Canfield v Bronze Wines Ltd.

IN THE SUPREME COURT OF BRITISH COLUMBIA

Citation:

Canfield v. Bronze Wines Ltd.,

2022 BCSC 546

Date: 20220405

Docket: S18180

Registry: Nelson

Between:

And

Frances Jean Walbey Canfield

Plaintiff

Bronze Wines Ltd., Continental Appraisals Ltd., Air Touch Communications

Ltd., Scot Stewart and Howard H. Engman

Defendants

Before: The Honourable Madam Justice Horsman

Reasons for Judgment

Counsel for the Plaintiff:

T. Pearkes

Counsel for the Defendant Continental

Appraisals Ltd.:

R. Sookorukoff

The Defendants Bronze Wines Ltd. and

Scot Stewart, Appearing in Person:

S. Stewart

Counsel for the Defendant Howard H.

Engman:

Q. Duong

J. Foster

Place and Date of Trial:

Nelson, B.C.

July 19–23 and July 26, 2021

December 6–8, 2021

January 13–14, 2022

Place and Date of Judgment:

Nelson, B.C.

April 5, 2022

Canfield v. Bronze Wines Ltd.

Page 2

Table of Contents

INTRODUCTION ....................................................................................................... 4

ISSUES...................................................................................................................... 6

FACTUAL BACKGROUND....................................................................................... 6

Mrs. Canfield’s history............................................................................................ 6

The signing of the Agreement ................................................................................ 8

The signing of the Form A freehold transfer ......................................................... 11

The mortgaging of the Property............................................................................ 12

The foreclosure proceedings................................................................................ 14

ANALYSIS............................................................................................................... 16

Evidentiary issues ................................................................................................ 16

The plaintiff’s credibility..................................................................................... 16

Mr. Bottoni’s role in the transaction................................................................... 17

Issue 1: Is the Agreement unconscionable?......................................................... 21

Legal Framework.............................................................................................. 21

Factual findings regarding the contracting process........................................... 25

Analysis: Is the Agreement unconscionable? ................................................... 27

Issue 2: What are Mrs. Canfield’s remedies for the unconscionable Agreement?

............................................................................................................................. 30

Remedies for unconscionability ........................................................................ 30

The appropriate remedies for unconscionability in this case............................. 32

Issue 3: Is Scot Stewart personally liable to Mrs. Canfield? ................................. 33

Issue 4: Has the limitation period expired for Continental to enforce its security

interest in the Property? ....................................................................................... 35

Legal Framework.............................................................................................. 35

Analysis ............................................................................................................ 36

a. Does Mrs. Canfield have to make an acknowledgement to stop the tolling

of the limitation period? ................................................................................. 37

b. Should the limitation period issue vis-à-vis Mrs. Canfield and Bronze

Wines be decided in this action?................................................................... 38

c. Has Continental’s limitation period expired to enforce its security?........ 40

The post-dated cheques............................................................................ 42

The standstill agreement ........................................................................... 46

Summary of conclusion on the limitation period issue ...................................... 47

Canfield v. Bronze Wines Ltd.

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Issue 5: Was Mr. Engman negligent in witnessing Mrs. Canfield’s signature on the

Form A freehold transfer? .................................................................................... 47

Legal Framework.............................................................................................. 47

Duty of care................................................................................................... 48

Standard of care............................................................................................ 50

Causation...................................................................................................... 51

Factual findings relevant to the claim against Mr. Engman............................... 51

Mrs. Canfield’s evidence ............................................................................... 52

Mr. Stewart’s evidence.................................................................................. 54

Mr. Engman’s evidence................................................................................. 54

Factual findings............................................................................................. 57

Analysis of the negligence claim....................................................................... 61

Did Mr. Engman owe a duty of care to Mrs. Canfield? .................................. 61

Did Mr. Engman meet the standard of care?................................................. 63

Determining the standard of care .............................................................. 63

Discussion..................................................................................................... 67

Did Mr. Engman’s breach of duty cause Mrs. Canfield’s injury? ................... 68

Summary of findings on the negligence claim against Mr. Engman.............. 70

Issue 6: Assessment of damages........................................................................ 71

The liability of Mr. Engman and Bronze Wines ................................................. 71

Quantification of damages ................................................................................ 72

Should damages be reduced to account for payments by Bronze Wines?....... 74

CONCLUSION/ORDERS ........................................................................................ 74

Canfield v. Bronze Wines Ltd.

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INTRODUCTION

[1]

The plaintiff, Jean Canfield, is 84 years old. In January 2012, she signed an

agreement of purchase and sale (the “Agreement”), agreeing to transfer ownership

of her home in Grand Forks, British Columbia (the “Property”) to the defendant

Bronze Wines Ltd. (“Bronze Wines”). At the time, Mrs. Canfield was residing in an

assisted living facility in the Lower Mainland, and recovering from hip surgery. She

had no previous knowledge of Bronze Wines. She had never met the defendant Scot

Stewart, who was the CEO and sole director of Bronze Wines, before the meeting at

which the Agreement was signed. The deal was brokered by Mrs. Canfield’s son-in-

law Max Bottoni, a childhood friend of Mr. Stewart’s. Mr. Bottoni drove Mrs. Canfield

to the office of the notary, the defendant Howard Engman, who witnessed her

signature on the Form A freehold transfer.

[2]

The Agreement stated that the purchase price was $465,000. However, the

terms of the Agreement did not provide for any immediate payment to Mrs. Canfield

in return for the transfer of the Property. Instead, she was to receive a future stream

of monthly income from a winery that Bronze Wine hoped to establish and operate

on the Property. Pursuant to the Agreement, the monthly payments were deferred

for two years. Depending on how one interprets the interest provision in the

Agreement, the amortization period, which is not specified, was anywhere from 20

years to 40 years.

[3]

It was a term of the Agreement that Mrs. Canfield had the right to foreclose

and reclaim the Property if Bronze Wines missed three consecutive monthly

payments. This security proved to be wholly ineffective. Bronze Wines had no

assets. The company was incorporated by Mr. Stewart for the sole purpose of

operating the winery. Mr. Stewart had limited income and assets. He had no

experience in the wine-making business. Following the transfer of the Property to

Bronze Wines, the company borrowed funds for the business from private lenders.

The loans were secured by registered mortgages against the Property.

Canfield v. Bronze Wines Ltd.

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[4]

By 2013, there were two mortgages registered against the Property in favour

of Alpine Credits Limited (“Alpine Credits”). The first mortgage, in the principal

amount of $335,000, was later assigned to the defendant Continental Appraisals Ltd.

(“Continental”). The second mortgage, in the principal amount of $69,440, was

assigned to the defendant Air Touch Communications Ltd. (“Air Touch”). These

mortgages are in default. Bronze Wines has not made payments on the mortgages

since 2015.

[5]

Continental and Air Touch both initiated foreclosure proceedings. Air Touch

reached a settlement with Mrs. Canfield, and did not participate in this trial. In 2019,

the Property was sold. By consent, the net proceeds of sale—in the sum of

$338,000—have been paid into court pending resolution of this proceeding.

[6]

Bronze Wines did not make any monthly payments to Mrs. Canfield before

defaulting on the mortgage loans. In effect, Mrs. Canfield transferred her Property to

Bronze Wines without receiving anything in return. Mrs. Canfield has no other assets

of significance. She now lives in subsidized housing in Nelson, BC.

[7]

In this action, Mrs. Canfield alleges that the Agreement is unconscionable. As

against Bronze Wines, she seeks the equitable remedy of rescission of the

Agreement, and damages to the extent she is not made whole by the remedy of

rescission. If the contract is not rescinded on the ground of unconscionability, Mrs.

Canfield seeks the remedies of an equitable mortgage and contract damages. The

plaintiff also seeks damages against Mr. Stewart personally. As against Mr.

Engman, Mrs. Canfield seeks damages for his alleged negligence in failing to meet

the standards of a competent notary in witnessing her signature on the Form A

freehold transfer. Mrs. Canfield says that Bronze Wines and Mr. Engman are jointly

liable for her loss.

[8]

As against Continental, Mrs. Canfield’s original allegation was that

Continental had actual or constructive knowledge of her interest on the date its

mortgage was registered on title to the Property. Mrs. Canfield abandoned this claim

in final argument. She concedes that the evidence does not support such a finding.

Canfield v. Bronze Wines Ltd.

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The sole remaining issue as it relates to Continental is whether the limitation period

for Continental to enforce its security under the mortgage has expired. If the

limitation period has not expired, then Continental’s registered interest in the

Property takes priority over any unregistered equitable interest that Mrs. Canfield

may establish in this action. Continental would then have priority over Mrs. Canfield

to the funds paid into court.

ISSUES

[9]

The issues that arise for resolution are as follows:

(1) Is the Agreement an unconscionable transaction?

(2) If so, what are Mrs. Canfield’s remedies?

(3) Is Scot Stewart personally liable to Mrs. Canfield?

(4) Has the limitation period expired for Continental to enforce its security

interest in the Property?

(5) Was Mr. Engman negligent in witnessing Mrs. Canfield’s signature on the

Form A freehold transfer?

(6) If Mrs. Canfield is entitled to compensation for the loss of the Property,

how should her damages be assessed?

FACTUAL BACKGROUND

[10] In order to establish a chronology, I will summarize the background facts that

are uncontested. I will resolve contested issues of fact in the Analysis section of this

judgment while addressing each of the issues that must determined.

Mrs. Canfield’s history

[11] Mrs. Canfield was born in Vancouver in 1938. She attained a grade 9 or 10

level of education, and then enrolled in secretarial training. Upon her completion of

the program, Mrs. Canfield went to work as a teller with the Royal Bank of Canada.

Canfield v. Bronze Wines Ltd.

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[12] At the age of 17, Mrs. Canfield left her job to marry Ken Canfield. Mr. Canfield

was, at the time, in the Royal Canadian Navy. After leaving the Navy, he worked for

a time for BC Ferries in Victoria before moving to work at an inland ferry on

Kootenay Lake. Mrs. Canfield and her husband had four children together: Lisa,

Nora, Timothy, and Doris. Timothy has passed away.

[13] In 1976, Mrs. Canfield and her husband moved to Nelson, BC. In 1990, they

purchased the Property, a 19.4-acre parcel of land just outside of Grand Forks that

is within the provincial Agricultural Land Reserve. At the time of the purchase, the

only structures on the land were a barn and some sheds. Mr. Canfield built the

house that he and the plaintiff lived in on the Property. They kept animals such as

cows, pigs, ducks, and chickens.

[14] Prior to moving to Grand Forks, Mrs. Canfield and her husband had

purchased and lived in other properties in Nelson and on Vancouver Island. They

also purchased several investment properties through municipal tax sales. They

were equal partners in these purchases. Mrs. Canfield had experience in assessing

the value of properties in order to settle on a bid price. She also had experience in

attending the offices of lawyers and notaries for the purpose of completing the

property sales.

[15] Mrs. Canfield lived on the Property with her husband until Mr. Canfield’s

death in 1997. After Mr. Canfield passed away, Mrs. Canfield had difficulty

maintaining the Property on her own. She began to have issues with her hips that

required an operation.

[16] In 2009, Mrs. Canfield left Grand Forks and moved to the Lower Mainland,

where there was a shorter wait list for hip replacement surgery. She moved in with

her daughter Doris and son-in-law Mr. Bottoni, who lived in Langley. Mrs. Canfield’s

other daughters, Lisa and Nora, lived in Nelson.

[17] Following the surgery, Mrs. Canfield moved into an assisted living facility, the

Langley Seniors Village. She paid the monthly cost of the facility herself, which she

Canfield v. Bronze Wines Ltd.

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estimates to have been approximately $3,000. After the surgery, Mrs. Canfield had

difficulty walking unassisted. She began to use a walker or a cane. Mrs. Canfield

was injured in the course of post-surgery physiotherapy. She then used two canes or

a walker.

[18] While she was residing at Langley Seniors Village, Mrs. Canfield decided that

she would list the Property for sale. She had known for some time that she would not

be able to manage such a large property on her own. It was also expensive to

maintain the insurance on the Property. While Mrs. Canfield was in the Lower

Mainland, her daughter Lisa had arranged for a work colleague to stay at the

Property. However, this was not a long-term solution.

[19] At some point in 2010, Mrs. Canfield, with the assistance of her daughter

Lisa, applied to the Agricultural Land Commission for permission to subdivide the

Property. Mrs. Canfield believed that it might be easier to sell a smaller property.

The application to subdivide was unsuccessful.

[20] On October 4, 2010, Mrs. Canfield listed the Property with a real estate agent

by the name of Ingrid Mathison. This listing expired at the end of December 2010.

On January 10, 2011, the Property was re-listed with a different agent, Patricia

Ballard. The initial list price was $548,000. On June 17, 2011, the price was reduced

to $485,000. This listing expired on November 30, 2011. There were no offers to

purchase the Property during these listing periods.

The signing of the Agreement

[21] At the same time that Mrs. Canfield was attempting to sell the Property, the

defendant Mr. Stewart was exploring opportunities to start a wine-making business.

To that end, he incorporated Bronze Wines. Mr. Stewart had previously worked at a

variety of jobs, including in the service industry as a cook and in telephone sales.

When Mr. Stewart was in his late 30s, he returned to work at his father’s business.

The business was not successful. It was eventually sold to pay the bills. Mr. Stewart

was then unemployed.

Canfield v. Bronze Wines Ltd.

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[22] Mr. Stewart had an interest in making wines, but no training or experience in

the field. Mr. Stewart discussed his plans to start a winery with Mr. Bottoni. The two

had been friends since junior high school. The difficulty was that Mr. Stewart’s

dream to start a wine-making business required money, and he did not have any

income or assets. Mr. Bottoni suggested to Mr. Stewart that he consider buying the

Property in Grand Forks for the purpose of establishing the wine business. Mr.

Bottoni advised Mr. Stewart that Mrs. Canfield had been attempting to sell the

Property without success, and that she might be open to an alternative arrangement.

[23] In the late summer of 2011, Mr. Stewart and Mr. Bottoni travelled together to

Grand Forks so that Mr. Stewart could see the Property. There is no evidence that

Mrs. Canfield was aware of this visit, nor is there evidence that she was aware that

Mr. Bottoni was engaged in discussion with Mr. Stewart about a possible purchase

of the Property.

[24] In his evidence at trial, Mr. Stewart described a period of “negotiation” with

Mrs. Canfield over a number of months leading to the signing of the Agreement.

However, he concedes that he had no direct communication with Mrs. Canfield prior

to January 31, 2012, when they met to sign the Agreement. Instead, Mr. Bottoni

acted as the go-between. It should be noted that Mr. Bottoni was not disinterested in

the transaction between Bronze Wines and the plaintiff. As reviewed in the Analysis

section of this judgment (at paras. 62–71), Mr. Bottoni had a personal interest in the

development of the winery, and he eventually became a representative of Bronze

Wines.

[25] Mr. Stewart understood from Mr. Bottoni that Mrs. Canfield was open to a

sale of the Property with deferred payments. Mr. Stewart says that Mrs. Canfield’s

“demands”, as conveyed to Mr. Stewart by Mr. Bottoni, included that there would be

no realtor involved, any legal or notary fees would be covered by Bronze Wines,

Bronze Wines would accept the Property “as is”, and Bronze Wines would provide

storage containers for the plaintiff’s personal effects. Bronze Wines accepted these

terms.

Canfield v. Bronze Wines Ltd.

Page 10

[26] Mr. Stewart testified that in November 2011, he delivered a letter to Mrs.

Canfield setting out the terms of the proposed purchase, as determined in his

discussions with Mr. Bottoni. Mrs. Canfield does not recall receiving this letter. There

is no evidence that she directly responded to it, either orally or in writing.

[27] Mr. Stewart drafted the Agreement, using a precedent contained in a self-

counsel business package that he had purchased. He sent the draft Agreement to

Mr. Bottoni for review. At Mr. Bottoni’s suggestion, he also sent the draft to the

plaintiff’s daughter Lisa. It appears from emails that are in evidence that Mr. Bottoni

was concerned to ensure Lisa’s “buy in” to the arrangement because he believed

she held the Power of Attorney over Mrs. Canfield’s affairs if anything should happen

to Mrs. Canfield.

[28] On the evening of January 31, 2012, Mrs. Canfield and Mr. Stewart met for

the first time at Mrs. Canfield’s then-home at Langley Seniors Village. Mr. Bottoni

was also present. Mr. Stewart brought the Agreement with him. It lists a purchase

price of $465,000. The payment terms are set out in an Appendix “C” to the

Agreement. The relevant payment terms include:

(1) Interest on the balance of the principal amount is set at “the Bank of

Canada Prime rate +1%”;

(2) Although interest will begin to accrue at the time the Property is

transferred, Bronze Wines is not required to make any payment of any

kind to the plaintiff for 24 calendar months from the date of transfer of title;

(3) Thereafter, Bronze Wines will make monthly payments of $2,500 until the

principal and interest is fully paid;

(4) Outstanding interest will be satisfied before payments can be applied to

the principal;

Canfield v. Bronze Wines Ltd.

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(5) Mrs. Canfield has “the right to foreclose and reclaim the [P]roperty and

any permanent enhancements to structures, irrigation and new buildings”

if Bronze Wines misses three consecutive payments;

(6) Fees to draw up the agreement and have it notarized will be assumed by

Bronze Wines;

(7) There is no monetary penalty for early repayment of any portion of the

principal amount, including in the event of a re-sale of the Property; and

(8) Up until the time of receipt of the final payment, Mrs. Canfield has the right

to convert any portion of the outstanding balance into common shares of

Bronze Wines.

[29] Appendix “B” to the Agreement addresses Mrs. Canfield’s personal effects.

They were to be removed from the Property by June 30, 2012. Bronze Wines, at its

expense, agreed to arrange for storage containers for the personal effects until they

were removed.

[30] Mrs. Canfield signed the Agreement without requesting changes. Mr. Stewart

signed on behalf of Bronze Wines. They both also initialled each page.

The signing of the Form A freehold transfer

[31]

After the Agreement was signed, Mr. Stewart understood that he needed to

have Mrs. Canfield’s signature on a Form A freehold transfer witnessed by a lawyer

or notary. Mr. Stewart booked an appointment with the defendant notary Mr.

Engman on February 27, 2012 at Mr. Engman’s New Westminster office. Mrs.

Canfield was, at this time, still living at Langley Seniors Village. On the day of the

appointment, Mr. Bottoni picked Mrs. Canfield up and drove her to Mr. Engman’s

office, where they met Mr. Stewart.

[32] Mr. Stewart prepared the Form A freehold transfer prior to the parties’

appointment with Mr. Engman. A copy of the Form A was not provided to Mrs.

Canfield before she arrived at Mr. Engman’s office. The Form A listed the “market

Canfield v. Bronze Wines Ltd.

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value” of the property as $200,317.60, and the “consideration” for the transfer as

$465,000. Mr. Stewart came up with the market value figure. He says it was based

on advice he was given by the BC Assessment Authority over the telephone as to

how to determine bare land value.

[33] The events at Mr. Engman’s office are controversial. I will canvass the

evidence in greater detail when addressing Mrs. Canfield’s claim in negligence

against Mr. Engman. The uncontested facts are that Mr. Engman witnessed her

signature on the Form A freehold transfer on February 27, 2012. Mr. Bottoni and Mr.

Stewart were both present in Mr. Engman’s office. Mr. Stewart, on behalf of Bronze

Wines, paid a $50 fee to Mr. Engman for the service. Mr. Stewart left Mr. Engman’s

office with the original copy of the Form A.

[34] The Form A was altered before it was registered in the Land Title Office

(“LTO”). Mr. Stewart had listed “Scot Stewart” as the applicant in the original version.

After submitting the Form A for filing, Mr. Stewart received advice from the LTO that

Mrs. Canfield (the transferor) should have been listed as the applicant. Mr. Stewart

made handwritten revisions to the Form A to change the name of the applicant to

Mrs. Canfield. He then resubmitted the Form A to the LTO, and it was accepted for

registration in March 2012.

[35] In 2013, Mrs. Canfield moved back to Nelson as she could not longer afford

the monthly cost of the Langley Seniors Village. She initially stayed with her

daughter Nora and her family. She then moved into Kiwanis Village, a subsidized

housing facility in Nelson.

The mortgaging of the Property

[36] Once Bronze Wines took title to the Property, it required mortgage financing

in order to carry out necessary repairs and renovations. A local credit union would

not approve a mortgage, at least in part due to the fact that Mr. Stewart had no

income. Bronze Wines then found a private lender, Jason Konken, who agreed to

advance $150,000, secured by a registered mortgage against the Property (the

Canfield v. Bronze Wines Ltd.

Page 13

“Konken mortgage”). Mr. Konken insisted that the mortgage be repaid within 18

months or refinanced. Bronze Wines agreed to these terms.

[37] Once Bronze Wines had the mortgage funds, it undertook renovations to the

Property, including fencing, irrigation, planting, and renovation of the barn. Bronze

Wines also undertook construction of a distillery and greenhouse.

[38] In 2013, Bronze Wines sought to refinance the Konken mortgage by way of a

new mortgage from Alpine Credits. An appraisal of the Property was carried out for

the purpose of the Alpine Credits mortgage application. The appraisal valued the

Property at $620,000 as of June 3, 2013. On June 10, 2013, Alpine Credits granted

Bronze Wines a mortgage against the Property in the principal amount of $335,000,

with an interest rate of 7%, compounded monthly. The mortgage term was 12

months. The Alpine Credits mortgage was registered as a first mortgage against the

Property, and the Konken mortgage was paid out and discharged.

[39] On June 25, 2013, Alpine Credits contacted Victor Yates, the owner of

Continental, to see if Continental would be interested in purchasing the Bronze

Wines mortgage. Continental’s business includes mortgage investments.

Continental had purchased many mortgages from Alpine Credits in the past. On this

occasion, Alpine Credits provided relevant information to Mr. Yates for review,

including an investment summary, appraisal, and credit report. Nothing appeared to

Mr. Yates to be unusual. He was most interested in the loan to value ratio, which

was within his risk tolerance.

[40] Continental agreed to purchase the mortgage. Alpine Credits agreed to

continue to administer the mortgage pursuant to the terms of a Mortgage

Administration Agreement. The administration duties assumed by Alpine Credits

included the collection of delinquent payments and the negotiation of mortgage

renewals.

[41] In July 2013, Alpine Credits registered the transfer of the mortgage to

Continental. It is not in dispute that at the time of the registration, Continental had no

Canfield v. Bronze Wines Ltd.

Page 14

knowledge of Mrs. Canfield or her potential interest in the Property. Bronze Wines

was notified of the transfer by letter dated July 10, 2013. The Bronze Wines

mortgage payments were thereafter paid to Continental by way of post-dated

cheques.

[42] Bronze Wines continued in its efforts to improve and develop the Property. In

the fall of 2013, Bronze Wines applied to Alpine Credits for a second mortgage. A

further appraisal carried out for the purpose of the application assessed the value of

the Property as $685,000 as of November 21, 2013. Alpine Credits agreed to

advance a further $69,440, secured by a second mortgage. The second mortgage

was later sold to Air Touch.

[43] In May 2014, Mrs. Canfield filed and served her notice of civil claim in this

action, and registered a certificate of pending litigation against the Property.

[44] Despite the service of the notice of civil claim, Continental and Bronze Wines

agreed to a one-year renewal of the first mortgage in June 2014. Mr. Yates says he

was not concerned with renewing the mortgage in these circumstances because

Bronze Wines was not in arrears on its mortgage payments, and Continental’s

interest in the Property was secure by virtue of Continental’s status as first

mortgagee.

The foreclosure proceedings

[45] By 2015, Bronze Wines was in significant financial difficulty. Mr. Stewart

maintains this was due, at least in part, to the impact of the commencement of this

litigation. Other factors included a fire at the Property in 2015 that disrupted business

operations for an extended period. For the purpose of this action, it is unnecessary

for me to reach a conclusion as to the precise reasons why the wine business failed.

[46] The Continental mortgage remained in good standing until February 2015.

The post-dated cheques for February and March 2015 could not initially be cashed

due to insufficient funds in the Bronze Wines account. Payments for those months

were eventually made. Bronze Wines’ last mortgage payment was made on April 15,

Canfield v. Bronze Wines Ltd.

Page 15

2015. As of May 2015, all of Bronze Wines’ cheques were returned due to

insufficient funds.

[47] In June 2015, Mr. Yates contacted Alpine Credits. Alpine Credits told Mr.

Yates that Air Touch, the second mortgagee, had initiated a foreclosure proceeding.

Mr. Yates left it to Alpine Credits to deal with Bronze Wines and the Air Touch

foreclosure proceeding. Mr. Yates did not take steps at this time to commence a

separate foreclosure proceeding on behalf of Continental. He assumed that,

because Continental held the first mortgage on the Property, Continental’s interest

would be protected through the Air Touch foreclosure proceeding.

[48] Mr. Yates had no further contact with anyone about the Air Touch foreclosure

proceeding until September 2016. At that time, Alpine Credits contacted Mr. Yates to

inquire as to whether Continental might be interested in reviewing a settlement

proposal from Bronze Wines. Alpine Credits put Mr. Yates in touch with the law firm

of Richards and Richards, who were retained to act for Air Touch on the foreclosure

petition. The firm sent Mr. Yates a copy of a settlement agreement for review.

[49]

Continental, Air Touch, and Bronze Wines all subsequently signed the

settlement agreement. Mr. Stewart signed on behalf of Bronze Wines on September

20, 2016. It appears from the agreement that by this time, Bronze Wines had

granted one or more land leases for farming garlic on the Property. It was hoped that

the profits from these contracts would be sufficient to cover Bronze Wines’ mortgage

debts. The agreement included the following Whereas clause:

The parties have worked out a settlement of all issues in order to facilitate a

standstill of Air Touch’s foreclosure of Bronze’s debt, a standstill of any

enforcement action by Continental under its mortgage, contracting out the

growing of garlic on a profit sharing basis, and Bronze focussing its business

on spirits.

[50] Pursuant to the settlement agreement, Air Touch agreed to take no further

action in its foreclosure proceeding and Continental agreed it would not take steps to

enforce its mortgage against the Property for a “standstill” period of one year,

provided that Bronze Wines was making the payments required by the agreement.

Canfield v. Bronze Wines Ltd.

Page 16

[51] Bronze Wines did not make the payments required under the settlement

agreement. On April 4, 2018, Continental delivered to Bronze Wines a notice of

intention to enforce security. On April 30, 2018, Continental commenced a

foreclosure proceeding.

ANALYSIS

Evidentiary issues

[52] Before turning to the specific issues that arise in this case, I will address two

evidentiary issues that were a general focus of the parties’ arguments: Mrs.

Canfield’s credibility, and Mr. Bottoni’s role in the negotiation and execution of the

Agreement.

The plaintiff’s credibility

[53] The defendants say that Mrs. Canfield was not a credible or reliable witness.

They say that she was evasive in answering questions directly, that her evidence

lacked focus, and that questions often had to be repeated multiple times before she

would provide a response. The defendants suggest that Mrs. Canfield deliberately

evaded personal responsibility for signing the Agreement, stating that “I am quite

sure that I was not myself agreeing to it, but my pen was”. They also say that she

was an unreliable historian.

[54] There is no question that Mrs. Canfield’s evidence at this trial was difficult to

follow at times. Her answers to questions were often non-responsive. Counsel

frequently had to repeat their questions because Mrs. Canfield’s answers were

incomplete or illogical. I note that these difficulties were not simply present during

Mrs. Canfield’s cross-examination, but also during her direct examination by her own

counsel. Mrs. Canfield appeared to me to be genuinely confused at times, not simply

by the questions that were being put to her by counsel, but by the very trial process

itself.

[55] Credibility, of course, has two components—honesty and reliability. The

evidence of an honest witness may be unreliable despite their genuine effort to tell

Canfield v. Bronze Wines Ltd.

Page 17

the truth: Ahonen v. Thauli, 2013 BCSC 1607 at para. 34. In my view, none of the

difficulties I have described reflect on Mrs. Canfield’s honesty. I accept that she did

her best to give accurate evidence over the course of three days of questioning that

must have been very challenging for her. Furthermore, she was being asked about

events that occurred at least a decade ago, and, in some instances, many decades

ago. For example, Mrs. Canfield was cross-examined at length about the details of

properties she and her late husband purchased in the 1970s and 1980s. It is not

surprising that Mrs. Canfield had difficulty recalling such details, nor that the effort of

doing so left her appearing tired and confused at times.

[56] Mrs. Canfield clearly has difficulty remembering the details of key events in

this action. She cannot remember meeting Mr. Stewart on January 31, 2012 to sign

the Agreement, although she acknowledges this must have happened. She has

limited memory of her meeting with Mr. Engman. Mrs. Canfield appeared, at times,

to be open to suggestion about how the relevant events likely transpired despite her

lack of memory. Given the issues with the plaintiff’s reliability, as opposed to her

honesty, I will approach her evidence with caution to the extent it is relied on by any

of the parties to establish facts that are contentious.

Mr. Bottoni’s role in the transaction

[57] Mr. Bottoni is a key figure in the events surrounding the transfer of the

Property. On the defendants’ theory, Mr. Bottoni, and, to a lesser extent, other family

members, protected Mrs. Canfield’s interest in the contracting process. Mrs. Canfield

says that Mr. Bottoni did not protect her interests, but rather was aligned with Bronze

Wines in its plan to develop a winery.

[58] Despite the central role that Mr. Bottoni played in the negotiation and

execution of the Agreement, he was not called as a witness at trial. This was an

unexpected development. Bronze Wines and Mr. Engman both listed Mr. Bottoni on

their respective witness lists. Mr. Bottoni swore an affidavit in this proceeding on July

9, 2021. It was anticipated that the affidavit would stand as Mr. Bottoni’s direct

evidence, and that he would be called for the purpose of cross-examination in the

Canfield v. Bronze Wines Ltd.

Page 18

course of the defendants’ case. The affidavit was marked as an exhibit for

identification pending Mr. Bottoni’s anticipated evidence at trial.

[59]

The plaintiff’s case completed in the first week of trial, which was July 19–23,

2021. The defendants’ evidence was scheduled to be heard the following week. Mr.

Stewart indicated that he was not ready to proceed. I granted his request for an

adjournment of the trial to the week of December 6, 2021. When the trial resumed in

December, the defendants advised that they did not intend to call Mr. Bottoni as a

witness.

[60] The plaintiff says I ought to draw an adverse inference from the defendants’

failure to call Mr. Bottoni—that is, that I should infer that Mr. Bottoni’s evidence

would not have assisted the defendants. An adverse inference may be drawn

against a party if, without sufficient explanation, that party fails to call a witness who

might be expected to provide important supporting evidence if their case was sound.

The inference is not to be drawn if the witness was equally available to both parties:

Thomasson v. Moeller, 2016 BCCA 14 at para. 35; Singh v. Reddy, 2019 BCCA 79

at para. 27.

[61] I decline to draw an adverse inference in this case for two reasons. First, Mr.

Bottoni was equally available to both parties. The plaintiff could have called Mr.

Bottoni as a witness if she considered his evidence to be important to her case. The

plaintiff says that by the time she was advised by the defendants that they did not

intend to call Mr. Bottoni, she had already closed her case. I do not agree that Mr.

Bottoni was not a witness equally available to Mrs. Canfield due to this timing. Mrs.

Canfield could have sought the defendants’ undertaking to call Mr. Bottoni before

she closed her case. There is no indication she did so.

[62] Second, and more importantly, it is unnecessary in this case to resort to an

adverse inference to support the findings that Mrs. Canfield invites the Court to

make about Mr. Bottoni’s role. There are numerous emails in evidence that are

authored by Mr. Bottoni. Pursuant to the parties’ document agreement, the emails

are authentic and admissible in the absence of evidence from Mr. Bottoni. The only

Canfield v. Bronze Wines Ltd.

Page 19

logical inference that can be drawn from the emails is that, before and after the

Agreement, Mr. Bottoni was actively supporting Mr. Stewart in the wine-making

business, and viewed the business as a joint endeavour. I will provide illustrative

examples.

[63] In the “negotiation” period, there is no evidence of any communication

between Bronze Wines and Mrs. Canfield, or even between Mr. Bottoni and Mrs.

Canfield. Instead, there are a series of emails between Mr. Stewart and Mr. Bottoni

in which the terms of the draft Agreement are discussed. In an email sent to Mr.

Stewart on January 27, 2012, before the Agreement was signed, Mr. Bottoni listed a

number of repairs that may be required on the Property, including to the main house.

Mr. Bottoni states:

I don’t have a lot – or really any – faith in house inspectors but it may be

prudent to have the place inspected. Other areas of potential issue: furnace,

water heater, water system. Again these are getting to be 20 years old or at

least 15 – they never have experienced issues to the best of my knowledge

but that’s how they get you. I would suspect that the furnace is fine but could

use a servicing – clean filters etc. The water heater? I’m not sure they can be

serviced. But with well water, it will be harder than municipal water so there

could be an additional build up of minerals. The water system – this had a

problem where a main pipe coming from the well was broken but it was fixed.

. . .

All this is really to say that once possession occurs, the issues will be ours.

Best to go in with eyes wide open.

[Emphasis added.]

[64] Mr. Stewart and Mr. Bottoni also exchanged emails in February 2012 to co-

ordinate a time to book with Mr. Engman to have the plaintiff’s signature on the Form

A witnessed. The email exchange suggests that the scheduling of an appointment

with the notary was of primary interest to Mr. Stewart and Mr. Bottoni, with the

plaintiff as only an after-thought. Mr. Stewart inquired as to whether it was necessary

to check the plaintiff’s availability before booking the appointment. Mr. Bottoni

responded:

not to be crude, but at present I suspect our schedules are a little more full

than hers…

but to be pleasant I will of course give her a heads up.

Canfield v. Bronze Wines Ltd.

Page 20

[65] Mr. Stewart acknowledged in his evidence at trial that the appointment with

Mr. Engman was booked before Mrs. Canfield’s availability was confirmed.

[66] In January 2014, Mr. Stewart and Mr. Bottoni exchanged emails regarding a

draft letter to Mrs. Canfield from Mr. Stewart, on behalf of Bronze Wines, which

encouraged her to consider converting the outstanding balance under the

Agreement to shares in the company. In the letter, Mr. Stewart suggested that in

converting her interest to shares, Mrs. Canfield might avoid tax liabilities that would

accrue from the receipt of payments under the Agreement that would count as

income or capital gains. The letter was sent to Mrs. Canfield sometime in late

January or early February of 2014. In March 2014, Mr. Bottoni emailed Lisa

Canfield, from the email address [email protected], to explain the purpose of

the letter. Mr. Bottoni states:

We mailed a copy of the attached letter and a summary statement to Jean in

late January early February. We have not heard back from Jean at this time. I

thought it best that you also be kept abreast of the current state of the

agreement between Bronze and Jean. I’m not sure if you have heard anything

about this as of yet. One rumor has it that certain individuals seem to be feeling

that this contract will never result [in] a return. This is not the intention of the

notice. The notice is the result of our concern for Jean’s financial state and the

repercussions resulting from the capital gains that she may need to pay as part

of her 2014 taxes as a result of the [fact] that the first payment is scheduled

later this year. It would greatly behoove Jean to look for some accountant

advice in this matter. …

[67] In 2015, Mr. Stewart and Mr. Bottoni exchanged emails concerning a letter

they planned to send to the plaintiff on behalf of Bronze Wines proposing terms to

settle her action. At this time, Mr. Bottoni continued to use the email address

“[email protected].” In response to a query from Mr. Stewart as to whether to

acknowledge in the letter to the plaintiff that the fair market value of the Property was

$465,000, Mr. Bottoni stated:

Well, we agreed in the Agreement to pay her 465 – which would suggest we

were satisfied with it at the time we signed the agreement. And we are

agreeing to pay to that original amount for the property and chattels.

. . .

Canfield v. Bronze Wines Ltd.

Page 21

I understand that based on our assessment of the property once we had

possession and could compare to other farm properties in the area, the fair

market value was less.

[Emphasis added.]

[68] Mr. Stewart acknowledged in his evidence at trial that Mr. Bottoni held himself

out as a director of Bronze Wines in correspondence with the plaintiff that was sent

around the same time.

[69] The natural inference arising from the documentary evidence is that Mr.

Bottoni had an active interest in Bronze Wines at all material times, including the

time of the signing of the Agreement. Furthermore, he became a formal

representative of Bronze Wines—perhaps even a director of the company—after the

transaction had completed. It was open to the defendants to call Mr. Bottoni to

provide some explanation for the documentary evidence that might have supported

an alternative inference. They chose not to.

[70] Mr. Stewart testified that he was told by Mr. Bottoni on several occasions

during the contracting process that Mr. Bottoni was providing information to, and

taking direction from, Mrs. Canfield. This evidence is hearsay. It is not admissible as

proof of the assertion that Mr. Bottoni was actively assisting Mrs. Canfield. If the

defendants had wished to establish the truth of this assertion, they were obliged to

call Mr. Bottoni.

[71] Accordingly, I find that the only rational inference arising from the evidence is

that Mr. Bottoni was not acting as an agent of Mrs. Canfield in the contracting

process, as the defendants maintain. Rather, he was aligned in interest with Bronze

Wines.

Issue 1: Is the Agreement unconscionable?

Legal Framework

[72] Unconscionability is an equitable doctrine that is used to set aside “unfair

agreements [that] resulted from an inequality of bargaining power”: Uber

Technologies Inc. v. Heller, 2020 SCC 16 at para. 54 [Uber], citing John D.

Canfield v. Bronze Wines Ltd.

Page 22

McCamus, The Law of Contracts, 2nd ed (Toronto: Irwin Law, 2012) at 424. Through

the doctrine of unconscionability, equity provides relief where the traditional

presumptions underlying freedom of contract—the “freely negotiated bargain or

exchange” between “autonomous and self-interested parties”—lose their justificatory

authority due to the vulnerability of one party to the contracting process: Uber at

paras. 56-60. Courts will not ignore serious flaws in the contracting process where

those flaws challenge the traditional paradigms of the common law of contract. As

explained by the Supreme Court of Canada in Uber:

[58]

…The elderly person with cognitive impairment who sells assets for a

fraction of their value (Ayres v. Hazelgrove, Q.B. England, February 9, 1984);

the ship captain stranded at sea who pays an extortionate price for rescue

(The Mark Lane (1890), 15 P.D. 135); the vulnerable couple who signs an

improvident mortgage with no understanding of its terms or financial

implications (Commercial Bank of Australia Ltd. v. Amadio, [1983] HCA 14,

151 C.L.R. 447) — these and similar scenarios bear little resemblance to the

operative assumptions on which the classic contract model is constructed.

[73] The Court’s consideration of the issue of unconscionability in Uber occurred

in the context of a challenge to the enforceability of a clause in the standard form

employment contracts signed by Uber drivers that required disputes under the

contract to be referred to a mediation and arbitration process. The place of the

mandated mediation and arbitration was the Netherlands. Further, in order to access

the dispute resolution process, a driver was required to pay up-front administration

and filing fees in the amount of $14,500. In a proposed class action brought on

behalf of Uber drivers, the plaintiff argued that the arbitration clause was

unconscionable.

[74] In its judgment in Uber, the Supreme Court of Canada re-stated the test for

unconscionability. The Court reaffirmed that a finding of unconscionability requires

two conditions: (1) inequality of bargaining power, and (2) a resulting improvident

bargain: Uber at para. 65.

Canfield v. Bronze Wines Ltd.

Page 23

[75] An inequality of bargaining power exists where one party cannot adequately

protect their interests in the contracting process. As explained in Uber:

[67]

There are no “rigid limitations” on the types of inequality that fit this

description (McCamus, at p. 429). Differences in wealth, knowledge, or

experience may be relevant, but inequality encompasses more than just

those attributes (McInnes, at p. 524-25). Professor McInnes describes the

diversity of possible disadvantages as follows:

Equity is prepared to act on a wide variety of transactional

weaknesses. Those weaknesses may be personal (i.e.,

characteristics of the claimant generally) or circumstantial (i.e.,

vulnerabilities peculiar to certain situations). The relevant disability

may stem from the claimant’s “purely cognitive, deliberative or

informational capabilities and opportunities”, so as to preclude “a

worthwhile judgment as to what is in his best interest”. Alternatively,

the disability may consist of the fact that, in the circumstances, the

claimant was “a seriously volitionally impaired or desperately needy

person”, and therefore was specially disadvantaged because of “the

contingencies of the moment”. [Emphasis in original; footnotes

omitted; p. 525.]

(See also Chen-Wishart (2018), at p. 363.)

These disadvantages need not be so serious as to negate the capacity to

enter a technically valid contract (Chen-Wishart (2018), at p. 340; see also

McInnes, at pp. 525-26).

[76] One common example of inequality of bargaining power arises from what the

Court in Uber characterizes as the “necessity” cases. In such cases, the weaker

party is so dependent on the stronger that serious consequences would flow from

not agreeing to the contract: Uber at para. 69–70. The second common example is

where only one party could understand and appreciate the full import of the

contractual terms, thus creating “cognitive asymmetry”:

[71]

… This may occur because of personal vulnerability or because of

disadvantages specific to the contracting process, such as the presence of

dense or difficult to understand terms in the parties’ agreement. In these

cases, the law’s assumption about self-interested bargaining loses much of

its force. Unequal bargaining power can be established in these scenarios

even if the legal requirements of contract formation have otherwise been met

(see Sébastien Grammond, “The Regulation of Abusive or Unconscionable

Clauses from a Comparative Law Perspective” (2010), 49 Can. Bus. L.J. 345,

at pp. 353-54).

[77] The Court in Uber cited these examples of inequality of bargaining power in

order to assist in “organizing and understanding” prior cases of unconscionability.

Canfield v. Bronze Wines Ltd.

Page 24

However, regardless of the type of impairment involved, what matters is whether the

evidence discloses a bargaining context: “…where the law’s normal assumptions

about free bargaining either no longer substantially hold true or are incapable of

being fairly applied”: Uber at para. 72.

[78] The second requirement of unconscionability, an improvident bargain,

consists of a bargain that unduly advantages the stronger party or unduly

disadvantages the weaker party. Improvidence is to be measured contextually at the

time the bargain was formed. The question is whether the potential for undue

advantage or disadvantage as a result of the inequality of bargaining power has

been realized. Proof of a manifestly unfair bargain may support an inference that

one party was unable to adequately protect their interests: Uber at paras. 74–79.

[79] As explained in Uber, a bargain may be improvident where the weaker has

been unduly disadvantaged by terms that they did not fully understand:

[77]

Where the weaker party did not understand or appreciate the meaning

and significance of important contractual terms, the focus is on whether they have

been unduly disadvantaged by the terms they did not understand or appreciate.

These terms are unfair when, given the context, they flout the “reasonable

expectation” of the weaker party (see Swan Adamski and Na, at pp. 993-94) or

cause an “unfair surprise” (American Law Institute and National Conference of

Commissioners on Uniform State Laws, Proposed Amendments to Uniform

Commercial Code Article 2 – Sales: With Prefatory Note and Proposed

Comments (2002), at p. 40). This is an objective standard, albeit one that has

regard to the context.

[80] The Court in Uber expressly rejected a more stringent four-part test for

unconscionability that had been adopted in previous cases. The four-part test

requires proof that the transaction was “grossly unfair”, that there was no

independent advice, that the imbalance in bargaining power was “overwhelming”,

and that the stronger party intended to take advantage of the vulnerable party. The

Court held that the four-part test raises the traditional threshold for unconscionability

and unduly narrows the doctrine: Uber at paras. 80–82.

[81] Under the two-part test for unconscionability articulated in Uber,

unconscionability can be established without proof that the stronger party knowingly

Canfield v. Bronze Wines Ltd.

Page 25

took advantage of the weaker: Uber at para. 84. Requiring proof that the stronger

party knowingly took advantage would improperly focus the inquiry on the state of

mind of the stronger party, rather than the protection of the more vulnerable: “…a

weaker party, after all, is as disadvantaged by inadvertent exploitation as by

deliberate exploitation”: Uber at para. 85.

[82] On the facts of Uber, the Court held that the arbitration agreement was

unconscionable, and therefore invalid. There was clearly inequality of bargaining

power between Uber and the plaintiff. The arbitration agreement was part of a

standard form contract, and the plaintiff was powerless to negotiate any terms. The

agreement itself contained no information about the cost of mediation and

arbitration, and thus the plaintiff could not be expected to appreciate the financial

and legal implications of the agreement to arbitrate: Uber at para. 93.

[83] The improvidence of the bargain in issue in Uber was clearly established. The

up-front administrative fees to access the dispute resolution process was close to

the sum of the plaintiff’s annual income. After paying such fees, the plaintiff would

then have to travel to the Netherlands to participate in the mediation and arbitration,

which would be governed by the law of the Netherlands. Effectively, the arbitration

clause rendered the plaintiff’s substantive rights under the contract unenforceable:

Uber at paras. 94–95.

Factual findings regarding the contracting process

[84] I will begin by resolving the factual contests between the parties as to what

occurred during the contracting process in this case. My findings are as follows.

[85] There is no evidence that Mrs. Canfield was involved in any negotiation of

terms with Bronze Wines before the Agreement was signed. There is no evidence

that a draft of the Agreement was ever sent directly to Mrs. Canfield. Mr. Stewart’s

evidence as to what he was told by Mr. Bottoni about Mrs. Canfield’s involvement

during the period leading up to the signing of the contract is, as I have noted,

inadmissible hearsay. I find that the first time that Mrs. Canfield was shown a

Canfield v. Bronze Wines Ltd.

Page 26

proposed form of the Agreement was on January 31, 2012, when Mr. Bottoni and

Mr. Stewart met with her at Langley Seniors Village.

[86] At the time of this meeting, Mrs. Canfield was 73 years old and residing in an

assisted living facility in Langley. She was recovering from hip surgery that left her

with mobility issues. Mrs. Canfield was concerned about her ability to continue to

pay her accommodation costs. She could not return to live at the Property due to her

age and health. Mrs. Canfield still had her personal effects at the Property, and she

was concerned about recovering them. I find, accordingly, that even though Mrs.

Canfield had the capacity to sign the Agreement, she was in a position of situational

vulnerability as a result of her age and health, and the pressure she was under to

sell the Property.

[87] Mrs. Canfield has no memory of the meeting on January 31, 2012. Mr.

Stewart testified that the meeting lasted somewhere between 20 minutes and 60

minutes, including a cigarette break. He says that Mrs. Canfield did not have any

questions about the terms of the Agreement. I conclude, accordingly, that the

meeting on January 31, 2012 was relatively brief and lasted no more than one hour.

I accept Mr. Stewart’s evidence that Mrs. Canfield did not propose any changes to

the Agreement, as drafted by Mr. Stewart, and did not ask any questions.

[88] Mrs. Canfield agreed in cross-examination that she trusted Mr. Bottoni, and

that she valued his opinion on financial matters. She believed that he had her best

interests at heart. I infer that during the course of the meeting on January 31, 2012,

Mrs. Canfield trusted Mr. Bottoni to protect her financial interests in this transaction.

Mrs. Canfield was unaware of Mr. Bottoni’s personal interest in Bronze Wines, which

was in clear conflict with her interests in the contracting process.

[89] Mr. Stewart testified that during the course of the meeting, Mr. Bottoni read

out every clause of the Agreement to Mrs. Canfield and asked her to confirm her

understanding. Counsel for Mrs. Canfield says I should reject this evidence as

implausible and self-serving. I am doubtful that Mr. Bottoni took the steps described

by Mr. Stewart to ensure Mrs. Canfield’s understanding of the terms of the

Canfield v. Bronze Wines Ltd.

Page 27

Agreement. As counsel for Mrs. Canfield points out, some of the terms of the

Agreement, including the interest provision, are nonsensical. There is no such thing

as a “Bank of Canada Prime rate”, so that term could not have been understood

without further questions. However, regardless, for the reasons I have already

explained, I find that Mrs. Canfield would have deferred to Mr. Bottoni during the

contracting process in any event. Even if the clauses had been read out to her, I

conclude that she could not have immediately grasped their full implication. She

relied on Mr. Bottoni for this process.

[90] Mrs. Canfield was not provided with the information she needed to assess the

risks inherent in the Agreement. She was not given information about Mr. Stewart’s

lack of income, assets, or experience in the wine-making business. She was not

encouraged to seek legal or accounting advice. Mr. Stewart agreed in cross-

examination that Bronze Wines always intended to seek mortgage financing after

the Property was transferred. However, he did not advise Mrs. Canfield of this

intention. There was no way for her to know that her contractual right to foreclose

and reclaim the Property in the event of default would be wholly ineffective to protect

her interests. I find, accordingly, that Mrs. Canfield did not have access to

information that she would have required in order to make a meaningful choice to

sign the Agreement.

Analysis: Is the Agreement unconscionable?

[91] In my view, the two conditions for a finding of unconscionability are present

on the facts of this case.

[92] There was an inequality of bargaining power as a result of Mrs. Canfield’s

inability to adequately protect her own interests. I accept the defendants’ submission

that there is no basis in the evidence for a finding that Mrs. Canfield lacked capacity

to contract. However, as Uber makes clear, the doctrine of unconscionability is not

restricted to cases where a party lacks capacity. In this case, Mrs. Canfield had

situational vulnerability as a result of the circumstances she found herself in at the

time of the Agreement. She was an elderly widow with health problems who felt

Canfield v. Bronze Wines Ltd.

Page 28

pressure to sell a Property she could no longer manage. She was deprived of

information that was critical to her exercise of autonomous decision-making in the

contracting process. She did not know that Mr. Bottoni had aligned himself with

Bronze Wines, and thus could not be relied on to protect her interests. She had no

information about Mr. Stewart’s limited income and assets, nor was she told of his

lack of experience in the wine-making business. She did not know of Mr. Stewart’s

plan to mortgage the Property as soon as it was transferred to Bronze Wines. She

was not provided with full information about the nature of the risks inherent in the

Agreement that Mr. Bottoni and Mr. Stewart wished her to sign.

[93] This contracting process did not take place on a level playing field. As a

practical matter, only Mr. Stewart and Mr. Bottoni could understand and appreciate

the full import of the contractual terms, as well as the extent to which the bargain

imperilled Mrs. Canfield’s interests. Unbeknownst to her, she was agreeing to

transfer her only asset of any significant value to Bronze Wines in return for an

unsecured stream of future income that was dependent on the financial success of a

wine-making business operated by someone with no income, assets, or wine-

making experience.

[94] A persistent theme of the defendants’ argument is that Mrs. Canfield was an

experienced real estate investor who was entirely capable of looking after her own

interests in the bargaining process. I reject this characterization. The fact that Mrs.

Canfield and her husband may have purchased properties in municipal tax sales

many decades ago does not counter the vulnerable position she was in during this

contracting process.

[95] The defendants’ arguments rely heavily on the assertion that Mrs. Canfield

managed to negotiate a contract to sell the Property at twice its market value, and

for this reason accepted the risk of the unorthodox repayment method. However, I

reject the defendants’ contention that $200,317 was the true market value of the

Property as of the time the Agreement was executed. As noted, Mr. Stewart alone

decided on the market value figure to insert into the Form A freehold transfer. His

Canfield v. Bronze Wines Ltd.

Page 29

evidence that, in valuing the Property, he relied on advice from BC Assessment is

not admissible for the truth of any such advice. In fact, the BC Assessment records

that are in evidence indicate that the Property had an assessed value of $536,000

as of July 1, 2011. Mr. Stewart has no expertise in real estate appraisal. No weight

can be placed on Mr. Stewart’s determination of market value for the purpose of

preparing the Form A.

[96] For the reasons set out in the section of this judgment addressing the

quantification of damages (at paras. 236–241), I have concluded that the market

value of the Property at the time of its transfer to Bronze Wines was $485,000. It is

not the case, accordingly, that Mrs. Canfield’s agreement to the improvident terms of

the Agreement can be explained as a deliberate assumption of risk in exchange for

a favourable purchase price.

[97] Mr. Stewart also argues that there is no evidence that he or Bronze Wines

deliberately took advantage of Mrs. Canfield. I accept that this is so. Mr. Stewart was

trying to pursue a dream, rather than deliberately exploiting Mrs. Canfield. Mr.

Stewart testified that Mrs. Canfield’s apparent willingness to sell the Property without

any upfront payment was a “godsend” because Bronze Wines had no other options

for securing the property it needed. In the circumstances, it may be that Mr. Stewart

was not inclined to make too many inquiries into the assurances he received from

Mr. Bottoni, but this is not the same thing as deliberately taking advantage of a

weaker contracting party. However, as Uber clarifies, Mr. Stewart’s state of mind is

not the relevant focus of the unconscionability analysis. For the reasons stated, I find

that Mrs. Canfield was disadvantaged in the contracting process. The Agreement

was not the result of free bargaining between two self-interested parties.

[98]

Turning to the second requirement for a finding of unconscionability, I have

no difficulty in concluding that this was an improvident transaction. A substantively

improvident bargain was struck as a result of Mrs. Canfield’s inequality of bargaining

power. The terms of the Agreement, which are more favourable to Bronze Wines

than to Mrs. Canfield, offered Bronze Wines, a corporation with no assets, a

Canfield v. Bronze Wines Ltd.

Page 30

generous two-year payment holiday as well as a 20 to 40-year amortization period to

repay the purchase price without providing any real security or an agreed interest

rate. In the context of Mrs. Canfield’s situational vulnerability and the informational

asymmetry that characterized this contracting process, she could not have

understood or appreciated the meaning or significance of the contractual terms, as

well as how they unduly disadvantaged her position.

[99] In effect, Mrs. Canfield agreed to transfer the only asset she owned of any

significant value, with no assurance of receiving anything in return. The potential for

undue disadvantage as a result of the inequality of bargaining power was thus

realized in this case. The Agreement was an improvident bargain that was the

product of an unfair bargaining process for Mrs. Canfield.

[100] Accordingly, I conclude that the Agreement was unconscionable.

Issue 2: What are Mrs. Canfield’s remedies for the unconscionable

Agreement?

[101] Mrs. Canfield seeks the remedies of rescission of the Agreement, and

damages from Bronze Wines to the extent necessary to compensate her for the loss

of the Property. However, Mrs. Canfield’s argument is under-developed on the

question of the appropriate remedy for unconscionability in the circumstances of this

case. It is not clear what practical effect the remedy of rescission may have. Further,

Mrs. Canfield cites no case law in support of her claimed remedies. It is necessary to

review the relevant legal principles before consideration can be given to the question

of appropriate remedy.

Remedies for unconscionability

[102] Rescission is the traditional remedy when a contract is found to be

unconscionable, and therefore unenforceable: Rick v. Brandsema, 2009 SCC 295 at

para. 66 [Brandsema]. The remedy of rescission in such circumstances extinguishes

the agreement as from the beginning—ab initio—so that it is as if it never existed.

The objective of the remedy is to restore the parties to their original positions as far

as possible: Dominic O’Sullivan, Steven Elliott and Rafal Zakrzewski, The Law of

Canfield v. Bronze Wines Ltd.

Page 31

Rescission, 2^nded. (Oxford: University Press, 2014) [The Law of Rescission], at

paras. 13.01–13.02.

[103] The situation may become more complex where the property has

subsequently either been transferred to a third party or a mortgage interest has been

granted, and the third party who acquired the property interest did so without notice

of the unconscionability. In S.M. Waddams, The Law of Contracts, 7^thed. (Toronto:

Thomson Reuters Canada Limited, 2017) at para. 557, the author states:

A further bar [to rescission] would be the intervention of third party rights. It

would not generally be equitable to set aside a transaction involving property,

if the property had been acquired by an innocent third party for value without

notice of the unconscionability, but in such a case an award of damages

against the stronger party would be appropriate.

[104] The cases cited by Waddams in the footnote to this paragraph reflect two

distinct concerns: prejudice to third parties and the impossibility of impracticality of

restoring the claimant’s pre-contract position through the remedy of rescission. The

two concerns may be interrelated, and either may pose a bar to the granting of the

remedy of rescission: The Law of Rescission at paras. 20.02–20.03.

[105] An order for rescission may be appropriate, despite intervening third party

property rights, if rescission can have some practical effect in restoring the parties’

pre-contract positions, without prejudicing innocent third parties. It may be, for

example, that a wrongdoer has retained a traceable exchange product, and the

claimant is entitled to a proprietary remedy in respect of that product: The Law of

Rescission at para. 20.24. In other cases, a wrongdoer may have transferred a

portion of the asset while retaining ownership of the remainder. In these

circumstances, the court may order rescission of the contract, combined with an

award of compensation to the extent that title to some or all of the property cannot

be re-vested due to the intervening transfer: McCarthy v. Kenny, [1939] 3 D.L.R. 556

(Ont. S.C.) at 563. While equity will protect the property rights of innocent third-party

purchasers, in many cases this can be achieved without barring the remedy of

rescission: The Law of Rescission at para. 20.24.

Canfield v. Bronze Wines Ltd.

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[106] In Canada, equitable compensation may be awarded as a remedy for

unconscionable dealing as an alternative to, or in conjunction with, an order for

rescission. The objective of an award of equitable compensation is to avoid the

inequity that would result if the defendant was permitted to retain the benefits of the

unconscionable bargain: Brandsema at paras. 66–67. The defendant may be

required not only to return the property to the claimant, or pay its market value, but

also account for the benefits the defendant received through possession of the

property: The Law of Rescission at paras. 17.01–17.09; GHL Fridman, The Law of

Contract in Canada, 6th ed (Toronto: Thomson Reuters Canada Limited, 2011) at

762.

The appropriate remedies for unconscionability in this case

[107] The ordinary remedy in the circumstances of this case would be rescission of

the Agreement ab initio. Mrs. Canfield is entitled to be restored to the position she

was in immediately prior to the transfer of the Property to Bronze Wines. However,

the question of remedy in this case is complicated by the fact that the Property was

subsequently encumbered by registered mortgages, including in favour of

Continental, and then sold to a third party in the foreclosure proceeding. Mrs.

Canfield does not argue that title to the Property should be re-vested in her at this

stage. The contest between Mrs. Canfield and Continental is over priority to the

proceeds of sale that have been paid into Court. That contest turns on the limitation

issue. If the limitation period for Continental to enforce its security had not expired by

the time the foreclosure proceeding commenced, then Mrs. Canfield acknowledges

that Continental has priority to the funds.

[108] For the reasons set out later in this judgment (at paras. 116–154), I have

concluded that the limitation period did not expire for Continental to enforce its

security interest in the Property prior to the commencement of foreclosure

proceedings. Pursuant to s. 28 of the Land Title Act, R.S.B.C. 1996, c. 250 [Land

Title Act], Continental’s mortgage on the Property had priority from the time of its

registration. Given that Mrs. Canfield no longer alleges that Continental had actual

knowledge of her unregistered interest, it is unnecessary to consider the implications

Canfield v. Bronze Wines Ltd.

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of prior knowledge under s. 29 of the Land Title Act. Accordingly, Continental has

priority to the funds that have been paid into court.

[109] However, this is not to say that the remedy of rescission can have no practical

effect as between Mrs. Canfield and Bronze Wines. It may be that excess funds from

the proceeds of sale will remain in court after the registered mortgages are paid out.

Whether there will be excess funds is not clear on the record in this proceeding. Mr.

Stewart seeks an order that any funds remaining in court be returned to Bronze

Wines. However, if the Agreement is rescinded, it is Mrs. Canfield, not Bronze

Wines, who would have a proprietary interest in any remaining funds.

[110] In my view, it is appropriate in these circumstances to order rescission of the

Agreement, combined with an order that Bronze Wines pay equitable compensation

to the extent necessary to restore Mrs. Canfield’s pre-contract position. To be clear,

the order for rescission of the Agreement has no effect on Continental’s claim of

priority to the funds in court. Continental is, as it has pleaded, a bona fide purchaser

of its interest in the Property for value without notice. Continental’s registered

mortgage interest takes priority over Mrs. Canfield’s unregistered equitable interest.

However, an order for rescission of the Agreement will mean that Mrs. Canfield has

priority to any remaining funds in court vis-à-vis Bronze Wines.

[111] Bronze Wines is liable to pay Mrs. Canfield equitable compensation for the

shortfall; that is, the difference between any funds Mrs. Canfield receives from the

proceeds of sale and the value of the Property at the time of the Agreement. The

assessment of the value of the Property as of the time of the Agreement is

addressed later in this judgment.

Issue 3: Is Scot Stewart personally liable to Mrs. Canfield?

[112] Mrs. Canfield has named Scot Stewart as a personal defendant to this action,

in addition to naming Bronze Wines. The basis for Mr. Stewart’s alleged personal

liability is unclear on the pleadings. In her notice of civil claim, Mrs. Canfield pleads

that Mr. Stewart and Bronze Wines are both liable to her for damages in the event

that the mortgage holders are found to rank in priority to Mrs. Canfield’s interest.

Canfield v. Bronze Wines Ltd.

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However, she does not plead any basis for Mr. Stewart’s alleged personal liability

under an Agreement that was between Mrs. Canfield and Bronze Wines. There are

no material facts pleaded that would bring this case within the exceptional

circumstances in which a director or officer may be personally liable in relation to a

corporate transaction: Edgington v. Mulek Estate, 2008 BCCA 505 at paras. 21–26;

Gichuru v. Smith, 2010 BCCA 352 at para. 11.

[113] In the course of oral argument at the end of trial, counsel for Mrs. Canfield

raised, for the first time, the prospect that Mr. Stewart might be liable in negligence.

It is unnecessary for me to explore the question of when, if ever, a corporate director

may personally owe a duty of care to another party in the negotiation and execution

of a contract with the corporation. The fact is that Mrs. Canfield has not pleaded a

claim in negligence against Mr. Stewart.

[114] Counsel for Mrs. Canfield further suggested that, as a practical matter, it was

necessary to name Mr. Stewart personally in order to ensure that Bronze Wines

actively defended the action, and participated in pre-trial discovery processes. It is

not apparent to me that naming Mr. Stewart as a defendant was necessary to permit

a full adjudication of issues in this case. Mr. Stewart surely could have been

compelled to provide pre-trial oral and documentary discovery on behalf of Bronze

Wines without being named as a personal defendant. In any event, the wisdom of

Mrs. Canfield’s strategic decision to name Mr. Stewart personally is of primary

relevance to the issue of costs. The parties have asked for an opportunity to make

further submissions on costs after judgment is rendered in this action. I will,

therefore, defer any further consideration of the wisdom of naming Mr. Stewart as a

personal defendant.

[115] Mrs. Canfield’s action against Mr. Stewart is dismissed.

Canfield v. Bronze Wines Ltd.

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Issue 4: Has the limitation period expired for Continental to enforce its

security interest in the Property?

Legal Framework

[116] The parties agree that the applicable limitation rules in this case are the two-

year limitation period set out in s. 6 of the Limitation Act, S.B.C. 2012, c. 13

[Limitation Act], and the special discovery rule for the enforcement of security in s.

15. These provisions read as follows:

Basic limitation period

6 (1) Subject to this Act, a court proceeding in respect of a claim must not be

commenced more than 2 years after the day on which the claim is

discovered.

. . .

Discovery rule for claims to realize or redeem security

15 A claim to realize or redeem security is discovered on the first day that

the right to enforce the security arises.

[117] A limitation period may be extended if liability is “acknowledged” within the

meaning of s. 24 of the Limitation Act. Where there is such an acknowledgement,

the act or omission on which the claim is based is deemed to have taken place on

the day the acknowledgement is made. An acknowledgement, therefore, re-sets the

limitation period.

[118] In Leatherman v. 0969708 B.C. Ltd., 2018 BCCA 33 [Leatherman], the Court

of Appeal explained the dual nature of a mortgage, in that there is both a debt and a

security obligation. The different obligations under the mortgage may give rise to

different limitation periods: Leatherman at paras. 45–48. The right to enforce security

is subject to the discoverability rule in s. 15 of the Limitation Act—that is, a claim to

realize or redeem security is discovered on the first day that the right to enforce

security arises. The right to enforce repayment of the debt is subject to the

discoverability rule in s. 14 of the Limitation Act for demand obligations: the claim is

discovered on the first day there is a failure to perform the obligation after a demand

for performance has been made. The date of a demand for repayment may differ

Canfield v. Bronze Wines Ltd.

Page 36

from the date of default, giving rise to different limitation periods for the enforcement

of security and enforcement of the debt.

Analysis

[119] The only limitation period in issue in the present case is the limitation period

for Continental to enforce its security. Mrs. Canfield and Continental agree that the

service of the notice of civil claim on Continental on May 23, 2014 constituted a

default under the mortgage, which triggered the tolling of the limitation period.

Continental initiated its foreclosure proceeding on April 30, 2018. Continental says

that Bronze Wines made acknowledgements after May 2014 that had the effect of

re-setting the limitation period, as provided for in s. 24 of the Limitation Act.

[120] In the course of final argument, Mrs. Canfield argued, for the first time in this

proceeding, that any acknowledgements by Bronze Wines cannot affect the

limitation period for Continental to enforce its claim to priority over Mrs. Canfield’s

claimed interest in the Property. If this argument does not succeed, then Mrs.

Canfield says that the issue of whether the limitation period for Continental to

enforce its security against Bronze Wines should not be decided in this action, but

rather should be left for the foreclosure proceeding. Accordingly, three issues must

be determined:

(a)

Does Mrs. Canfield have to make an acknowledgement in order

to stop the tolling of the limitation period?

(b)

Should the question of whether Continental’s limitation period for

realizing on its security as against Bronze Wines be decided in

this action?

(c)

If so, has the limitation period for Continental to enforce its

security interest under the mortgage expired?

Canfield v. Bronze Wines Ltd.

Page 37

a.

Does Mrs. Canfield have to make an acknowledgement to stop

the tolling of the limitation period?

[121] Mrs. Canfield’s arguments on this issue are both novel and difficult to follow.

Mrs. Canfield says that Continental had two years from service of the notice of civil

claim to enforce its security interest against Mrs. Canfield, and that it had failed to do

so. Mrs. Canfield says she cannot be bound by any acknowledgements by Bronze

Wines, because Bronze Wines is not her agent. In other words, Mrs. Canfield says

that absent some acknowledgement by Mrs. Canfield of Continental’s right to

enforce its security against her within two years of the service of the notice of civil

claim, the limitation period for Continental to assert its security interest in the

Property in this action has expired.

[122] Mrs. Canfield’s argument, as I understand it, rests on the premise that her

claim of equitable ownership of the Property, once asserted, effectively gave her

standing as a de facto party to the mortgage agreement. Since Mrs. Canfield sought

to recover ownership of the Property, as least in equity, Continental should not be

permitted to continue to deal with Bronze Wines as if Mrs. Canfield was a non-party

to the mortgage agreement. If the claim for rescission succeeded, as it has, then

Mrs. Canfield should not be bound by acknowledgements given by a party who

never should have owned the Property at all.

[123] It is not apparent to me in these circumstances why Continental would be

obliged to secure an acknowledgement from Mrs. Canfield to stop the tolling of the

limitation period. First, as of May 2014, her asserted claim in the Property had not

been determined, and Continental remained a party to a mortgage agreement with

Bronze Wines. Second, the remedy of rescission, which could only be obtained at

the end of a trial of the action, was only available, in any event, if there was no

resulting prejudice to third party rights. Continental was not a party to the

unconscionable transaction. It was entitled to continue to assert its contractual rights

against the other party to the mortgage agreement; rights that were acquired for

good and substantial consideration without notice of Mrs. Canfield’s claim. It was

Canfield v. Bronze Wines Ltd.

Page 38

entitled to enter into a standstill agreement with Bronze Wines if Continental decided

it was beneficial to do so, without sacrificing its right to enforce its security.

[124] Mrs. Canfield cites no authority for the proposition that a mortgagee must

secure acknowledgements from both the mortgagor and a party claiming an

equitable interest in the property in order to stop the tolling of the limitation period.

Such an argument is inconsistent with the principles underlying rescission as an

equitable remedy for an unconscionable transaction, including that rescission must

not prejudice the rights of innocent third parties. Having registered its mortgage

without notice of Mrs. Canfield’s interest, Continental was entitled to exercise the

usual rights of a mortgagee under the mortgage agreement, including the right to

realize on security, or to defer realizing on security during the period of a standstill

agreement with the mortgagor.

[125] For these reasons, in my view the only relevant question is whether there

were acknowledgements by Bronze Wines that re-set the limitation period.

b.

Should the limitation period issue vis-à-vis Mrs. Canfield and

Bronze Wines be decided in this action?

[126] In the course of final argument, Mrs. Canfield advanced the position that if the

Court decided the first issue against her, then the question of whether Continental

can enforce its security interest in the Property against Bronze Wines should be left

to the foreclosure proceeding. Mrs. Canfield argues that she is prima facie entitled to

raise the limitation period issue in the foreclosure proceeding as a means of

contesting Continental’s priority to the proceeds of sale of the Property. She raises

the prospect of inconsistent judicial findings if the same issue is adjudicated in two

separate proceedings.

[127] Mrs. Canfield’s arguments require some context. The original notice of claim

in this action did not include a claim based on the alleged expiry of the limitation

period for Continental to enforce its security interest under the mortgage. This is

because the limitation period only became an issue when Continental did not

commence foreclosure proceedings within two years of the service of the notice of

Canfield v. Bronze Wines Ltd.

Page 39

civil claim. The limitation period was relevant to the action due to the competing

claims asserted by Mrs. Canfield and Continental to an interest in the Property: Mrs.

Canfield’s claim of an unregistered equitable interest, and Continental’s claim to

enforce its security interest in the Property under to a registered mortgage.

[128] At a trial management conference (“TMC”) before Master Keim on October

22, 2020, the parties discussed the overlap between the action and the foreclosure

petition in relation to the limitation period issue. I have listened to the recording of

this TMC. In the course of the TMC, counsel for Mrs. Canfield submitted that the

question of whether the limitation period for Continental to enforce its security under

the mortgage had expired had become a live issue in the action since the filing of the

notice of civil claim, and further that an adjudication of the issue would have

implications for the foreclosure proceeding. Mrs. Canfield’s counsel sought to have

the foreclosure petition referred to the trial list, and heard at the same time as the

action. Master Keim suggested that the concern with overlap could be addressed,

instead, by an order granting leave to Mrs. Canfield to amend her pleadings to

squarely raise the limitation issue in the action. Counsel for Mrs. Canfield agreed

that such an amendment satisfied his concern. Continental did not oppose such an

order. On this basis, Master Keim ordered:

The plaintiff has leave to amend [her] pleadings to incorporate and raise the

issue of the limitation period as between Bronze Wines Ltd. and the mortgage

granted to Continental Appraisals Ltd.

[Emphasis added.]

[129] Mrs. Canfield subsequently filed an amended notice of civil claim pleading

that the limitation period for Continental to enforce its security interest against the

Property had tolled, and therefore the mortgage did not take priority over Mrs.

Canfield’s interest in the Property. Continental filed an amended response to civil

claim, which pleads s. 24 of the Limitation Act.

[130] As is evident from this history, it is at Mrs. Canfield’s insistence that the

limitation issue arises for determination in this action. Furthermore, Mrs. Canfield’s

submissions to Master Keim at the TMC expressly acknowledged the prospect that a

Canfield v. Bronze Wines Ltd.

Page 40

determination of the limitation period issue in the action could impact the foreclosure

proceeding. The terms of Master Keim’s order track the submissions she received

from the parties: Mrs. Canfield was granted leave to amend to raise the issue of the

limitation period between Bronze Wines and Continental.

[131] In light of this history, it is not open to Mrs. Canfield at this late stage in the

proceeding to take the position that the trial judge in this action should not decide the

very limitation issue that she has, until now, insisted the trial judge must decide.

Continental has fully defended Mrs. Canfield’s allegation that the limitation period for

enforcing its security has expired, including leading evidence about the

acknowledgements by Bronze Wines that Continental relies on to re-set the

limitation period. There is a full evidentiary record before the Court on which to

decide the issue. The limitation issue is relevant to the matters at issue in this action

because it affects the remedies sought by Mrs. Canfield, including her claim to a

priority interest in the Property.

[132] I express no view as to whether, in these circumstances, Mrs. Canfield should

be permitted to revisit the same limitation period issue in the foreclosure proceeding.

It is for the court hearing the foreclosure proceeding to decide whether to allow a re-

litigation of the limitation period in these circumstances.

c.

Has Continental’s limitation period expired to enforce its

security?

[133] The question of whether the limitation period for Continental to realize on the

security expired before Continental commenced foreclosure proceedings turns on

the question of whether there was an “acknowledgement” by Bronze Wines within

the meaning of s. 24 of the Limitation Act. Section 24(1) of the Limitation Act

provides:

24 (1) If, before the expiry of either of the limitation periods that, under this

Act, apply to a claim, a person acknowledges liability in respect of the claim,

(a) the claim must not be considered to have been discovered on

any day earlier than the day on which the acknowledgement is made,

and

Canfield v. Bronze Wines Ltd.

Page 41

(b) the act or omission on which the claim is based is deemed to

have taken place on the day on which the acknowledgement is made.

[Emphasis added.]

[134] Section 24(6) of the Limitation Act establishes certain conditions for the

application of s. 24(1), including that the acknowledgement must be in writing, and

made to the person with the claim or that person’s agent, receiver, or trustee. The

conditions in s. 24(6) do not apply to acknowledgements referred to in s. 24(7), (8) or

(9). Of relevance to the present case is s. 24(8), which provides:

(8)

A debtor's performance of an obligation under or in respect of a

security agreement is an acknowledgement by the debtor of liability in respect

of a claim by the creditor for realization on the collateral under the security

agreement.

[135] Where the conditions in s. 24(6) do apply and an acknowledgement must be

in writing, the document will extend the limitation period if a reasonable person

would construe its terms as an acknowledgement of “some liability”: Forjay

Management Ltd. v. 0981478 B.C. Ltd., 2020 BCSC 637 at para. 34 [Forjay] citing

Trombley v. Pannu, 2016 BCCA 324.

[136] Continental relies on two primary categories of acknowledgements to bridge

the gap between the service of the notice of civil claim on May 23, 2014, and the

commencement of foreclosure proceedings on April 30, 2018:

i. Bronze Wines’ mortgage payments, the last of which was made on

April 15, 2015;

ii. The standstill agreement which was signed by Mr. Stewart on behalf of

Bronze Wines on September 20, 2016.

[137] There is a third category of communication that Continental says gives rise to

an acknowledgement: emails exchanged between Mr. Stewart and counsel for Air

Touch between September 5–14, 2016, immediately prior to the signing of the

standstill agreement. Mr. Stewart disputes that these emails relate to the Continental

mortgage debt. His evidence is that he believed he was communicating with counsel

only in relation to the Air Touch mortgage. For the reasons that follow, I find that the

Canfield v. Bronze Wines Ltd.

Page 42

mortgage payments and the standstill agreement constitute acknowledgements, and

that Continental’s limitation period for enforcing its security interest had not expired

at the time of its commencement of foreclosure proceedings. As such, I find it

unnecessary to resolve the dispute over whether the emails also constitute an

acknowledgement.

The post-dated cheques

[138] There is no dispute that the post-dated cheques from Bronze Wines

constitute “performance of an obligation” by Bronze Wines under a security

agreement within the meaning of s. 24(8) of the Limitation Act. The issue of

contention is whether the cheques are an acknowledgement on the date that the

funds were paid to Continental, as Continental maintains, or only on the date the

post-dated cheques were delivered to Continental, as Bronze Wines maintains.

Although it is not entirely clear on the evidence, I assume that the post-dated

cheques in issue were delivered by Bronze Wines to Continental at the time of the

one-year mortgage renewal in June 2014. If Bronze Wines is correct in its position

that it is only the delivery of the cheques that constitutes an acknowledgement, then

Continental’s limitation period for realizing on its security tolled in June 2016.

[139] There is only one British Columbia case the parties were able to locate that

has considered the issue of whether a post-dated cheque postpones a limitation

period as of the time of delivery of the cheque or as of the time of payment: Hansen

v. Randa, [1996] B.C.J. No. 1654 (S.C.) [Hansen]. In Hansen, Boyle J. followed a

1925 decision from Ontario—Bank of Montreal v. Reinhorn (1925), 28 O.W.N. 476

(Ont. H.C.) [Reinhorn]—holding that post-dated cheques are only an

acknowledgement at the time of delivery. Although the trial judgment in Reinhorn

was overturned by the Ontario Court of Appeal, Boyle J. nevertheless considered

the judgment to be authoritative on this point:

[35]

Reinhorn was appealed to the Ontario Court of Appeal, a new trial

was ordered. The ground of appeal or reasons for allowing the appeal are not

given in the brief note recording the event in (1925) 29 OW.N. 125. There is

no subsequent record. There was more than one issue at trial, one of an

evidentiary nature. The Canadian Encyclopedia Digest 21 C.E.D. (West 3rd)

continues to cite the trial judgement as authority.

Canfield v. Bronze Wines Ltd.

Page 43

[36]

This Court is not bound by that authority but, because it stands alone,

not challenged in 30 years amidst millions of transactions, it has weight. In

any event, it is logically right to conclude on the foundation raised by the

learned authors that the date of confirmation of payment is the date the

Plaintiffs received the cheques which, allowing a month for delivery, leaves

the Plaintiffs regrettably out of time.

[140] Citing a line of contrary authority from Ontario, Continental argues that

Hansen should not be followed. Continental says that this case falls within the

exceptions to the general rule of judicial comity that are identified in Re Hansard

Spruce Mills Ltd., [1954] 4 D.L.R. 590 (B.C.S.C.) at 592. While a trial judge should

generally follow the judgment of another judge of the same court, a departure from

this rule may be justified where, among other things, subsequent decisions have

affected the validity of the impugned judgment, or it is demonstrated that some

binding authority in case law or relevant statute was not considered.

[141] Continental places particular reliance on the decision of the Ontario Superior

Court of Justice in Markham School for Human Development v. Ghods, (2002), 216

D.L.R. (4th) 202 (Ont. S.C.J.) [Markham School]. Justice Epstein, as she then was,

held that, having been overturned on appeal, the reasoning in Reinhorn cannot be

relied on, and Hansen was wrongly decided. Justice Epstein reasoned that the flaw

in the analysis in the judgments of Reinhorn and Hansen lay in their failure to

recognize the significance of each of two dates—the date when a post-dated cheque

is delivered and the date when the funds are withdrawn from the debtor’s account—

in representing an acknowledgement of the debt. Justice Epstein concluded that a

post-dated cheque acknowledges the existence of a debt on the date of delivery, but

an acknowledgement also occurs when funds are actually withdrawn from the

debtor’s account. In highlighting the significance of the two dates, Epstein J. relied

on the judgment of the Supreme Court of Canada in Keyes v. The Royal Bank of

Canada, [1947] S.C.R. 377 [Keyes], a case that is not cited in Hansen.

[142] Keyes addresses the legal effect of a post-dated cheque. The appellant had

made out a cheque for $2,000 on January 8, and post-dated it for January 9. The

respondent bank failed to notice that the cheque was post-dated, and it permitted

the recipient to withdraw the funds on January 8. The appellant had wished to stop

Canfield v. Bronze Wines Ltd.

Page 44

payment on the cheque, but his instructions arrived too late. The issue that arose

was whether the appellant could recover the $2,000 from the bank due to its error in

allowing the cheque to be cashed prior the date on the cheque.

[143] In finding in favour of the appellant’s right to recover from the bank, the

Supreme Court of Canada noted that a post-dated cheque is a bill of exchange

within the meaning of the Bills of Exchange Act, R.S.C. 1927, c. 16 [now cited as

R.S.C. 1985, c. B-4]. Pursuant to s. 27 of the Act [now s. 26], a bill of exchange is

not invalid by reason only that it is antedated or postdated. Section 29 of the Act

[now s. 28] provides:

29.

Where a bill or an acceptance, or any endorsement on a bill, is dated,

the date shall, unless the contrary is proved, be deemed to be the true date of

the drawing, acceptance or endorsement, as the case may be.

[144] On the facts of Keyes, the Court held that the “true date” of payment was

January 9^th, and that the bank was obligated to not permit the cheque to be cashed

before the date indicated for payment. Prior to the date for payment, the appellant

had the right to countermand the cheque by directing the bank to stop payment on it.

The right to countermand could not be defeated by the bank’s error in certifying the

cheque prior to its date for payment.

[145] In Markham School, Epstein J. cited Keyes in support of the significance she

placed on the date of payment of a post-dated cheque, as distinct from the date the

cheque is delivered to the creditor. Continental points out that Markham School has

been consistently followed in Ontario: see, for example, Emmott v. Edmonds, 2010

ONSC 4185 at paras. 48–50, and Cross Bridges Inc. v. Z-Teca Foods Inc., 2015

ONSC 2632 at paras. 60–64. As noted, Hansen was not followed in Markham

School. Hansen has not been cited in any subsequent decision of the British

Columbia courts.

[146] The Supreme Court of Canada’s judgment in Keyes was the subject of

comment by the British Columbia Court of Appeal, although not in the context of a

limitation defence, in Sereda v. Ni, 2014 BCCA 248 [Sereda]. This was an appeal of

the dismissal of a tenant’s judicial review of a decision of the Residential Tenancy

Canfield v. Bronze Wines Ltd.

Page 45

Board. Among the issues raised on appeal was whether the appellant had paid

December rent on December 19, when a post-dated cheque was delivered, or on

December 20, the date of the cheque. Consistent with the wording of s. 28 [formerly

s. 29] of the Bills of Exchange Act and the decision in Keyes, the Court of Appeal

held that the true date of payment was December 20. The analysis in Sereda is

consistent with the significance attributed to the payment date of a post-dated

cheque in Markham School for limitation period purposes.

[147] In light of these authorities, I decline to follow Hansen. The validity of the

analysis in Hansen has been undermined by subsequent authorities, specifically

Markham School. Furthermore, Hansen does not consider binding authority (the

judgment of the Supreme Court of Canada in Keyes) and the provisions of a relevant

statute (the Bills of Exchange Act). These authorities make it clear that an

acknowledgement of a debt occurs not only when post-dated cheques are delivered,

but also when the funds are withdrawn from the debtor’s account and payment is

made. To put it in the language of s. 24(8) of British Columbia’s Limitation Act, the

actual payment of funds pursuant to a post-dated cheque is “performance of an

obligation” which constitutes the debtor’s acknowledgement of the creditor’s claim to

realize on security.

[148] Bronze Wines’ primary argument in support of the reasoning and conclusion

in Hansen is that Bronze Wines lost control over the cheques once they were

delivered to Continental, and therefore Continental’s unilateral act of cashing the

cheque cannot be an acknowledgement by Bronze Wines. For the reasons stated,

this is not an accurate characterization of the legal effect of a post-dated cheque.

Until such time as the funds were withdrawn from Bronze Wines’ account on the

date indicated for payment, Bronze Wines could have instructed its bank to stop

payment on the cheque. Bronze Wines did not do so.

[149] Accordingly, I find that the mortgage payment that Bronze Wines made to

Continental on April 15, 2015 constituted an acknowledgement pursuant to s. 24(8)

of the Limitation Act of Continental’s right to realize on its security. As provided for in

Canfield v. Bronze Wines Ltd.

Page 46

s. 24(1), the two-year limitation period for Continental to enforce its security was re-

set as of the date of this acknowledgement, so that the limitation period extended to

April 15, 2017.

The standstill agreement

[150] Mr. Stewart signed the standstill agreement on behalf of Bronze Wines on

September 20, 2016. The agreement specifically references the Air Touch and

Bronze Wines mortgages. The terms of the agreement reflect the parties’

renegotiation of the time for payment of both mortgages. The agreement includes

the following relevant terms:

1. Air Touch will instruct its counsel to take no further action in the foreclosure

commenced in B.C. Supreme Court Action No. S18596 Nelson Registry.

Continental will take no steps to enforce its mortgage registered against the

Property. Each of Air Touch and Continental will standstill for a period of 1 year

ending December 31, 2017, and then standstill for an additional 1 year period

ending December 31, 2018, should Bronze be making payments as required by

this Agreement;

. . . .

3. Bronze will execute an assignment or pledge of its share of the profit from a

land lease/farming agreement, a copy of said agreement being attached and

marked Appendix A hereto (the “Garlic Contract”) and any second such

agreement (the “Second Garlic Contract”). Upon payment of the Amount Air

Touch and/or Continental shall instruct counsel to terminate the said

assignment(s) or pledge(s) and to remove their registration under the PPSA and

mortgage under the Land Title Act.

4. Bronze will pay the mortgages presently registered on the Bronze Property in

favour of Continental and Air Touch including principal, interest and assessable

legal costs, (the “Amount”), on the following terms:

[repayment terms omitted]

5. Bronze shall have the right to repay any balance of the Amount at any time on

the terms of the Mortgages. Continental will give a release of mortgage upon

payment in full. Air Touch will give a release of mortgage upon payment in full

and a release of all claims arising from the action.

. . . .

9. Upon default in its obligations under this agreement this settlement shall be null

and void and Continental and Air Touch will be free to enforce their respective

mortgages.

Canfield v. Bronze Wines Ltd.

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[151] Through the standstill agreement, Bronze Wines sought to address the

consequences of its liability under the mortgages by agreeing to new repayment

terms. This avoided foreclosure proceedings, at least during the currency of the

agreement. The terms of the agreement clearly acknowledge Continental’s right to

enforce its security against the Property under the mortgage agreement. That is, the

agreement acknowledges Bronze Wines’ liability on both the debt and the security

aspect of the mortgage: Forjay at paras. 63–71.

[152] The standstill agreement otherwise meets the requirements of s. 24(6) of the

Limitation Act. The acknowledgement is in writing, signed by an authorized signatory

of Bronze Wines, and it is made to the person with the claim (Continental). As such,

the standstill agreement had the effect of re-starting the limitation period as of

September 20, 2016, extending it to September 20, 2018.

Summary of conclusion on the limitation period issue

[153] The limitation period had not expired for Continental to realize on its security

against the Property at the time it commenced the foreclosure proceeding on April

30, 2018. The limitation period was extended by two acknowledgements of liability

by Bronze Wines: the mortgage payments made up to April 15, 2015, and the

signing of the standstill agreement on September 20, 2016.

[154] The relevance of this conclusion for the purpose of the present action is that

Continental’s right to realize on its security has not tolled. Continental’s registered

mortgage interest in the Property therefore takes priority over Mrs. Canfield’s

unregistered equitable interest.

Issue 5: Was Mr. Engman negligent in witnessing Mrs. Canfield’s

signature on the Form A freehold transfer?

Legal Framework

[155] To succeed in a negligence action, a plaintiff must show that: (1) the

defendant owed the plaintiff a duty of care; (2) the defendant’s behaviour breached

the standard of care; (3) the plaintiff sustained damage; and (4) the damage was

Canfield v. Bronze Wines Ltd.

Page 48

caused, in fact and law, by the defendant’s breach: Deloitte & Touche v. Livent Inc.

(Receiver of), 2017 SCC 63 at para. 77 [Livent]. The parties’ submissions focussed

on the elements of duty of care, standard of care, and causation.

Duty of care

[156] In Canadian law, the existence of a duty of care is determined in accordance

with the two-stage Anns/Cooper test. The test originated with the decision of the

House of Lords in Anns v. Merton London Borough Council, [1978] A.C. 728 (H.L.),

and was revised by the Supreme Court of Canada in Cooper v. Hobart, 2001 SCC

79 [Cooper]. The Anns/Cooper test involves the following two analytical steps:

i. Is the harm suffered by the plaintiff a foreseeable consequence of the

defendant’s acts or omissions, and is there a sufficient relationship of proximity

between the parties that it is just and fair to impose a duty of care?

ii. If so, are there residual policy considerations outside of the relationship

between the parties that may negate the imposition of a duty of care?

[157] In Livent, the Supreme Court of Canada observed that in cases involving

negligent misrepresentation or performance of a service, proximity will more usefully

be considered before foreseeability at the first stage of the Anns/Cooper test. This is

because the characteristics of the relationship between the parties, specifically the

purpose of the defendant’s undertaking, will inform the analysis of the foreseeability

of injury: Livent at para. 24.

[158] A relationship is sufficiently proximate if it falls within a previously established

category, or a sufficiently analogous one. The relevant “category” for the purpose of

supporting a duty of care is that of proximity of relationship: 1688782 Ontario Inc. v.

Maple Leaf Foods Inc., 2020 SCC 35 at para. 23 [Maple Leaf]. Where an

established, or analogous, category of proximate relationship cannot be found, the

court must undertake a full proximity analysis in order to determine whether the

necessary close and direct relationship exists between the parties. This involves

examining all relevant factors arising from the relationship between the plaintiff and

Canfield v. Bronze Wines Ltd.

Page 49

the defendant, including “expectations, representations, reliance, and the property or

other interests involved”: Livent at paras. 26–29; Cooper at paras. 34.

[159] In a case where a plaintiff seeks to recover pure economic loss alleged to

have been caused by the negligent performance of a service, two factors are

determinative in the proximity analysis: the defendant’s undertaking and the

plaintiff’s reliance. Where the defendant undertakes to provide a service in

circumstances that invites the plaintiff’s reasonable reliance, the defendant is

obligated to take reasonable care and the plaintiff has a right to rely on the

defendant’s undertaking to do so: Livent at para. 30; Maple Leaf at para. 32.

[160] Any reliance on the part of the plaintiff which falls outside the scope of the

defendant’s undertaking of responsibility necessarily falls outside the scope of the

proximate relationship and, therefore, of the defendant’s duty of care: Livent at para.

31. As explained by the Supreme Court of Canada in Maple Leaf:

[35]

… Livent makes clear, then, that considerations of undertaking and

reliance furnish not only a principled basis for drawing the line in cases of

negligent misrepresentation or performance of a service between duty and no-

duty, but also for delineating the scope of the duty in particular cases, based upon

the purpose for which the defendant undertakes responsibility. Reliance that

exceeds the purpose of the defendant’s undertaking is not reasonable, and

therefore not foreseeable (para. 35).

[161] If a prima facie duty of care is established at the first stage of

the Anns/Cooper test, then the analysis shifts to the second stage of the inquiry,

which looks at whether residual policy considerations negate the duty of care. The

policy considerations at the second stage of the test are concerned with the effect of

recognizing a duty of care on other legal obligations, the legal system, and society

more generally: Cooper at para. 37; Livent at para. 40. Second stage policy

considerations are external to the relationship between the parties. They include

such factors as whether the law already provides a remedy, and whether the

recognition of the duty of care creates “the spectre of unlimited liability to an

unlimited class”: Livent at para. 40.

Canfield v. Bronze Wines Ltd.

Standard of care

Page 50

[162] A notary public is subject to the same standard of care that would govern a

lawyer doing the same work: Normak Investments Ltd. v. Belciug, 2015 BCSC 700

at para. 69 [Normak Investments]. As explained by Fitch J., as he then was, in

Normak Investments:

[88]

The basis of a solicitor’s, or notary public’s, liability in tort for

negligence, and the right of a plaintiff to recover for purely financial loss, is an

application of the general principle of tortious liability for negligence based on

the breach of the duty of care arising from a relationship of sufficient

proximity. As noted in Central Trust at para. 61, “[t]hat principle is not

confined to professional advice but applies to any act or omission in the

performance of the services for which a solicitor is retained”.

[163] In Central Trust Co. v. Rafuse, [1986] 2 S.C.R. 147 at 208, the Supreme

Court of Canada described a solicitor’s standard of care in the following terms:

A solicitor is required to bring reasonable care, skill and knowledge to the

performance of the professional service which he has undertaken. See Hett

v. Pun Pong (1890), 18 S.C.R. 290, at p. 292. The requisite standard of care

has been variously referred to as that of the reasonably competent solicitor,

the ordinary competent solicitor and the ordinary prudent solicitor. …

[164] The same standard of care applies to a notary. The question to be answered

in a negligence claim against a notary is what a reasonably competent notary or

lawyer would have been expected to do in the defendant’s circumstances: Esser v.

Luoma, 2004 BCCA 359 at para. 41 [Esser].

[165] While expert evidence is generally required in a solicitor’s negligence case to

establish the standard of care, there are at least two exceptions to this general rule.

First, it may be possible for the court to reliably determine the standard of care

because the court is faced with “non-technical matters or those of which an ordinary

person may be expected to have knowledge”. Second, the impugned actions of the

defendant may constitute such a marked departure from any standard of reasonable

conduct that it is unnecessary for the court to determine the precise parameters of

that standard: Odobas v. Yates, 2021 BCSC 2320 at paras. 30–40; Zink v. Adrian,

2005 BCCA 93 at paras. 44–45.

Canfield v. Bronze Wines Ltd.

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[166] The rules of professional conduct that govern a particular profession may also

provide guidance to the court in determining the applicable standard of care,

although they are not binding on the court: Galambos v. Perez, 2009 SCC 48 at

para. 29. In some cases, a publication or checklist that is widely circulated in the

profession indicating a standard sanctioned by common usage may be more useful

and persuasive in establishing the standard of care than expert evidence in the

guise of a particular practitioner’s opinion of what they might have done if

hypothetically placed in the defendant’s circumstances: Esser at para. 41.

Causation

[167] In order to succeed in a negligence claim, a plaintiff must also establish that

the defendant’s breach of the standard of care was a factual and legal cause of the

plaintiff’s injury. Factual causation is generally determined in accordance with the

“but for” test; that is, the plaintiff must prove on a balance of probabilities that the

harm would not have occurred but for the defendant’s negligent act: Nelson (City) v.

Marchi, 2021 SCC 41 at para. 96 [Marchi]. It is not necessary for a plaintiff to prove

that a defendant’s negligence was the sole cause of her injury, only that it

was a cause: Athey v. Leonati, [1996] 3 S.C.R. 458 at paras. 17–19.

[168] The question of legal causation concerns whether the plaintiff’s loss is too

remote from the defendant’s wrongful conduct to be recoverable. The remoteness

inquiry asks whether the specific injury suffered by the plaintiff was a reasonably

foreseeable consequence of the defendant’s breach: Marchi at paras. 97–99.

Factual findings relevant to the claim against Mr. Engman

[169] There is conflicting evidence as to what occurred during Mrs. Canfield’s

attendance at Mr. Engman’s office on February 27, 2012. I will address those

conflicts and make the necessary factual findings before turning to an analysis of

Mrs. Canfield’s claim in negligence against Mr. Engman.

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Mrs. Canfield’s evidence

[170] Mrs. Canfield testified that Mr. Bottoni drove her from her residence in

Langley to Mr. Engman’s office in New Westminster. Mrs. Canfield understood that

the visit to the notary had something to do with the Property, but no one explained to

her exactly what was going to happen that day. She had never met Mr. Engman

before this visit. Mrs. Canfield says she had not received legal advice in relation to

the Agreement or transfer of the Property at the time she met with Mr. Engman.

[171] Mr. Stewart was outside Mr. Engman’s office when Mrs. Canfield and Mr.

Bottoni arrived. The three of them went into Mr. Engman’s office together. Mrs.

Canfield was directed to sit down in a chair.

[172] Mrs. Canfield recalls Mr. Engman approaching her with a piece of paper in his

hand. He spoke “very quietly”. Mrs. Canfield could not understand what Mr. Engman

was saying to her. Mrs. Canfield does not recall signing the Form A freehold

transfer, although she agrees it is her signature on the Form A. Mrs. Canfield says

she did not understand the purpose of the Form A, and its purpose was not

explained to her by Mr. Engman.

[173] Mrs. Canfield asked Mr. Bottoni on the way home what had been

accomplished by the visit to Mr. Engman’s office, but he just said words to the effect

of “he wanted the papers”. Mrs. Canfield says that when she arrived home that

evening, she did not understand that as a consequence of her visit to Mr. Engman’s

office, she had transferred the Property to Bronze Wines.

[174] Mrs. Canfield’s evidence in cross-examination and re-examination is

illustrative of the point I have already made about Mrs. Canfield’s receptiveness to

suggestion as a method of filling her memory gaps. In cross-examination by Mr.

Engman’s counsel, she gave the following evidence:

Q. You’ll agree with me that you didn’t ask Mr. Engman for any advice.

A. He spoke very softly and it was hard for me to follow what he was saying.

Q. All right. But – but I’m asking you whether you agree with me that you

didn’t ask him –

Canfield v. Bronze Wines Ltd.

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A. No, because –

Q. –for any advice.

A. No, because I – I felt at that time that I was having a difficulty in hearing

him and what he was saying, so, yeah.

Q. And so – and so what?

A. And so I didn’t ask him anything and he didn’t wait around to be asked.

Q. Isn’t it true that you told Mr. Engman that you didn’t need legal advice?

A. If it – I probably did say that because I was – why ask when I didn’t expect

to be able to hear what he was saying?

Q. Isn’t it true, Mrs. Canfield, that you told Mr. Engman that you had all the

advice you needed?

A. I could have done.

Q. And Mr. Engman didn’t give you or anyone you were aware of any advice

at the meeting?

A. Right.

Q. And he specifically told you that he was not providing you with any advice.

A. Right, yeah, that must have been it.

[175] In re-examination, Mrs. Canfield testified as follows:

Q. … So you answered a lot of questions about what happened in that

meeting, in response to Mr. Duong, and I want to ask you in answering those

questions did you have a present recollection today of those things or were

you speculating?

A. It was quite an experience in that building and so there are things that are

very clear and other things that are not as clear, but you know, kind of clear.

Q. All right. So let me give you a specific example.

A. Yes.

Q. My learned friend asked you if Mr. Engman specifically told you that he

was not giving advice, and your answer according to my note is, “Right, must

have been.” So in answering that question, did you have a present

recollection of Mr. Engman stating that or are you speculating?

A. I think it is more speculating.

[176] It is not in dispute that Mrs. Canfield had not seen a copy of the Form A

freehold transfer in advance of the appointment with Mr. Engman on February 27,

2012, and that she did not retain a copy after the Form A was signed. Mr. Stewart

had possession of the original Form A on leaving Mr. Engman’s office. Mr. Stewart

paid the $50 fee that Mr. Engman charged for the service he provided.

Canfield v. Bronze Wines Ltd.

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Mr. Stewart’s evidence

[177] Mr. Stewart says that he was the one who telephoned Mr. Engman’s office to

book the appointment to have the Form A signed by Mrs. Canfield. He cannot

specifically recall if he booked the appointment under the name “Mrs. Canfield”, but

agrees it makes sense that he would have done so. Mr. Stewart considered that

both he and Mrs. Canfield were clients for the purposes of the services Mr. Engman

was providing. Mr. Stewart filled out the Form A, and brought it with him to Mr.

Engman’s office. He agrees that Mrs. Canfield could not have seen the Form A prior

to arriving at Mr. Engman’s office. Mr. Stewart says he handed the Form A to Mrs.

Canfield in Mr. Engman’s presence.

[178] Mr. Stewart recalls that Mrs. Canfield used a collapsible walker at the time of

the appointment with Mr. Engman. She was given a seat at a desk or table during

her discussions with Mr. Engman. Mr. Stewart was not sitting with them. He cannot

remember the words spoken by Mr. Engman, and may not have heard everything

that was said in any event. He does not recall hearing Mr. Engman ask Mrs. Canfield

if she had received legal advice.

[179] Mr. Stewart paid Mr. Engman’s fee. He says that Mr. Engman then handed

Mr. Stewart the executed Form A, and Mr. Stewart left with it.

Mr. Engman’s evidence

[180] Mr. Engman worked as a notary public in New Westminster from 1990 until

his retirement in July 2020. In 2012, Mr. Engman’s practice was divided between

conveyancing (70–80% of his total practice), wills and powers of attorney (15%), and

signatures and attestations (5–15%). Mr. Engman is now 77 years old.

[181] Mr. Engman has no independent memory of his meeting with Mrs. Canfield

on February 27, 2012. He says he had a standard practice that he invariably

followed in attesting to a signature on a Form A freehold transfer. Mr. Engman says

he would have followed this standard practice in his dealings with Mrs. Canfield.

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[182] Mr. Engman’s evidence was not consistent as to the content of his standard

practice.

[183] In his examination for discovery evidence, portions of which were read in at

trial as part of Mrs. Canfield’s case, Mr. Engman testified that his obligations in

witnessing the execution a Form A are limited to checking the transferor’s

identification and attesting the document. Mr. Engman also testified that it was his

standard practice to confirm that the signatory had received independent legal

advice. Mr. Engman maintained that, in accordance with his standard practice, he

would have performed these obligations during Mrs. Canfield’s visit. Mr. Engman

stated that he would not have witnessed Mrs. Canfield’s signature on the Form A

absent a confirmation from Mrs. Canfield that she had received independent legal

advice. Mr. Engman testified that his standard practice did not require him to

determine the signatory’s voluntariness, capacity, or potential for undue influence, or

to read the document that he was attesting. By way of illustration, Mr. Engman gave

the following evidence on discovery:

222

Q. All right. What did you consider your obligations were in taking Mrs.

Canfield’s signature?

A. Proper and adequate identification, taking the signature in my

presence and attesting the document.

223

224

Q. And nothing else?

A. Nothing else.

Q. All right. And where do you draw that view of your obligations from?

A. As a commissioner for taking oaths that is all I am required to do.

. . . .

259

Q. … Now, can you tell me what your normal practice was in 2012 for

ascertaining that a transferor understands the significance of a Form A

transfer form and what they are doing by signing it?

A. First of all, I’m not giving legal advice, so I wouldn’t have gone into

those details.

260

261

Q. At all?

A. No.

Q. And that’s consistent with what you said to me, that you didn’t look at

the content of this form; is that fair?

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A. That is fair.

262

263

Q. All right. So, is it fair to say that you had no basis to conclude that

Mrs. Canfield understood what this form was doing; is that fair?

A. Other than the fact that she advised me she had received

independent legal advice.

Q. Well, you believe she did because your practice is that you wouldn’t

have signed the form without her having said that; is that fair?

A. Correct.

[184] Mr. Engman gave markedly different evidence regarding his standard practice

in his direct examination at trial. In his direct evidence, Mr. Engman testified that in

attesting a Form A, he is obliged to take steps to ascertain that the signatory

understands the document, has the capacity to sign it, and is signing it voluntarily.

He maintains he took these steps in witnessing Mrs. Canfield’s signature, although

he has no independent recollection of the meeting with her.

[185] In cross-examination, Mr. Engman was questioned about the inconsistency

between his evidence at trial and on discovery. Counsel for Mrs. Canfield specifically

put Mr. Engman’s answers to discovery questions 222–224 (quoted above) to him.

The following exchange ensued:

Q. Were you asked those questions and did you give those answers?

A. Yes, sir.

Q. And were they true?

A. Based upon additional information today, no. Because I am required to

ensure that she is mentally competent and not being coerced.

Q. And why do you say you’re required to do that?

A. I believe it’s in the notary society’s rules and regulations.

Q. All right. Can you direct me to any of the rules specifically that you have

concluded impose that obligation on you?

A. Not offhand, no sir.

Q. Did you look at any of them in preparing to give your evidence today?

A. Uh, we have looked at some of those, but I can’t tell you what they are

offhand.

[186] Mr. Engman estimates that his meeting with Mrs. Canfield on February 27,

2012 lasted 10–15 minutes. He did not make any notes of their discussion. Mr.

Engman’s usual practice on witnessing a signature is to maintain a file containing

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Page 57

copies of the identification that is provided to him as well as the document that is

signed. He cannot locate a copy of Mrs. Canfield’s file. Mr. Engman believes that the

file may have been destroyed in 2013 in the course of a general clean-up of

thousands of old files that had been stored at a warehouse. Mr. Engman cannot

confirm that this is how Mrs. Canfield’s file went missing, but he has no alternative

explanation. Given his lack of independent recollection of the meeting with Mrs.

Canfield, and in the absence of any documentary record of the meeting, Mr.

Engman’s evidence relies entirely on his standard practice.

[187] Mr. Engman’s usual practice was to receive a copy of the document to be

witnessed directly from the signatory. He believes he would have followed that

practice with Mrs. Canfield. If, in fact, it was Mr. Stewart who produced the Form A to

Mrs. Canfield, Mr. Engman says he would have inquired into who Mr. Stewart was

and what he had to do with the Form A. Mr. Engman agrees that he should ensure

that he is not dealing with more than one party when multiple people arrive in his

office.

[188] Mr. Engman was not aware that his fee for witnessing Mrs. Canfield’s

signature was paid by Bronze Wines, as the fee was collected by Mr. Engman’s

staff. Mr. Engman’s evidence was not consistent as to who he considered his client

to be in this particular instance. At one point in his direct evidence, Mr. Engman

testified that his client “would have been Mrs. Canfield”. At the end of his direct

evidence, Mr. Engman stated that he had no client because he was merely

witnessing a signature. In cross-examination, Mr. Engman reverted to referring to his

“client” in describing his standard practice for witnessing signatures.

Factual findings

[189] It is challenging to reach conclusions about what occurred in Mr. Engman’s

office given the absence of a contemporaneous documentary record or

corroborating evidence from an independent witness.

[190] Mr. Stewart is the only witness at trial, aside from Mr. Engman and Mrs.

Canfield, who was present at Mr. Engman’s office on February 27, 2012. I generally

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accept Mr. Stewart’s description of that meeting. His recollection was much clearer

than that of Mr. Engman and Mrs. Canfield, and his description of events was

plausible. I find that Mrs. Canfield arrived at Mr. Engman’s office in the presence of

Mr. Stewart and Mr. Bottoni. She was using a walker. Mr. Stewart had the Form A in

his possession when he arrived. Mr. Engman did not make inquiries as to the

relationship between the plaintiff and the two men who accompanied her. He did not,

accordingly, discover that one or more representatives of the corporate transferee

were present at the meeting. Mr. Engman allowed Mr. Stewart to leave his office

with the original copy of the Form A.

[191] Mr. Stewart’s evidence does not assist on the critical question of what was

discussed between Mr. Engman and Mrs. Canfield at their meeting on February 27,

2012. Mr. Stewart was not a party to the discussion. The meeting between Mrs.

Canfield and Mr. Engman lasted no more than 10–15 minutes. There are

inconsistencies in the evidence of Mr. Engman and Mrs. Canfield as to the nature of

their discussions.

[192] I have already stated my reasons for finding that Mrs. Canfield is not a

reliable witness. She has very little memory of what occurred at her appointment

with Mr. Engman. Mrs. Canfield agreed in cross-examination, that various things

could have happened, including that she could have told Mr. Engman that she had

received legal advice on the transaction. However, in my view it is not safe to reach

factual findings on the basis of Mrs. Canfield’s speculation about how events might

have occurred that she cannot actually remember. Mrs. Canfield’s confusion, poor

memory, and tendency to agree with the often-conflicting propositions that were put

to her over the course of three days of evidence combine to render her an unreliable

historian.

[193] I also find Mr. Engman to be an unreliable witness. Mr. Engman has no

independent recollection of his meeting with Mrs. Canfield, and therefore must rely

on his standard practice. However, his evidence of his standard practice changed

over time. Mr. Engman provided a much narrower vision of his standard practice in

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his examination for discovery in 2019 than he did at trial in 2021. Mr. Engman’s

evidence at trial that it was his practice to ensure voluntariness, capacity, and

understanding on the part of the signatory, stands in direct contrast to his discovery

evidence that he owed none of those obligations, and that he did not perform them

in his meeting with Mrs. Canfield. I infer from his evidence in cross-examination that

Mr. Engman’s views changed as a result of his post-examination for discovery

review of the rules and regulations that govern notaries, which revealed that his

understanding of his obligations was too narrow. It is impossible to place reliance on

Mr. Engman’s evidence that he followed a standard practice in his meeting with the

plaintiff in 2012, when the content of that standard practice was only discovered by

Mr. Engman after 2019.

[194] I conclude, accordingly, that Mr. Engman did not take steps to ensure that

Mrs. Canfield understood the document she was signing, had capacity to sign it, and

was not under undue influence in signing it.

[195] The final, and perhaps most critical, area of factual dispute is the question of

whether Mr. Engman confirmed that Mrs. Canfield had received independent legal

advice. As noted, Mr. Engman testified on discovery and at trial that he would not

have witnessed Mrs. Canfield’s signature on the Form A absent a confirmation by

her that she had received independent legal advice. In light of Mrs. Canfield’s

evidence that she could not understand what Mr. Engman was saying during their

meeting, the issue is not simply whether the evidence establishes that Mr. Engman

asked Mrs. Canfield if she had received independent legal advice, but also whether

she provided a responsive answer. Mr. Engman made no contemporaneous notes to

confirm what he said to Mrs. Canfield, or what she said to him. There is only Mr.

Engman’s evidence of his standard practice. In light of the fact that Mr. Engman’s

evidence of his standard practice shifted over time, it is not, in itself, a reliable basis

for determining what was said in regard to the issue of Mrs. Canfield’s legal advice.

It is necessary to consider other evidence of the surrounding circumstances.

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[196] As a starting point, it is important to resolve the question of whether Mrs.

Canfield had, in fact, received legal advice on either the Agreement or the Form A by

the time of her meeting with Mr. Engman. The defendants say that there is some

evidence that Mrs. Canfield had received legal advice, and, in fact, she volunteered

evidence to this effect in her re-examination. Mrs. Canfield’s evidence in re-

examination was confusing on this point. She had difficulty distinguishing between

legal advice she may have accessed in the process around the application for

subdivision of the Property, which occurred in 2010, and in the execution of the

Agreement in 2012. She stated that the events are all “jumbled together”. Her

evidence in re-examination is not a reliable basis on which to conclude that Mrs.

Canfield sought legal advice, and, if so, when and in relation to what topic.

[197] The only other evidence about possible legal advice came from Mrs.

Canfield’s daughter, Lisa Canfield. Lisa’s evidence is that during the course of a

Skype call in early March 2012 with Mr. Bottoni, he recommended to Lisa that Mrs.

Canfield consult with a real estate lawyer. Lisa says she later passed this

recommendation on to Mrs. Canfield, along with a referral name and number.

However, Lisa’s evidence is that all of this occurred after Mrs. Canfield’s visit to Mr.

Engman’s office. Furthermore, there is no evidence that Mrs. Canfield followed up

on the information that Lisa provided to her, or that she consulted a lawyer at any

time up until she retained counsel in the present action. Mrs. Canfield would have

required the assistance of at least one of her children, or her son-in-law, in order to

arrange a visit to a lawyer’s office in light of her circumstances at the time. There is

no evidence that such a visit was arranged. I infer, therefore, that there was no visit

to a lawyer’s office other than in relation to this action.

[198] I find, accordingly, that Mrs. Canfield had not received legal advice in regard

to the Agreement or the Form A freehold transfer at the time of her meeting with Mr.

Engman. There is no reason that I can discern for Mrs. Canfield to be untruthful with

Mr. Engman in responding to his question as to whether she had received legal

advice. I find it implausible that Mrs. Canfield would have confirmed to Mr. Engman

that she had received legal advice when she had not. I find, accordingly, that

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whether or not Mr. Engman actually asked Mrs. Canfield if she had received

independent legal advice during their meeting, which is a question that may well

have been posed by Mr. Engman but not heard or understood by Mrs. Canfield, she

did not confirm to him that she had, in fact, received independent legal advice.

Analysis of the negligence claim

Did Mr. Engman owe a duty of care to Mrs. Canfield?

[199] Mr. Engman argues that he did not owe a “general duty of care” to Mrs.

Canfield, and that the duty of care, if owed, must be limited to his actions in

witnessing Mrs. Canfield’s signature on the Form A. Mr. Engman emphasizes that in

cases where a plaintiff seeks to recover pure economic loss in relation to the

provision of services, the scope of the duty is limited by the defendant’s undertaking.

In this case, Mr. Engman says that Mrs. Canfield could not reasonably have relied

on him for any purpose other than the witnessing of her signature on the Form A.

[200] It does not appear to me that there is a significant dispute between the parties

in relation to the scope of the duty of care owed by Mr. Engman. Mrs. Canfield does

not argue that Mr. Engman generally undertook to protect her interests, nor does

she say that she relied on Mr. Engman to provide her with legal advice in relation to

the Agreement. Mrs. Canfield’s case is that Mr. Engman failed to perform the steps

that would have been undertaken by a reasonably prudent notary in witnessing her

signature on the Form A freehold transfer. The real contest between the parties is in

relation to the steps required of Mr. Engman in witnessing Mrs. Canfield’s signature,

whether he performed those steps, and whether any deficiencies in performance

caused injury to Mrs. Canfield. None of these issues go to the existence of a duty of

care.

[201] In any event, and in light of the fact that Mr. Engman does not appear to fully

concede the point, I will set out my reasons for concluding that Mr. Engman owed a

duty of care to Mrs. Canfield in witnessing her signature on the Form A. In doing so,

he was acting as an “officer” under s. 42 of the Land Title Act. The Property could

not be transferred unless the execution of the Form A was witnessed and certified by

Canfield v. Bronze Wines Ltd.

Page 62

an officer; that is, a person authorized by the Evidence Act, R.S.B.C. 1996, c. 124, to

take affidavits for use in British Columbia. The certification of an officer operates to

verify the signature and identity of the transferor. The witnessing requirement

protects the integrity of British Columbia’s land registration system: R.A.D. v.

Campbell, 2015 BCCA 494 at para. 10.

[202] Mr. Engman undertook to provide a service to Mrs. Canfield in witnessing her

signature on the Form A. Mr. Engman emphasizes that Mrs. Canfield did not pay for

the service. To my mind, this is irrelevant to the existence of the duty of care alleged

by Mrs. Canfield. The fact that, unbeknownst to Mr. Engman, Bronze Wines had

agreed with Mrs. Canfield to pay Mr. Engman’s fee does not exempt Mr. Engman

from a duty of care to Mrs. Canfield. It was her Property that was being transferred.

Mr. Engman knew from the use of the Form A that Mrs. Canfield was transferring a

fee simple interest. Her interests, as the property owner, were directly impacted by

the service that Mr. Engman provided.

[203] Mr. Engman places considerable reliance on the decision of the Court of

Appeal in Esser. However, that case is distinguishable. In Esser, the client of the

defendant notary used her services to defraud the plaintiff. The notary had never

met the plaintiff and, the Court found, she reasonably believed that the plaintiff was

represented by counsel. In these circumstances, the Court held that there was no

relationship of proximity between the parties.

[204] In the present case, Mr. Engman did meet Mrs. Canfield in person. He

provided services for her benefit. It was her Property that would be transferred

through the instrument that Mr. Engman was witnessing her signature on. Mr.

Engman’s undertaking to provide his services as a notary in witnessing Mrs.

Canfield’s signature invited Mrs. Canfield’s reasonable reliance within the scope of

that undertaking. There was a relationship of proximity between the parties. It was

foreseeable that Mrs. Canfield could suffer an injury if Mr. Engman was negligent in

the performance of his undertaking.

Canfield v. Bronze Wines Ltd.

Page 63

[205] Mr. Engman’s argument on the second stage of the Anns/Cooper test was

limited to the assertion that the imposition of a “broad duty of care” on those who

perform the limited function of attesting documents would have negative economic

and business impacts. This argument assumes that the Court is invited to impose an

all-encompassing duty of care on Mr. Engman that extends beyond his limited

undertaking to witness Mrs. Canfield’s signature on the Form A. As I have explained,

I do not understand that Mrs. Canfield is inviting the Court to impose an all-

encompassing duty of care. Her position is that the Mr. Engman owed a duty to take

reasonable care in witnessing her execution of the Form A transfer. There are no

residual policy considerations that would negate the existence of a duty on the part

of Mr. Engman to exercise reasonable care in performing the service he undertook

to provide.

[206] I conclude, therefore, that Mr. Engman owed a duty to Mrs. Canfield to act

with reasonable care in carrying out his undertaking to witness her signature on the

Form A freehold transfer.

Did Mr. Engman meet the standard of care?

Determining the standard of care

[207] Mr. Engman argues that this is a case in which expert evidence is necessary

to determine the standard of care. Mrs. Canfield has not tendered expert evidence

on the standard of care, and, therefore, Mr. Engman says the negligence claim

against him must be dismissed.

[208] I do not agree that this is a case in which expert evidence is required to

determine the standard of care. The standard of care required of a notary in

witnessing a document is a non-technical matter that is determinable without the

assistance of an expert. Mrs. Canfield relies on the standards set out in the Society

of Notaries Public of British Columbia Principles for Ethical & Professional Conduct

Guideline [Notaries Guideline]—a document that sets out the ethical and

professional standards that govern notaries in BC—that were in effect as of

February 2012. There is no question that the Notaries Guideline is widely circulated

Canfield v. Bronze Wines Ltd.

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in the profession and that it indicates a standard sanctioned by common usage:

Esser at para. 41. Mr. Engman agreed in his evidence that the standards set out in

the Notaries Guideline governed him in the exercise of his professional duties.

[209] The Notaries Guideline is based on 18 principles that reflect general

standards of ethical and professional behaviour. The principles are illustrated by one

or more guidelines, which provide concrete examples of the type of conduct covered

by the principle. As of February 2012, the principles included:

2-P2 Members should take reasonable steps to protect against fraud,

misrepresentation or unethical practices.

3-P1 Members should employ great care in the preparation of documents

and should be meticulous and conscientious in the swearing of them.

4-P1 Every member should competently perform the services that the

Member undertake on a clients’ behalf.

[210] The guidelines included:

2-G6 Unrepresented Persons – A Member should not advise an

unrepresented person in a transaction, but should urge such a person to

obtain independent advice and, if the unrepresented person does not do so,

the Member should take care to see that such person is not proceeding under

the impression that his or her interests will be protected by the Member.

3-G1 Signatories – Members should carefully screen the identity and

voluntariness of each signatory and oath taker, and to observe that each

appears to be aware of the significance of the transaction requiring a notarial

act.

3-G2 Legal Requirements – Members should ensure that, before notarizing a

document, they are aware of any legal requirements relating to the attestation

of the document, such as those contained in the Land Title Act, RSBC 1996,

c. 250 or those relating to documents from foreign jurisdictions.

4-G3 Lack of Capacity – Members should be cautious about accepting

instructions from or on behalf of clients whose capacity appears to be limited,

whether because of age, mental disability or for some other reason.

[211] I presume that these are the provisions that persuaded Mr. Engman, following

his examination for discovery, that his view of his obligations in witnessing a

signature on a Form A was overly-narrow. As noted, in his evidence at trial, in both

direct and cross-examination, Mr. Engman acknowledged that he was obliged to

ensure that Mrs. Canfield had the capacity to sign the Form A, that her signature

was voluntary, and that she understood the document she was signing.

Canfield v. Bronze Wines Ltd.

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[212] In final argument, counsel for Mr. Engman suggested that Mr. Engman was

incorrect in his evidence at trial in defining his obligations to include the assessment

of a signatory’s capacity, voluntariness, and knowledge of the document. This is

despite the fact that evidence of Mr. Engman’s more expansive view of his

obligations was elicited in the course of his direct examination. In final argument,

counsel for Mr. Engman submitted that the standard of care of a notary in witnessing

the execution of a Form A is limited to verifying the signature and identity of the

transferor, which are the certification requirements listed in s. 43 of the Land Title

Act.

[213] I do not agree that the duty of care expected of a notary in these

circumstances are as circumscribed as Mr. Engman’s counsel argues. Mr. Engman’s

understanding of his duties in witnessing Mrs. Canfield’s signature on the Form A is

consistent with the principles and guidelines that governed him in his work as a

notary, as outlined in the Notaries Guideline. It is also consistent with s. 42(4) of the

Land Title Act which provides:

42 (4) The signature of a transferor on an instrument is proof, in the absence

of evidence to the contrary, that the transferor

(a) knows the contents of the instrument and has signed it voluntarily,

and

(b) has the legal capacity to execute the instrument and intends to be

bound by it.

[214] The fact that the signed instrument constitutes prima facie proof that the

transferor knows the content of the instrument, has signed it voluntarily, and has

capacity to execute it, makes the performance of the duties identified in the Notaries

Guideline of particular importance in this context. Such standards of conduct are not

onerous to meet. The performance of these obligations protects the integrity of the

land registry at the same time as it protects the interests of the transferor who is in a

relationship of proximity with the notary.

[215] For these reasons, I conclude that the standard of conduct expected of Mr.

Engman as a reasonable and prudent notary witnessing Mrs. Canfield’s execution of

a Form A included:

Canfield v. Bronze Wines Ltd.

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(1) Confirming Mrs. Canfield’s identity;

(2) Advising Mrs. Canfield that Mr. Engman was not providing her with legal

advice on the transaction;

(3) Confirming that Mrs. Canfield had received independent legal advice, or at

least that she had made an informed decision not to seek legal advice;

(4) Making inquiries that were sufficient to satisfy himself that Mrs. Canfield

had the capacity to sign the Form A; and

(5) Making inquiries that were sufficient to satisfy himself that Mrs. Canfield

understood the content and legal effect of the Form A, and was signing it

voluntarily.

[216] Mrs. Canfield argues that Mr. Engman’s standard of care included various

other obligations that are listed in an article entitled “Witnessing a signature? Stop.

Read this first.”, in the Winter 2013 edition of Insurance Issues: Risk Management, a

publication of Law Society of British Columbia’s Lawyers Insurance Fund. This

article was marked as an exhibit for identification at trial, with the understanding that

in the trial judgment I would resolve the controversy over whether the article is

admissible evidence in relation to Mr. Engman’s standard of care.

[217] For a number of reasons, I conclude that this article is not admissible on the

issue of standard of care. First, unlike the Notaries Guideline, there is no evidence

that the article indicates a standard that is commonly used in the notary profession in

British Columbia. Second, the article was published in the Winter of 2013, which is

after Mr. Engman’s meeting with Mrs. Canfield in February 2012. Third, the article

appears to be in the nature of risk management advice to legal professionals. Such

advice may well reflect a set of optimal practices to minimize liability risk, but no

evidence was adduced to establish that these practices reflect generally accepted

standards of conduct in either the notary or legal profession.

Canfield v. Bronze Wines Ltd.

Discussion

Page 67

[218] I have already set out my findings of fact in relation to Mr. Engman’s meeting

with Mrs. Canfield on February 27, 2012. I have found that Mr. Engman did not take

steps to determine Mrs. Canfield’s capacity, the voluntariness of the transfer, or her

understanding of the content and legal effect of the instrument she was signing. He

also did not take steps to confirm that she had received independent legal advice on

the transfer of the Property. It follows that he did not meet the standard of care

expected of him in the circumstances.

[219] Mr. Engman argues that even if he failed to meet the standard of care

expected of him, there is no evidence that Mrs. Canfield suffered any loss as a

consequence of the breach of duty. These arguments go to the question of

causation, not standard of care.

[220] Before turning to the issue of causation, I will address a persistent theme of

Mr. Engman’s submissions in his emphasis on the limited nature of his involvement

in the events underlying this action, and the modest $50 fee he was paid for his

services. The suggestion, as I understand it, is that it would be unfair to impose

liability on Mr. Engman for what might be expected to be a significant damage award

when he did no more than witness her signature on the Form A freehold transfer.

[221] I accept that Mr. Engman’s involvement in these events was limited, and that

his undertaking a relatively narrow one. The standard of care expected of him

reflects the limited nature of the undertaking. While Mr. Engman’s obligations were

not onerous, it was important that they be properly performed. Mrs. Canfield’s

Property could not be transferred without the certification of an officer. The signature

requirement in s. 42 of the Land Title Act protects the integrity of the land registry

system by, among other things, screening for fraudulent and unconscionable

transactions. On the theory of Mr. Engman’s counsel—that Mr. Engman was only

required to check identification and attest the document—it would be appropriate for

a notary to witness the execution of a Form A even in the face of blatant and

Canfield v. Bronze Wines Ltd.

Page 68

egregious circumstances of apparent lack of capacity and/or voluntariness on the

part of the transferor.

[222] Whether or not the circumstances in Mr. Engman’s office on February 27,

2012 are properly described as blatant or egregious, they ought to have raised

suspicion and concern. Mrs. Canfield was not a “walk-in”, rather an appointment with

Mr. Engman was made in her name. She would have presented as an elderly

woman with mobility issues. She arrived at Mr. Engman’s office in the company of

two younger men, one of whom had the Form A in his possession. Mr. Engman

knew that Mrs. Canfield was the transferor. However, the applicant on the Form A

transfer was listed as Scot Stewart rather than Jean Canfield. Mr. Stewart’s address

was the same as the address of the corporate transferee, Bronze Wines. Mr.

Stewart took possession of the original of the Form A after it had been executed.

[223] Mr. Engman did not review the contents of the Form A, and therefore could

not have noted the discrepancy in the listed applicant. Mr. Engman did not inquire

into the identity of the two men, and therefore did not discover that one of them was

the sole director of the corporate transferee. Mr. Engman did not satisfy himself that

Mrs. Canfield knew and understood the content of the document she was signing.

He did not confirm that she had received independent legal advice.

[224] These circumstances highlight the importance of the obligations owed by a

notary or lawyer in witnessing the execution of a Form A freehold transfer. This is

true in every case, but particularly so where the circumstances ought to have raised

concern about a transferor’s voluntariness and understanding of the legal effect of

the Form A.

Did Mr. Engman’s breach of duty cause Mrs. Canfield’s injury?

[225] Mr. Engman argues that even if the Court finds he had, and failed to fulfill, an

obligation to inquire into Mrs. Canfield’s understanding, capacity, and voluntariness,

any such breach of his duty to Mrs. Canfield did not cause her any loss. This is

because, Mr. Engman says, Mrs. Canfield understood the content and legal effect of

the Form A, had the capacity to sign it, and signed it voluntarily. As such, even if Mr.

Canfield v. Bronze Wines Ltd.

Page 69

Engman had made the proper inquiries, he says they would not have led to any

different outcome.

[226] I accept Mr. Engman’s submission that any breach of Mr. Engman’s duty to

inquire into Mrs. Canfield’s capacity is not a cause of her loss. There is no evidence

that Mrs. Canfield lacked capacity; all of the evidence is to the contrary. If Mr.

Engman had made the necessary inquiries, he would have been satisfied that she

had the capacity to sign the Form A. This aspect of Mr. Engman’s breach of his

standard of care is, accordingly, not a cause in fact of Mrs. Canfield’s loss.

[227] I do not accept Mr. Engman’s submission in respect to the remaining

deficiencies in the performance of his duties. I have found that the Agreement was

unconscionable and the product of undue influence within the meaning of the

relevant authorities. While Mr. Engman may not have been able, or expected, to

form firm conclusions about undue influence in the course of his meeting with Mrs.

Canfield, even the most basic inquiries surely would have given Mr. Engman pause.

Mrs. Canfield would have explained to Mr. Engman that she understood that the

effect of her signature on the Form A would be to transfer her home to a company

owned by one of the men had accompanied her to Mr. Engman’s office, without any

immediate payment towards the purchase price. Alternatively, and more probably,

she would have told Mr. Engman that she was confused about the nature of the

transaction and the reason for her attendance at a notary’s office on that day. Either

response would have alerted Mr. Engman to the importance of ensuring that Mrs.

Canfield had independent legal advice.

[228] The fact that Mrs. Canfield had not received independent legal advice prior to

her attendance at Mr. Engman’s office would, on Mr. Engman’s own evidence, have

stopped the execution of the Form A, even in the absence of other inquiries into Mrs.

Canfield’s understanding and voluntariness. In his evidence at trial, Mr. Engman

testified that he would refuse to witness a signature if he believed the person signing

the document did not understand what they were signing, or were being coerced or

unduly influenced. Mr. Engman also stated that he would not have witnessed Mrs.

Canfield v. Bronze Wines Ltd.

Page 70

Canfield’s signature on the Form A if she had told him she had not received

independent legal advice. On Mr. Engman’s evidence, therefore, the Form A would

not have been executed on February 27, 2012 but for Mr. Engman’s failure to make

the appropriate inquiries of Mrs. Canfield.

[229] If Mr. Engman had insisted that Mrs. Canfield receive independent legal

advice before he witnessed her signature on the Form A, then she would have had

the opportunity to have the unconscionable Agreement rescinded before the transfer

of the Property had occurred. But for Mr. Engman’s breach of duty, Mrs. Canfield

would have avoided the loss of her Property to Bronze Wines. She could have sold it

in the ordinary course for its full market value. I find, therefore, that the evidence

establishes that Mr. Engman’s breach of his standard of care was a factual cause of

Mrs. Canfield’s injury.

[230] The loss for which Mrs. Canfield seeks compensation—the value of her

Property at the time of its transfer to Bronze Wines—is not too remote to be

recoverable. Mrs. Canfield’s actual loss is a reasonably foreseeable consequence of

Mr. Engman’s breach of duty. It was reasonably foreseeable that if Mr. Engman

failed in his duty to make the inquiries necessary to satisfy himself that the transfer

was voluntary, its effect was understood by Mrs. Canfield, and that she had received

legal advice about the transaction, then Mrs. Canfield risked losing the Property

without adequate compensation. I find, therefore, that the evidence also establishes

that Mr. Engman’s breach of his standard of care was a legal cause of Mrs.

Canfield’s injury.

Summary of findings on the negligence claim against Mr. Engman

[231] In summary, I conclude that Mr. Engman owed a duty of care to Mrs.

Canfield, that he breached the standard of care he owed, and that his breach of the

standard of care caused Mrs. Canfield’s injury. Mrs. Canfield has suffered a loss as

a result of Mr. Engman’s negligence. Her damages consist of the value of the

Property as of the time it was transferred to Bronze Wines, less any funds remaining

Canfield v. Bronze Wines Ltd.

Page 71

from the proceeds of the sale of the Property that are paid to Mrs. Canfield pursuant

to this judgment.

Issue 6: Assessment of damages

The liability of Mr. Engman and Bronze Wines

[232] I have found that Bronze Wines and Mr. Engman are both liable to Mrs.

Canfield for the same loss: the value of the Property at the time it was transferred to

Bronze Wines, less any funds that Mrs. Canfield receives from the proceeds of sale

that have been paid into court. Their liability is concurrent. Each is liable to Mrs.

Canfield for the full amount of the damages. The liability of each party is reduced to

the extent that Mrs. Canfield recovers from the other party: Brown v. Cole (1995), 14

B.C.L.R. (3d) 53 (C.A.) at paras. 26–28 [Brown]; Cuttell v. Bentz (1985), 65 B.C.L.R.

273 (C.A.) at para. 55.

[233] There is no right of contribution and indemnity between concurrent

wrongdoers at common law: Brown at para. 25. I received limited submissions from

the parties as to whether s. 4 of the Negligence Act, R.S.B.C. 1996, c. 333, applies

in these circumstances. Section 4 creates a right of contribution and indemnity

where the plaintiff’s damages are found to have been caused by the “fault” of two or

more persons. Section 4 clearly applies where the damage was caused by the

negligence of two or more parties. The term “fault” in s. 4 of the Negligence Act has

been interpreted more broadly to include intentional torts. It is less clear whether

apportionment is available where a party is found liable in contract or for an

equitable wrong: Long v. Brar, 2021 BCSC 1799 at paras. 140–143; Hans v. Volvo

Trucks North America Inc., 2018 BCCA 410 at paras. 61–73.

[234] I am skeptical that the concept of fault in s. 4 of the Negligence Act can be

interpreted to include a claim for equitable compensation arising from an

unconscionable agreement. However, I am not prepared to finally decide the point in

the absence of more detailed submissions from the parties. It is not necessary to

resolve the issue of apportionment for the purpose of determining Mrs. Canfield’s

claims against Bronze Wines and Mr. Engman. The question of apportionment will

Canfield v. Bronze Wines Ltd.

Page 72

be of primary interest to those defendants in the event that either seeks contribution

and indemnity from the other.

[235] In my view, the parties should have a further opportunity to address the issue

of apportionment, should they wish to, following this judgment. Accordingly, I will

direct that any party has leave to seek a further hearing before me for the purpose of

making submissions, but not adducing further evidence, on the issue of

apportionment.

Quantification of damages

[236] The central question as it relates to the quantification of damages is the value

of the Property at the time it was transferred to Bronze Wines in March 2012. To be

clear, this is not a question of whether Mrs. Canfield has proved that she suffered a

loss. She has proved a loss. I have found that Bronze Wines and Mr. Engman are

both liable to Mrs. Canfield for the loss of her Property.

[237] Mr. Stewart, on behalf of Bronze Wines, says that damages for the loss of

Property should be quantified on the basis that the Property had a market value of

$200,317.60 at the time of the transfer, as Mr. Stewart indicated on the Form A

freehold transfer. Mr. Stewart says that approximately $21,000 should be deducted

from this market value to account for expenses Bronze Wines incurred under the

Agreement that he claims were credits against the purchase price.

[238] Mrs. Canfield says that an analysis of the value of the Property should take,

as the starting point, its appraised value of $620,000 as of June 3, 2013. From this

amount, Mrs. Canfield proposes that $100,000 should be deducted to account for

improvements that Bronze Wines made to the Property after receiving the proceeds

of the Konken mortgage. From the full amount of the mortgage—$150,000—Mrs.

Canfield deducts the $50,000 in annual income that was apparently paid to Mr.

Stewart by Bronze Wines, leaving a value of $520,000. Net of real estate

commission, Mrs. Canfield says the value of the Property was $500,000.

[239] Mr. Engman made no submissions on the quantification of damages.

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[240] The evidentiary record on quantification is less than ideal. No party tendered

appraisal evidence in the form of an expert report. There are four potential sources

of evidence on value:

(1) The June 2013 appraisal that Mrs. Canfield relies on which values the

property at $630,000. This is not an expert report. The appraisal is

tendered in evidence as part of the Alpine Credits mortgage file.

(2) Assessments of the Property from BC Assessment. As of July 1, 2011, the

most recent of the assessments, the assessed value of the Property was

$536,000. I am mindful of the fact that assessments should generally not

be relied upon to determine property value in non-family cases: Dosanjh v.

Liang, 2015 BCCA 18.

(3) The sale price of the Property in 2019, which was $410,000.

(4) The evidence that the Property was listed at $485,000 in 2011, following a

price decrease from $548,000. I acknowledge that the Property did not sell

at this list price for a period of several months. However, there is limited

evidence about what marketing efforts were undertaken during the listing

period.

[241] Doing the best that I can with the evidence of value that is before me in this

proceeding, and viewing that evidence holistically, I find that the Property had a

market value of $485,000 as of the time of the transfer to Bronze Wines. This is

lower than the value indicated in both the June 2013 appraisal and the July 2011

assessment. However, the list price history suggests that those values may be over-

stated. The value I have determined is higher than the Property sold for in 2019.

However, this was six years after the transfer to Bronze Wines. There is no evidence

regarding the condition of the Property at the time of its sale in 2019, or in the

intervening years.

[242] Mrs. Canfield agrees that real estate commissions in the amount of $20,000

ought to be deducted from the market value, leaving a value of $465,000. This is the

Canfield v. Bronze Wines Ltd.

Page 74

loss that I find that Mrs. Canfield suffered as a result of the transfer of her Property

to Bronze Wines.

Should damages be reduced to account for payments by Bronze Wines?

[243] The final issue to be addressed is Mr. Stewart’s argument that Bronze Wines

made approximately $21,000 in payments after the Agreement was executed that he

says ought to be deducted from any award of damages to Mrs. Canfield. As I

understand Mr. Stewart’s argument, these payments related to the rental of

containers to store Mrs. Canfield’s personal effects, and Bronze Wines’ payment of

certain property taxes. Mrs. Canfield does not agree that Bronze Wines made any

payments that could constitute a credit under the Agreement.

[244] It is unnecessary for me to resolve this dispute. Even if the $21,000 could be

viewed as payment under the Agreement that Mrs. Canfield should account for,

Bronze Wines should, in turn, account for the benefit it derived from having exclusive

use and occupation of the Property for a period of several years: The Law of

Rescission at para. 17.05. The occupational rent that Bronze Wines would owe to

Mrs. Canfield is far in excess of $21,000. Mrs. Canfield does not press a claim for

occupational rent over and above the market value of the Property. It is

unnecessary, therefore, to make any financial adjustment to the market value.

CONCLUSION/ORDERS

[245] For the foregoing reasons, I make the following orders and declarations:

(1)

(2)

Mrs. Canfield’s action against Bronze Wines is allowed;

The Agreement is unconscionable, and, as between Mrs.

Canfield and Bronze Wines, it is rescinded;

(3)

Mrs. Canfield has a proprietary interest in any of the proceeds of

sale that have been paid into court that otherwise would have

been returned to Bronze Wines;

Canfield v. Bronze Wines Ltd.

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(4)

Bronze Wines is liable to Mrs. Canfield for equitable

compensation in the amount of $465,000, the adjusted fair

market value of the Property, less any amounts Mrs. Canfield

recovers from the proceeds of sale that have been paid into

court;

(5)

(6)

(7)

Mrs. Canfield’s action against Mr. Stewart is dismissed;

Mrs. Canfield’s action against Continental is dismissed;

The limitation period for Continental to enforce its security

interest in the Property did not expire prior to the

commencement of the foreclosure proceeding;

(8)

(9)

Continental’s registered mortgage interest in the Property has

priority over Mrs. Canfield’s unregistered equitable interest in

relation to the proceeds of sale;

Mrs. Canfield’s action in negligence against Mr. Engman is

allowed;

(10) Mr. Engman is liable to Mrs. Canfield for damages in the

amount of $465,000, the adjusted fair market value of the

Property, less any amounts Mrs. Canfield recovers from the

proceeds of sale that have been paid into court;

(11) The liability of Bronze Wines and Mr. Engman is concurrent;

(12) Any party has leave to seek a further hearing for the purpose of

making submissions, but not adducing further evidence, on the

issue of apportionment.

[246] The parties all seek a further opportunity to make submissions on costs and

interest following judgment in this action. Leave is therefore granted for the parties to

provide further submissions on costs and interest, in addition to the apportionment of

Canfield v. Bronze Wines Ltd.

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fault. If all parties agree, then the further submissions on all three issues may be

provided in writing. If the parties do not agree to written submissions, or cannot

agree on a schedule for the exchange and delivery of submissions, they may

request the scheduling of a one-hour judicial management conference before me to

seek procedural direction.

“Horsman J.”