Insurance Corp. of British Columbia v. Dragon Driving School Canada Ltd. et al., (2006) 234 B.C.A.C. 115 (CA)

• Judge: Rowles, Ryan and Mackenzie, JJ.A.
• Court: Court of Appeal (British Columbia)
• Case Date: April 25, 2006
• Jurisdiction: British Columbia
• Citations: (2006), 234 B.C.A.C. 115 (CA);2006 BCCA 584

ICBC v. Dragon Driving School (2006), 234 B.C.A.C. 115 (CA);

    387 W.A.C. 115

MLB headnote and full text

Temp. Cite: [2007] B.C.A.C. TBEd. JA.014

Insurance Corporation of British Columbia (appellant/plaintiff) v. Fung Kwan (Tammy) Lo, Foon-Wai (David) Chiu and Dragon Driving School Canada Ltd. (respondents/defendants) and Crispine Argana Diaz, also known as Crispina Argana Diaz, Zi Shan Guo, Li De Mai, Ze Yu Luo, Mao Hai Li, Mei Qiong Li, Xi Sen Lin, Bao Kang Huang, Yu Fei Zhang, Yi Liu, Jie Fang Cai, So Kum Chu, Yong Qiang Li, Zhuo Wen Li, Gui Qing Zhang, Yu Xiong Zhang, Yam Hau Chan, Qing Guang Zeng, Jian Ping Zeng (defendants)

(CA33177; 2006 BCCA 584)

Indexed As: Insurance Corp. of British Columbia v. Dragon Driving School Canada Ltd. et al.

British Columbia Court of Appeal

Rowles, Ryan and Mackenzie, JJ.A.

December 21, 2006.

Summary:

Chiu and his company, the driving school Dragon, collected funds from clients and paid a portion as a bribe to Diaz, a licence examiner with the Insurance Corporation of British Columbia (ICBC). In return, Diaz would arrange to have driving licences issued to Chiu's clients, without them being qualified to obtain them. After some of the clients were involved in at fault accidents for which ICBC had to provide compensation, ICBC sued Chiu, Dragon and Diaz for compensatory damages and, alternatively, for trust remedies, in respect of the monies obtained by the defendants. Lo, Chiu's common law wife, was added as a defendant. Chiu provided the money for a down payment for the purchase of a residence owned by him and Lo. ICBC contended that the funds received by Chiu were impressed with a trust and that it was entitled to accounting and tracing remedies allowing it to recover from Lo any of the funds that found their way into assets in her name.

The British Columbia Supreme Court, in a decision reported [2005] B.C.T.C. 1093, allowed the action against Chiu, Dragon and Diaz but dismissed it against Lo. The court rejected ICBC's argument that it was entitled to an equitable remedy by way of a constructive trust with respect to the funds Chiu received over and above what he paid to Diaz. The court held that there was no basis upon which equity could grant ICBC a proprietary or trust remedy that "would capture Mr. Chiu's profits" and that without "such a remedy, the plaintiff's claims to trace funds into the hands of Ms. Lo must fail". ICBC appealed.

The British Columbia Court of Appeal allowed the appeal.

Restitution - Topic 123

Unjust enrichment - Remedies - Constructive trust - Chiu and his company, the driving school Dragon, collected funds from clients and paid a portion as a bribe to Diaz, a licence examiner with the Insurance Corporation of British Columbia (ICBC) - In return, Diaz would arrange to have driving licences issued to Chiu's clients, without them being qualified to obtain them - After some of the clients were involved in at fault accidents for which ICBC had to provide compensation, ICBC sued Chiu, Dragon and Diaz for compensatory damages and, alternatively, for trust remedies, in respect of the monies obtained by the defendants - Chiu's common law wife, Lo, was later added as a defendant for a claim respecting the funds she received from Chiu to purchase a residence that they both owned - At issue was whether ICBC was entitled to a restitutionary remedy against Chiu for the monies he received over and above what was paid to Diaz - The British Columbia Court of Appeal held that it was - It would be inequitable for Chiu to retain his profits from the fraudulent scheme - Chiu's knowing participation in Diaz's breach of trust provided the foundation for the constructive trust remedies ICBC sought in relation to all the funds received by Chiu and Dragon - Also, the monies paid to Chiu as part of the bribery scheme provided a foundation for a claim in unjust enrichment against him.

Trusts - Topic 2308

Constructive trusts - General principles - Circumstances when imposed - [See Restitution - Topic 123 ].

Trusts - Topic 2344

Constructive trusts - Basis for imposition - Breach of confidence or fiduciary relationship - [See Restitution - Topic 123 ].

Trusts - Topic 2346

Constructive trusts - Basis for imposition - Unjust enrichment - [See Restitution - Topic 123 ].

Cases Noticed:

MacMillan Bloedel Ltd. v. Binstead (1983), 22 B.L.R. 255 (B.C.S.C.), consd. [para. 9].

Soulos v. Korkontzilas et al., [1997] 2 S.C.R. 217; 212 N.R. 1; 100 O.A.C. 241, consd. [para. 9].

Insurance Corp. of British Columbia v. Sanghera (1991), 55 B.C.L.R.(2d) 125 (C.A.), refd to. [para. 14].

Insurance Corp. of British Columbia v. Eurosport Auto Co. et al., [2004] B.C.T.C. 164; 8 C.C.L.I.(4th) 236; 2004 BCSC 164 (S.C.), refd to. [para. 14].

Hong Kong (Attorney General) v. Reid, [1994] 1 A.C. 324 (P.C.), consd. [para. 41].

Lister & Co. v. Stubbs (1890), 45 Ch. D. 1 (C.A.), refd to. [para. 42].

Grant v. Gold Exploration and Development Syndicate Ltd., [1900] 1 Q.B. 233 (C.A.), refd to. [para. 43].

Becker v. Pettkus, [1980] 2 S.C.R. 834; 34 N.R. 384, refd to. [para. 52].

Statutes Noticed:

Motor Vehicle Act, R.S.B.C. 1996, c. 318, sect. 25 [para. 3, Appendix].

Counsel:

B. Martyniuk and F. Potts, for the appellant;

W. Ryan, for the respondent, Lo;

Foon-Wai (David) Chiu, appearing for the respondents, Chiu and Dragon Driving School Canada Ltd.

This appeal was heard at Vancouver, B.C., on April 25, 2006, by Rowles, Ryan and Mackenzie, JJ.A., of the British Columbia Court of Appeal. The decision of the Court of Appeal was delivered by Rowles, J.A., at Vancouver, B.C., on December 21, 2006.