Ding v. GSV Futures Inc.

2022 BCSC 1921 Ding v. GSV Futures Inc.

IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: Ding v. GSV Futures Inc., 2022 BCSC 1921 Date: 20221103 Docket: S221145 Registry: Vancouver Between: Bei Ding Plaintiff And GSV Futures Inc. and Chuang Liu Defendants Before: The Honourable Justice E. McDonald Reasons for Judgment Counsel for the Plaintiff: F. Ju Counsel for the Defendants: No appearances Place and Date of Hearing: Vancouver, B.C. October 19, 2022 Place and Date of Judgment: Vancouver, B.C. November 3, 2022 Introduction [1] The plaintiff applies for judgment pursuant to Rule 9-7 of the Supreme Court Civil Rules [SCCR] against the defendant, GSV Futures Inc. ("GSV"). Although served with the claim and the application material, no one appeared at the hearing for either defendant. [2] The plaintiff alleges breach of contract and she seeks judgment pursuant to a liquidated damages clause or in the alternative, she seeks general damages for breach of contract including the costs paid by the plaintiff under the contract. [3] For the reasons that follow, I have determined that the matter is appropriate for summary trial and that judgment should be granted in favour of the plaintiff. Background [4] On September 27, 2021, the plaintiff and GSV entered into a contract described as the "Master Definitive Agreement" (the "Master Agreement"). The contract relates to bitcoin mining. Pursuant to the Master Agreement, GSV

promised to provide the plaintiff with "hosting services" at GSV's mining facility located in Canada in exchange for certain payments. [5] According to the plaintiff's affidavit made August 16, 2022, the contract included a one-page "supplemental agreement of mining hosting" that the parties executed as part of the Master Agreement. The plaintiff refers to this as the liquidated damages clause of the Master Agreement. [6] According to the supplemental agreement, GSV was required to guarantee the launch and mining of the machines in accordance with the provisions of the contract. It also provided that "if there is an extension, [plaintiff] shall be compensated according to the theoretical profit of daily mining". [7] The supplemental agreement then set out the theoretical profit calculation method as follows: the theoretical profit calculation method is as follows: 0.00000633 BTC/TH (Poolin's calculator will be for the reference) Total hashrate of [plaintiff's] miners are: 24710 TH/s. And the theoretical profit of daily mining will be 24710*0.00000633=0.1564143BTC. [8] The supplemental agreement also provides that if GSV's "hosting site cannot complete the online rate of the mining machine at 97% in five days" the plaintiff had the right to terminate the contract and take back her miners. The plaintiff did so. [9] According to the plaintiff's affidavit, she demanded return of

the amounts owing under the contract and reimbursement of her deposit and shipping costs but the defendants have failed or neglected to pay the amount sought. [10] On February 1, 2022, the plaintiff commenced this notice of civil claim. On March 30, 2022, the personal defendant, Chuang Liu, filed a response to notice of civil claim. Chuang Liu denies that he was ever a party to the Master Agreement or that he fraudulently induced the plaintiff to enter into the contract or that he guaranteed GSV's performance of the Master Agreement. Chuang Liu also denies that GSV guaranteed the launching and mining of the plaintiff's machine. [11] As mentioned, although served with these application materials, neither defendant provided an application response or attended the hearing. Analysis [12] The first matter for me to consider is whether the matter is appropriate for determination by a summary trial. Rule 9-7(15) of the SCCR provides that the court may on the hearing of a summary trial application grant judgment unless the court is unable on the evidence before it to find the facts necessary to decide the issues of fact and law or the court is of the opinion that it would be unjust to decide the issues by summary trial. [13] In my view, considering the evidence as a whole and keeping in mind that the plaintiff seeks relief based strictly on the terms of the contract, there is no

concern that I might be unable to decide the issues of fact and law based on the evidence before me. Given that there is no issue of credibility raised, I have no concern that it would be unjust to decide the issues raised. [14] The additional issue that I must consider is whether the terms contained in the one-page supplement agreement amount to a liquidated damages provision as the plaintiff alleges. To decide whether the provision at issue is in fact a genuine pre-estimate of expected loss versus a penalty, there must be a case-specific assessment: Super Save Disposal Inc. v. Blazin Auto Ltd., 2011 BCSC 1784 at paras. 26-34. [15] There is no specific language used in the supplemental agreement to characterize the nature of the amounts payable to the plaintiff. Instead, the supplemental agreement refers to the plaintiff's entitlement to compensation according to a theoretical profit. The calculation of the profit is explicitly set out. [16] I find that the supplemental agreement sets out a genuine pre-estimate of the amount that the plaintiff would otherwise have been entitled to under the contract but for its breach. That is, the plaintiff would have received the profit generated by the operation of the plaintiff's miners. In short, I am satisfied that the provisions in the supplemental agreement amount to a liquidated damages clause and they do not amount to a penalty. [17]

The plaintiff specifically seeks an award for liquidated damages related to GSV's breach of contract, on the following terms: a) the Canadian dollar equivalent of 6.1 bitcoins related to the period from November 14, 2021, which is the date by which the plaintiff's mining machines ought to have been "hooked up and operational", to December 23, 2021, which is the date on which the plaintiff's machines were returned to the plaintiff [i.e. 39 days x .01564143 BTC]; and b) The Canadian dollar equivalent of 47.70 bitcoins, related to the period between December 24, 2021 to October 25, 2022 [i.e. 305 days at a theoretical profit of daily mining rate of .01564143 BTC]. Disposition [18] The plaintiff is granted judgment against GSV Futures Inc. as follows: a) the Canadian dollar equivalent of 6.1 bitcoins, as the liquidated damages owing for the period November 14 to December 23, 2021, which amount shall be as determined at a reference to the Registrar of the Supreme Court of British Columbia pursuant to Rule 18-1; b) the Canadian dollar equivalent of 47.70 bitcoins, as the liquidated damages owing for the period December 24, 2021 to the trial date, which amount shall be as determined at a reference to the Registrar of the Supreme Court of British Columbia pursuant to Rule 18-1; [19] The plaintiff is directed to file an appointment for the reference to the Registrar and to schedule a

pre-hearing conference at which the Registrar may set the parameters for the hearing and make directions, including for the production of material required at the hearing. [20] The findings of the Registrar shall be certified. [21] The plaintiff is entitled to interest pursuant to the Court Order Interest Act, R.S.B.C. 1996, c. 79. [22] The plaintiff is entitled to costs, to include the costs of the reference to the Registrar. "E. McDonald J."