Ai Kang Yi Yuan Enterprises Corp. v 1098586 B.C. Ltd.

IN THE SUPREME COURT OF BRITISH COLUMBIA

Citation:

Ai Kang Yi Yuan Enterprises Corp. v.

1098586 B.C. Ltd.,

2022 BCSC 1416

Date: 20220817

Docket: S1812818

Registry: Vancouver

Between:

And

Ai Kang Yi Yuan Enterprises Corp.

Plaintiff

1098586 B.C. Ltd.

Defendant

– and –

Docket: S194361

Vancouver Registry

Between:

And

AK (007) GP Management Ltd. and

AK 007 Limited Partnership

Plaintiffs

Wang Dong,

Ai Kang Yi Yuan Enterprises Corp., and

1072709 B.C. Ltd.

Defendants

Before: The Honourable Justice Marzari

Reasons for Judgment

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Counsel for Wang Dong,

Ai Kang Yi Yuan Enterprises Corp., and

1072709 B.C. Ltd.:

S.K. Boyle

D.J. Urquhart

P.J. Palmer

Counsel for 1098586 B.C. Ltd.,

AK (007) Management Ltd., and

AK 007 Limited Partnership:

R.W. Cooper, Q.C.

S.J. Foweraker

S.F. Browning

Place and Dates of Trial:

Vancouver, B.C.

May 30-31, June 1-3, 6-10, 13-16, 2022

Place and Date of Judgment:

Vancouver, B.C.

August 17, 2022

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Table of Contents

INTRODUCTION ....................................................................................................... 4

BRIEF CONCLUSION............................................................................................... 7

BACKGROUND FACTS AND FACTUAL FINDINGS............................................. 10

The Relevant Parties............................................................................................ 16

The Formation of AKC.......................................................................................... 17

The Deposits ........................................................................................................ 22

Foreign Buyers’ Tax: Summer 2016..................................................................... 23

Dr. Wang’s Investments in the Properties ............................................................ 25

The Renfrew Street Project (Fund 6).................................................................... 26

Fall 2016............................................................................................................... 28

December 5 Document ........................................................................................ 32

The Immediate Context of the December 5 Document ........................................ 35

Subsequent Conduct............................................................................................ 41

IS THE DECEMBER 5 DOCUMENT A BINDING CONTRACT? ............................ 56

A. Did the Parties Intend to be Bound? ............................................................. 60

Position of the Parties....................................................................................... 60

Determination ................................................................................................... 62

B. What were the Essential Terms of the December 5 Document, and were they

Sufficiently Certain? ............................................................................................. 68

Position of the Parties....................................................................................... 68

Determination ................................................................................................... 70

Parties to the Contract................................................................................... 73

Shares vs. Property Transfer ........................................................................ 78

Timing of Conveyance................................................................................... 80

Management Structure.................................................................................. 82

C. Was There an Express or Implied Term of a Condition Precedent that

Dr. Wang Control the Partnership? ...................................................................... 86

Position of the Parties....................................................................................... 86

Determination ................................................................................................... 88

REMEDIES.............................................................................................................. 91

Position of the Parties....................................................................................... 91

Determination ................................................................................................... 92

CONCLUSION......................................................................................................... 94

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INTRODUCTION

[1]

This is a trial of two actions concerning five lots (the “Properties”), which are

part of an ongoing land assembly in the 400 block of Alder and East 1st Streets in

North Vancouver (the “Land Assembly”). As shown on Schedule 1, there are

approximately 39 separate residential lots on these blocks; the Properties are five of

those 39 lots.

[2]

The general objective of the Land Assembly is to consolidate the 39

residential lots, and a portion of the facing roads, into two large lots, one of which will

accommodate a high-density development featuring multi-unit residential buildings,

and one of which will be held by the City of North Vancouver for its own purposes,

including park land and affordable housing. A partnership, consisting of both a

general partner, AK (007) GP Management Ltd. (“GP7”), and a limited partner, AK

007 Limited Partnership (“LP7”), was formed for this purpose. Ms. Qun (Iris) Zhao is

the sole director of GP7. I will refer to GP7 and LP7 as the “Partnership” where I am

not drawing a distinction between them. This project and partnership is also referred

to by the parties as “Fund 7”.

[3]

In action S-194361, the Partnership sues Ai Kang Yi Yuan Enterprises Corp

(“AKYE”), AKYE’s wholly owned subsidiary 1072709 B.C. Ltd. (“107 Co.”), and

AKYE’s principal and controlling mind, Dr. Dong Wang (together the “Wang

Parties”), for specific performance of what it says is a contract wherein one or all of

the Wang Parties agreed to invest their interest in the Properties into LP7. This

includes $1.18 million in deposits paid by AKYE (the “Deposits”) on four of the

Properties, namely 475 Alder Street (“Lot 35”), 443 East 1^stStreet (“Lot 9”), 447 East

1^stStreet (“Lot 10”), and 453 East 1^stStreet (“Lot 11”) (the “Deposit Properties”), and

the title of the fifth property located at 473 East 1^st(“Lot 15”) currently held by

107 Co. I will refer to this action as the “Specific Performance Action”.

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[4] In response to the Specific Performance Action, the Wang Parties say that

there was no such contract, but, at most, an agreement to agree with uncertain

terms.

[5]

In action S-1812818, AKYE seeks declaratory and equitable relief that it is

entitled to an interest in the Deposit Properties commensurate with its Deposits on

those Properties. Because AKYE says that it did not enter into a contract for units in

LP7 in exchange for these Deposits, it argues that it is entitled to a resulting trust or

a constructive trust over the Deposit Properties, or damages in lieu for its

contributions. This claim is against the current corporate owner of those properties,

1095856 B.C. Ltd. (“109 Co.”), a corporate entity that was created for the purposes

of the Land Assembly. I will refer to this action as the “Deposit Action”.

[6]

In response to the Deposit Action, 109 Co. says that AKYE paid the Deposits

for the purpose of acquiring the Deposit Properties for the Land Assembly. 109 Co.

relies on the same document relied upon by the Partnership in the Specific

Performance Action to say that AKYE contracted for units in LP7 in compensation

for its contributions to the Deposit Properties.

[7]

At the heart of the dispute in both actions is whether a document signed by

Ms. Zhao and Dr. Wang on December 5, 2016 (the “December 5 Document”)

created a binding contract between the various parties, or whether it is merely a

letter of intent, with no binding effect.

[8]

The parties agree that if the December 5 Document is not a binding contract,

then AKYE has invested $1.18 million in the Partnership (specifically 109 Co.)

without compensation. On the other hand, if the December 5 Document is a binding

contract, then AKYE is not entitled to compensation (beyond the LP7 units agreed to

in that Document), and AKYE, 107 Co., and/or Dr. Wang are in breach of the

requirement to transfer Lot 15 to the Partnership. The remedies available to the

parties, including whether AKYE would be entitled to a resulting trust over the

Deposit Properties, or the Partnership would be entitled to specific performance to

require the transfer of Lot 15 to the Partnership, are also at issue.

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[9] Also before me is a counterclaim brought by the Wang Parties for return of

$700,000 of a $1.458 million mortgage taken out against Lot 15 and used by the

Partnership for its own purposes. If the December 5 Document is valid, the

Partnership would be entitled to keep those mortgage monies (and the associated

debt). However, if it is not a valid agreement, the Partnership would be required to

repay those funds to 107 Co.

[10] For convenience, I will refer to GP7 and LP7 (who are the plaintiffs in the

Specific Performance Action) and 109 Co. (who is the defendant in the Deposit

Action) together as the “Partnership Parties”. They were represented by the same

counsel in the actions before me, and I am satisfied on the representations made on

behalf of 109 Co., that 109 Co. acknowledges that it is contractually obligated to

assign its interests in the Deposit Properties to the Partnership upon request. The

interests of 109 Co. and the Partnership are therefore aligned in these two actions.

[11] I should also note that these two actions are not the only actions that engage

the interests of the various parties to this litigation. In particular, I am aware of action

S-1812177 in this Court, in which Ms. Zhao and her closely held company sue

persons and corporations associated with the Wang Parties in oppression, and

those parties counterclaim against Ms. Zhao and others for damages for breach of

duty, conversion, conspiracy, and other claims, in relation to the management of the

Partnership, and other projects these parties were involved in (the “Oppression

Action”). Before this trial was commenced, the Wang Parties brought two

applications in chambers to consolidate the Oppression Action with the two actions

before me, both of which applications were unsuccessful.

[12] Cognizant of these outstanding issues and actions, I have sought to limit my

findings to the matters that are necessary to resolve the two actions before me,

including whether the December 5 Document is a binding contract. While the factual

context leading to the signing of the December 5 Document in 2016 is relevant to

this determination, as is the subsequent conduct of the parties in 2017, I note that

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this Court received substantial testimonial evidence from both witnesses that, while

important to them, was only tangentially relevant to the two Actions before me.

[13] The contested issues that I must determine are as follows:

1) Is the December 5 Document a binding and enforceable contract?

(a)

(b)

Was there a mutual objective intention to contract?

If there was an intention to contract, what are the essential terms

of the agreement and are they sufficiently certain?

2) If the December 5 Document did create an enforceable contract, was it an

express or implied condition of that contract that Dr. Wang directly or

indirectly control GP7?

3) If the December 5 Document was not an enforceable contract, is AKYE

entitled to compensation in relation to the Deposits, and if so, is AKYE

entitled to a resulting trust, constructive trust, or damages?

4) If the December 5 Document was not an enforceable contract, are the Wang

Parties entitled to return of the $700,000 in mortgage funds advanced to the

Partnership against Lot 15?

5) If the December 5 Document was an enforceable contract, is the

Partnership entitled to specific performance of the December 5 Document?

BRIEF CONCLUSION

[14] At the heart of the issues before me as they were refined and argued at trial,

is the question of whether Dr. Wang’s control of the Partnership, through control of

GP7, was a necessary or essential term of any agreement on his part to transfer his

corporate interests in the Deposits and Lot 15 to the Partnership in exchange for

units in LP7. The Wang Parties argue that it was, and that the uncertainty of the GP7

share structure when Dr. Wang signed the December 5 Document, together with the

language of that document, indicate that it was no more than a preliminary

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agreement without contractual intention or effect, until the Partnership structure had

been determined and the relevant documents prepared and signed. Alternatively,

they argue that Dr. Wang’s direct or indirect control of GP7 was a condition

precedent of the December 5 Document.

[15] The Partnership Parties concede that the GP7 management and ownership

structure was still developing at the time of the December 5 Document, but say that

this uncertainty did not undermine the parties’ objective intention to enter into this

document as a binding contract. They say that the share structure of GP7, and the

ultimate positioning of the Wang Parties’ interests in it, was not essential to the

December 5 Document. Instead, they say that the December 5 Document

established the preservation and valuation of Dr. Wang’s contributions to the Land

Assembly in exchange for units in the LP7 at a time when Dr. Wang might otherwise

have lost them altogether. They say that the additional formal documents required to

give effect to the agreements made in the December 5 Document were not required

to establish the essential terms of the contract, which were contained within the

December 5 Document itself.

[16] Ultimately, the parties’ objective intentions when they signed the December 5

Document, including what terms were essential to that document, is a question to be

determined on the evidence before me at trial. For the reasons that follow, I find that

the evidence establishes that the December 5 Document is a manifestation of the

objective intention of Dr. Wang (and two of the companies he controlled, AKYE and

107 Co.) and Ms. Zhao on behalf of GP7, to agree on the preservation and valuation

of the Wang Parties’ contributions to the Land Assembly through the investment of

the Deposits and Lot 15 into the Partnership, in exchange for a favourable number of

units in the anticipated LP7.

[17] At the time of this agreement, the registration of LP7 was in preparation but

not completed, and the ultimate share and control structure of GP7 was

undetermined. In another case, this lack of certainty might lead to the conclusion

that the parties did not objectively intend to contract, or that essential terms were

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uncertain. However, I find that the evidence in this case establishes the opposite: the

parties objectively intended to contract on the basis of the information known to them

at the time, and that the formal registration of LP7, the wording of the share

subscription agreement, the timing of the exchange, and the ultimate share structure

of GP7, were not essential to their agreement at that time.

[18] The evidence also establishes that at some point after the December 5

Document was signed, in late January 2017, the business relationship between

Dr. Wang and Ms. Zhao broke down, and that the high level of trust Dr. Wang had

placed in Ms. Zhao to manage and execute the Land Assembly through December

2016 was replaced with anger and suspicion. Although the Wang Parties’ counsel

suggest that this was because Dr. Wang learned in January 2017 that his company

was not a named shareholder of the nascent GP7, I find that this theory was not

established by the evidence. I am unable to determine the specific reason for

Dr. Wang’s change of heart on the evidence before me.

[19] Starting in February 2017, the parties’ actions are coloured by this

relationship breakdown, and I find that disagreements (and agreements) regarding

the management of the Partnership after that date are generally not reliable

evidence of the parties’ intentions in December 2016. In any event, the Wang

Parties do not point to anything substantive in the formal documentation prepared by

corporate counsel and contemplated by the December 5 Document about which

there is any controversy. Dr. Wang was clear that his reasons for not signing those

further documents were not because he disagreed with their contents (which he did

not review), but because, by June 2017, he was discontent with Ms. Zhao and her

handling of the deal itself.

[20] Ultimately, I find that in signing the December 5 Document, the parties

objectively intended to create a binding contract, and that the essential terms of that

document, although imperfect in their expression, are sufficiently certain. They

require the Wang Parties to transfer Lot 15 to the Partnership in exchange for the

agreed-upon number of units in LP7. I also find that Lot 15 is unique in the sense

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that this lot is essential to the purposes of the Land Assembly, and that an order of

specific performance is warranted in this case.

BACKGROUND FACTS AND FACTUAL FINDINGS

[21] The parties helpfully entered as evidence an agreed statement of facts

that sets out material information regarding the parties, their related directors,

shareholders, and corporations, and background facts. The parties also entered,

by way of agreement, uncontroversial conveyancing and corporate documents.

[22] With respect to the remaining factual issues, the parties tendered substantial

documentary evidence and the testimony of two witnesses: Dr. Wang (on behalf

of the Wang Parties) and Ms. Zhao (on behalf of the Partnership Parties), both of

whom testified with the assistance of Mandarin interpreters. Many of the documents

in evidence, including the December 5 Document, were provided in translation from

Mandarin.

[23] It has been noted by this Court in Liu v. Westport Motor Cars Ltd.,

2018 BCSC 2127 at para. 18 that interpretation adds complexity to the task of the

trier of fact:

[18]

Many documents were produced from China. They were translated

into English by certified translators. Some were translated more than once, by

different certified translators, with different results. In other cases, counsel for

Ms. Liu, counsel for Mr. Chen, and Mr. Chu, all of whom speak Mandarin as

their first language, agreed on a different interpretation from what was

certified, and counsel for Westport went along with them. I am left with the

impression that Mandarin is highly nuanced and context-dependent language

that is susceptible of different reasonable interpretations. This makes the fact-

finding process more difficult than usual.

[Emphasis added.]

[24] Due to the nuanced, context-dependent nature of Mandarin, I have

considered the whole tenor of the evidence and of each document before making

findings with respect to it: Liu at para. 39; Fu v. Zhu, 2018 BCSC 9 at para. 40.

[25] In this case, it became clear at trial that the testimonies of Dr. Wang and

Ms. Zhao were likely affected by translation difficulties. Dr. Wang, in particular,

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had difficulty expressing evidence that was specific to a particular time or place.

His answers gave the strong impression that he was frequently testifying about his

current state of mind and knowledge, rather than providing evidence of what he

knew or believed at a particular time. Whether because of translation issues, lack of

recollection, or evasiveness, Dr. Wang provided little reliable testimony specific to

the time of signing the December 5 Document.

[26] I have given Dr. Wang the benefit of the doubt in relation to potential

translation errors based on the context of questions and his answers. Nevertheless,

it was apparent from his testimony that he had little to no independent recollection of

the events leading up to the December 5 Document or those that immediately

followed. Throughout his evidence, Dr. Wang repeatedly stated that he could not

remember key events. He relied almost entirely on the documentary record, often

reviewing the records before providing an answer, and stating that the documents

were more reliable than his own recollection. He even challenged the propriety of

questions that suggested he might know something not contained in those records.

He accepted propositions that were supported by those records, but I find that he

had little recollection of events or his own state of mind, beyond those records.

[27] His frequent response to questions that relied upon his own memory was that

he was a very busy man managing multiple companies and billions of dollars in

assets. He suggested that events and decisions relating to hundreds of thousands

of dollars that are critical to these actions were not significant enough for him to

remember, stating that “details like this one [were] not that important to me. For

example, it’s like, if you can make $100,000 a month, would you worry about

spending one dollar on an item?” He provided other similar explanations for his lack

of recollection. Often, he would not answer questions posed to him, or would answer

a question by asking counsel his own (often rhetorical) question. He appeared to

understand his testimony as a debate, rather than an exposition of factual

information. He needed repeated reminders that the Court was relying upon his

evidence and recollection of events.

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[28] After six days of testimony, my impression is that Dr. Wang has little

independent recollection of the events of 2016 other than those surrounding the

public launch of the company that represents his corporate brand in Canada:

Ai Kang Capital (“AKC”).

[29] I find that throughout 2016, Dr. Wang relied on Ms. Zhao to manage his

investments in Canada and has almost no independent recollection, beyond very

broad strokes, of his financial position at that time, the investments he approved,

how they were funded, or their structure. He could not provide specific evidence

(other than accepting the content of documents he often could not independently

recall) of critical events, including what he signed, when, or why.

[30] Dr. Wang was also unable to describe precisely why or when he ceased to

trust and rely on Ms. Zhao as the Chief Executive Officer (“CEO”) of AKC. I find that

Dr. Wang’s evidence was coloured by his conviction that Ms. Zhao had stolen from

him. He now believes that Ms. Zhao took the equity in the corporations she directed

and held on behalf of AKC, and later the Partnership, for herself, and misstated his

financial contributions to the Land Assembly. The evidence before me does not

support these beliefs. First, the evidence does not support the allegation that

Ms. Zhao treated the share equity in the corporate vehicles she created on behalf of

the Land Assembly and the Partnership as her own, though she held shares in her

own name pending agreements and resolutions on share structure. Second,

Ms. Zhao’s accounting of Dr. Wang’s contributions to the Land Assembly is

supported by the evidence, including the agreed statement of facts entered as

evidence in these actions. Unfortunately, Dr. Wang’s convictions about the truth of

these false allegations affected his ability to provide clear or useful evidence about

Ms. Zhao’s actions or related events throughout 2016 and the first half of 2017.

[31] This is not to say that Dr. Wang was dishonest, or that he was not making

an effort to tell the Court the truth. Dr. Wang clearly values honesty and integrity,

which the Court appreciates. He also greatly values his reputation, and views his

investments and business activities as altruistic. Generally, I accept that Dr. Wang

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strove to tell the truth from his perspective, albeit filtered through his own sense of

what was important for the Court to know, and limited by his lack of recollection.

[32] The Wang Parties argue that Ms. Zhao’s testimony was equally

argumentative, unhelpful, and incomplete. They concede that Dr. Wang did not have

a clear recollection of many of the key events of 2016 and 2017, but say that he

honestly acknowledged this and that it is understandable given that he was in China

for most of that period. They say that Ms. Zhao should have had a more complete

recollection of these events than she provided at trial, and that she gave inconsistent

and exaggerated evidence. They also argue that Ms. Zhao has a good grasp of

English, and used an interpreter to maximize her opportunity to give evasive,

misleading, and confusing answers.

[33] For the most part, I found Ms. Zhao’s testimony to be both reliable and

credible. Her small gaps in memory, for example around the timing of the

incorporation of 107 Co., were understandable and not self-serving. She was

somewhat scornful when asked about Dr. Wang’s sense of importance and altruism,

but this was nothing compared to the slurs and accusations he leveled against her in

court. More importantly, I find that this did not affect my ability to rely on her

evidence on relevant points.

[34] The Wang Parties also say Ms. Zhao was inconsistent in her evidence on

whether the Land Assembly was an “AKC project” and gave confusing evidence

about her and Dr. Wang’s respective roles in AKC.

[35] I find that both witnesses lacked clarity as to their respective roles and

responsibilities to the various corporations they directed, held, or were employed by.

Dr. Wang, for example, made little distinction between the corporate entities he

controlled (like AKYE) or partially controlled (like AKC) and himself, particularly when

it came to the source and destination of his funds. For Dr. Wang, his money is his

money, regardless of the corporate vehicle it came from or landed in. My findings

frequently reflect this ambiguity in the evidence, and where I cannot determine on

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the evidence the corporate vehicle through which Dr. Wang made any particular

investment, I have simply found that Dr. Wang made the contribution.

[36] Ms. Zhao acted as the CEO of AKC and the director and sometimes the

shareholder of a number of corporate vehicles, many that she originally created as

CEO of AKC, including 107 Co., 109 Co., and GP7. No attempt was made at this

trial to reconcile the various obligations arising from these various corporate roles.

Ultimately, Ms. Zhao generally assigned the shares in these corporate vehicles to

other shareholders, largely based on who invested in them (I will address the

specific circumstances of GP7 below). While Ms. Zhao had a better understanding of

the distinction between these corporations and their purposes than Dr. Wang, her

various corporate roles overlapped at times, and it appears that she also was

frequently asked to manage Dr. Wang’s investments outside of AKC-related

business as well. It is also apparent that Ms. Zhao and Dr. Wang clearly had very

different ideas of what a CEO and a corporate director does.

[37] However, I do not consider that these areas of confusion render Ms. Zhao’s

evidence unreliable or non-credible overall. Although I did not accept Ms. Zhao’s

testimony on every point, I did find her evidence to be generally reliable.

[38] As to the manner of Ms. Zhao’s testimony, I rejected the Wang Parties’

application to require Ms. Zhao to testify without an interpreter, because I accepted

the many authorities that recognize that, in the absence of establishing bad faith,

witnesses are entitled to testify in court in their mother tongue: see for example

Anand v. Anand, 2016 ABCA 23 at paras. 18–20; Jahanian v. Jahanian, 2021 BCSC

1890 at para. 53; R. v. Tran, [1994] 2 S.C.R. 951. In this case, Ms. Zhao

acknowledged that she had strong English language skills and could understand

approximately 80% of dealings in English, but she nonetheless wanted the benefit of

a Mandarin interpreter in court “where every word counts”. I did not consider the few

occasions where Ms. Zhao provided further clarification of her Mandarin answer

after hearing it in English to indicate that she was using interpretation to evade,

mislead, or fabricate her answers. Overall, I considered Ms. Zhao was concerned

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with completeness and accuracy on these occasions and was not using the

interpretation service to manipulate her evidence or mislead the Court.

[39] Ultimately, I find that both parties were seeking to be honest with the Court,

and would make admissions against interest because they each understood their

duty to the Court in this respect. However, Ms. Zhao was significantly more

responsive to the questions put to her, and I find that her recollection of the relevant

events of 2016 and 2017 is far clearer.

[40] I am cognizant of the factors, oft cited from cases including Bradshaw v.

Stenner, 2010 BCSC 1398 at para. 186, Faryna v. Chorny, [1952] 2 D.L.R. 152

(B.C.C.A.) at para. 356, and others, regarding the assessment of credibility of

witnesses. In this case, the matter is more of one of reliability. As was stated in

R. v. H.C., 2009 ONCA 56:

[41]

Credibility and reliability are different. Credibility has to do with a

witness's veracity, reliability with the accuracy of the witness's testimony.

Accuracy engages consideration of the witness's ability to accurately

i.

observe;

recall; and

recount

ii.

iii.

events in issue. Any witness whose evidence on an issue is not credible

cannot give reliable evidence on the same point. Credibility, on the other

hand, is not a proxy for reliability: a credible witness may give unreliable

evidence: R. v. Morrissey (1995), 22 O.R. (3d) 514, at 526 (C.A.).

[41] Where there is a conflict between Dr. Wang and Ms. Zhao’s evidence,

I generally prefer the evidence of Ms. Zhao because it is more complete and reliable.

I also rely on the available documentary evidence as to what the parties knew and

communicated at the relevant times.

[42] I will now set out my factual findings, relying on my assessment of the

reliability of the testimony before me, together with the agreed facts and

documentary evidence.

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The Relevant Parties

[43] Dr. Wang was born in China, where he initially studied urban planning. In the

late 1990s, he invested in a number of highly profitable high-rise buildings in Beijing.

In the early 2000s, he invested some of his profits in a private hospital in China. He

has since pursued further business opportunities, investments, and a doctorate in

hospital management in China. He indicated at trial that he prefers to be addressed

as Dr. Wang as a result of his education. In 2013, his daughter was born in

Vancouver and he moved to Vancouver.

[44] Dr. Wang’s companies in China are under the umbrella of the Ai Kang Group

and “Ai Kang” is the brand used by Dr. Wang’s companies throughout the world.

“AK” is included in the name of several companies in this litigation, including AKYE,

AKC, GP7, and LP7.

[45] AKYE is a BC company incorporated on March 3, 2015. It is the primary

corporate entity through which Dr. Wang makes investments in Canada. Dr. Wang

and his wife, Yun Shi, are current directors of AKYE. The sole shareholder of AKYE

is Love and Health Venture Capital Co., a company which Dr. Wang also indirectly

controls. While AKYE’s articles were not in evidence and there was little direct oral

evidence on this issue, in their agreed statement of facts, the parties agree that

AKYE is controlled by Dr. Wang. In his evidence, Dr. Wang made little or no

distinction between his own decisions and investments, and those of AKYE.

[46] Ms. Zhao was also born in China. She received a Bachelor of Arts from

Shanghai Maritime University in 1997, followed by a Masters in Business

Administration (“MBA”) from Fudan University in China. After graduation, she worked

in China in mergers and acquisitions and overseas investments. She worked for

Citic Group, the largest financial group in China, and afterwards she worked for one

of the largest private companies in China on fundraising and overseas investments.

[47] In 2011, Ms. Zhao, her then-husband, and their three-year-old son

immigrated to Canada to live in Vancouver, where Ms. Zhao and her son have

resided ever since. In Vancouver, she developed her professional network, worked

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at a small investment bank, and obtained another joint MBA from Queens and

Cornell Universities. By 2013–2014, Ms. Zhao had developed an investment

management business, identifying, advising, and managing real estate investment

opportunities largely for wealthy Chinese clients interested in investing in Vancouver.

[48] Ms. Zhao and Dr. Wang first met in 2013, at an event for Fudan University

alumni in Vancouver. She advised him on an acquisition of a commercial property at

No. 3 Road, Richmond. I accept Ms. Zhao’s evidence, over Dr. Wang’s, that she

assisted with the entire acquisition process, including price analysis and negotiation,

and arranging financing, including a vendor take-back mortgage. Ms. Zhao also

advised Dr. Wang of an investment opportunity with respect to an apartment building

on Yew Street in Vancouver in which she had made the initial deposit, and Dr. Wang

decided to be the sole investor.

The Formation of AKC

[49] I accept Ms. Zhao’s evidence that in early 2015 she was preparing to

incorporate her own investment management company. Ms. Zhao testified that

Dr. Wang proposed that he would provide the initial capital and logistical support,

and allow Ms. Zhao to concentrate on the business operations, if she joined him as

a partner and CEO in a new AK company based in Vancouver—AKC—instead of

starting her own company.

[50] Dr. Wang testified that he had decided to set up AKC as the Canadian

flagship of his AK brand, and that he hired Ms. Zhao as its CEO for $10,000 per

month. He also testified that he gave her 40% equity in AKC as an incentive for her

to work hard for him and to not work for others. At trial, he did not consider Ms. Zhao

to be a partner in AKC; it was his money, his office, and he owned and controlled the

company. Ms. Zhao was simply helpful in translating things and dealing with daily

operations.

[51] The corporate records show that AKC was incorporated in October 2015,

with Ms. Zhao and Dr. Wang as equal shareholders. By that time, Ms. Zhao had

identified at least two investment opportunities that Dr. Wang had decided to invest

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heavily in: No. 3 Road and Yew Street. In addition, I find that Ms. Zhao had not been

compensated for her ongoing work on the Yew Street project and received an initial

$10,000 consultation fee for her work on the No. 3 Road acquisition. During this

time, she was also receiving approximately $6,000 per month on retainer for the

Fudan Alumni Association and others.

[52] In light of all of the evidence, I find that Dr. Wang and Ms. Zhao were both

jointly interested in forming AKC and each brought something of value to what was

initially a shared enterprise. Dr. Wang provided seed capital, and was interested in

having a vehicle to make investments, an AK corporate presence and office in

Vancouver, and an accomplished CEO in Ms. Zhao to run it. Ms. Zhao was attracted

by Dr. Wang’s offer to provide the office and seed funding, and was prepared to

forego 100% ownership of her own company because “50% of a large cake is better

than 100% of a small cake”.

[53] I find that AKC’s share structure changed between October 2015 and

January 1, 2016 when Dr. Wang asked Ms. Zhao to bring in his friend, Mr. Patrick

Chen, as a 20% owner, with Dr. Wang and Ms. Zhao each contributing 10% of their

AKC shares. In the end, Mr. Patrick Chen only received 10% of the shares of AKC

and he received them from Ms. Zhao’s half-interest in AKC. Although Dr. Wang says

that he originally held 60% of the shares and gave Mr. Patrick Chen 10% of his own

shares to “supervise” Ms. Zhao, this evidence is inconsistent with the corporate

records and is tainted by the unreliability of Dr. Wang’s testimony regarding past

dealings with Ms. Zhao. I do accept that Dr. Wang saw Mr. Patrick Chen as an

opportunity to diminish Ms. Zhao’s 50% interest in AKC and to increase his own

control over that company. I accept Ms. Zhao’s evidence that she was asked to

provide Mr. Patrick Chen with 10% of the shares from her allocation, and that,

though she had understood that Dr. Wang would do the same, she accepted it when

he did not.

[54] I also accept Ms. Zhao’s evidence that, from the outset, she was in charge

of AKC’s operations as CEO which included identifying, analyzing, and pursuing

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investment opportunities. I find that, because of his inexperience, Mr. Patrick Chen

was unable to supervise her in this regard. Instead, the evidence suggests he acted

more as a staff member of AKC.

[55] I find that Dr. Wang’s role in AKC went beyond mere logistical support and

initial capital, as described by Ms. Zhao, and that he was a significant investor

(primarily through AKYE) in AKC’s initial projects.

[56] Effective January 1, 2016, Dr. Wang, Ms. Zhao, and Mr. Patrick Chen signed

an agreement titled “Joint Venture Agreement” (the “JVA”). That Dr. Wang called this

agreement then, and still referred to it at trial, as a joint venture agreement, is

indicative of the standing that each of Ms. Zhao and Dr. Wang had in the formation

of AKC. Legally, however, the JVA is closer to a shareholders’ agreement in AKC.

The JVA is approximately two-and-a-half pages and “every word” was written by

Dr. Wang. It sets out the following ownership interests in AKC:

 50% of the shares to be held by AKYE (Dr. Wang’s company);

 40% of shares to be held by AQM Investment International Ltd. (“AQM”,

Ms. Zhao’s company); and

 10% of shares to be held by Mr. Patrick Chen.

[57] The parties submitted two English translations of the JVA into evidence. Both

of these generally describe the scope or purpose of AKC’s business as including

real estate investment, and the management and development of investment funds.

[58] The JVA establishes Dr. Wang’s, Ms. Zhao’s, and Mr. Patrick Chen’s

respective roles in AKC. It provides that each would serve as a director, and

Dr. Wang would serve as the Chair. Ms. Zhao would be CEO, with the authority to

manage internal and daily operations, for a monthly salary of $10,000. She was to

pay her existing income from her ongoing retainers of $6,000 per month into AKC,

and not engage in any outside employment. Various clauses provide for the

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expenditures Ms. Zhao could make for various purposes with or without a second

director’s signature.

[59] The JVA contemplated that Dr. Wang would contribute an immediate

$600,000 loan to AKC for working capital, to be repaid with 8% annual compound

interest upon AKC realizing a profit. Profits were to be realized through a 20%

management fee charged against the revenues and sales proceeds of AKC’s

investment projects. Dividends were not to be paid until AKC had $1 million dollars

in revenue, at which point the $1 million would be placed in an investment account

that could only be spent with Dr. Wang’s approval. Dividends would then be paid in

accordance with the agreed shareholding ratio on profits and revenues beyond

$1 million.

[60] In the immediate term, the JVA referred to two specific projects that AKC

would manage: (1) the Yew Street Project, with ongoing revenues, worth tens

of millions of dollars; and (2) a proposed investment on Rupert Street in Vancouver

that did not proceed.

[61] As the Yew Street Project has never been sold, my understanding is that AKC

has never created the $1 million investment fund, repaid Dr. Wang’s initial loan (the

amount and timing of which is not established on the evidence), or paid dividends to

AKC’s shareholders.

[62] Beyond these two projects, I find that the JVA contemplated that AKC would

make further investments (in part with its 20% management fee on any revenues or

profits from the Yew Street Project) and that Dr. Wang could also “entrust” AKC with

his future investments if he was satisfied with Ms. Zhao’s ongoing management.

The JVA also states that Dr. Wang would have a “veto vote” for AKC’s significant

external decisions and capital investments.

[63] The parties agree that it is not necessary for me to determine the scope of

this veto power and the decisions it might apply to, for the purposes of the two

actions before me. The parties also agree that it is not necessary for me to

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determine the scope of Ms. Zhao’s authority as CEO, and what falls under daily

operations and “human resources”. The sufficiency of the JVA, its terms, and

whether it was also an employment contract, are better left to other proceedings

where those issues are more significant.

[64] Regardless of the legal interpretation or sufficiency of the JVA, the evidence

before me establishes that both Ms. Zhao and Dr. Wang considered it to be a

contract. The evidence before me suggests that Ms. Zhao believed that the JVA

and her role as CEO gave her authority to make operational decisions, including

essentially all management decisions that did not require the expenditure of

significant AKC funds. In practice, I find that Dr. Wang left Ms. Zhao to make those

types of decisions through 2016, including, for example, whether and how to

incorporate a new company for a particular investment. However, Dr. Wang still

considered AKC to be “his company” and, though he trusted Ms. Zhao to run it

through 2016, I find that he believed that if he ever wanted to make a decision,

operational or otherwise, Ms. Zhao would be obliged to comply and follow his

direction as a result of his “veto” power in the JVA.

[65] Dr. Wang placed substantial weight on his authority to control AKC through

this veto power, and Ms. Zhao placed substantial weight on her ability to control

and manage the internal workings of AKC as CEO, including the structure of its

investments. Both frequently referred to the JVA as a binding contract that they

understood to govern the management of AKC notwithstanding the JVA’s

considerable ambiguities, that one of the two projects mentioned in the JVA never

came to fruition, that Dr. Wang did not provide $600,000 of working capital within

five days (or perhaps at all), that the JVA provides very little information regarding

the role of CEO or the authority of its directors, and what appears to be imperfect

compliance with the JVA by its shareholders.

[66] On the evidence before me I also find that for the most part, Dr. Wang fully

entrusted Ms. Zhao with running AKC throughout 2016 as its CEO. I find that

Ms. Zhao performed this role by seeking, identifying, and evaluating real estate

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investment opportunities for AKC, and that she identified two such opportunities in

the first half of 2016 that came to be known as Fund 6 and Fund 7 (Fund 7 being the

Land Assembly). She also incorporated numbered companies for the purposes of

pursuing these opportunities, and frequently identified herself as the sole director

of these companies at the time of incorporation.

[67] I also find that throughout 2016, Dr. Wang trusted Ms. Zhao, for example by

providing her with blank cheques to pay AKC’s expenses while he was in China, as

well as for making investments. At one point in a WeChat message in 2016, he jokes

that Ms. Zhao is more familiar with his financial situation than he is. Despite this

considerable trust and authority, the evidentiary record before me also establishes

that throughout 2016, Ms. Zhao did not make significant investments related to

the Land Assembly, including real estate deposits and other payments, without

Dr. Wang’s approval. I find that Dr Wang relied on Ms. Zhao, as CEO, to bring these

opportunities to his attention, structure and make the investments, and manage his

personal investments in them.

The Deposits

[68] In early 2016, Ms. Zhao advised Dr. Wang of the Land Assembly. She

advised that the City of North Vancouver had recently passed an amendment to its

Official Community Plan that provided an opportunity for a developer to assemble

the 39 lots and to build higher density multi-family housing and park land on a

portion of them in collaboration with the City. Three contiguous, privately-held

parcels on this block were available for purchase, and Ms. Zhao believed that

whoever purchased these parcels would be in the best position to assemble the

remaining parcels and discourage others from doing so.

[69] The evidence establishes that Dr. Wang was interested in this opportunity

and supported Ms. Zhao in making offers and paying the deposits on these

properties. On May 30, 2016, Ms. Zhao signed offers to purchase these properties,

shown as Lots 9, 10, and 11 on Schedule 1, on behalf of AKC. She arranged to pay

deposits of $100,000 each, using some of Dr. Wang’s blank cheques. These

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cheques were not in evidence, but the parties are agreed that AKYE paid these

deposits. These sales were originally scheduled to close in September 2016, but

those closings were later extended to January and February 2017 for reasons

discussed below.

[70] On June 30, 2016, Ms. Zhao signed an offer to purchase Lot 15, this time

through 107 Co., which was incorporated by Ms. Zhao for investment purposes.

That sale was scheduled to complete August 31, 2016, but that closing was later

moved up to July 29, 2016, also for reasons discussed below.

[71] Finally, on July 22, 2016, Ms. Zhao signed an offer for the purchase of Lot 35,

with 107 Co. as the purchaser. This transaction was part of a "swap" with the

vendors whereby they ultimately acquired another property in North Vancouver.

Closing was scheduled for, and ultimately occurred on, December 15, 2016.

[72] The changes in the closing dates of the Properties was due to the BC

government’s adoption of what is known as the foreign buyers’ tax.

Foreign Buyers’ Tax: Summer 2016

[73] In August 2016, the BC government made short-notice amendments to the

Property Transfer Tax Act, R.S.B.C. 1996, c. 378 establishing a surtax payable by

non-residents who purchase residential property in certain areas of BC, including

Metro Vancouver (the “foreign buyers’ tax”).

[74] The Wang Parties argue that this was an “inflection point” that allowed

Ms. Zhao to “seize control” of the Land Assembly project to enrich herself. I find that

the evidence does not support this contention. However, the evidence does show

that after the foreign buyers’ tax was introduced, Ms. Zhao no longer named AKC or

other foreign-controlled corporations as the sole shareholder of new companies

incorporated to purchase residential properties on behalf of AKC. Overall, I am

satisfied on the evidence that when she named herself shareholder of these AKC

investment-related companies, Ms. Zhao was not doing so because she intended to

personally hold the benefit of the incorporating shares and thereby enrich herself,

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but rather she held them as a placeholder for the ultimate shareholders based on

future investments and investors.

[75] The documentary evidence establishes that Ms. Zhao advised Dr. Wang of

the foreign buyers’ tax in July 2016 soon after it was introduced, and that they

discussed how it might affect their cost of acquiring properties, including the Deposit

Properties. Dr. Wang’s contemporaneous text messages with Ms. Zhao indicate that

he understood this tax could increase purchasing costs for foreign buyers by 15%,

but that he was not overly concerned because it would be “simple” to avoid the tax,

for example by having a Canadian citizen or Canadian controlled company make the

purchase on his or his company’s behalf.

[76] At the time of trial, Dr. Wang believed that Ms. Zhao’s informational texts to

him in the summer of 2016 regarding this tax were nothing more than a power grab

on her part, and an attempt to steal “his company” from him. He no longer

considered the tax something to avoid, and he deemed any attempts by Ms. Zhao to

structure the residential purchases of the Land Assembly to be tax evasion that

should have criminal consequences for Ms. Zhao, including possible jail time.

However, Dr. Wang also admitted that in 2016, he took steps to avoid this tax. To

that end, he instructed Ms. Zhao to immediately move up the closing date of two

pending purchases, one for his personal residence, and another for Lot 15 (through

107 Co.), so that the purchases would complete in the short time before the tax

came into effect, and to delay the closings of the Deposit Properties.

[77] I find that the effect of expediting the purchase of Lot 15 to July 2016 was that

Dr. Wang further committed himself (and AKC) to pursuing the Land Assembly. AKC

had limited borrowing power, and Ms. Zhao redirected funds and borrowing room

originally intended for a project on Renfrew Street to Dr. Wang’s personal residence

and Lot 15 so that he would not have to pay the additional 15% tax on these

purchases, which he then successfully avoided. When that decision was made,

only the initial deposits had been made on all five Properties, and the offers were

all conditional at that point.

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[78] In addition, I find that with Dr. Wang’s approval and direction, Ms. Zhao

negotiated an extension to the completion dates of the Deposit Properties from

September 2016 to December 2016 and January 2017, in order for Dr. Wang or

AKC to find some way to pay for them. I accept Ms. Zhao’s evidence that, because

of the introduction of this tax, the sellers of the Deposit Properties were concerned

that the existing Deposits were insufficient to ensure that the sales would proceed.

Accordingly, she was able to negotiate later closing dates and reduced purchase

prices, in exchange for removing the subject clauses and paying further non-

refundable deposits in September 2016. I find that she took these actions as the

CEO of AKC. Dr. Wang remained the sole investor at that time, and paid the second

deposits with bank drafts. While the cheques and banks drafts used to pay the

investments were not in evidence, the parties agree that AKYE made these

payments.

Dr. Wang’s Investments in the Properties

[79] In the end, the parties agree that AKYE advanced a total of $1.18 million for

the deposits of the four Deposit Properties as follows:

(1)

in May 2016:

(a)

(b)

(c)

$100,000 deposit for Lot 9;

$100,000 deposit for Lot 10;

$100,000 deposit for Lot 11;

(2)

in September 2016:

(a)

(b)

(c)

(d)

$280,000 secondary deposit for Lot 9;

$200,000 secondary deposit for Lot 10;

$200,000 secondary deposit for Lot 11;

$200,000 deposit for Lot 35.

[80] The parties agree that one of the Wang Parties funded the purchase of Lot 15

by 107 Co. in the amount of $2.255 million on July 29, 2016.

[81] The Court was not provided with 107 Co.’s corporate records, but only its

“B.C. Company Summary” providing basic information about its incorporation status,

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registered office, records office, and current directors. On the limited available

evidence, I find that Ms. Zhao incorporated 107 Co. in April 2016 for AKC purposes,

and for a time was its sole director and possibly its sole shareholder, with Gowling

WLG (Canada) LLP (“Gowling”) as its registered and records office. A number of

unsigned corporate resolutions dated April 20, 2016 were also in evidence.

Ms. Zhao testified that Gowling provided these to her in September 2016, at which

point, AKYE was made the sole shareholder of 107 Co. Ms. Zhao remained a

director of 107 Co. until December 2018. By April 2021, both Dr. Wang and his wife

were directors of 107 Co. 107 Co.’s articles were not in evidence, and I find I do not

have reliable evidence of who had signing authority to dispose of its assets at the

material times.

The Renfrew Street Project (Fund 6)

[82] Sometime in early 2016, in addition to the Land Assembly, Dr. Wang and

Ms. Zhao began discussing an opportunity to acquire certain commercial lands on

Renfrew Street in East Vancouver. Unlike the Yew Street project, Dr. Wang either

did not have the funds, or the inclination, to fund the entire cost, which totalled over

$50 million. Instead, the Renfrew Street project was pursued as a partnership in

which AKC was a shareholder in the Fund 6 general partner, Dr. Wang (through

AKYE) was a unit holder in the Fund 6 limited partner, and other partners were

sought to invest in the project.

[83] On July 21, 2016, the general partner of the Renfrew Street project was

incorporated as Aikang GP (006) Management Ltd. GP6 (“GP6”), with Ms. Zhao as

the sole director. In August 2016, Aikang Fund VI Limited Partnership (“LP6”) was

created in furtherance of this project.

[84] On August 15, 2016, Ms. Zhao executed the LP6 Limited Partnership

Agreement. The initial parties to this Agreement were AKC and GP6. It provided

that:

a) GP6 was the “Initial General Partner” and AKC was the “Initial Limited

Partner”;

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b) the business and purpose of the partnership was to purchase, develop,

construct, finance, and sell the Lands (defined as certain properties on

Renfrew Street and Kaslo Street) and any other commercial operations,

activity, or undertaking related thereto;

c) GP6 would have the “full and exclusive right, power and authority to

manage, control, administer, and operate the Fund 6 Partnership and its

business and affairs;” and

d) GP6 would charge a management fee of 5% of the purchase price of the

Lands.

[85] On October 17, 2016, AKYE subscribed for six million units of LP6 for

$6 million. AKYE, through Dr. Wang, was required to sign a subscription agreement

in order to subscribe for the LP6 units. Although the subscription agreement in

evidence was not signed, Dr. Wang agrees that he signed this agreement.

[86] In addition to Dr. Wang, Mr. Bin Chen and Mr. Huai Xiang Xing also invested

in the Renfrew Street project as limited partners, for a combined investment greater

than the $6 million invested by AKYE.

[87] On November 6, 2018, GP6 entered into a “Shareholders’ Voting Agreement”

with AKC, Mr. Xing, and a company controlled by Mr. Bin Chen (Canada Sukunka

Coal Corporation). Pursuant to this agreement, Mr. Bin Chen and Mr. Xing were

granted equity and voting shares in GP6, which they required as a term of their

investments in LP6. The voting shares of GP6 were distributed 67% to AKC, and

16.5% to each of Mr. Bin Chen and Mr. Xing. Significant management decisions in

GP6 required a 75% vote of the directors. Thus, AKC’s voting position of 67%

allowed it to block significant decisions of GP6, but could not force such decisions.

Mr. Xing and Mr. Bin Chen between them also had the power to block significant

decisions, but would need the agreement of AKC to approve significant decisions.

The equity shares of GP6 were distributed 80% to AKC and 10% to each of

Mr. Bin Chen and Mr. Xing.

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[88] Both Dr. Wang and Ms. Zhao testified that they would have preferred it if AKC

could have maintained complete control and equity shares in the GP6, but that the

distribution of shares and voting rights set out in the Shareholders Voting Agreement

were essential to obtain Mr. Xing and Mr. Bin Chen’s investment. Ms. Zhao signed

this agreement on behalf of AKC and I find that Dr. Wang was aware of and agreed

to this distribution of equity and voting shares in GP6 in order to secure Mr. Xing’s

and Mr. Bin Chen’s significant investments.

[89] I find that in the fall of 2016, both Dr. Wang and Ms. Zhao hoped that a similar

partnership structure might apply to the Land Assembly, without knowing who the

other partners would be and what share of the equity and voting shares they might

demand.

Fall 2016

[90] At trial, the parties argued about whether the Land Assembly was always

intended to be an “AKC project” and whether Ms. Zhao was being evasive in

expressing why some of the offers and deposits were made by AKC and others by

107 Co. In my view, little turns on whether either witness called the Land Assembly

an “AKC project” at trial or not. I find that both parties considered the Land Assembly

and its Partnership as related to AKC, but in a more complex way than the Yew

Street project or other direct investments contemplated in the JVA.

[91] I find on the evidence that throughout the spring and summer of 2016,

Ms. Zhao pursued the Land Assembly, and incorporated 107 Co. as the CEO of

AKC. I also find that it was possible, early on, that AKC might actually hold these

contracts in its own name and ultimately complete the sales, either with loans from

Dr. Wang or through the funds from the Yew Street project.

[92] I also find that, at that time, Dr. Wang accepted that it was appropriate for

Ms. Zhao to incorporate new companies, such as 107 Co., for these pursuits. It was

not until much later that Dr. Wang came to view Ms. Zhao’s role as a director of

these incorporated companies with suspicion. I therefore find that, to the extent that

Ms. Zhao was identifying and pursuing investment opportunities as CEO of AKC, the

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Land Assembly might be called an “AKC project” and, in the early months, might

even have been managed, owned, and funded by AKC. The role of AKC in the Land

Assembly was not fully defined in its early stages.

[93] Dr. Wang’s evidence at trial as to what he considered he was doing when he

paid for Lot 15 and the Deposits on the Deposit Properties was as follows:

At the time, I felt that there were only two possibilities when my money came

into the project. The first possibility would be that I would sign an official

agreement with [LP7] and become a formal LP partner . . .The second option

would be, if let’s say, we were unable to reach an agreement, then my money

would become a loan … which I would expect 8% of interest back.

[94] Viewed in the context of all his evidence, I find that Dr. Wang was

contemplating two possibilities: (1) that his investments in the Deposits and Lot 15

were intended as investments in a future limited partnership similar to his investment

in the Renfrew Street project; or (2) if that partnership did not come to fruition, his

investments would be treated as loans advanced to AKC and the 8% annual

compound interest applicable to his capital loan to AKC under the JVA would apply

to these additional funds. Accordingly, his loan would be repaid with that agreed-

upon interest upon the sale of these properties pursuant to the AKC JVA.

[95] I find that by June 2017 when 107 Co. was used to purchase Lot 35, and

certainly by September 2016 when the completion dates were pushed back four to

five months, both Dr. Wang and Ms. Zhao knew that AKC did not have the funds to

complete the purchase of the Deposit Properties, let alone the remaining lots

required for the Land Assembly. They knew that the completion of these purchases

and the success of the Land Assembly was contingent on attracting other investors.

Although Dr. Wang might have initially contemplated funding the Land Assembly as

an AKC project, by September 2016 Dr. Wang and Ms. Zhao expected that the Land

Assembly would proceed in the form of a general and limited partnership structure.

Ms. Zhao was expected to raise the equity, loans, and investments required to

proceed, and to manage the Land Assembly to the point that the land could be

assembled, consolidated, and re-subdivided. However, AKC was not expected to be

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the manager of the Land Assembly, recognizing that a different control and equity

structure would be required to attract the significant investment needed to proceed.

[96] Therefore, I find that while the Land Assembly might still be called an “AKC

project” and Ms. Zhao was still expected to manage it, by September 2016 it was

evident that it would not be an AKC project in the sense that it would be directly

managed by, solely funded by, or held by AKC.

[97] After the closings were extended in September 2016, there was an immediate

need to raise more than $10 million required to close the purchase of the four

Deposit Properties. I find that, although Dr. Wang had no specific memory of being

advised of these amounts, Ms. Zhao regularly apprised him of this “funding gap” and

he was aware of the need to raise these funds. I also find that, although Dr. Wang

may have had billions of dollars worth of assets in China, he did not have immediate

access to the required funds in Canada as a result of China’s strict regime for the

removal of money. I also find that Ms. Zhao had sought and explored every avenue

available to AKC, and Dr. Wang as its main investor, for the raising or borrowing of

these funds.

[98] I also find that, although Dr. Wang was not able to put further money into the

Land Assembly in the fall of 2016, neither Dr. Wang nor AKC wanted to lose the

benefit of the over $1 million in Deposits that he had already paid. I also find that

both Dr. Wang and Ms. Zhao wanted to complete the purchases on the Deposit

Properties so that Land Assembly could proceed.

[99] In that context, I find that in the fall of 2016, Dr. Wang instructed Ms. Zhao to

pursue investments from several of his friends and associates, by telling potential

investors that he had already invested his own money in the Land Assembly and

would provide 20% of the overall investment required. Although Dr. Wang denies

this, I prefer Ms. Zhao’s testimony in this regard. This is also reflected in an AKC

reporting letter that she prepared for Mr. Patrick Chen and Dr. Wang in November

2016, reviewing the status of her discussions with the investors referred by

Dr. Wang and others. Ultimately, only Mr. Bin Chen, who had already invested in the

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Renfrew Street project, was prepared to invest significantly in the Land Assembly at

that time. However, he wanted 20–25% of the general partner in exchange for an

investment of up to 30% of the Land Assembly costs.

[100] I also accept Ms. Zhao’s evidence that in November 2016 she believed that

Dr. Wang had funded the purchase of Lot 15 and the Deposits for the purpose of the

Land Assembly, and that he was committed to pursuing the Land Assembly in the

form of a partnership. I accept her evidence that had Dr. Wang suggested during this

period that he would not transfer or assign his interests in them to the future

partnership, the Land Assembly and the formation of the Partnership would not have

proceeded. I find that Dr. Wang did not suggest to Ms. Zhao, or any other potential

investor, anything other than that he was committed to the Land Assembly, which he

demonstrated through his investments in Lot 15 and the Deposits.

[101] GP7 was incorporated on November 25, 2016 with Ms. Zhao as its sole

director, officer, and initial shareholder of 100 common shares. I find that Ms. Zhao

also instructed corporate counsel to prepare the LP Agreement at this time, though it

was not executed until December 15, 2016 and not registered until January 3, 2017.

Ms. Zhao executed the LP Agreement on behalf of GP7, which is named as both the

“Initial General Partner” and the “Initial Limited Partner” in the agreement. Once

signed and registered, the LP Agreement gave the GP7 “full and exclusive right,

power and authority to manage, control, administer and operate the Partnership and

its business and affairs”.

[102] At the end of November 2016, I find that Dr. Wang, Ms. Zhao, and the

investors that she had spoken to, expected that Dr. Wang would formalize Lot 15

and the Deposits as investments in the Land Assembly in exchange for units in the

anticipated LP7. I also find that these parties expected that Ms. Zhao would continue

to manage the GP7 as director as well as the CEO of AKC. I find that AKC’s precise

shareholdings in the GP7 were not yet settled, and that Ms. Zhao was holding

shares in the GP7 as a placeholder for a future share allotment once this share

structure was decided.

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[103] I find that by the end of November 2016, there was no longer any ambiguity

about these investments. Both Dr. Wang (as the controlling mind of AKYE and

107 Co.) and Ms. Zhao (as CEO of AKC and sole director of GP7) no longer saw

Dr. Wang’s investments in the Land Assembly as shareholder loans to AKC, but

rather as Dr. Wang’s initial investments, whether initially through AKC, 107 Co., or

AKYE, into another distinct entity: the Partnership in its formative stages.

December 5 Document

[104] The December 5 Document in its final signed form is attached in its certified

English translation as Schedule 2 to these reasons. It is not possible to tell what has

been lost in translation, but based on the factual context and the translated

document, the key provisions of the December 5 Document are as follows:

The Parties

[105] The parties to the December 5 Document are identified as:

Party A: WANG Dong and 1072709 BC Ltd.

Party B: AK (007) GP Management Ltd. and Aikang Fund VII Partnership

[106] In the original Chinese version of the December 5 Document, Dr. Wang

signed the bottom right of the first page, and beside his name and 107 Co. on the

second page. Ms. Zhao signed for both the GP7 and the aspect of Party B referred

to as “AK Fund VII Partnership”. “December 5, 2016” is handwritten as the date of all

four signatures.

The Exchange of Investments for LP Units

[107] The December 5 Document provides for “Party A” to do as follows:

Party A agrees to invest in Party B with 1072709 BC Ltd. Company owned by

Party A as well as the property at 473/475 E 1st, North Vancouver held by

Party A…

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[108] I suspect that some of the grammatical issues with this provision have more

to do with the translation than the original document. I discuss the meaning to be

given to this provision below.

[109] The value of Party A’s investment in the Partnership is set out in a table and

is clearly based on the amounts Dr. Wang paid for the Deposits and the purchase of

Lot 15, as well as the approximate date of these transactions. The table shows a

total investment of $3,529,019. Dr. Wang testified that this table was an important

aspect of the December 5 Document for him.

[110] The table in the December 5 Document also sets out the number of LP Units,

or shares, that Party A is entitled to, based on the timing of Dr. Wang’s contribution

to the Deposits and purchase price. Party A is credited with a beneficial subscription

price of $1 less 3 cents for every month before December 2016 that he advanced his

investment funds. Thus, for the May 30 deposits, his subscription unit price is

discounted to 79 cents, and for his purchase of Lot 15 in July 2016, his subscription

price is 85 cents. In total, the December 5 Document sets out that for his $3,529,019

investments in 2016, Dr. Wang is entitled to 4,110,332 LP7 units.

Representations

[111] The December 5 Document also contains the following statements regarding

the future LP:

Party B’s basic issue price is C$1.00 per unit. Starting from December 1,

2016 and by the end of each calendar month, the issue will increase by

C$0.03. Because Party A made its contribution earlier, the subscription price

is discounted accordingly.

Party B will charge all partners including Party A 1% of their contributions as

operational management fee, and when the project profit exceeds 10%

annual simple interest, 20% of the exceeding portion of the project profit will

be charged as profit sharing.

Mortgage Guarantee

[112] The December 5 Document further states:

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After Party B owns the property, if Party B needs to mortgage the property for

loan(s), and needs to acquire a personal guarantee from Party A, Party B

shall pay Party A 1.5% of the amount guaranteed as a guarantee.

[113] In the context of the December 5 Document, it is fairly uncontentious that this

provision contemplated a mortgage over Lot 15, and that Dr. Wang might be

required to personally guarantee such a mortgage. In that event, this provision

provided for Dr. Wang to receive a 1.5% fee for his services as guarantor.

Further Agreements

[114] Towards the end, the December 5 Document states:

Both parties will further sign a partnership subscription agreement and other

related agreement(s). Without explicit consents by both parties, any future

agreements shall not be in conflict with this agreement.

[115] In his testimony at trial, Dr. Wang suggested that he considered that this

clause contemplated the formal share subscription agreement in LP7, similar to the

one he signed for the Renfrew Street project in October 2016. On the stand, he was

visibly pleased that this clause was included, because it meant that he was not

bound to comply with the December 5 Document until he signed that share

subscription agreement. By the time he testified with respect to that provision, I find

that he was keenly aware of his litigation position in this regard, and that it informed

his testimony.

[116] On the whole of the evidence, I find that, in addition to the share subscription

agreement in LP7, the “other related agreement(s)” would necessarily also include

the transfer documentation and assignments required to effect the transfer of

Dr. Wang and 107 Co.’s interests in the Properties to the Partnership.

Other Terms

[117] Finally, the December 5 Document concludes with a statement to the effect

that the laws of BC will apply to “this agreement”.

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The Immediate Context of the December 5 Document

[118] On November 27, 2016, Ms. Zhao sent Dr. Wang and Mr. Patrick Chen an

email attaching a one-page agreement written by Ms. Zhao in Chinese that I find

was the first draft of the December 5 Document.

[119] Dr. Wang says that he did not receive this email because it was sent to an

email address that he does not regularly use. He suggested in evidence that

Ms. Zhao was deliberately attempting to make it look like she was advising him of

these and other matters when in fact she was trying to hide this information from

him. I reject this evidence, and I accept Ms. Zhao’s evidence that this email address

was his official address at the AK group in China, and was monitored at all times by

his executive assistant there. I also find that it is clear from the content of this email,

and its factual context, that it was very important to Ms. Zhao that Dr. Wang receive

and respond to this email as soon as possible. Accordingly, I reject the suggestion

that there was any attempt at deception or avoidance on her part.

[120] The attached early version of the December 5 Document was drafted as

between Dr. Wang and 107 Co. as Party A, and the GP7 and “AK Fund VII

Partnership” as Party B. It provided for Party A “to invest” 107 Co. and Lot 15 into

Party B at a purchase price of $1 per unit, with an increase in price for investment of

3 cents per month. It also provides that if Party B needs to mortgage the property

(which I take to refer to Lot 15) and needs a guarantee from Party A, a guarantee

fee would be paid of 1.5% by Party A to Party B. Finally, it provided that both parties

would sign a partnership subscription agreement and “other related agreements”,

and that any future agreements would not conflict with the present agreement

without consent of both parties.

[121] The email attaching this document advised that Dr. Wang needed to sign the

transfer of Lot 15 over to the “project company” as soon as possible to ensure that

there were no orphan lots and to enable smooth financing for the next stage. It noted

that December 16, 2016 was the closing date for one of the Deposit Properties. I

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consider that this email was referencing the need for financing from an outside

investor or investors to complete this purchase.

[122] On November 30, 2016, Ms. Zhao incorporated 109 Co. I find that she did so

in anticipation that the Deposit Properties would be funded by investors in the

Partnership other than the Wang Parties. If she did not know that would be Mr. Bin

Chen on November 30, 2016, I find that she secured that commitment shortly

thereafter. Ms. Zhao was the sole shareholder of 109 Co. until she transferred all

shares to Mr. Bin Chen. She acted as sole director of 109 Co. from the date of

incorporation until November 2018.

[123] The parties agree that the funds needed to complete the purchases of the

Deposit Properties were provided partly by Mr. Bin Chen and partly by other LP7

investors. I infer that, although Mr. Bin Chen had not yet signed a formal subscription

agreement in the LP7 and was not yet a shareholder in the GP7, he, like Dr. Wang,

made these investments in anticipation that they would be recognized as a portion of

his investment in LP7 in due course. I find that Ms. Zhao would have been aware of

the need to secure this financing to complete the sales when she incorporated

109 Co. on November 30, 2016 and sent the draft December 5 Document to

Dr. Wang on November 27, 2016.

[124] On November 28, 2016, Ms. Zhao followed up with another copy of the draft

December 5 Document entitled “Agreement re. Dong Wang’s Contribution of

acquired property in lieu of funds.docx”, which she sent by WeChat with a note to

Dr. Wang that he needed to sign and return this document to her as soon as

possible or it would be “impossible” to raise further funds. Although the draft

attached to that WeChat was not available at the time of trial, I accept Ms. Zhao’s

evidence that it was a similar document.

[125] Dr. Wang responded to the WeChat and draft December 5 Document, stating

(in translation), “The payment was made so long ago, that should be considered a

premium price.”

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[126] In response, Ms. Zhao sent another draft December 5 Document by WeChat

on November 29, 2016, to which Dr. Wang responded “When a guarantee is

provided, party B should pay a guarantee fee to Party A, right?” Ms. Zhao responded

“Right” to this comment.

[127] On the morning of November 30, 2016 she sent another draft December 5

Document, together with an assignment document, with a comment that “the next

property to be completed will have to be transferred to the new numbered company”,

and that Dr. Wang’s signature was required for the transfer. I find that this document

was the Assignment of Transfer of the contract for Lot 35 from 107 Co. to 109 Co.

that Dr. Wang eventually signed together with the December 5 Document on

December 5, 2016.

[128] In the evening of November 30, 2016, Ms. Zhao sent Dr. Wang another copy

of the draft December 5 Document and the assignment of Lot 15 via WeChat, with

similar comments regarding the need to transfer the offer on Lot 35.

[129] Dr. Wang responded “Found any investor?” to which Ms. Zhao responded

“For this property yes.” She also stated “The rest are still in the process of being

finalized.”

[130] Ms. Zhao went away for the weekend, but sent another draft December 5

Document on December 3, 2016, and again on December 4, with notes that the

documents needed to be signed urgently or it would affect the deal. Dr. Wang’s

executive assistant in China also received these copies and responded that she was

able to find a Chinese translation for the English-language documents (which I infer

include the assignment of Lot 35).

[131] On the evening of December 4, 2016, and continuing into the early morning

hours of December 5, 2016, Dr. Wang and Ms. Zhao exchanged a series of WeChat

messages where they discussed the documents to be signed (including the

December 5 Document and the Lot 35 Assignment). This exchange included the

following (in certified English translation):

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Ms. Zhao:

They must be signed back immediately, otherwise completion

will be affected. They are regarding the North Van property.

[…]

Dr. Wang: Where is AIKANG Capital?

What is the shareholding structure of No. 7’s management company?

[…]

Ms. Zhao:

Same structure as before for the time being.

Look at No. 4 document for the structure.

[…]

Dr. Wang:

My questions are not answered yet: where is AIKANG Capital?

What is the share structure of No.7’s management company?

Ms. Zhao: Same as No.6.

AIKANG Capital Holdings Management Company.

This is the case for now.

As new LP’s get in, a part of the shares may be transferred out.

The subsequent matters will need to be planned for the long term. Found

some money temporarily for the December completion.

Dr. Wang:

It’s unnecessary to come up with a management company,

right? Getting more and more chaotic.

Ms. Zhao:

Each project requires a separate management company.

The Investors are all different.

Not chaotic at all, ok? Very organized.

[…]

Ms. Zhao:

Say this one more time, [documents] 1-2 must be signed back

before tomorrow morning, otherwise the completion will be impossible, and

the deposit will be lost.

[Emphasis added.]

[132] The WeChat exchange concludes with further warnings that the deposit may

be lost if Dr. Wang does not sign the documents that day in China. Dr. Wang’s

executive assistant in China confirmed that Dr. Wang had signed the documents on

the morning of December 5, and that they were being sent over.

[133] The parties agree that the December 5 Document was initially drafted by

Ms. Zhao without legal assistance. I find that it was likely then redrafted several

times by Ms. Zhao in response to Dr. Wang’s negotiations between November 28

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and the date it was signed, based on the drafts attached to various WeChats and as

one of several documents sent to Dr. Wang’s executive assistant as part of a

document package around this time. I find that the December 5 Document signed by

Dr. Wang ultimately reflected his final negotiated position on both the guarantee, and

more importantly, the value of his investments and the number of units in the

Partnership’s future LP, that he would be entitled to in relation to that investment.

[134] In his testimony at trial, Dr. Wang agreed that the unit prices stated in the

December 5 Document for his investments showed the price he agreed upon, but

that this was not the final agreement required. He stated that “[i]f eventually we

reached a final agreement, that would be the unit price for me . . .” and “[a]t the core

of the document is just an intention for cooperation. It just shows my intention, I had

such intention to do such a thing, but that doesn’t mean I had to do such a thing . . .”.

[135] At times he also suggested that the December 5 Document would have been

binding had Ms. Zhao not breached her commitments or stolen from him. In the

context of his entire testimony, I understand these comments to primarily relate to a

further agreement he reached with Ms. Zhao on February 1, 2017, and a later AKC

resolution in May 2017 to distribute AKC’s interest in GP7 to AKC’s shareholders.

[136] At trial, Dr. Wang described his state of mind as follows:

At the time, I felt that negotiation was a process and if we reach an

agreement, then we reach an agreement and it’s a never-ending process.

Once we reach an agreement on some issues, then we put those agreed

issues aside and continue to negotiate on the issues on which he have not

reached agreement all the way until there is an LP agreement reached.

That’s what I was referring to.

Whatever we already reached agreement on, we must follow those things. …

I was just saying, what we already agreed upon, we have to obey that.

Otherwise, there is no way we can move forward. We have already reached

agreement on certain key issues, but we still need to continue to negotiate on

other issues.

[137] Considering all of Dr. Wang’s testimony (in the context of the events leading

up to it, the documentary evidence and written communications, and his difficulties

with specific recollection), I find that when Dr. Wang signed the December 5

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Document he believed he had reached an agreement with Ms. Zhao with respect to

the value of his contribution to the Land Assembly to that point. Dr. Wang trusted

that Ms. Zhao was doing what she could to save his Deposits and find investors to

complete the Deposit Properties’ purchases at that time, though conflicts arising

after that date led to a loss of confidence in Ms. Zhao.

[138] On all the evidence, I find that, at the time the December 5 Document was

signed, the mutual purpose of the document was for Dr. Wang to exchange the

money and real estate he had invested into the Land Assembly for a negotiated

number of units in an anticipated partnership. Essentially, Dr. Wang was exchanging

his personal interest (whether through AKYE or 107 Co.) in the Properties for a

partnership interest in the LP7 for the Land Assembly more broadly. At that point, I

find that both Dr. Wang and Ms. Zhao believed that Dr. Wang’s equity in Lot 15 and

the Deposit Properties would be transferred to an LP managed by GP7, in exchange

for which Dr. Wang (or perhaps a company he controlled) would have an interest

proportionate to his monetary investment at an agreed upon rate, upon the

completion of the LP7 registration and related documentation.

[139] I also find that Ms. Zhao believed, and Dr. Wang was aware, that if this was

not done and, in particular, if Lot 15 was not transferred to the Partnership,

Dr. Wang’s $1.18 million in Deposits would likely be lost. This was because it would

be impossible to convince new investors to invest over $10 million to complete the

Deposit Properties purchase unless they were assured that the Partnership, and not

Dr. Wang, owned and controlled Lot 15. I find that Mr. Bin Chen was the primary

focus of this concern, but other investors also may have been waiting to see if the

property held by Dr. Wang’s companies would be formally turned over to the

Partnership.

[140] Neither party raised any issues regarding the propriety of Dr. Wang and

Ms. Zhao wearing multiple corporate hats during this negotiation. Perhaps the

various duties owed by Dr. Wang as director and chair of AKC and Ms. Zhao as

CEO and director of AKC may be pertinent to the Oppression Action, but they were

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not argued before me. I accept the parties’ implied concession that they are not

relevant to this contractual proceeding. In any event, the evidence before me

suggests that both Dr. Wang and Ms. Zhao understood that, with respect to the

December 5 Document, Ms. Zhao was primarily negotiating on behalf of GP7 and

the forming Partnership, and Dr. Wang was negotiating on behalf of the Wang

Parties with respect to the transfer of Lot 15 and the value of his personal

investments to date in the forming Partnership.

Subsequent Conduct

[141] The parties rely upon the subsequent conduct of Ms. Zhao and the

Partnership on one hand, and Dr. Wang on the other, as evidence of whether the

parties objectively intended to be bound by the December 5 Document at the time it

was signed. There are some limitations to the reliance I find I can place on this

conduct, particularly as it gets further away from the signing of the Document itself,

but I have reviewed this evidence for the broader context it provides as to the

parties’ objective intentions as of December 5, 2016, both with respect to the

formation of the contract and its terms.

[142] The subsequent conduct said to be relevant to the parties’ intentions, and to

the sufficiency of any essential terms of the December 5 Document, can be grouped

into the following main events:

a) the assignment and completion of the purchases of Lots 9, 10, 11 and 35;

b) the LP Agreement;

c) the mortgage on Lot 15;

d) the February 1, 2017 AKC Board Meeting;

e) the May 2017 resolutions regarding the share structure of GP7;

f) Dr. Wang’s refusal in June 2017 to sign the Share Subscription

Documents and to transfer Lot 15; and

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g) the parties’ conduct in the following year.

[143] My factual findings with respect to the relevant events are as follows.

Assignment of Contracts to 109 Co. and Completion of Sales

[144] At the same time that he signed the December 5 Document, Dr. Wang also

signed the assignment of 107 Co.’s contract to purchase Lot 35 to 109 Co.

[145] When asked about this signed assignment, Dr. Wang stated that he

recognized his signature, but had no further recollection of it. He then contradicted

himself saying he would not have been able to sign it because he was in China.

He then agreed that he did sign it, and that he would have understood that he was

assigning his interest in Lot 35 to Mr. Bin Chen and 109 Co. He further said “If I

accept something I sign, and if I don’t accept something I don’t sign”, and that he

would accept the validity of anything he signed. He connected this statement to his

honour and integrity, and even to the December 5 Document.

[146] I find that Dr. Wang was aware of the contents of this assignment and the

reasons for it as a result of (a) Ms. Zhao sending the agreement via WeChat;

(b) explaining to him the reasons for the transfer (to allow another investor to

complete the purchase of Lot 35 on December 15, 2016); and (c) he would have had

the opportunity, with the assistance of his executive assistant in China, to review the

document. Accordingly, I find that he intended to make this assignment.

[147] 109 Co. then completed the purchase of Lot 35 on December 15, 2016 by

paying the balance of $1.96 million funded by Mr. Bin Chen.

[148] On December 21, 2016, Ms. Zhao executed a series of documents assigning

the remaining three contracts for the purchase of Lots 9, 10, and 11 from AKC to

109 Co.

[149] Neither party challenges the legal validity of these assignments, although

Dr. Wang complained in evidence that they should have required two AKC directors’

signatures pursuant to the JVA. The importance of these assignments for the Wang

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Parties, together with Ms. Zhao’s executing the LP Agreement on December 15,

2016, is that this is the point at which they say Ms. Zhao “assumed control” of the

Partnership, and essentially appropriated Dr. Wang and AKYE’s investments in the

Land Assembly project for herself. The Wang Parties also say that Dr. Wang was

not informed of these assignments and did not agree to them.

[150] Ms. Zhao testified that Mr. Wang was very happy that the contracts would be

assigned because he was unable to access funds to complete these purchases and

his Deposits would have been lost otherwise. Ms. Zhao also testified that she

informed Dr. Wang that Mr. Bin Chen would complete the purchases of the Deposit

Properties through 109 Co., and that Dr. Wang was very happy with that. The Wang

parties say this is an obvious exaggeration by Ms. Zhao, and that while Dr. Wang

may have been happy to know that someone was completing the purchases, he

would not have been happy that it was Mr. Bin Chen, or that this was accomplished

through a company that was not directly controlled by AKC.

[151] Although plausible, this argument is not supported by Dr. Wang’s evidence.

At trial, Dr. Wang had no recollection of when he was informed of these assignments

or whether he had any reaction, happy or not, to that information. He clearly became

aware at some point that it was Mr. Bin Chen that provided the over $10 million to

complete the sales, but he could not say whether he knew this in December 2016 or

not. He also could not explain why he would have agreed to assign the contract in

Lot 35 to 109 Co., but would have objected to the assignment of Lots 9, 10, and 11

for the same purposes. Taken as a whole, Dr. Wang’s testimony does not support

the Wang Parties’ theory that Dr. Wang discovered this information in mid-to-late

January, and that he was very upset by it.

[152] I also have no evidence from either party as to when Mr. Bin Chen became

the shareholder of 109 Co. in place of Ms. Zhao, but I infer that this was a condition

of his investment. If Dr. Wang became angry upon finding out that this had occurred,

and that the corporate owner of Lots 9, 10, 11, and 35 was not the Partnership but a

company in which Ms. Zhao was the director and Mr. Bin Chen was a shareholder,

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I do not have sufficient evidence before me in this trial to make such a finding, or

even to know when this occurred. I could equally speculate that Dr. Wang became

upset upon learning that Mr. Bin Chen’s investments in the Land Assembly had

eclipsed Dr. Wang’s. Dr. Wang gave little specific evidence of what he learned,

when he learned it, or why that knowledge made him lose trust in Ms. Zhao or feel

that she had stolen the Land Assembly project from him, although his evidence

establishes that he did come to this conclusion.

[153] On the evidence before me, I have no reason to reject Ms. Zhao’s evidence

that she advised Dr. Wang in December that Mr. Bin Chen was the investor that was

primarily funding the completion of the Deposit Property purchases and that he was

doing this through 109 Co. I also have no reason to reject Ms. Zhao’s evidence that

Dr. Wang was relieved upon hearing this news.

[154] I find that the assignment of the contracts to 109 Co. was consistent with the

parties’ intentions in signing the December 5 Document and in Dr. Wang signing the

Lot 35 Assignment. The December 5 Document provided for Dr. Wang to assign his

beneficial interest and equity in Lots 9, 10, 11, 15, and 35 to the Partnership,

whether the contracts were legally held by AKC or 107 Co. At the time, 109 Co. had

been incorporated for the immediate purpose of completing these sales with outside

investment, and for the longer term purpose of bringing these Properties into the

forming Partnership. I find that this purpose was also consistent with Dr. Wang’s

intentions at the time he signed the December 5 Document.

[155] At trial, Dr. Wang strongly objected to Ms. Zhao holding GP7 under her own

name rather than through AKC, saying this violated AKC’s interests. Ms. Zhao’s

explanation for making herself the sole shareholder and director of GP7 until an

agreement similar to the GP6 Shareholders Voting Agreement was signed, was

essentially that the Partnership would be unable to avoid the foreign buyers’ tax if

AKC was the interim shareholder of the Partnership. She testified, and I find, that

Dr. Wang was aware of this problem. I also accept Ms. Zhao’s evidence that she

would not have been able to attract other investors to the Partnership, including

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Mr. Bin Chen, without finding an ownership structure for the Partnership that would

avoid the foreign buyers’ tax.

[156] The sales of Lots 9 and 10 were completed on January 16, 2017 and the sale

of Lot 11 was completed on February 3, 2017, at purchase prices of $3.15 million,

$2.995 million, and $3.1 million, respectively. The funds needed to complete these

sales were primarily provided by Mr. Bin Chen. The total purchase cost of Lots 9, 10,

11 and 35, including the purchase prices, property transfer taxes, legal fees, and

commissions, was more than $11.5 million. The total amount advanced by Dr. Wang

to fund the Deposits was $1.18 million, or about 10% of their total cost.

[157] I find that GP7 relied upon the December 5 Document in December 2016 and

January 2017 to convince its investors to invest millions of dollars into the nascent

Partnership to complete the purchase of the Deposit Properties. Ultimately, I find

that the assignment of the Deposit Properties’ contracts is subsequent conduct by

both parties that tends to confirm the binding intention of the December 5 Document.

Bank of China Mortgage

[158] Throughout January 2017, Ms. Zhao continued to request that Dr. Wang

transfer the shares in 107 Co., or Lot 15 itself, to the Partnership. Dr. Wang did not

do so.

[159] I find that, in anticipation of Lot 15 (or the shares in 107 Co.) being assigned

to the Partnership, Ms. Zhao arranged for a mortgage from the Bank of China

against Lot 15. The parties agree that on or about January 6, 2017, the Bank of

China agreed to provide a loan to 107 Co., in the amount of $1,462,500, to be

secured by a mortgage over Lot 15. On January 18, 2017, this mortgage was

registered against title to Lot 15 and the funds were advanced to 107 Co. On or

about February 3, 2017, the sum of $700,000 from those funds was deposited to the

trust account of Gowling in trust for the purposes of the Partnership.

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[160] Dr. Wang testified that the reason for this loan was that he was unwilling to let

any asset “sit idle,” particularly when the interest rate was low. He did not agree that

the loan proceeds were intended for the Partnership.

[161] This evidence is in stark contrast to Ms. Zhao’s evidence that the purpose of

the loan was to provide the Partnership with much needed working capital, and that

the loan against Lot 15 was contemplated in the December 5 Document. It was only

at Dr. Wang’s insistence because of his own cashflow problems that only a portion

of the funds were provided to the Partnership.

[162] I find that Ms. Zhao’s evidence on this point is more consistent with the

evidence overall, including that even the initial draft December 5 Document in late

November 2016 contemplated the possibility of a loan against Lot 15 for the

Partnership’s benefit, with a 1.5% guarantee fee to Dr. Wang if such a loan was

provided. In addition, the fact that Ms. Zhao is the one who arranged the loan, and

that $700,000 of these funds were provided to the Partnership, cannot be explained

by Dr. Wang’s evidence. Dr. Wang’s evidence that these funds were “stolen” is not

consistent with the contemporaneous evidence, which I find indicates that he

consented to both the loan and at least its partial use by the Partnership.

[163] I note that Ms. Zhao was not entirely forthright in her evidence regarding the

guarantee fee. While she originally stated that it was paid to Dr. Wang in accordance

with the December 5 Document, she was impeached on this point. She then

amended her evidence to state that the guarantee fee was not paid to Dr. Wang

because he had not honoured his agreement to transfer Lot 15 to the Partnership

before the mortgage was taken out, and he took more than half of the loan for

himself. I find that this latter explanation is the true one.

[164] At trial, Dr. Wang was taken to the financial statements of 107 Co., which he

still controls. Those statements indicate that as of 2020, 107 Co. still had a mortgage

debt on its books that I find is related to the January 2016 loan. The 2018

statements also record an investment of nearly $1.88 million in LP7, that was

changed in the 2019 and 2020 statements to an investment of $1.88 million in an

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unstated “partnership/joint venture”. Although Dr. Wang could not confirm that this

record relates to his investments in the Properties, nor that 107 Co. has formally

accounted for these as investments in LP7, I find that this is most likely the case.

107 Co’s stated investment in LP7 corresponds neatly with the $1.18 million dollars

of investments in the Deposit Properties and the $700,000 in mortgage proceeds.

[165] Overall, I find that the conduct of the both parties in relation to the Bank of

China mortgage tends to confirm that the parties considered the December 5

Document to be binding on them.

February 1, 2017 Meeting

[166] By January 2016, Ms. Zhao was no longer solely focused on keeping

Dr. Wang happy: she now had a larger investor in both the in Mr. Bin Chen, and

perhaps other investors as well. Although she was still CEO of AKC, she was also

the director of the Partnership, and had obligations to more than one corporate entity

and investor.

[167] I have not been asked, and I do not attempt, to consider the web of corporate

obligations that Ms. Zhao owed in early 2017, and how they relate or could be

reconciled. On the evidence before me, I find that Ms. Zhao considered herself to be

serving as the CEO of AKC pursuant to the JVA, and that she did not perceive

herself to be breaching the JVA in incorporating and directing new companies

related to investments that started under the AKC umbrella. I find that, whether

appropriate or not, Ms. Zhao considered her role as director of GP7 to be part of her

agreed upon role within AKC of managing AKC’s investments, albeit with separate

obligations and loyalties to the Partnership. I find that she considered it necessary

for her to remain as the director and shareholder of GP7 until such time as the final

shareholding and management structure of the GP7 was agreed upon, preferably in

a way that would avoid the Partnership incurring the foreign buyers’ tax on future

Land Assembly purchases. In the interim, the evidence establishes that she did not

consider herself the beneficial owner of GP7 or the Partnership, but she did consider

herself to be the best person to direct them.

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[168] I also accept that Ms. Zhao believed that the Partnership would not be

competitive or viable if it was required to pay the foreign buyers’ tax on the

remaining 20 or so properties in the Land Assembly not already owned by the

Partnership or the City of North Vancouver. I accept that this was also a concern of

Mr. Bin Chen’s, who would not be required to pay the tax if he made these

purchases directly. I accept Ms. Zhao’s evidence that she understood that Mr. Bin

Chen was not prepared to invest further in the Partnership if it would have to pay an

additional 15% in taxes on each purchase.

[169] Towards the end of January, Ms. Zhao sent an email to Dr. Wang and

Mr. Patrick Chen stating that the GP7 share structure “is an extension” of the share

structure used for the Renfrew Street project, and that the promises made to the

founding investors would be honoured. That email also states that because AKC is

majority foreign-controlled (Dr. Wang and Mr. Patrick Chen at that time were not

citizens or permanent residents, although Ms. Zhao was), there was a “need to be

cautious” about the controlling interest in GP7 being a foreign-controlled company,

to avoid the foreign buyers’ tax.

[170] At trial, Dr. Wang considered this email to be further evidence that Ms. Zhao

was trying to “steal” his company, though it is not clear to me whether this was his

view at the time. Certainly, by late January 2016, Dr. Wang was raising concerns

that Ms. Zhao was wielding more control than he wanted her to over GP7, and that

Ms. Zhao and Mr. Patrick Chen were not affording him the respect he deserved for

his own contributions.

[171] At the end of January 2017, Dr. Wang demanded that he be made the

director of GP7. Ms. Zhao described him as yelling, pounding on the table, and

kicking the furniture at this meeting.

[172] The following day, on February 1, 2017, Dr. Wang, Mr. Patrick Chen, and

Ms. Zhao met in what they considered to be a meeting of AKC directors. A record of

the resolutions passed was made, and each participant signed this record, indicating

their agreement. Ms. Zhao testified that this record reflects compromises, largely

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brokered by Mr. Patrick Chen, in an effort to appease Dr. Wang. Dr. Wang described

this record as a “supplementary agreement” to the JVA, a “contract”, or a

“consensus”. I will refer to this record as the “Minutes”.

[173] While there is some controversy about the effect of the Minutes, there is

no controversy that the signatories accepted that they were intended to be binding.

I find that Dr. Wang’s evidence with respect to the Minutes tends to confirm his

evidence regarding other documents he signed: that his signature on the Minutes

indicates his agreement, and the signatures of all three indicates the binding nature

of the document.

[174] The first resolution in the Minutes contains a recitation of Dr. Wang’s

importance:

To approve the Aikang Group under WANG, Dong (Party A), Chair of the

Board of Directors, as the strength and endorsement of the brand; To

approve the network of WANG, Dong in Vancouver as an important resource;

To approve the position of WANG, Dong as the founder of Aikang Capital.

[175] I accept that this provision was included to address Dr. Wang’s concerns

about whether he was receiving the respect he deserved within AKC. I find this

language to be corroborative of Ms. Zhao’s evidence that the root of Dr. Wang’s

anger was related to a perception that Ms. Zhao and Mr. Patrick Chen were not

showing sufficient respect to his contributions and importance to AKC.

[176] The Minutes affirm AKC’s shareholders’ commitments to the JVA generally.

Another Resolution modifies the JVA regarding Ms. Zhao’s signing authority as

director and CEO of AKC, requiring two directors to sign for “external” purposes.

Ms. Zhao considered that this Resolution diminished her previous authority as CEO

of AKC to make all operational (as opposed to fund investment) decisions.

[177] There are two resolutions relating to changing the structure of GP7 which

suggests that AKC’s directors were still operating as though GP7 was a wholly

owned subsidiary that they controlled. The first resolution was that the sole

shareholder of GP7 be changed from Ms. Zhao to AKC. The second was that the

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sole director of GP7 be changed from Ms. Zhao to Ying Long Lu, the child of a friend

of Dr. Wang’s, who had recently started working at AKC.

[178] In addition, Dr. Wang agreed to transfer all the equity of 107 Co. (i.e. Lot 15)

to the LP7. I accept Ms. Zhao’s evidence that the original Chinese version of this

document attached urgency to this requirement.

[179] Ms. Zhao’s evidence was that she did not change the director of GP7 to

Mr. Lu because he refused to accept this responsibility. Her evidence is that she did

change the shareholder of GP7 from herself to AKC, but it is clear that she did so

only a number of months later and only once she considered that a solution had

been reached such that AKC’s shareholdings would not render GP7 foreign

controlled.

[180] Dr. Wang provided two reasons that he did not transfer the equity in 107 Co.

to the LP7: (1) because Ms. Zhao also did not comply with her commitments in the

Minutes, and (2) because he had not yet signed the final formal documentation to do

so.

[181] Although Dr. Wang and Ms. Zhao’s failure to comply with the Minutes

remained a bone of contention between them at trial, neither of the two Actions

before me was concerned with enforcing these Minutes. Overall, I find that the

February 1 Meeting Minutes are not of great assistance in determining the objective

intentions of the parties in December 2016 or the essential terms of the December 5

Document.

The May 2017 Structuring of GP7

[182] After the February 1 2017 Meeting, Dr. Wang returned to China. I find that

relations between Dr. Wang and Ms. Zhao were strained, and that Mr. Patrick Chen

acted as a go-between for at least some of the communication with Dr. Wang

regarding the Partnership and AKC.

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[183] During this period, there were ongoing discussions between Dr. Wang,

Ms. Zhao, Mr. Patrick Chen, and Mr. Bin Chen (who are not related) regarding the

management and equity structure of the Partnership. I find these discussions and

drafts contemplated that AKC would hold 80% of the equity shares and 66% of the

voting shares in the GP7, and Mr. Bin Chen would hold 20% of the equity shares

and 34% of the voting shares in the GP7. I note that this suggests a fairly similar

ownership structure to that of GP6, except that Mr. Bin Chen would hold all the non-

AKC shares rather than sharing them equally with Mr. Xing.

[184] In April 2017, Dr. Wang sent messages to Ms. Zhao by WeChat indicating

that he would sign the documents required to transfer Lot 15 to the Partnership if

she would get the documents ready promptly. She explained that instructions to

prepare the documents to transfer the shares in 107 Co. would have to come from

him, not her.

[185] On May 8, 2017, AKC held a board meeting over WeChat at which a motion

was made to transfer 80% of the equity shares of GP7 from Ms. Zhao to AKC, and

20% to Mr. Bin Chen. On the evidence before me, that part of the May 2017

resolution was likely uncontroversial. However, the resolution also included that the

remaining 80% of AKC shares in GP7 be divided between AKC shareholders in

accordance with their shareholding ratio of 5:4:1. Dr. Wang opposed the resolution.

[186] Ms. Zhao and Mr. Patrick Chen considered that as the May 2017 resolution

had the support of two of three AKC directors, it had passed. Dr. Wang considered

that, because he had had a veto vote on the AKC Board pursuant to the JVA, and

this decision was a significant one, he had effectively vetoed the resolution.

[187] The JVA is not clear as to whether the directors’ voting rights were equal (as

presumed by Ms. Zhao and Mr. Patrick Chen), or whether Dr. Wang had the ability

to block this resolution by virtue of his equity or his veto power. In any event, that

issue was not argued before me and I understand may be before another judge in

the Oppression Action.

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[188] I find that what occurred as a result of the May 8, 2017 AKC board meeting

was as follows:

a) Mr. Bin Chen signed an agreement that brought him into the Partnership,

including the properties held by 109 Co., in exchange for:

i.

Units in LP7 in accordance with his investments in Lots 9, 10, 11,

and 35 to date (and perhaps future investments) at a rate of

$1/unit, to be exchanged upon demand of the Partnership;

ii.

20% of the equity shares in GP7; and

34% of the voting shares in GP7.

iii.

b) Ms. Zhao filed director and shareholder resolutions transferring her initial

nominal shares in GP7 into equity and voting shares, and then transferring

these shares 80%/67% to AKC, and 20%/34% to Mr. Bin Chen.

c) In the same package of materials, Ms. Zhao filed formal resolutions

distributing AKC’s shares to its shareholders, resulting in the following

voting share distribution in GP7:

 34% held by Mr. Bin Chen;

 33% held by AKYE;

 26.4% by AQM; and

 6.6% by Mr. Patrick Chen.

[189] As a result of these resolutions, foreign ownership of GP7 was less than 50%.

AKYE’s direct control of GP7 was also less than 50%.

[190] I find that Ms. Zhao and Mr. Patrick Chen were motivated to transfer AKC’s

portion of the shares to its shareholders for business reasons, and not by a desire to

wrest control of GP7 from Dr. Wang or AKC. Those business interests included

establishing a share structure that would avoid the foreign buyers’ tax and result in

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Mr. Bin Chen investing the four Deposit Properties held by 109 Co. into the

Partnership.

[191] I find that the change was opposed by Dr. Wang because he considered that

it diminished his ability to control GP7, and the extent to which the GP7 was “his”.

In this regard, Dr. Wang may have overestimated the extent of his legal control of

AKC pursuant to the JVA, as well as the resulting control that might have given him

over GP7; however, I need not determine that issue here.

[192] Although this was a significant development for the Partnership, I find that it

tells me little about the parties’ objective intentions in December 2016 when they

signed the December 5 Document.

June 2017: Refusal to Sign Share Subscription and Transfer Documents

[193] In any event, I find that Dr. Wang perceived these events as a betrayal, and

refused to sign the share subscription agreement and share transfer documents

prepared for him in June 2017, whereby he would receive the agreed-upon units in

LP7 in exchange for his 2016 investments in the Deposits and Lot 15. I find that this,

and perhaps other perceived betrayals by Ms. Zhao, are the primary reason he has

never signed these documents to get the benefit of his investments in the Land

Assembly and the Partnership. This sense of a personal betrayal might also explain,

though not excuse, some of the highly inappropriate and degrading language he

directed at Ms. Zhao in relation to the May 2017 meeting.

[194] Based on all the evidence, including some of Dr. Wang’s evidence to the

contrary, I find that there was nothing in these further documents themselves that

Dr. Wang considered to be inconsistent with the December 5 Document or that

raised any new practical or legal concerns for him. Indeed, he did not even review

them. Rather, I find that Dr. Wang did not sign these documents because the shares

in GP7 had been structured such that he no longer considered the Land Assembly to

be “his”. Not only was this a loss of control over GP7 through his control of AKC, it

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was a loss of the respect he believed he deserved as the initial investor in a project

that had been “stolen” from him.

[195] By the time of trial, Dr. Wang had numerous explanations for why he did not

sign these documents, but his answers all generally came back to Ms. Zhao and her

betrayals. These included not only the decision to distribute AKC’s interests in GP7

to AKC’s shareholders, but also her failure to make Mr. Lu the director of GP7 in

February 2017; her failure to respect Dr. Wang’s veto vote; and Dr. Wang’s

conviction that she had not accounted for all of his contributions to the Land

Assembly and had thereby “stolen” his money.

The Following Year

[196] Through the rest of 2017 and early 2018, the evidence establishes that the

work of the Partnership continued. Ms. Zhao kept all of the partners up to date in the

progress of the Land Assembly, including new property acquisitions and ongoing

discussions with the City of North Vancouver regarding development plans and

approvals. At that point, Dr. Wang (through AKYE) was a significant shareholder in

GP7 but had no shares in LP7, and he made no further financial contributions to the

LP. At trial he explained, “I did not agree to make payments because she had

violated the contract, she did not follow the terms, and I was very upset.”

[197] At one point in early March 2018, Dr. Wang texted Ms. Zhao asking how to

have his investments in the Deposits and Lot 15 recognized as units in the

Partnership. She sent him the December 5 Document. Dr. Wang then agreed to

attend at the law offices to sign the required transfer and share subscription

documents, but I find he did not attend at the prescribed time nor sign the

documents. Instead, he fired Ms. Zhao as CEO and had her forcibly removed from

the AKC offices at the end of March 2018.

[198] Overall, I find that both Dr. Wang’s conduct, and the conduct of Ms. Zhao and

the Partnership, during this year tend to support their mutual intention to be bound

by the December 5 Document, and to carry on with the Land Assembly on the

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assumption that Dr. Wang would eventually subscribe to units in LP7 and transfer

his shares in 107 Co (and therefore Lot 15), in accordance with its terms.

[199] In April 2018, Ms. Zhao attempted to bring Dr. Wang and 107 Co. into the

LP7 through a proposed alternative arrangement, pursuant to settlement discussions

that were ultimately unsuccessful. Both parties referred to these discussions and

were content that settlement privilege had been waived in this regard. However,

I do not consider it appropriate for this Court to put significant weight on good faith

attempts to settle and the compromises that parties are prepared to make when they

are ultimately unsuccessful.

[200] Nevertheless, the Partnership Parties say I can review this correspondence

not for the compromises themselves, but for Dr. Wang’s description of the December

5 Document in that correspondence. Specifically, Dr. Wang objected in writing to

Ms. Zhao’s description of the December 5 Document in her settlement proposal as a

“Letter of Intent” stating: “What we signed in December 5 2016 was an agreement,

not a Letter of Intent. I’ve never refused to enforce this agreement and I have

already paid 1.88 million dollars for this agreement,” essentially suggesting mala

fides on Ms. Zhao’s part for suggesting anything less. His response also suggests

that Dr. Wang’s requirement that Ms. Zhao face legal consequences for her

“breaches” was the main barrier to a resolution at that time.

[201] While I do not place any weight on the parties’ contemplated compromises in

this exchange, Dr. Wang’s written response does nothing to contradict my findings

that his primary objection to performing the actions set out in the December 5

Document relates more to his anger with Ms. Zhao than with the bargain itself.

[202] My understanding is that the parties hired lawyers soon after this, and that

this and related matters have been in litigation since 2018.

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IS THE DECEMBER 5 DOCUMENT A BINDING CONTRACT?

[203] The central issue in these two actions is whether the December 5 Document

is an enforceable contract. There is no controversy before me on the legal test that

must be applied to make this determination.

[204] The test and the considerations relevant to determining whether a contract

has been formed were recently affirmed and summarized by the BC Court of Appeal

in Oswald v. Start Up SRL, 2021 BCCA 352 at para. 34 as follows:

(a)

(b)

(c)

(d)

there must be an intention to contract;

the essential terms must be agreed to [by] the parties;

the essential terms must be sufficiently certain;

whether the requirements of a binding contract are met must be

determined from the perspective of an objective reasonable

bystander, not the subjective intentions of the parties; and

(e)

the determination is contextual and must take into account all material

facts, including the communications between the parties and the

conduct of the parties both before and after the agreement is made.

[205] The test that governs whether the parties have formed an enforceable

contract essentially involves answering two questions: (1) whether the parties

objectively intended to enter contractual relations; and (2) whether they had reached

agreement on essential terms that are sufficiently certain to enforce: Matic v.

Waldner, 2016 MBCA 60 at para. 55, leave to appeal ref’d [2016] S.C.C.A. No. 359;

Concord Pacific Acquisitions Inc. v. Oei, 2022 BCCA 16 at para. 18.

[206] The court’s determination of contractual intention is rooted in the facts and

requires it to consider whether a reasonable third-party observer would conclude

from all the circumstances, including the document itself, the circumstances

underlying execution, and the parties’ subsequent conduct, that the parties intended

to enter into binding legal relations: UBS Securities Canada, Inc. v. Sands Brothers

Canada Ltd., 2009 ONCA 328 at para. 47; Hoban Construction Ltd. v. Alexander,

2012 BCCA 75 at para. 51; Spiegel v. Meilman, 2017 BCSC 766 at para. 33.

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[207] The case law recognizes that the above determinations are fact-driven:

Concord Pacific Acquisitions Inc. v. Oei, 2019 BCSC 1190 at para. 324, aff’d

Concord Pacific BCCA.

[208] Critical to a determination of the nature of the December 5 Document in this

case is the distinction between non-binding preliminary agreements to agree,

agreements to enter into further agreements without binding intent, and agreements

with binding intent that anticipate further documentation. This continuum was

described by the Ontario Court of Appeal in Bawitko Investments Ltd. v. Kernels

Popcorn Ltd. (1991), 79 D.L.R. (4^th) 97 (O.N.C.A.) at 103–104:

As a matter of normal business practice, parties planning to make a formal

written document the expression of their agreement, necessarily discuss and

negotiate the proposed terms of the agreement before they enter into it. They

frequently agree upon all of the terms to be incorporated into the intended

written document before it is prepared. Their agreement may be expressed

orally or by way of memorandum, by exchange of correspondence, or other

informal writings. The parties may "contract to make a contract", that is to

say, they may bind themselves to execute at a future date a formal written

agreement containing specific terms and conditions. When they agree on all

of the essential provisions to be incorporated in a formal document with the

intention that their agreement shall thereupon become binding, they will have

fulfilled all the requisites for the formation of a contract. The fact that a formal

written document to the same effect is to be thereafter prepared and signed

does not alter the binding validity of the original contract.

However, when the original contract is incomplete because essential

provisions intended to govern the contractual relationship have not been

settled or agreed upon; or the contract is too general or uncertain to be valid

in itself and is dependent on the making of a formal contract; or the

understanding or intention of the parties, even if there is no uncertainty as to

the terms of their agreement, is that their legal obligations are to be deferred

until a formal contract has been approved and executed, the original or

preliminary agreement cannot constitute an enforceable contract. In other

words, in such circumstances the "contract to make a contract" is not a

contract at all. The execution of the contemplated formal document is not

intended only as a solemn record or memorial of an already complete and

binding contract but is essential to the formation of the contract itself. . .

[Emphasis added; Citations omitted.]

[209] Ultimately, the determination of what was objectively intended by the parties,

including where on this continuum of contract formation the December 5 Document

lies, rests on both the wording of the Document itself and its factual context.

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[210] While the parties agree on the above principles, they differ on the issue of

who bears the legal onus in this case.

[211] The Partnership Parties rely on Langley Lo-Cost Builders Ltd. v. 474835 B.C.

Ltd., 2000 BCCA 365 at para. 20 to argue that the party denying the validity of a

written and signed agreement bears the onus of proving that the parties did not

intend to be bound by it, and that this onus is heavy. They say that the December 5

Document is in contractual written form and is signed, and so the onus is on the

Wang Parties to prove the absence of contractual intent.

[212] The Wang Parties say that the Partnership Parties have the legal and

evidentiary burden to prove that the alleged contract was made, and the terms of

that contract, because they are the parties that seek to rely on the validity of the

contract, relying on Concord Pacific BCSC at para. 82; Cutts v. Alterra Property

Group Ltd., 2013 BCSC 1951 at para. 48, and others. They say this is not a case

where a reverse onus arises as a result of the form of the document.

[213] Both parties say that regardless of who bears the onus, they have met their

legal and evidentiary burdens with respect to the validity of the December 5

Document.

[214] The Partnership Parties rely heavily on commentary in Langley regarding the

onus on a party that signed an agreement to establish that they did not intend for

their signature to bind them. Ultimately, however, the Court in Langley did not rely on

this reversed onus because the contract at issue in that case was not in contractual

form. Nevertheless, a number of cases have since repeated the language of Langley

with respect to this onus.

[215] Most notably in Oswald v. Start Up SRL, 2020 BCSC 1730, this Court

summarized these cases and sought to reconcile them:

[134] In my opinion, Concord Pacific sets out the general rule that the onus

of proving the existence of a contract is on the party who pleads the

existence of the contract. Langley and CAE Industries establish a limited

exception to this general rule and a reverse-onus situation. The exception

applies where, to use the words of McEachern, C.J.B.C., “the form of

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documentation was clearly contractual” (Langley at para. 20). As to what

constitutes “clearly contractual” documentation, this would include formal

documents titled “Agreement” or “Contract”, signed by the parties and

containing words of agreement. “Clearly contractual” documentation might

also include letters that unambiguously include terms or phrases of

agreement, such as in CAE Industries.

[135] I am inclined to agree with Mr. Oswald and Mr. Mhamunkar that the

exception to the general rule applies in this case. The MOU contains wording

that, in my view, is clearly contractual in nature. Nevertheless, this case does

not turn on who has the onus and burden of proof. As will be seen, I am of

the view that Mr. Oswald and Mr. Mhamunkar have proven on a balance of

probabilities: that there was an intention to contract; the terms of the contract

with requisite specificity; and that there has been a breach of the contract.

[216] In Concord Pacific BCSC, Justice Voith (as he then was) relied on the general

rule that the onus of proving the existence of a contract is on the party who pleads

and relies upon its existence. In that case, the agreement at issue was signed and

was in something much closer to a “contractual form” than in Langley and possibly

even Oswald.

[217] The Court of Appeal upheld this Court’s decisions in both Oswald BCSC and

Concord Pacific BCSC and largely endorsed the statement of legal principles in

each. In neither case did the Court of Appeal comment on the onus, and whether it

was reversed by a signed agreement in clearly contractual form (likely because

nothing turned on that onus in either case).

[218] Having considered these cases, I am of the view that Langley should not be

viewed as reversing the legal onus to prove a contract on the party seeking to rely

on that contract. Rather, I would view the language in Langley as pointing to an

inherent difficulty for a party that signs a document to overcome the evidentiary

weight of such evidence to show they were evincing no binding intent. That is an

evidentiary issue more so than a reversal of the burden of proof. I would not displace

the legal onus on the Partnership Parties in these two actions to prove the binding

intent of the parties who signed the December 5 Document because of the form that

document takes, and I apply that onus in these reasons.

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[219] In any event, as in Oswald and Concord Pacific, this is not a case that turns

on the legal onus or burden of proof. For the reasons set out below, I have

concluded that the Partnership Parties have proven on a balance of probabilities that

an objective bystander would conclude that the signatories to the December 5

Document intended to enter into a binding contract. This is not a case where my

determination depends on the placement of a legal onus.

[220] I turn then to my analysis of the evidence regarding the two elements that the

Partnership Parties are required to establish on a balance of probabilities: that the

parties objectively intended to be bound to by the December 5 Document, and that

the essential terms of that Document are sufficiently certain.

A. Did the Parties Intend to be Bound?

Position of the Parties

[221] The Wang Parties say that, on its face, the December 5 Document provides

minimal indication of an intention to be bound, pointing to the following evidence:

a) there is no title on the document;

b) there is no express statement that the terms are binding;

c) there is no statement of the purpose of the agreement;

d) a number of the terms are future-oriented, including that:

i. “After” December 1, 2016 the subscription price will increase by

$0.03 per month;

ii. “After” Party B owns the property, if Party B needs to mortgage

the property and obtain a personal guarantee from Party A,

Party B shall pay a guarantee fee; and

iii. both parties “will further sign” other agreements.

[222] They also say that the context in which the document was executed further

suggests that it was not intended to be a final agreement, notably because it was

executed urgently, after repeated requests on December 4 and 5, 2016, and there is

very limited evidence of any detailed discussion between Ms. Zhao and Dr. Wang

about its contents.

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[223] The Wang Parties also point to the absence of legal advice in the drafting of

the December 5 Document as indicating a lack of intent by the parties to be bound.

They say that Ms. Zhao was in regular contact with counsel regarding other legal

documents at that time, and so the most plausible explanation for her decision not to

consult with legal counsel in drafting the December 5 Document is that she did not

intend for it to be binding.

[224] The Partnership Parties submit that the Wang Parties have not established

that the parties did not objectively intend to contract, pointing to the following:

a) that the original, signed copy of the December 5 Document is in Chinese,

and that Dr. Wang reviewed it, negotiated its terms with Ms. Zhao, and

signed it, as did Ms. Zhao; and

b) that the circumstances at the time, as well as the parties’ subsequent

conduct, do not support the conclusion that the parties intended this to be

anything other than a binding agreement.

[225] The Partnership Parties say that the parties’ subsequent conduct indicates an

intent to be bound; reinforces a conclusion that essential terms are sufficiently

certain and have been agreed to; and shows that the parties did not intend to delay

binding obligations until the execution of the formal agreements and documents,

relying on Oswald at para. 50 and Matic at para. 63. To that end, the Partnership

Parties rely on the parties’ subsequent actions based on the commitments contained

in the December 5 Document, including the continued pursuit and investment in the

Land Assembly throughout 2017 and even 2018. They rely on Ms. Zhao’s frequent

reminders to Dr. Wang of his obligation to transfer Lot 15 to the Partnership, and

Dr. Wang’s intermittent affirmations through 2017 and early 2018 that this was his

intention. They also rely on Dr. Wang’s assignment of Lot 35 to 109 Co. in

December 2016, the mortgage taken out by Ms. Zhao against Lot 15 in January

2017, the Minutes affirming the transfer of Lot 15 on February 1, 2016, and the

financial statements for 107 Co. which indicate that that company had “investments

in partnership/joint venture” as a long-term investment of $1.88 million.

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[226] Despite the fact that Dr Wang had not signed the documents to effect the

transfer of 107 Co. or subscribe to shares in LP7, the Partnership Parties say

that both parties’ subsequent conduct indicates an objective intention that the

December 5 Document was binding upon them.

Determination

[227] I have already stated my factual finding that Dr. Wang subjectively intended

that the December 5 Document be binding. Dr. Wang believed that documents that

he signed carried legal obligations that were tied to both his integrity and the integrity

of others that signed them, even if they were just meeting minutes. Of course,

subjective intentions are not sufficient, and I must consider whether a reasonable

and objective observer would consider that the Document was intended to bind the

parties regardless of the signatories’ subjective intentions and beliefs: see for

example Concord Pacific BCSC at paras. 316–317; Oswald BCCA at para. 34.

[228] I find that the December 5 Document on its face, although brief, is contractual

in nature. It identifies the parties not as individuals but as parties to a contract,

namely Party A and Party B. It then sets out the terms of a negotiated exchange of

investments for units in a limited partnership via the obligations of Party A and Party

B. It is initialed on each page and signed by the authorized representatives of those

parties, and provides for the “agreement” to be subject to the laws of British

Columbia.

[229] I agree with the Wang Parties that aspects of the December 5 Document are

not typical of a legally drafted contract in Canada, including that it is missing a title;

an express statement that the terms are binding; and a statement of the purpose of

the agreement. However, none of these features are essential to a binding contract,

and their absence is not surprising given that it was not drafted by legal counsel.

I note that the signatories signed at least two other documents, the JVA and the

Minutes, with no greater clarity or formality, and that the evidence suggests that they

intended those documents to be binding.

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[230] I find that the immediate factual context of the December 5 Document, and

the urgency of reaching such an agreement, tends to support, rather than detract

from, the binding nature of that Document. The immediate factual context was that

the Partnership needed to secure nearly $2 million to close the purchase of Lot 35

only ten days later, and more than $10 million in total for transactions closing in the

next 60 days. Securing those funds required the assignment of 107 Co.’s interest in

Lot 35, as well as the Wang Parties’ binding commitment to transfer their interest in

the other Deposit Properties and Lot 15 to the Partnership.

[231] Dr. Wang also urgently needed to secure value for his $1.18 million

investment in the Deposits. Had the Wang Parties not reached such an agreement,

Dr. Wang was aware that he would lose those Deposits and that Lot 15 would be of

limited value to him. The purposes of the December 5 Document were important to

him, stated in his own words as follows:

With this agreement, it specifies the purpose of my investment . . . what my

investment would be used for, where it would be spent.

[. . .]

Second purpose was to state or to make it clear after this LP, as the earliest

investor, what sort of special treatment or benefit would I get as such an early

investor

[232] The urgency and relative simplicity of this situation explains why the

December 5 Document was not drafted by counsel and required that further

documents be signed to effect the share subscription and transfers it contemplated.

[233] I agree that there was limited evidence in this trial of detailed discussions

between Ms. Zhao and Dr. Wang about the contents of the December 5 Document.

The WeChats in late November 2016 and early December 2016 show a number of

iterations of the Document being provided over the days preceding, and reference a

package of documents sent to Dr. Wang through his executive assistant, but neither

party tendered these documents. The evidence before me suggests that the parties

had several discussions over a number of days, only a subset of which are included

in the documentary evidence or that the parties could recall five years later at trial.

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[234] The fact that a number of the terms of the December 5 Document are future-

oriented is not uncommon to binding contractual relations. I consider that the main

issues arising from these provisions is whether:

a) the requirement for the parties to sign a partnership subscription

agreement “and other related agreement(s)” indicates an objective

intention that the December 5 Document itself was not intended to be

binding but only these later documents; and

b) subsequent conduct that was not consistent with those future-oriented

provisions regarding guarantee fees, management fees, and the

subscription price suggests that there was no intention to be bound by

those conditions on December 5, 2016.

[235] With respect to the contemplation of a subscription agreement “and other

related agreements”, the law is clear that “an agreement is not incomplete simply

because it calls for the execution of further documents”: UBS at para. 47. As was

noted in Concord BCSC at para. 312, UBS has been relied upon numerous times in

this province.

[236] I find that the whole of the evidence indicates that the parties objectively

intended to bind each other to these terms, knowing that the documents required to

effect this exchange would still have to be prepared and signed. I also find that both

signatories believed that they had reached final and binding terms for this exchange.

Moreover, I find that on the continuum of contract formation set out in Bawitko, an

objective observer would conclude that the parties had agreed to the terms in the

December 5 Document and that the requirement of further documentation to effect

these agreements did not undermine this binding intent.

[237] With respect to the parties’ subsequent conduct, I agree with the Wang

Parties that neither party exhibited perfect compliance, and that in some

circumstances their non-compliance might indicate to a reasonable observer that in

fact the parties did not intend to be bound when they initially signed the Document.

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[238] One example of non-compliance relied upon by the Wang Parties is that

the Partnership did not pay the Wang Parties a guarantee fee for the mortgage on

Lot 15 in January 2017. However, I note that, at that point, Lot 15 had not yet been

transferred to the Partnership and Dr. Wang sought to keep Lot 15 and more than

half of the mortgage funds for himself. Therefore, it is not clear that the guarantee

fee was properly applicable. I find that the fact that the mortgage did proceed against

Lot 15 at all, that this mortgage was arranged by Ms. Zhao, and that $700,000 of

those funds went to the Partnership with Dr. Wang’s consent, are more supportive of

the parties’ objective intent to be bound by the broader terms of the December 5

Document than not.

[239] A second representation in the December 5 Document was that GP7 would

charge a management fee of 1%, but the Limited Partnership Agreement for GP7,

formalized only ten days later, provided for a management fee “equal to 2% of the

aggregate capital contribution”. Ms. Zhao explained this as a total of 2% for what

was anticipated as a two-year contract, whereas the 1% agreed to in the December

5 Document was annual. I am not fully convinced of this explanation, and it appears

to be an inconsistency between these agreements. I find that it is some evidence of

contradictory subsequent conduct, but not significant or weighty evidence of the

parties’ objective intentions in the context of the whole of the evidence.

[240] Finally, the Wang Parties argue that Dr. Wang negotiated for a subscription

price that would increase three cents a month, and that other investors, including

Mr. Bin Chen, were not charged this higher price. This was a term that was included

in the initial draft sent by Ms. Zhao to Dr. Wang on November 27, and the evidence

indicates it was used by Dr. Wang to negotiate a “premium” value for his early

investments. Regarding other investors, the evidence before me is fairly scant as to

whether the unit price changed from what was represented. I accept Ms. Zhao’s

explanation that when Mr. Bin Chen signed his share subscription agreement in May

2017 at $1/unit (rather than at $1.15/unit), that lower price reflected his substantial

financial commitments as of December 2016. While there was some evidence

before me that the Partnership was not able to demand a higher unit price in later

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years, by then Dr. Wang had still not transferred Lot 15, litigation had commenced,

and the future of the Land Assembly was in jeopardy. I am not convinced that this

subsequent conduct has any bearing on the parties’ objective intentions at the

relevant time.

[241] The Wang Parties also argue that control of his investments was very

important to Dr. Wang, and that he therefore would not have bound himself

objectively to any agreement whereby he was not certain of his ongoing control of

the Partnership. They say that Dr. Wang’s testimony indicates that he would have

found a way to pay the 15% foreign buyers’ tax himself or would have forgone the

investments altogether, rather than bind himself to a contract that might allow a

corporation he did not control to hold his property or manage his investment.

[242] I agree that Dr. Wang frequently emphasized the importance of his corporate

control. He was also convinced at trial that Ms. Zhao’s efforts to purchase the

Properties and future Land Assembly properties without paying the 15% foreign

buyers’ tax were simply excuses for her to steal his company and investments.

[243] However, for the reasons stated above, I find Dr. Wang’s testimony about his

actions and state of mind in 2016 to be wholly unreliable. I prefer to rely on his

conduct and words as recorded in the documentary evidence from that time.

[244] Dr. Wang’s conduct indicates that in 2016 he implicitly trusted Ms. Zhao to

manage his investments, including the Land Assembly and the Renfrew Street

project. He accepted it was general practice for Ms. Zhao to incorporate new

companies to make real estate investments, and raised no objections to Ms. Zhao

signing the documentation required for those corporations to purchase property

using his investment funds. He also recognized that a partnership was different from

AKC-managed projects because they involved other investors who would want to

have some control, which was done on the Renfrew Street project through GP6.

[245] He signed the subscription agreement for units in the Renfrew Street project

in October 2016, approximately a month before the shareholding st