Wright v. Czinege

2008 BCSC 1292 Wright v. Czinege IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: Wright v. Czinege, 2008 BCSC 1292 Date: 20080926 Docket: S084756 Registry: Vancouver Between: Constable David Wright Petitioner And Robert Czinege Respondent Before: The Honourable Madam Justice Humphries Reasons for Judgment Counsel for the petitioner P.J. Scheer The respondent, Robert Czinege On his own behalf Date and Place of Trial/Hearing: September 12, 2008 Vancouver, B.C. [1] This is a petition for judicial review of three decisions of the Small Claims division of the provincial court - one granting interlocutory default judgment in favour of the respondent, with damages to be assessed, one assessing damages, and one refusing to set aside the default judgment. As most of these reasons deal with the proceedings in the provincial court, I will refer to the respondent, Mr. Czinege, as "the claimant" and the petitioner, Mr. Wright, as "the defendant." Background [2] The petitioner is a police officer with Vancouver City Police. Sometime around November 18, 2003, he became involved in an incident with the respondent in which the respondent claims to have been assaulted. [3] The claimant filed a Notice of Claim on November 17, 2005. The Notice of Claim is addressed to "David Wright, c/o Vancouver City Police, 2120 Cambie Street, Vancouver, B.C., V5Z 4N6." It alleges that a vehicle driven by the defendant "wilfully rammed the claimant's vehicle causing damage to the vehicle," followed by the defendant punching the claimant several times through the window. The claimant sought damages for assault and trespass of $25,000. [4] The claimant filed an application to renew the claim on November 14, 2006, on the basis that he had not served the defendant, stating that he had been unaware that a member of the Vancouver Police Department could not be served at work (according to the claimant, he obtained this information from the Small Claims Registry), and the claim was extended to January 17, 2007. On January 16, 2007, the claimant sought another extension on the basis that the defendant had moved from the original address; an extension was granted to March 31, 2007. [5] According to the claimant, he mailed a copy of the Notice of Claim to Mr. Wright by double registered mail. It was returned unclaimed. [6] The claimant filed an application for substitutional service on March 27, 2007. According to the affidavit of attempted service, the process server had attempted personal service at 23060 - 24th Avenue, Langley, B.C. on February 6, 2007 and February 10, 2007. He noted the property was gated and locked. The first time he left a delivery notice card in the mailbox; the second time he spoke with a male who told him Mr. Wright was not in and made him leave the yard, telling him not to come in when the gate is closed. The male said Mr. Wright would be at the residence "next week." The process server attempted to leave a delivery notice with the male and was told to leave it in the mail box. The process server deposed that the mail box had "Fawcett" written on it, a fact that remains unexplained. [7] The process server's co-worker tried serving the defendant again on February 12, 2007, found the gate locked, and saw a Rottweiler in the yard. He left a delivery card in the "Fawcett" mail box. [8] The Registrar granted the following undated order: Pursuant to Small Claims Civil Rule 16(2)(e), and upon application by the claimant, Robert Czinege, the Claimant is at liberty to serve the Defendant, David Wright, with a copy of the Notice of Claim filed November 17, 2005, a blank Reply, a copy of this Order and a copy of the Application to the Registrar filed March 27, 2007, by mailing those documents by regular mail to the defendant at his residential address of 23060 - 24th Avenue, Langley, British Columbia, V2Z 2Z5, and by posting the said documents with tape to the front door of the said residence at 23060 - 24th Avenue, Langley, British Columbia. [emphasis added] The Defendant shall have 21 days from the date of posting of the said documents to file a Reply. [9] Although there is no evidence before the court as to exactly what the claimant did with the documents, an inference could be drawn from the transcript of the hearing to set aside the default judgment that he attached them somehow to the gate of the property but did not tape them to the front door of the residence. [10] During the present hearing, the claimant advised the court that he put the documents in an 8' x 11" envelope marked "WRIGHT" in large letters and taped the envelope to the gate. He produced a facsimile of the printed letters. He also produced a photograph which shows a large double gate made of chain link which forms part of a chain link fence around the property, installed some distance from the house. From the transcript, it appears that these documents were put to the defendant at the eventual hearing to set aside the default judgment on May 28, 2008, although they were not marked as exhibits so do not properly form part of the record. [11] On May 11, 2007, Mr. Czinege applied for default judgment before a provincial court judge. The following exchange took place: The Court: you're here applying for a default judgment? The Claimant: Yes. The Court: The defendant, Douglas Wright, was avoiding service, is that correct? The Claimant: Yes. The Court: And eventually he was served or - did you apply for an order for substitutional service? The Claimant: Yes I had. The Court: And what was the method of service that was approved? The Claimant: By registered mail. The Court: And the registered mail was returned undelivered, is that correct? The Claimant: Yes, it wasn't picked up. The Court: And it was unclaimed. The Claimant: So the subsequent order I believe was for it to be posted at the property and mailed by regular mail service. The Court: I see. There's no order to that effect in the file, but in any event, you were in a motor-vehicle accident with his gentleman on November the 18 of 2003? The Claimant: On November the - yes I believe it was the 18th or the 20th. [12] The Court then questioned the claimant about the nature of his claim, asked if he had pursued the vehicle damage through ICBC, which the claimant had not, and suggested the claimant take the stand to tell him about the incident. As a result of a discussion between the Court and the claimant, the judge told the claimant he would grant "interlocutory default" and have him come back another day with medical evidence to support his claim for damages. [13] The interlocutory default judgment is the first order that is the subject of the present petition. [14] On June 21, 2007, the claimant appeared before a second provincial court judge to have the damages assessed. This judge asked the claimant why he had not served the officer at work. The claimant said it was his understanding the officer could not be served at work. The judge differed, but continued to question the claimant on the efforts he had made to serve the defendant. By this time, it appears that there was a copy of the Order for Substitutional Service in the file. The claimant told the Court he had mailed the documents by regular mail. The Court asked the claimant if he had complied with both parts of the order: The Claimant: Yes, it's posted up in front of the property as well. The Court: Yes, you had to mail a letter by regular mail and the you had to post - did you get into the front door or did somebody - The Claimant: We posted a copy to the front of the property. The Court: You got through the locked gate, or what, or was it not locked? I think sir, what you've got to do is just get this - an affidavit and file it because that's required, saying that you complied with the order of substitutional service by mailing and by - have you got something there? [15] The claimant then handed up a Certificate of Service which had various boxes to be ticked off in order to certify the method of service used. The box for mailing a copy by ordinary mail was checked; a second box with the notation "fill in any instructions given by a judge or registrar for service" was completed by hand, with the words "by posting said documents with tape to the front door at 23060 - 24 Ave. Langley." This box was also ticked off. [16] This Certificate, dated April 10, 2007, was signed by the claimant. The judge asked what date the documents had been posted, was told they were posted on March 30, 2007, the same day as they had been mailed, and said "It seems to be in order then." [17] The Court went on to hear evidence from the claimant and assessed damages. During his reasons for judgment, the judge referred to the order for substitutional service and asked the claimant again if "both these measures were complied with." The claimant said: "Yes, that was 2007, Your Honour." [18] The judge assessed general damages at $5,000, loss of wages at $1,000, vehicle damages at $2,966.01, and a further amount of approximately $400 for bailiff fees and various other disbursements, for a total, including interest, of $10,754.91. This is the second order that is challenged in this petition, although it is more properly considered as part of the first order. [19] A summons to a Payment Hearing was filed on September 11, 2007, for a hearing date of October 26, 2007. The claimant asked that the matter be taken off the list because he had been unable to serve the defendant. [20] A second order for substitutional service was made on November 7, 2007, this time requiring service by ordinary mail or by posting on the door of the residence. A new hearing was scheduled for December 4, 2007. The defendant did not appear at the hearing and a warrant was issued for his arrest. The warrant was mailed to the defendant. [21] On December 21, 2007, the defendant filed an application to set aside the default judgment on the basis that he had never been served by any means, including by mail or by having the documents posted on his front door. [22] After numerous appearances and adjournments, one of which resulted in the claim for vehicle damage in the amount of approximately $3,000 being deleted from the judgment because ICBC had not been notified, the matter came back before the original provincial court judge who had granted the initial interlocutory default judgment. The defendant attended this hearing, represented by counsel. [23] The defendant testified that he had never received a copy of the notice of claim in the mail, nor had it ever been posted to the front door of his home. He testified that his mail box does not have a lock and is not secure. He has been made aware on several occasions of mail that he should have received but did not. He said he did not receive notice of registered mail in February 2007. [24] During cross-examination by the claimant, the following exchange took place: The claimant: This is a facsimile of the envelope that had been taped - posted to the front entrance of that property on or about the March the 30th of 2007, Your Honour. The Court: All right. Well, I'll take your word for it that it is - The Claimant: And you say you - The Court: But - The Claimant: You've never seen anything like that hang, posted to your front gate? The Defendant: No, Your Honour. [25] The questioning continued for some time. At one point, the Court said: Don't forget the only issues I must decide is whether or not it would be just, in all the circumstances, to set aside the default judgment. [26] In his reasons dismissing the application, the judge said at paras 8 - 10: The first substitutional service order required the claimant to do two things; serve the defendant by ordinary mail and to post the Notice of Claim and the draft reply on the front door of the defendant's residence. Something needs to be said about the defendant's residence. It is a five-acre parcel. It is surrounded by a chain-link fence and has two gates that are locked, or whenever the process servers arrived, they were locked. He also has two large dogs, a Rottweiler and an English Mastiff, roaming free on the property. He explained that he does this for reasons of security. The claimant, in an affidavit that is in the court file, says he did serve the defendant by ordinary mail and that the letter was never returned to him as undelivered. Clearly the defendant was unable to post the Notice of Claim and reply at the defendant's front door because the property was essentially a fortress with two large dogs and locked gates. [emphasis added] Counsel for the defendant submits that in light of that, the duty in law on the claimant was to return to court to seek an amendment to that order for service of the substitututional service. [27] The provincial court judge referred to Rule 17(2) of the Small Claims Rules: (2) A judge may cancel a dismissal order or a default order if (a) the order was made i) in the absence of a party or ii) for failing to file a reply, and (b) the party applies and attaches to the application an affidavit containing i) the reason the party did not file a reply or attend the settlement conference, trial conference or trial, ii) the reason for any delay if there has been delay in filing the application, and iii) the facts that support the claim or the defence. [28] He then referred to Miracle Feeds v. D.H. Enterprises Ltd (1979) 10 B.C.L.R. 58 (Co. Ct.), and quoted the following excerpt from it: In order for a defendant to succeed on an application to set aside a default judgment, he must show 1) that he did not wilfully or deliberately fail to enter an appearance or file a defence to the plaintiff's claim; 2), that he made application to set aside the default judgment as soon as reasonably possible after obtaining knowledge of the default judgment, or give an explanation for any delay in the application being brought; 3) that he has a meritorious defence, or at least a defence worthy of investigation. [29] In applying those tests, the provincial court judge said he was satisfied the defendant has a defence worthy of investigation. However, he found that the first test had not been met: I am satisfied that the defendant is the author of his own misfortune, that he chose deliberately throughout to avoid service, that he did not pick up registered mail when it was available to be picked up, and he has only himself to blame for not defending in this action. [30] The judge dismissed the application to set aside the default judgment. The petitioner seeks judicial review of that decision, in addition to the initial decision granting default judgment and the related assessment of damages. Issues and positions of the parties [31] In Double Eagle Entertainment Corp. v. Doolan [1995] B.C.J. No. 2157, Esson C.J.S.C., as he then was, said that the only avenue of challenge to a refusal by a provincial court judge to set aside an order made in default is by way of judicial review, not by way of an appeal. He said: The court can only interfere if there was a breach of the rules of natural justice so flagrant as to amount to an abdication of jurisdiction by the judge. [32] The petitioner submits that the issue for consideration by this court is one of the small claims Court's jurisdiction to grant default judgment in these circumstances and frames it this way: When a claimant relies upon an order for substitutional service to effect service of a Notice of Claim but fails to serve the Notice of Claim on a defendant in accordance with the terms of the order, can the court grant the claimant a default judgment against the defendant for failing to file a Reply to the Notice of Claim? [33] Counsel for the petitioner argues that it is settled law that if a claimant fails to serve a defendant with an originating process in accordance with the relevant statutory requirements - including any order for substitutional service made under them - and subsequently obtains a default judgment based on the defendant's failure to respond, then the default judgment is a nullity. The defendant in this case was therefore entitled to have the default judgment set aside as of right. The provincial court judge's determination that he could properly apply the discretionary tests in Miracle Feeds was in error. [34] Counsel for the petitioner submits that on a jurisdictional issue, the standard of review is one of correctness, but even if it is reasonableness, the orders and decisions in this case do not meet that standard. [35] The respondent, who was unrepresented, was unable to be of assistance on the standard of review. He made substantially the same arguments that he had made before the provincial court judge, based on fairness, equity, and the general proposition that it made no sense that the defendant could say he was unaware of the proceedings, given all of the steps that had been taken to serve him. The claimant submitted that it was unrealistic that no letters mailed to the defendant by the claimant had ever reached the defendant, but the letter from the Sheriff containing the arrest warrant received an immediate response. The claimant submits that it would have been impossible for the defendant to enter his property through his locked front gate and not see the envelope. [36] Mr. Czinege swore an affidavit on July 17, 2008, which is not part of the record of the proceedings before the provincial court, but is contained in the chambers record on the present application. The affidavit contains the following paragraph: On or about March 30, 2007, the Claimant mailed a copy of the Notice of Claim filed November 17, 2005; a copy of the Application to the Registrar filed March 27, 2007, and a copy of the Order of Substitutional Service granted March 27, 2007, and a blank reply, in accordance with the instructions given on the Order of Substitutional Service. On or about March 30, 2007, the Claimant also posted copies of the aforementioned documents with tape to the front door/entrance of the property at 23060 24th Avenue, Langley, British Columbia. [emphasis added] [37] During argument on the present motion, Mr. Czinege referred several times to a dictionary definition of "door" as an "entry-way," or a "means of access," and explained that in Hungary, where he is from, the front gate to a property is really the same as the front door to a residence, because one rings a bell at the front gate in order to be admitted to the residence. Discussion [38] Rule 2 of the Small Claims Rules provides: (1) The claimant must serve each defendant named in the notice of claim (2) If the defendant is an individual, the notice of claim must be served by (a) leaving a copy of it with the defendant, or (b) mailing a copy of it by registered mail to the defendant (6) The provisions in Rule 18 apply if (c) the claimant is having difficulty serving the defendant [39] Rule 18 (8) provides: (8) If a notice of claim cannot be served under Rule 2, the claimant may apply to the registrar who may (a) permit another method of service to be used, and (b) set the time limit for filing a reply. (10) A notice of claim that is served as permitted by a registrar's order is validly served. [40] Counsel for the petitioner referred to a number of cases which stand for the proposition that a default judgment given without notice to the other party is a nullity, not merely an irregularity, as it denies the other party the right to be heard and should thus be set aside as of right (Bache Halsey Stuart Shields Inc. v. Charles Estate, (1982) 40 B.C.L.R. 103 (S.C.), 140 D.L.R. (3d) 378; Hudson's Bay Co. v. Kallweit (1976) 2 B.C.L.R. 92 (S.C.), 4 C.P.C. 99. In the latter case, there was clear evidence before the court that the claim had in fact come to the attention of the defendant, but as it had never been properly served, the court said the further proceedings were a nullity. [41] In William v. Lake Babine Indian Band [2000] 1 C.H.L.R. 233, 30 C.P.C.(4th) 156, which concerned an application to set aside a default judgment, this court said at paras. 26 - 40:: There seems little question that defective service of documents cannot be cured merely by the fact that such documents have found their way into the possession of the person served. Service must be effected in a manner provided for by the Rules of Court or by such other statutory provision that may apply. Service improperly effected is no service. Where there has been no service of the proceedings leading up to default judgment then the judgment cannot stand, for it was obtained in circumstances where the defendant was denied an opportunity to be heard. That cannot be said to be an irregularity [42] Although Miracle Feeds had been argued as an alternative basis on which to set aside the default judgment, the Court said it was not necessary to consider it because the default judgment was a nullity. See also Bains v. James Lorimer & Co. [1993] B.C.J. No. 767 (S.C.) (QL); Norton v. Kel Holdings Ltd. [1995] B.C.J. No. 1498 (S.C.)(QL); Carpenter v. E.B.H. Financial Services Ltd. (1998), 19 C.P.C. (4th) 39 (S.C.); Pan Pacific Specialties Ltd. v. Shandong Machinery and Equipment I/E Corp. [1999] B.C.J. No. 2046 (S.C.) (QL). [43] In Michalakis v. Nikolitsas (2002) BCSC 1708, default judgment was granted in small claims court at a settlement conference against a defendant who subsequently showed that he had not been served with notice of the conference. The provincial court judge refused to set aside the judgment, drawing a distinction between service of an originating process and an interlocutory process. On judicial review, this court stated that there is no such distinction. Having found that process had been taken against a litigant without notice where notice was required, it was not a case for the exercise of discretion. The judge's refusal to set aside the default judgment was contrary to the rules of natural justice, patently unreasonable, and could not stand. [44] I take the following principles from the cases referred to above: 1. requirements for service must be strictly adhered to; service improperly effected is no service; 2. evidence that the proceedings have come to the attention of the other party is not a substitute for proper service; 3. failure to serve proceedings results in any consequent order being nullity; 4. the opposing party is entitled to have such an order set aside as of right; 5. the discretionary considerations set out in Miracle Feeds do not apply to applications to set aside default judgments where proper service was not effected. [45] While the detailed review of the law which was provided to me is of assistance, it must be mentioned, in fairness to the provincial court judge who declined to set aside the default judgment, that these cases were not provided to him. There was no issue taken before him with the relevance of the tests set out in Miracle Feeds to the application to set aside the default judgment. Application of these principles to the facts of this case [46] It appears from the transcript of proceedings on the occasion of the first hearing for default judgment on May 11, 2007, that the actual order for substitutional service was not in the file. The provincial court judge seems to have accepted the claimant's statement that the order provided for the notice to be mailed and to be "posted at the property." The judge also appears to have proceeded on the basis that service had been accomplished, although there is no evidence that any steps pursuant to the order for substitutional service, even the ones outside the terms of the order as described by the claimant, had been taken to serve the defendant. The judge simply granted default judgment without any evidence that service had been effected in the terms permitted by the Registrar. [47] The judge who heard the damage assessment on June 21, 2007, was much more careful about the terms of the order for substitutional service and compliance with those terms. The claimant produced a Certificate of Service signed by himself which states that service was completed in the terms of the order. Even so, the judge questioned him again about compliance with "both measures" and was told it had taken place. [48] Despite the Certificate, by the time the hearing to set aside the default judgment took place on May 29, 2008, it seemed to be common ground that the order had not been complied with. There was no evidence before the court as to what the claimant had done with the documents, and he did not testify at the hearing. Counsel for the defendant was clearly taken aback at this as there had apparently been an earlier hearing that had begun on affidavits, but had been adjourned for the hearing of oral evidence. There is a reference to an "application based on affidavits" at page 52 of the transcript, but I could not find any in the record before me. Counsel for Mr. Wright obviously expected to be able to cross-examine Mr. Czinege but was unable to do so. The result of all of this is that, even by the third hearing, there was no evidence, aside from the Certificate, as to whether or how service had been effected. [49] On the application to set aside the default judgment, the best indication that the court was proceeding on the basis that service had not been effected as permitted by the registrar in the terms of the order for substitutional service is the finding by the judge that the claimant could not have done so because the property was "a fortress." This finding was made in spite of the claimant's Certificate of Service in which the claimant had certified that he had performed the impossible and served the defendant by "posting the documents with tape to the front door at 23060 - 24th Avenue, Langley." The statement in the Certificate of Service was not referred to by the judge and does not appear to have formed part of his consideration. Decision [50] Without full argument from represented parties on the standard of review, I do not propose to enter into an analysis of that issue. In my view, whichever standard is used, the impugned orders cannot stand. [51] At the initial application for default judgment, the transcript shows that the claimant misinformed the judge about the terms of the order, and the judge accepted that misinformation without looking at the order himself. The order for default judgment, which was premised not only on a lack of evidence as to whether the manner of service was as permitted by the registrar, but on erroneous information as to the terms of the order for substitutional service, is a nullity and cannot stand. The damages assessment which followed upon this order is also a nullity, despite the efforts of the judge on that occasion to ensure that the registrar's order had been complied with. [52] Having made the determination that the default judgment was granted initially without jurisdiction, it is perhaps not necessary to consider the final hearing. However, in my view the approach taken there was in error as well, and demonstrates further the difficulty with the first decision. [53] At the hearing to set aside the default judgment, the provincial court judge, despite finding that the claimant could not have complied with the order for substitutional service, exercised his discretion not to set aside the default judgment. The judge erred in failing to treat the lack of service as permitted by the registrar as determinative of the issue before him, instead embarking on a discretionary analysis under Miracle Feeds. [54] If the originating process had not been served as permitted by the registrar's order, then the subsequent proceedings in which default judgment was issued were a nullity and the defendant was entitled to have the default judgment set aside as a matter of right. By failing to approach the issue in this way on either occasion, the provincial court judge did not make the inquiry he was bound to undertake, and in doing so, he lost jurisdiction in the first instance and compounded it in the second by finding that, although service had not been complied with, that was not fatal to the validity of subsequent proceedings. That was an error, on any standard of review. Result [55] Counsel for the defendant/petitioner suggested that if she were successful in her argument and the default judgment were set aside, she would acknowledge service on behalf of the defendant, file a Reply, and assist in bringing the proceedings to completion before the provincial court. In the alternative, the matter could be directed back to the small claims court for reconsideration in light of this court's reasons. [56] The Judicial Review Procedure Act, R.S.B.C. 1996, C. 241, allows this court to declare a decision invalid, set it aside, or direct the relevant tribunal to reconsider the matter. In Michalakis, supra, the court, having decided that the decision refusing to set aside the default judgment could not stand, nevertheless directed the matter back to the small claims court because the default judgment itself was still in place. In the present case, both the default judgment itself and the decision refusing to set it aside have been successfully challenged. [57] In these circumstances, there is no point requiring the provincial court to reconsider the matter. Considering the entire record from the court below, there is no basis upon which it could find that service of the originating process had been effected as permitted by the registrar's order, despite the claimant's efforts to establish that "posting [the] documents with tape to the front door of the said residence" means the same as taping documents to a chain link gate at the edge of the property, if that is indeed what occurred. Even if the claimant could establish, as he argued on the present petition, that he thought posting documents at a front gate was the same as taping documents to the door of a residence, it would only assist the defendant in establishing that the order for substitutional service as permitted by the registrar was not complied with. [58] Given the failure to effect service as permitted by the registrar's order and the finding made by the provincial court judge on the final application to that effect, there is no purpose to be served by remitting this matter for reconsideration as there is no basis upon which the provincial court could purport to issue default judgment again. [59] In the result, the decisions are set aside, and the proceedings will continue in the Small Claims division of the provincial court as if default judgment had not been taken. [60] The petitioner did not seek costs in the petition and no submissions were addressed to that issue. In any event, this is, in my view, a case in which the parties should bear their own costs. "M.A. Humphries J." The Honourable Madam Justice M.A. Humphries