Manning v. Algard Estate

2008 BCSC 1129 Manning v. Algard Estate

IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: Manning v. Algard Estate, 2008 BCSC 1129 Date: 20080821 Docket: S062205 Registry: Vancouver Between: Stephanie Manning Plaintiff And Alex Algard and Anna Shimizu, Executors of the Estate of Klas-Olof Algard Defendants Before: The Honourable Mr. Justice Butler Reasons for Judgment Counsel for the Plaintiff Susan M. Coristine Counsel for the Defendants Andrew Nathanson Alison Kearns Date and Place of Hearing: February 28-29, 2008 Vancouver, B.C. Introduction [1] Stephanie Manning was driving her mother, Marina Ovsenek, to the Cancer Center for a treatment in 2000 when they saw a sign advertising a garage sale. Ms. Ovsenek often went to garage sales. This one was in their old neighbourhood. They stopped, inspected the goods for sale and Ms. Ovsenek decided to buy a box containing a brooch and five gold-coloured coins. Ms. Manning assisted her mother in finding the five dollars required for the purchase. [2] The brooch and coins were kept by Ms. Ovsenek in the "painting room" at her home in Sechelt until she died of cancer in 2004. The room contained painting supplies, gardening books, cook books, costume jewellery and other trinkets purchased at garage sales. After her mother's death, Ms. Manning's father invited her to choose from the painting room those items that she wanted to keep. In June 2005, Ms. Manning selected the items

she wanted, including the five coins. Her father gave the items to her. [3] After looking at the coins closely she noticed that they had old dates and portraits of old-fashioned people. She made e-mail inquiries to an organization she found on the internet and learned that the coins might be Swedish antiques and if so, would be worth thousands of dollars. She asked an acquaintance to act as her agent to make inquiries about a possible sale of the coins. Shortly after he contacted a coin museum in Sweden, the West Vancouver Police met with Ms. Manning's agent, confiscated the coins and told him they had been stolen. [4] Klas-Olof Algard was born in Sweden and was known in his home country as a collector of Swedish coins. In 1987, he moved to West Vancouver. He sold most of his collection before moving, but continued to buy and sell coins after he came to Canada. In October 1994, he reported to the West Vancouver Police that a briefcase containing some of his coins had been stolen at a tailor's shop in West Vancouver. In the following year, he gave the police information about the loss of the briefcase on at least three occasions, including a lengthy statement given on November 16, 1994 that was recorded and transcribed. A fourth statement was given to the West Vancouver Police on October 7, 2005, after they had seized the coins from Ms. Manning's agent. In March 2006, shortly

after the coins were returned to him, Mr. Algard died of heart failure. [5] Ms. Manning initially commenced this action against the West Vancouver Police and Sergeant Pelkey to recover the coins. In May or June 2006, she learned that the coins had been given to Mr. Algard. His estate was then added as a defendant to this action. The claim against the West Vancouver Police and Sergeant Pelkey was discontinued. [6] Ms. Manning says that her mother was a bona fide purchaser for value of the coins and that she is now the rightful owner of them. Mr. Algard's estate says that the coins were lost or stolen in 1994 and that he retained legal title to the coins at all times so that the estate remains the owner of the coins. [7] The estate has brought this Rule 18A application to decide the issue of ownership. Ms. Manning has raised an evidentiary issue that must be decided first. She says that Mr. Algard's statements to the West Vancouver Police are hearsay and are not admissible in evidence. If that is the case, there is no way for the estate to prove that the coins were lost by or stolen from Mr. Algard, and Ms. Manning's claim to the coins must prevail. Issues [8] Are the statements given to the West Vancouver Police by Mr. Algard on November 16, 1994 (the "1994 Statement") and October 7, 2005 (the "2005 Statement") admissible in evidence? [9] If one or both of the statements are admissible, does Ms. Manning or Mr. Algard's estate have better title to the coins? Are the 1994 Statement and the 2005 Statement Admissible in Evidence? Position of Mr. Algard's Estate [10] The principled approach to the admissibility of hearsay evidence is set out in the decisions of the Supreme Court of Canada culminating in R. v. Khelawon, 2006 SCC 57, [2006] 2 S.C.R.

787. The estate argues that it has met the onus of establishing, on a balance of probabilities, the criteria of necessity and reliability such that the two hearsay statements should be admitted in evidence. It says that the evidence is necessary due to the death of Mr. Algard. In addition, the circumstances under which the statements were given negate any concerns regarding reliability. The fact that there has been no opportunity to cross-examine Mr. Algard is not a bar to admissibility because other indicia of reliability are present. It also argues that trial fairness is an important consideration; if the statements are inadmissible the prejudice to the estate is severe. Position of Ms. Manning [11] Ms. Manning argues that the estate cannot satisfy the onus to show either necessity or reliability. She says that the two statements the estate seeks to admit in evidence do not meet the necessity test because of the existence of an earlier statement made to the police on October 27, 1994, the day the coins were lost. [12] Ms. Manning also argues that the circumstances surrounding the taking of the statements do not satisfy the threshold reliability requirement. The statements were not made under oath, were not videotaped and Mr. Algard was not warned about the need to be truthful. He was never cross-examined on either of the statements. The 2005 Statement was taken more than ten

years after the loss of the coins and was prepared with the assistance of counsel. [13] Relying on Khelawon, Ms. Manning argues that the available extrinsic evidence can be examined when considering threshold reliability. The extrinsic evidence includes all of the statements given by Mr. Algard and the balance of the police file material. Ms. Manning says that the extrinsic evidence highlights fundamental inconsistencies between Mr. Algard's statements. For example, in his statement to the police on October 27, 1994 he said seven coins were stolen; in the 1994 Statement he said four coins were stolen; and in the 2005 Statement he said five coins were stolen. There are also inconsistencies between the statements about the circumstances of the day of the loss. Further, in its investigation, the police were unable to corroborate his evidence about what happened at the tailor shop. Analysis [14] The necessity test has been met in the circumstances of this case. As noted in Khelawon at para. 49, "[t]he criterion of necessity is founded on society's interest in getting at the truth." Necessity does not mean that the hearsay evidence is necessary for the party's case, but rather that there is no other way of obtaining the evidence. That is usually the case where the maker of the statement is dead by the time of trial. As noted by Henderson J. in Bolton v. Vancouver (City), 2002 BCSC

1061 at para. 13, "[t]he death of the declarant in and of itself satisfies the necessity principle." [15] Ms. Manning's argument that necessity has not been established because there was an earlier statement by Mr. Algard misses the point. The timing of the statements has relevance to the issue of threshold reliability, not the issue of necessity. It is the unavailablity of the witness to testify in court that makes the hearsay evidence necessary: R. v. F. (W.J.), [1999] 3 S.C.R. 569. [16] The real issue here is whether the estate has met the onus of proving threshold reliability for the two statements. For the reasons set out below, I have decided that the 1994 Statement is admissible, but that the 2005 Statement is not. [17] I have arrived at this conclusion after considering the circumstances surrounding the making of the statements, including an examination of the extrinsic evidence. I have also considered trial fairness. These considerations are highlighted in the convenient summary of the law governing the principled approach to the admissibility of hearsay evidence set out by Finch C.J.B.C. in R. v. Post, 2007 BCCA 123, 66 B.C.L.R. (4th) 148 at para.

47. He noted that the overarching principle is trial fairness and that threshold reliability can be established in two ways. First, the circumstances in which the statement was made may provide sufficient comfort as to its truth and accuracy. Second, the statement's truth or accuracy may be sufficiently tested because of the presence of adequate substitutes to an oath and cross-examination at trial. [18] In considering threshold reliability I have also considered other relevant factors, some of which are conveniently listed in Bolton at paras. 16-17: In this regard, the court is to consider such things as whether the declarant had any motive to lie, or bias; whether the statement was adduced through leading questions; whether the statement was preceded by the taking of an oath or, alternatively, by a warning of the importance of telling the truth; whether the declarant evidenced some awareness of the solemnity of the occasion and the importance of accuracy; whether the declarant evidenced any mental impairment due to alcohol, drugs, shock or fatigue; and whether the declarant had an opportunity to reflect and therefore to tailor her evidence. In my view, it is also relevant to consider under this head whether or not the statement was taken by an independent investigator. In a civil case, one should consider whether the statement was taken by a party, or an agent of a party, or

an agent of a potential party, in the litigation. (a) Trial Fairness [19] In Mohammed v. Canadian Northern Shield Insurance Co. (1994), 96 B.C.L.R. (2d) 373 (C.A.), Goldie J.A. noted at para. 37 that the test for admissibility of hearsay evidence is applied in civil cases in the same way that it is applied in criminal cases: These criteria [of necessity and reliability] appear to me to be as applicable to the proof of relevant facts in civil proceedings as to proof in a criminal trial. The difference in the burden of proof has no bearing on admissibility. [20] However, there is nothing in Khelawon that precludes the application of a relaxed standard in a particular case where it is required to achieve trial fairness or to avoid a miscarriage of justice: Post at para. 90. [21] Trial fairness was considered in Pierre v. Mount Currie Indian Band (1999), 61 B.C.L.R. (3d) 381 (S.C.), where Fraser J. weighed the potential prejudice to both parties. While that case dealt with the admissibility of affidavit evidence of a deceased affiant, the following comments at para. 49 are relevant to this case: The evidence of Mr. Joseph is vulnerable to attack because of the frailties I have already mentioned. It may well be that, at the conclusion of the trial of the issue, I will find myself unable to place any reliance on it. Ultimately, however, the prejudice to Mr. Pierre which would flow

from refusing to admit the affidavit is substantially more severe than the prejudice to the defendants which would flow from admitting it. Without the affidavit, Mr. Pierre has nothing from Mr. Joseph. With the affidavit, the defendants still may persuade me that it ought not to be given any weight. Even if there had been no opportunity for cross-examination, my conclusion would be the same. [22] Here, as in Pierre, if the statements are not admitted in evidence, the prejudice flowing to the estate from that refusal is substantially more severe than the prejudice to Ms. Manning from admitting it. Ms. Manning has argued that the statements should be given no weight if they are admitted in evidence. It may be that I will decide to give no weight to any statement that is admitted in evidence. However, without the statements the estate has no evidence from Mr. Algard, the only person who could give evidence about how the coins left his possession. [23] I should note that while I have considered trial fairness and the prejudice that would be suffered by the estate if the statements are not admitted in evidence, that consideration does not, by itself, make either of the statements admissible. The estate must still show that the statements have sufficient threshold reliability to justify admission in evidence. However, necessity and reliability are part of the same continuum and where

the declarant is dead, as in this case, there should be some elasticity given on the issue of reliability: Roussin v. Bouzenad, 2005 BCSC 1719 at para. 14. (b) Circumstances of the Statements [24] I have examined the factors set out in Post and Bolton for each of the statements that the estate seeks to admit in evidence. The 1994 Statement Oath or Warning [25] The 1994 Statement was given to the police about three weeks after Mr. Algard realized the coins were missing. He returned to the police station to provide the police with information about the coins. He was placed in an interview room and informed that the statement would be recorded and that a transcript would be created. He was not sworn or given a warning about the importance of telling the truth. [26] In spite of the absence of an oath or warning, the situation was such that he would have been aware of the solemnity of the occasion and the importance of telling the officer the truthful history about the missing coins. He knew that if he was going to recover the coins the police would have to be advised of the circumstances of the loss. He would have regarded the officer taking the statement as the individual to whom he should provide all information about his loss. The circumstances of the interview are such that it is very likely that Mr. Algard was attempting to report matters truthfully. Bias or Motive to Lie [27]

No legal action was pending, only a formal investigation of the circumstances surrounding the missing coins. Mr. Algard had no reason to be untruthful in his statement to the police officer and there is no issue of bias. Cross-Examination [28] Mr. Algard was never cross-examined. He passed away before Ms. Manning learned who had the coins. However, the police officer did question Mr. Algard extensively. The transcript is 32 pages in length. Recording of Statement [29] The transcript of the statement allows consideration of both Mr. Algard's mental status at the time of the interview and his approach to making the statement. Throughout the interview Mr. Algard showed a willingness to respond to all inquiries. [30] Ms. Manning argues that portions of the statement are "somewhat incoherent" or implausible. For example, he suggests that the briefcase was stolen from him when he was in the tailor's shop by a woman who could have been a "professional". There are also portions of the statement that could not be transcribed because of a lack of clarity in the recording. These concerns are relevant to ultimate reliability and can be considered when that is decided. An examination of the whole of the statement shows that Mr. Algard understood the importance of giving an accurate statement and that he attempted to do so. There is nothing in the transcript to suggest that he was mentally

impaired in any way. Opportunity to Reflect [31] Mr. Algard did have an opportunity to reflect on his evidence about what occurred on the day in question. He brought documentation to the police to provide details about the coins. He had an opportunity to reconstruct his recollection of the events. However, the passage of three weeks between the loss of the coins and the interview means that the statement was given reasonably contemporaneously with the events. Statement Taken by Police Officer [32] The statement was made to a police officer, not to an agent of a party. The officer had no interest in any proceeding anticipated at that time. The police officer was independent and would have no interest in having the statement reflect anything but Mr. Algard's recollection of the relevant events. Extrinsic Evidence [33] The evidence to consider is contained in the police file and includes the police notations of statements made by Mr. Algard, notations about other investigations done by the police, as well as the two statements that the estate seeks to admit in evidence. Ms. Manning points to a number of inconsistencies between the October 27, 1994 report to the police and the 1994 Statement. These include: a.) the number of missing coins was changed from seven to four; b.) Mr. Algard initially said that he went to the CIBC, the Royal Bank, a bake shop, and then the tailor shop. In

the November statement he said he went to Revenue Canada, the CIBC, a drug store, the Royal Bank, the tailor shop, the bake shop, then back to the tailor; and c.) he initially said he was at the tailor shop for five minutes but changed that to twenty minutes in the November statement. He was not asked by the police about most of these changes. The October police report contains a comment from the officer that Mr. Algard appeared to be confused. [34] Ms. Manning says that the contradictory extrinsic evidence combined with the absence of an oath, a videotape and cross-examination make it impossible for the estate to satisfy threshold reliability. I disagree. An examination of the extrinsic evidence actually provides substantial corroboration of the 1994 Statement regarding the loss of the coins. The description in his statements to the police about the events of October 27, 1994 remains generally consistent in all of the statements. While there are differences in the details, including the number of coins, the substance of what transpired on that date does not change from statement to statement. Mr. Algard said that he picked up the coins at a safety deposit box and went to various locations. After he attended the tailor, he realized the briefcase containing the coins was missing. He believed that it was stolen while he was in the tailor's shop. [35] In Khelawon, Charron J.

cautioned that the scope of the inquiry into extrinsic evidence must be tailored to the dangers presented by the evidence in the case and must be limited to determining the question of admissibility. Here, the question that must be determined is whether the coins were lost or stolen or whether Mr. Algard disposed of them in some other way. The danger presented by the 1994 Statement is that there was no opportunity for cross-examination at any time. However, as I have noted above, the circumstances surrounding the taking of the statement go a long way to overcoming that danger. An examination of the inconsistencies in the statements regarding the details of what occurred on October 27, 1994 is not required to be undertaken at this stage. That can be done when the ultimate reliability of the statement is considered. The corroboration in the extrinsic evidence regarding the general circumstances under which the coins went missing is sufficient to satisfy threshold reliability. The 2005 Statement Oath or Warning [36] The statement is four pages in length and was prepared with the assistance of Mr. Algard's counsel, Mr. Nathanson. It was signed by Mr. Algard, presumably at his lawyer's office. It was not sworn. Bias [37] Mr. Algard was advised that five coins had been recovered in the sting operation. The statement was prepared at the request of the police. While no litigation had

been commenced, the statement was prepared in the context of Mr. Algard making a claim to the coins. There was a potential for bias as he wanted the coins released to him. Recording of Statement [38] There is no video or audio recording of the statement. The language in the statement is very different from the language used by Mr. Algard in the 1994 Statement. It was likely not in Mr. Algard's own words. There is no way of assessing the procedure by which the statement was made. There is no way of determining the role played by Mr. Algard and his counsel in the preparation of the statement. Opportunity to Reflect [39] The statement was made more than ten years after the loss of the coins. That is a very long time for Mr. Algard to reflect upon, or forget, what happened on October 27, 1994. It is unclear what Mr. Algard relied upon to refresh his memory. [40] The circumstances under which this statement was made raise substantial concerns about its reliability. There are no substitutes for the usual means of testing the truth and accuracy of the statement. Not only was there no cross-examination, there was no questioning by an independent individual. The statement was prepared by or with the assistance of counsel. There is no recording, let alone a videotape of the statement. There is no opportunity to assess Mr. Algard's mental status at the time the statement was made. As a

result of the passage of ten years, Mr. Algard likely had a limited recollection of the events of the day in question. [41] In summary, I find that the estate has met the burden of establishing both necessity and reliability for the 1994 Statement. It will be admitted in evidence. The 2005 Statement is not admissible in evidence as the estate has failed to establish the threshold reliability of that statement. If One or Both of the Statements are Admissible, Does Ms. Manning or Mr. Algard's Estate Have better Title to the Coins? [42] In order to determine which party has better title to the coins, two factual issues must be determined. First, how did the coins leave Mr. Algard's possession? This involves a consideration of the ultimate reliability of the 1994 Statement and a determination as to what happened to Mr. Algard's briefcase on October 27, 1994. The second issue is whether Ms. Ovsenek was a bona fide purchaser for value. Once these are determined, the legal issue as to who has the better title to the coins can be decided. (a) What Happened to Mr. Algard's Briefcase on October 27, 1994? [43] In the 1994 Statement, Mr. Algard gave a clear explanation of the background information about the coins as well as a general description about the day in question. There is nothing in the 1994 Statement or the balance of the evidence to suggest that Mr. Algard's evidence in these

areas is not accurate. Accordingly, I find that Mr. Algard was the owner of four 17th century Swedish gold coins: two one ducat coins, one three ducat coin and one five ducat coin. He brought these coins with him when he immigrated to Canada. On October 27, 1994, he picked up the four coins from a safety deposit box at a downtown branch of the Canadian Imperial Bank of Commerce ("CIBC") because he was about to leave for Europe and wanted to take the coins with him. They were placed in a small briefcase. He then ran errands to a number of stores including a bank, a tailor and a drug store in West Vancouver. He realized that he had lost or misplaced the briefcase some time after his first visit to the tailor shop. He then reported the loss to the police. He subsequently reported the loss to an international association of coin collectors. [44] In light of these findings, I also conclude that Mr. Algard did not abandon the four coins. Abandonment is the voluntary relinquishment of a chattel by the owner with the intention of terminating ownership, possession and control: Canada (Attorney General) v. Brock (1991), 59 B.C.L.R. (2d) 261 (S.C.), appeal allowed (1993), 82 B.C.L.R. (2d) 1 (C.A.) on the issue of possession without discussion of abandonment. Further, I conclude that Mr. Algard had not previously sold or disposed of the four coins. [45] In arriving at these findings I have

considered Ms. Manning's argument that I should reject all of Mr. Algard's evidence. As noted above, she says that it is evident he was somewhat confused and that his evidence about the theft was improbable. The evidence from the beneficiaries of the estate is that Mr. Algard died without any coins and without records of the disposal of his coins. She says that this evidence should lead to a conclusion that he may have parted with the coins by sale or gift prior to October 1994. [46] Mr. Algard's theory that the briefcase and coins were stolen by a woman in the tailor shop is highly improbable and cannot be accepted. He said that he was sitting in the tailor shop for about 15 minutes with the briefcase clutched between his legs. He went to the desk on one occasion for no more than one or two minutes. He moved no more than two meters from the chair where he left the briefcase. There were two men and a woman talking when he arrived at the shop. At some point the woman left with clothing in her arms. He says she could have picked up and concealed the briefcase when she left. When he returned to the tailor shop ten minutes after leaving it, he said the two men were still present. The men and the tailors told Mr. Algard they never saw the briefcase. Mr. Algard offered a $5,000 reward for its return, but received no response. [47] The police investigated, but there was no evidence

put forward in support of Mr. Algard's theory. Based on his evidence the woman could have been easily identified and located, but there is no evidence, this was done. It would have been extremely difficult for the theft to have occurred as described by Mr. Algard. There was almost no opportunity and no motive for the stranger to commit the theft. It is evident that the police officer who interviewed Mr. Algard found that his theory lacked credibility. It is likely that the theory was constructed by Mr. Algard to explain a loss that he, too, described as "unbelievable". By that comment, Mr. Algard was indicating that he had no way of explaining how he lost the briefcase. [48] Mr. Algard's confusion and the improbability of the theft occurring as he described it are relevant to determining whether there was a theft in the tailor's shop. However, it is too large a leap to conclude from Mr. Algard's confusion about details and his improbable theory about the theft that he did not pick up the coins from his safety deposit box and did not lose or misplace them on the day in question. Similarly, the lack of good records and the fact that he had no coins at the date of his death do not call into question the substance of Mr. Algard's evidence as set out above. [49] The reasonable conclusion regarding the events of October 27, 1994 is that Mr. Algard lost or misplaced the briefcase in

the course of his busy day of running errands in preparation for his trip to Europe. The loss occurred sometime between his stop at the CIBC branch and his discovery that the case was missing. There is no way of determining from the evidence precisely when or how the loss occurred. (b) Was Ms. Ovsenek a Bona Fide Purchaser for Value of the Coins? [50] The estate argues that Ms. Ovsenek was not a bona fide purchaser for value of the coins without notice of the seller's defect in title. It says that the circumstances of the purchase in this case were such that Ms. Ovsenek should have made further inquiry about where the coins came from and how the seller acquired them. The circumstances relied upon include: 1. the coins were purchased for an amount that was nothing like their true value (in 1994 Mr. Algard told the police that the four coins had a value of approximately $58,000); 2. Ms. Ovsenek did not ask for documents of title or a receipt; 3. she paid cash; 4. the location of the sale was "hard by the Downtown Eastside"; and 5. an examination of the coins would have revealed that they were bright gold in colour and contained writing in a foreign language, and the date "1645" was easily visible on the largest one. [51] The estate also says that the evidence of Ms. Manning shows that Ms. Ovsenek did not honestly believe that they were buying junk at a garage sale and that should

also have put them on inquiry. While Ms. Manning thought in 2000 that the coins were junk rather than real antique coins, her mother said, "Maybe these are worth something". [52] Ms. Manning relies on the bona fide purchaser rule which is set out in the Sale of Goods Act, R.S.B.C. 1996, c. 410 (the "Act") at s. 28: When the seller of goods has a voidable title to them, but the seller's title has not been avoided at the time of the sale, the buyer acquires good title to the goods, if they are bought in good faith without notice of the seller's defect in title. [53] Good faith is defined in the Act at s. 2: A thing is done in good faith within the meaning of the Act when it is in fact done honestly, whether done negligently or not. [54] The onus of showing that Ms. Ovsenek acted in bad faith rests on the estate. Ms. Manning argues that her mother's actions show clearly that she was acting in good faith. She put the coins in her "painting room" with the rest of her garage sale trinkets and left them there for four years until she passed away. It was only when Ms. Manning examined them closely that she decided to find out if the coins were real. She thought that maybe her mother had discovered something at a garage sale, like the people who show their garage sale treasures on the television show Antiques Roadshow. At no time did she or her mother think that the vendor at the garage

sale did not have a right to sell the coins. [55] To establish a lack of good faith, the estate must prove that Ms. Ovsenek acted dishonestly and not merely negligently. Dishonesty can be shown where a purchaser was wilfully blind. A purchaser will be found to be wilfully blind where she possessed knowledge of such circumstances as might lead her to wish not to make any further inquiries lest she find out that there is something wrong: Regency Auto Investments Inc. (c.o.b. Regency Toyota Vancouver) v. Jane Doe, [1997] B.C.J. No. 2591 (S.C.) (QL) at paras. 15-16. [56] In the circumstances of this case, I find that when Ms. Ovsenek purchased the coins at the garage sale she was acting in good faith. There was nothing about the circumstances of the sale that should have put her on further inquiry. Neither she nor Ms. Manning had any knowledge of antique coins. Someone who had such knowledge would have recognized that the coins might be real antiques. However, the fact that the coins were in a box with a brooch and were being sold for five dollars would have lead Ms. Ovsenek to believe that the coins were toys or reproductions. The sale did not take place "hard by the Downtown Eastside", but in a residential area in East Vancouver somewhat removed from that location. The lack of a receipt or documents of title for a five dollar item at a garage sale is not a fact that would put

anyone on notice. Similarly, payment in cash at a garage sale is not something that would raise a suspicion. [57] The actions of Ms. Ovsenek after the purchase indicate clearly that she did not believe that the coins were antique or that they had value beyond what she paid for them. She put them aside with her costume jewellery and left them there until her death. [58] I have no hesitation in concluding that Ms. Ovsenek purchased the coins in good faith without any notice of any defect in title. Ms. Manning, having received the coins as a gift from her father, stands in the same position as her mother. (c) Does Ms. Manning or Mr. Algard's Estate Have Better Title to the Coins? Position of the Parties [59] The estate relies upon the principle reflected in the Latin maxim, nemo dat quod non habet, that no one can transfer better title to goods than he or she possesses. The rule is reflected in s. 26(1) of the Act: Subject to this Act, if goods are sold by a person who is not the owner of them, and who does not sell them under the authority or with the consent of the owner, the buyer acquires no better title to the goods than the seller had, unless the owner's conduct precludes the owner from denying the seller's authority to sell. [60] The estate argues that where goods are lost or misplaced, the owner retains legal title as long as the goods were not abandoned. As I have already

decided, the four coins were not abandoned by Mr. Algard. Having retained legal title, the estate says that it is irrelevant that Ms. Ovsenek bought the coins in good faith. The seller at the garage sale did not have the authority or consent of Mr. Algard to sell the coins and so Ms. Ovsenek can acquire no better title than the seller had. There is no evidence as to how the seller came into possession of the coins, but it could not have been from anyone who had the authority or consent of Mr. Algard to sell them. Further, nothing about Mr. Algard's conduct precludes him from denying that the seller at the garage sale had authority to sell the coins. [61] Ms. Manning relies upon the fact that Ms. Ovsenek was a bona fide purchaser for value and says that s. 28 of the Act is the provision that governs this case. She argues that the seller of the coins, as a finder or someone who received the coins in succession from a finder, had a voidable title that had not been avoided at the time of the purchase by Ms. Ovsenek. In these circumstances, she acquired good title because she purchased the coins in good faith without notice of any defect in title. [62] Ms. Manning also argues that it would be anomalous for an owner of goods who loses them to be in a better position than an owner who has the goods stolen. She says that s. 29(1) of the Act would have applied had the goods been stolen

and that would have meant that Ms. Ovsenek acquired title to the coins because no one was ever prosecuted to conviction for theft of the coins. Section 29(1) provides as follows: If goods have been stolen and the offender is prosecuted to conviction, the property in the goods stolen revests in the person who was the owner of the goods, or that person's personal representative, despite any intermediate dealing with them, whether by sale in market overt or otherwise. [63] The estate says that it would still succeed in this case if the coins had been stolen even though no one was prosecuted for the theft. It says that s. 29(1) was enacted solely to provide a means for an owner to retain title in the face of the market overt exception to the nemo dat principle that is set out in s. 27(1) of the Act: If goods are sold in market overt, according to the usage of the market, the buyer acquires a good title to the goods, as long as they are bought in good faith and without notice of any defect or want of title on the part of the seller. [64] Both parties agree the market overt exception is a legal anachronism. B.C. is the only province in Canada that retains the section in its Sale of Goods Act. Section 27(1) has never been successfully invoked in B.C. and its application has been doubted: Westcoast Leasing Ltd. v. Westcoast Communications Ltd. (1980), 22 B.C.L.R. 285

(S.C.). Analysis [65] This case raises squarely the conflict between two principles, protection of property and protection of commercial transactions, that was described by Lord Denning in Bishopgate Motor Finance Corp., Ltd. v. Transport Brakes, Ltd., [1949] 1 K.B. 322 at pp. 336-37, [1949] 1 All E.R. 37 at p. 46: In the development of our law, two principles have striven for mastery. The first is for the protection of property: no one can give a better title than he himself possesses. The second is the protection of commercial transactions: the person who takes in good faith and for value without notice should get a good title. The first principle has held sway for a long time, but it has been modified by the common law itself and by statute so as to meet the needs of our own times. [66] There are no B.C. cases dealing with the present fact situation. However, in St. John v. Horvat (1994), 89 B.C.L.R. (2d) 61 the Court of Appeal considered a number of the provisions of the Act that modify the nemo dat rule. The facts in St. John are distinguishable from the present case. The plaintiff owner delivered her van to a company, E&E, to be sold on consignment. Her instructions were to obtain a firm offer and revert to her. She gave E&E no authority to sell the van but, contrary to her instructions, it was sold to Horvat, an innocent purchaser. The plaintiff's claim was dismissed on

appeal. The decision turned on application of s. 58(1) of the Act (now s. 59(1)) which applies to sales of goods by a mercantile agent who is in possession of the goods. [67] While the St. John decision is not directly relevant to this case, Cumming J.A. set out at para. 43 the proper approach to take when considering the kind of issue raised here: The object of the nemo dat rule is the protection of the owner's right to his goods. However, this objective must be balanced against the competing objectives of promoting commerce and protecting consumers and other innocent purchasers, which are embodied in ss. 28, 30 and 58 of the Act. Section 28 (sale under voidable title), s. 30 (seller or buyer in possession after sale) and s. 58 (disposition by mercantile agent) are exceptions to s. 26 and represent encroachments on the traditional nemo dat rule. [68] As noted in Carolina Industrial Equipment Sales Ltd. v. Browne, 2002 BCSC 276 at para. 10, the principle that emerges from St. John is that s. 26 (the nemo dat rule) will apply unless one of the statutory exceptions can be found to be engaged. [69] Here, if the nemo dat rule does not apply, it must be because s. 28 of the Act has the effect of modifying the rule in the circumstances of this case. This depends on whether the seller of the coins to Ms. Ovsenek had "voidable title". [70] Here, the person who sold the coins to Ms.

Ovsenek must be considered to be a finder of lost goods. This is because there is no evidence to establish what happened to the goods between October 27, 1994, when Mr. Algard lost or misplaced the coins, and the date of the purchase by Ms. Ovsenek. The seller must therefore be in the same position as the original finder. The question that will determine this case is whether the seller, as finder, had voidable title to the coins. [71] The rights of a finder to a chattel taken into his or her possession are described in Halsbury's Laws of England, 4th ed. Reissue (London: Butterworths, 1994), vol. 35 at para. 1220 as something less than legal title: The finder of a chattel acquires no rights over it unless it has been abandoned or lost and he takes it into his care and control. Even if such a finder so takes it, he acquires very limited rights over it if he does so with dishonest intent or in the course of trespassing. Subject to the above, the finder of a chattel, whilst not acquiring any absolute property or ownership in the chattel, acquires a right to keep it against all but the true owner or those in a position to claim through the true owner [72] This same view of the rights of a finder of chattels was expressed by Lord Macnaghten in Farquarson Bros. & Co. v. King & Co., [1902] A.C. 325 (H.L.) at p. 335: Nothing is better settled than this, that if a person buys a chattel

and it turns out that the chattel was found by the person who professed to sell it, the true owner can recover his property, unless there has been a sale in market overt. The right of the true owner is not prejudiced or affected by his carelessness in losing the chattel, however gross it may have been. If I lose a valuable dog and find it afterwards in the possession of a gentleman who bought it from somebody whom he believed to be the owner, it is no answer to me to say that he never would have been cheated into buying the dog if I had chained it up or put a collar on it or kept it under proper control. If a person leaves a watch or a ring on a seat in the park or on a table at a café and it ultimately gets into the hands of a bonâ fide purchaser, it is no answer to the true owner to say that it was his carelessness and nothing else that enabled the finder to pass it off as his own. [73] This principle is still good law in B.C. Voidable title describes the situation where the title of a seller of goods may be voided at the option of the true owner. This may occur on grounds of fraud at common law or in equity, misrepresentation, non-disclosure, duress or undue influence: Benjamin's Sale of Goods, 7th ed. (London: Sweet & Maxwell, 2006) at p. 361; Terry v. Vancouver Motors U-Drive, [1942] 1 D.L.R. 407, [1942] 1 W.W.R. 503 (B.C.C.A.). A finder does not have voidable title.

Rather, a finder acquires a right to retain a chattel she has found. The right can be exercised against all but the true owner or those claiming through the true owner: Trachuk v. Olinek (1995), 177 A.R. 225, [1996] 4 W.W.R. 137 (Q.B.) at para. 31. [74] Some time was spent in argument in this case on s. 29(1) of the Act. As I have decided that the coins were lost rather than stolen, I do not have to rule on the issues raised regarding that section. However, I doubt that the section would apply to prevent an owner of stolen property from recovering that property even where there had been a good faith purchase for value by someone who had no notice of the defect in title. The section was intended to allow an owner to recover stolen goods even where they have been sold in market overt. In other words, it created an exception to the market overt exception. Its intent was to reinforce the nemo dat principle, not to create a much greater exception to that principle. I note as well that B.C. remains the only jurisdiction in Canada where the market overt section of the English Sale of Goods Act remains. It was repealed in 1995 in the United Kingdom. [75] In summary, the seller at the garage sale did not have voidable title to the coins as a result of which, s. 28 of the Act does not apply. The estate has better title to the four coins than Ms. Manning. The Fifth Coin [76] The police

seized five coins from Ms. Manning's agent. The fifth coin was also a Swedish antique coin. It is described as a Gustav II Aldorf 1 Dukat 1632 coin. Given my ruling on the admissibility of the hearsay statements, there is no admissible evidence to prove that Mr. Algard owned and then lost or misplaced that coin with the other four coins. The question that arises is whether it is possible to infer that the fifth coin must have been owned by Mr. Algard and must have been lost at the same time. [77] The difficulty in making that inference is that it requires an inference about the ownership of the coins. I can infer that the coin was lost with the other four coins. However, I cannot infer on the basis of the admissible evidence that it was owned by Mr. Algard. There is simply nothing in the record that permits me to do that. Ms. Ovsenek purchased the coin in good faith and without notice of any defect in title. The estate has not been able to prove that Mr. Algard had title to the coin. Accordingly, the estate's claim to the fifth coin fails. [78] While there has been divided success, the estate has succeeded with its claim to four of the five coins. In these circumstances, I order that Ms. Manning pay 75% of the estate's costs at Scale B. "Butler J."