S.U.N. Solar Energy Co. Ltd. v. Wattech Power Inc., 2021 BCPC 185

Citation: S.U.N. Solar Energy Co. Ltd. v. Wattech Power Inc. 2021 BCPC 185 Date: 20210729 File No: 29223 Registry: Richmond IN THE PROVINCIAL COURT OF BRITISH COLUMBIA Between S.U.N. Solar Energy Co. Ltd. Claimant and Wattech Power Inc. Defendant AND File No. 29128 Between Jing Chen Claimant and Wattech Power Inc. Defendant RULING ON APPLICATION OF THE HONOURABLE JUDGE D. VANDOR Counsel for the Claimant: Not represented. No Appearance Counsel for the Defendant: A. J. Pearson

Place of Hearing: Richmond , B.C. Date of Hearing: July 13, 2021 Date of Judgment: July 29, 2021 Introduction [ 1 ] The Defendant, Wattech, applies for orders dismissing both actions on the basis that each Claimant has engaged in an abuse of process. The Defendant also applies for orders setting aside what purports to be two consent orders, two garnishing orders, and for each Claimant to repay the Defendant for the monies received pursuant to each garnishing order. [ 2 ] The Claimant in Small Claims Action no. 29128 is Jing Chen, also known as Sunny Chen [ Ms. Chen ]. Ms.

Chen is the spouse of Allen Sun also known as Jian Guo Sun [ Mr. Sun ] who is a director of S.U.N. Solar Energy Co. Ltd. [ Sun Solar ], which is the Claimant in Small Claims Action no. 29223. Sun Solar is a company in which Ms. Chen is both a director and a shareholder. [ 3 ] Sun Solar is a company incorporated pursuant to the laws of the Province of British Columbia. Sun Solar is a shareholder of the Defendant, Wattech, which is a corporation incorporated pursuant to the

Canada Business Corporations Act , RSC 1985, c. C-44 . At present, Mr. Sun is both a director of Wattech and a director and officer of Sun Solar. [ 4 ] Since both applications involve similar parties and subject matter, I heard them together on July 13, 2021. The Claimants did not participate in this hearing despite receiving notice of these applications, and despite representation by legal counsel in related proceedings before the BC Supreme Court. I am satisfied that both Claimants, Ms. Chen and Sun Solar, as well as Ms. Chen’s spouse, Mr.

Sun, had reasonable notice of these applications and a reasonable opportunity to respond to them. In these circumstances, it was fair and appropriate to hear these applications in their absence. [ 5 ] I grant both applications. These are the reasons for my decision. History of Proceedings [ 6 ] My findings of fact are derived from the affidavits of Zhongwei Chen [ Professor Chen ] sworn on June 14, 2021, with attached exhibits, that were entered into evidence at this hearing. BC Supreme Court Actions [ 7 ] In 2015, Mr.

Sun and Professor Chen created Wattech to commercialize one of the battery technologies that Professor Chen had developed at the University of Waterloo [ University ]. The University granted an option over certain battery technology to Wattech and, in return, the University received shares in Wattech. Professor Chen’s graduate student, Hao Liu, also received shares in Wattech. Professor Chen took in his personal name while Mr. Sun took his shares in the name of his family company, Sun Solar. Originally, Mr. Sun and Professor Chen were the only two directors of Wattech. [ 8 ] In January 2017, Mr.

Sun and Professor Chen, together with the other shareholders of Wattech, agreed to bring a third party financier called Mahelin Enterprise Corp. [ Mahelin ] into Wattech as a shareholder. At about the same time, the shareholders of Wattech entered into a Shareholders’ Agreement. Under the Shareholders’ Agreement, each of Professor Chen, Sun Solar, and Mahelin had the right to appoint a director to the three member Board of Directors, which would supervise and manage Wattech. [ 9 ] Since Wattech’s incorporation until present, Professor Chen and Mr. Sun have been directors of Wattech. Mahelin appointed Mr.

Zhu, who has been a director of Wattech since January 2017. Up until early July 2017, Mr. Sun was also the company’s Chief Executive Officer. [ 10 ] In 2015 and 2016, Mr. Sun and his wife, Ms. Chen, were looking after the day-to-day affairs of Wattech. They were supposed to oversee the preparation of financial statements for the corporation. In the summer of 2017, the University expressed concern that the financial statements for Wattech had not been prepared for the fiscal year that ended June 30, 2016. [ 11 ] When Mr. Sun failed to provide the necessary documents, Wattech commenced proceedings against him.

As a result, Wattech received certain documents from Mr. Sun. These documents included evidence showing that Mr. Sun had written cheques for $30,000 and $50,000 to Sun Solar. Mr. Zhu and Professor Chen were not satisfied with Mr. Sun’s explanations for those cheques. [ 12 ] After receiving this information, Wattech commenced an action against Mr. Sun, Ms. Chen, and Sun Solar, in the BC Supreme Court on November 17, 2017, under Action No. S1710244, Vancouver Registry, to recover monies that they believed to have been improperly taken from Wattech by Mr. Sun, Ms.

Chen and Sun Solar. [ 13 ] In February 2019, due to Mr. Sun’s failure to comply with certain court orders, Wattech obtained an Order in the BC Supreme Court Action from Master Keighley striking out the Response filed by Mr. Sun, Ms. Chen, and Sun Solar and finding liability against the three of them, with damages to be assessed at a later date. I have reviewed a copy of that order and reasons for judgment of Master Keighley. [ 14 ] In July 2019, Wattech obtained a Certificate of Costs that Mr. Sun, Sun Solar and Ms. Chen pay Wattech’s costs in the amount of $20,017.79.

I have reviewed a copy of that Certificate of Costs that was issued by Master Schwartz sitting as Registrar of the BC Supreme Court.

[15] Professor Chen attests that, to date, Wattech has only been able to retrieve approximately $600 that was paid into court under thatgarnishing order. [16] Professor Chen attests that without any advance notice to him or Mr. Zhu in early October 2020, Mr. Sun filed a consent order inthe BC Supreme Court Action purporting to set aside Master Keighley’s Order. Mr. Sun purported to remove counsel of record in favourof himself by filing a Notice of Intention to Act in Person on behalf of Wattech but without notice to Wattech’s counsel, Mr.

Pearson orChurch & Company. [17] Following Professor Chen’s discovery of this, he caused Wattech to bring an application to set aside the consent order. An orderto that effect was made by Mr. Justice Grist on March 10, 2021. I have reviewed a copy of Mr. Justice Grist’s order and his Reasons forJudgment. In his Reasons for Judgment, Mr. Justice Grist found that Mr. Sun did not have the authority to act on Wattech’s behalf to setaside Master Keighley’s Order or to submit the consent order for entry in October 2020. First BC Provincial Court Action [18] On July 21, 2020, Ms.

Chen filed a Notice of Claim against Wattech in the Richmond Registry of the Small Claims division ofthe BC Provincial Court under action No. 29128 [Chen Action]. In the Chen Action, Ms. Chen claimed a total of $32,525.59 (includingcourt fees and interest) against Wattech. [19] On August 5, 2020, Mr. Sun purported to consent to judgment on behalf of Wattech in the Chen Action, which is the actioncommenced by his spouse, Ms. Chen. Both spouses signed the purported “consent order”. Mr.

Sun signed on behalf of Wattech and Ms.Chen signed on her own behalf. [20] Having obtained the Consent Order in the Chen Action, on August 12, 2020, Ms. Chen swore an affidavit and obtained agarnishing order requiring the Canadian Imperial Bank of Commerce [CIBC] to pay monies into Court. [21] Following CIBC’s payment of garnisheed funds into Court, Ms. Chen then caused the sum of $32,706.59 to be paid out of Courtto herself by way of a Request for Payment Out filed on September 8, 2020.

Second BC Provincial Court Action [22] On September 4, 2020, Sun Solar filed a Notice of Claim against Wattech in Richmond Registry of the Small Claims division ofthe BC Provincial Court under Action No. 29223 [Sun Solar Action]. In the Sun Solar Action, Sun Solar claimed a total of $20,754.24(including interest and court fees) as against Wattech. [23] Both spouses signed the purported “consent order” on September 8, 2020. Mr. Sun signed on behalf of Wattech and Ms. Chensigned on behalf of Sun Solar. [24] Having obtained the “Consent Order” in the Sun Solar Action, on or about September 15, 2020, Ms.

Chen then swore anAffidavit and obtained a garnishing order requiring the CIBC to pay monies into Court. [25] Following CIBC’s payment of garnisheed funds into Court, Ms. Chen then caused the sum of $15,497.46 to be paid out of Courtto Sun Solar by way of a Notice of Payment Out of Money dated October 1, 2020. Discovery of the Provincial Court Actions [26] During the course of investigating Mr. Sun’s actions in the BC Supreme Court Action, Professor Chen learned that Mr. Sun hadalso entered into purported “Consent Orders” in the Chen Action and the Sun Solar Action.

Prior to this, Professor Chen was unawarethat either of these actions had been commenced in the Provincial Court of British Columbia. He attests that neither of the notices ofclaim in those proceedings were provided to him. [27] Mr. Zhu, the other director of Wattech, was also unaware of any of the actions commenced by Mr. Sun or Ms. Chen againstWattech. [28] Upon Wattech’s discovery of the judgments in the Chen Action and the Sun Solar Action, legal counsel for Wattech repeatedlywrote to Mr. Sun, Ms. Chen, and Sun Solar demanding the return of the monies. Wattech’s lawyers wrote to Mr. Sun, Ms.

Chen, and SunSolar and/or their lawyer on November 13, 2020, January 22, 2021, and March 26, 2021, asking them to agree to set aside the purported“Consent Orders” in the provincial court proceedings and repay the monies that they had taken from Wattech. [29] Despite those demands, and based on my review of the evidence, I am satisfied that neither Sun Solar nor Ms. Chen havereturned the monies which they obtained. Analysis Legal Principles [30] This court has inherent jurisdiction to grant the relief sought by the Defendant: Racz v. Mission District, (BCCA), [1988] BCJ No. 19 (BCCA) [Racz]; Wang v.

Shi, [2020] BCJ No. 1846 (BCSC). It is not necessary for the Defendant to bring afresh action to set aside the purported consent orders where the party purporting to consent to the judgment was not authorized to do so.

As explained in Racz at para. 72 : An order entered by consent is in effect an agreement of compromise and such an order may be set aside on any ground which would invalidate a contract. A court in addition has inherent jurisdiction to set aside a judgment or order […] which was obtained by consent on a ground which would invalidate a compromise not contained in a judgment or order. A separate proceeding would not result in the bringing forth of additional facts or otherwise advancing the administration of justice: Racz. Abuse of Process [ 31 ] I find that there was no basis for the claim advanced by Ms.

Chen against Wattech in the Chen Action. The notice of claim in the Chen Action is that Wattech agreed to pay Ms. Chen the sum of $31,502.04. However, I accept the evidence of Professor Chen that there was never any valid agreement to pay Ms. Chen. In the BC Supreme Court Action, Ms. Chen alleged that she was entitled to receive payment totalling approximately that amount and, in fact, had received funds issued by her spouse on Wattech’s behalf. However, these monies were part of the same monies which were claimed back from Ms. Chen in the BC Supreme Court Action.

The monies have never been repaid by her. [ 32 ] I find that there was no basis for the claim advanced by Sun Solar against Wattech. The notice of claim in the Sun Action is that Wattech agreed to “repay” $20,017.79 to Sun Solar. However, I accept the evidence of Professor Chen who attests that there was never any valid agreement by Wattech to pay these monies to Sun Solar. Furthermore, the principle amount claimed, namely $20,017.79, is exactly the same as the amount of an Order for Costs granted by Master Keighey in favour of Wattech on February 15, 2019, in BC Supreme Court Action No.

S1710244, Vancouver Registry, and quantified by Master Schwartz in a Certificate of Costs dated July 8, 2019. I accept the evidence of Professor Chen who attests that, aside from approximately $600 paid into Court in connection with the BC Supreme Court Action, none of those costs’ award monies have been recovered to date. [ 33 ] I find that Mr. Sun had no authority on Wattech’s behalf to consent to judgment in favour of his spouse, Ms. Chen, in the Chen Action or in favour of his company in the Sun Solar Action. A quorum of two directors was necessary to authorize any action on Wattech’s behalf.

As of July 2020, Mr. Sun was one of three directors of Wattech. The other two directors were Professor Chen and Mr. Zhu. I accept the evidence of Professor Chen that neither he nor Mr. Zhu were aware of this legal proceeding at the time or that Mr. Sun was purporting to consent on Wattech’s behalf to a judgment in favour of his wife, Ms. Chen. [ 34 ] Mr. Sun’s lack of authority to act on behalf of Wattech was confirmed in a decision issued by the Honourable Mr. Justice Grist of the BC Supreme Court in BCSC Action No. S1710244, Vancouver Registry, on March 10, 2021. Mr. Sun, Ms.

Chen, and Sun Solar were represented by legal counsel at that proceeding. My understanding is that no appeal was taken by them from that decision and the time for doing so has now expired. [ 35 ] In that ruling, The Honourable Mr. Justice Grist set aside what purported to be a Consent Order entered November 5, 2020, dismissing the judgment in favour of Wattech pronounced by Master Keighley on February 15, 2019. He rejected the proposition that Mr. Sun was empowered to act for Wattech. He found that the actions taken by Mr.

Sun were in breach of the quorum requirement (no less than 2 of the legally constituted directors) stipulated in the shareholder’s agreement, and hence of no effect. The action commenced by Wattech in the BC Supreme Court was brought to recoup moneys taken from the company by Mr. Sun, or perhaps Mr. Sun and Ms. Chen. [ 36 ] Justice Grist rejected Mr. Sun’s argument that he was empowered to act for the company. Justice Grist was satisfied that Professor Chen was properly constituted as a director in the stead of Mr.

Zhang (Professor Chen’s former nominee as director) in January 2020, by virtue of the fact that the nomination, or replacement as it was in that case, was fully within the control of Professor Chen. Mr. Justice Grist found that the subsequent actions of Mr. Sun in April 2020 were invalid precluding him from purportedly setting himself up to act for Wattech and presentation of the supposed consent order. Mr. Justice Grist concluded that “the presentation of the consent dismissal as it was done here is, in my view, an abuse of the court process and should be set aside”: para. 15. [ 37 ] I find that both Mr.

Sun and Ms. Chen were aware of this lack of authority at the time that they filed the purported “consent orders” in the Chen Action and Sun Solar Action. Here, the fact is that Mr. Sun was purporting to act for both the claimant and the defendant, through his wife Ms. Chen and a company of which they are both directors. In one case, Mr. Sun was consenting to an order in favour of his spouse, and in the other case, Mr. Sun is consenting to an order in favour of his own company. [ 38 ] I find that Mr. Sun, Ms. Chen, and Sun Solar deliberately kept this information from court.

My conclusion is based on the evidence regarding the issuance of the garnishing orders. First, Sun Solar and Ms. Chen were required to issue garnishing orders against CIBC because they had no authority to unilaterally access Wattech’s bank account at CIBC. Second, Professor Chen attests that the Garnishing Orders were issued without any notice to him and he never received a copy of the Garnishing Orders at the time. Professor Chen is informed by Mr. Zhu that he did not have notice or receive a copy of the Garnishing Orders at the time. Third, the Garnishing Orders that Ms.

Chen obtained in each of the Chen Action and the Sun Solar Action show Wattech’s address as being 150-11120 Bridgeport Road in Richmond, which is the same address as the registered office of Sun Solar. Wattech is a corporation incorporated pursuant to the

Canada Business Corporations Act , RSC 1985, c. C-44 . It has a registered address in Ontario and an address for delivery in this proceeding through legal counsel. [ 39 ] In

summary, I find that there was no basis for the claims made against Wattech in the Chen Action or the Sun Solar Action. I find that Mr. Sun had no authority to consent to judgments against Wattech in these actions. I find that Mr. Sun and Ms. Chen were aware of this lack of authority at the time that they filed the purported “consent orders” in these actions. I find that Mr. Sun, Ms. Chen, and their company, Sun Solar, deliberately kept this information from court. Mr. Sun did not notify the other two directors or receive authorization from them to act on Wattech’s behalf.

The other two directors of Wattech – Professor Chen and Mr. Zhu – were not even aware of these proceedings. Wattech was not properly served because, at some point, Mr. Sun had caused the address for delivery to be changed from the address of Wattech’s solicitor in British Columbia to the address of Sun Solar.

[ 40 ] For all these reasons, I find that the Claimants have engaged in an abuse of the Court’s process. The purported consent orders in the Chen Action and the Sun Solar Action amount to an abuse of the Court’s process. Legal Consequences of an Abuse of Process [ 41 ] I set aside the consent orders that the Claimants had no right to make that were garnished.

Since the orders were made without proper authority, and there is no proper foundation for them, this court has inherent jurisdiction to grant the relief sought by the Defendant. [ 42 ] Wattech applies for an order that I grant judgment against the Claimants in the amount of $15,497.46 with respect to Sun Solar and $32,706.59 with respect to Ms. Chen. At issue is whether I can make the order for judgment. [ 43 ] At the outset, I acknowledge that there are powers that fall outside the jurisdiction of the Provincial Court of British Columbia. As expressed by Judge Skilnick in Klos v.

Fraser Valley Christian Soccer Assn, [2020] B.C.J. No. 1638 at para. 21 : The Small Claims Court is a court created by statute. Generally speaking, it has only the powers conferred by statute. The type of claims the court can hear are set out in s. 3 of the Small Claims Act . That

section also expressly provides that the court “does not have jurisdiction in a claim for libel, slander or malicious prosecution”. One of the things that the Small Claims Court does not have the jurisdiction to do is to grant injunctions (court order prohibiting parties in a civil suit from doing certain things) or orders compelling a party to do certain things. [ 44 ] However, the legislation does not preclude me from ordering the Claimants to repay monies improperly garnished through purported consent orders that I have found amount to an abuse of process.

Since the Provincial Court of British Columbia has jurisdiction over its own process, I have both the discretion and the authority to grant judgment in the amounts requested. [ 45 ] The jurisdiction of a Provincial Court Judge to control its own process as it pertains to Small Claims Court is found in the Small Claims Act and the Small Claims Rules which allows me to make orders consistent with the intent and spirit of the legislation: 2(2); Sterritt v. Canada , para. 16. The Act specifies that the purpose of the Act and the Rules is to resolve disputes in a “just, speedy, inexpensive and simple manner”: s. 2(1).

Allowing the Claimants to commence vexatious and abusive litigation in Provincial Court would completely defeat the purpose of the Act and Rules . These Claimants are taking up valuable court time, which should go to litigants who need the assistance of the court to resolve their legal matter. As stated by Judge Flewelling in Sterritt v. Canada (Governor General), [2019] BCJ.

No. 1131 at para. 16 : The jurisdiction of a Provincial Court Judge to control its own process as it pertains to Small Claims Court is found in the Act and Rules which allows us to make orders consistent with the intent and spirit of the legislation. However, I would go further and find that this Court also has jurisdiction to ensure that legal matters and cases proceed in an expeditious, orderly, just and dignified manner. Were it otherwise, this Court would simply be at the mercy of any litigant who wishes to bring any matter into court and in any manner.

That would be an unacceptable fettering of a Judge’s ability and duty to control the court process, to ensure that the Provincial Court is not used in a manner that is vexatious or an abuse of process and that if allowed to proceed would bring the administration of justice into disrepute. [citations omitted] [ 46 ] I have held a hearing on these applications, and I am satisfied that all parties have had a reasonable opportunity to be heard on the issues that I need to decide. Under Rule 16(6)(

o) of the Rules , I can make any order that I have the power to make and notice of which is served on another party after a hearing. I am satisfied that the Defendant followed the process set out under Rule 16(7) by completing an application following the instructions on the form and filing it with the Richmond Court Registry which is where the court files are located. I am satisfied that the Claimants had reasonable notice of these applications and a reasonable opportunity to respond to them. [ 47 ] A separate proceeding would not bring forth additional facts or otherwise advancing the administration of justice.

Since Wattech does not need to start a new action, it is a false remedy to set aside orders but not provide the relief that flows from the setting aside of those orders. In this case, it is fair and just for the Claimants to repay monies improperly garnished through purported consent orders that I have found amount to an abuse of process.

Having set aside the consent orders that the Claimants had no right to make, and having set aside the garnishing orders that flowed from that improper conduct, I order those monies to be repaid in full. [ 48 ] Finally, I raised the issue of whether Wattech is seeking costs in this proceeding. Rule 20(5) provides that a judge may order a party to pay to the other party up to 10% of the amount claimed or the value of the claim and proceeded through trial with no reasonable basis for success. This remedy has not been sought in this application. Orders 1. I grant both applications. 2.

I dismiss the Chen Action and the Sun Solar Action on the basis that each Claimant has engaged in an abuse of process. 3. I am setting aside what purports to be a consent order in the Chen Action. 4. I am setting aside what purports to be a consent order in the Sun Solar Action. 5. I am setting aside a garnishing order in the Chen Action. 6. I am setting aside a garnishing order in the Sun Solar Action. 7. I order each Claimant to repay the Defendant for the monies received pursuant to each garnishing order in the amount of

$15,497.46 with respect to Sun Solar and $32,706.59 with respect to Ms. Chen. I dispense with requiring approval. _____________________________ The Honourable Judge D. Vandor Provincial Court of British Columbia