ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
HOYIN CHEUNG Plaintiff
– and –
ZHIWEI LIU a.k.a. STEVEN LIU, SNEAKER HOUSE INC., t/a ALLEY-OOP SNEAKER MUSEUM t/a ALLEY-OOP TORONTO Defendants
-and –
RESIDENCES AT ATRIA INC. Nominal Party
Counsel: Pauline Cheuk Wai Leung, for the Plaintiff Steven Liu, In Person Robert Calderwood for the Nominal Party
HEARD: December 3, 2020
BEFORE: Papageorgiou J.
1The plaintiff noted the defendants in default and have moved for judgment. The defendants have moved to set aside the noting in default and for other relief if the noting in default is set aside.
2For the reasons that follow, I am dismissing the defendants’ motion to set aside the noting in default, and granting judgment to the plaintiff in the amount of $204,000.
Nature of the Case
3The plaintiff pleads that in or around April 2019 the defendant, Mr. Zhiwei Liu (“Mr. Liu”), solicited him to join a business venture by purchasing shares in the defendant Sneaker House Inc., carrying on business as Alley-Oop Sneaker Museum (“Sneaker House”) for $220,000. Mr. Liu is the principal of Sneaker House which is in the business of selling sports apparel. The plaintiff pleads that Mr. Liu failed to provide necessary documents to complete this transaction and that subsequently the defendants agreed to return his investment but only repaid $16,000.
Procedural History
4On October 22, 2019, the plaintiff emailed his Statement of Claim to the defendants seeking damages in the amount of $204,000. The Statement of Claim, incorrectly named the defendant “Weizhi Liu”, instead of “Zhiwei Liu”. The plaintiff emailed the Statement of Claim to the defendants but was unable to effect personal service.
5On November 29, 2019, the plaintiff obtained an order from Master Brott granting leave to amend its claim to correct Mr. Liu’s name, and for substituted service.
6On December 12, 2019, the plaintiff served an Amended Statement of Claim on the defendant Mr. Liu. On or about December 16, 2019, the plaintiff served the Amended Statement of Claim on Sneaker House.
7On February 10, 2020 the plaintiff noted the defendants in default.
8On or about February 13, 2020, the plaintiff served a Notice of Motion for default judgment returnable on April 27, 2020 and notified the defendants of the hearing date.
9The courts were closed between March 17, 2020 and July 2020 due to COVID and the motion scheduled for April 27, 2020 did not proceed. The defendants did not file any materials in advance of the motion.
10On June 9, 2020 Justice Myers imposed a schedule whereby the plaintiff’s motion for judgment would be heard on July 24, 2020. Pursuant to Justice Myer’s Order the defendants were ordered to file responding materials by July 16, 2020.
11On July 15, 2020 the defendants served a Motion Record to remove the plaintiff’s solicitor, Ms. Kwong and to set aside the noting in default. The Motion Record contained an affidavit from Mr. Liu sworn July 15, 2020 which indicated that it was in “partial” response to the plaintiff’s motion for judgment and appended a letter from counsel, Mr. Joseph S. Ciraco, where he indicated:
Mr. Liu is presently outside of Ontario and as such, we have not had an opportunity to consult with him at length, for the purpose of being potentially retained and it is doubtful that a substantive response could be delivered by him or on his behalf in the limited time that is available.
12I adjourned the July 24, 2020 return date and ordered the parties to arrange a further case conference.
13As well, because of Mr. Liu’s allegations, Ms. Kwong agreed to get off the record and the plaintiff retained other counsel.
14On July 30, 2020, the defendants proceeded to file a Statement of Defence without advising the Registrar that there was a pending motion to set aside the default judgment.
15The plaintiff attempted but had difficulty arranging a case conference until October 15, 2020. Mr. Liu attended with his own Mandarin interpreter. At that time I granted an interim order sought by the plaintiff preventing Mr. Liu from transferring his interest in his condominium for the reasons set out in my endorsement.
16I then scheduled another case conference for October 20, 2020 so that Mr. Liu would have a further opportunity to make submissions regarding the interim order. He again attended with a Mandarin interpreter and made submissions. I reserved and issued a further endorsement dated November 5, 2020 confirming that Mr. Liu may not transfer his interest in his condominium pending the results of the plaintiff’s motion for judgment and the defendants’ motion to set aside the noting in default.
17Mr. Liu delivered further materials on or about October 22, 2020 including his sworn affidavit of same date.
18On December 3, 2020, the parties attended before me to argue the motions. Mr. Liu brought an uncertified Mandarin interpreter with him. During the hearing, plaintiff counsel repeatedly asked the interpreter to only interpret what Mr. Liu was saying rather than embelish. Mr. Liu also argued that he preferred that the hearing be in writing without any oral submissions. Because of the issues with the interpreter and to accommodate Mr. Liu, I agreed. The remainder of the hearing was adjourned, and the parties made additional submissions in writing.
The test for setting aside a noting in default
19Rule 19.03 provides as follows:
19.03 (1) The noting of default may be set aside by the court on such terms as are just. R.R.O. 1990, Reg. 194, r. 19.03 (1).
(2) Where a defendant delivers a statement of defence with the consent of the plaintiff under clause 19.02 (1) (b), the noting of default against the defendant shall be deemed to have been set aside. R.R.O. 1990, Reg. 194, r. 19.03 (2).
20The decision to set aside a noting in default is discretionary. In Kisel v. Intact Insurance Company, 2015 ONCA 205, at para 13 the Court explained:
[13] When exercising its discretion to set aside a noting of default, a court should assess “the context and factual situation” of the case…It should particularly consider such factors as the behaviour of the plaintiff and the defendant; the length of the defendant’s delay; the reasons for the delay; and the complexity and value of the claim. These factors are not exhaustive…Some decisions have also considered whether setting aside the noting of default would prejudice a party relying on it…Only in extreme circumstances, however, should the court require a defendant who has been noted in default to demonstrate an arguable defence on the merits.
21As stated Kisel at para 14, some courts have taken into account the following factors:
(a) Is there believable evidence that, in the time permitted for responding to a statement of claim, the defendant had an intent to defend;
(b) What prevented the defendant from responding to the statement of claim in a timely fashion; and
(c) Has the motion been brought with reasonable dispatch.
See also, Quinn v. Morton, 2014 ONSC 6450 at para 22
The defendants’ arguments for setting aside the noting in default
The defendants are unrepresented
22Mr. Liu says that he is 26 years old Chinese citizen with temporary residence in Canada. He says his first language is not English and he does not have experience in the Canadian civil justice system. While he speaks English he says it is not at the level of a Canadian lawyer. He has relied, in part, upon his status as an unrepresented party who does not speak English to support his position that he did not understand the proceedings and his obligations under the Rules.
23I am mindful of the direction in Canadian Judicial Council: Statement of Principles on Self-Represented Litigants and Accused Persons (“Principles on Self-Represented Litigants”) and the following relevant principles set out therein:
(a) B(2): Self-represented persons should not be denied relief on the basis of a minor or easily rectified deficiency in their case.
(b) C(3) Judges should ensure that procedural and evidentiary rules are not used to unjustly hinder the legal interests of self-represented persons.
24However, in my view, Mr. Liu is not in reality a vulnerable self-represented party. The materials filed by him are well written and reference numerous legal arguments. Either he has an excellent facility with the English language and is well versed in the Canadian law and legal procedure, or he has counsel acting for him behind the scenes. As will become apparent, he in fact regularly uses lawyers, although it seems it is his preference to formally act on his own behalf. While it is certainly his right to choose to conduct his legal affairs in this way, he cannot at the same time request indulgences from the Court because of this decision. As well, the fact that he has access to and regularly uses lawyers undermines his position regarding his alleged misunderstanding of the documents and proceedings.
25In my view, his materials and conduct in this case demonstrate that he is an astute and strategic party who has effectively used court procedures to delay this matter and avoid the ultimate day of judgment.
26The plaintiff had difficulty serving the defendants and had to obtain an order for substituted service from Master Brott on November 29, 2019. After Justice Myers ordered that the defendants respond to the motion for Judgment by July 16, 2020, the defendants made an 11th hour request for an adjournment of the July 24, 2020 motion by raising allegations against the plaintiff’s lawyer, Ms. Kwong—allegations which I have determined have no merit whatsoever, as will be discussed below. The defendants said they needed an adjournment of the July 24, 2020 scheduled motion to cross-examine Ms. Kwong and then never made any efforts to do so (and still has not). Mr. Liu then followed up with a complaint to the Law Society against Ms. Kwong; all of this resulted in Ms. Kwong having to get off the record and necessitated that the plaintiff retain a new lawyer. The plaintiff’s new counsel, Ms. Leung, advised me that Mr. Liu has now threatened to make a complaint against her to the Law Society. Although no sworn evidence was before me on the issue, I accept her submission made as an officer of the court. As will be apparent in these reasons, Mr. Liu has blamed, criticized or made allegations or threats against almost every legal professional he has come in contact with in this proceeding including Ms. Kwong, Ms. Leung, Justice Myers and Master Brott, even though the responsibility for the defendants’ failure to defend lies squarely with him.
27Regarding their technical status as unrepresented litigants, I am satisfied that the Court has provided the defendants with significant accommodation including:
(a) Justice Myer’s order that the defendants be served with the motion for judgment although not required under the Rules;
(b) The adjournment of the July 24, 2020 motion for judgment to allow Mr. Liu to obtain counsel, conduct cross examination of Mr. Kwong and file more materials;
(c) Permitting the defendants to make their submissions in writing instead of orally as requested; and
(d) Giving him a second opportunity to address the interim order I made preventing him from transferring his condominium.
The first statement of claim did not properly name Mr. Liu
28Mr. Liu says he did not provide a defence to the first Statement of Claim because it named him as “Weizhi Liu”, instead of “Zhiwei Liu”, his correct name. While he is correct that he did not have to defend if not properly named, what concerns me is his statement that he did not even think the original Statement of Claim referenced him at all:
“Nor did I understand exactly what was going on and who was being sued and why Ms. Kwong was representing Mr. Cheung, however, I didn’t think it was me, because Ms. Kwong did know my English and Chinese names however it was not for me to correct her legal work.”
While it may be the case that his first name was incorrect on the original Statement of Claim, there could have been no doubt what the matter was about, and that “Weizhi Liu” referred to him based upon the contents of the original Statement of Claim and his admitted business dealings with the plaintiff. As well, there is no explanation for why Sneaker House did not file a defence at this time as it was correctly named.
Mr. Liu believed that the plaintiff’s former lawyer, Ms. Kwong, was acting on his behalf
29There is a great deal of affidavit evidence filed by Mr. Liu related to the plaintiff’s former solicitor, Ms. Kwong, both in respect of why the defendants failed to file a Statement of Defence and also in respect of the merits of the case. Mr. Liu says he thought for a long time that Ms. Kwong was representing his interests and did not understand until June of 2020 that he had been tricked.
30This position is not credible given:
(a) The Statement of Claim, Amended Statement of Claim and other communications from Ms. Kwong, which are in evidence, clearly show she was acting for the plaintiff;
(b) After the plaintiff sent the defendants the original Statement of Claim, Mr. Kwong sent Mr. Liu an email dated October 26, 2019 where she advised the defendants that they had 20 days within which to file a defence. On November 22, 2019, Ms. Kwong sent the following email:
Have you retained a lawyer for this action?
Are you willing to discuss any possibility of settlement (i.e. If you are agreeable to transfer the preconstruction unit to Martin, I can discuss with him to accept this as a full and final settlement.)
(c) There are many emails in evidence which demonstrate that Mr Liu regularly uses his own lawyer and that he had his own lawyer advising him during his negotiations and business dealings with the plaintiff, who he refers to as a “he”, not a “she”; and
(d) There is absolutely no documentary evidence which supports his alleged belief that Ms. Kwong was acting on his behalf, despite numerous communications.
Ms. Kwong allegedly told Mr. Liu that the defendants did not need to file a defence
31After the plaintiff served the Amended Statement of Claim on December 16, 2019 correctly naming him, Mr. Liu says he did not file a defence because he believed, based upon oral representations from Ms. Kwong, that he did not need to. In his affidavit, he set out the contents of the November 22, 2019 email above as support for this.
32First, the November 22, 2019 email from Ms. Kwong in no way suggests that the defendants did not need to file a defence. More importantly, in his affidavit, Mr. Liu has misrepresented the date of this email by including only its contents without the date and saying that Ms. Kwong sent it to him “right after delivering the Amended Statement of Claim” (which was on or about December 12, 2020).
33In my view, this was a deliberate attempt to mislead the Court in the belief that the email would be more helpful to him if the Court thought he received it after the Amended Statement of Claim was served.
34I find Mr. Liu’s evidence on this issue not credible given the breadth of written communications in the record among the parties which never set out or even hinted at such an arrangement.
COVID
35Mr. Liu admits that he received the plaintiff’s Motion Record for judgment on March 9, 2020 but says he did not respond because during the month of April he checked with the Superior Court and found out that the courts were in lock down due to Covid-19. Accordingly, there was no reason to attend the April 27, 2020 date. While this may be, it does not explain why he did not prepare and serve a motion to set aside the noting in default or otherwise communicate with the plaintiff at all about his intention to defend and bring a motion to set aside the noting in default. The courts did not have to be open to take these steps.
36He did not begin preparing his motion to set aside the noting in default until late June 2020, almost 7 months after the plaintiff first served the Amended Statement of Claim. At that point, he was facing an imminent motion for judgment and I infer that had it not been for the imminent motion, he would not have taken any steps.
The noting in default was irregularly obtained.
37In Redabe Holdings Inc. v. I.C.I. Construction Corporation, 2017 ONCA 808 the Court considered an appeal from the dismissal of a motion to set aside a default judgment. In that case, there had been some suggestion that the motions judge had improperly granted judgment on the basis of deemed admissions alone, which did not entitle it to judgment pursuant to Rule 19.06. In fact, the motion had been supported by affidavit material. The Court upheld the default judgment but in doing so stated:
[7] The appellant framed his argument on the reasonable understanding that, as reflected in the order, default judgment was irregularly obtained as a result of a requisition submitted without evidence. If it had been obtained in this way, the appellant’s argument would have had merit because, in accordance with r. 19.06, on the face of the statement of claim, the pleading of an oral guarantee alone would not have entitled the respondent to judgment. If a default judgment is irregularly obtained, as a general rule, a defendant is entitled to an order, as of right, setting it aside, without the requirement of establishing a defence to the plaintiff’s claim, and without the imposition of terms, other than possibly costs: Tomazio v. Rutale, (1995), 1995 CanLII 7138 (ON SC), 26 O.R. (3d) 191, [1995] O.J. No. 3032 (Gen. Div.)
38The defendants says the noting in default was irregularly obtained because the claim was for unliquidated damages. I do not understand this argument.
39The defendants also says that the noting in default was irregularly obtained because: 1) the motion for substituted service was brought without notice; 2) in the opening paragraph of Master Brott’s Order, it incorrectly refers to the plaintiff as “Jonathan Sung”; and 3) when Master Brott’s Order was sent to him, the enclosure email improperly referenced Master Jolly instead of Master Brott.
40First, although Mr. Liu has taken issue with Master Brott’s Order saying it was improperly obtained, he never appealed it and never filed any evidence on this issue other than his bald assertion that there was no basis for Master Brott to make the Order. I have no information on this issue before me. Regarding the technical errors in Mr. Brott’s Order, there could have been no doubt what this Order meant and that it referred to the plaintiff and the defendants. The title of proceeding correctly named all the parties and had Master Brott’s stamp was on it. I do not view anything about the manner in which the plaintiff obtained this Order to have had any irregularity that would entitle the defendants to set aside the noting in default as of right.
41The defendants also says the noting in default was irregularly obtained because Rule 25.03(2) required the plaintiff to serve the defendants with both the Amended Statement of Claim and the original Statement of Claim. Rule 25.03(2) says that when a new party is added, the original Statement of Claim must also be served on them together with the Amended Statement of Claim. Neither Mr. Liu, nor Sneaker House were added parties and so Rule 25.03(2) is inapplicable. In any event, they had both already been served with the original Statement of Claim at the outset.
The defendants did not know they had been noted in default
42When this matter originally came before me on July 24, 2020, the affidavit filed by the plaintiff indicated that the defendants had been noted in default but the plaintiff’s notice of motion asked for an order noting the defendants in default and I referenced this in my July 24, 2020 endorsement. I stated that it was unclear to me whether the defendants had been noted in default because of these two conflicting statements. This was an error in the plaintiff’s notice of motion and the defendants had indeed been noted in default which was apparent at Tab N of the Motion Record.
43In response to my July 24 endorsement, the defendants filed a Statement of Defence and with the Registrar on July 30, 2020, without informing the Registrar that there was a pending motion for judgment before me based on the fact that they had been noted in default. I view this as highly inappropriate.
44In his October 23, 2020 affidavit, Mr. Liu says that he could not possibly have understood that he had been noted in default if I, as a Judge, could not be certain based upon what I wrote in my July 24, 2020 endorsement. I note that in his affidavit dated October 23, 2020, in paragraph 26, Mr. Liu says that “in late June 2020 with the assistance of two lawyers one in Toronto and the other in Richmond BC, I started to prepare my response and cross motion to the motion brought by the plaintiff” [Emphasis added]. The material he filed on July 15, 2020 contained a motion to set aside the noting in default. He clearly knew the defendants had been noted in default but was very adept at picking up on something in my July 24, 2020 endorsement that he could use to support his narrative of being a vulnerable individual who simply hasn’t understood the process.
45As well, if the defendants really were confused about whether they had been noted in default or not, why hadn’t they prepared a Statement of Defence up until this point or communicated with the plaintiff about their intention to do so?
Justice Myer’s June 9, 2020 endorsement was unclear to him
46Mr. Liu says that Justice Myer’s June 9, 2020 endorsement was unclear; I have reviewed it and in my view it is not confusing. In any event, by the time of Justice Myer’s June 9, 2020 endorsement, Mr. Liu was already being assisted by two lawyers. No one took steps to communicate to Justice Myers to ask for any clarification which I would have expected had there been any confusion.
The defendants were waiting for me to schedule a case conference
47The defendants say they did not take any further steps after my July 24, 2020 endorsement because I had ordered a case conference to take place and Mr. Liu says that he was waiting for me to set the timetable. Again, at that time, the defendants were already being assisted by counsel. I do not know how they could have interpreted my endorsement in that way.
Complexity of the case
48The claim is not complex—it is frankly very straight forward and would not have been difficult or time consuming for the defendants to prepare the Statement of Defence which they ultimately attempted to file.
Conduct of the plaintiff and defendants
49The plaintiff argues that the defendants have not met the burden of satisfying the Court that the noting in default should be set aside and I agree. I am not satisfied that the defendants have had an intention to defend, that they have adequate explanations for not filing a Statement of Defence within the time limits imposed by the Rules or that the motion has been brought with reasonable dispatch. In my view, the defendants have been utilizing the court procedures and Rules to complicate this straight-forward collection case and unfairly delay its resolution in an attempt to avoid judgment day. In their motion materials the defendants have raised vague and unsubstantiated claims, which, although baseless, have required the plaintiff and this Court to spend considerable time to address.
50Taking into account all of the circumstances, I am dismissing the defendants’ motion to set aside the default judgment in the exercise of my discretion.
51In doing so, I note that despite the fact that a defendant is not ordinarily required to demonstrate an arguable defence on the merits, the fact is that the defendants in this case did file evidence on the merits because I have before me both the motion to set aside the noting in default as well as the plaintiff’s motion for judgment.
52Given that I am dismissing the defendants’ motion to set aside the noting in default, I will now consider the plaintiff’s motion for judgment.
Motion for Judgment
53Pursuant to Rule 19.02(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, where a defendant has been noted in default, he is deemed to admit the truth of all allegations of fact made in the statement of claim. A plaintiff is not entitled to judgment on a motion for judgment or trial merely because the facts alleged in the statement of claim are deemed to be admitted unless the facts entitle the plaintiff to judgment:
54Accordingly, on a motion for default judgment the inquiry undertaken by the court is on the following:
(a) What deemed admissions of fact flow from the facts pleaded in the Statement of Claim;
(b) Do those deemed admissions of fact entitle the plaintiff, as a matter of law, to judgment on the claim?
(c) If they do not, has the plaintiff adduced admissible evidence, which when combined with the deemed admissions, entitles it to judgment on the pleaded claim:
Nikore v. Jarmain Investment Management Inc. 2009 CanLII 46655 (ONSC), at paras 5, 6 & 8
Elekta Ltd. v. Rodkin, 2012 CarswellOnt 3928 (ONSC)
55The deemed admissions and the evidence filed by the plaintiff demonstrate the following:
(a) The plaintiff purchased shares in Sneaker House for $220,000 from Mr. Liu pursuant to the Share Purchase Agreement;
(b) Mr. Liu breached the Share Purchase Agreement by failing to provide closing documents within 30 days;
(c) The parties agreed orally that Mr. Liu would repay the $220,000 by September 1, 2019 but he did not.
(d) Thereafter, the parties negotiated a Termination Agreement whereby Mr. Liu and Sneaker House agreed to pay the $220,000 to the plaintiff by October 1, 2019, failing which the plaintiff could take action against the defendants for repayment; and
(e) The defendants only paid $16,000 pursuant to the Termination Agreement.
56The defendants filed two affidavits from Mr. Liu dated July 15, 2020 and October 22, 2020, respectively, setting out the merits of their defence. The affidavit material asserts Mr. Liu was misled by the plaintiffs’ former solicitor, Ms. Kwong, into signing the Termination Agreement. He says she was acting as his lawyer or providing legal advice to him and had a conflict of interest. He says that there was a robbery at Sneaker House resulting in a $300,000 loss and that after the plaintiff said he didn’t want to be a shareholder anymore, there were questions about how the plaintiff would be responsible for his share of the loss sustained by the robbery. He says that in drafting the Termination Agreement, he was under the impression that Ms. Kwong was his lawyer and that when he signed it, there would be an adjustment of monies which would be made on account of the plaintiff’s portion of responsibility for the robbery of the store. He says this understanding was confirmed in discussions with Ms. Kwong. He says that he relied upon Ms. Kwong to interpret for him, signed things whenever she told him to, and that she never advised him to seek legal advice. He says she has taken advantage of him and that he did not understand what the Termination Agreement said. He says that when he made partial payments to the plaintiff on account of the Termination Agreement in the amount of $16,000, it was on the basis that the remaining fees were waived.
57In my view, none of these defences are credible or have any chance of success. The defendants’ allegations are bare, unsupported by any evidence other than what Mr. Liu says in his affidavit, and most importantly, are inconsistent with his actions as well as the contemporaneous documents. It should be noted that all of the contemporaneous communications between the parties were in Chinese and the plaintiff has provided certified translations which the defendants have not disputed:
Mr. Liu’s assertion that the plaintiff must bear partial responsibility for the Sneaker house robbery
(a) The Share Purchase Agreement stipulates that if Mr. Liu failed to provide the financial records and other documents within 30 business days, he would have to refund the full $220,000. It is undisputed that Mr. Liu failed to provide these documents. This breach occurred before any robbery of Sneaker House—accordingly, the basis for fixing the plaintiff with partial responsibility for this is unclear.
(b) There are some communications regarding whether the plaintiff should bear some responsibility for the robbery, however, ultimately, the parties agreed that the plaintiff would be repaid the entire $220,000. In an email dated July 18, 2019, Mr. Liu states:
“Yesterday, we have reached a consensus and promised to withdraw the full amount of $220,000 from the company on September 1. We don’t need him to take any responsibility for the robbery that happened at the shop. Please confirm this with Martin.”
Mr. Liu’s assertion that Ms. Kwong was his lawyer and mislead him.
(c) Regarding allegations about Ms. Kwong having given Mr. Liu legal advice or having misled him and/or induced him to enter into the Termination Agreement;
i. Although he has provided sworn evidence that Ms. Kwong was providing legal services to both him and the plaintiff in relation to their business dealings so that they could save costs, there are many written communications from Mr. Liu where he clearly indicates that he was obtaining legal advice and drafting services from his own lawyer who he refers to as a “him”, and where he also indicates that the plaintiff should seek advice from its lawyer who he refers to as a “she”. There are also conversations where he refers specifically to Ms. Kwong as “your lawyer” when communicating with the plaintiff. Here are some examples:
Mr. Liu: “Ok, I’ll send it to my lawyer and have him finish the change today.”
Mr. Liu: “Actually the lawyer thinks your lawyer should be the one to voice her opinion, but we’ll try our best to make the change today. Is your lawyer busy? Can she take a look today”
Mr. Liu: “Have your lawyer contact me…or give me her number…I’ll call [her].
ii. He has not provided any particulars as to what established this alleged solicitor/client relationship.
iii. He has failed to provide any details on what alleged “inducement” Ms. Kwong used to cause him to execute the Termination Agreement.
iv. He has failed to provide any particulars of the alleged duress and compulsion which Ms. Kwong exerted against him.
v. There is no evidence that Ms. Kwong issued any accounts to Mr. Liu or that he paid her any fees.
vi. There are many emails, texts and other written communications, where Ms. Kwong clearly indicates that she acts for the plaintiff, e.g. making demands for payment, referring to the plaintiff as her client etc. Nowhere in his responses does Mr. Liu express any surprise or statement that he believed that she was acting for him.
vii. The Share Purchase Agreement dated June 24, 2019 contains the following terms:
20(t) Each party personally and/or by his or her lawyer has participated in the preparation of this Agreement. It must be construed as if the Parties were joint authors, and it shall not be construed against one party as if that party or that party’s lawyer were the sole or major author of the agreement.
20(u) The parties hereto, and each of them, hereby acknowledges that they were advised to obtain such independent legal advice as they felt was necessary or appropriate.
viii. The Unanimous Shareholder Agreement dated June 24, 2019 contains similar terms to those above.
ix. Ms. Kwong issued a buyer’s requisition letter dated June 17, 2019 to Mr. Liu and his then lawyers, Chen & Montgomery Law and Legal Services, demonstrating they each had their own legal counsel.
Mr. Liu’s assertion that he never agreed to return the $220,000
x. There is a lengthy text exchange between the plaintiff and defendants which took place between July 15, 2019 and September 3, 2019 where plaintiff repeatedly asks for return of his $220,000. Eventually, Mr. Liu provides several responses by text and email where he promises to return the money:
“I wanna pay by installments, 5w each installment, four installments. I’m asking your lawyer how I should calculate the interest or pay you compensation in case of delay. That’s my issue and I’m willing to bear the costs. I’m asking your lawyer whether there is any plan.”
“I’m trying my best to get the money. That’s why I asked to meet you the other day.”
“I hope to pay 50,000 in four installments and paying off by the last installment. That’ the plan I sent to the lawyer”
“I hope to pay back $50,000 each time for a total of four times, and the final payment will be settled. This was my proposal to the lawyer, and I should be able to get $50,000-70,000 by the 10th.”
xi. There are also emails where Mr. Liu promises to return the money. On September 3, 2019 Mr. Liu writes:
“Sorry I got up late. I’ve been working til midnight these days. I just called Martin back. I am preparing the funds bit by bit. I will gather together enough as soon as possible and deliver it or in several times. It is delayed due to some special reasons. ….”
xii. The parties executed the Termination Agreement on or about September 4, 2019 and it is consistent with the above written communications. This agreement also provided:
- The parties confirm that they have been afforded the opportunity to obtain independent legal advice with respect to the details of the settlement evidenced by this Mutual Release, and confirm that they and/or their representatives are executing this Mutual Release freely, voluntarily and without duress.
xiii. After he signed the Termination Agreement Mr. Liu made two instalment payments to the plaintiff in the amount of $11,000 and $5,000.
58There is nothing in these voluminous contemporaneous documents which supports the defendants’ version of event. There is nothing in the documents where the parties discuss or agree that the plaintiff would have to be partially responsible for the Sneaker House robbery. All of the contemporaneous documents are consistent with the plaintiff’s evidence.
59Mr. Liu does not dispute the authenticity of these communications or the translations. The most that he is prepared to say is that he recognizes some but not all the text messages and that they do not reflect the full dialogue on the issues because some of the communication was verbal; he says the Court has been given an unclear picture. This is another example of Mr. Liu providing vague allegations which raise a specter of impropriety without anything to back it up. In my view, in the absence of something clear from Mr. Liu stating that the alleged emails and texts did not occur, or are not authentic I am satisfied they adequately and sufficiently rebut Mr. Liu’s bald allegations. Given the breadth of the contemporaneous documentary record (dozens if not hundreds of texts and emails), it is highly improbable that there would have been oral communications which are so completely inconsistent with the documentary record and which are not referenced therein. Taken in the context of the voluminous contemporaneous documentary record, Mr. Liu’s assertions in his affidavit stretch credulity.
60Mr. Liu also says that I should draw an adverse inference from the plaintiff’s failure to file an affidavit from Ms. Kwong. In Parris v. Laidley, 2012 ONCA 755, at para 2 the Court stated:
Drawing adverse inferences from failure to produce evidence is discretionary. The inference should not be drawn unless it is warranted in all the circumstances. What is required is a case-specific inquiry into the circumstances including, but not only, whether there was a legitimate explanation for failing to call the witness, whether the witness was within the exclusive control of the party against whom the adverse inference is sought to be drawn, or equally available to both parties, and whether the witness has key evidence to provide or is the best person to provide the evidence in issue.
61I decline to exercise my discretion to draw any such adverse inference. Ms. Kwong is not under the control of the plaintiff. Mr. Liu has made a complaint against her to the Law Society and there may be legitimate reasons why she would not want to provide evidence in this proceeding in such circumstances. Furthermore, it is the defendants who are alleging conduct by her which they say is relevant to these proceedings; so it is for the defendants to lead that evidence. If the defendants felt her direct evidence was necessary, they could have attempted out of court examinations. Indeed, this was one of the reasons they sought the initial adjournment of the July 24, 2020 motion—but they never did.
62I am satisfied that the deemed admissions and evidence filed by the plaintiff entitles it to judgment as a matter of law. I calculate the damages to be $204,000, which is the amount which remains owed to the plaintiff pursuant to the Termination Agreement with interest at the contract rate of 6 % set out in section 5 of the Termination Agreement from the date of the default, October 1, 2019.
63I direct that:
(a) The plaintiff prepare a draft Order which calculates the total pre-judgment interest up to the date of these reasons at 6 %;
(b) The plaintiff shall serve the defendants with this draft Order by January 29, 2021 and if the defendants wish to dispute the interest calculation, they may provide me with brief submissions no longer than 2 pages by February 5, 2021;
(c) The plaintiff has requested costs in the amount of $12,168.35. The defendants have not provided any submissions on costs and they may do so by filing submissions no longer than 3 pages by February 5, 2021; and
(d) I am also dispensing with any need for the plaintiff to obtain approval as to form and content of the Order in respect of these motions.
Additional motions brought by the defendants
64The defendants have brought the following additional cross-motions:
(a) Motion to set aside the order preventing Mr. Liu from transferring the interest in his condominium; and
(b) Motion to strike out certain paragraphs of the affidavits filed by the plaintiff on the basis they contain legal argument and opinions, fail to disclose the source of the deponent’s belief and whether he believes it to be true and in some cases contain hearsay.
65Pursuant to Rule 19.02(1) a defendant who has been noted in default shall not take any other step in the action other than the motion to set aside the default judgment except with leave of the court. Given that I have dismissed the motion to set aside the noting in default, and my ultimate conclusion below that the plaintiff is entitled to judgment, I do not grant leave for the defendants to bring a motion to set aside the order preventing Mr. Liu from transferring his condominium. I pause to note here that as in much of the defendants’ materials he has misstated the basis for the interim order I made. He argues that I made the interim order on the basis of an alleged oral agreement whereby Mr. Liu agreed to give the plaintiff an interest in his condominium as security and that any such agreement is unenforceable pursuant to the Statute of Frauds, R.S.O. 1990, c. S.19. It is true that the plaintiff has alleged such oral agreement, but my interim order was made on the basis of concerns that Mr. Liu would dissipate his assets in advance of the conclusion of the motion for judgment on the liquidated debt. I concluded:
In my view, the defendant has been noted in default and the plaintiff, as such, has established a strong prima facie case that it will ultimately be successful in this case. The defendant has delayed this matter, failed to abide by previous scheduling orders and as a result, the plaintiff’s motion for judgment was adjourned. I am satisfied that if the order is not made, the plaintiff may suffer irreparable harm as the Unit appears to be the defendant’s only asset in Ontario, he is a foreign resident and at this conference the position he took regarding his cousin being the beneficial owner of the condominium causes me concern that if the order is not made, he may transfer the Unit to someone else, depriving the plaintiff the right of execution if it is ultimately successful on November 20, 2020. On the flip side, the closing will take place on November 17, 2020 and if the defendant is successful in setting aside the default judgment, the interim order I am making will be set aside.
66This is yet another example of Mr. Liu creating a baseless argument which then creates work for the parties and the Court to address.
67Accordingly, the Orders I made on October 15, 2020 and November 5, 2020 restraining the defendant from transferring his condominium shall remain in force pending further Order from me.
68With respect to the defendants’ motion to strike, I also do not grant leave for the defendants to bring this motion. I have reviewed the affidavit materials filed by the plaintiff thoroughly and even if the defendants may have a minor technical basis to strike out some parts of the impugned paragraphs in these affidavits, there is sufficient evidence which complies with the Rules that allows me to adjudicate this matter fairly and I am only taking into account such evidence. In Gutierrez v. Watchtower, 2019 ONSC 3069, at para 30 Justice Perell cited with approval Justice Feguson’s comments in Neighbourhoods of Windfields Limited Partnership v. Death, “judges, including motions judges, know how to disregard inadmissible evidence and not have it influence their judgment.”
Papageorgiou J.
Released: January 21, 2021
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
HOYIN CHEUNG Plaintiff
– and –
ZHIWEI LIU a.k.a. STEVEN LIU, SNEAKER HOUSE INC., t/a ALLEY-OOP SNEAKER MUSEUM t/a ALLEY-OOP TORONTO Defendants
-and –
RESIDENCES AT ATRIA INC. Nominal Party
REASONS FOR JUDGMENT
Papageorgiou J.
Released: January 21, 2021