COURT OF APPEAL FOR BRITISH COLUMBIA

Citation:

British Columbia (Securities Commission) v. Pioneer
  Ventures Inc.,

2021 BCCA 1

Date: 20210104

Docket: CA46666

Between:

British Columbia
Securities Commission

Respondent

(Respondent)

And

Pioneer Ventures
Inc.

Appellant

(Applicant)

Before:

The Honourable Madam Justice Newbury

The Honourable Madam Justice Saunders

The Honourable Mr. Justice Harris

On appeal from:  A decision
of the British Columbia Securities Commission, dated
December 30, 2019 (
Re Application to revoke certain orders
,
2019 BCSECCOM 454).

Counsel for the Appellant
(via videoconference):

R.N. Pelletier

Counsel for the Respondent
(via videoconference):

D.J. Chapman
J.L. Whately

Place and Date of Hearing:

Vancouver, British
  Columbia

November 24, 2020

Place and Date of Judgment:

Vancouver, British
  Columbia

January 4, 2021

Written Reasons by:

The Honourable Madam Justice Newbury

Concurred in by:

The Honourable Madam Justice Saunders

The Honourable Mr. Justice Harris

Summary:

Appeal of decision by
Securities Commission that freeze orders were validly issued in the public
interest and should not be revoked. Held: Appeal dismissed. Freeze orders do
not require that an onerous evidentiary burden be met. The Commission was not
clearly wrong to conclude that the allegations were serious and that the freeze
orders were issued in the public interest, nor did the Commission exercise its
discretion on a wrong principle or fail to consider all relevant factors. There
was evidence before the Commission to justify the orders, including allegations
of undisclosed insider trading, misrepresentations in public disclosure and
self‑dealing.

Reasons for Judgment of the Honourable
Madam Justice Newbury:

[1]

This appeal  and it
is
a statutory appeal, not a petition for
judicial review  requires us to consider the granting and revocation of so‑called
freeze orders made by the Securities Commission under the
Securities Act
,
R.S.B.C. 1996, c. 418. These are orders granted under s. 151 of
the
Act
(which section has since been repealed) that required persons in
control or possession of funds, securities or other property of alleged
wrongdoers to hold such property or refrain from withdrawing it from bank or
other accounts; or to hold it for authorities having possible claims, such as
interim receivers or liquidators in bankruptcy. Under s. 171, such orders
could be revoked by the Commission where it would not be prejudicial to the
public interest to do so. (I have attached as a schedule to these reasons the
relevant statutory provisions that were in force at all material times.)

[2]

The Commission has described freeze orders as discretionary tools
intended to preserve the
status quo
, ensuring that the frozen property
is not dissipated or destroyed before the Commission is in a position to
determine what, if any, further steps or orders in the public interest should
be made under the
Act
. (See
Re Amswiss Scientific Inc.
[1992] 7 B.C.S.C.W.S. 12 at 32.) The Commission has interpreted
its discretion to make such orders very broadly. It has said it is not
possible to state an evidentiary test that must be met in every case to support
a freeze order. (See
H&R Enterprises Inc. (Re)
[1997] 41
B.C.S.C.W.S. 18 at 7.) It has rejected the notion that before issuing
a freeze order, the Commission must find that the person whose assets would be
subject to the order has been dissipating, removing or disposing of assets or
may do so in future; and the notion that a connection must be shown between
the frozen property and the wrongdoing. (See
Re Samji
2012 BCSECCOM 91
at paras. 337.)

[3]

Freeze orders have been considered only rarely by this court on appeal.
We were referred to two of those occasions  first, in
Exchange Bank &
Trust Inc. v. British Columbia Securities Commission
2000 BCCA 389 (
EBT
),
where Mr. Justice Braidwood in chambers denied leave to appeal the
Commissions refusal to revoke a freeze order; and second, in
Zhu v. British
Columbia (Securities Commission)
2013 BCCA 248, where a division of
the Court dismissed an appeal from a similar refusal.

[4]

In
EBT
, Braidwood J.A. set out the Commissions reasons at
length with approval, beginning at para. 12 of his reasons. The passage
quoted included the Commissions observations that:

In seeking an investigation order, Commission
staff does not face an onerous evidentiary burden. Staff must show that the
circumstances relate to the trading of securities and is expected to provide a
basis on which to conclude the subjects of the proposed investigation have
acted, are acting or may act in contravention of the securities laws of British
Columbia or of another jurisdiction or in a manner contrary to the public
interest.

One of the grounds for making an order under section 151
appears to require nothing more than the existence of an investigation order,
or the intention to issue one. However, a freeze order generally has
far
more serious and immediate consequences than an investigation order. Property
of the alleged wrongdoers is immediately affected and the property of innocent
third parties can be captured in the freeze. The Commission must therefore
consider the seriousness of the allegations and the evidence supporting them so
it can weigh the threat to the public interest against the potential
consequences of the order.

That said, freeze orders are
often made at a very early stage
of an investigation. They are not
determinative of the facts in issue; they are made to preserve property until
the facts can be established, either through investigation or through a hearing
before the Commission. [Emphasis added.]

Braidwood J.A.s order was upheld on appeal for
reasons that focussed on procedural fairness: see 2000 BCCA 549.

[5]

In
Zhu
, Commission staff were investigating serious
allegations against the appellants, including fraud, participation in a Ponzi
scheme, failing to file a prospectus when required and selling certain
securities contrary to the
Act.
These allegations had not been heard by
the time the Executive Director applied for an extension of various temporary
orders designed to prevent future violations of the
Act
, including a
freeze order made April 30, 2012. The appellants applied for an order
revoking that freeze order under s. 171, but for unexplained reasons did
not apply for the revocation of a second freeze order made on May 4, 2012.

[6]

The Commission found that the evidence fell far short of
prima
facie
evidence of a Ponzi scheme or of fraudulent conduct. As a result, it
concluded that it was neither necessary nor in the public interest to extend
the temporary orders. However, it declined to vacate the freeze order. This decision
was the subject of the appeal to this court.

[7]

Speaking for the Court, Madam Justice Prowse noted at the outset of her analysis
that the
interpretation and application
of s. 171 of the
Act
had not been properly raised. She therefore restricted her comments to the
question of whether the Commissions refusal to vacate the April freeze order
was
reasonable
.
Zhu
was decided prior to the recent changes in
administrative law made by the Supreme Court of Canada in
Canada (Minister
of Citizenship and Immigration) v. Vavilov
2019 SCC 65 regarding
statutory appeals from administrative tribunals; see especially paras. 3652.

[8]

Prowse J.A. described the parties positions at paras. 516
of her reasons and then began her analysis of the law at para. 57. She
noted
Amswiss
,
EBT
and
H&R Enterprises
. She agreed
with the Executive Director that the approach adopted by the Commission
and reflected in these decisions is clearly
within their mandate and does not lend itself to guidance by this Court by way
of tests, mandatory criteria, or other guidelines which would tie the hands of
the Commission. She continued:

I agree with the submission of the Executive
Director in this respect, particularly in the circumstances of this case.
I
would decline the appellants invitation to set down guidelines, criteria or
mandatory tests for the exercise of the Commissions discretion under either
s. 151
or
s. 171
of the
Act
. ...

In assessing the
reasonableness of the Commissions decision against this backdrop, it is
important to note that, in this case,
there was an admitted breach of
s. 61
of the
Act
, and
evidence of other breaches of the
Act
, albeit
not to the level of a
prima facie
case.
...
In all of the circumstances, having regard to the breadth of the Commissions
mandate to act in the public interest in the area of its expertise, and the
broad discretion available to it under
s. 171
, I find that the Commissions decision not to revoke the freeze order
was reasonable. [At paras. 656; emphasis added.]

[9]

The case at bar involves quite different facts and, since it arises post‑
Vavilov
,
engages different standards of review from those applied in the past to the
appellate review of the Commissions orders. (See especially
Pezim v.
British Columbia (Superintendent of Brokers)
[1994] 2 S.C.R. 557.)
In
Vavilov
, the Supreme Court reversed its previous jurisprudence (last
reformulated in
Dunsmuir v. New Brunswick
2008 SCC 9) concerning
standards of review applicable to appeals like this one, i.e., statutory appeals
from decisions of administrative tribunals. The Court

adopted the
principle that where the legislature has indicated the applicable standard of
review, courts are bound to respect that designation, within the limits imposed
by the rule of law. (At para. 35.) It continued:

this principled position also
requires
courts to give effect to the legislatures intent, signalled by the presence of
a statutory appeal mechanism from an administrative decision to a court, that
the court is to perform an appellate function with respect to that decision
.
... Where a legislature has provided that parties may appeal from an
administrative decision to a court, either as of right or with leave, it has
subjected the administrative regime to appellate oversight and indicated that
it
expects

the court to scrutinize such administrative decisions on an
appellate basis. This expressed intention necessarily rebuts the blanket presumption
of reasonableness review.
...

It should therefore
be recognized that, where the legislature has provided for an appeal from an
administrative decision to a court, a court hearing such an appeal is
to
apply appellate standards of review to the decision. This means that the
applicable standard is to be determined with reference to the nature of the
question and to this Courts jurisprudence on appellate standards of review.
Where, for example, a court is hearing an appeal from an administrative
decision, it would, in considering questions of law, including questions of
statutory interpretation and those concerning the scope of a decision makers
authority, apply the standard of correctness in accordance with
Housen v.
Nikolaisen
... Where the scope of the statutory appeal includes questions
of fact, the appellate standard of review for those questions is palpable and
overriding error (as it is for questions of mixed fact and law where the legal
principle is not readily extricable): see
Housen
... . [At paras. 357;
emphasis added.]

[10]

By the same token, one assumes the exercise of a discretion by a
statutory tribunal is now subject on appeal to the standard of review described
in cases such as
Friends of the Oldman River v. Canada (Minister of
Transport)
[1992] 1 S.C.R. 3 at 76-7 and
Penner v.
Niagara Regional Services Board
2013 SCC 19 at para. 27.

Chronology

[11]

Having laid out the legal context of this case, I turn to a chronology
of the material facts.

·

November
23, 2016
 Based on information from a complainant not identified at the
time, a Commission investigator formed the view that an individual (whom I will
refer to as Mr. Z), the sole director and officer of the appellant
Pioneer Ventures Inc. (Pioneer), was an insider and
de facto
director
of a publicly-listed company, referred to as Yco. The investigator reviewed
trading information of Yco, which indicated that Pioneer was an active trader
and seller of shares of Yco. Mr. Z had not made any filings required of
insiders or directors of Yco. The investigators source also alleged that Mr. Z
was taking and using corporate funds for his own personal purposes, including
through other companies owned by [him] and had been stealing corporate
opportunities from [Yco], by setting up other companies that benefitted from
what are supposed to be the Companys transactions. In the course of a sworn
interview, the complainant did acknowledge that Ycos directors had approved
the payment of fees to Mr. Z and related companies.

·

November
29, 2016
 The Chair of the Commission issued an investigation order in
respect of Mr. Z, Pioneer, Pinto Ventures Ltd. and Yco.

·

June
5, 2018
 A Commission investigator recommended that the investigation
order be amended to clarify its scope and name additional subjects. The
investigator noted that according to the evidence gathered to date, Yco was a
developmental stage medical marijuana company; that it had entered into a
land lease and purchase agreements for marijuana-growing equipment with
companies controlled by Mr. Z, including Pioneer; and that Mr. Z
appeared to be on both sides of the agreements  a fact not disclosed by Yco
in its public filings.

·

May
22, 2019
 The Chair of the Commission granted a freeze order in respect of
Pioneers accounts at two banks. A typographical error in the original order
was corrected by subsequent order dated May 24, 2019.

·

May
27, 2019
 Pioneer applied under s. 171 of the
Act
for an order
revoking the freeze orders. The application was made by letter from counsel for
Pioneer, who submitted that the orders represented a substantial overreach of
the Commissions powers. He quoted a statement from
Amswiss
that:

the Commission must ... consider
the seriousness of the allegations the evidence supporting them so it can weigh
the threat to the public interest against the potential consequences of the
[freezing order].

Counsel argued that the evidence considered by the Chair in
granting the freeze orders contain[ed]  no evidence whatsoever concerning
the seriousness of the allegations or how the public interest was served by the
granting of the freeze orders. It was said that since the Commission had had no
such substantive evidence when it granted the freeze orders, the orders were
improper and should not have been granted.

·

June
10, 2019
 Counsel for the Executive Director filed his response,
addressing both the validity of the freeze orders under s. 151 and the
application to revoke them under s. 171. On the latter point, counsel
submitted that the onus was on Pioneer as applicant to demonstrate that it
would not be prejudicial to the public interest to revoke the orders. He argued
that since Pioneer had not tendered any evidence to this effect, it had not
discharged its onus and the application should be dismissed.

With respect to the validity of the freeze orders
themselves, counsel noted that certain parties in other investigations before
the Commission had challenged the constitutional validity of s. 151 and
that the Attorney General, under s. 43(3) of the
Administrative
Tribunals Act
, S.B.C. 2004, c. 45, had required the Commission to
refer the matter to the Supreme Court of British Columbia as a stated case. (I
understand the stated case has now been heard, but not yet decided, by the
Supreme Court: see
In the Matter of certain Applications Before the British
Columbia Securities Commission
, Vancouver Registry, Docket VA S1914058.)
Counsel in the case at bar recommended that the Commission as master of its
own procedures [should] defer ruling on Pioneers submission that s. 151
incorporate[s] factors, a test, or guidelines beyond what is in the
Act
as this issue will be dealt with by the Supreme Court.

·

June 14, 2019
 Counsel for Pioneer filed a reply,
submitting that the Executive Directors position was both tautological and
contrary to the principles of fundamental justice and that:

In any event, Pioneer requests that the Commission conclude
that
it cannot be prejudicial to the public interest to revoke any Order of
the Commission that was granted without evidence
and without compliance
with the law in force in British Columbia.

The evidentiary burden upon the Executive Director in respect
of obtaining the Freeze Orders in the first place is incredibly low and the
failure in this case to even attempt to meet such burden renders the granting
of the Freeze Orders to be itself prejudicial to the public interest and
contrary to the most basic principles of fundamental justice.

In other words, refusing to
revoke
the Freeze Orders would itself be
prejudicial to the public
interest. [Emphasis
added.]

Reasons of September
5, 2019

[12]

The Commission elected to treat the Executive Directors application to
defer the hearing of the application as an adjournment application. Pioneer
opposed the Directors request on the basis that it would be an abuse of
process. Pioneer said it was content
not
to challenge the constitutional
validity of s. 151 and
not
to ask that the panel craft any
particular test or approach to s. 151.

[13]

The Commission set out paras. 151 and 171 of the
Act
and s. 8.10(a) of Commission Policy 15‑601. The latter provides:

Discretion to revoke or vary
A
party may apply to the Commission for an order revoking or varying a decision.
Generally, the Commission does not hold a hearing, it considers written
submissions and makes its decision.
Before the Commission changes a
decision, it must consider that it would not be prejudicial to the public interest.
This usually means that the party must show the Commission new evidence or a
significant change in circumstances.
[Emphasis added.]

[14]

The Commission adopted the reasoning of the panel in
Re BridgeMark
Financial
2019 BCSECCOM 248 that in most circumstances, the intent of
the
Act
is that the tribunal of the Commission, with its presumed
expertise in the subject matter, is best placed to consider all questions of
law and assessments of the public interest that arise from the interpretation
of the
Act
and acts taken by the Commission in furtherance thereof. The
Executive Directors application for an adjournment was dismissed.

[15]

Turning to Pioneers application under s. 171, the Commission
confirmed that in usual circumstances, the onus is on the applicant to show
that revoking the order would not be prejudicial to the public interest.
(Citing
Re Bossteam
2012 BCSECCOM 377 at para. 70.) The
Commission continued:

This general guidance makes
perfect sense in the context of section 171 applications
where the public
interest considerations already form part of the record
. In most cases
these applications are heard by the original decision maker, and occur
following orders issued after substantial proceedings have taken place up to
and including hearings on the merits and orders relating to sanctions for
misconduct.
In the present matter, however, no allegations have been made,
no notice of hearing has been issued and the Applicant has from the Commission
only the Investigation Orders and Freeze Orders upon which to base its
Application.
Furthermore, as this panel did not grant the underlying
orders, we do not have the context and considerations from the original
proceedings, as is often the case in a section 171 application.
In these
circumstances, applying the onus on the Applicant to show new evidence or a
significant change of circumstances makes little sense.
[At para. 43;
emphasis added.]

[16]

The Commission found that it was impossible to consider whether
revoking the freeze orders would or would not be prejudicial to the public
interest in the absence of consideration of at least some of the underlying
evidence. In the result, it adjourned Pioneers application and ordered the
Executive Director to provide the evidence, if any, to the Applicant that was
provided to the Chair for her consideration before issuing the Investigation
Orders and the Freeze Orders sufficient, in the Executive Directors judgement,
to sustain the Freeze Orders.

[17]

Between October and December, 2019, the Executive Director provided Pioneer
with copies of an affidavit of a member of the Commissions investigative staff
to which he exhibited copies of two memoranda. These had been submitted to the
Chair in support of the original investigation orders. The first memorandum was
redacted to protect the identification of a complainant; the second memorandum
was essentially unredacted. Pioneer filed further submissions and a reply was
filed on November 1, 2019.

Reasons of December 30, 2019

[18]

After receiving the further information and submissions, the Commission
panel (being the same panel that had made the September orders) issued a second
set of reasons on December 30, 2019. It began by describing the parties
respective positions. Pioneer continued to assert that the Chair had not had
before her
any

evidence whatsoever
to support her exercise of discretion
to issue the freeze orders in the first instance and that the Commission had
entirely failed to provide even a scintilla of the required evidence of the
public interest, or consideration thereof, to maintain the Freeze Orders. (At para. 7.)
It was said the memoranda expressed only concerns, were based on hearsay and
that the Commission had not been forthright in its dealings with the
subjects. Pioneer did acknowledge that the two memoranda purported to show that
the same individual was sole director and officer of Pioneer and of another
company, Xco, and that Pioneer and Xco had together sold more shares of Yco
than any other person. In addition:

The Applicant also provided information regarding an
individual who the Applicant stated was obviously the Complainant. The
Applicant described civil litigation between [Mr. Z] and the Complainant
and included a copy of an Interim Order of the Court of Queens Bench of
Alberta (Interim Order), which enjoined the Complainant from making further
defamatory statements against [Mr. Z]. The Applicant submitted that the
statements of the nature and type alleged to have been made by the Complainant
to the Commission were of the same nature and type as those subject to the
Interim Order. The Applicant says that this is hugely problematic for the
Commission and for the proper administration of justice in this matter.

. . .

The Applicant submitted that
it remains impossible for the Applicant to tender evidence to satisfy the usual
onus in a section 171 application as the

evidence submitted by the
Commission which is to be addressed by [the Applicant] has either been withheld
or is nonexistent. This amounts to the Commission asserting that the granting
of an investigation order is sufficient, without more, to grant a freeze order
.
The Applicant submitted that the Chair accepted the opinion and conclusions of
an investigator in respect of the evidence of the public interest rather than
having such evidence put to the Chair and having her review such evidence and
draw her own opinions and conclusions. The Applicant says that this is clearly
wrong in law and on the particular facts of this matter and constitutes a
breach of procedural fairness and fundamental justice. [At paras. 9, 12;
emphasis added.]

[19]

For her part, the Executive Director summarized the information gathered
by investigators that had led to the concerns set out in the memoranda. This
information included the following:

o

Securities of Yco were publicly traded

o

[Mr. Z] was actively involved in the business of Yco
including finding projects, asset acquisition opportunities, private financings
and preparing public filings

o

The Complainants serious allegations against [Mr. Z] and
members of his family

o

The Applicant and Xco sold more shares of Yco than any other
person in a specified period

o

[Mr. Z] and [Mr. Z]s family members were trading in
Xco shares without public disclosure

o

Yco had entered into several agreements for investor relations,
leases of land and product purchases with companies controlled by [Mr. Z] (including
named Subjects) and his son (also a named Subject), which agreements were not
disclosed by Yco

o

[Mr. Z] made decisions for Yco including hiring and firing

The Commission investigators set
forth their apprehensions that the information outlined in the Memoranda raised
significant concerns that [Mr. Z] may have been acting as an unreported
de
facto
director of Yco and, if so, Yco had failed to comply with section 85
of the Act and [Mr. Z] had failed to file insider trading reports for the
trading in securities of Yco that the Applicant and Xco had made. Furthermore,
if [Mr. Z] were a
de facto
director of Yco, given [Mr. Z]s
involvement with Yco summarized above, Ycos public filings may have contained
misrepresentations. [At paras. 1516; emphasis added.]

[20]

The Director submitted that the burden needed to support the issuance of
an investigation order is not an onerous one, but that there must be trading
in securities and a basis to conclude that the subjects of the requested order
acted or may act in a manner contrary to the public interest. (At para. 17.)
Freeze orders, she said, may be issued even before an investigation is
commenced and a quick response is often necessary to enhance the Commissions
capacity to protect the capital markets. Echoing statements made in
Re
Samji
,
supra
, she submitted that the issuance of a freeze order does
not require evidence that the property sought to be frozen is closely involved
with the alleged wrongdoing or the dissipation or threatened dissipation of
the assets; nor does it require evidence of a connection between the frozen
assets and the wrongdoing. (At para. 19.)

[21]

In the Directors submission, there
had been
evidence before the
Chair prior to the granting of the freeze orders, i.e., the two memoranda
prepared by staff. Although the Director was not prepared to disclose the identity
of the complainant, she observed that his or her reliability could be tested at
a later stage if the matter proceeded. In the meantime, it was said the order had
been properly issued and that the applicant had provided no evidence of any
prejudice or inconvenience caused to the public by the freeze orders. (At para. 21.)

[22]

The panel began its own analysis at para. 22 of the December
reasons. It rejected Pioneers assertion that there was no evidence at all to
support the freeze orders. This assertion suggested that a high standard of
evidence was required, reflecting a misapprehension by the Applicant of what
the
Act
require[d]. (At para. 23.) The panel noted that
freeze orders may be issued as soon as an investigation is proposed, as well as
during and after an investigation. They may be based on very preliminary
information and their objective is to maintain the
status quo
.

[23]

In this case, the issuance of the freeze orders in May 2019 had been
supported by the second memorandum, which identified further subjects for the
investigation and further potential misconduct. The length of time between the
second memorandum and the issuance of the freeze orders had been reasonable,
given the need to obtain and review financial records and verify details before
the requests for freeze orders could be presented to the Chair. Like
investigation orders, freeze orders do not require that the Commission satisfy
an onerous evidentiary burden. The Commission continued:

Having reviewed the evidence that
was before the Chair prior to issuing the Freeze Orders,
we agree with the
Executive Director that the Chairs exercise of discretion to issue the Freeze
orders required consideration of the public interest in all of the
circumstances known at the time
. The information in the Memoranda provided
to the Chair before she issued the Investigation Orders indicated the
possibility of multiple breaches of securities law including failures to make
required disclosure of [Mr. Z]s de facto directorship of Yco, undisclosed
insider trading by [Mr. Z] and members of his family, failure to report
trading in securities of Yco by [Mr. Z], misrepresentations in public
documents of Yco and possible self- dealing by [Mr. Z]. The affidavits in
support of the Freeze Orders identified assets of the Applicant, which provided
the opportunity to freeze such assets and maintain the
status quo
. [At para. 30;
emphasis added.]

[24]

Accordingly, the Commission found that Pioneers contention there had
been no evidence before the Chair was simply not correct. The information
in the affidavit and memoranda satisfied the burden described in the chambers
decision in
EBT
and fully justified the issuance of the freeze orders.
As far as the public interest was concerned, the Commission found that the
public interest in issuing the freeze orders was compelling. The panel quoted
from
EBT,
where Braidwood J.A. had approved the following reasoning of
the Commission:

In our view, it is not possible to state an evidentiary
test that must be met in every case to support a freeze order.Where a freeze
order is imposed to preserve property at an early stage of an investigation, as
in this case, the
Commission expects staff to review the status of the order
on the basis of the emerging evidence as the investigation unfolds and, if
appropriate, to apply to have an order varied or revoked
. [At para. 33;
emphasis added.]

The panel concluded that the freeze orders had been
validly
issued
in the public interest.

[25]

With respect to Pioneers application for the
revocation
of the
freeze orders, the Commission observed that
Pioneer
had produced no
evidence and, in the Commissions analysis, had failed to make any compelling
argument in support of the conclusion that revoking the orders would not be
prejudicial to the public interest. This application was also dismissed.

[26]

Leave to appeal the Commissions order was granted to Pioneer by a
justice of this court on February 19, 2020.

On Appeal

[27]

In this court, Pioneer stated only one ground of appeal in its factum,
namely that:

the Commission erred in law, or
alternatively in fact and law, in finding that the Freeze Orders were validly
issued and thereon [
sic
] dismissing the Application.

This ground of appeal is stated in such general terms
that no particular error of law or fact can be gleaned from it. Such
compendious grounds are unhelpful to this court and should be avoided. From
the Argument portion of the factum, however, I draw the following grounds of
appeal, namely that the Commission erred in equating the evidentiary burden
required to issue an investigation order with that required for a freeze order;
and that it failed to consider the public interest before granting the freeze
orders.

[28]

In addition, counsel in his oral submissions in this court contended
that the Commissions decision represented a failure of fundamental justice
or a breach of procedural fairness.

The Evidentiary
Burden

[29]

In arguing that the Commission equated the evidentiary burdens required
for investigation orders with those required for freeze orders, Pioneer relied
specifically on the panels comment at para. 29 of its reasons that the
following passage quoted at para. 12 by Braidwood J.A. in
EBT
is also applicable to a freeze order:

In seeking an investigation
order, Commission staff
does not face an onerous evidentiary burden.
Staff
must show that the circumstances relate to the trading of securities and is
expected to provide a basis on which to conclude the subjects of the proposed
investigation have acted, are acting or may act in contravention of the
securities laws of British Columbia or of another jurisdiction or in a manner
contrary to the public interest. [Emphasis added.]

To
ensure that this it will not be taken out of context, I also note the two paragraphs
that followed that passage:

One of the grounds for making an order under section 151
appears to require nothing more than the existence of an investigation order,
or the intention to issue one. However,
a freeze order generally has far
more serious and immediate consequences than an investigation order.
Property of the alleged wrongdoers is immediately affected and the property of
innocent third parties can be captured in the freeze.
The Commission must
therefore consider the seriousness of the allegations and the evidence
supporting them so it can weigh the threat to the public interest against the
potential consequences of the order.

That said, freeze orders are
often made at a very early stage
of an investigation. They are not
determinative of the facts in issue; they are made to preserve property until
the facts can be established, either through investigation or through a hearing
before the Commission.
[
At para. 12;
emphasis added.]

[30]

I do not read the foregoing as equating the evidentiary burden
required for an investigation order with that required for freeze orders. As I
read the reasons, the Commission is saying simply that like investigation
orders, freeze orders do not require that a heavy evidentiary burden be met.
Although the consequences of a freeze order may be onerous in particular
circumstances, the jurisprudence is replete with references to the fact that
the realities of modern technology and instantaneous securities transactions
are such that in the absence of freeze orders, wrongdoers could avoid or circumvent
penalties or compensation ultimately ordered by the Commission, thus rendering
the entire process meaningless.

[31]

The Commission must of course always act in what it believes is the
public interest, no matter what type of order is being contemplated. It seems
to me likely that in most cases, the public interest considerations that are
relevant to the granting of an investigation order will at least overlap with,
if not be the same as, those that are relevant to the granting of a freeze
order. As for the seriousness of the allegations, this may change as the
investigation proceeds, as occurred in this case. There may be circumstances in
which the allegations are not at all serious, or in which serious allegations
are withdrawn, leaving only wrongdoing that would merit nothing more than a
small fine or even only a cease and desist order. In these situations, it
might well be appropriate for the Commission to conclude a freeze order is not
necessary in the public interest, or to vary the terms of an existing order. Or
it may be that a large amount of money belonging to innocent parties is caught
by a freeze order and it becomes apparent that the effects of the order are not
justifiable in the public interest.

[32]

I suspect, however, that such situations are fairly rare. In most
situations, I would suggest that the existence of allegations that if proven
would constitute non‑trivial contraventions of the
Act
and that
could result in adverse financial consequences (be they penalties, damages or
restitutionary orders of some kind) to the alleged wrongdoers would justify the
issuance of a freeze order. As the Commission acknowledged at para. 33 of
its December reasons (quoted
supra
), Commission staff is expected to
monitor the status of freeze orders and if appropriate, apply to have them
revoked or varied. If it becomes apparent the complaining party is not to be
believed (as was argued unsuccessfully by Pioneer in this case) or that the
freeze order is causing serious harm to innocent members of the public, the
onus under s. 171 might well be met. Or the concerns underlying a freeze
order might be addressed by proof of financial means of the alleged wrongdoer.
None of the foregoing situations existed in this case; nor had a long delay in
the bringing of charges against the subjects of the investigation occurred.

[33]

The Commission found that the public interest in
issuing
the
freeze orders was compelling in the present circumstances. These
circumstances consisted primarily of a review of the allegations made by the
complainant, which were not frivolous, and a recounting of the specific facts
alleged in support. By their nature, allegations of breaches of the
Act
will almost always involve conduct that may be contrary to the public interest
in having securities markets that are transparent, honest and efficient and
that inspire investor confidence. I am unable to say the Commission was clearly
and palpably wrong in concluding that the freeze orders in this case were
issued in the public interest, or that the panel exercised its discretion on a
wrong principle or failed to consider all relevant factors.

[34]

I take further comfort from the Commissions September reasons for my
conclusion that the tribunal did not equate the evidentiary burdens required
for investigatory orders and freeze orders respectively. In those reasons, the
Commission fully accepted the passage from
Amswiss
in which it acknowledged
that a freeze order generally has more serious and immediate consequences than
an investigation order and that the Commission must consider all the evidence
supporting the freeze order so that it can weigh the threat to the public
interest against the potential consequence of the order. (At para. 41.)
The Executive Director was given the opportunity to provide the evidence on
which she had relied, and did so. At para. 31 of its December
reasons, the Commission found that:

The
information contained in the affidavits and Memoranda satisfies the evidentiary
burden set forth in [
EBT
] and thereby fully justified the issuance of
the Freeze Orders.
This potential misconduct may also cause serious harm to
investors and Yco if the status quo is not maintained
. [Emphasis added.]

[35]

I am not persuaded that the Commission erred in law in misapprehending
the evidentiary burdens required to issue investigative orders and freeze
orders, or that the Commission erred in the application of the law to the facts
(i.e., the evidence put before the Commission prior to the December hearing)
before it. I would not accede to this ground of appeal.

Applied Wrong
Test?

[36]

At para. 11 of its factum, Pioneer asserts that:

The Decision does not address the
requirement that the Chair consider the seriousness of the allegations and the
evidence supporting those allegations, and then weigh the threat to the public
interest against the potential consequences of the Freeze Orders prior to
granting the Freeze Orders.

It is
true that nowhere in its December decision did the Commission
expressly
ask itself whether the allegations being investigated against Pioneer were
serious. However, it will be recalled that the information gathered during
the course of the investigation included those items listed in para. 15 of
the reasons, including a reference to the Complainants serious allegations
against [Mr. Z] and members of his family. The Commission continued:

The Commission investigators set
forth their apprehensions that the information outlined in the Memoranda raised
significant concerns that [Mr. Z] may have been acting as an unreported de
facto director of Yco and, if so, Yco had failed to comply with section 85 of
the Act and [Mr. Z] had failed to file insider trading reports for the
trading in securities of Yco that the Applicant and Xco had made. Furthermore,
if [Mr. Z] were a
de facto
director of Yco, given [Mr. Z]s
involvement with Yco summarized above, Ycos public filings may have contained
misrepresentations. [At para. 16.]

[37]

It may be that Pioneer or counsel do not regard these allegations as
serious, but I cannot say that the Commission would be clearly and palpably
wrong to so characterize them. Nor did the Commission consider a factor it
should not have or fail to consider a relevant matter. It did, for example,
consider the fact that an interim stay had been granted by an Alberta court in
a defamation action against the alleged complainant in this case; but the
Commission was apparently of the view that that evidence was not determinative
at that point.

[38]

I would not accede to this ground of appeal.

Breach of
Procedural Fairness?

[39]

Finally, counsel for Pioneer asserted at the hearing of the appeal that
it and the other subjects of the investigation were denied fundamental justice
as a result of the process followed in this case. In particular, Pioneer
asserts that in addressing the validity of a freeze order, procedural fairness
requires that the Commission produce the evidence relied upon by the Chair and
the Commission in granting [the Freeze Order]. It also suggested that if the Chair
had attempted to address the allegations made against Pioneer, it would have
been apparent to her that the allegations were unsubstantiated. In summary,
Pioneer says the Chair did not engage in the evidentiary and weighing
analyses mandated by the governing authorities before issuing the freeze
orders.

[40]

In my view, this argument must also fail. In its September reasons, the
Commission acknowledged that it would be procedurally unfair to the Applicant
to require it to tender evidence or provide a factual basis that revocation of
the Freeze Orders would not be prejudicial to the public interest

while at the

same time withholding the
evidence that was before the chair when she granted the investigative orders
and the freeze orders. The Commission explained that in most instances,
applications for the variation or revocation of a previous order are heard by
the original decision-maker after substantial proceedings have taken place, up
to and including hearings on the merits. In the circumstances of this case,
however, the panel had not granted the underlying orders and therefore did not
have the context and considerations from the original proceedings, as is often
the case in a section 171 application and no specific allegations had yet been
made or notice of hearing issued. (At para. 42.) As seen above, the
Commission found it would be impossible to proceed under s. 171 in the
absence of consideration of at least some of the underlying evidence.

[41]

As we have seen, by the time of the December hearing, the affidavit and
memoranda had been provided to the Commission. It found at the end of the day
that that information fully justified the issuance of the Freeze Orders and
that the public interest in maintaining those orders was compelling.

[42]

I agree with the Commission that it was simply not the case that there
was no evidence before the Commission that could have justified the issuance
of the freeze orders. The fact that this evidence may not have complied with
the rules of evidence is not fatal: s. 173(c) of the
Act
provides
that the Commission is generally not bound by the rules of evidence in
conducting a hearing. This means that information provided by a complainant may
be relied upon even though he or she has not been cross-examined on it. At this
stage, the Commission is not called upon to assess the merits of the complaint
or to assess the credibility of the complainant or anyone else.

[43]

In my view, no breach of the rules of procedural fairness has been
shown.

Disposition

[44]

For the foregoing reasons, I would dismiss the appeal. I emphasize that
Pioneer expressly elected not to advance any constitutional argument in this
case regarding s. 151. These reasons should not be read as commenting on
that issue in any way.

The Honourable Madam Justice Newbury

I agree:

The
Honourable Madam Justice Saunders

I agree:

The Honourable Mr. Justice
Harris

Schedule of Legislation

Appeal of commission
decision

167
(1)
A person directly affected by a decision of the commission, other than

(a) a decision under
section 48 or 76,

(b) a decision under
section 165 in connection with the review of a decision of the executive
director under section 48 or 76, or

(c) a decision by a
person acting under authority delegated by the commission under section 7,

may appeal to the
Court of Appeal with leave of a justice of that court.

(2) The commission or the Court of Appeal may grant a stay of the
decision appealed from until the disposition of the appeal.

(3) If an appeal is taken under this section, the Court of Appeal may
direct the commission to make a decision or to perform an act that the
commission is authorized and empowered to do.

(4) Despite an order of the Court of Appeal in a particular matter, the
commission may make a further decision on new material or if there is a
significant change in the circumstances, and that decision is also subject to
this section.

(5) The commission is a
respondent to an appeal under this section.

Order to freeze property

151
(1)
The commission may make a direction under subsection (2) if

(a) it proposes to order
an investigation in respect of a person under section 142 or during or after an
investigation in respect of a person under section 142 or 147,

(b) it or the executive
director proposes to make or has made an order under section 161 in respect of
a person,

(c) criminal proceedings
or proceedings in respect of a contravention of this Act or the regulations are
about to be or have been instituted against a person and the commission
considers the proceedings to be connected with or to arise out of a security or
exchange contract or a matter relating to trading in securities or exchange
contracts, or out of any business conducted by the person,

(d) a person fails or
neglects to comply with financial conditions applicable to the person under
this Act, or

(e) it proposes to apply
or has applied to the Supreme Court for an order under section 157, or the
Supreme Court has made an order under section 157.

(2) In the circumstances described in
subsection (1), the commission may direct, in writing,

(a) a person having on
deposit, under control or for safekeeping any funds, securities, exchange
contracts or other property of the person referred to in subsection (1), to
hold those funds, securities, exchange contracts or other property, and

(b)
a person referred to in subsection (1)

(i) to refrain from
withdrawing any funds, securities, exchange contracts or other property from
any person having them on deposit, under control or for safekeeping, or

(ii) to hold all
funds, securities, exchange contracts or other property of clients or others in
the person's possession or control in trust for an interim receiver, custodian,
trustee, receiver manager, receiver or liquidator appointed under the
Bankruptcy
Act
(Canada), the
Company Act
, the
Business Corporations Act
,
the
Law and Equity Act
, the
Personal Property Security Act
, the
Winding-up
Act
(Canada), the
Supreme Court Act
or this Act.

(3) In the case of a savings institution, a direction of the commission
under subsection (2) applies only to the offices, branches or agencies of the
savings institution that are named in the direction.

(4) A direction of the commission under subsection (2) does not apply
to funds, securities, exchange contracts or other property in a clearing agency
or to securities in process of transfer by a transfer agent unless the
direction expressly so states.

(5) In any of the circumstances referred to in subsection (1), the
commission may, in writing, notify a land title office or gold commissioner
that proceedings are being or are about to be taken that may affect land or
mining claims belonging to the affected person.

(6) The commission may, in writing, revoke or modify a notice given
under subsection (5) and, if a notice is revoked or modified, the commission
must send a copy of the written revocation or modification to the land title
office or gold commissioner, as the case may be.

(7) A notice sent under
subsection (5) or a copy of a written revocation or modification under subsection
(6) must be registered or recorded against the lands or claims mentioned in it
and has the same effect as the registration or recording of a certificate of
pending litigation or a caveat.

Discretion to revoke or vary decision

171    If the
commission, the executive director or a designated organization considers that
to do so would not be prejudicial to the public interest, the commission,
executive director or designated organization, as the case may be, may make an
order revoking in whole or in part or varying a decision the commission, the
executive director or the designated organization, as the case may be, has made
under this Act, another enactment or a former enactment, whether or not the
decision has been filed under section 163.

Authority
of persons presiding at hearings

173

The person
presiding at a hearing required or permitted under this Act

(c)
is not
bound by the rules of evidence.


COURT OF APPEAL FOR BRITISH COLUMBIA

Citation:

R. v. MacKay,

2021 BCCA 87

Date: 20210104

Docket: CA44514

Between:

Regina

Respondent

And

Kurk Joshua MacKay

Appellant

And

Ministry of
Children and Family Development

Intervenor

Restriction
on publication:
A publication
ban has been mandatorily imposed under
s. 486.4(2) of the
Criminal
Code
in cases
involving sexual offences to ban the
publication, broadcasting or transmission in any way of evidence that could
identify a
complainant or any witness under the age of 18. This publication ban
applies
indefinitely unless otherwise ordered.

Pursuant
to s. 16(4) of the
Sex Offender Information Registration Act
[
SOIRA
],
no
person shall disclose any information that is collected pursuant to an order
under

SOIRA
or the fact that information relating to a person is collected
under
SOIRA
.

FILE
SEALED IN PART

Before:

The Honourable Mr. Justice Willcock

The Honourable Madam Justice Dickson

The Honourable Mr. Justice Butler

On appeal from:  An
order of the Supreme Court of British Columbia, dated
March 9, 2017 (
R. v. MacKay
, Victoria Docket 165264).

Oral Ruling re
In Camera
Proceedings

Counsel for the Appellant

(via videoconference):

T.J. Russell

Counsel for the Respondent

(via videoconference):

M.G. Scott

Counsel for the Intervenor

(via videoconference):

L. Hawes

Place and Date of Hearing:

Vancouver, British
  Columbia

January 45, 2021

Place and Date of Judgment:

Vancouver, British
  Columbia

January 4, 2021

Summary:

The appellant applies for an
order that the entire appeal be held in camera, or, in the alternative, an
order that the grounds of appeal addressing errors relating to the trial
judges application of ss. 278.93 and 278.3 of the Criminal Code be
held in camera. Held: Application granted in part. The application to hear the
entire appeal in camera is dismissed, but the application to hear the grounds
of appeal addressing ss. 278.93 and 278.3 in camera is granted.

[1]

WILLCOCK J.A.
: The appellant applies for an order that this
appeal be heard
in camera
pursuant to s. 9 of the
Court of
Appeal Act
, R.S.B.C. 1996, c. 77, and our general jurisdiction.

[2]

In the alternative, he seeks an order that those aspects of the appeal
founded upon the grounds the trial judge erred in addressing the application
pursuant to s. 278.93 of the
Criminal Code
, R.S.C. 1985,
c. C‑46 for the determination that evidence of a complainants
sexual activity might be admitted into evidence be heard
in camera
,
and an order that that aspect of the appeal founded on the grounds of the trial
judge erred in addressing an application for production of third party records
in possession of the intervenor, Ministry of Children and Family Development,
be heard
in camera
.

[3]

We are of the view the application to hear the entire appeal
in camera
ought to be dismissed.

[4]

We will hear those grounds of appeal founded upon the alleged error in
addressing s. 278.93 in relation to a complainants prior sexual activity,
and the appeal founded upon an alleged error in relation to s. 278.3 for
production of third party records
in camera
. These appeals may require
us to make determinations that are required to be made following an
in‑camera
hearing pursuant to the applicable provisions of the
Criminal Code
.

The Honourable Mr. Justice
Willcock

The Honourable Madam Justice
Dickson

The
Honourable Mr. Justice Butler


COURT OF APPEAL FOR BRITISH COLUMBIA

Citation:

R. v. Baranec,

2021 BCCA 18

Date: 20210107

Docket: CA44035

Between:

Regina

Respondent

And

Eduard Viktorovitch Baranec

Appellant

Restriction
on publication:  A publication ban has been imposed under s. 486.5(1)
and s. 486.5(9) of the
Criminal Code
restricting the publication,
broadcasting or
transmission in any way of information that could identify the undercover
police
officers in this case. This publication ban applies indefinitely unless
otherwise
ordered.

Before:

The Honourable Madam Justice Saunders

(In Chambers)

On appeal
from:  An order of the Supreme Court of British Columbia, dated
October 8, 2016 (
R. v. Baranec
, New Westminster Docket X075945).

Oral Reasons for Judgment

No one appearing on behalf of the Appellant

Counsel for the Respondent

(via teleconference):

S.E. Elliott

Counsel for the Attorney General of Canada on behalf of
  the RCMP

(via teleconference):

J.I. Katz

Place and Date of Hearing:

Vancouver, British
  Columbia

January 7, 2021

Place and Date of Judgment:

Vancouver, British
  Columbia

January 7, 2021

Summary:

A ban restricting
publication of information that may identify undercover police officers is
renewed indefinitely with the same term for setting it aside as was contained
in a previous order of the court.

[1]

SAUNDERS J.A.
: This is an application for a renewal of a
publication ban order that was granted on May 1, 2018 by Mr. Justice
Willcock, that has now expired, as has the trial courts order.

[2]

Mr. Nathanson, who has acted for Mr. Baranec, most recently in
the Supreme Court of Canada on the leave application, has indicated that Mr. Baranec
takes no position on the application.

[3]

It is likely that it was expected the renewal would be taken up by the
division that heard the appeal, but it was not.

[4]

The publication ban sought to be renewed is to restrict publication of
any documents or information that could identify the identity of undercover
police officers, including any pseudonyms, and so on. The application seeks the
same terms as the last publication ban that was issued by this court. Quite
obviously, a publication ban should continue. The appeal has been disposed of,
and I understand the proceedings in the Supreme Court of Canada also have concluded.

[5]

The application is granted. Any interested party may apply to set aside this
order on three clear days notice.

The
Honourable Madam Justice Saunders


COURT OF APPEAL FOR BRITISH COLUMBIA

Citation:

Xu v. Hu,

2021 BCCA 2

Date: 20210107

Dockets: CA43073;
CA43079

Docket: CA43073

Between:

Tianyun Xu also
known as Terence Xu

Respondent/

Appellant on Cross
Appeal

(Claimant)

And

Yuenyuen Hu also
known as Betty Hu

Respondent/

Respondent on Cross
Appeal

(Respondent)

And

Vancouver
International Enterprises Ltd., and

Best Honour
International Trading & Investment Co. Ltd.

Appellants/

Respondents on Cross
Appeal

(Respondents)

-
and -

Docket: CA43079

Between:

Tianyun Xu also
known as Terence Xu

Respondent/

Appellant on Cross
Appeal

(Claimant)

And

Yuenyuen Hu also
known as Betty Hu

Appellant/

Respondent on Cross
Appeal

(Respondent)

And

Vancouver
International Enterprises Ltd., and

Best Honour
International Trading & Investment Co. Ltd.

Respondents/

Respondents on Cross
Appeal

(Respondents)

Before:

The Honourable Madam Justice Fenlon

The Honourable Mr. Justice Hunter

The Honourable Mr. Justice Butler

On appeal from:  Orders
of the Supreme Court of British Columbia, dated
August 10, 2015 (
Xu v. Hu
, 2015 BCSC 1400, Vancouver Docket E120635);
December 8, 2017 (
Xu v. Hu
, Vancouver Docket E120635); and July 23, 2019
(
Xu v. Hu
, 2019 BCSC 1336, Vancouver Docket E120635).

Counsel for Vancouver International Enterprises Ltd., and
  Best Honour International Trading & Investment Co. Ltd., appearing via
  videoconference:

L.N. MacLean, Q.C.

S. Chen

Counsel for Tianyun Xu also known as Terence Xu, appearing
  via videoconference:

C.J. Cao

Counsel for Yuenyuen Hu also known as Betty Hu, appearing
  via videoconference:

H.B. Chiu

L.B. Williams

Place and Date of Hearing:

Vancouver, British
  Columbia

September 21, 2020

Place and Date of Judgment:

Vancouver, British
  Columbia

January 7, 2021

Written Reasons by:

The Honourable Madam Justice Fenlon

Concurred in by:

The Honourable Mr. Justice Hunter
The Honourable Mr. Justice Butler

Summary:

The parties sought a divorce
and division of assets, including the family residence held by a corporation
controlled by the wifes parents. The trial judge granted the divorce, declared
the family residence to be subject to an express trust in favour of the wife
and therefore a family asset, and divided the interest equally between the
spouses. Held: Appeal allowed in part, express trust declaration set aside. The
facts found by the judge did not establish the requisite certainties of
intention and object. Characterization and division of other assets not
disturbed, as the trial judge made the best of an inadequate evidentiary record
and unreliable testimony. All parties to bear their own costs given their
litigation misconduct in misleading the court.

Reasons for Judgment of the Honourable
Madam Justice Fenlon:

[1]

This appeal turns primarily on whether the judge erred in finding
that a corporate-owned family residence was subject to an express trust in the
wifes favour and therefore a family asset. Yuenyuen Hu, also known as Betty Hu,
appeals that finding (CA43079), as do the corporate appellants, Vancouver
International Enterprises Ltd. (VIE) and Best Honour International Trading &
Investment Co. Ltd. (BHIT): CA43073. The respondent husband, Tianyun Xu, also
known as Terence Xu, cross appeals in both proceedings, seeking a larger share
of that asset and the setting aside of an order directing him to bear 50% of
the residences expenses. Ms. Hu and Mr. Xu also appeal orders determining
and dividing other assets.

[2]

For the reasons that follow, I would allow the appeal in part,
setting aside the orders declaring that BHIT holds the family residence in
trust for Yuenyuen Hu and dividing the beneficial interest in that property
between Ms. Hu and Mr. Xu.

Background

[3]

The parties married in 2002. At the time, Mr. Xu was living
and working in Beijing. He moved to Vancouver to join Ms. Hu and her son
from a previous marriage and to begin working in the seafood business owned by Ms. Hus
wealthy parents, Mr. Hu and Ms. Fan. That business consists of the two
corporate appellants, BHIT and VIE, as well as Best Honour International
Seafood Ltd. (BHIS). After marrying, Ms. Hu continued her employment as
a manager in the family business. Mr. Xu initially worked receiving
shipments of fresh seafood but eventually took on a more significant role.

[4]

After the couples son was born in 2005, BHIT purchased a home on
Marguerite Street in Vancouver and the family resided there until Mr. Xu
and Ms. Hu separated in 2012. BHIT paid the mortgage, property taxes, and renovation
and insurance costs, while the couple took care of routine home maintenance. Ms. Hus
annual tax forms recorded a taxable housing benefit reflecting the use of the
Marguerite Street property.

[5]

Following a 26-day trial, the judge resolved a range of issues,
including the enforceability of a separation agreement initially drawn up by Ms. Hu,
the pool of family assets, spousal and child support, responsibility for
extraordinary expenses, and eligibility for a divorce. She determined the
Marguerite Street property was the subject of an express trust in favour of Ms. Hu
and that, like the other family assets, it should be apportioned equally
between the spouses.

[6]

Most of the orders made are not in issue on this appeal, so I
need not review the judges reasons for making them. Of note, however, is her
assessment of the parties credibility:

[27]
This is a case in which I cannot accept all, or
even much, of the evidence of any party or its principals. To varying extents,
all were careless with the truth, self-serving and argumentative or dissembling
while on the witness stand. On balance, Mr. Xu suffered least from these
testimonial deficiencies, but, given their magnitude in others, this is hardly
praiseworthy. The net result, mildly put, is that finding facts on disputed
matters has been unusually challenging.

[28]      Mr. Xu, Ms. Hu and Mr. Hu all seemed
to have trouble answering many of the questions posed on direct and cross
examination. Instead, they launched into long soliloquies or rambled off on
tangents with regrettable frequency. In addition,
none of the three seemed
to strive much for factual accuracy. Their trial testimony often differed from
contemporaneous documents, previous affidavit or discovery evidence and, when
confronted, the common reaction was to shrug off the inconsistency dismissively
or project blame elsewhere
. For her part, Ms. Fan mostly parroted what
her husband said.

[Emphasis added.]

[7]

The judge was faced with the almost insurmountable task of
finding the truth about what had occurred despite the parties marked failure
to assist the court in that exercise.

[8]

Although the judge found Mr. Xu suffered least from these
testimonial difficulties, that assessment shifted markedly after she granted the
appellants application to reopen the trial. In unpublished oral reasons
delivered on December 8, 2017 (supplementary reasons), the judge described
the events leading to the reopening this way:

[5]        Shortly after the reasons were issued, Ms. Hus
counsel learned that Mr. Xu had recently become the registered owner of
two houses on the west side of Vancouver, 8556 Oak Street and 2134 West 53
rd
Avenue. Searches revealed that he purchased 8556 Oak Street for $1,165,000 on
February 18, 2015, two months after final argument completed, and he purchased
2134 West 53
rd
for $2,160,000 on August 20, 2015, 10 days after the
reasons were issued. The searches also revealed mortgages with Mr. Xu as
borrower registered on both properties.

[6]        On the face of it,
these facts were starkly at odds with the picture Mr. Xu painted of his
financial circumstances and prospects at trial only a few months earlier. In
particular, he would plainly not have been able to afford such purchases or to
qualify for mortgages if this trial description of his financial had been
accurate.

[9]

After setting out a litany of deficiencies in Mr. Xus
evidence on the reopening, the judge said:

[14]
The foregoing are but a few examples of Mr. Xus
many false, or at best, misleading statements
regarding his financial
circumstances that came to light when the trial was reopened. Mr. Xu made
some of these false statements inside the courtroom and he made others outside
the courtroom. As discussed below,
considered together, they affect my
previously expressed view that Mr. Xu suffered the least from testimonial
deficiencies as compared to Ms. Hu and Mr. Hu. In my view, what they
demonstrate is that he testified in an equally deficient way
.

[Emphasis added.]

[10]

With that sorry context, I turn to the grounds of appeal.

Analysis

1.       Did the judge err in
finding that the Marguerite Street property was subject to an express trust?

[11]

I begin by noting that, although Mr. Xu pleaded express, constructive,
and resulting trusts, he did not pursue an express trust claim at trial.
Instead, he argued that he was entitled to an interest in the Marguerite Street
property either as a matter of
contract or constructive trust
. The claim
in contract was based on Mr. Hus alleged promise to buy a big house for
Mr. Xu within two years of arriving in Canada if he worked hard in the
family seafood business. The constructive trust claim was based on Mr. Xus
contributions to the seafood business and his maintenance of the Marguerite
Street property. On appeal, Ms. Hu and the corporate parties do not take
issue with the judges conclusion that it was open to her to decide the case
before her on the basis of an express trust. I will accordingly proceed on that
assumption.

[12]

Express trusts are established when the certainties of intention,
subject, and object have been established, and the property has been vested in
the trustee:
Suen v. Suen,
2013 BCCA 313 at para. 45.

[13]

The onus of establishing each of the certainties
lies with the party asserting the trusts existence:
McInerney v. Laass,
2015
BCSC 1708 at para. 36. The standard of proof is the usual civil balance of
probabilities:
Pavlovich v. Danilovic,
2020 BCCA 239 at para. 27.

[14]

Certainty of intention is a question of fact; certainty of
subject and object are questions of mixed fact and Law:
Grewal v. Khakh
,
2018 BCCA 357 at para. 24. Thus, the trial judges conclusion that the
requisite certainties were satisfied is reviewable on a standard of palpable
and overriding error, except for any extricable questions of law, which are
reviewable on a standard of correctness:
Housen v. Nikolaisen
, 2002 SCC
33.

[15]

The settlors intention is the critical element
for the creation of an express trust. As explained by Deschamps J.: Express or
true trusts arise from the acts and intentions of the settlor and are
distinguishable from other trusts arising by operation of law:
Century
Services Inc. v. Canada (Attorney General),
2010 SCC 60 at para. 83.
As explained by A. H. Oosterhoff, Robert Chambers & Mitchell McInnes in
Oosterhoff
on Trusts: Text, Commentary and Materials,
8th ed. (Toronto: Carswell, 2014)
at 193194:

Certainty of intention is a question of
construction. That intention may be express or implied, it may arise from words
or acts
. Technical language need not be used. A
settlor may create a trust without using the word trust and, indeed, without
fully understanding the concept of trusteeship.

Nor is there any magic in words.
intention
ultimately is a matter of substance rather than form
. Language alone cannot
create a trust.

[Emphasis
added.]

[16]

However, it is not
enough for the purported settlor to intend for another party to benefit; they
must have intended for the other party to benefit
on trust
: Donovan W.M.
Waters, Mark R. Gillen & Lionel D. Smith,
Waters Law of Trusts in
Canada,
4th ed. (Toronto: Carswell, 2012) at 143144. Since
Milroy v.
Lord
(1862), 4 De. G.F. & J. 264adopted in BC in
Re Mee
(1971),
23 D.L.R. (3d) 491 (B.C.C.A.); courts have been unwilling to allow imperfect
gifts to take effect as a declaration of trust. Therefore, where the intention
to benefit is clear, the crucial inquiry is whether the donor intended the
property as a gift or as a trust.
If the benefit was intended as a gift, the court cannot convert it into a
trust.

[17]

Although no particular form of words is required to constitute a
trust, there must be a clear declaration of trust to avoid imperfect gifts
being given effect as trusts:
Paul v. Constance
, [1976] 1 W.L.R. 527
(C.A.) at 531. Further, the donor should have evinced by acts which admit of
no other interpretation, that he himself has ceased to be, and that the other
person has become, the beneficial owner:
Heartley v. Nicholson
(1875),
L.R. 19 Eq. 233 (Eng. Ch.) at 242. In
Richards v. Delbridge
(1874), L.R.
18 Eq. 11, Jessel M.R. said:

It is true he need not use the
words I declare myself a trustee, but he must do something which is
equivalent to it, and use expressions which have that meaning, for, however
anxious the court may be to carry out a mans intentions,
it is not at
liberty to construe words otherwise than according to their proper meaning
.

[Emphasis added.]

[18]

Compounding the difficulty of discerning the settlors intention,
in British Columbia, trusts are specifically exempted from the general
requirement that dispositions of land be evidenced in writing:
Law and
Equity Act,
R.S.B.C 1996, c. 253, s. 59(1)(a).

[19]

The judge in the present case concluded that certainty of
intention had been established. She found that Mr. Hu unambiguously told Ms. Hu
and others that the Marguerite Street house was being gifted to her: at para. 162.
She found that Mr. Hus goal in creating the trust was to protect his
daughters interest in the house from claims by Mr. Xu (at para. 164),
but concluded he had failed in that objective because a trust property that
would be a family asset if owned by a spouse is a family asset: s. 58(3)
of the
Family Relations Act,
R.S.B.C 1996, c. 128 [
FRA
]
.

[20]

Addressing the remaining elements of an express trust, the judge
said:

[166]    The first certainty
is thus established. The same is true of the second and third.
The subject
of the trust is the equity in the Marguerite Street house. The only person
intended to benefit is Ms. Hu, who is its object. Although Mr. Hu
referred to Mr. Xu in some of the statements
he made, given the nature
and circumstances of the family relationship and his other conduct,
I find
he intended to give the beneficial interest in the house to Ms. Hu alone
.

[Emphasis added.]

[21]

In my view, and with great respect to the judge who was faced with
a most challenging record, the findings of fact she relied on fall short of
establishing the certainties of intention and object.

[22]

First, the judge found that Mr. Hu told Ms. Hu and
others that the Marguerite Street property was being
gifted
to Ms. Hu.
The use of the word gift is not conclusive, but it is a very strong
indication that a gift was intended. I note as well that there is a presumption
that parties usually intend to gift, but rarely intend to constitute themselves
as trustees:
Oosterhoff
at 256.

[23]

Second, the judge found Mr. Hu told Mr. Xu that the
house was for
Mr. Xu and Ms. Hu
, that Mr. Hu wanted the
company to pay the mortgage for tax-saving purposes, and that
once the
mortgage was paid title would be transferred into Mr. Xus and Ms. Hus
name
: at para. 91. Although the judge found these statements did not
necessarily reveal Mr. Hus true reasons for putting the house in BHITs
name (at para. 95), in my view, they are consistent with an intention to
make a future gift to both spouses and do not support an intention to immediately
transfer a beneficial interest to Ms. Hu alone.

[24]

Third, the judge accepted the evidence of Kong Hung Tsui, a guest
at a dinner party hosted by Ms. Hus parents at their home shortly after
the Marguerite Street house was purchased. Ms. Tsui testified that Mr. Hu
told those present he had purchased a house on the west side of Vancouver for
his daughter and son-in-law to live in. This evidence is ambiguous as to
whether the house was being purchased as a gift or being purchased to provide
the couple with a rent-free place to live, but in either case, the statement
does not support an intention to make only Ms. Hu the object of a trust.

[25]

Finally, the judge found the following statements made to
witnesses Lina Xu and Kangkang Wang supported an intention to give a beneficial
interest in the house to Ms. Hu alone:

[98]

i.          when Mr. Xus
friend, Mr. [Wang], visited the Marguerite Street house in November 2005 Ms. Hu
gave him a tour and told him her parents bought the house and
gave it to her
and Mr. Xu
; and

ii.         over
dinner attended by Mr. Xus sister, Ms. Xu, in 2005, Mr. Hu
remarked on how lucky Mr. Xu and Ms. Hu were because they did not
have to pay a mortgage and got to live in a big house and Ms. Fan told Mr. Xus
mother she didnt have to worry about her son because
we bought them a big
house, best location
.

[Emphasis added.]

[26]

All of the statements relied on refer to the house being intended
for both Mr. Xu and Ms. Hu. The judge nonetheless relied on the nature
and circumstances of the family relationship and [Mr. Hus] other conduct
to conclude that he intended the beneficial interest to pass only to Ms. Hu:
at para.166. The difficulty with this conclusion is that it contradicts the
very words relied on to create the trust. In addition, the nature and
circumstances of the family relationship and Mr. Hus other conduct must
refer to Mr. Hus apparent antipathy towards Mr. Xu. However, the
relevant time to determine certainty of objects is the time the trust is
created:
Champoise v. Prost,
2000 BCCA 426 at para. 16. In the
present case, that was October 2005, when the Marguerite Street property was
purchasedthe same year the couples son was born. The judge expressly rejected
Mr. Hus evidence at trial that he disliked Mr. Xu from the outset
and did not speak to him prior to his arrival in Canada: at para. 64. She found
that Mr. Hu wanted Mr. Xu to marry Ms. Hu and come to Canada to
work for him. In particular, he wanted a suitable husband for his daughter and
a suitable son-in-law with whom to work : at para. 69. In my view, Mr. Hus
change in attitude towards his son-in-law after the date on which the trust was
alleged to have been created cannot be used to override the intention he
expressed that the house was purchased for both Ms. Hu and Mr. Xu.

[27]

In my respectful view, the judges findings of fact do not
establish the certainties of intention and object necessary to establish an
express trust. The statements relied on are consistent with either an imperfect
gift or an unenforceable gratuitous promise to transfer the house to Ms. Hu
and Mr. Xu at a future date:
Oosterhoff
at 248. More importantly,
the words relied on do not amount to a clear declaration of trust that admit
of no other interpretation:
Heartley
at 242.

[28]

I note that the judge did not have direct evidence about whether Mr. Hu
intended to create a trust because Mr. Xu did not advance this claim at
trial. Nor did the judge have the benefit of submissions on the issue.

[29]

Because all three certainties must be proved to establish an
express trust, it is not necessary to consider whether certainty of the subject
matter of the trust could be established given the ambiguity in whether Mr. Hus
words referred to the entire property or only the equity in the property.

[30]

Nor is it necessary to address the corporate appellants
submission that the judge erred in finding that BHIT purchased the Marguerite
Street property for Mr. Hu as his agent, and that his declarations were therefore
capable of causing BHIT to hold the beneficial interest in trust for Ms. Hu
(at para. 162). The corporate appellants contend that a corporation can
act only by way of resolution, and as no corporate resolutions or other
documentary evidence supported an intention on the part of BHIT to grant a
beneficial interest in the property to Ms. Hu, no trust could have been
created, let alone through the statement of a 50% shareholder.

[31]

In conclusion on this ground of appeal, I would set aside the
declaration that BHIT held the Marguerite Street property in trust for Ms. Hu.

[32]

As a result of that conclusion, a number of other grounds of
appeal fall away. Following trial, the Marguerite Street property was sold in
February 2018, with the proceeds of sale held in trust pending the resolution
of these proceedings. The sale triggered tax obligations for BHIT in the range
of 2 to 3.5 million dollars. The parties applied for directions: first, as to
the responsibility of the various parties for the tax obligations; and second,
as to the responsibility for expenditures of BHIT on Marguerite Street while
the couple resided there, including property taxes, insurance, and renovation
expenses. A chambers judge heard the applications, and ordered Ms. Hu and Mr. Xu
to pay for the taxes and expenses out of the sale proceeds as family debt before
dividing the remaining funds. Mr. Xu, in his cross-appeal, challenges this
order, but the parties agree that in the event it is determined that BHIT held
both the legal and beneficial title to the Marguerite Street property, (as it
now has been), Mr. Xu will not be required to pay taxes and expenses relating
to that asset. It follows that Mr. Xus appeal from that order must be
allowed and the order set aside.

[33]

Similarly, the appeals from the order apportioning the Marguerite
Street propertyMs. Hu having received 75% on the reopening and each of Ms. Hu
and Mr. Xu on appeal seeking up to 100% of that assetare no longer in
issue, and the orders relating to division of that asset should be set aside.

[34]

I turn now to the remaining grounds of appeal.

2.       Did the judge err in
refusing to allow Mr. Xu to claim a constructive trust in the corporate
appellants?

[35]

On appeal, Mr. Xu argues that his salary was not
commensurate with his contributions to the family business. He contends the
corporate appellants were unjustly enriched by his work and, therefore, that he
is entitled to a constructive trust interest in the corporate appellants. This
ground of appeal can be dealt with summarily.

[36]

The judge began her judgment by grappling with which of the
claims advanced at trial could be addressed. She ruled that Mr. Xu could
not pursue a constructive trust remedy against the corporations because he had
not pleaded an unjust enrichment claim in relation to BHIT and VIE and had, in
fact, abandoned those claims by consent shortly before the trial commenced: at para. 18.
On appeal, Mr. Xu does not argue that the judge erred in so holding; instead,
he attempts to argue the merits of the unjust enrichment claim for the first
time in this Courta course that is patently not open to him.

3.       Did the judge err in
finding the insurance policy on Ms. Hus life to be a family asset?

[37]

The judge found that a whole life insurance policy owned by Ms. Hu
at the time of her marriage was a family asset under s. 58 of the
FRA
because it was ordinarily used for a family purpose: at para. 175.

[38]

Ms. Hu contends the judge erred in so finding because BHIS
paid the premiums, and her parents were the named beneficiaries, not Mr. Xu.

[39]

I see no error in the judges finding. Because this was a whole
life policy, it had monetary value that increased over time and could be cashed
in at any pointas it eventually was for $109,936. As the owner of the policy, Ms. Hu
was able to make use of that asset whenever she chose. There was accordingly
evidence to support the judges finding that the policy provided Ms. Hu,
and by extension, her husband, with a measure of security, which was a family
purpose within the meaning of s. 58 of the
FRA
.

4.       Did the judge err in
finding that properties acquired by Mr. Xu after the marriage ended were
not family assets?

[40]

Ms. Hu says that the judge erred in finding that she was not
entitled to a 50% share of properties acquired by Mr. Xu when the first
trial came to a close and shortly thereafter. In issue are three properties in
Vancouver. First, a property held in Mr. Xus mothers name at 8568 Oak
Street, purchased in October 2014 for $1,090,000; second, a property acquired
in Mr. Xus name at 8556 Oak Street in February 2015 for $1,165,000; and
third, a property acquired in Mr. Xus name at West 53rd Avenue in August
2015 for $2,160,000. Mr. Xu is registered as the borrower on both of the
latter properties mortgages: supplemental reasons at para. 5.

[41]

On the reopening to address these properties, the judge was once
again faced with an unsatisfactory evidentiary record. She noted that Mr. Xu
did not call any witnesses to corroborate his version of events that the
properties belonged to his mother and his new romantic partner, Ms. Liu.

The judge described Mr. Xus testimony as follows:

[17]      Mr. Xu testified further that he met Ms. Liu
in 2014 but they did not become common-law partners until January 2015. He
described Ms. Liu as a very shrewd businesswoman. He went on to say that
before they were common-law partners, he learned of a good development prospect
in Marpole based on new zoning, and he told Ms. Liu about it. As a result,
he said, she decided to purchase 8556 Oak Street, which was near the property
at 8568 Oak that his mother already owned. As to 8568, Mr. Xu adamantly
denied that it was actually his property and being held in trust by his mother
for his benefit.

[18]      Mr. Xu went on to testify that Ms. Liu
asked him to purchase 8556 Oak on her behalf and provided him with the funds to
do so. She later did substantially the same thing, he said, with respect to
2134 West 53
rd
. She also caused funds for this purpose to be wired
in to their joint accounts by various of her employees in China or family
members. She did this, he said, in order to get around Chinese currency
controls.

[19]      In the result, Mr. Xu
said he acquired and held both properties in trust entirely for the benefit of Ms. Liu.
As already noted, he also said that the properties were purchased in his name
even though the beneficial interest was Ms. Lius because CIBC
representatives told them as a non-resident that Ms. Liu could only hold
one real property in her name.

[42]

The judge was unable to determine the precise extent to which
8556 Oak Street and 2134 W. 53rd Avenue were purchased with funds from Ms. Liu,
but the judge was satisfied on the whole of the evidence that Ms. Liu provided
at least the majority of the funding for the acquisitions: supplemental reasons
at para. 24. As a result, the judge concluded that, in large measure, Mr. Xu
holds the properties at 8556 Oak Street and West 53rd Avenue for the benefit of
Ms. Liu; although, the judge was also satisfied that he received, at a
minimum, some form of interest in them in exchange for the use of his name on
title.

[43]

Drawing an adverse inference against Mr. Xu for failing to
call his mother as a witness despite her being available for that purpose, the
judge was satisfied that 8568 Oak Street had been purchased in October 2014 for
Mr. Xus benefit. Again, she was unable to determine the precise extent of
that benefit or how and why the arrangement had been made as it was.

[44]

Although the judge stated that she was unable to determine
whether the three properties were family assets, this amounts to a finding that
Ms. Hu had not met the burden of proving that the properties were acquired
with family assets so as to warrant a compensation order under s. 66(2)(c)
of the
FRA.
Under the
FRA,
assets acquired by a spouse after the
triggering event, are not family assets:
Foster v. Foster
, 2007 BCCA
83 at paras. 3437. In the present case, the triggering event (a
declaration under s. 57 of the
FRA
that Ms. Hu and Mr. Xu
had no reasonable prospect of reconciliation with each other) occurred in
April 2012, long before Mr. Xu took title to the properties.

[45]

The judge did, however, take Mr. Xus changed financial circumstances
into account. She increased Ms. Hus share of the Marguerite Street
property from 50% to 75% and increased the income attributable to Mr. Xu
for child support and special expenses from $45,000 to $75,000 per year.

[46]

Although Ms. Hu will no longer receive an increased share in
the Marguerite Street property, I would not disturb the judges decision to
leave intact her order dividing all other family assets equally between the
former spouses. It is apparent the judge was doing the best she could with an
inadequate evidentiary record and unreliable testimony. Parties who come to
court intending to dissemble and deceive cannot expect perfect justice. In these
circumstances, I would not accede to this ground of appeal.

5.       Did the judge err in ordering the parties to bear their own costs?

[47]

In the court below, all parties sought special costs against the
opposing parties, pointing to litigation misconduct on the part of the others.
In addressing this question, the judge said:

[38]
I conclude that
all concerned engaged in litigation misconduct in that each of Mr. Xu, Ms. Hu
and Mr. Hu sought to mislead the court
in various ways and provided
unreliable testimony. These actions prolonged the trial and made the resolution
of all the claims extraordinarily difficult. In the end, success was divided,
although Mr. Xu did succeed to some extent on some major issues such as
the validity of the Chinese divorce agreement and the existence of the express
trust in the equity of the Marguerite Street house. Nevertheless,
I conclude
that the litigation misconduct of all concerned disentitles all of them to
costs
, and I order that all of the parties bear their own costs.

[Emphasis added.]

[48]

Costs orders are discretionary decisions that are afforded deference
on appellate review. I see no reason to interfere with the judges exercise of
her discretion in this case. Indeed, for the same reasons, I would not award
costs of the appeals to any party as an expression of this Courts censure of
the parties cavalier disregard for the oaths and affirmations they made to
tell the truth.

Disposition

[49]

The appeals are allowed in part: The declaration at 8(a) of the December
2017 order that BHIT holds the Marguerite Street property in trust for Yuenyuen
Hu is set aside, as is paragraph 10(a) of the order dividing that beneficial
interest. The cross appeals are allowed in part by setting aside the order of
the chambers judge made October 16, 2019, including paragraph 4 relating to
costs of the chambers hearing. Each party is to bear their own costs of the
appeals and cross appeals.

The
Honourable Madam Justice Fenlon

I AGREE:

The Honourable
Mr. Justice Hunter

I AGREE:

The Honourable
Mr. Justice Butler