Court File and Parties

Court File No.: CV-25-00741704-00CL Date: November 5, 2025 Superior Court of Justice – Ontario (Commercial List)

Re: Fan Zhou, 3888 Investment Group Limited and Visionary Holdings Inc., Plaintiffs

And: Zhong Chen, Donald M. Kealey, Simon L. Tang, Charles Youngfun Fu, Jie Luo, Xiaofeng Wang and Guohao Xu, Defendants

Before: Justice Jane Dietrich

Counsel:

• Andrew Ostrom, for the Plaintiffs
• Arash Jazayeri, for the Defendants

Heard: October 27, 2025

Reasons for Decision

Introduction

[1] The defendants Zhong Chen, Donald M. Kealey, Simon L. Tang, Charles Yongjun Fu, Jie Luo, (together the "Moving Parties") seek an order finding Fan Zhou, 3888 Investment Group Limited ("388") and Wan Hong Wu in breach of the order of Justice Steele made in these proceedings dated June 19, 2025 (the "June 19 Order"). The Moving Parties also seek a declaration that Ms. Zhou and Ms. Wu are in contempt of that Order and that their actions contrary to that Order are null and void.

[2] In their notice of motion, the Moving Parties also sought an order that Ms. Zhou and Wan Hong Wu as director of 3888 be immediately incarcerated, however, the Moving Parties acknowledge that should a finding of contempt be made, the penalty is not properly the subject of this hearing.

[3] Ms. Zhou, 388, and Ms. Wu oppose the relief sought.

Background

Visionary Holdings Inc.

[4] The dispute centers around a company, Visionary Holdings Inc. ("VHI"). VHI is an Ontario corporation, publicly traded on the NASDAQ. Ms. Zhou is the founder of VHI and is also a director. 388 is wholly owned and controlled by Ms. Zhou's daughter, Ms. Wu. 388 takes the position that it is the controlling voting shareholder of VHI – although there appears to be some dispute about the shares held by 388.

[5] The Moving Parties are five members of the nine-person Board of Directors of VHI.

The June 19 Order

[6] The June 19 Order was granted by Justice Steele following an endorsement she released of the same date (the "June 19 Endorsement").

[7] As Justice Steele noted in the June 19 Endorsement, the motion for interim relief before her centered around two things: (a) the rightful board of directors of VHI; and (b) whether there is a prima facie case that Ms. Zhou engaged in fraud and/or oppressive conduct in breach of her fiduciary duties owed to VHI, such that an order directing an investigation was appropriate. At that time, the Moving Parties also sought an order that restrained Ms. Zhou from participating directly or indirectly in the management of VHI pending further court order.

[8] First, Justice Steele found that the Board of Directors of VHI as it existed on March 25, 2025, continued to be the Board of Directors of VHI, subject to further order of the Court and that the shareholder meetings on March 26, 2025, and April 4, 2025, were a nullity: the June 19 Endorsement, at para. 28.

[9] Second, Justice Steele found that there was prima facie evidence of serious misconduct on the part of Ms. Zhou and that an investigation was in the best interest of VHI: the June 19 Endorsement, at para. 52.

[10] Third, Justice Steele found that the test set out in RJR-MacDonald Inc. v. Canada (A.G.), [1994] 1 S.C.R. 311, at p. 333 was met, as at para. 57 of the June 19 Endorsement, Justice Steele noted she was:

satisfied that the balance of convenience weighs in favour of enjoining Zhou from exercising powers as a director, officer, or shareholder of VHI pending an inspection. The evidence in respect of the Zhang Action, among other things, suggests that Zhou may not be acting in accordance with her fiduciary duties to the company. Zhou will face minor inconvenience from the injunction (being temporarily removed from the management of VHI). However, without the injunction in place, VHI and the defendants risk significant damage to VHI's reputation and potential legal actions, among other things

[11] Fourth, Justice Steele noted that the Moving Parties sought to prevent 388 from exercising its purported super-majority voting shares to control VHI. In that context, Justice Steele found that 388 was restrained from taking action to remove the defendants as VHI directors pending the outcome of the investigation or further court order: the June 19 Endorsement, at para. 61.

[12] In a later endorsement dated September 16, 2025, Justice Steele noted that the parties had agreed on the form of Order following the release of her June 19 Endorsement. She also scheduled this contempt motion at that time based on an exchange of affidavit evidence and out of court cross examinations.

[13] The operative paragraphs of the June 19 Order at issue are as follows:

3. THIS COURT ORDERS that the Board of Directors of VHI as it existed on March 25, 2025 shall constitute the lawful Board of Directors until further court order;

4. THIS COURT ORDERS that Fan Zhou is restrained from participating directly or indirectly in the management of VHI pending further court order;

5. THIS COURT ORDERS that 3888 Investment Group Limited is restrained from taking action to remove the Defendants as directors of VHI pending further court order; and

6. THIS COURT ORDERS that Fan Zhou and all persons who have notice of this Order shall forthwith provide to the Board of Directors of VHI access to all records, key codes, usernames and passwords:

• EDGAR, NASDAQ and all securities related portals for VHI

Moving Parties' Allegations of Contempt

[14] The Moving Parties filed five affidavits in support of their motion: four affidavits of Donald Marc Kealey sworn May 31, 2025, September 23, 2025, October 14, 2025, and October 22, 2025, as well as an affidavit of Chengrong Cai sworn May 31, 2025.

[15] The responding parties filed an affidavit of Ms. Zhou sworn on October 7, 2025, an affidavit of Ms. Wu sworn October 6, 2025, and an affidavit Xiyong Hou sworn October 7, 2025.

[16] Transcripts of the cross examinations of Ms. Zhou, Ms. Wu and Xiyong Hou were also uploaded to case center. There was no cross examination of Mr. Kealey.

[17] The underlying material contains numerous allegations of contempt, including repeated notices sent by Ms. Zhou calling board meetings. However, in oral submissions, counsel for the Moving Parties relied on three specific actions to ground their position of contempt.

The July 1 Letter

[18] First, on July 1, 2025, Ms. Zhou communicated with the SEC (the "July 1 Letter") on behalf of VHI as "Chairperson of the Board of Directors of Visionary Holding Inc." and asked the SEC to communicate directly with her. In her affidavit, Ms. Zhou also noted that she expressed her opposition to the SEC potentially releasing control of VHI's EDGAR filing account to the Moving Parties.

[19] The Moving Parties rely on the July 1 Letter to support two breaches of the June 19 Order. First, the Moving Parties take the position that through this letter, Ms. Zhou participated directly or indirectly in the management of VHI contrary to paragraph 4 of that order, and second that she is taking steps to deny the Moving Parties passwords to EDGAR contrary to paragraph 6 of that order.

[20] Ms. Zhou does not dispute that she sent the letter but argues that she sent the letter in her capacity as a valid director of VHI to bring certain inter-director issues to the attention of the regulator. The July 1 Letter describes certain actions that the Moving Parties took that Ms. Zhou takes issue with, but instead of writing as a director, she opens the letter by making clear she is writing 'On behalf of Visionary'. She provides an update of 'Pending Judicial Proceedings' during which she explains that "…the Company must maintain the status quo pending further orders, making the transfer of CIK control at this stage uncertain and potentially risky, which is inconsistent with the interest of the Company and in shareholders." She then provides her view of the "Irregular Practices by Director Zhong Chen" and explains his proposal (which was not carried out) to issue additional common shares to each director. After spending more time taking issue with Zhong Chen's 'plot' she requests the SEC's support to protect the interests of VHI and defer the transfer of CIK control (being critical to file documents with the SEC) to the Visionary Board of Directors at this time. Ms. Zhou goes on to state that "Any claim that Mr. Steven Schuster of McLaughlin & Stern LLP serves as the Company's legal counsel is entirely devoid of factual and legal basis", and states that "the Company categorically disavows and will not ratify such actions". She then writes that "The Company has formally appointed Mr. Martin G. Prego (Prego Law Group PLLC) to exclusively handle matters relating to Nasdaq." Finally, she concludes by declaring "The Company solemnly declares that any legal acts undertaken in its name by unauthorized parties without written authorization are invalid civil acts, regardless of whether they involve regulatory affairs. In the event of a formal appointment of a legal representative in the future, the Company will issue a separate written notice signed by myself…" and provides her email for any communication going forward.

July 14 Correspondence

[21] On July 14, 2025, Ms. Zhou also wrote to Steven Schuster, VHI's US counsel handling SEC communications, purporting to relieve him of his duties as securities counsel for VHI. In this email, she advises Mr. Schuster that the July 1, 2025, board meeting was not legally convened and because of this, Zhong Chen has no right to hire securities counsel on behalf of the Company. She writes, "You are not currently Visionary's legitimate securities counsel."

[22] Ms. Zhou does not dispute sending the email; however, she takes the position that she was doing so as a director of VHI.

Voting of 388's Shares by Ms. Wu

[23] A special meeting of VHI's shareholders purportedly took place on July 24, 2025. There is some allegation that Ms. Wu was involved in calling the meeting, but that is disputed. However, it is undisputed that Ms. Wu attended at the meeting and voted 388's shares to expand the Board and in favour of four board candidates. Similarly, at a purported shareholder meeting on September 4, 2025, it is undisputed that Ms. Wu again voted 388's shares to enlarge the VHI Board.

[24] Ms. Wu argues that she knew from the June 19 Order that she was prevented from using 388's shares to vote to remove the Moving Parties as directors, but that she did not understand that voting her shares to dilute those directors was problematic. She submits that at the time, she was not aware of paragraph 3 of the June 19 Order which required the board of directors of VHI remain as it was as of March 25, 2025, absent further order of the court.

Issues

[25] The two issues to be determined are whether (a) Ms. Zhou is in contempt of the June 19 Order; and (b) 388 and Ms. Wu are in contempt of the June 19 Order.

Analysis

[26] Carey v. Laiken, 2015 SCC 17, 2 S.C.R. 79, at paras. 32-35, outlines that civil contempt has three elements which must be established beyond a reasonable doubt:

a. the order alleged to have been breached must state clearly and unequivocally what should and should not be done;

b. the party alleged to have breached the order must have had actual knowledge of it; and

c. the party allegedly in breach must have intentionally done the act that the order prohibits or intentionally failed to do the act that the order compels.

[27] The contempt power is discretionary, and courts have consistently discouraged its routine use to obtain compliance with court orders, as it is an enforcement power of last rather than first resort: see Carey, at para. 36.

Was the June 19 Order Clear and Unequivocal?

[28] The first element of clarity ensures that a party will not be found in contempt where an order is unclear. An order may be unclear if it is missing an essential detail about where, when, or to whom it applies, if it incorporates overly broad language, or if external circumstances have obscured its meaning: Carey, at para. 33.

[29] The Ontario Court of Appeal held in Boily v. Carleton Condominium Corporation 145 et al., 2014 ONCA 574, 121 O.R. (3d) 670, at para. 59, that where the alleged contempt takes place after an endorsement has been released but before it has been finalized through an issued Court Order, the Court must assess the clarity of the term in issue in the context of the entire endorsement. This statement is applicable in the present circumstances. The conduct at issue occurred before the June 19 Order was issued (on or about September 23, 2025), but after Justice Steele's reasons were released on June 19, 2025.

[30] However, where there are multiple reasonable interpretations of an order, or a range of meanings to which the order could give rise, the alleged contemnor is entitled to the benefit of the interpretation that is in their favour: see Her Majesty the Queen in Right of Ontario v. Canadian Broadcasting Corporation, 2019 ONSC 1079, at para. 149.

[31] I am satisfied beyond a reasonable doubt that paragraph 4 of the June 19 Order is sufficiently clear and unequivocal in that Ms. Zhou is prohibited from participating directly or indirectly in the management of VHI absent a further order of the Court.

[32] Further, I am satisfied beyond a reasonable doubt that paragraph 6 of the June 19 Order is also sufficiently clear – that Ms. Zhou and all persons who have notice of that Order are to provide the relevant passwords and records to the Board of Directors.

[33] With respect to Ms. Wu, the Moving Parties rely on paragraph 3 of the June 19 Order which, as noted above, provides that the Board of Directors of VHI as it existed on March 25, 2025, shall constitute the lawful Board of Directors until further court order.

[34] Ms. Wu argues that this paragraph is declaratory in nature and not directive and so is not sufficiently clear and unequivocal to ground a finding of contempt. As noted by the Alberta Court of Appeal in Wesley v. Alberta, 2024 ABCA 276, 499 D.L.R. (4th) 197, at para. 86, relying on The Right Honourable The Lord Woolf & Jeremy Woolf, The Zamir & Woolf: The Declaratory Judgment, 3rd ed. (London: Sweet & Maxwell, 2002), at para. 1.02, a declaratory order is one that pronounces a legal relationship but does not contain any order which can be enforced. This is contrasted with a coercive judgment which requires a defendant comply with a duty. See also, Visagie v. TVX Gold Inc., [2002] 22 C.C.E.L. (3d) 273, at para. 32, where the court held that a judgment which affirms or creates rights or affirms or creates a particular relationship between the parties is not one which can be enforced by a contempt motion.

[35] As recently stated by the Ontario Court of Appeal in Bryton Capital Corp. GP Ltd. v. CIM Bayview Creek Inc., 2023 ONCA 363, 8 C.B.R. (7th) 22, at para. 62:

A declaratory judgment is "a formal statement by a court pronouncing upon the existence or non-existence of a legal state of affairs": Harry Woolf & Jeremy Woolf, Zamir & Woolf: The Declaratory Judgment, 3rd ed. (London: Sweet & Maxwell, 2002), at p. 1. Declaratory relief, being restricted to a declaration of the parties' rights, "is mainly sought in commercial matters to help parties define their rights" and contains no provision ordering any party to do anything or any form of sanction: Harrison v. Antonopoulos (2002), 62 O.R. (3d) 463 (S.C.), at paras. 27-28.

[36] Paragraph 3 of the June 19 Order defines the rights of the parties to the underlying proceeding by declaration – that Board of VHI is as it was on March 25, 2025 until further Court order – it does not require any party to do anything. It can be contrasted with Paragraph 5 of the June 19 Order which specifically restrains 388 from taking action to remove the Moving Parties as directors of VHI pending further court order. Accordingly, I am not satisfied beyond a reasonable doubt that paragraph 3 of the June 19 Order is sufficient to ground a motion for contempt.

Did Ms. Zhou and Ms. Wu have Actual Knowledge of the June 19 Order?

[37] There is no dispute that Ms. Zhou had actual knowledge of the June 19 Order at all relevant times.

[38] However, given my finding above that paragraph 3 of the June 19 Order is not directive – and thus cannot form the basis for a contempt finding – Ms. Wu's actual knowledge of the June 19 Order is not relevant.

Did the Actions in Question Amount to an Intentional Breach of the June 19 Order?

[39] This prong of the test requires that the party allegedly in breach of the order must have intentionally done the act that the order prohibits: see Carey, at para. 35. There is no dispute among the parties that the Moving Parties must only prove that Ms. Zhou intended to send the July 1 Letter and the July 14 Correspondence and that those two acts resulted in a breach of the June 19 Order, not that Ms. Zhou intended to breach the order: see para. 39 of Carey.

[40] It is not necessary for me to decide if Ms. Zhou's actions of calling the directors' meetings referenced in the Moving Parties' material violate paragraph 4 of the June 19 Order and amount to Ms. Zhou directly or indirectly interfering with management of VHI, given that the Moving Parties have narrowed the actions complained of with respect to Ms. Zhou to the July 1 Letter and July 14 Correspondence.

[41] There is no dispute that Ms. Zhou intended to send the July 1 Letter and the July 14 Correspondence. What is in dispute is whether those two acts amounted to Ms. Zhou participating directly or indirectly in the management of VHI, contrary to paragraph 4 of the June 19 Order and whether the July 1 Letter amounted to Ms. Zhou failing to provide the relevant codes and records as required by paragraph 6 of the June 19 Order.

[42] The July 1 Letter, as described above, was sent and took statements and positions on behalf of the Company. Ms. Zhou attempted to convince the SEC to take certain steps in respect of VHI, to only communicate with her on behalf of VHI and with the counsel she purportedly claimed was acting for VHI. I am not persuaded by Ms. Zhou that the July 1 Letter and the July 14 Correspondence were solely communications by Ms. Zhou as a director of VHI expressing inter-director disputes to a regulator. Rather, I am satisfied beyond a reasonable doubt that the July 1 Letter amounted to Ms. Zhou participating directly or indirectly in the management of VHI contrary to paragraph 4 of the June 19 Order.

[43] However, I am not persuaded that the July 1 Letter amounted to a breach of paragraph 6 of the June 19 Order. Paragraph 6 of the June 19 Order is very specific and directs Ms. Zhou (and others) to provide certain passwords and records to the board of directors of VHI. There is no evidence before me that Ms. Zhou did not provide such passwords or records. In the July 1 Letter, Ms. Zhou advocates that the SEC should not grant the relevant controls to the board of VHI, however, paragraph 6 of the June 19 Order does not specifically address such behaviour.

[44] As well, in the July 14 Correspondence, Ms. Zhou interferes with the management of VHI by interfering with selection of VHI's counsel. I am also satisfied beyond a reasonable doubt that this action was in breach of paragraph 4 of the June 19 Order.

[45] Given my finding regarding paragraph 3 of the June 19 Order above, it is not necessary to consider 388 or Ms. Wu's conduct in this regard.

Should I use my Discretion to Decline to Make a Finding of Contempt?

[46] The contempt power is discretionary. The court may ultimately decline to make a finding of contempt even where the three elements have been proven beyond a reasonable doubt. As an alternative to making a contempt order too readily, a judge should consider other options, such as issuing a declaration that the party breached the order or encouraging professional assistance: Carey, at para. 36; Greig et al. v. Kritikopoulou, 2023 ONSC 874, at paras. 34-35.

[47] In the current circumstances, I am not prepared to exercise my discretion to decline to make of finding of contempt.

Disposition

[48] For the reasons set out above, I find Ms. Zhou in contempt of paragraph 4 of the June 19 Order. However, I decline to make such a finding in respect of 388 or Ms. Wu.

[49] I direct counsel to arrange a 30-minute case conference before me through the Commercial List Office to schedule the penalty phase of this proceeding. In that phase, consideration will be given to Ms. Zhou's efforts to purge her contempt.

[50] Further, if the parties are not able to resolve costs of this matter, counsel to the Moving Parties may email a costs submission of no more than three double-spaced pages to the Commercial List Office within 15 days of the date of this endorsement. Ms. Zhou, 388 and Ms. Wu may deliver responding submissions of no more than three double-spaced pages within 15 days following the delivery of the Moving Parties' submissions. No reply submissions are to be delivered without leave.

The Honourable Justice Jane Dietrich

Date: November 5, 2025