COURT FILE NO.: CV-17-5816400CL
DATE: 20201005
ONTARIO
SUPERIOR COURT OF JUSTICE COMMERCIAL LIST
IN THE MATTER OF THE BANKRUPTCY AND INSOLVENCY ACT, R.S.C. 1985, c. B-3, AS AMENDED
AND IN THE MATTER OF A PROCEEDING IN THE HONG KONG SPECIAL ADMINISTRATIVE REGION RE: JAMES HENRY TING (IN BANKRUPTCY)
APPLICATION OF COSIMO BORRELLI AND JACQUELINE WALSH OF BORRELLI WALSH LIMITED UNDER SECTION 272 OF THE BANKRUPTCY AND INSOLVENCY ACT, R.S.C., 1985, c. B-3, AS AMENDED
BETWEEN:
ANDREW HENRY TING, Moving Party
– and –
COSIMO BORRELLI AND JACQUELINE WALSH, Responding Parties/Applicants
Rogerson, A. and Jazayeri, A., for the Moving Party
Ishai, I., for the Responding Parties/Applicants
HEARD: September 8, 2020
REASONS FOR DECISION
DIETRICH J.
Overview
[1] The moving party, Andrew Henry Ting, brings this motion for a stay of bankruptcy proceedings in this court. He seeks a stay pending the result of an application brought by his father James Henry Ting (the “Bankrupt”) on March 9, 2020 in the High Court of Hong Kong Special Administrative Region (the “Hong Kong Court”). In that application, the Bankrupt seeks an annulment of the bankruptcy order issued by the Hong Kong Court on November 29, 2016 (the “Bankruptcy Order”).
[2] The result of the stay would mean that the moving party would not be required, during the period of the stay, to comply with an order made by Justice Penny of this court on January 15, 2019. The January 15, 2019 Order requires the moving party, among other things, to produce documents and attend at an examination.
[3] The responding parties/applicants (the “Trustees”) oppose the stay on the basis that the moving party does not meet the test for a stay of the January 15, 2019 Order whether it is an interlocutory or a judgment.
[4] At the hearing on September 8, 2020, I dismissed the moving party’s motion and gave brief oral reasons, with written reasons to follow. These are those reasons.
Background Facts
[5] The Bankruptcy Order is the basis for an order of this court recognizing the bankruptcy proceeding in Hong Kong as the “foreign main proceeding” pursuant to s. 268 of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3 (the “BIA”). This Initial Recognition Order, granted on October 6, 2017, also granted the Trustees, jointly and severally, as Trustees in Bankruptcy, recognition as “foreign representative” pursuant to s. 268 of the BIA.
[6] On August 18, 2018, the Trustees moved to enforce a Letter of Request, dated June 14, 2018, from the Hong Kong Court requesting assistance to require the moving party to be examined and to produce certain documents. Following several adjournments, Justice Penny of this court granted that motion in the January 15, 2019 Order, which required the moving party to produce the documents shown in a Schedule to the Letter or Request within fourteen days, to attend at any examination, and to pay the costs of the motion.
[7] The moving party was unsuccessful in his attempts to appeal the January 15, 2019 Order to the Court of Appeal for Ontario. Costs were also awarded against him in the Court of Appeal. His application for leave to appeal to the Supreme Court of Canada was dismissed on January 21, 2019.
[8] The documents that the moving party produced, when again ordered to do so by the Court of Appeal for Ontario, were held in safekeeping by this court until the Supreme Court of Canada dismissed the moving party’s request for leave to appeal. Then, by order of Justice Hainey, the documents were released to the Trustees and they attempted to schedule an examination of the moving party.
[9] In emails exchanged between counsel to the moving party and counsel to the Trustees on March 9 and March 10, 2020, the Trustees attempted to set a date for the moving party’s examination to, among other things, test the completeness of the documentation produced. The Trustees served the moving party, via his counsel, with a Notice of Examination on March 10, 2020 for an examination on March 19, 2020. This examination was cancelled by the court reporter due to the COVID-19 pandemic. The Trustees served a second Notice of Examination on the moving party for an examination on March 26, 2020, which he failed to attend.
Issues
[10] The issues in this matter are as follows:
Is the January 15, 2019 Order an interlocutory order or a judgment?
Should the January 15, 2019 Order be stayed pending the Bankrupt’s application in the Hong Kong Court for the annulment of the Bankruptcy Order.
Positions of the Parties
[11] The moving party submits that the proper test for a stay in this case is the test applied to an interlocutory order and that he meets that test. He submits that the stay should be granted because there is a serious issue to be determined in the Bankrupt’s application in the Hong Kong Court. If the Bankrupt is successful, he submits that it would be improper for the Trustees to continue to pursue him for an examination or any other activity in accordance with the January 15, 2019 Order. The moving party further submits that he will suffer irreparable harm if the stay is not granted because he will have been subjected to intrusive examinations and to having his privacy breached before the annulment request is processed. The moving party also asserts that he is the subject of a contempt motion, which threatens his liberty before the Hong Kong Court can properly consider the matter. Finally, the moving party asserts that the balance of convenience strongly favours him.
[12] The Trustees submit that the proper test for the stay in this case is the test applied to a final order and that the stay should not be granted because the Trustees’ conduct is not frivolous and vexatious or an abuse of the court’s process. The Trustees further submit that even if the lower test applies, the stay should not be granted because there is no serious issue to be tried, there is no irreparable harm to the moving party in requiring him to comply with the January 15, 2019 Order, and the balance of convenience favours the Trustees.
Legal Principles
[13] The Courts of Justice Act, R.S.O. 1990, c. C.43 provides at s. 106: “A court, on its own initiative or on a motion by any person, whether or not a party, may stay any proceeding in the court on such terms as are considered just.”
[14] The three-pronged test for a stay of an interlocutory order is set out in RJR-Macdonald Inc. v. Canada (Attorney General), 1994 CanLII 117 (SCC), [1994] 1 S.C.R. 311, at para 48. The test requires: a) that there be a serious issue to be determined; b) that irreparable harm will occur if the stay is not granted; and c) that the balance of convenience favours the granting of a stay.
[15] The test for a stay of a final order/judgment is a much higher test. In Peerenboom v. Peerenboom, 2020 ONCA 240, at para. 10, the Court of Appeal for Ontario stated that “a stay of execution of a judgment may be granted in rare circumstances where the conduct of the judgment creditor is oppressive or vexatious or an abuse of process of the Court, and where the stay would not cause an injustice to the plaintiff.”
Analysis
Is the January 15, 2019 Order an Interlocutory Order or a Judgment?
[16] The Trustees assert that the January 15, 2019 Order is a judgment because all avenues of appeal with respect to that order have been exhausted. Leave to appeal to the Supreme Court of Canada was dismissed.
[17] I am satisfied that the January 15, 2019 Order is an interlocutory order. Recently, the Court of Appeal for Ontario, in Drywall Acoustic Lathing Insulation Local 675 Pension Fund v. SNC-Lavalin Group Inc., 2020 ONCA 375, citing Hendrickson v. Kallio, 1932 CanLII 123 (ON CA), [1932] O.R. 675 (Ont. C.A.), at p. 687, stated at para. 16:
An interlocutory order is one which does not determine the real matter in dispute between the parties – the very subject matter of the litigation – or any substantive right to relief of a plaintiff or substantive right of a defendant. Even though the order determines the question raised by the motion, it is interlocutory if these substantive matters remain undecided.
[18] In Drywall, the Court of Appeal for Ontario also cited Sun Life Assurance Co. of Canada v. York Ridge Developments Ltd., 1998 CarswellOnt 4534 (C.A.), where Weiler J.A. distinguished substantive matters, which are the subject of final orders, from procedural rights, which are not. She stated, at para. 13:
As stated in Holmested and Watson on Ontario Civil Procedure at 62-24: “…to be final an order must deal with the substantive merits as opposed to mere procedural rights, no matter how important the procedural rights may be. The test focuses on whether the order under appeal finally disposes of the rights of the parties, in the sense of substantive rights to relief (in the case of a plaintiff) or a substantive defence (in the case of a defendant).”
[19] The January 15, 2019 Order is final in the sense that no appeal lies from that Order. However, it is also a procedural order directing the moving party to produce documents and attend at an examination. It does not deal with the very subject matter of the litigation, but rather a collateral issue, being productions and examination in the foreign main proceeding. Accordingly, I find that the test set out in RJR-Macdonald applies.
Should the January 15, 2019 Order be Stayed?
[20] To determine whether the stay should be granted, I must apply the three-pronged test set out in RJR Macdonald.
[21] First, I must determine whether there is a serious issue to be tried. The moving party asserts that there is a serious issued to be tried in the foreign main proceeding. The Bankrupt is bringing an application to annul the Bankruptcy Order made against him nearly four years ago. The moving party argues that if the Bankrupt is successful in his application, the Trustees will have no authority as Trustees in Bankruptcy and no authority to examine the moving party. The moving party submits that the Bankrupt has attested that: a) he was not aware of the bankruptcy order against him; b) the Hong Kong Court did not have jurisdiction to make the order; and c) the bankruptcy petition was not properly served on him. The moving party further asserts that there has been no finding by the Hong Kong Court that the Bankrupt’s application is frivolous and vexatious.
[22] The Trustees assert that there is no evidence before this court to support the notion that the Bankrupt’s application has merit. There is no evidence before this court regarding any limitation period that may apply to the Bankrupt’s application. The Trustees assert that the arguments that the Bankrupt intends to make have already been made and rejected by every level of court in Ontario, and the Supreme Court of Canada has denied leave to hear an appeal from the decision of the Court of Appeal for Ontario. The moving party disagrees that the arguments that the Bankrupt will make in the Hong Kong Court are the same as those made by the moving party in Ontario.
[23] The Trustees further assert that the Bankrupt’s application is a delay tactic employed to avoid repaying over $1 billion in funds that the Hong Kong Court has concluded he owes as a result of his fraudulent activities. The Bankrupt made no submissions in this hearing regarding the merits of his application, which is a separate proceeding in which the moving party is not a party. The merits of the proceeding involving the moving party and the Letter of Request have been fully determined and the moving party has exhausted all rights of appeal.
[24] I appreciate that the standard set by RJR Macdonald to meet the first prong of the test is low, and that a prolonged examination of the merits is generally not necessary or desirable. Nonetheless, the record before me does not permit me to conclude that there is a serious issue to be tried in the Bankrupt’s application. There is no evidence on the merits of that application.
[25] Second, I must consider whether the moving party will suffer irreparable harm if the stay is not granted. Irreparable harm includes harm that cannot be quantified in monetary terms or which cannot be cured: R. v. Canadian Broadcasting Corp., 2018 SCC 5, [2018] 1 SCR 196 at paras. 13-15.
[26] The moving party asserts that he will be subject to intrusive examinations and to having his privacy breached before the Bankrupt’s annulment application is heard, which may dispose of the matter altogether. The moving party also asserts that is he is the subject of a motion for contempt scheduled to be heard immediately following this motion for a stay, which potentially threatens his liberty, before the Hong Kong Court will have an opportunity to consider the matter.
[27] Regarding the release of information, the moving party contends that its release will injure him in ways that cannot be compensated by money. He argues that once access to that information is granted, the effects of the access cannot be undone if the Bankrupt’s annulment is granted, and the Trustees then have no basis on which to conduct their examination. He argues that if the Trustees are permitted to proceed and the Bankrupt succeeds on his application, the Trustees will be in possession of unlawfully obtained information.
[28] I do not agree that the examination ordered in the January 15, 2019 Order will result in an undue intrusion into the moving party’s privacy. The moving party has been ordered to produce the documents in respect of which he will be examined, and he has produced documents in accordance with the January 15, 2019 Order. Those documents are now in the hands of the Trustees and form part of the public record. They are no longer private, and these are the documents on which he will be examined. Further, the Trustees submit that the examination is necessary, in part, to test the completeness of the documents the moving party produced. The moving party has offered no explanation regarding the irreparable harm he would face in paying the costs awarded against him pursuant to the January 15, 2019 Order. I am not persuaded that the moving party will suffer irreparable harm if the January 15, 2019 Order is not stayed.
[29] Third, I must determine the balance of convenience and decide which of the parties will suffer the greater harm if the stay is not granted. The moving party asserts that the harm to him would outweigh the harm to the Trustees should I decline to grant the stay. He asserts that the proceedings were initiated in Hong Kong in 2012 and that the Trustees have not prosecuted the case expeditiously, so there is no urgency in proceeding with the examination. He further asserts that, absent a stay, contempt proceedings against him could proceed and result in a loss of liberty for him. He also asserts that the Bankrupt’s application for annulment will not take an inordinate amount of time to be resolved.
[30] The Trustees submit that the moving party is seeking this stay in an attempt to assist his father, the Bankrupt, to evade justice and to avoid repaying over $1 billion that the Hong Kong Court concluded he owes as a result of his fraudulent activity. They further assert that he has not paid the costs awarded under the January 15, 2019 Order or costs awarded by the Court of Appeal for Ontario and that his blatant disregard for this Court’s authority should not be rewarded by a stay.
[31] I disagree that the Trustees have delayed in prosecuting their case insofar as the moving party is concerned. The focus of the stay must be on the rights of the parties in this motion. The record shows that the Trustees brought a motion on August 28, 2018 to enforce the Letter of Request. However, the motion was not heard that day, owing to adjournments, and on October 1, 2018, this court endorsed the record stating that counsel to the moving party had been advised that the motion would proceed on November 26, 2018 given the delay. The moving party asserts that the Bankrupt’s application for an annulment will not take an inordinate amount of time but has provided no evidence in support of that claim. Even if the application proceeds expeditiously, it is conceivable that the Bankrupt would appeal the decision if he is unsuccessful in his application, thereby causing further delay in the prosecution of the Trustees’ case. In my view, the balance of convenience favours the Trustees. They are fiduciaries with an obligation to maximize the value of the Bankrupt’s estate for the stakeholders and it is believed that the moving party has relevant information to assist them in discharging their duty.
[32] I find that the analysis of the three prongs of the test favours refusing the stay and that it is in the interests of justice to deny the stay in this case.
Disposition
[33] The moving party’s motion is dismissed. A stay of the January 15, 2019 Order is denied.
Costs
[34] The Trustees shall be entitled to their costs on this motion. The parties are strongly encouraged to agree on the matter of costs. If they cannot agree, the Trustees shall make written submissions on costs, not exceeding three pages in length (excluding a Costs Outline or Bill of Costs) within fourteen days hereof. The moving party may make written submissions on costs, not exceeding three pages in length (excluding a Costs Outline or Bill of Costs) within fourteen days thereafter. Reply submissions may only be made with leave.
Dietrich J.
Released: October 5, 2020
COURT FILE NO.: CV-17-5816400CL
DATE: 20201005
ONTARIO
SUPERIOR COURT OF JUSTICE
IN THE MATTER OF THE BANKRUPTCY AND INSOLVENCY ACT, R.S.C. 1985, c. B-3, AS AMENDED
AND IN THE MATTER OF A PROCEEDING IN THE HONG KONG SPECIAL ADMINISTRATIVE REGION RE: JAMES HENRY TING (IN BANKRUPTCY)
APPLICATION OF COSIMO BORRELLI AND JACQUELINE WALSH OF BORRELLI WALSH LIMITED UNDER SECTION 272 OF THE BANKRUPTCY AND INSOLVENCY ACT, R.S.C., 1985, c. B-3, AS AMENDED
BETWEEN:
ANDREW HENRY TING, Moving Party
– and –
COSIMO BORRELLI AND JACQUELINE WALSH, Responding Parties/Applicants
REASONS FOR DECISION
Dietrich J.
Released: October 5, 2020