On November 16, 2020, Justice Eileen Adair of the Superior Court of British Columbia published a 75-page, 548-paragraph judgment in the relationship fraud case Huang v. Li, 2020 BCSC 1727. The trial started in May 2019. It carried on for 47 days intermittently until February 2020. Dr. Huang attempted to recover approximately $1.35M that he transferred to Ms. Li over four short months while he was trying to gain her affection. In the end, he never even received a kiss.
The case demonstrates why old men should be careful when dating young women and be even more careful when suing them. This decision, published by the Court, is highly embarrassing to the plaintiff, Dr. Huang. To add insult to injury, given that the case spanned four years and 47 days of trial, it has likely cost Dr. Huang at least $250,000 to prosecute, likely double this amount.
The plaintiff, Dr. Dongdong Huang, is a very well-educated man, a lawyer called to the Bar in British Columbia and a published poet. He is now in his early 60s. The defendant, Peipei Li, is now in her mid-30s (30 years his junior). She has a master’s degree from China and operates a business in Vancouver.
Dr. Huang alleged that Ms. Li had, by her words and conduct, led him to believe that she was available for a long-term romantic and spousal relationship with him, and that she intended to be his romantic partner and business partner. He alleged that Ms. Li led him on and deceived him for the purpose of acquiring his financial assets and other benefits.
Dr. Huang alleged that, based on Ms. Li’s false representations that she was single, in love with him, from a wealthy, propertied family and was available for a long-term spousal relationship, he was induced to transfer money amounting to the majority of his life’s savings to Ms. Li (or to others for her benefit), in addition to other assets. The total amount at issue is approximately $1.35M.
Justice Adair held that her findings of the credibility and reliability of Dr. Huang and Ms. Li were critical to the result. In the end, unless the documents demonstrated otherwise, Justice Adair found Ms. Li more credible than Dr. Huang. This was especially the case because at the time that Dr. Huang was providing what Justice Adair characterized as “ridiculous gifts” to Ms. Li, she was married to another man and was conspicuously wearing her wedding and engagement rings.
While a judge’s findings of credibility and reliability are given significant deference at an appellate court, what is lacking in this judgment is a critical analysis of what consequence, if any, flowed from Ms. Li, a married woman, accepting gifts from Dr. Huang. The conduct of Dr. Huang is bizarre. But so is the conduct of Ms. Li. The story is so ridiculous that on first blush it would appear the commonsense result is to put both of these people back where they were before this all began.
Justice Adair’s decision is not easy to follow – the facts could have been marshalled in a more chronological format. We have taken the facts as published by Justice Adair and organized them as a chronological story. We are not suggesting that marshaling the facts chronologically would have changed the result, but it does make the decision easier to read. Our summary follows.
Who is Dr. Huang?
In September 1958, Dr. Huang was born in the People’s Republic of China. From 1978 to 1982, he attended Wuhan University. In 1984, Dr. Huang moved to Ottawa, Ontario. He attended the University of Ottawa, where he was enrolled as a graduate student in the Faculty of Law. In 1986, Dr. Huang received his LL.M. degree from the University of Ottawa.
In 1986, Dr. Huang began working at the Faskens law firm. In 1988, Dr. Huang worked at the Torys law firm. He was enrolled in both the doctoral program at the University of Ottawa, Faculty of Law and the LL.B. program at Osgoode Hall Law School. In 1991, he received his LL.B and was called to the Bar the following year.
In 1992, Dr. Huang also received his doctorate in law from the University of Ottawa. After being called to the bar, Dr. Huang practiced corporate and commercial law with the Smith Lyons law firm before he started his own practice D.D. Huang & Associates in 1994. In 1998, Dr. Huang rejoined Faskens where he practiced as an associate counsel until 2002.
In 2002, Dr. Huang joined a public company, Spur Ventures, as a director and vice-president, and practiced as a lawyer part-time. In June 2004, Dr. Huang became a partner in the Times Jusers law firm in Beijing. He continued to practice law part-time in Vancouver and in Canada through his own firm, D.D. Huang & Associates. As of 2015, in addition to his professional achievements, Dr. Huang was also a published poet in both Chinese and English. He is a smart person.
There was little said in the judgment about Ms. Li. As will be seen below, during the time she was going on dates with him, she failed to advise Dr. Huang that she was engaged and later married. She also failed to reject any of his alleged gift offerings. Ms. Li’s failure to reject the gift proposals of Dr. Huang while she was married to another man makes it difficult to understand why the Court found her an empathetic defendant. The answer may be that Madam Justice Adair was just very appalled by Dr. Huang’s behavior and seemingly transactional view of relationships.
Meeting
In June 2015, Dr. Huang and Ms. Li first encountered one another at an event held for alumni of Wuhan University in Vancouver. At the time, Dr. Huang had been separated from his second wife for about a year. They were not divorced. After the dinner, the two of them chatted briefly. In July 2015, Dr. Huang contacted Ms. Li through “WeChat,” and they exchanged some communications.
In September 2015, a Mr. Rao proposed marriage to Ms. Li. She accepted. Mr. Rao gave Ms. Li a very expensive engagement ring and provided her millions of dollars to capitalize her business in Vancouver. Dr. Huang was not aware of this development in Ms. Li’s life.
In October 2015, Dr. Huang and Ms. Li met again. Ms. Li discussed retaining Dr. Huang to do some legal work for her company, the defendant LPP Properties Ltd. (“LPP”). Dr. Huang was not retained to do anything at the time.
In January 2016, Dr. Huang and Ms. Li again ran into one another by chance in Vancouver. At Dr. Huang’s invitation, they had dinner together. They exchanged some messages on WeChat.
Dating
In March 2016, Dr. Huang invited Ms. Li to a dinner for the Chinese Canadian Writers Association, of which Dr. Huang was a member, and to play golf with him. Ms. Li accepted the invitations. This was the start of Dr. Huang’ attempts to date Ms. Li. The two of them had several dinners together. Dr. Huang began to assist Ms. Li with some business matters related to LPP.
As a result of his encounters with Ms. Li, Dr. Huang became seriously interested in pursuing a romantic relationship with her. By the end of March 2016, Dr. Huang believed that he was in a “long-term romantic and spousal relationship” with Ms. Li. He believed that she intended to be his “romantic and business partner”. Justice Adair found his beliefs to be delusional.
Justice Adair found that Ms. Li made no attempt to hide her engagement ring from Dr. Huang. Justice Adair found that the lack of any motive on Ms. Li’s part to encourage Dr. Huang’s romantic overtures rendered her evidence concerning interactions between them more likely than not. Ms. Li did not need access to Dr. Huang’s financial assets (about which, at the beginning, she knew nothing) to live well or to finance her business. The question that Justice Adair does not answer is why was Ms. Li dating Dr. Huang when she was engaged to another man?
Ms. Li’s Wedding to Another Man
On April 7, 2016, Ms. Li asked Dr. Huang to help her locate a place with “strip dancing”. According to Justice Adair, this should have demonstrated to Dr. Huang that Ms. Li in a relationship with Mr. Rao at the time, inferring that she was organizing a stag party for him. According to Justice Adair, Ms. Li’s request to find a place with strip dancing ought to have prompted Dr. Huang to ask Ms. Li what was going on between her and Mr. Rao. Dr. Huang, in his own odd way, did not.
On April 10, 2016, Ms. Li and Mr. Rao were married in Las Vegas. Dr. Huang was not aware that this had occurred. According to Justice Adair, Ms. Li did not make any particular efforts to hide her relationship with Mr. Rao from Dr. Huang. She kept wearing her engagement ring – something which Justice Adair found Dr. Huang was oblivious to.
By April 25, 2016, Dr. Huang had written at least four romantic poems about Ms. Li. He included them in his third published book of collected poetry. Dr. Huang explained that he specifically designed the dedication page to Ms. Li, as well as the fourth chapter starting pages. Ms. Li was aware of these poems and Dr. Huang’s efforts. Justice Adair found it necessary to recite some of these poems in her judgment – all of which is likely to be embarrassing to Dr. Huang.
April 25, 2016, was described by Dr. Huang at trial as “a day of significance for me.” He explained that it was “one of Ms. Li’s birthday dates”. Ms. Li testified that she had had no plans for a birthday celebration on April 25. Her birthday was May 9. Ms. Li did not know why Dr. Huang wanted to celebrate her birthday on that day. It is not explained in the judgment why Ms. Li, now married for two weeks, then showed up for this dinner.
On April 27, 2016, Dr. Huang took Ms. Li to see several securities lawyers in relation to B.C. Securities Commission issues she was dealing with. Thereafter, they had dinner at Ms. Li’s house.
Gift No. 1: The Ferrari
On May 8, 2016 (a Sunday), after two months of “dating”, Dr. Huang asked Ms. Li if he could celebrate Ms. Li’s birthday by going out for dinner. At the dinner, Dr. Huang told Ms. Li a story of giving his parents a home. According to Dr. Huang, Ms. Li said to him “you didn’t give me anything – I would love a Ferrari car – why don’t you buy me a car?” They discussed how much this would cost. They agreed it would be around $450,000 Canadian.
According to Ms. Li, she did not ask for a car. Rather, it was Dr. Huang who offered the car. Ms. Li alleges that she declined the offer, but then Dr. Huang got down on his knees in the middle of the restaurant and plead for her to accept a Ferrari. Ms. Li alleges that Dr. Huang would not stand up and end the spectacle until she accepted it. So, according to Ms. Li, she agreed to accept a Ferrari as a gift. After they left the restaurant, Ms. Li did not decline the gift.
Justice Adair seemed to accept that it was fine for Ms. Li, a married woman, to be accepting gifts from and attending dates with an obviously love-struck Dr. Huang. Justice Adair accepted as reasonable Ms. Li’s bizarre story that she had to accept a Ferrari. But the story gets stranger – Ms. Li alleged that instead of accepting a Ferrari, Dr. Huang asked her for the information for her mother’s bank account in China, so he could transfer funds for the car. Ms. Li gave Dr. Huang her mother’s banking information.
There is no explanation provided by Justice Adair for accepting Ms. Li’s evidence that the gift evolved from a Ferrari to cash being transferred to her mother. It would seem that Ms. Li saw Dr. Huang as a sucker, and as she could not explain a brand new Ferrari to her husband, Mr. Rao, she instead directed Dr. Huang to transfer the equivalent value to her mother who did not even know that she was married. This was quite a clever maneuver by Ms. Li, especially considering what happened next.
On May 12, 2016, Dr. Huang, with the assistance of his nephew, Ming Sun in Beijing, transferred 2.6M RMB to Ms. Li’s mother, Guihong Wang. According to Ms. Li, when her mother asked Ms. Li about the money, Ms. Li rebuffed her inquiries. Dr. Huang never bought a Ferrari, and neither did Ms. Li’s mother. 2.6M RMB is now equivalent to $508,506.44 CDN.
Justice Adair found that Dr. Huang’s offer to buy Ms. Li a Ferrari as a birthday gift to be “a ridiculously extravagant and wholly inappropriate gift coming from someone who was performing legal work for both Ms. Li and LPP at the time.” The unusual part of Justice Adair’s decision is that she then goes on to justify receipt of the gift as the “only way to terminate an awkward and embarrassing scene happening in the restaurant.” Really? Why not just walk out? And if Ms. Li’s motivation for accepting the gift was to mitigate embarrassment at the restaurant, why did she direct Dr. Huang to her mother’s banking coordinates to receive 2.6M RMB a few days later?
According to Justice Adair, at “first blush, Ms. Li did not have a particularly good explanation for why she gave Dr. Huang her mother’s bank card information after the dinner.” Justice Adair then attacked Dr. Huang’s fraud claim stating “Dr. Huang has not proved that Ms. Li made the representations he alleges concerning the Ferrari. Ms. Li’s statements at the time were not made with the intention to deceive Dr. Huang about her feelings for him.”
Justice Adair further found that “when Dr. Huang transferred 2.6 million RMB to Ms. Li’s mother on May 12, 2016, he had not been induced to do so by anything that Ms. Li said”. Rather, Justice Adair placed the moral culpability of this transfer on Dr. Huang, stating that his “motive was to further his pursuit of Ms. Li as a love target.”
Another way of looking at this scenario is that Dr. Huang believed Ms. Li had feelings for him because notwithstanding her engagement to another man, she was going out for dinner with him and accepting Ferraris as gifts. If the case is looked at this way, Ms. Li’s engagement ring was nothing more than an expensive ornament on her hand from another man. Ms. Li would not be the first person to telegraph extra-marital romantic interests to rich and generous men.
Gift No. 2: Jewelry
On May 13, 2016, (a day after the first transfer) Dr. Huang and Ms. Li went to a jewelry store. Dr. Huang alleges that Ms. Li said that “her mother would like to have a jade bracelet in the range of $20,000”. Ms. Li acknowledged that later, while in China, she accepted money from Dr. Huang to purchase a jade bracelet for her mother. She explained that she did so because “he repeatedly, repeatedly urged me to accept it, to buy it.”
According to Justice Adair, Ms. Li did not say anything knowingly false or with the intention to deceive Dr. Huang. Nor was Dr. Huang induced by anything Ms. Li said to purchase gifts for Ms. Li’s family members. Rather, she found that “Dr. Huang decided of his own accord to purchase items as gifts, and that he intended to give those gifts to strengthen his case, particularly in the eyes of Ms. Li’s parents, as a suitor for Ms. Li.”
Justice Adair found that Ms. Li’s statement that “her mother would like to have a jade bracelet in the range of $20,000” … “does not amount to a request by Ms. Li that Dr. Huang purchase a jade bracelet for her mother, much less a representation that he should do so as a goodwill gesture to show that he was sincere in pursuing Ms. Li as his romantic partner.” Really? What else could the married Ms. Li mean by that statement? It appears she was soliciting funds for her mother.
Justice Adair held that if Ms. Li wanted to bring a jade bracelet to her mother in China, Dr. Huang should have declined the request. Justice Adair correctly concluded that Dr. Huang did as he so often did – he interpreted what Ms. Li said based on his own perspective and desires concerning a relationship with her. His intentions were not Ms. Li’s intentions.
Yet Justice Adair does not comment on what else is apparent – that Ms. Li identified Dr. Huang as a love-struck sucker that she could take advantage of. To address this omission, Justice Adair found that “Dr. Huang has failed to prove that Ms. Li made the representations alleged, and she made no representations intending to deceive Dr. Huang. Dr. Huang purchased gifts on his own accord, in pursuit of his own objectives in relation to Ms. Li.”
The focus of this judgment is on what Dr. Huang pleaded and what he could prove – not whether Ms. Li could be faulted for taking advantage of Dr. Huang’s love-blind state.
Gift No. 3: Use of Bank Cards in China
On May 24, 2016 – just two weeks after receiving approximately $528,000 from Dr. Huang – Ms. Li left for Hong Kong. According to Ms. Li, before she left, Dr. Huang pressed her repeatedly to take one of his bank cards. She says that she declined the offer but when she was at the airport waiting for her flight, she found one of his credit cards and one of his bank cards in her purse. What a coincidence.
Dr. Huang’s evidence was Ms. Li informed him that as she had not been back to China for two years so she didn’t have bank cards that worked anymore. Dr. Huang stated that be offered her his bank cards based on this statement. What is not disputed is that Ms. Li used these cards, both before leaving Canada and while she was in China, making purchases and withdrawals of over $36,000 Canadian. In doing so, the total value of “gifts” received by Ms. Li from Dr. Huang had increased to over $564,000 CDN. Some readers may view this case through the lens of what Ms. Li continued to take from lovestruck Dr. Huang – and whether this was appropriate.
Meanwhile, Ms. Li’s Honeymoon with Mr. Rao
On May 24, 2016, Ms. Li arrived in Hong Kong. Mr. Rao, her husband, had arranged for a car to pick her up on arrival and bring her to him. Mr. Rao and Ms. Li then spent their honeymoon near Shenzhen. Ms. Li then parted company with Mr. Rao and went to Yunmeng to visit with her parents and sister, Qin Li. She did not tell her parents about Mr. Rao or their marriage. This conduct is consistent with Ms. Li’s pattern of omitting to disclose significant events to Dr. Huang.
On May 27 or 28, 2016, Dr. Huang, who was in Vancouver, received a phone call from Ms. Li complaining that he was not doing things properly for her. Later in the call, Ms. Li changed her tone, became much sweeter and invited him to a dinner at her parent’s home in Yunmeng, China. Justice Adair does not comment on the propriety of Ms. Li’s conduct in inviting Dr. Huang to China. The plain reading of this part of the story is consistent with the narrative of Ms. Li manipulating the love-blind Dr. Huang.
Gift No. 4: Transfers While Dr. Huang was in China
On May 30, 2016, Dr. Huang flew out of Vancouver and arrived in Ghangzhou. There is no dispute that, while Dr. Huang was in China, Ms. Li and her sister, Qin, received 94,000 RMB from him (or about $18,000 CDN). Separately, Dr. Huang transferred 1,987 RMB more to Qin, and another 8,085 RMB to Ms. Li, over WeChat. The Canadian equivalent of this $104,000 RMB is approximately $21,000. Accordingly, by this point in time, Ms. Li had obtained $575,000 Cdn from Dr. Huang – all money she could have refused if she believed that Dr. Huang was lovestruck.
On June 4, 2016, Dr. Huang arrived in Yunmeng, the city where Ms. Li’s parents lived. While there, he stayed at a hotel. He never went to Ms. Li’s parents’ home and never met them. He spent some time with Ms. Li and her sister, Qin. The visit did not go as he had planned or hoped.
Thereafter, Dr. Huang accompanied Ms. Li to the Tongji Hospital in Wuhan. At the hospital, Dr. Huang overheard a nurse conversed with Ms. Li about a pregnancy test. The way the judgment reads is this should have been a red flag to him that she did not have feelings for him because they had not had sexual relations, meaning it must have been obvious to Dr. Huang that Ms. Li had another man in her life, and it was absurd for him to be offering her gifts.
Perhaps the opposite was true – that Ms. Li told Dr. Huang she was seeking a pregnancy test because she did not want to be pregnant with a child from Mr. Rao. This scenario is probable because, as seen below, Ms. Li continued to accept “gifts” from Dr. Huang.
Gift No. 5: Funds before Dr. Huang Returns to Vancouver
On June 9, 2016, Dr. Huang flew back to Canada. On June 19, 2016, Ms. Li received a further $9,900 CDN in cash from Dr. Huang. This brings the total value of Ms. Li’s “gifts” from Dr. Huang to approximately $585,000.
Yet Justice Adair found that “Ms. Li made no representations to Dr. Huang intending that he would act on what she said by giving her bank and credit cards and money. I find that Dr. Huang pressed money and gifts on Ms. Li to further his own desires, with the goal of securing Ms. Li as his romantic and “spousal” partner, and to demonstrate his wealth and generosity.”
Gift No. 6: Ms. Lie Returns to Canada – Investments into Real Estate
On June 21, 2016, Ms. Li flew from China back to Vancouver. Dr. Huang went out to the Vancouver Airport to meet her. When Ms. Li arrived and saw him there, she said to him, “What are you doing here?” At trial, Dr. Huang acknowledged that Ms. Li was not happy to see him. She then left the airport with her brother.
Notwithstanding yet another brush-off by Ms. Li, toward the end of June 2016, Dr. Huang discussed with Ms. Li what should be done with the money he had back in China. Dr. Huang testified that Ms. Li told him to bring all of it to Canada and to invest in real estate. According to Dr. Huang, Ms. Li told him that she would invest his money for him, because he knew nothing about real estate. Ms. Li denied making any such recommendations.
In any event, true to form, Ms. Li continued to accept money from Dr. Huang notwithstanding that she told the Court she felt harassed by him. The judgment is not clear on the amounts transferred during this phase of the story. The judgment does dwell on whether some of the transfers from China to Canada were legal or not legal due to currency transfer limits out of China. This adds little to the significance to the story. Of greater significant is that Ms. Li continued to accept funds from Dr. Huang despite her knowledge that he was operating with less than a clear head. Ms. Li did not set Dr. Huang straight. According to the judgment, the following transfers were made.
On June 27 and June 28, 2016, Dr. Huang made separate arrangements through his own contacts in China to have 1,002,000 RMB transferred to Ms. Li’s mother and then converted in China to US dollars. The judgment later reads that 2,900,000 RMB was transferred to Ms. Li’s mother, brother and sister in China. The judgment later reads that between June 28 and July 4, 2016, the total amount transferred to Ms. Li’s mother, her brother Daqi and her sister Qin. was about 3.9M RMB. Today, 3.9M RMB is equals approximately $764,00 CDN.
There is no dispute that Ms. Li’s brother, Daqi Li, used this money to purchase a Mercedes in China. Except for approximately $100,000 USD which was deposited into a CIBC account in Vancouver, none of Dr. Huang’s money was ever repatriated to Canada. During the span of three months from May to July 2016, Ms. Li and relatives she designated had received approximately $1,338,000 CDN from Huang. Ms. Li accepted the gifts allegedly under duress of being harassed.
On July 1, 2016, Dr. Huang took Ms. Li out to dinner. Dr. Huang testified that they discussed investing the money in real estate and also his love and devotion to her. According to Dr. Huang, Ms. Li asked him to become her soulmate and lover. She said “you don’t know anything about investment; leave it — let me invest for you; it will make incredible returns.”
Ms. Li version of events was that all of the money Dr. Huang transferred to her family members at this time were gifts. Ms. Li denied that she had any discussions with Dr. Huang about investing the money for him. She explained that she told Dr. Huang that she did not want the gifts, but “he insisted on giving it to me. And, since the money had been sent, so I just accepted it.” The judgment provided no insight into the contradiction in Ms. Li’s evidence – that she accepted funds from a love-blind paramour while also complaining that these advances were unwanted.
In his claim, Dr. Huang pleaded that Ms. Li’s representations about her intentions to invest Dr. Huang’s money were false, and that they were made with the dishonest intent that Dr. Huang should rely on them and transfer his money to her. Justice Adair held that, despite this pleading, nowhere did Dr. Huang specifically plead that he was materially induced to act based on her representations. Justice Adair held that Dr. Huang failed to plead this fourth element of fraud.
Justice Adair held that Dr. Huang pleaded generally in his claim that he was induced to make all of his transfers to Ms. Li on the basis of her false representations that she was single, in love with him, available for a long-term spousal relationship and from a wealthy, propertied family. Justice Adair held that this approach to the transfers Dr. Huang made “reflects the reality of his complaints.” It seems this reason for inducement should have been plead for each transfer.
Justice Adair found that Ms. Li probably did say to Dr. Huang that he should invest in real estate in the Vancouver market, bring money from China to do that, and that a real estate investment in the Vancouver market in 2016 would be safe and likely yield high returns. Justice Adair held that these are not representations of fact, and accordingly are not actionable. Justice Adair held that “no doubt at the time many people held the opinion that bringing money from China to invest in real estate in the Vancouver market was a good idea, a relatively safe investment and likely to yield high returns” but that such statements did not constitute statements designed to induce Dr. Huang to make the transfers to Ms. Li.
Justice Adair held that Dr. Huang made the transfers out of some blind infatuation that the transfers would win him the love and affection of Ms. Li. Justice Adair found that Ms. Li never represented that she was single, in love with him, available for a long-term spousal relationship. In other words, Justice Adair found that Ms. Li never overtly lied to Dr. Huang. Justice Adair found that Ms. Li’s omissions were not material, as she “did not need Dr. Huang’s money to invest in real estate in Vancouver or for any other purpose. She (through LPP) had access to Mr. Rao’s money, and real estate investment was the point of LPP’s business. Moreover, funds provided by Mr. Rao to LPP allowed Ms. Li to purchase a Rolls Royce.”
All of this does not explain how the law treats a person who has lots but want more.
The Gift Note
On July 17, 2016, in the throes of another fit of blinded passion for Ms. Li, Dr. Huang created a hand-written note that he gave to her that stated “I gave PeiPei Li CNY 6.6. million Yuan. I will never go back on my word and never ask for repayment. This is the proof. Dongdong Huang.” The $6.6M Yuan (RMB) equals approximately the $1,338,000 CDN that Ms. Li had received from Dr. Huang to that point.
Dr. Huang alleged that he was induced to sign this “Gift Note” as a result of Ms. Li’s fraudulent representations, and that accordingly, it was unenforceable. According to Ms. Li, Dr. Huang said that he had given her his money as a gift, was not expecting anything in return and “was not trying to buy sex from her with money”. Dr. Huang said that he truly wanted her to be happy, he was not expecting anything in return, and just hoped that she would “forgive him”.
Justice Adair held that she preferred Ms. Li’s evidence as more consistent with the preponderance of probabilities that would be reasonable in the circumstances. She held that Dr. Huang wrote out and signed the Gift Note for the same reason that he had made the transfers: to prove to Ms. Li that he was not a “stingy man”, and to persuade her that she should give in to his desires for a long-term “spousal” relationship with her.
The Unraveling of Dreams
In early August 2016, Dr. Huang discovered that Ms. Li and Mr. Rao were going to be sharing a hotel on August 3 or 4. He felt betrayed by Ms. Li, and that she had acted towards him in a way that was dishonest. According to Dr. Huang, once he uncovered Ms. Li’s plans to travel with Mr. Rao, in his mind, there was no prospect of any relationship between him and Ms. Li.
Yet, on August 9, 2016 – the Chinese Valentine’s Day – he and Ms. Li shared a romantic dinner. Dr. Huang paid over $6,000 for a Dior bag for Ms. Li, as well as paying for about $5,000 for clothing purchased at Nordstrom. It seems that married Ms. Li did not evade the dinner with Dr. Huang, neither did she reject his further gifts. The gift tally that Ms. Li scored from the delusional Dr. Huang was now up to approximately $1.35M CDN.
On August 10, 2016, Dr. Huang tried to persuade Ms. Li that Mr. Rao was only using her and was not worthy of her love. Ms. Li was angry at Dr. Huang’s interference in her private life. After a lengthy exchange on the morning of August 12, Ms. Li finally said “Don’t continue your fantasy with me here. The things you talked about are made out of nothing. They came out from your mouth, it’s so obscene.”
On August 16, 2016, Dr. Huang and Ms. Li again met for lunch. Dr. Huang complained to Ms. Li about Mr. Rao. According to Dr. Huang, over that lunch he said to Ms. Li “let’s go back to square one,” and she responded with words to the effect that if money could resolve the problem, then it was a non-issue – that she would return what he had transferred to her.
On August 24, 2016, Dr. Huang and Ms. Li again had dinner. Dr. Huang testified that he said to Ms. Li “it’s over, and I want to go back to square one, and you give me back my money and goods; I have nothing to do with it, and whatever you do is your business.” Ms. Li testified that she became angry with Dr. Huang when he continued to speak to her about Mr. Rao. As she recalled, Dr. Huang, in turn, became very angry that she would trust Mr. Rao and not him.
On August 29, 2016, Ms. Li sent Dr. Huang an e-mail, with the subject line (in English) [all sic] “Requesting for Chinese Bank Account info.” According to Ms. Li, Dr. Huang told her that he wanted money in Canadian dollars. Ms. Li arranged to obtain a bank draft payable to Dr. Huang for $148,000 USD. On August 31, 2016, Dr. Huang picked up the bank draft.
On September 7, 2016, Ms. Li sent a letter to Dr. Huang terminating his services immediately with her company, LPP. Her reaction infers that from her perspective, the gig was up – Dr. Huang was no longer going to “gift” more money to her, so she fired him and severed all ties. This act demonstrates that Ms. Li could have rejected Dr. Huang’s gifts all along; she was not acting under duress as she alleged.
On September 12, 2016, Dr. Huang contacted Mr. Rao. He alleged that he (Mr. Rao), Ms. Li and her company owed him for all of the funds he had transferred to Ms. Li and her family members. Thereafter, both Dr. Huang and Ms. Li had retained legal counsel. Later in 2016, the litigation started, which resulted in 47 days of trial and the decision being rendered in November 2020.
Credibility and Reliability
Justice Adair accepted both Dr. Huang’s and Ms. Li’s evidence where that evidence was consistent with reliable documentary evidence or other reliable evidence, or where they made statements against their own interests. Where there was a conflict in their evidence, Justice Adair preferred Ms. Li’s evidence because “it was both more consistent with contemporaneous documentary evidence and more in harmony with the preponderance of probabilities that a practical and informed person would readily recognize as reasonable in the circumstances.”
Justice Adair found that Dr. Huang was a proud man, with a lifetime of accomplishments. He described himself as the only Chinese-Canadian doubly-qualified lawyer in the world, a poet of Chinese descent brimming with talent, a professor and scholar with profound thinking. That is how he sees himself. She also found that Dr. Huang sees himself as attractive to younger women.
Justice Adair concluded that Dr. Huang had a very strong interest in maintaining his self-image. In that light, the only excuse acceptable to Dr. Huang’s pride was that he was tricked and lied to by Ms. Li about her affections for him. Justice Adair held that his memory about events yielded to his pride, and his recollection of events was modified at trial accordingly. As a result, Justice Adair ruled that Dr. Huang’s memory about disputed facts with Ms. Li was not reliable.
Findings re Fraud
Justice Adair held that there was “no doubt” that Ms. Li never had any romantic feelings for Dr. Huang at any time. The most Ms. Li felt for Dr. Huang, until the end of their relationship, was friendship, gratitude for the help he provided to her, and admiration of his talents and accomplishments. The judgment does not square these findings with Ms. Li’s evidence that Dr. Huang had harassed her and, under duress, gave her no choice but to take his money.
Justice Adair held that Dr. Huang failed to prove that statements Ms. Li made to him about her family were either false or made with the intention to deceive Dr. Huang. Justice Adair concluded that Dr. Huang was not capable of accurately reading or interpreting his social interactions with Ms. Li, and that it was not until he was forced to face reality that Ms. Li had no intention of communicating any romantic interest in him that that he gave up.
Justice Adair held that Dr. Huang’s true complaint was Ms. Li’s failure to tell him about her marriage to Mr. Rao. Dr. Huang alleged that this omission constitutes material non-disclosure. Justice Adair held that Ms. Li made no attempt to hide her engagement ring from Dr. Huang, and because she was wearing an engagement ring it should have been plain and obvious to Dr. Huang that she and Mr. Rao had more than a business relationship.
According to Justice Adair, Dr. Huang’s admission that he never conducted any research on Mr. Rao was not consistent with the behavior of a practical and informed person in his circumstances. While Ms. Li did not expressly tell Dr. Huang about the nature of her relationship with Mr. Rao (being engaged and later married while dating Dr. Huang) it is not the fault of Ms. Li. She kept these secrets even from her parents. Justice Adair held that this omission does not constitute material non-disclosure to support a finding of civil fraud.
Findings re Unjust Enrichment
As we have repeated many times herein, Justice Adair’s judgment does not explain the legal consequence of Ms. Li’s acceptance of significant gratuitous transfers from someone who was obviously blinded by an unreasonable love interest in her. Justice Adair’s judgment does not explain under what legal principle Ms. Li could have been found liable for continuing to accept transfers from an obviously love struck and irrational man.
In an attempt to get an answer to this question, Dr. Huang alleged that if his fraud claim was not accepted by the Court, he was entitled to a judgment on the basis that Ms. Li was unjustly enriched at his expense. The basic elements of the tort of unjust enrichment are (1) enrichment of a defendant, (2) a corresponding deprivation of a plaintiff, and (3) the absence of any juristic reason for the enrichment. Broadly speaking, the doctrine of unjust enrichment applies when a defendant receives a benefit from a plaintiff in circumstances where it would be “against all conscience” for the defendant to retain that benefit.
The first two elements — enrichment and corresponding deprivation — are closely related. A straight-forward economic approach is taken to both of them, with moral and policy considerations coming into play at the juristic reason stage of the analysis. The third element — absence of a juristic reason — means that there is no reason in law or justice for the defendant to retain the benefit conferred by the plaintiff, making its retention “unjust” in the circumstances of the case.
Ms. Li argued that since most of the money transferred by Dr. Huang went to her mother and siblings in China, that any unjust enrichment claim Dr. Huang might have would be as against the persons to whom he transferred the money. Justice Adair held that a successful claim for unjust enrichment does not require a plaintiff to demonstrate payments — or the “enrichment” — flowed directly from the plaintiff to the defendant. She found that Dr. Huang intended Ms. Li have the benefit of the transfers of funds. He gave her control over where the funds would go.
Justice Adair, however, declined to hold Ms. Li liable based on the absence of juristic reason to unwind the transfers. She held that at the time Dr. Huang made the transfers to Ms. Li and to her family members, he intended them to be gifts. Justice Adair stated that the Gift Note corroborated that Dr. Huang’s transfers were in fact gifts. Justice Adair held that Dr. Huang’s intentions — whether or not he intended to make a gift — are to be interpreted at the time the benefits were transferred. Justice Adair held that given “once a gift, always a gift,” Dr. Huang cannot now change his mind because his relationship with Ms. Li has ended and ended badly.
Findings re Conversion
The tort of conversion involves a wrongful interference with the goods of another, such as taking, using or destroying the goods in a manner inconsistent with the owner’s right of possession. The tort is one of strict liability, and accordingly, it is no defence that the wrongful act was committed in all innocence.
Justice Adair held that since Dr. Huang did not succeed in his unjust enrichment claim, he cannot succeed in his conversion claim. She held that since the “goods” in question (ie. the $1.35M CDN) had been lawfully gifted to Ms. Li, Dr. Huang was no longer entitled to possession of them, and accordingly he is unable to make out one of the essential elements required to establish a conversion claim.
Bottom Line
The basic legal principles that apply to a claim for civil fraud are:
- a false representation or statements made by the defendant;
- the statements were knowingly false, or were made with reckless disregard for their truth;
- the statement was made with the intention that the plaintiff act on it; and
- the statement materially induced the plaintiff to act, resulting in damage.
With respect to the fourth element, the test for materiality is subjective. The question is not whether the statement or representation would have caused a reasonable person to act, but rather whether it was a true inducement to the plaintiff to act. If a defendant’s statement was actually relied on, it does not matter if a plaintiff was negligent or foolish in acting on it.
As can be seen in the case of Dr. Huang, allegations of fraud in relationship cases are extremely difficult to prove without documentation such as emails and texts which set out exactly what representations were made, and then rebutted by evidence showing the falsity of the statements.
Omissions of facts, such as being married while dating, may not be enough in the eyes of the Court. Justice Adair’s ruling infers that dating while wearing an engagement ring may result in the inference that it is not possible that a love interest is being represented. Once transfers are made, there is the risk they will be deemed in law to be gifts.
And unwinding any love story is a very expensive and time-consuming business. It is akin to the saying that the quickest way to poverty is divorce. It can also be very embarrassing. If such a case is going to be taken on, significant preparation should be engaged in so that when the plaintiff gives his or her evidence, he or she can demonstrate:
- a false statement was made by the defendant with respect to each transaction;
- the statement was knowingly false or reckless as to truth to obtain each transaction;
- the false statement was made with the intention that the plaintiff act on it; and
- the false statement materially induced the plaintiff to act, resulting in damage.
Inquiries
Deciding if and when to allege fraud is something that victims should canvas with a fraud recovery lawyer before commencing either process. Not every case, even if fraud seems apparent, is best litigated through fraud allegations. Some cases are better off not litigated at all. For further information, please contact us.
Norman Groot, LLB, CFE, CFI – January 4 2020
www.investigationcounsel.com
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