COURT OF APPEAL FOR BRITISH COLUMBIA

Citation:

Schlenker v. Torgrimson,

2013 BCCA 9

Date: 20130111

Docket: CA039685

Between:

Norbert Fred
Schlenker, Ted Bartrim,
Alison Mary Cunningham, Harold Derek Hill,
Malcolm George Legg, Dietrich Luth,
Victoria Linda Mihalyi and Mark Lyster Toole

Appellants

(Petitioners)

And

Christine
Torgrimson and George Ehring

Respondents

(Respondents)

Before:

The Honourable Mr. Justice Donald

The Honourable Madam Justice Newbury

The Honourable Mr. Justice Hinkson

On appeal from: Supreme
Court of British Columbia, January 13, 2012
(
Schlenker v. Torgrimson
, 2012 BCSC 41, Victoria Docket 11-4036)

Counsel for the Appellants:

L. J. Alexander and
  A. L. Faulkner-Killam

Counsel for the Respondents:

F. V. Marzari

Place and Date of Hearing:

Victoria, British
  Columbia

November 26, 2012

Place and Date of Judgment:

Vancouver, British
  Columbia

January 11, 2013

Written Reasons by:

The Honourable Mr. Justice Donald

Concurred in by:

The Honourable Madam Justice Newbury

The Honourable Mr. Justice Hinkson

Reasons for Judgment of the Honourable
Mr. Justice Donald:

[1]

Elected officials must avoid conflicts of interest.  The question on
appeal is whether the respondents were in a conflict when they voted to award
two service contracts to societies of which they were directors.  In the words
of s. 101(1) of the
Community Charter
, S.B.C. 2003, c. 26, did they have
a direct or indirect pecuniary interest in the matter[s]?

[2]

The chambers judge found they did not have such an interest because they
derived no personal financial benefit from the contracts.

[3]

With respect, I disagree with the judges opinion.  His view of the
matter comes from too narrow a construction of the enactment.  In my judgment,
the pecuniary interest of the respondents lies in the fulfillment of their fiduciary
obligation to their societies.  When they voted for the expenditure of public
money on the two contracts, which master were they serving, the public or the
societies?  In these circumstances, a reasonable, fair-minded member of the
public might well wonder who got the better bargain.

[4]

The respondents brought preliminary motions to quash the appeal for
mootness and lack of standing of the appellants to maintain the appeal.  I
would not accede to either motion.

[5]

The penalty for conflict is disqualification until the next election.
While disqualification from office is in this case no longer a practical remedy
because of the passage of time, the issues on appeal affect the public interest
generally and should be decided.  On the standing motion, fewer than ten
electors, the minimum number required to support a petition alleging a conflict
of interest, participated in the appeal.  The petition, however, was brought by
the requisite number of electors.  There is no rule requiring the same number
to bring a valid appeal.

[6]

I would allow the appeal and declare that the respondents violated the
Community
Charter
.

Factual Background

[7]

In November 2008, the respondents were elected as trustees for the Salt
Spring Island Local Trust Area.  They, and a resident from another Gulf Island,
comprised the Local Trust Committee (LTC) for Salt Spring Island.  An LTC is a
statutory corporation within the scheme of the
Islands Trust Act
,
R.S.B.C. 1996, c. 239, having local government responsibility for land use
planning and regulation for the particular island in question.

[8]

The respondents were active in environmental issues: the respondent
Torgrimson with the Water Council, and the respondent Ehring with the Climate
Action Council.  Both unincorporated bodies received funds from the LTC for
various activities associated with their environmental causes.  No issue is
taken with the LTC resolutions authorizing those expenditures.

[9]

On 20 April 2011, the respondents, along with three others, incorporated
the Salt Spring Island Water Council Society.  On 4 July 2011, the respondents,
with three others, incorporated the Salt Spring Island Climate Action Council
Society.  The respondents were directors of the Societies at the material time.

[10]

The appellants are Salt Spring Island electors who brought a petition
contesting the behaviour of the respondents in respect of two resolutions of
the LTC authorizing payments to the Societies for services related to their
fields of interest.  The chambers judge summarized the events in this way (2012
BCSC 41):

[16]      The incident that was the catalyst for the petition
against Ms. Torgrimson and Mr. Ehring occurred on September 1, 2011.  The
LTC held a meeting at which Ms. Torgrimson and Mr. Ehring were present along
with the third trustee, Ms. Malcolmson.

[17]      At the time of the vote on September 1, 2011, both
respondent trustees were directors of the newly incorporated Water Council
Society.

[18]      On September 1, 2011, Ms. Torgrimson moved and
voted in favour of a resolution to dedicate $4,000 to fund a project by which
the Water Council Society would organize and run a workshop to raise awareness
of water issues on Salt Spring Island.  Mr. Ehring was present and voted in
favour of the resolution as did the third trustee.

[19]      During the discussion and eventual vote on the
matter, neither Ms. Torgrimson nor Mr. Ehring disclosed that they were now
directors of the newly incorporated societies.

* * *

[23]      There was another
meeting of the LTC on October 6, 2011.  Again Ms. Torgrimson and Mr. Ehring
were present with the third trustee.  At this time Ms. Torgrimson made a motion
to dedicate $4,000 to the Climate Action Society for the purpose of providing a
progress report on greenhouse gases.  Again, there was no mention that both
respondents are directors of the Climate Action Society.  As on September 1,
2011, the motion was not on the agenda.  Given the similar conduct of the
respondents on October 6, 2011, whatever decision I make with respect to what
occurred September 1, 2011, would be the same decision for the October 6, 2011,
transaction.

[11]

At the hearing of the petition, no contract for services in relation to
either expenditure had been executed.  However, counsel agreed:

That the Court of Appeal panel be
advised at the hearing of the appeal that the Court below accepted that the
resolutions in question would lead to the contracts being let, and the money
actually expended, which is in fact what happened.

[12]

The appellants filed a motion to adduce new evidence relating to the
contracts.  This was in response to the respondents argument that there was no
evidence before the chambers judge that any money changed hands.  The evidence
is new in the sense that it arose after the hearing.  It supports the
appellants contention that the transactions were for service contracts and were
paid for.  Given the agreed statement above, I see no need to consider other
details of the new evidence.

[13]

The hearing of the petition occurred on the eve of the election in
November 2011 at the expiry of the respondents terms of office.  As will be
seen, the conflict legislation provides disqualification from office until the
next election as its primary remedy.  The respondents did not run again in
November 2011 and say they have no intention of standing for office in the
future.

Decision Under Appeal

[14]

The chambers judge dismissed the petition on the ground that the
evidence did not disclose a personal pecuniary interest.  He found that the
respondents duties as directors of the Societies failed to satisfy this test.
After reviewing case law, he ruled as follows:

[39]      In this case, the petitioners invite the court to
draw the inference that these trustees have an indirect pecuniary interest
based upon the fact of their being directors
simpliciter
.

[40]      I am not satisfied this is an appropriate inference
to be drawn given the courts comments in
Fairbrass BCCA
[
Fairbrass
v. Hansma
, 2010 BCCA 319, 5 B.C.L.R. (5th) 349].  Granted, directors are
the operating minds of a society.  However, the society exists as a separate
legal person from the individuals who in this case work for no remuneration to
guide it.

[41]      In my opinion,
Fairbrass BCCA
supports the
respondents position: the fact that they are directors of societies that
received the funds, in the absence of sufficient evidence to establish a
personal pecuniary interest between themselves and the societies, does not
permit the inference to be drawn that they have an indirect pecuniary interest
in the dedication of funds to the societies.

[42]      Again, as I decided in the Hendren judgment [
Schlenker
v. Hendren
(18 November 2011), Victoria 11-4036 (S.C.)], the law in British
Columbia cannot be read in the spirit of the Ontario legislation.  The Ontario
statute raised by counsel for the petitioners, the
Municipal Conflict of
Interest Act
, R.S.O. 1990, Chapter M.50, ss. 2(a)(iii), 4(k), and 5, sets a
low threshold for indirect pecuniary interest.  It includes within the category
of indirect pecuniary interest situations where an individual is a member of a
body that in turn has a pecuniary interest in the matter (s. 2(a)(iii)).

[43]      I am satisfied that in British Columbia,
disqualification on the grounds of indirect pecuniary interest requires
evidence sufficient that there can be a readily recognizable pecuniary
incentive to vote other than for planning reasons.  (See
Re McCaghren and
Lindsay
(1983), 144 D.L.R. (3d) 503 at 510 (Alta. C.A.).) In our
circumstances, reason to vote without conflict would not be for planning but
for public education on water issues.

[44]      Moreover, even though the society depends to a
certain extent on grants it receives from the LTC, as well as other sources, to
advance its goals and objectives and to assist in the viability of the society,
I do not conclude that Ms. Torgrimson and Mr. Ehring had an indirect pecuniary
interest in the issue that was before the LTC on September 1, 2011.  The
petitioners need not show an actual pecuniary interest being affected, yet
there still must be evidence of the potential to affect the members financial
interest.  (See [
Mondoux v. Tuchenhagen
, 2010 ONSC 6536, 79 M.P.L.R. (4th)
1], para. 46; and
Tolnai v. Downey
(2003), 40 M.P.L.R. (3d) 243 (Ont.
Sup. Ct.) at para. 25.)  Therefore, the fact that the respondents are directors
is not sufficient to establish an indirect pecuniary interest.

[45]      I am fully cognizant of the classic statement made
by the court in
Re Moll and Fisher et al
. (1979), 96 D.L.R. (3d) 506 at
509, 23 O.R. (2d) 609 (H.C.), that no man can serve two masters, and that the
conflict of interest rules and enactments recognize that even if elected
officials are well-meaning, their judgment may be impaired when their personal
financial interests are affected.  Yet I underline that it is personal
economic self-interest that must be in conflict with the officials public
duty.  While the vote on September 1, 2011, would provide the Water Council
Society with funds to set up a workshop in order to pursue its objectives and
educate the community with respect to water issues, the evidence does not
establish that the grants had the potential to affect the personal financial
interests of Ms. Torgrimson or Mr. Ehring.  Indeed, there is possibly less
pecuniary connection between a non-profit society and its directors as private
individuals than there was between the mayor and his sons in
Fairbrass
.

[46]      Given the totality of the evidence, I am not able
to conclude that the petitioners have established that Ms. Torgrimson and Mr.
Ehring had an indirect personal pecuniary interest when they voted for the
dedication of money to the Water Council Society on September 1, 2011.

[47]      As a result, where the
petition seeks a declaration that Ms. Torgrimson and Mr. Ehring have violated
s. 101 and s. 107 of the
Community Charter
because of a failure to disclose
a direct or indirect pecuniary interest, the petition is dismissed.

Relevant Enactments

[15]

The relevant sections of the legislation are as follows:

Community Charter
,
S.B.C. 2003, c. 26

100 (1) ...

(2)        If a
council member attending a meeting considers that he or she is not entitled to
participate in the discussion of a matter, or to vote on a question in respect
of a matter, because the member has

(a)  a direct or
indirect pecuniary interest in the matter, ...

the member must declare this and
state in general terms the reason why the member considers this to be the case.

(3)        After
making a declaration under subsection (2), the council member must not do
anything referred to in section 101 (2) [
restrictions on participation
].

* * *

101 (1) This
section applies if a council member has a direct or indirect pecuniary interest
in a matter, whether or not the member has made a declaration under section
100.

(2)        The council member
must not

(a)     remain
or attend at any part of a meeting referred to in section 100 (1) during which
the matter is under consideration,

(b)     participate
in any discussion of the matter at such a meeting,

(c)     vote
on a question in respect of the matter at such a meeting, or

(d)     attempt
in any way, whether before, during or after such a meeting, to influence the
voting on any question in respect of the matter.

(3)        A
person who contravenes this section is disqualified from holding an office
described in, and for the period established by, section 110 (2), unless the
contravention was done inadvertently or because of an error in judgment made in
good faith.

* * *

111 (1) If it
appears that a person is disqualified under section 110 and is continuing to
act in office,

(a)     10 or
more electors of the municipality, ...

may apply to the Supreme Court for
an order under this section.

* * *

(4)        An
application under this section may only be made within 45 days after the
alleged basis of the disqualification comes to the attention of

(a)     any of
the electors bringing the application, in the case of an application under
subsection (1) (a), ...

(6)        On the
hearing of the application, the court may declare

...

(b)     that
the person is disqualified from holding office, ...

* * *

191 (1) A council
member who votes for a bylaw or resolution authorizing the expenditure,
investment or other use of money contrary to this Act or the
Local
Government Act
is personally liable to the municipality for the amount.

* * *

(4)        Money
owed to a municipality under this section may be recovered for the municipality
by

...

(b)     an elector or taxpayer of the
municipality, ...

Society Act
,
R.S.B.C. 1996, c. 433

24 (1)   The
members of a society may, in accordance with the bylaws, nominate, elect or
appoint directors.

(2)        Subject
to this Act and the constitution and bylaws of the society, the directors

(a)     must
manage, or supervise the management of, the affairs of the society, and

(b)     may
exercise all of the powers of the society.

* * *

25 (1)   A director of a society must

(a)     act
honestly and in good faith and in the best interests of the society, and

(b)     exercise
the care, diligence and skill of a reasonably prudent person,

in exercising the powers and
performing the functions as a director.

(2)        The requirements
of this section are in addition to, and not in derogation of, an enactment or
rule of law or equity relating to the duties or liabilities of directors of a
society.

* * *

27        A
director of a society who is, directly or indirectly, interested in a proposed
contract or transaction with the society must disclose fully and promptly the
nature and extent of the interest to each of the other directors.

28  (1) ....

(2)        Unless the bylaws otherwise
provide, a director referred to in section 27 must not be counted in the quorum
at a meeting of the directors at which the proposed contract or transaction is
approved.

Business Corporations
Act
, S.B.C. 2002, c. 57

1  (1)    In
this Act:

* * *

company means

(a)     a
corporation, recognized as a company under this Act or a former
Companies
Act
, that has not, since the corporations most recent recognition or
restoration as a company, ceased to be a company

* * *

corporation
means a company, a body corporate, a body politic and corporate, an
incorporated association or a society, however and wherever incorporated, but
does not include a municipality or a corporation sole;

* * *

136 (1) The
directors of a company must, subject to this Act, the regulations and the
memorandum and articles of the company, manage or supervise the management of
the business and affairs of the company.

* * *

142 (1) A
director or officer of a company, when exercising the powers and performing the
functions of a director or officer of the company, as the case may be, must

(a)     act honestly and in good
faith with a view to the best interests of the company, ...

Canada Business
Corporations Act
, R.S.C. 1985, c. C-44

102. (1)  Subject to any unanimous shareholder agreement, the
directors shall manage, or supervise the management of, the business and
affairs of a corporation.

* * *

122. (1)  Every director and officer of a corporation in
exercising their powers and discharging their duties shall

(a)     act honestly and in good
faith with a view to the best interests of the corporation; ...

Issues

[16]

I will discuss the following issues:

1.       Standing:  Can less than ten
electors bring a valid appeal from dismissal of a conflict of interest petition
under the
Community Charter
?

2.       Mootness:  Is the case moot
and if it is should it nevertheless be decided?

3.       Statutory
interpretation of the phrase a direct or indirect pecuniary interest in the
matter:  Is it limited to personal financial gain of the councillor or does it
extend to a non-profit society of which the councillor is a director?

Discussion

Standing

[17]

The petition in this case was brought by 15 electors, more than the
minimum number (10) prescribed by s. 111(1)(a) of the
Community Charter
.
The respondents contest the validity of the appeal on the basis that the eight
appellants lacked standing as they form a group less than the requisite
number.

[18]

This argument has no support in the legislation.  The respondents argue
for a restriction on the right to appeal yet there is nothing in the
Community
Charter
or related enactments which extends the minimum requirement in s.
111(1)(a) to an appeal.

[19]

The jurisdiction of the Court is set out in the
Court of Appeal Act
,
R.S.B.C. 1996, c. 77:

6 (1)     An appeal lies to the court

(a)     from
an order of the Supreme Court or an order of a judge of that court, and

(b)     in any
matter where jurisdiction is given to it under an enactment of British Columbia
or Canada.

(2)        If another enactment of British
Columbia or Canada provides that there is no appeal, or a limited right of
appeal, from an order referred to in subsection (1), that enactment prevails.

[20]

Each petitioner must join with at least nine others to launch a valid
petition.  Once they have done so, each becomes a party to the proceeding.  Their
status as a party remains throughout the proceeding and enables them to invoke
the jurisdiction of this Court whether or not the original petitioning group
remains intact.  It would, in my opinion, take very specific language in the
relevant legislation to restrict access to this Court in the manner suggested
by the respondents.

[21]

I would not give effect to the preliminary objection based on standing.

Mootness

[22]

The respondents other preliminary objection is that there is no
practical purpose to be served by deciding the appeal.  Since the respondents
did not run in the 2011 election, the primary remedy for voting while in a
conflict of interest, namely, disqualification from office until the next
election, has no application; all that is left is a declaratory remedy, a
purely academic exercise which this Court should not engage in.  The
respondents submit that the problem will probably come up again and can and
should be decided on a live issue rather than on a moot case.

[23]

The appellants respond in several ways.  First, they say that there is a
practical remedy available in that this Court could order the respondents to
repay the money for the contracts under s. 191 of the
Community Charter
.
Second, the Court could order the respondents disqualified from holding office
for a period running from the date of the Courts judgment to the next
election.  Third, the prayer for relief in the petition expressly sought a
declaration as a remedy and nothing that has transpired since has affected the
soundness of that remedy.  Fourth, even if s. 191 is not available and it is
seen that there is no practical sanction against the respondents, there is
nevertheless a strong public interest in settling the law on the substantive
issue in the case.

[24]

I do not find it necessary to deal with the appellants first two
points.  In my opinion, the third and fourth points meet the mootness
objection.

[25]

The events giving rise to the dispute occurred within a short time of
the November 2011 election.  The respondents terms of office were about to
expire when they voted to approve the expenditures in question.  The
Community
Charter
prescribes a 45-day limit to bring a conflict challenge by way of
petition.  Since the procedures must be taken in such a compressed timeframe
and the terms of office can be shorter than the time it takes for a case to
make its way through to an appeal, it will often be difficult to apply the
disqualification sanction if it is not ordered at first instance.  Timing was
one of the factors that influenced this Court in
Fairbrass v. Hansma
,
2010 BCCA 319, to proceed with the appeal despite the lapse of the
disqualification period:

[9]        Section 110(2) referred to in s. 101(3) sets the
period of disqualification as commencing at the time of the contravention of s.
101 and ending on the date of the next general local election.

[10]      The potential period of
disqualification in this case has long since lapsed, there having been a
general local election in November 2008.  Nonetheless, the petitioners brought
the petition promptly.  It raises a serious issue which was considered by the
Supreme Court of British Columbia.  Were we to refuse to hear the appeal as
moot, it would be a rare case that could be advanced through the court process,
given the election cycle in municipal governance.  The issue in this case is
serious, the allegations are of consequence, in particular to the respondent,
and the issue has the potential to arise again in another guise.  Upon these
considerations we determined this appeal should be resolved on its merits.

[26]

The first two orders sought in the amended petition are expressed in
this way:

1.         A
declaration that Trustee Christine Torgrimson, Trustee George Ehring ... have
failed to disclose a direct, or indirect, pecuniary conflict of interest
contrary to section 101
and section 107
of the
Community Charter,

SBC 2003, c 26
;

2.         A declaration that Trustee
Christine Torgrimson, Trustee George Ehring ... have attended a meeting,
participated in discussions, attempted to influence voting, and voted on a
question contrary to section 101
and section 107
of the
Community
Charter
.

[27]

No objection could have been taken to the petition had it claimed only a
declaration as relief.  Rule 20-4 of the
Supreme Court Civil Rules
provides:

(1)        A proceeding is not open to
objection on the ground that only a declaratory order is sought, and the court
may make binding declarations of right whether or not consequential relief is
or could be claimed.

[28]

This appears to be a case of first impression.  None of the authorities
cited to us deals squarely with the position of a councillor voting on a money
resolution authorizing payment to a non-profit society of which the councillor
is a director.

[29]

Finally, and regardless of whether the case is moot, a resolution of the
issue will have practical utility.  As counsel for the appellants explained,
elected officials often seek legal guidance on whether they are in a conflict
of interest.  If they act on such advice, they have available to them a good
faith defence under s. 101(3) of the
Community Charter
:

(3)        A person who contravenes this
section is disqualified from holding an office described in, and for the period
established by, section 110 (2), unless the contravention was done
inadvertently or because of an error in judgment made in good faith.

[30]

So the respondents are concerned that unless the decision under appeal
is reviewed, it will remain the basis of legal advice to councillors throughout
the province and because of the good-faith defence, no one will be motivated to
challenge their conduct.  The argument is that if the decision is wrong and
left uncorrected, it will have a deleterious long-term effect.

[31]

I agree with this argument.  I am not satisfied the case is moot, but
even if it is, it falls within the class of cases that should be decided in the
public interest.

Construction of the Phrase a direct or indirect pecuniary interest
in the matter

[32]

As mentioned, my principal difference of opinion with the judge is in
what I consider to be his too narrow construction of the phrase a direct or
indirect pecuniary interest.

[33]

By limiting the interest to personal financial gain, the chambers
judges interpretation missed an indirect interest, pecuniary in nature, in the
fulfillment of the respondents fiduciary duty as directors.  The result of
applying that narrow interpretation to the facts was to defeat the purpose and
object of the conflict of interest legislation.

[34]

The object of the legislation is to prevent elected officials from
having divided loyalties in deciding how to spend the publics money.  Ones
own financial advantage can be a powerful motive for putting the public
interest second but the same could also be said for the advancement of the
cause of the non-profit entity, especially by committed believers in the cause,
like the respondents, who as directors were under a legal obligation to put the
entity first.

Liberal vs. Strict Interpretation

[35]

My starting point in the interpretive process is to recall the directive
in the
Interpretation Act
, R.S.B.C. 1996, c. 238:

8          Every enactment must be
construed as being remedial, and must be given such fair, large and liberal
construction and interpretation as best ensures the attainment of its objects.

[36]

I then move to the classic statement of the modern principle
enunciated by Elmer Driedger in the second edition of
Construction of
Statutes
and adopted by the Supreme Court of Canada in
Rizzo & Rizzo
Shoes Ltd. (Re)
, [1998] 1 S.C.R. 27:

[21]      Although much has been written about the
interpretation of legislation (see, e.g., Ruth Sullivan,
Statutory
Interpretation
(1997); Ruth Sullivan,
Driedger on the Construction of
Statutes
(3rd ed. 1994) (hereinafter
Construction of Statutes
);
Pierre-André Côté,
The Interpretation of Legislation in Canada
(2nd ed.
1991)), Elmer Driedger in
Construction of Statutes
(2nd ed. 1983) best
encapsulates the approach upon which I prefer to rely.  He recognizes that
statutory interpretation cannot be founded on the wording of the legislation
alone.  At p. 87 he states:

Today there is only one principle or approach,
namely, the words of an Act are to be read in their entire context and in their
grammatical and ordinary sense harmoniously with the scheme of the Act, the
object of the Act, and the intention of Parliament.

[37]

The context of the questioned phrase can be seen from its placement in
Part 4 of the
Community Charter
entitled Public Participation and
Council Accountability and Division 6 of that Part, entitled Conflict of
Interest.  The phrase appears in that part of the
Community Charter
addressing the problem of divided loyalties, particularly in money matters.

[38]

The purpose of such legislation was eloquently described by Robins J.
(later J.A.) speaking for the Ontario Divisional Court in
Re Moll and Fisher
(1979), 96 D.L.R. (3d) 506 at 509:

This enactment, like all conflict-of-interest
rules, is based on the moral principle, long embodied in our jurisprudence,
that no man can serve two masters.  It recognizes the fact that the judgment of
even the most well-meaning men and women may be impaired when their personal
financial interests are affected.  Public office is a trust conferred by public
authority for public purpose.  And the Act, by its broad proscription, enjoins
holders of public offices within its ambit from any participation in matters in
which their economic self-interest may be in conflict with their public duty.
The publics confidence in its elected representatives demands no less.

Legislation of
this nature must, it is clear, be construed broadly and in a manner consistent
with its purpose
.

[Emphasis
added.]

[39]

In
The Queen v. Wheeler
, [1979] 2 S.C.R. 650, the Court referred
to the New Brunswick equivalent of s. 8 of our
Interpretation Act
,
quoted earlier, in adopting at 659 a broad approach to the interpretation of
the conflict provision involved in that case.

[40]

In
Old St. Boniface Residents Assn. Inc. v. Winnipeg (City)
,
[1990] 3 S.C.R. 1170, Sopinka J. commented generally on conflict of interest
legislation for local government at 1196-97:

I would distinguish between a case of partiality
by reason of pre-judgment on the one hand and by reason of personal interest on
the other.  It is apparent from the facts of this case, for example, that some
degree of pre-judgment is inherent in the role of a councillor.  That is not
the case in respect of interest.  There is nothing inherent in the hybrid
functions, political, legislative or otherwise, of municipal councillors that
would make it mandatory or desirable to excuse them from the requirement that
they refrain from dealing with matters in respect of which they have a personal
or other interest.
It is not part of the job description that municipal
councillors be personally interested in matters that come before them beyond
the interest that they have in common with the other citizens in the
municipality.  Where such an interest is found, both at common law and by
statute, a member of Council is disqualified if the interest is so related to
the exercise of public duty that a reasonably well-informed person would
conclude that the interest might influence the exercise of that duty.  This is
commonly referred to as a conflict of interest
.  See
Re Blustein and
Borough of North York
, [1967] 1 O.R. 604 (H.C.);
Re Moll and Fisher
(1979), 23 O.R. (2d) 609 (Div. Ct.);
Committee for Justice and Liberty v.
National Energy Board
, [[1978] 1 S.C.R. 369]; and
Valente v. The Queen
,
[1985] 2 S.C.R. 673.

Statutory provisions in various provincial
Municipal Acts tend to parallel the common law but typically provide a
definition of the kind of interest which will give rise to a conflict of
interest.  See
Blustein
and
Moll
,
supra
.

[Emphasis
added.]

[41]

I think a reasonably well-informed elector on Salt Spring Island would
conclude that the respondents interest as directors would influence their
decision to authorize and pay for contracts with their Societies.  The
respondents themselves initiated the resolutions that directly benefitted their
Societies, and then voted in favour of those resolutions, without disclosing
that they were directors of the very Societies that were obtaining the benefit.

[42]

If, in the present case, the chambers judge approached the
interpretation narrowly because of the penalties for engaging in a conflict, he
erred in my opinion.  In
Tuchenhagen v. Mondoux
, 2011 ONSC 5398, 107
O.R. (3d) 675, the Divisional Court held:

[26]      The
MCIA
[
Municipal Conflict of Interest
Act
] s. 10 does provide for the penalties to be imposed if a member of
council is found to have breached the legislation.  The seat of the member is
to be declared vacant, he or she may be disqualified from being a member for a
period of time not exceeding seven years and, where the contravention has
resulted in financial gain, ordered to pay restitution.  As such,
the
MCIA
is penal in nature. This does not mean that it should be interpreted narrowly,
in favour of the member, in case of ambiguity.  Even with penal statutes, the
real intention of the legislature must be sought, and the meaning compatible
with its goals applied (see:
R. v. Hasselwander
, [1993] 2 S.C.R. 398 at
para. 30 as referred to in
Ruffolo v. Jackson
, [2010] O.J. No. 2840
(C.A.) at para. 9)
.

[Emphasis
added.]

Directors Duties

[43]

In most cases of conflict of interest, the conflict examined is between
the personal interests of the individual and his or her duty to the corporate
entity.  At bar, the question is whether the respondents took on conflicting
responsibilities as local councillors and Society directors such that they
could not participate in decisions awarding contracts to the Societies.

[44]

There is little difference in the duties of a director of a business
corporation and a society.

[45]

Directors of societies have a fiduciary duty of loyalty to act honestly
and in good faith and in the best interests of the society: s. 25(1)(a) of the
Society Act
.  This fiduciary duty is the same duty that directors owe to
corporations under the
Business Corporations Act
at s. 142(1)(a), which
provides that directors of a
company
(defined as a corporation
recognized as a company under that Act), when exercising the powers and
performing the functions of a director of the company
must act honestly and
in good faith with a view to the best interests of the company
, as well as
the federal
Canada Business Corporations Act
under s. 122(1)(a), which
provides that every director of a corporation in exercising their powers and
discharging their duties
shall act honestly and in good faith with a view to
the best interests of the corporation
.  Therefore, case law relating to the
fiduciary duty of directors of corporations is analogous to the fiduciary duty
of directors of societies.

[46]

As the Supreme Court of Canada noted in
Peoples Department Stores
Inc. (Trustee of) v. Wise
, 2004 SCC 68, [2004] 3 S.C.R. 461, the duty of
loyalty imposes several duties on directors:

[35]      The statutory fiduciary
duty requires directors and officers to act honestly and in good faith
vis-à-vis
the corporation.  They must respect the trust and confidence that have been
reposed in them to manage the assets of the corporation in pursuit of the
realization of the objects of the corporation.  They must avoid conflicts of
interest with the corporation.  They must avoid abusing their position to gain
personal benefit.  They must maintain the confidentiality of information they
acquire by virtue of their position.  Directors and officers must serve the
corporation selflessly, honestly and loyally: see K. P. McGuinness,
The
Law and Practice of Canadian Business Corporations
(1999), at p. 715.

[47]

In
Alberta v. Elder Advocates of Alberta Society
, 2011 SCC 24,
[2011] 2 S.C.R. 261, Chief Justice McLachlin, for the Court, wrote of the
fiduciary principle in general as follows:

[43]      The
duty is one of utmost loyalty to the beneficiary.  As Finn states, the
fiduciary principles function
is not to mediate between interests
. It
is to secure the paramountcy of
one sides
interests . . . . The
beneficiarys interests are to be protected. This is achieved through a regime
designed to secure loyal service of those interests (P. D. Finn, The
Fiduciary Principle, in T. G. Youdan, ed.,
Equity, Fiduciaries and Trusts
(1989), 1, at p. 27 (underlining added [by McLachlin C.J.]); see also [
Hodgkinson
v. Simms
, [1994] 3 S.C.R. 377], at p. 468,
per
Sopinka J. and
McLachlin J. (as she then was), dissenting).

[Emphasis
in text.]

[48]

The case of
Wheeler
involved a mayor and a business corporation
but the following remarks at 659-60 I think are apposite:

A director
, and particularly one who is also a
president,
owes a continuous, day-to-day duty to the legal entity, the
company
, as well as to the shareholders,
to prosecute the companys
affairs in an efficient, profitable, and entirely lawful manner
. Applying
the broad principle enunciated by Duff C.J. in [
J.B. Arthur Angrignon v. J.
Arsène Bonnier
, [1935] S.C.R. 38],
such an officer is most certainly
interested in his company entering into profitable contracts
. In a
service company or in the construction business, that may well be his only real
interest in conducting the affairs of the company.

* * *

It should not, however, be assumed that the Legislature
has thereby expressed an intention to reduce the meaning and application of the
expression indirect interest
.  It is unrealistic to believe that as a
general principle of human conduct a director or officer of a contracting
company does not have at least an indirect interest in the companys
contracts.  On the facts before this Court, the provision has an even clearer
impact.
A director or officer of a construction company or of a service
company must, in ordinary parlance and understanding, have an interest, albeit
indirect, in the welfare of the company as it relates to or results from
contracts
.

[Emphasis
added.]

Pecuniary Interest

[49]

In several ways in the course of these reasons, I have endeavoured to
make the point that so long as the matter involves the expenditure of public
funds and the respondents have an interest in the matter which a
well-informed elector would conclude conflicts with their duty as councillors,
it makes no difference that they put no money into their own pockets.

[50]

As directors of the Societies, the respondents were under a fiduciary
duty to put the Societys interests first.  Directors of societies, by virtue
of their position, have an indirect interest in any contract a society is
awarded.  When the respondents moved and voted in favour of resolutions that
benefitted their Societies through the granting of contracts, arguably
contracts the Societies might not have been awarded had the councillors not
also been directors, their duties as directors to put the Societys interests
first were in direct conflict with their duties as councillors to put the
publics interests first.  These circumstances encompass the mischief the
legislation was aimed at, namely, a conflict of interest in deciding money
resolutions.  The public is disadvantaged by the conflict, whether the
respondents derived any personal gain or not, because the public did not have
the undivided loyalty of their elected officials.

Case Law

[51]

This Court has twice considered pecuniary interest conflict.  In
Fairbrass
,
the Mayor of Spallumcheen voted on a bylaw to amend the Official Community Plan
allegedly to the potential benefit of his two sons.  In
King v. Nanaimo
(City)
, 2001 BCCA 610, 94 B.C.L.R. (3d) 51, a city councillor voted in
favour of matters benefitting his largest campaign contributor.  This Court
upheld the dismissal of the petition in
Fairbrass
and reversed the
finding of pecuniary conflict in
King
.

[52]

The decisions have a common rationale.  The proof requirement
establishing a link between the matter voted on and a pecuniary interest of the
councillor was lacking in each case.

[53]

In
King
, Mr. Justice Esson, for the Court, wrote:

[12]      That conclusion, in my respectful view, is wrong in
law.
What was prohibited by s. 201(5) is participation in the discussion or
vote on a question in respect of ... a matter in which the member has a direct
or indirect pecuniary interest.
  The matter (or matters) in respect of
which questions arose before Council were, in this case, the various
applications by Northridge Village and its associates.
Nothing in the facts
established in this proceeding could justify the conclusion that Mr. King had a
pecuniary interest, direct or indirect, in any of those matters.  The mere fact
that Northridge made campaign contributions could not, in and of itself,
establish any such interest.  There could, of course, be circumstances in which
the contribution and the matter could be so linked as to justify a conclusion
that the contribution created a pecuniary interest in the matter
.  Indeed,
the learned chambers judge took note of an example of such a situation when he
said in his reasons:

There is no evidence of a direct
pecuniary interest in the sense that he agreed to vote for these projects in
return for their campaign contribution of $1,000.00.

[13]
It would not be useful to speculate as to what
circumstances could create an indirect pecuniary interest
.  It is enough to
say that the mere fact of the applicant having made a campaign contribution is
not enough.  In the absence of any factual basis for finding that Mr. King had
a pecuniary interest in the matter, the finding based on s. 201(5) is wrong in
law and must be set aside.

[Emphasis
added.]

[54]

Madam Justice Saunders gave the judgment of the Court in
Fairbrass
and wrote:

[21]      I see no error in the approach of the judge to the
petition before him. In the circumstances disclosed to him in the evidence, the
case fell to be resolved by considering whether there could be enhancement of
the respondents financial position directly, or through the fact his sons
owned adjacent property. The judge recognized the sons had a direct pecuniary
interest because the proposal would make it easier for them to sub-divide their
property.
There were, then, only two questions: did the respondent have a
direct interest, and did the sons direct interest create such potential for
enhancement of the respondents financial circumstances as to be a pecuniary
interest that was indirect
.

[22]
The proposition that the person asserting a fact
has the burden of proving it, is fundamental. Here the petitioners alleged a
pecuniary interest, either direct or indirect. Yet they adduced no evidence to
the effect that the bylaw, were it to pass, would make the respondents four
acre but still un-subdividable property more valuable. Whether the change in
set-back requirements would have this effect is speculation
. So too, as the
judge said, is the possibility of the respondent acquiring land, thereby to
sub-divide the property. Even more speculative is the possibility of accretion
making the four acre parcel more valuable now.

[Emphasis
added.]

[55]

In the present case, however, proof of a pecuniary conflict does not
depend on a remote and tenuous connection as in
King
or on speculation
like
Fairbrass
, but on the solid footing of a fiduciary duty as
discussed.

[56]

It was contended by the petitioners in
Fairbrass
that the filial
relationship between the father and the sons was enough to establish an
indirect interest.  That proposition was rejected at both levels as an
unsupported inference.  I see no parallel to the case at bar.  Parents may or
may not be concerned with the business affairs of their children; it all
depends on the facts of each case.  But there is no doubt about the duty of a
director in fostering the business of his or her society; it inheres in the
nature of the relationship.

[57]

When, at para. 41 of his reasons, the chambers judge requires some
personal pecuniary benefit to flow to the respondents from their societies
before declaring a conflict, he in my opinion erred in principle and in law by
misconstruing the effect of
Fairbrass
.

Remedies

[58]

As mentioned, the declaratory order should be made because of the public
importance of the issue.  But the appellants also ask for an order pursuant to
s. 191(1) of the
Community Charter
requiring the respondents to
repay the money expended on the contracts.

[59]

In my opinion, s. 191(1) has no application to this case.  As I
read the provision, it addresses itself to the subject matter of the
expenditure rather than to the qualification of the councillor voting on the
expenditure.  The phrase contrary to this Act or the
Local Government Act

refers to the expenditure, investment or other use of money, not to the
council member who casts the vote.  The focus is on the impropriety of the
expenditure.

[60]

Thus, s. 191(1) is placed in a separate part of the
Community
Charter
under Part 6  Financial Management, Division 5  Restrictions on
Use of Municipal Funds, apart from those provisions dealing with improper
voting by council members who are disqualified by reason of conflict of
interest.

[61]

It is not alleged in this case that the projects covered by the
contracts let by the LTC were in themselves improper subjects for expenditure.
The attack was directed at the respondents conflict of interest.  There is,
therefore, no basis for an order of repayment under s. 191(1).

Conclusion

[62]

For these reasons, I would allow the appeal and declare that the
respondents voted on questions contrary to s. 101 of the
Community Charter
.

The Honourable Mr. Justice Donald

I agree:

The
Honourable Madam Justice Newbury

I agree:

The
Honourable Mr. Justice Hinkson


COURT OF APPEAL FOR BRITISH COLUMBIA

Citation:

Timberwolf Log Trading Ltd. v. British Columbia
  (Forests, Lands and Natural Resources Operations)
,

2013 BCCA 24

Date: 20130111

Docket: CA039909

Between:

Timberwolf Log
Trading Ltd.

Respondent

(Plaintiff)

And

Her Majesty the
Queen in Right of the Province of British Columbia
and Daniel Smallacombe

Appellants

(Defendants)

Before:

The Honourable Mr. Justice Low

The Honourable Madam Justice D. Smith

The Honourable Madam Justice A. MacKenzie

On appeal from: Supreme
Court of British Columbia, April 10, 2012
(
Timberwolf Log Trading Ltd. v. British Columbia (Forests, Lands and Natural
Resource Operations)
, 2012 BCSC 690, Vancouver Registry No. S110508)

Oral Reasons for Judgment

Counsel for the Appellant:

A.K. Fraser
B. Naylor

Counsel for the Respondent:

A. Wade
A. Mizrahi

Place and Date of Hearing:

Vancouver, British
  Columbia

January 10, 2013

Place and Date of Judgment:

Vancouver, British
  Columbia

January 11, 2013

[1]

D. SMITH J.A.:
The provincial Crown and Daniel Smallacombe
(collectively the Province) appeal, with leave, an order dismissing their
application made pursuant to Rule 9-5(1)(d) of the
Supreme Court Civil Rules
to strike out all, or parts of, a Notice of Civil Claim filed by the
respondent, Timberwolf Log Trading Ltd. (Timberwolf) against the Ministry of
Forests, Mines and Lands [now the Ministry of Forests and Range] (the
Ministry) and Mr. Smallacombe, an enforcement officer employed with the
Ministry. The claims advanced by Timberwolf in the Notice of Civil Claim
include misfeasance in public office and defamation (the parties have proceeded
on the understanding that this includes both libel and slander).

[2]

The Province also appeals, with leave, a further order dismissing
Timberwolfs claim for injunctive relief but granting them leave to amend that
relief to a declaration restraining the Crown and its officers from doing
various things. On appeal, Timberwolf concedes that the amended pleading, as
with the injunctive relief originally sought, contravenes the prohibition in s.
11(2) and (4) of the
Crown Proceeding Act,
R.S.B.C. 1996, c. 89, and
accordingly agrees that this second ground of appeal should be allowed. I would
accede to this ground of appeal and would strike para. 7 of the order under
appeal.

[3]

In its application, the Province had also sought an order striking
Timberwolfs claim of misfeasance in public office. However, leave to appeal
the order dismissing that application was denied. Therefore, at this time the
claims being advanced for trial by Timberwolf include misfeasance of public
office, slander and libel (the latter pending this Courts decision on appeal).

Background

[4]

The pleadings allege, in part, that in 2008 Mr. Smallacombe slandered
Timberwolf during an interview between Mr. Smallacombe and Mr. Good. Mr. Good
is an independent logging contractor whose company, BC Log Inventory Service
Ltd. (BC Log), had been retained by Timberwolf to do its scaling.

[5]

The impugned statement, it is claimed, was made to Mr. Good during an
investigation by Mr. Smallacombe into whether Timberwolf was underreporting the
quality and grade of its timber in order to reduce stumpage payable to the
Province. In its Notice of Civil Claim, Timberwolf pleaded (at para. 15) that
during the interview, Mr. Smallacombe slandered Timberwolf when he stated:

Maybe its not about wood at all.
Its on the surplus list as X and I [grade logs] and pass the surplus test
and gets approved for export and goes to the major drug trafficking routes in
the world South Korea, China, Washington. Who cares what wood is in it. All
that wood goes into a container.

[6]

Timberwolf further pleaded (at para. 16) that these words were meant and
intended to suggest that it deliberately misreported the grades of harvested logs
to provide it with access to legal export containers in order to distribute and
traffic illegal drugs.

[7]

The Province has conceded that they have no evidence to support the suggestion
made by Mr. Smallacombe (cited in para. 5 above) that Timberwolf was using its
timber shipments as a cover for participation in illegal drug trafficking to
the United States and Asia.

[8]

During the course of the investigation, Mr. Smallacombe obtained
Criminal
Code
search warrants for the seizure of records and personal property from
Timberwolf. The investigation resulted in an assessment against Timberwolf of
$3.5 million of underpaid stumpage. Timberwolfs appeal of that assessment to
the Minister was dismissed; however, we are advised that a statutory appeal of
that decision to the Supreme Court of British Columbia is scheduled for hearing
in September 2013.

Petition to Quash Warrants

[9]

In 2010, in relation to the disputed assessment, Timberwolf commenced a
petition to quash the search warrants obtained and executed by Mr. Smallacombe
(the Warrant Proceedings). Counsel for Timberwolf and counsel for the
Province were in attendance at the hearing of the petition. Mr. Good was also
in attendance as an observer and requested that he be provided with a copy of
the audio recording of his interview with Mr. Smallacombe in order to check the
accuracy of parts of the transcribed interview that had been included in the
Information to Obtain the search warrants. (The audio recording was not in
evidence at the hearing although an incomplete transcript of the interview was
before the court). In response to Mr. Goods request, counsel for the Province
advised the court that he would provide a copy of the audio recording to Mr.
Good. The chambers judge accepted counsels offer, stating that your
undertaking will be sufficient.

[10]

Several days later, counsel for the Province forwarded to Mr. Good an
email attaching a digital copy of the audio recording. In the email he wrote: I
have not provided these to Mr. Spencer [counsel for Timberwolf]. I have no
objection to your releasing the recording of the interview. The parties
disagree as to the objective meaning of that statement.

[11]

Several weeks later, in February 2011, the judge delivered her reasons
in the Warrant Proceedings in which she granted Timberwolfs application to
quash the search warrants. In January 2012, Timberwolf commenced the within civil
claims against the Province.

Motion to Strike Pleadings with Respect to Libel

[12]

The parties have proceeded in the litigation on the understanding that
the pleading of defamation includes libel and that the alleged libel arose out
of the republication during the Warrant Proceedings of the alleged slanderous
statement (i.e. when the audio recording was produced to Mr. Good). There are
two bases for this understanding. First, ostensibly the libel claim is being
advanced to avoid a limitation period defence to the claim of slander. The
second basis is from evidence (not material facts) that is pleaded in the
following highlighted passages of paragraphs 13 to 15 of the notice of civil
claim:

13.
Throughout
the investigation and following the issued Assessments, Timberwolf through its
counsel, made repeated requests for disclosure of the investigation report and
interviews.
Smallacombe and MOFR,

purposefully and deliberately
withheld disclosure of the requested documents and materials.

14.
On
December 1, 2010, during a related court proceeding, a judge of the Supreme
Court of British Columbia requested counsel for the

Defendants to ensure
that certain investigative material be disclosed to Timberwolf and Good.

15.
Subsequent
to the Court appearance of December 1, 2010, an audio recording of an interview
of Good by Smallacombe was disclosed.
In that interview Smallacombe
slandered Timberwolf. He stated:

[the
words as reproduced in para. 5 above]

[Emphasis added].

[13]

The central issue before the chambers judge, in regard to the orders for
which leave to appeal has been granted, was whether it was plain and obvious
that Timberwolfs claim in libel was bound to fail. In dismissing the
appellants application to strike that claim, and in particular paras. 14 and
15 of the pleadings, the chambers judge stated:

[65]      The defendants seek to strike the plaintiff's
pleadings on the basis that the tape recording in question cannot be advanced
in support of claims in the underlying action because it was produced by
counsel for the defendants under the compulsion of discovery procedures or a
court order in other litigation. As such, say the defendants, the plaintiff is
bound by the implied undertaking of confidentiality.

...

[71]      ... I have difficulty accepting the submission of
the defendants in this application that an implied undertaking of
confidentiality attaches to the tapes production. First, the recording was
voluntarily released to a non-party to the application to quash the search
warrant. It was not released pursuant to any discovery obligation. The
application to quash has, in any event, long since concluded.

[72]      Second, counsel advised Mr. Good that the
recording had not been produced to the plaintiff in any proceeding, and he
expressly advised Good that he could release it to whomever he pleased.

[73]      For these reasons, it
is not plain and obvious that the plaintiff cannot claim in defamation against
the defendants. Accordingly, the application to strike that pleading is also
dismissed.

On Appeal

[14]

On appeal, the Province submits that the trial judge erred in failing to
find that it was plain and obvious that the claim in libel would fail. They
contend that the audio recording was delivered by counsel for the Province to
Mr. Good pursuant to an express undertaking given by counsel for the Province
under compulsion by the court and that Mr. Good, although a non-party to the Warrant
Proceedings, thereby became subject to an implied undertaking of
confidentiality not to use the audio recording for any collateral purpose to
the proceeding. Relying on
Goodman v. Rossi
(1995), 125 D.L.R. (4
th
)
613 (O.N.C.A.) at paras. 24 and 26, and
Doucette (Litigation Guardian of) v.
Wee Watch Daycare Systems Inc.,
2008 SCC 8, [2008] 1 S.C.R. 157, the
Province says that Mr. Good breached that undertaking when he delivered the
information to Timberwolf or its counsel, who then relied on the audio
recording as the basis for its claim in libel. The Province submits that this
use of the audio recording for a purpose collateral to the Warrant Proceedings is
an abuse of process entitling it to an order striking paragraphs 14 and 15 of
the Notice of Civil Claim.

[15]

The Province further contends (citing
Hung v. Gardiner,
2003 BCCA
257, 13 B.C.L.R. (4
th
) 298) that the chambers judge erred in failing
to find that the claim in libel was bound to fail based on the doctrine of
absolute privilege. They submit that the republication of the audio recording,
when counsel for the Province delivered it to Mr. Good, occurred on an occasion
of absolute privilege in the course of the Warrant Proceedings and therefore
the Province was subject to absolute immunity.

[16]

Timberwolfs position (also relying on
Doucette
) is that Mr. Good
was not subject to an implied undertaking of confidentiality because counsel
for the Province in the Warrant Proceedings was not under compulsion by the court
to disclose the recording, rather he did so voluntarily, and Mr. Good was a
non-party to those proceedings. It further submits that the occasion on which
Mr. Good received the audio recording was not one of absolute privilege as the
audio recording was not evidence in the Warrant Proceedings and therefore its disclosure
to Mr. Good was made outside the scope of those proceedings.

[17]

Common to both submissions is Mr. Goods status as a non-party to the Warrent
Proceedings and the absence of any clear link between the disclosed audio
recording and the Warrant Proceedings. While the chambers judge did not
expressly address the Provinces second argument on absolute privilege, my
reading of her reasons suggest that her conclusions on the first issue would
support a similar finding on the second issue.

Discussion

[18]

The test for striking a pleading under R. 9-5(1) is well established: it
must be plain and obvious that the pleading, assuming the facts pleaded to be
true, discloses no triable issue:
Hunt v. Carey Canada Inc.,
[1990] 2
S.C.R. 959;
Odhavji Estate v. Woodhouse,
2003 SCC 69, [2003] 3 S.C.R.
263; and
R. v. Imperial Tobacco,
2011 SCC 42, [2011] 3 S.C.R. 45 at
para. 17.

[19]

It should also be noted that an order under R. 9-5(1) is a discretionary
order for which deference must be given absent an error of law or principle or
a failure of the judge to consider or weigh all of the relevant circumstances. The
standard of review for discretionary orders was summarized by Chief Justice
Finch in
Stone v. Ellerman,
2009 BCCA 294, 92 B.C.L.R. (4
th
)
203, leave to appeal refd [2009] S.C.C.A. No. 364 in this manner:

[94]      Discretionary powers
must be exercised in accordance with what the judge thinks the justice of the
situation requires. Judicial discretion is constrained by factors or principles
that must be weighed and balanced as between the competing interests, but no
rule of law dictates the result. Accordingly, an appellate court will not
interfere with an exercise of judicial discretion unless it can come to the
clear conclusion that it was wrongly exercised in that no weight or
insufficient weight has been given to relevant considerations (
Friends of
the Oldman River Society v. Canada (Minister of Transport),
[1992] 1 S.C.R.
3 at 76-77, 88 D.L.R. (4
th
) 1, [1992] 2 W.W.R. 193) or that on other
grounds it appears that the decision may result in injustice (
Taylor v.
Vancouver General Hospital,
[1945] 4 D.L.R. 737 at 743, [1945] 3 W.W.R.
510, 62 B.C.R. 42 at 50 (C.A.)).

[20]

As previously noted, where an application is brought pursuant to R.
9-5(1)(d), evidence may be tendered as the R. 9-5(2) prohibition against
admitting evidence is restricted to applications brought under R. 9-5(1)(a),
where only the pleadings are considered. In this case, the Province submitted two
affidavits in support of its application to strike. That evidence, when
considered with the pleadings, does not in my view meet the stringent plain
and obvious test for an abuse of process if Timberwolf were permitted to
advance its claim in libel to trial.

[21]

First, the Provinces submission that the implied undertaking of
confidentiality should extend to a non-party does not appear to be have been
adopted in
Doucette,
where the scope of the implied undertaking rule was
expressly limited to parties in the litigation:

[1] The principal issue raised on this appeal is the scope of
the implied undertaking rule under which
evidence compelled during
pre-trial discovery from a party to civil litigation can be used by the parties
only for the purpose of the litigation in which it was obtained.

...

[4] Thus the rule is that both documentary and oral
information obtained on discovery,
including information thought by one of
the parties to disclose some sort of criminal conduct,
is
subject to the
implied undertaking. It is not to be used
by the other parties
except
for the purpose of that litigation
, unless and until the scope of the
undertaking is varied by a court order or other judicial order or a situation
of immediate and serious danger emerges.

...

[27] For good reason, therefore,
the law imposes on the
parties to civil litigation an undertaking
to the court
not to use
the documents or answers for any purpose other than securing justice in the
civil proceedings in which the answers were compelled (whether or not such
documents or answers were in their origin confidential or incriminatory in
nature). ...

[Emphasis added.]

[22]

Furthermore, the doctrine of absolute privilege would appear to be
limited to occasions where the making of a statement (e.g. the publication of
the audio recording in this case) occurs in the course of proceedings before
the court (see
Lincoln v. Daniels,
[1962] 1 Q.B. 237 (C.A.), and
Gutstadt
v. Reininger
(1995), 27 O.R. (3d) 152 (Ont. General Division).

[23]

In the circumstances of this case, I am of the view that the factual
matrix in which both of these submissions are advanced must be fully explored
in order to arrive at a fair determination of this claim.

[24]

The claim in defamation (both slander and libel) advanced by Timberwolf
is a serious one. It is conceded that Mr. Smallacombe had no evidence to
support the comments he made, albeit the Province will argue that the comments
are not actionable because they were made on an occasion of qualified privilege
and, in any event, the claim in slander is subject to a two-year limitation
period which has passed (this defence is not yet pleaded by the Province).
These potential impediments to Timberwolfs claim in slander make it all the
more important to fully canvass the circumstances that gave rise to the alleged
claim in libel.

[25]

In my opinion, the significant factual and legal issues in this case can
only be determined fairly on the basis of a complete evidentiary record that is
not limited to a pleadings context. The remaining claims proceeding to trial
(misfeasance in public office and slander) will undoubtedly involve the
tendering of much of the same evidence that would be tendered in the libel
claim. In my view, to foreclose Timberwolf from advancing its claim in libel at
trial would, in these circumstances, result in an injustice.

[26]

The words of Chief Justice McEachern in
Bow Valley Resource Services
v. Kansa General Insurance Co. (B.C.C.A.)
(1991), 56 B.C.L.R. (2d) 337 are
apposite in these circumstances:

In my view it is not always appropriate to confine
complicated litigation, as this clearly is, within labels or general statements
of principle arising out of one or more authorities. My view is that the recent
jurisprudence particularly,
Hunt v. Carey-Canada Inc.
(1991), 74 D.L.R.
(4
th
) 321, leave us with a clear message particularly in a case of
this kind.

...

In my judgment there is no
rational chance that a division of this Court would depart from that practice
[set out in
Hunt
] and embark upon and attempt to resolve the novel and
difficult questions which arise in this case just on the pleadings. Pleadings
have a way of being amended as cases proceed towards trial and sometimes,
indeed, even at trial. In my view, it is inevitable that these pleadings will
be amended and I do not believe that this Court would purport to decide these
vital questions of law without a full investigation of the factual matrix out
of which these issues arise. I think the Court would inevitably defer to the
trial process as the place where these novel and difficult questions should be
first considered.

[27]

During submissions on appeal, it became apparent that amendments to the
pleadings would likely be necessary before the claims reached trial. Factual
issues were raised as to the objective meaning of the email attaching the
digital copy of the audio recording that counsel for the Province forwarded to
Mr. Good as well as the content and scope of counsel for the Provinces
undertaking to the court. Legal issues on the application of the implied
undertaking rule to a non-party and of the application doctrine of absolute
privilege beyond the parameters of the legal proceedings before the court were
also raised. I agree with the comments in
Bow Valley
that in such
circumstances the trial process is the place where these issues should be first
determined and that Timberwolf should not be driven from the judgment seat on
a motion to strike.

Conclusion

[28]

I am not persuaded that the chambers judge erred in the exercise of her
discretion in finding that it was not plain and obvious that an abuse of process
would arise, specifically on the basis of the doctrines of implied undertaking
and absolute privilege, if Timberwolf were permitted to pursue its claim in
libel. I agree with her conclusion that these important factual and legal
issues should not be determined on a R. 9-5(1)(d) application.

[29]

In the result, except for the setting aside of para. 7 of the order
under appeal as conceded by the respondent, I would dismiss the appeal.

[30]

LOW J.A.:
I agree.

[31]

A. MACKENZIE J.A.:
I agree.

[32]

LOW J.A.:
The appeal is allowed only to the extent of setting
aside para. 7 of the order under appeal, otherwise the appeal is dismissed.

The
Honourable Madam Justice D. Smith


COURT OF APPEAL FOR BRITISH COLUMBIA

Citation:

Woo v. Onni Ioco Road Five Development Limited
  Partnership,

2013 BCCA 18

Date: 20130111

Docket: CA040002

Between:

Ju Hee Woo, Susan-Lynn
Siwasch, Marcel Rainville, Mahmood Amin also known as Mahmood Amin Darolzarbi,
Bahareh Bahman-Zadeh, Madjid Razi, Parham Razi, Mohammad Bagher Dasht-Kian also
known as Mohammad Bagher Dashtakian, Tahereh Bozorgi, and Behrooz Dasht-Kian
also known as Behrooz Dashtakian

Respondent

(Plaintiffs)

And

Onni Ioco Road
Five Development Limited Partnership, ONNI Development (Ioco Road Five) Corp.
and Rossano De Cotiis

Appellants

(Defendants)

Before:

The Honourable Chief Justice Finch

The Honourable Madam Justice Saunders

The Honourable Mr. Justice Groberman

On appeal from Supreme
Court of British Columbia, May 23, 2012
(
Woo v. ONNI Ioco Road Five Development Limited Partnership,
2012 BCSC
764,
Vancouver Registry No. S103493)

Oral Reasons for Judgment

Counsel for the Appellant:

S.H. Stephens

Counsel for the Respondents (except M.& P. Razi):

B.G. Baynham, Q.C.
J.E. Shragge

Place and Date of Hearing:

Vancouver, British
  Columbia

January 11, 2013

Place and Date of Judgment:

Vancouver, British
  Columbia

January 11, 2013

[1]

FINCH C.J.B.C.
: On 4 October 2012, A. MacKenzie J.A., in
chambers, granted orders,
inter alia
, that the appellants Onni post
security for the costs of the appeal and that the appeal be stayed pending the
posting of that security. Madam Justice MacKenzie further ordered that the
respondents application for security for the judgments awarded in their favour
in the court below be dismissed.

[2]

On this application to review, the respondents seek to discharge or vary
the order dismissing their application for security for the judgments.

[3]

The appellants appeal is from the judgment of the Supreme Court of
British Columbia pronounced 23 May 2012. In the action giving rise to that
judgment, the respondents as purchasers claimed rescission of contracts made
with the appellant developers for the purchase and sale of five strata title
lots.

[4]

The appellants counterclaimed for an order that the respondents account
to them for occupational rent for the period of time from when the contracts of
purchase and sale closed to the date they give up possession of their units in
the event that the Court granted an order for rescission.

[5]

The Court granted orders that the respondents were entitled to rescind
their respective purchase agreements, according to the
Real Estate
Development Marketing Act
, S.B.C. 2004, c. 41, s. 21(3) (
REDMA
).
It also ordered repayment of certain sums to the respondents in exchange for
the transfer of individual titles to the appellants.

[6]

In chambers, MacKenzie J.A. outlined the security for judgment sought by
the respondents as follows:

[55]      The Respondents also seek security for the
judgments awarded in favour of the Respondents in the court below. They seek
amounts of the difference between the judgment at summary trial and the present
appraised market value of each unit plus a ten percent amount of present market
value to account for potential decline in the real estate market, costs of
sale, and pre-judgment interest. That would amount to:

·

$271,974.69 in favour of Ju Hee Woo;

·

$147,978.50 in favour of Susan-Lynn Siwasch and Marcel Rainville;

·

$173,439.17 in favour of Mahmood Amin and Bahereh Bahman-Zadeh;

·

$213,072.44 in favour of Mohammad Dasht-kian and Tahereh Bozorgi;
and

·

$168,399.96 in favour of Madjid Razi and Parham Razi.

[7]

In dismissing the respondents application for security for the
judgments MacKenzie J.A. held that the respondents had failed to meet the onus
of showing that it was in the interests of justice to so order, because the
respondents had failed to show that they cannot recover on at least most of the
judgment. She said:

[75]      I agree with the Appellants that the Respondents
will suffer no additional prejudice if this Court does not order the posting of
the security for the amount sought of the trial judgment. There is nothing
precluding them from executing on their judgments. Indeed, the Razis have
sought and obtained the order for sale from Pearlman J. and the other
Respondents are free to do so. The Appellants will not seek a stay of execution
of the judgment, nor will they oppose other applications for sale.

[76]      I agree the Respondents have substantial security
for the judgment already; they remain the registered owners of the strata lots
and are free to return or dispose of the strata lots as they see fit.

[77]      It is true there may be a shortfall between the
amount of the judgment and the sale proceeds from the units and the additional
costs, some of which I find somewhat speculative. That is not additional
prejudice arising from the appeal itself. Instead, that situation would exist
even without an appeal. I am also advised the Razis have registered their
judgment against other properties besides the one they own.

[78]      I agree the interests of justice would not be
served by ordering security for the portion sought of the trial judgment. Such
an order would stifle a meritorious and important appeal as the Respondents
accept the Appellants have no assets. It cannot be said that the appeal has no
merit.

[79]      The Respondents application for security for costs
of the appeal is granted to the extent stated, $10,000. The application for
security for the trial judgment, trial costs and pre-judgment interest is
dismissed.

[80]      The appeal will be
stayed until the security ordered is deposited with the Registrar in a form
acceptable to the Registry. It is to be deposited within fourteen days.

[8]

On this application to vary, the respondents say that MacKenzie J.A.
erred in holding that they were free to return or to dispose of [their strata
lots] as they saw fit, and in holding that as a result the respondents had
failed to show they could not recover on most of their judgments. As expressed
by their Memorandum of Argument, the respondents say:

[28]      From monetary
perspective, all that Mr. Justice Pearlmans judgment provides the respondents
is the difference between the purchase price and present market value of their
respective units. Because the respondents were free to list their respective
units and retain the proceeds of sale prior to rescinding, the fruits of the
litigation (the judgment debt as it were) must necessarily exclude the
present market value.

[9]

The respondents say they will suffer real prejudice in absence of
security, because the appellants have no money with which to satisfy the
monetary components of their judgments. Hence, if the appeal fails, the
appellants are effectively judgment-proof. If the appeal succeeds, the notices
of rescission would be vacated and the respondents would be in the same
position as they are today.

[10]

In response, the appellants say the order for security for the judgment
was discretionary. The judge considered all the relevant factors including
prejudice to the respondents if the order were not made, the merits of the
appeal, the effects on the ability of the appellants to continue the appeal if
security were ordered, and the interests of justice.

[11]

The appellants point out that the chambers judge held that an order for
security would stifle a meritorious appeal, that there is no additional
prejudice to the respondents from a denial of security, and that the order
sought would not prevent prejudice.

[12]

The appellants say that the respondents holding of title to their
strata lots constitutes security for a significant portion of the monetary
judgments. The appellants argue that the premise of the respondents position
is that they only sought the difference between the value of the strata lots
and the purchase price paid. In their Memorandum of Argument, the appellants
put it this way:

28.       ... The respondents
could have but did not sue for damages for misrepresentation at common law or
pursuant to s. 22 of
REDMA
, the measure of which would have been the
difference between the value of the units at the time of trial and the purchase
prices paid. The respondents sought and obtained monetary judgments for the
whole of the purchase prices paid. The strata lots constitute, at least,
substantial security for those judgments.

Discussion

[13]

A discretionary decision of a Court of Appeal judge in chambers is not
to be interfered with unless the chambers judge was wrong in law, principle, or
based her decision upon misconstrued facts; it is insufficient to show that she
exercised her discretion incorrectly. As stated in
Haldorson v. Coquitlam
(City)
, 2000 BCCA 672, para. 7:

It comes to this: that the review
hearing is not a hearing of the original application as if it were a new
application brought to a division of the court rather than to a chambers judge,
but is instead a review of what the chambers judge did against the test
encompassed by asking:  was the chambers judge wrong in law, or wrong in
principle, or did the chambers judge misconceive the facts. If the chambers
judge did not commit any of those errors, then the division of the court in
review should not change the order of the chambers judge.

[14]

So, the question here is whether or not the decision of MacKenzie J.A.
was wrong in law, principle, or based upon misconceived facts. The respondents
argue that the chambers judge committed an error by interpreting the judgment
as including the current fair market value of the strata lots. On their view,
as they were always entitled to sell their respective strata lots and retain
the proceeds, the judgment should be interpreted to be only the difference
between the current market value and the purchase price. Accordingly, MacKenzie
J.A. erred by considering that the respondents could sell their strata lots in
order to collect on most of the judgment.

[15]

Respectfully, this interpretation of judgment cannot be supported on a
reading of the decision of Pearlman J. In that decision, the order sought by
the respondents was summarized, at para. 1, as one seeking the return of
monies paid under the contracts of purchase and sale, together with interest,
and the costs of this action. Indeed, in seeking a rescission of the purchase
agreement under s. 21(3) of
REDMA
, the respondents cannot be said to be
seeking a payment of the difference in current market value and their purchase
price; rescission means that the agreement was to be undone, with the respondents
returning the title to the strata lots, and the appellants returning the
purchase price. This is exactly what Pearlman J. granted to the
respondents, as summarized at para. 134:

The plaintiffs will provide the defendants with vacant
possession of their respective Strata Lots by no later than 12 noon on July 16,
2012. If for any reason the parties anticipate that they will not be able to
fulfill their respective obligations
to repay the purchase monies and
transfer title
to the Strata Lots by July 16, 2012, they are at liberty to
apply for further directions or orders.

[Emphasis added.]

[16]

In this case, the respondents always had the option to sell their strata
lot and retain the proceeds. The respondents submit that this means the fruits
of the litigation, or the real effect of the judgment of Pearlman J., was to
grant them the difference between this market value and the purchase price.
While that may be the case, it does not change the character of the judgment
as being for the entire purchase price. Indeed, their submissions would have
greater weight if the respondents had sued the appellants for that difference,
as opposed to seeking a rescission of the purchase agreements. With the
respondents having chosen to pursue a judgment for the entirety of the purchase
price via a rescission, MacKenzie J.A. cannot be faulted for using that
amount as a basis for determining whether or not the respondents could collect
most of the judgment by selling their strata lots. Her decision was entirely within
her discretion. It was not wrong in law, principle, or based upon any
misconstrued facts.

Conclusion

[17]

Accordingly, I would dismiss the application to vary.

[18]

SAUNDERS J.A.
: I agree

[19]

GROBERMAN J.A.
: I agree.

[20]

FINCH C.J.B.C.
: The application is dismissed.

The
Honourable Chief Justice Finch


COURT OF APPEAL FOR BRITISH COLUMBIA

Citation:

R. v. Skinner
,

2013 BCCA 27

Date: 20130114

Docket: CA040347

Between:

Regina

Appellant

And:

Joshua Augustine
Victor Skinner

Respondent

Before:

The Honourable Madam Justice Kirkpatrick

The Honourable Mr. Justice Frankel

The Honourable Mr. Justice Hinkson

On Appeal from:
Provincial Court of British Columbia, October 2, 2012
(
R. v. Skinner
, Victoria Docket No. 153985-1)

Oral Reasons for Judgment

Counsel for the (Crown) Appellant:

J. Duncan, Q.C.

Counsel for the Respondent:

D. J. McKay

Place and Date of Hearing:

Victoria, British
  Columbia

January 14, 2013

Place and Date of Judgment:

Victoria, British
  Columbia

January 14, 2013

[1]

HINKSON J.A.:
On June 15, 2012, Mr. Skinner pleaded
guilty in the Provincial Court to one count of aggravated assault and on
September 14, 2012 he pleaded guilty to one count of assault. He was
sentenced on both offences on October 2, 2012 and given nine months in custody
for the aggravated assault, and 60 days concurrent for the assault.

[2]

The Crown appeals the sentence, contending that the sentence fails to
give adequate weight to the principle of general deterrence, is
disproportionate to the gravity of the offences and the degree of Mr. Skinners
responsibility, and/or is clearly unreasonable.

[3]

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

Background

[4]

There was evidence before the sentencing judge, to which she referred, that
Mr. Skinner had advised others prior to February 20, 2011, that he
did not, as a rule, abuse alcohol or drink to the point of blackouts. The judge
found that on February 20, 2012, Mr. Skinner purchased two bottles of
wine, and took them to Holland Point Park, within the greater Beacon Hill Park,
in Victoria, drinking at least one of them before he encountered 79 year
old Mr. Prior, standing at the edge of an embankment along the beachside,
enjoying the view.

[5]

The judge accepted that by the time he encountered Mr. Prior,
Mr. Skinner was extremely intoxicated, and for reasons that remain
inexplicable, even with the assistance of psychiatric and pre-sentence reports,
he pushed Mr. Prior over the embankment, lost his own balance and tumbled
down the embankment behind Mr. Prior, ultimately falling on top of him.

[6]

Mr. Prior sustained serious injuries; a suspected concussion and a
fractured pelvis, and damaged his eyeglasses and the clothes that he was
wearing. He has described his life as ruined because he lost his faith in his
own capacity to take care of himself, and, despite counselling, has become
somewhat of a hermit.

[7]

These events were witnessed by Mr. Easton, who was walking along
the beach with his seven year old son. Mr. Easton tried to intercede to
protect Mr. Prior, but was himself assaulted by Mr. Skinner. Mr. Easton
moved down the beach, followed by Mr. Skinner, staggering and yelling
profanities. The police were summoned, and Mr. Skinner was arrested. Mr. Easton
has a history of concussions, and while he was being assaulted by Mr. Skinner,
Mr. Skinner was attempting to bash his head against a log. Mr. Easton
sustained a mild concussion as a result of the assault, and both he and his son
have sought and received counselling for the trauma caused by the assault.

[8]

At his sentencing, Mr. Skinner denied any memory of committing the
offences, and said his only memory was of waking up in a jail cell and then
proceeding off to visit friends.

[9]

The judge recounted the evidence before her as disclosing that Mr. Skinner
was a stable, supportive, conscientious citizen. Mr. Skinners mother
reported violence was not tolerated by his family who described him as a good
man, whose conduct on the day of the assaults, in their view, and in the view
of a co-worker was completely out of character for him.

[10]

The judge noted that Mr. Skinner had a good employment record, and
an employer who would be happy to continue his employment, despite the events
of February 20, 2012.

[11]

The sentencing judge instructed herself on the purposes and principles
of sentencing set out in s. 718 of the
Criminal Code
, and
identified the objectives of sentencing as denunciation, general deterrence,
specific deterrence, separation of the offender from society, rehabilitation,
the making of reparations, and the promotion of a degree of responsibility in
the offender. Next, she referred to fundamental principle of sentencing of
proportionality between the gravity of the offence and the degree of
responsibility of the offender.

[12]

The sentencing judge focused her sentence primarily on the objective of
denunciation, relating it to the principle of proportionality and the gravity
of Mr. Skinners offences, and the aggravating and mitigating factors
established on the evidence before her, including Mr. Skinners guilty
pleas. She also referred to general deterrence, but questioned its potential
effect on those who might commit acts similar to those committed by Mr. Skinner.
She concluded that Mr. Skinner was remorseful, and had written letters of
apology to Mr. Prior and Mr. Easton. She referred to Mr. Skinners
resolution to abstain from the use of alcohol in future. She found that he had
shown he was on the way to rehabilitating himself as evidenced by his
remorsefulness and willingness to accept responsibility for the consequences of
his conduct, leaving specific deterrence of no concern to her.

Discussion

[13]

The Crown accepts that sentencing involves the exercise of discretion by
the sentencing judge and that a court of appeal should only intervene to vary a
sentence imposed at trial if the sentence is demonstrably unfit:
R. v. M.
(C.A.)
, [1996] 1 S.C.R. 500, at p. 565, or if the sentencing judge
commits an error in principle by failing to give sufficient weight to a
relevant factor or over-emphasizing a relevant factor:
R. v. Nasogaluak
,
2010 SCC 6, [2010] 1 S.C.R. 206, at pp. 233-234.

[14]

The Crown concedes that the sentencing judge was alive to the facets of
Mr. Skinners behaviour that was properly the subject of general
deterrence - drinking to the point of blacking out, but contends she dispensed
with that factor on the basis that it would be an ineffective effort for
conduct of the nature for which she was sentencing Mr. Skinner.

[15]

I agree with counsel for Mr. Skinner that the sentencing judge did
not dismiss general deterrence as a principle of sentencing that she did not
have to follow, but rather, she concluded, as in my view she was entitled to
do, Mr. Skinners sentence would have a limited effect on offences of the
nature of those for which she sentenced Mr. Skinner. I would not accede to
the submission that the sentencing judge failed to give adequate weight to the
principle of general deterrence.

[16]

In terms of proportionality, the Crown properly contends that the
sentence imposed must be broadly commensurate with the gravity of the offence
committed, see
R. v. M. (C.A.)
,

at p. 529. The Crown
contends that that range, was set out in the decision of this Court in
R. v.
Biln
, 1999 BCCA 369, and more recently confirmed in
R. v. Grassick
,
2012 BCCA 432, and is two years less a day to six years imprisonment.

[17]

The Crown concedes that sentencing ranges are not determinative, but
contends that the sentence imposed for the offence of aggravated assault in
this case was below the range for such an offence.

[18]

As this Court clarified in
R. v. Bernier
, 2003 BCCA 134, the
range of sentence does not preclude a sentence below the lower end of the range
if such a sentence is warranted by the other principles of sentencing set out
in the
Criminal Code
.

[19]

The sentencing judge demonstrated that she was aware of the gravity of
Mr. Skinners offences, and the location where they occurred. She referred
specifically to that part of para. 9 in
R. v. Wallin
, 2003 BCSC
809, where Madam Justice Dillon wrote:

While I accept that the offence
was not pre-meditated or continuous ... It was a motiveless, unprovoked, savage
attack ... in a public park relied upon by all citizens of Vancouver as
expressive of the physical and spiritual virtue of the city.

[20]

The sentencing judge did not accede to Mr. Skinners submission
that he be given a 90 day intermittent sentence to permit him to maintain his
employment. Despite the gravity of Mr. Skinners offences, the sentencing
judge imposed a sentence that was less than the lower end of the range
described in
Biln
and
Grassick
. I am unable to say that in so
doing, she committed an error in principle by failing to give sufficient weight
to a relevant factor or by over emphasizing a relevant factor and would not
accede to the submission that she erred in imposing a sentence that is less
than lower end of the range established in
Biln
and
Grassick
.

[21]

Finally, the Crown contends that the sentence imposed was clearly
unreasonable, but in support of this submission simply reiterates its
submissions on the first two alleged errors. The reframing of the other
submissions does nothing to advance this submission, and I would not accede to
it.

[22]

I would grant the Crown leave to appeal but dismiss the appeal.

[23]

KIRKPATRICK J.A.:
I agree.

[24]

FRANKEL J.A.:
I agree.

[25]

KIRKPATRICK J.A.:
The appeal is dismissed.

The Honourable Mr.
Justice Hinkson


COURT OF APPEAL FOR BRITISH COLUMBIA

Citation:

Downs Construction Ltd. v. Workers Compensation Appeal
  Tribunal,

2013 BCCA 13

Date: 20130115

Docket: CA039340

Between:

Downs Construction
Ltd. and Jerry Webster

Appellants

(Petitioners)

And

The Workers Compensation
Appeal Tribunal and Vicki Lynn Christianson

Respondents

(Respondents)

Before:

The Honourable Mr. Justice Lowry

The Honourable Mr. Justice Chiasson

The Honourable Madam Justice Garson

Supplementary Reasons
to: Court of Appeal for British Columbia, October 4, 2012
(
Downs Construction Ltd. v. Workers Compensation Appeal Tribunal,
2012 BCCA 392, Vancouver Registry No. CA039340)

Counsel for the Appellant,
Downs Construction Ltd.:

L.A. Slater

Counsel for the Appellant, Webster:

H.F. Turnham

Counsel for the Respondent,
Workers Compensation Appeal Tribunal:

J.T. Lovell

Counsel for the Respondent, Christianson:

M.N. Hillard

Place and Date of Hearing:

Victoria, British
  Columbia

September 18, 2012

Place and Date of Judgment:

Vancouver, British
  Columbia

October
  4, 2012

Written Submissions Received:

December
  14, 2012

Date of Supplementary Judgment:

January 15, 2013

Written Reasons by:

The Honourable Mr. Justice Chiasson

Concurred in by:

The Honourable Mr. Justice Lowry
The Honourable Madam Justice Garson

Reasons for Judgment of the Honourable
Mr. Justice Chiasson:

Introduction

[1]

This decision considers a number of costs issues: whether to award costs
against an administrative tribunal; whether costs should be awarded against an
unsuccessful party who has acted reasonably; and, whether successful parties
who have different legal interests and who are represented by different
counsel, but who file a single factum, each should recover costs.

Background

[2]

Ms. Christianson and Mr. Webster worked for Downs Construction (Downs).
 In January 2006, Ms. Christianson suffered a stress-related injury as a result
of conduct of the appellant, Mr. Webster, while they were performing their
duties for Downs.  In January 2008, Ms. Christianson sued Downs and Mr.
Webster.  In their defence, they pleaded s. 10 of the
Workers Compensation
Act
, R.S.B.C. 1996, c. 492.  In short, s. 10 bars an action in lieu of
a possible claim under the
Act
where the injury arose out of and in the
course of employment.

[3]

Compensation for stress-related injury is available if the injury arose
out of and in the course of employment and the event giving rise to the injury
was not unexpected.

[4]

Ms. Christianson initiated a claim for compensation pursuant to s. 5.1
of the
Act
.  She was unsuccessful.  The Board concluded that the event
giving rise to her injury was not unexpected.  The Workers Compensation Appeal
Tribunal (WCAT) upheld the decision of the Board.

[5]

Pursuant to s. 257 of the
Act
, WCAT issued a certificate to the
court stating, among other things, that t
he mental stress
injury suffered by Ms. Christianson did not arise out of and in the course of
her employment.

[6]

Downs and Mr. Webster sought judicial review of WCATs
decision to refuse compensation and to issue the above-stated portion of the
certificate.  They were unsuccessful.  On October 4, 2012, this Court
allowed their appeal (reasons indexed at 2012 BCCA 392).  The appeal was
limited to the certificate. This Court ordered WCAT to issue a certificate
stating:

The mental stress injury suffered
by the plaintiff Vicki Lynn Christianson arose out of and in the course of her
employment within Part 1 of the
Workers Compensation Act
, but she is not
entitled to compensation because the event giving rise to the injury was not
unexpected as required by s. 5.1 of the
Act
.

[7]

WCAT and Ms. Christianson seek an order for no costs.  Mr. Webster and
Downs individually claim costs against WCAT and Ms. Christianson.  WCAT and Ms.
Christianson, in turn, contend that if this Court awards costs, only one set of
costs should be allowed.

Positions
of the parties

[8]

WCAT relies on
Lang v. British Columbia (Superintendent of Motor
Vehicles)
, 2005 BCCA 244, 43 B.C.L.R. (4th) 65, for the proposition that
generally costs are not awarded against an administrative tribunal on a
judicial review subject to two exceptions: (1) misconduct or perversity in
proceedings before the tribunal; or (2) the tribunal agues the merits of the
judicial review application rather than merely addresses its jurisdiction.  Downs
and Mr. Webster do not dispute this proposition.

[9]

Recognizing limitations that have been placed on the ability of an
administrative tribunal to defend its decision in court, WCAT asserts that it
was entitled to address the reasonableness of its determination.  Downs and Mr.
Webster contend WCAT went beyond its limited right to participate and argued
the merits of the appeal.

[10]

Ms. Christianson resists an award of costs against her.  She states that
the appeal concerned an important point of public law and that her
participation was reasonable.

[11]

Downs and Mr. Webster each seek costs on the basis that their interests
differed and, in some respects, were in conflict, which required them to be
represented by separate counsel.  WCAT and Ms. Christianson oppose this.

Discussion

[12]

In
Lang
, Mr. Justice Donald addressed the role of an
administrative tribunal in court proceedings and associated costs implications.
 He began by observing that the general rule is that an administrative tribunal
is neither entitled to costs nor liable for them.  He stated in paras. 48-50:

[48]      For the purposes of this case it is enough to
identify two exceptions:

1.         misconduct
or perversity in the proceedings before the tribunal; or

2.         the
tribunal argues the merits of a judicial review application rather than its own
jurisdiction.

[49]      Applying the second exception may not always be
clear cut.  There are at least two reasons for this.  First, the review by the
adjudicator under the scheme in question does not conform to the classic
adversarial model where opposing parties argue for and against the decision in
question.  The peace officer's report is the case, so to speak, for the
prohibition, and there is no argumentation back and forth before the
adjudicator as there would be in a conventional hearing.  This feature may
create a tendency on the part of the tribunal, or the Attorney General on its
behalf, to argue the case for the prohibition at judicial review.  The tendency
should be resisted, otherwise costs may be awarded.

[50]      Secondly, the
traditional restriction against the tribunal's arguing the merits of its own
decision, articulated clearly and emphatically in cases like
Canada Labour
Relations Board v. Transair
, [1977] 1 S.C.R. 722, 67 D.L.R. (3d) 421, and
Northwestern
Utilities Ltd. v. Edmonton (City)
, [1979] 1 S.C.R. 684, 89 D.L.R. (3d) 161,
has been relaxed somewhat by the decision in
CAIMAW v. Paccar of Canada Ltd
.,
[1989] 2 S.C.R. 983, 62 D.L.R. (4th) 437.
Paccar
permits the tribunal
to demonstrate that its decision was not patently unreasonable.

[13]

Donald J.A. then referred to
Northwestern Utilities Ltd. v. Edmonton
(City)
, [1979] 1 S.C.R. 684, 89 D.L.R. (3d) 161

and
CAIMAW v.
Paccar of Canada Ltd
., [1989] 2 S.C.R. 983, 62 D.L.R. (4th) 437, in which
Mr. Justice La Forest quoted with approval a passage of the judgment of Mr.
Justice Taggart in
British Columbia Government Employees'
Union v. Industrial Relations Council
(1988), 26
B.C.L.R. (2d) 145 at 153, 32 Admin L.R. 78 (C.A.):

The traditional basis
for holding that a tribunal should not appear to defend the correctness of its
decision has been the feeling that it is unseemly and inappropriate for it to
put itself in that position.  But
when the issue becomes, as it does in
relation to the patently unreasonable test, whether the decision was reasonable,
there is a powerful policy reason in favour of permitting the tribunal to make
submissions.  That is, the tribunal is in the best position to draw the
attention of the court to those considerations, rooted in the specialized
jurisdiction or expertise of the tribunal, which may render reasonable what
would otherwise appear unreasonable to someone not versed in the intricacies of
the specialized area
.  In some cases, the parties to the dispute may not
adequately place those considerations before the court, either because the
parties do not perceive them or do not regard it as being in their interest to
stress them. [Emphasis added by Donald J.A.]

[14]

Donald J.A. continued in para. 54:

[54]      When read closely, the
passage adopted by La Forest J. does not in my view provide the tribunal a
broad opportunity to argue the merits.  The matters before the adjudicator,
breathalyzer analysis and refusing a breath sample demand, are hardly
unfamiliar to the regular courts and so it will seldom be necessary for the
tribunal to expose some arcane or esoteric feature of the case in order to
understand why it arrived at its decision.  While the line between arguing the
merits and explaining the record is somewhat blurry when the test is patent
unreasonableness, there remains a boundary which must be observed.  It will be
up to the judgment of the reviewing judge in each case to determine if the
tribunal, or the Attorney General on its behalf, has gone too far.

[15]

I have reviewed the factums on appeal.  While WCAT did address policy
issues underlying workers compensation legislation and its theory of
determining whether an injury occurs
out of and in the course
of employment, i
t is clear, in my view, that WCAT argued the merits of
the appeal.  It dealt with the implications of the appeal for Ms. Christianson
and defended the approach taken by the Board and by WCAT.  In the unusual
circumstances of this case, I do not criticize WCAT for doing so, but Downs and
Mr. Webster were required to address WCATs contentions.  I would order WCAT to
pay costs.

[16]

While Ms. Christianson was a reluctant participant in that she was
content to have her claim for compensation rejected as a foundation for the
certificate advising the court that her injury did not occur
out
of and in the course of employment, the source of the dispute was her underlying
litigation against Downs and Mr. Webster. This obliged them to support her
subsequent application for workers compensation and, later, to resist the
certificate issued by WCAT, both in the Supreme Court and in this Court.  She
clearly had a significant interest in the outcome of the appeal.  She sought
and was awarded costs in the court below.  I also would order her to pay costs.

[17]

I would order that Downs and Mr. Webster are entitled
to one set of costs only.  They filed a joint factum.  While their interest in
the underlying litigation may differ and be in conflict, I do not think that
was the case on the appeal which concerned only the certificate.

Conclusion

[18]

Downs and Mr. Webster are entitled to one set of costs
against each of WCAT and Ms. Christianson.  I would order that each party bear
its own costs of the proceedings in the Supreme Court.

The Honourable Mr. Justice Chiasson

I agree:

The
Honourable Mr. Justice Lowry

I agree:

The Honourable Madam Justice
Garson