The Yukon Supreme Court has declined to make an order for security for costs and granted a stay with conditions in a lawsuit stemming from the lease of a rural property.

Chief Justice Ron Veale released his eight-page written decision on Dec. 2.

It covers plaintiffs Wen-Tai Mao, I like Home Design Ltd. and 318 Arctic Color Tourism Development Ltd. and defendant Wayne Grove.

The property’s location was not made clear in the decision.

Grove had applied to get a security of costs order worth $29,316 from the plaintiffs. He is also asking the court to order the plaintiff organizations to register under the Business Corporations Act.

Grove’s lawyer indicated they would not be pursuing an application to have the statement of claim struck due to having no reasonable cause of action.

Grove agreed to lease his rural property to Arctic Color Tourism in August 2016. This company was represented by Lawrence Wei and James Pan.

Arctic Color planned to build on the property and run a bed and breakfast. The company allegedly breached this lease by not finishing construction, allowing liens to be registered.

In May 2017, Grove cancelled the lease. Arctic Color asked for another opportunity to finish construction.

A new lease was signed in August 2017 but this time with 318 Arctic Color and Mao.

Mao claimed to have invested $650,000 into the property.

“The 2017 lease is a complex document that permits 318 Arctic Color to construct buildings and operate a business on the understanding that the buildings are owned by Wayne Grove but leased to 318 Arctic Color,” Veale said in the decision.

He explained that there is a dispute on the ownership of 318 Arctic Color. Mao, Wei and Pan are all claiming ownership. There is an action in the Supreme Court of British Columbia over this.

“There is a dispute as to the authority of Daniel Mao, as sole shareholder of 318 Arctic Color, to enter into the 2017 Lease with Wayne Grove,” Veale wrote.

Grove kept an exclusive licence area in the lease, including the road access to the property.

There is a gate on the road which Mao put a lock on. Grove cut the lock to access his area. This allowed Pan and Wei to get in as well.

Mao alleges that this allows them to unlawfully use the property. He accused Grove of assisting this.

Grove stated he does not want to take sides.

Veale identified several issues he would have to resolve.

The first one was if the corporate plaintiffs can pursue any action with registration under the Business Corporations Act.

Veale noted there was nothing in front of him indicating these companies have been extra-territorially registered in Yukon; they’re incorporated in B.C.

He thus stayed the action until such a registration is completed.

The next issue was if the security for costs should be made against I like Home Design and 318 Arctic Color Tourism. Veale outlined the test he would have to apply.

To award the security, the following would need to apply:

• the plaintiff does not have the funds to pay defendant costs if the action fails;

• the plaintiff’s assets are not of a high enough value to satisfy the costs;

• does the court believe the defendant has an arguable defence; and

• would the order cause undue hardship on the plaintiff that could prevent its case from being pursued?

Mao sent an email to Grove outlining his ability to pay costs. He claims to have had no income for the last two years. Additionally, he claims to have spent his savings to “build improvements, pay rent and purchase a tour bus.”

“Unfortunately, Daniel Mao is self-represented and does not address the allegation that the corporate plaintiffs would be unable to pay the defendant’s costs if the defendant is successful,” Veale said in the decision.

He noted that there is no accusation nor evidence of either company failing to pay its bills. He felt the statement of Mao being in tough financial times did not meet the threshold to order the security, and dismissed this order.

The last issue was if the security for cost should be granted against Mao.

Veale felt, for the same reason listed for the companies, that grounds for a security were not met.

He dismissed this application as well, and did not award costs.