Yao v. Sun

2016 BCSC 2526 Yao v. Sun

IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: Yao v. Sun, 2016 BCSC 2526 Date: 20161221 Docket: S169988 Registry: Vancouver Between: Dejun Yao Plaintiff And Huigang Sun Defendant Before: Master Baker Oral Reasons for Judgment In Chambers Counsel for Plaintiff: J.D. Shields Counsel for Defendant: W.D. McEwan Place and Date of Trial/Hearing: Vancouver, B.C. December 21, 2016 Place and Date of Judgment: Vancouver, B.C. December 21, 2016 [1] THE COURT: This is an application concerning procedures and steps in litigation. And with the greatest of respect, and I mean that quite sincerely, we do not see enough of this to this extent: both counsel are extremely competent, both counsel are pressing their client's case emphatically and well. In fact, in my view, we do not see enough of that. We see too much litigation started, halted, started, restarted and halted and stumbling along. I heard a trial management conference yesterday in respect of a cause of action that arose eight years ago. [2] In any event, I digress. The immediate issue pertains to the examination for discovery, or not, of the defendant, Mr. Sun. The claim against Mr. Sun arises as a consequence of a guarantee, I understand, not denied by him, but his liability under it is denied. The guarantee is for some $950,000, and it all relates to, as Mr. McEwan has pointed out and described, a larger issue: the purchase

of, I gather, a prefab home-building entity called Viceroy. We will just simply call it Viceroy. [3] The defendant, Mr. Sun, is, I understand, president of Viceroy, successor to another Viceroy but that is not important right now, as well as principal or president of a foreign company called Wiston. I do not doubt what he says in his materials, that these companies preoccupy him tremendously. [4] Wiston has a manufacturing facility in China. He brings the flooring materials in to a warehouse in Richmond and then distributes them to his customers here in Canada. Viceroy has a facility in Ontario, Port Hope I understand, which has recently sustained damage to the roof. That certainly plays a part in the proceedings today, at least the evidence in relation to it. [5] This action was commenced quite recently, I think in November, and Mr. Shields, on behalf of Mr. Yao, has proceeded with alacrity. Mr. Sun was content initially that the matter be handled by his corporate solicitor, Mr. Tsao, and problems arose in that respect. More particularly, when Mr. Shields served Mr. Tsao with an appointment to examine for discovery set for December 14th, he did so on the 5th of December. [6] Mr. Sun says that that did not come to his attention or notice until December 13th. We do not have it directly from Mr. Tsao, but the excuse is that he misfiled the documents. I infer from that that he did

not appreciate the import, and as a consequence his client was not notified. [7] Mr. Shields did attend on that date but I think did not obtain an endorsement. It is not important. Adjourned the discovery in any event. By this time new counsel, Mr. McEwan's firm, were on the case, and I go back to what I said initially: I absolutely accept everything Mr. McEwan has said about the seriousness with which counsel have taken the matter, how fast they have come up to speed. [8] I am impressed, frankly, with how much has been done, how much structuring and response has been put in place, from steps to prepare the list of documents to scheduling a case planning conference for the 26th of January, if I recall correctly, with a plan to at least request at the CPC or by some other means a consolidation of four separate actions, all relating to matters arising from the original debt relating to the purchase of Viceroy. That original debt I think was about $1.46 million, but as I say, today's proceedings relate to a guarantee of $950,000. [9] Mr. McEwan plans to seek consolidation. He refers us to the Law and Equity Act and its attempts to discourage, in s.10, a multiplicity of proceedings. Certainly a laudable goal. In any event, he hopes, even if there is not consolidation, to obtain a direction or an order, possibly even an agreement, that one discovery of Mr. Sun would serve for all

four actions. Again, aggressive attempts to bring order and, I think, some expedition to the proceeding. [10] When the discovery did not proceed on the 14th, Mr. Shields reset the matter for the 22nd of December. I accept, as he has said, that he did ask or offer to Mr. Tsao in the very first instance other dates if the first date was not acceptable. Hearing no response for the reasons I have described earlier, he proceeded. [11] So the whole issue today turns on whether Mr. Sun is to attend tomorrow, on the 22nd, or not. Practically speaking, it is an impossibility. He has already gone to Ontario. The facility at Port Hope has sustained roof damage, and he says that that has required his attendance there. [12] That is just the start of a very busy period for Mr. Sun. His evidence is, and I think this is very important to get right, he says: I have to go to Port Hope because I am the president of the company. The damage to the roof is significant. It has affected operations of this facility, including by causing damage to important equipment. As the president of the company, it is important I attend. [13] I am inclined to agree more with Mr. Shields in this respect, that, yes, it is his facility, it is his business, I can see him wanting to be very involved, but again, I am sure he has good people taking care of this. I am not really sure what his presence as president will do

to assist in the repair of the roof, but I will certainly give him the benefit of the doubt in the circumstances. [14] Then, in para. 15 of his affidavit, he says: I will be in Toronto till December 22nd. I guess looking after the roof business and that sort of thing. I infer that. He says: I have business meetings scheduled over the Christmas period in Asia. I will go to Hong Kong on December 22nd, from Hong Kong to Singapore on December 27th, from Singapore to China on January 4th. I am planning to remain until January 13th, 2017. I note that latter sentence in particular. On January 13th, I go to Hanover, Germany, to attend the Domotex Trade Show. That is relating to flooring materials. That relates to his company Wiston. He says it is very important that he keep apprised of trends, to see and be seen. [15] I can accept that, that it is a good idea to do that. He says: I leave Germany on the 17th of January, and I go to Las Vegas, Nevada for another show. I think Mr. McEwan said it was important in relation to his other business. I do not think it is. It is another flooring show. It is called the International Surface Event Show. I looked at the exhibit relating to it. It is a flooring show. And he says: I have to be apprised of trends. I guess trends in Las Vegas are different than trends in Hanover. I do not know. I am not an expert in flooring. After that event I want to

go back to China for the Chinese New Year's celebrations. It is a very important event for myself and my family. I will acknowledge that. I go to China every year to participate in this. It is interesting because it was impressed upon me several times that he is a permanent resident of Canada. His wife and children are Canadian citizens. But in any event, he is going to China for Chinese New Year. [16] He will be back in Vancouver February 11th, and he can make himself available between February 14th and 28th. The problem with all this is that what Mr. Sun is saying is, "I have business to look after". What he does not seem to get is this lawsuit is business, very much so. It is I think in immediate terms, for the immediate future, as important as other aspects of his business, certainly trade shows. [17] I do not trivialize them, but I assume, if I am to accept his evidence, and I do, that he has 100 people working for him in various capacities in his businesses, that he must have some pretty good people who can maybe go to a trade show. Maybe the second one. I do not know. [18] I have to say, I am inclined to accept that if he is not actively being unavailable, he is certainly not interested in making reasonable concessions or changes to a busy schedule to make himself available. I think he is going to have to. I think he is going to have to find a couple of days in this busy

schedule to make himself available. I accept Mr. Shields' general submission that it is one thing to adjourn an examination for discovery for, say, tomorrow. It is another thing to wait approximately two months for this fellow's availability. [19] The events of the mortgages being placed on Mr. Sun's residence in Richmond are very interesting and, I think, concerning. Mr. Shields has been very clear that in collection cases the difficulty is collecting. It has been said the race goes to the swift. Nobody has suggested there are other judgments. Nobody has suggested there are other lawsuits against Mr. Sun save and except for the four that I have referred to, including this one, that all relate to this one business deal, as I understand it. [20] These mortgages are, I think, unusual, if not extraordinary. In September, he borrowed $1 million against his house at 2 percent per month compounded, requiring monthly payments of $20,000. On November 29th, after receiving a demand letter from Mr. Shields, he borrowed another million dollars. Almost an identical mortgage. The first from an individual, the second from an entity called Regal Investments. Also $1 million, 2 percent per month compounded, $20,000 per month. The exception or the difference being the last mortgage has a three-month term. Mr. Sun is obliged to repay the full balance of that mortgage and if he does not, he is in

default, which will trigger the transfer of his home for its assessed value of $4,042,000. I assume that includes the funds that have been advanced by Regal. I do not know. [21] That is an unusual mortgage. We see a lot of mortgages as Masters, we see a lot of foreclosures, and I have to say those are unusual mortgages. I agree with Mr. Shields, and I want to be clear, I agree that someone borrowing money on those terms can hardly offer a fairly sanguine assurance that "I am good for it". I do not want to be cavalier or pejorative when I say that, but that is essentially what Mr. Sun has said. He has said, " there's no problem here. My home is worth well over $4 million. I have put two mortgages on it for $3 million", he says in his affidavit. Yet the face value is 2 million. I suspect something is lost in translation. This affidavit was prepared and, I understand, executed through translation and interpretation. [22] In any event, I am not sure that his explanation of illness during the summer requiring that he offer a personal cash infusion into his businesses to keep payroll up and to keep the machine running, I am not sure that that explains such -- I have to say -- very onerous terms of borrowing. They are in excess of Visa, frankly. [23] So it is concerning. And while Mr. McEwan is correct that discovery does not offer a remedy for security in the sense of, say, an

injunction, Mr. Shields again has been clear that his intention is to bring a summary trial. We heard some discussion as to the merits of the defence and the strength of the plaintiff's case. Mr. McEwan is right, I do not decide that today, but I do understand how that figures into Mr. Shields' program or strategy on the case, which is to do a discovery, proceed to a summary trial, and take matters from there, and, I suppose, secure his client if he is successful. [24] I understand, therefore, the justification for haste. So far, nobody has done anything here that breaches the Rules. Mr. McEwan was clear on that. He was also just as clear and perhaps more emphatic that the case authorities have repeatedly discouraged or prevented oppressive use of the Rules; that the Rules are servant and not a master. He is absolutely right in that. [25] In this particular case the plaintiff is entitled to proceed to pursue their claims aggressively. They are permitted to do that within reasonable bounds that, as Mr. McEwan says, stop short of oppression. To expect Mr. Sun to deal with this matter, to interrupt his plans, is acceptable in my respectful view. [26] I noted his evidence as to what he is going to be doing the next couple of months, and it is interesting where he says: On the 22nd I will head off to China and Asia, and I will be in Singapore on the 27th, from Singapore to China on

the 4th. I am planning to remain there till the 13th. No reason for that nine days, I guess. I know it is a long flight from here to China, but he just says, I just plan to be there. I have to say, that does tend to support Mr. Shields' suspicions that Mr. Sun is simply making himself unavailable. [27] The consequence of this is I will adjourn the discovery tomorrow. I will accede to Mr. Sun's application, but the Rules provide that an order can be made on condition, and I am going to make a condition that he offer himself for discovery. Rather than have a third appointment delivered and we go through this all again, I am going to adjourn Mr. Sun's discovery tomorrow on the condition that he attend soon. I am thinking Friday, January 6th. [28] MR. MCEWAN: We can do that. [29] THE COURT: That is an interruption to his plans. It means him coming back to Canada and I guess returning to China for his family. It will interrupt one of those periods, and he did not explain why he is going to "remain there," but I think it permits him, then, to go back and attend on his Chinese New Year and family activities. So he will attend in Vancouver the 6th of January at a place and time to be set by counsel for his examination. Yes, Mr. McEwan. [30] MR. MCEWAN: Your Honour, I'm just wondering if we could add to that order, unless counsel otherwise agrees. [31] THE COURT: Absolutely. If for

whatever reason you want to work out another date. Thank you for that. [32] MR. SHIELDS: I'm happy to do that. [33] THE COURT: Sure. So unless the parties can agree to another time or arrangement, he will attend on the 6th for examination. [34] Anything else arising? [35] MR. MCEWAN: Your Honour, I had some submissions on costs, but I think that, given the result, in the cause is probably - [36] THE COURT: That is a good guess. [37] MR. SHIELDS: That will be charitable for the defendant, because I have served two appointments and he's failed to show up. So I would say costs to my clients in the cause would be best result. [38] THE COURT: Costs in the cause, counsel. "Master Baker"