Metro Motors Ltd. v. Rose, 2024 BCPC 7

Citation: Metro Motors Ltd. v. Rose 2024 BCPC 7 Date: 20240115 File No: C19665 Registry: Port Coquitlam IN THE PROVINCIAL COURT OF BRITISH COLUMBIA BETWEEN: METRO MOTORS LTD CLAIMANT AND: ERIC ROSE and YES MAN AUTO SALES, LEASING & FINANCE LTD. DEFENDANTS REASONS FOR JUDGMENT OF THE HONOURABLE JUDGE W. LEE Counsel for the Claimant: Q. Jiwan Appearing for the Defendants: E. Rose (Via Videoconference) Place of Hearing: Port Coquitlam, B.C. Date of Hearing: January 10, 2023 Date of Judgment: January 15, 2024

Background [ 1 ] This decision deals with an application by Eric Rose and Yes Man Auto Sales, Leasing & Finance Ltd. (“Yes Man”) to permit the late filing of a Form 2 Reply. [ 2 ] By way of background, on April 3, 2023, the Claimant, Metro Motors Ltd. (“Metro Motors”) filed a Form 1 Notice of Claim against both Defendants claiming money owing under an agreement in a profit-sharing venture relating to the sale of vehicles. [ 3 ] According to a BC Company

Summary filed with the Court at the same time as the Notice of Claim , the Defendant Yes Man was incorporated on March 29, 2019. Mr. Rose is a Director of the company. [ 4 ] On June 8, 2023, Metro Motors applied to the Court for an order to serve the Defendants by email. In support of the application, Metro Motors said that the proposed email address was one provided to the Claimant by Mr. Rose.

It was also an email address provided to customers to send e-transfer payments to Yes Man. [ 5 ] The Court ordered that Metro Motors could serve the Defendants by sending certain documents including the Notice of Claim to the email address.

The Court gave the Defendants 14 days from the date of service to file a Form 2 Reply . [ 6 ] According to a Certificate of Service filed with the Court on August 11, 2023, the required documents were sent by email to the Defendants on June 9, 2023. [ 7 ] The Defendants did not file a Form 2 Reply within the 14 days after service. [ 8 ] As the time for filing a Form 2 Reply has expired, the Defendants require the permission of the Court to file a Reply . [ 9 ] On August 11, 2023, Metro Motors filed a Form 5 Application for a Default Order .

That matter was set for September 18, 2023, and at the request of counsel for Metro Motors, was adjourned to October 16, 2023. [ 10 ] On October 16, 2023, the application for a default hearing came before Judge Campbell. There was insufficient time to hear the application and a hearing date was set for December 20, 2023. [ 11 ] On November 27, 2023, Mr. Rose filed a Form 17 Application to a Judge or Justice to seek “an extension to reply to the initial claim.” In the application, Mr.

Rose stated: “I became aware of this claim on Oct. 18, 2023 and need time to gather my documents to properly defend myself and file my own claim.” This application was set for December 20, 2023. [ 12 ] On December 1, 2023, Mr. Rose filed an Amended Application to a Judge . Mr. Rose asked for “an order permitting a late reply to be filed.” He also asked that the Court remove him as a Defendant because he was not an employee of Metro Motors. [ 13 ] On December 13, 2023, Mr. Rose submitted to the Court a document titled “Subprime Agreement between Metro Motors Ltd. and Eric Rose’s Company.” Mr.

Rose advised me that this document set out the agreement regarding the vehicle sales. The document refers to an agreement with a company owned by Mr. Rose but does not indicate any agreement directly with Mr. Rose. [ 14 ] On December 20, 2023, Mr. Rose’s application for permission to file a Reply and Metro Motors’ application for a default order came before me. Mr. Rose appeared remotely from outside British Columbia. As Mr. Rose was not in a position to give sworn evidence, I adjourned the applications to January 10, 2024, and ordered that Mr. Rose file an affidavit in support of his application. [ 15 ] Mr.

Rose filed an affidavit on January 2, 2024. [ 16 ] This matter came back before me on January 10, 2024. Application for the Late Filing of a Reply [ 17 ] Small Claims Rule 16(6)(

d) allows a judge to make an order permitting the late filing of a Reply . [ 18 ] The Small Claims Act and Rules do not set out the basis for extending the time to file a Reply . In my view, the considerations will be similar to setting aside a dismissal order or default order as set out in Rule 17(2), which requires an applicant to set out in an affidavit the following: (

i) the reason the party did not file a Reply, attend the settlement conference, trial conference or trial or make a deposit under

section 56.3 of the Civil Resolution Tribunal Act , (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. [ 19 ] These three factors are the same as set out in the seminal case Miracle Feeds v. D. and H. Enterprises Ltd. (1979), 10 BCLR 58 ; [1979] BCJ No. 1965 , which dealt with an application to set aside a default order. As set out in Passero v. Cupo , 2010 BCSC 1667 , these are relevant factors for consideration but they are not conditions in the sense that all three items must be satisfied.

[ 20 ] Rule 17(2) was discussed in the decision Waterloo Park Golf Inc. v. Little Bear’s Catering Ltd. and Morrison , 2011 BCPC 432 , where the Court stated: [20] In Lou Guidi Construction Ltd. v. Fedick , [1994] B.C.J. No 2409 , Judge Stansfield observed at para. 5 that given the purpose of the Small Claims Act, and the preponderance of self represented litigants in this court, as a general rule greater emphasis should be placed upon the facts which support the claim or defence than the other factors in Rule 17(2)(b).

He added that though “the reasons for the party failing to do that which led to the default, or delaying bringing the application to set aside, are relevant considerations, they are less so than whether on the merits the party “deserves their day in court”.” [21] It follows that it is necessary to consider these other relevant factors only if the court is satisfied there is merit to the claim or defence. … [25] Having concluded there is merit to both the claim and the claimant’s defence to the counterclaim, it is still necessary to consider the remaining factors in Rule 17(2)(b).

To paraphrase Judge Stansfield, while the merits of a claim or defence must be given paramount consideration, the other factors in Rule 17(2)(

b) remain relevant. In addition, in this case I must also consider the reasons the claimant failed to prosecute its claim in the first instance which consideration raises slightly different concerns than those regarding its failure to attend the settlement conference and file a reply to the defendants’ counterclaim. … [33] This was reckless behaviour to be sure, but I cannot be satisfied that it was intentional or contemptuous of this court.

On balance, given the merits of the claim and defence to the counterclaim, and the absence of any prejudice to the defendants’ ability to obtain a fair hearing in this matter, I find that it is in the interests of justice in this case to set aside the dismissal and default orders. Absent any evidence of prejudice or contumelious conduct, there are compelling reasons to ensure that litigants have an opportunity to bring their meritorious claims before these courts. It has long been a tradition in the civil courts that litigants are not to be driven from the judgment seat too quickly or too easily.

This, as Judge Stansfield acknowledged, may be difficult for litigants like the defendants herein who have complied with the Rules to accept. However, without evidence of the sort of intentional disregard for the court process necessary to justify a denial of an application to set aside a default order, there is no good juridical reason except prejudice caused by delay not to set it aside.

This is so particularly when other remedies are available which can address much of the inconvenience caused by the lack of action on the part of this claimant in particular. [ 21 ] I find that in an application for the late filing of a Reply pursuant to Rule 16(6)(d), an applicant should provide an affidavit explaining the following:

a) the reason the applicant did not file a reply,

b) the reason for any delay if there has been a delay in applying to extend the time to file a reply, and

c) the facts that support the claim or the defence. [ 22 ] Because the Act and Rules do not set out the factors to consider in an application to extend the time to file a late Reply , I may also consider any other relevant factors. [ 23 ] In his affidavit filed on January 2, 2024, Mr. Rose states: 5. The email address that Metro Motors sent documents to is not an email address that I regularly use, and I did not see the email. 6. I became aware of this lawsuit on October 18, 2023, and the time limit to reply had already passed. 7.

I telephoned the courthouse on October 18, 2023, to gather information about the claim and ask what my next steps are. I was advised that there was a hearing scheduled for December 20, 2023, and that I had time to file an Application to ask for an extension. 8. I was unaware that there was an urgency to file anything, as the hearing was set for late December. [ 24 ] According to Mr.

Rose, the Defendants did not file a Reply within 14 days after service on June 9, 2023, because they only became aware of the court proceedings on October 18, 2023. [ 25 ] The application to extend the time to file a Reply was filed on November 27, 2023, almost five weeks after the Defendants became aware of the court proceedings. [ 26 ] In deciding whether the time it took to apply was unreasonable, I take note of the fact that the Small Claims Rules allow 14 days to file a Reply . [ 27 ] At the same time, Mr. Rose was aware of the December 20, 2023 court date.

He believed that it was reasonable to have his application heard on that date which would only require that he apply before December 20, 2023. [ 28 ] In the circumstances, I am unable to find that there has been an unreasonable delay or any blameworthy conduct on the part of either Defendant to wait five weeks before applying. [ 29 ] I am also satisfied that Mr. Rose personally has an arguable defence to the claim. The Subprime Agreement refers only to an agreement between Metro Motors and “Eric Rose’s Company.” It did not say Mr.

Rose was a party to the agreement. [ 30 ] The Claimant submits that payments under the agreement went to Mr. Rose personally and this makes him a party to the

agreement. This is an arguable issue that requires a trial to resolve. [ 31 ] Turning to the corporate Defendant, Yes Man, although the Subprime Agreement only mentioned “Eric Rose’s Company”, there is no issue that this referred to Yes Man. [ 32 ] Mr. Rose submitted that the amount of the claim was excessive because the amounts had to be divided equally. I was not given any evidence to suggest an incorrect calculation of the claim, and only limited evidence from Metro Motors setting out their calculation. Nevertheless, the assessment of the claim is a live issue.

Until that proper assessment occurs, I cannot know if an order requiring payment by Yes Man to Metro Motors is appropriate. Mr. Rose also said there would be a claim against Metro Motors and should that succeed, it would affect whether the Court orders payment by Yes Man to Metro Motors or vice versa. [ 33 ] My concern about the calculation of Metro Motors’ claim continued after I reviewed the affidavit of Taryn Smith, a Manager at Metro Motors, filed on October 12, 2023. Exhibit L to the affidavit includes a breakdown of part of Metro Motors’ claim. Exhibit L shows a total of $8,677 paid by customers.

A separate entry shows a total of $850 paid to Metro Motors, and Metro Motors claims a balance of $7,827. The Notice of Claim described this claim as “Money received by the Defendant but owing to the Claimant.” Without hearing additional evidence, this appears contrary to the terms of the Subprime Agreement, which seems to contemplate a sharing of money paid rather than Metro Motors being entitled to all payments. [ 34 ] The Subprime Agreement itself is vague.

For instance, paragraph 2 reads: 2) 35% of front-end gross and 50% of back-end gross on deals turned over from the prime F & I office from packed cost (which includes $1000 pack on new and used). [ 35 ] The Subprime Agreement fails to state who is entitled to the “35% of front-end gross”, and what happens to the remaining 65%. Witness testimony will be required to establish the unwritten terms of the agreement between the parties. This is also necessary to determine if Mr.

Rose is personally a party to the agreement. [ 36 ] Given my uncertainty of the terms of the agreement, and how the claim is calculated, I find that a trial is necessary to resolve the issues between all three parties. Accordingly, I will order that the time for the Defendants to file a Reply , and Counterclaim if sought, be extended to February 7, 2024 . [ 37 ] If a Reply is filed, it must be in the name of both Defendants or each Defendant may file a separate Reply . Application to Remove Mr. Rose as a Defendant [ 38 ] This request was briefly discussed at the January 10, 2024 court appearance.

A Court must hear evidence concerning the terms of the agreement and who the contracting parties might be. Whether Mr. Rose is a proper Defendant can only be resolved at trial. Accordingly, the application by Mr. Rose to be removed as a Defendant is dismissed. Application for a Default Order [ 39 ] In light of my order allowing the Defendants to file a Reply , the application for a default order is adjourned generally. The Claimant may renew this request if a Reply is not filed as ordered. Address for Service [ 40 ] On November 27, 2023, Mr. Rose filed a Form 38 Address for Service.

He set out an email address for service. Regarding an address for personal service, Mr. Rose provided a Maple Ridge address and added a note as follows: *currently residing out of province but mail is forwarded. [ 41 ] Small Claims Rule 18(17) states: Types of addresses for service

(17) A party must, on an address for service (Form 38), give both of the following types of addresses: (

a) an address for personal service that must be (

i) the party's residence, place of business or solicitor's office, if the party is not incorporated and not a partnership, or (ii) the party's registered office, place of business or solicitor's office, if the party is incorporated or a partnership; (

b) an address for service by mail or email that must be (

i) a mailing address, or (ii) an email address. [ 42 ] Mr. Rose’s Form 38 Address for Service is defective because he failed to provide an address for personal service, which must be his place of residence, place of business or solicitor’s office. The filed Form 38 Address for Service form also only relates to Mr. Rose and not Yes Man. [ 43 ] As I indicated earlier, either each Defendant files their own Reply , or a single Reply is filed naming both Defendants. Since there are two Defendants, one of which is incorporated, each Defendant needs to file a Form 38 Address for Service as required by Rule 3(2).

[ 44 ] The Form 38 Address for Service must comply with Rule 18(17). [ 45 ] If the Form 38 Address for Service for either Defendant is defective, Metro Motors may seek an order pursuant to Rule 17(13), which permits a judge to make any order if a party has not obeyed the Rules . Order [ 46 ] I order as follows: 1) Eric Rose and Yes Man Auto Sales, Leasing & Finance Ltd. may file a Form 2 Reply to the Notice of Claim filed on April 3, 2023, and Counterclaim if sought, which must be filed with the Court on or before February 7, 2024. 2) If either Eric Rose or Yes Man Auto Sales, Leasing & Finance Ltd. file a Form 2 Reply on or before February 7, 2024,

a) they must also file a Form 38 Address for Service that complies with the requirements set out in Rule 18(7), failing which Metro Motors Ltd. may seek an order pursuant to Rule 17(13), and

b) a Settlement Conference will be scheduled involving Metro Motors Ltd. and any Defendant who has filed a Reply. 3) If either Eric Rose or Yes Man Auto Sales, Leasing & Finance Ltd. fail to file a Form 2 Reply on or before February 7, 2024, Metro Motors Ltd. may seek a default order against that party. 4) The application of Eric Rose to be removed as a Defendant is dismissed. _____________________________ The Honourable Judge W. Lee Provincial Court of British Columbia