Executive Summary: Key Legal and Evidentiary Issues

• Plaintiffs failed to post court-ordered security for costs within the required 30-day period.

• Defendants applied to dismiss the action based on plaintiffs' non-compliance under Rule 22-7(6).

• Court assessed whether late compliance could still satisfy the purpose of the security order.

• Plaintiffs provided weak and largely unsupported evidence for delay, including hearsay.

• Defendants argued litigation delay was prejudicial, particularly concerning real estate dealings.

• Court ultimately exercised discretion to allow the action to proceed but awarded costs against plaintiffs.

Facts and outcome of the case

Buffalo Megan Holding Ltd., Buffalo Holding Ltd., and William Wang filed an action on July 26, 2023, against PKT Holdings Inc., Quad-City Real Estate Group Ltd., Tina Mu, and Yangtao Chai. The lawsuit included serious but unspecified allegations, and as part of earlier proceedings, the court had previously dismissed all claims by William Wang and ordered the corporate plaintiffs to post $87,000 as security for costs within 30 days.

The plaintiffs admitted that security for costs was warranted but failed to comply with the deadline. The defendants brought an application to dismiss the action under Rule 22-7(6) of the British Columbia Supreme Court Civil Rules, citing the plaintiffs' failure to post security by the May 29, 2025 deadline. Although the plaintiffs deposited the funds on July 7, 2025—one day before the hearing—the court had to determine whether the delay and explanation provided justified dismissal.

The evidence provided by the plaintiffs was deemed insufficient. An affidavit from a consultant to the companies, Mr. Chiang, attempted to explain the delay by citing general financial difficulties and unrelated litigation. However, the court found this evidence vague, unsupported, and lacking in credibility. There was no direct affidavit from Ms. Lv, the principal shareholder, and no details on how she attempted to raise the required funds despite reportedly owning properties with significant equity. The judge drew an adverse inference from her silence.

Nevertheless, the court declined to grant the “draconian” remedy of dismissal. Justice W.A. Baker found that, although the plaintiffs had no reasonable excuse for their non-compliance, they eventually did fulfill the security obligation, and the delay did not result in clear material prejudice to the defendants. The judge emphasized that compliance with a court order is essential, but that in this case, allowing the claim to proceed was the more just outcome.

However, the court did impose a consequence. It ordered that the plaintiffs pay ordinary costs of the application to the defendants, payable forthwith, due to their last-minute compliance and conduct that necessitated the motion. The underlying claims by the corporate plaintiffs therefore remain active, although the plaintiffs were warned that future non-compliance might not be treated so leniently.