Jesse Jia-Bei Zhu v. XY, LLC

(British Columbia) (Civil) (By Leave)




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Tort law — Deceit and civil conspiracy — Specific elements — Evidence established JingJing, licensee of XY’s technology, underreported use of technology and underpaid royalties — What are specific elements of tort of deceit? — In particular, is tort established in absence of proof XY altered its position in reliance on JingJing’s misrepresentation and thereby suffered loss? — What acts or omissions fall within scope of term “unlawful act” in civil conspiracy claim context? In particular, does behaviour not actionable at private law found claim pursuant to “unlawful act” branch of tort of civil conspiracy?

This case arises in the context of a technology licensing agreement between the respondent XY, LLC as licensor and JingJing Genetic Inc. (of the “IND Group” of corporations), as licensee. The technology makes it possible to separate X and Y chromosomes in bovine spermatozoa, thus permitting the production of calves of a desired sex. The trial judge found that JingJing had provided XY with false reports concerning revenues it received from its use of the technology, underpaid the royalties it owed to XY, concealed documents from XY, and violated in several ways the confidentiality provisions in the agreement. The trial judge found JingJing liable for breach of contract and the tort of deceit and found three employees, including the applicant Mr. Zhu, liable for the torts of deceit and civil conspiracy. The trial judge awarded $8.6 million in damages jointly and severally against the employees as well as against JingJing and ordered a permanent injunction against them in respect of future use of XY’s technology. The Court of Appeal allowed their appeals in part and allowed XY’s cross-appeal to amend the terms of the permanent injunction and order a retrial of XY’s claim of unjust enrichment against the IND Group. In all other respects, the appeals were dismissed.

Lower Court Rulings

March 2, 2012
Supreme Court of British Columbia

2012 B.C.J. No. 433, 2012 BCSC 319
JingJing found liable for breach of contract and tort of deceit whereas three employees found liable for torts of deceit and civil conspiracy. $8.6 million in damages awarded jointly and severally against them as well as permanent injunction against them, in respect of future use of XY’s technology.
July 26, 2013
Court of Appeal for British Columbia (Vancouver)

CA039816, 2013 BCCA 352
Appeals allowed in part and cross-appeal allowed (to amend permanent injunction terms and order retrial of unjust enrichment claim), In all other respects, appeals dismissed.