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December 2010

BRITISH COLUMBIA EDITION

Happy Holidays from all of us at OnPoint

Inside this Issue: Featured Cases: Civil Procedure; Personal Injury; Charges to the Jury- p.3 Wrongful Dismissal; Costs- p.4 Estates; Costs- p.5 Civil Procedure; Jurisdiction- p.7 Secured Transactions; Priorities- p.9

New: Classified Section- p.10

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Sobolik v. Waters, 2010 BCCA 523 Areas of Law: Civil Procedure; Personal Injury; Charges to Jury

BACKGROUND The parties were involved in a motor vehicle accident and the respondent suffered injuries. The appellant admitted liability and a jury quantified the damages suffered by the respondent. Among other grounds of appeal, the appellant challenges the judge’s charge to the jury with respect to calculating damages for loss of future earning capacity. The jury awarded $240,400 in damages for future loss of earning capacity. APPELLATE DECISION The appeal was allowed and a new trial ordered. A judge’s direction to a jury on the issue of future loss of earning capacity is governed by Earnshaw v. Despins (1990), 45 B.C.L.R. (2d) 380 (C.A.). The judge must instruct the jury to consider two questions: first, whether the plaintiff’s

earning capacity has been impaired by the injuries sustained by the conduct of the defendant, and second, what amount should be awarded for that impairment in light of all the evidence. The Court concluded that the trial judge erred by failing to properly instruct the jury as to the first question. The trial judge instructed the jury that the respondent was entitled to damages for her future loss of earning capacity rather than asking the jury to come to this conclusion based on the evidence tendered at trial. The Court also concluded that the trial judge erred in instructing the jury on the second question. The trial judge did not instruct the jury to consider whether the partial disability alleged by the respondent was permanent or would subside. A further error in the charge concerned the explanation of the standard of proof when assessing

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this head of damages. The trial judge repeatedly stated to the jury that the respondent was “entitled to” damages for her future loss of earning capacity, however, prior case law makes clear that the plaintiff bears the onus of proving a substantial possibility of future loss of earning capacity. The Court concluded that a properly instructed jury may have reached a different conclusion on the issue of future loss of earning capacity, and that the erroneous charge amounted to a miscarriage of justice. The Court ordered a new trial.

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Davidson v. Tahtsa Timber Ltd., 2010 BCCA 528 Areas of Law: Wrongful Dismissal; Costs Under Appeal: Justice Rice BACKGROUND

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he appellant was dismissed from his employment with the respondent Tahtsa Timber Ltd. (“Tahtsa�) without notice or pay in lieu of notice. Tahtsa alleged that the appellant crashed his truck into the side of a repair shop and then denied doing so. In an action for wrongful dismissal the trial judge found that the appellant had been wrongfully dismissed and fixed the notice period at 10 months. The trial judge concluded that the appellant had mitigated the losses attributable

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to the notice period by finding alternate work and dismissed the claim for wrongful dismissal with a costs award against the appellant. In addition to the claim for wrongful dismissal against Tahtsa, the appellant also alleged a conspiracy on the part of Tahtsa and Mr. Brienen, an employee of the repair shop where the accident occurred. The appellant alleged that Mr. Brienen defamed him, interfered with his contractual relations with Tahtsa and induced Tahtsa to terminate his employment. The

appellant was unsuccessful at trial with these claims and costs were awarded against him.

APPELLATE DECISION The appeal was allowed in part. The trial judge did not consider the possibility of awarding the appellant nominal damages. Nominal damages are available where a plaintiff establishes a cause of action but where compensatory damages are unavailable, for example, by reason of mitigation. Because damages are the only way to indicate the success of a plaintiff in making out a cause of action against a defendant, where there is no actual loss to compensate, an award of nominal damages permits the court to record a verdict in favor of the plaintiff. In this case, the Court fixed an award of nominal damages at $100 for his success in showing wrongful dismissal. The Court then determined that the costs award against the appellant ought to be reversed, with the appellant entitled to costs against Tahtsa. The appellant argued that his success in obtaining nominal damages against Tahtsa ought to give rise to a costs award against Tahtsa for the defamation and conspiracy claims. The Court disagreed, finding no credible evidence to support the claims, no conduct on the part of either respondent to support such a costs award, and that a costs award would not be just or fair in the circumstances. The Court upheld the costs award against the appellant in favor of Mr. Brienen.

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A Company Another way to do business is through BACKGROUND a company. A company is a separate legal entity that can undertake to do business and own property in its he parties were own name. A company has its own requirements to file pay involved intaxanreturns, action taxes, and meet other obligations. regarding variation A company paysthe tax at different rates than does an individual of their mother’sproprietor. will.

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may be circumstances TheThere appellant’s claim where it is tax-efficient to do business through a company orwas where liability for a variation issues make incorporation a prudent dismissed both at trial choice.

andThere on are appeal, although costs associated with incorporation, however. Before making an award for unjust a decision, you should carefully enrichment allowedand consider the costswas of incorporating carrying on an incorporated business at both levels. After and compare them to the benefits that would gained by doing so. trial,bethe judge awarded Professional adviceto is Rule costs pursuant recommended to assist you in making 57(15) of the Rules of this assessment. Court, which deals with Caution This article is not intended to provide costs where the parties a complete summary of issues and have mixed success. The requirements relating to individuals in business; it highlights a few trial judge ordered that preliminary considerations. The comments provided herein are based the respondents were on information available at the time entitled toare70 percent of writing and general in nature. We recommend that individuals of their costs and the consult their own tax advisors before appellant was entitled acting on information contained into this article, to ensure that their own 30 percent of her costs. specific circumstances and current tax legislation are taken into account. s

Kathryn G. Edwards, is a Partner [continued on theCA,next page] with Pagnanini Edwards Lam Chartered Accountants. Kathy@accountantsplus.ca

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The Society of Notaries Public of British Columbia

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Volume 19 Number 2 Summer 2010


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Gould v. Royal Trust Corp. of Canada (Cont.) APPELLATE DECISION The appeal was dismissed. The Court first noted that costs awards are discretionary and will only be subject to appellate intervention where there is an error in principle or the order is plainly wrong. The trial judge appropriately applied the three-step test for apportioning costs between litigants where the result of a trial brings mixed success to both. The first step of the test is to show that there were separate and discrete issues in the action and that although a party was unsuccessful on the whole, had success on one or more of the

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issues. In this case, the trial judge appropriately concluded that the appellant was, on the whole, unsuccessful in her claim for a variation of her mother’s will, but partially successful as she was awarded an amount for unjust enrichment. The second step is to show that there is a basis on which the trial judge could apportion the trial time spent on each of the separate issues. The trial judge considered and applied this step appropriately. Finally, the party seeking the reapportionment pursuant to Rule 57(15) must show that the apportionment would effect a just result. The Court rejected

the appellant’s contention that she enjoyed “substantial success” in the action and that she was entitled to her costs pursuant to Rule 57(9). The fact that the appellant made an offer to settle and obtained a result that reflected 78 percent of that offer was not indicative of “substantial success” in the action. Finally, the Court agreed with the trial judge that the issues were not inextricably linked and therefore not subject to dissection pursuant to Rule 57(15). The trial judge exercised his discretion to employ Rule 57(15). His familiarity with the trial process enabled him to determine that the issues could be separated and that cost apportionment was appropriate.

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North America Steamships Ltd. v. HBC Hamburg Bulk Carriers GmbH & Co. KG., 2010 BCCA 501

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Areas of Law: Civil Procedure; Jurisdiction BACKGROUND The parties entered a forward freight swap agreement (“FFA”), a form of derivative contract where no physical goods are conveyed between the parties but obligations arise based on the difference between the freight forwarding rate in the FFA and the rate quoted on the Baltic Exchange. The respondent, North America Steamships Ltd. (“NSL”), was the notional purchaser of freight capacity under the FFA, and was a company registered in BC. The appellant, HBC Hamburg Bulk Carriers GmbH & Co. KG (“HBC”), was the counterparty to the FFA and was based in Germany. The FFA was subject to the non-exclusive jurisdiction of the courts in

London, England and was to be governed and construed by English law. The respondent commenced bankruptcy proceedings in BC shortly after the appellant indicated that the FFA was in default due to the respondent’s financial distress. Although a number of issues regarding the FFA and settlement between the parties were outstanding, the chambers judge focused on the territorial jurisdiction of BC courts to adjudicate such claims and concluded that BC courts did have jurisdiction. [continued on the next page]

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604.879.4280 | info@onpointlaw.com North America Steamships Ltd. v. HBC Hamburg Bulk Carriers GmbH & Co. KG., (cont.) APPELLATE DECISION The appeal was allowed. The Court focused on the Court Jurisdiction and Proceedings Transfer Act (the “CJPTA”) to determine that BC courts lacked territorial jurisdiction over actions in relation to the FFA. The CJPTA codifies the assumption of jurisdiction by BC courts and requires a real and substantial connection between BC and the facts of the proceeding for a court in BC to have jurisdictional competence. Section 10 of the CJPTA outlines situations where a real and substantial connection is presumed to exist. Subsection (e) presumes a real and substantial connection where contractual obligations were to be performed in the province and subsection (h) presumes such a connection where the proceeding concerns a business carried on in the province. The Court concluded that the chambers judge erred in relying on these two subsections to find that BC courts had territorial competence over the proceeding. The Court evaluated the FFA in its entirety rather than focusing on where payments were directed following NSL’s bankruptcy and found that the FFA concerned shipping rates around the world, the rates were those published by the Baltic Exchange located in London, England, the rates were expressed in U.S. dollars, the broker who arranged the FFA and earned commission on the transactions was in Germany, and the contract explicitly indicated that it was governed by English Law and was subject to the non-exclusive jurisdiction of English courts. The Court concluded that these factors outweighed the fact that the respondent operated its business out of BC and found that a real and substantial connection between the proceeding and BC could not be presumed in reliance on s.10(e) of the CJPTA. The Court further held that s.10(h), requiring the proceeding to “concern a business” carried on in the province, was not satisfied. Although the FFA arose from business dealings in the province, NSL’s derivative contract business and the actions arising therefrom could not meet the threshold of “concerning a business” carried on in the province.

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Re: Perimeter Transportation Ltd., 2010 BCCA 509 CLICK HERE TO ACCESS THE JUDGMENT

Areas of Law: Secured Transactions; Priorities

BACKGROUND Perimeter is a bus

transport company and leased 3 buses from Century McMynn Leasing Partnership (“Century”) for a term of 8 years. Although the lease contained options to purchase and default provisions, the lease was not registered in the Personal Property Registry (the “PPR”) prior to Perimeter’s bankruptcy. Shortly after the lease of the buses, Century took a loan for $4.3 Million from GE Canada (“GE”). Part of the security for the loan was the 3 buses leased to Perimeter including all proceeds from the buses from leasing or rental. GE registered a financing statement in the PPR against Century. Three days after Perimeter made an assignment in bankruptcy, Century filed

financing statements in the PPR in respect of the 3 leased buses. The chambers judge determined that GE had priority over Perimeter’s trustee to deal with the buses on Perimeter’s assignment in bankruptcy. APPELLATE DECISION The appeal was dismissed. The Court’s analysis focused on the proper application of s. 30(2) of the Personal Property Security Act (the “PPSA”), which deals with leases in the ordinary course of a debtor’s business. The provision protects buyers or lessees of goods, in this case Perimeter as lessee of the buses, from the claims of creditors of the party from whom the goods were obtained, in this case, Century. The provision has an exception for situations where the buyer or lessee

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of goods knows that the sale or lease violates a security agreement. The Court provided a thorough review of case law and academic literature on the provision, including a detailed account of the policy behind the provision. A secured party who takes a security interest in goods in which they know the debtor transacts, in this case, buses, it can expect that its security interest will be defeated by transactions in the ordinary course of the debtor’s business. Likewise, the provision protects purchasers and lessees of goods from having to search the PPR to protect against security interests given by the party from whom they are acquiring the goods. The Court concluded that s.30(2) of the PPSA gave Perimeter’s trustee a leasehold interest in the buses, but that GE’s perfected security interest remained in tact and interest in the buses returned to GE once the lease came to an end. In this case, because the trustee surrendered the buses, terminating the lease interest, GE’s interest in the buses prevailed over that of the trustee.


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BC Take Five, December 2010