Court File and Parties

COURT FILE NO.: CV-19-617365

MOTION HEARD: 20190909

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Liping Zhao and Fenglai Gao, Plaintiffs

AND:

8657181 Canada Inc., Christine (Liping) Tan, Xiaoquan Sun, Nan Zhang, Jason (Yicai) Zhu, 8014973 Canada Inc. o/b H&C Immigration Services Ltd. and Hao Bei (Howard), Defendants

BEFORE: Master Jolley

COUNSEL: Paul Starkman, Counsel for the Moving Party Defendants

Letitia Lee, Counsel for the Responding Party Plaintiffs

HEARD: 9 September 2019

REASONS FOR DECISION

[1] The moving defendants bring this motion to discharge a certificate of pending litigation (“CPL”) obtained by the plaintiffs without notice on 9 April 2019 and registered against real property owned by the defendant Christine Tan (“Tan”). They argue that the materials before Master Abrams on that motion were misleading, incomplete and failed to make full disclosure and that the CPL should be set aside as a result.

[2] Rule 39.01(6) requires a party who seeks an order ex parte to make full and fair disclosure of all material facts and provides that failure to do so is a sufficient ground for setting aside any order obtained. The test to set aside an ex parte CPL based on misrepresentation or non-disclosure is set out in Euro United Corp. v. Rehani [2003] O.J. No. 2426 at paragraph 11.

[3] I have dealt with this motion on the basis of the record as it appeared before Master Abrams. Having reviewed that record, I am satisfied that the plaintiffs complied with their obligations under Rule 39.01(6).

[4] The defendants argue that many of the statements presented as fact in the affidavit that was before Master Abrams are not borne out or are contradicted by the documents that were attached as exhibits to the affidavit. To this argument generally, I would not and do not presume that the Master relied solely on the affidavit presented without reviewing the attached exhibits and making her own conclusions about whether there was a reasonable explanation for any discrepancies between the affidavit and the exhibits and about whether the plaintiffs had met the test of demonstrating that there was a triable issue as to their interest in the land in question.

[5] With that being said, I will refer to a few examples of what the defendants say are misleading statements in the affidavit that was before Master Abrams. First, the affidavit stated that both plaintiffs were parties to an investment agreement (the “Sparrow Lake Agreement”) with the defendant 8657181 Canada Inc. (“865”). However, the Sparrow Lake Agreement appended to the affidavit is signed only by the plaintiff Zhao and references only Zhao (although has as her email address that of the plaintiff Gao). On this point, I note that the amended statement of claim that was also before Master Abrams, the contents of which were affirmed to be true, admits that only Zhao signed the Sparrow Lake Agreement but notes that Gao provided the funds together with Zhao and that Gao was the person who visited the site of the purported golf course investment. The issues of who will be considered a party to the Sparrow Lake Agreement and who has a claim to the pleaded tracing order and an equitable interest in the property are issues for trial. I also note, as an aside, that even if Gao were found not to be a party to the Sparrow Lake Agreement, that would not have materially impacted the decision to grant a CPL, although in favour of Zhao alone.

[6] By way of second example, on the issue of the refund, which the defendants assert is only $30,000 and only owed by 865 and which the plaintiffs assert is $280,000 owed to them by all defendants, the amount that is ultimately owed, if any, by whom and to whom is not a “fact” that was misrepresented or omitted by the plaintiffs on their ex parte motion. It is an issue for trial.

[7] Similarly, the defendants argue that what the plaintiffs describe in the affidavit as a promissory note from the defendant Tan was not a personal obligation of Tan and does not meet the legal requirements required of a promissory note. The document relied on (the “Agreement on Refund”) was attached to the affidavit before the Master. Having reviewed the material that was before the Master, I find that the plaintiffs’ characterization of the Agreement on Refund again is not a misrepresentation but is an issue for trial. A tial court will determine whether the language of the Agreement on Refund is sufficient to constitute a promissory note or not. This is also the case with respect to any personal obligations of the defendant Tan under the Agreement on Refund. The defendants argue that Tan is not a party to the Agreement on Refund and that her signature on that document is only in her capacity as a director of 865, the stated party to the agreement. The plaintiffs argue that 865 did not return their investment and they wanted to secure the debt owing. In order that the plaintiffs not disrupt the purported closing of the property owned by 865 on which the golf resort was to be built, Tan personally agreed to guarantee the debt owing to them and agreed to secure that obligation by way of a mortgage on her own property. In what capacity Tan signed the Agreement on Refund, whether it is enforceable as against her, and whether it or any representation made by her obliged her to provide the plaintiffs with a mortgage on her property are triable issues.

[8] Lastly, as to the defendants’ claim that the plaintiffs are precluded from bringing this action in court as a result of an arbitration clause in in the Sparrow Lake Agreement, they are free to bring a motion to stay the action but have not done so to date and have not asked for that relief on this motion.

[9] For the reasons above, the motion is dismissed. The parties shall attempt to come to an agreement on costs in the next 30 days. If they are unable to do so, they may provide brief costs submissions and a costs outline by October 11 to my assistant trial coordinator, Ms. Meditskos at christine.meditskos@ontario.ca.

Master Jolley

Date: 11 September 2019