ONCA 283, at paras. 47-55.

[35] On the other hand, rather than responding proportionately and reasonably, the responding parties aggressively litigated the motion. Five affidavits were filed by the responding parties, and a further affidavit was filed at the direction of the court. The transcripts of examination are replete with interventions by counsel. Some refusals are certainly warranted, but the overall tenor is needlessly interventionist. The responding parties claimed privilege over their unredacted dockets in relation to their Bill of Costs, even though unredacted dockets providing sufficient particulars to the court to identify the work performed are routinely filed in support of a Form 57A Bill of Costs. (I note that if dockets contain privileged information, the privileged information could be redacted.)

[36] Protracted litigation could have been avoided had the responding parties responded by filing an affidavit disclosing their financial arrangement and reconciling the dockets with the Bill of Costs. The affidavit ultimately filed by senior counsel at the court’s direction was decisive.

[37] Because Ms. Li had put senior counsel’s conduct in issue, I encouraged senior counsel to seek advice about whether his firm could continue to act for his clients on the r. 59.06(2) motion in my May 21, 2025 endorsement. His firm continued to represent the Michauds, even though senior counsel, his co-counsel on the anti-SLAPP motion, a paralegal, and two law clerks each filed affidavits on the r. 59.06(2) motion. In my view, neither senior counsel nor his firm could have brought the necessary objectivity in representing the responding parties on the motion. The firm should have shown better judgment and withdrawn in favour of another firm representing the responding parties on the motion. To be clear, I do not criticize Mr. Wylie.

[38] In exercising my discretion in awarding costs, I may consider any relevant matter and r. 57.01(1) sets out a list of factors that the court may consider. I have considered these factors, including: the principle of indemnity; the experience of counsel, rates charged, and hours spent; the amount an unsuccessful party could reasonably expect to pay; the amount claimed and the amount recovered; the importance of issues; the complexity of the proceedings; and the conduct of the parties. I am also mindful that the responding parties made Ms. Li a favourable offer to settle, attracting costs consequences under r. 49.10.

[39] The most significant factor to consider is that the amount of costs must be reasonable and fair. In my costs decision on the anti-SLAPP motion, I observed that although governed by the normal costs regime under the Rules of Civil Procedure and not by the costs regime applicable to small claims actions, there must nevertheless be some measure of correspondence between the amount in dispute in the underlying claim and the costs on the motion. That remains the case today. Incurring actual costs of $107,129.90 or even $77,177.24 on a r. 59.06(2)(a) motion in a proceeding that began as a small claims action is not reasonable or proportionate.

[40] Actual costs on this motion would more reasonably have been around $30,000 to $35,000. Given the serious, unfounded allegations of fraud levelled by Ms. Li and vexatious nature of this motion, her conduct is deserving of sanction and it attracts an elevated costs award. I therefore award costs to the responding parties on a substantial indemnity basis.

[41] Accordingly, I award the responding parties $28,000 in costs on a substantial indemnity basis, plus HST and disbursements.

Justice Owen Rees

Date: July 31, 2026