Court File and Parties

COURT FILE NO.: CV-22-00688485-0000 DATE: 2023-07-18 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: SHU KUAN LI, Applicant AND: BANK OF NOVA SCOTIA, Respondent

BEFORE: VERMETTE J.

COUNSEL: Michael R. Kestenberg, for the Applicant Christopher DiMatteo and Brittany Town, for the Respondent Gregory Govedaris, for Goldentrust XE Inc., Applicant in Court File No. CV-22-00687741-0000 Natalia Paunic, for Canadian Imperial Bank of Commerce, Respondent in Court File No. CV-22-00687741-0000

HEARD: July 12, 2023

Endorsement

[1] The Applicant, Shu Kuan Li, claims damages for conversion against the Respondent, the Bank of Nova Scotia (“BNS”). Mr. Li alleges that BNS negotiated a bank draft that he purchased and that BNS credited the proceeds of the draft to a person other than the intended payee. Most of the proceeds were subsequently transferred to the bank account of Goldentrust XE Inc. (“Goldentrust”) at the Canadian Imperial Bank of Commerce (“CIBC”). CIBC froze the funds a few days later and Goldentrust commenced an application against CIBC.

[2] BNS moves for an order that this application (“Li Application”) be converted to an action and heard together with the application commenced by Goldentrust, Goldentrust XE Inc. v. Canadian Imperial Bank of Commerce, Court File No. CV-22-00687741-0000 (“Goldentrust Application” and, together with the Li Application, the “Applications”).

[3] In my view, BNS’s motion to convert the Li Application to an action is premature. I also find that the balancing of the relevant factors does not favour an order that the Li Application and the Goldentrust Application be heard together. As a result, BNS’s motion is dismissed.

A. Factual Background

1. Li Application

[4] Mr. Li commenced the Li Application on October 11, 2022. He seeks damages for conversion in the amount of $901,199.05 against BNS.

[5] Mr. Li provided affidavit evidence in support of the Li Application. The following summarizes his evidence.

[6] Mr. Li is a lawyer. In June 2022, he was referred a sale transaction from a real estate agent. He was retained by a person who purported to be Mofei Yu, the registered owner of a condominium unit located on Yonge Street in Toronto (“Condo”). Ms. Yu asked that Mr. Li act on her behalf to complete the sale of her Condo to Hong Dong, the purchaser, further to an agreement of purchase and sale dated May 20, 2022.

[7] Mr. Li reviewed the parcel register of the Condo and the last transfer. The owner’s date of birth on the last transfer matched the ID received by Mr. Li from the person who held herself out as Ms. Yu.

[8] The purchase and sale transaction closed on June 15, 2022, and title to the Condo was transferred to Hong Dong.

[9] In connection with the closing of the purchase and sale of the Condo, Mr. Li received the sum of $920,476.95 from Hong Dong’s solicitor. After making the authorized and necessary disbursements, the net proceeds payable to Mofei Yu were $901,199.05.

[10] Mr. Li arranged to purchase a bank draft from his bank, National Bank of Canada, in the amount of $901,199.05 payable to Mofei Yu. BNS negotiated the draft and credited $901,199.05 to an account.

[11] BNS’s evidence on this motion is that the bank draft was deposited on June 16, 2022 into a BNS chequing account in the name of Mofei Yu and Daihang Liu. The BNS chequing account was opened on June 15, 2022, i.e., the day before the bank draft was deposited. The bank draft was held for five days before being cleared in the BNS account.

[12] In July 2022, the real estate agent who had acted for the person who held herself out as Mofei Yu told Mr. Li that she had discovered that the Condo had been sold without the real Mofei Yu’s knowledge and consent. Given the allegation that the real Ms. Yu had not retained him to act on her behalf on the sale of the Condo, Mr. Li concluded that the sale of the Condo on which he acted was possibly fraudulent.

[13] According to Mr. Li, an investigator for Chicago Title subsequently confirmed that the transaction was fraudulent, and Mr. Li’s office reported the matter to the Toronto Police. Mr. Li also took steps in early August 2022 to put both National Bank of Canada and BNS on notice and he asked them to take steps to address the apparent fraud.

[14] Mofei Yu has provided statutory declarations in which she declared that she did not receive the $901,199.05 draft, nor did she authorize anyone to receive the funds on her behalf.

[15] Mr. Li states the following in his affidavit:

At all times, I believed that I was dealing with and taking instructions from the registered owner of the Property – Mofei Yu. Consequently, I intended to pay the net proceeds of sale of the Property to the registered owner – Mofei Yu.

[16] On August 31, 2022, the Director of Titles registered a Caution under the Land Titles Act, R.S.O. 1990, c. L.5 in respect of the Condo. The Caution states that the underlying real estate transfer from Mofei Yu to Hong Dong may be fraudulent and orders that there be no dealings with the Condo until the matter has been resolved.

[17] On September 29, 2022, Mr. Li’s lawyer sent a letter to BNS that read, in part:

I am enclosing herewith, a copy of a letter which was delivered by Li Law Professional Corporation under dated [sic] of August 2, 2022, with respect to property municipally known as 388 Yonge Street, Unit 6901, Toronto. The transaction in question was a fraudulent transaction. You received a draft drawn on National Bank in the amount of $901,199.05, a copy of which I enclose. The draft was payable to Mofei Yu and was negotiated by your branch to a fraudster purporting to be Mofei Yu. I am sure, as you are aware, that Bank of Nova Scotia is liable in conversion, which is a strict liability obligation to reimburse the aforesaid amount to Mr. Li, on whose behalf we have been authorized to request repayment, so that in turn Mr. Li can reimburse the victim/purchaser of the aforesaid condominium at least in the amount of the bank draft.

Would you be good enough, if you have not already forwarded the prior letter dated August 2, 2022 to your legal department, that you do so immediately. If we have not heard from you within five days of the date hereof or your legal department on your behalf in respect to this matter, we will be instituting proceedings.

As a matter of courtesy, I understand that $800,000 of the proceeds of the draft are currently on deposit at CIBC. You might want to reach out to CIBC, who I understand has put a freeze on the property, to repay the monies in accordance with the Canadian Payment Association Rules.

2. Goldentrust Application

[18] Goldentrust commenced the Goldentrust Application against CIBC and Daihang Liu on September 23, 2022. The Goldentrust Application was commenced after CIBC froze Goldentrust’s bank account.

[19] Goldentrust seeks various relief, including an order unfreezing its bank account and a declaration that it is the absolute owner of the $800,000.00, free and clear of any third party claims. Goldentrust also requests an injunction enjoining and preventing CIBC from releasing the $800,000.00 from Goldentrust’s bank account to Mr. Liu or any other person or entity or, in the alternative, an order that the monies be paid to the credit of the Goldentrust Application.

[20] Peng Zhang, the principal of Goldentrust, provided affidavit evidence in support of the Goldentrust Application. The following summarizes Peng Zhang’s evidence.

[21] Goldentrust is registered with FINTRAC – Money Servives Business. Its activities are described as “Foreign exchange dealing” and “Money transferring”.

[22] On June 24, 2022, Daihang Liu came to Goldentrust’s office and said that he had sold his house in China and he needed to exchange Canadian dollars for Chinese renminbi. Goldentrust agreed to do the exchange with Mr. Liu because it needed Canadian dollars. Goldentrust provided its bank account details to Mr. Liu on WeChat.

[23] On June 24, 2022, Mr. Liu wire transferred CAD $800,000.00 from his BNS account to Goldentrust’s CIBC account. Goldentrust received $799,985.00 in its bank account.

[24] On June 27, 2022, Goldentrust transferred Chinese renminbi to the Chinese bank account provided by Mr. Liu.

[25] CIBC froze Goldentrust’s bank account after the $799,985.00 was deposited.

[26] On August 26, 2022, counsel for Goldentrust wrote to CIBC and demanded that CIBC immediately unfreeze Goldentrust’s bank account.

[27] On September 8, 2022, counsel for CIBC responded to Goldentrust’s counsel. He stated that recent deposits made to Goldentrust’s bank account, including the $800,000.00, required further investigation and the funds would be on hold until the investigation was complete.

[28] On October 26, 2022, on consent of the parties (except for Daihang Liu who has not participated in the litigation), I ordered that CIBC pay the sum of $800,000 from Goldentrust’s bank account into court to the credit of the Goldentrust Application (“Funds”), subject to further order of the Court. I also ordered that any notice of application to pay the Funds out of court be served on CIBC, Daihang Liu, Hong Dong. Mr. Li, Bank of Montreal (which has a charge from Hong Dong registered against the Condo), Mofei Yu and BNS.

3. Subsequent case conferences and BNS’s answers to written interrogatories

[29] In late 2022, counsel for the parties in the Li Application appeared before Justice Centa at Civil Practice Court because Mr. Li wanted to schedule the hearing of the Li Application. At that time, counsel for BNS raised the issue of whether the Li Application should be coordinated with the Goldentrust Application. Justice Centa convened a case conference with all counsel in both Applications to discuss how the two matters should move forward in an efficient way.

[30] The case conference took place on December 20, 2022. Justice Centa summarized the parties’ positions as follows in his endorsement:

Each of the applicants submits that their proceeding is properly commenced as an application and that there are no disputed facts that would require the proceeding to be brought as an action. They also submit that there is no need to consolidate or coordinate the applications and that each can proceed on its own path.

BNS is less sure. It maintains that it is still investigating the facts underling [sic] the fraudulent real estate transaction and the transfer of the funds. It states that many of the facts are unknown or remain under investigation. BNS agrees that the funds in the Goldentrust application should be paid out of court, but it is not sure to whom the funds should be paid. It wishes further time to advance further its investigations and to obtain instructions on whether or not to seek to consolidate the proceedings or to convert them to actions.

[31] Ultimately, Justice Centa ordered that BNS had to advise whether it intended to bring a motion to consolidate the two Applications and/or to convert the Li Application to an action on or before January 27, 2023. He also established a timetable for the motion, if brought. In addition, in the event BNS did not bring a motion, he scheduled the hearing of the Li Application for October 18, 2023 and he established a timetable for the delivery of materials and the other steps leading to the hearing.

[32] There is no hearing date or timetable with respect to the Goldentrust Application. No responding materials have been delivered.

[33] On March 13, 2023, I was assigned as the Case Management Judge for the two Applications. A case conference was held before me on April 3, 2023. At that time, I scheduled the hearing of BNS’s motion. An early motion date was provided in order to maintain the October 18, 2023 hearing date for the Li Application, if possible and depending on the outcome of the motion.

[34] On April 19, 2023, counsel for Goldentrust sent written interrogatories to counsel for BNS in relation to this motion. BNS provided the following answers on May 8, 2023:

1. Please advise if the Bank of Nova Scotia (“BNS”) will be advancing any claims against any parties. Answer: Please see below.
2. Please advise if the BNS is alleging any allegations of fraudulent conduct as against our client, Goldentrust Xe Inc. Answer: BNS is not aware, nor is it presently alleging, that Goldentrust Xe has perpetuated a fraud against BNS.
3. Assuming that both applications are converted into actions and consolidated\tried together, will BNS be advancing any claims as against our client, Goldentrust Xe Inc., the Canadian Imperial Bank of Commerce or Daihang Liu? Answer: BNS denies that it is liable to conversion to Shu Kuan Li. However, based on facts known to date, if the applications are converted to actions and consolidated or tried together, BNS expects to seek recovery from Goldentrust XE Inc., and reserves its right to seek recovery from Daihaung [sic] Liu, with respect to any amounts for which is held liable for conversion to Shu Kuan Li, including through a claim for conversion and/or contribution or indemnity. BNS does not intend to make a claim against CIBC in connection with these proceedings.
4. Was the BNS chequing account in the name of Mofei Yu and Daihang Liu, account number 64642 01537 29 opened up by the real Mofei Yu or an imposter, and by the real Daihang Liu or an imposter? If you do not know the answer, then please explain how having both applications converted into actions and consolidated\tried together will provide you with the answer? Answer: BNS is not currently in a position to verify the “true” identities of the parties who opened the account. This case involves material facts in dispute requiring a trial and production and discovery of interested parties is necessary to give the Court the factual foundation to allow it to determine the rightful owner of the funds in question.

B. Discussion

[35] There are two issues in this case: (1) whether the Li Application should be converted to an action; and (2) whether the Applications should be heard together.

1. Conversion to an action

i. Applicable legal test

[36] Under Rule 38.10 of the Rules of Civil Procedure, a judge may order that an application proceed to trial and give such directions as are just. A motion judge may convert an application to an action before the hearing of the application: see Metropolitan Toronto Condominium Corporation No. 965 v. Metropolitan Toronto Condominium Corporation No. 1031, 2014 ONSC 4458 at para. 8 (“MTCC”).

[37] Where the legislature has stipulated that a proceeding may be brought by application, there is a prima facie right to proceed by application and the matter should not be converted into an action without good reason, such as when the application judge cannot make a proper determination of the issues on the application record: see MTCC at para. 10 and Collins v. Canada (Attorney General) (2005), 76 O.R. (3d) 228 at para. 29 (S.C.J.) (“Collins”).

[38] The following factors are relevant to the determination of whether an application should proceed as an action: (1) whether there are material facts in dispute; (2) the presence of complex issues requiring expert evidence and/or a weighing of the evidence; (3) whether there is a need for the exchange of pleadings and for discoveries; and (4) the importance and impact of the application and of the relief sought. See Collins at para. 5 and Family and Children’s Services of Lanark, Leeds and Grenville v. Co-operators General Insurance Company, 2021 ONCA 159 at para. 48.

[39] In determining whether to convert an application into a trial of an issue, the court should consider whether it would be satisfied that there is no genuine issue requiring a trial if the proceeding had already been commenced as an action and a party had brought a motion for summary judgment. It has been held that it makes little sense to convert an application into an action that could be determined by a motion for summary judgment. See Sekhon v. Aerocar Limousine Services Co-Operative Ltd., 2013 ONSC 542 at para. 52.

ii. Positions of the parties

[40] BNS argues that there are several material facts in dispute that require the weighing of evidence. BNS refers to one of the defences potentially available to it under subsection 20(5) of the Bills of Exchange Act, R.S.C. 1985, c. B-4, i.e., the fictitious payee defence. A payee will be “fictitious” under subsection 20(5) if the payee is the name of a real person known to the drawer, but the drawer names him as payee by way of pretence, not intending that they should receive payment. Thus, the drawer’s intention determines whether a payee is fictitious. See Kayani v. Toronto-Dominion Bank, 2014 ONCA 862 at paras. 29-30.

[41] BNS submits that the state of Mr. Li’s knowledge and intentions cannot be resolved based on affidavit evidence alone. According to BNS, document production and discovery of Mr. Li and potentially others, such as Ms. Yu, will be required. BNS states the following in its Factum:

[…] Whether Mr. Li was party to the alleged fraudulent scheme, or a victim of it, is critical to assessing whether “Mofei Yu” is a fictitious payee within the meaning of s. 20(5). For example, if Mr. Li made the Bank Draft out to Ms. Yu “by way of pretence”, not intending that the real Mofei Yu should receive payment, then BNS cannot be liable in conversion because Ms. Yu would be a “fictitious payee” under s. 20(5) of the Bills of Exchange Act. Relevant to Mr. Li’s intentions include matters such as whether he complied with his “know your client” obligations, and what steps he took to validate Ms. Yu’s identity – which, aside from bald assertions with no supporting documents, are not addressed at all in Mr. Li’s affidavit. Also relevant to Mr. Li’s intentions are the nature of his relationship with Yuqi Zhang, the realtor who referred “Mofei Yu” to him, and the manner in which Mr. Li allegedly discovered the alleged fraud after closing. […]

[42] In addition to its argument regarding the fictitious payee defence, BNS argues that the Li Application should be converted to an action because an action is better suited to addressing all competing claims to the Funds. BNS states that if the Li Application is converted to an action, BNS expects to defend the claim and make a third party claim against Goldentrust for contribution and indemnity for any amount that BNS is held liable to Mr. Li, up to the maximum of the Funds. In BNS’s view, this way of proceeding would ensure that all parties with a potential interest in the Funds would be before the Court in one proceeding.

[43] BNS alleges that it is entitled to claim contribution and indemnity against Goldentrust because Goldentrust received and dealt with the Funds subject to Mr. Li’s conversion claim, and Mr. Li could himself have made a claim directly against Goldentrust in respect of conversion. In support of its position that it has a claim in contribution and indemnity against Goldentrust, BNS relies on the decision of the Supreme Court of British Columbia in Pang v. Zhang, 2021 BCSC 591 (“Pang”). According to BNS, the essential question before the Court in the two Applications is who should bear the loss occasioned by the alleged fraud.

[44] BNS states that if the Li Application and the Goldentrust Application proceed on their own, it will be forced to commence a third proceeding to effectively link the matters together and issue an entirely new claim against Goldentrust for contribution and indemnity in respect of any amounts for which BNS is held liable for conversion. BNS argues that there is no need for such a multiplicity of proceedings and haphazard process, and that principles of economy and efficiency generally call for contribution and indemnity actions to be joined with a main action.

[45] Finally, BNS submits that the relief sought in the Li Application – damages for conversion in the amount of the bank draft – is better suited to an action. It states that the adjudication of damages claims is the essence of an action, particularly where there are material facts in dispute. It also points out that other cases involving claims for conversion following allegedly fraudulent schemes have proceeded as actions rather than applications.

[46] Mr. Li’s position is that the legal test for conversion to an action is not met in this case. According to Mr. Li, the only relevant issue to be determined in the Li Application is whether the real Mofei Yu (or a person authorized by her) received the proceeds of the bank draft. Mr. Li points out that the real Mofei Yu has provided a sworn statutory declaration indicating that she did not receive the proceeds of the bank draft and did not authorize anyone to receive the proceeds on her behalf. Mr. Li states that should BNS wish to challenge Ms. Yu’s sworn statement, it can do so by cross-examination in the Li Application.

[47] Mr. Li submits that BNS’s bald and speculative assertions that an exchange of pleadings and discovery are necessary to a full determination of the issues on the Li Application are based on the premise that the circumstances giving rise to Mr. Li’s delivery of the bank draft are relevant. Mr. Li argues that the circumstances giving rise to his delivery of the bank draft to an individual who held herself out to him as Mofei Yu and as the owner of the Condo are legally irrelevant to his conversion claim. This is because contributory negligence of the drawer of the instrument or the ability to discover the underlying fraud are irrelevant in a claim for conversion.

[48] Goldentrust takes no position on the issue of the conversion of the Li Application to an action.

iii. The motion to convert the Li Application to an action is premature

[49] In my view, BNS’s motion to convert the Li Application to an action is premature. I find that there is no valid reason to convert the Li Application to an action at this stage. If it wishes to do so, BNS can renew its request at the hearing of the Li Application. At that time, the record will be fully developed, and the application judge will be in a better position to determine whether there are material facts in dispute to justify converting the Li Application to an action.

[50] The first factor to consider on a motion to convert an application to an action is whether there are material facts in dispute. On the record before me, there are no material facts in dispute. The points that BNS raises with respect to the issue of fictitious payee are all speculative at this time. As set out above, Mr. Li’s affidavit contains the following sworn statement:

At all times, I believed that I was dealing with and taking instructions from the registered owner of the Property – Mofei Yu. Consequently, I intended to pay the net proceeds of sale of the Property to the registered owner – Mofei Yu.

[51] Mr. Li’s application record also contains Ms. Yu’s statutory declarations that she did not receive the bank draft and did not authorize anyone to receive the bank draft funds on her behalf.

[52] BNS has not adduced any evidence to contradict these statements. While it advised Justice Centa in December 2022 that it needed more time to further its investigation, it has not shared anything about any such investigation. The affidavit filed by BNS in support of this motion was affirmed by one of its external counsel and, aside from a summary of the evidence filed by the applicants in the two Applications, it contains very little additional information. At the hearing, counsel for BNS advised that BNS had not taken any steps to contact Ms. Yu or her Ontario lawyer.

[53] It is possible that BNS could, during the cross-examination of Mr. Li or an examination of Ms. Yu under Rule 39.03, obtain information that raises credibility issues, shows that there are material facts in dispute and/or that there is a genuine issue requiring a trial. However, this is speculative at this point, especially in the absence of any evidence of BNS on the merits of the conversion claim. As pointed out by counsel for Goldentrust, BNS is the only party that can identify its account holders and has information in this regard.

[54] In determining whether there are material facts in dispute, it is important to characterize properly the issues raised in the Li Application. In my view, BNS’s arguments on this motion often mischaracterized the Li Application and the relief sought by Mr. Li. Mr. Li does not claim any entitlement to the Funds. He seeks damages for conversion against BNS. The Li Application also does not require the Court to make any findings about who should bear the loss occasioned by the alleged fraud or who is the rightful owner of the Funds.

[55] Despite this, BNS argues that there will be material facts in dispute in the future because it intends to bring a third party claim against Goldentrust if the Li Application is converted to an action. While BNS has expressed an intention to commence a claim against Goldentrust for contribution and indemnity, it has yet to do so. Even though the merits of any future claim advanced by BNS is not before me, I note that there is some uncertainty regarding the basis of BNS’s proposed claim for contribution and indemnity. The Li Application is based on the alleged conversion of the bank draft purchased by Mr. Li. The tort of conversion applies to instruments such as cheques and bank drafts. See Tran v. Chung, 2016 ONCA 378 at paras. 23-25 and Boma Manufacturing Ltd. v. Canadian Imperial Bank of Commerce, [1996] 3 S.C.R. 727 a para. 36. Goldentrust never dealt with the bank draft that was purchased by Mr. Li. The only party who dealt with the bank draft was BNS. It is unclear whether Mr. Li would have a claim for conversion against Goldentrust or that Goldentrust could be said to have participated in any way in the conversion of the bank draft. BNS relies on the Pang decision, but this decision is not binding on this Court and is not on all fours.

[56] The issues raised by BNS regarding its proposed third party claim against Goldentrust relate to the Funds and events that took place after the bank draft was deposited in a BNS account. Such issues are beyond Mr. Li’s claim. If the Li Application is dismissed, BNS will not need to pursue a claim against Goldentrust. If the Li Application is granted, BNS may well wish to seek relief against Goldentrust and raise the issues that it raised on this motion, but such issues can be dealt with between BNS and Goldentrust (and potentially others) and do not need to involve Mr. Li.

[57] Thus, I find that like its argument regarding a potential fictitious payee defence, BNS’s arguments with respect to a potential third party claim against Goldentrust are premature. No claim has been commenced, no draft pleading has been prepared and such a claim may not be necessary, depending on the outcome of the Li Application. There is no good reason to derail the Li Application, which is on track to be heard this fall. The discrete issues that it raises can be determined on their own, without the significant delay that would be associated with the conversion to an action. This does not prejudice BNS as it is open to it to commence a separate proceeding against Goldentrust, as acknowledged in its Factum. As the Case Management Judge for the Applications, I can address at the appropriate time the issue of coordination between the Goldentrust Application and any proceeding commenced by BNS.

[58] Turning to the other factors to consider when determining whether an application should proceed as an action, the issues raised in the Li Application are not complex and do not require expert evidence. It is uncertain whether the weighing of evidence will be required. Given that the issues raised are very narrow, I find that there is no need for the exchange of pleadings and for discoveries. The relevant issues can be explored during cross-examinations and examinations under Rule 39.03. Finally, the importance and impact of the application and of the relief sought do not militate in favour of converting the Li Application to an action.

[59] I note that the facts of the Li Application are very similar to the facts in Khosla v. Korea Exchange Bank of Canada, 2009 ONCA 467 (“Khosla”). While Khosla proceeded as an action, it was ultimately determined on a motion for summary judgment, including the defence of fictitious payee. As stated above, it would make little sense to convert the Li Application to an action if it could be determined on a motion for summary judgment.

[60] In light of the foregoing, I dismiss BNS’s motion to convert the Li Application to an action. As stated above, BNS can renew its request at the hearing of the Li Application if it wishes to do so.

2. Hearing together

i. Applicable legal test

[61] Rule 6.01(1) of the Rules of Civil Procedure provides as follows:

Where two or more proceedings are pending in the court and it appears to the court that,

(a) they have a question of law or fact in common;

(b) the relief claimed in them arises out of the same transaction or occurrence or series of transactions or occurrences; or

(c) for any other reason an order ought to be made under this rule,

the court may order that,

(d) the proceedings be consolidated, or heard at the same time or one immediately after the other; or

(e) any of the proceedings be,

(i) stayed until the determination of any other of them, or

(ii) asserted by way of counterclaim in any other of them.

[62] The underlying purpose of this rule is to avoid multiplicity of proceedings, to promote expeditious and inexpensive determination of disputes, and to avoid inconsistent judicial findings. The threshold question is to determine whether any of the criteria under Rule 6.01(1) have been met. If so, the court must still consider whether the balance of convenience requires the order. See Coulls v. Pinto at paras. 18-20 (Ont. S.C.J.) and Abdulrahim v. Air France, 2010 ONSC 5542 at para. 53.

[63] As noted by Justice Brown (as he then was) in CN v. Holmes, 2011 ONSC 4837 at para. 1 (“Holmes”), while a multiplicity of legal proceedings should be avoided as far as possible, multiple proceedings might be required in some circumstances to secure the just, most expeditious and least expensive determination of disputes, in accordance with Rule 1.04 of the Rules of Civil Procedure. Whether there should be one proceeding or two “turns on the particular facts of any case and the various litigation-related considerations attaching to any case.”

[64] In 1014864 Ontario Ltd. v. 1721789 Ontario Inc., 2010 ONSC 3306 at para. 18 (“101 Ontario”), Master Dash (as his title then was) set out a non-exhaustive list of seventeen factors that the court may consider when determining whether to order that two matters be tried together. [1]

ii. Positions of the parties

[65] BNS argues that at least two of the “gateway” criteria in Rule 6.01(1)(a)-(c) are satisfied in this case: (1) the two proceedings have a question of law or fact in common; and (2) the relief claimed in them arises out of the same transaction or occurrence. It states that the claims made in the two Applications are competing claims for the same money, arising from the same underlying transaction or occurrence, i.e., the allegedly fraudulent sale of the Condo. According to BNS, everyone with a potential interest in the Funds should be before the Court in one process so that the Funds can be returned to their rightful owner, whoever the Court determines that to be.

[66] BNS submits that hearing the Applications independently from one another would lead to a multiplicity of proceedings. It states that there are already two proceedings claiming entitlement to the Funds and that if the Li Application is not converted to an action and proceeds on its own, BNS will be forced to commence a third proceeding claiming contribution and indemnity from Goldentrust of any amount BNS is ordered to pay Mr. Li. BNS points out that the contribution and indemnity that BNS would seek from Goldentrust in a new action, i.e., the Funds, has already been paid into court to the credit of the Goldentrust Application, and that it would be inefficient for three separate proceedings to involve claims to the same money. BNS also argues that if the Goldentrust Application is adjudicated by itself, independently of BNS’s contribution action against Goldentrust, there is a risk of inconsistent findings.

[67] BNS states that the following factors set out in 101 Ontario favour hearing the two proceedings together: (a) the issues in each proceeding are interwoven and the damages overlap; (b) there will be an overlap of evidence or witnesses; (c) the parties and lawyers are the same; (d) there is a risk of inconsistent findings; (e) the complexity of the two cases; (f) the fact that a decision holding Goldentrust liable to BNS for contribution and indemnity in the amount of the Funds would effectively dispose of the Goldentrust Application; (g) the litigation status of each proceeding, i.e., all matters are at an early stage; and (h) considerations of advantage, prejudice and costs, including the fact that dealing with all competing claims to the Funds in one court proceeding would ensure that all issues can be determined in an orderly and cost-effective manner. I note that BNS’s arguments with respect to most of these factors are premised on BNS making a claim for contribution and indemnity against Goldentrust.

[68] According to Mr. Li, just as the events giving rise to his delivery of the bank draft to a person who held herself out as Mofei Yu are legally irrelevant to the determination of his conversion claim against BNS, any issues involving Mr. Liu’s transfer of monies to Goldentrust’s account at CIBC after BNS negotiated the bank draft and credited the proceeds to a BNS customer account are equally irrelevant to the determination of Mr. Li’s conversion claim against BNS.

[69] Mr. Li submits that none of the criteria in Rule 6.01(1)(a)-(c) are satisfied in this case. He states that there are neither factual nor legal issues in common between the Li Application and the Goldentrust Application. He notes that the only issue in the Li Application is whether BNS credited someone other than the real Mofei Yu with the proceeds of the bank draft on June 16, 2022. He argues that the issues presented in the Li Application cannot be said to be interwoven with the factual or legal issues presented in the Goldentrust Application, all of which began eight days after BNS negotiated the bank draft and credited its proceeds to its customer's account, and none of which involve Mr. Li or Ms. Yu.

[70] Mr. Li’s position is that any relief claimed in respect of what happened to the bank draft proceeds after BNS converted the bank draft payable to Mofei Yu cannot be said to arise out of the same transaction at issue in the Li Application. Mr. Li states that the relief sought in the Li Application is based wholly on BNS’s negotiation of the bank draft and its credit of the proceeds to the account of a customer who was not Mr. Li’s intended payee. The relief claimed starts and stops on June 16, 2022, with BNS’s negotiation of the bank draft to the credit of a customer account. Mr. Li points out that the Goldentrust Application, in contrast, arises from its dealings with Mr. Liu, which began the following week (on June 24, 2022). Neither Mr. Li nor Ms. Yu are alleged to have had dealings with Goldentrust.

[71] Mr. Li relies on cases that have held that where proceedings involve different parties, they should not be consolidated. I note that while BNS originally sought the consolidation of the two Applications, it now only seeks to have the two matters heard together.

[72] Mr. Li submits that in light of the limited relevant factual issues presented by the Li Application, there are no other reasons to make an order under Rule 6.01(1).

[73] Mr. Li also argues that where, as here, the sole issue in the proceeding can be determined by summary judgment, consolidation with another proceeding is not warranted.

[74] Goldentrust does not oppose the hearing together of the two Applications.

iii. The balance of convenience does not favour an order that the two Applications be heard together

[75] I accept that at least one criterion under Rule 6.01(1) has been met, i.e., that the relief claimed in the Applications arises out of the same series of transactions or occurrences. As a result, the question to determine is whether the balance of convenience requires an order that the Applications be heard together.

[76] I have considered the factors set out in 101 Ontario. However, I find it unnecessary to conduct a detailed analysis of each of them because: (a) I have dealt with many of them above, in the context of BNS’s request to convert the Li Application to an action; and (b) I have reached the conclusion that, in light of the “litigation-related considerations” particular to this case (see Holmes at para. 1), the Li Application should not be delayed and should not be required to be heard at the same time as the Goldentrust Application.

[77] BNS’s arguments under Rule 6.01(1) are, again, premised on a mischaracterization of the Li Application and/or on BNS making a claim for contribution and indemnity against Goldentrust. While there may be very good reasons for any proceeding commenced by BNS against Goldentrust to be heard together with the Goldentrust Application, such a claim has yet to be commenced and it does not justify having the Li Application heard together with the Goldentrust Application.

[78] In my view, there is no risk of inconsistent judicial findings between the Li Application and the Goldentrust Application. As pointed out already: (a) Mr. Li’s claim and the relief he is seeking do not relate to the Funds, and (b) if the Li Application is granted, BNS may well wish to seek relief against Goldentrust and raise the issues that it raised on this motion, but such issues can be dealt with between BNS and Goldentrust and do not need to involve Mr. Li.

[79] The effect of the Order I made on October 26, 2022 is that the Goldentrust Application cannot proceed without notice being provided to a number of parties as any application to pay the Funds out of court must be on notice to these parties. The involvement of multiple parties raises the possibility of delay. I see no reason to delay the adjudication of the issues raised in the Li Application, for which a hearing date has already been scheduled. Again, as the Case Management Judge for the Applications, I can address at the appropriate time any issue of coordination between the Goldentrust Application and any proceeding commenced by BNS.

[80] In light of the relevant factors and the discussion above, I conclude that the balance of convenience does not favour an order that the Li Application and the Goldentrust Application be heard together.

C. Conclusion

[81] BNS’s motion is dismissed.

[82] The parties have agreed that the appropriate scale of costs with respect to this motion is partial indemnity. If the parties cannot reach an agreement on costs, Mr. Li and Goldentrust shall deliver submissions of not more than three pages (double-spaced), excluding the costs outline, by July 31, 2023. BNS shall deliver its responding submissions (with the same page limit) by August 14, 2023. The submissions of all parties shall also be sent to my assistant by e-mail and uploaded onto CaseLines.

[83] A new timetable is needed for the steps leading to the hearing of the Li Application on October 18, 2023. In light of the arguments made on this motion, it is my view that Mr. Li should be given an opportunity to deliver supplementary materials. I order the parties to comply with the following timetable:

a. Any Supplementary Application Record to be delivered by July 31, 2023.

b. Responding Application Record of the Respondent to be delivered by August 18, 2023.

c. Reply Application Record, if any, to be delivered by August 31, 2023.

d. Cross-examinations and other examinations, if any, to be completed by September 15, 2023.

e. Factum of the Applicant to be delivered by September 27, 2023.

f. Factum of the Respondent to be delivered by October 11, 2023.

[84] The timetable set out above can be modified on consent. If any issue arises with respect to the timetable, counsel can contact my assistant to request a case conference.

Vermette J. Date: July 18, 2023

[1] The factors are the following: (1) the extent to which the issues in each action are interwoven; (2) whether the same damages are sought in both actions, in whole or in part; (3) whether damages overlap and whether a global assessment of damages is required; (4) whether there is expected to be a significant overlap of evidence or of witnesses among the various actions; (5) whether the parties are the same; (6) whether the lawyers are the same; (7) whether there is a risk of inconsistent findings or judgment if the actions are not joined; (8) whether the issues in one action are relatively straight forward compared to the complexity of the other actions; (9) whether a decision in one action, if kept separate and tried first would likely put an end to the other actions or significantly narrow the issues for the other actions or significantly increase the likelihood of settlement; (10) the litigation status of each action; (11) whether there is a jury notice in one or more but not all of the actions; (12) whether, if the actions are combined, certain interlocutory steps not yet taken in some of the actions, such as examinations for discovery, may be avoided by relying on transcripts from the more advanced action; (13) the timing of the motion and the possibility of delay; (14) whether any of the parties will save costs or alternatively have their costs increased if the actions are tried together; (15) any advantage or prejudice the parties are likely to experience if the actions are kept separate or if they are to be tried together; (16) whether trial together of all of the actions would result in undue procedural complexities that cannot easily be dealt with by the trial judge; and (17) whether the motion is brought on consent or over the objection of one or more parties.