2019 QCCA 789, 2019 QCCA 789

Wong c. Bill Wong inc. 2019 QCCA 789 COURT OF APPEAL CANADA PROVINCE OF QUEBEC REGISTRY OF MONTREAL No: 500-09-026704-171 (500-17-067696-115) MINUTES OF THE HEARING DATE: May 1, 2019 CORAM: THE HONOURABLE NICHOLAS KASIRER , J.A. JOCELYN F. RANCOURT , J.A. STEPHEN W. HAMILTON , J.A. APPELLANTS COUNSEL EARL WONG 9093-7244 QUÉBEC INC. Mtre MICHAEL D. WORSOFF (Campbell Cohen Worsoff) RESPONDENT COUNSEL BILL WONG INC. Mtre JULIEN LUSSIER ( IMK S.E.N.C.R.L/IMK L.L.P. ) IMPLEADED PARTY AMBIENTI MOBILIER DESIGN DÉCOR INC. 9183-2212 QUÉBEC INC. OFFICIER DE LA PUBLICITÉ DES DROITS DE LA CIRCONSCRIPTION FONCIÈRE DE MONTRÉAL ABSENT

On appeal from a judgment rendered on February 28, 2017 by the Honourable Paul Mayer of the Superior Court, District of Montreal. DESCRIPTION : Administration of the property of others – Rendering of account – Referred re-amended application for leave to appeal de bene esse (Articles 30, para. 2(8) and 357 C.C.P .). Clerk: Mai Nguyen. Courtroom: Pierre-Basile-Mignault.

HEARING 9:32 Commencement of the hearing. Introductory comments by the Court. 9:33 Exchanges between the Court and Mtre Worsoff on the application for leave to appeal de bene esse . Submissions by Mtre Worsoff. 9:36 Intervention by Mtre Lussier. 9:39 Mtre Worsoff submits a document. 9:42 Exchanges between the Court and Mtre Worsoff. 10:05 Mtre Worsoff submits a document. 10:16 Recess of the hearing. 10:22 Resumption of the hearing. The Court addresses Mtre Lussier. 10:23 Submissions by Mtre Lussier on the application for leave to appeal.

Mtre Lussier submits an additional book of authorities. 10:24 Submissions by Mtre Lussier. 10:26 Exchanges between the Court and Mtre Lussier. 10:43 Rebuttal by Mtre Worsoff. 10:47 Recess of the hearing. 10:50 Resumption of the hearing. 10:51 BY THE COURT: judgment – see page 4. Conclusion of the hearing. Mai Nguyen Clerk BY THE COURT JUDGMENT

[ 1 ] Earl Wong and 9093-7244 Québec inc. (“Québec inc.”) have filed an amended notice of appeal against a judgment of the Superior Court, District of Montreal (the Honourable Paul Mayer), rendered on February 28, 2017. [1] The judge granted a motion for inscription for judgment on an accounting brought by Bill Wong Inc., homologated that accounting and condemned Earl Wong and Québec inc. to pay, solidarily, the amount of $1,271,453.02 to Bill Wong Inc., with interest from the date of judgment. [ 2 ] The appellants also filed a re-amended application for leave to appeal de bene esse pursuant to

article 30, para. 2(8) C.C.P . They were no doubt mindful that in the event the judgment is characterized as one “ruling on execution matters / rendus en matière d’exécution ”, leave would be required. Our colleague Mainville, J.A., sitting in chambers, referred the de bene esse application to the Court. [2] *** [ 3 ] This is the latest

chapter in a long-standing dispute relating to a family business. [ 4 ] In 2011, respondent Bill Wong Inc. took action in the Superior Court, seeking, inter alia , an order requiring the appellants Earl Wong and Québec inc., a company that he controlled, to render account of their administration of an immovable property located on Décarie Boulevard in Montreal that belongs to Bill Wong Inc. [ 5 ] In that action, the respondent alleged, in particular, that the appellants had improperly managed Bill Wong Inc. and the immovable since 2001, that they had undertaken fraudulent transactions in respect of Bill Wong Inc.’s assets., leased and sub-leased the immovable without proper authority and misappropriated funds, including rents from sub-lessees (the latter being the impleaded parties to this appeal). [ 6 ] A trial was heard before Mayer, J. in 2015.

On June 5, 2015, the last day of the trial, Earl Wong and Québec inc. confessed to judgment and Mayer, J. acknowledged the confession to judgment and ordered the parties to abide by it.

By judgment dated June 22, 2016, the judge formally ordered, inter alia , the following: the appellants to render account of their administration of the immovable property, Earl Wong to render account of his administration of Bill Wong Inc.; the appellants to indemnify Bill Wong Inc. and its directors for certain tax liabilities and to pay Bill Wong Inc. certain sums of money representing, in particular, rents payable by the sub- lessees of the immovable property. [ 7 ] Following a period of several months, Bill Wong Inc. concluded that the appellants had failed to present their rendering of account as stipulated in the June 5, 2015 confession and the June 22, 2016 judgment.

The respondent then decided to prepare its own accounting and subsequently applied for inscription for judgment on that accounting.

In addition to asking for homologation of its accounting, Bill Wong Inc. asked the Superior Court to condemn the appellants, solidarily, to pay it $1,272,453.02, representing additional amounts paid to the appellants by sub-lessees Ambienti Mobilier Design Décor inc. and 9183-2212 Québec inc., but not properly remitted to Bill Wong Inc. [ 8 ] At the hearing in Superior Court on February 28, 2017 that gave rise to the judgment a quo , Earl Wong represented himself and no attorney appeared to represent Québec inc. At the hearing, Bill Wong Inc. filed its own accounting before the judge.

The appellant Earl Wong filed in the record a document (exhibit D-1) that purported to account for rents received and taxes and expenses paid in respect of the immovable. [ 9 ] Mayer, J. gave oral reasons for judgment at the hearing, and he signed the written judgment prepared by the respondent. In the oral judgment, Mayer, J. observed that “the Plaintiff Bill Wong Inc. did not receive any rendering of account”.

The materials submitted by Earl Wong at the hearing, including exhibit D-1, were characterized by the judge as a “partial undocumented accounting”, and “an inadequate accounting”, and the judge found additionally “it is not in time to be effective”.

The judge rejected all Earl Wong’s explanations and characterized the latter’s conduct as a “smug, disdainful and condescending fraud” perpetrated on his sisters and their late father’s business. [ 10 ] In his written judgment, and based on documents submitted by Bill Wong Inc. and testimony from its representative Julie Wong, the judge homologated Bill Wong Inc.’s accounting and condemned Earl Wong and Québec inc., solidarily, to pay Bill Wong the stated amount of $1,272,453.02, with interest. *** [ 11 ] The appellants ask that the trial judgment be set aside and that the damages they have been condemned to pay be reduced to $302,426.89, the amount they calculate to have been due from them to Bill Wong Inc.

In support of these conclusions, the appellants submit the following issues, recast here as three questions: 1. Did the trial judge state erroneously in paragraph 3 of the judgment that Appellants failed to render an account of their administration without examining or analyzing the evidence presented by the latter? 2. Did the trial judge incorrectly assess the rentals and the amount of damages based on documents and calculations submitted by Respondent, same being fraught with errors? 3.

Did the trial judge fail to take into account the relevant provisions of the Civil Code of Québec pertaining to rendering of accounts and, in particular articles 1347 and 1352 C.C.Q. ? [ 12 ] Assuming without deciding that the appellants are correct that the judgment a quo is susceptible of appeal of right, their appeal must be dismissed. None of their three grounds of appeal, which the Court proposes to treat in turn below, has any merit. ***

1. Did the trial judge state erroneously in paragraph 3 of the judgment that Appellants failed to render an account of their administration without examining or analyzing the evidence presented by the latter? [ 13 ] The appellants submit that the judge failed to examine the evidence they submitted, which amounted to a detailed accounting of the amounts of the rents collected.

It should have been held to satisfy their obligation to render account. [ 14 ] In support of this argument, the appellants presented new calculations, based on tables of information that were not presented to Mayer, J. in first instance. [ 15 ] This submission is rejected. [ 16 ] According to the judge, the appellants failed to render any account prior to the respondent’s inscription for judgment of its own accounting. In so deciding, the judge was entitled to follow the procedure set forth in the Code of Civil Procedure in the circumstances.

Article 678 C.C.P. provides: 678. À défaut d’exécution volontaire, la

partie qui a demandé la reddition de compte peut elle- même établir le compte et inscrire pour jugement. Celui qui doit rendre compte ne peut alors débattre le compte, mais il peut contre- interroger les témoins. 678. Failing voluntary execution, the party that required the rendering of account may prepare the account and have it set down for judgment. In that case, the party required to account cannot debate the account but may cross-examine the witnesses. [ 17 ] No reviewable error has been shown in the judge’s conclusion that, pursuant to the procedure set forth in

article 678, the appellants had failed to produce an adequate account in a timely fashion. [ 18 ] Exhibit D-1 was produced by the appellants on the day of the hearing at which the judge was seized of the respondent’s application for inscription for judgment of its own accounting. This was approximately 18 months after the appellants had confessed to judgment on June 5, 2015 in an action demanding that they render account, which confession the judge homologated.

The production of D-1 occurred approximately 7 months after the same judge, on June 22, 2016, had ordered the appellants to render account of their administration of the immovable within 60 days and Earl Wong to render account of his administration of Bill Wong Inc. within the same 60-day time limit. The judge was entitled to conclude that the evidence submitted by the appellants was late. [ 19 ] The judge was also entitled to conclude that what the appellants did submit failed to satisfy the requirements of a rendering of account as ordered. Exhibit D-1 only covered part of the period required.

There are unexplained discrepancies between D-1 and the information presented by the respondent, in particular the appellants’ bank statements that strongly suggest that D-1 was, as the judge concluded, unreliable. The judge was also entitled to consider on this point, testimony of the parties, including Earl Wong’s declaration, recorded by the judge in his oral reasons, that 90% of the information relating to Bill Wong Inc. was “in his head” and 10% was “on paper”. [ 20 ] Even if the regime set forth in

article 678 C.C.P . did not require the judge to consider the document filed by appellant Earl Wong designated as D-1, his oral reasons make it plain that he did so, leading him to the conclusion that “[Earl Wong’s] partial undocumented accounting is not enough to save the situation. It is an inadequate accounting and it is not in time to be effective”. [ 21 ] The appellants have failed to show a palpable or overriding error that would allow these findings of fact and mixed questions of fact and law to be disturbed: see, generally on the standard of review for such questions, Bell Canada v.

MusiquePlus inc ., 2018 QCCA 1986 , para. [21] to [27] . [ 22 ] Once a judge has decided that the party obliged to render account has failed to do so, it is an established principle under

article 678 C.C.P . that the party in default is prohibited from debating the substitute accounting made by the opposite party. The party in default may only cross-examine the opposite party on the evidence offered: Hemmings v. Hemmings , [1972] C.A. 261 at 262-4 . [ 23 ] At the hearing on February 28, 2017, the appellants asked only a few questions in cross-examination of the representative of Bill Wong Inc. on the accounting she submitted to the judge, as

article 687 C.C.P . allowed. The judge took due note of this. [ 24 ] Not only were the tables of calculations presented in support of the appeal not before the first judge, at least one of these tables is identical to a table that the appellants had sought to introduce into the record on a motion for new evidence that was dismissed: Earl Wong et al. v.

Bill Wong Inc. , 2017 QCCA 1912 . [ 25 ] In any event, it was plain at the hearing that the tables presented on appeal were themselves incomplete and, like exhibit D-1, did not present a reliable picture of the amounts received and paid by the appellants. [ 26 ] This first submission is thus rejected. *** 2. Did the trial judge incorrectly assess the rentals and the amount of damages on documents and calculations submitted by Respondent, same being fraught with errors? [ 27 ] The appellants submit that the judge should not have accepted and homologated the respondent’s accounting without properly analyzing it.

Moreover, the calculations used by the judge, based largely on respondent’s documents, do not justify the damage award of $1,271,453.02 to which the appellants were condemned. Specifically, the judge should not have awarded amounts for certain taxes, certain rents, and that the judge failed to take into account capital expenses paid by the appellants. In order to demonstrate this, the

appellants advance new calculations in their written argument on appeal that give rise to a far lesser amount of damages. [28] The judge’s evaluation of the reliability of the respondent’s accounting reflects his weighing of the evidence presented by theparties, both documentary and testimonial. His findings of facts in this regard merit deference in this Court. Again, these determinationscan only be disturbed on appeal if the appellants show, with the precision required by the jurisprudence, a palpable and overriding errorin the judgment: see, e.g., P.L. v.

Benchetrit, 2010 QCCA 1505, para. [24]. [29] No such error has been shown. [30] The judge plainly viewed the documents submitted by the appellants at the hearing as unreliable. [31] In its accounting, the respondent used, in part, Québec inc.’s bank statements that it had obtained through seizure to prepare theaccounting it submitted to the judge for inscription for judgment in light of the appellants’ failure to render account. These bankstatements showed, in particular, the amounts paid by the sub-lessees that the appellants failed to disclose properly in a timely manneraccording to the testimony of Ms.

Wong, representative of Bill Wong Inc. [32] As for the appellants claim that the judge failed to acknowledge the capital expenditures listed in their rental statements, Ms.Wong also testified to the fact that both sub-lessees had complained to Bill Wong Inc. that these capital expenditures were not legitimateand she testified that the freight elevator had not been replaced.

The judge was entitled to reject the argument of the appellants based onthe evidence before him. [33] The appellants argue as well that the amounts relating to the Goods and Services Tax and Quebec sales tax had already beencollected from the sub-lessees and remitted to the government authorities and that the effect of the judgment is to oblige the appellants topay that amount again. [34] Here again, the argument that the judge erred in condemning the appellants to pay damages equivalent to the GST and Quebecsales tax is rejected. [35] There was no adequate evidence presented, in the judge’s view, that the tax amounts had indeed been paid by the appellants.

BillWong Inc. would, at the end of the day, be liable for sums not properly remitted to the government. On the evidence, including thetestimony of Ms. Wong on this point, the judge was entitled to conclude as he did. [36] The appellants propose that the whole matter of the calculation be retried on appeal, which of course is not the function of a courtof appeal. No reviewable error has been shown in respect of the second submission and no basis has been shown to disturb the amount ofdamages he awarded to the respondent. *** 3.

Did the trial judge fail to consider relevant provisions of the Civil Code of Québec pertaining to the law relating to rendering ofaccounts, in particular articles 1352 and 1347 C.C.Q.? [37] The appellants argue that if the respondent wished to contest the documents submitted by them as rendering of account, it shouldhave undertaken an audit by an expert, as required by

article 1352 C.C.Q. as the basis for contesting the accounting. [38] The argument is without merit. Not only was the judge entitled to conclude that the appellants had failed to produce therendering of account ordered under

article 678 C.C.P., the appellants cite

article 1352 C.C.Q., which bears on annual accounts preparedby the administrator of property of another, out of context: see, generally, Succession Des Marais v. Des Marais, [1997] R.J.Q. 2662(C.A.), (QCCA). In any event,

article 1352, para. 2 C.C.Q. provides that an interest party “may / peut” apply to thecourt for an audit, it does not impose this as a precondition to contesting the late submission of documents that took place here. [39] Finally, no plausible argument as to the misapplication of

article 1347 C.C.Q. has been made. The appellants simply assert that“the capital account is generally debited for expenditures that are not debited from the revenues”. This observation has no bearing on theoutcome of the appeal given the evidence relating to capital expenditures adduced before the judge. *** [40] As a final note, the Court observes that Québec inc. was not represented by counsel before Mayer, J. at the hearing giving rise tothe judgment a quo. Article 87(3) C.C.P. required that, as a legal person, Québec inc. had to be represented by a lawyer.

The judgmentwas thus rendered in default for this party and, on appeal, no plausible argument was advanced to explain or remedy the default. [41] In sum, without deciding whether the appeal required leave or not, the Court finds no merit in any of the appellants’ submissions. FOR THE FOREGOING REASONS, THE COURT: [42] DISMISSES the appeal with legal costs against the Appellant; [43] DISMISSES the de bene esse application for leave to appeal without costs.

NICHOLAS KASIRER, J.A. JOCELYN F. RANCOURT, J .A. STEPHEN W. HAMILTON, J.A.