Court File and Parties

COURT FILE NO.: CV-17-581976

DATE: 2020-09-11

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: MELISSA MAGNOTTA as the Representative of the Estate of JOSEPH MAGNOTTA and MELISSA MAGNOTTA, Plaintiffs

AND:

ZIAOZENG YU, XIAHONG MAO and SUTTON GROUP-ADMIRAL REALTY INC., Defendants

BEFORE: Schabas J.

COUNSEL: Alfred J. Esterbauer and Arleen V. Huggins, for the Plaintiffs

Michael Kleinman and Esmaeil Mehrabi, for the Defendants

HEARD: September 9, 2020 by teleconference

ENDORSEMENT

[1] This endorsement addresses issues that have arisen with respect to terms of the formal Judgment following my Reasons for Decision in this matter released on February 18, 2020, followed by a Costs Endorsement released on April 9, 2020: Magnotta et al. v. Yu et al., 2020 ONSC 1049; Magnotta et al. v. Yu et al., 2020 ONSC 2217.

[2] The parties disagree over a number of terms of the draft Judgment.

[3] First, and simplest to resolve, is the issue of the dates to be included in the Judgment as to when funds shall be paid. Clearly the first payment of funds was not made within three days of the Offer to Settle being accepted, as the defendants argued they were not bound by the offer. Accordingly, as suggested by the defendants, the Judgment should reflect that reality and the date of the Judgment should be substituted for the date of the Offer in paragraphs 1 - 3 of the draft Judgment such that the three payments ($65,000, $200,000 and $285,000) will be made within three, fifteen and ninety days, respectively, of the Judgment.

[4] However, in order that the plaintiffs are not prejudiced by the delay in payment, the three payments shall bear interest at the pre-judgment rate of 2% per year from the dates that they should have been paid, on July 8, July 24 and October 1, 2019, respectively, until my Reasons for Decision were released on February 18, 2020, following which post-judgment interest of 3% per year shall apply. The award of costs, of $30,000, shall bear interest at 3% per year commencing April 9, 2020.

[5] Counsel for the defendants take issue with paragraph 6 of the draft Judgment, which states:

THIS COURT ORDERS AND ADJUDGES that the Defendant, Yu, shall immediately provide an executed Consent to Judgment for $900,000 in favour of the Plaintiffs, including a declaration that the $900,000 charge/mortgage registered against the Yu Residence in favour of the Defendant, Mao, registered on July 4, 2017 as Instrument No. YR2696166 (the "Mao Mortgage"), is a fraudulent conveyance and is void and of no effect as against the Plaintiffs, and shall be vacated from title by the Plaintiffs as security for the timely satisfaction of all terms herein; such Consent to Judgment to be held by the lawyers for the Plaintiffs.

[6] This tracks the wording of the Offer to Settle which provided: "My client will immediately provide an executed consent to Judgment for $900,000 in favour of your client, including a declaration that the Mao mortgage is a fraudulent conveyance, and is void and of no effect and shall be vacated from title by your client as security for the timely satisfaction of all terms above, to be held by your offices."

[7] The defendants' position is that the plaintiff's notice of motion only sought judgment against Yu and therefore she cannot provide the declaration that the Mao mortgage is a fraudulent conveyance. It is also observed, in this context, that the offer to settle, which was contained in an email, states throughout that the offer is by "my client", and not "clients."

[8] I do not accept the defendants' position on this issue. Although the notice of motion sought judgment against Yu because she was liable to the plaintiffs under the terms of the Agreement of Purchase and Sale, the notice of motion also sought judgment "in accordance with …the terms of a written Offer to Settle dated May 29, 2019 accepted in writing by the Plaintiffs." The notice also sought costs against both defendants. While the Offer was made on behalf of "my client", the lawyer who made the offer represented both Yu and Mao and the proposal to declare the Mao mortgage fraudulent had to have been made on Mao's behalf as well. The use of "my client" rather than "my clients" likely reflected the fact that counsel was receiving her instructions through the principal defendant, Yu, who was Mao's daughter, after Mao had come to Yu's assistance in placing the mortgage on Yu's property in an attempt to defeat or hinder the plaintiffs' claim. Furthermore, at the hearing of the motion for summary judgment counsel for the defendants treated the Offer as an offer from both defendants, counsel represented both defendants at the motion, and the motion was addressed as a motion to enforce the settlement against both Yu and Mao. To argue now that Mao is not bound by the offer, or my judgment, is not tenable.

[9] Accordingly, the Judgment shall contain paragraph 6 set out above, but for clarity and to be consistent with the intent of the Offer, the words "from Yu and Mao" shall be added after the words "including a declaration."

[10] Paragraph 4 of the draft Judgment provides that the plaintiffs shall "temporarily" lift the Certificate of Pending Litigation ("CPL") in order that the property may be refinanced to pay the Judgment, and then provides in paragraph 5 that the CPL shall be "permanently lifted" following receipt of the three payments. The defendants object to the word "temporarily" in paragraph 4 and ask that paragraph 5 be deleted entirely. I disagree. Paragraphs 4 and 5 track the language in the offer, and provide protection to the plaintiffs. They shall remain as proposed by the plaintiffs.

[11] Paragraph 7 of the draft Judgment provides that the parties shall exchange mutual releases. I agree with the defendants that this paragraph is not appropriate. While a term of the Offer, the need for releases was premised on the parties accepting the Offer and settling the action. That has not happened. Instead, the operative terms of the Offer have become a judgment and releases are no longer necessary.

[12] Defendants' counsel abandoned his objection to paragraph 8 of the draft Judgment.

[13] Finally, with respect to paragraph 9, in accordance with my reasons above, and the terms of my Costs Endorsement, both Yu and Mao shall be liable for costs.

[14] I make no order as to costs arising from the case conference to settle the terms of the Judgment.

Paul Schabas J.

Date: September 11, 2020