COURT FILE NO.: CV-21-00661576-0000
DATE: 2022-10-07
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
SUN JA YOON, HYUNJU SHIN, HAWIL PARK, TAI YOUNG LIM and MYUNG JA LIM
Plaintiffs/Responding Parties
- and -
DONG WOOK KIM, SHIN AE WON, THE TRUSTEES OF TORONTO FIRST KOREAN EVANGELICAL CHURCH, JOHN DOE and JANE DOE
Defendants/Moving Parties
COUNSEL:
A. Abdullah and T. Poynter, for the Plaintiffs/Responding Parties
A. Weiss, J. Cho and A. Vaturi, for the Defendants/Moving Parties
HEARD: June 8, 2022
ASSOCIATE JUSTICE: D. MICHAEL BROWN
REASONS
[1] The defendants bring this motion seeking to discharge a certificate of pending litigation granted by Master Short on May 3, 2021 on an ex parte motion by the plaintiffs. Master Short granted a CPL against four different properties. On this motion the defendants seek to discharge the CPL only as against the property located at 850 Steeles Avenue West, unit 607 (the “Steeles Property”). For the reasons that follow, the defendants’ motion is granted on the basis of the plaintiffs’ failure to make full and fair disclosure on the ex parte motion and on the basis that, on the record before me, there is no triable issue with respect to an interest in land.
Background
[2] The Statement of Claim in this action was issued on May 3, 2021, the same day that the plaintiffs’ ex parte motion for a CPL was filed and granted. The plaintiffs in the action are members of the Toronto First Korean Evangelical Church (“TFKEC”). The defendant, Dong Wook Kim, is the pastor of TFKEC. The defendant, Shin Ae Won, is Mr. Kim’s wife.
[3] The plaintiffs claim that the defendants misappropriated church funds and property for their own use. The primary allegations of misappropriation in the Statement of Claim relate to church-owned properties located at 406 and 408 Cummer Avenue in Toronto (the “Cummer Properties). In particular, the plaintiffs allege in the Statement of Claim that:
a) the defendants unilaterally registered title to 408 Cummer Avenue in their own names;
b) the defendants took out a $450,000 mortgage on 408 Cummer Avenue in their own names;
c) Mr. Kim misappropriated $59,829.19 from the proceeds of a fire insurance policy paid out in respect of the Cummer Properties.
[4] In addition to a return of the misappropriated funds and various injunctive relief, the claim seeks a certificate of pending litigation on four properties, namely the two Cummer Properties, the Steeles Property, and a property located at 7165 Yonge Street, Unit 530 (the “Yonge Property”).
[5] In April 2021, prior to the issuance of a statement of claim, the plaintiffs sought a CPL against the Cummer Properties by way of an ex parte application in writing to a judge[^1]. The evidence filed on the application consisted of affidavits sworn in March 2021 by each of the five plaintiffs in this action. Other than a few minor differences to account for the individual affiant’s position in the church and years of membership, the five affidavits are identical in content. Each is 15 paragraphs long and attaches the same six exhibits.
[6] The affidavits filed on the application focus on the Cummer Properties and the concerns regarding Mr. Kim’s dealings with the Cummer Properties, consistent with the allegations that would later be included in the Statement of Claim. The application did not seek a certificate of pending litigation on the Steeles Property and the affidavits and exhibits filed on the application contain no reference to the Steeles Property.
[7] The plaintiffs’ ex parte application for a CPL on the Cummer Properties and other relief was read by Justice Steele. In her endorsement dated April 21, 2021, Justice Steele adjourned the application in relation to the certificate of pending litigation on the following grounds:
- An action has not yet been commenced, within which a motion for a certificate for pending litigation may be sought. Under Rule 42 .01 (2), a party who seeks a CPL must include a claim for it in the originating process. It does not appear that the applicants are making a claim for the Properties based on the record before me. A CPL cannot be registered if the plaintiff does not claim any right, title or interest in the lands.
[8] Justice Steele also commented on the plaintiffs’ obligations on an ex parte proceeding:
The applicants also sought to bring this matter ex parte. Where a matter is brought without notice, there is a duty on the party before the court to ensure that there is material disclosure.
These ex parte materials raise numerous questions and do not address fundamental questions.
Ex Parte Motion for a CPL
[9] Two weeks after Justice Steele’s endorsement, the plaintiffs issued the Statement of Claim in this action and on the same day filed an ex parte motion for:
a) a representation order under Rule 12.08 to permit the plaintiffs to bring the action on behalf of all members of TFKEC;
b) a CPL to be registered against the two Cummer Properties, the Yonge Property and the Steeles Property.
[10] Notwithstanding Justice Steele’s comments regarding the sufficiency of the record before her on the ex parte application, the plaintiffs filed the exact same evidence on the ex parte motion as had been filed on the application, recycling the five affidavits sworn in March 2021. The six exhibits to the affidavits were not attached to the affidavits. Instead, the motion record includes seven separately tabbed documents, five of which appear to be the same documents exhibited to the affidavits (although they are not marked as such), and two of which are parcel registers from the land registry office for the Steeles Property and the Yonge Property that are not appended to or referenced in any affidavit. In addition to the motion record, the plaintiffs filed a factum.
[11] The ex parte motion record included a copy of the statement of claim. Although the statement of claim seeks a CPL against the Steeles Property in paragraph 1(b), the statement of claim pleads no material facts in relation to the Steeles Property, which is not even referenced elsewhere in the Statement of Claim. Similarly, and as noted above, the five affidavits filed on the ex parte motion make no reference to the Steeles Property.
[12] The factum filed by the plaintiffs on the ex parte motion also contains no reference to the Steeles Property. Under the heading “Nature of the Motion”, the factum describes the CPL sought as a “Certificate of Pending Litigation on 406 and 408 Cummer Avenue pursuant to rule 42 of the Rules of Civil Procedure” with no mention of the Steeles Property. The argument in relation to the CPL in the factum focuses exclusively on the facts in support of the CPL against the Cummer Properties.
[13] The factum also contains a number assertions of fact that are not supported by the evidence on the motion, including the following statements in the factum regarding the urgency of the requested CPL:
The members have been advised that the Defendants are preparing to close down the church, sell the remaining assets of the church, and flee the country; and
Unless a certificate of pending litigation is granted, the real threat of the Defendants selling and fleeing the country will materialize.
[14] There is, in fact, no evidence in the ex parte motion record that the defendants were preparing to shut down the church, sell off its remaining assets or flee the country.
[15] A threshold issue on an ex parte motion for a CPL is whether the plaintiff is claiming an interest in land. The factum, statement of claim and affidavits filed on the ex parte CPL motion all fail to claim any interest in land with respect to the Steeles Property. The only such assertion contained in the motion record are the following statements in the notice of motion:
The Plaintiffs are concerned that church funds were used to purchase two condominiums, 607-850 Steeles Avenue West and 530-7165 Yonge Street, currently registered in the names of the Defendants' son and daughter in law (Tabs 7 and 8);
As the Plaintiffs' contributions were used to purchase both church properties, the Plaintiffs have an interest in 406 and 408 Cummer Avenue. Furthermore, as potential church funds were used to purchase 607-850 Steeles Avenue West and 530-7165 Yonge Street, the Plaintiffs may also have an interest in these properties;
[16] Tabs 7 and 8 referenced in paragraph 20 of the notice of motion contain parcel registers for two properties, listing the owners as Kyung Hwan Kim and Narae Kang.
[17] The evidence in the ex parte motion record does not support the statements in paragraphs 20 and 21 of the notice of motion. In particular, there was no evidence:
a) that any of the plaintiffs or any other church members had a concern that church funds were used to purchase the Steeles Property or any property other than the Cummer Properties; or
b) that Kyung Hwan Kim and Narae Kang, the individuals identified in the parcel register, are the son and daughter in law of the defendants.
[18] There is one other issue with the evidence on the ex parte motion that was not revealed until the hearing of this motion. The factum of the plaintiffs on this motion states that the “None [of the plaintiffs] speaks English well enough to read formal documents.” Counsel for the plaintiffs advised in their submissions that the content of the five affidavits filed on the ex parte motion were translated to Korean for each affiant at the time they swore them. There is no indication on the face of the affidavits filed that they were translated for swearing, nor is there any certificate attesting to the accuracy of the translation.
The Motion to Discharge
[19] The defendants move to discharge the CPL against the Steeles Property on the grounds that:
a) the plaintiffs breached their duty of full and fair disclosure on the ex parte motion before Master Short;
b) there is no triable issue as to the plaintiffs’ interest in the Steeles Property; and,
c) the balance of the equities favours a discharge of the CPL.
[20] In support of the motion, the defendant has filed affidavits of the defendant, Mr. Kim, and his son, Kyung Hwan Kim. Mr. Kim’s affidavit provides details of the various sources of funds used for the purchase of the Steeles Property, which he admits to purchasing for his son. His affidavit attaches bank statements and account activity logs in support of his assertion that the Steeles Property was purchased using his own funds and not funds belonging to the church. The affidavits of Mr. Kim and his son also provide evidence of the harm they allege they will suffer if the CPL is not discharged.
[21] In opposing the motion the plaintiffs have filed a single six paragraph affidavit sworn by the plaintiff, Myung Ja Lim. That affidavit attaches as an exhibit a further, longer, affidavit of Myung Ja Lim sworn for a different motion in this proceeding. In the affidavit sworn in this motion, Ms. Lim describes a loan she gave to Mr. Kim for $40,000, only $10,000 of which has been repaid despite several demands for repayment of the balance.
[22] Ms. Lim attaches to her affidavit copies of text messages with Mr. Kim as evidence of the loan, but those text messages are in Korean, and they have not been translated in the record before me. She deposes that in one of these text messages, Mr. Kim stated that he would repay the $30,000 to Ms. Lim out of the sale of the proceeds of the “condo”, which Ms. Lim understood to mean the Steeles Property. The loan as described in Ms. Lin’s affidavit is a personal loan from Ms. Lin to Mr. Kim. There is nothing in her affidavit to suggest that this was a loan to the church or for the benefit of the church.
[23] The affidavit attached as an exhibit to the affidavit of Ms. Lin deals largely with matters that have little relevance to the issues on this motion. The only reference to the Steeles Property in the attached affidavit is the following paragraph discussing the motion for the CPL:
- On May 3, 2021, we also made a motion in writing without notice for certificates of pending litigation in respect of four properties: 408 Cummer Avenue; 406 Cummer Avenue; 607-850 Steeles Avenue West; and 7165 Yonge Street, Unit 530, in addition to a representation order. The Steeles Avenue and Yonge Street properties are properties that were purchased by the Pastor’s family members. I believe those properties were purchased using the Church’s funds.
[24] The Statement of Claim in the action remains as it was before Master Short on May 3, 2021. The plaintiffs have submitted a proposed fresh as amended statement of claim which, at the time of the hearing of the motion, had not been issued because it was subject to a pending motion for leave to amend which is opposed by the defendants. The defendants submit that I should not consider any new allegations in the proposed fresh as amended statement of claim in determining whether there is a triable issue with respect to an interest in land on this motion. I agree. The plaintiffs cannot rely on the allegations in a proposed, unissued, pleading in response to a motion to discharge a CPL.
The Duty of Full and Fair Disclosure
[25] Fairness in the adversarial process normally requires that proceedings be brought on notice to the opposing party. Where a motion is brought without notice, fairness is maintained by imposing a duty of full and fair disclosure on the moving party. Rule 39.01(6) provides:
39.01(6) Where a motion or application is made without notice, the moving party or applicant shall make full and fair disclosure of all material facts, and failure to do so is in itself sufficient ground for setting aside any order obtained on the motion or application.
[26] Justice Sharpe explained the basis for the rule of full and fair disclosure in United States v Friedland[^2]:
The rationale for this rule is obvious. The Judge hearing an ex parte motion and the absent party are literally at the mercy of the party seeking injunctive relief. The ordinary checks and balances of the adversary system are not operative. The opposite party is deprived of the opportunity to challenge the factual and legal contentions advanced by the moving party in support of the injunction. The situation is rife with the danger that an injustice will be done to the absent party.
[27] More recently, in a decision discharging a CPL obtained without notice, Justice Myers explained the importance of full and fair disclosure on an ex parte motion:
The duties to make full and fair disclosure replace the checks and balances of the adversarial system. The court has no choice but to trust the moving party when he or she says they are fully disclosing and fairly presenting all material facts and the applicable law. It is the need to trust an otherwise zealously adversarial party that makes the situation so fraught with risk and renders justice so vulnerable to abuse.[^3]
[28] The duty imposes an obligation on the moving party to present the facts and law in support of its own case fairly and impartially and to fully and fairly disclose any facts or legal arguments that the moving party knows the opposing party would reasonably have raised had they been given an opportunity to respond. Per Sharpe J. (as he then was) in Friedland:
[The moving party] is not entitled to present only its side of the case in the best possible light, as it would if the other side were present. Rather, it is incumbent on the moving party to make a balanced presentation of the facts and law. The moving party must state its own case fairly and must inform the Court of any points of fact or law known to it which favour the other side. The duty of full and frank disclosure is required to mitigate the obvious risk of injustice inherent in any situation where a Judge is asked to grant an order without hearing from the other side.
[29] The case presented by the plaintiffs on the ex parte motion before Master Short was far from fair or balanced as it related to the CPL sought against the Steeles Property. The statement of claim, affidavits and factum focused exclusively on the material facts and evidence relating to the Cummer Properties, for which the evidence in support of a claimed interest in land was far stronger than as against the Steeles Property.
[30] By focusing exclusively on the evidence relating to the Cummer Properties without any discussion of the evidence or material facts related to the Steeles property, or any attempt to distinguish the plaintiffs’ claim to the Steeles Property, the plaintiffs’ motion materials before Master Short create the false impression that the claims to an interest in property are the same with respect to all properties over which a CPL is being sought. The plaintiffs’ factum and affidavits filed on the ex parte motion at best, gloss over, or at worst, conceal from view, the weaknesses in the material facts and evidence in support of the CPL against Steeles Property, particularly as they relate to the threshold issue of an interest in land. Either way, the plaintiff’s motion materials before Master Short were inconsistent with the duty of full and fair disclosure on a motion without notice.
[31] Further, the unsubstantiated statements in the plaintiffs’ notice of motion in relation to the Steeles Property were neither full nor frank disclosure. The assumption is that statements of fact in the grounds section of a notice of motion are supported by the evidence on the motion. Even on a motion on notice it is improper to include wholly unsubstantiated facts in a notice of motion. On an ex parte motion, where there is no opposing party to contest such unsubstantiated assertions of fact, it is a violation of the rule of full and fair disclosure, and it is arguably misleading to the court.
[32] The unsubstantiated statements of fact in the factum relating to the defendants’ alleged plans to shut down the church, sell the assets and leave the country, are similarly inconsistent the duty of full and fair disclosure. These unsubstantiated statements appear to have been the only basis argued for the asserted urgency of the motion and the need to proceed without notice to the defendants. The fact that Master Short granted the CPL on the same day the motion was filed strongly suggests that these statements factored into his decision.
[33] In summary, I find that the plaintiffs breached their duty of full and fair disclosure on the ex parte motion before Master Short in relation to two key issues on the motion: 1) the plaintiffs’ claim to an interest in land as it relates to the Steeles Property; and, 2) the need to bring the motion without notice to the defendants.
[34] Rule 39.01(6) provides that a breach of the duty of full and fair disclosure is, in itself, sufficient grounds to set aside the ex parte order. The rationale for this was explained by Justice Sharpe in Friedland:
If the party seeking ex parte relief fails to abide by this duty to make full and frank disclosure by omitting or misrepresenting material facts, the opposite party is entitled to have the injunction set aside. That is the price the Plaintiff must pay for failure to live up to the duty imposed by the law. Were it otherwise, the duty would be empty and the law would be powerless to protect the absent party.[^4]
[35] The court may set aside an ex parte CPL order when the failure to make full and fair disclosure is material to the issues to be determined on the motion. The failure is material if it might have had an impact on the outcome of the ex parte motion; the court need not find that it would have had an impact.[^5] In this case, the plaintiffs’ failures to abide by their duty to make full and fair disclosure were material to the issues to be determined on motion before Master Short as it related to the CPL against the Steeles Property. The failure might have had, and very likely did have, an impact on his decision and the outcome of the motion. On this basis alone, I find that the Order of Master Short as it relates to the CPL against the Steeles Property should be set aside and that the defendants’ motion to discharge the CPL as against the Steeles Property should be granted. I would also grant the defendants motion on the basis that, on the record before me, there is no triable issue with respect to the plaintiffs’ interest in the Steeles Property.
Triable Issue Regarding Interest in Land
[36] The question of whether there is a triable issue regarding an interest in land is a threshold issue on both a motion on notice for a CPL and a motion to discharge a CPL. Peruzza v. Spatone sets out the applicable legal test:[^6]
(ii) The threshold in respect of the "interest in land" issue in a motion respecting a CPL (as that factor is set out at section 103(6) of the Courts of Justice Act, R.S.O. 1990, c. C.43) is whether there is a triable issue as to such interest, not whether the plaintiff will likely succeed (1152939 Ontario Ltd. v. 2055835 Ontario Ltd., 2007 CarswellOnt 756 (S.C.J.), as per van Rensburg J., citing Transmaris Farms Ltd. v. Sieber, [1999] O.J. No. 300 (Gen. Div. - Comm. List) at para. 62);
(iii) The onus is on the party opposing the CPL to demonstrate that there is no triable issue in respect to whether the party seeking the CPL has "a reasonable claim to the interest in the land claimed" (G.P.I. Greenfield Pioneer Inc. v. Moore, 2002 CanLII 6832 (ON CA), 2002 CarswellOnt 219 (C.A.) at para. 20);
[37] The onus on the party opposing the CPL is to demonstrate there is no triable issue with respect to the “interest in the land claimed”. The onus does not arise unless the party seeking to preserve the CPL has claimed an interest in the subject land. In this case, the plaintiffs have not claimed an interest in the Steeles Property. The Statement of Claim does not assert any interest in the Steeles Property, nor does it plead any material facts in relation to the Steeles Property.
[38] The 6-paragraph affidavit filed by the plaintiffs in response to this motion does not claim any interest in the Steeles Property either directly or indirectly. Instead, it describes a personal loan made by one of the plaintiffs to one of the defendants. The only reference to the Steeles Property is a quote taken from a text message from Mr. Kim stating that he will pay the balance of the loan from the proceeds of the sale of the Steeles Property. This promise to repay the personal loan from the proceeds of sale of the Steeles Property does not give rise to a reasonable claim to an interest in the Steeles Property.
[39] Finally, the bald statement of belief that church funds were used to purchase the Steeles Property, contained in an affidavit sworn on a different motion that was attached to the plaintiffs’ affidavit, does not, in my view, amount to a claim to an interest in land for the purposes of this motion. I find that as the plaintiffs have not claimed any interest in the Steeles Property, it follows that there is no triable issue with respect to a claimed interest in land with respect to the Steeles Property. I would grant the plaintiffs’ motion and discharge the CPL against the Steeles Property on this basis as well.
[40] In the event that I am wrong, and either the statement of claim or plaintiffs’ evidence on this motion can be interpreted to include a claimed interest in the Steeles Property, I also find that the defendants have, on the evidence, met their onus of demonstrating that there is no triable issue. Mr. Kim swore an affidavit detailing all of the sources of funding for the purchase of the Steeles Property, which consisted of the $40,000 loan from the plaintiff, Myung Ja Lim, $7,000 from his RBC line of credit, $11,500 from different accounts at Korean and Canadian banks, $2,500 cash and a $510,000 mortgage from HSBC Bank. The account activity statements from the various banks evidencing these transactions are attached as exhibits to Mr. Kim’s affidavit.
[41] Mr. Kim’s affidavit also accounts for the source of the funds used to pay the ongoing mortgage payments for the Steeles Property. Mr. Kim deposes that these payments were funded by the homestay accommodation business for Korean students operated by him and his wife. He attaches as exhibits bank statements and account summaries which he says evidence the wire transfers coming in from his Korean student homestay business and the corresponding withdrawals and deposits made for the mortgage payments.
[42] Plaintiffs’ counsel in their submissions point to what they say are inconsistencies in Mr. Kim’s affidavit and exhibits, such as where the dates and amounts of certain deposits and withdrawals do not line up. They also question why a man of Mr. Kim’s means would have so many different bank accounts and suggest that I should draw an adverse inference from that fact. The problem with these submissions is that the plaintiffs elected not to cross-examine Mr. Kim on his affidavit. From the court’s perspective, Mr. Kim’s evidence is uncontested. I am not prepared to draw any conclusions from the alleged inconsistencies or conflicts in Mr. Kim’s evidence when Mr. Kim has not been given an opportunity to respond to these alleged defects in his evidence through cross-examination.
[43] The plaintiffs have filed no evidence on this motion that would support a claim for an interest in land in respect of the Steeles Property. The defendants have filed affidavit evidence which, if accepted as true, would support a finding that there is no triable issue with respect to an interest in the Steeles Property. The plaintiffs elected not to cross-examine on the defendant’s affidavit. Accordingly, I find that to the extent that the plaintiffs have claimed an interest in the Steeles Property, the defendants have met their onus of demonstrating that there is no triable issue with respect to such interest in land.
[44] As I have found that the motion should be granted and the CPL should be discharged both on the basis of the lack of full and fair disclosure on the ex parte motion and on the basis of the lack of a triable issue in respect of an interest in land, I need not, and will not, consider the Dunnah[^7] factors nor whether the equities favour the discharge or maintenance of the CPL. I note that had I done this analysis, the fact that the plaintiffs have filed no evidence on this motion regarding the prejudice they might suffer if the CPL is discharged would have been a significant factor in my determination.
Disposition
[45] For all of the reasons above, the defendants’ motion is granted. The order of Master Short dated May 3, 2021 as it relates to the CPL against the Steeles Property is set aside. The CPL as against the Steeles Property is discharged.
[46] For greater certainty, there was no motion before me relating to the CPL as against the Cummer Properties and the Yonge Property or the representation order granted by Master Short on May 3, 2021, and I have made no findings or determinations in that regard. In particular, I have neither considered nor determined whether the there was full and fair disclosure by the plaintiffs on the motion before Master Short in relation to this other relief that was granted.
Costs
[47] The moving parties may deliver costs submissions through the Assistant Trial Coordinator within 3 weeks of the release of this decision, and the responding parties may deliver costs submissions within one week thereafter. Each party’s costs submissions shall be no longer than three pages in length, exclusive of any Costs Outline (Form 57B).
D. Michael Brown, Associate Judge
Released: October 11, 2022
[^1]: The Notice of Application is not in the record before me, only the affidavits filed (without exhibits) and the endorsement of Justice Steele. According to Justice Steele’s endorsement, in addition to the certificate of pending litigation, the application also sought authorization under Rule 12.08 for the applicants (the plaintiffs) to bring a claim on behalf of all of the members of TFKEC.
[^2]: [1996] OJ No. 4399 (Ont Gen Div) at para 26
[^3]: Moses v Metro Hardware and Maintenance Inc., 2020 ONSC 6684 at para 28
[^4]: Friedland, at para. 28, Moses at paras. 29 and 76
[^5]: Phillips v. SR & R Bay Ridges (Two) Ltd., 2020 ONSC 6015 (Master) at para. 8; Malekzadeh v. Barron Homes Ltd., 2018 ONSC 5506, at paras. 27-33
[^6]: Perruzza v. Spatone, 2010 ONSC 841, [2010] O.J. No. 493 (Master) at para 20
[^7]: 572383 Ontario Inc. v. Dhunna, 1987 CarswellOnt 551 (S.C. - Mast.)