COURT OF APPEAL FOR BRITISH COLUMBIA

Citation:

R. v. Hernandez-Lopez,

2020 BCCA 12

Date: 20200114

Docket: CA45577

Between:

Regina

Respondent

And

Milton Gilberto
Hernandez-Lopez

Appellant

Restriction
on publication: A publication ban has been imposed under
section 486.4 of the
Criminal Code
restricting the publication, broadcasting
or transmission in any way of evidence that could identify the complainant
and witness referred to in this judgment by the initials AD. This publication
ban applies indefinitely unless otherwise ordered.

Before:

The Honourable Chief Justice Bauman

The Honourable Mr. Justice Groberman

The Honourable Madam Justice Fisher

On appeal from:  An
order of the Supreme Court of British Columbia, dated
August 3, 2017 (
R. v. Hernandez-Lopez
, 2017 BCSC 2555,
New Westminster Docket No. X079453).

Counsel for the Appellant:

M.E. Sandford, Q.C.

A. Tolliday

Counsel for the Respondent:

J.R.W. Caldwell

Place and Date of Hearing:

Vancouver, British
  Columbia

September 3, 2019

Place and Date of Judgment:

Vancouver, British
  Columbia

January 14, 2020

Written Reasons by:

The Honourable Mr. Justice Groberman

Concurred in by:

The Honourable Chief Justice Bauman

The Honourable Madam Justice Fisher

Summary:

The appellant, who was
supervising a daycare, was alleged to have engaged in sexual touching of AD, a
four-year-old child. The only evidence dealing with the touching came from AD;
the appellant did not testify. The judge did not hear expert evidence on the
assessment of child evidence, nor was any academic literature on that issue
referred to by counsel. In his reasons, however, the judge referred to a law
review article that made observations with respect to the evidence of children.
He found ADs evidence convincing. In doing so, he noted that ADs answers to
open-ended questions were more detailed and more probative than her answers to
leading questions. He also commented on the witnesss demeanour. He convicted
the appellant. Held: Appeal dismissed. The law review article made observations
with respect to the evidence of children, but was not used as expert evidence.
The judge used it as a convenient summary of common-sense observations with
respect to child evidence, and such use was not improper. The judges
assessment of the weight to be given to particular answers and his observations
of the witnesss demeanour were within his purview, and did not give rise to
reversible error. Finally, the judges comment that the accused might have
masturbated after the event was unnecessary, but was not used to draw an
inference of guilt.

Reasons for Judgment of the Honourable
Mr. Justice Groberman:

[1]

Mr. Hernandez-Lopez appeals from his conviction on one count of
sexual touching of a person under the age of 16, contrary to s. 151 of the
Criminal Code
, R.S.C. 1985, c. C-46. The offence was alleged
to have occurred at a time when he was supervising a residential daycare
operated by his wife. The victim, AD, was under five years old at the time of
the offence and seven years old at the time of trial.

[2]

The allegations against Mr. Hernandez-Lopez are that, after getting
AD alone within the residence, he licked his finger and inserted it into the
childs vagina. After he withdrew his finger, it is alleged that he left the
child and went into a washroom.

[3]

The only direct evidence of the touching was given by AD. Other evidence
presented at the trial showed that Mr. Hernandez-Lopez was present at the
daycare and alone with the children for approximately 30 to 45 minutes on the
day in question, and that the victim suffered from inflammation of the labia
majora that was consistent with the events that she described, though also
consistent with other causes.

[4]

Mr. Hernandez-Lopez did not testify. The judges finding of guilt
turned on his assessment of the reliability and credibility of ADs evidence.

[5]

On this appeal, Mr. Hernandez-Lopez contends that the judge made
four errors in his assessment. First, he says that the judge erred by
improperly consulting and relying on a law review article that set out bases
for assessing the evidence of children. Second, he contends that the judge
erred in applying a principle that a child witnesss answers to open-ended
questions deserved greater weight than answers to leading questions. Third, he
argues that the judge placed too much reliance on the demeanour of the child in
making his assessments of credibility and reliability. Finally, he says that
the judge erred in drawing an inference for which there was no evidence: the
inference that the accused went into the washroom to masturbate after the
touching incident.

[6]

For reasons that follow, I would dismiss the appeal. In terms of the
four issues raised, it is my view that:

a)

the judges
reference to the law review article was not inappropriate;

b)

it was open to
the judge to find that certain answers given by the child in cross-examination
were of limited assistance and his findings were not the result of the adoption
of any erroneous principle;

c)

the judge
was entitled to consider the witnesss demeanour, and did not, in this case,
place undue reliance on demeanour in assessing credibility and reliability; and

d)

while the judge
did, in finding that the accused masturbated after touching the child, draw an
inference without an evidentiary foundation, the improper inference did not
play any role in the verdict.

The Law Review Article

[7]

Counsel at trial did not provide the judge with any case law or legal
articles dealing with the evidence of children, though they did make some
common-sense observations and made suggestions as to how the judge should go
about assessing ADs credibility and reliability. The primary issue on this
appeal concerns the judges use of a law review article that he came across on
his own.

[8]

The judge recognized that the evidence of young children must be
evaluated differently from the evidence of adults. He quoted from four
authorities that discuss the special approach that should be taken to the
evidence of children:
R. v. E.(A.W.)
, [1993] 3 S.C.R. 155;
R. v. L.(D.O.)
,
[1993] 4 S.C.R. 419;
R. v. F.(C.C.)
, [1997] 3 S.C.R. 1183; and
R. v. B.E.M.
, 2010 BCCA 602. The portions of those cases that
he cited also included references to
R. v. B. (G.)
, [1990] 2
S.C.R. 30;
R. v. (W.R.)
, [1992] 2 S.C.R. 122. Finally, the
judge referred to
R. v. Ceal
, 2012 BCCA 19.

[9]

After referring to these cases, the judge discussed an article published
in the Alberta Law Review. I quote his discussion in full:

[30]      I also refer to Bala et al. Judicial Assessment of
the Credibility of Child Witnesses (2005) 42 Alta. L. Rev. 995-1017 in which
the learned authors refer to psychological research on child witnesses in
addition to a review of Canadian legal authorities. Included in their
publication are the following statements, which are apt in the case at bar:

13  A major concern with child
witnesses is their potential suggestibility. As a result of repeated or
misleading questions, the memory of a witness may become distorted. It is
possible for a person who has been subjected to repeated, suggestive
questioning to develop memories of events that did not in fact occur. While
children, especially young children, are more suggestible than adults, there is
great variation between individuals of the same age in suggestibility and in
resistance to suggestion. There is a large body of experimental research about
the suggestibility of children, as well as some research about the
suggestibility of adults.

14  The way in which children are
questioned can also greatly affect what they are able to communicate. Research
studies reveal that children and adults generally provide more information in
response to specific questions rather than to the open-ended questions that are
typically posed during direct examinations of witnesses. Children, especially
young children, may lack the cognitive capacity to provide meaningful and
consistent answers to questions that involve frequency of events, time or size,
or that require explanation of motive (why questions), though if asked they
will usually try to answer. In addition, yes or no questions are problematic
as children, especially young children, may have a bias to produce yes
answers, and when asked such questions by unfamiliar adults, young children
will rarely respond with I dont know.

15  Children, especially young
children, are socialized to provide responses to questions, even if they do not
fully understand what is being asked. Children who are asked questions that
they do not fully understand will usually attempt to provide an answer based on
the parts of the question that they did understand, so that a childs answer to
a question may seem unresponsive or may even be misleading.
[1]
The authors comments about
childrens inability to estimate the frequency of events, time or size, as well
as their tendency to try to answer questions that they may not fully understand
might have affected AD and her responses to questions at trial. For instance,
AD was unable to answer questions posed to her by defence counsel during
cross-examination about what month she started attending or left the daycare,
approximately how far the daycare was from her house or how old young SH was
when the offence occurred. Defence counsel sometimes posed confusing questions,
such as thats probably not what happened, isnt it? to which ADs answers
may have seemed unresponsive, such as I dont remember.
[10]

Mr. Hernandez-Lopez argues that the judges reliance on this
article was improper. He characterizes the article as extraneous expert
opinions that were not properly admitted or tested at trial. He suggests that
this case is like
R. v. Bornyk
, 2015 BCCA 28, in which a trial judge
independently researched publications on fingerprint evidence, and then relied
on the expert evidence contained in those publications in preference to the
evidence before him at trial.
[11]

In my view, this case is not analogous to
Bornyk
. The judge in
Bornyk
was dealing with a highly specialized and technical area, in which opinions
could only reasonably be drawn with the assistance of witnesses possessing
specialized training and experience. The judge improperly used published
articles as substitutes for expert opinion evidence. In contrast, the judge in
this case was dealing with a subject very much within his own purview: the
assessment of the credibility and reliability of a witness.
[12]

I do not suggest that a judge is entitled, when assessing the veracity
of a witnesss testimony, to rely on expert evidence that is not properly
before the court. Not every reference to a publication, however, amounts to
reliance on outside expertise. Sometimes, a judge may refer to a publication
because it provides a concise and easily understood discussion of a concept, or
because it provides an accessible illustration of the judges thinking.
[13]

A judge, for example, may explain why an overstated denial lacks credibility
by quoting Queen Gertrude in Shakespeares
Hamlet
: The lady doth
protest too much, methinks (see, for example, Hardinge J. in
Shandro v.
Central Guaranty Trust
, [1992] B.C.J. No. 1220, 1992 CarswellBC 1889;
G.C. Weatherill J. in
Siddall v. Bencherif
, 2016 BCSC 1662 at para. 189).
It cannot be said that Shakespeare is being used as an expert witness in those
cases. Rather, the reference simply furnishes an illustration of a concept that
is widely understood.
[14]

The use of the Bala article in this case falls somewhere between the
clearly inappropriate use of published material in
Bornyk
, and the
clearly innocuous references to
Hamlet
that I have referred to. The
judge in this case was not referring to the Bala article merely as a literary
analogy; neither, however, was he relying on it to furnish critical evidence.
[15]

The Bala article appears in a law review, but it does not restrict
itself to legal analysis. It is interdisciplinary in nature, jointly authored
by a law professor, two psychology professors and an articling student. The
main part of the article (which was not relied on by the judge) presents the
results of two studies: a) an empirical study that attempted to determine how
well judges and other professionals are able to assess the honesty and
reliability of child witnesses; and b) a study of how Canadian judges perceive
child witnesses. The article includes references to and reports of experimental
data and empirical studies. Parts of it lie within the realm of specialized
expertise. Those parts could not properly have been relied on by the trial
judge in this case, and he did not rely on them.
[16]

The judges reference to the article is to an introductory portion
headed Psychological Research on Child Witnesses. That portion of the article
deals with commonplace knowledge. The authors preface it with the following
paragraph:
There has been a significant
amount of psychological research about the memory, suggestibility and
communication capacity of children, and the discussion offered here is only
intended to summarize a large and complex body of literature.
[17]

While the authors mention a number of studies in footnotes to the three
paragraphs referred to by the trial judge, the paragraphs, themselves, do not
refer to any particular empirical study. They simply describe generally
accepted propositions that apply to the evidence of children.
[18]

The excerpts of the Bala article cited by the judge do not contain any
information that is not already generally known by any person who has contact
with young children. The ideas contained in those excerpts must, of necessity,
be part of the basic toolbox that any judge hearing a case involving child
witnesses must employ.
[19]

Indeed, if one parses the paragraphs quoted by the judge, it becomes
apparent that the statements they contain are, for the most part, already
reflected in judicial commentary and practice. The phenomenon of child
witnesses being suggestible is well known. For example, this Court noted
concerns with respect to the suggestibility of a child witness in
R. v.
Horswill
, 2018 BCCA 148 at para. 49. The idea that repeated
suggestions to a child can implant memories was referred to in
R. v. E.A.L.
(1998), 130 C.C.C. (3d) 438 (Ont. C.A.) (appeal dismissed
R. v. Lance
,
[1999] 3 S.C.R. 658). Forensic interviews of children where sexual abuse is
suspected must be conducted in such a way as to avoid this difficulty.
[20]

The frequent inability of children to describe, with precision, the time
and place of an event or even its details has been commented upon in numerous
cases, among them
R. v. F. (C.C.)
at para. 47 and
R. v. B.E.M.
at
para. 35, both of which were cited by the trial judge.
[21]

I do not read the judges reasons as suggesting that he relied on the
Bala article as an instruction manual for assessing the evidence of children.
Rather, he used the three quoted paragraphs of the article as a convenient
summary outlining generally-understood and common features of the evidence of
children. The concepts that the judge relied on did not lie outside of the
general knowledge that judges are required to apply in assessing the evidence
of witnesses.
[22]

In short, the judge reached his conclusions as to how he should assess
the childs evidence based on his own experience and knowledge, as well as on
his reading of case authorities. His citation of the Bala article simply
collected a number of observations in a clear and concise summary, and showed
that the observations are generally known and accepted.
[23]

The use of published academic literature to show that certain concepts
are generally accepted is not uncommon. The Supreme Court of Canada often
refers to social science literature for that purpose (see, for example,
R.
v. Oickle
, 2000 SCC 38 at paras. 3436). A judge must
exercise caution in making such use of articles, however, to ensure that trial
fairness is not compromised.
[24]

Given the very general nature of the observations in the part of the
article cited by the trial judge, and the notoriety of the information
conveyed, I can see no possibility that trial fairness was compromised. It is
safe to conclude that the judges reference to the Bala article was only for
the purpose of providing a convenient summary of generally-known concepts that
he was bringing to bear on the case.
[25]

In the result, I am not persuaded that the judge made any error in his
use of the Bala article.
The Judges View that Answers to Leading Questions
Deserved Less Weight
[26]

The second ground of appeal concerns the judges preference for certain
answers given by the complainant in her interview and in direct examination
over answers given in cross-examination. This preference is first suggested in
his summary of the Crown position:
[32]      The Crown submits that the following elements of
ADs testimony, both in the statement given to Cst. Ellis and in her evidence
at trial, reveal its credibility and reliability:
a)   The most weight should be given
ADs answers to open-ended questions posed by Cst. Ellis and on direct
examination at trial as opposed to her answers to leading questions posed
during cross-examination. The Crown submits that AD gave direct and clear
answers to open-ended questions when she was not being prompted and submits
that such answers are more trustworthy than her answers given to leading
questions, which suggested particular answers. During submissions, the Crown
gave several examples of the differences in ADs answers to such questions. My
review of the transcripts supports the Crowns submission in this respect.
[27]

In his conclusions, the judge remarked that he was impressed by ADs
responses to open-ended questions. Mr. Hernandez-Lopez, in his factum,
takes issue with the judges assessment of the evidence:
It is submitted that the trial judges approach was
erroneous. Answers to leading questions posed in cross-examination are not
inherently of less weight or less trustworthy than answers to non-leading
questions in direct or questions asked in an open-ended manner in a police
interview of a child complainant.

The approach taken unfairly
skewed the assessment of credibility and reliability in favour of the Crown.
The adversarial system has incorporated cross-examination as an essential tool
in the fact-finding process. In the oft-cited description of Wigmore it is the
greatest legal engine ever invented for the discovery of truth. If the trier
of fact approaches the assessment of the evidence from the starting point that
answers to leading questions posed in cross-examination are of lesser weight
and are less trustworthy than those given in response to open-ended questions
asked in direct, or open-ended questions asked in a police interview, that the
latter two are in effect the best evidence, then that engine is deprived of
its most effective fuel.
[28]

I do not quarrel with the proposition that a judge is required to fully
consider the quality of the evidence given in both examination-in-chief and in
cross-examination. I also agree with the proposition that a judge must not
approach the assessment of the evidence with a pre-disposition to accept
answers given in direct examination over answers given in cross-examination.
This does not mean, however, that a judge is precluded from reaching an honest
assessment to the effect that a particular witnesss responses to open-ended
questions are more reliable than that witnesss answers to leading ones.
[29]

Not all witnesses react the same way to questioning. Some are
forthcoming and careful in their answers. Others are reticent to give
information, or are imprecise. Suggestibility is a problem for some witnesses,
while others are excessively suspicious of agreeing with any proposition put to
them.
[30]

While it is not true of all witnesses, some are more cogent when they
are responding to open-ended questions, giving clearer and more detailed
answers to such questions.
[31]

Leading questions, on the other hand, can sometimes be ineffective in
eliciting useful evidence from witnesses who are nervous, suggestible, or
easily confused. In the case of child witnesses, these frailties are not
unusual. While leading questions are permitted in cross-examination,
cross-examination need not consist of
only
leading questions. An
effective cross-examination will usually combine leading questions with
questions that do not suggest an answer.
[32]

I do not read the judgment in this case as suggesting that the judge
adopted a principle of favouring answers given in direct examination over those
given in cross-examination. Rather, the judge simply found that ADs answers in
direct examination and in response to direct questions in cross-examination
were more helpful than her answers to leading questions.
[33]

A perusal of the transcript reveals that many of the questions put in
cross-examination were complex, and some were convoluted. The child was asked
questions that included the probability of events occurring, and questions
that juxtaposed events in a confusing manner. It is evident that the childs
intellectual capacity was not up to answering at least some of the questions.
It is not surprising, then, that the judge did not find those answers useful.
[34]

The judge did not apply a principle that answers by a child to
open-ended questions should be given more weight than answers to leading
questions. Rather, he found that the answers that AD gave to certain leading
questions in this case were of limited value, a finding that was open to him. I
am not persuaded that the judge made any error in the relative weight that he
gave to ADs answers to questions posed in direct examination and those posed
in cross-examination.
The Judges Treatment of Demeanour
[35]

The third ground of appeal relates to the judges comments on ADs
demeanour in giving evidence. At para. 37 of his reasons, the judge said:
Both in her statement to Cst.
Ellis and in her testimony at trial, AD was clear and direct in her answers,
consistent in describing the offending conduct of the accused and unambiguous
when faced with open-ended questions. Especially during the statement, she was
very consistent in describing the conduct of the accused, referencing him
wetting his finger and placing it in her parts. She never varied from that
description. It was also apparent that she was very anxious towards the end of
her cross-examination and upon being told she was free to leave, raised her
arms and looked up in apparent relief. Her demeanour suggested to me that she
may have agreed with some of defence counsels suggestions out of sheer
exhaustion.
[36]

While the paragraph appears under the subheading demeanour, most of it
is devoted to a discussion of the consistency and clarity of the witnesss
evidence and not with demeanour,
per se
. Only the portion dealing with
the exhaustion of the witness is directed towards demeanour.
[37]

It is the judges role to analyse the testimony of witnesses, and
observing their demeanour is a part of that role. The judge did not emphasize
demeanour to the exclusion of other considerations, nor did he give undue
weight to demeanour as a factor in assessing the evidence.
[38]

The trial judges description of AD agreeing with some of the defence
counsels suggestions out of sheer exhaustion may have been overstated given
that ADs testimony was not long (having been completed within one afternoon).
However, the judge was dealing with a seven-year-old witness, not an adult, and
the transcript records him observing that AD looked happy at the conclusion
of the questioning. It is apparent that the judges view that AD was becoming
exhausted with the questioning arose not only from her rather equivocal
reaction when advised that she was free to leave, but also from the manner in
which she answered questions. The judge had an opportunity to observe the
witness and did not err in using his observations in assessing the weight to be
applied to her answers. I do not see that this Court is in a position to
second-guess his assessment.
[39]

In short, I am not persuaded that the judge erred in his use of the
witnesss demeanour as a factor in assessing her credibility and reliability.
The Inference that the Accused Masturbated after Touching the Victim
[40]

AD gave evidence that after the accused engaged in sexual touching, he
went into a washroom to urinate. The judge referred to that evidence as
follows:
AD also volunteered that the
accused went to the bathroom after he touched her parts which again I find
would be a description that only someone who had seen it would come up with. He
likely at that point was masturbating in the bathroom as submitted by the
Crown.
[41]

The accused contends that the judge improperly drew the inference that
the accused masturbated and then used that inference to support a guilty
verdict to the offence of sexual touching. I agree that if the judge had
engaged in such reasoning, it would have been an error. Only if the judge was
already convinced that the accused had engaged in sexual touching would there
be any basis for an inference that he masturbated when he entered the washroom.
[42]

As I read the judges reasons, however, he did not draw an inference
that the crime was committed from the fact that the accused entered the
washroom. Rather, the quoted excerpt of the judgment does no more than comment
on the detailed nature of ADs account of events and on its plausibility.
[43]

The judges comment on the probability that the accused masturbated was
unnecessary and improper speculation, but nothing in the judgment suggests that
he used that speculation to infer that the accused was guilty of the crime
charged.
[44]

The judge convicted the accused based on his analysis of the evidence,
and, in particular, on his finding that the evidence of AD proved the offence
beyond a reasonable doubt. He did not base his finding on speculative inferences.
[45]

Accordingly, this last ground of appeal must also fail.
Conclusion
[46]

As the trial judge made no error in finding the accused guilty of sexual
touching, the appeal should be dismissed.
The Honourable Mr. Justice Groberman
I AGREE:
The Honourable Chief Justice
Bauman
I AGREE:
The Honourable Madam Justice
Fisher

[1]
The paragraph numbers used by the trial judge do not appear in the article as
published. The judge omits reference to the articles footnotes. The quoted
paragraphs appear at pp. 999-1000 of the published article.


COURT OF APPEAL FOR BRITISH COLUMBIA

Citation:

Argo Ventures Inc. v. Choi,

2020 BCCA 17

Date: 20200117

Docket:
CA45925; CA45926

Docket: CA45925

Between:

Argo Ventures Inc.

Respondent

(Plaintiff)

And

Key Joo Choi

Appellant

(Defendant)

And

Tim Seo

Respondent

(Third
Party)

 and

Docket: CA45926

Between:

Argo Ventures Inc.

Respondent

(Plaintiff)

And

Yeong Ja Choi

Appellant

(Defendant)

And

Tim Seo

Respondent

(Third
Party)

Before:

The Honourable Madam Justice Newbury

The Honourable Mr. Justice Butler

The Honourable Mr. Justice Abrioux

On appeal from:  An
order of the Supreme Court of British Columbia, dated
January 25, 2019 (
Argo Ventures Inc. v. Choi
, 2019 BCSC 85,
Vancouver Docket S166992).

Counsel for the Appellant:

J. Zeljkovich

Counsel for the Respondent:

A.P. Morrison

Place and Date of Hearing:

Vancouver, British
  Columbia

November 22,
  2019

Place and Date of Judgment:

Vancouver, British
  Columbia

January 17, 2020

Written Reasons by:

The Honourable Mr. Justice Abrioux

Concurred in by:

The Honourable Madam Justice Newbury

The Honourable Mr. Justice Butler

Summary:

The appellants entered into
a contract for the purchase and sale of a property for approximately $6.5
million, with a non-refundable deposit of $300,000 due within ten business
days. The contract was immediately binding upon signature. After signing the contract,
the appellants decided not to complete the purchase and did not pay the deposit,
which was due and owing. Ultimately, the seller accepted the appellants
repudiation of the contract for non-payment of the deposit and sued. The trial
judge awarded judgment in the amount of the unpaid deposit, plus pre-judgment
interest and costs. The appellants argue, among other things, that the judge
erred in making this award because an unpaid deposit, unlike a paid deposit,
cannot be forfeited upon repudiation of a contract. Held: Appeal dismissed. A
seller can sue for the amount of an unpaid deposit that is due and owing at the
time the seller accepts the buyers repudiation of the contract. A buyer is not
entitled to put itself in a better position than it would be in had it met its contractual
obligation to pay the deposit by simply refusing to pay the deposit.

Reasons for Judgment of the Honourable
Mr. Justice Abrioux:

Overview

[1]

On June 25, 2016, the appellants

Key Joo
Choi and Yeong Ja Choi, a married couple,

entered into an agreement (the Contract) with 534834 B.C. Ltd. (534)
for the purchase and sale of a property located at 1485 Coast Meridian Road,
Port Coquitlam, British Columbia (the Property) for approximately $6.5
million, with an initial deposit of $300,000 due within ten business days. On
July 6 or 7, 2016, the appellants purportedly repudiated the Contract and
did not pay the deposit as required by July 11, 2016. On July 25,
2016, 534 accepted the appellants repudiation of the Contract for non-payment
of the deposit, and on July 29, 2016, commenced an action seeking judgment
in the amount of the unpaid deposit.

[2]

On January 25, 2019, in comprehensive reasons for judgment indexed
as 2019 BCSC 85 (the Reasons), Justice Shergill ruled in favour of the
respondent. She awarded judgment against the appellants in the amount of
$300,000, plus pre‑judgment interest and costs.

[3]

The appellants third party proceeding against the realtor, Tim Seo, was
dismissed. No appeal is taken from that order.

[4]

The appellants challenge the order, arguing that the judge erred in
finding that an unpaid deposit that was not owing at the relevant time was nevertheless
forfeited upon their repudiation of the Contract. Of significance is that they
do not take issue with the judges conclusion that the Contract became legally
binding on the parties on June 25, 2016. The respondent submits that there
was no dispute at trial that the deposit was due by July 11, 2016. In
fact, the appellants relied upon this binding obligation to support a defence
of
non est factum.
The respondents position is that the appellants
should not be permitted to advance a contrary argument on appeal.

[5]

For the reasons that follow, I would dismiss the appeal.

Background Facts

[6]

Since 1998, 534 has owned the Propertya business park with warehouses, restaurants,
convenience stores, and industrial and office space. The Property has been encumbered
by a statutory right of way in favour of the British Columbia Hydro and Power
Authority (BC Hydro) since 1962, which is registered in the Land Title Office
as the first charge against title to the Property. BC Hydro installed overhead
wires on the Property, which were visible to visitors at all times relevant to
the underlying action.

[7]

The Property was encumbered by one mortgage at all relevant times, which
was registered in favour of Industrial Alliance Insurance and Financial
Services Inc. (the Industrial Alliance Mortgage). The principal outstanding
on the Industrial Alliance Mortgage in March 2016 was approximately $1.36
million.

[8]

In 2016, Tim Seo, a realtor, approached Mr. Eric Lee, the Director
of Operations for the respondent, which managed the Property, to see if 534 was
prepared to sell the Property if he could find a buyer. In June 2016, Mr. Seo
was informed by Mr. Lee that 534 would not accept an offer of less than
$6.5 million or any condition except an assumption by the buyer of the
Industrial Alliance Mortgage.

[9]

What then transpired is not in dispute and is set out at paras. 2253
of the Reasons:

[22]      On June 21, 2016, three days after introducing Mr. Choi
to the Property, Mr. Seo emailed Mr. Lee, seeking income and
environmental information about the Property. Also on June 21, 2016, Mr. Lee
emailed to Mr. Seo an environmental report and information about the
income and expenses earned and incurred in respect of the Property.

[23]      Further on June 21, 2016, Mr. Seo forwarded by
email an environmental report and information about income and expenses to Mr. Choi.
On or before June 21, 2016, Mr. Choi agreed to have Mr. Seo draft an
offer to purchase the Property. Mr. Seo left blank spaces to be completed
with information to be decided by Mr. and Mrs. Choi.

[24]      On June 22, 2016, Mr. Seo met with the Chois
to sign an offer drafted by Mr. Seo (the Offer).

[25]      Later on June 22, 2016, Mr. Seo delivered the
Offer to Mr. Lee, together with an email explaining some of the terms of
the Offer. With respect to subjects, the email stated: No Subjects (Mortgage
transfer only if any).

[26]

Respecting
a deposit, the Offer included the following clause (the initial deposit
clause):

The initial deposit,
$300,000
is made to Sutton Group  1st West via bank draft within
7

10
business days of acceptance. Once the deposit is made, it is non-refundable and
this contract is binding and irreversible unless the Buyer is disapproved by
the lender. [Italicized portion reflects handwriting.]

[27]      The numbers $300,000 and 10 were written in by
hand by Mr. Seo on the Chois instructions. Mr. and Mrs. Choi
placed their initials beside the initial deposit clause as amended.

[28]      On June 22, 2016, when the Offer was delivered to
534 Ltd., the only mortgage registered against title to the Property was the
Industrial Alliance Mortgage.

[29]      On June 23, 2016, 534 Ltd. entered into a fee
agreement with Mr. Seo and his brokerage (the Fee Agreement). The Chois
were not a party to the Fee Agreement. The Fee Agreement provided that Mr. Seo
was not the agent for either the seller (534 Ltd.) or the buyers (Mr. and Mrs. Choi).

[30]      On June 23, 2016, Mr. Seo delivered an email
to Mr. Choi providing information about current market lease rates in the
area near the Property.

[31]      534 Ltd. did not accept the Offer.

[32]      On June 24, 2016, Mr. Lee delivered a
counteroffer to Mr. Seo (the Counteroffer), together with an email
explaining the two changes included in the Counteroffer. The first change was
in relation to costs to be borne by the seller for prepayment penalties; the
second change was to the initial deposit clause. In the email delivering the
Counteroffer, Mr. Lee stated as follows:

Page 1: .. if any, exceeding
$70,000 (this is the prepayment penalty with the existing lender if the Buyer
is not approved and the Seller has to provide the financing)

Page 7 of 7:  The deposit is
non-refundable terms and conditions at completion date. ( this will give the
Buyer some comfort in knowing that if Industrial Alliance does not approve the
Buyer, the Seller will step up and provide the necessary financing at the same
terms and conditions)

[33]      On June 24, 2016, Mr. Lee also delivered a
text message to Mr. Seo explaining the revisions in the Counteroffer.

[34]      Respecting the deposit, the Counteroffer included
the following clause (the revised deposit clause):

The initial deposit,
$300,000
is made to Sutton Group  1st West via bank draft within
7

10
business days of acceptance.
Once

t
The deposit is
made, it is
non-refundable and this contract is binding and irreversible unless the Buyer
is disapproved by the lender,
or the seller is unable to provide the
replacement financing to the buyer at the same terms and conditions at
completion date
.

[Italicized portion reflects handwriting.]

[35]

The
representative of 534 Ltd. initialled the Counteroffer twice beside the revised
deposit clause.

[36]

On
Saturday, June 25, 2016, Mr. Choi met with Mr. Seo to consider the
Counteroffer. Mr. Choi initialled the Counteroffer on behalf of himself
and Mrs. Choi (for which he had authority from Mrs. Choi).

[37]

On
June 25, 2016, Mr. Seo delivered the fully executed Counteroffer to Mr. Lee.

[38]

On
June 25, 2016, Mr. Seo sent a text message to Mr. Lee, asking him to
obtain the information required by Industrial Alliance to determine whether it
would agree to permit the Chois to assume the Industrial Alliance Mortgage. Mr. Lee
responded by advising Mr. Seo that he would obtain a credit application
from Industrial Alliance on Monday, June 27, 2016.

[39]

On
June 27, 2016, Mr. Lee emailed to Mr. Seo the credit authorization
form required by Industrial Alliance. Also on June 27, 2016, Mr. Seo
re-forwarded to the Chois the environmental report and information about income
and expenses for the leased units (sent previously on June 21, 2016).

[40]

On
June 30, 2016, Mr. Seo emailed Mr. Lee advising him that the Chois
were preparing a credit authorization form. He also requested additional
information about the leases of the Property.

[41]

On
July 4, 2016, Mr. and Mrs. Choi met with Mr. Seo, and completed
the credit authorization form for the assumption of the Industrial Alliance
Mortgage and provided documents to support their application. Mr. Seo
emailed this information to Mr. Lee on the same day, stating: We hope
that he gets the transfer approval asap so that he could deposit $300,000. Mr. Lee
delivered the credit authorization form and financial information to Industrial
Alliance shortly after he received them from Mr. Seo.

[42]

Also
on July 4, 2016, Mr. Choi met with Gaeten Royer to discuss the development
potential of the Property. Mr. Royer was a long-time friend and associate
of Mr. Choi, to whom Mr. Choi turned for business advice from time to
time. Mr. Royer had many years of experience in land acquisition, land
development, dealing with rights-of-way and other urban planning issues.

[43]

On
July 5, 2016, Mr. Seo sent a text message to Mr. Lee asking for
environmental information about the Property.

[44]

On
July 5, 2016, Mr. Royer advised Mr. Choi that the SRW might impact
the development potential of the Property.

[45]

On
July 7, 2016, Mr. Lee emailed Mr. Seo advising him that the lender
was requesting further information from Mr. and Mrs. Choi that it was
required to consider their request to assume the Industrial Alliance Mortgage.
The Chois did not respond to these requests for information.

[46]

Around
July 6 or 7, 2016, Mr. Royer told Mr. Choi that the Property had no
development potential. Mr. Choi decided not to complete the purchase of
the Property. Shortly thereafter, Mr. Choi called Mr. Seo to tell him
that he did not want to purchase the Property due to the SRW. Mr. Chois
decision not to proceed with the purchase of the Property due to the SRW was
confirmed by Mr. Royer to Mr. Seo in a telephone conversation on July
7, 2016.

[47]      Around July 7 or 8, 2016, Mr. Choi met with Mr. Seo
and confirmed that he no longer wished to proceed with the purchase of the
Property.

[48]

Shortly
thereafter, Mr. Seo advised Mr. Lee that the Chois had decided not to
complete the purchase of the Property. Industrial Alliance had not yet agreed
to allow the Chois to assume the Industrial Alliance Mortgage.

[49]

Pursuant
to the Counteroffer, the deposit was due on July 11, 2016. It was never paid.

[50]

On
July 15, 2016, counsel for 534 Ltd. (Mr. Morrison) delivered a letter to
the Chois asserting that they had breached the Contract and provided them with
an opportunity to keep the Contract alive. They were also advised that if the
lender did not approve the assignment of the Industrial Alliance Mortgage to
them, that 534 Ltd. would provide financing on the same terms.

[51]

On
July 21, 2016, counsel for the Chois (Ms. Ducey) wrote to Mr. Morrison,
taking the position that the Chois were unaware of the changes to the Offer
that were made in the Counteroffer, and were ultimately included in the
Contract. She denied that the Chois had any obligation to complete the
Contract.

[52]

On
July 25, 2016, Mr. Morrison delivered a letter to Ms. Ducey accepting
the Chois repudiation of the Contract. This action was commenced on July 29,
2016.

[53]

The Property was subsequently
sold to a third party.

Trial Judgment

Non Est Factum

[10]

The appellants primary defence at trial was
non est factum.
The
judge noted that a successful plea of
non est factum
renders a contract
void. To achieve this result, the judge held the appellants needed to establish
that they signed the Contract by mistake in the sense that what they believed
they were signing was fundamentally different from what the Contract actually
provided.

[11]

The judge began her analysis by considering the appellants personal
characteristics, noting that they emigrated from South Korea in the 1970s and
had been successful business people, accumulating assets worth about $30
million as of June 2016. They started with a grocery store business, which they
conducted in English. By June 2016, they had been involved in at least ten real
estate transactions in British Columbia pertaining to both residential and
commercial properties. All of the contracts for these transactions were written
in English. Although Korean is their first language, they speak English as a
second language, and they can read and understand simple written English. Mr. Choi
admitted on cross-examination that he can understand real estate contracts
written in English.

[12]

The judge set out the three-part test for
non est factum
at para. 58
of the Reasons:

A party seeking to rely on the
doctrine of
non est factum
must establish that (1) the document they
signed was fundamentally different from what they believed the document to be,
(2) they signed the document as a result of misrepresentation, and (3) that
they were not careless in doing so:
Farrell Estates Ltd. v. Win-Up
Restaurant Ltd.
, 2010 BCSC 1752 at paras. 82, 100 [Farrell];
Bulut
v. Carter
, 2014 ONCA 424 at paras. 18, 24;
Marvco Color Research
Ltd. v. Harris
, [1982] 2 S.C.R. 774 [Marvco]. A successful plea of
non
est factum
renders the agreement void at common law:
Fraser
at para. 38.
The analysis is highly fact-specific and contextual:
Zhang v. Soong
,
2012 BCSC 758 at para. 78. By its very nature,
non est factum
is a
difficult defence to establish:
Tang v. Chan
, 2014 BCSC 2251 at para. 51.

[13]

First of all, the judge accepted the appellants argument that the
Contract was fundamentally different from what Mr. Choi believed he was
signing on June 25, 2016.

[14]

She found that the initial offer was a non-binding agreement, which
provided the appellants with ten days to perform due diligence inquiries. She
then concluded that the executed counteroffer was binding on the parties on
signature, rather than on payment of the deposit ten days later. The appellants
had advanced this argument in support of their position that Mr. Choi did
not understand the effect of the changes to the deposit clause in the
counteroffer, as he mistakenly understood that he still had ten days to conduct
due diligence inquiries and he and his wife would not be bound until the
deposit was in fact paid. Since, by the time of trial, Mr. Choi now
understood the Contract was binding on acceptance, it was fundamentally
different from what he believed to be the case on June 25, 2016.

[15]

The factual basis for reaching this conclusion was, in part, Mr. Chois
evidence that:

MR. CHOI: Its my mistake ...

THE WITNESS: I know its my fault
that I didnt read the details of it, but because of the other contract I also
had 10 days, and theres 10 here, so I trusted they were the same.

[16]

Secondly, despite Mr. Chois mistaken belief, the judge found that
it was not caused by Mr. Seos misrepresentation. The judge preferred Mr. Seos
evidence that he explained the revised deposit clause to Mr. Choi, rather
than misleading Mr. Choi into believing that he still had ten days to
conduct due diligence. Furthermore, the judge found that it was implausible
that Mr. Choi would initial the revised deposit clause without reading it
himself or asking Mr. Seo what the changes meant.

[17]

Finally, the judge found that Mr. Chois mistaken belief arose from
his own carelessness in failing to read the details of the revised deposit
clause, assuming unreasonably that it was the same as the initial offer, and
not seeking independent legal advice from his lawyers before signing the
Contract. Mrs. Choi was also careless in deciding to completely rely on
her husband to determine whether to enter into the Contract. As a result, the
defence of
non est factum
was unsuccessful.

Alternative Defences

[18]

The judge also rejected the appellants alternative arguments. First,
she found that the Contract was not a standing offer but binding on acceptance,
and it was not void for uncertainty. Secondly, while 534 was required to
provide the appellants with a document prescribing that the property was free
from contamination within three days of acceptance (the environmental term),
this term was a warranty and not a condition. Thus, 534s failure to fulfill
the environmental term did not amount to repudiation of the Contract.

[19]

Finally, the judge rejected the appellants argument that they were
entitled to rescind the Contract when they learned about the undisclosed statutory
right of way. The judge not only held that 534 was not responsible for Mr. Seos
alleged misrepresentation about the size of the property contained in the Brochure,
but also dismissed the appellants third party claim against him.

On Appeal

[20]

The appellants appeal is predicated on a new argument, which was not
advanced at trial. It is to the effect that the judge erred in finding that an
unpaid deposit that was not owing and due was nevertheless forfeited upon
repudiation of the Contract.

[21]

There are two aspects to this argument.

[22]

The first is that the deposit was not owing on the date they repudiated
the Contract. Of significance to this submission is that the repudiation relied
on by the appellants is the one of July 6 or 7, 2016, when they communicated
their decision not to complete the Contract on the basis that the BC Hydro
statutory right of way prevented further development of the Property.

[23]

The second is that an unpaid deposit is of a different character than
one that has been paid. On this point, the appellants argue that the deposit
could not be forfeited because it was never paid, and thus, enforcing payment
at trial amounted to an unlawful penalty.

[24]

The respondents position is that there was no dispute at the trial that
the deposit was due by July 11, 2016. In fact, the appellants relied upon
this binding obligation to support their defence of
non est factum.
The
respondent argues that the appellants should not be permitted to argue the
opposite on appeal.

[25]

The respondent further submits that the appellants repudiated the
Contract when they did not pay the deposit by July 11, 2016. According to
the respondent, the appellants owed the deposit within ten business days
immediately upon signing the Contract. Since the right to payment of the deposit
had accrued by the date of the appellants repudiation, they should not be in a
better position for having defaulted than they would have been in had they
complied with the terms of the Contract.

[26]

Finally, in response to the appellants claim that an unpaid deposit
cannot be forfeited, the respondent argues the judge did not order the deposit
to be forfeited, but instead awarded damages for breach of contract in the
amount of the deposit.

[27]

In fact, the judge did not identify whether the action was for an award
in damages or debt, which is an issue I will return to below.

Discussion

[28]

Before considering what the issues on this appeal are about, it is
necessary to state what is not disputed by the appellants, specifically:

·

the judges findings of fact and conclusions regarding the
enforceability of the counteroffer when it was initialled, that is accepted, by
the appellants on June 25, 2016; and

·

the judges conclusion that the environmental term was a
warranty, not a condition.

[29]

Essentially, what the appellants now argue in this court is that the
judge made an error of mixed fact and law by failing to find that the deposit:

·

was not unconditionally owing until July 11, 2016;

·

could not be forfeited since it was never paid; and

that in any event, they had repudiated the Contract
themselves on July 6 or 7, 2016, and thus, the deposit was no longer
payable on July 11, 2016.

[30]

In my view, it is relevant that the appellants did not advance these
arguments at trial. On the contrary, the appellants relied on their
unconditional obligation to pay the deposit by July 11, 2016 to support
their defence of
non est factum.

[31]

A distinction is to be made between raising a new issue on appeal and
resiling from a position deliberately taken in the tribunal of first instance
:
VIH Aviation Group Ltd. v. CHC Helicopter LLC,
2012 BCCA 125 at para. 44.
Generally, this court has not permitted a party that has chosen a particular
position in the trial court to abandon that position on appeal
: Sahlin v. The
Nature Trust of British Columbia, Inc.
, 2011 BCCA 157 at para. 38.
Furthermore, taking inconsistent positions in legal proceedings can constitute
an abuse of process:
Fortinet Technologies (Canada) ULC v. Bell Canada
,
2018 BCCA 277 at para. 23.

[32]

The appellants position at trial, in support of their
non est factum
defence, was that they had been misled into signing a contract that they
failed to understand was binding on acceptance and unconditionally required
them to pay a deposit of $300,000 within ten business days. As they stated in
their written closing argument:

It is submitted that a non-binding agreement subject to due
diligence is fundamentally different than a binding agreement.

In making the Offer, the Chois intended and understood that
they would not be bound by the Offer until the deposit was paid and that they
had 10 days to do so during which they could conduct their due diligence.

The Chois did not understand the impact of the changes to the
Offer when Mr. Choi initialled the Counteroffer.

Specifically, Mr. Choi
did not understand the effect of the change to the deposit clause which the
plaintiff now asserts, ie that the deposit was owing regardless of whether it
had been paid,
which is not surprising given how nuanced that
clause was in the first instance and the fact that English is not his first
language...

[Emphasis added.]

They now resile from that position on appeal by arguing
instead that the deposit was not unconditionally owing and due by July 11,
2016.

[33]

At para. 75 of the Reasons the judge found that there was no
dispute that the Contract was immediately binding on signature. The issue
raised by the appellants in this court was not before the trial judge because
it would have been inconsistent with their
non est factum
defence. In my
view, having made that decision at trial, they must now live with it in this court:
Protection Mutual Insurance Co. v. Beaumont
(1991), 58 B.C.L.R. (2d) 290
(B.C.C.A.).

[34]

While this is sufficient to dispose of the appeal, I will nonetheless
address the merits of the new arguments advanced by the appellants.

[35]

First of all, I note there was ample evidence to support the judges
findings that the Contract was binding upon signature and 534s right to
payment of the deposit accrued on July 11, 2016, before it accepted the
appellants repudiation and terminated the Contract on July 25, 2016. The
judges interpretation of the deposit clauseas negotiated between the parties
in unique factual circumstancesis a question of mixed fact and law, which is
entitled to deference, absent a palpable and overriding error:
Creston Moly
Corp. v. Sattva Capital Corp.
, 2014 SCC 53 at para. 50;
Ledcor
Construction Ltd. v. Northbridge Indemnity Insurance Co.
, 2016 SCC 37 at para. 46.

[36]

This court has held that where the sellers right to a non-refundable
deposit has accrued before it accepts the buyers repudiation, the seller can
sue for an amount equal to the unpaid deposit owed under the contract:
Vanvic
Enterprises Ltd. v. Mack
(1985), 66 B.C.L.R. 211 (B.C.C.A). In
Tang v.
Zhang
, 2013 BCCA 52, this court further clarified that a deposit is
intended to encourage parties to complete their contracts. While a deposit cannot
be excessive or unconscionable, it is an exception to the usual rule against
penalties:
Tang
at para. 30.

[37]

Nor would I accede to the appellants new argument that the judge erred
by awarding judgment against them in the amount of the unpaid deposit. The
appellants do not argue that the deposit was excessive, but only that an unpaid
deposit, unlike a paid deposit, cannot be forfeited.

[38]

Contrary to what the appellants now argue, the judge did not order that
the deposit be forfeited. The deposit could not be forfeited because it was
never paid. Rather, the judge awarded the respondent judgment in an amount
equal to the unpaid deposit.

[39]

She was entitled to make that order. In
Vanvic
,
at paras. 1718,
this court distinguished between the concepts of rescission
(which is a remedy arising in cases of mistake, fraud, or lack of consent) and
repudiation (which occurs when a party elects to treat the contract as no longer
binding). The Court held that when a party accepts a repudiatory breach, the
contract is not
void
ab initio
.

A party who accepts a repudiatory breach is discharged from
further performance and may bring an action for damages, but the contract
itself is not rescinded. Rights that have already been acquired by a party who
accepts a repudiatory breach are not divested or discharged: see also
Guarantee Co. of North America v. Gordon
Capital Corp.,
[1999] 3 S.C.R. 423 at paras. 3941.

[40]

Vanvic
involved a contract of purchase and sale of property,
which was supplemented by a trust agreement by which the buyer agreed to
provide a non‑refundable deposit to the sellers solicitor forthwith
upon acceptance. The buyers agent delivered a cheque in the deposit amount to
the sellers lawyer. Shortly thereafter, the buyer decided not to pursue his
purchase of the property and stopped payment of the deposit cheque. The seller
notified the buyer that it considered the buyers conduct to amount to a
repudiation of the contract and that it accepted the buyers repudiation. The
seller demanded immediate payment of an amount equal to the unpaid deposit. The
buyer refused to pay the amount demanded.

[41]

This court upheld the trial judges award to the seller of judgment in
an amount equal to the unpaid deposit with Hinkson J.A., for the Court, stating
at para. 17:

In my opinion that covers the
situation in the present case. When repudiation occurred the right to the
$45,000 non-refundable deposit had already accrued to the plaintiff. The
acceptance of the repudiation by the plaintiff did not affect that right. The
plaintiff was still entitled to claim under the contract for that accrued right
and, as a result, I conclude that the learned trial judge came to the correct
conclusion. In the result, I would dismiss the appeal.

[42]

Furthermore, the England and Wales High Court (Commercial Court) and
Court of Appeal (Civil Division) have rejected the argument that only a paid
deposit is valuable: see
Griffon
Shipping LLC v. Firodia Shipping Limited
,
[2013] EWHC 593 (Comm.), affd
Firodi Shipping Limited v. Griffon Shipping LLC
,

[2013] EWCA Civ.
1567,
where Mr. Justice Teare stated at para. 27:

The requirement
to pay a deposit encourages the buyer to perform. It is a guarantee that the
purchaser means business; see
Soper v Arnold
(1889) 14 AC 429 at p.435
per Lord Macnaughten.
The encouragement flows from the fact that the
deposit may indeed exceed the sellers damages.  Moreover, it has long been
recognised that a deposit which has been paid will be forfeited if the buyer
fails to perform even though the deposit exceeds the loss of bargain damages.
In those circumstances there is, in my judgment, no commercial or business
sense in permitting a buyer to improve his position by the simple expedient of
not paying the deposit. This has been recognised since at least 1868; see
Hinton
v Sparkes
[
(1868) 3 LR 3 CP 161 at p.166
].

[43]

The Court in
Griffon
emphasized, at paras. 18 and 26, the value of a commitment to pay a
deposit, as distinct from receipt of a deposit:

The right to a deposit is valuable. It is the sellers security
for the correct fulfilment of this Agreement. It has long been recognised that
a deposit remains payable notwithstanding the termination of the contract....
The court would therefore expect that if the parties intended to exclude such
right they would do so by the use of clear words

A deposit serves the commercial
purpose of providing the seller with security for the performance of the MOA.
It would not be consistent with business common sense to enable a buyer to put
himself in a better position than he would be in having paid the deposit by
adopting the simple expedient of refusing to pay the deposit...

[44]

On this point, I agree with the respondent that to accept the appellants
argument on this point would create an inequitable situation in which a party
to a contract could take advantage of its breach to obtain a better outcome
than it would have had if they had performed their contractual obligations: see,
for e.g.,
Angus v. Sian,
1982 CarswellBC 618 (B.C.S.C.) at paras. 35 and 41.

[45]

Accepting that the respondent can sue the appellant for judgment in the
amount of the unpaid deposit, a question remains as to whether this is properly
characterized as a claim for damages or debt. In this case, the judge did not
identify the award as either. The respondent says that the judge awarded
damages. As the judge made no reviewable error in making the award, it is not
necessary to decide the issue in this case. Nevertheless, it is worth noting
that both remedies are referred to in the case law.

[46]

There is authority in this province for the proposition that a claim
relating to an unpaid deposit is a claim for debt: see e.g.,
Busnex Business Exchange Ltd. v. Canadian Medical
Legacy Corp.,
1999 BCCA 78 at para. 15,
where an unpaid portion of a deposit was a claim in debt, and
Vanvic,
affg
[1982] 5 WR 530, where this court upheld an award by the trial judge, who found
that an unpaid deposit was a debt owing upon acceptance of the offer. The
English cases referred to above also addressed this issue. In
Firodi,
at
para. 4,

the Court of Appeal clarified that an unpaid deposit that
fell due before termination of the contract may be recovered as a debt. However,
if the deposit had not fallen due
as occurred
in
Damon Compania Naviera v. Hapag-Lloyd
International, the Blankenstein
[1985] 1 WLR 435, where the deposit was due on signing but the
contract was never signeda claim may still be brought for damages for loss of
bargain in the amount of the unpaid deposit.

[47]

Finally, in my view, none of the principles to which I have referred, in
particular those in
Vanvic,
was overturned by this court in
Tang
.
In
Tang,
this court held that a deposit is forfeitable regardless of
whether the other party suffered any damages, and in doing so, reversed
Agosti
v. Winter,
2009 BCCA 490. Accordingly, in my view, the principle set out in
Vanvic
that a party may sue another for the amount of an unpaid deposit
owing under a contract when it accepted the other partys repudiation remains
the law in this province.

[48]

As the authorities to which I have referred make clear, what is
important is the state of affairs that existed when 534 accepted the appellants
repudiation for non‑payment of the deposit on July 25, 2016. As
noted by the judge at para. 50 of the Reasons, on July 15, 2016, 534
had offered the appellants the opportunity to keep the contract alive, but
this was refused. The appellants repudiation was then accepted on July 25,
2016, and at that time, the unpaid deposit was due and owing.

Conclusion

[49]

The Contract required the appellants to pay the deposit within ten business
days of June 25, 2016, being July 11, 2016. This obligation was neither
optional nor conditional. It was mandatory, a finding which the appellants
urged the judge to make in support of their defence of
non est factum
.

[50]

In my view, no reviewable error was committed by the judge. In fact, the
opposite is the case.

[51]

I would dismiss the appeal with thanks to counsel for their very helpful
submissions.

The Honourable Mr. Justice Abrioux

I AGREE:

The
Honourable Madam Justice Newbury

I AGREE:

The
Honourable Mr. Justice Butler


COURT OF APPEAL FOR BRITISH COLUMBIA

Citation:

Manning v. Dhalla,

2020 BCCA 35

Date: 20200117

Docket: CA46272

Between:

Andreas Eric
Manning, A.E. Manning M.D. Inc., and 0712199 B.C. Ltd.

Respondents

(Plaintiffs)

And

Naguib Dhalla

Appellant

(Defendant)

Before:

The Honourable Madam Justice DeWitt-Van Oosten

(In Chambers)

On appeal from:  An
order of the Supreme Court of British Columbia, dated
July 2, 2019 (
Manning v. Dhalla
, 2019 BCSC 1067, Vancouver Docket
S133517).

Oral Reasons for Judgment

Counsel for the Appellant:

T.A. Hakemi

Counsel for the Respondents:

S. Kamboj

Place and Date of Hearing:

Vancouver, British
  Columbia

January 17, 2020

Place and Date of Judgment:

Vancouver, British
  Columbia

January 17, 2020

Summary:

The respondents sought $350,000
in security for costs of the appeal and costs of the trial.  Held: Application
allowed in part.  Security for costs of the appeal is granted in the amount of
$35,000.  It must be posted within 30 days.  The application for security for
costs of the trial is adjourned, generally.  The respondents did not provide
sufficient information to substantiate the amount sought.

[1]

DEWITT-VAN OOSTEN J.A.
: The respondents seek the following orders:
(1) $350,000 as security for costs of the appeal and costs of the trial;
(2) a stay of the appeal pending the posting of security; (3) leave to apply to
dismiss the appeal if security is not posted within 30 days; and (4) costs on
the application.

[2]

The appellant is opposed to all four orders.

Background

[3]

From 2008 to 2011, the appellant, Naguib Dhalla, was retained to assist
the respondent, Andreas Eric Manning (a physician), and his two companies with
bookkeeping and other financial tasks. Dr. Manning is the sole officer,
director, and shareholder of the companies.  In this role, Mr. Dhalla
engaged in discussions with Dr. Manning about investment opportunities.  Among
other things, he is said to have encouraged Dr. Manning to invest over $12
million in a Ponzi scheme orchestrated by Rashida Samji, a notary public. Dr. Manning
alleges that, unbeknownst to him, Mr. Dhalla received a commission from Ms. Samji
for securing that investment.

[4]

In 2012, the Ponzi scheme collapsed and the respondents lost over $8 million.
 In a related class action, Ms. Samji was found to have committed fraud,
misrepresentation, breach of trust, and conversion:
Jer v. Samji
, 2014
BCSC 1629; affd 2015 BCCA 257, leave to appeal refd [2015] S.C.C.A. No. 345
(S.C.C.).  She was also found guilty of fraud and theft under the
Criminal
Code
, R.S.C. 1985, c. C‑46,

and sentenced to six years
imprisonment:
R. v. Samji
, 2016 BCPC 301.  Finally, the BC
Securities Commission imposed penalties against Ms. Samji that include a
disgorgement order of more than $10 million and an administrative penalty of
$33 million:
Samji (Re)
, 2015 BCSECCOM 29.  The Commission found
that Ms. Samji perpetrated a fraud by trading securities to at least 200
investors for proceeds of at least $100 million:
Samji (Re)
, 2014
BCSECCOM 286.

[5]

I understand that since the collapse of the Ponzi scheme, the
respondents have recovered about $3 million of their losses.  They continue to
seek remedies in respect of the remaining $5 million.

[6]

This appeal arises from an action in fraudulent misrepresentation that
was brought against Mr. Dhalla by the respondents in May 2013.  Mr. Dhalla
is alleged to have concealed the commission he received from Ms. Samji in
exchange for the respondents investment.

[7]

On December 5, 2018, Justice Branch dismissed the respondents action:
Manning
v. Dhalla
, 2018 BCSC 2148.  The primary basis for the dismissal was that
the respondents failed to prove that Mr. Dhalla received a commission.  There
is an outstanding appeal from that dismissal, although presently in abeyance.

[8]

Approximately two weeks after the dismissal, the respondents received
documents from legal counsel in the class action that appear to substantiate
their claim of a commission.  Mr. Dhalla did not produce the documents in
the court below; however, he has acknowledged that they likely originated with
him.

[9]

The respondents applied for a mistrial based on Mr. Dhallas
failure to disclose the documents.  The order dismissing the respondents claim
had not been entered when the application was filed; accordingly, they took the
position that Justice Branch was not
functus.
The trial judge granted
the application for a mistrial on grounds that not doing so would result in a
miscarriage of justice.  He found that the entire trial was tainted by the
absence of this information .  The documents are so important that they are
likely to change the complexion of everything heard at the trial:
Manning
v. Dhalla
, 2019 BCSC 1067 at para. 52.  Justice Branch subsequently
awarded special costs to the respondents:
Manning v. Dhalla
, 2019 BCSC
1514.  Those costs have not been assessed.  Dr. Manning says that to
complete the assessment would require that he waive privilege over his legal
files on the misrepresentation action.  He is not prepared to do so until the
action has completed.

[10]

Mr. Dhalla appeals from the order for a mistrial, as well as the
award of special costs.  He contends that the trial judge erred in granting a
mistrial, at least in part, on grounds that the faster and less expensive
option of an appeal would result in an injustice.  Mr. Dhalla says the
judge wrongly thought that a fresh evidence application on the appeal would not
adequately address the situation, and a mistrial was therefore a more effective
remedy to address any injustices that would otherwise result if the respondents
were not able to have their civil claim reconsidered.  Mr. Dhalla also
says it was reasonably open to the judge to re‑open the trial, allow the
documents in as evidence, and give the parties an opportunity to address them,
recalling witnesses if necessary.  From Mr. Dhallas perspective, it was
not required that the trial begin afresh.

Discussion

A.

Security for Costs of the Appeal

[11]

The jurisdiction to order security for costs of an appeal is found in
s. 24(1) of the
Court of Appeal Act
, R.S.B.C. 1996, c. 77.  The
appellant bears the onus of showing that an order is not warranted:
Creative
Salmon Company Ltd. v. Staniford
, 2007 BCCA 285 at para. 9 (Chambers).
 The primary question for me to answer is whether an order for security would be
in the interests of justice:
Lu v. Mao
, 2006 BCCA 560 at para. 6
(Chambers).  The relevant factors were summarized in
Gardezi v. Positive
Living Society of British Columbia
, 2018 BCCA 84 (Chambers):

[29]      This Court generally considers five factors in
determining whether to make an order for security for costs of the appeal.  The
first factor is the appellants financial means.  If ordering security for
costs would prevent the appellant from pursuing a meritorious appeal, it may
not be in the interests of justice to make the order:
Zen v. M.R.S. Trust
Company
(1997), 88 B.C.A.C. 198 (Chambers).  However, the Court may require
the appellant to post security for costs of the appeal even if obtaining the
funds would be difficult:
D. Bacon Holdings Ltd. v. Naramata Vines Inc.
,
2010 BCCA 427 at para. 21 (Chambers).

[30]      The second factor is whether the costs of the
appeal will be readily recoverable if the respondent succeeds.  If the
applicant shows there is a serious question that recovery may be difficult, a
presumption in favour of granting security for costs arises, unless the
appellant can demonstrate the appeal has obvious merit:
Edwards v. Moran
,
2003 BCCA 443 at para. 14 (Chambers);
Sangha v. Azevedo
, 2005 BCCA
125 at para. 6 (Chambers).

[31]      The third factor is the timing of the application
for security.  Because the appeal is usually stayed until security is posted,
injustice would result if the respondent applied for security for costs on the
eve of the appeal:
M.(M.) v. F.(R.)
(1997), 43 B.C.L.R. (3d) 98
at 101 (C.A. in Chambers).

[32]      The fourth factor is the merits of the appeal.  If
the appeal is virtually hopeless or bound to fail, security for costs may
be ordered even if the order prevents the appellant from pursuing the appeal:
Jenkins
v. Swallow Frames & Cycles Ltd.
(1997), 97 B.C.A.C. 81 at paras. 5, 7
(Chambers);
Freshway Specialty Foods Inc. v. Map Produce LLC
,

2006 BCCA 592 at para. 14 (Chambers).  On the other hand, the Court
will not order security for costs if it would prevent the appellant from
pursuing a meritorious appeal:
Creative Salmon Company Ltd.
at para. 12.

[33]      The fifth and ultimate
factor is whether the order for security for costs would be in the interests of
justice:
Lu v. Mao
, 2006 BCCA 560 at para. 6 (Chambers).

Appellants Financial Means

[12]

Applying this framework to the case before me, Mr. Dhalla has not
filed an affidavit setting out his current financial circumstances.  He has not
shown that he has sufficient assets to cover the costs of an appeal.

[13]

Nor has he shown that he could not prosecute his appeal if ordered to secure
the respondents costs:
Zen v. M.R.S. Trust Company
(1997), 69 A.C.W.S.
(3d) 608 (B.C. C.A.) at para. 18 (Chambers).  His counsel takes the position
that affidavit evidence to this effect was not necessary.  Instead, the Court
should simply infer, from the trial record and the evidence put forward by the
respondents, that Mr. Dhalla is not someone with the means to post a large
amount of security.  He says he could afford $5,000 in security, but anything
above that is likely problematic.

Difficulty of Recovery

[14]

The respondents contend that Mr. Dhalla does not have sufficient
exigible assets to satisfy the order for special costs made below; any award
for damages that might emerge from completion of the trial; costs on the trial
if the respondents are successful in their claim for misrepresentation; or,
costs on the appeal should Mr. Dhalla fail in his challenge to the order
for a mistrial.  As noted, there is no evidence to the contrary.

[15]

According to the respondents, Mr. Dhalla holds a 1/7 interest as a
registered owner of lands valued at $684,600.  However, there is a $500,000
mortgage against that property.

[16]

The respondents also contend that Mr. Dhalla has taken steps to
place assets beyond the reach of creditors, which does not bode well for their
ability to recover against him.  On May 30, 2019 (after the respondents filed
their mistrial application), he is said to have transferred title of a residential
property owned by him to his spouse for the sum of $1.00.  The assessed value
of the transferred property is $1.31 million.  As I understand it, there are
two mortgages registered against title, with a cumulative value of $1.56
million.  The second of these mortgages, which secures a loan of $1 million,
was registered after Mr. Dhalla transferred the property to his spouse.  The
respondents have filed an action in fraudulent conveyance in respect of that
transfer.

Timing of the Application

[17]

Mr. Dhalla commenced his appeal on August 1, 2019.  He filed the
appeal record on September 30, 2019, and his appeal book on October 30, 2019.  He
has not filed a factum. In accordance with Rule 21(1) of the
Court of Appeal
Rules
, the factum was due October 30, 2019.  He requires an order to extend
time for filing his factum.  Filing the factum is a necessary pre‑requisite
to setting a date for hearing on the merits of the appeal.

[18]

The respondents motion for security of costs was filed on December 5,
2019.  However, on November 14, 2019, they advised Mr. Dhalla that they
required security for costs (either by consent or pursuant to an order from
this Court).  As such, he has had notice of a pending application since then.

[19]

While there has been delay in bringing this application (three and one
half months), I see no real prejudice in granting security at this point.  The
factums have not been prepared and a hearing date has not been secured.  Mr. Dhalla
accepts, for todays purposes, that the application for security is timely.

Merits of the Appeal

[20]

Mr. Dhalla contends that his appeal has merit.  As noted, he says
the trial judge wrongly thought that a mistrial was the only effective remedy.  The
appellant does not contend that a mistrial was not jurisdictionally open to the
trial judge; rather, it is the basis on which the order was granted that is
contested by Mr. Dhalla.  He also points out that although the
respondents claim was dismissed on the ground that there was no proof of a
commission, the judge went on to make other findings that would have defeated
the claim in any event (such as no reliance placed by Dr. Manning on Mr. Dhallas
financial advice).  In deciding whether the judge committed reviewable error
in granting a mistrial, these additional findings will need to be considered.  It
is likely to be argued on the appeal that even if the late‑in‑the‑day
documents established proof of a commission, it mattered not, because there was
no reliance on anything said about the Ponzi scheme by Mr. Dhalla.

[21]

I have reviewed the reasons for judgment in the court below.  It is
ultimately for a division to assess the merits of the appeal and determine
whether the appellant is able to establish reversible error.  However, I note
that in granting a mistrial, Justice Branch was alive to the fact that a
mistrial is a last resort and will occur only where the court concludes that
no other curative measure will suffice (at para. 33).

[22]

He also found that the entire trial was tainted by the absence of [the
discovered information] (at para. 52).  As I read his reasons, based on
his familiarity with the evidence, he concluded that even if the respondents
could meet the test for fresh evidence on an appeal, that application and
possibly the outcome of the appeal would be assessed within the context of a
record that lacked integrity because of the appellants non‑disclosure
of the relevant documents.  From the trial judges perspective, the
availability of the documents would have changed everything at the trial, and
the respondents were entitled to an opportunity to reframe their case, from
their pleadings and opening submissions, through to the evidence of their own
witnesses (at para. 52).  If they remained unsuccessful in proving their
case against Mr. Dhalla, any subsequent appeal of the dismissal would at
least be informed by a more complete (and accurate) evidentiary foundation.

[23]

I cannot say that the appeal is without merit.  However, on the face of
it, I do not see obvious error in the reasoning brought to bear by the trial
judge.  The granting of a mistrial is discretionary and not something interfered
with lightly by this Court:
Cleeve v. Gregerson,
2009 BCCA 2 at para. 33.

[24]

After weighing the relevant factors, as a whole, I am satisfied it is in
the interests of justice to order that Mr. Dhalla post security for costs
of the appeal.  The respondents contend that the appeal will cost approximately
$50,000.  However, they have not provided a draft bill of costs supporting that
estimate, or any other breakdown of the anticipated costs.  The appellant says
the estimate is excessive.  The mistrial application took one day before
Justice Branch and the appellant estimates a half day for the appeal.  In my
view, posting $35,000 in security as costs of the appeal is reasonable in the
circumstances of this case.  Although the mistrial application consumed only
one day of court time, it may be that large portions of the trial record need
to be available for the appeal to properly assess the judges determination
that the entirety of the evidence was tainted by the non‑disclosure.

B.

Security for Costs of the Trial

[25]

The jurisdiction to order security for costs of the trial is found in
s. 10(2)(b) of the
Court of Appeal Act
, which authorizes a justice
to make an interim order to prevent prejudice.  This form of security is
ordered less readily than costs of an appeal:
Siekham

v. Hiebert
,
2008 BCCA 299

at para. 13 (Chambers).  The governing principles are
set out in
Aikenhead v. Jenkins
, 2002 BCCA 234 at para. 30
(Chambers):

1.

The onus
is on the applicant to show that it is in the interest of justice to order
posting for security of a trial judgment and/or of trial costs.

2.

The
applicant must show prejudice if the order is not made.

3.

In
determining the interests of justice the chambers judge should consider the
merits of the appeal and the effect of such an order on the ability of the
appellant to continue the appeal.

[26]

Applying these principles, I note that prejudice in an application for
security of trial costs generally arises where pursuit of the appeal
negatively alters the respondents ability to recover sums found by the trial
court to be owing to it:
Agent E v. Canada (Attorney General)
, 2018
BCCA 492 at para. 17 (Chambers).  For example, prejudice can arise where
an appellant obtains a stay of execution in respect of a trial judgment or
trial costs, incidental to the appeal.  If a respondents ability to collect
its trial costs is made no worse by the fact of an appeal, the threshold has
likely not been met:
Chan
v
.
Vancouver
Trade Mart Inc.

(1997),
29 B.C.L.R. (3d) 264 (C.A.);
D. Bacon Holdings Ltd.
v. Naramata Vines Inc.
, 2010 BCCA 427 at para. 25 (Chambers).

[27]

Here, as noted, the respondents submit that Mr. Dhalla does not
have sufficient exigible assets to satisfy the special costs award.  Moreover,
by transferring real property to his spouse, Mr. Dhalla has made it more
difficult (and less likely) that the respondents will be able to recover on
that judgment, or any other monetary amounts that may be awarded in their
favour.  The respondents say that Mr. Dhallas conduct in the court below
shows he is willing to mislead the court and disobey the rules; as such, they
have little faith he will voluntarily pay amounts ordered against him.  They
now find themselves having to expend further costs to defend what they believe
is a meritless appeal.

[28]

I appreciate the respondents concerns; however, in my view, the
prejudice alleged in support of their application for costs of the trial does
not arise from the fact of an appeal.  Rather, it is predominantly grounded in
circumstances that existed prior to the appeal having been filed, and would
have existed in any event.

[29]

The respondents have not submitted a certificate of costs relating to
the trial (the costs have not been assessed), or even a draft bill of costs.  The
affidavits depose that the actual costs incurred at trial were in excess of
$380,000. However, there is no particularization.

[30]

There are cases in which this Court has declined to rule on an
application for security for trial costs where costs have yet to be assessed.  See,
for example,
Buchy v. Villars
, 2008 BCCA 237 at para. 3 (Chambers);
Friends of Davie Bay v. British Columbia
, 2011 BCCA 491 at para. 14
(Chambers).  At the same time, I appreciate there are decisions in which
security has been granted, even without that evidence.  See, for example,
Lombardo
v. Lombardo,
2008 BCCA 21. It is a case‑by‑case determination.

[31]

The respondents are seeking $300,000 in security for costs of the trial.
 That is a considerable amount.  The information before me is insufficient to
decide whether the whole of that amount, or only a portion of it, will be
included in the assessment of special costs.  To come up with a figure at this
time would be speculative.  I note that the order granting special costs is
itself under appeal.

[32]

As stated, although I cannot say the appeal lacks merit, I do not find
it to be a strong challenge, as currently framed.  Mr. Dhalla has not
tendered financial information indicating that an order for security of costs
of the trial will present an undue hardship to him, or preclude him from
pursuing his appeal.  However, given the primary genesis of the prejudice
alleged by the respondents; the lack of particularization provided in support
of the estimate of $300,000; and the fact that an assessment of costs will not
occur for some time, in part because of the position taken by the respondents
on production of their legal files, I consider it in the interests of justice
to adjourn this aspect of the respondents motion generally.  They have leave
to re‑apply should greater particularization become available, there is a
material change in circumstance, or additional information comes to light that
necessitates reconsideration.

C.

Stay of Appeal Pending Posting of Security

[33]

Where the Court orders security for costs, it will usually stay the
appeal until security is posted:
Pitt Polder Preservation Society v. Pitt
Meadows (District)
, 1999 BCCA 593 at para. 5 (Chambers);
Austin v.
Goerz
, 2007 BCCA 151 at para. 6.

D.

Leave to Appeal to Dismiss as Abandoned

[34]

The respondents seek an order for leave to apply to dismiss the appeal
as abandoned if security is not posted within 30 days.  That order is
unnecessary as s. 24(2) of the
Court of Appeal Act
gives a justice
the power to dismiss the appeal of an appellant who fails to comply with an
order to post security for costs of the appeal:
Sutherland v. Reeves
,
2013 BCCA 495 at paras. 2223 (Chambers);
The Owners, Strata Plan
LMS3259 v. Sze Hang Holding Inc.
, 2010 BCCA 80 at para. 9
(Chambers).

E.

Costs of the Application

[35]

Usually, costs on this type of application will be costs in the appeal:
Lee
v. Lee
, 2014 BCCA 155 at para. 62 (Chambers);
Pearlman v. Insurance
Corporation of British Columbia
, 2009 BCCA 237 at para. 35 (Chambers).  However,
the application in this case was necessitated, in large part, because of Mr. Dhallas
conduct in the court below.  In those circumstances, I consider it appropriate
to order that the respondents receive their costs on the application, in any
event of the appeal.

Disposition

[36]

For the reasons provided, I order that Mr. Dhalla post security for
costs of the appeal in the amount of $35,000.  The appeal is stayed until the
security is posted.  The appellant has 30 days in which to do so.  I grant the respondents
costs on this application, in any event of the appeal.

[37]

The application for security for costs of the trial is adjourned
generally.

[38]

Finally, the application for leave to apply to dismiss the appeal if
security for costs of the appeal is not posted within 30 days is dismissed on
the basis that it is not necessary.

The Honourable Madam Justice DeWitt‑Van Oosten


COURT OF APPEAL FOR BRITISH COLUMBIA

Citation:

Pavlovich v. Danilovic,

2020 BCCA 36

Date: 20200117

Docket: CA45939

Between:

Ljuba Pavlovich

Respondent

(Plaintiff)

And

Alexander Gordon
Danilovic

Appellant

(Defendant)

Before:

The Honourable Madam Justice DeWitt‑Van Oosten

(In Chambers)

On appeal from:  An
order of the Supreme Court of British Columbia, dated
February 11, 2019 (
Pavlovich v. Danilovic
, 2019 BCSC 153,
Vancouver Docket S158302).

Oral Reasons for Judgment

Counsel for the Appellant:

J.M. Richter

A.M. James

Counsel for the Respondent:

R.D. Bellamy

Place and Date of Hearing:

Vancouver, British
  Columbia

January 17, 2020

Place and Date of Judgment:

Vancouver, British
  Columbia

January 17, 2020

Summary:

The appellant applied to
file an amended factum and supplementary appeal book, as well as to adjourn the
hearing of the appeal.  Held: Application allowed.  The additional issue raised
by the appellant stems from recent developments in the case law, was raised in
the court below, and likely can be addressed on the already‑established
factual record.  An adjournment of the appeal carries little prejudice.

[1]

DEWITT‑VAN OOSTEN J.A.
: The appellant, Alexander Danilovic,
seeks three orders: (1) leave to file an amended factum; (2) leave to file a
supplementary appeal book that includes the closing submissions at trial; and
(3) an adjournment of the hearing of the appeal (scheduled for January 22,
2020).

[2]

The appellant has also filed an application to adduce fresh evidence at
the appeal; however, that application is not before me.  Instead, it will be
determined by the division that hears the appeal on its merits.

Background

[3]

The appeal arises out of a dispute between the parties about their
respective entitlement to beneficial interest in two residential properties
purchased by the parties parents, both of whom are now deceased.

[4]

After the mothers death, and at separate times, each of the properties
was made the subject of a joint tenancy between the father and the appellant, Mr. Danilovic.
I understand that the second of these transfers was executed solely by the
appellant, relying on a power of attorney provided to him by his father that
allowed the appellant to transfer the fathers assets to himself.  The father
passed away and died intestate (a will has not been located).  If the joint
tenancies effected a transfer of the entire legal and beneficial interest in
the properties to the appellant, including rights of survivorship, the
properties would not form part of the fathers estate for division amongst any
deemed beneficiaries.

[5]

It is Mr. Danilovics position that he is entitled to full legal
and beneficial ownership of the properties and that his father intended such to
be the case at the time the transfers were made.  Ljuba Pavlovich, the
appellants sister and respondent in this matter, contends that the appellant
holds the properties in trust and she is entitled to a share of their value
equal to that of any other deemed beneficiaries, including (but not limited to)
the appellant.

[6]

The dispute between the siblings went to trial:
Pavlovich v.
Danilovic,
2019 BCSC 153 [Trial Reasons].  The trial judge rejected
the respondents submission in favour of an express trust.  However, she found
that the transfers into a joint tenancy with the appellant were gratuitous
and, as such, subject to a rebuttable presumption of resulting trust.  The
judge further found that the appellant did not displace that presumption on the
evidence.  The judge could not determine the fathers intention on a balance of
probabilities.  Instead, the evidence [stood] in equipoise (at para. 55).
In light of this conclusion, and by operation of the presumption, the judge
declared that the appellant holds both properties on a resulting trust for the
fathers estate (at para. 56).

[7]

The appellant seeks to overturn the judges ruling.  In his factum,
filed May 31, 2019, he raises one ground of appeal, namely, that the judge
committed palpable and overriding error in concluding the appellant failed to
rebut the presumption of a resulting trust.

[8]

The ground of appeal has three components.  Specifically, the appellant
contends that the judge: (1) failed to consider testimony provided by the
appellants spouse on the fathers intention in transferring the properties;
(2) failed to consider documentary evidence consistent with the appellants
position; and (3) speculated about the transfer of the properties reflecting an
intentional financial strategy that was aimed at saving the family money in
probate.

Appellants Application

[9]

The appellants notice of motion, brought on December 20, 2019, seeks to
file an amended factum that adds an additional argument in support of his
appeal.

[10]

In particular, he asks for leave to advance the proposition that the
trial judge erred in law by limiting her analysis on the fathers intention at
the time of the impugned transfers to whether the father intended that the
appellant receive beneficial ownership of the properties.  The appellant says
the judge should have also considered, as a separate possibility, that the
father intended to transfer an immediate legal interest, retain beneficial
ownership during his lifetime, but give the appellant a right of survivorship
that would entitle him to full and exclusive beneficial ownership of both
properties upon the fathers death.  The appellant says the trial judge failed
to appreciate that a right of survivorship is a distinct right accompanying a
joint tenancy.

[11]

The additional ground of appeal has been brought forward seven months
after the appellant filed his factum.  The hearing of the appeal is less than a
week away (as noted, it is scheduled for January 22).  The appellant
appreciates that the request to amend is late in the day; however, he says it
is based on two decisions that were released after he filed his factum, one of
which is this Courts decision in
Herbach v. Herbach Estate,
2019 BCCA
370 (released October 11, 2019).  The appellant says the case clarifies, at para. 24,
that a transfer of property into joint tenancy may consist of an immediate
grant of a legal interest
and
a beneficial right of survivorship, even
though the transferor retains beneficial ownership of the property during their
lifetime.  With this kind of an arrangement, full beneficial ownership of the
property vests in the joint tenant upon death.

[12]

The appellant says that
Herbach
and a decision out of the British
Columbia Supreme Court (
Petrick v. Petrick,
2019 BCSC 1319) raise a
critical point that should have been considered by the trial judge on the
evidentiary foundation before her.  She did not do so and the appellant
contends that as a result, the judge applied an incomplete legal test in
deciding whether the evidence relied upon by the appellant was sufficient to
rebut the presumption of a resulting trust.  She could have found that the
presumption had been rebutted, even though not satisfied of proof of an
intention to transfer beneficial ownership of the properties to the appellant
at the time the relevant documents were executed.

[13]

In fact, the appellant intends to argue that this is the only logical
conclusion the trial judge could have reached.  She accepted that the father
organized his affairs including his property holdings so as to minimize his
tax obligations on death: Trial Reasons at para. 47.  She also found that
his actions in doing so were informed by an understanding of the legal
consequences of a joint tenancy, based on his assumption of full legal and
beneficial ownership of the impugned properties when his wife died many years
prior (at para. 47).  This would have included a right of survivorship.
In light of the judges findings, the appellant says that her conclusion about
the evidence not rebutting a presumption of resulting trust cannot stand.  Had
she turned her mind to the right of survivorship as a distinct right, capable
of transfer at the time the joint tenancy was created, she would have had to
have found that the fathers intention must have been to transfer a right of
survivorship in both properties to the appellant, consistent with the results
of his own joint tenancy with his spouse.  He would have understood that that
was the route by which to keep the properties out of his estate and free from the
related tax implications.

[14]

The respondent is opposed to the request to file an amended factum.
Among other things, she cites
MacMillan Bloedel v. Youell
(1993)
,
23 B.C.A.C. 214, 43 A.C.W.S. (3d) 7 (B.C.C.A.) and
Block Bros. Realty Ltd.
v. Boese and Gonzo
(1988)
,
24 B.C.L.R. (2d) 178 (C.A.), which stand
for the proposition that a party should not be allowed to amend their factum
shortly before the hearing unless it is beyond doubt that all factual issues
relevant to the new issue were before the trial court (see para. 12 of
MacMillan
and para. 3 of
Block Bros.
).  The respondent argues that in this
case, it cannot be said that all factual issues relevant to the proposed
amendments were before the court.  To the contrary, the respondent says the
issue now sought to be raised is closely entwined with the fresh evidence that
the appellant seeks to introduce at the hearing of the appeal, making the point
that the appellant cannot substantiate the additional alleged error in the
absence of a buttressed evidentiary record.

[15]

After hearing submissions from both sides, and reviewing the application
materials, I am satisfied it is in the interests of justice to grant the
appellant leave to amend his factum as requested; grant leave to file a
supplementary appeal book with the closing submissions from trial; and adjourn
the appeal to ensure that the respondent has sufficient opportunity to respond
to the amended factum.  In light of this ruling, if the respondent considers it
necessary to amend her factum to respond to the new ground of appeal, she has
leave to do so.

[16]

In my view, the additional argument likely can be resolved on the
factual record established in the court below, although, ultimately, that will
be for the division to determine.  The issue is not dependent on the admission
of the fresh evidence.  This is not a situation akin to
Shannon v. Gidden,
1999
BCCA 461 (Chambers), for example, in which leave to file an amended factum was
denied because an entirely different body of evidence was required to properly
assess the newly found challenge to the judges ruling (at para. 6).

A
central issue at trial in this case was the fathers intention at the time of
the impugned transfers.  Considerable evidence was called on that point,
including the history involving the two properties, the fathers involvement
with the properties, and the effect of his spouses death on his beneficial ownership
of those properties.

[17]

The judge made specific findings in that regard.  The additional legal
argument in support of overturning the trial judgment can likely be assessed
with reference to those findings, within the context of the reasons as a
whole.  I agree with the appellant that on the face of it, the supplemental
issue is more legal in nature than it is factual and, consistent with the
approach taken in
MacMillan
at para. 13, I am reluctant to deny the
appellant an opportunity to advance an issue of that nature.  In response to
his sisters notice of civil claim, the appellant pleaded that the father
intended to gift an undivided one half interest in both properties to the
appellant.  This pleading is broad enough in scope to include the argument now
raised by the appellant.  I am also satisfied, based on the closing
submissions, that the right of survivorship was addressed by both parties
before the trial judge.  It was a live issue at trial.

[18]

The orders sought by the appellant are discretionary.  The appeal was
filed in March 2019, less than a year ago.  The January 22 date is the first
hearing date for the appeal and I understand that if adjourned, there is time
available for hearing in February and March.  In fact, I have been advised that
the parties have spoken of a new date and counsel agree the appeal could be
heard on March 24.  As such, an adjournment will not result in considerable
delay.  The appellant has provided a legitimate reason for the proposed
amendments to his factum and request for an adjournment.  I accept that clarity
on the proper analytical approach for the assessment of a right of survivorship
did not present itself to the appellant until October 2019, when
Herbach
was
released.  The proposed amendments to the factum have been articulated and the
respondent has been aware of them since December.  I do not consider the
additional issue to be overly complex.  In my view, the prejudice brought about
by an amendment, the addition of the closing submissions (already known to the
respondent), and a relatively brief adjournment of the appeal, is minimal.

[19]

The appeal is hereby removed from the hearing list for January 22, 2020,
and adjourned generally.  Counsel are to confirm March 24, 2020, as the new
date as expeditiously as possible.

[20]

Costs on the application will be costs in the appeal.

The Honourable Madam Justice DeWitt‑Van Oosten