Ambrozic v. Voodoo Enterprises Ltd., 2013 ABQB 148

Court of Queen ’ s Bench of Alberta Citation: Ambrozic v. Voodoo Enterprises Ltd., 2013 ABQB 148 Date: 20130311 Docket: 1101 09853 Registry: Calgary Between: Monyca Ambrozic Applicant - and - Voodoo Enterprises Ltd. Respondent _______________________________________________________ Memorandum of Decision of the Honourable Mr. Justice P. R. Jeffrey _______________________________________________________ [ 1 ] This application considers, among other things, whether the accounting process described in

section 17 of the Law of Property Act , is available to a party that is alleged to already have claimed for an accounting, in respect of the same trust property, in a law suit between the same parties. For the reasons that follow I grant the application for an accounting back to May 10, 1977 to be undertaken. Background

[ 2 ] Justice Wilkins of this Court (the “ trial judge ”) earlier declared that the Applicant, Monyca Ambrozic, was the beneficial owner of an undivided one third interest in three quarter sections of land on the periphery of Calgary (the “ Farmland ”) legally owned by the Respondent, Voodoo Enterprises Ltd.: Ambrozic v Burcevski , 2006 ABQB 4 , 394 AR 15 (“ Ambrozic Trial ”). Voodoo was one of the defendants in that action.

That decision was upheld on appeal: Ambrozic v Burcevski , 2008 ABCA 194 , 433 AR 25; leave to appeal to SCC refused, 32745 (November 20, 2008) (“ Ambrozic Appeal ”). [ 3 ] Burcevski and Voodoo then started a new action alleging that Ambrozic’s earlier litigation success resulted from her fraud, perjury and non-disclosure.

They applied, without success, to have that decision set aside: Burcevski v Ambrozic , 2010 ABQB 570 , 491 AR 245, aff’d 2011 ABCA 178 , 505 AR 359, leave to appeal to SCC refused, 34433 (December 8, 2011). [ 4 ] In her Amended Amended Statement of Claim (the “ Statement of Claim ”) to the original law suit, Ambrozic alleged (emphasis added): 40. ...

Alternatively, Ambrozic claims a beneficial interest of 50% in all property owned by Burcevski or Voodoo at the time of the divorce and a 50% interest in all profits earned from such property by virtue of a trust or equitable relationship, constructive or otherwise. [ 5 ] She also summarized the relief she was seeking at the end of her Statement of Claim: WHEREFORE AMBROZIC CLAIMS: ... (

i) An accounting by Burcevski and Voodoo of all profits earned from any property legally or beneficially owned by Burcevski during the marriage or thereafter, the purchase or acquisition of which can be traced to proceeds or profits arising from such property; (

j) An accounting by Burcevski of all profits earned from any property legally or beneficially owned by Burcevski, Ambrozic or Voodoo at the time of the divorce; (

k) Damages pursuant to such accounting; ... (

r) Such further and other relief as to this Honourable Court deems just. [ 6 ] The trial judge declared that Voodoo held title to the Farmland in favour of Ambrozic as to a one-third undivided interest but said nothing in respect of the claim for profits earned from that property or any accounting thereof: Ambrozic Trial at para 164. [ 7 ] Ambrozic has now applied pursuant to

Part 3 of the Law of Property Act , R.S.A. 2000, c. L-7 (the “ Act ”), for partition and sale of the Farmland plus an accounting and rendering to her of her share of the rents and profits generated from the Farmland. [ 8 ] Sections 15 and 17 of the Act state: Application for termination of co-ownership

15(1) A co-owner may apply to the Court for an order terminating the co-ownership of the interest in land in which the co-owner is a co-owner.

(2) On hearing an application under subsection (1), the Court shall make an order directing (

a) a physical division of all or part of the land between the co-owners, (

b) the sale of all or part of the interest of land and the distribution of the proceeds of the sale between the co-owners, or (

c) the sale of all or part of the interest of one or more of the co-owners’ interests in land to one or more of the other co-owners who are willing to purchase the interest.

(3) A sale under subsection (2)(

b) or (

c) and the distribution of the proceeds of the sale shall be under the direction of the Court.

(4) In making an order under subsection (2)(c), the Court shall fix the value of the land sold and the terms of the sale. ... Accounting, contribution and adjustment 17(1) In making an order, the Court may direct that (

a) an accounting, contribution and adjustment, or any one or more of them, take place in respect of the land, and (

b) compensation, if any, be paid for an unequal division of the land.

(2) In determining if an accounting, contribution or adjustment should take place or compensation be paid for an unequal division of the land, the Court shall, without limiting itself from considering any matter it considers relevant in making its determination, consider whether (

a) one co-owner has excluded another co-owner from the land; (

b) an occupying co-owner was tenant, bailiff or agent of another co-owner; (

c) a co-owner has received from third parties more than the co-owner’s just share of the rents from the land or profits from the reasonable removal of its natural resources; (

d) a co-owner has committed waste by an unreasonable use of the land; (

e) a co-owner has made improvements or capital payments that have increased the realizable value of the land;

(

f) a co-owner should be compensated for non-capital expenses in respect of the land; (

g) an occupying co-owner claiming non-capital expenses in respect of the land should be required to pay a fair occupation rent; (

h) a co-owner has at the time the application is made under this Part rights in the land for which the co owner would receive compensation under the Dower Act if an order had been made under that Act dispensing with that co owner’s consent to the disposition of that land. [ 9 ] The parties agreed to terminate the co-ownership and by judicial process list the Farmland for sale.

A Consent Order dated September 1, 2011, terminated the co-ownership and ordered the Farmland be listed for sale as three separate parcels, for $50,000,000 in total, and the net proceeds of sale paid into Court pending further order of the Court. [ 10 ] The parties also agreed to an accounting, but did not agree on the start date from which Voodoo would have to account. That issue was set over to be determined by way of this separate chambers application. [ 11 ] Ambrozic claims that Voodoo must account to her for profits since May 10, 1977.

The trial judge found that this was the date Voodoo first had an interest in any property; Burcevski rolled into Voodoo properties in which Ambrozic had an equitable interest. That receipt of trust property by Voodoo, the trial judge found, was with knowledge of the equitable interest of Ambrozic.

The trial judge traced Ambrozic’s interest in those properties, or proceeds of sale of those properties, to the Farmland, title of which still remained in Voodoo’s name at the time of trial. [ 12 ] Voodoo disagrees and says that the correct commencement date for any accounting is September 1, 2006, when the Judgment Roll was entered for the trial decision that declared the constructive trust in favour of Ambrozic.

That Judgment Roll was amended two years later, but only in respect of a correction of typographical error in a date and Voodoo no longer relies upon it as the operative date from which it must account [ 13 ] Voodoo said that September 1, 2006 is the operative date for the accounting, based upon its

interpretation of the trial judgment. Voodoo says that: 1) the Statement of Claim leading to that trial already claimed for the very same accounting; 2) the trial judge did not grant it; and therefore 3) any such cause of action merged into the judgment or is res judicata (claiming both issue estoppel and cause of action estoppel). It argued that Ambrozic is not permitted to claim again for something that she claimed at trial but was not awarded.

Finally, whether or not the reasserted claim is now barred, Voodoo says it would be unjust and inequitable to now grant an accounting of Ambrozic’s claim because of the probable lack of available information and because of the doctrine of laches. [ 14 ] Ambrozic interpreted the trial judgment as establishing the trust back on May 10, 1977, when Burcevski was converting to his own use her interest in their property.

She said further that the accounting claimed in her Statement of Claim is a different kind of accounting than she now applies for and therefore this current claim for an accounting remains available to her as a right of property ownership. [ 15 ] In her application Ambrozic asked that I not only find May 10, 1977, to be the appropriate start date for the accounting, but

that I also then fix the amount due to her from Voodoo for one-third of the profits, to be transferred to her from out of Voodoo’s two- third’s share of the net proceeds of sale of the Farmland. She submitted a calculation and explanation of the source of all input figures and estimates. She claimed as her one-third share the sum of $267,592.39 and seeks an order for that amount. [ 16 ] Voodoo said this is mere guesswork and that it would be inequitable, unfair, unjust and unreasonable to require Voodoo to account back that far into the past given the dated and fragmentary nature of any remnant records.

It stated: The conclusions that can be drawn from the fragments should not ultimately be a plausible fiction, but rather be realistically connected to supportable facts. [ 17 ] Voodoo said the passage of time and the existence of previous opportunities through pre-trial processes to discover any remaining records of the revenues and expenses associated with the Farmland renders this further initiative unjust and “Whatever the accounting exercise eventually becomes, ... it is increasingly unlikely to actually do justice between the parties.” Issues [ 18 ] Therefore, the issues before me are: i.

Did the trust start on May 10, 1977 or September 1, 2006? ii. If the trust started on May 10, 1977, do merger or res judicata bar Ambrozic’s application? iii. If the trust started on May 10, 1977, and Ambrozic is not barred from an accounting back to that date, is it nevertheless inequitable or unjust to now require it? and, iv. If the trust started on May 10, 1977, and issues ii. and iii. above are answered in the negative, what amount must Voodoo return to Ambrozic for her one-third undivided interest in profits from the Farmland? Analysis i.

Did the trust start on May 10, 1977 or September 1, 2006? [ 19 ] For three reasons, I find that the trust commenced on May 10, 1977. [ 20 ] First, while the trial judge did not expressly state that the trust commenced on May 10, 1977, that date is the start date most consistent with the entirety of his reasons for judgment. [ 21 ] At paragraph 145 of his reasons for judgment the trial judge began to “properly consider the extent of the trust to be awarded in favour of [Ambrozic]”.

On that issue he found, starting at paragraph 156, that by the time of the divorce (February 20, 1978), two of the three quarter sections comprising the Farmland were fully paid for and the Chestermere quarter was half paid for. He found that each of Ambrozic, Burcevski and “Nik” (Burcevski’s brother) contributed towards Voodoo’s purchase of the Farmland: Ambrozic Trial at para 158. At paragraph 162 he stated: It is not possible for this Court to trace the proceeds of the sale of [Ambrozic’s] property interests or those of [Burcevski] or Nik into

subsequent purchases with any certainty. No financial documentation was available at trial for this purpose. Such documentation no longer exists. This Court is bound to determine the extent of those contributions from the evidence available at trial.

The trial judge made some further related findings and then, at paragraph 164, concluded as to the property to be impressed with the trust and the extent of the trust: After a consideration of all the evidence and argument advanced in this matter I hereby declare that Voodoo and/or [Burcevski] are found to hold title to the three quarter sections of farmland ... in favour of [Ambrozic] as to an undivided one third interest as tenant in common. [ 22 ] In context, therefore, this determination by the trial judge was of the extent of the trust at the time of the various individuals’ contributions to Voodoo at or before it acquired the Farmland, not as at the time of trial.

The finding of Ambrozic having a one-third undivided interest resulted from that analysis of contributions to acquire the Farmland, which came to be owned by Voodoo. [ 23 ] It further follows from the trial judge’s determining the extent of Ambrozic’s interest to be one-third based on events at or around 1977, that on May 10, 1977 the trust that he found existed was already at that time, one-third of the property impressed with the trust.

The trial judge did not reason that Ambrozic was entitled on May 10, 1977 to an indeterminate share of the Farmland, conduct an accounting of the profits from the property since May 10, 1977, add them to that equitable interest of indeterminate size and find they totalled the declared one-third interest by the time of his trial decision. [ 24 ] The few phrases in the trial judgment that were relied upon by Voodoo, that use the present tense in speaking of Ambrozic receiving the one-third interest (at paragraph 163: “it is necessary to grant her an interest in the only properties remaining...” and, at paragraph 164: Burcevski and Voodoo “are found to hold title to [the Farmland] in favour of [Ambrozic] as to an undivided one-third interest”), are equally open to the

interpretation that the trial judge spoke of his declaration in the present tense, not that the trust first came into existence at the time of his declaration.

Elsewhere the trial judge spoke in the present tense of the declaration but the conversion of Ambrozic’s equitable interest being in the past (emphasis added): [129] ... she is entitled to a declaration that he stands as her trustee subject to a trust for the value of her interest in the properties which he subsequently converted to his own use. ... [142] On the findings of fact made by this Court [Ambrozic] is entitled to a declaration of trust in relation of those properties based on the conversion of her interest by [Burcevski].

As I have found that the proceeds of those dispositions were , ... rolled into properties now registered and remaining in the name of Voodoo , she is entitled to a declaration of trust charging those remaining properties to the extent of her interest... It is far more consistent with the entirety of the trial judge’s reasons that the trust existed on or about May 10, 1977, rather than when it was first judicially recognized on September 1, 2006. [ 25 ] I further note that the

summary of relief sought, listed at the end of the Statement of Claim and asserting the remedies then being tried by the trial judge, were replete with the phrase “at the time of the divorce”. The parties had joined issue on whether at that time Voodoo had title to property that was impressed with a trust in favour of Ambrozic. The trial judge ruled on that issue. [ 26 ] Second, this

interpretation of the trial judgment appears consistent with the Alberta Court of Appeal’s

interpretation of the trial judgment, in the course of their upholding that judgment in the Ambrozic Appeal.

[27] For example, the Court of Appeal referred to the trial judge’s findings in the following words, all consistent with Ambrozic’sone-third interest existing in May 1977, rather than arising for the first time on September 1, 2006 (emphasis added): [12] ... The trial judge also concluded that Burcevski was unjustly enriched as a result of his dealings with the properties registered inAmbrozic’s name. He found that Burcevski was a trustee for Ambrozic’s interest in the properties, but had converted her interest in theproceeds of sale.

Since Burcevski ultimately used the converted proceeds to buy the farmland, the trial judge found that Ambroziccontributed to the acquisition of the farmland.

As a remedy, the trial judge declared that Voodoo held one-third of the farmland in trustfor Ambrozic. ... [54] In any event, the trial judge’s fact findings clearly establish that Burevski sold properties in which Ambrozic had an interest, shereceived none of the proceeds, he did not account to her for the proceeds, those proceeds of sale were used to make payments towardssome, but not all, of the farmland and most of these payments were made before the divorce. Moreover, the farmland has continuallybeen registered in the name of Voodoo.

Therefore, all these findings support the trial judge’s conclusion that Ambrozic is able to tracethe proceeds of disposition of the converted properties into the farmland. ... ... [58] In order to assess any possible impact of the constructive trust on the interests of Voodoo and Nik, one must first determine whenthe constructive trust arose. Ambrozic submits that it arose each time Burcevski converted her interest in a property and rolled theproceeds into Voodoo or into other property that was rolled into Voodoo.

She submits that on this basis, the constructive trust arose in1977 when she attended at Harrison’s office and signed documents, or at the latest, at the time of the divorce in 1978. Six properties inwhich Ambrozic had either a registered or dower interest were sold at various times: one in 1973, two in 1975 and three in 1978 after thedivorce. The trial judge found that Voodoo had no interest in any property at all until May 10, 1977 at the completion of the rollover ofthe Burcevski and Ambrozic properties to Voodoo.

The trial judge also found that apart from the property rolled over from Burcevski,Voodoo did not acquire any additional property prior to the divorce. Accordingly, Voodoo, a company in which Burcevski was thecontrolling mind at the relevant time , was not a bona fide purchaser for value. Thus, it received trust property with the knowledge ornotice that it was subject to a trust. [28] Further, at paragraph 67, the Court of Appeal referred to trust property rising in value, saying that a proprietary claim in it“will carry with it some or all of the gain”.

This observation would only have been made in the context of this litigation if the trustproperty was held over time, that is, since before the date it was declared to exist, rather than arising at the time it was declared to exist. [29] Therefore, the Court of Appeal understood the trial judge to have found May 10, 1977 to be the date that Ambrozic’sequitable interest was received by, and thereafter held by, Voodoo.

The Court of Appeal understood the trial judge to have found that thetrust existed prior to September 1, 2006. [30] Third, a trustee’s obligations begin when the trustee receives the property that is impressed with the trust. The trial judgefound that Voodoo received the property impressed with the trust on May 10, 1977. That trust property was traced to the farmland whichVoodoo held through to trial. The trial judge did not establish the trust on September 1, 2006; he merely declared its existence.

Thisconclusion is consistent with the majority decision of the Supreme Court of Canada in Rawluk v Rawluk, (SCC), [1990]1 SCR 70 at 92, 65 DLR (4th) 161: It must be emphasized that the constructive trust is remedial in nature. If the Court is asked to grant such a remedy and determines that adeclaration of constructive trust is warranted, then the proprietary interest awarded pursuant to that remedy will be deemed to have arisenat the time when the unjust enrichment first occurred.

But, as Professor Scott makes clear, the fact that the proprietary interest is deemedto have arisen before the remedy was granted is not inconsistent with the remedial characteristics of the doctrine. ii. If the trust started on May 10, 1977, do merger or res judicata bar Ambrozic’s application?

[ 31 ] Voodoo argued that Ambrozic’s right to an accounting was extinguished by virtue of the doctrines of merger and res judicata . It said the claim for an accounting arises out of the same cause of action that was determined by the trial judge, which claim merged into the trial judge’s judgment on that cause of action, and which was then upheld on appeal. It pointed out that in his reasons for judgment the trial judge did not grant an accounting, or conduct an accounting and then grant a monetary award, and that Ambrozic did not appeal the trial judgment on the basis it failed to grant the accounting.

It is not open to Ambrozic, Voodoo said, to now re-litigate this issue; she is estopped from doing so. Finally, Voodoo argued that even if the claim for an accounting was not before the trial judge it should have been if Ambrozic wished to assert it, since the courts are averse to serial litigation. [ 32 ] Ambrozic disagreed, saying that an “accounting” is not a form of relief or remedy in and of itself, but rather is merely a process to determine the quantum of entitlement.

Therefore, her counsel said, merger and cause of action estoppel have no application in this case. [ 33 ] Ambrozic relied on Ruwenzori Enterprises Ltd. v Walji , 2004 BCSC 741 , 8 ETR (3d) 209, which states: [240] Neither tracing nor an accounting is a remedy.

Each is a process designed to assist in the perfection of a remedy ... ... [242] An accounting is directed at the determination of profit, gain or loss derived from assets in respect of which tracing has identified a right to, and the claimant has opted to assert, a proprietary interest. [ 34 ] Ambrozic said that: Tracing has identified, and Ambrozic has been granted, a proprietary interest in the [Farmland] through the remedy of a constructive trust.

Her application for an accounting, contribution and adjustment in respect of [that Farmland] is simply the means by which that remedy granted her may be properly valued and perfected. [ 35 ] Ambrozic drew a distinction between the accounting claimed in her Statement of Claim, as a monetary remedy in damages, and the one now sought pursuant to the Act, as “a trustee’s obligation to account as a necessary and ancillary element” of a trust.

In oral argument her counsel further described this distinction as follows: There’s an accounting as a remedy ... [a]nd then distinct from that is the type of reckoning of accounts, making of accounts, disgorging of profit, reconciling matters between a fiduciary and a beneficiary which is a different thing than awarding an accounting as a form of a monetary remedy. ... the Law of Property Act ... invites this Court to address this question of an adjustment or an accounting as a reconciliation between trustee and beneficiary as part of the partition and sale process. [ 36 ] Later in oral argument, Ambrozic’s counsel described the distinction to be observed as between accounting “as a remedy” and accounting “as damages between a trustee and the beneficiary which arises as a matter of law from a decision on a proprietary remedy, a trust” and submitted: What we’re here today for is dealing with the consequences of the proprietary relief that [the trial judge] did give and upheld by the Court of Appeal et cetera, et cetera the existence of the trust.

The accounting that Ambrozic seeks here today is not a remedy of a monetary nature as discussed by the Supreme Court of Canada in thecontext of unjust enrichment. It’s not even the accounting she sought as damages in the Statement of Claim. Rather the accounting thatAmbrozic seeks is the natural, automatic, legally necessary reconciliation of finances between a trustee and its beneficiary. It’s not the same cause of action that Ambrozic sought in 2001, it’s not the same remedy.

There’s no merger, there’s no res judicata. [37] It is correct that the beneficiary under a constructive trust may choose to recover her due by pursuing either a proprietaryremedy or a monetary remedy. The House of Lords stated in Foskett v McKeown, [2000] 3 All ER 97 at 123-124 (relied upon inRuwenzori Enterprises at para 213; and Waxman v. Waxman (2002), (ON SC), 25 BLR (3d) 1 at para 1654 (Ont SupCt J), aff’d (2004), (ON CA), 44 BLR (3d) 165 at paras 571-588 (Ont CA)) (emphasis in original): Accordingly, I would state the basic rule as follows.

Where a trustee wrongfully uses trust money to provide part of the cost of acquiringan asset, the beneficiary is entitled at his option either to claim a proportionate share of the asset or to enforce a lien upon it to secure hispersonal claim against the trustee for the amount of the misapplied money. [38] Here Ambrozic chose a proprietary remedy; she claimed a proportionate share of the assets. The Alberta Court of Appealconfirmed that this was entirely her choice, saying at paragraph 50 of the Ambrozic Appeal: The trial judge found that Burcevski had converted Ambrozic’s interests in real property.

Accordingly, Ambrozic is entitled toproprietary relief as a matter of right, rather than of discretion. [39] Ambrozic’s Statement of Claim also claimed, at paragraph 40, “a 50 percent interest in all profits earned from such propertyby virtue of a trust or equitable relationship, constructive or otherwise”. She said this is different from and not to be confused with theaccounting she now claims. She said that that original claim to profits in her Statement of Claim, that proceeded through trial tojudgment and which was not granted, was a monetary claim.

The accounting she now claims, she said, is an accounting of herentitlement to the profits generated from the trust property, as an incident of being awarded that proprietary remedy. At this stage it is aprocess to access her entitlement, not a remedy. [40] I disagree with Ambrozic’s characterization of her original claim to profits from the Farmland enjoyed by Voodoo. It was nota monetary accounting claim. Ambrozic was not actually claiming an accounting at all. In her Statement of Claim she did not claim anaccounting of those profits, but rather “a 50 percent interest in” them.

An accounting might be the process by which that claim wouldlater be quantified (as Ambrozic now requests), but an accounting was not actually requested in respect of any beneficial interest thatmight be granted her in any property owned by Burcevski or Voodoo, in paragraph 40 of her original Statement of Claim. Ambrozic atthat time was claiming a proprietary remedy – an “interest in” the profits. [41] I therefore disagree also with Voodoo, when it said that Ambrozic had already claimed for the very same accounting she nowseeks as part of her application for partition and sale.

In paragraph 40 of her Statement of Claim, as just described above, Ambrozic doesnot seek an accounting but a proprietary interest. [42] Then, in her

summary of the relief being claimed listed at the end of her Statement of Claim, she did ask for two accountings.However, both were monetary accounting claims for which she then requested “damages”, at paragraph (k). Neither were for anaccounting of the kind now requested; neither were from Voodoo for a share of any profits it derived from the Farmland. Theaccountings she claimed in her Statement of Claim

summary were (emphasis added): 1) At paragraph (i): “an accounting by Burcevski and Voodoo of all profits from any property legally or beneficially owned by Burcevskiduring the marriage or thereafter, the purchase or acquisition of which can be traced to proceeds or profits arising from such property;”and, 2) At paragraph (j): “an accounting by Burcevski of all profits earned from any property legally or beneficially owned by Burcevski,Ambrozic or Voodoo at the time of the divorce”

[ 43 ] The claim in paragraph (

i) was for an accounting of profits from property that was purchased or acquired from proceeds or profits arising from “such property”. This describes a very narrow category of profits and appears to catch second level profits. That is, profits from property acquired by profits, provided that those latter profits, the first level profits, were from property legally or beneficially owned by Burcevski (not Voodoo) during the marriage.

An example might be profits generated from increased equity in property, where the increased equity resulted from Burcevski using the profits from such property to pay down debt on that same property, thereby increasing the equity therein. Another example might be profits from one (or more) properties (that were legally or beneficially owned by Burcevski during the marriage) that were used to acquire another property, which then generated profit. [ 44 ] I am not persuaded that the trial judge found any of the Farmland to have been acquired in the way described in paragraph (

i) of the Statement of Claim, for which an accounting was claimed at trial. The trial judge did not expressly find that any of the property impressed with the constructive trust fell into this category. The trial judge reached conclusions about how the Farmland was acquired and about the source of the contributions of each of Ambrozic, Burcevski and Nik thereto: see paragraphs [155] to [161] of his judgment. [ 45 ] The accounting claimed in paragraph (

j) of the Statement of Claim is from Burcevski, which also is not what Ambrozic now claims. She now claims for an accounting by Voodoo. [ 46 ] Therefore, in my view, Ambrozic is not now claiming an accounting that she already claimed in the original action. This current accounting claim is not a reassertion of an earlier identical accounting claim. Voodoo is not now having to answer a claim that it already had to answer and defend in the original action. Neither merger or issue estoppel apply. [ 47 ] Ambrozic did claim “a 50 percent interest in” the profits of the Farmland.

The trial judge did not expressly state that he was granting that claim. If he had, there would now be no issue as to Ambrozic’s entitlement to an accounting of those profits, to either monetize it or recover it by way of an upward adjustment to her beneficial interest in the Farmland. But I agree with Ambrozic that, in declaring the one-third interest in the Farmland to be held by Voodoo in her favour, the trial judge thereby granted her whatsoever increase in value in the property over the period Voodoo held it in trust for her and whatsoever profits were generated by the Farmland over that period.

Those are necessary incidents of owning the beneficial interest in the Farmland. [ 48 ] Were my decision otherwise it would have the ironic effect of Ambrozic being entitled to a one-third share in the appreciation in value of the property over the time Voodoo held it in trust for her, but not in the profits generated by the property over the same period of time. It was certainly open to the trial judge to so conclude, but very express language to that effect would have ben required to deny Ambrozic one property right (profits therefrom) while enjoying another (increases in property value).

In Foskett , Lord Millett did not distinguish between the two, but spoke of profits as including increases in property value at page 122: If the traceable proceeds have increased in value and are worth more than the original asset, he will assert his beneficial ownership and obtain the profit for himself. There is nothing unfair in this.

The trustee cannot be permitted to keep any profit resulting from his misappropriation for himself, and his donees cannot obtain a better title than their donor. [ 49 ] I am in agreement with Ambrozic, that when the trial judge declared her one-third interest in the Farmland, he granted her all the bundle of property rights incident to that interest. This included the right to hold the trustee to account for any profits generated over the period it held the property in trust for her. [ 50 ] The Statement of Claim in the Ambrozic Trial did not claim for an accounting by Voodoo of the profits from the Farmland.

That is fatal to the argument based upon the doctrine of merger: Zukowski v Royal Insurance Company of Canada , 2000 ABCA 165 at paras 13-14 , 266 AR 81. [ 51 ] Similarly, the preconditions to issue estoppel, one of the two forms of res judicata , were therefore not met here: 420093 B.C. Ltd. v Bank of Montreal , 1995 ABCA 328 at para 29 , 174 AR 214; Ernst & Young Inc. v Central Guaranty Trust Company , 2006 ABCA 337 at para 30 , 397 AR 225. [ 52 ] Finally, cause of action estoppel, the other form of res judicata , deals with claims or defences which could properly have been

[ 52 ] Finally, cause of action estoppel, the other form of res judicata , deals with claims or defences which could properly have been but were not made in an earlier proceeding between the parties or their privies: Bank of Montreal at paras 35-36 .

In that decision the Alberta Court of Appeal adopted with approval, at paragraph 36, the following statement from Sopinka, Lederman & Bryant’s text on evidence: A judgment on a particular set of facts, however, “does not raise an estoppel with respect to every cause of action which is subsequently based on the same facts, but only those claims which properly belonged to the first step proceedings”: [ The Law of Evidence in Canada (Markham, Ont: Butterworths, 1992)] at p. 999. [ 53 ] In my view the accounting now sought is not a separate cause of action, but rather a method of quantifying the proprietary relief already granted by the trial judge.

This process did not properly belong to the “first step proceeding” and was not asserted within that first step proceeding. It is appropriate to undertake at the partition and sale stage. [ 54 ] More often than not such accounting processes are not undertaken at trial but after, following a decision confirming or declaring the existence of a trust; statements of claim do not seek this at the trial stage. There is an efficiency about this approach since it avoids forcing the parties to engage in litigation of much broader scope unnecessarily, until it is known that a trust in fact exists.

This is no different than parties agreeing to the trial of an issue, where a threshold issue is the contentious point and, once determined, remaining issues might be resolved without further resort to the court. [ 55 ] In Henderson v Henderson Estate , 2012 BCCA 31 , 27 BCLR (5th) 38 an accounting was requested in advance of any application for partition and sale and refused as premature for that reason. The British Columbia Court of Appeal agreed with that approach by the lower court, commenting as follows: [2] The obvious final resolution to this dispute is an order for partition and sale ....

However, the surviving owners, the former spouses, have declined to make such an application for their own strategic reasons. Rather, the court below was asked to make inter alia , orders respecting: Margaret Henderson’s constructive trust interest in the Property; expenses incurred for maintenance of the Property; and possession of the Property. The trial judge partially settled the respective interests of each party in the Property but declined to order an accounting on the basis that such relief should only be granted if and when an application for partition and sale is made. ... [64] ...

I would also find that Ardelle Henderson’s estate is responsible for insurance, property taxes, and necessary maintenance costs relating to the property up until April 2, 2006, in conformity with the 2000 order of this Court. Any further accounting for the expenses, income, and benefits of the use of the property must await a partition and sale proceeding. ... [69] The trial judge held that all the competing claims and interests must be settled on a partition and sale application.

He was troubled by the parties’ attempts to obtain remedies available through a partition and sale application without actually commencing such an action. ... [70] I agree with this conclusion. The settling of all accounts and interests other than those that are consequential to the constructive trust, can only be done under the rubric of a partition action. It makes sense to undertake all such an accounting at one time.

To conduct piecemeal accounting is not in the interests of justice because, as each year passes, the circumstances of the Property alter and the facts relevant to accurate accounting change. [71] ... The proper time to determine the nature of Robert Henderson’s interest pursuant to the consent order is at the time of a final accounting of the parties’ interests in the course of a partition and sale proceeding.

[73] I would allow the appeal in part by ....

As to the accounting for expenses, rental income, and other items claimed by both parties aside from what I have stated above at para. 64, that must await a partition and sale proceeding. [ 56 ] I therefore do not regard cause of action estoppel to operate here to preclude Ambrozic from requiring Voodoo to account for Farmland profits back to May 10, 1977. [ 57 ] If I am incorrect in my conclusion that Ambrozic never actually claimed in her original Statement of Claim for the same kind of accounting that she now seeks, such that she actually did ask for an accounting of the very same profits she now seeks in the context of her partition and sale application, my conclusion would nevertheless be the same. [ 58 ] If in paragraph (

i) Ambrozic actually was seeking an accounting of the profits of the property she was ultimately awarded at trial, it was a monetary request for damages. It was not granted. She was, however, granted the proprietary remedy of the undivided one- third interest in the Farmland. That proprietary interest already entailed the right to share, in accordance with that proprietary interest, in the appreciation of property value and other forms of profits generated from that property. [ 59 ] It is that incident of property ownership that s. 17 of the Act avails a process to realize upon. In my view, the accounting process described in

section 17 of the Act is available to a party that, as here, has already claimed for but was not granted a monetary remedy in damages following an accounting, in respect of the same trust property, in a law suit between the same parties. [ 60 ] If at trial Ambrozic had won her monetary claim for damages for a third of those same Farmland profits, then in her current partition and sale application she would not be entitled to “an accounting, contribution or adjustment” [s. 17 of the Act]. But it would not be because of issue estoppel or merger.

It would be because she no longer had any damages to recover; she no longer would have had a loss warranting redress. The claim under the Act is a different claim than was advanced at trial, therefore, again, merger and issue estoppel do not apply. My reasoning for denying the cause of action estoppel defence applies equally here under this ‘in the alternative’ scenario. The right to an accounting now advanced by Ambrozic is an incident of the ownership of a beneficial interest in property, whereas the accounting claim at trial was a monetary claim.

In these circumstances the pleading of one at trial will not preclude access later to the other – to the statutory process available to a co-owner of property to pursue an accounting. [ 61 ] Put another way, Ambrozic could choose to pursue either an in rem or in personam remedy (see paras 37 and 38 above). She chose to pursue only the in rem remedy, and succeeded. She is entitled to an accounting from the trustee, Voodoo. If I am incorrect and in fact she also pursued at trial the in personam monetary remedy, the trial judge granted just one – the in rem remedy – not both.

As an incident of the constructive trust she was awarded in the Farmland she is entitled to an accounting from the trustee. iii. If the trust started on May 10, 1977, and Ambrozic is not precluded from an accounting back to that date, is it nevertheless inequitable or unjust to now require it? [ 62 ] Voodoo argued that it would be unfair and inequitable “to now require [Voodoo] to search for and try to locate or re-create the relevant records after the passage of so many years”.

It suggested that if any records were available they would have been, or could have been, produced during the pre-trial discovery process, and therefore, probably, there are none.

Voodoo suggested that it is not “fair or equitable to either party to enter into an accounting exercise 20, 25, 30, or 35 years in the past that is not based on actual records – where the Court will be asked, necessarily, to speculate, and guess what the real actual state of accounts were those many years ago.” It argued: “there’s a tremendous reasonable apprehension that this process will result in incomplete fragmentary information that will simply invite the court to speculate”. [ 63 ] In my view it is premature to know that.

The evidence before me on this record does not reveal whether an attempt was earlier made, without success, in this regard. There is only the apprehension that, given the passage of time, the Court will “necessarily” have to speculate. The apprehension that sufficient reliable information for an accounting will not be available is itself speculative, on this record.

It is not known on this record whether information relevant to an accounting was ignored through the pre-trial discovery process or whether full efforts were made that generated little useful information or, further, whether applications to compel production were made, including for information potentially in the hands of third parties. In any event, based on my earlier analysis, those matters were not put in issue by the Statement of Claim and there therefore would have been no reason to compel production of information relevant to them.

[64] Voodoo argued that: “There’s a danger that going back 35 or 36 or 37 years will result in fragmented incompleteinformation.” I agree that there is a danger, but that alone is not cause to shy away from the process entirely.

It does not necessarilyfollow that the passage of time alone renders an accounting inequitable or unjust. [65] Further, it is not uncommon for the Courts to award damages to parties on less than complete information or on impreciseinformation: Cadbury Schweppes Inc. v FBI Foods Ltd., (SCC), [1999] 1 SCR 142 at para 99, 167 DLR (4th) 577.Often flexibility is warranted, discretion exercised, judgment brought to bear. This situation may necessitate something similar; it is tooearly to know.

Ambrozic will have the burden of satisfying the Court on a balance of probabilities of the amount she claims from herfiduciary trustee. At that time the court will assess whether she has satisfied that burden based upon the best evidence then available.

Iwould not foreclose access to that process a priori merely because of the passage of time. [66] Voodoo also relied on the equitable doctrine of laches, saying “the delay in seeking the remedy renders the granting of theorder sought unjust.” For laches to be established the party asserting it must show (1) an unreasonable delay in the commencement orprosecution of proceedings, and (2) in all the circumstances the consequences of delay must render the grant of relief unreasonable orunjust: Ahone v Halloway (1988), (BC CA), 30 BCLR (2d) 368 at 378 (CA). [67] The delay involved in Ambrozic commencing her original claim was considered by the Court of Appeal.

It concluded therewas not laches barring her from the declaration of trust in her favour. It is not open to me to decide otherwise for the period of time up tothe trial judgment. On this point issue estoppel does apply. The accounting now disputed is merely realizing upon that judicial grant forwhich laches did not apply. [68] Regarding the period of time since September 1, 2006, most if not all of the delays resulted from Voodoo, or its directingmind Burcevski, not Ambrozic. She did not launch any of the four appeals or the second action, but prevailed in each.

After Ambrozicclaimed the proprietary interest back in 2001, over the entire time that has passed from then until today, Voodoo resisted returning herproperty to her. Further in respect of the period of time since the constructive trust was imposed, Ambrozic was not obliged to apply forpartition and sale, with or without an accounting, and certainly not by any deadline. Either co-owner could have applied.

Ambrozic choseto do so relatively soon after the dust settled on the final appeal attempt by the parties opposite. [69] The Court has found that Voodoo, as trustee, owes Ambrozic a fiduciary duty, that is, a duty of the utmost good faith. YetVoodoo has resisted performing even that portion of its obligations which it does not dispute are Ambrozic’s due (accounting sinceSeptember 1, 2006). The equities in this case are the very opposite to what Voodoo is urging upon the Court. [70] These circumstances do not render the accounting request to be unreasonable or unjust by reason of delay.

Therefore, in myview, it would not be inequitable or unjust to now require an accounting back to May 10, 1977. iv.

If the trust started on May 10, 1977, and issues ii. and iii. are answered in the negative, what amount must Voodoo return toAmbrozic for her one-third undivided interest in profits from the Farmland? [71] While it would not be unjust or inequitable to proceed now to conduct an accounting back to May 10, 1977, it would bepremature for me to do so. [72] As alluded to in my reasons on issue iii. above, it appears that both parties have not yet fully informed the Court on what eachconsiders should be the result of the accounting.

The parties have not yet had the opportunity to do a full discovery on the duration ofaccounting that Ambrozic seeks. [73] In her filed material Ambrozic set out the amount she was seeking and her rationale. Further, Ambrozic identified specificcriteria that Voodoo ought to have to satisfy for any expenses it might allege ought to offset some or all of any income that was earnedfrom the property. Voodoo expressed concern that Ambrozic was asking the Court to, or would soon be asking it to, merely “infer”income was generated from the trust property, yet refuse to similarly infer that expenses were incurred.

In oral argument, Ambrozic’scounsel indicated that he had submissions on that matter which he would want heard and considered before any directions were given inthat regard. Ambrozic underscored that she was not asking the Court to make any directions about how to go forward at this time.

Therefore, it was my impression that both parties preferred that the Court await the parties’ next steps following their receipt of this ruling. Conclusion [ 74 ] The application for an accounting back to May 10, 1977 is granted. Voodoo became the trustee of Ambrozic’s property on that date. No such accounting was claimed previously in proceedings between these parties.

It is not inequitable or unjust to require Voodoo to now so account. [ 75 ] As discussed at the conclusion of the oral hearing, I am not seized with the matter further (other than in respect of any issue as to costs) although economy of judicial resources militates in favour of the parties bringing any further issues back before one of the members of this Court now familiar with the background. The parties may return before me to speak to their next steps, if they wish. If they return before me for costs of this application, they must initiate that process within 30 days of this decision.

Heard on the 18 th day of January, 2013. Dated at the City of Calgary, Alberta this 8 th day of March, 2013. P. R. Jeffrey J.C.Q.B.A. Appearances: Blair R. Carbert and Kelly Patrick Colborne for Monyca Ambrozic Brian N. Clark for Voodoo Enterprises Ltd.