



COURT OF
APPEAL FOR BRITISH COLUMBIA




Citation:



Four Star Management Ltd. v. Solid
  Gold Capital et al,









2003 BCCA 160




Date: 20030121





Docket: CA030219

Between:

Four Star Management Ltd.

Respondent

(
Plaintiff
)

And

Solid Gold Capital Corp.

Defendant







And

A. Ted Ewachniuk,

Formerly
  dba A. Ted Ewachniuk & Associates

Appellant














Before:



The Honourable Mr. Justice Braidwood





(In Chambers)




Oral Reasons for Judgment




J. Dawson



Counsel
  for the Appellant





F. Lamer



Counsel
  for the Respondent





Place and Date:



Vancouver, British
        Columbia





January 21, 2003







[1]


BRAIDWOOD, J.A.
: The application before
  me is for leave to appeal an order made in chambers on October 16, 2002, when
  the learned chambers judge dismissed the applicants
  motion for an interim injunction.  On that day two actions were in front of
  the chambers judge. In the first action, an application was brought on behalf
  of
  Mr. Ewachniuk in the style of Four Star Management Limited v. Solid Gold
  Capital Corporation. In this action, Mr. Ewachniuk sought to preserve the
  availability of certain shares which were to be sold to satisfy Mr. Ewachniuks
  fees. The second action was brought in the style of A. Ted Ewachniuk v. BMF
  Trading et al. In this action, Mr. Ewachniuk sought a declaration of trust
  in relation to the same shares.

[2]

The writ in the second suit is as follows:

THE PLAINTIFFS CLAIM IS:



For a declaration against the Defendants, other
  than the defendant, MONTREAL TRUST COMPANY OF CANADA, that certain property
  registered in the name of those Defendants (or with respect to which they claim
  title ownership or interest), obtained in or around June, 1992, and consisting
  of shares of Consolidated Ruskin Development Ltd. (or any predecessor or
  successor), now known as LML Payment Systems Inc., and redeemed or redeemable
  for shares in LML Payment Systems Inc. are to the extent a 50% thereof
  (hereinafter the Shares) legally and beneficially the property of the
  Plaintiff and are held by or on behalf of the Defendants in trust, express,
  constructive or resulting, for the Plaintiff, such trust arising by an
  agreement between the Plaintiff and the Defendants, BMF TRADING and ABRAXIS
  HOLDINGS LTD., for the provision of legal services and payment of legal
  expenses and disbursements by the Plaintiff in the period between 1989 and
  1996.



[3]

In this latter action, which I will call No. 2,
  counsel brought a motion under Rule 18 of the Supreme Court Rules to dismiss
  the action.  The notice of motion filed in the first action reads in part as
  follows:

TAKE NOTICE for directions and for an order
  pursuant to 79 of the
Legal Profession Act,
S.B.C. 1998 s. 39 of the
  Law and Equity Act and the inherent jurisdiction of this Honourable Court
  that:







2.   an
  interim injunction be granted restraining the Plaintiff from selling, pledging,
  transferring, redeeming, converting or otherwise disposing of or dealing with
  the Property.





[4]

The learned trial judge, in her Reasons for
  Judgment, wrote as follows:

[1]
THE COURT:
This is the application
  of the defendant, Abraxis Holding Ltd., pursuant to
Rule 18,
to dismiss
  the plaintiff's action on the basis that it is limitation barred.  There is,
  as well, the plaintiff's application to preserve the subject matter of the
  dispute, some shares.



[2] The plaintiff's action was commenced by
  writ on May 4, 2001.  The
  plaintiff asserts a 50 percent interest in shares pursuant to a contingency
  agreement, which he claims was amended by oral agreement.  No statement of
  claim has been filed.  The nature of the action, as endorsed on the writ, is
  framed in trust, not in contract.  This is necessary to escape a limitation
  bar.  The admissible material filed in support of this application, including
  the plaintiff's affidavits, does not support a claim in trust.  Any claim,
  tenuous as it may be, could only be in contract and is limitation barred since
  entitlement would have crystallized in May 1991.



[3] There is no evidence the cause of action
  was confirmed at a later date.  The plaintiff's action is dismissed with costs.



(Submissions re costs)

[4]
THE COURT
:  It may be close to the
  line but in my view it is not a circumstance for special costs.  Is there any
  reason why it would not be set on Scale 3?  All right.  Costs on Scale 3.







[5]

I am of the opinion that an appeal in this case
  has no possibility of success and that the chambers judge was plainly correct. 
  Case No. 2 is framed in trust.  An appeal concerning it can proceed without
  leave.  Case No. 1 is a claim for a solicitors lien.  The solicitors lien is
  based on contract.  This alone precludes any claim based on trust in the case
  now under review.  The contingency agreement, however, reads as follows:

In consideration of your acting as my
  solicitor, in connection with my claim for damages and injuries, I agree to pay
  for professional services rendered by you, exclusive of disbursements a fee
  based on a portion of the amount recovered as follows





The typing
    is 50% of any amount recovered.  There is an ink stroke through 50% and above it
  written in ink is 25% on the first $250,000 and 33 1/3 % on the balance.  I
  will just pause here to note that in these reasons that alteration makes no
  difference.  It is not in dispute.

The aforementioned fee based on a portion of
  the amount recovered relates to all professional services rendered up to and
  including settlement of any claim or obtaining judgment after trial, but does
  not include any fees for services that may arise out of an Appeal.  Amount
  recovered means all general and special damages, plus court order interest.





[6]

Here the amount received means, as defined,
  general and special damages plus court order interest.

[7]

In the Statement of Facts in the Respondents
  Motion Book, para. 3 reads as follows:

3. The appellant Ewachniuk took over as counsel
  for Four Star Management Ltd.  (Four Star), now known as Abraxis Holdings
  Ltd.) on or about January 9, 1991, after executing a contingency agreement
  dated January 9, 1991 (Contingency Agreement).  Two
  weeks after his appointment, the Defendant Solid Gold Capital Corp. (Solid
  Gold) filed a proposal in bankruptcy, thereby staying all proceedings against
  it (including this action).  The proposal in bankruptcy then called for the
  payment to creditors of 1 share in the capital of Solid Gold for every dollar
  indebtedness owing to is creditors.  Solid Gold is now known as LML Payment
  Systems Ltd. (LML).  A proof of claim was filed by Four Star in the amount of
  approximately $406,000.  This proof of claim was rejected by Solid Golds
  trustee in Bankruptcy.  In or about May 1991, the Appellant Ewachniuk settled
  the proof of claim for 225,000 shares (Solid Gold Shares) in the capital
  of Solid Gold (Solid Gold Settlement).





[8]

The shares were obtained as a result of a
  settlement of proceedings in bankruptcy and cannot be characterized as special
  or general damages.  So any claim to shares is outside the written terms of the
  contract.  It was admitted that at the time of settlement the shares were
  worthless, although they later came to be quite valuable.  Further, the
  underpinning of any trust is vague and confusing and the evidence said to
  support an inference of trust is too vague to meet any standard of a
prima
  facia
case.  Paras. 6 and 7 of the argument read as follows:

6. In May 1991, the Solid Gold Shares were
  worthless.  In any event, both Four Star and its president Mr. Bryon Williams
  were governed by a 12 year trading ban issued on December 31, 1989 by the Securities
  Commission.  This trading ban precluded any trade of these shares within British
  Columbia and the share
  certificates were issued with a trading legend in which this restriction was
  set out.  In effect, Mr. Ewachniuk had achieved nothing of value for Four Star.



7. The appellant Ewachniuk never retained
  possession of any of the share certificates issued by Solid Gold pursuant to
  the Solid Gold Settlement.  By the spring of 1992, Solid Gold had become
  (through amalgamations) Consolidated Ruskin Developments ltd. and new share
  certificates were issued by Consolidated Ruskin to Four Star in replacement of
  the Solid Gold share certificates originally issued.  Mr. Ewachniuk was given
  two of these share certificates representing 20,000 shares in Consolidated
  Ruskin Developments Ltd.  as security for the disbursements incurred by Four
  Star and other clients of his in an unrelated action, namely
Four Star Management
  Ltd. et al v. Coopers Lybrand Ltd.
Mr. Ewachniuk confirmed this fact to
  the Securities Commission in 1994 when he attempted to obtain permission to
  sell these 20,000 shares.  In this correspondence, Mr. Ewachniuk never
  mentioned to the Securities Commission any entitlement to any of the shares
  issued as part of the Solid Gold Settlement, under the Contingency Agreement
  or otherwise.





[9]

The contingency agreement for fees must be in
  writing.  The only written agreement is the one mentioned above and has nothing
  to do with shares.  The case before me is, in reality, a claim for specific
  performance of an oral agreement and so is inappropriate as a claim under the
Legal
  Professions Act
, and, is statute barred, as a claim in contract.

[10]

Accordingly, I am of the opinion that this application should be
  refused.



The Honourable Mr. Justice Braidwood




