Exclusion of a Party at Trial or Discovery

Exclusion of a Party at Trial or Discovery

Generally speaking a party to an action has the right to attend the entire trial or the examinations for discovery of other parties to the action and exclusion of a party is an uncommon event, but appropriate in some circumstances.

The BC Court of Appeal case Sisson v. Olson 1 W.W.R. (N.S.) 507  discusses this and it is the dissenting decision that is often reported. Some jurists have found the test in BC to be lower than  in other jurisdictions. The recent Ontario case of Lazar v TD general Insurance co 2017 ONSC 1242 is also cited later in this blog. 

 Sisson stated that  the Appellants had as much right to attend each other’s examination as they had to remain in court and listen to each other’s testimony at the trial itself. Acceptance of this conclusion does not deny jurisdiction in the court at the trial, or in the presiding judicial official at any stage of the proceedings, to order the physical exclusion of a party should a violation of an essential of justice occur or be threatened, if exclusion is not directed. What may constitute such a violation depends on the situation in each case appraised in its own atmosphere, see Bird v. Vieth (1899) 7 B.C.R. 31 (C.A.), 34 Can Abr 1264.1

The ground on which this appeal should be allowed is that the registrar appears to have ordered exclusion merely because it was asked for. This practice is not permitted by the authorities. He must exercise a discretion, and here he does not seem to have done so. 

The minority decision of the appeal court stated :

The onus on a party of showing why an opposite party should be excluded either at a trial or on discovery while his co-party testifies is not a heavy one and is lighter on discovery than at a trial, since the possibility of injustice from exclusion is more remote. Even at a trial, the chance of injustice being done in this way is extremely small. But in many cases the chances of injustice to the opposite party from refusal to exclude may be very substantial. The benefit of any real doubt should be given to the party asking for exclusion. If from the pleadings or otherwise it appears that the examinations of the co-parties will cover the same ground, and that their credibility will be a factor, then their exclusion should be ordered.

The Ontario decision of Lazara v TD General Insrtuacne Co 2017 ONSC 1242 stated:

37      The minority decision in Sissons was followed in Rando, as already noted, and in a decision of Rutherford J.: Karamanokian v. Assad, [1992] O.J. No. 2284 (Ont. Gen. Div.) (QL) [Karamanokian]. Both Rando and Karamanokian were decided before Liu Estate. There have also been cases decided since Liu Estate, where no mention is made of Lui Estate; for example Lipischak v. DeWolf, [2008] O.J. No. 4918 (Ont. S.C.J.) (QL), per Caputo J. [Lipischak] and Atlas Corp. v. Ingriselli, 2010 ONSC 3678 (Ont. S.C.J.), per Lauwers J. (as he then was), which followed Lipischak. In both of those cases, the competing lines of authority on the issue of the onus were reviewed and it was determined by the respective judge that the less stringent test as set out by Smith J.A. in Sissons should apply in the circumstances.

38      In my view, there is a risk that, by focusing on the question of whether a more or less stringent test should apply in deciding whether or not a party should be excluded from an examination for discovery or other pre-trial examination, the underlying rationale of a party’s right to be present at the examination is not properly considered. I prefer the language of Borins J. in Baywood, as set out above. In my view, it is preferable to focus on the competing interests and express the onus as that the party seeking exclusion has to demonstrate that exclusion is necessary to meet the ends of justice.

39      In considering whether or not a party has discharged its onus, a number of factors, including those enumerated by Master Rogers in Besner v. Ontario [2011 CarswellOnt 14483 (Ont. S.C.J.)], at para. 24, may be considered:

Factors considered include: whether the co-parties have common interests; whether the co-parties are represented by the same lawyer; whether it appears that the examinations for discovery of co-parties will cover the same grounds; whether credibility will be a factor or an issue in the case; whether evidence is likely to be tailored or parroted; whether a party is likely to be intimidated; whether the proceedings are likely to be disturbed or disrupted; whether there would be prejudice to the excluded party; and, generally, whether the ends of justice require the exclusion [citations omitted].

This list is not intended to be exhaustive.

40      I would make one qualification to the factors outlined in Besner. In my view, it is not always necessary that a party prove that it is likely that evidence will be tailored or parroted. That would be an impossible standard in most cases. Depending on the existence of the other factors, a risk that evidence will be tailored may be sufficient to discharge the onus. In fact, the very existence of the other factors may lead to a reasonable inference that there is such a risk.

41      As Rutherford J. stated in Karamanokian:

It is difficult to imagine how the applicant could establish in evidence directly, a probability that one other of the respondents would tailor his evidence if he had access to the evidence of the others before being cross-examined. While in rare circumstances that might be possible, direct evidence would not normally be available to demonstrate that future probability. It seems to me to be a matter which must be evaluated in the circumstances of the case and the issue or issues to be determined in the litigation.

[Emphasis added]

42      Parties are presumed to tell the truth when they testify under oath. Given the reality that there will seldom be any direct evidence of a propensity to tailor evidence, in my view, inferences will have to be drawn from other factors, such as those identified in Besner. In light of the factors that are found to be present, consideration should be given to whether or not there is a risk that evidence will be tailored if an exclusion order is not made.

43      Credibility is a factor in most litigation. The concern in cases where credibility will be the central issue in the action and co-parties intend to be present for the discovery of the other, however, is that a party’s evidence might be affected by hearing the questions asked of the other party and the answers provided. This concern is greatest when the other factors identified in Besner are present.

The Profiteering Fiduciary

Fiduciary Duties: The Rules on Profit
Fiduciaries must account for their handling of trust properties to the trust beneficiaries, and are not allowed to profit from being a fiduciary other than being paid reasonable fees for services rendered.
Equity compels a fiduciary to hold and manage trust property on the terms of the express trust by imposing a trust obligation upon it in favour of the trust beneficiaries.
The typical example of this constructive trust is found as far back as 1726 in the English decision of Keech v. Sandford , 20 E.R. 223, that is authority for the principle that a trustee may not make a profit for himself through his trusteeship. This decision has been adopted many times in Canada.
It is a fundamental duty of a trustee that he not permit his personal interest to conflict with his duty as trustee. This duty extends to any profits which the court may consider to be acquired improperly.
The principle of profiteeship encumbrances any gains made personally by the fiduciary and the law will then impose a constructive trust on the asset on the terms of the express trust, all of which depends on the facts of the particular case.
If the profit remains in the same form in which it was held by the fiduciary, then the beneficiaries can recover it in the same form or trace it into any other form into which it was converted by the trustee. The beneficiaries are entitled to argue that the property in dispute was always theirs  and never the trustee/fiduciaries, and if they can identify it among the assets in the trustee’s name, or in mixed funds, they are entitled to recover it.
The nature of the fiduciary relationship arises from the placing of trust and confidence by the claimant in the fiduciary and equity will impose express trust obligations upon the fiduciary who abuses that trust and confidence. Once equity imposes the trust provisions, the fiduciary will become a constructive trustee of the assets.

The rule against profits is a strict one, which is designed to ensure that the fiduciary acts, as equity requires, from the purest motives – the fiduciary must be motivated only by the best interest of his beneficiary.

The Supreme Court of Canada in Soulos v Korkontzilas (1997) 2 SCR 217 held that to establish a constructive trust to be imposed upon a wrongful gain, four conditions must generally be satisfied:

  1. The defendant must of been under an equitable obligation- an obligation of the type that courts of equity have enforced in relation to the activities, giving rise to the assets in his hands;
  2. The assets in the hands of the fiduciary must be shown to have resulted from deemed or actual agency activities of the fiduciary in breach of his equitable obligation to the plaintiff/owner;
  3. The plaintiff must show a legitimate reason for seeking a proprietary remedy, either personal or related to the need to ensure that others like the defendant remain faithful to their duties;
  4. There must be no factors which would render imposition of a constructive trust unjust in all of the circumstances of the case- for example, the interests of intervening creditors must be protected.
The imposition of constructive trusts in breach of fiduciary obligations have included cases that vary from the crown acquiring land from first nations people in breach of its fiduciary obligations to them, to commercial cases in which one Corporation owes a fiduciary duty to another; to information where the fiduciary has acquired information that is used to acquire a personal gain.

Vexatious Litigant Enjoined From Further Court Actions

Vexatious Litigant Enjoined From Further Court Actions

A particularly frivolous and vexatious claim commenced by ” God, Prince Kitsilano, Skidegate-Sterritt Family, in James Sterritt and Marya Watson , on behalf of all Indians and Muslims was struck and the litigant barred from commencing further court actions without leave of the Supreme Court.

While the reasons for judgement are entertaining to read, the case is an example of some of the court actions that are commenced where there is no merit whatsoever to the claim which is typically almost unintelligible.

A portion of the judgment is as follows:

Application to Strike the Notice of Civil Claim

[6]          Rule 9-5(1) of the Supreme Court Civil Rules, B.C. Reg. 168/2009, provides that “at any stage of a proceeding, the court may order to be struck out or amended the whole or any part of a pleading, petition or other document on the ground that”:

(a) it discloses no reasonable claim or defence, as the case may be,

(b) it is unnecessary, scandalous, frivolous or vexatious,

(c) it may prejudice, embarrass or delay the fair trial or hearing of the proceeding, or

(d) it is otherwise an abuse of the process of the court, and the court may pronounce judgment or order the proceeding to be stayed or dismissed and may order the costs of the application to be paid as special costs.

[7]           A claim will only be struck for disclosing no reasonable claim if it is plain and obvious, assuming the facts pleaded are true, that it discloses no reasonable cause of action. That is, is there a question fit to be tried? (British Columbia v. Imperial Tobacco Canada Ltd., 2011 SCC 42, at paragraph 17; Citizens for Foreign Aid Reform Inc. v. Canadian Jewish Congress, [1999] B.C.J. No. 2160 (S.C.)

[8]          In this instance the plaintiff purports to make a claim “on behalf of all Indians and Muslims” for a declaration that he has title to the land in B.C. and as well seeks an order that the defendants enter into a tenancy agreement with him as the paramount landlord of the world. Aside from the absurdity of such an assertion, an individual member of a particular indigenous community cannot in any event assert aboriginal title as aboriginal title is communal. As a result it is plain and obvious that the notice of civil claim discloses no reasonable cause of action. (Louison v. Ochapowace Indian Band #71, 2011 SKQB 87, at paragraphs 2 and 9. See, also, Sterritt v. Canada and Sterritt v. Prince Rupert, supra.)

The Notice of Civil Claim is Unnecessary, Frivolous. Embarrassing. Scandalous and an Abuse of the Court’s Process

[9]           A pleading is “unnecessary” or “vexatious” if it does not go to establishing the plaintiff’s cause of action or does not advance a claim known in law: Citizens, supra, at paragraph 47.

Application to Strike the Notice of Civil Claim

A pleading is frivolous if it “is without substance, is groundless, fanciful, trifles with the court or wastes time”: Borsato v. Basra, [2000] B.C.J. No. 84 (S.C.), rev’d on other grounds, [2000] B.C.J. No. 2855.

[10]        An “embarrassing” and “scandalous” pleading is one that is so irrelevant that it will involve the parties in useless expense and will prejudice the trial of the action by involving them in a dispute apart from the issues: Citizens, supra, at paragraph 47.

[11 ] The abuse of process doctrine allows the courts to dismiss actions in circumstances where the court process is used for improper purposes. Abuse of process is a flexible doctrine unencumbered by specific requirements. It is directed to prevent actions that violate such principles as judicial economy, consistency, finality and the integrity of the administration of justice: Krist v. British Columbia, 2017 BCCA 78, at para. 52.

[12]        In determining whether proceedings constitute an abuse of process, the court may consider whether there have been multiple or successive related proceedings that are likely to cause vexation or oppression: Stephen v. British Columbia (Ministry of Children & Family Development), 2008 BCSC 1656, at paragraph 51.

[13]        It is an abuse of process for a plaintiff to have multiple actions seeking the same relief against the same defendant: Dixon v. Stork Craft Manufacturing Inc., 2013 BCSC 1117, at paragraph 61.

[14]        Making a claim knowing that there is no factual basis for the allegations or for some improper collateral purpose constitutes an abuse of process: Moon v. Sails at the Village on False Creek Developments Corp., 2012 BCSC 1999, at paragraphs 27-28.

Discussion

[15]        I reproduce the Statement of Facts and Relief Sought as follows:

Part 1 Statement of Facts

1. World History, the Tzalm al’klt adaawik, is divided by the two Abramic blessings:

a. Ishmaglite – The Singular Great Nation

b. Isaacite – the Many Nations.

Canada is Isaacitic, part of the multi-state capitalist model, conducive to war and enforced by arms.

The Provincial government of British Columbia is invested in the Isaacite Model and

The City of Vancouver and City of Prince Rupert resist plaintiffs’ proposal to convert to the Ishmaelite, great Nation, Caliphate, model.

The manager of M’akola Society, Nicholas Najda, seeks to remove plaintiffs Mary Watson and James Sterritt from 438-8th Avenue West, Prince Rupert for claiming title to the lot of land at that address by threatening to evict Watson, who believes she owns the house by completing rent-to-own in 2007.

The RCMP, mayor and bylaw officer refuse to consult and order James Sterritt to stay out of City Hall, A dog bylaw ticket was issued and demand to license dog issued.

2. Plaintiffs’ Indian title to all land in the Province of British Columbia requires that all occupants of the Province end trespass and join the great nation by agreement to terms of tenancy under God in Prince Kitsilano (Jesus Chris), as in the Tzalm Family of Skidegate-Sterritt, as in James Sterritt, the landlord on behalf of the plaintiffs.

3. Section 604 City of Prince Rupert Bylaw #3250 is authority to set the ticket aside until the City ends trespass against plaintiffs.

4. M’Akola Society cannot evict or claim the lot at 438-8th West, Prince Rupert under the Residential Tenancy Act, as the land is owned by plaintiffs and Marya Watson paid for the house over the 20 years from May 1987 to May 2007, and overpaid $36, 930.00 up to June 2016 when M’Akola threatened to move her to a small apartment.

5. By resolving Indian Title over the entire Province of B.C., Plaintiffs advance the great nation against the failing multi-nation system, thus satisfying Jihad and termination terrorism by the Jewish/American coalition.

Part 2 Relief Sought

(1)         An order that defendants enter terms of tenancy under Plaintiffs as paramount world landlord.

(2)         An order setting aside Ticket #CH991 under section 604 Bylaw #3250.

(3)         An order that Marya Watson be given the deed to 438-8th Avenue West, Prince Rupert, B.C., and be reimbursed $36,930.00 for overpayment from May 2007 until June 2016.

(4)         An order that defendants pay restitution and damages and compensation to the plaintiffs, in particular to the Tzalm and to the Skidegate-Sterritt Family, and to James Sterritt,

(5)          An order or declaration that all Indians in the Province of British Columbia have their particular rights and titles to lands reserved to them and each of them recognized and affirmed within terms of tenancy that relieve them of the burden imposed on them by Canada and by the Province of British Columbia, and by Cities, Towns, Villages and all such.

[16]        It is self-apparent the claim fails to establish a cause of action against any of the defendants and does not advance a claim known to law and “is without substance, is groundless, fanciful, trifles with the court or wastes time.” It is also “embarrassing” and “scandalous” and is so irrelevant it will involve the parties in useless expenses and will prejudice the trial of the action by involving them in a dispute apart from the issues.

[17]        The pleadings fail to plead facts and make no allegations against Mr. Lindquist that establish a cause of action. In addition, his claims against the City and Mr. Lindquist amount to a collateral attack.

[18]        As in Sterritt v. Canada, the claim at bar “is embarrassing not only because of its disjointed nature, but also by reason of bare assertions and conclusions” preventing the defendants from knowing “how to react to and deal with” the claim: Sterritt v. Canada, supra, at paragraph 17.

[19]        The pleadings are not capable of amendment. They are fundamentally flawed for the reasons given. There is a noted lack of connection to reality and the assertions made are absurd. The Notice of Civil Claim is struck in its entirety.

[20]        I turn now to the application to have Mr. Sterritt declared a vexatious litigant. Vexatious Proceedings

[21]        Section 18 of the Supreme Court Act, R.S.B.C. 1996, c. 443, provides that:

[i]f, on application by any person, the court is satisfied that a person has habitually, persistently and without reasonable grounds, instituted vexatious legal proceedings in the Supreme Court or in the Provincial Court against the same or different persons, the court may, after hearing that person or giving him or her an opportunity to be heard, order that a legal proceeding must not, without leave of the court, be instituted by that person in any court.

[22]       The hallmarks of vexatious conduct by litigants were noted in R.D. Backhoe Services Inc. v. Graham Construction and Engineering Inc., 2017 BCCA 91 at paragraphs 29-30:

29.          A non-exhaustive list of the considerations this Court may take into account in deciding whether to make a vexatious litigant order were set out by Mr. Justice Donald in Lindsay v. Canada (Attorney General), 2005 BCCA 594. They include:

The respondents urged on us the summary provided by Henry J. in Re Lang Michener et al. and Fabian et al. (1987), 37 D.L.R. (4th) 685 at 691, 59 O.R. (2d) 353 (H.C.J.):

From these decisions the following principles may be extracted:

(a) the bringing of one or more actions to determine an issue which has already been determined by a court of competent jurisdiction constitutes a vexatious proceeding;

(b) where it is obvious that an action cannot succeed, or if the action would lead to no possible good, or if no reasonable person can reasonably expect to obtain relief, the action is vexatious;

(c) vexatious actions include those brought for an improper purpose, including the harassment and oppression of other parties by multifarious proceedings brought for purposes other than the assertion of legitimate rights;

(d) it is a general characteristic of vexatious proceedings that grounds and issues raised tend to be rolled forward into subsequent actions and repeated and supplemented, often with actions brought against the lawyers who have acted for or against the litigant in earlier proceedings;

(e) in determining whether proceedings are vexatious, the court must look at the whole history of the matter and not just whether there was originally a good cause of action;

(f) the failure of the person instituting the proceedings to pay the costs of unsuccessful proceedings is one factor to be considered in determining whether proceedings are vexatious;

(g) the respondent’s conduct in persistently taking unsuccessful appeals from judicial decisions can be considered vexatious conduct of legal proceedings.

30.          While our focus on whether an order should be made in this Court depends on the litigant’s conduct in this Court, our analysis may also be informed by the litigant’s conduct in the courts below.

[23]        In addition, the courts in Canada “have finite resources that cannot be squandered. Every moment devoted to a vexatious litigant is a moment unavailable to a deserving litigant. The unrestricted access to courts by those whose access should be restricted affects the access of others who need and deserve it”: Canada v. Olumide, 2017 FCA42, at paragraph 19.

[24]        As is apparent from the summary of actions initiated by Mr. Sterritt in various courts, they are strikingly similar. He reiterates claims on behalf of God, styles himself as a “Prince” and purports to act for all first nations. His actions fall within a number of the hallmarks referred to in R. D. Backhoe.

[25]        The history of Mr. Sterritt’s involvement in various courts clearly establishes a pattern of repetitive applications respecting the same issue or issues, with claims utterly lacking in merit, in certain cases brought for improper purposes and throughout lacking any kind of rational connection to reality. I note that the Provincial Court, while not declaring Mr. Sterritt a vexatious litigant, possibly from concerns respecting jurisdiction to do so, has more than once sought to control its process by requiring Mr. Sterritt to obtain leave before pursuing a claim.

[26]        In addition, despite repeatedly being informed by this and other courts that he cannot advance the claims he is making in this case, he persists in doing so.

[27]        I am satisfied that it is appropriate to order that Mr. Sterritt is a vexatious litigant and for the reasons given must have his applications to this Court and the Provincial Court of British Columbia controlled. As suggested by counsel for the Province, the form of order made by Chief Justice Hinkson in Fyfe v. Fyfe, 2014 BCSC 1999, is appropriate on the facts of this case.

[28]        As a result I make the following orders with respect to the vexatious litigant application:

(a) I order that the Notice of Civil Claim in this proceeding is struck in its entirety.

(b) I order, pursuant to section 18 of the Supreme Court Act, that James Sterritt is enjoined from instituting any legal proceeding, on his own behalf or on behalf of others, in the Supreme Court of British Columbia and in the Provincial Court of British Columbia, or from making further applications in this action without obtaining leave of a Justice of the Court to do so.

(c) I further order that James Sterritt and anyone acting on his behalf are enjoined from filing or attempting to file, by any means whatsoever, any document in any registry of the Supreme Court of British Columbia or the Provincial Court of British Columbia without leave of a Justice of the Court.

(d) The only exceptions to this injunction will be for applications for leave to file applications for leave to commence new proceedings or applications for leave to file documents in existing actions. The plaintiff or anyone acting on his behalf will be permitted to file applications for such leave, so long as they are three pages or less in length, and accompanied by only one affidavit, not to exceed five pages in length.

(e) I further order that the staff of the Registries of the Supreme Court of British Columbia and the Provincial Court of British Columbia discard any document that Mr. Sterritt or anyone on his behalf attempts to file in contravention of this order.

(f) The defendants are entitled to their costs of this action to be taxed before the registrar.

Fiduciary Duties of Corporate Directors

Fiduciary Duties of Corporate Directors

Ascent One Properties Ltd v Liao 2017 BCSC 1017 dealt with an aborted real estate development project that alleged inter alia a breach of fiduciary duties by a corporate director and officer.

The case outlines the law relating to the fiduciary duties owed by a director and officer of a corporation.

THE LAW

173      It is trite law that directors owe duties to the companies they serve.

174      The Business Corporations Act, S.B.C. 2002, c. 57 (“BCA“) provides in relevant part as follows:

Powers and functions of directors

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

Duties of directors and officers

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

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

175      The statutory fiduciary duty requires company directors and officers to respect the trust and confidence that have been reposed in them to manage the assets of the company in pursuit of the realization of the objects of the company. They must avoid conflicts of interest and abusing their position for personal benefit: Peoples Department Store Inc. (Trustee of) v. Wise, 2004 SCC 68at para. 35.

176      A director must not usurp for herself a maturing business opportunity.

177      As was stated by the Supreme Court of Canada in BCE Inc. v. 1976 Debenture Holders, 2008 SCC 69:

[37] The fiduciary duty of the directors to the corporation originated in the common law. It is a duty to act in the best interests of the corporation. Often the interests of shareholders and stakeholder are co-extensive with the interests of the corporation. But if they conflict, the directors’ duty is clear — it is to the corporation . . .

[38] The fiduciary duty of the directors to the corporation is a broad, contextual concept. It is not confined to short-term profit or share value. Where the corporation is an ongoing concern, it looks to the long-term interests of the corporation. The content of this duty varies with the situation at hand . . . the fiduciary duty owed by directors is mandatory; directors must look to what is in the best interests of the corporation.

. . .

[40] In considering what is in the best interests of the corporation, directors may look to the interests of, inter alia, shareholders, employees, creditors, consumers, governments and the environment to inform their decisions. Court should give appropriate deference to the business judgment of directors who take into account these ancillary interests, as reflected by the business judgment rule. The “business judgment rule” accords deference to a business decision, so long as it lies within a range of reasonable alternatives [citations omitted]. It reflects the reality that directors, who are mandated under s. 102(1) of the CBCA to manage the corporation’s business and affairs, are often better suited to determine what is in the best interests of the corporation. This applies to decisions on stakeholders’ interests, as much as other directorial decisions.

. . .

[66] . . . However, the directors owe a fiduciary duty to the corporation, an only to the corporation . . . not to stakeholders, and that the reasonable expectation of stakeholders is simply that the directors act in the best interests of the corporation.

178      The fiduciary duty is to maximize the value of the corporation: Carr v. Cheng, 2005 BCSC 445at para. 25. A director’s interests as a shareholder must be subservient to his fiduciary duty: Polar Star Mining Corp. v. Willock (2009), 96 O.R. (3d) 688 (Ont. S.C.); Peoples Department Stores at para. 43.

179      It is a breach of fiduciary duty to use, for personal advantage or gain, information acquired as a director in order to attempt to take control of the company: Dockside Brewing Co. Ltd. v. Strata Plan LMS 3837, 2007 BCCA 183 at para. 54.

180      In determining whether a director has acted in the best interests of the company, the court will consider whether the director has applied informed judgment which had a reasonable basis: Maple Leaf Foods Inc. v. Schneider Corp., (1998), CanLII 5121 (Ont. C.A.) at p. 42. This “business judgment rule” operates to shield from court intervention business decisions which have been made honestly, prudently, in good faith and on reasonable grounds: Krynen v. Bugg, 2003 O.J. No. 1209 (Ont. C.J.) at para. 74(7).

181      A director will not be liable for breach of fiduciary duty when the conduct at issue is qua shareholder and not qua director: Polar Star Mining at paras. 33-34.

182      The court must scrutinize the circumstances of each case to determine whether the director has acted honestly and in good faith and with a view to the interests of the company. A finding that there was no fraud or dishonesty on the part of a director’s who was attempting to solve the company’s problems stands in the way of a finding of breach of fiduciary duty: Peoples Department Stores at paras. 39 — 40.

183      When assessing whether a breach of fiduciary duty has occurred, the subjective motivation of the director is relevant: Peoples Department Stores at paras. 62 — 63; Dockside Brewing Co. at paras. 54 — 55.

Executor/Trustee Must Decide and Not Delegate

Executor/Trustee Must Decide and Not Delegate
While a trustee or executor may retain an agent to perform a particular duty or give them advice, if the will permits delegation of such duties, the executor, trustee must ultimately make the decision about the course of action.
The leading decision on the matter is McLellan Properties LTD v. Roberge 1947 SCR 561 at 566 – 567:
The general rule that one who accepts the position of trustee undertakes to perform personally those duties requiring the exercise of his discretion is subject to certain exceptions. A trustee by the terms of his appointment may be permitted to delegate some or all of those duties. Again, if in the circumstances it would be regarded as prudent for a person in the ordinary course of business to delegate the performance of those duties, a trustee is permitted to do so: Speight v. Gaunt [(1883), 22 Ch.D. 727 (C.A.)]….

These authorities illustrate the general rule and the exceptions thereto founded upon the necessities of prudent business management…

In Re Hatfield Estate (1986), 5 B.C.L.R. (2d) 297 (C.A.), the Court held that trustees may not delegate a power involving the exercise of personal discretion unless they have the authority to do so (see discussion in 0847395 B.C. Ltd. v. Guilbride Estate 2009 BCSC 847 at paras. 64-69; see also Haughton v. Haughton Estate (1995), 80 O.A.C. 273 (C.A.)).

According to Eileen E. Gillese in The Law of Trusts, 3d ed. (Toronto: Irwin Law, 2014) at 160:

If delegation is permitted, trustees may use agents, but they are still responsible for making all decisions. In other words, ultimate decision making rests with the trustees; all they are entitled to do is have the particular agent perform a particular duty or give advice. Trustees, while permitted to delegate some of their duties, may not delegate all of them since that would amount to an abdication of responsibility.

Trustees Breach of Trust Excused

Trustee Act: Trustees Breach of Trust Excused

Section 96 of the Trustee Act allows the court to excuse a trustee for negligence or breach of trust when handling estate assets if the trustee acted honestly and reasonably.

Section 96 states as follows:

96. If it appears to the court that a trustee, however appointed, is or may be personally liable for a breach of trust, whenever the transaction alleged to be a breach of trust occurred, but has acted honestly and reasonably, and ought fairly to be excused for the breach of trust and for omitting to obtain the directions of the court in the matter in which the trustee committed the breach, then the court may relieve the trustee either wholly or partly from that personal liability.

 

 

Like trustees, pursuant to section 96, executors may be excused of liability in appropriate circumstances: see Brown v. Brown, 2011 BCSC 649.

To be excused, a trustee must satisfy all three elements in section 96:

  1. he or she must have acted honestly;
  2. must have acted reasonably;
  3. and the court must find that, in the circumstances, it would be fair to excuse the trustee for the breach and for failing to obtain directions from the court: Langley v. Brownjohn, 2007 BCSC 156 at para. 61.

The burden rests with the trustee who is seeking the protection of section 96 to prove that his or her actions are worthy of the exercise of the court’s discretion to excuse the trustee for the breach: Langley, supra, at para. 63.

In exercising its discretion pursuant to section 96, the court will consider factors including {Langley, supra at para. 66):

In Fales v. Canada Permanent Trust Co., [1977] 2 S.C.R. 302 (“.Fales”), the Court discussed the duties of trustees. The principles in Fales apply to executors: see Madock v. Greater, 2010 BCSC 567 at para. 61 and Re Ili/lis Estate, 2015 BCSC 208 at paras. 76- 77.

As set out in Fales, it in large part it reflects the longstanding principles regarding the duties of a trustee:

Traditionally, the standard of care and diligence required of a trustee in administering a trust is that of a man of ordinary prudence in managing his own affairs (Learoyd v. Whiteley [(1887), 12 App. Cas. 727.], at p. 733; Underhill’s Law of Trusts and Trustees, 12th ed., art. 49; Restatement of the Law on Trusts, 2nd ed., para. 174)

Common Law Spouse Expanded

Common Law Spouse Expanded

Connor estate 2017 BCSC 978 could be a bit of a game changer for common law WESA spouses in the sense that the court finding that the parties were spouses could be an “expansion” of the concept of common law spouse.

Kent J found a long time couple to be common law spouses despite:

  • the parties maintained two entirely separate residences and did not live under the same roof;
  • each undertook their own separate domestic tasks such as meal preparation, shopping, tending to clothing and household maintenance;
  • no mingling of finances occurred;
  • sexual relations between them in their respective households were significantly reduced in the last two years;
  • Ms. Connor’s hospital records identified her marital status as single and indicated Mr. Chambers as an alternative contact identifying him as a “friend”;
  • Ms. Connor identified herself as “single” on her tax returns and Mr. Chambers identified himself as “separated” after 2012;
  • Mr. Chambers identified his wife as his “current spouse” in the spousal declaration for his municipal pension plan application in September 2011, a designation that was never changed;
  • in August 2013 Mr. Chambers declared for the purposes of his group benefits with Manulife Financial that he had no common-law spouse and he did not declare Ms. Connor as a beneficiary;
  • Mr. Chambers’ children had no involvement in the life of Ms. Connor and indeed the son was never even introduced to her; and
  • neither Mr. Chambers nor Ms. Connor displayed photographs of each other in their respective residences.

The application to determine if  Chambers was a common law spouse was opposed by her five half siblings whom she did not know.

For much of the long time relationship the male partner Chambers  lived with his wife and family and saw the female Connor when he could.

The Judge found that they never lived together under the same roof as a result of Connor being a hoarder and there was no room for her partner Chambers to reside in her residence.

She had left him her $410,000 RRSP and the Judge found it likely that while she died intestate, that she had prepared a will that had left  him a substantial bequest, but the will could not be found.

Molodov/lch v. Penttinen (1980), 17 R.F.L. (2d) 376 (Ont. Dist. Ct.), which was also relied on in the case referred to above, was invoked in a recent WESA decision to identify generally accepted characteristics of a “marriage-like relationship”, Richardson Estate (Re), 2014 BCSC 2162:

[22]  A leading authority with respect to the meaning of “marriage-like relationship” (sometimes also referred to as “cohabitation”, Campbell v. Campbell. 2011 BCSC 1491 at para. 80) is Molodowich v. Penttinen (1980), 17 RFL (2d) 376 (ONDC):

[16] I propose to consolidate the statements just quoted by considering the facts and circumstances of this case with the guidance of a series of questions listed under the seven descriptive components involved, to varying degrees and combinations, in the complex group of human inter­relationships broadly described by the words “cohabitation” and “consortium”

7 Guidelines to Common Law Relationships

(1) SHELTER:

(a) Did the parties live under the same roof?

(b) What vie re the sleeping arrangements?

(c) Did anyone else occupy or share the available accommodation?

 

(2) SEXUAL AND PERSONAL BEHAVIOUR:

(a) Did the parties have sexual relations? If not, why not?

(b) Did they maintain an attitude of fidelity to each other?

(c) What were their feelings toward each other?

(d) Did they communicate on a personal level?

(e) Did they eat their meals together?

(f) What, if anything, did they do to assist each other with problems or during illness?

(g) Did they buy gifts for each other on special occasions?

 

(3) SERVICES:

What was the conduct and habit of the parties in relation to:

(a) Preparation of meals,

(b) Washing and mending clothes,

(c)  Shopping,

(d) Household maintenance,

(e)  Any other domestic services?

 

(4) SOCIAL:

(a) Did they participate together or separately in neighbourhood and community activities?

(b) What was the relationship and conduct of each of them towards members of their

respective families and how did such families behave towards the parties?

 

(5) SOCIETAL:

What was the attitude and conduct of the community towards each of them and as a couple?

 

(6) SUPPORT (ECONOMIC):

a) What were the financial arrangements between the parties regarding the provision of or contribution towards the necessaries of life (food, clothing, shelter, recreation, etc.)?

(b) What were the arrangements concerning the acquisition and ownership of property?

(c) Was there any special financial arrangement between them which both agreed would be determinant of their overall relationship?

 

(7) CHILDREN:

What was the attitude and conduct of the parties concerning children?

[23] Other authorities have emphasized that this is not a checklist and “these elements may be present in varying degrees and not are all necessary for the relationship to be found conjugal” (M. v. H. [1999] 2 S C R. Sat para. 59; cited in Austin v. Goerz 2007 BCCA 586at para. 57: the Court of Appeal equated “conjugal” with “marriage-like” in the same paragraph).

8    In Weber v. Leclerc 2015 BCCA 492, leave to appeal to SCC refused, [2016] S.C.C A No 19, the Court again reviewed the case law respecting “marriage-like relationships”, noting:

[23]     The parties’ intentions — particularly the expectation that the relationship will be of lengthy, indeterminate duration — may be of importance in determining whether a relationship is “marriage-like”. While the court will consider the evidence expressly describing the parties’ intentions during the relationship, it will also test that evidence by considering whether the objective evidence is consonant with those intentions.

[24]     The question of whether a relationship is “marriage-like” will also typically depend on more than just their intentions. Objective evidence of the parties’ lifestyle and interactions will also provide direct guidance on the question of whether the relationship was “marriage-like”.

Court Orders Mental Capacity Exam

The Court Orders Mental Capacity Exam

In Re Singh 2017 BCSC 984 the court invoked its parens patriae jurisdiction and  ordered a 93 year old father to undergo a mental capacity examination by two geriatric doctors .

Two of his six children claimed that their father was mentally incompetent to manage his own affairs and asked the court to order an assessment by two geriatric doctors. Based on his mental capacity exam, if he was found to be incapable then they sought to be appointed his committee under the Patients Property act. The other four children opposed the application. The family doctor stated that he showed signs of vascular dementia and had good days and bad days.

The court held that while it was an intrusion into the patients life it was important enough to order the mental capacity examinations under the inherent jurisdiction of the court to protect those who were incapable of protecting themselves.

35   Sections 3 and 5 of the Patient’s Property Act govern the procedure for obtaining a declaration of incapability. Those sections provide, in relevant part:

Hearing of application

3(1) If, on

(a) hearing an application, and

(b) reading the affidavits of 2 medical practitioners setting out their opinion that the person who is the subject of the application is, because of

(i) mental infirmity arising from disease, age or otherwise, or

(ii) disorder or disability of mind arising from the use of drugs, 

(iii) incapable of managing his or her affairs or incapable of managing himself or herself, or incapable of managing himself or herself or his or her affairs,

The court is satisfied that the person is, because of

(c) mental infirmity arising from disease, age or otherwise

Examination 5(1) If

(a) an application is made or an issue is tried under section 3,

(b) an appeal is taken from an order under section 3, or

(c) an application is made under section 4,

the court hearing the appeal or application or trying the issue may order the person who is the subject of the application or the patient to attend and submit at the time and place the order directs to examination.

(2) An examination under this section must be made by

(a) one or more medical practitioners other than those whose affidavits were before the court on the appeal, application or trial, or

(b) a board of 3 or more medical practitioners designated by the College of Physicians and Surgeons of British Columbia at the request of the court.

36   In the leading case of Temoin v. Marlin 2012 BCCA 250, Neilson J.A., for the Court, observed at para. 27 that this legislation “reflects the tension between the right to personal autonomy and the protection of vulnerable individuals”.

37   I take the following principles from Temoin:

  • There is no statutory authority to order a person to undergo the medical examinations required for an application under s. 3 of the Act (at para. 48).
  • There is a gap in the Act, which provides no protection for individuals who appear to be incapable but have no access to physicians, or who refuse to be medically examined (at para. 51).
  • The parens patriae jurisdiction is founded on the need to protect those who cannot care for themselves. The court’s discretion must be exercised to do what is necessary for the protection of the person for whose benefit it is exercised (at para. 55, citing Re Eve, [1986] 2 S C.R 388).
  • The Court may exercise its powers under its parens patriae jurisdiction to fill in the gap by making what is effectively a provisional finding of incapacity for the limited purpose of bringing an individual within the Act and its procedural safeguards. However, this power must be exercised cautiously, and only on a proper evidentiary basis (at para. 56).
  •  The Court’s parens patriae jurisdiction must be used for the benefit of the person in need of protection, and not to benefit others (at para. 60).
  • The application to compel a person to undergo the two medical examinations required for a declaration of incapability engages the Charter values of liberty, autonomy and equality. “Those values are given meaning by requiring a level of proof that is commensurate with both the importance of the individual interests and the seriousness of the intervention at stake” (at para. 60).
  • The test for the exercise of the parens patriae power requires the applicant to present evidence establishing a serious question to be tried, both with respect to the individual’s capacity and his or her need for protection (at para 61).

38  In Temoin, at para. 61, the court also approved the test stated by the chambers judge: a requirement for “prima facie evidence of incompetence and a compelling need for protection

Loan or Gift Within the Family?

s it a Loan or Gift Within the Family?

ABP v KGW 2017 BCSC 977 provides a template of the criteria a court will examine in determining if a gratuitous advance of monies or property within a family from parents to children will be a loan or a gift.

5      The topic of gratuitous transfers between parents and adult children was covered in Pecore v. Pecore, [2007] 1 S.C.R. 795, in which it was held that these come freighted with a rebuttable presumption of resulting trust putting the transferee to the onus of demonstrating that a gift was intended. What matters is the intention of the transferor at the time of handing over the property.

6      A template for evaluating whether the presumption has been rebutted was set up in Locke v. Locke, 2000 BCSC 1300, and applied and approved in Kuo v. Chu, 2009 BCCA 405 at para. 9, where the questions to be considered on the loan/gift issue in a family law context were said to include:

a. whether there were any contemporaneous documents evidencing a loan;

b. whether the manner for repayment is specified;

c. whether there is security held for the loan;

d. whether there are advances to one child and not others, or advances of unequal amounts to various children;

e. whether there has been any demand for payment before the separation of the parties;

f. whether there has been any partial repayment; and

g. whether there was any expectation, or likelihood, of repayment.

Undue Delay: Laches

Undue Delay: Equitable Defence of Laches

Hrenyk v Preiss estate 2017 SKQB 151 contains a through discussion of the equitable defence of laches- the plaintiff’s undue delay in proceeding with a court action to resolution.

26 Laches is discussed in Ahone v. Holloway (1988), 30 B.C.L.R. (2d) 368 (C.A.), at page 378:

… Laches is established when two conditions are fulfilled:

(1) there must be unreasonable delay in the commencement or prosecution of proceedings, and

(2) in all the circumstances the consequences of delay must render the grant of relief unreasonable or unjust.

27 Laches was more recently considered by Gabrielson J. in Turcot v. Slade, 2010 SKQB 367, 364 Sask. R. 36at para. 15:

[15] … The equitable doctrine of laches was discussed by the Supreme Court of Canada in M. (K.) v. M. (H.), [1992] 3 S.C.R. 6, [cites omitted] where the court stated at paras. 97 and 98:

97 The leading authority on laches would appear to be Lindsay Petroleum Co. v. Hurd (1874), L.R. 5 P.C. 221, in which the doctrine is explained as follows, at pp. 239-40:

… the doctrine of laches in Courts of Equity is not an arbitrary or a technical doctrine. Where it would be practically unjust to give a remedy, either because the party has, by his conduct, done that which might fairly be regarded as equivalent of a waiver of it, or where by his conduct and neglect he has, though perhaps not waiving that remedy, yet put the other party in a situation in which it would not be reasonable to place him if the remedy were afterwards to be asserted, in either of these cases, lapse of time and delay are most material. But in every case, if an argument against relief, which otherwise would be just, is founded upon mere delay, that delay of course not amounting to a bar by any statute of limitations, the validity of that defence must be tried upon principles substantially equitable. Two circumstances, always important in such cases, are, the length of the delay and the nature of the acts done during the interval, which might affect either party and cause a balance of justice or injustice in taking the one course or the other, so far as relates to the remedy.

. . .

In turn, this formulation has been applied by this Court; see Canada Trust Co. v. Lloyd, [1968] S.C.R. 300; Blundon v. Storm, [1972] S.C.R. 135.

98 The rule developed in Lindsay is certainly amorphous, perhaps admirably so. However, some structure can be derived from the cases. A good discussion of the rule and of laches in general is found in Meagher, Gummow and Lehane, supra, at pp. 755-65, where the authors distill the doctrine in this manner, at p. 755:

It is a defence which requires that a defendant can successfully resist an equitable (although not a legal) claim made against him if he can demonstrate that the plaintiff, by delaying the institution or prosecution of his case, has either (a) acquiesced in the defendant’s conduct or (b) caused the defendant to alter his position in reasonable reliance on the plaintiff’s acceptance of the status quo, or otherwise permitted a situation to arise which it would be unjust to disturb …

Thus there are two distinct branches to the laches doctrine, and either will suffice as a defence to a claim in equity. What is immediately obvious from all of the authorities is that mere delay is insufficient to trigger laches under either of its two branches. Rather, the doctrine considers whether the delay of the plaintiff constitutes acquiescence or results in circumstances that make the prosecution of the action unreasonable. Ultimately, laches must be resolved as a matter of justice as between the parties, as is the case with any equitable doctrine.

(Emphasis added)

. . .

35      The applicant asserts that the respondent bears the burden of establishing laches, relying on the following comments of Caldwell J.A. in Olney Estate v. Great-West Life Assurance Co., 2014 SKCA 47, 438 Sask. R. 47 (Sask. C.A.):

75 … the doctrine of laches is an equitable defence which must be made out on the evidence by the party who asserts it. If the evidence adduced by the party relying on the doctrine makes out the availability of the defence, the onus shifts and the other party is logically and properly put to the burden of adducing evidence to dispel its application; however, the law does not require a party to make out the party opposite’s defence.

[emphasis in original]

36      I must first determine whether the respondent has established that the applicant acquiesced in the respondent’s position. In Gottselig Estate v. Gottselig Estate, 2014 SKQB 20 (Sask. Q.B.) at paras 51, 54 and 55, (2014), 436 Sask. R. 144 (Sask. Q.B.), Barrington-Foote J. explained the relationship of acquiescence to the doctrine of laches:

51 Laches is an equitable doctrine. In Waters’ Law of Trusts, supra, the principled justification for the doctrine is described as follows: (at p. 1242-43)

No legal system could allow a person who has a legal claim to do nothing over a long period of time to then assert it, and bring his action because it pleases him at that moment to do so. A would-be defendant is reasonably entitled to ask that action shall be brought when the evidence, particularly in his own favor, is still available and at least relatively fresh. Nor is it unreasonable for him to assume, if the would-be plaintiff does nothing for a considerable period of time, that the latter has condoned the wrongdoer’s act or omission, and intends that the wrongdoer may arrange his affairs accordingly. Courts of equity traditionally adopted these views, and applied them in the doctrine of laches. The claimant who delayed bringing his claim for an unreasonable period of time was taken to have acquiesced in the circumstances brought about by the wrongdoing. (footnotes omitted)

. . .

54 Laforest J. [in M. (K.) v. M. (H.), [1992] 3 S.C.R. 6] also explores the concept of acquiescence, which is not only relevant to a consideration of laches, but is a separate equitable doctrine. The following comments in Waters’, supra, are instructive: (at p. 1254)

[The doctrine of laches] is also closely related to the doctrine of acquiescence which in recent years has increasingly become associated with delay in bringing action. Indeed, it is more likely that what the courts are really concerned with is implied acquiescence rather than delay itself. This is particularly true today when limitation statutes expressly apply to so many actions brought in equity…[Acquiescence] is something more than a mere abstaining from legal proceedings; it is an adoption established by some positive evidence of the transaction or dealing which the claimant now disputes. … (footnotes omitted)

55 This statement is consistent with Laforest J.’s explanation of acquiescence, and its relationship to laches, which is as follows:

100 Acquiesence [sic] is a fluid term, susceptible to various meanings depending upon the context in which it is used. Meagher, Gummow and Lehane, supra, at pp. 765-66, identify three different senses, the first being a synonym for estoppel, wherein the plaintiff stands by and watches the deprivation of her rights and yet does nothing. This has been referred to as the primary meaning of acquiescence. Its secondary sense is as an element of laches — after the deprivation of her rights and in the full knowledge of their existence, the plaintiff delays. This leads to an inference that her rights have been waived. This, of course, is the meaning of acquiescence relevant to this appeal. The final usage is a confusing one, as it is sometimes associated with the second branch of the laches rule in the context of an alteration of the defendant’s position in reliance on the plaintiff’s inaction.

101 As the primary and secondary definitions of acquiescence suggest, an important aspect of the concept is the plaintiff’s knowledge of her rights. It is not enough that the plaintiff knows of the facts that support a claim in equity; she must also know that the facts give rise to that claim: Re Howlett, [1949] Ch. 767. However, this Court has held that knowledge of one’s claim is to be measured by an objective standard; see Taylor v. Wallbridge (1879), 2 S.C.R. 616, at p. 670. In other words, the question is whether it is reasonable for a plaintiff to be ignorant of her legal rights given her knowledge of the underlying facts relevant to a possible legal claim.