A trust saves half a house, contempt stay application not screened out, and a warrantless whisky seizure
This week on Legally Speaking with Michael Mulligan:
Equity is a body of law that was originally developed in the English Court of Chancery. It was distinct from the common law, prior to English reforms in the 1870s. Since then, in England, and other jurisdictions with an English legal tradition including Canada, Australia, and New Zealand, equity is the origin of legal principles including the law of trust, fiduciary law, subrogation, unjust enrichment, and equitable estoppel.
A case discussed on the show involved a couple who agreed to purchase a house together but then separated.
Despite claiming that she intended to do so, the ex-girlfriend paid nothing towards the down payment, mortgage payment or any other expenses relating to the home. She was, however, listed in the land title system as an owner and she claimed that she was entitled to half the value of the house.
In British Columbia, a central tenant of the Land Title Act is the idea of indefeasible title. This means that whoever is listed as the owner of property in the land title registry is conclusively the owner of the property. The principle makes it easier to buy and sell real estate because you can unambiguously determine who owns it. You don’t need to be concerned about who might have owned the property previously and whether someone purporting to own property has proper title to it.
In the case of the house that was registered in the name of both the ex-boyfriend and ex-girlfriend, the trial judge, and the BC Court of Appeal, both concluded that while the ex-girlfriend was the registered owner of half the house, she did so only as a trustee for the ex-boyfriend.
When someone receives something for no consideration, they have the burden of proving that the intention was for the property to be given to them as a gift. Otherwise, there will be a resulting trust and the recipient of the property if only keeping the property for the benefit of the real owner.
In addition, both courts concluded that the equitable principle of unjust enrichment also applied to the facts of this case.
Also on the show, people charged with criminal contempt relating to efforts to block logging in Fairy Creek will be permitted to argue that charges should be stayed because of alleged police misconduct.
The decision discussed involved a screening hearing to determine if the argument had sufficient merit to permit it to proceed. The judge hearing the case concluded that the argument had “at least a toe-hold in the jurisprudence” and so should be permitted to proceed. People who were not charged would not be allowed to participate in order to “air their grievances”.
Finally, on the show, the British Columbia Liquor and Cannabis Regulation Branch has been ordered to turn over documents relating to the search and seizure of 242 bottles of whisky from a restaurant.
The whisky was seized on the premise that it was purchased from a private liquor store and not the Liquor Distribution Branch.
As with other regulatory schemes, the Liquor Control and Licensing Act allows for inspections without a warrant. The legislation does, however, permit prosecutions and even jail sentences for conduct that can also be dealt with as a regulatory matter. Where a search is related to potential prosecution, a warrant is required.
In the case discussed the search operation was even named: “Operation Malt Barley”.
The documents ordered produced will assist in determining if what occurred was a regulatory inspection that happened upon the whisky, or if it was a search for the whisky that could have resulted in a prosecution.
Legally Speaking with Michael Mulligan is live on CFAX 1070 every Thursday at 10:30 am. It’s also available on Apple Podcasts or wherever you get your podcasts.
An automated transcript of the show:
Legally Speaking March 17 2022
Adam Stirling [00:00:00] Time to check in with Michael Mulligan Barrister and Solicitor with Mulligan Defence Lawyers for Legally Speaking. Morning, Michael. How are we doing?
Michael T. Mulligan [00:00:06] Good morning. Always great to be here.
Adam Stirling [00:00:08] Lots of interesting things on the agenda today.
Michael T. Mulligan [00:00:11] Indeed. First out of the gate involves a, was described by the court, as a problem that arose from a “Short term, later in life, romantic relationship”.
Adam Stirling [00:00:23] Okay. Short term, later in life. Okay, okay.
Michael T. Mulligan [00:00:26] Romantic relationship. I’m hoping that if I wind up in court, I don’t wind up being described as later in life. But.
Adam Stirling [00:00:32] No, no.
Michael T. Mulligan [00:00:32] You know, there it is. And he actually keeps sort of Victoria. And the fact pattern of the case involved a couple in the short term, later in life, romantic relationship who, after about three months of dating, decided to buy a house together, and the boyfriend in the relationship made an offer. It was accepted and then the agreed they were going to put the house on both of their names, and they would both contribute to the down payment and the mortgage payments, and all of those things, right?
Adam Stirling [00:01:04] mm-hmm.
Michael T. Mulligan [00:01:05] Both people were financially stable and able to do that. Well, things, of course, don’t always go as planned. The romantic relationship ended, and the girlfriend of the relationship never moved into the house and significantly never paid for anything. She didn’t provide half of the down payment. She didn’t make any mortgage payments. She didn’t pay for any expenses, nothing. Her evidence at trial was she meant to but was never asked. But whatever the case,
Adam Stirling [00:01:35] I meant to help buy the house, but nobody asked me, okay.
Michael T. Mulligan [00:01:38] nobody asked me.
Adam Stirling [00:01:40] okay, okay
Michael T. Mulligan [00:01:40] sometimes these things happen.
Adam Stirling [00:01:41] Okay.
Michael T. Mulligan [00:01:43] And then the boyfriend or ex-boyfriend who’s lived in the house for several years and then asked to ask her to be removed from title. Right on the bases, she wasn’t living there, wasn’t paying anything.
Adam Stirling [00:01:56] Yeah.
Michael T. Mulligan [00:01:56] And she demanded money. She said, I want, I think, originally $25,000, and I think it went up to $50,000 if, to be removed from. She was listed as an owner of the house, right?
Adam Stirling [00:02:09] hmm.
Michael T. Mulligan [00:02:10] And in B.C., we have the Land Title Act, and one of the concepts in the Land Title Act is this concept of indivisible title. The idea is you can rely upon what’s listed there to determine who owns a property, right? You don’t need to worry about, you know, looking at deeds or trying to figure out who might be the owner of a piece of property does the concept.
Adam Stirling [00:02:31] mmhmm.
Michael T. Mulligan [00:02:31] And so off the court, they went, and she was claiming half the house right? And probably that would be a considerable value is, of course, houses have always gone way up in price over the past few years, right.
Adam Stirling [00:02:43] Yeah.
Michael T. Mulligan [00:02:44] And so how do we sort that out? Well, to the rescue comes a concept some people may have heard of in a general way, which is the law of equity and the history of that; it actually arose as a parallel court system in the United Kingdom, and there were courts there which were common law courts, and there were courts that used to be the English Court of Chancery.
Adam Stirling [00:03:05] Hmm.
Michael T. Mulligan [00:03:06] And they actually developed in parallel. And the idea behind a common law is to provide some certainty in dealings. You know, what are the rules for a contract and this kind of thing?
Adam Stirling [00:03:17] Yes.
Michael T. Mulligan [00:03:18] And you don’t make future decisions in a fashion consistent with past decisions, that kind of thing.
Adam Stirling [00:03:22] Yes.
Michael T. Mulligan [00:03:23] And the history of the Court of Chancery, it actually started out with sort of this equitable jurisdiction that the king would have that he eventually delegated to produce sort of fair results where the common law result might be harsh or unfair.
Adam Stirling [00:03:39] Hmm.
Michael T. Mulligan [00:03:40] And that’s the origin of it. And it developed for many years, and they developed these two parallel systems of law, and they were eventually merged. And then when the English legal system was adopted in Canada, we got that merged version of these two things. And it’s from the law of equity that we have principles that people have probably heard of things like, laws with respect to trusts, or laws with respect to fiduciary duties, like obligation to act in the interest of somebody else, or other things that sometimes you might have heard of, like equitable estoppel or subrogation. These are concepts that came out of the law of equity.
Adam Stirling [00:04:20] Fascinating.
Michael T. Mulligan [00:04:21] And one of the principles that we have from that, is this principle where you can have what’s called a resulting trust. And the idea there is that if you become a legal owner of something for no consideration, right? Like if I say to you, can I put my car in your name? The idea there would be that you might be the legal owner of the thing, but you’re not really the beneficial owner. You’ve got that for me.
Adam Stirling [00:04:53] hmm.
Michael T. Mulligan [00:04:53] One of the ways that often arises, and this is where there’s that I can express trust would be in the context of, for example, a will, or when you have an executor.
Adam Stirling [00:05:02] yes.
Michael T. Mulligan [00:05:02] Somebody dies, you might have a trust created in a will, and the executor of the trust might be listed as the owner of property, the property like the house or something, right? And if you went and looked in the land title office and say, who owns this property, it might be the name of the executor. Right. But that person doesn’t own it for their own benefit. They don’t get it and get to move into the house, sell it, and run away with the money or something, right. They just own it, but for the benefit of, in that case, the beneficiaries of the will right, they’ve got it to pay off the debts, follow the will, and give it to whoever is the person that would receive it. And this concept of a resulting trust can arise even where you don’t have expressly somebody say, I am creating a trust, but it can arise and it does arise as a result of one of these equitable principles when a person receives something for no, nothing in exchange. And when that happens, the person who receives something if they want to try to claim, for example, oh, that was a gift you meant to just give me the house, or whatever it might be.
Adam Stirling [00:06:08] Yeah.
Michael T. Mulligan [00:06:09] They would have the burden of showing that the plan was that it would be gifted to them for free. And so that’s the law that applied to this case to alleviate what would appear to be a very unfair result, because I think most people looking at it would say it’s just not fair that this person who paid nothing, contributed nothing, never lived there, didn’t provide any down payment, didn’t make any mortgage payments, essentially did nothing to contribute to the home would get half of it right.
Adam Stirling [00:06:37] yeah.
Michael T. Mulligan [00:06:37] Sort of an ah-ham reap the windfall.
Adam Stirling [00:06:39] Yeah.
Michael T. Mulligan [00:06:39] And the other concept gets to that same thing is this concept of unjust enrichment and that would arise with the same result. And that’s also an equitable, equitable principle.
Adam Stirling [00:06:49] hmm.
Michael T. Mulligan [00:06:49] And so what happened to this case at trial and now just the decision just came out upholding it on appeal yesterday.
Adam Stirling [00:06:57] Yeah.
Michael T. Mulligan [00:06:57] Was a finding that what happened, here, was when the girlfriend got put on a title for no contribution, no money, I meant to pay, but I just didn’t. What happened is she received it, the court’s found, but in the capacity of somebody holding it in trust for the person who did pay for everything.
Adam Stirling [00:07:18] Hmm.
Michael T. Mulligan [00:07:19] And so the court found that there was a resulting trust and that she only owned her share of it. Yes, as a matter of law, you can look it up and see there she is in the land title office.
Adam Stirling [00:07:28] Yeah.
Michael T. Mulligan [00:07:29] But she only did so as a person who held it in trust for the person who actually made all the payments, made the down payment, paid the monthly expenses, did all the upkeep. And so, the result was that the court using that equitable principle of a resulting trust, ordered that the girlfriend who received the house for no contribution be required to transfer it to the person who did pay for it all. And so that was the outcome of the case. And I must say, looking at it, it’s one of the things which I think you commented on before that, it is really beautiful about our legal system. That is to say, legal principles that have developed over many years to achieve outcomes like this are generally in accordance with what a reasonable person would consider a fair outcome where you don’t want a legal system that produces harsh results that most people look at and say, Wow.
Adam Stirling [00:08:28] Yeah.
Michael T. Mulligan [00:08:29] That was it totally unfair outcome, that person just got, you know, taken advantage of. You don’t want a legal system that does that, and happily, we don’t have one. And one of the mechanisms for achieving, what you think many people would view as a just or fair result. Are these equitable, equitable principles that originally developed in England and the Court of Chancery that we’ve now, that court was eventually integrated with the Common Law Court System there, and we inherited that, and judges here can apply both principles, right and both systems.
Adam Stirling [00:09:05] yeah.
Michael T. Mulligan [00:09:06] And so that’s how in this case and in other cases, it’s possible to achieve a just, equitable outcome. Applying those principles like trust principles or unjust enrichment or things like that, even when if you just looked at the, looked up the statute in the Land Title Act, you’d say, well, that’s it, she owns it. There’s nothing more to be said about it. She’s listed their own title. And so that’s how with this case from Victoria, the court was able to achieve an objective that I think most, an outcome that most people would say. Yeah, that seems like what should happen there. You don’t just get a windfall because of the legal wording or something. I see. Okay.
Adam Stirling [00:09:45] Fascinating. All right. We’ll take a quick break here on CFAX 1070, Michael Mulligan with Mulligan Defence Lawyers. Legally Speaking, we’ll continue right after this.
Adam Stirling [00:09:52] All right back to legally speaking on CFAX 1070, Michael Mulligan with Mulligan Defence Lawyers. Michael, I saw something on the agenda that harkens. Back to an ongoing matter, you and I have discussed any number of times. What is next?
Michael T. Mulligan [00:10:05] Yeah, next on the agenda involves the continued prosecution of people for criminal contempt coming from the Fairy Creek or Teal Cedar and described as the court as unknown persons operating as “Rainforest Flying Squad”.
Adam Stirling [00:10:21] Yep.
Michael T. Mulligan [00:10:22] Prosecutions. And so, there was a decision with respect to those prosecutions that just came out, which I think people should know about. And it was a decision in what’s referred to as a screening application and the idea there is this: so, in this case, various of the some four hundred people who are being prosecuted and some other people were applying for a stay of proceedings to stop criminal prosecutions. And the basis for that, broadly speaking, would be allegations of police misconduct.
Adam Stirling [00:10:58] Hmm.
Michael T. Mulligan [00:10:59] And so Crown Counsel who was doing the prosecution of this large group of people and I must say, boy, that’s a large group of people to be dealing with all at, all in parallel.
Adam Stirling [00:11:11] Yes.
Michael T. Mulligan [00:11:12] Was applying to ask the judge to not allow that application to proceed and there is authority to do that. In fact, we have this concept, the Supreme Court of Canada has endorsed. That courts can screen out applications that have no reasonable prospect of success. And the idea there is a courts of general authority to manage their process that they should try to keep things moving. And if there’s some application being made, that just is not going to go anywhere, has no reasonable prospect of success. They can just say, we’re not hearing that right. We’re not going to spend two weeks arguing about, you know, whether the vacuum cleaner made you do it or whether your tinfoil hat was somehow defective, right?
Adam Stirling [00:11:53] Yeah, it stops frivolous litigation and whatnot, too.
Michael T. Mulligan [00:11:56] Yeah, that’s the idea, right? But you have to use care when applying that principle because of course, the law develops and we don’t want to try to screen out novel applications or new things somebody might try to argue, all of that is fine.
Adam Stirling [00:12:09] Yeah.
Michael T. Mulligan [00:12:10] But it’s going to have some reasonable prospect of success. And so, the Crown was arguing, hey, this just can’t work, right? There’s argument that the police misconduct should result in these charges being stayed. That just can’t work. It’s never going to succeed, so you shouldn’t hear it at all. And so, the judge went through an analysis of whether that was so and found, first of all, when you’re doing that analysis, you have to you assume that the facts being alleged are all true, right? And that the sort of the highest possible, you know, highest and best assessment of the argument would be established, right? You know, the worst part of police conduct, that kind of thing.
Adam Stirling [00:12:47] Yeah, sort of setting a limit. Okay, that makes sense.
Michael T. Mulligan [00:12:50] Yeah, sort of. Well, you’re alleging, you know, the police engaged in terrible, awful, really, no good conduct. Right.
Adam Stirling [00:12:56] Yeah.
Michael T. Mulligan [00:12:56] And you should get a stay. So, you would analyze that. Okay, well, if you succeed in proving this terrible, awful, no-good conduct that you’re alleging, could that have that outcome? That’s how you would analyze it.
Adam Stirling [00:13:06] Okay.
Michael T. Mulligan [00:13:06] Or is there some reasonable prospect? And so it may be that you passed that test and in part of the part of the analysis there the judge applied is that, and this was good language, the judge said well, these arguments have a “toehold in the jurisprudence”. So, I’m not sure I want to have my application described as having a toehold. But it at least got to that threshold.
Adam Stirling [00:13:31] not a foothold, a toehold. I like that.
Michael T. Mulligan [00:13:32] You’ve got a toehold; you’re hanging in there. And the lawyers involved pointed to the use of this doctrine of abuse of process, which can apply when there’s very bad police conduct. One of the examples that they cited, where charges were stayed, was a circumstance where in an investigation police pretended to be gangsters; undercover police officers pretended to be gangsters and threatened and intimidated the accused, who then made some incriminating statement. And the court found that that amounted to an abuse of process, and the court wasn’t going to countenance a prosecution premised on the police, you know, pretending to be gangsters and threatening somebody to making some incriminating statement and then prosecuting them. And so, he said, Look, if that’s your toehold, there is a principle of abuse of process. And if you manage to prove these terrible, lawful, no-good things happen, maybe there’s something there, so you could go ahead and try. But, for at least a couple of the people involved and these were people who were arrested but not charged, and there were people who were arrested by the police and then either of police didn’t recommend contempt charges or the Crown didn’t approve them. A couple of those people were involved in this thing, and they were complaining that if they couldn’t participate, they wouldn’t be able to “air their grievances”.
Adam Stirling [00:14:53] Hmm.
Michael T. Mulligan [00:14:54] And so for those people, the judge found that you just can’t participate in this, right, this isn’t some forum to “air your grievances”.
Adam Stirling [00:15:03] No.
Michael T. Mulligan [00:15:04] You have no hope of success here. There’s nothing you can argue. And so those people cannot participate in it. And so now the judges said, look, there have to be some decision about who’s going to participate in this argument. Some people have counsel, some people don’t. And so, they’ll be allowed to make their make their argument, which is good, right? That’s why we have a court system.
Adam Stirling [00:15:24] Yeah.
Michael T. Mulligan [00:15:25] And hopefully people are not trying to undermine the court system, but appreciating that you have a court system which is prepared to, you know, give you a venue to make your argument, right? That’s what we’ve got. We should be pretty proud of it. And you don’t want to be undermining a court system, which this is yet another example of why it is why we’re so fortunate to live where we live. That’s not what happens in China or Russia or some other place. You have a court system says, Look, you’ve got a novel argument to make, we’ll hear you out. And so, it’s an example of the court trying to not have things that are totally frivolous; but if you have some legitimate argument to make, let them make it and so they’ll have their opportunity to do that. And so that’s how the ongoing prosecution of so far four hundred people is carrying on.
Adam Stirling [00:16:11] All right. Well, I’m sure we’ll check in on that one from time to time as it moves forward as fast as the justice system will allow. What else is on our agenda today?
Michael T. Mulligan [00:16:19] Next on the agenda is a case, an interesting one, I think, out of Vancouver that involves a place called Fets Whisky Kitchen. That sounds like the kind of place they’d want to go for lunch, and it’s a place which specializes in, amongst other things, selling and serving as sort of high-end exotic scotch. And what happened here is in 2018, there was a search or raid, depending on who you asked or Fets Whisky Kitchen.
Adam Stirling [00:16:47] I’m sorry, I shouldn’t laugh.
Michael T. Mulligan [00:16:50] Where the liquor. What do they call it now, the Liquor and Cannabis Regulation branch. The Branch went in and seized; 242 bottles of Scotch whisky valued at $40,000.
Adam Stirling [00:17:02] Wow.
Michael T. Mulligan [00:17:02] And the reason for doing that is that there’s a rule whereby if you’re a restaurant, you’ve got to buy all of your liquor from the liquor distribution branch. And they alleged that the restaurant bought this whisky from a private liquor store. And so that was the basis for the raids, and you can’t buy it from a private liquor store, you must buy it from a liquor distribution branch. And so, they took it, and then there was a hearing about that, and eventually that matter wound up in court. And the issue was whether the liquor branch should have been allowed to conduct this search in this way. And the reason that was an issue is that under this legislative scheme, like other regulatory schemes we’ve got, there is often authority to conduct a search without getting a search warrant for sort of regulatory enforcement like, for example, you know, probably, although I haven’t looked it up, probably the fire department could show up and inspect CFAX facts to make sure that you got fire alarms and you’re.
Adam Stirling [00:18:02] Absolutely.
Michael T. Mulligan [00:18:03] fire extinguisher it’s charged up right up. But that’s a different kind of a search than if the police are coming in to try to gather evidence to, you know, prosecute CFAX for some dastardly. You’ve got to get a warrant for that.
Adam Stirling [00:18:14] Yes.
Michael T. Mulligan [00:18:15] And under the liquor legislation in B.C., both things can be done.
Adam Stirling [00:18:20] Interesting.
Michael T. Mulligan [00:18:20] You can have like an administrative fine imposed for something like, you know, hey, you didn’t buy your liquor from the liquor distribution branch here or they find the $3,000 and kept the whisky, which is, of course, one of the other issues here.
Adam Stirling [00:18:33] I wonder where it went.
Michael T. Mulligan [00:18:35] You know, it was probably in some government warehouse somewhere. So, they said, well, look, but under that same legislation, there’s capacity to for the same activity prosecute people for which you can get a fine of up to $100,000 or go to jail for 12 months.
Adam Stirling [00:18:52] Wow.
Michael T. Mulligan [00:18:52] And the restaurant argument was, well, look, you just came in and went straight to our two hundred and forty-two bottles of Scotch whisky and seized them. This wasn’t just some inspection to say, oh, we’re just going down our list making sure everyone’s got there, you know, fire equipment in order. This was a, potentially, a sort of raid to do a particular, take a particular thing they knew about in advance, and that could lead to a prosecution for which you could go to jail. You need a warrant.
Adam Stirling [00:19:19] Yeah.
Michael T. Mulligan [00:19:20] And so what they were asking for is they said, hey, we want the documentation describing why you came here.
Adam Stirling [00:19:27] oohh.
Michael T. Mulligan [00:19:27] Was this just an inspection or was this a raid for which we could have been prosecuted? What were you doing? Give us your paperwork. And the liquor branch refused, and their adjudicators refused. And their argument was, well, if we had to give you that, it would be meaningless our regulatory search powers. And the court said, no, no, you know what’s being asked where they were asking for the documentation so they could figure out what was going on here?
Adam Stirling [00:19:54] Yes.
Michael T. Mulligan [00:19:54] Was this some raid of a particular thing for which you might have been prosecuted or was this just an inspection, that turned up some, you know, bottles of whisky that were purchased from the wrong store.
Adam Stirling [00:20:05] Yeah.
Michael T. Mulligan [00:20:05] And so the judge or oh, this is also great the need to get disclosure that liquor branch is named this particular operation. They called it Operation Malt Barley. And so, I’m not sure that’s going a whole lot.
Adam Stirling [00:20:19] They didn’t have legal counsel check that out before they named the operation. That’s probably not a good idea.
Michael T. Mulligan [00:20:26] No, it’s like if you’re going in to, you know, inspect the fire extinguishers or something, don’t call it operation, you know, fire crackdown or Operation Malt Barley, that probably is going to hurt you.
Adam Stirling [00:20:38] Oh, that’s funny
Michael T. Mulligan [00:20:39] …litigated. So, the result here is that the judge has ordered that they turn over the documentation about Operation Malt Barley.
Adam Stirling [00:20:47] Yeah.
Michael T. Mulligan [00:20:48] And the Fets whisky Kitchen will get to look at the documentation and then go back and have a new hearing. And if there’s a basis there to argue this was some raid with the potential prosecution where that could be going to jail. They’ve got a legitimate argument. You should have got a search warrant.
Adam Stirling [00:21:02] Yeah.
Michael T. Mulligan [00:21:03] And so that’s where that is.
Adam Stirling [00:21:05] Yeah, it’s pretty bad when they say that something’s found incidentally, and it wasn’t the point of the inspection, but the operation is named after the thing they supposedly incidentally found. Not a good look.
Michael T. Mulligan [00:21:14] Yeah.
Adam Stirling [00:21:14] Not a good look.
Michael T. Mulligan [00:21:15] If you knew there was Malt barley. What were you doing? Give it back.
Adam Stirling [00:21:21] Oh, Michael Mulligan a pleasure. A pleasure. As always, thank you for your time. I’ll talk to you next week.
Michael T. Mulligan [00:21:26] Thank you so much. Talk to you.
Adam Stirling [00:21:27] All right, Michael Mulligan with Mulligan Defence Lawyers every week.
Automatically Transcribed on March 25, 2022 – MULLIGAN DEFENCE LAWYERS