CITATION: Zhao v. 51.CA Inc., 2017 ONSC 3274
DIVISIONAL COURT FILE NO.: 205/17 DATE: 20170525
ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT
BETWEEN:
PINGBO ZHAO
Applicant (Appellant)
– and –
51.CA INC., 294467 ONTARIO INC., 2258797 ONTARIO INC. and 51 WEEKLY INC.
Defendants/Respondents
Gregory M. Sidlofsky, for the Applicant (Appellant)
Igor Ellyn, for the Defendants (Respondents)
HEARD at Toronto: May 25, 2017
MATHESON J. (Orally)
[1] There are two motions before me. The appellant, Pingbo Zhao, has brought a motion to expedite the appeal in this matter. In particular, this is an appeal from the Order of Wilton-Siegel J. dated March 23, 2017, dismissing an application to produce certain financial records and other corporate documents to the applicant Pingbo Zhao.
[2] In response, the respondents have brought a cross-motion to stay the appeal in this matter. There was also a request for a leave to abridge the time for service of the cross-motion but the appellant has not objected to the cross-motion being heard today, as it has been.
[3] I will touch briefly on the backdrop to these two motions. These parties have had a trial before Wilton-Siegel J. that began in late 2014 and concluded in early 2015, culminating in a trial judgment dated April 12, 2016. Additional relief was then sought, culminating in supplementary reasons from Wilton-Siegel J. dated October 25, 2016. Both sides have appealed the trial decision and supplementary decision as reflected in the supplementary reasons. That appeal has not yet been heard. I am told this morning that the transcripts, although ordered, have not yet been received.
[4] The gist of the underlying dispute in that trial was the nature and extent of the appellant’s interest in a business called “51.ca” as between him and his brother, although the parties are mainly corporations.
[5] Toward the end of last year, Pingbo Zhao requested certain corporate records from the respondents. The request was very broad, including, but not limited to, records that would ordinarily be available to a shareholder. That request also included records from the inception of the companies, well before the trial, and included records that were not only available to but also in the possession of the appellant at and before the trial. However, the request also extended to records post-trial right up to 2016 records. The request to produce records was refused.
[6] Pingbo Zhao then brought an application for production of records, culminating in the decision of Wilton-Siegel J. dated March 23, 2017. Wilton-Siegel J. dismissed the application for reasons set out in his reasons for decision, which I need not repeat here. That is the order that is under appeal and gives rise to the motions before me.
[7] There are therefore now two appeals before the Divisional Court with the same parties: the first is the appeal from the trial judgment, appealed by both sides, and the second is Pingbo Zhao’s appeal from the dismissal of his application for the production of records.
[8] In short, with respect to the motions before me, the appellant wants the appeal of the production of documents order heard first, before the appeal of the trial decision, and the respondents want the appeal of the production of documents order put off until after the appeal of the trial decision.
[9] I turn to the main motion: the motion to expedite the appeal. Three grounds were put forward by the appellant in support of his motion, two of which were the focus of oral argument.
[10] The first ground and the main focus of oral argument was that the documents that the appellate seeks may have an impact on the valuation date, which was the subject of the trial among other issues. He therefore wants that information in advance of the appeal of the trial decision with a view to potentially advocating for a different valuation date before the appellate court.
[11] Having reviewed the lengthy decision of Wilton-Siegel J. arising from the trial, it is apparent that there was significant trial evidence about the valuation date, including expert evidence by both sides. Both sides put forward expert witnesses on the subject of valuation on two specific dates. The first date was the date advocated for by the respondent – specifically, August 28, 2010 – the date at which the appellant apparently stopped his involvement in the business. The second date was December 31, 2013, put forward by the appellant, roughly the commencement of the trial. As I mentioned, expert evidence on valuations on both dates was heard at trial. Wilton-Siegel J. went on to find that the proper valuation date was the earlier date of August 28, 2010.
[12] Moving back to the subject of this appeal, to the extent that the appeal seeks the production of earlier dated documents, which it does, the appellant had all of those documents for the trial and indeed had the full discovery process with respect to pre-trial material. With respect to later dated documents, that is, post-trial documents, obviously there will be no expert evidence available to the appellate court considering the trial appeal with respect to later dated documents. The expert evidence was on the two specific dates I have already mentioned and the appellant’s suggestion that he can simply put forward later dated records on the appeal and request a new valuation date, to my mind, significantly underestimates the complications that would result in that approach in the absence of a full record.
[13] Moving to the second ground put forward before me today in oral argument and in the written submissions, the appellant submits that as a shareholder of some of these companies, he has a right to certain financial documentation and other corporate records under the relevant corporate legislation. There are some difficulties with this argument. First of all, he had access to all of that information up to the trial through the ordinary discovery process. That information is now being sought again. Apparently, the appellant wants to see if it has been changed in any way, which is at least speculative. Secondly, the broad document request goes well beyond what the ordinary shareholder would be entitled to. Thirdly, this gentleman is apparently not a shareholder of all of the companies from which he has requested documentary disclosure.
[14] Lastly, if the rationale for the production of these corporate records is that, as a shareholder, there is an entitlement to such records in the ordinary course, to some extent that may be correct but it is certainly not a reason to expedite the appeal. The ordinary course nature of the document request would apply equally to the timing of an appeal.
[15] The third ground for the request for an expedited appeal is that the more recent documents, in the three years post-trial, might contain fresh evidence of the oppression allegations addressed at the trial. To my mind that sounds a great deal like a fishing expedition, post-trial, for evidence to support an unsuccessful claim at trial.
[16] Taking all of these things into account, I am not persuaded that there should be an expedited appeal in the circumstances of this request for production of documents.
[17] Moving to the second motion, the respondents now seek an order staying this appeal pending the trial appeal, on two grounds. The first ground is that there is a very modest unpaid cost order in another proceeding and I am not persuaded that is an adequate ground to stay this appeal. Second, the respondents submit that it possible that, depending on the disposition of the appeal from the trial judgment, this appeal may become moot. On that front, I acknowledge that there may hypothetically be that possibility, but it is not by any means clear that it would become moot. I am not prepared to stay this appeal on that basis either.
[18] I therefore dismiss the cross-motion as well. I do leave open one possibility for the parties. If this appeal has not been heard in the ordinary course before the trial appeal, I leave open the possibility that the parties may, if they wish to, request an order that the two appeals be heard together.
[19] I have endorsed the Motion Record as follows: “Motion dismissed for reasons given orally. If the appeal is not heard before the appeal of the trial judgment, either party may ask that the two appeals be heard together, by further motion. Given the divided success (or lack of success) on this motion and the cross-motion, there shall be no order as to costs for either motion.” I have endorsed the cross-motion record as follows: “Motion dismissed for reasons given orally. See endorsement on main motion.”
___________________________ matheson J.
Date of Reasons for Judgment: May 25, 2017
Date of Release: May 29, 2017
CITATION: Zhao v. 51.CA Inc., 2017 ONSC 3274
DIVISIONAL COURT FILE NO.: 205/17 DATE: 20170525
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
BETWEEN:
PINGBO ZHAO
Applicant (Appellant)
– and –
51.CA INC., 294467 ONTARIO INC., 2258797 ONTARIO INC. and 51 WEEKLY INC.
Defendants/Respondents
ORAL REASONS FOR JUDGMENT
MATHESON J.
Date of Reasons for Judgment: May 25, 2017
Date of Release: May 29, 2017