Gill v. Khural

2019 BCSC 2143 Gill v. Khural IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: Gill v. Khural, 2019 BCSC 2143 Date: 20191210 Docket: 197232 Registry: New Westminster Between: Kuldip Singh Gill and Balwinder Kaur Gill Plaintiffs And Harjinder Singh Khural, Gurwinder Kaur Khural, and Amitoz Kaur Khural Defendants And Harnaik Singh Third Party Before: The Honourable Mr. Justice Gomery Reasons for Judgment In Chambers Counsel for the Plaintiffs: J. Woods Counsel for the Defendants: J. Malik Place and Date of Hearing: New Westminster, B.C. November 21, 2019 Place and Date of Judgment: New Westminster, B.C. December 10, 2019 Introduction [1] This is an action for breach of contract. It comes before me on a summary trial application pursuant to Rule 9-7 of the Supreme Court Civil Rules. [2] The plaintiff, Mr. Gill, and the defendant, Harjinder Khural, are neighbours. A fire started on Mr. Khural's property and spread to Mr. Gill's property. Mr. Gill's property was damaged. Mr. Gill had fire insurance and he made a claim under his policy. [3] Mr. Gill says that Mr. Khural agreed to reimburse him for the cost of repairing the fire damage at his home, in exchange for which he abandoned his claim under the policy of fire insurance. Mr. Khural acknowledges that he agreed to make a payment to Mr. Gill in connection with the fire damage and paid him $20,000 on account of the agreement. [4] There is a dispute as to the precise terms of the oral agreement made by Mr. Gill and Mr. Khural. Mr. Gill says that Mr. Khural agreed to pay the full costs of repair and restoration, which total $98,352.38. Mr. Khural says that he only promised to pay $45,000. [5] It is Mr. Khural who has applied for judgment. He maintains that the agreement he admits he made is legally unenforceable due to an absence of consideration. He says that the action must be dismissed and that he is entitled to recover the $20,000 he has paid. [6] Mr. Gill accepts that the case is suitable for disposition on a summary trial. Taking Mr. Khural's $20,000 payment into account, Mr. Gill asks that I grant him judgment in the amount of $78,352.38. [7] Mr. Khural says that, if he is wrong on the point concerning an absence of consideration, I may make an order dismissing that defence, but I should not grant Mr. Gill judgment because of the dispute concerning the amount of money Mr. Khural promised to pay. He concedes that, in the result, this would amount to "litigating in slices". Mr. Gill responds that I can and should resolve all of the issues between Mr. Gill and Mr. Khural on the record before me on this application. [8] The parties agree that the only dispute in this action is between Mr. Gill and Mr. Khural. The other claims in the pleadings between the plaintiffs and the defendants should be dismissed by consent. In particular, these are: the plaintiffs' claims against Gurwinder and Amitoz Khural; their counterclaim against the plaintiffs; Balwinder Gill's claim against Mr. Khural; and his counterclaim against Balwinder Gill. [9] There is a third party claim by the defendants (now limited to Mr. Khural) against an insurance broker, Mr. Singh, who is alleged to have given Mr. Khural negligent advice leading him to make the agreement with Mr. Gill. Mr. Singh took no part in the hearing of the summary trial application. If the action succeeds or even if it merely survives the summary trial, the third party proceeding will remain outstanding. Issues [10] The issues are as follows: a) Is the admitted agreement between Mr. Gill and Mr. Khural unenforceable for want of consideration? b) Are any of the issues in this case suitable for resolution on a summary trial? First issue: Enforceability of the agreement between Mr. Gill and Mr. Khural Background [11] The adjoining residential properties of Mr. Gill and Mr. Khural are located on 68 Avenue in Surrey, B.C. Both Mr. Gill and Mr. Khural own their respective properties as joint tenants with others who played no part in making the agreement that is the subject of this action. For present purposes, Mr. Gill and Mr. Khural can be treated as the owners of the properties. [12] At the beginning of September 2016, the Khural property was unoccupied. Mr. Khural planned to redevelop the property and had obtained a demolition permit. [13] The fire began at the Khural property in the early morning hours of September 2, 2016. It spread to the Gill property. The fire department attended and was able to extinguish the fire. The Gill property suffered substantial damage. [14] Demolition work had not begun on the Khural property and there is no evidence as to the cause of the fire. Mr. Gill has not pleaded that the fire was Mr. Khural's fault. [15] Mr. Khural did not have fire insurance. Mr. Gill had a policy of insurance underwritten by Optimum West Insurance Company. Mr. Gill initiated a claim under the Optimum policy. [16] Mr. Singh is Mr. Gill's brother-in-law and his insurance broker. The evidence concerning the agreement [17] The agreement was made at a meeting attended by Mr. Gill, Mr. Khural and Mr. Singh. The meeting took place at Mr. Gill's property in late September 2016. Mr. Gill and Mr. Khural have sworn affidavits for this application. Mr. Singh has not. [18] Mr. Gill says that the meeting was preceded by several meetings he had with Mr. Khural in which they discussed the fire damage and Mr. Gill's insurance claim. In these early meetings, Mr. Gill says that Mr. Khural raised the possibility that he would be sued by Optimum to recover the amount it would pay to indemnify Mr. Gill. Mr. Gill says that Mr. Khural told him that he would prefer to deal with the matter privately. On Mr. Khural's account, these preliminary discussions did not take place. [19] Mr. Gill has pleaded that he told Mr. Khural "that the Fire Damage costs would be to the tune of $90,000", but his evidence is that, coming into the meeting, he had obtained quotes from contractors and a roofer indicating that the cost of repair and restoration work could exceed $110,000. He says that he conveyed this information to Mr. Khural at the meeting. He says that "Mr. Khural again offered to pay for the repairs to the Gill Property so long as I withdrew my insurance claim with respect to the Fire Damage. I conveyed my agreement to this proposal to Mr. Khural during the Meeting". Mr. Gill says that Mr. Singh did not provide any advice at the meeting. [20] Mr. Khural says that Mr. Singh played an important role in the meeting. He says that Mr. Singh advised that, should the matter proceed though Mr. Gill's insurance, Mr. Khural would be responsible for the cost of repairs and the cost would be significantly higher than if the matter was settled privately. Mr. Khural says that, in reliance on Mr. Singh's advice, he agreed to pay $45,000 towards the cost of the damage suffered by Mr. Gill. [21] Mr. Khural does not say so expressly, but it must have been a part of the agreement, as he describes it, that Mr. Gill would abandon his claim under the Optimum policy. [22] On September 27, 2016, Mr. Khural provided to Mr. Gill a bank draft in the amount of $20,000. Mr. Gill cashed the bank draft and subsequently withdrew the insurance claim. Analysis [23] It is clear that Mr. Gill and Mr. Khural made an agreement. The agreement was that Mr. Gill would abandon his insurance claim in exchange for which Mr. Khural would make a payment to Mr. Gill towards the cost of repairing the fire damage at the Gill property. The amount that Mr. Khural agreed to pay is disputed: Mr. Gill says Mr. Khural agreed to fully indemnify him for the fire damage, and Mr. Khural says that he only agreed to pay $45,000. [24] The agreement was fully performed by Mr. Gill and partly performed by Mr. Khural. [25] Mr. Khural acknowledges an agreement to pay $45,000 in his response to civil claim. He maintains there was no objective legal basis for him to fear that he would be liable to Optimum, if it paid Mr. Gill's insurance claim. Accordingly, he got nothing of value in exchange for his agreement to pay Mr. Gill. He pleads that the agreement is unconscionable because he got nothing from it, but he did not pursue this contention in argument. Mr. Khural now maintains that the agreement is legally unenforceable only on the basis that it was unsupported by consideration. [26] Assuming that Mr. Khural is correct that he was not objectively at risk of being required to pay Optimum, it is clear that he thought he was at risk. Mr. Khural made the agreement to get something he wanted, namely, Mr. Gill's agreement to abandon the insurance claim. [27] In my opinion, it makes no difference in this case if what Mr. Khural wanted was not objectively of value to Mr. Khural, for the following reasons. [28] The doctrine of consideration exists to identify promises that the law will enforce. As Professor Swan puts it in Canadian Contract Law (Toronto: LexisNexis, 2006) at p. 23, the central consideration underlying the doctrine is the identification of promises giving rise to reasonable expectations. [29] Mr. Gill's right to payment of his claim under the Optimum policy was incontestably of value to him. He gave it up in exchange for Mr. Khural's promise of payment. Accordingly, Mr. Gill gave something of real value in exchange for Mr. Khural's promise. Mr. Gill acquired a reasonable expectation of payment in the circumstances. [30] At the time, Mr. Khural valued what he was getting in exchange - the abandonment of Mr. Gill's insurance claim - and should have reasonably expected that he would have to honour his promise to pay Mr. Gill. It is only subsequently that Mr. Khural came to understand that what he wanted was of no value to him. [31] The point is that Mr. Gill's agreement to abandon his insurance claim and Mr. Khural's promise of payment gave rise to reasonable expectations on both sides at the time the agreement was made and both sides acted on it. Following Professor Swan's reasoning, a bargain giving rise to reasonable expectations should in principle be viewed as one supported by consideration. [32] Consistent with this analysis, in The Law of Contracts, 6th ed. (Aurora, ON: Canada Law Book Inc., 2010) at 86-87, Professor Waddams states that while consideration must have some substance, it need not actually be of benefit to the promisor: The notion of exchange as an element of bargain further requires that what is exchanged for the promise sought to be enforced must be of some substance. The exchanged act or promise need not, however, be of benefit to the promisor. For example, if B lends money to X in exchange for A's promise to guarantee repayment, there is no doubt that there is a bargain between A and B and that A's promise is enforceable without any enquiry into whether A benefited by the advancement of money to X. Similarly, any act or promise by B or any forbearance to act is sufficient consideration for A's promise if the promise is given in return. It is enough that Mr. Gill gave up something of substance in exchange for Mr. Khural's promise of payment. [33] The present case is equivalent to one in which a plaintiff has refrained from suing the defendant in exchange for a payment by the defendant. While Mr. Gill did not refrain from suing Mr. Khural, his abandonment of the insurance claim meant that there was no possibility of Optimum suing Mr. Khural in Mr. Gill's name. In a case of forbearance from suing, it does not generally matter if the claim the plaintiff did not pursue would have failed at the end of the day, so long as it is "a serious claim, honestly made". In Bougainville Investment Corp. v. Semple, 2013 BCSC 1919, Justice Fitzpatrick summarized the authorities addressing this point: [166] In Visscher Lumber Inc. v. Ivis Partners Inc., 2008 BCSC 1893, rev'd on other grounds 2009 BCCA 548, the court stated at para. 36 that "the relevant timeframe for the parties to consider the adequacy of the consideration is at the time of the making of the agreement or the contract and not at the time the agreement is sought to be enforced." [167] It is clear that forbearance to sue may in itself constitute consideration: Ronald Elwyn Lister Ltd. v. Dunlop Canada Ltd., [1982] 1 S.C.R. 726 adopted in Visscher at para. 38. Forbearance of a serious claim, honestly made, is good consideration even if it should later be proved that no valid claim existed: Attorney General of British Columbia v. Deeks Sand & Gravel Co., [1956] S.C.R. 336 (S.C.C.). See also Stott v. Merit Investment Corp., [1988] O.J. No. 134 (C.A.), leave to appeal to SCC refused, Stott v. Merit Investment Corp., [1988] S.C.C.A. No. 185 at paras. 37-40. [Emphasis added.] [34] Mr. Gill's insurance claim was serious, and it was honestly advanced. The benefit to Mr. Khural was the same as if Mr. Gill had refrained from pursuing a potential claim against Mr. Khural. There is nothing in the evidence to suggest that Mr. Gill was aware that his abandonment of the insurance claim would be of no value to Mr. Khural, or that he was taking advantage of Mr. Khural in any way: Famous Foods Ltd. v. Liddle (1941), 56 B.C.R. 372 (C.A.) at 377-378. Mr. Gill has been examined for discovery and Mr. Khural has had an opportunity to explore this point, if there were anything to it. [35] Taking everything into account, I conclude that Mr. Khural's defence that his agreement to pay Mr. Gill is invalid because it was not supported by consideration is legally untenable. On any view of the evidence, Mr. Khural has breached his agreement by refusing to pay more than $20,000. Second issue: suitability for resolution on a summary trial Legal framework [36] Pursuant to R. 9-7(15), the court may grant judgment in favour of any party on a summary trial application, either on an issue or generally, unless: a) The court is unable, on the whole of the evidence before the court on the application, to find the facts necessary to decide the issues of fact or law; or b) The court is of the opinion that it would be unjust to decide the issues on the application. [37] The first question - whether the court can find the facts necessary to decide the issues of fact or law - requires an assessment of the evidence and the law that determines what must be proved to establish or defeat a claim. The second question involves the exercise of judicial discretion, taking a variety of factors into account. The list includes: the amount involved, the complexity of the matter, its urgency, any prejudice likely to arise by reason of delay, the cost of taking the case forward to a conventional trial in relation to the amount involved, the course of the proceedings, the cost of the litigation, whether credibility is a critical factor in the determination of the dispute, whether the summary trial may create an unnecessary complexity in the resolution of the dispute, and whether the application would result in litigating in slices: Gichuru v. Pallai, 2013 BCCA 60 at paras. 28-31. Can I find the facts necessary to decide the issues? [38] On the evidence I have reviewed, it is clear that Mr. Khural is liable to Mr. Gill for breach of contract. Mr. Khural's counterclaim to recover his $20,000 payment to Mr. Gill must fail because the payment was made pursuant to a legally valid contract. [39] The quantum of Mr. Khural's liability to Mr. Gill is another matter. It requires a finding of fact resolving the disputed question of the content of Mr. Khural's promise to pay: was it a promise to pay just $45,000 or a promise to fully indemnify Mr. Gill? [40] Mr. Gill urges me to resolve this question on the record before me. For the reasons set out below, I do not think it would be just to attempt to do so on this application. Is it just to decide the issues on this application? [41] This action was commenced in December 2017. Both sides have conducted examinations for discovery. A trial has been scheduled beginning on April 27, 2020 for three days. [42] As I noted early in these reasons, no matter the outcome of this summary trial application, the third party proceeding against Mr. Singh will remain to be resolved. It centres on the dispute as to what Mr. Singh said at the meeting in late September 2016 when Mr. Gill and Mr. Khural made their agreement. I expect that Mr. Gill, Mr. Singh and Mr. Khural will be witnesses. [43] In the circumstances, it is not appropriate for me to attempt to resolve the dispute between Mr. Gill and Mr. Khural as to the amount Mr. Khural agreed to pay Mr. Gill. The dispute will be canvassed with these witnesses and Mr. Singh in any event and there is a real risk that any conclusion I might come to would be called into question. [44] Accordingly, I reject Mr. Gill's request that I grant him judgment in the amount of $78,352.38. It is not just that I determine the amount of Mr. Khural's liability to Mr. Gill on this summary trial. [45] On the other hand, I think it is just that I determine the issue of liability, leaving damages to be assessed. Mr. Khural has asked me to determine the validity of his defence of lack of consideration. It is a discrete issue. The amount in issue is relatively modest. Proportionality favours the resolution of the issues to the extent possible. Determining this issue may shorten the trial or assist the parties in negotiating a settlement. [46] Partial resolution of litigation - often described as "litigating in slices" - presents well recognized dangers. These include the possibility that evidence will emerge later that calls an initial decision into question, and the possibility that final resolution of the case will be delayed by an appeal that does not resolve all the issues in the case. In this case, the issue I am deciding is essentially a legal question on uncontroversial facts, and the risk that further proceedings will call into question the evidentiary foundation of my decision is minimal. The risk of an appeal that would delay final resolution of the litigation cannot be avoided. In my view, an appeal is relatively unlikely and this risk is outweighed by the other considerations I have outlined. Disposition [47] For these reasons, I grant judgment as follows: a) Mr. Khural is liable to Mr. Gill for breach of contract, for damages to be assessed; b) Balwinder Gill's claim is dismissed; c) Mr. Khural's claims against Gurwinder Khural and Amitoz Khural are dismissed; and d) The counterclaim is dismissed. [48] Concerning costs, Mr. Gill has been substantially successful on this application. The plaintiffs and defendants were each represented by common counsel, and the unsuccessful claims and counterclaims offset one another. Unless there are matters that must be brought to my attention, as against Mr. Khural, Mr. Gill is entitled to costs of the action to date. Mr. Gill's bill of costs will not include tariff costs or disbursements incurred in connection with his unsuccessful claims against Gurwinder Khural and Amitoz Khural. The dismissal of various claims, as set out above, will be without costs. "Gomery J." _____________________________ The Honourable Mr. Justice Gomery