SFC Litigation Trust v. Chan, 2016 ONSC 7487
CITATION: SFC Litigation Trust v. Chan, 2016 ONSC 7487
COURT FILE NO. CV-14-10684-CL
DIVISIONAL COURT FILE NOS.: 383/16 & 340/16
DATE: 20161130
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
MARROCCO A.C.J.S.C.
BETWEEN:
SFC LITIGATION TRUST
Plaintiff/Moving Party
– and –
ALLEN TAK YUEN CHAN
Defendant/Responding Party
Robert W Staley, Derek J Bell and Jonathan G Bell, for the Plaintiff
Robert Reuter, Sara J Erskine and Malik Martin, for the Defendant
HEARD: IN WRITING
[1] The plaintiff unsuccessfully moves for leave to appeal two orders of the motion judge granted on June 22, 2016 and July 25, 2016 permitting the defendant’s daughters and companion to release funds that are frozen pursuant to Mareva injunctions issued in Ontario and Hong Kong.
[2] The June 22, 2016 motion permitted a liquidation of some assets to pay legal fees to counsel in Toronto and Hong Kong and adjourned the balance of the motion. The July 25, 2016 motion resulted in conditional permission to liquidate the defendant’s daughter and companion’s Hong Kong bank accounts.
[3] The two tests for leave to appeal in Rule 62.02 (4) (a) and (b) have two parts that must be met. There must be a conflicting decision or the serious possibility of a legal error as well as a question of legal importance.
[4] In deciding to conditionally permit liquidation of the bank accounts, the motion judge applied the test in Canadian Imperial Bank of Commerce vs. Credit Valley Institute of Business and Technology 2003 12916 (ON SC), [2003] O.J.No. 40 (S.C.J.) to the facts established on the record before him.
[5] The application of the Credit Valley test to a set of facts does not raise a question of legal importance. Even if it did, I would not grant leave because there is no basis for concluding that there is “good reason to doubt the correctness” of the motion judge’s decision. Nor are there conflicting decisions concerning the legal test applied by the motion judge.
[6] The motion judge was the same judge who issued in August 2014 a worldwide Mareva injunction prohibiting the defendant from dealing with or disposing of any of his assets. In addition it appears from the motion judge’s reasons that His Honour has made several orders permitting the defendant to use money to pay legal fees. The motion judge was obviously familiar with the factual matters which formed the context for the decision with which we are concerned.
[7] The Mareva injunction order in Paragraph 4 permitted the defendant to apply for the release of funds to pay for legal representation and that is what happened in January 2015. At that time the defendant obtained from the motion judge the first order permitting the release of funds to pay outstanding and future legal fees. This order was never appealed. Since that time the defendant has applied for and obtained other orders releasing funds to pay legal expenses. These orders were made with the plaintiff’s consent.
[8] In the motion resulting in the order which the plaintiff seeks to appeal, the defendant moved for permission to sell a townhouse in Kowloon and to use part of the proceeds to pay legal expenses. The defendant however did not pursue that relief but instead asked for access to funds in Hong Kong bank accounts in the name of Joyce and Grace Chan. This time plaintiff objected claiming that the defendant had improperly transferred assets after the Mareva injunction had been granted.
[9] The motion judge determined that the test in Credit Valley was the appropriate test to apply. This conclusion cannot seriously be questioned. This is not a case where there are conflicting decisions about the applicable legal test to be applied.
[10] The Credit Valley decision holds in part that a person can use non-proprietary assets frozen by a Mareva injunction to pay for legal costs provided other branches of the test set out in that decision are met. The plaintiff conceded that the funds in the bank accounts in question are not proprietary assets. Accordingly the motion judge’s conclusion that the funds in the bank accounts were non-proprietary assets is not reviewable by the plaintiff.
[11] One aspect of the test is whether the defendant has established that he has no other assets available to pay his legal expenses other than those frozen by the injunction. The motion judge had already concluded in earlier rulings which were not appealed that this was the case. The motion judge indicated that there was nothing in the evidentiary record before him on the motion with which we are concerned that would lead to a different conclusion. It has not been demonstrated that the motion judge failed to appreciate the evidence that was in the evidentiary record.
[12] The motion judge observed that the proceedings which are taking place both in Hong Kong and in Toronto had become very expensive. It was also the motion judge’s view that the estimated legal fees were reasonable from a Toronto perspective. As indicated the motion judge is the same judge who granted the Mareva injunction and who appears to have been case managing this matter. The motion judge’s factual conclusion in this regard is entitled to considerable deference.
[13] The order of the motions judge is not a collateral attack upon the freezing order of the High Court of the Hong Kong Special Administrative Region. Specifically, the motion judge indicated that his order releasing funds would not become effective unless the High Court in Hong Kong also permitted release of the funds. The motion judge in effect deferred to the High Court of Hong Kong concerning the release of the funds while at the same time providing the court with his conclusion that liquidation of the bank accounts was permitted by His Honour’s Mareva order.
[14] Accordingly, I am of the view that there are no conflicting decisions on an issue raised in this appeal and that there is no reason to doubt the correctness of the motion judge’s order. As indicated even if either pertained, the appeal raises no question of general legal importance which extends beyond the interests of the particular litigants.
[15] Accordingly, this application for leave to appeal is dismissed with costs. If the parties cannot agree on costs, brief submissions, not exceeding three pages, shall be provided by both parties within five days of the release of these reasons.
MARROCCO A.C.J.S.C.
Released: 20161130
CITATION: SFC Litigation Trust v. Chan, 2016 ONSC 7487
COURT FILE NO. CV-14-10684-CL
DIVISIONAL COURT FILE NOS.: 383/16 & 340/16
DATE: 20161130
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
MARROCCO A.C.J.S.C.
BETWEEN:
SFC LITIGATION TRUST
Plaintiff/Moving Party
– and –
ALLEN TAK YUEN CHAN
Defendant/Responding Party
REASONS FOR JUDGMENT
Released: 20161130