COURT FILE NO.: CV-11-420816-00CP
DATE: 2021/01/15
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
ZAOQIANG LI and RUI LI
Plaintiffs
- and -
WEIZHEN TANG, HONG XIAO, WEIZHEN TANG CORPORATION, and WEIZHEN TANG & ASSOCIATES INC.
Defendants
Joel P. Rochon for the Plaintiffs
Proceeding under the Class Proceedings Act, 1992
HEARD: In writing
PERELL, J.
REASONS FOR DECISION
[1] Rochon Genova LLP was retained by You-Shi Lou and a group of persons who suffered investment losses in the Oversea Chinese Fund, which was a type of Ponzi scheme orchestrated by Weizhen Tang between January 2006 and March 2009.
[2] The group of clients believed that Mr. Tang had defrauded members of the Chinese community in Canada by misappropriating millions of dollars. Mr. Tang was ultimately convicted of fraud and sentenced to six years in jail.
[3] In 2011, the clients instructed Rochon Genova LLP to commence a class action against Mr. Tang and his corporations.
[4] From the outset of the retainer, the firm was concerned that Mr. Tang might not have sufficient assets to satisfy a judgment. Therefore, the clients instructed the firm to also commence a parallel non-class action against Mr. Tang.
[5] On January 20, 2011, one of the clients, Mr. Lou volunteered to be an individual plaintiff, and he commenced an action against Mr. Tang.
[6] Mr. Tang did not defend Mr. Lou’s action, and on February 23, 2011, Mr. Lou obtained a default judgment for $150,117.53 for his personal claim for losses.
[7] The same day, the Plaintiffs, Zaoqiang Li and Rui Li commenced a class action against Mr. Tang.
[8] Mr. Tang defended the Class Action as a self-represented litigant.
[9] The proposed class action was held in abeyance, and meanwhile, Rochon Genova LLP investigated whether Mr. Tang had assets to satisfy the judgment obtained by Mr. Lou. The firm, however, was able to locate only one property owned by Mr. Tang, which was encumbered by a mortgage.
[10] In January 2016, the Toronto-Dominion Bank exercised power of sale proceedings against Mr. Tang’s property, and on January 13, 2016, the Bank obtained an Order to pay the balance of the sale proceeds into Court.
[11] On May 30, 2017, Mr. Lou obtained an Order to have $38,466.60 paid out from the funds in court. The funds were deposited in the Rochon Genova LLP trust account.
[12] No further avenues for recovery appeared to be available, and on February 12, 2019, the law firm sent a letter to the 14 known putative Class Members and advised that the firm would be seeking directions from the Court to distribute the entire $38,466.60 to Mr. Lou and to have the Class Action dismissed.
[13] The firm requested that the putative Class Members contact the firm within one month if they had questions or objections. No responding communications were received.
[14] The Plaintiffs in the proposed class action now seek Orders that:
a. the Class Action be dismissed; and
b. the $38,466.60 held in trust by Rochon Genova LLP be distributed to Mr. Lou.
[15] Rochon Genova LLP has not received and does not seek any legal fees or disbursements in respect of either Mr. Lou’s individual action or the proposed class action.
[16] Section 29 of the Class Proceedings Act, 1992 requires court approval for the discontinuance, abandonment, dismissal or settlement of a class action. Section 29 states:
Discontinuance, abandonment and settlement
- (1) A proceeding commenced under this Act and a proceeding certified as a class proceeding under this Act may be discontinued or abandoned only with the approval of the court, on such terms as the court considers appropriate.
Settlement without court approval not binding
(2) A settlement of a class proceeding is not binding unless approved by the court.
Effect of settlement
(3) A settlement of a class proceeding that is approved by the court binds all class members.
Notice: dismissal, discontinuance, abandonment or settlement
(4) In dismissing a proceeding for delay or in approving a discontinuance, abandonment or settlement, the court shall consider whether notice should be given under section 19 and whether any notice should include,
(a) an account of the conduct of the proceeding;
(b) a statement of the result of the proceeding; and
(c) a description of any plan for distributing settlement funds.
[17] A motion for discontinuance or abandonment should be carefully scrutinized, and the court should consider, among other things: whether the proceeding was commenced for an improper purpose; whether, if necessary, there is a viable replacement party so that putative class members are not prejudiced; or whether the defendant will be prejudiced.[^1]
[18] In the immediate case, no purpose would be served by continuing the proposed class action against the judgment proof defendants and there is no prejudice to the Class Members in dismissing the action. I grant the requested order dismissing the action.
[19] I, however, do not grant the order directing that the $38,466.60 held in trust by Rochon Genova LLP be distributed to Mr. Lou. This order is unnecessary, and I am not aware of any jurisdiction to make this Order. Mr. Lou has obtained a default judgment in an action for his personal losses and he does not need a court order to receive the funds held by his lawyers.
Perell, J.
Released: January 15, 2021
COURT FILE NO.: CV-11-420816-00CP
DATE: 2021/01/15
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
ZAOQIANG LI and RUI LI
Plaintiffs
- and -
WEIZHEN TANG, HONG XIAO, WEIZHEN TANG CORPORATION, and WEIZHEN TANG & ASSOCIATES INC.
Defendants
REASONS FOR DECISION
PERELL J.
Released: January 15, 2021
[^1]: Logan v. Canada (Minister of Health), [2003] O.J. No. 418 (S.C.J.), aff’d (2004), 2004 CanLII 184 (ON CA), 71 O.R. (3d) 451 (C.A.).