Cantronic Systems Inc. v. Pavan Date:, 2017 BCPC 341

Citation: Cantronic Systems Inc. v. Pavan Date: 20171123 2017 BCPC 341 File No: C16650 Registry: Port Coquitlam IN THE PROVINCIAL COURT OF BRITISH COLUMBIA BETWEEN: CANTRONIC SYSTEMS INC. CLAIMANT AND: SANDI ATKINS PAVAN DEFENDANT REASONS FOR JUDGMENT OF THE HONOURABLE JUDGE T.S. WOODS Appearing for the Claimant: H. Leung Appearing in person: S. Pavan Place of Hearing: Port Coquitlam , B.C.

Date of Hearing: October 27, 2017 Date of Judgment: November 23, 3017 INTRODUCTION [1] In these civil proceedings, Cantronic Systems Inc. (“Cantronic”) brings action against its former employee Sandi Atkins Pavan(“Ms. Pavan”). In its Notice of Claim filed on January 20, 2017, Cantronic alleges that while she was in its employ, Ms. Pavan madeunauthorised purchases for herself using credit cards and company accounts that were made available to her for business purposes only. The losses suffered by Cantronic are said to amount to $19,883.71, together with interest of $4,500.

On its face Cantronic’s Notice ofClaim states that its cause of action arose in August 2010. [2] In her Reply filed on February 6, 2017, Ms. Pavan denies Cantronic’s claims against her as being false, stating among otherthings that all of the charges in question were incurred “for sales and marketing purposes only and were authorized …” Ms. Pavan doesnot expressly plead any limitations defences against Cantronic’s claims in her Reply. [3] On June 2, 2017, the parties appeared before de Couto, P.C.J. at a Settlement Conference. Judge de Couto adjourned thatconference to permit Ms.

Pavan an opportunity to bring an Application for dismissal of Cantronic’s claims on the ground that thelimitation period governing them may have lapsed, rendering them statute-barred. Ms. Pavan accordingly filed and served an Application that was returnable, initially, on July 10, 2017—a list day. There being insufficient time on July 10th to hear theApplication, it was adjourned to a one-hour hearing before me on October 27, 2017. [4] These are my Reasons for Judgment on Ms. Pavan’s Application.

WHICH LIMITATION ACT GOVERNS? [5] On its face, Cantronic’s Notice of Claim, filed on January 20, 2017, invokes (as noted) a cause of action that arose in August2010—a time when the former Limitation Act, R.S.B.C. 1996, c. 266 was still in force. However, that statute was repealed and replacedby the Limitation Act, S.B.C. 2012, c. 13, which came into force on June 1, 2013.

Thus it can be seen that the British Columbialimitation statue that existed when Cantronic’s cause of action arose in 2010 was not the limitation statute that was in force whenCantronic ultimately commenced proceedings on that cause of action against Ms. Pavan more than six years later in 2017. This requiresme to consider whether it is the old or the new limitation statute that governs for the purposes of the Application before me. [6] There is no issue as to discoverability of the subject cause of action “on or after” the coming into force of the new LimitationAct in 2013.

By the wording of its Notice of Claim and in submissions generally, Cantronic concedes that it was aware of Ms. Pavan’salleged fraud in the fall of 2010. [7] Accordingly, it is the former Limitation Act that governs. CHARACTERISATION OF THE CAUSES OF ACTION ASSERTED AND REMEDIES SOUGHT [8] Meaning no disrespect to Cantronic or its principals, I note that its Notice of Claim in these proceedings is a somewhatinexpertly drawn, layperson’s pleading.

However, some lack of precision and legal acuity is to be expected in court documents filed bylay litigants in actions pursued in Provincial Court; lay litigants are not (and ought not to be) held to the same standards in drafting theirpleadings as are parties represented by counsel: see, for example, Popular Shoe Store Ltd. v. Simoni (1998) (NLCA), 24 C.P.C. (4th) 10 (Nfld. S.C. -- A.D.), Rosic v. Mayer, [2005] O.J. No. 3529 (S.C.J.), Oasis Motor Home Rentals v. Thomas,2001 NSSC 45 , [2001] N.S.J. No. 112 (S.C.) and Menzies v. Strata Plan No. 2924, B.C.J. No. 2404 (Prov.

Ct.). [9] Except for a cryptic, one-word passing reference in its prayer for relief, Cantronic does not make use of the word “fraud” inasserting its claims. Neither is any particular remedy identified by Cantronic in its Notice of Claim. Accordingly, determining whatcause or causes of action are raised by Cantronic against Ms. Pavan and what relief it seeks from the court to remedy its claimed lossesnecessarily entails, to some extent, a process of inference. [10] One can reasonably infer from the language of the Notice of Claim that Cantronic pleads a cause of action against Ms.

Pavan incontract, alleging a breach on her part of a term of her employment contract—either express or implied—that she make use ofCantronic’s credit cards and accounts only for authorised, company purposes. On that inference, Cantronic seeks an award of damagesagainst Ms. Pavan for fraudulently breaching that contractual term. [11] One can also reasonably infer from the language of the Notice of Claim that Cantronic effectively asserts that, by her actions infraudulently making unauthorized use of company credit cards and accounts to benefit herself, Ms.

Pavan has been unjustly enriched andthat Cantronic seeks to invoke the device of the remedial constructive trust to recover the monies at issue from her. That is, properlyread, Cantronic’s layperson’s pleading can in my view be fairly understood, inter alia, to assert that: (

a) Ms. Pavan was unjustly enriched by her unauthorised use of Cantronic’s credit cards and accounts; (

b) Cantronic has in turn been correspondingly deprived; and (

c) there is no juristic reason for permitting the enrichment of Ms. Pavan to persist. [12] In such circumstances, the remedial constructive trust is an equitable remedy that, subject to jurisdictional factors that I shalladdress presently, a deprived party may ask the court to employ to remedy the unjust enrichment of which it complains.

[13] I will say again that the above-noted causes of action and their associated remedies are only implicitly pleaded in Cantronic’sNotice of Claim. Equally, however, the limitations defence that Ms. Pavan now seeks to vindicate in this Application is also notexpressly pleaded by her but must be inferred. In either case, the court’s concern—in the face of imprecise, laypersons’ pleadings—is todiscern what the real issues are in the dispute the parties have placed before the court for adjudication.

That has required that I take asomewhat charitable and forgiving approach to construing both Cantronic’s Notice of Claim and Ms. Pavan’s Reply. WHAT ARE THE APPLICABLE LIMITATION PERIODS UNDER THE GOVERNING LIMITATION ACT? Cantronic’s Claim in Contract [14] Under s. 3(2)(

a) of the applicable (former) Limitation Act, claims in, inter alia, contract for damages arising from “injury toperson or property, including economic loss arising from the injury” have a limitation period of two years. However, Cantronic’s claimagainst Ms. Pavan has no tie to “injury to person or property” and so s. 3(2)(

a) has no application. [15] A claim for damages for breach of contract simpliciter that is unrelated to “injury to person or property” and is not otherwisespecifically provided for in the governing Limitation Act falls within the scope of s. 3(5). Cantronic’s contractual claim against Ms.Pavan is just such a claim. Section 3(5) provides that contractual claims of the kind Cantronic has asserted against Ms. Pavan expire“after the expiration of 6 years” following the date on which the right to bring action on such a claim arose. [16] As I have noted above, Cantronic’s claim in contract against Ms.

Pavan arose in August 2010, as its Notice of Claim states. That is when the six-year limitation period began to toll, expiring ultimately in August of 2016. Having not commenced proceedings incontract against Ms. Pavan until January 20, 2017—several months after August of 2016—it is clear that Cantronic brought thoseproceedings against her outside the applicable, six-year limitation period. Cantronic’s claim in contract against Ms. Pavan is,accordingly, statute-barred. Cantronic’s Claim for Unjust Enrichment [17] Under s. 3(3)(

b) of the former Limitation Act, claims “against a trustee in respect of any fraud or fraudulent breach of trust towhich the trustee was party or privy” are subject to a 10-year limitation period. If Cantronic’s unjust enrichment claim fits within thelanguage of that section, then its ability to seek redress against Ms. Pavan for a cause of action that arose in August 2010 would not lapseuntil August of 2020.

Having filed its Notice of Claim in January of 2017, Cantronic would, as regards its unjust enrichment claim, nottherefore be vulnerable to a limitation defence. [18] Can Cantronic’s claim for unjust enrichment against Ms. Pavan in this case be properly characterised as a claim against a“trustee” in respect of “fraud” or “fraudulent breach of trust” to which Ms. Pavan, as a “trustee” was “party or privy”?

I am satisfied thatit can. [19] Clearly, in the present case in which Cantronic’s Notice of Claim, by necessary implication, includes a claim for unjustenrichment, the remedial constructive trust as contemplated by authorities such as Petkus v. Becker, (SCC), [1980] 2S.C.R. 834 is the mechanism that Cantronic seeks to have the court employ to provide it redress. The remedial constructive trust wasrecently characterised by Grauer J. in Haigh v. Kent, [2016] B.C.J. No. 391 at para. 12 (S.C.) as “… a recognition in equity that theplaintiff is entitled to ownership of the trust property”.

In terms of the present case, Cantronic seeks court recognition in equity that it isentitled to ownership of the monies, as trust property, obtained by Ms. Pavan by fraud through unauthorised use of Cantronic’s creditcards and accounts. As Grauer J. went on to state in Haigh at para. 12: The trustee of a constructive trust does not normally have the duties or powers of an express trustee. Instead, equity merely imposes onthe trustee an obligation to transfer legal title in the trust property to the beneficiary on demand … [20] While it is unlikely that Ms.

Pavan was formally a trustee bound by obligations under an express trust with regard to her use ofCantronic credit cards and accounts, in circumstances where it is alleged that she enriched herself to the detriment of Cantronic bymaking fraudulent, unauthorised use of those credit cards and accounts, it is certainly arguable that, by her conduct, Ms. Pavan madeherself a constructive trustee with regard to her allegedly ill-gotten gains, holding them for the benefit of Cantronic.

On that analysis,Cantronic can argue that she has been enriched, it has been correspondingly deprived, and there is no juristic reason to permit theenrichment to persist or continue (that is, to permit Ms. Pavan to retain the “trust property”). [21] The question of whether, for limitations purposes, the words “trust” in s. 1 and “trustee” in s. 3(3)(

b) of the former LimitationAct extend to include remedial constructive trusts and constructive trustees, respectively, came up for detailed consideration in Sun-RypeProducts v. Archer Daniels Midland Co., 2008 BCCA 278 , [2008] B.C.J. No. 1298 (C.A.)—a decision in which the courtgave extensive reasons dealing with, inter alia, distinctions that are sometimes recognised between “substantive” and “remedial” trusts.

Importantly for present purposes, the court held, at para. 91, as follows: … [W]e conclude that the trial judge was correct in interpreting s. 1 of the [former Limitation] Act to include remedial constructivetrusts and in finding that the ten-year limitation period under s. 3(3) of the Act applies to the plaintiffs' claims, assuming they are able toestablish their claims at trial and that a remedial constructive trust is the appropriate remedy. [22] Based on that reasoning and, of course, subject to Cantronic being able to make out a case at trial for the imposition of aremedial constructive trust as against Ms.

Pavan based on its allegation that she has been unjustly enriched through her unauthorised useof company credit cards and accounts, I conclude that the limitation period that governs Cantronic’s unjust enrichment claim against Ms.Pavan is the 10-year period specified in s. 3(3)(

b) of the former Limitation Act. [23] Cantronic pleads that its causes of action against Ms. Pavan, including its implicit cause of action for unjust enrichment, arose inAugust 2010 and thus the limitation period for the unjust enrichment claim will lapse in August 2020. It follows that in commencingproceedings against Ms. Pavan in January 2017, Cantronic did so well before the expiry of the applicable limitation period and that itsclaim for unjust enrichment is therefore not statute-barred.

IS THE REMEDIAL CONSTRUCTIVE TRUST A REMEDY THAT IS AVAILABLE IN THE PROVINCIAL COURT? [24] The final question I must consider is whether, as an equitable remedy, the remedial constructive trust is available to Cantronic inProvincial Court, given that the Provincial Court’s jurisdiction is primarily conferred by statute. [25] I am satisfied that this last question can be answered in the affirmative. [26] This court has held on several occasions that it possesses limited equitable jurisdiction that can be traced to, inter alia, thelanguage of s. 2(1) of the Small Claims Act, R.S.B.C. 1996, c. 430 and ss. 3 and 4 of the Law and Equity Act, R.S.B.C. 1979, c. 224: see,for example, R.K. v.

McBride, [1994] B.C.J. No. 2791 at para. 28 (Prov. Ct.); Bank of Montreal v. Minshull, [1994] B.C.J. No. 3189 atpara. 39 (Prov. Ct.); Joey Beenz Coffee Bar Ltd. v. Di Stasio (c.o.b. Neon Sign Writers), [2011] B.C.J. No. 2528 at paras. 19-25 (Prov.Ct.); and Bloomberg v. Barr, [2015] B.C.J. No. 1771 at para. 52 (Prov. Ct.). [27] Cases in the civil division of this court where the remedial constructive trust remedy specifically has been recognised asavailable (and sometimes employed) when unjust enrichment has been established include True Fit Form Rentals Ltd. v. Carr, [2005]B.C.J. No. 621 at paras. 13-16 (Prov.

Ct.) and Royal Bank of Canada v. Romanczuk, [1999] B.C.J. No. 1870 (Prov. Ct.). Further, inArtisan Floor Co. v. Lam (1993), (BC SC), 76 B.C.L.R. (2d) 384 (S.C.), Esson, C.J.S.C. (as he then was) adverted, inobiter, to the remedy of the constructive trust in a discussion of Provincial Court civil proceedings and did not gainsay or question itsavailability to those who litigate in that forum. CONCLUSIONS AND DISPOSITION [28] To the extent that Cantronic asserts a claim for damages for breach of contract in the present proceedings against Ms.

Pavan,that claim is governed as to limitations by s. 3(5) of the former Limitation Act. Section 3(5) fixes a six-year limitation period for suchclaims. Because Cantronic’s cause of action in contract against Ms. Pavan arose in August 2010, and Cantronic commenced proceedingsagainst her in January 2017, the six-year limitation period that governs the claim had lapsed when those proceedings were commenced. Accordingly, Cantronic’s action in contract against Ms. Pavan is dismissed on the ground that it is statute-barred. [29] To the extent that Cantronic asserts a claim in the present proceedings against Ms.

Pavan for unjust enrichment, the ProvincialCourt possesses sufficient equitable jurisdiction to adjudicate it. Moreover, that claim is governed as to limitations by s. 3(3)(

b) of theformer Limitation Act. Section 3(3)(

b) fixes a ten-year limitation period for such claims. Because Cantronic’s cause of action for unjustenrichment against Ms. Pavan arose in August 2010, the ten-year limitation period that governs the claim has not yet lapsed, andperforce it had not yet lapsed when those proceedings were commenced by Cantronic against Ms. Pavan in January 2017. Accordingly,that claim is not statute-barred and may still be pursued against her. [30] The preliminary questions raised at the first Settlement Conference having now been answered, and there being a claim forunjust enrichment by Cantronic subsisting against Ms.

Pavan, a continuation of the Settlement Conference commenced before de Couto,P.C.J. shall now be scheduled before him. [31] Orders accordingly. _______________________________ Thomas S. Woods, P.C.J.