COURT OF APPEAL FOR BRITISH COLUMBIA

Citation:

Este v. Esteghamat-Ardakani,

 

2018 BCCA 290

Date: 20180716

Docket: CA44482

Between:

Rosa Donna Este

Appellant

(Plaintiff)

And

Mina Esteghamat-Ardakani also known as Mina Estegahamat-Ardakani,

Francis Amir Este and Craig Blackburn

Respondents

(Defendants)

And

Mehran Taherkhani

Respondent

Before:

The Honourable Mr. Justice Frankel

The Honourable Madam Justice MacKenzie

The Honourable Madam Justice Fisher

On appeal from:  An order of the Supreme Court of British Columbia, dated
May 29, 2017 (Este v. Esteghamat-Ardakani, 2017 BCSC 878,
Vancouver Docket S151066).

Counsel for the Appellant:

E.E. Vanderburgh

K.A. McGoldrick

Counsel for the Respondents,

M. Esteghamat-Ardakani and F.A. Este:

J.K. McEwan, Q.C.

E.A. Kirkpatrick

Counsel for the Respondent,

C. Blackburn:

D.W. Burnett, Q.C.

Counsel for the Respondent,

M. Taherkhani

J.M. Richter

A.M. James

Place and Date of Hearing:

Vancouver, British Columbia

March 6 and 7, 2018

Place and Date of Judgment:

Vancouver, British Columbia

July 16, 2018

 

Written Reasons by:

The Honourable Mr. Justice Frankel

Concurred in by:

The Honourable Madam Justice MacKenzie

The Honourable Madam Justice Fisher


 

Summary:

D. appeals from an order dismissing an action in which she asserted beneficial ownership of assets held by her mother and brother.  Her action was dismissed on the basis it constituted an abuse of process, as D. had taken the position in earlier divorce proceedings, including in her Form F8 Financial Statement and in her discovery testimony, that she had no beneficial interest in those assets.  On appeal, D. contends the trial judge erred by concluding the inconsistent pleadings amounted to an abuse of process without appreciating the significance of the unjust enrichment her mother and brother would receive as a result of such a finding, or D.’s evidence that her mother and brother had pressured her into the fraudulent scheme.  Held:  Appeal dismissed.  A Form F8 is tantamount to a pleading.  The judge made no error in concluding the administration of justice would be better served by dismissing D.’s action, despite the mother and brother’s alleged role in the steps taken to deceive D.’s former spouse.

Reasons for Judgment of the Honourable Mr. Justice Frankel:

Introduction

[1]             Is it an abuse of process for a litigant to disavow beneficial ownership of assets in one action and then claim beneficial ownership of those assets in a subsequent action?  That question lies at the heart of this appeal.

[2]             Without disrespect for anyone, for ease of reference and clarity I will refer to some of the parties by their given names, as the parties have done in their factums and in oral argument.

[3]             In a divorce action commenced against Rosa Donna Este by Mehran Taherkhani, Donna asserted she held millions of dollars of real property registered in her name in trust for her mother, Mina Esteghamat-Ardakani.  That action was settled by a consent order under which Mr. Taherkhani’s claims were resolved by Donna paying him $70,000.  That amount was determined in accordance with their marriage agreement.

[4]             Less than a year later, Donna commenced an action against her brother, Francis Amir Este, Mina, and Mina’s common-law partner, Craig Blackburn.  In that action, Donna asserted she is the beneficial owner of the real property she previously asserted she held in trust for Mina.  She also asserted she is the beneficial owner of several million dollars held by Mina.  Donna’s claims rest, in part, on allegations of breach of trust and breach of fiduciary duty.

[5]             In her notice of civil claim (as amended), Donna pleaded she was counseled, encouraged, and urged by Mina and Francis to deceive Mr. Taherkhani in the divorce action.  That deception included Donna signing false documents and giving false evidence at an examination for discovery.

[6]             Mina, Francis, and Mr. Blackburn denied all of the allegations made against them.  In addition, Mina and Francis brought a counterclaim against Donna.

[7]             The action came on for trial before Justice Funt.  At the conclusion of Donna’s case, the trial judge dismissed Donna’s action on the basis it was an abuse of process.  Donna now appeals from that order and seeks a new trial.  Mr. Taherkhani has been added as a respondent on the appeal.  He supports Donna’s request for a new trial.

[8]             For the reasons that follow, I would dismiss this appeal.

Factual Background

The Divorce Action

[9]             Donna and Mr. Taherkhani married in July 2004.  In 2006, they entered into a marriage agreement, which contains a schedule of Donna’s assets.

[10]         On May 22, 2013, Mr. Taherkhani filed a notice of family claim seeking a divorce, spousal support, and an equal division of family property and family debts.  He sought to set aside the marriage agreement and claimed an interest in three properties in West Vancouver: 2668 Bellevue Avenue; 3153 Travers Avenue; and 2369 Constantine Place.

[11]         Mr. Taherkhani also claimed an interest in approximately $3 million in a bank account in Donna’s name.  That same day, Donna transferred $3.4 million from her account at one bank to her account at another bank.  Mina was later added as a joint holder on the latter account and eventually became its sole holder.

[12]         On July 3, 2013, Donna filed a response and a counterclaim to the notice of family claim.  She denied all of Mr. Taherkhani’s claims on the basis of their marriage agreement.  In the counterclaim she sought a declaration that all property in her name or in which she had an interest was excluded property pursuant to s. 85 of the Family Law Act, S.B.C. 2011, c. 25, i.e., property over which Mr. Taherkhani did not have a claim.  In the further alternative, she sought an unequal division of any property in her name, or in which she had an interest, that was found to be family property.  In the counterclaim, Donna claimed an interest in the three properties Mr. Taherkhani had listed.

[13]         By virtue of s. 5(1) of the Family Law Act:

A party to a family law dispute must provide to the other party full and true information for the purposes of resolving a family law dispute.

To that end, Rule 5-1 of the Supreme Court Family Rules directs each party in most family law disputes to file a Form F8 Financial Statement.  A party completing a Form F8 is required to swear (or affirm):

1.      The information set out in this financial statement is true and complete to the best of my knowledge.

[14]         Part 3 of Form F8 is entitled “Property Assets”.  By virtue of Rules 5-1(9) and (10), if spousal support or division of assets is in issue, then the parties are required to complete Part 3.

[15]         With respect to real estate, the instructions in Part 3 direct deponents, among other things, to:

Provide details, including address or legal description and nature of interest, of any interest you have in land, including leasehold interests and mortgages, whether or not you are registered as owner.

[16]         Mr. Taherkhani listed the following real estate in Part 3 of his Form F8:

Details

Date Acquired

Value

2668 Bellevue Avenue, W. Vancouver

 

$12,000,000*

3153 Travers Avenue, W. Vancouver

 

$3,500,000*

2369 Constantine Place, W. Vancouver

 

$4,000,000*

(All in name of respondent)

 

 

 

Sub-total

$19,5000,000

[17]         He also listed a $3 million bank account in Donna’s name.

[18]         Donna listed the following real estate in Part 3 of her Form F8 (sworn September 10, 2013):

Details

Date Acquired

Value

2668 Bellevue Avenue West Vancouver, B.C. (the Respondent’s one-half joint interest held in trust for the other joint owner, Mina Esteghamat-Ardakani)

Sept 12, 2003

$7,405,000*

2369 Constantine Place West Vancouver, B.C. (held in trust for Mina Esteghamat-Ardakani)

Jan 14, 2000

$2,439,000*

3153 Travers Avenue, West Vancouver, B.C. (held in trust for Mina Esteghamat-Ardakani)

July 30, 2007

$2,243,000*

Inherited property in Tehran owned jointly with Francis Amir Este, particulars unknown

 

value unknown

 

 

 

 

Real estate Sub-total

$12,087,000

 

 

 

* As per 2012 BC Assessment

[19]         The debts listed by Donna included:

Details

Date Incurred

Amount

First mortgage in favour of Mina Esteghamat Ardakani over 2369 Constantine Pl. West Vancouver

July 2000

$480,000

 

 

Mina Esteghamat Ardakani – personal loan

Jan 2007

$1,500,000

[20]         At her examination for discovery in the divorce action, Donna testified she held her real property interests in trust for Mina and that Mina held a demand mortgage on the Constantine Place property.

[21]         Prior to the divorce action going to trial, Donna and Mr. Taherkhani agreed to settle by way of a consent order.  The application for that order came before a judge on May 27, 2014, in the presence of Donna, her counsel, and counsel for Mr. Taherkhani.

[22]         By virtue of Rule 10-10(2)(g) of the Supreme Court Family Rules, an affidavit in Form F38 is required to obtain a final order in an undefended family law case.  Just prior to attending in court, Donna swore an affidavit in Form F38 which was filed in the proceedings.  In that affidavit she deposed, in part:

1.      I am the Respondent.

6.      I am neither directly nor indirectly a party to an agreement or conspiracy for the purpose of subverting the administration of justice, or to any agreement, understanding or arrangement to fabricate or suppress evidence or to deceive the court.

[23]         The opening recital of the May 27, 2014 consent order reads:

This family law case coming on for hearing at Vancouver, British Columbia on May 27, 2014 and on hearing [name omitted], counsel on behalf of the Claimant and [name omitted], counsel on behalf of the Respondent, and on considering the evidence put forward.

[24]         In addition to granting a divorce, the order contains the following terms: (a) Donna was ordered to pay Mr. Taherkhani $70,000 in full and final settlement of his property and spousal support claims; (b) save for the divorce, all of the claims in the notice of family claim and counterclaim were dismissed; and (c) each party was ordered to bear their own costs.

Additional Property Acquisitions

[25]         In 2001, 3010 Procter Avenue, West Vancouver, was purchased and registered in the names of Mina, and Francis.  This property was later registered in Mina’s name only, and then registered again in both Mina and Francis’s names.  It was sold in November 2014.

[26]         In 2004, 205 – 150 24th Street, West Vancouver, was purchased and registered in Mina’s name.  It was sold in 2009.

[27]         In 2010, 1501 – 2240 Bellevue Avenue, West Vancouver, was purchased and registered in Francis’s name.  It was sold in July 2013.

[28]         In June 2014, 2605 Lawson Avenue, West Vancouver, was purchased and registered in Mina’s name.

[29]         In November 2014, 4585 West 2nd Avenue, Vancouver, and 801 – 2120 Argyle Avenue, West Vancouver, were purchased and registered in the names of Mina and Francis.

Donna’s Action

[30]         On February 6, 2015, Donna filed a notice of civil claim which commenced the action that is the subject of this appeal.  Amongst other things Donna claimed that: (a) no money is owed to Mina in respect of the mortgage on the Constantine Place property; (b) she is the sole beneficial owner of 2668 Bellevue Avenue; (c) she is entitled to one-third of the proceeds of the sale of the Procter Avenue property; (d) she is the beneficial owner of $3.4 million held by Mina; and (e) she is entitled to an interest in the Lawson, Argyle, and West 2nd properties in proportion to what she contributed to purchasing them; she alleged Mina and Francis used monies beneficially owned by her to purchase those properties.  Donna alleged breaches of trust and fiduciary duty by Mina and Francis.  She also alleged Mr. Blackburn knowingly participated in the breaches of trust and fiduciary duty committed by Mina and Francis.

[31]         In their response to Donna’s notice of civil claim, Mina and Francis asserted the beneficial ownership in the assets claimed by Donna tracks the legal (registered) ownership and denied the alleged breaches of trust and fiduciary duty.

[32]         On September 23, 2015, Donna filed an amended notice of civil claim.  On October 21, 2015, Mina and Francis filed an amended response.

[33]         Donna’s initial list of documents (required under Rule 7-1 of the Supreme Court Civil Rules) did not refer to any documents from the divorce action.  Donna later amended her list to add certain documents from that action, but claimed privilege over them.  On January 18, 2017, a judge ordered Donna to list and produce her Form F8 and the transcript of her examination for discovery.

[34]         On February 10, 2017, a judge ordered Donna to produce further documents from the divorce action.  Notwithstanding that order, Donna withheld the Form F38 affidavit she had sworn until just before trial.

[35]         On February 28, 2017, following the production of documents from the divorce action, Mina and Francis amended their response to Donna’s notice of civil claim to raise factual issues relating to the divorce proceedings and to plead additional defences, including abuse of process.

[36]         On March 10, 2017, Donna filed a further amended notice of civil claim in which she pleaded:

11B.     In her upbringing of the Plaintiff and Francis as children, and through their adulthood, Mina conditioned the Plaintiff and Francis to be distrustful of persons outside of their immediate family circle, including potential romantic partners, and counseled them to follow her advice and directions as to the steps that should be taken to protect themselves from dangers inherent in their interpersonal relationships and interactions with others.

11C.    From approximately 1990 to late 2014, the Plaintiff, Mina and Francis regularly engaged in discussions and planning regarding the manner in which properties that they owned or proposed to acquire should be held, including the name or names in which title should be held and trust arrangements or other agreements amongst themselves that should be made related to them.  The primary objectives which the Plaintiff, Mina and Francis sought to advance through those discussions and planning measures included maximizing the extent to which the capital gains exemption available for gains realized on the sale properties claimed as their principal residences could be claimed, and protecting those properties from potential claims that their present or potential future spouses, romantic partners or creditors might make against them.

[37]         In a new section of her notice of civil claim headed “Breach of Fiduciary Duty by Mina and Francis”, Donna pleaded, among other things that:

(a)   “Mina, with Francis’ participation and assistance, counseled and encouraged” Donna to falsely claim in the divorce action that Mina was the owner of assets actually owned by Donna;

(b)   “[a]t Mina’s suggestion and urging” Donna participated in the creation of a false documentary record for use in the divorce action, to make it appear that Mina was the owner of the $3.4 million that had initially been in a bank account held solely by Donna;

(c)    “at Mina’s suggestion and urging”, and “using a template created by Francis”, Donna and Mina signed back-dated trust declarations to create a false documentary record for use in the divorce action;

(d)   “Mina, with Francis’ involvement and participation, counseled and urged” Donna to give false evidence in regard to the ownership of her assets at her examination for discovery in the divorce action;

(e)   “[as] counseled and urged by Mina”, Donna gave false evidence regarding the ownership of her assets at her examination for discovery in the divorce action, in particular with respect to the ownership of the 2668 Bellevue Avenue and Constantine Place properties;

(f)    in November 2014, a breakdown occurred in the relationship between Donna, Mina, and Francis, due to Donna’s refusal of a request by Mina and Francis for Donna to provide “a false statement or alibi” to assist Francis in an audit of his former medical practice;

(g)   Mina did not return monies belonging to Donna as a means of applying pressure on Donna to assist Francis;

(h)   in disavowing Donna’s claims and defending the action, “Mina and Francis have acted with malice … and have sought to exact revenge” on Donna for refusing to assist Francis; and

(i)     “Mina and Francis … have sought to exploit to their benefit the fact that [Donna] gave false evidence in her examination for discovery” even though they “devis[ed]” and “counsel[ed]” her to give that evidence “knowing … that … [Donna] trusted and was relying on them to act in her interests”.

[38]         On March 15, 2017, Mina and Francis filed an application to strike Donna’s further amended notice of civil claim on the basis it disclosed no reasonable claim, or on the basis it was an abuse of process.

[39]         On March 20, 2017, Mina and Francis filed an amended response.  They denied the allegation of counseling, encouraging, etc. made against them and pleaded facts related to Donna’s discovery evidence and the positions taken by Donna in the divorce action.  They further pleaded Donna is precluded by the doctrine of abuse of process from taking positions contrary to her discovery evidence in the divorce action.

[40]         On March 23, 2017 (four days before the commencement of the trial), a chambers judge directed that, subject to the discretion of the trial judge, Mina and Francis’s application would be heard, at the earliest, at the close of Donna’s case.

[41]         The trial commenced on March 27, 2017.  Following Donna’s counsel’s opening statement, counsel for Mina and Francis advised the trial judge they might seek to proceed with their application after Donna had closed her case.  The trial then proceeded.

[42]         Donna was in the witness box for approximately three weeks.  The thrust of her evidence was that everything she did in the divorce action to paint a false picture of her financial affairs was done under Mina’s influence and control.  She described Mina as the “leader” and herself as a “robot”.  She was afraid she would lose her relationship with Mina and Francis if she did not follow Mina’s directions.  Donna said Mr. Taherkhani was not deceived in the divorce action because he knew the true picture of her financial affairs and knew documents she filed in that proceeding were “fake”.  She did not elaborate on the source of Mr. Taherkhani’s knowledge.

[43]         During her testimony Donna admitted:

(a)   she backdated instructions to effect the transfer of $3.4 million to Mina;

(b)   her Form F8 and discovery transcript “have many false statements”;

(c)    her discovery transcript is “based on a bunch of lies”;

(d)   she attempted to have all copies of her discovery transcript destroyed, including copies held by the court reporting service that had prepared it;

(e)   declarations showing her interests in the 2668 Bellevue Avenue, Travers Avenue, and Constantine Place properties as being held in trust for Mina were fake, were prepared using a template created by Francis, and had been backdated to support her false claims in the divorce action; and

(f)    a fake promissory note showing she was indebted to Mina had been created for use in the divorce action.

[44]         Donna testified that in early January 2015 (i.e., after she and Mr. Taherkhani were divorced and just prior to her filing her notice of civil claim), she financed Mr. Taherkhani’s purchase of a property on 23rd Street in West Vancouver, through her lines of credit.  That property was worth approximately $3 million.  Donna holds a mortgage in the amount she lent him.  Mr. Taherkhani makes payments when he can.  He is to repay the principal and accumulated interest when he sells the property.

[45]         Donna further testified she and Mr. Taherkhani live in the same building in “separate suites, areas”, and work together.

[46]         Donna called several witnesses.  She called Mr. Blackburn as an adverse witness, but did not call Mina, Francis, or Mr. Taherkhani.

[47]         At the conclusion of Donna’s case, Mr. Blackburn brought a no evidence motion seeking dismissal of the action against him.  Mina and Francis brought a no evidence motion coupled with an abuse of process motion.  With respect to their motions, Mina and Francis relied on Rule 9-5(1)(a) and (d) and Rule 12-5(4) and (5) of the Supreme Court Civil Rules and s. 8 of the Law and Equity Act, R.S.B.C. 1996, c. 253.  Those provisions state:

9-5(1)  At any stage of a proceeding, the court may order to be struck out or amended the whole or any part of a pleading, petition or other document on the ground that

(a)   it discloses no reasonable claim or defence, as the case may be,

…, or

(d)   it is otherwise an abuse of the process of the court …

(2)  No evidence is admissible on an application under subrule (1)(a).

12-5(4)   At the close of the plaintiff’s case, the defendant may apply to have the action dismissed on the ground that there is no evidence to support the plaintiff’s case.

12-5(5)   A defendant is entitled to apply under subrule (4) without being called on to elect whether or not to call evidence.

* * *

8(1)    A cause or proceeding pending in the court must not be restrained by prohibition or injunction, but every matter of equity on which an injunction against the prosecution of that cause or proceeding might have been obtained before April 29, 1879, either conditionally or unconditionally, may be relied on by way of defence.

(2)     Nothing in this Act disables the court from directing a stay of proceedings in a cause or matter pending before it, if it thinks fit.

(3)     Any person, whether or not a party to a cause or matter pending before the court, who would have been entitled, but for this Act, to apply to the court to restrain the prosecution of it, or who may be entitled to enforce, by attachment or otherwise, any judgment, decree, rule or order, contrary to which all or any part of the proceedings in the cause or matter may have been taken, may apply to the court, by motion in a summary way, for a stay of proceedings in the cause or matter, either generally or so far as may be necessary for the purposes of justice and the court must make any order that is just.

[48]         On May 29, 2017, the trial judge dismissed Donna’s action on the basis that it constituted an abuse of process.  He did not find it necessary to address Mr. Blackburn’s no evidence motion.

Trial Judge’s Reasons
(2017 BCSC 878, 96 B.C.L.R. (5th) 379)

[49]         The trial judge proceeded on the basis of Donna’s pleadings and accepted her evidence “at its highest”: para. 24.  He assumed “the illegality, intimidation, and participation by [Mina and Francis] as [Donna had] pleaded or argued occurred”:  para. 108.

[50]         With respect to the divorce action, the judge found that Donna:

(a)   “did not disclose key facts as required by law and oath”: para. 47;

(b)   “deceived [Mr. Taherkhani], counsel, and the Court”: para. 61;

(c)    “perpetrated a fraud designed to cheat ... [Mr. Taherkhani], using the Court and its processes”: para. 63;

(d)   used false documents and false discovery evidence to mislead her own counsel and Mr. Taherkhani’s counsel: para. 68; and

(e)   “attended the divorce hearing and remained silent while knowing of her sworn false filed Form F8 … and the ‘false and concocted’ story she gave during her examination for discovery”: para. 104.

[51]         The judge did not take into consideration Donna’s Form F38 affidavit in which she deposes she was not a party to any agreement to subvert the administration of justice, or any agreement or arrangement to fabricate or suppress evidence, or to deceive the court: para. 61.  However, the judge rejected Donna’s submission that she was not being untruthful in that her statements related only to the issue of divorce and not to the division of property issues: paras. 120130.

[52]         The judge rejected Donna’s submission that Mr. Taherkhani was aware the trust declarations were false.  He noted she had not called Mr. Taherkhani as a witness and that her assertion was contrary to her pleadings: para. 62.

[53]         The judge also rejected Donna’s submission that she had been under Mina’s control at the time of the divorce action.  He referred to the fact she had not pleaded lack of capacity and to the absence of evidence that she lacked capacity.  Rather, the judge noted Donna had pleaded, and her counsel had argued, that Mina and Francis had “applied pressure” on her to put forward a false story in the divorce action:  paras. 6971.  The judge cited s. 3(1) of the Adult Guardianship Act, R.S.B.C. 1996, c. 6, which provides, “Until the contrary is demonstrated, every adult is presumed to be capable of making decisions about the adult’s … financial affairs”: para. 72.

[54]         The judge considered three aspects of abuse of process: (a) illegality; (b) the pursuit of inconsistent rights; and (c) the administration of justice: para. 23.

[55]         With respect to illegality, the judge held that since Donna was not advancing a cause of action based on an illegal bargain with Mina and Francis, the principle set out in Holman v. Johnson (1775), 1 Cowp. 341 at 343, that “No Court will lend its aid to a man who founds his cause of action upon an immoral or an illegal act”, was inapplicable.  He opined that absent the divorce action, the law relating to the enforcement of illegal bargains would not preclude Donna from advancing her claims: paras. 2530.

[56]         The judge found Donna’s action to be an abuse of process because she was attempting to pursue inconsistent rights by claiming in the divorce action that she did not have a beneficial interest in certain property and then, in the action against Mina and Francis, claiming she did have that interest.  In this regard, the judge stated (in para. 33):

A litigant cannot use the Court’s process to state one set of rights in a proceeding and then in a subsequent proceeding assert rights inconsistent with the rights first stated.  Otherwise, uncertainty would result and many paths for mischief would be introduced into our law for the avaricious, the malicious, and the vexatious.  The litigant must elect at the outset which set of rights the litigant wishes the Court to recognize.

[57]         The judge was also of the view that to allow Donna’s action to continue would bring the administration of justice into disrepute.  He cited R. v. Grant, 2009 SCC 32 at para. 68, [2009] 2 S.C.R. 353, for “the principle that the reputation of the justice system, including that of the courts, ‘must be understood in the long term sense of maintaining the integrity of, and public confidence in, the justice system’”:  para. 35.  In addition, he stated:

[79]      To entertain the plaintiff’s claim any further, the Court would be condoning the plaintiff’s deliberate misuse of the court process in the divorce proceedings.  This would bring the administration of justice into disrepute and is an abuse of process.  A reasonable person, informed of all of the relevant circumstances, would not expect the Court to help a litigant claim Blackacre when that litigant, in previous divorce proceedings, deliberately did not make proper financial disclosure of Blackacre to the Court as so clearly required by law and oath.  The plaintiff’s claim will be dismissed.

[99]      In sum, the plaintiff knowingly swore a materially false Form F8 Financial Statement and then deliberately gave false answers on discovery, consistent with the “false and concocted story” she pleads in the case at bar.  The plaintiff abused the judicial process by playing by the rules she set rather than those set by Parliament and our Legislature.

[58]         The judge acknowledged that not permitting Donna’s action to continue might result in Mina and Francis enjoying a “windfall” by reason of their own improper conduct:  paras. 80, 84.  However, the judge was not prepared to allow Donna, who, by her own admission, had been directly involved in perpetrating a fraud in the divorce action, to use the Court to perfect that fraud: para. 86.  In addressing the relative culpability of Donna, Mina, and Francis, the judge stated:

[109]    The essential differences between the plaintiff and the defendants, taking the plaintiff’s claim and assertions at their highest, are that it was the plaintiff who signed the deliberately false Form F8 Financial Statement, gave the false evidence at her examination for discovery, and did not correct matters even though she was present at the divorce hearing.

[59]         Last, having earlier in his reasons (at para. 38) referred to the oft-cited passage from Cunha v. Cunha (1994), 99 B.C.L.R. (2d) 93 at para. 9 (S.C.), that “Non-disclosure of assets is the cancer of matrimonial property litigation”, the judge opined that not permitting Donna’s claim to continue would impress upon family-law litigants the need to be truthful with respect to disclosure of their assets:

[87]      Finally, I note that, as a matter of policy, the result of allowing the motions of the plaintiff’s mother and brother may serve to discourage an avaricious spouse engaged in family law proceedings from not fulfilling the relevant disclosure requirements.  Where an avaricious spouse realizes that if, in an attempt to defeat a claim of a then spouse, he or she places a property in the name of a person he or she trusts, the property may not be returned if the relationship changes, the avaricious person may make the cold calculation that he or she may be better off financially by disclosing his or her financial assets and losing a portion of these to his or her spouse rather than risking losing all to a then trusted person.

Post-Trial Developments

[60]         On June 5, 2017, Donna filed a notice of appeal from the order dismissing her action.

[61]         On January 23, 2018, Mr. Taherkhani filed an application in the divorce action to have the consent order and settlement agreement set aside on the basis that the settlement was obtained by fraudulent misrepresentation and/or is unconscionable.  Donna consented to that application.  At the hearing on February 7, 2018, Donna, through her counsel, acknowledged Mr. Taherkhani had been misled.

[62]         The provisions of the consent order were set aside, save for the divorce.  Mr. Taherkhani’s claims against Donna were ordered to proceed to trial as if no settlement had been reached and no order for corollary relief had been made.

[63]         On February 8, 2018, Mr. Taherkhani applied for and obtained an order from a judge of this Court adding him as a respondent on this appeal.  Donna consented to that application; Mina, Francis, and Mr. Blackburn opposed it.  In granting Mr. Taherkhani’s application the judge stated:

[15]      In my opinion, Mr. Taherkhani has met the test under R. 2(2).  The outcome of Ms. Este’s appeal could affect him.  If this Court grants Ms. Este the order she has requested, the matter would be remitted and the issue of whether the property is owned by Ms. Este by Ms. Esteghamat-Ardakani and Mr. Este would be finally decided.  If the appeal is dismissed, however, Mr. Taherkhani would need to add Ms. Esteghamat-Ardakani and Mr. Este to his family claim.  He would be the one who had to prove that Ms. Este owned some or all of the property at the time they separated before he could proceed to make a claim that some of that property was family property that should have been divided between them.

Mr. Taherkhani’s Application to Adduce Further Evidence

[64]         On February 21, 2018, Mr. Taherkhani filed an application for leave to adduce evidence not before the trial judge.  That evidence consists of the following, which are attached as exhibits to an affidavit sworn by one of Mr. Taherkhani’s counsel: (a) the notice of application Mr. Taherkhani filed to set aside the consent order and settlement agreement; (b) the affidavit Mr. Taherkhani swore in support of that application, in which, among other things, he discusses the history of his relationship with Donna, why he signed the marriage agreement, and why he settled the divorce action; and (c) the order setting aside the consent order and settlement agreement.

[65]         In response, Mina and Francis filed two affidavits by a paralegal assistant employed in their counsel’s law firm to which are attached: (a) the transcript of the hearing of Mr. Taherkhani’s application to set aside the consent order and settlement agreement; (b) the trial brief and witness list Donna filed in the matter under appeal, in which she lists Mr. Taherkhani as a witness she intends to call with respect to “Most issues”; and (c) an affidavit Mr. Taherkhani swore and filed in the divorce action in late January 2017, objecting to the release of any material from the divorce file, including Donna’s discovery transcript.

[66]         Mina and Francis oppose Mr. Taherkhani’s application.  They submit the material he seeks to adduce does not meet the test for admission of “fresh evidence” set out in Palmer v. The Queen, [1980] 1 S.C.R. 759.  It is to be noted that some of what Mr. Taherkhani seeks to adduce is more properly described as “new evidence”, as it concerns matters that post-date the trial: Hellberg v. Netherclift, 2017 BCCA 363 at para. 53, 2 B.C.L.R. (6th) 126.

[67]         Mina and Francis say the evidence should not be admitted because: (a) Mr. Taherkhani’s evidence could have been adduced at the trial and Donna decided not to call him as a witness, presumably because she believed that, at least once subject to cross-examination, his evidence would not assist her; (b) Mr. Taherkhani’s evidence is not relevant to the issues on appeal; and (c) Mr. Taherkhani’s evidence is not reliable.  With respect to the last point, Mina and Francis note Mr. Taherkhani has not been cross-examined on his affidavit.  They also say his affidavit is selective and self-serving.  They note, for example, that Mr. Taherkhani does not mention the 23rd Street property or that he and Donna are living in the same building and working together.

[68]         With the exception of the order setting aside the settlement agreement and the divorce order, the evidence Mr. Taherkhani seeks to adduce is not relevant to this appeal.  That order should be before this Court to provide context to Mr. Taherkhani’s submissions in regard to his ability to assert a claim to the properties and funds that are the subject matter of the within action.  In that regard, it should be noted that during the hearing, Mina and Francis, through their counsel, gave an undertaking that in the event this appeal were to be dismissed, they would not take the position Mr. Taherkhani is in any way estopped by the trial judge’s order from pursuing any rights he may have to those properties and funds.

[69]         In the result, I would allow Mr. Taherkhani’s motion only to the extent of admitting the May 7, 2018 order in the divorce action as evidence on this appeal.

Grounds of Appeal

[70]         In her factum, Donna states her grounds of appeal as follows:

The trial Judge erred in law in failing to identify and apply the correct legal tests in dismissing Donna’s entire claim as an abuse of process.  In particular:

(a)   He decided the issue of abuse of process based on a rigid and out-dated articulation of the law and failed to properly consider whether the application of the doctrine of abuse of process to the case before him would lead to an unjust and unfair result.

(b)   He failed to apply the correct legal test to the consideration of whether it was an abuse of process for Donna to pursue inconsistent rights in the divorce action and in the proceeding before him.

(c)   He failed to apply the correct legal test to the consideration of whether Donna’s claims based on resulting trust and constructive trust relied on illegality and therefore should be dismissed.

Analysis

No Evidence Motion

[71]         Although it does not affect the determination of this appeal, I begin by noting that the joining of a no evidence motion under Rule 12-5(4) with an abuse of process motion under Rule 9-5(1)(d) was ill-conceived.  It added nothing to Mina and Francis’s contention that Donna should not be permitted to prosecute her action because it constituted an abuse of process even if there was evidence to support it.

[72]         The test to be applied when a no evidence motion is brought at the close of a plaintiff’s case requires a trial judge to determine only whether there is any evidence capable of supporting the plaintiff’s case.  In Tran v. Kim Le Holdings Ltd., 2010 BCCA 156 at para. 2, 286 B.C.A.C. 47, this Court adopted the following formulation of the test, set out in Sopinka, Lederman & Bryant, The Law of Evidence in Canada, 2d. ed. (Toronto: Butterworth's, 1999) at 139:

The trial judge, in performing this function, does not decide whether he or she believes the evidence.  Rather the judge decides whether there is any evidence, if left uncontradicted, to satisfy a reasonable person.  The judge must conclude whether a reasonable trier of fact could find in the plaintiff’s [sic] favour if it believed the evidence given in the trial up to that point.  The judge does not decide whether the trier of fact should accept the evidence, but whether the inference that the plaintiff seeks in his or her favour could be drawn from the evidence adduced, if the trier of fact chose to accept it.

See also: Brule v. Rutledge, 2015 BCCA 25 at paras. 2527, 70 B.C.L.R. (5th) 291.

[73]         In the present case, the trial judge was not asked to determine whether Donna had presented any evidence which, if accepted, could support her action.  Rather, the judge was asked to end that action even if such evidence existed on the basis that it amounted to an abuse of process.  The judge was clearly alive to this.  However, after referring to the no evidence motion before him as “not a typical no evidence motion” (para. 21), he went on to say:

[22]      I am satisfied that if the abuse of process motion succeeds, the no evidence motion succeeds because there would not be a proper case for a jury to consider -- the essence of a no evidence motion.  If the abuse of process motion fails, I am also satisfied that the no evidence motion fails.  Without an abuse of process, there is evidence that a jury could find for each of the constituent elements of the plaintiff's claim.

[74]         With respect, the above statement blurs the respective “essence” of two motions that are juridically distinct.  The focus of the abuse of process motion was whether Donna was disentitled from prosecuting her action regardless of its merits.  The focus of the no evidence motion was whether Donna had presented any evidence capable of supporting that action.  I have no doubt the trial judge was drawn into intertwining the two motions by the way in which they were argued.

Standard of Review

[75]         A decision taken under Rule 9-5(1)(d) to dismiss an action as an abuse of process involves the exercise of discretion in relation to specific facts and is generally entitled to deference on appeal.  To overturn such a decision, an appellant must show that “the judge wrongly exercised her discretion, erred in principle, ignored or misapplied a relevant factor or was clearly wrong so as to amount to an injustice”: Gonzalez v. Gonzalez, 2016 BCCA 376 at para. 16, 91 B.C.L.R. (5th) 221 (per Bennett J.A.).

[76]         As recently discussed by Justice Fisher in Greengen Holdings Ltd. v. British Columbia (Ministry of Forests, Lands and Natural Resource Operations), 2018 BCCA 214, the level of deference will depend on the context:

[24]      The order of the chambers judge was made under Rule 9-5(1)(d) of the Supreme Court Civil Rules, which permits the court to strike a pleading on the ground that it is an abuse of process and to order the proceeding to be stayed or dismissed.  This kind of application, being contextual, may require the court to make findings of fact and apply legal principles to those findings.  It may also require the court to exercise discretion.  The amount of deference to be accorded to orders made on the basis of abuse of process depends on the context: Krist v. British Columbia, 2017 BCCA 78 at para. 25; Tangerine Financial Products Limited Partnership v. The Reeves Family Trust, 2015 BCCA 359 at paras. 3637.

[25]      Appellate intervention is appropriate in discretionary decisions where the judge proceeded on a wrong principle or failed to give weight, or sufficient weight, to relevant considerations: Timberwolf Log Trading Ltd. v. British Columbia (Forests, Lands and Natural Resource Operations), 2013 BCCA 24 at para. 19, citing Stone v. Ellerman, 2009 BCCA 294.  Intervention is also appropriate where the judge made a palpable and overriding error in the assessment of the facts or misdirected herself as to the applicable law.  A failure to apply the applicable legal criteria for the exercise of a judicial discretion, or a misapplication of them, raises questions of law: Cliffs Over Maple Bay (Re), 2011 BCCA 180 at para. 24; British Columbia (Minister of Forests) v. Okanagan Indian Band, 2003 SCC 71 at para. 43.

See also: Pan Afric Holdings Ltd. v. Athabasca Holdings Ltd., 2018 BCCA 113 at para. 28.

[77]         Also apposite is the following from the judgment of Chief Justice Finch in Stone v. Ellerman, 2009 BCCA 294, 92 B.C.L.R. (4th) 203, leave to appeal ref’d [2009] 3 S.C.R. x:

[94]      Discretionary powers must be exercised in accordance with what the judge thinks the justice of the situation requires.  Judicial discretion is constrained by factors or principles that must be weighed and balanced as between the competing interests, but no rule of law dictates the result.  Accordingly, an appellate court will not interfere with an exercise of judicial discretion unless it can come to the clear conclusion that it was wrongly exercised in that no weight or insufficient weight has been given to relevant considerations (Friends of the Oldman River Society v. Canada (Minister of Transport), [1992] 1 S.C.R. 3 at 76-77, 88 D.L.R. (4th) 1, [1992] 2 W.W.R. 193) or that on other grounds it appears that the decision may result in injustice (Taylor v. Vancouver General Hospital, [1945] 4 D.L.R. 737 at 743, [1945] 3 W.W.R. 510, 62 B.C.R. 42 at 50 (C.A.)).

Undue Influence

[78]         Donna alleges the trial judge misunderstood the significance of her evidence.  The judge, referring to Donna’s evidence that Mina and Francis had applied pressure on her and that she was a “robot”, found Donna “was capable of making decisions about her financial affairs”:  para. 73.  Donna says the judge’s focus on the issue of capacity evinces he failed to appreciate that her evidence, “at its highest”, supported a finding her actions in the divorce action were the result of “undue influence” exerted by Mina and Francis, whom she describes as the “architects” of the deception and false statements regarding the ownership of assets.  In effect, Donna says she should not be held accountable for what she did because of what Mina and Francis did.  I would not give effect to this argument.

[79]         The judge proceeded on the basis that the “illegality, intimidation, and participation” by Mina and Francis was as Donna had “pleaded or argued”: para. 108.  It is, therefore, necessary to have regard to Donna’s pleadings and submissions.

[80]         Donna did not plead “undue influence”, i.e., that by reason of the actions of Mina and Francis she did not intend to do what she did.  In her pleadings she makes the following general statement:

62.      As of mid-2013, the Plaintiff was undergoing a bitter and contentious divorce from her second husband, and the Plaintiff was under extreme stress, emotional upset and in a particularly vulnerable state.

With respect to Mina and Francis in particular, Donna pleaded she painted a false picture of her financial affairs—including by giving false evidence and backdating documents—because they “counseled”, “encouraged”, and “urged” her to do so.

[81]         In closing submissions at the trial, Donna’s counsel (who are not counsel on this appeal) did not argue Donna was not responsible for her actions or that her actions were the product of “undue influence”.  Rather, they argued Mina and Francis’s participation was a factor that weighed in favour of allowing Donna’s claim to proceed because to do otherwise would result in Mina and Francis obtaining a significant windfall notwithstanding their own wrongdoing.

[82]         The judge cannot be faulted for failing to consider a matter that was neither pleaded nor argued.

Abuse of Process

[83]         Abuse of process is a flexible doctrine, one which focuses on the proper administration of justice and the court’s power to prevent misuse of its process.  Recently, in Pan Afric Holdings, Justice Fisher summarized the doctrine as follows:

[36]          The doctrine of abuse of process engages a court’s inherent power to prevent the misuse of its procedures in a way that would bring the administration of justice into disrepute, and it arises in a variety of legal contexts.  While many of the cases that deal with abuse of process do so in the context of relitigation, the doctrine itself does not have specific requirements such as those applicable to res judicata and issue estoppel: Toronto (City) v. C.U.P.E., Local 79, 2003 SCC 63 at paras. 36‒37; Behn v. Moulton Contracting Ltd., 2013 SCC 26 at paras. 40‒41.

[37]          Abuse of process may be invoked where a party takes inconsistent factual and legal positions in different proceedings, but such assertions must be considered in the context and circumstances of the case: First Majestic Silver Corp. v. Davila Santos, 2013 BCCA 5 at paras. 22‒28; Vanmills Establishment v. Coles, [1992] B.C.J. No. 881; Peppers’ Produce Ltd. v. Medallion Realty Ltd., 2012 BCCA 247 at paras. 24‒27; Glover v. Leakey, 2018 BCCA 56 at paras. 22‒23.

[Emphasis added.]

[84]         In the present case, the trial judge’s conclusion that Donna’s action was an abuse of process was based on his overall assessment of the following facts with respect to her deceitful conduct in the divorce action:

(a)   failing to disclose her assets by swearing a false Form F8;

(b)   giving false evidence at her examination for discovery regarding her assets;

(c)    creating false documents to be used as evidence to support her false assertions; and

(d)   misleading the court by misleading her own counsel.

[85]         Donna submits the judge made numerous errors in assessing those facts.  I will address her various arguments in turn.

The Law Relating to Illegal Bargains

[86]         Donna, supported by Mr. Taherkhani, takes issue with the trial judge’s treatment and interpretation of the law relating to the enforceability of illegal bargains, in particular the judge’s references to Lord Mansfield’s maxim in Holman.  She submits the judge failed to recognize that the law has evolved since 1775, such that illegal contracts may now be enforced where unjust enrichment would result if enforcement were refused.

[87]         I see no need to discuss this area of the law in detail for two reasons.  First, the judge expressly acknowledged that the law with respect to the enforceability of illegal bargains has been “refined” and “narrowed” since Holman, and made specific reference to recent authorities: paras. 2627.  Second, and more important, the judge did not dismiss Donna’s case because she was seeking to enforce an illegal bargain, but because of how she conducted the divorce action.  He was well-aware Donna was asserting a lawfully acquired entitlement to the property in issue in the action.

Was Donna’s Form F8 a “Pleading”?

[88]         Donna submits that because the Form F8 in which she asserted she held her interests in the 2668 Bellevue Avenue, Constantine Place, and Travers Avenue properties in trust for Mina is not a “pleading”, the trial judge erred in finding she had filed inconsistent pleadings.  She points to Rule 1-1(1) of the Supreme Court Family Rules, which provides:

In these Supreme Court Family Rules, unless the context otherwise requires:

“pleading” means a notice of family claim, a response to a family claim, a counterclaim and a response to counterclaim;

I would not accede to this argument.

[89]         The objects of the Supreme Court Family Rules, set out in Rule 1-3, include “the just, speedy and inexpensive determination of every family law case on its merits”.  That object cannot be achieved unless the parties make full and frank disclosure of their respective financial circumstances.  It is significant that the Rules contain provisions dealing with the ordering of “particulars” in regard to both a “pleading” and a Form F8.  Under Rules 4-6(3) and 7-1(15) particulars can be ordered with respect to a “pleading”.  The only other provision in the Rules under which particulars can be ordered is Rule 5-1(14), which deals with Form F8s.

[90]         The importance of Form F8s is underscored by the fact the Rules contain a specific enforcement provision with respect to them.  Under Rule 5-1(28), failure to file a Form F8, or to comply with an order for particulars, can result in a number of things including: dismissal of all or part of a claim; striking out all or part of a response to a claim or counterclaim; a fine; and costs.

[91]         Donna swore and filed her Form F8 to assert facts in support of the property claims she was advancing in the divorce action.  In her notice of civil claim, she asserted diametrically different facts in support of the property claims she was advancing in the present action.  Having regard to the mandatory nature of Form F8 and the purpose it serves, I am of the view that in the context of an allegation of inconsistent pleadings, a Form F8 is tantamount to a pleading.

Were Donna’s Pleadings Inconsistent?

[92]         Donna submits the trial judge erred in applying the law on inconsistent pleadings “to automatically equate inconsistent pleadings with abuse of process, without consideration of the context and circumstances of the case.”  She says, correctly, that not every instance of inconsistent pleadings will amount to an abuse of process: Pan Afric Holdings at para. 37.

[93]         Cases concerning inconsistent pleadings fall along a spectrum.  At one end are cases in which the courts find that, properly interpreted, no inconsistency exists: Stewart v. Clark, 2013 BCCA 359 at para. 48, 49 B.C.L.R. (5th) 1; First Majestic Silver Corp. v. Davila Santos, 2012 BCCA 5 at para. 26, 29 B.C.L.R. (5th) 211.  In the middle are cases in which an inconsistency is found, but the court declines to characterize it as an abuse of process because it was not advanced “deliberately or with full knowledge of the facts”: Walsh v. Mobil Oil Canada, 2013 ABCA 238 at para. 94, 364 D.L.R. (4th) 508.  At the other end are cases in which a party knowingly took inconsistent positions: Pepper’s Produce Ltd. v. Medallion Realty Ltd., 2012 BCCA 247 at para. 28, 34 B.C.L.R. (5th) 226.  Of note is that in both First Majestic and Pepper’s Produce, the following passage from Mystar Holdings Ltd. v. 247037 Ltd., 2009 ABQB 480 at para. 49, 10 Alta. L.R. (5th) 260, is quoted with approval:

In general, I am persuaded that a party is not free to deliberately argue diametrically inconsistent facts in various actions, thus knowingly advancing irreconcilable positions which are not articulated as alternative claims.

[Emphasis in original.]

[94]         The principle that a litigant is not entitled to knowingly advance inconsistent positions is longstanding.  This is evinced by Manley v. O’Brien (1901), 8 B.C.R. 280 (S.C., Full Ct.).  The facts of that case are complicated; for present purposes, the following are sufficient.

[95]         O’Brien had pre-empted (i.e., claimed) certain Crown land.  In proceedings in the Supreme Court of British Columbia, Manley obtained a monetary judgment against O’Brien.  The formal order gave Manley the right to enter onto the pre-empted land to cut timber and apply the proceeds to the amount owing.  The order also restrained O’Brien from cutting or removing any timber for six months, or until the amount owing to Manley had been paid.  After Manley registered his judgment against the land, O’Brien entered into an agreement to sell Mackintosh timber on the land.  Shortly thereafter a Crown grant for the land was issued to O’Brien, which O’Brien deposited with Mackintosh.  Manley then returned to court and obtained an order for the sale of the land.  In appealing that order, O’Brien and Mackintosh contended that: (a) Mackintosh was entitled to the timber on the land and the order for sale should have been made subject to his rights; and (b) Mackintosh had an equitable mortgage on the land by virtue of the Crown grant having been deposited with him.

[96]         One of the points O’Brien and Mackintosh advanced was that in light of the first order Manley had obtained—which was based on O’Brien having rights to timber on the land—it was not open to Manley to contend otherwise on his second application.  In acceding to that argument, Justice Martin (as he then was), said this (at 287):

The defendant, as well as Mackintosh, is a party to this appeal, and his rights in the land are being determined even though the determination may take the form of what, it is contended, is only a settling of priorities.  While it is true that in determining the defendant’s rights we also determine Mackintosh’s, nevertheless that does not entitle the plaintiff to take a different stand to-day in regard to the defendant’s rights from that which he took when he succeeded in inducing the Court to grant him a sweeping, and, if I may say so, novel judgment appropriating this very timber to his own use. I am unable to perceive how the situation differs in principle from that in Gandy v. Gandy (1885), 30 Ch. D. 57 at p. 82, wherein Lord Justice Bowen spoke very strongly as follows:

“The husband having got the benefit of our decision on the appeal from the Divorce Court, on the ground that he was acknowledging his continued liability to pay for the maintenance of the two youngest children, now turns round and declines to contribute to their maintenance and education. I am not quite sure (and I reserve the point for further consideration) that the decision of the Court on that appeal did not involve a judicial construction of the covenant which, whether it was right or wrong, would be binding upon the parties.  I am not certain that this is not res judicata within the view which has been taken of res judicata, when the same questions arise again between the same parties litigating similar subject-matter.  But whether it is res judicata or not, it seems to me that there would be monstrous injustice if the husband, having suggested one construction of the deed in the old suit and succeeded on that footing, were allowed to turn round and win the new suit upon a diametrically opposite construction of the same deed.  It would be playing fast and loose with justice if the Court allowed that.”

In my opinion it would be unseemly if the plaintiff were, at this stage, allowed to dispute the right of the defendant to deal with the timber.

[Emphasis added.]

In the result, the appeal was allowed and the order for sale varied to provide that the sale was subject to Mackintosh’s interest.

[97]         I am, accordingly, of the view the judge did not err in treating Donna’s deliberately inconsistent pleadings as falling at the abuse of process end of the spectrum.

Donna’s Discovery Testimony

[98]         Donna submits the trial judge should not have taken into account the fact that she gave false and misleading evidence at her examination for discovery because that evidence was not placed before the judge who granted the consent order in the divorce action.  In support of that submission, Donna relies on Mayer v. Mayer, 2012 BCCA 77, 29 B.C.L.R. (5th) 232.  In my view, that decision does not assist her.

[99]         Mayer involved a dispute between five brothers who created a trust agreement that provided they would be equal beneficial owners of all business ventures undertaken and assets acquired by any of them, excluding personal residences.  The brothers operated as the Osborne Group of companies.  After Bhagwan Mayer withdrew from the Osborne Group he commenced an action against a number of persons, including his brother, Mhinder Mayer.  During his examination for discovery, Mhinder Mayer denied any interest in certain assets.  That action settled part way through the trial and was dismissed by way of a consent order.  Later, other litigation arose among the brothers and family members in which Mhinder Mayer asserted the same assets were held in trust for him and had been misappropriated.  Those trust claims were dismissed on a summary trial application brought by the defendants.  In doing so, the judge rejected Mhinder Mayer’s evidence.

[100]     This Court allowed Mhinder Mayer’s appeal and remitted his trust claims for trial.  It did so on the basis the trial judge had erred in concluding he could resolve conflicts in the affidavit evidence and find the facts necessary to decide the issue by way of a summary trial: at paras. 6874.  Having done so, the Court went on to consider the respondents’ argument that the dismissal of the trust claims could be upheld on the basis they were barred by the equitable “clean hands” doctrine.  In doing so, the respondents relied, in part, on the evidence Mhinder Mayer had given at his examination for discovery in the earlier proceedings.  Of importance here is that the trial judge, in declining to accede to the clean hands argument, dealt with the matter on a purely hypothetical basis.  This Court rejected the clean hands argument for a number of reasons, the most significant of which being that the judge made no finding that Mhinder Mayer had committed fraud in the previous proceedings.

[101]     Donna relies on the underlined portion of the following passage from the judgment of Justice K. Smith in Mayer, which appears under the heading “Mhinder’s ‘Misconduct’”:

[92]      As well, the judge referred to Taylor v. Wallbridge (1879), 2 S.C.R. 616 at 639, where the Court commented that it would be contrary to public policy to permit a litigant to assert a resulting trust when the litigant had transferred the subject property out of his hands in order to perpetrate a “fraud on the court” by testifying as a disinterested witness in an earlier proceeding in which title to the property was in issue.  In my view, this dictum would not apply here since, although Mhinder testified on his examination for discovery in the Bhagwan Mayer Action in a manner the judge found to be false and misleading, there was no evidence that this testimony was placed before the court in the truncated trial of that action and, in any event, although the consent order dismissed the action “as if pronounced by this Court after a full trial of this proceeding on the merits”, the court did not adjudicate Bhagwan’s claims and it therefore cannot be said Mhinder’s evidence led to a “fraud on the court.”

[Emphasis added.]

[102]     This passage, however, cannot be read in isolation from what else appears under that heading, which includes:

[90]      It follows that, although Mhinder’s behaviour in the Bhagwan Mayer Action could constitute misconduct, depending on how the evidentiary conflicts in regard to this conduct might be resolved, the misconduct did not have an “immediate and necessary relation” to his trust claims and it would be possible for Mhinder to prove these claims without relying on the impugned conduct: Tinsley v. Milligan, [1994] 1 A.C. 340 at 367, 371, 375, [1993] 3 All E.R. 65 (H.L.).  Further, the fact that, in the judge’s view, Mhinder did not have a clean record in the matter was not a bar to the equitable relief he claimed.  As Lord Brougham said in [Attwood v. Small (1838), Cl. & F. 232, 7 E.R 684 (H.L.)], at 447-448, quoted in I.C.F. Spry, The Principles of Equitable Remedies, 8th ed. (London: Sweet & Maxwell Ltd., 2010 at 170),

... [T]hat general fraudulent conduct signifies nothing; that general dishonesty of purpose signifies nothing; that attempts to overreach go for nothing; that an intention and design to deceive may go for nothing, unless all this dishonesty of purpose, all this fraud, all this intention and design can be connected with the particular transaction, and not only connected with the particular transaction, but must be made to be the very ground upon which this transaction took place, and must have given rise to this contract.

[Underlining by Smith J.A.; bolding added.]

[103]     In the context of the judgment as a whole, the discussion of Mhinder’s Misconduct may well be obiter dicta.  As Smith J.A. stated in para. 93, “allegations of bad faith, abuse of process, lack of clean hands and the like cannot be resolved without a consideration of their full factual circumstances, especially when there are credibility issues”, and “no scrupulous examination of the all the circumstances” had taken place.  In any event, at most Mayer stands for the proposition that the clean hands doctrine will preclude a resulting trust claim on the basis of prior litigation misconduct when that conduct has “an immediate and necessary relation” to the claim.

[104]     The clean hands doctrine is not in issue on this appeal and was not in issue before the trial judge.  Moreover, this case is not solely about the effect of Donna having given false evidence at her examination for discovery.  It is about whether her present claims are an abuse of process by reason of the totality of her conduct in the divorce action.

[105]     I am, accordingly, of the view the judge did not err in considering Donna’s false discovery evidence.

Effect of the Settlement of the Divorce Action

[106]     Donna cites this Court’s recent judgment in Glover v. Leakey, 2018 BCCA 56, 7 B.C.L.R. (6th) 1, in support of her submission the trial judge erred in not considering the settlement of the divorce action as militating in her favour.  However, that case is distinguishable for a number of reasons.

[107]     Ms. Glover and Mr. Leakey were married and jointly owned a motor vehicle that was involved in an accident.  Mr. Leakey was driving that day; Ms. Glover and Ms. Yeomans were passengers.  Ms. Yeomans commenced an action against Ms. Glover, Mr. Leakey, and others.  In their response to civil claim, Ms. Glover and Mr. Leakey admitted Mr. Leakey had been negligent.  That action was resolved by way of settlement.

[108]     Ms. Glover commenced an action against Mr. Leakey.  In his response to civil claim, Mr. Leakey denied he had been negligent.  Part way through a jury trial, Ms. Glover applied to strike Mr. Leakey’s denial on the basis that having admitted his negligence in another action arising out of the same accident, he was precluded from continuing to contest his liability.  The trial judge deferred ruling on that issue until the jury had rendered its verdict.  The jury found Mr. Leakey had not been negligent.  The judge then heard submissions on how to deal with the jury’s verdict.  Following those submissions, the judge: declared a mistrial; dismissed an application to enter the jury verdict; struck the denial of liability in Mr. Leakey’s response to civil claim on the basis that it was an abuse of process; and granted Ms. Glover judgment on the issue of liability.

[109]     This Court dismissed Mr. Leakey’s appeal from the mistrial declaration, but allowed his appeal from the liability judgment and ordered a new trial.  The Court held that, in the circumstances, it was open to Mr. Leakey to deny liability in relation to Ms. Glover even though he had admitted liability in relation to Ms. Yeomans.

[110]     Donna relies on the following from the judgment of Justice Willcock:

[40]      I agree with the appellant’s submission that it is important that the Yeomans Action was settled before trial.  Pleadings are rarely struck as an abuse of process on the ground of relitigation unless the prior pleading has led to a judgment (which is not the case here).  Even where the prior litigation has resulted in a judgment, the courts have been cautious in our application of the abuse of process doctrine to prevent relitigation: see R. v. Mahalingan, 2008 SCC 63, and the cases cited therein.

[41]      Here, as in [Caviglia v. Tenorio (1992), 71 B.C.L.R. (2d) 255 (S.C.)], there had been no prior adjudication of the issue in question and thus the finality principle is not engaged.  The jury was not reviewing evidence that had resulted in an earlier decision.  No resources were wasted.  There is no basis to conclude that the jury verdict would undermine the integrity of the administration of justice.

[Emphasis added.]

However, these passages cannot be read in isolation.  Glover does not stand for the proposition that inconsistent pleadings cannot amount to an abuse of process when one of the matters has settled.

[111]     As Willcock J.A. pointed out earlier in his reasons, the inconsistency between the pleadings in the two actions related to a formal admission which was binding only in the case in which it was made: paras. 2628.  Further, and of importance, Willcock J.A. found that:

(a)   “[t]he prior admission did not mislead or confuse [Ms. Glover’s] counsel”: para. 42;

(b)   Mr. Leakey had “not reaped any advantage from the inconsistent pleading, nor were the pleadings a fraud on the court”: para. 42; and

(c)    “the inconsistent plea [was] not a positive averment, but simply a responsive statement”; by denying liability, Mr. Leakey had not “plead[ed] facts known to be untrue”: para. 44.

[112]     These facts are in stark contrast to those in the present case, which include a fraud perpetrated on the Court, Mr. Taherkhani, and others.  Had Donna disclosed what she now says is the true state of her financial affairs, it is highly unlikely the divorce action would have settled on terms as favourable to her as those in the consent order.  To paraphrase Willock J.A. at para. 32, in the case at bar there is more giving rise to an injustice than the inconsistent pleadings alone.

[113]     Accordingly, I would not accede to this argument.

Windfall to Mina and Francis

[114]     Donna, supported by Mr. Taherkhani, contends the trial judge erred in failing to balance the policy interests in protecting the administration of justice with the policy interests in preventing injustice and the unjust enrichment of Mina and Francis.  This argument is grounded on the approach courts have taken in cases in which a claim is based on illegal conduct, such as:

(a)   William E. Thomson Associates Inc. v. Carpenter (1989), 69 O.R. (2d) 545 (C.A.), leave to appeal ref’d [1990] 1 S.C.R. vi: action by lender against guarantors of a loan agreement containing an illegal (criminal) interest rate; obligation to pay interest unenforceable; lender successful in recovering the principal amount;

(b)   Nelson v. Nelson, [1995] HCA 25, 184 C.L.R. 538: mother providing funds to purchase a house which was registered in the names of her son and daughter to enable her to illegally remain eligible to obtain a government subsidized loan should she wish to purchase another house; mother later purchasing second house with a subsidized loan obtained by providing a false declaration; first house sold and daughter claiming half the proceeds; son taking the position beneficial ownership had always vested solely in mother; mother and son successful in obtaining declaration with respect to mother’s beneficial interest; and

(c)    Patel v. Mirza, [2016] UKSC 42, [2017] 1 All E.R. 191: claimant giving money to another person to be used for illegal insider trading; agreement between them a criminal conspiracy; money never used for illegal trading; claimant successful in action to recover the money.

[115]     In my view, the approach taken in litigation in which one of several parties to an illegal bargain seeks to enforce that bargain does not have general application when the issue concerns an abuse of the court’s process.  Further, and more important, the judge was alive to the fact that dismissal of Donna’s action could result in a windfall to Mina and Francis.  He concluded that, even assuming a windfall to them in the millions of dollars, the administration of justice would be better served by denying Donna’s claim.  In doing so, the judge considered the broader policy implications of a court being seen to condone the actions of someone who knowingly and deliberately makes false financial disclosure in family law litigation, litigation in which incomplete, let alone deliberately false, disclosure is anathema to the proper and timely resolution of disputes.

[116]     The judge’s conclusions regarding the reputation of the administration of justice are well-founded and admit to no legal error.  Accordingly, I would not accede to this argument.

Trust Claims

[117]     In her amended notice of civil claim, Donna claimed express, or, in the alternative, resulting or constructive, trusts over the Lawson, Argyle, and West 2nd properties in proportion to the amounts she claimed to have contributed to their acquisition.  On appeal, she submits the trial judge erred by dismissing this aspect of her claim, as her entitlement to those properties does not depend on any of the falsified documents and discovery evidence relating to the divorce proceedings.

[118]     I would not accede to this argument.  The interest Donna claimed in those properties is inextricably linked to her conduct in the divorce proceedings.  In the present action she pleaded Mina and Francis used a portion of her share of the proceeds from the post-divorce sale of the Procter property to purchase the West 2nd property.  However, Donna did not disclose her interest in the Procter property in her Form F8.  As for the Lawson and Argyle properties, Donna pleaded Mina and Francis purchased them using funds beneficially owned by her, funds she failed to disclose.

[119]     I see no error in the judge dismissing this portion of Donna’s action as it formed part of the overall context of her deceiving Mr. Taherkhani in the divorce proceedings.

Re-opening of the Divorce Action

[120]     Mr. Taherkhani submits it will be difficult for him to pursue his property claims against Donna. He notes that if this appeal is dismissed, then he will have to add Mina and Francis as parties to the divorce action and then, in the context of that action, carry the burden of establishing the disputed assets are beneficially owned by Donna and are, therefore, family property.  Mr. Taherkhani says he will have to expend considerable time and money in that regard.  To avoid having to do so, he supports Donna’s request for a new trial of the within matter; a trial in which Donna will bear the burden of establishing her beneficial ownership of those assets.

[121]     The lis at the trial of the within matter was between Donna on the one hand, and Mina, Francis, and Mr. Blackburn on the other.  Donna’s action was dismissed because she had abused the process of the court.  That subsequent events in another action have opened the door for Mr. Taherkhani to advance a claim to the disputed assets does not, in any way, lessen the seriousness of Donna’s misconduct, or militate in favour of her being allowed to proceed in the face of that misconduct.

[122]     In my view, the position Mr. Taherkhani finds himself in is not relevant to the disposition of this appeal.

Disposition

[123]     I would admit the May 7, 2018 order in the divorce action as evidence in this appeal and dismiss the appeal.

“The Honourable Mr. Justice Frankel”

I AGREE:

“The Honourable Madam Justice MacKenzie”

I AGREE:

“The Honourable Madam Justice Fisher”