



COURT OF APPEAL FOR ONTARIO

CITATION: Korea Data Systems (USA), Inc. v. Aamazing
    Technologies Inc. (Ajay Amazing Technologies Inc.), 2014 ONCA 652

DATE: 20140925

DOCKET: M43880, M43941, M44009,

M44015 and M44059 (C55916)

Watt, Tulloch and Benotto JJ.A.

BETWEEN

Korea Data Systems (USA), Inc.

Plaintiff (Appellant)

and

Aamazing Technologies Inc. carrying on business
    as Ajay Amazing Technologies Inc.,
Jay Chiang, a.k.a. Jay
    Tien Chiang a.k.a. Tienchieh Chiang
, Julius Chiang and Christina Chiang
    a.k.a. Christian Chiang a.k.a. Suh Mei Tasi, a.k.a. Suh Mei Tsai a.k.a.
    Christina Suh Mei Tsai, a.k.a. Suh Mei Tasi Chiang, a.k.a. Christina Suh-Mei
    Chiang a.k.a. Suh-Mei Chiang, and Dong Liang a.k.a. Tung Liang

Defendants (
Respondents in Appeal
)

AND BETWEEN:

Mendlowitz &
    Associates Inc. in its capacity as Trustee in bankruptcy of Jay Tien Chiang,
    and
Korea Data Systems (USA), Inc.

Plaintiffs (
Appellant
)

and

Jay
    Tien Chiang, a.k.a. Jay Chiang, a.k.a. Tienchieh Chiang, Christina Chiang, also
    known as Suh Mei Tasi, a.k.a. Christian Chiang a.k.a. Suh Mei Tsai, a.k.a.
    Christina Suh Mei Tsai, a.k.a. Suh Mei Tasi Chiang, a.k.a. Christina Suh-Mei
    Chiang a.k.a. Suh-Mei Chiang
, Chun Chun Wu, Jie Chu Wu, Chen Cheng-Yueh
    Tsai, Yu Chang Chiang also known as Y.C. Chiang, En Fu Chiang, Brenda Chang,
    Samson Chang, David Cheng, Everview Inc., 961266 Ontario Inc., 1204360 Ontario
    Inc., 1243723 Ontario Inc., Aamazing Technologies Inc., Wen Wang Chiang a.k.a.
    Wen Chiang a.k.a. Wen Wang, Crystalview Technology Corp., E.C. Holdings Ltd.,
    Telepower International (Canada), Inc., Best Buy Electronics Inc., Su Feng Tsai
    a.k.a. Tsai Su Feng, Tsai Zheng Li, Tsai Zheng Ying, Asia Pacific Gateway
    (H.K.) Ltd., Century Group Holdings Ltd., Albany Investments Ltd., Mei Huang,
    Winner International Group Limited, Huang Chi Lung, Min Huang, Wainwright
    Ventures Ltd., New Global Investment Limited and Floratino Limited

Defendants (
Respondents in Appeal
)

Scott Hutchison, for the moving party Korea Data Systems
    (USA), Inc. on M44059

Hilary Book, for the moving party Christina Chiang on
    M43941 and M44015

Catherine Francis and Mark A. Freake, for the moving
    party Mendlowitz & Associates Inc. on M43880

J.T. Curry and K.M. Pentney, for moving party Jay Chiang
    on M44009

Heard: August 25, 2014

On motion for directions on the appeal from the order of Associate
    Chief Justice Frank N. Marrocco of the Superior Court of Justice, dated July 9,
    2012.

ENDORSEMENT

[1]

The motions before the court arise out of a proposed appeal by Korea
    Data Systems (USA), Inc. of an order for costs made in favour of Christina
    Chiang. A summary of the background is necessary to put the motions in context.

Brief History of Litigation

[2]

The parties have been embroiled in a complex commercial dispute since
    the early 1990s.  It has occupied courts in California, Taiwan, Hong Kong and
    Ontario.

[3]

The litigation arose between Aamazing Technologies Inc. and KDS and its
    affiliates.  KDS sued Aamazing and its alter egos Jay Chiang and Julius
    Chiang to enforce a settlement agreement and to obtain damages for computer
    monitors that were shipped but not paid for. The California Superior Court gave
    judgment against Aamazing, Jay Chiang personally, and Julius Chiang personally
    for US$9, 678, 832. Jay Chiang then filed for bankruptcy in Ontario, declaring
    the California Judgment to be a liability. He is currently an undischarged
    bankrupt, with his property vested in his Trustee. KDS filed proofs of claim in
    the bankrupt's Estate in the amount of the California Judgment.

[4]

In 1998, KDS started an action in Ontario against Jay Chiang, Julius
    Chiang, and Aamazing to enforce the California Judgment and to obtain a
    declaration that the judgment debt should survive bankruptcy pursuant to s. 
    178(1)(d) of the
Bankruptcy and Insolvency Act
, RSC 1985, c. B-3.

[5]

In 2000, KDS started another action in Ontario against Jay Chiang and
    his wife Christina Chiang, as well as some of their relatives and associated
    corporations, for conspiracy and fraudulent conveyance (the fraudulent
    conveyance action). The Trustee later joined this action as a co-plaintiff.

[6]

KDS then obtained a default judgment from a California court against
    Christina Chiang on the basis that she had fraudulently conveyed assets to
    defeat the earlier California Judgment. In 2006, the Ontario Superior Court of
    Justice ordered that this judgment of more than US$5,000,000 be enforced (the
    enforcement action).

[7]

Notwithstanding its success against Christina Chiang in California, KDS
    continued to pursue the fraudulent conveyance action against her in Ontario.

[8]

The enforcement action and the fraudulent conveyance action were heard
    together by Marrocco J. in 2011. His judgment was released on July 9, 2012. In
    a separate ruling, dated May 28, 2014, Marrocco A.C.J.S.C. ordered the Estate
    and KDS jointly and severally liable for the costs of the fraudulent conveyance
    action to Christina Chiang. He refused to allow a set-off of the costs for the
    amount by which Christina Chiang was indebted to KDS. The reasons for the May
    28, 2014 orders were provided on April 29, 2014.

[9]

In August 2012, KDS and the Trustee issued a Notice of Appeal against
    the trial judgment. The appeal has yet to be perfected. KDS would now like to
    appeal the costs order against Christina Chiang, which arose from the
    fraudulent conveyance action. But for costs, KDS has settled the fraudulent
    conveyance appeal.

[10]

After
    the trial decision was released, the Trustee reached an agreement with Jay and
    Christina Chiang settling all the remaining issues between them. Prior to
    deciding the costs order, the trial judge was advised by the Trustee of its
    position that Christina Chiang was entitled to reasonable costs. The Trustee
    supports Ms. Chiangs position on the motions.

Motions before this Court

[11]

The
    motions concern the means  if any  by which KDS can appeal the costs order.

[12]

These
    are the issues to be determined:

1.

Is leave
    required to appeal the costs order and, if so, should this court grant leave?

2.

Should the costs
    appeal be separated from the main appeal?

3.

Should KDS be
    required to post security for costs?

4.

Costs of the
    motions.

Is leave required to appeal the costs order?

[13]

Christina
    Chiang and the Trustee argue that leave is required for all appeals as to
    costs, pursuant to s. 133(b) of the
Courts of Justice Act
.

[14]

KDS
    argues that the order goes beyond the usual quantum and entitlement
    determination with respect to costs; the order alters legal rights not related
    to the costs of the fraudulent conveyance action.

[15]

The
    costs order provides that:

1.

Christina Chiang
    is entitled to her costs fixed in the amount of $665,990.96;

2.

to the extent
    that the costs are paid by the Estate, the Trustee is entitled to seek recovery
    from KDS;

3.

counsel for
    Christina Chiang is entitled to a solicitors lien on the costs, which shall
    have priority over the claims of the Estates unsecured creditors;

4.

all of KDSs
    reasonable costs  arising from KDSs efforts to sell the Chiangs house at 10
    Cortina Court, and an outstanding costs order for $15,000 made against
    Christina Chiang, have been satisfied from surplus funds realized from the sale
    of the house;

5.

outstanding
    costs orders made against Jay and Christina Chiang are to be satisfied out of
    funds received by the Trustee from Winner International Group Ltd. after the
    trial decision.

Is the order more than a costs
    order?

[16]

There
    appear to be few, if any, Ontario cases that consider this question. The
    British Columbia Court of Appeal considered a similar situation in
Jamieson
    v. Loureiro
, 2009 BCCA 254, [2009] B.C.J. No. 1426. There, the costs order
    specified that the costs would be set-off against a judgment debt. Neilson J.A.
    found that the order for set-off is in effect a variation of the earlier
    division of family assets. As a result, leave was not required because the
    costs order was not an order respecting costs only under s. 7(2)(b) of the
Court
    of Appeal Act
, R.S.B.C. 1996, c. 77.

[17]

Here,
    the trial judge's decision not to allow set-off has a substantive effect on the
    legal rights of KDS. The decision effectively eliminates the ability of KDS to
    set-off this debt against the much larger judgment debt owed to it by Christina
    Chiang.

[18]

In
    our view, the order is not a straightforward determination of who should pay
    the costs and how much those costs should be. The order determines rights that
    extend beyond the entitlement to and quantum of the costs. As such, the appeal
    is not only as to costs. Thus, leave is not required under s. 133(b) of the
Courts
    of Justice Act
. However, if leave were required, we would have granted
    leave.

Should the costs appeal be separated from the main appeal?

[19]

The
    complexity of the issues involved and the commonality of the history make it
    necessary to have the costs appeal heard with the enforcement appeal.  In
    addition, the claim for set-off can only be fully evaluated in the context of
    the past judgments and costs orders issued against Jay and Christina Chiang. The
    appeals will be heard together.

[20]

KDS
    will have 45 days to perfect the appeals.

Security for Costs

[21]

Christina
    Chiang asks that KDS be required to pay the costs order, as well as security
    for costs of the appeal, into this court. She contends that KDS has no assets
    in Canada.

[22]

The
    appeal is not frivolous or devoid of merit. In addition, it is Ms. Chiang who
    has been found in contempt of court and who has failed to pay costs ordered
    against her. This would not be an appropriate case for security for costs.

Costs of this Motion

[23]

The
    parties shall exchange and provide written submissions of no more than three
    pages. The submissions shall be filed by October 15, 2014.

David Watt J.A.

M. Tulloch J.A.

M.L. Benotto J.A.


