COURT OF APPEAL FOR BRITISH COLUMBIA

Citation:

Rousta v. MacKay,

2018 BCCA 29

Date: 20180129

Docket:
CA44447

Between:

Yassaman Rousta

Appellant

(Plaintiff)

And

Sabrina W. MacKay

Respondent

(Defendant)

Before:

The Honourable Chief Justice Bauman

The Honourable Mr. Justice Lowry

The Honourable Mr. Justice Savage

On appeal from:  An
order of the Supreme Court of British Columbia, dated
April 20, 2017 (
Rousta v. MacKay
, 2017 BCSC 644, Vancouver Registry
M151252).

Counsel for the Appellant:

F.E. Hayman

Counsel for the Respondent:

S. Schwartz

G. Crouch

Place and Date of Hearing:

Vancouver, British
  Columbia

January 10, 2018

Place and Date of Judgment:

Vancouver, British
  Columbia

January 29, 2018

Written Reasons by:

The Honourable Mr. Justice Savage

Concurred in by:

The Honourable Chief Justice Bauman

The Honourable Mr. Justice Lowry

Summary:

The appellant, Ms. Rousta,
was injured in a motor vehicle accident. She appeals an order dismissing her
claim for past loss of earning capacity and limiting her award for future loss
of earning capacity to $100,000 in relation to the prospects of her business
venture. Ms. Rousta submits that the judge considered the wrong standard
of proof for assessing loss of past earning capacity, and in wrongly giving no
weight to an expert report favourable to her cause. Held: appeal dismissed.
While the judge incorrectly articulated the standard of proof for assessing the
likelihood of past hypothetical events, stating it was the balance of
probabilities standard as opposed to the real and substantial possibility
threshold, this error was not material because the judge appropriately
concluded the expert report did not rise above the level of speculation. Ms. Roustas
evidence therefore did not meet the requisite standard of proof. Given the judges
inability to place weight on the expert report, it was appropriate for him to
assess loss of future earning capacity in the manner he did.

Reasons for Judgment of the Honourable Mr. Justice Savage:

I.

Introduction

[1]

Ms. Yassaman Rousta appeals the order of Mr. Justice Skolrood,
submitting he erred (1) in dismissing her claim for past loss of income
earning capacity, and (2) in awarding her $100,000 for loss of future
income earning capacity. She submits the amount of the award for future income
earning capacity was too low.

[2]

Ms. Rousta says the judge erred in applying the wrong standard of
proof regarding past earning capacity, in wrongly giving no weight to the
evidence of Dr. Silk, an expert witness favourable to her cause, and in failing
to consider important facts concerning her potential for earning income
contained in Dr. Silks report.

[3]

The respondent, Ms. MacKay, concedes that the judge erred in
articulating the test applicable to proof of past loss of income earning
capacity, but says that the wrong articulation of the test was not material to
the outcome. The respondent submits the judge considered the evidence
presented, including the evidence of Dr. Silk, but found that the
assumptions on which it was based were unproven and speculative, and therefore
properly gave the report no weight.

[4]

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

II.

Background

[5]

On December 4, 2013, Ms. Rousta was injured in an automobile
accident in West Vancouver, when her car was hit from behind while she was
stopped at an intersection. Ms. Rousta suffered significant injuries, for which
the respondent was found liable. After an approximately three-week long trial, Ms. Rousta
was awarded $110,000 in non‑pecuniary damages, $85,000 for the cost of
future care, and over $18,000 in special damages. None of these awards are
contested on appeal.

[6]

The most controversial issue at trial was whether Ms. Rousta should
receive an award for loss of past and future earning capacity, and if so, in
what amount, in relation to the new launch of a business venture called Néange.
Néange is a line of beauty products, namely face creams, developed by Ms. Rousta.

[7]

Ms. Rousta presented evidence which she said supported an award of between
$8.6 million and $10.9 million, conservatively estimated, for her
loss of past and future earning capacity. However, the judge rejected the
evidence of Ms. Roustas principal expert, Dr. Silk, whose
calculations of her loss he found to be both speculative and unproven. The
judge declined to make an award for loss of past earning capacity, and made an
award for loss of future earning capacity of $100,000, relying on past decisions
of this Court.

[8]

The judge found that the plaintiff suffered soft tissue injuries to her
neck, shoulders and back, as well as an injury to her right hip as a result of
the accident. He accepted her evidence that she still experiences pain in these
areas, but has a full range of motion in her neck and back. He found that the
injuries will continue to cause her some pain and discomfort but are not by
themselves disabling (RFJ, para. 80).

[9]

The judge considered her other symptoms, namely balance and coordination
issues, headaches, sleep disturbance and resulting fatigue. He concluded that
her ability to work to the same capacity was affected but she has some
residual capacity that would enable her to operate Néange to some degree (RFJ,
para. 130). He did not accept that she cannot do anything to develop the
business, which is what has essentially happened since the accident (RFJ, para. 132).

[10]

With respect to the claim for past loss of income the judge said:

[133]    Where does this leave
the court in terms of assessing the plaintiffs claims for loss of past and
future earning capacity? With respect to the past loss claim, the evidence does
not satisfy me that Néange would have become a profitable business in the time
period between the date of the accident and the date of trial. I do not accept
that the business was ready to launch in January 2014, given that no seminars
had been scheduled and, according to Ms. Travers, the presentation was not
completed until late January or February. I do accept that at some point in 2014,
the plaintiff would have held some additional seminars but the evidence simply
does not support a finding that the business would have become profitable by
the end of 2016. I therefore decline to make any award for past loss of earning
capacity.

[11]

With respect to loss of future income earning capacity the judge said:

[134]    With respect to the claim for future loss, I have
found that the plaintiff is unable to work to the same degree as before the
accident and, as such, her capacity to earn income is diminished. However, I
have also found that I am unable to place any weight on Dr. Silks opinion
concerning the value of that diminution.

[135]    In the circumstances, I
adopt the approach taken in
Gojevic v. Philpott
, 2001 BCSC 748, affd
2002 BCCA 483. There, the plaintiff advanced a claim for loss of future earning
capacity based on her inability to pursue and build her business of selling
womens clothing through a direct home sales model, similar to the plaintiffs
model for Néange, due to her injuries suffered in the accident. There, as in
this case, the plaintiff had made no money from the business prior to the
accident. The evidence in that case was that the plaintiff also worked as a
nurse but saw the clothing business as something in the future she could build
into a viable business.

[12]

In
Gojevic
,

the judge awarded $100,000 for loss of future
earning capacity. That award was upheld on appeal. Although the award was made
in 2001, and therefore the passage of time would support a higher award today,
the plaintiff in
Gojevic
was 34 at the time of the accident and had a
much longer working life ahead of her than Ms. Rousta, who was 59 at the
time of the accident. The judge therefore concluded that an award of $100,000
would be reasonable for Ms. Roustas loss of future earning capacity.

III.

Test for Past Loss of Income Earning Capacity

[13]

With respect to past loss of income earning capacity, the judge quoted
from
Ostrikoff v.

Oliveira,
2015 BCCA 351, saying:

[103]    In
Ostrikoff v. Oliveira
,

2015 BCCA
351 [
Ostrikoff
]
,
the Court of Appeal considered claims for past
and future income loss based on projected earnings from a business formed
shortly before the accident.

[104]    In dealing with the past income claim, Madam Justice
Saunders said at para. 21:

it remains true that it is for the plaintiff to prove a
claim for past loss of earning capacity on a balance of probabilities, and that
an award must keep in touch with the evidence before the court. It seems to me
that the judge himself, in saying a projection of increased income would be
speculation, recognized that past income capacity loss predicated on increasing
earnings was not proved to the requisite standard.

[14]

The test to be applied to
hypothetical events
, past and future,
is whether there is a real and substantial possibility that the events in
question would occur.

[15]

In
Grewal v. Naumann
, 2017 BCCA 158, the Court described the
principles underlying this approach as follows:

[42]      The trial judge commenced his analysis by setting
out the principles that govern awards concerning past loss of opportunity and
diminished earning capacity:

[134]    The essential purpose of
an award for past loss of opportunity and diminished earning capacity is to
provide the plaintiff with full compensation for all of his pecuniary losses,
subject to rules of remoteness and mitigation:
Andrews v. Grand &
Toy Alberta Ltd.
, (1978), 83 D.L.R. (3d) 452, [1978] 2 S.C.R. 229, [1978] 1
W.W.R. 577, 8 A.R. 182, 3 C.C.L.T. 225, 19 N.R. 50. It is to restore, as best
as is possible with a monetary award, an injured plaintiff to the same position
he or she would have been in had the negligence not occurred. It is the
difference between the plaintiffs original position just before occurrence of
the negligent act or omission, and the injured position after and as a result
of such act or omission, that comprises the plaintiffs loss:
Athey v.
Leonati
, [1996] 3 S.C.R. 458 at paras. 34‑35.

[135]    As an initial threshold
issue, the plaintiff must demonstrate both impairment to his or her earning
capacity and that, in this case, there is a real and substantial possibility
that the diminishment in earning capacity will result in a pecuniary loss. It
is not to be an exercise in the abstract though at the same time is described
in
Andrews v. Grand & Toy Alberta Ltd.
, as gazing deeply into the
crystal ball. If established, quantification of the loss can be by either an
earnings approach or a capital asset approach:
Perren v. Lalari
, 2010
BCCA 140 at para. 32.

[136]    In
Brown v. Golaiy
,
(1985), 26 B.C.L.R. (3d) 353 (S.C.), Finch J. as he then was stated:

The means by which the value of the
lost, or impaired, asset is to be assessed varies of course from case to case.
Some of the considerations to take into account in making that assessment
include whether:

1.         The plaintiff has been
rendered less capable overall from earning income from all types of employment;

2.         the plaintiff is less
marketable or attractive as an employee to potential employers;

3.         the plaintiff has lost
the ability to take advantage of all job opportunities which might otherwise
have been open to him, had he not been injured; and

4.         The plaintiff is less
valuable to himself as a person capable of earning income in a competitive
labour market.

[137]    Under any approach to
assessing damages, the court is to make an assessment as opposed to applying a
mechanical mathematical or statistical exercise.

[138]    Ultimately, the court must base its decision on
what is fair and reasonable in all the circumstances:
Parypa v.
Wickware
, 1999 BCCA 88.

[16]

In its analysis of the error below, the Court in
Grewal
said
this:

[43]

The
appellants submit that the trial judge erred and applied an incorrect lesser
burden of proof in his analysis of Mr. Grewals claim for loss of past
income earning capacity. They rely on this Courts comments in
Reynolds v.
M. Sanghera & Sons Trucking Ltd.
, 2015 BCCA 232 at paras. 15‑16
and in
Osterkoff

v. Oliveria
, 2015 BCCA 351

at para. 15.
Both cases suggest that the plaintiffs task in respect of past loss of earning
capacity is to prove that loss on a balance of probabilities as contrasted with
the task in claiming future loss of earning capacity, which requires a
plaintiff establish a real and substantial possibility of a future event
occurring that could result in the plaintiffs loss of earning capacity.

[44]

With
respect, I cannot agree. The appellants submission conflates the way courts
deal with alleged past events and the way courts deal with hypothetical events,
past or future. This fundamental distinction was explained in
Athey v.
Leonati
, [1996] 3 S.C.R. 458:

[27]      Hypothetical events (such
as how the plaintiffs life would have proceeded without the tortious injury)
or future events need not be proven on a balance of probabilities. Instead,
they are simply given weight according to their relative likelihood:
Mallett
v. McMonagle
, [1970] A.C. 166 (H.L.);
Malec v. J. C. Hutton Proprietary
Ltd.
(1990), 169 C.L.R. 638 (Aust. H.C.);
Janiak v. Ippolito
, [1985]
1 S.C.R. 146. For example, if there is a 30 percent chance that the plaintiffs
injuries will worsen, then the damage award may be increased by 30 percent of
the anticipated extra damages to reflect that risk. A future or hypothetical
possibility will be taken into consideration as long as it is a real and
substantial possibility and not mere speculation:
Schrump v. Koot
(1977), 18 O.R. (2d) 337 (C.A.);
Graham v. Rourke
(1990), 74 D.L.R.
(4th) 1 (Ont. C.A.).

[28]      By contrast, past events
must be proven, and once proven they are treated as certainties. In a
negligence action, the court must declare whether the defendant was negligent,
and that conclusion cannot be couched in terms of probabilities. Likewise, the
negligent conduct either was or was not a cause of the injury. The court must
decide, on the available evidence, whether the thing alleged has been proven;
if it has, it is accepted as a certainty:
Mallett v. McMonagle, supra
;
Malec
v. J. C. Hutton Proprietary Ltd., supra
, Cooper-Stephenson,
supra
,
at pp. 6781.

[29]      This point was expressed
by Lord Diplock in
Mallett v. McMonagle, supra
, at p. 176:

The role of the court in making an
assessment of damages which depends upon its view as to what will be and what
would have been is to be contrasted with its ordinary function in civil actions
of determining what was. In determining what did happen in the past a court decides
on the balance of probabilities. Anything that is more probable than not it
treats as certain. But in assessing damages which depend upon its view as to
what will happen in the future or would have happened in the future if
something had not happened in the past, the court must make an estimate as to
what are the chances that a particular thing will or would have happened and
reflect those chances, whether they are more or less than even, in the amount
of damages which it awards.

[45]

The
governing authority in this Court is
Smith v. Knudsen
, 2004 BCCA 613. In
Smith
, this Court, after an extensive review of the authorities,
rejected the proposition that a claim for past loss of opportunity had to be
established on a balance of probabilities. Rowles J.A. wrote for the
court. She explained that the plaintiff in the first instance was required to
establish both liability and causation on a balance of probabilities. This
required the plaintiff to establish that the respondent's negligence, in whole
or in part, caused the accident, and that the injuries the appellant sustained
in the accident caused or contributed to the loss for which damages were sought
(para. 26).

[46]

Rowles J.A.
then went on to discuss the assessment of damages. She noted that the same test
applies regardless of whether you are assessing past or future loss of earning
capacity. In both situations the judge is considering hypothetical events. She
reasoned:

[29]       What would have happened in the past but for the
injury is no more knowable than what will happen in the future and therefore
it is appropriate to assess the likelihood of hypothetical and future events
rather than applying the balance of probabilities test that is applied with
respect to past actual events.

[17]

As can be seen from the above, the standard for the proof for
hypothetical past events, like hypothetical future events, is the lesser real
and substantial possibility threshold. This standard can be contrasted with
the standard of proof for past events, which is on the ordinary civil balance
of probabilities standard, and alleged events which do not rise to the real
and substantial possibility standard because they constitute mere speculation.

[18]

In his analysis, the judge considered the evidence led regarding Néanges
prospects, and concluded that the evidence regarding the business was, at best,
speculative. The judge held Dr. Silks projections do not rise above the
level of speculation (RFJ, para. 109). Accordingly, he determined no
award for past income loss was merited and rejected Dr. Silks analysis with
respect to loss of future earning capacity.

[19]

Ms. Rousta submits that the incorrect articulation of the test relating
to past income loss infected the judges approach to loss of future earning
capacity. That is because, in part, the method used to prove such alleged
losses was based on the expert analysis of Dr. Silk. Ms. Rousta
argues that in the circumstances of this case it was, at the very least,
appropriate to assess her losses with reference to Dr. Silks report. In
oral argument she submitted they should be assessed as a percentage of the
range provided by Dr. Silks report.

[20]

In my view, if Néanges prospects, as described by Dr. Silk, did
not rise to the level of a real and substantial possibility, as they were merely
speculative, then the judges wrongful articulation of the test was not material
to the outcome of the case. It is necessary, therefore, to consider whether the
judge made a palpable and overriding error in finding that the earnings
approach proffered did not rise above the level of speculation.

IV.

Past and Future Earning Capacity Claims

[21]

The judge concluded that the analysis of Dr. Silk did not rise
above the level of speculation for three principal reasons: (1) consideration
of the evidence regarding the development of the business opportunity up the
point of injury, (2) the failure to address key elements of a successful
business plan, and (3) the basic assumption that postulated the plaintiff
was unable to pursue the opportunity as a result of her injury. In the result,
he found the report unhelpful and afforded it no weight in his analysis of the
losses.

[22]

Ms. Rousta argues that it was an error for the judge to admit the report
and then to give it no weight. However, as the judge correctly noted, the
admissibility of expert evidence is a different inquiry than the weight to be
given to such a report (RFJ, para. 118). Simply put, an expert report may
be admissible, but its conclusions rejected or afforded no weight.

[23]

I turn now to the judges analysis of Dr. Silks expert report, and
his related consideration of past and future earning capacity.

(1)  Past Business Performance

[24]

Ms. Rousta submitted that she had been working on this business for
some 10 years prior to the motor vehicle accident. Ms. Rousta estimated
she had spent over $350,000 of her own money in development. Notwithstanding
those efforts, the actual performance of the business had not proven
financially viable.

[25]

For the years 2006 to 2014, the business had accumulated deficits of $276,813
and had not in any year broke even or generated a profit. During its best year
(2006), Néange had a net loss of $12,349, and, in the most recent pre‑accident
year (2013), it had a net loss of $36,469 (RFJ, para. 35).

[26]

With respect to the past performance of the business, the judge said:

[123]

A second concern with Dr. Silks
report is that it ignores that past earnings performance of Néange which, as
noted previously, had accumulated losses of about $250,000 by June 30,
2013, the last fiscal year before the accident. Dr. Silks explanation for
not considering past performance was that the plaintiff had not previously
identified a preferred sales methodology. That may be so, but it is difficult
to accept that past performance is wholly irrelevant to future success.

[27]

Ms. Rousta, however, submits that past performance in this case is
not a good indicator of the viability of the business, because she is a
perfectionist

and the preferred
sales methodology was not determined until 2011. However, the judge found that
she did not work full time on the business and found that the desultory
progress called into question her commitment. The judge said:

[128]    Two other factors undermine the plaintiffs income
loss claims as presented. First, it is apparent on the evidence that she did
not work full-time on developing Néange since leaving Dior in 2004. While there
was clearly considerable time spent initially developing the products and
sourcing suppliers, subsequent efforts to market and sell the products were
somewhat sporadic. That is particularly so in the years since 2009, which was
the year that sales revenues peaked at approximately $46,000. The following
year, sales revenues fell precipitously to $3,429, which the plaintiff
attributed to the recession and to the loss of her U.S. distributor. However,
apart from attending one trade show and talking to two shopping channels, the
plaintiff appears to have taken minimal steps to build the business or
recapture the market that she had developed in the U.S.

[129]    Further, the plaintiff
did not adequately explain why, after the successful 2011 seminar that led her
to focus on a direct sales model, she did not do more to pursue that model
immediately; for example, she did not explain why her home seminar presentation
was not completed until early 2014. The clear impression is that it is because
she was not in fact working on Néange full-time. This calls into question her
commitment to spending the time and effort necessary to build the business to
the degree contemplated by Dr. Silks projections.

[28]

It cannot be said that the judge erred by considering past business
performance and the desultory progress of the business as factors worthy of significant
consideration in determining whether the losses proposed by Ms. Rousta
rose above the level of speculation. He considered, and rejected, Dr. Silks
reasons for not factoring in this past performance. In this case, the evidence
was that Ms. Rousta had worked on N
é
ange
for some 10 years and it had never been profitable. In my view, it was
open for the judge to consider this as a factor in rejecting the analysis as
not rising above speculation.

(2)  Business / Business Plan

[29]

Ms. Rousta represented that significant initiatives by Néange were
incipient as of the date of the accident. She had spent many years considering
and developing her business, and her evidence was that she intended to newly
launch Néange with seminars beginning in January 2014, within a month or two of
the accident.

[30]

In relation to her business plan, Ms. Rousta submitted that she had
two key employees to assist her in the business, Wendy Travers, who was to
assist in presentation development, and Sima Hirbod, who would give seminars.
Both of these persons figured significantly in the assumptions made by Dr. Silk.

[31]

With respect to Ms. Travers, Dr. Silk said:

22.       In October 2013, Ms. Travers
moved from Paris to Vancouver for the purpose of working with Ms. Rousta
in launching Néange. During the next few months, she settled into a condo,
renovated it, and worked very closely with Ms. Rousta in developing the
seminar presentation. She put in an average of 25 hours per week working on Néange.
She anticipated being able to support herself financially through the sales of
Néange products.

[32]

With respect to roles of Ms. Travers and Ms. Hirbod, Dr. Silk
said:

30.       Starting in January
2014, Ms. Rousta planned on holding six seminars per month for the first
two months. Néange had three people committed to delivering the seminars: Ms. Rousta,
Ms. Travers, and Sima Hirbod, a former dermatologist office assistant who
also worked as an esthetician. The 12 sessions held in the first two months
would be conducted by Ms. Rousta and Ms. Travers with Sima Hirbod
attending to observe, learn and help refine the presentation. Starting in the
third month, Ms. Rousta, Ms. Travers and Sima Hirbod would deliver 6
seminars each for a total of 18 seminars per month. Thereafter, they would each
continue delivering 6 seminars per month.

[33]

However, the judge found that Ms. Travers intended to participate
only to supplement her income from other sources and the fact that she left to
find other employment within three months of the accident was indicative of her
level of commitment to the business (RFJ, para. 113).

[34]

In cross-examination, Ms. Hirbod described her proposed role in the
following way:

Q         Did, ah, Ms. Rousta ever ask you to
present a sales seminar in someones home?

A          Ah, she told me thats her plan, but, of
course,
(indiscernible)

told her, so I dont have any friends
or I dont have that opportunity to I can threw a party or seminar in my home
or my friends.

Q         And -- and why did you say that?

A          Why?

Q         Yeah.

A          So because I didnt have that opportunity.

Q         Sorry, and -- but what -- what do you mean by
you didnt have the opportunity?

A          So I didnt have that chance to threw a party
at my home, or any of my friends didnt, they were not interested.

Q         Your -- your
friends were not interested?

A          No.

[35]

The judge held that Ms. Hirbod appeared to know little about the
products and she showed minimal interest in hosting or presenting at seminars (RFJ,
para. 114).

[36]

Ms. Roustas plan, as outlined by Dr. Silk, required the
holding of seminars conducted by sales associates to interested customers. The
plan was to hold 462 seminars by the end of year one, 1650 seminars by the end
of year two, 3702 seminars by the end of year three, 6,618 seminars by the end
of year four, with projected attendance growing from 5,544 persons in year one
to 79,416 by the end of year four.

[37]

Despite these outlined plans, the judge found that as of December 2013
no seminars had actually been scheduled and no hosts had been recruited. Moreover,
Ms. Rousta had only held one informally organized seminar in 2011 (RFJ, para. 111).

[38]

With respect to Ms. Roustas plan to recruit and retain sales
associates, the judge found it to be both vague and unrealistic (RFJ, para. 111).
As the judge noted, the assumption that Ms. Rousta could have recruited
and retained the projected number of sales associates and held the projected
number of seminars underpinned Dr. Silks analysis (RFJ, para. 110).

[39]

Ms. Rousta objects to the characterization of her plan by the
judge. She testified to doing significant seasonal hiring for sales staff for
cosmetic firms in the past, and as a component of her prior employment. While
that may be so, Ms. Rousta testified as follows regarding her actual scheduling
efforts prior to the accident:

In addition to that, I had talked
to six of my friends would -- that they had -- said they were completely open
to host a place -- a party at their place. Or seminar, if you want to call it.

[40]

The judge further found that no evidence was led to show how Ms. Rousta
or Néange would be able to support the hosts and sales associates or manage
and distribute the products purchased (RFJ, para. 115).

[41]

In arguing her case before us, Ms. Rousta points to passages in the
evidence which she says supports her contention that she considered many issues
connected with the successful launch of her business, and that she herself
possessed qualities that would make that business successful. For example, she
points to evidence that part of the distribution plan was that sales associates
would pick up supplies from Ms. Rousta who stored them in her garage.

[42]

Although Ms. Rousta had a supply of N
é
ange
products in her garage, there was no evidence that Ms. Rousta had been in
contact with the supplier in recent years to determine if it could or would
supply the anticipated increased volumes (RFJ, para. 117). In response to
Dr. Silks projected expansion of the business beyond British Columbias
lower mainland, the judge noted that there was no evidence about how products
would be distributed throughout that expanded network (RFJ, para. 116).

[43]

In this case, the findings of the trial judge, absent an error in
principle, or a wholly erroneous estimate based on an inordinately high or low
award, are entitled to deference:
Reynolds v. M. Sanghera & Sons
Trucking Ltd.
, 2015 BCCA 232 at para. 14. Absent a manifest or
palpable and overriding error, an appellate court should not interfere with a
trial judges assessment of damages:
Jarmson v. Jacobsen
, 2013 BCCA 285
at para. 14;
Fan v. Chana
, 2011 BCCA 516 at para. 13.

[44]

It
is not the role of this Court to reweigh the evidence in respect of the
inference-drawing process. As set out in
Nelson (City) v. Mowatt
, 2017
SCC 8 at para. 38:

It is certainly possible to weigh parts of the
evidence differently than the chambers judge did. The possibility of
alternative findings based on different ascriptions of weight is, however, not
unusual, and presents no basis for overturning the findings of a fact-finder.
It is not the role of appellate courts to second-guess the weight to be
assigned to the various items of evidence
.

Absent palpable and overriding
error  that is, absent an error that is plainly seen and has affected the
result  an appellate court may not upset a factfinders findings of fact (
Housen
v. Nikolaisen
, 2002 SCC 33, [2002] 2 S.C.R. 235, at paras. 6
and 10; see also
H.L. v. Canada (Attorney General)
, 2005 SCC 25,
[2005] 1 S.C.R. 401, at para. 55).
The standard of palpable and
overriding error applies with respect to the underlying facts relied upon by
the Trial Judge to draw an inference, and to the inference-drawing process
itself
(
Housen
, at para. 23).

[Emphasis
added.]

[45]

In contrast to N
é
anges
actual desultory track record, the envisioned business was a multimillion-dollar
enterprise with hundreds of sales associates in several countries. In my view,
it was open to the judge to conclude that the evidence, considered as a whole,
did not rise to the requisite real and substantial possibility threshold.

(3)  Impact of Injury on Business

[46]

The judge also found that Ms. Rousta was not so disabled as to
preclude her from pursuing the business in any event. While he accepted that
her injuries would impact her ability to work to the same level as she could
prior to the accident, she retained a residual capacity to work. In support of
this finding, the judge noted her success in participating in the seminars organized
by Dr. Silk (
RFJ, paras. 130‑31).

V.

Conclusion

[47]

While Ms. Rousta emphasizes the trial judges incorrect
articulation of the test for past loss of earning capacity at the beginning of
his analysis, I have concluded that the error was not material to his reasons,
as he found that the track record of Néange did not support a past income loss
claim nor, as presented by the evidence of Dr. Silk, present a scenario rising
above the level of speculation for a loss of future earning capacity award.

[48]

Given his inability to place weight on Dr. Silks expert opinion,
the judge chose to assess damages for loss of future earning capacity in a
manner similar to that accepted by this Court in
Gojevic
, taking into
consideration the date of that award and the relative age of Ms. Rousta,
as discussed above. I see no error in that.

[49]

It is, then, for these reasons I would dismiss the appeal.

The
Honourable Mr. Justice Savage

I agree:

The
Honourable Chief Justice Bauman

I agree:

The Honourable Mr. Justice
Lowry


COURT OF APPEAL FOR BRITISH
COLUMBIA

Citation:

Leatherman v. 0969708 B.C. Ltd.,

2018 BCCA 33

Date: 20180130

Docket: CA44488

Between:

Charles Brooke
Leatherman and Sandra Lea Leatherman

Respondents

(Petitioners)

And

0969708 B.C. Ltd.
and Kootenay Lake Estates Ltd.

Appellants

(Respondents)

And

Oliver Berkeley
and Her Majesty the Queen in Right of Canada

Respondents

(Respondents)

Before:

The Honourable Mr. Justice Lowry

The Honourable Mr. Justice Willcock

The Honourable Mr. Justice Savage

On appeal from:  An
order of the Supreme Court of British Columbia,
dated May 15, 2017 (
Leatherman v. 0969708 BC Ltd.
, 2017 BCSC 793,
Nelson Registry H19731).

Counsel for the Appellants:

T.W. Pearkes

Counsel for the Respondents:

A.A. Edgar

Place and Date of Hearing:

Vancouver, British
  Columbia

January 8, 2018

Place and Date of Judgment:

Vancouver, British
  Columbia

January 30, 2018

Written Reasons by:

The Honourable Mr. Justice Savage

Concurred in by:

The Honourable Mr. Justice Lowry

The Honourable Mr. Justice Willcock

Summary:

Appeal from an order granting
foreclosure to the respondent mortgagees. The appellant mortgagors say the
respondents commenced the underlying action more than two years after they
discovered their right to realize on the mortgage security and therefore, the
proceeding was filed out of time as s. 15, not s. 14, of the
Limitation Act applied. Because of his findings, the judge did not determine
whether the limitation periods had been postponed. Held: Appeal allowed in
part. Under the mortgage the covenant to pay was a demand obligation,
s. 14 applied, and had not tolled. Subject to postponement (1) the
interest payments, due annually, were not demand obligations, and therefore the
mortgagees were barred from suing to recover payments missed more than two
years prior to the commencement of the action, and (2) the ability to
realize on the security was governed by s. 15 of the Act and was time
barred as the mortgagees right to realize on the security arose more than two
years prior to commencement of the action. The matter is remitted to the court
below to determine whether the running of the limitation periods were
postponed.

Reasons for Judgment of the Honourable Mr. Justice Savage:

I.

Introduction

[1]

This appeal arises out a mortgage transaction between former friends.
The central issue in the appeal is whether the debt and the mortgage security
were demand obligations, in which case they would be subject to the limitation period
prescribed by s. 14 of the
Limitation Act
, S.B.C. 2012, c. 13
[
Act
], as found by the judge below.

[2]

The appellant mortgagors say that the obligations were contingent
obligations and s. 15 of the
Act
applies. Since the respondent
mortgagees commenced this proceeding more than two years after they discovered
their right to realize on the mortgage security, the proceeding was filed out
of time. The appellants therefore submit that the appeal must be allowed and
remitted for a trial of the issue that the borrowers acknowledged liability,
and thereby postponed running of the limitation period, a matter not determined
by the chambers judge.

[3]

The respondent mortgagees say that the obligations were demand
obligations. The failure of the mortgagors to comply with their demand for
payment triggered the running of the limitation period pursuant to s. 14
of the
Act
. The decision of the chambers judge should be upheld and the
appeal dismissed. Alternatively, the mortgagees say this Court should find that
the mortgagors confirmed the cause of action within the meaning of s. 24
of the
Act
, thereby postponing the running of the limitation period, and
the appeal should be dismissed.

II.

Background

[4]

On May 28, 2013, Kootenay Lake Estates Ltd. (KLE) granted a
mortgage to Mr. and Ms. Leatherman (collectively, the Leathermans) with
respect to KLEs interest in land, securing a $1,500,000 debt owed by KLE to the
Leathermans (the Mortgage).

[5]

KLE subsequently sold its interest in the land to 0969708 B.C. Ltd.
(708 B.C. Ltd.), which assumed KLEs obligations under the Mortgage on
August 2, 2013. Mr. Oliver Berkeley was the principal and operating
mind of KLE, while his wife, Ms. Siara Berkeley was the authorized
signatory of 708 B.C. Ltd.

[6]

Under the Mortgage, the date of payment is on demand. Until the demand
was made by the mortgagees, the mortgagors were obliged to pay accrued
interest. The Mortgage defined maturity date as the balance due date shown on
the mortgage form, or any earlier date on which the mortgagees could lawfully
require payment of the mortgage money. The Mortgage incorporated the provisions
of
Schedule B  The Prescribed Standard Mortgage Terms
.

[7]

KLE and 708 B.C. Ltd. gave the Leathermans a General Security Agreement
(GSA) over the proceeds of sale of lots that might be subdivided from the
mortgaged land. The GSA provided that if the mortgagors were in breach of the
Mortgage, the mortgagees were free to realize on the GSA.

[8]

708 B.C. Ltd. first failed to make a required interest payment on
October 31, 2013. No action was taken by the Leathermans in response to
this failure. 708 B.C. Ltd. continued to fail to make the required interest
payments in the subsequent years. Correspondence was exchanged in relation to
the debt and its repayment between the mortgagees and the mortgagors in
November 2015.

[9]

The Leathermans issued a demand for payment of the whole amount of the
principal and interest due on the debt (and are now seeking only 6% annual
interest, the lowest amount of interest contemplated by the Mortgage) after 708
B.C. Ltd. again failed to make an interest payment on October 31, 2016.
This demand was made on November 9, 2016. The Leathermans filed a petition
seeking repayment and foreclosure in December 2016.

[10]

The mortgagors responded to the petition by arguing it was statute
barred because the two‑year limitation period commenced on November 1,
2013 when the mortgagors first failed to make a required payment. According to
the mortgagors, their failure to make payment on October 31, 2013 was a
breach of the promise contained in the agreement, and an act of default
pursuant to Clause 7, which triggered the right of the mortgagees to
accelerate payment pursuant to Clause 8
Schedule B  The
Prescribed Standard Mortgage Terms
(Clause 8 of the Prescribed
Terms). In support of this argument, the mortgagors relied on ss. 6(1)
and 15 of the
Limitation Act
.

[11]

Conversely, the Leathermans submitted the failure of the mortgagors to
comply with their demand for payment, made November 9, 2016, was the
triggering event for the purposes of the
Limitation Act
. They referred
to s. 14 of the
Limitation Act
, which provides that a claim for a
demand obligation is discovered on the first day that there is a failure to
perform the obligation after a demand for the performance has been made. Thus,
the mortgagees submit, there is no merit to the limitation period response made
by the mortgagors. Alternatively, they say that the limitation period was
postponed.

Decision of the Chambers Judge

[12]

In reasons indexed as
Leatherman v. 0969708 BC Ltd.
, 2017 BCSC
793, Mr. Justice Rogers found that the Mortgage and assumption agreement
are governed by the provisions of the 2013 iteration of the
Limitation Act
.
The earlier iteration of the
Limitation Act
[
R.S.B.C. 1996, c. 266
]
did not apply. The judge considered the
authorities submitted by the mortgagors, namely
492621 B.C. Ltd. v. Bustin
Farms Ltd.
, 2009 BCSC 1464, and
Kong v. Saunders
, 2014 BCCA 508. The
judge concluded that the case at bar was distinguishable from both those cases.

[13]

Bustin Farms
was not instructive because the mortgage at issue
stipulated a maturity date, unlike the Mortgage at issue, which indicated the
mortgagee could demand payment at any time. While Clause 8 of the
Prescribed Terms was incorporated into the Mortgage, the judge held that its
inclusion was superfluous as the mortgagees could in fact realize on the Mortgage
at any time.

[14]

Likewise,
Kong
did not help the mortgagors.
Kong
noted
that the ability of a lender to realize on a demand loan arises from the moment
the agreement is reached. However, the judge noted the 2013 amendments to the
Limitation
Act
modified the law.

[15]

Section 14 of the
Limitation Act
provides that a pure demand
loan will be treated like a delayed-demand loan in which the lender may demand
payment at any time but stipulates that payment occur upon some future event.
The effect of s. 14 is that the limitation period for pure demand loans
commences not upon the making of the loan but rather
when a demand is made
and the borrower fails to comply.

[16]

The judge said the mortgagors argument confused the legal right to sue
with the start of a limitation period. Section 14 does not modify when the
lender may make a demand for payment on a demand loan. It simply modifies when
the limitation period commences once the lender has issued such a demand. The judge
was unpersuaded by the further submission that the existence of the GSA
indicated the parties did not intend to create a simple demand loan.

[17]

Accordingly, the Leathermans had the right to demand repayment of the
loan at any time once the agreement was made, and the limitation period to seek
foreclosure was triggered by their request for repayment in November 2016. An
order
nisi
was therefore entered, pursuant to the terms requested by the
mortgagees, granting a six‑month redemption period and $1,934,827.65 due
with 6% interest accruing per annum.

III.

Legislation

[18]

British Columbias new
Limitation Act
came into force on June 1,
2013. Unlike the former act, the new
Act
sets out the governing
limitation period unless modified by another law.

[19]

The new
Act
created a single two‑year basic limitation
period for most civil claims (s. 6), modifying the limitation periods
found in the prior
Act
which varied between two, six, and ten years
depending on the cause of action: see Graeme Mew, Debra Rolph & Daniel
Zacks,
The Law of Limitations
, 3d ed. (Markham, Ont.: LexisNexis,
2016) at 11. The two‑year basic limitation period commences once the
claim has been discovered (s. 6(1)).

[20]

Significantly, for the matter at bar, the new
Act
introduced discovery rules for certain types of claims, including the
enforcement of demand obligations and realizing or redeeming securities in the
secured transactions context.

[21]

Prior to the enactment of the amended
Act
, there was no special
rule in place for demand obligations, which are financial arrangements with no
fixed conditions for repayment and are payable on the demand of the lender.

[22]

Absent specific statutory provisions, the common law interpretation was
that the limitation period for demand loans commenced the day at which the
parties entered into the demand loan. In
Berry v. Page
(1989), 38
B.C.L.R. (2d) at 247 (C.A.), the Court said:

The characterization of the
loan as either a contingent loan or a demand loan determines whether or not the
action is statute barred under the Limitation Act. It is well established that
the cause of action accrues, and the statute of limitation runs, from the
earliest time at which repayment can be required (Chitty on Contracts, 25th ed.
(1983), vol. I, para. 1843, p. 1024).
For a demand loan, the
statute of limitations runs as of the date of the advancement of the funds, and
not from the date of the demand. No demand is necessary in order for the cause
of action to arise
:
Barclay Const. Corp. v. Bank of Montreal
(1988),
28 B.C.L.R. (2d) 376 at 381 (S.C.);
Henback v. Sprague
,
[1933] 3 D.L.R. 647 (Man. C.A.).

[Emphasis added.]

[23]

On the other hand, in the context of delayed-demand or contingent loans,
the cause of action and thus, the limitation period, would commence on the
repayment date or upon the happening of the contingency: see
Ewachniuk
Estate v. Ewachniuk
, 2011 BCCA 510;
Kong v. Saunders
, 2014 BCCA 508.
In
Berry v. Page
, at 247, the Court said this:

Case law supports the proposition
that if money is lent to be repaid at a particular time in the future, or upon
the happening of a specified contingency, then the cause of action arises at
the time specified or upon the happening of the contingency:
Ingrebretsen v.
Christensen
, 37 Man. R. 93, [1927] 3 W.W.R. 135 (C.A.);
Re Gould;
Ex parte Garvey
, [1940] O.R. 250, [1940] 3 D.L.R. 12 (C.A.). In these
circumstances, the cause of action does not arise, and the statute of
limitations does not run until the contingency is satisfied.

[24]

The relevant sections of the new
Act
are as follows:

Discovery
rule for claims for demand obligations

14
A
claim for a demand obligation is discovered on the first day that there is a
failure to perform the obligation after a demand for the performance has been
made.

Discovery
rule for claims to realize or redeem security

15
A claim to realize or redeem
security is discovered on the first day that the right to enforce the security
arises.

[25]

It is the impact of these provisions that is in issue in this appeal.

IV.

Standard of Review

[26]

The issue on appeal concerns both the interpretation of the
Limitation
Act
and the interpretation of the Mortgage. The judges interpretation of
the
Limitation Act
is reviewable on the standard of correctness. The
interpretation of the Mortgage is a question of mixed fact and law, and
reviewable on the more deferential palpable and overriding error standard,
unless there is an extricable question of law.

V.

Discussion and Analysis

(i) The New
Act

[27]

The inclusion of s. 14 in the amended
Act
was designed to
address the difficulties arising from the application of the limitation period
to pure demand obligations. Lenders who enter into such obligations range from
unsophisticated parties lending to friends, to institutions such as banks and
credit unions lending in a commercial context.

[28]

Under the former
Act
, the limited timeframe in which a lender
could seek recourse to enforce repayment could be problematic as persons who
entered into demand loans included unsophisticated parties, or family members,
whose agreements were often informal. Unfairness could also occur where a
lender died before recovering payment and the lenders beneficiaries, for
example, did not know of the informal arrangement: see Civil Policy and
Legislation Office, British Columbia Ministry of Justice, White Paper on
Limitation Act Reform: Finding the Balance (Victoria: Ministry of Attorney
General, September 2010), at 75; John D. Morrison & Navnit Duhra,
New B.C.
Limitation Act
More Favourable to Lenders Holding Demand
Obligations, (2014) 31:1 Natl Insolv Rev 4 at 4; Katherine A.
Reilly & Jamieson D. Virgin, The Discovery of Demand Obligations
under B.C.s
Limitation Act
 (2014)
34 Est. Tr. & Pensions J. 288 at 293
.

[29]

The effect of s. 14 in the new
Act
brings the limitation
period for demand obligations in line with delayed-demand obligations. Pursuant
to s. 14, a claim for repayment of a demand obligation is discovered on
the first day there is a failure to make repayment
once a demand has been
made
. The two‑year limitation period thus commences once there is a
default after a demand for repayment is made.

[30]

While deciding an appeal in the context of the prior
Act
, Mr. Justice
Tysoe of this Court noted that with the passage of s. 14 of the new
Act
addressing the limitation period for demand obligations the limitation period
does not begin running until demand is made:
Kong
at para. 23.
While
obiter dicta
, this interpretation is consistent with legislative
intent given the harms the amended legislation sought to address.

[31]

In the secured transactions context, s. 15 of the new
Act
modified the limitation period for secured parties seeking to bring a claim to
realize or redeem their security. Under s. 3(4) of the prior
Act
,
there was no limitation on the period in which a secured party could bring an
action to realize on collateral that they already possessed. If the collateral
was not in the possession of the secured party, then the six‑year
limitation period applied (s. 3(6)(a)). This provision was often cited in
mortgage foreclosure proceedings: see e.g.,
Taylor Ventures Ltd. (A Bankrupt)
v. High Meadow Holdings Ltd.
, 2006 BCSC 1095 at para. 23, affd 2008
BCCA 80 at para. 13.

[32]

The effect of s. 15 of the new
Act
is that the general two‑year
limitation period applies to actions seeking to realize or redeem a security,
but the time starts running from the first day
the right to enforce the
security arises
. This change would not have an adverse effect on secured
parties holding demand obligations, for which the limitation period will only
commence once a demand has been made: see Morrison & Duhra at 4‑5.

[33]

If a security is realizable or redeemable upon default, then the
limitation period commences when the default  or right to enforce the security
 occurs. If the security is enforceable on demand, then logically the
limitation period will commence once the demand has been made, and there has
been a default.

[34]

Sections 14 and 15 of the new
Act
have yet to receive
judicial consideration, apart from the present proceedings. On its face,
s. 14 modifies the commencement date for the limitation period for demand
obligations to the date of demand. On its face, s. 15 did not modify the law
regarding the commencement date for tolling the limitation period for a claim
to realize or redeem security.

(ii) The Mortgage

[35]

The Mortgage in this case was for the principal amount of $1,500,000.
The first payment of interest was October 31, 2013. The last payment day
is specified as On Demand and the balance due date is On Demand. The
Prescribed Standard Mortgage Terms are checked off as applying.

[36]

Under Payment Dates the following provision occurs:

This Mortgage is due On Demand. Until
Demand is made, the Borrower must make minimum payments of interest only, such
payments of interest to be paid on the earlier of (a) any sale of any lot
subdivided from the Mortgaged Lands, and (b) on October 31st of each
and every year commencing October 31, 2013.

[37]

Clause 8 of the Prescribed Terms provides:

8(1) If a default occurs, all the mortgage money then owing
to the lender will, if the lender chooses, at once become due and payable,

(2) if a default occurs the lender may, in any order that the
lender chooses, do any one or more of the following:

(a) demand payment of all the
mortgage money;

(b) sue the borrower for the amount
of money due

(f) apply to the court for an order
that the land be sold on terms approved by the court;

(g) apply to
the court to foreclose the borrowers interest in the land so that when the
court makes its final order of foreclosure the borrowers interest in the land
will be absolutely vested in and belong to the lender;

[38]

The term mortgage money is defined to mean:

the principal amount, interest
and any other money owed by the borrower under this mortgage, the payment of
which is secured by this mortgage.

[39]

The judge interpreted Clause 8 of the Prescribed Terms to be
superfluous. This was because the Mortgage did not have a maturity date and
the right to demand payment was not contingent on some act of default by the
mortgagor.

(iii) Application

[40]

The appellants argue that the Mortgage is not a pure demand
obligation, relying on
Bustin Farms
and the authorities cited therein,
to claim that the running of the limitation period begins immediately upon
default by the borrower. In
Bustin Farms
,

the mortgage in
question was not a demand mortgage, it provided for monthly payments, had a
last payment date and balance due date. Upon the first incident of default the
lender had the option to accelerate the debt. The cases relied on in
Bustin
Farms
did not concern demand obligations: each had an explicit payment due
date and required an acceleration provision to seek payment in full after
default.

[41]

The situation in
Kong
is an example of a demand obligation under
the old
Limitation Act
. The Court found that the limitation period began
to run on the date the loan was made, and expired six years later. The Court
noted that s. 14 of the new
Limitation Act
would have treated the
case differently, as the limitation period would not have commenced to run
until demand was made.

[42]

The appellants submit that the Mortgage here is a contingent loan with
a demand element and the use of the term payable on demand does not make the
Mortgage a demand obligation. The appellants rely on Ontario authorities
saying that loans that have demand elements may not be considered demand
obligations for the purposes of parallel provisions under the Ontario
legislation.

[43]

In my view, the Ontario authorities are not particularly helpful. In
Berry
v. IPC Securities Corp.
, [2009] O.J. No. 1598, the loan called for
monthly interest payments and had an explicit due date for the principal sum (para. 17).
In
Urbas Estate v. Home Savings and Loan Corp.
, 2015 ONSC 6399, the
demand component was inherent in the loan, which was found to be a demand
obligation in circumstances where the demand date was uncertain (paras. 47‑56).
A debt obligation that does not specify a date for repayment is a demand
obligation. Where a debt obligation was payable on a specified date, it was
found not to be a demand obligation:
Skuy v. Greennough Harbour Corporation
,
2012 ONSC 6998 (paras. 50‑51).

[44]

I agree that the mere insertion of the term payable on demand does not
render a mortgage a demand obligation. In my view, the agreement here
reflects a reasonable arrangement in a high-risk lending environment where
there was little prospect for repayment on strict terms or on a specified due
date. As such, it included
both
a demand obligation and a contingent
obligation.

[45]

This Mortgage, like most mortgages, includes both a covenant to pay and
security for the debt. The covenant to pay the principal, considered on its
face, and alone, is a demand obligation. With respect to it, s. 14
applies; that is, it is not payable until demand. The obligation to pay
interest, however, is not a demand obligation because it was payable without
demand on October 31 of each year. The Mortgage also provides that the
property mortgaged is security for the debt. With respect to security for the
debt, s. 15 of the
Act
applies. The right to realize on the
security arises upon discovery of that right.

[46]

Discovery of the right, by s. 15, arises upon default. The default
occurred when an interest payment was not made under the Mortgage, and thus the
right to realize on the security arose on such default, and the two‑year
limitation period would apply from default, unless postponed.

[47]

With respect to the demand obligation, s. 14 applied. Thus, the
limitation period with respect to the ability to seek judgment enforcing the
covenant to pay ran from November 9, 2016, the first day of a failure to
pay after demand. With respect to the right to realize on the security, the
limitation period ran from the first day that the right to enforce the security
arose, namely, the date of default, October 31, 2013, by virtue of
s. 15.

[48]

Accordingly,
absent postponement
, the limitation period has
expired with respect to the Leathermans ability to realize on the security and
some of the interest. However, the limitation period had not tolled with
respect to their ability to seek judgment on the covenant to pay, except to the
extent of the interest payable more than two years prior to the commencement of
the foreclosure action.

[49]

The appellants submit that the incorporation of the Clause 8 of the
Prescribed Terms accelerates the due date of the Mortgage to the first instance
of default: when the first payment of interest was due and not paid. The
appellants submit that, as in
Bustin Farms,
the first missed interest
payment commenced the limitation period for the entirety of the Mortgage, that
is, for actions on the covenant as well as enforcement of the security.

[50]

The judge found that the inclusion of Clause 8 of the Prescribed
Terms into the Mortgage was superfluous, but I do not see how that can be so.
Rather, the Prescribed Terms must be read alongside the stipulated terms of the
Mortgage.

[51]

Clause 8 of the Prescribed Terms provides that if a default
occurs, all the mortgage money then owing to the lender will, if the lender
chooses, at once become due and payable. As noted above, mortgage money is
defined to include the principal amount, interest and any other money owed by
the borrower under this mortgage, the payment of which is secured by this
mortgage.

[52]

In the context of this particular Mortgage, the parties stipulated that
the principal was payable on demand. Therefore, consistent with the language of
the Prescribed Terms, the repayment of the principal remains a demand
obligation. Pursuant to s. 14 of the new
Act
, the limitation period
for this demand component will only commence once demand is made. In my view,
the Prescribed Terms cannot render inapplicable the changes to the
Limitation
Act
concerning demand obligations.

[53]

This does not render the Prescribed Terms superfluous. Certain other
obligations stipulated by the Mortgage that are not demand obligations may be
impacted by the Prescribed Terms. For example, while the parties did not make
submissions to the effect that the interest and principal owing should be
treated differently with respect to limitation periods, the Prescribed Terms
effect is to treat these moneys differently.

[54]

The judge found it unnecessary to deal with the postponement issue.
However, as I have concluded the limitation period has tolled with respect to
the respondents ability to realize on the security, and to sue for some of the
interest, it is necessary to consider whether postponement actually occurred in
this case.

[55]

In general, it is inappropriate for this Court to determine factual
issues at first instance. To do so would require appellate fact-finding,
something, ordinarily, this Court will not do:
Swiss Reinsurance Company v.
Camarin Limited,
2015 BCCA 466 at para. 65;
Winstanley v.
Winstanley
, 2017 BCCA 265 at para. 64. I see no reason to depart from
that principle here.

VI.

Conclusion

[56]

In the result, I would dismiss the appeal from the order granting
judgment on the covenant. I would allow the appeal as it pertains to the
ability to realize on the security, and the obligation to pay some of the interest,
set aside the order
nisi
, and remit the matter to the court below to
deal with the postponement issue and any residual issues.

The
Honourable Mr. Justice Savage

I agree:

The Honourable Mr. Justice
Lowry

I agree:

The Honourable Mr. Justice
Willcock


COURT OF APPEAL FOR BRITISH COLUMBIA

Citation:

R. v. Nelson,

2018 BCCA 45

Date: 20180130

Docket: CA44586

Between:

Regina

Respondent

And

Berk Vili Nelson

Appellant

Pursuant
to s. 16(4) of the
Sex Offender Information Registration Act
(
SOIRA
),
no person shall disclose any information that is collected pursuant to an order
under

SOIRA
or the fact that information relating to a person is collected
under
SOIRA
.

Before:

The Honourable Mr. Justice Fitch

(In Chambers)

On appeal from: an
order of the Supreme Court of British Columbia, dated
August 2, 2016 (conviction) (
R. v. Nelson
, Williams Lake Registry No.
33585) and
April 28, 2017 (sentence) (
R. v. Nelson
, 2017 BCSC 1050, Williams Lake
Registry No. 33585)

Oral Reasons for Judgment

Appellant appearing In Person (via videoconference re.
  conviction appeal)

B.V. Nelson

Counsel for the Appellant (sentence appeal):

E. Purtzki

Counsel for the Respondent:

D. Layton, Q.C.

Place and Date of Hearing:

Vancouver, British
  Columbia

January 30, 2018

Place and Date of Judgment:

Vancouver, British
  Columbia

January 30, 2018

Summary:

The appellant appeals both conviction
and sentence. He applies for an order allowing the sentence appeal to be heard before
the conviction appeal. The Legal Services Society is funding the sentence
appeal. The appellants application for court-appointed counsel to argue the
appeal from conviction has been dismissed. The appellant wishes to prosecute
the conviction appeal but does not currently have the resources to do so on his
own. Held: Application granted. In the exceptional circumstances of this case,
it would be in the interests of justice to hear the sentence appeal first. Because
the appellants application for state-funded counsel on his conviction appeal
has just been dismissed, he is entitled to more time to acquire resources to
prosecute that appeal. He has not yet ordered transcripts or appeal books and
may never be in a position to do so. The conviction appeal has not been show to
have merit. If the order sought is not made, the sentence appeal may be moot,
or nearly so, by the time it is heard. The appellant was sentenced to two
years imprisonment and has already served approximately nine months.

[1]

FITCH J.A.
: I have been case managing this appeal from conviction
and sentence since September 2017. The background circumstances were canvassed
in my reasons for judgment delivered on November 10, 2017, which dealt with the
appellants applications to extend time and to have counsel appointed on his
behalf pursuant to s. 684 of the
Criminal Code
, R.S.C. 1985, c. C-46.
The reasons I am delivering today should be read in conjunction with the
reasons given on November 10, 2017.

[2]

Since November 10, 2017, the following significant events have occurred.

[3]

First, the limited s. 684 appointment was accepted by Mr. Purtzki. By
letter dated January 24, 2018, Mr. Purtzki advised the Court that he had
conducted the investigations contemplated by the limited appointment of counsel
order in relation to the conviction appeal. Having conducted those
investigations, he has come to the conclusion that there is no basis on which
to proceed with a full application for the appointment of counsel to conduct
the appellants conviction appeal.

[4]

Second, the Legal Services Society has reconsidered its original
decision in relation to the appellants sentence appeal and has now determined
to fund that appeal. Mr. Purtzki has agreed to act for the appellant on the
appeal from sentence.

[5]

The appellant, who appears this afternoon by video conference, advises
that, despite Mr. Purtzkis assessment of the matter, he plans on pursuing the
conviction appeal. He is not prepared to abandon it at this stage even though he
has no current ability to pay for the required transcripts and appeal books.

[6]

In any event, I consider the limited s. 684 order to be spent at this
stage. I dismiss the original application to appoint counsel to argue the
conviction appeal. I do so because the appeal from conviction has not been
shown to be possessed of any merit. I addressed this issue in my reasons given
on November 10, 2017, at paragraphs 2029. Mr. Purtzkis assessment of the
matter, having had the opportunity to investigate the appellants ineffective
assistance of counsel claims and his contention that fresh evidence exists that
could assist him on the appeal, simply fortifies me in this conclusion. As the
appeal has not been shown to have any merit, it is not in the interests of justice
that public funds be expended on the full appointment of counsel order the
appellant sought.

[7]

Mr. Purtzki takes the position that, in the unusual circumstances of
this case, I should exercise my discretion to direct that the appeal from
sentence proceed in advance of the appeal from conviction. The application is
supported by the Crown. I confirmed with Mr. Nelson this morning that he, too,
supports the making of this order.

[8]

Despite the unusual nature of the application, the matter is time
sensitive and I have determined to give oral reasons today on the application
to reverse the usual order of hearing.

[9]

I will say at the outset that both counsel quite properly recognize that
the making of such an order is a departure from the usual practice of this Court.
For sound reasons, the practice of the Court is to hear conviction appeals
first. There are at least three reasons for this. The first is rooted in the
prudent allocation of judicial resources. If a conviction appeal is successful,
the sentence appeal becomes redundant and the Court will have wasted its time
and public resources in disposing of the sentence appeal first:
R. v.
Freeman
(1998), 101 B.C.A.C. 79 at para. 5 (Chambers);
R. v. Reed
(1998),
102 B.C.A.C. 157 at para. 10 (Chambers). Second, even when a conviction appeal
is dismissed, the reasons may provide a helpful perspective regarding facts and
issues relevant to the merit and disposition of the appeal from sentence:
R.
v. Owusu
, 2006 ABCA 91 at para. 6 (Chambers). Third, proceeding with the sentence
appeal first might be seen as potentially compromising the appearance of
fairness if the conviction appeal is allowed, a new trial is ordered, and the
appellant is convicted following a retrial. In these circumstances, the
appellant will appear for sentencing before a judge who has the considered
opinion of this Court as to the fitness of the sentence originally imposed. An
appellant in that situation might perceive (reasonably or not) that the
sentencing judge will feel bound to follow the decision of this Court.

[10]

While
the usual practice exists for good reasons, this Court has acknowledged that
there may be exceptions to the practice where it is shown that the interests of
justice would be served by an order reversing the usual order of hearing:
Freeman
at para. 5;
Reed
at paras. 910. Although rare, orders of the kind
sought in this case appear to have been made in the past both in this
jurisdiction (see
R. v. Hossainnia
, 2011 BCCA 379 at para. 2) and
elsewhere (see
R. v. Delchev
, 2014 ONCA 448 at para. 1;
R. v. M.W
.,
2015 ONCA 644 at paras. 915).

[11]

From
my review of the authorities provided in support of the application, it is
clear that the order sought should only be granted in exceptional circumstances
where compelling reasons to depart from the usual order of hearing have been
demonstrated.

[12]

I
agree with the joint position of counsel that the exceptional circumstances of
this case are such that the interests of justice would best be served by making
the order sought.

[13]

There
are a number of considerations that have led me to this conclusion. Many of
them are identified in the materials filed by the parties.

[14]

First,
transcripts from the five-day trial have not yet been ordered. The appellant
has just learned of the disposition of his s. 684 application and is entitled
to additional time to acquire the resources necessary to fund the conviction
appeal on his own. It is likely that an application to dismiss the conviction
appeal for want of prosecution would be viewed as premature at this stage.

[15]

Second,
although the appellant should be given some additional time to prosecute the
appeal with his own resources, there is a very real possibility in this case
that the appellant will be unable to fund the costs of transcripts and appeal
books such that the appeal from conviction will never be heard.

[16]

Third,
as the conviction appeal has not been shown to have any merit, it is unlikely
(at least on the basis of material before me) that hearing the sentence appeal
first will result in squandering scarce judicial resources because the
conviction appeal is subsequently allowed.

[17]

Fourth,
further delay in scheduling the sentence appeal to permit the appellant an
opportunity to proceed with his conviction appeal means that it is likely that
the sentence appeal will become moot, or nearly so, through the passage of
time. After being given credit for pre-sentence custody, the appellant was
sentenced on April 28, 2017, to two years imprisonment to be followed by two
years probation. By my calculations, he has now served approximately nine
months of that sentence. I would add that concerns arise about the sentence
appeal becoming moot from a pragmatic perspective even if the conviction appeal
languishes and is eventually dismissed for want of prosecution.

[18]

Fifth,
failing to grant the order sought would likely result in a sentence appeal the
Legal Services Society has determined to have sufficient merit to fund never
being heard by this Court, or heard at a time when no practical remedy will be
available to the appellant even if the original sentence is found to be unfit.
In my view, and in all the circumstances of this case, allowing the sentence
appeal to become moot, or nearly so, through the passage of time would be
contrary to the interests of justice.

[19]

Finally,
my assessment of the interests of justice in this case takes account of the
evidence before me that the appellant has experienced in the past, and
continued to experience at the time of sentencing, significant mental health
challenges. I appreciate that the appellant rejects the notion that he is
unwell or in need of professional assistance but the evidence before me is
capable of suggesting otherwise. While the appellant continues to assert his
desire to proceed with the conviction appeal, I question the extent to which
his decision is truly an informed one, or whether the appellant understands the
consequences of his intended course of conduct and how pursuit of what appears
to be a meritless conviction appeal could potentially prejudice the prosecution
of his appeal from sentence.

[20]

The
unusual features of this case, viewed cumulatively, support the making of an
order that the sentence appeal be heard in advance of the appeal from
conviction. I make that order.

[21]

Further,
I order that the appeal from sentence be expedited to the earliest possible
date. To that end, I would direct counsel to attend before the registry and
secure the earliest date upon which a one-hour sentence appeal could reasonably
be heard once it is known when the reasons on sentencing will be transcribed
and available for filing.

[22]

If the appellant determines to proceed with a bail application pending
the hearing of his appeal from sentence, it would be desirable that the
application come before me as I am familiar with the circumstances of this
appeal. Having said that, I am not seizing myself of the application for the
practical reason that I am sitting with a division of the Court during the
weeks of February 5 and February 12, 2018, and may not be in a position to
entertain the application, particularly if it is opposed. If an application for
bail is made, I will leave it with counsel to determine whether that
application should come before me or another judge.

The
Honourable Mr. Justice Fitch