Waytowich v. District of Kitimat et al Date:, 2012 BCPC 400

Citation: Waytowich v. District of Kitimat et al Date: 20121008 2012 BCPC 0400 File No: 16904 Registry: Kitimat IN THE PROVINCIAL COURT OF BRITISH COLUMBIA BETWEEN: RODNEY B. WOYTOWICH CLAIMANT AND: DISTRICT OF KITIMAT DEFENDANT AND: ALUMINIUM CITY ENTERPRISES LTD. THIRD PARTY REASONS FOR JUDGMENT OF THE HONOURABLE JUDGE GOUGE Counsel for the Claimant: in person Counsel for the Defendant: K. Morley Place of Hearing: Kitimat , B.C.

Date of Hearing: July 12, 2012 Date of Judgment: October 8, 2012 INTRODUCTION [1] Sections 403 – 427 of the Local Government Act RSBC 1996, c. 323 empower local governments to sell land in respect ofwhich property taxes are in arrears. The landowner has one year from the date of the tax sale in which to redeem the land. In order toredeem, the landowner must pay to the collector appointed by the local government a sum equal to the total of: (

i) the upset price at thetax sale (i.e. the tax arrears, interest and penalties); (ii) taxes for the ensuing year; and (iii) costs incurred by the tax-sale purchaser tomaintain the property and prevent waste. If the landowner fails to pay the redemption amount within one year after the sale, the salebecomes absolute and the tax-sale purchaser is entitled to register title to the land. [2] In theory, the landowner ought to be able to attend at the local government office 364 days after the date of the tax sale,demand a statement of the redemption amount and tender a cheque, thereby effecting redemption.

However, as this case demonstrates, itis not always that simple. The collector may be unaware of expenses which have been incurred by the tax sale purchaser. There may bedisputes as to whether some of those expenses are properly reimbursable, or as to quantum. If so, someone or some tribunal must beempowered to resolve such disputes. One would expect that the dispute resolution procedure would provide both the landowner and thetax-sale purchaser an opportunity to be heard. Dispute resolution usually takes some time.

If the redemption amount cannot bedetermined on the anniversary date, it is difficult to see how the landowner can redeem. One would think that there ought to be somemechanism to allow the landowner to preserve her right of redemption pending resolution of the dispute. [3] Sadly, the statute is silent on the points mentioned in paragraph 2, et hinc illae lacrimae. A PROBLEM OF ADJUDICATION [4] The parties did not address the matters mentioned above in their submissions. That left me with a quandary.

I am obliged toadjudicate according to law; that is, I must apply appropriate legal principles in making my decision, and am not at liberty to ignore suchprinciples even if the parties omit any reference to them. Where both parties are represented by counsel, I think that I am entitled toassume that counsel have good reasons for raising, or omitting to raise, legal issues, and that I can safely adjudicate the case by aconsideration of the issues raised by counsel in their submissions. However, those assumptions are unjustified where there areunrepresented parties.

In such cases, I think it my duty to identify legal issues for the parties, to invite their submissions respecting them,and to decide the case according to law. I have followed that course in this case. In so doing, I have followed, to the best of my ability,the guidance provided by the Nova Scotia Court of Appeal in Family & Children’s Services of Cumberland County vs D.M. 2006 NSCA75; 247 NSR (2d) 43 @ paragraph 26. [5] There is a claim which might have been made in this case, but was not. In this case, the amount tendered by the landownerduring the redemption period was less than the amount required to redeem.

That being so, it might be argued that the landowner failedto redeem, and that title to the property vested in the tax-sale purchaser on the redemption date. That, in turn, might give rise to thefollowing questions: (

i) whether relief from forfeiture would be available in such a case; (ii) if so, whether relief from forfeiture shouldbe granted in this case; (iii) whether this court has jurisdiction to grant declaratory relief or relief from forfeiture. I did not raise thoseissues because Mr. Woytowich made no claim for a declaration or for title to the land. His only claim in this action is for monetaryrelief. While I think it my duty to raise legal issues which must be decided in order to adjudicate the claim which is made, I do not thinkthat it would be right for me to suggest different claims which might have been made.

To do so would be to assume a role as advocate orinquisitor, which is not my proper function: Farrar vs Farrar (2003) (ON CA), 63 OR (3d) 141 @ paragraph 25;TSP International Ltd vs Mills (2006) (ON CA), 81 OR (3d) 266 @ paragraphs 29 – 39. THE FACTS [6] On September 29, 2008, Mr. Woytowich was the successful bidder at a tax sale of a property known as the Aluminum CityMotel (“the Motel”), which is in Kitimat, British Columbia, a little less than a kilometer from Mr. Woytowich’s home. His bid was$32,000.

The owner of the property was the Third Party, Aluminum City Enterprises Ltd. (“ACE”). [7] The Motel had been vacant and unprotected for several years before the tax sale. It had been badly damaged by squatters andvandals. [8] Ms. Mulder was then the Municipal Treasurer for the District of Kitimat (“the District”), and also the collector for the District. She has since retired. Mr. Woytowich met with Ms. Mulder sometime between September 29 and October 1, 2008. During the meeting,Mr. Woytowich sought Ms.

Mulder’s permission to place a camper on the property to assist him in securing it from further vandalism,and also wanted to know whether he would be reimbursed for maintenance costs and the cost of a security service in the event that ACEexercised its statutory right to redeem the property within one year of the date of the tax sale. Ms. Mulder refused to allow Mr.Woytowich to place a camper on the property. By letter dated October 1, 2008, Ms. Mulder sought legal advice from the District’ssolicitors on the question of maintenance and security expenses.

The solicitors provided advice by letter dated October 14, 2008. Ms.Mulder gave a copy of that letter to Mr. Woytowich at a meeting on October 17, 2008. Two passages from the letter of October 17 arepertinent to this case: Yes, in my opinion the purchaser can take steps to secure the building, including the replacing and repairing of broken doors, locks andwindows. * * * The question of maintaining onsite security is a more problematic - given the history of vandalism there may be a foundation for such a

claim, but the tax sale purchaser should satisfy himself that the proposed actions are appropriate, and as with all expenses incurred the tax sale purchaser should obtain his or her own legal advice. [ 9 ] In answer to my questions at trial, Ms.

Mulder confirmed that it was her opinion in October, 2008, and, indeed, her opinion at the time of trial, that, if the owner redeems the property during the year allowed, the tax sale purchaser is entitled to be reimbursed only for expenses of a kind which the collector considers to be reasonable and appropriate, and only for amounts which the collector considers to be reasonable and appropriate. Ms. Mulder was mistaken. The statute confers on the collector no decision-making authority. She had no authority to grant or refuse permission for Mr.

Woytowich to place a camper on the property, nor to decide what expenses, or in what amount, would be reimbursable. [ 10 ] At the meeting on October 17, 2008, Ms. Mulder told Mr. Woytowich that he would not be reimbursed for security services if ACE were to redeem the property during the year allowed. She also told him that he would be reimbursed for the cost of physical steps taken to secure the building, of the kind referred to in the solicitor’s letter. My note of Ms.

Mulder’s evidence on the point is: I told him that I would consider reasonable maintenance costs, and that’s all - not security costs. [ 11 ] Mr. Woytowich made enquiries of local security companies about the cost of security patrols, but the fees they quoted were beyond his means. He enquired of the RCMP, who advised that they would not provide patrol services. [ 12 ] Mr. Woytowich is a taxi driver by profession. He adopted a practice of visiting the Motel several times a day. He said that he would drop by whenever he “had a spare moment”. He would often park his taxi at the Motel when he was waiting for a call.

He was unable to be precise about the

schedule of his visits, and I conclude that their frequency and duration was highly variable, depending on the other demands on his time. During August, 2009, Mr. Woytowich was away from Kitimat. He asked a friend, who is also a taxi driver, to keep an eye on the Motel. He has not paid anything to his friend, but says that he will share with him part of any award which I may make in this case. [ 13 ] On Thursday, September 17, 2009, Ms. Mulder was attending a conference in Victoria. On that day, Mr. Bernt, the Deputy Treasurer of the District, received a telephone call from Mr. Hruda, the principal of ACE. Mr.

Hruda informed Mr. Bernt that ACE wished to redeem the Motel, and asked how much was owing. Mr. Bernt replied that the balance owing was $23,406.45, but that “… there would be additional charges owing to the purchaser for securing and protecting the property for the past year and that we didn’t have that information available …”. Mr. Bernt offered to make further enquiries of Ms. Mulder on that subject. Mr. Bernt spoke with Ms. Mulder by telephone on September 18. As a result of their discussion, he informed Mr.

Hruda on September 18 that the only firm figures which could be provided were the “redemption figure” of $23,406.45 and the 2009 taxes and penalty of $4547.86 (for a total of $27,954.31), but that “… there would be additional charges …”. On September 21, 2009, Mr. Bernt received a bank draft from Mr. Hruda (on behalf of ACE) in the sum of $30,000. [ 14 ] There is no evidence of any material communications between the District and Mr. Woytowich during between the end of October, 2008 and September 21, 2009. In particular, Mr.

Woytowich provided no information to the District about the work which he had done on the Motel during that time or about his visits to the Motel for security purposes, and the District made no enquiries on that subject. Ms. Mulder and Mr. Bernt made no attempt to contact Mr. Woytowich on September 17 or 18, 2009 to obtain information to assist them in responding to Mr. Hruda’s enquiry. [ 15 ] Sometime during the week of September 21, 2009, Ms. Mulder invited Mr. Woytowich to submit a claim for expenses incurred to maintain the Motel between September 2008 and September, 2009. On September 28, 2009, Mr.

Woytowich submitted a handwritten invoice, without particulars, claiming: (i) $200 for “parts” (by which he meant construction materials); (ii) $6500 for labour (260 hours at $25 per hour) expended in securing broken windows, doors and the like; and (iii) $12,000 ( 12 months at $1000 per month) for “patrol security” (by which he meant his visits to the property in lieu of a security service). [ 16 ] On October 6, 2009, the District issued a cheque to Mr. Woytowich for $34,081.55, representing the price which he had paid for the Motel ($32,000) plus interest. At about the same time, Ms. Mulder asked Mr.

Woytowich for particulars of his invoice dated September 28, 2009. Mr. Woytowich provided written particulars on December 3, 2009. [ 17 ] On January 13, 2010, the District issued a cheque in favour of Mr. Woytowich in the amount of $6700, representing payment in full for the first two items in his invoice, but declined to pay anything on account of the third item. Ms. Mulder explained that she had told Mr.

Woytowich in October, 2008 that the District would not pay for security services, and that, as she understood the statute, she had the authority to decide what kinds of expenses would be reimbursed, and in what amounts. [ 18 ] As noted above, a total of $27,954.31 was owing on account of taxes and penalties. After satisfaction of those amounts from the $30,000 paid by ACE, a balance remained of $2046.69. The District applied that balance against the $6700 payment made to Mr. Woytowich on January 13, 2010. That left a balance (of the $6700) of $4654.31.

The District added that amount to ACE’s tax bill and has either recovered or will recover it from ACE. DISCUSSION [ 19 ]

Section 417 of the Local Government Act RSBC 1996, c. 323 provides that the owner may redeem property sold at a tax sale within one year after the date of sale, and that (underlining added): A redemption is made by paying or tendering to the collector for the use and benefit of the purchaser … the total of the following amounts:

(

a) the upset price of the parcel at the time of the tax sale; (

b) all costs of which the collector has had notice that have been incurred by the purchaser in maintenance of the real property and inprevention of waste; (

c) taxes advanced by the purchaser; (

d) interest … [20] The first question is whether compensation for Mr. Woytowich’s time in conducted his “patrols” is a “cost” which was“incurred by” Mr. Woytowich “in maintenance” of the Motel, or “in prevention of waste”. The word “cost” is not defined by the LocalGovernment Act or by the

Interpretation Act. It must therefore be defined according to ordinary English usage. [21] I observe that Ms. Mulder regarded Mr. Woytowich’s time spent in repairing and securing broken doors and windows as a“cost” - she included $6500 in the redemption amount to compensate Mr. Woytowich for his time in doing that work. However, thatfact is of no assistance in construing the statute.

It is sometimes appropriate to consider the conduct of the parties in performance of acontract as an aid to construction of the contract, on the theory that the conduct of the parties may be evidence of their intention at thetime the contract was made. However, when construing a statute, the relevant intention is that of the legislature. Ms. Mulder’s conductcannot provide useful evidence as to the intention of the legislature. [22] Similarly, the fact that Ms. Mulder told Mr. Woytowich in October, 2008 that the District would not pay for security services isirrelevant.

Either those services are reimbursable under section 417(3)(

b) or they are not. The statute does not empower a municipalcollector to decide that question. [23] According to the Shorter Oxford English Dictionary, “cost” may include “expenditure of time, labour, etc”. I thereforeconclude that, depending on the context, an expenditure of time and effort may be a “cost” incurred by the person who does the work. The context includes the practical consequences which would ensue if the word were, or were not, given that meaning.

If “cost” does notinclude the fair value of services provided by a tax sale purchaser, then such purchasers will be discouraged from performingmaintenance and security services themselves, and encouraged to retain independent contractors to perform such services. That would beeconomically inefficient and would increase the cost burden, both on tax sale purchasers and on owners who wish to redeem. In thecontext, I cannot conclude that the legislature intended such a result. It follows that the fair value of such services may be a “cost”, asthe word is used in section 417(3). [24] The cost of Mr.

Woytowich’s “patrols” was incurred by him in a bona fide attempt to prevent further damage to the Motel fromsquatters and vandals. Such damage constitutes “waste”. [25] Ms. Morley submits that the date of redemption was September 21, 2009 and that, as at that date, Ms. Mulder had not had noticeof Mr. Woytowich’s claim for “patrol fees”, with the result that she was not obliged to include them in the amount required to redeem theMotel. Ms.

Morley submits that a municipality has no duty to enquire of a tax sale purchaser before assessing the amount required toredeem, and that notice of the purchaser’ s claim for reimbursement of expenses could only be given by rendering detailed particulars ofthe claim prior to the date of redemption. If that were so, practical difficulties would arise. The owner is entitled to redeem at any timeduring the year following the tax sale. In many cases, the tax-sale purchaser will incur ongoing daily expenses to maintain the propertyand prevent waste. If Ms.

Morley is correct, a tax-sale purchaser can protect its right to reimbursement only by rendering daily invoicesto the municipality. That would be, at best, inconvenient. [26] I reject Ms. Morley’s submission for three reasons: a. On September 21, 2009, Ms. Mulder had reasonable grounds to believe, and did believe, that Mr. Woytowich had incurredreimbursable expenses in excess of the redemption amount quoted by Mr. Bernt. For that reason, she invited Mr. Woytowich to submithis claim later that week. She deliberately refrained from enquiring of Mr.

Woytowich about the particulars of his claim beforeSeptember 21, 2009. I do not intend by that to impute any bad motive or misbehaviour to Mr. Mulder. No doubt, she believed that thedetails could, and would, be resolved sometime after September 21. However, because, before September 21, she knew that Mr.Woytowich had a claim and deliberately refrained from enquiring as to the claim, she had notice of the claim: Grant vs Imperial TrustCo [1934] OJ #70; (SCC), [1935] 4 DLR 570, applying Jones vs Gordon (1877) 2 App Cas 616. b. The date of redemption in this case was not September 21, 2009.

On that date, ACE tendered payment of $30,000. However, noone knew on that date how much would be required to redeem. The District had informed ACE that the redemption amount could not becalculated until further information about Mr. Woytowich’s expenses was available. In the end, even if one accepts Ms. Mulder’sassessment of the redemption figure, it exceeded $30,000. Because the full redemption amount was not tendered or paid until long afterSeptember 21, 2009, that cannot be the redemption date. c.

Section 417(3) includes the following phrase (underlining added):: A redemption is made by by paying or tendering to the collector for the use and benefit of the purchaser …. The phrase “… for the use and benefit of …” has a long legal history. That history is relevant because one is entitled to assume that thelearned solicitors in the office of Legislative Counsel were aware of it and used the phrase advertently, having regard to its historicalconnotations. The history began with the early medieval device of a conveyance to “A” for the use of “B”. The effect of such a

conveyance was to confer legal title on “A”, but to impose on “A” the obligation to allow “B” to reap the benefits of ownership, for example, by collecting rents or feudal dues. While the common law declined to recognize any right of “B” in the property, by the 15 th century the Court of Chancery began to impose on “A” a set of obligations in favour of “B” which were the precursors of the fiduciary obligations later imposed on trustees: Pettit: Equity & The Law of Trusts (9 th ed) at pages 12 – 13.

Still later, the Court of Chancery developed the concept of the resulting trust, which was assumed to arise in favour of the transferor when land was conveyed without consideration. In order to avoid a resulting trust, conveyancers adopted a practice of conveying “… to and to the use of ...”, the transferee, so as to indicate clearly that the transferee was to receive both title and the beneficial interest in the land. That conveyancing practice was rendered obsolete by the Statute of Uses 27 Henry VIII c 18, but the phrase did not thereby lose its meaning.

Thereafter, the phrases “… in trust for …” and “… for [or to] the use of …” were legally synonymous: Snyder vs Masters [1850] OJ # 171; 8 UCR 55 @ paragraph 18. The underlying concept of a trust is that the trustee holds the trust assets for the benefit of the cestuis que trustent.

I conclude that the legislature used the phrase “… for the use and benefit …” of the tax sale purchaser to express a legislative intention to create a statutory trust, of which the collector is the trustee and the tax-sale purchaser is the beneficiary. [ 27 ] As a trustee, a collector owes fiduciary obligations to the tax-sale purchaser. It is unnecessary, and would be unwise, to attempt in this judgment an exhaustive catalogue of those obligations.

It is sufficient for me to conclude that they include: a. an obligation to make reasonable enquiries of the purchaser respecting costs which the purchaser may have incurred and may want to claim before providing a redemption figure to the owner; b. an obligation to refer the issue to a court in the event of a dispute over the redemption amount. [ 28 ] The District cannot rely on a lack of notice of Mr.

Woytowich’s claim when the lack of notice is the consequence of the failure of the collector to discharge her fiduciary obligation. [ 29 ] In this case, the appropriate remedy for breach of fiduciary duty is an award of damages sufficient to place Mr. Woytowich in the position he would have occupied if the duty had been performed. If Ms. Mulder had made enquiries of Mr. Woytowich, as she ought to have done, she would have learned of his claim for compensation for patrol services. She would have refused to include them in her assessment of the redemption amount and referred the question to a court.

For the reasons given above, a court would have found that Mr. Woytowich was entitled to such compensation as part of the redemption amount. I have no doubt that ACE would have paid the additional amount required to redeem the Motel. As a result, the appropriate award of damages is the fair value of Mr. Woytowich’s patrol services. [ 30 ] The figure of $1000 per month proposed by Mr. Woytowich is arbitrary. His evidence did not include an estimate of the number of hours per month. I observe that Ms.

Mulder considered $25 per hour to be a fair recompense for his work in performing physical maintenance, but there is no evidentiary support for that hourly rate and the patrol services clearly required less skill and effort than Mr. Woytowich’s carpentry. Most of the time spent on patrol services was time when Mr. Woytowich had nothing else to do. The fact that damages are difficult to assess is no reason to decline to award them. Rather, it is the obligation of the trier of fact to assess damages as fairly as possible on the evidence available: Chaplin vs Hicks [1911] 2 KB 786 .

In this case, I think that $2500 would be a fair figure, and I award that amount. Mr. Woytowich is also entitled to court order interest at the Registrar’s rate from September 21, 2009. [ 31 ] The District issued a third party notice to ACE, seeking indemnity for any amount which the court might award in favour of Mr. Woytowich. ACE did not file a reply, and did not participate in the trial. The District will have judgment against ACE for the amounts awarded to Mr. Woytowich. October 8, 2012 ______________________________ T. Gouge, PCJ