XY, LLC v. Canadian Topsires Selection Inc.,


2014 BCSC 1331

Date: 20140716

Docket: S122330






Canadian Topsires
Selection Inc.,
Fraser Biomedical Inc.,
Ai De Diagnostic Co. Ltd. (also known as Aide Diagnostic Co. Ltd.),
Sire Lodge Inc.,
GenerVations Inc.,
Technoterm Integrated Services Ltd.,
International Newtech Development Incorporated,
IND Embryontech Inc.,
IND Diagnostic Inc.,
497244 BC Ltd.,
Barry Dong Sheng Cheng,
Kevin Chung Li Xu also known as Kevin Chun Li Xu,
Abbotsford Veterinary Clinic & Hospital Ltd.,
Canadian Pacific Genetics Center Ltd.,
Richard Vanderwal,
Zhenyu Zhang,
Jesse Zhu (also known as Jia-Bei Zhu and Jesse Jia-Bei Zhu),
Shu Li Wang (also known as Shuli Wang),
Shu Xi Wang (also known as Peter Wang and Peter Shu Xi Wang),
Jin Tang (also known as Tang Jin),
Selen Zhou (also known as Cui Feng Zhou and Selen Cui Feng Zhou and Selen
James Yang, Alice Lin,
Cheng Li (also known as Li Cheng),
Fu Qi (also known as Qi Fu, also known as David Qi Fu),
Zhigang Wang (also known as Gary Wang and Zhigang (Gary) Wang),
Shu Qing Wang,
Xiahong Xu (also known as Xu Xiahong and Xiahong (Amy) Xu),
Maggie Hu,
Jane or John Does #3-10,
IND Pharmaceuticals Inc.,
John Doe (Company) #2, and
John Doe (Company) #3-10


The Honourable Madam Justice Fitzpatrick

Reasons for Judgment

Counsel for the Plaintiff:

C.S. Wilson
G.M. Bowman
K. Smiley
E.C. Lapper
R. Mittal, Articled Student

Counsel for the Defendants Canadian Topsires Selection
Inc., Fraser Biomedical Inc., International Newtech Development Incorporated,
IND Embryontech Inc., IND Diagnostic Inc., Barry Dong Sheng Cheng, Kevin
Chung Li Xu, Jesse Zhu, James Yang, Alice Lin, Fu Qi, and Maggie Hu:

R. Clark, Q.C.
J. Ren

Counsel for the Defendants Shu Li Wang and 497244 BC Ltd.:

J.C. MacInnis

Defendant Jin Tang appearing on her own behalf

Jin Tang
(appeared April 22, 25, 2014 only)

Place and Date of Hearing:

Vancouver, B.C.

April 22-25, May 26-27,

Place and Date of Judgment:

Vancouver, B.C.

July 16, 2014



The plaintiff XY, LLC (“XY”) owns valuable technology and intellectual
property relating to the making of “sexed” bull semen which allows the
production of calves of a certain sex, usually cows. This semen is produced
using what are called “cytometers”. In this and earlier litigation, the central
issue has revolved around efforts of XY to protect its rights to this
technology and allegations as to the use (or misuse) of this technology by the
various defendants.

On March 27, 2014, the court granted an ex parte pre-judgment
Mareva injunction against various defendants in this action (who will later be
described in these reasons as CTS, FBI, IND, IEI, IDI, Zhu, Wang, 497, Tang,
Yang, Xu, Cheng and Fu). Injunctions were also granted in the earlier
litigation and in a new action commenced by XY in late March 2014 which relates
to transfers of assets by certain former defendants, now judgment debtors (the
“Recovery Action”). These reasons only address issues arising in this action
and not the other actions.

Now that the defendants have been served, XY brings this application to
continue the Mareva injunction and also to seek further relief, as adjourned
from the original application, to supplement the terms of the injunction.

There is a considerable history between the parties beginning with a
business relationship from 2004 which allowed the use of XY’s intellectual
property rights. The fallout of that relationship gave rise to litigation
leading to trial (called the “Original Action”) and appeal proceedings from the
Original Action. This action (called the “Topsires Action”) is the second action
to be commenced and arises from XY’s allegations that the defendants in the
Original Action are continuing to use its confidential information, together
with other persons who are now named as defendants in this action, so as to
cause damage to its business. It is necessary to summarize this history in some
detail in order to understand the issues and also the relationships between the
various defendants.

The Mareva injunction is the second extraordinary pre-trial remedy to be
granted in this Topsires Action in that XY sought and obtained certain Anton
Piller orders in 2012/13.

For the most part, the evidence advanced on the ex parte
application and this application arises from fairly recent document disclosure
by the defendants, which came about from the seizure of the documents under the
Anton Piller order. In addition, XY has now presented evidence from the
defendant Selen Zhou, who has recently settled with XY and is now cooperating
and providing evidence against the remaining defendants in both the Original
Action and this Topsires Action.

There have been varying degrees of responses from the defendants against
whom the Mareva injunction was granted.

Tang has made no effort to set the injunction aside as against her. Other
defendants (CTS, FBI, IND, IEI, IDI and Zhu) do not oppose the continuation of
the injunction and the granting of the supplementary terms but submit that
certain provisions should be amended to address the operation of the injunction
going forward. On April 25 and May 2 and 30, 2014, orders were granted to amend
the Mareva injunction as against them to clarify the basis upon which
operations of the defendant companies would continue and also to relieve the
individuals from restrictions concerning the use of their incomes.

The main focus of these reasons arises from the position of the other
enjoined defendants who oppose the granting and continuation of the injunction
but advance different arguments on that front. Wang submits that no prima
case has been made out against her justifying relief against her and
her company, 497; other defendants (Yang, Xu, Cheng and Fu) submit that the
balance of convenience does not support the granting of an injunction as
against them, arguing that there is no evidence of risk of dissipation of
assets. With respect to all these defendants, and given the time required to
hear all the arguments, on April 25, May 2, 30 and June 9, 2014, certain
provisions of the Mareva injunction were amended or clarified on an interim
basis until a decision on these issues could be issued by the court.

The Parties

There is a considerable cast of characters (both individual and
companies), the most significant for the purposes of this application being the
following defendants:

a)       Jesse
Jia-Bei Zhu (“Zhu”) – purportedly the head of the IND group of companies, which

International Newtech Development Inc. (“IND”)

IND Diagnostic Inc. (“IDI”)

IND Embryontech Inc. (“IEI”)

Fraser Biomedical Inc. (“FBI”)

Canadian Topsires Selection Inc. (“CTS”)

b)       Shuli
Wang (“Wang”) – Zhu’s wife and shareholder of 497244 B.C. Ltd. (“497”) which
owns property in Delta, B.C. where a lab is located;

c)       Jin
Tang (“Tang”) – semen and embryo lab manager;

d)       Selen
Zhou (“Zhou”) – former IND accounting manager;

e)       James
Yunjian Yang (“Yang”) – IND office manager;

f)        Kevin
Chunli Xu (“Xu”) – head technician;

g)       Barry
Dong Sheng Cheng (“Cheng”) – technician;

h)       David
Qi Fu (“Fu”) – technician; and

i)        Shu
Xi Wang (aka Peter Wang and Peter Shu Xi Wang) – Wang’s brother and Zhu’s
brother-in-law; former director of FBI; and now deceased.

The Original Action

The Original Action, which began in October 2007, essentially involved
allegations that the original licensee, IND Lifetech Inc. (name later changed
to JingJing Genetics Inc.) (“JingJing”) had breached the terms of a Commercial
License Agreement (“CLA”) with XY dated from February 2004. These allegations
were later expanded to include conspiracy, deceit and breach of confidence,
principally relating to the actions of the individuals involved, Zhu, Zhou and

Mr. Justice Kelleher described the
Original Action in his reasons after trial released o
n March 2, 2012: XY,
Inc. v. International Newtech Development Incorporated
, 2012 BCSC 319, varied 2013 BCCA 352, leave to appeal
ref’d [2013] S.C.C.A. Nos. 376, 378 and 380 (the “Trial Reasons”):

[1]        The plaintiff XY Inc. (“XY”) owns technology (and
the intellectual property rights associated with the technology) that permits
the separation of X (female) and Y (male) chromosomes from bovine spermatozoa.
This valuable technology is used as a means of producing calves of a desired

[2]        The chromosomes are separated using a cytometer, a
device that counts cells. The cytometers that are adapted for this purpose are
called SX cytometers. These cytometers are manufactured by DakoCytomation Inc.,
which has a cross-licensing agreement with XY.

[3]        On February 6, 2004, the plaintiff entered into a
contract called a “Commercial License Agreement” (“CLA”) with the defendant IND
Lifetech Inc., now known as JingJing Genetics Inc. (“JingJing”). Under the
terms of the contract, JingJing acquired the right to use the plaintiff’s
technology. In return, it had various obligations, including strict
confidentiality, disclosure and assignment to XY of any technological
developments, accurate and timely reporting of its use of XY’s technology and
products, the duty to not sub-license or sub-contract, and the fundamental
obligation to pay royalties.

[4]        The plaintiff’s case
is that JingJing and four persons, Jesse Jia-Bei Zhu, Selen Zhou, Tang Jin, and
Richard Remillard, systematically deceived XY and vastly underreported the
number of products they were making, selling and using.

XY’s allegations as to a “systematic deception” on the part of at least
some of the defendants were proven at trial. Kelleher J. commented that the
deception of XY by the individuals behind JingJing, including Zhu, Zhou and
Tang, began only days after the CLA was signed in 2004: Trial Reasons at para. 84. That deception would
continue to
XY’s termination of the CLA in November 2008 (see Trial
Reasons at para. 141) and beyond. Examples abound but as I will discuss in
more detail below, one of the most egregious circumstances was the
surreptitious actions of certain of the defendants including putting JingJing
into bankruptcy on August 31, 2010, which in turn allowed those defendants to
regain control of the cytometers purportedly for use in producing sexed semen
using XY’s technology.

Pre-trial proceedings in which XY sought injunctive relief in the
Original Action in 2007 and 2008 also involved outright deceit by the
principals of JingJing in attempts to thwart XY’s efforts to stop the
unauthorized use of its technology: Trial Reasons at paras. 111-116, 227.

Kelleher J. determined that the personal defendants (Zhu, Tang and
Zhou), who were “members of management and owners of the other defendants”, had
falsified documents and reports, failed to produce relevant documents,
deliberately altered documents “for purposes of misleading [XY] and,
eventually, this Court”, and gave “dishonest testimony” and “attempted to
mislead the court”: Trial Reasons at paras. 6, 9, 133, 351, 361.

Kelleher J. also found that efforts were
made by certain of the defendants to transfer away shares in JingJing prior to
the trial, those agreements
lacked “commercial reality” and Zhu
“admitted in cross-examination that the share transfer was to avoid liability
in this litigation”: Trial Reasons at paras. 15, 119-120.

In the Trial Reasons, Kelleher J. described the deception as follows:

[225]    As the CLA sets out in article 2.1, JingJing was
permitted to sort semen in the U.S. and Canada, and was allowed to sell the
sorted products in China. JingJing was not permitted by the CLA to create
sorting operations in China itself. Yet, starting in 2007, in an expected
breach of article 2.1 and in violation of XY’s confidence, JingJing began
negotiations to sort semen in China for Shanghai Guangming, a large bull stud
located in China.

[226]    The negotiations with Shanghai Guangming were not
disclosed to XY. That is the evidence of Dr. Remillard, which I accept.

[227]    Mr. Zhu, on the other hand, swore an affidavit
on July 11, 2008, in which he deposed:  “I categorically state under oath that
I have no plans, individually or through any company of mine, to produce
sex-selected semen in China.”  That statement was untrue.

[228]    The evidence is that JingJing attempted to establish
sorting operations in China, using XY’s technology, contrary to the
confidentiality inherent in their relationship. This constitutes a misuse of
XY’s information and a breach of confidence.

[229]    Overall, there has been
a widespread misuse of XY’s confidential technology and information amounting
to a breach of confidence. An appropriate remedy under this heading is a
mandatory and prohibitive injunction, to be discussed below.

The trial of the Original Action began in October 2010 and continued
into February and March 2011.

Kelleher J. concluded in the Trial Reasons that JingJing had breached
the terms of the CLA in multiple respects (paras. 187-200) and concluded
that Zhu, Tang and Zhou were joint tortfeasors with JingJing in deceit (para. 262)
and conspiracy (para. 277). He also concluded that there had been a
widespread misuse of XY’s confidential technology and information amounting to
a breach of confidence (para. 229). Shu Xi Wang was found liable based on
a default judgment. Accordingly, judgment was awarded against these parties in
the amount of $8,507,891 plus prejudgment interest, totalling $9,174,105, with
further damages to be assessed (for embryos produced after December 2008), and
special costs.

Particularly relevant to the later Topsires Action, Kelleher J. also
determined that the cytometers contained specialized parts that, together with
their configuration, were confidential to XY and that XY had developed detailed
and confidential protocols relating to its processes and technologies: Trial
Reasons at paras. 209-215. Kelleher J. granted a permanent injunction
against JingJing, Zhu, Tang, Zhou and Shu Xi Wang (including their directors,
officers, agents, employees, servants, affiliates, joint venturers, successors,
assigns, subsidiaries or related companies, and all those over whom they exercise
control, directly or indirectly) from using this “Confidential Information”.
The Order after Trial dated March 2, 2012 identifies 11 specific components of
the cytometers (including a nozzle assembly, which includes a “tip”), specific
XY protocols and a report as “Confidential Information”. It also confirms that
information imparted in training by XY to the defendants or their employees was
included, as were all improvements made to XY’s technology by the defendants.

On appeal, reasons were issued in July 2013: XY, LLC v. Zhu, 2013 BCCA 352 (the “Appeal Reasons”).
The Court of Appeal noted Kelleher J.’s finding that the defendants could not
sort semen without using XY’s “Confidential Information”: para.103. However, the court also noted
that Zhu may wish to enter or re-enter the business and accordingly, the court modified
the definition of “Confidential Information” to exclude information generally
available to the public, consistent with the CLA: paras. 105-114. The
findings of breach of contract, deceit and civil conspiracy in the court below
were upheld. On February 20, 2014, the Supreme Court of Canada dismissed
applications for leave to appeal filed by Zhu, Tang and Zhou: [2013] S.C.C.A.
Nos. 376, 378 and 380.

The Topsires Action

On March 8 and 13, 2012, just days after Kelleher J. issued his Trial
Reasons, XY received several e-mails, ostensibly from a Jue Wang, indicating
that Zhu and Tang had set up a secret lab and were producing sexed semen using
nozzles and other parts stolen from the cytometers previously used by JingJing.
After XY’s further investigations, this second action, the Topsires Action was
commenced on March 30, 2012. The focus of these investigations were certain lab
facilities on Byrne Road in Burnaby and also other lab facilities on Foster’s
Way in Delta and the activities of the various defendants in the operations of
those labs as they related to the use of XY’s technology in sorting bull semen.

These investigations also resulted in XY seeking relief under certain
Anton Piller orders.

On April 2, 2012, Mr. Justice Voith granted an ex parte
Anton Piller Order (the “APO”): XY, LLC v. Canadian Topsires Selection Inc. (2
April, 2012), Vancouver S122330 (B.C.S.C.) (the “APO Reasons”). The court found
that based on XY’s investigations, there was a strong prima facie case
against CTS, FBI, IEI, IND and Tang, that these persons were conducting lab
operations while using XY’s Confidential Information. The court did not find
there to be a prima face case against Zhu, Zhou, Yang, and the lab technicians
Xu and Cheng, nor against other defendants allegedly involved (Alice Lin or Zhu
Zhenyu Zhang), as there was no direct evidence of their involvement. Voith J.
concluded, “Mr. Zhu has virtually no direct connection with either Canadian
Topsires or Fraser Biomedical”: APO Reasons at para. 43.

Voith J. also found there to be “strong evidence” that suggested that
items would be found at the Byrne Road and Foster’s Way locations to support
XY’s claim: para. 48. Finally, he found that given the findings of
dishonesty in the Original Action, there was a real possibility that documents
and other evidence may be destroyed or hidden: paras. 49-55.

XY executed the APO on April 2-4, 2012. The results of that event
confirmed to a large extent the suspicions of XY and would be further
considered by Voith J. at the later application by the various defendants to
set aside the APO.

 Following a lengthy hearing held in July/September 2012, reasons were
issued on December 3, 2012: XY, LLC v. Canadian Topsires Selection Inc.,
2012 BCSC 1797 (the “APO Review”), reconsideration allowed 2013 BCSC 780.
Importantly, Voith J. described the results of the search as follows:

a)       three
cytometers were found at the Byrne Road location, including two operational and
one in the process of being configured. All were found to have XY’s
confidential parts and features which were found to be “Confidential
Information” in accordance with Kelleher J.’s Trial Order (paras. 42, 51);

b)       documentation
found included the XY protocols which had been specifically included as
“Confidential Information” (para. 40); and

c)       found
to be “particularly disturbing” was that the XY discovered certain parts at the
lab which XY had sought to earlier locate and secure from JingJing’s bankruptcy
trustee notwithstanding that Zhu, in the Original Action, had claimed to have
no knowledge of these parts (paras. 43, 51).

Voith J. again concluded that there was a strong prima facie case
against CTS and FBI (para. 44). Regarding Tang and Zhu, he concluded:

[82]      The evidence before me
now establishes that Mr. Zhu and Ms. Tang had significant operational
involvement in setting up Canadian Topsires and in its ongoing operations.

He concluded that there was not a strong prima facie
case against IND and IEI because XY could not prove that its confidential
information, listed in a joint list of documents by Zhu, IND and IEI, was
actually found in the possession of IND or IEI as opposed to Zhu’s office or
IEI’s laboratory: paras. 74-84. Nevertheless, he refused to direct that
any documents be returned to the various defendants, including Zhu.

By December 2012, some document discovery had occurred in that the
defendants had delivered the first tranche of electronic documents, in the form
of emails. Further emails were disclosed in February 2013.

Based on that disclosure, in March 2013, XY applied to vary the APO to
include IND and IEI. On May 3, 2013, Voith J. delivered reasons arising from
that application: XY, LLC v. Canadian Topsires Selection Inc., 2013 BCSC
780 (the “APO Reconsideration”). Voith J. found that the recent disclosure of
the seized documents “give rise to a fundamentally different case”: (para. 18).
Further, he stated:

[19]      Nevertheless, the
documents which underlie this application, on their face, suggest a pervasive
and coordinated pattern of wrongful behavior by a number of individual
defendants associated to varying degrees with Newtech and Embryontech as well
as with other IND companies. There is no doubt, for the reasons that follow,
that had the electronic materials that XY now relies on been available to me
during the review application a different result would have ensued – at least
insofar as it relates to Embryontech.

Voith J. recounts in detail the involvement, as then disclosed in the
documents, concerning the secret efforts to acquire the cytometers from the
trustee, the misrepresentations to XY and the trustee concerning the “missing
parts”, the setting up of CTS and misrepresentations to Kelleher J. regarding
confidential testimony at the trial; all involving Zhu, Tang, Zhou, Yang, Cheng
and Xu to varying degrees: paras. 25-53. In summary, the court stated:

[54]      It appears from the
foregoing chronology that the individuals I have repeatedly identified were
involved in setting up Canadian Topsires, in providing it with the equipment
and information it required to function and in securing the necessary
government accreditation for its operations. There was nothing wrong with these
activities in the abstract. These individuals also appear, however, to have
been involved in the deceptive acquisition of the cytometers that were critical
to Canadian Topsires’ operation. They appear to have misappropriated or
converted XY’s proprietary nozzles and other parts to their own use or the use
of Canadian Topsires. They appear to have obtained further confidential
information during the Earlier Action on the basis, inter alia, of a
misrepresentation to the Court. They appear to have set up Canadian Topsires
with the clear knowledge and understanding that they would be using XY’s
confidential information and processes. In both the Anton Piller Reasons and
the Review Reasons, I also concluded that such use extended beyond the use of
the cytometers and nozzles to other confidential information and processes.

Influenced by the “breadth of apparent wrongdoing” and the documents
supporting that wrongdoing, he concluded that there was a strong prima facie
case also as against IEI “on the legal theory that Embryontech is a joint
tortfeasor with Mr. Yang, Mr. Zhu and Ms. Tang.” (paras. 21,
59). Voith J. concluded that the involvement of IND was “more tenuous” (para. 65)
and that there is not a strong prima facie case as against IND, “though
I have some misgivings about this conclusion” (para. 61). He noted that he
was told that IND was a holding company, but that seemed unlikely (para. 62).
He also noted that he was “further troubled by the apparent free flow of people
between the IND companies and by the various references to the ‘IND Group’ or
to ‘our companies’ in the material” (para. 63).

Summary of Evidence to Date

Since the APO Reconsideration in May 2013, document disclosure by the
defendants has continued, albeit slowly. In January 2014, a series of
emails were produced and in March 2014, a series of financial documents were produced,
both in response to XY’s August 2013 demand. However, to date, the defendants
have not produced documents dated after April 2, 2012, the day documents were
seized by XY under the APO.

In addition, as I stated above, XY has now obtained the evidence of
Zhou, the accounting manager who worked with Zhu, Wang and Tang in the various
IND companies.

I agree with XY’s submissions that this further evidence also suggests that
Zhu, through the various defendant companies that he controls, had crafted a
scheme to create a semen sorting operation using XY’s technology, both in China
and Canada, which came to fruition in early 2012. The apparent basic elements
of the plan were as follows:

a)       February
2010: the Byrne Road lab location was secured by a lease executed by Wang on
behalf of FBI;

b)       August
2010: JingJing is placed into bankruptcy;

c)       September/October
2010: XY inspects cytometers in hands of bankruptcy trustee and discovers
missing parts. Various lies are concocted in terms of what the trustee and XY
are to be told about those parts;

d)       mid-October
2010: various defendants arrange to purchase the three cytometers from the trustee
ostensibly using a third party, Technoterm. Wang on behalf of FBI signs a $54,000
cheque for the deposit.

e)       late-October
2010:  the trial before Kelleher J. begins and would continue to mid-November.
On the subject of the missing parts, the court is advised that the defendants
disclaim any knowledge of the parts. One of the lab technicians, Xu, is allowed
to attend during certain confidential testimony of XY’s witness, based on Xu’s
connection to FBI which is said to have “no ownership connection at all to any
of the IND companies”, a lie known to the defendants, but not their counsel. A
further email follows by which a scheme is concocted to disguise Zhu, Wang,
Tang and Zhou’s involvement in FBI.

f)        early
November 2010: Yang sets up CTS.

g)       December
2010: before the closing of the sale of the cytometers by the trustee, XY
replaced certain parts on them. The defendants made efforts to figure out which
ones had been replaced so that they could later “duplicate the refitting
process specifically”. The defendants also make arrangements to purchase two
other cytometers from the U.S.

h)       January/February
2011: the IND technicians get underway in terms of preparing the cytometers. In
meeting minutes dated February 15, 2011, reference is made to “copying the
classic semen sorting machine type” with the “objective of preliminary semen
sorting” before moving on to “manufacture **IND**’s own sorting machine”. Those
meeting minutes set out the Vancouver and Chinese teams that will be involved, specifically
referring to Xu, Cheng and Fu. A further cheque is written by FBI per Wang that
day for $2,000 to an intermediary party.

i)        March
2011: Two cytometers are shipped to China. Reference is made to perhaps
designing another tip, but before doing that “it is proposed to still copy
**XY**’s first (the plan made by everyone the last time… To gradually improve
after debugging the machine[/s]”. In the meantime, the trial has continued in
mid-February and concluded in mid-March 2011.

j)        April
2011: efforts are made to secure a signal gain card, one of the components which
is included in “Confidential Information” by the Trial Order. Reference is made
to not exposing “our purpose” so as to disguise that the IND companies are
behind such efforts.

In perhaps
one of the more colourful – and telling – emails that has been disclosed, on
April 21, 2011, Xu writes to Tang (regarding XY, a U.S. firm):

Well it seems American imperialism is very cunning, suggest
to make an imitation one, I’ll send pictures to Yuanhui [Kevin Yuan] and let
xiaoguo [GUO Hai Sen] to find them.”

to which Zhu replies:

 The law is strong, but
the outlaws are ten times stronger!

k)       May-August
2011: further efforts to retrofit the machines are made. Xu specifically uses
the confidential information heard by him in court during the trial to write a
patent summary in addition to using information from XY’s patent in China.

l)        September
2011: a business plan is prepared for the Beijing Futonghua Investment Co. Ltd.
in China whose main business is “production and sales of sexed semen
production and sales of flow cytometer…” It is noted that this will greatly
reduce the cost that would otherwise have been required to be paid to XY for
its technology.

m)      October
2011: the IND technicians succeed in reverse engineering the tip for the

n)       November
2011: IEI and CTS continue efforts to obtain government approvals for the lab.
Key personnel identified include Tang and the three technicians, Xu, Cheng and

o)       December
2011: the team is trained and final arrangements are made before the sorting
machines go into production. The team also discusses bringing samples of the
tip for copying in China but there are concerns about whether this will “cause
**XY** to track us down”.

p)       February
2012: government approval for the lab is received and the team announces that
they “can commence producing formally”.

q)       March/April
2012: Kelleher J. issues the Trial Reasons on March 2. Two of the cytometers
are operational around this time and found during the subsequent seizure under
the APO on April 2, 2012.

As noted above, XY has now secured the cooperation of Zhou and she has
filed various affidavits which were before the court on the ex parte
application. I note at the outset that Zhou’s evidence must undoubtedly be
viewed with some caution. As Kelleher J. found in the Original Action, Zhou was
found to be deceitful. In addition, the settlement agreement dated February 25,
2014 between XY and Zhou provides for a substantially reduced payment by her in
satisfaction of XY’s judgment against her in consideration of which she has
agreed to assist XY in the various actions.

Nevertheless, as I will discuss below in more detail, Zhou’s evidence is
generally consistent with the documents otherwise disclosed.

Overview of the Topsires Action Issues

In the APO Review, Voith J. summarized XY’s pleadings as of June 2012:

[11] In
its Amended Notice of Civil Claim filed June 13, 2012,
XY alleges that
Newtech, Embryontech, Canadian Topsires and Fraser Biomedical and others are
joint tortfeasors and conspirators in a scheme to deceive XY, the Trustee in
Bankruptcy of XY’s former licensee JingJing, and ultimately the Court, to
acquire cytometers and to use XY’s parts
and protocols in breach of
confidence. At its core, XY’s claim is that
the IND group of companies conspired to replace JingJing’s business of
producing sexed semen using XY’s confidential information. More specifically,
XY alleges:

Para 4:            IND Newtech and its divisions (defined to include
IND Embryontech, Canadian Topsires and
Fraser Biomedical) are wrongfully using XY’s
Confidential Information;

Para: 8:           IND
Embryontech, which is managed and staffed jointly with Canadian Topsires, is
using sex-selected inseminates created by the wrongful use of XY’s Confidential
Information to produce IVF embryos.

XY’s allegations are essentially that Zhu, acting through IND and its
divisions, effected this scheme and acted throughout with the assistance of
others, including Tang, Zhou, Wang, Yang, Xu, Cheng and Fu, so as to knowingly
use and exploit XY’s “Confidential Information”.

In addition to claims of conspiracy and breach of confidence in respect
of the use of the “Confidential Information”, XY claims unlawful and direct
interference with economic relations and unjust enrichment and constructive
trust. The relief sought by XY includes permanent injunctive relief,
destruction of any “Confidential Information” in the defendants’ possession,
interest and general, special and punitive damages.

Zhu and the various companies have filed a defence. As their counsel
candidly admitted during this hearing, it is clear what his clients were up to although
he characterizes it as development of their own sex streaming cytometer. He
asserts that the real question is whether they were entitled to do what they
were doing. In essence, they deny that they used or are using any of XY’s
“Confidential Information”, and point to the clarification from the Court of
Appeal which confirmed that they were still at liberty to use publicly available
information. They contend that all of their activities were:

…based on their own confidential
scientific research and information or on that which is publicly known through
public patent processes and/or publications

Alternatively, they deny that XY suffered any damage from
their actions in any event.

These same defences are advanced by Tang, Yang and the lab technicians, Xu,
Cheng and Fu, with the added contention that they incurred no personal
liability since they were salaried employees at all times.

Finally, the defendants other than the defendants in the Original Action
argue that in order to be liable for breach of confidence, they must have had
knowledge of the CLA and the injunction issued in late March 2012. They contend
that they had no such knowledge until the Trial Reasons were issued.

Wang filed a defence on behalf of herself and her companies, IDI and 497.
She denies that any of these companies are “divisions” of IND or that she
personally owns, controls or operates any of the defendant corporations. She
disclaims any knowledge of or involvement in any alleged use of XY’s
“Confidential Information”. She denies being a current or former partner or
joint venturer of Zhu, her brother Shu Xi Wang, Tang, Zhou, Yang, Xu, Cheng or
Fu or the other individuals. She specifically denies any knowledge of the
operations of CTS.

Mareva Injunctions – General Principles

The parties are not in dispute about the general principles that apply
in granting Mareva injunctions.

The general proposition is that a litigant is
not entitled to a remedy or execution against a defendant’s assets before
having established any liability on the part of that defendant. In this
context, the granting of a Mareva injunction is an extraordinary remedy: Aetna
Financial Services v. Feigelman
, [1985] 1 S.C.R. 2 at 10.

Therefore, the starting point is that until
liability is established by a plaintiff, a defendant has a prima facie
right to deal with his assets: First Majestic Silver Corp. v. Santos,
2009 BCCA 71 at para. 23.

Following from the statutory authority found in
the Law and Equity Act, R.S.B.C. 1996, c. 253, s. 39(1), the
fundamental question is whether the granting of the injunction is just and
equitable in all the circumstances:
Mooney v.
[1994] B.C.J. No. 2652 (S.C.) (Mooney
at para. 43; Silver Standard
Resources Inc. v. Joint Stock Co. Geolog
168 D.L.R. (4th) 309 at para. 20 (C.A.).

It is a precondition to the granting of a Mareva
injunction that an applicant must show a strong prima
or a good arguable case: Tracy v. Instaloans
Financial Solutions Centres (B.C.) Ltd.
, 2007 BCCA 481 at para. 54.
If that hurdle is met, the court must then consider whether the Mareva injunction
is justified on a balance of justice and convenience, having regard to all the
relevant factors.

In Tracy, the
court outlined the exceptions where such an injunction may be granted:

[34]      … Exceptions to this referred to in Aetna
at pp. 12-14 are:

1.         for the
preservation of assets, the very subject matter in dispute, where to allow the
adversarial process to proceed unguided would see their destruction before the
resolution of the dispute…;

2.         where
generally the processes of the court must be protected even by initiatives
taken by the court itself;

3.         to
prevent fraud both on the court and on the adversary…;

4. quia timet injunctions
generally permitted under extreme circumstances which included a real or
impending threat to remove contested assets from the jurisdiction.

This case engages the fourth exception, where
there is said to be a real risk of dissipation of assets.

In addressing the balance of convenience, it is
also now well established that in British Columbia, there are no “hard and
fast” rules governing when Mareva injunctions can be granted, following the
seminal decision in Mooney #2 (which involved the second exception)
which prescribes a flexible approach. Madam Justice Huddart in that case
outlined some non-exhaustive factors that may be considered:

[45]      … the
nature of the transaction (local, national, international) giving rise to the
cause of action, the risks inherent in that transaction, the residency of the
respondent, enforcement rights for judgment creditors in the jurisdiction where
the respondent’s assets are located, the amount of the claim, the history of
the respondent’s conduct.

In particular, it is not absolutely necessary
that there be any evidence of active dissipation of assets or that there be a
dishonest intent on the part of the defendant in the dissipation or disposal of
assets: Blue Horizon Energy Inc. v. Ko Yo Development Co. Ltd, 2012 BCSC
58 at paras. 17, 24; Leaton Leather & Trading Co. v. Kong,
[1997] B.C.J. No. 645 at paras. 4-10 (S.C.); Santos at para. 20.
Further, in some cases, it may be appropriate to order “security” for the
plaintiff’s claim: Mooney #2 at paras. 52, 59.

However, after declining to depart from the
flexible approach adopted in Mooney #2, the court in Tracy
provided a certain “clarification and a reminder” particularly as regards the
second exception:

[44]      I do not consider that the general
approach to Mareva injunctions in British Columbia requires modification.
It may, however, require clarification and a reminder that it is a species of
interlocutory injunction with special requirements. Those requirements relate
to the general rule against pre-judgment execution and may vary depending on
the nature of the exception into which the injunction fits (with reference to
the four categories of exception given as examples in Aetna Financial).
While the term "Mareva injunction" is used to denote any order
impounding assets or freezing assets before judgment (outside of statutory
remedies such as builders liens or garnishing orders), they are not all alike. Awareness
of the root issue is helpful in sorting out the exercise of discretion

[45] Unlike a quia timet
injunction, in which the issue is removal of assets from the jurisdiction, an
injunction to protect the
processes of
the court may not involve extra-territorial considerations but may engage
issues of dissipation. But at its root, the issue is the risk of harm through
either dissipation of assets or removal of them to a place beyond the court’s

[46]      In all cases, great caution is to
be shown to avoid the mischief of litigious blackmail or bullying, and due
regard must be paid to the basic premise that a claim is not established until
the matter is tried. Great unfairness may be occasioned, and the administration
of justice brought into disrepute, by an order which impounds assets before the
merits of the claim are decided. It is useful to recall the words of Huddart
J.A. in Grenzservice Speditions Ges.m.b.H. et al. v. Jans et al.
(1995), 129 D.L.R. (4th) 733, 15 B.C.L.R. (3d) 370 (S.C.) at 755-756 at
p. 23:

[Mareva and
Anton Pillar orders] represent an extraordinary assumption of power by the
judiciary. Judges must be prudent and cautious in their issue.

[Emphasis added]

Accordingly, the “root issue” remains whether there is a “genuine
risk of disappearance of assets, either inside or outside the jurisdiction”: Aetna at 25. In ICBC v. Patko, 2008 BCCA 65, the Court of Appeal reaffirmed this approach:

[26]      The
root of the Mareva injunction is the risk of harm either through
dissipation of assets or removal of assets to a place beyond the court’s reach:
Tracy at para. 45. In most cases it will not be just
or convenient to tie up a defendant’s assets merely on “speculation that the
plaintiff will ultimately succeed in its claim and have difficulty collecting
on its judgment if the injunction is not granted”: Silver Standard
at para. 21. Thus, though a party may apply for and obtain an injunction
as security for damages sought in the litigation without showing that there is
a real risk the defendant will dissipate assets, in most cases a real risk of
dissipation must be established before a party will be granted a Mareva injunction
in British Columbia.

The court’s jurisdiction is not limited to potential application in
relation to domestic assets. Rather, depending on the circumstances it may
extend to granting an order freezing the assets of a defendant worldwide: First
Majestic Silver Corp. v. Davila
2013 BCSC 1209 at para. 37.

With those principles in mind, I now turn to the specific circumstances
and issues arising from the arguments of the various defendants subject to the
Mareva injunction.


(a)      Zhu, Tang, CTS, FBI, IEI, IND and IDI

No opposition to the continuation of the Mareva injunction, as amended
later at the request of some of them, was advanced by these defendants.
Nevertheless, the relevant circumstances relating to these defendants is a
useful context in which to consider the arguments advanced by those defendants who
do oppose the continuation of the Mareva injunction.

In the APO Review, Voith J. found that XY has a strong prima facie
case against CTS and FBI (para. 44) and Tang who was the lab manger on the
payroll of IEI working at both lab locations under the control of Zhu (para. 53).
In the APO Reconsideration, Voith J. found that XY has a strong prima facie
case as against IEI “on the legal theory that Embryontech is a joint tortfeasor
with Mr. Yang, Mr. Zhu and Ms. Tang” (para. 59).

The evidence of Zhou in her affidavit #3 now largely implicates all these
defendants in the scheme to improperly use XY’s “Confidential Information”.

Zhou was the bookkeeper for the IND group of companies starting in 1997.
This group of companies included IND, IDI, IEI, JingJing, FBI and CTS. Her
evidence is that all these companies were controlled by Zhu and his wife, Wang,
and that they regularly transferred funds among the various companies for
“various reasons”. In particular, she says that following JingJing’s
bankruptcy, FBI was the corporate vehicle that Zhu and Wang used for the
purpose of running JingJing’s semen-sorting business, “together with CTS once
CTS was set up as a new company”.

Zhou also states that the operations of CTS and FBI were funded by
monies transferred from IDI and IND, as part of the regular transfer of monies
between the various IND companies.

Based on Voith J.’s findings and this additional evidence, I was equally
satisfied on the ex parte application for the Mareva application that XY
had established a strong prima facie case as against Tang, CTS, FBI and
IEI. No affidavits have been filed to challenge the evidence set out above or that

In addition, on the same basis, I was equally satisfied that a strong prima
case had been established as against Zhu, IND and IDI, along with the
others, on the legal theory that they are joint tortfeasors and have conspired
to deceive XY (along with the bankruptcy trustee and ultimately, the Court) to
acquire cytometers and use XY’s “Confidential Information” in breach of

Nor do any of these defendants challenge the granting of the Mareva
injunction on the basis that there is a real risk of dissipation of assets so
as to defeat the claim of XY. There is compelling evidence to suggest that such
a risk exists and that, in fact, XY has already suffered some potential detriment
by the actions of Zhu and others acting under his direction.

The trial before Kelleher J. ended on March 11, 2011 and as stated
above, the Trial Reasons were issued March 2, 2012.

Zhou confirms that in addition to the IND group of companies (which also
included IND Lifetech Group Ltd., or “ILG”), Zhu controlled various offshore holding
companies: Excel Advance International Ltd., Unique Way Technology Limited, Grand
Network Technology Limited, JingJing International Limited, Advance Investment
Inc. and Wolsey Corporation. Zhou states that these offshore companies are set
up to appear so that they are controlled by others (usually relatives of Zhu
and Wang, including for example, her brother Shu Xi Wang, or employees of the
companies), but that in reality, these other persons are mere nominees
appointed by Zhu and sometimes, Wang.

In 2011/2012 and before the release of the Trial Reasons, Zhou confirms
that she, Zhu and Tang met several times towards “arranging our assets to avoid
execution”. Even before the trial had ended, on February 26, 2011, Zhu sent an
email to Tang and Zhou to:

Reasonably arrange the fixed
assets of the three persons in Canada === clear the overseas assets held by
*ind* === prepare for the appeal at any time under the condition of not
stopping the execution;

Zhou says that before and after the judgment was released, Zhu spoke to her
about steps he and his wife had taken to arrange their assets to avoid
execution by XY. Zhu, Zhou and Tang had several meetings about arranging the
personal defendants’ assets. In addition, and relevant to the submissions of
Wang below, Zhu, Zhou and Wang had several additional meetings regarding
arranging company assets for this purpose.

The day after the Trial Reasons were released in March 2012, Zhu sent an
email to Zhou assigning her the task of avoiding execution on the judgment:

2. === Arrange the assets of [Zhu] at once === the assets of
oversea are transferred into *ADVENCE INVESMENT, grandnetwork* and *JJB*,
including the stocks of [Zhu] and *IND* in *uniway, wolsy, ILG* === [Zhu] is in
Canada Company, disposal scheme of assets and salary === skills for disposal of
[Zhu]’s stock of *ILG* === *[Zhou]* will be responsible for this issue. ….

4. === Circumvention of [Zhou]’s assets and salary

4. === Circumvention of [Tang]’s
assets and salary

It appears that as a result of these efforts, Zhu did cause
IND, the indirect and sole shareholder of companies valued at $68-72 million,
to divest themselves of all assets by the time XY was in a position to seize
IND’s shares.

In addition to efforts to avoid execution of company assets, Zhu and his
wife, Wang, also made efforts to protect their local assets in the spring of 2011.
Zhou states that Zhu instructed his wife to take out “the biggest mortgage
possible” on a certain Richmond property. That appears to have happened, as Zhu
and Wang obtained a line of credit to reduce the equity in the property. Zhou
believes that all or a portion of that credit was paid by Zhu to one of the IND
companies. An email dated April 24, 2011 confirms that the intention was to pay
the money for “price of goods purchased” but that if Zhu was not found liable,
then this money would be “repaid directly to the bank right away”.

Tang was also part of these efforts to avoid execution. On May 28, 2012,
the day of her Examination in Aid of Execution, Tang granted a second mortgage
over her property in favour of her husband, Mr. Li. She has also produced
two documents relating to her two properties, of which she is the sole
registered owner. Her evidence was that each property is subject to a nearly identical “Agreement on Property
Joint Ownership” between her and her husband. Pursuant to the agreement, Tang
and her husband purport to hold the properties in joint tenancy, and upon any
sale or division, Tang agrees to provide her husband with priority. Tang
admitted that she did not disclose to the mortgagees that anyone other than
herself owned any interest in her properties.

XY is making efforts to challenge these transactions by
Zhu and his wife and also by Tang
in the Recovery Action just recently

I am more than satisfied that there is a significant risk of dissipation
or removal of assets by these defendants, including Zhu, the defendant
companies he controls and Tang that more than supports the granting of the
Mareva injunction. It is manifestly clear that they have already taken steps to
arrange assets under their control purportedly so as to avoid execution by XY
under the judgment. They have also undertaken efforts to transfer away assets
even after judgment was obtained against the individuals.

 XY refers to the authorities that establish that the Court is
entitled to infer, from the material facts establishing the strong prima
case, sufficient risk of dissipation of assets or their removal from
the jurisdiction, even absent direct evidence to that effect: 663309
Ontario Inc. v. Bauman
[2000] O.J. No. 2674
(Sup. Ct. J.) at para. 41;
Netolitzky v. Barclay, 2002 BCSC 1098 at para. 31; University
of B.C. v. Moscipan
, 2012 BCSC 292 at para. 8; Patko at para. 28.

In my view, while such an inference against these defendants is
certainly available on the evidence before me, it is not necessary in these
circumstances given the direct evidence as to dissipation or removal of assets.

Again, none of these defendants dispute the conclusion that there is a
real risk of dissipation of assets if the Mareva injunction is not maintained.

(b)      The Employees – Yang, Xu, Cheng and Fu

 As with the defendants discussed above, these “employee” defendants do
not dispute that a strong prima facie case has been made out against
them by XY.

Zhou’s evidence is to the effect that Zhu and Wang had the “ultimate
authority over and full control of all the companies listed above” (i.e. those
companies which are the subject of this application, including what has been
termed the “IND group of companies” and the offshore companies of Zhu). Wang is
described as handling the finances and payroll for the Byrne Road lab and also
involved in handling the funding for FBI and CTS through IDI and IND.

Zhou describes Yang as the “office manager” of the Byrne Road lab. Indeed,
at the time of execution of the APO, he acknowledged that he was on the payroll
of IEI.

XY did not seek any relief with respect to Yang before Voith J. arising
from the various applications addressing the APO. Nevertheless, Voith J. described
the substantial involvement of Yang in the various matters described below to
the point of describing him as a joint tortfeasor with IEI (APO Reconsideration
at paras. 28, 59):

a)       involvement
in the secretive efforts to acquire the cytometers (paras. 31-36);

b)       involvement
in the misappropriation/conversion of the confidential parts and subsequent
efforts to deceive the bankruptcy trustee (paras. 37-42);

c)       involvement
in the setting up of CTS using a nominee shareholder to disguise the
involvement of the others and to acquire the government accreditation (paras. 49,
53); and

d)       involvement
in the plan to use the confidential trial testimony to be heard by Xu so as to
discern what parts had been replaced by XY before the sale of the cytometers by
the trustee (paras. 50-51).

Yang now confirms that he is presently employed as the business manager
of IEI and that he was never involved in the operational aspects of the lab. He
states that the work at the lab was to:

…design and construct a
cytometer which would stream sexed semen, but using only information which was
publically available through patents or publications or otherwise on the
internet, and specifically was not designed to use any information which was
not so publically available. I had no knowledge of the use of any XY parts.

I agree with XY that Mr. Yang’s recent evidence is difficult to
reconcile with his clear participation in the above matters as confirmed by the
various email exchanges in which he participated.

As a general response to this defence of Yang and the others (re using
“publically available information”), one can legitimately ask – if the work in
the lab was lawful and did not involve improperly using XY’s “Confidential
Information”, then why all the deception, secretiveness and skullduggery?

In any event, having conceded there is a strong prima facie case
against him, Yang’s conduct in that respect is a relevant consideration in the
balance of convenience analysis below, particularly regarding any propensity to
dissipate assets.

The remaining defendants in this group are the technician employees whom
Zhou confirms formerly worked for JingJing but were subsequently employed by
FBI under the specific direction of Tang and Zhu. These included the head
technician, Xu (who remained in the courtroom to hear the confidential sealed
testimony per Kelleher J.’s order) and Cheng and Fu.

Like Yang, these employees have only made tepid efforts to refute the
import of the substantial documentation evidencing their involvement.

Xu deposes that the “primary” source of information he used in his
research and development activities was found on the internet. He denies using
any of XY’s “Confidential Information”. With respect to his attendance in
court, he states that he was in court:

… because I was asked to
help legal counsel understand the professional terms used by Mike Evans.
However, what Mike Evans said in the courtroom could be found online and I had
prior knowledge of the information he presented. …

However, this evidence is contrary to the clear inference that arises
from the various e-mails sent by Xu: “will it cause **XY** to track us down”,
or Kevin Yuan’s e-mail to him: “Now we are breaking up a damaged **Nozzle**
ourselves, to analyze what it is like inside.”, or Jin Tang’s e-mail to him:
“You have to make a record at [sic] of the location [and] model
of each part of the machine, so that we may know in the end what parts are
replaced by **XY**”. His claim that the testimony was not “confidential”
(leaving aside that the court found it to be confidential and directed him to
not disclose it), is belied by later communications by Zhu to him in June 2011:

Chun Li combined the patent **XY** applied for in China and
on the basis of the confidential information provided in court
, [and]
according to our technology development, wrote our patent summary===obtain
priority===and then patent application details

[Emphasis added.]

Despite filing two affidavits, Fu does not deny any of the evidence or
facts alleged against him.

In his affidavit, Cheng says that he “never held the role of ‘Chief
Scientific Officer’ in CTS or [JingJing]” and his raise in 2012 was “because of
work that I had done regarding wagyu cattle hybridization.”  He further states

…In my capacity as a lab
technician, although I have operated cytometers, I have never worked to alter
or modify a cytometer, or tried to obtain any parts or accessories of a
cytometer, or to apply for any patent related to cytometer techniques.

An email from February 2011 does refer to his work regarding wagyu
cattle, however, a later email in May 2011 refers to Cheng being invited to a
meeting to discuss a report on “in-depth test of the assembled machines”; an
email in July 2011 refers to Cheng attending a meeting to discuss “progress of
equipment modification”; and an email in September 2011 to him refers to a work
list so as to “[f]ully understand the existing sample machines that have been
assembled”. Finally, he was a recipient of the celebratory email from Tang to Xu,
Cheng and Fu in late January 2012 confirming that Zhu (as “leader”) had
approved a raise for them all because “due to the joint efforts of everyone,
remodeling of the machine has now been completed.”

Further, Cheng’s involvement in the semen sorting operation or misuse of
XY’s “Confidential Information” is referred to in the list of staff
responsibilities for the new Chinese company listing him as the “Production
Technology Director … responsible for the sexed semen sorting and production in
the Vancouver base in Canada, and the making up of the relevant intellectual
property rights; being responsible for the technical training of new staff
members in the Canadian region”.

In sum, I am satisfied that the evidence to date strongly suggests that Xu,
Cheng, Fu and other IND technicians were all working towards configuring and
retrofitting the cytometers, reverse engineering XY’s parts and concealing
their activities in doing so. The evidence to date also strongly suggests that
they did so intentionally while using XY’s “Confidential Information”,
including the missing parts and protocols. Cheng and Fu were both personally
present at the Byrne Road lab on April 2, 2012 where the retrofitted cytometers
were found to be in operation using XY’s “Confidential Information” and where XY’s
protocols were also found.

As with Yang, Xu, Cheng and Fu concede there is a strong prima facie case
against them on the basis that they are joint tortfeasors with Zhu, Tang, Yang
and the various companies. In addition, like Yang, their conduct in that
respect is a relevant consideration in the balance of convenience analysis
below, particularly regarding any propensity to dissipate assets. Of particular
concern are the actions of Xu in relation to his participation in
misrepresentations to the court which allowed him to hear the confidential
testimony and what appears to be a clear breach of the order of the court
preserving its confidence.

 The focus of the arguments of Yang, Xu, Cheng and Fu is to the effect
that XY has failed to show that there is any real risk of dissipation of assets.
I agree that the personal circumstances of these defendants reveal what might
be termed the ordinary lives of Canadians.

Yang is currently employed by IEI and CTS, earning about $51,000 per
year. He is a Canadian citizen. He has a wife and daughter and lives in his
home with other members of his extended family. He (perhaps along with his
wife) has equity in his home of about $590,000. He has a car. He and his wife
deposit their salaries into various joint accounts and pay their debts from a
line of credit. Yang also has various RRSPs totalling approximately $25,500.

Xu was employed by FBI until March 2012. He states that he is currently
employed by “ILI” earning $60,000 per year. He has a wife and son who live in a
home jointly owned by him and his wife. There is combined equity in that home
of about $61,200. He and his wife also have a line of credit.

Cheng is currently employed by CTS and reported $43,400 in income for
2013. He is a Canadian citizen. He has a son and is separated from his wife. He
lives in his home and has another rental property. He has equity in his home and
rental property of about $443,000. Post issuance of the Trial Reasons, he has
both sold and acquired other properties. In October 2012, Cheng sold a
property, the proceeds of which were used in part to create the equity in the
rental property. He also entered into a presale contract to purchase a
condominium which was to close in May 2014, again using part of the sale

[100]     Fu is
currently employed by CTS, earning about $36,000 per year. He is a Canadian
citizen. He has a wife and daughter. He and his wife own a townhome with a combined
equity of about $146,000. He has two cars. He and his wife deposit their salaries
into various joint accounts.

[101]     All of
these defendants, with the exception of Cheng’s one sale, confirm that they
have been aware of the Topsires Action since April 2012 but have taken no steps
to dispose of their assets since that time.

[102]     The Mareva
injunction granted on March 27, 2014 froze the bank accounts of these
defendants but allowed for certain spending limits for ordinary living expenses
and legal representation. Nevertheless, as attested to by each of them, the
effect of the Mareva injunction on their ability to operate in their day to day
lives was significantly affected.

[103]     Accordingly,
on April 25, 2014 a further order was granted to alleviate the major concerns
such that, assuming the salaries were deposited into the bank accounts, they
could use the funds to pay ordinary living expenses. Also, the bank accounts
were unfrozen, Xu was confirmed as being able to renew his mortgage and Cheng
was allowed to complete the sale of the condominium using monies in his bank
account. In this way, the Mareva remedy has already been amended to some extent
to readdress the balance of convenience in light of the later revealed
circumstances of these defendants: Sociedade-de-Fornento Industrial Private
Limited v. Pakistan Steel Mills Corporation (Private) Limited
, 2013 BCSC
1304 at para. 32, rev’d 2014 BCCA 205.

[104]     Accordingly,
the day to day financial lives of these defendants having been regularized to
some extent, the main focus is whether Yang, Xu, Cheng and Fu should be
enjoined from dealing with their capital assets (essentially their homes and in
the case of Cheng, his rental properties and some investments). In their
submission, given that their homes and their livelihoods are here in Canada,
they have “no where to go”. They also suggest that if there are any sales or
dealings with their assets, XY may pursue those after judgment, just as they
are doing with Zhu and Tang.

[105]     These
defendants point to Santos, where the plea was fraud. Groberman J.A.
found that “there was virtually no evidence to support the proposition that
such a transfer would seriously impede the plaintiffs’ ability to collect on
any judgment” (para. 26).

The court in Patko confirmed at para. 28 that, while a risk
of dissipation of assets may be inferred from the strong prima facie
case, it is not inevitable that such an inference arises. Further, the court

[29] In determining whether such
a risk exists, the court must assess whether, in all of the circumstances, the
defendant will deal with the assets in a manner that will interfere with or
defeat the plaintiff’s attempts to realize on any judgment it might obtain: Caisse
Populaire Laurier D’Ottawa Ltée. V. Guertin et al
. (1983),
36 C.P.C. 63, [1983] O.J. No. 2221 (QL) (Ont. H.C.J.) at para. 17,
cited in Netolitzky at para. 27.

[30] In this case, Madam Justice
Fisher considered the evidence and the authorities. There was no evidence
showing that the defendant had dissipated any assets since ICBC commenced its
suit. Although ICBC established a strong prima facie
case of fraud, the law in this province does not impose an onus on the
defendant to show that his assets would not be dissipated before ICBC could
execute on a judgment.

[31] Importantly, Madam Justice
Fisher was not able to conclude, based on the circumstances of this case, that
there was a real risk of dissipation of assets before judgment could be
obtained. She held that the fraud alleged to have been committed by J. Patko
was different in kind or degree from the frauds allegedly committed in such
cases as ICBC v. Leland (1999), 91 A.C.W.S. (3d)
49, [1999] B.C.J. No. 2073 (QL) (S.C.) and Netolitzky.
In those cases the trial judge was able to infer that there was a real risk of
dissipation of assets. Madam Justice Fisher noted that in Leland
and Netolitzky the alleged frauds “involved substantial
taking of assets from the plaintiffs in a manner where the fraud was concealed
and from which a clear inference could be drawn that the defendant would
continue to act in the same way” (para. 40)
. Here, the alleged fraud
committed by J. Patko did not involve any complex taking of property from which
inferences could be drawn that the fraud would continue. Rather, the alleged
fraud “involved lies and misleading statements for the apparent purpose of
avoiding criminal prosecution and obtaining insurance for the damage to his
vehicle” (para. 42).

[Emphasis added.]

[107]     XY argues
that the court may infer such risk from the nature of their conduct, citing Bauman
and Netolitzky.

[108]     To some
extent, XY relies on (if I can borrow the idea from the Court of Appeal reasons
from the Trial Reasons) “infective deceit” arising from the clear instances of
such deceit by the main participants, being Zhu and Tang, based on Kelleher
J.’s findings of deceit in the Original Action and the evidence that they have
acted to thwart XY’s execution efforts. They also rely on the contention that Zhu
has substantial influence on them as the “leader” of the operations. Finally, they
say that just because these defendants had not to date taken any steps to
transfer or further encumber their assets, they may just do that in the face of
any judgment, just as Zhu did and just as he counselled other employees (Zhou and
Tang) to do. I do not find this argument very persuasive here as there is no
evidence that Zhu has such a level of control or influence over these employees’
private lives and assets.

[109]     However,
XY points to what it calls the “manifest involvement” of these employee
defendants, and that they were not “mere” employees doing what they were told.
That conclusion is open on the basis of the evidence produced to date and distinguishes
Santos in that there was “limited evidence” in Santos to suggest
the defendants had acted fraudulently (para. 25).

[110]     I agree
that Yang’s participation in the deceit of the bankruptcy trustee and XY over
XY’s missing parts is arguably an indication of Yang’s disrespect for XY’s
rights and the Court process. Similarly, the participation of Xu, Cheng and Fu in
what appears to be the intentional misuse of XY’s “Confidential Information” (including
their use of the missing parts while consciously concealing their activities
from XY, and their use of XY’s parts and protocols after the Trial Reasons were
issued on March 2, 2012) is arguably, as XY says, indicative of their
disrespect for XY’s rights, the bankruptcy process, and the Court’s process.
Disrespect for the authority of the Court on the part of Xu can also be
inferred by what happened at the trial during XY’s witness’ confidential

[111]     In the
Chambers decision in Patko, Fisher J. drew an inference that Patko was a
dishonest person but that the inference could not be taken beyond propensity (2007
BCSC 743 at para. 32). However, she also clearly distinguished other cases
such as Netolitzky and ICBC v. Leland, [1999] B.C.J. No. 2073
(S.C.), the latter being a case where such risk was “inferred from evidence
that strongly suggested that the defendant was involved in a criminally
fraudulent scheme which caused significant losses to ICBC” (Patko (S.C.)
at para. 27).

[112]     These
defendants argue that if there is evidence of risk of dissipation of assets,
then much of this was known about one year ago, when the APO Reconsideration
hearing took place. As such, they argue that this militates against even XY’s
perceived assessment of risk. I would not accede to this argument. As I
referenced above, document discovery has been ongoing and only recently have
further documents come to light. In addition, Zhou’s evidence was only recently
obtained and is a critical underpinning in presenting this application.

[113]     I have
concluded that it is open to me to infer a real risk of dissipation of assets
by Yang, Xu, Cheng and Fu arising from the material facts giving rise to the
strong prima facie case conceded to be present. The decisions in Netolitzky
and Leland are, in my view, more applicable in these circumstances than
those in Santos and Patko. While not involving fraud or theft of
a plaintiff’s assets, the case against these defendants is akin to such a case,
in that what is indicated is a concerted scheme to cause significant harm and
loss to XY by the misappropriation and use of its “Confidential Information”.
This scheme on its face involves elements of concealment, misrepresentations
and dishonesty that have been ongoing for years and were undertaken in the face
of known efforts of XY to assert its rights both during and at the trial. The
evidence strongly suggests that Yang, Xu, Cheng and Fu were an integral part of
that scheme and that they knew that XY’s rights were being improperly used by

[114]     There can
also be no doubt that these defendants benefited from their actions. While only
employees of the IND companies, they no doubt realized that this new scheme was
the only way to secure their ongoing employment. In addition, Xu, Cheng and Fu
were all named as part of the “key personnel” in the Beijing Futonghua
Investment Co. Ltd. located in China which was to have ownership ties to CTS.
Zhu distributed its “Business Plan of Breeding Industry Development Project” in
September 2011 and it is important to note that under the plan, these employees
were to receive valuable shares in the corporation.

[115]     These
employee defendants also argue that any dissipation of assets would be small in
relation to any judgment that XY might seek and obtain. This can be referred to
as the “I’m just small potatoes” argument. That may be true but I’m not
convinced that it is a major factor in considering the balance of convenience.
If XY succeeds in its claims against these defendants, I am sure that they will
be glad of the availability of these assets, however small their value might be,
towards reduction of the judgment amount.

[116]     In conclusion, the amendments to the ex parte Mareva
injunction in late April 2014 have addressed the activities of these defendants
on a day to day basis. I have, however, also concluded that a real risk of
dissipation of assets can be inferred, as above. As such, it is appropriate
that Yang, Xu, Cheng and Fu continue to be enjoined from disposing of their
capital assets. If any dispositions are to be made in the future, then I would
expect XY to be advised: Grenzservice Speditions Ges.m.b.H. v. Jans, [1995]
B.C.J. No. 2481 at para. 26 (S.C.)
. If any
issues arise, those can be dealt with by consent or court order.

(c)      Wang and 497

[117]     Wang and
her company, 497, also challenge the granting of and continuation of the Mareva
injunction as against them.

[118]     On a
preliminary matter, Wang and 497 do not dispute that XY has shown a real risk
of dissipation of assets in regards to them. This is not surprising – not
because Wang is married to Zhu, but because she appears to have actively
assisted him in taking steps to avoid execution on XY’s judgment in 2011, as I
have recounted above.

[119]     The issue
to be addressed then is whether XY has established a strong prima facie
case as against Wang sufficient to grant relief against her and 497.

[120]     The bar to establishing a strong prima facie case is not a
necessarily high one. In Mooney #2, it was expressed as “either side
‘might well win’” (paras. 25, 55) and in Tracy, it was said
to be “more than an arguable case”, but not reaching the “bound to succeed”
threshold (para. 54).

[121]     Again, the
documentary evidence disclosed, together with the evidence of Zhou, is critical
in this respect. Zhou’s evidence is that Zhu and Wang have full control of IND,
IDI, IEI, FBI and CTS, among other companies within the IND group of companies,
although Zhu usually had the final say as between him and his wife. Both were
said to have regularly transferred funds between the various companies,
including transfers from IND and IDI to FBI and further transfers to CTS.

[122]     Again, Zhou
states that she and Wang handled the finances, payroll and day-to-day expenses
for the Byrne Road lab which allowed its operations to start and continue. XY
acknowledges that Ms. Wang was not involved in the day-to-day operations
of the lab business. This appears to be at least in part because she did not
get along with Tang, the lab manager.

[123]     XY asserts
that evidence of Wang’s control of FBI (along with Zhu) is as follows:

a)       in
February 2010, Wang signed the FBI lease over the Byrne Road lab. Zhou also
states that Zhu and Wang used FBI to run JingJing’s semen sorting business
after the bankruptcy;

b)       in
October 2010, Wang was responsible for approving the transfer of  $1,300,500 US
from FBI for an investment in Zhu’s Chinese company, Qingdao Jiahua Biotech Co.
Ltd., which was being used in efforts to take IND LIfetech (China) Co. Ltd.

c)       in
October 2010, Wang signed the $54,000 FBI cheque to obtain the bank draft for
Di Xu. Zhou states “[w]e were using [Di Xu’s] name, making it appear he was a representative
of a third party, Futonghua Bio-technology (Yingkou) Co. Ltd., to hide the fact
that the IND group was buying the cytometers back from the trustee in
bankruptcy. That company is actually controlled by [Zhu].”

d)       in
February 2011, Wang signed the $2,000 FBI cheque to Wang Zhi Gang. Zhou states
“[w]e were using Wang Zhi Gang as our go-between with Technoterm to hide the
fact that the IND group was buying the cytometers back from the trustee in

e)       in
March 2011, Wang approved and signed the Annual Report for FBI and a Notice of
Change of Directors.

f)        in
March 2011, Wang signed the $7,480 FBI cheque to obtain a bank draft for
Qingdao Jiahua Biotech Co. Ltd. to buy the sexed semen from the bankruptcy trustee.
As Zhou explained, “[w]e purchased a bank draft to hide the fact that it was
the IND group buying the semen, not Qingdao Jiahua Biotech Co. Ltd. as we had
told the trustee."

g)       in
February 2012, Zhou states that when CTS needed funds, Wang signed a cheque
from FBI for $15,000 to CTS. The funds were transferred into the FBI account
that date from IDI’s account, through IND’s account. Zhou also believes that
Wang signed a further cheque that month from FBI to CTS for $100,000 or
approved a pre-signed cheque after the fact.

h)       Zhou
also states that Wang approved the monthly payroll of the IND companies,
including IEI and FBI, particularly, for Tang (being paid by IEI); and also Xu,
Cheng and Fu (who were all being paid by FBI).

i)        Zhou
also states that Wang signed (or approved pre-signed cheques after the fact) various
FBI cheques including expense cheques to the various employees, such as Xu, Cheng
and Fu.

[124]     Wang has
filed a number of affidavits in response to this application. She confirms that
497 owns the building on Fosters Way in Delta which leases space to IND and
IEI. This building is said have approximate equity of $3 million. 497 also
leases most of the space to IDI which is in the business of the development,
manufacture and sale of various diagnostic tests unrelated to the semen sorting

[125]     On a
personal level, she attempts to distance herself from Zhu in that she describes
their marriage as “unhappy” and that he spends most of his time in China such
that she has limited information about his financial affairs.

[126]      In general,
Wang disclaims any knowledge of the actual operations at the Byrne Road lab and
in particular, any knowledge of any unlawful activity. She also claims that she
had no knowledge of the specific cheques she signed nor the transactions for
which these cheques were signed by her on behalf of FBI (for example, for the
cytometers and the sexed semen) and suggests that these must have been
accomplished with pre-signed cheques she provided to the accounting department.
She says that her role “was limited to ensuring that the cheques were in the
correct amount (i.e. the payment was supported by an invoice in the same amount
or that the cheque had been made out in the amount requested)”.

[127]     She says
she made no decisions about what expenses to incur, which supplies to purchase
or which employees to hire at the Byrne Road lab. She states that she has “no
knowledge of the business of Canadian Topsires Selection Inc.”  Finally, she
points out that she was not named as one of the “key personnel” in the September
2011 Beijing Futonghua Investment Co. Ltd. business plan by which those
personnel were to receive shares.

[128]     In
response to this evidence, Zhou says that she knew Wang well, having worked
with her daily for some time and apparently having somewhat of a personal relationship.
Zhou sets out evidence that indicates that Wang was the financial controller of
JingJing, including paying employees and royalties to XY; that Wang was aware
of the termination of the CLA and the continued operations of JingJing until
the bankruptcy, notwithstanding that termination; that she was aware of the dispute
with XY and the trial which she attended; that Wang was aware that the Byrne
Road lab was set up to conduct a semen-sorting business in replacement of
JingJing’s business, using the same employees of JingJing who were kept on the
payroll during the transition to FBI; and that Wang was aware of the purchase
of the cytometers from the trustee and that they were not operational for some

Zhou states:

I specifically recall Shuli telling me, shortly after the
Anton Piller Order was executed, that she had a feeling she should have told
Jesse to move the cytometers out of the Burnaby lab because she sensed that
something would happen.

After the Anton Piller Order was
executed, Shuli told me that she had signed cheques and purchase orders and
other documents for FBI and asked me what else she might have signed that
implicated her as being involved in the semen business.

[130]     Wang
argues that at no time does Zhou actually state directly that Wang, while
knowledgeable about the operations of the Byrne Road lab, had actual knowledge
that the CTS operations were utilizing XY’s “Confidential Information”. I agree
that this is the case, however, I consider that a strong inference arises from
the totality of Zhou’s evidence in her affidavits that such was the case.

[131]     It bears
repeating in respect of this issue that the above steps taken by Wang to assist
Zhu in what appear to be efforts to avoid XY’s execution in 2011/12, together with
Zhou’s other evidence that Zhu met with Wang and Zhou several times in that
time frame to “organiz[e] company assets”, raise some questions as to what Wang
actually knew was going on in the Byrne Road lab.

[132]     At one
point during the trial, Wang advised Zhou that Zhu was unhappy about Zhou’s
testimony at the trial and that she should be “more cautious”.

[133]     The stark
contrast between the evidence of Wang and Zhou as to Wang’s involvement and
knowledge certainly means that both Zhou and Wang’s credibility will be tested
at the trial. XY maintains that Wang is not credible and that even if she was
not aware of the specifics of the operations, she was nevertheless aware of, or
at least wilfully blind to, the ongoing wrongdoing in the use of XY’s

[134]     Even with this
conflict in the evidence, Wang makes substantial submissions that XY has failed
to establish a strong prima facie case in respect of the causes of
action against her, being conspiracy and breach of confidence. This argument is
largely based on the apparent evidence to date that Wang has not been
personally implicated in the actual misuse of XY’s technology.

[135]     Wang submits
that in order to find liability as a joint tortfeasor, a civil conspiracy must
first be found to exist. Accordingly, a threshold issue arises as to whether I
should analyze these two grounds of liability together or separately.

I have not been referred to any authority which stands for the above
proposition that liability as a joint tortfeasor must be analyzed in
conjunction with a civil conspiracy. The court in Fullowka v. Royal Oak
Ventures Inc.
, 2008 NWTCA 4, aff’d 2010 SCC 5, said:

[38] Individual parties can be joint tortfeasors
when they act collectively in committing a tort. Joint liability in torts
generally only arises with intentional torts, and generally only where there
has been some element of conspiracy or agreement to commit the tort.

[Footnote omitted.]

[137]     That
statement does not say that a civil conspiracy must exist in order to
find joint liability.

[138]     As will
become clear in my review of the cases below, other authorities do not
specifically deal with whether a conspiracy must exist in order to find
liability as joint tortfeasors; rather, they tend to deal with one ground of
liability or the other, or both separately. Both the Trial Reasons and the
Appeal Reasons demonstrate that civil conspiracy and joint tortfeasors are
treated as separate grounds for liability as the two are addressed in separate
sections of the judgments (Trial Reasons: joint tortfeasors at paras. 237-262
and civil conspiracy at paras. 263-277; Appeal Reasons: civil conspiracy
at paras. 43-55 and joint tortfeasors at paras. 82-97). I note the
comment in the Appeal Reasons that there is “very little difference” in the two
when the tortfeasors participate in a concerted action to a common end: para. 42.
However, at no time, did the Court of Appeal link the two causes of action in
the manner suggested by Wang.

[139]     As such, I
read the authorities to say that liability under civil conspiracy and joint
tortfeasors are two separate grounds for liability. Again, Wang has not
referred me to any authority which states otherwise.

I turn now to the first ground of liability. XY alleges that Wang was
involved in a civil conspiracy. Two categories of civil conspiracy exist. In Bank
of Montreal v. Tortora
, 2010 BCCA 139, the Court of Appeal
reiterated the statement of the law as set out in the Supreme Court of Canada’s
decision in Cement LaFarge v. B.C. Lightweight Aggregate, [1983] 1
S.C.R. 452. Chiasson J.A. said:

[35]      In LaFarge, the Court defined the two
forms of conspiracy at p. 471:

… the law of torts [recognizes] a claim … as the tort of
conspiracy if:

(1)   whether
the means used by the defendants are lawful or unlawful, the predominant
purpose of the defendants’ conduct is to cause injury to the plaintiff; or,

(2)   where the conduct of the
defendants is unlawful, the conduct is directed towards the plaintiff (alone or
together with others), and the defendants should know in the circumstances that
injury to the plaintiff is likely to and does result.

[141]     XY alleges
only the second type of conspiracy in that the defendants are alleged to have
agreed to act in concert to take unlawful steps which were directed at XY and
which they knew would likely cause injury to XY.

[142]     The above
authorities demonstrate that there are two elements to the second branch of
civil conspiracy. First, there must be an agreement and second, there must be
unlawful conduct on the part of all conspirators.

On the issue of whether there is an agreement, Kelleher J. accepted that
in addition to direct evidence, an “agreement may be inferred from the facts,
so long as they ‘cannot fairly admit of any other inference being drawn from
them’”: Trial Reasons at para. 268. In Pat’s Off-Road Transport v.
, 2010 ABQB 443, the court concluded that no inference could arise
to establish an agreement on the part of a person who had simply financed the

[69]  I can find no evidence on which John Gillam
can be said to have been party to the agreement alleged by the Plaintiff. The
evidence is clear that John Gillam came into the agreement with Cody Campbell
solely to provide financing. As a lender of last resort, John Gillam was a
businessman interested in making a large return on his money. He knew nothing
of the oil industry and invested based upon Cody Campbell’s sales pitch and
suggested rates of return.

[70]  There is no evidence of any agreement or
conspiracy as alleged by the Plaintiff. Nor is there any evidence from which
an agreement or conspiracy can be inferred.
Therefore, the Plaintiff cannot
succeed against these defendants on the claim that John Gillam conspired with
his co-defendant to create a heating unit based on the Plaintiff’s trade

[Emphasis added.]

[144]     I accept
that, based on the documents and in particular, Zhou’s evidence, there is a
strong prima facie case that Wang was part of an agreement to use XY’s
technology in the new business, started up after JingJing, by way of FBI and
CTS. Zhou’s evidence points to Wang having knowledge as to the actual
operations at the Byrne Road lab going well beyond the corporate affairs or
financing that she admitted handling and with clear knowledge of the underlying
dispute with XY in terms of the ability of JingJing and any new lab to operate.
In these circumstances, a fair inference arises that Wang had actual or imputed
knowledge of both XY’s “Confidential Information” and the use of it, and that
she agreed to assist in furthering those efforts.

The substantive issue here is whether XY has shown some evidence upon which
the court can conclude that as part of this agreement or conspiracy, Wang has
committed an unlawful act. Wang places considerable reliance on the comments of
Chiasson J.A. in Tortora in that an unlawful act must be
committed by each conspirator. I find his analysis helpful and set out at length
this portion of his reasons:

[36]      After noting that the tort of civil conspiracy has
been criticized, Estey J. stated, “[n]o doubt the reaction of courts in the
future will be to restrict its application for the very reasons that some now
advocate its demise”.

[37]      It was the [trial] judge’s view
that to sustain the conspiracy claim against Mr. Punja, against whom there
was no allegation of wrongful acts, would be to extend the claim beyond the
boundaries defined in LaFarge. After quoting LaForest J. in
v. Smith
, [1987] 2 S.C.R. 99 at 109, 42 D.L.R. (4th) 81:
“this Court has made it clear that it does not look kindly upon the extension of
this tort, which it regards as an anomaly”, the chambers judge had this to say
in para. 48:

[48]      To extend a conspiracy
claim to include co-conspirators who are not alleged to have committed any
wrongful conduct would be a further extension of the tort. It would be
illogical if a claim in conspiracy could succeed against someone who:

a)         did
not have as his predominant purpose the intent to cause injury to the
plaintiff, and

b)         did
not engage in any unlawful or wrongful conduct directed towards the plaintiff.

Yet, if the Bank’s argument is
accepted, that is exactly the extension to the tort of conspiracy that would be
created. In essence it would create a third category of conspirator: someone
who does not meet either of the first two branches of the test, but is drawn in
because of his familial or business relationship with another conspirator.

[38]      In LaFarge, the Court specifically was
considering unlawful act conspiracy. Estey J. stated at p. 468:

… The question which must now be
considered is whether the scope of the tort of conspiracy in this country
extends beyond situations in which the defendants’ predominant purpose is to
cause injury to the plaintiff, and includes cases in which this intention to
injure is absent but the conduct of the defendants is by itself unlawful, and
in fact causes damage to the plaintiff.

[39]      As part of his analysis, Estey J. referred to
comments of Wilson J. in Southam Co. Ltd. v. Gouthro, [1948] 3 D.L.R.
178 (B.C.S.C.), in which he noted that, “[t]he subject of inquiry is lawfulness
or unlawfulness”. Where the acts of the conspirators are in themselves lawful,
but their objective is to injure another, by reason of that objective, the acts
become unlawful. If the acts are themselves unlawful and the conspirators know
or should know injury to another will result, an intention to injure is not

[40] It is the unlawful conduct that is at the root
of the second branch of the law of civil conspiracy
. Seen in this light, I
conclude that under the second ground of civil conspiracy, the Bank was obliged
to plead an unlawful act by Mr. Punja and that he knew or should have
known his action would cause injury to the Bank.

[41]      The Bank disputes that the basis
of the conspiracy claim is Mr. Punja’s relationship with Ms. Poonja.
Referring to para. 111 of the amended statement of claim, in its factum
the Bank states:

…the basis for the conspiracy
claim against Punja is not that he is Poonja’s husband … the basis is … that he
“he knew or ought to have known that monies transferred to his account at CIBC
by Tortora were proceeds of commissions that neither he nor his wife had any
lawful right to receive”…

It may be that Mr. Punja did not have a right to receive
the money, but that does not make his receipt of it an unlawful act. There was
nothing per se unlawful in Mr. Punja receiving money from Ms. Tortora,
be it part of her commission revenue or otherwise.

[42]      In my view, the chambers judge’s analysis was
correct. The Bank seeks to create a hybrid form of conspiracy, one that derives
from knowledge that the conduct of others is not lawful. In my view, such
knowledge cannot convert what otherwise would be a lawful act into an unlawful
act in the context of a claim for civil conspiracy.

[43]      The Bank’s approach is more consonant with the law
of criminal conspiracy where the crime is in the agreement. The distinction
between criminal and tortious conspiracy was made clear by Lord Diplock in Lonrho
Ltd. v. Shell Petroleum Co. Ltd.
, [1982] A.C. 173 at p. 188, as quoted
by Estey J. in LaFarge:

The gist of the cause of action is
damage to the plaintiff; so long as it remains unexecuted the agreement, which
alone constitutes the crime of conspiracy, causes no damage; it is only acts
done in execution of the agreement that are capable of doing that…the tort,
unlike the crime, consists not of agreement but of concerted action taken
pursuant to agreement.

[44] Where the gravamen of the tort is unlawful
conduct, Mr. Punja’s agreement to assist Ms. Tortora and Ms. Poonja
by lawful conduct – receiving money from Ms. Tortora – does not constitute
actionable civil conspiracy

[45]      The Bank relies on Kuwait Oil
Tanker Co. SAK v. Al Bader
, [2000] 2 All ER (Comm) 271 (C.A.), for the
proposition that it is not necessary to allege an unlawful act against each
conspirator. It asserts in its factum that, “[t]he raison d’etre of the law of
conspiracy under the second branch of the test
is to render those who
assist others in unlawful conduct directed against the plaintiff liable along
with those who committed the unlawful act”.

[46]      Ms. Poonja and Mr. Punja
question reliance on English jurisprudence in light of the Supreme Court of
Canada’s departure in LaFarge from the English cases’ requirement of
intention in unlawful act conspiracy. They also note that the court in Kuwait
referred to the above-quoted passage of Lord Diplock in Lonrho and
assert that the facts in Kuwait do not support the proposition advanced
by the Bank: there were a number of schemes organized by employees to take
money from their employer and each person participated.

[47]      In my view, there is merit in the
observations of Ms. Poonja and Mr. Punja. In any event, I am not persuaded
that the decision in Kuwait obviates what I take from the analysis in LaFarge:
actionable unlawful act conspiracy requires unlawful conduct by each


[146]     I agree
with Wang that there is nothing in her known activities that suggests any
unlawful act or conduct. I do not understand that XY submits otherwise. In that
event, XY has failed to establish a strong prima facie case
against Wang under the head of civil conspiracy.

[147]     XY’s
alternate claim is that Wang is liable as a joint tortfeasor. While references
to her involvement are found in numerous paragraphs in the Amended Notice of
Civil Claim, in substance XY alleges that Wang is a “joint actor” in that she
acted in concert with the other defendants to establish a semen sorting
enterprise for IND which enterprise wrongfully used XY’s “Confidential

XY relies on Osborne v. Pavlick, 2000 BCCA 120, the leading
authority in this province on joint tortfeasors, and referred to in both the
Trial Reasons and the Appeal Reasons. In Osborne, the Court of Appeal
set out three different categories in which liability as joint tortfeasors may
arise: agency, master/servant and agreement on common action followed by a tort
committed by one:

[16]      The classic statement of the concept of "joint
tortfeasors" is to be found in The Koursk, [1924] P. 140 at
155 (C.A.), per Scrutton L.J.:

The substantial question in the
present case is: What is meant by "joint tortfeasors"? and one way of
answering it is: "Is the cause of action against them the same?"
Certain classes of persons seem clearly to be "joint tortfeasors":
The agent who commits a tort within the scope of his employment for his
principal, and the principal; the servant who commits a tort in the course of
his employment, and his master; two persons who agree on common action, in
the course of, and to further which, one of them commits a tort. These seem
clearly joint tortfeasors; there is one tort committed by one of them on behalf
of, or in concert with another

[17]      As I understand the judgment of Cartwright J. in Cook
v. Lewis
, [1951] S.C.R. 830, he accepted that passage as sound

[Emphasis added.]

[149]     Osborne
involved a couple who sold a daycare business and the property in which it was
located, which was held by them in joint tenancy. However, the husband, Mr. Pavlick,
had no involvement in operating the business itself. The wife made false
representations regarding the viability of the business but not the value of
the property, which were relied on by the plaintiff purchaser. The Court of
Appeal noted important factors in the pleadings, namely: that Mr. Pavlick had
not made any representations but that his wife had made the representations on
behalf of both; that no misrepresentations had been made regarding the real
property; and that Mr. Pavlick had no interest in the day care business (para. 12).

Findings made by the trial judge were repeated by the Court of Appeal:

[13]      As to Mr. Pavlick, the learned judge made
these findings:

[84]      At the time Leon Pavlick
signed the October 27th contract, he knew:

– His wife was in a fragile
condition mentally and emotionally and had been for some time. Given that
condition and knowing he was personally obligated under the $110,000 mortgage
they had granted to buy Marchmont, I suspect he kept a close watch on the
numbers of children enrolled and the revenues.

– Given the numbers of children he
saw in attendance compared to the numbers permitted by the license, he must
have known there was no waiting list. He agreed that he probably told Meranda
Baker that the Centre had not paid any rent for June, July and August of $1,400
monthly and he does not disavow saying "the mortgage is ruining me".

– He knew the contract for the sale
of the business included a waiting list. He remained silent.

– He knew there were no proper
financial records of the business; again he remained silent.

– He knew it was a condition of
sale of the business that the real property be included with it. He permitted
his wife to act as his agent throughout the negotiations. Despite his
protestations, I conclude the sale of the real property was fortuitous. The
Pavlicks received $25,000 more than they had paid five months before, received
more than the value attributed to it by Canada Trust, and there was no
commission to pay.

* * *

[93]      The plaintiffs say that Mr. Pavlick
received substantial benefits from the sale and his silence in respect of the
true financial affairs of the Centre, and particularly in the matter of the
waiting list constituted fraudulent misrepresentation. They rely on the
judgment of the Court of Appeal in Sidhu Estate v. Bains (1996),
25 B.C.L.R. (3d) 41 (C.A.) ….

[94]      I find Leon Pavlick’s
silence knowing his wife was obligating herself to provide a waiting list on
closing, when he must have known a waiting list did not exist for but a handful
of children were attending the Centre, constituted a fraudulent

[95]      The defendants say that
before they met with Harvey Osborne on October 20th, they had decided not to
give him any financial information about the business because they did not have
any proper actual figures. They say that decision suggests there was no
fraudulent intent to deceive.

[96]      But it was not left
there. On October 20th, when Harvey Osborne asked for reliable financial
information, Leon Pavlick was present when his wife undertook to provide it. He
does not say he protested then or later. Leon Pavlick has testified that he
never knew of the existence of the Tab 9 document until some time in 1996 when
it was exhibited to an affidavit used to obtain a stay of payment on the second
mortgage. I suspect that Leon Pavlick well knew that some financial information
had been given to the Osbornes; likely the information contained in the Tab 9
Document. He has enough business experience to know that purchasers do not pay
$240,000 for a Day Care in the absence of some financial information.

[97]      Leon Pavlick permitted
Ann Pavlick to act as his agent in negotiating and concluding the sale and
benefitted from her misrepresentations. As principal, he is liable for her

[Emphasis in original.]

The Court of Appeal did not accept the trial judge’s finding that Mr. Pavlick
was liable as a joint tortfeasor on the basis that the wife acted as his agent
in misrepresenting the value of the business. However, the Court of Appeal
found Mr. Pavlick liable as a joint tortfeasor under the third category of
liability as the parties agreed to a common action and the wife then committed
a tort. Southin J.A. said:

[22]      It is plain that Mrs. Pavlick was not Mr. Pavlick’s
servant, and it is at least doubtful, in my opinion, that she was his agent,
simply because of their joint ownership of 812 Marchmont Road.

[23]      But in my opinion, the facts of this case bring the
appellants within the third of Scrutton L.J.’s categories. They agreed on the
common action of selling together both the real property and the business and
in the course of negotiating that sale, and to further that sale, the female
appellant committed the tort of deceit.

[24]      Thus, the appellants
are joint tortfeasors.

[152]     Subsequent
cases illustrate the application of the principles from Osborne.

In Two-Tyme Recycling Inc. v. Woods, 2010 ONSC 5672, the court
granted summary judgment against the defendant, Ronald Woods, as a joint
tortfeasor in fraud as he had no arguable defence. The defendant, Darlene
Woods, an employee of the plaintiff, was found to have fraudulently converted
$608,493 from the plaintiff, a waste management company (para. 12). Ronald
and Darlene Woods were married. The plaintiff submitted that summary judgment
was appropriate for a number of reasons:

[19]  The plaintiff submits that there is no
genuine issue requiring a trial whether Ron acted in concert with Darlene and
is therefore jointly and severally liable for the fraudulent conversion for,
among others, the following reasons:

(a)        Ron was a signatory of
the TD account;

(b)        Ron
knew that the shareholders had decided to use the HSBC account;

(c)        hundreds
of thousands of dollars were transferred into accounts in his and his wife’s
joint names;

(d)        Ron
represented to the other shareholders that he would get tougher with customers
regarding the collection of their accounts – accounts that were no longer

(e)        after
the fraud was discovered, Ron participated in the moving of files at the office
and launched a spurious injunction to stop the sale transaction; and

(f)         Ron’s evidence is completely
lacking in credibility.

The court found that Ronald Woods was not credible and rejected “his
evidence that he had no knowledge or involvement in the fraud” (para. 29).
Citing Osborne, the court found Ronald Woods liable as a joint

[25]  In this case,
the existence of a fraud is undisputed. The issue is Ron’s knowledge of and
involvement in it, which he denies in his affidavit. Silence in the face of a
fraud can be sufficient to ground a finding that the person acted in concert
with the fraudster and is jointly liable for the fraud: see Osborne v.
, 2000 BCCA 120, 74 B.C.L.R. (3d) 311, 2000 CarswellBC 325.

On the issue of Ronald Wood’s knowledge, the court said:

[33]      It is implausible that Ron would not have noticed
the transfer of hundreds of thousands of dollars into his bank account or,
given the allegations, reviewed his personal bank statements. The transfers to
his and Darlene’s personal account began at the outset of the period during
which the fraud occurred, and continued, with regularity, throughout the
relevant period. Ron adduced no evidence of any loans owing to him. Given his
role at the plaintiff, and his relationship with Darlene, his evidence that he
did not know who was responsible for entering cheque information into TRUX is
also implausible.

[34]      A claim for fraudulent
conversion is serious. … Despite the nature of the claim in this matter, I have
concluded, without hesitation, that summary judgment for fraudulent conversion
can be granted against Ron Woods.

In a case where the defendants (a husband and wife) convinced the
plaintiff to undergo alternative medical treatment for a rare skin disease, the
co-defendant wife was found liable as a joint tortfeasor in deceit (Auch v.
, 2003 MBQB 91). The defendant husband was a professed herbalist and
iridologist and the co-defendant wife assisted her husband with the business (para. 4).
The plaintiff’s condition worsened after he followed the advice of the
defendants and spent just under $95,000 on these alternative treatments. In
finding the wife liable as a joint tortfeasor, the court said:

[18]      In concluding that the
co-defendant, Elsie Wolfe, was a joint tortfeasor, I note the uncontroverted
evidence that she worked side by side with her co-defendant at their health
food store and, aside from selling products to the plaintiff on numerous
occasions, she made representations as to the quality of the products being
purchased by the plaintiff and arranged for the travel of the plaintiff and his
wife to attend the recommended "clinic" in Puerto Vallarta, Mexico.
Even assuming that she was not the author of any specific fraudulent
misrepresentations to the plaintiff, she acted in concert with her co-defendant
and is liable for the tort of deceit committed by him. Support for this
principle is found in the judgment by Southin J.A. in Osborne v. Pavlick,
[2000] B.C.J. No. 322

In Nippon v. Okusako, 2002 BCSC 38, the defendant husband (Okusako)
entered into a verbal agreement to sell his photo finishing shop to the
plaintiff. Subsequently, the defendant wife (Etsuko Okusako), who owned the
shares for the photo finishing shop, entered into a written purchase and sale
agreement and transferred all shares to the plaintiff. Approximately seven
months later, Okusako went to the shop, ordered all of the plaintiff’s
employees to leave, changed the locks and thereafter operated the shop without
accounting to the plaintiff or returning to him any of the amount he had paid
for the shares in the business (paras. 5-8). Cohen J. found the wife
liable as a joint tortfeasor in civil fraud:

[126]    Finally, dealing with the plaintiffs’ claim against
the defendant Etsuko Okusako, the fact that she did not herself deceive
Ashimura does not mean that she cannot be held liable for the civil fraud
committed by Okusako. In Osborne v. Pavlick (2000), 74 B.C.L.R.
(3d) 311 (B.C.C.A.) at paras. 16-24, Southin J.A., for the Court, said, as

[127]    The defendant Etsuko Okusako did not testify.
However, her examination for discovery testimony established that she was the
sole shareholder of Nippon. It also established that she was not involved in
the finances, lease arrangements or any other business matters for the shop,
and that she did not negotiate the purchase of Nippon with Ashimura, although
she knew that Okusako had negotiated the purchase with Ashimura.

[128]    She also testified on discovery that in all matters
she left things up to Okusako to handle. For example, she knew that the
landlord’s consent was required for a change in ownership. However, it was her
evidence that, like everything else, she left this up to Okusako who handled
such matters on her behalf.

[129]    Okusako’s evidence at trial and discovery was that
he was the business mind behind Nippon. His wife did not take an active part.
His wife knew that he was negotiating with Ashimura to sell the shares. In all
things, he considered his wife and himself to be one and the same.

[130]    In all of the
circumstances, I agree with Ashimura’s counsel that there can be no finding
other than that Okusako, at all material times, acted both on his own behalf
and as agent for the defendant Etsuko Okusako. They held a common intention to
sell Nippon to Ashimura. Thus, I find that the defendant Etsuko Okusako is
liable for the acts of Okusako in pursuit of their common goal.

In the Trial Reasons, Kelleher J. rejected the argument that the IND
companies had acted in concert with Zhu, Tang and Zhou in deceiving XY: paras. 287-318.
That finding was upheld in the Appeal Reasons (paras. 82-84). However,
that conclusion was based on the finding that the improper conduct was in the
course of their duties as employees of JingJing and the fact that Tang and Zhou
may have used some IND facilities did not amount to proof that they were acting
on behalf of or for the benefit of the IND companies.

XY argues that:

Further, even if one accepts all
of Shuli Wang’s evidence for the moment, it is difficult to see how her
evidence puts her in any different position than Mr. Pavlick in Osborne
v. Pavlick. Even on her evidence, she agreed on the common action of
using FBI—a company over which she had signing authority—for Jesse Zhu, Jin
Tang, James Yang, Selen Zhou, Barry Cheng, Kevin Xu, and others to run the
Byrne Road lab. In the course of that business, and to further that business,
those individuals and FBI itself committed numerous torts. Even putting her
facts in the best possible light, she is liable as a joint tortfeasor in the
same way that Mr. Pavlick was liable as a joint tortfeasor for his wife’s

[160]     I have
some hesitation in adopting XY’s above interpretation of Osborne, in
that if that is correct, then one could contend that any employee in a
corporation which commits an unlawful act might be found to be a joint
tortfeasor even if that employee had no knowledge of the wrongdoing of the
corporation and did not participate in it.

[161]     Further, Wang
also argues that there is no evidence upon which one might conclude that FBI
and/or CTS were doing anything unlawful “on behalf of or for the benefit of”
Wang. She argues that there is no evidence of her directing or instructing any
unlawful act to be done by any other person, including the lab employees.

[162]     I accept
that the case against Wang is clearly not as strong as that against Zhu, Tang,
Yang, Xu, Cheng and Fu. Nevertheless, despite Wang’s submissions, I accept that
there is a strong prima facie case against her as a joint tortfeasor,
based on the Osborne principle. Similar to my conclusions about an
agreement as part of the conspiracy claim, the documents and Zhou’s evidence clearly
take Wang’s involvement beyond that of an employee simply writing cheques and
blindly meeting funding requests from the lab operations from time to time.
Zhou’s evidence in particular suggests that Wang was well aware of the dispute
with XY and that she acted “in concert” with her husband and the others
(including Tang and Zhou) in setting up the operations in FBI and CTS “to
continue the same work sorting semen”.

[163]     Given Wang’s
knowledge of the dispute, the bankruptcy of JingJing and the subsequent transfer
of these operations shortly thereafter, it does strain credulity to consider
that Wang would not have been aware that these “new” operations would suffer
from the same issues that arose in JingJing as regards XY. This is particularly
so given her alleged knowledge of the purchase of the cytometers and the sexed
semen from the bankruptcy trustee which were to be used in those same
operations; although I acknowledge that the purchase of these items alone does
not necessary suggest wrongdoing. Wang was clearly aware of the XY litigation.
It is hard to imagine that she did not read the Trial Reasons, by which
Kelleher expressly rejected Zhu’s contention that “semen could be sorted
without XY’s confidential information”: para. 336-337.

[164]     In that
sense, it is more than arguable that Wang was acting in concert with the others
or alternatively, that the others were acting on her behalf or as her and her
husband’s agent in the implementation of an unlawful scheme established at a
high level between her and her husband, Zhu.

[165]     Wang also
raises a further issue relating to her wholly owned company, 497.

[166]     This Court
has the power in appropriate cases to make an order directly against companies
owned directly or indirectly by the individual defendants so as to preserve the
status quo of the corporate assets (and thus the value of their shares),
or to join the companies to the action for that purpose, even without piercing
the corporate veil: Welsh v. Welsh, 2011 ABQB 686 at paras. 41-47;
Rohani v. Rohani, 2004 BCCA 605, at paras. 24 and 27,
application for leave to appeal discontinued, [2005] S.C.C.A. No. 46; Xu
Foo, 2006 BCCA 525 at para. 49.

[167]     On these authorities,
the Mareva order enjoined 497 from dealing with its bank account, enjoined Wang
from dealing with her shares in 497 and also from removing or disposing of 497’s
assets by her indirect ownership through the shares. On June 9, 2014, 497’s
bank account was unfrozen to allow payment of normal business expenses,
including Wang’s salary.

[168]     Wang
submits that 497’s building is adequate security for XY’s claims against her,
citing as authority the decision of this court in RACP Pharmaceutical
Holdings Ltd. v. Li Xiaobo
, 2007 BCSC 1695 at para. 26. However, in
that case real estate was caught by both the Mareva order and certificates of
pending litigation in relation to the injunction which was limited to $10
million. On application by the defendant, the Mareva order was discharged on
the posting of security valued at $11.9 million, which included the real estate
and further cash.

[169]     While
the value of the building owned by 497 does have substantial value, I am not
convinced that any other asset of Wang or 497 should be discharged from the
Mareva order. If, as XY estimates below, the potential damage award is well in
excess of the value of Wang’s shares in 497, then she is potentially liable for
this further amount and her other assets may be needed to satisfy any judgment.

[170]     The
evidence establishes that there is lack of clarity regarding the operations
between the various IND companies (see APO Reconsideration at paras. 63-64)
and Zhou’s evidence that Zhu and Wang frequently used nominees to disguise the
true ownership of shares in companies is a concern. In fact, Zhou states that
based on her experience, she believes that Zhu and Wang both own 497
beneficially. While Zhou’s evidence on this point is not what I would call
strong or might be accorded little weight, if it is true, then Zhu and Wang
have every reason to take steps to protect this valuable asset, by keeping
Zhu’s interest hidden and maintaining it in the hands of the one person who has
not been identified as being personally involved in the operations.

[171]     I reject
the argument that the injunction should be dissolved as against Wang with only
497’s building to remain subject to the Mareva Order.

Evidence of Quantum of Claims (Wang/497 and Yang, Xu, Cheng, Fu)

[172]     These
defendants argue that the Mareva injunction should be dissolved because XY has
not shown that the value of the frozen assets bears any relationship to the

[173]     In Tracy,
the court stated that it is incumbent upon the applicant to establish that the
extent of the viable claim bears some relation to the value of assets sought to
be impounded or frozen: paras. 56, 67. See also Santos at para. 28;
ProSuite Software Limited v. Infokey Software Inc., 2013 BCSC 2227 at paras. 37-38.

[174]     XY argues
that this litigation is still in its early stages, a point that was also made
by the employee defendants. As I have stated above, document disclosure is
ongoing and it was only recently ordered by the court that documents post April
2, 2012 should be disclosed. No examinations for discovery have yet taken

[175]     Accordingly,
XY argues that it is not yet able to determine what cytometers were in use or used,
either in Canada or in China, nor the number of doses of sexed semen or embryos
that were produced by the sexed semen, so as to calculate a potential damage

[176]     XY points
to the Beijing Futonghua Investment Co. Ltd. business plan in China which, as
of September 2011, described ambitious efforts to commence production in
October 2011 with its main business being the “production and sales of sexed
semen … production and sales of flow cytometers … and sorting and application
of special cells”. That business plan anticipated $7 million in profit in 2013
and after going public, raising $30 million in 2014. In addition, the documents
disclosed reveal that cytometers had already been shipped by Zhu to China in
the spring of 2011. This business plan identified that Futonghua possesses
“abundant sexed semen separation experiences and technology” and discusses how
much money would be saved by not having to purchase such equipment and
technology from XY.

[177]     Based on
this business plan, XY has advanced two approaches to damages to 2014 on the
assumption that some or all of the proposed operations in China have come to
fruition: firstly, an estimate based on the licensing fees and royalties that
would have been payable to XY for the use of its technology ranging from
$28.3-99.5 million; secondly, an estimate based on profits ranging from
$24-91.5 million. These figures do not include punitive damages which are also

[178]     The
employee defendants point out that the Byrne Road lab was closed down shortly
after it became operational so no damages could arise there. That is certainly
the case but it has not yet been revealed exactly what operations did take
place prior to that time. Nor is there any disclosure of what operations, if
any, were commenced in China or the status of any such operations. All of this
information would drive a more accurate calculation of the damages to be sought
by XY.

[179]     Another
interesting footnote on this issue is that in the trial before Kelleher J., the
defendants refused to produce documentation as to their operations in China:
Trial Reasons at para. 281. That same situation has yet to come to pass in
this case; however, if it does then certainly XY will face those same hurdles
in proving its damages.

[180]     I
appreciate, as Wang argues, that certain of the approaches to damages based on
the business plan may not be appropriate in arriving at a proper measure of
damages. However, in my view, the cases do not support that at this early stage
of the proceedings, XY is required to accurately estimate the damage claim,
particularly without disclosure by the defendants who are really the only
people at this time who know about the actual operations.

[181]     It
suffices to say that the evidence does establish that if XY’s technology was
used improperly in these operations, the beneficiaries of those operations would
have saved millions of dollars depending on the scope of those operations. The
only information disclosed to date about what those overseas operations might
have amounted to is likely not accurate, but it does provide some guidance.

[182]     It is also
difficult to consider the damage claim in relation to the assets that have been
disclosed and frozen. We are of course aware of 497’s building and the real
estate owned by the employees and Wang. Zhu and Tang’s assets are of course in
play although they are already subject to the trial judgment. At the end of the
hearing, Zhu had yet to disclose his worldwide assets and the assets of the
various corporate defendants.

[183]     I do not
consider that XY should be defeated in seeking or maintaining this relief
because information that would inform this analysis has yet to be disclosed by
the defendants.

Disclosure Order (Wang)

[184]     If a
Mareva Order that is obtained ex parte is upheld on the return of the
motion, an ancillary Order to list assets is commonly made. The purpose of such
an ancillary order is to “breathe some life” into the Mareva injunction so as
to permit enforcement of the order: Sekisui House Kabushiki Kaisha v.
, [1982] B.C.J. No. 1491 at para. 10 (C.A.); Tracy
at para. 74; Davila at para. 42.

[185]     XY seeks
such an order as against Wang, as it did with the other defendants subject to
the Mareva injunction.

[186]     Wang argues
that an affidavit will only assist XY in determining, if and when it obtains
judgment, whether the Mareva order has been complied with. She suggests that
can equally be possible under the Supreme Court Civil Rules, B.C. Reg.
168/2009 such as by examining her in aid of execution (Rule 13-4). I reject
such an argument. If that was the answer to a request for this relief, then no
disclosure would be ordered in any case, save perhaps for a situation where
there was an offshore defendant and it was questionable whether attendance at
such an examination could be compelled.

[187]     In my
view, Wang should be treated no differently than the other defendants subject
to the Mareva injunction. Her disclosure is therefore required.


[188]     In
reviewing the evidence as a whole, including the newly presented affidavits of
the employee defendants, I conclude that the balance of convenience continues
to favour maintaining the Mareva Order as against them. In addition, I confirm
my previous determination on the ex parte application that a strong prima
case has been made out as against Wang.

[189]     I have
referred numerous times to various amending orders after the original Mareva
order on March 27, 2014, which addressed issues relating to use of funds to pay
ordinary living expenses, the operation of bank accounts, the ordinary business
expenses of the companies and certain anticipated dealings with the capital
assets. There has already been a certain level of appropriate cooperation
between the parties to address these types of issues. In any event, if it
wasn’t already clear, the parties remain at liberty to apply to further amend
the Mareva injunction, as amended, to address any further issues that may arise.