



COURT OF APPEAL FOR BRITISH COLUMBIA




Citation:



Li v. Li,









2021 BCCA 39




Date: 20210114

Dockets:
CA44691; CA46070

Docket: CA44691

Between:

Shaoqing Li

Respondent

(Plaintiff)

And

Xingzi Li also
known as Xing Zi Li also known as Withy Li
and Minwoo Kim

Appellants

(Defendants)

- and -

Docket: CA46070

Between:

Shaoqing Li

Respondent

(Plaintiff)

And

Xingzi Li also
known as Xing Zi Li also known as Withy Li
and Minwoo Kim

Appellants

(Defendants)




Before:



The Honourable Madam Justice Dickson

The Honourable Madam Justice DeWitt‑Van Oosten

The Honourable Mr. Justice Voith




On appeal from: Orders
of the Supreme Court of British Columbia, dated
July 27, 2017 (
Li v. Li
, 2017 BCSC 1312, Vancouver Docket S160037)
and
April 9, 2019 (
Li v. Li
, 2019 BCSC 533, Vancouver
Docket S160037).

Oral Reasons for Judgment




Appearing in person on behalf of the Appellants (via videoconference):



X. Li





Counsel for the Respondent (via videoconference):



B. Blake





Place and Date of Hearing:



Vancouver, British
  Columbia

January 6, 2021





Place and Date of Judgment:



Vancouver, British
  Columbia

January 14, 2021








Summary:

Following a 25‑day trial,
the appellant, Withy Li, was found to have wrongfully converted $423,900 belonging
to her father (the respondent). The trial judge also determined that Ms. Li
failed to repay a $10,000 loan. Ms. Lis spouse, Minwoo Kim, was found to
have benefitted from the converted funds; as such, each appellant was unjustly
enriched. Some of the converted funds were used to purchase a townhouse in Ms. Lis
name. In his final judgment, the trial judge granted the respondent a 100%
interest in that townhouse. On appeal, the appellants challenge the judges
liability findings and the proprietary remedy, contending: he made errors of
fact; his conduct gave rise to a reasonable apprehension of bias; and he erred
in his legal analysis of the proprietary remedy. Held: Appeal dismissed. The
appellants have not shown palpable and overriding errors of fact, a reasonable
apprehension of bias, or an error of law. Instead, they effectively ask this
Court to retry the case, conduct its own assessment of credibility and make its
own findings of fact. That is not the role of an appeal court, and, on the
record in this case, there is no principled basis on which to interfere with
the judges conclusions.



DEWITT-VAN OOSTEN J.A.
:

Introduction

[1]

After a lengthy trial, a Supreme Court judge determined that the
appellants, Withy Li and Minwoo Kim, wrongfully converted funds belonging to
Shaoqing Li, the respondent. The judge also found that Ms. Li failed
to repay Mr. Li a loan of $10,000. Withy Li is Shaoqing Lis
daughter. Minwoo Kim is her spouse. The judge found that the wrongful
conversion benefitted both appellants, resulting in their unjust enrichment.

[2]

Before finalizing his resolution of the case, the judge directed that a
registrar conduct a tracing and accounting inquiry on the converted funds,
which totalled $423,900 (
Supreme Court Civil Rules
, Rules 18‑1(1)
and (3)). The registrar reported on various uses made of the funds, including
the purchase of a townhouse in Withy Lis name (the Townhouse). The
judge determined that Mr. Li was entitled to a 100% interest in the
Townhouse. He quantified Mr. Kims liability to the respondent at
$145,061.67.

[3]

The trial judge reached his conclusions on conversion, unjust enrichment
and unpaid debt after a 25‑day trial in which he heard extensive evidence
from each side and assessed the credibility of their witnesses. The appellants did
not dispute that Ms. Li took possession of funds originating with the
respondent. However, the parties offered starkly different narratives of the
reasons why Ms. Li had access to those funds; their intended purpose and
use; and Ms. Lis beneficial entitlement to them. Some of the
circumstances surrounding the dispute were captured in documentary evidence;
however, much of the case depended on testimonial descriptions of familial
events that preceded the alleged conversion; conversations between the parties
over time; and their respective perceptions of the reasons or motivation behind
particular acts vis‑à‑vis one another.

[4]

Given that context, the judges assessment of credibility played a critical
role. The parties acknowledged that credibility would heavily influence the
outcome of the trial. Ultimately, the judge found the respondent and his
witnesses credible and accepted the respondents version of events. He rejected
Ms. Lis assertion that she was lawfully entitled to the $423,900, as well
as Mr. Kims testimonial support for Ms. Lis position.

[5]

On appeal, the appellants challenge the judges findings, contending
that his assessment of credibility and the ensuing determinations of fact reflect
a misapprehension or inadequate consideration of the evidence on several key
points. They also allege a reasonable apprehension of bias. They seek to have
all liability findings set aside. Doing so would mean that neither appellant is
responsible for the $423,900, in whole or in part; the unpaid debt would cancel;
and Ms. Li would be entitled to a 100% interest in the Townhouse.

[6]

If they are not successful in challenging the liability findings, the
appellants say that in quantifying Mr. Lis interest in the Townhouse, the
judge misunderstood the nature of Withy Lis contributions to the Townhouse, as
well as the applicable law. As such, even if this Court affirms the findings of
conversion, unjust enrichment and unpaid debt, Ms. Li is legally entitled
to a share of the Townhouse.

Findings at Trial

[7]

In 2002, Mr. Li purchased an apartment in China (802) and
registered it in his daughters name. The apartment sold in 2015. The proceeds
of sale lie at the centre of the dispute between the parties.

[8]

At trial, Withy Li argued that her father purchased the apartment as a
gift for her, intending that she have immediate beneficial ownership. Mr. Lis
position was that he purchased the apartment with the intention of passing
beneficial entitlement to Ms. Li upon his death. He acknowledged having
registered the property in her name, but for other reasons. He argued that Ms. Li
held the apartment in trust for him and that he reserved the right to deal with
it as he saw fit, including disposing of the apartment during his lifetime and
claiming the proceeds.

[9]

The trial judge accepted Mr. Lis evidence. His key factual
findings are detailed in reasons for judgment indexed as
Li v. Li
, 2017
BCSC 1312 (RFJ‑1):

[194]    When Mr. Li purchased 802, he did not intend it
to be an
inter vivos
gift to his daughter. He purchased 802 for several
reasons: (a) to provide a home for his aging parents to live; (b) to
provide an inheritance for his daughter on his death; (c) to avoid
disputes between his two children on his death; and (d) to protect his
cash.

[195]    Mr. Li did not create a testamentary
disposition in favour of his daughter.

[196]    When Mr. Li purchased 802, he intended to have
complete control over the disposition of 802 during his lifetime, including the
right to use and sell it, and in that event, to disburse the sale proceeds, all
as he saw fit. His intention in that respect never changed.

[197]    Ms. Li was aware since May 2003 of Mr. Lis
reasons for purchasing 802 and of his right to deal with and dispose of it
during his lifetime. She understood that she had no right to take, control, or
sell 802, and also, that she might not inherit 802 on her fathers death.

[198]    Mr. Li registered title to 802 in Ms. Lis
name, but she held it in trust for him until it was sold. At no time did he gift
his beneficial ownership to her. Nor did he ever gift the proceeds of the sale
of 802 to Ms. Li. The sale proceeds belonged to Mr. Li.

[199]    Mr. Lis plans in respect of 802 changed in the
late summer of 2014, when he decided to immigrate to Canada with Ms. Wei
and R.L. [their son]. Ms. Li was fully aware that her fathers plans for
802 changed.

[200]    Mr. Li reached an agreement with Ms. Li to
pay her $150,000 to act as his familys sponsor and to facilitate their
immigration application. She knew that she would not receive the proceeds of
sale of 802.

[201]    Ms. Li invited R.L. to live with her and Mr. Kim
after R.L. graduated from elementary school. In accordance with that
invitation, R.L. moved to live with his stepsister in August 2015.

[202]    Ms. Li and Mr. Li agreed that he would
give her $20,000 per year to cover R.L.s tuition and living expenses, which he
proposed, and they agreed, would be set at $650 per month. Of that amount, Ms. Li
could keep whatever sum she did not spend in a particular month.

[203]    Ms. Li removed money that Mr. Li deposited
in R.L.s RBC Account and Mr. Lis RBC Account, without her fathers
consent. She used those funds for the benefit of herself and Mr. Kim.
Except for her withdrawal of funds from R.L.s RBC Account to purchase the
vehicle and to pay her debt, which she told her father she had done after the
fact, Mr. Li was unaware of his daughters conduct in respect of his other
funds. She repaid the funds she took from R.L.s RBC Account with her fathers
funds.

[204]    Contrary to her agreement with Mr. Li, Ms. Li
refused to act as the familys sponsor. She did not take any steps to carry out
her agreed role. She nonetheless took the $150,000 payment for her own
purposes.

[205]    On December 2, 2015, Ms. Li made a sudden and
abrupt demand that R.L. be removed from her home. She told her father that she
would renounce her custodianship of R.L. when he turned 13 on December 12.

[206]    Ms. Li has not repaid any of her fathers
funds.

[207]    Ms. Li has wrongfully taken $420,000 that
belongs to Mr. Li.

[208]    She has also refused to return the remainder of the
funds she was given for R.L.s living expenses for the months of January to
June 2016.

[209]    Ms. Li used her fathers money to renovate her
house, to pay personal debt, to invest in a TFSA, and to make the down payment
on the Townhouse. It is unclear whether she used all or any portion of those
specific funds that Mr. Li wired into Ms. Lis chequing account to
purchase the Townhouse, or whether she used funds from Mr. Lis RBC Account,
or a combination of both.

[210]    Mr. Kim has also
benefitted from his wifes wrongful conduct.

[10]

The trial judge also found that Ms. Li failed to repay $10,000 loaned
to her to assist with the purchase of her principal residence in June 2013.

[11]

After the judge reached his conclusions on liability, he directed a
registrar to conduct a tracing and accounting inquiry on the converted funds. The
registrar produced two reports. The judge confirmed both of them, as set out in
reasons for judgment indexed as
Li v. Li
, 2019 BCSC 533 (RFJ‑2).

[12]

In the first report, the registrar found that the $423,900 in converted
funds had been used for several purposes. They consisted of: (a) a down
payment on the Townhouse ($133,776.67); (b) repairs and renovations to the
home Ms. Li owns with Mr. Kim ($76,966.27); (c) the purchase of
a pick‑up truck ($51,376.64); (d) personal use, including a vacation
with Mr. Kim ($13,000); and (e) legal fees ($148,780.42).

[13]

The registrar also found that Mr. Kim benefited from one‑half
of the converted funds ($145,061.67), excluding the down payment for the
Townhouse.

[14]

In his notice of civil claim, Mr. Li sought a declaration of constructive
trust over assets held by the appellants, as well as a tracing order and an accounting.
At trial, he obtained leave to amend his pleadings to include a claim for a
certificate of pending litigation (CPL) against the Townhouse. The judge
directed the registrar to determine Mr. Lis beneficial interest in the
Townhouse. As at December 11, 2018, the property carried a fair market value of
$520,000.

[15]

The registrar reported the purchase price of the Townhouse to be
$323,976.67, including property transfer tax, conveyance costs and legal fees. As
noted, the down payment came from the converted funds. Mortgage financing
secured by Ms. Li covered the remainder of the purchase, including conveyance
costs. After the purchase, Ms. Li rented the Townhouse to one or more
tenants. The registrar found that between June 2015 and October 2017, rental
income totalled $42,740.97. The related expenses for that period totalled
$37,376.10. As detailed at para. 15 of RFJ‑2, those expenses were
covered by the rent. This included:

(a)        monthly
mortgage payments between August 2015 and October 2017 totalling $24,292.23;

(b)        strata fees between July 2015 and October 2017
totalling $4,628.04;

(c)        property taxes for 2015 to 2017 totalling
$6,101.45;

(d)        a one‑time
special levy imposed by strata council for repairs and maintenance of $220.38;
and,

(e)        tax paid on the rental
income in May 2018 of $2,134.00.

[16]

The appellants did not dispute the numbers in the registrars first
report. In fact, as explained by the registrar, the parties reached an
agreement, by consent, which they believed resolved all the issues referred to
the registrar.

[17]

The registrars second report addressed the relative interests of Mr. Li
and Ms. Li in the Townhouse. Mr. Li conceded that his daughter did
the legwork in finding and purchasing the Townhouse. Based on that fact, as
well as the fact that she secured the mortgage, Ms. Li argued that her
fathers interest in the Townhouse was limited to a 41.3% share, consistent
with the proportion of the original purchase price covered by the down payment.
In light of her own contributions, Ms. Li said she was entitled to a 58.7%
interest.

[18]

The registrar rejected Ms. Lis position on the ground that it
would result in a windfall to her directly from her wrongful conduct, where
she has made no actual financial contribution to the purchase of the Townhouse.
He recommended that Mr. Li receive a 100% interest in the Townhouse. The
trial judge agreed. He declared that Ms. Li held the property on a
constructive trust for Mr. Lis benefit (RFJ‑2 at paras. 4546).
He then said:

[53]      Turning to whether Ms. Li can claim an
interest in the Townhouse and a consequential pro‑rata share of the
increase in its value, I will begin by saying that I agree with Registrar
Nielsens finding that the mortgage for the Townhouse was secured only because 
Mr. Lis converted funds were used as the down payment.

[54]
Next, by her own admission, Ms. Li did not
make any financial contribution to the Townhouse
. No case has been cited to
me where a non‑financial contribution has been sufficient to establish a
pro‑rata interest. I do not conclude, however, that a non‑financial
contribution could never be sufficient to found a pro‑rata interest.
But,
in this case, where Ms. Li chose not to adduce any evidence of the value
of any non‑financial contribution, there is no evidentiary basis in which
to consider her claim
.

[55]      As a result, Ms. Li has not established that
she has made the requisite contribution to the Townhouse to establish an
interest in it.

[56]      Lastly, I wish to
address Ms. Lis submission that a tortfeasors right to share in the increase
in value or profit can only be precluded in cases involving findings of breach
of fiduciary duty or fraud (which she argues were not pleaded by Mr. Li in
his notice of civil claim). No cases dealing with claims in conversion and
unjust enrichment containing any statement of principle to that effect were
cited to me.

[Emphasis added.]

Issues on Appeal

[19]

In challenging the findings of conversion, unjust enrichment and unpaid debt,
the appellants raise two grounds of appeal. They say: (1) the trial judges
credibility determinations and findings of fact are materially flawed and
undermine his conclusions on liability; and (2) he made comments and
interventions during the trial that gave rise to a reasonable apprehension of
bias.

[20]

The appellants challenge the respondents 100% interest in the Townhouse
on two bases. They say: (1) the judge misapprehended the evidence on
financial contributions by Ms. Li to the Townhouse; and (2) in any
event, he erred in his legal analysis of the effect of her non‑financial
contributions.

[21]

There is an ancillary issue. At the hearing of the appeals, Mr. Li
applied to adduce new evidence concerning events since the trial. He filed an
affidavit that, among other things, indicates the Townhouse sold in September
2019, with the net proceeds transferring by consent to Mr. Li. Counsel for
Mr. Li advised that the primary purpose of this evidence was to bring the
Court up to date on what has transpired since the judge made his findings. The
appellants objected to the admissibility of the evidence, saying it is
irrelevant to the issues raised on appeal.

[22]

I do not consider it necessary to address the legal framework that
governs the admission of new evidence, or the particulars of the evidence
adduced by Mr. Li. Upon a review of the affidavit, I agree with the
appellants that the events addressed there are irrelevant to assessing the
merits of the grounds of appeal as framed by the appellants. Nor does the new
evidence render moot any of the issues before us. As such, I would deny the
application.

Discussion

Did the Trial Judge Err in His Assessment of Credibility and the Facts?

[23]

The appellants allege five material errors in the judges acceptance of
the respondents testimony. They say the judge misapprehended the trial evidence,
or ignored relevant evidence, in relation to each of these points. Cumulatively,
it resulted in a skewed credibility assessment in favour of the respondent. As
the judges assessment of credibility heavily influenced his findings of fact,
the appellants contend that the conclusions he reached on liability are irreparably
flawed.

[24]

Specifically, the appellants say the trial judge was wrong to find that:

·

Mr. Li
had been effectively separated from his first wife (Withy Lis mother) since
1993;

·

Mr. Li
and his daughter had a conversation in June 2013 wherein Ms. Li proposed
that her half‑brother, R.L., travel to Canada and live with her once he
graduated from elementary school;

·

Mr. Li
did not know that the Canadian bank accounts opened for him and R.L. in July
2014 were held jointly with Ms. Li;

·

the
proceeds of sale from 802 were sent to Canada for three specific purposes:
(1) $150,000 for Withy Li to assist Mr. Li and his immediate family
with immigration sponsorship; (2) $150,000 for Mr. Li to purchase
property in Canada; and (3) $120,000 for R.L.s education; and

·

Mr. Li did not know that $70,000 removed by Withy Li from
R.L.s Canadian bank account had been repaid by her, at least in part, using funds
taken from Mr. Lis account.

[25]

Credibility findings are subject to a deferential standard of review. Appeal
courts must defer to a trial judges assessment of credibility unless the party
seeking to challenge that assessment establishes palpable and overriding error.
As explained in
R. v. Wright
, 2019 BCCA 327:

[25]

The
assessment of credibility is not a science  it involves a complex process of
watching, listening, and reconciling the various versions of events:
R. v.
Gagnon,
2006 SCC 17 at para. 20. Trial judges are required
to justify their credibility findings and explain how credibility concerns were
resolved;
however, deficiencies in a trial judges credibility analysis will
rarely rise to the level requiring appellate intervention
:
R. v.
Dinardo,
2008 SCC 24 at para. 26;
R. v. Kinney
2013 YKCA 5
at para. 14.

[Emphasis added.]

[26]

The standard of review for factual findings is also highly deferential
and requires palpable and overriding error to justify appellate interference:
Housen
v. Nikolaisen
, 2002 SCC 33 at para. 10. A palpable error is one that
is obvious, plain to see or clear:
Housen
at para. 5.
An overriding error is one that is so tied to the
issues at trial that it can be said to have affected the outcome:
Franklin
v. Cooper
, 2016 BCCA 447 at para. 13.

[27]

The appellants say the trial judges credibility assessment of the
respondent, and his ensuing findings of fact, meet the test for palpable and
overriding error because they reflect misapprehensions of the trial evidence or
a failure to consider relevant evidence.

[28]

It is the respondents position that the judge did not commit palpable
and overriding error. Instead, he properly reviewed the evidence in the entire
context, considering the parties/witnesses relationship, cultural background,
language ability, and places of residence, and weighed trial testimonies with
objective evidence such as contracts of sales, names shown on bank documents,
wire transfer information, photos, text messages, emails, and oral testimony
(respondents factum at para. 120).

[29]

I have considered each of the five errors alleged by the appellants and
the evidence they say either contradicts the findings of the trial judge or was
given insufficient consideration in the assessment of the credibility of Mr. Lis
testimony. I have also carefully considered the various points raised by them in
support of their argument that Mr. Lis evidence was inherently
implausible, demonstrably fabricated, inconsistent with his pleadings, and
inconsistent with the documentary evidence, including text messages exchanged
with his daughter, banking statements for Mr. Li and R.L.s bank accounts,
and records surrounding the opening of those accounts.

[30]

In my view, it was open to the trial judge to make his findings, both in
his assessment of credibility and his determinations of fact. There was a
supportable basis for those findings in the record, allowing him to draw the
inferences that he did and to accept the evidence of Mr. Li and his
witnesses over the evidence of the appellants. The reasons for judgment reflect
a comprehensive and careful review of the evidence,
as a whole
, with
explicit reference to many of the portions of the recordboth testimonial and
documentarythat the appellants say the judge failed to appreciate or ignored
all together. The appellants complain that some of the evidence they consider
supportive of their version of events was not mentioned by the judge in
resolving the issues before him; however, the law does not oblige a judge to
advert to every piece of evidence that was tendered and considered at trial:
R. v. J.M.H.
,
2011 SCC 45 at para. 32.

[31]

The appellants do not allege that in
finding conversion, unjust enrichment and unpaid debt, the trial judge
misunderstood or wrongly applied the relevant legal principles. Instead, it is
the judges interpretation of the evidence that they take issue with. Consistent
with the position put forward at trial, the appellants say the preponderance of
the evidence supported their narrative, not the version advanced by the
respondent. From their perspective, the evidence made it clear that 802 was
intended as an immediate beneficial gift to Ms. Li when purchased in 2002;
that intention never changed; and, as a result, the sale proceeds from the
property belonged to her, not her father. Any conclusion to the contrary is
said to defy common sense.

[32]

I appreciate that the appellants believe
firmly in the rightness of their position. However, it was up to the trial
judge to decide whether such was the case, after considering and weighing the
whole of the evidence, within the context of the pleadings as reviewed and
understood by him. It is not for this Court to re‑try 25 days of
evidence and submissions and substitute our own view of credibility and the facts:
Silverhill Homes Ltd. v. Borowski
, 2019 BCCA 227 at paras. 2931,
40;
Wright
at paras. 23, 25;
Esau v. McCurdy

et al.
,
1999 BCCA 223 at para. 2. Instead, the deferential standard of
review on this first ground of appeal mandates that we respect the trial
judges determinations in the absence of palpable and overriding error. The
appellants have not met that test.

Is There a Reasonable Apprehension of Bias?

[33]

The appellants allege that the judges comments and interventions
during the trial gave rise to a reasonable apprehension of bias. As noted by
Bauman C.J.B.C. in
Dhillon v. Dhillon
, 2019 BCCA 163,
this is a serious allegation and one that should not be made lightly. The
independence of the judiciary, both actual and reasonably perceived, is a
foundation of our legal system (at para. 30).

[34]

The appellants face a high barrier on this ground of appeal because of
the presumption of impartiality:
Dhillon
at para. 31.
As explained by the Supreme Court of
Canada in
Wewaykum Indian Band v. Canada
, 2003 SCC 45:

[59]
[t]he presumption of impartiality carries
considerable weight, and the law should not carelessly evoke the possibility of
bias in a judge, whose authority depends upon that presumption
.

[60
]      In Canadian law, one standard has
now emerged as the criterion for disqualification. The criterion, as expressed
by de Grandpré J. in
Committee for Justice and Liberty v. National
Energy Board
,
supra
, at p. 394, is the reasonable
apprehension of bias:

. . . the apprehension
of bias must be a reasonable one, held by reasonable and right minded persons,
applying themselves to the question and obtaining thereon the required
information. In the words of the Court of Appeal, that test is what would an
informed person, viewing the matter realistically and practically  and having
thought the matter through  conclude. Would he think that it is more likely
than not that [the decision‑maker], whether consciously or unconsciously,
would not decide fairly.

[Emphasis added.]

[35]

The appellants say the trial judge conducted himself in a manner that
left a reasonably held perception he was assisting the respondents case and
that he prejudged Ms. Lis credibility. The impugned conduct is said to
include:

·

repeatedly
attempting to have respondents counsel acknowledge that Mr. Li told his
first wife about his extra‑marital affair (presumably in support of a
finding that they were effectively separated);

·

allowing
a late motion to amend the respondents pleadings to include a request for a
CPL against the Townhouse and blaming Ms. Li for not disclosing that
property;

·

providing
legal counsel with case law during their submissions that assisted the
respondents case; and

·

making negative comments about Withy Li and her testimony before
deciding the case.

[36]

I have reviewed the parts of the record the appellants point to in
support of their position on bias. The judge asked questions about whether Mr. Li
told his former wife of his relationship with R.L.s mother (Ms. Wei) to ensure
that he accurately understood the evidence referred to by respondents counsel
in her submissions. Before allowing the respondent to add a CPL against the
Townhouse to his pleadings (the merits of which is not under appeal), the judge
gave both sides an opportunity to address the issue, including possible prejudice
to the appellants. At the hearing of the appeals, Ms. Li said the judge
wrongly found that she did not disclose the Townhouse until she was cross‑examined.
She says she referred to it in her direct evidence. That may be so, but Ms. Li
does not take issue with the fact that
before the start of trial
, she
did not disclose her purchase of the Townhouse, or that proceeds from the sale
of 802 had been used for the down payment. Quite properly, it was
that
fact
that carried analytical significance on the motion to amend.

[37]

When he raised case law not advanced by counsel, the judge gave them time
to review it and to make submissions on its relevance and legal effect. Finally,
I do not agree that comments made about Ms. Lis testimony, the manner in
which she expressed herself in text messages, and her demeanour while testifying,
indicate that the judge prejudged her credibility. Instead, the impugned
comments arose during closing submissions by appellants legal counsel. The
judge candidly flagged his concerns with Ms. Lis evidence and provided her
counsel an opportunity to address those concerns before the judge reached his
final determination. Credibility was a critical issue at trial. In that
context, it was appropriate for the judge to identify the parts of the evidence
that troubled him and to ask Ms. Lis lawyer to show him, with reference
to the record, why those concerns were unwarranted.

[38]

A bias inquiry is fact‑specific, contextual and informed by the
entirety of the proceedings. In the circumstances of this case, I am not
persuaded that an informed person, viewing the matter realistically and
practically, would think it more likely than not that the trial judge would not
decide the matter fairly:
Yukon Francophone School Board, Education
Area #23 v. Yukon (Attorney General)
, 2015 SCC 25

at para. 20,
citing
Committee for Justice and Liberty v. National Energy Board
,
[1978] 1 S.C.R. 369 at 394.

Did the Judge Err in Finding No Financial Contribution to the Townhouse?

[39]

The appellants say: (1) the judge misapprehended the record in
finding there was no evidence of the amount of tax paid by Ms. Li on
rental income (RFJ‑2 at para. 40); and (2) because of that
misapprehension, he committed palpable and overriding error in concluding that Ms. Li
did not financially contribute towards the Townhouse (RFJ‑2 at para. 54).

[40]

The respondent says there is no error. Ms. Li made
all
payments associated with the Townhouse from its rental income, including related
income tax. There was no evidence of Ms. Li expending her own funds for the
purchase of the Townhouse or the costs of maintaining it as a rental unit.

[41]

I agree with the appellants that, contrary to the judges statement at para. 40
of RFJ‑2, the amount of income tax paid on the rental income had been
quantified. In his first report, the registrar put that amount at $2,134: see para. 15
of RFJ‑2. The judge was mistaken on this point. However, I do not see
that the factual error makes a difference. In other words, it is not overriding.
The parties agreed for the purpose of the registrars first report that the
rents have covered all the expenses,
including
any paid rental income
taxes. Furthermore, consistent with that agreement, Ms. Li did not argue
before the trial judge that the income tax constituted a financial contribution
(RFJ‑2 at para. 40).

[42]

The tracing and accounting inquiry did not reveal any form of direct
financial contribution by Ms. Li. Moreover, for the registrars second
report, the appellants declined to provide evidence quantifying the monetary
value of any of her contributions that did not involve an expenditure of funds,
from which Ms. Li might then have argued in support of an indirect financial
contribution. The ultimate finding, that Ms. Li did not make any
financial contribution to the Townhouse, is borne out by the record (RFJ‑2
at para. 54).

Did the Judge Err in Denying Ms. Li an Interest in the Townhouse?

[43]

This ground of appeal raises a question of law, reviewed on a standard
of correctness:
Housen
at para. 8.

[44]

The appellants say that even if this Court affirms the conversion and
unjust enrichment, Mr. Lis interest in the Townhouse was necessarily limited
to a 41.3% share, proportionate to the amount of the down payment. Consistent
with their position in the court below, the appellants contend that Ms. Li
is entitled to a 58.7% share, proportionate to the amount of the purchase price
covered by the mortgage. She says the trial judge erred in law when he awarded Mr. Li
a 100% interest.

[45]

The record established that Ms. Li did not expend personal funds towards
the purchase or maintenance of the Townhouse. However, she was the party who
found the Townhouse; researched the neighbourhood; facilitated the purchase; arranged
for one or more tenants; and made sure that the property taxes were paid. Critically,
from her perspective, she was the party who secured the mortgage, which made up
the bulk of the purchase, and exclusively bore its risk. Without the mortgage,
the purchase would not have completed. Ms. Li also says that the existence
of the mortgage, and the payments made in reducing its principal, facilitated the
growth of equity in the Townhouse over time. In light of these factors, she
contends the trial judge was duty bound to adopt the approach taken in
ICBC
v. Dragon Driving School
, 2007 BCSC 389, and recognize that Ms. Li
is entitled to a share of the Townhouse.

[46]

The respondent says
Dragon Driving School
is distinguishable on
its facts. Unlike in that case, Ms. Li made no separate, unrelated,
direct or indirect financial contribution towards the Townhouse (respondents
factum at para. 35). Accordingly, the judge rightly held that Ms. Li
is not entitled to an interest in the Townhouse, allowing her to benefit from
her tortious conduct by sharing in its fair market value.

[47]

I agree with the respondent that in the circumstances of this case, the
judge correctly awarded Mr. Li a 100% interest in the Townhouse. The judge
properly held that Mr. Lis remedy for conversion is neither premised nor
restricted to the actual loss he has suffered (RFJ‑2 at para. 47). Indeed,
at trial, Ms. Li acknowledged that her father was entitled to recover a
pro rata share of the increase in the value of the Townhouse (RFJ‑2 at para. 35).

[48]

This Court recognized in
Ruwenzori Enterprises Ltd. v. Walji
,
2006 BCCA 448, that wrongfully obtained funds traced to the purchase
of real property, in whole or in part, entitle the plaintiff to an equitable
claim in proportional ownership (at para. 28). To hold otherwise would
constitute a reproach to justice, allowing the wrongdoer to profit from their
own wrongdoing by receiving any increase in the asset value (at para. 41).
See also
British Columbia Teachers Credit Union v. Betterly
(1975),
61 D.L.R. (3d) 755 (B.C.S.C.) (a conversion case) and the
discussion in
Dhillon v. Dhillon
, 2006 BCCA 524 at paras. 8593.

[49]

In
Dragon Driving School
, Groberman J. (as he then was)
found that the entirety of the equity in real property at the time of its
purchase was traceable to a fraud (at para. 39). However, he was not
prepared to make that same finding in relation to equity that built up subsequent
to the purchase by paying down the mortgage, because some of
that money
may have come from the proceeds of sale of another home, the acquisition of
which predated the fraud (at para. 39; emphasis added). In other words,
the equity in the property at the time of granting the remedy reflected a commingling
of fraudulent and
bona fides
funds (at para. 40).

[50]

That is not the situation here and the trial judge was correct to
distinguish
Dragon Driving School
on that basis

(see RFJ‑2
at paras. 5255). The down payment for the Townhouse and all direct and
indirect expenses associated with its purchase and ongoing maintenance were
traceable to Ms. Lis use of the converted funds. Any reduction of the mortgage
principal, to the extent it may have occurred, was only possible because of income
generated by the property. The appellants provided no evidence showing that Ms. Li
put her own funds towards the Townhouse, or funds drawn from a source
unconnected to the property. Ms. Li relies upon various non‑financial
contributions as a basis for entitlement to the Townhouse. However, assuming
without deciding that non‑financial contributions may be considered, the
appellants did not lead any evidence quantifying those contributions, through
an equivalent monetary value or otherwise, for the purpose of the judges
analysis. As a result, there was no demonstrated commingling of wrongfully converted
and
bona fides
funds.

Disposition

[51]

For the reasons provided, I would dismiss both appeals.

[52]

The respondent seeks increased costs on the appeals because of the
volume of the record, the time required for preparation and the lack of merit. I
see nothing out of the ordinary about these appeals that would warrant such an
order. Accordingly, I would order that the costs of the appeals be assessed at
Scale 1, payable by the appellants.

[53]

DICKSON J.A.
: I agree.

[54]

VOITH J.A.
: I agree.

[55]

DICKSON J.A.
: The appeals are dismissed. Costs of the appeals are
assessed at Scale 1, payable by the appellants.

The
Honourable Madam Justice DeWitt‑Van Oosten


