Jin v. Ren et al., (2015) 613 A.R. 96 (QB)

• Judge: Michalyshyn, J.
• Court: Court of Queen's Bench of Alberta (Canada)
• Case Date: August 15, 2014
• Citations: (2015), 613 A.R. 96 (QB);2015 ABQB 115

Jin v. Ren (2015), 613 A.R. 96 (QB)

MLB headnote and full text

Temp. Cite: [2015] A.R. TBEd. MR.086

Shan Jin (plaintiff) v. Zigang Ren and Hart Fibre Trade Company Ltd. (defendant)

(0703 07538; 2015 ABQB 115)

Indexed As: Jin v. Ren et al.

Alberta Court of Queen's Bench

Judicial District of Edmonton

Michalyshyn, J.

February 13, 2015.

Summary:

The plaintiff (Jin) was a businessman in Shanghai. The defendant Ren was a former Shanghai businessman who emigrated to Canada in 2004. Early in 2006, Ren had returned to Shanghai seeking investors for an Alberta-based business operating through the corporate defendant ("Hart Fibre"). By May 1, 2006, Jin had provided some $300,000 CDN to Ren, representing Jin's investment in Hart Fibre. In August 2006, Jin demanded the return of his funds after Ren failed to confirm Jin's shareholdings in Hart Fibre. In June 2007, Jin commenced the within action. The issues were: (1) did the arrangement between the parties create an express trust; (2) did Ren owe Jin a fiduciary duty; (3) was there an unjust enrichment and if so, could Ren be held personally liable; and (4) what was the appropriate remedy?

The Alberta Court of Queen's Bench held that there was an unjust enrichment. It was appropriate to lift the corporate veil between Ren and Hart Fibre, as Ren received the monies in his capacity as director. The defendants were jointly and severally liable for the investment amount of $300,000 CDN, together with simple interest pursuant to the Judgment Interest Act.

Company Law - Topic 312

Nature of corporations - Lifting the corporate veil - Principals - "Directing mind and will" of company - [See first Restitution - Topic 121 ].

Contracts - Topic 1503

Formation of contract - Consensus or agreement - What constitutes a consensus necessary for a binding contract - [See Restitution - Topic 703 ].

Equity - Topic 3713

Fiduciary or confidential relationships - Commercial relationships - Arm's length commercial transactions - The plaintiff argued that the defendant acted in a fiduciary capacity in the parties' business relationship, in that the defendant was expected to not misappropriate the plaintiff's investment funds - The Alberta Court of Queen's Bench held that the defendant did not owe the plaintiff a fiduciary duty - While the defendant was not expected to misappropriate the investment funds, this was merely a contractual expectation and did not give rise to a fiduciary relationship - The plaintiff had every opportunity to protect his vulnerabilities in advancing the investment monies - He could have required more onerous terms in a written agreement or otherwise to secure his expectations as to the funds, the duties of loyalty expected, and what would occur if the agreement were breached - There was no evidence to suggest that he was an unknowledgeable or unsophisticated businessman, and no evidence to support any particular vulnerabilities or exceptional circumstances giving rise to a fiduciary duty - See paragraphs 33 to 50.

Interest - Topic 3519

Statutory interest - On judgments - Simple or compound interest - In his statement of claim, the plaintiff claimed judgment interest pursuant to the Judgment Interest Act (Alta.) - No claim was made for compound interest - The plaintiff asserted at trial that he should be compensated for the loss of the use of his money since 2006 - No facts were alleged to substantiate a claim for compound interest and amendments were never made to the original statement of claim - The Alberta Court of Queen's Bench held that the plaintiff was entitled to recover only simple interest - "I accept that the Court has power to award interest at a rate which would compensate [the plaintiff] for the loss of the use of his money. However, for similar reasons as expressed by Belzil J. in ExxonMobil Canada, I am not satisfied that this case warrants anything over and above that provided by the Judgment Interest Act. Compound interest was not plead in the Statement of Claim, nor was the Bank of America or Nilsson test met." - See paragraphs 94 to 105.

Practice - Topic 5402

Judgments and orders - General - Currency of judgments (incl. conversion) - The enrichment to the defendants and the corresponding deprivation to the plaintiff was expressed at trial variously in terms of Chinese, U.S., and Canadian currencies - The Alberta Court of Queen's Bench expressed the award in Canadian currency - There was discretion to select either the date of breach/tortious conduct or date of judgment as the conversion date - Here the conversion date of Chinese and U.S. dollar amounts was the date of the reasons for judgment - In the end result, the Court awarded judgment to the plaintiff in the amount of $300,000 CND, more or less once conversion had taken place, plus simple interest pursuant to the Judgment Interest Act - See paragraphs 106 to 109.

Restitution - Topic 62

Unjust enrichment - General - What constitutes - [See Restitution - Topic 703 ].

Restitution - Topic 121

Unjust enrichment - Remedies - General - The defendant Ren had received the plaintiff's investment monies in his capacity as director of the corporate defendant - The plaintiff was promised a controlling interest in the company and a corresponding share of its major asset - The defendant had failed to comply - The Alberta Court of Queen's Bench found that the unjust enrichment claim was not precluded against Ren, the sole director and controlling mind of the company - It was appropriate to lift the corporate veil between Ren and the company - Ren had enticed and retained the investment funds for an improper purpose - He had refused to account to the plaintiff for his investment monies, both before and after the action was commenced, and even at trial - By retaining the plaintiff's monies in his capacity as director, he "expressly directed a wrongful thing to be done" - Therefore, an unjust enrichment claim was not precluded against Ren personally - See paragraphs 69 to 81.

Restitution - Topic 121

Unjust enrichment - Remedies - General - Unjust enrichment had been established - The plaintiff sought disgorgement of profits - The Alberta Court of Queen's Bench held that the appropriate remedy was a monetary one designed to compensate the plaintiff for the enrichment conferred to the defendants - "Canadian courts have generally held that for restitution in unjust enrichment claims, the measure of relief is capped by the highest amount common to the parties' respective enrichment and deprivation - or in other words, the lesser of the enrichment of the defendant and that of the plaintiff's deprivation. The defendant cannot give up more than was gained, and the plaintiff cannot get back more than was lost ... A remedy of disgorgement of profits, whereby the wrongdoer must give up all of the benefits that were acquired by virtue of the wrong, is only appropriate where there is a successful claim of civil wrongdoing, like a breach of fiduciary duty or a breach of contract, as opposed to the 'autonomous unjust enrichment' three-part cause of action" - See paragraphs 82 to 86.

Restitution - Topic 699

Benefit acquired from the plaintiff - Recovery of money - Money paid on condition - [See Restitution - Topic 703 ].

Restitution - Topic 703

Benefit acquired from the plaintiff - Recovery of money - Money paid in anticipation of contract - The plaintiff sued for the return of investment monies he had provided to the defendant in exchange for a controlling interest in the corporate defendant, including corresponding shareholdings and a corresponding share of its major asset - The defendant had failed to comply - The Alberta Court of Queen's Bench held that an unjust enrichment was made out as there was an enrichment to the defendants, a deprivation to the plaintiff, and a lack of any juristic reason for the transfer - There was no contract in place - The alleged "contract" was no more than an agreement to agree: the share ratios were to be confirmed at some time in the indefinite future; the final paragraph stated "whole terms of the Agreement will be arranged by every shareholder after the whole capital stocks of whole shareholders have been inputted"; and the plaintiff's demands for certainty were unmet, leading to his demands for the return of his monies - Neither party thought the "agreement" was binding - The document was merely intended as a show of good faith and at best, a "preliminary understanding" - See paragraphs 51 to 68.

Restitution - Topic 2195

Benefit acquired from the plaintiff - Anticipated contracts which fail to materialize - General - [See Restitution - Topic 703 ].

Restitution - Topic 3395

Benefit acquired by defendant's wrongful act - Breach of fiduciary relationship - General - [See Equity - Topic 3713 ].

Trusts - Topic 358

Creation of trust - Intention - Trust v. contract - The parties were businessmen of some long acquaintance - The plaintiff claimed that by investing monies in the corporate defendant in exchange for shares and an interest in land to be purchased by the company, there was an intention that the defendant hold those funds in trust until consideration was exchanged - The defendant had delivered nothing in return - The plaintiff sought to recover his investment monies in full - The Alberta Court of Queen's Bench concluded that the parties' intentions were purely contractual - There was no evidence supporting an intention, express or implied, that the defendant was to hold the monies in trust until consideration was exchanged - The plaintiff's demand for the return of his funds was further evidence that the parties' arrangement was intended to be purely contractual - The only words or actions supporting the plaintiff's proposition that he intended to create a trust was his testimony that he advanced the monies because he "trusted" the defendant - However, "it would pervert the meaning of the word 'trust' in trusts law to say that the exchange here created a trust relationship simply because an investor trusted a corporation's director" - See paragraphs 21 to 32.

Cases Noticed:

Jin v. Ren, [2014] A.R. Uned. 278; 2014 ABQB 250, refd to. [para. 18].

Luscar Ltd. and Norcen Resources Ltd. v. Pembina Resources Ltd. (1994), 162 A.R. 35; 83 W.A.C. 35; 1994 ABCA 356, refd to. [para. 22].

Knight v. Knight (1840), 3 Beav. 148; 49 E.R. 58, refd to. [para. 22].

Royal Bank v. Eastern Trust, [1951] 3 D.L.R. 828; 32 C.B.R. 111 (P.E.I.T.D.), refd to. [para. 24].

Canada Trust Co. v. Pricewaterhouse Ltd. et al. (2001), 288 A.R. 387; 2001 ABQB 555, refd to. [para. 24].

Air Canada v. M & L Travel Ltd., Martin and Valliant, [1993] 3 S.C.R. 787; 159 N.R. 1; 67 O.A.C. 1, refd to. [para. 29].

Udovitch Estate v. Helm Estate, [2002] A.R. Uned. 119; 111 A.C.W.S.(3d) 444; 2002 ABQB 94, refd to. [para. 31].

Frame v. Smith and Smith, [1987] 2 S.C.R. 99; 78 N.R. 40; 23 O.A.C. 84, refd to. [para. 35].

Elder Advocates of Alberta Society et al. v. Alberta et al., [2011] 2 S.C.R. 261; 416 N.R. 198; 499 A.R. 345; 514 W.A.C. 345; 2011 SCC 24, refd to. [para. 36].

Indutech Canada Ltd. v. Gibbs Pipe Distributors Ltd. et al. (2013), 544 A.R. 205; 567 W.A.C. 205; 2013 ABCA 111, refd to. [para. 37].

Professional Institute of the Public Service of Canada et al. v. Canada (Attorney General), [2012] 3 S.C.R. 660; 438 N.R. 1; 300 O.A.C. 202; 2012 SCC 71, refd to. [para. 37].

Financial Management Inc. v. Associated Financial Planners Ltd. et al. (2006), 384 A.R. 70; 367 W.A.C. 70; 2006 ABCA 44, refd to. [para. 38].

155569 Canada Ltd. v. 258524 Alberta Ltd. et al. (2000), 255 A.R. 1; 220 W.A.C. 1; 2000 ABCA 41, refd to. [para. 38].

Cadbury Schweppes Inc. et al. v. FBI Foods Ltd. et al., [1999] 1 S.C.R. 142; 235 N.R. 30; 117 B.C.A.C. 161; 91 W.A.C. 161, refd to. [para. 38].

Hodgkinson v. Simms et al., [1994] 3 S.C.R. 377; 171 N.R. 245; 49 B.C.A.C. 1; 80 W.A.C. 1, refd to. [para. 38].

Ironside v. Smith (1998), 223 A.R. 379; 183 W.A.C. 379; 1998 ABCA 366, refd to. [para. 39].

Litwin Construction (1973) Ltd. v. Kiss (1988), 29 B.C.L.R.(2d) 88; 52 D.L.R.(4th) 459 (C.A.), refd to. [para. 39].

Huber (J.A.) Holdings Ltd. v. Davidge et al. (1992), 128 A.R. 268 (Q.B.), refd to. [para. 40].

Scott & Associates Engineering Ltd. v. Finavera Renewables Inc., [2013] A.R. Uned. 376; 79 Alta. L.R.(5th) 172; 2013 ABQB 273, refd to. [para. 52].

Becker v. Pettkus, [1980] 2 S.C.R. 834; 34 N.R. 384; 117 D.L.R.(3d) 257, refd to. [para. 52].

Soulos v. Korkontzilas et al., [1997] 2 S.C.R. 217; 212 N.R. 1; 100 O.A.C. 241; 146 D.L.R.(4th) 214, refd to. [para. 52].

Garland v. Consumers' Gas Co., [2004] 1 S.C.R. 629; 319 N.R. 38; 186 O.A.C. 128; 2004 SCC 25, refd to. [para. 53].

Ghitter (Ron) Property Consultants Ltd. v. Beaver Lumber Co. (2003), 330 A.R. 353; 299 W.A.C. 353; 2003 ABCA 221, refd to. [para. 60].

Milroy v. Klapstein (2003), 342 A.R. 352; 2003 ABQB 871, refd to. [para. 61].

Salomon v. Salomon & Co., [1897] A.C. 22 (H.L.), refd to. [para. 71].

Halpern Investments Ltd. v. Sovereign General Insurance Co. (2004), 375 A.R. 394; 2004 ABQB 865, refd to. [para. 71].

Kosmopoulos et al. v. Constitution Insurance Co. of Canada et al., [1987] 1 S.C.R. 2; 74 N.R. 360; 21 O.A.C. 4; 34 D.L.R.(4th) 208, refd to. [para. 73].

Transamerica Life Insurance Co. of Canada v. Canada Life Assurance Co. et al. (1996), 2 O.T.C. 146; 28 O.R.(3d) 423 (Gen. Div.), affd. [1997] O.J. No. 3754 (C.A.), refd to. [para. 74].

Shillingford v. Dalbridge Group Inc. (1996), 197 A.R. 56; 47 Alta. L.R.(3d) 154 (Q.B.), refd to. [para. 75].

642947 Ontario Ltd. v. Fleisher et al. (1997), 9 R.P.R.(3d) 261; 29 O.T.C. 161 (C.J.), affd. (2001), 152 O.A.C. 313; 56 O.R.(3d) 417 (C.A.), refd to. [para. 77].

Shoppers Drug Mart Inc. v. 6470360 Canada Inc. et al. (2014), 314 O.A.C. 341; 372 D.L.R.(4th) 90; 2014 ONCA 85, refd to. [para. 79].

A. v. B., [2013] 1 S.C.R. 61; 439 N.R. 1; 354 D.L.R.(4th) 191; 2013 SCC 5, refd to. [para. 85].

Quebec (Attorney General) v. A. - see A. v. B.

Air Canada v. British Columbia, [1989] 1 S.C.R. 1161; 95 N.R. 1; 59 D.L.R.(4th) 161, refd to. [para. 85].

Peter v. Beblow, [1993] 1 S.C.R. 980; 150 N.R. 1; 23 B.C.A.C. 81; 39 W.A.C. 81, refd to. [para. 90].

Man-Shield (Alta.) Construction Inc. v. 1117398 Alberta Ltd. et al. (2007), 436 A.R. 353; 2007 ABQB 603, refd to. [para. 90].

International Corona Resources Ltd. v. LAC Minerals Ltd., [1989] 2 S.C.R. 574; 101 N.R. 239; 36 O.A.C. 57; 61 D.L.R.(4th) 14, refd to. [para. 91].

Bank of America Canada v. Mutual Trust Co. et al., [2002] 2 S.C.R. 601; 287 N.R. 171; 159 O.A.C. 1; 2002 SCC 43, refd to. [para. 95].

Creditel of Canada Ltd. v. Terrace Corp. (Construction) Ltd. and Terrace Inn (1983), 50 A.R. 311; 23 A.C.W.S.(2d) 442 (C.A.), refd to. [para. 97].

321665 Alberta Ltd. v. ExxonMobil Canada Ltd. et al. (2012), 529 A.R. 276; 2012 ABQB 76, refd to. [para. 97].

Costello and Dickhoff v. Calgary (City) (1997), 209 A.R. 1; 160 W.A.C. 1; 1997 ABCA 281, refd to. [para. 98].

Village on the Park and Greenwood Acres, Re (2009), 472 A.R. 230; 2009 ABQB 497, refd to. [para. 101].

Alberta v. Nilsson (2002), 320 A.R. 88; 288 W.A.C. 88; 2002 ABCA 283, refd to. [para. 102].

Litecubes et al. v. Northern Light Products Inc., [2009] B.C.T.C. Uned. 181; 94 B.C.L.R.(4th) 158; 2009 BCSC 427, refd to. [para. 107].

Houweling Nurseries Oxnard Inc. v. Saskatoon Boiler Mfg. Co. (2011), 370 Sask.R. 1; 2011 SKQB 112, refd to. [para. 108].

Stevenson Estate v. Siewert et al., [2001] 10 W.W.R. 401; 286 A.R. 181; 253 W.A.C. 181; 2001 ABCA 180, refd to. [para. 108].

Brown & Root Services Corp. v. Aerotech Herman Nelson Inc. et al. (2004), 184 Man.R.(2d) 188; 318 W.A.C. 188; 238 D.L.R.(4th) 594; 2004 MBCA 63, refd to. [para. 108].

Counsel:

Genevieve Chan, for the plaintiff;

Zigang Ren, self-represented for himself, and for the defendant, Hart Fibre Trade Company Ltd.

This trial was heard on June 9-19, 2014, by Michalyshyn, J., of the Alberta Court of Queen's Bench, with further written submissions received August 15, 2014. The Court delivered the following judgment and reasons, dated at Edmonton, Alberta, on February 13, 2015.