Court File and Parties

Court of Appeal for Ontario Date: 2024-10-11 Docket: COA-24-CV-0397

Before: Huscroft, Harvison Young and Copeland JJ.A.

Between: Yudan Zhao Applicant (Respondent)

And: Guofeng Fan, Futecan Canada Inc. and Chateau de Niagara Winery Ltd. o/a Lundy Manor Winery Respondents (Appellant)

Counsel: Li He and J. Gardner Hodder, for the appellant Erin Farrell and Grace Li, for the respondent

Heard: October 3, 2024

On appeal from the judgment of Justice David L. Edwards of the Superior Court of Justice, dated March 15, 2024.

Reasons for Decision

[1] The appellant, Guofeng Fan, appeals the judgment of the application judge declaring that his refusal to transfer 33.15 shares in Futecan Canada Inc. (“Futecan”) to the respondent, Yudan Zhao, was oppressive; ordering the appellant to transfer 33.15 shares to the respondent forthwith; and ordering that the Futecan shareholders register be amended to reflect that the share transfer occurred effective November 2019.

[2] The appellant and Xin Zhao, the respondent’s father, made an oral agreement that the appellant would buy out a third shareholder of Futecan, Mr. Johnson, and sell a controlling interest in Futecan to the Zhao family. Mr. Zhao assigned the share transfer to the respondent. Mr. Zhao wired payment for the shares to the appellant in early 2020, but the appellant never transferred any shares. The only issue in dispute before the application judge and in this court was how many shares were to be transferred. The appellant contends it was 30 shares, which would leave him with control of Futecan. The respondent contends it was 33.15 shares, which would give her control of the corporation.

[3] The appellant argues that the application judge erred by relying on hearsay evidence to find that the agreement was for the transfer of 33.15 shares. He contends that there was no non-hearsay evidence supporting the finding that 33.15 shares were to be transferred.

[4] We disagree. There was ample non-hearsay evidence in the record to support the application judge’s finding that the agreement was to transfer 33.15 shares. In particular, the documentary record supports the finding that the agreement was to give the Zhao family – ultimately the respondent – 51% of the shares of Futecan. This result would be achieved by a transfer of 33.15 shares and not by a transfer of 30 shares. By contrast, nothing in the documentary record supports the appellant’s position that the agreement was for the transfer of only 30 shares. The application judge cautioned himself not to rely on hearsay evidence and said he did not rely on it. Given the presence of non-hearsay evidence in the record to support the findings of the application judge and his self-instruction not to rely on hearsay, we are not persuaded that he relied on hearsay in making his findings.

[5] Further, we see no basis to interfere with the application judge’s finding that only the respondent’s interpretation of the share transfer agreement – that it was for 33.15 shares – made commercial sense.

[6] The record supports the findings made by the application judge. We see no palpable and overriding error in his finding that the agreement was that the appellant would transfer 33.15 shares in Futecan to Mr. Zhao, which was assigned to the respondent.

[7] The appeal is dismissed. As agreed by the parties, the respondent is entitled to costs of the appeal in the amount of $20,000, all inclusive.

"Grant Huscroft J.A." "A. Harvison Young J.A." "J. Copeland J.A."