Canada Trustco Mortgage Co. v. Renard

2008 BCCA 343 Canada Trustco Mortgage Co. v. Renard

COURT OF APPEAL FOR BRITISH COLUMBIA Citation: Canada Trustco Mortgage Co. v. Renard, 2008 BCCA 343 Date: 20080909 Docket: CA034615 Between: Canada Trustco Mortgage Company Respondent (Plaintiff) And Regis Eugene Renard and Velma Elaine Renard Appellants (Defendants) Before: The Honourable Chief Justice Finch The Honourable Mr. Justice Frankel The Honourable Mr. Justice Groberman P.E. Jaffe Counsel for the Appellant H.W. Wiebach Counsel for the Respondent Place and Date of Hearing: Vancouver, British Columbia June 4 & 5, 2008 Place and Date of Judgment: Vancouver, British Columbia September 9, 2008 Written Reasons by: The Honourable Mr. Justice Frankel Concurred in by: The Honourable Chief Justice Finch The Honourable Mr. Justice Groberman Reasons for Judgment of the Honourable Mr. Justice Frankel:

INTRODUCTION [1] Following a 36-day trial, Mr. Justice Burnyeat of the Supreme Court of British Columbia granted judgment against Regis Eugene Renard and Velma Elaine Renard in favour of Canada Trustco Mortgage Company. Mr. and Mrs. Renard were ordered to pay the balance owing on a promissory note held by Canada Trustco in the principal amount of $50,000, and Canada Trustco was granted an Order Nisi of foreclosure with respect to the mortgage it holds on the Renards' property: 2006 BCSC 1609, 51 R.P.R. (4th) 204. The trial judge later dismissed an application by Mr. and Mrs. Renard to re-open the case to call further evidence: 2007 BCSC 523, 55 R.P.R. (4th) 104. [2] How Mr. and Mrs. Renard came to be indebted to Canada Trustco turns, in large measure, on their desire to invest in what I would call a "get rich quick" scheme, known as a "bank bond trading program". This led them to Andre Glockl who, at the time, was a Mortgage Development Manager with Canada Trustco. In defending the claims against them, Mr. and Mrs. Renard alleged they were induced into a financial relationship with Canada Trustco by the negligent and fraudulent representations made to them by Mr. Glockl regarding the efficacy of their proposed investment in the bank bond trading program. They took the position that Canada Trustco was vicariously liable for Mr. Glockl's actions, and counterclaimed against both

for damages. [3] The trial judge dismissed the counterclaim. He found that Mr. and Mrs. Renard had not been induced by any misrepresentations made by Mr. Glockl. To the contrary, the trial judge found that Mr. and Mrs. Renard had conspired with Mr. Glockl to circumvent Canada Trustco's lending policies so that they could obtain a mortgage for which they did not qualify. Although Mr. and Mrs. Renard initially appealed the dismissal of the counterclaim they have not pursued their claim for damages. Prior to the hearing, they abandoned the appeal against Mr. Glockl, and he is no longer a party to these proceedings. [4] Mr. and Mrs. Renard advance numerous grounds of appeal. These grounds include challenges to several findings of fact, an allegation that the trial was unfair, an allegation of reasonable apprehension of bias with respect to the trial judge, and an assertion that the mortgage in issue is unenforceable because it constitutes an illegal transaction under both the Trust and Loan Companies Act, S.C. 1991, c. 45, and the Criminal Code, R.S.C. 1985, c. C-46. [5] I would allow this appeal on the basis that the trial was unfair. By reason of the pleadings, and the manner in which the trial was conducted, the question of complicity between Mr. and Mrs. Renard and Mr. Glockl to perpetrate a fraud on Canada Trustco was not an issue during the trial and, accordingly, was not

addressed by any counsel in closing submissions. Rather, it first appeared as a finding of fact in the trial judge's reasons for judgment. In my view, it was not appropriate for the trial judge to find that the Renards had been involved in what amounts to criminal conduct when they had no notice of such an allegation, and no opportunity to defend against it. [6] I would, however, reject Mr. and Mrs. Renard's contention that the mortgage is not enforceable because it exceeds the 75% loan to value limitation in the Trust and Loan Companies Act. This is a pure legal question that does not depend on any findings of fact made by the trial judge.

FACTUAL BACKGROUND [7] At trial, the evidence conflicted, or was unclear, on a number of important points. Canada Trustco's record of the transactions was somewhat wanting, as it could not locate relevant documents. Further, the trial judge was less than impressed with the veracity of Mr. and Mrs. Renard and Mr. Glockl, and disbelieved much of their testimony: see para.

5. What follows is a limited review of the evidence, and the trial judge's findings. [8] Mr. and Mrs. Renard were married in 1972. In 1982, they purchased ten acres of land in Chilliwack, British Columbia, and began to reside in a 60-foot mobile home on the property. Their combined income in 1996 was just under $18,000.00. [9] In August of 1995, Mr. Renard had an exhibit at the Pacific National Exhibition in Vancouver, seeking to attract investment to an ostrich business he proposed to run. While at the Exhibition, Mr. Renard met Donley Lehman. Mr. Lehman discussed the possibility of Mr. Renard becoming involved in a program with his ostrich farm that would assist in teaching and training developmentally challenged individuals, i.e., the "Lehman Project". Following this, Mr. Renard assisted Mr. Lehman in looking for a suitable location for this project. [10] Mr. Renard understood from Mr. Lehman that funding for the project would come from American investors. Mr. Renard further understood that his expenses would be reimbursed once this funding was put in place. However, by June of 1996, Mr. Renard was becoming frustrated with the lack of progress being made by Mr. Lehman. [11] Mr. Lehman arranged for Mr. Renard to meet with Edward Sailer and Richard Strom on June 7, 1996. Mr. Sailer and Mr. Strom were said to represent Tri-Sal International Limited, a potential source of funds

for the Lehman Project. [12] Mr. Sailer and Mr. Strom suggested to Mr. Renard that he invest in a bank bond trading program that they were undertaking, to raise funds for the Lehman Project. They told Mr. Renard that if he invested $175,000.00 (U.S.) he would receive his money back together with a profit of $375,000.00 (U.S.) after 45 days. Mr. Sailer and Mr. Strom said that Tri-Sal International would cover whatever costs Mr. Renard incurred in obtaining a loan to invest in the bank bond trading program. [13] Either before or after the meeting with Mr. Sailer and Mr. Strom, Mr. Renard telephoned Mr. Glockl. Mr. and Mrs. Renard had met Mr. Glockl in 1996, and he had given them his business card. Mr. Glockl worked at the Tsawwassen Branch of Canada Trustco. Mr. and Mrs. Renard did not usually deal with Canada Trustco, but had a banking relationship with two other financial institutions (i.e., accounts, loans, and a mortgage). [14] Mr. and Mrs. Renard met with Mr. Glockl on June 10, 1996. Mr. Renard testified that the purpose of this meeting was to have Mr. Glockl investigate the legitimacy of Tri-Sal International, and the bank bond trading program. However, the trial judge found that the primary purpose of the meeting was for the Renards to provide Mr. Glockl with financial information about themselves so that they could borrow the necessary money to invest in the bank bond

trading program. The trial judge also found that by this time, Mr. and Mrs. Renard had already decided to invest in the program, and that they provided Mr. Glockl with false information to obtain the funds they needed. [15] Mr. Glockl told the Renards that their property would not qualify for a mortgage of $175,000.00 (U.S.), but that he had an anonymous client who was willing to put up the remainder, if they gave Mr. Glockl a promissory note for $110,000.00 (U.S.). Mr. Glockl also required $5,000.00 (Can.) from Mr. and Mrs. Renard to expedite the appraisal of their property. [16] According to Mr. Renard, Mr. Glockl telephoned him on the evening of June 10, 1996, to tell him that the bank bond trading program was legitimate. However, the trial judge did not accept this evidence. Rather, he found that if such a conversation took place at all, then it occurred after Mr. Renard had met with Mr. Strom on June 11, 1996, to give him $3,000.00 (U.S.) for "administrative costs" associated with setting up the bank bond trading program. The Renards withdrew that money from one of their bank accounts. [17] On June 13, 1996, Mr. and Mrs. Renard met with Mr. Glockl at the Tsawwassen Branch, and signed a number of computer generated documents, including a term loan agreement for $35,000.00 (Can.), and a commitment letter for a mortgage in the amount of $250,000.00 (Can.). The documents

indicate that the Renards have a combined annual income of $100,000.00 (Can.), and that their property is worth $350,000.00 (Can.). The trial judge rejected the Renards' evidence that these forms had been blank when they signed them. An appraisal done on the property a few days later valued it at $185,000.00 (Can.). However, for reasons that were not fully explained, this appraisal did not prevent Canada Trustco from processing a mortgage in the higher amount of $250,000.00 (Can.). [18] On June 13, 1996, an account was opened at the Tsawwassen Branch in the names of Mr. and Mrs. Renard, and $35,000.00 (Can.) was deposited into it. On June 24, 1996, a further $14,886.92 (Can.) was deposited into this account. No documents were adduced in evidence with respect to why or how the second deposit was made. Indeed, Canada Trustco was unable to produce the promissory note it says was the reason why it advanced these funds to the Renards. [19] On June 28, 1996, Mr. and Mrs. Renard executed the documentation for the mortgage at the office of a notary public. Canada Trustco advanced the funds that day. Mr. Glockl assisted the Renards in obtaining three bank drafts totalling $175,000.00 (U.S.) through Canada Trustco payable to Tri-Sal Investments, which the Renards deposited into Tri-Sal Investments' account at a bank in Blaine, Washington. The money was later transferred out of that

account into a new account for which the Renards did not have signing authority. [20] Mr. and Mrs. Renard's investment in the bank bond trading program proved too good to be true. Although the Renards received some money from Tri-Sal Investments, they received nothing from the bank bond trading program, and lost most of what they had invested. CONDUCT OF THE TRIAL - FRAUD BY THE RENARDS [21] Canada Trustco did not plead that Mr. and Mrs. Renard had acted fraudulently in obtaining the loan and the mortgage. The trial judge, in fact, commented on several occasions that fraud had not been pleaded. [22] During cross-examination of Mrs. Renard, Canada Trustco's counsel suggested that the $5,000.00 (Can.) payment to Mr. Glockl had been a "bribe". This prompted an objection by Mr. and Mrs. Renard's counsel, who pointed out that there was "no allegation that my clients have committed any sort of misconduct". In sustaining the objection, the trial judge said: Okay. Well, I'll say to you in -- in that regard as I would say to your friends when they raised it regarding you. One of the things we actually do at the end of the day is to go and look at the pleadings. And your interjection may have done anything other than require your friends or -- or suggest to the friends -- your friends that it might be in order for them to request an amendment of the pleadings at this late date. But in

the absence of it being in the pleadings, Mr. Jaffe, I agree with you. So it seems to me that there's -- there's -- well, I will, as I say, in due course take all of the evidence and compare it against the pleadings and see whether it's -- it's conducive to support or not support what has actually been plead by the parties as opposed to theories that might be advanced by you or your friends. That seems to me ironically one of the skirmishes we've already had as to whether the theories of the defence were properly reflected in the pleadings. And if -- if this is a tit-for-tat argument it's well made. Anyway, you can call the Renards back. [Emphasis added] [23] Several days later, during an argument with respect to whether Mr. and Mrs. Renard were entitled to claim solicitor-client privilege over certain documents, their counsel referred again to the fact that there was no allegation in the pleading that they had committed fraud. This prompted the trial judge to remark: The only person who uses the word your clients are said to have perpetrated a fraud, as I understand it, Mr. Jaffe, is you. [24] In the discussions that preceded closing argument, counsel for Mr. and Mrs. Renard raised the question of whether it would be open to either Canada Trustco or Mr. Glockl to argue that his clients engaged in fraudulent conduct. The trial judge asked counsel for Canada Trustco and Mr.

Glockl to provide written submissions as to their respective intentions in this regard. [25] On the basis of the written submissions from the parties as to what issues they intended to argue, the trial judge issued a memorandum to counsel. In the memorandum, he set out the order of oral submissions and the issues to be argued. Although fraud is listed as an issue with respect to the conduct of Mr. Glockl and Canada Trustco, it is not mentioned with respect to the conduct of Mr. and Mrs. Renard. [26] At the hearing of this appeal, counsel for Canada Trustco stated that his client did not argue at the trial for a finding that Mr. and Mrs. Renard had committed fraud. TRIAL JUDGE'S REASONS [27] The trial judge held that Canada Trustco and the Renards were two independent contracting parties, and that their relationship was purely commercial in nature. He further held that Canada Trustco did not owe a fiduciary duty to Mr. and Mrs. Renard, and that they had not relied on any advice from Mr. Glockl in making their decision to invest in the bank bond trading program. [28] In rejecting Mr. and Mrs. Renard's argument that Mr. Glockl had taken advantage of them, rendering the transactions with Canada Trustco unenforceable, the trial judge said: [221] The Renards submit that Mr. Glockl took advantage of them and that his "breach of trust" is a civil wrong which makes the resultant

transactions "unconscionable" and not enforceable against the Renards. In this regard, the Renards refer to the decision in Zimmerman v. Letkeman, [1977] 79 D.L.R. 508 (S.C.C.) where Martland J. refers at p. 519 to the decision in Alexander v. Rayson, [1936] 1 K.B. 169 (C.A.). [222] I can make no finding that Mr. Glockl took advantage of the Renards in the transactions which saw the Plaintiff make loans to the Renards. I can make no finding that there was a breach of trust. I can make no finding that the transactions were "unconscionable" either as that term is used at common law or is used in Provincial legislation. I find that the Renards have not satisfied the heavy onus on them to prove a fraud. If anything, the Renards and Mr. Glockl participated in a scheme to circumvent the lending policies of the Plaintiff so that the Renards could have the use of the money of the Plaintiff and so that Mr. Glockl could receive the $5,000.00 payment immediately and receive the benefit of payment of the balance owing under the Promissory Note once the proceeds from the B.B.T.P. were available. The Renards are complicit in any fraud or illegality and are now seeking to benefit from their own illegal acts in conspiring with Mr. Glockl to defraud the Plaintiff. I am satisfied that the Renards should not retain the fruits of any illegal dealings and that they are estopped from raising

illegality as a defence to the claims of the Plaintiff. Voiding the Mortgage would unjustly enrich the Renards and, accordingly, even if the overall transaction was illegal, I am satisfied that it is enforceable: Brazier v. Columbia Fishing Resort Group Corp. (1997), 33 B.C.L.R. (3d) 293 (B.C.S.C.), affirmed (1997), 33 B.C.L.R. (3d) 293 (B.C.C.A.). [Emphasis added] [29] The trial judge also rejected the Renards' submission that the mortgage was unenforceable because the effect of including the $110,000.00 (U.S.) promissory note to Mr. Glockl and the $5,000.00 (Can.) payment to expedite the appraisal created a criminal rate of interest in contravention of s. 347(2) of the Criminal Code: paras. 201 - 208. He also rejected their contention that the mortgage was invalid by reason of the fact that the amount advanced exceeds 75% of the value of the property and, thus, contravenes s. 418 of the Trust and Loan Companies Act. [30] The trial judge dismissed the counterclaim as he was not satisfied that Mr. and Mrs. Renard had suffered any damages as a result of the actions of Mr. Glockl. Any loss suffered resulted from the Renard's own actions in investing in the bank bond trading program. Accordingly, he could not find that Canada Trustco should be held vicariously liable for what was said and done by Mr. Glockl: paras. 236 - 240.

ANALYSIS Finding of Fraud [31] Canada Trustco acknowledges that the pleadings do not allege any fraudulent conduct on the part of Mr. and Mrs. Renard, but submits that even in the absence of pleadings it was open to the trial judge to find that the Renards had participated with Mr. Glockl in a fraudulent scheme. In addition, Canada Trustco says that, in any event, this finding was not strictly necessary to resolving the action in its favour. However, given how the trial was conducted, in my view it was unfair to Mr. and Mrs. Renard for the trial judge to have considered the possibility of fraud on their part. [32] Canada Trustco submits that a court is required to take account of illegality, even when it has not been pleaded. It relies on the following passage from the judgment of Mr. Justice Krever, as he then was, in Menard v. Genereux (1983), 39 O.R. (2d) 55 (H.C.) at 64, quoted with approval in Continental Bank Leasing Corp. v. Canada, [1998] 2 S.C.R. 298 at para. 85: It is, however, well established that whether or not they are pleaded, if facts are shown in the course of a trial which may render an agreement unenforceable by reason of illegality or public policy a court must take these facts into consideration and, depending on the circumstances, act upon them if necessary by refusing to lend its assistance to a party seeking to enforce his or her rights by relying on the

agreement. See also: Top Line Industries Ltd. v. International Paper Industries Ltd., 2000 BCCA 23, 184 D.L.R. (4th) 534 at paras. 15 - 17. [33] This principle, however, only operates to deny a plaintiff the court's assistance when it is evident that what is sought to be enforced is an illegal agreement. Even so, if the plaintiff has been prejudiced in the presentation of its case by the failure of the defendant to plead the illegality (e.g., by being denied an opportunity to call evidence to rebut a presumption of illegality), then the court will not refuse to enforce the agreement: Uruski v. Hnatiw (1956), 6 D.L.R. (2d) 441 (Sask. C.A.); Snell v. Unity Finance Co. Ltd., [1964] 2 Q.B. 203 (C.A.) at 221, 222. Canada Trustco cited no authority for the proposition that it is open to a court to find that a defendant acted in an illegal and/or criminal manner when the defendant has been given no notice of the allegation in the pleadings. [34] That a party is generally entitled to notice of an allegation as serious as fraud is underscored by Rule 19(11) of the Rules of Court, B.C. Reg. 221/90, which provides: Where the party pleading relies on misrepresentation, fraud, breach of trust, wilful default or undue influence, or where particulars may be necessary, full particulars, with dates and items if applicable, shall be stated in the pleading. If the particulars of debt, expenses or

damages are lengthy, the party may refer to this fact and instead of pleading the particulars shall deliver the particulars in a separate document either before or with the pleading. [Emphasis added] As Mr. Justice Spencer observed in Cadumaus Enterprises Ltd. v. Pawa, [1986] B.C.J. No. 1166 (S.C.) (QL), one of the functions served by Rule 19(11) is "to prevent a party from being taken by surprise at trial": para. 2. [35] That a party should not be surprised by an allegation of criminality is evinced by Donald H. Bain Ltd. v. Maddison, [1930] S.C.R.

299. Maddison sued Donald H. Bain Ltd. for breach of contract when it failed to deliver certain goods. At trial, the company sought to lead evidence in support of a defence that Maddison and the company's agent had entered into the contract for the purpose of defrauding the company (i.e., that Maddison had fraudulently obtained from the agent a price lower than the market price for the goods). The trial judge rejected that evidence on the ground that fraud had not been pleaded as a defence, and awarded Maddison damages. This Court dismissed an appeal by the company: [1929] 1 W.W.R. 437 (B.C.C.A.). [36] On further appeal to the Supreme Court of Canada, the company argued that despite the fact that fraud and conspiracy were not pleaded it was the duty of the trial judge to investigate the matter, and to receive evidence in that regard. In rejecting this contention, Mr. Justice Duff, as he then was, stated, at 302: The pertinent rule is not open to doubt. If such an agreement, affecting the contract sued upon, is embodied in a document put in evidence by the plaintiff, and the character of it is thereby plainly disclosed, or if the nature of it plainly appears from other evidence adduced by the plaintiff, then if the Court is satisfied it has before it all the facts, the plaintiff must necessarily fail; and, in such circumstances, it is immaterial whether or not the agreement has

been pleaded in defence. It is otherwise, however, where the defendant, in order to shew that the contract sued upon is unenforceable, must adduce evidence of the corrupt inducement. The defendant is not entitled to present such evidence unless the plaintiff has had notice, through the pleadings, of the nature of the defence. [37] Mr. Justice Duff then quoted at length from Lord Moulton's speech in North Western Salt Co. v. Electrolytic Alkali Co., [1914] A.C. 461 (H.L.), another case in which a defendant was not permitted to assert that a contract was illegal because that defence had not been raised in the pleadings. The following passage from that quotation is particularly germane to the case at bar (at 304 S.C.R.): [O]ur judicial procedure is based on the principle that in fairness a litigant should have due notice of the issues that are to be raised in order that he may prepare himself with the evidence necessary to present his case fittingly to the Court, and it would indeed be strange to hold that this wholesome rule should be relaxed when he is charged with something so grave as acting against the common weal. [38] Fairness requires that a trial judge not bring issues into litigation without giving the parties an opportunity to address them. This is also reflected in Walker v. Blades, 2007 BCCA 436, 70 B.C.L.R. (4th) 226 at para. 16, and Rodaro v. Royal Bank of Canada

(2002), 59 O.R. (3d) 74 (C.A) at paras. 60 - 62. In Walker, the trial judge erred in dismissing an action on the basis that the plaintiff had repudiated the contract in issue, when repudiation had not been pleaded or argued. In Rodaro, the trial judge's error was in granting judgment in favour of the plaintiff on a theory of liability that had not been pleaded or argued. [39] The common thread running through these authorities is the proposition that a party is entitled to know and respond to the case against it, whether by the calling of evidence, or through submissions. This is particularly so when there is a question as to whether a party is engaged criminal activity. In my view, the trial in the case at bar became unfair when the trial judge, acting on his own initiative, made a finding that Mr. and Mrs. Renard acted in concert with Mr. Glockl to defraud Canada Trustco. In effect, the Renards were pronounced guilty of fraud, albeit on an application of the civil burden of proof, without having an opportunity to respond to allegations against them. [40] I am not suggesting that on the evidence it was not open to the trial judge to make a finding adverse to Mr. and Mrs. Renard with respect to their complicity with Mr. Glockl. However, they were never given an opportunity to "defend" themselves in that regard. Indeed, given how the trial was conducted, the Renards had every

reason to believe their honesty was not in issue. Most telling is the trial judge's memorandum setting out the issues to be argued, which is silent with respect to any allegation of fraud against them. [41] Had the trial judge made Mr. and Mrs. Renard aware that he had concerns with respect to their conduct, then their counsel could have taken steps to address those concerns. Assuming, without deciding, that the lack of a formal pleading of fraud would not preclude the trial judge from considering whether the Renards had acted in concert with Mr. Glockl to defraud Canada Trustco, notice of the trial judge's concerns would have, at the very least, enabled the Renards' counsel to make submissions on this point. It may be that counsel would have been able to persuade the trial judge that Mr. and Mrs. Renard had not been deceitful. Had the trial judge been so persuaded, then he may have taken a different view of the case, and drawn different inferences with respect to how events unfolded. [42] The trial judge's failure to give Mr. and Mrs. Renard an opportunity to address the question of whether they had been parties to a fraud violates the audi alteram partem principle, i.e., the right of a party to know and respond to the case against it: A.(L.L.) v. B.(A.), [1995] 4 S.C.R. 536 at para.

27. In these circumstances, the result cannot be allowed to stand. 75% Lending Limit [43] In 1996, s. 418(1) of the Trust and Loan Companies Act provided: A company shall not make a loan in Canada on the security of residential property in Canada for the purpose of purchasing, renovating or improving that property, or refinance such a loan, if the amount of the loan, together with the amount then outstanding of any mortgage having an equal or prior claim against the property, would exceed 75 per cent of the value of the property at the time of the loan. The same lending limit is found in s. 418 of the Bank Act. (The limit in both Acts was recently increased to 80%: S.C. 2007, c. 6, ss. 27, 359.) [44] Mr. and Mrs. Renard submit that since the mortgage exceeds 75% of the value of their property the entire transaction is illegal, and Canada Trustco can have no rights under it. In support of their argument, they rely on Bank of Toronto v. Perkins (1883), 8 S.C.R.

603. In that case, a mortgage was held null and void because it was part of a transaction entered into to avoid a prohibition against the lending of money directly, or indirectly, upon the security of a mortgage, contained in both the Bank Act, and the bank's charter: 34 Vic., ch. 5, s. 40; 20 Vic., ch. 160, s. 28. [45] I agree with the trial judge's reasons that exceeding the 75% lending limit does not, in and of itself, affect the validity of a mortgage. As he points out in paragraph 214 of his judgment, s. 536 of the Trust and Loan Companies Act specifically provides that a contract is not invalid by reason of the fact that it violates a provision of the Act: Unless otherwise expressly provided in this Act, a contravention of any provision of this Act or the regulations does not invalidate any contract entered into in contravention of the provision. Also pertinent is s. 15 of the Act, which provides: No act of a company, including any transfer of property to or by a company, is invalid by reason only that the act or transfer is contrary to the company's incorporating instrument or this Act. The version of the Bank Act considered in Bank of Toronto v. Perkins contained no similar provisions, although they are in the current statute: ss. 15, 988. Further, even prior to the enactment of these "saving" provisions it had been held that a mortgagee could enforce a mortgage in excess of the 75% lending limit: Bank of Montreal v. McPhee, [1982] B.C.J. No. 1429 (S.C.) (QL) at paras. 28 - 31, affirmed [1984] B.C.J. No. 1566 (C.A.) (QL).

COSTS [46] In their factum, Mr. and Mrs. Renard seek dismissal of all of Canada Trustco's claims against them, and costs in both this Court and the Supreme Court. In its factum, Canada Trustco asks for an order that the Renards' appeal be dismissed with costs. [47] As Mr. and Mrs. Renard have succeeded on this appeal, I see no reason why the ordinary rule with respect to costs should not be applied. The Renards are, therefore, entitled to their costs on the appeal. I would leave the costs of the first trial to the judge who hears the new trial.

CONCLUSION [48] I would allow this appeal, set aside the judgment of the Supreme Court of British Columbia, and order a new trial. Mr. and Mrs. Renard are entitled to their costs on this appeal. "The Honourable Mr. Justice Frankel" I AGREE: "The Honourable Chief Justice Finch" I AGREE: "The Honourable Mr. Justice Groberman" Corrigendum to Written Reasons of The Honourable Mr. Justice Frankel - 12 September 2008 Mr. Justice Frankel: [1] In reasons for judgment, 2008 BCCA 343, released September 9, 2008, the words "As already mentioned," at the beginning of paragraph 40 are to be deleted. Paragraph 40 will therefore now read as follows: [40] I am not suggesting that on the evidence it was not open to the trial judge to make a finding adverse to Mr. and Mrs. Renard with respect to their complicity with Mr. Glockl. However, they were never given an opportunity to "defend" themselves in that regard. Indeed, given how the trial was conducted, the Renards had every reason to believe their honesty was not in issue. Most telling is the trial judge's memorandum setting out the issues to be argued, which is silent with respect to any allegation of fraud against them. "The Honourable Mr. Justice Frankel"