IN THE PROVINCIAL COURT OF BRITISH COLUMBIA

[1]           Keith Weston, an older gentleman who retired a few years ago, owns a rural property near Enderby, B.C., with a mobile home on it. He bought the property to provide rental income and support himself in his retirement. He obtained two mortgages over the property to be able to buy it. Unfortunately, he was not able to make payments as required and defaulted on the mortgage in 2011. The defendant Toronto Dominion Bank (“Bank”) commenced foreclosure proceedings and on March 12, 2012, obtained an Order nisi. In these reasons, at times I will refer to the Bank as including its agents, solicitors and independent contractors.

[2]           On December 10, 2012, the Bank obtained an order for conduct of sale of the property. Mr. Weston continued to indicate that other litigation was going to be successful and that he would be able to pay the outstanding mortgage balance. It seems the Bank agreed with that assessment for a number of years. Ultimately, it did not receive the funds and on February 1, 2018, instructed their solicitors to arrange to sell the property.

[3]           During that time of inaction, Mr. Weston offered to pay the Bank proceeds of renting his mobile home. The Bank refused to accept any rent because it thought that was more advantageous to it. Also during that time, the Bank sent various people to the property to assess its value, amongst other things. Mr. Weston’s tenant complained about the continuing interruptions and moved out without notice to him in January 2018. Mr. Weston was not able to rent out his property after that.

[4]           Before the property could be sold, the mobile home required a valid Canadian Standards Association (CSA) certification label (sticker), ensuring that it met the requisite electrical standards. The Bank’s agent for obtaining the CSA sticker, referred to in evidence as “Home Alone”, arranged for an initial inspection to be done in March 2018. A person came with a snow blower, cleared the driveway and said an electrician would be there the next week. That did not happen. It took some time to hire an electrician after getting competing quotes. In April, arrangements were made for the chosen electrician to do the required work.

[5]           Although initially estimated to take 2 to 3 days, the work was finally finished at the end of May 2018. The electrical inspector attended on May 30, the mobile home passed the inspection and was given a CSA sticker. That same day, power to the pump house for a well that supplied water to the property was apparently disconnected.

[6]           In June, a new real estate company was retained to sell the property. On July 24 the Bank’s solicitors found out that the realtor could not sell the property because there was no water supply. Mr. Weston complained to the solicitors about the lack of water. Notwithstanding his repeated requests and despite some assurances by the Bank, it appears no concrete action was taken until November when a plumber went out to the property to fix the water supply. Not surprisingly, he did nothing because it was not a plumbing problem. Mr. Weston had no money to hire his own electrician to fix the problem. Up to the time of trial, the water supply remained unrepaired.

[7]           Mr. Weston claims that the Bank is responsible for the costs of cleaning up after his tenant departed without notice. He also claims that the Bank is responsible for lost rent. The Bank says it is not liable because the evidence does not support his claim; the mortgage is still operative and its terms result in Mr. Weston not having any right to claim rent; it was not negligent; and, if unsuccessful, seeks to have any amount payable set-off against the debt Mr. Weston owes the Bank.

[8]           Before the trial started, counsel for the Bank sought permission to call a witness, apparently the electrician who had done some of the work. Mr. Weston, who was unrepresented, had been informed of that witness and the application five minutes before trial. The Bank had known for a number of weeks they intended to call that witness and, despite appearing before the court some three weeks before the trial, failed to give notice or raise that issue any earlier than the morning of trial. Mr. Weston was caught unaware and was otherwise ready to proceed with the trial. In an oral ruling, I ordered that the trial proceed without that witness.

[9]           In the course of the trial, it became evident that Mr. Weston thought that his claim was a continuing one and not just limited to the 10 months set out in part of his Notice of Claim, which was the rent from February 1 to November 1, 2018, when he filed the claim. After hearing submissions, again in an oral decision, I permitted an amendment to Mr. Weston’s claim so that it was clear it was an ongoing claim. I also stated that I would adjourn the trial to ameliorate any prejudice to the Bank as a result of any lack of clarity in his claim. The Bank declined an adjournment.

[10]        Mr. Weston was the only witness. In addition, there were a number of exhibits entered. Exhibit 3 included various notes made by Ms. Reiswig, a legal assistant with the Bank’s solicitors. She communicated with Mr. Weston and others. In effect, she was the liaison between the Bank, its agents, independent contractors and lawyers, and Mr. Weston.

[11]        The Bank argued that there was insufficient evidence to support Mr. Weston’s claim. First, they submitted there was no evidence as to why the tenant left. There is some evidence: Mr. Weston testified the tenant had told him she would leave if the unannounced and unplanned visits by the Bank’s agents continued, because they created too much stress for her. The evidence is that those visits continued. I have no doubt she left for the reasons she told Mr. Weston. I reject that submission.

[12]        It was submitted that Mr. Weston did not pay BC Hydro for power and accordingly there was no electricity when the electrician came to do the repairs. Even if that is so, that does not impact the analysis. Mr. Weston’s complaint is that the Bank failed to act promptly and reasonably, resulting in his tenant moving out and an inability to rent out the property again without the electricity to the well reconnected. However, there is unchallenged evidence that the power was on when the electrician came, in Mr. Weston’s testimony and Ms. Reiswig’s notes from April 2018. That evidence is that the electricians were working on the property by April 17; BC Hydro cut off power on April 24 and reconnected it on April 25. I reject that submission.

[13]        It was submitted that there was no evidence as to why the mobile home had not been rented before the electrician came in April. Mr. Weston testified that he was unable to rent the mobile home during the winter given the lack of notice by his tenant, the time of year, and because the Bank and its agents wanted to get into the property when it was unoccupied because it was better for them to do the work needed to obtain CSA certification. I reject that submission.

[14]        It was submitted that there was no evidence to prove that the electrical work was faulty or caused the disruption to the water supply. Photographs taken by Mr. Weston entered as exhibits showed the electrical wires disconnected at the pump for the well. Mr. Weston testified he had looked at the electrical connection before May 30, that nobody else had disconnected the wiring and that the water supply had been working. Mr. Weston testified that the electrician told him on May 30, 2018, that he had disconnected the wires because they were unsafe and had to be replaced. The electrician said he would be back the following Monday with a backhoe to dig up the land so that he could install new underground wiring and reconnect the electricity to the pump house so that there would be a water supply. Ms. Reiswig’s notes on July 10 and 17, 2018, corroborate Mr. Weston’s testimony. In cross-examination, Mr. Weston testified the electrical inspector could not have cut the power because electrical inspectors do not carry tools to do electrical work. Their job is only to inspect the electrical system and work done under the permit.

[15]        The evidence is very clear that the electrician doing the work at the property disconnected the electricity from the pump house, intended to return on June 4, 2018, to fix the improper wiring and then reconnect the electricity so that there would be a water supply. I reject that submission.

[16]        It was argued that there was no documentary evidence to show the amount of rent Mr. Weston had lost, nor to prove the work that he did for clean-up. Although that is true, it is not conclusive. Mr. Weston’s testimony on those points was unchallenged. Mr. Weston’s testimony on most points was corroborated by documentary evidence. There is no basis for rejecting his testimony. He proved to be a reliable witness and he was credible. I reject that submission.

[17]        Mr. Weston had a tenant for some two years that felt forced to move in January 2018 because of the Bank’s agents’ or contractors’ unannounced and unarranged attendances for various reasons, including assessing the value of the rented mobile home. Mr. Weston does not dispute the Bank’s right to do that; his complaint is the manner in which it was done.

[18]        He was paid $600 per month in rent and received all the rental income. He had offered to assign it to the Bank but the Bank declined and told him to keep collecting the rent. At least as of February 23, 2017, the Bank’s solicitors, who had conduct of the arrangements to complete the court ordered sale, were aware that the mobile home needed a CSA sticker to sell the property. The Bank extended various deadlines to January 31, 2018. After that date, they started to take action to get CSA certification. Again, Mr. Weston does not dispute the Bank’s right to do so; his complaint is the manner in which it was done.

[19]        On March 1, 2018, an assessment of the scope of work required for the CSA sticker was completed. Eventually a specific company, unidentified at trial, was hired to do the work. The first scheduled date for work was April 10, 2018. No one attended as scheduled, except Mr. Weston. The electricians also failed to attend on other dates as scheduled. There were various problems with the electricians and access to the property arising from the electricians’ failure to provide proof of their qualifications or liability insurance satisfactory to Mr. Weston. Mr. Weston, despite his efforts, was unable to find any public listing for the electrical company apparently retained to do the work, which made him concerned. He wanted to ensure that his property was insured for any work done, that the work was done by properly qualified people and in accordance with permit requirements. Those were reasonable concerns.

[20]        The initial estimate of 2 to 3 days of work was a significant underestimate. Mr. Weston testified that they worked on his property for about three weeks. Although it may not have been every day, it was far more than three days. On May 30, 2018, the mobile home was CSA approved and the electrical connection to the pump house disconnected by the attending electrician, who planned to repair the deficiency on June 4. He never returned.

[21]        On June 25 a new real estate company, RE/MAX of Vernon, was assigned to sell the property. On July 10 and July 17, Mr. Weston complained to Ms. Reiswig that there was no water so that he could not rent the horse pasture or the mobile home. He did not know if the CSA sticker had been obtained. He informed Ms. Reiswig what the electrician had told him on May 30. On July 24, a realtor wanted to show people the property and stated they could not sell it because there was no water. The property was listed for sale by that date. On July 31, Mr. Weston confirmed with Ms. Reiswig he would allow access to his property so that the water-supply issue could be fixed.

[22]        Selling a property through a realtor involves instructing the realtor. In the case of mobile homes, that includes informing the realtor that there is a valid CSA sticker and other relevant facts. That would obviously include whether or not there was a water supply. Either the Bank did not do so or they did nothing to make sure there was a water supply so that the property could be sold. The Order for sale included a provision that the Bank was entitled “to do all things reasonably incidental” to the sale[1]. That included ensuring it had a water supply.

[23]        There was a protracted period where nothing concrete was done. A plumber was scheduled to attend in September, but no one appeared. On November 7, Mr. Weston complained to Ms. Reiswig again that the water issue had still not been resolved and that there could be more problems if the pipes froze in winter. That is also a matter of common sense. On November 8, a plumber arrived but did nothing. On November 9, Mr. Weston told Ms. Reiswig of that fact. On November 19, he told Ms. Reiswig that there still was no water and reiterated that the last time the water worked was on the last electrical visit at the end of May.

[24]        According to Ms. Reiswig’s notes, at least as of July 10, the Bank, its solicitors or its agents, were aware that there was no water supply to the mobile home. Mr. Weston testified that he spoke with Ms. Reiswig about the problem in the first week of June 2018. Given his desire to rent the property, the electrician’s promise to return the first week of June and the records that show Mr. Weston was diligent about going to his property and letting Ms. Reiswig know about issues, I find he told Ms. Reiswig by mid-June. The Bank chose to take no action. When they did act, they retained a plumber despite the fact that they knew it was not a plumbing problem, but an electrical one. They knew the plumber did not fix the problem. Yet, by the time of trial, no further action was taken. That means the Bank knew they would not be able sell the property, and chose not to pursue the Order for sale. They knew Mr. Weston would not be able to rent the property. They knew that without that rental income, Mr. Weston would not be able to make any payments on his mortgage debt.

[25]        The primary argument of the Bank is that in their mortgage[2], sections 7.02, 7.03 and 9 lead to the result that Mr. Weston had assigned the rent to the Bank. It was therefore the Bank’s rent and accordingly his claim for lost ability to rent must fail. Those sections state:

[26]        With respect to section 7.02, there is no evidence that the Bank requested an assignment of any lease, so that provision does not apply, but it informs interpretation. With respect to section 7.03, the Bank argues that pursuant to paragraph (b), all of the rents payable from time to time were assigned to the Bank when the mortgage came into effect. The difficulty with that submission lies in paragraphs (c) through (e) and the evidence in this case. Paragraph (c) required Mr. Weston, if requested by the Bank, to execute and deliver an assignment as well as any other documents that the Bank considered necessary “to make the assignment effective”. There appears to be a contradiction between the terms. If the mortgage in fact assigned all rents, then it was effective. What other documents would be needed to make it effective? Why would the Bank have to ask Mr. Weston to execute an assignment? Why would he have to do so?

[27]        Interpretation of a contract requires a court to seek an interpretation in light of the entire contract that reflects or promotes the true intent of the parties at the time they entered into the contract[3]. If there is a lack of clarity, I must examine the facts to try to resolve any ambiguity[4]. Only if there is a real ambiguity that I cannot resolve, the principle of contra proferentem can be applied to resolve ambiguity against the party that drafted the contract. That principle is generally reserved for situations where one party has had no meaningful opportunity to negotiate the contract, as in this case[5].

[28]        Assignment is the act by which one person transfers to another, or causes to vest in that other, the whole or part of the right, interest, or property which he has in any realty or personalty, in possession or in action[6]. That would include rent. Paragraph (b) assigns rent under a lease that exists at the time of entering into the mortgage. It also purports to assign future rents payable under future leases. Future rent under future leases obviously does not exist at the time of entry into the mortgage. It might never exist. The term would not comply with s. 36 of the Law and Equity Act, R.S.B.C. 1996, c. 253, which governs legal assignments.

[29]        That can explain why paragraph (c) exists: to actually assign rents upon request of the Bank. If the Bank makes no request, there is no assignment. The Bank only has an equitable interest in it. That need for a request is similar to section 7.02, suggesting the same intent – additional security if requested by the Bank.

[30]        The facts support that interpretation. Mr. Weston received rent over a number of years from tenants. There is no evidence that the Bank ever requested an assignment of rent. The facts are the opposite: after entering into the mortgage, Mr. Weston offered to give rent to the Bank and the Bank refused. That suggests there was no assignment of that rent initially; and the Bank waived assignment of it at the time of the offer.The contract as a whole and the evidence lead me to conclude that paragraph (b) was meant to mirror section 7.02. Any assignment of rent from leases that did not exist at the time of entering into the mortgage required the execution of other documents to assign it.

[31]        Even if there was an actual assignment of potential future rent under the mortgage, that assignment did not extinguish any right Mr. Weston had to enter into a contract for rent. It would only result in the Bank having all of the rights to the rent collected by him. Paragraphs (d) and (e) of section 7.03 make it clear that the Bank was not required to collect rent and did not possess the property; and paragraphs (b) and (c) permitted Mr. Weston to enter into any leases after the mortgage was signed. The Bank did not take the enforcement action of possession. Mr. Weston had the right to rent the property he still possessed.

[32]        As noted, the Bank’s equitable interest is in effect a trust. I was not referred to any legal authority for the proposition that an equitable trust confers rights on the beneficiary other than the rights to that which is held in trust. Yet that is what the Bank argues – that somehow, its equitable interest in possible future rent gives them a right to prevent Mr. Weston from trying to obtain it. The Bank’s argument that the mortgage terms removed his right to rent the property fails.

[33]        Apart from there being no legal foundation, such an interpretation appears to be against the Bank’s commercial interests. Why would they want to prevent someone from being able to pay them money? Why would they want to nullify additional security? That interpretation, advanced by its counsel, might be suggestive of mala fides, because it in no way advances the Bank’s interests under the mortgage. I do not suggest the Bank has ill intent, let alone conclude that. I only state that possibility to show that the argument is without foundation or merit.

[34]        Factually, there was no lease for the “lost” rent claimed by Mr. Weston. That fact is not new. It has always existed. Mr. Weston’s claim is simple: the acts and inaction of the Bank, its agents and independent contractors have prevented him from being able to rent his property. There has never been any foundation for the Bank’s mortgage argument, legally or factually.

[35]        At the outset of trial, Mr. Weston made it clear in his opening that his claim was based in negligence. As submitted by the Bank, Mr. Weston’s claim in negligence requires proof of four elements:

[36]        The Bank had some rights in respect of the property, but Mr. Weston still possessed it. He too had rights. If the Bank was careless in exercising its rights, it was clearly foreseeable that Mr. Weston may be impacted. Specifically, it was obvious that disconnecting the power to the pump house would interfere with Mr. Weston’s rights and he would not be able to rent the property. The Bank knew or ought to have known this by mid-June 2018. According to Ms. Reiswig’s notes, they clearly did on July 10, 2018. The Bank owed a duty of care to Mr. Weston. There is no reason why the Bank should not be liable.

[37]        The Bank argues in written submissions that it cannot be negligent because it retained “a professional property management company”. In the first place, there was no evidence that Home Alone, apparently the entity retained, was a professional management firm. The Bank never intended to call any evidence in support of that submission; and in any event, the laws of agency do not shield the principal from liability arising from acts of its agents in these circumstances. It was open to the Bank to make the management firm a third party. They did not. It is an argument without merit.

[38]        The Bank also argues that Mr. Isaac performed his work properly. There was no evidence who Mr. Isaac is. If he was the electrician that shut off the power, and that was not within the scope of his work, there is limited evidence that step was taken because an electrical inspector required it. The only possible evidence is in Ms. Reiswig’s notes of a conversation with Mr. Weston on July 17, 2018. The note is: “electrician told had to dig ditch for trailer to well to put in new wire for power to the well so pump would work”. That is consistent with something the electrician just told Mr. Weston, as opposed to a direction from the inspector. It could be that Mr. Weston said, “The electrician told me he had to dig a ditch…” Mr. Weston testified that is what the electrician told him.

[39]        It may be a note that Mr. Weston said, “The electrician was told he had to dig a ditch…” That would be consistent with the electrician being told by someone, including an inspector, that was what he had to do. On its face or in context, I cannot say which interpretation of the note is correct. I certainly cannot say it was a direction by an electrical inspector. Following that is an entry that appears to be a note by Ms. Reiswig to herself: “upgrade wire to the pump @ the well & to dig ditch. Sunrise Electric.” That is consistent with a reminder to instruct the electrician to do the work; and with it being the instruction provided to the electrician by Sunrise Electric – presumably the contractor. Again, I cannot tell on its face or in context what was meant. Both versions support Mr. Weston’s position.

[40]        There is no basis for concluding that an electrical inspector directed the electrician to shut off the power to the pump. There is no evidence to sustain an argument that shutting off the power was outside the scope of work. It is most probable that Ms. Reiswig’s first note reflects what Mr. Weston testified to: that the electrician told him he would replace the wire and reconnect the well so the pump worked. It is most probable that was within the scope of work; that it was work that should have been done and was not; and that the Bank’s agents knew that.

[41]        The Bank knew Mr. Weston had rented the property and wanted to rent it. Electrical work had to be done to obtain the CSA certification so the Bank could sell the property. A reasonable period to obtain quotes and choose an electrician to do the work was required. There was some delay in arranging that, but there is no evidence that it could have happened any faster. The CSA sticker was obtained on May 30, 2018. That is when the electrician shut off the power to the pump house, which shut off the water supply to the property and the mobile home. The electrician said he was going to come back and do the work. He would have known the scope of the work he was to do and clearly thought the pump-house work was within that scope. For whatever reason, he did not return. The Bank retained an agent to arrange for the electrical work to be done. The Bank engaged solicitors to also manage that work. The Bank is responsible for the acts and failures of its agents.

[42]        It is well known that a principal or master is liable for the acts or failures to act by its agents or employees, respectively. The Bank or its agents (actual or ostensible) did not make any arrangements for the electricity to be reconnected. No work was done despite the Bank knowing Mr. Weston could not rent his property without water. Eventually arrangements were made for a plumber to attend. The Bank’s agents knew it was an electrician that was needed, not a plumber. The Bank entirely failed to ensure that Mr. Weston’s rights with respect to his property were not negatively impacted by the people it retained to do work on his property for its purposes. The Bank failed to consider its duties to Mr. Weston.

[43]        In torts, the word “agent” has a broader meaning than in contract and can include an independent contractor. A principal who employs an independent contractor will generally not be liable for that person’s negligence unless the principal is under a duty to act, retains the contractor to do that work and the contractor does not do the work or does it improperly; or the principal is required to supervise the work and fails to do so properly. Liability arises from the contractor’s misfeasance in the course of doing the contracted work or because the principal’s duty cannot be delegated[9]. I found that the electrician was contracted to repair the pump-house wiring. He did not and the Bank knew it, yet did nothing to rectify that failure.

[44]        Even if that work was not within the scope of the authorized work, the Bank is still liable because it should have authorized the work or ensured that the pump-house power was reconnected. Electrical work is inherently hazardous. It can kill people. That is why electricians have certification, why permits are required and why the electrical work is supervised by an authority. The electrician wrongfully performed his contract and negligently interfered with Mr. Weston’s right to use his property. The Bank knew that, yet failed to act. They failed to properly supervise the electrician. The Bank is liable for damages resulting from that wrongful performance.

[45]        It is within the Bank’s rights to not pursue selling the property. But in choosing that route, what the Bank cannot do is interfere with Mr. Weston’s exclusive rights that attach to his possession of it. I have no doubt that Mr. Weston would have rented his property as of July 1, 2018, if he had a water supply. He had a history of renting it. Summer was an opportune time. He rented to people for years. The Bank knew of that and the lack of water to the property that prevented Mr. Weston from renting it. The Bank is liable for the resulting loss suffered by Mr. Weston.

[46]        Compensation is the primary purpose of tort law: payment to recompense the claimant for the wrongful economic and psychological harm he has suffered[10]. The Bank did not argue that they were not responsible for Mr. Weston’s claim for the costs of cleaning up the trailer after the tenant left in January 2018. He claimed $500. He is successful.

[47]        Mr. Weston sought lost rent from January 1, 2018, and on. I am not satisfied that he has proved that the Bank was negligent such that it is liable for rent lost as a result of his tenant leaving without notice. The Bank had a right to do electrical work on the mobile home. It did so and that took a number of months. There was no evidence it could have been done more quickly. It was completed on May 30, 2018. The pump house wiring was to have been completed by June 4. By mid-June the Bank knew of the electrical problem to the pump house. If the problem could have been fixed by June 4, it could easily have been fixed by the end of the month and the mobile home rented from July 1, 2018, at $600 per month. Mr. Weston is successful in his claim from that date.

[48]        I will hear submissions as to when the electricity to the pump house will be reconnected and the water supply re-established. I can then ensure that Mr. Weston is properly compensated.

[49]        In its pleadings, amended approximately three weeks before trial, the Bank sought any award of damages to Mr. Weston be set off against his debt to the Bank. Its submissions were simply that if damages were awarded, there should be set-off. It did not set out what kind of set-off should apply nor argue as to whether the Bank had met any of the required elements, either on a contractual, legal or equitable basis. They have not shown that there should be set-off, so I decline to order it.

[50]        Pursuant to Rule 20(2) of the Small Claims Rules, B.C. Reg. 261/93, I order that the Bank pay Mr. Weston’s reasonable expenses and charges that relate to this proceeding. I delegate that determination to the registrar in accordance with Rule 20(3).

[51]        As noted, the Bank’s arguments that did not relate to the evidence in the trial were untenable because there never was a legal or factual basis for them. Their arguments that there was no evidence in the trial on various points was also unfounded. There was never a reasonable prospect of success. I will hear submissions as to what consequences if any should flow from that, pursuant to Rule 20(5) of the Small Claims Rules.