Govorcin Fisheries Ltd. v. Medanic Fisheries Ltd.,  
2022 BCSC 1201  
Date: 20220715  
Docket: S171625  
Registry: Vancouver  
Govorcin Fisheries Ltd.  
Medanic Fisheries Ltd., Denis Medanic,  
Sea Kiss Fisheries Ltd., 0999137 B.C. Ltd.,  
0739960 B.C. Ltd., John Doe, Jane Doe, ABC Ltd.  
Before: The Honourable Mr. Justice D.M. Masuhara  
Reasons for Judgment  
Counsel for the Plaintiff:  
B.M. Caldwell  
D.J. Barker  
K. Iacono  
Counsel for the Defendants:  
Place and Dates of Trial:  
D.K. Jones  
E. Brown  
Vancouver, B.C.  
September 27-29, 2021  
October 1, 48, 12-15, 18-22, 25-29, 2021  
November 1-5, 15-19, 2021  
December 13-15, 2021  
Place and Date of Judgment:  
Vancouver, B.C.  
July 15, 2022  
Govorcin Fisheries Ltd. v. Medanic Fisheries Ltd. et al.  
Page 2  
Table of Contents  
[1] - [14]  
[15] - [20]  
[21] - [21]  
[22] - [81]  
[82] - [83]  
[84] - [84]  
[85] - [96]  
[86] - [86]  
[87] - [89]  
Bly Industries  
Direction to lessees of Neekis Quota and Licence to make payments  
to parties other than to the Neekis Partnership  
Salmon Licence Revenues  
Sablefish Licence  
[90] - [93]  
[94] - [94]  
T-37 Trawl Licence  
[95] - [96]  
[97] - [98]  
Evidence of Stuart Nelson  
Evidence of De Greef  
Evidence of Theresa Williams  
Evidence of Jennifer Blacklock  
[99] - [120]  
[100] - [109]  
[110] - [112]  
[113] - [113]  
[114] - [120]  
[121] - [125]  
[126] - [128]  
[129] - [138]  
[139] - [158]  
[159] - [171]  
[172] - [182]  
[183] - [188]  
[189] - [196]  
[197] - [199]  
[200] - [221]  
[214] - [214]  
[215] - [215]  
[216] - [216]  
[217] - [221]  
Lease Revenue Quota, column A Table 1.3  
Lease Revenue Licence, column B Table 1.3  
Lease Reimbursement of 50% Licence Fees, Column C Table 1.3  
Deposits, Column E Table 1.3  
Govorcin Fisheries Ltd. v. Medanic Fisheries Ltd. et al.  
Page 3  
Table of Contents  
[222] - [222]  
[223] - [227]  
[228] - [234]  
[235] - [242]  
[243] - [243]  
[244] - [258]  
[259] - [263]  
[264] - [267]  
Govorcin Fisheries Ltd. v. Medanic Fisheries Ltd. et al.  
Page 4  
These reasons deal with a dispute essentially between two entities that were  
engaged in a commercial fishing enterprise together through the ownership of fishing  
vessels that held licences and associated quota for fish such as salmon, sablefish,  
hake and other ground fish. This business was called the Neekis Partnership.  
Govorcin Fisheries Ltd. (“GFL”), the plaintiff, asserts that Denis Medanic and the  
defendant companies which he controls including Medanic Fisheries Ltd. (“MFL”),  
wrongfully diverted, took and used monies due to it from the jointly owned fishing  
business called the Neekis Partnership, over many years. The plaintiff as its primary  
position says that Denis Medanic was in breach of the fiduciary duty owed to the  
plaintiff as a result of his position as an agent for the plaintiff and was engaged in  
fraud. The claim covers the years 1999 through 2017. The forensic report tendered  
by the plaintiff estimates that during that period $6,167,851.14 was diverted to the  
defendants and other known persons such as the two sons of Denis Medanic. The  
plaintiff says that its share of the diverted funds is $3,083,952.57. The plaintiff seeks  
an accounting and tracing order to determine whether the diverted funds were used  
to obtain other items such as a sablefish licence related to the fishing vessel Dovre  
B (including related revenues), halibut licence L-179 (including related revenues),  
and other various property. After this determination, the plaintiff will be in a position  
to elect between damages or equitable relief.  
The basis for this action came to light upon the passing of Slavica Govorcin,  
the wife of Bogomil Govorcin (the founder of GFL), in June 2015. She was the  
beneficiary of Bogomil Govorcin’s estate which includes the fishing interests.  
Attempts to value the fishing assets by Robert and Albert Govorcin, sons of Bogomil  
and Slavica, for estate purposes led to the discovery of monies not being equally  
distributed between the parties and assets of the joint fishing enterprise being used  
wrongfully by the defendants.  
The plaintiff’s evidence includes detailed reviews of transactions made by  
Denis Medanic in relation to the fishing assets of the Neekis Partnership with various  
entities; expert opinions on the value of fish licences and quotas; fish prices; and the  
Govorcin Fisheries Ltd. v. Medanic Fisheries Ltd. et al.  
Page 5  
identification of unaccounted funds to which the plaintiff asserts an entitlement. This  
case involved considerable forensic analysis of financial and licensing/quota  
documentation extending back many years.  
The defendants deny any wrongdoing. The primary defence is the assertion  
of an oral agreement between Denis Medanic and Bogomil Govorcin which in  
essence permitted Denis Medanic to take licence and quota revenues, that would  
ordinarily be deposited into the Neekis Partnership bank account, in amounts and  
the manner in which he deemed appropriate for his compensation for managing the  
assets of the joint enterprise, with no requirement to provide a record of such taking  
to GFL. I will refer the alleged agreement as the “Alleged Management Fee  
Agreement”. The Alleged Management Fee Agreement is said to have entitled  
Denis to compensation for his management services in the amount of $1,576,927.88  
for the period 1990-2004; and $105,128.52 per year for the period 2005-2016 for a  
total set off of $2,943,591. This defence was explicitly raised late in the litigation.  
The defendants also raise a limitation defence to claims arising before  
February 2015 under the Limitation Act, S.B.C. 2012, c. 13 [Act], or alternatively the  
Limitation Act, R.S.B.C. 1996, c. 266 [Predecessor Act]; as well as, on the doctrine  
of laches and acquiescence. This action was commenced February 21, 2017.  
The defence of equitable set-off related to the efforts in managing the joint  
enterprise by Denis Medanic is raised should liability be found.  
I have determined below that the Neekis Partnership joint fishing enterprise  
was a joint venture. I will refer to it as the “Joint Venture”.  
For the reasons that follow, I have found that Denis Medanic personally and  
through the corporate defendants was engaged in the wrongful diversion, taking and  
use of monies and property over many years in which GFL had an interest. The  
steps taken by Denis were to hide from GFL his wrongful conduct. I have found that  
Denis Medanic and MFL breached their fiduciary duty to the plaintiff through  
fraudulent means. I also find the remaining defendants (except 099137 B.C. Ltd.  
which is not controlled by Denis Medanic) to have participated in a joint enterprise to  
Govorcin Fisheries Ltd. v. Medanic Fisheries Ltd. et al.  
Page 6  
misappropriate lease revenue from the Joint Venture. Denis Medanic’s claim that  
his actions were permitted based on the existence of the Alleged Management Fee  
Agreement was not established. I have found that Denis Medanic was not  
believable and the agreement was a concoction.  
The witnesses called in the plaintiff’s case were:  
Robert Govorcin, president of Govorcin Fisheries Ltd. and son  
of the founder Bogomil Govorcin.  
Tim Turyk, former general manager of Bella Coola Fisheries.  
He spoke to certain transactions conducted between Bella  
Coola and Denis Medanic. He appeared via video deposition.  
Erika Watkins, manager in the Fisheries and Oceans Canada  
(“DFO”). She extracted various documents from DFO’s file  
pertaining to the reallocation of fishing quotas related to licences  
held by the vessels Neekis and Western Breeze.  
Stuart Nelson, fisheries consultant and expert. He prepared two  
reports for this case which sought to ascertain the earnings  
under the licences held by the Neekis and Western Breeze.  
Adam Keizer, regional manager, sustainable fisheries  
framework of DFO. He spoke to matters which were within his  
area of responsibility while regional manager of groundfish  
including the operation of the integrated groundfish  
management plan.  
Mike Buston, fishing licence owner, former owner of a fish  
processing company, former fishing fleet manager. He spoke to  
his dealings in buying hake and leasing quota from the Neekis  
through Denis Medanic. Medanic is a shareholder and director  
of a company that owns a factory vessel to which Mr. Medanic  
transferred quota from the Neekis for groundfish.  
Govorcin Fisheries Ltd. v. Medanic Fisheries Ltd. et al.  
Page 7  
Launa Groulx, works in a family fishing business, Leader  
Fishing Ltd (“Leader Fishing”). She has performed all office  
functions for the company. She spoke to the dealings that she  
had with Denis Medanic regarding the transfer of quota to her  
company and to another and the payments made to Denis  
Medanic or his designates.  
Theresa Williams, is the principal of the working commercial  
trawling companies; and an expert in management of non-  
aboriginal commercial trawl quota, including hake and trawl  
licences in Canada’s pacific coast trawl fishery. She spoke to  
her tendered reports.  
Blake Tipton, manager of the Canadian fishing fleet for  
SM Products BC Ltd (“SM Products”). He spoke to agreements  
between SM Products and Denis Medanic regarding the leasing  
of quota.  
Robert Morreau, part owner of the fishing vessels Pacific Quest,  
Tenatious, and Summer Breeze. He spoke to the fishing  
transactions that he had with Denis Medanic.  
Mohammed Akbanie, controller of Cold Fish Seafoods  
Company Inc. and former inventory accountant with Pasco  
Seafood Enterprise Ltd. (“Pasco”). He spoke about transactions  
between these companies and Denis Medanic and related  
Shirley Manfron, notary public. She spoke to various  
documents and transactions related to services she provided to  
Denis Medanic.  
(m) Joe Pastor, 82 year old retiree; formerly, sole proprietor of Bly  
Industries, a settlement company for fishing vessel owners  
since 1991. Before that he was with B.C. Packers providing  
settlement services. He knew both of the founders through this  
Govorcin Fisheries Ltd. v. Medanic Fisheries Ltd. et al.  
Page 8  
work. He spoke to the settlement transactions and other  
transactions he conducted for Denis Medanic. The transactions  
he spoke to were largely from 2005 to 2015 which were non-  
settlement services, largely receiving and depositing funds into  
a Bly account and disbursing them as directed by Denis  
Medanic. Mr. Pastor terminated his relationship with Denis  
Medanic in 2015.  
Chris Wick, is the co-owner of North Delta Seafoods Ltd. He  
spoke to his transactions with Denis Medanic. North Delta  
Seafoods Ltd. leased salmon licences from Denis Medanic.  
Nick Heras, vice president, fishing operations of Seven Seas  
Fish Co. Ltd. (“Seven Seas”), a seafood wholesaler and  
distributor. The company in 2013 acquired another seafood  
wholesaler and distributor, Pasco. Mr. Heras spoke to the  
purchases of fish he made on behalf of Seven Seas from Denis  
Medanic and the payment for such fish. He also spoke to  
various documents produced by Seven Seas in this action.  
David Dawson, vice president of S&S Seafoods Canada. He is  
also a member of several committees, boards and organizations  
related to commercial fishing particularly with groundfish. He  
spoke to his retention as an expert by plaintiff’s counsel in  
April 2016 to investigate the fishing assets by the joint  
enterprise, the quotas attached to fishing licences, and values  
for the assets. Mr. Dawson was unable to complete his work as  
an expert due to his work commitments. His evidence was  
received not as an expert but to address the steps taken by the  
plaintiff particularly in respect to the limitation defence.  
Robert Holmes, accountant. He worked on the financial  
statements of MFL and GFL. He provided his calculation of  
income taxes for GFL under various scenarios based on the  
Govorcin Fisheries Ltd. v. Medanic Fisheries Ltd. et al.  
Page 9  
revenues estimated in Table 8 of the forensic report of  
Ms. Blacklock (the “Blacklock Report”).  
Mila Medanic Bebek, sister of Denis Medanic. Spoke about the  
Medanic family, the interactions within the family and with the  
Govorcin family, the fishing business, and her interactions with  
her brother Denis.  
Peter De Greef, expert on valuing sablefish and halibut.  
Mark Fernandes, former controller and bookkeeper of Select  
Seafoods Canada Ltd. (“Select Seafoods”). He spoke to  
transactions between Select Seafoods and Denis Medanic.  
Christopher Thurgood, accountant. He testified to his  
communications, reports and statements he produced for the  
Joint Venture, MFL; and GFL. He prepared the financial  
statements for MFL until 2013. He continues to prepare the  
financial statements for GFL.  
Robert Fraumeni, commercial fisherman and principal of FAS  
Seafoods Producers Ltd. He appeared by video. He spoke to  
his dealings with Denis Medanic.  
John Skapski, lawyer and commercial fisherman. He practises  
in the area of fisheries and provided legal services to Denis  
Medanic and related companies. He received and distributed  
funds relating to Denis Medanic and related companies.  
Jennifer Blacklock, forensic accountant. She reviewed  
accounting records and other documents to determine among  
other things, if GFL received its 50% share of the Joint Venture  
revenue for fiscal years ending 1998 to 2017 and to quantify the  
amount if not.  
Govorcin Fisheries Ltd. v. Medanic Fisheries Ltd. et al.  
Page 10  
[10] The witnesses called in the defendants’ case were:  
Tyler Medanic, son of Denis Medanic. He testified about his  
involvement in helping his father on the fishing vessels Neekis  
and Western Breeze. His involvement was limited. He received  
significant monies through his company 0999137 B.C. Ltd. at  
the direction of his father. He had limited interest in the fishing  
industry. He was 26 years old at the time of trial.  
Denis Medanic, a defendant and principal of MFL among others.  
[11] As noted several expert reports were tendered and the defence required all of  
the experts (listed above) to appear for cross examination. The defence did not  
tender any expert reports.  
[12] I also note that the defence in the course of the litigation objected to providing  
in the disclosure and discovery process information regarding the source of funds  
used by the defendants to purchase assets during the period of the plaintiff’s claim.  
[13] In addition to the documents, the parties tendered an Agreed Statement of  
Facts. Also, several notices to admit and responding admissions or responses were  
[14] This case involved a significant volume of detailed documentary evidence  
contained in 15 large binders. Further, materials were tendered during the trial. I  
appreciated counsel at my request having the documents scanned into digital form  
for my use.  
The Parties  
[15] The plaintiff, GFL, was incorporated on January 21, 1977. When it was  
incorporated, Bogomil Govorcin and his wife, Slavica Govorcin, were the sole  
directors and sole shareholders. With the death of Mrs. Govorcin in June 2015, her  
sons Robert and Albert ultimately became the directors and shareholders of the  
Govorcin Fisheries Ltd. v. Medanic Fisheries Ltd. et al.  
Page 11  
[16] The defendant, MFL, was incorporated by Tomislav Medanic in 1977. Denis  
Medanic has been a director of the company since 1997. Mila Bebek, his sister was  
at some point a director and then removed. Neda Medanic, wife of Tomislav  
Medanic, was the sole shareholder of the company until her recent death. It  
appears that until her death she and Denis Medanic were directors of the company.  
There is no clear evidence before the Court as to the shareholdings in this company  
since the death of Neda Medanic.  
[17] The defendant, Denis Medanic, is a businessman and former fisherman. In  
addition to being a director of MFL, Sea Kiss Fisheries Ltd., and 0739960 B.C. Ltd.,  
he has also been a director of Select Seafoods Canada Ltd. since it was  
incorporated on January 23, 2012 and a 20% shareholder of that company through  
his company 0739960 B.C. Ltd.  
[18] The defendant, Sea Kiss Fisheries Ltd. (“Sea Kiss Fisheries”) is a British  
Columbia Corporation. Mr. Medanic has been its sole shareholder since it was  
incorporated on April 10, 2002. He is also its manager, director and president.  
[19] The defendant, 0739960 BC Ltd., is a British Columbia Corporation. Its  
directors are Denis Medanic and his spouse, Sandra Viktora. Denis Medanic is the  
President. Denis Medanic and his spouses are equal shareholders. Denis Medanic  
has been a director since it was incorporated on November 8, 2005 and is the  
company’s manager.  
[20] The defendant, 0999137 BC Ltd., is a British Columbia Corporation. Its sole  
director and shareholder is Tyler Medanic, the son of Denis Medanic. It was  
incorporated April 9, 2014.  
[21] The key issues that arise are:  
What was the arrangement and the nature of the business  
arrangement between GFL and MFL?  
Govorcin Fisheries Ltd. v. Medanic Fisheries Ltd. et al.  
Page 12  
Was there a compensation agreement between Denis Medanic  
and Bogomil Govorcin for management fees for his work for the  
Joint Venture?  
If not, then what amount was diverted or taken by the  
What liability do the defendants have?  
Does a limitation bar or laches operate in this case?  
Is Denis entitled to an equitable set off against any monies  
owing to GFL?  
If there is liability, what are the next steps?  
[22] The founders of the principal companies, Bogomil Govorcin and Tomislav  
Medanic, were first cousins who came to Canada in the late 1960’s from the island  
of Iz in Croatia. Bogomil was about five years older than Tomislav. The founders  
died many years ago. Tomislav Medanic had previous experience in commercial  
fishing in South America before coming to Canada. In Canada, the two started out  
in commercial fishing by purchasing and operating a fishing vessel called the  
Western Breeze in about 1969. In 1983, Tomislav Medanic wished to buy a fishing  
vessel called the Neekis and asked Bogomil Govorcin to join him in purchasing the  
vessel, which he did. Each held an equal interest in the vessel. Together they  
worked as commercial fishermen off the west coast of British Columbia.  
[23] The licences issued to the Neekis were: K-20 sablefish; T-37 groundfish trawl;  
and AS-153 salmon.  
[24] The licence issued and applicable to the Western Breeze was: AS-491  
salmon by seine.  
[25] The commercial fishing industry has become highly regulated. I discuss  
some of the features of this increased regulation relevant to this case later in these  
Govorcin Fisheries Ltd. v. Medanic Fisheries Ltd. et al.  
Page 13  
[26] Decisions regarding the management of the fishing operations were originally  
in the hands of Tomislav Medanic, this responsibility over time was taken over by  
Denis Medanic. This included dealing with fish processors, managing the fishing  
vessels, licences and quotas.  
[27] The financial or banking administration was done by Bogomil Govorcin and  
over time taken over by Robert Govorcin.  
[28] Each of the founders worked for a period of time on the vessels. Tomislav  
would captain the vessels and Bogomil would be the engineer/cook. The two would  
also would be involved in maintaining equipment such as handling and repairing  
nets. The two worked well together, got along and trusted each other.  
[29] The founders involved their sons (Bogomil had two sons Albert and Robert  
and Tomislav had one son Denis) in the fishing operations as they were growing up.  
Neither of Bogomil’s sons developed an interest in building a career in commercial  
fishing but Denis Medanic did and continued on in fishing for the Joint Venture. His  
role increased over the years. Denis Medanic crewed and eventually would captain  
the enterprise’s vessels starting in 1993 and was paid for his work as such. There  
were other crew members and captains who would operate the vessels as well.  
[30] Denis Medanic over the years developed many business contacts in the  
fishing industry. He has also been involved in organizing and participating in various  
industry organizations. My view, is that Dennis Medanic is experienced in business  
generally and is very experienced in commercial fishing, including the harvesting,  
selling and processing of fish, knowledge of government policies, regulations and  
[31] Robert Govorcin’s interests were in other areas and he had limited  
involvement in the Joint Venture. However, his involvement would increase as his  
father’s health diminished starting in about 2000. Until more recently, Robert had  
limited knowledge of the operations of the fishing business such as who the players  
were in the fishing industry, how quota and licences were or could be assigned,  
leased, transferred, or who or what various entities were and what they had to do  
Govorcin Fisheries Ltd. v. Medanic Fisheries Ltd. et al.  
Page 14  
with Joint Venture. He trusted and relied upon his cousin Denis as manager of the  
Joint Venture.  
[32] The financial arrangement between the founders of the business was that  
monies received from fishing operations including the leasing out of licences and  
quotas were to be deposited into a joint account with the TD Bank branch in North  
Vancouver. The account was named the Neekis Partnership until it was recently  
renamed to Neekis Fishing in May 2015. This location was convenient to Bogomil  
Govorcin as he resided in North Vancouver and administered the banking for the  
Joint Venture. Cheques from buyers and lessees would be provided by Tomislav or  
Denis to Bogomil or Robert for deposit at the bank. Each of MFL and GFL could  
issue cheques from the account with a single signature. Receipts and expenses of  
the enterprise would be carefully reviewed by Bogomil Govorcin. Payments would  
be paid out of this account. Draws would be discussed between the two companies  
and each would take a similar amount. Management fees were not claimed by  
either of the companies. At the end of each year, the net profits as calculated by  
their accounting firm would be distributed equally to GFL and MFL.  
[33] The financial statements and tax returns were prepared by Mr. Reid, C.A. for  
the two companies and when Mr. Reid retired in 1988 his partner Mr. Thurgood  
became responsible for the accounts of the two companies. MFL terminated its  
arrangement with Mr. Thurgood in 2013. Throughout the years, the financial  
statements and income tax statements referred to the joint fishing enterprise as a  
joint venture.  
[34] It seems that settlement services for the payment of captain and crew out of  
the revenues of the Joint Venture were conducted by Bly Industries through its  
owner Joe Pastor as early as 1995.  
[35] In 1996 Tomislav Medanic suffered a major stroke. He lost his ability to  
speak and walk. His involvement in the fishing business thereafter was very limited.  
Over time he recovered some ability to walk and talk but required ongoing care. He  
died in 2014. Following his stroke Denis Medanic took on the role his father had  
performed in the fishing enterprise, including managing the vessels, licences and  
Govorcin Fisheries Ltd. v. Medanic Fisheries Ltd. et al.  
Page 15  
quota. This was something he wanted to do. Denis Medanic as part of his role  
would submit meticulous and detailed accounts to be reflected in the accounting for  
the Joint Venture. He also would communicate with Bogomil about the business.  
[36] Denis Medanic became a director of MFL in 1997 and has remained so to the  
present. His sister Mila Bebek became a director in 2001. She stated that this  
ended when her mother passed. Their mother Neda Medanic was the sole  
shareholder of MFL following her husband’s death. She died in September 2021. I  
am told her estate has yet to be settled and as such the current ownership in MFL is  
not yet clear.  
[37] At trial, Denis Medanic testified that he had a major management role from an  
early point in the Joint Venture and that it continued throughout. In essence, he  
testified that he was the directing mind behind the fishing operations from about the  
time the vessel Neekis was purchased and was responsible for the success  
achieved by the Joint Venture. He agreed with the description that he considered  
himself to be “the Man”.  
[38] Bogomil Govorcin was diagnosed with cancer in the summer of 2000. He  
underwent heavy cancer treatment and surgery; his cancer would go in and out of  
remission and he resumed his involvement with the fishing enterprise when he was  
able. Unfortunately, the cancer returned and he succumbed, dying in 2005. His  
ownership in the fishing business passed onto his wife, Slavica Govorcin.  
[39] Once Bogomil became ill it seems Robert had to become involved in assisting  
his mother in caring for his father and in managing GFL. His involvement in the  
actual fishing business was limited. He did the banking deposits, signed lease  
agreements and requests for reallocation of quota documents as brought to him by  
Denis. He would consult with his father before he signed but deferred to and had  
confidence in his cousin Denis. Robert’s main focus during this time was building  
his house full-time, managing a family apartment building and assisting his mother  
who had developed health problems. This carried on until 2015.  
Govorcin Fisheries Ltd. v. Medanic Fisheries Ltd. et al.  
Page 16  
[40] Denis Medanic stopped preparing and submitting detailed accounts of the  
fishing operations to GFL. He states he stopped in 2006. However, I accept the  
evidence of Robert Govorcin on this point.  
[41] On May 10, 2002, GFL became a one share owner of the fishing vessel  
Pachena No. 1. The K-20 licence on the Neekis was moved off the vessel onto the  
Pachena No. 1 on May 16, 2002.  
[42] In 2003, Denis Medanic purchased a permanent transfer of a sablefish quota  
attached to the fishing vessel Dovre B, owned by F.A.S. Seafood Producers, the  
principal of which is Mr. Faumeni. On November 12, 2003, Denis caused 0.2537  
percent of the non-aboriginal commercial quota to be transferred from the K-25  
licence on the Dovre B to the K-20 licence which was then on the Pachena No. 1.  
This related quota was later transferred from the K-20 to the New S Shadow on  
September 26, 2012. The quota has never been returned to the K-20 to the K-25  
licence. In 2012, Denis stated that he found an empty K licence, ie., the licence had  
zero pounds on the K-40 attached to the Ocean Maurader and transferred 0.2537%  
of quota from the K-20 to K-40. Denis also transferred MFL’s portion of the K-20  
licence to K-40. Denis then leased the quota on the K-40 to various fishers from that  
point forward. Denis stated he was able to lease all of the quota on the K-40.  
[43] On March 30, 2005, on application dated March 1, 2005 signed and sworn by  
Denis Medanic and Robert Govorcin before Shirley Manfron, a sablefish licence K-  
20 was permanently transferred from the vessel Pachena No. 1 to the vessel  
Neekis. The licence had been earlier transferred permanently off the Neekis onto  
the Pachena No. 1 on approval by Denis Medanic and Robert Govorcin in December  
[44] Denis also began to buy halibut licences in the early 2000s.  
[45] In February 2005, a promissory note was drawn up by a solicitor under which  
MFL acknowledged a debt of $1,576,927.88 (the “Principal Debt”) owed to Denis  
Medanic and that the debt would be repayable on demand. The debt amount was  
stated to be for “Valuable Services” that Denis had provided during 1990 to 2004.  
Govorcin Fisheries Ltd. v. Medanic Fisheries Ltd. et al.  
Page 17  
Denis Medanic also obtained a personal guarantee from each of his parents for the  
payment of the debt.  
[46] In addition to the personal guarantee, Denis also had a further two  
agreements drawn up and executed in March 2005; namely a security agreement  
(the “Security Agreement”) and an interest agreement. Under the latter, MFL and  
Denis Medanic’s parents agreed that interest under the Principal Debt would attract  
interest at prime plus 2% compounded annually “until ALL the Principal Amount  
owing and ALL of the accumulated Interest charges have been paid in FULL to the  
"Creditor" Denis Medanic or nominee.” Under the former agreement, MFL as debtor  
and the parents of Denis Medanic as guarantors agreed to provide a security  
interest over all assets of MFL. A further agreement was also drawn up at the same  
time under which MFL and the parents agreed that the debt to Denis Medanic “may  
be repaid in whole or in part by the transfer of assets from MEDANIC FISHERIES  
LTD. to DENIS MEDANIC or his nominee in lieu of cash.”  
[47] The Principal Debt was derived by determining what captains had earned for  
crew share and bonuses over the years on the vessels held by the Joint Venture.  
The available records were incomplete as amounts for some years were not  
available at all (1994 through 1997) or in other years only partially available (1992  
and 2000). For the years 1994 through 1997, the value inserted for each of those  
years was the average of the years for which there were available values divided by  
the entire fifteen-year period. The information for the values were obtained by Denis  
Medanic and given to Mr. Thurgood, who compiled the numbers over the years 1990  
to 1993 and 1998 to 2004. By dividing the total of known amounts over the 15 years  
an “average” of $105,128.52 was derived. I note, that it is not really an average as  
there are several years that are unknown and the available historical numbers to  
1994 through 1997 never reach this “average” level. This “average” level is only  
exceeded in 1999 and then onward from 2001.  
Govorcin Fisheries Ltd. v. Medanic Fisheries Ltd. et al.  
Page 18  
[48] The table assembled by Mr. Thurgood is below:  
Average 105,128.52  
Average 105,128.52  
Average 105,128.52  
Average 105,128.52  
There are probably missing settlements for 1992 and 2000,  
which when located will be added in to the respective years.  
[49] Denis Medanic testified his father instructed the lawyer to draw up the  
aforementioned documents. However, given the evidence of Tomislav Medanic’s  
condition, it is more likely that Denis was making arrangements for the agreements  
to be provided to him. In my view, he was the one directing the production of the  
[50] Beyond the documents, Denis Medanic testified that there was a further  
agreement with MFL, and his parents that on a prospective basis he would be paid  
$105,128.23 annually as a management fee. From 2005 onward, Denis Medanic  
stated that he took $105,128.52 annually for his personal compensation out of MFL  
and directly from lease and quota revenues.  
[51] His parents informed his sister of the agreements. This incensed her and an  
angry physical confrontation occurred between brother and sister with their mother  
between them. There were several altercations over the years. Police were called  
on one occasion in 2011 and Denis Medanic was restricted from attending his  
parent’s home.  
Govorcin Fisheries Ltd. v. Medanic Fisheries Ltd. et al.  
Page 19  
[52] The promissory note is not reflected in the financial statements of MFL.  
Denis Medanic testified that he discussed this matter with Mr. Thurgood.  
Mr. Thurgood testified he was not aware of the promissory note nor of any  
discussions of an agreement by GFL to pay management fees to Denis Medanic.  
Mr. Thurgood was not challenged on these points. The promissory note and related  
agreements is material and significant from a financial perspective and could involve  
the need to restate MFL’s financial statements over the years covered by the  
promissory note. In this regard, I note that in the balance sheet of the financial  
statements of MFL, a different promissory note in a much smaller amount of $44,910  
owed to Tomislav has been reflected. The reflection of that liability supports  
Mr. Thurgood’s testimony. Given, my reservations regarding the testimony of Denis  
Medanic as discussed later and that Mr. Thurgood was not challenged in cross  
examination on these points, I prefer the testimony of Mr. Thurgood on not being  
aware of the promissory note or of any agreement by MFL or GFL to pay Denis  
management fees.  
[53] In 2005 Denis Medanic approached Joseph Pastor with the proposal of giving  
him cheques from various companies the Joint Venture did business with and  
depositing them into the Bly Industries accounts, with Mr. Pastor being free to  
deposit the funds to an interest bearing account. Mr. Pastor had stopped completing  
settlements for the Joint Venture in 2003. Mr. Pastor agreed and transferred funds  
into an interest bearing account and thereafter collected income from the funds.  
Denis began bringing cheques to Mr. Pastor in around May 2005. Mr. Pastor would  
disburse the funds in amounts to the Joint Venture as directed by Denis. Mr. Pastor  
terminated his relationship with Denis in March 2015. Over the period of this  
relationship, Denis Medanic would bring in cheques made out to Bly Industries from  
lessees of the Joint Venture. Mr. Pastor would deposit the amounts. At subsequent  
times Denis would ask for cheques to be issued to the Neekis Partnership in  
amounts that did not equate to any cheque brought. There would always be a  
positive balance until near the end of the relationship. This gave the misleading  
impression of steady or normal revenues to GFL.  
[54] On June 16, 2005, Bogomil Govorcin died.  
Govorcin Fisheries Ltd. v. Medanic Fisheries Ltd. et al.  
Page 20  
[55] In 2005 Robert Govorcin became a director of GFL.  
[56] In September 2005, the Neekis ran into an offshore reef in Barkley Sound  
with about 100 tonnes of fish in its hold and could not extract itself. The boat was  
being captained by Paul Puratich and his crew. It was damaged but was able to  
extract itself after unloading its fish to another ship and make its way to a shipyard in  
Vancouver. The vessel was inspected and deemed able to return to fishing for the  
rest of the season and the herring season in March 2006. The vessel was then  
hauled out for repairs. Robert and Denis participated in repairing the ship and  
received $15,000 each for their labour. During the period that Neekis underwent  
repairs, Denis leased out the licence and quota held by the Joint Venture to Leader  
Fishing on a permanent rather than temporary basis, the reason being that if leased  
on a temporary basis he then would to have to manage it from year to year.  
[57] Following the 2006 and 2008 fishing season, the Neekis and Western Breeze,  
respectively, no longer went out to harvest fish. The vessels remained docked. The  
licences and quota were leased out to third parties by Denis. This carried on  
through to the 2016/2017 fishing season.  
[58] On May 26, 2006, Denis Medanic convinced Robert Govorcin to sign the  
permanent transfer of the T-37 trawl quota from the Neekis to the Viking Storm T-  
135 licence, owned by Leader Fishing. Robert Govorcin was assured by Denis  
Medanic that the quota “would be coming back to the Neekis” in order to obtain his  
signature. This transfer allowed Denis Medanic unilaterally through Leader Fishing,  
to effect temporary or permanent transfer of all or part of the T-37 quota. In effect  
Denis Medanic took control over the T-37 licence. The T-37 quota only came back  
to the Neekis in 2017 following demand letters from counsel.  
[59] In 2006 the hake quota was permanently transferred from the T-37 licence to  
the Viking Storm, a vessel owned by Leader Fishing.  
[60] On September 5, 2008, Denis Medanic directed Luana Groulx of Leader  
Fishing to pay $250,000 in trust to Shirley Manfron and $150,000 to Bly Industries.  
He picked up the bank drafts from Ms. Groulx that same day.  
Govorcin Fisheries Ltd. v. Medanic Fisheries Ltd. et al.  
Page 21  
[61] Sometime in 2011 Denis Medanic learned that his parents had gifted a house  
that they owned on Granville Street to his sister. This incensed him and he sought  
to talk to his mother about this. His sister who was residing with his parents to assist  
in the care of her father Tomislav was home and an angry confrontation between  
sister and brother occurred, including Denis grabbing his sister by her shirt.  
[62] On May 6, 2011, Denis Medanic, through his company Sea Kiss Fisheries  
purchased the halibut licence L-179 associated with the vessel New S Shadow  
holding 0.2249519998% of total allowable catch from Silver Shadow Fishing  
company Ltd. for $912,480.42.  
[63] In 2012, Denis Medanic became a 20% shareholder and director in Select  
Seafoods through an investment by his company 0739960 B.C. Ltd. Other  
shareholders of Select Seafoods were: Mike Buston, John Bray, Donald Vaccher,  
and Robert Tyron. This company purchased a factory ship called the Northern  
Alliance. Each shareholder contributed $80,000 to $100,000 for the purchase. The  
financial viability of the vessel was dependent on a yearly quota of between 12 to 15  
million pounds of hake. Denis Medanic controlled 7-8 million pounds. As part of his  
participation in ownership, Mr. Medanic allocated quota from the Neekis to Select  
Seafoods, as did Don Vaccher. Denis testified that he did not commit the quota. In  
that regard I prefer the evidence of Mr. Buston who said there was an understanding  
that the entire quota was committed. There was no year which was an exception.  
[64] By letter dated March 17, 2014, Denis provided notice to MFL of his demand  
for immediate payment of $1,576,927.88 plus accrued interest under the promissory  
note of February 2, 2005. The notice further stated that if payment was not made in  
48 hours, Denis Medanic intended to take possession of the assets of MFL under  
the Security Agreement.  
[65] It appears that the demand was prompted by the medical advice that the  
outlook for Tomislav Medanic who had been hospitalized because of lympho  
leukemia was grim. Denis moved to make the demand to protect his interest from  
his sister. It is notable that Denis testified that did not know the specific amount  
owed under the promissory note, though it is apparent from the evidence and his  
Govorcin Fisheries Ltd. v. Medanic Fisheries Ltd. et al.  
Page 22  
testimony that he had received significant management fees from MFL before the  
demand. His father died a week after the demand on March 24, 2017.  
[66] Slavica Govorcin died on June 7, 2015, at age 83. Under her will her sons  
Albert and Robert were to receive an equal share of the assets of GFL. Robert was  
one of the executors under her will. He was advised by a solicitor to identify the  
assets and obtain values for them. He contacted Denis a number of times to obtain  
the information. Denis never provided any useful information but asked if Robert  
was interested in the sale of GFL’s portion of the quotas and licences.  
Denis Medanic in direct gave dubious evidence to the effect that he did not want to  
get involved with valuing the assets, apparently due to concerns as to his personal  
liability for doing so. Robert Govorcin then contacted Mr. Thurgood, the accountant  
for GFL, MFL, and the Joint Venture. Mr. Thurgood said he knew the values that he  
was given for accounting purposes but could not provide any more assistance.  
Robert then engaged counsel, Mr. Brad Caldwell, in early 2016 to assist in the  
obtaining the information.  
[67] In 2016, Brad Caldwell contacted David Dawson and retained him to  
investigate the fishing assets of the Joint Venture.  
[68] In an email dated April 28, 2016, David Dawson informed Brad Caldwell that  
the groundfish and hake quota “has been permanently removed from T-37”.  
[69] In a letter dated May 16, 2016, Brad Caldwell asked David Dawson to expand  
the scope of his investigation to also include determining the market value of the  
fishing assets including licences and quota; whether the joint venture sold or  
permanently transferred any fishing licences or quota since 2000; and whether GFL  
received a 50% share of the licence and quota profits from 2010 to 2015.  
[70] On July 4, 2016, David Dawson sent Brad Caldwell an email containing his  
estimates of the fishing asset prices at the time.  
[71] On July 5, 2016, David Dawson sent Brad Caldwell a further email containing  
his estimates of the fishing asset prices.  
Govorcin Fisheries Ltd. v. Medanic Fisheries Ltd. et al.  
Page 23  
[72] In a letter dated October 3, 2016, Brad Caldwell asked David Dawson to  
determine what the income from the Neekis and Western Breeze licences and  
quotas should have been for the years 2010 to 2016. Brad Caldwell sent an email to  
David Dawson that same day stating that he may ask David Dawson to “go back  
further” in his investigation if it has been found that GFL received less money than it  
should have in the years from 2010 to 2016.  
[73] On October 11, 2016, David Dawson sent an email to Brad Caldwell stating  
that approximately half of the Offshore Hake quota that was originally from Neekis  
licence was missing.  
[74] On November 23, 2016, Brad Caldwell emailed David Dawson a list of the  
lease payments GFL received from the joint venture in the years 2009-2015. In  
testimony, David Dawson stated that the payment of $200,000 in 2010 seemed low  
as there was a large salmon run that year and approximately $700,000 in leasable  
assets that year.  
[75] On February 20, 2017, David Dawson emailed Brad Caldwell stating that he  
was “extremely busy”. David Dawson spent approximately a few hundred hours in  
his investigations for Brad Caldwell, but could not commit to providing an expert  
opinion as he did not have the time to do so.  
[76] David Dawson based his estimates on his experience in the fishing industry  
and from inquiring about prices at a local boat broker.  
[77] In or about early 2017, Denis Medanic made a detailed proposal to split up  
the quota on the licences by species with Robert Govorcin.  
[78] In early 2017, Brad Caldwell wrote to Mr. Medanic suggesting the possibility  
of a lawsuit.  
[79] The Notice of Civil Claim for this lawsuit was filed on February 21, 2017.  
Govorcin Fisheries Ltd. v. Medanic Fisheries Ltd. et al.  
Page 24  
[80] On June 26, 2018, Robert Govorcin prepared a summary of the payments  
drawn from the Joint Venture from 1998 to 2017. The amounts drawn by MFL and  
GFL were equal.  
[81] Denis agreed that he never reported any sums he had taken directly out of  
monies that would have normally been deposited into the Joint Venture bank  
account for the entire period that is the subject of this action. Denis Medanic does  
not dispute that he took a significant portion of monies that but for the management  
fee would have been deposited into the account of the Joint Venture. At trial, he  
could not state the amount that he had taken but disputed the $6.167 million figure  
estimated by Ms. Blacklock that was not deposited. Interestingly, he was able to  
suggest that the amount was closer to $5 million. His main criticism was that the  
higher amount includes monies related to fish not subject to this litigation and that  
certain monies were not related to the period of time relevant to this litigation.  
Medanic Fisheries Management payments  
[82] Mr. Thurgood produced a table setting out the payouts of monies described  
as management fees to members of the Medanic family. The table shows the  
following the payouts of to family members, including to Denis Medanic through his  
company Sea Kiss Fisheries:  
Medanic Fisheries Ltd. Management Fees Paid  
Sea Kiss  
200 No split available  
Govorcin Fisheries Ltd. v. Medanic Fisheries Ltd. et al.  
Page 25  
Medanic Fisheries Ltd. Management Fees Paid  
Sea Kiss  
200 No split available  
200 No split available  
200 No split available  
1,727,940 Determined  
[83] Denis Medanic in cross examination was questioned on whether he received  
monies for the years where there is no recipient identified. While he was not  
responsive to the suggestion that he received monies for all the years in which an  
allocation is not specified, I find it was more likely than not he received more than  
the $831,400 reflected in the chart above.  
Fishing Licences and Quota  
[84] The pacific commercial fishing industry is highly regulated with detailed rules  
and procedures both in terms of authorizations and operations. Harvesting is also  
highly monitored. The current quota system was initiated in 1997. The DFO  
produces an Integrated Fisheries Management Plan every two years that provides  
the operational and management framework for non-aboriginal groundfish fishing.  
The key regulator is DFO. It issues licences to parties which sets out the vessel, the  
method of fishing, the species of fish, and the areas authorized for fishing. The DFO  
also establishes the amount of fish that a sector can harvest and the amount any  
licence holder can harvest during a set period (the “quota”). The quota is  
established by weight by DFO, and individual licence holders are then assigned a  
percentage of the total allowable catch that can reach up to 10 decimal points of  
specificity. The quota can be assigned or transferred by a holder to another licence  
holder either temporarily or permanently. Further, sub-assignments of a quota (the  
individual species of fish and amount) and transfers can occur. This is also  
Govorcin Fisheries Ltd. v. Medanic Fisheries Ltd. et al.  
Page 26  
administered by DFO through a reallocation system. A registry and database  
tracking the status of licences and quotas including the history of transfers and the  
identity of transferors and transferees is maintained by the DFO. There is value in  
holding a licence and quota as a holder does not have to actually engage in fishing  
as the quota can be transferred or assigned, in portions and for specific species, for  
value to others. An interesting aspect of the system that came to light during the trial  
was the existence of something called a ‘stick boat’, which is technically considered  
a vessel for licencing purposes but is in fact nothing more than two 2 x 4 studs  
nailed together to represent a keel that is certified by a professional surveyor. This  
‘stick boat’ sitting on land is sufficient to obtain a licence and to receive quota. Thus,  
exemplifying the arcane nature of the regulatory system. Denis Medanic owns such  
a ‘stick boat’ – the New S Shadow.  
Transactions by Denis Medanic  
[85] The transactions which form the basis of the plaintiff’s claim are not contested  
by the defendants. It is also not contested that they were not disclosed by Denis  
Medanic to GFL.  
Bly Industries  
[86] Cheques were issued from Bly Industries by Mr. Pastor to the Joint Venture  
from 2005 to 2015. At the time, Robert Govorcin believed that Bly Industries was a  
company which the Joint Venture sold fish to. In reality, Bly Industries was a  
settlement company but was not required for such services after 2003. As described  
earlier, Bly Industries received funds from lessees of the Joint Venture, held them in  
an interest-bearing account for Mr. Pastor’s benefit, and disbursed them in amounts  
and at times as directed by Denis Medanic to the Neekis Partnership. Significant  
funds were run through Bly Industries in this manner. Denis Medanic’s rationale for  
using Bly Industries had no discernible business purpose.  
Govorcin Fisheries Ltd. v. Medanic Fisheries Ltd. et al.  
Page 27  
Direction to lessees of Neekis Quota and Licence to make payments to  
parties other than to the Neekis Partnership  
[87] The parties who were given the directions by Denis Medanic included: Select  
Seafoods, SM Products, Pacific Quest Fishing Ltd., Coldfish Seafoods, North Delta  
Seafoods, Pasco, Leader Fishing, Bella Coola Fisheries Ltd., and Seven Seas.  
[88] The witnesses from each of the companies testified that payments for quota  
they had leased were directed by Denis Medanic and these payments included  
payments directly in the name of Denis Medanic; his companies; Bly Industries; his  
sons; his notary public, Shirley Manfron; and his solicitor, John Skapski.  
[89] The transactions were outlined in the Blacklock Report and in the Notices to  
Salmon Licence Revenues  
[90] The Joint Venture held salmon licences AS-491 and AS-153. MFL and GFL  
each owned 50% of each licence through their equal partnership in the Western  
Breeze and the Neekis.  
[91] No revenues were deposited into the Joint Venture accounts by Bly Industries  
for fishing years 2007 to 2017. During this time yearly licence fees and an  
association fee were paid by the Joint Venture. Further, the quotas associated with  
the licensees were leased out to various fishing processors listed above. The fish  
processors were directed by Denis Medanic to make their payments to Denis  
Medanic, his companies and his sons.  
[92] Instead of a full payment for leased salmon quota from Bella Coola Fisheries,  
Denis Medanic arranged for a portion of the larger higher quality fish to be custom  
processed for him at a per pound rate which he would sell to another buyer.  
[93] In salmon lease transactions with Pacific Quest Fishing Ltd., Denis Medanic  
arranged for 50% of the fish revenue to be paid to him and occasionally he would  
keep his half of the fish instead of payment and arrange to process and sell the fish  
Govorcin Fisheries Ltd. v. Medanic Fisheries Ltd. et al.  
Page 28  
Sablefish Licence  
[94] Denis Medanic entered into lease agreements with certain parties in his own  
name and not the Joint Venture. He directed certain lessees to make payments to  
Bly Industries, to his companies, to his lawyer Mr. Skapski and to his notary public,  
Ms. Manfron.  
T-37 Trawl Licence  
[95] Denis Medanic directed Leader Fishing to make certain lease payments to  
Shirley Manfron. Denis Medanic in 2012 directed Leader Fishing to transfer a  
portion of the hake and sablefish total allowable catch to the New S Shadow T-127  
[96] Leader Fishing stopped leasing quotas from Denis Medanic in 2011 or 2012.  
The hake and groundfish quotas controlled by Denis Medanic was then leased to  
Select Seafoods. Denis Medanic directed Select Seafoods to make lease payments  
to Bly Industries; and his own companies.  
[97] Over the period covered by this claim, Denis Medanic or members of his  
family purchased other assets such as real estate, fishing licences and quotas.  
Some of these purchases were effected through monies paid into the accounts of  
Mr. Skapski and Ms. Manfron. In one instance, Denis Medanic deposited an amount  
far in excess of the amount required for the purchase of real property. The excess  
funds were paid back to “Denis, or Tyler Matthew Medanic”.  
[98] Denis Medanic ceased producing operating summaries of revenue, their  
source, and expenses. This occurred according to Denis in 2006. This coincided  
with the death of Bogomil in 2005.  
Expert Reports  
[99] The plaintiff tendered the following expert reports:  
October 31, 2019 by Stuart Nelson regarding salmon.  
Govorcin Fisheries Ltd. v. Medanic Fisheries Ltd. et al.  
Page 29  
October 31, 2019 by Stuart Nelson regarding sablefish.  
October 21, 2019 by Theresa Williams regarding the Pacific  
trawl management system and fishery, the general practice of  
trawl quota leasing, including trawl quota lease pricing.  
January 6, 2020 supplementary opinion by Theresa Williams.  
May 10, 2021 supplemental and revised opinion by Theresa  
November 3, 2019 report by Mr. De Greef.  
Evidence of Stuart Nelson  
[100] Mr. Nelson was asked to address the same three questions in each report  
regarding salmon and sablefish.  
[101] In the salmon report the task Mr. Nelson was requested to carry out was to  
ascertain what the earnings of the Area B salmon licences aboard Neekis and  
Western Breeze' were for the period 2010 to 2016.  
[102] The summary from his report is as follows:  
Based on the information reviewed and analyzed, my summation of the lease revenue  
earned by the Neekis and Western Breeze salmon licences for the period is as follows:  
Year Species  
Total Revenue  
Barkley sockeye  
Fraser sockeye  
Barkley sockeye  
2012 Barkley sockeye  
Barkley sockeye  
Barkley sockeye  
Fraser sockeye  
2015 Barkley sockeye  
2016 Barkley sockeye  
Govorcin Fisheries Ltd. v. Medanic Fisheries Ltd. et al.  
Page 30  
[103] In the sablefish report the questions he was asked to respond to were:  
To provide my opinion as to the per pound lease value of  
sablefish quota in the Pacific Region for the years 1999 and up  
to and including 2015.  
To provide my opinion on lease rates for bare sablefish licences  
for the same period.  
To provide my opinion on the cost per pound of purchasing  
sablefish quota in 2003.  
[104] The following are the results from the report for each question.  
[105] For question one, the sablefish quota lease rates for 1999 2015 were  
determined to be as follows:  
Quota Lease Rate Quota Lease Rate  
Quota Lease Rate Quota Lease Rate  
per lb ($)  
Range per lb ($)  
per lb ($)  
Range per lb ($)  
no report  
no report  
no report  
no report  
[106] For Question 2 regarding bare licence lease rates, the report states:  
Bare sablefish licences - commonly referred to as K licences or tabs - are  
vessel-based licences that cannot be readily transferred amongst vessels  
due to a number of DFO rules and restrictions. Because K licence leasing is  
uncommon, this parameter was not included in the Valuation Reports.  
I do not offer an opinion of K licence leasing rates, other than to state that the  
practise of leasing K tabs is extremely rare.  
Govorcin Fisheries Ltd. v. Medanic Fisheries Ltd. et al.  
Page 31  
[107] For Question 3, the report provides the following responses:  
I do not have an opinion on the value of sablefish quota in 2003 because I did  
not prepare a Valuation Report that year. For reference, I provide the j-cut  
quota valuation for each of the years I did prepare a report.  
Value of Quota  
(per lb)  
no report  
no report  
[108] A supplementary question was posed to Mr. Nelson as a result of the lack of  
a valuation for 2003:  
With respect to the cost per pound of purchasing sablefish quota in 2003,  
would you please revise your report to show a calculation of your estimated  
cost of purchasing 14,800 round pounds of sablefish quota in 2003?  
[109] The response was as follows:  
Because I did not perform a quota valuation in 2003, I offer the following  
calculations that use the 2002 and 2004 valuations. The calculations are  
done for both round and fcut pounds:  
Lbs of quota  
Govorcin Fisheries Ltd. v. Medanic Fisheries Ltd. et al.  
Page 32  
2002 Value per report  
Quota cost  
Lbs of quota  
2004 Value per report  
Quota cost  
If one assumes that the value of sablefish quota in 2003 was similar to that in  
2002 and 2004, then the range of cost would be in the $382,000 to $403,000  
Evidence of De Greef  
[110] Mr. De Greef provided an expert report on valuing sablefish.  
[111] Mr. De Greef noted that:  
…based on my experience, that the lease rates listed in the Nelson Reports  
are often slightly lower than the market rates. Fishermen who report lease  
rates to DFO tend to understate the lease rates because it involves reporting  
their revenue to the government. In light of that I consulted my network of  
commercial sablefish fishermen and buyers who regularly lease quota and  
derived the following average annual lease rates from that research.  
[112] This observation makes sense.  
Evidence of Theresa Williams  
[113] Ms. Williams provided expert evidence in respect to many aspects of the  
commercial Pacific groundfish fishery including topics such as:  
general practices;  
markets and pricing for specific seasons including hake and  
trawl sablefish.  
Govorcin Fisheries Ltd. v. Medanic Fisheries Ltd. et al.  
Page 33  
Evidence of Jennifer Blacklock  
[114] The result of Ms. Blacklock’s review is summarized at para. 56 of her report:  
56. Based on my analysis as set out in this report, Govorcin Fisheries did not  
receive its 50% share in earnings from the Joint Venture. Joint Venture  
revenue (proceeds from the lease of licences and/or quota including  
reimbursed licence fees) that should have been deposited to the Joint  
Venture Accounts was paid to the following recipients including:  
a. Medanic Fisheries;  
b. Denis Medanic;  
c. Tyler Medanic;  
d. Matthew Medanic;  
e. Sea Kiss Fisheries;  
f. 07 BC Ltd.;  
g. Pasco Seafoods Ltd.;  
h. Select Seafoods Ltd.;  
i. Shirley M. Manfron “in trust”;  
j. John Skapski “in trust”; and  
k. 639122 BC. Ltd  
57. I have summarized the Joint Venture revenue that remains unpaid and  
not deposited to the Joint Venture Accounts for each licence from F1998 to  
F2017 on Table 8.0, Column E.  
58. Revenue earned by the Joint Venture between F1998 and F2017 (based  
on both actual payments and estimates) but not deposited to the Joint  
Venture Accounts was $6,167,851.14 [Table 8.0, Column E]. Govorcin  
Fisheries share of the revenue not deposited is equal to 50% of the total  
revenue not deposited or $3,083,925.57 [Table 8.0, Column F].  
[115] Table 8 from the report is set out below [notes and footnotes removed]:  
T37 Sablefish AS153 and NOT DEPOSITED  
(50%) SHARE  
Govorcin Fisheries Ltd. v. Medanic Fisheries Ltd. et al.  
Page 34  
T37 Sablefish AS153 and NOT DEPOSITED  
(50%) SHARE  
(4,318.82) (255,811.14)  
(3,794,382.18) (1,608,914.43) (29,728.04) $(734,826.48)  
[116] In terms of her investigation of Denis Medanic’s management of the Joint  
Venture, she observed that:  
a. accounting records including summaries, synoptics or invoices were not  
maintained by Mr. Medanic after F2001;  
b. lease revenue records were not maintained by Mr. Medanic or included in  
the Joint Venture Records;  
c. deposit information on the cheques or drafts paid to the Joint Venture is  
incomplete as to the fishery or licence that the lease payments represented.  
Verification of the source of funds paid to the Joint Venture was not possible  
without the information from third parties;  
d. Mr. Medanic did not represent Govorcin Fisheries as owner of the Joint  
Venture Assets;  
e. documents supporting the permanent transfers of Joint Venture Assets  
were not included in the Joint Venture Records;  
f. Mr. Medanic directed Lessees to pay lease payments for the lease of Joint  
Venture Assets to pay Bly Industries or other companies, individuals or trust  
accounts and not the Joint Venture;  
g. lease proceeds between F2006 and F2016 were obscured by the use of  
Bly Industries to hold funds for the Joint Venture;  
h. payments from Bly Industries on the instructions of Mr. Medanic were  
deposited regularly to the Joint Venture Accounts but not necessarily in the  
fiscal year (or fishery) that they were earned; and  
i. expense records supporting cancelled cheques were not maintained or  
provided to Govorcin Fisheries.  
Govorcin Fisheries Ltd. v. Medanic Fisheries Ltd. et al.  
Page 35  
[117] Between F2007 and F2017 (“F” here, and throughout referring to the fiscal),  
the report indicates that in total the amounts paid to Denis Medanic was  
$4,416,143.81 after removing the K-40 revenue.  
[118] In terms of the question posed to Ms. Blacklock for her report, how the  
aforesaid monies were spent, she states:  
I am unable to determine from the available records how profits received by  
Mr. Medanic, his relatives or his related companies were spent. Sea Kiss  
Fisheries bank records and 07 BC Ltd. bank records provided to me were  
redacted preventing any meaningful review of the records. [DB2, T8 and T9;  
DB2, T10 and T11]  
[119] At the conclusion of her report, Ms. Blacklock states:  
In summary, a review of the Joint Venture Records and third-party documents  
indicates that the way the Joint Venture was managed contributed to  
preventing Govorcin Fisheries from understanding the operations of the Joint  
Venture and to allowing Mr. Medanic to take advantage of undisclosed  
profits. While each of Govorcin Fisheries and Medanic Fisheries took an  
equal share of advances from the Joint Venture Accounts they did not share  
equally in the profit (revenue less expenses) from the Joint Venture.  
Mr. Medanic’s management allowed him to divert lease proceeds and quota  
from the Joint Venture for his benefit while the Joint Venture paid  
substantially all of the associated expenses.  
[120] I note Ms. Blacklock used conservative numbers in doing her analysis. She  
also used averages but replaced averages when actual figures were available.  
[121] I start with the observation that Tomislav Medanic and Bogomil Govorcin  
came to Canada with little. Through hard work and acumen, they achieved success  
in their joint fishing enterprise. Each invested in real estate. This provided a  
comfortable life for their respective families. The families were close in Canada and  
often socialized together. Since the passing of the founders, their respective  
children as beneficiaries have received considerable value in the assets the men  
had accumulated.  
[122] The key actors in this case are Denis Medanic and Robert Govorcin, age 59  
and 50, respectively.  
Govorcin Fisheries Ltd. v. Medanic Fisheries Ltd. et al.  
Page 36  
[123] A primary feature of this case has to do with the actions of Denis Medanic in  
relation to monies he or his designates received arising from the licences and quotas  
held in the Joint Venture. The plaintiff asserts that the actions were wrongful. The  
defence relies upon the assertion of an oral agreement reached between Bogomil  
Gorvorcin and Denis Medanic that permitted him to take the subject monies as  
compensation for his management of the fishing enterprise.  
[124] If the agreement is not found to have arisen, then the exercise in effect turns  
into one of quantifying the amount due to the plaintiff and whether Denis Medanic is  
entitled to an offset based on quantum meruit for his efforts in managing the fishing  
enterprise. This was acknowledged as much by defendants’ counsel.  
[125] I will deal first with the nature of the arrangement between MFL and GFL in  
respect to the fishing enterprise. I will then address the admissibility of hearsay  
evidence of certain statements said to have been made by Bogomil Govorcin as  
related by Denis Medanic regarding the agreement as well as the credibility and  
reliability of Denis.  
What was the arrangement between MFL and GFL?  
[126] My view of the evidence is that the founders of the Neekis fishing enterprise,  
Tomislav Medanic and Bogomil Govorcin, agreed that their respective financial,  
operational, and administrative contributions to the business entitled each to an  
equal share in the net profits from the business. The evidence indicates that  
Tomislav dealt with fish processors and the management of the vessels, licences  
and quotas and Bogomil looked after the finances of the enterprise. Each worked on  
the vessels and associated work such as hanging and repairing nets. Bogomil’s  
duties on the vessels were the more dangerous ones, working with the mechanical  
devices, net drums and in the engine room. The evidence clearly shows that each  
side took an equal amount from net profits each year after the expenses of the  
fishing enterprise were accounted for. Neither side took monies separately from the  
joint enterprise for their specific responsibilities. There is no history of management  
fees being paid or accrued from the records of the joint enterprise.  
Govorcin Fisheries Ltd. v. Medanic Fisheries Ltd. et al.  
Page 37  
[127] The arrangement was at its core an equal sharing of profits from a common  
fishing enterprise.  
[128] Based on the evidence, initially it was Tomislav Medanic who managed the  
fishing operations including the leasing of the available quotas and licences to third  
parties. In doing so, Tomislav in those dealings was an agent for both GFL and  
MFL. With Tomislav’s stroke in 1996, Denis Medanic assumed the responsibilities  
of his father and carried on in managing the fishing operations of the joint enterprise  
and doing deals as agent for both companies. In my view an agency relationship  
has been established and a fiduciary duty was placed upon Denis Medanic. In this  
regard, I agree with the plaintiff’s submission that (a) Denis Medanic had unlimited  
discretion while leasing out quota; (b) he had the ability to unilaterally exercise  
power that could be mis-used to affect the rights of GFL (e.g. transferring co-owned  
quota to other vessels and diverting lease payments); and (c) GFL was particularly  
vulnerable because it allowed the transfer of the quota and the K licence to other  
vessels, with the result that DFO did not recognize it as an owner of the licence  
and/or quota. With respect the breadth of discretion, under cross, Denis Medanic  
admitted that he had the discretion to direct North Delta Seafoods to pay all the  
money that was to go to the Neekis Partnership to his sons and companies. When  
further questioned on this level of discretion, Denis Medanic stated that he “felt that  
[he] was entitled to it based on past services and contributions” and that he did not  
need to tell Robert Govorcin about these payments. This indicated Denis Medanic  
exercised unfettered discretion.  
What was the nature of the relationship between MFL and GFL?  
[129] The plaintiff submits that the business arrangement between MFL and GFL  
was a joint venture.  
[130] The defendants characterize the relationship generically as a fishing  
enterprise. The defendants do not take issue with the ingredients that make up a  
joint venture.  
Govorcin Fisheries Ltd. v. Medanic Fisheries Ltd. et al.  
Page 38  
[131] The essential factors for establishing a joint venture have been set out in  
Canlan Investment Corp. v. Gettling, (1997), 4126 at para. 31, 37 B.C.L.R.  
(3d) 140 (C.A.). There must be a contractual basis and the presence of:  
A contribution by the parties of money, property, effort,  
knowledge, skill or other asset to a common undertaking;  
A joint property interest in the subject matter of the venture;  
A right of mutual control or management of the enterprise;  
Expectation of profit, or the presence of "adventure," as it is  
sometimes called;  
A right to participate in the profits;  
Most usually, limitation of the objective to a single undertaking  
or ad hoc enterprise.  
[132] The defendants did not identify the absence of any of the above factors.  
[133] In my view, I agree with the plaintiff that the factors making up a joint venture  
have been established.  
[134] In regards to meeting the first two factors it is clear that Bogomil Govorcin and  
Tomislav Medanic set up two parallel corporate structures, into which they each  
transferred a 32/64 shares of both the Western Breeze and the Neekis along with  
their licences and quotas. The licences are registered in the name of the vessels.  
They then carried on a common commercial fishing enterprise together fishing with  
both vessels and sharing the net profits equally. The business was called and  
operated under the name the Neekis Partnership. Contracts were entered into using  
that name. Banking documents also were under this name. In evidence, Robert  
Govorcin observed that when he took over managing GFL, there was a joint bank  
account into which the fishing revenue was deposited, and expenses were paid out  
of, and profits distributed. I note here that the account was called the Neekis  
Partnership (until May 2015 when it changed to Neekis Fishing), while not legally  
accurate it evidences a contractual relationship between the parties and a closeness  
Govorcin Fisheries Ltd. v. Medanic Fisheries Ltd. et al.  
Page 39  
in the relationship which factually was true. While the boats were actively fishing,  
the founders both worked on the vessels. It appears both men contributed their  
labour to keep the venture operating. I also note that the financial statements and  
income tax returns of both MFL and GFL described the enterprise as a joint venture.  
[135] In regard to the presence of the third factor it is apparent that each party had  
a right of mutual control and management. As I have described, the founders each  
were involved in the control and management in the fishing enterprise. Each  
participated in the operations, set up a structure for how revenues, expenses, and  
net income would be recorded and distributed. They discussed such things as when  
draws would be taken and whether other opportunities should be pursued. I  
recognize that in this situation, the management of the fishing operations, quotas,  
licences, were in the hands of Tomislav Medanic, who was succeeded by Denis  
[136] With respect to the presence of the factors four and five, there is no debate.  
There was clearly an expectation of profit and the right to participate in the profit.  
There is no question that the profits were to be shared equally between the two  
[137] With respect to the presence of factor six, it is clear that the enterprise was  
singularly focussed on commercial fishing through the vessels, licences and quotas  
held in common.  
[138] Turning then to the admissibility of hearsay statements attributed to Bogomil  
Hearsay Evidence  
[139] The evidence of the existence of the Alleged Management Fee Agreement is  
through the testimony of Denis Medanic. It is said to be an oral agreement that  
arose in conversations he had with Bogomil Govorcin.  
[140] The admissibility of statements attributed to Bogomil Govorcin in regard to the  
Alleged Management Fee Agreement was contested as hearsay; thus,  
Govorcin Fisheries Ltd. v. Medanic Fisheries Ltd. et al.  
Page 40  
presumptively inadmissible. The defence, relies upon the principled exception of  
necessity and reliability as well as admissions against one’s own interest.  
[141] The parties agreed that I could receive this evidence and make  
determinations regarding admissibility as part of my final determinations. I will now  
address this threshold issue.  
[142] Denis Medanic stated that through discussions he had with Bogomil Govorcin  
an agreement was reached which provided for compensation for his management  
services. Denis stated that Bogomil was aware that he and his father were trying to  
sort out compensation for Denis’ services. The key discussion between Bogomil  
and Denis is said to have been when the two men met to look at a seiner that was  
up for sale. It held a salmon and herring roe licence. Denis could only state that this  
was in the late 1990’s or early 2000’s. The owner of the vessel is said to have been  
a Mr. Alexich who stated to them that he wished to remain captain of the ship for 5  
years and receive payment as such as well as a fee for looking after the vessel in  
the off season. While the purchase was not pursued, in their discussion after  
meeting with Mr. Alexich, Denis said he told Bogomil that the work that Mr. Alexich  
was seeking to be compensated for was the work that Denis was doing for their joint  
fishing enterprise and he was entitled to compensation. Bogomil is said to have  
replied that he agreed and said “work it out with your dad, whatever he agrees to I  
will agree to.” Denis testified that he told Bogomil that he was trying to figure out a  
formula with his father for compensation but was having problems obtaining  
settlement sheets and statements which showed the compensation for captains on  
their vessels. Denis also said he had a discussion with Bogomil in 2004 or 2005 on  
the topic but gave no specifics as to what was said.  
[143] Upon obtaining the available settlement sheets, Denis Medanic provided  
them to Mr. Thurgood who in 2005 created the schedule of captain’s crew share and  
bonus that is set out earlier in these reasons. The calculated average amount was  
inserted into the Promissory Note. The terms of the Promissory Note and  
associated agreements are asserted by Denis Medanic to reflect the agreement  
terms that he had with Bogomil Govorcin. This is on the strength of the hearsay  
Govorcin Fisheries Ltd. v. Medanic Fisheries Ltd. et al.  
Page 41  
statement that Bogomil said to him that he would agree to whatever his father  
Tomislav agreed to. I note here that the examination discovery transcript of Denis  
Medanic has him stating that Bogomil Govorcin said “work it out with your dad first.”  
[144] There is no real issue on threshold necessity as Bogomil Govorcin has  
[145] Turning then to threshold reliability. This can be established where it can be  
shown that there are adequate substitutes for testing truth and accuracy –  
procedural reliability; or there are sufficient circumstantial or evidentiary guarantees  
that the statement is inherently trustworthy substantive reliability: R v. Bradshaw  
2017 SCC 35 at para. 27.  
[146] Based on the evidence, there is little to allow for a finding of procedural  
reliability in this case. The parties provided minimal submission on procedural  
reliability, their focus was on substantive reliability which I address next.  
[147] Although the parties cite different sources, the five factors for assessing  
substantive reliability in the context between the two are the same: (a) the presence  
or absence of a motive to lie; (b) independent corroborative evidence that “goes to  
the trustworthiness of the statement”; (c) timing of the statement relevant to the  
event, contemporaneity; (d) the declarant’s mental capacity at the time of the making  
of the statement; (e) solemnity of the occasion and whether the declarant’s  
statement was made “in circumstances that could arguably be akin to the taking of  
an oath where the importance of telling the truth and the consequences of making a  
false statement were properly emphasized.”: R. v. Khelawon, 2006 SCC 57;  
Gutierrez Estate v. Gutierrez, 2015 BCSC 185 at para. 34; and Peterson v.  
Welwood, 2018 BCSC 1379  
[148] The weight to be applied to any factor in this threshold assessment is  
dependent upon the circumstances of a case. I also note that the question of  
whether the statements were ever made is a question of ultimate reliability and does  
not arise at the threshold stage.  
Govorcin Fisheries Ltd. v. Medanic Fisheries Ltd. et al.  
Page 42  
[149] In this case, I find the absence of independent corroborative evidence to be  
significant. I also note the absence of any solemnity on any of the said occasions  
and the non-specific broad period of time that Denis Medanic says the conversations  
he had with Bogomil occurred. The key conversation was said to have been in late  
1990’s or early 2000’s and the nature of the discussions appear to have been casual  
with few specifics. I have concerns regarding the accuracy of the statement and the  
recall of Denis Medanic regarding the statement.  
[150] The defendants submit that the statements are corroborated in terms of the  
compensation Denis Medanic received from MFL for management as evidenced in  
the Promissory Note and associated documents; and the assertion that there was to  
be ongoing annual payments of $105,128.52 from MFL. Some paid directly to  
Mr. Medanic or his company and the balance from quota lease payments.  
[151] I do not accept this as independent corroborating evidence.  
[152] The key here is a stringent standard for the use of corroborative evidence. In  
Bradshawthe court stated:  
…at the threshold reliability stage, corroborative evidence must work  
in conjunction with the circumstances to overcome the specific hearsay  
dangers raised by the tendered statement. When assessing the admissibility  
of hearsay evidence, “the scope of the inquiry must be tailored to the  
particular dangers presented by the evidence and limited to determining the  
evidentiary question of admissibility” (Khelawon, at para. 4). Thus, to  
overcome the hearsay dangers and establish substantive reliability,  
corroborative evidence must show that the material aspects of the statement  
are unlikely to change under cross-examination (Khelawon, at para. 107;  
Smith, at p. 937). Corroborative evidence does so if its combined effect,  
when considered in the circumstances of the case, shows that the only likely  
explanation for the hearsay statement is the declarant’s truthfulness about, or  
the accuracy of, the material aspects of the statement (see U. (F.J.), at  
para. 40). Otherwise, alternative explanations for the statement that could  
have been elicited or probed through cross-examination, and the hearsay  
dangers persist.  
In assessing substantive reliability, the trial judge must therefore  
identify alternative, even speculative, explanations for the hearsay statement  
(Smith, at pp. 93637). Corroborative evidence is of assistance in  
establishing substantive reliability if it shows that these alternative  
explanations are unavailable, if it “eliminate[s] the hypotheses that cause  
suspicion” (S. Akhtar, “Hearsay: The Denial of Confirmation” (2005), 26 C.R.  
(6th) 46, at p. 56 (emphasis deleted)). In contrast, corroborative evidence  
Govorcin Fisheries Ltd. v. Medanic Fisheries Ltd. et al.  
Page 43  
that is “equally consistent” with the truthfulness and accuracy of the  
statement as well as another hypothesis is of no assistance (R. v. R. (D.),  
1996 207 (SCC), [1996] 2 S.C.R. 291, at paras. 3435). Adding  
evidence that is supportive of the truth of the statement, but that is also  
consistent with alternative explanations, does not add to the statement’s  
inherent trustworthiness. [At paras. 478; emphasis by underlining added.]  
[153] The defendants, simply make the assertion that the existence of the  
Promissory Note and associated documents and an oral agreement from MFL is  
enough to corroborate that there was an agreement made with Bogomil Govorcin.  
That is not the only explanation. It could easily be seen that the Promissory Note  
and associated documents and the oral agreement had only to do with internal  
issues within the Medanic family, particularly regarding Denis Medanic’s sister, who  
he was having difficulties particularly, but not limited to, with respect to the  
management of MFL since the early 2000’s. The effort can easily be seen as his  
attempts to have the agreements to protect his interest in MFL against his sister.  
This can be seen in the absence of similar documents which could have easily been  
drafted changing only the obligor to be Bogomil Govorcin and/or GFL and having  
them delivered to Bogomil Govorcin or GFL at the same time. There is as well the  
absence of the Promissory Note in the professionally prepared financial statements  
of MFL, an obligation which was material to the financial position of the company.  
Denis Medanic’s comment that he did not reach out to Bogomil about the agreement  
because of the illness of Bogomil Govorcin was not convincing. There is no  
evidence as to when Denis Medanic learned of the health problems of Bogomil  
Govorcin and what he knew of it. In any event, my sense of Denis Medanic is that  
this would not have been a barrier to him sending the documentation along to  
Bogomil and/or GFL to secure his interests given his disgruntlement about his  
compensation. Again, I also note that there was no written documentation  
supporting the prospective annual management fee of $105,128.52. In short, there  
is not only one hypothesis.  
[154] Threshold substantive reliability has not been made out.  
[155] Based then on the failure to establish threshold procedural or substantive  
reliability, the statement of Bogomil Govorcin is not admitted.  
Govorcin Fisheries Ltd. v. Medanic Fisheries Ltd. et al.  
Page 44  
[156] Even if I were to have admitted the statement, I would attach zero weight to  
the statement in the ultimate reliability assessment. My reasons are largely in  
respect to my assessment of the credibility of Denis Medanic and the improbability of  
Bogomil, an experienced business person, agreeing to terms unknown and unseen.  
I discuss this below.  
[157] Further, I agree with the submissions of the plaintiff that at best, if such  
statements had been made that they amounted only to an agreement to agree; or  
subject to further discussion.  
[158] I turn then to my assessment of Denis Medanic’s credibility generally and in  
relation to his assertion of the oral management agreement.  
Assessment of Credibility of Denis Medanic  
[159] A helpful guide on the assessment of credibility has been set out by Dillon J.  
in Bradshaw v. Stenner, 2010 BCSC 1398 aff’d 2012 BCCA 296:  
[186] Credibility involves an assessment of the trustworthiness of a witness'  
testimony based upon the veracity or sincerity of a witness and the accuracy  
of the evidence that the witness provides (Raymond v. Bosanquet (Township)  
(1919), 59 S.C.R. 452, 50 D.L.R. 560 (S.C.C.)). The art of assessment  
involves examination of various factors such as the ability and opportunity to  
observe events, the firmness of his memory, the ability to resist the influence  
of interest to modify his recollection, whether the witness' evidence  
harmonizes with independent evidence that has been accepted, whether the  
witness changes his testimony during direct and cross-examination, whether  
the witness' testimony seems unreasonable, impossible, or unlikely, whether  
a witness has a motive to lie, and the demeanour of a witness generally  
(Wallace v. Davis (1926), 31 O.W.N. 202 (Ont. H.C.); Farnya v. Chorny,  
[1952] 2 D.L.R. 354 (B.C.C.A.) [Farnya]; R. v. S.(R.D.), [1997] 3 S.C.R. 484  
at para. 128 (S.C.C.)). Ultimately, the validity of the evidence depends on  
whether the evidence is consistent with the probabilities affecting the case as  
a whole and shown to be in existence at the time (Farnya at para. 356).  
[187] It has been suggested that a methodology to adopt is to first consider  
the testimony of a witness on a 'stand alone' basis, followed by an analysis of  
whether the witness' story is inherently believable. Then, if the witness  
testimony has survived relatively intact, the testimony should be evaluated  
based upon the consistency with other witnesses and with documentary  
evidence. The testimony of non-party, disinterested witnesses may provide a  
reliable yardstick for comparison. Finally, the court should determine which  
version of events is the most consistent with the "preponderance of  
probabilities which a practical and informed person would readily recognize  
as reasonable in that place and in those conditions" (Overseas Investments  
Govorcin Fisheries Ltd. v. Medanic Fisheries Ltd. et al.  
Page 45  
(1986) Ltd. v. Cornwall Developments Ltd. (1993), 12 Alta. L.R. (3d) 298 at  
para. 13 (Alta. Q.B.)). I have found this approach useful.  
[160] As a whole I found the testimony of Denis Medanic to be unsatisfactory and  
unpersuasive. I found him to be at various points evasive, unresponsive, equivocal,  
argumentative, defensive, and inconsistent. I found his testimony to be of a person  
whose wrongful conduct had been uncovered. Though not determinative I noted his  
demeanour at key points was one of unease, particularly when he was addressing  
the alleged oral agreement with Bogomil Govorcin and his diversion of funds. I  
noted that he began to drink from his water bottle frequently, he shifted his position  
in the witness box, became flushed, animated and agitated in his movements as he  
testified. He made unsupported and self-serving statements such as being the lead  
or “the man” in charge of the fishing enterprise and responsible for the success of  
the enterprise since 1983; this when he was only 21 years old, a time when the  
founders were healthy, active and engaged in the fishing enterprise and had  
invested significantly into the enterprise. I note that just before he turned 21 years  
Denis unfortunately suffered serious injuries in a car accident (several skull  
fractures) requiring hospitalization for weeks and several months recovery at home  
and during this general period was attending university. Also, Denis Medanic during  
a good portion of his description of the actions taken used the broader “we” meaning  
he and his father, not himself in the singular in terms of the management of the  
fishing operations. Thus, belying his singular role in the operations. I was also  
advised that Mr. Puratich who did captain’s duties on the Joint Venture vessels was  
on the defendants’ witness list (see defendants’ trial brief) and who might potentially  
have spoken to this point was not called in the defence case. The evidence of other  
witnesses who dealt only with Denis as a representative of the Joint Venture goes to  
Denis being a representative but not the directing mind since 1983.  
[161] The evidence that Tomislav Medanic would speak harshly at Denis Medanic  
(which he agreed occurred) on the boats in front of other crew members could hardly  
be seen as a recognition of his supposed leadership of the fishing operation.  
[162] I also noted the testimony of Denis’ sister Mila, who clearly stated that though  
Denis Medanic would engage and discuss the fishing business with his father, it was  
Govorcin Fisheries Ltd. v. Medanic Fisheries Ltd. et al.  
Page 46  
her father who was the “brains” and “boss” of the fishing operations and had the final  
say before his stroke. I accept her evidence on this point.  
[163] His testimony regarding whether he had ever discussed the alleged  
agreement with Robert Govorcin was telling. He vacillated. At first, he avoided  
answering the question, then moved towards suggesting he had, then said he had  
not, and then said there was no reason to have discussed the agreement with  
Robert. When challenged that Robert Govorcin would not have known about the  
existence of the management fee agreement and the funds taken by Denis, Denis  
maintained astonishingly that Robert would have known. When pressed on how  
Robert would know, Denis glibly answered that he did not think he had to explain.  
[164] I noted his unusual defensiveness and contrariness when questioned on the  
funds from the Joint Venture he had diverted. He stated that he stopped providing  
operating summaries to GFL because had never been given a thank you or shown  
appreciation for his efforts. This was strange in the context of his assertion that an  
agreement had been reached for his management as well as his acknowledgement  
that he had received financial assistance from his father for his purchase of real  
estate, that he had received as his normal pay for crewing and then captaining, and  
had received a distribution of net proceeds from MFL. This revealed a  
disgruntlement and motivation for his taking of the funds a taking which he knew  
was not agreed to. He added that he stopped because the vessels were no longer  
fishing. However, it was clear that there were ongoing activities regarding the  
vessels and assets which he was managing related to fees, revenues and expenses.  
[165] I found it telling in his response when asked if he had a duty of honesty  
toward Robert Govorcin with respect to the management of the Joint Venture, he  
said “I had a duty to myself”.  
[166] Other aspects of the evidence that diminished his credibility included:  
acknowledging that he had directed funds that would be for the  
account of the Joint Venture but then at other points disputed  
the funds were for the Joint Venture’s account.  
Govorcin Fisheries Ltd. v. Medanic Fisheries Ltd. et al.  
Page 47  
indicating that he had not provided values of the Joint Venture  
assets to Robert Govorcin but then said he had.  
he could not say how much he had diverted as management  
fees yet argued that the amounts identified in the Blacklock  
Reports were too high and offered that it was about a million  
dollars to high.  
testifying that the Principal Debt of the Promissory Note was for  
his management fee for MFL, but interestingly he stated the  
compensation he received from MFL included work he had done  
for his parents such as painting their home and other work at  
their home.  
testifying that he stopped providing operating summaries to GFL  
because he was not appreciated, then stating it was after 2006  
and summaries were not required because the fishing vessels  
were no longer fishing. However, it was clear that he was still  
incurring expenses for the vessels such as insurance, moorage,  
and licence fees; and that there was managing of the quotas  
and licences related to the Joint Venture. He also stated he  
prepared summaries for MFL. I accept the testimony of Robert  
Govorcin, that Denis Medanic did not provide summaries to GFL  
after 2000.  
the payment to his sons of $20,000 each from lessees on the  
basis that they had performed work on the vessels in the  
absence of any documentation of the work performed and no  
reporting of such expenses.  
testifying that rather than managing the fishing enterprise he  
was instead managing the vessels, quotas and licences; yet  
stated he was not responsible for keeping Robert Medanic on  
behalf of GFL apprised of what he was doing with the quotas  
and licences and associated revenues.  
Govorcin Fisheries Ltd. v. Medanic Fisheries Ltd. et al.  
Page 48  
stating in his examination for discovery that he could not explain  
the lengthy delays in the payment out of monies held by Bly  
Industries; at trial he stated that it had to do with deferring  
testifying in his examination for discovery that he did not recall  
the source of monies for the Dovre B quota he obtained, yet at  
trial he stated it was not Joint Venture revenues or his  
management fees.  
his inability to specify the amount of monies he had received  
directly or indirectly due to him under the Alleged Management  
Fee Agreement in the face of his clear ability to be a meticulous  
and detailed recorder of accounts and other documents related  
to the Joint Venture. As well as in the face of his ability to direct  
lessees to make payments in amounts that did not directly relate  
to a specific transaction; mixing payments between different  
transactions; delaying payments out; directing lessees to make  
payments to third parties and not to the Joint Venture. He  
obviously had some running account or acute memory to  
manage things. His testimony that he destroyed documents  
after seven years and that some documents were lost due to a  
house flood was not persuasive.  
the failure of Denis to have the Promissory Note and associated  
documents he obtained from MFL and his parents, which he  
says reflected what Bogomil had agreed to, drafted and  
delivered to Bogomil at the same time when his parents and  
MFL signed the documents.  
his demand to MFL for payment of the full amount under the  
Promissory Note, when it was clear that the full amount was not  
due as by his own testimony monies had been paid significant  
amounts by MFL.  
Govorcin Fisheries Ltd. v. Medanic Fisheries Ltd. et al.  
Page 49  
(m) his testimony that he made a demand letter under the  
Promissory Note as a director of MFL, not personally. I found it  
incredible to think that MFL would cause itself to trigger an  
obligation on itself to pay Denis Medanic $1.5 million plus  
the surreptitious methods he used to divert the payments of  
Joint Venture monies; and the controlled manner of payouts to  
the Joint Venture through Bly Industries which created the  
impression that business was normal.  
[167] More specific to the existence of the Alleged Management Fee Agreement  
with Bogomil Govorcin, Denis Medanic’s evidence was unpersuasive based on:  
the overall improbability of Bogomil Govorcin, given his  
substantial investment in the Joint Venture, his involvement in  
the fishing operations, his administrative responsibilities, and  
business experience, agreeing to an unwritten open-ended  
arrangement with no specifications as to amounts, terms,  
reporting or accounting as to how and what Denis Medanic  
would be entitled to take as compensation. Particularly, on  
Denis Medanic’s testimony, that triggering the Promissory Note  
for $1.5 million at the time it was entered into would have  
bankrupted MFL, which in my view would have had a similar  
effect upon GFL and entitled Denis to take GFL’s assets to  
satisfy the debt. The one-sided method of arriving at the  
$105,128 annual fee adds to the improbability. Bogomil was an  
experienced business person. The subject agreement is  
entirely inconsistent with good business sense which he no  
doubt had.  
The absence of documentation of the asserted agreements;  
with GFL and/or Bogomil Govorcin despite Denis arranging for a  
lawyer to draft a detailed set of agreements to document his  
Govorcin Fisheries Ltd. v. Medanic Fisheries Ltd. et al.  
Page 50  
entitlement to compensation for his efforts from MFL and his  
parents. I find it incredible that having instructed a solicitor to  
draft the Promissory Note and associated documents mentioned  
earlier for MFL and his parents that he did not have such  
documents drafted (adjusted for GFL and Bogomil Govorcin as  
parties) at the same time. This would have been a simple  
exercise. The argument that hand shake deals are the norm in  
the fishing industry does nothing to further Denis’ position. The  
“hand shake” deals are in reference to transactions involving  
fish prices, quota leases, and licence leases; not management  
fees related to running a fishing enterprise and certainly not to  
terms that would have caused Bogomil to lose his company to  
Denis Medanic. I find his reliance on learning that Bogomil  
Govorcin was ill so he did not communicate the terms to be a  
convenient rationalization as opposed to the truth. He provided  
no evidence as when he learned of Bogomil’s poor health or the  
extent of the illness. Regardless, my sense of Denis Medanic is  
that his stated need for compensation from GFL would have  
propelled him to find a way to confirm his agreement with  
Bogomil through some type of communication to GFL.  
Furthering my lack of confidence in the testimony of Denis  
Medanic is the absence of any communication or discussion  
after Bogomil’s death with GFL or Robert Govorcin of the  
existence of the Alleged Management Fee Agreement. The  
evidence clearly establishes that Denis and Robert would have  
discussions about the business and specifically talked about  
taking draws from the Joint Venture. Denis never raised the  
topic that he had an agreement for the payment of management  
The absence of independent corroboration of such an  
Govorcin Fisheries Ltd. v. Medanic Fisheries Ltd. et al.  
Page 51  
His lack of knowledge or any record keeping related to monies  
he was owed from the alleged agreement reflecting what he had  
taken or the balance owed.  
His astonishing assertion that he did not have to account to GFL  
for the management fees he says he was entitled to and took.  
The method of having lessees of quota and licence transfers  
originally held by the Joint Venture make their payments to third  
parties such as Bly Industries, Sea Kiss Fisheries, Denis’ sons,  
and Denis’ personal companies;  
The method of having Bly Industries receive and hold monies  
from lessees when there was no need for settlement services as  
the Joint Venture vessels were no longer operating and thus no  
crews, nor expenses, needed to be paid out.  
His agreement to allow Mr. Pastor of Bly Industries to invest the  
monies he held and to keep the interest that accrued.  
His controlled payout of monies from Bly Industries to the Joint  
Venture which maintained a regular level of revenues and a  
sense that everything was normal.  
His actions of paying himself and his son’s directly from  
revenues owed to Neekis, was not consistent with his claim or  
recording of other expenses paid out of Neekis, like when the  
boat went aground, both Robert and Denis got paid for their  
time out of the Neekis Partnership.  
No where did Denis document the monies he diverted were for  
management fees. He did not invoice the Joint Venture; he did  
not report paying GST; and he did not report it in his income tax  
Govorcin Fisheries Ltd. v. Medanic Fisheries Ltd. et al.  
Page 52  
[168] Based on the most favourable view of Denis Medanic’s evidence (which I do  
not accept), the discussion he had with Bogomil Govorcin at best was that there was  
some form of commitment that Bogomil would look at whatever came up between  
Denis and his father Tomislav. This however, could not be construed in any way as  
an agreement or licence to divert monies as he did.  
[169] Based on all of the foregoing, I conclude that the Alleged Management Fee  
Agreement did not exist. Its assertion is a concoction to provide cover for the  
intentional wrongful diversion of monies and use of Joint Venture assets.  
[170] The defence raised issues regarding the credibility of Robert Govorcin;  
however, the instances referred to do not diminish the effects of Denis Medanic’s  
actions. While Robert’s testimony was somewhat variable in certain instances, I  
found him generally credible and was justified in believing GFL had been wronged.  
The defence pointed to instances where it could be said Robert was more involved  
than he testified, my view is that he was clearly dependent on the information or the  
lack of it from Denis. He justifiably relied on the management role held by Denis  
[171] I will now address the question of liability.  
Did a fiduciary duty arise?  
[172] The plaintiff submits that in the context of the Joint Venture the participants  
owed fiduciary obligations to the other when dealing with the property or enterprise  
of the joint venture. The key cases relied upon are: 0731431 B.C. Ltd. v. Panorama  
Parkview Homes Ltd., 2021 BCSC 607; Hodgkinson v. Simms, [1994] 3 S.C.R. 377,  
97 B.C.L.R (2d) 1and Wonsch Construction Company Ltd. v. National Bank of  
Canada, (1990) 75 D.L.R. (4th) 732 (Ont. C.A.), 1 O.R. (3d) 382.  
[173] The defendants deny the existence of a fiduciary relationship and argue that  
such a relationship rarely arises between arm’s length commercial parties. It is  
submitted that there was no vulnerability present. With respect to misplaced trust or  
confidence by a party in a business arrangement, it is submitted that this does not  
lead to a fiduciary relationship relying upon Dyck v. Roulston (1997), 36 B.C.L.R.  
Govorcin Fisheries Ltd. v. Medanic Fisheries Ltd. et al.  
Page 53  
(3d) 126 (C.A.), 32 B.L.R. (2d) 221, which cites the High Court of Australia case of  
Hospital Products Ltd. v. United States Surgical Corporation (1984), 55 A.L.R. 417 at  
A fiduciary relationship does not arise where, because one of the parties to a  
relationship has wrongly assessed the trustworthiness of another, he has  
reposed confidence in him which he would not have done had he known the  
true intentions of that other. In ordinary business affairs persons who have  
dealings with one another frequently have confidence in each other and  
sometimes that confidence is misplaced. That does not make the  
relationship a fiduciary one: see Lloyds Bank v. Bundy, supra, at p 341. A  
fiduciary relationship exists where one party is in a position or reliance upon  
the other because of the nature of the relationship and not because of a  
wrong assessment of character or reliability. That is to say, the relationship  
must be of a kind which of its nature requires one party to place reliance upon  
the other; it is not sufficient that he in fact does so in the particular  
[174] The defendants on the topic of trust and confidence further rely upon Jasmur  
Holdings Ltd. v. Taynton Developments Inc., 2016 BCSC 1902 at para. 141.  
[175] While the facts here do not establish a partnership, there was a relationship  
between the two entities which approximated it. As I have mentioned, there is the  
name under which the Joint Venture conducted its business and their bank account:  
the Neekis Partnership. The accountant of MFL and GFL described the business as  
a joint venture and this characterization is reflected in all of the financial statements  
of MFL and GFL. Their income tax returns also stated the business as a joint  
venture. The evidence of Mr. Thurgood established that this description arose from  
a consideration of the factors typically employed for a joint venture. I infer the GFL  
and MFL were informed of and accepted this characterization.  
[176] The existence of a joint venture does not necessarily give rise to fiduciary  
duties. For example see: Blue Line Hockey Acquisition Co., Inc. v. Orca Bay  
Hockey Limited Partnership, 2008 BCSC 27, aff’d 2009 BCCA 34. However, in this  
case, I find that such duties arose. I do so on the bases that:  
there was a close relationship between GFL and MFL as I  
described earlier as being close to a partnership; and between  
the principals;  
Govorcin Fisheries Ltd. v. Medanic Fisheries Ltd. et al.  
Page 54  
the joint venture had divided responsibilities between the  
principals. MFL’s responsibilities included the management of  
the vessels, licences and quotas. Denis willingly assumed the  
responsibilities. There was clearly a reasonable expectation  
that Denis Medanic would exercise his responsibilities in good  
faith and loyalty toward the common interest in the Joint  
that Denis had broad discretion to manage the assets and  
operations of the Joint Venture, which included the interest of  
the plaintiff. Given the testimony of Denis Medanic as to his  
authority and broad discretion to deal with the vessels, licences  
and quota, and revenues in the context of his management  
responsibilities, it can hardly be disputed that he had broad  
discretion. See also the defendants’ admission in the Notice to  
Admit in this regard. Importantly, the plaintiff relied upon Denis  
Medanic to carry out his responsibilities to manage the assets  
and operations in a clear and transparent way. This was not  
simply the bare belief and trust by GFL in Denis as a person.  
in addition to Denis’ role as manager, there was a clear  
asymmetry of knowledge of the operations of the Joint Venture  
in favour of Denis Medanic over Robert as a result of the  
division of responsibilities. Robert trusted Denis and had  
confidence in him. Denis was relied upon to carry out his  
responsibilities in an open and transparent manner.  
that Denis convinced Robert to transfer quota and the K licence  
to other vessels, with the result that DFO did not recognize  
Robert as an owner of the licence and/or quota and could not  
obtain information from DFO officials regarding the quota and  
licences. Thus, rendering GFL vulnerable.