COURT OF APPEAL FOR
BRITISH COLUMBIA

Citation:

R. v. Thrower,

2004 BCCA 41

Date:
      20040122

Docket: CA031523

Between:

Regina

Respondent

And

Mark
      Thrower

Appellant

D.
Markovitz

Counsel
            for the Appellant

P.
Sebellin

Counsel
            for the Respondent

Date of
            Written Submissions of the appellant:

8th January, 2004

Date of
            Written Submissions of the respondent (Crown):

16th January, 2004

Place and
            Date of Judgment:

Vancouver, British Columbia

22nd
            January, 2004

Reasons
        for Judgment of the Honourable Madam Justice
Southin
:

[1]

The
        applicant, who was charged late in 2003 with first degree murder, applies
        pursuant to s. 680(1) of the
Criminal Code
for a direction
        for the review of the order of the Chief Justice of the Supreme Court of
        British Columbia, pronounced the 5th November, 2003, upon an application
      under s. 522 of the
Criminal Code
refusing him bail.

[2]

The
      application for a review is granted.

The Honourable Madam Justice
Southin
,

Acting Chief Justice pursuant to
Court
            of Appeal Act
, R.S.B.C. 1996, c. 77,
s
.
          12(a).


COURT OF APPEAL
        FOR BRITISH COLUMBIA

Citation:

Assessor
                of Area #09  Vancouver v. The Cadillac Fairview Corporation
                Ltd.,

2004 BCCA
            35

Date: 20040123

Docket: CA029200

Between:

Assessor
      of Area #09 - Vancouver

Appellant

(
Appellant
)

And

The Cadillac
      Fairview Corporation Ltd. and
The Four Seasons Hotel

Respondents

(
Respondents
)

Before:

The Honourable
            Madam Justice Southin

The Honourable
            Madam Justice Saunders

The Honourable
            Mr. Justice Thackray

P.W. Klassen
            and J.D. Houston

Counsel for the Appellant

B.T. Gibson,
            Q.C.

Counsel for the Respondent

The Cadillac Fairview Corporation

W.G Allen

Counsel for the Respondent
The Four Seasons Hotel

Place and
            Date of Hearing:

Vancouver, British Columbia

May 26, 2003

Place and
            Date of Judgment:

Vancouver, British Columbia

January 23, 2004

Written
              Reasons by
:

The Honourable
            Madam Justice Saunders

Concurred
              in by:

The Honourable
            Madam Justice Southin
The Honourable Mr. Justice Thackray

Reasons for Judgment of the Honourable Madam Justice
        Saunders:

[1]

This
      appeal concerns the assessment for property tax purposes, by the appellant
      Assessor, of four office buildings in downtown Vancouver, British Columbia,
      that form part of Pacific Centre.  The respondent Cadillac Fairview Corporation
      Ltd. is the manager and a part owner of Pacific Centre.

[2]

The
      order appealed dismissed a stated case without answering the questions
      posed.  The learned chambers judge held that the questions posed were questions
      of fact, not law, and thus not appropriate for answer by the Supreme Court
      of British Columbia under s. 65 of the
Assessment Act
, R.S.B.C.
      1996, c. 20.

[3]

The
      decision of the Assessment Appeal Board challenged in the stated case included
      valuation of tenant improvements in the four office towers.  Extensive
      tenant improvements transform the shell space into usable office quarters.  One
      of the questions in the proceedings before the Assessment Appeal Board
      was whether those tenant improvements should be included in the value of
      the property, and if so, on what basis.  The Assessment Appeal Board held
      that only relatively new tenant improvements add market value to the building,
      and captured the market value of tenant improvements by including the valuation
      of the amortized value of tenant improvement allowances in an analysis
      of a particular lease transaction to determine net effective rent for that
      transaction.  Also in reaching its decision on the actual value of the
      properties, it applied a capitalization rate different from the rates used
      by the experts put forward by the Assessor and Cadillac Fairview, using
      instead the rate employed by the former area assessor whose work was appended
      to the Assessors expert report as supplementary data (the Jones Report).

[4]

On
      this appeal the appellant Assessor raises three issues:

1.    whether
      the chambers judge erred in declining to answer the questions on the basis
      they were questions of fact; and

2.    if the
      answer to question 1 is in the affirmative, whether the Assessment Appeal
      Board erred in failing to attribute a value to all tenant improvements;
      and

3.    whether the Assessment Appeal Board erred in the
      capitalization rate it used to attribute value to the property.

[5]

An
      appeal from a stated case may be brought to this Court on a question of
      law only with leave (s. 65(9) of the
Assessment Act
).  On
      4 April 2002 Mr. Justice Thackray gave leave to appeal on these grounds:

[i]   that the
      chambers judge erred when he found that Questions 1-6 of the Stated Case
      were questions of fact and not questions of law;

[ii]  that the chambers judge erred when he failed to
      answer each of the Questions 1-6 of the Stated Case in the affirmative.

The three issues come within the grounds recited in
      the order granting leave to appeal.

[6]

The
      first issue is whether the chambers judge erred in declining to answer
      any of the six questions posed on the stated case and referred to in the
      order granting leave to appeal.  (Two other questions of the stated case,
      Nos. 7 and 8, are not at issue in this Court).

[7]

The
      six questions still in issue are:

1.    Did the
      Board err in law by failing to include in the actual value of the respondents
      office buildings the value of the tenants interest as well as the landlords
      interest in the subject building?

2.    Did the
      Board err in law when it held, that although tenant improvements have value
      for the tenant so long as the tenant occupies the space, that such value
      is value to the owner, and is therefore not assessable?

3.    Did the
      Board err in law and act upon a view of the facts that could not be reasonably
      entertained when it held that the best way to capture the value of tenant
      improvements, to the extent they do have market value, is to include the
      amortized value of tenant improvement allowances in an analysis of a particular
      lease transaction to determine net effective rent for that transaction?

4.    Did the
      Board err in law and act upon a view of the facts which could not reasonably
      be entertained when it held that only relatively new tenant improvements
      add market value (and therefore actual value) to the building?

5.    Did the
      Board err in law when it held it was establishing equity by using only
      the capitalization rate applied by the Assessor to the income streams for
      similar office buildings in the years in question, when those income streams
      had been determined using a different set of assumptions than those that
      were used in determining the income stream of the subject buildings.

6.    Did the Board err in law when in determining the
      actual value of the subject buildings it adopted a capitalization rate
      determined by using one set of assumptions as to market rents and applied
      that capitalization rate to a market rent determined by using a different
      set of assumptions?

[8]

The
      stated case came before the chambers judge pursuant to s. 65(1) of the
Assessment
      Act
:

65.
(1)  Subject
      to subsection (2), a person affected by a decision of the board on appeal,
      including a local government, the government, the commissioner or an assessor
      acting with the consent of the commissioner, may require the board to refer
      the decision to the Supreme Court for appeal on a question of law alone
      in the form of a stated case.

[9]

It
      is well settled that the words of s. 65(1) mean that the only jurisdiction
      of the Supreme Court of British Columbia on a stated case is on questions
      of law alone:
Crown Forest Industries Ltd. v. Assessor of Area 6
       Courtenay
(1985), Stated Cases, Case 210, [1985] B.C.J. No. 163
      (S.C.).

[10]

The
      Assessor contends before this Court, as before the Supreme Court of British
      Columbia, that the six questions ask questions of law as that notion is
      discussed in jurisprudence.

[11]

The
      Assessor relies upon the reasons for judgment of Madam Justice Southin
      in
Crown Forest Industries Ltd.
, at p. 1191:

Under the British
      Columbia statute, this Court has no power to substitute its opinion on
      questions of fact for those of the Board.

So long as the
      Assessment Appeal Board which must, in deciding appeals to it, apply the
      Act does not:

1.    misinterpret or misapply the section . . .;

2.    misapply any applicable principle of general law . . ., or

3.    act without any evidence or upon a view of the facts which could
      not reasonably be entertained

this Court has no
      power to intervene.

On the third
      proposition, which is fundamental to the appellants case, see: . . .
Edwards
      v. Bairstow
[1956] A.C. 14 (H.L.) at 29:

For it is universally
      conceded that, though it is a pure finding of fact, it may be set aside
      on grounds which have been stated in various ways but are, I think, fairly
      summarized by saying that the court should take the course if it appears
      that the commissioners
have acted without any evidence or upon a view
      of the facts which could not reasonably be entertained
.  [underlining
in
      Crown Forest Industries Ltd
.]

[12]

An
      example of an error in the findings of fact of the assessment appeal tribunal
      is found in
Westcoast Transmission Limited v. Assessor of Area 9
       Vancouver
(1987), Stated Cases, Case 235, [1987] B.C.J. No. 1273
      (S.C.).  There Mr. Justice Cumming adopted the passage above from
Crown
      Forest Industries Ltd.
, and in its application said at p. 1352:

I stated above
      that the concepts used, in developing capitalization rates for application
      to the subject, should be used consistently.  Thus it makes no sense to
      develop a capitalization rate on one set of assumptions about long-term
      vacancy rates, long-term rents, and long-term expenses, and then apply
      that rate to the income of the subject property that is not derived in
      the same way.

The choice of a vacancy rate goes directly into the calculation
      of gross income, from which the appraiser then deducts expenses to arrive
      at an estimate of net income.  All of these factors, for consistency, should
      be used in the same manner as they were used in the study of comparables
      which resulted in the development of the capitalization rate.  To do otherwise
      is to offend appraisal theory, and is likely to produce a mistaken result.

[13]

Likewise
      in
Pacific Logging Company Limited v. The Assessor for the Province
      of British Columbia
(1976), Stated Cases, Case 99, 16 N.R. 515
      (B.C.C.A.) in reasons approved by the Supreme Court of Canada and subsequently
      applied by this Court in
Kelfor Holdings Limited v. Assessment Area
      of Prince George (26)
(1979), Stated Cases, Case 130, [1979] B.C.J.
      No. 880 (C.A.), Mr. Justice McIntyre concluded that certain findings of
      fact were arbitrary and therefore an error in law, saying as to the word
      arbitrary at 492:

When
      I use the word arbitrary I mean  and from the context in which the word
      is used in the case I conclude the assessor meant  a decision made at
      discretion in the absence of specific evidence and based upon opinion or
      preference (see Shorter Oxford English Dictionary).  The resulting assessment
      is then made without regard for the statutory provisions and uncontrolled
      by them.

The authorities
      are clear that an assessment must be made in conformance with the statute
      that provides for it. . . .

They all enunciate the proposition that an assessment made in a
      manner not justified in law cannot stand.  In my view that is what has
      occurred here.  The assessor has assessed upon a basis not authorized in
      the statute, and in the selection of another method which has no legal
      warrant, has acted in an arbitrary manner and created an arbitrary assessment.

[14]

The
      first issue, then, is whether the six questions raise questions which fit
      within the limited scope of court review.

[15]

The
      chambers judge concluded all six questions raised questions beyond his
      review.  The first four questions relate to the valuation of the tenant
      improvements.  The core of the Assessment Appeal Boards decision on the
      tenant improvements issue, reproduced in the reasons for judgment of the
      chambers judge, is:

The Board finds that
      the buildings should be valued on the basis that tenancies have improvements
      in place, but that not all tenant improvements have market value.  Office
      space cannot be occupied without tenant improvements.  Tenant improvements
      clearly have value when they are first constructed, and continue to have
      value to the tenant for whom they were constructed so long as the tenant
      occupies the space.  When office buildings sell, they have tenant
      improvements in place.  The tenant pays for tenant improvements either
      directly or through the rent paid where the landlord provides a tenant
      improvement allowance and amortizes the expense over the term of the lease.  Where
      a tenant allowance is amortized into the rent, that rent becomes part of
      the income stream purchased on the sale of the property.  The evidence
      suggests, however, that tenant improvements have no value in the market
      generally and that a landlord will not receive more rent for already improve
      space.  The Board finds that only relatively new tenant improvements
      add market value to a building.  While they may have value to the
      particular tenant occupying the space, the tenant's interest is more in
      the nature of "value to owner" and has no market value.

At any give time,
      except when a building is brand new or not yet occupied, an office building
      will have office space with new improvements that have market value and
      older improvements which no longer have any market value.  In a perfect
      situation, a lease sample will include new leases where the landlord provides
      an allowance for tenant improvements, and renewals where tenant improvements
      are already in place and no value for them is reflected in the rent.  Market
      rent, therefore, will include a combination of both types of rent.

The Assessor cannot possibly inspect every tenancy every year to determine
      the level of tenant improvements and whether they, in fact, add value in
      each case.  The Board finds that the best way to capture the value
      of tenant improvements, to the extent they do have market value, is to
      include the amortized value of tenant improvement allowances in an analysis
      of a particular lease transaction to determine net effective rent for that
      transaction.  The net effective rent of leases including value for
      tenant improvements and the net effective rent of lease where there is
      no market value to the tenant improvements will, together, lead to a conclusion
      of market rent generally, and will reflect both the landlord's and the
      tenant's interest in the building.

[16]

On
      questions 1-4 the chambers judge held:

[8]   This holding
      is attacked both by the Assessor and Cadillac Fairview, each saying that
      it amounts to an inconsistency which offends the principle articulated
      by Cumming J. in
Westcoast
.  If the improvements have
      a value in the first term, the Assessor says, they must have a value afterwards.  If
      tenant improvements add no value, Cadillac Fairview says, how can they
      add value in the first term?

[9]   I conclude that the Board drew an inference of fact from the evidence
      as to tenant improvements, turnkey leases, shell rents, and so forth, in
      arriving at its conclusion on this issue.  It distinguished between
      situations, rather than treated the data inconsistently. Thus, the questions
      which relate to this issue are not within my appeal jurisdiction.

[17]

On
      questions 5 and 6 the chambers judge held:

[10]  The Board heard
      evidence from the Assessor and from Cadillac Fairview as to capitalization
      rates.  It declined to accept the evidence of the experts put forward
      and instead employed the "Jones Valuation Summary", which was
      in evidence before it.

[11]  The Assessor
      contends that the rates set out in the Jones Valuation Summary are based
      on realities different from those of the respondents.

[12]  That, I conclude, is not a question of law.  It has to do
      with the pertinence of evidence, its weight and applicability.  The
      Board had a range of evidence before it, and chose what it was among that
      evidence on which it should act.  This was not a matter of using inconsistent
      data when there were consistent
and credible
data to hand, it was
      a matter of using the best available evidence.  The determination
      of which evidence is most persuasive is within the prerogative of the Board
      and is a decision of fact.  It does not involve a question of law.  [emphasis
      in original]

[18]

On
      appeal to this Court the Assessor contends that all six questions are questions
      of law in that they ask whether the Boards review of the evidence was
      reasonable, and whether there was evidence before the Board to support
      its conclusions.  And as to the first question concerning tenant improvements,
      the Assessor contends that the Assessment Appeal Board erred in law by
      failing to value all interests in the subject property, including the interests
      of the tenants in their own improvements.  Questions 5 and 6 are said to
      challenge inconsistent premises used in the component parts of the valuation,
      which is an error of law on the authority of
Westcoast Transmission
,
supra
,
Assessor
      of Area 09  Vancouver v. James Lau
(1999), Stated Cases, Case
      423 (B.C.S.C.) and
Lornex Mining Ltd. v. British Columbia (Assessor
      of Area No. 23  Kamloops)
, [1987] B.C.J. No. 2555 (S.C.).

[19]

The
      respondents answer that all six questions challenge findings of fact that
      had a basis of support in the evidence, and that the chambers judge was
      therefore correct.

[20]

It
      appears to me that there has been, in the reasons for judgment of the chambers
      judge, a compression of the jurisdiction issue and the answers to the questions
      posed.  This may originate from the form of question.  For example, as
      to question 1, neither a no nor a yes adequately provides an answer:
      no suggests that the Board failed to include all the interests in its
      valuation (which would be an error of law) and yes affirms that the described
      failure was an error of law.   It is rather like the old question have
      you stopped beating people? It is not unknown that questions framed in
      a stated case may require interpretation because they do not admit of a
      straight yes or no, see for example, the reasons for judgment of Mr.
      Justice Esson in this Courts appeal decision in
Crown Forest Indust.
      Ltd.
(1987), Stated Cases, Case 210, 10 B.C.L.R. (2d) 145.  Nonetheless,
      to the extent the questions pose questions of law, some answer must be
      given.

[21]

On
      those questions that challenge the findings of fact on the basis there
      was no evidence which reasonably could support the conclusion, the questions
      are questions of law as explained by Madam Justice Ryan in
British
      Columbia (Assessor Area 26  Prince George) v. Cal Investments Ltd.
,

[1993]
      B.C.J. No. 93 (S.C.), and an answer must be given.  That is not to say
      that the answer will be in the affirmative, but an answer to the question
      of law must be provided.  Further, those questions which ask outright whether
      there is error of law in the decision (questions 1, 2, 5 and 6) ask a question
      within the Courts jurisdiction and an answer must be given.  And it is
      clear from the authorities cited that a failure to determine the entire
      value of the property, or a decision based on inconsistent premises, to
      which those questions are directed, may amount to an error of law.

[22]

There
      is one other matter.  Question 1 is said to be inconsistent with question
      4.  Those questions ask, again:

1.    Did the
      Board err in law by failing to include in the "actual value" of
      the Respondent's office buildings the value of the tenant's interest as
      well as the landlord's interest in the subject building?

.  .  .  .  .

4.    Did the Board err in law and act upon a view of
      the facts which could not reasonably be entertained when it held that only "relatively
      new tenant improvements" "add market value (and therefore "actual
      value") to the building"?

[23]

I
      would interpret questions 1 and 4 as asking the same question, whether
      there was an evidentiary basis on which the Board could conclude that only
      some, but not all, of the tenant improvements added value to the property
      for the purpose of assessment.  If the answer is yes, there is no error
      of law.  If the answer is no, there is an error of law in the sense described
      by question 4.  If the evidence indisputably established that all tenant
      improvements added value to the building, there is an error as described
      by question 1.

[24]

It
      follows that I consider that all six questions, in some fashion, pose questions
      of law to which answers must be provided.

[25]

I
      turn now to the questions themselves and the scheme of the statute.  The
      task of an assessor under s. 19(2) of the
Assessment Act
is
      to determine the actual value of land and improvements.  Actual value
      is defined in s. 19(1) as the market value of the fee simple interest
      in land and improvements.

[26]

There
      are several approaches to valuation that may be used, each aimed at divining
      the market value of the property.  One method is the income approach.  The
      income approach is based upon the proposition that the market value of
      an income generating property may be determined by finding the income that
      can reasonably be expected to be generated on a continuing basis, and translating
      that income to a capital value by utilizing a capitalization rate.  It
      is one way of asking how much money a person would spend to secure a particular
      level of income.

[27]

In
      general terms, the income divided by the capitalization rate will generate
      the market value.  The market value derived this way will increase with
      either an increase in income or a decrease in the capitalization rate.

[28]

The
      stated case presented by the Assessor challenged two aspects of the valuation
      by the Assessment Appeal Board, the income attributable to the property,
      which the Assessor said was too low, and the capitalization rate, which
      the Assessor said was too high.  Either or both of these points, if successful,
      would generate a higher assessed value and, the Assessor contends, a value
      more equitable to other property owners who share the burden of property
      taxes.

[29]

The
      first four questions are directed at the income level used by the Board.  For
      convenience I repeat them:

1.    Did the
      Board err in law by failing to include in the actual value of the respondents
      office buildings the value of the tenants interest as well as the landlords
      interest in the subject building?

2.    Did the
      Board err in law when it held, that although tenant improvements have value
      for the tenant so long as the tenant occupies the space, that such value
      is value to the owner, and is therefore not assessable?

3.    Did the
      Board err in law and act upon a view of the facts that could not be reasonably
      entertained when it held that the best way to capture the value of tenant
      improvements, to the extent they do have market value, is to include the
      amortized value of tenant improvement allowances in an analysis of a particular
      lease transaction to determine net effective rent for that transaction?

4.    Did the Board err in law and act upon a view of
      the facts which could not reasonably be entertained when it held that only
      relatively new tenant improvements add market value (and therefore actual
      value) to the building?

[30]

One
      of the factors in determining the income level for the property was the
      rent that should be attributed to the tenant improvements, other factors
      being the vacancy rate and the expense allowances.  The imperative to consider
      tenant improvements in determining rent follows from the myriad ways in
      which landlords and tenants arrange their leases.  At one end is a lease
      of fully finished space with a relatively high rent reflecting the landlords
      greater investment.  On the other end is the lease of bare space with a
      low rental rate and a tenant obligation to install tenant improvements
      at tenant expense.  In between are variations.  As noted by the Assessment
      Appeal Board in the passage quoted at para. 15 of these reasons, [t]he
      tenant pays for tenant improvements either directly or through the rent
      paid where the landlord provides a tenant improvement allowance and amortizes
      the expense over the term of the lease.

[31]

The
      Board here found:

.
      . . The Board finds that the best way to capture the value of tenant improvements
      to the extent they do have market value, is to include the amortized value
      of tenant improvement allowances in an analysis of a particular lease transaction
      to determine net effective rent for that transaction.  The net effective
      rent of leases including value for tenant improvements and the net effective
      rent of leases where there is no market value to the tenant improvements
      will, together, lead to a conclusion of market rent generally, and will
      reflect both the landlords and the tenants interest in the building.

[32]

On
      behalf of the Assessor it is said that this passage, in declining to put
      a rental value on tenant improvements that have been fully amortized and
      in making no provision for tenant improvements paid by the tenant, demonstrates
      a failure to value all of the tenant improvements.  It is said this result
      is contrary to the statutory requirements that all improvements be included
      in the actual value assessed and is inconsistent with the Assessment Appeal
      Boards own conclusion that only relatively new tenant improvements add
      market value to a building.

[33]

The
      suggestion is that on an income approach the entire cost of tenant improvements
      is value to the property.  This equation is not absolute in my view.  The
      sole question is the market value of the property, meaning what a purchaser,
      including the present owner, would pay for this property. Here all parties
      adopted an income approach to valuation and the Assessment Appeal Board
      chose to use that approach.  In furtherance of that approach the Board
      was required to determine an amount that could be said to fairly reflect
      the income that the owner could derive from the property, considering a
      wide variety of lease arrangements, vacancy rates and expense allowances.  There
      was no evidence that the hypothesis put by the Assessor, a tenant self-funding
      its tenant improvements, had occurred in these buildings; even the Assessors
      expert report contained no such information.  On the other hand there was
      evidence the landlord had provided tenant improvement allowances and amortized
      the expense over the term of the lease, and some evidence that pre-existing
      tenant improvements were a negative influence on rental income when property
      was re-let, that new tenants had required removal of even relatively new
      improvements.  It was in that evidentiary mix that the Board made its decision.

[34]

The
      Assessor contends that the Boards finding that only relatively new tenant
      improvements add market value to a building and its earlier statement
      that [t]enant improvements . . . continue to have value to the tenant
      for whom they were constructed so long as the tenant occupies the space
      are inconsistent with an attribution of value for only those improvements
      that are evident in the owners amortization schedule.  While those two
      findings clearly would be consistent with the conclusion that all new improvements
      must be included in the assessed value, the question is whether they are
      inconsistent with the result reached by the Board in this case.  I conclude
      they are not.

[35]

The
      two statements referred to by the Assessor are part of a larger paragraph
      that says [t]he evidence suggests . . . that tenant improvements have
      no value in the market generally and that a landlord will not receive more
      rent for already improved space.  In context, it is clear that the Board
      was concerned with the valuation for assessment purposes of all the improvements
      and was alive to the evidence before it that the market value of the property
      in the marketplace would not reflect tenant improvements, in general, although
      the tenant improvements had value to the tenants themselves.  The Board
      considered the market value of those tenant improvements that it found
      had market value, being the relatively new ones, and attributed value through
      the device of amortization.  As there was no evidence that tenant improvements
      had been self-funded, and there was evidence that older tenant improvements
      did not add value to the property, the Boards decision on this point,
      in my view, was soundly based upon the evidence before it.

[36]

The
      Assessor contends that the Board, in declining to attribute value to all
      the tenant improvements, committed the error found in
Re A. Merkur & Sons
      Ltd. and Regional Assessment Commissioner, Region No. 14 et al.
(1997),
      17 O.R. (2d) 339 at 343 (H.C.J.) (Reversed on other grounds: 21 O.R. (2d)
      797 (C.A.):

I
      am of the opinion that where there are two or more interests in land it
      is the land itself that must be assessed and not merely the owners interest
      in the land.  As in the present case, the owner often does not have the
      exclusive occupation of premises because it is held by the tenants.  Even
      if the rent charged by the owner is in line with general market rents,
      there is still an interest to a tenant.  Therefore, it is not just the
      market rent less the expenses of the owner that must be used in calculating
      the market value of the land, but also whatever the interest of the tenant
      is.  In many cases the tenants interest may be subject to certain variable
      adjustments.  It is quite obvious that if only the rent that is received
      by the owner is to be used as the basis of assessment, two buildings identical
      in construction and finishing could be assessed at different valuations.
      I use as an example an office building that is built as a shell and then
      rented by the owner to individual tenants with an obligation upon the tenant
      to finish the interior thereof.  Obviously, the rent received by the owner
      would be less than that of a similar office building which the owner constructs,
      finishes the interior and thereafter rents.  If only rents were considered
      in the two cases, although the buildings are identical, the assessment
      of one would be lower than the assessment of the other, even though in
      both cases a fair market rent was charged to the respective tenant.  Under
      a rental agreement, by merely casting the burden of cost of the repairs
      and finishing and decorating of a building in different directions, the
      assessment would differ although if the properties were being sold as complete
      units, including tenants interest, they should sell at identically the
      same price.  This is the nub of the difference in the arguments raised
      by the assessment commissioner and the owner of the property in the present
      case.  I am of the opinion that it is the total property and not its parts
      that form the basis of assessment.

[37]

This
      passage was applied in this province by Mr. Justice Murray in
Assessor
      of Area 23  Kamloops v. Trelco Enterprises Ltd.
(1991), Stated
      Cases, Case 308 (B.C.S.C.).  In
Trelco
Mr. Justice Murray
      held that the Board erred in failing to consider any value for the property
      over and above the shell rental of the building.

[38]

The
      Assessor also relies upon
Assessment Office v. Office Specialty
,
      [1975] 1 S.C.R. 677, a case of assessment of an industrial building for
      which no purchasers for the building in its existing use could be found,
      but which was suitable for the existing owner.  The Court held that the
      assessor was required to regard the owner as a possible purchaser and to
      consider what he would expend on a building to replace the one being valued.

[39]

The
      three cases,
Merkur
,
Trelco
and
Office
      Supply
, are quite different than that before this Court.
Office
      Supply
is a case discussing a property uniquely suited to the owners
      use.  In the
Trelco
case, it appears that the Assessment
      Appeal Board did not grapple with evidence of the market value of the tenant
      improvements, unlike the case at bar.  Likewise
Merkur
appears
      to be a case in which the Board simply did not address the value of tenant
      improvements.

[40]

In
      contrast to those three cases, the Board in the case at bar expressly considered
      evidence of value of the tenant improvements and reached its decision attributing
      value to some, but not all, on the basis of that evidence.  In many situations
      tenant improvements may enhance market value.  However, the evidence relied
      on by the Board was that, as a general proposition, tenant improvements
      to these buildings did not have this effect.  Based on evidence before
      it the Board made a finding of fact which, being based in evidence, is
      not one with which this Court may interfere.

[41]

It
      follows from this discussion that I do not consider that the Board failed
      to value the entire property as it was made known to it on the evidence.  As
      to question 1, I would answer that the Board did not commit the error of
      failing to value all the lands and improvements.

[42]

Question
      2 in my view does not accurately reflect the decision of the Assessment
      Appeal Board.  The Board said only, in discussing the general absence of
      market value for tenant improvements, the interest [to a particular tenant]
      is more in the nature of value to owner.  In the context of the evidence,
      this was a fair simile and a reasonable conclusion.  In my view the statement
      does not reflect an error of law.  As to question 2, I would answer that
      the Board did not err in law in comparing the tenants interest to value
      to owner.

[43]

Questions
      3 and 4 address the reasonableness of findings of fact.  I have concluded
      that there was an evidentiary foundation to support both the finding that
      only relatively new tenant improvements add market value to the building
      and that the best way to capture the value was to include the amortized
      value of tenant improvement allowances in an analysis of a particular lease
      transaction.  I would answer no to questions 3 and 4.

[44]

I
      turn now to questions 5 and 6.  They relate to the capitalization rate.  For
      convenience I repeat them:

5.    Did the
      Board err in law when it held it was establishing equity by using only
      the capitalization rate applied by the Assessor to the income streams for
      similar office buildings in the years in question, when those income streams
      had been determined using a different set of assumptions than those that
      were used in determining the income stream of the subject buildings.

6.    Did the Board err in law when in determining the
      actual value of the subject buildings it adopted a capitalization rate
      determined by using one set of assumptions as to market rents and applied
      that capitalization rate to a market rent determined by using a different
      set of assumptions?

[45]

The
      Assessment Appeal Board rejected the capitalization rate analyses put forward
      by both the appraiser for the Assessor and the appraiser for the respondents,
      and instead based its conclusion on the capitalization rate found in the
      Jones Report, modified slightly to adjust for the type of income generated
      by this property.  The Board held:

The
      Board has concluded that the capitalization rate analysis of both appraisers
      must be rejected in favour of a capitalization rate in line with those
      rates used by the Assessor for comparable buildings in each year to ensure
      equity.  Given the difficulties the Board has with the capitalization rate
      evidence of both appraisers, the Board finds it would not be fair or consistent
      to apply capitalization rates to the Pacific Centre Buildings that are
      lower than the rates applied to comparable downtown office buildings in
      each assessment year.

[46]

The
      Assessor contends that the capitalization rate determined by the Board
      was not based upon the same assumptions as were used in determining the
      market rent, and relies upon the reasons for judgment of Mr. Justice Cumming
      in
Westcoast Transmission Company Limited
,
supra
,
      at 1348:

I stated above that the
      concepts used, in developing capitalization rates for application to the
      subject, should be used consistently.  Thus it makes no sense to develop
      a capitalization rate on one set of assumptions about long-term vacancy
      rates, long-term rents, and long-term expenses, and then apply that rate
      to the income of the subject property that is not derived in the same way.

The
      choice of a vacancy rate goes directly into the calculation of gross income,
      from which the appraiser then deducts expenses to arrive at an estimate
      of net income.  All of these factors, for consistency, should be used in
      the same manner as they were used in the study of comparables which resulted
      in the development of the capitalization rate.  To do otherwise is to offend
      appraisal theory, and is likely to produce a mistaken result.

[47]

In
      like vein are the reasons for judgment in
Lau
,
supra
,
      at 2675:

.
      . . It is my view, notwithstanding an extremely able argument by Mr. Lau,
      one which would have done most lawyers proud, that it is not consistent
      to apply a capitalization rate determined on one basis, to operating income
      determined on another.  I accept and concede that the capitalization rate
      to be used is a matter for decision by the Board, but it has been demonstrated
      to me, or at least to my satisfaction, that the use of the capitalization
      rate developed by the Assessor, the seven and a half percent rate, to a
      net operating income for the subject property determined in a manner entirely
      different than that used in respect of the comparables by the Assessor
      to develop that rate is an error in principle and therefore an error in
      law, and reviewable.

[48]

Rent,
      vacancy rates and expense allowances interplay with capitalization rates
      to generate the actual value of property.  Here the capitalization rates
      used came from a schedule of rates for other office buildings found in
      the Jones Report.  The Assessor contends that because the method of determining
      market rent did not derive from the parties but flowed from the Boards
      own conclusions, because no party provided evidence of the appropriate
      capitalization rate to apply to those values, and because the economic
      rent in the Jones Report was developed by a different analysis than was
      used here, the capitalization rate for the buildings referred to in that
      report therefore cannot be used here without creating an inequitable result.

[49]

The
      respondents reply that the Board used the only reliable evidence before
      it.  Having rejected the evidence of both appraisers for reasons that are
      not challenged in this Court, the evidence remaining was the Jones Report
      put in evidence as part of the Assessors case.  The respondents say that
      while consistency of determination of market rent, vacancy rate and expense
      allowance influence the selection of capitalization rate, there was no
      disagreement between the parties over either the vacancy rate or expense
      allowance.  The expense allowance they agreed upon was the same as that
      used in the Jones Report.  The vacancy rate they agreed upon, say the respondents,
      was lower than that used in the Jones Report, which would not be a basis
      on which to adjust the capitalization rate to create higher value.  In
      other words, they say the assumptions used in this case would only suggest
      an adjustment to the capitalization rate favourable to the respondents.  They
      contend that use of that rate, potentially unfavourable to them, cannot
      be a basis of complaint by the Assessor who contends for a higher, not
      lower, assessment.

[50]

The
      Assessor also contends that because it was not aware of the basis the Board
      would use for valuing the tenant improvements, the evidence on capitalization
      rates did not address the basis of valuation the Board selected and that
      the Board therefore erred in failing to call for further evidence.  With
      respect, the positions before the Board ranged from attribute no great
      value to tenant improvements as advanced by the respondents to attribute
      significant value as advanced by the Assessor.  It was for the parties
      then to address evidence of the appropriate capitalization rates for those
      possibilities and the possibilities in between.  In my view there was no
      obligation on the part of the Board to call for further evidence.

[51]

I
      repeat that the task of a Court is not to make fresh findings of fact.  The
      issue on these questions is only whether inconsistency is demonstrated
      such that one can say either that the evidence could not reasonably found
      the findings of fact or that an error of law is demonstrated.

[52]

The
      chambers judge said in his reasons for judgment:

[12]  That, I conclude, is not a question of law.  It has to do
      with the pertinence of evidence, its weight and applicability.  The
      Board had a range of evidence before it, and chose what it was among that
      evidence on which it should act.  This was not a matter of using inconsistent
      data when there were consistent
and credible
data to hand, it was
      a matter of using the best available evidence.  The determination
      of which evidence is most persuasive is within the prerogative of the Board
      and is a decision of fact.  It does not involve a question of law.  [emphasis
      in original]

[53]

In
      my view these comments are correct, the Board did not err in basing its
      conclusion on the evidence before it.  The parties presented their evidence
      on the issue of capitalization rate.  The Board found market rent between
      the extremes of the parties and on the evidence available determined the
      applicable capitalization rate.  In doing so it demonstrated an awareness
      of the correct considerations.

[54]

Further,
      it is not apparent to me that any inconsistency, if there be one, is other
      than to the prejudice of the respondents who do not complain of the result.  I
      would not accede to this basis of appeal.

[55]

It
      follows that I would answer no to questions 5 and 6.

Conclusion

[56]

In
      conclusion, I would allow the appeal and answer the questions on the stated
      case as follows:

as to question 1, I would answer
      that the Board did not commit the error of failing to value all the lands
      and improvements;

as to question 2, I would answer
      that the Board did not err in law in comparing the tenants interest to
      value to owner; and

as
      to questions 3, 4, 5 and 6, I would answer no.

The Honourable
      Madam Justice Saunders

I AGREE:

The
      Honourable Madam Justice Southin

I AGREE:

The Honourable Mr. Justice
      Thackray


COURT OF APPEAL
        FOR BRITISH COLUMBIA

Citation:

Port
                Chevrolet Oldsmobile Ltd. (Re),

2004 BCCA
            37

Date: 20040126

Docket: CA030337; CA030338

In the Matter of the
Bankruptcy and Insolvency Act

and

In the Matter of the Proposal of
Port Chevrolet Oldsmobile Ltd.

Before:

The Honourable
            Madam Justice Ryan

The Honourable
            Madam Justice Newbury

The Honourable
            Madam Justice Levine

D.G. Nygard

Counsel for the Appellant
Minister of National Revenue

J.F. Grieve

Counsel for the Respondent
Port Chevrolet Oldsmobile Ltd.

B.J. Ingram

Counsel for the Respondent
PricewaterhouseCoopers as Trustee

Place and
            Date of Hearing:

Vancouver, British Columbia

November 24, 2003

Place and
            Date of Judgment:

Vancouver, British Columbia

January 26, 2004

Written
              Reasons by
:

The Honourable
            Madam Justice Newbury

Concurring Reasons by:

The Honourable
            Madam Justice Levine

Concurred
              in by:

The Honourable
            Madam Justice Ryan

Reasons for Judgment of the Honourable Madam Justice
        Newbury:

[1]

The
        respondent Port Chevrolet Oldsmobile Ltd. ("Port") has carried
        on business as an automobile dealership in the lower mainland of British
        Columbia for some years.  On July 9, 2002, the appellant Canada Customs
        and Revenue Agency ("CCRA") issued a Notice of Assessment to
        Port under the
Excise Tax Act
, R.S.C. 1985, c. E-15, for
        the sum of $16,436,009.96 in respect of a 43-month period ending in October
        1998.  According to the Notice, the assessment represented "adjustments
        to input tax credits" of $8,651,572.86, a penalty of $3,201,994.73,
      interest of $2,419,549.16 and "other penalty" of $2,162,893.21.

[2]

Port
        denied liability for the amount assessed and began preparing a Notice of
        Objection to Assessment in the form required by the
Excise Tax Act
.  The
      Objection stated in part:

2.    The Taxpayer
        was fraudulently induced by Sameer Mapara to purchase vehicles that it
        believed existed (the "Vehicles") from one or more companies
      associated with Sameer Mapara ("Mapara's Companies").

3.    The Vehicles
        were purchased during the reporting periods from April 1, 1995 to October
      31, 1998 (the "Reporting Periods").

4.    The Taxpayer
        paid goods and services tax ("GST") to Mapara's Companies on
        the purchase of the Vehicles and claimed input tax credits ("ITCs")
      in respect of that tax.

5.    The Taxpayer
        was then fraudulently induced by Mapara to resell the Vehicles to Mapara's
      Companies for export.

6.    The Taxpayer
        did not collect GST on the subsequent resale of Vehicles to Mapara's
      Companies as it understood that the Vehicles were being purchased for export.

. . .

11.   The Taxpayer was defrauded by Mapara and Mapara's
        Companies into believing that the Vehicles existed and were owned [by]
        Mapara's Companies and were being acquired by Mapara's Companies for
      export.

Port also took the position that many of the amounts
        assessed were statute-barred, that it was entitled to certain rebates
      against the tax assessed, and that CCRA had incorrectly calculated various
      tax
        credits to which it was entitled.  Further, Port contended that it had
        exercised due diligence in determining its net taxes and had not knowingly
        or under circumstances amounting to gross negligence, consented to or
        acquiesced in the making of a false statement or omission in a return,
        and was therefore
        not liable to pay penalties under s. 285 of the
Excise Tax Act
.  The
      Notice of Objection was delivered to CCRA on or about September 12, 2002.

[3]

There
        was no evidence that CCRA invoked the procedure available under s. 316
        of the
Excise Tax Act
and certified an amount payable by
        Port.  (Where a certificate is registered in the Federal Court, it is said
        to have the same effect as if it were a judgment for a debt in the amount
        certified.)  However, execution proceedings of some kind were evidently
        instituted by CCRA against Port, leading General Motors of Canada, Port's
        inventory supplier and financier, to express concern about the company's
        viability.  Sensing that it could be out of business unless it took action,
        Port decided to make a proposal to its creditors under the
Bankruptcy
        and Insolvency Act
, R.S.C. 1985, c. B-3 as amended (the "
BIA
").  Port
        issued notice of its intention to do so on July 10, 2002, which had the
        effect of staying all proceedings against it pursuant to s. 69 of the
BIA
.  Port's
        solicitors also began correspondence with its banker, with General Motors,
        and with CCRA in hopes of arriving at some arrangement whereby Port could
      remain in business and pursue its objection to the assessment.

[4]

The
        final form of Port's proposal to creditors (filed on October 4, 2002)
      was unusual, but reflected the fact that but for the CCRA assessment, Port
        was not experiencing any particular financial difficulty.  The proposal
        contemplated that the company would create a "pool" of not less
        than $250,000 by depositing with the Trustee 50 percent of profits earned
        during the ensuing five years.  From this pool the Trustee would pay
        the claims of CCRA for any outstanding source deductions under the
Income
        Tax Act
, R.S.C. 1985, c. 1 (5th Supp.), unsecured creditors with
        claims of $400 or less in full, and other unsecured creditors pro rata
        according to the amounts of their claims.  Preferred creditors were to
        be paid in full in accordance with s. 136(1) of the
BIA
in
        priority to unsecured creditors, and secured creditors were to be paid
        in accordance with already existing arrangements, or as might be "arranged
        between the Company and each of those parties outside of the terms of this
        Proposal."  The proposal also contemplated that if CCRA's assessment
        under the
Excise Tax Act
was eliminated or reduced "in
        accordance with the applicable process of appeal", CCRA would repay
        to the Trustee "any amount to which CCRA would not be entitled if
        its Proof of Claim either did not reflect the Assessment or reflected it
        in the reduced amount, as applicable, and the Trustee may adjust any subsequent
        dividends to CCRA accordingly."  The proposal was silent about what
        would happen if Port's objection to the assessment was not ultimately
      successful.

[5]

The
        meeting of creditors to vote on the proposal was scheduled for October
        25, 2002.  With the notice of meeting, creditors received the Trustee's
        preliminary report on Port's affairs.  It was prepared on the assumptions
        that (i) Port could either meet its obligations to the business creditors
        or negotiate compromises with them, (ii) it could "successfully deal
        with the impact" of the CCRA assessment, and (iii) it would be able
        to continue operating under the General Motors dealer's agreement.  Based
        on these assumptions, and on its review of Port's assets, the Trustee reported
        that a forced liquidation in bankruptcy would not provide sufficient funds
        to make any payment on account of the claims of preferred or unsecured
        creditors.  The Trustee therefore recommended that the creditors accept
        the proposal which, if the underlying assumptions were correct, would
        result in the payment in full of all preferred creditors, the continued
        employment
        of Port's 55 employees and, depending on its success in appealing the
      CCRA assessment, full or partial recovery to unsecured creditors.

[6]

Also
        accompanying the notice of meeting and the Trustee's report was a letter
        to creditors dated October 3, 2002 from Port's president, Mr. Michael
      Wolfe.  He
      stated in part:

Most of you know how
        we ended up in this situation.  Canada Custom[s] and Revenue Agency ("CCRA")
        has assessed Port for an amount of some $16,000,000 in connection with
        GST related to [sic] transactions which took place several years ago.  Port
        obviously does not have the money to make that kind of payment and we do
        not think that we are liable to pay it in the first place.  We are appealing
        that CCRA assessment, but until that appeal is resolved, CCRA's claim
      is there.

When CCRA issued its $16,000,000 assessment, they also took steps against
        some of Port's assets, namely accounts receivable.  Had we done nothing,
        Port's cash flow would have been eliminated and we would have had to
      shut down.

[7]

In
        the weeks leading up to the creditors' meeting, solicitors for Port and
        CCRA discussed the proposal in correspondence, but CCRA declined to indicate
        ahead of time how it would vote at the meeting.  The day before the meeting,
        CCRA forwarded to the Trustee a proof of claim in "Form 31" (prescribed
        by the Superintendent under the
BIA
) in the amount of $15,864,279.83.  The
      material portions of the Form 31 stated:

3.    That the debtor
        was, at the date of the proposal namely July 10, 2002, and still is, indebted
        to the creditor in the sum of $15,864,279.83 as specified in the statement
        of account attached and marked Schedule "A", after deducting
      any counterclaims to which the debtor is entitled.

4.    (X) UNSECURED
      CLAIM of $15,864,279.83.

That in respect of this debt, I do not hold any assets of the debtor
      as security and

(X)   Regarding the amount of $15,864,279.83, I do not
      claim a right to priority.

5.    That, to the
        best of my knowledge, the above-named creditor is not related to the
      debtor within the meaning of section 4 of the Bankruptcy and Insolvency
      Act.

6.    That the following
        are the payments that I have received from, and the credits that I have
        allowed to the debtor within the three months immediately before the
      date of the initial bankruptcy event within the meaning of Section 2 of
      the
      Bankruptcy and Insolvency Act.

NIL

Attached as Schedule "A" to the Form 31 was
        a statement of account consisting of columns of dates and a net tax amount,
        interest, penalty and a "period total" for each date.  The total
      of "period totals" shown on Schedule "A" was $15,874,279.83.

[8]

The
        creditors' meeting was duly held on October 25.  According to the minutes
        of the meeting, the Trustee advised those present that CCRA's claim was "not
        proven due to an unresolved appeal and Notice of Objection filed by the
        Company.  Therefore, its claim had been disallowed and valued at nil for
        purposes of the meeting and . . . CCRA had been informed of this just prior
        to the meeting."  After some discussion of the proposal and an adjournment,
        the chair of the meeting stated that for purposes of voting on the proposal,
        CCRA's claim would be valued at nil.  The chair declined a request by CCRA
        for a further adjournment to seek the opinion of legal counsel.  The
        proposal was approved by creditors representing 99 percent of the total
        claims in
        value and 98 percent of the creditors by number, excluding CCRA in both
      cases.

[9]

The
        Trustee's formal Notice of Disallowance was forwarded in due course to
      CCRA.  It stated the following reasons for the disallowance:

1.    Your Proof
        of Claim is unsupported by any evidence for an alleged debt of $15,864,279.83
        owed by Port on account of Goods and Services Tax.  Subsection 124(4)
        of the BIA requires a proof of claim to include not only a statement
        of account
      but also the evidence by which the statement of account can be substantiated.

2.    Based on
        a review by the Trustee of the Notice of Objection filed with CCRA on
      behalf of Port and dated September 12, 2002, the Trustee is not persuaded
      that
        Port is in fact indebted to CCRA and the Trustee would require but is
      not aware of any adjudication in favour of CCRA resolving the claim it
      is asserting
      against Port.

3.    In particular,
        based on the contents of the Notice of Objection, it appears that Port
        paid a significant amount of money to a third party in connection with
        what Port believed to be the purchase of vehicles owned by the third party
        and claimed an equivalent figure as an Input Tax Credit, thereby reducing
        the amount payable by Port to CCRA on account of collected Goods and Services
        Tax.  Port alleges that it was fraudulently induced by a Sameer Mapara
      to purchase vehicles from him and his associated companies.

4.    In its
        Notice of Objection Port raises several grounds of objection.  First, Port
        claims that all assessment of reporting periods beginning April 30, 1996
        and ending May 31, 1998 are statute-barred under subsection 298(1) of the
        Excise Tax Act.  The total period covered by the CCRA assessment extends
        from April 30, 1996 to October 31, 1998.  Second, Port claims that Input
        Tax Credits were claimed by it in respect of amounts paid as or on account
        of tax in circumstances where none was actually payable, and that Port
        is therefore entitled to have CCRA apply rebates for such payments against
        the net tax assessed against Port.  Third, Port objects to the substantial
        penalties claimed by CCRA.  Finally, Port takes issue with the calculations
        of the amount of Input Tax Credits claimed by Port.  The CCRA Proof of
      Claim does not address any of these issues raised by Port.

5.    Such other reasons as the Trustee may subsequently
      determine are applicable.

[10]

By
        the time CCRA received this notice, it had already applied to the Supreme
        Court of British Columbia to appeal the disallowance pursuant to s. 135(4)
        of the
BIA
.  The Court's order dismissing that appeal is
      the first of the two orders now being appealed to this court.

The First Chambers Judgment

[11]

Madam
        Justice Neilson dealt in Chambers below with the first appeal.  She noted
        in her Reasons (see [2002] B.C.J. No. 3206) that the appeal raised two
        basic questions, the first of which I regard as one of statutory compliance
      and the second as more substantive:

1.    Were the trustee
        and the Chair in error in disallowing the claim for non-compliance with
      s. 124 of the
Bankruptcy and Insolvency Act
?

2.    Did the trustee and Chair err in categorizing CCRA's claim as contingent
      and of no value for the purpose of voting?  [para. 18]

On the first question, she started with the proposition
        that the provisions of the
BIA
dictating the form of proofs
        of claim are "mandatory and to be strictly construed", and that
        a proof of claim must be sufficient to enable a trustee to make an informed
        decision on its merits.  In this regard, she cited
Re G. Totton Publishers
        Ltd.
(1975) 20 C.B.R. (N.S.) 140 (Ont. S.C.) and
Re Riddler
(1991)
        3 C.B.R. (3d) 273 (B.C.S.C.).  She then described the proof of claim
      filed by CCRA as follows:

CCRA's proof
        of claim follows the format of Form 31, and attaches a statement of account
        that shows a debt occurring between 1995 and 1998 of $15,864,279.83.  It
        includes no reference to the assessment, or to any other basis for this
        account.  There is nothing in the proof of claim that could be construed
        as evidence in support of the claim.  It makes no mention of the Notice
        of Objection.  Nor does it set out any explanation for the discrepancy
        of almost $600,000 between the debt described in the proof of claim and
        the assessment that was delivered on July 9, 2002.  In paragraph 6, where
        it is required to state payments from, or credits to, the debtor in the
      three months preceding the date of bankruptcy event, the response is "nil".

In my view, these defects provided a lawful basis for the trustee
        to exercise his discretion in favour of disallowing the claim pursuant
        to s. 135(2).  There was nothing in the proof of claim on which he could
      make an informed decision as to its merits.  [paras. 24-5]

[12]

Further,
        Neilson J. noted, CCRA had provided no explanation for the discrepancy
        between the amount claimed in the Notice of Assessment and that in the
        proof of claim.  She found nothing in the proof of claim itself or in the
        evidence on the appeal to permit her to infer that it arose from credits
        made to Port since July 10, 2002.  CCRA's other arguments  that the Trustee
        should have required further evidence under s. 135(1), that CCRA had been
        led to expect that formalities would not be strictly observed, and that
        the Trustee should generally have extended greater "latitude" to
      the CCRA  were also rejected.  The Chambers judge reasoned:

I find it difficult
        to believe they would have led CCRA to expect any leniency with respect
        to the formalities required to permit it to vote against the proposal.  Port
        had consistently and strenuously denied the basis for CCRA's debt.  Its
        proposal was necessitated by CCRA's action in executing against its assets.  Port
        was fighting for its economic survival.  CCRA, as the largest potential
        unsecured creditor, carried effective veto power over the proposal, and
        would not advise Port if it was in favour of it prior to the meeting.  In
        my view, CCRA would be naive to think it could deliver an inadequate
        proof of claim in these circumstances, the day before the meeting without
        it
      being challenged.

I recognize
        that
Re Totton
,
supra
, suggests there should be
        some latitude given to creditors in filling out proofs of claim, as many
        are
        completed by creditors without the benefit of legal assistance.  I find
        those comments have limited application, however, to sophisticated and
      experienced creditors such as CCRA.  [paras. 30-1]

Considering also that trustees are experienced professionals
        who have a discretion to exercise, the Chambers judge concluded that
      the Trustee in this case was within its discretion in disallowing CCRA's
      Proof
        of Claim under s. 135(2).  She stated she would dismiss the appeal
      on that ground alone.

[13]

Neilson
        J. went on, however, to examine CCRA's submission that the Trustee and
        the chair of the meeting had erred in categorizing CCRA's debt as contingent
        and of no value.  On this issue, CCRA relied heavily on ss. 299(3), 299(4),
      313(1) and 315(2) of the
Excise Tax Act
, which provide:

299(3)
Assessment
          valid and binding
- An assessment, subject to being vacated on an
          objection or appeal under this Part and subject to a reassessment,
shall
        be deemed to be valid and binding
.

. . .

299(4)
Assessment
          deemed valid
- An assessment shall, subject to being reassessed or
          vacated as a result of an objection or appeal under this Part, be
deemed
          to be valid and binding, notwithstanding any error, defect or omission
        therein or in any proceeding under this Part relating thereto
.

* * *

313(1)
Debts
          to Her Majesty
 All taxes, net taxes, interest, penalties, costs
          and other amounts payable under this Part are debts due to Her Majesty
          in right of Canada and are recoverable as such in the Federal Court or
          any other court of competent jurisdiction or in any other manner provided
        under this Part.

* * *

315(2)
Payment of Remainder
 Where the Minister mails a
        notice of assessment to a person, any amount assessed then remaining
      unpaid is payable forthwith by the person to the Receiver General.  [Emphasis
      added.]

[14]

As
        well, CCRA cited the decision of the Ontario Court of Appeal in
Re
        Norris
(1989) 75 C.B.R. (N.S.) 97, in which a trustee in bankruptcy
        had disallowed a proof of claim filed by the Crown against an individual,
        Mr. Norris, on the basis of a notice of assessment issued against a corporation
        pursuant to s. 227(10) of the
Income Tax Act
.  Mr. Norris
        was a director of the corporation and if the Crown's claim against the
        corporation was valid, would be jointly and severally liable for the assessed
        amount.  He made an assignment in bankruptcy.  The Crown issued a notice
        of assessment in the same amount against him personally.  The trustee was
        not satisfied with the claim filed by the Crown and asked for more information.  The
        Crown supplied the notice of assessment directed to Mr. Norris, but the
        trustee was still not satisfied and asked for Revenue Canada's working
        papers.  Neither these papers nor any further details were supplied,
      leading the trustee to disallow Revenue Canada's entire claim.

[15]

The
        Ontario Court of Appeal ruled that although it had been "within the
        power" of the trustee to "call for evidence to support the proof
        of claim", the trustee's request had been "fully answered by
        the notice of assessment".  After citing s. 152(8) of the
Income
        Tax Act
(the terms of which are similar to those of s. 299(4) of
      the
Excise Tax Act
quoted above), the Court stated:

A taxpayer who
        objects to an assessment may file a notice of objection pursuant to s.
        165(1) of the Income Tax Act and if necessary proceed to exercise rights
        of appeal to the Tax Court and to the Federal Court.  When the trustee
        in bankruptcy wishes to question the validity of an assessment against
        a bankrupt he, like anyone else, must seek his remedy within the Income
        Tax Act: see
Re Carnat Const. Co.
and
Re Selkirk
(1972),
      17 C.B.R. (N.S.) 302 (Ont. S.C.).

To hold that
        the trustee in bankruptcy can disallow an assessment made pursuant to the
        Income Tax Act would be tantamount to clothing the trustee with the powers
        of the Tax Court.  No interpretation of the Bankruptcy Act can support
      such a conclusion.

In the result, the appeal is allowed and the disallowance is set
        aside and the trustee in bankruptcy is directed to allow the claim filed
        by the Crown.  Such allowance of the claim is, however, without prejudice
        to the right of the trustee in bankruptcy to proceed with any right he
      may have under the Income Tax Act.  [at 99]

[16]

However,
        the Chambers judge in the case at bar found
Re Norris
(and
Re
        Bateman
(1998) 10 C.B.R. (4th) 197 (N.S.S.C.)) to be distinguishable
      from this case.  In her analysis:

Those authorities
        deal with a trustee managing a bankrupt estate, in which the assets were
        vested in the trustee.  There had evidently been no challenge to the assessment
        by the debtor prior to bankruptcy.  Nor had the trustee filed a notice
      of objection.

I find the circumstances here quite different.  The debtor is not
        yet bankrupt.  It was a profitable business with over 50 employees before
        the assessment and is now diligently pursuing a proposal under the
Bankruptcy
        and Insolvency Act
,
which is the only course left open to
        it to avoid a bankruptcy and continue to operate, in the face of an assessment
        that it claims is invalid.  Neither the debtor nor the trustee are seeking
        to avoid the appeal procedures outlined in the
Excise Tax Act
.  Instead,
        the debtor is vigorously pursuing them.  The problem is that those procedures
        could not be completed before the first creditors' meeting.  Port has evidently
        convinced the trustee that there is merit to its objection.  Even CCRA's
        representative, Mr. O'Connell, has conceded to the trustee that one possible
        outcome of Port's challenge may be a nil value to CCRA's claim.  [paras.
      40-1]

She also noted that the Court in
Re Norris
had
        relied on
Re Carnat Construction Co
.
Ltd.
(1958)
        37 C.B.R. 47 (Ont. S.C.), where Smily J. had stated that although any challenge
        to an income tax assessment made by a trustee in bankruptcy must be pursued
        through the appeal process in the
Income Tax Act
, there was
      also

. . .
no question that
The

Bankruptcy Act
provisions
          must be complied with, by the filing of proof of claim by the Crown
with
          respect to income tax, and that this assessment may be disallowed by
          the Trustee, and that in such event the Crown is called upon to proceed
          under the provisions of
The

Bankruptcy Act
and appeal
        from that disallowance.  [at 48; emphasis added.]

[17]

Relying
        on this passage, Neilson J. accepted that the debtor or trustee is bound
        to follow the appeal process in the applicable taxing statute to ascertain
        the final amount of any debt owed to CCRA.  On the other hand, if CCRA
        wished to "participate in concurrent proceedings under the
Bankruptcy
        and Insolvency Act
", it was bound to comply with that statute
        with respect to the proof of its claim and, she added, "that compliance
        includes recognition of the trustee's powers to determine a claim is contingent
        and value it accordingly."  (para. 43.)  She found additional support
        for this conclusion in s. 4.1 of the
BIA
 a provision not
        referred to in
Re Norris
 which states that the
BIA
binds
        Her Majesty in Right of Canada, and in the fact that whereas the
Income
        Tax Act
expressly subordinates the
BIA
to its terms,
      the
Excise Tax Act

does not do so.

[18]

The
        Chambers judge also saw substantial practical reasons for permitting
      Port to continue operating pending resolution of the excise tax appeal.  That
        appeal might take a year  during which the CCRA was to be entitled to
        receive "the lion's share" of profits set aside for the unsecured
        creditors under the proposal.  On the other hand, substantial prejudice
        would accrue to Port, its employees and its other creditors if it were
        prematurely forced into bankruptcy on the strength of an assessment that
        might be successfully challenged.  In the result, she found that the Trustee
        had not erred in categorizing CCRA's claim as contingent and of no value.  She
      dismissed the appeal on this ground as well.

The Second Chambers Judgment

[19]

The
        second order under appeal in this court was made five days later, on
      November 18, 2002, by Mr. Justice Groberman.  After hearing counsel for Port, the
        Trustee and the Minister of National Revenue, he approved Port's proposal
        pursuant to s. 59 of the
BIA,
but postponed the coming
        into effect of his order until noon on November 21 in order to allow
        CCRA to seek leave to appeal the rejection of its claim, to appeal his
        order,
        and to seek a further stay.  However, CCRA did not seek a further stay
        prior to November 21, so that Groberman J.'s order became effective as
      of that date.

[20]

On
        November 22, CCRA filed notices of appeal in this court in respect of the
      two orders.

On Appeal

[21]

In
        this court, much of CCRA's argument was taken up with the second branch
        of Neilson J.'s Reasons for Judgment  the conclusion that it lay within
        the discretion of the Trustee to rule that CCRA's claim was a contingent
        one and to assign it a nil value.  The basis of CCRA's submission was
        again that because s. 299(4) of the
Excise Tax Act
provides
        that subject to being vacated on an objection or appeal, a notice of
        assessment
        shall be deemed to be "valid and binding", it was not open to
        the Trustee to rule that CCRA's claim was anything other than valid and
        provable in the amount stated.  In response, the Trustee and Port contend
        that, to quote from Port's factum, the fact that the Crown has "conferred
        upon its collectors the right to assess an amount outstanding subject to
        objection or appeal cannot turn something which is clearly contingent into
        something which is not contingent."  Counsel notes that even CCRA's
        representative at the creditors' meeting acknowledged that ultimately,
      CCRA's claim might amount to nothing.

[22]

The
        issue thus framed is a difficult one of principle.  With all due respect
        to the Court in
Re Norris
, it is not answered by a general
        statement to the effect that the process for challenging an assessment
        under the
Excise Tax Act
is the process prescribed by that
        statute.  That principle is not in question here: unlike the corporate
        taxpayer or its director in
Norris
, Port
is
proceeding
        under the
Excise Tax Act
with its objection to the assessment.  The
        whole purpose of the proposal was apparently to secure time in which to
        carry out that process.  In the meantime, the statutory validity of the
        assessment unless and until Port succeeds in having it set aside, does
        not necessarily mean that in
fact
, CCRA's claim may not be highly
        questionable or of doubtful "value".  (I express no opinion on
        whether that is so in this case.)  The real question is the nature of
        the determination made by a trustee in examining and assessing proofs
        of claim
        under the
BIA
.  Does the trustee make a determination of
fact
concerning
        the validity of (all) the claims filed against the debtor, or is it bound
        to rule as a matter of
law
that an assessment under the
Excise
        Tax Act
, no matter how questionable it might be in fact, is valid
        and fully binding on the debtor for purposes of the
BIA
?  CCRA
        contends that the answer is simple: s. 299 of the
Excise Tax Act
prevails
        notwithstanding the particular facts or equities surrounding the claim,
        and the trustee is obliged to accord it 'full faith and credit', even
        though the assessment may later be set aside.  The other view, however,
        is that the
BIA
and
Excise Tax Act
may be
        reconciled by distinguishing the commercial judgements made in the "real" world
        by a trustee under the
BIA
, from the artificial "deeming" provisions
        of the
Excise Tax Act
which may be invoked by CCRA without
      regard for the objection and appeal process provided in the same statute.

[23]

Unfortunately,
        no appellate authority was brought to our attention considering this
      question, or considering how the two statutes relate to each other in this
      regard.  In
        the absence of direct authority, I prefer to decide this case on a more
        technical basis  the Chambers judge's conclusion on the first branch
      of her reasons that CCRA's proof of claim did not comply with s. 124 of
      the
BIA
.  For
      convenience, I set out s‑ss. (1) and (4) thereof below:

124. (1)
Creditors
          shall prove claims
 Every creditor shall prove his claim, and
          a creditor who does not prove his claim is not entitled to share in
          any
        distribution that may be made.

. . .

(4)
Shall refer to account
 The proof of claim shall contain
        or refer to a statement of account
showing the particulars of the claim
and
        any counter-claim that the bankrupt may have to the knowledge of the creditor
and
        shall specify the vouchers or other evidence, if any, by which it can be
      substantiated
.  [Emphasis added.]

[24]

I
        did not understand CCRA to argue, and I do not read
Re Norris
to
        suggest, that when advancing a claim (whether for taxes due or otherwise)
        under the
BIA
, CCRA need not comply with the applicable
        provisions regarding proofs of claim.  (Indeed, I note that s. 124 was
        not mentioned by the Court in
Re
Norris.)  The ground of appeal stated
        by CCRA in its factum was whether CCRA's proof of claim had in fact been
        defective "such as to justify total disallowance of the claim."  (With
        respect to the latter phrase, I am not aware of any authority for the
        proposition that a defective claim could result in only a
partial
disallowance
        of the claim.)  This ground is inextricably tied to CCRA's argument that
        the Chambers judge failed to consider all the evidence before her  including
        evidence not before the Trustee  in deciding whether CCRA's proof of
      claim had met the requirements of s. 124.

[25]

All
        counsel seemed to be in agreement with CCRA's contention that its appeal
        of the Trustee's decision was a "trial
de novo
" such that
        CCRA could file further evidence in order to establish a provable claim
        in the court below.  The only authority cited on this point was
Re
        Eskasoni Fisheries Ltd.
(2000) 16 C.B.R. (4th) 173, a decision
      of a registrar of the Nova Scotia Supreme Court.  The Registrar stated:

Where a creditor appeals to the court from the decision of a trustee
        to disallow a claim that appeal will proceed by way of trial
de novo
.  While
        I have found no specific case or commentary that makes this point clear,
        it is clear from a review of the cases generally that a Judge or Registrar
        hearing an appeal from a trustee's decision is not required simply to proceed
        upon the information before the trustee.  In other words, on
        such appeals the court is entitled to accept and consider all evidence
      relevant to the claim.  [para. 17]

I note that the ability of the court to accept "new" evidence
        can operate in favour of either party: in
Eskasoni
,

a
        trustee was permitted to advance a separate and distinct basis for disallowing
        a claim on the appeal in addition to the basis previously advanced at the
      meeting.

[26]

Since
        counsel did not challenge
Eskasoni
, I frame the question
        before us to be whether, on the basis of the material before the Trustee, "as
        amplified" by the further evidence filed in the court below, the proof
        of claim filed by CCRA complied with s. 124.  Specifically, did the document "contain
        or refer to a statement of account showing the particulars" thereof,
        and did it specify the "vouchers or other evidence, if any, by which
      it could be substantiated"?

[27]

I
        agree with Neilson J. that the answer to these questions is "no".  As
        I have already described, CCRA's proof of claim consisted of a covering
        letter, a Form 31 and a Schedule "A" listing a series of assessments,
        penalties and interest charges.  I note that consistent with s. 124(4),
        the form prescribed for proofs of claim (presumably also prescribed by
        the Superintendent) is accompanied by an instruction that "The attached
        statement of account or affidavit must specify the vouchers or other evidence
        in support of the claim."  CCRA's proof of claim simply stated at
        paragraph 3 that Port was indebted to CCRA as of July 10, 2002 in the amount
        of $15,864,279.83 "as specified in the statement of account attached
        and marked Schedule 'A', after deducting any counterclaims to which the
        debtor is entitled."  No reference was made to allegations regarding
        Port's sale of non-existent vehicles to a fraudulent party or parties,
      nor to any evidence by which the claim could be substantiated.

[28]

As
        noted earlier, CCRA's Form 31 also stated that CCRA had not received
      any amount from the debtor within the three months preceding the proposal.  If
        this was correct, then even if the Notice of Assessment had been attached
        to the proof of claim, a discrepancy between the amount claimed ($15,864,279.83)
        and the amount stated in the Notice of Assessment ($16,436,009.96) would
        have been apparent.  On the other hand, there was affidavit evidence
        before the Chambers judge to the effect that Port
had
made payments
        in the usual course to CCRA within three months of making the proposal.  If
        this was correct, the Form 31 may have been inaccurate.  In either event,
        the Notice of Assessment would not have "fully answered" the
        question which no doubt arose in the Trustee's mind as to which amount
      was correct  unlike the situation in
Re Norris
,
supra
.

[29]

In
        its factum, CCRA suggests that these defects would have been cured had
        Neilson J. not "failed to consider the Assessment, the Statement of
        Audit Adjustments, the Notice of Objection, the Proof of Claim with Schedule
        'A' and the affidavit material in evidence before her."  With respect,
        there is little doubt that the Chambers judge considered the Proof of Claim
        and Schedule "A" before her.  There was also in evidence before
        her (but not before the Trustee) an affidavit of Mr. O'Connell, an employee
        of CCRA, who attached as exhibit "A" a copy of the Assessment
        dated July 9, 2002 and Port's Notice of Objection in turn dated September
        12, 2002.  The Notice of Objection had attached to it a "Statement
        of Facts and Reasons for Objection of Port Chevrolet Oldsmobile Ltd.",
        which had obviously been prepared by or on behalf of Port.  This document
        set out in general terms the allegation that Port had been defrauded by
        Mr. Mapara and his companies into believing that various vehicles existed
        and were being acquired by his companies for export.  It also advanced
        the other defences noted earlier in these Reasons.  Clearly, the Chambers
        judge considered this document, since she referred at several places in
        her Reasons to Port's objection to the assessment.  In any event, the
        Notice of Objection and the Statement of Facts and Reasons serve to cast
        doubt
      on CCRA's assessment  they do not support it.

[30]

The
        Statement of Audit Adjustments referred to in CCRA's factum was filed
      as an exhibit to the affidavit of Mr. Peerson, a member of the law firm
      acting
        for Port.  This document, prepared by CCRA, is a list of "tax changes" for
        each month covered by the assessment, stating in each case an amount and
        that "ITCs on export vehicles disallowed as they pertained to the
        purchases of non-existent vehicles or vehicles that were not owned by the
        alleged vendors.  Bills of lading (all fraudulent) were used to substantiate
        about 50% of these alleged exports."  Again, CCRA did not provide
        copies of the bills of lading "or other evidence, if any" by
        which the claim could be substantiated.  The Statement of Audit Adjustments
        is a series of conclusory accounts which could provide the Trustee with
        no assistance in carrying out his duty of determining the validity of
      the claim.

[31]

In
        these circumstances, I see no error in the Chambers judge's conclusions
        that the documents filed by CCRA in proof of its claim, as augmented by
        the documents described above, did not comply with s. 124(4) of the
BIA
.  I
        would therefore dismiss the appeal from Neilson J.'s order on that basis.  I
        would also dismiss the appeal from the order of Groberman J., which essentially
      followed upon Neilson J.'s order.

[32]

In
        view of my conclusion, it is unnecessary for me to deal with a fourth
      issue raised by the Trustee in its factum, namely whether, if CCRA had
      been successful
        on this appeal, the creditors' vote would be vacated or whether CCRA
      would simply have become entitled to share in any distribution under the
      existing
        proposal.  I leave that interesting question, as well as that raised
      on the second branch of Neilson J.'s Reasons, for another day.

The Honourable
Madam
      Justice Newbury

Reasons for Judgment of the Honourable Madam Justice
        Levine:

[33]

I
        have had the privilege of reading in draft form the reasons for judgment
        of my colleague, Madam Justice Newbury. I agree that the appeals should
        be dismissed on the ground that CCRA's proof of claim failed to comply
        with the requirements of s. 124 of the
BIA
. I also agree
        that the questions of whether a Trustee in Bankruptcy may determine that
        an assessment under the
Excise Tax Act
is "contingent" and
        how a successful appeal by CCRA would impact on the voting process for
      the proposal should be left for another day.

[34]

In
        my opinion, CCRA's failures to reconcile the amount claimed in its proof
        of claim with the amount claimed in its Notice of Assessment and to accurately
        record payments made by Port in the three months before the proposal were
        fatal to its claim. The additional evidence provided to Neilson J. did
        not remedy these defaults. For this reason, the Trustee was justified in
      rejecting CCRA's proof of claim.

[35]

While
        the factual circumstances in
Re Norris
differed in that the
        Trustee there was administering a bankrupt estate and no notice of objection
        had been filed, I agree with the decision of the Ontario Court of Appeal
        insofar as it determined that Revenue Canada was not required to produce
        its working papers to the Trustee to substantiate its proof of claim. In
        this case, in my view, CCRA was not required to refer in its proof of claim
        to the allegations of fraud that formed the basis for the Assessment or
        to provide copies of the bills of lading referred to in the Assessment.
        Nor, in my opinion, was CCRA required to refer or append to its proof of
      claim the Notice of Objection that had been filed by Port.

[36]

The
        question of whether the Trustee may determine, as a factual matter, that
        a claim by CCRA that complies in form with s. 124 of the
BIA
is
      of doubtful validity or value, remains open.

[37]

I
      would dismiss the appeals.

The Honourable
      Madam Justice Levine

I Agree
:

The Honourable
      Madam Justice Ryan


COURT OF APPEAL FOR BRITISH COLUMBIA

Citation:

Bedwell v. McGill,

2004
            BCCA 86

Date: 20040127

Docket: CA30758

Between:

Janice Marie Bedwell

Respondent

(
Plaintiff
)

And

Thomas W. McGill

Appellant

(
Defendant
)

And

Maureen P. Currie

Respondent

(Third Party)

Before:

The
            Honourable Madam Justice Levine

(In
            Chambers)

Oral Reasons for Judgment

G.
            Ritchey

Counsel for the Appellant

F.
            Hayman

Counsel for the Respondent

Place
            and Date:

Vancouver, British Columbia

27 January 2004

(Leave to appeal)

[1]

LEVINE,
          J.A.:
This
          is an application to appeal the order of Mr. Justice Melvin made following
        a summary trial pursuant to Rule 18A of the
Supreme Court Rules
.

[2]

The
        issue before Mr. Justice Melvin was the cause of a fall taken by the
      plaintiff the day following a motor vehicle accident and whether the injuries
      sustained
        in the fall were causally related to the injuries suffered in the motor
        vehicle accident.  Mr. Justice Melvin found on his review of the evidence
        that the fall was causally related to the injuries caused by the motor
        vehicle accident. The defendant, the driver of the other motor vehicle,
      brings this application for leave to appeal.

[3]

The
        primary ground for the application for leave is the allegation that the
        trial judge erred in coming to the conclusion that he did, on the ground
        that there is no evidence to support the inferences he drew.  The evidence
        before him included an affidavit of the plaintiff, portions of the examination
        for discovery of the plaintiff by the third party (some of which was tendered
        by the defendant in support of its case) and medical reports of two doctors,
        the plaintiffs family doctor and a specialist who examined her complaints
        of pain in her ear.  Also in evidence were the plaintiffs statements
        to the insurance adjuster and affidavits of witnesses who were present
        at
        the house where the fall took place but did not directly witness the
      fall.

[4]

The
        plaintiffs car was spun 180 degrees in the motor vehicle accident.  Following
        the accident, she reported symptoms of dizziness, headache and a pain in
        her ear.  She did not attend the doctor or the hospital the day of the
        accident or the fall because there were strikes and work stoppages during
      those days.

[5]

The
        day following the fall, among other activities, the plaintiff drove to
        a friends house in the evening.  She spent some time there with friends,
        but decided to leave because of headache and pain in her ear.  When she
        left the house, she fell down approximately five stairs leading from a
        balcony outside the front door. She broke her left ankle and sprained her
        right ankle.  She attended the hospital and her doctors office the day
      following the fall.

[6]

The
        plaintiffs evidence indicated that she experienced some episodes of
      dizziness following the accident.  She described it in her affidavit as
      sporadic dizziness. She also described pain in her left ear.

[7]

Her
      family doctor opined:

As
        a result of the motor vehicle accident that occurred on April 12, 2001,
        [the plaintiff] was experiencing vertigo. It is my opinion that the vertigo
        was caused by a whiplash effect to the vestibular (balance) system of
        the inner ear that occurred as a result of the motor vehicle accident.
        It is my opinion that this inner ear vestibular imbalance resulted in [the
      plaintiff] being at risk for falling...

[8]

The
        specialist in otolaryngology to whom the plaintiff was referred examined
        her six months following the accident. He found that she was suffering
        from a vestibular disorder called Visual Vestibular Mismatch which was
        confirmed by objective signs.  He opined that Visual Vestibular Mismatch
      often coincides with an abnormality involving the balance system.

[9]

The
        defendant says that the lack of direct evidence from the plaintiff as
      to how she was feeling immediately before the fall is a gap in the evidence
        that must lead to the conclusion that the plaintiff has not met the onus
        to prove the cause of the fall.  The plaintiffs counsel puts the question
        somewhat more broadly, as it was put to the trial judge. That was whether
        the plaintiff established that the injuries sustained in the motor vehicle
        accident caused or contributed to the fall.  She points out that the
        evidence showed that the plaintiff suffered from headaches, was shaky,
        suffered
      sporadic dizziness and had significant pain in her ear.

[10]

The
        tests to be applied on an application for leave are not in dispute.  They
        are whether the appeal has merit, whether the issue is of importance
        to the practice generally and to the parties, the utility of the appeal
        to
        the parties and whether the delay of the appeal will be prejudicial to
      the trial process.

[11]

The
        primary argument on this application relates to the merit of the appeal;
        however, counsel for the defendant also raises an issue that he argues
        is of general importance. He says it is anomalous that a final decision
        on an issue determined pursuant to a summary trial under Rule 18A that
        does not determine all of the issues between the parties requires an
      application for leave to appeal, whereas if the same issue was decided
      together with
        all the issues in a regular trial, leave would not be required.  He suggests
        that a party should not be denied its right to appeal because the summary
        trial procedure is chosen. That, he says, is a general issue of some
      importance on this application for leave.

[12]

In
        my opinion, in choosing to proceed in accordance with the Rule 18A summary
        trial procedure (which both parties in this case believed would have positive
        consequences for the proceeding in simplifying the issues and perhaps reducing
        the number of parties), parties are aware that an appeal will require leave.
        That is one of the consequences that they have to take into account in
      choosing that procedure.

[13]

In
        my opinion, the tests to be applied to this particular application for
        leave are the tests that apply with respect to all appeals from what
      are characterized as interlocutory decisions.  On that basis, I cannot say
        that there is any general importance of this appeal to the practice.  The
        decision with respect to causation is one that is peculiar to these facts.  Of
        course, an appeal would be of importance to the parties if one was taken
        and would have the utility that the decision of the trial judge would
      be either confirmed or overturned. Delay is not an issue.

[14]

Thus
        we return to the merits. In my opinion, the defendant has not demonstrated
        that the trial judge erred in his assessment of the evidence.  Neither
        his findings of fact nor his drawing of inferences from those facts could,
        in my view, be viewed by a panel of this Court as revealing a palpable
        and overriding error.  It was open to the trial judge to draw the inferences
        of fact that he did from the evidence before him.  The Supreme Court of
        Canada is clear that a trial judges findings of fact and inferences drawn
        from those findings of fact, whether based on direct or circumstantial
        evidence, are subject to the same standard of review in this Court; there
        must be demonstrated to be a palpable and overriding error.  On the argument
        that has been made before me, I cannot see any basis on which a panel
      of this Court could find that standard has been met.

[15]

I
      therefore dismiss this application for leave to appeal.

The Honourable
      Madam Justice Levine