Court File and Parties

COURT FILE NO.: 01-CV-214076CM DATE: 20170310 SUPERIOR COURT OF JUSTICE – ONTARIO

BETWEEN:

YAO WEI LI, WILLIAM LI also known as FEE LIANN LI, CHARLES LI also known as FEE SANG LI, LILY LI also known as FEE LEE CHEN and LINDA LI also known as FEE THAO LINDA LI Plaintiffs

- and -

YAO CHAO LI also known as YAO CHAO LEE Defendant

BEFORE: F.L. Myers J.

COUNSEL: Shawna Sosnovich for the defendant David Marks Q.C. and Corey Bergstein for the plaintiffs

HEARD: March 7, 2017

Endorsement

[1] The plaintiff Y.W. Li and the defendant Y.C. Li are brothers. The other plaintiffs are the adult children of Y.W. Li. They purchased their father’s causes of action against their uncle from their father’s trustee in bankruptcy. The issues involve dealings between the brothers that arose at a time when they both lived in India decades ago. The law of India applies to the issues in this action.

[2] The defendant moves for summary judgment on a narrow issue arising under the law of India with a related and straightforward issue of Ontario law. In light of the very comprehensive briefing of the applicable Indian law by both sides’ expert witnesses, I am satisfied that I can apply the law to the facts to reach a fair and just resolution. I note that it would be quite disproportionate to have to bring the experts here from India for trial on a question of India’s civil procedure law. Moreover, since the question of foreign law emanates from a Commonwealth country with which we share a common legal history, the concepts described in the experts’ evidence are familiar and accessible. While resolution requires me to favour the evidence of one expert over the other, I am not required to make a credibility finding in the traditional sense. The issue that is the subject matter of the experts’ opinions is proof of foreign law. While our law treats the issue as one of fact, subject to proof on evidence, the evidence amounts to legal argument. The process of determining which legal argument has better support in law on the evidence is closer to resolving an issue of law than it is to making a finding of fact that an event occurred or did not occur on contested eyewitness evidence. Accordingly, in my view, it is in the interests of justice to resolve the narrow legal issue before me summarily. Griva v Griva, 2016 ONSC 1820 at para. 19.

[3] The defendant argues that the plaintiffs have no right to sue him because in 1999 the plaintiff Y.W. Li commenced a lawsuit in India against him on the same subject matter. Y.W. Li abandoned the claim before serving the originating process on the defendant who had already emigrated to Canada by that time. The defendant relies upon a provision of Indian law that he says bars a second claim by Y.W. Li on the same subject matter. If that issue is resolved against him, the defendant also relies on the doctrines of res judicata and abuse of process under Ontario law to try to prevent re-litigation of the prior claim.

[4] For the reasons that follow, I find that there is no bar to the plaintiffs’ claims. Accordingly, the motion is dismissed.

[5] In the prior lawsuit in India, Y.W. Li sued the defendant and a Mr. Uppal. Y.W. Li claimed that he and the defendant were partners in a family business that was the tenant on the land on which it operated. Y.W. Li claimed that the defendant closed the business, terminated their tenancy, and sold the land to Mr. Uppal without the Y.W. Li’s knowledge or authority. He claimed compensation from the defendant and return of the property from Mr. Uppal.

[6] Y.W. Li quickly settled his claims against Mr. Uppal for the return of the property before he served the defendant with the claim. The memorandum supporting the consent dismissal order that implemented the settlement leaves no doubt but that the settlement was between Y.W. Li and Mr. Uppal only. In the settlement, Y.W. Li released his claims against the property and Mr. Uppal in return for a cash payment. Nothing was said about Y.W. Li’s claims for damages against the defendant. However, the consent order that Y.W. Li obtained dismissed all of the claims against all of the defendants and brought the litigation to an end.

[7] The plaintiffs’ claims in this action are essentially the same in substance and fact as the claims that Y.W. Li brought against the defendant but did not press in India. The plaintiffs claim that the defendant forged Y.W. Li’s signature on transaction documents and thereby deprived Y.W. Li of his interest in the Indian land and business. On examination for discovery, the defendant admitted that he signed Y.W. Li’s name to several transaction documents. But, he says, he had his brother’s authority to do so. The defendant did not pay anything to Y.W. Li to compensate him for giving up his interests despite the defendant confirming those interests by signing documents that purported to waive them on Y.W. Li’s behalf.

[8] Under Order 23, Rule 1(4) of the Indian civil procedure code, when a lawsuit is abandoned without leave of the Court to institute a fresh claim being obtained in advance, the plaintiff is barred from bringing any further claims on the same subject matter against the defendant. In settling the prior claim with Mr. Uppal and obtaining an order dismissing all of the claims against all defendants, the plaintiff YW Li did not obtain leave to bring a further claim against the defendant. The defendant argues therefore that this claim is precluded.

[9] Indian courts have held that the claims bar under Order 23, Rule 1 (4) is not just a procedural rule. Rather, like the expiration of a limitation period here, the rule creates a substantive right in the defendant to be free from future claims by the plaintiff. Tolofson v Jansen, [1994] SCJ No 110. Therefore, if Order 23, Rule 1 (4) applies, the defendant has a full, substantive defence to the plaintiffs’ claims. The defence flows from India’s law and does not depend on the Ontario law doctrines of res judicata or abuse of process.

[10] Mr. Nair is the plaintiffs’ expert witness. His evidence is that under Indian law, Order 23, Rule 1 (4) does not apply where, as in this case, the defendant was never served with the originating process. Mr. Nair cites Dalmia Cement (Bharat) Limited v Uthandi alias Peria Uthandi, AIR 2005 MAD 457, a decision of the High Court of the Judicature at Madras for the proposition that Order 23, Rule 1 (4) does not apply where the defendant was not served and, as well, where a claim is abandoned without a determination on the merits or, as they call it, “dismissed as not pressed.”

[11] Mr. Naqvee is the expert witness for the defendant. He testified that a withdrawal by dismissal order as occurred in this case is an altogether different process than “dismissed as not pressed.” He relies on case law showing that a withdrawal obtained without leave to re-file precludes a later lawsuit on the same subject matter. That is apparently true. But it does not support his contention that a “dismissed as not pressed” is different than a dismissal order that does not address the merits of the claim. Mr. Naqvee repeats his assertion on page 10 of his Reply Report dated September 6, 2016, likening a comparison of the two processes to “apples to oranges.” But he provides no evidence of the existence of a rule that creates a specific “dismissed as not pressed” term of art or category. Neither has he provided any case law or other authoritative source to support his evidence that the dismissal order in this case is not the same as “dismissed as not pressed” as discussed in the Dalmia case.

[12] Mr. Nair responds with case law, including D. Davender Reddy v. S. Ravinder Reddy, 2016 (4) ALT 53 in which the High Court of Judicature at Hyderabad for the State of the Telangana and the State of Andhra Pradesh held that under an analogous rule governing withdrawal of appeals:

… the appeal was not decided on the merits, and it was dismissed as not pressed. Withdrawing the appeal or not pressing the appeal, in my view is one and the same, because in both cases, there will be no order on the merits. [Emphasis added.]

[13] Ms. Sosnovich argues that I should look strictly at the operative words of the order made by the Indian court to find that there was a dismissal of the entire proceeding including all claims against the defendant and therefore a further claim is precluded. This ignores the recitals in the order itself and the materials filed to obtain the order. In Dalmia, at para. 17, the court reviewed case law in which courts expressly looked at the supporting memorandum to ascertain the circumstances surrounding the making of a dismissal order. [^1] In any event, even if I confined my interpretation strictly to the operative wording of the order that dismissed the claims against all defendants, that wording does not establish that there was a dismissal on the merits as discussed in D. Davender Reddy.

[14] I do not accept that a dismissal of damages claims against an unserved, foreign defendant, that is tacked onto a settlement with a local defendant of a separate proprietary claim against domestic land, is a determination on the merits against the unserved, foreign defendant. The defendant never joined issue on the claims against him in India. No decision taken in India would have bound him in personam without service of process upon him. Mr. Nair’s opinion, supported by applicable case law, is that Order 23, Rule 1(4) does not apply to a defendant who was not served and when a claim is dismissed or abandoned because the plaintiff has chosen not to pursue it. There was no dismissal on the merits. Mr. Naqvee’s view to the contrary is not supported by any law or other authorities in the evidence before me. I therefore prefer and accept Mr. Nair’s view, especially after reading the relevant authorities myself.

[15] There is therefore no bar preventing the plaintiffs from suing the defendant proven under the laws of India.

[16] Ontario law does not avail the defendant any better. Absent a decision on the merits, in which a matter was put in issue and decided expressly, res judicata does not apply. Danyluk v. Ainsworth Technologies Inc., 2001 SCC 44 at paras. 24 and 25. Default judgments are not analogous. In a default judgment, not only has the defendant been served, but a judge has determined that the plaintiff’s claims, as deemed admitted or otherwise supported by evidence, are entitled to judgment on the merits.

[17] Similarly, the doctrine of abuse of process applies to prevent re-litigation of claims. Canam Enterprises Inc. v. Coles (2000), 51 OR (3d) 481 (C.A.) at paras. 55 to 59 of the dissenting opinion of Gouge J.A. that was adopted by the Supreme Court of Canada, 2002 SCC 63, [2002] SCJ No. 64. The claim against the defendant is not being re-litigated as it has not been litigated a first time. The dismissal of the prior claim occurred before the defendant was served or even in jeopardy because the plaintiff Y.W. Li decided not to press the case in India knowing that the defendant had already emigrated to Canada.

[18] Even if a form of res judicata or abuse of process could apply, I would exercise the residual discretion to allow the action to proceed to trial. Toronto (City) v. C.U.P.E., Local 79, 2003 SCC 63, Danyluk, at para. 62. The defendant should fairly be called upon to establish his right to sign his brother’s name so as to renounce his brother’s interests without sharing any of the compensation that he received by doing so. Absent a prior determination on the merits by a court of competent jurisdiction, deciding the contested issues of fact and law, one time only, is very much in the interests of justice. The plaintiffs allege that the defendant committed serious wrongdoing. If the parties cannot find a way to settle their dispute so as to reunite their family, they are all entitled to a fair and just determination of the dispute on the merits once and for all.

[19] The motion is therefore dismissed. Under Hryniak v Mauldin, 2014 SCC 7, the parties agree that there is nothing more to be done than for this case to get ready for trial on the merits. I have no leg-up on any other trial judge from my review of the material on this motion. Little of the material that I reviewed went to the underlying merits as opposed to facts and issues relating to the prior litigation. Therefore, there is no reason for me to become seized of this action. Rather, I direct both sides’ counsel to take steps to have the action re-listed for trial and to book another pre-trial conference as soon as practicable.

[20] I agree with counsel that costs should follow the event. Both sides’ legal fees for the motion were comparable and therefore the amount claimed by the plaintiffs was readily within the reasonable expectation of the defendant. The defendant is ordered to pay the plaintiffs, jointly and severally and forthwith, costs on a partial indemnity basis in the sum of $40,000 inclusive of expert fees, other disbursements, and taxes.

[21] Under Skunk v. Ketash, 2016 ONCA 841, the findings that Order 23, Rule 1(4) of the civil procedure code of India and the Ontario doctrines of res judicata and abuse of process do not preclude this action are final orders in the sense that the issues are no longer issues for trial. A declaration is granted to that effect that is to be included in the formal order dismissing the motion.

F.L. Myers J. Date: March 10, 2017

[^1]: Our law is no different were it to apply. We look to all surrounding circumstances to determine if an order made represented a determination on the merits or if it was just consensual or procedural. Re Ontario Sugar (1912), 19 OWR 764 (C.A.) at para 11.