Executive Summary: Key Legal and Evidentiary Issues

• Dispute centered on repayment of $10.4M CAD allegedly invested by plaintiffs into a real estate project.

• Plaintiffs asserted a verbal and later written agreement for repayment, disputed by defendants.

• Defendants applied for summary dismissal citing expiration of limitation period under BC’s Limitation Act.

• Plaintiffs relied on later WeChat communications and an October 2023 meeting to show a renewed agreement.

• Defendants also sought to strike the case as an abuse of process, linking it to a prior shareholder dispute.

• The court found contested facts and credibility issues unsuitable for summary resolution, dismissing the application.

Facts and outcome of the case

The case involves a dispute between two couples—Zhi Ying Zhou and Zhen Li (the plaintiffs), and Xiaohong Liu and Zhongping Xu (the defendants)—over a failed investment in a Richmond, BC property development known as the “Minoru Project.” The parties had previously been business partners, with the plaintiffs contributing approximately $8 million CAD to the project. The corporate defendant, Canada Sparkle Holdings Ltd., was established to facilitate the acquisition of the Minoru Properties. The plaintiffs allege that the funds were to be repaid, either under an original verbal agreement or under a later written agreement communicated through WeChat in 2018.

The project became mired in complications when a third party—the Yu Family—became involved and eventually sued the defendants in what became known as the Soho Litigation. During that litigation, the plaintiffs claim they learned that the ownership structure of Canada Sparkle deviated from the original plan, prompting further discussions about repayment. According to the plaintiffs, a new agreement was reached via WeChat and reaffirmed in person in October 2023, promising repayment from litigation trust funds.

The defendants disputed both the existence of a repayment agreement and any enforceable debt. They applied to have the claim summarily dismissed under Rule 9-6, arguing it was barred by the limitation period in the Limitation Act. Alternatively, they claimed the suit should be struck as an abuse of process under Rule 9-5, citing overlap with the previous Soho Litigation. They relied on affidavits suggesting that any claim by the plaintiffs had already arisen and was discoverable in 2016, during the earlier case.

Justice Underhill declined to grant either form of relief. The court held that the existence and timing of the repayment agreement were hotly contested and involved weighing evidence and assessing credibility—tasks not appropriate on a summary judgment application. The court also found that the connection to the Soho Litigation was not sufficient to establish abuse of process. Although there were shared facts and some coordination between the parties in the earlier litigation, the claims and legal bases in the current action were distinct.

As a result, the defendants’ application was dismissed in full. The plaintiffs were awarded costs on Scale B, with the court indicating that further steps in the litigation would be necessary to resolve the underlying contractual and trust-related claims.