Executive Summary: Key Legal and Evidentiary Issues

• Plaintiff Yixuan Zeng sought recognition and enforcement in British Columbia of a Chinese Judgment obtained against defendants Qicheng Zuo and Lingling Ding for unpaid loans totaling RMB 25 million in principal.

• Defendants, who were self-represented, shifted their defence from allegations of fraud to claims of duress, arguing their participation in the Chinese legal proceedings was not free or voluntary.

• Extensive certified text message translations provided contemporaneous, objective evidence contradicting the defendants' duress claims and demonstrating their active, cooperative participation in the Chinese Action.

• No steps were taken by the defendants to challenge or set aside the Chinese Judgment in China over a period of seven and a half years, and the expert on Chinese law confirmed the Civil Mediation Paper is equivalent to a civil judgment and cannot be appealed.

• The Court found the matter suitable for summary trial given the sufficiently objective documentary evidence, dismissing the need for a conventional trial.

• Plaintiff's request for special costs was denied, though the Court cautioned against the use of AI-generated legal submissions, calling it a dangerous endeavour with the potential to mislead the Court and counsel.

The loans and the business relationship

Between 2006 and 2014, Yixuan Zeng and several other individual lenders made private loans to Qicheng Zuo for the operation of the defendants' business in Nanjing, China. The loans were structured as investments with interest payable quarterly and the principal repayable on demand, totaling RMB 25 million — approximately CAD $5 million. Commencing around 2015, the defendants began missing interest payments. A mutual friend, Yunxia Zhu, acted as the lenders' intermediary, and the defendants assured her they would personally guarantee the loans and interest owing.

Discovery of the defendants' move to Canada and the frozen assets

Around January 2018, Mr. Zeng learned the defendants had permanently relocated to Canada and could not repay the loans because their assets in China had been frozen as a result of legal actions commenced by other creditors. After learning of the other creditors' actions, the lenders decided to commence a civil action against the defendants in China, with Mr. Zeng acting as the representative plaintiff. Through telephone calls and text messages, the defendants were informed of and agreed to this arrangement, even entering into a new consolidated loan agreement with Mr. Zeng to facilitate the lawsuit.

The Chinese legal proceedings and the consent judgment

On March 7, 2018, Mr. Zeng commenced the lawsuit in the People's Court of Gulou District, Nanjing City. The defendants acknowledged the debts and agreed to consent to judgment. Mr. Zuo confirmed by text message that the facts were clear and there was no real dispute. The defendants first appointed Mr. Dou and then Zhengjun Wang — Ms. Ding's first cousin and the defendants' employee — as their agent, filing power of attorney documents with the Chinese Court granting Mr. Wang full authority to participate in mediation and settlement. On April 26, 2018, through a court-mediated process, the parties reached a settlement agreement recorded in a Civil Mediation Paper. The Chinese Judgment required the defendants to pay RMB 35.35 million in principal and accrued interest, plus RMB 114,275 in court and security guarantee fees, before May 15, 2018. No payments were made by that deadline.

Enforcement efforts and partial payments

On or around May 16, 2018, Mr. Zeng applied to the Chinese Court to enforce the Chinese Judgment. Between 2018 and 2021, the Chinese Court undertook enforcement procedures against the defendants' frozen assets in China and made distributions of the proceeds to the defendants' judgment creditors, including Mr. Zeng. In 2020 and 2021, Mr. Zeng received distributions totaling RMB 5,846,332 in partial satisfaction of the Chinese Judgment. The defendants also made 15 voluntary payments totaling approximately RMB 62,800 between December 2018 and June 2021, consistently acknowledging the debt during that period. Despite these partial payments, the entire principal amount of RMB 35.35 million remained outstanding as of January 1, 2025, along with RMB 20,455,141.64 in accrued interest, with interest continuing to accrue at RMB 10,273.97 per day.

The British Columbia proceedings and the property at issue

Mr. Zeng commenced proceedings in British Columbia and, as an alternative to his primary enforcement claim, brought a debt claim and alleged a constructive trust over a property at 4455 Westminster Highway, Richmond, B.C., filing a certificate of pending litigation in November 2021. By consent, the CPL was removed in September 2024 and the property was sold, with approximately CAD $600,000 held in trust by the defendants' notary pending the outcome of the case. The defendants filed a counterclaim alleging that the imposition of the CPL caused them damage because they were forced to sell the property when the housing market was lower than it would otherwise have been, claiming a potential loss of $350,000, and seeking repayment of the enforcement payments made to Mr. Zeng by the Chinese Court, plus interest.

The defendants' shifting defences

The self-represented defendants initially alleged that the Chinese Judgment was obtained by fraud, then shifted their position to argue they participated in the Chinese Action under duress. Mr. Zuo submitted that financial difficulties and concerns for personal safety prevented him from returning to China to defend himself. At the hearing, the defendants played an unverified recording of their teenage daughter recounting that she had heard yelling at the time the Chinese Action was proceeding. The Court found this evidence of little evidentiary value and noted that the copious text messages between the parties told a different story, reflecting a friendly and cooperative tone inconsistent with duress.

The Court's analysis of foreign judgment enforceability

The Court applied the common law principles from Beals v. Saldanha, 2003 SCC 72, and Lonking (China) Machinery Sales Co. Ltd. v. Zhao, 2024 BCSC 79, requiring that the foreign court had jurisdiction, that the judgment was final and conclusive, and that no available defence existed. The Court found the Chinese Court had jurisdiction based on the defendants' attornment through their appointed agents and the real and substantial connection between the dispute and Nanjing, where the loans were made and the defendants' business operated. Expert evidence from Dong Liu, a former Chinese court judge, confirmed that the Civil Mediation Paper was equivalent to a civil judgment, could not be appealed, and was effective upon acknowledgment of receipt by both parties. The defendants had taken no steps in seven and a half years to set aside the judgment.

Rejection of the duress and fraud defences

On the natural justice defence, the Court concluded that the objective evidence — including text messages showing Mr. Zuo actively coordinating the appointment of his agent, directing the litigation strategy, and providing updates on mediation progress — overwhelmingly contradicted any claim of duress. The Court drew an adverse inference from the defendants' failure to provide affidavit evidence from Mr. Wang, noting that he was Ms. Ding's first cousin and the defendants' employee. On the fraud defence, the Court held that the defendants were fully aware of and agreed to the consolidated Loan Agreement, signed it in Canada, and sent the signed copies to the plaintiff in China, and thus could not meet the Beals threshold requiring that the alleged fraud involve facts not discoverable by the exercise of due diligence prior to the foreign judgment.

The ruling and the outcome

Justice Gibb-Carsley of the Supreme Court of British Columbia ruled entirely in favour of the plaintiff, Mr. Zeng. The Court ordered enforcement of the Chinese Judgment as a judgment of the Supreme Court of British Columbia and held the defendants jointly and severally liable for the Canadian dollar equivalent of RMB 35.35 million in principal, RMB 20,455,141.64 in interest calculated to January 1, 2025, and interest accruing at RMB 10,273.97 per day to the date of judgment. The Court further ordered that 31 days after the judgment, the approximately CAD $600,000 held in trust from the sale of the Richmond property be released to the plaintiff's counsel. The defendants' counterclaim was dismissed in its entirety. While the plaintiff was awarded costs, the request for special costs was denied, as the Court found that the defendants' conduct, though contrary to what was presented in the objective evidence, did not reach the level to warrant an award of special costs. The Court did, however, caution against the use of AI to generate legal submissions, warning that it has the potential to mislead the Court and counsel, and that it does a disservice to the courts and legal process. The exact total Canadian dollar amount of the judgment was not specified, as the award is denominated in RMB and subject to currency conversion, though the practical recovery available to the plaintiff is likely limited to the approximately CAD $600,000 currently held in trust.