Executive Summary: Key Legal and Evidentiary Issues

• The court determined that examinations for discovery of a foreign-resident defendant could proceed virtually despite the challenges posed by dual interpreters and a significant time-zone difference.
   
• Pleading amendments were permitted only where they arose from facts already alleged in the original statement of claim, consistent with the applicable limitation period.
   
• A proposed amendment alleging money laundering was rejected as scandalous and irrelevant to the plaintiff's cause of action.
   
• Credibility concerns justified departing from the usual order of examinations by requiring the defendant to be examined before the plaintiff.
   
• Divided success on the underlying motions led the court to reduce the costs award below the amount initially sought by the defendants.
   
• Cross-examination evidence bearing on a limitations issue warranted departing from the standard costs rule governing that examination.
   

Facts of the case

The litigation concerns a dispute over the acquisition, financing, ownership, and potential sale of real property in Niagara Falls, Ontario. V2 Niagara Inc. was incorporated to acquire the property, with the plaintiff, Valeriy Revura, and Vladimir Meshkov as shareholders. Terminal Ltd., controlled by Alexey Vladimirovich Gloukhov (also known as Alexey Glukhov), advanced a loan to finance the purchase pursuant to a Contract of Conditional Loan, and the shares in V2 were transferred to Glukhov as security for that loan. The property was purchased by V2 in or about 2012. In March 2022, Revura learned that the property was to be sold and that he would receive no proceeds from the sale. In a statement of claim issued July 22, 2022, he alleged he had been defrauded of the value of his interest in the property, including funds generated from it since purchase, and sought rescission of the loan contract along with damages for fraud, fraudulent misrepresentation, conspiracy, misappropriation, breach of contract, breach of confidence, breach of trust, deceit, breach of the duty of good faith, conversion, inducing breach of contract, and intentional interference with economic relations. Revura brought a motion seeking directions on the examination for discovery of the defendants and leave to amend the statement of claim. The defendants other than Meshkov, who had not been served, cross-moved for a discovery plan governing the examination of the plaintiff.

Policy and legislative provisions at issue

Several procedural rules governed the analysis. Subrule 34.07(1) of the Rules of Civil Procedure gives the court discretion over the time, place, and manner of an examination for discovery when the person to be examined lives outside Ontario. Rule 26.01 requires leave to amend a pleading to be granted on just terms unless non-compensable prejudice would result, the proposed pleading is scandalous, frivolous, or vexatious, or it fails to disclose a reasonable cause of action; the Ontario Court of Appeal's decision in Klassen v. Beausoleil confirmed that an amendment does not assert a new, potentially time-barred cause of action if the original pleading already contains the facts necessary to support it. Rule 25.05(b) addresses when pleadings are closed. On the costs motion, section 131 of the Courts of Justice Act establishes the court's discretion to award costs, rule 57.01 sets out the factors informing that discretion, including success, indemnity, complexity, importance of the issues, and the parties' conduct, and rule 39.02(4)(b) presumptively allocates responsibility for the costs of a cross-examination to the examining party.

Reasoning and analysis

On the discovery issues, the court accepted that virtual examination of Glukhov from Russia was appropriate given the war-related travel restrictions he faced, noting that videoconferencing is now common in Ontario proceedings and that witness credibility can be assessed as readily by video as in person. The time-zone difference could be managed by scheduling sessions to begin early in the Ontario morning, and the presence of two interpreters, while cumbersome, would not be materially affected by holding the examination in one location rather than another. On sequencing, the court exercised its discretion to order Glukhov examined first, given that Revura had already been cross-examined on an earlier affidavit and had put his position on the substantive issues on the record, making it fair for Glukhov to answer before hearing Revura's discovery evidence. Turning to the proposed amendments, the court found that pleadings remained open as between Revura and the responding defendants, since Meshkov had not been noted in default. It permitted amendments seeking full ownership of the property and V2's shares, and procedural amendments concerning use and preservation of information, because they did not raise new causes of action and rested on facts already pleaded. It refused amendments seeking repayment of roughly $600,000 in property-related expenses, finding no supporting facts in the original pleading and concluding the claim was a new, limitations-barred debt claim. It also refused the proposed money-laundering allegation as scandalous, since Glukhov's purchasing motive was irrelevant to the claim and the amendment appeared aimed at embarrassing him. On costs, the court found the Glukhov defendants substantially successful on the most contested issues, the location of examination, and the rejected expense and money-laundering amendments, while Revura succeeded on the order of examinations and several lesser amendments. It regarded the Glukhov defendants' decision to bring a separate cross-motion as an unnecessary procedural step and found the cross-examination of Revura had produced evidence relevant to the limitations question, justifying a departure from the usual rule allocating those costs to the examining party.

Ruling and overall outcome

The court ordered that Glukhov attend for a virtual examination for discovery from Russia on May 27 and 28, 2026, on his own behalf and on behalf of V2 and Terminal, with Revura's own examination to follow within 30 days. It granted leave to amend the statement of claim only as to paragraphs 1(h), (k), (p), and (q) of the draft amendment, refusing leave as to the remaining proposed amendments, and otherwise dismissed the motion and cross-motion. On the subsequent costs decision, the Glukhov defendants were the successful parties, and the court fixed partial indemnity costs at 30 percent of their actual costs, ordering Revura to pay them $17,499.18, all-inclusive, payable in any event of the cause rather than forthwith; no costs were ordered in Revura's favour for the cross-examination.