2005 BCSC 101 Greywall et al v. Sekhon

Before: The Honourable Mr. Justice Rogers

Reasons for Judgment

Counsel for the Appellants:	B.K.P. Chudiak
Appearing for the Respondent:	R. Barton
Date and Place of Hearing:	January 20, 2005
	Quesnel, B.C.

Introduction

[1] This is an appeal of a small claims matter. The appellants seek to overturn the decision of the learned trial judge and ask this court to substitute a finding that the respondent is not entitled to the relief she obtained in the court below.

[2] The appellants say that the learned trial judge erred by accepting evidence from witnesses who were present in the courtroom during a portion of the respondent’s testimony at trial. They say, as well that the learned trial judge erred in concluding that there was no agreement between the parties with respect to the payment of certain funds by the respondent to the appellants.

[3] Those errors, so say the appellants, led the learned trial judge to order that the appellants return the funds in issue to the respondent. They seek to reverse that order.

Proceedings at Trial

[4] This matter occupied two days of trial in Small Claims Court. The learned trial judge delivered his reasons after reserving on the matter for about three months.

[5] It was the respondent who commenced the small claims action. She sought an order requiring the respondents return $4,638 to her. The evidence at trial revealed that the respondent invested some money in Genesis Land Development Corporation. She was unhappy with the quality of that investment. A number of other investors shared her sentiment. The respondent happened to live in Quesnel. Other investors were scattered around British Columbia and Alberta. A group of investors headed up by the respondents proposed to sue Genesis in an effort to recover their money. The respondents were headquartered in the Lower Mainland.

[6] The respondents organized the group of disgruntled investors (GDI). At a series of meetings the respondents put together a proposal for the GDI. They proposed that each investor who wished to participate in a suit should be required to contribute 10 cents for each share of Genesis stock they owned, plus another 5 cents in the event that more money was needed. The funds were to be held in trust by the respondents and were to be used solely to pay the group’s lawyer.

[7] The respondent was the first witness. She had completed her evidence in chief and was about to be cross-examined when the appellants noticed that some of the respondent’s witnesses were sitting in the courtroom. The appellants brought this to the learned trial judge’s attention. The learned trial judge ordered that those witnesses absent themselves until they were called to give evidence. The learned trial judge considered the quality and quantity of the respondents’ evidence to that point, and took the view that no great harm had been done as a consequence of those witnesses having heard the respondent’s evidence in chief.

[8] The respondent testified that she did not attend any general or information meetings of the GDI. There was evidence, accepted by the learned trial judge, that the respondent’s husband Avtar Sekhon did attend such a meeting. However, the learned trial judge concluded that there was no evidence that Avtar told the respondent any particular details of those meetings. In particular, the learned trial judge found that there was no evidence that the respondent was aware of a stipulation by the GDI that once money was contributed to the suit fund it could not be withdrawn until the suit was resolved. The learned trial judge concluded that the respondent could not be bound by any terms or conditions expressed in those meetings.

[9] After the meetings took place, the respondent decided to participate in the GDI. She contributed one current and three post-dated cheques totaling $4,638. The cheques were made out to the appellants Greywall and Lee in trust. The cheques were dated October 15, November 30, and December 14, 2001, and January 11, 2002.

[10] After giving the cheques to the appellants the respondent received a retainer letter dated November 15, 2001. The retainer letter was from the lawyer the appellants had hired to prosecute the GDI’s suit against Genesis. The respondent signed the retainer letter, thus indicating her agreement with its terms.

[11] The retainer letter contained a number of terms, several of which are germane to the appeal. The first was that the retainer letter stipulated that the members of the GDI had agreed “not to pursue, or to defer, any potential conflicts or disputes against one another until the present lawsuit is resolved”. The second was that:

Subject to the approval of my firm and Narinder or Jasbir, new members may be admitted to the group as the matter progresses. Conversely, if any of you decide to drop out of the lawsuit prior to its conclusion, unless you have been named as a defendant by counterclaim, you would be free to discontinue the action upon payment of your share of our legal fees and your portion of the other side’s taxable costs.

[12] The Jasbir in the passage above was the appellant Jasbir Singh. The Narinder was another person nominated by the GDI to instruct the lawyer on the group’s collective behalf.

[13] In October 2002, the respondent instructed the lawyer to discontinue her proceeding against Genesis and requested that he refund to her the money she had contributed to the litigation fund. She acknowledged that her portion of the legal fees incurred so far and Genesis’ costs should be deducted from the money to be returned to her. The lawyer achieved her removal from the suit, but did not account to the respondent for fees and costs, and did not send any money to her. Although it is not clear from the evidence or the learned trial judge’s reasons why the lawyer did not do this, I infer that it is because the litigation fund to which the respondent contributed remained in the hands of the appellants and was paid to the lawyer as he rendered accounts. The lawyer did not actually have any money in trust and so he could not actually return any money to the respondent.

[14] After receiving no monetary satisfaction from the lawyer, the respondent eventually asked the appellants for her money back less deductions for legal fees and costs. The appellants refused to comply and the respondent commenced her small claims action. The appellants defended the suit and launched a counter-claim for payment from the respondent of an additional $2,469, which they say the respondent owed for an additional 5 cent per share call made by the GDI on its members.

The Trial Decision

[15] The learned trial judge carefully reviewed the oral and documentary evidence adduced by both parties. He canvassed their respective positions. In the end the learned trial judge preferred the respondent’s evidence that she did not attend any information meetings of the GDI. He found, therefore, that she was not aware that during those meetings the group’s leaders made it clear that once paid in the litigation fund could not be withdrawn before the suit was resolved. He found further that while Avtar did attend one of those information meetings there was no evidence on which he could conclude that Avtar relayed to the respondent the proposition that she could not get her money out before the Genesis suit was resolved. He specifically rejected the appellants’ argument that Avtar must have informed the respondent of the details of the information meeting, including the no-refund policy.

[16] The learned trial judge found that the respondent gave her money to the respondents by four cheques marked “in trust”. He found that the respondent signed the retainer letter.

[17] The learned trial judge concluded that there was no meeting of the minds between the respondent and the appellants about the funds she put in their hands. He said:

[26] There must be agreements between persons negotiating the terms of a proposed verbal agreement as to what the terms or the subject matter of that agreement is to be. On the evidence in this case, that agreement was never reached. There never was an agreement. There never was a contract. The Claimant was not present at the meeting of prospective litigants at which time the major details of the general proposal were discussed. The court cannot assume that Atvar Sekhon conveyed the details or even the general tone of the discussions based upon some sort of suggested cultural or religious prerogative.

[18] There being no agreement about the funds, the learned trial judge concluded that the appellants had no call to hold onto the respondent’s money and order that they pay it to her.

Discussion

[19] The appellants say that the learned trial judge erred when he accepted the respondents position because that position was founded on evidence from witnesses who were tainted by having seen the respondent testify in chief.

[20] The appellants did not point out precisely what portions of the impugned witnesses’ testimony ought to have been rejected. Their argument was that that evidence should have been entirely discarded.

[21] In my view, the issue of evidence from a witness who had seen another person testify is a question of weight, not admissibility. The learned trial judge was clearly alive to the potential problem as soon as the appellant raised it. The learned trial judge cannot be said to have blindly accepted everything that the respondent’s witnesses said at trial. He did, for example, reject Avtar’s assertion that he never attended a disgruntled investors’ information meeting. The learned trial judge carefully canvassed the evidence adduced at trial, and made findings of credibility and weight based on his observation of the witnesses in the stand. The learned trial judge was uniquely able to make those decisions and an appeal court must not interfere with those decisions unless they are most clearly wrong. There is nothing ‘clearly wrong’ with the learned trial judge’s decision to give the weight he did to the impugned witnesses. That ground of appeal is dismissed.

[22] The appellants say that the evidence showed that there were terms of agreement between the respondent and the appellants with respect to the money she contributed to the litigation fund, and that the learned trial judge erred when he concluded that there was no agreement. They say that if there was an agreement then it is open to this court to find what those terms were and make an order accordingly.

[23] With the greatest of respect to the learned trial judge, I am inclined to agree with the appellants on this point. The respondent herself testified that she understood she was sending the money to the appellants on some terms and for some purpose. The cheques she wrote stipulated that the funds were paid to Ms. Lee and Mr. Greywall in trust. The appellants all testified that some terms and conditions applied to the funds they held for the investors. The retainer letter contained some terms which clearly governed the operation of the GDI (eg: acceptance of new members and departure of existing members) rather than governing the solicitor-client relationship. The learned trial judge accepted this evidence.

[24] I think it likely that the learned trial judge misspoke when he said that there was no agreement at all between the respondent and the appellants. I think it likely that the learned trial judge intended to say that there was no agreement about whether those funds would be non-refundable before the Genesis suit was concluded. Nevertheless, the judgment as it is written says there was no agreement at all between the respondent and the appellants. That conclusion is, in my view, contrary to the evidence. There was an agreement – the question is whether that agreement included a term that the respondent could not extract her money before the suit was concluded.

[25] The appellants’ second ground of appeal must succeed.

[26] The next question is: what were the terms of the agreement governing the use and return of the respondent’s money? The parties urged me to find those terms rather than sending the matter back to the learned trial judge. They took that position in the interest of economy and expediency. I accept the task.

[27] There are no grounds on which I can properly overturn the learned trial judge’s conclusions on credibility and weight. Therefore, I will proceed on the basis that Avtar Sekhon did attend an information meeting but that the respondent did not. Avtar did not tell the respondent that at the meeting the group’s organizers stipulated that money paid into the litigation fund could not be paid out before the litigation’s conclusion. The respondent paid the money to the appellants but she did not know and never agreed to a term that she could not get the money back before the litigation’s end.

[28] I find that the lawyer’s retainer letter contained some terms governing the lawyer’s duties to the respondent and her duty to him. The retainer letter also contained some terms that did not govern the solicitor-client relationship but rather the relationship between the members of the GDI itself. One of those terms was the requirement that members of the litigation group postpone internecine disputes. That term would certainly make the lawyer’s life easier, but its bedrock purpose was to govern the group’s members and keep them from each other’s throats while the litigation was underway.

[29] By the same token the letter’s provision concerning removal of a member from the suit must have been primarily designed to govern the group’s relations with one another as opposed to the member’s relations with the lawyer. That is because the group intended the appellants to hold and administer the litigation fund and to pay it to the lawyer as his bills came in. The lawyer would get his fees regardless of the number of members in the group. As the keeper of the money, it was the appellants who were interested to know who had contributed money and who wanted to get out of the group.

[30] I assume that the lawyer only wrote in the retainer letter the things the appellants instructed him to put there. The appellants were, therefore, content with the withdrawal provisions.

[31] In the appeal the appellants took the position that they held the members’ money, including the respondent’s money, for the sole purpose of funding the litigation. The terms of the trust or alternatively the contract between the appellants and the respondents were, therefore, that the appellants would only use the money to pay their lawyer.

[32] Since the appellants specifically endorsed the idea that a member could withdraw from the litigation upon paying a pro-rata share of the legal fees, and since the money the appellants held could only be used to pay those fees, it follows that once a member was no longer liable for legal fees upon withdrawing from the litigation the appellants no longer any reason or right to hang onto the remainder of the withdrawing member’s money.

[33] Of course, the outcome may have been different if the evidence had established that the respondent agreed at the outset that the money was non-refundable. In that case, the court would have been obliged to reconcile that agreement with the retainer letter. Happily, in this case I am not put to that task.

[34] Accordingly, although I reluctantly and with the greatest of respect must find that the learned trial judge fell into error when he said there was no agreement at all governing the appellants’ use of the respondent’s money, I agree entirely with the learned trial judge’s disposition of the case, viz: the appellants must return the respondent’s money to her.

[35] The appellants argued, in closing, that if the money ought to go back to the respondent it should be net of the respondent’s pro-rata share of legal fees and costs. I reject that argument – that is an issue the appellants ought to have raised in the alternative at trial. It is too late now to seek that relief.

Conclusion

[36] The appeal is dismissed with such costs as may be claimed to the respondent. There will be an order that the money paid into court by the appellants to secure the appeal shall be paid out to the respondent forthwith.

[37] There may be some monies paid into court pursuant to a garnishing order in the Provincial Court proceeding. I, of course, make no order with respect to those funds and leave their management and disposition to the Provincial Court.

“P. Rogers, J.”
The Honourable Mr. Justice P. Rogers

Citation:	*Greywall et al v. Sekhon*
	2005 BCSC 101