Grewal et al. v. Sandhu et al., 2012 BCCA 26

• Judge: Levine, Lowry and Tysoe, JJ.A.
• Court: Court of Appeal (British Columbia)
• Case Date: January 19, 2012
• Jurisdiction: British Columbia
• Citations: 2012 BCCA 26;(2012), 315 B.C.A.C. 170 (CA)

Grewal v. Sandhu (2012), 315 B.C.A.C. 170 (CA);

    535 W.A.C. 170

MLB headnote and full text

Temp. Cite: [2012] B.C.A.C. TBEd. JA.041

Agyapal Singh Grewal (appellant/respondent by cross-appeal/plaintiff) v. Jatinder Singh Sandhu and 676207 B.C. Ltd. (respondents/appellants by cross-appeal/defendants) and Royal Lepage Westgard Realty Ltd., Lakhvir Kaur Gill and Jaswinder Dhaliwal (respondents/defendants) and Kuldip Kaur Grewal and South-Slope Enterprises Ltd. (respondents/plaintiffs)

(CA038665; 2012 BCCA 26)

Indexed As: Grewal et al. v. Sandhu et al.

British Columbia Court of Appeal

Levine, Lowry and Tysoe, JJ.A.

January 19, 2012.

Summary:

Sandhu was a psychiatrist. Grewal worked in farming and then land excavation. They were friends. Sandhu commenced treating Grewal for clinical depression in March 2002. He discontinued the treatment in December 2004. During that time they participated in two real estate transactions which concluded in June 2005. Grewal immediately brought an action against Sandhu and others alleging, inter alia, that Sandhu had cheated him financially in a manner that seriously impaired his mental and emotional health.

The British Columbia Supreme Court, in a decision reported at [2010] B.C.T.C. Uned. 1627, awarded damages for breach of trust respecting the first transaction (farm property), and damages as well as a registrar's reference to assess further damages, essentially for breach of contract, respecting the second transaction (subdivision property). The court also awarded general damages based on breach of fiduciary duty. The court declined to award punitive damages, but ordered Sandhu to pay special costs of the action. Grewal appealed and Sandhu et al. cross-appealed parts of the decision.

The British Columbia Court of Appeal dismissed the appeal and allowed the cross-appeal.

Editor's Note: Other decisions in this proceeding can be found at [2011] B.C.T.C. Uned. 726 and [2011] B.C.T.C. Uned. 1184.

Damages - Topic 1309

Exemplary or punitive damages - Breach of trust - Sandhu was a psychiatrist - Grewal worked in farming and then land excavation - They were friends - Sandhu commenced treating Grewal for clinical depression in March 2002 - He discontinued the treatment in December 2004 - During that time they participated in two real estate transactions which concluded in June 2005 - Grewal immediately brought an action against Sandhu and others alleging, inter alia, that Sandhu had cheated him financially in a manner that seriously impaired his mental and emotional health - Respecting the first transaction, the trial judge awarded, inter alia, damages for breach of trust and $125,000 general damages for breach of fiduciary duty - Grewal appealed, arguing, inter alia, that the general damages award should have been much larger - Sandhu cross-appealed, maintaining that there was no legal basis for the award at all - The British Columbia Court of Appeal dismissed the appeal and allowed the cross-appeal - There was no basis for the $125,000 award for breach of fiduciary duty as a compensatory award in equity - Nor could the $125,000 award be upheld as an award of punitive damages for breach of trust - Sandhu's sale of the property was not purposefully repugnant to Grewal's interests - Sandhu appeared to have sold the property (and financed the sale), after it had been listed for some months, not to injure Grewal, but to be rid of an investment that had not gone well at a time when his relationship with Grewal had become adversarial - It would indeed be an exceptional case of a breach of a trust obligation such as occurred here that would warrant a punitive remedy - This was clearly not the case - Further, the trial judge did not err in not awarding punitive damages per se - Sandhu may have been guilty of professional misconduct in having entered into a business relationship with his friend while he was treating his depression, but that was a matter for the consideration of the association by which his profession was governed - See paragraphs 96 to 101.

Damages - Topic 1309.1

Exemplary or punitive damages - Breach of confidence or fiduciary duty - [See Damages - Topic 1309 and Damages - Topic 4001 ].

Damages - Topic 4001

Damages - Interference with economic relations - Breach of fiduciary or confidential relationship - General - Sandhu was a psychiatrist - Grewal worked in farming and then land excavation - They were friends - Sandhu commenced treating Grewal for clinical depression in March 2002 - He discontinued the treatment in December 2004 - During that time they participated in two real estate transactions which concluded in June 2005 - Grewal immediately brought an action against Sandhu and others alleging, inter alia, that Sandhu had cheated him financially in a manner that seriously impaired his mental and emotional health - Respecting the first transaction, the trial judge awarded, inter alia, damages for breach of trust and $125,000 general damages for breach of fiduciary duty - Grewal appealed, arguing, inter alia, that the general damages award should have been much larger - Sandhu cross-appealed, maintaining, inter alia, that there was no legal basis for the award at all - The British Columbia Court of Appeal dismissed the appeal and allowed the cross-appeal - In accepting Grewal as his patient, Sandhu pledged himself to act in Grewal's best interests and undertook a duty of loyalty, good faith and avoidance of conflicting interests - Theirs was a trust relationship obliging the doctor to exercise the power a psychiatrist held over his patient solely for the patient's benefit - That did not mean Sandhu assumed any responsibility for giving Grewal financial advice - He was his psychiatrist and owed the duty of a psychiatrist to his patient - Grewal was entitled to an equitable remedy for a breach of Sandhu's fiduciary duty that, on a common sense view, caused Grewal to suffer a loss regardless of whether it was foreseeable - The applicable equitable remedy would not be damages but compensation, although the distinction was slight - Whether compensation in equity should be awarded where damages as a common law remedy could be awarded appeared to be a matter of whether the policy objectives of the two kinds of awards were the same - Where they were, an additional award was not warranted - Equitable compensation to punish deserving conduct could, where warranted, be awarded on the same basis as the common law remedy of punitive damages - Where such compensation was awarded in equity a further award of common law punitive damages could not be made - Here, there was no conflict of interest during the therapeutic relationship; the interests of the psychiatrist and his patient were the same - Both wanted to see Grewal properly treated for his depression and both wanted each other to benefit financially from the transactions - There might have been a potential for conflict as was not unusual in financial dealings, and that might reflect adversely on Sandhu's professional responsibilities in entering into the transactions, but no actual conflict arose until months after the therapeutic relationship had been discontinued - Further, the judge identified no wrongful exercise of whatever power Sandhu might have derived from the therapeutic relationship over Grewal respecting either transaction - There was no misrepresentation and nothing untoward about the transactions that would suggest any sinister motivation on Sandhu's part in entering into them - Grewal did not testify to placing greater reliance on his friend because he was his doctor - On its face, this case appeared to have little to do with the doctor-patient relationship and everything to do with a commercial dispute between friends that arose months after the therapeutic relationship had ended - Sandhu did not breach the fiduciary duty he owed Grewal by using their therapeutic relationship in any way that caused Grewal's loss - Thus, no compensatory award in equity could be justified on that basis - See paragraphs 56 to 95.

Fraud and Misrepresentation - Topic 4086

Practice - Pleadings - Fraud - Sandhu and Grewal participated in two real estate transactions which concluded in June 2005 - Grewal immediately brought an action against Sandhu et al., alleging, inter alia, that Sandhu had cheated him financially - The trial judge awarded damages for, inter alia, breach of trust respecting the first transaction on the basis that Sandhu had held Grewal's interest in the property in trust and, unknown to Grewal, had sold it for less than its market value - On appeal, Grewal submitted, inter alia, that the judge erred in dismissing his action for fraud against Ms. Gill who had purchased the property from Sandhu - Grewal contended that the judge misunderstood the case against Ms. Gill - He submitted that it was not a question of imputing her husband's knowledge to her, because her husband had actually purchased the property from Sandhu or he and his wife purchased it together; in any event, it was Mr. Gill who committed the fraud - The British Columbia Court of Appeal held that the case against Ms. Gill was properly dismissed - The case that Grewal sought to advance was simply not pleaded - An allegation of fraud had to be scrupulously pleaded and fully particularized - All of the material facts of the alleged fraud had to be pleaded - There was no reference to Mr. Gill at all in Grewal's pleaded allegation against Ms. Gill - Ms. Gill represented herself at the trial which made the pleaded case against her particularly important - She was entitled to the clearest statement of the case she had to meet - Had the case which Grewal argued been pleaded, Mr. Gill might well have testified - See paragraphs 17 to 19.

Medicine - Topic 2021

Discipline for professional misconduct - Professional misconduct or conduct unbecoming a member - General - [See Damages - Topic 1309 and Damages - Topic 4001 ].

Practice - Topic 1335

Pleadings - The issues - Issues to be raised must be pleaded (incl. time for) - [See Fraud and Misrepresentation - Topic 4086 ].

Practice - Topic 1956

Pleadings - Particulars - Particulars in specific proceedings - Fraud and misrepresentation - [See Fraud and Misrepresentation - Topic 4086 ].

Practice - Topic 7109.1

Costs - Party and party costs - Special orders - Increased costs (based on solicitor and client or special costs) - Sandhu and Grewal participated in two real estate transactions which concluded in June 2005 - Grewal immediately brought an action against Sandhu et al., alleging, inter alia, that Sandhu had cheated him financially - The trial judge awarded damages for breach of trust respecting the first transaction on the basis that Sandhu had held Grewal's interest in the property in trust and, unknown to Grewal, had sold it for less than its market value, and damages as well as a registrar's reference to assess further damages, essentially for breach of contract, respecting the second transaction - The court also awarded $125,000 general damages based on breach of fiduciary duty - The court declined to award punitive damages, but ordered Sandhu to pay special costs of the action - Grewal appealed and Sandhu et al. cross-appealed certain aspects of the decision - The British Columbia Court of Appeal dismissed the appeal and allowed the cross-appeal - The court ordered, inter alia, that while Sandhu should bear Grewal's costs of the action to the end of the trial, they should be taxed as party and party costs - The court stated that "Special costs are not compensatory; they are punitive. They are awarded to address conduct in the course of litigation that is reprehensible such as to be deserving of censure and rebuke ... There is authority for awarding special costs based on pre-action conduct, but that is seldom done, and I consider it now clear this is not a case to make an award of costs on that basis." - The trial judge considered that Sandhu's conduct in the litigation showed a lack of candour and efforts to conceal evidence, but Sandhu already had two awards of special costs imposed on him respecting his pretrial conduct - Grewal contended that the judge was entitled to take into account instances where he found Sandhu's credibility impaired having regard for his testimony on discovery and at trial, but special costs were not awarded based on the acceptance or rejection of testimony - Otherwise, instead of being an extraordinary measure, special costs could be imposed whenever credibility was in issue - See paragraphs 102 to 108.

Practice - Topic 8800

Appeals - General principles - Duty of appellate court regarding findings of fact - Sandhu and Grewal participated in two real estate transactions which concluded in June 2005 - Grewal immediately brought an action against Sandhu et al., alleging, inter alia, that Sandhu had cheated him financially - The trial judge awarded damages for breach of trust respecting the first transaction (farm property), and damages as well as a registrar's reference to assess further damages, essentially for breach of contract, respecting the second transaction (subdivision property) - Grewal appealed - Sandhu cross-appealed, contending that the evidence did not support the judge's findings concerning the agreements that were made respecting the subdivision property - The British Columbia Court of Appeal allowed the cross-appeal and ordered a new trial respecting the subdivision property - The judge misapprehended the only two aspects of the evidence upon which he said his conclusion was based - A new trial was required where there was a clear conflict in credibility on a fundamental issue which the appeal court was not in a position to resolve - Further, it was the judge's view that there was insufficient evidence adduced at trial to prove the damages claimed, such that a reference was ordered - See paragraphs 20 to 55.

Practice - Topic 9224

Appeals - New trials - Grounds - General - [See Practice - Topic 8800 ].

Trusts - Topic 6155

The trustee - Breach of trust - Remedies - Damages - Sandhu and Grewal participated in two real estate transactions which concluded in June 2005 - Grewal immediately brought an action against Sandhu et al., alleging, inter alia, that Sandhu had cheated him financially - The trial judge awarded damages for, inter alia, breach of trust respecting the first transaction on the basis that Sandhu had held Grewal's interest in the property in trust and, unknown to Grewal, had sold it for less than its market value - On appeal, Grewal submitted, inter alia, that the judge erred in assessing his loss on the basis of the property's value at the time of sale instead of the judgment date - The British Columbia Court of Appeal rejected the submission where Grewal wanted the property sold - Sandhu's breach of the trust agreement was not in disposing of the property but in failing to obtain what the judge found was the amount for which it ought to have been sold in June 2005 - See paragraphs 15 and 16.

Trusts - Topic 6155

The trustee - Breach of trust - Remedies - Damages - The British Columbia Court of Appeal stated that "... where a trustee wrongfully withholds or disposes of a beneficiary's proprietary interest, it is clear on the authority cited the beneficiary is entitled to damages for the appreciation of the interest, which will normally be from the date of the breach to judgment." - See paragraph 16.

Trusts - Topic 6155

The trustee - Breach of trust - Remedies - Damages - [See Damages - Topic 4001 ].

Cases Noticed:

Guerin v. Canada, [1984] 2 S.C.R. 335; 55 N.R. 161; 59 B.C.L.R. 301, refd to. [para. 15].

Ruwenzori Enterprises Ltd. et al. v. Walji et al. (2006), 231 B.C.A.C. 166; 381 W.A.C. 166; 274 D.L.R.(4th) 696; 2006 BCCA 448, refd to. [para. 15].

Kostiuk (Bankrupt), Re (2002), 170 B.C.A.C. 215; 279 W.A.C. 215; 215 D.L.R.(4th) 78; 2002 BCCA 410, refd to. [para. 15].

Chudy v. Merchant Law Group et al. (2008), 262 B.C.A.C. 210; 441 W.A.C. 210; 300 D.L.R.(4th) 56; 2008 BCCA 484, refd to. [para. 19].

Housen v. Nikolaisen et al., [2002] 2 S.C.R. 235; 286 N.R. 1; 219 Sask.R. 1; 272 W.A.C. 1; 2002 SCC 33, refd to. [para. 53].

Basic v. Strata Plan LMS 0304, Owners, [2011] B.C.A.C. Uned. 81; 2011 BCCA 231, refd to. [para. 53].

Heyes (Susan) Inc. v. Vancouver (City) et al. (2011), 301 B.C.A.C. 210; 510 W.A.C. 210; 329 D.L.R.(4th) 92; 2011 BCCA 77, refd to. [para. 53].

Burdett v. Eidse et al. (2011), 305 B.C.A.C. 94; 515 W.A.C. 94; 334 D.L.R.(4th) 130; 2011 BCCA 191, refd to. [para. 53].

Fisher v. Fisher et al. (2009), 280 B.C.A.C. 293; 474 W.A.C. 293; 4 B.C.L.R.(5th) 4; 2009 BCCA 567, refd to. [para. 53].

Norberg v. Wynrib, [1992] 2 S.C.R. 226; 138 N.R. 81; 9 B.C.A.C. 1; 19 W.A.C. 1; 68 B.C.L.R.(2d) 29, dist. [para. 57].

Perez v. Galambos et al., [2009] 3 S.C.R. 247; 394 N.R. 209; 276 B.C.A.C. 272; 468 W.A.C. 272; 2009 SCC 48, refd to. [para. 57].

Todosichuk v. Daviduik, [2008] Man.R.(2d) Uned. 68; 247 D.L.R.(4th) 715 (Q.B.), leave to appeal denied (2005), 348 N.R. 199 (S.C.C.), refd to. [para. 71].

Martin v. Goldfarb et al. (1998), 112 O.A.C. 138; 41 O.R.(3d) 161 (C.A.), refd to. [para. 81].

Canson Enterprises Ltd. et al. v. Boughton & Co. et al., [1991] 3 S.C.R. 534; 131 N.R. 321; 6 B.C.A.C. 1; 13 W.A.C. 1, refd to. [para. 83].

K.M. v. H.M., [1992] 3 S.C.R. 6; 142 N.R. 321; 57 O.A.C. 321, refd to. [para. 84].

M.L.H. v. R.G.R. et al. (2007), 231 O.A.C. 136; 88 O.R.(3d) 1; 2007 ONCA 804, refd to. [para. 84].

J.R.I.G. v. Tyhurst., [2001] B.C.T.C. 369; 2001 BCSC 369, affd. (2003), 181 B.C.A.C. 227; 298 W.A.C. 227; 13 B.C.L.R.(4th) 81; 2003 BCCA 224, dist. [para. 93].

Freeman v. Perlman (1999), 118 B.C.A.C. 116; 192 W.A.C. 116; 169 D.L.R.(4th) 133; 1999 BCCA 40, refd to. [para. 93].

Whiten v. Pilot Insurance Co. et al., [2002] 1 S.C.R. 595; 283 N.R. 1; 156 O.A.C. 201; 2002 SCC 18, refd to. [para. 101].

Leung v. Leung (1993), 77 B.C.L.R.(2d) 314 (S.C.), refd to. [para. 106].

Authors and Works Noticed:

Canadian Medical Association Code of Ethics, Annotated for Psychiatrists (1996), generally [para. 58].

Ellis, Mark Vincent, Fiduciary Duties in Canada (1988), generally [para. 85].

Counsel:

D. Lunny and J.A. Dawson, for the appellant;

D.G. Cowper, Q.C., for the respondents, Jatinder Singh Sandhu and 676207 B.C. Ltd.;

H.S. Nirwan, for the respondent, Lakhvir Kaur Gill.

This appeal was heard on October 13 and 14, 2011, at Vancouver, B.C., by Levine, Lowry and Tysoe, JJ.A., of the British Columbia Court of Appeal. Lowry, J.A., delivered the following decision for the court on January 19, 2012.