ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: CV-16-11599-00CL

DATE: 20201230

BETWEEN:

Zizhong Wu and Noreast Foods Ltd.
Plaintiffs

– and –

Bin Chen and Qixiang Chen
Defendants

Jean-Alexandre De Bousquet and Andrew Ostrom, for the Plaintiff Zizhong Wu

Jonathan Rosenstein, for the Defendants

HEARD: October 19-23, 26-27, December 1, 2020

C. Gilmore, J.

TRIAL JUDGMENT

OVERVIEW

[1] This is a case in which the relationship between former business partners broke down in a manner that led to mistrust, suspicion, and allegations of fraud and forgery. Much of the case turns on credibility and conflicting experts’ reports.

[2] The Plaintiff Zizhong Wu (“Wu”) seeks recovery of debts he claims are owed to him by the Defendants Qixiang Chen (“Chen”) and Bin Chen (“Bin”) (together “the Chens”) in the amount of $1,332,572.57 CDN inclusive of interest. Wu also seeks punitive damages of $400,000 CDN, including $200,000 CDN for oppression and a further $200,000 CDN for the Defendants’ conduct during the litigation.

[3] Wu’s position is that all of the debt he claims is secured by certain Promissory Notes (“the Notes”) given to him by Chen and Bin. While the debt was incurred by Noreast Foods Ltd. (“Noreast”) and Chen, Wu insists that the Notes secure the debt by way of personal obligations from Bin and Chen.

[4] The Plaintiff corporation, Noreast, was incorporated in 2013. It produces dry tofu sheets, sliced and knotted kelp, and “veggie” goose which is sold to restaurants and Asian grocery stores in the Toronto area. Noreast was operated by Bin and Wu as partners.

[5] Wu’s position is that he loaned Bin and Chen considerable sums for capital purchases for Noreast which form the substance of the Notes. He has never been repaid. The Chens take the position that there are no Notes. They claim they never wrote or signed any Notes and the signatures on the Notes produced by Wu are forgeries. Both Parties have provided experts’ reports which attempt to refute the others’ contention regarding the veracity of the signatures.

[6] Bin brought a motion to wind up Noreast in December 2016. This resulted in a shotgun sale which took place on January 9, 2017, wherein Bin purchased Wu’s interest in Noreast for $480,000 CDN. According to Wu, the Notes are entirely separate from the buyout of his share of Noreast and should not be factored into any amount he is owed on the Notes. The shotgun sale also extinguished Bin’s counterclaim to have Noreast wound up. Wu is therefore referred to as the Plaintiff in this judgment, any claims in relation to Noreast having been dealt with on the wind up.

FACTUAL BACKGROUND AND THE PARTIES’ EVIDENCE

The Chens

[7] Chen emigrated to Canada in 1999 when he was 34 years old. He achieved a high school education in China. His evidence was that he neither writes nor speaks English very well. He speaks and writes in Chinese although he was not required to read or write when working at Noreast.

[8] In 2000, Chen opened an export and trading business called “Benfield” that sold beach sandals and children’s clothing. After several years operating this business and then a restaurant, he opened a soymilk factory on Midland Avenue in Scarborough (“the Midland factory”). Chen testified that he went to China to learn the soymilk production process and to purchase equipment. Production began in January 2012. When production began, Chen did everything from production, labelling and bottling to delivery. However, within a month of starting production, there were issues with quality control and the shelf life of the product.

[9] Bin came to Canada with his parents in 1999. He left China when he was halfway through the fourth grade. Bin is well-educated, having obtained a Bachelors of Accounting and Financial Management and, more recently, a Masters in Accounting from Waterloo University in 2012.

Wu meets the Chens

[10] Wu came to Canada in 2012 from China. He met Chen through mutual acquaintances in April 2012 within days of arriving in Canada. Chen told Wu about his soymilk factory on Midland Avenue, which was then running into financial difficulties. Chen invited Wu to see the factory and asked Wu to invest some money into opening a larger factory.

[11] Wu invested 200,000 Ren Min Bi (“RMB” or “Chinese currency”) with Chen in September 2012. The evidence was contradictory about whether Wu’s initial investment was intended for the expansion of Benfield or the commencement of a new business. Chen did not deny that Wu invested 200,000 RMB into soy milk production, but his evidence was that it was for the expansion of Benfield, not for the creation of a new business.

[12] Wu, on the other hand, maintained that the investment was for a new business that was not yet operating in September 2012.Wu’s evidence was that he and Chen entered into a shareholder’s agreement (“the First Agreement”) with respect to a new business on November 11, 2012. Each was to hold 50% of the shares in the business.

[13] Chen testified that he signed a contract for soymilk production equipment in China on December 3, 2012. He also agreed that it was his signature on a contract for a sterilization pot on January 18, 2013. The equipment was to be shipped by sea container and was to arrive in Toronto in February. Chen suggests that this equipment was purchased for Benfield. Benfield, however, shut down production in around February 2013.

[14] The fact that the company shut down so soon after this equipment was delivered belies Chen’s evidence that he sought this equipment for Benfield, rather than a new company. Chen was asked why he would buy new equipment for Benfield when that company would shut down production within a month or less of it arriving. His response was that the new equipment went to the Markham location, and could be used by Noreast, once Benfield shut down.

The Parties begin operating Noreast

[15] Noreast was a new business started by Wu and Bin. After the soymilk business failed, Wu lost confidence in Chen and decided to go into business with Bin. The new business would produce soy milk but also tofu, kelp, and a product called “veggie goose” (which is a flavoured tofu product).

[16] Noreast was incorporated by Bin on January 14, 2013. A lease was signed on March 4, 2013, to occupy two units at 1220 Markham Road. Since Wu was in China at the time the lease was signed, he authorized his daughter to sign the lease using his signature. The lease included a personal guarantee by Wu to pay the rent in the event that Noreast defaulted. Wu paid the security deposit of over 26,000 CDN at Bin’s request because Bin was in China ordering equipment for Noreast and needed a location for delivery and set up. Bin did not deny that Wu paid the security deposit but described it as a “favour” rather than an investment because Wu was not yet a Director of Noreast. Only Bin was listed as a Director on the original corporate profile at that time. Wu was added as a Director on April 4, 2013.

Financial contributions made by Wu and related agreements

[17] Throughout his dealings with Noreast and the Chens, Wu made several financial contributions to the company which lie at the heart of this trial. The agreements entered into between the Parties are worth examining in some detail, as they set out some of the investments and loans contemplated by the Parties at the start of their business relationship.

[18] The First Agreement, referenced above, set out the shareholders’ responsibilities as well as expected investment and cash flow. It was entitled “Shareholder Agreement on the Creation of Canadian Soymilk Products.” According to Wu, the First Agreement did not reference Noreast by name as Noreast had not yet been incorporated and there was still some uncertainty as to what the new business name would be. Wu’s evidence was that he was present when Chen signed it and they both put their thumbprints on the Agreement as is common for Chinese business transactions according to Wu. Chen did not deny signing the First Agreement and testified that he and Wu agreed on its terms.

[19] As noted above, Chen contends that this First Agreement related solely to the Midland factory soymilk business called “Benfield.” Wu denies this contention and says he had never heard of Benfield until this litigation commenced. Further, while not specifically mentioned in the First Agreement, Wu’s evidence was that he and Chen had discussed that the new business would expand production into dry tofu, kelp, and veggie goose. Chen denied any discussion of products other than soy milk. His evidence was that the First Agreement related solely to the expansion of Benfield notwithstanding that Benfield is not mentioned in the First Agreement and that the First Agreement refers to the “creation” of a soymilk plant as opposed to the expansion of one.

[20] Pursuant to the First Agreement, a fixed asset investment of 1.3M RMB and a cashflow investment of 1.5M RMB was required for the start-up of the business. The First Agreement stipulated that Wu was to invest the 1.5M RMB cashflow into the business at an interest rate of 1.5% per month. Wu’s evidence was that Chen did not have the funds to invest so he was to make the investment.

[21] Chen’s evidence was that he prepared a list of inventory from the Midland factory and he was to be given a credit of 250,000 RMB for the equipment that was to be used in the new factory. According to Chen, this was to be treated as his investment in the new business. Chen agreed that the interest rate on Wu’s investment was to be 1.5% per month in accordance with the custom related to private loans in their hometown in China. Chen agreed at trial that he wrote and signed the inventory list from Midland factory, although at discovery he denied ever having seen such a list or writing or signing it.

[22] A second agreement was allegedly signed by Bin and Wu and also dated November 11, 2012. This agreement was entitled “Shareholders Agreement on Establishing Noreast Foods Ltd. in Toronto, Canada” (the “Second Agreement”). The Second Agreement sets out that Bin and Wu would be 50% shareholders of Noreast and also sets out various responsibilities for the owners. It also refers to a capital investment of 1,300,000 RMB for fixed assets and a budget of 1,800,000 RMB for “circulating capital.” Chen’s evidence was that he was an “outsider” to the arrangements between Wu and his son and, although he does not deny that Wu told him that he and Bin signed an agreement, he had no details about it. Chen agreed that, as someone who had operated businesses over the years, it was important to have something in writing when you go into business with someone else.

[23] Bin denies that he signed the Second Agreement. While admitting that he understands business organizations and has set up two companies on his own, he was adamant that it was not necessary to have something in writing with Wu from his point of view. He could not explain how his driver’s license number was beside his signature on the Second Agreement. He did not deny, however, that he and Wu went into business together and that he and Wu agreed that each would fund 50% of the venture.

[24] When was asked why the First Agreement was signed on the same date as the Second Agreement, Wu told the Court that he signed the Second Agreement when he returned to Canada from China and that he and Bin agreed to date it as of the date of the First Agreement since it was meant to replace the First Agreement. He also testified that, upon signing the Second Agreement, the First Agreement became invalid.

[25] The Second Agreement sets out various responsibilities of the Parties and other family members but not Bin. Wu’s evidence was that Bin had a full-time job at another company and did not actually work at Noreast. Since Bin spoke English fluently, he handled the details of the incorporation of Noreast and other matters such as inspections or customs issues that required an English-speaking contact.

[26] Wu told the Court he loaned money to Noreast for a variety of items including, but not limited to, special machinery for the production of dry tofu which had to be imported from China, packaging, a creative design for the plastic film covering the tofu packaging for retail sale, employee uniforms, sterilization equipment, raw materials, wiring, rent, insurance, shipping, freight, and supplies. However, the majority of the money loaned by Wu was for large ticket items such as machinery. At trial, Chen testified that he was aware from a discussion with Bin and Wu that Wu had invested money in Noreast, but he did not know how much. At discovery, he denied ever having such a discussion with Wu and his son.

[27] Wu also gave evidence that he lent Noreast 250,000 RMB for equipment to manufacture soy milk (see Tab 108 of Volume 111 of the Joint Document Brief). On other occasions, Wu was asked by Chen to lend money to Bin and to reimburse Chen for business expenses. Wu did so and did not inquire why it was needed. He trusted that all monies were intended for the benefit of Noreast. Wu provided receipts or evidence of bank wires or transfers for each transaction.

Bin’s evidence about expenses and funding for Noreast

[28] Bin denied that Wu loaned all of the money he claimed to Noreast. Rather, he submits that much of the early funds for Noreast came from him and his father. Bin’s evidence was that his grandmother advanced him the equivalent of $786,000 CDN to invest in his new business. His evidence was that he was not sure if the money from his grandmother was a gift or a loan. They had never had that discussion. In any event, she has never asked for repayment. In his affidavit sworn November 28, 2016, Bin deposed that the money from his grandmother was an advance on his inheritance.

[29] Bin’s evidence was that all of the transfers from his grandmother’s bank book clearly show her payments for equipment for Noreast. Counsel for the Plaintiff had challenged the authenticity of the bank book. Bin was aware of this, but only on his re-examination at trial was a notarized copy of the bank book ever produced.

[30] Bin’s uncontested evidence was that he bought 1,952,841.77 RMB worth of equipment for Noreast before the end of March 2013. He had both the invoices and shipping documents showing payment for and receipt of the equipment. He claims that the equipment was paid for with the money transferred to him from his grandmother as evidenced by the bank passbook referenced above.

[31] Bin did not deny that Wu made certain investments into Noreast when it became clear to Bin that he would need more than his grandmother’s money to make it viable. His evidence was that he and Wu agreed to be 50% partners in Noreast but that they never signed a shareholder’s agreement (as indicated above, he denied signing the Second Agreement or agreeing to its terms). Bin deposed in his affidavit of October 5, 2016, that Wu invested at least $350,000 CDN into Noreast which included machinery, raw materials, freight, insurance and rent. At trial, he could not remember how much Wu had invested in Noreast.

[32] Several invoices were raised at trial evidencing different transactions related to the company. The authenticity of the invoices was questioned. For example, Bin was shown an invoice to Noreast Foods from Fujian Foodstuff Company dated November 10, 2014, for 2600 kilograms of kelp in the amount of $14,560 USD as well as a Freight Collection Notice for $4,300 USD dated December 15, 2014, for the kelp. It was suggested to him that this was proof of raw materials purchased by Wu. Bin questioned the authenticity of both documents and testified that it was not a Noreast invoice. He disputed that Wu had wired the money for these transactions.

[33] Bin was also cross-examined about the invoices he himself produced. It was suggested to him that his invoices were fabricated because they did not contain official stamps, the products were not described in Chinese, the invoices were created from the same template (despite being from different suppliers and for different products) and there was no address or contact information for the suppliers. Bin denied this. His evidence was that many suppliers use the same accounting software to create invoices and that would explain why they look similar. Further, he noted that he has customs brokerage forms which match up to his invoices. Wu failed to produce customs brokerage forms linked to his invoices which, according to Bin, are essential proof that the product was shipped to and entered into Canada.

[34] Bin also denied that Wu paid 250,000 RMB for sterilization machines and disputed the authenticity of the invoice produced by Wu and the corresponding wire transfer slip.

[35] At trial, Bin adopted a list of expenses for various equipment and supplies that he had purchased from China and had shipped to Toronto with his grandmother’s money. The purchases totalled almost 540,000 USD. These were cross-referenced to invoices in the joint document brief and withdrawals from his grandmother’s bank book. Bin also cross-referenced the purchases to invoices from Canada Customs which show the duty and taxes paid and the estimated value of the equipment. Bin’s evidence was that the list of expenses he adopted was prepared in the course of litigation but that there was an Excel spreadsheet that he had prepared tracking his expenses when Noreast was operating. This spreadsheet was never produced in Bin’s affidavit of documents and it was suggested to Bin that he never prepared anything until this litigation started. He denied this and testified that he gave Wu copies of invoices and customs forms when Noreast was operating.

[36] In addition, Bin testified that he and his father jointly spent $94,000 CDN in cash on expenses for a three-month trip to China in late 2012 and early 2013 to attend training on tofu production and to purchase both machinery and raw materials for the business. The expenses also included meals, entertainment, travel and consulting fees. Bin was asked where this money came from since he was a recently-graduated student at that time and his father’s credit was not good. Bin explained that part of his school program included co-op placements for which he was well paid. He claimed that the money came from him. Wu’s evidence was that he loaned the Chens this money.

[37] There was no receipt produced at trial for any of these expenses. Bin was questioned as to why someone who has a Master’s degree in Accounting would not retain receipts for business expenses. Bin explained that in Chinese culture it would have been insulting to ask for a receipt from a tofu master who was providing specialized training and insisted on being paid in cash. Bin could not recall exactly how he and his father came up with the expense amount. He assumed there were some receipts for items such as airfare which were charged to a credit card but he did not have them. During his discovery in November 2016, Bin deposed that most of the money for these expenses came from his father.

Wu’s evidence about his financial contributions

[38] Wu kept track of all of the money he lent to Bin and Chen through a document entitled the “Cash Journal System” (the “Journal”). He kept a running balance of the money spent, a description of the items purchased, and a record of whom the funds were given to. The Journal referred to transactions between 2012 and 2014. As outlined below, Wu claimed that several of these loans were secured through Notes written by Bin and Chen.

[39] Wu’s evidence was that the only amount missing from the Journal was his initial loan to Chen for 200,000 RMB as secured by the subsequent Note dated September 24, 2012. This loan never made it into the Journal as Noreast had not yet started up and Wu only started the Journal to keep track of Noreast-related expenses. The first loan to Chen was for 200,000 RMB, as described above. In support of his evidence, Wu provided a copy of his bank transaction statement from CITIC Bank in China showing a 200,000 RMB withdrawal. His evidence was that he wired this amount to Chen’s mother in China at Chen’s request after Chen gave him the account number. Wu produced a copy of the detailed transaction statement showing the funds went to Chen’s mother’s account. However, her bank book shows no such entry. Chen agreed that he did not have a bank account in China but denied ever requesting that funds be sent to his mother. He was asked about the undisputed evidence showing a wire to his mother’s account number from Chen’s bank account. He had no explanation for this.

[40] Wu testified that the Note for 200,000 RMB was written and signed by Chen in his presence on September 24, 2012 (the date on the Note). Wu explained that while there was no interest rate stipulated on the Note, he and Chen orally agreed that Chen would pay him interest at the rate of 1.5% per month, a rate commonly used in China for private loans. Chen denied signing the Note.

[41] By April 2013, Wu’s Journal showed that he had loaned 2,004,614 RMB to Noreast for its start-up. At that time, Wu’s accounting was done in RMB as many of the items he purchased for Noreast came from China and purchases were transacted in RMB with money being wired from Wu’s bank account in China.

[42] Wu testified that, from time to time, he would give Bin and Chen copies of pages of his Journal so that they could compare accounts. The Chens denied ever having seen the Journal until this litigation was commenced. At trial, Chen gave evidence that he had seen it once although in discovery he denied ever having seen it.

[43] Wu’s evidence was that he wrote all of the entries in the Journal. He did not write on every page of the journal. The backs of each page were left blank. After a time, the Journal fell apart and Wu stapled the pages together. When he compared accounts with Chen, he would put a pencil checkmark on the left-hand side of the journal to indicate that the accounts had been verified, the amounts had been agreed upon and a copy of the receipt had been given to Chen or a member of his family. He did not put those checkmarks where the entry related to a Note or where he did not have a receipt for the purchase. Wu agreed that he did not necessarily make the entry on the same day that he verified the accounts with Chen. Often, he wrote it in after.

[44] Not all of the entries in the Journal explained the reasons for the loans. For example, in November and December 2012, Wu’s Journal shows loans to Chen directly of 40,000, 15,000, and 30,000 RMB on November 22, December 5 and December 21, 2012. Since Chen was in China and did not have a bank account there, Wu wired the funds to Chen’s friend in China at Chen’s request. Chen told Wu he needed the money to buy equipment for Noreast. Wu unquestioningly accepted that this was the case. In January 2013, the Journal entries show that Wu lent Chen another $5,000 CDN ($4,000 on January 27 and $1,000 on January 29) in cash. He could not recall why Chen needed this money. On March 21, 2013, there is a Journal entry showing Wu lent Chen $2,600 CDN and another on March 8, 2013 for $2,500 CDN. Wu’s evidence was that Chen requested these funds to buy supplies for Noreast. Chen denied receiving any of these amounts from Wu or requesting that he wire funds to a friend in China on his behalf.

[45] Wu testified that he loaned Bin $10,000 CDN in cash at Chen’s request. He recalled that Bin came to his home to pick up the money. Again, he trusted that the funds were needed for Noreast and did not question the request for funds further. Wu agreed that he had no proof of having given this cash to Bin or the cash given to Chen described above other than his Journal entry. Bin and Chen denied ever receiving this cash from Wu.

[46] Some payments were not reflected in the Journal. Wu testified in relation to a Note from Chen dated April 1, 2013, for 210,000 RMB. According to Wu, this was for soymilk equipment that Chen purchased but could not afford to pay for. Wu’s evidence was that he was present when Chen wrote and signed the Note and that they agreed to an interest rate of 1.5% per month. This payment was not reflected in the Journal because Chen personally borrowed it from Wu and Wu had his friend Yuan make the payment to Chen on his behalf. Wu testified that he and Chen came to an oral agreement that Chen would be solely responsible for the payment for this piece of equipment. Wu produced a receipt for the wire transfer. Chen denied borrowing these funds from Wu or signing the related Note.

[47] Wu’s evidence was that, on April 7, 2013, he sat down with Chen at his apartment at Warden and Highway 7 to compare accounts. After the deduction of expenses which Chen was able to prove had been spent on the business (140,000 RMB), Wu testified that it was agreed that Chen would write him a Note for 156,380 RMB. Wu told the Court that he was present when Chen wrote and signed the Note. However, adjustments were made to the Journal after the fact for rental payments on the old soymilk factory of $36,000 CDN and an overcharge error for some design costs of $10,800 CDN. Chen denied agreeing to pay Wu this amount as any form of account reconciliation or signing the related promissory Note.

[48] Wu gave evidence that each month he would meet with Chen and Chen’s wife (who worked in the business) to review income and expenses. Chen would sign off on and Wu would note any amount owing in the Journal. Chen agreed that expenses were reviewed monthly with Wu; however, Chen’s evidence differed from Wu’s in that Chen insisted that many of the expenses listed on the monthly accounts had been paid by him. He testified that money for such expenses was “entrusted” to him by Bin (that is, that the money came from Bin). Further, while not denying that he reviewed expenses with Wu each month and signed off on them, he could not explain why he deposed in his discovery on April 3, 2017, that he had no role in the bookkeeping or tracking of expenses at Noreast. He told the Court he attended these monthly meetings at Bin’s request and in his role as an employee there.

[49] Chen told the Court that he was not involved in tracking income for Noreast. Bin did not permit him to do this. He acknowledged that his wife signed off on monthly revenue statements although, when one was shown to him, he testified that he did not know if it was his wife’s signature. Various revenue receipts were shown to Chen who told the Court that he was not sure if it was his signature on them. He had forgotten or was not sure or had been shown so many documents that he was confused. In discovery four years ago, he deposed that he had never seen the receipts before and had not signed them.

[50] It was suggested to Wu that some of the expenses listed on the monthly account forms were actually paid for by the Chens. He denied this was the case. In fact, he said, if Chen purchased supplies for Noreast he would come to Wu and ask to be reimbursed for the expense upon presentation of the receipt to Wu. Chen denied that Wu reimbursed him for expenses. Some sample expenses were reviewed with Chen from an expense sheet in May 2013 in which he is noted to have made purchases for $532 CDN and $686 CDN. Chen’s evidence was that he paid those expenses himself without reimbursement from Wu.

[51] Expenses are noted in the Journal as invoices for specific amounts as in the entries on March 23, 25, 30 and April 1, and 4, 2013. In 2014, there are clear entries for income and expenses each month. Wu provided copies of the documents which showed income and expenses as verified by Mrs. Chen Sr. Wu also testified that he showed Chen all the receipts for money wired from his bank accounts in China for Noreast purchases.

Further loans made to the corporation and Notes used to secure loans

[52] Wu calculated that, as of April 7, 2013, he had lent Noreast 1,873,434 RMB. This was after accounting for the Note signed by Chen for 156,380 RMB with the adjustments noted above. He requested that Bin prepare and sign a Note to him for 900,000 RMB representing what Wu calculated as Bin’s share of the company’s expenses. Wu was asked why he asked Bin to sign a Note for such a large amount when Chen was only asked to sign a Note for 156,380 RMB. Wu’s response was that since Bin was a 50% shareholder in Noreast he was responsible for half of the outstanding loans and should have been contributing from the beginning but had not.

[53] Wu’s evidence was that the Note dated April 1, 2013, for 900,000 RMB was prepared and signed by Bin in the presence of Wu, his wife and Chen’s wife at the Markham Road factory. Bin denies signing this Note. Bin testified that he cannot write or sign his name in Chinese.

[54] Although the Note in evidence was dated April 1, 2013, Wu’s evidence was that it was likely not signed until after he settled his accounts with Chen on April 7, 2013. According to Wu, Bin agreed that the Note should be dated April 1, 2013, and that the interest rate would be 1.5% per month.

[55] On the assumption that Bin would pay the Note, Wu reduced the debt in the Journal to 73,434 RMB. After certain credits were given to the Chens for expenses which they paid (including the equipment brought in by the Chens from the Midland factory and a credit to Wu for $4,000 CDN of equipment he had purchased), Wu calculated that he owed Noreast $28,858.21 CDN. He started to make his calculations in Canadian dollars at this point as Noreast was fully operational and purchases and sales were being made in Canadian dollars. Chen’s counsel submitted that Wu’s explanation for these numbers at trial did not make sense. I disagree. Wu gave an explanation which was admittedly somewhat convoluted but could be followed. Wu explained that, as of April 7, 2013, he had invested 1,873,434 RMB in Noreast. Bin gave him a Note for 900,000 RMB thereby reducing that debt to 73,434 RMB. Wu then applied a credit to Chen for 250,000 RMB for the sale of the Benfield assets, meaning Wu owed Noreast 176,566 RMB or $28,858 CDN to match the Chens’ contributions. Wu then reduced this by $4,000 CDN for an equipment purchase he made from his personal funds.

[56] Wu continued to pay expenses on behalf of Noreast through to the end of 2013. By October 31, 2013, he had contributed a further $317,131.54 CDN to Noreast. Wu’s evidence was that Bin gave him a further Note for 900,000 RMB dated August 1, 2013. While it was dated August 1, 2013, it was not actually signed until around November 1, 2013, to reflect the amount owed as of October 31, 2013. According to Wu, Bin wrote and signed the Note in his presence and agreed to the interest rate of 1.5% per month. Accounting for the Note allowed a credit to the Chens of $150,000 CDN which reduced Wu’s running balance owed to him to $17,131.54 CDN.

[57] On cross-examination, Wu conceded that he had no specific recollection of discussing the 900,000 RMB Note with Bin but does recall that Bin came into the Noreast factory to sign it. He agreed that the reference to the 900,000 RMB Note from Bin was written in his Journal in pencil. At trial he denied writing in this entry after the lawsuit started although at discovery he agreed that he did.

[58] Wu’s evidence is that he continued to contribute to the company expenses including a significant contribution towards the Chens’ share of expenses. Wu told the Court that by Feb 28, 2014, he had contributed a further $145,169 CDN in expenses and sought reimbursement from the Chens for their share. As such, he secured a Note from Bin for 500,000 RMB, being the equivalent (at the exchange rate at the time) of half of his contributions or $86,206 CDN.

[59] Wu produced a copy of the Note dated December 20, 2013. He told the Court that he was present when Bin wrote and signed the Note. He agreed that the Note was not actually signed on December 20, 2013, but on March 1st or 2nd, 2014, when they sat down to review the accounts. They both agreed to backdate the Note.

[60] The effect of the Note was to once again reduce Wu’s running balance. Based on the 500,000 RMB Note from Bin, the running balance owed to Wu was reduced to $27,243 CDN. Once again, Bin denied being requested to write this Note by his father. He said he could not have done so as he cannot write in Chinese.

[61] Wu then gave evidence about certain Notes signed by Chen which related to interest on Notes previously signed by Chen and Bin. Wu’s evidence was that all of the Notes for interest were written and signed by Chen. Wu was asked why he was entitled to interest on the Notes after one year when the Notes do not stipulate that. Wu told that Court that it was customary to settle interest this way in the region of China where he and the Chens were from. Chen denies agreeing to pay interest on any Notes and further denies writing or signing the related Notes. Bin denies agreeing to pay interest on the Notes or requesting that his father prepare or sign the Notes. The Notes are set out below as follows:

a. A Note dated April 1, 2014, for one year of interest in the amount of 37,800 RMB being interest from April 1, 2013, to April 1, 2014, on the Note dated April 1, 2013 for 210,000 RMB.

b. A Note dated April 1, 2014, for one year of interest in the amount of 162,000 RMB being interest from April 1, 2013, to April 1, 2014, on the Note for 900,000 RMB from Bin. When asked why Chen wrote and signed the Note when the Note was from Bin, Wu’s evidence was that Bin told Wu to have his father give him the Note.

c. A Note dated April 7, 2014, for one year of interest in the amount of 21,668 RMB being interest from April 7, 2013, to April 7, 2014, on the Note from Chen for 156,000 RMB which was agreed to be reduced to 120,380 RMB. Wu could not recall if the interest was calculated on the amount of the original Note or the reduced amount because Chen wrote the Note.

d. A Note dated August 1, 2014, for one year of interest in the amount of 162,000 RMB being interest from August 1, 2013, to August 1, 2014, on the 900,000 RMB Note given by Bin. As with the April 1 Note, when asked why Chen wrote and signed the Note when the Note was from Bin, Wu’s evidence was that Bin told Wu to have his father give him the Note.

e. A Note dated September 24, 2014, for two years of interest in the amount of 72,000 RMB being interest from September 24, 2012, to September 24, 2014. This was interest on the first loan Wu gave to Chen for 200,000 RMB to assist with the Midland factory and wired to Chen’s mother’s account in China.

The Parties’ relationship begins to unravel

[62] Wu told the Court that things between him and the Chens began to seriously deteriorate in 2016 when he found out that Bin had opened new company bank accounts at CIBC and RBC and that income from Noreast was being deposited into those accounts. Wu found himself in a position where he had to pay company expenses from his own pocket just to keep the business running. The Chens were no longer responding to him. Bin’s evidence was that the business relationship fell apart because Wu was stealing cash from the business and refused to account for it.

[63] Bin testified that he opened business accounts with both CIBC and RBC in order to protect Noreast. He also prevented Wu from accessing information from these accounts,. While agreeing that Wu, as his business partner, had a right to receive financial information about the company, Bin acknowledged that Wu did not have signing authority on the accounts and that the RBC account statements were not actually produced to him until trial. This is despite the request for production of these statements at Bin’s discovery in 2016 and by way of letters to Bin’s lawyer on January 26, 2017, and January 11, 2019. Wu complained that, because he was never given information about how much money was in the RBC account, he was at a disadvantage in terms of how much to accept or offer on the shotgun sale. Bin denied Wu’s allegation that he deliberately withheld disclosure of the account statements for the RBC account because there were more funds in the account than he had told Wu.

[64] Bin’s evidence was that he told his mother to stop signing cheques for the company. He felt that disrupting normal business operations would force Chen to use the hidden cash to pay expenses and then matters could return to normal.

[65] In August 2016, Wu had a “shareholder” meeting with Bin and Chen. At that meeting, Wu revoked Bin’s status as a director of Noreast. As Wu had always assumed he was a shareholder based on the wording of the Second Agreement, he was of the view that he had the authority to take steps including preparing a shareholder’s resolution with respect to the revocation of Bin as a director. Bin recalled the meeting as one in which Wu shouted at him and his father.

[66] After the meeting, Wu then took the shareholder’s resolution to the bank and had Mrs. Chen’s signing authority on the corporate account with TD revoked and the account closed. The Chens suggested that Wu created the Second Agreement and forged Bin’s signature on it after the litigation commenced in order to corroborate his purported authority as a shareholder. Wu denied this.

[67] Wu complained that, while he received a buyout for his interest in Noreast in January 2017 as a result of the Court-ordered shotgun sale, he has no idea if the amount he received was fair. He remains concerned that, without the necessary information from Bin concerning the income from the company which he retained in the RBC and CIBC accounts, he has no idea if the amount he was paid is truly reflective of the value of Noreast.

[68] After the shotgun sale, Bin created a subsidiary of Noreast called Aerdon. Aerdon produced hydroponically grown mung bean sprouts. Bin told the Court that he originally went to Wu with the idea of expanding Noreast into this new area of business, but Wu was not interested and specifically told Bin he was not to use any of Noreast’s assets to start up Aerdon. Bin’s evidence was that Aerdon was not that expensive to start up, probably less than 80,000 CDN.

[69] Bin was asked about why he wanted to start up Aerdon in 2013/14 when Noreast was not profitable. It was further suggested to him that he misappropriated Wu’s money to fund Aerdon when Wu had specifically prohibited this including buying equipment and renting space. Bin’s response was that the only reason Noreast was not profitable at that time was that Wu was stealing money from it.

THE EXPERT EVIDENCE

[70] As noted above, much of this case turns on the authenticity of the signatures allegedly made by the Chens on the Notes. Both Parties introduced expert evidence regarding the authenticity of the signatures. I summarize my findings about the expert evidence below.

The Expert Evidence of the Plaintiff

[71] Ms. Yang Chiew Yung (“Ms. Yang”) gave expert evidence on behalf of the Plaintiff with respect to the handwriting of both Bin and the Elder Chen.

[72] Ms. Yang has an impressive CV and her qualifications and ability to provide expert testimony in this case were not challenged. Ms. Yang has a B.A. in Chemistry and a Masters in Forensic Sciences Administration (Questioned Documents track) and a Graduate Certificate in Forensic Examination of Questioned Documents from Oklahoma State University in the United States.

[73] Ms. Yang is a consultant with the Forensic Experts Group in Singapore where she has worked since 2013. Prior to that, she was a Senior Forensic Scientist with the Health Sciences Authority and then a Document Examination Team Leader in the Forensic Chemistry and Physics Laboratory in Singapore. Ms. Yang can read and speak Chinese and English fluently. In Chinese, she is able read and write in both traditional and simplified characters.

[74] Ms. Yang has worked on hundreds of cases and testified in multiple Court cases around the world including in the United States. She has testified in relation to Chinese signatures and handwriting, tampering, stamp impressions, obliteration, deciphering and counterfeit. The types of cases she has been involved in range from will tampering, government form counterfeiting, fraudulent tax forms, employment documents, business agreements, invoices and hospital consent forms.

[75] Ms. Yang has co-authored various texts and articles on forensic handwriting examination and been featured in Singapore newspapers, television shows and documentaries including an article in the Singapore Law Gazette entitled, “Forensic Document Examination: A Primer for Lawyers” (March 2015).

[76] Ms. Yang produced two reports, one in relation to Bin’s alleged signature on three promissory Notes and a shareholder agreement and the other in relation to the Elder Chen’s signature on eight promissory Notes and a shareholder agreement.

The Expert Evidence in relation to Bin Chen’s Handwriting

[77] Bin’s evidence was that, while at school in China as a child, he did not think that his written Chinese was very good. He was an average student who was educated in a small rural school without resources. His father testified that Bin had no education outside of school and did not bring home homework. Bin was adamant that he is not able to write in Chinese as he came to Canada before completing the fourth grade. He agreed that he continues to speak to his parents in their local dialect and is involved in business in the Chinese community.

[78] Bin swore an affidavit on October 5, 2016, in which he deposed that he can read and write reasonably well in Chinese. At trial, he did not deny that statement but clarified that he cannot write sophisticated characters in Chinese and still maintained that he cannot really write in Chinese.

[79] Ms. Yang’s report dated November 10, 2017, was admitted into evidence and she testified that she had reviewed the report and that her opinion had not changed since writing it. Given how long ago the report was written, Ms. Yang confirmed that she is still employed as a forensic handwriting analyst.

[80] Ms. Yang was provided with and examined three promissory Notes dated April 1, 2013, for 900,000 RMB (“X1”), December 20, 2013, for 500,000 RMB (“X2”) and August 1, 2013, for 900,000 RMB (“X3”) (collectively “the Notes”). Ms. Yang was requested to analyze the entirety of the Notes to determine if Bin had written them. Bin’s evidence at trial was that he denied writing and signing all of the Notes.

[81] The shareholder agreement provided to Ms. Yang was referred to earlier in this judgment as the Second Agreement dated November 11, 2012 (“X4”). Ms. Yang was requested to analyze the signatures in X4 and the Notes to determine if Bin had signed those documents. Wu testified that this was the shareholder agreement signed by him and Bin. Bin denied signing X4. All of the above documents (referred to herein as the “Questioned Documents”) were sent to Ms. Yang in a “.pdf” format.

[82] There are no independently verifiable specimens of Bin’s handwriting in Chinese because he denied knowing how to write Chinese. Given these circumstances, Ms. Yang had Bin copy the text (including dates and numbers) of the three promissory Notes in Chinese for comparison with the Questioned Documents. The 10 documents with the copied text in Chinese are referred to in this section as the Specimen Samples in R1 to R10.

[83] Ms. Yang testified that this was the first time she has ever analyzed someone writing in Chinese who claimed they did not know how to write in Chinese. She told the Court she has done some analysis of individuals writing in Romanized writing where that person claimed not to know how to write in such characters. However, she has no experience doing this type of analysis with Chinese characters.

[84] Ms. Yang was cross-examined on her observation that some of the copied text was stiff, awkward and exhibited “poor fluency” and in other instances the strokes were observed to be “tremulous.” It was suggested to her that these variations might be normal for someone who did not know how to write Chinese characters. Ms. Yang did not disagree but was concerned about the amount of variation between samples. She testified that, for her, this was one of the indicia that contributed to her conclusion that the handwriting was disguised.

[85] Ms. Yang also noted that some of the Specimen Samples contained overwriting and retouching. It was suggested to Ms. Yang that this could simply be an attempt to correct the copy sample. Ms. Yang agreed that this was a possibility but was suspicious because the most serious overwriting occurred with numbers that were not Chinese characters. She felt there was no logical reason for this, and that Bin was attempting to make the writing more difficult for the expert to do a comparison.

[86] Ms. Yang observed that, in writing his name in Chinese (copying the characters), there was “wide variation” in the formation and slant of Bin’s strokes. It was suggested to Ms. Yang that the explanation for this was the fact that Bin was copying his name in Chinese characters with which he was not familiar. Ms. Yang did not agree. She testified that people have certain habits in the way they form letters and these habits do not change even when one is writing a different language.

[87] Ms. Yang was taken to specific examples of Bin’s specimen writing and the Promissory Notes. She was questioned about how she could know Bin wrote the Notes when there were variations in the specimen writing. Ms. Yang was clear that she looked at how Bin formed certain characters and concluded that he formed them within a range of variation in the Notes which was the same as the range of variation in the specimen writing samples. Further, she was unable to conclude that the signatures in X2 and X3 were Bin’s because they were made in a cursive form and she had no cursive specimens with which to compare those signatures.

[88] Ms. Yang’s conclusion in this report was that Bin does in fact know how to write Chinese and that he “disguised” his writing in the specimen samples. Specifically, she concludes that it is likely that the handwriting in X1, X2 and X3 is that of Bin, that there are indications that the signatures on X1 and X4 are that of Bin and that the evidence is inconclusive as to whether the signatures on X2 and X3 are Bin’s.

[89] I agree with the Defendants’ counsel that Ms. Yang’s conclusions may not be sufficient by themselves to meet the onus of the Plaintiff; however, they cannot be viewed in a vacuum. As will be seen below, after a review of Bin’s evidence, this Court concludes that his evidence must be approached with extreme caution. Given that finding, Ms. Yang’s conclusions with respect to the possibility of disguised writing and “indications” that the signatures on X1 and X4 are Bin’s must be given considerable consideration. The concerns about Bin’s credibility combined with Ms. Yang’s concerns and conclusions lead this Court to find that the Notes were written and signed by Bin and the Second Agreement was signed by Bin.

The Expert Evidence in Relation to Chen’s Handwriting

[90] Ms. Yang provided a separate expert’s report in relation to her analysis of Chen’s signatures. That report is also dated November 10, 2017. Ms. Yang received several documents for examination. Documents Q1-Q8 were the alleged Notes signed by Chen, Document A1 was the First Agreement (between Chen and Wu) dated November 11, 2012, Document B1 was a copy of Chen’s Driver’s License,[^1] and Documents C1-C10 are ten sheets of specimen signatures of Chen as requested by Ms. Yang. Chen provided at least 55 sample signatures to Ms. Yang on C1-C10.

[91] When Chen was asked to provide samples of his Chinese handwriting to the Plaintiff’s expert, his response through his counsel was that he had been signing his name in English for the last 20 years and had no samples to give. Instead, a representative from the Plaintiff’s counsel’s office attended at Chen’s lawyer’s office to take a photo of his 2016 Driver’s Licence which contained his signature in Chinese characters. He did not provide the list of assets from the Midland factory or any of the signed monthly accounting slips to either Ms. Yang or his own expert.

[92] It should be noted that Chen provided a different driver’s licence to his own expert. It was a driver’s licence renewed on December 5, 2019, with a new signature and photo. This driver’s licence was the only signature sample he gave to his own expert. It was suggested to Chen that he renewed his license before it was set to expire in 2021 so that he could insert a new and different signature on that license for his expert’s handwriting examination after that date. He did not deny that he paid for a new photo and signature and obtained a new licence notwithstanding that he had not changed his appearance or address. He said he had lost his old licence and sought a replacement one. When was asked why he did not simply have Service Ontario print out a copy of the old one for him rather than paying for a new signature, his response was that he did not understand Ontario law.

[93] When asked why the signatures on the two driver’s licences were different, he explained that one was written in cursive and one in traditional Chinese characters.

[94] Ms. Yang’s evidence was that, although there were superficial differences between the specimen signatures and the other signatures provided, her opinion was that the specimen signatures were deliberately disguised. While there is always variation in a person’s writing, certain variations are indicative of deliberate efforts to disguise one’s writing.

[95] By way of specific example, Ms. Yang testified that in making what is called a “dot stroke” within a Chinese character, Chen drew a small circle in his specimen samples. This is unusual in Chinese writing and was different from the “normal” specimens of Chen’s writing. Ms. Yang used this observation amongst others to conclude that the specimen samples were possibly disguised.

[96] It was put to Ms. Yang that a person’s writing may vary at different times and for different reasons. She agreed with this broad proposition but testified that where requested specimens lack consistency there is a possibility of disguise. Her opinion was that the most likely explanation for the variations she observed in Chen’s specimens was that Chen was trying to disguise his writing. Ms. Yang noted that, when considering her opinion about Chen disguising his writing, she looked at a variety of different factors. She emphasized that handwriting analysis is about considering multiple factors as a whole.

The Expert Evidence of the Defendants

[97] The Defendants relied on the Authentication and Research Report of the Taiwan Development & Research Academia of Economic and Technology. Ms. Yi Ching Lin testified on behalf of the panel who authored the report dated May 29, 2020. A voir dire was held with respect to the admissibility of the report. That issue will be dealt with later in this judgment. Below is brief summary of Ms. Lin’s evidence.

[98] The panel, of which Ms. Lin was one member, only examined the handwriting of Chen and not Bin. She was provided with a copy of Chen’s 2019 driver’s licence and used that signature as the comparator. She was not provided with any other samples of Chen’s handwriting including his undisputed signature on First Agreement. Ms. Lin agreed that handwriting does change over time and that Chen’s handwriting five to eight years ago may have been different. She also agreed that on superficial examination there were differences between Chen’s signature on the 2019 driver’s licence and the 2016 driver’s licence. She agreed that her report is based on the assumption that Chen’s signature on the 2019 licence is an accurate one.

[99] She was asked about the Plaintiff’s expert report. She testified that she read it and had prepared a power point in response to it. Since no formal reply report was served, Ms. Lin was not permitted to present this evidence.

[100] For analysis, Ms. Lin was also provided with Chen’s signature on three of the Notes dated September 24, 2012, April 1, 2013 and August 1, 2014. She was asked only to compare the signatures and not the actual handwriting in the Notes.

[101] After a detailed analysis of the various strokes within the characters making up Chen’s signature, Ms. Lin concluded that the Chen’s signature on all three promissory Notes was “inconsistent” with the signature on the driver’s licence provided and therefore they were “dissimilar” handwritings.

ANALYSIS

Credibility

[102] Both sides in this case cannot be right. Either Wu or the Chens have not told the truth. An assessment of the credibility and reliability of the evidence of the Parties is therefore necessary. As the Court of Appeal stated in R. v. C.(H.), 2009 ONCA 59, 241 C.C.C. (3d) 45 at para. 43:

The correct disposition of this case is dependent upon an assessment of credibility. An assessment of credibility involves evaluation not only of the honesty of the particular witness, but also the reliability of the evidence of the witness. One should not rely on the testimony of a dishonest witness in the absence of some independent corroborative evidence; however, even honest witnesses can be mistaken. It sometimes happens that a witness will be quite honest and sincere yet his or her evidence may not be reliable due to external factors such as ability to observe, remember, or relate accurately.

[103] In assessing the credibility and reliability of the Parties’ testimony in this case it is important for the Court to take the following factors into account:

a. The witness’ demeanour and the manner in which they gave their evidence including their responses in cross-examination;

b. Their intelligence and understanding of the issues at stake;

c. Any propensity they may have to lie with respect to either the payment or receipt of money;

d. The overall presentation of their evidence including inconsistent answers, answers that lacked common sense or any tendency to evade the question.

e. Any age or memory issues which could affect their recounting of events.

f. Their relationship to other witnesses.

g. Any language or interpretation issues which may affect the meaning of a witness’ evidence.

The Evidence of Chen

[104] Turning first to Chen, I find that there were serious credibility problems with his evidence in terms of both a lack of consistency and a tendency to evade.

[105] One of the most glaring examples of this related to the Benfield list of assets (See Tab 68 of the Joint Document Brief). This is an important document in terms of Chen’s credibility. At his cross-examination in April 2017, Chen denied having seen this document before. At trial, Chen admitted that he wrote the list of Benfield assets. Not only did he admit to having written the list, but he readily told the Court both when (before the First Agreement was signed) and why (to let Wu know how much he had invested into Benfield).

[106] When cross-examined about this inconsistency, his answer frankly made no sense. He told the Court that if his answers were inconsistent, he could not explain the inconsistency but perhaps it was because he did not see the document clearly at the cross-examination or hear the question properly. This was but one of many evasive non-answers by Chen in the course of his cross-examination.

[107] The other issue with the Benfield list of assets is that it was never given to Ms. Yang to use as a comparator with respect to Chen’s writing in Chinese. When samples of Chen’s writing were requested from his counsel, Plaintiff’s counsel was advised that Mr. Chen had signed his name in English for the last 20 years so the only sample of his signature in Chinese was on his driver’s licence. The handwritten list of Benfield assets was not offered to Ms. Yang. Mr. Chen denied that this was because he did not want Ms. Yang to have this writing sample.

[108] It is clear that Chen wrote the list of Benfield assets. This makes sense since the assets belonged to him and were located in his factory. I accept Wu’s evidence that they negotiated based on this document. I find that Chen did not provide this document to Ms. Yang because it could assist her in verifying that Chen wrote and signed the Notes. I further find that Chen’s attempt to explain his inconsistent answer with respect to whether he had written the Benfield list of assets rings hollow given all of the above.

[109] At his discovery in April 2017, Chen denied having any role in the bookkeeping or tracking of expenditures for Noreast. However, at trial he testified that he regularly met with Wu to review expense reports for Noreast. When asked to explain this inconsistency, Chen did not deny his discovery answer yet maintained that he regularly reviewed expenses with Wu. Notwithstanding this answer, he went on to insist that he had nothing to do with tracking expenses at Noreast and that the meeting with Wu was simply part of his employee job description. He added that he was entrusted with this job by Bin as Bin’s father and a family member which is, of course, inconsistent with his insistence that it was merely part of his job description.

[110] Chen was shown a series of expense receipts (17 in total) from 2013. He did not deny that he had signed each one. Of interest is that none of those 17 receipts were provided to Ms. Yang for comparison purposes.

[111] While Chen admitted that he was involved in tracking expenses at Noreast, he denied any involvement in tracking income. When a “gathering receipt” containing income information was put to him in cross-examination, he oddly answered that he “dare not confirm” that it was his signature on the receipt and could not really verify if it was his signature or not. He then stated that he had forgotten if it was his signature. This was again inconsistent with his discovery evidence from April 2017 when he was firm in his denial that it was his signature on the gathering receipt. When asked about that inconsistency, he testified that he had been shown so many documents that he could not remember which ones he had denied seeing. When asked about the similarity of the signature on the expense receipts and the gathering receipts, he was unable to provide an answer but continued to deny that he was involved in tracking income at Noreast.

[112] Bin’s evidence was that he entrusted his parents to verify Noreast’s revenue and expenses. However, Chen refused to acknowledge his wife’s signature on the gathering receipts or that she in fact had any involvement in tracking revenues. On re-examination, he agreed that his wife and Wu recorded the sales and purchases for the company. I note that the Defendants did not call Chen’s wife to give evidence about how revenues were recorded, to explain her involvement with the company bookkeeping or to refute Chen’s evidence about revenue and expense tracking for the business.

[113] These answers are redolent of Chen’s persistent attempts during cross-examination to evade questions and provide implausible explanations for the glaring inconsistencies in his testimony. The overall effect left the Court with the impression that Chen was doing his best to distance himself from any significant knowledge of Noreast’s operations so as to make the creation and obligations under the Notes more implausible.

[114] The formation of the First Agreement and the Benfield saga also bears examining. Chen insisted that the First Agreement specifies that it is for the “expansion” of his Midland factory. Chen admitted signing the First Agreement but the Chens insisted throughout the trial that the First Agreement related to the expansion of Benfield, Chen’s soymilk factory on Midland Avenue. The Chens did not want the First Agreement associated with Noreast as this would date Wu’s involvement with Noreast back to November 11, 2012, (when the First Agreement was signed).

[115] I do not accept that the First Agreement related to the expansion of Benfield. The First Agreement does not contain the word “Benfield” anywhere in its content. Furthermore, according to Mr. Gerald Yang, the jointly-retained certified translator who interpreted at this trial, the translation of the relevant word in the agreement was “creation” and not “expansion.” This is consistent with Wu’s testimony as to why the First Agreement was signed; that is, for the creation of a new business in which he was a 50% partner.

[116] When asked why the First Agreement did not contain the words “Benfield” if it was intended to relate to the expansion of that company, Chen’s response was that he signed the First Agreement when he was in China and could not remember the company name. This explanation is improbable given that Chen had incorporated and operated Benfield since 2001.

[117] The timing of events was also an issue in Chen’s testimony. While in China in November 2012, and after signing the First Agreement, Chen ordered new equipment to manufacture soy milk. Chen’s evidence was that this equipment was for the expansion of Benfield. However, this makes little sense when the equipment arrived in Canada in February 2013 only to have Benfield shut down within days of its arrival. The more logical explanation is that the equipment was always intended for Noreast which was about to begin operations in February 2013.

[118] As well, Wu’s daughter signed a lease for Noreast on March 4, 2013. She personally guaranteed the lease on behalf of her father. Wu advanced a security deposit and two months of rent payments totalling $26,421.99 CDN on February 27, 2013. On March 8, 2013, Wu’s daughter made an insurance payment of $1,550.70 CDN on behalf of Noreast. These transactions were all completed before the Second Agreement was signed in April 2013. The most plausible explanation for all of this aligns with Wu’s evidence that the First Agreement related to Noreast but did not refer to Noreast by name as the business had not yet been registered. The purchase of equipment in China in the fall of 2012, the signing of the lease, and the payments made by Wu in early 2013 for rent and insurance all related to Wu’s involvement in Noreast. Bin’s explanations that the rent and insurance payments made by Wu were a form of gratuitous payment made as a “favour” cannot be given any weight in these circumstances.

[119] There are also the questionable circumstances surrounding the signature on the drivers’ licences given by Chen to his expert and to the Plaintiff’s expert. There is a suspicion that Chen replaced his driver’s licence prior to the expiration date and paid for a new signature and photo (when those were not necessary) in order to ensure that the signature on the 2019 licence given to Ms. Yang would not match the signatures on the Notes. This issue on its own would not be that notable. However, combined with all of the above and what I find to be a deliberate attempt on the part of Chen to distance himself from all internal knowledge about Noreast, it would shatter his fictional accounting of events if the signature on the Notes was found to be his own.

[120] Given the above, I find that Chen’s evidence lacks credibility. It also lacks reliability given his implausible explanations when confronted with previous contradictory answers. At times Chen seemed confused as to what answers he had given and when. Chen gave the impression that he was often trying to recall which truthful and untruthful answers he had given in the past and was desperately trying to align them.

[121] The tenor of Chen’s evidence also bears mentioning. Chen often asked for the question to be repeated and would then deny any knowledge of the issue. At times the Court was required to ask Chen to answer the question that was asked of him as he would often launch into the answer to an entirely different question. This was part of the evasive overtone of his evidence. When confronted with obvious contradictions he often claimed confusion or declared that there were simply too many documents in this case. There is also a concern about Chen’s motive to lie which I find is rooted on the one hand in attempting to protect Bin and on the other hand to avoid payment on any of the Notes.

[122] In summary, I find that Chen’s evidence was neither reliable nor credible and I therefore give no weight to it.

The Evidence of Bin Chen

[123] Bin had a better memory and was more articulate in his descriptions than his father. However, notwithstanding his smoother delivery, Bin gave answers which, like those of his father, made no sense.

[124] Bin readily admitted that he and Wu were 50% partners in Noreast and that Wu paid the deposit on the lease for the Markham location. However, quite remarkably he claimed he was not aware that, due to a default under the lease, the Landlord had sued and obtained a judgment against Wu. Wu had crossclaimed against Bin under the indemnity given by Wu under the lease on the shotgun buyout. While admittedly a corollary issue, it nonetheless strains credulity that Bin had no knowledge of being sued by Wu on the indemnity.

[125] Another concern was Bin’s insistence that he did not sign the Second Agreement. His evidence was that the signature on that agreement was forged by Wu and that he had never seen the document prior to the litigation. While admitting that his driver’s licence number appeared at the bottom of the Second Agreement beside his signature, he did not know how Wu could have obtained that information.

[126] Bin is a well-educated individual holding a Master’s degree in Accounting and having also studied financial management. He admitted that he has started at least two companies on his own. Despite this, he insisted that he entered into the partnership with Wu with no written agreement and that such an arrangement was not out of the ordinary. Bin’s denial that such an Agreement existed makes no sense given his education and business background.

[127] Bin’s counsel submitted that not having anything in writing about Noreast gave Bin “flexibility” and the leverage he wanted. Further, the First Agreement was prepared using a template given to Wu by a friend. The Second Agreement was prepared by Wu using the same template but after the fact. That is, after going into business with Bin and realizing he may not get back his investment and that he was not a shareholder, he created the Second Agreement to backstop his claims.

[128] The problem that Wu has, according to Bin’s counsel, is that the Second Agreement is missing paragraph five with respect to a 1.5M RMB investment into the business by Wu. As Wu’s counsel pointed out, however, paragraph 5 dealt with an investment into cashflow, not capital. Wu’s position has always been that he invested capital into Noreast, not cashflow.

[129] Bin’s counsel further submitted that Wu forged the Second Agreement in 2016 when he was attempting to gain control over Noreast and needed a document to corroborate his entitlement to a shareholding interest in the business. I reject this argument entirely. Wu had always (incorrectly) thought he was a 50% shareholder in Noreast. He acted on that assumption based on the Second Agreement when he called the Shareholder’s meeting described above. Wu’s actions throughout the Parties’ relationship were consistent with the existence of the Second Agreement.

[130] When asked about how he kept track of the investments made into the business made by Wu and himself, Bin referred to a chart that was contained at paragraph six of his affidavit sworn November 28, 2016. However, this chart related only to Bin’s evidence of monies he had received from his grandmother from 2012 to 2015, showing total payments of 692,243.12 RMB to various food and trading companies in China. Bin’s evidence was that he and Wu had an Excel spreadsheet which tracked expenses. However, this spreadsheet was never produced in the course of litigation. When it was suggested to Bin that he did not create any of this accounting until after the litigation was started, he was equivocal.

[131] Not surprisingly, Bin was unable to adequately respond to questions in cross-examination about why he would allow Wu to receive half the profits of Noreast without any documentation related to Wu’s investment into the business. He insisted that Wu alone was responsible for the bookkeeping at Noreast (despite the signed expense sheets by his father and the involvement of his mother in tracking income). He also denied that any tracking of income and expenses was related to Wu’s Journal. He testified that Wu did have a system, he just did not know what that system was.

[132] Bin’s evidence was that he bought 1,952,841.77 RMB worth of equipment for Noreast by March 2013. As Bin agreed that Wu was a 50% partner in the business, this would have meant that Wu was entitled to 50% of the amount invested by Bin without investing a penny himself. Such a situation would be absurd given Bin’s financial background and Wu’s evidence. It defies logic that, even if there was no Second Agreement, that there would not have been some form of tracking system for each Party’s investment. It is far more plausible that there was an agreement (the Second Agreement) that set out each Party’s financial obligations as well internal tracking systems (the expense and revenue reconciliations) and a running Journal kept by Wu to track his own contributions.

[133] Neither Bin nor Chen denied the intention that each would be a 50% partner in the business. Wu denies that Bin invested the amounts from his grandmother but does not deny that Bin made some investment into the business. I accept that both Parties invested money into Noreast and that, while their tracking and accounting systems for verifying those investments were not perfect, neither Party’s contributions can be denied. Admittedly, Bin does not have verification by way of transfer slips like Wu; however, as Bin points out, the transfer slips were never verified by bank statements. In his favour, Bin has customs and shipping documents as well as invoices. As such, and notwithstanding my concerns about Bin’s credibility, I accept that he made a contribution to the business through his grandmother’s funds of 1,952,841.77 RMB and that this contribution must be offset against the amounts claimed by Wu. Both Parties made significant contributions to Noreast, but Wu’s was greater. Bin and Chen owe Wu the difference as secured by the Notes.

[134] In addition to the investment from his inheritance, Bin insisted that he and his father invested $94,000 CDN into the business in 2012 and 2013 while staying in China. This money went to the purchase of products, training and consultants’ fees totaling $51,000 CDN, meals and entertainment totaling $12,000 CDN and travel and hotel fees of $31,000 CDN. Bin testified that all of these amounts were paid in cash, some by him and some by his father, but he had no record as to who paid what. He conceded that some of the amounts for flights may have been put on credit cards, but he had no receipts.

[135] Bin admitted that in 2012 his father did not have good credit because his tofu factory was not doing well. Bin himself had just graduated from a five-year university program. Despite this, somehow Bin and his father were able to come up with $94,000 CDN in cash to develop Noreast. Bin claimed he had been working in co-op programs as part of university program and had some money from doing so. His ability to save that much cash from working in a student program seems farfetched at best. At his discovery, Bin deposed that most of the $94,000 CDN came from his father.

[136] I do not accept Bin’s explanations for the lack of receipts. It strains credulity that a person with a Master’s degree in Accounting would not save a single receipt for his new business, including for the purpose of writing off business expenses against income. Bin flippantly told the Court that he is not a bookkeeper and therefore not good at saving receipts. He also said that many things are paid for in cash in China so there is no possibility of obtaining a receipt. These answers are obviously unsatisfactory.

[137] Nor do I accept Bin’s explanations about the source of the $94,000.00 CDN. Bin’s explanations of where the money came from and why the expenses were not recorded do not make sense. What does make sense is that all of the money came from Wu and that Bin prepared this chart after the litigation commenced in order to offset some of the amounts claimed by Wu. Neither Bin nor Chen should receive any credit for this amount.

[138] Bin’s evidence was that the business relationship between the Chens and Wu came apart when they discovered that Wu was stealing cash from the business. No details were provided by either of the Chens as to how much was allegedly stolen or when. The Defendants failed to provide evidence as to how it was that cash could have been stolen given the expense and income tracking systems in place which Bin acknowledged involved Wu as well as his mother and his father.

[139] As well, Bin’s reaction to the discovery of the alleged stolen cash was disproportionate. Rather than confronting Wu or taking the logical step of removing Wu’s wife’s signing authority on the company bank account such that only his mother had signing authority, he instructed his mother to stop signing cheques for the business. This resulted in a complete disruption to business operations including employees not receiving their salaries.

[140] Bin’s explanation for his actions was that, by taking such extreme measures, Wu would come clean and use the cash he had stolen to pay for expenses and then the issue would be “done.” Bin’s explanation is implausible given that he had no idea how much Wu had allegedly stolen. I also accept Wu’s evidence that Bin did far more than simply stop payments on cheques. He fired the company employees. He then proceeded to open new company accounts at CIBC and RBC without telling Wu after Wu closed the company TD account.

[141] Of some interest as well is Wu’s unrelenting attempts to receive copies of the RBC statements so that he could understand how much money was put into the company account after he left Noreast. This would have allowed him to inform himself on the issue of a reasonable amount for the shotgun buyout. Despite multiple pleas to the Chen’s counsel over several years for this information, and despite the undertaking at his examination to produce them, the statements were only produced at the end of the trial. Much time, effort and expense could have been avoided by early production of this information. The Plaintiff’s request that I draw an adverse inference from the failure to produce those statements. Such an inference is reasonable in the circumstances.

[142] With respect to Bin’s allegation of stolen cash, I accept the Plaintiff’s argument that the issue did not relate to stolen cash at all. It in fact was related to Wu’s refusal to provide further funds for the mung bean growth operation expansion proposed by Bin and his refusal to substitute Notes given by Chen for Notes given by Bin.

[143] Bin became animated when testifying about the invoices which Wu alleged had been created by the Chens. Bin dismissed this allegation as a complete fabrication. He then criticized Wu’s invoices for not having corroborating customs forms and suggested it was suspicious that the invoices were from manufacturers when products and machinery from China are purchased almost exclusively from trading companies. There was considerable evidence during this trial about various invoices with both sides alleging that the other had fabricated the invoices underlying their investments into the company. However, in the end, this evidence is of little consequence given my acceptance of both Parties’ contributions to the business.

[144] In summary, I find that Bin’s evidence must be approached with caution. I find that Bin, like his father, attempted to distance himself from any formal relationship with Wu. All of the business problems of Noreast were inevitably traced by Bin back to Wu’s alleged stealing of cash, which was never proven nor quantified. Bin’s educational and work background did not align with his illogical accounts of why there was no written agreement between him and Wu; why he did not keep receipts for the China trip with his father; why he failed to produce important documents such as the spreadsheet showing his investment into Noreast and the RBC bank statements; or how he was able to come up with $94,000 CDN cash within months of graduating from university.

[145] While there are problems with Bin’s evidence, I accept that he invested money in Noreast by way of an early inheritance or gift from his grandmother. There are difficulties with both Bin and Wu’s accounting systems and the authenticity of the underlying documents, but in the end, it is clear that a considerable amount of equipment was purchased. The Parties’ contributions to capital should be reconciled.

The Evidence of Wu

[146] Overall, I found Wu to be a credible witness. He was not evasive like Chen and his answers generally made sense. At times Wu was candid that he could not remember certain events or the timing of certain events.

[147] For example, he admitted that he did not always record transactions into the Journal at the time they arose. At times he went back and made check marks in pencil to verify accounts. I accept that from time to time he showed the Journal to Chen to verify certain entries. This makes sense since there was no other generalized accounting system according to Bin and Chen. There was a process for recording ongoing expenses and one for recording income but apparently nothing in writing to track the purchase of large items of equipment or bulk raw materials.

[148] Wu had no experience in the food production industry. His evidence that this necessitated him keeping careful track of all expenses made sense, especially since all of the money was coming out of his pocket.

[149] Wu denied that the Chens paid for anything in the business. He claims that whenever they paid for something they immediately sought reimbursement from Wu. While it may not normally make sense for a 50% partner to pay for everything, as mentioned earlier in this judgment, Chen had credit problems and Bin had just finished school. Bin was candid that he and his father were actively looking for an investor. I infer this was because neither of them had their own money to put into the business.

[150] I prefer Wu’s evidence over Chen’s as to how Noreast came about. That is, the plan was not to expand the Midland soymilk factory but to engage in a new business which would include soy milk but also dry tofu and veggie goose. Wu’s version of events has more of an air of reality. For example, why would equipment be ordered from China in late 2012 for a factory which was failing? If it was truly meant for Benfield, why was Benfield shut down within days or a few weeks of the new equipment arriving? There is no documentation that connects Wu to Benfield. It makes more sense that the equipment was ordered around the time that the First Agreement was signed in contemplation of opening a new business as per Wu’s evidence.

[151] As well, on the issue of timing, why would Wu commit to rental deposits, guaranteeing a lease, and paying insurance for a failing business? Wu’s evidence makes more sense on this point. That is, he made the lease and insurance payments in February and March 2013 in accordance with his understanding that he and Chen, and then later Bin, were starting up a new business. The lease and insurance payments were not “favours” as described by Bin. They were payments made in accordance with Wu’s obligations under the First Agreement with respect to the start-up of the new business.

[152] Wu’s recounting of how the various Notes came about also made sense. For example, with respect to the Note signed by Bin in April 2012 for 900,000 RMB, Wu’s evidence was that by April 2013 he had spent 1.8M RMB on the business, half of which was the Chen family’s responsibility. He sat down at his apartment with Chen and reviewed the Journal with him. Chen reviewed the numbers and agreed that Bin would write Wu a Note for 900,000 RMB. Bin wrote the Note to Wu at the Markham factory a few days later in Chen and Wu’s presence. The other Notes were written over time as Wu’s entries in the Journal revealed significant contributions on his part. The Notes signified an equalizing of contributions, failing which I infer that Wu would not have carried on with his cash infusions into the company.

[153] I accept that Wu and Chen had regular weekly and/or monthly accounting meetings and that when Wu’s overcontribution attained a certain level he would make a further request for a Note from Bin through Chen.

[154] The Defendants’ counsel argued that there was no reference to the Notes in Wu’s Journal. I do not think that is important. The amounts outstanding and owed to Wu (by his calculations) were clearly set out in the Journal. The debt was then crystallized by the Notes which I have found below were valid.

The Expert Evidence

[155] After the voir dire on Ms. Lin’s qualifications was completed, Plaintiff’s counsel submitted that Ms. Lin should not be qualified as an expert at this trial. He submitted that the report did not comply with Rule 52.03 of the Rules of Civil Procedure in that it was not signed, the names of the individuals involved in preparing the report were not provided, nor was there any information relating to the qualifications of the other members of the panel.

[156] Specifically, counsel noted that Ms. Lin had not yet graduated from the program that would qualify her as an expert; in fact, she was the most junior member of the panel. When asked about her involvement in preparing the report, her evidence was that the report was a group effort and yet her involvement was “100 percent.” Respectfully, this makes no sense.

[157] Mr. Rosenstein pointed out in response that the report was not stamped but was signed by the Institute. Ms. Lin’s evidence was that she has participated in 20 different cases where panel expert reports have been accepted. It is difficult to find Chinese handwriting experts here and the Court should be open to accepting how reports are done in different jurisdictions.

[158] In my ruling on the voir dire, I determined that, despite concerns about compliance with Rule 53.03, I would hear Ms. Lin’s testimony and determine what weight to give her report in the context of this judgment. For the reasons below, I give no weight to Ms. Lin’s report.

[159] Rule 53.03(2.1) sets out the requirements for an expert report as follows:

53.03(2.1) A report provided for the purposes of subrule (1) or (2) shall contain the following information:

1. The expert's name, address and area of expertise.

2. The expert’s qualifications and employment and educational experiences in his or her area of expertise.

3. The instructions provided to the expert in relation to the proceeding.

4. The nature of the opinion being sought and each issue in the proceeding to which the opinion relates.

5. The expert’s opinion respecting each issue and, where there is a range of opinions given, a summary of the range and the reasons for the expert’s own opinion within that range.

6. The expert’s reasons for his or her opinion, including,

i. a description of the factual assumptions on which the opinion is based,

ii. a description of any research conducted by the expert that led him or her to form the opinion, and

iii. a list of every document, if any, relied on by the expert in forming the opinion.

7. An acknowledgement of expert's duty (Form 53) signed by the expert.

[160] Expert reports must comply with these requirements. In DBDC Spadina Ltd. v. Walton, 2014 ONSC 4644, 121 O.R. (3d) 449, the Court rejected two experts’ reports because they lacked certain requirements under Rule 53.03. One of the reports did not disclose the name of the expert who had prepared the report, an omission the Court determined was fatal and one which the Court had “never seen before” (para. 60).

[161] Beyond the difficulties with compliance in relation to Rule 53.03, there are further procedural problems with the form of the Defendants’ expert report. The most glaring problem is the inability of the Plaintiff’s counsel to cross-examine the anonymous authors of the report on their qualifications, contributions to the report, or findings. As mentioned above, not even the names of the other authors were included in the report. Section 111 of the report provides a detailed description of the Taiwan Development & Research Academia but without any specifics with respect to the qualifications of Ms. Lin or in fact any person that worked there.

[162] No cases were provided to me from Canada or the United States where an expert report, co-authored by an anonymous panel and then presented by a single member, was accepted. Nor did the research of my law clerk reveal such a case.

[163] Finally, Ms. Lin’s report was comprehensive but was based on only one sample of Chen’s writing: the 2019 driver’s licence. The concerns with reliance on this sample as a comparator have already been highlighted in this judgment.

[164] The procedural deficiencies in the Defendants’ expert report can therefore be summarized as follows:

i. The report was not signed by Ms. Lin or any panel member.

ii. The report did not contain information relating to the expertise of any panel member. In addition, the expertise of Ms. Lin fails to rise to the level required in a highly contested case such as this. She lacked the full credentials to give the opinion sought.

iii. As the report was prepared by a panel, it was not known to the Court what contribution had been made by each member of the panel. The other panel members were not available for cross-examination.

iv. There are suspicious circumstances surrounding the driver’s license licence sample provided to Ms. Lin. Neither the First Agreement, the list of Benfield assets nor any of the expense receipts were provided to Ms. Lin. The only signature sample provided to Ms. Lin was one written after the litigation had been commenced even though more reliable samples were available.

[165] Given all of the above, I give no weight to Ms. Lin’s report and rely solely on the report of the Plaintiff.

[166] In contrast to Ms. Lin, the Plaintiff’s expert, Ms. Yang, had impressive qualifications and her expertise was accepted without contest. Ms. Yang was also not provided with pre-litigation handwriting samples. Rather, based on Bin’s position that he did not know how to write in Chinese characters and Chen’s position that he seldom writes and has written his signature in English for the last 20 years, Ms. Yang was provided with specimens written post litigation and with the knowledge they would be analyzed. She was not provided with the Benfield list of assets, the First Agreement or the expense receipts all of which Chen admitted he had signed.

[167] Not surprisingly, and given my findings in relation to the credibility of both Bin and Chen, Ms. Yang found evidence that there was a strong possibility that the writing samples of both were “disguised.”

[168] Bin’s counsel submitted that Ms. Yang engaged in confirmation bias; that is, she identified samples which confirmed her theories and ignored those that did not. Further, Bin’s counsel suggests that Ms. Yang did not attach to her report all of the specimen samples from Bin. She only attached some of them for analysis. In the end, she concludes that because the handwriting samples do not look like Bin’s writing, they must not be his. Bin’s counsel suggests that this approach sets Bin up for failure: he has either intentionally disguised his writing so the writing on the Notes must be his, or the handwriting samples have variations that are consistent with the writing in the Notes so the writing on the Notes must be his.

[169] However, Ms. Yang was not shaken in cross-examination. She conceded many of the propositions put to her by the Defendants’ counsel. She was firm, however, that while there are always variations in a person’s handwriting, there are certain consistencies which are present even when a person is attempting to disguise their handwriting. I find that she did a thorough and complete examination and accept her conclusions that:

i. Three of the Notes were likely signed by Chen.

ii. There are indications that the remaining five Notes were likely signed by Chen.

iii. It is likely the three Notes alleged to have been written by Bin were in fact written by him.

iv. There are indications that one of the Notes and the First Agreement were signed by Bin.

The Authenticity of the Notes

[170] There are 11 handwritten Notes in evidence in this case. It is alleged by Bin and Chen that all of them were forged by Wu including the signatures. Bin and Chen allege that Wu also created the Journal after the fact in order to substantiate the forged Notes.

[171] I reject this position for the reasons set out above. I further note the following points in support of Wu’s position:

i. The Journal is not perfect. Wu admits that not all entries were put in on the date they arose. Some entries and corrections were put in later. Some entries were written in pencil. The page numbering was consecutive. Wu admitted that he was a pig farmer and not a bookkeeper. This lack of perfection belies the idea that the Journal was merely made after the fact. More suspicion may have been merited had the Journal been without flaws.

ii. If the Notes were “created” by Wu, this means that Wu went to the trouble of forging the handwriting and signatures on all 11 Notes. With all due respect to Wu, this would be a forgery of significant breadth and sophistication. Ms. Yang’s findings with respect to the similarities between the specimen samples and Bin and Chen’s signatures are sufficiently reliable for this Court to conclude that Wu did not create any of the Notes.

[172] Part IV of the Bills of Exchange Act, R.S.C. 1985 c. B-4 defines a promissory Note as follows:

176 (1) A promissory Note is an unconditional promise in writing made by one person to another person, signed by the maker, engaging to pay, on demand or at a fixed or determinable future time, a sum certain in money to, or to the order of, a specified person or to bearer.

[173] The 11 Notes in this case meet the definition of Promissory Note as set out above.

[174] The Defendants argued that there was no consideration for the Notes. Section 52 of the Bills of Exchange Act provides that consideration for a bill may be constituted by any consideration sufficient to support a simple contract, or an antecedent debt or liability. In this case, the consideration is the antecedent debt.

[175] The Chens argue that there would be no reason for them to assume any debts of Noreast personally. These were debts of the corporation and not its shareholders. However, at the same time, Bin argues that the Parties were in fact not shareholders because the Second Agreement was never signed. He argues there was simply an understanding that each of them had a 50% interest in Noreast. If this is so, then he should not object to a reconciliation of their respective contributions.

[176] I further note that the Parties never understood the contributions made by Wu to Noreast as creating debts owing only by the company. Rather, the Parties always understood that unmatched contributions made by Wu would be reimbursed by either Bin or Chen. As such, the Parties understood that a debt owing by the Chens to Wu arose whenever the latter made unmatched contributions to the company. Furthermore, Wu frequently made loans directly to the Chens. This amounts to an antecedent debt and satisfies the requirement for consideration.

[177] I also find that, in exchange for the Notes, Wu was forbearing from demanding repayment of his loans from either the company or from the Chens. It is clear that forbearing from moving on a debt is sufficient consideration for a promisor’s promise to pay, even where that forbearance benefits a third party: see Caligiuri v Tumillo, 2003 MBCA 119, 38 B.L.R. (3d) 163 at paras. 11-14.

[178] There was never any issue raised as to the capacity of any Party in this case and as such I find that Wu, Bin and Chen had the capacity to enter into the obligations under the Notes. The Notes are clear on their face in that the amount, the debtor and the creditor are stated on each.

[179] There is also no issue to be raised with respect to the Limitations Act in that the Notes are payable on demand and the Limitation Period does not begin to run until the demand is made: Henry v Greig, 2015 ONSC 168. In this case, there was no specified date for payment, so the Notes are presumed to be payable on demand. According to the chronology of events provided by counsel, Wu formally demanded payment on the Notes on August 29, 2016. He issued his claim less than two weeks later and well within the Limitation Period.

[180] Wu claims payment and interest on six Notes;

i. The 200,000 RMB Note dated September 24, 2012, from Chen to Wu (no interest rate stipulated).

ii. The 210,000 RMB Note dated April 1, 2013, from Chen to Wu (interest rate of 1.5% stipulated).

iii. The note dated April 7, 2013, for 156,380 RMB (reduced to 120,380 RMB) (no interest rate stipulated)

iv. The 900,000 RMB Note dated April 1, 2013, from Bin to Wu (interest rate of 1.5% stipulated).

v. The 900,000 RMB Note dated August 1, 2013, from Bin to Wu (no interest rate stipulated)

vi. The 500,000 RMB Note dated November 20, 2013, from Bin to Wu (interest rate of 1.5% stipulated).

[181] As noted, three of the Notes do not have stipulated interest rates. Wu’s evidence was that, in the region where the Parties are from in China, it is common for private loans to attract an interest rate of 1.5% per month. This was not contested by Bin. Wu also relies on the rate of interest in Notes for interest signed by Chen in the years following the signing of the original Notes.

[182] 1.5% per month works out to an interest rate of 18% per year. This is a very high rate by any standard. The Court is not prepared to accept that a Note without any stipulated rate of interest should attract an interest rate of 18%. Indeed, under s. 3 of the Interest Act, R.S.C. 1985, c. I-15, a written contract with an interest rate higher than 10% per annum must explicitly provide the yearly rate. Otherwise, no interest exceeding the rate or percentage of five percent per annum shall be chargeable. I note that even the Notes which actually do provide a monthly rate fail to explicitly provide the yearly rate.

[183] As such, I find that the interest rate on the Notes should be five percent from the time they were made until the time when the cause of action arose; that is, the time when Wu made a demand for payment. Where no rate was stipulated, I find that the interest from the time of this demand for payment onwards should align with the rates for pre-judgment interest in the Courts of Justice Act. Where a rate was stipulated, I find that the interest from the demand for payment onwards should match the interest rate actually provided in the Note. This conclusion is consistent with the Ontario Court of Appeal’s reasoning in Pizzey Gate v Crestwood Lake Ltd., [2004] 236 D.L.R. (4th) 177.

[184] Ms. Yang concluded that Bin likely wrote the three Notes in (d), (e) and (f) above and that he likely signed the Note for 900,000 RMB dated April 1, 2013, as well as the Second Agreement. She could not conclude that he signed the Notes dated August 1, 2013, and November 20, 2013. However, given her findings with respect to Bin’s handwriting samples being “disguised” and my findings in relation to concerns about his overall credibility, I am satisfied that Bin wrote and signed all three of the Notes that he is alleged to have given to Wu.

[185] Ms. Yang did not conclude that it was likely that Chen signed the Notes dated September 24, 2012, or April 1, 2013. She could only say that there were indications that he signed them. However, Ms. Yang’s conclusions in relation to Chen must be taken in the context of her findings in relation to Chen’s attempt to disguise his handwriting and Chen’s failure to provide available pre-litigation handwriting samples (i.e. the Benfield asset list and the expense reports). There is also a concern about the comparator sample provided to Ms. Yang by way of the 2019 driver’s licence in that there was evidence that Bin deliberately renewed his signature on that licence to ensure it did not match the signatures on the Notes and the First Agreement.

[186] Given all of the above, and in light of the credibility findings and expert’s conclusions related to Bin and Chen, I find that there is strong evidence, which I accept, that they wrote and signed the Notes. Given this finding, it is not necessary to explore in detail the documents underlying the Notes. I have accepted Wu’s evidence and therefore accept the accounting in the Journal and the documents to which it relates. The money as claimed in the Notes is owed to Wu plus the interest as per the reasons above. Deducted from the principal of Bin’s notes is the 1,477,201 RMB contribution by Bin.

[187] I therefore find that Wu is entitled to be paid as follows:

a. From Qixiang Chen the following amounts:

i. The 200,000 RMB Note with an interest rate of five % per annum from September 24, 2012, and a pre-judgment interest rate as set out in the Courts of Justice Act from August 29, 2016 (the date Wu formally demanded payment).

ii. The 210,000 RMB Note with an interest rate of five % per annum from April 1, 2013, and a pre-judgment interest rate of 1.5% per month from August 29, 2016.

iii. The 120,380 RMB Note with an interest rate of five % per annum from April 7, 2013, and a pre-judgment interest rate as set out in the Courts of Justice from August 29, 2016.

b. From Bin Chen the following amounts:

i. The three Notes signed by Bin. Deducted from the principal of Bin’s Notes is the 1,952,841.77 RMB invested by Bin in Noreast as found herein. As Bin’s Notes total 2,300,000 RMB, this would absorb the two 900,000 RMB notes and leave 347,158.30 owing on the 500,000 RMB note (with interest at 5% per annum from December 20, 2013, and 1.5% per month from August 29, 2016).

ii. Interest is to be calculated based on a simple interest rate and not compounded.

iii. The amounts payable by the Defendants are intended to be in Canadian currency sufficient to purchase the RMB amounts set out in (a) and (b) above at an Ontario bank listed in Schedule 1 of the Bank Act as of the close of business on the date of this judgment.

[188] Counsel for the Plaintiff shall prepare a revised Appendix in Canadian dollars for the draft judgment. I may be spoken to if there is any disagreement in relation to the calculation Appendix. Once the amounts in the Appendix are calculated and the judgment signed, the amounts are payable by the Defendants forthwith.

PUNITIVE DAMAGES

[189] This is not a case for punitive damages arising as a result of the Defendants’ alleged oppressive conduct during the Parties’ business relationship, nor is it an appropriate case to grant punitive damages for the Defendants’ highhanded conduct during the litigation. This claim related solely to the enforcement of a debt. The Defendants’ conduct with respect to their unreliable and evasive evidence and their failure to disclose relevant documents can be adequately dealt with in costs.

COSTS

[190] The Plaintiff has had some success. Costs should flow to the Plaintiff accordingly. I will receive written submissions on costs starting with Plaintiff seven days from the date of release of this judgment on a seven-day turnaround. Cost submissions shall not exceed 10 double spaced pages in length exclusive of any Offers to Settle. Case law referred to in the written submissions must be hyperlinked. If no submissions are received within 35 days of the date of this judgment, costs will be deemed to be settled.

C. Gilmore, J.

Released: December 30, 2020

COURT FILE NO.: CV-16-11599-00CL

DATE: 20201230

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Zizhong Wu and Noreast Foods Ltd.
Plaintiffs

– and –

Bin Chen and Qixiang Chen
Defendants

TRIAL JUDGMENT

C. Gilmore, J.

Released: December 30, 2020

[^1]: While Ms. Yang said she was unable to make out the date on the Driver’s Licence, it was conceded to be dated November 30, 2016. This is a different Driver’s Licence than the one provided by Chen to his own expert as is explained below.