CITATION: Mendlowitz & Associates Inc. v. Jay Chiang, 2013 ONSC 7442

COURT FILE NO.: 00-CL-3835 DATE: 20131202

SUPERIOR COURT OF JUSTICE – ONTARIO

COMMERCIAL LIST

IN THE MATTER OF the bankruptcy of Jay Tien Chiang, of the Town of Richmond Hill, in the Regional Municipality of York, in the Province Of Ontario

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

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 known 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

BEFORE: D. M. Brown J.

COUNSEL: C. Francis and M. Freake, for the plaintiff Trustee, Mendlowitz & Associates Inc. A. Blumenfeld and J. Gibson, for the plaintiff, Korea Data Systems (USA), Inc. H. Book, for defendant, Christina Chiang T. Curry, for the defendant/bankrupt, Jay Chiang

HEARD: November 20, 2013, with prior written submissions.

case conference memorandum no. 1

I. Introduction

1Pursuant to directions given by Morawetz J., this proceeding was assigned to me to case manage. Counsel filed submissions identifying the issues outstanding in this proceeding, and they offered differing proposals for the sequencing and scheduling of those issues. A case conference was held on November 20, 2013. Although the conference did not finish, the written submissions filed by counsel provided the necessary information to issue scheduling directions.

2The Trustee filed an omnibus motion for directions dated October 17, 2013. Item No. 2, the ability of Borden Ladner Gervais LLP to continue to represent the plaintiff, KDS, was dealt with by way of my endorsement dated November 13, 2013.

3The parties raised three sets of scheduling issues: (i) those which remain to be dealt with by the trial judge, A.C.J. Marrocco, who issued lengthy trial reasons on July 9, 2012 (the “Trial Reasons”); (ii) those which I must address as the case management judge; and, (iii) the appeal pending before the Court of Appeal. In light of the timing of certain directions I give below, I shall only deal with Items (ii) and (iii) in this Memorandum; a further Memorandum should issue later this week.

II. Issues which remain for A.C.J. Marrocco to deal with

4The Trial Reasons identified a number of issues which remain outstanding. I shall consult with A.C.J. Marrocco on those issues and release further directions as soon as possible.

III. The sequencing of issues before the case management judge

A. The Taiwan Proceeding (Trustee notice of motion para. 3(j))

5On November 29, 2013, I heard the motions by KDS and the Trustee in respect of the recognition and enforcement proceeding in Taiwan. Reasons for decision were released on November 30, 2013: 2013 ONSC 7405. That decision dealt with the relief sought by the Trustee in paragraph 3(j) of its Notice of Motion.

B. Challenges to the disclosure of the Trustee’s October 11, 2013 Report (Trustee notice of motion para. 1)

6On October 29, 2013, Mesbur J. issued reasons dealing with the claim of KDS that certain portions of, and documents appended to, the October 11, 2013 Report of the Trustee were privileged and therefore should not form part of the Report and should not be disclosed to other interested parties, such as Jay and Christina Chiang. I have reviewed the KDS notice of motion dated October 24, 2013. It is apparent that Mesbur J. dealt with all issues raised by KDS.

7KDS now wishes to argue that parts of the Report should be produced to the Chiangs for unspecified “policy” reasons. Let say that I am not impressed by this approach by KDS. If a party has problems with a report filed by a court-appointed official, then it should put all of its cards on the table, “face up” as a former veteran litigator from BLG used to put it, and ask the court to adjudicate only once on all of its complaints. Just as our Courts of Justice Act seeks to avoid the multiplicity of proceedings, so too courts seek to avoid (to use an understated word) the multiplicity of motions in respect of one matter.

8I will entertain further submissions by KDS about what additional portions of, or documents attached to, the Report should not be disclosed or form part of the public record, but KDS must identify ALL remaining complaints it has about the Report. I also give the parties fair warning that partial indemnity costs may not be the starting point for any consideration of the scale of costs which an unsuccessful party may bear in respect of this “Phase II” of the motion. I will not hold a hearing to receive oral submissions on this point. An ample evidentiary record exists; a motion in writing will suffice. In respect of that motion I make the following order:

(i) No later than Monday, December 9, 2013 KDS shall serve and file its notice of motion specifying any other portion of the Report it contends should not form part of the public record, together with written submissions (which are NOT to exceed 20 pages in length) and authorities;

(ii) All responding parties shall serve and file their written responding submissions and authorities (which are NOT to exceed 20 pages in length) by Monday, December 16, 2013; and,

(iii) KDS may serve and file brief reply submissions (which are NOT to exceed 5 pages in length) no later than Thursday, December 19, 2013.

I shall issue written reasons after receiving those submissions. That will deal with Item 1 in the Trustee’s notice of motion.

C. KDS BIA s. 38 motion other than in respect of the Taiwan Proceeding (Trustee notice of motion para. 3(e); Report Schedules 46 and 47)

9I have reviewed the July 22, 2013 letter from counsel for KDS and the response of Trustee’s counsel dated July 31, 2013. Much of what KDS described as the subject-matter of a potential BIA s. 38 proceeding really concerned issues which remained to be dealt with by the trial judge. Consequently, I see no need to consider this item further until after the trial judge has rendered his supplementary reasons for judgment.

D. Directions sought by the Trustee regarding the payment of US $45,000 to Winner International Group Ltd. (Trustee notice of motion para. 3(a))

10KDS has refused to provide its consent to the Trustee releasing US $45,000 to Winner. This is not a $4.5 million dollar issue; it is not a $450,000 issue; it is a $45,000 issue – i.e. $20,000 above the limit of our Smalls Claims Court. I will deal with the issue by motion in writing as follows:

(i) No later than Monday, December 9, 2013 KDS shall serve and file its motion record, together with written submissions (which are NOT to exceed 10 pages in length) and authorities;

(ii) All responding parties shall serve and file their written responding submissions and authorities (which are NOT to exceed 10 pages in length) by Monday, December 16, 2013; and,

(iii) KDS may serve and file brief reply submissions (which are NOT to exceed 5 pages in length) no later than Thursday, December 19, 2013.

I shall issue written reasons after receiving those submissions. That will deal with Item 3(a) in the Trustee’s notice of motion.

E. A proposed garnishment proceeding by KDS against the Trustee (Trustee’s notice of motion, para. 3(g))

11According to the Trustee’s Report, this past August KDS proposed bringing a motion to ask the Court to issue a notice of garnishment to the Trustee. The Trustee reported: “BLG made it clear that it was seeking the garnishment order for the express purpose of preventing the Trustee from settling Christina’s cost claim.” The correspondence was not attached to the Report, so I am not clear about the details of what KDS was proposing.

12In any event, this issue shall await the release of supplementary reasons by the trial judge which will deal, in part, with the issue of costs relating to claims made against Christina. At the November 29 hearing counsel for the Trustee confirmed that the Trustee did not propose make any distribution of the funds in its possession and control without making a further report to and seeking directions from the Court, so I see no urgency in dealing with this issue.

F. Proposed KDS motion for payment by the Trustee of $300,000

13KDS advised that it wished to bring a motion requiring the Trustee to pay it or Mr. Hui, its principal, $300,000 pursuant to a May, 2013 agreement. The Trustee submitted that this matter should await its distribution motion. I agree. I see no practical need or reason to schedule it at this point.

G. BIA s. 163 motion and bankrupt’s discharge motion

14KDS wants to examine Jay Chiang pursuant to BIA s. 163. It also wants to examine Jay and Christina Chiang as judgment debtors. Also, a discharge hearing must be scheduled at some point in Jay Chiang’s bankruptcy.

15These issues should await the release by the trial judge of his supplementary reasons and his determination on the contempt sentencing. The latter will relate, in part, to the issue of the compliance by the Chiangs with the undertakings which formed part of the July 16, 2003 Consent Contempt Order. I see no purpose in authorizing further examinations of Jay or Christina Chiang until the contempt motions judge has expressed his view on sanctions. Similarly, since some of the BIA s. 173 facts concern the bankrupt’s accounting for his assets, the discharge hearing should await the contempt motions judge sentencing which relates to disclosure of financial information pursuant to the Undertakings.

H. Summary

16The directions which I have given above will result in the filing of submissions on the remaining pressing issues this month, which will enable me to release reasons for decision in January, 2014. The parties can then devote their time to working on the outstanding trial issues, which should be their priority given that it is now 1.5 years since the release of the Trial Reasons.

IV. Appeal directions (Trustee’s notice of motion para. 3(j))

17The Trustee sought directions regarding its rights and obligations in relation to the appeal from the Trial Decision. From what I gather, the appeal by KDS only concerns the trial judge’s refusal of KDS’ request for a declaration that the debt owed by Jay Chiang fell within BIA s. 178(1)(d). I suspect the appellate court would want the parties to complete all outstanding matters with the trial judge before it was asked to deal with any appeal, so I would encourage the parties to focus their attention on the issues outstanding from the trial.

(original signed by)_

D. M. Brown J.