CITATION: 106307 v. Wang, 2022 ONSC 7288
COURT FILE NO.: CV-22-00689652-0000
DATE: 20221223
SUPERIOR COURT OF JUSTICE – ONTARIO
RE: 1061307 ONTARIO INC.
Applicant
AND:
YANG WANG and SCOTT YIFENG WENG
Respondents
BEFORE: Koehnen J.
COUNSEL: Susanne Balpataky for the applicant
Jordan Katz for Scott Yifeng Weng
R. Leigh Youd for Yang Wang
HEARD: December 19, 2022
ENDORSEMENT
[1] The applicant seeks a Norwich order against the respondents to help it enforce a judgment the applicant has against Ms. Tong Zang in the amount of $369,072.61. The respondents are two lawyers, each with his own sole practitioner office.
[2] The motion was first brought without notice, the applicant was then directed to provide notice to the respondents which it did. The respondents object to the relief sought on the grounds that the applicant does not satisfy the test for a Norwich order and that granting the order would disclose privileged information.
Factual Background
[3] The applicant obtained judgment against Zhang on June 3, 2019. On November 1, 2019 Zhang purchased units 505 and 519 at 7 Grenville St. in Toronto together with her cousin, Trung Tran. They purchased both units as tenants in common with Zhang holding a 1% interest and Tran holding a 99% interest. They sold unit 505 on March 2, 2020 at a profit that the applicant estimates at $256,000.
[4] On May 10, 2021 they transferred unit 519 to Zhang’s first son, Harrison Frank Roy who was 20 years old at the time and is a university student. The applicant says the transfer occurred at significantly less than fair market value. At the time, unit 519 was bound by a writ of execution that the applicant had registered on August 13, 2020. The lawyer who acted on the transfer,[^1] made a statement that the transferor Zhang was not the same person as the execution debtor referred to in the writ when she in fact was. It appears that Zhang falsely informed her lawyer that she was not the debtor named in the writ. In a letter of complaint to the Financial Services Regulatory Authority of Ontario Zhang had admitted that she was the Zhang referred to in the writ. Harrison Roy then placed a mortgage on the property based on its fair market value.
[5] The applicant believes that Harrison Roy then used the excess proceeds of the mortgage on unit 519 to purchase two additional properties: unit 201 at 60 Montclair Avenue in Toronto, and 3721 Paden Road in Ottawa. Those properties were purchased through Royz Brothers International Inc. and Royz Brothers 3721 Inc. (collectively the "Royz Corps") both of which were incorporated after the judgment was obtained. The directors and officers of the Royz Corps are Harrison Roy and his brother, Zhang’s second son, Lawrence John Roy. Lawrence is 24 and is a real estate salesperson in Toronto.
[6] The gist of the evidence that the applicant seeks from both lawyers is information that would indicate whether Zhang has a beneficial interest in the Grenville, Montclair and Padden properties beyond the 1% legal interest she held in the Grenville Street properties.
[7] The applicant has made several efforts to conduct an examination in aid of execution of Zhang. On three occasions, Zhang could not be served with a notice of examination because she was allegedly out of the country or evaded service. On a fourth occasion, Zhang was served with the notice of examination but failed to attend.
[8] The applicant says the respondents likely have transactional information in their files that would shed light on any beneficial interest that Zhang has in the properties beyond the 1% legal interest in the Grenville St. units.
[9] The respondent Yang Wang acted for Zhang in the transactions. The respondent Scott Weng acted for the Royz Corps.
Principles Applicable to Norwich Orders
[10] As Mason J. noted in Alberta Treasury Branches v. Leahy [^2]:
As the variety of cases in which Norwich type relief has been granted demonstrates, equity is elastic. C.F. Spry notes at page 1 of The Principles of Equitable Remedies, 5th ed., (Agincourt, ON: Carswell Co., 1997):
It is . . . of importance that the principles of equity should be widely understood and that they should not ossify, but, as in the past, should be fruitful and receive new applications where appropriate.
Equitable principles have above all a distinctive ethical quality, reflecting as they do the prevention of unconscionable conduct. They are of great width and elasticity, and are capable of direct application, as opposed to application merely by analogy, in new circumstances as they arise from time to time. Thus at law a court is required to operate largely by analogy when presented with new situations. But in equity the establishment of fiduciary duties or the application of an equitable doctrine may arise in any circumstances at all, whether or not similar circumstances have come about previously, provided that the case falls within the general principles that originated in the Court of Chancery.
[11] Norwich orders have been granted to obtain the identity of a wrongdoer, to evaluate whether a cause of action exists, to plead a known cause of action, to trace assets, or to preserve evidence or property.[^3] The flexibility , elasticity and ethical nature of equitable remedies also make a Norwich order applicable to help enforce a judgment.
[12] The test that has evolved over time for Norwich orders requires the court to address the following questions:
a. Has the applicant provided evidence sufficient to raise a bona fide or reasonable claim?
b. Was the third party from whom the information is sought involved in the events giving rise to the claim?
c. Is the third party the only practicable source for the information?
d. Can the third party be indemnified for the cost of complying with the order and any potential damages that might flow from compliance?
e. Do the interests of justice favour granting the relief sought?[^4]
[13] These criteria are met in the case before me.
[14] There is clearly a bona fide claim because the applicant has a judgment. In addition, there are several indicia of conduct designed to defeat a judgment creditor including the transfer of property to Harrison Roy at what appears to be undervalue, transfers of property to related parties in the face of a judgment that binds Zhang, the purchase of properties by Zhang’s sons through Royz Corps in circumstances where there is a reasonable claim to assert that the funds were obtained from Zhang and that the properties may be held in trust for Zhang.
[15] The respondents here were involved in the events giving rise to the claim.
[16] In my view the respondents are the only practicable source of the information. The applicant seeks information about:
a) the true ownership (both legal and beneficial) of units 505 and 519 at 7 Grenville St.;
b) information as to whether Zhang required a trust agreement about the ownership of the Grenville St. units in light of the judgment against her;
c) the source of funds for the purchases of the Grenville St units;
d) information as to whether Zhang orchestrated the purchase of the Paden property and the Montclair property with her own funds; and
e) the source of funds for the purchase of the Paden property and the Montclair property.
[17] As noted, the applicant has tried four times to conduct an examination in aid of execution of Zhang to obtain this information. It has been unable to do so because Zhang has failed to attend when served and otherwise evaded service. Her lawyer, Mr. Wang, was served with this motion and appeared through counsel. He has no instructions from Zhang to release any of the information the applicant seeks.
[18] Mr. Wang objects as well on the grounds that a new action has been commenced against Zhang, Tran and Royz Corps in relation to the transactions. He submits that production should occur in the ordinary course of that action. I do not accept that proposition. The applicant is entitled to enforce the existing judgment and use what mechanisms are available to do so. It should not have to wait for production to occur in a brand new claim when its efforts to obtain information have already been unsuccessful. There are far too many barriers an uncooperative defendant can raise to production of documents to force the applicant to rely on a new action to get information it is entitled to as of right because of its judgment.
[19] Mr. Weng acts for the Royz Corps. He submits the Norwich order is not necessary because he is not the only practical source of the information. He submits that the applicant has not tried to obtain the information from the Royz Corps directly. I do not accept that argument. The applicant served the Royz Corps with this motion. They did not respond or volunteer information. Mr. Weng advised the Royz Corps of this motion. He received no authority to disclose any information. That is an adequate effort to obtain the information from the Royz Corps directly.
[20] The test for a Norwich order requires that the respondents be the only practicable source of the information. It does not necessarily require the applicants to go through years of litigation to try to obtain documents that they have a prima facie right to because of the judgment they already have.
[21] Although as a general proposition, an applicant seeking a Norwich Order must establish that the requested relief is a “necessary measure,” this element must be considered in the context of each individual case.[^5] Moreover, although a Norwich order is exceptional, is also intended to be an elastic, flexible remedy that is rooted in ethical equitable principles to prevent unconscionable conduct.
[22] The respondents can be indemnified for the costs of complying with the Norwich order. I address that in my costs order the end of these reasons.
[23] I am also satisfied that the interests of justice favour granting a Norwich order. I return to that during my discussion of solicitor client privilege below.
[24] The respondents note that the applicant has issued a notice of action for a new claim. They submit that what the applicant seeks here is information to perfect its new claim. They cite GEA Group AG v. Flex-N-Gate Corporation, for the proposition that the applicant is not entitled to use a Norwich order to perfect its pleading in the new action. I do not accept that proposition for three reasons. First, as I have already noted, a Norwich order is, on the particular facts of this case, properly available to assist in the enforcement of the judgment. Second, the court’s statement in GEA must be understood in the context of the fact that the applicant in that case had already obtained a great deal of information in a related arbitration. In those circumstances, the Norwich order was unnecessary. Here, there was no related proceeding in which the applicant was able to obtain information. On the contrary, here we have a situation where the applicant has been denied information because of Zhang’s improper refusal to attend an examination in aid of execution. Third, a notice of action is far from a statement of claim. It is clear that one acknowledged purpose of a Norwich order is to determine whether an applicant has a claim. The fact that an applicant has enough information to put together a notice of action does not mean it has enough to put together a statement of claim that will withstand a motion to strike.
Solicitor-Client Privilege
[25] In addition to the foregoing, the respondents resist the motion on the grounds of solicitor client privilege.
[26] The applicant notes that it is not seeking information about the communication of legal advice but is seeking factual information about transactions that would otherwise be producible from either Zhang on an examination in aid of execution or from her sons or the Royz Corps in civil litigation.
[27] It is well accepted that privilege does not attach to everything in a solicitor-client relationship.[^6]
[28] Historically, the purpose of the solicitor-client privilege has been to protect disclosure of communications between lawyers and clients "made for the purpose of obtaining legal advice".[^7] The protection has traditionally been seen to protect communications, not acts or statements of fact. Actions taken or not taken by lawyers are facts and not communications.[^8] Traditionally, to attract privilege, a communication must be: (1) between a client and his or her lawyer who must be acting in a professional capacity as a lawyer; (2) given in the context of obtaining legal advice; and (3) intended to be confidential.[^9]
[29] Canadian Courts have often found that transactional information in lawyers’ files is not privileged, especially in the context of real estate files.[^10]
[30] The Supreme Court of Canada has, however, recognized that it can be difficult to demarcate the line between an act and a communication in certain circumstances (such as the issue of who pays a lawyer's bills).[^11]
[31] In this regard, the respondents rely heavily on Canada (Attorney General) v Chambre des Notaires du Québec,[^12] for the proposition that the test for the production of information from lawyers files is “absolute necessity.” That requirement must be understood in the context in which Chambre was decided.
[32] In Chambre, the Court dealt with a provision of the Income Tax Act that allowed tax authorities to compel the production of information from lawyers’ and notaries’ files. The provision stipulated that accounting records were not privileged.
[33] The Court noted that the line between facts and privileged communications may be difficult to draw and that certain facts, if disclosed, could speak volumes about a solicitor client communication.[^13] This is why, explained the court, there must be a rebuttable presumption to the effect that “all communications between client and lawyer and the information they shared would be considered prima facie confidential in nature”[^14]
[34] The Court struck the provision in Chambre because it violated section 8 of the Charter in that it permitted unreasonable search and seizure of legal advisors’ records. That finding turned on the nature of the legislation at issue in Chambre. That legislation compelled lawyers and notaries to produce information without any further process on pain of fine or imprisonment. It did not provide notice to the client. It imposed the burden of protecting privilege on legal advisers. It contained no measures to mitigate the infringement on privilege.[^15] In that context, the Court reiterated that that it was not appropriate to interfere with solicitor client privilege unless absolutely necessary to do so.[^16]
[35] In fleshing out the concept of absolute necessity, the Court noted that the information CRA sought would be available from alternative sources, such as financial institutions, that do not have as onerous an obligation to protect confidentiality and that there was no evidence that CRA had even tried to obtain the information in question by alternative means before issuing a demand to legal advisers.[^17]
[36] The circumstances here are quite different. I am not dealing here with a legislative regime that calls for mandatory disclosure but with a judicial process that calls for disclosure only after review by a court. Here, the clients were given notice and could have objected. They chose not to and chose to leave it to their lawyers to resist the request. The applicant has sought the information from other means reasonably available, an examination in aid of execution, and has been unsuccessful. Finally, a Norwich order would not compel blanket production but would compel production only of information that is not privileged. If there were a concern about privilege, that issue would be resolved not through blanket production as in Chambre, but through a process in which the court could review the information in question without disclosing it to the applicant and determine, with the benefit of submissions, whether it is privileged. That is the very sort of mitigating measure that the Supreme Court noted was absent in Chambre.
[37] 106 Corp says it does not seek privileged information. Rather, it seeks information that will enable it to trace funds and determine any possible causes of action in its efforts to collect on its judgment. This includes information about Zhang’s true beneficial and legal ownership of the Grenville, Montclair, and Paden properties.
[38] By way of example it seeks production of any trust agreements with respect to the ownership of the properties in issue, documents evidencing the origin and destination of funds arising from the purchases and sales of any of the properties. These documents would generally constitute evidence of what happened and not attract privilege.[^18]
[39] Privilege is designed to protect the freedom of parties to seek legal advice without having to disclose that advice to others. It is not intended to form a shield that protects parties from the disclosure of factual or transactional information that they refused to disclose on their own even when under a legal obligation to do so.
[40] Even if information is presumptively privileged, the presumption can be rebutted by showing that there is no reasonable possibility that disclosure of the information at issue will lead to the disclosure of confidential solicitor-client communications.[^19] Whether information is protected from disclosure cannot be determined with broad assertions of privilege. That determination must be based on an assessment of specific information or documents. If the respondents feel that some of the requests cross that line from the factual and transactional into the privileged, they can seek an attendance before me to assess the specific information that gives them concern. That will ensure that there is “no reasonable possibility” that privileged information will be disclosed.
[41] The respondents object that information like the identities of persons giving instructions, the sources of payments and the identities of payees are categories of information that could reveal privileged information. I think it more appropriate in this case to cross that bridge if and when we come to it. What the applicant really seeks is to determine the connection between Zhang and the properties. If the information in the respondents’ files discloses only that Zhang, Tran, Royz Corp and Zhang’s two sons are involved in these categories of information, no privilege is likely to be breached. That is what the public records would suggest occurred. If added parties are involved, that may lead to a more detailed inquiry.
[42] It bears repeating that the applicant already has a judgment against Zhang and is entitled to certain information that Zhang has refused to provide by refusing to attend an examination in aid of execution.
[43] The Divisional Court considered a similar issue in Ontario (Securities Commission) v. Greymac Credit Corp.[^20] where it was called upon to decide whether a lawyer could refuse to provide records to the Ontario Securities Commission on the grounds that the records were subject to solicitor-client privilege. The Court found that the information was not privileged, but amounted to evidence of acts or transactions, that were producible. In doing so the Court stated:
It may be helpful to ask in such a case whether the client himself, if he were the witness, could refuse on the ground of the solicitor-and-client privilege to disclose particulars of a transaction directed by him through his solicitor's trust account. The fact that a client has paid to, received from, or left with his solicitor a sum of money involved in a transaction is not a matter as to which the client himself could claim the privilege, because it is not a communication at all. It is an act. The solicitor-and-client privilege does not enable a client to retain anonymity in transactions in which the identity of the participants has become relevant in properly constituted proceedings.[^21]
[44] A similar approach is warranted here. That approach should deal with most of the information sought from Mr. Wang’s files. If it is information that Zhang could be asked in an examination in aid of execution, it is not privileged.
[45] I am satisfied in the foregoing circumstances that the interests of justice favour granting the order sought. The order is required only because of Zhang’s refusal to meet her legal obligations. To the extent privilege is implicated, that can be addressed in a proportionate hearing before me where I review the information without having it be disclosed to the applicant.
Conclusion
[46] For the reasons set out above I order that the respondents produce to the applicant such information in their files that is not subject to solicitor client privilege as determined by the court regarding the purchase of the Grenville Street units, unit 201 at 60 Montclair Ave. and 3721 Paden Road., Ottawa, Ontario. Such disclosure is to include information about:
a) the true ownership (both legal and beneficial) of the four properties (this could include information about the shareholdings in the Royz Corps);
b) information as to whether Zhang required a trust agreement in relation to the four properties;
c) the source of funds for the purchases of the four properties;
d) information as to whether Zhang orchestrated the purchase of the Paden Property and the Montclair Property with her own funds; and
e) the source of funds for the purchase of the four properties.
[47] To the extent that the respondents are concerned that any particular information they have in this regard would breach solicitor client privilege in light of the principle set out above, they may seek a case conference before me for the resolution of those issues in accordance with the principles set out above.
[48] The applicant seeks costs of $16,378.74 on a party and party basis. I order that the applicant is entitled to recover those costs against Zhang as part of the costs of enforcing on the judgment.
[49] The respondent Weng seeks costs on a full indemnity scale which they ask me to fix at $6,232.51. The respondent Wang seeks costs on a full indemnity scale which they ask me to fix at $7,523.86.
[50] I am mindful that the respondents themselves should not bear the costs of defending this application. I will therefore order the applicant to pay the respondent Weng his costs of $6,232.51 and order the applicant to pay the respondent Wang his costs of $7,523.86. The applicant shall have the right to collect those costs from Zhang.
[51] Going forward, any costs incurred in relation to challenges to the production of specific information on the basis of privilege or any other grounds will, prima facie, be borne by Zhang and the Royce Corps. It is their privilege to protect. If they wish to take the position that the information in question is privileged, they will have to make arrangements to pay lawyers to advance that position. That will always be subject to their right to seek costs from the applicant on any such future hearing if they are successful in asserting the right to privilege. If any such future hearing is required, the parties may contact me for a case conference to resolve those issues.
Koehnen J.
Released: December 23, 2022
[^1]: Not either of the respondents.
[^2]: Alberta Treasury Branches v. Leahy, 2000 ABQB 575; aff'd: Alberta Treasury Branches v. Ghermezian, 2002 ABCA 101 application for leave to appeal dismissed [2002] S.C.C.A. No. 235 at paras. 108-109
[^3]: GEA Group AG v. Flex-N-Gate Corporation, 2009 ONCA 619 at para. 91.
[^4]: Leahy at para. 106.
[^5]: GEA Group AG v Ventra Group Co, 2009 ONCA 619 at para 75.
[^6]: R. v. Serfaty, 2005 CanLII 18858 (ON SC), [2004] O.J. No. 1962 (SCJ) at para. 50.
[^7]: Marton v. Wood Gundy Inc., 2013 ONSC 1246 at para. 20.
[^9]: Omega Process Servers Inc. v. Grillone, 2019 ONSC 7512 at para. 40.
[^10]: Westra Law Office (Re), 2009 ABQB 391 at para. 34; Armstrong v. Penny, 2021 ONSC 6646 at para. 36; R. v. Tysowski, 1997 CarswellMan 339 (MBQB) at para. 25; Canada (Minister of National Revenue) v. Reddy, 2006 FC 277, [2006] 3 C.T.C. 17 (F.C.) at para. 14; Wirick, Re, 2005 BCSC 1821 at para. 15-16; Minister of National Revenue v. Vlug, 2006 FC 86 (F.C.) at para. 11; Omega Process Servers Inc. v. Grillone, 2019 ONSC 7512 at para. 40.
[^11]: Maranda v. Richer, 2003 SCC 67 (S.C.C.) at para. 32.
[^12]: Canada (Attorney General) v Chambre des Notaires du Québec, 2016 SCC 20
[^13]: Chambre at para. 40.
[^14]: Chambre at para. 40.
[^15]: Chambre at para. 44
[^16]: Chambre at para. 58.
[^17]: Chambre at para. 59.
[^18]: R. v. Tysowski, 1997 CarswellMan 339 (MBQB) at para. 18.
[^19]: Kaiser, Re, 2012 ONCA 838 at para. 30.
[^20]: Ontario (Securities Commission) v. Greymac Credit Corp., (1983), 1983 CanLII 1894 (ON SC), 146 D.L.R. (3d) 73 (Div Ct)
[^21]: Ibid. at para. 24.