Lawyer, investor petition for private hearing on bistro case
A prominent Richmond lawyer and a wealthy offshore investor accused of systematic tax evasion in a court battle over a Chinese bistro have petitioned to prevent the public from accessing a B.C. Supreme Court hearing regarding the case.
Postmedia News reported last week that a last-minute settlement halted a trial that would have spotlighted the banking and accounting records of a high-end Chinese restaurant in Richmond and its principal investor, Cheng-Hsiung Huang, and his lawyer, William Lim. The case pitted Huang and Lim against the head chef and food suppliers for the business, Nu Shanghainese Bistro.
On Wednesday, a B.C. Supreme Court judge will hear a petition from Huang, Lim and the bistro’s director Manli Liu seeking to seal a court file on settlement terms.
The petition also seeks to have an in camera hearing on costs for the case, meaning the media wouldn’t be able to report on the proceedings, scheduled for March.
“Two of the applicants in particular, William Lim and ChengHsiung Huang, have and continue to suffer reputational harm due to recent inaccurate reports in the Chinese and other media publications of developments (in) relation to this action,” the petition says.
The judge must consider whether the benefits of a closed hearing, including protecting the commercial interests of litigants, outweigh the public’s interest in open courts and free expression, the filing says.
Lim’s lawyer Daniel Reid said Lim can’t comment on the case because it’s still before the courts.
Lawyers for Huang and Liu didn’t respond to Postmedia’s request for comment Tuesday.
Case filings say that Huang, an investor in China, invested in the bistro by using his company, YSY International Investments. Postmedia’s review of B.C. property documents shows that Huang, his wife and YSY International Investments own $35.9 million worth of B.C. properties, including farm plots in Richmond. Filings indicate several properties are linked to the restaurant business.
Last Thursday, the bistro’s head chef, Xiao Yang Zhu, was scheduled to testify before a late-night deal halted the trial. Zhu had alleged he was cheated out of shares in the bistro, and that in the restaurant’s operations Huang and Lim were involved in “systematic tax evasion (and) siphoning large quantities of undeclared cash out of the business daily.”
A Feb. 7 application from a number of food suppliers sought to set aside solicitor-client privilege for Lim and the restaurant’s investors and force them to produce documents.
The application alleged Lim was involved in “unlawful conduct,” including “misappropriation … unlawfully reducing income tax, sales tax and as a fraud on creditors.”
The application quoted extensively from text messages, company documents and transcripts of evidence discovery examinations of Lim, Liu and Huang.
The application alleges “evidence of Lim’s direct involvement in NSB’s cash-diversion scheme” and presents a March 2014 note for the bistro’s business plans, which Lim admitted writing.
“Lim’s notes refer to ‘skim, onethird each,’” the application states.
“Lim testified that he could not recall what (skim) meant.”
The application alleges Liu texted daily reports of cash sales to Lim and Huang, and she also texted Lim reports of cash diverted.
The texts show that Liu, writing in Chinese characters, “used the euphemism ‘lessons’ to describe cash reserved for special treatment,” the application alleges.
The application shows an example of an Oct. 1, 2014, text message from Liu, which said: “Total revenue for September was $204,395. Daily expenses totalled $18,940. $53,674 was for lessons … A check of $22,000 was written to Bily ( William Lim) today (as investment).”
On the same day, the application alleges, Lim wrote a cheque for $22,000 to the bistro from another company connected to Lim and Liu. The application alleges Lim invested in the bistro through a mortgage loan company called Canmerica and subsidiary companies owned by Liu and Lim.
“Lim personally and through Lim and Liu’s company Federal Rentals paid NSB cash diverted from NSB business operations … as well as funds paid from the Lim and Company trust account,” the application alleges.
In examinations for discovery, Lim denied that he made investments in the bistro.
The Feb. 7 application also alleged “there is independent evidence to question the bona fides of the Canmerica companies.”
The application cites a 2011 Immigration and Refugee Board ruling. “The IRB held that Canmerica Manufacturing Corporation is a business that serves primarily to allow a permanent resident to comply with their residency obligation while residing outside Canada,” the application states.
In that case, a man named Chun Qing Huang challenged a finding that he had failed to meet his Canadian residency requirement. A panel rejected the appeal, noting that William Lim was Chun Qing Huang ’s original counsel of record in the appeal, and “the evidence does not establish, on the balance of probabilities, that there is any operation for Canmerica separate from the appellant’s former counsel’s law practice.”
“The descriptions of business operations that appear in the documents (for Canmerica) before me are generic descriptions implying ties with China in relation to trade but … it is not possible to pin down what sort of trade the company is involved in,” the IRB decision states.
“It is notable that Canmerica has only been in existence since July 30, 2008, less than two months before the appellant entered into an employment agreement with them, employment which is necessary for the appellant to overcome what would otherwise be a deficiency in his residency obligation.”