



COURT OF APPEAL FOR BRITISH COLUMBIA




Citation:



Liu v. Zhang,









2018 BCCA 10




Date: 20180103

Docket: CA44332

Between:

Jun Liu

Appellant

(Petitioner)

And

Wei Zhang

Respondent

(Respondent)




Before:



The Honourable Chief Justice Bauman

The Honourable Madam Justice Newbury

The Honourable Madam Justice Kirkpatrick




On appeal from: an
order of the Supreme Court of British Columbia, dated
February 24, 2017 (
Liu v. Zhang
, Vancouver Registry No. S1510327)

Oral Reasons for Judgment




Counsel for the Appellant:



M. Lithwick
J. Goosen





Counsel for the Respondent:



B.T. Martyniuk
M. Szepes





Place and Date of Hearing:



Vancouver, British
  Columbia

January 3, 2018





Place and Date of Judgment:



Vancouver, British
  Columbia

January 3, 2018








Summary:

The appellant brought an
application seeking declarations regarding certain company expenses in the
context of an oppression petition pursuant to s. 227 of the Business
Corporations Act, S.B.C. 2002, c. 57. The respondent also brought an
application seeking declarations which was heard at the same time. Some
declarations were made in favour of the respondent. The appellant argued that
the chambers judge committed errors in making the declarations in favour of the
respondent. The respondent argued on appeal that the chambers judge lacked
jurisdiction to make the declarations. Held: Appeal allowed. The chambers judge
did not have jurisdiction to make declarations that amounted to a final
disposition of certain issues between the parties before the full hearing of
the oppression petition.

[1]

BAUMAN C.J.B.C.
: This is an appeal from an order of a chambers
judge making declarations that expenses related to a certain vehicle and a
management salary were proper company expenses for the benefit of the
respondent, Mr. Zhang.

[2]

The order was made in the context of oppression proceedings brought by
each of the parties in respect of the pizza business in which they were the
only shareholders (Mr. Liu as to 49% of the shares and Mr. Zhang as to 51% of
the shares).

[3]

The application within which the order was made was in the Liu petition
proceeding. This was essentially an interlocutory application as the petition
itself, seeking a final declaration that the affairs of the respondent company
had been conducted in a manner that is oppressive and unfairly prejudicial to
Mr. Liu, has not been heard or set for hearing.

[4]

The petition seeks an order winding up the respondent company and an
accounting to determine amounts owing to Mr. Liu and Mr. Zhang by the
company and by Mr. Zhang to the company. The petition seeks sundry other
relief.

[5]

Mr. Zhang, when represented by previous counsel, initially agreed
with the appellant that the evidence before the chambers judge was insufficient
to support his findings, but the parties then disagreed on the appropriate
remedy. The appellant sought (and still seeks) an order from this Court
declaring that the respondent is not entitled to be paid either the vehicle
expense or a management salary. The respondent, Mr. Zhang, sought an order for
a trial of these issues. Mr. Zhang is now represented by new counsel who
has filed a fresh factum by consent. Mr. Zhang now takes the position that
the chambers judge has effectively granted interlocutory declaratory relief and
that he lacked jurisdiction to do so.

[6]

In the alternative, Mr. Zhang now argues that there was a
sufficient evidentiary basis for the order made and seeks to uphold it in this
Court.

[7]

In my view, the respondent is essentially correct in his principal
submission, although I would not characterize the order as one making interlocutory
declarations. On the contrary, it purports to be a final disposition of these
aspects of the oppression proceeding made on the basis of an interlocutory
application in that proceeding. Such an application is wholly inappropriate.
The application was misconceived. It sought relief under s. 227 of the
Business
Corporations Act
, S.B.C. 2002, c. 57, consequent on a principal
finding of oppression before the petition considering that principal relief has
been heard.

[8]

To the extent the issue of jurisdiction was not raised before the
chambers judge, I would grant leave for it to be raised now. It is in the
interests of the administration of justice that we determine this issue at this
time.

[9]

While certain parts of the order made by the chambers judge might
represent appropriate interim relief under the oppression provisions of the
Business
Corporations Act
, those parts are so closely tied to other forms of relief
that should only be considered after a finding of oppression that they cannot
be disentangled from the jurisdictional error. Accordingly, I would allow the
appeal, and vacate the order in its entirety. The substantive issues addressed
in the application, particularly the declarations as to apportionment of
expenses, should be determined at the hearing of the main oppression petition
in the Supreme Court of British Columbia. Whether the petition should go to the
trial list is a matter for consideration by that court. For greater clarity, I
do not mean to preclude the parties from seeking appropriate interim relief in
that court.

[10]

I
would dispose of the matter in this manner.

[11]

NEWBURY
J.A.
: I agree.

[12]

KIRKPATRICK
J.A.
: I agree.

[13]

BAUMAN
C.J.B.C.
: The application is disposed of as indicated in these reasons.

[14]

I
would add, though, a postscript and it is further to the submission we just
heard on the viability of portions of the Registrars work most valuably done
in August 2017. We are sure the parties can salvage and use findings from the
work of the learned Registrars that is clearly within jurisdiction and advance
the litigation with that work already at hand.

[15]

We
encourage the parties to undertake that analysis and move forward on that basis.

[16]

Thank you for your submissions.

The Honourable Chief Justice Bauman


