COURT FILE NO.: CV-20-00641339-00CL

DATE: 20210609

SUPERIOR COURT OF JUSTICE – ONTARIO (COMMERCIAL LIST)

RE: EZEKIEL RIMON, EMTI MANAGEMENT INC., MYTAM HOLDINGS LTD., and THE PLANNING MANAGEMENT GROUP LIMITED, Plaintiffs

AND:

CBC DRAGON INC., CHARLES CHAN, KBIJ CORPORATION, DEREK LEE, SUN AND PARTNERS PROFESSIONAL CORPORATION, AN-DAK TRADING COMPANY LTD., and AN YUAN LIN, Defendants

BEFORE: S.F. Dunphy J.

COUNSEL: Jasdeep Bal, for the Plaintiffs

Vusumzi Msi, for the Defendants CBC Dragon Inc., Chan, KBIJ Corporation, An-Dak Trading Company Ltd. & Lin

HEARD at Toronto: June 03, 2021

REASONS FOR DECISION

[1] This case does not meet the test for a Certificate of Pending Litigation and the motion is dismissed. In the circumstances, I am making no order as to costs.

[2] The test for issuing a CPL requires the court to consider three questions: (i) whether the underlying claim is a claim for an interest in land for which evidence sufficient to establish a triable issue has been led; (ii) whether the moving party will suffer irreparable harm if the CPL is not issued or whether damages are an adequate remedy; and (iii) whether the balance of convenience favours issuing a CPL considering the interests of all affected parties.

[3] In my view, the plaintiff has failed to cross the first hurdle of this test. Mr. Bal quite frankly concedes that his client’s claim arises from an unsecured debt – not normally the starting point for a successful claim to an interest in property. He proceeds from an unsecured debt claim to a potential claim to an interest in land by pleading the equitable remedy of a constructive trust. This is available, he submitted, because the defendants have admitted that the approximately $1,000,000 advanced by the plaintiffs to the defendants were admitted by the principal of the first two corporate defendants (Mr. Chan) to have been intended to be used in the development of one property. That admission was not to be fair accompanied by any contemporary contractual conditions and the plaintiff had legal advice from time to time along the way while advancing the funds in multiple chunks. The plaintiffs do not know where the funds have gone. I am asked to infer that the plaintiffs’ funds were in fact diverted in part to another property controlled by Mr. Chan being the Scarborough property for which the CPL is sought. There is no evidence of how much if any funds were ever in fact so diverted.

[4] While orthodox enough in its general description, there are a number of hurdles that need to be cleared before one can conclude that the evidence in support of the constructive trust claim rises to the level of a triable issue even if that hurdle is not meant to be a very high one. The moving party’s evidence must be tested to some degree even if no binding conclusions can be reached at this early stage in the litigation. There are four fundamental problems with the evidence presented here.

[5] First, while Mr. Chan readily admitted that the funds in question were intended to be used only for the now-lost Richmond Hill development opportunity, the evidence of both parties establishes that material portions of the advances made were made by one or more of the plaintiffs directly to a completely different company (the owner of the Scarborough property over which the CPL is sought) with no apparent connection to the Richmond Hill project beyond common control.

[6] Second, the Scarborough property in question was acquired before any of the plaintiffs’ advances were made and there is simply no evidence that any of the plaintiffs’ advances were in fact used to service any mortgage debt on the property or to improve it in some way. In other words, I have no basis beyond the requested negative inference from unanswered questions to conclude that any of the plaintiffs’ funds found their way into the subject land in Scarborough.

[7] Third, the plaintiffs at one point asked for a mortgage over the Scarborough property but appear to have simply chosen not to pursue that request while continuing to advance further funds without it.

[8] Fourth and perhaps most significantly, the principal of the plaintiff signed a subscription agreement in August 2018 by which he agreed to convert all of the claims he now alleges are debt claims into shares of the first defendant CBC Dragon. The plaintiffs assert that this agreement is not valid but were unable to provide me with any reasoned grounds that might lead to that conclusion.

[9] I recognize that it is not my task at this stage to form conclusions on the merits of the claims before me. However, the test for issuing a CPL goes beyond a mere inspection of the pleadings. The plaintiffs were simply unable to explain to me why, beyond a bald assertion that the subscription agreement is not valid why this should be so. Looking at these four factors together, I cannot find the first hurdle to the issuance of a CPL has been cleared. I am not satisfied that the plaintiffs have demonstrated the existence of a triable issue regarding a claim to an interest in land.

[10] That conclusion is enough to dispose of this motion. I shall, for the sake of completeness, review the other two criteria briefly because the claim fails on all three conditions.

[11] Can it be said that damages are not an adequate remedy here?

[12] The claims of unjust enrichment and misrepresentations made in connection with the various advances made by the plaintiffs all arise in the context of what the plaintiffs concede was a debtor-creditor relationship. Each advance had an amount, a term, an interest rate and was evidenced in writing. Lawyers were involved with at least some of them. The plaintiffs have attempted to find out where their money went. The development that was supposed to be the object of the loans made never got off the ground – it is not clear that any material steps were taken at all to pursue it. The property has now been taken away through mortgage enforcement proceedings of mortgages which are not in any way subject to challenge. The claim itself is obviously a financial one – there is nothing in the evidence from which I could conclude that there is a link between any potential inability to satisfy a future judgment (and there is no basis to believe such an inability exists one way or the other) and the property over which the CPL is sought. CPLs are not a catch-all remedy for plaintiffs feeling apprehensive about the solvency of the defendants. The advances were made on an unsecured basis. Related to the failure to establish a triable claim to an interest in the Scarborough property is the failure to establish any connection between the Scarborough property and the ability of the defendants to make good any claim. There is no evidence to suggest a Mareva-like situation of a defendant liquidating assets and disappearing. It seems to me that damages are an adequate remedy here.

[13] I am by no means impressed with the stonewalling efforts of Mr. Chan and my observations of his obstructive behaviour in respect of this motion explain why I have declined to make any order as to costs. The fact that one disagrees with a motion is no reason to decline to answer legitimate questions or answer undertakings.

[14] Finally, the balance of convenience does not favour disrupting the status quo. The plaintiffs have frankly failed to define their claim with sufficient precision to acquire any real understanding of it and the failure to address the question of the subscription agreement is baffling. Mr. Chan and his other company are continuing to work on the redevelopment of the Scarborough property. A CPL on title would very likely be the death knell for any new financing to enable that dream to be realized. The plaintiffs can obtain such information as they require regarding the status of those efforts through the litigation process. There is no evidence of any funds going into the Scarborough property that can be traced to the plaintiffs. Given the date of acquisition of this property, even the application of negative inference to find that some of the plaintiffs’ funds found their way into the Scarborough property, there is no basis to assume that this was a material portion of the overall investment in that property. However, handing the plaintiffs an effective veto over the management of the Scarborough property on the basis of a speculative interest of even more speculative dimensions would be to doom any and all efforts to failure. The plaintiffs’ interests, once properly defined and explored on discovery, are capable of being protected through undertakings and any tangible peril to those interests can be addressed in court with an appropriate application if need be. The balance of convenience favours the status quo and no CPL.

[15] The motion is dismissed and there shall be no order as to costs.

S.F. Dunphy J.

Date: June 9, 2021