Greenomics Corporation et al. v.. Big Feats et al. Date:, 2011 BCPC 223

Citation: Greenomics Corporation et al. v.. Big Feats et al. Date: 20110830 2011 BCPC 0223 File Nos: 1134128, 1134129, 1134787, 1134788, Registry: Vancouver IN THE PROVINCIAL COURT OF BRITISH COLUMBIA BETWEEN: GREENOMICS CORPORATION CLAIMANT AND: BIG FEATS MANAGEMENT & LOGISTICS INC. & GREEN LEAP EVENTS MANAGEMENT INC. & PAUL DOMKE dba GREEN LEAP BUSINESS COMMUNITY DEFENDANTS AND: BETWEEN: 0842573 B.C. LTD. dba REPUTATIONS CLAIMANT AND: PAUL DOMKE dba GREEN LEAP BUSINESS COMMUNITY DEFENDANTS RULING ON APPLICATION OF THE HONOURABLE JUDGE N.N. PHILLIPS Counsel on behalf of 0842573: K.

Labelle Appearing on behalf of Greenomics: K. Peterson & E. Schwartz Counsel on behalf of the Defendants: D. Bizos Place of Hearing: Vancouver , B.C. Date of Hearing: August 16, 2011 Date of Judgment: August 30, 2011 [ 1 ] The Claimant companies, Greenomics and Reputations, are not related in any way but coincidentally find themselves before the Court with claims against the Defendants for unpaid invoices for services rendered on behalf of the Defendants during 2010.

Due to the high degree of factually similarity involved, it was appropriate to deal with certain preliminary Applications at the same time. [ 2 ] It is necessary to provide some background in relation to these cases in order to explain the Applications to set aside Default Judgments and to join the claims. I will begin first with the Notices of Claim filed by Greenomics on Court files 1134128 and 1134129. [ 3 ] On February 3, 2010, Green Leap entered into a written consultancy agreement with Greenomics wherein the Claimant company was to provide consulting services for the development of the Defendant’s business.

In September 2010, the parties prepared an addendum to the retainer agreement for certain work. Pursuant to the addendum, weekly billings would potentially increase from $2000 to $5000. The parties dispute whether there was an agreement to provide additional services as of early fall 2010 or at some later date and whether Greenomics would carry out the work itself or use outside contractors to produce the work.

The Claimants provided written materials to the Court showing that the Defendants expressed contentment with Greenomics work product until the relationship came to an end in early November 2010. [ 4 ] During the business relationship, Greenomics provided monthly invoices to Green Leap. A representative of Greenomics told the Court that the invoices tracked the service provided under the initial consultancy agreement with the Defendants separately from those provided through the addendum.

Greenomics submitted that the addendum was in the nature of a subcontracting arrangement by which the Claimant retained and billed for outside professional services on behalf of the Defendants. [ 5 ] According to the affidavit evidence of Erich Schwartz, president of Greenomics, the Defendants paid all invoices from February to August 2010 in full and without complaint. A partial payment of $10,000 was made on the September 2010 invoice and there was no

payment made on the October 2010 invoice for $62,904.36 (of which $47,926.39 related to services provided in October and $14,978 to outstanding fees on earlier invoices). Although the October invoice (provided to the Court) includes a

section for “additional launch activities”, the services itemized under this heading appear to be similar to other services provided. Neither the Claimant nor the Defendants provided the Court with a copy of any other invoices except for the month of February involving a modest fee which was not in issue. [ 6 ] Greenomics provided the Court details relating to its efforts to obtain payment for services and the promises made by the Defendants to pay.

When those efforts failed to resolve the outstanding payments, the Claimants started two separate Small Claims actions on January 19, 2011 naming only Big Feats Management and Logistics Inc. as a Defendant. It was on the basis of what the Claimant believed to be the separate provision of services under the addendum that Greenomics thought it could bring two separate court actions in debt. [ 7 ] By way of the affidavit material filed in support of the Applications, the Defendants put forward a number of defences to the Claims brought by Greenomics.

To summarize, those defences include: the work done was of poor quality; work was haphazardly produced; work was not in accordance with expectations and unsuitable; work product contained unauthorized material; and amounts billed were in excess of what the parties had budgeted. Paul Domke, the operating mind of the Defendant companies, also denied any personal liability for the debts.

However, the main defense put forward for the purposes of these Applications was that Greenomics was splitting its dispute into a claim for $31,728.89 (reduced to $25,000) and a separate claim for $18,087.50 in order to get around the $25,000 maximum monetary jurisdiction of the Small Claims Court. [ 8 ] The original Notices of Claim were served on the Defendant Company on January 27 th , 2011 but no replies were filed. Mr. Domke denied having signed for the registered mail service of the Notices of Claim and the signature on the Canada Post documents does not appear to be his.

At any rate, Greenomics did not take steps to obtain default judgment on these matters and on March 24, 2011 filed amended Notices of Claim adding Green Leap Event Management Inc. and Paul Domke as defendants. [ 9 ] Service of the amended Notices of Claim was made on all three Defendants on April 25 th , 2011.

When no replies were filed, the Claimants obtained Default Judgment on both claims on May 11, 2011 and began collection proceedings. [ 10 ] Before turning to the conduct of the Defendants in relation to the filing of Replies on the claims brought by Greenomics, I will address the claims brought by the numbered company (0842573 B.C. Ltd., dba Reputations) against Paul Domke (dba Green Leap Business Community). The two claims filed by Reputations were commenced on March 14, 2011.

Claim 1134787 was served on the Defendant on April 25, 2011 and 1134788 was served on April 30, 2011. [ 11 ] According to the Notices of Claim, on Court file 1134787 Reputations seeks payment of $18,925.07 in relation to an October 31, 2010 invoice. On Court file 1134788 Reputations claims $19,418.25 for unpaid services as of December 8, 2010. According to the evidence put before the Court on these Applications, the claim amount of $18,925.07 on file 1134787 relates to an outstanding balance on an August invoice along with monies due on a September invoice and contractual interest.

The $19,418.25 amount claimed on 1134788 was said to relate to an October invoice and contractual interest. [ 12 ] Reputations and the Defendant had entered into a contract for services in June 2010. The business relationship came to an end on November 3, 2010 when Mr. Domke wrote to the Claimant terminating the relationship. Prior to that termination, Reputations had rendered three invoices for services to the Defendant covering monthly billing cycles of August, September and October 2010 in the amounts of $9203.50, $15,377.60 and $17,763.70 respectively.

I note that the claim amounts do not equal the outstanding balance on these three invoices (after credit is applied). [ 13 ] Not unlike the claims brought by Greenomics, Reputations provided the Court materials tending to show the Defendant company was content with the work provided by the Claimant and the relationship came to an end due to lack of revenue generation.

However, the Defendant submitted material to the Court at this Application to attempt to put into question the quality of work performed by the Claimant and the amount charged for the work. [ 14 ] The Defendants’ evidence with respect to the failure to file replies is set out in detail in the affidavit material filed in support of the four Applications to set aside the default judgments. For the most part Mr. Domke’s evidence relating to the numbered company (dba Reputations) and Greenomics on this issue was the same. Mr.

Domke told the Court when he was served with the Notices of Claim in April he did not appreciate there were two separate claims being brought by both Reputations and Greenomics and he mistakenly thought there was a single claim being made by each company. [ 15 ] Mr. Domke said that his new job required him to travel to Toronto from May 1 st to May 7 th and kept him too busy to do anything about the claims prior to May 9 th . He also said the Process Server did not bring to his attention the 14 day time period within which he needed to file Replies to the Claims.

It is important to note that the Notice of Claim is a document drawn for the benefit of ‘lay’ litigants and it is written in plain English. The single page document contains the following caution in bold print: TIME LIMIT FOR A DEFENDANT TO REPLY The defendant must complete and file the attached reply within 14 days from being served with this notice, unless the defendant settles this claim directly with the claimant. If the defendant does not reply, a court order may be made against the defendant without any further notice to the defendant.

Then the defendant will have to pay the amount claimed plus interest and further expenses. [ 16 ] Mr. Domke said that on May 9 th he called his lawyer and made an appointment for May 25 th . He did not say whether that appointment was the first available date to meet with counsel but clearly wanted that inference to be drawn.

[ 17 ] Mr. Domke said that as a result of his meeting with counsel he attended the Small Claims Registry on May 26 th and tried to file replies to the single claims brought by Greenomics and by Reputations but learned he could not do so as a result of the Default Judgments having been entered.

He said on learning of this he immediately filed Applications to set aside the Default Judgments and arranged hearing time for those Applications. [ 18 ] Domke said he then tried to work out a negotiated settlement of the claims with the Claimants and in the course of those efforts learned there were in fact two other claims before the Court. He said upon that discovery at the end of June, he immediately made additional Applications to set aside the other two Default Judgments and to join the actions together.

Those Applications were adjourned from time-to-time while the Defendant put his court materials in order and direction given by the Court to file affidavit materials was attended to. Applicable Law [ 19 ] The Defendants’ Applications are made pursuant to the following provisions of the Small Claims Rules: Rule 16(6) A judge may make any of the following orders after a hearing: (

i) an order changing or cancelling an order made in the absence of a party (see Rule 17 (1)); Rule 17(2) A judge may cancel a dismissal order or 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 (see Rule 16 (7)) 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. [ 20 ] In Miracle Feeds v. D & H Enterprises Ltd., [1979] B.C.J. No. 1965 (County Court, Hinds, J. @ paragraph 5) the Court set out four elements for consideration on an application to set aside a default judgment: … it appears that 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; and 4. That the foregoing requirements will be established to the satisfaction of the court through affidavit material filed by or on behalf of the defendant. [ 21 ] In McEvoy v. McEachnie [2008] B.C.J.

No. 1787 , Justice Rogers stated the following about the factors a court should consider in relation to an application to set aside a default judgment (@ paragraphs 13 &14): ...Whether to set a default judgment aside is an exercise of discretion, and the Miracle Feeds criteria are nothing more than a non- exhaustive set of factors to be taken into account when considering whether to exercise that discretion. That this is so was established by the Court of Appeal in H.M.T.Q. In Right of the Province of British Columbia v. Ismail , 2007 BCCA 55 .

In that case, the chambers judge found that the applicant had wilfully allowed default to be taken against him, but nevertheless the judge set the judgment aside. The plaintiff appealed, citing the applicant's failure to satisfy the first Miracle Feeds test. In response to that argument, Smith J.A. said: In my view the items enumerated in the Miracle Feeds test are not conditions that must be satisfied by an applicant.

Rather, they are relevant factors to be taken into account by a chambers judge in exercising the discretion conferred by Rule 17(12)... ...In this case, the chambers judge considered that in all of the circumstances the default judgment should be set aside. In doing so, he exercised his discretion. I do not think that there is any likelihood that the appellants would be able to persuade a panel of this Court to interfere.

It is, therefore, open to the court to set a default judgment aside if all the circumstances of the case, including but not limited to the factors enumerated in Miracle Feeds , are such that it would be just to do so. It follows that relative strength in one or more of the relevant factors may overcome a relative weakness in another.

[22] The Defence Applications to join the two sets of claims herein and limit the total amount claimed to $25,000 (the currentmonetary jurisdiction of the Court as prescribed by regulation) are brought pursuant to the following sections of the Small Claims Act: 2

(1) The purpose of this Act and the rules is to allow people who bring claims to the Provincial Court to have them resolved and tohave enforcement proceedings concluded in a just, speedy, inexpensive and simple manner.

(2) Subject to this Act and the rules, in conducting a hearing the Provincial Court may make any order or give any direction it thinksnecessary to achieve the purpose of this Act and the rules. 3

(1) The Provincial Court has jurisdiction in a claim for (

a) debt or damages, ... if the amount claimed or the value of the personal property or services is equal to or less than an amount that is prescribed by regulation,excluding interest and costs. [23] In Wah Loong Ltd. v. Fortune Garden Restaurant (Richmond) Ltd., 2000 BCPC 163 , [2000] B.C.J. No. 1581, JudgeDhillon of this Court considered Applications to set aside eight default orders relating to a series of claims in debt.

The issue before theCourt was very much akin to the matter before me and was set out as follows (@ paragraph 12): …Whether the issuance of eight Notices of Claim brings the matter outside the monetary jurisdiction of the Provincial Court and, if so,whether a challenge on jurisdiction is a factor to be considered in determining if the applicant has a meritorious defence or a defenceworthy of investigation? [24] The Court (@ paragraphs 41-44) set out the following analysis of whether an issue of jurisdiction is a defence which can beconsidered at an Application stage.

By jurisdiction is meant the limits that are imposed on a court to hear and determine issues under its own process. Subject matter, thetype of relief sought and the monetary value of the claim being advanced all limit the jurisdiction of Provincial Court, Small Claims.Where a court having a limited jurisdiction exercises a jurisdiction which does not belong to it, any order made may either be a nullity ormay be valid until set aside on appeal, depending on the nature of the limit on jurisdiction: Fraser & Horn,

section 4.1. I accept that if the indebtedness of the Corporate Defendant arises from one cause of action or claim, then this Court's jurisdiction islimited to $10,000. A party may not divide a cause of action for the purpose of bringing two or more suits in Provincial Court. Only oneaction is properly brought and the remaining actions fall outside the monetary jurisdiction and must be abandoned or, alternatively, thewhole claim must be transferred to Supreme Court: Kids Only Market Ltd. v. Chan [1993] B.C.J. No. 2728 (BCPC per Martinson PCJ).

Alternatively, if the indebtedness arises from distinct claims or causes of action, then each Notice of Claim is within the monetaryjurisdiction of Provincial Court. I am of the view that a defence based on a lack of jurisdiction by Provincial Court is relevant in determining if a default order should beset aside. A lack of jurisdiction or an excess of jurisdiction is a defence on which a defendant may rely and can be considered in applyingMiracle Feeds. On an application to set aside a default order, it is not always necessary to determine whether jurisdiction is, in fact,lacking.

However, an application judge is not precluded from deciding the issue of jurisdiction if notice has been given that it will beargued at the hearing. [25] In analyzing the facts in Wah Loong, Judge Dhillon observed the following (@ paragraphs 50 and 55): In addition to the separate invoices delivered with the product, monthly statements were sent to the Defendant showing activity on theaccount by listing each invoice. The monthly statements do not summarize the total amount due and owing or demand payment of onesum derived from adding the invoices.

They provide a listing of the invoices sent out, and indicate those invoices remaining unpaid. Inmy view, the monthly statements are persuasive in establishing that the invoices are stand-alone statements of debt, each calling forpayment within a stipulated time, the breach of which gives rise to a claim under that invoice. ... Accordingly, I conclude that the Claimant properly combined its outstanding invoices or claims in each Notice of Claim to claim themaximum permissible. By doing so, it has not exceeded the monetary jurisdiction of this court.

I have considered the case relied on bythe Defendant, Kids Only Market Ltd. v. Chan [1993] B.C.J. No. 2728 (BCPC), and conclude that it is distinguishable from the case atbar as it was concerned with only one contract. [26] In Kids Only Market Ltd. v. Chan [1993 B.C.J. No. 2728, Judge Martinson (as she then was) considered an application to jointwo causes of action and limit the total amount claimed to the monetary jurisdiction of this Court (then at $10,000).

The two claims inthat case arose out a commercial lease where one claim was for outstanding rent and the other was for a shortfall in rent relating to a newlease agreement. Judge Martinson observed the following (@ paragraph 11): The argument raised by the Claimant does not answer the monetary jurisdiction question that arises. The Claimant seeks $19,889.31 as aresult of the single act (breach) of the Defendant of abandoning the premises in question in September, 1992.

Though part of the loss canbe characterized as a debt and part as damages, the loss still arises out of the same event and constitutes one cause of action. [27] The Court went on to conclude as follows (@ paragraphs 14 – 17): To allow the Claimant to split its case by proceeding with two separate claims would defeat not only the monetary jurisdiction of the

Court but also the purpose of the Act and Rules. The purpose is to allow a claim for $10,000.00 or less to be resolved in a just, speedy, inexpensive and simple manner (section 2(1) of the Act supra). This avoids the more complicated and expensive procedure provided for in the Supreme Court Rules. This is in fact a claim for $19,889.31 and both parties are entitled to the benefits of the Supreme Court Rules. If these claims are proceeded with separately, it could lead to ineffective use of court time, inconvenience to witnesses and possibly to inconsistent results.

It is true that the Court could order that the actions be tried together. However, from a practical point of view such applications are not always made by lay litigants and judges are not always aware that another claim exists. In this case two separate Settlement Conferences were set by the Registry. The question of res judicata also arises. It could be argued at the second trial that the issues in dispute were already adjudicated upon at the first trial. The Claimant would therefore be estopped from asking the Court to make a determination at the second trial.

This would be true even if there was not an issue as to the monetary jurisdiction of the Court. There was no suggestion in this case that the Claimant was deliberately trying to defeat the monetary jurisdiction of the Court. Its representatives believed that they had the right to do what they did. However, for the reasons stated above, the two claims are consolidated and the Claimant is limited to claiming $10,000.00 in total.

Analysis [ 28 ] As set out earlier, the Defendants must address a number of criteria in order to succeed in their Applications to set aside the four default judgments entered in these claims. To begin, the Defendants must establish that their failure to file Replies to the claims was neither wilful nor deliberate. The Defendants herein submit they did not appreciate there was a fourteen day time limit for filing the replies. Mr.

Domke also said he was too busy with his new job to attend to the filing of the replies in accordance with the rules and he was confused about the number of claims being made against the Defendants by Greenomics and Reputations. [ 29 ] I simply cannot accept that the Defendants, as sophisticated business entities, could have failed to appreciate there were multiple claims being brought against them and fourteen day time limits for filing disputes to the claims. The most cursory of review of the single page Notices of Claim would have made these things abundantly clear. [ 30 ] Although I accept that Mr.

Domke was very busy at the start of May with his new job, other litigants are under similar time pressures and find a way to attend to their court obligations. Mr. Domke offered no explanation for not filing Replies upon his return from Toronto on May 7 th other than to say he made a lawyer’s appointment for the end of the month and thereafter took steps to respond well after the fourteen day time limit. [ 31 ] The Defendants’ explanation for the failure to file a defence in my opinion offers only an excuse and not a ‘reason’ in law.

By that I mean the Defendants told the Court why they failed to file timely Replies but I do not find the reasons offered persuasive. The Defendants have the bur den of persuading a judge, on balance, that the failure to file a reply was not due to a deliberate or wilful act on their part. I am unable to conclude the Defendants have established that their failure to file replies to the four claims was other than a conscious decision to not give priority to these matters and a failure to pay attention to the basic court timelines involved.

In so far as they chose not to do anything until after fourteen days had passed, the conduct was deliberate. [ 32 ] Turning to the issue of how promptly the Defendants dealt with the default judgments once they became aware of them, I find in relation to the claims brought by Reputations that Mr. Domke has established he acted promptly in applying to set aside both default judgments. In relation to the claims brought by Greenomics, one Defendant was given notice as early as January 2011 that law suits had commenced and yet it chose to do nothing. I appreciate that Mr.

Domke himself may not have been served with the claims in January, but the Defendants did not dispute that the company was properly served. When combined with the delay in dealing with the amended claims brought by Greenomics until May and June 2011, I am unable to find the Defendants acted promptly to file replies.

However, I do find they have met the test of acting as soon as reasonably possible to apply to set aside the default judgments upon learning of their existence. [ 33 ] As to the issue of whether the Defendants have a meritorious defence or a defence worthy of exploration, the Defendants raised a number of points. The Defendants raised concerns about the quality of the work performed by both Greenomics and Reputations as well as concerns about the amount charged.

To counter these defences, both Claimants put forward evidence at this hearing tending to suggest complaints about the quality of work and the fees charged were issues concocted after the fact to try to avoid paying legitimate charges. [ 34 ] However, the principal concern the Defendants have raised is that the multiple court actions amount to the Claimants splitting claims to come within the monetary jurisdiction of this court in a manner that is improper or abusive. The Defendants submit that “lack of jurisdiction” is a defence in that the multiple actions collectively raise a triable question of jurisdiction.

In answer to this argument, the Claimants submit that the invoices and not the underlying contracts, created the obligation to pay, and that each invoice supports a valid and separate claim. [ 35 ] I find the materials put before the Court by Greenomics show that despite the fact the parties intended to expand the scope of services to be provided (as set out in the addendum to the original contract), very little changed in terms of the type of work provided and how the work was billed by Greenomics.

The October 2010 invoice includes fees outstanding from an earlier account pre-dating the contemplated expanded scope of work. Although the invoice is set up in two parts, the type of work described in the two sections is very similar. The October invoice summarizes an amount owing derived from adding a debt from an earlier invoice. On balance, I do not find there was a separate basis to bill the Defendants and the invoices do not establish this was actually how Greenomics was treating the situation.

The Defendants failure to pay the cumulative balance is not something which can give rise to successive claims for recovery. I find the evidence tends to show that the two Small Claims cases were brought in order to try to recoup more of the unpaid services from the Defendants and not because the two claims arise from separate contracts or services rendered by Greenomics.

[ 36 ] Turning to Reputations, although the company put forward evidence that the two court files related to separate invoices, the paperwork in support of that position was not at all clear. A review of the outstanding invoices and amounts shows they do not align with the Claim amounts and the evidence as to how the claim amounts were established was unclear. Unlike the case of Wah Loong (supra), I cannot conclude that the invoices rendered by Reputations to the Defendants are stand-alone statements of individual actions in debt.

As with Greenomics, I find Reputations sued for two amounts in order to try to recoup their loss from the failure of the Defendant to pay for the services provided. [ 37 ] So although I have found that the Defendants have not met some of the applicable criteria, they have shown there is a defense worthy of exploration. I find that the Court was without jurisdiction to order separate default judgments for the same services or agreements for both Greenomics and Reputations. The original default judgments are nullities in that they should not have been granted as the Court did not have jurisdiction to do so.

Accordingly, all four default judgments will be set aside as it would not be just to permit them to stand. [ 38 ] Turning to the related defense application to then have the two sets of claims joined and the total monetary amount limited to $25,000 for each corporate claimant, I do not think it appropriate for the Court to make that order at this stage. Fairness requires that the Claimants be afforded an opportunity to consider their position with respect to that application and to make submissions on the issue in light of the Court’s ruling on the default judgments.

The Claimants will have thirty days in which to make an application to transfer their claims to the Supreme Court (pursuant to Rule 7.1(1)) or make further written submissions on this issue in this Court, failing which the Court will rule on the defence applications to join. Thereafter the Court will provide direction to the Registry on scheduling these cases to proceed through our Small Claims process or to transfer the cases to the Supreme Court. _______________________ N. N. Phillips Provincial Court Judge