Court of Appeal for Ontario

Citation: Korea Data Systems (USA), Inc. v. Aamazing Technologies Inc., 2012 ONCA 756 Date: 2012-11-06 Docket: M41692 (C55916)

Before: Blair J.A. (In Chambers)

Between

Korea Data Systems (USA), Inc. Plaintiff (Appellant/Moving Party)

and

Aamazing Technologies Inc. carrying on business as Ajay Amazing Technologies Inc., Jay Chiang, aka Jay Tien Chiang aka Tienchieh Chiang, Julius Chiang and Christina Chiang aka Christian Chiang aka Suh Mei Tasi, aka Suh Mei Tsai aka Christina Suh Mei Tsai, aka Suh Mei Tasi Chiang, aka Christina Suh-Mei Chiang aka Suh-Mei Chiang, and Dong Liang aka Tung Liang Defendants (Respondent in Appeal)

And Between

Mendlowitz & Associates Inc., in its capacity as Trustee in Bankruptcy of Jay Tien Chiang, and Korea Data Systems (USA) Inc. Plaintiffs (Appellants/Moving Parties)

and

Jay Tien Chiang, aka Jay Chiang, aka Tienchieh Chiang, Christina Chiang, also known as Suh Mei Tasi, aka Christian Chiang aka Suh Mei Tsai, aka Christina Suh Mei Tsai, aka Suh Mei Tasi Chiang, aka Christina Suh-Mei Chiang aka Suh-Mei Chiang, Chun Chun Wu, Jie Chu Wu, Chen Cheng-Yueh Tsai, Yu Chang Chiang also knows as Y.C. Chiang, En Fu Chiang, Brenda Chang, Samson Chang, David Cheng, Everview Inc., 961266 Ontario Inc.,1204360 Ontario Inc., 1243723 Ontario Inc., Aamazing Technologies Inc., Wen Wang Chiang aka Wen Chiang aka Wen Wang, Crystalview Technology Corp., E.C. Holdings Ltd., Telepower International (Canada), Inc., Best Buy Electronics Inc., Su Feng Tsai aka Tsai Su Feng, Tsai Zheng Li, Tsai Zheng Ying, Asia Pacific Gateway (H.K.) Ltd., Century Group Holdings Ltd., Albany Investments Ltd., Mei Huang, Winner International Group Limited, Huang Chi Lung, Min Huang, Wainwright Ventures Ltd., New Global Investment Limited and Floratino Limited Defendants (Respondents in Appeal)

Counsel: Aaron Blumenfeld and Alessandra Nosko, for the appellants, Korea Data Systems (USA), Inc. and Mendlowitz & Associates Inc., Trustee in Bankruptcy of Jay Tien Chiang Hilary Book, for the respondent Christina Chiang Rebecca Huang, for the respondents Winner International Group Limited and Mei Huang John O’Sullivan, for the respondents Su Feng Tsai, Tsai Zheng Li, Tsai Zheng Ying, Huang Chi Lung and Chen Cheng-Yueh Tsai Brent Arnold, for the respondents Brenda Chang and Samson Chang

Heard: October 23, 2012

Motion to stay the appeal from the judgement of Justice Frank N. Marrocco of the Superior Court of Justice dated July 9, 2012.

Reasons for Decision

[1] The issues on this motion are the following: (1) Was there a final judgment at trial that can form the subject matter of an appeal, given the outstanding matters left to be determined, and (2) if there is, should the appeal be stayed pending the determination of those outstanding matters?

Background

[2] The trial was long and complex, and involved many parties. It dealt with two actions together.

[3] The plaintiff in the first action – Korea Data Systems (USA), Inc. (“KDS”) – is a significant judgment creditor of the defendant, Jay Chiang, pursuant to a multi-million dollar judgment obtained against him in the California Superior Court. Shortly after the judgment was rendered, Mr. Chiang made an assignment in bankruptcy in Ontario. KDS nonetheless sued to enforce the California judgment in Ontario, arguing that the judgment represented the kind of debt that survives a bankruptcy.

[4] In the second action, KDS and Mr. Chiang’s Trustee in Bankruptcy, Mendlowitz & Associates Ltd., sued Mr. Chiang and numerous companies and related family members claiming damages, different forms of declaratory relief and an equitable tracing order. They alleged fraudulent conveyance of property, conspiracy, spoliation and unjust enrichment. In substance, though, the claim was that Mr. Chiang, in conspiracy with the other defendants, was hiding and spiriting away assets from his creditors and his Trustee in Bankruptcy.

[5] Justice Marrocco presided over the trial. After 10 weeks of evidence plus lengthy written submissions, he found that Jay Chiang had indeed engaged in a conspiracy to defeat the plaintiffs’ collection efforts and that he had used nominees for that purpose and to hide his assets. But the parties to the conspiracy were not Mr. Chiang and these respondents. They were Mr. Chiang and his father and a brother (the latter two are no longer parties to the proceedings). The conspiracy and related claims were dismissed against these respondents for varying reasons, but essentially because, although their actions may have assisted Mr. Chiang’s efforts, they were not part of a conspiracy agreement to defeat, hinder, delay or defraud his creditors.

[6] With respect to the respondents, Winner International Group and Mei Huang, the issue was somewhat different. Winner is the holder of an approximately $10 million fund that KDS and Mendlowitz allege belongs to the bankrupt, Jay Chiang. Mei Huang is the registered owner of all of the shares of Winner, but the trial judge found that she holds a 50% interest in trust for Mr. Chiang. On appeal, KDS and Mendlowitz will argue that the trial judge erred and should have found that 100% of the shares are held in trust for Mr. Chiang.

[7] KDS and the Trustee wish to appeal the dismissal of the actions against the other respondents and some of the findings respecting Mr. Chiang, including the one just mentioned above. They have filed a Notice of Appeal solely to protect their position. They maintain that there is as yet no need to appeal because the trial judge left a number of issues open for subsequent determination and there is no final judgment at this point that can be the subject of an appeal. The parties differ over this interpretation as well as over whether, if there is a final judgment, any appeal should be stayed at this point pending the finalization of the outstanding issues by the trial judge.

[8] That dispute has given rise to this motion.

[9] KDS and Mendlowitz seek an order staying the appeal pending the disposition of the issues left to be determined by the trial judge. The remaining respondents oppose, arguing that those issues relate only to Jay Chiang – who takes no position on the motion – and that the issues respecting them are discrete and finalized, and should proceed.

Analysis

[10] The issues still to be determined by the trial judge (the “Outstanding Issues”) may be summarized as follows:

a) Post-judgment interest on the California judgment;

b) The nature of the damages, if any, that KDS is entitled to recover from Mr. Chiang;

c) The terms of a Mareva injunction in aid of execution, to which the trial judge held KDS and Mendlowitz were entitled;

d) The specifics of an equitable tracing order against Mr. Chiang, to which the trial judge held KDS and Mendlowitz were entitled, should they consider it advisable to apply for a specific order (the trial judge held it was not an appropriate case for “a general imprecise tracing order”);

e) An accounting with respect to the sum of $2 million transferred from the respondent, Floratino Limited, to Winner; and

f) Costs.

[11] On behalf of the appellants, Mr. Blumenfeld argues that the Outstanding Issues are substantial matters affecting the rights of the parties still remaining to be determined by the trial judge and, accordingly, that there is as yet no final judgment that “disposes of [the] action on its merits”: Byers (Litigation Guardian of) v. Pentex Print Masters Industries Inc., (2003), 2003 42272 (ON CA), 62 O.R. (3d) 647, at paras. 19 and 41; see also the definition of “judgement” in Rule 1.03 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. It follows, he says, that the time for appealing under Rule 61.04(1) has not yet begun to run, although the appellants have nonetheless filed a Notice of Appeal out of an abundance of caution.

[12] The respondents do not quarrel with the Byers test, but submit that the Outstanding Issues do not relate to the dismissal of the claims against them. Those issues are discrete, finally disposed of, and readily subject to determination on appeal without determination of the Outstanding Issues, they argue. The one exception may be the issue respecting the accounting for monies transferred to Winner, but the broader issue of whether the shares in Winner are held in a constructive trust for Mr. Chiang is one that is ripe for determination on appeal now. The respondents contend that considerations of finality militate in favour of their issues being determined in a timely fashion on appeal, after more than a decade of litigation with, amongst other things, the restraints of a Mareva injunction hanging over their heads.

[13] Unfortunately, the procedural choice is not so simple.

[14] While I find Mr. Blumenfeld’s argument that there is not yet a final order to appeal from somewhat attractive, it faces both practical and procedural impediments as a result of the way in which the proceedings have evolved. First, a Notice of Appeal has been filed, and therefore there is an appeal in existence. Secondly, the order the appellant’s seek in this regard would be tantamount to an order quashing the appeal, something I as a single judge have no authority to do. Motions to quash must be determined by a panel of judges: Courts of Justice Act, R.S.O. 1990, c. C.43, s. 7(3). Thirdly, no one is asking me to quash the appeal. The respondents, who might have an argument for doing so if they brought a motion to that effect, do not want the appeal quashed; they want it to proceed as quickly as possible. The appellants are hardly seeking to have their own appeal quashed.

[15] It seems to me, then, that the motion must be determined on the basis that there is an appeal in place and a decision to be made whether that appeal should be stayed either for a limited period of time or until the Outstanding Issues have been dealt with by the trial judge. In that exercise, the “final order” debate remains relevant, in my view.

[16] What the appellants request here is not a stay of an order or judgment under appeal, pending the disposition of the appeal. Nor is it a stay of another body’s proceedings (e.g. an arbitration proceeding or a trial) pending some other matter, or an injunction. In those types of situations it is clear that the three-step exercise set out in RJR-Macdonald Inc. v. Canada (Attorney General), 1994 117 (SCC), [1994] 1 S.C.R. 311, applies. That is, the court must ask itself (i) whether there is a serious issue to be determined, (ii) whether the applicant will suffer irreparable harm if the stay is not granted, and (iii) whether the balance of convenience favours the applicant or the respondent, and exercise its discretion based upon the answers to those questions.

[17] Instead, the appellants ask this Court to stay the appeal itself, pending the decision of another body (the trial court). In effect, they wish to have the Court adjourn the exercise of its own jurisdiction to proceed with the appeal until sometime later, pending the other body’s decision. In those circumstances, the Federal Court has adopted a policy that the principles of RJR-Macdonald do not apply; rather, it is a matter of the court exercising its discretion and determining “whether, in all the circumstances, the interests of justice support the appeal being delayed”: Mylan Pharmaceuticals ULC v. AstraZeneca Canada, Inc., 2011 FCA 312, 426 N.R. 167, at paras. 3, 5, 6 and 14, per Stratas J.A.; see also EpiCept Corp. v. Canada (Minister of Health), 2011 FCA 209, 425 N.R. 353.

[18] The Federal Court’s rationale is rooted in the wording of s. 50 of the Federal Courts Act, R.S.C. 1985, c. F-7 – its statutory power to grant a stay – which empowers the court to stay proceedings where “it is in the interest of justice that the proceedings be stayed.” That is the core tenet underlying any court’s power to impose a stay of proceedings, in my view, and applies equally to the exercise of this Court’s jurisdiction to stay an appeal pending the disposition of another body.

[19] I prefer the broader “interests of justice” test to the three-stage RJR-Macdonald test in such circumstances because I think it responds more flexibly to the somewhat different considerations that are in play when a party seeks to have the appeal itself stayed as opposed to an order or judgment appealed from. In the former circumstances, broader considerations regarding the administration of justice are also in play. Factors demonstrating irreparable harm or an imbalance of convenience are undoubtedly relevant when a court is contemplating delaying its proceedings until a later time, (considerations respecting the merits of the appeal, perhaps less so). However, the court must also take into account other factors such as the public interest in the fair, well-ordered and timely disposition of litigation, and the effective use of scarce public resources.

[20] Taking into account all of those considerations, I am satisfied that a relatively short, and time-limited, stay of the appeal ought to be ordered in the circumstances here but subject to one condition: that the appellants be required to order the transcript needed for purposes of the appeal involving the respondents now.

[21] As I read the trial judge’s reasons, resolution of the Outstanding Issues does not involve any further evidence. He has called for submissions. I see no reason why those submissions cannot be made and dealt with within a reasonable period of time.

[22] The one exception to the call for submissions may be the trial judge’s direction that the plaintiffs “can apply for” a specific equitable tracing order “when they consider it desirable to do so.” It is not clear whether he contemplated additions to the evidentiary record in that regard. Even if he did, however, I am not persuaded that the trial judgment would not be final and appealable until that determination is made, or that the appeal should be stayed indefinitely for that eventuality. I am inclined to read the trial judge’s reasons as making a final order that the plaintiffs “are entitled to an equitable tracing order against Jay Chiang,” and granting them leave to apply later, if so advised, for a specific form of tracing order.

[23] The procedural framework in Ontario does not generally contemplate the disposition of appeals in multi-party, multi-issue cases on a party by party basis. There is one judgment following a trial. This approach avoids a multiplicity of proceedings and the potential of inconsistent results. While there are no doubt exceptions to this general policy, this is not such a case. The trial here was not a bifurcated trial and evidence was led, and arguments made, on all issues respecting all defendants, including the Outstanding Issues. Ordinarily, one appeal dealing with all of those issues is the most effective and fair use of both the public and private resources involved.

[24] At the same time, I have some sympathy for the position in which the responding parties find themselves. They have been successful, for the most part, after a decade of pre-trial proceedings and a lengthy, complex, and expensive trial. If there is to be an appeal, they quite understandably and justifiably would like to have the appeal disposed of as soon as the Rules of Civil Procedure permit. The allegations against them – and to this point, resolved in their favour – are serious (conspiracy and fraud). There appears to be some merit in their view that the issues relating to them on appeal are separate and discrete from those remaining to be determined in the Outstanding Issues. There is little prejudice to the appellants, except in terms of costs, if the appeal moves forward without finalization of the Outstanding Issues.

[25] That said, the overall interests of justice favour the granting of a short stay, in my view, to enable the Outstanding Issues to be determined. As the Divisional Court noted in Rosenhek v. Windsor Regional Hospital, [2010] O.J. No. 2893, at para. 50, citing Marché D'Alimentation Denis Thériault Ltée v. Giant Tiger Stores Ltd., 2007 ONCA 605, 87 O.R. (3d) 660, at para. 34:

The Rules of Civil Procedure must be interpreted in a manner that recognizes that expeditious justice is only one value to be weighed against others and that delay may be excused where necessary to ensure complete justice.

[26] In the result, I grant a stay of the appeal for a period of 120 days from the date of this decision or until the Outstanding Issues have been finalized by the trial judge, whichever is the earlier. Notwithstanding the stay of the appeal, however, the appellants are to proceed to order the transcripts necessary for the appeal as if the Rules respecting the ordering of transcripts were in effect.

[27] I do not think this is an appropriate motion for an award of costs, and I make no order in that regard.

“R.A. Blair J.A.”