IN THE SUPREME COURT OF BRITISH COLUMBIA
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Citation: |
Li v. Liu, |
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2018 BCSC 1156 |
Date: 20180712
Docket: S180767
Registry: Vancouver
Between:
Zhi Bang Li
Plaintiff
And
Chuan Sheng Liu, Xuelan Xu, Zheng Han Xu and Yi Xu
Defendants
Before: The Honourable Madam Justice Iyer
Reasons for Judgment
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Counsel for Plaintiff / Respondent: |
K. Ducey |
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Counsel for the Applicant, Yin Ping Wang: |
E. Bojm |
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Place and Date of Hearing: |
Vancouver, B.C. May 28, 2018 |
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Place and Date of Judgment: |
Vancouver, B.C. July 12, 2018 |
Table of Contents
[1] This application arises out of the plaintiff’s civil claim against the defendants. After the plaintiff, Zhi Bang Li, obtained default judgment in another action against two of the defendants, Chuan Sheng Liu and Xuelan Xu, he commenced this claim. Mr. Li alleges that these defendants fraudulently conveyed two properties, known as the “Service Street Property” and the “Douglas Road Property,” to avoid paying their judgment debt to him. Mr. Li has registered a certificate of pending litigation (“CPL”) against each of those properties.
[2] In this application, Yin Ping Wang applies to have herself added as a defendant to Mr. Li’s claim against the defendants for the sole purpose of having the CPL against the Service Street Property cancelled. She claims that she is the owner of that property. Ms. Wang then seeks to have the action against her dismissed.
[3] The reason Ms. Wang wants Mr. Li’s CPL cancelled is that the Service Street Property has already been sold pursuant to a foreclosure order obtained by Farm Credit Canada (“FCC”). The Land Title Registry will not register the transfer to the new owner unless Mr. Li’s CPL is removed. The defendant Zheng Han Xu is the registered owner of the Service Street Property, and FCC obtained the foreclosure in a proceeding against him. Ms. Wang claims that Mr. Xu transferred the Service Street property to her in their divorce settlement, but says that she did not register the transfer in order to avoid the tax consequences. Removing Mr. Li’s CPL will allow the sale to complete and give Ms. Wang the proceeds of the sale remaining after FCC’s claim has been satisfied.
[4] At the outset of the hearing, the parties agreed that Ms. Wang should be added as a defendant and that she can file her response to civil claim attached as Schedule “A” to her Notice of Application. They also agreed that the CPL against the Service Street Property should be removed. Accordingly, Ms. Wang did not pursue her allegation of abuse of process. The issues before me are:
(1) what security or undertaking should be required of Ms. Wang respecting the remainder of the sale proceeds on the Service Street Property in exchange for the removal of the CPL; and
(2) whether the claim against Ms. Wang should be dismissed.
[5] Mr. Li says Ms. Wang should post security in the full amount of the debt. Ms. Wang submits that her undertaking to pay damages is sufficient or, in the alternative, she is willing to post half the amount of the judgment as security. Mr. Li opposes dismissal of the claim against Ms. Wang.
[6] Many of the parties are related and have similar names. It is helpful to describe their relationships with each other at the outset.
Zhi Bang Li (“Mr. Li”) is the plaintiff and obtained default judgment against the Father and Mother in an earlier action;
Chuan Sheng Liu (“Father”) is a defendant, spouse of the Mother and a judgment debtor to Mr. Li;
Xuelan Xu (“Mother”) is a defendant, spouse of the Father and a judgment debtor to Mr. Li;
Zheng Han Xu (“Son”) is a defendant, son of the Mother and Father and sole director of Zhenghan International Investment Inc. (“Zhenghan”);
Yi Xu (“Daughter”) is a defendant and daughter of the Mother and Father; and
Yin Ping Wang (“Ms. Wang”) is the applicant and former spouse of the Son.
[7] Eight properties and numerous transactions form the background of this application. Without making findings of fact or resolving conflicting details in the various affidavits, the following chronology provides a sense of some of the relevant events:
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November 2010 |
Mother and Father purchase Angus Property in their names with mortgage |
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April 2011 |
Service Street Property purchased and registered in Son’s name |
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May 2011 |
Fairway Property purchased and registered in name of Zhenghan |
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September 2011 |
Nanton Property purchased and registered in Son’s name; inter alia mortgage registered against this property and Angus Property |
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April 2012 |
Further inter alia mortgage registered against Nanton Property and Angus Property |
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May 2012 |
Chilliwack Farm purchased and registered in the name of Lawrence Hacienda Fruit Processing Canada Inc. whose registered address is the Angus Property |
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Mother, Father Son and Daughter are guarantors on the mortgage to FCC |
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Fairway Property mortgaged |
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December 2012 |
Angus Property transferred to mortgagee |
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November 2013 |
Wiltshire Property purchased and registered in Father’s name |
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August 2015 |
FCC commences foreclosure proceedings on Chilliwack Farm against Son and Daughter |
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Son and Ms. Wang separate and enter into a separation agreement |
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December 2015 |
Douglas Road Property purchased and registered in Daughter’s name |
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February 2016 |
No. 6 Road Property purchased and registered in Ms. Wang’s name |
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Mr. Li claims he loaned Mother $20,000 towards the purchase price |
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March 2017 |
Service Street Property transferred by Son to Ms. Wang but transfer is not registered |
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April 2017 |
Divorce obtained in China |
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Son gives power of attorney to Ms. Wang |
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June 2017 |
Fairway Property sold |
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August 2017 |
No. 6 Road Property sold |
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November 2017 |
Mr. Li obtains default judgment against Mother and Father for $589,458.42. |
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December 2017 |
Wiltshire Property sold in foreclosure proceeding |
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January 2018 |
Mr. Li commences the present civil claim and registers CPLs against Service Street Property and Douglas Property |
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March 2018 |
FCC obtains foreclosure and order for sale on Service Street Property based on claim against Son as registered owner |
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Court-ordered sale occurs without notice to Mr. Li |
[8] Mr. Li claims that the Mother and Father have bought and sold numerous properties in British Columbia. He alleges that they are the true owners of the Service Street Property and the Douglas Road Property. Specifically, he says that, if the balance of the proceeds from the court-ordered sale of the Service Street Property are paid out to Ms. Wang, his ability to recover the judgment debt owed to him by the Mother and Father will be impaired.
[9] Although the parties have agreed that the CPL on the Service Street Property should be removed, it is useful to consider the basis for cancellation before turning to the question of what security or undertaking is appropriate. Under the Land Title Act, R.S.B.C. 1996, c. 250, a CPL will be cancelled if there is no triable issue relating to an interest in the property; alternatively, the court may cancel a CPL where there is hardship and inconvenience: 0861695 B.C. Ltd. v. Meola, 2013 BCSC 121, paras. 8-10.
[10] As is evident from the summary chronology above, the affidavit evidence raises questions about the true ownership of the Service Street Property. There is some evidence that the Son and Ms. Wang continued to share the same residence after their separation and divorce. As noted, the Son gave his power of attorney to Ms. Wang shortly after separation. The divorce was obtained in China despite the fact that the Son, Ms. Wang and their children all live in B.C. This evidence raises doubt about whether the divorce was genuine. There are also inconsistencies between Ms. Wang’s first and second affidavits, putting her credibility in issue. It is also curious that Ms. Wang simply identifies her city of residence on her affidavits rather than her address.
[11] There may be innocent explanations for these matters, and it may be that Mr. Li is not entitled to any portion of the sale proceeds of the Service Street Property. However, the evidence as a whole persuades me that there is a triable issue about ownership of the Service Street Property. That issue is whether Mr. Li has an interest in the Service Street Property by virtue of the debt owed to him by the Mother and Father. As noted, his claim against them alleges that the Mother and Father fraudulently conveyed the Service Street Property (and the Douglas Road Property) to avoid their judgment debt to him.
[12] Despite Mr. Li’s CPL, the Service Street Property was sold as a result of the FCC’s foreclosure proceeding against the Son. Mr. Li’s CPL remains on the Douglas Road Property. Ms. Wang deposes that the equity in the Douglas Road Property is approximately $600,000 but the basis for this assertion is not clear. As noted, the Daughter is the registered owner of the Douglas Road property. It is not possible to know whether Mr. Li will succeed in his claim respecting both or only one of the properties (or succeed at all). Therefore, I cannot accept Ms. Wang’s submission that Mr. Li’s CPL on the Douglas Road Property is adequate security.
[13] I agree with the parties that removing the CPL to permit transfer of title to the purchaser of the Service Street Property is necessary to avoid hardship. However, I am not persuaded by Ms. Wang’s submission that Mr. Li’s claim on the Service Street Property is so weak that her undertaking to pay damages is sufficient. This is not a situation analogous to De Cotiis v. De Cotiis, 2004 BCSC 1658.
[14] That said, while there is some other evidence supporting his claim, much of Mr. Li’s evidence about the nature of the transactions between the defendants as they involve the Service Road Property is based on his personal belief and is grounded in his theories about their underlying motivations. In light of that, I conclude that $294,729.21, representing half of the judgment debt owed to Mr. Li should be posted as security in exchange for removing the CPL.
[15] There remains Ms. Wang’s request for dismissal of the action against her. In her application response, Ms. Wang submits that the claim against her should be dismissed because:
The facts alleged in the Notice of Civil Claim as regards the [Service Street] Property are untrue. The true facts are stated above. The Plaintiff has no cause of action against the Applicant and the claim against her and the [Service Street] Property should be dismissed.
[16] It appears that Ms. Wang relies on Rules 9-5 (striking pleadings) and 9-6 (summary judgment). The submission reproduced above does not meet either the tests for striking a pleading or the test for summary judgment. Having sought to add herself to this action in this application, Ms. Wang has adduced evidence – and provided an opportunity for Mr. Li to adduce evidence – that I have found sufficient to raise a triable issue about whether he has a claim to the Service Street Property. That necessarily includes an issue about whether Ms. Wang is the true owner of that property. Based on the evidence tendered in this application, I find that she is an appropriate defendant.
[17] I make the following orders:
a) Ms. Wang will be added as a defendant to this action, and her Response to Civil Claim will be accepted for filing;
b) The Certificate of Pending Litigation registered by Mr. Li under Land Registry No. CA6586304 against the Service Street property, whose legal description is
PID: 003-243-133
LOT 126 DISTRICT LOT3 GROUP 1 NEW WESTMINISTER DISTRICT PLAN 30133
will be cancelled pursuant to s. 257(1)(a)(ii);
c) Ms. Wang will pay into court the sum of $294,729.21 as security for cancelling the Certificate of Pending Litigation referred to above;
d) As success was divided, I make no order as to costs.
“IYER J.”