Louie (H.Y.) Co. v. Bowick, 2015 BCCA 256

• Judge: Newbury, Chiasson and Frankel, JJ.A.
• Court: Court of Appeal (British Columbia)
• Case Date: March 18, 2015
• Jurisdiction: British Columbia
• Citations: 2015 BCCA 256;(2015), 373 B.C.A.C. 159 (CA)

Louie Co. v. Bowick (2015), 373 B.C.A.C. 159 (CA);

    641 W.A.C. 159

MLB headnote and full text

Temp. Cite: [2015] B.C.A.C. TBEd. JN.029

H.Y. Louie Co. Limited (respondent/plaintiff) v. Lance Bowick doing business as Power Quest Batteries (appellant/defendant)

(CA41932; 2015 BCCA 256)

Indexed As: Louie (H.Y.) Co. v. Bowick

British Columbia Court of Appeal

Newbury, Chiasson and Frankel, JJ.A.

June 5, 2015.

Summary:

H.Y. Louie Co. commenced an action against Bowick, seeking damages for breach of contract. Two judgments were filed by consent in October 2012 and February 2013, for the payment of $342,819.20 and $368,539.53, respectively by Bowick to H.Y. Louie. The judgments were in respect of Bowick's indebtedness arising from H.Y. Louie's payment of certain invoices for goods and services that were to have been supplied to it by Bowick but were not. Bowick subsequently made an assignment into bankruptcy. H.Y. Louie applied for: 1. an order declaring that the stay of proceedings pursuant to s. 69.3(1) of the Bankruptcy and Insolvency Act (BIA) no longer operated in respect of H.Y. Louie; 2. an order authorizing H.Y. Louie to continue its action against Bowick, for the purpose of seeking the relief set out in the application; 3. an order declaring that the debt owed to H.Y. Louie by Bowick arising from the two judgments in the action would not be released by any discharge of Bowick from bankruptcy; 4. an arder granting leave to H.Y. Louie to take all enforcement remedies available to it to enforce the judgment debt during the bankruptcy; and 5. in the alternative, an order declaring that the issue of whether the judgment debt should be released from any discharge of Bowick from bankruptcy, and/or whether H.Y. Louie should be allowed to take any enforcement remedies available to it to enforce the judgment debt during the bankruptcy, be determined by summary trial. In its notice of application, H.Y. Louie alleged that the judgment debts had arisen as a result of Bowick's obtaining payment by false pretences, false representations, defalcation, embezzlement, and/or abuse of trust. It invoked ss. 69.3, 69.4 and 178 of the BIA.

The British Columbia Supreme Court, in a decision reported at [2014] B.C.T.C. Uned. 1097, lifted the stay of proceedings imposed by reason of Bowick's bankruptcy to allow H.Y. Louie to bring its application. The court granted a declaration that the judgments were "debts resulting from obtaining property or services by false pretences, as defined by s. 178(1)(e) of the BIA, and will not be released upon Mr. Bowick's discharge from bankruptcy." Bowick appealed.

The British Columbia Court of Appeal, Newbury, J.A., dissenting, allowed the appeal and set aside the declaration that the consent judgments "are debts or liabilities resulting from obtaining property or services by false pretences, and shall not be released upon [the appellant's] discharge from bankruptcy". Relevant to characterizing the consent judgments was merger, cause of action estoppel and abuse of process. Those concepts were not determinative in the context of this case, but they informed the analysis. The consent judgments had been granted on a claim of breach of contract. There was no pleading of fraud or allegation that property had been obtained by false pretences. The court stated, inter alia, "it is clear that when characterizing a judgment for the purposes of s. 178 of the BIA, a court may look to the pleadings and the circumstances that gave rise to the judgment. Where pleadings allege a specific cause of action to which a defendant consents to judgment, a court should be loath to characterize the judgment based on allegations not made and on facts not pleaded. This is particularly so when no evidence to the contrary is presented to the court and doubly so when, as in the present case, evidence to the contrary would not have been admissible on the pleadings before the court. When a creditor takes judgment, the cause of action arising from its claims is merged in the judgment. To determine whether s. 178 of the BIA applies, the court characterizes the judgment. It does so based on the pleadings and proceedings that resulted in the judgment. When they include a claim that property was obtained by false pretences, the judgment may be characterized as within s. 178. Where, as in the present case, such a claim was not advanced and is not otherwise supported by the prior proceedings, the judgment is not within s. 178."

Bankruptcy - Topic 8987

Discharge of debtor - Liabilities not released by discharge - Act of fraud of debtor - See paragraphs 56 to 89.

Bankruptcy - Topic 8995

Discharge of debtor - Liabilities not released by discharge - Practice - See paragraphs 56 to 89.

Courts - Topic 2015

Jurisdiction - General principles - Controlling abuse of its process - See paragraphs 62 to 72.

Equity - Topic 5006

Merger - General - Application of doctrine - See paragraphs 62 to 72 and 88.

Equity - Topic 5041

Merger - Judgments - General - See paragraphs 62 to 72 and 88.

Estoppel - Topic 379

Estoppel by record (res judicata) - Res judicata as a bar to subsequent proceedings - Cause of action - See paragraphs 62 to 72.

Cases Noticed:

Valastiak v. Valastiak (2010), 283 B.C.A.C. 204; 480 W.A.C. 204; 2010 BCCA 71, refd to. [paras. 13, 82].

Winfield v. Lomas, [2008] B.C.T.C. Uned. E68; 2008 BCSC 1636, refd to. [para. 13].

Toronto-Dominion Bank v. Cushing, [2007] B.C.T.C. Uned. F83; 37 C.B.R.(5th) 60; 2007 BCSC 1581, refd to. [para. 15].

Robson (Bankrupt), Re, [2009] B.C.T.C. Uned. 1392; 2009 BCSC 1392 (Master), refd to. [para. 15].

Berger (Bankrupt), Re, [2010] O.T.C. Uned. 4376; 2010 ONSC 4376 (Reg.), refd to. [para. 15].

Beneficial Finance v. Durward (1961), 2 C.B.R.(N.S.) 173 (Ont. Div. Ct.), refd to. [para. 21].

Hughes et al. v. Graves (2001), 194 N.S.R.(2d) 51; 606 A.P.R. 51; 2001 NSSC 68, refd to. [para. 21].

McArthur (Bankrupt), Re (2000), 185 N.S.R.(2d) 96; 575 A.P.R. 96 (S.C. Registrar), refd to. [para. 21].

Bissonette (Bankrupt), Re, [2006] O.T.C. 1106 (Sup. Ct.), refd to. [para. 22].

Mann (Bankrupt), Re, [2003] B.C.T.C. Uned. 837; 2003 BCSC 1829 (Reg.), refd to. [para. 22].

Toronto (City) v. Canadian Union of Public Employees, Local 79 et al., [2003] 3 S.C.R. 77; 311 N.R. 201; 179 O.A.C. 291; 2003 SCC 63, refd to. [para. 25].

McIntosh v. Parent (1924), 55 O.L.R. 552, refd to. [paras. 26, 67].

Danyluk v. Ainsworth Technologies Inc. et al. (2001), 272 N.R. 1; 149 O.A.C. 1; 2001 SCC 44, refd to. [para. 26].

Skytal Ltd. v. Schiber (1997), 31 O.T.C. 389; 46 C.B.R.(3d) 275 (Gen. Div.), affd. (1999), 115 O.A.C. 197; 9 C.B.R.(4th) 129 (C.A.), refd to. [para. 29].

Phillips, Re (1994), 27 C.B.R.(3d) 126 (Alta. Q.B. Master), refd to. [paras. 30, 86].

Ip v. Insurance Corp. of British Columbia et al., [1994] B.C.T.C. Uned. 62; 89 B.C.L.R.(2d) 251 (S.C.), refd to. [para. 34].

Garcia v. Crestbrook Forest Industries Ltd. (No. 2) (1994), 45 B.C.A.C. 222; 72 W.A.C. 222; 9 B.C.L.R.(3d) 242 (C.A.), refd to. [para. 34].

Simone v. Daley et al. (1999), 118 O.A.C. 54; 43 O.R.(3d) 511 (C.A.), refd to. [paras. 39, 79].

Jerrard v. Peacock (1985), 61 A.R. 161; 37 Alta. L.R.(2d) 197; 57 C.B.R.(N.S.) 54 (Q.B. Master), refd to. [paras. 39, 80].

Martin v. Martin et al. (2005), 282 N.B.R.(2d) 61; 738 A.P.R. 61; 2005 NBCA 32, refd to. [paras. 40, 81].

Williams (F.) Logging Co. et al. v. Roethel et al. (1995), 58 B.C.A.C. 84; 96 W.A.C. 84; 32 C.B.R.(3d) 99 (C.A.), refd to. [paras. 42, 83].

Bourassa (Bankrupt), Re (2002), 312 A.R. 19; 281 W.A.C. 19; 2002 ABCA 205, refd to. [paras. 43, 85].

Demitor (Bankrupt), Re (1993), 137 A.R. 381 (Q.B. Bktcy.), refd to. [para. 43].

Gill (Bankrupt), Re, [2012] A.R. Uned. 182; 2012 ABQB 139, refd to. [para. 43].

McNabb (Bankrupt), Re (1995), 167 A.R. 209; 27 Alta. L.R.(3d) 420 (Q.B.), refd to. [para. 43].

Szeto (Bankrupt), Re, [2014] B.C.T.C. Uned. 1563; 2014 BCSC 1563, refd to. [para. 49].

Celanese Canada Inc. et al. v. Murray Demolition Corp. et al., [2010] O.T.C. Uned. A27 (Sup. Ct.), refd to. [para. 50].

Iroquois Falls Community Credit Union Ltd. v. Miljours, [2009] O.J. No. 169 (Sup. Ct.), refd to. [para. 50].

Wolverton Securities Ltd. v. Schemel - see Schemel (Bankrupt), Re.

Schemel (Bankrupt), Re, [2009] B.C.T.C. Uned. 1048; 2009 BCSC 1048, refd to. [para. 63].

Hislop et al. v. Canada (Attorney General), [2007] 1 S.C.R. 429; 358 N.R. 197; 222 O.A.C. 324; 2007 SCC 10, refd to. [para. 64].

Ladner v. Ladner (2004), 200 B.C.A.C. 298; 327 W.A.C. 298; 2004 BCCA 366, refd to. [para. 65].

Statutes Noticed:

Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, sect. 69.4, sect. 178(1)(d), sect. 178(1)(e) [para. 11].

Authors and Works Noticed:

Handley, K.R., The Doctrine of Res Judicata (3rd Ed. 1996), pp. 221 [para. 65]; 227 [para. 66].

Houlden, Lloyd W., Morawetz, Geoffrey B., and Sarra, Janis P., Bankruptcy and Insolvency Law in Canada (4th Ed. 2009) (Looseleaf), generally [para. 21]; pp. 6-230.2 [para. 41]; 6-232 [para. 13]; 6-248 [para. 29].

Houlden, Lloyd W., Morawetz, Geoffrey B., and Sarra, Janis P., The 2014 Annotated Bankruptcy and Insolvency Act, pp. 866 to 869, 881 [para. 23].

Lange, Donald J., The Doctrine of Res Judicata in Canada (3rd Ed. 2010), p. 27 [para. 27].

Sarna, Lazar, Law of Bankruptcy in Canada (2013) (Looseleaf), p. 9-57 [para. 41].

Counsel:

P.D. Le Dressay and T. Acton, for the appellant;

K. Siddall and S. Boucher, for the respondent.

This appeal was heard on March 18, 2015, at Vancouver, B.C., before Newbury, Chiasson and Frankel, JJ.A., of the British Columbia Court of Appeal. The judgment of the Court of Appeal was delivered on June 5, 2015, including the following opinions:

Newbury, J.A., dissenting - see paragraphs 1 to 54;

Chiasson, J.A. (Frankel, J.A., concurring) - see paragraphs 55 to 89.