COURT OF APPEAL FOR BRITISH COLUMBIA

Citation:

R. v. Colligan,

2017 BCCA 42

Date: 20170120

Docket: CA43254

Between:

Regina

Respondent

And

Adam James
Colligan

Appellant

Before:

The Honourable Madam Justice Saunders

The Honourable Mr. Justice Frankel

The Honourable Madam Justice Stromberg-Stein

On appeal from: an
order of the Supreme Court of British Columbia, dated
March 13, 2015 (
R. v. Colligan
, Kamloops Registry No. 96272-2)

Oral Reasons for Judgment

Counsel for the Appellant:

D.M. Melville

Counsel for the Respondent:

D. Layton, Q.C.

Place and Date of Hearing:

Vancouver, British
  Columbia

January 20, 2017

Place and Date of Judgment:

Vancouver, British
  Columbia

January 20, 2017

Summary:

The appeal
from conviction by a jury of aggravated assault, discharge of a firearm with
intent to wound, using a firearm to commit extortion, and breach of probation
is dismissed. The appellant contended that the judges instructions did not
adequately deal with allegations made by the Crown counsel in his opening
statement that were not proved, and that the verdict was unreasonable because
the identification evidence was too frail to support the verdict. Held: the
instructions adequately instructed the jury on the use to which it could put
the submissions of counsel. The evidence was such that the jury, properly
instructed, could convict.

[1]

SAUNDERS J.A.
: Mr. Colligan appeals from conviction by a jury of
aggravated assault, discharge of a firearm with intent to wound, maim or
disfigure, using a firearm to commit extortion, and breach of probation. Two
other counts were conditionally stayed by the trial judge applying the
Kienapple
principle.

[2]

The appellant raises two grounds of appeal. He contends that the trial
judge erred in his instructions to the jury by failing to deal with comments
made by Crown counsel in the opening statement that, in the end, were not
supported by evidence. Second, he contends the verdict was unreasonable because
the identification evidence was so weak as to be incapable of supporting the
jury verdict.

[3]

The charges arose from an incident on May 11, 2013, at Mr. Powells home
wherein he was shot in the leg. Mr. Powell was a user and distributor of
marihuana. There was evidence Mr. Powell had some acquaintance with the
appellant for about a year-and-a-half  that Mr. Colligan had earlier sought to
be Mr. Powells supplier but Mr. Powell had declined, being unsatisfied as
to quality. Mr. Powell testified that two men visited him at his home on May
11, 2013, and demanded Mr. Powell buy his marihuana from them. Mr. Powell said
that when he refused they became angry and left, saying they would return.
Later that day three people attended Mr. Powells home and said they wanted to
talk. One had a gun. Mr. Colligan took two of the men into the bathroom. During
the events the gun was passed from one man to the second. Mr. Powell was struck
in the face. There was an altercation and the person Mr. Powell subsequently
identified as the appellant, pointed the gun at Mr. Powell. Mr. Powell knocked
the gunmans hand down and the gun discharged into Mr. Powells knee.

[4]

Mr. Powell called 911. In the course of the call he mentioned the name Adam.
In speaking to the police Mr. Powell described one of the men as having stubble
hair. Mr. Powell was shown a photo pak line-up. He first picked the
appellant out as one man in the bathroom and then picked out another person as
the other man. It turned out the selection of the second man was a
misidentification, and Mr. Powell eventually picked a man who he said was taking
pictures at the hospital from a second photo pak line-up.

[5]

No objection is taken to the photo line-up procedure.

[6]

Mr. Colligan testified in his own defence. He denied the events and said
he had never met Mr. Powell. He provided alibi evidence. The judge correctly
instructed the jury on the approach it must take to the evidence given by Mr.
Colligan and defence witnesses.

[7]

I turn to the grounds of appeal. I observe, first, that Mr. Melville
quite properly abandoned a complaint made in his factum of a ruling by the
trial judge refusing to give a directed verdict, and any complaint of the in-dock
identification, which was properly handled by the trial judge.

[8]

The first ground of appeal is that the trial judge did not instruct the
jury to disregard particular comments of the Crown made in opening. The opening
included the statements that Mr. Colligan sold crystal meth, he sold to
young people and nobody really wanted to cross him. It is agreed there was
no evidence that the appellant sold crystal meth or that he sold to young
people, and there was no evidence Mr. Powell feared the appellant. The
instructions to the jury did not include a particular reference to these
portions of the opening statement. There was, however, more than one pre-charge
conference between counsel and the trial judge looking at the instructions
proposed by the judge to be given to the jury. In these conferences no request
was made to include such a specific instruction to augment the usual
instructions that were included, to the effect that what counsel said was not
evidence and that the jury was to decide the case only on the evidence.
Further, some use of this failure to prove these statements were made by
defence counsel trial in his closing submissions to the jury. In my view, the instruction
now contended for, in the circumstances, was not required. The judges
instructions on the issue of the effect of counsels submissions were fully
adequate. I would not accede to this ground of appeal.

[9]

The second ground of appeal concerns the identification evidence. There
is no doubt that the identification evidence was open to submissions by the
defence that it was not to be accepted as establishing proof of identification
beyond a reasonable doubt. Such submissions were, of course, made and the
instructions to the jury fully canvassed the frailties of the evidence and
fully addressed the issue of photo pak line-ups, eyewitness identification, and
the evidence in the case. No objection is taken to the instruction.

[10]

On appeal Mr. Colligan focuses on the misidentification by Mr. Powell of
the second man in the photo line-up, and Mr. Powells evidence that he did not
observe distinctive tattoos on the gunmans hands that corresponded to tattoos
across the knuckles of Mr. Colligan that spelled HARD LUCK. Mr. Powell
explained the latter by saying he was looking not at the gunmans hands but at
the gun pointed at him and the finger on the trigger.

[11]

Notwithstanding the frailties of the evidence, in my view it was
evidence capable of supporting the verdict. I say this noting that there were
other threads of evidence that tended to corroborate the identification. These
included Mr. Powells use of the name Adam in his call to 911, which is the
appellants first name, that the photo picked out by Mr. Powell in the line-up
had the sort of hair he had described, evidence that a man named Adam had
once delivered marihuana to the house and said he would like to be Mr. Powells
exclusive supplier, and some post-offence conduct that, on a correct basis (as
to which there was no complaint) was left with the jury.

[12]

In my view, the evidence was such that this jury, properly instructed as
it was, could return a guilty verdict.

[13]

I would dismiss the appeal.

[14]

FRANKEL J.A.
: I agree.

[15]

STROMBERG-STEIN J.A.
: I agree.

[16]

SAUNDERS J.A.
: The appeal is dismissed with thanks to counsel.

The Honourable Madam Justice Saunders


COURT OF APPEAL FOR BRITISH COLUMBIA

Citation:

Wolff v. Canada (Attorney General),

2017 BCCA 30

Date: 20170120

Docket: CA43467

Between:

Frank Albert Wolff

Appellant

(Plaintiff)

And

Attorney General
of Canada

Respondent

(Defendant)

Before:

The Honourable Madam Justice Saunders

The Honourable Mr. Justice Tysoe

The Honourable Madam Justice Dickson

On appeal from:  An
order of the Supreme Court of British Columbia,
dated February 1, 2016 (
Wolff v. Canada (Attorney General)
,
2016 BCSC 147, Victoria Docket 15-0700).

Counsel for the Appellant:

C.N. Christie

Counsel for the Respondent:

O.R. Pulleyblank

Place and Date of Hearing:

Victoria, British
  Columbia

December 1, 2016

Place and Date of Judgment:

Vancouver, British
  Columbia

January 20, 2017

Written Reasons by:

The Honourable Mr. Justice Tysoe

Concurred in by:

The Honourable Madam Justice Saunders

The Honourable Madam Justice Dickson

Summary:

The summary trial judge
declared that the appellant had an equitable easement by virtue of proprietary
estoppel to access his property by way of a laneway, but that the easement did
not include the right to install a power line to the property.  The judge awarded
costs of the proceeding to the respondent.  Held: Appeal dismissed, except on
the costs issue.  The judge did not err in failing to consider the reasonable
expectations of the parties or in failing to do minimum equity.  Both those
matters go to the issue of the appropriate remedy, and not to the extent of the
equity established by the evidence.  Any rights ancillary to the easement did
not include the right to install a power line within the easement area.  The
issue of costs is remitted to the summary trial judge.

Reasons for Judgment of the Honourable
Mr. Justice Tysoe:

Introduction

[1]

The issues on this appeal relate primarily to the scope of an equitable
easement in favour of the appellant over a laneway within the Pacific Rim
National Park (the Park).  The summary trial judge ordered that the appellant
has an equitable easement to access his property using the laneway but that the
easement did not include the right to install a power line along the laneway.

[2]

The appellant appeals the order, asserting that the judge made three
errors in applying the doctrine of proprietary estoppel to determine that the
equitable easement did not include the right to install an underground power
line.

[3]

For the reasons that follow, I would dismiss the appeal except to the
limited extent of remitting the issue of costs to the summary trial judge.

Facts

[4]

The parties submitted an agreed statement of facts and two affidavits to
the summary trial judge.  I will summarize the facts briefly.

[5]

The appellant is the owner of a property in Port Renfrew, B.C. (the Property),
which is not immediately adjacent to a paved road.  The Property is bordered on
the north and west by four privately owned properties, and is otherwise
surrounded by the Park.  The only access to the Property is by way of a narrow
gravel path along the east boundary of the property, which runs across
approximately 100 metres of the Park.

[6]

The Property and the adjoining part of the Park were initially part of a
single parcel that fronted on Pacheena Road.  There was a subdivision in 1961
that made the Property its own parcel.  There was an occupied house on the
Property at the time of the subdivision. The approving officer with the
Ministry of Highways who approved the subdivision plan was initially concerned
that there would be no legal access to the Property but he approved the plan
after being satisfied that the laneway in question, which was used by the
occupant of the house, was maintained as a public road.

[7]

The lands on which the laneway is situate had been owned by British
Columbia Forest Products, but were transferred to the provincial government in
1987, and then to the federal government in 1992, when they became part of the
Park.

[8]

The appellant purchased the Property in 2006.  The former owner had a
conditional authorization from Parks Canada to access the Property by motor
vehicle via the laneway.  The appellant has continued to access the Property by
way of the laneway without objection by Parks Canada.  The Property has never
had electricity.

[9]

In March 2007, the appellant made a request of Parks Canada for an
easement giving him the right to install an electric line to the Property.
Parks Canada refused the request on the basis that utility corridors across
national park reserve lands were not permitted.  In 2014, the appellant
approached three of the adjacent neighbours for such an easement without
offering them any payment, and they all refused.

[10]

In August 2015, the appellant commenced the underlying proceeding
seeking a declaration of an easement of necessity or an equitable easement and
a declaration that he was entitled to use the easement for any lawful purpose
necessary for his reasonable enjoyment of the Property, including the right to
install a hydro line.

[11]

The appellant made an application to have the proceeding determined by
way of a summary trial.  In the response to the application, the respondent
stated there was no dispute that the appellant has the lawful right to access
the Property.  The respondent took the position that the real issue was about
the appellant endeavouring to improve the Property by acquiring electric
service as a right ancillary to what the respondent referred to as an unnecessary
easement.

Decision of the Summary Trial Judge

[12]

The claim for an easement of necessity was not pressed at the summary
trial and, in his reasons for judgment indexed as 2016 BCSC 147, the summary
trial judge dealt primarily with the claim for an equitable easement based on
the doctrine of proprietary estoppel.

[13]

The judge reviewed several case authorities dealing with the doctrine of
proprietary estoppel, including
Maritime Telegraph and Telephone Co. v.
Chateau LaFleur Development Corp.
, 2001 NSCA 167, leave to appeal refd
[2002] S.C.C.A. No. 14;
Idle-O Apartments Inc. v. Charlyn Investments
Ltd.
, 2014 BCCA 451; and
Pogachar v. Ontario (Minister of Natural
Resources)
(2005), 54 R.P.R. (4th) 201 (Ont. S.C.).

[14]

The judge inferred that by maintaining the laneway as a travelled
highway, British Columbia Forest Products had represented there would be
continued access to the Property across the laneway.  He found that this
representation was relied on by the owner of the Property and the approving
officer at the time of the 1961 subdivision when it was concluded that the
Property could forgo its other access in favour of access by way of the
laneway.  His reasoning continued as follows:

[28]      On
that basis, I would say that Mr. Wolff has a specific right to access the
property based on the representation that was made by the conduct of the owners
and the [approving officer].  Whether the right to access the property
through the path is a mere right or an equitable easement I think is a matter
of form rather than substance.  But I would find that based on equitable
principles, Mr. Wolff has a right to access his property using the
laneway.  Canada does not dispute that right exists and seems to concede
that it will be a continuous right associated to the property.

[15]

The judge then considered whether proprietary estoppel could provide an
implied right beyond mere access to the property (i.e., the right to install an
electric line).  He concluded that there was no history associated with the
Property in connection with a power line that fit within the test for
proprietary estoppel and that there was no evidence of any reliance such that
it would be unconscionable to refuse the right to install a power line in the
laneway (para. 33).

[16]

The judge next considered the issue of ancillary rights.  He referred to
the decision in
Kasch v. Goyan
(1993), 103 D.L.R. (4th) 51, 81 B.C.L.R.
(2d) 268 (C.A.) at para. 11 for the proposition that ancillary rights are
associated with the exercise or enjoyment of the easement, but commented that
there are cases in which the ancillary rights benefited the dominant tenement
as well as expanding the use or enjoyment of the easement.  He then
distinguished the decision in
Pogachar
, which had been relied upon by
the appellant, and concluded that an ancillary right to install an underground
power line would not be justified (para. 41).

[17]

In the concluding paragraph of his reasons, the judge stated that he
could not find the right to install an electric line based on the doctrine of
proprietary estoppel or the concept of ancillary rights.  He then stated that
the action must be dismissed and that the respondent was entitled to costs.
However, the order signed by the judge did not dismiss the action.  Rather, the
order declared that the appellant had a right to access the Property using the
laneway but that the appellant did not have the right to install a power line
along the laneway.  The order also gave costs to the respondent.

Issues on Appeal

[18]

The appellant contends the summary trial judge erred in three respects
when applying the doctrine of proprietary estoppel:

a.          in
failing to consider the reasonable expectations of the appellants predecessors
in title.

b.          in treating ancillary rights as being frozen in time.

c.          in finding that the minimum
equity did not include a right to hydro-electric access.

The appellant also maintains the judge erred in granting
costs to the respondent when success was divided.

[19]

Although I have concluded that the appellants arguments on the first
and third grounds of appeal suffer from a similar flaw, I will deal with the grounds
in the order in which they were presented by the appellant.

Discussion on Proprietary Estoppel

[20]

Before addressing the specific errors alleged by the appellant, it will
be useful to briefly outline the general principles of proprietary estoppel.
The approach to be taken was set out by Lord Justice Scarman in the seminal
case of
Crabb v. Arun District Council
, [1976] 1 Ch. 179 at 192-93:

In such a case I think it is now
well settled law that the court, having analysed and assessed the conduct and
relationship of the parties, has to answer three questions.  First, is there an
equity established?  Secondly, what is the extent of the equity, if one is
established?  And, thirdly, what is the relief appropriate to satisfy the
equity?

[21]

In order to determine the question of whether an equity has been
established, some cases have posed four sub-questions (see
Idle-O Apartments
at paras. 22 and 24).  Those sub-questions were combined into the
following two-pronged test by Madam Justice Bennett in
Sabey v. Rommel
,
2014 BCCA 360 at para. 30 (which the summary trial judge set out at
para. 21, quoting from
Idle-O Apartments
at para. 49):

1.

Is an equity established? An equity will be established where:

a.   There was an assurance or representation, attributable to the
owner, that the claimant has or will have some right to the property, and

b.   The claimant
relied on this assurance to his or her detriment so that it would be
unconscionable for the owner to go back on that assurance.

For the purposes of the present case, it is important to
note that the assurance or representation need not be express and can be
inferred from the conduct of a party, and that acquiescence can amount to an
assurance or representation.

[22]

The summary trial judge held that an equity was established.  As there
was no express assurance or representation by the former owner of the laneway,
he effectively found that the former owner had, by its acquiescence,
represented to the owner of the Property that he or she could use the laneway
to access the Property.  The owner relied on this implicit representation in
causing the Property to be subdivided with no other access, and it would have
been unconscionable for the owner of the laneway to go back on this
representation.  The judges holding that an equity was established is not in
dispute on this appeal.

[23]

What is in dispute on this appeal relates to the second and third
questions articulated in
Crabb
; namely, the extent of the equity and the
appropriate remedy.

(a)
Reasonable Expectations

[24]

The appellant submits that the reasonable expectations of his
predecessors in title ought to be considered when determining the equitable
interest.  In that regard, he points to two competing theories of proprietary
estoppel as discussed in W. David Rankin, Concerning an Expectancy-Based
Remedial Theory of Promissory Estoppel (2011) 69(2) U.T. Fac. L. Rev. 116.  In
brief terms, the reliance theory protects the detrimental reliance by the
promisee, but no more (at 124).  The expectation theory is not limited to the
reliance loss of the promisee but serves to fulfil the expectation engendered
by the promise (at 12627).

[25]

The appellant says this Court, in
Idle-O Apartments
at para. 75,
has endorsed the expectation theory of proprietary estoppel, and the summary
trial judge erred in para. 33 of his reasons by considering reliance only
and failing to consider the reasonable expectations of people living on the Property.
He goes on to argue that the laneway was part of a public road and that the
reasonable expectations of the owners were that services such as hydro power
would be installed underneath the laneway when they became available because
services are commonly installed within the right-of-way of public roads.

[26]

In my view, the appellant is conflating two of the questions to be asked
in claims of proprietary estoppel.  He is attempting to import the expectation
theory that is to be considered as part of the third question (the appropriate
remedy) into the second question (the extent of the equity).

[27]

In para. 33 of his reasons, the judge was determining the extent of
the equity.  He had already concluded that an equity was established and he was
considering whether the extent of the equity went beyond the right of access
and included the right to install an underground power line.  In that regard,
he looked to any evidence with respect to an assurance or representation made
by the owners of the laneway and any evidence with respect to reliance by the
owners of the Property.  He concluded there was no evidence of an assurance or
representation regarding the installation of a power line or any reliance on
any such assurance or representation.  Thus, he held that it would not be
unconscionable for the owner of the laneway to refuse the right to install a
power line in the laneway.  In my opinion, the judge followed the correct
approach.

[28]

The reasonable expectations of the promisee are to be considered at the
remedy stage of the test, not at the stages of determining whether an equity
exists and the extent of the equity.  This is apparent from the introduction in
the Rankin article (at 117):

The question of
the
proper remedy
when an estoppel has been raised has relatively
recently found itself at the centre of much academic attention.  Prominent
scholars  have presented arguments in favour of limiting relief to the
reliance loss of the promisee. .. other leading academics have argued that,
once raised, a promissory estoppel should prevent (
estoupe
) the promisor
from acting inconsistently with the promise  thereby protecting the
expectation interest engendered by them.

[Footnotes
omitted; underlining added.]

[29]

Similarly, it is clear that this Courts discussion of reasonable
expectations in
Idle-O Apartments
was in the context of the appropriate
remedy once the extent of the equity is determined:

[75]      That said, there is
no doubt that the claimants reasonable expectations will usually be a very
important factor, and perhaps the primary factor,
in the fashioning of a
remedy for proprietary estoppel
.

[Underlining
added.]

[30]

In my view, the judge did not fail to consider the reasonable
expectations of the owners of the Property.  After concluding that the extent
of the equity was restricted to accessing the Property, he fashioned a remedy
that accommodated the reasonable expectations of owners of property who had
been given an assurance of access, namely an equitable easement of access.  Thus,
the judge did not err as asserted by the appellant.

[31]

I wish, however, to add two comments about the appellants submissions
on this point.  First, he places reliance on the fact that the laneway was part
of a public road.  While it is true that the approving officer approved the
1961 subdivision because the laneway was maintained as a public highway, there
was no evidence that the owners of the laneway gave an assurance or made a
representation that it would continue to be maintained as a public road.  One
could question whether it was a reasonable expectation of an owner of the
Property that the laneway would continue to be maintained as a public road.

[32]

My second comment is that the reasonable expectations of the holder of
an easement over what may be regarded as a public road does not necessarily
include the expectation that services will be installed within the easement.  A
case touching on this point in the context of determining the intentions of the
parties to an express easement is
Robb v. Walker
, 2014 BCSC 408, affd
2015 BCCA 117.  In that case, an express easement was granted over what was
considered to be a public road.  The easement was expressed to permit the
grantee to use, enter, pass and repass over and upon the easement area.  It
was held that the easement did not include the right to install a sewer line
within the easement area.

(b)
Ancillary Rights

[33]

The parties are agreed that an accurate description of ancillary rights
is contained in the decision of
Kasch v. Goyan
:

[11]
In my opinion, the question of what rights are reasonably
necessary incorporates into it the usual factors that accompany any question of
reasonableness, namely, a consideration of all of the circumstances which are
in any way relevant. That consideration should be followed by a decision
whether in all of those circumstances what is done or what is proposed is reasonably
necessary to the exercise or enjoyment of the easement.

[34]

The appellant says that ancillary rights are not frozen in time and
evolve with social conditions.  In that regard, he relies on the following
passage from
Depew v. Wilkes
(2002), 60 O.R. (3d) 499 (C.A.):

[24]      In the present case, I agree with the respondents
that the appellants had to establish that parking was, in the words of
Ellenborough
Park
[
In re Ellenborough Park; In

re Davies, Powell v. Maddison
,
[1955] 2 All E.R. 38, [1956-57] Ch. 131] reasonably necessary for the better
enjoyment of the dominant tenements.  The reasonable necessity requirement is
fact specific and must be applied in a flexible manner.  As was said in Anger
and Honsberger, [Anger and Honsberger:
Law of Real Property
, 2nd ed.
(Aurora: Canada Law Book, 1985)] at p. 927:

What is reasonably necessary must be a flexible criterion
and have reference to current social conditions and the prevailing patterns and
trends of conduct.  What today might not be regarded to be a reasonable amenity
for the better enjoyment of a property might be regarded as a reasonable
amenity tomorrow.

[35]

The appellant submits that the summary trial judge made the correct
inquiry at paras. 29 and 30 of his reasons but arrived at the incorrect
legal conclusion at para. 41 of his reasons.  In reply, the respondent
says that it was unnecessary for the judge to have considered the topic of
ancillary rights because the doctrine applies only to expressly granted
easements (relying on statements made in
Fallowfield v. Bourgault
(2003),
68 O.R. (3d) 417, 235 D.L.R. (4th) 263 (C.A.) at para. 11, and
Gale on
Easements
, 17th ed. (London: Sweet and Maxwell, 2002) at 47).

[36]

I need not decide whether the respondent is correct in its position and,
in the absence of persuasive authority, I would be reluctant to hold that
equitable easements do not carry any ancillary rights.  The authorities relied
upon by the respondent stand for the proposition that a grant of an express
easement includes ancillary rights, but they do not state that non-express
easements do not include such rights.

[37]

Indeed, it would seem odd to me that a person entitled to an equitable
easement to access his or her property over a roadway would not have the
ancillary right to maintain the roadway in a condition that permitted such
access to be exercised.  In the
Pogachar
decision referred to by the
summary trial judge, the Ontario Superior Court of Justice held that the
claimant was entitled to a prescriptive easement to use and maintain a road
that would permit access by cars.  It seems to me that another way of viewing
this decision is that the Court granted a prescriptive easement for access by
cars and also declared that the claimant had the ancillary right to maintain
the road.

[38]

The summary trial judge did make reference to the evolution of rights in
para. 30 of his reasons, but he did so in the context of determining the
extent of the equity.  He was not discussing the topic of ancillary rights at
that point.  More importantly, however, the judge did not expressly or
implicitly hold in para. 41 that ancillary rights are frozen in time and
cannot evolve.

[39]

What the judge held in para. 41 was that any ancillary rights
included in the equitable easement to which the appellant was entitled did not
include the right to install an underground power line.  In my view, the judge
was correct in his conclusion.

[40]

An ancillary right is a right that is reasonably necessary for the
exercise or enjoyment of the easement.  The right to install an underground
power line does not relate to the exercise or enjoyment of the equitable
easement.  Rather, it benefits the dominant tenement (i.e., the Property).
What the appellant is endeavouring to accomplish through this argument is to
expand the extent of the equity through the guise of an ancillary right.  If
the appellant is not entitled to an equitable easement for an underground power
line, he cannot indirectly achieve one through the mechanism of ancillary
rights.

[41]

I note the judge commented that there are cases where the ancillary
rights benefited the dominant tenement as well as expanding the use or
enjoyment of the easement.  Counsel on this appeal were unable to assist us in
determining what cases the judge had in mind.  I can envisage that an ancillary
right could incidentally benefit the dominant tenement in addition to being
reasonably necessary to the exercise or enjoyment of the easement.  However, a
right that is intended to benefit the dominant tenement and is not necessary
for the exercise or enjoyment of the easement is not, in my opinion, an
ancillary right.  Rather, it is an expansion of the easement which must be
justified on the principles underlying the establishment of the easement which,
in this case, required the right to be established under the doctrine of
proprietary estoppel.  The judge correctly held that the entitlement to install
an underground power line was not established under the doctrine of proprietary
estoppel because there were no assurances or representations by the owners of
the laneway regarding the installation of a power line.

(c)
Minimum Equity

[42]

The appellant argues that the minimum equity in the circumstances
included a right to hydro-electric power.  He says the summary trial judge
erred by failing to find that the minimum equity to do justice included such a
right.

[43]

In my view, the appellants submission on this ground of appeal suffers
from a flaw similar to the flaw I identified in respect of the first ground.  The
appellant is attempting to expand the extent of the equity by relying on
principles that are applicable to the issue of remedy.

[44]

The law is clear that the concept of minimum equity in cases of
proprietary estoppel relates to remedy.  This is reflected in the following
statement made by Madam Justice Newbury in
Idle-O Apartments
:

[73]      The notion that the
appropriate remedy
in
proprietary estoppel is the minimum equity necessary to do justice has been
widely adopted: see Megarry and Wade,
The Law of Real Property
(7th ed.,
2008) at 716-8.

[Underlining
added.]

[45]

The concept of minimum equity was not in issue in this case.  The
summary trial judge found that an equity had been established with respect to
access to the Property by way of the laneway.  He concluded that the
appropriate relief was a declaration of an equitable easement.  Given the
extent of the equity that was established, this was the maximum relief the
judge could properly have granted.  There was no error by the judge in
fashioning the appropriate remedy.

[46]

It is not sufficient to simply say, as the appellant does, that the
minimum equity in the circumstances included the right to hydro-electric
access.  The court must look to the extent of the equity that has been
established and grant a remedy that corresponds to that equity.  If the extent
of the equity does not relate to the installation of an underground power line
because no assurance or representation was made in that regard, then equity
does not require a remedy to address the absence of a power line.  It is not a
matter of minimum equity.  It is a matter of the extent of the equity not
calling for such a remedy.

Discussion on Costs

[47]

The appellant submits the summary trial judge erred in awarding costs to
the respondent when the appellant was successful in obtaining a declaration of
an equitable easement, albeit one that did not include the right to install an
underground power line.  The appellant contends he is entitled to the costs of
the proceeding or, alternatively, each party should bear their own costs.  In
reply, the respondent says success was not divided because Parks Canada
acknowledged the right of the appellant to use the laneway to access the
Property and the only real issue at the summary trial, as stated by the judge
at para. 2 of his reasons, was whether the appellant had the right to
install an underground power line.

[48]

Although Parks Canada acknowledged the right of the appellant to use the
laneway for access, the respondent did oppose the granting of a declaration of
an equitable easement as being unnecessary.  While the judge did comment, at para. 28
quoted above, that whether the right to access the Property was a mere right
or an equitable easement was a matter of form rather than substance, it is
apparent from his reasons that he was prepared to grant the declaration of an
equitable easement.  In para. 36 of his reasons, when he introduced the
topic of ancillary rights, the judge stated that an easement of access had been
found to exist.

[49]

The matter is complicated by the fact that, in the concluding paragraph
of his reasons, the judge stated the action must be dismissed and the
respondent was entitled to costs.  However, the order did not dismiss the action,
and it contained a declaration of an equitable easement of access.  It did give
costs to the respondent.

[50]

Counsel could not agree on the form of the order, and an appointment to
settle the form of the order was made before a master.  The master did not
consider herself in a position to settle the order and referred it to the
summary trial judge.  No submissions were apparently made to the judge, and it
is not known whether his attention was drawn to the aspect of costs when he
settled the order in a form that was different from the last paragraph of his
reasons (i.e., granting a declaration rather than dismissing the action).  It
is not known whether the judge directed his mind to Rule 14-1(15) of the
Supreme
Court Civil Rules
that gives the court the discretion to award costs that
relate to a particular matter in a proceeding.

[51]

The matter is further complicated by the advice given to us by counsel
for the respondent that there is certain evidence relevant to the topic of
costs.  I infer that an offer to settle was made, and it could have an impact
on costs.

[52]

In all of these circumstances, I would allow the appeal on this ground
and remit the issue of costs to the summary trial judge so that it may be fully
considered by him.

Conclusion

[53]

I would dismiss the appeal except to the extent of setting aside the
award of costs to the respondent.  I would remit the issue of costs to the
summary trial judge.  I would grant costs of the appeal to the respondent
despite the appellants limited success with respect to the costs of the
underlying action.

The Honourable Mr. Justice Tysoe

I agree:

The Honourable Madam Justice
Saunders

I agree:

The Honourable Madam Justice
Dickson


COURT OF APPEAL FOR BRITISH COLUMBIA

Citation:

Oh v. Langley (City),

2017 BCCA 43

Date: 20170123

Docket: CA43634

Between:

Serena Oh

Appellant

(Petitioner)

And

City of Langley
and Carolyn Mushata

Respondents

(Respondents)

Before:

The Honourable Madam Justice Newbury

The Honourable Mr. Justice Harris

The Honourable Mr. Justice Willcock

On appeal from: an
order of the Supreme Court of British Columbia, dated
April 12, 2016 (
Oh v. Langley (City)
, 2016 BCSC 1357,
New Westminster Registry No. 178985)

Oral Reasons for Judgment

Appellant Appearing In Person:

S. Oh

Counsel for the Respondents:

F.V. Marzari

Place and Date of Hearing:

Vancouver, British
  Columbia

January 23, 2017

Place and Date of Judgment:

Vancouver, British
  Columbia

January 23, 2017

Summary:

The court below did not err in finding
the appellants petition, which effectively sought a recount of votes cast in a
municipal by-election, was out of time and that a case was not made out. Appeal
dismissed.

[1]

NEWBURY J.A.:
Ms. Oh, who is
unrepresented in this court, seeks to appeal an order of Madam Justice Brown
made April 12, 2016 which dismissed her petition, with costs to the
respondents, the City of Langley and Ms. Mushata, who is the Citys Chief
Election Officer.

[2]

Ms. Ohs petition contested the results of a municipal
by-election held on February 27, 2016 to fill a single vacant seat on Langleys
city council. Nine candidates ran for election in the by-election, including
Ms. Oh. The official election results were certified and declared by the Chief
Election Officer on March 2, 2016 in council chambers. The result was that
Mr. Nachal was elected with 740 votes, or just over 1/3 of
the vote.
Ms. Oh received 57 votes or 2.7% thereof.

[3]

The Chief Election Officer
submitted her report of the election results to the City on March 21, 2016. It
disclosed no fraud or irregularities.

[4]

On March 23, 2016, Ms. Oh filed her petition, in which
she sought relief under the
Local Government Act
,
R.S.B.C. 2015, c. 1, as follows:

1.

An Order that an election should be declared invalid because it was
not conducted in accordance with this Act or a regulation or bylaw under this
Act or a regulation or bylaw under this Act.

2.

An Order for Judicial Recount, 148(2)(b) that a ballot
account does not accurately record the number of valid votes for a candidate;
148(2)(c) that the final determination under section 145 [determination of
official election results] did not correctly calculate the total number of
valid votes for a candidate.

[5]

Under the headings Factual Basis and Legal Basis,
the petition stated:

Part 1: FACTUAL BASIS

1.

That a ballot account does not accurately record the number of valid
votes for a candidate;

2.

That the final determination under section 145 did not correctly
calculate the total number of valid votes for a candidate.

Part 2: LEGAL BASIS

1.

The Election Act Officials,
[sic]
s. 4-13 The Chief Electoral
Officer (CEO) applies the Election Act in a fair and neutral way. The CEO must
be impartial.

2.

Every vote must count, no matter who you vote for.

[6]

In their Response, the respondents pointed out that
insofar as a judicial recount was concerned, the petition was out of time
because of the limitations imposed by ss. 148 and 149(1) of the
Local Government
Act
.
They provide:

148 (1) An application
may be made in accordance with this section for a judicial recount, to be
undertaken by the Provincial Court, of some or all of the votes in an election.

. . . .

(3) The time period during which an
application may be made is limited to
the time between the declaration of official election

results under
section 146 and 9 days after the close of general

voting.

. . .

149 (1)
A judicial
recount must be conducted in accordance with this section and completed by the
end of the 13
th
day after the close of general voting.

[Emphasis added.]

[7]

As far as the prayer for a declaration that the
election was invalid,
s. 153 of the
Local Government
Act
provides:

153 (1) The right of an elected candidate to take office or
the validity of an election may not be challenged except by an application
under this section.

(2)       An
application may be made in accordance with this section to the Supreme Court
for a declaration regarding the right of a person to take office or the
validity of an election.

(3)       The time limit for making an application
is 30 days after the

declaration
of official election results
under section 146.

(4)       An
application may be made only by a candidate in the election, the chief election
officer or at least 4 electors of the municipality or electoral area for which
the election was held.

(5)
An application may be made only
on one or more of the following bases:

a.

that a candidate declared
elected was not qualified to hold office at the time he or she was elected or,
between the time of the election and the time for taking office, the candidate
has ceased to be qualified to hold office;

b.

that an election
should be declared invalid because it

was not conducted
in accordance with this Act or a

regulation or
bylaw under this Act
:

c.

that an election or the
election of a candidate should be declared invalid because section 161
[vote buying],
162
[intimidation]
or
163 (2) (a)
[voting when not
entitled]
was contravened.

(6)
As a
restriction on subsection (5) (b), an application may not be made on any basis
for which an application for judicial recount may be or may have been made.

(7)
At the time the petition commencing an
application is filed,
the court
registry must set a date for the court to hear the

application, which must be at least 10 days but no later than 21

days after the date the petition is filed
.

[Emphasis added.]

[8]

The City took the position that Ms. Oh was effectively seeking
a judicial recount  an argument clearly supported by the affidavit evidence
filed by Ms. Oh. She deposed that she had carried out various inspections on
March 24, March 29, March 31 and April 1, 2016 of ballots of people that I
randomly picked who voted for me. She deposed that their ballots had been
destroyed or were not counted and indeed she asserted that Over 95 percent or
over 1,500 to 2,000 ballots have been destroyed or ballots are not counted.
This statement contravenes the Chief Election Officers report and affidavit,
which states that every ballot was accounted for in the vote tallies. Ms.
Mushata suggests that Ms. Oh seems to be under the impression that every person
listed in the voting books attended to vote in the election  obviously  an
erroneous belief Ms. Oh continues to hold.

[9]

The chambers judge heard the
petition on April 12, 2016 and dismissed it on two bases. First, Ms. Oh was out
of time under the relevant provisions of the
Local Government Act

I
have quoted above
,

and second, her evidence was entirely deficient.
In the words of the chambers judge:

[5]         It
is difficult to understand where the information is coming from, how Ms. Oh is
reaching the conclusions which it appears she has reached by looking at some
sort of documentation. It is just not possible to determine what the basis of
the evidence is. It is simply hearsay, hard to know exactly what is being said
or what the source of the information is.

Accordingly, the judge ruled that the
evidence did not rise to the level necessary to make a challenge under s.
153(5)(b) of the [
Local Government Act
]

and
indeed that she had not met the preliminary burden of establishing a failure
of some kind in the election process.

[10]

In this court, Ms. Oh has argued that the chambers judge ignored the
evidence she had filed. She insisted that 123 people had registered and voted
for her but that their votes had not been counted. We have questioned Ms. Oh
today at some length as to how she can state categorically that the votes of
particular people were not counted. What we gleaned from her was that since she
had expected to receive 123 votes at least, some fraud must have occurred
because she received only 57. However, as Ms. Mushata deposes, the names of
voters in the voting books are crossed off when they attend at the voting
station. People who do not attend do not have their names crossed off. Further,
there is no means by which, after an election, one can identify
from the
record
who has voted for whom: it is, after all, a secret ballot. Although
Ms. Oh remains convinced that her inspections establish that some fraud
occurred, she is unable to offer anything further than her evidence of conversations
with people who, she says, voted for her. With respect, this evidence is
simply not probative of Ms. Ohs claim of electoral misfeasance.  I agree with
the judges finding that no evidence was adduced that provides support for that
claim.

[11]

Even if this were not the case, Ms. Oh has not shown that the chambers
judge erred in finding that her petition was aimed at obtaining a judicial
recount, or in ruling that her petition was out of time under s. 148(3) of the
Local
Government Act
.

[12]

It follows in my opinion that the appeal must be dismissed, with costs
to the respondents.

[13]

HARRIS J.A.
: I agree.

[14]

WILLCOCK J.A.
: I agree.

[15]

NEWBURY J.A.
: The appeal is dismissed.

[Counsel
requests that signature of appellant on the form of order be dispensed with.]

[16]

NEWBURY J.A.
: The appellants signature is dispensed with on this
order.

The
Honourable Madam Justice Newbury


COURT OF APPEAL FOR BRITISH COLUMBIA

Citation:

JEKE Enterprises Ltd. v. Northmont Resort Properties
  Ltd.,

2017 BCCA 38

Date: 20170125

Docket: CA43568

Between:

JEKE Enterprises
Ltd.

Appellant

(Plaintiff)

And

Northmont Resort
Properties Ltd.

Respondent

(Defendant)

Before:

The Honourable Chief Justice Bauman

The Honourable Madam Justice D. Smith

The Honourable Mr. Justice Goepel

On appeal from: An
order of the Supreme Court of British Columbia, dated
March 8, 2016 (
JEKE Enterprises Ltd. v. Northmont Resort Properties Ltd.
,
2016 BCSC 401, Vancouver Docket S154134)

Counsel for the Appellant:

D. Wotherspoon

R. Coad

Counsel for the Respondent:

J.E. Virtue

V. Naranjo

Place and Date of Hearing:

Vancouver, British
  Columbia

October 24, 25, 2016

Place and Date of Judgment:

Vancouver, British
  Columbia

January 25, 2017

Written Reasons by:

The Honourable Chief Justice Bauman

Concurred in by:

The Honourable Madam Justice D. Smith

The Honourable Mr. Justice Goepel

Summary:

JEKE appealed the trial
judges dismissal of its claim alleging breach of contract in connection with
its time share interests at a resort. It alleged that Northmont breached its
vacation interval agreements by charging to lessees a renovation project fee
that included certain capital costs, and by charging delinquencies and its
legal expenses. The trial judge found that the agreements permitted Northmont
to charge these amounts as Operating Costs such that there was no contractual
breach. Held: appeal dismissed. The trial judges contractual interpretation is
subject to review on a palpable and overriding error standard. She made no such
error in her analysis or findings. The contractual language clearly
contemplates Northmont charging the costs associated with the proposed
renovations, delinquent accounts of other owners and lessees, and its legal
expenses. Nothing in the surrounding circumstances detracts from the
unambiguous contractual language.

Reasons for Judgment of the Honourable
Chief Justice Bauman:

Introduction

[1]

Before the courts of British Columbia the purchaser, as lessee, of two
time share units in a large development in the beautiful Columbia Valley of
this province seeks to avoid the effect of relatively clear language in the
governing contractual documents with its new lessor. These provisions assign
responsibility for all costs incurred in the operation, continuing maintenance
and repair of the resort to the purchasers/lessees of the units. The appellant
would ignore the plain words of the contract and impose on the lessor a duty to
always provide a fit and proper resort and to spend the significant sums to
make this so.

[2]

No provisions in the applicable documents expressly so provide. No
provisions in the applicable documents qualify the clear responsibility on the
lessees to pay their way in the enjoyment of their resort community. My reasons
for so concluding and finding no reversible error in the trial judges analysis
follow.

Facts

[3]

The appellant, JEKE Enterprises Ltd. (JEKE),
is a holding company owned by the Belfry family. It holds two time share
interests in a resort known as Sunchaser Vacation Villas located in Fairmont
Hot Springs, BC (the Resort).

[4]

Fairmont Resort Properties Ltd. (Fairmont)
developed the Resort over a number of years, but ultimately sought creditor
protection pursuant to the
Companies Creditors Arrangement Act
, R.S.C.
1985, c. C-36. In June 2010, Fairmont entered into a foreclosure agreement
which led to the respondent, Northmont Resort Properties Ltd. (Northmont),
acquiring all interests held by Fairmont in the Resort.

[5]

Time share interests in the Resort are governed
by the terms of vacation interval agreements (VIAs or, when used in the
singular, VIA). There were approximately 14,500 owners holding time share
interests in the Resort pursuant to the terms of VIAs. Prior to signing the
VIAs, JEKE received a prospectus from Fairmont. It also signed a consumer
protection agreement (the CPA). Key to the present appeal is clause 9 of the
JEKE VIAs, which reads:

OPERATING COSTS AND RESERVE FOR REFURBISHING: In addition to
the Management Fee described in paragraph 10 of this Lease, the [Lessee] shall
be responsible for his proportionate share
of all administration[,]
maintenance and repair costs (the "Operating Costs") and replacement
costs incurred with respect to the Vacation Resort and the Vacation Properties
including, without limiting the generality of the foregoing
, the following:

(a) property taxes;

(b) water and sewer rates;

(c) lighting and heating;

(d) insurance;

(e) clearance of walks and roadways from snow and debris;

(f) housekeeping services, on a hotel standard basis,
including the provision of towels, linens, bathroom soap and paper products
(ie., normal housekeeping encompasses linen changes and general clean up
following the termination of a week period, and any services in addition are
classified as special housekeeping services and are subject to a special
charge);

(g) painting, redecorating and refurbishing as required;

(h) garbage disposal;

(i) repairs to both the exterior and interior of the Vacation
Properties;

(j) service fees and costs of the Trustee;

(k) maintenance staff and equipment;

(I) administrative staff;

(m) office space and equipment;

(n) accounting costs;

(o) furniture and equipment replacement costs; and

(p) all expenses incurred by the Lessor In the management of
the Vacation Properties (i.e., see paragraph 10 of this Lease).

All maintenance and repairs to the Vacation Properties will
be apportioned equally between the lessees in accordance with the number of
weeks and the type of Vacation Property specified on page 1 of this Lease.

A yearly assessment shall be made of the furnishing and
fixtures to permit replacement as required.

[Emphasis added.]

[6]

Northmont is the successor in interest to
Fairmonts rights and obligations under the VIAs.

[7]

When Northmont took over there were significant
financial and maintenance issues associated with the Resort. In late 2012,
Northmont determined that it was necessary to raise funds from the time share
owners and lessees to carry out extensive renovations and repairs and resolve
outstanding financial deficits. It levied a renovation project fee (RPF) upon
owners and lessees in April 2013. At the same time, it gave owners and lessees
the option to surrender their interests and terminate the VIAs on payment of a
cancellation fee. The majority of interest holders have either paid the RPF or
surrendered their interests to Northmont. As of the date of the trial judgment,
around 25% had done neither.

[8]

JEKE is in the group that has done neither. It
has also refused to pay annual maintenance fees. It commenced this litigation
in October 2014, alleging that Northmont is in breach of the VIAs as a result
of, among other things, insisting on payment of the RPF or cancellation fee.

[9]

Northmont has commenced thousands of superior
and provincial court actions against owners and lessees who have refused to
pay. These actions have been stayed pending the outcome of this action. JEKE has
had some success in garnering support for its position from other interest
holders and described its case as a test case in the court below.

Related Litigation

[10]

There are two other proceedings related to the
present appeal. In April 2013, Northmont wrote to the Trustee holding
beneficial title to the Resort on behalf of owners and lessees, requesting his
cooperation in implementing a 4-stage realignment plan (the Plan). The Plan
involves assessing the RPF, providing the cancellation option, amending VIAs by
agreement, and reducing the Resort by removing units transferred to Northmont.
The Trustee filed a petition seeking advice and direction from the court
regarding whether Northmont can remove properties from the Resort as
contemplated by the Plan. This proceeding is being held in abeyance pending the
resolution of this action by order of Justice Fitzpatrick dated 19 May 2015.

[11]

The second related proceeding is this Courts decision in
JEKE
Enterprises Ltd. v. Philip K. Matkin Professional Corp.
, 2014 BCCA 227.
This was an appeal of a special case on interpretation issues arising under the
VIAs  namely, Northmonts ability to levy the cancellation fee and the RPF.
This Court held that it was inappropriate to determine the issues by way of
special case. It therefore overturned Justice Loos decision that Northmont was
entitled to levy the fees at issue (
Philip K. Matkin Professional Corp. v.
Northmont Resort Properties Ltd.
, 2013 BCSC 2071) (
Special Case
(BCSC)).

Decision Under Appeal

[12]

At trial, JEKE sought a declaration that Northmont is in breach of the
VIAs, and that its breaches are fundamental and constitute a repudiation of the
VIAs such that it is relieved from any further obligations under the VIAs. It
claimed the remaining value of its interests and amounts it alleged Northmont
improperly charged to it.

[13]

Justice Fitzpatrick was not persuaded by JEKEs interpretation of the
VIAs. In the course of her exhaustive reasons, indexed as 2016 BCSC 401, she
considered the nature of the interests held by JEKE; the role of Northmont as
developer/lessor/manager; whether Northmont is in breach of the VIAs; and
whether repudiation is available if such breaches are found.

[14]

On the issue of JEKEs interest, the trial judge concluded that JEKE did
not acquire any specific interest in the Resorts real property but rather
acquired a time share interest to be used generally in conjunction with other
time share owners and lessees.

[15]

As it relates to Northmonts role, she found that, as the developer,
Northmont retains a residual interest in the Resort after the term of any
lease. The developer also holds various units from time to time in which case
it is treated the same as any other owner or lessee in sharing operating
expenses. As manager, Northmont is required to maintain the Resort in a
reasonable fashion and deal with maintenance issues. This includes addressing
required repairs left behind by Fairmont.

[16]

As it relates to contractual interpretation and the alleged breaches,
the trial judge resolved the interpretation issues within the four corners of
the contract based on the plain meaning of the words in the context of the
VIAs. At trial, both JEKE and Northmont argued that this was the proper
interpretive approach because the wording of the JEKE VIAs is clear and
unambiguous. The trial judge concluded that costs for delinquent accounts,
capital expenses and Northmonts legal fees all fall within the meaning of
Operating Costs in clause 9. With respect to capital costs, she noted the
difficulties associated with JEKEs interpretation, including that there is no
reference to capital costs in the VIAs. She reasoned that it would defy logic
that the parties failed to turn their minds to who would pay for significant
maintenance issues. She further concluded that even if she had found ambiguity
in the terms of the VIAs such that she could consider extrinsic evidence, that
extrinsic evidence supported her interpretation.

[17]

The trial judge also found that Northmont did not err in calculating the
management fee or its proportionate share of operating expenses. She also
rejected JEKEs submissions regarding a number of alleged wrongful acts and
omissions committed by Northmont in managing the Resort. On appeal, JEKE does
not take issue with these findings and instead focuses on the liability for
delinquencies, capital costs and legal fees.

[18]

In light of her finding that Northmont acted in accordance with its
obligations under the VIAs, the trial judge concluded that repudiation was not
available to JEKE. Even if it was available, she held that JEKE failed to
communicate to Northmont its election to accept the repudiation within a
reasonable period of time, or at all.

Grounds of Appeal

[19]

JEKE seeks to have this Court set aside the trial judges order and
substitute a declaration that JEKE has no further obligations under the VIAs.
Alternatively, it asks that the matter be remitted to the Supreme Court to be
decided in accordance with this Courts judgment.

[20]

JEKE alleges a number of errors concerning the trial judges
interpretation of the VIAs. It says the trial judge erred in:

1.

interpreting clause 9 of the VIAs;

2.

concluding that Northmont had not fundamentally breached and repudiated the
VIAs; and

3.

concluding that JEKE was not entitled to accept Northmonts repudiation
of the VIAs.

[21]

JEKE argues that the first two grounds of appeal reflect errors of law.
It says the third ground of appeal concerns an error in principle or,
alternatively, a palpable and overriding error of fact.

[22]

If this Court finds that the first ground of appeal fails then it is
unnecessary to consider the remaining grounds of appeal.

Submissions

Interpretation of the VIAs

[23]

JEKE submits that the standard of review for the trial judges
contractual interpretation is correctness due to two extricable errors of law: the
trial judges failure to consider the parties intentions and the circumstances
at the time the agreement was made; and the trial judges reliance on incorrect
and irrelevant factors as context for the interpretation of the VIAs. At the
hearing of this appeal, JEKE noted the recent decision in
Ledcor Construction
Ltd. v. Northbridge Indemnity Insurance Co
., 2016 SCC 37, but acknowledged
that it had not pleaded that the VIAs are standard form contracts such that the
new standard of review test applicable to such contracts does not apply.

[24]

JEKE submits that the trial judge failed to consider relevant
surrounding circumstances at the time of contract formation. It says the trial
judge focused on Northmonts position after its acquisition of the Resort and
reasoned backward to determine whether the renovations and Plan were
reasonable. This led her to consider irrelevant factors.

[25]

JEKE argues that on a proper construction it is not responsible for the
RPF, the delinquent accounts of other owners or lessees, or legal fees incurred
by Northmont. It says this interpretation is supported by the plain language of
s. 9, read in the context of the entire agreement and the proper factual
matrix, and business efficacy.

[26]

Northmont submits that the appropriate standard of review is whether
there is a palpable and overriding error. It says appellate courts should be
cautious in identifying extricable questions of law in issues of contractual
interpretation.

[27]

Northmont argues that the trial judge made no error in applying the
principles of contractual interpretation to the VIAs. The trial judge properly
considered s. 9 within the context of the entirety of the VIAs, the
factual matrix, and what reasonably ought to have been within the common
knowledge of the parties at the time of execution. Northmont says the alleged
ignored circumstances were all addressed by the trial judge. The irrelevant
factors alleged by JEKE were post-contract events that the trial judge
considered in determining whether Northmont had complied with its duties as
manager and not in interpreting the contract.

[28]

Northmont further submits that JEKEs interpretation fails to account
for the tripartite relationship the VIAs create between a time share interest
owner, other owners and lessees, and the developer/manager. It says the trial
judge properly found that all costs relating to repairs proposed in the RPF
fell within the language of clause 9.

Fundamental Breach

[29]

JEKE submits that the trial judges ruling that there was no fundamental
breach flowed from her mistaken interpretation of the VIAs, which was an error
of law. It says her flawed analysis of the parties rights and obligations led
her to conclude, in the alternative, that JEKE was not deprived of the benefits
of the bargain it had struck. JEKE says the alleged breaches are fundamental;
if it refuses to pay the fees then it loses its ability to benefit from the use
right. This deprives it of the entire benefit of the VIAs.

[30]

Northmont responds that the trial judge correctly determined that it had
not breached, or fundamentally breached, the VIAs by assessing delinquency
costs and legal fees to owners and lessees, and in levying the RPF. It says
JEKEs interpretation distorts the plain meaning of clauses 9, 13 and 14 of the
VIAs.

[31]

Northmont says JEKEs position on delinquency costs would effectively designate
Northmont as guarantor of any owner in default. It says that legal expenses,
the RPF and any associated capital costs are all Operating Costs of the
Resort. Whether a replacement or repair cost is capital does not determine
whether it is chargeable under clauses 9 and 10 of the VIAs.

[32]

In the alternative, Northmont argues that a mere breach of contract does
not terminate the contract. The VIAs create a long-term relationship for which
the insistence of a payment beyond what a party is entitled to cannot
constitute a fundamental breach. Moreover, the disputed invoice is with
Northmont as manager and not as lessor.

[33]

Northmont says even if the breaches were proven; they do not
fundamentally change the bargain. JEKE could still get the benefit of its time
share interest if it were not in default of the maintenance fees owing under
the VIAs.

Acceptance of Northmonts Repudiation

[34]

JEKE submits that the trial judge erred in holding that JEKE failed to
give prompt notice of its acceptance of Northmonts repudiation. JEKE says it
has never resiled from its position since receiving notice of Northmonts
intentions in December 2012, and that it has communicated its position to
Northmont throughout that time.

[35]

In the alternative, JEKE submits that it communicated its acceptance of
Northmonts repudiation when it participated in the Trustees petition and the
special case; and when it filed its notice of civil claim in the present case.
It says it was entitled to assess its circumstances and options before electing
to accept Northmonts repudiation.

[36]

Northmont submits that JEKE did not elect to disaffirm at the time of
the alleged breaches. Throughout the proceedings JEKE has said different
communications formed its acceptance of Northmonts repudiation. It notes that
the notice of civil claim was not issued until several years after the alleged
breaches. JEKE is not entitled to wait and see what suits it bestit must
promptly communicate its acceptance of the repudiation.

Analysis

[37]

The issue before us on appeal centers on the trial judges
interpretation of the contract between the parties. The standard of review to
be applied in our consideration of the disposition by the judge is at the
threshold of that enquiry.

[38]

To advance that consideration we must first determine just what the
contract includes, orally or in writing. The trial judge discussed this issue
at paras. 3238 of her reasons. She concluded (I take it as a matter of
fact or at least mixed fact and law) that the VIA and the CPA constituted the
entirety of the contract in place between the parties. The latter document (the
CPA) is one page in length and it summarizes the essential terms of the VIA. It
includes this as clause 14 in bold print:

14.       I understand
that the salesperson is not authorized to make written or verbal offers which
represent modifications, alterations or additions to the Lease Agreement or
Consumer Protection Agreement, and that work sheet number
103978
includes all agreements and considerations which I based my purchase decision
on.

[39]

The trial judge did not agree with JEKE that the prospectus was part of
the written contract between the parties but did allow that it was part of the
factual matrix to which resort may be had in the interpretation exercise before
the court (reasons for judgment at para. 32). JEKE accepts this conclusion
on appeal but maintains that the so-called Owners Album is part of the prospectus.
Northmont disagrees with the latter point but nothing really turns on it.

[40]

The judge eventually turned to discuss the applicable principles of
contract interpretation (at paras. 228233) and adopted Justice Loos
summary of the principles in the
Special Case
(BCSC) at para. 61,
as follows:

1          courts must give effect to the intention of the
parties as expressed in their written agreement as a whole;

2.         words and provisions in an agreement must be
interpreted not standing alone, but in light of the agreement as a whole;

3.         courts will deviate from the plain meaning of
words, only if a literal interpretation leads to an absurdity or to a result
that is clearly repugnant to the parties intentions;

4.         absent any ambiguity in the words of an agreement,
the intention of the parties must be determined objectively by attributing to
the words a meaning that would be conveyed to a reasonable person having the
background knowledge that would have reasonably been available to the person at
the time they entered into the contract;

5.         terms may not be
implied into a contract unless it can be said that it goes without saying;
and terms may not be implied that contradict any express term of the agreement.

[41]

The judge of course cited and discussed the decision of the Supreme
Court of Canada in
Sattva Capital Corp. v. Creston Moly Corp.
, 2014 SCC
53.
Sattva
discussed the courts ability to look to the factual matrix
the surrounding circumstances  in play at the time of the contracts
formation. While the surrounding circumstances can be considered they must
never be allowed to overwhelm the words of that agreement (at para. 57).

[42]

Sattva
also, importantly, addressed the standard of review to
apply to a trial judges interpretation of a contract. It is a standard of
deference; contractual interpretation involves issues of mixed fact and law.
Questions of law are subject to review on a standard of correctness. There is
room for that standard to apply in a matter of contract interpretation where
one can (cautiously) find an extricable question of law (
Sattva
at para. 53):

Nonetheless, it may
be possible to identify an extricable question of law from within what was
initially characterized as a question of mixed fact and law (
Housen
, at paras. 31
and 34-35). Legal errors made in the course of contractual interpretation
include the application of an incorrect principle, the failure to consider a
required element of a legal test, or the failure to consider a relevant factor
(
King
,

at para. 21). Moreover, there is no question that
many other issues in contract law do engage substantive rules of law: the
requirements for the formation of the contract, the capacity of the parties,
the requirement that certain contracts be evidenced in writing, and so on.

[43]

Sattva
was distinguished by the majority in
Ledcor
. There,
Justice Wagner said (at para. 24):

I would recognize
an exception to this Courts holding in
Sattva
that contractual
interpretation is a question of mixed fact and law subject to deferential
review on appeal. In my view, where an appeal involves the interpretation of a
standard form contract, the interpretation at issue is of precedential value,
and there is no meaningful factual matrix that is specific to the parties to
assist the interpretation process, this interpretation is better characterized
as a question of law subject to correctness review.

[44]

Before us, JEKE specifically declined to adopt
Ledcor
as guiding
the standard of review here; it specifically stated that this was not a case of
a standard form contract.

[45]

Rather, JEKE maintained that there are here extricable errors of law in
the trial judges analysis which are subject to review on a standard of
correctness, namely:

(1)      a
failure to consider the parties intentions and the circumstances at the time
the agreement was made; and

(2)      reliance
on incorrect and irrelevant factors including Northmonts circumstances and
intentions, as context for the interpretation of the VIAs.

[46]

I disagree. In my view, there are no extricable errors of law in the
trial judges analysis and it is, accordingly, subject to review on the
palpable and overriding error standard. It is certainly arguable that this is a
standard form contract case where the result, given the number of outstanding
cases awaiting disposition by provincial and superior courts, will have
significant precedential value. But that was not the position put before us.
That said, it is the duty of the court in most circumstances to determine the
standard of review, not for the parties to dictate it. However, in the result,
it is not necessary to definitively resolve the issue as even applying the
correctness standard of review, I can identify no error in the trial judges
analysis.

[47]

I advance then to the issue of contractual interpretation.

[48]

The trial judge began her analysis by considering various provisions in
the VIA in order to determine the nature of JEKEs interest in the Resort. I
have related above the judges conclusion in this regard. She rejected JEKEs
submission that its position under the contract was akin to that of a commercial
lessee who would not normally enjoy responsibility for capital costs associated
with common areas (although no authority was cited for this proposition). The
trial judge concluded (at paras. 112115):

[112]    All of the above provisions confirm the fundamental
nature of a time share plan in creating an interest that is not specific, but
is to be used generally in conjunction with other time share owners. This, in
essence, creates not only a relationship as between the lessor and lessee, but
one between all of the time share owners, whose interests are to be managed in
a manner that gives effect to their collective interests.

[113]    That these are long-term contractual relationships
is more than evident; the leases are for 40 years and later VIAs would create
permanent ownership interests. In addition, the VIAs provide only limited
circumstances in which a lessees responsibilities can be terminated and do not
provide for any right of a lessee to unilaterally terminate the VIAs. This, of
course, became an important aspect of the VIAs that, in part, led to the Resort
Realignment Plan being proposed by Northmont in April 2013.

[114]    Mr. Belfry would
have been well-aware of this by his careful reading of the Prospectus, which
states, by way of a capitalized and bolded statement on the first page of that
document:

TIME SHARING INVOLVES A
CONTINUING RELATIONSHIP WITH A SUBSTANTIAL NUMBER OF OWNERS OF EACH TIME SHARE
INTEREST
...

[115]    In summary,
JEKEs
interest, under the JEKE VIAs, is not that of a commercial tenant, but is a
part of a substantial number of other interests in the Resort which are to be
collectively managed for the benefit of all owners or lessees
.

[Emphasis added.]

[49]

JEKE does not apparently take issue with these conclusions on appeal.
The critical issue of contractual interpretation involves determining where
responsibility lies for payment of the costs associated with the renovation
program proposed by Northmont: the RPF. To answer this question it is necessary
to describe these renovations in more detail.

[50]

The trial judge accepted Justice Loos summary of the proposed
remediation and renovation planning set out in the
Special Case
(BCSC)
at para. 18 thereof:

(a)        Replacement of
Polybutal (Poly-B) Domestic Water Piping

(i)         The construction of the
initial 14 buildings in the resort used Poly-B plumbing pipe which at the time
was permitted under the BC Building Code. Use of Poly-B has been discontinued
in Canada and its CSA certification removed as a result of wide spread
failures.

(ii)        The 14 buildings have
and continue to experience frequent water leaks from failed Poly-B piping, many
of which have resulted in catastrophic damage.

(iii)       The Poly-B piping is
behind walls and ceilings, and smaller non-catastrophic leaks cause mould and
fungal growth, due to the length of time it takes to discover these type of
pinhole leaks.

(iv)       The resort risks losing
insurance coverage for water leaks due to the continued presence of Poly-B, and
the mechanical engineering consulting firm recommends that all Poly-B piping be
removed and replaced.

(b)        Exterior Building
Envelope and Decks/Patios

(i)         The exterior envelope
of all of the buildings is compromised and exterior stucco was installed to a
depth of 1/2 inch rather than to the current construction practice of 3/4 inch
which is more resistant to damage and water penetration.

(ii)        Repair of the exterior
decks and cladding components of the building envelope is required as a result
of areas of moisture ingress which has resulted in areas of building envelope
failure.

(iii)       Moisture penetration
contributes to mould and fungal growth, a known health issue.

(c)        Civil Repairs

(i)         Storm water
infrastructure is inadequate and must be addressed through the installation of
an additional storm water pipeline, additional catch basins, and the tie-in of
perimeter drainage from the buildings.

(ii)        Parking and drive
surfaces are beyond their designed life and must be replaced. This can be done
in conjunction with the storm water work as it occurs above or adjacent to
these surfaces.

(d)        Furnishings, Fixtures and Equipment

(i)         The interior of the
units is original dating from 1990-2004. Replacements have been sporadic on an
as needed basis. There are issues of functional obsolescence as well as wear
and tear.

(ii)        Large areas of the
exterior and interiors of the buildings must be demolished in order to deal
with the water penetration, mold, and removing and replacing the Poly-B piping.
The required demolition creates an opportunity to update the interior design of
the resort during reconstruction of the demolished areas.

(iii)       Samantha Pinksen Design
and Décor was retained to develop a scope of refurbishment to deal with
obsolete design and colour as well as new functional requirements of modern
electronic amenities. Information gathered from surveys of vacation interval
owners conducted by the resort manager was used in the proposed updating of
in-suite amenities.

(v)        Care has been taken to
replace like with like adjusted to 2013 specifications by using mid-quality
materials such as vinyl wrapped cabinetry, tile and counter top selections,
flooring materials, plumbing fixtures and the reuse of other components such as
railings and doors.

[51]

The RPF contemplated a budget of some $40.8 million; added to this was
the operating deficit for the Resort of approximately $4.3 million. JEKEs
assessed share of the RPF (before taxes) was $5,992.77 (and without interest
since).

[52]

This brings us to the VIA and specifically clause 9, the opening words
of which are very broad indeed. I reproduce that portion of the clause below
for ease of reference:

OPERATING COSTS AND RESERVE FOR
REFURBISHING: In addition to the Management Fee described in paragraph 10 of
this Lease, the [Lessee] shall be responsible for his proportionate share of
all administration[,] maintenance and repair costs (the "Operating Costs")
and replacement costs incurred with respect to the Vacation Resort and the
Vacation Properties including, without limiting the generality of the foregoing,
the following:

[53]

JEKE seeks to restrict the generality of these words through a number of
submissions. First, it says that nothing in clause 9 makes mention of capital
costs. JEKE seizes on the phrase Operating Costs in clause 9 and submits
that operating costs are by definition distinct from capital costs. English
authority is cited to suggest this is so. But this is an erroneous take on the
interpretation exercise. The VIA in clause 9 does not use the phrase operating
costs
simpliciter
and thereby possibly leave its meaning to be
determined by commercial or accounting usage. It rather simply uses the phrase
as a defining term for all administration, maintenance and repair costs. To
put it another way, Operating Costs in the VIA are not necessarily operating
costs in commercial or accounting parlance.

[54]

Contracting parties are free to define words or phrases in a manner that
differs from their ordinary usage. Where they have clearly done so, a court
need go no further than this unambiguous language in interpreting the meaning
of that word or phrase (
Belsat Video Marketing Inc. v. Astral Communications
Inc.
(1999), 86 C.P.R. (3d) 413 at paras. 7, 8 (O.N.C.A.)).

[55]

In any event, as the trial judge lamented, JEKE led no expert evidence,
in particular from a construction expert, analyzing the capital cost issue (at para. 265):

[a]t best, JEKEs counsel was
only able to give their own opinions on what constituted a capital cost or
not, submissions that were largely unhelpful.

[56]

The judge continued (at para. 266):

[a]t bottom, JEKE did not provide
any analysis on this issue beyond admitting that some of the work contemplated
in the Renovation Plan was properly chargeable to the owners. That led to the
submission that since some charges were capital in nature, the entirety of
the Renovation Project Fee is not payable by the owners. I see no basis for
such a bald statement. JEKE argues that this Court should declare the amount
that is properly chargeable to the owners as part of the Renovation Project
Fee, without absolutely any evidence being introduced or submissions made as to
what that amount is and why it is chargeable or not. I can only conclude from
this approach that JEKE has chosen not to spend the time and effort in
pre-trial procedures available to it to prove its case on this point. It is
hardly the responsibility of Northmont to address the issue for the benefit of
JEKE, which is exactly what JEKE suggests it should have done.

[57]

Before us, counsel for JEKE (who was not counsel at trial) went even
further. In his submission
none
of the RPF falls to JEKE under the VIA.
JEKEs fluid position on this elementary point does not assist it before the
court. Even if capital costs are to be distinguished from operating costs,
there are surely many repair costs in the renovation project that would come
within the rubric of operating costs.

[58]

Then JEKE has resort to the principle of
noscitur a sociis
 or
the associated words rule  which states that the generality of a term can be
limited by a series of more specific terms which precede or follow it. True,
the application of this principle may result in the scope of the broader term
being limited to that of a narrower term (
McDiarmid Lumber Ltd. v. Gods
Lake First Nation
, 2006 SCC 58 at para. 31). However, that narrowing
is dependent on whether the specific terms indicate just how the broader term
should be narrowed. Justice Bastarache, dissenting but not on this point,
explained the interpretive principle this way in
Marche v. Halifax Insurance
Co.
, 2005 SCC 6 at paras. 67, 70:

[67]      It is a well-known rule of interpretation that a
term or an expression cannot be interpreted without taking the surrounding
terms into account. The meaning of a term is revealed by its association with
other terms: it is known by its associates

[70]      When applying the
noscitur a sociis
rule
(associated words rule) to a term that is part of a list, one must look for a
common feature among the terms
, the meaning of the more general being
restricted to a sense analogous to the less general

[Emphasis added, citations
omitted.]

[59]

In the present case, the problem with this submission is that the
specific items listed in clause 9 after the general words are so varied that no
genus
can be said to have been created to effectively limit the general
words to expenses of a like matter and kind.

[60]

Even in the specific list we find broad descriptions of costs that are
the responsibility of the lessees. For example, clause 9(i) describes costs
incurred in respect of repairs to both the exterior and interior of the
Vacation Properties; and in clause 9(p) all expenses incurred by the Lessor in
the management of the Vacation Properties (i.e. see paragraph 10 of this lease).
Clause 10, in turn, charges the manager to manage and maintain the Vacation Resort
in a prudent and workmanlike manner. The trial judge found as a fact (and no issue
is taken with this finding on appeal) that the projects to be funded by the RPF
are necessary and reasonable (at paras. 402, 404):

[402]    JEKEs counsel, while conceding that some work was
necessary, argued that the entire Renovation Plan did not need to be done. That
may technically be the case, but this decision is one that was made reasonably
within the managerial discretion afforded to Northmont under the JEKE VIAs.
JEKE has produced no evidence to indicate that some other course of action was
reasonably available to the Manager and should have been selected. Again, JEKE
could have engaged a construction expert to inspect the Resort to review the
proposed Renovation Plan and inspect the ongoing repairs. No such evidence was
tendered in support of any argument against the reasonableness of the
Renovation Plan, whether in whole or in part.

[404]    In conclusion, I am
satisfied that the Manager does have the ability to impose the Renovation
Project Fee on the owners and that, in these circumstances, it was a necessary
and reasonable course of action to address the significant maintenance issues
facing the Resort.

[61]

Where, as here, the Manager complies with its clause 10 duty in managing
and maintaining the Resort, expenses incurred to repair and manage the Resort
are properly chargeable to lessees under clause 9.

[62]

Moreover, JEKEs submission on this point also ignores the words that
precede the listing in clause 9:

including, without limiting the
generality of the foregoing, the following

[63]

This would seem to expressly oust the operation of the associated words
rule to narrow the meaning of Operating Costs.

[64]

JEKE then goes beyond clause 9 of the VIA in its efforts to limit the
general words therein to some concept of operating costs as distinct from
capital costs. It asks this Court to find that Operating Costs takes on a
different meaning when considered in the context of the contract as a whole.

[65]

For example, JEKE points to clause 17 of the VIA which deals with damage
to the Vacation Properties (as that term is defined in the VIA):

If during the term of this Lease,
a Vacation Property is destroyed or damaged by fire or other hazards for which
insurance is carried, then the proceeds of insurance shall be used to rebuild
or replace the Vacation Property and, during the period of rebuilding, the
Lessee will not be entitled to any claim for loss of occupancy; provided,
however, that the Lessor shall use reasonable efforts to provide the Lessee
with an alternative Vacation Properties at rates to be negotiated by the Lessor
with the Lessee. The Lessor agrees to rebuild, repair or replace the Vacation
Property provided insurance proceeds are available for such purpose.

[66]

JEKE makes the general submission, which I will address below, that
Northmont, as lessor, has a duty to pay capital costs associated with
maintaining the Resort to a level such that JEKE always would enjoy access to
what it bargained for: useable, prudently maintained units in a functioning
resort. This duty being present, JEKE then submits that the implication in
clause 17 becomes clear: by expressly contracting out of its duty to rebuild,
repair or replace in the circumstances set out in clause 17 beyond the total of
insurance proceeds received, Northmont implicitly has not otherwise limited its
general duty to be responsible for capital costs incurred in rebuilding,
repairing or replacing the Vacation Property.

[67]

Such an argument is really two-edged, it can just as readily be said
that the express reference to this limited duty on the lessor in clause 17 is
an implicit indication that the lessor does not
otherwise
have a duty to
rebuild, repair or replace at its expense.

[68]

In any event, I do not credit the submission that the essential
obligation the lessor took under the VIA was to provide merchantable units
throughout the term of the lease at its cost. That is not said anywhere
expressly in the VIA. Indeed, to the contrary, where ongoing costs are
contemplated, clause 9 makes it clear that they all are the responsibility of
the lessee. This is again illustrated by the responsibility for management
costs. Clause 10 of the VIA imposes a duty on the lessor to manage and
maintain the Vacation Resort in a prudent and workmanlike manner. The lessors
expenses incurred in this regard  all expenses  are expressly the
responsibility of the lessees under clause 9(p).

[69]

Again, this was not the position taken by JEKE at trial. Indeed, JEKEs
submission that the contract did not call for it to pay such costs led the
trial judge to state (at para. 277):

It defies logic that the parties
intended any uncertainty regarding who would pay to fix the Resort buildings
and infrastructure when faced with maintenance issues of this magnitude. If
JEKE is right, but the Lessor was unable or unwilling to pay and contribute to such
expenses (assuming no express liability), then no one would pay to repair the
resort, which would inevitably result in a decline in the Resort. I do not
accept that this was what the parties intended. The JEKE VIAs were intended to
set out the responsibility for these very expenses in paragraph 9.

[70]

JEKE adds to its submission by referring to the prospectus where, for
example, it states in clause 2.06(5):

The price of the Vacation Lease
paid at the time of purchase is fixed and will not change throughout the
duration of the Vacation Lease. The maintenance cost will increase only as
actual costs of operation increase.

[71]

JEKE also refers to clause 10 of the CPA:

I understand that the annual
maintenance fee is currently 463 + GST per week of ownership. Said fee shall
cover maid service, utilities, insurance, taxes, refurbishing and general
maintenance. Fees are subject to increases as costs increase.

[72]

And to this question and answer in the Owners Album:

Q.        Will the maid/maintenance fees go up in the
future?

A.         Your annual
maintenance charge will increase or decrease only in direct relation to actual
expenses. Each years charge is based on an estimate of the total annual cost
of operation. This total includes maintenance of the facility, replacement of
furniture and equipment, taxes, utilities and other expenses.

[73]

None of these statements that form part of the factual matrix blunt the
very general words in clause 9 of the VIA  all administration[,] maintenance
and repair costs. I repeat my earlier statement of principle that the
surrounding circumstances must never be allowed to overwhelm the words of that
agreement (
Sattva
at para. 57).

[74]

JEKE finally resorts to commercial efficacy in aid of its submission
that the trial judges view of cost responsibility under the VIA lacks
commercial efficacy from the perspective of the lessees. In considering this
submission, it is instructive to look at another question and answer in the
Owners Album, which points to an important factor when considering the business
efficacy of JEKEs bargain; namely, the fact that the interests of the lessees
are theirs to sell. We find this in the Album (as of the date of JEKEs
purchase):

Q.        Will my Villa appreciate in value?

A.         The value of the
vacation leases at Fairmont have more than doubled since 1979. It is reasonable
to assume that the future value will vary with the future value of rentals in
luxury accommodations.

[75]

Today, there is apparently no secondary market for these units. But
there apparently was one historically and when we talk of commercial efficacy
one could note the possibility at the time of purchase (based on the experience
to that date) that lessees might enjoy appreciation in the value of their
units. Commercial efficacy is not served if JEKE has all of the upside benefits
of that potential appreciation and none of the downside costs to maintain and
replace the vacation properties during the term of the lease.

[76]

Moreover, the first page of the prospectus provides, in bold print, the
following statement that further assists in evaluating the commercial efficacy
of JEKEs bargain:

THE PURCHASE OF A TIME SHARE
INTEREST SHOULD BE BASED ON ITS VALUE TO THE PURCHASER AND NOT THE PROMISE OF
FUTURE EXCHANGE RIGHTS, RESALE OR INVESTMENT POTENTIAL.

[77]

Key then is the value to the purchaser. It is consistent with this
purpose to require owners and lessees to pay the managers costs to make
necessary and reasonable repairs such that the Resort maintains its value.

[78]

In my view, after applying the above principles of contractual
interpretation, the invariable conclusion is that JEKE is responsible for its
proportionate share of what it has termed capital costs included in the RPF.

[79]

JEKE also takes issue with the trial judges conclusion that
delinquencies and Northmonts legal fees are to be borne by lessees under
clause 9 of the VIA. The delinquencies arise out of other owners and lessees failing
to pay their assessments. The trial judge concluded (at para. 240):

Delinquency refers to the failure
of some owners and lessees to pay the costs assessed to them. Mr. Wankel
testified that delinquency is a typical and anticipated cost of operating the
Resort. Common sense would dictate, and Mr. Wankel, as a chartered accountant
confirms, that if you anticipate having expenses of $100 for the ensuing year
and only collect $90, you will have a deficit. The JEKE VIAs expressly
contemplate that, as a result of the budgeting process, deficits or surpluses
may occur. In my view, such delinquencies do constitute part of the Operating
Costs referred to in paragraph 9 of the JEKE VIAs and are chargeable to the
lessees and owners.

[80]

JEKE refers to clauses 13 and 14 of the VIA and submits that they
clearly make Northmont responsible for these costs. Clause 14 has no
application to the case of the delinquent lessee. It makes Northmont
responsible for costs as though it was a Lessee in respect of weeks (units)
not sold in any year (except for the one week maintenance period). The unit of
the delinquent lessee of course has been sold to that individual (at least
until it is, if ever, assumed by the lessor under clause 13).

[81]

Clause 13 of the VIA provides:

13.       DEFAULT OF THE LESSEE IN ANY PAYMENT
REQUIRED UNDER THIS LEASE:
In the event that the Lessee should default in
making any payment required to be made by the Lessee hereunder, within the time
stipulated for payment, then the Lessee agrees that the Lessee's right to
occupy a Vacation Property shall be suspended until such time as all payments
due have been duly paid.

If a default in any payment required to be paid according to
this Lease has not been remedied within 90 days from the date of such default,
and the Lessee has been given a minimum of one written notice of such default,
the Lessor may terminate this Lease upon written notice to the Lessee, and from
the date of such notice all of the Lessee's rights to the Vacation Property
pursuant to the provisions of this Lease shall be terminated. Furthermore, from
the date of such notice of termination the Lessor shall be entitled to the full
and exclusive right to use and occupy the Vacation Property free and clear of
all rights of the Lessee pursuant to this Lease or otherwise and Lessor may
grant the right to use the Vacation Property during the week period to which
the Lessee is entitled hereunder to another person or may retain it for any
other purpose. The monies received by Lessor on account of rights of occupation
or otherwise following such default or termination shall be retained by the
Lessor as its sole and exclusive property as liquidated damages and not as a
penalty. In the event of termination as hereinbefore provided, the Lessee
shall, following such termination, be released from all obligations hereunder
except for any monies then owing to the Lessor, or any other liabilities then
outstanding of the Lessee, under this Lease.

[82]

Clearly, clause 13 gives Northmont an option in the circumstances noted.
If it terminates the lease, it steps into the shoes of the lessee and is
responsible for ongoing costs in respect of that unit. But if it does not,
Northmont takes no responsibility for those costs; that responsibility
continues to rest on the defaulting lessee. Absent payment by such lessee,
delinquencies are chargeable to non-defaulting lessees as Operating Costs under
clause 9. Of course, this does not absolve the defaulting lessee of its
responsibility to repay these amounts to the manager on behalf of its fellow
lessees. In my view, the trial judge committed no error in her conclusion on
this issue.

[83]

I reach the same conclusion with respect to Northmonts litigation
expenses relating to the
Special Case
, both in the Supreme Court and in
the Court of Appeal. The trial judge held that these were costs arising from
the management of the Resort by Northmont and properly chargeable under sub-clause
9, in particular under clause 9(p) thereof. In this regard, JEKE points to
clause 38 of the VIA. It provides:

38.
INDEMNITY:
The
Lessee covenants with the Lessor to indemnify and save harmless the Lessor from
any and all actions[,] suits, claims, liabilities, damages, costs, losses and
expenses incurred or sustained by the Lessor arising from or connected with:

(a)        any breach,
violation or non-performance of any covenant, agreement, condition or proviso
in this Lease set out and contained on the part of the Lessee to be fulfilled,
kept, observed and performed[;]

(b)        any damage to any
Vacation Property or other part of the Vacation Resort by the Lessee or the
Lessees agents, sublessees, licensees or invitees;

(c)        any injury to the
Lessee or any agent, sublessee, licensee or Invitee of the Lessee, including
death resulting at any time therefrom, occurring in or about the Vacation
Property or the Vacation Resort, or

(d)        any other act or omission of the Lessee.

[84]

JEKE submits that the trial judge failed to consider this provision as a
limit on Northmonts right to indemnity for costs caused by the default of a
lessee. I disagree. The fact that Northmont may be able to look to individual
lessees for indemnification in some cases does not take away from the fact that
the expenses are properly within clause 9(p). Northmont, in making chargebacks,
would obviously give credit for any sums collected under clause 38.

Conclusion

[85]

Applying a standard of deference in my review of the trial judges
interpretation of the provisions of the agreement before this Court, no error
has been demonstrated. Indeed, in my view, applying a standard of correctness
yields the same result. In light of this conclusion, it is not necessary to
consider JEKEs argument on the issues of fundamental breach and whether JEKE
accepted Northmonts alleged repudiation.

[86]

I would dismiss the appeal. The parties apparently wish to make further
submissions on costs in this Court and in the Supreme Court proceedings. I
would grant leave to do so. I would trust that counsel will come to an
agreement on an appropriate schedule for the exchange of submissions.

The
Honourable Chief Justice Bauman

I
agree:

The Honourable Madam Justice D. Smith

I
agree:

The
Honourable Mr. Justice Goepel