COURT OF APPEAL FOR BRITISH COLUMBIA

Citation:

Grewal v. Sandhu,

2012 BCCA 26

Date: 20120119

Docket: CA038665

Between:

Agyapal Singh
Grewal

Appellant/Respondent
by Cross Appeal

(Plaintiff)

And

Jatinder Singh
Sandhu and 676207 B.C. Ltd.

Respondents/Appellants
by Cross Appeal

(Defendants)

And:

Royal Lepage
Westgard Realty Ltd.,
Lakhvir Kaur Gill and Jaswinder Dhaliwal

Respondents

(Defendants)

And

Kuldip Kaur Grewal
and South-Slope Enterprises Ltd.

Respondents

(Plaintiffs)

Before:

The Honourable Madam Justice Levine

The Honourable Mr. Justice Lowry

The Honourable Mr. Justice Tysoe

On appeal from: Supreme
Court of British Columbia, November 18, 2010
(
Grewal v. Sandhu
, 2010 BCSC 1627, Vancouver Docket S054086)

Counsel for the Appellant:

D. Lunny and J. A.
  Dawson

Counsel for the Respondents,
Jatinder Singh Sandhu and 676207 B.C. Ltd.:

D. G. Cowper, Q.C.

Counsel for the Respondent,
Lakhvir Kaur Gill:

H. S. Nirwan

Place and Date of Hearing:

Vancouver, British
  Columbia

October 13 and 14,
  2011

Place and Date of Judgment:

Vancouver, British
  Columbia

January 19, 2012

Written Reasons by:

The Honourable Mr. Justice Lowry

Concurred in by:

The Honourable Madam Justice Levine
The Honourable Mr. Justice Tysoe

Reasons for Judgment of the Honourable
Mr. Justice Lowry:

[1]

Jatinder Sandhu is a psychiatrist.  Agyapal Grewal worked in farming and
then land excavation.  They were friends.  Dr. Sandhu commenced treating
Mr. Grewal for clinical depression in March 2002.  He discontinued the
treatment in December 2004.  During that time they participated in two real
estate transactions which concluded in June 2005.  Mr. Grewal immediately commenced
this action alleging Dr. Sandhu had cheated him financially in a manner
that seriously impaired his mental and emotional health.  It was tried before
Mr. Justice N. Smith five years later.  He awarded damages for breach of trust
in respect of the first transaction (the Farm Property), and damages as well
as a registrars reference to assess further damages, essentially for breach of
contract, in respect of the second (the Subdivision Property).  In addition,
he also awarded what he said were general damages based on Dr. Sandhu having breached
a fiduciary duty owed to Mr. Grewal.  The judge specifically declined to make
an award of punitive damages which Mr. Grewal sought, but he ordered Dr. Sandhu
to pay special costs of the action (2010 BCSC 1627).

[2]

Mr. Grewal appeals, contending on various grounds the damages
awarded should be much greater and that an award of punitive damages should be
made.  Dr. Sandhu cross appeals on the basis that some of the damages awarded
are not supportable either in fact or in law and that no case for special costs
was made out.

[3]

While various individuals and companies are named as parties, the appeal
is confined to the action taken by Mr. Grewal, who operated his excavating
business through South-Slope Enterprises Ltd., against Dr. Sandhu, a numbered
company Dr. Sandhu acquired (676207 B.C. Ltd., referred to as Holdco) in
respect of the Subdivision Property, and Lakhvir Gill, who is alleged to have
committed fraud against Mr. Grewal in respect of the Farm Property.

[4]

I proceed to consider the case advanced on appeal by each of Mr. Grewal
and Dr. Sandhu in respect of first the Farm Property and then the Subdivision
Property before turning to the judges award of general damages, the claim for
punitive damages, and special costs.

The Farm Property

[5]

The judge awarded damages in respect of the Farm Property on the basis
that Dr. Sandhu had held Mr. Grewals interest in that property in trust and,
unknown to Mr. Grewal, had sold it for less than its market value.  Mr. Grewal
appeals, raising two grounds.  He first says the judge erred in assessing his
loss on the basis of the value of the property at the time it was sold instead
of the date of judgment.  He then says the judge erred in dismissing his action
for fraud against Ms. Gill who purchased the property from Dr. Sandhu.

[6]

Mr. Grewal, through South-Slope, had been in the excavating business
since 2000.  He had on occasion bought and quickly sold or flipped real
estate properties.  In June 2003 he borrowed $20,000 from Dr. Sandhu, which he
apparently used to make a $16,000 down payment on the 5.5 acre Farm Property,
consisting of two lots on one of which was a derelict house occupied by a
tenant.  The purchase price was $275,000.  Mr. Grewal did not have the money to
complete the purchase and asked Dr. Sandhu to participate in acquiring the
property.  The purchase was completed in July.  There were three purchasers,
who each took a one-third interest:  Dr. Sandhu, who paid $160,000; Mr. Grewal,
who except for the borrowed $16,000 deposit paid nothing; and a business
associate of Mr. Grewal who apparently paid the balance of the purchase price.
Dr. Sandhu then lent Mr. Grewal a further $20,000.  Mr. Grewal was to clean up
the property and improve it for resale.

[7]

Based on an appraisal they obtained in July 2003 valuing the property at
$300,000, the purchasers borrowed $195,000 which was deposited in Mr. Grewals
bank account.  Most of it was paid out to South-Slope (apparently to purchase
excavating equipment), although $65,000 was paid to Mr. Grewals business
associate.  Mr. Grewal made some irregular payments totalling $8,300 on the
loan between December 2003 and April 2004.

[8]

In April, Dr. Sandhu assumed responsibility for making all the loan
payments.  Mr. Grewals associate withdrew from any further involvement in
the property and relinquished his one-third interest to Dr. Sandhu.  In May, Dr.
Sandhu had Mr. Grewal convey his one-third interest to him.  The property
was appraised in June 2004 at $410,000.  In July, Dr. Sandhu had a solicitor
draw an agreement, executed by Dr. Sandhu as Trustee and by Mr. Grewal as
Beneficiary, which provided that Dr. Sandhu held a one-half interest in
the property in trust for Mr. Grewal and a one-half interest for himself.  The
arrangement gave Dr. Sandhu certain tax advantages as the sole owner of the
property making the payments on the loan.  The evidence appears to be
incomplete, and the parties are at odds, with respect to any financial
adjustments made between the initial three purchasers with respect to their contributions
to the acquisition of the property.  In the end, it appears Mr. Grewal contributed
little if anything to what was paid for the property.  The judge made no
finding in this regard.  He did, however, suggest that a one-half interest was
out of proportion to anything Mr. Grewal had contributed to the acquisition,
but said the trust agreement had been drawn by Dr. Sandhus solicitor and he
had executed it.

[9]

It is unclear how much work Mr. Grewal did on the property.  He
solicited some landfill dumping on one of the lots but the municipality put a
stop to that.  The house remained largely unaltered.

[10]

In February 2005, Mr. Grewal and Dr. Sandhu decided to sell the
property.  Mr. Grewal signed a promissory note to pay Dr. Sandhu $70,000 out of
his share of the proceeds of the sale which the judge saw as Dr. Sandhus
attempt to recover from Mr. Grewal some or all of various amounts of money Mr.
Grewal had received from him.  (As will become evident, Mr. Grewal received
money from Dr. Sandhu in respect of the Subdivision Property as well as the
Farm Property.)  Dr. Sandhu and Mr. Grewal met with a real estate agent and the
property was listed at $550,000.  In April, the price was reduced to $485,000.
The agent testified it was in terrible shape and had no development potential
because it was in an agricultural land reserve.  Two offers were received, the
first for $430,000 and the second for $390,000.  Both were subject to financing
and, although accepted, did not complete.

[11]

The listing agreement expired at the end of May.  About a week later,
Dr. Sandhu sold the property to Lakhvir Gill for $290,000.  Ms. Gill is
the wife of Iqbal Gill who, years before, had been a patient of Dr. Sandhu and who,
in the spring of 2005, had entered into a business arrangement with Dr. Sandhu
to construct and sell houses.  Ms. Gill paid a $34,000 deposit.  She obtained a
mortgage for $188,500 (essentially the amount required to discharge the
existing mortgage) which was guaranteed by Dr. Sandhus wife.  She did not,
however, have sufficient funds available to complete the transaction so the
balance was paid out of a $70,000 bank draft Ms. Gill received from Dr.
Sandhus wife.  This money was drawn from a bank account maintained by Dr.
Sandhu which he said was an advance against shared profits in his and Mr.
Gills house-building business.

[12]

The assessed value of the property for tax purposes was then $460,000.
Appraisals prepared for the trial value the property as of June 2005 at
$475,000, and as of November 2009 at $725,000.

[13]

Given the net amount realized from the sale of the property and the
amount of Mr. Grewals promissory note which Dr. Sandhu held, Dr. Sandhu
considered Mr. Grewal was not entitled to any of the sale proceeds for his
one-half interest.

[14]

The judge found Mr. Grewal knew nothing of the sale to Ms. Gill until
after it was completed.  He also found the sale was improvident: Dr. Sandhu
breached the fiduciary duty he owed as trustee of Mr. Grewals half interest to
obtain full value for the property.  Despite the evidence of the propertys
value that would have been apparent to Dr. Sandhu at the time of the sale to
Ms. Gill, the judge determined the highest appraisal ($475,000)  prepared for
the trial  to be the best evidence of the propertys market value that Dr.
Sandhu had a duty to obtain, and awarded damages to Mr. Grewal against Dr.
Sandhu on that basis: $162,500.  The judge said it was necessary to take into
account the $70,000 promissory note Mr. Grewal had signed in favour of Dr.
Sandhu in February 2005 when they decided to sell the Farm Property but, while
no point is taken in this regard by Dr. Sandhu on the appeal, it appears the
judge did not account for the note in the award he made.

i)

The award for the improvident sale

[15]

At trial, Mr. Grewal sought a much higher award, as he does now.  He
maintains that, given there was a breach of trust, damages must be assessed at
their highest value.  Citing
Guerin v. The Queen
, [1984] 2 S.C.R. 335,
59 B.C.L.R. 301;
Ruwenzori Enterprises Ltd. v. Walji
, 2006 BCCA 448, 274
D.L.R. (4th) 696; and
Kostiuk (Re)
, 2002 BCCA 410, 215 D.L.R. (4th) 78
at paras. 33-34 in particular, he maintains he is entitled to an award based on
the value of the property at the date of judgment such that he should be
awarded $342,500.

[16]

The judge rejected the contention because Mr. Grewal wanted the property
sold.  As he recognized, where a trustee wrongfully withholds or disposes of a
beneficiarys proprietary interest, it is clear on the authority cited the
beneficiary is entitled to damages for the appreciation of the interest, which
will normally be from the date of the breach to judgment.  But here, Dr.
Sandhus breach of the trust agreement was not in disposing of the property but
in failing to obtain what the judge found was the amount for which it ought to
have been sold in June 2005.  Had it been sold for that amount, Mr. Grewal
would, on the judges assessment, have been entitled to receive $162,500 from
the net proceeds of the sale.  Dr. Sandhu cannot be liable to compensate Mr.
Grewal for the appreciation of an interest with which Mr. Grewal agreed to
part.  Mr. Grewal is only entitled to be compensated for the loss he suffered
as a consequence of the breach.  I see no error in the judges reasoning in
this regard.

ii)

The action against Lakhvir Gill

[17]

Mr. Grewal sued Ms. Gill on the basis she had participated in a fraud.
At trial, he argued she knew the sale of the property for $290,000 was
improvident and that, if she did not know, her husband, who did not testify,
knew Dr. Sandhu held Mr. Grewals interest in trust and was selling it
without Mr. Grewals consent in order to deprive Mr. Grewal of the share of the
proceeds of the sale to which he would otherwise have been entitled.  The judge
recognized that Ms. Gill knew only that she was acquiring the property at a
favourable price.  He found no evidence that she knew anything of Mr. Grewal or
his trust agreement with Dr. Sandhu, and he determined that any knowledge her
husband may have had about Mr. Grewals interest in the property was not to be
imputed to her.  He dismissed the action against Ms. Gill accordingly.

[18]

Mr. Grewal contends the judge misunderstood the case against Ms. Gill.
He says it was not a question of imputing her husbands knowledge to her,
because it was her husband who actually purchased the property from Dr. Sandhu
or he and his wife purchased it together.  In any event, it was Mr. Gill who
committed the fraud.  Ms. Gills involvement was no more than nominal.  The
allegation of fraud is, at least now, said to rest on two aspects of the
evidence in particular.  The first is a statement Dr. Sandhu made in the course
of being cross-examined to the effect that he told Mr. Gill about Mr. Grewals
interest in the property and held nothing back from him, although he was not
asked to be specific as to what he actually said to Mr. Gill in that
regard.  The second is the improvident nature of the sale and the way it was
financed.  The contention, as I understand it, is that although Ms. Gill
continued to own the property at the time of the trial five years after she
acquired it, and, according to her, had made the mortgage and tax payments
during that time, Dr. Sandhu must have maintained some continuing interest in
the property, presumably by engaging the Gills to assist him in defrauding Mr. Grewal.

[19]

While I consider the two aspects of the evidence on which Mr. Grewal
relies fall far short of establishing Mr. Gill was engaged in a fraud when his
wife acquired the property, I consider the immediate answer to the case Mr.
Grewal seeks to advance in this regard is that it is simply not pleaded.  An
allegation of fraud must be scrupulously pleaded and fully particularized:
Chudy
v. Merchant Law Group
, 2008 BCCA 484, 300 D.L.R. (4th) 56 at para. 168 and
the authority cited there.  (See Rule 19(11) of the
Supreme Court Rules
,
now Rule 3-7(18) of the
Supreme Court Civil Rules
.)  All of the facts
material to an alleged fraud must be pleaded.  Here there is no pleaded
allegation that Mr. Gill was a participant in a fraud.  Indeed, there is no
reference to him at all in Mr. Grewals pleaded allegation against Ms. Gill.  A
clear statement of Mr. Gills involvement in material respects would be
essential to pleading and particularizing the case that is argued on the
appeal.  Without a proper pleading, I do not consider it open to Mr. Grewal to
seek to establish a case of fraud against Ms. Gill that depends entirely on Mr.
Gills knowledge and his participation in the purchase of the property.  Ms.
Gill represented herself at the trial which made the pleaded case against her
particularly important.  She was entitled to the clearest statement of the case
she had to meet.  Had the case which Mr. Grewal argues been pleaded, Mr. Gill
may well have testified.  I consider the action against Ms. Gill was
properly dismissed.

The Subdivision Property

[20]

The judge awarded damages sustained by Mr. Grewal for breach of contract
in respect of agreements he found to have been made between Mr. Grewal and
Dr. Sandhu with respect to the development of the property acquired for
subdivision in the second transaction.  Dr. Sandhu appeals, contending the
evidence does not support the judges findings concerning the agreements that
were made.

[21]

In the fall of 2003, after the purchase of the farm had been completed,
a real estate agent Mr. Grewal knew told him about a property that was
available for subdivision.  Mr. Grewal told Dr. Sandhu.  The property consisted
of four lots that could be subdivided into nine.  There was a house on one of
the lots.  Holdco was a holding company that held an agreement with the owners
of the property to purchase it for $920,000 with completion in May 2004.
Completion could be extended.  Dr. Sandhu purchased Holdco from the companys
owners in October 2003.  He paid $60,000 to them for the one issued share of
the company, plus $30,000 to be paid to the owners of the property as a deposit.
Holdco completed the purchase of the property in mid-June 2004, having removed
the subject clause and increasing the deposit by $45,000 to $75,000.  To fund
the balance of the purchase price, Holdco obtained bank financing of $500,000,
secured by a mortgage, and Dr. Sandhu paid $361,029 in cash from his own
account on completion.

[22]

Mr. Grewal had no financial participation in the acquisition of Holdco.
He contributed nothing.  Through South-Slope, he undertook to act as the
project manager for the subdivision, coordinating the services of engineering
consultants, a construction contractor and solicitors as required, and
ultimately obtaining subdivision approval.

[23]

In November 2004, a municipal deposit of $600,000 was required.
Dr. Sandhu had only $300,000 in cash available at the time and borrowed
$320,000 from a private lender to which he was introduced by Mr. Grewal.  The
loan was secured with a second mortgage on the property.  Mr. Grewal is said to
have guaranteed the mortgage, although significantly only an unexecuted copy of
a Covenantor Agreement was tendered at trial.

[24]

The subdivision of the property was relatively straightforward, although
some rezoning was required.  The subdivided lots were ready to be sold, and
were sold, in May 2005.  The judge appears to have understood that Mr. Grewal (South-Slope)
was to clear and service the property for subdivision.  That may have been
initially expected but it is not what happened.  Mr. Grewal testified South-Slope
demolished the house but did nothing more on the property itself.  A consulting
firm was engaged at a cost to Holdco of $48,000 to do the engineering, and a
construction company did the clearing and servicing of the lots at a cost to
Holdco of $330,790.  Solicitors were also engaged to do the legal work at Holdcos
expense.  Mr. Grewal oversaw and managed the work.  Expert evidence adduced
(the factual basis of which is challenged) suggests he would, however, have had
limited involvement with the land development process because it was handled by
the consultants.  It was said it would have taken perhaps one day a week of his
time over a 15-month period for upwards of 490 hours.  For that time, a well-qualified
project manager would have expected to be paid between $45,000 and $62,000.
The cost of having the house demolished would have been between $5,000 and
$7,000.

[25]

In response to requests for money during March, April, and July 2004,
Mr. Grewal received cheques from Dr. Sandhu totalling $52,000 as well as
cheques totalling a further $15,000 from Dr. Sandhus father and brother.

[26]

It is then common ground that Dr. Sandhu contributed all of the
financing and took all of the risk in respect of acquiring and subdividing the
property.  It appears he contributed over $750,000 of his own money in what was
more than a $1.5 million investment.  The money he borrowed was secured by two
mortgages on which he made the payments.  He alone bore all the expense of
developing the property.  Mr. Grewal made no financial contribution.  He
had no ownership interest and took virtually no risk.  He was simply the
project manager.  His job was largely to coordinate the work of others.

[27]

The parties divide over how Mr. Grewal was to be remunerated.  He
testified that before the property was purchased, he and Dr. Sandhu agreed
verbally  he was to have one-half of all the profit from the sale of the
subdivided lots.  Dr. Sandhu testified there was no agreement about
sharing profit at all.  He said that, for his services, it was agreed Mr.
Grewal was to be sold one of the subdivided lots (Lot 4) at cost but that
agreement was ultimately replaced by an agreement to pay South-Slope a $100,000
fee.

[28]

An agreement of purchase and sale for what was to be Lot 4 of the
subdivision was drawn by a realtor in standard form and executed by Mr. Grewal
and Holdco in June 2004, two weeks after Holdco completed its purchase of the
property.  The sale price was $150,000 to be financed by Dr. Sandhu on
Mr. Grewals promissory note, the terms of which were to be agreed.  The
purchase was to complete within 10 days of the Seller advising the Buyer that
the District is accepting applications for building permits for the
subdivision.

[29]

The judge said the expectation was that Mr. Grewal would be able to sell
the lot for more than the purchase price.  When subdivided, the lots were
expected to sell for $200,000 or more.  However, Mr. Grewal sold his home in
June 2004 and, while he would have had the option of reselling Lot 4, he said
he intended to build a new home on it when the subdivision was completed.  Within
a few months, however, he lost interest in building on Lot 4 and, in September,
assigned the purchase agreement for a fee of $50,000 payable on completion.
In March 2005, the purchase agreement was further assigned for a fee of $76,000
payable on completion.

[30]

In May 2005, when the subdivision of the property was completed, it
appears that two agreements (the second expressly referencing and replacing the
first) were drawn by a solicitor and executed by Holdco and South-Slope.  The
agreements provide for the payment of $100,000 plus GST to South-Slope as its
fee for its (Mr. Grewals) services as property development manager, to be
paid from the net proceeds of the sale of the lots.  The agreements were both
dated for reference June 15, 2004, being the date of the completion of Holdcos
purchase of the property.  The solicitors records show the first agreement to
have been drawn in the first week of May; the second was drawn during the last
week.

[31]

Significantly, neither makes any direct reference to the agreement for
the purchase and sale of Lot 4 to Mr. Grewal that Dr. Sandhu says the fee
agreement replaced.  Dr. Sandhu testified that in February 2005, acting on tax
advice his accountant testified was given to Dr. Sandhu, and which Dr. Sandhu
says he explained to Mr. Grewal, they decided to replace the purchase agreement
with a fee agreement for $100,000.  Dr. Sandhu testified Mr. Grewal brought the
purchase agreement to him and they ripped it up, threw it in the garbage.
Mr. Grewal said there was no such meeting.  The judge did not directly address
this aspect of the evidence.  The original document, which would have been a
complete answer to Dr. Sandhu if it still existed, was not produced and
put to him at trial.

[32]

After the first fee agreement was executed, Mr. Grewal consulted with
the solicitors who had done the legal work for the subdivision.  On May 24,
2005, they filed a claim of lien for South-Slope against all nine lots in the
subdivision for $100,000 plus GST, and a caveat against Lot 4 for Mr. Grewal
even though he had assigned the agreement to purchase it.  The second fee
agreement makes provision for the discharge of the liens.  It also makes
provision for two holdbacks of $7,500 each.  The first relates to a holdback by
the municipality; the second to a dispute over Lot 4.  Mr. Grewal was
subsequently paid $85,000 without any set-off of the money he had received from
Dr. Sandhu or his father and brother.

[33]

The dispute over Lot 4 arose when it became evident in May there were
two purchasers, the first being the second assignee of Mr. Grewals purchase
agreement for the lot, and the second being a purchaser to whom Holdco had, in
April, agreed to sell Lot 4 for $228,000.  Dr. Sandhu had listed the lot with a
realtor in March.  He said he did that after Mr. Grewal agreed to a fee of
$100,000.  The $7,500 holdback was to cover anticipated legal expenses in the
event of there being litigation with the second assignee.  Holdco essentially
completed the sale of Lot 4 with the second assignee for $226,000 (the total to
be paid for the lot including fees under the second assignment).  The purchaser
obtained judgment against Holdco for $17,611.  Apparently to avoid a threatened
claim by the first assignee, Mr. Grewal paid him $26,000, being the net fee to
be received by the first assignee under the second assignment ($76,000 -
$50,000).

[34]

Dr. Sandhu maintained he knew nothing of the assignment until the second
assignee sought to complete the purchase of Lot 4 in May.  Mr. Grewal testified
he told Dr. Sandhu he had assigned the purchase agreement at the time it was
assigned in September 2004.  He says that when he did, Dr. Sandhu became very
angry with him.  It is difficult to see why Dr. Sandhu would have listed Lot 4
for sale in March and sold it in April if he knew then the purchase agreement
between Holdco and Mr. Grewal remained in effect  that it had not been torn
up.  Indeed, while he may well have been upset with Mr. Grewal if he
learned about the assignment in May, it is difficult to see why he would have
had any cause to be angry with him months earlier.  But, by somewhat the same
token, there appears to be no explanation as to why Mr. Grewal would have
torn up the purchase agreement for Lot 4 and entered into the $100,000 fee
agreement after having assigned the purchase agreement for $50,000.  The judge
did not address these conflicts.

[35]

Mr. Grewal testified that the agreement for the purchase and sale of Lot
4 was an idea Dr. Sandhu had after the property was purchased.  It was
something Mr. Grewal was to have in addition to his share of the profit from
the development of the subdivision.  He said the $100,000 fee agreement did not
replace the Lot 4 agreement.  The fee agreement was imposed on him by Dr.
Sandhu.  It meant he would not share in the profit.  On what Mr. Grewal said,
he agreed to accept a $100,000 fee, payable out of the sale of the subdivided
lots, instead of one-half of the whole profit from the development, and he was
receiving nothing in return.  In any event, he sues Dr. Sandhu on the profit
sharing agreement and the Lot 4 agreement, contending the $100,000 fee
agreement is unenforceable because it was obtained by undue influence and
conferred no benefit on him.

[36]

Mr. Grewal testified he consulted the solicitors after executing the
first fee agreement to ask what he should do.  That led to the caveat against
Lot 4 and the claim of lien against all the lots being filed.  He then executed
the second fee agreement under which South-Slope agreed to discharge the lien.  The
caveat must have been lifted soon after.

[37]

The judge found that there was a verbal agreement between Mr. Grewal and
Dr. Sandhu for the equal sharing of profit from the sale of the subdivision
lots.  He stated his reasons as follows:

[33]      I find that the
situation that existed in 2004 is not consistent with one in which Mr. Grewal
was merely a hired development manager.  One would not expect such a property
manager to work without pay merely on the expectation of future profit from the
purchase and sale of one lot, or to assume liability as guarantor of the mortgage.
Those facts support Mr. Grewals assertion that there was a verbal
agreement to share the profits.  In that light, the payments made to Mr. Grewal
or South Slope from time to time make sense as an advance against those future
profits.

[38]

Thus, the judge concluded that Mr. Grewal being remunerated out of
anticipated profits and his guaranteeing the second mortgage supported his
having made a verbal agreement with Dr. Sandhu to share all the profit from the
sale of eight lots equally in addition to what Mr. Grewal was to derive from
the written agreement to purchase Lot 4.

[39]

The judge suggested the payments received by Mr. Grewal totalling
$52,000 made sense as advances against shared profits as opposed to loans, but it
may then be difficult to see why Mr. Grewal signed a promissory note in
February 2005 for $70,000 which the judge presumed was Dr. Sandhus attempt to
recover some or all of the amounts he had paid to him out of the sale of the
Farm Property.

[40]

With respect to Lot 4, the judge recounted Dr. Sandhus testimony that
he and Mr. Grewal had agreed to tear up the purchase agreement.  Later he said
that despite the tax advice he had received, Dr. Sandhu had no right to
unilaterally cancel the contract that had been made (which neither Dr. Sandhu
nor Mr. Grewal appear to have suggested had happened).  Later still, without
giving any further reason, the judge said he had found Mr. Grewal had never
surrendered his contractual right to acquire one lot.  I find the absence of
further explanation renders a proper review of the judges resolution of the
issues associated with Lot 4 quite difficult.

[41]

While he did not say so specifically, the judge appears to have
determined the $100,000 fee agreement to be unenforceable simply because Mr.
Grewal was at a disadvantage when it was executed.  The judge said only that
when the agreement was executed, Mr. Grewals (South-Slopes) work was done,
and the agreement to share profit for which he contends was not in writing.
Without saying more, the judge then assessed damages in respect of the
subdivision based on the equal sharing of profits from the sale of the Subdivision
Property, effectively ignoring the fee agreement.

[42]

In assessing damages based on a breach of the agreement to share profits,
the judge said there was no reliable evidence before him of the profit earned
by Holdco on the sale of the lots.  While it was not sought by Mr. Grewal (who
maintains his case was proven), the judge ordered a reference to the registrar
for a report determining, on further evidence to be adduced, the net profit
Holdco realized on all but Lot 4.  He found Mr. Grewal entitled to half of what
that amount may be, less the $85,000 he was paid when the lots were sold at the
end of May 2005 and the $52,000 he received from Dr. Sandhu in 2004 (but not
the $15,000 Mr. Grewal received from Dr. Sandhus father and brother).  For
reasons that are not clear to me, he awarded Mr. Grewal $76,000 in damages
against Dr. Sandhu for what the judge said was Mr. Grewals lost opportunity
to acquire and resell Lot 4.  It may be questionable that it was open to the
judge to order a reference that the parties did not seek in order to afford one
of them the opportunity to adduce further evidence to prove his case, but no
point is taken in this regard on the appeal.

[43]

Dr. Sandhu contends the judge erred in concluding there was, between
Mr. Grewal and himself, any verbal agreement to share the profits from the
sale of the Subdivision Property.  He maintains that neither of the two reasons
the judge gave for accepting what is no more than Mr. Grewals bald assertion
of an agreement support his conclusion.  Mr. Grewal says the judges conclusion
is sound and should not be disturbed.

[44]

In considering sharing of profit, it is important to remember it is Mr.
Grewal who makes the assertion, such that he bears the onus of proving that it
is more probable than not that the agreement was made.  The judge questioned
the veracity of both Mr. Grewal and Dr. Sandhu and indeed preferred the testimony
of Dr. Sandhu over that of Mr. Grewal in one important instance: the
account each gave concerning which of the two sought to draw the other into the
transactions.  Kuldip Grewal, Mr. Grewals wife, testified that during 2002 and
2003 Dr. Sandhu told her that he and her husband were partners, one
contributing financially and the other sweat equity, and would share profits
equally.  But she also said she was never a part of their business dealings.
She was not privy to any agreements that were actually made.  The judge made no
mention of her testimony in this regard.

[45]

To be clear, Mr. Grewal said his arrangement with Dr. Sandhu was to be
the same as it was for the Farm Property where they were equal partners.  He
had found and introduced Dr. Sandhu to both properties.  But the difference
lies in the fact that Mr. Grewal participated in the Farm Property as a
documented owner and, after his interest was transferred to Dr. Sandhu, as a
documented beneficiary of a trust under which his interest was held.  There was
no similar documenting of any interest that would permit him a share of the
profit derived from the sale of the subdivision apart from Lot 4.  Virtually
all the other agreements said by the parties to have been made between Dr.
Sandhu and Mr. Grewal pertaining to both the Farm Property and the Subdivision Property
were documented save perhaps for the decision Dr. Sandhu said he and Mr. Grewal
took to tear up the purchase agreement for Lot 4 which, in any event, Dr.
Sandhu said led to the documented $100,000 fee agreement.  All of the
agreements were professionally drawn either by a solicitor or a realtor.  Only
the critical and substantive agreement for which Mr. Grewal contends was not
committed to writing.

[46]

But it was, nonetheless, Mr. Grewals testimony that he and Dr. Sandhu
made the verbal agreement for which the judge found support in two aspects of
the evidence.  The question now is whether Mr. Grewal being remunerated out of
profits and his guaranteeing the mortgage support the judges conclusion.  In
my view, they do not.

i)

Remuneration

[47]

In stating that one would not expect a project manager to defer his fee,
the judge appears to have relied on the evidence of industry practice adduced in
cross-examination to which he subsequently referred, saying a project manager
would usually be paid as a project went along.  However, while it was accepted
that a monthly draw would be usual, the burden of the testimony was that it
depends on what is agreed in any given circumstance.  In some instances,
project managers do not get paid until the end of the development: [t]heres
many different ways to deal with it and it depends very much on the
arrangement.

[48]

It may be project managers are usually paid as a development proceeds, but
this was not a development that could be said to be usual.  Dr. Sandhu was not
an experienced subdivision developer nor was Mr. Grewal an experienced project
manager.  He said he had worked with others on developing properties but had
never done a development himself.  There was an agreement whereby Mr. Grewal was
to purchase one of the nine lots at cost, which was something an employed
project manager would not usually do.  Mr. Grewal received $67,000 from
Dr. Sandhu (and his father and brother) as the project progressed in any
event.  I do not consider the fact that Mr. Grewal was not to be paid until the
project was completed necessarily supports there having been a verbal agreement
for equal sharing of all the profit from the sale of the subdivided lots.  At
best, it is a neutral consideration.

ii)

Mortgage guarantee

[49]

Dr. Sandhu was introduced to the private lender by Mr. Grewal through
his real estate contacts.  The loan the second mortgage secured was short term
at a high rate of interest (15% for four months and 30% after that).  There is
no evidence that Mr. Grewal actually executed a guarantee of the mortgage.  He
was shown the unsigned copy of the mortgage tendered.  He said it was never
explained to him; he was just called to sign it.  But strangely he was not
asked if he did.  Dr. Sandhu did not say he ever saw an executed guarantee but
accepted both on his discovery and at trial that Mr. Grewal guaranteed the
mortgage.  Whether he actually did or not was not established.  All that can be
said for certain is that, for some reason, Mr. Grewal was to have
guaranteed the mortgage and documentation was prepared by a solicitor for that
purpose.  The matter was not one that appears to have been seen as an issue in
the course of the trial and becomes important on the appeal only because of the
significance the judge attached to it.

[50]

In stating that one would not expect a project manager to guarantee a
mortgage, the judge again appears to have had in mind the cross-examination
evidence of industry practice to which he later referred: a project manager
would not normally guarantee an owners mortgage, although again the evidence
is it depends on the structure of the deal.  In any event, the judge said
nothing about what evidence there is of the reason for Mr. Grewal guaranteeing
the second mortgage.  Mr. Grewal gave no explanation in this regard but, on
cross-examination, Dr. Sandhu was asked if he had Mr. Grewal guarantee
the mortgage to make him feel equal in the transaction.  The doctor responded
he always treated Mr. Grewal as his equal  like a brother  and then
twice explained his understanding of the reason for the guarantee.  Dr. Sandhu said
he was told by the solicitor who drew the documents essentially that the lender
sought Mr. Grewals guarantee so that the project manager of the development
would to some extent be burdened with completing the subdivision, and having
the loan repaid, in a timely manner.  The solicitor later testified but was
asked nothing about the mortgage or the guarantee.  The lender did not testify.

[51]

There can be little in the suggestion Dr. Sandhu sought the guarantee
for any reason let alone just to make Mr. Grewal feel his equal in the
transaction.  It would normally be the lender, not the borrower, who would seek
to have someone guarantee a mortgage.  Apart from what Dr. Sandhu said he was
told by the solicitor, there is no evidence as to why the lender would have
sought the guarantee of the second mortgage from Mr. Grewal or even what the
lender was told about Mr. Grewals involvement.  To suggest the lender
would have sought the guarantee because Mr. Grewal was, by virtue of a verbal
agreement, entitled to one-half of the profit anticipated from the sale of the
subdivision lots  or even that the lender was told Mr. Grewal was to share in
the profit  can be no more than speculation.  Indeed, if the lender or the
solicitor had been told that Mr. Grewal was to share in the profit, it is
difficult to see why Mr. Grewal would not have adduced that evidence to support
his contention.

[52]

Having regard for the absence of proper proof that Mr. Grewal did in
fact execute the guarantee, I question the extent to which his having done so
could properly be relied upon in reaching a conclusion on such a substantial
issue as the existence of a verbal agreement to share all the profits equally.
More importantly, however, the judge reached the conclusion he did, finding
support in the guarantee, without addressing Dr. Sandhus explanation as to why
it was to be obtained.  If accepted, his explanation would completely undermine
the support the judge saw in the guarantee for his conclusion about there
having been a verbal agreement.  Whether the judge overlooked that evidence or
discounted it is not clear, but I do not consider the mere fact that Mr. Grewal
may have guaranteed the second mortgage, without more, can in the circumstances
be said to support the conclusion the judge reached.

[53]

The standard of review concerning errors of fact has been stated many
times by this Court since the series of decisions of the Supreme Court of
Canada culminating in
Housen v. Nikolaisen
, 2002 SCC 33, [2002] 2 S.C.R.
235, perhaps most recently in
Basic v. Strata Plan LMS 0304
, 2011 BCCA
231 at para. 2;
Susan Heyes Inc. (c.o.b. Hazel & Co.) v. South Coast British
Columbia Transportation Authority
, 2011 BCCA 77, 329 D.L.R. (4th) 92 at
para. 48; and
Burdett v. Eidse
, 2011 BCCA 191, 334 D.L.R. (4th) 130 at
para. 43.  All are consistent with what was said in
Fisher v. Fisher
,
2009 BCCA 567, 4 B.C.L.R. (5th) 4:

[3]   The standard of review on
questions of fact is palpable and overriding error.  Palpable error is one that
is readily or plainly seen (
Housen v. Nikolaisen
, 2002 SCC 33, [2002] 2
S.C.R. 235 at paras. 5-6); overriding error is one that must have altered the
result or may well have altered the result (
Van Mol (Guardian ad litem of)
v. Ashmore
, 1999 BCCA 6, 58 B.C.L.R. (3d) 305 at para.12).  A trial judges
findings of fact are to be accorded great deference:
Housen
at para. 11.
 An appellate court may only overturn findings of fact if it is established
that the trial judge made a manifest error, ignored conclusive or relevant
evidence, misunderstood the evidence, or drew erroneous conclusions from the
evidence:
Van Mol
at para. 9.  Absent palpable and overriding error, an
appellate court may not substitute its views of the evidence for those of the
trial judge and may not interfere with the trial judges decision provided
there was some evidence upon which the trial judge could have reached his or
her decision:
Housen
at para 1.

[54]

It appears plain to me the judge misapprehended the only two aspects of
the evidence upon which he said his conclusion was based.  His reasons do not
reflect his having come to grips with the volume of substantive evidence I have
outlined that bears on the issue.  The conclusion is fundamental to the
resolution of the dispute concerning the Subdivision Property such that the
intervention of this Court is warranted.

[55]

Dr. Sandhu contends this Court can make its own assessment of the evidence
and make such findings as are necessary to reach its own conclusion as to how
Mr. Grewal was to be remunerated for his work as the project manager of the
subdivision development.  But there is a clear conflict in credibility on a
fundamental issue which this Court is not in this case in a position to
resolve.  Further, as I have noted, it was the judges view there was
insufficient evidence adduced at trial to prove the damages Mr. Grewal claims,
such that a reference was ordered.  While ordering a new trial is always an
unfortunate disposition of an appeal, I see no alternative here.  I consider
the issue of what, if any, damages Mr. Grewal may be entitled to have assessed
against Dr. Sandhu based on the breach of an agreement or agreements between
them (or based on quantum meruit in the absence of agreement) relating to the Subdivision
Property including Lot 4, and any accounting in respect thereof, will have to
be retried as well as Holdcos counterclaim in respect of the judgment taken
against it by the purchaser of Lot 4.

General Damages

[56]

Mr. Grewal claims that, in addition to the pecuniary losses he sustained
by virtue of Dr. Sandhus breach of trust and breach of contract, he also
suffered a non-pecuniary loss by reason of the mental and emotional impact of
Dr. Sandhus conduct in respect of the two transactions.  The judge awarded the
sum of $125,000 against Dr. Sandhu on the basis that, having been in a
fiduciary relationship, he had breached his fiduciary duty seriously enough to
warrant condemnation and deterrence.  Mr. Grewal appeals, contending the award
should be much greater  perhaps $300,000.  Dr. Sandhu cross appeals,
maintaining there is no legal basis for the award at all.

[57]

Drawing on the frequently referenced dissent of Madam Justice McLachlin,
as she then was, in
Norberg v. Wynrib
, [1992] 2 S.C.R. 226, 68 B.C.L.R.
(2d) 29, and what was said in
Galambos v. Perez
, 2009 SCC 48, [2009]
3 S.C.R. 247, the judge concluded Dr. Sandhu and Mr. Grewal were in a
fiduciary relationship from the time Dr. Sandhu began treating Mr. Grewals
depression in March 2002.  He said the fiduciary relationship ended in December
2004 when Mr. Grewal ceased to be Dr. Sandhus patient and it then became
adversarial, as evidenced by the claim of lien Mr. Grewal had solicitors file
in May 2005.

[58]

The judge first turned to expert evidence based on the standards as were
stated in the
1996 Canadian Medical Association Code of Ethics, Annotated
for Psychiatrists
.  That Code stated that psychiatrists can hold
considerable influence over their patients and must ensure that this does not
lead to exploitation for personal advantage, whether it be personal, sexual, or
financial.  The opinion expressed, based on the Code, is that the problem a psychiatrist
is treating, like Mr. Grewals depression, may affect the patients
judgment such that a psychiatrist should never enter into a business or social
relationship with a patient.

[59]

The judge recognized professional codes of ethics are not binding on the
courts and do not necessarily describe legal duties, quoting from
Galambos
at
para. 29.  However, he took the view that the provisions of the 1996 code
cited reflected and re-enforced the legal duty inherent in the doctor-patient
relationship.

[60]

Relying on the expert evidence to the effect a psychiatrist should never
go into business with his patient, which the judge considered self-evident, he
said the roles of the psychiatrist and business associate are fundamentally
irreconcilable and attempts to combine them cannot help but give rise to
perceived or actual conflicts of interest.  He then said:

[62]      By virtue of the
professional relationship, the psychiatrist will have knowledge of the
patients affairs, needs and vulnerabilities not normally available to another
party in a business transaction.  At the same time, the patients trust in the
psychiatrist−which is fundamental to the success of the therapeutic
relationship−may make the patient more likely to accept the
psychiatrists assurances and representations at face value and less likely to
demand the further information or written contractual protection that he or she
might expect and desire in an arms-length business deal.

[61]

The judge discussed the significance of the power-dependency feature of
the psychiatrist-patient relationship, recognizing that the relationship is
rendered fiduciary in nature because the doctor implicitly undertakes to act
with loyalty to the patient and to exercise any discretionary power in a manner
that is consistent with the patients interests.  After quoting from both
Galambos
and
Norberg
with respect to a fiduciarys exercise of power he said:

[70]      In this case, the
discretionary power existed not only in that broader sense, but in the classic
sense of a direct legal power: the properties at issue were in the name of Dr.
Sandhu or his company, giving him the ability to deal with them without the
knowledge or consent of Mr. Grewal.

[62]

The judge concluded:

[73]      For all of those
reasons, I find that there was a fiduciary relationship between Dr. Sandhu and
Mr. Grewal.  It then becomes necessary to consider if and how there was breach
of the fiduciary duty and the impact of any such breach on Mr. Grewal.

[63]

Dr. Sandhu accepts that, as psychiatrist and patient, he and Mr. Grewal
were in a fiduciary relationship.

[64]

The judge reviewed the relationship.  Dr. Sandhu and Mr. Grewal were at
odds as to how long they had known each other.   They were introduced by someone
who was one of Dr. Sandhus patients who Mr. Grewal called his uncle.  Dr.
Sandhu said that, on reviewing his records, they were introduced in 1998,
although on discovery he had said it was later.  Mr. Grewal said it was two or
three years later; he was not sure.   The judge specifically noted Dr. Sandhu
considered Mr. Grewal to be an old friend (Dr. Sandhu actually said close
friend).  It appears all that can be said now is there was an established
friendship for some period of time before March of 2002.

[65]

Mr. Grewal was referred to Dr. Sandhu then by his family doctor.  Dr.
Sandhu explained that Mr. Grewal had returned from what had been an emotionally
difficult trip to India attributable to conflict within his family.  Mr. Grewal
told Dr. Sandhu he had previously taken antidepressant medication and he wanted
a new prescription.  Dr. Sandhu told him to consult his family doctor who then
saw fit to make the referral.  Dr. Sandhu diagnosed Mr. Grewal as having a
chronic major depressive disorder with anxious features manifesting a lack of
self-confidence and low self-esteem.  Medication was prescribed.  Dr. Sandhu
then saw Mr. Grewal periodically to assess his progress and monitor his
medication until December 2004.  They and their families socialized together
throughout that time.  While not cured, Mr. Grewals depression was recorded to
be in full remission by November 2002.

[66]

Mr. Grewal was recorded as being stressed and anxious in September and
October 2004, although Dr. Sandhu recorded that, when he saw him in November
and December, Mr. Grewal was doing well.  He asked to discontinue his
medication and Dr. Sandhu explained the risk of relapse.  Dr. Sandhu recorded
that Mr. Grewal was not taking his medication in November and December.  At the
end of December, Dr. Sandhu told Mr. Grewal it would not be necessary that he
see him for any further treatment and he did not see him in a professional
capacity again.

[67]

Mr. Grewal saw his family doctor three weeks later.  He was then taking
medication and his doctor increased the dosage.  Mr. Grewal testified to his
condition having deteriorated in the fall of 2004 and that he told Dr. Sandhu
virtually the opposite of what Dr. Sandhu recorded.  The judge discounted the
accuracy of Dr. Sandhus records from September 2004 onward because, in
the judges view, his conflict of interest and breach of professional standards
was by then such that his records could not be accepted as accurate.  The judge
also said he did not necessarily accept that Mr. Grewals condition was as bad
as he remembered but, on the evidence of his family doctor, the judge found Mr.
Grewal was not doing as well as Dr. Sandhus records suggest.  In any event,
Mr. Grewal was not then referred back to Dr. Sandhu or to any other
psychiatrist for further treatment.  His family doctor testified, but only as a
rebuttal witness to establish he saw Mr. Grewal in January 2005 and increased
the medication he was taking.  He was not asked about Mr. Grewals depression
or when he saw him at any time thereafter.  On one occasion in October 2005,
Mr. Grewal attended a psychiatric program at a clinic to which he was referred
by his family doctor, but he did not attend the program for depression and
anxiety that was recommended.

[68]

There is evidence of an expert witness who is a professor of psychiatry
upon whose unchallenged report Mr. Grewal relies.  Rather than being asked to
assume certain facts on which to base his opinion, he was given the pleadings,
Dr. Sandhus records (apparently including those Mr. Grewal challenged as
unreliable), and documentation relating to the two transactions.  While the
value of his opinion may be questionable from that perspective, he did interview
Mr. and Ms. Grewal once in December 2009.  The judge noted the witness
considered Mr. Grewal to continue to suffer symptoms that suggest he still has
a major depressive disorder, although the witness also said the ongoing stress
of the litigation and the unresolved issues with regards to Dr. Sandhu may well
be adversely affecting his medical condition.  The judge noted that the witness
said Dr. Sandhus inappropriate financial dealings with Mr. Grewal (during the
period March 2002 to December 2004) would have been detrimental to his medical
condition, but the judge dismissed the suggestion regarding it more as a
matter of assumption or informed speculation than a firm medical opinion on
causation.

[69]

Mr. Grewals contention is that his clinical depression, which had been
in remission, again became symptomatic after his business relationship with
Dr. Sandhu became adversarial. The judge made no clear finding in that
regard but said Mr. Grewal testified that, since the breakdown of his
professional and business relationship with Dr. Sandhu, he has suffered from
prolonged and worsened depression which has affected his ability to work.  His
wife testified that he was unable to work for about three years, he had to sell
his excavating equipment, they lost their home, and their financial problems
put great strain on their marriage.  According to her, Mr. Grewal lost all
confidence in doctors and refused to seek treatment for his depression, but the
judge said only that, whether or not that is the reason, there is a paucity
of clinical records documenting Mr. Grewals mental and emotional state in the
years following his being treated by Dr. Sandhu.

[70]

Based on this review of the evidence the judge said:

[101]    If this were a medical
malpractice action based solely on negligent psychiatric treatment, I would
have to apply a but for test of causation.  On that basis, I would conclude
that Dr. Sandhus conduct likely contributed to a worsening in Mr. Grewals
mental and emotional health.  However, it would be very difficult to determine,
based on the evidence before me, the extent of that worsening, the contributing
role of other factors, and the likelihood that Mr. Grewals depression would
have relapsed at some point in any event.  On the application of tort
principles, Mr. Grewal would only have proved a claim to modest damages for
pain and suffering.

[71]

The judge then expressed the view that, where there has been a breach of
a fiduciary duty, the court has a broad range of remedies, quoting first from
Todosichuk
v. Daviduik
, 2004 MBCA 191, 247 D.L.R. (4th) 715 at paras. 22-24, leave to
appeal to S.C.C. refused [2005] S.C.C.A. No. 248, and from McLachlin J.s
dissent in
Norberg
at 295.  He then said:

[104]    Those comments do not
apply precisely to this case because I have awarded Mr. Grewal what I consider
to be his full economic loss.  However, such economic restitution does not
fully address the damage done by a professional who abused his position of
trust and misused the therapeutic relationship for personal gain.  I accept
that there were emotional and social consequences for Mr. Grewal that went well
beyond the financial loss, even if all of those consequences cannot be
accurately encompassed by a medical or psychiatric diagnosis.

[72]

He concluded as follows:

[107]    There are really no
comparable cases guiding an assessment of general damages in this case.
Because this case involves a breach of fiduciary duty, I must consider not only
the impact on Mr. Grewal, but also the seriousness of Dr. Sandhus conduct and
the need to protect the integrity of the doctor-patient relationship by clearly
condemning and attempting to deter such conduct.  Taking those matters into
account, but also recognizing that Mr. Grewal is being made whole in a
financial sense, I conclude that an award of $125,000 is appropriate.

[73]

Thus, although the judge awarded what he considered to be Mr. Grewals
full economic or pecuniary loss for breach of trust and breach of contract, he
made a substantial additional award against the doctor.  As I understand him, he
based the award on Dr. Sandhu having misused the therapeutic relationship in entering
into the two transactions with Mr. Grewal, and having breached his obligation
to the beneficiary of a trust in respect of the sale of the Farm Property, all
for his personal gain, in a manner that required the courts condemnation and
deterrence.

i)

The appeal and cross appeal

[74]

In appealing the award, Mr. Grewal relies on what he maintains is the
egregious nature of Dr. Sandhus conduct and his contention the judge erred in
discounting the gravity of the injury to his health and well being.

[75]

Mr. Grewal relies on Dr. Sandhu acknowledging that he did not have
regard for the professional boundaries which he knew to be essential to the
psychiatrist-patient relationship and that he failed to do so out of self-interest
in the business opportunities Mr. Grewal brought to him, thereby jeopardizing
the provision of appropriate medical care and putting his patients health at
risk.  Mr. Grewal also attaches importance to Dr. Sandhu accepting that he
should not have continued to treat his patient in the circumstances but should have
had him referred to another psychiatrist and have recorded and properly
disclosed their business dealings.

[76]

However, the question that arises, and to which I will return, is the
extent to which what Dr. Sandhu did constitutes a breach of his fiduciary duty
to his patient and the extent to which that may have caused any loss Mr. Grewal
suffered.  To be clear, there is no suggestion that, because of his mental or
emotional state, Mr. Grewal should not have been engaged in business with
anyone, but only that it should not have been with Dr. Sandhu.  By the fall of
2004, Mr. Grewal may have been stressed and anxious about financial and
business matters as Dr. Sandhu recorded, but that is not uncommon in conducting
business.  The evidence is that Mr. Grewal contributed little to the finances
of his household for many months; his wife paid the bills out of her modest salary
working for a notary public.  They had little money and that was a source of escalating
friction between them and escalating pressure on Mr. Grewal.  Once his
relationship with Dr. Sandhu became adversarial in the spring of 2005, leading
to his commencing this litigation, that pressure would only have escalated
further.

[77]

It appears to me from the passages of the judges reasons quoted, that
although he was dismissive of the expert opinion on causation, he effectively
found there was some injury, beyond financial loss, suffered by Mr. Grewal
that was caused by Dr. Sandhus conduct in respect of their business dealings.  The
loss was some worsening of his mental and emotional health which had some
emotional and social consequences.  But, in drawing what I can from what the
judge said, he cannot have considered any loss Mr. Grewal suffered that was
attributable to Dr. Sandhus conduct to have been more than minor.  The
judge did not find that Dr. Sandhus conduct did in fact contribute to the
worsening of Mr. Grewals health; the most he was able to say was that if this
were a negligence case he would find it
likely
did.  He made no
determination of the extent of the worsening or the contribution to such of Dr.
Sandhus conduct, saying only that it would be
very difficult to determine
.
He accepted there were emotional and social consequences but did not say what
they were or over what period of time they were experienced.  He suggested that,
on tort principles, Mr. Grewal would have proved a claim to only modest damages.
Indeed, on the little he said, I doubt that any meaningful assessment of a
non-pecuniary loss could have been made.

[78]

Mr. Grewal contends the judge was required to give greater effect to his
testimony and that of his wife, supporting his contention that his depression,
which had been in remission, became symptomatic when his business relationship
with Dr. Sandhu turned adversarial, rendering him unable to work and
causing him to lose confidence in doctors such that he would not seek treatment
and can, in the result, offer little medical evidence pertaining to his health
in the years following to support his claim.  As indicated, the medical
evidence adduced was only to the effect that in 2009 he manifested symptoms
that were suggestive of a major depressive disorder.

[79]

It was incumbent on the judge to have regard for the accepted fact that
Mr. Grewal responded well to the medication Dr. Sandhu prescribed; his
depression was not cured but went into full remission within eight months in
2002.  His family doctor prescribed the same medication in 2005, increasing the
dosage.  Mr. Grewal was taking what was presumably the same medication when he
and his wife were interviewed for the purposes of obtaining expert evidence in
2009, and he was taking the medication at the time of trial.

[80]

The judge was not satisfied the absence of medical evidence was
necessarily attributable to a lost confidence in doctors.  Why Mr. Grewal would
have lost confidence in the medical professions ability to treat him, given
Dr. Sandhus success in treating his depression, may be difficult to explain.
It was open to the judge to consider Mr. Grewal may not have thought he
had the need of further medical attention: the medication continued to be
effective.  Indeed, there is no evidence that would explain why the medication,
if properly taken, should not have continued to hold his depression in
remission.  The judge was not required to accept that Mr. Grewals mental
health deteriorated to the extent he and his wife said it did in the same way
as he did not accept Mr. Grewals condition to necessarily be as bad as Mr.
Grewal recalled when his professional relationship with Dr. Sandhu ended in
December 2004.

[81]

Dr. Sandhu cross appeals in broad terms contending there is, in the
circumstances, no justification for a compensable award of $125,000 based on
breach of fiduciary duty.   It is acknowledged Mr. Grewal was in a somewhat
vulnerable position and that it may have been unprofessional of Dr. Sandhu to
enter into the two transactions, but it is contended Dr. Sandhu in no way abused
the therapeutic relationship such as to cause any loss to Mr. Grewal.  Dr.
Sandhu maintains the judge fully compensated Mr. Grewal for his economic loss
on breach of trust and breach of contract principles such that no further
compensatory award was justified.  Dr. Sandhu relies in particular on a
statement of principle in this regard in a decision of the Ontario Court of
Appeal in
Martin v. Goldfarb
(1998), 41 O.R. (3d) 161.  The case
concerned the breach of a fiduciary duty owed by a law firm to its client who
sustained a substantial loss by reason of the firms non-disclosure.  One
question that arose was the determination of what damages flowed from the
breach and in that regard the trial judges thorough analysis of the governing
authorities was adopted at 173:

The trial judge made a full analysis of three
decisions of the Supreme Court of Canada:
Air Canada v. M&L Travel Ltd.
,
[1993] 3 S.C.R. 787, 108 D.L.R. (4th) 592;
Canson Enterprises Ltd. v.
Boughton & Co.
, [1991] 3 S.C.R. 534, 85 D.L.R. (4th) 129; and
Hodgkinson
v. Simms
, [1994] 3 S.C.R. 377, 117 D.L.R. (4th) 161.  I agree with his
analysis and adopt his final reconciliation of the opinions expressed by the
members of the Supreme Court when he said [at p. 292]:

Regardless of the doctrinal underpinning,
plaintiffs should not be able to recover higher damage awards merely because
their claim is characterized as breach of fiduciary duty, as opposed to breach
of contract or tort.  The objective of the expansion of the concept of
fiduciary relationship was not to provide plaintiffs with the means to exact
higher damages than were already available to them under contract or tort law.

ii)

The fiduciary duty

[82]

It appears to me the fiduciary duty Dr. Sandhu owed to Mr. Grewal was,
in material respects, the same as the duty the physician was said by McLachlin
J. in
Norberg
(at 283-284)

to owe to his patient.  In accepting
Mr. Grewal as his patient to be treated for clinical depression, Dr. Sandhu
pledged himself to act in Mr. Grewals best interests and undertook a duty of
loyalty, good faith and avoidance of conflicting interests.  Theirs was a
relationship of trust obliging the doctor to exercise the power a psychiatrist
holds over his patient solely for the patients benefit.  That does not mean
Dr. Sandhu assumed any responsibility for giving Mr. Grewal financial advice.
He was his psychiatrist and owed the duty of a psychiatrist to his patient.

[83]

Mr. Grewal would then be entitled to an equitable remedy for a breach of
Dr. Sandhus fiduciary duty that, on a common sense view, caused Mr.
Grewal to suffer a loss regardless of whether it was foreseeable:
Canson
Enterprises Ltd. v. Boughton & Co.,
[1991] 3 S.C.R. 534 at 556 per
McLachlin J. (as she then was) concurring.

[84]

The applicable equitable remedy would not be damages but rather
compensation, although the distinction is said to be slight.  Whether
compensation in equity should be awarded where damages as a common law remedy could
be awarded appears to be a matter of whether the policy objectives of the two
kinds of awards are the same.  Where they are, an additional award is not
warranted.  Equitable compensation to punish deserving conduct can, where
warranted, be awarded on the same basis as the common law remedy of punitive
damages:
M.(K.) v. M.(H.),
[1992] 3 S.C.R. 6 per La Forest J. for the
majority at 81-82.  Where such compensation is awarded in equity a further
award of common law punitive damages cannot be made:
M.L.H. v. R.G.R.,
2007
ONCA 804.

[85]

The conditions precedent for awarding punitive damages for breach of a
fiduciary duty were quoted by McLachlin J. in
Norberg
at 299, from M. V.
Ellis,
Fiduciary Duties in Canada
(Don Mills, Ontario: Richard DeBoo,
1988):

Where the actions of
the fiduciary are purposefully repugnant to the beneficiary's best interests,
punitive damages are a logical award to be made by the Court.  This award will
be particularly applicable where the impugned activity is motivated by the
fiduciary's self-interest.

[86]

I then consider the judges award on these principles insofar as it is
said to be based first on Dr. Sandhus misuse of the therapeutic relationship
and then on his abuse of a position of trust, the questions being whether there
was any breach of the psychiatrists fiduciary duty that caused a loss and, if
so, whether the compensatory award is supportable.

iii)

Misuse of the therapeutic relationship

[87]

The judge did not say how he considered Dr. Sandhu had misused the therapeutic
relationship in a manner that caused Mr. Grewals loss, pecuniary or
non-pecuniary.  He made no finding in this regard.  On what he found had
occurred, I am unable to see any misuse that on a common sense view caused any
loss.  The fact is Dr. Sandhu did not
use
the relationship at all.  He
entered into two financial transactions with his friend.  Mr. Grewals position
when his relationship with Dr. Sandhu became adversarial was no different
than it would have been if they had entered into the transactions in the same
way but shortly before their therapeutic relationship began.

[88]

The two transactions were, on any account, clearly beneficial
financially to Mr. Grewal.  That does not excuse any lack of professional
conduct on Dr. Sandhus part but recognizes this is not a case where a psychiatrist
induced his patient into financial dealings to benefit himself at his patients
expense.  Rather, this is a case where two friends, who at the time were in a doctor-patient
relationship, entered into two transactions which one  the patient  brought
to the attention of the other  the doctor  for the purpose of interesting him
in investing for their mutual benefit.

[89]

As discussed, Mr. Grewal made no financial contribution in respect of
the acquisition of the Subdivision Property and little, if any, to acquiring
the Farm Property.  Dr. Sandhu clearly could not have entered into the
transactions with any expectation of taking Mr. Grewals money; he did not
have any.  Rather, as between the two of them, it appears to have been
virtually all Dr. Sandhus money that was invested and at risk, and the amounts
were certainly substantial.  In both instances, Mr. Grewal was provided with
work (although it is unclear how much he actually did on the Farm Property) at
a time when he appears to have had little to do, and an opportunity for
significant remuneration.  He is entitled to half of the profit from the sale
of the Farm Property (now established to be $162,500) and, apart from whether
he is entitled to share in the profit pursuant to the verbal agreement for
which he contends, he has been paid $85,000 in respect of the Subdivision
Property which is significantly more than the evidence suggests was the value
of the work he did there.  Further, Mr. Grewal received tens of thousands of
dollars interest free from Dr. Sandhu, and even Dr. Sandhus father and
brother lent him money at Dr. Sandhus request, all because they were
friends.

[90]

There was no conflict of interest during the therapeutic relationship;
the interests of the psychiatrist and his patient were the same.  Both wanted
to see Mr. Grewal properly treated for his depression and both wanted each
other to benefit financially from the transactions.  There may have been a
potential for conflict as is not unusual in financial dealings, and that may
reflect adversely on Dr. Sandhus professional responsibilities in entering
into the transactions, but no actual conflict arose until months after the
therapeutic relationship had been discontinued.

[91]

Further, the judge identified no wrongful exercise of whatever power
Dr. Sandhu may have derived from the therapeutic relationship over Mr.
Grewal in respect of either transaction.  There was no misrepresentation.  There
was nothing untoward about the transactions that would suggest any sinister
motivation could be attributed to Dr. Sandhu in entering into them.  Certainly
the judge did not find otherwise.

[92]

With respect to the Subdivision Property, the judge did say Mr. Grewals
acceptance of what is said to have been Dr. Sandhus verbal assurance [to
share the profit equally] had been made more likely by the trust inherent in
the doctor-patient relationship.  But the judge did not say why Mr. Grewal
would have been any more trusting of Dr. Sandhu because he was treating his
depression than he would have been otherwise: Dr. Sandhu was his friend.  There
is no evidence to support the distinction.  Mr. Grewal certainly did not
testify to placing greater reliance on his friend because he was his doctor.

[93]

This case can be contrasted with cases like
Norberg
or
J.R.I.G.
v. Tyhurst,
2001 BCSC 369, affd 2003 BCCA 224 to which the judge referred,
where doctors used the therapeutic relationship they had with their patients to
obtain sexual favours.

In both instances, doctors took advantage of
their position of power and influence over a considerable period of time during
the course of ongoing treatment in a manner that retarded their patients
treatment and compromised their health and well-being.  The interests of doctor
and patient were in conflict and the doctors clearly exploited their patients
to serve their own interests.  It may well be that a doctor could use his
position of power in a therapeutic relationship to take financial advantage of
a patient, resulting in a breach of his fiduciary duty, but, as this Court has
recognized, the fact that a fiduciary relationship exists between a doctor and
a patient does not necessarily mean their engaging in a financial transaction
during the course of their professional relationship will constitute the breach
of the fiduciary duty owed by the one to the other:
Freeman v. Pearlman,
1999 BCCA 40, 169 D.L.R. (4th) 133.

[94]

The case that was pleaded and was sought to be supported largely with
Mr. Grewals testimony at trial was that Dr. Sandhu had conducted
himself in a predatory manner, exerting control and influence over Mr. Grewal,
deliberately taking steps to humiliate, degrade and injure him, thereby
exploiting him to take financial advantage.  The contention was and remains that
Mr. Grewal went to Dr. Sandhu for treatment and what he received was
serious injury.  But that is not the factual case the judge accepted had been
made out.  On its face, this case would appear to have little to do with the doctor-patient
relationship and everything to do with a commercial dispute between friends that
arose months after the therapeutic relationship had ended.

[95]

Dr. Sandhu did not breach the fiduciary duty he owed to Mr. Grewal by
using their therapeutic relationship in any way that caused Mr. Grewals loss.
It follows no compensatory award in equity can be justified on that basis.

iv)

Abuse of a position of trust

[96]

Given that I do not consider a compensatory award in equity could be
made against Dr. Sandhu on the basis that he misused the therapeutic
relationship in a way that caused Mr. Grewals loss, it remains to consider
whether the award can be justified on the basis of Dr. Sandhus abuse of his
position of trust in the sale of the Farm Property.

[97]

Dr. Sandhu did breach the fiduciary obligation a trustee owes to the
beneficiary of a trust by virtue of his improvident sale of the Farm Property.
The breach did cause the financial loss Mr. Grewal suffered.  The question is whether
the judges compensatory award exceeding Mr. Grewals economic loss is
supportable.

[98]

The award of $125,000 does not reflect any compensable loss Mr. Grewal
was found to have suffered beyond perhaps a minor non-pecuniary loss.  It can,
in the main, then only be a compensatory award that is almost entirely punitive
in nature.  As the judge said the award was imposed having regard for what he
considered to be the seriousness of Dr. Sandhus conduct and the need to
protect the integrity of the doctor-patient relationship by clearly condemning
and attempting to deter such conduct.  Indeed, the judge subsequently expressly
declined to award punitive damages
per se
because he said he had already
considered many of the factors to be taken into account in awarding such
damages in his assessment of the compensation award (general damages):

[108]  ... I have already
considered many of those factors, including the nature of the defendants
conduct and the need for deterrence, in assessing compensatory damage.  A
further award for punitive damages would therefore not be appropriate.

[99]

Dr. Sandhu sold the Farm Property for less than its market value, but it
must be remembered that the property was sold for $15,000 more than what was
paid to purchase it and Mr. Grewals loss attributable to the improvident sale
was no greater than that of Dr. Sandhu.  He bore as much of the difference
between what the property was found to be worth and the sale price as did Mr.
Grewal.  They were joint owners, each with a 50% interest.  The judge did not
suggest, nor could it be said, that Dr. Sandhus selling the Farm Property
was purposefully repugnant to Mr. Grewals interests.  Dr. Sandhu appears
to have sold the property, financing the sale to Ms. Gill as he and his
wife did, after it had been listed for some months, not to injure Mr. Grewal,
but essentially to be rid of an investment that had not gone well at a time
when his relationship with Mr. Grewal had become adversarial.  It must indeed
be an exceptional case of a breach of a trust obligation such as occurred here that
would warrant the imposition of a punitive remedy.  It is, in my view, clearly
not this case.

[100]

I see
little in Mr. Grewals appeal of the $125,000 compensatory award and I consider
Dr. Sandhus cross appeal to be well founded.  The award cannot be upheld.

Punitive Damages

[101]

Mr. Grewal
appeals the judges refusal to award punitive damages
per se
in addition
to the other awards he made.  From what I have said, it will be clear I do not
consider any award of punitive damages was in order.  Such an award is
exceptional.  It is reserved for instances were conduct has been high-handed,
malicious, arbitrary, or highly reprehensible and departing to a marked degree
from the standards of ordinary behaviour:
Whitten v. Pilot Insurance Co.,
2002
SCC 18, [2002] 1 S.C.R. 595 at para. 94.  The judge certainly did not
characterize Dr. Sandhus conduct as meeting those criteria nor do I
consider he could have done so.  Dr. Sandhu may have been guilty of
professional misconduct in having entered into a business relationship with his
friend Mr. Grewal while he was treating his depression.  But, in the
circumstances, that was an aspect of the matter for the consideration of the
association by which his profession is governed.

Special Costs

[102]

Dr. Sandhu
appeals the award of special costs against him.

[103]

In
awarding special costs to Mr. Grewal the judge said:

[111]    I am satisfied that an
award of special costs against Dr. Sandhu is appropriate in this case.  It was
his conduct in blatantly and knowingly ignoring his professional and fiduciary
duties that gave rise to this action. Mr. Grewal cannot be properly and
fully compensated for those breaches of duty unless his remedy includes an
award for special costs.  Further, Dr. Sandhus conduct in the litigation,
up to and including trial, has been characterized by a lack of candour and
efforts to conceal evidence.

[104]

At the end
of the trial, counsel for Dr. Sandhu asked to defer his submission on costs
pending judgment.  The judge awarded special costs without hearing further from
him, although there were subsequent appearances before the judge when nothing
was said about what had happened in this regard.

[105]

The
parties divide over whether the award can be upheld, but of course they do so
without the benefit of the way the appeal, in which Dr. Sandhu will have been
successful, alters the disposition of the action.

[106]

It does,
however, appear to me the judge, to whom deference must of course be shown in
the absence of a reversible error, can be said to have erred in principle in
awarding special costs in part on the basis it was required to fully compensate
Mr. Grewal.  Special costs are not compensatory; they are punitive.  They
are awarded to address conduct in the course of litigation that is
reprehensible such as to be deserving of censure and rebuke:
Leung v. Leung
(1993), 77 B.C.L.R. (2d) 314 (S.C.).  There is authority for awarding special
costs based on pre-action conduct, but that is seldom done, and I consider it
now clear this is not a case to make an award of costs on that basis.

[107]

The judge
considered what he described as Dr. Sandhus conduct in the litigation, showing
a lack of candour and efforts to conceal evidence, but Dr. Sandhu already
had two awards of special costs imposed on him in respect of his pretrial
conduct.  Mr. Grewal contends the judge was entitled to take into account
instances where the judge found Dr. Sandhus credibility impaired having regard
for his testimony on discovery and at trial, but special costs are not awarded
based on the acceptance or rejection of testimony.  If it were otherwise,
instead of being an extraordinary measure, special costs could be imposed
whenever credibility was in issue.

[108]

While I
consider Dr. Sandhu should bear Mr. Grewals costs of the action to the end of
the trial, I consider they should be taxed as party and party costs.

Disposition

[109]

I would
dismiss the appeal and allow the cross appeal.

[110]

I would
set aside the judges order (except paragraphs 5, 6 and 10) and replace it with
an order essentially in the following terms:

1.       Mr.
Grewal will have judgment against Dr. Sandhu for breach of trust obligations in
respect of the sale of the Farm Property for $162,500 plus pre-judgment
interest;

2.       Mr.
Grewals and South-Slopes claims against Dr. Sandhu and Holdco for pecuniary
losses in respect of the Subdivision Property, as well as Holdcos counterclaim
in respect thereof, are remitted to be retried on the basis stated in these
reasons;

3.       Mr.
Grewal will have his costs of the action to the conclusion of the trial that
was held, to be taxed as between party and party.  Costs of the retrial will be
for the presiding judge to award.

The Honourable Mr. Justice Lowry

I agree:

The
Honourable Madam Justice Levine

I agree:

The
Honourable Mr. Justice Tysoe