1061307 Ontario Inc. v Zang, 2023 ONSC 2712

Court File and Parties

COURT FILE NO.: CV-22-00691420-0000 DATE: 20230503 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: E.M. Morgan, J.

COUNSEL: Dora Konomi, for the Plaintiff

HEARD: May 2, 2023

MOTION for CERTIFICATE OF PENDING LITIGATION

[1]

Motion for Certificate of Pending Litigation

The Plaintiff seeks an order that the registrar issue a certificate of pending litigation against the property municipally known as 701-99 John Street (the “John Property”) and legally described as:

UNIT 1, LEVEL 7, TORONTO STANDARD CONDOMINIUM PLAN NO. 2909 AND ITS APPURTENANT INTEREST; CITY OF TORONTO [Property Identifier Number: 76909-0094 (LT)]

UNIT 40, LEVEL F, TORONTO STANDARD CONDOMINIUM PLAN NO. 2909 AND ITS APPURTENANT INTEREST; CITY OF TORONTO [Property Identifier Number: 76909-0700 (LT)]

2The motion has been brought on notice to the Defendants, but no one has responded or appeared on their behalf.

[3]

Background

The Plaintiff alleges that the Defendant, Tong Zang (“Zang”), is fraudulently hiding her interest in the John Property. Zang is the mother of the Defendants, Lawrence John Roy (“Lawrence”) and Harrison Frank Roy (“Harrison”). The Plaintiff has already obtained a Norwich Order against the Defendants and registered cautions and subsequently certificates of pending litigation against three other properties for which it alleges that Zang has done the same thing. The Defendants have taken no steps to discharge those certificates.

4On January 10, 2023, shortly after the motion for other three certificates was heard, Zang made an assignment in bankruptcy. The Plaintiff subsequently amended the Statement of Claim, with the Trustee’s consent, to include claims in respect of the John Property. It also obtained an Order under section 38 of the Bankruptcy and Insolvency Act to allow it to continue to prosecute this action.

5Zang, through corporations she controls, granted mortgages over the three other properties and personally guaranteed two of these mortgages. All three mortgages were ultimately assigned to the Plaintiff. Zang and her corporations then defaulted under the mortgages. On June 3, 2019, the Plaintiff obtained judgment in the aggregate amount of $369,072.61 plus interest and costs against Zang and her corporations.

6On August 10, 2020, the Plaintiff filed a writ of seizure and sale with the Sheriff of Toronto to bind any interest in real property that Zang owns in the city. In the meantime, Zang has made no payments under the judgment and, in addition, evaded service several times before being served with a Notice of Examination as judgment debtor. Then, after finally being served, failed to attend at the judgment debtor examination.

7After the first three certificates were obtained, the Plaintiff conducted further investigations regarding the John Property. The information obtained led the Plaintiff to the following conclusions:

• On May 24 2022, Lawrence took title to John Property. The transfer was from a builder and was for a stated consideration of $436,711.
• Lawrence entered into the agreement of purchase and sale for the John Property, which was a pre-construction condominium, several years prior to 2022. He was then 16 years old and was not in a financial position to make such a purchase.
• The transaction bears resemblance to the purchase of two of the other properties against which the Plaintiff has registered certificates.
• The initial mortgage of $410,000 granted by Lawrence to purchase the John Property was to the same private lender that Zang and his cousin, the Defendant, Thomas Tran (“Tran”), used for the other two properties.
• Lawrence subsequently refinanced the John Property with the Royal Bank of Canada (“RBC”), which discharged the previous mortgage. The RBC mortgage is a first collateral mortgage securing the original principal amount of $780,000.00 against the John Property.
• The borrowers under the loan agreement secured by the RBC Mortgage are recorded as Lawrence and someone named Hong Zhang. The Plaintiff surmises that Zang, who is also known as Tong Hua Zhang, may be using this name as an alias or whoever registered the mortgage may have misspelled Zang’s own name as borrower.
• On February 17, 2023, Lawrence granted a second mortgage in the amount of $120,000 on the John Property to Chang Bin Li and Meng Wang. This significantly depleted the equity in the John Property. Tran guaranteed the indebtedness under this second mortgage.

8On the closing date of Lawrence’s acquisition of the John Property, the Plaintiff’s writ of execution was already filed against Zang. The Plaintiff claims that the John Property was purchased by Zang but taken in the name of Lawrence to shield it from the Plaintiff and from Zang’s other creditors.

9The Plaintiff has registered a caution against the John Property, which expires on May 16, 2023.

10On the basis of all of this, the Plaintiff claims that Zang is the true beneficial owner of the John Property and that Lawrence is trustee titleholder or, alternatively, that Lawrence’s title is fraudulent and void. The Plaintiff therefore seeks a certificate of pending litigation to ensure that Zang and Lawrence do not dispose of or further encumber the John property.

[11]

Disposition

The materials filed in support of this motion establish that the Plaintiff has a reasonable chance of proving one or more of its claims. Accordingly, the Plaintiff shall have an Order that the registrar issue a certificate of pending litigation against the John Property.