COURT FILE NO.: CV-22-00691420-0000 DATE: 20230109

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: 1061307 Ontario Inc. Plaintiff

AND:

Tong Zang a.k.a. Terri Zhang a.k.a. Tong Hua Zhang, Harrison Frank Roy, Lawrence John Roy, Trung Tran a.k.a. Thomas Tran, Royz Brothers International Inc., and Royz Brothers 3721 Inc. Defendants

BEFORE: Justice Chalmers

COUNSEL: D. Konomi for the Plaintiff

HEARD: January 5, 2023

ENDORSEMENT

Overview

[1] The Plaintiff obtained judgment against Ms. Tong Zang on June 3, 2019, in the amount of $369,072,61. The judgment remains unpaid. The Plaintiff takes the position that Ms. Zang has fraudulently tried to hide her ownership interests in various properties in an attempt to avoid her obligation to pay the judgment. The Plaintiff seeks an order granting leave to register Certificates of Pending Litigation on title of the following three properties: 517 - 7 Grenville, Toronto, 201 - 60 Montclair Ave., Toronto, and 3721 Paden Road, Ottawa.

Service of Motion

[2] This motion proceeded on an urgent basis. The cautions currently registered on the titles of the subject properties expired on January 6, 2023.

[3] Efforts were made to personally serve the responding parties. The Plaintiff filed Affidavits of Attempted Service with respect to Harrison Frank Roy, Lawrence John Roy and Thomas Tran in their personal capacity and as directors of Royz Brothers International Inc., and Royz Brothers 3721 Inc. The Royz Corporations were served by alternative service. The moving party sent the motion materials to the responding parties by e-mail on December 30, 2022. In addition, the documents were delivered to the responding parties’ real estate lawyers with the request that the documents be forwarded to their clients. Finally, the Plaintiff served Ms. Zang personally on January 4, 2023, at 3:21 p.m. I am satisfied that the responding parties had notice of the motion. The responding parties did not attempt to contact counsel for the Plaintiffs and did not attend on the motion.

[4] I order that service on the responding parties is validated. I also order that the time for service of the motion is abridged.

Background Facts

[5] The chronology is as follows:

• The Plaintiff obtained judgment against Ms. Zang on June 3, 2019;
• On November 1, 2019, Zang purchased units 505 and 519 at 7 Grenville St., Toronto with her cousin, Thomas Tran. They held the properties as tenants in common with Ms. Zang holding a 1% interest and Mr. Tran holding a 99% interest;
• The property at 505 – 7 Grenville was sold on March 2, 2020;
• The Plaintiff filed a writ of execution with respect to the judgment on August 13, 2020;
• On November 23, 2020, Ms. Zang writes a letter of complaint to the Financial Services Regulatory Authority of Ontario that an unauthorized writ had been filed with respect to her;
• On May 10, 2021, Ms. Zang and Mr. Tran transferred unit 519 - 7 Grenville Toronto to Ms. Zang’s son, Harrison Frank Roy. Mr. Roy was 20 years old at the time and a university student;
• At the time of the transfer to Mr. Roy, Ms. Zang’s lawyer signed a declaration that Ms. Zang was not the same person as on the writ that was filed in August 2020;
• Harrison Roy placed a mortgage on the 519 - 7 Grenville property based on its fair market value;
• The Plaintiff believes that Harrison Roy used the mortgage proceeds to purchase two more properties – unit 201 at 60 Montclair Ave., Toronto and 3721 Paden Road in Ottawa. The properties were purchased by the corporations, Royz Brothers International Inc. and Royz Brothers 3721 Inc. Both corporations were incorporated after the judgment was obtained. The directors of Royz corporations are Harrison Roy, and his brother, Lawrence Roy; and
• The 519 – 7 Grenville property has been listed for sale on four different occasions between September 2021 and October 2022. The Paden property was listed for sale in August 2022.

Analysis

Basic Requirements

[6] To obtain a CPL, the moving party must establish two basic requirements:

• That the action calls into question an interest in land: Courts of Justice Act, s. 103(1); and
• In the originating process, the claimant includes a claim for a CPL and provides a description of land that is sufficient to allow for registration: R. 42.01(1), (2) of the Rules of Civil Procedure.

[7] Here, the moving party is a judgment creditor. A claim that a debtor is the beneficial owner of a property as a result of an express, resulting or constructive trust, is a claim that calls into question an interest in land: West v. West, 1997 CarswellOnt 1670 (Ont. Gen. Div.) at para. 18. A claim seeking to set aside a fraudulent conveyance is also a claim in which an interest in land is called into question: Xerox Canada v. Sterling, 2006 CarswellOnt 9491 (SCJ-Master) at paras. 13-15.

[8] In the Statement of Claim, the Plaintiff advances both a claim that there is an express, resulting or constructive trust and that Ms. Zang fraudulently conveyed her interest in 519 - 7 Grenville as well as the proceeds from the sale of 505 - 7 Grenville and the mortgage proceeds from 519 - 7 Grenville. In the Statement of Claim, the Plaintiff specifically claims that a CPL be issued with respect to the 519 – 7 Grenville, and the Paden and Montclair properties. The claim includes the proper legal descriptions.

[9] I am satisfied that the two basic requirements are satisfied in this case.

Governing Test

[10] On a motion for leave to issue a CPL, the court must:

a. Determine if there is a triable issue as a threshold question; and b. Consider the equities of all matters between the parties to determine if it should exercise its discretion to allow the CPL: Can-China Real Capital Inc. v. Askare, 2021 ONSC 5043, (SCJ- Master), at para 37.

[11] The moving party takes the position that it has a reasonable chance of proving a claim that brings title to or an interest in land in question. The threshold for establishing a triable issue is low: THMR Development Inc. v. 1440254 Ontario Ltd., 2017 ONSC 5411, at para. 14.

[12] Here, the moving party has a judgment. Ms. Zang is the judgment debtor. She has not paid any part of the judgment. Since the date the judgment was issued, Ms. Zang has been involved in several real estate transactions involving her son and cousin.

[13] With respect to the 519 – 7 Grenville property, Ms. Zang held only a 1% interest in the property. It appears from the evidence that she contributed more than 1% towards the purchase of the property. Ms. Zang and Mr. Tran then transferred the property to Ms. Zang’s son. Given the fact that he was only 20 years of age and in university, there is an issue as to whether he could have paid appropriate consideration for the property. There is no evidence that would rebut the presumption that he is holding the property in trust for his mother. The Paden and Montclair properties were purchased from the proceeds of the mortgage on the 519 - 7 Grenville property. The properties were purchased by the Royz corporations which were corporations controlled by Ms. Zang’s sons.

[14] I am satisfied that the moving party has met the low threshold of establishing that it raised a triable issue as to whether Ms. Zang holds a beneficial interest in the properties by virtue of a resulting trust.

[15] The Plaintiff also claims that there was a fraudulent conveyance. There is evidence of several badges of fraud that gives rise to an inference that there was an intent to defraud the Plaintiff in transferring the 519-7 Grenville property. In particular:

• the timing of the transfers in relation to the date of the judgment;
• Ms. Zang is a judgment debtor;
• The manner in which Mr. Tran and Ms. Zang took title (99%:1%) is suspicious;
• Harrison Roy does not seem to have sufficient assets to purchase 519 - 7 Grenville;
• a misrepresentation was made in the 519 – 7 Grenville transfer that Ms. Zang was not the person referred to in the Toronto writ; and
• The effect of the transfer of 519 - 7 Grenville was to render Ms. Zang judgment proof.

[16] I am satisfied that the moving party has established that there is a triable issue as to whether the transfer of 519 - 7 Grenville was a fraudulent conveyance.

[17] Part 2 of the governing test is to review all matters as between the parties to determine whether the CPLs should be granted.

[18] The moving party has a judgment in the amount of $369,072,61. No attempts have been made to pay the judgment. The 519 - 7 Grenville property has been listed for sale on four different occasions, most recently in October 2022. The Paden property was also listed for sale. Ms. Zang has taken steps to avoid paying the judgment. She has failed to attend the examination in aid of execution.

[19] I am satisfied that if the CPL is not granted, the properties may be sold before a judicial determination can be made with respect to the Plaintiff’s claims of resulting trust and fraudulent conveyance. The responding parties did not put any evidence before the court or attend on the motion to make any submissions that they would experience any hardship or prejudice if the order was made.

[20] I find that the balance of convenience favours the Plaintiff. In reviewing all the matters as between the parties, I satisfied that the CPL should be granted.

Disposition

[21] I grant the relief sought. I order that the registrar shall issue CPLs with respect to the properties at 3721 Paden Road, Ottawa, 519 - 7 Grenville Street, Toronto, and 201 - 60 Montclair Ave., Toronto.

[22] Costs of the motion are awarded to the Plaintiff in the cause.

[23] Order to go in accordance with the draft order filed and signed by me.

Date: January 9, 2023