Gifts of Cheques

Gifts of Cheques

Teixeira v Markgraf 2017 ONCA 819 dealt with the issue of inter vivos gifts of  cheques.

In the Teireira case the plaintiff was given a cheque to cash as a gift several days before the death of  the bank account holder.

The cheque was for $100,000 but there was only $84,000 in that particular account the cheque was issued on but there were other monies on deposit that the bank refused to transfer to make up the $100,000 without the express permission of the account holder.

The recipient of the cheque sued the bank and lost both at trial and on appeal.

The application judge was correct in holding that that the cheque was a gift inter vivos and that the law of gifts applied to the facts of this case.

37      The absence of consideration is one of the central indicia of a gift at law. By its very nature, a gift is a voluntary transfer of property to another without consideration: McNamee v. McNamee, 2011 ONCA 533, 106 O.R. (3d) 401, at para. 23. In Peter v. Beblow, [1993] 1 S.C.R. 980, McLachlin J. (as she was then) described the “central element of a gift at law” as the “intentional giving to another without expectation of remuneration”: at pp. 991-2.

38      The three elements of a legally valid gift identified by the application judge and referred to at para. 10, above, are well established:

(1) an intention to make a gift on the part of the donor, without consideration or expectation of remuneration;

(2) an acceptance of the gift by the donee; and

(3) a sufficient act of delivery or transfer of the property to complete the transaction: McNamee v. McNamee, at para. 24. All three requirements are essential: Mary Jane Mossman & William F. Flanagan, Property Law: Cases and Commentary, 2nd ed. (Toronto: Emond Montgomery Publications Limited, 2004), at p. 441.

39      The first two elements are not at issue on this appeal. The central issue here is whether the delivery of the cheque for $100,000 into the hands of the appellant could be a sufficient act of delivery of the gift. The wrinkle in this case is that there were insufficient funds in Mary’s account.


40      The delivery requirement has been a part of the modern law of gifts since the seminal case of Irons v. Smallpiece (1819), 2 B. & A. 551. The delivery requirement is an important distinguishing feature of gifts as compared to other methods of transferring property, such as by contract. As Mossman and Flanagan note in Property Law: Cases and Commentary, at p. 442:

The delivery requirement marks an important difference between contract law and the law of gifts. A contract involves an exchange of promises. A gift, a unilateral promise, does not. Contract law will enforce an exchange of promises (a “bargain” promise) with expectation damages. On the other hand, the law of gifts attaches no significance to a unilateral promise to pay in the absence of delivery.

41      The delivery requirement in the law of gifts continues to serve several important functions. It forces a would-be donor to consider the consequences of their expressed intention to make a gift and it furnishes tangible proof that a gift has in fact been made: see Bruce Ziff, Principles of Property Law, 6th ed. (Toronto, Thomson Reuters, 2014), at pp. 161-2. See also: Philip Mechem, “The Requirement of Delivery in Gifts of Chattels and of Choses in Action Evidenced by Commercial Instruments” (1926) 21 Ill. L. Rev. 341, at pp. 348-352.

Indicia of delivery

42      The most obvious form of delivery is the actual physical transfer of the subject matter of the gift from the donor to the donee such that the gift is literally given away: see Ziff, at p. 161.

43      However, in certain circumstances, such as where the item is unwieldy, courts have acknowledged that constructive delivery will suffice. In these cases, the critical questions have been whether or not the donor retained the means of control and whether all that could be done had been done to divest title in favour of the donee: see Ziff, at p. 165.

44      Ultimately, in order for a gift to be valid and enforceable, the donor must have done everything necessary and in his or her power to effect the transfer of the property: Kavanagh v. Lajoie, 2014 ONCA 187, 317 O.A.C. 274, at para. 13.

Gifts by Cheque

45      A gift of cash can be readily effected by delivery to the donee. But a gift of money by cheque can be problematic, due to the nature of a cheque. A cheque is not money. Nor is it a transfer of property. It is a direction by the drawer (the bank’s customer) to the drawer’s bank to pay a sum of money to the payee: Re Bernard (1911), 2 O.W.N. 716 (Div. Ct.), at p. 717. The direction can be revoked by the drawer at any time — for example, by a “stop payment” order, referred to in s. 167 of the BEA as “countermand”. Under s. 167, the bank’s authority to pay the cheque is terminated by countermand or when the bank receives notice of its customer’s death: McLellan v. McLellan (1911), 25 O.L.R. 214 (Div. Ct.), at p. 216; Re Beaumont, [1902] 1 Ch. 889, at p. 894.1

46      For these reasons, a gift by cheque is not complete when the cheque is given to the donee. It is only complete when the cheque has been cashed or has cleared: see Ziff, at p. 166. Thus, in Campbell v. Fenwick, [1934] O.R. 692 (C.A.), a cheque given to the donee three days before the donor’s death and cashed a day before her death was found to be a valid inter vivos gift of the amount of the cheque.

47      In Re Swinburne, above, a case strikingly similar to this one, the Court of Appeal for England and Wales held that the death of the donor ruins a gift inter vivos by way of cheque if the cheque is not deposited before the donor dies. There, the donor had given the defendant a cheque shortly before her death. The bank refused to honour the cheque because of concerns about the validity of the signature. Before anything else could be done, the donor died. On the date the cheque was presented, the donor had insufficient funds in her current account, on which the cheque was drawn, but sufficient money to cover the cheque in her deposit account. In light of evidence given by the bank that it might honour a cheque in such circumstances, the court considered the case as though the whole amount was in the current account.

48      Nonetheless, the court held that a gift inter vivos was not made out. In reaching this conclusion, Warrington L.J. wrote, at p. 44:

[I]n order to make an effectual gift inter vivos there must be an actual transfer of the subject of the gift or of the indicia of title thereto. A cheque is not money. It is not the indicia of title to money. A cheque is nothing more than an order directed to the person who has the custody of the money of the [donor] requiring him to pay so much to the person in whose favour the cheque is drawn.

49      Similarly, in Re Bernard, above, the deceased had written a cheque for $1,000 payable to her sister and put it in her “cash box” with a note that her sister should present the cheque one month after her death. She gave the key to the box to her niece, with instructions to give it to her solicitor after her death. The box was duly opened after her death and the cheque was discovered. Chief Justice Mulock held that the donee could not enforce her claim, stating, at p. 717:

A cheque is not a chose in action, but merely a direction to some one, who may or may not have in his possession funds of the drawer authorising him to pay to the payee a certain sum of money. Death of the drawer before presentation revokes such authority. Thus in this case the claimant is met with two difficulties, each fatal to her claim: one being that the cheque not having been acted upon by acceptance or payment, never lost its primary character of a mere cheque, which is not a chose in action, and is not the subject of donatio mortis causa; and the other being that the testatrix’s death revoked the banker’s authority to pay the cheque.

50      The appellant argues that death only terminates the bank’s authority to pay on a cheque, not the drawer’s duty to pay, citing Crawford’s The Law of Banking and Payment in Canada. While this statement of the law is correct with respect to the authority of the bank, there must still be some independent duty to pay in order for the payee to be able to enforce a claim against the estate. As Crawford goes on to state, in the same passage cited by the appellant, at p. 34-54.1:

However, since the bank has no duty to anyone but its customer to pay, unless it has certified the cheque . . . , the only recourse available to the holder is action against the estate, assuming that the liability continues under the applicable provincial law dealing with successions. If the holder is not a holder for value, as where a gift or donatio mortis causa has been attempted, he may retain proceeds collected before the bank learned of its customer’s death, but will be unable to compel completion by payment thereafter, at least in any common law province. [Footnotes omitted.]

51      The appellant also cites Campbell v. Fenwick, above, in support of the contention that death terminates any power of revocation of a cheque by the estate of the donor and leaves the original gift in full vigour and effect. However, in Campbell v. Fenwick, the donee had successfully deposited the cheque the day before the death of the donor and the estate was trying to recover the funds. The gift inter vivos was therefore complete and death did not intervene. Indeed, the donee in that case had learned that a cheque would be revoked by death and knew the importance of having the cheque cashed during the donor’s lifetime. She deposited the cheque the day after she received it for this reason.

52      I conclude that the application judge was correct. The purported gift of $100,000 by way of cheque failed because it was not delivered before the bank received notice of Mary’s death.

Partial Summary Trial Rebuked

Partial Summary Trial Rebuked

The Ontario Court of Appeal has issued a warning to lawyers that they should only bring partial summary judgment motions in the clearest of cases.

In a recent judgment in Butera v. Chown, Cairns LLP,2017, the court allowed a $5-million negligence action brought against a law firm to proceed to trial in its entirety and rolled back a lower court judge’s decision to dismiss part of the case.

“A motion for partial summary judgment should be considered a rare procedure that is reserved for an issue or issues that may be readily bifurcated from those in the main action and that may be dealt with expeditiously and in a cost effective manner.”

[23] In Hryniak v. Mauldin, 2014 SCC 7 (CanLII), [2014] 1 S.C.R. 87, the Supreme Court rewrote the law on summary judgments. Justice Karakatsanis, writing for a unanimous court, commenced her analysis by stating: “Ensuring access to justice is the greatest challenge to the rule of law in Canada today.” She described accessibility as being achievable through justice that is proportionate, timely and affordable. As noted in that decision, rr. 1.04(1) and (1.1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, specifically codify the proportionality principle:

1.04(1) These rules shall be liberally construed to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits.

(1.1) In applying these rules, the court shall make orders and give directions that are proportionate to the importance and complexity of the issues, and to the amount involved, in the proceeding.

[24] The Superior Court of Justice has since considered a multitude of summary judgment motions using the principles established in Hryniak.

[25] Hryniak does not address partial summary judgment per se except in the context of exercising the enhanced fact-finding powers contained in r. 20.04(2.1). In that regard, Karakatsanis J. observed that it may not be in the interests of justice to use the new fact-finding powers to grant summary judgment against a single defendant if the claims against other parties will proceed to trial in any event. Such partial summary judgment runs the risk of duplicative proceedings or inconsistent facts.
On the other hand, Karakatsanis J. noted that the “resolution of an important claim against a key party could significantly advance access to justice and be the most proportionate, timely and cost effective approach.”

[26] The pre-Hryniak appellate jurisprudence on partial summary judgment limited its availability. At para. 3 of Corchis v. KPMG Peat Marwick Thorne, [2002] O.J. No. 1437 (C.A.), this court applied Gold Chance International Ltd. v. Daigle& Hancock, [2001] O.J. No. 1032 (S.C.J.) to state that:

Partial summary judgment ought only to be granted in the clearest of cases where the issue on which judgment is sought is clearly severable from the balance of the case. If this principle is not followed, there is a very real possibility of a trial result that is inconsistent with the result of the summary judgment motion on essentially the same claim.

[23] Since Hryniak, this court has considered partial summary judgment in Baywood Homes Partnership v. Haditaghi, 2014 ONCA 450 (CanLII), 120 O.R. (3d) 438 and in Canadian Imperial Bank of Commerce v. Deloitte & Touche, 2016 ONCA 922 (CanLII), 133 O.R. (3d) 561. Baywood was decided in the context of a motion for summary judgment on all claims, but where only partial summary judgment was granted. CIBC involved a motion for partial summary judgment.

[24] In both Baywood and CIBC, the court analyzed the issue from the perspective of whether (i) there was a risk of duplicative or inconsistent findings at trial and whether (ii) granting partial summary judgment was advisable in the context of the litigation as a whole. In both cases, the court held that partial summary judgment was inadvisable in the circumstances.

[25] The caution expressed pre-Hryniak in Corchis is equally applicable in the post -Hryniak world. In addition to the danger of duplicative or inconsistent findings considered in Baywood and CIBC, partial summary judgment raises further problems that are anathema to the stated objectives underlying Hryniak.

[26] First, such motions cause the resolution of the main action to be delayed. Typically, an action does not progress in the face of a motion for partial summary judgment. A delay tactic, dressed as a request for partial summary judgment, may be used, albeit improperly, to cause an opposing party to expend time and legal fees on a motion that will not finally determine the action and, at best, will only resolve one element of the action. At worst, the result is only increased fees and delay. There is also always the possibility of an appeal.

[27] Second, a motion for partial summary judgment may by very expensive. The provision for a presumptive cost award for an unsuccessful summary judgment motion that existed under the former summary judgment rule has been repealed, thereby removing a disincentive for bringing partial summary judgment motions.

[28] Third, judges, who already face a significant responsibility addressing the increase in summary judgment motions that have flowed since Hryniak, are required to spend time hearing partial summary judgment motions and writing comprehensive reasons on an issue that does not dispose of the action.

[29] Fourth, the record available at the hearing of a partial summary judgment motion will likely not be as expansive as the record at trial therefore increasing the danger of inconsistent findings.

[23] When bringing a motion for partial summary judgment, the moving party should consider these factors in assessing whether the motion is advisable in the context of the litigation as a whole. A motion for partial summary judgment should be considered to be a rare procedure that is reserved for an issue or issues that may be readily bifurcated from those in the main action and that may be dealt with expeditiously and in a cost effective manner. Such an approach is consistent with the objectives described by the Supreme Court in Hryniak and with the direction that the Rules be liberally construed to secure the just, most expeditious, and least expensive determination of every civil proceeding on its merits.

[24] Lastly, I would observe the obvious, namely, that a motion for partial summary judgment differs from a motion for summary judgment. If the latter is granted, subject to appeals, it results in the disposal of the entire action. In addition, to the extent the motion judge considers it advisable, if the motion for summary judgment is not granted but is successful in part, partial summary judgment may be ordered in that context.

[25] Turning then to the substance of the second ground of appeal, the appellants submit that granting partial summary judgment on the misrepresentation issue provides minimal, if any, efficiency as the action is proceeding to trial on the negligence, breach of contract, and Arthur Wishart Act claims. The misrepresentation claims are largely intertwined with these other claims and partial summary judgment risks inconsistent results.

[26] The respondents reject these submissions, arguing that r. 20.05(1) recognizes the utility of partial summary judgment. The motion judge’s decision is entitled to deference and was appropriate for the litigation as a whole.

As explained in Hryniak, the exercise of powers under the summary judgment rule generally attracts deference. Here the motion judge made an extricable error in principle in failing to consider whether partial summary judgment was appropriate in the context of the litigation as a whole. As the appellants point out, the action is proceeding to trial on the Arthur Wishart Act claims, which include allegations of a breach of the duty of fair dealing and deficient disclosure, the claims in negligence, and for breach of contract. These claims are intertwined with the misrepresentation claims. An award of partial summary judgment in these circumstances may lead to inconsistent results to the extent the misrepresentation claims were not barred due to a limitation period. On the other hand, had the litigation as a whole been considered, partial summary judgment would not have been an appropriate award as it would not serve the objectives of proportionality, efficiency, and cost effectiveness.

Highest Court Encourages Alternatives to Trial

Highest Court Encourages Alternatives to Trial

The Supreme Court of Canada released its decision in Hryniak v. Mauldin (2014 S.C.C. 7, [2014] 1 S.C.R. 87) and encouraged alternative solutions to a trial.

In her decision, Karakatsanis, J. called for “a shift in culture” (para. 20). She recognized that the adjudication of civil disputes by way of a full trial has become illusory for many litigants (para. 24). She encouraged litigants and members of the judiciary to consider alternatives to a trial, including motions for summary judgment.

27      Karakatsanis, J. began her analysis of the issue of access to justice by emphasizing that “Our civil justice system is premised upon the values that the process of adjudication must be fair and just. This cannot be compromised.” (See para. 23.)

28      The principles of fairness and justice, the latter in particular, are reflected in Rule 20 of the Rules of Civil Procedure, R.R.O. 1990, O. Reg. 194. In determining whether there is a genuine issue requiring a trial, a judge hearing a motion for summary judgment is entitled to exercise fact-finding powers “unless it is in the interest of justice for such powers to be exercised only at a trial” (rule 20.04 (2.1)).

29      With respect to the interest of justice, Karakatsanis, J. concluded that, “What is fair and just turns on the nature of the issues, the nature and the strength of the evidence and what is the proportional procedure” (para. 59). She also emphasized consideration of the litigation as a whole:

The “interest of justice” inquiry goes further, and also considers the consequences of the motion in the context of the litigation as a whole. For example, if some of the claims against some of the parties will proceed to trial in any event, it may not be in the interest of justice to use the new fact-finding powers to grant summary judgment against a single defendant. Such partial summary judgment may run the risk of duplicative proceedings or inconsistent findings of fact and therefore the use of the powers may not be in the interest of justice. On the other hand, the resolution of an important claim against a key party could significantly advance access to justice, and be the most proportionate, timely and cost effective approach. (para. 60)

30      The Ontario Court of Appeal has, in a number of recent decisions, emphasized the obligation on a judge hearing a motion for summary judgment “to assess the advisability of the summary judgment process in the context of the litigation as a whole”. (See: Baywood Homes Partnership v. Haditaghi, 2014 ONCA 450, at para. 35 and Hamilton (City) v. Thier & Curran Architects Inc., 2015 ONCA 64, at para. 22.)

Adding, Substituting and Removing Parties to an Action

Adding, Substituting and Removing Parties to an Action

Stewart v Stewart 2017 BCSC 1532 also dealt with Rule 6-2 (7) that deals with adding, substituting or removing parties to a court action.

Rule 6-2(7)(a) provides:

(7) At any stage of a proceeding, the court, on application by any person, may, subject to subrules (9) and (10),
(a) order that a person cease to be party if that person is not, or has ceased to be, a proper or necessary party,

66 The plaintiff relies on Bilfinger Berger (Canada) Inc. v. Greater Vancouver Water District, 2014 BCSC 1588. There, a defendant sought to remove a plaintiff as a party on the basis that the plaintiff that was named as the “Joint Venture” was not a legal person in and of itself. Notwithstanding the fact that the other plaintiffs had acknowledged that they were jointly and severally liable for anything for which the Joint Venture might be liable, the court did not accept the defendant’s submission that the Joint Venture itself ought to be removed as being unnecessary with Justice Griffin stating:

a) on an application under Rule 6-2(7)(c), for the addition of a party, all that is required is that the application establish that there is a “possible cause of action”: Terasen Gas Inc. v. TNL Construction Services Ltd., 2011 BCSC 1345at para. 12;

b) under this sub rule there is also no requirement to demonstrate the likelihood that an allegation can be proven. The threshold is a low one: The Owners, Strata Plan LMS 989 v. Port Coquitlam (City), 2003 BCSC 1398at para.10;

c) it may be appropriate to name individuals as defendants under Rule 6-2(7)(b), even if it has been conceded that vicarious liability will attach to another named defendant: Edwards v. British Columbia, 2006 BCSC 710at paras. 13-21;

d) the test for joinder under Rule 6-2(7)(b) will be met where the involvement of the party is material in an evidentiary sense to ensure that all matters in the proceeding may be effectively adjudicated upon: British Columbia v. R.B.O. Architecture Inc., 1994 CarswellBC 1931 (S.C.) at para. 8; and

e) the test for adding or substituting a party is whether a party “ought to be have been joined as a party” or if their participation is “necessary”. A party is “necessary” if their participation is required to effectively adjudicate all matters at issue, whereas a party “ought” to be joined in situations including where it may “be more than mere convenience but less than a necessity”: Kitimat (District) v. British Columbia (Ministry of Energy and Mines), 2006 BCCA 562at paras. 28-29.

Reasonable Cause of Action Must Be Claimed

Reasonable Cause of Action Must Be Claimed

Stewart v Stewart 2017 BCSC 1532 discussed the law relating to the failure to disclose a reasonable cause of action in the notice of claim, which if upheld by the court  can lead to the dismissal of the claim.

52 The legal framework is well known and can be summarized as follows:

(a) the test under Rule 9-5(1)(a) is whether it is “plain and obvious”, assuming the facts plead are true, that the claim discloses no reasonable cause of action; or the claim is “certain to fail”: Hunt v. T & N, P.L.C., [1990] 2 S.C.R. 959; R. v. Imperial Tobacco Canada Ltd., 2011 SCC 42at para. 17;

(b) pursuant to Rule 9-5(2), no evidence is admissible on an application under Rule 9-5(1)(a) and reference may only be had to the pleadings (in this case the Amended NOCC) which are assumed to be true: McNaughton v. Baker (1988), 25 B.C.L.R. (2d) 17 (C.A.) at paras. 21-22;

(c) the Rule provides a mechanism for an attack on pleadings on the basis that the action cannot succeed as a matter of law: Drummond v. Moore, 2012 BCSC 496at para.16, citing International Taoist Church of Canada v. Ching Chung Taoist Association of Hong Kong Limited, 2011 BCCA 149at paras. 9-10;

(d) it is appropriate for the court to look behind the allegations that are based on assumptions and speculation, or sweeping allegations and subject them to a skeptical analysis: Young v. Borzoni, 2007 BCCA 16at paras. 30-34;

(e) guidelines to the “plain and obvious” rule include whether:

• there is a question fit to be tried regardless of complexity or novelty;
• the outcome of the claim is beyond a reasonable doubt;
• serious questions of law or questions of general importance are raised, or if facts should be known before rights are decided;
• the pleadings might be amended; and
• there is an element of abuse of process: Owners, Strata Plan LMS 1328 v. Surrey (City of), 2001 BCCA 693at para. 5.

53 The following principles also apply:

(a) if there is some realistic chance that the cause of action could be saved by a future development in the law, the court should allow the action to proceed. The law is not static and unchanging: Moses v. Lower Nicola Indian Band, 2015 BCCA 61at para. 41;

(b) a judge hearing a motion to strike pleadings founded upon a complex question of statutory interpretation is not obliged to come to a conclusion on the interpretation of the provisions in issue. The judge can leave the matter to trial in the exercise of his discretion: British Columbia (Director of Civil Forfeiture) v. Flynn, 2013 BCCA 91at paras. 13 and 15;

(c) any doubt on the plain and obvious test must be resolved in favour of permitting the pleading to stand: Citizens for Foreign Aid Reform Inc. v. Canadian Jewish Congress, [1999] B.C.J. No. 2016 (S.C.) at para. 34; and

(d) “an excellent statement of the test for striking out a claim” is found in Hunt v. Carey Canada Inc., being that “if there is a chance that the plaintiff might succeed, then [he] should not be driven from the judgment seat”: Odhavji Estate v. Woodhouse, 2003 SCC 69at para. 15.

54 In Chingee v. British Columbia, 2017 BCCA 250[Chingee], the Court of Appeal recently considered the approach to an application under Rule 9-5(1)(a) with Justice Harris stating:

[51] Although there is no dispute over the test to be applied in striking pleadings for not disclosing a reasonable cause of action, it is helpful to recall its rationale as explained by the Chief Justice in R. v. Imperial Tobacco Canada Ltd., 2011 SCC 42. In brief, the test is designed to weed out claims that have no reasonable prospect of success to ensure that only those claims that have some chance of success go to trial: paras. 17 and 19.

[20] This promotes two goods — efficiency in the conduct of the litigation and correct results. Striking out claims that have no reasonable prospect of success promotes litigation efficiency, reducing time and cost. The litigants can focus on serious claims, without devoting days and sometimes weeks of evidence and argument to claims that are in any event hopeless.

[52] This important gatekeeping tool is to be used with care, so as not to hinder the development of the law. Hence, the court assumes the facts pleaded are true and asks whether there is a reasonable prospect the claim will succeed. It is, however, incumbent on a plaintiff clearly to plead the facts relied on. A court can evaluate the possibility of success only on the firm basis of the pleaded facts: para. 22. It is, I think, also clear that the exercise of evaluating the prospects of success does not reduce to a mechanical exercise of checking whether the material elements of a recognized cause of action have been set out. The exercise must examine whether the pleaded facts underlying the cause of action establish a reasonable prospect of success.

Conflict of Interest: Disqualifying a Lawyer

Disqualifying a Lawyer for Conflict of Interest

Stewart v Stewart 2016 BCSC 2256 dismissed an application to have an acting lawyer disqualified as counsel for having a conflict of interest.

The court set out the criteria for such an application.

The two questions to be asked in determining whether there is a disqualifying conflict of interest are:

(a) Did the lawyer receive confidential information attributable to a solicitor-client relationship relevant to the matter at hand?

(b) Is there is a risk that that information will be used to the prejudice of the client? (MacDonald Estate v. Martin, [1990] 3 S.C.R. 1235 (S.C.C.) [MacDonald Estate]; Manville Canada Inc. v. Ladner Downs, [1993] B.C.J. No. 554 (B.C. C.A.), aff’g (1993), 63 B.C.L.R. (2d) 102 (B.C. C.A.).)

37 As was stated by Justice Bauman (as he then was), in Jackson Estate v. Ritch, 2003 BCSC 1942 (B.C. S.C.) [Jackson Estate] at para. 65, the first question involves two aspects: did the lawyer receive confidential information relevant to the matter at hand, and was the lawyer in a solicitor-client or near solicitor-client relationship with the applicant.

38 The near solicitor-client relationship arises in “circumstances where there has developed a relationship of confidence in the same or a related matter”: Jackson Estate at para. 59.

39 The analysis of whether a near solicitor-client or informal solicitor-client relationship existed involves considering whether the applicant “bared its soul” to the lawyer it seeks to disqualify: Jackson Estate at para. 67 referring to MacDonald Estate.

40 In Brookville Carriers Flatbed GP Inc. v. Blackjack Transport Ltd., 2008 NSCA 22 (N.S. C.A.), Justice Cromwell (as he then was), considered at paras. 50-53 the issue of when retainers are “related”:

50 Whether two retainers are related must be considered in light of the underlying purpose of the inquiry. In the MacDonald Estate analysis, the focus is on protection of the client’s confidential information. In that context, two matters will be sufficiently related to trigger the principle if, as Goudge J.A. put it in Chapters at para. 30, ” . . . it is reasonably possible that the lawyer acquired confidential information pursuant to the first retainer that could be relevant to the current matter.” The issue is not so much whether the subject-matter of the two retainers is the same, but whether confidential information learned in one would be relevant to the other. Ultimately, the “overriding policy” must be “that the reasonably informed person would be satisfied that no use of confidential information would occur” MacDonald Estate, p. 1260.

51 Under the principle relevant here, that concerning acting against a former client in a related matter, the focus is different. As the cases and commentators show, the scope of this duty is very limited absent confidential information being at risk. This broader continuing duty of loyalty to former clients is based on the need to protect and to promote public confidence in the legal profession and the administration of justice. What is of concern is the spectre of a lawyer attacking or undermining in a subsequent retainer the legal work which the lawyer did for the former client or of a lawyer effectively changing sides by taking an adversarial position against a former client with respect to a matter that was central to the previous retainer. Basinview is an example of the former: the new retainer involved the lawyer attacking or attempting to undermine the very legal services provided to the former client. Harris and Chiefs of Ontario are examples of the latter: the new retainer involved attacks on the honesty and integrity of the former client in relation to exactly the same sort of matters as the lawyer acted to defend in the previous retainer. In either type of case, the relationship between the two retainers must be very close so that the lawyer in the new retainer is attacking or undermining the value of the legal work provided to the former client or effectively changing sides in a matter that was central to the previous retainer.

52 It is important, in my view, that this principle not be applied too broadly. One must not lose sight of the important right of parties to retain and instruct the counsel of their choice or of lawyers to earn a living free of undue restriction. Moreover, one must not ignore the possible strategic use of applications to disqualify counsel. As Binnie, J. pointed out in Neil at para. 14, “[i]f a litigant could achieve an undeserved tactical advantage . . . by … using ‘the integrity of the administration of justice’ merely as a flag of convenience, fairness of the process would be undermined.”

53 It is also important that the scope of these duties be as clear as possible. To be avoided is an approach ” . . . on a case-by-case basis through a general balancing of interests, the outcome of which would be difficult to predict in advance.”: Strother at para. 51. This sort of uncertainty intrudes unduly into the rights of parties to retain counsel of choice, nourishes misuse of the principles for tactical purposes and generally undermines rather than reinforces public confidence in the legal profession and the administration of justice.
[Emphasis added.]

41 The applicable standard is that of a reasonably informed person, apprised of the facts: MacDonald Estate at para. 53. In making this determination, there should be a cautious approach to disqualification applications. The court should interfere with a party’s right to representation by counsel only in clear cases: Manville Canada Inc. v. Ladner Downs (1993), 63 B.C.L.R. (2d) 102 (B.C. C.A.) [Manville] at para. 51; Merrick v. Rubinoff, 2013 BCSC 2352 (B.C. S.C.) [Merrick] at para.14.

42 Both this court and the Court of Appeal have provided additional direction on the circumstances in which a disqualification application should succeed:

(a) to demonstrate that the current action is a related matter, there must be more than “a mere assertion of similarity”: LS Entertainment Group Inc. v. Wong, 2000 BCSC 1789 (B.C. S.C.) [LS Entertainment] at para. 53;

(b) “given the drastic nature of the remedy there should be compelling and cogent evidence which provides a sufficient connection between the retainers”: LS Entertainment at para. 54 citing Moffat v. Wetstein (1996), 135 D.L.R. (4th) 298 (Ont. Gen. Div.) at 326;

(c) disqualification ought only to occur where there is evidence of “real or actual mischief”. A “mere perception or appearance of a conflict of interest is not sufficient to find a disqualifying conflict of interest”. Instead, the court must have regard to reality rather than perceptions and appearances: Maedou Consulting Inc. v. 0887455 B.C. Ltd., 2015 BCSC 2009 (B.C. S.C.), para. 43; LS Entertainment at para. 70; Manville (S.C) at paras. 45-49;

(d) even where the MacDonald Estate requirements are met, disqualification is a discretionary remedy that is equitable in nature. Disqualification of the lawyer can only be justified if it prevents the imposition of a greater injustice on the party applying for the disqualification than that suffered by the party whose counsel is disqualified: Manville (S.C.) at para. 51; Merrick at para. 23; and

(f) generally, courts in this province have taken a cautious approach in ordering the removal of counsel contrary to the wishes of the client, thereby acknowledging the right of a litigant to the choice of his or her own counsel: Coutu v. Jorgensen, 2004 BCCA 400 (B.C. C.A.)at para. 31.


Amending Pleadings

Amending Pleadings

The Law regarding Amending pleadings was discussed in Director of Civil Forfeiture v Sanghera 2017 BCSC 863 where the director applied to amend the notice of claim which was opposed by the defendant.

[18]         Mr. Justice Davies clearly set out the law regarding amendments and pleadings commencing at para. 39 in British Columbia (Director of Civil Forfeiture) v. Violette, 2015 BCSC 1372 [Violette]:

[39]         In Mayer v. Mayer, 2012 BCCA 77 at para. 215, the Court of Appeal affirmed that the fundamental purpose of pleadings is to define the issues to be tried with clarity and precision, to give the opposing parties fair notice of the case to be met, and to enable all parties to take effective steps for pre-trial preparation.

[40]         Applications for leave to amend pleadings are considered on the same basis as applications to strike pleadings with the question being whether it is plain and obvious that the proposed amendments are bound to fail. In assessing that question, it is not determinative that the law has not yet recognized a particular claim. In its analysis, the court must be generous and err on the side of permitting an arguable claim to proceed to trial. See: McMillan v. McMillan, 2014 BCSC 546 at paras. 13-14, and cases cited therein.

[41]         In Peterson v. 446690 B.C. Ltd., 2014 BCSC 1531 at para.37, this Court summarized the general principles arising on an application to amend pleadings as follows:

[37]      Finally, the general principles arising on an application to amend pleading can be summarized as follows:

(a) Amendment to pleadings ought to be allowed unless pleadings fail to disclose a cause of action or defence: McNaughton v. Baker, [1988] 24 B.C.L.R. (2nd) 17 [(C.A.)].

(b) Amendments are usually permitted to determine the issues between the parties and ought to be allowed unless it would cause prejudice to party’s ability to defend an action: Levi v. Petaquilla Minerals Ltd., 2012 BCSC 776.

(c) The party resisting an amendment must prove prejudice to preclude an amendment, and mere, potential prejudice is insufficient to preclude an amendment: Jones v. Lululemon Athletica Inc., 2008 BCSC 719.

(d) Costs are the general means of protecting against prejudice unless it would be a wholly inadequate remedy.

(e) Courts should only disallow an amendment as a last resort: Jones, McNaughton, Innoventure S & K Holdings Ltd. et al. v. Innoventure (Tri-Cities) Holdings Ltd. et al., 2006 BCSC 1567.

Converting a Petition to an Action

Converting a Petition to an Action

Kent v Kent 2017 BCSC 1392 discussed converting a Petition to an Action when a court action has been commenced by a Petition and becomes mired in the litigation process, usually due to disputed facts, and requires the petition process to be converted to an action so that examinations for discovery, a trial, discovery of documents and such can be provided for as in an action commenced by a Notice of Claim. Petitions are generally sued when the facts and credibility will not be disputed and the case is argued by affidavits.

36 Rule 22-1(7)(d) of the Supreme Court Civil Rules empowers a court hearing a chambers proceeding to refer a matter to the trial list. Specifically, Rules 22-1(4) and 22-1(7)(d) provide as follows:

Rule 22-1 Chambers Proceedings
. . .
Evidence on an application

(4) On a chambers proceeding, evidence must be given by affidavit, but the court may
(a) order the attendance for cross-examination of the person who swore or affirmed the affidavit, either before the court or before another person as the court directs,
(b) order the examination of a party or witness, either before the court or before another person as the court directs,
(c) give directions required for the discovery, inspection or production of a document or copy of that document,
(d) order an inquiry, assessment or accounting under Rule 18-1, and
(e) receive other forms of evidence.
. . .

Power of the Court

(7) Without limiting subrule (4), on the hearing of a chambers proceeding, the court may
. . .
(d) order a trial of the chambers proceeding, either generally or on an issue, and order pleadings to be filed and, in that event, give directions for the conduct of the trial and of pre-trial proceedings and for the disposition of the chambers proceeding.

37 In British Columbia (Milk Marketing Board) v. Saputo Products Canada G.P., 2017 BCCA 247 and Robertson v. Dhillon, 2015 BCCA 469, the Court of Appeal recently clarified the applicable test for conversion into an action of a proceeding commenced by petition. The multifactorial test heretofore applied by the trial court of this Province has been based on Haagsman v. British Columbia (Minister of Forests) (1998), 64 B.C.L.R. (3d) 180 (S.C.), Terasen Gas v. Surrey (City), 2009 BCSC 627, and Boffo Developments (Jewel 2) Ltd. v. Pinnacle International (Wilson) Plaza Inc., 2009 BCSC 1701. In B.C. (Milk Marketing Board), the Court found that the framework adopted in the Boffo line of cases is similar to the test applied when determining whether a matter is suitable for summary trial under Rule 9-7. However, as held in Robertson and B.C. (Milk Marketing Board), the test for determining whether a matter should be converted into an action is not similar to the one under Rule 9-7. Rather, it is akin to an application for summary judgment under Rule 9-6 (i.e., whether, on all the relevant facts and applicable law, there is a bona fide triable issue): Robertson at paras. 55-56; and B.C. (Milk Marketing Board) at paras. 44, 46.

38 The Court of Appeal has long held that proceedings brought by petition should be referred to the trial list when there are disputes of fact or law, unless the party requesting the trial is bound to lose: B.C. (Milk Marketing Board) at para. 43.

39 The proper test, as explained in Robertson at paras. 55-56 and affirmed in B.C. (Milk Marketing Board) at para. 44, is as follows:

[44] In Robertson, the Court set out the test to determine whether a petition should be converted to a trial:

[55] On the hearing of a petition, a judge must be satisfied that there is no dispute as to the facts or law which raises a reasonable doubt or which suggests that there is a defence that deserves to be tried: Douglas Lake Cattle Co. v. Smith (1991), 54 B.C.L.R. (2d) 52 (C.A.) at 59. If such a dispute exists, the judge may refer the matter to the trial list, pursuant to R. 22-1(7) (former R. 52(11)(d)).

[56] The test is not that used to determine a summary trial. Rather it is akin to that on an application for summary judgment under R. 9-6. Mr. Justice Lambert summarized the task in Montroyal Estates Ltd. v. D.J.C.A. Investments Ltd. (1984), 55 B.C.L.R. 137 (C.A.) at 138-39:

We were referred by counsel for T& A Holdings Ltd. to the judgment of Esson J. (as he then was) in Progressive Const. Ltd. v. Newton, 25 B.C.L.R. 330, [1981] 2 W.W.R. 741, 117 D.L.R. (3d) 591 (S.C.), and particularly at p. 334. There Esson J. summarizes, in my opinion, accurately, the law in relation to establishing a defence on an application for summary judgment in these words [pp. 334-35]:

The cases do not establish an invariable rule as to what steps must be taken to resist a R. 18 application for summary judgment. On all such applications the issue is whether, on the relevant facts and applicable law, there is a bona fide triable issue. The onus of establishing that there is not such an issue rests upon the applicant, and must be carried to the point of making it “manifestly clear”, which I take to mean much the same as beyond a reasonable doubt. If the judge hearing the application is left in doubt as to whether there is a triable issue, the application should be dismissed.

In essence, if the defendant is bound to lose, the application should be granted, but if he is not bound to lose, then the application should be dismissed.
[Emphasis added in B.C. (Milk Marketing Board)]

40 Additionally, the Court held that the suggestion in Boffo that the mere existence of a bona fide triable issue is not in itself sufficient to warrant conversion to the trial list is contrary to the test established by the Court of Appeal: B.C. (Milk Marketing Board) at para. 46. Further, at paras. 47-48, the Court in B.C. (Milk Marketing Board) stated the following:

[47] I would note the fact that a matter is converted to an action does not necessarily mean that a full trial will be required. It still remains open to the parties to bring a summary trial application under Rule 9-7.

[48] Given the authorities in this Court, it is not open to this division to adopt the Boffo approach. A five-justice division would be necessary as it would require overruling previous decisions of this Court: Bell v. Cessna Aircraft Co., (1983) 46 B.C.L.R. 145 (C.A.). I should also note that although Haagsman, Terasen and Boffo all suggest a different test, in each of those cases the petition was converted into an action.

41 In B.C. (Milk Marketing Board) at paras. 49-52, the Court found that the trial judge had erred in principle in resolving the matter by applying the Boffo criteria. The trial judge failed to consider both whether the appellant, Saputo, raised a bona fide triable issue, and what the implications of such a determination would be. Moreover, he did not find that Saputo was bound to lose. In the result, the Court allowed the appeal and ordered that the petition be converted into an action. In Robertson at para. 60, the Court similarly found the chambers judge erred by failing to indicate his reasoning with respect to whether he was satisfied of the absence of a bona fide triable issue and whether he gave consideration to any substantive defences.

42 While Ms. Kent challenged the suitability of the Petition under Rules 2-1(d) and 2-1(g)(i) of the Supreme Court Civil Rules, I am satisfied that the Petition was properly brought. The issue is not so much whether the particular property is trust property, but whether the Trust Agreement should be enforced; and if it is, whether Ms. Kent is entitled to some compensation: McDonald v. Lau, 2016 BCSC 1651at para. 56. Consequently, the real question for determination is whether the Petition should be converted into an action pursuant to Rule 22-1(7)(d).

43 In light of the recent guidance from the Court of Appeal, I will apply the test enunciated in Robertson at paras. 55-56, as affirmed in B.C. (Milk Marketing Board) at para. 44. That test involves the petitioner satisfying this Court that there is no dispute as to the facts or law which raises a reasonable doubt or which suggests that there is a defence that deserves to be tried. The onus of establishing that there is not such an issue rests on the applicant, and must be carried to the point of making it “manifestly clear”, a standard similar to proof beyond a reasonable doubt. If the judge hearing the application is left in doubt as to whether there is a triable issue, the application should be dismissed. In essence, if the respondent is bound to lose, the application should be granted; but if the respondent is not bound to lose, the application should be dismissed.

Re-Opening a Trial: New Evidence

Re-Opening a Trial: New Evidence

Lambert v Peachman 2017 ONSC 4270 outlined the law relating to what is necessary in the form of new evidence to re-open a trial.


26      The principles and authority to re-open evidence of a trial are well established and noted by the Supreme Court of Canada in Sagaz Industries Canada Inc., Sagaz Industries Inc. and Joseph Kavana v. 671122 Ont Limited, formerly Design Dynamics Limited [2001] 2 R.C.S. to fall within the trial judge’s discretion but to be used “sparingly and with the greatest care”.

27      The Court is concerned with never ending litigation. The competing tensions are between finality to the hearing process and the need to prevent unduly protracted legal proceedings against the need to ensure that important and relevant evidence is not ignored, since doing so might lead to a substantial injustice (See Justice P. Lauwers at par. 16 in Jackson v. Corp. of the City of Vaughan, 2009 CanLII 717 (ONSC).

Test to Admit New Evidence

28      The test to re-open evidence of a trial to admit new evidence, is a two-prong test, both parts of which must be satisfied by the moving party:

  1. First, could the evidence have been obtained before trial by the exercise of reasonable diligence?
  2. Second, would the evidence, if presented at trial, probably have changed the result?

Availability of Evidence at Trial and Reasonable Diligence

29      The reasonable diligence requirement may be “relaxed in exceptional circumstances where necessary to avoid a miscarriage of justice” (See Degroote v. Canadian Imperial Bank of Commerce, [1999] O.J. No. 2313 (C.A.) at p. 2.). To avoid a miscarriage of justice a “trial judge has the discretion to permit a matter to be reopened and new evidence to be admitted even if the evidence could have been placed before the Court in the first instance” (See 130734 Ontario Inc. v. 1243058 Ontario Inc., [2001] O.J. No. 257).

30      Nordheimer J. noted at p. 3 – 4 in 1307347 Ontario Inc.:

It is also my view that a miscarriage of justice involves more than just a finding that a different result might have occurred. It involves a finding that, absent the reopening of the matter and the reversal of the original determination, a fraud would be perpetrated or the giving of perjured evidence or the deliberate misleading of the court would be countenanced.

31      In Qit Fer et Titane Inc. v. Upper Lakes Shipping Ltd. (1991), 3 O.R. (3D) 165, at p. 168, Gravely J. suggested that fraud was the usual requirement, but it may not be the only basis to find a miscarriage of justice:

Where justice demands it and particularly where fraud is involved or the court may have been deliberately misled, a judge is justified in departing from the diligence requirement in order to prevent a miscarriage of justice.

Summary of Special Costs

Summary of Special Costs Awarded by the Court

When one litigant is ordered to pay all or most of the other  litigants legal fees it is an award of special costs, and Siemens v Howard 2017 BCSC 1193 is a good summary of when the court will award special costs.

The single standard for the awarding of special costs is that the conduct in question properly be categorized as “reprehensible.” The basic principles are conveniently summarized by N. Smith J. in Gill v. Bassi 2016 BCSC 754, at paras. 9-16:

[9] An award of special costs is intended to chastise a party for reprehensible, scandalous or outrageous conduct, either in the circumstances giving rise to the cause of action or in the course of the litigation: Bradshaw v. Stenner 2012 BCSC 237at para. 9, leave to appeal ref’d 2012 BCCA 481.

. . .

[11] The circumstances under which special costs may be ordered were summarized in Mayer v. Osborne Contracting Ltd., 2011 BCSC 914 at para. 11:

(a) where a party pursues a meritless claim and is reckless with regard to the truth;

(b) where a party makes improper allegations of fraud, conspiracy, fraudulent misrepresentation, or breach of fiduciary duty;

(c) where a party has displayed “reckless indifference” by not recognizing early on that its claim was manifestly deficient;

(d) where a party made the resolution of an issue far more difficult than it should have been;

(e) where a party who is in a financially superior position to the other brings proceedings, not with the reasonable expectation of a favourable outcome, but in the absence of merit in order to impose a financial burden on the opposing party;

(f) where a party presents a case so weak that it is bound to fail, and continues to pursue its meritless claim after it is drawn to its attention that the claim is without merit;

(g) where a party brings a proceeding for an improper motive;

(h) where a party maintains unfounded allegations of fraud or dishonesty; and

(i) where a party pursues claims frivolously or without foundation.

. . .

[14] . . . 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”: Grewal v. Sandhu, 2012 BCCA 26at para. 107, leave to appeal ref’d 2012 CarswellBC 1815 (S.C.C.).

[15] Even if one assumes the plaintiffs’ evidence was dishonest as opposed to merely unreliable  and I made no explicit finding on that point dishonest testimony alone is not sufficient to warrant an order for special costs. There must be something more egregious in the impugned conduct for it to be considered reprehensible: Schwabe Estate v. Lisinski, 2005 BCSC 1284at para. 26; Mayer, at para. 13; 380876 British Columbia Ltd. v. Ron Perrick Law Corp., 2009 BCSC 1209at para. 25.

[16] There is a difference between a party who deliberately attempts to mislead the court and a party who fails to prove a case on a balance of probabilities because his or her evidence is not accepted . . .

9      The court must exercise restraint in awarding specials costs, and the party seeking special costs must demonstrate exceptional circumstances to justify an order for special costs: see Westsea Construction Ltd. v. 0759553 B.C. Ltd., 2013 BCSC 1352, at para. 73.