B.C. Judge Calls Vintage Auto “Frankenstein’s Monster of Automobile World”

In 1987 John Gabriel acquired 1961 Studebaker Hawk. In 2002, he agreed to sell it to Robert Watterworth. Neither of them realized that the vintage automobile was an amalgam of two Studebakers with different Vehicle Identification and Serial numbers, one made in the US and the other in Canada, and of parts from other cars, rendering it a virtual Frankenstein.

In the British Columbia Supreme Court case of Gabriel v. Watterworth, decided in April, 2012, Mr. Gabriel sued to force compliance with the terms of the contract, while Mr. Watterworth sought to get out of the deal. Both parties agreed when they struck the deal that the car was worth about $20,000. So was Mr. Watterworth’s 3.5 acres of land that he agreed to sign over in exchange for the Studebaker. The problem was that while the vehicle was probably worth no more than $20,000 at the time of trial, the land value had increased to about $95,000.

Mr. Watterworth was driving in the country with his lover at the time, Ms. Flynn. They spotted the Studebaker on Mr. Gabriel’s property and stopped to find out more about it. Ms. Flynn liked how it looked. Most of the interior and chrome trim was missing, but Mr. Gabriel indicated he had all the necessary pieces to make the car whole. He told them it was a 1961 Hawk although the supercharger was not the right one for a 1961 Studebaker; but that nevertheless it was a very rare car. The parties decided to swap land for car. Mr. Watterworth wanted to fix up the car to give to Ms. Flynn as a gift.

A few days later Mr. Watterworth received the car, and purportedly the missing pieces. He took it to a collision shop to find out the cost of making it roadworthy. He was informed that some parts were missing and others were broken. He also learned that one of the two front hoods that came with the car and the trunk lid were from a 1958 Studebaker Golden Hawk, and the other front hood was of 1961 vintage, but had been modified. Mr. Watterworth elected to do nothing about these problems. In March, 2003, Mr. Gabriel contacted Mr. Watterworth since he wanted the land transferred to his name in compliance with the deal. They met and signed a contract that had been prepared when they had met previously, stating that Mr. Watterworth agreed to trade his described property for a 1961 Studebaker Hawk, indicating the serial number.

Mr. Watterworth’s evidence was that his signed the contract after he knew of the problems with the car and was unsatisfied with it, because he hoped that Mr. Gabriel would follow through and supply all the parts needed to complete the car.

Between 2002 and 2009 Mr. Gabriel paid all the taxes on the property. Mr. Watterworth had been sending him the bills. In 2008 Mr. Gabriel demanded that Mr. Watterworth transfer the land. At first Mr. Watterworth used an excuse that there was a title issue with the land. Then he simply refused to transfer it. He finally shipped the car back to Mr. Gabriel.

Some time after the contract was signed but before the car was returned to Mr. Gabriel, Mr. Watterworth learned that the car had two different VINs (for a US and a Canadian manufactured Studebaker), and a second serial number, this one from a 1958 Golden Hawk. Mr. Watterworth also learned that in 1961 Studebaker did not produce a car with a supercharged engine. It appeared clear that the vehicle was made from at least the two Studebakers, one 1958 and another 1961.

Mr. Gabriel sued Mr. Watterworth, demanding that the contract be completed with the land transfered to him. According to Mr. Gabriel, he could not be held liable for any promises outside of the terms of the 2003 contract. He delivered a 1961 Studebaker Hawk to Mr. Watterworth, with all available parts.

Mr. Watterworth claimed rescission of the contract. He was promised a complete 1961 Studebaker Hawk but instead received an amalgam of two cars, so Mr. Gabriel fundamentally breached the contract, and Mr. Watterworth entered the deal under a mistake. He believed that Mr. Gabriel had or could source the parts to make a whole 1961 vehicle.

Justice Rogers stated that the contract was part written and part oral, since there was nothing in the written document stating that there could be no other terms, representations or warrantees. Most written contracts have clauses stating that the written terms are all of the terms unless there is something else in writing changing them. This contract did not have such wording so the judge was able to determine the full extent of the deal through evidence of conversations and not just the written document. He found that the contract was to deliver a complete 1961 Studebaker Hawk, albeit one with a 1958 supercharged engine from another car.

The judge found that Mr. Gabriel fundamentally breached the contract and that Mr. Watterworth was entitled to rescission. Mr. Watterworth was ordered to pay Mr. Gabriel the money he had paid for the land taxes plus interest on the payments, and Mr. Gabriel was ordered to pay costs of the proceeding to Mr. Watterworth.

Counsel for Mr. Gabriel indicated that his client did not instruct him to appeal, a costly process. But the decision is problematic:

• Both parties stated the car was worth $20,000, and so was the land, so wasn’t Mr. Watterworth getting what he bargained for?
• The judges stated that if the car would have been in Mr. Watterworth’s possession at the time of trial, he would have ordered the car valued and ordered Mr. Watterworth to pay Mr. Gabriel for it, on the theory that Mr. Watterworth wanted it. Should the fact of returning the car before trial change the whole outcome?
• When the deal was struck, Mr. Watterworth knew that it was not a complete 1961 Studebaker, since he knew that Studebaker did not use a supercharged engine that year. He had the car in his possession, with parts, when he signed the contract. Would a reasonable person sign a contract without all the parts, knowing that the car was not a complete 1961 model, unless he wanted it, as is?
• Why did Mr. Watterworth do nothing for eight months, until Mr. Gabriel demanded the land, and why did he keep sending Mr. Gabriel the tax bills if he had concerns? 
• At the time of trial Ms. Flynn was no longer Mr. Watterworth’s lover and thus Mr. Watterworth no longer had any use for the car, an intended gift for Ms. Flynn. 
• At the time of trial there was another important change; the value of the land had increased substantially.

It appears that Mr. Watterworth wanted to get out of the deal because his land had substantially increased in value, but the car had not, and more importantly he would no longer have use for it because he had broken up with Ms. Flynn.

- Alvin Starkman, Oaxaca, Mexico

Alvin Starkman received his Masters in Social Anthropology in 1978. After teaching for a few years he attended Osgoode Hall Law School, thereafter embarking upon a successful career as a litigator until 2004. Alvin, a good-standing member of the Law Society of Upper Canada, now resides with his wife Arlene in Oaxaca, Mexico, where he writes, leads small group tours to the villages, markets, ruins and other sights, is a consultant to documentary film production companies, and operates Casa Machaya Oaxaca Bed & Breakfast.

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Removing Antiques upon Sale of a Home: Chattels v. Fixtures

When Richard Foltz and Wendy Loper sold their house in Pointe – Claire, Quebec, they unhinged and took with them an antique door that they had received as a gift. But the door was not stipulated as an exclusion in the agreement of purchase and sale. So when the purchasers, Kimberly Kyle and Jacqueline Jensen took possession of the home and found the door missing, they sued. They had other reasons to take Mr. Foltz and Ms. Loper to court, but in the proceeding they included a claim for the antique door that they believed was part of the sale and included in the purchase price.

The 2010 Court of Quebec case of Kyle c. Foltz raises the issue of what you can remove from your house upon its sale, in the way of antiques and collectibles, and what must legally remain on the premises. While it’s up to your real estate agent to prepare the agreement to protect you, sometimes realtors are simply not sensitive to this important issue. Unless otherwise specified in an agreement of purchase and sale, a vendor can remove all chattels from the property or home, but fixtures must remain.

For antique collectors there are important ramifications, particularly when, for example, your garden landscaping includes an old iron plough, or when you’ve installed a vintage stained glass window with pine frame, hung a Victorian crystal chandelier, or yes, affixed a nice old oak door.

Curiously, this past year there were a number of Canadian real estate law cases which dealt with the issue of the difference between chattels and fixtures. The leading case cited by courts across the country is a 1902 decision of the Ontario Court of Appeal. In the 2010 Supreme Court of British Columbia case of CMIC Mortgage Investment Corp. v. Rodriguez, Mr. Justice Rogers summarized the law from the Ontario case, and other more recent cases, as follows:

From these authorities I take the law to be that a thing affixed to the real estate will be presumed to be a fixture unless the evidence shows it is affixed for the purpose of making better use of it as a chattel as opposed to being an integrated part of the property as a whole; and that a thing that is not fixed to real estate will be presumed to be a chattel unless the evidence shows that its presence on the property is intended to make it an integral part or an enhancement of the property as a whole.

We can break down this somewhat convoluted legal principle by reference to our Quebec case and another recent B.C. case, Manarin v. Stelmaschuk, Doucettle Realty Ltd. and Leckie. In the Quebec case, the hinged antique door was clearly “an integrated part of the property” and not attached “for the purpose of making better use of it.”

In the Manarin case, Mr. Manarin purchased a home from Mr. Stelmaschuk. He sued Mr. Stelmaschuk and the realty company and agent who represented Mr. Stelmaschuk. Mr. Manarin claimed that the defendants misrepresented the square footage of the property, and that Mr. Stelmaschuk removed a number of “fixtures” from the home between when Mr. Manarin saw the home, and when he took possession after the sale. Mr. Stelmaschuk allegedly exchanged some of the items with others of lesser value. The list included a greenhouse and utility shed, wall mounted sconces and mirrors, and numerous other items; some the judge wasn’t convinced had been removed, others he couldn’t value for lack of evidence, and others he decided upon and valued.

Recall that the judge in the CIMC Mortgage case used the words “will be presumed.” This means that a party can still argue one way or the other, by rebutting the presumption. In the Manarin Judge M.J. Brecknell wrote that determining whether an item is a chattel or fixture “is not always as clear as may initially be thought.”

The judge found that the greenhouse and utility shed were chattels, stating that they were not annexed to the land, and citing evidence of how easily portable they were. However, other cases have looked at the weight of an item, so that an outer building could be intended to be a fixture, yet not attached to the ground simply because its weight makes it unnecessary.

The judge decided that the wall mounted sconces were chattels. It appeared that some had been hanging on screws and could be easily taken down without removing the screws (as apparently had been the case). The mirrors were determined to be fixtures “because their attachment to the wall was for the better use of room as a room, and not the better use of the mirror as a mirror.”

How would a judge make a decision regarding our vintage stained glass window with pine frame? Let’s assume that an ordinary window has been removed from a living room, and the stained glass unit inserted in its place, with silicone, and that the stained glass is what the purchaser saw before agreeing to buy the house. The window would be presumed to be a fixture. What evidence would have to be adduced to convince the judge that it was “affixed for the purpose of making better use of it as a chattel as opposed to being an integrated part of the property as a whole?” Would it be enough to tell the judge that it was installed where the old window had been, purely to make the best use of it, with the daylight and sunshine accentuating its beauty?

In the Manarin case, the buyer and seller did use a standard real estate association contract with pre-printed provisions and space for hand-written insertions, including an area for specific inclusions and exclusions. It was not completed with sufficient particularity.

Vendors should go through their home with their real estate agent, compiling a list of everything they want to take with them, that could possibly be construed as a fixture, and ensure that each item is enumerated as excluded. Purchasers should do the same thing for any item that could possibly be deemed a chattel, and have each listed as an inclusion. Real estate agents don’t always know what’s important to their vendors and purchasers. If they don’t ask, tell them.

- Alvin Starkman, Oaxaca, Mexico

When Alvin Starkman sold his Toronto home, the purchaser insisted he remove the big old iron plough which had been incorporated into the front garden shrubbery. Alvin refused, and won that battle. Alvin and his wife Arlene now live in Oaxaca, Mexico, and own Casa Machaya Oaxaca Bed & Breakfast (http://www.oaxacadream.com). Alvin is also a partner in Oaxaca Culinary Tours (http://www.oaxacaculinarytours.com), providing custom designed small group gastronomic tours of Oaxaca.

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Incompetent Conservation Officer Beats Hunter’s Malicious Prosecution Lawsuit

According to Justice R.E. Powers, Conservation Officer Aaron Kilback was “unskilled, uninformed, incompetent and careless,” as well as reckless and poorly trained. But that wasn’t enough for him to conclude that Kilback was guilty of malicious prosecution in two unsuccessful cases which Kilback brought on behalf of British Columbia’s Minister of Environment, against hunter Ken Olynyk.

B.C. Supreme Court decision Olynyk v. Kilback, rendered in Kamloops last December, dealt with the alleged vendetta that CO Kilback had against Olynyk, dating back to 2004, when the hunter first went afoul of the law. The basis for the malicious prosecution court case was CO Kilback’s alleged motivation and means by which he proceeded with consecutive prosecutions against Olynyk.

Ken Olynyk had been a hunter for approximately 25 years. He valued his right to hunt, and relied partially on hunting to provide food for his family. The first case against him arose after he shot a cougar which had killed his dog. The problem was that he subsequently purchased a tag which would allow him to hunt cougar. He knew it was wrong. CO Kilback showed up a few days later and issued Olynyk a ticket, a warning slip, and notice of potential cancellation of a hunting license.

CO Kilback forgot to endorse the original ticket with the date he served Olynyk, so contacted him and arranged for Olynyk to come to the conservation office to get a new ticket and notice. In error CO Kilback dated the offences 2003, instead of 2004.

It became obvious that the date on the ticket was wrong, so Olynyk was acquitted. CO Kilback was embarrassed and humiliated. He eventually admitted that he often issued a new ticket to correct an error in a ticket already issued.

In front of the Justice of the Peace, CO Kilback made it clear that he would lay the charge again. Olynyk told him he did not think it was appropriate as he had already been acquitted. Olynyk was a hunter, not a lawyer, yet he knew about double jeopardy. CO Kilback subsequently admitted that he had limited prosecutorial experience and had received neither training nor direction as to how to proceed with a trial.

Shortly thereafter, on Father’s Day, CO Kilback attended at the Olynyk residence with a new ticket for the same offences. My Olynyk protested but CO Kilback left the ticket, and while doing so allegedly spoke nastily to him. Olynyk paid a lawyer to have the proceedings against him stayed by Crown counsel. Crown counsel wrote to CO Kilback making it clear that a person could not be re-charged in such circumstances.

CO Kilback prepared a RAP sheet indicating the charges against Olynyk, and fine amounts. Even in the face of the acquittal, he never changed the RAP sheet, which remained on record.

The second case against Olynyk arose the following year, after he had shot a deer. He believed that he and the deer were on Crown land. However they were both on land owned by a neighbour. The neighbour complained, so CO Kilback and another conservation officer issued a ticket to Olynyk, charging that he hunted on cultivated land without permission.

CO Kilback knew that his fellow officer would not appear at the trial. It appears that it was the second officer who took all the photos of the land and boundaries in dispute, even though CO Kilback stated that he took some of them. The person who takes photographs should be the one putting them into evidence at a trial.

CO Kilback had received information that the neighbour might not show up at trial. Her evidence was needed to prove that Olynyk was on her land without permission. You cannot rely on hearsay under such circumstances, in terms of an officer stating that the landowner said the permission to hunt on the land had not been given. You need the landowner.

In this second prosecution it also appeared that documents had been altered by CO Kilback. During testimony, when the discrepancy about documents became apparent, CO Kilback was anxious and embarrassed that he might make a fool of himself in front of an RCMP officer and the Justice of the Peace.

In the end, Olynyk was acquitted in the deer incident because the neighbour did not attend. Regardless, the evidence was shaky, without the other officer in attendance, and with problems concerning the photographs and the documentary discrepancy.

Did CO Kilback have a vendetta against Olynyk dating back to his embarrassment and humiliation arising out of the cougar incident? Did he deliberately serve the second ticket on Father’s Day to embarrass Olynyk in front of family? Was he acting maliciously by issuing a second ticket when he should have known the double jeopardy rule? Did he proceed with the cougar trial out of malice, knowing that the photographs were problematic without his fellow officer present, and the likelihood of not having the neighbour in attendance as the key witness regarding lack of permission to hunt? And what about altering documents?

Olynyk sued CO Kilback and the province in civil court, claiming damages for malicious prosecution. Justice Powers reviewed the allegations and defence. He noted that the elements of malicious prosecution are:

• the defendant was responsible for initiating and continuing proceedings against the plaintiff;
• proceedings are terminated in favour of the plaintiff;
• in instituting proceedings, the defendant acted without reasonable and probable cause, and;
• the defendant in instituting and continuing proceedings, did so with malice or a primary purpose other than that of carrying the law into effect.

The judge had no difficulty with the first two elements, since they were proven; Olynyk was acquitted with respect to both incidents, the cougar prosecution because of the error regarding the date, and the deer prosecution because the Crown could not prove lack of permission by the neighbour.

Reasonable and probable grounds have subjective and objective elements; actual belief in the guilt of the accused, and the belief must be reasonable in the circumstances. If there are no reasonable and probable grounds, the plaintiff then must prove malice in the form of a deliberate and improper use of the office of the Attorney General or Crown Attorney, inconsistent with the status of “minister of justice.” Malice cannot be inferred solely from a lack of reasonable and probably grounds.

The judge embarked upon a lengthy analysis of the two final elements, discussing the facts in light of the law. There were no reasonable and probable grounds for issuing a new ticket after the first acquittal. The judge concluded the CO Kilback was unskilled, uninformed, incompetent, careless and lacked training, but that lack of professionalism was not evidence of malice. Malice similarly was not proven as a result of other questionable and inappropriate actions of CO Kilback in the cougar case. Regarding the deer incident, after reviewing the evidence the judge once again was critical of CO Kilback, but was “not satisfied that he was acting out of malice so much as gross incompetence.” The judge was not satisfied that CO Kilback was prosecuting Olynyk for an improper motive.

Even though Ken Olynyk lost the civil case against Aaron Kilback and British Columbia, the judge did not award costs against him, stating that it was not surprising that CO Kilback’s actions appeared to be motivated by malice, given his lack of training by the Province of British Columbia.

As judges often do when they dismiss a lawsuit claiming damages, Justice Powers assessed the amount he would have awarded in favour of Olynyk had liability been proven in both incidents. The total payable would have been $35,548.01, plus interest and costs.

Counsel for Ken Olynyk has advised me that the plaintiff elected to not appeal the decision.

- Alvin Starkman, Oaxaca, Mexico

Alvin Starkman is a member of The Law Society of Upper Canada. However, this article is not intended to be and should not be relied upon as constituting legal advice or opinion. Alvin and Arlene moved from Toronto to Mexico in 2004. They operate Casa Machaya Oaxaca Bed & Breakfast (http://www.oaxacadream.com). Alvin also arranges small group Oaxaca culinary tours (http://www.oaxacaculinarytours.com).

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Playing Poker with Your Ex: Who Gets the Antique Seth Thomas Clock?

It would give Canadians a lot more faith in the legal system, if judges were able to apply a new legal concept, the “this’ll teach the son-of-a-gun a lesson” rule. And you can bet that every week, there is at least one judge who yearns to be able to ground his decision using The Starkman Principle.

Throughout Canadian jurisdictions, subject to certain exceptions, when spouses separate the value of their assets accumulated during cohabitation is divided equally. If a wife, for example, has possessions and money worth a total of $250,000, and her husband’s accumulations are $350,000, the husband pays the wife $50,000. This is known as an equalization payment.

Sometimes, as well as determining values, judges are charged with deciding who gets what, if for example some assets are owned jointly by both parties. Of course judges can order chattels and real estate sold, and that the proceeds be divided as the court stipulates. But often a judge will be asked to determine ownership of a specific piece of property, and its fair market value for calculating the equalization payment.

In Riley v. Riley,2009 SKQB 98 (CanLII), a family law case decided last year by the Queen’s Bench for Saskatchewan, one of the more contentious matters resolved by Judge G.A. Chicoine was who would keep the antique Seth Thomas #19 Regulator Clock circa 1904, and at what value. Was it worth as low as $7,000 - $8,000, as Mrs. Riley’s antiques specialist suggested, or upwards $25,000 - $40,000 as Mr. Riley’s appraiser believed?

One would think that with such divergent opinions, Mrs. Riley would have wanted it for herself since she gave it a low value, and Mr. Riley wouldn’t have wanted it. Why? Because Mrs. Riley would only have to account for a modest value on her side of the asset ledger, and Mr. Riley, trying to have it valued at upwards of $40,000, would want his wife to be saddled with an asset valued at a great deal. For example, if $40,000 was accepted by the court, and Mrs. Riley kept the clock, she would have to give her husband a $20,000 credit.

But in this case there was a hitch. Apparently, Mr. Riley also wanted the clock. At least that’s what he told the judge. But if he wanted the clock, why would he have his expert attribute a high value to it? If he won on both counts, that is getting to keep the clock and having his value accepted, it would have cost him dearly. And that’s where poker comes into play. Mr. Riley was, in my opinion, simply toying with his wife, and also with The Court. Just perhaps - he really didn’t want the clock, at least not with a value of anywhere close to the $40,000?

Mrs. Riley’s grandfather bought the clock in a Moose Jaw jewelry store in the early 1950s. It was subsequently given to her parents. After her father died, and her mother moved to home care in 2003, it was put into storage. About a year before her mother’s death it somehow ended up in the Riley home, having been gifted to both Mr. and Mrs. Riley.

The clock was an heirloom, having been in the care of Mrs. Riley’s family for nearly 60 years. But Mr. Riley also claimed some attachment to it, since his father, a professional jeweler, refurbished it after it stopped working, and Mr. Riley himself later spent a great deal of time with the clock, adjusting the amount of mercury in the weights so it would keep proper time.

The judge decided that since it had been in Mrs. Riley’s family for three generations, and would not likely be sold by Mrs. Riley but rather passed on to one of her and Mr. Riley’s children, she should take possession of it … but compensate Mr. Riley for half its value.

Mrs. Riley’s expert, Vern Reese, had valued many clocks in his 40 years as a collector, dealer and appraiser of antiques. For many years his values had been accepted by government for the purpose of providing tax receipts for donations of antique articles. He had been qualified to give expert evidence in many divorce cases requiring antique valuations. In 2006, he appraised the clock at $7,000 - $8,000, if sold at a Saskatchewan auction, and stated that an antique dealer would only be interested if he could double his price. By the time of trial Mr. Reese acknowledged that the Seth Thomas clock might be worth $10,000.

Mr. Riley’s expert, Forster Monson, was a Certified Personal Property Appraiser, with no particular expertise in valuing clocks, but stated that for clocks he would apply the same methodology as used for other chattels … finding comparables. In 2007 he valued clock at $25,000 USD, using comparables found on the internet. However, the printout attached to his appraisal report showed that the pages were printed by Mr. Riley, suggested that Mr. Riley had done the search. Mr. Monson also relied on a conversation with a clock dealer in Saskatoon who was familiar with this particular clock. He said the dealer believed it was worth $25,000 - $40,000, and that at a reduced price he would be interested in buying it. However, it turned out that the dealer was an acquaintance of Mr. Riley.

Judge Chicoine decided that Mrs. Riley’s expert’s opinion should be given more weight than that of Mr. Riley, and that the clock should be valued in the Saskatchewan market since neither party intended to remove the clock from the province. On the basis of all the evidence, he attributed a value of $10,000, to the 100-year-old clock.

It can be argued that Mr. Riley had been expert-shopping, and took steps to influence the value that Mr. Monson attributed to the clock. And that as indicated above, he really wasn’t interested in keeping the clock … at least not at the value at which his expert pegged its worth.

Mrs. Riley got what she wanted, and at a price with which she could surely live. But within the context of an acrimonious matrimonial dispute, don’t you think she would have been more than a little content, and justice would have equally prevailed, if the judge had awarded the clock to her husband, accepting his highest value of $40,000, using The Starkman Principle? After all, what could Mr. Riley complain about? He wanted the clock, and the value for which he would have had to account to Mrs. Riley had been proposed by his very own expert. And the fate of the antique Seth Thomas clock? On balance it still would have stayed in Mrs. Riley’s family, at least for a fourth generation, being willed to one of the three Riley children by their father.

The Riley ruling has been appealed.

- Alvin Starkman, Oaxaca, Mexico

Alvin Starkman received his Masters in Social Anthropology in 1978. After teaching for a few years he attended Osgoode Hall Law School, thereafter embarking upon a successful career as a litigator until 2004. Alvin, a good-standing member of the Law Society of Upper Canada, now resides with his wife Arlene in Oaxaca, Mexico, where he writes, leads small group tours to the villages, markets, ruins and other sights, is a consultant to documentary film production companies, and operates Casa Machaya Oaxaca Bed & Breakfast.

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Downside of Keeping Antiques in Storage for Five Years, Unmonitored

Sherry Boire treasured her household contents. In fact when she began suffering from what turned out to be a long-term disability, she placed it all into storage – where it remained for five years, at a monthly cost of initially $64.20. When Ms. Boire recovered and wished to re-establish her home, she removed her chattels from storage. Most, including furniture consisting of family heirlooms and a number of antique barber chairs, had sustained significant damage as a result of moisture and mice: mold-discoloured wood, corroded metal, and furniture damaged by rodent chewing, urination and droppings.

In the 2009, Saskatchewan case of Sherry Boire v. Eagle Lake Enterprises Ltd. and Paul Florizone o/a Delta Sales, Ms. Boire sued the initial and the subsequent owner of the storage facility for her losses, over $35,000.

The Facts:

Before placing her belongings into storage, Ms. Boire met with Mr. Florizone, first owner of the facility, for a building tour and discussion. Mr. Florizone assured her that the newly-constructed building had temperature control, was air and water tight, pallets were not necessary, and that it would be like storing goods in her own home.

There was no written contract, but on the receipt Mr. Florizone wrote “all items left at owner’s risk.” Ms. Boire believed that this meant that she had to have insurance. She did, but there were exclusionary clauses relating to water and other damage, so her insurance did not cover the loss.

Mr. Florizone told Ms. Boire that to enter the building she would need to contact management, and to access her unit she would have to provide her own lock and key. Since he would not have a key to her locker, and therefore no access, she would have to look after the contents.

Mr. Florizone effectively approved of the manner in which Ms. Boire stored her goods. She even placed five pounds poisoned oats for rodent control.

When the plaintiff returned almost five years later, she encountered the damage. However none of the more than 100 other locker – renters, with virtually identical units, had a problem. The facility had been properly heated and kept clean and dry, and was secure. But the people who helped move Ms. Boire out of her unit noted a hairline crack in the floor, powdery mildew halfway up the walls and signs of rodents.

The Issues:

The court was charged with determining six issues:

• Were the plaintiff’s goods damaged while in the defendants’ building?
• If so, what caused the damage?
• Were the defendants liable in bailment, negligence, or breach of contract?
• Did “left at owner’s risk” on the receipt absolve the defendants of responsibility?
• What was the quantum of damages and how should it be apportioned?
• Did the plaintiff contribute to the loss by her own negligence or by failing to take steps to reduce the loss?

Bailment:

When someone leaves property in the possession of another, a bailment may be created. Two fundamental conditions of bailment are that ownership is not transferred, and the property is to be returned in the expected condition upon reasonable notice. If a bailment exists, who has to prove what, initially, changes. In this case we would begin with the premise that the defendants are returning the goods not as first stored, meaning they would be obliged to shift the blame to the plaintiff.

The Position of Ms. Boire:

Ms. Boire claimed that a bailment existed. In the alternative, she argued that the defendants were negligent in their care of her chattels, or they breached an implied term of the contract, that management would look after her goods. Without bailment, she would have to prove negligence or that there was an implied term of the contract (caring for her goods) that was breached. She alleged that she was blameless, having received all assurances from Mr. Florizone. Therefore his notation “left at owner’s risk” was irrelevant.

The Position of the Defendants:

Mr. Florizone and the subsequent owner of the facility, Eagle Lake Enterprises Ltd., argued that:

• No bailment existed since Ms. Boire had exclusive access to her locker and therefore the defendants did not have full possession of the contents.
• The defendants were not negligent nor did they breach the terms of the contract. They provided a secure, clear, dry storage unit, and in fact also placed antifreeze and traps to avoid rodents. There were never any other problems with damage over the entire five years, to the property of others.
• Ms. Boire must have allowed damp items into the unit, packed too tightly, or was otherwise negligent; if not entirely, then partially.
• Ms. Boire did not prove the condition of the chattels when she first stored them.
• Damage may have occurred during or after removal from storage.

The Court's Decision:

The court found that Ms. Boire’s belongings arrived at the storage unit in good condition, and that all was packed properly, with due care. That was her nature. She had a well-kept home and contents.

There was no definite answer as to how the damage occurred, but it did happen while the contents were in storage. It likely accumulated over time. The property of other tenants was not damaged because it was not stored long enough.

Because only Ms. Boire had access to her unit, the relationship was not a bailment. However, the defendants owed her a duty of care. The “left at owner’s risk” did not absolve them of responsibility, for two reasons: it was reasonable for Ms. Boire to understand that the phrase meant she was responsible for insurance, and she did have coverage, albeit insufficient; and it was clear that optimum storage conditions were critical to Ms. Boire, constituting an implied in the contract. The defendants breached it.

The defendants’ duty of care meant they were required to keep the surrounding environment safe. Ms. Boire relied on the defendants for an assurance that her goods would not be damaged by anything that could affect the safety of the unit. Mr. Florizone assured that leaving the goods in his premises would be the same as storing them in her own home. And of course in one’s well-kept home this would include ensuring a rodent-free environment and monitoring for moisture and water seepage. The defendants were negligent on both counts. Furthermore, they failed to alert Ms. Boire to the possibility of rodent and moisture problems.

But in this “dual control” storage arrangement, Ms. Boire had responsibilities since she alone had access to her unit. Mr. Florizone cautioned her that she had to look after her property. If she had stored the goods in her own home over that period of time and acted in a prudent manner, periodically she would have inspected them, or in failing health instructed someone else to do so. Inspections might have uncovered the damage in time to prevent it from progressing.

While approximately $35,000 in damage was proven, since the case was argued in small claims court the maximum recoverable was $20,000. A $20,000 judgment was entered. But Ms. Boire was found 50% negligent, so she was awarded only $10,000. The defendants were jointly and severally responsible for the other 50% of the loss.

The Moral of the Story:

As is often the case, there are lessons to be learned:

• Periodically monitor goods in storage
• Considering giving management a key, if permitted
• Consider purchasing supplementary coverage which insures against all losses
• While in this case the waiver of liability was deemed inconsequential, if you can, quality in writing whatever you agree to
• If after discussion with counsel you think you have an excellent case, ponder proceeding in a higher court.

If Ms. Boire had considered the foregoing, either she wouldn’t have had the problem, or if so perhaps she would have ended up with a $35,000 judgment, plus costs.

- Alvin Starkman, Oaxaca, Mexico

Alvin Starkman received his Masters in Social Anthropology in 1978. After teaching for a few years he attended Osgoode Hall Law School, thereafter embarking upon a successful career as a litigator until 2004. Alvin, a good-standing member of the Law Society of Upper Canada, now resides with his wife Arlene in Oaxaca, Mexico, where he writes, leads small group tours to the villages, markets, ruins and other sights, is a consultant to documentary film production companies, and operates Casa Machaya Oaxaca Bed & Breakfast.

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Car Auction Reveals Seedier Side of Humanity: “A Friend of a Friend is Not Necessarily Your Friend”

In writing trial decisions, judges are typically careful describing witnesses, in an attempt to maintain the utmost professionalism as impartial arbiters of fact and interpreters of law.

Imagine, then, the case before The Honourable Mr. Justice J.W. Quinn, which compelled him to describe defendant Gurnek Singh, as:

• unblinkingly dishonest
• no aptitude for the truth
• without a conscience
• a devious man

The May 7, 2010 decision of the Ontario Superior Court of Justice in Pirbhai v. Singh et al, 2010 ONSC 2446 (CanLII), also contains several colourful words and phrases to describe how Mr. Singh gave his testimony – evasive, non-responsive, maddeningly unwilling to respond to the simplest of questions, told untruths too numerous to catalogue and insulting in their breadth.

Given the foregoing, there is no need to even mention Mr. Singh’s version of the facts. I’ll restrict my comments to the “truths,” based on a balance of probabilities as determined by Judge Quinn.

The plaintiff, Kalimuddin Pirbhai, is a medical doctor from St. Catharines. He wanted to buy a used, high-end motor vehicle. A friend told him that he had a friend (Mr. Singh) who had access to automobile auctions. Dr. Pirbhai and Mr. Singh spoke, and agreed that Mr. Singh, who owned a motor vehicle sales outlet and auto collision centre, would buy such a car at a Stouffville auction of damaged motor vehicles.

The purchased vehicle turned out to be a 1998 Lexus. The parties agreed that Dr. Pirbhai would pay Mr. Singh the auction price, plus repair costs of $5,000. Mr. Singh assured Dr. Pirbhai that $5,000 could put the vehicle into “showroom condition.”

Dr. Pirbhai was not allowed into the auction premises pursuant to auction house rules. He had his wife and son wait outside while Mr. Singh was bidding. Mr. Singh bought the Lexus for $27,065.65, but told the Pirbhais that it cost $32,913.20. After the auction had ended, Dr. Pirbhai’s wife and son provided Mr. Singh with the requested cheque, having no idea of the actual purchase price. Unbeknownst to Dr. Pirbhai, Mr. Singh used the difference between what he really paid for the Lexus, and what Dr. Pirbhai paid him, to buy a second car at the auction for himself or his company.

After Mr. Singh had received payment from the Pirbhais, the wife and son saw the Lexus for the first time. At trial Mrs. Pirbhai described the car as simply dirty, filthy and damaged. The Pirbhais had no idea of the true extent of the damage. It was at that point that Mr. Singh soothingly reassured them that he could put it into “showroom condition” for $5,000. But at the auction, Mr. Singh had been provided with a four page damage estimate showing that $24,919.69 in repairs was needed. He secretly kept that document from his prey and instead told them that $5,000 would do the trick.

Apart from paying the agreed $5,000 for repairs, Dr. Pirbhai paid an additional $7,000, and then a further $3,000 to Mr. Singh. Mr. Singh demanded the extra payments. Mrs. Pirbhai testified that she and her husband felt “trapped,” having already invested so much money in the vehicle.

Subsequently Mr. Singh arranged for an auto body repair shop to fraudulently certify that the vehicle was structurally safe. Then he had Dr. Pirbhai sign two partially blank vehicle purchase agreements, which ended up showing the purchase price as $50,000. According to Judge Quinn, the agreements were “fraudulently created and altered” by Mr. Singh “in a clumsy attempt to contractually extort $50,000 from the plaintiff.”

Dr. Pirbhai made a final payment of $4,735 to Mr. Singh, before he would release the Lexus. Thereafter the Pirbhais realized that the car had not been properly repaired. Dr. Pirbhai had it test driven and evaluated by a Lexus dealership. He took the vehicle back to Mr. Singh and was assured that he would be refunded the purchase price on the basis that Mr. Singh intended to re-sell the car. It never happened.

Mr. Singh’s deception continued for months. Dr. Pirbhai eventually secured three reports which outlined the full extent of the still existing serious damage to the Lexus. For example, the author of a report which analyzed the Lexus using a specialized piece of equipment that measures deviations from manufacturers’ standards, gave evidence that of the 4,000 inspections performed by his centre, the deviations on the Lexus were among the worst. Armed with the reports, Dr. Pirbhai began his court action.

The judge awarded the plaintiff damages against Mr. Singh and his companies of $33,465.77 for breach of contract, deceit and misrepresentation, plus interest and costs. In addition, he ordered them to pay Dr. Pirbhai the sum of $50,000 for punitive damages. Punitive damages are reserved for those rare cases where a defendant’s conduct can be described as, according to the authority quoted by Judge Quinn, “malicious, high-handed, arbitrary, oppressive, deliberate, brutal, grossly fraudulent, evil, outrageous, egregious, callous, disgraceful, willful, wanton, in contumelious disregard of the plaintiff’s rights, or in disregard of ‘ordinary standards of morality or decent conduct’.” Judge Quinn wrote that at least 12 of these descriptions applied to the conduct of Mr. Singh.

Counsel for the plaintiff advised me that a decision has not yet been released regarding the amount of costs awarded to Dr. Pirbhai, but that the defendants have filed a notice of appeal, meaning that unfortunately for Dr. Pirbhai, the case is not yet over. Pirbhai v. Singh et al. took just over ten years from commencement of proceedings, until judgment. Hopefully it won’t take another ten years for Dr. Pirbhai to receive payment.

Mr. Justice Quinn began his decision with the words, “a friend of a friend is not necessarily your friend,” a life lesson for all of us.

- Alvin Starkman, Oaxaca, Mexico

Alvin Starkman received his Masters in Social Anthropology in 1978. After teaching for a few years he attended Osgoode Hall Law School, thereafter embarking upon a successful career as a litigator until 2004. Alvin, a good-standing member of the Law Society of Upper Canada, now resides with his wife Arlene in Oaxaca, Mexico, where he writes, leads small group tours to the villages, markets, ruins and other sights, is a consultant to documentary film production companies, and operates Casa Machaya Oaxaca Bed & Breakfast.

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The Importance of Up-to-Date Powers of Attorney and Wills

The Court of Queen’s Bench of Alberta released a decision in May 2009 which brings home the implications of not having a will, or powers of attorney, covering decisions concerning your property and health-care.

Arnot Russell Maves was a man of reasonable means, with assets worth in excess of $300,000. They consisted of a modest house, several large pieces of farmland, at least some of which were capable of producing revenue, and household contents including antiques. He died in November, 2008. Back in 1995, when he first became gravely ill and unable to manage his financial affairs or make medical decisions for his personal well-being, he did not have powers of attorney in place. And when he died some thirteen years later, he did not have a will.

The Reasons for Judgment of the Honourable Mr. Justice Donald Lee in the case known as Maves Estate, should be a sobering warning to us all. The decision points out how without the proper legal documents in place, the value of your estate can be substantially eaten up through legal proceedings; family members can end up being pitted against one another; and while you’re struggling with your health, your financial affairs can be mismanaged without your knowledge.

Laws governing such matters are legislated provincially, which means that there may be variations from province to province and territory to territory, and terminology may not always be the same between jurisdictions. While this case was decided in Alberta, for the ease of reference I’ll use Ontario terms. However, the legal principles at work are pretty well consistent in most respects, throughout Canada.

A power of attorney is in effect while you are alive. In Ontario there are two types. A power of attorney for property enables you to appoint one or more individuals (or a financial institution) to manage your financial affairs by making decisions and transacting business relating to banking, investments, payment of bills, buying and selling real estate, and so on. A power of attorney for personal care is a separate document, and enables you to appoint one or more individuals (or an institution) to make decisions on your behalf regarding your health if you are mentally incapable of making such decisions. Responsibilities include nutrition, shelter (i.e. moving to a nursing home, assisted living facility, etc.), clothing, hygiene, safety, and cessation or continuation of measures whereby your life may be artificially prolonged.

Upon your death, your powers of attorney are of no further force or effect, and your will takes over. This means that decisions, mainly relating to carrying out of the financial terms of your will such as holding and then selling assets to create a fund to pay your beneficiaries, are made by your executor / executrix, often referred to as estate trustee. You appoint your estate trustee in your will. As with powers of attorney, you can appoint one or more individuals and / or institutions (i.e. a trust company).

In the case of both powers of attorney, and a will, most people tend to appoint a close relative or friend, often someone younger for obvious reasons, or a combination of people. And in both cases, if you do not have powers of attorney, or a will, in the event of respectively your infirmity or death, complications frequently arise … as our case illustrates.

When Mr. Maves first became seriously ill in 1995, his sister and a niece, Carla Poppitt, one of the Applicants in this most recent proceeding, were appointed his attorneys over his assets and health-care decisions. When Ms. Poppitt left Alberta, her daughter took over her responsibilities, and in 2004, the Office of the Public Guardian and Trustee was appointed to attend to the care of Mr. Maves. In 2008, another niece, Rose Braun, the Respondent in this case, filed a court application to become her uncle’s attorney for personal care. It was opposed by Ms. Poppitt.

The implication of the foregoing is that whenever a court application is filed, whether it is a purely administrative step, or opposed, costs are involved. In this case, because Mr. Maves did not have powers of attorney, three proceedings ensued, each of which required payment of filing fees, and in all likelihood legal fees. At least one of the proceedings was contested, resulting in even more lawyer costs being expended. Legal fees and disbursements usually come out of the estate of the infirmed.

With powers of attorney, while one can always apply to a judge if there are grounds to believe that an attorney is not acting in the best interest of the individual, more often than not there are no such proceedings, and there is little or no expense to the estate of the grantor. In this case powers of attorney did not exist. Accordingly, we must assume that thousands of dollars from Mr. Maves’ estate were used up before he even passed away.

When you do not have a power of attorney for property, you have no way of being assured that the best person or persons, in your opinion, will be making decisions which affect your assets. In this case, according to the judge, Ms. Poppitt was apparently a lifelong city resident, whereas Ms. Braun was a “farm person.” Ms. Braun alleged that Ms. Poppitt caused the estate to lose value. She stated that Ms. Poppitt:

1) did not properly tend the farmlands and they were allowed to go to weed. This resulted in the need to spray with expensive herbicides, the property then no longer being able to be characterized as “organic;”

2) did not rent out the lands between 1995 and 2008, thereby not enabling Mr. Maves to obtain rental revenue, and when she finally did rent them out, she did so for below market value;

3) failed to take adequate steps to protect Mr. Maves’ property, in that many of his personal effects and household goods including antiques were never removed from the farmhouse, and it and the barn were ultimately ransacked and vandalized, causing yet further losses.

Had Mr. Maves appointed a power of attorney for property, he likely would have considered, in the course of making his decision, which of his relatives would best be able to maximize revenue for him and protect his real estate and chattels. Certainly Ms. Braun would have been a top candidate given that she had a record of ongoing management of farmlands, having looked after her late father’s rural holdings. Ms. Poppitt had no such experience.

Because Mr. Maves died intestate, Alberta legislation governed who were the beneficiaries, and the percentages to be distributed to each. They consisted of ten nieces and nephews. Two of the nieces, Ms. Poppitt and her twin sister Karen Loucraft, applied to be appointed estate trustee in this final court proceeding. They had a lawyer. The remaining beneficiaries supported Ms. Braun, herself a beneficiary, being the estate trustee. She also had a lawyer. Once again, there were legal costs to the estate, all incurred because Mr. Maves did not have a will.

The judge concluded that both groups had much to contribute and that it would be difficult and unfair to exclude either. But isn’t it the job of the judge to make difficult decisions? Should fairness enter the equation, or should the decision be based on how best to maximize the net value of the estate and attend to its distribution. The judge appointed Ms. Poppitt and Ms. Loucraft, and Ms. Braun as representative of the remaining beneficiaries. He believed that they could put aside their differences to work for the benefit of their late uncle’s estate, yet acknowledged that “neither group publicly wants to have a great deal to do with the other on a regular day to day basis.”

Is this how you want your relatives to conduct themselves upon you becoming ill, and ultimately upon your demise? Is this how you would want your lifelong efforts working and collecting, to be rewarded; paying lawyers? Just think about it; and then get in to see your lawyer; if not for drafting these legal documents for the first time, then to review what’s already in place with a view to making amendments based on any recent changes in your circumstances.

Read the ruling: Maves Estate

- Alvin Starkman, Oaxaca, Mexico

Alvin Starkman received his Masters in Social Anthropology in 1978. After teaching for a few years he attended Osgoode Hall Law School, thereafter embarking upon a successful career as a litigator until 2004. Alvin, a good-standing member of the Law Society of Upper Canada, now resides with his wife Arlene in Oaxaca, Mexico, where he writes, leads small group tours to the villages, markets, ruins and other sights, is a consultant to documentary film production companies, and operates Casa Machaya Oaxaca Bed & Breakfast.

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Dealing With Antiques On Marital Breakdown

A recent decision of the Supreme Court of British Columbia confirms that trying to predict how a judge with deal with the division of antiques upon marital breakdown is futile, and that it’s best to resolve at least that one issue outside of the courtroom.

In the December, 2008, case of Lane v. Creighton, The Honourable Madam Justice Bruce was charged with deciding whether to order the antiques purchased by Melodie Lane and David Creighton during their 17 years of cohabitation, sold, or divided between them; who should pay for the storage costs incurred by Dr. Creighton after the parties’ separation; and all associated logistics. A compounding issue was that while an appraisal pegged the value of the antiques at $30,820, at one time Dr. Creighton had estimated that they were worth $200,000.

Dr. Creighton and Ms. Lane married in 1981, and separated in 1998. They had three children. The family continued to live together in the matrimonial home until late 2000, when Ms. Lane commenced court proceedings. In the course of eight years of litigation leading to the trial decision, their struggles and allegations escalated, and resulted in the court having to decide almost every issue imaginable, including: custody and access; child and spousal support; who was to blame for alienating the children from which spouse; whether Ms. Lane was mentally ill as repeatedly alleged by Dr. Creighton; and their acrimonious dispute over the sale and division of assets, including their collectibles.

Of course given this backdrop it should come as no surprise that Justice Bruce found that there was clear evidence that “there can be no trust between these individuals.” That being the case, why did she order Dr. Creighton alone to have conduct of the sale of the antiques simply because he had possession of them, and grant him authority to approve of any price offered without Ms. Lane’s consent (though she ordered him to provide an accounting)?

Dr. Creighton had retained the antiques since separation, initially in his garage. But between 2003, and the date of trial, he had been paying between $240 and $270 a month in storage fees … approximately $18,000 paid out altogether! Dr. Creighton never offered his wife the opportunity to hold onto any of the antiques. Ms. Lane never knew that her husband was incurring storage costs. But in the end Justice Bruce ordered that Ms. Lane was to be responsible for half of the costs up until the date of her judgment.

Dr. Creighton submitted that the antiques should be sold, with the proceeds divided equally after deducting his storage costs. Ms. Lane wanted everything sold, or divided equally, but stated that she should not be saddled with storage costs that she did not know were being incurred. She was agreeable to accepting half of their appraised value, somewhat surprising since her husband had at one point in time commented that they were worth more than seven times that amount.

The judge opined that it was difficult to strike a balance between on the one hand Ms. Lane’s position that she should not have to be responsible for costs she did not know were being incurred and over which she had no control, and on the other the fact that Dr. Creighton went to considerable expense storing the items and did not treat them as his own by selling or otherwise disposing of them, as often occurs in matrimonial disputes. The question as to the true value of the antiques also troubled the judge.

Justice Bruce concluded that the only fair means of allocating a value to and dividing the antiques was to have them sold. She ordered that Dr. Creighton be reimbursed for his storage costs out of the proceeds before they were divided equally. The incentive that the court gave to Dr. Creighton to sell the antiques on a timely basis, was that he alone was to bear the storage costs from the date of the judgment until their disposition. Finally, Justice Bruce ordered that in the event that Dr. Creighton was unable to sell any or all of the antiques by December 31, 2009, he and Ms. Lane were to divide them equally in specie (such as using an alternate choice mechanism), as long as Ms. Lane had paid her husband half of the storage costs incurred over the seven year period.

The decision may appear reasonable, but leaves two unanswered questions:

1) If the judge was prepared to have the parties divide up any remaining antiques, why didn’t she just order an alternate choice means of distribution in the first place, with Ms. Lane having to reimburse Dr. Creighton for half of his storage costs? A coin toss could have easily resolved the issue of who chooses first, and if there was one antique worth a great deal more than the rest, two other items could have been lumped together to reduce any financial inequity resulting from the coin toss. After all, she did order that precise resolution in the event some or all were not sold, so she must have been comfortable with how it would unfold. It would have avoided an extra step; enabled each party to retain half of the collectibles; and redressed any power imbalance resulting from Dr. Creighton having complete control.

2) Why did the Judge entrust the conduct of the sale to one party, when she knew that there was that level of mistrust and acrimony between the spouses, when should could have ordered an independent third party chosen by the spouses to conduct the sale?

The answer leads us to the lessons to be learned, and provides some insight into the role of the court in such disputes, and the discretion which a superior court judge exercises.

When rendering decisions, judges usually cite legislation and case law as precedents. They generally follow laws which reference broad yet exacting principles of financial fairness. But when it comes to asset distribution, their discretion is almost boundless as long as monetary equity prevails: division of assets vs. their sale; who gets what and by what means; the extent to which appraisal evidence will be accepted; etc. The adage “you never know what a judge will do” applies in spades to resolving disputes concerning assets.

Many family law lawyers refuse to deal with the division of household contents at the trial level, and basically insist that spouses either find a way to resolve the matter on their own, with minimal assistance of counsel, or through mediation. And many judges do not see that their role includes dealing with such minutiae. Of course there are exceptions, such as in the 2006, Saskatchewan decision in Cey v. Cey, where the judge considered who should get the antique dining room suite based upon which spouse had more of an emotional attachment to it.

If you cherish your antiques, play an active role in their division upon separation, outside of the courtroom, rather than leave the decision to a government employee. If the battle with your estranged spouse is bitter, and you hear “I don’t care, let the judge order everything sold,” remember that it might just be posturing. When a calmer moment emerges, seize the opportunity, through negotiation, to try to retain at least part of what you’ve spent years collecting.

You’ll be happier for it.

• Read the B.C. Supreme Court's complete decision here: Lane v. Creighton, 2008 BCSC 1689 (CanLII)

- Alvin Starkman, Oaxaca, Mexico

For 28 years Alvin Starkman has resented that his first wife ended up with the oak roll-top, while he got the Victorian sleigh style brass bed. Alvin is a member of The Law Society of Upper Canada. However, this article is not intended to be and should not be relied upon as constituting legal advice or opinion. Alvin and Arlene, former Toronto residents and collectors of Canadiana, moved to Mexico in 2004. They operate Casa Machaya Oaxaca Bed & Breakfast.

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