Legally Speaking with Michael Mulligan
Legally Speaking with Michael Mulligan
The $95,000 Gamble: Civil Resolution Tribunal Lessons and Residential Tenancy Mansion Dispute
The latest Legally Speaking segment with Michael Mulligan takes listeners on a fascinating journey through British Columbia's alternative dispute resolution landscape, revealing both promising innovations and concerning pitfalls in our justice system.
The conversation begins with an extraordinary Civil Resolution Tribunal case in which a woman abandoned $95,000 of her $100,000 claim to proceed in a forum designed for minor disputes—only to lose everything. This cautionary tale illustrates the critical importance of forum selection and the permanent consequences of claim abandonment. Mulligan explains how the tribunal determined responsibility in a sophisticated WhatsApp fraud case, applying the principle of "who most enabled the third-party fraud" to conclude that ignoring explicit financial institution warnings proved fatal to the claim.
Equally compelling is the examination of a Vancouver tenant's fight for $82,380 in compensation (twelve months' rent) from a landlord alleged to have never moved into a property after eviction. This high-stakes dispute raises constitutional questions about provincial tribunal jurisdiction while highlighting fundamental procedural fairness requirements that cannot be circumvented. When an adjudicator dismissed a key witness, imposed arbitrary time limits of just minutes for closing arguments, and failed to provide adequate hearing time, the Supreme Court intervened despite high thresholds for judicial review.
These cases reveal the complex tensions within our legal system as it attempts to balance accessibility, efficiency, and fundamental fairness. Mulligan's expert analysis shows how legislative interventions in contractual relationships, particularly between landlords and tenants, have created increasingly fractured relationships, leading to novel litigation that tests the boundaries of our justice system.
Ready to learn more about navigating legal disputes effectively? Subscribe to catch future episodes of Legally Speaking with Michael Mulligan, where complex legal concepts become accessible wisdom you can use to protect yourself in an increasingly complicated world.
Follow this link for a transcript of the show and links to the cases discussed.
It's time for our regular segment, joined as always by barrister and solicitor with Mulligan Defense Lawyers. Michael Mulligan with Legally Speaking on CFAX Afternoon. Michael, how are we doing? Hey, good afternoon, I'm doing great, always good to be here. Some interesting items on the agenda today. I'm just reading it says abandoning $95,000 of a $100,000 claim to proceed in the Civil Resolution Tribunal and then losing. There's a lot there. What's happening?
Michael Mulligan:proceed in the Civil Resolution Tribunal and then losing. There's a lot there. What's happening? There is a lot there. That's a bad day in the Civil Resolution Tribunal if you're the person making the claim for the $100,000. So probably as a place to start, we'd just be to mention again what the Civil Resolution Tribunal is, because I think some people may not even be familiar with what it is, and it's a thing which was set up a number of years ago, initially to deal with a combination of minor strata disputes you know, people having a dispute about whether they can have a barbecue on their patio or whatever it might be or very small claims matters. And it has jurisdiction to deal with claims up to $5,000, so very small claims. The government later added other things, like disputes with ICBC, which, as we've spoken about before, in my judgment are not appropriate because the people who make the decisions for the Civil Resolution Tribunal are on short-term renewable government contracts and so it's not really an ideal entity to decide disputes with the government. Right, you don't want your neighbor's employee to be deciding your dispute with the neighbor, but certainly for things like tiny or small small claims disputes, I think it's a good format and the idea is that, rather than having people go to court even small claims court, which can deal with claims up to $35,000. For very small claims, the idea is they can be dealt with more efficiently, like using things like email or a telephone call or video connection, things like that, and so they have a lot of flexibility to sort out disputes in that way, which I think makes a lot of sense, so that the resolution process kind of accords with how much money people are fighting over. Right, you know, if you have to take the day off work for your claim for $500, it may not be worth taking the day off work and so it goes unresolved.
Michael Mulligan:Now the interesting thing about this case is it's a case involving a woman who is claiming that she lost what amounted to $102,000 Canadian, 544,000 RMB, chinese currency. And, just like in a small claims court, if somebody decides, hey, I want to sue. You know, let's say, in a small claims court I've got a claim that could be worth $40,000, but it's not worth going to Supreme Court with more procedure and so on, they might say, well, I'll just abandon the extra $5,000 and I'll just sue for the $35,000,. Right, fair enough, that would make sense in some cases like that, or a person who says look, I've got a claim. I say that you owe me $6,000, but I don't want to have to take the day off work to go to court. I'll try that in the Civil Resolution Tribunal and I'll just give up the other thousand, right?
Michael Mulligan:The unusual thing about this case is that the woman who was suing and she was suing a currency exchange company had this claim. She alleged to have lost $102,000 Canadian, but she started the thing in the civil resolution tribunal, and so the first order of business for the person hearing it was well, hold on a minute, I can't do anything about the $95,000 plus above what the jurisdiction is, and the woman responded she wanted to continue there. Now, the other thing about that is that if you abandon part of your claim, whatever amount it might be to get yourself into sort of a quicker process, that's it. If you lose, you can't go back later and try again, and so she was told that, but nonetheless she decided to continue, and so the fact pattern here involved this woman who wanted to. She was from China. She wanted to transfer 540,000 RMB into a roughly $102,000 Canadian. She went into a currency exchange place to talk about that, and they discussed with her the process and forms and things. They require ID and things to be filled out and so on. But, more importantly, she needed to have a Canadian bank account and she didn't have one set up at the time, and so the person at the store sent her away to go and get what she needed and set up the bank account, but also added the woman to their WhatsApp account their private one to further communicate if there were further questions or whatnot.
Michael Mulligan:And, very unfortunately, it would appear that a hacker got control of the WhatsApp account for the employee that worked at the currency exchange place, and that appears to be common ground. For the employee that worked at the currency exchange place, and that appears to be common ground. The woman didn't challenge the fact that this wasn't ultimately the currency store employee that was communicating with her, but the person who hacked into the account wound up communicating with the woman and eventually asked her if she still wanted to do the transaction and discussion about what the exchange rate would be, and eventually the hacker gave the woman instructions about where to transfer the 544,000 RMB to a numbered bank account, and the woman did it and, surprise, surprise, no money came right and so the woman tried suing the currency exchange place saying well, they're responsible for all of this because your employee's account got hacked and that's what allowed me to be defrauded and lose all this money. And so that was the issue that the adjudicator then had to consider well, who's responsible for this right? And this is another general thing people should know about who's on the hook when you wind up being defrauded in this way?
Michael Mulligan:Resolution tribunal adjudicator looked to a previous BC Supreme Court case, which stands for the proposition that where there is a fraud that occurs between you know, involving a third party, like a fraud artist, the approach to look at it is who most enabled that third party fraud. That's one of the primary considerations, and there can be other considerations. Like you know, one of the parties sort of do something that would have facilitated it. So here the adjudicator looked at things like well, you know, was the company somehow, you know, negligent in terms of how they were, for example, dealing with their accounts? You know, let's say, they left their password on a sticky note for anyone to see in the store, or something right?
Adam Stirling:Yeah.
Michael Mulligan:And there was no indication of that. Nor was there any indication that the currency company had somehow condoned communication in that way, like if the currency place had said, ok, well, we'll finalize everything by text message then or something. Right, you might say, ok, well, you've kind of accepted that that might not work out too well, but again, there was no evidence of any willful activity on the part of the currency company, nor was there any evidence they did anything to facilitate the account getting hacked. Nor was there anything to indicate they had kind of okayed yeah, you can just set this up on WeChat. And in fact, the currency company and it was accepted explained to the woman that, in order to do this transaction, they required things like a copy of a passport, a driver's license, bank statements, they need to know information about the source of funds, a bunch of regulatory things, and none of that happened in terms of this WeChat conversation that wound up with the money being sent. Moreover, the adjudicator pointed to the fact that I think this is not an uncommon thing in China, because there's, quite frankly, a lot of fraud that goes on, including organized fraudulent activity trying to defraud people of money, and we see that in Canada and elsewhere, but there's a lot of that where Chinese citizens are also the victim of that kind of sort of online fraud effort, and one of the things that that's prompted and it occurred in this case is that when somebody in China tries to transfer a substantial amount of money by way of electronic transfer, they get sent a warning from the financial institution, and this woman got the warning. It was sort of a warning you know, sending money by way of wire transfer is an indication of fraud. You should verify this. You know, sending money by way of wire transfer is an indication of fraud, you should verify this. And the woman ignored the warning and carried on with what she was doing, despite the warning.
Michael Mulligan:And so, given that combination of things, the adjudicator found that it wasn't the currency exchange company that was somehow more responsible here, the woman who sent the money. Essentially, she just wasn't prudent and careful with what she was doing, despite having an express warning from her financial institution and the fact that the process ultimately, that was followed here didn't accord with what the currency company told her would need to be done to make this transfer happen. They told her look, we need paperwork, documentation, passport, driver's license, all that info, all of which just seemed to get, of course, bypassed by the fraud artists that got control of the account. They weren't asking for proof of source of funds, it was just, you know, go ahead and quickly transfer your money to whatever account number they provided, and so the net result of that was that not only did the woman abandon the $95,000 plus of her claim and in a way that she can't go back and try again but she was also unsuccessful in the claim that she did advance.
Michael Mulligan:Another thing to comment on here is that the currency company was countersuing for defamation on the basis that the woman had posted things claiming bad things about the currency company. That counterclaim was also dismissed because the Civil Resolution Tribunal, in addition to having a $5,000 cap, has no authority to deal with claims involving allegations of libel and slander, and so that could not be considered either. That was rejected. Another important thing for people to know about you can't sue in this online dispute resolution process over claiming libel or slander.
Michael Mulligan:Another interesting point is that the legislation dealing with and setting up the Civil Resolution Tribunal requires it to receive evidence in English or translated to English, and in this case, one of the things that the woman was suing for she claimed to have a recording of a conversation with the employee over the phone, but it was not in English nor was it translated to English, and so, because of that, the adjudicators were like I can't consider this thing which is presented not in English.
Michael Mulligan:On the other hand, the currency company had the WeChat exchange, which they did have translated to English, and the woman accepted that the translation was accurate, and so the adjudicator was able to consider that, at the end of it, I should say the currency company, even though they won, they asked for their costs, including a $375 cost to translate the weak chat conversation, and the adjudicator declined to provide that on the basis that, well, there was some evidence that the currency exchange at least had a system that was vulnerable to hacking, and, given how much money this woman had lost, the adjudicator wasn't going to pile on with the $375 bill for the translation. So that's the latest out of the Civil Resolution Tribunal, what you can and cannot sue for there, and also that just information about how it works when you abandon a claim and what that means. So that's latest on currency exchanges, the Civil Resolution Tribunal and who's on the hook for fraud.
Adam Stirling:Michael Mulligan with Mulligan Defense Lawyers. Legally Speaking, will return in just a moment. Legally Speaking continues on CFAX 1070 with Michael Mulligan from Mulligan Defense Lawyers, michael up next. I'm reading.
Michael Mulligan:It says more litigation over 12 month rent awards for a landlord who allegedly didn't move into a property after an eviction yeah, this is an interesting one and it's a trend, which is to say, not a not a great trend, uh, but the? Uh, the provincial adp introduced a provision that, uh, if a landlord uh evicts a tenant for the purpose of moving into a property and then doesn't, in a reasonable time, move into the property, the former tenant may be able to get an award for 12 months rent, to be a substantial amount of money. And it's led to a trend of litigation, not only by way of the adjudication but in the Supreme Court fighting over it, because in some cases there's so much money at stake and it's sort of a function of, as we talked about before, contracts are usually don't wind up in court because usually they are things that both parties want and have kind of agreed to. You know, I agreed to buy your car, you wanted to sell the car, we agreed on the amount of money, we're both happy, right. But because residential tenancy has been so modified by statute to try to quote, protect, close, quote tenants, many of those contracts are now not things that the people are mutually agreeing to, it's things they're being ordered to do, and so they result in litigation. That's what's happening, and so this is one of those cases and it's interesting in several respects.
Michael Mulligan:First of all, one of the interesting things is the amount of money involved here. This is a rent in Vancouver not a cheap place to rent anything and it was apparently a very nice house. It was a house which was renting for $6,865 a month and so if you do the math there, 12 months rent is $82,380. That's a lot of money. Now I should pause just for a moment on that fact, and it relates to the other story we talked about the Civil Resolution Tribunal and how much you can sue for in small claims court right Civil Resolution Tribunal $5,000. Small claims, small claims court right Civil Resolution Tribunal 5,000. Small claims court, provincial court those are judges. 35,000. Why not more? It can't just be an unlimited amount because we have a Supreme Court in British Columbia and the judges there are appointed federally under Section 96 of the Constitution Act and they enjoy protections as a result of that. They can't just be fired because you don't like their decision. It's only on joint resolution of the House and Senate. And for that section to be meaningful, you can't just have the province creating some you know, inferior court and then just giving them all the power of the Supreme Court and getting rid of the Supreme Court right. That's why that can't happen. And so if you have something like large civil disputes over things like property, you can't just have an unlimited amount of money in some provincial tribunal or it may be unconstitutional.
Michael Mulligan:Now, it wasn't argued in this case probably. I don't know why it wasn't argued, but there'd be a very live question about whether you could have a residential tenancy adjudicator grant an award for $82,000 on. The landlord gave notice, saying I want to move in. And then the person who was renting the $82,000 a year house with a pool and also a coach house, it would seem continued to live in the same area and notice they thought things. They didn't think anyone had moved into the house. They didn't think anyone had moved into the house and so they saw things like the garbage cans hadn't moved for some period of time and the pool became murky and so on. So they started a claim for the $82,000.
Michael Mulligan:And there was a hearing, and when there's a hearing for a residential tenancy dispute it doesn't have all of the accoutrements of a trial, but in this case apparently even fewer of the accoutrements that might exist in the Civil Resolution Tribunal, for the adjudication was carried out by phone. The adjudicator announced at the beginning of the hearing you only got one hour, that's it. And then, also troublingly, at the beginning of the hearing, there was a witness for the homeowner and the adjudicator said well, you know, we don't need this person right now. If we need them, we'll get them reconnected and it's going to rush them off. And so they were never heard from and so the hearing went on.
Michael Mulligan:The landlord claimed that she did live in the house. She claimed that she lived in the coach house for part of the period of time while they were painting and renovating and changing appliances and so on, and then claimed that she was later living in the house the main house and submitted photographs and utility bills and food takeout orders and various things. The former tenant disagreed, pointing to the murky pool and the unmoved garbage containers and so on, and one of the interesting points that the tenant made was that the landlord also incorrectly identified the number of bathrooms on the main floor of the giant house.
Adam Stirling:Oh dear.
Michael Mulligan:So that was some evidence that she hadn't lived there. So, anyway, I guess the problem is to have you've lost track of how many bathrooms on one floor of your giant house. But anyways, the adjudicator found for the former tenant, ordering this very large award I think it was $82,380. And there was then an appeal of that by way of a judicial review to the BC Supreme Court and the review was really there were two arguments made. One was an argument about whether the decision was patently unreasonable, and that's the threshold for this kind of a judicial review, because there's a privative clause, like a clause in the legislation that allows adjudicators to decide these things, which sets a higher standard for judicial review. And the other thing about it is both parties tried to then give extra evidence on the judicial review, going to court like other people who were in the house saying, hey, I guess I saw her there, I came over for a party or whatever it was. On that ground, the judge hearing the judicial review had to go through an analysis of whether you can give this kind of fresh evidence on a review, and the judge ordered for both parties, the former tenant and the owner. The answer was no, because there's an idea there that you can't, on an appeal or a review, show up with a bunch of new evidence that you could have presented earlier but didn't. And the argument is, hey, if you've got something and you could reasonably get that evidence, get it out there at the original hearing. Don't try with some stuff and then come along later with more. And so that got a big raspberry on both sides from the judge that was reviewing this order. But the other part of it and this is important for people to know and this is an element of one of the reasons why we have judicial reviews and why you can't just order, like the, you know, no court review of some things, because there's also a requirement that there be what's called procedural fairness at a hearing, and there's some basic elements to procedural fairness. They would include things like giving each side an opportunity to be heard. Procedural fairness. They would include things like giving each side an opportunity to be heard. Right, you know things like that. Most things, I think, when you sort of look at what it would require, would be sort of things people would say, yeah, that seems only fair. Right, you should hear from both sides before you make a decision and on that ground.
Michael Mulligan:Despite that privative clause right that has that high standard of review on the merits of it, there is always a requirement that the hearing be conducted fairly, and fairness can take a whole bunch of different forms, like not everything has to be in a courtroom, just like the Civil Resolution Tribunal could have a fair hearing by video conference, or they could get some things by email or talk on the phone. That's fine, but you do have to have, at the end of the day, basic fairness. And one of the things which the judge focused on on the review was he said look, it's troubling that the landlord's witness, cynthia, was excused at the beginning of the call by the arbitrator. The arbitrator provided no reasons why the witness should be excluded and just said if we need her, we can then call her back in and concluded probably the arbitrator just forgot about her at the end of it and you know the time provided for things like they allowed each side the adjudicator two minutes to make a closing submission, and so the judge ultimately found yeah, appreciate, this is a privative clause, I get all that, but you know, a basic principle of fairness is that you give both sides an opportunity to be heard and call their witnesses and said look, it's not a quote line by line treasure hunt for errors, but you've got to be basically fair.
Michael Mulligan:Apparently forgot about the witness person was there ready to testify? And there's a substantial amount of money at stake here. The judge found that there just wasn't that basic procedural fairness and so for that reason, rather than taking into account the new evidence themselves, ordered back for a new hearing. Go try again. And unfortunately we're just seeing all kinds of these things because of how fractured those relationships have become between landlords and tenants because of how much we've mucked around with the contractual relationship. So we'll go and see this one done again, and it'll also be interesting to see whether anyone makes that argument about hey, does the arbitrator have any jurisdiction to deal with that kind of a big claim at all? And so that's the latest from the BC Supreme Court and dispute with the landlord of the giant house.
Adam Stirling:We'll wait and see what happens, michael Mulligan, with Mulligan Defense Lawyers, legally speaking, during the second half of our second hour every Thursday. Thank you so much. Pleasure as always. Thanks so much. Always great to be here. All right, we'll take a quick break. News is next.