



COURT OF APPEAL
        FOR BRITISH COLUMBIA




Citation:



Enns
                (Guardian ad Litem) v. Voice of Peace Foundation,









2004 BCCA
            13




Date: 20040113





Docket: CA031497

Between:

Abram Enns
      by his Guardian ad Litem the Public Guardian and Trustee in and for the
      Province of British Columbia

Appellant

(
Plaintiff
)

And

Voice of
      Peace Foundation

Respondent

(
Defendant
)












Before:



The Honourable
            Mr. Justice Donald





(In Chambers)









D.R. Urquhart and
S. Yung



Counsel for the Appellant





J.A. Rost
            and

A.H. Northey



Counsel for the Respondent





Place and
            Date of Hearing:



Vancouver, British Columbia





30 December 2003





Place and
            Date of Judgment:



Vancouver, British Columbia





13 January 2004







Reasons for Judgment of the Honourable Mr. Justice Donald:

[1]

The
        appellant applies for leave to appeal the refusal of a
Mareva
injunction
        by Madam Justice Sinclair Prowse in chambers on 22 December 2003, and if
        leave is granted, an injunction pending the appeal in the same terms sought
      below.

[2]

The
        action is brought by the Public Guardian and Trustee as the guardian
      ad litem for Dr. Abram Enns to recover a debt of $999,000 on a series of
      promissory
        notes.  The respondent says the appellant represented to its directors
        that the debt was repaid and on that basis the respondent made commitments
        to contribute financial aid to a charitable organization working in Eastern
        Europe.  The appellant maintains that the notes were never actually repaid
      and he is therefore still owed the money.

[3]

Because
        of the urgency of this matter, counsel have agreed on a note of reasons
        for judgment given orally by the learned chambers judge.  She found that
        the appellant was unable to satisfy the threshold test for a
Mareva
injunction,
        a strong
prima facie
case, and she dismissed the application for
        an order freezing the assets of the respondent in two accounts.  The
      note of her reasons conclude as follows:

9.    With respect
        to an interim injunction, there is no dispute that the funds in the accounts
        are the only assets of the Defendant.  Therefore, the application is
      in the nature of a mareva injunction.

10.   The test
        set out in
Aetna Financial Services Ltd. v. Feigelman
[1985] 1
        S.C.R. 2 requires that the applicant demonstrate a strong prima facie
        case.  I
        am not satisfied that the applicant meets this test.  The Defendant has
        not established a strong prima facie case.  The financial statements show
        that the debt was no longer owing in 1999.  The Plaintiff was the only
        or one of the only three directors at all material times.  Although there
        may have been a fraud perpetrated on Revenue Canada, there is no evidence
        of a fraud perpetrated on the Plaintiff.  The Plaintiff represented himself
      as the creditor repaid and the debtor making the payment.

11.   Given that
        the evidence does not establish a strong prima facie case, the application
        is dismissed.  Whatever stay order may be forthcoming should not pertain
        to the legal fees incurred by the Voice of Peace Foundation for the defence
      of this application or pending the stay/leave application.

12.   This order will not be entered until December
        30, 2003 unless otherwise ordered by the court or agreed to by the parties
      in writing.

[4]

Leave
        to appeal is sought on the ground that the judge wrongly applied the
      threshold test and in so doing she erred in the exercise of her discretion.  The
        appellant argues that she applied a "strict formalistic approach" rather
        than one which is more flexible and relaxed in the manner in which the
        various factors are considered and cites in support of that proposition
Mooney
        v. Orr
, [1994] B.C.J. No. 2652 (B.C.S.C.) and
Silver Standard
        Resources Inc. v. Joint Stock Co. Geolog
, [1998] B.C.J. No. 2887
      (B.C.C.A.).

[5]

The
        requirement of showing "a strong
prima facie
case" was
        pronounced by the Supreme Court of Canada in the leading case of
Aetna
        Financial Services Ltd. v. Feigelman
,

[1985] 1
        S.C.R. 2.  It is a threshold test.  In my respectful opinion, it can
        be reasonably argued that the judge erred in finding that the appellant
        did not have
        a strong
prima facie
case.  This is evident from the circumstances
      which I shall now briefly recite.

[6]

Dr.
        Enns created the Voice of Peace Foundation as a charitable society.  He
        was the mind and will of the foundation and its sole officer and director
        until 1998 when the Reverend Vincent Price and a Dr. Hunt joined the board
        of directors.  Dr. Enns funded the foundation by depositing $1,000,000,
        his life savings, in the treasury of the foundation with the idea that
        the interest earned on the capital would fund various religious endeavours
        undertaken by Reverend Price through the European Christian Mission.  This
        organization provides financial support to local pastors and evangelists
        working in Ukraine, Russia and the Baltics.  Dr. Enns took back promissory
      notes for his contributions to the respondent.

[7]

In
        November and December of 1998 Dr. Enns participated in two transactions
        which, if the facts alleged concerning them are proved, could be said
      to be cheque kiting.  The first involved a lawyer, Blake Bromley, who together
        with his wife and their two children issued cheques to the respondent totalling
        $500,000.  Dr. Enns then issued charitable tax receipts to the Bromleys
        and represented on the books of the respondent that he used the money to
        repay $500,000 on the promissory notes.  He caused the respondent to issue
        him a cheque for $500,000 in payment of promissory notes.  What the books
        do not show, and what was not apparently revealed to the other directors,
        was that on the same day the Bromleys issued their cheques, Dr. Enns issued
        two personal cheques payable to Mr. Bromley and his wife each in the sum
        of $250,000.  In the result, no money actually changed hands and the Bromleys
        obtained charitable tax receipts.  It is alleged that there was an understanding
        that the Bromleys would contribute part of their tax savings to the respondent,
      but that did not occur.

[8]

The
        December transaction was similar in nature and involved Stan Unger.  Mr.
        Unger issued a cheque for $400,000 to the respondent, Dr. Enns caused the
        respondent to issue a cheque to him in the same amount for repayment of
        promissory notes and then Dr. Enns issued a personal cheque to Mr. Unger
        for that same amount.  The only difference appears to be that Mr. Unger
        actually paid part of his tax credit, approximately $178,000, to the
      respondent.

[9]

On
        the evidence before me, the Bromleys did not have the money to cover
      their cheques amounting to $500,000.  Thus Dr. Enns did not receive any
      money in repayment of his promissory notes.

[10]

Dr.
        Enns suffered a stroke in June of 2001.  A certificate of incapability
        pursuant to the
Patients Property Act
, R.S.B.C. 1996, c.
        349 was issued on 16 August 2001 as a result of which the Public Guardian
      and Trustee became the committee of Dr. Enns' person and estate.

[11]

Canada
        Customs and Revenue Agency conducted an investigation into the transactions
        which it suspected were fraudulent.  As a result of the investigation,
        Mr. Bromley has been charged with criminal offences and will proceed
      to trial in January 2004.

[12]

To
        grant leave I must determine whether there is a reasonable prospect of
        persuading a division of this Court that the judge was clearly wrong in
        the exercise of her discretion:
Mikado Resources Ltd. v. Dragoon
        Resources Ltd.
(1990), 46 B.C.L.R. (2d) 354 at 357 (C.A.).  The
        case for the appellant is that Dr. Enns did not obtain repayment of his
        promissory notes.
Prima facie
, that is true.  The cheques he issued
        to himself on the respondent's account say that they are in payment of
        the notes, but plainly he got no money from the two transactions.  So his
        claim in debt is strongly based on the facts.  I think that may be as
        far as he needed to go in securing an injunction to freeze the remaining
        funds
      in the respondent's accounts, approximately $380,000.

[13]

The
        respondent's defence is that Dr. Enns said he was paid and therefore
      he waived his right to enforce the notes; or he is estopped from denying
      he
        was paid because the respondent relied on his representations in promising
        to fund Reverend Price's European charitable activities.  Furthermore,
        the respondent asserts that the appellant's action must rely on the cheque
        kiting scheme, a fraud, to overcome the documentation that would defeat
      the claim.

[14]

It
        can, in my view, be reasonably argued that ironically it is the respondent
        who relies on the fraud, if such it is, to prevent Dr. Enns' estate from
        recovering on the notes.  The notes exist and they have not been paid.  The
        respondent calls in aid documents prepared as part of an allegedly dishonest
      scheme for its defence.

[15]

As
        far as the clean hands doctrine is concerned, a principle invoked by
      the respondent, the respondent could be said to be fixed with the knowledge
        of the nature of the scheme because, as I have noted, Dr. Enns was the
        mind and will of the respondent.  The other directors may have been in
        the dark but that would not affect the imputation of knowledge to the respondent.  Moreover,
        the scheme was intended for the benefit of the respondent.  Are the hands
        of either party clean?  That is a question worthy of exploration on an
      appeal from the refusal of the injunction.

[16]

I
        think, with respect, it may have been an error for the judge to have
      decided the motion on the basis of the defences proposed by the respondent.  In
        my view, the evidence for the appellant if advanced at a trial would be
        amply sufficient to require the presentation of a defence.  It is by no
        means clear to me that the respondent is bound to succeed in its defences.  If
        both parties participated in a fraud, why should one be allowed to set
        up the fraud to defeat the other's claim when the claim does not depend
      on the fraud?

[17]

The
        foregoing views are expressed tentatively and for the limited purpose
      of deciding whether leave to appeal should be granted.  I go no further
      than to say that there is a reasonable prospect that the appellant may
      be able
        to demonstrate an error in principle in the judge's ruling on the threshold
        requirement or that she was clearly wrong in her decision:
Silver
        Standard Resources Inc.
,
supra
at para. 23.  Accordingly,
      I grant leave to appeal.

[18]

It
        follows that there should be an injunction pending the appeal.  The appeal
        will be nugatory without it.  Reverend Price has expressed an intention
        to spend a large portion of the respondent's money if lawfully permitted
        to do so.  The respondent has made no disbursements since the Public Trustee
        became Dr. Enns' committee.  Reverend Price deposed that he thought when
        the Public Trustee requested the respondent not to make any disbursements
        he was bound by law to comply.  He is now aware that the appellant requires
        a freezing order.  Nevertheless, the respondent has not been active for
        a significant period of time and I think the status quo should remain
      until the appeal is decided.

[19]

I
        have not been persuaded that the respondent should be permitted to make
        expenditures said to be in the ordinary course of its business.  The
        injunction shall be in the terms requested in para. 3 of the appellant's
        notice of
        motion for leave and stay pending appeal, to which should be added para.
        2 of the learned chambers judge's interim stay pronounced 22 December
        2003 giving the defendant liberty to pay its legal expenses in defending
        the
      appeal.

The Honourable
      Mr. Justice Donald






