The Owners, Strata Plan K855 v. Big White Mountain Mart Ltd.

2014 BCCA 397 The Owners, Strata Plan K855 v. Big White Mountain Mart Ltd.

COURT OF APPEAL FOR BRITISH COLUMBIA Citation: The Owners, Strata Plan K855 v. Big White Mountain Mart Ltd., 2014 BCCA 397 Date: 20141016 Docket: CA041831 Between: The Owners, Strata Plan K855 Appellant (Plaintiff) And Big White Mountain Mart Ltd. and Bank of Montreal Respondents (Defendants) And Global Surface Solutions Inc. Respondent (Third Party) Before: The Honourable Chief Justice Bauman The Honourable Mr. Justice Harris The Honourable Mr. Justice Willcock On appeal from: An order of the Supreme Court of British Columbia, dated April 30, 2014 (The Owners, Strata Plan K855 v. Big White Mountain Mart Ltd., Kelowna Registry S70713). Counsel for the Appellant: R. Burke Counsel for the Respondents: J.M. Hogg, Q.C. Place and Date of Hearing: Vancouver, British Columbia October 2, 2014 Place and Date of Judgment: Vancouver, British Columbia October 16, 2014 Written Reasons by: The Honourable Mr. Justice Harris Concurred in by: The Honourable Chief Justice Bauman The Honourable Mr. Justice Willcock Summary: This appeal involved orders made after a trial dealing in part with amendments to pleadings, adding parties for a continuation of the trial, and a stay of a term of the trial order. The appellant alleged that the trial judge was functus officio with respect to the orders and, in all the circumstances, comments by the judge raised a reasonable apprehension of bias. Appeal

dismissed. The issues of amendments and adding parties had become academic and need not be considered. The judge did not err in staying the term of an order. Nothing in the circumstances gave rise to a reasonable apprehension of bias. Reasons for Judgment of the Honourable Mr. Justice Harris: [1] This appeal arises out of a series of applications brought in chambers as a consequence of the failure to carry out the terms of an order made after trial in 2008. The trial involved disputes arising between a strata corporation ("K855"), the plaintiff and defendant by counterclaim, but the appellant in this Court, and the defendant and plaintiff by counterclaim ("Mart"), the respondent here. [2] It is unnecessary to delve into the details of the underlying dispute, save to note the following. Mart operated a business in the building owned by K855, the strata corporation. It wanted to expand its business into existing common property. Doing so involved renovating that common property. The parties reached an agreement. Initially, the parties agreed the new space would become limited common property for the exclusive use of Mart. This plan was approved by the strata owners. [3] This agreement was amended. In place of limited common property, Mart was to have conveyed to it new strata lots. This did not occur. Mart's claim for specific performance was a central issue at the 2008 trial,

but it was one among many. [4] The agreement also contemplated that Mart would undertake renovations in the building to replace the facilities displaced by its expansion into the common property. Those renovations were to be completed by a certain date, but were not. [5] K855's action against Mart sounded in breach of contract for failure to complete the renovations and for shoddy workmanship. It also claimed occupational rent because Mart occupied the expanded space. [6] Most of the claims were resolved in Owners, Strata Plan K855 v. Big White Mountain Mart Ltd., 2008 BCSC 1587 (the "2008 Reasons"). The trial involved multiple issues but, in essence, the trial judge: a) ordered and declared that Mart is entitled to specific performance and, to the extent necessary, that K855 will cooperate and participate in all acts necessary to achieve subdivision and consolidation. The order also contained a term granting leave for counsel to speak to any supplementary orders or directions to give effect to the order; b) ordered K855 to pay to Mart a sum representing the value of work performed by Mart at K855's request and damages equal to the increase in Mart's financing costs as a result of its inability to offer discrete lots, rather than limited common property, as security; c) ordered Mart to pay occupational rent to K855; d) adjourned K855's claim for shoddy work so that Mart would

have time to remedy the deficiencies; and e) seized himself of the issue that had been adjourned (the "2008 Order"). [7] By mid-2013, the order of specific performance had not been perfected and Mart had continued to pay higher interest on its financing as a result. [8] In July 2013, Mart applied for an order holding K855 in contempt of court for failing to convey the lots and staying execution of the term in the 2008 Order requiring Mart to pay rent to K855. In November 2013, Mart applied for liberty to continue its counterclaim. In April 2014, Mart applied for leave to amend its counterclaim. The chambers judge (who had been the trial judge) heard all three applications. His orders (the "2014 Orders") give rise to this appeal. [9] The chambers judge: 1. dismissed the contempt application (that order is not in issue in this appeal); 2. ordered that if the defendant wished to add as parties defendants by counterclaim who have not consented or whose consents were unreasonably delayed, the necessary order to extend time for filing the counterclaim or add parties will go; 3. granted leave to the defendant to amend its counterclaim to claim further damages; 4. granted a stay of execution of his order requiring Mart to pay occupational rent; 5. adjourned generally Mart's application for liberty to prove and update its claim for additional damages incurred by increased costs of

financing; and 6. seized himself of all further matters relating to this action. [10] K855 contends on this appeal that the orders identified as 2‑4 and 6 should be set aside because the trial judge lacked the jurisdiction to make them because he was functus officio after the entry of the 2008 order. Moreover, they allege that the orders rest on a misapprehension of K855's obligations and responsibilities as a strata corporation. Finally, it contends that the record discloses a reasonable apprehension of bias on the part of the trial judge and that his order seizing himself of all further applications or matters in the action should be set aside. [11] Mart contends that regardless of the merits of the appeal of the order extending time to add defendants and amend the counterclaim, the appeal of those two terms of the order is now academic. First, there will be no application to add defendants to the counterclaim because each owner who had not provided the necessary consent to facilitate conveying the new strata lots to Mart has now provided their consent. The failure of each owner to provide consent to creating the new strata lots had been the principal impediment to effecting the order for specific performance. Mart says that the order for specific performance can be implemented and it will be. Counsel for Mart stated unequivocally that no additional parties will be added to

the litigation when it resumes. [12] This Court does not engage in academic exercises. I take the statement by counsel to be a representation on which this Court can rely and which renders the issue on appeal moot. Accordingly, I would not entertain this ground of appeal further. [13] Secondly, Mart says that it will not proceed to the continuation of the trial on the amendments to its counterclaim that the order permitted. Although an amended counterclaim in the terms authorized by the order has been filed, it will be abandoned. Again, I think this Court can rely on that representation. [14] Much the same, accordingly, may be said about this second order under appeal. The issue is now academic and need not be considered further. [15] I would add, however, without deciding the matter that I see little, if any, merit in the appeal of these orders. One of the orders extended time to add parties and the other granted leave to amend a pleading. These are essentially procedural orders which do not finally determine any substantive rights. This Court rarely interferes with such orders most particularly when they are made in the course of a proceeding that is not yet complete and before the issues they would raise have been adjudicated. [16] I observe, moreover, that in my view it is premature for this Court to consider what legal issues may properly be dealt with on the continuation

of the trial. The application to continue the existing counterclaim to prove additional damages flowing from the failure to perfect the order for specific performance was adjourned generally. If K855 has an argument that the only issue left open for the continuation of the trial is the issue of deficiencies and not additional damages, then that position should be taken before the trial judge. The existing orders do not foreclose the argument. It is for the trial judge, in the first instance, to determine whether it is open to him to award damages to Mart as a result of the time that has elapsed since he ordered specific performance and the perfection of the order. Only once this has occurred, and a proper record been created, is this Court in a position properly to consider the legal issues. Indeed, at this stage, not only is it impossible to say what order would ultimately be made at the completion of the trial, there is no current order determining the rights of the parties for us to assess. [17] Accordingly, I would not accede to these grounds of appeal. [18] I turn now to consider whether the chambers judge erred in staying execution of the judgment pending the trial of the remaining issues in the action. [19] The chambers judge said this at paras. 40‑46: There is an application with respect to ongoing execution. The plaintiff wants to be able to realize its judgment,

because that is what it is, as set out in the order, requiring the defendant to pay occupational rent. I am alive to the fact that occupational rent has not been paid as I have ordered. I am concerned that that has put the defendant in breach of a term of the order that I made in November 2008. I am concerned that that ongoing breach or apparent breach may or may not be as a result of agreement between the parties sometime ago. I gather there is a dispute about that. Whether or not there is such an agreement, I am not entirely convinced that the parties can agree to a breach of an order of the court. So there is a problem, in my view, with respect to the defendant's continued non‑compliance with an order that it pay occupational rent. That problem may cause significant difficulties to the defendant if the defendant calls upon the court to exercise its equitable jurisdiction in favour of the defendant, because the failure to pay the occupational rent may bring that defendant before this court without the clean hands that are required when a party seeks equity. I am not deciding that at this stage; I am simply noting that I am aware of it. I had some concern whether the application for contempt that I have already dismissed ought to be influenced by the apparent breach by the defendant of the order to pay occupational rent. It did not affect that decision, I will say, because I

did not need to deal with that. But insofar as the plaintiff wishes to pursue its claims for occupational rent, and largely because, in my view, the defendant with a frustrated order for specific performance still has, as I understand the House of Lords' decision in Johnson v. Agnew, a live contract and an ability to re‑elect or to elect to take damages instead of specific performance, it would be unjust to permit the plaintiffs to execute on their judgment against the defendant when that defendant may have a very much larger claim in damages against the plaintiff, should the defendant elect to pursue that damages claim. I have not heard what the plaintiff intends to prove or to attempt to prove by way of damages for shoddy work, which was what was left outstanding in November of 2008, but I rather suspect that whatever that amount is and whatever is added to it for occupational rent or other damages might not exceed and in fact might be significantly less than those damages the defendant might claim if it elects to treat the contract as at an end and pursue the damages. As I say, all I recall from 2008 is that the defendant alleged it had spent somewhere in the range of $1.2 million making improvements to the plaintiff's building. If the defendant elects to treat the contract at an end and seek damages, those damages will start at $1.2 million, and I do not know what will be

left after setoffs for occupational rent or other cross‑claims by the plaintiff. So there will be no order for or permitting execution as sought by the plaintiff, and in fact, on the expectation that this trial will be concluded one way or the other this summer, there will be a stay of execution until the trial this summer. [20] The appellant contends that the chambers judge had no jurisdiction to make this order because he was functus officio. I do not think that point has merit. The judge was refusing to make an order permitting execution of his 2008 order because of events that had occurred since the order was pronounced. In doing so, he was exercising a discretion conferred on him by Rule 13‑2(31)(a) which provides "The court may, at or after the time of making an order, stay the execution of the order until such time as it thinks fit". Clearly, he had the jurisdiction to make the order and was not functus officio. [21] The appellant has not identified any error in principle, in the circumstances that existed at the time the order was made, that would warrant interfering with the order. It appears that the ground the judge relied on to stay the effect of his order, namely, that Mart might re‑elect damages in lieu of specific performance because the order of specific performance had been frustrated for five or more years, has now fallen away. Moreover, the stay was in place

until a trial contemplated to occur in July or August of this year. That trial has been adjourned generally. In these circumstances, it is open to the parties to apply to the Supreme Court to vary the stay in the light of the changes in circumstances. Any such application should be dealt with in the court that made the original order. In the result, I would not interfere with the stay order. [22] I turn now to the allegation that the chambers judge's handling of these matters, and comments he has made, give rise to a reasonable apprehension of bias. K855 submits the judge has made several comments that give rise to reasonable apprehension of bias: a) On 2 November 2012, the judge indicated he believed K855 to be in breach of the 2008 Order because it still had not conveyed the lots to Mart. b) On 20 February 2014, during Mart's submissions about its application for an order holding K855 in contempt, the judge referred in passing to Mart's counterclaim for damages for the increased interest. Mart had been awarded damages for the increased interest in the 2008 Order and, in response to a question by counsel for Mart, the judge indicated that, because the litigation was still ongoing, that counterclaim had not elapsed and Mart could seek additional damages for the period from 2008 to present. c) On 20 April 2014, the judge referred the parties to Johnson v. Agnew, [1980] A.C. 367

(H.L.), and stated that because K855 was still refusing to convey the lots he was "starting to wonder whether this is a wise use of judicial resources, counsel's time and the parties' resources". He suggested to counsel that he ask Mart if it might like to pursue damages instead of specific performance, which Agnew would permit it to do. d) On 30 April 2014, in declining to award costs to K855 in respect of Mart's rejected application for a contempt order, the judge stated K855 had not acted reasonably in attempting to obtain the consents necessary to convey the lots to Mart. [23] Also on 30 April 2014, the judge said that because Mart alleges it spent $1.2 million improving K855's building, if Mart ends up electing damages in lieu of specific performance, "those damages will start at $1.2 million, and I do not know what will be left after setoffs for occupational rent or other cross claims by the plaintiff". [24] K855 argues that these comments indicate that the judge had reached a firm view that K855 was liable for the failure to specifically perform the contract and had pre‑judged the issue of damages. A reasonable and well‑informed observer would conclude that the outcome of the continuation of the trial was a forgone conclusion or, at a minimum, that there was a reasonable apprehension that the trial judge would not approach the issues for trial with an open and impartial

mind. [25] The test for finding the existence of a reasonable apprehension of bias is well‑settled: the apprehension of bias must be a reasonable one, held by reasonable and right-minded persons, applying themselves to the question and obtaining thereon the required information [T]hat test is "what would an informed person, viewing the matter realistically and practically - and having thought the matter through - conclude. Would he think that it is more likely than not that [the decision-maker], whether consciously or unconsciously, would not decide fairly." R. v. S. (R.D.), [1997] 3 S.C.R. 484, para. 31 [26] The Court of Appeal of Yukon has recently summarized the principles engaged in assessing claims of judicial bias. In Commission scolaire francophone du Yukon no. 23 v. Yukon (Procureure générale), 2014 YKCA 4, the Court said: [77] In Taylor Ventures Ltd. (Trustee of) v. Taylor, 2005 BCCA 350, the court, drawing on what was said in Wewaykum Indian Band v. Canada, 2003 SCC 45, provided this summary of the principles applicable to claims of judicial bias at para. 7: (i) a judge's impartiality is presumed; (ii) a party arguing for disqualification must establish that the circumstances justify a finding that the judge must be disqualified; (iii) the criterion of disqualification is the reasonable apprehension of bias; (iv) the question is what would an informed, reasonable and

right-minded person, viewing the matter realistically and practically, and having thought the matter through, conclude; (v) the test for disqualification is not satisfied unless it is proved that the informed, reasonable and right-minded person would think that it is more likely than not that the judge, whether consciously or unconsciously, would not decide fairly; (vi) the test requires demonstration of serious grounds on which to base the apprehension; (vii) each case must be examined contextually and the inquiry is fact-specific. [Emphasis in original.] [27] In my view, the appellant cannot meet this test. [28] It is important to remember that much of what the judge did say occurred in the context of an order that he had made not being perfected over many years. He was also faced with an application to find K855 in contempt of his order. In those circumstances, the judge was entitled, in my view, to comment critically on K855's conduct. Certain of his comments were relevant to findings and analysis arising from that application. Notwithstanding those comments he did not find K855 in contempt, thereby demonstrating, if such were necessary, his ability to deal fairly, impartially and properly with the issues before him. In the context of a contempt application, he expressed views, as he was entitled to do, about K855's conduct. He was entitled to be critical of K855, but I do

not think those comments imply anything about how he would decide other issues. [29] It must also be stressed that the situation facing the judge was difficult. The perfection of his order had been frustrated. The integrity and authority of the court had been called into question by individuals who had refused to provide consents necessary to perfect the order. The judge was entitled, in my view, to address these concerns. [30] In my view, in any event, the appellant overstates what the chambers judge said and attributes views that the record does not support. For example, the judge did not assume it was K855's responsibility to get the consents. The 2008 Reasons state the following (at para. 123): While the contract places no express obligation on K855 to do anything to achieve the subdivision of common property and creation of the new strata lots, I have found an implied term that K855 would act reasonably to see that the subdivision plan creating the new strata lots was registered. [31] With respect, I do not think a well-informed reasonable observer would view the judge's comments as indicating that he had pre‑judged the issues remaining in the litigation. I think his comments should be regarded as, at most, tentative expressions of view. His comment about the quantum of damages owed to Mart if it were to re‑elect damages in lieu of specific performance reflects his

knowledge of the facts from the 2008 trial which include a finding of liability in favour of Mart and an appreciation of what the evidence at that time established about damages in the event that the election of specific performance had not been made at that time. [32] I do find the judge's suggestion that Mart should give serious consideration to re‑electing damages in lieu of specific performance on the basis of Johnson v. Agnew somewhat more troubling. It is obviously not generally appropriate for judges to suggest litigation strategy to the parties. But these were difficult circumstances. An implementation of an order had been frustrated. There was no resolution of the problem clearly available. The integrity of the court process had been called into question. The judge's suggestion may well be seen as one intended to find an alternative means by which the essential finding of liability could be respected and the integrity of the court process be preserved. [33] A judge's impartiality is presumed. Nothing in the record before us persuades me that presumption has been eroded. Nothing suggests that the judge would not decide the remaining issues impartially on the basis of the evidence and the law. I do not think that a right-minded, informed person, viewing the matter realistically and practically, could think it more likely than not the judge, whether consciously or

unconsciously, would not decide fairly. [34] The order sought by the appellant would set aside the order that the chambers judge is seized of all matters in the action. Orders or directions by which a judge seizes him or herself are inherently matters of trial management to which this Court owes high deference. While a finding of a reasonable apprehension of bias supports disqualifying a judge from hearing the matter, I am not persuaded that the appellant has discharged the burden placed on it. In the result, I would not accede to this ground of appeal. [35] I would dismiss the appeal. "The Honourable Mr. Justice Harris" I agree: "The Honourable Chief Justice Bauman" I agree: "The Honourable Mr. Justice Willcock"