Half of the proceeds of a Richmond house sale will go to pay off a debt in China, after a judge decided the house was fraudulently transferred to the owner's daughter to avoid that debt.
On Dec. 11, B.C. Supreme Court justice Sandra Wilkinson upheld a previous ruling against Chuming Qiao, who currently owes Asia Growth VIII, an investment company, more than $17 million USD (around $23 million CAD) after losing an arbitration in China back in 2018.
To enforce the arbitration award in B.C., the company obtained a court order in August 2021 and tried to register its judgment to Qiao’s house on Lockhart Road in Richmond on Oct. 14 of the same year.
The house is Qiao’s only known asset in B.C. that can be seized and sold by Asia Growth.
Asia Growth began enforcement proceedings against Qiao in China and Hong Kong as well.
However, Qiao applied in September 2021 to transfer his interest in the house to his daughter, Yan Qiao. The title was transferred on Oct. 14 to Qiao’s daughter and his wife.
In response, Asia Growth took the Qiao family to court to set aside the transfer as "fraudulent conveyance" and a B.C. Supreme Court justice pronounced the transfer as void in January 2022 in a default judgment against the Qiao family because they didn't take part in the court proceedings.
An order was made later in the year for Qiao’s 50-per-cent interest in the property be sold.
When bailiffs began the process of listing Qiao's interest in the house for sale in June 2023, Qiao’s daughter applied to set aside the default judgment and claimed the transfer was to repay a debt Qiao owed to her company in China.
Daughter’s evidence lacked credibility and was unreliable: Judge
In a judgment issued on Monday, Dec. 11, Wilkinson rejected Qiao’s daughter’s claim that she was not aware of the proceedings and found the daughter’s “conflicting evidence” lacked credibility and was unreliable.
She found Qiao’s daughter’s claim that she was living in China at the time and unaware of the proceedings, and that the transfer was to repay a corporate debt to be inconsistent with what Qiao’s daughter told the Land Title and Survey Authority of British Columbia (LTSA) and the Minister of Finance.
In particular, the consideration for transfer was noted as “$1 and natural love and affection” in the title transfer form. Qiao’s daughter also certified she continually lived in the house for more than 18 years and the house would continue to be her primary residence.
“The implication is that she was residing at the property when the action was commenced, was evading service of the notice of civil claim, and received the notice of civil claim by alternative service delivered to the property,” wrote Wilkinson.
Following an order by a B.C. Supreme Court master in 2021, Asia Growth was allowed to serve the documents for the lawsuit to the Qiao family by mail to their Richmond house and by affixing the documents to its front door in an envelope.
Wilkinson added Qiao’s daughter failed to explain how “her apparent ignorance of dozens of legal documents delivered by Asia Growth to the attention of her father, and later, herself during the January 2020 to March 2023 period.”
Furthermore, Wilkinson said documents submitted by the Qiao family's local lawyer did not mention a corporate loan repayment or that Qiao’s daughter was holding the title for the benefit of her company.
However, there was a one-page client information sheet by an unknown author noting Qiao lived in the house from 2003 to 2021.
Qiao, his wife and his daughter were marked as “resident,” but listed their residential addresses as being in China.
“If her later statements are to be believed, then (Qiao’s daughter) has admitted to committing a fraud upon the LTSA’s Land Title Office and the Minister of Finance, resulting in evasion of property transfer and non-resident taxes,” said Wilkinson.
Wilkinson added the Qiao family, despite claiming ignorance, did not allege any wrongdoing by their B.C. lawyer, who had the duty to notify them of Asia Growth’s demands,
Their lawyer in China, on the other hand, claimed he did not receive a letter from the B.C. lawyer that referenced the fraudulent conveyance claim because it ended up in his assistant’s junk mail. The lawyer in China did not testify to the fact that the B.C. lawyer apparently notified his office of the claim prior to sending the letter.
“Badges of fraud” found in connection with the transfer
In dismissing Qiao’s daughter’s application, Wilkinson also found the Qiao family chose to ignore the lawsuit until “as (Asia Growth submits), peril arrived at their doorstep when the bailiff posted notices on their property in June 2023.”
Evidence supporting this inference includes the fact that people who were asked to collect mail and look after the property did not see the legal documents posted on the front door and “a number of process servers” saw the legal documents removed over time.
In addition, Wilkinson found Qiao’s daughter was unable to provide a reasonable or believable reason for her “lengthy delay” in applying to set aside the default judgment, as it was pronounced on Jan. 18, 2022 and her application was brought in October 2023.
When considering the nature of the title transfer, Wilkinson found “a number of badges of fraud.”
This included the fact that Qiao was insolvent at the time of the transfer, the parties involved are father, mother, daughter and potentially a company owned and controlled by the daughter and her uncle, and the fact that the transfer disposed of all known remaining assets that could be used to pay back the debt.
The Qiao family also hired their B.C. lawyer shortly before the arbitration award was recognized in B.C., and Qiao and his daughter admitted the transfer was “initiated with haste” after the daughter found out about Qiao’s debt to Asia Growth.
Wilkinson also considered the parties’ evasion of tax and their misrepresentations made to the government, the lack of documentation of the “loan” Qiao got from his daughter’s company, and misrepresentations made in the testimony of the lawyer from China.
Even if Qiao’s daughter succeeded in her application, Wilkinson added, the default judgment is still valid against her parents and they’re still required to restore the property title as it was before the transfer, thus rendering Qiao’s daughter’s application moot.
In addition, Wilkinson found further prolonging the proceedings would cause prejudice against Asia Growth, as “very little” of the $17 million USD arbitration award has been recovered since it was issued in 2018.
“It would be contrary to the interests of justice to allow Mr. Qiao to continue to avoid judgment enforcement by relying on affidavits that contradict earlier certified representations made to the LTSA and Minister of Finance,” she explained.
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