Court File and Parties

COURT FILE NO.: CV-19-614263 DATE: 20201029 SUPERIOR COURT OF JUSTICE – ONTARIO

RE: Antoni Sciucca, Euroloft Inc., Alex Marrero, Elan Zakkai and Peter Puzzo, Plaintiffs/Respondents AND: Chi Heon Yoon, Yon Sook Yoo, Tea Wong Yun, Byeongin Song, Suyup Kim, Hyun Woo Song, Home Standards Brickstone Realty and Bae Seok Lee, Defendants/Moving Party

BEFORE: Davies J.

COUNSEL: Christopher Belsito, for the Plaintiffs David Hwang, for the Defendants Hyun Woo Song, Beyongin Song and Suyup Kim

HEARD at Toronto: August 20, 2020

REASONS FOR DECISIONS

A. Overview

[1] In April 2017, Yoon Sook Yoo signed an Agreement of Purchase and Sale (APS) to buy 176 Leyton Ave. in Toronto from Antonio Sciucca for $1.12 million. The deal was to close on July 6, 2017.

[2] The APS allowed Ms. Yoo to assign the agreement to another purchaser. A few days after the APS was signed by Ms. Yoo, she filed an amendment purporting to name Hyun Woo Song as the purchaser, although Hyun Woo Song never signed the amendment.

[3] On the same day the APS was purportedly amended, Ms. Yoo’s real estate agent, Bae Seok Lee, sent Mr. Sciucca a cheque for the $30,000 deposit required under the contract. The cheque was drawn from an account held by Beyongin Song and Suyup Kim, who are Hyun Woo Song’s mother and father. Mr. Sciucca did not accept the deposit cheque because it was not certified and replacement funds were provided.

[4] The deal did not close.

[5] Mr. Sciucca has now issued three statements of claim in relation to this aborted transaction. The first statement of claim was issued on September 22, 2017 against Yoon Sook Yoo and Hyun Woo Song for breach of the APS.

[6] The second statement of claim was issued in February 2018. Ms. Yoo’s real estate agent, Bae Seok Lee, and the real estate brokerage that Mr. Lee worked for, Home Standard Brickstone Realty were added as defendants. Mr. Sciucca again claimed that Ms. Yoo and Hyun Woo Song breached the APS. He also claimed damages for negligent misrepresentation by Mr. Lee and Home Standard Brickstone Realty. After the 2018 action was commended, Mr. Scuicca unilaterally discontinued the 2017 action.

[7] Ms. Yoo did not defend the 2018 action and Mr. Sciucca has obtained default judgment against her.

[8] The third statement of claim was issued on February 11, 2019 after Hyun Woo Song and Bae Seok Lee were examined as part of the discovery process in the 2018 action. Euroloft Inc., Alex Marrero, Elan Zakkai and Peter Puzzo were added as Plaintiffs. They each are alleged to have a beneficial interest in 176 Leyton Ave. Hyun Woo Song’s parents, Byeongin Song and Suyup Kim, were added as defendants along with Chi Heon (Greg) Yoon and Tea Wong Yun (Ms Yoo’s husband and son). The Plaintiffs continue to seek damages for breach of the APS. The Plaintiffs now seek damages for “fraud, deceit, conspiracy, breach of duty of good faith and fidelity” as well as aggravated, exemplary and punitive damages.

[9] Ms. Yoo, Mr. Yoon and Mr. Yun did not defend the 2019 action. Default judgment has been obtained against them.

[10] Hyun Woo Song, Beyongin Song and Suyup Kim have brought a motion to strike the 2019 claim on the basis that it discloses no cause of action against them. In the alternative, they argue that the 2019 action should be stayed or dismissed as an abuse of process. Finally, they argue that the Plaintiffs breached the deemed undertaking rule by relying on information obtained during the discovery process in the 2018 action as the factual foundation for the 2019 action.

[11] There are three issues for me to decision on this motion to:

i. Did the Plaintiffs breach the deemed undertaking rule by using information obtained during the discovery process in the 2018 action in their 2019 statement of claim?

ii. Do the 2019 pleadings disclose a cause of action?

iii. If any cause of action is sustainable in the 2019 action, should it nonetheless be stayed as an abuse of process?

[12] For the reasons that follow I find that the Plaintiffs have breached the deemed undertaking rule and, as a result, the 2019 action should be struck out with leave for the Plaintiffs to amend the pleadings so they do not refer to information protected by the deemed undertaking rule. In light of this finding, I need not address the remaining two issues.

B. Did the Plaintiffs Breach the Deemed Undertaking Rule?

[13] All parties and their lawyers are deemed to undertake not to use evidence or information obtained during an examination for discovery or as part of the documentary discovery process “for any purpose other than those of the proceedings in which the evidence was obtained.”[^1]

[14] Counsel for the Plaintiffs acknowledges that he used information obtained during the discovery process on the 2018 action as the basis for adding Beyongin Song and Suyup Kim as defendants in the 2019 Statement of Claim and as the basis for alleging fraud and conspiracy.

[15] It was during the documentary discovery process that the Plaintiffs learned for the first time that the original $30,000 deposit cheque – that was provided to the Plaintiff’s agent on the day that the APS was amended to name Hyun Woo Song as the purchaser – was drawn on the account belonging to Hyun Woo Song’s parents, Beyongin Song and Suyup Kim. That cheque was not certified and was later replaced.

[16] The Plaintiffs also learned during the discovery process that Mr. Lee, Yon Sook You’s real estate agent, also had photo identification from Hyun Woo Song, Beyongin Song and Suyup Kim in his file. This evidence could lead to the inference that Mr. Lee was acting for all four parties in relation to that transaction.

[17] The Plaintiffs also learned during the discovery process that Chi Heon Yoon, Yon Sook Yoo, Tea Wong Yun are related to one another. Ms. Yoo is Mr. Yoon’s husband. Mr. Yun is their son.

[18] Finally, the Plaintiffs learned during the examination of Hyun Woon Song that his parents were involved in the transactions. Hyun Woon Song testified that he learned about the purchase of 176 Leyton Ave. from his parents. He testified that he knew his father was going to make him the owner of the property. He also testified that he never met Greg Yoon and never applied for a mortgage for 176 Leyton Ave.

[19] In response to the motion to strike, the Plaintiffs filed an affidavit from Nicole Ferley, a law clerk who works with their lawyer. Ms. Ferley states that it was only during the discovery process that counsel “truly appreciated or became aware of Song Sr. and Kim’s involvement in the transaction.” Ms. Ferley also states that until the examination for discoveries, the Plaintiffs were not aware of the relationship between the Plaintiffs or their involvement in the transaction:

In light of the new information discovered at the examinations, the Plaintiff learned there were several other individuals involved in the subject transaction and also believed that a conspiracy had been perpetrated by the Defendants with respect to their attempt to purchase the Property with various undisclosed strategies. It became apparent that several Defendants needed to be added. Counsel for the Plaintiffs decided it would be most practical to prepare and issue a fresh claim as opposed to trying to amend the claim in the Second Action [the 2018 claim] and add additional parties.

[20] Rather than seeking to amend the 2018 claim to add parties and claims, the Plaintiffs used the information obtained during the discovery process in that matter to launch a new claim altogether. Counsel did not seek relief from the deemed undertaking before issuing the 2019 claim.

[21] Plaintiffs’ counsel argued that he did not breach the deemed undertaking rule because the 2018 claim and the 2019 claim both relate to the same transaction. Counsel did not provide any authority for this argument.

[22] The deemed undertaking rule protects the privacy of parties who are compelled by law to produce documents and disclosure private information. It also promotes the integrity of the discovery process by ensuring parties will provide full and frank disclosure. As the Court of Appeal held in Goodman v. Rossi, 1995 CanLII 1888 (ON CA), 24 O.R. (3d) 359, “without such an undertaking the fear of collateral use may in some cases operate as a disincentive to proper discovery.”

[23] It would frustrate the purpose of R. 30.1.01 to permit parties or their counsel to use evidence obtained during discovery to launch new proceedings, even if the subject matter of the new claim is related to the earlier claim.

[24] Counsel also argued that it was more efficient to file a new claim than seek to amend the old claim. I do not understand why this is so. But even if true, it does not provide a legitimate reason for breaching the deemed undertaking rule.

[25] I, therefore, find that the Plaintiffs breached R. 30.1.01 by using information obtained during the discovery process in the 2018 proceedings as a basis for the 2019 statement of claim. The plaintiffs’ statement of claim in the 2019 action is, therefore, struck out. If the plaintiffs or some of them have causes of action that do not rely on information that is subject to the deemed undertaking rule, they may deliver a fresh as amended statement of claim by December 1, 2020.

C. Conclusion

[26] The motion to strike is granted with leave to the Plaintiffs to amend the 2019 pleadings so they do not refer to any information protected by the deemed undertaking rule

[27] I encourage the parties to reach an agreement on the issue of costs. If they are unable to do so, the Respondents may serve and file written submissions on costs of no more than five (5) pages each together with their costs outline and any supporting authority on or before November 10, 2020. The Plaintiffs may serve and file written responding submissions on costs of no more than five (5) pages with supporting authorities on or before November 24, 2020. Any costs submissions should also be sent to my assistant electronically. In the event that I do not receive any written cost submissions by November 27, 2020, I will deem the issue of costs to have been settled.

Davies J.

Released: October 29, 2020

[^1]: Rules of Civil Procedure, R. 30.01.01(3)