COURT
    OF APPEAL FOR BRITISH COLUMBIA

Citation:

Lu
          v. Mao,

2007
          BCCA 27

Date: 20070115

Docket: CA034352

Between:

Min
    Lu

Respondent

(
Plaintiff
)

And

San
    Liang Mao

Appellant

(
Defendant
)

Before:

The
          Honourable Madam Justice Rowles

(In
          Chambers)

S.
          Mao

Acting on his own behalf

Sherwin
          Mah

Counsel for the Respondent

Place
          and Date of Hearing:

Vancouver
,
British Columbia

9 January 2007

Place
          and Date of Judgment:

Vancouver
,
British Columbia

15 January 2007

Reasons for Judgment of the Honourable Madam Justice
    Rowles:

[1]

Mr. Justice Williamson, in reasons found at 2006 BCSC 1119, made the
    following order on 20 July 2006 in matrimonial proceedings:

(1)
    The defendants counterclaim/application to reapportion assets is dismissed,

(2)
    The defendants claim for spousal support is dismissed,

(3)
    The plaintiffs claim for special costs is dismissed, and

(4)        The plaintiff will have her costs
    at Scale 3.

[2]

The defendant has brought an appeal from the order dismissing his claims
    and now applies for the following orders:

1.
    Pursuant to Rule 37, Linda Heaps, Linda Chen, and Min Lu attend and be cross-examined
    on their affidavits before an official reporter or a commissioner for taking
    affidavits designated by the court or a justice.

2.
    Pursuant to Act 9(7) and Supreme Court Rule 56, Min Lu be found in contempt
    of paragraph 2 and 3 of the Order of Master Taylor pronounced December 12,
    2005, requiring her to producing (
sic
) bank records.

3.  Pursuant to 18(1) of the
Court of Appeal Act
, the execution
    of the court order made by Mr. Justice Williamson on
July 20, 2006 be stayed.

[3]

At the conclusion of the hearing in chambers, I dismissed the appellants
    application with reasons to follow.  These are my reasons for dismissing the
    three parts of the appellants application.

Part One:  Pursuant to Rule 37, Linda Heaps, Linda Chen,
    and Min Lu attend and be cross-examined on their affidavits before an official
    reporter or a commissioner for taking affidavits designated by the court or
    a justice.

[4]

The appellant confirmed that the affidavits of Linda Heaps, Linda Chen,
    and Min Lu to which he referred in the first part of his application are not
    affidavits sworn on any application filed in this Court.  According to the
    reasons for judgment of Mr. Justice Bauman dated 12 June 2006, Linda Heaps
    and Linda Chen are employees of Mr. Larry Kahn, the lawyer who had previously
    acted for the plaintiff.  Ms. Heaps, Ms. Chen and Mr. Kahn were joined by
    the appellant as third parties in the matrimonial proceedings.  Mr. Justice
    Bauman dismissed the third party claim against them.

[5]

Rule 37 of the
Court of Appeal Rules
, B.C. Reg. 297/2001,
    is found in Part 6 - Applications.  The first rule in Part 6 is Rule 32, which
    provides:

32
This Part applies to every application made
    to the court or to a justice except to the extent that these rules otherwise
    provide or a justice otherwise orders.

[6]

Rule 37(1) provides:

37
(1) Any party wishing to cross-examine the
    deponent of an affidavit filed on behalf of another party may apply to the
    court or a justice for an order that the deponent attend and be cross-examined
    before a commissioner for taking affidavits designated by the court or a justice.

[7]

Rule 37 of the
Court of Appeal Rules
permits the court
    or a justice to order cross-examination of the deponent of an affidavit filed
    in this court by another party to the appeal.   As noted above, Linda Heaps,
    Linda Chen and Min Lu have not sworn affidavits on any application filed in
    this Court.

[8]

There is no foundation to grant the order sought by the appellant in
    the first part of his application.

Part two:  Pursuant to Act 9(7) and Supreme Court Rule
    56, Min Lu be found in contempt of paragraph 2 and 3 of the Order of Master
    Taylor pronounced December 12, 2005, requiring her to producing (
sic
)
    bank records.

[9]

On the second part of his application, the appellant seeks to have
    the respondent, Min Lu, held in contempt of court, for allegedly failing to
    obey an order made by Mr. Justice Taylor in the trial court.   The appellant
    relies on s. 9(7) of the
Court of Appeal Act
, R.S.B.C. 1996,
    c.77 and Rule 56 of the
Rules of Court
, B.C. Reg. 221/90 in
    bringing that application in this Court.

[10]

Section 9(7) of the
Court of Appeal Act
provides:

9
(7)  The court and a justice have the same powers
    as the Supreme Court in relation to matters of contempt of court.

[11]

Rule 56 of the
Rules of Court
guides contempt proceedings
    in the Supreme Court of British Columbia.

[12]

Contempt proceedings for failing to comply with an order of a judge
    of the Supreme Court of British Columbia must be brought in trial court, not
    this Court. The order made by Mr. Justice Taylor on 12 December 2005 was made
    in the trial court, not the Court of Appeal, and predated the trial before
    Mr. Justice Williamson.  The second part of the appellants application is
    misconceived.

Part three:  Pursuant to 18(1) of the
Court of Appeal
    Act
, the execution of the court order made by Mr. Justice Williamson on
    July 20, 2006 be stayed.

[13]

On the third part of his application, the appellant seeks,
pursuant to s. 18(1) of the
Court of Appeal Act
,
a stay of the order granting the plaintiff
    costs.  Section 18(1) provides:

18
(1)
    After an appeal or application for leave to appeal is brought, a justice may,
    on terms the justice considers appropriate, order that all or part of the
    proceedings, including execution, in the cause or matter from which the appeal
    has been taken are stayed in whole or in part.

[14]

Section 14 of the
Family Relations Act
, R.S.B.C. 1996,
    c. 128 provides:

14
Despite any other enactment, if an order made
    under this Act is appealed, unless the court that made it otherwise orders,
    the order remains in full force and effect until the determination of the
    appeal.

[15]

In this case, the matrimonial proceeding in which the appellant was
    the defendant included a claim for divorce but, according to the reasons of
    Mr. Justice Williamson, the divorce had been granted in July 2005.  The three-day
    trial before Mr. Justice Williamson took place in July 2006 and was primarily
    directed to the division or reapportionment of assets under the
Family
    Relations Act
, although there was a claim advanced by the appellant
    for spousal maintenance, presumably under the
Divorce Act
, R.S.C.
    1985, c. 3 (2
nd
Supp.).

[16]

I understand from counsel for the respondent that the appellant has
    already brought an application before Mr. Justice Williamson to stay the order
    for costs and that the order was refused.  There is no transcript of the reasons
    available in respect of that application so it is not clear on what grounds
    the order was refused.  At the time the application for a stay was made in
    the trial court, the costs awarded had yet to be assessed.

[17]

I understand that the hearing for the assessment of the costs awarded
    against the appellant has now commenced before the Registrar and is expected
    to conclude shortly.

[18]

An order for costs is an integral part of the judgment in a proceeding
    and an order for costs may be reviewed as part of an appeal from the substantive
    judgment:
Heppner v. Schmand
(1997), 29 B.C.L.R. (3d) 128 at
    132 (C.A. Chambers) and
Monenco Ltd. v. Commonwealth Insurance Co.
(1999), 64 B.C.L.R. (3d) 307, 1999 BCCA 133 at paragraph 4.

[19]

There is no doubt that if the appellant had sought to stay a substantive
    provision in the order made under the
Family Relations Act
,
    s. 14 of that
Act
would apply.  In this case, however, no order
    was made by the trial judge requiring either party to pay funds or transfer
    assets to the other.  The appellant has appealed the order made under the
Family Relations Act
dismissing his claim but the stay he seeks
    concerns only the order for costs.

[20]

Generally speaking, costs follow the event in civil proceedings and
    family law is not an exception:
Gold

v.

Gold

(1994),
    49 R.F.L. (3d) 56, (1993), 82 B.C.L.R. (2d) 180 (C.A.).
The respondent was successful in the proceedings at trial
    and was awarded her costs.  The appellant has not put forward any error in
    principle in respect of the trial judges award of costs against him.

[21]

In the circumstances described, there is no foundation to grant an
    order staying the order for costs made in the trial court and that is so regardless
    of whether the application is properly brought under s. 18(1) of the
Court
    of Appeal Act
or under s. 14 of the
Family Relations Act
.

Costs of the application and approval of the form of
    the order

[22]

The respondent sought costs of the appellants unsuccessful application
    in a fixed amount to be paid forthwith.  I declined to make that order and
    directed that the costs of the application should await the determination
    of the appeal.

[23]

I note that Madam Justice Ryan has granted an application brought by
    the respondent for security for costs of the appeal and that the application
    for security for costs of the trial has  been adjourned pending the completion
    of the assessment of costs.  The appellant informed me that he had paid the
    $5000 ordered as security for costs of the appeal.

[24]

The division hearing the appeal may determine whether the costs of
    the appellants unsuccessful application should go to the respondent and,
    if so, whether ordinary or special costs ought to be awarded.

[25]

Respondents counsel will have carriage of drawing the order.  The
    order is to be sent to the appellant for his approval.  If he refuses to sign
    and return the order without having shown any error in the form of the order
    within ten days of the order being mailed to him, the order may be submitted
    for entry without the appellants signature.

Summary

[26]

The appellants application is dismissed.  Costs of the application
    are in the discretion of the division hearing the appeal.

The Honourable Madam Justice Rowles


COURT
    OF APPEAL FOR BRITISH COLUMBIA

Citation:

R.
          v. Kim,

2007
          BCCA 25

Date: 20070115

Docket: CA32667

Between:

Regina

Respondent

And

Chol
    Hwan Kim

Appellant

Before:

The
          Honourable Mr. Justice Low

The
          Honourable Mr. Justice Thackray

The
          Honourable Madam Justice Kirkpatrick

S.
          Goldberg

Counsel for the Appellant

V.L.
          Hartney

Counsel for the Respondent

M.K.
          Woodall

Counsel for Mr. Johnson

Place
          and Date of Hearing:

Vancouver
,
British Columbia

27 and 29 September
and 22 and 23 November 2006

Place
          and Date of Judgment:

Vancouver
,
British Columbia

15 January 2007

Written
          Reasons by
:

The
          Honourable Mr. Justice Low

Concurred
          in by:

The
          Honourable Mr. Justice Thackray

The
          Honourable Madam Justice Kirkpatrick

Reasons for Judgment of the Honourable Mr. Justice Low:

[1]

Police officers searched the appellant at the Vancouver
International
Airport
    on 17 May 2004.  They found packages containing two kilograms of cocaine secured
    to his midriff and current airline tickets for Sidney, Australia
via
Seoul, South Korea
.

[2]

On 14 October 2004, the appellant pleaded guilty before Fratkin PCJ
    to the offence of possession of cocaine for the purpose of exportation from
    Canada contrary to s. 6(2) of the
Controlled Drugs and Substances Act
,
    S.C. 1996, c. 19.  On 3 February 2005, Watchuk PCJ sentenced him to imprisonment
    for three years.

[3]

The appellant applied to this court to set aside the guilty plea and
    remit his case to the Provincial Court for trial.  He raises the defence of
    duress by claiming that he committed the offence and pleaded guilty under
    threats made by a co-accused, Sang In Choi, against his life and the lives
    of members of his family.  He also contends that his counsel, Christopher
    Johnson, was in a conflict of duty because he also represented Choi against
    whom the Crown eventually entered a stay of proceedings.

[4]

I have come to the conclusion that Mr. Johnson was in a position of
    conflict and ought not to have represented both the appellant and Choi.  I
    also conclude that the appellants guilty plea must be set aside with the
    case to be returned to the trial court for the taking of a fresh plea.  Therefore,
    I find it unnecessary to comment on the availability to the appellant of the
    defence of duress or on the strength of the evidence with respect to that
    defence.

[5]

There is no fixed category of cases or situations in which a trial
    court or an appeal court might set aside a guilty plea.  In
Adgey v.
    The Queen
, [1975] 2 S.C.R. 426, 13 C.C.C. (2d) 177, Dickson J. (as
    he then was) said at 431 (S.C.R.):

This
    Court in
The Queen v. Bamsey
, [1960] S.C.R. 294, at p. 298, held that
    an accused may change his plea if he can satisfy the
Appeal Court
"that
    there are valid grounds for his being permitted to do so."  It would
    be unwise to attempt to define all that which might be embraced within the
    phrase "valid grounds".  I have indicated above some of the circumstances
    which might justify the Court in permitting a change of plea.  The examples
    given are not intended to be exhaustive.

[6]

It should be noted that this is not a case in which submissions given
    to the trial court should have alerted either the judge who took the guilty
    plea or the sentencing judge to the possibility that the plea might not be
    valid.  The concern is that in the particular circumstances of this case Mr.
    Johnsons duty to the appellant was in conflict with his duty to Choi such
    that there was a miscarriage of justice and the only remedy available is the
    setting aside of the guilty plea.

[7]

The appellant filed fresh evidence in this court in the form of affidavits.
    Crown counsel cross examined the appellant on his affidavits in our presence.
    Mr. Johnson also swore an affidavit as did Emil Doricic, an associate from
    the same law office (not a partnership) who spoke to sentence on behalf of
    the appellant.  Both lawyers were cross examined before us by counsel for
    the appellant.  We also received other affidavits to which I will refer as
    required.  I would admit all the fresh evidence in the appeal.

[8]

The appellant, Choi and four others were arrested at the airport at
    the same time.  The other four, two young men and two young women, were students
    who had been recruited in Korea to come here to transport cocaine to Australia.
    It appears that the appellant had little to do with them.  The appellant says
    that Choi, a onetime school friend, had recruited him by offering him a free
    trip to Australia and later requiring him to transport contraband which Choi
    represented to be ground bull horn for the possession of which he would only
    be fined.  As already noted, the appellant further says that it was Choi who
    threatened his life and the lives of members of his family in order to get
    him to participate.

[9]

It is established by an affidavit filed by counsel for the appellant
    and sworn by a travel agent, Sunja Lee, that a young Korean male made the
    airline reservations for all six accused by telephone prior to 13 May 2004.
    The same male attended at the travel agency and paid cash for all the tickets.
    The tickets for the four Korean students were issued on the 13th and the other
    two were issued on the 14th, the intended day of travel.

[10]

Although it is not necessary to the argument of the appellant, it is
    interesting to note that the affidavit of Ms. Lee exhibits tickets issued
    to Choi, So Han Jo and Lee In Seung for travel to Seoul via Tokyo, Japan on
    24 March 2004 returning directly to Vancouver on the 4th of April.  There
    was another ticket issued to Choi for the same routes with a departure date
    of 9 March and a return date of 16 March.  We can reach no conclusions from
    this evidence of extensive travel by Choi but the evidence would likely have
    been of interest to the police and a statement from the appellant might have
    added context sufficient to support continuation of the prosecution of Choi.

[11]

Ms. Lee also swore that after 17 May 2004 she received a telephone
    call from the same young Korean male who had purchased the airline tickets.
    He told her that the tickets had not been used and that he wanted a refund.
    She advised the man that a refund would be given upon return of the tickets.
    The evidence does not disclose who obtained release of the tickets from police
    custody, but Ms. Lee swore that Mr. Johnson telephoned her later about the
    refund.  On 30 September 2004 her agency issued and delivered a cheque payable
    to Mr. Johnson for $7,285.40 representing the cost of the tickets less 25%
    and the agencys handling charges.  Mr. Johnson confirmed in his affidavit
    that he received this money as part of his fees but he was unable to recall
    many of the details as to how this came about.

[12]

The police knew Choi to be an associate of a known drug dealer.  Chois
    name on the airline manifest for Korean Air flight 72 scheduled to depart
    on the offence date triggered the interest of the police in the activities
    of all six accused.  All the co-accused except Choi possessed cocaine when
    arrested.  Choi had $6,100 in his possession.  In preparing its case it was
    the theory of the Crown that Choi was the overseer of the other five accused.
    However, the prosecutor ultimately concluded that this theory was not provable
    beyond a reasonable doubt.

[13]

We learned from the evidence of Mr. Johnson that his retainer and a
    later refresher of it came from a source unknown to him as the person would
    not give his name.  There is no suggestion in the evidence that this person,
    whoever he was, had any connection with the appellant.

[14]

Mr. Johnson met with all six accused while they were in custody and
    he did not require any further payment of fees from them.  He was successful
    in securing the release of Choi and later of the appellant on bail.  He could
    not recall the source of the appellants $10,000 cash bail that he received
    and posted on the appellants behalf on 4 June 2004.  He thought the source
    might have been the appellants brother or it might have been Choi.  The appellant
    testified that his parents were in Korea at the time and that neither he nor
    any other member of his family was in a position to provide such funds.  He
    did not know the source of the money.  There is no reason to reject this evidence.

[15]

Upon fulfilment of the terms of his bail recognizance, the appellant
    would have been entitled by law to return of the money posted.  However, he
    was required to sign an assignment of the money to Choi, an event not recalled
    by Mr. Johnson in his evidence.  The bail assignment is also signed by Choi.
    For the purposes of this appeal, the only conclusion I can reach is that Choi
    provided the appellants bail money or acted as the agent of somebody else
    who did so.  Whatever might be the truth of the matter, it was in Chois best
    interests to assist the appellant in the hope that he would not provide the
    prosecution with evidence to complete its case against him.

[16]

The appellant testified that he and the five other accused met with
    Mr. Johnson two days after their arrests.  He claimed that Mr. Johnson told
    them that a friend of Choi had paid him.  He accepted Mr. Johnsons advice
    to apply for bail.  The appellant said that he did not trust his lawyer because
    he was also Chois lawyer and he feared that what he said to him would get
    back to Choi.  He also said that he had had no previous experience with court
    matters and did not know how to contact another lawyer.  After his release
    on bail he saw Choi at Mr. Johnsons office and at court in Richmond.

[17]

The appellant claimed that he continued to feel threatened by Choi.
    He also claimed that Mr. Johnson told him that if he pleaded guilty he would
    be sentenced to less than two years in prison and would not be deported to
    Korea, assertions I am unable to credit.  He swore in his affidavit of 9 February
    2005 that on 14 October 2004 (the day he pleaded guilty) Choi told him that
    I must plead guilty so that the charges against him [Choi] would be dropped
    so there would no longer be a threat to the life of me and/or my family.
    Mr. Johnson told him that the charge against Choi would be dropped.

[18]

The four Korean students also pleaded guilty on 14 October 2004.  On
    the same day, the court ordered delivery to Mr. Johnson of the money seized
    from Choi at the airport.

[19]

A week later the Crown directed a stay of proceedings as against Choi.

[20]

Sentence proceedings with respect to the appellant had been fixed for
    1 November 2004.  With the concurrence of the Crown and for reasons not at
    all clear to me, it was arranged that the sentencing of the appellant would
    take place before a judge other than the judge charged with the sentencing
    of the four Korean students.  Fratkin PCJ sentenced those four on 21 October
    2004.  He concluded that a sentence of four years was appropriate for each
    of them.  Taking into account the time each had spent in custody (more than
    five months), he imposed sentences of three years.

[21]

Mr. Johnson testified that he recognized that if this matter went to
    trial he would then be in a conflict position and the appellant and Choi would
    have to be represented by separate counsel.  He was not asked by counsel to
    articulate the conflict.  It is clear to me that from the beginning there
    was a conflict between his duty toward the appellant and his duty toward Choi.
    That conflict became stark when it was decided that the appellant would plead
    guilty and the Crown would be asked to enter a stay of proceedings against
    Choi.

[22]

The appellant was born in Korea in 1982.  He came to Canada for schooling
    in 1997, at age 15.  His parents and siblings arrived during the following
    year.  When arrested, the appellant was 22 years old.  Although he finished
    his schooling here and attended the B.C. Institute of Technology, his proficiency
    in English is less than complete.  Some credit has to be given to his assertion
    that after his arrest he was in strange territory and did not adequately understand
    what his options were.

[23]

Assuming he was to be convicted of the drug offence, a main concern
    of the appellant was that he avoid a sentence of two years or greater.  He
    has landed immigrant status only and is subject to automatic deportation if
    so sentenced.  If sentenced to less than two years, he might be able to avoid
    deportation.  Therefore, he had to be represented by counsel who, in addition
    to being free to explore possible defences (including duress), had to be free
    to explore all avenues that might lead to this post-conviction goal.  One
    thing to consider was to offer to give information to the Crown that would
    assist it in making its case against Choi and also to offer to testify against
    Choi.  Such co-operation by the appellant might have persuaded the prosecutor
    to participate in a joint submission for a sentence of less than two years,
    or at least it might have persuaded the court that such a sentence was merited
    because of the appellants co-operation.  Because he also represented Choi,
    Mr. Johnson was unable to advise this course of action, much less put it into
    effect.

[24]

Counsel for the appellant cited the case of
R. v. Burlingham
,
    [1995] 2 S.C.R. 206, 124 D.L.R. (4th) 7.  In that case, the court ruled inadmissible
    certain derivative evidence obtained by police investigators as the result
    of a confession found at trial to be inadmissible because of the effective
    denial to the accused of his right to counsel in breach of s. 10(b) of the
Canadian Charter of Rights and Freedoms
.  That case has no relevance
    here because the appellant was not denied a right to effective legal representation
    as a result of any conduct by an agent of the government.  The
Charter
has no application.  This case falls to be decided on the basis of principles
    existing long before constitutional enactment of the
Charter
.

[25]

In
R. v. W.(W.)
(1995), 100 C.C.C. (3d) 225, 25 O.R.
    (3d) 161 (C.A.), at 235  236, Doherty J.A. stated the law with respect to
    joint representation as follows:

While there
    can be no absolute bar against the joint representation of co- accused, joint
    representation puts counsel's obligation of undivided loyalty to each client
    at risk:
R. v. Silvini
,
supra
, at p. 257.  In attempting to
    serve two masters, counsel may do a disservice to the interests of one or
    both.  Counsel who undertake the joint representation of co-accused assume
    the heavy burden of ensuring that they are not placed in a position of representing
    interests which are or may be in conflict:  Law Society of Upper Canada,
Professional
    Conduct Handbook
(Toronto: Law Society of Upper Canada, 1992), rule 5.
     Where counsel fails to perform that duty and undertakes the representation
    of interests which do or may conflict, the court will order counsel removed
    from the record:
Re Regina and Speid
(1983), 8 C.C.C. (3d) 18, 3 D.L.R.
    (4th) 246, 37 C.R. (3d) 220 (Ont. C.A.);
R. v. Robillard
(1986), 28
    C.C.C. (3d) 22, 23 C.R.R. 364, 14 O.A.C. 314 (C.A.).

[26]

The above passage deals with identification of a conflict in the trial
    court.  When the issue is raised for the first time on appeal, the concern
    is whether, as stated by Doherty J. A. at 236 in
W.(W.)
,  on
    a review of the trial record supplemented by . . . fresh evidence, the [appellant
    has] demonstrated that [his] joint representation resulted in a miscarriage
    of justice.  As I have already indicated, I think the appellant here has
    discharged that burden.

[27]

On the facts this case is indistinguishable from this courts decision
    in
R. v. Stork and Toews
(1975), 24 C.C.C. (2d) 210 in which
    the court permitted withdrawal of guilty pleas by two appellants and directed
    a new trial.

[28]

It is fundamental to our criminal court system that counsel representing
    an accused person must be free from any conflict between his duty to that
    accused and his duty to another accused person.  In the present case, (in
    the absence of an informed waiver the by appellant) the conflict existed from
    the very beginning.  In the circumstances of this case, no counsel could have
    represented both the appellant and Choi without being in a conflict of duty.
    The appellant was denied effective assistance of counsel from the outset and
    there was manifest unfairness to him resulting in a miscarriage of justice.

[29]

It must be emphasized that whether counsel acting for more than one
    accused in the same matter is in a conflict of duty and whether the conflict
    leads to a miscarriage of justice will always depend on the circumstances
    of the particular case.  In the present case it is likely that if Choi had
    also been found in possession of cocaine at the airport Mr. Johnson would
    not have been in a position of conflict.

[30]

I wish to add that this decision should not be seen to be a reflection
    on the ethics or competence of either defence counsel.  Mr. Johnson did no
    more than err in assuming that the appellant concurred in the course of conduct
    and that he had given him complete instructions.  He should have recognized
    the conflict I have described but I have no doubt he thought he was acting
    in the best interests of all his clients.  Mr. Doricic did not become involved
    until after the guilty plea and he did a thorough and capable job of preparing
    for and speaking to sentence.

[31]

I would set aside the appellants guilty plea and remit the charge
    to Provincial Court for a fresh arraignment.

The Honourable Mr. Justice Low

I agree:

The Honourable Mr. Justice Thackray

I agree:

The Honourable
    Madam Justice Kirkpatrick


COURT
    OF APPEAL FOR BRITISH COLUMBIA

Citation:

Omega
          Salmon Group Ltd. v.
Pubnico Gemini (The),

2007
          BCCA 33

Date: 20070117

Docket: CA033744

Between:

Omega
    Salmon Group Ltd.

Appellant/
Respondent on Cross Appeal

(
Plaintiff
)

And

The
    Owners and All Others Interested in
The Ship "Pubnico Gemini" and "Pubnico Gemini",
Bounty Holdings Ltd., Gold Luck Enterprises Co. Ltd.,
Sea Haul Technologies 2000 Ltd. and Greg Olafson

Respondents/
Appellants on Cross Appeal

(
Defendants
)

Before:

The
          Honourable Madam Justice Southin

The
          Honourable Madam Justice Rowles

The
          Honourable Madam Justice Ryan

A.
          P. Mayer

Counsel for the Plaintiff below

D.
          F. McEwen, Q.C.

Counsel for the Defendants below

Place
          and Date of Hearing:

Vancouver
,
British Columbia

12th October, 2006

Place
          and Date of Judgment:

Vancouver
,
British Columbia

17th January, 2007

Written
          Reasons by
:

The
          Honourable Madam Justice Southin

Concurred
          in by:

The
          Honourable Madam Justice Rowles

The
          Honourable Madam Justice Ryan

Reasons
    for Judgment of the Honourable Madam Justice Southin:

[1]

On 12th January, 2006, Stromberg-Stein J. pronounced this judgment:

THIS
    COURT ORDERS that

1.         The Plaintiff is awarded damages in the amount of $314,834.00.

2.
    The Plaintiff is awarded simple pre-judgment interest at the rate of 8.4%
    calculated as follows:

a.         From
June
    15, 2001 to February 11, 2002 on $314,834;

b.
    From February 12, 2002 to January 12, 2006 on $189,834.

3.
    The Defendants shall pay to the Plaintiff the cost of this action on scale
    3 forthwith after assessment thereof.

[2]

Thereupon, the plaintiff below appealed, seeking an order:

1)
    Reversing the portion of the Judgment of the Honourable Madam Justice Stromberg-Stein
    in which her ladyship reduced principal amount on which admiralty interest
    is to be awarded to the Plaintiff, by $125,000, being the amount of insurance
    monies received by the Plaintiff from its underwriters, from the date upon
    which said insurance monies were received forward; and

2)
    Costs throughout.

[3]

The defendants below then riposted with a cross appeal seeking an order:

... that the interest rate for pre-judgment interest be set at the prime
    rate prevailing during the period set out in the Order of the Supreme Court,
    with costs of the appeal and the cross-appeal paid by the Appellant to the
    Respondents.

[4]

The defendants concede, rightly in my opinion, that the appellant is
    entitled to succeed on its appeal.  That the plaintiff received partial compensation
    from its insurer was
res inter alios acta
.

[5]

Thus, the remaining issue is that arising on the cross appeal.

[6]

As I understand counsel, it would be in the interests of the orderly
    conduct and outcome of litigation arising from collisions within admiralty
    jurisdiction that there should be consistency in the rate of interest to be
    awarded a successful plaintiff.

[7]

If I may say so, this is a point which Parliament ought long since
    have addressed.  But I do not suppose there are any votes to be gained from
    addressing it.

[8]

How this case arose was succinctly described by the learned judge in
    the opening paragraph of her reasons for judgment, 22 C.P.C. (6th) 86, 2006
    BCSC 59:

[1]  On
May 18, 2001,
    the fish packer Pubnico Gemini collided with a fish farm owned by the plaintiff,
    Omega Salmon Group Ltd. (Omega), anchored at Doyle
Island
, east of Port
    Hardy, British Columbia.  The defendant Bounty Holdings Ltd. owned the ship;
    the defendant
Sea
Haul Technologies
    2000 Ltd. chartered the ship from Bounty; the defendant Gold Luck Enterprises
    Co. Ltd. contracted with Sea Haul to provide officers and crew; and the defendant
    Greg Olafson was the ships Master at the time of the collision.

[9]

The learned judge then noted that the defendants admitted liability
    for the collision and said:

[2]
    ... Omega received $125,000 from its insurers, and now seeks judgment in the
    amount of $314,834 from the defendants, of which $297,000 is the cost of replacing
    the damaged section of the fish farm.  Omega also seeks admiralty interest
    at 8.4 per cent compounded semi-annually, and condemnation of the Pubnico
    Gemini.

[3]  The defendants dispute Omegas entitlement to the full amount of
    $297,000 for purchase and installation of the replacement section.  They submit
    that appropriate compensation is $175,000, with simple interest at prime rate.

[10]

Thus, the only issues in dispute at the trial were mitigation of damages
    and the appropriate rate and type of interest.

[11]

On the mitigation issue, the learned judge found against the defendants
    and nothing more need be said about it.

[12]

On the question of the rate of interest, the learned judge said, in
    part:

[40]
    The parties agree that the
Court Order Interest Act
, R.S.B.C.
    1996, c. 79, does not apply to maritime claims and that Omega is entitled
    to pre-judgment interest on damages arising from the collision at admiralty
    rates.

[41]
    Omega seeks interest at 8.4 per cent compounded semi-annually.  Omega argues
    that there is no specific rate of admiralty interest; that interest is awarded
    wholly at the courts discretion in maritime law; that the rate of interest
    should be determined by the evidence; and that compound interest should be
    awarded when the evidence shows it is necessary to fully compensate the plaintiff.

[42]
    The defendants agree that admiralty interest is discretionary but submit that
    the usual practice in this province is to award simple interest at prime or
    near-prime.  They further argue that the insurance monies received by Omega
    should be considered in setting the interest rate.

[43]
    The parties differing positions on interest lead to the following results,
    based on an interest rate of 8.4 per cent calculated from August 30, 2001
    to June 30, 2005 on the principal sum of $314,834 and rounded to the nearest
    dollar: simple interest: $101,377; semi-annual compounding: $116,833; monthly
    compounding: $119,114.

[44]  At all material times Omega carried standing debt with Farm Credit
Canada in excess of the claimed
    damages, and paid interest to service that debt at rates at or exceeding 8.4
    per cent.  Keith Bullough, Omegas CFO at the time of the collision, testified
    that if Omega had not had to spend $314,834 on repairs it would have either
    grown more fish or paid down debt.

[13]

Evidence before the learned judge showed that prime varied from 6.5%
    at the date of the collision to as low as 3.75% during part of the period
    to the date of trial, and was 4.25% at the commencement of the trial.

[14]

The learned judge first addressed the question of whether interest
    should be compound or simple, and held the latter.  But in the course of so
    doing, she set out some of the relevant British Columbia cases:

[50]  The British Columbia courts have most often awarded simple interest
    at prime or near-prime:
MacMillan Bloedel Ltd. v. Youell
(1993),
    79 B.C.L.R. (2d) 326, 23 C.C.L.I. (2d) 18 (C.A.), leave to appeal to S.C.C.
    refused (1994), 91 B.C.L.R. (2d) xxxvi, [1993] S.C.C.A. No. 532 (QL);
Tilbury
    Cement Ltd. v. Seaspan International Ltd.
(1991), 47 C.P.C. (2d) 292,
    [1991] B.C.J. No. 273 (QL) (S.C.);
Voest-Alpine Canada Corp. v. Pan
    Ocean Shipping Co.
(1991), 60 B.C.L.R. (2d) 50, 50 C.P.C. (2d) 308
    (S.C.), affd (1993), 79 B.C.L.R. (2d) 388, 18 C.P.C. (3d) 328 (C.A.);
Nelson
    Marketing International Inc. v. Royal & Sun Alliance Insurance Co. of
    Canada
(2005), 27 C.C.L.I. (4th) 57, 2005 BCSC 772;
Meeker Log
    & Timber Ltd. v. Sea Imp VII (The)
(1996), 1 B.C.L.R. (3d) 320,
    [1994] B.C.J. No. 3006 (QL) (S.C.), affd (1996), 21 B.C.L.R. (3d) 101, [1996]
    B.C.J. No. 1411 (QL) (C.A.), leave to appeal to S.C.C. refused, [1996] S.C.C.A.
    No. 396 (QL).

[15]

She concluded:

[54]  Omega has only offered evidence as to its standing debt before the
    collision.  It has provided no evidence that it was forced to borrow money,
    or that its borrowing costs increased, after and as a result of the collision.
    Its submissions about what it would have done with money not tied up in debt
    are speculative.  I therefore decline to award compound interest, but accept
    Omegas rate of 8.4 per cent as appropriate.

[16]

Thus, the learned judge rejected the submission of the defendants that
    prime was appropriate and settled on a rate of interest personal to the plaintiff,
    i.e. fixed with reference to what the plaintiff's own creditworthiness obliged
    it to pay to its own lender.  The learned judge did not explain why she considered
    she was warranted in doing what judges sitting in this Province in maritime
    collision cases have not generally done.

[17]

In this Court, counsel for the cross-appellant puts the issue for the
    Court thus:

18.       The Court must decide whether the Learned Trial Judge was correct
    in considering the actual costs of borrowing of the Appellant as the appropriate
    rate of interest on the portion of the claim for which they did not receive
    payment by their insurer.  If a plaintiff has poor credit and pays a high
    rate of interest on its borrowing, should that rate be the appropriate rate
    for pre-judgment interest?  The Respondents will submit that the actual cost
    of borrowing is irrelevant and the Court should award interest at a rate that
    the Appellant could have obtained on safe investments if the funds had been
    paid at the date the loss was suffered.  That rate will be prime rate or less.

[18]

It has, from time to time, been said that the award of interest in
    admiralty is discretionary.  But all discretion must be exercised on the relevant
    principles.  As I have said, the simple issue here is whether the personal
    financial circumstances of a successful plaintiff in an action arising from
    a collision at sea are properly taken into account.  If "yes", then
    the learned judge's answer cannot be said to be in error; if "no",
    then the defendants are entitled to succeed.

[19]

Whether those personal circumstances are properly taken into account
    is simply a matter of the practice in the courts of British Columbia, in which
    I include decisions from the days when a British Columbia judge sat as a local
    judge in admiralty.  [For those interested in such matters, the local judge
    in admiralty derived his jurisdiction from 1890 onward from the
Colonial
    Courts of Admiralty Act
, 53 & 54 Vict., c. 27, and,
    so far as relevant, from antecedent statutes on the same subject matter.]

[20]

British Columbia is a jurisdiction in which, before the introduction
    of shore-based systems of control of shipping in our confined waters, there
    were many collisions at sea.  For some 40 years, the Province had only one
    local judge in admiralty, the Honourable Archer Martin, who, having reached
    the age of 75, chose to retire in 1940.  He was, reputedly, a very difficult
    man, but everything he wrote is worth reading.  Of special note is his judgment
    in
The "Leonor"
(1916), 3 P. Cas. 91, [1917] 3 W.W.R.
    861.  He was a stickler for strict practice.

[21]

In many of his judgments, one finds words to this effect:  "There
    will be the usual reference to the registrar with merchants to assess the
    damage."  See
Fred Olsen and Co. v. The "Princess Adelaide"
(1929), 41 B.C.R. 274 at 281;
The King v. The Despatch
(1916),
    22 B.C.R. 496 at 502;
SS. Charmer v. SS. Bermuda
(1910), 15
    B.C.R. 506 at 510; and
Bank Shipping Co. v. The "City of
Seattle"
(1903), 10 B.C.R. 513 at 518.  In none that I have read
    does he make mention of interest.  He did not have to because he was following
    the practice of the Probate, Divorce and Admiralty Division in London, a practice
    which had come down to it from the Court of Admiralty.  In collision cases,
    the judge did not normally assess the damages.  The question of damages was
    referred to the registrar and merchants.

[22]

I think it reasonable to infer that the practice followed here was
    the same as that in England, which is described in
Halsbury's Laws of England
,
    2d ed., vol. 1 (London:  Butterworth, 1931) at 158:

270.
As soon as possible after the hearing of the reference has been
    concluded the Registrar makes his report to the Court, stating his decision
    on the questions referred to him; and where the report is as to damages, it
    shows in a schedule in parallel columns the items claimed, and those allowed,
    and from what period interest
at 4 per cent. until payment
, allowed
    as part of the damages proceeded for, will run.

[Emphasis added.]

[23]

That practice was explained In
The Joannis Vatis (No. 2)
,
    [1922] P. 213, by Sir Henry Duke, the President, at 223:

Here two special matters are to be considered.  In this jurisdiction a
    rule exists with regard to interest upon damages which is well established
    and proper to be taken into account.  The registrar and merchants include
    in their computation of damage by collision interest upon the items of claim
    from the time of accrual of the damage until the date of the assessment.
    The practice was discussed and confirmed in
The Kong Magnus
[[1891]
    P. 223], and is in conformity with what was said long since by Lord Stowell
    in
The Dundee
[(1827) 2 Hagg. Adm. 137, 143].  The sum so calculated
    is given not as interest on a debt but as part of the damages.  During recent
    years interest as damages has been reckoned in this way at 5 per cent....

[24]

In
The Kong Magnus
, upon the assessment, the registrar
    had awarded interest at four per cent from 1st May, 1878, the date of the
    collision in the North Sea between the
Kong Magnus
, a Norwegian vessel,
    and a British brigantine, the
Mizpah
, owned by the plaintiffs.  The
    plaintiffs did not sue until 1889.  Much of the report is addressed to why
    the action was not brought more promptly.  The owners of the
Kong Magnus
,
    asserting interest ought not to be awarded from the date of the collision
    because of the delay of the plaintiffs, argued, in part, at 232-33:

... the defendants contend that the practice, in Admiralty, as to the
    allowance of interest, is discretionary, and that, in the particular circumstances
    of this case, it will not be allowed.  Dr. Lushington, in
The Amalia
[5 N.R. 164], states that "interest was given for this reason, namely,
    that the loss was not paid at the proper time," that is, "from the
    time when the loss ought to have been paid for"; but "ought"
    implies a duty, and there could be no duty in this case to pay that which
    for nearly twelve years was never claimed, and in respect of which no steps
    were taken to fix the defendants with any liability; so that the defendants
    have never failed in the performance of any duty cast upon them which would
    render them liable for interest.  There is no previous case in which the action
    has not been brought within, at the most, three or four years; but in this
    case for twelve years the company has been paying dividends in ignorance of
    the existence of any such debt as this, and it would be inequitable to add
    interest to the damages now for the first time ascertained to be due.

[25]

The argument was rejected, but, in 1927, in
The "
St. Charles"
, 138 L.T. 456 at 459, the Court of Appeal held that
    the registrar might disallow interest if there had been undue delay in prosecuting
    the claim.

[26]

There is no suggestion in Halsbury or in the two judgments to which
    I have referred, that the rate of interest was other than conventional, by
    which I mean that it did not depend upon circumstances peculiar to the successful
    plaintiff.

[27]

In many of the authorities cited to us from Canadian courts, the rate
    has been set at prime.  See, e.g.
Algoma Central Railway v. The "Cielo
    Bianco"
, [1987] 2 F.C. 592 (F.C.A.).

[28]

The practice of awarding a conventional rate of interest obviates any
    judicial investigation into financial circumstances peculiar to the plaintiff,
    and therefore leads to efficiency in litigation.

[29]

I would therefore allow the appeal and fix the rate of interest at
    prime from the date of the collision to the date of judgment below.  If counsel
    are unable to agree on the calculation of that interest, its calculation will
    be referred to the registrar of the court below.

[30]

The defendants are entitled to the costs of the cross appeal on scale
    2.  The defendants having conceded the plaintiff's appeal, it is allowed with
    costs on scale 1.

The
    Honourable Madam Justice Southin

I agree:

The Honourable Madam Justice Rowles

I agree:

The
    Honourable Madam Justice Ryan


COURT
    OF APPEAL FOR BRITISH COLUMBIA

Citation:

Regina
          v. Porter,

2007
          BCCA 39

Date: 20070117

Docket: CA032751

Between:

Regina

Respondent

And:

Norman
    Monty Porter

Appellant

Before:

The
          Honourable Madam Justice Rowles

The
          Honourable Madam Justice Ryan

The
          Honourable Madam Justice Newbury

Oral Reasons for Judgment

B.R.B.
          Morahan

Counsel for the Appellant

J.
          M. Gordon, Q.C.

K.
          Gagnon

Counsel for the (Crown) Respondent

Place
          and Date:

Victoria, British Columbia

January 17, 2007

Introduction

[1]

RYAN, J.A.:
The appellant was convicted on 19 November
    2004 in Supreme Court of 6 weapons-related offences of a 9 count indictment.
    The offences were the following:

Count 1

Norman Monty PORTER between the 16
th
day of May, 2002 and the
    4
th
day of November, 2002, inclusive, at or near Central Saanich,
    in the Province of British Columbia, did contravene a regulation made under
    paragraph 117 (h) of the Firearms Act, respecting the storage of restricted
    firearms in that they were not stored in a manner that rendered them inoperable
    or stored in a container, receptacle, or room that is kept securely locked
    and that is constructed so that it cannot readily be broken into and had readily
    accessible ammunition, contrary to Section 86(2) of the Criminal Code.

Count 2

Norman Monty Porter, between the 16
th
day of May, 2002 and
    the 4
th
day of November, 2002, inclusive, at or near Central Saanich,
    in the Province of British Columbia, did contravene a regulation made under
    paragraph 117(h) of the Firearms Act, respecting the storage of non-restricted
    firearms in that they were not stored in a manner that rendered them inoperable
    or stored in a container, receptacle, or room that is kept securely locked
    and that is constructed so that it cannot readily be broken into and had readily
    accessible ammunition, contrary to Section 86(2) of the Criminal Code.

Count 6

Norman Monty PORTER, on or about the 4
th
day of November, 2002,
    at or near Central Saanich, in the Province of British Columbia, being at
    large on a recognizance entered into before a Justice or a Judge and being
    bound to comply with a condition of that recognizance as directed by a Justice
    or a Judge, did fail without lawful excuse to comply with the following condition
    or direction:  Not to be in possession of any firearm, cross-bow, prohibited
    weapon, restricted weapon, prohibited device, ammunition, prohibited ammunition
    or explosive substance, and any related authorizations, licences and registration
    certificates, until you are deal with according to law, contrary to Section
    145(3) of the Criminal Code.

Count 7

Norman Monty PORTER, on or about the 17
th
day of May, 2002,
    at or near Central Saanich, in the Province of British Columbia, being at
    large on a recognizance entered into before a Justice or a Judge and being
    bound to comply with a condition of that recognizance as directed by a Justice
    or a Judge, did fail without lawful excuse to comply with the following condition
    or direction: To surrender any firearm, cross-bow, prohibited weapon, restricted
    weapon, prohibited device, ammunition, prohibited ammunition or explosive
    substance, and any related authorizations, licences and registration certificates
    you possess to the Central Saanich Police Department within 24 hours of your
    release from custody, contrary to Section 145(3) of the Criminal Code.

Count 8

Norman Monty PORTER, between the 16
th
day of May, 2002 and
    the 4
th
day of November, 2002, inclusive, at or near Central Saanich,
    in the Province of British Columbia, did possess a prohibited weapon, a switchblade,
    while not being the holder of a licence under which he may possess it, contrary
    to Section 91(2) of the Criminal Code.

Count 9

Norman Monty PORTER, between the 16
th
day of May, 2002 and
    the 4
th
day of November, 2002, inclusive, at or near Central Saanich,
    in the Province of British Columbia, did possess a prohibited device, a cartridge
    magazine that is capable of containing more than 10 cartridges of the type
    for which the magazine was originally designed and that is designed or manufactured
    for use in a semi-automatic handgun that is commonly available in Canada,
    while not being the holder of a licence under which he may possess it, contrary
    to Section 91(2) of the Criminal Code.

[2]

Mr. Porter appeals his convictions for these offences on a number of
    grounds.

Factual Background

[3]

The offences arose in the aftermath of a bitter dispute between the
    appellant, Mr. Porter, and his neighbour, which led to the appellants conviction
    for a number of offences including fraud, forgery and uttering a forged document.
     The appellant appealed those convictions to this Court and was released on
    bail while awaiting appeal.  There were allegations that the appellant violated
    the terms of this Courts release order.  As a result, the appellant was arrested
    for breach of the order and released on bail by a Justice of the Peace on
    16 May 2002.  The terms of the bail order were as follows:

CONDITION 1:            Keep the peace and be of good behavior.

CONDITION 2:            Not to contact or communicate directly or indirectly
    and shall stay away absolutely from Donald Henderson and Linda Kyle.

CONDITION 3:            Not to attend at or be on the property of Donald
    Henderson and Linda Kyle at 724 Mt. Newton Cross Road, Saanichton, BC or be
    found on portion of the land referred to in the Indictment.

CONDITION 4:            Not to be in possession of any firearm, cross-bow,
    prohibited weapon, restricted weapon, prohibited device, ammunition, prohibited
    ammunition or explosive substance, and any related authorizations, licences
    and registration certificates, until you are dealt with according to law.

CONDITION 5:            To surrender any firearm, cross-bow, prohibited
    weapon, restricted weapon, prohibited device, ammunition, prohibited ammunition
    or explosive substance, and any related authorizations, licences and registration
    certificates you possess to the Central Saanich Police Department within 24
    hours of your release from custody.

[4]

The last two conditions of the order are the bases for many of the
    grounds of appeal raised in this court.

[5]

On May 18, 2002, Sgt. Morrison of the Saanich police detachment telephoned
    the appellant to advise him that he was in breach of the fifth condition of
    bail which required him to surrender all weapons in his possession to the
    Central Saanich police detachment within 24 hours of his release.

[6]

On May 23, the appellant attended the police station and handed the
    officer on duty a letter the appellant had written to Cst. Teague, the primary
    investigating officer in the instant matter.

[7]

The letter stated that ten years earlier Mr. Porter had disposed of
    the weapons referred to in condition 5.  The letter written by Mr. Porter
    also said:

Additionally, there has now been a rather disturbing suggestion from a
    concerned party that someone is going to attempt to plant illegal materials
    on my property intended to initiate a search of my lands in order to have
    my bail revoked and the surety seized.  I therefore invite you to contact
    me to attend my property, in my presence, to conduct a thorough search for
    any such materials.

[8]

Cst. Teague did not act on Mr. Porters invitation.

[9]

By November 2002 the appellants failure to comply with these conditions
    of bail, together with the inability of the police to confirm, through various
    inquiries, that the appellant had actually disposed of the weapons led Cst.
    Teague to make an application and obtain a search warrant to search the appellants
    residence.  The search took place on November 4, 2002.

[10]

Acting on information he received, Cst. Teague and another officer
    had little difficulty accessing the attic crawl space in Mr. Porters home
    and locating a storage compartment containing the weapons which were the subject
    matter of the counts I have earlier set out.

[11]

The storage compartment consisted of a plywood panel fastened to the
    top and sides by partially seated screws.  Gaps between the plywood panel
    and the side walls to which it was attached allowed Cst. Teague to see that
    there were items inside the compartment.  Gripping the bottom of a panel with
    his hands, the officer managed to pull it off the compartment.  The guns,
    ammunition and other paraphernalia were inside.  There were no trigger locks
    or secure devices on any of the firearms to prevent them from being used.

[12]

A
voir dire
was held during the trial to determine whether the
    search violated s. 8 of the
Charte
r
.  At the conclusion
    of the
voir dire
, the trial judge ruled that s. 8 had been violated
    by Cst. Teague when he obtained the warrant to search by telewarrant.  She
    found that the
Code
provisions to obtain a telewarrant had not
    been met.  The trial judge rejected the appellants arguments that other breaches
    had occurred.  She found in the circumstances that the evidence should not
    be excluded under s. 24(2) of the
Charter
.

[13]

The full text of the reasons for judgment on the
voir dire
read:

[1]
THE COURT:
Mr. Porter faces a nine-count Indictment,
    and on this voir dire the defence challenges the validity of a search warrant
    executed November 4
th
, 2002.

[2]        On a review of the warrant issued by the justice of the peace,
    I find that the defence has shown on balance that, on the material provided,
    the justice, while acting judicially, could not be satisfied that the statutory
    requirements of s. 487.1 were met, namely that it was impracticable for the
    applicant peace officer to appear personally before a justice on his application
    for a search warrant.

[3]        I do not find that the balance of the defence arguments as
    to the sufficiency of the information to obtain are compelling, and I reject
    them.

[4]        As to the analysis which the court then must undertake under
    s. 24(2) of the
Charter
, and applying the
Collins
factors to this case, and as in particular on a consideration of the nature
    of the breach, I have concluded that the admission of the evidence obtained
    would not bring the administration of justice into disrepute.

[5]        As is clear, counsel, these are skeletal reasons.  I wanted
    to get them to you, get the result to you, so as to give you an opportunity
    to consider how you want to proceed next week.  I expect to give you more
    complete reasons when we next convene.

[14]

This ruling was made 28 April 2004.  The trial continued on 3 May 2004.
    The trial judge apparently was not ready to provide the complete reasons on
    May 3.  She asked Crown counsel what he proposed to do as a result of the
    skeletal ruling.  The Crown, with the consent of defence counsel, tendered
    the evidence called on the
voir dire
as evidence in the main trial.
    Exhibits were marked, other housekeeping matters attended to, and the defence
    opened its case.  The more complete reasons were never delivered.

[15]

On 10 March 2005 the appellant filed his notice of appeal.  On 6 December
    2006 the respondent, by way of a notice for directions, brought an application
    in Chambers in this Court seeking a direction that counsel be permitted to
    write to the trial judge to ask her to provide her more complete reasons,
    or to prepare and provide them.  The application was opposed by the appellant,
    apparently on the ground that, at this late date, the production of further
    reasons would necessitate an adjournment.

[16]

I am of the view that on the basis of this courts decision in
Scarr
    v. Gower
(1956), 18 W.W.R. 184,
2 D.L.R. (2d) 402 at 405 (C.A.)
, there are only rare circumstances in which
    this court would request a trial judge to produce reasons for the purpose
    of an appeal after the notice has been filed.  It is unfortunate, however,
    that no inquiry was made of the trial judge as to whether there were existing
    reasons, that by oversight had not been filed or delivered during the course
    of the trial.  We are left to do the best that we can with the skeletal reasons.

[17]

Relying on
R. v. Sheppard
(2002), 162 C.C.C. (3d) 298,
    the appellants first ground of appeal is that the reasons provided by the
    trial judge in her ruling on the
voir dire
are generic and are incapable
    of proper judicial scrutiny as a result of their brevity.  He submits that
    the existing reasons, without supplement are insufficient.  If this ground
    is successful, the appellant says that he should have a new trial.

[18]

The appellant says that there are four points which required analysis
    by the trial judge and, that without that analysis, this Court is unable to
    properly scrutinize the ultimate decision of the trial judge to admit the
    evidence.  He says that the reasons are deficient on the question whether
    there were objective and subjective grounds to issue the warrant, whether
    the police officer provided misleading information in the information to obtain,
    and whether they were deficient in examining the balance of factors in s.
    24(2).

[19]

The Crown does not dispute that the principles set out in
Sheppard
should apply to this ruling.  The Crown submits, however, that when viewed
    in the context of the evidence adduced and the submissions of counsel, the
    factual and legal bases of the trial judges ruling are discernable and susceptible
    to appellate review.

[20]

The evidence surrounding the obtaining of the search warrant was provided
    by Cst. Teague who was examined and cross-examined on the subjective and objective
    grounds he had to believe weapons were stored in Mr. Porters home and his
    reasons for obtaining the search warrant by telewarrant.

[21]

Cst. Teague testified that, through a registry search, he learned Mr.
    Porter had registered certain weapons under former
Criminal Code
provisions.  The legislation in force required him to keep the weapons at
    an address set out in a documents issued to him by the registry.  That address
    was Mr. Porters present address.  Cst. Teague attempted to search, by various
    ways, any documented movement of the weapons in question.  He could not find
    anything to indicate that the weapons were any place other than as required
    by the registration.  Mr. Porter failed to turn over any weapons in accordance
    with his order.  Thus there were reasonable grounds to believe that the weapons
    were kept where they were required to be kept.

[22]

Cst. Teague was asked whether he expected that the weapons were on
    the premises when Mr. Porter sent him the letter consenting to a search of
    his home in March.  Cst. Teague said that he did not expect them to be there
    when he was first invited to search.   He volunteered that, my feeling was
    until something further happened they may not be there still, thats a possibility.
    This was not explored further in cross-examination.  It was not until November
    that Cst. Teague sought a search warrant.  By that time he had accumulated
    a number of unsubstantiated rumors, had done further registry searches that
    turned up nothing on the weapons and decided to seek to obtain a search warrant.
    On the information to obtain a tele-warrant, Cst. Teague wrote that there
    was no on-call Justice of the Peace in Central Saanich.  This statement
    was literally true, but on fuller amplification at trial, Cst. Teague
    testified that he sought a telewarrant because of administrative policy in
    place at the time that searches outside Victoria be done through the telewarrant
    centre.

[23]

The appellant did not testify or call evidence on the
voir dire
.

[24]

I agree with counsel for the Crown that, on the basis of this evidence,
    the trial judge was not called upon to address troublesome principles of settled
    law or to resolve confused and contradictory evidence relevant to those key
    issues.  In my view, the entire record, including the allegedly deficient
    reasons, satisfactorily explain the trial judges decision to admit the evidence.

[25]

In my view, it was entirely reasonable for the trial judge to conclude
    that the police officer had both subjectively and objectively reasonable grounds
    to believe that the weapons in question were somewhere on Mr. Porters property.
    Nothing in the evidence suggests bad faith in the officers actions in seeking
    a telewarrant.  Thus, the only factor the trial judge had to consider in determining
    whether to exclude the fruits of the search was a technical breach of s. 8
    in that the requirements of the telewarrant provisions were not satisfied.
    Otherwise, the evidence obtained was not conscriptive, reasonable and probable
    grounds existed for the search, and there was no bad faith on the part of
    the officer.  The breach was not serious; the offences were.  The trial fairness
    and other factors in
R. v. Collins
(1987) 33 CCC (3d) 1 were
    satisfied.  Thus the appellant has failed to demonstrate any basis on which
    this court ought not to be appropriately deferential in its review of the
    decision of the trial judge to admit the evidence.

[26]

I would dismiss the first ground of appeal.

[27]

The next ground of appeal relates to the substance of counts one and
    two of the indictment.  Mr. Porter was charged with two counts of careless
    use of a firearm under s.86(2) of the
Criminal Code
as it stood
    in 2002.  At the time in question that section provided:

Every person commits an offence who contravenes a regulation under paragraph
    117(h) of the Firearms Act respecting the storage, handling, transportation,
    shipping, display, advertising and mail-order sales of firearms and restricted
    weapons.

[28]

The regulations passed under s. 117(h) of the
Firearms Act
required the subject firearms to be kept securely locked.  The firearms,
    as noted earlier, were kept in a compartment in the appellants attic the
    parts of which were screwed together, but not locked as such, with a locking
    device.  The trial judge dealt with the appellants submission that the regulations
    required him only to keep the firearms in a secure manner, not necessarily
    locked in the conventional sense.  In her reasons for judgment, paragraphs
    24 to 28, the trial judge rejected this submission.  In submissions before
    this Court, counsel for the Crown, Ms. Gagnon, submitted that a purposive
    interpretative approach to the
Act
and regulations reveals a
    legislative intent to ensure that firearms be kept out of the wrong hands.
    Thus, she says, it can be seen that the regulations require access to the
    registered firearms by lock and key or lock and combination because that method
    of storage permits an element of exclusivity to the registrant.  Only the
    registrant will have a key or combination for access.  What the regulations
    do not permit is storage that can be violated by the use of a screw driver
    or other non-exclusive instrument.  While this argument is interesting, there
    is no need on this appeal to examine it further.  I am in substantial agreement
    with the reasons for judgment of the trial judge who found that the regulations
    were intended to set out, and did set out, a certain and clear method of storage
    by way of conventional locking, and that other methods of storage were simply
    non-compliant.

[29]

The next ground of appeal raised by the appellant is that the trial
    judge erred in finding that risk was not an essential element in the
mens
    rea
required for the s. 86(2) offences.  In my view the principles
    set out by this court in
R. v. Smillie
(1998) 129 C.C.C. (3d)
    414 are applicable to this case and were properly applied by the trial judge.
    I would dismiss this ground of appeal.

[30]

Next, the appellant submitted that the trial judge erred in finding
    that the appellant had not established the defence of due diligence.  This
    ground cannot succeed.  There was no evidence proffered that the appellant
    took reasonable care to store his firearms in a manner consistent with the
    regulations.  I would dismiss this ground of appeal.

[31]

The next ground of appeal deals with Counts 6 and 7 of the indictment.
    In his factum, the appellant seems to attack the lawfulness of the bail conditions
    imposed by the Justice of the Peace.  I agree with counsel for the Crown that
    the appellant is not entitled at this point to mount a collateral attack on
    the order of the Justice.  In any event, s. 515(4)(f) of the
Code
permits a Justice to direct the accused to comply with such other reasonable
    conditions specified in the order as the Justice considers desirable.  In
    my view conditions 4 and 5 of the bail order were properly made under this
    section.  I would dismiss this ground of appeal.

[32]

The appellants complaint with respect to Counts 6 and 7 is that he
    was unaware that conditions 4 and 5 were a part of his bail conditions until
    the police contacted him two days after his release to tell him that he had
    not complied with condition 5.  The appellant testified that his lawyer had
    left him at the police station on the understanding that he had with the Crown
    that Mr. Porter would be released on the same terms and conditions as other
    bail orders made in connection with the matters that brought him to court.
    These orders had not contained provisions similar to conditions 4 and 5.

[33]

While the appellant testified as to his understanding of what would
    happen with respect to his bail, he did not provide any evidence as to what
    facts were alleged at the bail hearing or what submissions were made to the
    Justice by whom as to what the order should contain.  In other words, there
    is no evidence as to how these conditions came to be included in the order.

[34]

The trial judge accepted that counsel for Mr. Porter understood that
    he had an agreement with counsel for the Crown as to what the bail order would
    contain.  I would add only that no matter what agreement may be made between
    the
Crown
and
    the defence, it is still up to the Justice or the judge at the bail hearing
    to determine what conditions a bail order should contain and it is open to
    him or her to add any conditions he or she might think necessary as a condition
    of release.  In the case at bar, the trial judge found that, not only was
    the order made, but the appellant signed the recognizance that included the
    two terms.  The trial judge rejected the evidence that the appellant did not
    know that conditions 4 and 5 were a part of his bail order.  For this reason,
    it is unnecessary to consider the appellants submission that he could not
    be in breach of an order that he turn over weapons to the police within 24
    hours of his release when he did not know the condition existed until that
    time had passed.

[35]

There are other issues raised by the appellant that I do not propose
    to deal with.  In my view they have no merit.   The final grounds of appeal
    require, in part, a finding by this court that the trial judges rejection
    of his evidence was unreasonable.  I see nothing in the reasons that persuade
    me that the trial judge erred in her assessment of the credibility of the
    appellant, or that she was wrong not to base a doubt upon his evidence.

[36]

In my view the appellant has not demonstrated that the trial judge
    erred in law or in fact in her analysis of any of the issues before her.
    I would dismiss the appeal.

[37]

ROWLES, J.A.:
I agree.

[38]

NEWBURY, J.A.:
I agree.

[39]

RYAN, J.A.:
The appeal is dismissed.

The Honourable Madam Justice Ryan

CORRECTION
 July 20, 2007

The date
    under Place and Date in the head notes has been changed from January 17,
    2006 to January 17, 2007.


COURT
    OF APPEAL FOR BRITISH COLUMBIA

Citation:

Saanich
          (District of) v. Dominelli,

2007
          BCCA 38

Date: 20070117

Docket: CA033472

Between:

Corporation
    of the District of Saanich

Appellant

(
Defendant
)

And:

Maria
    Dominelli

Respondent

(
Plaintiff
)

Before:

The
          Honourable Madam Justice Rowles

The
          Honourable Madam Justice Ryan

The
          Honourable Madam Justice Newbury

Oral Reasons for Judgment

Michael
          J. Hargreaves

Counsel for the Appellant

Graham
          N. Rudyk

Counsel for the Respondent

Place
          and Date:

Victoria
,
British Columbia

January 17, 2007

[1]

ROWLES, J.A.:
The respondent, Maria Dominelli, brought an
    action under the
Occupiers Liability Act
,
1996 R.S.B.C., c. 337,
against the appellant, the Corporation of the District
    of Saanich, for damages for injuries she sustained when her head struck a
    bulkhead dividing a 50 meter competition swimming pool on premises occupied
    by Saanich.  Following a trial confined to the determination of the issue
    of fault, the trial judge apportioned liability 50% against Saanich and 50%
    against the respondent.

[2]

The reasons of the trial judge are reported at (2005), 15 M.P.L.R.
    (4
th
) 263, [2005] B.C.J. No. 2444, and at 2005 BCSC 1455.

[3]

The appeal is brought on the grounds that the trial judge erred in
    finding that the failure of Saanich to post signs on both sides of the bulkhead
    dividing the competition area of the pool constituted a breach of the appellants
    duty as imposed by s. 3 of the
Occupiers Liability Act
,
    in finding that the posting of a sign would have enabled the respondent to
    avoid injury and in apportioning liability equally between the parties.

[4]

In my opinion, the trial judge did not err in principle in reaching
    the conclusions he did on liability and the appellant has not demonstrated
    any reversible error with respect to the trial judges findings of fact.
    I would dismiss the appeal.

[5]

RYAN, J.A.:
I agree.

[6]

NEWBURY, J.A.:
I agree.

[7]

ROWLES, J.A.:
The appeal is dismissed.

The Honourable Madam Justice Rowles


COURT
    OF APPEAL FOR BRITISH COLUMBIA

Citation:

Daignault
          v. Gueldner,

2007
          BCCA 40

Date: 20070118

Docket: CA033805

Between:

Norman
    Daignault

Appellant

(
Petitioner
)

And

Bradley
    Alan Gueldner and Dana Darlene Gueldner

Respondents

(
Respondents
)

Before:

The
          Honourable Chief Justice Finch

The
          Honourable Mr. Justice Donald

The
          Honourable Mr. Justice Low

Oral Reasons for Judgment

D.R.
          Thompson

Counsel for the Appellant

M.J.
          Meyers

Counsel for the Respondent

Place
          and Date:

Vancouver, British Columbia

18 January 2007

[1]

LOW, J.A.
: This is an appeal of an order made by Arnold-Bailey
    J. on 10 February 2006 setting aside an order she had made on 5 August 2005
    granting relief in a petition brought by the appellant for an order that the
    respondents remove certain old buildings that substantially encroach on the
    petitioners property.

[2]

The appellant raises four grounds of appeal: (1) that the chambers
    judge erred in finding that there had not been effective service of the petition
    on the respondent Bradley Alan Gueldner; (2) that the judge erred in determining
    that there had not been a wilful failure on the part of the respondents to
    enter an appearance to the petition within time and wrongly inferred that
    the failure was not wilful; (3) that the judge erred in finding that the respondents
    moved to set aside the order within a reasonable time after learning that
    it had been made; and (4) that the judge erred in considering the merits of
    the respondents defence to the petition.

[3]

As to the first ground of appeal, the chambers judge, after hearing
viva voce
evidence from the process server and from the respondents,
    determined that the process server was clearly mistaken in swearing that Bradley
    Gueldner was the man she had served at the same time as she served his wife.
    The appellant does not challenge this factual finding but says that service
    on Bradley Gueldner was effected when his wife showed him the petition.

[4]

It is arguable that Bradley Gueldner, because he was not personally
    served, was entitled as of right to have the order set aside as against him.
    If Bradley Gueldner had been the only respondent it seems clear to me that,
    in the absence of an order for substituted service, he would have had that
    right.  Where personal service is required, it must be effected for subsequent
    proceedings to be lawful.  I am not sure that it makes any difference when
    the respondent who has been personally served brings the proceedings to the
    attention of the respondent who has not been personally served.  But the chambers
    judge did not determine this matter on that point.  Rather she decided the
    issue on the basis of the requirements set out by Hinds C.C.J., as he then
    was, in
Miracle Feeds v. D.H. Enterprise Limited
(1979), 10
    B.C.L.R. 58.  She analysed the situation on the assumption that Bradley Gueldner
    had been personally served.  Therefore, even if there was some merit to the
    first ground of appeal it would avail the appellant nothing.

[5]

The second and third grounds of appeal require a discussion of the
    sequence of events from the filing of the petition to the application to have
    it set aside.  Counsel for the appellant filed the petition on 19 July 2005.
    It was served on Dana Gueldner on July 21
st
.  The respondents met
    with their lawyer on July 27
th
, the first day he was available.

[6]

Under R. 14(3) of the
Rules of Court
, the respondents
    had seven days from the date of service to file an appearance.  On July 28
th
,
    the seventh day, counsel for the appellant searched the registry and determined
    that no appearance had been filed.  On August 3
rd
counsel for the
    respondents filed an appearance dated July 27
th
but did not deliver
    it to the other side.  On August 4
th
, counsel for the appellant
    filed a notice of hearing of the petition returnable the next day in apparent
    compliance with the applicable provisions of R. 51A.  On August 5
th
,
    the chambers judge, relying on the affidavit of the process server that both
    respondents named in the petition had been served, made the order granting
    the relief sought in the petition.  It is likely that the appearance, although
    filed in the registry, had not yet found its way to the court file.

[7]

On August 10
th
counsel for the respondent delivered the
    appearance to counsel for the appellant.  Respondents counsel received a
    draft copy of the August 5
th
order on or about August 12
th
and was served with an entered copy on August 22
nd
.

[8]

On August 29
th
, another counsel filed a notice of change
    of solicitor, the two respondent counsel being in the same law firm.  On August
    31
st
she delivered a notice of motion to set aside the August 5
th
order and it was the hearing of this motion several months later that gave
    rise to the order under appeal.  In the meantime, on September 1
st
the respondents brought an appeal to this Court of the August 5
th
order and also filed a petition seeking equitable relief with respect to the
    encroachments under s. 36 of the
Property Law Act
, R.S.B.C.
    1996, c. 37, as amended.

[9]

The thrust of the argument on the second ground of appeal is that the
    respondents did not prove that their delay in filing an appearance was not
    wilful or deliberate under the first part of the test in
Miracle Feeds
.
    The appellant argues that there is no explanation in evidence from the lawyer
    the respondents initially consulted as to why he did not file the appearance
    in time and why it took him another week to deliver it to the other side rather
    than forthwith as required by R. 14(1)(b).  Therefore, the argument continues,
    it must be concluded that the respondents deliberately did not file and deliver
    the appearance as required by the rules.

[10]

It is conceded in the appellants factum that if there had been an
    admission by the respondents first lawyer that he alone was the cause of
    the delay the order of 5 August 2005 would almost certainly have been set
    aside.  I take this to mean that had there been such evidence there would
    have been no appeal.

[11]

A complete answer to this argument is found in the evidence of the
    respondents and in the reasons of the trial judge.  The respondents testified
    that they consulted their lawyer at the first available opportunity and relied
    on him to protect their interests.  They obviously intended to oppose the
    petition on the merits.  It cannot be said that the relatively short procedural
    delay was the product of wilfulness on their part.

[12]

The chambers judge dealt with this point clearly.  After noting that
    there was no evidence given as to why the lawyer did not act more promptly,
    the judge said this:

[24]      . . . I simply point out that it is not the Gueldners' fault
    in terms of them simply ignoring the matter.  It is also worth noting that
    the Gueldners did not attempt to either delay responding or in any way fail
    to address the proceedings because, in fact, although Mr. Bradley Gueldner
    was not personally served, his wife brought it to his attention and the two
    of them acted within a reasonable time to deal with it.  I cannot find on
    the evidence before me that they either wilfully or deliberately failed to
    enter an appearance or file a defence of the claim.

[13]

There was substantial evidence to support this conclusion.  The delay
    in filing and delivering the appearance could not be found to be the fault
    of the respondents themselves.  I see no merit in the second ground of appeal.

[14]

On the third ground of appeal it is argued that the respondents did
    not act, as stated in the second part of the
Miracle Feeds
test,
    as soon as reasonably possible after obtaining knowledge of the default judgment
    and did not give an explanation for any delay in the application being brought.

[15]

As already noted, the respondents received the entered order on 22
    August 2005.  Their counsel served the motion to set it aside nine days later.
    In my opinion, this was a prompt response well within the test.

[16]

Although not pressed on the hearing today, the final ground of appeal
    concerns the merits of the proposed opposition to the appellants petition.
    It does not seem to be in issue that two buildings on the respondents property
    substantially encroach on the appellants adjacent property.  Apparently there
    has been an issue between the parties for some time as to what could or should
    be done about it.  So the case comes down to the proper remedy.  The respondents
    make a case that removal of the buildings, the only remedy sought in the appellants
    petition, is not the appropriate remedy and that a transfer of part of the
    appellants property to the respondents, or an easement over it, under the
Property Law Act
is appropriate.

[17]

One of the buildings is a barn leased to tenants who board horses.
     The other building is a shed that houses a pump and other equipment used
    to supply water to three families from a well on the respondents property.
    The respondents say they have made extensive repairs to both buildings.  It
    is said that removal or alterations to these buildings would be costly.

[18]

It is clear to me that there is arguable merit to the assertion of
    the respondents that the appropriate remedy is other than that sought by the
    appellant in his petition.  The chambers judge did not err in finding that
    the evidence meets the third part of the test in
Miracle Feeds
.

[19]

I would dismiss the appeal with costs to the respondents.

[20]

FINCH, C.J.B.C.
: I agree.

[21]

DONALD, J.A.
: I agree.

[22]

FINCH, C.J.B.C.
: The appeal is dismissed.

The Honourable Mr. Justice Low


COURT
    OF APPEAL FOR BRITISH COLUMBIA

Citation:

Domtar
          v. H.M.T.Q. (British Columbia),

2007
          BCCA 49

Date: 20070119

Docket: CA033714

Between:

Domtar
    Inc.

Respondent

(
Petitioner
)

And

Her
    Majesty the Queen in Right

of
    the Province of British Columbia

Appellant

(
Respondent
)

Before:

The
          Honourable Chief Justice Finch

The
          Honourable Mr. Justice Donald

The
          Honourable Mr. Justice Low

Oral Reasons for Judgment

H.W.
          Gordon

S.
          Kirkpatrick

Counsel for the Appellant

J.H.
          Goulden

A.
          Robertson

Counsel for the Respondent

Place
          and Date:

Vancouver, British Columbia

19 January 2007

[1]

FINCH, C.J.B.C.
: The Provincial Crown appeals the order of
    the B.C. Supreme Court pronounced on 21 December 2005 allowing the petitioners
    appeal from the decision of the Ministry of Provincial Revenue, assessing
    Social Service Tax payable by the petitioner on the purchase of biocides,
    chemical agents used to eliminate bacteria in the material the petitioner
    processes to make paper.

[2]

The petitioner claimed that biocides are exempt from taxation under
    Section 76(1)(b) of the
Social Service Tax Act
:

76(1) The following are exempted from taxes imposed by sections 5 to 25
    and 112.3:

. . .

(b)
    subject to subsections (2) and (5), a substance used as a catalyst, or as
    a direct agent, in a chemical reaction for the transformation or manufacture
    of a product for sale or lease and that is in contact with, or is temporarily
    incorporated into, the material being transformed or manufactured into the
    product;

[3]

The Crown says that the exemption is not applicable by virtue of s.
    76(5):

76(5)
    The exemption under subsection (1) (b) does not apply to a substance used
    as a catalyst or direct agent if

(a)
    the substance is not used directly in the transformation or manufacture of
    a product or the contact between the substance and the material being transformed
    or manufactured into a product is inconsequential to the transformation or
    manufacture of the product

[4]

Direct agent is defined in s. 1 of the
Act
:

"direct agent"
means a substance that produces or modifies a chemical
    reaction and that is consumed in the chemical reaction to the point of destruction
    or dissipation or uselessness for any other purpose

[5]

The learned chambers judge held that the biocides were exempt from
    taxation.  She concluded:

[34] The biocides are used as a direct agent in a chemical reaction for
    the manufacture of paper for sale and are in contact with the material being
    manufactured into paper.  The biocides are used directly in the manufacture
    of the paper.

[6]

She therefore allowed the petition, and ordered a refund of tax paid
    by the petitioner.  It is from that order that the Crown appeals.

[7]

The petition was decided on affidavit evidence, which included conflicting
    opinions from experts in the pulp and paper industry.  The chambers judge
    found the following facts, which are not in dispute:

[5]
    The petitioner Domtar Inc. ("Domtar") produces fine coated paper
    at its paper manufacturing plant in New Westminster, B.C.  Wood pulp fibre
    is combined with various additives, including sizes and starches, in a white
    water slurry.  The papermaking machine forms the slurry into a wet mat that
    is then dried with pressure and heat to form a base sheet that is coated with
    a mineral pigment-based coating.

[6]
    During the papermaking process, the raw materials are generally maintained
    at a temperature that is conducive to the development and growth of many kinds
    of bacteria.  If left unchecked, the bacteria growth will result in:

(a) The creation of volatile fatty acids that will permanently contaminate
    the paper product and result in an undesirable odour in the paper product
    itself;

(b) The production of hydrogen sulphide gas within the plant where employees
    work.  An environment in which there is hydrogen sulphide gas is not a safe
    environment; and

(c) The rapid build up of slime on the papermaking machinery that will
    physically contaminate the paper product and cause sheet holes, sheet spots
    and paper breaks while the paper product is being manufactured.  It also requires
    shutting down the contaminated machinery for expensive and time consuming
    chemical cleaning.  The machinery can be permanently damaged by the bacteria
    contamination.

[7]
    The parties agree that saleable paper cannot be manufactured without the use
    of biocides.

[8]
    Biocides use five modes of action to kill or inhibit bacteria in the papermaking
    process:

(a) Surface penetrating - the biocides disrupt the chemical bonds of a
    cell wall causing cell leakage which leads to the death of the cell;

(b) Surface binding - the biocides form a barrier around the cell wall
    by ionic bonding to the cell preventing food entering or waste leaving the
    cell which leads to the death of the cell;

(c) Enzyme inhibition - the biocide enters the cell and interferes with
    enzymes necessary for energy production within the cell which stops development
    of the cell;

(d) Reproductive inhibition - the biocide enters the cell and interferes
    with enzymes necessary for reproduction of the cell which stops multiplication
    of the cell; and

(e)
    Oxidizing - the biocide reacts with chemical bonds via electron transfer which
    alters the chemical structure of the bacteria.

[8]

The Crown argues that biocides do not come within the exception to
    the exemption provided by s. 76(5) because they are  not used directly in
    the transformation or manufacture of a product.  The Crown says that to be
    used directly within the meaning of that section the biocides must directly
    result in converting the raw materials into paper. It says the prevention
    of or reduction in the formation of bacteria in the raw materials does not
    directly result in the conversion of the raw materials into paper.  It says
    a substance will not qualify for exemption in a manufacturing process unless
    it gives the raw materials used to make the paper (essentially the fibres,
    pigment sizes and starches) a new form, quality and property such that the
    end product is paper.

[9]

In support of this position the Crown relies on the opinion of its
    expert, Dr. George Ionides.  In his opinion, biocides are process chemicals
    as opposed to functional chemicals.  His opinion includes this:

[26]
    In response to questions from counsel for the Crown.  Certain of the questions
    and Dr. Ionides's answers are as follows:

A          . . .
The latter (process chemicals)
are added to optimize
    the papermaking process or minimize undesirable side effects of the process.
    However, they do not have any direct, functional impact on paper quality,
    and they do not become integrated into the finished paper.  Examples of such
    chemicals are defoamers (added to control foam build-up in pulp and paper
    process lines), and biocides.  Biocides are used to inhibit undesirable bacterial
    growth which results in inefficiencies and degradation of paper quality.
    They do not contribute "functionally" to paper quality.

[Underlining in original.]

[10]

So the Crown argues that biocides are used indirectly in the manufacture
    of paper, as opposed to directly.  The Crown says the use of a process chemical
    to combat bacteria in the material may avoid inefficiencies or degradation
    of paper quality, but that such a use is not a direct use in the manufacture
    of paper.  The Crown says the words used directly in s. 76(5)(a) must be
    read to mean that the substance will not come within the exemption unless
    it gives the raw materials new forms, new qualities and new properties.  It
    says that biocides do none of these things.  It says the biocides react with
    bacteria, or prevent bacteria from forming.  As the bacteria is not a raw
    material, the use of the biocides in paper manufacture is indirect.

[11]

In my respectful opinion, these arguments cannot be reconciled with
    the facts found by the chambers judge.  If the bacteria in the material are
    not destroyed, the paper product will be permanently contaminated by volatile
    fatty acids, and will have an undesirable odour.  It is accepted that marketable
    paper cannot be manufactured without the use of biocides.

[12]

It is therefore apparent that the biocides are a substance within
    the meaning of s. 76(1)(b) used as a direct agent in a chemical reaction
    for the manufacture of a product for sale.

[13]

It is not correct to say, as the Crown argues, that biocides do not
    give the raw material new forms, new qualities or new properties.  The use
    of biocides results in an odourless paper, and a paper that, but for their
    use, would not be marketable.

[14]

The fact that the use of biocides has other beneficial consequences
    for the work environment, and for the maintenance of paper making equipment,
    does not alter the result.

[15]

The Crown advanced an argument based on legislative history, and judicial
    interpretation taking account of cases previously decided under the
Act
as then in force.  It refers to
Highland Valley Copper v. H.M.T.Q.
,
    1999 BCCA 0692 and
British Columbia v. Homestake
, 1999 BCCA
    274.

[16]

I did not find these submissions persuasive, in light of the facts
    found by the chambers judge, and the application of the present legislation
    to those facts.

[17]

I would dismiss the appeal with costs to the respondent.

[18]

DONALD, J.A.
: I agree.

[19]

LOW, J.A.
: I agree.

[20]

FINCH, C.J.B.C.
: The appeal is dismissed.

The Honourable Chief Justice Finch