COURT
    OF APPEAL FOR BRITISH COLUMBIA

Citation:

Park
          v. FinancialCAD Corporation,

2009
          BCCA 7

Date: 20090113

Docket: CA036011; CA036012; CA036023; CA036024

Between:

Robert
    Park, Takashi Yuri, Steven P. Korn, Gerri Sinclair, Frank Barr,
John Greiner, Katherine Greiner, Robert Reynolds, Nancy Petersen,
Capital G. Limited, Cayber Management Limited, Shadowood Builders Ltd.,
Conqueror Limited, Jambo Limited, Stratos Limited,
Tower Nominees Limited, William W. Stevenson, Sojitz Corporation,
Kelly L. Storteboom, Juniperus Limited G, Coral Caper Limited,
Westward Grand Cayman Limited, Sandee-Jo Butterley,
Techmatrix Corporation, Brian Kipp, Priscilla McDonald,
Lachlan Brown, Lynne Dale-Johnson, Rod Dale-Johnson,
Bari Consiglio, Bonny Consiglio and Ronald Gillies

Appellants

(
Petitioners
)

And

Gary
    Davidson, Byron Doyle, Elizabeth Doyle, Glacier Fuels Ltd.,
David Glassco, National Tradex Limited and Pavel Vasak

Respondents

(
Respondents
)

And

FinancialCAD
    Corporation

Appellant

(
Respondent
)

Before:

The
          Honourable Chief Justice Finch

The
          Honourable Mr. Justice Lowry

The
          Honourable Madam Justice Smith

D.
          B. Kirkham, Q.C. and R. S. Padda

Counsel for the Appellants/Petitioners,
Robert Park et al

J.
          C. McArthur and
T. C. Louman-Gardiner

Counsel for the Appellant/Respondent, FinancialCAD
          Corporation

B.
          D. M. Loewen

Counsel for the Respondents

Place
          and Date of Hearing:

Vancouver, British Columbia

November 28, 2008

Place
          and Date of Judgment:

Vancouver, British Columbia

January 13, 2009

Written
          Reasons by
:

The
          Honourable Mr. Justice Lowry

Concurred
          in by:

The
          Honourable Chief Justice Finch

The
          Honourable Madam Justice Smith

Reasons
    for Judgment of the Honourable Mr. Justice Lowry:

[1]

FinancialCAD Corporation is a successful privately held software company
    that is the subject of a shareholders dispute.  It was incorporated in British
    Columbia in 1990 and continued under the
Canada Business Corporations Act,
R.S.C. 1985, c. C-44, in 2000.  There are five directors and approximately
    85 shareholders.

[2]

On June 26, 2007, at the annual meeting, a special resolution
    presented by the directors, amending the Corporations articles to restrict
    the transfer of shares, was adopted.  A Certificate of Amendment amending
    the articles was issued by the Director under the
Act
.  Statutory dissent
    rights  the right of those who did not vote for the resolution to choose
    to surrender, and be paid the fair value of, their shares  were triggered.
    Seven of the shareholders, who hold 30 per cent of the shares, did not vote
    and then gave notice of their dissent; the Corporation refused to accept the
    notices, reserving the right to make a court application to have the special
    resolution set aside.

[3]

Thirty shareholders, holding almost 60 per cent of the shares, who
    voted in favour of the resolution, including three of the directors holding
    more than 20 per cent of the shares, maintain they did not know its adoption
    would trigger dissent rights.  They take the position that, had they known,
    the resolution would not have been presented and adopted: it was a mistake.
     They contend that, while the value of the dissenting shareholders shares
    has not been determined, the size of the payment that might be expected could
    so impair the Corporations financial position as to threaten its continued
    viability, thereby substantially diminishing the value of the remaining issued
    shares.

[4]

The seven dissenting shareholders (the Davidson Petitioners) filed
    a petition naming the Corporation the respondent and seeking a declaration
    of entitlement with an order for payment of the value of their shares.  A
    cross-petition was filed by the 30 shareholders and the two directors not
    holding shares (the Park Petitioners) naming the Davidson Petitioners and
    the Corporation the respondents.  They seek to have the special resolution
    and the notices of dissent set aside as void, and the Certificate of Amendment
    issued by the Director cancelled.  The Corporation supports the relief sought
    in the petition filed by the Park Petitioners.

[5]

On hearing the petitions, Mr. Justice Pitfield, in reasons for
    judgment, indexed as 2008 BCSC 353, 44 B.L.R. (4th) 70, concluded the Davidson
    Petitioners should succeed.  The relief they sought was granted; the cross-petition
    was dismissed.  The orders entered are now appealed by the Park Petitioners
    as well as by the Corporation.  The appeals have been consolidated for hearing.
     The question is whether, on the grounds advanced, the judge erred in his
    conclusion such that this Court should now intervene to preclude the
    Davidson Petitioners from exercising their dissent rights.

The
    Resolution

[6]

The judge began by outlining the circumstances he found had led to
    the adoption of the special resolution.  He saw the resolution to be the directors
    strategic response to the attempt of one minority shareholder, who holds the
    largest number of shares (24 per cent), to avoid a Shareholders Agreement
    to which he is a party.  The agreement precludes him from selling his shares
    without the approval of others, and such approval was not forthcoming, at
    least not on terms satisfactory to the shareholder.  He is one of the two
    people who founded the Corporation.  He was discharged from the position he
    last held with the Corporation and wished to sell his interest.  He commenced
    proceedings for a declaration he was no longer bound by the Shareholders
    Agreement.  The directors then sought the amendment to the articles to restrict
    the transfer of shares without their approval so that, even if the shareholders
    court application succeeded, they would have control over the sale of his
    shares.  Subsequent to the orders that are the subject of this appeal being
    made, the relief sought in the petition was in material respects dismissed:
Glassco v. 554252 Saskatchewan Ltd.
, 2008 BCSC 523.

[7]

The
Canada Business Corporations Act
provides:

173.
    (1)  Subject to sections 176 and 177, the articles of a corporation may by
    special resolution be amended to

* * *

(n)
    add, change or remove restrictions on the issue, transfer or ownership of
    shares; ...

[8]

However, the
Act
also provides that, if a corporation resolves
    to amend its articles to restrict the transfer of shares, a shareholder may
    dissent and the corporation must then pay the shareholder the fair value of
    the shares held:

190.
    (1)  Subject to sections 191 and 241, a holder of shares of any class of a
    corporation may dissent if the corporation is subject to an order under paragraph
    192(4)(d) that affects the holder or if the corporation resolves to

(a)
    amend its articles under section 173 or 174 to add, change or remove any provisions
    restricting or constraining the issue, transfer or ownership of shares of
    that class;

* * *

(3)
    In addition to any other right the shareholder may have, but subject to subsection
    (26), a shareholder who complies with this section is entitled, when the action
    approved by the resolution from which the shareholder dissents or an order
    made under subsection 192(4) becomes effective, to be paid by the corporation
    the fair value of the shares in respect of which the shareholder dissents,
    determined as of the close of business on the day before the resolution was
    adopted or the order was made.

[9]

An information circular approved by the directors based on legal advice
    they obtained was sent to the shareholders with the notice of the annual meeting
    and a form of proxy.  The circular stated the intention to present the following
    resolution:

BE
    IT RESOLVED that:

1.
    Section 4 of the Corporations articles is hereby amended to add the following:

No securities
    (other than non-convertible debt securities) of the corporation shall at any
    time be transferred to any person without the consent of the directors to
    be signified by a resolution passed by the board or by any instrument or instruments
    in writing signed by a majority of the directors.

2.
    Any one director or officer of the Corporation is hereby authorized, on behalf
    of the Corporation, to take such steps, and execute, file and deliver such
    documents (including, without limitation, the required Articles of Amendment),
    as may be necessary or advisable in order to give effect to the foregoing
    resolution.

[10]

The
Act
and the Regulations promulgated under it, as well as
    the by-laws of the Corporation, prescribe the information the circular was
    required to contain.  The
Act
provides:

150. (1)  A person shall not solicit proxies unless

(a)
    in the case of solicitation by or on behalf of the management of a corporation,
    a management proxy circular in prescribed form, either as an appendix to or
    as a separate document accompanying the notice of the meeting, or

(b)
    ...

is
    sent to the auditor of the corporation, to each shareholder whose proxy is
    solicited, to each director and, if paragraph (
b
) applies, to the corporation.

[11]

The prescribed form is found in the
Canada Business Corporations
    Regulations, 2001
, SOR/2001-512:

57.  A management
    proxy circular shall contain the following information:

* * *

(z)        if action is to be taken under section 173
    or 174 of the Act to modify the rights, privileges, restrictions or conditions
    attached to any class of securities of the corporation or to authorize or
    issue securities in order to exchange them for other securities of the corporation,

(i)         ...

(ii)        ...

(iii)
    the reasons for the proposed modification or exchange and the general effect
    on the rights of existing security holders,

(iv)
    ...

(v)
    all other information material to the proposed modification or exchange, including,
    if the corporation is a distributing corporation, information required to
    be included in a prospectus or other similar document under the securities
    laws of any of the provinces of Canada, unless an exemption from the laws
    is available or a waiver of the laws or similar relief is granted by the relevant
    provincial securities regulator;

* * *

(z.5)
    a statement of the right of a shareholder to dissent under section 190 of
    the Act with respect to any matter to be acted on at the meeting and a brief
    summary of the procedure to be followed;

[12]

Under the Corporations By-law No. 1, Article 10.4 provides:

10.4
Notice of Meetings
.  ... Notice of a meeting of shareholders called
    for any purpose other than consideration of the financial statements and auditor's
    report, election of directors and reappointment of the incumbent auditor shall
    state the nature of the business to be transacted in sufficient detail to
    permit the shareholders to form a reasoned judgment thereon, and shall state
    the text of any special resolution to be submitted to the meeting....

[13]

Under the
Act
, a dissenting shareholder who is given notice
    of a resolution to be presented for consideration at a meeting
and
the right to dissent is required to deliver written objection prior to the
    meeting:

190.
    ...

(5)
    A dissenting shareholder shall send to the corporation, at or before any meeting
    of shareholders at which a resolution referred to in subsection (1) or (2)
    is to be voted on, a written objection to the resolution, unless the corporation
    did not give notice to the shareholder of the purpose of the meeting and of
    their right to dissent.

[14]

The circular the Corporations directors approved did not, however,
    contain a statement of the right of a shareholder to dissent under s. 190
    of the
Act
as required by s. 150(1)(a) of the
Act
and s. 57(z.5)
    of the Regulations.  Nor was there any discussion to that effect at the meeting
    where the resolution was adopted.  The Davidson Petitioners took no part in
    the meeting.  None attended in person nor did they vote their shares by proxy.

[15]

Section 190(7) of the
Act
provides a dissenting shareholder
    shall, within 20 days of learning of the adoption of the resolution, inform
    the corporation of the number of dissenting shares held and make demand for
    payment.  Under subsection (8) the shareholder shall then surrender the shares
    within the following 30 days.

[16]

It is common ground the Davidson Petitioners complied with s. 190.

The
    Trial Judgment

[17]

The relief sought in both petitions is predicated on the following
    provision of the
Act
:

247.
    If a corporation or any director, officer, employee, agent, auditor, trustee,
    receiver, receiver-manager or liquidator of a corporation does not comply
    with this Act, the regulations, articles, by-laws, or a unanimous shareholder
    agreement, a complainant or a creditor of the corporation may, in addition
    to any other right they have, apply to a court for an order directing any
    such person to comply with, or restraining any such person from acting in
    breach of, any provisions thereof, and on such application the court may so
    order and make any further order it thinks fit.

[18]

The judge determined the courts jurisdiction under s. 247 was properly
    invoked with respect to the declaration the Davidson Petitioners sought to
    compel the Corporation to comply with s. 190.  He considered the right to
    dissent had accrued to the Davidson Petitioners and would only be vitiated
    if the special resolution was to be rescinded or nullified.

[19]

The judge concluded s. 247 did not provide the relief sought by the
    Park Petitioners.  He said it was not disputed the
Act
and the Regulations
    had been breached by the failure to inform the shareholders the resolution
    would trigger dissent rights.  He also said the Corporations by-laws had
    not been complied with.  However, he expressed the view that nothing in the
Act
suggests a failure to notify shareholders of their right to dissent
    in the event of certain corporate acts necessarily means that act will be
    invalid.  In support of this conclusion, he cited provisions of the
Act
he considered suggest otherwise.

[20]

In any event, with respect to the Park Petitioners relying on s. 247
    for the relief they seek, the judge said:

[30]
    Section 247 contemplates the restraint of action by any of the named persons,
    or an order requiring a named person to comply with the
CBCA
or the
    regulations, or with a companys articles and by-laws.  It does not expressly
    confer jurisdiction on the court to exercise discretion to rescind or nullify
    the special resolution adopted by the shareholders in this case.  There is
    no provision in the
CBCA
which stipulates that any resolution of shareholders
    adopted without strict compliance with all of the provisions of the statute
    and the regulations, or the articles and by-laws of the company is a nullity
    and void
ab initio.
Likewise, there is no provision in the
CBCA
which empowers the court to ratify resolutions of shareholders which appear
    to have been adopted other than in strict compliance with the statutory and
    regulatory requirements.  In that respect, the
CBCA
differs from some
    of its provincial counterparts:  see, for example s. 229 of the
Business
    Corporations Act
, S.B.C. 2002, c. 57.

[21]

The judge concluded the Park Petitioners are not seeking an order to
    either compel or restrain compliance, but rather they seek nullification of
    a special resolution in order to restore articles that contain no restriction
    on the transfer of shares.  Section 247 provides no jurisdiction to grant
    that form of relief.

[22]

The Park Petitioners petition also seeks to invoke s. 265.1 of the
Act
.  It is that section on which reliance is placed for an order compelling
    the Director to cancel the amended articles and the related certificate he
    issued.  But the judge considered that can only be done in the circumstances
    prescribed by s. 96 of the Regulations, which do not arise here.  Most
    significantly, the relief appears limited to instances where it is the Director
    who has made an obvious error, having lacked authority to issue the articles
    and related certificate, which is clearly not the case with respect to the
    special resolution in question.

[23]

In the absence of any other provision of the
Act
being cited
    as providing the relief the Park Petitioners seek, the judge then engaged
    (we are told
ex mero motu
) in weighing the factors he considered ought
    to govern what he regarded to be the exercise of a discretion lying within
    the power the court has, as a court of general jurisdiction, to rescind the
    special resolution, thereby nullifying the amendment to the Corporations
    articles.  The judge said his discretion was to be exercised having regard
    for the interests of the Corporation and its shareholders.

[24]

The factors he considered to favour rescission were: the exercise of
    dissent rights would permit the individual holding by far the largest number
    of the Davidson Petitioners shares to circumvent the Shareholders Agreement
    he was seeking to have set aside; that individual knew before the meeting
    the effect the resolution would have in triggering dissent rights but said
    nothing; the directors would not have presented the resolution to amend the
    articles to the shareholders if they had known dissent rights would be triggered;
    and the financial burden the payments to be made would have on the Corporation
    is uncertain and could be unacceptable.  The factors the judge considered
    to favour refusing rescission were: no provision of the
Act
suggests
    a failure to give notice of dissent rights renders corporate acts invalid;
    the amendment to the articles was a conscious corporate strategy to defeat
    the largest shareholders attempt to sell his shares without the directors
    approval; and the Corporation may have a remedy in damages suffered, if any,
    against the solicitors who gave advice to the directors.

[25]

On the factors considered, the judge concluded he should decline to
    rescind the special resolution.

The
    Appeal

[26]

The Park Petitioners and the Corporation raise the same grounds of
    appeal.  The Corporation adopts the submission of the Park Petitioners.

[27]

They first say the judge erred in not exercising jurisdiction under
    s. 154(1) of the
Act
, although it was in no way raised before him.
     It provides:

154.
    (1)  If a form of proxy, management proxy circular or dissidents proxy circular
    contains an untrue statement of a material fact or omits to state a material
    fact required therein or necessary to make a statement contained therein not
    misleading in the light of the circumstances in which it was made, an interested
    person or the Director may apply to a court and the court may make any order
    it thinks fit including, without limiting the generality of the foregoing,

(
a
)
    an order restraining the solicitation, the holding of the meeting, or any
    person from implementing or acting on any resolution passed at the meeting
    to which the form of proxy, management proxy circular or dissidents proxy
    circular relates;

(
b
)
    an order requiring correction of any form of proxy or proxy circular and a
    further solicitation; and

(
c
)
    an order adjourning the meeting.

[28]

The Park Petitioners continue to rely in the alternative on s. 247
    but, for the reasons given by the judge, with which I agree, that section
    does not provide for the remedy they seek.  As I understand it, no reliance
    is now placed on s. 265.1 and it need not be further considered.  We
    are asked to apply s. 154(1) now to restrain the exercise of dissent rights
    under s. 190.  This is the primary ground argued on the appeal.  It is said
    to give the court a jurisdiction specific to the facts of this case and to
    constitute the complete answer to the shareholders dispute.

[29]

The contention is s. 154(1) provides the relief sought because the
    proxy circular sent to the shareholders with the notice of the annual meeting
    omitted to disclose a material fact  adopting the resolution to be presented
    would trigger s. 190 dissent rights to be paid the fair value of shares
    not voted in favour of the resolution.  Reliance is placed on what was said
    in
Sparling v. Royal Trustco Ltd.
(1984), 6 D.L.R. (4th) 682 at 687,
    45 O.R. (2d) 484 (Ont. C.A.), in adopting a statement from American authority
    of what constitutes a material fact in the context of shareholder information:

an omitted fact is material if there is a substantial likelihood that a reasonable
    shareholder would consider it important in deciding how to vote.

[30]

The disclosure was clearly required by s. 150(1)(a) of the
Act
and s. 57(z.5) of the Regulations: a statement in the proxy circular of the
    right of a shareholder to dissent under s. 190 and a brief summary of the
    procedure to be followed.

[31]

That being the case, the Park Petitioners say but for the omission
    the resolution would not have been adopted and s. 154(1) can then be invoked.
    They say the discretion s. 154(1) provides should be exercised to restrain
    the Corporation and the Davidson Petitioners from complying with s. 190.

[32]

The Davidson Petitioners maintain s. 154(1) cannot be raised on this
    appeal but, if it can, there was no omission of a material fact.  They argue,
    with some force, the omission of a statement of legal rights is not the omission
    of a material fact.  They say further what was material was not that the adoption
    of the resolution would give rise to s. 190 dissent rights, but that some
    shareholders would exercise those rights.

[33]

The Park Petitioners then contend in the alternative that, if the relief
    they seek is not available under sections 154(1) or 247 of the
Act
,
    the judge was required to exercise the courts general jurisdiction to set
    the special resolution aside, given its adoption constituted what they maintain
    was a serious breach of the
Act
, the Regulations, and the Corporations
    by-laws: it was illegal.  They say the judge erred in purporting to exercise
    any discretion but, in the further alternative, they say he erred in the exercise
    of any discretion he did have by considering irrelevant factors: the equities
    between a minority shareholder and the Corporation and the potential of a
    remedy against solicitors.  The Park Petitioners say the judge failed to give
    proper consideration to the financial harm to be suffered by the Corporation
    and, most particularly, by the shareholders who are not among those seeking
    to exercise dissent rights.

[34]

The Davidson Petitioners maintain the judge properly exercised the
    jurisdiction afforded him under s. 247 of the
Act
in granting the relief
    they sought against the Corporation with respect to the exercise of their
    s. 190 rights.  They say there is now no challenge to the exercise of the
    judges discretion under s. 247 and there is no basis upon which the relief
    sought by the Park Petitioners should be granted as a matter of the courts
    general jurisdiction.

A
    Section 154 Application

[35]

What the Park Petitioners essentially seek to do is make an application
    under s. 154(1) in this Court that was not made in the trial court.  They
    seek to establish the omission of a material fact in the form of proxy employed
    in respect of the special resolution.  I am unable to see on what basis that
    can be done.

[36]

It is clear the application contemplated in the wording of the section
    is, in this province, an application to the Supreme Court of British Columbia,
    the court defined in s. 2 of the
Act
.  The Park Petitioners say s.
    9 of the
Court of Appeal Act,
R.S.B.C. 1996, c. 77, gives this Court
    jurisdiction to grant any relief that could be granted by the Supreme Court,
    which it does.  But that is the jurisdiction the Court has on hearing an appeal
    from the trial court.  It does not give this Court jurisdiction to entertain
    applications under s. 154(1) in the first instance.

[37]

Section 154(1) requires the exercise of the courts discretion.  That
    is not an exercise to be undertaken by an appellate court but rather by a
    judge sitting in the trial court.  An order made on the exercise of the discretion
    the section affords may be reviewed by an appellate court for error in the
    principles applied or the understanding of facts, but generally it is only
    where error of that kind is found there can be any intervention.  An
    appellate court cannot entertain a s. 154(1) application and exercise
    its own discretion as if it were sitting as a judge of the Supreme Court.

[38]

Further, s. 154(2) requires the applicant to give notice of an application
    under s. 154(1) to the Director under the
Act
.  A copy of the Park
    Petitioners petition was delivered to the Director and a response was received.
     The Park Petitioners say that was sufficient to constitute the required notice
    under s. 154(2); the petition states the information sent to the shareholders
    with the proxy was deficient:

16.
    There was no disclosure by the Corporation in the Information Circular, or
    otherwise, to the shareholders that if they passed the Special Resolution
    it would trigger dissent rights pursuant to Section 190(1).  This was contrary
    to the requirements of the
CBCA
, the Regulations herein and the Articles
    of the Corporation.

[39]

But the petition makes no mention of s. 154(1), nor does it make any
    mention of a failure to disclose a material fact such as would render that
    section applicable.  The petition the judge heard was simply not an application
    made under s. 154(1) for a restraining order.  As I stated at the outset,
    the relief sought is for orders setting aside the special resolution and notices
    of dissent as well as a declaration the amendment to the articles is invalid
    and an order cancelling the Amending Certificate issue by the Director.  The
    sections of the
Act
under which the relief is claimed are stated to
    be s. 247 and s. 265.1.  The judge was clear on the position taken before
    him:

[44]
    In this case, the Park Petitioners do not seek a restraining or compliance
    order.  Rather, they seek nullification of a special resolution in order to
    restore articles that contain no restriction on the transfer of shares.

[40]

Section 154(2) makes the requirement the Director be given notice of
    a s. 154(1) application concerning the deficiency in a proxy circular
    mandatory  [The] applicant  shall give to the Director  and the fact
    is that was not done.  The Park Petitioners made no s. 154(1) application
    before the Supreme Court and, accordingly, no notice of such could have been
    given.  It is evident there was a covering letter sent to the Director with
    a copy of the petition, which is not in the appeal record, but it is clear
    a copy of the petition was sent to him solely to comply with s. 265.1(5) which
    requires notice be given to him of an application under s. 265.1(4).

[41]

Finally, the evidentiary record appears to be less than complete because
    the Park Petitioners made no application under s. 154(1) seeking to establish
    the omission of a material fact.  The Davidson Petitioners say, had it been
    otherwise, they would have sought to adduce evidence, through cross-examination,
    of the extent to which the omission was material to the adoption of the resolution.
     The affidavits of the directors establish they would not have presented the
    resolution had they known about the s. 190 dissent rights.  But as to whether
    the omission was actually material to the shareholders, the evidence is limited.
    Apart from the directors, only three of the shareholders and the principal
    of eight corporate shareholders say they would not have voted the shares they
    hold or control to adopt the resolution if they had known the amendment would
    trigger dissent rights.  They say they may have voted against the resolution
    or not voted at all in order to exercise the right to dissent.  No evidence
    is adduced from any of the remaining Park Petitioners.  However, the extent
    to which the evidence adduced, or which may have been adduced, might bear
    on a s. 154(1) application, need not be further considered.

[42]

In my view, it is not open to the Park Petitioners to make an application
    under s. 154(1) now.  No application under that section was made in the
    petition before the judge and no notice of such an application was given to
    the Director.  It then becomes unnecessary to decide whether the section provides
    for the relief sought.

The
    Courts General Jurisdiction

[43]

While the Park Petitioners did not seek to have the judge invoke any
    general jurisdiction to set the special resolution aside, they contend now
    that, because the non-disclosure of dissent rights in the proxy circular was
    a failure to comply with the
Act
, the Regulations, and the Corporations
    by-laws, the resolution was illegal and cannot stand.  They rely on
Caleron
    Properties Ltd. v. 510207 Alberta Ltd.
, 2000 ABQB 720, [2001] 3 W.W.R.
    323, as discussed by the judge at paras. 35-37 of his reasons, for the proposition
    the court has a general jurisdiction to inquire into the legality of corporate
    actions beyond, but not inconsistent with, the jurisdiction provided by statute.

[44]

Given the provisions of s. 150(1)(a) of the
Act
and s. 57(z.5)
    of the Regulations in particular, it is then necessary to consider whether
    the omission in the proxy circular of a statement of the right to dissent
    and the procedure to be followed to obtain payment for shares held requires
    the special resolution be set aside rendering the amendment to the articles
    invalid.

[45]

The Park Petitioners base their case on non-compliance with statutory
    requirements, but it is of no small significance the non-compliance of which
    they complain is not attributable to the Davidson Petitioners against whom
    relief is sought.  The Davidson Petitioners have done nothing but comply with
    the provisions of s. 190 in attempting to exercise the rights given them by
    statute.  The omission in the circular sent to the shareholders was attributable
    to the directors who approved the contents, albeit based on legal advice.
    They are now among the Park Petitioners seeking relief from the failure to
    comply with the
Act
and the Regulations.

[46]

The Park Petitioners seek to have a resolution to amend the Corporations
    articles, which they voted to adopt, set aside.  They seek to have the amendment
    rendered invalid, solely for the purpose of depriving the Davidson Petitioners
    of their statutory right to dissent.  The Park Petitioners cite the financial
    implications both they and the Corporation will experience as justification
    for depriving the Davidson Petitioners of their statutory rights.

[47]

Whether, in these circumstances, an order setting aside the resolution
    the Park Petitioners voted to adopt, thereby defeating the exercise of the
    minority shareholders statutory rights, could be justified would, in my view,
    be questionable even if such would not offend the provisions of the
Act
.
    But I consider the question to be essentially foreclosed by what appears to
    me to be a clear legislative intention that an amendment of the articles of
    a corporation under s. 173(1) remains valid even where it is made by
    the adoption of a special resolution in the absence of any notice of s. 190
    dissent rights being given when required.

[48]

First, the
Act
contemplates shareholders may not be informed
    about dissent rights when a resolution to amend the articles pursuant to s. 173(1)(n)
    is presented.  Section 190(5) of the
Act
(quoted above) requires a
    dissenting shareholder to give written objection prior to the meeting where
    the resolution is to be considered.  But the shareholder is required to do
    so only if given notice of the right to dissent.  If no notice is given, no
    objection need be made.  It would appear to follow that the amendment is valid
    and the shareholders right to dissent is preserved.

[49]

Second, the
Act
does specifically provide that where notice
    of a meeting is given at which a proposal of a director or a shareholder to
    amend the articles of a corporation is to be considered, the omission of a
    required statement that a dissenting shareholder is entitled to the value
    of the shares held pursuant to s. 190 does not invalidate the amendment:

175.
    (1)  Subject to subsection (2), a director or a shareholder who is entitled
    to vote at an annual meeting of shareholders may, in accordance with section
    137, make a proposal to amend the articles.

(2)
    Notice of a meeting of shareholders at which a proposal to amend the articles
    is to be considered shall set out the proposed amendment and, where applicable,
    shall state that a dissenting shareholder is entitled to be paid the fair
    value of their shares in accordance with section 190, but failure to make
    that statement does not invalidate an amendment.

[50]

The parties divide over whether the directors presentation of the
    resolution to amend the articles was a proposal of a director made in accordance
    with s. 137.  It is difficult to see why the reference in s. 175 is to a director
    instead of to the directors as it was until the
Act
was amended in
    1978 (see s. 169 of the
Canada Business Corporations Act
, S.C. 1974-75-76,
    c. 33).  It is also difficult to see why the section provides a proposal
    of a director is to be made in accordance with s. 137 when that section
    appears to govern only proposals made by shareholders.

[51]

However, even if s. 175 is not directly applicable, I see no basis
    on which it could be said the absence of a statement about s. 190 dissent
    rights required in a proxy circular under s. 57(z.5) of the Regulations will
    render an amendment of the articles of a corporation invalid.  I see no reason
    why an amendment made by a resolution presented by the directors for the shareholders
    consideration should be invalid if the required notice of dissent rights is
    not given when the same amendment made by a resolution proposed by a shareholder
    without the required notice will be preserved by s. 175(2).

[52]

Further, there are, as the judge observed, other sections in the
Act
similar to s. 175(2) where a failure to notify shareholders of their right
    to dissent will not render the corporate act invalid: ss. 183(2), 188(3),
    189(4).  These sections all relate to fundamental changes such as an amalgamation,
    the continuance of the corporation in another jurisdiction, and the sale of
    substantially all of a corporations assets.  It appears to me the requirement
    that there be a statement about s. 190 dissent rights is largely procedural
    in nature.  Parliament has not seen fit to provide that non-compliance will
    render amendments to the articles, or other corporate changes, invalid.

[53]

The legislation does not provide non-compliance with s. 150(1)(a)
    of the
Act
and s. 57(z.5) of the Regulations renders the amendment
    invalid.  To the contrary, the intention appears to be the amendment stand.

[54]

I do not consider support for the relief sought in the petition filed
    by the Park Petitioners for an order setting aside the special resolution
    lies in the exercise of the courts general jurisdiction.  Given the provisions
    of the
Act
, I do not consider an order that would invalidate the amendment
    to the articles should be made.

Conclusion

[55]

I would not then accede to any of the grounds of appeal raised by the
    Park Petitioners and the Corporation.  The underlying question the judge had
    to address was whether he should exercise jurisdiction under s. 247 of the
Act
to grant the relief sought by the Davidson Petitioners in the petition
    they filed.  His exercise of discretion in their favour under that section
    is not now directly challenged; the grounds of the appeal are confined to
    the Park Petitioners reliance first on s. 154(1), then on s. 247, and then
    on the general jurisdiction of the court in support of the relief sought in
    their petition.  No case for interfering with the judges determination the
    Davidson Petitioners are entitled to exercise their s. 190 rights has been
    made out.  They are statutory rights and the Davidson Petitioners have done
    what is required by the statute to exercise them.  The Corporation must comply
    with the provisions of the
Act
.

Disposition

[56]

I would dismiss the appeals.

The Honourable Mr. Justice Lowry

I
    agree:

The
    Honourable Chief Justice Finch

I
    agree:

The
    Honourable Madam Justice Smith


COURT OF APPEAL FOR
BRITISH COLUMBIA

Citation:

Dondale
(Re),

2009 BCCA
  10

Date: 20090115

Docket: CA035253

IN BANKRUPTCY AND INSOLVENCY

IN THE MATTER OF THE JOINT PROPOSAL OF

Ronald Manning
Dondale
and
Lynell
Marie
Dondale

Corrected Judgment:
The text of the judgment was corrected at paragraph 9 on August 4, 2009

Before:

The
  Honourable Madam Justice Prowse

The
  Honourable Mr. Justice Hall

The
  Honourable Mr. Justice Low

D.
Nygard

Counsel for the Appellant

J.I.
McLean and S.
Pivnick

Counsel for the Respondents

Place and
  Date of Hearing:

Vancouver, British Columbia

16 October 2008

Place and
  Date of Judgment:

Vancouver, British Columbia

15 January 2009

Written
  Reasons by
:

The
  Honourable Mr. Justice Low

Concurred
  in by:

The
  Honourable Madam Justice Prowse
The Honourable Mr. Justice Hall

Reasons
for Judgment of the Honourable Mr. Justice Low:

[1]

Lynda Vogt, an official
receiver, acting on behalf of the Superintendent of Bankruptcy under the
Bankruptcy
and Insolvency Act
,
R.S.C.
1985, c. B-3 (the
Act
), invoked her power under s. 66.22(1) of the
Act
to require the administrator to apply to the court for review of a joint
consumer proposal made by Ronald Manning
Dondale
and
Lynell
Marie
Dondale
pursuant to
Division II of Part III of the
Act
.  The Superintendent now
appeals the order of Mr. Justice
Burnyeat
approving
the proposal.  At issue is the legality of clause 7(b) of the
proposal.  We are told that the clause is in common use and that a
decision at the appellate level will serve to guide administrators in the
preparation and approval of proposals made under Division II.

[2]

Clause 7 of the
Dondale
proposal reads:

(a)
the
creditors may appoint up to three inspectors responsible
for the Consumer Proposal of the consumer debtor. The inspectors may have, in
addition to any powers of inspectors under the Act, the power to

(
i
)
receive
any notice of default in the performance of a provision of the Consumer
Proposal and waive any such default, and

(ii)
approve any amendment to the Consumer Proposal without calling a meeting of
creditors, if the amendment would alter the schedule for and the amount of the
payments to be made by the consumer debtor, but would not change the total
amount to be paid; and

(b)
in
the absence of appointed Inspectors the
Administrator of this Consumer Proposal shall have the power to extend the time
for the making of any payment required to be made pursuant to this Proposal
provided that no such extension shall extend beyond the five years following
the approval of this Proposal by the court.

[Emphasis added]

[3]

The Superintendent
contends that clause 7(b) overrides a provision in the
Act
that
mandates the consequences of default by a debtor in making payments under the
proposal, and that it permits the administrator of the proposal to amend it
without resort to the proposal amendment provision in the
Act
.

[4]

Division II creates a
summary process for an insolvent person to make a proposal to creditors to
retire debt by making payments over time.  It is not necessary to describe
this statutory scheme in complete detail to determine the narrow point at
issue.  It will suffice to observe that the scheme applies to
non-corporate
debtors
whose aggregate debt does not
exceed $75,000, excluding debt on the debtors principal residence.  The
debtor may make a proposal to his or her creditors generally.  Section
66.13(1
)(
a) of the
Act
requires the
debtor to obtain the assistance of an administrator in preparing the consumer
proposal.  An earlier section designates trustees in bankruptcy as
administrators.  In the present case,
Abakhan
& Associates Inc. is the administrator and is the respondent in this
appeal.

[5]

On 1 February 2007, the
Dondales
made a consumer proposal that they pay $400
per month for sixty months to retire their joint unsecured debt.  They had
assets of $173,786.74, secured debt of $136,300 and unsecured debt of
$54,409.  The proposal went to their fourteen creditors.  All the
creditors who voted approved the proposal.  They represented unsecured
debt of $43,244.61.  Under the payment schedule, the debtors would pay off
$24,000 of their unsecured debt, less administrative costs.

[6]

On 8 February 2007, the
administrator reported to the creditors as follows:

4.       That we
are of the opinion that the cause or causes of the consumer debtors insolvency
are as follows:

The debtors
advise that their debt load has been slowly mounting over the course of the
last few years.  In January of 2006 Mr.
Dondale
was forced to take time away from work at a reduced income due to heart
problems leaving less money to service their debt.  The situation was
further compounded by the fact that Mrs.
Dondale
is a
casual
LPN
, whose work schedule is irregular and infrequent
due to her being in school.  As a result of these factors and poor
financial management the debtors now find themselves in a position where they
can no longer continue to service their debt obligations as they come due and
feel that their creditors will be better off if they make a consumer proposal
rather than an assignment in bankruptcy.

5.       That we
are also of the opinion, for the following reasons, that the consumer proposal
is reasonable and fair to both the consumer debtor and the creditors, and that
the consumer debtor will be able to perform it:

As noted in
Appendix A in a bankruptcy, the unsecured creditors may receive approximately a
$0.08 recovery for every dollar they are owed.  This proposal provides a
better return for all the unsecured creditors of approximately $0.30 for every
dollar they are owed.

[7]

Under ss. 66.15(1) and
(2
)(
b) of the
Act
, a meeting of the
creditors can be required by the official receiver or by creditors holding 25%
of the proven debt claims.  At such a meeting, the creditors can appoint
inspectors from among their number.  Otherwise, under s. 66.18, the
proposal is deemed to have been accepted by the creditors.  In the present
case, no meeting was required so no inspectors were appointed.  This seems
to be the norm under the consumer proposal provisions of the
Act
.
In most cases, the administrator becomes the ongoing connection between the
debtor and the creditors.

[8]

Because no inspectors
were appointed, clause 7(b) of the
Dondale
proposal
became operative.

[9]

Court approval of a
proposal is required only if requested by the official receiver or any other
interested party within fifteen days after the day of acceptance or deemed
acceptance  (s. 66.22(1)).  Otherwise the proposal is deemed to have
been approved by the court (s. 66.22(2)).

[10]

Under s. 66.24, the court can either
approve or refuse to approve the proposal.  Subsection 66.24(3) provides
that the court
shall
refuse approval if the proposal does not comply
with ss. 66.12(5) and 66.12(6) of the
Act
(reproduced below at
para
. 15).  Under s. 66.24(2), the court
shall
refuse approval where it is of the opinion that the terms  are not reasonable
or are not fair to the consumer debtor and the creditors ; and the court
may
refuse approval if the debtor has committed any of certain offences under the
Act
or was not eligible to make the proposal when it was filed.

[11]

In the present case, the
Superintendent argues that the chambers judge should have refused approval of
the proposal on the basis that it does not comply with the
Act
.
It is not clear to me whether this argument is based on the assertion that
clause 7(b) of the proposal renders the proposal unreasonable or unfair to the
creditors; or on the assertion that the court should have rejected the proposal
under a residual discretion in s. 66.24(4), which reads: subject to
subsections (1) to (3), the court may either approve or refuse to approve the
consumer proposal.  It seems to me that if a proposal is in conflict with
the legal requirements of the
Act
, it ought to be rejected as
being unreasonable or unfair.

[12]

The official receiver required the
administrator to apply for court review of the proposal.  In an earlier
letter to the administrator, the official receiver set out a number of concerns
about the proposal.  The principal concern related to clause 7 and was
expressed in the letter as follows:

·

It
is not reasonable to expect
creditors to recognize that paragraph (7) bypasses the requirement to send the
Notice of Deemed Annulment when payments are not made.  As a result, the
Administrator may (or may not) send notice when payments are not made  for up
to five years.

·

It
appears the purpose of paragraph #7
is to bypass the Notice of Deemed Annulment when payments are in arrears in
excess of 3 months; which diminishes the integrity of Bankruptcy and Insolvency
Act and compromises the credibility of the proposal process.

[13]

No creditor appeared at the hearing
of the administrators application to the court for approval of the
proposal.

[14]

Two trustees in bankruptcy employed
by the administrator swore affidavits amplifying the reasons for the content of
the proposal in general and for clause 7 in particular.
At
para
.
9 of his reasons, the
chambers judge set out the crux of their evidence:

(a) Richard Robinson:

The family income is sufficient to allow for the payment of $400.00 per month
but with little room for error. However, Mrs.
Dondale
is currently attending school to become a fulltime nurse and currently earns
$375.00 per month. It is anticipated that when she completes her schooling in
September of 2009, the family income should increase by approximately $2,500.00
per month.  .

Paragraph 7 of the Proposal allows the creditors flexibility in whether or not
to terminate the Proposal and induce a bankruptcy. In the absence of
inspectors, the Trustee is given the ability to defer payments and avoid a
default under the Proposal.

The Trustee would only rely on that provision if:

(a) the
Debtor had a valid reason for missing payments, such as loss of employment or
illness, and that the Debtor was confident that he or she still had the ability
to complete the terms of the Proposal; and

(b)
the
Trustee was satisfied that the creditors as a whole
would be better off allowing the Proposal to continue than they would be were
the Debtors to become bankrupt.

In this case, it is possible that the Debtors could miss payments before Mrs.
Dondale
achieves fulltime employment as a nurse. It may
well not be in the creditors interest to terminate this Proposal were the
Debtors to miss three payments if that were to occur at a time when it still
appears that Mrs.
Dondale
would become a fulltime
nurse with the resultant substantial increase in the family income.

(b) George
Abakhan
:

The Office of the Superintendent of Bankruptcy
has expressed concern with the inclusion of paragraph 7 in the Consumer
Proposal filed by Mr. and Mrs.
Dondale
.

This provision is a term that is used by
Abakhan
& Associates Inc., and other Trustees, as a
common practice in consumer proposals.

Consumer proposals typically involve
individuals with relatively modest incomes.

Consumer proposals usually call for regular
payments to be made by the consumer debtor (the Debtor) over a period of
three to five years.

It is difficult for this type of Debtor to
predict the future with precision what the Debtors income will be over a three
to five year period. The flexibility that paragraph 7 of the proposal provides
allows the Debtor to be confident that he or she will not be in default under
their proposal should there be a temporary interruption in their employment or
unanticipated expenses over the term of the proposal.

Temporary employment interruption is fairly
common in the resource sectors of the British Columbia economy.

The flexibility allowed to a Debtor under
paragraph 7 of the Proposal allows the Debtor to make proposals to his or her
creditors so that the Debtor would pay more in a proposal than in a bankruptcy.

Our experience with consumer proposals is that
only about 5% to 10% of them have defaults. Many of these catch up payments in
arrears during the course of the proposal.

In the typical consumer proposal the creditors
will consist almost exclusively of financial institutions, credit card
companies and Canada Revenue Agency.

These creditors will each have either an
internal department that specializes in dealing with loans that are in default
or will outsource this to a third party who specializes in administering
default loans.

It is the policy of our firm to advise Debtors
of their respective rights and costs in a bankruptcy situation and in a
settlement proposal situation to ensure Debtors understand the alternatives and
the costs relating thereto.

The advocacy of our firm is to encourage the
Debtors to consider proposals to maximise the return to Creditors which
invariably would receive NIL in a bankruptcy. Therefore, the need for Clause 7
referred to above is to allow flexibility in the successful completion of the
proposal.

In the vast majority of the consumer proposals,
there is never a meeting of the creditors.

It is also rare to ever have inspectors
appointed by the creditors in a consumer proposal.

[15]

Parliament has seen fit to give
sparse direction under the
Act
as
to the form and content
of consumer proposals.  The
Act
states:

66.12(5)
A
consumer
proposal must provide that its performance is to be completed within five
years.

(6)      A
consumer proposal must provide

(a)
for
the payment in priority to other claims of all
claims directed to be so paid in the distribution of the property of the
consumer debtor;

(b)
for
the payment of all prescribed fees and expenses

(
i
)
of
the administrator on and incidental to proceedings arising out of the consumer
proposal, and

(ii)
of
any person in respect of counselling provided
pursuant to paragraph 66.13(2)(b); and

(c)
for
the
manner of distributing dividends.

[16]

Section 66.2 of the
Act
provides
that the creditors may include in the proposal, subject to the consent of the
debtor, such provisions or terms  with respect to
the supervision of the
affairs of the consumer debtor
as they may deem advisable [emphasis
added].  In my opinion, whether it was initiated by the debtors or by the
creditors, clause 7(b) in the subject proposal is such a provision.
Supervision must be seen to include adjustment of the payment schedule.

[17]

Just as s. 66.12 is sparse, so s.
66.2 is very broad.  Together they evince an intention of Parliament to
permit creditors to consent to, and to permit the court to approve, consumer
proposals containing flexible provisions.  These two sections of the
Act
permit the parties to structure the payment provisions
and the
supervision of payment
in such manner as they see fit.

[18]

The Superintendent contends that
clause 7(b) of the proposal in question cannot be approved because it provides
for an amendment of the proposal unilaterally and without compliance with the
legal requirements for amendment found in the statute.  The Superintendent
says that the clause forestalls the effect of default as dictated by the
statute.  The sections in question are ss. 66.3(1), 66.31(1), 66.31(2),
and 66.37(1).  These provisions read:

66.3(1)
Where
default is made in the performance of any provision in a consumer proposal
,
or where it appears to the court

(
a
)
that
the debtor was not eligible to make a consumer
proposal when the consumer proposal was filed,

(
b
)
that
the consumer proposal cannot continue without
injustice or undue delay, or

(
c
)
that
the approval of the court was obtained by fraud,

the
court may, on application
, with such notice as the court may
direct to the consumer debtor and, if applicable, to the administrator and to
the creditors,
annul the consumer proposal
.

66.31
(1) Independently of section 66.3,

(
a
)
where
payments under a
consumer proposal are to be made monthly or more frequently and
the consumer
debtor is in default to the extent of three months

payments
, or

(
b
)
where
payments under a
consumer proposal are to be made less frequently than monthly and the consumer
debtor is in default for more than three months on any payment,

the
consumer proposal shall
thereupon be deemed to be annulled
unless the court has previously ordered
otherwise or unless an amendment to the consumer proposal has previously been
filed, and the administrator shall forthwith so inform the creditors and file a
report thereof in the prescribed form with the official receiver.

(2)
Where an
amendment to a consumer proposal filed before the deemed annulment of the
consumer proposal by virtue of subsection (1) is withdrawn or refused by the
creditors or the court, the consumer proposal shall thereupon be deemed to be
annulled.

...

66.37 (1) Where an administrator files an
amendment to a consumer proposal

(a)
before
the withdrawal, refusal, approval or deemed approval
by the court of the consumer proposal, or

(b)
after
the approval or deemed approval by the court of the
consumer proposal and before it has been fully performed or annulled or deemed
annulled,

the
administrator shall call a meeting of
creditors to be held within twenty-one days after the amendment is filed, to
consider the consumer proposal as amended.

[Emphasis added]

[19]

The chambers judge correctly stated
the law of statutory interpretation as it applies to the
Act
by
quoting the following passages from the judgment of Levine
J.A.
in
Port Alice Specialty Cellulose Inc. (Bankruptcy) v. ConocoPhillips Co.
2005 BCCA 299; 41
B.C.L.R.
(4th) 259:

[25]    There is no dispute that
the proper approach to the interpretation of s. 81.1 [of the Act] is that
described in
E.A.

Driedger's

Construction of Statutes
(2nd ed. 1983), at p. 87:

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.

[26]    This approach has been
approved by the Supreme Court of Canada in numerous cases. The Supreme Court
has also said that this approach is confirmed by s. 12 of the
Interpretation
Act
,
R.S.C.
1985, c. I-21, which provides that
every enactment "is deemed remedial, and shall be given such fair, large
and liberal construction and interpretation as best ensures the attainment of
its objects": see
Barrie Public Utilities v. Canadian Cable Television
Assn.
, [2003] 1
S.C.R.
476 at
para
.
20;
Bell
ExpressVu
Limited
Partnership v. Rex
, [2002] 2
S.C.R.
559 at
para
.
26.

[27]    In interpreting the
BIA
,
courts have noted that it is a commercial statute used by business people and
should not be given an overly narrow or legalistic approach: see
Re
McCoubrey
, [1924] 4
D.L.R.
1227 at 1231-32 (Alta.
S.C
);

Mercure
v. Marquette &
Fils
,
[1977] 1
S.C.R.
547 at 556;
Re Maple Homes Canada Ltd.
, 2000
BCSC
1443 at
para
. 21.

[20]

The judge also referred to
conflicting decisions on the point in question.  In
Bankruptcy of
Williams
, 2005
BCSC
108, Master Baker,
sitting as a Registrar, considered a term in a proposal identical to clause
7(b) in the present case.  He concluded his analysis with the opinion that
there is a great deal of flexibility in crafting a Consumer Proposal, the only
limitation being that the proposed terms not offend or violate the terms of the
Act
 (
para
. 8).  He found no
conflict between the clause and the provisions of the
Act
.
In Ontario, Registrar Nettie reached the opposite conclusion in
Re
Sztojka
, [2005]
O.J.
No.
5551 (
S.C.J.
).  Although he agreed that there is
a great deal of flexibility in crafting a consumer proposal, he was of the
opinion that creditors cannot cure a default in payment under a Division II
proposal, except by acceptance of a properly filed amended proposal in
accordance with [s. 66.37] of the Act  (at
para
.
15).  For the reasons that follow, I prefer the conclusion on the point
reached by Master Baker.

[21]

The chambers judge described the
issue before him as follows:

[32]     the question which
arises is whether I should refuse to approve this consumer proposal on the
basis that it is not reasonable or not fair to the consumer debtor and the
creditors (s. 66.24(2) of the
Act
) or whether, in interpreting the
Act in a way which is not overly narrow or legalistic, I should approve or
refuse to approve the Consumer Proposal (s. 66.24(4) of the
Act
).

He considered the reasonableness and fairness clause and the residual
discretion clause.

[22]

The chambers judgment concludes with
nine paragraphs containing ten reasons why the court should approve the
proposal.  In these paragraphs, the judge conflated the issues of legality
and reasonableness.  It seems to me that those two issues should be
considered separately.  If the proposal in question does not comply with
the
Act
, it cannot be approved because it is presumptively
unreasonable.  If it does comply, there should then be a subjective
consideration of its reasonableness.

[23]

The Superintendent contends that the
Dondale
proposal is not legal because clause 7(b) has
the effect of permitting the debtors to miss three monthly payments with the
administrator then having the power to effectively override the legal effect of
those missed payments under s. 66.31(1).  In other words, says the
Superintendent, a deemed annulment under that section can be excused by the
administrator.  The Superintendent argues further that clause 7(b)
conflicts with the proposal amendment provision, s. 66.37(1).

[24]

I do not agree with these
submissions.  The purpose and effect of clause 7(b) is not to override the
annulment provision in the
Act
.  Rather, it is to avoid it
before it becomes operative.  If the
Dondales
have legitimate difficulty in meeting the payment schedule at any time during
the five-year period because their income flow is erratic, the administrator
can rearrange the payment schedule from time to time to make the monthly
payments correspond more closely to the flow of their income.  However, if
they miss three payments in a row before the schedule can be adjusted by the administrator,
or if they miss three payments in a row under the adjusted schedule (or if the
adjusted payment schedule provides for payments less frequently than monthly
and one payment falls in arrears for more than three months), s. 66.31 will
become operative and there will be a deemed annulment.

[25]

In my opinion, s. 66.31(1) does not
purport to dictate the content of proposals and how they are to be
administered.  It only provides that a proposal is automatically annulled
if the debtor is in default for three months, except as provided therein.
It does not define default and is not specific as to how default may come
about.  In the present case, the creditors have agreed that the
administrator can alter the payment schedule to create flexibility to meet
changing conditions during the term of the proposal.  The provision would
likely reduce administration costs that otherwise might be incurred.  It
does not give the administrator the power to forgive any part of the debt
payment.  Nor does it offend s. 66.12(5) by permitting the debtor to make
payments beyond the five-year term.

[26]

Section 66.31(1
)(
a)
requires default under a consumer proposal for three months before there is an
automatic annulment of the proposal.  Clause 7(b) of the subject proposal
permits a summary and efficient rearrangement of the payment schedule by the
administrator.  It seems to me that this does not offend s. 66.31(1)(a)
because there can be no default under the consumer proposal until the debtors
have missed three months of payments or have been in default for three months
under the payment schedule as modified by the administrator under his delegated
authority.  This is what the creditors and the debtors agreed to and I see
no reason under the statutory scheme to reject the proposal as being in
conflict with the
Act
.  To the contrary, it seems to me that
it builds into the proposal flexibility that is administratively efficient and
potentially less costly.

[27]

I do not see clause 7(b) as being in
conflict with s. 66.37(1) of the
Act
.  Empowerment of the
administrator to adjust the payment schedule during the five-year term of the
proposal is simply designed to make the payment schedule flexible, to make it
adjustable to future exigencies.  If such an adjustment is properly viewed
as an amendment of the proposal and not just its implementation (which I am
inclined to think is the case), there is nothing in the
Act
that
says that the procedure under s. 66.37(1) is the only way that an amendment can
be brought about.  That section is concerned with the filing of an
amendment by the administrator.  It does not provide that its procedure is
the only available mechanism for adjustment of a payment schedule.  The
creditors and the debtors can agree to a procedure that is more efficient
administratively and is less costly.

[28]

The above is in keeping with
Parliaments overall purpose in enacting Division II of Part III.  If
Parliament had intended to restrict the way consumer proposals are to be worded
and administered, it would have used more specific and restrictive language in
ss. 66.12(5) and (6), and in s. 66.2.

[29]

I do not understand the
Superintendent to argue that if clause 7(b) of the proposal is not in conflict
with the
Act
, the proposal is nonetheless unreasonable.
Therefore, it is not necessary for us to consider that issue.

[30]

I would dismiss the appeal.

The
Honourable
Mr. Justice Low

I agree:

The
Honourable
Madam Justice Prowse

I agree:

The
Honourable
Mr. Justice Hall


COURT
    OF APPEAL FOR BRITISH COLUMBIA

Citation:

Stevanovic
          v. Sin,

2009
          BCCA 11

Date: 20090116

Docket: CA035259

Between:

David
    Stevanovic

Appellant

(
Plaintiff
)

And

Yong
    Gen Sin and Dhong Yin Sin

Respondents

(
Defendants
)

Before:

The
          Honourable Mr. Justice Mackenzie

The
          Honourable Madam Justice Levine

The
          Honourable Mr. Justice Tysoe

D.
          Stevanovic

Appearing In Person

A.
          Urquhart

Counsel for the Respondents

Place
          and Date of Hearing:

Vancouver, British Columbia

11 December 2008

Place
          and Date of Judgment:

Vancouver, British Columbia

16 January 2009

Written
          Reasons by
:

The
          Honourable Mr. Justice Mackenzie

Concurred
          in by:

The
          Honourable Madam Justice Levine

The
          Honourable Mr. Justice Tysoe

Reasons
    for Judgment of the Honourable Mr. Justice Mackenzie:

[1]

This appeal is from an assessment of damages for personal injuries
    sustained in a motor vehicle accident.  The defendants admitted liability.
    The plaintiff appellant, David Stevanovic, was awarded $35,000 for non-pecuniary
    damages, $16,026 for past wage loss, and $837.24 for special damages.  His
    claim for loss of future earnings was dismissed.  He appeals on the ground
    that the trial judge erred in dismissing the claim for future loss of earnings
    and made errors in the assessments under other heads of damages.  He also
    submits that the trial judge erred in the application of the principles of
    causation to his claim.

[2]

The trial judge accepted that the appellant suffered soft tissue injuries
    in the accident but she found that his medical problems at the time of trial
    in 2007 were caused by a degenerative condition of his spine and shoulders
    and not caused by injuries sustained in the motor vehicle accident.  She concluded
    symptoms of neck and shoulder pain resulting from the accident would have
    been resolved within two years at the outside.  In reaching that conclusion
    she relied on the medical opinion of an orthopaedic surgeon who examined the
    appellant on behalf of the respondents.

Facts

[3]

The appellant was injured in an accident on 16 December 1998 when the
    Volkswagen Vanagon he was driving collided in an intersection with the respondents
    Volvo sedan that was turning left in front of him.  Both vehicles had been
    travelling at speeds between 20 and 30 kph.  The appellant braced himself
    against the steering wheel before impact.  He heard his neck make two cracking
    noises as he was propelled forward in the collision.  The left front bumper
    area of the appellants vehicle was damaged in the collision, later repaired
    at a cost of $3,026.99.  The appellant was able to drive his vehicle a short
    distance to his home after the accident.

[4]

He went to bed when he arrived at home and woke up the next morning
    stiff and sore in his shoulders and upper back.  He had a headache.  He could
    not turn his head to the left and experienced numbness on one arm from the
    mid-arm to the thumb.  He had difficulty sleeping.  Over the next four months
    he had 31 physiotherapy and three acupuncture treatments.  His symptoms gradually
    improved.

[5]

The appellant was 57 at the date of the accident.  He was employed
    as a heavy duty mechanic with Deere-Hitachi.  He was off work for four months
    after the accident.  He then returned to full-time work and continued until
    he retired in 2003, after 13 years with the employer.  He claimed that the
    injuries he sustained in the accident contributed to his retirement three-and-a-half
    years before his normal retirement date.  His claim for loss of future earnings
    and loss of pension benefits is based on his early retirement.

[6]

The trial judge accepted the appellants evidence that he has continuing
    neck and shoulder problems but she found that they were caused by the degenerative
    condition of his spine aggravated by the physical demands of his work and
    not related to the injuries sustained in the motor vehicle accident.  Accordingly
    she rejected the claim for future income loss arising from his early retirement.
     The appellant contends that she erred in that conclusion and the motor vehicle
    accident injuries contributed to his forced early retirement.

Issues and Analysis

[7]

The trial judge applied the test of causation outlined in
Athey
    v. Leonati
, [1996] 3 S.C.R. 458, which she summarized as requiring the
    appellant to show that but for the negligence of the respondents the injury
    would not have happened.  She noted that the accident does not have to be
    the sole cause but must materially contribute to the injury.

[8]

The appellant contends that the trial judge erred in her application
    of the
Athey
principles to the future earnings claim.  The issue turns
    primarily on the medical evidence.  The appellant called his family physician,
    Dr. Frank Beck, and the respondents called Dr. Iain Dommisse, who conducted
    a medical examination of the appellant on their behalf.

[9]

Dr. Beck noted the degenerative changes of the appellants cervical
    spine and shoulders but in his opinion the appellants continuing symptoms
    were consistent with soft tissue injuries resulting from the motor vehicle
    accident.  Dr. Dommisse disagreed.  His opinion was that the soft tissue injuries
    suffered in the 1998 accident would have temporarily flared a pre-existing
    condition resulting from degenerative changes and soft tissue injuries in
    an earlier 1977 accident.  That flare-up would not have lasted more than 24
    months and ended before the appellant retired.  The trial judge accepted the
    evidence of Dr. Dommisse over that of Dr. Beck.

[10]

The appellant contends that there are inconsistencies in Dr. Dommisses
    opinion letters that make his opinion unreliable.  Dr. Dommisse examined the
    appellant on 10 July 2006, six-and-a-half years after the accident.  In his
    report letter of 13 July 2006, he gave his opinion that the appellant sustained
    a Grade II cervical strain as a result of the accident and that [t]he overall
    prognosis for this man is good.  He added:

Bilateral
    shoulder tendonitis is noted in the handwritten notes dated July 24, 1998
    and x-rays done at that time showed calcific tendonitis.

He was noted
    to have neck problems with chiropractic adjustments in the handwritten entry
    dated September 8, 1998.

Additionally,
    as outlined above, Mr. Stevanovic was involved in a motor vehicle accident
    in 1977.  His vehicle flipped over at that time and he sustained a neck injury.
    He was off work for eighteen months following the injury in 1977.

In my opinion,
    this mans prior history of neck and shoulder problems is likely contributing
    to his ongoing symptoms.

Additionally,
    this man has degenerative changes within the cervical spine as noted above.
     In my opinion, his degenerative changes are contributing to his symptoms
    predominantly at this time.

The CT scan
    done for his cervical spine on October 5, 2002 does show right-sided C516
    foraminai stenosis, as outlined above, and, in my opinion, these changes are
    likely causing a degree of nerve root irritation and contributing predominantly
    to his symptoms.

[11]

Dr. Dommisse was asked by counsel to supplement his report and responded
    by letter dated 8 February 2007 as follows:

Following our telephone conversation yesterday, I confirm
    that in my opinion, this mans symptoms would likely have been flared temporarily
    for a period of approximately six (6) to twelve (12) months as a result of
    the motor vehicle accident of December 16, 1998.  It is likely that as outlined
    in my letter of July 13, 2006 in the last two paragraphs on page 7, his prior
    history of neck problems, requiring chiropractic adjustments in September
    1998 and his previous neck injury as a result of his motor vehicle accident
    in 1977 is contributing predominantly to his symptoms at this time.

In my opinion Mr. Stevanovic would have been able to
    continue working for Deere Hitachi until retirement as he stated he would
    be able to manage this work as a heavy duty mechanic following the motor vehicle
    accident of December 16, 1998.

[12]

The appellant contends that these reports present conflicting predominant
    causes of the continuing symptoms and treat the soft tissue injuries from
    the 1977 and 1998 accidents inconsistently.  The appellant says that Dr. Dommisse
    opines that the soft tissue injuries from 1977 still contribute to the appellants
    present symptoms whereas the symptoms of similar injuries in 1998 must have
    resolved within 12 months (extended to 24 months in his evidence at trial).
    He argues that there is no objective reason to view similar injuries from
    the two accidents differently.

[13]

Dr. Dommisses report and supplementary letter are confusing and potentially
    inconsistent.  The trial judge saw this apparent inconsistency and she questioned
    Dr. Dommisse for clarification during the course of his cross-examination
    by the appellant.  Dr. Dommisse responded that the soft tissue injuries from
    the 1977 accident were significant to the extent that they made the recovery
    from the 1998 accident soft tissue injuries a little longer.  He maintained
    his opinion that the appellant was not prevented by his medical condition
    from continuing to work as a heavy duty mechanic until normal retirement.

[14]

There were difficulties with respect to Dr. Becks opinion as well.
    The appellant did not become Dr. Becks patient until 2001 and Dr. Beck was
    unaware of the appellants pre-accident medical history.  The appellants
    family physician at the time of the accident was not called as a witness or
    asked to provide a medical-legal report.

[15]

The trial judge concluded (at para 52):

The defendant is not obliged to put the plaintiff into a better position
    than he would have been had the accident not occurred.  Here the plaintiff
    suffered from a condition of degeneration of the spine before the accident.
     Given the numerous doctor and chiropractor visits prior to the accident for
    neck and shoulder pain (of which Dr. Beck was unaware) and the significant
    degenerative changes in the spine, I accept the opinion of Dr. Dommisse over
    that of Dr. Beck in terms of the long-term cause of the pain. Mr. Stevanovic
    had significant shoulder and neck problems pre-accident.  His problems today
    are related to the degeneration of his spine, not the motor vehicle accident.
     He would suffer his present symptoms even if the motor vehicle accident did
    not occur.

[16]

And later, at para 70:

I have found that Mr. Stevanovic's ongoing
    neck and shoulder problems are due to the degenerative changes in his spine
    from which he suffered before the accident.  I expect that the aggravation
    of these injuries was caused by his work and related to the degenerative spine
    and not the motor vehicle accident.  I cannot conclude that Mr. Stevanovic
    had to retire due to his injuries.  He worked four years post-accident.  Retirement
    was his decision and his decision alone.  This is not something for which
    the defendant is responsible.  It is therefore not necessary to review the
    merits of the claim from a financial analysis.  The claim for future wage
    loss is dismissed.

[17]

The appellant contests these findings.  He contends that the 1998 accident
    injuries must have contributed to a degenerative condition in his cervical
    spine appearing on post-accident medical imaging in 2002, 2003, and 2007 as
    they were not shown in pre-accident X-rays.  The medical evidence does not
    support that inference.  Dr. Dommisses opinion was that the degenerative
    condition was unrelated to the accident.  Dr. Beck disagreed to the extent
    that he regarded the appellants spasm as consistent with chronic soft tissue
    injury but he agreed that the degenerative changes shown on the X-rays were
    not caused by the accident.

[18]

The appellant also states he told Dr. Dommisse that shortly before
    he retired, the nature of his work for Deere Hitachi changed from lighter-duty
    refits of logging road excavators to heavier work involving quarter-inch plate
    steel that put additional strain on his neck and shoulders.  Dr. Dommisse
    did not refer to that change in his report but in his testimony he confirmed
    that his opinion was based on the lighter work and he was not opining that
    the appellant could do the heavier work.  However, he maintained that the
    occupational disability with respect to the heavier work was related to the
    degenerative condition and not to the MVA soft tissue injuries.

[19]

The trial judge correctly applied the principle of causation taken
    from
Athey
. I am satisfied that there was evidence to support her finding
    that the causes of the appellants early retirement were unrelated to the
    soft tissue injuries sustained in the 1998 accident.  There was no misapprehension
    of the evidence or other palpable or overriding error that would permit this
    court to disturb that conclusion: see
Toneguzzo-Norvell (Guardian ad litem
    of) v. Burnaby Hospital
, [1994] 1 S.C.R. 114 at 121-22.  Accordingly,
    there are no grounds to set aside the dismissal of the claim for loss of future
    earnings.

[20]

The trial judge allowed the appellants claim for the cost of post-accident
    physiotherapy treatments but rejected a claim for the cost of chiropractic
    treatments, and a claim for time off work to attend the chiropractor, on the
    ground that the chiropractic treatments were not recommended by his doctor.
    She also dismissed a claim for time off to attend medical appointments on
    the ground that the time off for that purpose was not proven on the balance
    of probabilities.  I do not think that there are any grounds to vary the trial
    judges conclusions on those aspects of past wage loss and special damages.

[21]

In the result, I would dismiss the appeal.

The Honourable Mr. Justice Mackenzie

I AGREE:

The Honourable Madam Justice Levine

I AGREE:

The Honourable Mr. Justice Tysoe


COURT
    OF APPEAL FOR BRITISH COLUMBIA

Citation:

Loyola
          v. Loyola,

2009
          BCCA 20

Date: 20090119

Docket: CA035720

Between:

Concepcion
    Loyola

Respondent

(
Plaintiff
)

And

Jamie
    Anglo Loyola

Appellant

(
Defendant
)

Before:

The
          Honourable Mr. Justice K. Smith

The
          Honourable Mr. Justice Lowry

The
          Honourable Madam Justice Neilson

Oral Reasons for Judgment

J.
          Marquardt

Counsel for the Appellant

Y.S.
          Wong

M.P.
          Maryn

Counsel for the Respondent

Place
          and Date:

Vancouver, British Columbia

19 January 2009

[1]

K. SMITH J.A.
: Before us are an appeal and a cross-appeal from a judgment
    for damages for loss and injury suffered by the respondent as a result of
    an automobile accident on 20 September 2001.

[2]

The respondent was a front seat passenger in an automobile driven by
    the appellant, her husband, which collided with the rear of another automobile
    and pushed it into a third.  She suffered injury from the collision itself
    and from the airbag in her vehicle which suddenly inflated in front of her
    and struck her in the face.

[3]

Following a three week trial before the Honourable Mr. Justice Sigardson
    and a jury in which liability for the accident was admitted, judgment was
    granted for the respondent for damages assessed by the jury as follows:

Non-pecuniary damages        $194,000

Special damages                    $745

Past loss of income                $6,000

Total
      $200,745

[4]

The jury assessed no damages for future loss or diminution of earning
    capacity or for cost of future care, although the respondent claimed damages
    under those heads.

[5]

The appellant submits the jury committed palpable and overriding error.
    In his submission, the award of $194,000 for non-pecuniary damages is wholly
    out of proportion to the evidence, is inordinately high, and is inconsistent
    with the jurys refusal to award damages for future losses.  He seeks an order
    setting aside the award for non-pecuniary damages and either substituting
    an award of between $75,000 and $90,000 or remitting this head of damages
    to the trial judge for assessment.

[6]

The respondent contends the award for non-pecuniary damages is warranted
    on the evidence and the jury made no error in their assessment under this
    head of damages.  On her cross-appeal, she submits the jury erred in failing
    to assess any damages for future loss of earning capacity and cost of future
    care and asks us to award a modest sum for a loss of opportunity to earn income
    in future and about $124,000 for costs of future of care.

[7]

The respondent was a homemaker and a nanny.  She was 48 years old at
    the time of the accident.  She suffered from chronic low back pain before
    the accident as a result of an injury she suffered more than 20 years earlier.
    She claimed the accident aggravated her symptoms from that condition and,
    as well, that it caused soft tissue injuries to her neck, back and other parts
    of her body that, in turn, caused her pain that was constant and had become
    chronic by the time of trial five years later.  Further, she claimed the accident
    caused her mild traumatic brain injury and post-concussion syndrome that resulted
    in depression, anxiety and cognitive problems including difficulties with
    her memory.

[8]

It was her position that these conditions were permanent and that she
    requires treatment for her psychological conditions and for her chronic pain.
    She claimed the effects of her injuries have changed her from a happy, sociable,
    independent and active woman to one who is depressed and irritable and unable
    to do the things she did before, requiring assistance even with mundane day-to-day
    tasks.

[9]

She claimed she had worked gainfully in the past, that she confined
    her work to babysitting while she raised her three children, and that she
    would have returned to the workforce before the trial but for her injuries.
    She claimed the injuries have rendered her competitively unemployable.

[10]

There was expert and lay evidence led at the trial that, if accepted
    by the jury, would have supported the respondents claims and a substantial
    award of non-pecuniary damages along with awards for past loss earnings, future
    loss of earning capacity, and cost of future care.  We were referred, during
    submissions this morning, to cases that would support an award of $75,000
    to $90,000 or as much as $200,000, depending on what view the jury took of
    the nature and extent of the respondents injuries.

[11]

The appellants position at trial was that the respondent lacked credibility.
    He argued that the doctors who saw her after 2004, which included virtually
    all of the medical specialists who diagnosed mild traumatic brain injury and
    psychological injury, relied on her reports of symptoms, for their diagnoses
    and prognoses, and that to that extent their opinions were not reliable.
    He urged the jury to rely on the respondents complaints to her family doctor
    in the months immediately following the accident.  He noted that there was
    no diagnosis of concussion or brain injury during those early months and that
    her first report of complaints to a doctor that would support such a diagnosis
    were not recorded until August 2004.  He submitted the respondent had proven
    only soft tissue injuries and injuries to her face and that she had completely
    recovered from these injuries within about three months of the accident.

[12]

He argued she had not proven she was unable to work as a babysitter
    after the accident, and that there should be no award for past wage loss.
    He submitted, as well, that no diminution in the respondents earning capacity
    had been proven.  Further, he submitted, many of the items claimed for cost
    of future care related to her pre-existing back condition and were unrelated
    to the accident.  The balance, he argued, were largely related to treatment
    for the consequences of post-concussion syndrome which, in his submission,
    had not been proven.

[13]

Accordingly, he urged the jury to assess no damages for cost of future
    care.

[14]

There were frailties in the respondents evidence that could have led
    to the jury to conclude she was not a credible witness and that her complaints
    could not be relied upon.  Thus, it was open to jury on the evidence to accept
    the picture painted for them by defence counsel.

[15]

The difficulty on this appeal is that both sides say the jury erred.
    If, as the appellant contends, the refusal to assess any damages for future
    diminished earning capacity and future cost of care indicates that the jury
    accepted the appellants submission that the respondent suffered only minor
    injuries with short term consequences, the award of $194,000 for non-pecuniary
    damages was clearly inordinately high and should be set aside.

[16]

On the other hand, if the jury accepted the respondents evidence that
    she suffered mild traumatic brain injury and post-concussion syndrome and
    was left with chronic pain and permanent psychological problems that have
    rendered her unemployable and which require future treatment, which the award
    of non-pecuniary damages and, to some extent, the award of past loss of income
    would signify, the jury clearly erred in failing to assess any damages for
    future diminished earning capacity and cost of future care.

[17]

Without weighing the evidence or speculating as to what evidence the
    jury accepted, which we cannot do, I am quite unable to determine where the
    jurys error lies.  Regrettably, I see no alternative except to allow the
    appeal and the cross-appeal and to remit the assessment of damages to the
    Supreme Court for a new trial.

[18]

I would so order.

[19]

LOWRY J.A.
: I agree.

[20]

NEILSON J.A.
: I agree.

[21]

K. SMITH J.A.
: The appeal and the cross-appeal are allowed.  The appellant
    will have the costs of the appeal.  The respondent will have the costs of
    the cross-appeal.  The costs of the trial and the new trial will be for the
    Supreme Court.

The Honourable
    Mr. Justice K. Smith