August 2011 B.C. Take Five

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August 2011

BRITISH COLUMBIA EDITION EDITION

INSIDE THIS ISSUE:

Cases:

P. 3- Worker’s Compensation; Occupational Disease

P. 5- Search and Seizure; Negligent Investigation; Damages

P. 7- Contracts; Property; Capacity; Notary Public; Breach of Professional and Fiduciary Duties

P. 10- Conflict of Interest; Disqualification

P. 12- Divorce; Spousal Support; Variation Order

P. 15- Classified Section: Job opportunities, sales of law practices, and other law-related postings.

P. -17- Who is OnPoint?

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Jensen v. Workers’ Compensation Appeal Tribunal, 2011 BCCA 310Areas of Law : Worker’s Compensation; Occupational Disease

Under Appeal : Justice Preston

The appellant in this case was Mr. Jensen. The respondent was the Workers’

Compensation Appeal Tribunal (“WCAT”). In February 1994, the appellant, a long-haul truck driver, fell while unloading his truck and suffered injuries to the right side of his back, right shoulder and right wrist. The Workers Compensation Board (the “Board”) approved his claim for compensation with respect to the injuries he suffered from the fall. Shortly after the incident, the appellant complained of swelling and pain in his joints which was later diagnosed as symptoms of mild poly arthritis. The appellant filed a claim for compensation for his arthritis but it was denied in July 1994 because the Board found no connection between the arthritic symptoms and the work-related injury suffered earlier that year. In October 1994, the appellant was diagnosed with rheumatoid arthritis requiring aggressive treatment. As the appellant’s condition severely limited his range of motion especially in his dominant right hand, he stopped working and

BACKGROUND

CLICK HERE TO ACCESS THE JUDGMENT

went on disability pension. In 2000, after reading about a possible link between trauma and rheumatoid arthritis, the appellant sought an extension of time to appeal the Board’s July 1994 ruling. In December 2003, after protracted proceedings, the Board upheld the finding of a case manager that the appellant’s rheumatoid arthritis was not linked to the February 1994 accident. On appeal, a vice chair of WCAT reached the same conclusion after receiving evidence during a hearing where the appellant was represented by counsel. Undaunted, the appellant elevated the matter to the Supreme Court for judicial review. The chambers judge dismissed the petition and upheld the decision of the WCAT. The appellant appealed the dismissal and asked the Court of Appeal to remit his case to the WCAT for reconsideration. He argued that the WCAT exceeded its jurisdiction when it only considered medical evidence in resolving his appeal.


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The appeal was dismissed. The Court of Appeal

agreed with the chambers judge that there was nothing in the WCAT decision that was patently unreasonable. The Court observed that contrary to the appellant’s contention, the WCAT vice chair’s decision was reached after a careful consideration of all evidence, both medical and non-medical. The WCAT decision was

also based on established policies relating to the adjudication of workers’ compensation claims. Since the cause of rheumatoid arthritis was unknown and the condition was not listed as an occupational disease under the schedule attached to the Workers Compensation Act, the appellant bore the burden of showing that his ailment was caused or aggravated

by the nature of his employment. The Court of Appeal agreed with the WCAT vice chair’s conclusion that medical opinions on the temporal relationship between the 1994 work-related injury and the onset of appellant’s rheumatoid arthritis were insufficient to support a finding of compensability. The parties were ordered to bear their own costs.


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Jensen v. Workers’ Compensation Appeal Tribunal (cont.)

APPELLATE DECISION

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The appellants were the Attorney General of Canada and the Canada Revenue

Agency (“CRA”). The respondent was Mr. Neumann. Mr. Neumann was the principal of Vantage Equipment Company Ltd (“Vantage”), a company engaged in buying and selling heavy equipment. Mr. Neumann conducted business out of his home in

Neumann to produce all the cash in the house, counted the money in his presence and made him sign a document acknowledging the amount. Although the officers had made it clear that he was not the subject of the criminal investigation, Mr. Neumann felt threatened by the officers’ presence in his house and was traumatized by the incident. He was later diagnosed with depression

Neumann v. Canada (Attorney General), 2011 BCCA 313Areas of Law : Search and Seizure; Negligent Investigation; Damages

Under Appeal : Justice Wilson

BACKGROUND

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Saanich which also served as the registered and records office of Vantage. During the course of an audit of the company’s books in 2005, the CRA discovered that Vantage had paid commissions to a Ms.B amounting to $400,000 from 2001 to 2004. As Ms.B had not reported this income for tax purposes, the CRA commenced a criminal investigation for tax evasion. On September 7, 2005, CRA officers accompanied by two armed policemen came to Mr. Neumann’s house with a search warrant in connection with the investigation of Ms. B. The officers took documents and computer files pertaining to Vantage transactions with Ms. B. They also asked Mr.

and post traumatic stress disorder resulting from the shock and distress he experienced during and after the search. Mr. Neumann sued the CRA for damages claiming that its officers were negligent in conducting their investigation and infringed his constitutional right to be secure against unreasonable search. After trial, the jury found in favour of Mr. Neumann and awarded him damages in the total amount of $1.3 million. The appellants appealed the verdict arguing, inter alia, that the CRA officers were not negligent in obtaining and executing the search warrant and that the search conducted at Mr. Neumann’s home was not unreasonable. The appellants also challenged the damages award.


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Neumann v. Canada (Attorney General), (cont.)

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APPELLATE DECISION

The appeal was allowed. The Court of Appeal observed that

the verdict was premised on the trial judge’s finding that the CRA was liable for the tort of negligent investigation because its officers owed a duty of care to the appellant and thus should have conducted the least intrusive search to obtain the documents they needed. Case law was cited explaining the duty of care owed by an investigator to a suspect of crime in conducting an investigation. The Court observed, however, that whether the same duty of care is owed to a third party had not been the subject of judicial consideration until this legal action was commenced. The Court of Appeal declined to rule on this novel issue, holding that the appeal may

be allowed for other reasons. The Court held that assuming that the CRA officers owed a duty of care to the appellant, there was no evidence showing that there was a breach of such duty. Given that the appellant had a close business relationship with Ms. B, it was reasonable for the lead investigator to opt for a search warrant as he was uncertain whether the appellant would voluntarily produce all the documents sought. The Court also found no negligence in the lead investigator’s failure to disclose to the issuing judge that the place to be searched was a residence. Even if the issuing judge had known this fact, there would have been no reasonable way to limit the scope of the search as it was not known in which areas of the house the appellant kept his computer files and documents. As the evidence revealed, the CRA officers limited their search only to the home office and the basement where the appellant worked and stored his files. Having concluded that the CRA officers were not negligent in obtaining and enforcing the search warrant, the Court found no basis for the claim that the appellant’s Charter right against unreasonable search was breached. Each party was ordered to bear its own costs.


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York v. York, 2011 BCCA 316Areas of Law : Contracts; Property; Capacity; Notary Public; Breach of Professional and Fiduciary DutiesUnder Appeal : Justice Blair

BACKGROUND

The appellants were Devey Susanna Theresa

York (“Devey”) and the Estate of Stanley James York (“Stanley”), represented by Devey as administrator. The respondents were Ken York (“Ken”) and Morely Stonehouse (“Stonehouse”), a notary public. Devey and Ken were the children of Stanley by different mothers. Ken was adopted by Stanley’s parents and lived with them during his childhood. Devey grew up and lived with her parents in their family home in Merritt, British Columbia. In 1989, Stanley transferred a one-half interest in the

Merritt home to Devey. Although the title to the property was registered in the names of Stanley and Devey as tenants in common, Stanley’s intention was to share ownership as joint tenants.. On August 21, 2003, Ken brought Stanley and Devey to Stonehouse’s office, where they signed a document transferring ownership of the Merritt property to Ken and Devey as joint tenants. Stonehouse prepared and registered the transfer of title to Ken and Devey. Ken paid for Stonehouse’s services. After Stanley’s death in 2005, Devey commenced an action on her own behalf and as administrator of Stanley’s estate seeking to nullify the 2003 transfer of the Merritt property to Ken and to her. She claimed that her father was incompetent when he signed the transfer and that she herself did not understand the nature and legal effect of the transaction. Devey also alleged that Stonehouse breached his professional and fiduciary duties as a notary public when he failed to explain to her the consequences of the transfer. The appellants interposed an alternative claim for damages. During trial, it was established that at the time of the transfer in 2003, Stanley and Devey were alcoholics, while Ken was



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York v. York, (cont.)

a recovered alcoholic. Devey claimed that on the day in question, Ken had plied her and Stanley with alcohol and induced them to sign the transfer. She alleged that neither Ken nor Stonehouse explained the nature and effect of the transaction. The trial judge dismissed the claims made on behalf of the Estate on the ground that Devey lacked standing. The trial judge also dismissed all of Devey’s claims against the respondents, holding that Devey failed to substantiate her allegations of fraud, inducement or diminished capacity. The judge also found that Devey

Records and DocumentationIf you are carrying on a business, you are required to keep adequate records that provide sufficient details and support to determine how much tax you owe. Estimates and incomplete information are not acceptable to CRA. In this regard, I refer you to CRA’s Guide RC4409 Keeping Records, which can be found on CRA’s Website.

A CompanyAnother way to do business is through a company. A company is a separate legal entity that can undertake to do business and own property in its own name. A company has its own requirements to file tax returns, pay taxes, and meet other obligations. A company pays tax at different rates than does an individual proprietor.

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did not suffer any loss as a result of the transfer as she retained her one-half interest in the property. The judge rejected Devey’s claim against the respondents for lost potential inheritance. On appeal, the appellants argued, inter alia, that the trial judge erred in dismissing the claims filed on behalf of the Estate. The appellants further contended that the 2003 transfer should have been set aside on the grounds of undue influence, unconscionable behaviour, or fraud committed by the respondents against Stanley and Devey. They claimed that the respondents breached their fiduciary duties and duty of care to the appellants. The appellants also faulted the trial judge for failing to assess damages.

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York v. York, (cont.)

APPELLATE DECISION

The appeal was allowed in part. The Court of Appeal sustained the dismissal of the

claims of the Estate and the claims against Ken. As for the dismissal of the claims against Stonehouse, the Court allowed the appeal. The Court of Appeal noted that the threshold issue was whether Stanley was competent when he transferred his interest in the Merritt property to Ken. The Court observed that, although the trial judge erred in summarily dismissing the claims of the estate, the appeal pertaining to the claims against Ken must still fail in light of the implicit

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finding of the trial judge that Stanley was competent at the time of the transfer in 2003. Although Stanley was an alcoholic, there was evidence on record showing that he knew and understood what he was doing when he signed the transfer. As for the claims against Stonehouse which the trial judge failed to consider, the Court ordered a new trial on the questions of whether he breached his professional and fiduciary duties to Devey and whether Devey is entitled to damages.


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CLS Catering Services Ltd. v. Mahil, 2011 BCCA 321Areas of Law : Conflict of Interest; Disqualification

Under Appeal : Justice Bruce CLICK HERE TO ACCESS THE JUDGMENT

BACKGROUND

The appellant in this case was Mr. Mahil. The

respondent was CLS Catering Services Ltd (“CLS”). Mahil was the controller of CLS. During the course of his employment, Mahil dealt with lawyers of Borden Ladner Gervais (“BLG”), the law firm that acted as corporate counsel for CLS. Mahil was also a director of Mahil and Kang Investments Ltd (“M&K”) which retained the services of BLG for the purpose of purchasing a UPS franchise. In 2008, shortly after Mahil ceased to be an employee of CLS, the company commenced two legal actions against him and other defendants for fraud and conversion, inter alia. In both actions,

CLS, represented by BLG, sought tracing orders against assets purchased by the defendants with money allegedly misappropriated from CLS Catering. Mahil sought the disqualification of BLG from the two actions on the ground of conflict of interest that allegedly arose as a result of BLG having acted for M&K. Mahil claimed that he had provided a BLG lawyer with confidential information about his personal assets in relation to the UPS franchise application. The lawyer who handled the UPS transaction for M&K denied having received Mahil’s personal financial information. The lawyer asserted that BLG only became involved in the UPS deal after M&K had acquired the franchise. The chambers judge dismissed Mahil’s application after finding that BLG’s retainer with M&K had no connection with and did not give rise to a potential conflict of interest in the CLS litigation. The judge found that no confidential information of Mahil could be used by BLG in the CLS actions. Mahil appealed, arguing that the chambers judge failed to consider that the M&K retainer and the CLS retainer were sufficiently related. The appellant also contended that the chambers judge erred in placing an onus on the appellant to provide “cogent and compelling” evidence of a relationship between the two retainers. He further argued that the chambers judge had erred by requiring him to prove that BLG received and considered confidential information when it dealt with the UPS transaction for M&K.




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The appeal was dismissed. The Court of Appeal held

that the two retainers would be considered sufficiently related if it was shown that the lawyer acquired confidential information pursuant to the first retainer that could be relevant to the subsequent matter. The Court upheld the finding of the chambers judge that the M&K and CLS retainers were not connected

because the information acquired by BLG pursuant to the M&K retainer was not relevant to the actions commenced by CLS against the appellant. Further, the information was not relevant to the tracing orders sought by CLS because M&K was not a party to the two actions and CLS was not making a claim against any of M&K’s assets. The Court of Appeal observed that the chambers judge used the phrase “cogent and compelling evidence” not in the context of a heightened onus but in contradistinction to bald assertions. The Court also rejected the appellant’s argument that the chambers judge required him to prove that BLG used or considered potentially relevant confidential information in the first retainer.

CLS Catering Services Ltd. v. Mahil, (cont.)

APPELLATE DECISION

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The appellant was Mrs. Walters. The

respondent was Mr. Walters. Mr. and Mrs. Walters divorced after a 23-year marriage. By consent, the Divorce Order provided, inter alia, that Mr. Walters would pay Mrs. Walters $1,850 monthly spousal support and that such amount may be reviewed at any time by either party upon a change in circumstances. When the Divorce Order was finalized, Mrs. Walters had been operating a cleaning, maintenance and restoration business from her home for 18 months. She also provided room and board to international students, but made very little profit from the service. During the marriage, Mrs. Walters was a homemaker and primary caregiver to the parties’ two children.


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Although she held some part-time jobs, her ability to work was limited due to certain health issues including osteoporosis. After the parties’ separation, Mr. Walters was employed by Diversified Properties (“DP”) at an annual salary of $85,000. He and his present common law partner also started an advertising business, Anonymous Advertising, which was later absorbed and incorporated by DP as a wholly owned subsidiary. Mr. Walters and his partner operated Anonymous Advertising as DP’s in-house advertising division. Mr. Walters also had health issues. He suffered a stroke in 2007, but this did not affect his ability to work. In 2009, Mr. Walters was laid off by DP. In lieu of severance pay, he and his partner received all the shares of

Walters v. Walters, 2011 BCCA 331Areas of Law : Divorce; Spousal Support; Variation Order

Under Appeal : Justice Metzger CLICK HERE TO ACCESS THE JUDGMENT

BACKGROUND

Anonymous Advertising for $100. Thereafter, they began operating the business out of their home. After he lost his job, Mr. Walters immediately advised Mrs. Walters of his change in circumstances and unilaterally reduced his monthly support payments from $1,850 to $474. Upon Mr. Walters’ application, a variation hearing was held. Mr. Walters presented the financial statements of Anonymous Advertising for the years 2007 and 2008 when it was still owned by DP. However, he failed to provide the chambers judge with the company’s financial statement for 2009 when he and his partner acquired the company shares and began operating the business out of their home. At the time of the variation proceedings,




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Walters v. Walters, (cont.)

the parties were found to have comparable capital assets. The chambers judge concluded that Mr.Walters had established a material change in circumstances arising out of his termination from employment. His gross annual gross income was calculated to be $30,000, based on evidence that he expected to earn $2,500 a month from his business. The chambers judge determined Mrs. Walters’s gross annual income to be $21,000, which was derived by adding her gross business

income of $11,590, less 20% business expenses, her honoraria of $10,500 for the international students’ room and board, and dividend and interest income of $1,400. Based on these findings, the chambers judge ordered the reduction of the monthly spousal support payable to $474 from June 1, 2009 to March 1, 2010, and then to $318 from April 1, 2010 and for every month thereafter unless the parties agreed on or the court ordered another amount. Counsel for respondent had suggested including a review condition in the Variation Order but this was not done. Mrs. Walters appealed the Variation Order arguing that the chambers judge erred in failing to consider her claim for compensatory support based on her role in the marriage. She contended that the chambers judge also erred in failing to consider relevant evidence in determining the parties’ respective annual incomes.



The appeal was allowed. The Court

of Appeal explained that in spousal support variation proceedings, the judge must consider such factors as the nature of the marriage, its economic consequences, the effects of its breakdown and the respective situations of the parties. The Court observed that the chambers judge only considered the parties’ respective incomes without looking at the compensatory factors that must be considered in arriving at a Variation Order. The Court found that Mrs. Walters was entitled to compensatory support in view of her


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role in the marriage and the economic disadvantages she experienced during and after the marriage. The Court also found that the Mrs. Walters required non-compensatory support, taking into account the length of the marriage and her financial dependence on Mr.Walters during their 23-year marriage. The Court of Appeal agreed with Mrs. Walters that the findings of the chambers judge that Mr.Walters’s income had no evidentiary basis as Anonymous Advertising’s 2009 financial statement was never presented. At the very least, the chambers judge should

have included a review condition upon the production of the 2009 financial statement. The Court also found that the chambers judge erred in imputing income to Mrs. Walters. He did not give sufficient allowance for Mrs. Walters’s business expenses as well as the costs she incurred in providing room and board to the international students. The Court also noted that Mrs. Walters’s investment income should not have been imputed to her as it was a non-recurring income. The matter was remitted to the Supreme Court for a new hearing.

Walters v. Walters, (cont.)

APPELLATE DECISION

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August 2011 B.C. Take Five

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