Zhong Tie Enterprise Inc. v. Lihui Meng, 2024 BCSC 224

IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: Zhong Tie Enterprise Inc. v.

Topcorp Development Inc., 2024 BCSC 224 Date: 20240212 Docket: S158691 Registry: Vancouver Between: Zhong Tie Enterprise Inc. and Lihui Meng Plaintiffs And Topcorp Development Inc., Canadian Top Consultant Ltd., Ping Wang also known as Peter Wang also known as Peter Ping Wang , Qian Fan also known as Sophie Fan also known as Sophie Qian Fan, and Wen Qing Sun also known as Wenqing Sun Defendants And Ping Wang also known as Peter Wang also known as Peter Ping Wang, Qian Fan also known as Sophie Fan also known as Sophie Qian Fan, Zhong Tie Enterprise Inc., Lihui Meng, Topcorp Development Inc. and 8688 Holding Inc.

Defendants by Counterclaim Before: The Honourable Mr. Justice N. Smith Reasons for Judgment Counsel for the Plaintiffs and Defendants by Counterclaim, Zhong Tie Enterprise Inc. and Lihui Meng: S.A. Turner D.C. Han Counsel for the Defendant, Canadian Top Consultant Ltd., and the Defendants and Defendants by Counterclaim, Topcorp Development Inc., Ping Wang also known as Peter Wang also known as Peter Ping Wang, Qian Fan also known as Sophie Fan also known as Sophie Qian Fan, and the Defendant by Counterclaim, 8688 Holding Inc.: J.A.

Henshall Counsel for the Defendant and Plaintiff by Counterclaim, Wen Qing Sun also known as Wenqing Sun: C. Dayan A.S. Hefford T. Lanthier, Articled Student Place and Dates of Trial: Vancouver, B.C. May 29-31, June 1-2, 5-9, 12-16, 19-23, 26-29, July 13-14, August 21-22, 24-25, 2023

Place and Date of Judgment: Vancouver, B.C.

February 12, 2024 Table of Contents INTRODUCTION .. 4 THE PARTIES .. 4 Individuals . 4 Companies . 5 THE PROVINCIAL NOMINEE PROGRAM .. 6 CONSULTING AGREEMENTS AND INITIAL PAYMENTS .. 8 Jianguo Dong . 8 Wenqing Sun . 11 ALLEGED CANCELLATION OF THE AGREEMENTS .. 13 THE INVESTMENTS .. 15 The Squamish Property . 15 The purchase and purported lease . 15 The Topcorp shares . 21 Raymond Yang . 23 The Mission Property . 27 The Skol Pub . 31 The Sunset Cemetery . 39 A NOTE ON CREDIBILITY .. 46 APPLICATION OF THE LAW ... 47 Breach of Fiduciary Duty . 47 The Personal Defendants Owed a Fiduciary Duty . 47 The Personal Defendants Breached Their Fiduciary Duty . 51 Fraudulent Misrepresentation .. 52 Breach of Contract 54 Unjust Enrichment and Conversion .. 54 THE DEFENDANTS’ COUNTERCLAIMS .. 57 REMEDIES .. 60 PUNITIVE DAMAGES .. 63 SPECIAL COSTS .. 66

SUMMARY OF ORDERS .. 67 INTRODUCTION [ 1 ] The plaintiff, Lihui Meng, and the plaintiff by counterclaim, Wen Qing Sun also known as Wenqing Sun, separately sought to

immigrate to Canada from China under a program for entrepreneur immigrants investing in British Columbia businesses. They say that the defendant, Ping Wang, also known as Peter Wang, agreed to find qualified business opportunities and help establish those businesses, while the defendant, Qian Fan, also known as Sophie Fan, agreed to prepare and submit their immigration applications. Instead, the plaintiffs allege that those two defendants (“the personal defendants”) converted investment funds to their own use while doing nothing to advance the immigration process. THE PARTIES Individuals [ 2 ] The plaintiff, Ms.

Meng, is a Chinese citizen currently living in Surrey, BC. She is the surviving spouse of Jianguo Dong, who owned a railway parts manufacturing business in Qinhuangdao, China. Mr. Dong was also a plaintiff in this action until his death in 2016. Ms. Meng claims both in her own right and as her husband’s successor in interest. These reasons will sometimes refer to Jianguo Dong by his full name to distinguish him from another person with the same surname who was involved in some of the relevant transactions and appeared as a witness. [ 3 ] The plaintiff by counterclaim, Mr.

Sun, now lives in Moose Jaw, Saskatchewan and became a permanent resident of Canada in 2022. He previously owned a cemetery and Bible theme park in Shenyang, China, and, prior to that, he owned and operated a restaurant in China. Although Mr. Sun is named as a defendant, Ms. Meng now seeks no relief against him and Mr. Sun’s counterclaim against other defendants aligns his interest with hers. I will therefore sometimes refer to Ms. Meng and Mr. Sun collectively as the “plaintiffs”. [ 4 ] The defendant, Mr. Wang, is a business consultant and operates a pub and liquor store in Nanaimo, BC. [ 5 ] The defendant, Ms.

Fan, operated an immigration consulting business in Vancouver, although she was not a licensed immigration consultant. Companies [ 6 ] The plaintiff, Zhong Tie Enterprises Inc. (“Zhong Tie”), is a British Columbia company that was incorporated on March 12, 2013 with Jianguo Dong as the sole shareholder and director. Current shareholders are the defendant Mr. Wang, in trust for Ms. Meng, and Mr. Sun’s former spouse, Li Zhang, in trust for Mr. Sun. Mr.

Wang has been the sole director since May 2016. [ 7 ] The defendant, Canadian Top Consultant Ltd. (“Top Consultant”), was a British Columbia company through which Ms. Fan operated her immigration business. It was incorporated in 2008 and dissolved in 2016 for failure to file its Annual Reports. [ 8 ] The defendant, Topcorp Development Inc. (“Topcorp”), is a British Columbia company incorporated on May 6, 2013. The directors are Mr. Wang, Ms. Fan and Mr. Sun.

Those three are the registered shareholders in Topcorp along with 8688 Holding Inc. (“8688”), a Saskatchewan company that was incorporated on January 16, 2014, and is a defendant to Mr. Sun’s counterclaim. The registered directors of 8688 are Mr. Wang, Ms. Fan and a Raymond Yang. The defendants say that Mr. Yang is the majority shareholder, but corporate filings list Mr. Wang as the sole shareholder. Counsel for Mr. Sun alleges that Mr. Yang is a fictitious alter ego for Mr. Wang and Ms.

Fan. [ 9 ] The plaintiff by the defendants’ counterclaim, Topsuccess Investments Ltd. (“Topsuccess”), is a British Columbia company incorporated on October 28, 2013. The shareholder and directors are Mr. Wang, Ms. Fan and Libin Dong (no relation to Jianguo Dong). [ 10 ] The claim against the defendant, Landquest Realty Corporation, was discontinued on March 26, 2021. THE PROVINCIAL NOMINEE PROGRAM [ 11 ] The British Columbia Provincial Nominee Program (“BCPNP”) is an economic immigration program operated by the province of BC in cooperation with Citizenship and Immigration Canada (“CIC”).

The BCPNP assesses applications and nominates successful candidates for permanent residence in Canada. Each nomination goes to CIC, which makes the final decision on permanent residence. [ 12 ] As of 2013, the BCPNP included a “business immigration” option for experienced entrepreneurs or business owners who intended to create and actively manage an eligible business in the province.

A published BCPNP program guide said: This stream accelerates the permanent residence application process for individuals who can establish themselves in B.C. and develop a business that will provide significant economic benefits to the province.

To qualify, you must meet specific personal net worth thresholds, make a minimum investment in an eligible business, be actively involved in the daily management of the business, and create one or more new jobs for Canadian citizens or permanent residents. [ 13 ] The minimum investment required was $400,000 for businesses in the greater Vancouver and Abbotsford areas and $200,000 for businesses in other parts of the province.

However, meeting those requirements did not guarantee acceptance because there was a limit on the number of applications accepted in each year. [ 14 ] The procedure, as outlined in the program guide, began with a written application that would be assessed against program criteria. If the application passed that initial review, the applicant would be required to attend an in-person interview. If approved, the applicant was required to sign a performance agreement with terms including the type of business, the breakdown of the total investment and the number of jobs intended to be created.

The BCPNP would then support the applicant in an application to CIC for a two-year work

permit. That permit would allow the applicant to move to BC, along with their dependants and begin implementing the business plan. [ 15 ] Within designated timelines, the approved applicant was required to notify the BCPNP of their arrival in BC and submit proof they had transferred the required funds for the investment. After the business plan was implemented, the BCPNP required a final report to show that conditions of the performance agreement had been complied with.

At that point, BCPNP would nominate the applicant to CIC for permanent residence in Canada. [ 16 ] Of particular importance to this action, the guide included the following statements: The PNP cannot comment on the eligibility of your business plan or the likelihood of whether we will approve you as a nominee candidate and support your work permit before assessing your formal application.

We require that you submit all forms and documentation to determine if you meet the program requirements. … Keep in mind that our expectation is that you are actively managing your business and have an on-site senior management role that is evident on a day to day basis.

PNP Program Advisors will evaluate your active involvement in the business when you submit your Final Report and consider this to determine whether to nominate you for permanent residence. [ 17 ] A slightly later version of the program guide states: The BCPNP discourages all registrants and applicants from making any investment prior to signing a performance agreement with the BCPNP and obtaining a valid work permit from Citizenship and Immigration Canada (CIC).

Signing an agreement to purchase a business and/or making a deposit is solely at your own risk. [ 18 ] Until about mid-2015, the BCPNP also offered a “Regional Business Succession Option”, which was intended to facilitate purchases of small businesses outside the Vancouver and Abbotsford metropolitan areas whose owners were retiring. Under that option, applicants were required to meet with the retiring owners, establish a fair market value for the business, complete the purchase and operate the business for at least a year before BCPNP would consider nominating them for permanent residence.

The applicant also had to demonstrate long-term intentions of continuing to operate the business. CONSULTING AGREEMENTS AND INITIAL PAYMENTS Jianguo Dong [ 19 ] At some point prior to 2013, Ms. Meng and her husband, Jianguo Dong, began considering immigration to Canada, although neither had previously been to Canada nor spoke English. Ms. Meng testified they were attracted by Vancouver’s reputation as a desirable city to live in and believed their children could get a better education in Canada. She said Ms.

Fan had been recommended as someone who could help with Canadian immigration matters, and she and her husband first met Ms. Fan in China in 2011 or 2012. [ 20 ] Mr. Dong first came to Canada in March 2013 for what was described as an “exploratory visit”. The BCPNP recommended such visits for potential applicants. Ms. Fan testified that she helped arrange a visitor’s visa for that purpose. She said she made those arrangements through an office in Shanghai and corrected errors that initially led to the visa being refused.

It is not clear what relationship, if any, she had to that office. [ 21 ] On March 13, 2013, Mr. Dong and Top Consultant, represented by Ms. Fan, signed a document on Top Consultant letterhead called a “British Columbia Business Immigration Nominee Program Agreement”. (Like many documents in this case, the agreement was written in Mandarin, but there is no dispute about the accuracy of translations that were put into evidence.) [ 22 ] The document stated that Top Consultant had an “official licence” from the Immigration Consultants of Canada Regulatory Council and set out the number of that licence.

In fact, such licences were only issued to individuals, not companies, and Ms. Fan had no such licence. [ 23 ] Ms. Fan testified that a licensed immigration consultant named Han Hui Dai authorized Top Consultant to use her license to obtain clients and submit client application materials to her. The agreement with Mr. Dong makes no reference to Han Hui Dai, and there are no documents evidencing a business relationship between Han Hui Dai and Top Consultant. Han Hui Dai did not testify at trial although she had been listed as a witness in the defendants’ trial brief. [ 24 ] The agreement stated that Mr.

Dong intended to “apply for a Canada permanent resident visa through the British Columbia Business Immigration Nominee Program” and that Top Consultant would submit the application to the province and to CIC.

In particular, Top Consultant agreed to: • assist in filling out the necessary application forms and documents; • assist with the preparation of a business plan; • submit applications to the BC Government and CIC; and • prepare the applicant for the personal interview and “teach in interview techniques”. [ 25 ] The agreement called for payment for services in China, including the obtaining of a visitor’s visa, totalling 60,000 RMB (the equivalent of about $9,750 CDN). It also called for Jianguo Dong to pay a “management fee” of $40,000 to Mountview Enterprises Inc.,

a company of which Ms. Fan was a director, for “a business plan as required by the B.C. Provincial Government” and to provide $100,000 as “the deposit for the immigration project as required by the B.C. Provincial Government”. There was in fact no government requirement for a $100,000 deposit at that initial stage. Ms. Fan attributed that reference to her use of an outdated precedent form. [ 26 ] On the same day that he entered into a contract with Top Consultant, Mr. Dong entered into a contract with Mr. Wang.

That agreement referred to him needing to invest $400,000 in BC “to found and operate business investment for the purpose of PNP immigration” and listed an investment in that amount as one of Mr. Dong’s “liabilities” under the agreement. Mr. Wang agreed to “provide services and contracted business operation” in regard to that investment. In particular, Mr. Wang was to: • act as Mr.

Dong’s agent and be “responsible to contact the relevant government bodies, institutions, agencies, lawyers, accountants, and businesses etc. to get their professional services”; • perform preliminary work of market investigation, market analysis, looking for projects and conducting feasibility analyses; • assist in the registration and incorporation of a company and the normal operation of the company; • assist in “business investment so as to get maximum interest”; • submit business investment information to Mr.

Dong in a timely manner and keep him informed of the progress and success of his investment; • “Contract the operation” of the project Mr. Dong invested in; • ensure that the project “started immediately after the arrival” of the investment funds; and • complete the immigration investment project after the arrival of investment funds “according to the current policy of the province of British Columbia”. [ 27 ] In short, Mr. Dong would invest $400,000 in a qualifying business opportunity that Mr. Wang would identify, and Mr. Wang would do what was necessary to create an operating business.

The reference to “contracting the operation of the business” suggests that Mr. Wang or his designate would manage the business on Mr. Dong’s behalf. That would be contrary to the BCPNP’s fundamental requirement of active on-site management by the immigration applicant. [ 28 ] The agreement also provided that, once Mr. Dong obtained permanent resident status in Canada, Mr. Wang would purchase all shares in the operating company for $200,000. In other words, Mr. Wang would effectively earn $200,000 by being able to acquire the benefit of Mr.

Dong’s investment for half price. [ 29 ] The plaintiff company Zhong Tie was incorporated on March 12, 2013 with Mr. Dong as the sole director and shareholder. Between March 15 and May 9, 2013, a total of $398,832 was transferred to Zhong Tie from Mr. Dong’s and Ms. Meng’s joint bank account. This was effectively the $400,000 Mr. Dong was to provide under his contract with Mr. Wang, less transfer and service charges.

There was no reason for him to forward those funds at that stage because the BCPNP program guide clearly does not require investment funds to be transferred to BC until after a project has been approved. Mr. Dong did not read English and could not have read the program guide himself. I find that he could only have relied on advice from the personal defendants as to what was required. [ 30 ] Before returning to China after his exploratory visit, Mr. Dong gave Mr. Wang signed but otherwise blank cheques on the Zhong Tie account. Mr. Wang filled in three of those cheques on May 6 and 7, 2013.

One cheque transferred $250,000 to the defendant Topcorp. Both personal defendants described this as a loan, which they said Mr. Dong had agreed they could use to “move around” as they wished until work began on a suitable immigration project. [ 31 ] Mr. Wang used another cheque to provide a $30,000 deposit on real property ultimately acquired by another company in which he and Ms. Fan had an interest. That property will be discussed later in these reasons. Mr. Wang used the third cheque to pay himself $10,000 toward his management fee, although nothing in the contract entitled him to collect fees at that point.

Wenqing Sun [ 32 ] Meanwhile, Mr. Sun, who feared persecution in China because of his Christian religion, had also been introduced to Ms. Fan. In November 2012, Ms. Fan sent him a brief Chinese Language description of the BCPNP and a personal information form for him to complete. The description of the BCPNP was on Top Consultant letterhead. It included a statement that “[f]rom coming to BC for a local exploratory visit to receiving the nomination paper, it takes about 8-10 months. Then it will take about 1 year to get the Maple Card to be permanent residents…”. Unlike any documents provided to Mr.

Dong, the document did say that investment was required only after an application was accepted. [ 33 ] Mr. Sun visited Vancouver in April 2013 and, on April 23, signed agreements with both Top Consultant and Mr. Wang. The terms of the agreement with Top Consultant were similar to those in the agreement with Mr. Dong, except that the management fee was to be $50,000 rather than $40,000 and paid to another company, NML Investment Corp. Like the agreement with Mr. Dong, the agreement with Mr. Sun included a $100,000 deposit. Ms.

Fan testified that both the $100,000 and $50,000 amounts were from her outdated contract precedent and were neither required nor paid. Unlike the contract with Mr. Dong, the contract with Mr. Sun does not refer to an immigration consulting licence. [ 34 ] The contract also required Mr. Sun to pay a “legal consulting fee” of60,000 RMB, with an immediate payment of 20,000 RMB to “activate” the agreement. The document is ambiguous as to whether the 20,000 RMB payment is part of or additional to the 60,000 RMB.

[ 35 ] Mr. Sun’s agreement with Mr. Wang was also similar to that of Mr. Dong in that it authorized Mr. Wang to act as his agent and to find and manage a suitable investment project. Two significant differences were that it called for Mr. Sun to invest $600,000, rather than $400,000, and to pay Mr. Wang a management fee of $220,000, with an initial, non-refundable deposit of $20,000. [ 36 ] Mr. Sun testified that, shortly after he arrived in Canada, Ms. Fan and Mr. Wang accompanied him to a bank where he opened two accounts, from which he transferred $37,150 to Ms. Fan and $20,000 to Mr. Wang. [ 37 ] Ms.

Fan said that $5,150 of the $37,150 paid to her by Mr. Sun was used to pay for summer camp fees for Mr. Sun’s daughter. Mr. Sun agrees that Ms. Fan helped organize his daughter’s summer camp but denies she paid for it, and Ms. Fan has produced no bank statements or receipts showing that payment. ALLEGED CANCELLATION OF THE AGREEMENTS [ 38 ] In June 2013, Ms. Fan travelled to China to meet clients, including Mr. Dong and Mr. Sun. She testified that she had by then learned that Top Consultant was not permitted to operate under Han Hui Dai’s licence. She said she told both Mr. Dong and Mr.

Sun at separate meetings that their contracts with Top Consultant were cancelled. [ 39 ] Ms. Fan said Top Consultant stopped carrying on business at that point and she continued to act only as conduit of information between her former clients and a company called Magsen Immigration, to whom she had transferred their files. Magsen Immigration was operated by a licenced immigration consultant named Ying Liu, but Ms. Fan said she dealt primarily with an employee who she referred to as “Brenda”. “Brenda’s” full name is Bai Song Qin. Neither she nor Ying Liu gave evidence at trial.

A Brenda Yu was listed on the defendants’ trial brief, but no contact information was included for her, and she was not called. [ 40 ] There is no evidence of a written agreement to terminate either contract with Top Consultant. Nor is there evidence of any new contract between either Mr. Dong or Mr. Sun and another company. There is no evidence that Mr. Dong or Mr. Sun ever met the people who were supposedly their new immigration consultants. Ms. Fan said she briefly introduced Ms. Meng to “Brenda” on one occasion, which Ms.

Meng denies. [ 41 ] There is also no evidence that Magsen Immigration, Ying Liu or “Brenda” ever submitted an application or a business proposal to the BCPNP on behalf of either Mr. Dong or Sun. The only evidence of any communication with the BCPNP is an email acknowledging payment of a $300 online registration fee on behalf of Mr. Sun dated November 13, 2015—some two and a half years after the files were allegedly transferred. The BCPNP program guide makes clear that mere registration is not an application. [ 42 ] Libin Dong was a friend of Ms. Fan who had first recommended her services to Jianguo Dong.

He testified that he accompanied Ms. Fan to the meeting with Jianguo Dong where the contract with Top Consultant was allegedly cancelled. However, Libin Dong could not corroborate Ms. Fan’s evidence on that point because he said he was out of the room for part of the meeting. I do not accept Ms. Fan’s evidence about the cancellation of the contracts. [ 43 ] Ms. Fan also says that when she met with Jianguo Dong in China, he told her for the first time that he had had a kidney transplant in 2012.

She said she advised him that medical history would preclude his passing the medical examination that CIC required as part of the immigration process, even if BCPNP approved his business plan. [ 44 ] Ms. Meng was not present at the meeting Ms. Fan describes, but Ms. Meng testified that neither her late husband nor either defendant ever told her that his medical history made him ineligible for immigration. She said her husband was in good health following his kidney transplant and his later death was due to subsequent unrelated cancer. [ 45 ] According to Ms.

Fan, Jianguo Dong asked that the BCPNP immigration application be continued on behalf of Ms. Meng. Ms. Meng did not have the necessary experience as a senior manager or business owner to qualify as an entrepreneur immigrant under the BCPNP. Before her marriage to Jianguo Dong, Ms. Meng had worked as a broadcaster in China and had not worked outside the home since the birth of their twin children in 1999. [ 46 ] Ms. Fan says that when she pointed out Ms. Meng’s lack of qualifications for the BCPNP, Mr. Dong asked her to try anyway and said he could give Ms.

Meng a senior management title within his company for that purpose. If Mr. Dong made such a suggestion, I find it would have been Ms. Fan’s duty to tell him that would be a fraud on the BCPNP and to refuse to participate in it. It would also have been a fraud likely to be exposed if an application from Ms. Meng ever advanced to the personal interview stage of the BCPNP process, where she would likely have to describe her business experience. [ 47 ] Mr. Sun testified that, prior to his own meeting with her, Ms.

Fan asked him to have the 80,000 RMB referred to in the consulting agreement ready to give to her in cash. He said he did so, and Ms. Fan promised to issue a receipt on her return to Canada but never provided one. THE INVESTMENTS [ 48 ] There is no evidence of any application to the BCPNP on behalf of either plaintiff. However, between May 2013 and November 2014, the personal defendants used money provided by Mr. Sun and/or Mr. Dong to purchase three properties.

Those properties were two pieces of vacant land: one in Squamish BC, one in Mission BC, and a cemetery in Moose Jaw, Saskatchewan. [ 49 ] The personal defendants also caused Mr. Sun and Ms. Meng to become owners, through Zhong Tie, of a pub on Gabriola Island, BC. Mr. Wang now asserts that he managed the pub on their behalf and counterclaims for management fees. [ 50 ] The sometimes-complicated movement of funds between different bank accounts and companies created inter-relationships

between those four transactions, but it is necessary to try to describe each of them separately. The Squamish Property The purchase and purported lease [ 51 ] Ms. Fan testified that during Mr. Dong’s visit in March 2013, she and Mr. Wang took him to see a number of businesses for possible BCPNP investment, but they could not find anything comparable to the railway parts business he owned in China. However, she said they took him to a tourist-oriented mini-railway in Confederation Park in Burnaby, and he expressed interest in finding a location for a larger such attraction. [ 52 ] Mr.

Sun testified that during his initial exploratory visit, Mr. Wang and Ms. Fan took him to three large properties: one in Chilliwack, one in Mission and one in Squamish. Mr. Sun said they recommended that, given his background in cemeteries, he should invest in a plot of land on which he could develop a cemetery as a qualifying BCPNP investment. [ 53 ] The defendants deny that development of a cemetery was initially Mr. Sun’s goal in looking at the properties and say that he became generally interested in investing in land in BC. That position is contradicted by the following evidence given by Mr.

Wang on discovery: Q Okay. You had said the plan was initially to develop a cemetery on the Squamish lands, right? A That’s – that’s Mr. Sun’s plan. That’s the purpose of his purchase of the land. [ 54 ] The purchase of land was not, in itself, an eligible investment for purposes of the BCPNP. Mr. Sun had never been to Canada before this visit of less than two weeks and came specifically to investigate immigration possibilities.

I find there was no logical reason for him to buy land unrelated to his immigration plans, and I accept his evidence that any interest he had in buying land was for the purpose of obtaining a site on which to develop a cemetery. [ 55 ] The defendants agree that they took Mr. Sun to see the Chilliwack and Mission properties but say they did not identify the Squamish property until after Mr. Sun returned to China. [ 56 ] The Squamish property is 286 acres consisting mostly of undeveloped forest except for a single house. It was and remains in the Agricultural Land Reserve (“ALR”). On April 29, 2013, Mr.

Wang was in contact with the selling realtor whose email to Mr. Wang pointed out that the property was in the ALR. Mr. Wang testified that he viewed the property on May 2, 2013. [ 57 ] On May 3, 2013, Mr. Wang entered into a contract to purchase the property for $1,820,000. A $30,000 deposit was provided by Mr. Sun on May 9, 2013. On May 15, 2013, Mr. Wang assigned the contract to the newly incorporated defendant Topcorp. [ 58 ] Before the purchase of the Squamish property closed, Mr. Wang prepared a document under which Mr. Dong agreed to lease the entire property for three years at $100,000 per year.

Although Mr. Dong did not sign the lease until Ms. Fan later took it to him in China, the first year’s payment of $100,000 was paid by cheque from Zhong Tie to Topcorp on May 21, 2013. This was another of the blank cheques that Mr. Dong had provided to Mr. Wang. [ 59 ] The lease agreement also called for Mr. Dong to pay a management fee of $40,000 to what is described only as Mr. Wang’s company. Mr.

Wang had already received $40,000 from the Zhong Tie account—the $10,000 paid directly to him and the $30,000 he used as a deposit on another property. [ 60 ] There is no evidence that a mini-rail project contemplated by Mr. Dong would ever have been permitted on property that was in the ALR. Nor is there any evidence that the cemetery contemplated by Mr. Sun would have been permitted. There is no evidence of any extensive inquiries about what uses might be permitted before the land was purchased and the lease was signed. [ 61 ] Mr.

Wang gave evidence of visiting a government office in Pemberton (presumably a Regional District office) on one occasion before making an offer. He testified that, based on his inquiry, he told Mr. Dong that a mini-railway was possible on the property, but he did not mention the ALR because “[Mr. Dong] wouldn’t understand anyway”. [ 62 ] There is no documentation of any advice Mr. Wang may have received on his single visit to a government office.

Based on the short time that elapsed between his initial viewing of the property and his offer to purchase, I find that any inquiries he made could only have been cursory and unlikely to have resulted in any firm or definitive advice about what would be permitted. [ 63 ] The only evidence of any communication with the Agricultural Land Commission, which has jurisdiction over the ALR, is a letter from the commission to Topcorp dated May 7, 2014—a year after the land was purchased—that refers to a subdivision application rather than an application to approve any use.

The letter states that the application was not being processed at that time because further documentation was required. [ 64 ] Asked whether she or Mr. Wang took any steps to determine whether a mini-railway might qualify as an eligible business under the BCPNP, Ms. Fan said they relied on the immigration consultant Ying Liu and/or her employee “Brenda”. There is no evidence of any advice from that source. [ 65 ] In the brief time between viewing the Squamish property and buying it, Mr. Wang could not have done any of the market research or feasibility studies contemplated in his contract with Mr.

Dong to determine whether a mini-railway in that location would be viable even if it was permitted. Mr. Wang said he prepared a plan for the mini-railway and showed it to Mr. Dong but he is no longer able to find that document. He could not have shown any such plan to Mr. Dong when he bought the property because Mr. Dong was in China at the time.

[ 66 ] Topcorp completed the purchase on May 30, 2013 for a final purchase price, with adjustments, of $1,855,610. Most of that money—a further $1.6 million—came from Mr. Sun and was forwarded directly to the conveyancing solicitor on May 15, 2013. The $1.6 million paid by Mr. Sun was in addition to the $30,000 deposit he had provided. A balance of $224,871 came from Topcorp, using the funds it had previously received from Zhong Tie. Mr. Sun, who was contributing most of the money to buy the property, had no knowledge of this lease agreement with Mr.

Dong. [ 67 ] After providing the funds to be used to buy the Squamish property, Mr. Sun paid another $150,000 to Topcorp on May 21, 2013. He testified that the defendants told him that he should make a “donation” to the provincial government in order to help expedite his BCPNP application. In an email to Mr. Sun dated May 19, 2013, Ms. Fan said that “apart from your $150,000, Peter and I will also donate $100,000 (Provincial government.)” In a further email dated May 23, Ms.

Fan referred to $250,000 being “used for donation”. [ 68 ] At trial, the defendants said the references to a donation actually referred to the possible development of some sort of non-profit or charitable project on part of the property. That is not consistent the following discovery evidence from Mr. Wang: Sophie said Mr. Sun is already accustomed to the practice in China that you donate money to the government, so that will probably be easier for them to do the cemetery project. [ 69 ] At trial, Mr. Wang said he had been “mixed up” when he gave that evidence, and Ms.

Fan denied telling him that. [ 70 ] There is one document, which Mr. Sun alleges to be a forgery and which will be discussed shortly, that refers to money being used for a charitable contribution rather than a direct donation to the government. Those two descriptions cannot logically be described as synonymous. [ 71 ] There is nothing in the BCPNP material to suggest that charitable contributions have any relevance to the establishment of a qualifying business, and Ms. Fan’s emails clearly suggest a direct cash payment to the government, not to any charitable agency. I find that the Mr.

Sun was being led to believe his immigration chances would be improved with a bribe to someone in government. There is no evidence any such bribe was ever offered, but Mr. Sun’s $150,000 was not returned to him. [ 72 ] At the time of its incorporation and purchase of the Squamish property, Topcorp’s only shareholders were Ms. Fan and Mr. Wang, with 7 issued common shares each. Mr. Sun received no shares at that point. [ 73 ] More than 10 years after its purchase, the Squamish property remains vacant and in the ALR.

No application was ever submitted to the BCPNP for development of a mini-railway, a cemetery or any other business on the property. [ 74 ] To summarize the rather convoluted events to this point: • Although the BCPNP contemplates an investment being made only after an application is approved, Jianguo Dong agreed or was persuaded to immediately create a company, advance $400,000 to that company and give Mr.

Wang effective control over those funds before anything had been done to prepare or submit an application to the BCPNP. • Of that amount, approximately $225,000 was used by the defendant Topcorp, of which the defendants Mr. Wang and Ms. Fan were then the sole shareholders, toward the purchase of the Squamish property. • The balance of the funds to purchase the Squamish property — $1,630,000 — came from Mr. Sun, although investment in real estate was not a qualifying investment under the BCPNP, and Mr. Sun believed he was buying the property to develop a cemetery.

Although he provided most of the funds for Topcorp to purchase what was and remains its only asset, Mr. Sun did not receive any shares in the company at that point. • A further $100,000 from Mr. Dong’s company Zhong Tie was paid to Topcorp under a lease, supposedly for the purpose of a building a mini-railway, and Mr. Dong paid the defendant Mr. Wang a further $40,000 to manage that project. Mr. Sun, who was providing most of the money for the land purchase, had no knowledge of the lease to Mr.

Dong. • There is no evidence that either a mini-railway or a cemetery would have been possible on a site that was within the ALR, and there is no evidence of any significant investigation into that question before the property was purchased. • The Squamish property remains Topcorp’s only asset and, a decade after it was purchased, remains vacant and in the ALR. No development plan has ever been submitted to any approving authority, and no plan for a business located there has ever been submitted to BCPNP as an eligible investment for immigration purposes.

The Topcorp shares [ 75 ] More than nine months after Topcorp purchased the Squamish property, on March 6, 2014, Mr. Sun finally received shares in Topcorp. But, although he had contributed approximately 88% of the cost of what became and remains Topcorp’s only asset, Mr. Sun received only 43 shares, representing only a 43% interest in the company. Another 43 shares were issued to 8688. [ 76 ] The defendants say the shares were issued pursuant to a “Cooperation Agreement” between them and Mr. Sun dated June 2013. That agreement refers to Mr.

Sun receiving 43% of the shares in exchange for his $1.63 million contribution, and Mr. Wang and Ms. Fan receiving 7% each. As for the remaining 43%, the document says that Mr. Wang: …will be in charge of managing and allocating the remaining 43% of the company shares, finding person(

s) or enterprise(

s) with extensive management experience, contact and project resources to subscribe to the shares and take full charge of the design, development, publicity, project financing and other work for the land project…”. [ 77 ] This is also the only document that refers to Mr. Sun making a charitable contribution as opposed to a donation to the

government. [ 78 ] Mr. Sun says the document is a forgery that he never saw before this litigation. It is purportedly signed with his Chinese corporate and personal seals, but Mr. Sun says those are counterfeit. He gave evidence of certain differences in appearance between the seals on the document and his real seals, which he said he never brought to Canada and never used to sign documents with the defendants. The Chinese language document with the seals that the defendants have produced is a photocopy.

They have not produced an original document. [ 79 ] Even if the “Cooperation Agreement” was genuine, I find that Mr. Sun’s agreement could only have been obtained by deception. At the time of the purported agreement, Topcorp was in no position to recruit another investor to develop the Squamish property because the entire property was subject to the lease in favour of Jianguo Dong. That was still the case in March 2014, when the share distribution took place. Mr.

Dong did not acknowledge abandonment of a project related to Squamish until May 2014, when he authorized funds to be “transferred” to the purchase of a pub. [ 80 ] Between the date of the purported “Cooperation Agreement” and the date that the shares were issued, Ms. Fan suggested another reason, completely unrelated to the Squamish property, for Mr. Sun to receive shares representing only half the value of his investment. [ 81 ] In an email on December 25, 2013, Ms. Fan suggested to Mr. Sun that half his shares in Topcorp be sold to finance the purchase of a cemetery in Saskatchewan.

That transaction will be discussed later in these reasons. For the moment, the important point is that Ms. Fan’s email referred to Mr. Sun holding 85.7% of the shares in Topcorp, worth $1.6 million, and suggested he sell half of them. That suggestion would have made no sense if Mr.

Sun had already agreed six months earlier to accept only a 43% interest. [ 82 ] I find that the existence of two different explanations for the share distribution is a further reason to doubt the authenticity of the purported “Cooperation Agreement”, particularly as the actual distribution of shares took place closer in time to the second explanation that was unrelated to the Squamish property. [ 83 ] On all of the evidence, I find the “Cooperation Agreement” was likely forged or, if not forged, obtained by misrepresentation. [ 84 ] In the months following the purchase of the Squamish property, Mr.

Sun remained under the impression that it was going to be used for development of a cemetery—a business in which he had the necessary expertise and would have had no need for a partner. On August 8, 2013, Mr. Sun paid an additional $200,000 to Topcorp. He says the defendants told him the money was necessary to develop a cemetery on the Squamish property and would be transferred to a new corporation for that purpose. The new corporation, Topcando Cemetery Development Inc. (“Topcando”), was a British Columbia company incorporated by Mr.

Wang on August 6, 2013. [ 85 ] The defendants say Topcando was incorporated for the purpose of developing a funeral monument business as opposed to a cemetery. But in discovery evidence that was put to her, Ms. Fan replied “correct” to a suggestion that the $200,000 was specifically to be used “towards the development of the cemetery project”. [ 86 ] The only evidence of a monument company is what appears to be a draft business plan for a company called Everlasting Memorial Monuments Inc., involving a proposal to import monuments from China.

The document makes no mention of Topcando and does not identify any individual associated with the company; it simply refers repeatedly to “Mr. (applicant)”. However, it does refer to the cemetery Mr. Sun owned in China. There is no evidence of that business plan having been completed or presented to anyone, least of all the BCPNP. Raymond Yang [ 87 ] The defendants say 8688, which received 43 shares of Topcorp, was the entity contemplated by the purported “Cooperation Agreement” to manage a project on the Squamish lands. Corporate filings for 8688 list Mr.

Wang as the sole shareholder, but the defendants say that Raymond Yang is the majority shareholder and was to find investors to develop the Squamish property. [ 88 ] Mr. Yang is listed as a director of the company on a Saskatchewan corporate registry document filed on October 30, 2020. The Regina address that appears for him on that document is in fact that of Mr. Wang’s sister. [ 89 ] Mr. Sun has never met nor spoken to Mr. Yang. Mr. Yang did not testify at trial. The personal defendants say that he has returned to China, and they do not have current contact information for him. [ 90 ] On April 7, 2021, Mr.

Sun obtained an order requiring Mr. Yang to attend an examination for discovery by videoconference as a representative of 8688. In initially opposing the application for that examination, the defendants relied on affidavit from their counsel, who said: I am informed by Sophie Fan and verily believe that the majority shareholder of 8688 is one Raymond Yang who is an entirely new party to the litigation, that he was residing in China at the time that the litigation commenced, that he continues to reside in China, [and] that as long as COVID is a threat, Raymond Yang is not intending to return to Canada.

I am informed by the defendant Peter Wang and verily believe that Raymond Yang wants him to represent 8688 Holding Ltd. in the Sun litigation. [ 91 ] However, Ms. Fan said at trial that she had not spoken to Mr. Yang since he returned to China in 2018—three years before she gave those instructions to counsel and two years before COVID-19 became an issue. Mr. Wang said at trial that he last spoke to Mr. Yang in 2020. If that is the case, Mr. Yang could not have given him any instructions about the representation of 8688 in this litigation because Mr. Sun’s counterclaim naming 8688 was not filed until January 2021.

Mr. Wang previously said in discovery that he hadn’t spoken to Mr. Yang since 2018. Nothing in the affidavit suggests that the defendants had no current contact information for Mr. Yang, although that was later their evidence at trial. [ 92 ] The examination of Mr. Yang was to take place by video on May 19, 2021, but he did not appear.

[ 93 ] There are no documents showing any written communication with Mr. Yang, although there are two that purportedly have his signature. One is a “Cooperation Agreement” dated May 2014, which refers to 8688’s 43% shareholding in Topcorp and says that Mr. Wang would hold and manage the shares in 8688 “for the time being”. The second is also a “Cooperation Agreement” dated March 2017 in which Mr. Yang purportedly agreed to invest $500,000 as “working capital” toward development of the Squamish property. Even to the untrained eye, there is no similarity between the purported signatures of Mr.

Yang on the two documents. [ 94 ] The personal defendants say that Mr. Yang transferred $565,000 to be used towards the development of the Squamish property. The only document offered in support of that assertion is a bank statement dated October 19, 2017 showing that amount in Ms. Fan’s personal bank account as of that date. There are no documents confirming that money came from Mr. Yang, no documents indicating any of it was transferred to 8688, which was allegedly developing the property, and no evidence of any of it being spent on the Squamish property. There is also no explanation of why Mr.

Yang would have simply abandoned that money, returning to China and cutting off all contact with the personal defendants. [ 95 ] Ms. Fan testified that she attended a seminar Mr. Yang held in 2015 for potential investors in the Squamish property. But she previously gave evidence on discovery that she had only met him once, in 2017. [ 96 ] On November 24, 2017, in support of an application to cancel a certificate of pending litigation on the Squamish property, Ms.

Fan referred to “two proposals from investors that were considering making significant business investments in the Squamish Property”. [ 97 ] One of those proposals is a single page email addressed to Mr. Wang, not to Mr. Yang, from a Yu Jun. That document refers to a campground proposal to be developed by Yu Jun and others as part of their own immigration efforts and would have been no assistance to the BCPNP application of either of the plaintiffs who had invested in the property. The document is dated September 8, 2015, more than two years before the date of Ms.

Fan’s affidavit, and there is no evidence that anything further happened. [ 98 ] The second proposal is an undated brochure about a possible horse rental and western theme park. There is nothing in the document to indicate who it was sent to and nothing in it that is specific to the Squamish property. In fact, it appears to refer to Langley as the ideal location for such an enterprise.

Once again, no such development would have been of assistance to the plaintiffs’ immigration efforts. [ 99 ] On August 3, 2021, Master Vos ordered the personal defendants to provide responses to more than 100 outstanding requests from examinations for discovery, including all plans and documents produced or provided by Mr. Yang. The order required those documents to be produced by August 31, 2021. Mr. Wang’s response to that order stated that he had produced all the documents he had, while Ms.

Fan’s response said that she had none. [ 100 ] However, more than a year later, on October 31, 2022, the personal defendants and 8688 produced a number of documents purporting to be development proposals for the Squamish land that Mr. Yang had obtained or been involved in. That was shortly before this trial was originally scheduled to begin but could not proceed because no judge was available. Mr. Wang testified that when he produced the documents, he had only recently obtained them from an assistant to Mr.

Yang named “Andy”, who was not called as a witness. [ 101 ] At least one of those documents is patently false. It is undated and refers to a summer camp on the Squamish property said to have been “provided” by 8688 and to have been operating since 2013, with a “young leaders” program that was established in 2016. The 2013 date would have been before 8688 was incorporated, and there has never been a summer camp on the property. Mr.

Wang implausibly tried to explain that by suggesting the document must have been intended to refer to an existing camp in China, but it clearly states that a summer camp was established about 13 kilometres from Squamish in 2013. [ 102 ] Two other documents produced by Mr. Wang in 2022 are purported business plans each involving a lease (for an unstated price) of only 5 of the 282 acres in the Squamish property. One, dated March 25, 2017, is for a construction rental business said to be operated by a subsidiary of 8688. The other, dated July 10, 2017, is for an organic mushroom farm.

There is no evidence of any efforts to pursue those plans, and they clearly would have been no assistance to the plaintiffs’ immigration efforts. I also note that the two business plans ostensibly dated in 2017 were not mentioned in Ms. Fan’s affidavit sworn later that year. [ 103 ] I do not need to decide whether I accept the contention of Mr. Sun’s counsel that Mr. Yang does not exist and is simply a fictitious alter ego of the personal defendants.

It is sufficient to find that, in the absence of any direct evidence from him, I do not accept that he ever did anything in relation to the Squamish property or that he, rather than Mr. Wang, is the true owner of 8688. [ 104 ] In further

summary: • Mr. Sun provided Topcorp with approximately 88% of the money it used to buy the Squamish property, but he received only 43% of the shares in Topcorp. • Another 43% of the shares in Topcorp were issued to 8688 while Ms. Fan and Mr. Wang retained 7% each. • The defendants’ explanation for 8688 receiving shares was that it was to find investors who would develop the property, although Mr.

Sun’s purpose in buying the property was to develop a cemetery business for purposes of his own immigration efforts. • Raymond Yang, who the defendants assert is the principle shareholder of 8688, did not testify or attend a scheduled examination for discovery, and the defendants say they do not know how to contact him. • There is no reliable evidence of efforts by 8688 to develop the Squamish property, and the efforts asserted by the defendants would not have benefitted the BCPNP application of either plaintiff. The Mission Property

[ 105 ] As said above, during Mr. Sun’s visit to British Columbia in April 2013, he was taken to look at properties in Chilliwack and Mission as well as the Squamish property. [ 106 ] On June 27, 2013, the Mission property was purchased by a company called Topwest Development Inc. (“Topwest”) for an adjusted price of $1,348,751. Topwest had been incorporated two days earlier. The shareholders were Ms. Fan and Mr. Wang, with 30% each, and Libin Dong with 40%. Topwest still owns the Mission property. The current directors are Libin Dong, Mr. Wang’s sister and Ms.

Fan’s son. [ 107 ] There were two deposits of $30,000 each. One was the cheque drawn on Zhong Tie’s account that was referred to earlier. Mr. Wang said he provided the other deposit, but a $30,000 deposit was paid from Mr. Sun’s account to a different realtor on May 2, 2013. [ 108 ] The defendants say that the $30,000 deposit from Mr. Sun did not relate to the Mission property but for the property in Chilliwack that he had looked at but never purchased. I do not accept that evidence. [ 109 ] If Mr.

Sun’s $30,000 payment was a deposit on the Chilliwack property, it would presumably have been tendered along with an offer to purchase. No document containing such an offer, or even providing an address for the Chilliwack property, has been put into evidence. Correspondence from Ms. Fan to Mr. Sun at the time described the property being within a provincial park. There is no explanation of how property in a park could have been available for purchase. [ 110 ] Ms. Fan testified that Mr. Sun had offered or agreed to buy the Mission property but, as the closing date approached, told her he no longer wanted it.

That is actually consistent with Mr. Sun’s evidence that he was only interested in a property on which he could develop a cemetery for purposes of his immigration application. I find it likely that he provided deposits for both the Squamish and Mission properties, but had no interest in completing on the Mission property once purchase of the Squamish property completed. [ 111 ] Ms. Fan said that in order not to lose the deposit, she and Mr. Wang decided to purchase the Mission property themselves, but they did not have enough money.

She therefore approached Libin Dong to make up the shortfall. [ 112 ] The purchase of the Mission property was completed with $400,000 from Libin Dong and $889,000 from Topcorp. Almost all of the money provided by Topcorp appears to have come from either Mr. Sun or Zhong Tie. [ 113 ] Topcorp’s bank statement shows the purchase of three drafts totalling $889,000 on June 26, 2013. Prior to that date, two drafts totalling $650,000 drawn on Mr. Sun’s account — $150,000 on May 21 and $500,000 on June 21 — were deposited into the Topcorp account. [ 114 ] The $150,000 was the money Mr.

Sun had previously been told would be used for a “donation” in regard to the Squamish property. Mr. Sun testified that in or about June 2013, Mr. Wang told him that, in addition to his investment in the Squamish property, he should also invest in a restaurant and then use whichever business was approved first for his BCPNP application. He testified that the $500,000 he transferred to Topcorp on June 21, 2013, was to be used for a suitable restaurant investment. [ 115 ] Mr. Wang confirmed that he had discussed restaurants with Mr. Sun but said that by June 2013, he had not found a suitable restaurant and Mr.

Sun agreed to loan the money to him and Ms. Fan. [ 116 ] Zhong Tie had paid $250,000 into the Topcorp account on May 7, 2013. Most of that had been applied to the purchase of the Squamish property, but a little more than $20,000 remained in the Topcorp account when a further $100,000 from Zhong Tie was deposited on May 21, 2013.

This was the purported first year payment on the lease of the Squamish property. [ 117 ] From the time Topcorp was incorporated and opened a bank account to the time it advanced funds for purchase of the Mission property, there was only one significant cash infusion into its bank account from a source other than Mr. Sun or Zhong Tie. That was an amount of $120,000 from Ms. Fan on May 22. However, even that contribution appears to have been derived in part from the plaintiffs. [ 118 ] On March 18, 2013, Jianguo Dong deposited $37,112 into Ms. Fan’s chequing account, which held less than $3,000 before that deposit.

The next day, Ms. Fan transferred $34,443 from the chequing account to a savings account. On April 23, 2016, Mr. Sun deposited a total of $37,150 into Ms. Fan’s chequing account, which had a balance of less than $2,000 prior to that deposit. She transferred $33,810 to her savings account the following day. The $120,000 that Ms.

Fan deposited to Topcorp on May 22 came from the savings account, which had received a little more than $68,000 from the plaintiffs. [ 119 ] It therefore appears that almost 95% of the $889,000 Topcorp advanced to Topwest to complete the Mission property purchase can be traced to either Mr. Sun or Jianguo Dong. The plaintiffs were also the source of the deposits, while Libin Dong contributed $400,000. [ 120 ] Although Libin Dong acquired 40% of the shares in Topwest, his $400,000 contribution at the time of closing represented less than 30% of the purchase price.

He testified that in July 2013, he transferred another $140,000 to Ms. Fan’s personal account to bring his contribution up to the 40% represented by his shareholding. [ 121 ] Ms. Fan and Mr. Wang acquired their combined 60% interest in Topwest, which holds the Mission property as its only asset, with at most about $52,000 of their own money. Neither Zhong Tie, Jianguo Dong nor Mr. Sun, who together contributed most of the purchase price, ever received shares in Topwest . [ 122 ] I do not accept the evidence of the defendants that Jianguo Dong and Mr.

Sun knew how their money was being used and had agreed to lend it as what Ms. Fan calls “move around money”. Mr. Sun denies that, while Jianguo Dong’s subsequent death made his evidence unavailable. There is no documentary evidence of any such agreement. [ 123 ] In fact, the purchase of the Mission property and the enlistment of Libin Dong appears to have been part of a larger scheme to use money provided by multiple immigration clients. In an email to Libin Dong dated June 25, 2013 (four days after Mr. Sun paid $500,000

into Topcorp), Ms. Fan said: If we undertake four investor category immigration clients, without calculating the deposit of 100 thousand Canadian dollars wired at the initial stage, each immigrant will further wire in 500 thousand Canadian dollars. That’s 2 million Canadian dollars from 4 immigrants. That’s a total of about 12 million RMB Before these funds are actually invested, there’ll be an idle period of 1 to 6 months, which can be used for lending purpose.

If we do well with immigration, if there are lots of cases, and contracts are received in a routine cycle, there will be a batch of idle funds available for us to use. … Counsel for Mr. Sun says that email was not produced by the defendants but was obtained by Ms. Meng from Libin Dong’s ex-wife. [ 124 ] Ms. Fan and Mr. Wang subsequently transferred their Topwest shares to Ms. Fan’s son and Mr. Wang’s sister, respectively, but admitted that they remain the beneficial owners of those shares. Since Topwest acquired the Mission property, a series of mortgages have been placed on it, then replaced.

The property is currently encumbered by mortgage for $1.2 million in favour of AP Capital Mortgage Investment Corp., but it remains undeveloped. The Skol Pub [ 125 ] On April 24, 2014, Mr. Wang entered into a contract to purchase the Skol Pub on Gabriola Island, BC, for $800,000 and paid a $25,000 deposit through a company called Topspring Development Inc. Mr. Wang’s intention was clearly to assign the contract to immigration clients. This is shown by a contractual condition stating: Subject to the buyer obtaining approval of this purchase from the BCPNP office on or before October 31, 2014.

The sellers agree that any extension of this subject required by the BCPNP office for approval will not be unreasonably withheld from the buyer by the sellers. This condition is for the sole benefit of the buyer. [ 126 ] A number of other subject conditions for the benefit of the buyer, including financing, property inspection and confirmation of regulatory compliance, were to be satisfied by June 16, 2014. [ 127 ] Mr. Wang’s evidence at trial was that he told both Jianguo Dong and Mr. Sun that this was an investment that could be used for immigration purposes. As said above, Mr.

Sun had previously provided $500,000 to Topcorp for a possible restaurant investment, but that money was used to buy the Mission property. [ 128 ] Ms. Fan prepared a “letter of authorization” dated May 10, 2014, in which Jianguo Dong authorized Mr. Wang to purchase the pub using funds “taken from the Squamish land project”. However, Jianguo Dong agreed to remain personally responsible for the $100,000 lease payment and the $40,000 management fee set out in the lease agreement. Mr.

Wang had in fact taken those amounts from Zhong Tie’s bank account a year earlier. [ 129 ] The fact that Jianguo Dong authorized funds to be “taken” from the Squamish project is clear evidence that he believed the money he had advanced to Zhong Tie was still available and did not know it had been used toward purchase of the Squamish and Mission properties. [ 130 ] The “letter of authorization” further stated that Jianguo Dong would be obtaining a 45% interest in the pub, that Mr. Wang would look for a “partner” to acquire the majority interest and that Ms.

Meng would replace her husband as director of Zhong Tie and hold his shares. The partner turned out to be Mr. Sun, although at that point he had met neither Jianguo Dong nor Ms. Meng. [ 131 ] Finally, the letter stated that Jianguo Dong would pay Mr. Wang $200,000 for “business services” for a two-year period beginning in May 2014. As counsel for Ms. Meng points out, that essentially provided Mr. Wang with the same $200,000 benefit he was to receive under the March 2013 consulting agreement. The “business services” to be provided appear to refer to Mr.

Wang managing the pub, which he claims to have done. [ 132 ] Ms. Fan testified that the pub purchase was intended to qualify under the BCPNP’s Regional Business Succession Option—the purchase of an existing business from a retiring owner. There is no evidence that Jianguo Dong, Ms. Meng or Mr. Sun were ever told of the specific requirements of that procedure. [ 133 ] On June 13, 2014, Mr. Wang removed all subject conditions except the one relating to BCPNP approval.

There is no evidence that any of the further inspections and other due diligence steps contemplated in those conditions ever took place. [ 134 ] On or about October 15, 2014, Jianguo Dong’s 100,000 shares in Zhong Tie were transferred to Ms. Meng, while 122,222 new shares were issued to Mr. Sun. [ 135 ] On October 24, 2014, Mr. Wang removed the condition making the contract subject to BCPNP approval. The document signed by Mr. Wang states that the condition had been “satisfied”, although there had been no application to the BCPNP, much less an approval, by that date. [ 136 ] Mr.

Wang testified that he received authorization from Jianguo Dong to remove that condition. There is no correspondence or other document confirming that authorization, and Jianguo Dong is, of course, no longer alive to respond to Mr. Wang’s assertion. The pub was being purchased solely for the purpose of BCPNP approval and the resulting ability to immigrate.

In those circumstances, I simply do not believe that Jianguo Dong would have allowed the condition to be waived so easily, particularly if he had known that absolutely nothing had been done toward obtaining BCPNP approval. [ 137 ] Although the Regional Business Succession Option required possible applicants to meet with the retiring owners of a business and, if possible, a local economic development representative, no such meeting involving Ms. Meng, Jianguo Dong or Mr. Sun ever took

place. None of them spoke English. [ 138 ] The purchase of the Skol Pub by Zhong Tie closed on November 14, 2014, for $813,000. The purchase was completed with funds the conveyancing solicitor received in the form of two bank drafts totalling $900,000. [ 139 ] A draft for $500,000 came from another client of the personal defendants, a Xuefei Ding, who is also a distant relative of Ms. Fan. On September 5, 2017, Ms. Ding filed a Notice of Civil Claim against Ms. Fan, Mr. Wang, Topsuccess and two other companies of which Ms. Fan and Mr. Wang were directors. She alleged that Ms.

Fan told her money was invested in a pub in Nanaimo. That pub referred to is now owned or operated by Mr. Wang. [ 140 ] The defendants’ response admitted that Ms. Ding was told she would be acquiring shares in a company with an indirect interest in a pub in Nanaimo, that part of her $500,000 was invested in shares of HDA Enterprise Inc. (one of the defendants in that action) and the balance would be paid to Topsuccess in “service fees”. There is no suggestion in those pleadings of money being used to buy a pub on Gabriola Island. However, at this trial, Ms. Fan testified she had borrowed the $500,000 from Ms.

Ding to pay back Mr. Sun for the money that had been used in the purchase of the Mission property. [ 141 ] The other draft used to complete the Skol Pub purchase came from Zhong Tie, although it is not entirely clear when or how Zhong Tie got that money. As said above, Jianguo Dong thought Zhong Tie had the money he originally put into the company for a project in Squamish, although those funds had in fact been used for other purposes.

Bank records show that there was no money at all in Zhong Tie’s account at the beginning of November 2014, but $400,000 was transferred into it on November 4, 2014. [ 142 ] The source and use of that $400,000 became the subject of an action commenced on September 4, 2015 by Wei Xu against Zhong Tie and Topsuccess. Ms. Xu is apparently the former spouse of Libin Dong. Ms. Xu alleged that she provided $400,000 to Libin Dong, who advanced the money to Zhong Tie on or about October 21, 2014.

She alleged that the loan agreement was assigned to her and that the loan was secured against the Skol Pub property. [ 143 ] The response to Ms. Xu’s claim was not filed until June 20, 2016, after Mr. Wang became sole director of Zhong Tie. It asserted that Libin Dong advanced $400,000 to Topsuccess as a shareholder’s loan to provide working capital and that Zhong Tie had no connection with the loan. [ 144 ] It appears that neither Ms. Ding’s action or Ms. Xu’s ever proceeded to trial. However, it is clear that Zhong Tie purchased the pub without using any money from Ms. Meng or Mr.

Sun, who were the shareholders in that company. [ 145 ] The defendants suggest that the plaintiffs ultimately acquired an asset through Zhong Tie and their money that had been used for other purposes was effectively repaid. However, Mr. Sun and Ms. Meng (in her case through her late husband) advanced funds only for purposes of making an eligible investment that would support an immigration application under the BCPNP. Mr.

Wang unilaterally waived the condition requiring BCPNP approval before any attempt had been made to obtain that approval. [ 146 ] The defendants say that all immigration work at that time was being done by Magsen Immigration and its employee referred to as “Brenda”. The only documentary evidence of communication between “Brenda” and the personal defendants is an email from her to Ms. Fan dated September 10, 2014, which the defendants only produced mid-trial. The email states that “Peter says that chief Sun and Lihui Meng share the same project between the two of them: the Skol Pub”.

The email requests certain personal documents from Ms. Meng and Mr. Sun and documents about the Skol Pub property and business. Ms. Fan testified that the requested documents were not provided at that time, which begs the question of why the purchase was allowed to proceed in those circumstances. [ 147 ] There is also what appears to be a draft of a “business concept plan” for the Skol Pub that the defendants say was prepared by “Brenda”. The document is undated but was clearly prepared well after the pub was purchased.

The document refers to the pub having been acquired in November 2014 “in anticipation of applying under the previous PNP program”. The BCPNP was suspended in mid- 2015 and later resumed without the Regional Business Succession Option. [ 148 ] There is no evidence that the document, or any version of it, was ever submitted to the BCPNP. If it had been, it would have misrepresented facts going to the eligibility of the investment under the BCPNP. [ 149 ] The purported business plan states that Ms.

Meng would “utilize education and professional experience in brand building and customer relations to enhance the marketing and sales efforts”. Ms. Meng had no such education or experience. Experience as a senior manager or business owner was a fundamental requirement of the BCPNP. While Mr. Sun had that experience, Ms. Meng did not. [ 150 ] The document also states that Mr. Sun and Ms. Meng “will be responsible for the day to day and financial management” and overseeing staff. Neither Mr. Sun nor Mr.

Meng ever played any direct role in managing the pub, and there is no evidence that anyone ever applied on their behalf for work permits that would have allowed them to do so. [ 151 ] Mr. Wang structured the transaction so that Mr. Sun and Ms. Meng would be absentee owners, which would not qualify them as eligible applicants under the BCPNP, while putting himself in a position to claim management fees. I find that was likely his intention throughout. [ 152 ] Although no BCPNP application was ever submitted, Mr. Wang was still representing to Ms.

Meng as late as October 2015, that the immigration process was nearing completion. In a meeting with Ms. Meng, he said the process was 70% complete and would be concluded in about a further six months. Ms. Meng’s daughter was present during that conversation and recorded it, and the transcript was put into evidence. [ 153 ] The defendants’ counterclaim alleges that Topsuccess provided, through Mr. Wang, management services to the pub and claims $360,000 (six years at $60,000 per year) in management fees. It alleges that Mr. Wang has spent three or four days a week on Gabriola Island managing the pub. Yet Mr.

Wang also testified that he hired an on-site manager, who he identified as “Victor”, and provided him with living accommodation and a vehicle in addition to his salary.

[ 154 ] During the time Mr. Wang claims to have been managing the pub, he had also agreed to manage a restaurant in Chemainus and a pub in Nanaimo for other clients, while giving an undertaking to the government of Saskatchewan to be the full-time manager of a cemetery that was being purchased in that province. [ 155 ] In the counterclaim, Mr. Wang also seeks payment of $100,000 representing the first-year lease on the Squamish property and a $40,000 “start-up fee” for the mini-railway that was never built.

These are amounts that he had actually collected in 2013, using the blank cheques on the Zhong Tie account that Jianguo Dong had given him. [ 156 ] I find that the plaintiffs were induced to purchase the Skol Pub by representations that it would be a qualifying BCPNP investment and that efforts to obtain BCPNP approval were under way. I find they would not have purchased the pub in the absence of those representations. [ 157 ] I further find that the personal defendants, in making those representations, knew that the Skol Pub was not and could never have been an eligible investment under the BCPNP for Ms. Meng.

I find they also knew that they were creating a structure involving purported management by Mr. Wang that would preclude the pub being an eligible BCPNP investment for Mr. Sun. Even if the personal defendants had applied to the BCPNP on behalf of their clients, which they never did, they would have done so knowing the application would not be accepted. [ 158 ] Mr. Wang became the sole director of Zhong Tie on May 28, 2016. On or about the same day, Mr. Sun’s 122,222 shares and Ms. Meng’s 100,000 shares were transferred to Mr. Wang in trust. (Later, in July 2018, the shares held in trust for Mr.

Sun were transferred to Mr. Sun’s former spouse, Li Zhang, to be held in trust for Mr. Sun.) [ 159 ] After becoming sole director and sole legal shareholder, Mr. Wang caused Zhong Tie to grant a $200,000 mortgage over the Skol Pub on November 30, 2016. Five days later, on December 5, 2016, he transferred $130,000 from Zhong Tie’s bank account to his personal account. On December 9, he wrote a cheque on the Zhong Tie account for $70,000 to Ms. Fan’s son, then a teenager. [ 160 ] Mr. Wang and/or Ms. Fan also instructed counsel to file a response to Ms.

Meng’s notice of civil claim on behalf of all named defendants, including Mr. Sun. That response includes a statement that Mr. Sun, as majority beneficial shareholder of Zhong Tie, had not authorized it to become a plaintiff in this action. Mr. Sun testified that he was not aware of the action at that stage and had no knowledge of the pleadings issued in his name. [ 161 ] The pub is Zhong Tie’s only operating business. Mr. Wang admitted that, a year after the purchase, he had provided no financial reporting to the shareholders, Ms. Meng or Mr. Sun.

He said he didn’t report to them during the first year of operation because he was waiting for year-end financial statements. [ 162 ] Subsequent financial statements show that the pub operated at a loss for each of the first three years after Zhong Tie purchased it, and those statements do not even mention the management fees that Mr. Wang claims to be entitled to. Financial statements given to Mr. Wang at the time he made his offer to purchase show that the pub was profitable under its former owners. [ 163 ] One factor that likely contributed to the poor financial performance is that Mr.

Wang says that, while he was managing the pub, he also hired a manager who he also provided with living accommodation and a vehicle. Mr. Wang also appears to have mingled accounts of the pub and Zhong Tie with those of his pub in Nanaimo. [ 164 ] At around the same time as the Skol Pub purchase, the personal defendants were involved in a somewhat similar transaction with different clients that also ended in litigation. That case went to trial before Skolrood J. (as the then was), who gave judgment indexed as Han v. Yan , 2018 BCSC 1450 . Mr. Wang, Ms.

Fan and Topsuccess were named as third parties in that case, but the trial dealt exclusively with that third-party claim. [ 165 ] According to the reasons for judgment, Mr. Wang and Ms. Fan entered into a contract on May 8, 2014 to purchase a restaurant in Chemainus, BC, with the intention of assigning the contract to an investor. That contract did not complete, but on January 30, 2015, the restaurant was purchased by a company in which two clients of the personal defendants (Mr. Han and Ms. Yan) had been allocated shares. Mr.

Wang and Topsuccess took over management of the restaurant. [ 166 ] Each client contributed $530,000, but only Ms. Yan’s contribution was used to buy the Chemainus restaurant. Mr. Han’s money was diverted to an investment in a pub in Nanaimo, the same pub that was referred to in the action commenced by Ms. Ding. Justice Skolrood stated: [88] A fair

interpretation of the evidence is that Wang gave different prices at different times depending on who he was talking to and the circumstances. [89] Regardless of what Wang said about the purchase price, I am satisfied that the third parties represented to Yan that the other investor was contributing an equal amount towards the purchase of the business and that they deceived her by failing to disclose that, in fact, none of Han’s money was used.

I am further satisfied that they intentionally hid from her the fact that a debt of $150,000 was incurred on behalf of GJH and a mortgage granted to the [previous owners]. [ 167 ] The findings of the Court in that case are relevant here because they indicate a broader practice in which the personal defendants transferred clients’ funds as they pleased and for their own purposes without disclosure to, or consent of, the clients. The Sunset Cemetery [ 168 ] The fourth transaction at issue was the purchase by Mr. Sun of the majority interest in the Sunset Cemetery in Moose Jaw, Saskatchewan. The loss Mr.

Sun claims from this transaction is minor, but the way it unfolded provides further evidence of the manner in which the defendants dealt with the plaintiffs. The transaction also includes some evidence Mr. Sun relies on to refute the defendants’

counterclaim against him. [ 169 ] Mr. Sun testified that Mr. Wang and Ms. Fan recommended in late 2013 that he purchase a cemetery in Saskatchewan. That is consistent with two emails Ms. Fan sent to Mr. Sun in December 2013. The first of those emails, dated December 9, 2013, briefly described the Sunset Cemetery and the city of Moose Jaw, attaching photographs of the cemetery. [ 170 ] In the second email, on December 25, 2013, Ms. Fan suggested Mr. Sun sell half of his interest in Topcorp, owner of the Squamish property, for $815,000 and put those proceeds toward the cemetery purchase. Ms. Fan told Mr.

Sun that a further large investment “might be too risky” while his immigration application was still in process. She then said: Therefore, I have been thinking for a long time. I have a solution. … We think that half the shares of the Squamish land could be sold to others, thus there will be money to buy the cemetery. If Mr. Sun received $815,000 to from the sale of shares, Ms. Fan said, only an additional $250,000 would be needed to complete the cemetery purchase. [ 171 ] This is the email I referred to earlier as being inconsistent with the assertion that Mr.

Sun had previously agreed to accept an interest in Topcorp equal to only half of his financial contribution in order to issue shares to someone who would assist in development of the Squamish property. The sale of half of Mr. Sun’s interest in Topcorp was clearly being described as a new idea being raised for the first time on December 25, 2013. [ 172 ] The defendants say Ms. Fan’s emails in December 2013 were actually referring to a proposal to invest more than $1 million in multiple cemeteries.

Those emails were written in Mandarin, and it is agreed that the Mandarin word translated as “cemetery” could also have been translated in the plural. However, the emails contain no information about any cemeteries other than the Sunset Cemetery. [ 173 ] On February 28, Mr. Wang incorporated a Saskatchewan company called AK Memorial Services Inc. (“AK Memorial”), of which he was the sole director. Prior to its incorporation, on January 13, 2014, AK Memorial, along with Ms. Fan and Mr. Wang, entered into a contract to purchase the Sunset Cemetery.

AK Memorial became the registered owner of the cemetery on July 15, 2014. [ 174 ] The defendants say Mr. Sun did not acquire any interest in the cemetery until October 27, 2017, when he was issued 67.3% of the shares in AK Memorial. Prior to that, they say Mr. Sun did not follow through with cemetery investment and Mr. Wang decided to purchase it himself, through AK Memorial. I find that to be improbable in light of the fact that Mr. Wang had absolutely no experience in the cemetery or funeral business. [ 175 ] The assertion that Mr.

Sun did not acquire an interest in AK Memorial until October 2017 is refuted by a “notarial letter” drafted by Ms. Fan more than two years earlier. That document is dated July 2, 2015. Ms. Fan and Mr. Wang took Mr. Sun to the office of their lawyer, Xiao Feng Zheng, on that date and all three signed the letter. It states they had jointly incorporated AK Memorial and contributed capital of $1,189,000 to purchase Sunset Cemetery, with $800,000 of that coming from Mr. Sun and giving him a 67.3% interest. [ 176 ] Mr.

Sun testified the letter was prepared after he made repeated requests for proof of the purchase of the Sunset Cemetery and his ownership interest in AK Memorial. He had not contributed $800,000 but had been told half of his shares in Topcorp would be sold to obtain those funds. That document clearly shows that, as of its date, Mr. Sun was being told that he had a majority interest in AK Memorial and with it the Sunset Cemetery, which is exactly what Ms. Fan’s emails in December 2013 had told him would happen. [ 177 ] The defendants’ position is also inconsistent with the fact that on September 9, 2014, Mr.

Sun provided an additional $70,000 to AK Memorial, which he said he was asked to provide as working capital. Mr. Wang characterized that payment as a loan. [ 178 ] There are two versions of the contract for the purchase and sale of the cemetery, with a dramatic difference in the purchase price. One shows a total purchase price of $1,195,000, including $910,000 for “real property and trust accounts”. The other, which Mr. Sun says he only subsequently found in the files of the business, shows a price of only $285,001, of which $279,000 is stated to be for the real property. [ 179 ] Mr.

Wang testified that he knows nothing about the contract showing the higher price and that the cemetery was purchased for $285,001. Mr. Wang swore a “Title Affidavit of Value” dated July 7, 2014, as part of the land title registration process in Saskatchewan. That affidavit said that the value of the cemetery land, including all buildings and other improvements, was $285,000. [ 180 ] On August 8, 2013, Mr. Sun had provided a $200,000 draft to

[…]