COURT FILE NO.: CV-14-00497218

MOTION HEARD: 20240725

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Stainless Steel Products, Plaintiff

AND: Lie He, Li Zhang and Yue Ling He, Defendants

BEFORE: Associate Justice B. McAfee

COUNSEL: M. Magonet, Counsel, for the Moving Parties, the Defendants L. Iantosca, Counsel, for the Responding Party, the Plaintiff

HEARD: July 25, 2024

REASONS FOR DECISION

[1] The defendants Lie He, Li Zhang and Yue Ling He (the defendants) seek an order vacating the certificate of pending litigation (CPL). Leave to issue the CPL was granted by Justice Glustein on November 3, 2015. The CPL was registered on November 21, 2016.

[2] The plaintiff Stainless Steel Products (SSP) opposes the motion.

[3] This action arises from a proceeding in the state of Ohio wherein on January 27, 2012, SSP obtained default judgment in the amount of USD $833,271.56 against the defendant Lie He and Jiangmen Yuesheng Metal Products Co Ltd, a company owned by the defendant Lie He (the judgment). Three days prior to the judgment, a property owned in Ontario by the defendant Lie He and his wife, the defendant Li Zhang, was transferred to their daughter, the defendant Yue Ling He (the transfer).

[4] The within action was commenced on January 27, 2014. SSP seeks a declaration that the transfer is void as a fraudulent conveyance and payment in an amount in Canadian dollars sufficient to purchase USD $833,271.56.

[5] The court’s authority to discharge a CPL is found under rule 42.02 of the Rules of Civil Procedure and section 103(6) of the Courts of Justice Act, R.S.O. 1990, c. C.43.

[6] The applicable legal principles for consideration on a motion to discharge a CPL are set out in Perruzza v. Spantone, 2010 ONSC 841 (Ont. S.C.J.) at para. 20. See also Woodheath Developments Inc. v. Singh, [1996] O.J. No. 3571 (Ont. Gen.Div.) at paras. 4-7, 15-19 and Deveney v. Vanton Construction Inc., [1991] O.J. No. 593 (Ont. Gen.Div.) at para.11.

[7] The defendants confirm that on this motion they seek the discharge of the CPL on the basis of SSP’s failure to prosecute the action with reasonable diligence. The defendants rely on section 103(6)(a)(iii):

(6) The court may make an order discharging a certificate,

(a) where the party at whose instance it was issued,

(iii) does not prosecute the proceeding with reasonable diligence.

[8] On January 8, 2024, my reasons for decision on SSP’s contested motion for an order setting aside the registrar’s order dismissing the action for delay dated November 12, 2019, were released (Stainless Steel Products v. He, 2024 ONSC 150, herein the January 8, 2024 reasons). The motion was granted. As set out at paragraph 24 of the January 8, 2024 reasons, I was satisfied that any litigation delay had been satisfactorily explained.

[9] The defendants argue that a satisfactory explanation for the litigation delay is not the same as prosecuting the proceeding with diligence. Having regard to the facts summarized at paragraphs 9 to 24 of the January 8, 2024 reasons, I am also satisfied that SSP prosecuted the claim with reasonable diligence having regard to the circumstances of this matter.

[10] As set out at paragraph 34 of the January 8, 2024 reasons, SSP agreed to set the action down for trial within 30 days. SSP has set the action down for trial. A pre-trial conference is scheduled for October 20, 2025. The trial is scheduled for February 23, 2026. SSP has posted the security for costs ordered, including the amount to be posted prior to the pre-trial conference.

[11] I am not satisfied of any prejudice to the defendants if the CPL remains on title to the property at this stage. The defendants do not put forward evidence of prejudice. On the other hand, there is evidence from SSP that if the CPL is discharged, SSP will be severely prejudiced because no assurances of alternate security have been provided by the defendants and SSP will be denied an opportunity to collect on the judgment. On the basis of the evidence before me, I am satisfied that if the order sought is granted, SSP would be prejudiced.

[12] Having regard to all of the circumstances of this matter, I am not satisfied that it is just to discharge the CPL. The motion is dismissed.

[13] SSP was successful in opposing the motion. SSP is entitled to costs on a partial indemnity basis in the all-inclusive amount of $8,991.64. However, an order that costs be payable other than within 30 days is more just. Costs are payable by the defendants to SSP in the cause.

[14] Order to go as follows:

1. The motion is dismissed.
2. Costs of the motion are fixed in the all-inclusive amount of $8,991.64, payable by the defendants to SSP, in the cause.

Associate Justice B. McAfee

Date: October 1, 2024