NEWMARKET COURT FILE NOS.: CV-20-516, CV-22-2240, CV-22-1544 DATE: 20230616 CORRIGENDA: 20230619 SUPERIOR COURT OF JUSTICE – ONTARIO

COURT FILE NO.: CV-20-516 RE: YAN JUN LI, Applicant AND: JIAPENG ZHOU, Respondent

COURT FILE NO.: CV-22-2240 AND RE: JIAPENG ZHOU, Plaintiff AND: YAN JUN LI, a.k.a. YANJUN LI a.k.a. NANCY LI, YAN XU, a.k.a. SUMMER XU and BOSSTON INVESTMENT HOLDING GROUP (CANADA) INC., Defendants

COURT FILE NO.: CV-22-1544 AND RE: JIAPENG ZHOU, Plaintiff AND: GABRIEL KRIKUNEZ and KRIKUNEZ LAW PROFESSIONAL CORPORATION, Defendants

BEFORE: The Honourable Mr. Justice R.E. Charney

COUNSEL: Leon Li and Edward Zhou, Counsel for the Applicant (CV-20-516): Yan Jun Li and the Defendant (CV-22-2240): Yan Jun Li, a.k.a. Yanjun Li a.k.a. Nancy Li, Yan Xu, a.k.a. Summer Xu Gregory Govedaris, Counsel for the Respondent (CV-20-516) and Plaintiff (CV-22-2240 and CV-22-1544): Jiapeng Zhou

HEARD: In Writing

Endorsement

(TEXT OF ORIGINAL ENDORSEMENT HAS BEEN AMENDED – CHANGES APPENDED)

Introduction

[1] At a telephone case conference held on April 19, 2023 (Li v. Zhou, 2023 ONSC 2401), the following issue arose:

1. Pursuant to the schedule established on January 17, 2023, cross-examinations in relation to Mr. Govedaris’ motion to consolidate certain actions were to be completed by March 31, 2023.

2. Subsequent to the January 17, 2023 case conference, counsel for the Applicant, Yan Jun Li (Li), indicated that he wanted to also examine two of Mr. Govedaris’ clients, Jiapeng Zhou (Zhou) and Lihui Gu (Gu), who are parties to the actions sought to be consolidated, but who did not swear affidavits in support of the motion. Mr. Govedaris did not agree to the cross-examination of these parties, and the cross-examination of the affiants did not proceed.

3. The primary issue in dispute is whether counsel for Li may cross-examine Zhou and Gu for the consolidation motion.

[2] The parties agreed to have this issue resolved by a motion in writing, and agreed to the following schedule:

a. Counsel for Li will serve his Notices of Examination/Summons on Zhou and Gu by April 20, 2023.

b. Mr. Govedaris will serve his Motion to Strike the Notices of Examination/Summons and supporting factum by May 19, 2023.

c. Counsel for Li will serve his responding factum and any responding record by June 9, 2023.

[3] Notices of Examination were served on Zhou and Gu on April 20, 2023, and on May 9, 2023, Counsel for Zhou and Gu brought a motion to strike the Notices of Examination.

The Two Actions and Motion to Consolidate

[4] On December 23, 2019, Zhou and his wife, Gu, commenced an action (Court File #CV-19-633374) against fifteen defendants, including Yan Jun Li (Li) and her daughter, Yan Xu (Xu), alleging that Li misappropriated millions of dollars, part of which was used to maintain properties owned by Xu and Li. I will refer to this as the Zhou/Gu Action.

[5] On February 6, 2020, Li issued an Application against Zhou (Court File #CV-20-516), seeking the removal of a Caution registered by Zhou on property owned by Li, and damages for the registration of the Caution. I will refer to this as the Li Application.

[6] The Caution was removed by Zhou on February 12, 2020, and the only issue remaining in the Li Application is the issue of damages.

[7] On August 12, 2022, Regional Senior Justice Edwards ordered that the Li Application be converted to an action. Counsel for the Li Application has since advised (at the telephone case conference held on June 1, 2023) that he will not issue a Statement of Claim, but will rely on the Notice of Application as the Statement of Claim.

[8] On August 25, 2022, Zhou brought a motion seeking to have the Li Application heard at the same time as the Zhou/Gu Action. I will refer to this as the consolidation motion.

[9] The consolidation motion seeks to consolidate several proceedings:

An Order that the Consolidated Action bearing Court File Number CV-19-00633374-0000 (Toronto), and the Newmarket Action bearing Court File Number CV-20-00000516-0000 (Newmarket), Newmarket Action bearing Court File Number CV-22-00001544-0000 (Newmarket), and Newmarket Action bearing Court File Number CV-00002240-0000 (Newmarket) be heard at the same time or one immediately after the other in Newmarket. [1]

[10] This is the second time that Zhou has brought a motion to consolidate the Zhou/Gu Action and the Li Application. A previous motion to convert the Li Application to an action, transfer it to Toronto and consolidate it with the Zhou/Gu Action was brought by Zhou on February 19, 2021, but was dismissed by McKelvey J. on April 14, 2021.

[11] At that time, the Zhou/Gu Action was a Toronto action, and the Li Application was a Newmarket application. At the April 14, 2021, motion, McKelvey J. did consolidate two Toronto actions on consent.

[12] As a result of scheduling difficulties, the parties did not have the Order relating to the April 14, 2021 motion taken out until January 20, 2022, when they returned to court to argue about costs. The January 20, 2022 Order states that Zhou’s motion to convert and consolidate is dismissed “on a without prejudice basis for the Respondent [Zhou] to seek the same relief if the Respondent chooses to do so.”

[13] I have located the April 14, 2021 oral reasons of McKelvey J. on the first consolidation motion. In dismissing the motion to convert the Li Application to an action and consolidate it with the Zhou action, McKelvey J. gave the following reasons:

This is a motion to consolidate the within application together with two separate actions which have been commenced. In addition, the motion seeks to have the application converted into an action and for that action to be transferred to Toronto.

The main issue before me is whether an application brought by the defendant Yan Li should be consolidated with the two other actions. On this issue I find that the application should not be consolidated with the other two actions, nor should the application be converted to an action at this point. Finally, I see no reason to transfer the application to Toronto where the two actions were commenced. My reasons are as follows.

The application related to a Caution which was registered against a property owned by the Applicant at 155 Carmel Drive in Markham It is alleged in the second action that the Applicant misappropriated some of the funds advanced to the Defendants in that action for her own benefit to pay for mortgage payments, maintenance and renovations of the property at 155 Carmel Drive. These allegations were vigorously denied by the Applicant, who brought the within Application to remove the Caution placed on the property. When the Application came on for a hearing on February 13, 2020, the Respondent removed the Caution – the Respondent advised that the caution had been removed on February 12, 2020.

Rule 6.01 is the Rule which grants authority to the court to order consolidation…In the present case I do not see common questions of fact or law in the Application and the consolidated actions. Given that the Caution has been withdrawn, the issues in the two actions no longer relate to the property at 155 Carmel Drive. In addition, the two actions involve numerous other parties and allegations other than the issues involved in this Application. This Application relates to the property at 155 Carmel Drive. The Respondent argues that evidence in the consolidated action might subsequently prove that money was unlawfully funnelled into the property at 155 Carmel which could lead to inconsistent verdicts. However, given that the Caution on this property has been removed and the property itself has been sold, it does not appear that this will be a live issue at the trial of the consolidated action. Therefore I view the risk of inconsistent verdicts to be remote.

I am also concerned that the consolidation of the Application with the consolidated action would significantly delay the Newmarket application. The consolidated action involves numerous parties and transactions and would appear to be a very complex action which will likely take a lengthy period of time before it is ready for trial. This compares to the issue on the Application, which involves a very narrow issue involving the registration of a caution on a property and the alleged damages which have resulted. In summary, I do not see common questions of fact or law on this issue, nor do I see any reason why this Application should be consolidated with the consolidated action.

The Respondent on this motion also seeks an order converting this Application to an action. I do not feel that this is required at this point in time. While the Respondent has not formally admitted that it registered the Caution unlawfully, it does note in its factum that the only relief remaining with respect to the Application is in relation to Applicant’s damages. While no formal admission of liability has been made, I also note that no evidence has been put before this Court that liability will be a major issue. If it turns out, at a later time, that liability is in dispute, that on that basis the application should be converted to an action, then my decision today is without prejudice to the Respondent to bring a further motion seeking to convert this Application into an action. At present, it would appear that the main issue relates to the damages claimed. These damages relate to the delay in the sale of the property and an alleged claim relating to the failure of the Applicant to be able to finance the purchase of a new property without the proceeds of sale from the Carmel property…

As noted previously, it is unclear whether liability will be an issue in this case, and if so what those issues will be. The damages which are alleged, however, in my view, can be dealt with by way of affidavit and cross-examination. I do not see the need, at this point, for pleadings and discoveries. If it turns out that these issues become more complex it is open to the Respondent to renew its motion for the application to be converted into an action.

[14] As indicated, the Li Application was later converted into an action by the Order of R.S.J. Edwards on August 12, 2022.

[15] It is the position of Zhou that the Zhou/Gu Action and the Li Application (which is now an action) have a question of law or fact in common, and that the relief claimed in both matters arises out of the same transactions or occurrences or series of transactions or occurrences and should be heard together or one immediately after the other (Rule 6.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194).

[16] Zhou’s consolidation motion record was served on August 26, 2022. His factum in support of the motion was served on September 8, 2022. In support of his consolidation motion, Zhou filed the affidavit of Caitlyn Reid, a paralegal with Zhou’s counsel’s law firm, which appended the relevant court documents.

[17] Li’s counsel responded to this motion with a Motion Record and a Supplementary Motion Record. The Supplementary Motion Record included affidavits sworn by Li and Xu.

[18] At the January 17, 2023 Case Conference, we established a schedule for the remaining steps in the motion to consolidate. The cross-examinations on affidavits were to be completed by March 31, 2023.

[19] Pursuant to this Endorsement, the parties scheduled the cross-examinations of the deponents of the affidavits for March 13, 2023. Notices of Examination were served on each of the deponents. There is no dispute that each party has the right to cross-examine the deponents of the affidavits filed by the opposing party on the motion.

[20] On March 7, 2023, counsel for the Applicant Li advised counsel for Zhou that, in addition to cross-examining Caitlyn Reid on her affidavit, he wanted to also examine Zhou and Gu, who are parties to the action but who did not swear affidavits in support of the motion. Counsel for Zhou and Gu did not agree to the examination of these parties.

[21] Counsel for Li took the position that he could not cross-examine Caitlyn Reid until after he examined Zhou and Gu, and stated that he would not attend the cross-examination that had been scheduled for March 13, 2023.

[22] Counsel for Zhou and Gu offered to permit counsel for Li to cross-examine Caitlyn Reid on March 13, without prejudice to his right to seek to cross-examine Zhou and Gu, advising that he would not raise any objection about the order of the cross-examinations (see Rule 39.02(2) below). This would ensure compliance with the timetable set out in the January 17, 2023 Endorsement.

[23] Counsel for Zhou and Gu attended for the cross-examination on March 13, 2023 with Caitlyn Reid, and obtained a Certificate of Attendance.

[24] Counsel for Li did not attend for the cross-examinations. In failing to attend, Counsel for Li did not comply with the timetable set out (and agreed to) in the case conference Endorsement of January 17, 2023.

[25] Another case conference was held on April 19, 2023 to address this issue, and the procedure set out in para. 2 above was agreed to.

[26] Pursuant to that schedule, counsel for Li served Notices of Examination on Zhou and Gu on April 20, 2023.

[27] Zhou and Gu have brought motions to quash the Notices of Examination.

Issue

[28] The issue to be determined is whether counsel for Li may cross-examine Zhou and Gu – parties to the action who did not swear affidavits - in relation to Zhou’s consolidation motion.

[29] The merits of the consolidation motion are not before me on this motion.

Analysis

[30] Li seeks to examine Zhou and Gu in advance of the consolidation motion pursuant to Rule 39.03, which provides:

Evidence by Examination of a Witness Before the Hearing

39.03 (1) Subject to subrule 39.02 (2), a person may be examined as a witness before the hearing of a pending motion or application for the purpose of having a transcript of his or her evidence available for use at the hearing.

[31] The relevant portions of Rule 39.02 provide:

Evidence by Cross-Examination on Affidavit On a Motion or Application

1. A party to a motion or application who has served every affidavit on which the party intends to rely and has completed all examinations under rule 39.03 may cross-examine the deponent of any affidavit served by a party who is adverse in interest on the motion or application.

(2) A party who has cross-examined on an affidavit delivered by an adverse party shall not subsequently deliver an affidavit for use at the hearing or conduct an examination under rule 39.03 without leave or consent, and the court shall grant leave, on such terms as are just, where it is satisfied that the party ought to be permitted to respond to any matter raised on the cross-examination with evidence in the form of an affidavit or a transcript of an examination conducted under rule 39.03.

[32] Thus, under Rule 39.02, either party has a right to cross-examine the deponent of any affidavit filed by the opposing party in support of the motion. Counsel for Zhou may cross-examine Li and Xu under Rule 39.02, because Li and Xu swore affidavits in support of their position on the consolidation motion.

[33] Zhou and Gu have not sworn affidavits in support of their motion, so Rule 39.02 does not apply to them.

[34] The right to examine a witness in advance of a motion under Rule 39.03 will only be permitted where the party requesting the examination can demonstrate that (a) the evidence sought from the witness is relevant to the underlying motion; (b) the witness is able to provide the evidence sought; and (c) the evidence sought is necessary for the motion.

[35] The onus is on the party seeking to conduct the examination to show on a reasonable evidentiary basis that the examination would be conducted on issues relevant to the pending motion and that the proposed witness is in a position to offer relevant evidence: Ontario Federation of Anglers & Hunters v. Ontario (Ministry of Natural Resources), leave to appeal to the S.C.C. refused [2002] S.C.C.A. No. 252 (S.C.C.), at para. 30. See also: PowerServe Inc. v. Ontario College of Trades, 2015 ONSC 857, at para. 15.

[36] Rule 39.03 applies to both parties and non-parties, although it may be more difficult to persuade the Court that a non-party has evidence that is relevant to a pending motion: Roberts v. Georgian College, 2022 ONSC 7304, at para. 40.

[37] The examination must be relevant to issues on the motion. It cannot be used as a general discovery within the action: Payne v. Ontario Human Rights Commission, at para. 165.

[38] The Notices of Examination in this case relate to Zhou’s motion under Rule 6.01 to have two actions heard together. Rule 6.01(1) provides:

6.01 (1) Where two or more proceedings are pending in the court and it appears to the court that,

(a) they have a question of law or fact in common;

(b) the relief claimed in them arises out of the same transaction or occurrence or series of transactions or occurrences; or

(c) for any other reason an order ought to be made under this rule,

the court may order that,

(d) the proceedings be consolidated, or heard at the same time or one immediately after the other; or

(e) any of the proceedings be,

(i) stayed until after the determination of any other of them, or

(ii) asserted by way of counterclaim in any other of them.

[39] Counsel for Li takes the position that he wants to examine Zhou and Gu because they have relevant evidence on the issues of:

a. whether the two actions arise out of the same transaction(s) or occurrence(s);

b. whether the two actions have a question of fact in common;

c. the factual circumstances surrounding Mr. Zhou’s registration and subsequent removal of the Caution, as disclosed in Mr. Gabriel Krikunez’s responding motion record delivered in the underlying consolidation motion; and

d. whether there have been any changes in circumstance that would warrant a revisit at Justice McKelvey’s last Order dated January 20, 2022 dismissing Mr. Zhou’s previous consolidation motion

[40] Counsel for Li argues that he is not trying to examine Zhou and Gu on the merits of the Zhou/Gu Action, but rather whether the actions have “facts in common” and the basis for Zhou’s claim that “the relief claimed in them arises out of the same transaction or occurrence or series of transactions or occurrences”

[41] Counsel for Li also argues that since Li and Xu are subject to cross-examination as deponents of affidavits under Rule 39.02, he should be permitted to examine Zhou and Gu under Rule 39.03. I reject this proposition. The right to cross-examine a deponent of an affidavit under Rule 39.02 is automatic. The right to cross-examine a witness (even a party witness) under Rule 39.03 is not automatic, but is subject to the requirement that the proposed witness is in a position to offer relevant evidence with respect to the issues on the motion.

[42] Counsel for Zhou and Gu argues that the question of whether the two actions have questions of fact in common, or arise out of the same transaction, is determined by reference to the pleadings. This is clearly the exercise undertaken by McKelvey J. when he denied Zhou’s first consolidation motion on April 14, 2021.

[43] If there is an affirmative answer to one of these questions, the Court would then consider whether the balance of convenience favours such an order, pursuant to the discretionary factors which include:

(i) will the order sought create a saving in pre-trial procedures, and in particular, pre-trial conferences; (ii) will there be a real reduction in the number of trial days taken up by the trials being heard at the same time; (iii) what is the potential for a party to be seriously inconvenienced by being required to attend a trial in which that party may have only a marginal interest; (iv) will there be a real saving in experts’ time and witness fees; (v) is one of the actions at a more advanced stage than the other, and (vi) will the order result in a delay of the trial of one of the actions, and if so, does any prejudice which a party may suffer as a result of that delay outweigh the potential benefits a combined trial might otherwise have…

See: Heliotrope v. 1324789 Ontario Inc., 2020 ONSC 808, at para. 11, quoting Coulls v. Pinto at paras. 18 – 20, aff’d by the Court of Appeal at Heliotrope Investment Corporation v. 1324789 Ontario Inc., 2021 ONCA 589, at paras. 35 – 38.

[44] In 1014864 Ontario Ltd. v. 1721789 Ontario Inc., 2010 ONSC 3306, at para. 18, Master Dash set out a non-exhaustive list of seventeen factors that the court may consider when determining whether to order two matters be tried together:

(a) the extent to which the issues in each action are interwoven;

(b) whether the same damages are sought in both actions, in whole or in part;

(c) whether damages overlap and whether a global assessment of damages is required;

(d) whether there is expected to be a significant overlap of evidence or of witnesses among the various actions;

(e) whether the parties the same;

(f) whether the lawyers are the same;

(g) whether there is a risk of inconsistent findings or judgment if the actions are not joined;

(h) whether the issues in one action are relatively straight forward compared to the complexity of the other actions;

(i) whether a decision in one action, if kept separate and tried first would likely put an end to the other actions or significantly narrow the issues for the other actions or significantly increase the likelihood of settlement;

(j) the litigation status of each action;

(k) whether there is a jury notice in one or more but not all of the actions;

(l) whether, if the actions are combined, certain interlocutory steps not yet taken in some of the actions, such as examinations for discovery, may be avoided by relying on transcripts from the more advanced action;

(m) the timing of the motion and the possibility of delay;

(n) whether any of the parties will save costs or alternatively have their costs increased if the actions are tried together;

(o) any advantage or prejudice the parties are likely to experience if the actions are kept separate or if they are to be tried together;

(p) whether trial together of all of the actions would result in undue procedural complexities that cannot easily be dealt with by the trial judge;

(q) whether the motion is brought on consent or over the objection of one or more parties.

[45] In my view, the questions of whether the two actions have a question of law or fact in common, or whether the relief claimed in them arises out of the same transaction or occurrence or series of transactions or occurrences, are questions that must be argued by counsel and answered by reference to the pleadings in the two actions. These are not questions on which a party could reasonably be expected to provide evidence in a Rule 39.03 examination.

[46] Further, the question of whether “there have been any changes in circumstance that would warrant a revisit at Justice McKelvey’s last Order ... dismissing Mr. Zhou’s previous consolidation motion” can be answered by counsel reviewing McKelvey J.’s oral reasons. It is clear that McKelvey J.’s analysis related to issues of pleading and procedure, not questions of evidence. The factors reviewed by McKelvey J. can be addressed by counsel in argument. These are not factors that a party would be able to provide evidence about. Counsel can argue about the significance of any procedural changes when the consolidation motion is argued. There is no evidence that a party could contribute to this issue.

[47] The discretionary factors set out in Heliotrope and 1014864 Ontario Ltd. are factors within the knowledge of counsel and can be advanced by counsel in argument. I do not see how a party could be expected to know the answer to any of the questions listed in those cases unless advised by their lawyer, and any such advice would be subject to solicitor/client privilege. I am not persuaded that Zhou and Gu could possibly provide relevant evidence in relation to any of these factors or any issues that arise on this motion.

Conclusion

[48] For the foregoing reasons, the Notices of Examination of Jiapeng Zhou and Lihui Gu are quashed.

[49] Counsel for Li failed to attend at the cross-examinations of Caitlyn Reid scheduled for March 13, 2023. He also failed to comply with the timetable set out in the January 17, 2023 Endorsement. Arguably, he has now lost the right to cross-examine on the affidavit of Caitlyn Reid (see Rule 3.04(4)). As an indulgence, I will give him one more chance to cross-examine on that affidavit. Cross-examinations shall be scheduled forthwith.

[50] Counsel for Zhou and Gu seeks partial indemnity costs for this motion in the amount of $4,847.80, inclusive of legal fees, disbursements and HST.

[51] Counsel for Li indicates that if Li had been successful, she would have sought partial indemnity costs in the amount of $6,017.

[52] In my view, the costs sought by Zhou and Gu are reasonable for a motion of this nature, and clearly what the unsuccessful party could reasonably expect to pay, given that they are less than the costs that Li would have claimed if she had been successful.

[53] Costs of this motion fixed in the amount of $4,847.70 and payable by Yan Jun Li within 30 days.

Justice R.E. Charney Date: June 16, 2023

Amendments

1. Paragraph [21] has been amended from its original text:

   Counsel for Li took the position that he could not cross-examine Caitlyn Reid until after he examined Zhou and Gu, and stated that he would not attend the cross-examination that had been scheduled for March 13, 2023. He also refused to produce Li and Xu for cross-examination on their affidavits.

   To new paragraph [21]:

   Counsel for Li took the position that he could not cross-examine Caitlyn Reid until after he examined Zhou and Gu, and stated that he would not attend the cross-examination that had been scheduled for March 13, 2023.

2. Paragraph [24] has been amended from its original text:

   Counsel for Li did not attend for the cross-examinations and did not produce Li and Xu. In failing to attend, Counsel for Li did not comply with the timetable set out (and agreed to) in the case conference Endorsement of January 17, 2023.

   To new paragraph [24]:

   Counsel for Li did not attend for the cross-examinations. In failing to attend, Counsel for Li did not comply with the timetable set out (and agreed to) in the case conference Endorsement of January 17, 2023.

3. Paragraph [49] has been amended from its original text:

   Counsel for Li failed to attend at the cross-examinations scheduled for March 13, 2023. He also failed to comply with the timetable set out in the January 17, 2023 Endorsement. Arguably, he has now lost the right to cross-examine on the affidavit of Caitlyn Reid (see Rule 3.04(4)). As an indulgence, I will give him one more chance to cross-examine on that affidavit. Li and Xu must also attend for cross-examination on their affidavits, or their affidavits will be struck out. Cross-examinations shall be scheduled forthwith.

   To new paragraph [49]:

   Counsel for Li failed to attend at the cross-examinations scheduled for March 13, 2023. He also failed to comply with the timetable set out in the January 17, 2023 Endorsement. Arguably, he has now lost the right to cross-examine on the affidavit of Caitlyn Reid (see Rule 3.04(4)). As an indulgence, I will give him one more chance to cross-examine on that affidavit. Cross-examinations shall be scheduled forthwith.

[1] The Zhou/Gu Action was commenced in Toronto and was traversed to Newmarket on consent. Two of the actions referenced in this consolidation motion were consolidated on consent: Court File Number CV-19-00633374-0000 and Court File Number CV-22-00002240-0000.