Court File and Parties

COURT FILE NO.: CV-22-00687209-0000 DATE: 20230501

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

LI YANG (CANADA) HOLDINGS CO. LTD. and DANIEL EXECUTIVE (CANADA) HOLDINGS CORP. Plaintiffs – and – LYSR MANAGEMENT LTD., 2708042 ONTARIO INC., RINA SHINCHI, YANGGUANG LIN, ZI MU LI, RENXIANGYU ZHANG, LOCATION WAY INC., WEI ZHENG, JOHN DOE, JANE DOE and OTHER PERSONS UNKNOWN WHO HAVE CONSPIRED WITH THE NAMED DEFENDANTS Defendants

Counsel: Ford Wong, for the Plaintiffs Eric Delouya, for the Defendants, Wei Zheng and Location Way Inc. William Murray, for the Defendant, Lin Samuel Eng, for the Defendants, LYSR Management Ltd., 2708042 Ontario Inc., 2786584 Ontario Inc., Rina Shinchi and Yangguang Lin

HEARD: March 27, 2023

BEFORE: Papageorgiou J.

Decision

[1] The plaintiffs, Li Yang (Canada) Holdings Co. Ltd. (“Li Yang”) and Daniel Executive (Canada) Holdings Corp. (“DE Corp.”), move for a Mareva injunction, enjoining the named defendants and persons related to them from dissipating assets.

[2] The plaintiffs, Li Yang and DE Corp. are collectively referred to as the “Plaintiffs” hereinafter.

[3] In this case, there are three distinct groups of defendants:

i) The Lin Defendants, who are all represented by the same counsel: Yuangguang Lin (“Lin”), Rina Shinchi (“Shinchi”), 2708042 Ontario Inc. (“270Ont.”) and 2786584 Ontario Inc. (“278Ont.”);

ii) The Zheng Defendants, who are all represented by the same counsel: Wei Zheng (“Zheng”) and Location Way Inc. (“Location Way”). Location Way is a Quebec corporation used by Zheng in his work as a sales representative of Prime Leasing Inc./Location Prime Inc., (hereinafter “Prime Leasing”) which is an automobile dealership located in Quebec. Prime Leasing is not a defendant.

iii) Other Parties: Renxiangyu Zhang (“Zhang”) and Zi Mu Li (“Li”) who have not responded to this proceeding or this motion.

[4] In the recent case Quantum Dealer Financial Corporation and NextGear Capital Corporation v. Toronto Fine Cars and Leasing Inc., et al, 2023 ONCA 256, the Court of Appeal considered a summary judgment decision which involved allegations of fraud. The motions judge had referred to the defendants as a group, which the Court directed was incorrect. At para. 9, the Court directed that their liability had to be determined individually, not collectively.

[5] Therefore, although I have referenced the Defendants as three distinctive groups, when I address findings, I address each of the individuals within each group separately.

[6] The essence of the Plaintiffs’ case is that all the Defendants engaged in multiple levels of fraud. This involved borrowing money from the Plaintiffs to purchase luxury vehicles for export overseas, showing the Plaintiffs documentation which confirmed that such vehicles had been purchased, and purportedly transferring these vehicles to the Plaintiffs who had financed them pursuant to fraudulently created documents. Ultimately, the Plaintiffs are in the position now that the vehicles in question have either disappeared or cannot be sold because they are subject to security interests.

[7] I begin by dismissing the motion as against the Other Parties, Zhang and Li as there is insufficient evidence against them.

[8] The Plaintiffs initially sought to bring an urgent ex parte motion.

[9] On November 2, 2022, the triage judge determined that the motion could not proceed on an urgent ex parte basis for the reasons set out in his endorsement. He directed that some notice be provided and that the matter be scheduled for a hearing on notice at Civil Practice Court. One of his concerns was that it was not apparent that the Plaintiff, Li Yang, had the corporate authority to commence the proceeding as the Defendant, Shinchi was a Director and there was no Board Resolution authorizing the commencement of this proceeding.

[10] Thereafter, by affidavit dated November 25, 2022, Lin stated that he was advised by Shinchi, and verily believed, that she was the sole shareholder of Li Yang and did not authorize the commencement of the proceeding.

[11] On November 28, 2022, the Lin Defendants’ counsel sent the Plaintiffs an email specifically advising that Shinchi was both the sole shareholder of Li Yang as well as a Director and had not consented to the commencement of the proceeding. Therefore, it could not proceed.

[12] This information was proven to be false.

[13] The current President of Li Yang, Ms. Guanglin Zhu, provided a sworn affidavit dated November 29, 2023 which provided the following uncontradicted evidence.

[14] Li Yang was incorporated in July, 2021. At that time, Ms. Zhu and Shinchi were made Directors and Officers. Shinchi was issued shares because DE Corp., the offshore corporation from which the funds would come, had not yet determined the most tax efficient method of holding Li Yang’s shares. Shinchi never provided any payment for these shares and never contributed any money to Li Yang’s business. It was always understood that she was only holding the shares temporarily. In November 2022, once Li Yang had established bank accounts in Canada, Shinchi’s shares were transferred to Li Yang Investments, a Taiwanese corporation which is now Li Yang’s parent and sole shareholder.

[15] Ms. Zhu produced share transfer documents signed by Shinchi, as well as evidence as to the meeting where the transfer of her shares was discussed. The Plaintiffs also provided a further supporting affidavit dated November 29, 2022 as to all of this from Alex Wai, a certified public accountant who acts for the Plaintiffs and who witnessed the transfer of the shares.

[16] Li Yang’s sole shareholder, Li Yang Investments, also provided an affidavit dated November 28, 2022, stating that it had authorized the commencement of this proceeding because in the Fall of 2022, Li Yang suspected that Shinchi, who was still an Officer and Director of Li Yang, was acting fraudulently contrary to its best interests.

[17] Shinchi did not contradict any of this as she did not provide an affidavit in response to this motion. Lin also did not provide any further affidavit in response to this evidence, even on information and belief.

[18] Therefore, the concerns expressed by the triage judge regarding the authority to commence the proceeding have been addressed.

[19] Therefore, it is a reasonable inference that the Lin Defendants saw the triage judge’s statement in his endorsement regarding Shinchi’s directorship of Li Yang as a potential avenue to stop this proceeding altogether by providing, through Lin’s affidavit, and subsequently their counsel’s written letter, false assertions as to Shinchi being the sole shareholder of Li Yang. [1]

The Law

[20] As noted above, the Plaintiffs seek a Mareva injunction freezing the Defendants’ assets. The following are the criteria for a Mareva injunction:

a. A strong prima facie case. In R. v. Canadian Broadcasting Corp., 2018 SCC 5, [2018] 1 S.C.R. 196, the Court indicated that a strong prima facie case entails showing a strong likelihood on the law and evidence presented that, at trial, the applicant will be ultimately successful in proving the allegations set out in the originating notice;

b. Some grounds for believing the respondent has assets within the court’s jurisdiction, (although as I will discuss below, this is not always required);

c. Some grounds for believing that the respondent is removing, or there is a real risk that he or she is about to remove the assets from the jurisdiction: Chitel v. Rothbart, (1983) 39 O.R. (2d) 513 (C.A.); Petro-Diamond Inc. v. Verdeo Inc., 2014 ONSC 2917, 13 C.B.R. (6th) 211, at para. 25;

d. Irreparable harm; and

e. That the balance of convenience favours granting the Mareva injunction.

Facts relevant to the issue of whether the Plaintiffs have established a strong prima facie case against the various Defendants

[21] Overall, the record before me demonstrated a complicated web of parties and transactions related to the purchase and sale of luxury vehicles for export.

[22] The only Defendant who provided affidavit evidence was Lin. When Lin was cross examined, he indicated that his answers bound 270Ont., 278Ont., and LYSR.

[23] Most of the facts asserted by the Plaintiffs were uncontested and were corroborated by a great deal of Lin’s affidavit and the contents therein.

[24] Below, where the evidence is uncontradicted, I have stated the facts as facts. Where the Plaintiff’s evidence on an important issue has been corroborated, I have set out how. Where the evidence is contradicted but I have determined that the evidence permits me to prefer one side over another, I have explained why. Where Lin has provided evidence on an important issue which is neither corroborated nor contradicted, but relevant, I have set it out.

Background

[25] In or around September 2016, Lin began buying and exporting luxury cars to China. The process involved sourcing a car for export, arranging financing where required, purchasing it, paying for it, and then delivering it overseas.

[26] When cross examined, Lin explained that sometime in 2019, he learned that dealerships do not like transferring too many cars to the same parties as they wish to limit the export of cars they sell to one particular purchaser. He explained his understanding that each brand has their own allocations of the number of cars they wish to sell in different areas, regions and countries. Dealers do not want purchasers to sell vehicles they purchased in a particular area, in another area because this can impact on the market price in other areas or regions.

[27] When cross examined, Lin stated that after he learned about dealer concerns in 2019, he began purchasing cars through agents.

[28] In 2019, Lin incorporated 270Ont. which continued the same business that Lin had begun in 2016.

[29] One of the parties who he sourced cars from was Zheng.

[30] Zheng worked as a salesperson at the dealership, Prime Leasing (which is not a defendant). Lin said that Location Way would often purchase these vehicles from Prime Leasing and then sell them to 270Ont. Alternatively, Zheng would sell these vehicles in his role as salesperson for Prime Leasing.

[31] Lin explained that he had a very good relationship with Zheng (who owns the defendant Location Way) and they did a significant amount of business through LYSR and 270Ont. He estimated that 270Ont. and Location Way did $10 million in business a year.

[32] In September 2020, Zheng advised Lin that he was having difficulties sourcing vehicles for export. Zheng told Lin that his boss at Prime Leasing told him he did not want too many cars sold to one company too quickly.

[33] To accommodate Zheng, Lin and two friends incorporated 278Ont.

[34] Their arrangement was implicitly and explicitly designed to mislead dealers as to who the actual purchaser was. It also hid the fact that the vehicles would be exported to a region other than where they were sold.

[35] There is no evidence that the Plaintiffs knew anything about this issue with dealers.

[36] In December 2020, Shinchi incorporated LYSR to obtain financing for 270Ont. When cross examined, Lin explained that this was because there were issues with 270Ont.’s bank account. 270Ont. would receive wire transfers from overseas and banks “did not like this”. So, these transactions had to be handled through LYSR.

[37] In 2021, Lin met Daniel Chen of DE Corp. who wanted to finance cars for export.

[38] Beginning in early 2021, DE Corp. loaned money to 270Ont. to be used in its business of purchasing luxury cars in Canada for export overseas. Because of 270Ont.’s banking issues described above, pursuant to Lin’s request, DE Corp. began loaning money to LYSR for the same purpose. Pursuant to an agency agreement dated October 1, 2021, LYSR acted as 270Ont.’s agent for the purposes of sourcing and purchasing vehicles in Canada (the “Agency Agreement”).

[39] After approximately five months of successful cooperation in the purchase and export of vehicles overseas, in or around July 2021, Li Yang was incorporated. It would receive the funding from DE Corp. which would be passed on to LYSR for the purchase of the vehicles for export. LYSR would purchase the vehicles from Location Way, which would purchase them from Prime Leasing where Zheng worked as a salesperson.

[40] Lin explained that after these vehicles were purchased, they would be brought to a freight forwarding warehouse where they would be inspected and photographed for marketing purposes. Once they found a purchaser, the vehicles would be placed into containers for export.

[41] From July 2021 until February 2022, Li Yang entered into specific loan agreements (the “Loan Agreements”) with LYSR to fund LYSR’s luxury car export business. Li Yang understood that each vehicle would be purchased in 270Ont.’s name.

[42] Shinchi and Lin, provided personal guarantees of all funds loaned pursuant to the Loan Agreements. [2]

[43] Each of these Loan Agreements was with respect to a specific vehicle. The documents in respect of these transactions included: the signed Loan Agreement, copies of an extract of a Bill of Sale in respect of the vehicle in question which was purchased for the same amount as the amount in the Loan Agreement, a pay-out statement for amounts paid by Li Yang to LYSR, a bank receipt in respect of the transfer of the funds from Li Yang to LYSR, a wholesale dealer contract between Location Way and LYSR, and pictures of the vehicle. All these documents are in the record.

[44] Additionally, Shinchi initially gave possession of her own personal Bentley as security for the Loans.

[45] Li Yang’s affidavit evidence sets out that as the vehicle transactions appeared to be running smoothly, Shinchi requested that her personal Bentley be returned. Li Yang says that it agreed to release possession back to Shinchi, but not its security interest over her vehicle. Shinchi did not provide any direct evidence to contradict this, although when Lin was cross examined, he indicated that the loan, which Shinchi’s Bentley secured, had been repaid. He did not provide any documentary proof of this. Therefore, I accept the Plaintiffs direct evidence on this issue.

[46] As of Fall 2021, five of the transactions had been completed, such that upon sale and export of a particular vehicle, the loaned amount was repaid.

The Arrears

[47] It is undisputed that by February 2022, LYSR had failed to repay approximately eight of the Loans with a total outstanding amount of approximately $1,695,623.48 (the “Arrears”). [3] At that time Li Yang also discovered that Shinchi had exported and sold her own Bentley overseas without notice or consent from Li Yang, thereby denying Li Yang of one of its security interests. The shipment and sale of Shinchi’s Bentley overseas was confirmed by Lin when he was cross-examined.

The Cooperation Agreement

[48] Thereafter, on or about February 22, 2022, Li Yang, LYSR, DE Corp., and Keiyo Kabushikikaisha (Li Yang’s agent in Japan, “Keiyo Inc.”) entered into a written agreement (the “Cooperation Agreement”).

[49] Paragraph 1 of the Cooperation Agreement provided as follows:

1. Up to the date when this memorandum was signed, [LYSR] owed [Li Yang] CAD 1,697,106.54 in arrears (the details of arrears are listed in Schedule A); as from the date when this memorandum was signed, the real right of the four vehicles (their detailed information is listed in Schedule B) that [LYSR] had purchased and had buyers selected for is in the ownership of [Li Yang], and [LYSR] shall sell them at a price no lower than CAD 1,697,106.54, which shall be applied to repay the arrears that [LYSR] owed [Li Yang] as set out in this agreement. If the sale does not cover the arrears in full, [LYSR] shall provide other collateral or funds to repay the balance. Because [Keiyo Kabushikikaisha] [4] acts as the operating company for the import and export of vehicles in this project, all the parties acknowledge [Keiyo Kabushikikaisha] shall be the receiver of the collateral and funds owed on behalf of Li Yang.

[50] The four vehicles referenced by the Cooperation Agreement and listed in Schedule B were a 2018 Bentley, a 2020 Bentley, a 2018 Ferrari, and a 2022 McLaren (collectively the “Vehicles”).

[51] Paragraph 7 of the Cooperation Agreement provided that if any of the Four Vehicles were not sold, LYSR was required to find another purchaser within 60 days, failing which LYSR would pay for the vehicle in full.

[52] Li Yang received the following proof that the Four Vehicles had been purchased:

Vehicle	Retail Sales Agreement	Proof of full payment
2020 Bentley	Between 278Ont. and Prime Leasing (where Zheng is a salesperson) dated September 1, 2021 in the amount of $443,095	TD Bank debit memo transfer from LYSR (a Lin Defendant) to Location Way (owned by Zheng) dated September 1, 2021 in the amount of $443,095
2018 Bentley	Between 270Ont. and Prime Leasing (where Zheng is a salesperson) dated November 2, 2021 in the amount of $257,250	TD Bank debit memo transfer from LYSR (a Lin Defendant) to Location Way (owned by Zheng) dated November 24, 2021 in the amount of $257,250
2018 Ferrari	Between 270Ont. and Prime Leasing (where Zheng is a salesperson) dated November 15, 2021 in the amount of $491,489	TD Bank debit memo transfer from LYSR (a Lin Defendant) to Location Way (owned by Zheng) dated November 23, 2021 in the amount of $491,489
2022 McClaren	Between 270Ont. and Prime Leasing (where Zheng is a salesperson) dated November 11, 2021 for $465,870	TD Bank debit memo transfer from LYSR (a Lin Defendant) to Location Way (owned by Zheng) dated November 11, 2021 in the amount of $465,870

[53] Notably, the Retail Sales Agreements appear to be Prime Leasing standard form agreements. Lin said these were given to him by Zheng. Zheng did not provide an affidavit in response to anything in this motion and in particular to contradict Lin’s direct evidence that Zheng provided him these Retail Sales Agreements.

[54] Additionally, the Plaintiffs uncontradicted evidence is that they entered into written Vehicle Transfer Agreements in respect of each of the Four Vehicles which transferred ownership from LYSR to Li Yang. The only one produced in evidence relates to the 2020 Bentley dated March 18, 2022. Nevertheless, despite the fact that not all Vehicle Transfer Agreements have been produced, when cross examined, Lin admitted that pursuant to the Cooperation Agreement, the beneficial ownership of the Four Vehicles was transferred to Li Yang.

[55] Additionally, pursuant to the Cooperation Agreement, DE Corp. agreed to loan $400,000 to LYSR to develop the Japanese export market. The Plaintiff says it advanced the full amount and Lin states that only $360,000 was advanced. This difference is not material to the analysis herein. Li Yang also obtained a second mortgage (“Second Mortgage”) in the amount of $400,000 on Shinchi’s condominium pursuant to the Cooperation Agreement.

[56] After the Cooperation Agreement, Li Yang felt satisfied that things were on the right path and it entered into two further loan transactions in the amount of $148,499.51 plus $243,840.75.

[57] On or about May 15, 2022, Lin advised the Plaintiffs that he found a local purchaser for the 2022 McLaren instead of selling it in Japan. There are communications documenting this, as well as an invoice sent by Li Yang to LYSR in the amount of $465,870 which Li Yang requested payment of upon receipt. However, the Plaintiffs did not subsequently receive repayment.

[58] In or about the end of May 2022, the Plaintiffs became suspicious. Through inquiries they learned that the 2022 McLaren had never been owned by any of the Lin Defendants and that it had been sold by McLaren Toronto.

[59] In response to correspondence from the Plaintiffs, McClaren Toronto wrote advising that the 2022 McLaren had been sold to Prime Leasing on October 15, 2021 and was purchased back from them in April 2022. They advised that they had never had any communication with anyone regarding this vehicle apart from Mr. Zheng Wei and David Bilton from Prime Leasing. The correspondence from Prime Leasing in this regard has been produced.

[60] Further, the Plaintiffs learned the 2020 Bentley, 2018 Bentley, and 2018 Ferrari were all subject to Personal Property Security Act, R.S.O. 1990, c. P.10, (“PPSA”) registrations which are dated before the Cooperation Agreement.

Vehicle	Alleged Purchaser pursuant to retail sales agreements	Debtor on PPSA Registration	Secured Party on PPSA Registration	Date of Registration
2020 Bentley	278Ont.	278Ont.	Prime Leasing	Oct 5, 2021
2018 Bentley	270Ont.	Shinchi	Prime Leasing	Nov 22, 2021
2018 Ferrari	270Ont.	278Ont.	Prime Leasing	Oct 12, 2021

[61] Lin said that when the Vehicles were purchased, he did not know that there were any security interests:

• Regarding the 2020 Bentley, Lin received confirmation from Zheng that there were no liens as follows: On September 29, 2021, Zheng provided a letter, “To Whom It May Concern” on Prime Leasing letterhead confirming that the 2020 Bentley was released from all liens. Zheng also confirmed this by text and screenshot of a discharge report. These documents have been produced and are in the record
• Regarding the 2018 Bentley, Zheng told Lin that the Vehicle was free of liens. Lin provided supportive documentation he received that showed a registered security interest had been discharged.
• Regarding the McLaren, Zheng told him the car was free of liens. [5]
• Regarding the 2018 Ferrari, when cross examined, Lin stated he did not know there were liens at the time of purchase.

[62] In fact, the security registrations in respect of the McClaren and the Ferrari were made after the date of the Retail Sales Agreement in respect of them, while the registrations in respect of the other vehicles were dated before the date of the purported sale.

[63] Lin said that he found out about the security interests sometime in 2022 when he conducted searches. He noted that the registrations identified 278Ont. and Shinchi as the debtors even though they were not the purchasers. He contacted Zheng to ask how this had happened. Zheng told him that the security interests would be removed immediately, but this never happened. Lin expressed his belief that Zheng did not make the full payments to Prime Leasing.

[64] I note that had any of the Lin Defendants or the Plaintiffs conducted searches pursuant to the PPSA, prior to entering into the Cooperation Agreement, they would have seen these registrations.

[65] This failure to conduct these searches would constitute some defence to a negligence claim, but the Plaintiffs’ claim is not in negligence. It is based upon fraud. I have not been shown any caselaw that says that a failure to conduct due diligence is a defence to the types of allegations made by the Plaintiffs, if proven.

[66] On August 30, 2022, Plaintiffs’ counsel emailed Prime Leasing requesting further information in respect of the 2020 Bentley, the 2018 Bentley and the 2018 Ferrari and in particular, the security interest registered by Prime Leasing.

[67] Zheng spoke to Plaintiffs’ counsel on behalf of Prime Leasing.

[68] On September 7, 2022, Plaintiffs’ counsel emailed Prime Leasing and Zheng confirming their conversation wherein Zheng advised that the cars were leased and were owned by Prime Leasing. This is inconsistent with the Retail Sales Agreements which were provided by Zheng and shown to the Plaintiffs.

[69] Plaintiffs’ counsel provided Zheng and Prime Leasing copies of the Retail Sales Agreements as well as the TD Debit Memo Transfers provided by Lin which showed that the Vehicles had been paid for.

[70] On September 7, 2022, Zheng sent Plaintiffs’ counsel the following email:

I need make those BOS, and the money is send to location way, car is belong to prime leasing. So everything is fake.

[71] On September 8, 2022, Plaintiffs’ counsel sent a further email to Zheng which provided as follows:

I understand from your email that someone made you make those BOS (Bill of Sales) and they are fake. 2786584 Ontario Inc. appears on the retail car sales contract for the 2020 Bentley and 2708042 Ontario Inc. appears on the retail car sales contracts for the 2018 Bentley and the 2018 Ferrari.

Who made you make those BOS? Was it representatives of 2786584 Ontario Inc. and 2708042 Ontario Inc., or someone else and if so who? If the BOS were faked, then how did 2786584 Ontario Inc and 2708042 Ontario Inc. actually get the cars? If they were legitimately leased, please send us any related lease and financing documents.

As you pointed out, the money was sent to Location Way but the car belongs to Prime Leasing. Where did the money go after it was sent by LYSR and received by Location Way? Did the money go to Prime Leasing and if not then where did the money ultimately go? Who owns and controls Location Way?

[72] On September 8, 2022, Zheng responded as follows:

No one make me the BOS, they make to you not me. You have to ask your guy. Those are still on lease, and never belong to 2708 inc.

[73] Zheng’s counsel argued that these emails should be interpreted to mean that the Retail Sales Agreements were fakes and that the cars are leased. I query instead, if that is the case, why is there no evidence from Zheng?

[74] As well, through his answers to undertakings, Lin admitted that the TD Deposit Memo Transfers shown to the Plaintiffs proving that they had paid Location Way for the Vehicles in full, were reversed. He explained:

When [Lin] and [Zheng] agreed that 2786 would purchase the Bentley Continental, they agreed that payments would be made in installments, as cashflow allowed. They agreed that the total of payments would be the contract purchase price, plus an additional amount for a commission to [Zheng]. Installment payments were to be made to [Zheng], Location Way or to someone [Zheng] directed. However, when the contract was prepared, [Zheng] instructed [Lin] to process a payment for the full purchase price under the contract, then cancel the payment, but provide the transaction receipt for the payment to [Zheng] so that Location Way would not have to record the contract as a conditional sale, and [278Ont] would be able to receive the car immediately. When [Lin] was asked to provide receipt for payment for the Bentley Continental to Li Yang [Lin] believed that the appropriate receipt to provide was the receipt that [Zheng] had requested, because that was the receipt that matched the exact contract price (without commission) and was the receipt that Location Way had in its records associated directly with the vehicle.

[75] Lin’s evidence was the same with respect to each of the Four Vehicles.

[76] There is no evidence that the Plaintiffs were ever advised of this or shown the transaction which reversed the full payment made from LYSR to Location Way.

[77] I add that the documentary proof of payment which Lin attached to his affidavit in respect of each of these Vehicles (which I have set out in a schedule attached) included a variety of payments by way of Debit Memo Transfers from LYSR to Location Way or “WEIZ” (which I infer stand for Wei Zheng), checks from LYSR to Zheng and even Prime Leasing. These payments begin in July 2021 and end at the latest on March 30, 2022.

[78] It is notable that all of the Debit Memo Transfers which Lin gave to Li Yang to demonstrate that the Vehicles had been paid for were all dated the same day or around the same day as the date of the Retail Sales Agreements which were dated between September 2021 and November 2021. Therefore, Lin’s explanation makes no sense and even if he ultimately paid full price for the Vehicles, at least some of those payments postdated the Debit Memo Transfers he showed to Li Yang.

[79] Therefore, Lin showed the Plaintiffs false documents which purported to show full payment for each Vehicle which did not accurately demonstrate the transaction which had taken place or the fact that payments were made by way of instalments, some of which continued to be made after the date of the Cooperation Agreement.

[80] In that regard, showing the Plaintiffs the payment in full was consistent with a sale, whereas showing a series of instalment payments could be consistent with a conditional sale and would have put the Plaintiffs on notice of the possibility of a security interest in favour of the dealership or someone else.

[81] I add that Lin had provided two Motion records which were uploaded to Caselines which were identical. These documents were not at all visible on one of his Motion Records due to poor photocopying but most were visible on the one found at Tab 3. As well, most of the amounts Lin says he paid and which are supported by these records do add up to the approximate amount which he says he paid for the Vehicles. In each case there was one document which was not legible and it may be the reason for the difference. The notable exception is the 2018 Ferrari which had a price of $491,400 on the Retail Sales Agreement and for which he only provided documentary proof of payment in the amount of $260,000.

Where are the Vehicles Now?

[82] In his affidavit and when cross examined, Lin indicated that he learned from the freight forwarding warehouse, where the McLaren and the Ferrari had been delivered and were stored, that they had been picked up by Location Way.

[83] The two Bentleys were shipped to Japan. However, because of the security interests in favour of Prime Leasing, even though the shipper is related to the Plaintiffs, it will not release them. They are currently sitting in a container and the Plaintiffs are paying for their storage and preservation.

Prima Facie Case as against the Lin Defendants

[84] The Plaintiffs have alleged the following causes of action: breach of contract, fraud, fraudulent misrepresentation, conspiracy, unjust enrichment, knowing assistance and knowing receipt, all based upon the above facts.

[85] I requested subsequent submissions based upon the Court of Appeal decision in Quantum Dealer Financial Corporation, referenced above which was released after the motion was argued and involved the torts of knowing assistance and knowing receipt. I am satisfied that the Plaintiffs have not demonstrated a strong prima facie case in respect of these torts because the Plaintiffs have not established a relevant fiduciary relationship at the time of the events in question or the existence of trust property.

[86] However, I am satisfied that the Plaintiffs have established a strong prima facie case of breach of contract, fraudulent misrepresentation, fraud and conspiracy. I need not address unjust enrichment, as a result.

Breach of Contract as against the Lin Defendants

[87] The Plaintiffs have provided evidence that there are outstanding Loans made by Li Yang to LYSR in the amount of $3,200,000. This consists of the $1,697,106.57 acknowledged in the Cooperation Agreement, two further loans made afterward in the amount of $148,499.51 plus $243,840.75, the $400,000 additional funds advanced pursuant to the Cooperation Agreement, as well as interest and other storage fees. This has not been contradicted, except that Lin says that the $400,000 was never advanced but a different $360,000 was advanced. This difference is not material.

[88] There is no evidence that the Loans have been repaid.

[89] LYSR’s only defence is a mostly bald allegation that DE Corp. set out in Lin’s evidence that DE Corp had previously agreed to inject $6.2 million into Li Yang to facilitate the continuous purchase of cars and failed to do so. Although Lin does not say so specifically, I am inferring that he is alleging his own breach of contract.

[90] The only supporting documentation of this alleged agreement is a WeChat conversation between Sam Tseng, the nephew of the owner of DE Corp., in September 2021 where Sam Tseng discusses injecting more money. However, this message does not reference any amount. There are insufficient details before me to conclude that this conversation was even about Li Yang.

[91] I add that even if there were discussions about injecting more money into Li Yang, Lin did not allege that the agreement then required Li Yang to lend further moneys using the $6.1 million injection. All of the transactions before me between Li Yang and LYSR involved specific loan agreements related to specific vehicles for specific amounts. It is simply not believable that there would be any agreement regarding any required injection into Li Yang, coupled with a requirement that it advance such funds, without any supporting written agreements.

[92] The Cooperation Agreement entered into in February 2022 makes no mention of this alleged prior agreement.

[93] In all the circumstances, I do not find Lin’s argument about the alleged broken promise to inject $6.2 million into Li Yang credible as a defence to the outstanding loan amounts payable to Li Yang or the guarantees in respect of these.

[94] Therefore, the Plaintiffs have established a strong prima facie case as against LYSR as to breach of contract in respect of the Loan Agreements. LYSR acted as 270Ont.’s agent; therefore the Plaintiffs have also established a prima facie case of breach of contract as against 270Ont. They have also established a prima facie case against Lin and Shinchi as to breach of their guarantees of the Loans.

Fraudulent Misrepresentation

[95] Lin incorporated 270Ont., was a Director upon incorporation and remained a Director, President and Officer as of July 2022. Shinchi incorporated LYSR and was its initial Director. Recent filings indicate that Lin is now a Director. The filings of 278Ont. do not show Lin or Shinchi as directors of 278Ont., but Lin’s evidence is that he incorporated 278Ont. together with friends in order to facilitate the buying and selling of luxury vehicles because of dealer concerns. Pursuant to a Trust Agreement dated December 8, 2020, Lin is a beneficial owner of 50 % of the shares in 278Ont. As well, Lin is an authorized signing officer of 278Ont.

[96] The elements of the tort of fraudulent misrepresentation are as follows: (1) the defendant makes a false statement; (2) the defendant knew that the statement was false, or was indifferent to its truth or falsity; (3) the defendant had the intention to deceive the plaintiff; (4) the false statement was material in that it induced the plaintiff to act; and (5) the plaintiff suffered damages as a result of so acting: see Fiorillo v. Krispy Kreme Doughnuts Inc., 2009 ONSC 29902, 98 O.R. (3d) 103 (S.C.), at paras. 66-67.

[97] I am satisfied that the Plaintiffs have established a strong prima facie case against Lin, and LYSR in respect of fraudulent misrepresentation in respect of the following:

a) As part of the Cooperation Agreement between LYSR and Li Yang, Lin forwarded bank transfer documentation showing that the purchase price set out in the Retail Sales Agreements in respect of each Vehicle had been paid in full in a single transfer. However, this was not the case as Lin admitted during his cross-examination that the payment transactions which were shown to Li Yang were reversed.

b) And as set out above, the Debit Memo Payments shown to Li Yang completely misrepresented the nature of the payments which were made for the Vehicles. In fact, his affidavit showed that the Vehicles were paid by way of instalments, many of which occurred after the date of the purported retail sale agreements, and some even after the Cooperation Agreement in February 2022. The only logical and reasonable inference is that these transactions were made in this way and shown to the Plaintiffs to deliberately conceal the true nature of the transactions.

c) Had Li Yang seen the instalment payments, and in particular the fact that full payments had not been made as of the Cooperation Agreement, it would have been put on notice as to a potential security interest and may have conducted a search;

d) Li Yang relied upon the misrepresentation by entering into the Cooperation Agreement, advancing additional funds pursuant to it, and later entering into further loan agreements believing that all was running well. It also caused Li Yang to delay the commencement of these proceedings.

[98] LYSR is liable for the fraudulent misrepresentations made by its Officer or Director, Lin, in respect of the above. Even though Lin was an Officer or Director when he made these misrepresentations, there is a strong prima facie case that he is liable for committing the same tort since he is the one who provided all of the above fraudulent misrepresentations: see Taylor v. Chair Source, 2023 ONSC 2011.

[99] Finally, in Yaiguaje v. Chevron, 2018 ONCA 472, 141 O.R. (3d) 1, the Court of Appeal confirmed that the court can pierce the corporate veil: a) when it can be established that the company is an authorized agent of its controllers or members; and b) where the court is satisfied that a company is a “mere façade” concealing the true facts.

[100] The uncontradicted evidence is that LYSR acted as 270Ont.’s agent because, for reasons not yet disclosed, 270Ont.’s bankers were asking questions about deposits into 270Ont.’s bank account, and so LYSR was established to facilitate the receipt of money. There is a specific agency agreement between LYSR and 270Ont. Therefore there is a strong prima facie case that 270Ont. is also liable for the fraudulent misrepresentation made by LYSR and Lin by virtue of LYSR acting as an authorized agent of 270Ont.

[101] I am also satisfied that to the extent necessary, there is a sufficiently strong prima facie case that 270Ont, 278Ont and LYSR were mere facades concealing the true facts which justifies piercing the corporate veil to hold Lin personally liable for their actions.

[102] Lin’s evidence is that until 2019 he personally purchased vehicles for export. In 2019 he learned that dealers did not like to sell to the same party as they were concerned about vehicles being resold in another market. Shortly afterward he incorporated 270Ont. When he ran into further difficulties, at the request of Zheng, he incorporated 278Ont for the same purpose.

[103] Therefore, the primary purpose for purchasing vehicles through this complicated web of corporations was to conceal from the dealers who the actual purchaser was, the fact that the vehicles would be exported to another market, and also to conceal from the bank who the party receiving financing was. On this record, there is a strong prima facie case that these corporations were mere facades concealing true facts. There is also a sufficiently strong prima facie case that Lin was in complete control of these corporations which did his bidding as to which corporation would purchase the vehicles (it was 270Ont or 278Ont), which corporation would pay for them (that was LYSR) who they would be sold to, and which corporation would receive funds (LYSR because the bank had concerns about 270Ont). Lin had full control over the only things this record shows that these corporations did.

[104] I am satisfied that the Plaintiffs have established a strong prima facie case as against the Lin Defendants for the above reasons.

Prima Facie Case Regarding the Zheng Defendants

[105] I will again deal with each of the Zheng Defendants separately after I set out the facts that demonstrate fraud.

[106] I begin with the proposition that to defraud someone is to deprive a person dishonestly of something which is theirs, or of something to which they is or would be entitled, but for the perpetration of the fraud: Mary Young v. Masonry Doctors (3 March 2023), Toronto, 23-00695711 (Ont. S.C.), at para. 44 citing Scott v. Commissioner of Police for the Metropolis, [1974] 3 All E.R. 1032 (H.L.).

Purchase of the Vehicles and Zheng confirming there were no liens

[107] With respect to the Four Vehicles, Lin provided uncontradicted evidence that the Vehicles were purchased by 270Ont and 278Ont from Prime Leasing (where Zheng worked as a salesman) and he produced Retail Sales Agreements for each.

[108] Lin’s evidence was that he dealt with Zheng who provided him with these signed Retail Sales Agreements, with Zheng confirming that the Vehicles were free of liens. Lin provided supporting documentation. In the case of the 2020 Bentley, Zheng provided a letter from Prime Leasing dated September 29, 2021 confirming that it was released from all liens as well as a screenshot of a discharge report and this evidence is in the record. In the case of the 2018 Bentley, Zheng showed Lin a document that showed that a registered security interest had been discharged. However, this was not true.

Payment by LYSR for the Vehicles

[109] Lin provided documentary evidence of significant payments made over time for the Vehicles as stated above.

Location Way Removes the Cars from the Freight Forwarders

[110] Finally, Lin gave evidence that he was advised that Location Way picked up the Ferrari and the McLaren from the freight forwarders.

[111] For reasons I have cited above, I do have concerns about Lin’s credibility, but the facts he claims as against Zheng and Location Way are supported by documentary evidence. Zheng and Location Way chose not to cross examine Lin on any of this or provide any evidence. The only explanation from Zheng are two emails he sent to the Plaintiffs’ lawyer, which Zheng’s lawyer says should be interpreted as Zheng taking the position that the Retail Sales Agreements were fakes and that these Vehicles were leased. If that were the case, the Zheng Defendants could have filed evidence swearing to this fact or to dispute any of the facts alleged. Zheng still works at Prime Leasing; if these Vehicles were actually leased and not sold, it would have been a simple thing to file a short affidavit attaching the lease agreements and disputing everything Lin said.

[112] As well, there are enough payments for which Lin provided documentary proof that total such significant sums over a short period of time, that this could not possibly have been a lease arrangement as suggested by Zheng in his email. If the payments Lin provided evidence of were not in fact made to Zheng or Location Way, again, it would have been a simple matter for them to provide evidence denying the fact. There is no explanation from Zheng or Location Way for any the payments which were Lin said were made to them in respect of the Vehicles, and not even a bald denial.

[113] I would also have expected that Zheng, as a salesperson at Prime Leasing, would have advised Prime Leasing of this proceeding and that they would have attended claiming the return of the two Bentley’s which are sitting in storage containers. It is odd that they did not.

[114] Thus, despite my concerns about Lin’s overall credibility, I accept the evidence which Lin has given against Zheng and Location Way which has documentary support and which has not been contradicted.

[115] I conclude that there is a strong prima facie case that Zheng committed fraud by providing Retail Sales Agreements showing a sale of the Vehicles from Prime Leasing to 270Ont and 278Ont which it now appears were never actually sold by Prime Leasing. He provided this false documentation as well as false documentation regarding security interests.

[116] There is a strong prima facie case that Location Way and Zheng committed fraud in that they received a series of payments for the Vehicles which payments were apparently never made to Prime Leasing with the exception of one check which was directly written to Prime Leasing and which is noted in Schedule A. And then Location Way picked up two of the Vehicles from the freight forwarding warehouse even though they had purported to sell them and received significant payment towards the purchase price.

[117] In my view there is sufficient evidence to establish a strong prima facie case that Location Way and Zheng conspired to defraud the Lin Defendants as well as the Plaintiffs. Given each of their conduct above, I infer that Location Way and Zheng had an agreement to defraud the Lin Defendants and ultimately the Plaintiffs. I infer an agreement because there would be no reason for each of them to engage in their respective roles with respect to the exact same Vehicles, but for an agreement between them. The unlawful means used were the creation of the false Retail Sales Agreements and misrepresentations by Zheng as to the security interests. The unlawful means used by Location Way (and Zheng) was the receipt of payments for the Vehicles which were mostly never passed on to Prime Leasing, and the subsequent removal of the Vehicles from the freight forwarding warehouse.

[118] Regarding actual or constructive knowledge that the conduct was likely to cause damage to Li Yang, the Zheng Defendants’ main argument is since they did not have direct dealings with the Li Yang there is no cause of action against them which can be asserted. I disagree. Lin said that he and Zheng were doing approximately $10 million in business a year (which I infer included business with Location Way given Lin’s evidence about how the business generally ran.)

[119] Thus, the Zheng Defendants implicitly knew that these Vehicles were being purchased for sale to third parties and as such, that third parties could be harmed by their actions in providing false Retail Sales Agreements and in failing to remit payment for the Vehicles to Prime Leasing. Li Yang was one intended beneficial owner of the Vehicles pursuant to the Cooperation Agreement. The Plaintiffs suffered damage by losing access to the Vehicles, to which they were entitled pursuant to the Cooperation Agreement, or to which they would have been entitled if the transactions had been actually implemented, and were not false. See Agribrands Purina Canada Inc. v. Kasmekas, 2011 ONCA 460 at paras 26, 33 for the elements of conspiracy.

[120] In my view, innocent downstream entities who are victims of fraud do not need to know or have direct dealings with the fraudster. Most complex frauds would be impenetrable if that were the case. Consider the case of a fraudster who en masse is able to penetrate and withdraw funds from the accounts of thousands of bank customers based upon false payment pre-authorizations generated by an algorithm. They do not know the parties individually or have direct dealings with them, but I have no doubt that those account holders would have a cause of action against the fraudster, if found.

Assets in the Jurisdiction

[121] The Plaintiffs have provided the following evidence of assets in Ontario belonging to the Defendants:

Lin

• Ownership of shares in 270Ont., 278Ont., LYSR
• Registered liens against Location Way and/or Prime Leasing, with a total value of approximately $6 million

Shinchi

• 311 Bay Street, Suite 4704, Toronto, Ontario M5H 4G5
• National Bank (Institution number: 006, Branch Transit number: 14171, Account number: XXX604)

270Ont.

• Royal Bank of Canada (Account No. XXXXX-XXX842)

LYSR

• Royal Bank of Canada (Account No. XXXXX-XXX651)
• The Toronto Dominion Bank of Canada (Account No. XXXXX-XXX004)

278Ont.

• Bank of Montreal (Financial institution: 001, Branch Transit number: 04592, Account number: XXX-569)
• TD Bank (Financial Institution: 004, Branch Transit number: 19762, Account number: XXX4618)

Location Way

• TD Canada Trust (Account No. XXXXX-XXX3146)

Zheng

• Ownership of Location Way

[122] While the Plaintiffs have not shown that the Zheng Defendants have assets in Ontario, the court’s power to issue a Mareva injunction is not tied to such a requirement. In SEC Litigation Trust (Trustee of) v. Chan, 2017 ONSC 1815, 137 O.R. (3d) 382, at paras. 27-29, and 33, the Divisional Court noted that a Mareva injunction, being an equitable remedy, evolves as facts and circumstances merit and the fundamental question in each case is whether the granting of an injunction is just and equitable. The Divisional Court relied on s. 101 of the Courts of Justice Act, R.S.O. 1990, c. C.43, in affirming a motion judge’s decision to grant a Mareva injunction where the defendant had no assets in Ontario.

[123] The circumstances of this case are particularly egregious. The uncontradicted facts are that the Zheng Defendants and the Lin Defendants orchestrated a series of complicated transactions which misrepresented the true nature of what was taking place, such that the Plaintiffs have been misled and deprived of something they negotiated the entitlement to.

Risk of Removal of Assets From the Jurisdiction

[124] A court can infer from a defendant’s fraudulent conduct, a sufficient risk of disposition of his or her assets to render the possibility of future tracing of assets remote and to infer that the defendant will thereby frustrate the enforcement of any judgment that the plaintiff may obtain: 663309 Ontario Inc. v. Bauman, 2000 ONSC 22640, 190 D.L.R. (4th) 491, at para. 41 (Ont. S.C.). See also: Mary Young v. Masonry Doctors et. Al citing Riar v. Khudal, 2020 ONSC 6238; Electromart (Ontario) Inc. v. Fabianiak, 2016 ONSC 5266, Sibley & Associates LP v. Ross, 2011 ONSC 2951, 106 O.R. (3d) 494.

[125] In my view, the elaborate scheme orchestrated by the Lin Defendants and the Zheng Defendants, for which there is a strong prima facie case, is sufficient to establish that there is a risk of removal of assets from Ontario or from wherever they may be.

[126] Fraud, by its nature, is often structured with multiple layers of corporations and individuals so as to shield and protect those perpetrating them. In this case, there is sufficient evidence to establish a strong prima facie case that this is what the Defendants have done, particularly since they have provided little evidence to dispute anything alleged by the Plaintiffs.

[127] I do not accept Lin’s evidence that he and Shinchi have no intention to dissipate their assets.

[128] The uncontradicted evidence is that Shinchi and Lin are not Canadian residents and have advised the Plaintiffs that if their legal troubles continued, they would simply leave the jurisdiction. They have abandoned their previous home and Lin would not even give his address when he was cross examined claiming that this was for his own personal protection as people were following him. As well, the uncontradicted evidence with respect to Shinchi is that she gave possession of her own personal Bentley as security for the Loans, that when the Loans were running well, the Plaintiffs returned possession to her, but did not give up their security interest. Shinchi then exported this car and sold it without notice or consent. Therefore, Shinchi has already shown that she is prepared to remove assets from the jurisdiction.

[129] As well, Shinchi and Lin have already provided false evidence as to Shinchi’s directorship and shareholding in Li Yang, which I infer was an attempt to forceclose any proceeding against them and this Mareva injunction motion in particular. I am also taking this into account in determining that there is a risk of dissipation if the Order is not made as they appear prepared to engage in dishonesty to protect themselves.

[130] With respect to Location Way, the evidence is that it has already taken two of the Vehicles, after having received at least significant payment for them.

[131] Zheng’s actions, by providing what are apparently false Retail Sales Agreements and false information as to security interests, creates significant concerns as to what he may do with his assets.

[132] In all the circumstances, taking into account the findings I have made in respect of the prima facie case, there is sufficient evidence to be concerned that all of these Defendants will dissipate their assets.

Irreparable Harm and Balance of Convenience

[133] In my view, irreparable harm has been established in that there may not be any assets anywhere for the Plaintiffs to realize upon if the Order is not granted, other than the two vehicles in the storage containers.

[134] The McClaren is gone and I add that the record of payments which Lin attached to his affidavit show that it was almost completely paid; there is one illegible transfer which may make up the difference. Location Way has repossessed the Ferrari. The other two vehicles have been shipped to Japan, but they cannot be sold because there is a PPSA registration in respect of them. They are sitting in a container and the Plaintiffs are paying storage fees to keep them safe but they cannot be returned or otherwise accessed.

[135] With respect to the condominium over which the Plaintiffs have a mortgage, it appears it is being sold under Power of Sale, and it does not appear that there will be any remaining equity left over for the Plaintiffs.

[136] The Defendants argued that the Plaintiffs already have security. However, even if there was $400,000 in equity in the condominium over which the Plaintiffs have a second mortgage, and even if the Plaintiffs could have resort to the 2020 and 2018 Bentleys in the storage containers whose value totals $1,000,000 this falls far short of the amount which the Plaintiffs have demonstrated they are owed which is more than $3,000,000.

[137] Regarding the harm to the Defendants, Lin’s lawyer submitted that Lin does significant import/export business and this will harm his business although no actual details of his business were provided to support that assertion. Zheng and Location Way provided no evidence as to harm, although one can presume it will affect them all.

[138] In my view, the balance of convenience favours the Plaintiffs. The harm to the Plaintiffs of not granting the injunction would be irreparable for the reasons set out above, in particular the strong risk that these parties would place their assets out of reach rendering any judgment unenforceable.

[139] To address the potential harm to the Defendants, I will be providing that the parties may return before me on an urgent basis to provide evidence and argument as to living expenses which they should be allowed to access. As well, once the Mareva injunction is complied with, and they have provided information as to their assets, they may return before me on an urgent basis to restrict the Mareva injunction’s application to the amount of money or assets which the Plaintiffs’ strong prima facie case demonstrates they are owed as against them, taking into account any security held.

[140] In the case of Zheng and Location Way, it would be the value of the two Vehicles taken by Location Way, which is approximately $1,000,000.

[141] With respect to the Lin Defendants, I will hear arguments on what that amount should be, although my conclusion at this point is that it should be for the full amount for which the Plaintiffs have established a strong prima facie case of being owed, $3,000,000, minus the two Vehicles in the storage container which would be approximately $2,000,000.

[142] The Defendants can minimize any potential harm to them by immediately complying and disclosing their assets so that the Mareva injunction can be amended and restricted as I have suggested. I will make myself available on short notice to address these issues.

[143] I wish to make a few additional points addressing some arguments which were made.

Delay

[144] The Defendants have also collectively argued that I should be influenced by the fact that it took some time for the Plaintiffs to bring their motion. In this case, the Plaintiffs became aware of the facts they assert sometime in June 2022 and did not seek to bring the Mareva injunction until September 2022.

[145] Complicated frauds are difficult to analyze and prove. The Plaintiffs took the time to prepare their materials and they should not be penalized by a court of equity for having taken the time to put together a thorough and compelling case. The delay was in part because they were not permitted to move ex parte and then the time it took to exchange materials and conduct cross examinations.

[146] In any event, no one referred me to any case law which says that a Mareva injunction is contingent on moving quickly.

Quebec Litigation: Canamax Holding Inc. v. Nonghauo Freight et al, 2022 FC 1416 (“Canamax”)

[147] During his cross examination, Lin advised that he had commenced litigation against the Zheng Defendants in Quebec based on the allegations of fraud, though he did not provide a copy of the pleadings as undertaken.

[148] The Plaintiffs conducted litigation searches in Quebec and did not find records of any litigation concerning the Four Vehicles, contrary to Lin’s allegations. What they did find is decisions made in respect of another party, Canamax Holding Inc. (“Canamax”), who brought proceedings against Location Way, Zheng, 270Ont., and others, making similar allegations to the Plaintiffs in this case that it paid for a luxury vehicle for export, was shown title documents, but when shipped, the vehicle was re-routed and not to Canamax.

[149] I note that it was actually the Zheng Defendants who filed this decision on Caselines and made reference to it. They argued these cases heavily because the Quebec Court did not grant an injunction. They argued that I should be persuaded by the Judge’s conclusions in Canamax. I note as well that the Zheng Defendants were represented by the same counsel in the Canamax case and also did not file any affidavit evidence there either.

[150] There are important differences between these cases. First, there is no evidence that the materials filed by the plaintiff in Canamax were as comprehensive. Further, the moving party in the Canamax case, did not frame its case as a Mareva injunction but as a regular injunction based upon Canamax being the rightful title holder and seeking an Order that the vehicle be returned to Canamax. The Court found that Canamax had established a substantial issue to be tried, but no irreparable harm because it could be paid in damages. The main difference between the two cases is that Canamax did not seek to prove fraud or allege a risk of dissipation of assets and a Mareva injunction was not sought.

[151] Understanding the Canamax Litigation is not required to establish the Plaintiffs’ case, but it does show that the Plaintiffs are not the only ones caught in the crosshairs of the Lin and Zheng Defendants’ business practices.

[152] I add that there may likely be more to this than meets the eye in terms of a possible coordination between the Zheng Defendants and the Lin Defendants because the Retail Sale Agreements were between 270Ont or 278Ont and Prime Leasing, yet the payments were from LYSR to Location Way and Zheng. And then the security registrations do not reflect any of these transactions either. However, whatever that is must be left for another day. At this stage, there is enough evidence given by Lin himself against the Lin Defendants as well as against the Zheng Defendants to establish a strong prima facie case against each member as I have found.

[153] The parties may make submissions on costs as follows: a) The Plaintiffs within 7 days; b) the Defendants within 7 days thereafter.

[154] Order to go in the form attached and as signed by me.

Justice Papageorgiou

Schedule A

2020 Bentley

• Date of Retail Sale Agreement: Sept 1, 2021 for $443,095
• Payments:
  • July 22, 2021: TD Debit Memo Transfer LYSR to Location Way supported by Deposit Account Financial Inquiry - $91,350
  • July 20, 2021: TD Debit Memo Transfer LYSR to Location Way supported by a Deposit Account History - $15,980.42
  • July 20, 2021: There are other amounts also shown in the amount of $64,000 and $20,000 but the recipient is “PEIH” who is unknown so I have not included these
  • Aug 9, 2021: TD Debit Memo Transfer LYSR to WEIZ (I infer this is Wei Zheng based upon Lin’s affidavit attaching these as payment to Zheng or Location Way for the Vehicles) - $49,000
  • Aug 17, 2021: Cheque to Zheng supported by a Deposit Account History - $17,400
  • Aug 23, 2021: Cheque to Zheng supported by a Deposit Account History - $5,000
  • Sept 1, 2021: Cheque to Zheng supported by a Deposit Account History - $24,000
  • Sept 24, 2021: TD Debit Memo Transfer LYSR to Location Way supported by a Deposit Account History - $5,250 $6,000
  • Sept 1, 2021: Check to Prime Leasing supported by a CIBC transaction record - $140,497.42
• Total: If the amounts to PEIH are included the total is $438,477 - $354,477.84

2018 Bentley

• Date of Retail Sale Agreement: Nov 2, 2021 for $257,250
• Payments:
  • Nov 5, 2021: TD Debit Memo Transfer LYSR to WEIZ (Wei Zheng) supported by Deposit Account History - $50,000
  • Nov 9, 2021: TD Debit Memo Transfer LYSR to WEIZ supported by Deposit Account History - $24,432
  • Dec 6, 2021: TD Debit Memo Transfer LYSR to Location Way supported by Deposit Account History - $40,000
  • Dec 3, 2021: TD Debit Memo Transfer LYSR to Location Way supported by Deposit Account History - $50,000
  • Dec 3, 2021: TD Debit Memo Transfer to Location Way supported by Deposit Account History - $77,919.18
  • Jan 10, 2022: TD Debit Memo Transfer - illegible
  • Jan 1, 2022: Check to Zhongshi (not included because no information as to who Zhongshi is) - $30,000
  • TD Debit Memo Transfer LYSR to Location Way supported by Deposit Account History - $6,000
• Total of legible amounts: $248,351.18

2018 Ferrari

• Date of Retail Sale Agreement: Nov 15, 2021 for $491,400
• Payments:
  • Nov 2, 2021: Debit Memo Transfer LYSR to Location Way - $260,000

2022 McLaren

• Date of Retail Sale Agreement: Nov 11, 2021 for $465,870
• Payments:
  • Dec 6, 2021: TD Debit Memo Transfer LYSR to Location Way - $40,000
  • Dec 16, 2021: TD Debit Memo Transfer LYSR to WEIZ - $61,883
  • March 17, 2022: Check to Location way - $200,000
  • March 30, 2022: TD Debit Memo transfer Shinchi to WEIZ - $20,000
  • TD Debit memo transfer LYSR to Zheng - illegible
  • May 13, 2022: TD Debit memo Transfer LYSR WEIZ - $100,000
• Total: $421,883

Footnotes

[1] There were other attendances. On November 11, 2022, Centa J. provided a schedule for the exchange of materials and cross examinations. This motion was then scheduled and had to be rescheduled for various reasons.

[2] Li also provided a personal guarantee. As I set out at the outset, there is no evidence against him regarding dissipation of assets and other matters and as such, in my view, the motion must be dismissed against him. As such, I have not made specific reference to his guarantee in the body of this decision.

[3] Lin admitted during cross-examinations on his affidavit that $1,695,623.48 loaned pursuant to the Loan Agreements remained outstanding as of February 22, 2022.

[4] Kabushikikaisha is the Plaintiffs’ Japanese agent.

[5] His affidavit said that Daniel had told him that, but at his cross examination he corrected his answer to be Zheng.