Randhawa v. 420413 B.C. Ltd. et al., 2009 BCCA 602

• Judge: Finch, C.J.B.C., Ryan and Chiasson, JJ.A.
• Court: Court of Appeal (British Columbia)
• Case Date: June 12, 2009
• Jurisdiction: British Columbia
• Citations: 2009 BCCA 602;(2009), 281 B.C.A.C. 125 (CA)

Randhawa v. 420413 B.C. (2009), 281 B.C.A.C. 125 (CA);

    475 W.A.C. 125

MLB headnote and full text

Temp. Cite: [2010] B.C.A.C. TBEd. JA.023

Jasvir Kaur Randhawa and Amrik Randhawa (appellants/plaintiffs/third party) v. 420413 B.C. Ltd., Central Valley Taxi Ltd., Central Valley Limousine Ltd., West Coast Limousines Incorporated, Tarsem Buttar, Nirbhai Dhat, Rajinder Kang, Avtar Sumra and Simerdeep Sumra (respondents/defendants)

(CA035541; 2009 BCCA 602)

Indexed As: Randhawa v. 420413 B.C. Ltd. et al.

British Columbia Court of Appeal

Finch, C.J.B.C., Ryan and Chiasson, JJ.A.

December 29, 2009.

Summary:

The plaintiff minority shareholder alleged that she was the victim of a dishonourable scheme perpetrated by the defendants (the other directors of a company and its manager) whereby they skimmed unreported cash from the company's taxi business. Several defendants admitted that they took cash from the taxi business but alleged that the plaintiff acted in concert with them and shared equally in those monies.

The British Columbia Supreme Court, in a decision reported at [2007] B.C.T.C. Uned. 838, dismissed the action. The court concluded that all the parties engaged in a fraudulent scheme to avoid paying income tax by taking unreported cash income from their taxi business. The court declined to award the parties costs ([2009] B.C.T.C. Uned. 3). The plaintiff and her husband appealed arguing that the judge erred in finding the plaintiff and her husband took cash in the absence of any evidence supporting such a conclusion and by applying the doctrine of ex turpi causa to deny compensation.

The British Columbia Court of Appeal dismissed the appeal.

Editor's Note: there are several prior cases involving these parties.

Actions - Topic 1704

Cause of action - Bars - Ex turpi causa non oritur actio - The plaintiff minority shareholder alleged that she was the victim of a dishonourable scheme perpetrated by the defendants (the other directors of a company and its manager) whereby they skimmed unreported cash from the company's taxi business - The trial judge concluded that all the parties engaged in a fraudulent scheme to avoid paying income tax by taking unreported cash income from their taxi business - She refused to award damages to the plaintiff based on the doctrine of ex turpi causa non oritur actio - The plaintiff and her husband appealed, arguing that the trial judge erred by applying the doctrine to deny compensation - They alleged that the doctrine was not pleaded or argued and that they did not participate in the illegal scheme for a period between 2002 and 2004 and were entitled to 20% of the company's assets which were distributed during that period - The British Columbia Court of Appeal rejected the arguments - It was not necessary to plead the doctrine - It was a question of law - It was necessary to plead the material facts to support the application of the doctrine - That was done here - It would have been preferable for the trial judge to have asked for submissions on the application of the doctrine, but the parties fully addressed the issue in appellate court - The post-2000 payments, like those made previously, were made in secrecy with the purpose of unlawfully avoiding taxation - The scheme that gave rise to the payments was illegal - It was originated and participated in by the appellants - They did not participate for a period of time after 2000 and wanted to do so now - The judge correctly refused to provide the assistance of the court to enable the appellants to participate in the illegal scheme - See paragraphs 66 to 83.

Courts - Topic 587

Judges - Duties - To decide according to evidence and pleadings - The plaintiff minority shareholder alleged that she was the victim of a dishonourable scheme perpetrated by the defendants (the other directors of a company and its manager) whereby they skimmed unreported cash from the company's taxi business - Several defendants admitted that they took cash from the taxi business but alleged that the plaintiff acted in concert with them and shared equally in those monies - The trial judge dismissed the action - She concluded that all the parties engaged in a fraudulent scheme to avoid paying income tax by taking unreported cash income from their taxi business - The plaintiff and her husband appealed, arguing that the trial judge erred in finding they took cash in the absence of any evidence supporting such a conclusion - They argued that the finding was conjecture and did not accord with the parties' direct evidence or positions advanced at trial - The British Columbia Court of Appeal rejected the argument - There was considerable evidence adduced concerning activities not related directly to the cash diversion scheme in issue - They were addressed by the judge under the heading "The Randhawas' personal and business affairs - a pattern of dishonesty and failing to disclose revenue" - The trial judge did not step outside of the pleadings and the case as developed by the parties to find liability - She was entitled to reach a determination of the likely conduct of the parties that did not accord with their direct evidence or positions advanced by them at trial - There was evidence upon which the trial judge could conclude that all of the parties were involved in "skimming cash" from the taxi business - See paragraphs 18 to 47 and 93 and 94.

Evidence - Topic 1257

Relevant facts - Relevance and materiality - Similar acts - To prove course of conduct - The plaintiff minority shareholder alleged that she was the victim of a dishonourable scheme perpetrated by the defendants (the other directors of a company and its manager) whereby they skimmed unreported cash from the company's taxi business - The trial judge dismissed the action - She concluded that all the parties engaged in a fraudulent scheme to avoid paying income tax by taking unreported cash income from their taxi business - There was considerable evidence adduced concerning activities not related directly to the cash diversion scheme in issue - They were addressed by the trial judge under the heading "The Randhawas' personal and business affairs - a pattern of dishonesty and failing to disclose revenue" - The plaintiff and her husband appealed, arguing that the trial judge erred by using similar fact evidence - The British Columbia Court of Appeal held that the trial judge did not impermissibly use the similar fact evidence - It bore on the issue of whether the appellants initiated the scheme - The question was not one of general propensity - It was: did they have a propensity of failing to report income? - The judge was obliged to decide whether the appellants participated in the scheme - The fact they had a pattern of concealing cash payments was relevant to that inquiry - See paragraphs 48 to 65.

Cases Noticed:

Foss v. Harbottle (1843), 2 Hare 461; 67 E.R. 189 (Ch.), refd to. [para. 16].

Walker v. Blades et al. (2007), 245 B.C.A.C. 284; 405 W.A.C. 284; 285 D.L.R.(4th) 35; 2007 BCCA 436, refd to. [para. 23].

Rodaro et al. v. Royal Bank of Canada et al. (2002), 157 O.A.C. 203; 59 O.R.(3d) 74 (C.A.), refd to. [para. 23].

R. v. Handy (J.), [2002] 2 S.C.R. 908; 290 N.R. 1; 160 O.A.C. 201; 2002 SCC 56, refd to. [para. 49].

R. v. C.R.B., [1990] 1 S.C.R. 717; 107 N.R. 241; 109 A.R. 81, refd to. [para. 51].

R. v. Arp (B.), [1998] 3 S.C.R. 339; 232 N.R. 317; 114 B.C.A.C. 1; 186 W.A.C. 1; 129 C.C.C.(3d) 321, refd to. [para. 53].

R. v. Shearing (I.), [2002] 3 S.C.R. 33; 290 N.R. 225; 168 B.C.A.C. 161; 275 W.A.C. 161; 2002 SCC 58, refd to. [para. 54].

Canada Cement LaFarge Ltd. et al. v. British Columbia Lightweight Aggregate Ltd. et al., [1983] 1 S.C.R. 452; 47 N.R. 191, refd to. [para. 66].

Hall v. Hebert, [1993] 2 S.C.R. 159; 152 N.R. 321; 26 B.C.A.C. 161; 44 W.A.C. 161, refd to. [para. 66].

X v. R.D.M., [2008] 1 S.C.R. 27; 370 N.R. 365; 250 B.C.A.C. 3; 416 W.A.C. 3; 2008 SCC 4, refd to. [para. 66].

Miller v. Decker, [1955] 4 D.L.R. 92 (B.C.C.A.), refd to. [para. 68].

Cooper (David) Investments Ltd. v. Bermuda Tavern Ltd. et al. (2001), 151 O.A.C. 378; 56 O.R.(3d) 243 (C.A.), refd to. [para. 68].

Iannone v. Hoogenraad (1992), 66 B.C.L.R.(2d) 106 (C.A.), refd to. [para. 68, footnote 1].

Bowmakers Ltd. v. Barnet Instruments Ltd., [1945] 1 K.B. 65 (C.A.), refd to. [para. 77].

Belvoir Finance Co. v. Stapleton, [1971] 1 Q.B. 210 (C.A.), refd to. [para. 77].

Tribe v. Soiseth et al., [2006] B.C.T.C. 652; 26 R.F.L.(6th) 28; 2006 BCSC 652, refd to. [para. 78].

Brazier v. Columbia Fishing Resort Group Corp. et al., [1997] B.C.T.C. Uned. 608; 33 B.C.L.R.(3d) 293 (S.C.), refd to. [para. 78].

MacDonald et al. v. Canada Kelp Co. et al., [1973] 5 W.W.R. 689; 39 D.L.R.(3d) 617 (B.C.C.A.), refd to. [para. 97].

Johnson v. Bugera - see Statton v. Johnson et al.

Statton v. Johnson et al. (1999), 120 B.C.A.C. 91; 196 W.A.C. 91; 64 B.C.L.R.(3d) 52; 1999 BCCA 170, refd to. [para. 97].

R. v. Hogan (1982), 2 C.C.C.(3d) 557 (Ont. C.A.), refd to. [para. 99].

R. v. S.G.G., [1997] 2 S.C.R. 716; 214 N.R. 161; 94 B.C.A.C. 81; 152 W.A.C. 81, refd to. [para. 100].

Authors and Works Noticed:

Law Society of Upper Canada, Special Lectures 2003: The Law of Evidence (2004), p. 401 [para. 56].

Schiff, Stanley, Evidence in the Litigation Process (1993), pp. 1161 to 1162 [para. 97].

Counsel:

B. Baynham, Q.C., and J. Sullivan, for the appellants;

R.H. Hamilton, Q.C., for the respondents.

This appeal was heard on June 12, 2009, before Finch, C.J.B.C., Ryan and Chiasson, JJ.A., of the British Columbia Court of Appeal. On December 29, 2009, the judgment of the Court of Appeal was delivered and the following judgments were filed:

Chiasson, J.A. (Finch, C.J.B.C., concurring) - see paragraphs 1 to 84;

Ryan, J.A. - see paragraphs 85 to 103.