Court File and Parties
COURT FILE NO.: FS-22-29253 DATE: 20230420 ONTARIO SUPERIOR COURT OF JUSTICE SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Hugh Kuang, Applicant (Moving Party) AND: Diana Young, Shawn Yeung, Theodore Wang, Gracia Wall, 2174112 Ontario Inc., 2394049 Ontario Inc., 2690212 Ontario Inc., 2305969 Ontario Inc., Diana Young Professional Corporation, Respondents (Responding Parties)
BEFORE: Kristjanson J.
COUNSEL: Christopher Mamo, Harold Niman, Ken Dekker, Karen Law, Shaun Laubman, Counsel for the Applicant Patrick Summers, counsel for Shawn Yeung, Theodore Wang, Gracia Wall Ted Evangelidis, Counsel for 2174112 Ontario Inc., 2394049 Ontario Inc., and 2690212 Ontario Inc. Olena Brusentsova, Counsel for 2305969 Ontario Inc. and Diana Young Professional Corporation Diana Young, Self Represented
HEARD: At Toronto by videoconference February 16, 2023
Endorsement
Kristjanson, J
[1] The only issue on this long motion is the interpretation of the term “usual and ordinary course of business” as it applies to the business of the corporate respondents, 2174112 Ontario Inc. ("217"), 2394049 Ontario Inc. ("239"), 2690712 Ontario Inc. ("269"), 2435982 Ontario Inc. ("982"), 2691181 Ontario Inc. ("181"). Diana Young Professional Corporation and 2305969 Ontario Inc. ("230"). This requires the application of principles of interpretation of judicial orders. The term “usual and ordinary course of business” is found in the interim preservation order of dated August 25, 2022. The respondents seek an expansive interpretation, and the applicant a narrow interpretation.
[2] The applicant Hugh Kuang and the respondent Diana Young were married in 2005 and separated in 2021. Their finances are complex. By domestic contract signed in 2007, the parties release each other from all support and property rights and obligations. Mr. Kuang seeks to set aside the domestic contract.
[3] The corporations which are the subject of the dispute hold and manage real property and run a private mortgage lending business. Prior to separation both parties worked for the corporations. Mr. Kuang asserts that he founded, managed, and funded the corporations, which own and manage commercial real estate holdings and a private mortgage lending business. He claims that he beneficially owns the corporations, either solely or together with Ms. Young. Ms. Young claims that neither she nor the applicant are the beneficial owners of most of the corporations: they are owned by the wife’s mother, the respondent Shawn Yeung. She asserts that she owns Diana Young Professional Corporation ("DYPC") and 230.
[4] On July 7, 2022, the parties consented to interlocutory orders aimed at preserving the various properties and assets, and restraining the individual and corporate respondents from depleting assets pending argument of a preservation/non-depletion motion brought by the applicant.
[5] The applicant’s long motion for preservation and non-depletion of property orders was set for August 25, 2022. It was adjourned at the request of some respondents. The motion judge then made the interim preservation order which is the subject of this interpretation motion.
[6] This motion is brought by the corporate respondents. Pursuant to the order of Justice Diamond, the Case Management Judge, the motion is strictly limited to an interpretation of the term “usual and ordinary course of business” as set out in the interim preservation order. The Notice of Motion seeks relief beyond this limited scope, and those requests for relief which seek to expand the scope of the motion are dismissed.
Principles of Interpretation Applicable to Judicial Orders
[7] Interpretation of judicial orders requires a contextual approach to determine the intent of the judge. As drawn from the authorities discussed below, the determination includes a consideration of text, context, and purpose based on:
(a) The express language of the order itself,
(b) The purpose of the terms of the order,
(c) The authority to make the order, including the statutory context and procedural rules,
(d) The broader context within which the order was granted, including the pleadings and the litigation events leading to the order,
(e) Resolving apparent inconsistencies between different terms by reaching an interpretation which can reasonably give meaning to each of the terms in question.
[8] How to approach the interpretation of court orders was the subject of the Saskatchewan Court of Appeal decision in Koroluk v KPMG Inc., 2022 SKCA 57. The court considered the interpretation of a liquidation plan approved by court order, holding at para. 43:
However, the interpretation of a court order, or for that matter a document approved by a court order or which a court order directs be implemented, involves more than simply reading its words in isolation. Like other law-making instruments, court orders are to be interpreted wholistically and purposively. The interpretation of specific provisions must take into account other parts of the order. A court interpreting an order should consider the authority to render it, since it should be assumed that a court would not grant an order it had no power to make. Finally, consideration must also be given to the broader context in which the order was made, including the pleadings and litigation events leading to the order. Warde v Slatter Holdings Ltd., 2016 BCCA 63, 394 DLR (4th) 513 [Warde] and Onion Lake provide two recent examples of the application of these principles.
[9] The rules for interpreting court orders are no different in the family context. The court “uses accepted principles of statutory and contractual interpretation to ascertain the intent of the ordering judge”: Pliskevicius and L’Homme, 2011 ONSC 6102 at paras. 22-24, Canadian National Railway Company v Holmes, 2015 ONSC 3038 at para. 18 and Royal Bank of Canada v. Robertson, 2016 NSSC 1776 at para 14.
[10] When interpreting court orders, rather than contracts or statutes, the principle of judicial efficacy must also be considered, as stated by Justice Moir in Royal Bank of Canada v. Robertson, 2016 NSSC 176 at paras. 19-21:
[19] In my opinion, the Driedger contextual approach to interpreting statutes and the principle of commercial efficiency for interpreting contracts, with necessary modification, apply to the interpretation of orders. A contextual interpretation is not for altering the effect of an order any more than it allows the interpreting court to alter Parliamentary intent or the intent of the contracting parties. Where supremacy of Parliament and freedom of contract keep interpretation in bounds for statutes and contracts, the requirement for finality forbids an interpretation of a final order that changes its true effect. See, Bank of Nova Scotia v. Golden Forest Holdings Ltd. (N.S.C.A), [1990] N.S.J. No. 230 (SC, AD at para. 9).
[20] Contextual interpretation applies to orders. The words of an order “are to be read in their entire context in their grammatical and ordinary sense harmoniously with the scheme of the… [order], the object of the… [order] and the intention of… [the court].”.
[21] One must speak of judicial efficacy rather than commercial efficacy when interpreting orders rather than contracts. Otherwise, the results are the same. A judicious meaning consistent with the text (read in context) is preferred over an unreasonable result.
[11] The court must also consider how to resolve apparent conflicts between terms in an order. In Bott v Schneider, 2022 ABQB 307, Justice Mandziuk accepted that the interpretation of court order should include the purpose of the terms of the order and the express language of the order. At para. 50, he also held that “where there are apparent inconsistencies between different terms… the court should attempt to find an interpretation which can reasonably give meaning to each of the terms in question (BG Checo International Ltd. v. British Columbia Hydro and Power Authority (at para. 9).
[12] Finally, it is important to remember that “the interpretation of a court order is not governed by the subjective views of one or more of the parties as to its meaning after the order is made. Rather an order, whether by consent or awarded in an adjudicated disposition, is a decision of the court. As such, it is the court, not the parties, that determines the meaning of its order”: Yu v. Jordan, 2012 BCCA 367 at para. 53.
The Litigation Context
[13] I first consider the context within which the interlocutory order was made. This is a family proceeding in which the applicant seeks equalization, child support, spousal support, and parenting time/decision-making. He also seeks a declaration that he is the sole legal/beneficial owner of the respondent corporations, relying in part on trust doctrines, and seeks oppression remedies under the Ontario Business Corporations Act, RSO 1990, c. B.16. He seeks relief aimed at preserving the assets and transferring them to him.
[14] The respondent wife, Ms. Young, denies the claims about ownership of the corporations. She asserts that the corporations are owned by her mother, respondent Shawn Yeung, except for Diana Young Professional Corporation and 230, which she owns. Ms. Young also relies on a domestic contract in respect of the equalization claims by Mr. Kuang.
[15] The applicant was given leave to bring an urgent motion for a preservation order to preserve the assets of the respondent corporations pending trial. Both the Family Law Rules, O. Reg 114/99, and the Rules of Civil Procedure, RRO 1990, Reg 194, were relied on at the motion. Family Law Rule 12 provides that, where equalization of net family property or spousal support is sought, the court may make an interim or final order restraining the depletion of a spouse’s property, and for the possession, delivering up, safekeeping and preservation of the property. Rule 45 of the Rules of Civil Procedure similarly provides for the interim preservation of “any property in question in a proceeding or relevant to an issue in a proceeding.”
[16] The preservation motion was scheduled to be heard on July 7, 2022. It was adjourned at the request of the respondents. The motion was returned on August 25, 2022. The respondents sought to adjourn the preservation motion for a second time.
[17] The motion judge made the interlocutory, interim preservation order and granted the adjournment, together with disclosure orders. In so doing, the motion judge found:
(a) The applicant was given leave to bring the urgent, interim preservation motion in part because, as Justice Kraft held in granting leave: “The applicant is highly concerned that the respondent has placed assets they accumulated during the marriage into corporations neither of them own or transferred them to third parties in an attempt to defeat his family law claims. He requires disclosure about these companies and the assets they hold so he can proceed with his claims. The respondent will not provide the disclosure needed.”
(b) The schedule for respondents to file materials for the motion was set by Justice Boucher, on consent. The respondents did not comply with Justice Boucher’s consent order and did not file materials within the time frame ordered. Except for one respondent (claiming mental incapacity), the motion judge found that “the failure of the rest of the respondents to comply with Justice Boucher’s order is unacceptable” The motion judge held that: “The wife’s excuses for non-compliance are thin and suspect.”
[18] The motion judge made disclosure orders and the interim preservation order as terms of adjournment. Expressing significant concerns about the respondents’ delay and failure to make full disclosure of the complex finances, the motion judge held as follows:
[27] The respondents have demonstrated a lack of respect for court orders. This must stop. Orders are not suggestions. They must be followed. The husband is concerned that the respondents’ delay is a tactic that they are using against him. Whether it is a tactic or not it must stop.
[28] Disclosure should not be delayed and should start immediately. The respondents’ suggestion that disclosure be limited is contrary to appellate authority. Delayed disclosure benefits the respondents. It impedes the ability of the husband to understand what the respondents have done with the assets and to move this matter ahead. Furthermore, the failure to make full and fair disclosure will limit the ability of the court to fully and fairly assess the claims and bring this application to an end in a timely manner.
[19] The litigation context is on in which the motion judge:
(a) was concerned with the failure of the respondents to comply with court orders, finding the non-compliance with court orders to be “unacceptable”
(b) recognized that the issues were serious
(c) recognized that the financial issues were highly complex
(d) sought to end delay
(e) made extensive disclosure orders and
(f) situated the order within litigation about the applicant’s concerns that the respondents were depleting assets of the respondent corporations.
[20] In summary, the interlocutory, interim order was designed to preserve the assets of the respondents, including the respondent corporations, pending argument of the preservation motion. The litigation context is one where the motion judge found that the respondents had not complied with court orders and expressed her concerns about the adequacy of disclosure.
The Express Terms and Purpose of the Order
[21] The order directs both the individual and corporate respondents to preserve property on an interim basis, as set out below. The only reference to the “usual and ordinary course” of business are paragraphs 1(b) and 1(d):
(a) The individual Respondents are restrained from directly or indirectly, dealing with, assigning, encumbering, disposing or otherwise transferring or issuing any shares or interest in any of the Respondent Corporations, or in any businesses or corporations in which any of the Respondents are registered shareholders or that are otherwise controlled by the Applicant or any the individual Respondents (Order, para. 1(a)
(b) The individual Respondents are hereby restrained from, directly or indirectly, causing the Respondent Corporations to make payments, incur any expenditures or liabilities except as required in the usual and ordinary course of the Respondent Corporations’ business, and for the payment of the legal fees of a corporation and/or a corporation’s owner (Order, para. 1(b))
(c) The Respondents are hereby restrained, directly or indirectly, from causing the Respondent Corporations to pay or remunerate the Respondents any monies including by way of salary, dividend, distribution, or shareholder loans or otherwise … (Order, para. 1(c))
(d) para. 1(d): The Respondents are hereby restrained from assigning, transferring, selling, discharging, or encumbering any of their assets except in the usual and ordinary course of business. Notwithstanding the preceding provisions, in the event that any of the Respondents seek to list for sale any real property or discharge any mortgages held or owned by any of them, at least seven (7) days’ notice shall be given to the other parties of such transaction, that party shall advise the other parties to this proceeding of the full details of such transactions, and the proceeds from the sale of any properties owned by any of the Respondents or from the discharge of any mortgages in favour of any of the Respondents shall be held in trust by a solicitor agreed upon by all parties and be subject to terms of this Order pending agreement of the parties or further Order of the Court. If there is no agreement as to the solicitor, the net proceeds shall be paid into court to the Accountant of the Superior Court of Justice to the credit of this action. (emphasis added) (Order para. 1(d))
(e) An Order that the Respondents shall also preserve all proceeds and other funds held or received in relation to the what the respondents allege to be completed sale of properties and discharge of mortgages (Order, para. 5).
[22] Only subparagraphs 1(b) and 1(d) make exceptions for incurring any expenditures or liabilities, distributing or paying or spending any money, or selling, assigning or encumbering any assets, and then only “in the usual and ordinary course of business.” Even then, all proceeds from the sale of any properties owned by any of the respondents, or from the discharge of any mortgages in favour of any of the respondents, must be held in trust pending agreement of the parties or further court order.
[23] The term “usual and ordinary course of business” must be interpreted consistent with both the overall purpose of the interim order (preservation of the assets pending the hearing of the preservation motion) and the specific paragraphs preventing the sale, encumbrance, or disposition of assets.
[24] Whether or not an activity is undertaken in the ordinary course of business was considered by the Court of Appeal in Re Stelco Inc., 2007 ONCA 483, in the context of limits aimed at preserving corporate assets contained in a restructuring plan under the Companies’ Creditors Arrangement Act, RSC 1985, c. C-36. The Court held at paras. 97-99:
[97] In Gainers, supra, Fruman J.A. noted (at para. 21) that:
The analysis is to be achieved through an objective examination of the usual type of activity in which the business is engaged, followed by a comparison of that general activity to the specific activity in question. The transaction “must fall into place as part of the undistinguished common flow of business carried on, calling for no remark and arising out of no special or peculiar situation”: Aubrett Holdings Ltd. v. Canada, [1998] G.S.T.C. 17 (T.C.C.). [Emphasis added.]
[98] In Roynat Inc. v. Ron Clark Motors Ltd., supra, at 197, Herold J. cited Re Bradford Roofing Industries Property Ltd., [1966] 1 N.S.W.R. 674 – a decision of the New South Wales Supreme Court – to the same effect:
The transaction must be one of the ordinary day to day business activities, having no unusual features, and being such as a manager of a business might reasonably be expected to be permitted to carry out on his own initiative without making prior reference back or subsequent report to his superior authorities such as, for example, to his board of directors.
[99] These observations are consistent with dictionary explanations. The Shorter Oxford English Dictionary, 3rd ed., defines “ordinary” as being “of common occurrence, frequent, customary, usual” and “of the usual kind, not singular or exceptional”. It defines “course” as meaning “habitual or ordinary manner of procedure; way, custom, or practice”. Black’s Law Dictionary, 6th ed., describes “ordinary course of business” in the following fashion:
The transaction of business according to the common usages and customs of the commercial world generally or of the particular community or (in some cases) of the particular individual whose acts are under consideration. … In general, any matter which transpires as a matter of normal and incidental daily customs and practices in business. [Emphasis added.]
[25] The Court of Appeal summarized these benchmarks in determining whether a transaction occurred “in the ordinary course of business” at para. 101, being whether the transaction:
a) is distinguishable from the normal course of the company’s operations because of its particular complexity or its far-reaching or otherwise unusual nature;
b) arose out of some special or peculiar situation;
c) required approval from the company’s shareholders or board of directors;
d) was given special notice by the company;
e) was an unusual or isolated undertaking as opposed to a routine one; or,
f) is reflective of standard practice in the relevant industry.
The Business of the Corporations
[26] It is not necessary to set out all the complex financial affairs of all the respondent corporations for the purposes of this interpretation motion, as all the corporations are bound by the preservation order. Examples suffice to determine the usual and ordinary course of business. Similarly, most of the disputes in the evidence need not be decided for the purpose of this motion.
[27] Generally, 217, 982, and 239/181 own commercial properties which generate rental income, while 230 manages the commercial properties and earns property management fees. Whether the Parkade for the Agincourt Commercial Centre is now owned by 239 or 181 is disputed in the evidence, so I simply refer to 239/181.
[28] 269 is now the private mortgage lender business. 239 holds some private mortgages which are involved in litigation; the others were assigned to 269 before the litigation.
Ownership and Management of Commercial Properties
[29] Some corporations own and manage commercial properties, including freehold commercial buildings, commercial condominiums, condominiums, and a parkade, that earn rental income, and bring in property management fees.
[30] In terms of the ordinary and usual course of the commercial property ownership and management businesses run by 217, 982, 239/181 and 230, I accept the evidence of Mr. Kuang, who states in his affidavit that:
The usual and ordinary operation of a commercial building with dozens of tenants involves mundane tasks such as making sure tenants pay their rent, ensuring that the rental units and common areas are well maintained and in good repair, negotiating renewals of expiring leases, taking steps to obtain tenants for vacant units, maintaining financial records and making the necessary filings with the Condominium Authority of Ontario (CAO).
[31] The Minutes of Meetings show consideration of these issues, along with issues such as garbage removal, cleaning, contractors, maintenance, repair, renovation, staffing, schedules, and contractors. These are the kind of usual and ordinary course business expenditures, together with payment of third-party accountants and tax professionals to prepare financial statements, or litigation counsel to sue overholding tenants, that the order contemplates.
[32] Historically, some of these corporations have made intercorporate loans, investments, or payments to other companies in the groups. That said, I do not agree, on the evidence before me, that selling their properties or mortgaging, drawing down lines of credit, or otherwise encumbering their assets to provide funding to different respondent corporations to conduct a separate mortgage lending business constitutes the usual and ordinary course of business of the property ownership/management corporations within the meaning of the interim preservation order. Those would be extraordinary steps not allowed by the interim preservation order, as the decisions are not a daily, routine, management decision, given the text, context and purpose of the interim preservation order.
Private Mortgage Lending Business
[33] The second aspect is the mortgage lending business, which is run by 269. This has historically involved lending out from a pool of funds generated primarily by the other corporations (217, 982, 239/181). These other corporations earn income from ownership/management of on the commercial properties. Because they own property, these other corporations can borrow money at a lower interest rate through secured lines of credit and secured mortgages. These other corporations have from time to time provided funds from their own borrowing to 269. 269 has leveraged the moneys it receives from the intercorporate transfers to extend private mortgages at a higher interest rate.
[34] The mortgage lending business is now run through 269, the active mortgage lending company
[35] In 2017, 217 assigned its mortgages to 2394049 Ontario Inc. (“239”). In 2019, 239 assigned its mortgages to 2690712 Ontario Inc. (“269”), except the mortgages involved in enforcement litigation. Essentially, 239 is now an intermediary with respect to mortgage lending business, except to the extent that it is involved in enforcement litigation.
[36] The evidence of the respondents is that most of the pool used to fund the private loans comes from the leveraging of real property owned by 217, 982, 239/181 (mortgages and lines of credit secured against property owned by those companies). Interest is charged by 269 on the private mortgage deals at a higher rate than incurred on the credit facilities or secured mortgages obtained by 217, 892 and 239/181 from institutional lenders. Some funds may be obtained from property management and rental profits.
[37] 269 currently has 9 active private mortgages with $18.24 million deployed, generating mortgage interest income.
[38] 269’s private mortgage business is a low-volume business, given that it has 9 active mortgages. Some mortgages require specialized and complex underwriting. Credit terms offered depend on individualized risk assessment for each mortgage. It is unclear how many “lower risk” mortgages are offered. Diana Young acknowledges the risk of the private lending business in her November 16 affidavit, where she states:
As secondary lenders involved in private lending, the risk profile for the Corporate Respondents is typically higher than that of a first-secured bank or traditional financial institution/lender, such that the rate of interest charged and associated lending and ancillary fees are greater than traditional mortgage financing to reflect the higher risk.
[39] While under a preservation order, 269 is expected to pay its rent and staff, engage suppliers and accounting/legal professionals as any business does, and collect mortgage interest. Under the preservation order, all funds from discharged mortgages are to be held in trust pending agreement or court order.
[40] The respondents argue that “seeking to draw upon borrowed funds from institutional lenders to lend at a higher rate of interest has always been the Moving Corporate Respondents’ usual business model.” In other words, they argue that causing separate corporations to increase lines of credit, or encumber real property, to lend funds to 269, which would then lend to third parties in riskier transactions (thus the higher interest rate), is the usual and ordinary course of business.
[41] Considering the terms of the interim preservation order, the purpose, and the litigation context, the interpretation urged by the respondents would deprive the interim preservation order of any effect. This is particularly the case given the uncertain ownership of any of the corporations, the complexity of the intercorporate flow of funds, and the admitted risk of 269’s private mortgage lending.
[42] The transactions sought to be defined by the respondents as part of the usual and ordinary course of business, are not in the ordinary course of business. They require incurring expenditures and liabilities, and assigning, transferring, selling, discharging or encumbering the assets held by some of the corporate respondents, contrary to the terms and purpose of the preservation order, and then investing or lending funds to a different corporate respondent, all contrary to the terms and purposes of the preservation order.
[43] For example, the respondents seek an interpretation that would allow the respondent corporations to engage in: “Incurring expenditures and liabilities, and assigning, transferring, selling, discharging or encumbering the Corporate Respondents’ assets or the private investors’ assets for the purpose of borrowing funds to be utilized for the private mortgage lending business through institutional mortgages and lines of credit secured against the properties owned by various of the respondent corporations.” This interpretation of the usual and ordinary course of business would permit the wholesale mortgaging or liquidation of all the property owned by all the corporate respondents, to flow all funds to 269, and then out from 269 to high-risk borrowers (or conflicted borrowers who are not arm’s length parties). This is not and could not be contemplated by the existing preservation order.
[44] The respondents seek to include the activity of “Repay or return excess funds to investors,” as part of the usual and ordinary course of business, without any definition of what constitute “excess funds,” or who the investors are.
[45] In the guise of an interpretation motion, the respondents seek to change the terms of the preservation order. Thus, the respondents seek an order that mortgage discharge funds owed to 239 in the amount of $4,129,854.74 paid into Court by Tung Kee Investment Canada Ltd. in a separate Commercial List matter “be released to 239, to be used in the usual and ordinary course of the private lending business. But nothing in the interim preservation order would permit this. It involves a third party, Tung Kee Investment Canada Limited, not before the court, and a separate court order. Further, under the interim preservation order, all mortgage discharge funds are to be paid into trust, and held pending agreement by the parties or further court order. This is not an interpretation issue.
[46] The respondents seek an order that the sum of $505,000 currently being held in trust by Blaney McMurtry LLP be released to 269 to be used in the usual and ordinary course of the private lending business. But these are mortgage discharge funds paid into trust. Under para. 5(d), they are to remain in trust pending agreement or further court order. This is not an issue of interpretation.
[47] Most of the activities sought to be defined by the respondents as part of the ordinary course of business, are not. They are vague, and so broad, as to permit wholesale liquidation of all corporate assets, and payment to any investor without limits, including Ms. Young and her family members. There is a real dispute about beneficial ownership of all the corporations, while the proposals put forward by the respondents assume that Ms. Young’s mother owns most of the property and the corporations, and that Ms. Young owns 230.
[48] This is about the interpretation of an interim preservation order, one delayed twice by the respondents, in the context where there are significant concerns about the compliance by respondents with court orders.
[49] I agree with the submissions of the applicant that the position of the respondents stakes out a realm of business conduct far from the ordinary and day-to-day tasks needed to run the businesses and preserve their assets pending the preservation motion. The risk of dissipation of assets from allowing an unfettered and ill-defined ability to sell and encumber assets of the respondent corporations and distribute the proceeds to unspecified “investors,” or lend to unknown third parties, whoever they may be, is very high.
[50] The respondents’ definition also conflicts with other parts of the interim preservation order, and cannot be read consistently with those terms. For example, the motion judge ordered funds from discharged mortgages be held in trust pending agreement of the parties or further court order. The respondents seek to release of some of the mortgage discharge funds to use in the private lending business. The applicant has refused. The respondents argue that the interpretation of the term “usual and ordinary course of business” used in the interim preservation order needs to permit the use of discharge proceeds for the private mortgage lending business to prevent the applicant from holding the respondents “ransom.” But that is what the order provides – to hold mortgage discharge proceeds in trust unless there is consent, or a further court order. It is not a question of interpretation.
[51] The term “usual and ordinary course of business” cannot be interpreted in a manner which is specifically contradicted by the balance of paragraph 1(d). This is not a question of interpretation, but one which fundamentally seeks to change the terms of the interim preservation order.
[52] In summary, the respondents’ proposed definition is contrary to both the usual and ordinary course of business of the respondent corporations and the other terms and general purpose of the interim preservation order: to preserve assets pending the preservation motion.
[53] The mortgage protocol sought by Mr. Kuang, which would require his participation in new mortgage lending approvals, falls outside the scope of the interpretation motion. I agree with the respondents that the applicant has present role in the respondent corporations, and an interim preservation motion is not one which can force a corporation to include a litigant in business operations.
[54] The relief requested under paragraph 3 of the Respondent’s November 23 Notice of Motion is dismissed as it falls outside the scope of this motion pursuant to Justice Diamond's November Endorsement.
Procedural Issues
[55] Notwithstanding the very narrow scope of the motion, the parties in their Confirmation of Motion sought to rely on 3,125 pages of affidavit evidence and factums. More than 3,000 pages before counting any of the lengthy cases argued before me. Bringing the reading load to three times the length of Tolstoy’s War and Peace. Which sums up the degree of conflict in this family law file.
[56] A motion judge cannot read materials which are three times the length of Tolstoy’s War and Peace for a one-day motion.
[57] Counsel must have the focus and discipline to present materials in an accessible manner that will assist the motion judge in understanding the key issues, the limited evidence which is clearly material and relevant, and the cases which are persuasive or dispositive of the issues. As RSJ Edwards states in Lepp v. The Regional Municipality of York, 2022 ONSC 6978:
Advocacy is both an art and a skill. To advocate for one’s client involves both written and oral advocacy. Both are skills that can be learned and improved upon. Part of that skill begins in the lawyer’s office as he or she prepares for oral argument. Part of the skill is recognizing what your motion judge will need to write his or her endorsement/reasons. Counsel needs to exercise good judgement in their determination of the written record that the court will need to review prior to oral argument. Good judgement does not include “throwing the kitchen sink” into a “document dump” that you hope the court will be able to sort out. Rather good judgement will involve how to make your client’s case more attractive to the motion judge.
[58] I also rely on the Provincial Notice to the Profession, Parties, Public and the Media effective August 2, 2022, which provides:
The oral hearing is the occasion when arguments must be succinctly set out by the parties. Parties must bring to the attention of the court all relevant material facts and the authorities that establish the legal proposition relied upon. It is not sufficient to merely upload filed materials to CaseLines. Materials that are not brought to the attention of the judicial officer at the hearing may not be considered. Judicial officers’ judgment writing time is not sufficient to permit it to be used as an extension of the time allocated for oral argument.
[59] Unfortunately, given the very large amount of material, I have had to spend too much time reviewing material either not referenced, or only briefly referenced, to discern the arguments of the parties and understand the corporate structure. For future motions, I will only review those materials brought to my attention during the hearing of the motion.
Order
This court declares that for 2174112 Ontario Inc., 2394049 Ontario Inc., 2435982 Ontario Inc., 2691181 Ontario Inc., Diana Young Professional Corporation and 2305969 Ontario Inc. ("230"), and other corporate respondents which own, operate or manage commercial and other properties, the term “usual and ordinary course of business” as used in the interim preservation order shall be defined to include the tasks necessary to run the day-to-day operations and manage the properties, including the negotiation of leases, collection of rents, payment of employees, suppliers, and contractors, and the general maintenance of the properties, in a manner consistent with pre-separation practices. It also includes retaining professional advisors for tax, litigation, and corporate filing purposes, and for Diana Young Professional Corporation, providing legal advice. The usual and ordinary course of business does not include selling or encumbering properties, or mortgaging or encumbering any assets for the purpose of transferring funds to any other persons, including to any of the individual or corporate respondents, or for the purpose of investing any funds in or through any other corporate respondent.
This court declares that for 2690212 Ontario Inc., the term “usual and ordinary course of business” as used in the interim preservation order shall be defined to include the tasks necessary to run the day-to-day operations of the private mortgage lending business, including the collection of mortgage payments, payment of employees, suppliers, and contractors in a manner consistent with pre-separation practices. It also includes retaining professional advisors for tax, litigation, and corporate filing purposes. 269 may use its own assets, including funds received from investors not subject to the preservation order, in the mortgage lending business.
All other relief sought by the respondents in the November 23, 2022, Notice of Motion is dismissed.
Costs
[60] The applicant has been largely, although not completely successful, and is presumptively entitled to costs. The applicant shall serve his costs submissions by May 4 (limited to five pages plus Bill of Costs plus Offers to Settle). The Responding Moving Parties 217, 239 and 269, the only parties filing a factum and making oral submissions, shall file their responding costs submissions by May 18 (same limits).
Kristjanson J. Released: April 20, 2023