2019 QCCA 1841, 2019 QCCA 1841

Zhang c. Massachusetts Growth Capital Corporation 2019 QCCA 1841 COURT OF APPEAL CANADA PROVINCE OF QUEBEC REGISTRY OF MONTREAL No: 500-09-027350-180 ( 500-17-090895-155 ) MINUTES OF HEARING DATE: October 25, 2019 CORAM: THE HONOURABLE GUY GAGNON, J.A. SIMON RUEL, J.A. SUZANNE GAGNÉ, J.A. APPELLANTS COUNSEL Yisheng Zhang CANAIMEX INC.

Mtre VÉRONIQUE SAAD ( Legault Joly Thiffault ) RESPONDENT COUNSEL Massachusetts Growth Capital Corporation Mtre Dominique Vallières ( Lavery, De Billy s.e.n.c.r.l. ) Absent On appeal from a judgment rendered on February 5, 2018 by the Honourable Peter Kalichman of the Superior Court , District of Montréal . NATURE OF THE APPEAL: International - jugement étranger - compétence des tribunaux Clerk at the hearing : Annabel David-Boudrias Courtroom: Antonio-Lamer HEARING 9:00 Continuation of the hearing of October 23 rd , 2019. BY THE COURT : judgment – see page 3. Conclusion of the hearing.

Annabel David-Boudrias, Clerk at the hearing JUDGMENT [ 1 ] On December 10, 2013, a U.S. court (United States Bankruptcy Court, District of Massachusetts (Central Division)) rendered a written judgment against the appellants, the conclusions whereof read as follows: 2. Judgment is entered against Yisheng Zhang and in favor of the Trustee on Counts III-V of the Complaint in the amount of $69,000 (USD) plus interest at 12% from the date of filing the Complaint to December 9, 2013 and post-judgment interest at the federal statutory rate of 0.13% from December 10, 2013 until the judgment is paid. 3.

The Counterclaim of Canaimex, Inc. and Yisheng Zhang against David M. Nickless, Trustee is dismissed. [1] [ 2 ] The Superior Court (the Honourable Peter Kalichman) dismissed the appellants’ contestation of the respondent’s motion for recognition of a foreign judgment.

They appeal that judgment, the conclusions of which are as follows: [64] RECOGNIZES the judgment rendered on December 10, 2013 in Worcester, Massachusetts, by the United States Bankruptcy Court, district of Massachusetts (central division) condemning CANAIMEX INC. and YISHENG ZHANG, jointly and severally, to pay the amount of USD $69,000.00 plus interest at 12% from April 25, 2012 to December 9, 2013 (which as of that date represented an amount of CAD $83,847.92), and at 13% from the latter date to the date of payment and dismissing the Defendants’ Counterclaim; [65] DECLARES the said judgment enforceable; [66] THE WHOLE , with costs. [2] [ 3 ] In essence, the appellants contend that they were the victims of a breach of the fundamental principles of procedure (art. 3155 para. 3 C.C.Q. ), because they were not served with certain legal documents emanating from the U.S. court, which resulted in the foreign judgment being rendered without their knowledge.

Consequently, they did not have a reasonable opportunity to defend themselves in the Massachusetts court. [ 4 ] The judge dismissed the argument as follows: [57] The address which the Trustee had used prior to the Defendants’ Objection of July 13, 2012 was 69 Rue A. Subsequent to the Defendants’ Objection of July 13, 2012, the Trustee and the Court attempted unsuccessfully to serve Mr. Zhang at the address he had given on Sources Boulevard. [58] At trial, Mr. Zhang indicated that he has resided at 69 Rue A since 2004. [59] Mr.

Zhang testified that after his letter of July 13, 2012, he was waiting for the Court to contact him and was therefore surprised when he learned that the Judgment had been rendered. How exactly he expected the Court to contact him is unclear since he had given the wrong address not only for himself but for Canaimex as well. If he had wanted the Court to contact him by some other means, he should have indicated as much in his July 13, 2012 letter.

[60] Under the circumstances, the Defendants have themselves to blame for the fact that they did not receive proceedings subsequent to July 12, 2013. [61] Furthermore, despite his request for a delay until November 30, 2013 to find a new lawyer to represent the Defendants before the Massachusetts Court, Mr. Zhang testified that he never found a new lawyer and the efforts he made to find one were, in the Court’s view, feeble. [62] In light of the above, it is not surprising that the Judgment was rendered against the Defendants.

In fact, under the circumstances, it would have been surprising if a judgment had not been rendered against them. [ 5 ] These findings, which are essentially factual, are exempt from any reviewable error. Here are the reasons why. [ 6 ] The appellants participated actively in the legal proceedings brought before the U.S. court, by retaining the professional services of a Boston, U.S.A., lawyer, Tal M. Unrad, Esq., of the firm Burns & Levinson LLP. The latter had asked to appear on behalf of his Canadian clients before the Massachusetts court on or about June 25, 2012.

He then obtained an authorization to have the default against them removed on July 13, 2012 and was authorized to file a defence and counter-claim on their behalf, the most recent amended pleadings having been filed in the court record on January 10, 2013. [ 7 ] In their motion dated July 13, 2012 to vacate the default judgment, [3] the appellants indicated their respective addresses in Canada. For the appellant Canaimex, the declared address was 2001 University Avenue, Suite 17003 , Montreal, Quebec (allegation 4a). In support of this allegation, Mr.

Unrad filed an Industry Canada document [4] confirming this address and including the date of the last annual meeting of the corporation, [5] which was held on May 18, 2012. This evidence is therefore contemporaneous with the July 13, 2012 pleading. [ 8 ] As for appellant Zhang, the same pleading informed the U.S. court of his personal address, namely, “ [...], DDO, Montreal, Québec, Canada” (allegation 4b). This information was also supported by evidence dated July 4, 2012 originating from Industry Canada and confirming the address in question. [6] [ 9 ] The record shows that, in the course of his mandate, Mr.

Unrad experienced difficulties with his Canadian clients. According to the allegations set out in his motion dated April 11, 2013 to withdraw as counsel, Mr. Unrad claimed that the appellants had failed to cooperate with him to move the case forward. This pleading contains the following allegation: 12. Burns & Levinson has provided the Defendants with sufficient notice of its intent to file the instant motion to withdraw.

Despite the Defendants’ statements of its intent to seek successor counsel, Burns & Levinson is not aware of whether the Defendants have taken any steps to engage successor counsel. [7] [ 10 ] The judgment authorizing Mr. Unrad to withdraw as counsel granted the appellants until May 31, 2013 to find new counsel and to allow such counsel to file an appearance before the United States Bankruptcy Court, District of Massachusetts. Since Mr.

Unrad’s ethics have not been called into question in this case, we can rightfully assume that he informed his clients of the deadline to “find successor counsel and for successor counsel to file an appearance”. [8] [ 11 ] The evidence indicates that all relevant proceedings in the U.S. case were sent either directly to Mr.

Unrad or to the appellants by registered mail, to each of the two Canadian addresses disclosed in the pleading dated July 13, 2012, the whole until July 26, 2013. [ 12 ] On July 12, 2013, appellant Zhang informed the clerk of the U.S. court that, from then on, appellant Canaimex had moved its office to 2001 University, Montreal, Suite 17053 [9] .

This information can easily be understood as being a personal appearance in the U.S. court file. [ 13 ] Also, the record indicates that the clerk took note of these changes as of July 26, 2013, such that the pleadings as of that date were sent by registered mail to the aforementioned address. [ 14 ] The record reveals, however, that two weeks after the notice dated July 12, 2013, appellant Canaimex moved once again to Monkland Avenue in Montreal. At that time, appellant Zhang failed to notify the opposing party and the clerk of the U.S. court of the change.

He explained this carelessness in two lines: J’avais beaucoup de changements avec la banque, des clients, j’ai oublié […]. Non, j’ai pas réalisé qu’il faut que je … prévenir, j’informe à la Cour aux États-Unis […] [10] [ 15 ] Appellant Zhang acknowledged under cross-examination that after appellant Canaimex’s second move in almost one month, he had returned on several occasions to his former address to collect his mail. Non.

En fait, après mon… après j’ai déménagé, je suis retourné très souvent parce qu’il y a aussi des lettres commerciales, il y a des contacts commercials que je dois retourner pour vérifier. [11] [ 16 ] It appears that notwithstanding this initiative, appellant Zhang disregarded the notices and pleadings from the U.S. court, despite the fact they had been sent by registered mail to the most recent address disclosed by the appellants, namely, 2001 University, Suite 17053. [ 17 ] That being said, the evidence shows that appellant Zhang was informed well before April 11, 2013 of the withdrawal of his U.S. counsel.

Notwithstanding this announcement, the evidence contains no indication that the appellants attempted to find new counsel before May 31, 2013. [ 18 ] In a letter dated July 12, 2013, the appellants unilaterally gave themselves until November 30, 2013 to find new counsel.

[ 19 ] In short, the appellants had nearly eight months within which to retain counsel, without success. In addition, the record does not show the extent of their diligence in order to find counsel. [ 20 ] Moreover, after November 30, 2013, the appellants continued to show a lack of concern for judicial proceedings by failing to take any useful steps in order to seek an additional extension of time in the U.S. court, assuming, of course, such extension were legally possible. Yet the appellants must have known that their self-imposed delay to find new counsel had now expired.

It should be noted that the U.S. judgment, which is now being contested, was only rendered on December 10, 2013. [ 21 ] With respect to the evidence regarding foreign law, the judge relied on expert evidence, which he accepted, consisting of the opinion of U.S. lawyer Alex F. Mattera, Esq., who stated the following: However, in this case, initial service was made and there was a return receipt for that service.

Subsequent service was made specifically to the address provided by the defendants, and so the Court was within its jurisdiction to determine that even though the mail was returned as undeliverable, because it was delivered or attempted to be delivered to the defendants at the address they themselves provided, the trustee’s efforts to effectuate service were sufficient .

So the Court does have discretion to look at each attempt of service on an ad hoc basis to determine whether it was sufficient. [12] [Emphasis added.] [ 22 ] Lastly, the appellants never attempted to ask the U.S. court to retract the December 10, 2013 judgment, notwithstanding the fact that they had been informed of its existence on October 13, 2015. [13] [ 23 ] In short, there is no evidence that the fundamental principles of procedure were breached.

Rather, the evidence strongly suggests that the appellants were completely indifferent to the proceedings before the U.S. court, believing, perhaps, that the judgment resulting therefrom would never make it across the Canadian border. [ 24 ] Given the foregoing, the judge was therefore well founded in concluding as follows: [63] The Court has no hesitation in concluding that the exception of Art. 3155(3) does not apply. [ 25 ] Having said this, the appellants draw the Court’s attention to an error of form contained in the conclusions of the judgment under appeal, where a rate of 13% is mentioned, while the rate should be “0.13%”, as provided in the conclusions of the United States Bankruptcy Court, District of Massachusetts.

The respondent does not oppose this application for a correction.

FOR THESE REASONS, THE COURT: [ 26 ] ALLOWS the appeal for the sole purpose of amending paragraph 64 of the judgment under appeal, which should read as follow: [64] RECOGNIZES the judgment rendered on December 10, 2013 in Worcester, Massachusetts , by the United States Bankruptcy Court, district of Massachusetts (central division) condemning CANAIMEX INC. and YISHENG ZHANG, jointly and severally, to pay the amount of USD $69,000.00 plus interest at 12% from April 25, 2012 to December 9, 2013 (which as of that date represented an amount of CAD $83,847.92), and at 0.13% from the latter date to the date of payment and dismissing the Defendants’ Counterclaim; [ 27 ] THE WHOLE , with costs against the appellants.

GUY GAGNON, J.A. SIMON RUEL, J.A. SUZANNE GAGNÉ, J.A.