Sangha v. Sangha, 2019 BCSC 646

IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: Sangha v. Sangha, 2019 BCSC 646 Date: 20190326 Docket: S137514 Registry: Vancouver Between: Susan Sangha in her capacity as the executor of the Estate of Ajit Singh, a.k.a. Ajit Singh Sangha, a.k.a. Ajit Sangha, deceased Plaintiff And: Kehar Garry Sangha in his capacity as the executor of the Estate of Gegander Kor Sangha, deceased; Kehar Garry Sangha, in his personal capacity; Prevost Farm Ltd.; and Kelveer Kelly Sangha Defendants Before: The Honourable Madam Justice Adair Oral Reasons for Judgment Counsel for the Plaintiff: C. Cho M.A.

Magnusson Counsel for Kehar Garry Sangha in his capacity as the executor of the Estate of Gegander Kor Sangha, deceased, Kehar Garry Sangha, in his personal capacity, and Prevost Farm Ltd.: R.A. Kasting No other appearances Place and Date of Trial: Vancouver, B.C. March 11-14, 2019 Place and Date of Judgment: Vancouver, B.C. March 26, 2019 Introduction [ 1 ] Ajit Sangha (“Ajit”) died in August 2012, just before his 82nd birthday. His wife of over 50 years, Gegander Kor Sangha (“Gegander”) predeceased him, and died in April 2011.

They had two children: the defendant Kehar Garry Sangha (“Garry”, and the defendant Kelveer Kelly Sangha (“Kelly”). On his death, Ajit left a relatively modest estate, the residue of which was divided equally between Garry and Kelly. [ 2 ] For over 25 years, Ajit and Gegander lived in the Vancouver region. Ajit worked at a sawmill and was the primary (if not the sole) financial provider for the family. However, Ajit suffered greatly from depression, to the extent that he was on disability benefits on and off prior to 1979.

He ceased to work permanently in or around 1980 or 1982. [ 3 ] In the early 1980s, Gegander moved to Duncan, B.C., with Garry. She acquired an interest in a farm property there by purchasing the shares in the defendant Prevost Farm Ltd. (“Prevost Farm”) and an interest in real property from the then-owners, James and Judith Rose. For a time after Gegander and Garry moved to Duncan, Ajit lived in the family home in Vancouver with Kelly. Later, he lived in residential care.

However, throughout their lives, Ajit and Gegander always considered themselves to be spouses, and they never separated. [ 4 ] As of trial, Prevost Farm’s net assets are worth about $2.7 million. Garry is the sole owner of all of the shares of Prevost Farm, which were transferred to him by Gegander prior to her death. [ 5 ] Kelly has taken no

part in the proceedings. Thus, when I refer to the “parties,” I am referring to the plaintiff and the defendants represented by Mr. Kasting, and when I refer to the “defendants,” I am referring to the three defendants represented by Mr. Kasting, unless otherwise indicated. [ 6 ] The plaintiff, who is the executor of Ajit’s estate, says that Prevost Farm was in fact a joint family venture, as that term is used in Kerr v. Baranow , 2011 SCC 10 . The plaintiff says that, as a result of Ajit’s contributions to the acquisition and development of Prevost Farm, Garry was unjustly enriched when he received 100% of the shares in Prevost Farm, and Ajit suffered a corresponding

deprivation. The plaintiff says that, based on the principles set out in Kerr , the appropriate remedy to compensate Ajit’s estate for the unjust enrichment, and to recognize Ajit’s contribution to the joint family venture, is a monetary award in the sum of $400,000, payable by Prevost Farm. [ 7 ] The trial was unusual. At the beginning of the trial, counsel for the plaintiff tendered a very detailed agreed statement of facts (the “Agreed Statement of Facts”) as part of the plaintiff’s case.

The parties also had a document agreement (marked as Exhibit 2) that covered the vast majority of the documents admitted into evidence at trial, and that included a term whereby most documents were admissible to prove the truth of facts contained in them. One witness (Harbajan Singh Sangha, Ajit’s younger brother) gave evidence by affidavit, and another (Mr. Rose) gave evidence by video deposition, both pursuant to a prior court order. Matters relating to Prevost Farm’s milk quota, a very significant asset, were addressed in the Agreed Statement of Facts and a second agreed statement of facts.

No witness gave oral evidence at the trial. The defendants called no evidence at trial, although Mr. Kasting made closing submissions. [ 8 ] Garry did not attend the trial in person. Rather, he attended by video from Vancouver Island Regional Correctional Centre. I was advised that, since 2017, Garry has been in custody in relation to criminal charges that (I understand) are scheduled for trial in June.

Other than being advised that the charges are not related to the matters in issue in this action, I was not told the nature of the charges. [ 9 ] In addition, I was advised at the outset of the trial of a further “wrinkle” that affected the settlement that had in fact been reached between the parties concerning the issues in this case. [ 10 ] In 2017, a family law action had been commenced under Chilliwack Registry No. E14791 by Treena Sheree Sangha, Garry’s spouse, against Garry, Prevost Farm and SSC Ventures (No. 105) Ltd. (“SSC Ventures”).

A without-notice order was pronounced in that action on October 13, 2017, by N. Brown J., restraining Garry, Prevost Farm and SSC Ventures from “disposing of, encumbering, assigning, or in any similar manner dealing with family property, or any property in which the Claimant has, or may have, an interest pending final determination of this action, without the consent in writing of the Claimant or without further order of the Court.” Whether any further steps have been taken in the family law action since Mr. Justice Brown’s order was made is unclear, although I was advised that there had not been.

It is apparent from the Receiver’s Third Report (which I refer to below) that Ms. Sangha (through her counsel) participated to some degree in this action following the appointment of the Receiver of all the assets, undertakings and properties of Prevost Farm in June 2018. [ 11 ] I was further advised that Ms. Sangha and her counsel had been advised of the trial date and that (since an order had been made in November 2017 making the trial date peremptory on the defendants) the trial would be proceeding. Mr.

Kasting advised that, leading up to the March 11 trial date, he made multiple, unsuccessful attempts to contact Ms. Sangha’s counsel. However, he received an email from her before court on March 11 (the first day of trial) advising that her representation of Ms. Sangha moving forward was “uncertain,” and that she expected Ms. Sangha would attend the trial as Mr. Kasting had suggested. In the result, neither Ms.

Sangha nor counsel representing her attended the trial. [ 12 ] In that light, despite the broad areas of agreement and the very narrow areas of dispute, there are still some matters on which I am required to draw inferences and make findings. The plaintiff says that, based on the evidence and inferences that are amply supported by the evidence, I should find that Prevost Farm was a joint family venture to which Ajit contributed, and a monetary remedy in Ajit’s favour for unjust enrichment, assessed at $400,000 and payable by Prevost Farm, is justified in this case. For the reasons that follow, I agree. 2.

Factual synopsis [ 13 ] For the most part, the following synopsis reflects evidence that was not in dispute based on the Agreed Statement of Facts and the documents admitted into evidence pursuant to the document agreement. Where there was a dispute, I have set out the factual findings I have made based on the whole of the evidence at trial. This, of course, includes the affidavit evidence of Mr. Harb Sangha and the evidence of Mr. Rose. [ 14 ] From 1980 to 2006, Prevost Farm operated a farm on about 37 acres with the civic address 3504 Drinkwater Road, in Duncan, B.C.

I will refer to the real property as “3504 Drinkwater” and the farming operations there as the “Farm.” I note that a slightly different defined term (“3504 Drinkwater Farm”) has been used in the Agreed Statement of Facts. However, I do not consider the differences to be material. [ 15 ] Prevost Farm was incorporated in November 1980 by Mr. and Mrs. Rose to operate a dairy farm on 3504 Drinkwater. For that purpose, the Roses arranged for Prevost Farm to borrow up to $450,000 from the Canadian Imperial Bank of Commerce (“CIBC”).

This was a demand loan, secured by a debenture charging all of the assets (including 3504 Drinkwater, title to which was held as to 99/100ths in the name of Prevost Farm and as to 1/100th in the name of the Roses) owned by Prevost Farm. However, particularly because of the very high interest rates in the early 1980s, Prevost Farm struggled to service the debt. The Roses decided to sell their interests in both Prevost Farm and 3504 Drinkwater. [ 16 ] On November 8, 1982, Gegander became the sole shareholder of Prevost Farm by purchasing 100 common shares and 1,284 preferred shares in the company from the Roses.

She also purchased the Roses’ 1/100th interest in 3504 Drinkwater. As a result, title to 3504 Drinkwater was held, as to 1/100th in Gegander’s name, and the remaining 99/100ths in the name of Prevost Farm. When Gegander acquired the shares in Prevost Farm, the shareholder loan balance was zero.

In other words, Prevost Farm did not owe any money to the Roses, the previous shareholders. [ 17 ] Gegander completed the acquisition by paying about $40,000 as a down payment and assuming liability under the CIBC debenture, which continued to charge Prevost Farm’s assets, including 3504 Drinkwater. [ 18 ] I find that the source of the funds to make the down payment on Gegander’s acquisition of Prevost Farm and 3504 Drinkwater came from money that Ajit had earned as the primary breadwinner for the family and other income (such as investment income) he was

receiving in the early 1980s. It is agreed that Gegander remained at home as a homemaker for most of her and Ajit’s marriage, except for a few years in the 1970s when she worked part-time at a restaurant. Gegander never worked enough to qualify to receive a CPP pension. It is also agreed that, when Gegander acquired the shares in Prevost Farm and her interest in 3504 Drinkwater, she did not own title to any real property and she did not have a paid job.

Although she was a beneficiary of the estate of her late father (who died in January 1976), I find that she did not receive any distributions from the estate until about 1986. Gegander’s personal bank statements from the relevant period that are in evidence do not support the conclusion that she withdrew the sum required to make the down payment. Rather, the evidence is consistent with Gegander having access to money in Ajit’s bank accounts and having access to Ajit’s money (income from investments and pension income, for example), even after she moved to Duncan.

Apart from Ajit, no other likely source was identified in the evidence for the down payment to acquire Prevost Farm and the interest in 3504 Drinkwater. [ 19 ] In 1982, Gegander and Garry (who was then a teenager) moved to Duncan, and began living and working on the Farm. Ajit continued to live in Vancouver in the family home with Kelly. [ 20 ] Ajit went to stay with Gegander and Garry at 3504 Drinkwater on and off from 1983 to 1986. However, during these years, Ajit was also hospitalized from time to time as a result of his mental health issues.

Around June 1984, Ajit attempted suicide by overdosing on antidepressants. His memory and motor skills deteriorated due to the severe brain injury that was caused by the overdose. From about that time, Ajit became incapable. When he was released from hospital, he was moved to a care home in Duncan to be closer to Gegander and Garry. Gegander always wanted Ajit to be well cared for. [ 21 ] Around 1986, Prevost Farm purchased 82 litres of milk quota. About the same time, $23,000 was withdrawn from Ajit’s RRSP account.

I find that Gegander withdrew this sum from Ajit’s RRSP account and used the money to purchase milk quota for Prevost Farm. There can be no doubt that milk quota comprised and comprises a very substantial part of the value of Prevost Farm. [ 22 ] After 1986, Ajit stayed in institutional care homes on Vancouver Island and in Vancouver. Gegander visited Ajit regularly until she herself suffered a stroke and had to live in a care home in 1996. Between 1986 and February 1991, Gegander received and managed all of Ajit’s monthly pension income of $1,800.

After payment of Ajit’s expenses for residential care, Gegander received the balance of about $950 per month, or about $57,000 in total during this period. [ 23 ] In September 1989, the family home in Vancouver was sold. The net sale proceeds were approximately $140,000. Ajit and Gegander used about $88,000 to purchase (as joint tenants) 20 acres (the “Auchinachie Property”) next to 3504 Drinkwater. The hope was for Ajit and Gegander to purchase a trailer to live on the Auchinachie Property together, and be near Garry and his family, who were living in the farmhouse at 3504 Drinkwater.

However, as it turned out, Ajit was too ill to move to the Auchinachie Property, and the plan to live there with Gegander was never carried out. [ 24 ] Even though Ajit was too ill for that plan to be carried out, in January 1991, at the request of Gegander and Garry, Ajit signed a document that gave Farm Credit Canada a mortgage on the Auchinachie Property to secure a loan of $85,000.

This loan was used to purchase 100 litres of milk quota for Prevost Farm. [ 25 ] I find that Ajit’s agreement to give a mortgage on the Auchinachie Property to obtain a loan to purchase milk quota for Prevost Farm resulted in a significant contribution on his part to Prevost Farm. [ 26 ] The Public Guardian and Trustee was appointed Ajit’s committee in February 1991. Between 1991 and 1997, the Public Guardian and Trustee paid spousal support of $800 per month to Gegander, totalling approximately $57,000. [ 27 ] By May 26, 1995, Gegander had transferred all of the common shares in Prevost Farm to Garry.

Following her debilitating stroke in 1996, Gegander was no longer able to manage her financial affairs, and she gave her power of attorney to Garry. In July 2004, Gegander transferred her 1/100th interest in 3504 Drinkwater to Garry for $1.00 and “other good and valuable consideration.” In October 2005, by deed of gift, Gegander transferred her half-interest in the Auchinachie Property to Garry. Then, in February 2006, Gegander transferred all her preferred shares in Prevost Farm to Garry. Thus, as of February 2006, Garry was the sole shareholder of Prevost Farm.

Moreover, these transfers to Garry left virtually nothing in Gegander’s estate on her death, and no application has ever been made for a grant of probate of her will. [ 28 ] In March 2006, 3504 Drinkwater (including the Farm) was sold. Based on the facts set out in paras. 39 to 43 of the Agreed Statement of Facts, I find that the property referred to as the “Stamps Property” was purchased using proceeds from the sale of 3504 Drinkwater and $400,000 of the proceeds of a loan made by Farm Credit Canada to Prevost Farm.

On that basis, I find further that the Stamps Property should be considered to be an asset of Prevost Farm, and that Prevost Farm is the beneficial owner. [ 29 ] Although 3504 Drinkwater was sold in 2006, Prevost Farm retained its milk quota. As set out in detail in the Agreed Statement of Facts (at paras. 52 and following), in March 2006, Prevost Farm entered into an arrangement (described as the “Quota Lease Agreement”) whereby it transferred the legal ownership of its milk quota to SSC Ventures, who then held it as bar trustee.

The amount of milk quota held in trust by SSC Ventures for Prevost Farm has increased since March 2006. Between June 2006 and August 2017, Prevost Farm has received over $2 million in lease payments under the Quota Lease Agreement. [ 30 ] On his examination for discovery read into evidence at the trial, Garry testified spontaneously that: Prevost Farm’s signs on those barns only ever said “Sangha family.” And I was proud to have that put on those signs. It wasn’t about Garry or whatever, it was about the Sangha family. . . . And that means a lot to me. Right? . . . It was about a family effort. Right?

It had nothing to do with individuals. It was about a family working together, to be able to work together. Right? It’s a pretty cool thing to see. Not many people get to experience that, and I’m glad I did. Q. Did that - - and when you refer to the family does that include your father? A. Of course.

[ 31 ] On the application of the previous plaintiffs (who were then the co-executors of Ajit’s estate), a receiver of Prevost Farm was appointed, pursuant to the order of Mayer J. pronounced June 20, 2018. At the same time, the style of cause was amended to the current style of cause. (Mr. Justice Mayer’s oral ruling on the application is indexed at 2018 BCSC 1074 .) [ 32 ] Pursuant to the terms of the document agreement, the Receiver’s Third Report (the “Report”), dated February 28, 2019 and filed March 1, 2019, was admitted in evidence for the truth of its contents.

In the Report, the Receiver noted the involvement of Ms. Sangha (or her counsel) from time to time. [ 33 ] On October 25, 2018, on the application of the Receiver, an order was made by Davies J. that (among other things) authorized the Receiver to sell up to $1.7 million worth of milk quota and to pay certain debts (including to Farm Credit Canada) out of the net proceeds.

As stated in the Report, the Receiver ultimately calculated that approximately $1.6 million would be sufficient to pay out all secured creditors, income taxes, ongoing expenses and Receiver’s fees and disbursements, and the Receiver negotiated a sale accordingly with a closing date of February 1, 2019. The details of the disbursements resulting from this sale are included in

Schedule E to the Report, which is the Receiver’s interim statement of cash receipts and disbursements for the period June 20, 2018 to February 25, 2019.

Schedule F to the Report is the Receiver’s cash flow projection for the period February 26, 2019 to November 30, 2019. It shows (among other things) a cash balance in the Receiver’s account as of February 25, 2019 of $552,660.60, and projected available funds (after, among other things, payment of 2019 estimated corporate income taxes, Receiver’s estimated fees and disbursements, and estimated legal fees and disbursements for the Receiver’s legal counsel) of $300,000.

The projected available funds assume that there are no further sales of Prevost Farm’s remaining milk quota, the estimated value of which was approximately $1,145,000. 3. Discussion and analysis [ 34 ] Although a number of claims (including partnership) were advanced in the notice of civil claim (as amended), in closing submissions, the plaintiff claimed only restitutionary relief on the basis of resulting trust and unjust enrichment. I note, with respect to such claims, Mr. Justice Grauer’s observation in Iberg v. Claridge , 2019 BCSC 165 , at para. 8 : [8] The parties do not dispute the applicable law.

Although both resulting trust and constructive trust are pleaded, Mrs. Iberg relies on unjust enrichment. When it comes to an unjust enrichment analysis, the concepts of resulting trust and constructive trust tend to overlap: Donovan W.M. Waters, Mark Gillen & Lionel Smith: Waters’ Law of Trusts in Canada , 4th ed. (Toronto: Carswell, 2012) (“Waters”) at 395. Consequently, in circumstances such as we have here, unjust enrichment and the law of resulting trusts tend to lead to the same result: [citations omitted]. [ 35 ] I agree with Mr.

Kasting’s submission to the effect that, in the circumstances of this case, unjust enrichment and the law of resulting trusts tend to lead to the same result. [ 36 ] With respect to claims based on unjust enrichment, as Cromwell J. pointed out in Kerr , at para. 60 : [60] At least one other basis for an unjust enrichment claim is easy to identify. It consists of cases in which the contributions of both parties over time have resulted in an accumulation of wealth.

The unjust enrichment occurs following the breakdown of their relationship when one party retains a disproportionate share of the assets which are the product of their joint efforts. . . .Thus, where there is a relationship that can be described as a “joint family venture”, and the joint efforts of the parties are linked to the accumulation of wealth, the unjust enrichment should be thought of as leaving one party with a disproportionate share of the jointly earned assets. [ 37 ] Ms.

Cho (on behalf of the plaintiff) submits that, here, Prevost Farm was a joint family venture between Ajit, Gegander and Garry, and that Garry (in particular) was unjustly enriched, and Ajit (and his estate) correspondingly deprived, when Gegander gave all of the shares in Prevost Farm to Garry. [ 38 ] I agree, and the defendants do not take issue with these basic propositions. I find that Garry, through ownership of Prevost Farm, has retained a disproportionate share of the accumulated wealth and assets resulting from the joint family venture to which Ajit made significant contributions.

There is no juristic reason for the enrichment. [ 39 ] The evidence at trial supports the conclusion that Prevost Farm was a joint family venture. Ajit and Gegander had been married for 29 years when Gegander purchased Prevost Farm and acquired the interest in 3504 Drinkwater. They were not estranged, and they had a traditional marriage, operating as a single economic unit, in which Ajit acted as the primary breadwinner. Ajit and Gegander continued to operate as a single family economic unit after 1982.

Although they were not living together full-time because of Ajit’s illness, Gegander (on the evidence) always wanted Ajit to be well cared for and was always looking out for his best interests. Ajit continued to support Gegander financially, contributing approximately $114,000 in that respect. Before Ajit became too ill, they planned to live together on the Auchinachie Property, next to 3504 Drinkwater. Gegander acquired Prevost Farm at a time when Ajit was becoming too ill to earn an income from work, and I have found that Ajit’s money was used to make the down payment to make the acquisition.

I consider it reasonable to infer that Gegander was intending, in acquiring Prevost Farm, to make a fresh start with Ajit (and their son) on 3504 Drinkwater and to find a new way (through the Farm) for the family to make money to support itself. As I have found, Ajit also contributed directly to Prevost Farm’s ability to obtain milk quota, a very significant asset. [ 40 ] To the extent he was able, Ajit financially supported Gegander and Garry as they pooled their efforts and worked toward common goals (principally, Prevost Farm’s success and supporting the family).

Family funds were used to acquire and maintain Prevost Farm. Garry’s evidence on discovery strongly supports the conclusion that Prevost Farm was a joint family venture, and one that included Ajit. Ajit’s contributions are linked to the accumulation of assets in Prevost Farm. Garry would be unjustly enriched if he were left with a disproportionate share of the jointly earned assets. [ 41 ] Accordingly, Ajit’s estate is entitled to a remedy for unjust enrichment and to a share in the accumulated wealth of the joint family venture, proportionate to his contributions.

[ 42 ] The parties agree that a monetary remedy (rather than a proprietary remedy) is appropriate in this case. I also agree. Moreover, with respect to assessment of the amount, the court was advised at the outset of the trial that the parties had reached a settlement on the amount, and agreed that $400,000 should be paid by Prevost Farm to the plaintiff in full satisfaction of all claims. The parties have agreed that this is the appropriate measure of compensation, proportionate to Ajit’s contributions to the accumulated wealth of the joint family venture.

The parties have also agreed on a form of order concerning payment. [ 43 ] In the light of that settlement and agreement, I will make only brief comments concerning the amount. It is based on Ajit’s estate being entitled to a 15% interest in Prevost Farm and assuming a current value of Prevost Farm of at least $2.7 million. This value, in turn, is, in part, based on the Stamps Property being considered an asset of Prevost Farm which (for the reasons set out above) I have found it is.

By the Agreed Statement of Facts, it is agreed that the appraised value of the Stamps Property as of October 31, 2018 is between $1,063,000 to $1,115,000. [ 44 ] In my view, given the nature and amount of Ajit’s contributions to the joint family venture, assessing his share of the accumulated wealth at 15% of $2.7 million, or $400,000, is reasonable and justified. [ 45 ] Given the parties’ agreement concerning the appropriate amount of the remedy, I do not find it necessary to make findings concerning the loan of $300,000 to Joe Bifano referred to in para. 49 of the Agreed Statement of Facts, or the $600,000 loan to Nata Farms Inc. (which includes the $300,000 loan to Mr.

Bifano) referred to in para. 72 of the Agreed Statement of Facts, although I note the plaintiff’s position is that these loans are payable to Prevost Farm and therefore assets of Prevost Farm. 4.

Summary and disposition [ 46 ] In

summary, I order that the plaintiff have judgment against Prevost Farm in the sum of $400,000. With respect to payment of the judgment, I order that $300,000 is to be paid by the Receiver from the funds on hand, and paid to the plaintiff’s solicitors in trust. All other claims are dismissed. [ 47 ] I have been advised that there are two outstanding costs orders against the defendants and in favour of the plaintiff, one pronounced on November 20, 2017, and one pronounced March 5, 2019.

The parties have agreed that, following assessment of or agreement between the parties concerning the amounts, such costs are to be paid from the funds on hand with the Receiver. I so order. [ 48 ] Otherwise, and by agreement, the parties will bear their own costs. [ 49 ] That concludes my reasons. “ADAIR J.”