Western Weekly Reports

WESTERN WEEKLY REPORTS Reports of Cases Decided in the Courts of Western Canada and Certain Decisions of the Supreme Court of Canada 2016-VOLUME 4 (Cited [2016] 4 W.W.R.)

All cases of value from the courts of Western Canada and appeals therefrom to the Supreme Court of Canada

SELECTION EDITOR Walter J. Watson, B.A., LL.B.

ASSOCIATE EDITORS (Alberta) E. Mirth, Q.C. (British Columbia) Darrell E. Burns, LL.B., LL.M. (Manitoba) E. Arthur Braid, Q.C. (Saskatchewan) Greg Fingas, B.A., LL.B.

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THOMSON REUTERS One Corporate Plaza Customer Relations 2075 Kennedy Road Toronto 1-416-609-3800 Toronto, Ontario Elsewhere in Canada/U.S. 1-800-387-5164 M1T 3V4 Fax 1-416-298-5082 www.carswell.com Contact www.carswell.com/email Hyczkewycz v. Hupe 213

[Indexed as: Hyczkewycz v. Hupe] Mary Viola Hyczkewycz (Plaintiff / Respondent) and Paul Hupe (Defendant / Appellant) and Sharon Linda Hupe (Defendant) Manitoba Court of Appeal Docket: AI 15-30-08472 2016 MBCA 23 Richard J. Chartier C.J.M., Holly C. Beard, Christopher J. Mainella JJ.A. Heard: February 10, 2016 Judgment: February 10, 2016 Family law –––– Division of family property — Determination of ownership of property — Application of trust principles — Resulting and constructive trusts — Resulting trusts generally –––– Defendant man and defendant woman were engaged in matrimonial litigation — Plaintiff mother of woman brought action claiming she had beneficial interest in three properties registered in name of one or both defendants on ground of resulting trust — Defendant man brought successful motion for summary judgment to dismiss plaintiff’s claim based on indefeasibility of title provisions of s. 59 of Real Property Act — Master found that s. 59 of Act was absolute bar to any resulting trust claim in Manitoba and struck out statement of claim — Plaintiff’s appeal was allowed — Judge interpreted s. 59 of Real Property Act — Judge found that there was credible evidence that plaintiff might be able to rebut statutory presumption of in- defeasiblity of title under s. 59 of Act at trial — Judge held that defendant man had not established that he had prima facie defence to resulting trust claim — Judge could not conclude that plaintiff’s case was bound to fail — Defendant man appealed — Appeal dismissed — Trial of legal and factual issues was required — There were triable issues as to proper interpretation of s. 59 of Act given approaches in other provinces and case law in Manitoba — There were triable issues as to facts surrounding alleged resulting trusts. Civil practice and procedure –––– Summary judgment — Requirement to show no triable issue –––– Defendant man and defendant woman were engaged in matrimonial litigation — Plaintiff mother of woman brought action claiming she had beneficial interest in properties registered in name of defendants on ground of resulting trust — Defendant man brought successful motion for summary judgment to dismiss plaintiff’s claim — Plaintiff’s appeal was allowed — Judge interpreted s. 59 of Real Property Act — Judge held that defendant man had not established that he had prima facie defence to resulting trust claim — Judge could not conclude that plaintiff’s case was bound to fail — Defendant man appealed — Appeal dismissed — There were triable issues as to proper interpretation of s. 59 of Act and as to facts surrounding alleged resulting trusts — 214 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

Judges deciding motions for summary judgment were discouraged from making statements about law, where law was in dispute, if they were referring that same legal issue back for determination by another judge — Making statements as to interpretation of law in case where responsibility would fall to another judge in same case to interpret that same law was unnecessary use of judicial resources and jeopardized judicial comity. Statutes considered: Real Property Act, R.S.M. 1988, c. R30 s. 59 — considered

APPEAL by defendant from judgment reported at Hyczkewycz v. Hupe (2015), 2015 MBQB 134, 2015 CarswellMan 397, 56 R.P.R. (5th) 32, [2015] 9 W.W.R. 830, 63 R.F.L. (7th) 86, 320 Man. R. (2d) 126 (Man. Q.B.), allowing plaintiff’s appeal from judgment granting defendant’s motion for summary judgment to dismiss plaintiff’s claim for resulting trust.

C.B. Paul, for Appellant W.S. Gange, K.B. Bomback, for Respondent

Per curiam:

1 The defendant, Paul Hupe (the defendant), appeals the decision of the motion judge rejecting his request to dismiss, by way of summary judgment, the plaintiff’s claim that she is the beneficial owner of certain properties pursuant to the law of resulting trusts. This motion for summary judgment raises both disputed legal and factual issues. The legal issue relates to the interplay between section 59 of The Real Property Act, CCSM c R30 (the RPA), and resulting trusts, while the factual issues relate to whether there was, in fact, a resulting trust. 2 In coming to his decision, the motion judge provided his interpretation of section 59 of the RPA and then found that the evidence did not lead him to conclude that the plaintiff’s case must fail. On that basis, he dismissed the entire summary judgment motion, with the effect that both the legal and factual issues would have to be determined by another judge. In this case, the motion judge was not asked to decide the legal issue separate from the factual issue. 3 We are satisfied that there are triable issues as to the proper interpretation of section 59, given the approaches in other provinces and the case law in Manitoba, and also as to the facts surrounding the alleged resulting trusts. As the law is unsettled and there are material credibility issues Hyczkewycz v. Hupe Per curiam 215

regarding the parties, we are all of the view that this is not an appropriate case to be decided by summary judgment. A trial of these issues is required. 4 In reaching our decision, we are neither endorsing nor disagreeing with the interpretation of section 59 given by the motion judge. Whether that section is an absolute bar, a rebuttable presumption or something else is a question we think is best left for the trial judge to decide, with the benefit of a full record. 5 We would take this opportunity to say something about reasons where a judge hearing a motion for summary judgment decides not to grant summary judgment. Judges deciding motions for summary judgment are strongly discouraged from making statements about law, where the law is in dispute, if they are referring that same legal issue back for determination by another judge. A short endorsement that the moving party has not met the test for summary judgment for a stated reason(s) is all that is required. Making statements as to the interpretation of a law in a case where the responsibility will fall to another judge in the same case to interpret that same law is an unnecessary use of judicial resources and, more importantly, jeopardizes judicial comity; the trial judge is placed in the difficult position of potentially having to disagree with a colleague. 6 In the result, the appeal is dismissed with costs. Appeal dismissed. 216 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

[Indexed as: Garber v. Canada (Attorney General)] Kevin Garber, Respondent (Plaintiff) and Her Majesty The Queen in the Right of Canada as represented by the Attorney General of Canada and Her Majesty The Queen in the Right of Canada as represented by the Minister of Health, Appellants (Defendants) Philip Newmarch, Respondent (Plaintiff) and Her Majesty The Queen in the Right of Canada as represented by he Attorney General of Canada and Her Majesty The Queen in the Right of Canada as represented by the Minister of Health, Appellants (Defendants) Timothy Sproule, Respondent (Plaintiff) and Her Majesty The Queen in the Right of Canada as represented by The Attorney General of Canada and Her Majesty The Queen in the Right of Canada as represented by the Minister of Health, Appellants (Defendants) British Columbia Court of Appeal Docket: Vancouver CA41883, CA41919, CA41920 2015 BCCA 385 Saunders, Bennett, Garson JJ.A. Heard: May 27, 2015 Judgment: September 16, 2015 Civil practice and procedure –––– Disposition without trial — Stay or dismissal of action — Grounds — Another proceeding pending — Miscellane- ous –––– Three plaintiffs sought to have Canada’s laws and regulations that affected their use of medical marijuana declared unconstitutional and struck down — Defendant federal Crown submitted that because there was action in Federal Court that sought substantially similar relief, it would be in interests of justice to stay actions until Federal Court proceeding was determined — Su- preme Court of British Columbia declined to stay actions challenging constitutionality of Marihuana for Medical Purposes Regulations — Crown appealed — Appeal dismissed — Judge did not make error in principle and did not fail to give sufficient weight to all relevant considerations — Judge correctly approached task before her by referring to criteria for stay of proceedings — Judge recognized Federal Court proceedings would have material impact on issues in these actions but found that there were issues of fact and law in actions that would not be resolved by decision — Judge recognized risk of inconsistent re- Garber v. Canada (Attorney General) 217 sults but she found that risk was not avoided by stay but only postponed — Judge did not err in her discretionary analysis — Convenience to Crown in having test case that would decide common issues did not translate to preventing citizen from bringing action in Superior Court of his or her province — Crown’s argument that judge erred in declining to stay actions in Supreme Court of Brit- ish Columbia because Crown designated test case came very close to challenging ability of Supreme Court of British Columbia to manage its own process — It was within judge’s discretion to weigh various factors, including that Federal Court proceedings would not produce final order in these actions and that plaintiffs had raised some different issues — Judge provided principled reasons for refusing application and there was no basis to interfere with exercise of her discretion. Criminal law –––– Narcotic and drug control — Scope of statutory regulation — Constitutionality of legislation — Miscellaneous –––– Three plaintiffs sought to have Canada’s laws and regulations that affected their use of medical marijuana declared unconstitutional and struck down — Defendant federal Crown submitted that because there was action in Federal Court that sought substantially similar relief, it would be in interests of justice to stay actions until Federal Court proceeding was determined — Supreme Court of British Colum- bia declined to stay actions challenging constitutionality of Marihuana for Medi- cal Purposes Regulations — Crown appealed — Appeal dismissed — Judge did not make error in principle and did not fail to give sufficient weight to all relevant considerations — Judge correctly approached task before her by referring to criteria for stay of proceedings — Judge recognized Federal Court proceedings would have material impact on issues in these actions but found that there were issues of fact and law in actions that would not be resolved by decision — Judge recognized risk of inconsistent results but she found that risk was not avoided by stay but only postponed — Judge did not err in her discretionary analysis — Convenience to Crown in having test case that would decide common issues did not translate to preventing citizen from bringing action in Supe- rior Court of his or her province — Crown’s argument that judge erred in declining to stay actions in Supreme Court of British Columbia because Crown designated test case came very close to challenging ability of Supreme Court of British Columbia to manage its own process — It was within judge’s discretion to weigh various factors, including that Federal Court proceedings would not produce final order in these actions and that plaintiffs had raised some different issues — Judge provided principled reasons for refusing application and there was no basis to interfere with exercise of her discretion. Cases considered by Saunders J.A.: Ainsworth Lumber Co. v. Canada (Attorney General) (2001), 2001 BCCA 105, 2001 CarswellBC 278, 85 B.C.L.R. (3d) 62, 2001 D.T.C. 5136, 1 C.P.C. 218 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

(5th) 49, 149 B.C.A.C. 263, 244 W.A.C. 263, [2001] B.C.J. No. 255 (B.C. C.A.) — distinguished Allard v. Canada (2014), 2014 FC 280, 2014 CF 280, 2014 CarswellNat 1277, 2014 CarswellNat 1278, [2014] F.C.J. No. 412, [2014] A.C.F. No. 412, 451 F.T.R. 45 (F.C.) — considered Allard v. Canada (2014), 2014 FCA 298, 2014 CarswellNat 5126, 466 N.R. 173, [2014] F.C.J. No. 1241, 324 C.R.R. (2d) 78 (F.C.A.) — considered Canada (Attorney General) v. Law Society (British Columbia) (1982), [1982] 2 S.C.R. 307, 37 B.C.L.R. 145, [1982] 5 W.W.R. 289, 19 B.L.R. 234, 43 N.R. 451, 137 D.L.R. (3d) 1, 66 C.P.R. (2d) 1, 1982 CarswellBC 133, 1982 Car- swellBC 743, [1982] S.C.J. No. 70 (S.C.C.) — considered Conseil scolaire francophone de la Colombie-Britannique v. British Columbia (2013), 2013 BCSC 751, 2013 CarswellBC 1107, 47 B.C.L.R. (5th) 361, [2013] 11 W.W.R. 366, 283 C.R.R. (2d) 79 (B.C. S.C.) — considered Friends of the Oldman River Society v. Canada (Minister of Transport) (1992), [1992] 2 W.W.R. 193, [1992] 1 S.C.R. 3, 3 Admin. L.R. (2d) 1, 7 C.E.L.R. (N.S.) 1, 84 Alta. L.R. (2d) 129, 88 D.L.R. (4th) 1, 132 N.R. 321, 48 F.T.R. 160, 1992 CarswellNat 649, 1992 CarswellNat 1313, [1992] S.C.J. No. 1, EYB 1992-67211 (S.C.C.) — referred to Harelkin v. University of Regina (1979), [1979] 2 S.C.R. 561, [1979] 3 W.W.R. 676, 26 N.R. 364, 96 D.L.R. (3d) 14, 1979 CarswellSask 79, 1979 Carswell- Sask 162, [1979] S.C.J. No. 59 (S.C.C.) — referred to MiningWatch Canada v. Canada (Minister of Fisheries & Oceans) (2010), 2010 SCC 2, 2010 CarswellNat 55, 2010 CarswellNat 56, 47 C.E.L.R. (3d) 159, 397 N.R. 232, 99 Admin. L.R. (4th) 1, 315 D.L.R. (4th) 434, [2010] S.C.J. No. 2, [2010] 1 S.C.R. 6 (S.C.C.) — referred to R. v. Smith (2015), 2015 SCC 34, 2015 CSC 34, 2015 CarswellBC 1587, 2015 CarswellBC 1588, [2015] S.C.J. No. 34, [2015] A.C.S. No. 34, 20 C.R. (7th) 246, 472 N.R. 1, 386 D.L.R. (4th) 583, 323 C.C.C. (3d) 461 (S.C.C.) — referred to Wenngatz v. 371431 Alberta Ltd. (2013), 2013 BCCA 225, 2013 CarswellBC 1443, 86 E.T.R. (3d) 164, 35 C.P.C. (7th) 255, 44 B.C.L.R. (5th) 76, 362 D.L.R. (4th) 356, 337 B.C.A.C. 291, 576 W.A.C. 291 (B.C. C.A.) — considered 472900 B.C. Ltd. v. Thrifty Canada Ltd. (1998), 1998 CarswellBC 2830, 168 D.L.R. (4th) 602, [1998] B.C.J. No. 2944, 116 B.C.A.C. 233, 190 W.A.C. 233, 57 B.C.L.R. (3d) 332, [1999] 6 W.W.R. 416 (B.C. C.A.) — considered Statutes considered: Canadian Charter of Rights and Freedoms, Part I of the Constitution Act, 1982, being Schedule B to the Canada Act 1982 (U.K.), 1982, c. 11 Generally — referred to s. 6 — referred to Garber v. Canada (Attorney General) Saunders J.A. 219

Combines Investigation Act, R.S.C. 1970, c. C-23 Generally — referred to Controlled Drugs and Substances Act, S.C. 1996, c. 19 Generally — referred to s. 4 — referred to s. 5 — referred to Law and Equity Act, R.S.B.C. 1996, c. 253 s. 8 — referred to Regulations considered: Controlled Drugs and Substances Act, S.C. 1996, c. 19 Marihuana Medical Access Regulations, SOR/2001-227 Generally — referred to Marihuana for Medical Purposes Regulations, SOR/2013-119 Generally — referred to

APPEAL by Crown from decision reported at Garber v. Canada (Attorney Gen- eral) (2014), 2014 BCSC 835, 2014 CarswellBC 1312, [2014] B.C.J. No. 932 (B.C. S.C.), declining to stay actions challenging constitutionality of Marihuana for Medical Purposes Regulations.

J.E. Brongers, B.J. Wray, for Appellants K.I. Tousaw, for Respondents

Saunders J.A.:

1 Canada, as represented by the Attorney General of Canada and the Minister of Health, appeals from the dismissal of its application for a temporary stay of three actions, brought by Mr. Garber, Mr. Newmarch, and Mr. Sproule respectively. In the actions, the plaintiffs challenge the constitutional validity of the Marihuana for Medical Purposes Regula- tions, SOR/2013-119. The actions are similar to claims brought by different plaintiffs in the Federal Court known as Allard v. Canada, File No. T-2030-13. 2 In its application in the Supreme Court of British Columbia for a stay, Canada contended, as it does before us, that the similarity in the constitutional challenges mounted in these three actions to the constitutional challenges mounted in the Allard action, and the similarity in remedies sought in the actions in the two courts, weigh heavily in favour of a stay of the actions in the Supreme Court of British Columbia until Allard is determined. 220 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

3 In general terms, the possession and production of marihuana is prohibited by the Controlled Drugs and Substances Act, S.C. 1996, c. 19, subject to exceptions established by regulation. Such regulations allow distribution and use for medical, scientific and industrial purposes. 4 Over the last many years, courts in Ontario and British Columbia, and the Federal Court, have addressed constitutional challenges to the regulatory regime in place with respect to medical marihuana. In the result, Marihuana Medical Access Regulations, SOR/2001-227 established a scheme whereby individuals, with support of authorized medical practitioners, could have lawful access to marihuana through purchase directly from Health Canada, through their own production, or through production by a designated person. The regulations limited the amount of medical marihuana a patient could possess. 5 Between 2001 and 2013, the number of individuals authorized to obtain marihuana and the amounts of medical marihuana that the individuals could possess increased significantly. In response to that growth and to concerns over the structure and consequences of the scheme, Canada altered the regulatory framework. On June 7, 2013, the Marihuana for Medical Purposes Regulations at issue in these actions came into effect and the Marihuana Medical Access Regulations were repealed. The new regulations provide for individuals to possess marihuana to a limited amount with the support of an authorized healthcare professional. The new regulations also authorize the production of dried marihuana by licensed producers, and the sale and distribution of dried marihuana to individuals authorized to possess it. They do not permit individuals to grow their own marihuana or to designate another person to grow it for them as was the case under the Marihuana Medical Access Regulations; pa- tients are able to obtain their supply of marihuana for medical purposes from a licensed producer only. The amount of medical marihuana a person may possess is restricted to a maximum of 150 grams. As with the former regulations, the new regulations do not permit purchase of marihuana other than in a dried form. The latter aspect of the regulations however, has been found to be too narrow and a tailored declaration of invalidity of ss. 4 and 5 of the Controlled Drugs and Substances Act directed to medical needs has now issued: R. v. Smith, 2015 SCC 34 (S.C.C.). 6 The Federal Court action, Allard, was commenced in December 2013 by four plaintiffs, three of whom are users of medical marihuana and one of whom is a person who held a licence under the former Medical Access Garber v. Canada (Attorney General) Saunders J.A. 221

Regulations to produce marihuana for her common law spouse. Two months after Allard was commenced, the three actions giving rise to these appeals were filed in the Supreme Court of British Columbia. 7 In Allard the plaintiffs sought and were granted an interim injunction preventing repeal of the former Marihuana Medical Access Regulations with respect to the authorizations issued to them to produce or possess marihuana, effective until their constitutional rights are determined at trial, but subject to the exception that the current 150-gram limit for personal possession applies: Allard v. Canada, 2014 FC 280 (F.C.). Further, under the injunction, only dried marihuana may be produced and possessed by a patient. Canada has extended the application of that injunction to other persons in the same situation as the Allard plaintiffs. 8 An appeal of that injunction was heard and dismissed by the Federal Court of Appeal: Allard v. Canada, 2014 FCA 298 (F.C.A.). We are advised that the trial process is proceeding apace in the Federal Court. Since the hearing of this appeal a motion was brought in the Federal Court to vary the injunction to include additional terms, including as to the 150-gram limit. That application was dismissed by reasons for judgment issued July 15, 2015, forwarded to us. In those reasons, Justice Phe- lan states that the evidentiary phase of the Allard trial has been completed. 9 With the constitutional validity of the Marihuana for Medical Pur- poses Regulations before the Federal Court, Canada sought a stay of these three actions. In her reasons for judgment dismissing the application for a stay, the judge related that there are 90 claims in the Federal Court similar to the Allard claims, challenging the constitutionality of the Marihuana for Medical Purposes Regulations, and there are 24 claims in superior courts of the provinces, including the three proceedings before us and six others also commenced in the Supreme Court of British Co- lumbia. Some litigants in the other actions, at the request of the Federal Crown, have agreed to stay their actions. Seven of the actions in other provinces have been stayed in light of the proceedings in the Allard action, one action has been dismissed, and one has been discontinued. In the Federal Court, in particular, the many actions challenging the current medical marihuana regime are stayed on an interim basis pending the outcome of the Allard action, provided that the plaintiffs may bring applications for interim relief in the event the injunction currently in place is insufficient for the purposes alleged by those plaintiffs. 222 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

10 In the Supreme Court of British Columbia, the Federal Crown asked the court to defer to the Federal Court because the Federal Court has national jurisdiction. The Federal Crown said it is treating Allard as a national test case, and observes that the plaintiffs now have the benefit of the injunction issued by the Federal Court and upheld by the Federal Court of Appeal. It says that without a stay there is a prospect of inconsistent decisions from the Supreme Court of British Columbia and the Federal Court, which would have a negative impact upon the administration of justice in British Columbia and which could undermine the appli- cability and enforcement of either decision in this Province. 11 Madam Justice Griffin refused the application. She recognized her jurisdiction to stay the proceedings as affirmed in s. 8 of the Law and Eq- uity Act, R.S.B.C. 1996, c. 253, but said she was not persuaded she should exercise her discretion to give the relief sought. In doing so she paid particular attention to the factors listed in Conseil scolaire francophone de la Colombie-Britannique v. British Columbia, 2013 BCSC 751 (B.C. S.C.) at paras. 32-33. The judge observed that each plaintiff in these three cases pleads his unique medical situation and facts specific to his condition that he alleges make the current regime established by the Marihuana for Medical Purposes Regulations unworkable for him to the extent there is infringement of his Charter rights. In particular, the judge observed that with respect to at least one of the plaintiffs, there is the possibility that the limit on current maximum personal possession may not satisfy the daily dosage medically required by the plaintiff, a matter outside the terms of the Allard injunction. She reflects in her reasons the stated intention of counsel to amend the pleadings in each action to allege interference with the plaintiffs’ mobility rights protected by s. 6 of the Charter, an issue not within the claims before the Federal Court in Allard. The judge then observed that Allard may not resolve the litigation before her, saying, “it is equally possible that anything less than total victory by the plaintiffs in Allard will leave the claims of the plaintiffs in this proceeding unsatisfied and undetermined”. She held: [63] The issues being advanced in this litigation as well as in Allard must be determined in context of evidence and findings of fact. The findings of fact involving these plaintiffs may be different than the findings of fact involving the plaintiffs in Allard. [64] I am also not persuaded by the Federal Crown that it is contrary to the interests of the administration of justice to have more than one proceeding advance at one time, or that the prospect of inconsistent results should be avoided. There may well be multiple decisions from Garber v. Canada (Attorney General) Saunders J.A. 223

courts of different jurisdictions addressing the constitutionality of the MMPR. However, this may actually assist in the development of the law. The highest court of this land may one day grapple with these issues and may indeed find its deliberations assisted by having the record of evidence of more than one trial to consider. [65] Furthermore, I am not persuaded by the Federal Crown’s argument that there will be a wasting of legal resources if there is not a stay of all proceedings other than the Allard case. [66] It is one thing when litigants voluntarily agree to a temporary stay to save their own legal resources. But it is another thing to be subject to a temporary stay against the litigants’ desire to proceed. The only resources sought to be saved in those cases will be that of the Federal Crown as a common defendant. However, the Federal Crown is able to accomplish considerable efficiencies in these cases: it should have only one set of documents to produce; it can rely on most of the same witnesses and content of expert opinions in each case; and can recycle its legal arguments. ... [68] It may well be that the timing of litigation stages in this Court will take into account the timing of expected helpful judgments in other courts including the Federal Court. But since this Court does not control the proceedings in other courts, I am loathe to grant a temporary stay of these proceedings and thereby make the plaintiffs’ entire claims subject to proceedings involving other parties in another court. 12 On this appeal Canada contends that the judge erred by failing to consider: 1. the national application of a Federal Court decision on the constitutionality of the Marihuana for Medical Purposes Regulations, and the resulting legal consequences of potentially inconsistent orders from the Federal Court and the Supreme Court of British Co- lumbia; and 2. the fact that Canada is treating Allard as a national test case and that it agrees it will be bound nationally by the outcome in that case. 13 On its first ground of appeal, Canada says that there is potential for actual conflict between decisions in the courts of British Columbia and the Federal Court, positing the prospect of plaintiffs’ success in Allard and failure in British Columbia. This would be a situation, Canada says, in which Canada could be required to allow an individual to cultivate 224 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

medical marihuana in his or her residence but the same individual would face criminal prosecution before the British Columbia Supreme Court for home cultivation. This example, it says, shows the potential for actual irreconcilable conflict that weighs heavily in favour of a stay which, in error, the judge did not recognize. 14 On its second ground of appeal, Canada says that the judge erred in failing to give adequate weight to Canada’s position that it is treating Allard as a national test case. 15 Comprehensively, as factors that weigh in favour of a stay, Canada raises the experience of plaintiff’s counsel in Allard, the fact Allard was filed in the Federal Court before the plaintiffs commenced these actions, and the fact that, broadly speaking, the Allard claim challenges the constitutionality of contentious provisions of the Marihuana for Medical Purposes Regulations in a way that will have national application. Can- ada says that it will be wasteful to pursue these actions because they are unlikely to come to trial before a decision has been rendered in Allard, and it invokes the stays issued in other provincial superior courts as the example that should be followed in British Columbia. Last, Canada says the judge made too much of the differences between the pleadings in these actions and the pleadings in Allard. 16 In support of all its submissions, and because the case arises in the context of courts with jurisdictional overlap, Canada invokes the approach taken in cases discussing forum non conveniens, exemplified by 472900 B.C. Ltd. v. Thrifty Canada Ltd. (1998), 57 B.C.L.R. (3d) 332, 168 D.L.R. (4th) 602 (B.C. C.A.), applied in Wenngatz v. 371431 Alberta Ltd., 2013 BCCA 225 (B.C. C.A.) at para. 27. The issue of forum non conveniens, however, used to sort out the preferred jurisdiction in which proceedings should be brought, addresses parallel proceedings involving the same parties in different states. That is not the situation that is before us - the parties are not the same in the Federal Court and the Supreme Court of British Columbia. I have not found the forum non conveniens approach helpful. 17 This leaves us with the task of determining whether we should interfere with the order refusing to stay these actions. 18 It must be said, foremost, that the order appealed engages the discretion of the judge in managing the trial court’s processes. Accordingly it attracts a high degree of deference from this Court. As a general proposition, we may interfere with discretionary decisions of the trial court only when this court considers the judge acted on a wrong principle, or failed Garber v. Canada (Attorney General) Saunders J.A. 225

to give sufficient weight to all relevant considerations: Friends of the Oldman River Society v. Canada (Minister of Transport), [1992] 1 S.C.R. 3, 88 D.L.R. (4th) 1 (S.C.C.); Harelkin v. University of Regina, [1979] 2 S.C.R. 561, 96 D.L.R. (3d) 14 (S.C.C.); MiningWatch Canada v. Canada (Minister of Fisheries & Oceans), 2010 SCC 2, [2010] 1 S.C.R. 6 (S.C.C.). 19 In my view, neither of the grounds of appeal establishes an error in principle. Nor do the reasons of the judge demonstrate that she failed to give sufficient weight to all relevant considerations. 20 As to the principles applied by the judge, I consider she approached her task correctly, referring to the usual criteria for a stay of proceedings. She recognized that the related proceedings in the Federal Court will have a material impact on the issues that arise in these actions, but found that there were issues of fact and law raised in these pleadings, as drawn and as intended to be amended, that will not be resolved by Allard. She addressed the issue of economy and efficiency in the passage I have rep- licated. The stay sought is temporary, but in the event the challenge to the legislation in Allard is unsuccessful, the plaintiffs in this litigation will be advancing their additional bases for finding the impugned regulations are unconstitutional. In the event a stay has issued, they will do this later in time than they otherwise would have done. The temporary nature of the stay proposed and its potential duration, which does not appear to be long, does not greatly assist Canada, in my view. 21 There is, as the judge recognized, a risk of inconsistent results. How- ever, in the event the plaintiffs in Allard are successful, and assuming that result will be known before the conclusion of these actions, the litigation may be trimmed, if anything is left to be decided, to the additional claims or relief sought. In the event the plaintiffs in Allard are unsuccessful, the plaintiffs in this case still will be entitled to bring their actions, contending that stare decisis does not bind the courts of British Colum- bia. Therefore the potential for inconsistent verdicts is not avoided by issuing a stay; it is, at most, only postponed. On my reading of her reasons for judgment, the judge recognized the potential for inconsistent results and was not alarmed at the prospect. For the reasons I have just stated, I cannot say she erred in her discretionary analysis. 22 The second ground of appeal rests on Canada’s intention to treat Al- lard as a test case. No doubt Allard will sort out common issues relating to the authorizations and licences provided to individuals to possess, and possibly produce, marihuana in different forms. But the convenience to 226 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

Canada does not translate, in my respectful view, to foreclosing a citizen from bringing an action in a superior court of his or her province. It is not, by itself, a basis to stay proceedings if, in the considered view of the judge, a stay should not issue. At the hearing of this appeal, Canada strongly urged us to weigh the potential costs to the litigants and courts of proceeding in more than one jurisdiction on substantially the same issues, and observed that these plaintiffs, and other persons in Canada, by agreement will gain the advantage of the interlocutory injunction issued in Allard that has the effect of retaining some of the advantages perceived by plaintiffs to adhere to the former regulations. 23 Canada noted that an expedited hearing process in the Federal Court has been utilized, and compared the progress of Allard to the slower track of these actions. 24 In my view, these aspects do not provide a basis in principle to interfere with the judge’s order. That Allard has proceeded expeditiously is commendable, but is not a reason we may say the judge erred in declining to stay these actions. 25 These are not cases such as Ainsworth Lumber Co. v. Canada (Attorney General), 2001 BCCA 105 (B.C. C.A.), in which the same parties were before a provincial superior court and the Tax Court. Rather they are ones in which the plaintiffs seek to utilize the courts of general jurisdiction as contemplated by the constitutional design of Canada. In Canada (Attorney General) v. Law Society (British Columbia), [1982] 2 S.C.R. 307 (S.C.C.), a case arising from Mr. Jabour’s challenge to re- strictions upon lawyers advertising, the Supreme Court of Canada considered the role of provincial superior courts in relation to the Combines Investigations Act, R.S.C. 1970, c. C-23, a federal statute that often is the subject of litigation before the Federal Court. Justice Estey for the court reflected on the place in confederation of the provincial superior courts and of the Federal Court, which in 1970 became the successor to the Exchequer Court of Canada. He observed at 326-27: There is, however, another and more fundamental aspect to this issue. The provincial superior courts have always occupied a position of prime importance in the constitutional pattern of this country. They are the descendants of the Royal Courts of Justice as courts of general jurisdiction. They cross the dividing line, as it were, in the federal-provincial scheme of division of jurisdiction, being organized by the provinces under s. 92(14) of the Constitution Act and are pre- sided over by judges appointed and paid by the federal government (sections 96 and 100 of the Constitution Act). As was said by Pigeon Garber v. Canada (Attorney General) Saunders J.A. 227

J. in R. v. Thomas Fuller Construction Co. (1958) Ltd. et al., [1980] 1 S.C.R. 695, at p. 713: It must be considered that the basic principle governing the Canadian system of judicature is the jurisdiction of the superior courts of the provinces in all matters federal and provincial. The federal Parliament is empowered to derogate from this principle by establishing additional courts only for the better administration of the laws of Canada. Earlier in his judgment Pigeon J. quoted from Chief Justice Ritchie in Valin v. Langlois (1879), 3 S.C.R. 1, at pp. 19-20: ... These courts [provincially organized superior courts] are surely bound to execute all laws in force in the Do- minion, whether they are enacted by the Parliament of the Dominion or by the Local Legislatures, respectively. They are not mere local courts for the administration of the local laws passed by the Local Legislatures of the Provinces in which they are organized. They are the courts which were the established courts of the respective Provinces before Confederation, ... They are the Queen’s Courts, bound to take cognizance of and execute all laws, whether enacted by the Dominion Parliament or the Local Legislatures, ...... 26 After affirming that Parliament could not preclude a provincial superior court from determining the constitutional validity of legislation, Jus- tice Estey said at 328: In my view Parliament lacks the constitutional authority to so provide. To do so would strip the basic constitutional concepts of judicature of this country, namely the superior courts of the provinces, of a judicial power fundamental to a federal system as described in the Constitution Act. At the same time it would leave the provincially- organized superior courts with the invidious task of execution of federal and provincial laws, to paraphrase the Valin case, supra, while being unable to discriminate between valid and invalid federal statutes so as to refuse to “execute” the invalid statutes. 27 I recognize that Canada’s proposition is not that the Supreme Court of British Columbia lacks jurisdiction to hear the case. However, its proposition that the judge erred in declining to stay proceedings in the Su- preme Court of British Columbia because Canada had designated a case 228 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

in the Federal Court as the test case, comes very near to a challenge to the ability of the superior trial court in this province to manage its own processes. While saying the Supreme Court of British Columbia should defer to the Federal Court, the appellant is really saying in these circumstances it must defer to the Federal Court. Yet the path of two or more cases proceeding on similar or overlapping issues is well trod in Canada, and reflects the essential character of confederation, with architecture that respects the beauty of the differences between jurisdictions. 28 Earlier I set out much of the judge’s reasoning in rejecting the argument that these proceedings should await the conclusion of Allard, and in declining to defer progress towards the final resolution of these actions until after the Allard action is completed. This weighing of various factors, considering always that Allard, in any event, will not produce a final order in these actions and that these plaintiffs have raised some issues different than those being addressed in Allard, appears to me to be well within the discretion of the judge. It was open to her, of course, to stay the actions as was done elsewhere, but in my view it was not mandatory. It will also be open to the Supreme Court of British Columbia to manage its processes for efficient resolution of all the actions filed before it. However, here the judge provided principled reasons for refusing the application, having weighed the values engaged in the question, and I would leave it to the trial court to continue to manage these and the other actions. 29 I conclude there is no basis upon which we may interfere with the judge’s exercise of her discretion. I would dismiss the appeal.

Bennett J.A.:

I AGREE:

Garson J.A.:

I AGREE: Appeal dismissed. Haan v. Haan 229

[Indexed as: Haan v. Haan] Gordon Dean Haan, Respondent (Plaintiff/Defendant by Counterclaim) and Iva Mae Haan and Mitchell Owen Haan, Appellants (Defendants/Plaintiffs by Counterclaim) Alberta Court of Appeal Docket: Edmonton Appeal 1403-0263-AC 2015 ABCA 395 Frans Slatter, Barbara Lea Veldhuis, Frederica Schutz JJ.A. Heard: December 2, 2015 Judgment: December 14, 2015 Contracts –––– Statute of Frauds — Compliance with statute — Part performance — Miscellaneous –––– Grandparents owned home quarter and transferred title into joint names of grandmother and son — Title was then transferred into names of son, his wife, grandson and grandson’s wife — Son died and grandson and grandson’s wife divorced, with result being that title was in name of son’s wife and grandson — Son’s wife severed joint tenancy — Grand- son brought action alleging that there was family agreement when title was transferred into four names that joint tenancy would not be severed — Trial judge found that there was agreement not to sever joint tenancy — Trial judge found that Statute of Frauds applied but concluded that there was sufficient part performance that was unequivocally related to agreement not to sever joint tenancy to take agreement out of Statute — Son’s wife appealed — Appeal dismissed — Trial judge found body of evidence that demonstrated part performance of agreement not to sever joint tenancy — Trial judge examined circumstantial evidence and looked at acts of parties to see whether they were consistent with alleged agreement — Trial judge relied on fact that grandson and grandson’s wife moved to property and spent considerable amounts in improving, maintaining and upgrading it — Trial was also entitled to take into account that when grandson and grandson’s wife divorced she surrendered her joint interest and acknowledged that it was always intention that grandson end up with land — Having made findings of fact, trial judge then examined whether facts, as found, were unequivocally referable to alleged agreement — Trial judge was entitled to rely on circumstantial evidence to see if there was sufficient evidence to prove that parties entered into agreement and that facts unequivocally pointed to type of agreement that was alleged — Trial judge’s reasons did not disclose any overriding error. 230 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

Cases considered: Athey v. Leonati (1996), [1997] 1 W.W.R. 97, 140 D.L.R. (4th) 235, 81 B.C.A.C. 243, 132 W.A.C. 243, 31 C.C.L.T. (2d) 113, 203 N.R. 36, [1996] 3 S.C.R. 458, 1996 CarswellBC 2295, 1996 CarswellBC 2296, [1996] S.C.J. No. 102 (S.C.C.) — referred to B (Children), Re (2008), [2008] UKHL 35, [2008] 3 W.L.R. 1, [2008] 4 All E.R. 1, [2008] 2 F.L.R. 141, [2008] 2 F.C.R. 339, [2008] Fam. Law 619, [2008] Fam. Law 837, [2009] 1 A.C. 11 (U.K. H.L.) — referred to Booth v. Knibb Developments Ltd. (2002), 2002 ABCA 180, 2002 CarswellAlta 951, 312 A.R. 173, 281 W.A.C. 173, [2002] A.J. No. 957 (Alta. C.A.) — referred to Brownscombe v. Alberta (Public Trustee) (1969), [1969] S.C.R. 658, 68 W.W.R. 483, 5 D.L.R. (3d) 673, 1969 CarswellAlta 31 (S.C.C.) — referred to C. (R.) v. McDougall (2008), 2008 SCC 53, 2008 CarswellBC 2041, 2008 Car- swellBC 2042, 83 B.C.L.R. (4th) 1, [2008] 11 W.W.R. 414, 60 C.C.L.T. (3d) 1, 61 C.P.C. (6th) 1, (sub nom. H. (F.) v. McDougall) 297 D.L.R. (4th) 193, [2008] S.C.J. No. 54, 61 C.R. (6th) 1, (sub nom. F.H. v. McDougall) 380 N.R. 82, (sub nom. F.H. v. McDougall) 260 B.C.A.C. 74, (sub nom. F.H. v. McDougall) 439 W.A.C. 74, (sub nom. F.H. v. McDougall) [2008] 3 S.C.R. 41, [2008] A.C.S. No. 54 (S.C.C.) — referred to Creston Moly Corp. v. Sattva Capital Corp. (2014), 2014 SCC 53, 2014 CSC 53, 2014 CarswellBC 2267, 2014 CarswellBC 2268, 373 D.L.R. (4th) 393, 59 B.C.L.R. (5th) 1, [2014] S.C.J. No. 53, [2014] 9 W.W.R. 427, 461 N.R. 335, 25 B.L.R. (5th) 1, 358 B.C.A.C. 1, 614 W.A.C. 1, (sub nom. Sattva Capital Corp. v. Creston Moly Corp.) [2014] 2 S.C.R. 633 (S.C.C.) — referred to Deglman v. Guaranty Trust Co. of Canada (1954), [1954] S.C.R. 725, [1954] 3 D.L.R. 785, 1954 CarswellOnt 140, [1954] S.C.J. No. 47 (S.C.C.) — followed Erie Sand & Gravel Ltd. v. Seres’ Farms Ltd. (2009), 2009 ONCA 709, 2009 CarswellOnt 6035, 84 R.P.R. (4th) 157, 97 O.R. (3d) 241, 254 O.A.C. 377, 63 B.L.R. (4th) 161, 312 D.L.R. (4th) 111, [2009] O.J. No. 4179 (Ont. C.A.) — referred to Hill v. Nova Scotia (Attorney General) (1997), 142 D.L.R. (4th) 230, 206 N.R. 299, [1997] 1 S.C.R. 69, 157 N.S.R. (2d) 81, 462 A.P.R. 81, 60 L.C.R. 161, 1997 CarswellNS 10, 1997 CarswellNS 11, [1997] S.C.J. No. 7 (S.C.C.) — referred to Housen v. Nikolaisen (2002), 2002 SCC 33, 2002 CarswellSask 178, 2002 Car- swellSask 179, [2002] S.C.J. No. 31, 286 N.R. 1, 10 C.C.L.T. (3d) 157, 211 D.L.R. (4th) 577, [2002] 7 W.W.R. 1, 219 Sask. R. 1, 272 W.A.C. 1, 30 M.P.L.R. (3d) 1, [2002] 2 S.C.R. 235, REJB 2002-29758, 2002 CSC 33 (S.C.C.) — considered Haan v. Haan The Court 231

McNeil v. Corbett (1907), 39 S.C.R. 608, 1907 CarswellNS 180, [1907] S.C.J. No. 73 (S.C.C.) — considered Meston v. Gray (1925), 20 Sask. L.R. 321, [1925] 3 W.W.R. 656, [1925] 4 D.L.R. 887, 1925 CarswellSask 132 (Sask. C.A.) — considered North Vancouver (District) v. Tracy (1903), 34 S.C.R. 132, 1903 CarswellBC 19 (S.C.C.) — referred to Statutes considered: Statute of Frauds, 1677 (29 Cha. 2), c. 3 Generally — referred to

APPEAL by severer of joint tenancy from judgment finding that there was agreement not to sever joint tenancy and sufficient part performance that took agreement out of Statute of Frauds.

G.D. Heinrichs, Q.C., for Respondent B.A. Guido, for Appellants

The Court:

1 This appeal concerns an agreement by the joint tenants of the family home quarter that the joint tenancy would never be severed. Specifically it concerns whether that agreement is enforceable in the face of the Stat- ute of Frauds (1677), 29 Car. II, c. 3.

Facts 2 The home quarter was at one time owned by the Haan Grandparents, but in 1985 it was transferred into the joint names of grandmother Bar- bara and her son David. In 1996, as a result of a family meeting with a lawyer, the title was transferred into the joint names of four persons: son David and his wife Iva, and grandson Dean and his wife Cindy. David died in 2006, and Dean and Cindy divorced in 2007, resulting in the title being in the joint names of Iva and Dean. 3 In 2009 Iva severed the joint tenancy. Dean commenced these proceedings, and the trial judge found as a fact that there was a family agreement in 1996 that the joint tenancy would not be severed. This was to reflect the intention of grandfather Haan that the home quarter would pass to his eldest son David, and then to his eldest grandson Dean. Iva, represented by her attorney Mitchell Haan, does not challenge this fact finding on appeal, although she alleges that the agreement is unenforce- able by virtue of the Statute of Frauds. 232 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

4 The trial judge found there was an agreement not to sever the joint tenancy. He assumed that the Statute of Frauds applied, but concluded that there was sufficient part performance to take the agreement out of the Statute. He cited Booth v. Knibb Developments Ltd., 2002 ABCA 180 (Alta. C.A.) at paras. 25-7, (2002), 312 A.R. 173 (Alta. C.A.) for the legal test: part performance must be unequivocally related to the challenged agreement. The trial judge held that there was evidence which demonstrated that there was an agreement respecting the land, specifically an unequivocal agreement not to sever the joint tenancy. 5 The respondent argues that the Statute of Frauds is not engaged because the agreement not to sever the joint tenancy was a term of the 1996 agreement to transfer the land, which was in writing and fully performed. Alternatively, he supports the trial judge’s finding that there was sufficient part performance to make the agreement enforceable.

Issues and Standard of Review 6 The central issue on this appeal is whether the trial judge committed any reviewable error in concluding that there was sufficient part performance that was unequivocally related to an agreement not to sever the joint tenancy. 7 The interpretation of the Statute, and the meaning of terms in the legal test (such as “unequivocally”) are questions of law that are reviewed for correctness: Booth at para. 23. The requirements for the formation of a contract, including the requirement that certain contracts be evidenced in writing, is also an issue of law: Creston Moly Corp. v. Sattva Capital Corp., 2014 SCC 53 (S.C.C.) at para. 53, [2014] 2 S.C.R. 633 (S.C.C.). Whether evidence is admissible is likewise a question of law. 8 The legal test having been correctly stated, whether there is sufficient evidence to meet that test is a mixed question of fact and law. Mixed questions of fact and law call for a “higher standard” of review, because “matters of mixed law and fact fall along a spectrum of particularity”: Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235 (S.C.C.). Def- erence is still, however, owed to the findings of the trial judge on the factual foundation of the conclusion.

The Statute of Frauds 9 The Statute of Frauds recites that it was enacted for the “... preven- tion of many fraudulent practices which are commonly endeavored to be upheld by perjury ...”. The mischief arising from claimants asserting oral Haan v. Haan The Court 233

agreements was to be avoided by requiring that certain contracts be evidenced by “some memorandum or note thereof ... in writing and signed by the party to be charged therewith ...”. Contracts respecting land “created by livery and seisen1 only or by parole” would not be enforced absent such a writing. 10 It quickly became apparent to the common law judges that the Statute might itself become an instrument of fraud (or at least injustice) if it was strictly enforced with respect to contracts that were wholly or partly performed: Hill v. Nova Scotia (Attorney General), [1997] 1 S.C.R. 69 (S.C.C.) at para. 10. The courts developed the concept of “part performance” as an exception. If a contract concerning land was partly performed, that could displace the need for a note or memorandum in writing signed by the party to be charged. 11 It was one thing to create an exception that displaced the need for a memorandum in writing, but something else to completely nullify the Statute’s operation. The thrust of the Statute was that contracts concerning land could not be proved by parol evidence alone. Thus, part performance might be an exception, but it could not, in effect, mean that the underlying contract could be proven by parol evidence. In developing the “part performance” exception, a balancing of the competing considerations was required. An important factor in the case law became that the part performance must be “unequivocally” related to the alleged contract. 12 In McNeil v. Corbett (1907), 39 S.C.R. 608 (S.C.C.) at pp. 611 -2 Duff J stated the rule in the following way: With great respect, moreover, I must disagree with the view of the court below that the plaintiff has made out a case enabling him to take advantage of the doctrine known as the doctrine of part performance. A condition of the application of that doctrine is thus stated by Lord Selborne, in Maddison v. Alderson, 8 App. Cas. 467, at page 479: All the authorities shew that the acts relied upon must be unequivocally, and in their own nature, referable to some such agreement as that alleged; i.e. to an agreement respecting the lands themselves; and, as further explained in that case, a plaintiff who relies upon acts of part per-

1 “Livery and seisen” was an ancient method of conveying land orally, often accompanied by symbolic acts like handing over a twig or branch, followed by an actual change of possession during the life of the feoffor. 234 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

formance to excuse the non-production of a note or memorandum under the Statute of Frauds, should first prove the acts relied upon; it is only after such acts unequivocally referable in their own nature to some dealing with the land which is alleged to have been the subject of the agreement sued upon have been proved that evidence of the oral agreement becomes admissible for the purpose of explaining those acts. It is for this reason that a payment of purchase money alone can never be a sufficient act of performance within the rule. (emphasis added) In that case, it was shown that although consideration had changed hands, that consideration might have related to any number of different agreements, and so was not sufficient to overcome the requirement for a note or memorandum in writing. 13 McNeil was followed in another leading case, Deglman v. Guaranty Trust Co. of Canada, [1954] S.C.R. 725 (S.C.C.). The court of appeal had opined that it was sufficient if the part performance was “consistent with” the alleged agreement. At p. 734 Cartwright J, for the majority, disagreed with this contention, citing McNeil and quoting Meston v. Gray, [1925] 4 D.L.R. 887 (Sask. C.A.) at p. 888: ... In order to exclude the operation of the Statute of Frauds, the part performance relied upon must be unequivocally referable to the contract asserted. The acts performed must speak for themselves, and must point unmistakably to a contract affecting the ownership or the tenure of the land, and to nothing else. The concepts are neatly illustrated by Deglman, where the claimant had lived with his elderly aunt for many years, and had admittedly performed personal services for her. When she died, he claimed an oral agreement that he would get a piece of land in return for the services he had provided. The asserted part performance to get around the Statute of Frauds was that he had in fact provided personal services to her. 14 In Deglman there were three possible explanations: 1) The claimant provided the services to his aunt out of natural love and affection; 2) He provided the services in return for room and board; or 3) He provided the services under a contract that his aunt would leave him the piece of land on her death. When the cases say the acts of part performance must “speak for themselves”, it means that the acts, looked at independently, must point to the third option, namely the asserted contract. The claimant cannot argue backwards, by saying that: “I provided services, therefore there must be a contract”, as that would undermine the premise of the Statute of Frauds that contracts cannot be proven by parol evidence. The Haan v. Haan The Court 235

requirement that the evidence “must point unmistakably to a contract affecting the ownership or the tenure of the land”, signals that the part performance had to relate to a contract respecting a transfer of ownership of the land and not, for example, a contract whereby room and board was exchanged for services. That explains the reference to “and to nothing else”. Unless the evidence points “unequivocally” to the type of contract alleged, the Statute of Frauds will preclude its enforcement. 15 The discussion in particular cases is invariably influenced by the facts before the court. In some cases the requirement of evidence about a contract is emphasized, and in other cases the requirement in the forefront is that the part performance be “unequivocally” related to the alleged agreement. Thus, the case law hints at a multi-part analysis: (a) First, the claimant has to “prove the acts relied upon”: McNeil at p. 611. The claimant must prove, on a balance of probabilities, what the parties said and did up to and after the time of the alleged agreement, as well as the acts said to constitute part performance. (b) Secondly, the claimant must show that the acts proven are “referable in their own nature to some dealing with the land”: McNeil at p. 611; Booth at para. 27. In other words, the acts must not be equally explainable as being merely a coincidence, the product of social interaction out of natural love and affection, or possibly an agreement of some kind that did not relate to the land itself. This must be done otherwise than by relying on the part performance. As noted, the claimant cannot argue backwards by saying that there was part performance, and therefore there must have been an antecedent agreement, as that would unacceptably undermine the operation of the Statute. (c) Thirdly, at this point “evidence of the oral agreement becomes admissible for the purpose of explaining those acts”: McNeil at p. 611; Booth at para. 27; Erie Sand & Gravel Ltd. v. Seres’ Farms Ltd., 2009 ONCA 709 (Ont. C.A.) at paras. 75, 87, (2009), 312 D.L.R. (4th) 111 (Ont. C.A.). Once the essential background facts have been proven on a balance of probabilities, the parol evidence about the agreement becomes admissible to explain the nature of the agreement, and to show how the background facts and the part performance relate to it. At the second and third level the test is strict: the claimant has to prove that the part performance was “unequivocally” related to the very type of contract alleged. Part performance that is “consistent with” several dif- 236 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

ferent types of contractual arrangement is insufficient: Booth at paras. 18-9. Thus, for example, the test is not met if the part performance is equally consistent with a transfer of ownership, a lease for a term of years, or a loan with the land given as security. If the test is met, there is sufficient part performance to dispense with the need for a note or memorandum in writing. 16 The analytical model is clear, but it is sometimes difficult to apply. Even though there is a multi-part test, this does not mean that there will be a bifurcated trial. The trial judge will hear evidence about all aspects of the case. Evidence about what the parties said and did with respect to the land will almost invariably overlap with evidence about the acts of part performance. A trial judge must commence with factual findings, and must accordingly ensure that evidence admissible on one aspect of the test is not used on issues where it is inadmissible. 17 This analytical model also does not mean that no parol evidence will be admissible at a trial involving the Statute of Frauds. As in this case, there will always be oral evidence about what the parties said or did. What the statute specifically prevents is the use of parol evidence to prove the existence of the very agreement; oral evidence that “We agreed on this”, is not admissible to prove a contract. Other parol evidence to the same effect is also excluded. Admissible parol evidence will fall loosely into two categories: (a) Evidence about what the parties did or said with respect to the land that is sufficient to meet the first parts of the test, namely that there was some sort of agreement about the land. In other words, the observed conduct of the parties respecting the land is not just coincidental, or explainable by something other than some sort of agreement. (b) Once an agreement is proven on a balance of probabilities, then the claimant is entitled to introduce evidence showing part performance that is unequivocally related to the type of contract alleged. The evidence of part performance is not, however, admissible to prove the very existence of the underlying agreement which is the subject of the first parts of the analysis. To repeat, direct parol evidence about “what we agreed to” is only admissible at the final stage, and then only to demonstrate the kind of agreement that the evidence of partial performance is said to demon- Haan v. Haan The Court 237

strate. The burden on the trial judge is to ensure that the evidence is only used on those issues for which it is admissible. 18 The Statute of Frauds also does not displace the ordinary rules of evidence and proof. Circumstantial evidence is still examined at the appropriate stages of the analysis to see if it supports an inference that there was an agreement, and if so what type of agreement. It is not an error to say that circumstantial evidence is “consistent with” certain facts; this is not the same thing as saying that the part performance is “consistent with” the alleged type of agreement. The former is an analytical method of proof; the latter is part of the substantive legal test. Further, the circumstantial evidence must be examined as a whole, not piecemeal, to see if it supports the necessary inferences: Brownscombe v. Alberta (Public Trustee), [1969] S.C.R. 658 (S.C.C.) at p. 664. 19 From the opposite perspective, part of the legal test for “part performance” is the requirement that part performance be “unequivocally” related to the type of agreement alleged. This legal requirement does not change the burden of proof of the underlying facts. The inferences to be drawn from the evidence still need only to be proven on a balance of probabilities: C. (R.) v. McDougall, 2008 SCC 53 (S.C.C.) at para. 40, [2008] 3 S.C.R. 41 (S.C.C.). Once a fact is proven on a balance of probabilities, it is treated as a certainty: Athey v. Leonati, [1996] 3 S.C.R. 458 (S.C.C.) at para. 28; B (Children), Re, [2008] UKHL 35 (U.K. H.L.) at para. 2, (2008), [2009] 1 A.C. 11 (U.K. H.L.). Once the facts are found, the legal test is applied, under which the proven facts must be “unequivocally” related to the agreement alleged.

The Agreement to Maintain the Joint Tenancy 20 The trial judge found a body of evidence demonstrating part performance of an agreement not to sever the joint tenancy: the original inten- tions of Grandfather Haan, which were testified to by several witnesses; Iva’s acknowledgement of the overall estate plan; the state of the title from 1985 to 2009; the discussions at the time of the 1996 agreement, including the testimony of the lawyer; the conduct of the parties in improving and maintaining the property; the residency of Dean and Cindy on the property; the continuation of the joint tenancy after David’s death and Dean’s divorce; the discussions at the time of the negotiation of Dean and Cindy’s matrimonial settlement; Dean’s refusal to add his sister to the title; and the general conduct of the parties between 1996 and 2009. The trial judge found that this body of evidence, considered to- 238 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

gether, was only consistent with an agreement in 1996 not to sever the joint tenancy. 21 The appellant argues that the trial judge erred in relying on some of this evidence, because it was not “unequivocally” related to an agreement not to sever the joint tenancy. It is fair to say that most, if not all, of the pieces of evidence relied on would not support the trial judge’s finding, if taken alone. However, the proper test of circumstantial evidence is to consider all of the evidence together, not piecemeal. As noted above, there is a difference between the evidentiary test for sufficiency of circumstantial evidence and the legal test for part performance, namely that the facts as found from the circumstantial evidence must unequivocally point to the alleged agreement. 22 The trial judge relied on the fact that the parties consistently maintained the property in joint tenancy, notwithstanding significant changes in the family (e.g., death and divorce). Attempts to change the nature of the title (e.g., by adding Dean’s sister to the title, and Iva’s eventual sev- erance of the joint tenancy) were immediately resisted. The trial judge described these facts as being “consistent with” the alleged agreement, but again in the context of weighing the circumstantial evidence. He did not commit the error in Booth of finding that mere consistency was sufficient to overcome the Statute of Frauds. 23 For example, the trial judge held that Dean and Cindy’s conduct in moving onto the lands, and improving the lands, was “not inconsistent” with the alleged agreement. In context, the trial judge’s comment on this piece of evidence relates to his assessment of it as circumstantial evidence. This comment follows immediately after his statement that the “acts of part performance must be unequivocally referable to the oral contract”. The trial judge was aware of the proper legal test. All of his statements about “consistency” relate to the fact-finding portion of his reasons. 24 The trial judge relied on the fact that Cindy and Dean moved on to the property shortly after 1996, and thereafter spent considerable sums on improving, maintaining, and upgrading it. The appellant argues that this evidence might simply point to some sort of tenancy, and is not unequivocally referable to an agreement not to sever the joint tenancy. In assessing the evidence, the trial judge is entitled to “consider the acts of part performance having regard to the way in which reasonable people carry on their affairs”: Erie Sand at para. 94. Reasonable people do not expend considerable sums of money on land unless they have some rea- Haan v. Haan The Court 239

sonable expectation that they are in a position to recover the value of that investment. Taken alone, this piece of circumstantial evidence would not be sufficient to displace the Statute of Frauds, but the trial judge was entitled to consider it along with all the other circumstantial evidence. 25 When Dean and Cindy divorced, they entered into a matrimonial property settlement whereby Cindy surrendered her joint interest in the home quarter. She acknowledged at that time that it was always their intention that the land eventually end up in Dean’s hands. Her agreement to surrender her interest may have reflected an acknowledgement that this was exempt property, or it may have been balanced by other consideration she received in the settlement. When asked, she indicated that she was turning her interest “over to Dean”. The appellant argues that this is inconsistent with the alleged agreement not to sever the joint tenancy, because, if there was really such an agreement, Cindy should have given her interest to the other three joint tenants, not just Dean. The matrimonial settlement was between Cindy and Dean, and the statement that she was surrendering her interest to Dean was accurate. However, if there was no agreement to maintain the joint tenancy, and Cindy was literally giving her interest “to Dean”, one might have expected that Dean would sever the joint tenancy at that stage, and end up with a one-half interest in the property. The trial judge was entitled to consider the fact that Dean maintained the joint tenancy after his divorce was consistent with the alleged agreement. 26 To the same effect is the evidence that Dean’s parents asked that the title be changed to give Dean’s sister an interest. Dean refused. The appellant argues that if there was an agreement not to sever the joint tenancy, this request would never have been made. However, what happened when Dean refused the request is telling. At that point David and Iva could simply have severed the joint tenancy, and then provided for Dean’s sister out of their share. The trial judge was entitled to conclude that their acquiescence in Dean’s refusal was consistent with the alleged agreement. 27 There was evidence that Iva had acknowledged at one point that there was an agreement, although she never indicated exactly what kind of agreement it was. An admission by the defendant that there was an agreement is not sufficient to get around the Statute of Frauds: Sievewright v Archibald, (1851), 17 QB 103 at p. 119, 117 ER 1221; North Vancouver (District) v. Tracy (1903), 34 S.C.R. 132 (S.C.C.) at p. 140. An admission, however, can still be part of the circumstantial evi- 240 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

dence. It is relevant to the first parts of the test, namely that there were “acts proven that are referable in their own nature to some dealing with the land”. 28 The appellant argues that the trial judge erred because he referred to evidence about the existence of the agreement while also referring to the evidence of part performance. The appellant refers to the statement in Meston v. Gray that the acts must “speak for themselves”. This expression must not be taken literally, and it does not mean that the trial judge is not entitled to draw any inferences from the proven direct or circumstantial evidence. The thrust of this comment is that the words and deeds of the parties must unequivocally point to the alleged agreement, without any reliance on the parties testifying as to “what was agreed to”. The appellant specifically points to the following types of statements in the reasons: • Dean and Cindy invested in the property “on the strength and understanding that in due course he would secure a joint tenancy with a right of survivorship”; • Iva maintained the joint tenancy, and even acknowledged the prior agreement, and that this was “in accord with the wishes of grandpa”. These statements are unobjectionable. They are evidence of conduct of the parties that is consistent with the alleged agreement, and are therefore legitimate circumstantial evidence. The first comment, for example, merely speaks to Dean and Cindy’s expectations, which are not completely dependent on any agreement. As previously noted, the trial judge will have to hear all the evidence at the trial, and it is artificial to attempt to completely exclude the evidence about the alleged acts of part performance from the fact finding process. 29 During the fact finding portion of his reasons, the trial judge examined the circumstantial evidence. He looked at the acts and deeds of the parties to see whether they were consistent with, or at least not inconsistent with, the alleged agreement. Having made his findings of fact, he then examined whether the facts, as found, were “unequivocally” referable to the alleged agreement. Undoubtedly the trial judge could have expressed himself differently (and perhaps even better) in places, but overall the reasons do not disclose any overriding error. Haan v. Haan The Court 241

Conclusion 30 In summary, the trial judge was entitled to rely on the circumstantial evidence, taken as a whole, to see if there was sufficient evidence to prove on a balance of probabilities that the parties had entered into an agreement, and that the facts “unequivocally” pointed to the type of agreement alleged. The appellant has not demonstrated any reviewable error, and the appeal is dismissed. Appeal dismissed. 242 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

[Indexed as: R. v. Chanalquay] Her Majesty the Queen, Appellant and Joseph Francis Chanalquay, Respondent Saskatchewan Court of Appeal Docket: CACR2576 2015 SKCA 141 Richards C.J.S., Lane, Whitmore JJ.A. Heard: June 18, 2015 Judgment: December 17, 2015 Criminal law –––– Offences — Sexual assault — General offence — Sen- tencing — Adult offenders — Complainant unconscious or asleep –––– Ac- cused was member of Buffalo River Dene Nation — Accused was convicted of sexual assault for having sexual intercourse with woman who had fallen asleep during course of drinking party — In sentencing accused, trial judge gave significant weight to various Gladue factors that he saw as shedding light on accused’s moral culpability with respect to offence and imposed sentence of two years less day in jail — Crown appealed — Appeal allowed — Two years less day jail term was sustained if it was supplement by probation order for 18 months — Sentencing judge should not simply stack up all Gladue-type considerations at play in case and if list was long or severe, automatically proceed on assumption such factors have had substantial limiting effect on offender’s culpability as required analysis was more demanding than that — To determine extent to which Gladue factors impact, sentencing judge must examine both nature of relevant factors and particulars of crime in issue and then consider extent to which unique circumstances of offender “bear on his or her culpability” in specific context — Other than broad notion that alcohol consumption typically serves to lower inhibitions, it was not clear how accused’s intoxication could be taken as saying anything particularly revealing about his culpability for sexual assault of victim — Trial judge overlooked nothing that finding of reduced moral culpability rooted in Gladue factors did not automatically lead to shorter period of incarceration. Criminal law –––– Sentencing — Principles — Miscellaneous –––– Gladue factors — Accused was member of Buffalo River Dene Nation — Accused was convicted of sexual assault for having sexual intercourse with woman who had fallen asleep during course of drinking party — In sentencing accused, trial judge gave significant weight to various Gladue factors that he saw as shedding light on accused’s moral culpability with respect to offence and imposed sentence of two years less day in jail — Crown appealed — Appeal allowed — R. v. Chanalquay 243

Two years less day jail term was sustained if it was supplement by probation order for 18 months — Sentencing judge should not simply stack up all Gladue- type considerations at play in case and if list was long or severe, automatically proceed on assumption such factors have had substantial limiting effect on offender’s culpability as required analysis was more demanding than that — To determine extent to which Gladue factors impact, sentencing judge must examine both nature of relevant factors and particulars of crime in issue and then consider extent to which unique circumstances of offender “bear on his or her culpability” in specific context — Other than broad notion that alcohol consumption typically serves to lower inhibitions, it was not clear how accused’s intoxication could be taken as saying anything particularly revealing about his culpability for sexual assault of victim — Trial judge overlooked nothing that finding of reduced moral culpability rooted in Gladue factors did not automatically lead to shorter period of incarceration. Cases considered by Richards C.J.S.: R. v. Cappo (1993), 116 Sask. R. 15, 59 W.A.C. 15, 1993 CarswellSask 271, [1993] S.J. No. 571 (Sask. C.A.) — referred to R. v. Gladue (1999), [1999] S.C.J. No. 19, 1999 CarswellBC 778, 1999 Car- swellBC 779, 133 C.C.C. (3d) 385, 171 D.L.R. (4th) 385, [1999] 2 C.N.L.R. 252, 23 C.R. (5th) 197, 238 N.R. 1, [1999] 1 S.C.R. 688, 121 B.C.A.C. 161, 198 W.A.C. 161, [1999] A.C.S. No. 19 (S.C.C.) — followed R. v. H. (M.J.) (2004), 2004 SKCA 171, 2004 CarswellSask 881, 257 Sask. R. 1, 342 W.A.C. 1, [2004] S.J. No. 812 (Sask. C.A.) — referred to R. v. Ipeelee (2012), 2012 SCC 13, 2012 CarswellOnt 4375, 2012 CarswellOnt 4376, 91 C.R. (6th) 1, 280 C.C.C. (3d) 265, [2012] 2 C.N.L.R. 218, 428 N.R. 1, 288 O.A.C. 224, [2012] S.C.J. No. 13, 318 B.C.A.C. 1, [2012] 1 S.C.R. 433, 541 W.A.C. 1, 113 O.R. (3d) 320 (note) (S.C.C.) — followed R. v. Roberts (1995), 128 Sask. R. 158, 85 W.A.C. 158, 1995 CarswellSask 108, (sub nom. R. v. W.S.R.) [1995] S.J. No. 109 (Sask. C.A.) — referred to Statutes considered: Criminal Code, R.S.C. 1985, c. C-46 Pt. XXIII — referred to s. 718.2(e) [en. 1995, c. 22, s. 6] — considered Sex Offender Information Registration Act, S.C. 2004, c. 10 Generally — referred to

APPEAL by Crown from sentence for sexual assault.

Beverly Klatt, for Appellant Bruce Campbell, for Respondent 244 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

Richards C.J.S.: I. Introduction 1 This appeal obliges the Court to consider R. v. Gladue, [1999] 1 S.C.R. 688 (S.C.C.) [Gladue] and R. v. Ipeelee, 2012 SCC 13, [2012] 1 S.C.R. 433 (S.C.C.) [Ipeelee]. The central issue is whether those cases were properly applied in relation to the sentencing of the respondent, Jo- seph Chanalquay. 2 Mr. Chanalquay is a member of the Buffalo River Dene Nation. He was convicted of sexual assault for having sexual intercourse with a woman who had fallen asleep during the course of a drinking party. 3 In sentencing Mr. Chanalquay, the trial judge decided to give significant weight to various Gladue factors that he saw as shedding light on Mr. Chanalquay’s moral culpability with respect to the offence. He also considered several of Mr. Chanalquay’s personal circumstances to be mitigating and, in the end, imposed a sentence of two years less a day in jail. 4 The Crown appeals this sentence. It argues that Mr. Chanalquay’s sentence is demonstrably unfit. 5 As explained below, I have concluded that the trial judge misapplied the admittedly difficult concepts found in Gladue and Ipeelee. It is possible to sustain a jail term of two years less a day on the facts of this case but only if it is imposed in combination with a period of probation aimed at restorative justice goals.

II. Background A. The Offence 6 On the evening of September 9, 2012, Mr. Chanalquay and a number of other people were drinking at his house. At some point the victim, a woman in her 20s, fell asleep on the couch. She was fully clothed. 7 The victim testified that she awoke to find her pants pulled down and Mr. Chanalquay on top of her having sexual intercourse. She got up from the couch, pulled up her pants and ran home. 8 The RCMP were called. They took a statement from the victim and then brought her to the hospital for examination. A vaginal swab revealed the presence of Mr. Chanalquay’s DNA. 9 Mr. Chanalquay initially denied having had sex with the victim. However, at trial, he testified that he had asked the victim if he could R. v. Chanalquay Richards C.J.S. 245

perform oral sex on her and that, when she told him how good he was at it, he had asked if he could have sex with her and she had consented. 10 The trial judge found the victim to be credible and did not believe Mr. Chanalquay. As a result, he found Mr. Chanalquay guilty of sexual assault.

B. Mr. Chanalquay’s Circumstances 11 As noted above, Mr. Chanalquay is a member of the Buffalo River Dene Nation. He is presently 48 years old and has always resided on the Buffalo River Reserve. Mr. Chanalquay was raised by his parents and his grandparents. He chose to live most of the time with his grandparents. They took him out on the trap line and taught him to hunt and trap. Con- sequently, he did not receive a full education and has limited reading and writing skills. 12 Both of Mr. Chanalquay’s parents abused alcohol when he was a child. There were times when he and his siblings were left alone and Mr. Chanalquay says that sometimes there was no food in the house and the children would go to their grandparents’ home because they were hungry. 13 Mr. Chanalquay’s father had attended a residential school. He stopped drinking in 1976 when Mr. Chanalquay was nine years old. Mr. Chanalquay’s father subsequently became a community leader and has been the Chief and a NADAP worker and has held various other positions on the Reserve. 14 Mr. Chanalquay reports being sexually abused by an aunt on three or four occasions while living as a child at his grandparents’ house. He also reports being sexually abused on one occasion as a 10 or 11-year-old by an adult male who lived on the Reserve. 15 Sophie Sylvestre has been in a common-law relationship with Mr. Chanalquay for the past 11 years. He characterizes their relationship as good and describes Ms. Sylvestre as the most supportive and influential person in his life. The quality of their relationship is confirmed by Ms. Sylvestre who says she will stand by Mr. Chanalquay regardless of the outcome of the current proceedings. 16 Mr. Chanalquay had only one child, a daughter. He did not raise her but did maintain a relationship with her and provided financial support while the child was growing up. She committed suicide four or five years 246 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

ago. Mr. Chanalquay says he experiences an ongoing sense of loss because of this. 17 Mr. Chanalquay began consuming alcohol on weekends when he was about 18 years of age. He indicates that his normal drinking pattern for many years was to consume alcohol one or two nights per month. He denies drinking to an extreme state of intoxication, indicating that he typically consumed up to eight drinks per episode but admitted that he had been drinking for a period of two days when the offence in issue here occurred. He says he does not remember everything that happened due to his state of intoxication. 18 Mr. Chanalquay does not identify himself as associating with a negative peer group. He had apparently been sober for five months at the time the pretrial sentence report was prepared. He said that, since he had stopped drinking, he did not seem to have any friends and mostly associated with Ms. Sylvestre. Mr. Chanalquay also acknowledged having smoked marijuana on a daily basis. However, he quit drugs a year before the pre-sentence report was prepared and did not identify drug use as a problem. 19 Mr. Chanalquay believes he has a grade eight education. Nonetheless, he did complete a heavy equipment operator’s course at SIAST and has been trained in construction work. He had obtained safety certificates which were valid as of the date of the pre-sentence report. 20 Mr. Chanalquay was renovating homes on the Reserve when he was charged with the offence underpinning this appeal. Prior to that, he had worked as a heavy equipment operator in Fort McMurray. 21 Mr. Chanalquay has a limited and dated criminal record consisting of convictions between 1986 and 2006 for failing to stop at the scene of an accident, driving “over .08,” obstruction and failing to appear. 22 I note as well that Mr. Chanalquay filed eight letters of support with the trial judge. They describe him as being a respected and trusted member of his community who both now and historically has taken care of his extended family. Mr. Chanalquay attends church every Sunday. 23 Both the Saskatchewan Primary Risk Assessment test and the Static- 99R test assessed Mr. Chanalquay as being a low risk to reoffend. 24 The victim did not give an impact statement. We know nothing concrete about the effect the assault had on her. R. v. Chanalquay Richards C.J.S. 247

III. The Sentencing Decision 25 Mr. Chanalquay was convicted after trial. As is his right, he continues to contend that the sexual relations with the victim were consensual. 26 The Crown asked for a sentence in the range of three-and-a-half to five years. Mr. Chanalquay sought a community-based sentence. 27 The trial judge began his sentencing decision by saying it was clear that Mr. Chanalquay had been affected by a range of Gladue factors. He then went on to briefly summarize the general principles that established the framework in which his decision had to be made. He concluded this part of his decision by saying: ... I must weigh these so-called Gladue factors in conjunction with those other fundamental principles of sentencing that I have referred to, bearing in mind the concept of proportionality of the sentence to the gravity of the offence and the degree of responsibility of the offender. 28 The trial judge identified denunciation and deterrence as the primary sentencing considerations which needed to be factored into the decision along with Gladue matters. In so saying, he stressed that sleeping or unconscious women are too often victims of sexual assault and said the courts must denounce such assaults and impose penalties capable of deterring them. He described Mr. Chanalquay’s conduct in taking advantage of the sleeping victim as the only aggravating factor which needed to be taken into account. 29 With respect to what he called mitigating factors, the trial judge referred to several considerations: (a) no violence had been involved in the assault other than that which was inherent in the nature of non-consensual sex; (b) there were systemic and personal Gladue factors at play; (c) Mr. Chanalquay had significant support from Ms. Sylvestre and his extended family; (d) Mr. Chanalquay has no significant criminal record; (e) Mr. Chanalquay had complied fully with his release conditions while awaiting trial; (f) Mr. Chanalquay has community support and a history of volunteerism in the community; and 248 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

(g) Mr. Chanalquay provides important assistance to his elderly father. 30 In the end, the trial judge characterized the offence here as being totally out of character for Mr. Chanalquay. He acknowledged a three-year jail term as the starting point for his deliberations but, in light of Gladue considerations and the mitigating factors he had identified, the judge imposed a sentence of two years less a day. He said this: ... It is my conclusion that it is appropriate to give significant weight to the Gladue factors, both systemic factors and personal factors, because I have concluded that particularly as they play out through the consequences of his alcohol abuse they shed light on Mr. Chanal- quay’s moral culpability in the circumstances of this case. As I’ve said before, I’m satisfied this offence was an offence totally out of character from [sic] Mr. Chanalquay and I have no doubt that it was simply a crime of impulse and opportunity that was occasioned because he was in the middle of a multi-day drinking binge. While he denies the offence occurred, the denial does not, in the current circumstances, alter my conclusion that the offence was out of character for Mr. Chanalquay. I’m of the view that the community in which he lives with a culture of abusing alcohol, the Gladue factors, including his sexual abuse as a child and the abuse of the alcohol — or the alcohol abuse problem he has all contributed. While this cannot excuse his wrongful act, these factors must be considered in my sentencing ... 31 The trial judge also made ancillary orders relating to a firearms prohibition and the Sex Offender Information Registration Act, SC 2004, c 10.

IV. Analysis 32 The Crown submits that the trial judge erred by, in effect, reducing Mr. Chanalquay’s sentence because of Gladue considerations. More particularly, it suggests the trial judge failed to properly appreciate that, in applying s. 718.2(e) of the Criminal Code, the question is not whether there are Gladue factors in the mix, but whether those factors diminish the offender’s moral culpability. The Crown stresses that this Court has repeatedly said a person who has, or attempts to have, sexual relations with a sleeping or unconscious person should face a heavy custodial sentence. R. v. Chanalquay Richards C.J.S. 249

A. The Basic Principles 33 Before turning to the particulars of this case, it may be helpful to re- visit some of the basic principles that animate the operation of s. 718.2(e) of the Criminal Code. At the time of the trial, it read as follows: 718.2 A court that imposes a sentence shall also take into consideration the following principles: ... (e) all available sanctions other than imprisonment that are reasonable in the circumstances should be considered for all offenders, with particular attention to the circumstances of aboriginal offenders. 34 The proper approach to the application of s. 718.2(e) was first elabo- rated by the Supreme Court in Gladue. Some of the key points made in that decision are set out below: (a) The purpose of s. 718.2(e) is to ameliorate the problem of over- representation of Aboriginal people in prisons by encouraging judges to consider a restorative justice approach to sentencing (para 93). (b) In appropriate cases, the goals of restorative justice may take on greater weight and traditional sentencing goals will be less relevant (para 77). (c) The effect of s. 718.2(e) is to alter the method of analysis sentencing judges are required to use in determining an appropriate sentence for an Aboriginal offender (para 75). (d) In sentencing an Aboriginal offender, a judge must consider: (i) the unique systemic or background factors that may have played a part in bringing the offender before the courts; and (ii) the types of sentencing procedures and sanctions that may be appropriate in the circumstances for the offender because of his or her Aboriginal heritage or connection (para 66). (e) Judges must take judicial notice of the broad systemic and background factors affecting Aboriginal people generally, but case- specific information will have to come through counsel or pre- sentence reports (para 93). (f) Systemic and background factors, on their own, do not necessarily dictate any particular sentence for Aboriginal offenders. They provide a context for considering case-specific information (para 88). 250 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

(g) The lack of alternative sentencing programs particular to an Ab- original community does not eliminate the obligation of a sentencing judge to impose a sanction that takes into account principles of restorative justice (paras 74, 93). (h) If there is no alternative to incarceration available, the length of the jail term imposed on the offender must be carefully considered (para 93). (i) Section 718.2(e) does not require an automatic reduction of the sentence imposed on an offender simply because he or she is Ab- original (para 88). 35 In Ipeelee, the Supreme Court provided further explanation with respect to the operation of s. 718.2(e). In that case, the Court made three points of particular relevance here: (a) There is no discretion as to whether s. 718.2(e) should be considered in a case involving an Aboriginal offender. The application of the Gladue principles is required in every case (para 86). (b) An offender is not required to establish a causal link between background Gladue factors and the commission of the offence in issue before a judge is entitled to consider such factors in his or her sentencing decision (paras 81-82). (c) Unless the unique circumstances of the offender bear on his or her culpability for the offence or indicate which sentencing objectives can or should be actualized, they will not influence the ultimate sentence (para 83). 36 It is important to recognize that Gladue and Ipeelee are not unvar- nished calls to impose shorter jail terms on Aboriginal offenders. The Supreme Court’s reasoning is far more nuanced than that. Its approach is very much tied to the concept of restorative justice and the decision in Gladue, in particular, returns repeatedly to that concept in explaining how it is that sanctions other than incarceration might satisfy the sentencing objectives referenced in Part XXIII of the Criminal Code. It is essential that this basic theme be remembered. In very simplified terms, the fundamental dynamic underlying s. 718.2(e) when a trial judge sentences an Aboriginal offender is not merely one of reflexively giving less jail time. Rather, it involves the subtler idea of attempting to limit or mini- mize jail time by using restorative justice approaches when and if such approaches are appropriate. In the end, s. 718.2(e) means what it says: R. v. Chanalquay Richards C.J.S. 251

“all available sanctions other than imprisonment that are reasonable in the circumstance should be considered....” 37 I observe as well that the analysis mandated by s. 718.2(e), as explained in Gladue and Ipeelee, is not a free-standing inquiry that is brought into play to adjust an otherwise fit sentence after it has been determined. Instead, the analysis is an integral part of the reasoning which leads to a fit sentence (Gladue at para 88). It does not stand outside of that reasoning and judges should not approach the sentencing exercise with a view to giving (or not giving) a specific or express reduction in a sentence because of Gladue factors. This is not what Gladue and Ipeelee provide. 38 Further, and relatedly, s. 718.2(e) and the Gladue analysis mandated by it do not automatically trump or displace other sentencing considerations and objectives. More particularly, s. 718.2(e) does not require that Aboriginal offenders always be sentenced in a manner which gives great- est weight to the principles of restorative justice, as opposed to goals such as deterrence, denunciation and separation (Gladue at para 78). As the Supreme Court has said, “The analysis for sentencing aboriginal offenders, as for all offenders, must be holistic and designed to achieve a fit sentence in the circumstances” (Gladue at para 81). In other words, Gladue considerations should not drive a judge to ignore other sentencing principles and objectives. The question in sentencing an Aboriginal offender, as for other offenders, will always be “For this offence, committed by this offender, harming this victim, in this community, what is the appropriate sanction under the Criminal Code?” (Emphasis in original) (Gladue at para 80) 39 As noted above, the methodology mandated by the Supreme Court directs sentencing judges to consider two matters when dealing with s. 718.2(e): (a) systemic and background factors which played a part in bringing the Aboriginal offender to court, and (b) the types of sentencing procedures and sanctions that may be appropriate for the offender in light of his or her Aboriginal heritage. It is important to appreciate the ways in which these two considerations can influence a sentencing decision. Let me comment briefly on each of them. 40 First, systemic and background factors. In Ipeelee, the Supreme Court said these factors may speak to the culpability of an Aboriginal offender if they reveal something of his or her level of moral blameworthiness and, as a result, may affect the nature of an appropriate sentence (Ipeelee at para 73). Systemic and background factors are, of course, not the only 252 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

considerations which are relevant in determining an offender’s blameworthiness. The sorts of factors that normally come into play on this front remain relevant to an assessment of the culpability of an Aboriginal offender. The circumstances of such an offender “which could reasonably and justifiably impact on the sentence imposed” may speak to his or her moral culpability to an extent which would lead to a different sort of sentence than what might normally be imposed for the same offence. But, there is no invariable rule on this front (Ipeelee at para 71). Sentences have to be determined on a case-by-case basis taking into account all relevant considerations (Gladue at para 88). 41 The second and ultimately most important aspect of the Gladue framework that must be considered by a sentencing judge is the types of sanctions which might be appropriate. In this regard, and keeping in mind that the root purpose of s. 718.2(e) is to address the overrepresenta- tion of Aboriginal offenders in Canadian jails, a sentencing judge must carefully consider available alternatives to incarceration. Programming specific to an Aboriginal community may be particularly significant in this regard. However, the absence of programs and treatment aimed directly at Aboriginal offenders does not eliminate a judge’s obligation to consider a restorative justice approach. Such things as other kinds of programming or sentencing alternatives available to all offenders may also be helpful in crafting an effective sanction. These restorative-type aspects of a sentence will normally be brought into play by way of the terms of a conditional sentence or probation order. 42 Thus, while s. 718.2(e), as interpreted by Gladue and Ipeelee, man- dates a particular kind of analysis when sentencing an Aboriginal offender, it does not create a wholly new sentencing paradigm. Sentencing judges must attempt to give meaningful effect to the remedial purpose of s. 718.2(e) and must be highly alert to the ongoing problem represented by the troubling incarceration rates of Aboriginal people. But, the ultimate sentencing objective is clear: considering all of the relevant sentencing principles, including s. 718.2(e), what is a fit sentence for the offender given his or her circumstances, the nature of the crime, the situation of the victim, and the interests of the community? (Gladue at para 75.) 43 I note that this means a sentencing judge must attempt to understand not just the situation and background of the offender and the particulars of the crime in issue. He or she must also, to the extent reasonably possible, attempt to understand the relevant dynamics of the community and R. v. Chanalquay Richards C.J.S. 253

the circumstances of the victim. After all, the victims of crimes committed by Aboriginal offenders are all too frequently other Aboriginals, often ones with precisely the same Gladue backgrounds as the offenders. They must not be overlooked. In order to understand all of this, it may sometimes be necessary for a trial judge to demand more than is typically provided in this province by way of a pre-sentence report.

B. The Sentence in this Case 44 As noted above, the Crown submits the trial judge made errors in sentencing Mr. Chanalquay. It asks that his jail term be increased. 45 The Crown is, of course, correct in submitting that the sexual assault of a sleeping or unconscious woman is a serious crime and should be dealt with as such. This Court has repeatedly said these kinds of assaults should not be approached in such a way as to effectively reward an offender for taking advantage of a helpless victim rather than one who is in a position to resist the assault. See, for example: R. v. Cappo (1993), 116 Sask. R. 15 (Sask. C.A.) at para 13 [Cappo]; R. v. H. (M.J.), 2004 SKCA 171 (Sask. C.A.) at para 16, (2004), 257 Sask. R. 1 (Sask. C.A.) [H. (M.J.)]. 46 The trial judge was alert to the problem of men taking it upon themselves to engage sexually with sleeping or unconscious women. Speaking of this sort of crime, he said, “It happens far too often and so it’s necessary for the Courts by their sentences to denounce that kind of conduct and to impose penalties that deter others.” He was also aware of the precedents in this jurisdiction to the effect that the starting point sentence for a serious sexual assault is three years of imprisonment. 47 As I read his decision, the trial judge began with these premises and went on to find that Mr. Chanalquay should receive a sentence of two years less a day in jail because of both Gladue factors and because of what he saw as various other mitigating considerations. 48 I acknowledge that operationalizing Gladue and Ipeelee can be challenging. In my respectful view, these challenges led to two problems in the line of analysis employed by the trial judge. The first problem concerns the judge’s assessment of the connection between the Gladue factors he identified and the moral culpability of Mr. Chanalquay. In this regard, the judge referred to the culture of alcohol abuse in Mr. Chanal- quay’s community, Mr. Chanalquay’s own relationship with alcohol and the sexual abuse Mr. Chanalquay suffered as a child. I say this because, 254 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

as noted above, the judge stated as follows when coming to his conclusions on this issue: It is my conclusion that it is appropriate to give significant weight to the Gladue factors, both systemic factors and personal factors, because I have concluded that particularly as they play out through the consequences of his alcohol abuse they shed light on Mr. Chanal- quay’s moral culpability in the circumstances of this case. ... I’m of the view that the community in which he lives with a culture of abusing alcohol, the Gladue factors, including his sexual abuse as a child and the abuse of the alcohol — or the alcohol abuse problem he has all contributed. (Trial Transcript at T48) 49 At an earlier point in his decision, the trial judge also noted the issues of poverty that had affected Mr. Chanalquay, his feelings of abandon- ment by his parents in his childhood and his father’s residential school experience as being Gladue factors. However, the judge does not appear to have placed any real weight on these matters at the critical points of his decision-making. 50 It is true, of course, that Ipeelee says there is no requirement that “an offender must establish a causal link between background factors and the commission of the current offence before being entitled to have those matters considered by the sentencing judge” (para 81). A direct cause- and-effect correlation will simply not be possible to establish in most cases. 51 However, at the same time, I understand the Court in Ipeelee to have also warned against an approach to assessing the impact of Gladue factors on moral culpability which is entirely abstract and not rooted in the factual realities of the case before the sentencing judge. In this regard, LeBel J. wrote as follows: [83] ... Systemic and background factors do not operate as an excuse or justification for the criminal conduct. Rather, they provide the necessary context to enable a judge to determine an appropriate sentence. This is not to say that those factors need not be tied in some way to the particular offender and offence. Unless the unique circumstances of the particular offender bear on his or her culpability for the offence or indicate which sentencing objectives can and should be actualized, they will not influence the ultimate sentence. (Emphasis added) R. v. Chanalquay Richards C.J.S. 255

52 A sentencing judge should not simply stack up all of the Gladue-type considerations at play in a case and, if the list is long or severe, automatically proceed on the assumption such factors have had a substantial limiting effect on the offender’s culpability. The required analysis is more demanding than that. To determine the extent to which Gladue factors impact on an offender’s moral culpability, a sentencing judge must examine both the nature of the relevant factors and the particulars of the crime in issue. He or she should then consider the extent to which the unique circumstances of the offender “bear on his or her culpability” (Ipeelee at para 83) in the specific context of the case at hand. As mandated by the Supreme Court, the search here is not for a cause-and-effect relationship but for circumstances that cast light on the degree of the offender’s blameworthiness for the specific offence in issue. It might be that the Gladue considerations impact the offender’s culpability a great deal, not at all, or only to some intermediate extent. 53 The trial judge in this case does not appear to have taken this approach. There are clearly Gladue considerations involved here and the judge had some basis for concluding, as he did, that those factors were playing themselves out in Mr. Chanalquay’s binge drinking. However, other than the broad notion that alcohol consumption typically serves to lower inhibitions, it is not clear how Mr. Chanalquay’s intoxication can be taken as saying anything particularly revealing about his culpability for the sexual assault of the victim in this case. The same might be said about the Gladue considerations said to lie behind Mr. Chanalquay’s drinking. Seen within the proper framework of principle and in light of the record here, Gladue factors would not seem to warrant the “significant” weight given to them by the judge in assessing, and accordingly reducing, Mr. Chanalquay’s moral culpability. 54 The second problem with the trial judge’s reasoning is that his assessment of Mr. Chanalquay’s moral blameworthiness seems to have led him directly to a conclusion that Mr. Chanalquay’s sentence should be reduced from the normal starting point of three years. In other words, the judge appears to have overlooked the notion that a finding of reduced moral culpability rooted in Gladue factors does not automatically lead to a shorter period of incarceration. More importantly, the judge also appears to have effectively applied s. 718.2(e) of the Code as if it was a directive to shorten jail terms imposed on Aboriginal offenders. As explained above, this is not the import of Gladue and Ipeelee. The sentencing judge should have asked himself how a restorative justice approach might have allowed him to reduce or limit the term of imprisonment im- 256 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

posed on Mr. Chanalquay while still meeting the sentencing objectives of the case before him. 55 The search for a fit sentence involves consideration of the sanction that is appropriate “[f]or this offence, committed by this offender, harming this victim, in this community” (Emphasis in original) (Gladue at para 80). On the one hand, and very centrally, this requires an apprecia- tion of the reality of the offence committed by Mr. Chanalquay — sexual intercourse with a sleeping woman. This is a serious crime which, as noted, would normally attract a sentence in the range of three years. See: Cappo; H. (M.J.); R. v. Roberts (1995), 128 Sask. R. 158 (Sask. C.A.). 56 On the other hand, and as identified by the trial judge, there are a number of factors that suggest Mr. Chanalquay is an offender who can be dealt with effectively by way of a non-penitentiary sentence: (a) Mr. Chanalquay is a low risk to reoffend as per the assessment of the trial judge and the pre-sentence report. It is not necessary to incarcerate him in order to protect the victim or his community. Personal deterrence is not an issue here either. Mr. Chanalquay’s actions on the night of September 9, 2012 were found to have been wholly out of character. (b) Mr. Chanalquay is a respected and valuable member of his community, a role model and a volunteer. His incarceration will de- prive the community of important and useful leadership. (c) Mr. Chanalquay has a limited and dated criminal record. He has managed to largely steer clear of the criminal justice system even though he was raised and lives in an environment where that is not easy to do. (d) After the offence, Mr. Chanalquay took steps to address the issues as he has with alcohol. He had been sober for five months as of the date of the pre-sentence report. He also stopped smoking marijuana. (e) Mr. Chanalquay plays a vital role in looking after his elderly father. As one sister indicated, “[M]y dad relies on him for everything.” Another wrote, “If he goes away there will be no-one to take care of [my father].” (f) Mr. Chanalquay is a key member of his extended family, acting as a much-loved near-father to some of his nieces. (g) Mr. Chanalquay has a history of gainful employment. As indicated above, he was a heavy equipment operator in Fort McMur- R. v. Chanalquay Richards C.J.S. 257

ray and was employed as a construction worker at the time he committed the offence in issue here. On this front, he is obviously a valuable role model and income earner in his community. (h) Mr. Chanalquay has significant support from his common-law partner and his extended family. In short, there are several considerations here which suggest that neither Mr. Chanalquay, his family nor his Reserve overall will be well served if he is obliged to serve penitentiary time. 57 However, all things considered, I conclude that the bare sentence of two years less a day imposed by the trial judge cannot stand. It does not take adequate account of the gravity of the offence committed by Mr. Chanalquay, the situation of his victim, the need to reintegrate Mr. Chanalquay into his community, or Mr. Chanalquay’s own need to address his issues with alcohol. 58 That said, in the circumstances of this case, it is appropriate to consider whether the trial judge’s assessment of a proper jail term for Mr. Chanalquay can nonetheless be left intact if it is cast as part of a more comprehensive sanction that reflects the restorative justice approach emphasized in Gladue and Ipeelee. In this regard, I note that, in the period of time between the offence and his incarceration, Mr. Chanalquay complied with the terms of his release. He appears to have made good progress in dealing with the alcohol abuse that was a significant part of the context in which this crime was committed. This resolve not to drink also helped him to avoid associating with individuals who might have drawn him into further difficulties. It is important, both for Mr. Chanalquay and his Reserve, that this progress continue after he is released from jail. His reintegration into his community must be both respectful of the victim and as successful as possible. He needs to build on what he has already accomplished. 59 In light of all of this, and bearing in mind Gladue and Ipeelee, I conclude that the two year less a day jail term imposed by the trial judge can be sustained if it is supplemented by a probation order aimed at restorative justice goals. That order will be for a term of 18 months and will include conditions that Mr. Chanalquay: (a) report to a probation officer within one week of his release from custody and thereafter report as required by the officer; (b) keep the peace and be of good behaviour; 258 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

(c) abstain from communicating directly or indirectly with the victim unless she initiates such communication; (d) abstain from going to the victim’s home in Dillon, Saskatchewan unless invited to do so by the victim; (e) refrain from consuming alcohol or drugs; (f) take such programming in relation to alcohol or sexual offending as may be directed by the probation officer; (g) make reasonable efforts to seek and maintain employment; and, (h) perform 180 hours of community service over a period of 18 months, as approved by the probation officer. 60 On the particular facts of this case, a jail sentence of two years, com- bined with the probation order prescribed above, will both protect the public, respect the victim of Mr. Chanalquay’s crime, provide adequately for denunciation and deterrence, and serve to help ensure Mr. Chanal- quay’s ongoing success as a member of his family and his community.

V. Conclusion 61 The Crown’s appeal is allowed and the sentence varied as described above.

Lane J.A.:

I concur.

Whitmore J.A.:

I concur. Appeal allowed. Saadati (Litigation guardian of) v. Moorhead 259

[Indexed as: Saadati (Litigation guardian of) v. Moorhead] Mohsen Saadati, by his Litigation Guardian, Sara Zarei, Respondent (Plaintiff) and Grant Iain Moorhead, Able Leasing (2001) Ltd., and Thi Hao Hoang, Appellants (Defendants) British Columbia Court of Appeal Docket: Vancouver CA42075 2015 BCCA 393 Saunders, Chiasson, Frankel JJ.A. Heard: May 21, 2015 Judgment: September 23, 2015* Remedies –––– Damages — Damages in tort — Personal injury — Princi- ples relating to non-pecuniary loss — Pain and suffering — Psychological damage –––– Plaintiff, through his litigation guardian, brought action for damages for injuries suffered in motor vehicle accident — Liability was admitted — Trial judge found that plaintiff had not sustained any physical injuries in accident and rejected his claim that he suffered brain injury, but based on evidence of plaintiff’s friends and relatives, found that he was “changed man” — Plaintiff did not plead or argue psychological injury — Plaintiff was awarded $100,000 in non-pecuniary damages for psychological injury, including personality change and cognitive difficulties, sustained as result of accident — Defendants appealed — Appeal allowed — In order for damages to be compensable, plaintiff must prove that he suffers from recognizable psychiatric or psychological condition — Trial judge did not refer to any authorities dealing with when psychological or emotional effects of accident are compensable — Absent expert medical opinion evidence, judge is not qualified to say what is or is not illness — Plaintiff was not entitled to damages for psychological injury, as he failed to prove he suffered from recognizable psychiatric illness — Trial judge decided case on basis neither pleaded nor argued by plaintiff, and should not have done so — Plaintiff did not prove entitlement to compensation for his post- accident psychological condition — Trial judge’s order set aside and action dismissed.

* A corrigendum issued by the court on September 30, 2015 has been incorporated herein. 260 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

Cases considered by Frankel J.A.: Burgsteden v. Long (2014), 2014 SKCA 115, 2014 CarswellSask 712, 378 D.L.R. (4th) 562, [2015] 3 W.W.R. 246, (sub nom. Eckdhal v. Long) 446 Sask. R. 207, (sub nom. Eckdhal v. Long) 621 W.A.C. 207 (Sask. C.A.) — considered Canada Trustco Mortgage Co. v. Renard (2008), 2008 BCCA 343, 2008 Car- swellBC 1888, 71 R.P.R. (4th) 1, 60 C.P.C. (6th) 11, 83 B.C.L.R. (4th) 267, 298 D.L.R. (4th) 216, 259 B.C.A.C. 140, 436 W.A.C. 140, 60 C.P.C. (4th) 11, [2008] B.C.J. No. 1704 (B.C. C.A.) — referred to Clements (Litigation Guardian of) v. Clements (2012), 2012 SCC 32, 2012 Car- swellBC 1863, 2012 CarswellBC 1864, [2012] 7 W.W.R. 217, 31 B.C.L.R. (5th) 1, 93 C.C.L.T. (3d) 1, 29 M.V.R. (6th) 1, 346 D.L.R. (4th) 577, (sub nom. Clements v. Clements) 431 N.R. 198, [2012] S.C.J. No. 32, (sub nom. Clements v. Clements) [2012] 2 S.C.R. 181, (sub nom. Clements v. Cle- ments) 331 B.C.A.C. 1, (sub nom. Clements v. Clements) 565 W.A.C. 1 (S.C.C.) — followed Frame v. Smith (1987), 78 N.R. 40, [1987] 2 S.C.R. 99, 42 D.L.R. (4th) 81, 23 O.A.C. 84, 42 C.C.L.T. 1, [1988] 1 C.N.L.R. 152, 9 R.F.L. (3d) 225, 1987 CarswellOnt 347, 1987 CarswellOnt 969, [1987] S.C.J. No. 49, EYB 1987- 67479 (S.C.C.) — considered Graham v. MacMillan (2003), 2003 BCCA 90, 2003 CarswellBC 360, 10 B.C.L.R. (4th) 397, 15 C.C.L.T. (3d) 155, 179 B.C.A.C. 309, 295 W.A.C. 309, [2003] B.C.J. No. 334 (B.C. C.A.) — referred to Guastelluccia v. Scott (1978), 20 O.R. (2d) 241, 87 D.L.R. (3d) 423, 1978 Cars- wellOnt 732 (Ont. C.A.) — referred to Guay v. Sun Publishing Co. (1953), [1953] 2 S.C.R. 216, [1953] 4 D.L.R. 577, 1953 CarswellBC 181 (S.C.C.) — considered Hawkeye Power Corp. v. Sigma Engineering Ltd. (2012), 2012 BCCA 414, 2012 CarswellBC 3159, 70 C.E.L.R. (3d) 175, [2013] 1 W.W.R. 213, 37 B.C.L.R. (5th) 217, 329 B.C.A.C. 38, 560 W.A.C. 38 (B.C. C.A.) — referred to Healey v. Lakeridge Health Corp. (2011), 2011 ONCA 55, 2011 CarswellOnt 229, 103 O.R. (3d) 401, 328 D.L.R. (4th) 248, 81 C.C.L.T. (3d) 67, 273 O.A.C. 179, [2011] O.J. No. 231, 103 O.R. (3d) 402 (Ont. C.A.) — followed Insurance Corp. of British Columbia v. Patko (2008), 2008 BCCA 65, 2008 CarswellBC 253, 57 M.V.R. (5th) 70, 51 C.P.C. (6th) 53, 77 B.C.L.R. (4th) 254, 290 D.L.R. (4th) 687, 251 B.C.A.C. 259, 420 W.A.C. 259, [2008] B.C.J. No. 240 (B.C. C.A.) — considered Kotai v. “Queen of the North” (The) (2009), 2009 BCSC 1405, 2009 Car- swellBC 2708, [2009] B.C.J. No. 2022, 70 C.C.L.T. (3d) 221 (B.C. S.C.) — followed Mustapha v. Culligan of Canada Ltd. (2008), 2008 SCC 27, 2008 CarswellOnt 2824, 2008 CarswellOnt 2825, 55 C.C.L.T. (3d) 36, [2008] S.C.J. No. 27, Saadati (Litigation guardian of) v. Moorhead Frankel J.A. 261

293 D.L.R. (4th) 29, 375 N.R. 81, 238 O.A.C. 130, [2008] 2 S.C.R. 114, 92 O.R. (3d) 799 (note) (S.C.C.) — followed Odhavji Estate v. Woodhouse (2003), 2003 SCC 69, 2003 CarswellOnt 4851, 2003 CarswellOnt 4852, 19 C.C.L.T. (3d) 163, [2003] S.C.J. No. 74, 233 D.L.R. (4th) 193, 312 N.R. 305, 180 O.A.C. 201, [2003] 3 S.C.R. 263, 11 Admin. L.R. (4th) 45, 70 O.R. (3d) 253 (note), [2004] R.R.A. 1, 2003 CSC 69, 70 O.R. (3d) 253 (S.C.C.) — considered Thompson v. Webber (2010), 2010 BCCA 308, 2010 CarswellBC 1529, 320 D.L.R. (4th) 496, 75 C.C.L.T. (3d) 183, 288 B.C.A.C. 233, 488 W.A.C. 233 (B.C. C.A.) — referred to Thompson v. Webber (2010), 2010 CarswellBC 3522, 2010 CarswellBC 3523, 416 N.R. 394 (note), 307 B.C.A.C. 319 (note), 519 W.A.C. 319 (note) (S.C.C.) — referred to Young v. Borzoni (2007), 2007 BCCA 16, 2007 CarswellBC 119, 64 B.C.L.R. (4th) 157, 235 B.C.A.C. 220, 388 W.A.C. 220, 277 D.L.R. (4th) 685, [2007] B.C.J. No. 105 (B.C. C.A.) — considered

APPEAL by defendants from judgment reported at Saadati (Litigation guardian of) v. Moorhead (2014), 2014 BCSC 1365, 2014 CarswellBC 2133 (B.C. S.C.), allowing plaintiff’s action for damages for injuries suffered in motor vehicle accident.

S.A. Braun, E. Tolfo, for Appellants D.O Shane, A.T. McLelan, A.A. Pang, for Respondent

Frankel J.A.: Introduction 1 This is an appeal from the judgment of Mr. Justice Funt of the Su- preme Court of British Columbia, awarding Mohsen Saadati non-pecuniary damages of $100,000, for a psychological injury, including personality change and cognitive difficulties, sustained as a result of a motor vehicle accident caused by the negligence of Grant Iain Moorhead. 2 Liability was admitted. The only issue at trial was whether Mr. Saadati was entitled to recover damages as a result of the accident. After counsel had made their respective submissions, the trial judge reserved his decision. 3 In reasons for judgment indexed as 2014 BCSC 1365 (B.C. S.C.), the trial judge found that Mr. Saadati had not sustained any physical injuries in the accident. However, based on the evidence of lay witnesses, the judge found that Mr. Saadati was a “changed man” after the accident 262 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

and, by reason of that change, entitled to damages: para. 65. The judge dismissed Mr. Saadati’s claim for past wage loss. 4 By the time of the trial, Mr. Saadati had been involved in five motor vehicle accidents. This case concerns the second one. The trial judge found the psychological injury sustained in that accident was indivisible from any psychological injury sustained in the following third accident. Prior to trial, Mr. Saadati was declared mentally incompetent and his action was prosecuted on his behalf by a litigation guardian. 5 Mr. Saadati did not allege a psychological injury in his pleadings and did not advance his claim on that basis during closing submissions. Rather, he based his claim entirely on his having sustained a brain injury (concussion) in the second accident, a claim the trial judge rejected. The parties did not know the judge was considering awarding damages on the basis of a psychological injury until he released his reasons for judgment. 6 The appellants raise three grounds of appeal. First, they contend Mr. Saadati was not entitled to damages for a psychological injury, as he did not prove he suffers from a recognizable psychiatric illness. Next, they argue the trial judge erred in finding the injuries from the second accident were indivisible from the first accident. Last, they argue the damage award is excessive. 7 For the reasons that follow, I would allow this appeal on the first ground. As I will explain, Mr. Saadati’s post-accident psychological condition is non-compensable. In light of this, I do not find it necessary to address the other grounds.

Factual Background The Motor Vehicle Accidents 8 The first accident occurred on January 28, 2003. Following this accident, Mr. Saadati was prescribed a variety of painkillers and muscle rela- xants. He also received physiotherapy. The majority of his pain was di- agnosed as soft tissue myofascial pain. He did not experience any cognitive difficulties as a result of this accident. Mr. Saadati commenced an action with respect to this accident in 2004. 9 The second accident occurred on July 5, 2005. Mr. Saadati was driving a tractor-truck without a trailer which was hit by a large sports-utility vehicle driven by Mr. Moorhead. The truck sustained approximately $10,000 in damage. The ambulance attendants who attended noted Mr. Saadati as being emotionally “shaken”. They recorded a Glasgow Coma Saadati (Litigation guardian of) v. Moorhead Frankel J.A. 263

Score of 15, indicating no abnormal signs which would reflect a brain injury. The attendants did not observe any injuries that warranted taking Mr. Saadati to the hospital. Mr. Saadati commenced an action with respect to this accident in 2007. 10 The third accident occurred on September 17, 2005. Mr. Saadati was the passenger in a tractor-trailer unit which rolled onto the driver’s side. There were no other vehicles involved. Mr. Saadati received workers’ compensation benefits as a result of this accident. 11 The fourth accident occurred on March 28, 2008. Mr. Saadati lost control of a tractor-trailer unit which slid into a ditch and struck an em- bankment. He again received workers’ compensation benefits. 12 The fifth accident occurred on March 23, 2009. Mr. Saadati was a passenger in a vehicle being driven by his sister, which was struck by another vehicle.

The Pleadings 13 This matter proceeded to trial on a statement of claim that contained the following allegation: 8. As a result of the said collision the Plaintiff has sustained personal injury, loss and damage and in particular has sustained: a) traumatic brain injury; b) injury to the neck; c) injury to the back; d) injury to the shoulders; e) injury to the chest; f) injury to the arms; g) injury to the legs; h) such further and other injuries as may become apparent through medical reports and examinations, details of which shall be provided as they become known; and the effects or results of the said injuries upon the Plaintiff include headaches, fatigue, dizziness, nausea and sleeplessness. The Plaintiff claims general damages for pain and suffering, loss of earning capacity past, present and future, loss of opportunity, loss of enjoyment of life, loss of physical health, all of which said injury, loss and damage was caused by the negligence of the Defendants. 264 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

The Evidence and Reasons for Judgment 14 It is not necessary to discuss the evidence called on the issue of whether Mr. Saadati sustained physical injuries as a result of the second accident because the trial judge found against him on that issue and he does not challenge that finding. In the section of his reasons entitled “Physical Injuries Arising From The Accident”, the judge, after review- ing that evidence, said this: [32] In conclusion, the Court finds that the plaintiff suffered no further physical injuries nor any aggravation of pre-existing physical injuries related to his significant chronic pain as a result of the July 5, 2005 accident. The plaintiff’s complaints to his medical professionals, the prescriptions he received, and Dr. Chu’s opinion, in particular, support the Court finding that all of the physical injuries of which the plaintiff complained after the accident were present prior to July 5, 2005. I find that prior to the July 5, 2005 accident the plaintiff had developed a significant chronic pain syndrome (as described by Dr. Chu in his May 6, 2004 report) that had not resolved prior to the July 5, 2005 accident. 15 The evidence upon which the trial judge relied in finding a psychological injury was given by relatives and friends of Mr. Saadati. Prior to closing submissions, the judge ruled some of the testimony of those witnesses inadmissible on the basis it was hearsay: 2013 BCSC 636, 46 B.C.L.R. (5th) 392 (B.C. S.C.). As set out in paras. 31-32 of that ruling, the following statements made by Mr. Saadati’s witnesses were excluded: Testimony of Sara Zarei (niece) “He told me he had bad headaches” “He told me he kept hearing the explosion noise in his head” “He told me he was having memory difficulties” Testimony of Afsaneh Saadati (sister) “He told me he was having problems with memory” “He told me he kept hearing the noise of the crash” “He told me he was having headaches all the time” Testimony of Zoleikha [Alanvar] (former wife) “He told me he was having headaches” Testimony of [Partiya] Lotfiazar (not related but plaintiff was “like her second dad”) “He complained to me of headaches” Saadati (Litigation guardian of) v. Moorhead Frankel J.A. 265

“He told me he kept hearing an explosion” 16 At the outset of the section of his reasons entitled “Psychological In- juries Arising from the July 5, 2005 Accident”, the trial judge stated: [33] The Court does find that the plaintiff suffered psychological injury as a result of the July 5, 2005 accident. In reaching this conclusion the Court has considered that although the particular medical cause of the psychological injury is not known the testimony of the plaintiff’s family and friends leads to finding that the July 5, 2005 accident, for which the defendants have admitted liability, caused a psychological injury. This finding is in accordance with the direction provided by the Supreme Court of Canada in Clements v. Clements, 2012 SCC 32, at para. 46: As a general rule, a plaintiff cannot succeed unless she shows as a matter of fact that she would not have suffered the loss “but for” the negligent act or acts of the defendant. A trial judge is to take a robust and pragmatic approach to determining if a plaintiff has established that the defendant’s negligence caused her loss. Scientific proof of causation is not required. [Emphasis added.] 17 Based on evidence given by family members and friends of Mr. Saadati, the trial judge found he suffers from a psychological injury. In so doing, the judge placed particular reliance on the evidence of Sara Zarei, Mr. Saadati’s niece. Ms. Zarei, who lives in the United States of America, testified about telephone conversations she had with Mr. Saadati between the second and third accidents. She did not recall whether she visited him during that period. 18 Ms. Zarei testified that after the second accident Mr. Saadati was not as “charming” or “energetic” as before. She described him as a “totally different person”. 19 Zoleikha Alanvar, Mr. Saadati’s former wife, testified that prior to the second accident he was “active, happy, cheerful, outgoing, very nice.” She said after that accident he had mood swings and was “completely different than before”. Similar evidence was given by other family members and friends. 20 The trial judge expressed his conclusion as follows: [50] Taking a “robust and pragmatic” approach, I find that the July 5, 2005 accident caused the plaintiff psychological injuries, including personality change and cognitive difficulties, despite there not being enough evidence to satisfy me that there was a physical injury or 266 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

concussion. The plaintiff’s personality change and cognitive difficulties such as slowed speech, which could not be hidden from his friends and family, are observable consequences of the plaintiff’s psychological injuries.

Analysis 21 I begin by noting the trial judge does not refer to any authorities dealing with when the psychological or emotional effects of an accident are compensable. The only authority he refers to is Clements (Litigation Guardian of) v. Clements, 2012 SCC 32, [2012] 2 S.C.R. 181 (S.C.C.). That case, however, deals only with proof of causation. 22 The appellants submit that for damages to be compensable a plaintiff must prove he or she suffers from a medically recognized psychiatric or psychological illness or condition. There is considerable authority in support of that position. In Odhavji Estate v. Woodhouse, 2003 SCC 69, [2003] 3 S.C.R. 263 (S.C.C.), Mr. Justice Iacobucci said: [41] Although courts have been cautious in protecting an individual’s right to psychiatric well-being, compensation for damages of this kind is not foreign to tort law. As the law currently stands, that the appellant has suffered grief or emotional distress is insufficient. Nev- ertheless, it is well established that compensation for psychiatric damages is available in instances in which the plaintiff suffers from a “visible and provable illness” or “recognizable physical or psychopathological harm”: see for example Guay v. Sun Publishing Co., [1953] 2 S.C.R. 216, and Frame v. Smith, [1987] 2 S.C.R. 99. Conse- quently, even if the plaintiffs could prove that they had suffered psychiatric damage, in the form of anxiety or depression, they still would have to prove both that it was caused by the alleged miscon- duct and that it was of sufficient magnitude to warrant compensation. ... [Emphasis added.] 23 This Court dealt with this question in Young v. Borzoni, 2007 BCCA 16, 277 D.L.R. (4th) 685 (B.C. C.A.). Mr. and Ms. Young commenced an action against several parties, including Mr. Borzoni, a lawyer who had argued against them in a dispute between them and their landlord. Their statement of claim included the following: 84. As a consequence of the Defendants’ conduct, as set out above, the Plaintiffs have lost trust in government, police forces, landlords, and communities. Saadati (Litigation guardian of) v. Moorhead Frankel J.A. 267

85. As a result of the Defendants’ conduct, as set out above, the Plaintiffs lost their sense of security, their peace and quiet enjoyment of their home, including their patio, while living at Beechwood Park and eventually lost their affordable home with all the ensuing economic and quality of life benefits. 87. The Defendants’ conduct, as set out above, has caused severe emotional stress and mental anguish, and extreme despair. 24 A judge granted a pre-trial application brought by Mr. Borzoni and dismissed the action against him for a number of reasons, including that the statement of claim alleged no cause of action. In dismissing the Youngs’ appeal from that order, Mr. Justice Thackray said: [37] In my opinion the pleaded material facts do not support the proposition that the suggested injuries were caused by the alleged actions of Mr. Borzoni. Recognizable psychiatric illnesses, such as are defined in the Diagnostic and Statistical Manual of Mental Disorders (DSM-IV) for example, amount to visible and provable illnesses for the purposes of the tort of the intentional infliction of mental suffering. However, emotional stress, mental anguish and despair, the emotional states pleaded by the appellants, are not generally accepted as amounting to “visible and provable illness” for the purposes of the tort of the intentional infliction of mental suffering. In Mustapha v. Culligan of Canada Ltd. [(2006), 275 D.L.R. (4th) 473] the Ontario Court of Appeal reaffirmed its earlier position with respect to liability in cases of psychiatric harm: In Canadian law, a plaintiff can recover for the negligent infliction of psychiatric damage if he or she establishes two propositions — first, that the psychiatric damage suffered was a foreseeable consequence of the negligent conduct; second, that the psychiatric damage was so serious that it resulted in a recognizable psychiatric illness: see Linden, Canadian Tort Law, supra, at pp. 389-92. [38] The principle that the psychiatric damage must be so serious that it results in a recognizable psychiatric illness is not novel: See for example: Topgro Greenhouses Ltd. v. Houweling, 2006 BCCA 183 at para. 62 [, 53 B.C.L.R. (4th) 310]; Mackenzie J.A.’s minority con- curring judgment in Devji v. Burnaby (District), 1999 BCCA 599 at paras. 79-113 [180 D.L.R. (4th) 205]; Kalaman v. Singer Valve Co. (1997), 93 B.C.A.C. 93 at para. 63. [39] The appellants have not, in my opinion, demonstrated any error on the part of Bouck J. in his conclusion that the “statement of claim fails to plead the necessary elements of the tort of intentional infliction of nervous shock.” 268 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

[Emphasis added.] See also: Graham v. MacMillan, 2003 BCCA 90 (B.C. C.A.) at paras. 5, 8, (2003), 10 B.C.L.R. (4th) 397 (B.C. C.A.); Thompson v. Webber, 2010 BCCA 308 (B.C. C.A.) at paras. 30-34, (2010), 320 D.L.R. (4th) 496 (B.C. C.A.), leave to appeal ref’d [2010 CarswellBC 3522 (S.C.C.)] [2010] 3 S.C.R. vii; Healey v. Lakeridge Health Corp., 2011 ONCA 55 (Ont. C.A.) at paras. 59-63, (2011), 328 D.L.R. (4th) 248 (Ont. C.A.); Kotai v. “Queen of the North” (The), 2009 BCSC 1405 (B.C. S.C.) at paras. 68, 69, (2009), 70 C.C.L.T. (3d) 221 (B.C. S.C.). 25 Mr. Saadati’s position is that the current state of the law is set out in Mustapha v. Culligan of Canada Ltd., 2008 SCC 27, [2008] 2 S.C.R. 114 (S.C.C.). He says any requirement for a plaintiff to show a recognizable psychiatric or psychological condition has been removed by that decision. Put otherwise, he says the threshold for establishing a compensable psychiatric or psychological injury is lower now than it was before Mustapha. 26 As a result of seeing a dead fly and part of another dead fly in an unopened bottle of water distributed by Culligan, Mr. Mustapha developed a recognizable psychiatric illness, namely, “a major depressive disorder with associated phobia and anxiety”: para. 10. He successfully sued Culligan for damages but that judgment was set aside by the Court of Appeal for Ontario. The Supreme Court of Canada, in reasons written by Chief Justice McLachlin, affirmed the decision of the Court of Appeal. The Supreme Court held that although Culligan had breached the duty of care it owned to Mr. Mustapha, the damages he sustained were too remote to allow recovery. 27 Mr. Saadati relies on the following passage from the Chief Justice’s reasons, particularly the words I have bolded for emphasis: [8] Generally, a plaintiff who suffers personal injury will be found to have suffered damage. Damage for purposes of this inquiry includes psychological injury. The distinction between physical and mental injury is elusive and arguably artificial in the context of tort. As Lord Lloyd said in Page v. Smith, [1996] 1 A.C. 155 (H.L.), at p. 188: In an age when medical knowledge is expanding fast, and psychiatric knowledge with it, it would not be sensible to commit the law to a distinction between physical and psychiatric injury, which may already seem somewhat artificial, and may soon be altogether outmoded. Nothing will be gained by treating them as different “kinds” of per- Saadati (Litigation guardian of) v. Moorhead Frankel J.A. 269

sonal injury, so as to require the application of different tests in law. [Emphasis by McLachlin C.J.] [9] This said, psychological disturbance that rises to the level of personal injury must be distinguished from psychological upset. Per- sonal injury at law connotes serious trauma or illness: see Hinz v. Berry, [1970] 2 Q.B. 40 (C.A.), at p. 42; Page v. Smith, at p. 189; Linden and Feldthusen, at pp. 425-27. The law does not recognize upset, disgust, anxiety, agitation or other mental states that fall short of injury. I would not purport to define compensable injury exhaus- tively, except to say that it must be serious and prolonged and rise above the ordinary annoyances, anxieties and fears that people living in society routinely, if sometimes reluctantly, accept. The need to accept such upsets rather than seek redress in tort is what I take the Court of Appeal to be expressing in its quote from Vanek v. Great Atlantic & Pacific Co. of Canada (1999), 48 O.R. (3d) 228 (C.A.):“Life goes on” (para. 60). Quite simply, minor and transient upsets do not constitute personal injury, and hence do not amount to damage. 28 I do not accept Mr. Saadati’s argument that the above quoted passage brought about a change in the law. I agree with the decision in Healy, wherein Mr. Justice Sharpe, writing for a five-member panel of the Court of Appeal for Ontario, held that Mustapha did not remove the requirement that a plaintiff prove a recognizable psychiatric (or psychological) condition: paras. 39-63. As discussed in that decision, this requirement is also the law in the United Kingdom, Australia, and New Zealand. I also agree with the reasoning on this point in the judgment of Mr. Justice Joyce in Kotai: paras. 64-69. 29 In the alternative, Mr. Saadati submits there was medical evidence at trial to support a finding he suffers from a recognizable psychiatric condition. In that regard, he states in para. 67 of his factum: [T]here was clearly expert evidence before the court. While that evidence may have had limited weight due to the inadmissibility of evidence relied on by Dr. Mok, it was still before the court. It is submitted that even under the strictest version of the test proposed, Mr. Justice Funt was permitted to find compensable psychological harm. Dr. Hiram Mok is a psychiatrist who prepared an expert report tendered by Mr. Saadati. That report was based on an evaluation of Mr. Saadati 270 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

which took place in the summer of 2010, more than a year after the fifth accident. 30 The difficulty with this argument is that the trial judge, who had before him both Dr. Mok’s report and his viva voce testimony, was not satisfied Mr. Saadati had proven he suffers from a recognized medical condition. Given, as Mr. Saadati concedes, Dr. Mok’s evidence was of “limited weight”, it is not for this Court to make a finding based on that evidence that the trial judge was not prepared to make. 31 In the further alternative, Mr. Saadati submits, based on para. 41 of Odhavji Estates, that even if he did not prove he suffers from a “recognizable ... psychopathological harm”, he is nonetheless entitled to damages on the basis that he proved he suffers from a “visible and provable illness”. He says that “illness” was visible to his family and friends and that a medical diagnosis is not required. I disagree. 32 In my view, it is apparent from how those expressions are used in the cases cited in para. 41 of Guay v. Sun Publishing Co., [1953] 2 S.C.R. 216 (S.C.C.), at 238, and Frame v. Smith, [1987] 2 S.C.R. 99 (S.C.C.), at 127-129 — that both connote a medically recognized condition that af- fects a person’s health or well-being. Absent expert medical opinion evidence, a judge is not qualified to say what is, or is not, an illness. 33 For the above reasons, I am of the view Mr. Saadati did not prove an entitlement to compensation arising out of the second accident. 34 Although procedural fairness was not advanced as an independent ground of appeal, I feel compelled to comment on the fact that the trial judge decided the case on a basis neither pleaded nor argued by Mr. Saadati. In my view, he ought not to have done so. 35 As Chief Justice Finch stated in Insurance Corp. of British Columbia v. Patko, 2008 BCCA 65 at para. 37, 290 D.L.R. (4th) 687 (B.C. C.A.), “it is improper for a judge to decide a case on issues that were not argued”. More recently, in Burgsteden v. Long, 2014 SKCA 115 at para. 17, 378 D.L.R. (4th) 562 (Sask. C.A.), Mr. Justice Caldwell stated that “where a trial judge determines a matter on the basis of a legal theory that was not raised in the pleadings and was not argued at trial, the trial judge commits an error of law”. See also Canada Trustco Mortgage Co. v. Renard, 2008 BCCA 343 at paras. 38-39, 298 D.L.R. (4th) 216 (B.C. C.A.); Hawkeye Power Corp. v. Sigma Engineering Ltd., 2012 BCCA 414 at paras. 57-62, 37 B.C.L.R. (5th) 217 (B.C. C.A.). Saadati (Litigation guardian of) v. Moorhead Chiasson J.A. 271

36 It is apparent the trial judge turned his mind to awarding damages on the basis of a psychological injury only after he determined Mr. Saadati had failed to prove the case as advanced by him at trial, namely, that he sustained a brain injury in the second accident. At this point in his deliberations, the judge should have notified counsel he was prepared to consider a claim that had not been pleaded, given Mr. Saadati an opportunity to apply to amend his pleadings, and, if the amendment were allowed, given the defendants, now appellants, an opportunity to call further evidence and to make further submissions: see Guastelluccia v. Scott (1978), 20 O.R. (2d) 241 (Ont. C.A.), at 244. I have no doubt that had the defendants been properly notified, they would have, at a minimum, drawn the judge’s attention to the same authorities they have drawn to this Court’s attention.

Disposition 37 I would allow this appeal, set aside the order of the trial judge, and dismiss the action. 38 I would award the appellants costs of the appeal. As requested by the appellants, I would remit the issue of trial costs to the trial judge for determination.

Saunders J.A.:

I agree

Chiasson J.A.:

I agree Appeal allowed. 272 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

[Indexed as: 1400467 Alberta Ltd. v. Adderley] 1400467 Alberta Ltd., Adderley Holdings Ltd., Herlick’s Welding Ltd., MacPherson Pipeline & Oilfield Consulting Inc., Lynco Construction Ltd., Plaintiffs/Respondents and John Adderley, Colin MacPherson, Ivan Herlick, Jico Holdings Ltd., Ulster Cattle Corp., CJM Consulting Services Inc. and Clouded Moon Consulting Ltd. and Pro Canada West Energy Inc., Defendants/Applicants Colin MacPherson, John Adderley, John Adderley as Trustee of the J&S Adderley Family Trust, Ivan Herlick, Jesse Herlick, Robyn Herlick and Tracy Herlick, Plaintiffs by Counterclaim 1400467 Alberta Ltd. and Lynco Construction Ltd., Defendants by Counterclaim Alberta Court of Queen’s Bench Docket: Edmonton 1103-12774 2015 ABQB 528 J.B. Veit J. Heard: May 22, 2015 Judgment: August 21, 2015 Civil practice and procedure –––– Discovery — Discovery of documents — Privileged document — Miscellaneous –––– Settlement privilege — Certain of plaintiffs were involved in two actions, respectively relating to complex arrangement involving for purchase of L Ltd. shares and transfer of assets and to alleged breaches of limited partnership agreements between parties — Litigation was resolved by settlement agreements — Plaintiffs, now including L Ltd., brought action against defendants with respect to mismanagement of L Ltd. — Defendants took position that plaintiffs might have already been compensated, through settlement, for claims advanced in action — Defendants applied for production of all records relating to settlement — Application dismissed — De- fendants argued that possibility of double recovery or over-compensating fell into exception from settlement privilege, but case law established that compensation principle applied on where only indemnity-type relationship existed between or amongst defendants — Defendants did not establish any possibility that plaintiffs in current action would be overcompensated as result of settlements reached in two actions — Only one of settled actions mentioned L Ltd., and it dealt with acquisition rather than operation of L Ltd. — As L Ltd. was not party to settlement, it was difficult to see how actions could have dealt with its alleged mismanagement — If mismanagement of L Ltd. had been involved in settlement, defendants who were then in control of L Ltd. would have been party 1400467 Alberta Ltd. v. Adderley 273

to settlement negotiations — There was clearly no indemnity-like connection between claims so as to override settlement privilege — Even without considering settlement privilege, defendants did not establish documents were relevant and material. Cases considered by J.B. Veit J.: Apotex Inc. v. Merck & Co. (2010), 2010 FC 1265, 2010 CarswellNat 5009, (sub nom. Merck & Co. v. Apotex Inc.) 91 C.P.R. (4th) 1, 381 F.T.R. 162 (Eng.), [2010] F.C.J. No. 1646 (F.C.) — considered Bellatrix Exploration Ltd. v. Penn West Petroleum Ltd. (2013), 2013 ABCA 10, 2013 CarswellAlta 76, 542 A.R. 83, 566 W.A.C. 83, 358 D.L.R. (4th) 628, [2013] 8 W.W.R. 71, 81 Alta. L.R. (5th) 84, 43 C.P.C. (7th) 145, [2013] A.J. No. 10 (Alta. C.A.) — considered Bombardier inc. c. Union Carbide Canada inc. (2014), 2014 SCC 35, 2014 CSC 35, 2014 CarswellQue 3600, 2014 CarswellQue 3601, [2014] S.C.J. No. 35, (sub nom. Union Carbide Canada Inc. v. Bombardier Inc.) 457 N.R. 279, 55 C.P.C. (7th) 1, 373 D.L.R. (4th) 626, (sub nom. Union Carbide Canada Inc. v. Bombardier Inc.) [2014] 1 S.C.R. 800 (S.C.C.) — considered British Columbia Children’s Hospital v. Air Products Canada Ltd./Prodair Canada Lt´ee (2003), 2003 BCCA 177, 2003 CarswellBC 614, 11 B.C.L.R. (4th) 28, 29 C.P.C. (5th) 15, 224 D.L.R. (4th) 23, 24 C.P.R. (4th) 16, 180 B.C.A.C. 129, 297 W.A.C. 129, [2003] B.C.J. No. 591 (B.C. C.A.) — considered Dos Santos (Committee of) v. Sun Life Assurance Co. of Canada (2005), 2005 BCCA 4, 2005 CarswellBC 5, 17 C.C.L.I. (4th) 180, 5 C.P.C. (6th) 278, 249 D.L.R. (4th) 416, (sub nom. Dos Santos Estate v. Sun Life Assurance Co. of Canada) 207 B.C.A.C. 54, (sub nom. Dos Santos Estate v. Sun Life Assurance Co. of Canada) 341 W.A.C. 54, 40 B.C.L.R. (4th) 245, [2005] 7 W.W.R. 1, [2005] B.C.J. No. 5, 5 C.P.C. (4th) 278 (B.C. C.A.) — considered Dow Chemical Canada Inc. v. Nova Chemicals Corp. (2014), 2014 ABCA 244, 2014 CarswellAlta 1255, [2014] A.J. No. 790, 577 A.R. 335, 613 W.A.C. 335, 12 Alta. L.R. (6th) 162 (Alta. C.A.) — followed Ed Miller Sales & Rentals Ltd. v. Caterpillar Tractor Co. (1990), 72 Alta. L.R. (2d) 330, [1990] 4 W.W.R. 39, 105 A.R. 4, 1990 CarswellAlta 30, [1990] A.J. No. 232 (Alta. Q.B.) — considered Gnitrow Ltd. v. Cape Plc (2000), [2000] 1 W.L.R. 2327, [2000] 3 All E.R. 763, [2000] E.W.J. No. 3985 (Eng. C.A.) — considered Imperial Oil Ltd. v. Calgary (City) (2014), 2014 ABCA 231, 2014 CarswellAlta 1136, 83 C.E.L.R. (3d) 181, 70 Admin. L.R. (5th) 119, 26 M.P.L.R. (5th) 35, 374 D.L.R. (4th) 489, [2015] 1 W.W.R. 516, 580 A.R. 125, 620 W.A.C. 125 (Alta. C.A.) — referred to Inuit of Nunavut v. Canada (Attorney General) (2014), 2014 NUCA 2, 2014 CarswellNun 14, (sub nom. Nunavut Tunngavik Incorporated v. Canada 274 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

(Attorney General)) [2014] 3 C.N.L.R. 193, [2014] Nu.J. No. 13, (sub nom. Nunavut Tunngavik Inc. v. Canada (Attorney General)) 580 A.R. 75, (sub nom. Nunavut Tunngavik Inc. v. Canada (Attorney General)) 620 W.A.C. 75 (Nun. C.A.) — followed Malik Estate v. State Petroleum Corp. (2007), 2007 BCSC 1169, 2007 Car- swellBC 1809 (B.C. S.C. [In Chambers]) — considered Progressive Holdings Inc. v. Crown Life Insurance Co. (2005), 2005 MBQB 175, 2005 CarswellMan 289, 199 Man. R. (2d) 108, [2005] M.J. No. 293 (Man. Q.B.) — considered Sable Offshore Energy Inc. v. Ameron International Corp. (2013), 2013 SCC 37, 2013 CarswellNS 428, 2013 CarswellNS 429, 359 D.L.R. (4th) 381, 37 C.P.C. (7th) 225, 22 C.L.R. (4th) 1, 446 N.R. 35, 1052 A.P.R. 1, 332 N.B.R. (2d) 1, [2013] S.C.J. No. 37, [2013] 2 S.C.R. 623 (S.C.C.) — considered Waterman v. IBM Canada Ltd. (2013), 2013 SCC 70, 2013 CarswellBC 3726, 2013 CarswellBC 3727, D.T.E. 2013T-851, 366 D.L.R. (4th) 287, [2014] 2 W.W.R. 452, 52 B.C.L.R. (5th) 1, 11 C.C.E.L. (4th) 169, (sub nom. IBM Canada Ltd. v. Waterman) 2013 C.E.B. & P.G.R. 8060 (headnote only), (sub nom. IBM Canada Ltd. v. Waterman) 2014 C.L.L.C. 210-008, [2013] S.C.J. No. 70, 452 N.R. 207, (sub nom. IBM Canada Limited v. Waterman) [2013] 3 S.C.R. 985, 347 B.C.A.C. 43, 593 W.A.C. 43, 9 C.C.L.T. (4th) 173, 8 C.C.P.B. (2nd) 1 (S.C.C.) — followed 1400467 Alberta Ltd. v. Adderley (2015), 2015 ABQB 524, 2015 CarswellAlta 1511 (Alta. Q.B.) — referred to

APPLICATION by defendants for production of all records relating to settlement agreement resolving prior litigation by certain plaintiffs.

Dr. McKay White, for Applicants Carmen L. Plante, for Respondents

J.B. Veit J.: Summary 1 Relying on the general principle of compensation whereby a plaintiff should be compensated only for its actual loss, the defendants ask the court to set aside settlement privilege and order the production of all records relating to the settlement of Actions 0903-18024 and 0903 18454. The defendants are not parties in the 18024 and 18454 actions. They state, however, that claim 41(m) made by the plaintiffs in this lawsuit was advanced by them in 18024, and must have been the subject of the settlement; therefore, the possibility arises that the plaintiffs in this lawsuit have already been compensated for the loss they claim in the 18024 settlement. 1400467 Alberta Ltd. v. Adderley J.B. Veit J. 275

2 The application is denied. 3 Although the public policy underlying settlement privilege is compelling, it is not absolute; exceptions to the privilege can be established where a competing public policy outweighs the privilege. The need to ensure that a plaintiff is not over-compensated sometimes grounds an exception to settlement privilege; however, there are many exceptions to the compensation principle. In the result, the potential for over-compensation of a plaintiff will only displace settlement privilege where there is some indemnity-type relationship between the defendant and the persons with whom the plaintiff has settled. 4 There is no indemnity-type situation here. On the contrary, there is no evidence here that suggests the possibility that the plaintiffs in this lawsuit may have already been compensated for the claims they make in this lawsuit as part of the settlement effected in Actions 0903-18024 and 0903 18454. Of those two other lawsuits, only 18024 referred to Lynco. However, Lynco was not a party to the settlement. Moreover, the defendants Adderley, MacPherson and Herlick were in control of Lynco while the settlement was being negotiated; if Lynco had been involved in the settlement, these individuals would have been party to settlement negotiations. In addition, the plaintiffs have disclosed the only primary expert opinion on which they will be relying in this trial and that opinion does not refer to any loans. In the result, the plaintiffs in this action are suing the defendants in this action only for damages arising from the dealings of those defendants. 5 Even tested only on the requirement that disclosure is required only of material records, the applicants would not be entitled to disclosure of the settlement agreements.

Cases and authority cited 6 By the applicants: Sable Offshore Energy Inc. v. Ameron International Corp., 2013 SCC 37 (S.C.C.); Imperial Oil Ltd. v. Calgary (City), 2014 ABCA 231 (Alta. C.A.); Progressive Holdings Inc. v. Crown Life Insurance Co., 2005 MBQB 175 (Man. Q.B.); Dos Santos (Committee of) v. Sun Life Assurance Co. of Canada, 2005 BCCA 4 (B.C. C.A.); Malik Estate v. State Petroleum Corp., 2007 BCSC 1169 (B.C. S.C. [In Chambers]); Dow Chemical Canada Inc. v. Nova Chemicals Corp., 2014 ABCA 244 (Alta. C.A.). 7 By the court: Bombardier inc. c. Union Carbide Canada inc., 2014 SCC 35 (S.C.C.); Bellatrix Exploration Ltd. v. Penn West Petroleum 276 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

Ltd., 2013 ABCA 10 (Alta. C.A.); Ed Miller Sales & Rentals Ltd. v. Caterpillar Tractor Co., [1990] 4 W.W.R. 39 (Alta. Q.B.); Waterman v. IBM Canada Ltd., 2013 SCC 70 (S.C.C.); Inuit of Nunavut v. Canada (Attorney General), 2014 NUCA 2 (Nun. C.A.) [hereinafter Nunavut Tunngavik Inc.]; Apotex Inc. v. Merck & Co., 2010 FC 1265 (F.C.). Appendix A: Plaintiffs’ Breach of Duties’ Claim in this action — Ac- tion No: 1103 12774

1. Background 8 The general background to this litigation has been set out in earlier written decisions. 9 In Action 0903-18024, Douglas Golosky, who was at that time a principal of certain Clearwater companies, sued NPC Integrity and related companies for a little over $7.5 million in relation to a somewhat compli- cated arrangement made in 2008 between Golosky and NPC Integrity in relation to Lynco. Under the arrangement, Golosky would provide approximately $2.7 million to 1400467 Alberta Ltd. - one of the plaintiffs in this action - for the purchase of Lynco shares, 140 would purchase Lynco shares and assets for approximately $2.7 million, 140 would grant Misty River the option to purchase the Lynco shares and assets at fair market value - which was a 15% increase over the purchase price, or a total of approximately $3.1 million - Misty River would grant NPC the option to purchase the Lynco shares and assets at the same fair market value or $3.1 million, and NPC would exercise the option by transferring specific lands to Misty River. All of this occurred as of September 2008. However, in December 2008, Misty River transferred the specific lands back to NPC. In 18024, Golosky was therefore claiming that NPC had failed to pay for Lynco’s shares and assets. 10 For the purposes of this decision, it should be noted that from May 2008 to July 2011, the defendants who have been described as the Ad- derley defendants, i.e. Messrs. Adderley, MacPherson and Herlick, were in control of Lynco. 11 In Action 0903-18454, Oil Sands Energy Holdings Inc. sued Golosky Holdings, Clearwater Holdings, NPC Integrity and related persons for $10 million in relation to alleged breaches of limited partnership agreements 12 In February 2011, settlements were reached in 18024 and 18454. 1400467 Alberta Ltd. v. Adderley J.B. Veit J. 277

13 On February 10, 2011 Newport Partners Income Fund (TSX:NPF.UN) publicly announced that it had acquired all of the units of Golosky Holdings LP and Clearwater Holdings LP held by Oil Sands Energy Holdings Inc. and settled other claims for $19.7 million in cash. 14 In this lawsuit, Douglas Golosky was discovered — in 2013 and 2014 - including on matters relating to the claim made by the plaintiffs in para. 41(m) of their statement of claim. The second round of questioning in 2014 dealt only with the allegations made in para. 41(m) of the statement of claim. The answers Mr. Golosky gave to Undertakings 76, 78 and 82 form the basis of the defendants’ current application. Undertaking No. 76, page 419 (Under Advisement) Q. Advise whether NPC’s failure to make the payment of $2.7 million for the 80 percent interest in Lynco was resolved by litigation or in some other way. A. In February, 2011 NPC and the Golosky group of companies resolved all outstanding issues between them, including the ownership of Lynco by way of settlement of all outstanding litigation between the parties. Undertaking No. 78, page 439 (Under Advisement) Q. Advise if there is any way to find out what percentage of the settlement with NPC addressed the Lynco dispute. A. There is not. Undertaking No. 82, page 477 Q. Make best efforts to provide an accurate number that the defendants caused Lynco to borrow in order to keep it afloat. A. Doug Golosky, through Clearwater Welding & Fabrication Ltd. loaned funds to Lynco in the sum of approximately $4M. 15 On February 17, 2015, based on Mr. Golosky’s answers to undertakings 76, 78 and 82, the defendants asked for copies of the settlement agreement and all documents produced during the settlement negotiations in action 18024. On February 20, 2015 the plaintiffs advised that they were withdrawing the claim made in para. 41(m) of the amended statement of claim and refusing to provide the settlement documents. On March 25, 2015, the defendants executed a “conditional” Form 37, i.e. one in which the parties agreed that, although they had not yet completed all pre-trial process, they undertook to be ready for trial; the only incomplete pre-trial process identified on the proposed Form 37 was the exchange of expert reports. 16 The plaintiffs state that the claims alleged in paras 41(a)-(l) are independent of the claim originally made in para. 41(m). In particular, they 278 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

state that they are not seeking reimbursement of borrowed funds, but seeking only damages caused by inappropriate disbursements caused by the Adderley defendants. In support of that contention, the plaintiffs produce their forensic expert report quantifying their losses and noting that none of the losses claimed relate to reimbursement of borrowed funds. Moreover, the plaintiffs undertake that, other than the possible production of an expert report quantifying Lynco’s losses or Pro Canada’s gains caused by the incorporation of Pro Canada West Energy Inc. post August 2011, they will not produce any further primary expert reports. 17 The defendants brought this application on the understanding that the court would not deal with it unless the court disallowed the defendants’ application to amend their statement of claim so as to allow a claim which is apparently statute-barred. That application was disallowed: 2015 ABQB 524 (Alta. Q.B.).

2. Settlement privilege and its exceptions 18 The importance of the role of settlement privilege both to promote settlements and to improve access to justice was emphasized by the SCC in Sable Offshore and repeated in Union Carbide. 19 It will be recalled that Sable Offshore involved defendants who were not parties to Pierringer agreements which the plaintiff had concluded with other defendants. The terms of the Pierringer agreements, except for the amounts the parties had settled for, had been provided to the remaining defendants. The SCC concluded that the remaining defendants were not entitled to know the amounts for which the other parties had settled. The remaining defendants had been assured that they would not be held liable for more than their share of damages. The SCC concluded: The defendants remain fully aware of the claims they must defend themselves against and of the overall amount that Sable is seeking. There is therefore no tangible prejudice created by withholding the amounts of the settlements which can be said to outweigh the public interest in promoting settlements. 20 Nonetheless, the SCC also noted that settlement privilege was not absolute: 19 There are, inevitably, exceptions to the privilege. To come within those exceptions, a defendant must show that, on balance, “a competing public interest outweighs the public interest in encouraging settlement” (Dos Santos Estate v. Sun Life Assurance Co. of Canada, 2005 BCCA 4207 B.C.A.C. 54, at para. 20). These countervailing interests have been found to include allegations of misrepresentation, 1400467 Alberta Ltd. v. Adderley J.B. Veit J. 279

fraud or undue influence (Unilever plc v. Procter & Gamble Co., [2001] 1 All E.R. 783 (C.A.), Underwood v. Cox (1912), 26 O.L.R. 303), and preventing a plaintiff from being overcompensated (Dos Santos). (Emphasis added) 21 The facts in Dos Santos are usefully summarized in the headnote: Appeal by the plaintiff, Dos Santos, against the defendant, Sun Life Assurance, from an order requiring the plaintiff to produce documents detailing a mediated settlement the plaintiff agreed to on his wife’s behalf in motor vehicle accident litigation. In the main action, the plaintiff claimed under the wife’s group long-term disability insurance provided through her employment. The insurance policy contained a subrogation clause which provided that if disability was caused by the negligence of a third party, 75 per cent of the employee’s net recovery from loss of income in any action must be re- paid to Sun Life to the extent of benefits paid or payable under the policy. The plaintiff signed a subrogation acknowledgment. In the third party litigation, the driver was held to be 100 per cent at fault and damages were mediated with the driver and Insurance Corpora- tion of British Columbia (ICBC). The court approved a global settlement with an amount allocated to Sun Life for disability payments received by the plaintiff on his wife’s behalf. A judge directed the plaintiff to produce all the documents underlying the settlement including economic and actuarial evidence, expert reports, settlement offers, mediation summaries and notes. 22 In justifying an exception to settlement privilege, the BC Court of Appeal noted: 19 However, the test for discharging the burden to establish an exception should not be set too low. The public policy behind settlement privilege is a compelling one. It is so compelling that even threats arising in the context of settlement negotiations may not justify an exception: Unilever, supra at p. 2449-2450. 20 To establish an exception in this case, the defendant must show that a competing public interest outweighs the public interest in encouraging settlement. An exception should only be found where the documents sought are both relevant, and necessary in the circumstances of the case to achieve either the agreement of the parties to the settlement, or another compelling or overriding interest of justice. ... 31 In Gnitrow Ltd. v. Cape plc, [2000] 3 All E.R. 763 (C.A.), Pill L.J. ordered disclosure of parts of a settlement agreement, between 280 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

the plaintiff’s insurer and a potential defendant, to the non-settling defendant. The damages sought by the plaintiff were reimbursement for monies it had paid in compensation to its employees who suffered from asbestosis. Pill L.J. said: “The relevance in the present action of the agreement between the claimant and Newalls [the potential defendant] is in the fact that the claimant is not permitted to recover more than it has paid to its employees. To ensure that there is no excess recovery, it is necessary to know what contribution Newalls has made to the relevant sums. Dis- closure is appropriate for that reason. It is also information relevant to Cape [the non-settling defendant] making a realistic Pt 36 payment and responding realistically to a Pt 36 offer from the claimant. That accords with the overriding objective of enabling the court to deal with the case justly. (p. 767) 32 This Court distinguished Gnitrow, supra, in B.C. Children’s Hos- pital, supra, in which the remaining defendants in a multi-party action for conspiracy to fix gas prices, brought an action seeking disclosure of the settlement agreements between the plaintiff hospitals and the settling defendants. Mr. Justice Hall said: [... I consider that the Gnitrow case is distinguishable on its facts from the case at bar because a relevant and distin- guishing circumstance there was a relationship between what the claimant had paid its employees and the amount it would be permitted to recover from the defendant. 33 I agree with the defendant and the chambers judge (para. 34) that this distinction cannot be drawn in the case at bar. There was no potential for double recovery in B.C. Children’s Hospital since the plaintiffs in that case were suing the remaining defendants “only for damages arising from their dealings with those defendants.” In the case at bar, there is a clear relationship between the sums the plaintiff seeks from the defendant and the sums the plaintiff may have already received in settlement with I.C.B.C. Gnitrow remains a persuasive judgment. (Emphasis added) 23 The way in which Gnitrow Ltd. v. Cape Plc [[2000] 3 All E.R. 763 (Eng. C.A.)] was interpreted by the BC Court of Appeal in British Columbia Children’s Hospital v. Air Products Canada Ltd./Prodair 1400467 Alberta Ltd. v. Adderley J.B. Veit J. 281

Canada Lt´ee [2003 CarswellBC 614 (B.C. C.A.)] is, in fact, supported by the content of Gnitrow itself: 19. My conclusions are as follows: 20.1. Those terms of the national agreement between the claimant’s insurers and Newalls which provide for the settlement as between them of claims arising out of operations at the Cowes shipyard should be disclosed to Cape, so far as they provide for the apportionment of such liability. That will enable Cape to make a Part 36 offer with knowledge relevant to that offer. 21.2. The judge should not be told the terms until he has made his apportionment of responsibility on the basis of evidence called, the terms not being relevant to that task. If necessary, the relevant terms can be shown to the judge when he has completed that task so that he can ensure that the claimant recovers no more than it has paid to its employees. 22. I would confine my conclusion upon the application of this procedure to present circumstances, that is, where a claimant has settled for a fixed sum a specific claim against him and seeks only an indemnity or contribution with respect to the sum paid by him. Other situations will require separate consideration. The circumstances would be different, for example, if a claimant in an action for damages for personal injuries, where damages were at large, were to settle with one of two defendants. It could be a severe disincentive to negotiations generally if, by declining to negotiate, a party can routinely claim the advantage of knowing what other parties have agreed before condescending to negotiate for himself. (Emphasis added) 24 The warning by the BC Court of Appeal against setting too low a bar to the removal of settlement privilege was repeated by our Court of Ap- peal in Bellatrix Exploration: However, courts must proceed cautiously before establishing exceptions to settlement privilege, as the underlying public policy justification is a compelling one: see Brown v. Cape Breton (Regional Mu- nicipality), 2011 NSCA 32 at para 65, 331 DLR (4th) 307. 282 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

25 The limitation expressed in Gnitrow and Dos Santos was respected in Malik Estate where there was also a claim only for an indemnity or contribution: 13 I have concluded that the quantum of the sum that Mr. Khan has agreed to pay as part of the settlement reached with the Plaintiff must be revealed by the Plaintiff. The Statement of Claim makes it clear that the obligation of Mr. Khan and State to pay Mr. Malik a finder’s fee is a joint and several obligation. As well, paragraph 1(c) of the Particulars provided on behalf of the Plaintiff make it clear that the indebtedness owed is joint and several as it is stated that Mr. Khan “guaranteed the terms of” the agreement that Mr. Malik had with State. 14 There is a clear relationship between the sums that the Plaintiff seeks from State and Arakis and the sums that the Plaintiff will receive as a result of the settlement with Mr. Khan. In order that the possibility of excess recovery can be avoided, it is necessary to know what contribution Mr. Khan has made to the sums which the Plaintiff is seeking against Mr. Khan and State. (Emphasis added) 26 Wachowich J., as he then was, added the following in Ed Miller Sales & Rentals Ltd.: On the authority of Waxman and Rush & Tompkins, I am of the view that the better position in law is that a stranger to “without prejudice” negotiations for settlement is not entitled to disclosure of the content of such discussions during examination for discovery in the circumstances of this case. [It is important to note that Wachowich J. was dealing with strangers to the negotiations but co-defendants in the lawsuit - the defendants R. Angus Alberta Ltd. and Caterpillar Tractor Co.; therefore, he was speaking of the type of situation which existed between co-defendants in Sable Offshore.] Applying this rationale to the issue on this motion, it is arguable that a stranger to the negotiations occupies a unique position with respect to the “without prejudice” rule given that the third party has no knowledge of the content of the discussions. With respect to the parties to the negotiations, the policy of encouraging settlements is allowed to prevail; the parties are aware, or know they will become aware, of the contents of the discussions and are allowed to proceed on a “without prejudice” basis to ensure any admissions are not prej- udicially used. For third parties, however, the need for full and fair disclosure of all relevant facts on discovery gains in importance: 1400467 Alberta Ltd. v. Adderley J.B. Veit J. 283

Derco Industries, supra at 141; Schetky v. Cochrane, supra at 824- 825 per MacDonald, C.J.A.. As a matter of principle and logic, there is merit to the argument that the lack of knowledge on the part of the third party shifts the balancing of interests towards disclosure. In my view, however, any benefits derived from permitting disclosure do not outweigh the detriment to the policy of encouraging settlements in these circumstances. It is reasonable to conclude that permitting disclosure to parties who are strangers to the negotiations but parties to the same action would discourage negotiations for settlement to the same extent as would ordering disclosure between the parties to the negotiations themselves. ... It may well be that a different balance is to be struck when the stranger to the negotiations is not a party to the same action 27 With great respect, I suggest that the Progressive Holdings decision on which the applicants rely must be approached with great caution. First, although English decisions, for example, describe one kind of privilege as the “Without prejudice” privilege, that usage appears to be problematic in light of the weight of the jurisprudence which holds that it is the core of the situation which establishes whether or not a privilege ex- ists, not the label attached to it by the parties. Also, the statement in para. 47 to the effect that, where agreement is reached, there is no need for the privilege to continue appears to have been explicitly over-ruled by the Supreme Court of Canada in Sable Offshore: see para. 15. 28 A parallel approach to that taken in the case law with respect to exceptions to settlement privilege to ensure that a plaintiff is not over-compensated is discerned in the case law relating to the treatment of compensation advantage: see, IBM Canada Limited. In that case, the SCC noted: 23 Not all benefits received by a plaintiff raise a collateral benefit problem. Before there is any question of deduction, the receipt of the benefit must constitute some form of excess recovery for the plaintiff’s loss and it must be sufficiently connected to the defendant’s breach of legal duty. ... 25 Even if there is some form of excess recovery, however, there is only a collateral benefit problem if the benefit is sufficiently connected to the defendant’s breach. This requirement of sufficient connection serves a purpose with respect to collateral benefits that is analogous to that served by rules of causation and remoteness with respect to damages. Just as plaintiffs cannot recover all losses, no 284 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

matter how loosely related to the defendant’s breach or how far beyond the parties’ reasonable contemplation, so too the defendant does not get credit for all benefits accruing to the plaintiff, no matter how loosely connected to the defendant’s wrongful conduct. ... 36 Considerations other than the extent of the plaintiff’s actual loss shape the way the compensation principle is applied and there are well-established exceptions to it. For example, the rule that contract damages compensate only the plaintiff’s actual loss is not the only rule that applies to assessing contract damages. As a leading English case put it, “Damages are measured by the plaintiff’s loss, not the defendant’s gain. But the common law, pragmatic as ever, has long recognized that there are many commonplace situations where a strict application of this principle would not do justice between the parties. Then compensation for the wrong done to the plaintiff is measured by a different yardstick”: Attorney General v. Blake, [2001] 1 A.C. 268 (H.L.), at p. 278. In some cases, for example, an award of damages in contract may be based on the advantage gained by the defendant as a result of the breach rather than the loss suffered by the plaintiff: see, e.g., Bank of America Canada v. Mutual Trust Co., 2002 SCC 43, [2002] 2 S.C.R. 601, at para. 25. The rule that damages are measured by the plaintiff’s actual loss, while the general rule, does not cover all cases. In addition, through the doctrines of remoteness and mitigation, the compensation principle gives way to considerations of reasonableness in relation to whether the plaintiff’s expectations of the contract and his or her conduct in response to the breach of it were reasonable. 37 Finally, there are well-recognized exceptions in which benefits flowing to plaintiffs are not taken into account even though the result is that they are better off, economically speaking, after the breach than they would have been had there been no breach. These exceptions are ultimately based on factors other than strict compensatory considerations. As Lord Reid put it in Parry, “[t]he common law has treated [the deductibility of compensating advantages] as one depending on justice, reasonableness and public policy”: p. 13. Or, as McLachlin J. wrote, this issue raises a question of “basic policy”: Ratych, at p. 959. ... The Nature and Purpose of the Benefit 55 The nature and purpose of the benefit, on the other hand, is often a better explanation of why private insurance benefits should or should not be deducted. Two factors relating to the nature of the benefit 1400467 Alberta Ltd. v. Adderley J.B. Veit J. 285

have been particularly important: whether the benefit is an indemnity for the loss caused by the defendant’s breach and whether the plaintiff has directly or indirectly paid for the benefit. 56 I will not attempt to lay down general principles that will cover all possible types of benefits. However, as we shall see, a review of this Court’s jurisprudence supports the following general propositions (subject, of course, to statutory or contractual provisions to the contrary). • Benefits have not been deducted if (a) they are not intended to be an indemnity for the sort of loss caused by the breach and (b) the plaintiff has contributed to the entitlement to the benefit: Gill; Guy. • Benefits have not been deducted where the plaintiff has contributed to an indemnity benefit: Jack Cewe; Cunningham. • Benefits have been deducted when they are intended to be an indemnity for the sort of loss caused by the breach but the plaintiff has not contributed in order to obtain entitlement to the benefit: Sylvester; Ratych. 57 The pension benefit in this case was not intended to be an indemnity for lost wages and Mr. Waterman contributed to the acquisition of his pension through his years of service. This, no doubt, is why it has never been argued that the benefits should be deducted under the principle of mitigation. The pension benefit, therefore, is the type of benefit which should not be deducted. (Emphasis added) 29 Yet a third general approach to the potential over-compensation of a plaintiff is outlined by the Nunavut Court of Appeal in Nunavut Tunngavik Inc.: 79 The appellant correctly points out that “expectation damages” are the normal measure of damages for breach of contract. The general rule is that the plaintiff in a breach of contract case is entitled to be put into the position it would have been in if the contract had been performed:Bank of America Canada v. Mutual Trust Co., 2002 SCC 43 at para. 26, [2002] 2 SCR 601. In most cases this amounts to giving the plaintiff the benefits of the bargain it made. 80 Notwithstanding the presumption in favor of expectation damages, the law recognizes that expectation damages are not always the appropriate measure, and that justice in some cases requires a different approach. As was said in Bank of America Canada at para. 25: 25 Contract damages are determined in one of two ways. Expectation damages, the usual measure of contract dam- 286 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

ages, focus on the value which the plaintiff would have received if the contract had been performed. Restitution damages, which are infrequently employed, focus on the advantage gained by the defendant as a result of his or her breach of contract. Restitutionary damages are available in exceptional cases, where the expectation damages are difficult or impossible to calculate, or where expectation damages would effectively allow the breaching party immunity notwithstanding the breach. ... 83 The courts will generally award only expectation damages for breach of contract, in order to avoid discouraging what is known as “efficient breach”. As explained in Bank of America Canada at para. 31: Courts generally avoid this measure of damages so as not to discourage efficient breach (i.e., where the plaintiff is fully compensated and the defendant is better off than if he or she had performed the contract) (Waddams, supra, at p. 473). Efficient breach is what economists describe as a Pareto optimal outcome where one party may be better off but no one is worse off, or expressed differently, no- body loses. Efficient breach should not be discouraged by the courts. This lack of disapproval emphasizes that a court will usually award money damages for breach of contract equal to the value of the bargain to the plaintiff. So, if the plaintiff effectively “got its bargain”, it is generally not relevant that the defendant might also have prof- ited from the contract or the breach. 84 The flexibility of the common law approach was recently confirmed in IBM Canada Limited v. Waterman ... 30 A slightly different articulation of the difference between the common law and the equitable approach to damages arising from breach of contract is set out in Merck: 613 While both damages and accounting of profits are intended to provide compensation to a wronged plaintiff, the fundamental principles underlying the two remedies and the practical considerations are substantially different. 614 The object of an award of damages is to make good any loss suffered by the plaintiff as a result of the defendant’s infringement of the patent. Quantification of the award is based on the losses suffered by the plaintiff; any gains realized by the defendant because of its 1400467 Alberta Ltd. v. Adderley J.B. Veit J. 287

wrongdoing are not relevant. On the other hand, an accounting of profits is based on the premise that the defendant, by reason of its wrongful conduct, has improperly received profits which belong to the plaintiff. The objective of the award is to restore those actual profits to their rightful owner, the plaintiff, thereby eliminating whatever unjust enrichment has been procured by the defendant. Cal- culation is based on the profits wrongfully gained by the defendant; any other losses suffered by the plaintiff are irrelevant. 31 As can be seen from the case law, settlement privilege has usually only been waived, or even raised, where the person asking for the waiver is a defendant (Bellatrix, Union Carbide, Dow Chemical Canada), co- defendant (Sable Offshore, Ed Miller Sales, Progressive Holdings, Malik Estate, Gnitrow, B.C. Children’s Hospital) or is in an indemnity-type situation (Dos Santos). None of the case law relied on by the applicants deals with a true stranger to the litigation. It is therefore difficult to imagine a situation in which a true stranger to litigation, as are the applicants here, would have a public policy basis for claiming access to a settlement involving others. 32 The law can therefore be summarized in this way: • the public policy underlying settlement privilege is compelling; • exceptions to settlement privilege are justified by competing public policy which outweighs the privilege; • the public policy underlying the compensation principle is a competing public policy which may outweigh settlement privilege; • there are many exceptions to the compensation principle; • the compensation principle applies to over-ride settlement privilege only where there is an indemnity-type relationship between or amongst defendants or potential defendants. 33 Informed by that assessment of the applicable law, the specific circumstances of this request must be addressed.

3. Here, there is no risk of double recovery or compensating advantage 34 The evidence relied upon by the applicants does not suggest the possibility that the plaintiffs in this action would be overcompensated as a result of the settlements reached in actions 0903 18024 and 0903 18454. 35 In coming to that conclusion, I have taken the following into account: • the available evidence supports the plaintiffs’ argument that although both 18024 and 18454 were settled at the same time, the 288 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

cash payment referred to in the February 10, 2011 news release referred to the 18454 lawsuit rather than the 18024 lawsuit. The latter lawsuit is the only one which mentions Lynco. The outcome of the settlement, as is confirmed by the subsequent decision of our court returning the control of Lynco to Golosky, is that although Golosky/Clearwater did not receive any cash or land from NPC Integrity, it did receive complete control of Lynco. That result is not inconsistent with the February 10, 2011 press release; • Lynco was not a party to the settlement. If mismanagement of Lynco were an aspect of the settlement, it is difficult to see how Lynco would not be a party to the settlement as mismanagement could then be raised in a different lawsuit by Lynco; • the defendants Adderley, MacPherson and Herlick were in control of Lynco while the settlement was being negotiated. If Lynco, and the mismanagement of Lynco, had been involved in the settlement, these individuals would have been party to settlement negotiations; and, • the plaintiffs have disclosed the only primary expert opinion on which they will be relying in this trial and that opinion does not refer to any loans. 36 In coming to the conclusion that there is no suggestion that the plaintiffs would be overcompensated if they were to be successful in this lawsuit as a result of the settlement amongst the parties in 18024 and 18454, I have not taken into account the plaintiffs’ argument that, after having been told that the settlement documents would not be produced, the defendants were still prepared to sign a Form 37 stating that they were, essentially, ready for trial, thereby suggesting that they accepted the plaintiffs’ response to their request for the settlement documents. The reason I do not take that argument into account is that, in 2015 ABQB 524 (Alta. Q.B.), I held that the agreement between the parties in this lawsuit concerning amendments to pleadings and the filing of Form 37 had properly been terminated by the plaintiffs. The plaintiffs cannot now invoke the willingness of the defendants to sign Form 37 as an argument in favour of a different issue. 37 Overall, the dispute between Golosky and NPC Integrity had to do with the acquisition of Lynco, not with the operation of Lynco. In this lawsuit, the plaintiffs are claiming for mismanagement of Lynco. Those are two different types of claim. At the very least, it can be said with certainty that there is no indemnity-like connection between these two 1400467 Alberta Ltd. v. Adderley J.B. Veit J. 289

claims. The situation here is similar to that in B.C. Children’s Hospital: the plaintiffs in this action are suing the defendants in this action only for damages arising from the dealings of those defendants.

4. In order to be even producible, documents have to be relevant and material 38 By application of this test alone, even without considering settlement privilege, the defendants would not succeed in their application for production of the settlement agreements. 39 I agree with the applicants that useful guidance about which documents are producible is set out by our Court of Appeal in Dow Chemical. After confirming that the first hurdle which a litigant must meet is that of relevance, the Court of Appeal continues: Materiality 19 The second part of the test is “materiality”. Previously, discovery was available on anything “touching the matters” in issue. Question- ing under the Rules is now limited to topics that are “relevant and material” in order to reduce the scope and expense of pretrial procedures. There is no fixed standard of what is “material”. An element of judgment is required, and questioning is not permitted just because some remote and unlikely line of analysis can be advanced. ... 21 It is not sufficient for a litigant to show some theoretical line of argument in order to establish “materiality”. The case management judge is fully entitled to reject lines of pretrial discovery that are un- realistic, speculative, or without any air of reality. As R. 5.3(1)(b) implies, the case management judge is allowed to reject questioning where the expense involved is disproportionate to the likely benefits that will result. At an interlocutory stage of proceedings, the court should not measure counsels’ proposed line of argument too finely: Weatherill at para. 16. 40 On this application, the defendants’ assertion that the settlement agreements requested are material to the issues in this lawsuit is “unreal- istic, speculative and without any air of reality”.

5. Costs 41 If the parties are not agreed on costs, I may be spoken to within 30 days of the release of this decision. Application dismissed. 290 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

Appendix A

41. The Adderley Defendants have breached their fiduciary, statutory, common law and contractual duties, failed to act as reasonable directors in the circumstances and breached the terms of the Order, particulars of which include, but are not limited to: a. Transferring the pay and benefits of the Employment Agreements to, or in the alternative, causing Lynco to pay to, Ulster Cattle, CJM Consulting and Clouded Moon (the “Related Corporations”) the sum of no less than $1,592,524.00 (the “Consulting Fee”), broken down as follows: i. To Ulster Cattle: $555,336.00; ii. To CJM Consulting: $589,236.00; iii. To Clouded Moon: $447,952.00; without any juristic reason for the same; b. In breach of Lynco’s policies and procedures, causing Lynco to reimburse them or the Related Corporations for expenses unrelated to Lynco’s business activities and/or for which no receipts in support were produced; c. Causing Lynco to pay for legal services provided to and for the sole benefit of the Adderley-Defendants and JICo, in the total sum of no less than $113,230.23 (the “Legal Fees”); d. Causing Lynco to enter into improvident and unconscionable agreements for the rental of equipment from JICo at rates above market rate and for equipment not in good working order (the “JICo Rental Agreements”), causing damages in an amount to be proven at trial, but estimated at no less than $1,098,000.00; e. Causing Lynco to enter into the JICo Rental Agreements in lieu of purchasing the equipment, to the benefit of JICo and to the detriment of Lynco, in an amount to be proven at trial, but estimated at $1,870,000.00; f. Converting by wrongfully taking, using, and maintaining possession or control of personal property owned by Lynco (the “As- sets”), and Personal Properly lawfully possessed by Lynco of a value to be proven at trial, but estimated to be no less than $1,000,000; 1400467 Alberta Ltd. v. Adderley J.B. Veit J. 291 g. Failing to prepare, finalize and file financial returns for Lynco from 2009 to 2010; h. Failing to ensure that all taxes and source deductions were properly withheld and paid; i. Failing to take reasonable steps to ensure payment of accounts receivable; j. Causing JICo to improperly seize Lynco’s property after terminat- ing the Lease with Lynco; k. Wrongfully taking, using and retaining Lynco’s confidential information; l. Wrongfully accelerating Lease payments in favour of JICo; m. As a result of the above acts, causing losses to Lynco and causing Lynco to borrow funds which were used to pay for these losses, in an amount to be proven at trial but estimated at no less than $2,750,000.00; n. In breach of the Employment Agreements and Non-Competition Agreements, competing with Lynco, utilizing Lynco’s confidential information and soliciting Lynco’s clients, customers, employees and contractors; and o. Other such acts of’ negligence and of breach of fiduciary, common law, statutory and contractual duties as may be proven at trial. 292 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

[Indexed as: Vancouver Community College v. Vancouver Career College (Burnaby) Inc.] Vancouver Community College, Plaintiff and Vancouver Career College (Burnaby) Inc., dba Vancouver Career College, also dba CDI College, also dba Vancouver College of Art and Design, also dba Eminata Group, Defendant British Columbia Supreme Court Docket: Vancouver S112258 2015 BCSC 1470 Affleck J. Heard: September 22-26, 29-30, 2014; October 1-3, 6-10, 14-16, 2014; November 26-28, 2014 Judgment: August 20, 2015* Intellectual property –––– Trade-marks — Passing off and unfair competition — Scope of action –––– Plaintiff and defendant were, respectively, “community” and “career” college starting with same city name — Plaintiff brought action for passing off against defendant, alleging that defendant misrepresented its educational services as those of plaintiff — Action dismissed — Plaintiff’s struggle to constrain defendant’s ability to compete with it was motivated by concern that its own inability to invest necessary funds and expertise in sophisti- cated online advertising program left it at competitive disadvantage in comparison with defendant — Passing off action was not intended to be used by plaintiff to handicap defendant that had developed more effective means of marketing its goods and services than plaintiff — Bidding process in keyword advertising was well-established practice, and it would be inappropriate to preclude or limit practice where defendant bid on plaintiff’s name for purposes of keyword advertising as that would disadvantage defendant in comparison to other online advertisers — Defendant did not cause confusion by taking advantage of service offered by providers of search engines — Any confusion that prospective student might experience between very similar names of plaintiff and defendant was irrelevant or chimera — Enrollment in defendant’s college required in person attendance and completion of multiple forms bearing defendant’s name such that there could be no plausible reason for confusion — Finding of plaintiff’s extensive use of trademark VCC, made in rejecting defendant’s application to register

* A corrigendum issued by the court on September 2, 2015 has been incorporated herein. Vancouver Community College v. Vancouver 293

its domain name as trademark, was not available on facts of this case and was not relevant to issues in this action — Plaintiff enjoyed goodwill in educational services it provided but they had not achieved “secondary meaning” in marketplace — Defendant had not caused confusion by misrepresenting its services as those of plaintiff — It was unlikely that plaintiff suffered damage from defendant’s conduct. Intellectual property –––– Trade-marks — Passing off and unfair competition — Confusion as to wares and services — General principles –––– Plain- tiff and defendant were, respectively, “community” and “career” college starting with same city name — Plaintiff brought action for passing off against defendant, alleging that defendant misrepresented its educational services as those of plaintiff — Action dismissed — Point during online search when relevant “first impression” was made was when searcher reached parties’ website and not on page showing results from search engine — Defendant did not cause confusion by taking advantage of bidding process in keyword advertising service offered by providers of search engines, to obtain plaintiff’s name for purposes of keyword advertising — Any confusion that prospective student might experience between very similar names of plaintiff and defendant was irrelevant — Enrollment in defendant’s college required in person attendance and completion of multiple forms bearing defendant’s name such that there could be no plausible reason for confusion — Finding of plaintiff’s extensive use of trademark VCC, made in rejecting defendant’s application to register its domain name as trademark, was not available on facts of this case and was not relevant to issues in this action — Plaintiff enjoyed goodwill in educational services it provided but they had not achieved “secondary meaning” in marketplace — Defendant had not caused confusion by misrepresenting its services as those of plaintiff. Cases considered by Affleck J.: British Columbia Automobile Assn. v. O.P.E.I.U., Local 378 (2001), 2001 BCSC 156, 2001 CarswellBC 229, 85 B.C.L.R. (3d) 302, [2001] B.C.J. No. 151, [2001] 4 W.W.R. 95, 10 C.P.R. (4th) 423 (B.C. S.C.) — considered Canadian Business School Inc. v. Sunrise Academy Inc. (2002), 2002 FCT 1294, 2002 CarswellNat 3659, 2002 CFPI 1294, 2002 CarswellNat 4107, 23 C.P.R. (4th) 220, 226 F.T.R. 117, [2002] F.C.J. No. 1762 (Fed. T.D.) — considered Ciba-Geigy Canada Ltd. v. Apotex Inc. (1992), 95 D.L.R. (4th) 385, 58 O.A.C. 321, [1992] 3 S.C.R. 120, 143 N.R. 241, 44 C.P.R. (3d) 289, 1992 Carswell- Ont 1007, 1992 CarswellOnt 1007F, EYB 1992-67576, [1992] S.C.J. No. 83 (S.C.C.) — considered Consumers Distributing Co. v. Seiko Time Canada Ltd. (1984), [1984] 1 S.C.R. 583, 1 C.P.R. (3d) 1, (sub nom. Seiko Time Canada Ltd. v. Consumers Distributing Co.) 10 D.L.R. (4th) 161, 54 N.R. 161, 29 C.C.L.T. 296, 3 294 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

C.I.P.R. 223, 1984 CarswellOnt 869, 1984 CarswellOnt 801, 29 C.C.L.I. 296 (S.C.C.) — considered GSW Ltd. v. Great West Steel Industries Ltd. (1975), 22 C.P.R. (2d) 154, 1975 CarswellNat 495, [1975] F.C.J. No. 406 (Fed. T.D.) — considered Grant Industries Inc. v. Alfred Grass Gesellschaft m.b.H. Metallwarenfabrik (1991), 39 C.P.R. (3d) 46, (sub nom. Grass (Alfred) Gessellschaft m.b.H. Metallwarenfabrik v. Grant Industries Inc.) 47 F.T.R. 231, 1991 Car- swellNat 1105 (Fed. T.D.) — considered ITV Technologies Inc. v. WIC Television Ltd. (2003), 2003 FC 1056, 2003 Car- swellNat 2744, [2003] F.C.J. No. 1335, 29 C.P.R. (4th) 182, 2003 CF 1056, 2003 CarswellNat 4812, 239 F.T.R. 203 (F.C.) — considered Insurance Corp. of British Columbia v. Stainton Ventures Ltd. (2014), 2014 BCCA 296, 2014 CarswellBC 2124, 62 B.C.L.R. (5th) 331, 377 D.L.R. (4th) 464, 359 B.C.A.C. 146, 615 W.A.C. 146, [2015] 2 W.W.R. 525, 128 C.P.R. (4th) 303 (B.C. C.A.) — considered Interflora Inc. v. Marks and Spencer Plc (2013), [2013] EWHC 1291 (Eng. Ch. Div.) — followed Masterpiece Inc. v. Alavida Lifestyles Inc. (2011), 2011 SCC 27, 2011 Car- swellNat 1613, 2011 CarswellNat 1614, 92 C.P.R. (4th) 361, 332 D.L.R. (4th) 1, 416 N.R. 307, [2011] 2 S.C.R. 387, [2011] S.C.J. No. 27 (S.C.C.) — considered Mattel U.S.A. Inc. v. 3894207 Canada Inc. (2006), 2006 SCC 22, 2006 Car- swellNat 1400, 2006 CarswellNat 1401, [2006] S.C.J. No. 23, (sub nom. Mattel Inc. v. 3894207 Canada Inc.) 348 N.R. 340, 49 C.P.R. (4th) 321, (sub nom. Mattel Inc. v. 3894207 Canada Inc.) 268 D.L.R. (4th) 424, (sub nom. Mattel Inc. v. 3894207 Canada Inc.) [2006] 1 S.C.R. 772, 53 Admin. L.R. (4th) 1 (S.C.C.) — considered Modonese v. Delac Estate (2011), 2011 BCSC 82, 2011 CarswellBC 100, 65 E.T.R. (3d) 254 (B.C. S.C.) — followed Modonese v. Delac Estate (2011), 2011 BCCA 501, 2011 CarswellBC 3463, 73 E.T.R. (3d) 159, 314 B.C.A.C. 33, 534 W.A.C. 33 (B.C. C.A.) — referred to Molson Canada v. Oland Breweries Ltd./Brasseries Oland Lt´ee (2001), 2001 CarswellOnt 596, 11 C.P.R. (4th) 199, [2001] O.J. No. 431, [2001] O.T.C. 129 (Ont. S.C.J.) — considered Private Career Training Institutions Agency v. Vancouver Career College (Burnaby) Inc. (2010), 2010 BCSC 765, 2010 CarswellBC 1341, 8 B.C.L.R. (5th) 186 (B.C. S.C.) — followed Provigo Inc. v. Union Agricole des Cooperatives Laitieres Isigny-Sur-Mer & Ste-M`ere Eglise (1993), 49 C.P.R. (3d) 569, 1993 CarswellNat 2549 (T.M. Opp. Bd.) — considered R. v. Baldree (2013), 2013 SCC 35, 2013 CarswellOnt 8032, 2013 CarswellOnt 8033, [2013] S.C.J. No. 35, 3 C.R. (7th) 10, 445 N.R. 247, 298 C.C.C. (3d) Vancouver Community College v. Vancouver Affleck J. 295

425, 361 D.L.R. (4th) 389, 306 O.A.C. 1, [2013] 2 S.C.R. 520, 124 O.R. (3d) 480 (note) (S.C.C.) — considered R. v. Khelawon (2006), 2006 SCC 57, 2006 CarswellOnt 7825, 2006 Carswell- Ont 7826, 42 C.R. (6th) 1, 215 C.C.C. (3d) 161, [2006] S.C.J. No. 57, 274 D.L.R. (4th) 385, 355 N.R. 267, [2006] 2 S.C.R. 787, 220 O.A.C. 338 (S.C.C.) — considered R. v. Smith (1992), 15 C.R. (4th) 133, 75 C.C.C. (3d) 257, [1992] 2 S.C.R. 915, 55 O.A.C. 321, 139 N.R. 323, 94 D.L.R. (4th) 590, 1992 CarswellOnt 103, [1992] S.C.J. No. 74, 1992 CarswellOnt 997, EYB 1992-67546 (S.C.C.) — considered Red Label Vacations Inc. v. 411 Travel Buys Ltd. (2015), 2015 FC 19, 2015 CarswellNat 427 (F.C.) — considered Statutes considered: Private Career Training Institutions Act, S.B.C. 2003, c. 79 Generally — referred to Trade-marks Act, R.S.C. 1985, c. T-13 Generally — referred to s. 6(5) — considered s. 7(b) — considered s. 9 — considered s. 9(1)(n)(iii) — considered s. 11 — considered

ACTION by plaintiff community college against defendant career college for passing off.

C.S. Wilson, M.D. Brechtel, for Plaintiff L. Brasil, J.M. Campbell, C.D. Hermanson, for Defendant

Affleck J.: The Nature of the Claim 1 This is a passing off action in which the plaintiff, Vancouver Com- munity College, alleges the defendant, Vancouver Career College, prin- cipally through keyword advertising, but through other means as well, misrepresents its educational services as those of the plaintiff. The plaintiff also alleges the defendant improperly uses its “official mark”. The parties share the common initials “VCC”. The plaintiff uses those initials to identify itself, both internally and to the public at large. The plaintiff alleges the defendant improperly also uses those initials both internally and externally. The plaintiff further alleges the defendant has adopted the domain name “VCCollege.ca” thereby creating public confusion to the 296 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

disadvantage of the plaintiff. There is no issue about the defendant using the full name by which it conducts business, Vancouver Career College. 2 The plaintiff’s allegations are set out in detail in the Third Amended Notice of Civil Claim: Commencing in or about mid-2009, the Defendant began a wide- spread campaign, continuing as at the date of filing this Notice of Civil Claim, to advertise and promote its education services in association with the marks VCC and VANCOUVER COMMUNITY COLLEGE. In particular: (a) The Defendant adopted and commenced using VCC and VANCOUVER COMMUNITY COLLEGE in the headings and body of advertisements published on Google and Yahoo! and their search partners; (b) The Defendant adopted and commenced using VCC and VANCOUVER COMMUNITY COLLEGE as keywords in an extensive advertising campaign using advertising services from Google and Yahoo!, such that users searching for VCC or VANCOUVER COMMUNITY COLLEGE would be directed to the Defendant’s websites. (c) The Defendant adopted and commenced using VCC and VANCOUVER COMMUNITY COLLEGE as trade-marks in its advertising and identification in the Google Maps service, such that users searching for VCC or VANCOUVER COM- MUNITY COLLEGE would be directed on Google Maps to the Defendant’s business and campus locations. (d) The Defendant adopted and commenced using VCC in the headings and body of advertisements posted on Facebook, and in the heading “About VCC” on its Facebook site. (e) The Defendant registered a new domain name, VCCollege.ca (the “Domain”) and began using the Domain as the root of the e-mail addresses for its staff. At or about the same time, the Defendant ceased promoting its existing website at www.vancol.com and started promoting a website at www.VCCollege.ca. Between in or about March 2009 and June 2011, directly or through various third parties, for its own benefit and use, the Defendant registered over 80 other domains which are listed in Schedule “A” to this Amended Notice of Civil Action (collectively, the “Domains”), including my-VCC.com, thisisVCC.com, VCC-bc.com, VCC-canada.com, VCC-college.com, VCCollegeemail.com, VCC- careers.com and VancouverCommunityColleges.info, Vancouver Community College v. Vancouver Affleck J. 297

myVCCollege.ca and VCConline.ca, among others. The De- fendant is the beneficial registrant of and controls the Domains. (f) The Defendant adopted VCCollege as its public user name to identify itself on the Twitter social media site. (g) The Defendant adopted and commenced using VCCollege as its public user name for a Flickr online photo gallery. (h) The Defendant adopted and commenced using VCCollege as its public user name, and adopted and commenced using VCC as a keyword tag, on the YouTube video site for promotional videos. 3 The relief sought by the plaintiff is the following: The Plaintiff claims: (a) a declaration that VCC is the owner of all right, title and interest in and to the trade-mark VCC and the trade name and trade-mark VANCOUVER COMMUNITY COLLEGE for use in association with education services; (b) a declaration that, by adopting and using VCC and VAN- COUVER COMMUNITY COLLEGE, including but not limited to VCCollege and the Domains, in association with education services, the Defendant has: i) passed off its business and services as and for the business and services of VCC; ii) directed public attention to its business and education services in such a way as to cause or be likely to cause confusion between its business and education services and those of VCC; iii) adopted in connection with its business, as a trademark or otherwise, marks likely to be mistaken for marks for which public notice has been given under section 9(1)(n)(iii) of the Trade-marks Act; (c) an interim, interlocutory and permanent injunction restraining the Defendant and its affiliates, successors, assigns, princi- pals, officers, directors, employees, agents and all those over whom they exercise or could exercise control, from: i) adopting and using VCC and VANCOUVER COM- MUNITY COLLEGE or any trade-mark or trade name confusingly similar thereto, including but not limited to VCCollege and the Domains, in association with their wares and services; 298 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

ii) directing public attention to their business, wares and services in such a way as to cause or be likely to cause confusion between their business and education services and those of VCC; iii) passing off their business, wares services as and for those of VCC; iv) for greater certainty and without limiting the generality of the foregoing, registering or using VCC and VANCOUVER COMMUNITY COLLEGE and any term confusingly similar thereto, including but not limited to VCCollege and the Domains, as keywords, meta tags, in or as part of the title, path name or URL of a website, in or as part of a domain name, in the heading or body of advertisements, newsletters or other promotional material, as a user name or public account name on the Internet, including but not limited to Google, Yahoo!, Facebook, Twitter, Flickr and YouTube; (d) an order directing the Defendant to deliver up to VCC all material in its possession or control which may offend the relief requested above, or in the alternative to destroy such material under oath; (e) an order directing the Defendant to cease using the Domains and any confusingly similar domain names; and to transfer such domain names to VCC or, in the alternative, to de-register those domain names; (f) general damages or an accounting and payment of the Defen- dant’s profits, whichever VCC may elect after an examination of the Defendant, including production of documents upon the issue of VCC’s damages and the Defendant’s profits; (g) punitive, aggravated and exemplary damages; (h) pre-judgment and post-judgment interest; (i) costs; ...

The Genesis of the Dispute 4 In September 1998, Mr. Cruickshank, then president of the plaintiff, wrote to Mr. Chung, the president of the defendant as follows: You may recall that we met some time ago and discussed the “similarity” of our college names. At that time I also mentioned that we had been advised by many of our students as well as members of the public, that there was some confusion over the use of “VCC” by Vancouver Community College v. Vancouver Affleck J. 299

Vancouver Career College. Vancouver Community College has used the abbreviation for many years and is probably better known as “VCC”. When we conversed, you agreed that you would not use “VCC” but only “Vancouver Career College” and I trusted that to be the case. I see from recent newspaper articles and have been otherwise advised that Vancouver Career College has not discontinued use of this logo. I must advise you that I have contacted our lawyers and that you will be hearing from them. 5 Mr. Chung gave evidence at trial, and in a solicitor’s letter quoted in para. 10 below, took a different view of the agreement alluded to by Mr. Cruickshank in his letter. I am informed Mr. Cruickshank died before this proceeding began. 6 On November 30, 2000, Mr. Dorn, who was the president of Vancou- ver Community College at that time, wrote to Mr. Chung reminding him of the correspondence of 1998 and brought to his attention: The enclosed copy of an advertisement in an October 2000 Japanese newspaper and your use of “VCC” is particularly misleading, since Vancouver Community College has a well known and well respected Hospitality Management Diploma Program. The “VCC” logo is the registered trademark of Vancouver Community College, registered under Section 9(1)(n)(iii) of the Trade-mark Act of Canada. I therefore request that you not use “VCC” in your promotions or advertisements. 7 The advertisement enclosed was mostly in English and was headed VANCOUVER CAREER COLLEGE. In somewhat smaller letters was printed “(VCC) Hospitality Operations Diploma Program”. 8 Mr. Chung did not respond to the November 30, 2000, letter and on January 19, 2001, the president of Vancouver Community College wrote again advising that Vancouver Community College had received a copy of another advertisement from a Japanese newspaper using the initials “VCC” which advertisement he asserts had been placed by the defendant. Mr. Chung was informed that if other “such incidents” were brought to the plaintiff’s attention the plaintiff would “turn the matter over” to its legal advisors. Mr. Chung responded in a letter of January 30, 2001, as follows: Thank you for sharing your concerns in your letter of January 19, 2001. I would like to point out that we do not use “VCC” exclusively in our advertisements, but, in the context of individual ads that have 300 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

mentioned Vancouver Career College several times, we will shorten it to VCC. Your concerns have been taken under advisements, but I would like to assure you that we, at no time, try to present ourselves as Vancou- ver Community College. We take pride in being who we are and use the acronym merely for expediency. 9 This letter eventually prompted a letter from the plaintiff’s solicitors, dated May 17, 2002, threatening legal proceedings in the Federal Court because, it was said, the defendant’s “continued use of VCC in advertisements is a violation of our client’s rights under the Trade-marks Act...” The plaintiff sought an undertaking from the defendant to cease use of the initials “VCC” in all its advertisements. 10 The solicitor for the defendant responded to the plaintiff’s solicitor in a letter of June 18, 2002, referring to the meeting several years earlier between Mr. Cruickshank and Mr. Chung, which was alluded to by Mr. Cruickshank in his September 1998 letter. The letter by the defendant’s solicitor asserted that, during that meeting, Mr. Cruickshank was satisfied that the defendant: ... was not doing anything that would result in confusion between our respective client’s business. It was understood at this meeting that all advertisements by our client would use the acronym “VCC” in tan- dem with the full name “Vancouver Career College” so that could be seen in context. 11 On June 24, 2002, the solicitor for the plaintiff wrote again saying in part that “Mr. Chung [had] agreed [with Mr. Cruickshank] not to use VCC, but rather Vancouver Career College in full would be used in its entirety to avoid confusion” but “your client has commenced using VCC once again in its advertisements. This has caused actual instances of confusion and is likely to continue and cause confusion in the market place”. Proceedings were threatened by the plaintiff in the Federal Court under the Trade-marks Act, R.S.C. 1985, c. T-13 unless an “acceptable response” was received the next day. 12 The defendant did not respond as requested, and the solicitor for the plaintiff sent a further letter, dated July 18, 2002, enclosing a draft Fed- eral Court statement of claim which sought a declaration that the plaintiff owned the trade-mark and trade name “VCC” and an injunction restraining the defendant from advertising using “VCC” and from “passing off its services and business as that of the plaintiff”. The defendant was Vancouver Community College v. Vancouver Affleck J. 301

advised the plaintiff proposed to file the statement of claim on July 25, 2002. It was not filed. 13 It was not until March 15, 2005, that the solicitor for the plaintiff again wrote to complain that the defendant continued to use the trademark “VCC”. A copy of an email “that our client received from a confused product supplier” was enclosed. Once again the plaintiff sought an undertaking that the defendant would cease using “VCC”, failing which Federal Court proceedings would follow. The email the plaintiff complained of had been sent from a personal hotmail address to which the defendant did not have access. The offending email ended with the name of its author, a Ms. Taylor, followed by “VCC Surrey Campus” and a street address. 14 On March 21, 2005, the solicitor for the defendant responded to the March 15 letter saying that: Notwithstanding the fact that, there was no legal basis for your client’s previous complaints, Vancouver Career College, as a measure of good faith, gratuitously offered to refrain from using the “VCC” acronym in an effort to avoid confusion between our respective client’s businesses. There was no legal necessity for them to do so. Now, almost 3 years later, we receive a letter from you complaining about the use of the “VCC” acronym by one instructor in one email on her own personal hotmail account. One would have thought, given the open and positive manner in which our client addressed these issues in the past, a telephone call, rather than a demand letter from counsel would have been sufficient. You will be interested to know that the apparently offensive email communication was not sanctioned by our client. Ms. Taylor has been advised to change her signature and cease using her personal hotmail account for Vancouver Career College business. We are surprised that you would suggest that your client has somehow been damaged by this email. We trust this satisfies your client. If it does not, we have instructions to accept service on behalf of our client. 15 The plaintiff did not take legal proceedings at that time. Its solicitor wrote on November 29, 2005, yet again threatening to take such proceedings because: Vancouver Community College believes that much harm has been done to its reputation and will continue to be done to its reputation if Vancouver Career College’s blatant attempts to trade on the trade- 302 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

mark “VCC” and to pass itself off as Vancouver Community College do not cease. 16 In response the defendant’s solicitors wrote: In your letter, you state that “[d]isappointingly, Vancouver Career College continues to use the trade-mark ‘VCC’ as well as ‘Vancou- ver Community College’ for no apparent reason other than to try to pass itself off as Vancouver Community College”. First of all, our client is entitled to use the acronym “VCC” but has not been doing so on a gratuitous basis. Second, there is absolutely no basis for your allegation that our client has used “Vancouver Community College”. You also suggest that our client uses “VCC” in its email address and signature line. This is simply untrue and even if it were true, our client would be entitled to do so. Third, there is no benefit to our client associating itself with Vancouver Community College. If anything, there would be a benefit to your client associating itself with Van- couver Career College. You also suggest that our client uses “VCC” throughout its web site and uses the phrase “Vancouver Community College” in its web site titles and meta tags. Again, these allegations are untrue and even if they were true our client would be entitled to do so. Vancouver Ca- reer College eventually appears when you search “VCC” or “Van- couver Community College”. Big deal. It appears far down the search results, long after your client’s website appears. Vancouver Community College also appears when you do a search for “Vancou- ver Career College”, but the hit shows up much sooner. 17 A gap in time of almost four years opened before the plaintiff’s solicitor wrote to the defendant on August 18, 2009, to complain that the defendant had: ...resumed its use of the name “Vancouver Community College” for no apparent reason other than to try to pass itself off as Vancouver Community College. For example, we note that Vancouver Career College is advertising on Facebook, the Internet social networking site, using the VCC mark. Vancouver Career College has registered the domain name www.vccollege.ca and is using the VCC mark on its various websites. Vancouver Career College is also using the VCC mark on Twitter and has apparently purchased both “VCC” and “Vancouver Community College” as Google Adwords. Once again, Vancouver Career College is attempting to trade on Vancouver Com- munity College’s goodwill and reputation in the VCC mark and pass itself off as Vancouver Community College. This must stop. Vancouver Community College is determined to protect its reputation and rights in and to the VCC mark. In addition to taking action Vancouver Community College v. Vancouver Affleck J. 303

under the complaint procedures provided by Facebook, Google and Twitter, Vancouver Community College intends to bring legal action against Vancouver Career College and, potentially its [Internet Ser- vice Providers], unless Vancouver Career College finally and unequivocally commits to cease any and all use of the VCC mark. 18 On the same day the Private Career Training Institutions Agency of B.C. (“PCTIA”), a regulatory body for career training institutions created by the Private Career Training Institutions Agency Act, S.B.C. 2003, c. 79, appeared before Mr. Justice Gaul, seeking a permanent injunction prohibiting Vancouver Career College from “using the business names of other member institutions in connection with its internet advertising strategy”: see Private Career Training Institutions Agency v. Vancouver Career College (Burnaby) Inc., 2010 BCSC 765 (B.C. S.C.) [PCTIA]. The injunction was sought on the basis that the defendant’s advertising was “false, deceptive, or misleading and therefore in breach of [PC- TIA’s] bylaw relating to advertising”. The advertising in issue on that application was “keyword advertising”. 19 Gaul J. had been given the evidence of two students who PCTIA alleged had been confused by the keyword advertising of the defendant. The students believed they had applied to Vancouver Community Col- lege when instead they found themselves at Vancouver Career College. Gaul J. observed that: [63] ... in assessing the likelihood of confusion, the Court ought to give the average consumer a certain amount of credit. Consumers are not generally completely devoid of intelligence or of normal powers of recollection; nor are they totally unaware or uni[n]formed as to what goes on around them. The overriding consideration regarding the likelihood of confusion is “all the surrounding circumstances”. This allows the Court to examine and assess any and all facts pecu- liar to the case before it: Mattel, Inc. v. 3894207 Canada Inc., 2006 SCC 22. 20 Gaul J. was satisfied the two students, who were offered by PCTIA as examples of the alleged confusion, were not deceived or misled by the defendant. One student: [72] ... obviously did not examine the results of her Google search very closely, as if she had, she would have discovered that the choice she made was not the one she wanted. That fact was, or should have been, clear to her. By “simply clicking” on the first result she found without properly examining it before she did, I find Ms. Eppele was 304 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

careless and the resulting problems she had flowed from that fact and not from anything done by [Vancouver Career College]. Gaul J. concluded the other student was also imprudent when she conducted her internet search. PCTIA’s application was dismissed. 21 PCTIA was not a passing off or trademark case. Although the finding of carelessness and imprudence in that case may not be directly relevant to the allegations made by the plaintiff in the present action, nevertheless, a number of the witnesses for the plaintiff, who testified about their “confusion”, were also careless when conducting online searches for reasons that cannot be attributed to the defendant. 22 The PCTIA application was heard on October 16 and November 5, 2009, with reasons delivered on May 28, 2010. In February 2010, the plaintiff in this action had complained to the Canadian Internet Registry Authority about the defendant’s registration of the domain VCCOL- LEGE.ca. The Authority determined it lacked jurisdiction to consider the complaint. 23 On January 12, 2010, the solicitor for Vancouver Community Col- lege, apparently unaware of the PCTIA application before Gaul J., had written to PCTIA saying that Vancouver Career College was using the “VCC” mark in a way that was confusing to potential students and to the public at large. The plaintiff raised trade-mark and passing off issues and urged PCTIA to initiate proceedings against Vancouver Career College to ensure its compliance with PCTIA’s bylaws “by ceasing and desisting from its false, deceptive and misleading advertising”. PCTIA’s counsel responded, advising that: ... the issue of whether the use of another institution’s trademarks, logo, or business name, or anything confusingly similar, by a registered institution in any search engine AdWords, or any similar medium for advertising purposes constitutes false, deceptive or misleading activity within the meaning of Bylaw 29.1 is currently an issue which is pending before the Court. In that regard, PCTIA is seeking a declaration on whether the use of AdWords constitutes a “misleading activity”, and PCTIA is also seeking an injunction against Vancouver Career College (and others) to prevent them from using such advertising methods. 24 On January 19, 2010, in-house counsel for the Eminata Group, which is referred to in the style of cause in this action as a name by which the defendant conducts business, emailed PCTIA explaining the defendant’s Vancouver Community College v. Vancouver Affleck J. 305

position in the controversy engendered by the use of the initials “VCC” as follows: ... it does not surprise me that on typing VCC into a google search that one of the results could be Vancouver Career College. It did not happen when I did it a moment ago but I do not doubt has come up along with name like VCC Victory Christian Centre among others, just as searching “Vancouver Career College” will result in a listing for “Vancouver Community College” among others. Having said that, however, I again reviewed with our webmarketing staff to confirm that we do not use “VCC” as a url, tag or stand alone representation for the Vancouver Career College. We do not advertise or market Vancouver Career College as “VCC” in anyway that could be considered a trademark or a trademark violation. We do not hold ourselves out to the public to be VCC. We respect that “VCC” is the trademark of the Vancouver Community College and, although Van- couver Career College’s existence predates the registering of the VCC trademark to Vancouver Community College, we will continue to respect VCC is their trademark. It is more important to note, however, to trademark [a] word or series of letters is not to prevent anyone from ever using those letters or words or ever abbreviating their own name. Such an application of trademark has never been accepted nor should it ever be so... 25 On April 8, 2011, a notice of civil claim was filed to commence the present action. 26 At the beginning of the trial, because of the defendant’s inability to respond in a timely way to the late delivery by the plaintiff of an expert report on the alleged damages, I ordered liability to be heard first with the damages to be assessed if necessary following the release of reasons on liability. I dismissed an application by the plaintiff to amend the third amended notice of civil claim to include the word “orally” as one of the means by which the defendant is alleged by its advertising to have improperly and confusingly directed public attention to itself. As part of the narrative I will refer to the evidence of a telephone greeting frequently used by the defendant. Although the greeting may be indicative of the defendant’s common use of the initials “VCC” to identify itself on the pleadings the oral telephone greeting is not evidence by which I can find the plaintiff has established one element of the test to impose liability. 306 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

The Plaintiff’s Claim that the Defendant Has Violated Subsection 9(1)(n)(iii) of the Trades-mark Act 27 The material portions of s. 9(1)(n)(iii) of the Trade-marks Act provide that: 9. (1) No person shall adopt in connection with a business, as a trademark or otherwise, any mark consisting of, or so nearly resembling as to be likely to be mistaken for, ... (n) any badge, crest, emblem or mark ... (iii) adopted and used by any public authority, in Canada as an official mark for goods or services, 28 Section 11 of the Trade-marks Act, so far as it is material to this trial, reads: 11. No person shall use in connection with a business, as a trademark or otherwise, any mark adopted contrary to section 9 ... of this Act ... 29 The evidence satisfies me that the defendant used the initials “VCC” to identify itself before the plaintiff had registered them as its official mark. The provisions of sections 9 and 11 of the Trade-marks Act do not operate retrospectively so as to prohibit a person from continuing to use a mark which is subsequently declared to be an official mark under the Trade-marks Act. 30 In Insurance Corp. of British Columbia v. Stainton Ventures Ltd., 2014 BCCA 296 (B.C. C.A.), Mr. Justice Frankel, with whom the other judges agreed, wrote at para. 30: [30] By virtue of ss. 9 and 11 of the Trade-marks Act, once a mark has been given official mark status, persons other than the holder of the rights to that mark are prohibited from adopting and using it “in connection with a business, as a trade-mark or otherwise”. This prohibition has been held to operate prospectively only, so as not to affect persons who were using the mark in connection with goods and services prior to it being given official mark status: Canadian Olympic Assn. v. Allied Corp., [1990] 1 F.C. 769 at 774 (C.A.); Ca- nadian Olympic Assn. v. Konica Canada Inc. (1991), 85 D.L.R. (4th) 719 at 721 (F.C.A.), leave ref’d [1992] 1 S.C.R. ix. 31 The plaintiff’s complaint that its official mark “VCC” has been used improperly by the defendant is without merit. Vancouver Community College v. Vancouver Affleck J. 307

Keyword Advertising, in Particular Google AdWords 32 Much of this trial concerned the potential for confusion when the search term “VCC” is entered in a search engine such as Google. I use “Google” for illustrative purposes; also because Google is an advertising platform for both parties, and it enjoys about 80% of the market share in North America for online searched ads. I am informed that Google no longer uses the expression “keyword advertising” but it has become a common expression, including in this trial, and I will use it in these reasons. 33 The plaintiff delivered a notice to admit entitled “Google AdWords”, which describes the nature of the keyword advertising the parties engage in. I cannot improve on the parties’ own language to describe Google AdWords. I heard much evidence about the nature of online advertising, most prominently from Ross McGowan who advises clients on their online advertising. The admitted facts are consistent with the evidence. They read as follows: 2. Google AdWords is an online advertising program provided by Google. 3. Keywords are words or phrases chosen by the AdWords advertiser that can trigger an advertisement to appear. 4. When someone searches Google using an advertiser’s keyword, its advertisement may appear next to the Google search results. Keywords can also trigger advertisements to show on other sites across the internet which are affiliated with Google AdWords. 5. If multiple advertisers use the same keyword to trigger their advertisements to appear, Google uses Ad Rank to determine whose advertisements will appear, and in what order. 6. An advertisement’s Ad Rank is a score based on: (a) The advertiser’s bid (how much the advertiser is willing to pay for the advertisement); (b) The advertisement’s Quality Score, which is based on the expected clickthrough rate of the advertisement, the relevance of the advertisement to the search terms, and the quality of the website the advertisement links to; and (c) The impact of the advertisement’s format. 7. Advertisements cycle through the search results pages based on their Ad Rank. The advertisement with the highest Ad Rank appears in the first eligible position on the search results page, the advertise- 308 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

ment with the second-highest Ad Rank appears beneath it, and so on down the page. 8. An advertiser can use “keyword insertion” to update the text of an advertisement to include one of the advertiser’s keywords that matches a customer’s search terms. When a customer uses one of the advertiser’s keywords in their search, AdWords automatically re- places the selected portion of the advertisement with the keyword that triggered the advertisement to appear. This feature allows one advertisement to appear differently to customers depending on their search terms. 9. The “display URL” is the webpage address that appears with an advertisement, typically shown in green text. The display URL is what appears to users who see the advertisement. 10. The “destination URL” is the URL address for the page in the advertiser’s website where people are sent after they click the advertisement. The destination URL generally isn’t visible in the advertisement. 11. An “ad group” is a set of keywords, ads, and bids which are managed together, in order to show ads to people likely to be interested in them. Separate ad groups can be used for different types of products or services. 12. A “campaign” is a set of ad groups that share a budget, location targeting, and other settings. Campaigns can be used to organize categories of products or services. Where AdWords Advertisements Can Appear 13. The “Google Network” is all of the places where AdWords advertisements can appear, including Google sites, websites that partner with Google, and other placements like mobile phone apps. 14. The Google Network is divided into the “Search Network” and the “Display Network.” 15. The Search Network is a group of search-related websites where AdWords advertisements can appear, including Google search sites and non-Google search sites (like AOL) that partner with Google to show search ads, called search partners. 16. An AdWords advertisement can show on the Search Network when someone searches with terms related to one of the advertiser’s keywords. 17. The Display Network is a group of more than a million websites, videos, and apps where AdWords advertisements can appear. Vancouver Community College v. Vancouver Affleck J. 309

18. AdWords advertisements can be automatically matched to websites and other placements like mobile phone apps when the advertiser’s keywords are related to the sites’ content. An advertiser can also choose to target specific sites, pages about specific topics, or specific demographic groups. 19. “Display partners” are websites in the Display Network that partner with Google to show advertisements. 20. “Placements” are locations on the Display Network where advertisements can appear. AdWords advertisers can choose specific websites on which they want their advertisements to appear by adding “managed placements.” Advertisers can also let Google choose relevant “automatic placements” based on keywords or other targeting methods. 21. AdWords advertisements in the Display Network may be displayed on Gmail. Targeting AdWords Advertisements 22. There are a variety of methods an advertiser can use to target AdWords advertisements on the Search Network and the Display Network. 23. An advertiser can use location targeting to show advertisements to customers in a selected geographic region. For each ad campaign, an advertiser can select locations where advertisements can be shown. The location may be an entire country, areas within a country like cities or territories, or a radius around a location. 24. An advertiser can choose targeting settings on the Display Net- work for each individual ad group. The advertiser can add a single targeting method, such as keywords, or more than one targeting method, such as keywords and placements. Measuring the Effectiveness of a Google AdWords Advertisement 25. Analytics is a Google product that provides in-depth reporting on how people use websites. Analytics can be used to determine what people do on an advertiser’s website after clicking on their advertisement. 26. AdWords advertisers can access their AdWords account history online. This history contains a variety of data, including changes to advertisements, campaign budgets, bids, network settings, keywords, and campaign targeting. 27. A search terms report is a list of search terms that people have used before seeing an AdWords advertisement and clicking it. This 310 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

report shows every search query that resulted in an advertisement being shown and clicked. It can be accessed online by an AdWords advertiser. 28. “Impressions” are a measurement of how often an advertisement is shown. An impression is counted every time an advertisement is shown on a search result page or other site on the Google network. 29. An advertisement’s “impression share” is the number of impressions the advertisement has received divided by the number of impressions it was eligible to receive. Impression share is a way of measuring the share of online advertising space an advertiser has obtained, 30. When someone clicks on an advertisement, such as the blue headline of a text advertisement, AdWords counts that as a “click”. 31. An advertisement’s “clickthrough rate” or “CTR” is a ratio showing how often people who see the advertisement end up clicking it. The CTR is calculated by dividing the number of clicks the advertisement receives by the number of impressions for the advertisement. 34 In its response to the plaintiff’s Google AdWords notice to admit, the defendant admitted paras. 2 through 31 and advised it would admit paragraph 33 if it had the bolded words inserted, as follows: 33. A “conversion” occurs when someone clicks on advertisement and after arriving at the landing webpage then takes an action that the advertiser has defined as valuable to its business, such as making a purchase, filling out a form or signing a contract. An AdWords advertiser can choose what is considered to be a conversion based on what that advertiser recognizes as valuable. I accept the bolded words are consistent with the evidence. 35 The comments of Gaul J, in the PCTIA case, at paragraphs 14 through 25 are instructive: [14] Internet search engines collect and store data about websites, including keywords contained in the website and the location of the website. When a user enters a query into a search engine such as Google or Yahoo, the search terms are compared to the website information stored in the search engine. The search engine then pro- duces a list of websites, which are ranked according to relevance, as determined by the search engine. [15] One way in which a website operator can attempt to increase the traffic to their website is through the use of pay-per-click advertising. The relevant form of pay-per-click advertising in the case at bar is Vancouver Community College v. Vancouver Affleck J. 311

keyword advertising (“Keyword Advertising”). This service allows the website operator to pay search engines for links to their websites to appear as “sponsored links” alongside the search engine’s normal or “organic” search results. [16] In order to use Keyword Advertising, a website operator will create an advertisement which specifies certain keywords to describe their website and set the maximum price they are willing to pay to use those keywords. The keywords then act as a trigger causing the advertisement and the associated link to be displayed. Specifically, when a user enters a search query containing a triggering keyword, the search engine checks to see which advertisement is most relevant and has placed the highest bid for the selected keywords. These advertisements and the associated links are displayed as “sponsored links” in a prominent location among the organic search results. If the user selects one of the sponsored links, that website is charged according to its bid. [17] The website operator will provide instructions to the search engine as to how much money they want to spend in a particular advertising campaign. Those instructions can be modified daily, depending on the success of the keywords or campaign. Once the maximum amount of money to be spent in a campaign is exhausted, including daily maximums, the online advertisement will stop appearing when the keywords are searched. [18] Assuming there are funds available in a campaign, all bids on keywords will result in the online advertisement being displayed if those keywords are used in conjunction with an online search. The higher the bid, the higher the placement of the online advertisement. Bids that are not high enough will result in online advertisements that do not appear on the first results page, which is the most desirable placement. [19] Typically, Keyword Advertising is purchased in a campaign where keywords are grouped around themes aimed at specific marketing goals. For example, an advertising campaign built around “online degrees” could include keywords such as “online”, “online degrees”, “online education”, “online studies”, “online training” and “internet training”. The idea is to try to predict what terms the searcher will use when looking for a product or service. [20] The keyword does not need to match the exact search term entered by the internet user in order to trigger the occurrence of a sponsored link. For example, if one bids on the keyword “college” and the user searches “Vancouver colleges”, the results could include the sponsored link. 312 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

[21] In addition, keywords are not case sensitive, so if a user searches “Business”, it may trigger the occurrence of a sponsored link where the word “business” was bid on. [22] The actual online advertisement that appears as a part of Keyword Advertising typically consists of a title, a description and a URL, and have to fit within the following prescribed limits: • For Google online advertisements, the title line is limited to 25 characters; the two description lines are limited to 35 characters; and the URL is limited to 35 characters; • For Yahoo online advertisements, the title line is limited to 40 characters; the two description lines are limited to 70 characters; and the URL is limited to 40 characters. [23] In the context of the present dispute between the parties, it is important to note that the advertisements that are listed in the search results as “sponsored links” do not displace or replace the organic search results that typically appear free of charge when a user conducts an online search. The sponsored links are displayed along with the organic search results and appear either to the right of the organic search results, separated by a vertical line, or above the organic search results, within either a yellow or blue shaded box. In both cases, the sponsored links are clearly designated as such or as “spon- sor results”. [24] It is also important to note that the person who has conducted a search and who has chosen to examine a sponsored link can always click on the “back” button on their browser and return to the original search results page to locate other sites of interest. [25] Website operators will sometimes specify trademarks or operating names of their competitors as triggering keywords, since these terms are often not bid on, even by their rightful owner. If the owner of the trademark or operating name has not specified their trademark or operating name as a triggering keyword in conjunction with Keyword Advertising, or if their bid for these keywords is too low, other advertisements may appear as a sponsored link and can outrank the rightful owner of the trademark or operating name. Again, it is important to remember that the rightful owner of the trademark or operating name will still appear as part of the organic search results; they will simply not be positioned in the “sponsored links” area of those results. 36 A helpful description of Google AdWords, also consistent with the evidence in this trial, is found at paras. 89 through 98 in Interflora Inc. v. Vancouver Community College v. Vancouver Affleck J. 313

Marks and Spencer Plc, [2013] EWHC 1291 (Eng. Ch. Div.). For ease of reference those paragraphs are attached to these reasons as Schedule “B”. 37 The first form of relief the plaintiff seeks is a declaration that it is the owner of “the trade-mark VCC and the tradename and trademark VAN- COUVER COMMUNITY COLLEGE for use in association with education services”. I understand the defendant takes no objection to a declaration that the plaintiff is entitled to use the name “Vancouver Community College”. The evidence does not persuade me the defendant uses that name. The defendant does object to a declaration that the plaintiff is entitled to the exclusive use of the letters VCC to identify it, and I can see no basis in law to prohibit the defendant from using them. They are frequently used internally by the defendant. The evidence is that it does not intentionally use them to identify itself to the public. The few instances where that has occurred were mistakes that, when detected, were quickly rectified. There is no basis to enjoin the defendant from using the initials “VCC”.

The Law of Passing Off 38 Subsection 7(b) of the Trade-marks Act provides that: 7. No person shall ... (b) direct public attention to his goods, services or business in such a way as to cause or be likely to cause confusion in Canada, at the time he commenced so to direct attention to them, between his goods, services or business and the goods, services or business of another; 39 In ITV Technologies Inc. v. WIC Television Ltd., 2003 FC 1056 (F.C.) at para. 203 the court held that: Subsection 7(b) is a statutory enactment of the common law action of classic passing off. 40 Ciba-Geigy Canada Ltd. v. Apotex Inc., [1992] 3 S.C.R. 120 (S.C.C.), is the leading authority from the Supreme Court of Canada on the tort of passing off. The Court traced its development as follows, at 131-133: The concept of passing-off was developed in 1842 in Perry v. Truefitt (1842), 6 Beav. 66, 49 E.R. 749, which seems to have been the first case in which the expression “passing-off” appeared: “A man is not to sell his own goods under the pretence that they are the goods of another man” (p. 752 E.R.). In Singer Manufacturing Co. v. Loog (1880), 18 Ch. D. 395 (C.A.), aff’d (1882), 8 App. Cas. 15 314 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

(H.L.), James L.J. described passing-off and its origins, at pp. 412- 13: ... no man is entitled to represent his goods as being the goods of another man; and no man is permitted to use any mark, sign or symbol, device or other means, whereby, without making a direct false representation himself to a purchaser who purchases from him, he enables such purchaser to tell a lie or to make a false representation to somebody else who is the ultimate customer. ... [H]e must not, as I said, make directly, or through the medium of another person, a false representation that his goods are the goods of another person. The House of Lords has set out the requirements for a passing-off action on many occasions. In Erven Warnink B.V. v. J. Townend & Sons (Hull) Ltd., [1980] R.P.C. 31, Lord Diplock identified five conditions, at p. 93: there must be (1) misrepresentation (2) by a trader in the course of trade (3) to prospective customers of his or ultimate consumers of goods or services supplied by him, (4) which is calculated to injure the business or goodwill of another trader, and (5) which causes actual damage to the business or goodwill of the trader bringing the action. More recently, in Reckitt& Colman Products Ltd. v. Borden Inc., [1990] 1 All E.R. 873, Lord Oliver reaffirmed, at p. 880: The law of passing off can be summarised in one short general proposition, no man may pass off his goods as those of another. More specifically, it may be expressed in terms of the elements which the plaintiff in such an action has to prove in order to succeed. These are three in number. First, he must establish a goodwill or reputation attached to the goods or services which he supplies in the mind of the purchasing public by association with the identifying “get-up” (whether it consists simply of a brand name or a trade description, or the individual features of labelling or packaging) under which his particular goods or services are offered to the public, such that the get-up is recognised by the public as distinctive specifically of the plaintiff’s goods or services. Second, he must demonstrate a misrepresentation by the defendant to the public (whether or not intentional) leading or likely to lead the public to believe that goods or services offered by him are the goods or services of the plaintiff. ... Third, he must demonstrate that he suffers or, in a quia timet action, that Vancouver Community College v. Vancouver Affleck J. 315

he is likely to suffer damage by reason of the erroneous belief engendered by the defendant’s misrepresentation that the source of the defendant’s goods or services is the same as the source of those offered by the plaintiff. [Emphasis added by Gonthier J.] The three necessary components of a passing-off action are thus: the existence of goodwill, deception of the public due to a misrepresentation and actual or potential damage to the plaintiff. In Canada the Supreme Court has also had occasion to rule on a passing-off action, in particular in Oxford Pendaflex Canada Ltd. v. Korr Marketing Ltd., supra, in which the issue turned primarily on the similar get-up of the parties’ products. In that case this Court stated that in any passing-off action the plaintiff, in order to succeed, must establish that its product has acquired a secondary meaning. [Emphasis added.] 41 In Molson Canada v. Oland Breweries Ltd./Brasseries Oland Lt´ee (2001), 11 C.P.R. (4th) 199 (Ont. S.C.J.) at Kealey J. of the Ontario Su- perior Court of Justice held, at para. 12, that: The first ingredient to succeed in a passing off action requires the plaintiff to establish goodwill or reputation regarding their goods or services. This, in the sense that the consumer by association with the product “get-up” (be it brand name, trade description labelling or other packaging features), recognizes same as distinctive of the plaintiff’s wares. Reputation of this kind is gained through specific and direct association in a potential consumer who, from market exposure and experience, automatically regards the brand name, mark or appearance as uniquely distinctive of the plaintiff’s product. The plaintiff must lead evidence of distinctiveness, a concept which has also been described as the need for the product to have acquired a secondary meaning in the marketplace. [Emphasis added.] 42 Kealey J. warned, at para. 19, that: ... What is sought, if granted, tends to restrain and limit the freedom to compete, and such freedom must be preserved, undiminished in any way, except in the clearest of cases. 43 In British Columbia Automobile Assn. v. O.P.E.I.U., Local 378, 2001 BCSC 156 (B.C. S.C.) Mr. Justice Sigurdson commented on two types of passing off as follows, at para. 55: ... In National Hockey League v. Pepsi-Cola Canada Ltd. (1992), 42 C.P.R. (3d) 390 (B.C.S.C.), affd. (1995) 59 C.P.R. (3d) 216 316 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

(B.C.C.A.), the Court indicated that passing-off cases fall into two broad categories. At trial, Hardinge J., whose judgment was affirmed by the Court of Appeal, said that the first type of case is: ... those where competitors are engaged in a common field of activity and the plaintiff has alleged that the defendant has named, packaged or described its product or business in a manner likely to lead the public to believe the defendant’s product or business is that of the plaintiff. A second type, which is perhaps a more common type of passing-off was described to exist: ...[where] a defendant has promoted his product or business in such a way as to create the false impression that his product or business is in some way approved, authorized or endorsed by the plaintiff or that there is some business connection between the defendant and the plaintiff. By these means a defendant may hope to “cash in” on the goodwill of the plaintiff. 44 The first type of passing off described by Sigurdson J. resembles the allegations of the plaintiff in this action. I repeat that the plaintiff’s complaints are not that the defendant uses the name Vancouver Career College.

The Evidence of the Plaintiff’s “Goodwill” 45 The parties agree that the plaintiff’s goodwill is to be determined as of February 2009, when the defendant commenced the marketing campaign of which the plaintiff complains. 46 Several witnesses testified to the plaintiff’s long-standing presence in Vancouver and the level of recognition it has enjoyed, especially since it changed its name to Vancouver Community College in about 1974. There was evidence of the plaintiff’s high reputation as a career training college and evidence that, in placing students with employers for practical training, it has had success and relies on its good name in that regard. 47 The evidence at trial addressed the goodwill the plaintiff enjoys both as Vancouver Community College and as VCC. 48 Approximately 285 documents described as “historical advertising” were placed in evidence. They range in date from 1965 to 2009 and include program calendars, newsletters, annual reports, program content guides, open house brochures, SkyTrain ads, and press releases. They demonstrate that in the early years of its operation the plaintiff used its full name, in conjunction with the initials “VCC” prominently displayed Vancouver Community College v. Vancouver Affleck J. 317

in a stylized form, to identify itself. The documents show that this practice continued up until 1990. Thereafter the use of the initials “VCC” was largely abandoned until 2013, when Kathleen Chandler was hired by the plaintiff to recover its “brand”. Thereafter the initials “VCC” were again prominently displayed on the plaintiff’s literature. 49 One of the historical advertising documents among the 285 in evidence is an article dated December 19, 1989, in “Spectrum” an internal newsletter of the plaintiff. It reads in part: ... According to David Reycraft, Director of Public Relations and De- velopment, “The need for updating the College’s visual image as conveyed in part through the logo has been apparent for quite some time now.” As far back as October 1986, an External Review Team examining College operations found “that a corporate identity is not extant within either the college community or the metropolitan community.” ... Observers will notice that the stylized “VCC” letters are no longer part of the logo. “While we will probably always call ourselves VCC inside the College — it’s a nice short hand and has a friendly sound — outside the College, what the letters “VCC” stand for is not universally known, especially to newcomers,” said Reycraft. “Unlike 3M which started as Minnesota Mining and Mineral Company or IBM, International Business Machines, we are not large enough in an advertising sense to force that identification.” [Emphasis added.] 50 The plaintiff’s annual budget for online advertising at the time Ms. Chandler was hired was only about $60,000. By contrast, the defendant’s budget at that time was about $2 million annually. This disparity helps to explain the plaintiff’s realistic view that it was not able to “force” its identity with the initials “VCC”. There is no basis on the evidence to find that by 2009 this view had changed. 51 When Ms. Chandler took over her task of “reclaiming the plaintiff’s brand”, as she put it, the plaintiff began to generate some promotional materials on which the letters VCC were printed prominently, but they were not incorporated into the plaintiff’s logo. Instead they became part of the plaintiff’s domain name for its website www.vcc.ca. 318 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

52 I accept, and the defendant acknowledges, that the plaintiff had established “goodwill” in the name Vancouver Community College in Febru- ary 2009, but the evidence does not persuade me that its services had acquired distinctiveness, a “secondary meaning”, as defined by the authorities.

The Authorities on Misrepresentation in Passing Off Actions 53 In Canadian Business School Inc. v. Sunrise Academy Inc., 2002 FCT 1294 (Fed. T.D.), the court wrote, at para. 25: The essence of the [passing off] action is not in the mere copying of the plaintiff’s goods or symbols; it lies in the representation by the copier that its goods are those of the plaintiff ... The defendant need not have intended to misrepresent ... It is essentially a cause of action arising out of confusion. [Citations omitted; Emphasis added.] 54 In Ciba-Geigy Canada, at 133, Gonthier J. referred to Consumers Distributing Co. v. Seiko Time Canada Ltd., [1984] 1 S.C.R. 583 (S.C.C.), where the Court had spoken of the evolution of the tort of passing off as follows: ... attention should be drawn to the fact that the passing off rule is founded upon the tort of deceit, and while the original requirement of an intent to deceive died out in the mid-1800’s, there remains the requirement, at the very least, that confusion in the minds of the public be a likely consequence by reason of the sale, or proffering for sale, by the defendant of a product not that of the plaintiff’s making, under the guise or implication that it was the plaintiff’s product or the equivalent. [Emphasis added.] 55 The question of whether there is likely to be confusion between the products of the parties as a consequence of the defendant’s conduct cannot be answered as an abstraction. It is to be answered in the context of the factual circumstances of the individual case. Section 6(5) of the Trade-marks Act provides a list of some of those circumstances in the context of trade-marks or trade-names as follows: In determining whether trade-marks or trade-names are confusing, the court or the Registrar, as the case may be, shall have regard to all the surrounding circumstances including (a) the inherent distinctiveness of the trade-marks or trade-names and the extent to which they have become known; Vancouver Community College v. Vancouver Affleck J. 319

(b) the length of time the trade-marks or trade-names have been in use; (c) the nature of the goods, services or business; (d) the nature of the trade; and (e) the degree of resemblance between the trade-marks or trade- names in appearance or sound or in the ideas suggested by them. 56 In Grant Industries Inc. v. Alfred Grass Gesellschaft m.b.H. Metallwarenfabrik (1991), 47 F.T.R. 231 (Fed. T.D.), Cullen J. of the Federal Court in reference to the above subsection at paragraph 25 held: These criteria are not exhaustive and it is not necessary to find that all the circumstances exist or that they exist to an equal degree... It must be kept in mind that a decision on the issue of confusion involves a practical determination of fact and therefore each case stands on its own facts. The cases cited can be used to illustrate principles or guidelines, but are not determinative of the specific issues of confusion before me. [Emphasis added.] 57 In Mattel U.S.A. Inc. v. 3894207 Canada Inc., 2006 SCC 22 (S.C.C.) Binnie J. discussed the question of the context in which the likelihood of confusion should be addressed asking, at paras. 56 and 58: What, then, is the perspective from which the likelihood of a “mistaken inference” is to be measured? It is not that of the careful and diligent purchaser. Nor, on the other hand, is it the “moron in a hurry” so beloved by elements of the passing-off bar: Morning Star Co-Operative Society Ltd. v. Express Newspapers Ltd., [1979] F.S.R. 113 (Ch. D.), at p. 117. It is rather a mythical consumer who stands somewhere in between, dubbed in a 1927 Ontario decision of Mere- dith C.J. as the “ordinary hurried purchasers”: Klotz v. Corson (1927), 33 O.W.N. 12 (Sup. Ct.), at p. 13. ... A consumer does not of course approach every purchasing decision with the same attention, or lack of it. When buying a car or a refrigerator, more care will naturally be taken than when buying a doll or a mid-priced meal... 58 In Masterpiece Inc. v. Alavida Lifestyles Inc., 2011 SCC 27 (S.C.C.), a trade-mark case, under the heading “When Considering the ‘Nature of the Trade’ Under Section 6(5) of the Act, What Effect Does the Nature 320 WESTERN WEEKLY REPORTS [2016] 4 W.W.R. and Cost of the Wares or Services Have on the Confusion Analysis?” Rothstein J., for the Court, wrote: [66] A further difficulty is the trial judge’s consideration of the cost associated with a retirement residence. He found that consumers in the market for a retirement residence will take more care and ultimately will be less likely to be led astray by confusing trade-marks than if they were in the market for less expensive wares or services. In taking into account both the nature of the parties’ business under s. 6(5) (c) and the “nature of the trade” under s. 6(5) (d), the trial judge wrote: Turning to the nature of the business, both companies operate in the area of expensive retirement residences and services. People take considerable care in choosing a residence and selecting the company that will provide it. In these circumstances, consumers can be presumed to be less susceptible to confusion about the source of the goods or services they are seeking because they are unlikely to make choices based on first impressions. They will generally take considerable time to inform themselves about the source of expensive goods and services. [Citation omitted; emphasis added by Rothstein J.] [67] This Court has affirmed that consumers in the market for expensive goods may be less likely to be confused when they encounter a trade-mark, but the test is still one of “first impression”. In his reasons, the trial judge used the importance and cost of expensive goods and services to change the likelihood of confusion test from one of first impression of a trade-mark to a test of consumers being “unlikely to make choices based on first impressions”. This approach is not consistent with the test for confusion under s. 6(5) which has been consistently endorsed by this Court, most recently in Veuve Clicquot. [68] While the hypothetical test for likelihood of confusion must be applied in all situations, it is flexible enough to reflect the observation of Binnie J. in Mattel, at para. 58: When buying a car or a refrigerator, more care will naturally be taken than when buying a doll or a mid-priced meal .... [69] However, as one element of the broader hypothetical test, this care or attention must relate to the attitude of the consumer approach- ing an important or costly purchase when he or she encounters the trade-mark, not to the research or inquiries or care that may subse- Vancouver Community College v. Vancouver Affleck J. 321

quently be taken. As Rand J. put it in General Motors Corp. v. Bel- lows, [1949] S.C.R. 678, at p. 692: Do the words then in that situation [refrigerators] lend themselves to the errors of faint impression or recollection of the average person who goes to their market? [Emphasis by Rothsein J.] [70] The focus of this question is the attitude of a consumer in the marketplace. Properly framed, consideration of the nature of the wares, services or business should take into account that there may be a lesser likelihood of trade-mark confusion where consumers are in the market for expensive or important wares or services. The reduced likelihood of confusion is still premised on the first impression of consumers when they encounter the marks in question. Where they are shopping for expensive wares or services, a consumer, while still having an imperfect recollection of a prior trade-mark, is likely to be somewhat more alert and aware of the trade-mark associated with the wares or services they are examining and its similarity or difference with that of the prior trade-mark. A trade-mark, as Binnie J. observed in Mattel, is a shortcut for consumers. That observation applies whether they are shopping for more or less expensive wares or services. [Emphasis added.] Notwithstanding the fact that Masterpiece was not a case which concerned passing off, I have found its analysis of “confusion” helpful. Fur- ther, I have found the discussion in the authorities referred to in the next three paragraphs of these reasons to be instructive. 59 In Teresa Scassa, Canadian Trademark Law, 1st ed (Markham: Lex- isNexis Canada, 2010) at 408 the author wrote: ... Where a user who is deliberately searching for the plaintiff’s wares or services is led to the defendant’s site instead, this is called initial interest confusion. Although relied upon by some courts, the concept of initial interest confusion must be treated carefully when used as a basis for finding the confusion necessary for an action in passing off. The problem with “initial interest confusion” is that it may amount to nothing more than a very initial confusion, and may not be sufficient to be reasonably actionable. For example, in one U.S. case, the Court noted: There is a difference between inadvertently landing on a web site and being confused. Thousands of Internet users every day take a stab at what they think is the most likely 322 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

domain name for a particular web site. Given the limited number of letters in the alphabet, and the tendency toward the use of abbreviations in commerce generally and in domain names in particular, it is inevitable that consumers will often guess wrong. This view has been shared by other courts: “Dissimilarity of goods and services resolves the initial interest confusion question.” Initial interest confusion appears also to assume a relatively inexperi- enced Internet user, and indeed the concept emerged in the early days of the Internet. Early cases relying on initial interest confusion should therefore be approached with caution. As use of the Internet becomes familiar and ubiquitous, the test person for confusion is likely to shift from a tentative and easily confused neophyte to an increasingly savvy user who is familiar with search engines, and capable of sifting through search results. [Emphasis added; Footnotes omitted] 60 “Initial interest confusion” is a term of art in U.S. trademarks law which has not been incorporated into Canadian law: Red Label Vacations Inc. v. 411 Travel Buys Ltd., 2015 FC 19 (F.C.) at paras. 114 and 115. 61 In GSW Ltd. v. Great West Steel Industries Ltd. (1975), 22 C.P.R. (2d) 154 (Fed. T.D.), the Federal Court Trial Division heard an appeal from a decision of the Registrar of Trademarks who had dismissed opposition proceedings by GSW Ltd. against the application of Great West Steel Industries Ltd. for the registration of the trademark “GWS”. The Registrar had found that “letters per se are not inherently descriptive and are not entitled to a wide ambit of protection”. In dismissing the appeal Cattanach J. found at 163: It is clear ... that a trade mark consisting only of letters, and prior to the registration dated May 3, 1968, that is what the appellant’s mark consisted of, without any accompanying distinctive indicia as registered, is a trade mark that lacks inherent distinctiveness. Accordingly a trade mark or design mark consisting only of letters is characterized as a “weak mark”. Cattanach J. went on to hold at 163-164 that: ... where a trader has appropriated letters of the alphabet as a design mark without accompanying distinctive indicia, and seeks to prevent other traders from doing the same thing, the range of protection to be given that trader should be more limited than in the case of a unique trade mark and comparatively small differences are sufficient to avert Vancouver Community College v. Vancouver Affleck J. 323

confusion and a greater degree of discrimination may fairly be expected from the public in such instances. 62 Provigo Inc. v. Union Agricole des Cooperatives Laitieres Isigny- Sur-Mer & Ste-M`ere Eglise (1993), 49 C.P.R. (3d) 569 (T.M. Opp. Bd.), involved proceedings before the Trademarks Opposition Board. The chairman noted, at 575: ...that trade marks comprising or dominated by letters or initials are weak marks which, in the absence of evidence of acquired distinctiveness, are only entitled to a narrow ambit of protection.

The Evidence of the Likelihood of “Confusion” Caused by the Defendant’s Advertising 63 The plaintiff relies both on documents which it submits indicate the likelihood of confusion caused by the defendant’s alleged deceptive advertising practices, and the testimony of witnesses who believe prospective students have often been confused, by the advertising practices of the defendant, about the difference between the parties. Much of the evidence was hearsay and I will return to that difficulty.

Catherine Clement 64 In January 2013, Catherine Clement became the plaintiff’s Executive Director of Marketing and Communications. She describes the plaintiff as a public institution controlled by the Ministry of Advanced Education with about 22,000 full and part-time students. It attempts to keep its tuition low to enable a wide variety of students to attend to “get a skill”. When Ms. Clement became the marketing director she was given the task of developing a marketing strategy to “retain our name”. She testified that while the plaintiff had a good website, she wanted to see it made more accessible to allow “people to remember our name”. 65 Ms. Clement initially was not familiar with Google keyword advertising but became concerned when she learned that the defendant’s name appeared above that of the plaintiff on Google organic sites. In her opinion, this led to confusion. She testified that from a marketing perspective confusion is created when a searcher on Google enters “VCC” or “Van- couver Community College” and is taken to the website of Vancouver Career College. 66 Ms. Clement was shown a print of a blog saying “VCC - sucks”. The text includes the words “VCC = the worst decision you could make!” She found this to be a “big issue” from a marketing perspective. 324 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

67 Ms. Clement was also shown a “Twitterfeed” link to “VCC — sucks.blogspot. com”. She testified that for the plaintiff “reputation is everything” and the public view of the plaintiff might be affected by the Twitterfeed. 68 In cross-examination Ms. Clement agreed the Twitterfeed contained no reference to Vancouver Community College and it appeared to have been created by the same person who had created the blog. She acknowledged that anyone can create a blog and on the blog with the words “VCC-sucks” the name “Vancouver Career College” appeared in bold red and gold colours. She agreed that the person who created that blog must have intended “VCC” to refer to the defendant. She was aware the plaintiff had demanded the blog be taken down. No prospective student had expressed a concern to Ms. Clement that the blog referred to the plaintiff. She had found it herself some months before the trial. 69 Ms. Clement also testified that the plaintiff, like the defendant, uses keyword advertising and bids on words which are not part of the plaintiff’s name, but when searched on Google will trigger the appearance of advertisements for the plaintiff. 70 Ms. Clement was shown a Google screen capture taken in August 2010, in which a search had been entered for “Vancouver Community College” and in the organic results “Vancouver Career College” appeared at the top of the screen followed by “Vancouver Community Col- lege”. The screen capture indicates the search had led to over 6 million results. She agreed that commonly a Google search would turn up a very large number of results depending on the search term used, and it is then for the searcher to sift through the results to determine which are of interest. She agreed the presence of paid advertising does not prevent the appearance of an organic search results. 71 In cross-examination, Ms. Clement was shown a Yahoo! screen capture from August 2010, in which a searcher entered “Vancouver Com- munity College”. The screen capture showed paid results for advertising with Sprott Shaw Community College ranked first at the top of the screen. She acknowledged that Sprott Shaw Community College, at least to some extent, is a competitor of the plaintiff. 72 Ms. Clement’s evidence was that about 39% of the plaintiff’s advertising budget has usually been spent on print advertising and, although her predecessors had no means to track which form of advertising had been effective in bringing in new students to Vancouver Community College, she believed print had been effective. This had not changed over Vancouver Community College v. Vancouver Affleck J. 325

time but the proportion of online responses from prospective students had increased in recent years and had become an important source of students. 73 Ms. Clement was shown a screen capture of a Google Maps search of “VCC” from September 2010. In it is seen, as an organic link, a photo- graph of a Vancouver Community College sign with the “mountain logo”. There were also sponsored links to both Vancouver Career Col- lege and Kwantlen University which Ms. Clement testified would have come up on the screen when the search term “VCC” had been entered. 74 Another Google Maps screen capture from September 2010, was presented to Ms. Clement in which the search query was for “VCC” and sponsored links for paid advertisements were shown. One was for Van- couver Career College and another for Royal Roads University. The advertisement for the defendant, which shows the website as “www.VCCollege.ca”, caused Ms. Clement concern “from an advertising point of view” not, as she said, from the point of view of competition, but making it appear “you are somebody else”. Ms. Clement testified she had heard from only one person who spoke of confusion.

Shammai Najera 75 In 2011, Shammai Najera became interested in paralegal training. She heard the plaintiff had a reputable program and she conducted a Google search for “VCC”. She then saw an advertisement on her screen apparently on the organic side for Vancouver Career College. She moved from the organic side to the sponsored side and the first advertisement on the top of the sponsored listings was for Vancouver Career College. She went to the defendant’s website and later received a telephone call from a representative of the defendant. She could not recall if the representative referred to “VCC” during the call. She attended an interview at what she “assumed” was Vancouver Community College. Ms. Najera acknowledged that when she went to the interview, there was signage for the Vancouver Career College and testified she “probably did look at it, but it didn’t click”. 76 Nothing in the interview process disabused Ms. Najera of the assumption that she was at the campus of the Vancouver Community College. She enrolled to take a paralegal program. Upon doing so she received a voucher for an iPad in which the campus at which she attended was identified as “VCC — Vancouver”. She was assigned an email address for internal emails which was “shammai.najera@my VCCollege.ca”. She 326 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

testified that “all students” at the defendant’s campus referred to it as “VCC”. She later learned of the present lawsuit, as did other students, and “everybody was confused” and “upset”. 77 In cross-examination Ms. Najera agreed she had control over the online searches and she understood the results were usually shown as organic and sponsored results. After Ms. Najera’s initial contact with the defendant, but before registering she received an email the subject of which was “online interview guide”. The email begins “Dear Shammai, thank you for your recent inquiry to Vancouver Career College...”. The Interview Guide was not attached to the email. About an hour later she received another email with the Interview Guide attached. The words “Vancouver Career College” were plainly visible on the top of its first page. 78 Ms. Najera was taken on a tour of the defendant’s Vancouver campus prior to registering. There was signage both inside and outside the building identifying it as Vancouver Career College. Ms. Najera, again prior to registration, received another email which began “Hi Shammai, it’s Kim at Vancouver Career College”. She signed a “Student Enrolment Agreement” which had “Vancouver Career College” printed in large letters on its first page. Ms. Najera testified she “wasn’t really focusing or paying attention” to the name of the college on the top of the page. 79 Ms. Najera was also shown a Google screen capture of August 21, 2010, which she agreed showed a search result similar in format to that she had seen when she had entered the search term “VCC”. On the screen capture there were two organic results shown. “Vancouver Career College” was shown immediately above “Vancouver Community college”. Both results had a search box to permit the search to continue and both were equally visible to the searcher.

Ryan Waldner 80 Ryan Waldner testified that he was soon to begin a culinary program with the plaintiff. He had lived near the plaintiff’s campus in Vancouver. He conducted a Google search for “VCC” on his smart phone. He believed those were the initials of the plaintiff. When he conducted the search he also saw the defendant’s domain “VCCollege.ca”. Shortly thereafter he received a telephone message to call a person he believed was “Kathleen”. He called the number provided and heard the greeting “VCC how can I help you”. He was invited to come to an interview. He made an appointment and went to the plaintiff’s campus, which was the Vancouver Community College v. Vancouver Affleck J. 327

location with which he was familiar. When he arrived for his appointment he was informed that there was no record of it. He then realized that he had made his appointment with the defendant. He did not register with the defendant nor did he attend its campus. 81 In cross-examination Mr. Waldner was shown a printout of a text message sent to his mobile phone which read “Don’t forget you have an appointment at Vancouver Career College tomorrow...”. A somewhat later text message read “the school is located at 1100 - 626 West Pender Street between Granville and Seymour, near Waterfront Station. See you at 1 p.m. Kathleen”. The address given in the text message was for Van- couver Career College.

Viviana del Cengio 82 Viviana del Cengio hoped to enrol with the plaintiff to take a paralegal course. Initially she knew little of the plaintiff. She googled “VCC” but paid little attention to the advertisements that appeared on the screen. She was contacted by a person named Elizabeth Liang who Ms. del Cengio believed was with the plaintiff. She was actually with the defendant and Ms. del Cengio eventually enrolled with the defendant. In doing so she signed a document which lists the detailed cost of the two-year paralegal program for a total of $25,127. The document had the logo of the defendant printed on the top next to the words “Vancouver Career College”. 83 Ms. del Cengio acknowledged she was familiar with Internet searches and aware of the use of organic and sponsored advertisements. When she searched “VCC” she testified she was taken only to the domain name of the defendant and to its website. 84 Ms. del Cengio completed a “personal data sheet” at the request of Elizabeth Liang. It had the name Vancouver Career College at the top of the page in large letters. A four-page outline of the paralegal course was signed by Ms. del Cengio with the defendant’s name prominently printed on all of its pages.

Jessica Jamison 85 Jessica Jamison saw “pop-up ads” on Facebook which she recalled referred to “VCC College”. The ads among things said “apply now”. She had been considering applying to Langara College, but had walked past the Vancouver campus of the plaintiff “off the SkyTrain station”. Ms. Jamison clicked on an ad which led her to a screen showing an advertise- 328 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

ment for the Kelowna campus of Vancouver Career College. She went to that campus and completed an “Employment History”. In answer to the question “How did you hear about VANCOUVER CAREER COL- LEGE?” she wrote “in Vancouver, walked passed (sic)”. After registering with the defendant Ms. Jamison signed an iPad voucher on which was printed “VCC-Kelowna Campus”. Ms. Jamison’s evidence was that it was common for students at the defendant’s Kelowna campus to refer to it as “VCC”. She believed Vancouver Community College and Van- couver Career College “were the same thing”. She agreed the Kelowna campus of the defendant had a banner across the front of its building which read “Vancouver Career College”. She also agreed she had registered with the defendant in person following an interview and had completed a “personal data sheet” with the name “Vancouver Career Col- lege” printed on the top of the page. She also signed a four page medical office assistant program outline with “Vancouver Career College” printed on all four pages. Further she signed a student loan form showing a “balance owed” of $11,648. The form had VANCOUVER CAREER COLLEGE printed on the top.

Pretti Grewalson 86 Pretti Grewalson was employed by the defendant to interview and enroll prospective students. She testified that “quite often” prospective students were confused about whether they had come to the plaintiff’s or the defendant’s campus She testified that as often as twice a day students referred to the defendant as “VCC”. 87 During interviews of prospective students Ms. Grewalson would advise them that they had come to the defendant’s campus. She testified that this often happened near the end of the interview, and that sometimes prospective students believed that two colleges were affiliated. 88 In cross-examination Ms. Grewalson testified that she was trained when leaving a telephone message with a prospective student to introduce the message with the words “I am calling from the Admissions De- partment of Vancouver Career College”. She adhered to that training during her employment with the defendant. If the person called answered the telephone Ms. Grewalson again used the defendant’s full name in her response. Vancouver Community College v. Vancouver Affleck J. 329

Bridget Jones 89 Bridget Jones investigated the plaintiff for a medical laboratory assistant program in which she was interested. She used Google and recalled that she had searched both “VCC” and “Vancouver Community Col- lege”. She had only a vague memory of the search results that came onto her screen. She booked an appointment at what she thought was the Van- couver Community College. She went to a building in Cloverdale for the appointment. She thought this location was “strange”. During her interview she commented to the interviewer that she was confused because she had expected to attend the interview “downtown”. She testified she was told by the interviewer school downtown was a “different school”. Ms. Jones did not register with the defendant. 90 During her cross-examination Ms. Jones was shown a copy of an email which had been sent to her prior to her appointment. The email was headed “Appointment confirmation — Vancouver Career College”. Included in this email was a Google map of the defendant’s address for the location of the interview.

Harkiran Bajwa 91 Harkiran Bajwa hoped to further her education through Vancouver Community College to become a licensed practical nurse. She searched on Google for “VCC LPN” and “two links” came up on her screen: one for the plaintiff and the other for the defendant. She “stumbled onto Van- couver Career College” while assuming Vancouver Career College and Vancouver Community College were “the same”. 92 In her evidence in chief Ms. Bajwa testified that when she called the telephone number provided in the search result the person who answered said “something along the lines of ‘good afternoon VCC how can I help you’”. She made an appointment, which she thought was with the plaintiff. Ms. Bajwa later telephoned to the Vancouver Community College to confirm the appointment and was told there was no record of it. She testified she had not heard of Vancouver Career College before attempting to book an appointment with Vancouver Community College. 93 In cross-examination Ms. Bajwa agreed that when the telephone was answered at Vancouver Career College the greeting may have been “good afternoon VCC Vancouver Career College”. She also testified that she was not familiar with online advertising, and when she was shown screen captures of Google keyword advertising she was not able to identify which portion of the screen showed the advertising. She was aware 330 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

that if a searcher clicked on a link and the result was not of interest she could return to the previous page and try another link to a different website.

Angela Abbinante 94 Angela Abbinante took up employment with the plaintiff in 1980, and became a student admissions advisor. She testified that, since 2009, there had been increased confusion among prospective students between the two colleges. Prospective students told her they had Googled the plaintiff, but had been taken to the defendant’s website. She also testified that she remembered that on two occasions she had telephoned to the defendant’s number and received the response “VCC”. 95 Ms. Abbinante made two affidavits in Trade-Mark proceedings brought by the plaintiff in opposition to the defendant’s use of “VC Col- lege” and “VCCollege.ca”. The first affidavit, made on October 1, 2012, refers to a discussion with a prospective student named Ms. Dhillon on November 3, 2011. Ms. Dhillon had apparently searched “‘VCC’ on the Internet” and made an appointment “with the Career College as it turned out” but cancelled when she realized it was not with the plaintiff. Ms. Abbinante had deposed that she “had numerous experiences similar to this example”, of which she had not kept notes, but had given contact information of those “whose names were recorded by the staff in my office” to the plaintiff’s counsel. The second affidavit of Ms. Abbinante refers to another encounter with a prospective student Ms. Feng who had also “searched for contact information for VCC on the Internet” and “had been led to the Career College”. Ms. Abbinante again deposed that contact information of the students “whose names were recorded by the staff in my office” was given to counsel for the plaintiff, but she believed none of those persons whose names were recorded had responded or had been willing “to provide a statement... with the exception of one Ms. Feng”. 96 Ms. Feng did not testify, but an unsigned and undated typed document bearing the name Jennica Feng reads: This student had an appt. with me regarding the Hospitality Manage- ment Program. She was disappointed because she was referred by a friend to contact VCC to apply for the Hosp. Management or Early Childhood Program. She thought the person meant Vancouver Com- munity College. She googled the Web to find our location and address and information and of course the first thing that popped up was Vancouver Career College. She called to make an appointment Vancouver Community College v. Vancouver Affleck J. 331

with an Advisor. They answered the phone as VCC. The address she had was 625 West Pender Street, Downtown Campus. When she went for the appointment, with an Advisor named Elizabeth (didn’t have the last name), the Advisor referred to their college as VCC, and said they were number one college for teaching Hospitality and Early Childhood. The person said they were confused, as the cost and expense of the program was triple the amount. After the appt. realized that she made the Appt. with the wrong institute. Person was ESL so English was her second language, however she explained as best she could her experience. 97 Three other typed unsigned notes, apparently made by staff of the plaintiff, were produced at trial through Ms. Abbinante. One is dated No- vember 3, 2001 and bears the name Sarabjit Dhillon. The note reads in part: “This student was very confused as to the date and time of her appt. Initially she researched on the Web to find our address and phone number. It was a matter of brand identity, as she by mistake called Vancouver Career College being the first college which shows up on the list. She contacted them and originally made an appt. with them not realizing it wasn’t VCC. She cancelled the appointment with Vancouver Career College, she then contacted us and made an appt. 98 I need not quote from the other two notes. These notes, like those apparently made following conversations with Ms. Feng and Ms. Dhil- lon, have hearsay problems.

Christiana Clayton 99 Christiana Clayton was an admissions representative for “CDI Col- lege” a name through which the defendant conducts part of its business. She testified that it was common for the initials “VCC” to be used internally by staff members and by students. When she answered the telephone it was her practice to greet the caller with “It’s a beautiful day at Vancouver Career College”. She testified that other representatives of the defendant sometimes used the initials “VCC” as a telephone greeting. In 2011, all staff, including Ms. Clayton, were told not to use the initials “VCC” either internally or externally in any circumstance. Ms. Clayton testified that she could confidently say that she had never allowed an applicant to leave the campus of Vancouver Career College thinking they 332 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

were at a different college. Some flavour of Ms. Clayton’s evidence is found in the following passage from her evidence in chief: Q. All right. Did you ever discuss this — this — these occur- rences, this confusion, with anyone? A. Sure. Yeah. I mean we’d have — you know, you talk to reps on a daily basis at difference campuses, or you would men- tion to your managers. I mean there was a meeting we had at the Vancouver Career College location in Abbotsford. I was sitting with Posie Fletcher and Colin Crowie, the two other advisors in Abbotsford. And we talked about the brands. And I asked Posie, like do you think you guys get a lot of people calling you for VCC? And she says, all the time. People call us all the time thinking we’re Vancouver Community Col- lege, or assuming we’re Vancouver Community College. Q. And sorry; who is Posie Fletcher? A. She was the main admissions representative at Vancouver Ca- reer College Abbotsford. She was one of their legacy staffers. So she was with the original group.

Susan Ip 100 Susan Ip is a professional investigator who made a pretext call to the defendant, at the request of the plaintiff. She conducted a search of “VCC” on Google and turned up no results associated with the defendant. The search was conducted in February 2014. 101 Ms. Ip also attended at the Vancouver Career College and purported to conduct an interview as if she was a prospective student. She was given printed materials on all of which was clearly printed the name Vancouver Career College.

Debbie Vanden Dungen 102 Debbie Vanden Dungen was a supervisor of program advisors and recruitment for the plaintiff. She testified that when she joined the plaintiff’s team, concern about confusion between the plaintiff and defendant was growing among the management of Vancouver Community College. In 2012 and 2013 she was asked to document incidents of such “confusion”. She asked her staff to create a “Word” document to store their experiences of “confusion”. Ms. Vanden Dungen herself had noted the names of 13 people who may have been confused about whether they had attended the plaintiff or the defendant. Ms. Vanden Dungan did not meet any of the students herself and none of the people Ms. Vanden Vancouver Community College v. Vancouver Affleck J. 333

Dungan had noted testified at the trial. The evidence does not reveal whether Ms. Vanden Dungan’s instructions to create the Word document were followed.

Gary Schoenhaar 103 Gary Schoenhaar is a private investigator who attended the defendant’s Surrey campus to conduct a pretext interview while using the initials “VCC” as often as possible to test the response. The interview was recorded. The representative of the defendant to whom Mr. Schoenhaar spoke did not use the initials “VCC” during the interview. Mr. Schoenhaar testified that he did not notice any signage at the defendant’s Surrey campus. The evidence of several other witnesses is that the signage was prominent and identified the Surrey campus as that of Van- couver Career College.

Wendy LaFrance 104 Wendy LaFrance has been a student advisor for many years with the plaintiff. A number of prospective students have spoken to Ms. LaFrance and indicated they have been confused by the two college names. Ms. LaFrance had been directed by her employer to keep notes of persons who apparently had been confused. Despite learning of the present dispute in 2011, she had notes of only three instances of confusion. How- ever, those notes did not include the names of those who were confused, nor did they describe the source of the confusion.

Yoko Ito 105 At the time of trial Ms. Ito had been a student advisor for the plaintiff for about two years. She has often dealt with students by telephone or in person. In one instance, a student in an English as a second language (“ESL”) program asked Ms. Ito about programs offered by the plaintiff. The student showed Ms. Ito an email she had received, which ended with the defendant’s domain name VCCollege.ca. The student apparently believed the email had come from the plaintiff. Ms. Ito explained it had come from Vancouver Career College. 106 On another occasion Ms. Ito observed a student waiting in the plaintiff’s waiting area for some time. Ms. Ito spoke to him and he said he had an appointment for an English language assessment. The student showed Ms. Ito a text message he had received which ended “VCCollege.ca”. 334 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

Ms. Ito explained that his appointment was not with the plaintiff but with the defendant. She did not see the text message itself. 107 Ms. Ito testified that on the telephone she often receives inquiries about the location of the Surrey campus of the plaintiff and she explains that Vancouver Community College does not have a Surrey campus but Vancouver Career College does. 108 Ms. Ito testified that the majority of students she talks to, speak En- glish as a second language, and referred to the plaintiff as “VCC” because it is “easier to remember” for those who have difficulty with En- glish. Ms. Ito believed there was no confusion for ESL students between the full names of the parties.

Preet Parmar 109 Ms. Parmar heard from a friend, who had been on a waiting list to attend, about a medical lab assistant course offered by the plaintiff. She did not know the full name of the plaintiff. She conducted a Google search for “VCC” and clicked on the first advertisement she saw and found a reference to a campus in Surrey. She went with a friend for an interview. Both Ms. Parmar and her friend and the interviewer referred to the location of the interview as “VCC”. 110 Ms. Parmar was told by the interviewer that there was no waiting list to attend the institution where she had her interview and this surprised her. She decided not to register with the defendant, but later received a number of text messages from “Sharon from VCC” just “following up”. 111 In cross-examination Ms. Parmar was asked about her search on Google for “VCC”, and in particular if she understood that many results appear in response to the entry of a search term. She agreed that she was aware of that fact, but acknowledged that she usually just clicked on “the first one that comes up”. 112 Ms. Parmar recalled there must have been signage at the campus in Surrey where she was interviewed. However, she “just assumed” the signs were the same as those that were at the plaintiff’s campus in Van- couver. She was also given written materials during her interview with the defendant. She agreed those materials must have referred to Vancou- ver Career College. She also agreed that the emails from “Sharon” had come to her from Vancouver Career College. Copies of six emails were shown to Ms. Parmar which came from “Sharon Martin” of Vancouver Career College. Several of the emails also contained the logo of the defendant prominently displayed. Vancouver Community College v. Vancouver Affleck J. 335

Doreen Chui-Chai 113 Ms. Chui-Chai has been a student advisor with the plaintiff since 2008. She testified she is always careful to refer to the plaintiff by its full name. She is not surprised if she runs into instances of confusion between the two colleges. She stated this particularly so on the telephone, and occurred perhaps eight times a day. On one occasion a student came to Vancouver Community College and spoke with Ms. Chui-Chai to say she had had an interview. There was no record of the interview for this prospective student. The student gave Ms. Chui-Chai the telephone number she had called to make the appointment. Ms. Chui-Chai called the number and a person answered with “VCC” and it was apparent that the call had been answered at the office of the defendant. 114 On another occasion a prospective student asked Ms. Chui-Chai if a cheque should be payable to “VCC” or “Vancouver Career College”. 115 Ms. Chui-Chai became aware of the potential dispute between the parties in September 2011 but notwithstanding a request from her employer to keep notes of all instances of confusion that came to her attention she had made only two notes.

Heather Straight 116 Ms. Straight is the Director of Clinical Education for the Vancouver Coastal Health Authority. In that role she deals with the staff of both the plaintiff and the defendant particularly in regard to the placement of students within healthcare institutions for training as licensed practical nurses. It is clear she has greater confidence in the training given to students who studied at Vancouver Community College than she has for those that come from the defendant. 117 Ms. Straight’s direct involvement in the administration of the placement of students in practical training began sometime in 2010 and ended in 2012. During those years she had addressed a concern that staff of the defendant sometimes referred to it as “VCC”. She had numerous conversations with representatives of the defendant about what she believed was a misleading practice. An email exchange in 2010 between Ms. Straight and Patricia Hitchen, a representative of the Eminata Group, referred to an “interschool/inter-agency” meeting which included three representatives of the defendant. During the meeting one of those representatives referred to the defendant as “VCC” which displeased Ms. Straight. She testified a representative of the plaintiff who was present at the meeting was also displeased by this event. By email Ms. Straight brought her 336 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

concerns to the attention of Ms. Hitchen who promptly apologized to Ms. Straight in an email and thanked Ms. Straight for bringing the matter to her attention. Ms. Hitchen promised that the complaint would also be brought to the attention of the representative who had attended the meeting and used the acronym “VCC” to describe the defendant. Ms. Hitchen told Ms. Straight that “she was aware of what a problem [the use of the initials “VCC” by representatives of the defendant] can be”. Ms. Hitchen did not testify. 118 Ms. Straight agreed she had no basis for saying the defendant intended to mislead by its use of the initials “VCC”. She agreed that in her communications with Ms. Hitchen, it was clear Vancouver Career Col- lege was cooperating to resolve the concern about the use of the initials “VCC”. Ms. Straight was also satisfied that there was no basis for saying that the defendant had instructed its staff to identify the defendant as “VCC”.

The Admissibility of the Hearsay Evidence of Confusion Offered by the Plaintiff 119 The evidence described above was offered by the plaintiff to demonstrate confusion between the parties in the minds of prospective students. This comprised a mixture of direct evidence and hearsay, but it was mostly the latter. The plaintiff submits the hearsay ought to be admitted both on the “state of mind” exception and on the “purposive approach” found in various decisions of the Supreme Court of Canada including R. v. Smith, [1992] 2 S.C.R. 915 (S.C.C.); R. v. Khelawon, 2006 SCC 57 (S.C.C.); and R. v. Baldree, 2013 SCC 35 (S.C.C.). 120 The hearsay is found in the notes of the plaintiff’s student advisors and the oral testimony, both of student advisors and others, who gave evidence about their recollections of what they heard various persons say, who did not testify themselves. 121 The defendant does not challenge all of the student advisory notes or all the oral testimony about confusion on the basis they contain inadmissible hearsay. However, the defendant submits the statements in the advisory notes and in the oral testimony that communicate out-of-court statements about alleged confusion by persons who did not testify are inadmissible. This is so, the defendant says, because the only purpose in seeking to admit the statements is to prove the truth of their contents and they are not saved by the “purposive” approach to hearsay. Vancouver Community College v. Vancouver Affleck J. 337

122 I conclude there are substantial difficulties in permitting the advisory notes and oral testimony about the alleged confusion to be admitted into evidence. One is prejudice to the defendant arising out of the late disclosure by the plaintiff of the advisory notes, and another is the question of “necessity” articulated by the Supreme Court of Canada in the cases dealing with the “purposive approach”.

The Prejudice Issue 123 In February 2014, Catherine Clement was examined for discovery by the defendant. The defendant left requests with Ms. Clement for her to inform herself, one of which reads: ... Determine whether the admissions staff has ever been advised to monitor any use by Vancouver Career College of the terms VCC or Vancouver Community College as well whether they have ever been advised to report instances of confusion by students or outside persons, and if so, how they go about reporting that, who they report that to, whether any written records are made of such instances, and produce all relevant records. 124 On June 16, 2014, the plaintiff responded to the request as follows: ... VCC has produced all relevant materials responsive to this request that are not privileged of which it is currently aware 125 The defendant then wrote to the plaintiff’s counsel advising that it took the view that the response given in the June 16, 2014 letter was incomplete saying “The request was not for simply ‘relevant materials’ but rather a determination of the matters outlined”. On September 3, 2014, the plaintiff responded, giving an “additional answer” which reads: ... To the extent this question does not call for a privileged answer, the admissions staff were not advised to monitor such use or to report instances of confusion. 126 The plaintiff became aware shortly after September 3, 2014 that its response was incorrect and on September 9, 2014 delivered a supplemen- tary list of documents which included redacted advisory notes. Un- redacted copies were produced during the trial itself. Those documents reveal that the prospective students, about whom the student advisors had made notes regarding “confusion”, were willing to speak with the plaintiff’s counsel. The trial began on September 22, 2014. 127 In my opinion the defendant was placed at a significant disadvantage in responding to the hearsay about what the prospective students understood about the alleged “confusion”. The plaintiff had not informed the 338 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

defendant prior to trial about what it had learned about what these prospective students might say, nor did the defendant have an opportunity to speak to them directly to learn of that evidence. My understanding is that none of the persons whose names are mentioned in the “advisory notes”, because they had spoken to someone with the plaintiff about confusion, testified at the trial. 128 I am not asked to draw an inference that if any of the prospective students had testified their evidence would not have been helpful to the plaintiff and I draw no such inference. I am persuaded however, it would be unfair and prejudicial to the defendant if the statements in the advisory notes about “confusion” were, in the circumstances of their disclosure here, received as evidence to demonstrate the truth of their contents.

The Purposive Approach 129 In Modonese v. Delac Estate, 2011 BCSC 82 (B.C. S.C.), aff’d 2011 BCCA 501 (B.C. C.A.), Groves J. described “the framework for assessing hearsay evidence” as follows, at paras. 80 and 81: [80] As set out in R. v. Mapara, 2005 SCC 23 at para. 15, [2005] 1 S.C.R. 358, and repeated in Khelawon, the framework for assessing hearsay evidence is as follows: (a) Hearsay evidence is presumptively inadmissible unless it falls under an exception to the hearsay rule. The traditional exceptions to the hearsay rule remain presumptively in place. (b) A hearsay exception can be challenged to determine whether it is supported by indicia of necessity and reliability, required by the principled approach. The exception can be modified as necessary to bring it into compliance. (c) In “rare cases”, evidence falling within an existing exception may be excluded because the indicia of necessity and reliability are lacking in the particular circumstances of the case. (d) If hearsay evidence does not fall under a hearsay exception, it may still be admitted if indicia of reliability and necessity are established on a voir dire. [81] There are three important points to keep in mind when applying the principled approach to hearsay: 1. The onus is on the party tendering the hearsay evidence to establish necessity and reliability on a balance of probabilities: Khelawon at para. 47. 2. The principled approach should not be compartmentalized, but rather should be considered as a continuum between ne- Vancouver Community College v. Vancouver Affleck J. 339

cessity and reliability. In particular, “there may be instances where the necessity is so great — such as where the declarant is dead — that some elasticity on the issue of reliability may be given”: Roussin v. Bouzenad, 2005 BCSC 1719 at para. 14, [2005] B.C.J. No. 2682. 3. The principled approach is not based on fixed criteria, but is applied case-by-case by identifying the relevant concerns and factors in determining admissibility. 130 In my opinion the plaintiff has not met the onus it bears to demonstrate the necessity to lead hearsay to prove its truth. This is not a case where the allegedly confused prospective students were unknown or un- available. They may have been reluctant to testify, but that cannot be a reason to conclude it was necessary for the plaintiff to put hearsay statements before the court. They could have been compelled to testify. The same considerations apply to some of the evidence given by Ms. Abbi- nante, which I have described at paras. 94 through 98 above.

The State of Mind Exception 131 I do not accept the hearsay statements by the plaintiff’s witnesses of confusion are admissible on the basis of the state of mind exception to the hearsay rule. The comments of Groves J., at para. 85 of Modonese, are instructive: [85] Declarations of mental or emotional state are also an established exception to the rule against hearsay. In R. v. Smith, [1992] 2 S.C.R. 915, 94 D.L.R. (4th) 590 [Smith cited to S.C.R.], the Court held that the state of mind exception to the hearsay rule permits reception of evidence to prove the declarant’s state of mind, but not the truth of the factual assertion which may be contained in it. Statements attributed to a deceased declarant tending to show her state of mind, namely a fear of the defendant, are admissible under this exception to the hearsay rule: R. v. Evans, 2002 BCSC 1674 at para. 35, [2002] B.C.J. No. 3100. 132 The evidence of a confused state of mind may be found in some of the oral hearsay testimony and in the advisors notes. The only issue however, to which that evidence could be relevant is whether the confusion was caused by the alleged improper conduct of the defendant. The notes do not assist the plaintiff in that regard. 133 The plaintiff also relies on what it characterizes as an “admission” made by the defendant through Christina Clayton, who was at one time 340 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

an employee of the defendant. For ease of reference I will repeat the relevant paragraphs from Ms. Clayton’s evidence: Q. All right. Did you ever discuss this — this — these occur- rences, this confusion, with anyone? A. Sure. Yeah. I mean we’d have — you know, you talk to reps on a daily basis at difference campuses, or you would men- tion to your managers. I mean there was a meeting we had at the Vancouver Career College location in Abbotsford. I was sitting with Posie Fletcher and Colin Crowie, the two other advisors in Abbotsford. And we talked about the brands. And I asked Posie, like do you think you guys get a lot of people calling you for VCC? And she says, all the time. People call us all the time thinking we’re Vancouver Community Col- lege, or assuming we’re Vancouver Community College. Q. And sorry; who is Posie Fletcher? A. She was the main admissions representative at Vancouver Ca- reer College Abbotsford. She was one of their legacy staffers. So she was with the original group. [Emphasis added.] 134 The trial reasons in Modonese address such “admissions”, at para. 87: [87] The defendant also objects to the admission of things he said out of court; for example, that he was heard in the background using abu- sive language, attempting to have his wife, Vera Delac, cease telephone contact with the plaintiff. If the plaintiff did hear the defendant make such statements, they are admissible at trial. In Jones v. Ma, 2010 BCSC 866, 6 B.C.L.R. (5th) 137, Ehrcke J. stated: 9 That issue was specifically addressed by the Ontario Court of Appeal in R. v. Foreman (2002), 62 O.R. (3d) 204 (C.A.). In that case Doherty J.A., delivering the judgment of the Court, said at pages 215 to 216: Admissions, which in the broad sense refer to any statement made by a litigant and tendered as evidence at trial by the opposing party, are admitted without any necessity/reliability analysis. As Sopinka J. explained in R. v. Evans, [1993] 3 S.C.R. 653, at page 664: The rationale for admitting admissions has a different basis than other exceptions to the hearsay rule. Indeed, it is open to dispute whether the evidence is hearsay at Vancouver Community College v. Vancouver Affleck J. 341

all. The practical effect of this doc- trinal distinction is that in lieu of seeking independent circumstantial guarantees of trustworthiness, it is sufficient that the evidence is tendered against a party. Its admissibility rests on the theory of the ad- versary system that what a party has previously stated can be admitted against the party in whose mouth it does not lie to complain of the unreliability of his or her own statements. As stated by Morgan, “[a] party can hardly object that he had no opportunity to cross-examine himself or that he is unwor- thy of credence save when speaking under sanction of oath” (Morgan, “Basic Problems of Evi- dence” (1963), pp. 265-6, quoted in McCormick on Evidence, ibid., p. 140). The rule is the same for both criminal and civil cases subject to the special rules governing confes- sions which apply in criminal cases. 10 I agree with that statement of the law. It was adopted by our Court of Appeal in R. v. Terrico, 2005 BCCA 361. Admissions made by one party to litigation are generally admissible if tendered by the opposing party, without re- sort to any necessity/reliability analysis. [Emphasis in original.] 135 The “admission” the plaintiff seeks to rely on is that of Posie Fletcher, who did not testify. The testimony of Ms. Clayton about what Ms. Fletcher said regarding the statements of others is double hearsay. The basis for admitting into evidence an admission by a party is that it is likely to be reliable. That cannot be said in this instance. Nor does the “admission” assist by giving the source of the alleged confusion. It cannot be discerned from the “admission” that the confusion had its origins in the conduct of the defendant. If that determination cannot be made, the “admission” has no probative value. 342 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

136 I will add that Ms. Clayton’s evidence quoted above includes the sentence “I mean it was a general conversation and comment about, you know, do you think you guys get a lot of inquiries because of the similarity in the name? Posie goes, oh, yeah, a lot”. The confusion the plaintiff complains of cannot be “because of the similarity in the name”. As I have mentioned earlier in these reasons there is no allegation of confusion caused by similarity between the names Vancouver Community College and Vancouver Career College.

The Defendant’s Expansion Following its Advertising Campaign Beginning in 2009 137 In 2008 the defendant embarked on a program to expand its business. It purchased most of the business of CDI College. At that time, Randy Cox was a regional Vice President for Western Canada. In due course he met Peter Chung, who had owned Vancouver Career College’s Burnaby campus since 1995. Mr. Cox became President and Chief Operating Of- ficer of the defendant. He took that role in the expectation that its annual revenue could be increased from about $14 million to about $100 million, in part because there was thought to be a large unsatisfied demand for post-secondary career training particularly in Western Canada. 138 Mr. Chung was the majority shareholder of the defendant but did not intend to play a management role. In essence, Mr. Cox was to have sole responsibility for hiring key employees to manage the defendant and to implement measures to increase its enrolment, including an aggressive online marketing campaign. 139 In 2008, when Mr. Cox became president of the defendant, it had a marketing staff of only three people. Mr. Cox knew little of the defendant when he took up his management role, but determined that he needed to hire competent and talented people to drive forward the expansion plans. He recruited a team, which included Larry Heinzlmeir as Vice President of Marketing and Todd Lush as Vice President of Admis- sions. Thereafter, the defendant grew rapidly, and by 2011 had surpassed Mr. Cox’s target of $100 million in revenue. The number of campuses grew to 18 throughout metropolitan Vancouver. 140 One of Mr. Lush’s first tasks as head of admissions was to hire and train representatives for each of the defendant’s campuses who would be in direct contact online, by telephone, and in person, with prospective students. Mr. Lush and his staff developed a highly structured “A+ Ad- missions” process to attract prospective students, known as “leads”, and Vancouver Community College v. Vancouver Affleck J. 343

to sell the defendant’s programs once a “lead” was found to be suitable in accordance with various criteria. 141 Prospective students typically make their first contact online through a website that they have located using Google or some other search engine, such as Yahoo!. Less frequently their first contact will be by telephone. Once a potential student contacts one of the defendant’s campuses and becomes a “lead”, he or she will be asked to come to the appropriate campus for an interview. Students cannot enrol online. 142 An interview will usually be about 90 minutes in duration. The student meets an admissions representative and a financial planner. Approx- imately 70% of students require a loan to finance their selected program. Most programs are about a year in duration and cost about $1,450 for each month of the program. 143 As part of the interview process, the prospective student will be taken on a tour of the campus to which they have applied. Mr. Cox testified that the intention of the admissions process is to understand the prospective student’s expectations, how they are to be met, and to impress upon students the expectations the defendant has for attendance and adherence to the appropriate course of studies. Many have been away from formal education for a number of years, and the first aim of the defendant is to teach new students “how to be a student again”. 144 There is some experience within the defendant of students dropping out after enrolment. An interview is then requested so that the admissions staff will learn of the reasons for the student’s decision to withdraw. If a student withdraws within 30 days of enrolment there is a mandatory re- fund of tuition fees. Mr. Cox was not aware of any incident involving a student who withdrew from one of the defendant’s campuses on the basis of a belated realization that he or she had enrolled with Vancouver Ca- reer College when they had intended to enrol with Vancouver Commu- nity College. 145 Mr. Cox testified that the initials “VCC” are often used internally within the defendant to mean the Vancouver Career College, which he understands has been the practice since the defendant began to conduct business in the mid-1990s. Each of the defendant’s campuses has signage identifying it as Vancouver Career College and none use the initials “VCC” as part of their exterior signage. 146 The question of the use by the defendant of the initials “VCC” to identify itself when answering the telephone was the subject of several discussions between Mr. Cox and representatives of the plaintiff. The 344 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

concern expressed by the plaintiff was that the telephone at the defendant’s various campuses was often answered using the initials “VCC” as a greeting. Mr. Cox testified that he had called each of the defendant’s locations without advance warning, and in all instances the telephone was answered by a voice saying “Vancouver Career College, how may I help you?” Mr. Cox testified that he had called “upwards of 100 times” and on each occasion the telephone was answered without using the initials “VCC”, which he observed was “how they had been trained” to answer the telephone. 147 Mr. Cox testified that he was aware of two instances where advertisers “made a mistake” and used the initials “VCC” to identify the defendant. He also had been made aware that Global evening TV news had referred to “VCC” to identify Vancouver Career College. This apparently prompted an email from the head of the plaintiff’s Practical Nursing De- partment to Patricia Bawtinheimer, then the Dean of Health Sciences with the plaintiff. It reads: Subject: re misuse of VCC logo again! Hi Pat I thought I should pass information along this from Cheryl Irwin along to you - not sure who else should get this message: I believe we were watching Global evening news Friday evening when an article was done on Vancouver Career Colleges introduction of E books into the classroom. The VCC logo was visual and verbal and very obvious in the broadcast, this may have been the doing of the TV station or by their design but the words were even stated. They got a lot of free VCC advertising on the evening news. Thought you might be able to pass this onto the right department if they were not aware. 148 Ms. Bawtinheimer testified she was given the task of reporting these incidents to the plaintiff’s management. There was no other evidence to support the hearsay report of the news broadcast, but it is indicative of the level of anxiety felt within the plaintiff about what was viewed as the defendant’s improper use of the initials “VCC” even though the news item “may have been the doing of the TV station”. 149 Mr. Cox hired Larry Heinzlmeir to “spearhead” the “rebranding” of the defendant beginning in 2009. Mr. Cox received reports and recom- mendations but was not engaged in the process himself to any extent. He had no concerns about the manner in which Mr. Heinzlmeir conducted Vancouver Community College v. Vancouver Affleck J. 345

the rebranding process. In particular Mr. Cox was not concerned with the plaintiff’s reaction to the rebranding. He did not consider the plaintiff to be a competitor in the same market as the defendant; the competitors for the defendant he viewed as having much larger revenue than that enjoyed by the plaintiff. 150 An important component of the rebranding was the creation of a new website, about which Mr. Cox testified he was kept informed. He was shown an email sent to the Eminata Group to Barry Masellis the “director of web operations” for the defendant in May 2009 which reads: The Web Team is proud to announce the “soft launch” of www.vccollege.ca. The soon to be ‘new website’ of the Vancouver Career College brand. The site will remain in soft launch for the next couple of days. This is to assure that everyone involved with the brand has time to review the site and find any errors/bugs that will need to be addressed. We are also letting google get a head start on indexing our pages to increase our natural search positions. Currently we have on a few of our web ads that are directing users to this site for testing/benchmarking purposes. We are aiming to go-live with the new site on Friday, at which time we will be re-directing the current vancol.com site to the new domain. 151 Mr. Cox testified the email was “consistent with what happened”. A few days after the email was sent, Mr. Masellis sent another email confirming the following: ... we have completed the full launch of www.vccollege.ca [http://www.vccollege.ca/]. Most of our ads are now pointing to the new domain and the old vancol.com site is now pointing here as well. 152 Mr. Heinzlmeir testified he had joined the defendant in September 2008 as Vice President of Marketing because Mr. Chung was concerned about his investment in the defendant and wanted Mr. Heinzlmeir to use his expertise to increase enrolment. This would increase revenue to place the company in a position, in due course, to make a public offering. He described the defendant when he joined it as “a very small brand” that was underfunded and with a “talent pool that was very low”. 153 Within the first year Mr. Heinzlmeir hired Mr. Lush, dedicated to admissions alone, while Mr. Heinzlmeir devoted his time to marketing. A number of other people were hired including graphic designers to create print ads, brochures, billboard advertisements, and transit ads. In addition, others were brought on who engaged in search engine optimization 346 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

to grow the “organic” or “natural” side of the online advertising. A team was developed for website design. A social media team was added to raise the defendant’s profile on Facebook, YouTube and Twitter. 154 Mr. Heinzlmeir took the view that the defendant must have considerable “content” in its online advertising to assist prospective students to decide how to pursue their education. Email campaigns were designed to maintain contact with “leads” and with those already enrolled. A “blanket of analytics” was developed to enable Mr. Heinzlmeir and others to understand the “enrolment funnel”. “Everything was measured in extreme detail”. A “contact relationship management” system was developed to retain student information to allow for analysis of their progress. Mr. Heinzlmeir testified that he operated five computer monitors at any given time to “follow the analytics”. One of the results of these steps was that the “leads” that had come from advertising of various kinds grew from 16,640 in June 2009 to 27,704 in June 2014. 155 The success in attracting and increasing the number of leads in part was achieved by the defendant working with Google and with various social media as what Mr. Heinzlmeir characterized as “data partners”. In Mr. Heinzlmeir’s view, since 2009 the defendant has been on the “alpha edge” in the application of online technology to the recruitment of students and the monitoring of their progress. 156 To sustain its marketing effort the defendant increased its annual advertising budget from slightly less than $1 million in 2008, to upwards of $17 million at the time of the trial. Most of the budget was spent on keyword pay-per-click advertising. 157 In 2008, when Mr. Heinzlmeir assumed his position, the domain name/URL of the defendant was “vancol.com”. He decided the URL was inadequate in part because in his opinion it was “hard to say”. He also found navigating the website was “clunky”. It had broken links and provided only a low level of search engine optimization in his view. A decision was made to “start from scratch”. Mr. Heinzlmeir along with two others “brainstormed” the new URL. One of the others was Barry Masel- lis the director of web operations who had been hired by Mr. Heinzlmeir. 158 The “best fit” was determined to be “VCCollege.ca”. Its advantages were thought to be that it was short and therefore accommodated mobile devices unlike the full name Vancouver Career College. Further, it reflected clearly that the defendant was a school, and the URL was available to be purchased. “VCC” was not considered to be a reasonable option because the plaintiff was already using vcc.ca as its domain name. Vancouver Community College v. Vancouver Affleck J. 347

159 In addition to developing a new domain name, in 2010, the defendant also began the process of changing its logo. The old logo had the full name Vancouver Career College below a stylized star. A variety of sug- gestions were generated all of which included the defendant’s full name, Vancouver Career College. The new logo includes a stylized letter “V” in a box, next to the defendant’s full name. In December 2010 the defendant published a Local Standards Guide for internal use, which made clear that great care was to be taken by all those with the responsibility within the defendant for attracting new students to ensure defendant’s logo was not modified so that it was “as easy as possible for people to recognize information from Vancouver Career College”. 160 Mr. Heinzlmeir’s evidence was that the new logo is used in all advertising, newsletters, brochures, envelopes, curriculum guides, and other printed materials generated by the defendant for both internal and external use. 161 In June 2013 an email was sent by Mr. Heinzlmeir to all marketing staff of the defendant which reads: Subject: The use of VCC, Vancouver Community College, vccollege All, This is just a reminder that under absolutely NO circumstances should we use the following three phrases whether as stand alone terms or used in combination with other terms in any content, description, ad, meta description, landing page, banner, email, or any other form of advertising or communication, etc.: VCC Vancouver Community College vccollege vccollege.ca is our web domain and that is all it is. This is very important to fully understand and embrace. It would also be a good idea to ensure that there are no current uses of those three terms anywhere right now. Larry 162 From 2008 to 2012 Mr. Heinzlmeir managed what he described as “explosive growth” during “chaotic times”. In those years on a few isolated occasions the term “VCC” was used by the defendant in pay-per- click advertising with Google AdWords. Mr. Heinzlmeir testified that he was not certain who had placed the advertising. He had not reviewed the ads before they were posted because of the pressure of other demands on 348 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

his time. Since the “chaotic times” he testified he implemented a “compliance review process” for both print ads and online advertising to avoid the use of the term “VCC”. 163 He testified that in late 2009 there were two incidents of a Facebook ad of the defendant’s which used the term “VCC”. One dated from Sep- tember 9, 2009 and referred to “Education Programs at VCC”. This appeared immediately above the then logo of the defendant with the stylized star and the words “Vancouver Career College”. The full name of the defendant appeared prominently elsewhere on the ad. The other example of the use of the initials “VCC” on Facebook was in an ad of March 3, 2010, where the words “Pharmacy Technician Careers from VCC are in high demand - Enroll Here”. If a searcher clicked on that ad he or she would have been taken to the landing page of the defendant with the star logo and the full name of the defendant. Mr. Heinzlmeir’s evidence is that there was never a time when the defendant’s logo did not appear on its website. 164 In another incident on June 2, 2009, Mr. Heinzlmeir testified that the defendant’s new website displayed the defendant’s logo at the top along with its full name, which also appeared throughout the website, but in a search button on the website the words “welcome to VCC” appeared. Mr. Heinzlmeir testified this was an error. It was detected soon after the new website was posted, and at that time it was corrected by substituting the words “welcome to VCCollege”. Mr. Heinzlmeir testified that to the best of his knowledge the plaintiff had not contacted the defendant to complain of the error. Since that time the defendant has not used the term “VCC” in any advertising, nor has the defendant ever used the name Vancouver Community College in any of its ads. 165 Mr. Heinzlmeir’s evidence is that it is a common practice for online pay-per-click advertisers to bid on each other’s ads. He gave as an example a Google ad for “Canadian Tourism College” which provides a link to “Hospitality Programs” one of which is a 2014 ad for which the plaintiff would have paid Google when a searcher entered the term “College”. The ad shows the plaintiff’s website address followed by the words “Train for a career in hospitality at Vancouver Community College”. 166 Mr. Heinzlmeir testified that the defendant bids on upwards of 300,000 keywords. Any word an online searcher may use as a search term to locate information is often bid on by numerous advertisers. The defendant will bid on keywords found in the names of other colleges. For example, the defendant, and others, may bid on search terms such as Vancouver Community College v. Vancouver Affleck J. 349

“paralegal” or “nursing”. He testified the examples are almost limitless. He stated that the bidding does not affect the results of “organic” searches. If a searcher entered the term “VCC” Mr. Heinzlmeir was con- fident “Vancouver Community College” would be one of the organic search results. 167 Mr. Heinzlmeir understands, as does Mr. McGowan, that an algorithm created by Google drives the search results on the organic side. Advertising clients, such as the parties to this lawsuit, do not have access to the algorithm. Nevertheless, the ranking of search results depends heavily on the content, on the organic side, provided to Google by an advertiser. Mr. Heinzlmeir testified that the defendant works closely with Google and Facebook to enhance the results of organic searches to make the searching process satisfactory from the defendant’s point of view and, most particularly, satisfactory to online searchers. Mr. McGowan advises his online advertising clients on this content and, among other matters, bidding on keywords. 168 In August 2009 the plaintiff wrote to Cirrus Tech Ltd., which the plaintiff referred to as “the host of the website associated with the domain name www.VCCollege.ca”, to complain that the defendant was using that domain without the permission of the plaintiff to promote its educational services. Cirrus Tech Ltd. was requested by the plaintiff to “cease hosting the www.VCCollege.ca website and any other websites of Vancouver Career College that make use of the ‘VCC’ mark in either the domain name or in contents of the website (whether visibly, through the use of meta-tags or otherwise)”. Mr. Heinzlmeir testified he did not know if Cirrus Tech Ltd. had responded to this complaint. Similar complaints were made by the plaintiff to Facebook, Google and Twitter. Mr. Heinzlmeir was again unaware of any response to these letters. No evidence of a response was offered by the plaintiff. 169 Mr. Heinzlmeir was asked in his examination in chief about an email from Barry Masellis, the director of web operations of the defendant, in which Mr. Masellis advised Mr. Heinzlmeir that he had “managed to work out a deal for two key domain names for our Vancouver Career College web strategies. These two domain names will play a huge role in competing with Vancouver Community College for a variety of keywords including VCC”. Mr. Heinzlmeir explained that Mr. Masellis had no experience in marketing, was new to his position with the defendant, and apparently wished to impress Mr. Heinzlmeir with his online marketing skills. Mr. Heinzlmeir testified that he believed Mr. Masellis 350 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

did not understand that obtaining a domain name by itself achieved little unless content was added. Mr. Heinzlmeir testified that the defendant did not intend to add content to a domain name of the plaintiff. I accept that evidence as true. 170 Schedule “A” to the third amended notice of civil claim is what is described as a “list of the impugned domains registered by the defendant”, a copy of which is attached to these reasons. The plaintiff alleges the defendant registered the domain name “VCCollege.ca” and registered over 80 other domain names listed in Schedule “A” “for its own use and benefit”. Schedule “A” lists 85 domains, all of which use the term “VCC” as part of the domain name. The defendant admits this allegation. 171 Mr. Heinzlmeir testified that the purpose for securing these domain names was “reputation management”. His evidence was that the defendant wished to have those domain names under its control in order to prevent anyone else from adding content to them and thereby cause difficulties for the defendant by posting undesirable material. Again I accept that evidence as true. 172 Mr. Heinzlmeir testified that the defendant does not use the domains in Schedule “A” for its own purposes, except to prevent others from using them in a manner which may damage the defendant. The plaintiff has never asked for any of the domain names on Schedule “A” to be transferred to it.

The Credibility of Mr. Heinzlmeir and Mr. Cox 173 The plaintiff invites me to reject the evidence of both Mr. Heinzlmeir and Mr. Cox where it conflicts with other evidence. It characterizes their evidence as evasive in cross-examination and disingenuous. The plaintiff submits, for example, that Mr. Heinzlmeir was intentionally misleading when he refused to admit the parties are competitors. 174 The relationship between the plaintiff and defendant has clearly been competitive in some aspects. However, Mr. Heinzlmeir’s answers to questions about their relationship were given in the context of his pride in the marketing achievements of the defendant. The defendant had developed an online advertising program with a much larger budget and sophistication than that of the plaintiff. In that regard, which was central to the trial, he does not view the plaintiff as a serious competitor. 175 I find that Mr. Heinzlmeir gave his evidence honestly. He was faced with questions concerning a complex topic and addressing events which Vancouver Community College v. Vancouver Affleck J. 351

stretched over many years. He was cross-examined vigorously and at length. His credibility was not damaged in any important way. 176 Nor do I accept the plaintiff’s criticisms of Mr. Cox’s credibility. The plaintiff is particularly critical of Mr. Cox’s attempts at humour in emails, usually internal, about the plaintiff. Years later a critical observer could read those attempts at humour, divorced from their original context, to support the plaintiff’s view that Mr. Cox was prepared to engage in underhanded tactics to compete unlawfully with the plaintiff. I do not read Mr. Cox’s remarks in that way. Mr. Cox is intensely competitive. I believe part of his management style is to make jokes at his competitor’s expense. It is not surprising the plaintiff finds the jokes offensive. None- theless, I conclude that Mr. Cox’s purpose, apart from his apparent plea- sure in being amusing, has been to boost morale amongst his staff as a means to engender enthusiasm to compete for business and to create a team effort amongst those employees who were “in” on the joke. The jokes do not reveal unlawful conduct. 177 The plaintiff characterizes Mr. Cox’s evidence as “evasive” in cross- examination and gives a particular example in the following portion of the transcript of his trial evidence: Q. And would you agree with me that it’s not difficult to answer? In fact, it is straightforward and obvious that the career college — it was straightforward and obvious not to use VCC for the career college? A. In choosing a URL, I agree, yes. Q. And of course the choice that was made in early 2009 was not just for a URL, it was also as an alternate brand, VCCollege? A. Definition of the word brand I think would come into question. Q. I think I can assist you with this point as well, Mr. Cox. Do you agree with me that VCCollege was opted as an alternate brand for Vancouver Career College in early 2009? A. I agree it was a URL. Q. Yes. Are you disagreeing with me that it was an alternate brand? A. I’m confused over your use of the term brand which is a very broad term. Q. All right. How about a companion brand, companion brand to the Vancouver Career College brand? A. I call it a URL. 352 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

Q. Not a brand? A. Brand is a very broad term. 178 The above passage was part only of a more extended series of questions and answers in which Mr. Cox gave evidence about the defendant’s use of the initials “VCC”. His evidence is more fairly represented by a reading of a larger portion of the transcript which I reproduce below and which includes the words already quoted: Q. Mr. Cox, you agree sitting here today that it is obvious not to use VCC to promote Vancouver Career College’s business? A. A difficult question to answer because of 20 years close to use of it. It has been used internally, it has been used to label brands and in terms of attracting new students, it’s a term that should not be used for Vancouver Career College. Q. Mr. Cox, I’m going to turn you to Mr. Heinzlmeir’s discovery at volume 1, and you’ve got volume 2 there, I’ll show you to volume 1 in just a moment here. My Lord, I’m going to turn to question 1023 which is at page 199. So starting at question 1021 actually, Mr. Cox, I asked Mr. Heinzlmeir: Q. Did you consider the natural abbreviation for Vancouver Career College VCC? And he said: A. Did we consider it? I believe it was taken. I asked him: Q. But did you consider it? And he said: A. No, it was taken, I’m serious. And I said okay, and he said: A. It was taken. It was, like, why would we waste our lung space. And I said: Q. It wasn’t discussed? And he said: A. No, we wouldn’t do it. How insane I’m sorry, but it would just be ridiculous to. We were working under the premise that we would not use VCC in our advertising. How insane would that be to try and secure Vancouver Community College v. Vancouver Affleck J. 353

VCC. I’m just — just — you have to admit it’s just funny. And I asked him: Q. Did anybody raise it during that two day period? We were talking about a two day period in February of 2009, Mr. Cox. And Mr. Heinzlmeir answered: A. Oh, no. Again, we were all very serious professionals and we had a job to do, we had to find a domain. And I asked him: Q. It was just obvious not to use VCC? And he said yeah. Do you accept that Mr. Heinzlmeir was asked those questions and gave those answers under oath on his discovery? A. Yes. Q. And would you agree with me that it’s not difficult to answer? In fact, it is straightforward and obvious that the career college — it was straightforward and obvious not to use VCC for the career college? A. In choosing a URL, I agree, yes. Q. And of course the choice that was made in early 2009 was not just for a URL, it was also as an alternate brand, VCCollege? A. Definition of the word brand I think would come into question. Q. I think I can assist you with this point as well, Mr. Cox. Do you agree with me that VCCollege was opted as an alternate brand for Vancouver Career College in early 2009? A. I agree it was a URL. Q. Yes. Are you disagreeing with me that it was an alternate brand? A. I’m confused over your use of the term brand which is a very broad term. Q. All right. How about a companion brand, companion brand to the Vancouver Career College brand? A. I call it a URL. Q. Not a brand? A. Brand is a very broad term. 354 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

Q. Okay. If I — I’m going to pass up an affidavit from Mr. Heinzlmeir. I understand that my friends have a copy from yesterday, if I could just ask if they still have that copy, and, My Lord, I will hand up — this is affidavit number 1 of Mr. Heinzlmeir sworn July 16, 2013. Mr. Cox, do you recognize this as Mr. Heinzlmeir’s affidavit that we looked at yesterday? A. Yes. Q. And if I could turn you to paragraph 31 which is on page 8. This is in the context of Mr. Heinzlmeir’s explanation of the adoption of VCCollege and you see there Mr. Heinzlmeir says: We then engaged in an extensive process to consider alternate brand names and in the course of this process we reviewed and considered in excess of 500 options for an alternate brand name. Paragraph 32 he says, he makes some explanations about why — about the — how they chose this alternate brand name, and then in paragraph 35 he concludes: Taking into account all these considerations, the VCCollege abbreviation of Vancouver Career College was selected in or about February 2009 as the ideal choice for our new domain name and alternate brand. A. Mm’hmm. Q. Seeing this, does that help you acknowledge that VCCollege was in fact selected not merely as a domain name, but also as an alternate brand? A. It confirms the understanding that Mr. Heinzlmeir and I have different understandings of the concept brand, but that doesn’t surprise me, he’s marketing. Q. He’s a brand guy? A. He’s a marketer. Q. All right. And in any event, despite the fact — actually, no, let me just go back to the question for a moment. Would you agree with me, having read Mr. Heinzlmeir’s answers on discovery and seeing the affidavit that we just looked at, would you agree with me now that it’s not a difficult question to answer? In fact, it was just obvious not to use VCC as an alternate brand? Vancouver Community College v. Vancouver Affleck J. 355

A. It’s still difficult for me because my concept of brand is different. I don’t come at it from a marketing perspective. Q. Would you agree with me then, I’ll try and stay a little bit away from the controversial point about brand, would you agree with me that it was obvious not to use VCC to refer to the business of the career college? A. It was used internally as a label on or before, prior to that, after that, so in terms from a marketing perspective and an advertising perspective, I would agree that it would not be a good use of the term. 179 Mr. Cox’s testimony in the foregoing paragraphs from the transcript was not evasive. He was pressed by counsel to agree with a characterization of the defendant’s adoption of VCCollege.ca as the adoption of a “brand”. He declined to do so, and instead insisted it is a URL. There is an important distinction in his mind between a brand and a URL and he defended that distinction. I find that Mr. Cox’s testimony was given honestly.

Application of the Law of Passing Off 180 To impose liability on the defendant for the tort of passing off the plaintiff must satisfy me that: a) it enjoys goodwill attached to the educational services it provides; b) its services have acquired a distinctiveness in the marketplace; c) the defendant has caused confusion by intentionally or otherwise misrepresenting its services as those of the plaintiff; and d) the plaintiff is likely to suffer damage as a result of the defendant’s misrepresentation. 181 Prior to commenting on elements of the test I make the following observation. In my view, this lawsuit, and the previous attempts to enlist this Court and PCTIA in the plaintiff’s struggle to constrain the defendant’s ability to compete with it has been motivated by a concern that its own inability to invest the necessary funds and expertise to create a so- phisticated online advertising program leaves it at a competitive disadvantage in the marketplace in comparison with the defendant. Passing off is a cause of action which permits a court, in appropriate circumstances, to compensate a plaintiff for unlawful competition by a defendant. It is not intended to be used by a plaintiff to handicap a defendant that has developed a more effective means of marketing its goods and services than has a plaintiff. 356 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

182 To determine whether the defendant’s conduct alleged in this action is unlawful, it is necessary to consider the defendant’s conduct in the context of the particular facts of this case. This in turn requires a consideration of what happens when persons search online for a career training institution that suits their individual needs. When individuals in British Columbia who seek information about a career training institution conduct a search on a search engine, such as Google, they are not taken by default to any particular search result. The searcher is able to review the search results before making a decision to click on an organic or sponsored advertisement. Once persons clicks on the advertisement they are shown a webpage, often called a “landing page” or a “landing site”. The webpage displays information provided by the advertiser and it is for the searcher to make the decision to move forward with the search or if unin- terested to return to the search results, and perhaps try another website. Neither the defendant nor any other advertiser online controls the search process. The main role of a website owner is to provide content for its website. 183 The authorities on passing off provide that it is the “first impression” of the searcher at which the potential for confusion arises which may lead to liability. In my opinion, the “first impression” cannot arise on a Google AdWords search at an earlier time than when the searcher reaches a website. When a searcher reaches the website of the defendant in the present proceeding it is clearly identified as the defendant’s website. As was said by Frankel J.A. in Insurance Corp. of British Columbia v. Stainton Ventures Ltd. the “relevant consumer” will “understand that it is necessary to view a website to determine whose site it is”. In my opinion that is the point during a search when the relevant first impression is made. 184 In Red Label Vacations Inc. v. 411 Travel Buys Ltd. Manson J. reached a similar conclusion to that I have reached on the question of when a searcher receives a “first impression” during an online keyword search. The comments of Manson J., at para. 115 of those reasons, are apposite: ... [i]f there is no likelihood of confusion with respect to the source of goods or services on the website, there is no support for finding this prong of the test for passing off. Accordingly, use of a competitor’s trademark or trade name in metatags does not, by itself, constitute a basis for a likelihood of confusion, because the consumer is free to choose and purchase the goods or services from the website he or she initially searched for. Vancouver Community College v. Vancouver Affleck J. 357

185 I will add a comment about meta tags. Although the plaintiff makes no specific allegation about meta tags in its pleadings, it nevertheless makes submissions about the influence of meta tags in the present instance. I note that meta tags are not displayed to the searcher. They are used for a variety of purposes, including committing the owner of a website to place content on it and it may be that Google has used meta tags to rank search results. They have no potential to cause confusion in the present context and are irrelevant to my decision. 186 I will also comment on the bidding process in keyword advertising which is a well-established practice throughout the world of online advertising. It would be imprudent for this Court to attempt to preclude or even limit that practice in this jurisdiction unless it can be shown to be an unreasonable constraint on competition. That has not been shown. To award damages to the plaintiff or to enjoin the defendant from certain conduct because the defendant bids on the plaintiff’s name for the purposes of keyword advertising would be to disadvantage the defendant in a way that other online advertisers are not. It is not the defendant, or another advertiser in its position, which controls the bidding process, apart from making a decision to bid. A bid on a keyword may send a searcher to the bidder’s landing page, but the process of the search is controlled by the searcher and the search engine, not by the advertiser. Google and other providers of search engines generate revenue by offering an efficient bidding process. I cannot conclude that the defendant causes confusion by taking advantage of this service offered by Google. 187 Any confusion a prospective student may experience between the names Vancouver Community College and Vancouver Career College is irrelevant to this lawsuit. Even if it were relevant, it is a chimera. If, because of confusion between the names, a prospective student mistak- enly attempts to enroll in Vancouver Career College she must do so in person; attend an interview in which her suitability is canvassed; is given a tour of the campus of the defendant which is identified by signage prominently displaying the defendant’s name, and complete a number of forms, usually involving a loan application from Vancouver Career Col- lege, all of which have the defendant’s name printed on them. There can be no plausible reason for confusion. 188 The plaintiff’s allegation that the defendant’s adoption of the domain name VCCollege.ca causes confusion is not borne out by the evidence on this trial. In Insurance Corp. of British Columbia v. Stainton Ventures Ltd. Frankel J.A. referred to the argument advanced by the appellant that 358 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

the “relevant consumer” would be likely to believe ICBC was offering advice when, during an online search, that consumer encountered various domain names that included the letters “ICBC”. At para. 37 Frankel J.A. wrote the following: [37] I am unable to accept this argument as it fails to give the “relevant consumer”, i.e., an Internet user, credit for even the most basic understanding of the function of a domain name. Even though there is some resemblance between ICBCadvice.com and ICBC’s family of marks, the average Internet user with an imperfect recollection of ICBC’s marks would not likely be mistaken by the domain name. They understand, for example, that a domain name which, in part, contains the name of a business or its acronym will not necessarily be affiliated with or endorsed by that business and may, instead, be the subject matter of the website or entirely unrelated to that business. As well, they understand that it is necessary to view a website to determine whose site it is. While I appreciate that Mattel, Inc. v. 3894207 Canada Inc., 2006 SCC 22, [2006] 1 .C.R. 772, involved a dispute over a trade-mark rather than an official mark, it is noteworthy that the Court attributed a reasonable level of intelligence to “the casual consumer somewhat in a hurry”: paras. 56-58. In the present context, to paraphrase a passage from Michelin & Cie v. Astro Tire & Rubber Co. of Canada Ltd. (1982), 69 C.P.R. (2d) 260 (F.C.T.D.), quoted with approval in Mattel, Inc., one must not proceed on the assumption that average Internet users are completely devoid of intelligence or of normal powers of recollections or are uninformed as to what goes on around them. 189 Mr. Justice Frankel’s words apply to the matter before me. 190 The plaintiff has brought to my attention a decision by the Trade- marks Opposition Board cited at 2015 TMOB 15 (T.M. Opp. Bd.) in which Vancouver Community College opposed an application by Van- couver Career College for the trademark VCCollege.ca. 191 The plaintiff acknowledges the reasons are not binding on this Court but “can be taken into consideration as relevant”. 192 At paragraph 22 of the decision it was held that “[Vancouver Com- munity College] has shown extensive use of the trademark VCC in the Vancouver area for a long period of time. Such extensive use has resulted in [Vancouver Community College’s] trademark VCC becoming distinctive”. That finding is not open to me on the facts of the present case but formed at least part of the basis for the decision of the Trade- marks Opposition Board to reject Vancouver Career College’s applica- Vancouver Community College v. Vancouver Affleck J. 359

tion to register its domain name as a trademark. I have not found the decision helpful in deciding the issues before me. 193 I find that the plaintiff enjoys goodwill in the educational services it provides but they have not achieved a “secondary meaning” in the marketplace. I also find that the defendant has not caused confusion by misrepresenting its services as those of the plaintiff. Those findings are sufficient to dispose of the action, but I will add that, in my opinion, it is unlikely that the plaintiff has suffered damage from the conduct of the defendant of which it complains.

Conclusion 194 The action is dismissed with costs. In the light of my reasons for dismissing the action, I see no basis for giving any declaratory judgment. If the defendant continues to seek the declaratory relief referred to in its counterclaim, it will have leave to reserve a date through the Supreme Court Scheduling to address the issue. Action dismissed.

Schedule “A” List of Impugned Domains Registered by the Defendant 1. my-VCC.com 43. VCColIege-chilliwack.com 2. my-VCC.mobi 44. VCCollege-chilliwack.info 3. my-VCC.net 45. VCCollege-chilliwack.net 4. thisisVCC.com 46. VCCollege-chilliwack.org 5. thisisVCC.mobi 47. VCColIege-coquitlam.com 6. thisisVCC.net 48. VCCollege-coquitlam.info 7. vancouvercommunitycol- 49. VCCollege-coquitlam.net leges.info 8. VCC-bc.com 50. VCCollege-coquitlam.org 9. VCC-bc.info 51. VCCollege-kelowna.com 10. VCC-bc.net 52. VCCollege-kelowna.info 11. VCC-bc.org 53. VCCollege-kelowna.net 12. VCC-canada.com 54. VCCollege-kelowna.org 13. VCC-canada.info 55. VCCollege-sucks.com 14. VCC-canada.net 56. VCCollege-sucks.info 360 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

15. VCC-canada.org 57. VCCollege-sucks.net 16. VCC-college.com 58. VCCollege-sucks.org 17. VCC-coilege.info 59. VCCollege-surrey.com 18. VCCcareers.com 60. VCCollege-surrey.info 19. VCCcolege.com 61. VCCollege-surrey.net 20. VCCcolege.info 62. VCCollege-surrey.org 21. VCCcolege.net 63. VCCollege.biz 22. VCCcollege.info 64. VCCollege.ca 23. VCCcollege.net 65. VCCollege.com 24. VCCcollege.org 66. VCCollege.info 25. VCColege.com 67. VCColIege.mobi 26. VCColege.info 68. VCCollege.net 27. VCCollege-abbots- 69. VCCollege.org ford.com 28. VCCollege-abbots- 70. VCCollegeemail.com ford.info 29. VCCollege-abbotsford.net 71. VCColleges-bc.com 30. VCCollege-abbotsford.org 72. VCColleges-bc.info 31. VCCollege-bc.com 73. VCColleges-bc.net 32. VCCollege-bc.info 74. VCColleges-bc.org 33. VCCollege-bc.net 75. VCColleges.com 34. VCCollege-bc.org 76. VCColleges.info 35. VCCollege-burnaby.com 77. VCColleges.net 36. VCCollege-burnaby.info 78. VCColleges.org 37. VCCollege-burnaby.net 79. VCConline.biz 38. VCCollege-burnaby.org 80. VCConline.info 39. VCCollege-canada.com 81. VCConline.mobi 40. VCCollege-canada.info 82. VCConline.us 41. VCCollege-canada.net 83. VCollege.info 42. VCCollege-canada.org 84. myVCCollege.ca 85. VCConline.ca Vancouver Community College v. Vancouver Affleck J. 361

Schedule “B” Interflora Inc. & Anor v. Marks and Spencer Plc & Anor, [2013] EWHC 1291 [Ch], paras 89 - 98 89. The principal way in which Google provides advertising is by means of a service Google calls AdWords. It is important to note that Google constantly refines the way in which its search engine operates and that Google regularly changes the way in which AdWords operates. There have been a considerable number of such changes in the period from April 2008 to now which are potentially relevant to the issues in the present. I cannot hope to describe all these changes. Accordingly I shall first attempt to describe the common features of AdWords over this period, and then to indicate some of the principal changes that have occurred during this time. 90. Common features. When a user of the Google search engine carries out a search, the SERP presented to the user usually contains three main elements. The first is the search box, which displays the search term typed in by the user. This may consist of one or more than one word. The second element comprises the “natural” or “organic” results of the search, consisting of links to websites assessed to be relevant to the search term by the search engine’s algorithm, accompanied in each case by some text derived from the website in which the search term appears, sorted in order of relevance. Typically, there is a large number of natural results, the listing of which continues on succeeding pages. Although there are various ways in which website operators can and do seek to influence their position in the “natural” search results, a process known as “search engine optimisation” or SEO, in principle the ranking is an objective one based solely on relevance. The third element comprises advertisements containing links to websites which are displayed because the operators of those websites have paid for them to appear in response to the search term in question. The advertisements are generally displayed in one or more of three sections of the SERP, namely (i) in a shaded box at the top of the SERP (often referred to as the “golden box”) which contains up to three advertisements, (ii) in a panel on the right- hand side of the SERF and (iii) a panel at the bottom of the SERF after the first ten natural results. 91. The display of such advertisements is triggered when the user enters one or more particular words into the search engine. These words, which are referred to as keywords, are selected by the advertiser in return for 362 WESTERN WEEKLY REPORTS [2016] 4 W.W.R. the payment of a fee calculated in the manner described below. This is often referred to as “bidding on” or “purchasing” the keywords. 92. The advertisements consist of three main elements. The first is an underlined heading (consisting of a maximum of 25 characters) which functions as a hyperlink to a landing page specified by the advertiser. That is to say, when the user clicks on the link, the user’s browser is directed to that page on the advertiser’s website. The hyperlink may consist of or include the keyword or it may not. The second element consists of two lines of promotional text (with a maximum of 35 characters for each line), which may or may not include the keyword. The third element consists of the URL of the advertiser’s website (maximum of 35 characters). It should be noted that the URL does not function as a hyperlink (although the user could type it or cut-and-paste it into his or her browser and access the website in that way). 93. The way in which the advertiser pays for this form of advertising is that the advertiser pays a certain amount each time a user clicks on the hyperlink in its advertisement and thus is directed to the advertiser’s website (known as “click through”). Accordingly, the advertiser does not pay for the display of advertisements to users who do not click through. The amount the advertiser pays is calculated as the “cost per click” or CPC for each keyword purchased subject to a maximum daily limit specified by the advertiser. If the daily limit is exceeded, the advertisement will not be displayed. 94. More than one person can purchase each keyword. Where more than one person purchases a particular keyword, there is an automated auction process whereby, subject to the influence of the Quality Score discussed below, the advertiser who bids the highest maximum CPC has its advertisement displayed in the highest position and so on. This means that popular keywords are more expensive than unpopular ones. 95. In addition to the CPC, the positioning of advertisements is influenced by the Quality Score or QS which Google ascribes to the advertisement. Google does not publish all the factors it takes into account in determining the QS, and I believe that this has changed over time, but they include the relevance of the promotional text, the “click through rate” or CTR and the relevance of the landing page. An advertiser whose advertisement has a high QS, but low maximum CPC, can appear higher in the ranking than one whose advertisement has a lower QS but higher maximum CPC. Vancouver Community College v. Vancouver Affleck J. 363

96. Google offers advertisers the facility to match a keyword to the user’s search query so as to trigger an advertisement in various different ways. An “exact match” is where the search term entered by the user must be the same as the keyword selected by the advertiser in order for the advertisement to appear, with no additional words. A “phrase match” requires the search term to contain the same words as the keyword in the same order, but it may include additional words before or after the phrase. A “broad match” enables the search term to be matched to vari- ants of the keyword such as plurals. By May 2008 Google’s broad match included a facility referred to by practitioners (but not Google) as “advanced broad match”, namely for a search term to be matched to a different keyword which was nevertheless relevant. For example, this enabled M & S to display advertisements associated with the keyword “florists” when the search term “flowers” was entered. “Negative match” enables advertisers to prevent advertisements from appearing when the search query includes a particular word or phrase. Negative matching is a straightforward and routine process. 97. Google enables advertisers to organise their keyword advertising in various ways. An advertiser may have one or more accounts, which may be categorised by reference to product or service. Within each account, advertisers can have various “campaigns”. Each campaign is subject to settings determined by the advertiser that dictate the manner in which advertisements are displayed e.g. in which geographical area, on what devices, at what times of day and in what sequence. Within each campaign, there can be various “groups”. Each group contains a list of keywords and the promotional text, URL and match type associated with it. The process of creating a keyword advertising campaign as at April 2009 is illustrated in Annex 1 to my first judgment. 98. Google enables advertisers to assess and manage their keyword advertising campaigns by means of Search Query Reports or SQRs. De- pending on how they are set up and used, SQRs can produce information on a variety of performance measures for keywords, as follows: i) Impressions — how many times the advertiser’s advertisements appeared following a search which has been conducted against a search term which, in some way, matches the keyword bid on. ii) Clicks — how many times the advertiser’s advertisements were clicked on by users who had searched for a particular search term and had been presented with an advertisement. iii) CTR — the proportion of clicks to impressions. 364 WESTERN WEEKLY REPORTS [2016] 4 W.W.R. iv) CPC — on average, how much the advertiser had to pay to Google per click on the advertisement. v) Cost — how much in total the advertiser spent on bidding for that search term. vi) Conversions — how many tracked events were recorded from the keyword if Google AdWords tracking is implemented on the site. vii) Revenue — how much revenue has been generated from the keyword if this facility was implemented as part of setting up Google AdWords tracking on the site. viii) Conversion Rate — the rate at which conversions (sales) are made to the number of clicks generated. A 50% conversion rate would indicate that one in every two people that clicks on the advert purchases from the website. Arnold v. General Insurance Council 365

[Indexed as: Arnold v. General Insurance Council] Robert Arnold, Plaintiff and General Insurance Council, Defendant Alberta Court of Queen’s Bench Docket: Calgary 1301-11710 Dario J. Judgment: July 15, 2015* Constitutional law –––– Charter of Rights and Freedoms — Nature of rights and freedoms — Unreasonable search or seizure –––– Plaintiff was insurance agent and owner of insurance broker MIB — Defendant was agency empowered by Minister of Finance and Enterprise to investigate complaints on behalf of the General Insurance Council (council) related to Insurance Act — Defendant received information from former employee of MIB regarding plaintiff’s billing practises, with respect to two clients in particular — Defendant’s examiners attended at MIB when plaintiff was not present and required production of files related to those two clients — When he returned, plaintiff asserted that files were wrongfully taken — At initial hearing before council defendant did not disclose that plaintiff was not present at time its examiners attended MIB — Plain- tiff sought to appeal decision and claimed files were taken during illegal search and seizure conducted by defendant in violation of s. 8 of Canadian Charter of Rights and Freedoms — Plaintiff brought application to have evidence obtained from files taken from MIB excluded from production on appeal — Application dismissed — As regulated entity, files held by MIB were subject to review by regulating body; plaintiff was similarly subject to review and other requirements of regulating entity — Though not compelled to participate in industry, by choosing to do so plaintiff voluntarily elected to submit to regulatory framework governing industry — Plaintiff had limited expectation of privacy with respect to attendance of defendant’s examiners at MIB to obtain files — While there was seizure of files, plaintiff did not meet burden of proof to establish that he had requisite expectation of privacy regarding entry by the examiners into reception of office for such attendance to constitute “search”, and thus for s. 8 rights to be invoked in that regard — Even if there was search, it was authorized by legislation and there was no breach of s. 8 rights.

* Affirmed at Arnold v. General Insurance Council (2016), 2016 CarswellAlta 241, 2016 ABCA 55, [2016] 4 W.W.R. 379 (Alta. C.A.). 366 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

Cases considered by Dario J.: British Columbia (Securities Commission) v. Branch (1995), [1995] 5 W.W.R. 129, 4 B.C.L.R. (3d) 1, 7 C.C.L.S. 1, 38 C.R. (4th) 133, 123 D.L.R. (4th) 462, 97 C.C.C. (3d) 505, 180 N.R. 241, 27 C.R.R. (2d) 189, [1995] 2 S.C.R. 3, 60 B.C.A.C. 1, 99 W.A.C. 1, 1995 CarswellBC 171, 1995 CarswellBC 638, [1995] S.C.J. No. 32, EYB 1995-66968 (S.C.C.) — followed R. v. Diep (2005), 2005 ABCA 54, 2005 CarswellAlta 153, 363 A.R. 321, 343 W.A.C. 321, 131 C.R.R. (2d) 59 (Alta. C.A.) — distinguished R. v. Edwards (1996), 45 C.R. (4th) 307, 192 N.R. 81, 26 O.R. (3d) 736, 104 C.C.C. (3d) 136, 132 D.L.R. (4th) 31, 33 C.R.R. (2d) 226, 88 O.A.C. 321, [1996] 1 S.C.R. 128, 1996 CarswellOnt 2126, [1996] S.C.J. No. 11, 1996 CarswellOnt 1916, EYB 1996-67692 (S.C.C.) — referred to R. v. Grant (1993), [1993] 8 W.W.R. 257, 84 C.C.C. (3d) 173, 159 N.R. 161, [1993] 3 S.C.R. 223, 24 C.R. (4th) 1, 35 B.C.A.C. 1, 57 W.A.C. 1, 17 C.R.R. (2d) 269, 1993 CarswellBC 1168, 1993 CarswellBC 1265, [1993] S.C.J. No. 98, EYB 1993-67107 (S.C.C.) — referred to R. v. Jarvis (2002), 2002 SCC 73, 2002 CarswellAlta 1440, 2002 CarswellAlta 1441, 2002 D.T.C. 7547, [2003] 1 C.T.C. 135, 6 C.R. (6th) 23, [2002] S.C.J. No. 76, 219 D.L.R. (4th) 233, 169 C.C.C. (3d) 1, 295 N.R. 201, [2003] 3 W.W.R. 197, 8 Alta. L.R. (4th) 1, 317 A.R. 1, 284 W.A.C. 1, 101 C.R.R. (2d) 35, [2002] 3 S.C.R. 757, REJB 2002-35624 (S.C.C.) — followed R. v. McKinlay Transport Ltd. (1990), [1990] 1 S.C.R. 627, 68 D.L.R. (4th) 568, 106 N.R. 385, 39 O.A.C. 385, 55 C.C.C. (3d) 530, 76 C.R. (3d) 283, 47 C.R.R. 151, (sub nom. Canada v. McKinlay Transport Ltd.) [1990] 2 C.T.C. 103, (sub nom. McKinlay Transport Ltd. v. R.) 90 D.T.C. 6243, 72 O.R. (2d) 798 (note), 1990 CarswellOnt 992, 1990 CarswellOnt 802, [1990] S.C.J. No. 25, EYB 1990-67530 (S.C.C.) — referred to Statutes considered: Canadian Charter of Rights and Freedoms, Part I of the Constitution Act, 1982, being Schedule B to the Canada Act 1982 (U.K.), 1982, c. 11 s. 8 — considered s. 24 — considered s. 24(2) — considered Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.) Generally — referred to Insurance Act, R.S.A. 2000, c. I-3 Generally — referred to s. 758(1)(b) — considered s. 759 — considered s. 759(2) — considered s. 759(6) — considered s. 760 — considered Arnold v. General Insurance Council Dario J. 367

s. 760(1)(c) — considered s. 760(1)(d) — considered

APPLICATION by plaintiff to have evidence obtained from files taken from insurance brokerage excluded from production on appeal.

J.L. Denis, for Plaintiff R.L. Martz, for Defenadnt, General Insurance Council L.C. Enns, Q.C., for Defendant, Attorney General of Alberta

Dario J.:

1 THE COURT CLERK: Order in court. THE COURT: Good afternoon, please be seated.

Reasons for Judgment 2 Mr. Arnold is applying to have evidence obtained during an insurance examiner’s attendance at his brokerage be excluded from production in an appeal of a May 16th, 2013, decision of the General Insurance Coun- cil, which I will refer to as “GIC”. He claims that this was a search and a seizure conducted in violation of section 8 of the Canadian Charter of Rights and Freedoms and that the examiners did not comply with the applicable provisions of the Insurance Act, R.S.A. 2000, c I-3 in conducting such search and seizure. Mr. Arnold is also seeking to have the Court dismiss or stay the findings of the GIC decision.

Facts: 3 I will not go through the fact pattern in detail it is laid out in the parties’ brief materials. The most salient portions are as follows: 4 Mr. Arnold is an insurance agent and owns Mitchell Insurance Bro- kers. The Alberta Insurance Council (AIC) is an agency empowered by the Minister of Finance and Enterprise to investigate complaints on behalf of the GIC related to the Insurance Act, which powers include inspection. The GIC is delegated the authority to hold hearings and conduct investigations related to a regulated person. 5 Prior to the investigation in question, the AIC had other files open with respect to Mr. Arnold. He had been previously convicted of an offence under the Insurance Act. Another claim was concurrently under investigation. 368 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

6 The AIC received information from a former employee of Mitchell Insurance Brokers regarding Mr. Arnold’s billing practises and, in specific, in relation to two clients. Sometime later, in furtherance of this investigation examiners of the AIC attended at the business premises of Mitchell Insurance at the time when they knew from another employee that Mr. Arnold would not be present as he was out of the country. Mr. Arnold also advised the AIC that he would be out of the office during that period and not to send documents to his office while he was away. 7 There is some dispute as to whether the examiners attended the business with the intent to obtain two client files or three client files. Based on the evidence presented, I find that the examiners during their attendance at Mitchell Insurance Brokers required production of two files related to those clients and were at that time offered by the employee, Ms. Johnson, a third client file to consider regarding billing practices. Re- garding this volunteered file, I find acceptance by the AIC examiners of the third file was not a search in relation to section 8 of the Charter. 8 When Mr. Arnold returned from his trip he asserted that the files were wrongfully taken. He subsequently provided communication to various agencies in addition to the AIC advising of his position, including making a complaint to the police, to the Privacy Commissioner regarding a breach of privacy laws, and to the Premier of Alberta, as well as to the Law Society with respect to the conduct of one of the examiners. The recipients of these communications generally advised that no further inquiry or action would be taken to pursue Mr. Arnold’s complaints. 9 At the initial hearing the AIC did not disclose that Mr. Arnold was not present at the time the AIC examiners attended Mitchell Insurance Brokers. This, the applicant argues, painted the wrong picture and skewed the GIC’s ability to understand the context of the subsequent correspondence and the actions of Mr. Arnold. Whether or not that is the case, and to clarify the scope of this application, the Court will not be conducting a review of that decision, nor will it be making a credibility determination or assess whether there are issues of bias of the GIC. These issues will be left for the appeal, which I understand will be a trial de novo involving viva voce evidence and an opportunity to call new evidence.

Issues: 10 The issue before the Court is whether section 8 of the Charter has been breached, and whether the AIC examiners failed to comply with Arnold v. General Insurance Council Dario J. 369

sections 759 and 760 of the Insurance Act by their attendance at Mitchell Insurance Broker’s business premises on March 28th, 2012.

Analysis: 11 In evaluating whether there was a breach of section 8 relating to a claim of unreasonable search and seizure, I note that the onus is on the applicant to establish that such a breach occurred. 12 The respondent argues that there was no search and seizure in this case. The examiners only attended the reception area of the brokerage and did not enter beyond where the public had access. With respect to seizure, the respondent argues that the applicant had no privacy interest in the files, thus no section 8 rights are invoked. The respondent claims Mr. Arnold had no standing to represent Mitchell Insurance Brokerage, thus no section 8 rights are triggered at all. In this case, I am not prepared to say prior to a section 8 analysis that none of Mr. Arnold’s section 8 rights are impacted. I, therefore, turn to the section 8 analysis. 13 This Court considers first whether there was a reasonable expectation of privacy, and secondly, whether the search and seizure was an unreasonable intrusion on that right of privacy: R. v. Edwards, [1996] S.C.R. 128 (S.C.C.). If the applicant is able to establish that a breach occurred, then the Court must consider whether the evidence is still permissible pursuant to section 24(2) of the Charter, or if its admission would bring the administration of justice into disrepute: R. v. Grant, [1993] 3 S.C.R. 223 (S.C.C.). 14 The first step is a determination of whether there is any expectation of privacy over the information obtained. The information in question is limited to business records. I reject the argument of the applicant, that the invoices, insurance quotes, and similar information contained in the insurance records of Mitchell Insurance Brokers are in any way personal information of Mr. Arnold. While there may be some possibility that there could be personal information of the respective clients contained in such documents, which fact would still have to be proven, that possibility does not make it personal information of Mr. Arnold under any applicable privacy legislation. Having said that, however, I view the concept of a privacy interest covered under section 8 of the Charter as spanning somewhat beyond just personal information as defined in privacy legislation. 15 The applicant here is subject to a regulatory review. Where documents are created in the course of a regulated activity, generally there is 370 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

only a limited scope privacy interest: R. v. Jarvis, [2002] 3 S.C.R. 757 (S.C.C.). In this case that limited scope is much narrower than it would be, for example, for information disclosed related to a personal tax return, such as in R. v. Jarvis. In the context of income tax, the information attracts greater protection given the amount of personal information contained in the documents. Further, in an income tax situation, such as in Jarvis, the claim is brought by the party who is the subject of the documents: the actual claimant (as opposed to a service provider to the subject of the documents, such as in this case). Any expectation of the applicant of privacy in relation to the files in the present case would be extremely limited. 16 Regarding the search component of the claim, in this case rather than request the applicant or one of his employees send the required information to the AIC, the AIC examiners attended on the brokerage office. This, the applicant suggests, is a significant breach of his reasonable expectation of privacy as the AIC could have just requested this information be sent to it. 17 Case law supports a finding that there may be a reasonable expectation of privacy from a search at one’s place of business. That expectation, however, is limited where the business operates in a regulated field: British Columbia (Securities Commission) v. Branch, [1995] 2 S.C.R. 3 (S.C.C.) and R. v. McKinlay Transport Ltd., [1990] 1 S.C.R. 627 (S.C.C.). It is further limited by the nature of the search in this case in that the examiners did not go beyond the reception area and merely requested two specific files. In this case it is not clear to me that the applicant has met the burden of proof to establish that he had a reasonable expectation of privacy over the area entered given the nature of the search conducted. 18 For the purpose of completing this analysis, however, I will assume that Mr. Arnold has some limited expectation of privacy from the search and seizure of the files through the attendance of the business premises, and consider a second part of the test: whether the search and seizure was an unreasonable intrusion on that expectation of privacy. In the context of how the “search” was conducted and the limited information seized is relevant. 19 I consider the following factors as set out in Branch: (1) Is the search and seizure authorized by law; (2) Is the law itself reasonable; Arnold v. General Insurance Council Dario J. 371

(3) Was the search conducted in a reasonable manner? 20 I note the application is not challenging the constitutionality of the Insurance Act. As such, the provisions as they stand are considered legal, and part (2) of this test is met. Thus, only parts (1) and (3) of the factors are considered further.

Authorized by Legislation: 21 Turning to part (1) of the evaluation I consider whether the search and seizure was authorized by legislation. Much of this application regarding a breach of section 759 of the Insurance Act hangs on the interpretation of section 759(2) and whether the owner or manager is required to be present in order for the AIC to exercise its right to enter the premises. The applicant’s argument is that the owner or manager must be present and that this is the only way such a person can exercise its right to refuse entry to the AIC examiners. The applicant further argues that legislation should be interpreted to require the AIC examiners to first obtain a court order prior to entering into the premises. There is no language in the Act to support this interpretation. 22 I reject the notion that the inclusion in the legislation of provisions to address how the AIC can deal with a wrongful denial of access by the applicant somehow creates a right for the applicant to deny access. The court order provisions of section 760 are there to enable enforcement, not to negate it. I further reject that the clearly permissive language of section 760, allowing the examiners to obtain a warrant in certain circumstances, namely section 760(1)(c) and (d), should be interpreted as mandatory. The applicant suggests this is similar to requirements requiring obtaining a Breathalyzer. There are, however, significant distinctions from that context, including that the results could lead to a criminal charge as compared to the present non-criminal context, which is specifically governed by legislation of a regulated entity. The analogy does not work. Further, the interpretation proposed by the applicant would essentially render section 759 meaningless. 23 Section 759(2) reads as follows: (as read) An examiner who enters any premises or place under this section may require the owner or manager of the premises or place and any other person in the premises or at the place (a) to give the examiner all reasonable assistance and to make reasonable efforts to answer all the examiner’s questions, 372 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

(b) to produce for inspection or examination all records or documents that are or may be relevant, and (c) to produce any property of the regulated person or subsidiary or holding body corporate of the regulated person. 24 I note that a strict reading of this provision taken in isolation could lead to more than one interpretation. I must, however, interpret it in the context of the legislative framework taken as a whole. In looking at the related sections I note that section 759(6) makes provision for obtaining consent from the owner of a dwelling place as contrasted to the owner of a business premises. I also note that in section 758(1)(b), a demand for information could be made to any employee, and not just to the owner or manager and the person who receives the request of the examiner is compelled to provide the disclosure. 25 In view of these provisions and the overall purpose of this examination function, I do not interpret section 759 to require the owner or manager to be present during an AIC premises search, but rather, if he or she is present he or she must also assist in the examination as required. 26 In the event that I am wrong in this determination, I note that Ms. Johnson, the employee responsible for the office during Mr. Arnold’s absence, was present. The applicant argues that the AIC was fully aware that he was the owner and manager of the business. This is supported by the affidavit evidence of Ms. Dowhaniuk, the senior investigator on the file. The applicant further argues that his employees had no authority to make decisions in his absence. This is contrasted against the uncontested evidence that Ms. Johnson would manage the office without calling Mr. Arnold during his absences of several weeks. She would manage employees and deal with client issues while Mr. Arnold was away. 27 I note that in Ms. Dowhaniuk’s evidence she also states that, in prior site investigations, it was actually the agent or regulated person who was on site in most cases, and not necessarily the owner or manager. 28 Mr. Arnold’s own testimony in this regard is contradictory. He states that he remains in charge and that staff know how to contact him while away, and that there was a clear chain of command that they followed without exception. Yet, he also states that while a message was left for him on March 28th, the day of the examiner’s attendance, he did not even retrieve it until his return to Calgary on April 6th. If a telephone message was not how his staff were supposed to contact Mr. Arnold, then clearly his comment about clear communication and chain of com- Arnold v. General Insurance Council Dario J. 373

mand without exception was inaccurate. He did not suggest that the staff were supposed to do something different. 29 If a telephone message is how they were supposed to contact him, then Mr. Arnold providing no response for over a week is not reflective of someone who is the acting manager at that point in time. He also confirmed that it was his first time that Ms. Johnson attempted to call him while he was away in the two to three years she worked at Mitchell In- surance Brokers. It is difficult to conceive that no other issues requiring some form of management would have occurred and been dealt with by someone other than Mr. Arnold while he was away during that two to three year period. (For clarity, I am not suggesting Mr. Arnold was away for two to three years, but that he was away for periods during that two to three year period of time.) Consequently, I find Ms. Johnson was the de facto manager of the premises at the time of the investigation. In the event that section 759(2) requires such individual to be present during an on-site inspection, I find that in this case based on the facts presented that requirement was met. 30 As such, based on the evidence I find the search and seizure was authorized by legislation. Similarly, to the extent only a seizure is considered, for example, for the third file seized, I find that the seizure was authorized by legislation. I find the examiners conducted the search and seizure in compliance generally with the requirements of the Act. Al- though there may have been other options available to the examiners to obtain the files, they were not compelled to first exercise those other options.

Conducted in a Reasonable Manner: 31 I now turn to consider whether the search and seizure was conducted in a reasonable manner. The applicant argues that the fact the examiners waited until Mr. Arnold would not be present constituted an unreasonable search and seizure. He cites R. v. Jarvis in setting out the evaluation the Court must undertake in making such an assessment. The Court in R. v. Jarvis set out factors the Court should evaluate in determining what the primary purpose of an inquiry is. In the present case, this analysis is not even invoked as there is at no point a suggestion that this review could or would turn into a criminal investigation. 32 I note the distinction between the legislative framework as set out in the Insurance Act from the Income Tax Act, the latter containing both an administrative and an separate criminal review process all under one stat- 374 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

utory regime. In the present case an administrative review may have penalties or other consequences. That is not the same as criminal investigation. No criminal charges were laid in this case. There is no suggestion of a penal liability. 33 Consequently, the Court assesses the reasonableness of the search and seizure in this case taking into consideration the following five factors: (1) The AIC could have just provided a demand letter for production of the files; (2) On-site attendance at the premises of the regulated person is rarely used by the AIC examiners; (3) The nature of the search; (4) The timing of the attendance was deliberately chosen while Mr. Arnold would not be in the office; and (5) The duty of AIC to protect the public. 34 First, the AIC could have just provided a demand letter for production of the files. The evidence suggests that while there was no direct assertion that the AIC was under the belief Mr. Arnold would destroy the files, the examiners were of the view that he would be unwilling to provide them and would likely be confrontational. Weighed against this, Mr. Arnold’s evidence is that he provided materials requested in a prior examination within several days or weeks after such request. Yet, in the context of the on-site examination, Mr. Arnold’s own evidence was that if given the opportunity, i.e. if he was present at the time of the examination, he would refuse to provide the information. Rather, he would require the AIC to obtain a court order to compel production of these files. There is no evidence as to whether Mr. Arnold would have a different view if the files were requested through communication rather than requested while on site. 35 Second, on-site attendance at the premises of the regulated person is rarely used by the AIC examiners. For example, Ms. Dowhaniuk had only attended on site four or five times out of the roughly 700 investigations in which she participated. This was the first on-site attendance for Ms. Graham of roughly 300 investigations. While rarely used, the fact that the legislation provides for such an on-site attendance enhances the ability of the AIC to ensure compliance with the legislation. There is no requirement that this step only be exercised after the regulated person fails to provide the information sought by other means. The issue is whether in the circumstances the use of this enforcement mechanism was Arnold v. General Insurance Council Dario J. 375

unreasonable, which I will assess taking into consideration all of the relevant factors. 36 Third, the nature of the search was essentially attendance by two examiners who explained to Ms. Johnson their authority to enter the premises for the purpose of an examination under the Insurance Act, requested two files, which the employee obtained, and were offered a third file, which the examiners accepted. The requirement to provide receipts and the return of the files in a timely manner were all met by the examiners. The examiners did not go beyond the reception area. The examiners did not themselves root through the business premises or investigate any files for which they did not already have some basis for the necessity for the review. Further, there was no suggestion that the examiners behaved in any manner other than professional. 37 Fourth, the timing of the attendance was deliberately chosen while Mr. Arnold would not be in the office. The evidence of the examiners was that they were concerned that he would be unwilling to release the documents, which is substantiated by Mr. Arnold’s own testimony, and further that he may be confrontational since he was also confrontational on a separate prior investigation. The applicant argues that the choice of this timing contravenes the legislation that required on-site attendance to be conducted at a reasonable time, which he suggests means more than just during business hours. 38 I agree that a reasonable time means more than just during business hours. This concept should also generally mean not at a time when it would cause avoidable interruption to the business of the brokerage or otherwise be unnecessarily disruptive. There was no evidence presented that the timing was otherwise inconvenient, other than due to Mr. Arnold not being present. Given the comments I have already made regarding compliance with the legislation, I will not again address whether the owner or manager was required to be present in order to comply with the legislation. 39 The applicant notes that in ensuring that the owner/operator was present in the case of R. v. Diep was considered by the Court to constitute good faith. The absence of the owner/operator, or in this case manager, does not necessarily however constitute bad faith. Again, unlike R. v. Diep, 2005 ABCA 54 (Alta. C.A.), the present case is not one where criminal charges can arise. Although the potential consequence to Mr. Arnold are material, they are not penal. While I agree that the examiners had a duty to exercise their authority in good faith, in considering all of 376 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

the circumstances of the present case I do not find that they failed to do so. 40 Fifth, the duty of the AIC to protect the public and the balancing it must do to ensure that, in exercising its investigative authority, it can accomplish its purpose. There is a much larger policy principle behind the extent to which the insurance industry is regulated to the degree that it is. The AIC in engaging in this investigation had, as its purpose, the protection of certain customers from overbilling, contrary to the Act. The Insurance Act sets out measures the examiners can take in furtherance of this objective. 41 I have already rejected the notion that a warrant must first be sought to allow attendance or examination on the premises, or that Mr. Arnold had the right to refuse access to the premises. Incidentally, this is consistent with the four or five prior on-site attendances performed by Ms. Dowhaniuk. In none of those cases did the AIC first obtain a court order for such on-site examination. I further note that Mr. Arnold has not provided any reason why the Court would not or should not grant a warrant had the AIC examiners sought such an order. 42 In looking at the totality of the circumstances, while on-site examination may have been rarely used by the AIC, the present case is an appropriate situation to employ the right to attend on the premises rather than just provide a demand letter for production of the documents. Particu- larly in light of how limited the search was - a request for two specific files that were obtained by the employee and provided to the AIC examiners who waited in the reception area - I find the search and seizure was conducted in a reasonable manner. 43 Again, if the Court only considered the seizure aspect of this claim I would find in this case the seizure meets the reasonableness requirements. 44 I have already addressed whether the AIC complied with the legislation and in particular section 759 and 760 of the Insurance Act above and will not address is separately as my position is the same as already stated.

Conclusion: 45 In summary, I find that as a regulated entity the files held by Mitchell Insurance Brokers are subject to review by a regulating body. The applicant is similarly subject to the review and other requirements of the regulating entity. Though not compelled to participate in this industry, by Arnold v. General Insurance Council Dario J. 377

choosing to do so the applicant has voluntarily elected to submit to the regulatory framework governing this industry. 46 The applicant has a lesser expectation of privacy than would, for example, a taxpayer disclosing his or her personal financial information. In the present case, as mentioned, the applicant is not the party that has the ability to claim privacy rights over files. That would be left for the clients to contend. I find Mr. Arnold has a minimal expectation of privacy over these files from the regulating entity. The applicant has a limited expectation of privacy with respect to attendance of the AIC agent at the place of business to obtain files. While there was a seizure of files in this case, it is not clear to me that the applicant has met the burden of proof to establish that he has the requisite expectation of privacy regarding entry by the examiners into the reception of the office for such attendance to constitute a “search,” and thus for section 8 rights to be invoked in that regard. For the purpose of this analysis, I have assumed a search was conducted for the two files. No search was conducted for the third file. 47 I find that a seizure, and if it could be established that there was one, the search undertaken by the AIC examiners were authorized by the legislation. I find the legislation was not challenged as to its validity and, therefore, for the purpose of this case, is deemed reasonable. Finally, I find that the search and seizure were conducted in a reasonable manner and otherwise reasonable. The reasonableness test would also be met if I considered only the seizure of the files separate from the search related to them. 48 Consequently, I find that no breach of section 8 of the Charter occurred. As such, it is not necessary for me to go on to consider whether the breach is saved pursuant to section 24 of the Charter. The application to dismiss or stay the findings of the GIC decision is denied. The issues regarding the failure of the AIC to disclose the circumstances in which the files were obtained can be addressed during the trial de novo before the GIC. 49 So hopefully that was clear. If the parties have any question, now would be the time ask and, otherwise, we will address costs. MR. MARTZ: No questions from my side. MR. DENIS: No questions. THE COURT: Thank you. Costs. MR. MARTZ: On costs I know that Mr. Wong was unable to attend today and my friend, as he indicated, is not very familiar with this 378 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

file, not surprisingly. We’re prepared to address costs at a later date when Mr. Wong is available if that’s fine with the Court. THE COURT: Certainly, and if the parties can come to their own agreement, obviously, that would be fine. MR. DENIS: Thank you. THE COURT: All right. Thank you, we are adjourned. Application dismissed. Arnold v. General Insurance Council 379

[Indexed as: Arnold v. General Insurance Council] Robert Arnold, Appellant and General Insurance Council, Respondent Alberta Court of Appeal Docket: Calgary Appeal 1501-0202-AC 2016 ABCA 55 Ronald Berger, Barbara Lea Veldhuis, Thomas W. Wakeling JJ.A. Heard: July 15, 2015 Judgment: February 26, 2016 Insurance –––– Regulation of insurance industry — Scope of legislation — General principles –––– Alberta Insurance Council (AIC) entered appellant broker’s offices without a search warrant and seized files — Appellant was convicted of various breaches of Insurance Act resulting in $21,000 penalty — Ap- pellant contended search was in violation of s. 8 Canadian Charter of Rights and Freedoms rights and evidence should have been excluded — Chambers judge ruled that no s. 8 breach had occurred — Appellant brought appeal — Appeal dismissed — Nothing in Insurance Act that compels application for search warrant as condition precedent to attending at business premises in circumstances — Act permitted AIC to compel production of records in issue — Low expectation of privacy given that business was regulated one and records were business records. Statutes considered: Canadian Charter of Rights and Freedoms, Part I of the Constitution Act, 1982, being Schedule B to the Canada Act 1982 (U.K.), 1982, c. 11 s. 8 — referred to Insurance Act, R.S.A. 2000, c. I-3 Generally — referred to s. 481 — considered s. 758 — considered s. 758(1)(b) — considered s. 758(2) — considered s. 759 — considered s. 759(5) — considered s. 760 — referred to s. 760(1)(a) — considered s. 760(1)(c) — considered 380 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

s. 760(1)(d) — considered

APPEAL from judgment reported at Arnold v. General Insurance Council (2015), 2015 CarswellAlta 1943, [2016] 4 W.W.R. 365 (Alta. Q.B.).

R. Wong, for Appellant R. Martz, for Respondent

Ronald Berger J.A. (for the Court):

1 On March 28, 2012 two examiners on behalf of the Alberta Insurance Council (“AIC”) attended at the business premises of the appellant and came away with three client files. Their attendance at Mitchell Insurance Brokers was occasioned by a complaint from a Ms. Beverly MacDonald who maintained that the appellant may have breached the provisions of the Insurance Act. The appellant, Robert Arnold, was not present. He was in Mexico and had left Rona Johnson to operate the office which remained open for business. She is both an employee and a regulated person under the Act. The chambers judge found that Ms. Johnson was in effect managing the brokerage in Mr. Arnold’s absence. 2 There seems to be no doubt that Ms. Johnson who was questioned earlier on February 2, 2012, had indicated that the appellant would not cooperate with the examiners, that he would be unwilling to release the documents and that he may be confrontational. Certainly, that is what the examiners believed in good faith. 3 With that in mind, they very deliberately set out to seek the files at a time when the appellant would be away. Ms. Johnson did not deny entry to the premises and delivered up the three files that the examiners sought. 4 The appellant says that the examiners should have obtained a court order under s. 760 of the Insurance Act, that they nonetheless effected a search and seizure, and that s. 8 of the Charter in all of the circumstances was infringed. The appellant argues, accordingly, that the resulting evidence relied upon by the General Insurance Council (“GIC”) to convict the appellant of various breaches of the Insurance Act [resulting in a global monetary penalty of $21,000] should be declared to have been obtained in breach of s. 8 of the Charter and excluded from the evidentiary record in respect of the extant appeal to the AIC (the initial convictions were recorded by the chair of the GIC relying on the investigation report; the appeal panel of the GIC was to hear the appeal on October 28, 2013). Arnold v. General Insurance Council Ronald Berger J.A. 381

5 The matter went to the Court of Queen’s Bench premised on the notion that the appeal panel has no jurisdiction to hear constitutional issues. The Queen’s Bench chambers judge ruled that no s. 8 breach occurred and that, accordingly, it was not necessary to consider s. 24(2) of the Charter. 6 There can be no question that the appellant’s business operates in a regulated field. Section 760(1)(a), (c) and (d) of the Insurance Act allows the AIC examiner to apply for a court order. But there is nothing in the legislation, as we see it, that compels such an application as a condition precedent to attending at the business premises of the appellant in the circumstances of this case. 7 The appellant elected to engage in a business enterprise that is regulated pursuant to provincial legislation. All insurance agents are subject to the Act. It seems to us that, as the respondent maintains, regulated individuals “at most, have a very low reasonable expectation of privacy over documents created in the normal course of their business.” The Act permits the AIC to compel the production of the records in issue in this case. Sections 758 and 759 authorize the AIC to require the production of business records from the premises and ss. 481, 758(2), and 759(5) require the regulated person to provide the documents in the face of such a request. That obligation, in our opinion, extends to Ms. Johnson on the facts of this case. She is in any event an employee pursuant to s. 758(1)(b) of the Act. 8 We discern no error of law on this record that warrants appellate in- tervention, nor any misapprehension of the findings of fact which are unassailable. 9 The appeal must be dismissed. Appeal dismissed. 382 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

[Indexed as: Manitoba (Director of Criminal Property and Forfeiture) v. Lamy] The Director of Criminal Property and Forfeiture, Plaintiff and Jerry Roy Lamy, Diane Lynn Lamy and Clifford Lamy, Defendants Manitoba Court of Queen’s Bench Docket: Dauphin Centre CI 13-05-00723 2015 MBQB 156 Master Harrison Judgment: October 1, 2015 Criminal law –––– Pre-trial procedure — Search and seizure under proceeds of crime legislation — Forfeiture of proceeds of crime –––– RCMP executed search warrant at male accused’s residence — Male and female accused were each charged with possession of marijuana for purpose of trafficking and production of controlled substance — Female accused pled guilty to charges and served conditional sentence — Charges against male accused were stayed — Di- rector of Criminal Property and Forfeiture brought motion to order accused to answer questions objected to at discovery — Motion dismissed — Action under Criminal Property Forfeiture Act (CPFA) did not seek numerically quantifiable monetary goal arising from administrative process — Other than exempt land, dwelling and drug paraphernalia, there was no asset in play to establish civil in rem jurisdiction — As pled, suit was not in conformity with provincial constitutional objectives regarding deterring of crime being in direct conflict with statutes regarding confiscation of specific exempt property as noted above — Ac- tion was in pith and substance of criminal nature — Action’s dominant feature appeared to be punishment of accused by forfeiture or confiscation of their land and home and means of livelihood — It was not within ambit of purported civil litigation to approve further discovery given lack of relevancy — Accused could not be compelled to answer refused questions given their lack of relevancy — Provincial Crown was estopped from pursuing questions on discovery which would contradict prior proceedings in Provincial Court — In any case, questions regarding provincial statutory exempt asset were not relevant. Civil practice and procedure –––– Discovery — Examination for discovery — Conduct of examination — Objecting and refusing to answer –––– RCMP executed search warrant at male accused’s residence — Male and female accused were each charged with possession of marijuana for purpose of trafficking and production of controlled substance — Female accused pled guilty to charges and served conditional sentence — Charges against male accused were Manitoba (Director of Criminal Property and Forfeiture) 383 stayed — Director of Criminal Property and Forfeiture brought motion to order accused to answer questions objected to at discovery — Motion dismissed — Action under Criminal Property Forfeiture Act (CPFA) did not seek numerically quantifiable monetary goal arising from administrative process — Other than exempt land, dwelling and drug paraphernalia, there was no asset in play to establish civil in rem jurisdiction — As pled, suit was not in conformity with provincial constitutional objectives regarding deterring of crime being in direct conflict with statutes regarding confiscation of specific exempt property as noted above — Action was in pith and substance of criminal nature — Action’s dominant feature appeared to be punishment of accused by forfeiture or confiscation of their land and home and means of livelihood — It was not within ambit of purported civil litigation to approve further discovery given lack of relevancy — Accused could not be compelled to answer refused questions given their lack of relevancy — Provincial Crown was estopped from pursuing questions on discovery which would contradict prior proceedings in Provincial Court — In any case, questions regarding provincial statutory exempt asset were not relevant. Public law –––– Crown — Practice and procedure involving Crown in right of province — Discovery — Discovery by Crown –––– RCMP executed search warrant at male accused’s residence — Male and female accused were each charged with possession of marijuana for purpose of trafficking and production of controlled substance — Female accused pled guilty to charges and served conditional sentence — Charges against male accused were stayed — Director of Criminal Property and Forfeiture brought motion to order accused to answer questions objected to at discovery — Motion dismissed — Action under Crimi- nal Property Forfeiture Act (CPFA) did not seek numerically quantifiable monetary goal arising from administrative process — Other than exempt land, dwelling and drug paraphernalia, there was no asset in play to establish civil in rem jurisdiction — As pled, suit was not in conformity with provincial constitutional objectives regarding deterring of crime being in direct conflict with statutes regarding confiscation of specific exempt property as noted above — Action was in pith and substance of criminal nature — Action’s dominant feature appeared to be punishment of accused by forfeiture or confiscation of their land and home and means of livelihood — It was not within ambit of purported civil litigation to approve further discovery given lack of relevancy — Accused could not be compelled to answer refused questions given their lack of relevancy — Provin- cial Crown was estopped from pursuing questions on discovery which would contradict prior proceedings in Provincial Court — In any case, questions regarding provincial statutory exempt asset were not relevant. Cases considered by Master Harrison: Alberta Government Telephones v. Canadian Radio-Television & Telecommunications Commission (1989), [1989] 5 W.W.R. 385, [1989] 2 S.C.R. 225, 61 D.L.R. (4th) 193, 98 N.R. 161, 68 Alta. L.R. (2d) 1, 26 384 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

C.P.R. (3d) 289, 1989 CarswellNat 699, 1989 CarswellNat 758, EYB 1989- 67255, [1989] S.C.J. No. 84 (S.C.C.) — followed Angle v. Minister of National Revenue (1974), [1975] 2 S.C.R. 248, 47 D.L.R. (3d) 544, 2 N.R. 397, 1974 CarswellNat 375, 28 D.T.C. 6278, 1974 Car- swellNat 375F, [1974] S.C.J. No. 95 (S.C.C.) — followed Borowski v. Canada (Attorney General) (1989), [1989] 3 W.W.R. 97, [1989] 1 S.C.R. 342, 57 D.L.R. (4th) 231, 92 N.R. 110, 75 Sask. R. 82, 47 C.C.C. (3d) 1, 33 C.P.C. (2d) 105, 38 C.R.R. 232, 1989 CarswellSask 241, 1989 CarswellSask 465, [1989] S.C.J. No. 14 (S.C.C.) — considered British Columbia (Workers’ Compensation Board) v. British Columbia (Human Rights Tribunal) (2011), 2011 SCC 52, 2011 CarswellBC 2702, 2011 Car- swellBC 2703, 25 Admin. L.R. (5th) 173, 337 D.L.R. (4th) 413, [2011] 12 W.W.R. 1, 23 B.C.L.R. (5th) 1, 421 N.R. 338, 95 C.C.E.L. (3d) 169, (sub nom. B.C. (W.C.B.) v. Figiola) 2012 C.L.L.C. 230-001, (sub nom. British Columbia (Workers’ Compensation Board) v. Figliola) [2011] 3 S.C.R. 422, 311 B.C.A.C. 1, 529 W.A.C. 1, [2011] S.C.J. No. 52, [2011] A.C.S. No. 52, (sub nom. British Columbia (Workers’ Compensation Board) v. Figliola) 73 C.H.R.R. D/1 (S.C.C.) — followed Canadian Western Bank v. Alberta (2007), 2007 SCC 22, 2007 CarswellAlta 702, 2007 CarswellAlta 703, 49 C.C.L.I. (4th) 1, [2007] S.C.J. No. 22, [2007] 8 W.W.R. 1, 362 N.R. 111, 75 Alta. L.R. (4th) 1, 281 D.L.R. (4th) 125, [2007] I.L.R. I-4622, 409 A.R. 207, 402 W.A.C. 207, [2007] 2 S.C.R. 3 (S.C.C.) — considered Chartier v. Chartier Estate (Trustee of) (2013), 2013 MBCA 41, 2013 Car- swellMan 231, 100 C.B.R. (5th) 279, [2013] 7 W.W.R. 100, 30 R.F.L. (7th) 33, (sub nom. Chartier (Bankrupt), Re) 291 Man. R. (2d) 298, (sub nom. Chartier (Bankrupt), Re) 570 W.A.C. 298, 362 D.L.R. (4th) 407 (Man. C.A.) — referred to Decorby v. Decorby (1985), 37 Man. R. (2d) 271, 21 E.T.R. 238, 24 D.L.R. (4th) 293, 1985 CarswellMan 80, [1985] M.J. No. 184 (Man. C.A.) — considered Fort Garry Care Centre Ltd. v. Hospitality Corp. of Manitoba Inc. (1997), 1997 CarswellMan 644, [1998] 4 W.W.R. 688, 123 Man. R. (2d) 241, 159 W.A.C. 241, 15 R.P.R. (3d) 253, [1997] M.J. No. 650 (Man. C.A.) — considered Guindon v. R. (2015), 2015 SCC 41, 2015 CSC 41, 2015 CarswellNat 3231, 2015 CarswellNat 3232, [2015] S.C.J. No. 41, [2015] A.C.S. No. 41, 21 C.R. (7th) 23, [2015] 6 C.T.C. 1, 387 D.L.R. (4th) 228, (sub nom. Guindon v. Minister of National Revenue) 473 N.R. 120, 2015 D.T.C. 5086 (S.C.C.) — considered Irwin v. Liverance (1998), 1998 CarswellOnt 5300, 30 C.P.C. (4th) 309, 91 O.T.C. 207, [1998] O.J. No. 5828 (Ont. Gen. Div.) — referred to Martineau c. Ministre du Revenu national (2004), 2004 SCC 81, 2004 Car- swellNat 4564, 2004 CarswellNat 4565, 24 C.R. (6th) 207, (sub nom. Manitoba (Director of Criminal Property and Forfeiture) 385

Martineau v. Minister of National Revenue) 247 D.L.R. (4th) 577, (sub nom. Martineau v. M.N.R.) 192 C.C.C. (3d) 129, (sub nom. Martineau v. Ministre du Revenu national) 328 N.R. 48, REJB 2004-81677, (sub nom. Martineau v. Canada (Minister of National Revenue)) 125 C.R.R. (2d) 301, [2004] 3 S.C.R. 737, 9 T.T.R. (2d) 487, [2004] S.C.J. No. 58, 2004 CSC 81 (S.C.C.) — considered Multiple Access Ltd. v. McCutcheon (1982), [1982] 2 S.C.R. 161, 138 D.L.R. (3d) 1, 44 N.R. 181, 18 B.L.R. 138, 1982 CarswellOnt 128, 1982 Carswell- Ont 738, [1982] S.C.J. No. 66, [1982] A.C.S. No. 66 (S.C.C.) — considered Ontario (Attorney General) v. 714 Railton Avenue (2014), 2014 ONCA 397, 2014 CarswellOnt 6414, [2014] O.J. No. 2357, 310 C.C.C. (3d) 448, 322 O.A.C. 54 (Ont. C.A.) — followed Ontario (Attorney General) v. Chatterjee (2009), 2009 SCC 19, 2009 Carswell- Ont 1949, 2009 CarswellOnt 1950, 242 C.C.C. (3d) 129, 65 C.R. (6th) 1, 387 N.R. 206, 249 O.A.C. 355, 304 D.L.R. (4th) 513, [2009] S.C.J. No. 19, 97 O.R. (3d) 399 (note), [2009] 1 S.C.R. 624 (S.C.C.) — followed Penner v. Niagara Regional Police Services Board (2013), EYB 2013-220248, 2013 SCC 19, 2013 CarswellOnt 3743, 2013 CarswellOnt 3744, 32 C.P.C. (7th) 223, 49 Admin. L.R. (5th) 1, [2013] S.C.J. No. 19, 356 D.L.R. (4th) 595, 442 N.R. 140, 304 O.A.C. 106, [2013] 2 S.C.R. 125, (sub nom. Penner v. Niagara (Police Services Board)) 118 O.R. (3d) 800 (note) (S.C.C.) — followed R. c. Ouellette (2009), 2009 SCC 24, 2009 CarswellQue 4982, 2009 Carswell- Que 4983, (sub nom. R. v. Ouellette) 244 C.C.C. (3d) 42, (sub nom. R. v. Ouellette) 306 D.L.R. (4th) 618, 66 C.R. (6th) 235, (sub nom. R. v. Ouel- lette) 388 N.R. 320, [2009] 1 S.C.R. 818 (S.C.C.) — considered R. v. Catagas (1977), [1978] 1 W.W.R. 282, 2 C.R. (3d) 328, 38 C.C.C. (2d) 296, 81 D.L.R. (3d) 396, 9 C.N.L.C. 476, 1977 CarswellMan 110, 7 C.E.L.R. 49 (note), [1977] M.J. No. 73 (Man. C.A.) — followed R. v. Craig (2009), 2009 SCC 23, 2009 CarswellBC 1357, 2009 CarswellBC 1358, 244 C.C.C. (3d) 1, 306 D.L.R. (4th) 577, 66 C.R. (6th) 201, 388 N.R. 254, 271 B.C.A.C. 1, 458 W.A.C. 1, [2009] S.C.J. No. 23, [2009] 1 S.C.R. 762 (S.C.C.) — considered R. v. Nguyen (2009), 2009 SCC 25, 2009 CarswellBC 1359, 2009 CarswellBC 1360, 244 C.C.C. (3d) 48, 306 D.L.R. (4th) 624, 66 C.R. (6th) 231, 388 N.R. 329, 271 B.C.A.C. 67, 458 W.A.C. 67, [2009] 1 S.C.R. 826 (S.C.C.) — considered R. v. Trang (2004), 2004 ABCA 246, 2004 CarswellAlta 904, 28 Alta. L.R. (4th) 50, 188 C.C.C. (3d) 85, 334 W.A.C. 1, [2004] A.J. No. 799, 357 A.R. 1 (Alta. C.A.) — followed R. v. Van Bemmel (2010), 2010 ONCA 276, 2010 CarswellOnt 2129, 253 C.C.C. (3d) 284, 260 O.A.C. 382, [2010] O.J. No. 1468 (Ont. C.A.) — considered 386 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

Rans Construction (1966) Ltd. v. R. (1987), 87 D.T.C. 5415, [1987] 2 C.T.C. 206, 16 F.T.R. 73, [1988] 1 F.C. 526, 1987 CarswellNat 464, 1987 Car- swellNat 885, [1987] F.C.J. No. 963 (Fed. T.D.) — considered Rizzo v. Hanover Insurance Co. (1993), [1993] I.L.R. 1-2956, 14 O.R. (3d) 98, 103 D.L.R. (4th) 577, 64 O.A.C. 230, 18 C.C.L.I. (2d) 199, 1993 Carswell- Ont 682, [1993] O.J. No. 1352 (Ont. C.A.) — considered Saskatchewan (Director, Seizure of Criminal Property Act 2009) v. Kotyk (2013), 2013 SKCA 140, 2013 CarswellSask 862, 304 C.C.C. (3d) 18, [2014] 3 W.W.R. 38, 427 Sask. R. 193, 591 W.A.C. 193, [2013] S.J. No. 751 (Sask. C.A.) — followed Shah v. British Columbia (1992), 72 B.C.L.R. (2d) 174, (sub nom. British Columbia v. Shah) 19 B.C.A.C. 38, (sub nom. British Columbia v. Shah) 34 W.A.C. 38, 17 C.R. (4th) 314, 1992 CarswellBC 291, [1992] B.C.J. No. 2208 (B.C. C.A.) — considered Theodore v. Duncan (1919), [1919] A.C. 696 (Australia P.C.) — followed Wong v. Shell Canada Ltd. (1995), 35 Alta. L.R. (3d) 1, 15 C.C.E.L. (2d) 182, 174 A.R. 287, 102 W.A.C. 287, 1995 CarswellAlta 740, [1995] A.J. No. 979 (Alta. C.A.) — followed Statutes considered: Canadian Charter of Rights and Freedoms, Part I of the Constitution Act, 1982, being Schedule B to the Canada Act 1982 (U.K.), 1982, c. 11 Generally — referred to s. 11 — considered Civil Remedies Act, 2001, S.O. 2001, c. 28 Generally — referred to Constitution Act, 1867, (U.K.), 30 & 31 Vict., c. 3, reprinted R.S.C. 1985, App. II, No. 5 s. 91 — considered Controlled Drugs and Substances Act, S.C. 1996, c. 19 Generally — referred to s. 16(1) — considered s. 19 — considered Criminal Code, R.S.C. 1985, c. C-46 Generally — referred to s. 2 “every one”, “person” and “owner” — considered s. 21(1) — considered s. 21(1)(b) — considered s. 21(1)(c) — considered s. 21(2) — considered s. 579(1) — considered s. 579(2) — considered Criminal Property Forfeiture Act, S.M. 2004, c. 1 Generally — referred to Manitoba (Director of Criminal Property and Forfeiture) Master Harrison 387

s. 2 — considered s. 17.13 [en. 2012, c. 13, s. 17] — considered s. 17.13(a) [en. 2012, c. 13, s. 17] — considered s. 17.13(b) [en. 2012, c. 13, s. 17] — considered s. 17.15(3) [en. 2012, c. 13, s. 17] — considered s. 17.15(4) [en. 2012, c. 13, s. 17] — considered s. 18 — considered Homestead Act, S.M. 1871, c. 16 Generally — referred to Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.) s. 163.2 [en. 2000, c. 19, s. 50] — considered Interpretation Act, R.S.M. 1987, c. I80 s. 17 — referred to Judgments Act, R.S.M. 1987, c. J10 Generally — referred to s. 3(3) — considered s. 13(1)(a) — considered s. 13(1)(b) — considered s. 16 — considered s. 18(1) — considered Real Property Act, R.S.M. 1988, c. R30 Generally — referred to s. 59(1) — considered s. 62(1) — considered Rules considered: Queen’s Bench Rules, Man. Reg. 553/88 R. 34.13 — considered R. 34.14 — considered

MOTION for order directing that examinee answer questions at discovery.

Lisa Cupples, for Crown Eric B. Irwin, for Defendants

Master Harrison:

1 This case is about relevancy. The subject motion was initiated by counsel for the plaintiff (Tab #25) for a ruling by this court on: the propriety of questions which were objected to at the examination for discovery of the Defendant Jerry Roy Lamy and the Defendant Diane Lynn Lamy. 388 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

2 For this court to make the requested orders under the referenced Queen’s Bench rule or subrules 34.13 and 34.14, the Master must place the subject questions within the understandable relevancy context particular to this action. In layperson’s language, relevancy is defined by the Concise Oxford English Dictionary (thumb index edition p. 1214) as: relevant, adj. Closely connected or appropriate to the matter in hand 3 Moving into the legal definition Black’s Law Dictionary (8th edition p. 1316): relevant, adj. Logically connected and tending to prove or disprove a matter in issue; having appreciable probative value - that is, ration- ally tending to persuade people of the probability or possibility of some alleged fact. .. ‘The word relevant means that any two facts to which it is applied are so related to each other that according to the common course of events one either taken by itself or in connection with other facts proves or renders probable the past, present or future existence or non-existence of the other.’ 4 Black’s also reiterates the above definition under the heading of relevant evidence (p. 599) being evidence tending to prove or disprove a matter in issue that is evidence both probative and material and is admissible unless excluded by a specific statute or rule. 5 The task of this court in determining relevancy and compellability of the subject evidence is more difficult as a result of the criminal character- istics of this civil suit. The subject cause of action purports to be built on the foundation of alleged criminality of the defendants or their respective disregard of “unlawful” conduct as set out in a provincial statute. The nature of the subject litigation thus conflicts with a court’s reluctance, in normal circumstances, to hear evidence of the “bad” character of litigants. The learned authors David Paciocco and Lee Stuesser in their second edition of The Law of Evidence (p. 2 and 3): Despite the common impression that the rules of evidence tend to exclude useful information, most of the rules are meant to improve accurate fact finding. They exclude information that may appear to be useful, but which, as a matter of experience, is not. For example, we restrict access to information about the bad character of accused persons because of fear that it will be given more “weight” than it deserves in resolving what happened on the particular occasion in question ... Manitoba (Director of Criminal Property and Forfeiture) Master Harrison 389

6 The authors go on (p. 21) to note that “there is no legal test for identifying relevant evidence”. Their point is that relevance is a matter of logic.

What Happened? 7 On August 8th, 2012, members of the R.C.M.P. Emergency Response Team (Winnipeg Drug Section), pursuant to a general search warrant granted by Provincial Court Judge R. Pollock, attended the residence and premises of the defendant Jerry Roy Lamy located near the Village of Crane River on the west shore of Lake Manitoba. Said property is legally 1 described as the SE /4 31-29-12 WPM. This course of action followed as a direct result of two aerial surveillances of the land and premises which occurred on June 25th, 2012 and August 7th, 2012. As a result of evidence obtained on August 8th, Jerry Lamy and Diane Lynn Lamy were both charged with possession of marijuana for the purpose of trafficking and the production of a controlled substance i.e. marijuana. The above facts are set forth within and/or as exhibits to the affidavit of Philip Siatecki sworn March 22nd, 2013 (Tab #3). 8 Records of the Provincial Court of Manitoba in the City of Dauphin reveal that all charges were stayed by the federal crown against Jerry Roy Lamy on October 2nd, 2013 and more importantly were never re- laid. Also indicated, is that Diane Lynn Lamy plead guilty to the charges against her and served a conditional sentence of imprisonment in her home and community for one year.

Statutory Framework 9 At law the advent of provincial statutes for the criminal forfeiture of property has been relatively recent. Certainly there has been a substantial amount of caselaw defining the role of the federal criminal statutes and corresponding criminal/civil jurisdiction of the provinces and territories of this country. This caselaw illustrates the change in jurisprudence i.e. the theory or philosophy of law regarding the execution and power division between a province such as Manitoba and the Government of Can- ada. To an extent, doctrines of “paramountcy” and “occupied fields” have given way to what the Supreme Court of Canada stated in Canadian Western Bank v. Alberta, 2007 SCC 22 (S.C.C.) para 37: A court should “favour”, where possible, the ordinary operation of statutes enacted by both levels of government. 390 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

10 Put another way, a court should start any comparison of provincial/federal statutes with the presumption of compliance i.e. that the subject statutes can operate side by side without conflict. The Supreme Court of Canada’s decision in Ontario (Attorney General) v. Chatterjee, [2009] S.C.J. No. 19 (S.C.C.) is a profound dissertation on the necessary principles to guide inferior courts. 11 This guidance, however, does not lessen the judicial responsibility of any undertaking court to carefully analyze a case based not only on the facts but as well on what particular sections of each statute may opera- tionally be in conflict given those facts. The determination of relevance is difficult enough when isolated into either criminal or civil evidentiary standards. The parliamentary and legislative meshing of these divisions of constitutional power makes for an interesting but challenging judicial task when tied to a foundation of criminal or unlawful activity. Let us first look in generality at the evidence request by the plaintiff from Jerry Roy Lamy. 12 Jerry Lamy was granted a stay of all charges against him by the federal Crown attorney as indicated above. The Criminal Property Forfei- ture Act (CPFA) C.C.S.M. c C306 s. 17.13 reads as follows: “Proof of offences 17.13 In a proceeding under this Act, (a) proof that a person (i) was convicted, (ii) was found guilty, or (iii) was found not criminally responsible on account of mental disorder, in respect of an offence is proof that the person committed the offence; and (b) evidence that a person was charged with and acquitted of an offence under the Criminal Code (Canada), or that such a charge was withdrawn or stayed, is not relevant in making a finding of fact.” (emphasis mine) 13 This court accepts the above specific provincial legislation in that regard. Caselaw has long held that an acquittal by a defendant of a criminal offence has never been accepted in a civil court as proof, obviously on a balance of probabilities test, that the subject and thus questioned act or actions was or were not done by that defendant. In the opinion of this Manitoba (Director of Criminal Property and Forfeiture) Master Harrison 391

court, the clearest caselaw is the decision of the Saskatchewan Court of Appeal, Saskatchewan (Director, Seizure of Criminal Property Act 2009) v. Kotyk, [2013] S.J. No. 751 (Sask. C.A.). Written for an unanimous panel by Justice M.J. Herauf paragraph 29 is relevant here: Section 11 of the Act provides that all applications pursuant to the Act are to be determined on the balance of probabilities. In F.H. v. McDougall, 2008 SCC 53, [2008] 3 S.C.R. 41, the Supreme Court of Canada, adopting this standard for all civil cases, made at least three relevant comments regarding the application of the standard. First, the Court noted that there is no presumption of innocence in civil cases. Second, the Court made the following statement at para. 45: ‘To suggest that depending upon the seriousness, the evidence in the civil case must be scrutinized with greater care implies that in less serious cases the evidence need not be scrutinized with such care. I think it is inappropriate to say that there are legally recognized different levels of scrutiny of the evidence depending upon the seriousness of the case. There is only one legal rule and that is that in all cases, evidence must be scrutinized with care by the trial judge.’ [emphasis added by Justice Herauf] Third, the Court reiterated that the standard is whether the allegation is more likely than not, and that whether a proposition is inherently probable or improbable is a matter of common sense. 14 Thus it must be accepted by this court that evidence of a verdict of acquittal in a criminal case is inadmissible in a subsequent civil case, as proof that the party did not commit the offence (Irwin v. Liverance, [1998] O.J. No. 5828 (Ont. Gen. Div.) para. 24) following Rizzo v. Hanover Insurance Co., [1993] O.J. No. 1352 (Ont. C.A.) 15 However, the statutory ramifications of an entered stay of charges are specifically set out in the Criminal Code. The legal status of an individual is set forth under section 579 (1) and (2). Subsection (1) states in general terms the ability of the Attorney General to enter a stay of proceedings as was done in this case. Subsection (2) however is also ger- mane to the legal status of Jerry Lamy: (2) Recommencement of proceedings Proceedings stayed in accordance with subsection (1) may be recom- menced, without laying a new information or preferring a new indict- ment, as the case may be, by the Attorney General or counsel instructed by him for that purpose giving notice of the 392 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

recommencement to the clerk of the court in which the stay of the proceedings was entered, but where no such notice is given within one year after the entry of the stay of proceedings, or before the expi- ration of the time within which the proceedings could have been commenced, whichever is the earlier, the proceedings shall be deemed never to have been commenced. (Emphasis mine) 16 In addition, the Criminal Code section 21.(1) appears to be relevant under the circumstances regarding Jerry Lamy: 21.(1) Parties to offence - Everyone is a party to an offence who: (a) actually commits it; (b) does or omits to do anything for the purpose of aiding any person to commit it; or (c) abets any person in committing it. 17 Subsection 21.(2) deals with the formation of a common intention regarding two (or more) people committing an offence. The staying of the above-noted “main” charges would thus also stay charges against Jerry Lamy covering omissions, abetting under section 21.(1)(b) and (c) as well as common intention charges under 21.(2). 18 As this juncture it is to be noted that the plaintiff is not taking the position that the quarter section owned by Mr. Jerry Lamy was acquired with monies obtained by illegal or unlawful conduct. Rather, the plaintiff’s focus and thus emphasis in argument was that the subject land owned solely by Jerry Lamy was used as an “instrument of unlawful activity”. 19 In furtherance of that position, the plaintiff was able to obtain from the court an ex parte (without notice) protection order pronounced by Madam Justice Greenberg April 2nd, 2012 (Tab #7). However, the said order did stipulate that service thereof on the defendants was to occur within ten days. The order granted to the plaintiff a prohibition (para. 3) directing the District Registrar of the Winnipeg Land Titles Office: from accepting for registration any instrument affecting the Property without the approval of the Director. 20 This order was extended by Justice Martin (Tab #14) on May 2nd, 2013 with much the same wording. Obviously realizing the errors made by the plaintiff in the drafting of both orders, the defendants Jerry Lamy and Diane Lamy appear to have simply ignored them. As the above- noted orders specifically directed the District Registrar of The Winnipeg Land Titles Office to honour the above prohibitions on “any” further re- Manitoba (Director of Criminal Property and Forfeiture) Master Harrison 393

gistrations they may have put that office in conflict with that individual’s statutory duty under our Torrens system of land registration set forth in the Real Property Act. More importantly, however, is the fact that the land in question was incorrect in both orders in that the subject quarter section is in fact registered in the Portage-la-Prairie Land Titles Office. The noted defendants have the luxury of ignoring the orders above, this court does not. While the orders do not directly affect the issue of relevancy before this court, it is important to look at those orders as a result of the stay entered by the federal Crown against the registered owner Jerry Lamy. The Alberta Court of Appeal in the case of R. v. Trang, [2004] A.J. No. 799 (Alta. C.A.) dealt with much the same issue. In Trang, a stay was entered and the question before the court (para. 1) was whether that stay of proceedings rendered the appeal moot. Relying on the definition of mootness in Borowski v. Canada (Attorney General), [1989] 1 S.C.R. 342 (S.C.C.) at page 353: First it is necessary to determine whether the required tangible and concrete dispute has disappeared and the issues have become aca- demic. Second, if the response to the first question is affirmative, it is necessary to decide if the court should exercise its discretion to hear the case... In the interest of clarity, I consider that a case is moot if it fails to meet the “live controversy” test. A court may nonetheless elect to address a moot issue if the circumstances warrant. 21 Utilizing those principles the Alberta Court of Appeal in Trang summarized whether the appeal should proceed: The legal landscape, however, has changed. Although the stay of proceedings entered by the Crown does not, at this time, bring the proceedings to a final conclusion in favour of the Appellant, it can be said with certainty that the underlying foundation for the Restraint Orders which precipitated the constitutional challenge, and which are the subject of the extant appeal, has now crumbled. The Restraint Orders do not survive the stay of proceedings. It follows that even if the Appellant remains in jeopardy of the Crown resurrecting the underlying charges, the appeal from the Order of Belzil, J. dismissing the constitutional challenge is, in our opinion, moot. The “live controversy” test is not met. In such circumstances, we decline to adjudi- cate the appeal. (emphasis mine) 22 In the case at bar, the protection orders were granted on the civil file on the basis of the affidavit sworn March 22nd, 2013 by Philip Siatecki (Tab #3). In the circumstances, however, it would appear that the stay of 394 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

proceedings against the registered owner of the subject property and defendant in this matter would as in Trang (supra) mandate that ex parte orders cannot functionally survive that action. This conclusion is stronger in the case at bar in that charges against Jerry Lamy have not been re-laid within the necessary period of time stipulated under the Criminal Code. 23 At this point, it is necessary to contemplate why the federal crown would have stayed the charges against Jerry Lamy. Certainly this court can take no issue with either the authority or propriety of the Crown in so doing. Under the circumstances, the court refers to the words of Freed- man C.J.M. in R. v. Catagas, [1977] M.J. No. 73 (Man. C.A.) and adopts same as the guiding principle concerning the crown’s discretion: 14 The other point is that nothing here stated is intended to curtail or affect the matter of prosecutorial discretion. Not every infraction of the law, as everybody knows, results in the institution of criminal proceedings. A wise discretion may be exercised against the setting in motion of the criminal process. A policeman, confronting a motor- ist who had been driving slightly in excess of the speed limit, may elect to give him a warning rather than a ticket. An Attorney-Gen- eral, faced with circumstances indicating only technical guilt of a serious offence but actual guilt of a less serious offence, may decide to prosecute on the latter and not on the former. And the Attorney-Gen- eral may in his discretion stay proceedings on any pending charge, a right that is given statutory recognition ... of the Criminal Code. But in all these instances the prosecutorial discretion is exercised in relation to a specific case. It is the particular facts of a given case that call that discretion into play. But that is a far different thing from the granting of a blanket dispensation in favour of a particular group or race... 24 This court certainly would never be able to put itself into the shoes of the federal crown who entered a stay of proceedings against Mr. Jerry Lamy and more importantly elected not to relay these charges against him within one year. Many considerations would have been part of that decision well beyond the ken of this court. However, certainly one factor may well have been the result the federal crown could have achieved, or hoped to have achieved, by way of a successful prosecution. I suspect that the federal crown having conduct would have been very familiar with the decisions of the Supreme Court of Canada referred to as the trilogy on Forfeiture under the Criminal Code. The Ontario Court of Ap- peal in R. v. Van Bemmel, [2010] O.J. No. 1468 (Ont. C.A.) summarized and analyzed three cases being R. v. Craig, [2009] 1 S.C.R. 762 (S.C.C.), R. v. Nguyen, [2009] 1 S.C.R. 826 (S.C.C.) and R. c. Ouellette, [2009] 1 Manitoba (Director of Criminal Property and Forfeiture) Master Harrison 395

S.C.R. 818 (S.C.C.) Writing for an unanimous panel, Justice Gillese analyzed these cases which all involved, as in the case at bar, sections of the Controlled Drugs and Substances Act, S.C. 1996, c.19 s.16(1) and s. 19 (CDSA). Within para. 55 of the Van Bemmel decision, the court noted that relief against forfeiture was not restricted to cases in which the offences are minor or of a technical nature. Looking at the factors within s. 19 of the CDSA, the analysis considered the nature and gravity of the offence, the circumstances surrounding the commission of the offence and the offender’s criminal record. The federal crown would have weighed these factors and within his or her discretion made the appropriate decision. The Van Bemmel case has quite a number of facts very similar to the case at bar. The size of the subject property was uncertain in both cases. The value of the illicit drug was higher in the Van Bemmel case and the acreage used appears to be very similar in both instances. In both cases as well, the accused were consumers of their home grown product. The headnote indicates in summary on Van Bemmel that in any event, the forfeiture order was disproportionate. Marijuana was not the most serious drug and Van Bemmel was not doing anything to try to conceal his operation. There was no link between Van Bemmel and organized crime. The property was not being used in a manner to place public safety at risk. The bottom line regarding Jerry Lamy would have been that a forfeiture order application under the CDSA would probably have been unsuccessful if a judge followed the Van Bemmel precedent. Instead, the federal crown would have accepted the guilty plea from Di- ane Lamy and entered a stay against Jerry Lamy. Under the circumstances and the law, this court has no issue with the obviously negotiated resolution. 25 The issue remains as to the effect of the stay of proceedings on the plaintiff in this matter from the perspective of evidentiary relevancy. Again turning to caselaw, there is precedent for a stay of proceedings affecting a forfeiture action. The Ontario Court of Appeal in Ontario (Attorney General) v. 714 Railton Avenue, [2014] O.J. No. 2357 (Ont. C.A.) dealt with a crown forfeiture application under that province’s Civil Remedies Act. The case is relevant to this court on two important principles. The first is the finding that the personal respondent in that matter, one Russell Kenneth Dowdle, pled guilty to the production of marijuana, was fined and seized equipment was forfeited. Events after this are captured in para. 8 of the decision: 8 However, the application judge was troubled by a different factor. In his affidavit filed in response to the AGO’s forfeiture application 396 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

and in the cross-examination on the affidavit, Mr. Dowdle asserted that he pleaded guilty to the production offence only after receiving an assurance from the federal Crown that there would be no attempt to seek forfeiture of his home. 26 The issue then became in the eyes of the Court of Appeal as to whether the federal crown’s “deal” would be binding on the Ontario provincial crown under civil legislation very similar to the governing provincial legislation here. The said appellate court concluded that: 23 However, my agreement with the appellant’s criticism of the application judge on this point does not mean that her ultimate conclusion is wrong. On the contrary, in my view the resolution of the first issue disposes of the appeal. The reality here is that the federal Crown did and said things in this case (which I do not criticize; he was entitled to make these choices) that led an accused to enter into a plea agreement that he thought, reasonably, involved a final decision that he would not have to forfeit his home. The application judge found this as a fact and, on the record before her; I see no error in this finding and the disposition flowing from it. 27 It is to be noted that the court in Ontario (Attorney General) v. 714 Railton Avenue meet head on the guidance and/or stipulations of the Su- preme Court of Canada in Ontario (Attorney General) v. Chatterjee, supra, stating quite properly in para. 16 that the Supreme Court had rejected the idea that the forfeiture provisions of the CRA might in some cases interfere with the sentencing process in a criminal proceeding. The concern is stated within para. 49 of Chatterjee by Justice Binnie: ... where no forfeiture is sought in the sentencing process, I see no reason why the Attorney General cannot make an application under the CRA [i.e. provincial civil legislation]. Where forfeiture is sought and refused in the criminal process, a different issue arises. (emphasis mine) 28 The second important principle stated by the appellate court in Ontario (Attorney General) v. 714 Railton Avenue is found within paragraph 18: 18 I do not accept this submission. The application judge was aware of Chatterjee and this court’s decision in Darlington, both of which discuss the interplay between the forfeiture provisions in the Crimi- nal Code and the CRA. She recognized that the federal and provincial Crowns are not indivisible in this context and that a decision by the federal Crown not to pursue, or to abandon, forfeiture in a crimi- Manitoba (Director of Criminal Property and Forfeiture) Master Harrison 397

nal proceeding does not prevent a provincial Crown from seeking a civil forfeiture order under the CRA. 29 It is to be noted however that the latter principle of the divisibility of Her Majesty the Queen is not universally accepted. In Rans Construction (1966) Ltd. v. R., [1987] F.C.J. No. 963 (Fed. T.D.), Dube J. stated as follows: 8 As to the identity of the parties, the plaintiffs submit that the parties in the criminal proceedings and the parties in these civil proceeding are not the same: in the previous proceedings, the Queen was acting in her capacity as Attorney General for Canada, whereas in these civil proceedings, the Crown is Her Majesty the Queen acting in her capacity as the Minister of National Revenue. In my view, that argument cannot stand. The Queen is indivisible and wears the same crown in civil or criminal proceedings. 30 As support, the court noted within footnote two to the decision, the guidance of Viscount Haldane in Theodore v. Duncan, [1919] A.C. 696 (Australia P.C.) wherein the statement was made that the Crown is one and indivisible throughout the Empire, “and it acts in self governing States on the initiative and advise of its own Ministers in these States”. 31 Again, however the British Columbia Court of Appeal in Shah v. British Columbia, [1992] B.C.J. No. 2208 (B.C. C.A.) para 16, in essence agreed with the Ontario appellate court in 714 Railton (supra). A review of the said paragraph is important: 16 There is no dispute as the factors I should take into account on the leave application. I turn first to the merits. I agree with Mr. Gillese’s submission that the parties are not the same in the two proceedings. The role of the Attorney General in the civil and criminal proceedings is not the same. The proceeds of crime application has been brought against Mr. Shah after his conviction. The civil proceedings have been brought against three defendants. I also agree that the object of the criminal proceedings is not the same as the civil proceedings. What is sought, amongst other relief, in the civil proceedings is pre-judgment interest on the damages, and costs. As well, ancillary relief is sought, that is, to set aside an alleged fraudulent conveyance. A plea of res judicata is not open in the civil proceedings, and in my view, the same reasoning which prevents that plea being raised also applies in the case of issue estoppel. 32 In spite of the two above decisions by eminent appellate courts in Ontario and Alberta, this court is bound by the guidance of the Supreme Court of Canada in a decision written by Dickson C.J. known as 398 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

the Alberta Government Telephones v. Canadian Radio-Television & Telecommunications Commission case [1989] 2 S.C.R. 225 (S.C.C.) at page 274: ...[A] case has not been made for departing from the view previously taken by this Court and by the Privy Council that the general reference to ‘Her Majesty’ in s. 16 [now s. 17] of the Interpretation Act embraces the Crown in right of a province as well as the Crown in right of Canada. 33 This interpretation is also reflected statutorily in this province under the Schedule of Definitions (Section 17) of the Interpretation Act C.C.S.M. c.I80 wherein Her Majesty the Queen and the Crown are defined to mean the Sovereign of Canada and territories which would logically include our province. The guidance of Ruth Sullivan as the author of Sullivan and Driedger On the Construction of Statutes (fourth edition) at page 605 is helpful: Although it is presumed that Parliament does not intend to bind Her Majesty in right of a province, Parliament is not constitutionally barred from making its legislation binding on a provincial Crown. The Court in Alberta Government Telephone was unwilling to recognize a doctrine of inter-jurisdictional immunity. Dickson C.J. wrote: In my view, it would be wrong to accept a theory of constitutional inter-governmental immunity. If Parliament has the legislative power to legislate or regulate in an area, emanations of the provincial Crown should be bound if Parliament so chooses ... Canadian federalism has evolved in a way which tolerates overlapping federal and provincial legislation in many respects, and in my view a constitutional immunity doctrine is neither desirable nor necessary to accommodate valid provincial objectives.

Criminal Law - Federal and Provincial? 34 A review of the CDSA provisions regarding forfeiture and the subject Criminal Property Forfeiture Act reveals two systems of criminal law operating along parallel paths. Section 91 of the Constitutional Act dele- gates to the federal government jurisdiction to govern the sometimes oc- curring criminal breaches by some of the residents of this country in statutes such as the CDSA. Part of the federal criminal law regime contains provisions allowing the Government of Canada to apply for, and under appropriate circumstances, receive both the proceeds of crime and/or the Manitoba (Director of Criminal Property and Forfeiture) Master Harrison 399

instruments used to commit those crimes. As discussed above, these recovery provisions are subject to the jurisdiction of the appropriate courts of law. In what some would refer to as a legislative “piling on”, the citizens of this province through their elected representatives decided to also legislate in the criminal area. A review of our subject provincial legislation demonstrates some effort to recover the proceeds of crime or the instruments of crime under civil as opposed to criminal legislation. The question that needs to be asked and answered is just how much evidence of a crime is needed to be proven in a civil forum of law to allow that court to make a finding and order forfeiture of the above-noted two clas- sifications of the defendants’ property. 35 Starting with the title of the provincial civil legislation, one notes in that exercise the use of the word “criminal”. Again referring to the above-noted text of Ruth Sullivan, her comments on the use of “titles” is instructive. At page 292 she noted the importance of the title when considering the scope and purview of an Act as well as the title’s assistance in identifying the primary purpose or pith and substance of legislation. This court does not accept the argument sometimes put forth that the use of “criminal” in the title was solely used in this legislation for political palatability. Even if this was a legislative consideration, it is of no import in this forum. The court is bound by precedent to give in matters of interpretation the plain and ordinary meaning of the words used in a statute and this includes the title. When read in conjunction with the purpose of the act under section 2, therefore it become clear that the Manitoba Leg- islature did not intend that mere “unlawful activities” such as double parking or as mundane as building code infractions would trigger a civil cause of action against a landowner. This interpretation is further supported by the use of the words “criminally responsible” and “Criminal Code” in section 17.13(a) and (b). As well, section 17.15(3)(4) and section 18 again emphasis the dimension or element of criminality. 36 The above comments however do not in and of themselves make the subject federal and provincial laws incompatible. However two further issues arise from the above. The first is whether or not the CDSA can be read in a compatible way to allow the provincial legislation to be utilized for the stated criminal/civil hybrid purpose. The second is whether the subject quarter section is connected to the crime for which Diane Lamy was convicted. The evidence of the crime is established. What is not established is a connection at law between the landowner, Jerry Lamy, and the crime involving his land. It seems that the subject federal and provincial legislation are occupying the same field i.e. criminal law. It is ac- 400 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

ceptable at law for the province to put into its legislation what effect an entered stay is to have in the conduct of a civil suit. However, it is not acceptable and is incompatible when a federal criminal statute sets forth, as above-noted in paragraph 15 above, the legal status of a person against whom criminal charges have been stayed and not re-laid within a year. The province, under those circumstances, cannot assert that the two parallel legislative schemes are able to work together. This realization comes with the relevancy exercise ongoing before this court. How can a provincial Crown Attorney question Jerry Lamy as a defendant in a civil discovery when the charges against him are deemed in criminal law to never have been laid against him? The answer lies in a discussion of the following two precedent cases.

Chatterjee v. Ontario 37 This case tested the constitutionality of similar Ontario civil legislation. The test applied was whether the provincial legislation encroached upon the criminal law powers of the federal government. The Supreme Court of Canada found that the appellant’s argument was an “exagger- ated” view of the immunity of federal jurisdiction in matters of criminal law. Chatterjee emphasizes favouring the ordinary operation of statutes enacted by both levels of government. Additionally, it utilized the concept of the “dominant feature” of the questioned civil provincial legislation. The court stated that the impugned statute must have the dominant feature of a relationship to provincial objectives. 38 The following partial excerpt from paragraph four of the decision en- capsulates the above view: ...It is true that forfeiture may have de facto punitive effects in some cases, but its dominant purpose is to make crime in general unprofita- ble, to capture resources tainted by crime so as to make them un- available to fund future crime and to help compensate private individuals and public institutions for the costs of past crime. These are valid provincial objects. There is no operational conflict between the forfeiture provisions of the Criminal Code, R.S.C. 1985, c. C-46, and the CRA. It cannot reasonably be said that the CRA amounts to colourable criminal legislation. 39 Regarding the case at bar, it is necessary for this court to determine [para 16 of Chatterjee] the essence of what the law does and how the Manitoba (Director of Criminal Property and Forfeiture) Master Harrison 401

civil statute accomplishes that goal. In this matter, the objective of the legislation is set forth in paragraph two under the heading of “Purpose”: 2 The purpose of this Act is to provide civil remedies that will prevent (a) people who engage in unlawful activities and others from keeping property that was acquired as a result of unlawful activities; and (b) property from being used to engage in certain unlawful activities. 40 As noted by Supreme Court of Canada in Chatterjee (para. 17) consideration of a statement of [provincial] legislative intent is a useful tool when considering whether “the machinery created” by the provincial legislation “corresponds to what is required to achieve the stated purposes”. In this matter, the court accepts without question that the above purpose clause of the Manitoba legislation is within those objectives validly within provincial legislative goals. Again, however, to be emphasized is the duty of this court (para. 19) to review the practical effect of the legislation in operation. 41 As directed by Chatterjee, the court must look to the dominant purpose of the provincial enactment in relationship to provincial objectives. Turning to the issue of operational conflict Multiple Access Ltd. v. Mc- Cutcheon, [1982] 2 S.C.R. 161 (S.C.C.) p. 191: In principle, there would seem to be no good reasons to speak of paramountcy and preclusion except where there is actual conflict in operation as where one enactment says ‘yes’ and the other says ‘no’, ‘the same citizens are being told to do inconsistent things’; compliance with one is defiance of the other. 42 Looking at the said test of operational conflict through the lens of relevancy, there is an argument to be made that the Criminal Code, by its declaration of the legal status of Jeremy Lamy after the stay, renders irrelevant any discovery questions concerning his criminality. In other words, the federal criminal charges laid and stayed against Mr. Lamy, he now has within the realm of criminal law, the legal status of never having been charged. However, again operating under a parallel umbrella of criminal law, the subject provincial legislation states that this federally bequeath legal status is irrelevant to the prosecution of the provincial civil action. It appears that not only are the citizens of this country and province being told inconsistent things legislatively but also this court. A student of constitutional law viewing both subject statutes could easily 402 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

reach the conclusion that there indeed is an element of defiance observable. For obvious reasons, this potential conflict, between the federal and provincial legislation, impacts the relevancy issue before this court. The Manitoba legislation states clearly by any standard of interpretation that a federal criminal stay of proceedings in any civil action for forfeiture is irrelevant but admissions concerning a criminal/unlawful act or acts are not. 43 The question, however, that must be considered by this court is whether the subject provincial statutory objective is in fact in line with all aspects of Manitoba legislation concerning property and civil rights. It is commonly accepted that the majority of Manitoba residents or their pioneering forebears came from distant regimes where people suffered the opposing acts of confiscatory states concerning land. Perhaps as a consequence thereof, Manitoba legislators enacted protective legislation to safeguard their civil and property rights. This sentiment is part of the statute law of our province i.e. The Judgments Act C.C.S.M. c.J 10: Exemptions 13(1) Subject to subsections (2), (3) and (4), unless otherwise provided, no proceedings shall be taken under a registered judgment or attachment against (a) the farm land upon which the judgment debtor or his family actually resides or which he cultivates, either wholly or in part, or which he actually uses for grazing or other purposes, where the area of the land is not more than 160 acres; (b) the house, stables, barns, and fences, on the judgment debtor’s farm, subject, however, as aforesaid ... (emphasis mine) 16 A judgment debtor is entitled to a choice from the greater quantity of the same kind of property which is hereby exempted from being sold under a registered judgment or attachment. 44 The belief behind the above provincial legislation was important enough for the Manitoba legislature to state in section 18(1) thereof that the stated exemption could not be abandoned by any person and thus prevent them from claiming that benefit, right or privilege under the Act. Thus, an additional problem for this court when considering relevancy is not only a concern over potentially conflicting federal legislation but as well a relevancy problem in considering long enacted provincial legislation found in the Judgments Act. At a minimum the two above considered provincial statutes put into serious consideration by this court, the Manitoba (Director of Criminal Property and Forfeiture) Master Harrison 403

dominant purpose of the subject provincial forfeiture legislation in making a decision on relevancy questions put forward in discovery. 45 It may well be that this case must be considered in light of the court’s guidance in Chatterjee within paragraph 51: 51 I believe the various doctrines of res judicata, issue estoppel and abuse of process are adequate to prevent the prosecution from re- litigating the sentencing issue. Detailed consideration must await a case where the clash of remedies is truly in issue. Reference may be made, however, to Toronto (City) v. C.U.P.E., Local 79, 2003 SCC 63, [2003] 3 S.C.R. 77. In that case, in the context of civil proceedings launched in the wake of a criminal conviction, the Court said that it is an abuse of process “where the litigation before the court is found to be in essence an attempt to relitigate a claim which the [criminal] court has already determined” (para. 37).

Penner v. Niagara 46 Regarding the last point above, this court has the advantage of the Supreme Court of Canada’s decision in Penner v. Niagara Regional Police Services Board, [2013] S.C.J. No. 19 (S.C.C.), a marjority/minority (4-3) decision exploring the limitations of issue estoppel within the context of public policy arising from police disciplinary hearings. The latter proceeding was regarded by the entire court, both minority and majority, as being an administrative body decision. The court below i.e. the Ontario Court of Appeal applied issue estoppel thus finding that the decision of the administrative panel bound the complainant regarding certain of his relief claimed against the same officer in a subsequent civil suit. The Supreme Court of Canada allowed the subject appeal finding that it was not necessary or desirable to create a rule of public policy excluding police disciplinary hearings from the application of issue estoppel. The bottom line for the majority of that court was that the doctrine of issue estoppel allowed for the exercise of discretion to ensure that no injustice was a result. As stated in the case headnote, the proper procedure in matters of issue estoppel called for a case-by-case review of the circumstances to determine whether its application would be unfair or unjust. 47 In some split decisions at this level of our judicial system, there can be a complaint of a lack of certainty being created in the law. The Penner decision, however, demonstrates the opposite. The case was heard by the court on January 11, 2012 and was issued well over a year later in April of 2013. The analysis of issue estoppel given by the entire court was 404 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

exceptional in terms of caselaw and guiding principles. The underlying principles of the jurisprudence or the philosophy (theory) of the decision were clearly and understandably accepted by both minority and majority as being one of fairness. It was in the application of fairness that the court split regarding the factual foundation differently. The benefit of this court is the intense and detailed discussion of issue estoppel contained in the decision. The majority found it unfair to use the results of the administrative process to determine conclusively the complainant’s remedies in his following civil action. The minority, again applying fairness, reasoned that the administrative process was fairly conducted and that the complainant should be bound by the results. 48 In reaching their disagreement, both minority and majority members of that court set forth the guiding principles concerning the application of the doctrine of issue estoppel. That is the ultimate goal (headnote) of issue estoppel is to protect the fairness of finality in decision making and thus avoid the re-litigation of issues already decided by a decision-maker with the authority to resolve them. Ample discussion took place within the decision regarding the fundamentals of the exercise of issue estoppel. That court’s obvious and lengthy struggle with the application of fairness to the fixed factual circumstances before it does not in any way take away from, or distort the certainty of the legal principles discussed nor the solid guidance provided this court regarding issue estoppel. The court in Penner adopted (para. 92) the three preconditions for the application or operation of issue estoppel enunciated by Justice Dickson in Angle v. Minister of National Revenue (1974), [1975] 2 S.C.R. 248 (S.C.C.) at p. 254: (1) whether the same question has been decided; (2) whether the judicial decision which is said to create the estoppel is final; and (3) whether the parties to the decision or their privies were the same in both proceedings. 49 In the case at bar, it would certainly appear that the issue of the criminality of Jerry Lamy was decided. While it was not decided by way of a formal decision of a court, it was decided by the conduct of the federal crown in staying, on the provincial court record, all proceedings against this defendant. The finality of this decision is accentuated by the said crown in not relaying these charges nor any included offences. An obvious election was made by the Crown to proceed only against Diane Lamy. Manitoba (Director of Criminal Property and Forfeiture) Master Harrison 405

50 This brings into play the third issue and the determination inherent therein as to whether relationship between the federal crown attorney and the plaintiff in this matter. In both instances, the Crown provincially and federally before the provincial court was and is represented by a Crown Attorney. The question to be addressed was touched upon above in paras 28 to 33 that the Crown is not divisible and is indeed Her Majesty the Queen both in Right of Canada and the Province of Manitoba. The sim- plest path is to say that as a result of the federal decision it is binding upon this province i.e. the plaintiff in this action. Ignoring that path for a moment Black’s Law Dictionary (8th edition) at page 1239 gives the following definition: privy, n. A person having a legal interest of privity in any action, matter, or property; a person who is in privity with another. Tradi- tionally, there were six types of privies: (1) to (5) . . . (6) privies in law, such as husband and wife. The term also appears in the context of litigation. In this sense, it includes someone who controls a lawsuit though not a party to it; someone whose interests are represented by a party to the lawsuit; and a successor in interest to anyone having a derivative claim. 51 Section 2 of the Criminal Code ties the issue together: ‘every one’, ‘person’ and ‘owner’, and similar expressions, include Her Majesty and an organization. 52 Thus there is a reasonable argument to be made that the action of the federal crown attorney in entering a stay of proceedings against Jerry Lamy has consequences in perhaps binding the Crown acting for the plaintiff director in this matter. There remains, of course, the issue of whether an action by the Crown could trigger the operation of issue estoppel. In this matter, the court has no need to review a court finding and the possible reasons therefore the decision to entry a final stay rested at all times with the Crown and perhaps can be used in this instance to prejudice the plaintiff. The issue before this court is whether the criminality of the subject defendant was determined in the provincial court proceedings in the City of Dauphin in such a manner as to render irrelevant question of same directed to Mr. Lamy. As stated within paragraph 95 and 96 of Penner: 95 Consistent with the principles underlying issue estoppel, the fairness of the parties is focused on preventing parties from undergoing the burden of duplicative litigation - the objective of fairness is 406 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

linked to the principle of finality. Indeed, in Danyluk, Binnie J., writing for the Court, focused on the importance of finality in litigation; An issue, once decided, should not generally be re-liti- gated to the benefit of the losing party and the harassment of the winner. A person should only be vexed once in the same cause. Duplicate litigation, potential inconsistent results, undue costs, and inconclusive proceedings are to be avoided. 96 In other words, Binnie J. stated, ‘[a] litigant...is only entitled to one bite at the cherry’ (para. 18). Underlying the applicant of issue estoppels in this context is the theory that ‘estoppel is a doctrine of public policy that is designed to advise the interests of justice’ (para. 19). 53 This court is attracted to the guidance of the Supreme Court of Can- ada in British Columbia (Workers’ Compensation Board) v. British Columbia (Human Rights Tribunal), 2011 SCC 52, [2011] 3 S.C.R. 422 (S.C.C.) (para. 36): Justice is enhanced by protecting the expectation that parties will not be subjected to the relitigation in a different forum of matters they thought had been conclusively resolved. Forum shopping for a different and better result can be dressed up in many attractive adjectives, but fairness is not among them. 54 With specific guidance to the case before me is the decision of the Alberta Court of Appeal in Wong v. Shell Canada Ltd. (1995), 174 A.R. 287 (Alta. C.A.). That decision indicates that unless a statute precludes the application by a court of issue estoppel it is always a judicial option or perhaps duty to determine on a case-to-case basis whether the doctrine applies. 55 Paraphrasing the definition in 16 Hals. (4th ed) at 1030, para. 1530 utilized by the Manitoba Court of Appeal in Decorby v. Decorby, [1985] M.J. No. 184 (Man. C.A.) (para. 21). Estoppel is known as issue estoppel where a plea of res judicata cannot be established because the causes of action are not the same. While as indicated above, the CDSA charges and the civil forfeiture legislation do have a common element of criminality they have taken place in different forums under fundamentally differing legislation although with perhaps a common remedy. A party is precluded from contending the contrary of any precise point which, having once been distinctly put in issue, has been sol- emnly and with certainty determined against him. Even if the objects of the first and second actions are different, the finding on a matter Manitoba (Director of Criminal Property and Forfeiture) Master Harrison 407

which came directly (not collaterally or incidentally) in issue in the first action, provided it is embodied in a judicial decision that is final, is conclusive in a second action between the same parties and their privies. (emphasis mine) This principle applies whether the point involved in the earlier decision, and as to which the parties are estopped, is one of fact or one of law, or one of mixed fact and law. The conditions for the application of the doctrine have been stated as being that the same question was decided in both proceedings; the judicial decision said to create the estoppel was final; and the parties to the judicial decision or their privies were the same persons as the parties to the proceedings in which the estoppel is raised or their privies.” (emphasis mine). 56 The conclusion reached by this court, based upon the above caselaw, is that in this court’s determination of relevancy, issue estoppel is an open topic for judicial consideration. 57 The subject motion brought by the plaintiff for consideration by this court can be logically divided into three separate parts. The first and most important part is the refused answers to questions put to the defendant Jerry Lamy. The second but perhaps only collaterally important answers sought by the plaintiff are again to questions put to Jerry Lamy again in discovery but in his legal capacity as a purported personal representative of his father’s estate. His father unfortunately passed away subsequent to the plaintiff’s amendment to its claim adding Clifford Lamy as a part to the action given his alleged mortgage real property interest in the quarter section of land (above described) registered in Jerry Lamy’s name. The third division of the motion concerns those refused answers to questions directed to Diane Lynn Lamy.

Decision 58 Ms. Cupples in her capacity as the legal representative for the Plain- tiff put to Jerry Lamy a number of questions on discovery. In addition, she advised this court at the hearing of this motion that the litigation goal of the plaintiff was to establish that the subject quarter section of land was indeed property definite by the subject provincial legislation (Forfei- ture Act) as an instrument of unlawful activity. That is, the land in question could be forfeited to the Crown in the Right of the Province of Man- itoba because of criminal/unlawful activities that took place thereon. 59 Jerry Lamy is the registered owner. Jerry Lamy is prohibited from making a disposition of his property (up to 320 acres) without Diane 408 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

Lamy’s consent. Essentially, Diane Lamy has a legal right to block or veto any sale by Jerry Lamy by withholding this consent which right would seem to have no fair market value. In addition, Diane Lamy has a life interest in the property upon Jerry Lamy’s death. The Manitoba Court of Appeal found that in certain circumstances regarding the bank- ruptcy of a spouse, a homestead may well have value (Chartier v. Chartier Estate (Trustee of), 2013 MBCA 41 (Man. C.A.)) to the trustee. In normal circumstances, however, as the land is protected under the Judgments Act, supra, her homestead interest would not be capable of seizure by any judgment creditor including the plaintiff. 60 Regarding the relevancy of Jerry Lamy’s evidence concerning his father’s estate, his legal role as a personal representative remains unde- fined. The court has no knowledge of whether he is an executor, an administrator or simply functioning in some capacity “de son tort”. While the homestead is encumbered by way of a registered mortgage under the Real Property Act, the amount owing, if anything, to the subject estate is unknown. Questions in this area, however, are relevant only if the property itself in Jerry Lamy’s name is subject to a judgment and subsequent attachment. In other words, any claim from his father’s estate is only of import where the plaintiff can get a judgment seizing the land in question. It is appropriate therefore to explore whether Jerry Lamy can within the cloak of relevancy be ordered to respond to the questions he refused to answer on discovery. 61 Again the majority of questions put to Jerry Lamy are predicated upon the foundation that he has been found guilty of criminal conduct. The provincial legislation certainly authorizes the plaintiff to ask questions concerning a crime. The difficulty for this court is whether in the absence of a specific asset, these questions are relevant. The federal criminal law, as above-noted, stipulates that Jerry Lamy must be treated as never having been charged with the stayed specific, and included, offences. In the opinion of this court, the provincial legislation, also operating within the criminal realm, is in defiance of the Criminal Code provisions in that regard. Jerry Lamy at law, specifically criminal law, has the status of an individual who has never been charged with a crime. While the plaintiff again seeks a very exploratory methodology in its discovery, with the exception of the home quarter, there is no specific asset targeted. The statement of claim is not based on any specific asset obtained as a result of criminal proceeds or utilized in criminal activities. Questions concerning the farm operation are not relevant nor are accusations concerning Jerry Lamy’s past or present drug use. The conduct of Jerry Manitoba (Director of Criminal Property and Forfeiture) Master Harrison 409

Lamy simply is not an issue. The Crown is not entitled to particulars of Jerry Lamy’s conduct unless it relates to an asset specified in the claim related to a crime. The statute does in fact focus on such assets not on parties having a property interest therein. 62 The specific farm asset targeted in the Statement of Claim is not an asset which can be seized by the plaintiff and still be in compliance with the objectives of provincial law in Manitoba. The plaintiff must be assumed by this court to have knowledge of the Judgments Act as more extensively set forth above (para 43). The defendants and this court have no information as to the plaintiff’s motivation in pursuing seizure of the farm. Given the director’s statutory immunity from discovery, in spite of a civil format, it is unlikely that this information will ever be available. An argument can be made that in the absence of an explanation, the plaintiff’s goal regarding Jerry Lamy must be punitive in nature placing it in conflict with federal criminal legislation. 63 The defendant Diane Lamy was convicted of a criminal act, sentenced therefore, and duly served her sentence. Given these circumstances as a non-registered individual to the subject property, the question must be asked why she is a defendant. The forfeiture of the subject property including her homestead interest therein is barred by the Judg- ments Act and in any event is a personal right which can be released by her but certainly is not an asset capable of being liquidated by a judgment creditor. This makes any questions she could be asked by the Crown irrelevant given that in reality there is no reasonable cause of action outstanding against her. The legislation indeed stipulates under section 3(3) that all proceedings are in rem and not in personam. This statutory structure thus forces the plaintiff to establish that an asset in question derives from criminality. In other words, the cause of action was established by the provincial statute must start with some asset. The discovery questions directed to Diane Lamy have put the legal cart before the horse. In other words, the subject questions follow the methodology established in the format of an examination of a judgment debtor. That is, we have a judgment against you, now tell us everything you have because with some statutory exceptions we have a claim against anything you own. The obvious Crown hope in their interroga- tion of Diane Lamy is that she must produce her tax returns and must answer “fully and properly” any further questions arising therefrom. Missing is reference to a partiular asset they believe derives from her crime. The discovery questions also concerning the particulars her criminality are irrelevant as she is a convicted felon who has served her sen- 410 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

tence. The plaintiff must have knowledge of some asset owned by Diane Lamy that they can question her on. In its present format, the refused questions are the epitome of a “fishing expedition”. Without the identified existence of an asset, the plaintiff’s cause of action against Diane Lamy is perhaps not appropriately pled in that it does not reflect the stated statutory foundation required. 64 Regarding any possible homestead interest in the farm and home, Ms. Diane Lamy has only an interest personal to her under the Homestead Act. Even if the plaintiff can establish that her homestead interest in the home quarter has an attachable value that legal interest is protected by the Judgments Act and consequently any such questions are irrelevant given the current structure of the statement of claim. 65 An order will therefore go dismissing the plaintiff’s motion to compel Diane Lamy to answer the questions as set out in the material before this court.

The Land 66 The plaintiff’s action sets out its statutory right of forfeiture against the “home quarter”, registered only in Jerry Lamy’s name, under the instruments of crime section. Courts have faced a variety of situations in Canada regarding the determination of whether particular sets of circumstances are predominantly administrative in nature or criminal. The Su- preme Court of Canada on July 31st, 2015, issued its decision in Guindon v. R., [2015] S.C.J. No. 41 (S.C.C.). Guindon concerned whether Julie Guindon, a lawyer, should have protection of the Canadian Charter of Rights and Freedoms given the very large administrative money penalty (AMP) assessed. The sum of $546,747 was, under s. 163.2 of The In- come Tax Act, assessed by the Minister of National Revenue against her given her misfeasance regarding a charitable tax opinion. The plan was in fact a sham. If the penalty was a result of criminal activity, she would have had a certain level of protection under s. 11 of the Charter. The said Court acknowledged within paragraph 44 the difficulty “... in formulat- ing a precise test to identify particular proceedings which give rise to s. 11 protections.” The court rigidly stated within said paragraph that protection under section 11 is available only to those charged with criminal offences not those subject to administrative sanctions. The further following guidance was given: 45 A proceeding is criminal by its very nature when it is aimed at promoting public order and welfare within a public sphere of activ- Manitoba (Director of Criminal Property and Forfeiture) Master Harrison 411

ity. Proceedings of an administrative nature, on the other hand, are primarily intended to maintain compliance or to regulate conduct within a limited sphere of activity: see Martineau, at paras. 21-22; Wigglesworth, at p. 560. The focus of the inquiry is not on the nature of the act which is the subject of the proceedings, but on the nature of the proceedings themselves, taking into account their purpose as well as their procedure ... Proceedings have a criminal purpose when they seek to bring the subject of the proceedings “to account to society” for conduct “violating the public interest”: Shubley, at p. 20. 67 The court went on within paragraph 46 to describe a “true penal consequence” as: “imprisonment or a fine which by its magnitude would appear to be imposed for the purpose of redressing the wrong done to society at large rather than to the maintenance of internal discipline within [a] limited sphere of activity” (quoting from Wigglesworth at p. 561) 68 The court also noted that the quantum of an AMP is not relevant unless it is punitive, paragraphs 75, 76 and 77, that is its purpose has to be punitive. 69 From the Guindon case and Martineau c. Ministre du Revenu national, [2004] S.C.J. No. 58 (S.C.C.), the question of whether proceedings are criminal in nature arises not within the nature of the act which gives rise to the proceedings but rather the nature of the proceedings themselves. While this court accepts that the nature of proceedings in this case have not been conducted as a criminal prosecution against the defendants, it would be hard to imagine a remedy more punitive than taking away both Jerry Lamy’s home and his family’s livelihood in one fell swoop. Certainly the Supreme Court of Canada in criminal forfeiture, as noted above, has found that proportionality must remain a primary concern. Based on the caselaw, Jerry Lamy would not have lost both his home and his living. In the opinion of this court, such a proposed and pled draconian judgment is criminal in nature. 70 Supporting the above from the standpoint of other provincial legislation in Manitoba, the plaintiff cannot rely, as in Chatterjee, that this action against the subject land is in furtherance of provincial constitutional objectives. As noted, the Judgments Act has set forth for over a century the subject homestead as a statutory exemption against the noted civil remedies. 412 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

71 In addition, the conflict between legislation within this province is set forth also within s. 62 of The Real Property Act: 62 (1) No action of ejectment or other action for the recovery of land under the new system lies or shall be sustained against the registered owner for the estate or interest in respect of which he is so registered, except in the following cases: ... 72 None of the exceptions, in the opinion of this court, apply to the present case. As noted by Huband J.A., as he then was, in Fort Garry Care Centre Ltd. v. Hospitality Corp. of Manitoba Inc., [1997] M.J. No. 650, [1998] 4 W.W.R. 688 (Man. C.A.): 20 In Manitoba, however, the jurisdiction of the court is circum- scribed. The Act emphasis the significance of the certificate of title under the Torrens land registration system. Section 59(1) states that, subject to fraud and specific reservations which have no application in the present case, the certificate of title is conclusive evidence at law and in equity that the registered owner is entitled to the land described therein for the estate or interest therein specified. 73 Of particular importance to this court is the statutory inclusion within section 59(1) of the Real Property Act: “59(1) Every certificate of title, so long as it remains in force and uncancelled, is conclusive evidence at law and in equity, as against Her Majesty and all persons, that the person named in the certificate is entitled to the land described therein for the estate or interest therein specified ...” (emphasis mine) 74 Returning to the noted decision of Huband J.A. (supra), the ability of any court to give a without notice (ex parte) order under the subject legislation in face of the above-noted provisions of the Real Property Act appears problematic. In addition, the concept that such an order could effectively replace the statutory authority of the District Registrar as the administrator of the Torrens system regarding the subject parcel again raises a substantial issue between the conflicted provincial statutes. The role of the Plaintiff/Crown is impossible given the provisions of section 59(1). The conclusion reached by the court in this matter is that the subject provincial legislation is punitive in nature and thus solely within federal jurisdiction. This impacts at law his examination for discovery. 75 In the opinion of this court, Jerry Lamy cannot be compelled to answer his refused questions on discovery given their lack of relevancy. The Crown within the forum of The Provincial Court of Manitoba bound Manitoba (Director of Criminal Property and Forfeiture) Master Harrison 413

its privy the provincial Crown, regarding the issue of Jerry Lamy’s conduct or criminality. The plaintiff is thus estopped from pursuing questions on discovery which would contradict the prior proceedings in Pro- vincial Court. To find otherwise would be to encourage the process of forum shopping and is not in compliance with the necessity of fairness in the determination of issue estoppel. The indivisible Crown is bound by the past conduct of litigation decisions previously made. Regarding the issue of relevancy on a wider spectrum, questions regarding a provincial statutory exempt asset are not relevant.

In Rem 76 The refused questions directed to Jerry Lamy and as well to Diane Lamy outside the home quarter do not appear to be relevant. As an old advertisement stated “Where’s the Beef?” In the subject litigation, the statutorily granted cause of action is founded on identifying a particular asset which enables the plaintiff to issue a statement of claim. If that asset or “beef” is not pled, relevancy cannot be ascertained. This is more than the often quoted fishing expedition as the identity of an asset in rem is an absolute essential requirement to bring the action. The plaintiff is not allowed to perform an inquisition by way of discovery on either Jerry Lamy or Diane Lamy in an effort to find an asset connected to the crime. As the statute indicates, the crime is far from the most important element in this type of action. The identification of an asset arising in whatever connotation from the crime can be examined upon but in the absence of identification of same, general questions are irrelevant. Bank records, farming procedures, tax returns and drug use add nothing to the essential initial requirement that a foundational proceeds of crime be presented within the pleadings. An open-ended discovery regarding the defendants’ lives could go on for weeks to no avail. 77 In summary, the plaintiff’s action under the CPFA does not seek a numerically quantifiable monetary goal arising from an administrative process. Other than the exempt land and dwelling and, miscellaneous drug paraphernalia of no apparent fair market value, there is no asset in play to establish civil in rem jurisdiction. As pled, the suit is not in conformity with provincial constitutional objectives regarding the deterring of crime being in direct conflict with statutes regarding the confiscation of specific exempt property as noted above. This court finds that the present suit is in pith and substance of a criminal nature. Its dominant feature appears to be the punishment of the defendants by the forfeiture or confiscation of their land and home and means of livelihood. It is thus 414 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

impossible for this court within the ambit of the purported civil litigation to approve further discovery given its lack of relevancy. 78 An order will therefore go that the plaintiff’s motion for continued discovery be dismissed. This matter is continued for the purpose of costs. Motion dismissed. Matsqui First Nation v. Canada (Attorney General) 415

[Indexed as: Matsqui First Nation v. Canada (Attorney General)] Matsqui First Nation, Plaintiff and Attorney General of Canada, Defendant British Columbia Supreme Court Docket: Vancouver S113792 2015 BCSC 1409 Kent J. Heard: August 6, 2015 Judgment: August 7, 2015* Alternative dispute resolution –––– Mediation — Miscellaneous –––– By its further amended notice of civil claim, plaintiff alleged that Department of Fish- eries and Oceans infringed its domestic salmon fishing right — Matter was set for 30-day trial — Crown was served with notice to mediate issued by plaintiff, which notice triggered mandatory mediation process contemplated by Notice to Mediate (General) Regulation — Crown brought application for order that it was exempt from attending mediation in matter — Application dismissed — Court was not satisfied that mediation was either impracticable or unfair — Plaintiff sought declaratory relief respecting perceived aboriginal right — This was not sort of remedy that was readily available in mediation process, and plaintiff undoubtedly knew this but had initiated mediation nonetheless — Pre- sumably, plaintiff believed there was some basis for settling claim available — One could not help but ask what parties had to lose by confidentially exchanging and explaining perspectives and interests — If nothing else, perhaps some accommodations and efficiencies could be reached regarding evidence or other trial process that might reduce mutual inconvenience and cost — At best, some sort of creative resolution in principle might emerge, albeit subject to later ratification by superiors if necessary, and at worst, case would simply proceed to trial in couple months’ time with interim “loss” of one or two days’ effort. Cases considered by Kent J.: IBM Canada Ltd. v. Kossovan (2011), 2011 ABQB 621, 2011 CarswellAlta 1747, [2011] A.J. No. 1092, 59 Alta. L.R. (5th) 69, 528 A.R. 1 (Alta. Q.B.) — followed

* A corrigendum issued by the court on August 11, 2015 has been incorporated herein. 416 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

Soleil Hotel & Suites Ltd. v. Soleil Management Inc. (2008), 2008 BCSC 953, 2008 CarswellBC 1488, 63 C.P.C. (6th) 149 (B.C. S.C. [In Chambers]) — referred to Soleil Hotel & Suites Ltd. v. Soleil Management Inc. (2008), 2008 BCCA 93, 2008 CarswellBC 495, 77 B.C.L.R. (4th) 309, (sub nom. Executive Inn Inc. v. Tan) 253 B.C.A.C. 126, (sub nom. Executive Inn Inc. v. Tan) 425 W.A.C. 126 (B.C. C.A.) — considered Statutes considered: Constitution Act, 1982, being Schedule B to the Canada Act 1982 (U.K.), 1982, c. 11, reprinted R.S.C. 1985, App. II, No. 44 Generally — referred to s. 35(1) — considered Rules considered: Alberta Rules of Court, Alta. Reg. 124/2010 R. 4.16(1) — considered Regulations considered: Law and Equity Act, R.S.B.C. 1996, c. 253 Notice to Mediate (General) Regulation, B.C. Reg. 4/2001 Generally — referred to s. 20 — considered s. 23 — considered s. 23(c) — pursuant to

APPLICATION by Crown for order that it was exempt from attending mediation in matter.

Mark G. Underhill, Bram Rogachevsky, for Plaintiff Jennifer Chow, Sandra J.H. Evans, for Defendant

Kent J. (orally):

1 The Crown applies pursuant to s. 23(c) of the Notice to Mediate (General) Regulation, B.C. Reg. 4/2001 (“the Regulation”) for an order that it is exempt from attending mediation in this matter. It argues that in the unique circumstances of this case, such mediation is, in the words of the subsection, “materially impracticable”. 2 These applications are rare. Indeed, since the Regulation came into force in 2001, there appears to have been only one other case in this province where an application was made to exempt parties from attending a mediation process which had been triggered under the Regulation. Matsqui First Nation v. Canada (Attorney General) Kent J. 417

3 By its Further Amended Notice of Civil Claim filed June 27, 2012 the plaintiff alleges that the Department of Fisheries and Oceans (“DFO”) infringed the Matsqui “domestic salmon fishing right”, an aboriginal right within the meaning of s. 35 (1) of the Constitution Act, 1982. The alleged infringement is said to have occurred on various occasions during the 2010 fishing season when the Department failed to issue certain fishing licences to the Matsqui. By its lawsuit, the plaintiff seeks: • a declaration that the Matsqui have an aboriginal right to fish for salmon for domestic purposes within a certain specified area along the Fraser River; • a declaration that the decisions by the Crown to deny licences and not to permit the Matsqui to fish at certain times during the 2010 fishing season constituted an unjustifiable infringement of their aboriginal rights; and • an award of damages on account of such infringement. 4 By its Amended Response to Civil Claim filed May 23, 2014, the Crown: • puts the plaintiff to strict proof of the existence of an aboriginal right to fish for salmon for food, social and ceremonial needs in the specified area claimed; • alleges that the management of fisheries for Fraser River salmon involves complex and discretionary balancing of international ob- ligations, environmental and fish conservation concerns, aboriginal and treaty right claims, allocations between aboriginal, com- mercial and recreational fisheries, and the like; and • claims that, in the exercise of its discretion respecting the issuance of fishing licences in this case, the Matsqui food, social and ceremonial needs were accorded all appropriate consideration and that, indeed, those needs were well met in the 2010 fishing season such that no infringement of any aboriginal right occurred in any event. 5 This matter is set for a 30-day trial commencing September 28, 2015. 6 On May 26, 2015, the Crown was served with a Notice to Mediate issued by the plaintiff. This notice triggered the mandatory mediation process contemplated by the Regulation. It has also resulted in the present application for an order effectively exempting this litigation from the mediation process. 418 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

7 In essence, the Crown argues that this case raises important issues that require resolution in court and which therefore makes mediation impracticable. This is said to be a “test case” with broad implications. The important issues to be determined are said to include • clarification of, and in this case a vindication of, the Crown’s exercise of discretion in the exercise of its fisheries management and licensing responsibilities, particularly in the context of the accom- modation of aboriginal interests; • characterization as an aboriginal right within the meaning of s. 35(1) of the Constitution Act, the right to harvest salmon on the specified area of the Fraser River to satisfy Matsqui needs for food, ceremonial and social purposes; and • the “highly controversial” claim for damages, not so much in respect of the loss of the salmon itself, but more so in respect of the existence and parameters of an alleged “cultural loss” arising from the infringement of the alleged right. 8 Once a Notice to Mediate is issued and served under the Regulation, it becomes mandatory for each party to a lawsuit to “engage in mediation”. The Regulation requires attendance of the parties at a mediation session, if not in person, then by way of a representative who must “have full authority to settle, or have access at the earliest practicable opportunity to a person who has ... full authority to settle, on behalf of that participant”. 9 Section 23 of the Regulation contemplates applications to court for directions respecting the terms or conditions on which a mediation might proceed, the timing and postponement of same, and the exemption of parties from attendance where the same would be “materially impracticable or unfair”. 10 In submissions, counsel for the Crown advised that, quite apart from the need for judicial precedent in this test case, as a practical matter the DFO does not have the “mandate” or authority to resolve claims involving the definition of a constitutional right or the reconciliation of the pre- existence of aboriginal societies with the sovereignty of the Crown. The resolution of such claims for declaratory relief, which the Crown considers highly improbable at a mediation in any event, would almost certainly require approval at the highest levels of government. Given the fact that a federal election is currently underway, there is in effect no one presently available who has “full authority to settle” and that will remain the case up to and beyond the present trial date. As a further practical Matsqui First Nation v. Canada (Attorney General) Kent J. 419

matter, then, the Crown suggests it cannot comply with the requirements of s. 20 of the Regulation and so, it is argued, mediation before trial is impracticable on this ground as well. 11 British Columbia appears to be unique among the provinces in impos- ing the standard of “material impracticability or unfairness” as the basis for exempting parties from mandatory mediation. The standard has received very little judicial consideration. In Soleil Hotel & Suites Ltd. v. Soleil Management Inc., 2008 BCCA 93 (B.C. C.A.), it was observed that “s. 23, was enacted to ensure that a court in an appropriate case would be endowed with a broad power to make orders to ensure the effi- cacy of the mediation process.” In that case, the court upheld the lower court’s rejection of an exemption application based on a combination of challenging international logistics, deep pessimism as to outcome, and outright hostility between the parties. In the lower court decision, indexed at 2008 BCSC 953 (B.C. S.C. [In Chambers]), the court had observed, “... settlement rates in all forms of mediation, including mandatory mediation, are high. Pessimism and hostility on the part of parties compelled to attend a mediation are often predictable and, in and of themselves, may not justify exemption from the mandatory mediation process ....” 12 In Alberta, R. 4.16 (1) of that province’s Rules of Court imposes a “responsibility” on parties to litigation to undertake “good faith participation” in alternative dispute resolution processes. The rule allows the court to exempt parties from such alternative dispute resolution only in certain prescribed circumstances, including: • prior unsuccessful attempts at alternative dispute resolution; • unlikelihood of settlement, having regard to the nature of the claim; • likely futility of the process; • the necessity or desirability of a court decision; or • other compelling reasons. 13 The Alberta courts have observed with respect to these rules that: • the party seeking an exemption from mediation has the onus of establishing that the exemption should be granted; and • the threshold for obtaining an exemption is high and the rule is to be used sparingly. 420 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

(See IBM Canada Ltd. v. Kossovan, 2011 ABQB 621 (Alta. Q.B.) at paras. 29 and 31.) 14 Arguably, all of the grounds articulated in the Alberta rule are sub- sumed into the BC exemption standard of “material impracticability”. Crown counsel also refers to the provincial government’s website which hosts the Regulation and which itself sets out various circumstances making mandatory mediation inappropriate, namely: • a legal precedent is needed to govern similar cases in the future; • an issue of law, public policy, or interpretation needs to be clari- fied on the record; • public access or participation in the decisional resolution is desirable; people who are not parties to the dispute might be prejudiced by the outcome; • the dispute is over a decision where a statutory decision-maker had no discretion, i.e., no negotiable issue; • the constitutional validity of an act or law is challenged; • the case is genuinely frivolous or opportunistic; • parties acting in bad faith; or • there is a fear of violence between the parties and the mediation would not be safe. 15 Here the Crown relies on the first three bulleted grounds. 16 The Kossovan case, supra, also made various observations about the alternative dispute resolution process which may be apposite here: [39] It is a fallacy to think that the outcome of a [mediation] will always result in a substantial compromise to one’s initial position. While one of [the] objects of [alternate] dispute resolution is to get both parties to “move” from their initial positions to one which they can mutually accept, the ultimate objective is achievement of a judi- cious outcome that all parties can live with, put behind them and move on. ... [41] A number of plaintiffs enter into the litigation process, believing [in the justness of their cause and] that they are entitled to recover the full amount of their claim. Positions may be based on what they have been told by counsel, personal principles, or ... corporate direction. Yet despite this belief successful settlements are often reached. Par- ties may be persuaded to resolve the dispute once the weaknesses in their own case is revealed to them, given the uncertainties of litiga- Matsqui First Nation v. Canada (Attorney General) Kent J. 421

tion. Having a [suitably qualified and experienced mediator] outline the strengths and weaknesses of each party’s case may cause one or both of the parties to modify their settlement positions. Alternatively, if a strong case is put forward where ability to recover is in issue, creative repayment solution might be successfully canvassed. [42] A belief that there is little room for flexibility and no major con- cessions ... will be made does not act to render the [mediation] process futile...... [43] Even if the parties are unable to reach a settlement, this does not mean that attendance at the [mediation] has been “futile”. Multiple other benefits may be obtained. ... The parties may be able to narrow down or agree [on issues] during the [mediation] process. At the very least, getting together to refine the legal issues and plan the next court steps can also result in time and cost savings. A good faith commitment to a process that may ultimately resolve the dispute, or shorten trial time and reduce heavy trial costs is never a futile endeavor. [editing in parenthesis is mine] 17 I agree that settlement of the claims in this case may confront formi- dable obstacles. However, after participating in dozens of mediations in more than 30 years of practice at the bar before joining the bench, I agree with and endorse the observations made in the Kossovan case. 18 The beauty of mediation lies in its confidentiality and flexibility. With the assistance of a skilled mediator, the parties are free to speak to each other directly and to frankly express their concerns and interests without fear of prejudicing the litigation should the matter not settle. That is to be encouraged. Empathy and apology can and often does play a powerful role. Seemingly intractable positions become less so. The legal issues framed in the pleadings frequently do not reflect the real interests or concerns motivating the litigants. Creative remedies not available to the court can be forged to bridge differences. Important relationships can be repaired. 19 In this case, the Matsqui seek declaratory relief respecting a perceived aboriginal right protected and preserved by the Constitution. This is not the sort of remedy that is readily available in a mediation process. They undoubtedly know this, yet they have initiated the mediation nonetheless. Presumably they believe there is some basis for settling the claim available. It may have little to do with the formal legal relief sought in the litigation. One cannot help but ask what do the parties have to lose by 422 WESTERN WEEKLY REPORTS [2016] 4 W.W.R.

confidentially exchanging and explaining perspectives and interests? If nothing else, perhaps some accommodations and efficiencies may be reached regarding evidence or other trial process that may reduce mutual inconvenience and cost. At best, some sort of creative resolution in principle may emerge, albeit subject to later ratification by superiors if necessary. At worst, the case will simply proceed to trial in a couple months’ time with an interim “loss” of one or two days’ effort. 20 I am not satisfied that a mediation in this case is either impracticable or unfair. The application is dismissed. Costs will be in the cause. Application dismissed.