Sekhon v. Tung et al., 2018 BCPC 139 (CanLII)
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2018 BCPC 139 |
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Date: |
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File No: |
S83060 |
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Registry: |
Surrey |
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IN THE PROVINCIAL COURT OF BRITISH COLUMBIA
(Small Claims)
BETWEEN:
JETENDER SEKHON
CLAIMANT
AND:
GAGANDEEP TUNG
DEFENDANT
AND:
GURVINDER SINGH ATWAL
THIRD PARTY
RULING ON APPLICATION
OF THE
HONOURABLE JUDGE J.T. DOULIS
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J. Sekhon |
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Counsel for the Defendant: |
G. Gabri |
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Appearing for Third Party: |
G.S. Aywal |
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Place of Hearing: |
Surrey, B.C. |
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Date of Hearing: |
May 28, 2018 |
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Date of Judgment: |
June 7, 2018 |
INTRODUCTION
[1] On April 30, 2018, Gurvinder Singh Atwal (“Mr. Atwal”) filed an Application to a Judge seeking an order striking out the third party notice of the Defendant, Gagandeep Tung (“Mr. Tung”). Mr. Atwal’s application came before me for hearing on May 28, 2018, in Surrey Provincial Court. Mr. Atwal says he has never received any money from Mr. Sekhon, he was not privy to any agreement between Mr. Sekhon and Mr. Tung, and, in any event, the third party proceedings are untimely and the statutory limitation period has expired.
[2] At the hearing of Mr. Atwal’s application, I received into evidence the affidavit of Mr. Tung sworn May 26, 2018 (filed May 28, 2018) and heard submissions of Mr. Atwal, Mr. Gabri, counsel for Mr. Tung, and Jetender Sekhon (“Mr. Sekhon”).
[3] Upon reviewing the court file, I learned that Mr. Tung’s reasons for naming Mr. Atwal as a third party in these proceedings are interrelated with other proceedings involving Mr. Tung, Mr. Sekhon and Mr. Atwal. I requested the parties provide further submissions on whether the issue before the court is res judicata. I received submissions from Mr. Gabri, Mr. Sekhon and Mr. Atwal on June 4, 2018. These are my reasons for judgment.
ISSUES
[4] The overarching issue before the court in this application is whether the third party notice ought to be struck. This issue requires the court to consider a number of factors including: (a) the expiration of a limitation period; (b) the merits of the proposed claim; (c) the delay in the proceedings; (d) the timeliness of the application; and (e) prejudice to the parties. With respect to prejudice, the salient issue is whether the third party proceedings vis-à-vis Mr. Tung and Mr. Atwal are res judicata with respect to B.C. Supreme Court File 160222.
BACKGROUND FACTS AND PROCEDURAL HISTORY
[5] The procedural history of this small claims matter is a serpentine trail from Provincial Court to Supreme Court back to Provincial Court. The cause of action arose on June 6, 2012, and the litigation commenced on January 2, 2014, when Mr. Sekhon filed a Notice of Claim against Mr. Tung in Surrey Provincial Court under Court File 75437 (“BCPC File 75437”).
[6] In his Notice of Claim, Mr. Sekhon says that on June 6, 2012, he lent Mr. Tung $18,000 to invest in a housing project. Mr. Tung agreed to repay the principal in one year together with $2,000 interest for a total of $20,000. Mr. Tung did not repay the $20,000 as agreed and Mr. Sekhon filed his Notice of Claim.
[7] Mr. Tung filed a Reply to Mr. Sekhon’s Notice of Claim on January 20, 2014, in which he states he “vehemently disagrees” with the claim.
[8] On April 4, 2014, Mr. Tung filed a Notice of Civil Claim in the British Columbia Supreme Court (“BCSC”), New Westminster Registry, Court File 160222, against Paramjeet Gill, Jetender Sekhon, Ranbir Atwal and Gurvinder Atwal (see Exhibit “A”, Tung Affidavit filed in BCPC File 83060 on May 28, 2018). In his Notice of Civil Claim Mr. Tung alleged that in December 2007, he entered into a verbal agreement with the Defendants, Paramjeet Gill, Jetender Sekhon, Ranbir Atwal and Gurvinder Atwal (collectively, the “Borrowers”) to lend them money to build a duplex in Burnaby (the “Burnaby Project”) on lands registered in the names of Gurvinder Atwal, Ranbir Atwal and Paramjeet Gill. The Borrowers agreed to repay the principal when the Burnaby Project was complete together with 12% interest per annum. The Defendants in BCSC File 160222 filed their Response to Civil Claim on May 5, 2014, which was subsequently amended on July 14, 2017 (see Exhibit “A”, para. 8 and Exhibit “E”, Tung Affidavit #1 filed December 13, 2017, BCSC File 168242).
[9] In his Reasons for Judgment (at para. 9) handed down in BCSC File 160222 on October 5, 2017 (the “RFJ”) Justice Sewell notes that Gagandeep Tung, Paramjeet Gill, Jetender Sekhon, Ranbir Atwal and Gurvinder Atwal had known each other for a number of years and had done business with each other in the past. Paramjeet Gill and Jetender Sekhon are married to each other (see Exhibit “B”, Tung Affidavit #2 filed in BCPC File 83060 on May 28, 2018)
[10] The names of the parties in these proceedings and BCSC File 160222 are spelled inconsistently in the various documents. I will adopt the spelling set out in para. 2 of the RFJ.
[11] In his Notice of Civil Claim in BCSC File 160222, Mr. Tung alleged that between January 21, 2008 and September 28, 2009, he lent the Borrowers a total of $117,000. The Burnaby Project completed in March 2012 and the Borrowers repaid Mr. Tung $80,000 of the loan on or about April 3, 2012. Mr. Sekhon paid Mr. Tung $18,000 on June 6, 2012, leaving unpaid $19,000 in principal plus accrued interest (see Exhibit “A” Tung Affidavit #2 filed in BCPC File 82060 on May 28, 2018).
[12] On August 21, 2014, Mr. Tung filed an Application to a Judge to transfer BCPC File 75437 to the Supreme Court pursuant to Rule 7.1 of the Small Claims Rules. Mr. Tung argued that Mr. Sekhon’s Notice of Claim for $20,000 was related to Mr. Tung’s Notice of Civil Claim in BCSC File 160222.
[13] By order of Judge Gordon made January 28, 2015, BCPC File 75437 was transferred to British Columbia Supreme Court, New Westminster Registry, where it was assigned BCSC Court File Number 168242 (“BCSC File 168242”). Jetender Sekhon was the Plaintiff in BCSC File 168242 and Gagandeep Tung, the Defendant (see Exhibit “A”, Sekhon Affidavit filed in BCSC File 168242 on November 14, 2017 and Exhibit “F”, Tung Affidavit #1 filed in BCSC File 168242 on December 13, 2017).
[14] BCSC File 160222 was never joined with BCSC File 168242. In fact, no action was taken in BCSC File 168242 following its transfer from Provincial Court. Specifically, neither Mr. Sekhon nor Mr. Tung conducted any examinations for discovery, invoked any pre-trial procedures, or scheduled a trial date.
[15] Mr. Sekhon never filed a counterclaim against Mr. Tung in BCSC File 160222 and Mr. Tung never filed a third party notice in BCSC File 168242 until November 23, 2017.
[16] On June 28, 2017, Mr. Tung filed a Notice of Application in BCSC File 160222 seeking an order transferring both BCSC File 160222 and BCSC File 168242 to Provincial Court and an order they be heard together. On July 13, 2017, Mr. Justice Skolrood dismissed Mr. Tung’s application (see Exhibit “A”, Tung Affidavit #1 filed December 13, 2017 in BCSC File 168242).
[17] On July 14, 2017, Paramjeet Gill, Jetender Sekhon and Ranbir Atwal filed an Amended Response to Civil Claim in BCSC File 160222. In their Amended Reply, the Defendants state that Gurvinder Atwal was the project manager from 2007 to 2010 on the Burnaby Project. The Borrowers state:
17. The $18,000 the Plaintiff [Gagandeep Tung] alleges was paid back to him by Jetender Sekhon on June 6, 2012, had nothing to do with his claims set out in his Notice of Civil Claim.
18. The $18,000 given to the Plaintiff by Jetender Sekhon was for a loan the Plaintiff requested from Jetender Sekhon so the plaintiff could do a residential construction project.
19. Jetender Sekhon asked for payment of the $18,000 but the Plaintiff refused.
20. Jetender Sekhon commenced a Small Claims action on January 2, 2014 to seek repayment of the $18,000.
(See Exhibit “E”, Tung Affidavit #1 filed December 13, 2017 in BCSC File 168242.)
[18] On July 27, 2017, at a Trial Management Conference in BCSC File 160222, Master Caldwell suggested Mr. Sekhon’s claim against Mr. Tung in BCSC File 168242 amounted to a set off, and BCSC File 168242 ought to be heard concurrent with BCSC File 160222 (see Exhibit “B”, Tung Affidavit #1 filed December 13, 2017 in BCSC File 168242).
[19] Mr. Tung’s Notice of Civil Claim in BCSC File 160222 came before Mr. Justice Sewell for trial on August 28, 29, 30, 31, September 1 and 5, 2017 in New Westminster Supreme Court. On the first day of trial, Mr. Tung reapplied to have BCSC File 160222 and BCSC File168242 heard together. Mr. Sekhon and Ranbir Atwal opposed the application for joinder and Justice Sewell denied the application (see Tung Affidavit #1 filed December 13, 2017 in BCSC File 168242, para. 9).
[20] Mr. Sekhon says the reasons Justice Skolrood and Justice Sewell gave for refusing to join BCSC File 168242 and BCSC File 160222 was the lateness of the application and the lack of pre-trial procedures undertaken in BCSC File 168242.
[21] On October 5, 2017, after a six-day trial, Justice Sewell found Mr. Tung failed to prove his claim against any of the Borrowers except Gurvinder Atwal. Justice Sewell found Mr. Tung made the loans in issue to Gurvinder Atwal to help him pay for his share of the capital cost of the Burnaby Project in which Mr. Atwal was investing (see Exhibit “B”, Tung Affidavit filed May 28, 2018 in BCPC 83060).
[22] Justice Sewell found Gurvinder Atwal liable to Mr. Tung in the amount of $83,580, which sum comprises of $19,000 in principal and $64,580 in interest accrued at 12% per annum. Justice Sewell based his findings on Gurvinder Atwal’s admissions at trial.
[23] In his RFJ, Justice Sewell refers to Mr. Sekhon’s evidence with respect to the $18,000 which Mr. Tung said constituted a payment on his $117,000 loan to the Borrowers. Justice Sewell states at paras. 23, 24, 28 and 29, in part:
[23] Mr. Tung testified that he received a payment of $80,000 and a later payment of $18,000 from Mr. Sekhon, who told him the $18,000 payment was the payment of his wife’s portion of the remaining balance outstanding on the loan.
[24] Gurvinder [Atwal’s] supports the basic tenets of Mr. Tung’s evidence. . .
. . .
[28] Mr. Sekhon denies that he ever approached Mr. Tung to ask for a loan, either for the project or on behalf of his wife. . .
[29] Mr. Sekhon denied that he had borrowed any money from Mr. Tung. He testified the $18,000 bank draft he provided to Mr. Tung in 2012 was in fact a loan from himself to Mr. Tung. In his evidence he said first that Mr. Tung needed funds because he was building a house, but agreed in his examination for discovery, he said Mr. Tung wanted the money for his trucking business.
[24] Justice Sewell rejected Mr. Tung’s evidence that the loan in issue in BCSC File 160222 was to Mr. Sekhon; Justice Sewell states at paras. 54, 61-62 and 67-68 of his RFJ, in part:
[54] . . . I find that I do not accept the evidence of the plaintiff’s witnesses or of Gurvinder [Atwal] with respect to the issue of who were the parties to the loans advanced by Mr. Tung.
. . .
[61] . . . The first clear assertion from Mr. Tung that the loans in issue in this case were made to all four defendants is in the notice of civil action filed in 2014. There was no reliable evidence that Mr. Tung ever looked to anyone other than Gurvinder [Atwal] for repayment of the loans before that date. In particular, in his reply to Mr. Sekhon’s claim against him for the $18,000, Mr. Tung did not plead that the $18,000 was a repayment of the loan in issue in this case, although Mr. Tung in that reply did say he vehemently denied that the $18,000 was a loan to him.
[62] Accordingly, I find I cannot accept Mr. Tung’s evidence on the critical issues in this case.
. . .
[67] I also accept Mr. Sekhon’s evidence that he did not borrow any money from Mr. Tung. I find that Mr. Sekhon was not a participant in the joint venture for the development of the Burnaby project. I cannot infer that Paramjeet Gill was acting as his alter ego or agent in the project. Accordingly, I find Mr. Sekhon is not liable for any part of the alleged loan.
[68] I also accept Ms. Gill’s evidence that she did not borrow any money from Mr. Tung. . .
[25] On November 14, 2017, Mr. Sekhon filed a Notice of Application seeking an order that BCSC File 168242 be transferred back to Provincial Court.
[26] On November 23, 2017, Mr. Tung filed a third party notice in BCSC File 168242 against Mr. Atwal. In the third party notice, Mr. Tung states that in BCSC File 160222, he credited Mr. Sekhon with repaying $18,000 of the $117,000 loan he made to the Borrowers. When assessing Mr. Atwal’s liability for the outstanding amount on the loan, Justice Sewell based his findings on Mr. Tung’s calculations which included the $18,000 payment Mr. Tung had credited to Mr. Sekhon.
[27] In the third party notice, Mr. Tung seeks:
a. a declaration that Gurvinder Atwal was liable to pay $18,000 plus any interest to Jetender Sekhon or alternatively to Gagandeep Tung, and or alternatively,
b. a declaration that Gagandeep Tung was not liable to pay $18,000 to Jetender Sekhon.
[28] It appears Mr. Tung’s third party notice was filed well past the 42-day deadline set out in Rule 3-5(4)(b) of the Supreme Court Civil Rules, B.C. Reg. 168/2009, and without leave of the court. Rule 3-5 (4) states:
(1) A party against whom relief is sought in an action may, if that party is not a plaintiff in the action, pursue a third party claim against any person if the party alleges that
(a) the party is entitled to contribution or indemnity from the person in relation to any relief that is being sought against the party in the action,
(b) the party is entitled to relief against the person and that relief relates to or is connected with the subject matter of the action, or
(c) a question or issue between the party and the person
(i) is substantially the same as a question or issue that relates to or is connected with
(A) relief claimed in the action, or
(B) the subject matter of the action, and
(ii) should properly be determined in the action.
…
(4) A party may file a third party notice
(a) at any time with leave of the court, or
(b) without leave of the court, within 42 days after being served with the notice of civil claim or counterclaim in which the relief referred to in subrule (1) is claimed.
[29] BCSC File 168242 (formerly BCPC File 75437), was transferred back to Provincial Court and assigned BCPC File Number 83060 in the Surrey Small Claims Registry.
[30] In his Application to a Judge filed April 30, 2018, Mr. Atwal asks the court to strike the third party notice on the basis he never received any money from Mr. Sekhon and had no part of any agreement between Mr. Sekhon and Mr. Tung. Moreover, the third party notice was filed almost three years after Mr. Sekhon filed his Notice of Claim.
[31] Mr. Gabri points out that according to para. 2 of Justice Sewell’s RFJ, Mr. Atwal gave evidence in the trial of BCSC File 160222 supporting Mr. Tung’s version of events.
LEGAL FRAMEWORK
[32] Both the Provincial Court Small Claims Rules (Rule 5) and the Supreme Court Civil Rules, B.C. Reg. 168/2009, allow for third party proceedings.
[33] In Community Futures Development Corp. v. Dore River Forest Products Ltd., 2014 BCSC 992, Mr. Justice Romilly (at para. 24) summarized the following applicable principles with respect to third party pleadings extracted from the seminal case McNaughton v. Baker, 1988 CanLII 3036 (BCCA) [citations omitted]:
1. If there is a possibility that the third party proceedings may succeed, they will be allowed to stand . . . ;
2. Third party proceedings are a form of pleading by which a defendant asserts a claim against someone other than the plaintiff in the event the defendant is found liable to the plaintiff, which are no longer confined to contribution or indemnity but may be brought for claims for relief or a remedy relating to or connected with the original subject matter of the action, and in cases where the proposed third party claim involves a question or issue substantially the same as a question or issue arising in the claim between the plaintiff and defendant: . . . ;
3. The purpose of third party pleadings is to avoid a multiplicity of proceedings and inconsistent findings, to provide a mechanism for the third party to defend the plaintiff's claim, and to ensure the third party claim is decided before a defendant is called upon to pay the full amount of any judgment. The avoidance of a multiplicity of proceedings is fundamental to our rules of civil procedure . . . ;
4. A third party notice may be struck out on the basis that the claim does not fall within one of the categories listed under [Rule 3-5(1)] or that it discloses no reasonable cause of action, or is frivolous and vexatious, may prejudice or embarrass the hearing of the appeal, or is otherwise an abuse of the process of the court . . . ;
5. Even if a cause of action has been pleaded in a defective manner, the pleadings out to be allowed to stand as these defects may be remedied by the delivery of appropriate particulars or amendment . . . ;
6. A motion to strike out or amend a third party claim should be considered on the assumption that the facts pleaded can be established - in other words the court proceeds on the assumption all the facts pleaded are true . . . ; and
7. The courts take a liberal approach to pleadings. Before the courts will strike out a pleading or refuse an amendment on the ground that it discloses no reasonable cause of action or defence the case must be perfectly clear . . . the power to strike out a pleading on the ground that it discloses no reasonable cause of action "should be exercised only where the case is absolutely beyond doubt." . . .
[34] In Herman v. Accent Homes Realty Ltd., 2017 BCSC 479 (CanLII), at para. 18, Master McDiarmid enumerated the following factors the court may consider when exercising its discretion to grant leave to file a third party notice:
a. expiration of limitation period;
b. the merits of the proposed claim;
c. any delay in the proceedings;
d. the timeliness of the application; and
e. prejudice to the parties.
[35] I will consider each of these factors in turn.
Expiration of limitation period
[36] Mr. Sekhon is suing for payment of a debt he claims is owed to him by Mr. Tung. Mr. Sekhon says on June 6, 2012, he lent Mr. Tung $18,000 on the condition Mr. Tung repay the principal plus $2,000 interest within one year. Mr. Tung did not repay the loan as agreed, thereby breaching his oral contract with Mr. Sekhon. The date upon which Mr. Tung breached his contract with Mr. Sekhon was June 6, 2013.
[37] Mr. Sekhon commenced these proceedings on January 2, 2014, almost six months after the breach. Mr. Tung added Mr. Atwal as a third party on November 23, 2017, while these proceedings were still before the Supreme Court. Mr. Atwal says he was not served with the third party notice until April 9, 2018, although Mr. Tung’s affidavit indicates Mr. Gabri attempted to serve Mr. Atwal with the notice on December 4, 2017 and again on January 24, 2018. Eventually, Mr. Atwal was personally served with the third party notice on April 9, 2018. In any event, it has been over six years since Mr. Sekhon says he lent the $18,000 to Mr. Tung, five years since the loan was to be repaid, and over four years since Mr. Sekhon initiated these proceedings.
[38] On June 6, 2012, the date upon which Mr. Sekhon advanced the $18,000 to Mr. Tung, the limitation for a claim of breach of contract was governed by the Limitation Act R.S.B.C. 1996, c. 266 (“Former Limitation Act”). Section 3(5) provided for a six-year limitation period on a claim based on breach of contract.
[39] On June 1, 2013, the Limitation Act, SBC 2012, c. 13 (the “New Limitation Act”) replaced the Former Limitation Act. Pursuant to s. 30 of the New Limitation Act, the limitation periods established by the Former Limitation Act continue to govern if a pre-existing claim arose and was discovered before the New Limitation Act came into force.
[40] The key statutory provisions are s. 6(1), s. 8 and ss. 24(1), (6) and (10) of the New Limitation Act, which state:
6 (1) Subject to this Act, a court proceeding in respect of a claim must not be commenced more than 2 years after the day on which the claim is discovered.
…
8 Except for those special situations referred to in sections 9 to 11, a claim is discovered by a person on the first day on which the person knew or reasonably ought to have known all of the following:
(a) that injury, loss or damage had occurred;
(b) that the injury, loss or damage was caused by or contributed to by an act or omission;
(c) that the act or omission was that of the person against whom the claim is or may be made;
(d) that, having regard to the nature of the injury, loss or damage, a court proceeding would be an appropriate means to seek to remedy the injury, loss or damage.
…
24 (1) If, before the expiry of either of the limitation periods that, under this Act, apply to a claim, a person acknowledges liability in respect of the claim,
(a) the claim must not be considered to have been discovered on any day earlier than the day on which the acknowledgement is made, and
(b) the act or omission on which the claim is based is deemed to have taken place on the day on which the acknowledgement is made.
…
(6) Subsection (1) does not apply to an acknowledgement, other than an acknowledgement referred to in subsection (7), (8) or (9), unless the acknowledgement is
(a) in writing,
(b) signed, by hand or by electronic signature within the meaning of the Electronic Transactions Act,
(c) made by the person making the acknowledgement or the person's agent, and
(d) made to the person with the claim, the person's agent or an official receiver or trustee acting under the Bankruptcy and Insolvency Act (Canada).
…
(10) This section applies to an acknowledgment of liability in respect of a claim for payment of a liquidated sum even though the person making the acknowledgment refuses or does not promise to pay the sum or the balance of the sum still owing.
[41] Mr. Sekhon’s right to bring an action against Mr. Tung for breach of contract did not mature until June 6, 2013, six days after the New Limitation Act came into force. Mr. Sekhon had until June 5, 2015 to commence an action against Mr. Tung for breach of contract. Because he filed his Notice of Claim on January 2, 2014, Mr. Sekhon commenced his action against Mr. Tung well within the two-year statutory time limit set out in the New Limitation Act. Mr. Tung filed his Reply on January 20, 2014, confirming by that date he had notice of the proceedings.
[42] Section 24 of the Limitation Act states that a limitation period essentially re-starts if liability is acknowledged. That limitation period, however, can only be extended while the claim is still enforceable. It cannot be revived after the limitation period has passed. Further, the acknowledgement must be in writing, signed, given by the person making the acknowledgement or his agent, and made to the person with the claim or his agent. There is some indication in the RFJ that Mr. Atwal acknowledged the debt owing to Mr. Tung at trial and in his pleadings. In para. 3 of his RFJ, Justice Sewell states, “Gurvinder Atwal gave evidence supporting Mr. Tung’s version of events.” At para. 56 Justice Sewell states:
[56] I am also concerned about the timing of this action and the context in which it was brought. Mr. Tung did not commence this action until April 4, 2014, some two years after the date he says the defendants had agreed to repay him. In that time there was no evidence of Mr. Tung requesting or demanding payment from the defendants who oppose this claim. In that time period, there have been numerous other actions relating to the project. In some of those actions Gurvinder took the position that Mr. Tung advanced $100,000 to all of the participants in the project. However, he made no mention of any other amounts that Mr. Tung advanced.
[43] Two of the other actions relating to the Burnaby Project are attached as exhibits “C” and “D” to Mr. Tung’s affidavit of December 11, 2017. On September 11, 2012, Mr. Sekhon filed a Notice of Claim against Mr. Atwal for $23,500 plus costs for monies he said that were owed to him as of November 22, 2010 as the project manager for the Burnaby Project. On November 23, 2012, Paramjeet Gill filed a Notice of Claim against Mr. Atwal for $25,000 for money she said she lent to Gurvinder Atwal from her TD Canada Trust. This was part of $80,000 lent to Mr. Atwal to repay Mr. Tung for the loans he advanced for the Burnaby Project.
[44] In his Notice of Application filed on June 28, 2017, in BCSC File 160222, Mr. Tung states that on September 18, 2012, Mr. Atwal filed a Notice of Civil Claim in BCSC File S145408 against [Ranbir] Atwal, Paramjeet Gill and Jetender Gill for an accounting. BCSC File S145408 was settled on June 20, 2017.
[45] By the time BCSC File 160222 went to trial, the limitation period with respect to Mr. Sekhon’s loan expired, unless I can find Mr. Atwal confirmed the cause of action in writing thereby postponing the running of the limitation period. To the extent that Mr. Sekhon’s claim against Mr. Tung has something to do with funding the Burnaby Project, then it is possible Mr. Atwal did acknowledge this debt. Mr. Atwal, however, denies having anything to do with Mr. Sekhon’s loan to Mr. Tung in issue in these proceedings (BCPC 83060).
[46] On the evidence before me, I cannot find Mr. Atwal confirmed the cause of action within the meaning of s. 24 of the Limitation Act. Still, I note the expiration of a limitation period is but one factor in considering whether a third party notice ought to be struck.
The merits of the proposed claim
[47] In his January 20, 2014 Reply to Mr. Sekhon’s Notice of Claim, Mr. Tung was adamant that Mr. Sekhon did not lend him $18,000. Although Mr. Tung did not plead the $18,000 was repayment for the Burnaby Project loan, Mr. Tung now asserts this to be the case. Mr. Tung argues that if the Court were to find Mr. Sekhon did lend him $18,000, then Mr. Atwal is liable for that sum because this amount was credited toward the payment on the Borrower’s loans for the Burnaby Project in BCSC File 160222.
[48] The difficulty with Mr. Tung’s argument is that the issue of Mr. Atwal’s liability for Mr. Tung’s loans for the Burnaby Project has already been decided by Justice Sewell in his RFJ. I will consider the application of the principle of res judicata below.
Any delay in the proceedings
[49] There has been inordinate delay in Mr. Tung seeking to join Mr. Atwal as a third party to these proceedings. Mr. Tung has had notice of Mr. Sekhon’s claim since January 2014. He waited until November 23, 2017, to add Mr. Atwal as a third party. Had he been added as a third party in a timely manner, Mr. Atwal may have had an opportunity to influence the direction of the litigation.
The timeliness of the application
[50] Although these proceedings have been before the court since January 2014, very little has happened. The third party notice was filed well in advance of any trial date on this matter.
Prejudice to the parties
[51] The prejudice to Mr. Atwal if the third party proceedings persist is the matters described in the third party notice have already been adjudicated by Justice Sewell in BCSC File 160222, and are therefore res judicata.
[52] In this regard, I will consider the application of the doctrines of cause of action and issue estoppel. Cause of action estoppel prevents a litigant from relitigating the same cause of action between the same parties. It also prevents a party from litigating an issue that ought to have been pursued in a previous proceeding. Issue estoppel prevents a litigant from relitigating an issue that has already been decided in a previous proceeding, even though the issue arises in the context of a different cause of action.
Cause of Action Estoppel
[53] In Mohl v. U.B.C., 2006 BCCA 70 (CanLII) at para. 23 (“Mohl”), the B.C. Court of Appeal adopted the following definition of cause of action estoppel:
Cause of action estoppel arises where the cause of action in the later proceedings is identical to that in the earlier proceedings, the latter having been between the same parties or their privies and having involved the same subject matter. In such a case the bar is absolute in relation to all points decided unless fraud or collusion is alleged, such as to justify setting aside the earlier judgment.
[54] Mr. Justice Smith, for the unanimous court in Mohl, goes on to describe what is meant by “cause of action.” He states at para. 24 [citations omitted]:
[24] The meaning of “cause of action” in this context is clear . . . “A cause of action is simply a factual situation the existence of which entitles one person to obtain from the court a remedy against another person.” . . . the word “action” in its usual meaning “refers to any proceeding in the nature of a litigation between a plaintiff and a defendant”.
[55] In Cliffs Over Maple Bay, Madam Justice Newbury set out the requirements of cause of action estoppel at para. 28:
a. There must be a final decision of a court of competent jurisdiction in the prior action [the requirement of “finality”];
b. The parties to the subsequent litigation must have been parties to or in privy with the parties to the prior action [the requirement of “mutuality”];
c. The cause of action in the prior action must not be separate and distinct; and
d. The basis of the cause of action and the subsequent action was argued or could have been argued in the prior action if the parties had exercised reasonable diligence.
Apply the elements of cause of action estoppel
[56] Finality: Justice Sewell’s decision in BCSC File 160222 was made after a six day trial of Mr. Tung’s Notice of Civil Claim on its merits. There is no indication Justice Sewell’s decision has been appealed.
[57] Mutuality: Three of the parties to these proceedings are the same as in the Notice of Civil Claim, namely Gagandeep Tung, Jetender Sekhon and Gurvinder Atwal.
[58] Separate and Distinct: The facts upon which Mr. Tung relies to support third party notice against Mr. Atwal in these proceedings mirror the facts supporting his claim against Mr. Atwal et al. in BCSC File 160222. Although the relief in BCSC File 160222 is not identical to that which he now seeks in this matter (BCPC File 83060), the two proceedings are not separate and distinct. Specifically, the facts set out in paras. 1 to 7 of Mr. Tung’s third party notice are the same as the statement of facts set out in paras. 7 to 20 in Mr. Tung’s Notice of Civil Claim in BCSC File 160222.
[59] In para. 7 of his submissions, Mr. Gabri states that Justice Sewell’s judgment in BCSC File 160222 “is based on $19,000 + 12% accrued interest and does not take into account $18,000 credit already given to the Borrowers.” The $19,000 in principal which Justice Sewell awarded Mr. Tung was based on Mr. Tung’s evidence and pleadings and Mr. Atwal’s admissions. For example, in para. 18 of the Notice of Civil Claim in BCSC File 160222, Mr. Tung states:
The outstanding amount left from the Total Loan Amount to the Plaintiff by the Defendants is $19,000.
[60] In paras. 1 and 23 of his RFJ Justice Sewell states:
[1] In this action, the plaintiff, Gagandeep Singh Tung, sues to recover what he alleges is the balance owing from loans he made to the defendants in 2008, pursuant to an agreement that he says was made in December [2007]. Mr. Tung alleges that he is owed $19,000 in principal and $64,580 in interest on the loans, with interest calculated at 12%.
. . .
[23] Mr. Tung testified that he received a payment of $80,000 and a later payment of $18,000 from Mr. Sekhon, who told that the $18,000 payment was the payment of his wife’s portion on the remaining balance outstanding on the loan.
[61] Justice Sewell goes on to find (at paras. 67 and 68) that neither Mr. Sekhon nor his wife, Paramjeet Gill borrowed money from Mr. Tung. In para. 70, Justice Sewell found that Gurvinder Atwal was liable to repay the loans in the amount Mr. Tung testified was owing, namely $19,000 in principal and $64,580 in interest, for a total of $83,580. It is clear that Justice Sewell did not accept Mr. Tung’s evidence that on June 6, 2012, Mr. Sekhon gave him $18,000 as partial payment on the $117,000 Mr. Tung says he lent the Borrowers. It is also clear that Justice Sewell did not accept Mr. Tung’s evidence on many of the critical issues raised in BCSC File 160222. In the end, Justice Sewell awarded judgment against Mr. Atwal in the amount of $83,580 based on Mr. Atwal’s admissions at trial.
[62] Mr. Sekhon maintains the money he seeks to recover from Mr. Tung in these proceedings (BCPC File 83060) was a loan. Still, Mr. Sekhon agrees that Mr. Atwal ought to be part of these proceedings. In his June 4, 2018, submissions, Mr. Sekhon states:
There was a joint TD Bank account (names on the account were Gurvinder Atwal, Raymond Atwal, Paramjeet Gill) which had just over $20,000 in it. Parmajit Gill is my wife. There was an agreement from my understanding that from that joint TD account $18,000 was supposed to go to Mr. Tung.
Instead Mr. Gurvinder Atwal received all those funds, close to $20,000 and refused to pay Mr. Tung the amount owing to him as they had agreed.
So I believe Mr. Gurvinder Atwal should be part of this current Small Claims lawsuit.
[63] In his Amended Response to Civil Claim filed July 14, 2017 in BCSC File 160222, Mr. Sekhon maintains the $18,000 he gave to Mr. Tung on June 6, 2012, had nothing to do with Mr. Tung’s Notice of Civil Claim. Mr. Sekhon has made no allegation of Mr. Atwal owing any portion of the loan which is subject of these proceedings. It is unclear to me why Mr. Sekhon says a loan he made to Mr. Tung on June 6, 2012 ought to be repaid by Mr. Atwal.
[64] Due Diligence: Mr. Tung made two attempts to have BCSC File 160222 heard with BCSC File 168242 when both were before the B.C. Supreme Court. His application was rejected by Judge Skolrood on July 13, 2017, and again by Judge Sewell on August 28, 2017. Mr. Gabri has not explained why Mr. Tung’s applications were dismissed. Mr. Sekhon indicated in previous pleadings that Mr. Tung’s joinder application was dismissed because it was untimely and BCSC File 168242 was unprepared for trial.
[65] I find that in attempting to have Mr. Atwal joined as a third party, Mr. Tung is relitigating the same cause of action as his claim in BCSC File 160222. If I am wrong in that regard, then I will consider if he is attempting to relitigate one of the same issues in BCSC File 160222 which was tried and decided by Justice Sewell on October 5, 2017.
Issue Estoppel
[66] The pre-conditions for issue estoppel are set out in Danyluk v. Ainsworth Technologies Inc., 2001 SCC 44 (CanLII), at para. 25:
a. the same question has been decided;
b. the judicial decision which is said to create the estoppel was final; and,
c. the parties to the judicial decision or their privies were the same persons as the parties to the proceedings in which the estoppel is raised or their privies.
[67] If this three-part test is made out, the court retains a residual discretion to refuse to enforce the estoppel where its application would produce an injustice. (See Danyluk, paras. 33, 62-66, 80.)
Has the same question been decided?
[68] In his Third Party Notice, Mr. Tung claims contribution or indemnity from Mr. Atwal of any monies the court may find owing by Mr. Tung to Mr. Sekhon. In his submissions, Mr. Gabri states:
13. The principle of res judicata does not apply in the present case because the issue of $18,000 was never decided in Action #S160222 because Mr. Justice Sewell did not agree to join the present case with Action #S160222.
14. Mr. Tung should be given a chance to adduce evidence regarding $18,000 credit given to the borrowers and also to produce all the evidence in the shape of the Trial Transcripts where Mr. Atwal agreed with Mr. Tung's claim which in present action Mr. Atwal is refusing.
[69] I agree that Justice Sewell did not decide whether Mr. Tung was liable to Mr. Sekhon for the $18,000 loan, the subject of these proceedings (BCPC File 83060). Justice Sewell did, however, decide Mr. Atwal’s liability to Mr. Tung for the outstanding amount owing on loans Mr. Tung advanced to finance the Burnaby Project. Mr. Tung has not asserted Mr. Atwal is liable to repay monies advanced for any other purpose.
[70] Mr. Tung testified in the trial of BCSC File 160222 that he received $18,000 from Mr. Sekhon, who told him it was payment of his wife’s portion of the remaining balance outstanding under the loan. Although he did not accept Mr. Tung’s evidence in this regard, Justice Sewell did accept the principal outstanding on the loans, Mr. Tung says he made to the Borrowers, was $19,000. It is difficult to see how this court can find Mr. Atwal owes more on those very same loans than what Justice Sewell found owing based on Mr. Tung and Mr. Atwal’s evidence at trial.
[71] In my view, Mr. Atwal’s indebtedness to Mr. Tung for loans made with respect to the Burnaby Project was determined by Justice Sewell in his RFJ in BCSC Case 160222.
Was the judicial decision which is said to create the estoppel final?
[72] Justice Sewell handed down his RFJ on October 5, 2017, after a six-day trial in Supreme Court. His decision has not been appealed and is final.
Were the parties to the judicial decision or their privies the same persons as the parties to the proceedings in which the estoppel is raised or their privies?
[73] Three of the parties to the claim in these proceedings were all parties in BCSC Action 160222.
Residual Discretion
[74] As res judicata is an equitable doctrine, the Court can refuse to apply cause of action or issue estoppel where to do so would cause an injustice. In J.R.T. Nurseries Inc. v. 0843374 B.C. Ltd., 2016 BCSC 501 (CanLII), Justice Gauer notes the circumstances in which the court will decline to rigidly apply the doctrine of res judicata. He states at para. 43:
[43] The court’s discretion in the application of the doctrine of res judicata was considered in British Columbia v. Tekavec, 2014 BCCA 444 (CanLII), leave to appeal to SCC refused 2015 CanLII 23006 (SCC), 2015 CanLII 23006:
[20] Where the requisite elements of res judicata have been established, the court retains a limited discretion not to apply the doctrine in special circumstances such as fraud or new evidence, or where necessary to prevent unfairness or injustice. This discretion is rarely exercised, however, in a court-to-court context, as opposed to a tribunal-to-court context.
[75] In R. v. Thompson, 2014 ONCA 43 (CanLII), leave to appeal refused, 2014 CanLII 56692 (SCC), the Ontario Court of Appeal identified some of the factors relevant to the court’s inquiry into whether the operation of issue estoppel would create unfairness. Watt J.A. states for the unanimous court at para. 84:
[84] To determine whether the operation of issue estoppel would create unfairness through according preclusive effect to the results of a prior proceeding in a subsequent proceeding requires a nuanced inquiry. Relevant factors in this inquiry may include, but are not limited to:
i. the nature and extent of any differences between the purposes, processes or stakes involved in the two proceedings . . . ;
ii. the reasonable expectations of the parties in relation to the scope and effect of the prior proceeding as informed by the text and purpose of the enabling legislation . . . ;
iii. the risk of adding to the complexity and length of the estoppel-creating proceeding by attaching undue weight to its results through the application of issue estoppel . . . ;
iv. the availability of an appeal from the finding in the estoppel-creating proceeding . . . and
v. whether, in all the circumstances of the case, the application of issue estoppel would work an injustice . . .
[citations omitted]
i. the nature and extent of any differences between the purposes, processes or stakes involved in the two proceedings
[76] In this case, there is little if any difference between the purposes and process involved in Mr. Tung’s claim against Mr. Atwal in BCSC File 160222 and BCPC File 83060. This is a situation of court-to-court proceedings as compared to tribunal-to-court proceedings. There are no ongoing administrative proceedings in the present case. The estoppel-creating proceeding is one of a superior court.
[77] As indicated in British Columbia v. Tekavec, 2014 BCCA 444 (CanLII), the court’s residual discretion not to apply res judicata in court-to-court proceedings is attenuated. In Hill v. Hill, 2015 ABQB 436 (CanLII) at para. 19, Mr. Justice R.A. Hall of the Alberta Court of the Queen’s Bench expressed doubt that, absent fraud or new evidence, the Court can even exercise residual discretion where the original final decision and the current matter involve court proceedings. The Newfoundland Court of Appeal in Guardian Insurance Company of Canada v. Roman Catholic Episcopal Corp. of St. John's, 2013 NLCA 62 (CanLII) and Eimskip, Usa, Icelandic Steamship Inc. v. The Icelandic Steamship Company Limited also distinguished the application of the fairness exception from tribunal-to-court cases and court-to-court cases. The appellate court found the court has limited discretion not to apply the doctrine of issue estoppel in court-to-court situations.
ii. the reasonable expectations of the parties in relation to the scope and effect of the prior proceeding
[78] The scope and effect of the Notice of Civil Claim is set out in Judge Sewell’s RFJ. At the conclusion of a six-day trial in B.C. Supreme Court, reasonable parties would expect the issues with respect to the Mr. Atwal’s liability to Mr. Tung for monies advanced for the Burnaby Project have been determined.
iii. the risk of adding to the complexity and length of the estoppel-creating proceeding
[79] Justice Sewell’s decision in BCSC 160222 is final. The risk of adding to the complexity of these proceedings is greater if the Court were to exercise its discretion not to apply the doctrine of issue estoppel. In Eimskip, Hoegg J.A. states at para. 32:
[32] In Penner, the Supreme Court explains why judicial finality is so important:
[28] Relitigation of an issue wastes resources, makes it risky for parties to rely on the results of their prior litigation, unfairly exposes parties to additional costs, raises the spectre of inconsistent adjudicative determinations and, where the initial decision maker is in the administrative law field, may undermine the legislature’s intent in setting up the administrative scheme.
[80] In the instant case the elements of cause of action estoppel and issue estoppel are clearly present in Justice Sewell’s October 5, 2017 decision in BCSC File 160222. To allow the third party notice against Mr. Atwal to stand would risk an inconsistent determination of a matter already decided by a superior court.
iv. the availability of an appeal from the finding in the estoppel-creating proceeding
[81] Mr. Tung had the right to appeal Justice Sewell’s decision to limit Mr. Atwal’s liability to $83,580.
v. whether, in all the circumstances of the case, the application of issue estoppel would work an injustice
[82] In this case, Mr. Tung’s Third Party claim does not disclose the presence of fraud or collusion or some other compelling reason to apply the fairness exception. Mr. Tung already has a judgment from the B.C. Supreme Court holding Mr. Atwal liable for monies Mr. Tung lent him for the Burnaby Project. Justice Sewell did not accept Mr. Tung’s evidence with respect to the $18,000 Mr. Tung said he received from Mr. Sekhon. This does not entitle Mr. Tung to seek reimbursement of this sum from Mr. Atwal in another proceeding.
CONCLUSION
[83] Having considered those factors identified by Master McDiarmid in Herman v. Accent Homes Realty, I find the third party proceedings in this matter are both untimely and prejudicial. At some point the litigation of a dispute must end. Mr. Tung has already litigated Mr. Atwal’s liability for monies advanced for the Burnaby Project in BCSC File 160222 and is estopped from doing so again in these proceedings.
[84] I am satisfied the third party proceedings against Gurvinder Atwal ought to be dismissed, and I so order.
____________________________
The Honourable Judge J.T. Doulis
Provincial Court Judge