Joey Beenz v. Di Stasio et al. Date:, 2011 BCPC 375

Citation: Joey Beenz v. Di Stasio et al. Date: 20111124 2011 BCPC 0375 File No: C10897 Registry: Port Coquitlam IN THE PROVINCIAL COURT OF BRITISH COLUMBIA BETWEEN JOEY BEENZ COFFEE BAR LTD. CLAIMANT AND: MATTEO DI STASIO coba NEON SIGN WRITERS, MATTEO DI STASIO coba NEON BRIGHT, MATTEO DI STASIO coba NEON LIGHT SIGNS, and the said NEON SIGN WRITERS, NEON BRIGHT and NEON LIGHT SIGNS DEFENDANTS RULING OF THE HONOURABLE JUDGE T.S. WOODS Appearing for the Claimant: T. Caylor Appearing for the Defendants: M. Di Stasio Place of Hearing: Port Coquitlam, B.C.

Dates of Hearing: March 29 and November 24, 2011 Date of Judgment: November 24, 2011 INTRODUCTION [ 1 ] This case is concerned with an allegedly defective, free-standing, double-sided electronic sign (the “Electronic Sign”). The claimant Joey Beenz Coffee Bar Ltd. (“Joey Beenz”), purchased the Electronic Sign from the defendants Matteo Di Stasio coba Neon Sign Writers, Neon Bright and Neon Light Signs (collectively, the “Neon Defendants”). It says the product supplied did not answer the specifications contained in the original contract and that the one supplied did not perform as required.

Joey Beenz seeks to recover the full amount of the purchase price of the Electronic Sign, stating in its Notice of Claim: “We would request a refund so we can purchase a new operational sign for marketing.” [ 2 ] This plea arguably embraces (among other things) the equitable remedy of rescission. [ 3 ] The Neon Defendants deny all of Joey Beenz’ allegations and say that, to the extent they have been called upon to assist with expected operational problems with the Electronic Sign, post installation, they have done so in a timely and effective manner. [ 4 ] On March 18, 2011, toward the end of the first day of trial, an issue arose concerning an anomaly detected by the Neon Defendants in a document tendered in evidence by Joey Beenz.

The anomaly was noted by defendants’ representative Mr. Di Stasio

while Joey Beenz’ principal and witness, Terry Caylor (“Ms. Caylor”), was giving her evidence-in-chief. In my view, the existence of the anomaly raised, prima facie , the issue of the possible application of the equitable, clean hands doctrine to bar Joey Beenz from continuing to pursue its claim. [ 5 ] I directed Ms. Caylor to investigate the anomaly and the integrity of Joey Beenz’ document production generally and to come to court prepared to address those matters when the case came back before me for continuation on November 24, 2011.

At the commencement of the court day on November 24 th I heard further evidence from Ms. Caylor, followed by evidence from Mr. Di Stasio, followed by oral submissions, all dealing solely with the question of whether the document anomaly would justify the dismissal of Joey Beenz’ claims against the Neon Defendants on equitable grounds. [ 6 ] This is my ruling on that question. THE ANOMALOUS DOCUMENT [ 7 ] On June 2, 2010, the parties engaged in an exchange of e-mails relating to alleged problems with the performance of the Electronic Sign.

The version that is found under tab 7 of Exhibit 1 tendered by Joey Beenz (tagged as 7A) is from the records of Joey Beenz and it contains some text in a portion of the e-mail string purportedly originating with Mr. Di Stasio that he denies was included in the e-mail he sent to Ms. Caylor on that date. Suffice it to say that the text in question, if actually written by Mr. Di Stasio, would cause the court and any reader to view him in a negative light vis à vis his contractual obligations to Joey Beenz.

It conveys, on his part, a grossly dismissive and cavalier attitude on the part of the Neon Defendants toward the concerns being expressed elsewhere in the e-mail string by Joey Beenz regarding the performance of the Electronic Sign, its warranty terms, and the like. [ 8 ] As I have previously noted, when Ms. Caylor directed the court’s attention to the subject e-mail during her evidence-in-chief on the first day, Mr. Di Stasio quickly rose and objected, saying words to the effect of “I would never say anything like that in an e-mail to a customer”. There was then a brief pause in the proceedings while Mr.

Di Stasio hunted through the documents he had received from Joey Beenz pursuant to a document production order made during the pre-trial phase of these proceedings and located another version of the same e-mail—also showing as Joey Beenz’ copy—in which the offensive text does not appear. That version was marked as Exhibit 2. [ 9 ] I wish to lay emphasis on three important facts that were clear when this issue arose on the first day of trial. First, both versions of the subject e-mail are headed, at the top, “Joey Beenz”. No one disputed that they both are printed from the claimant’s e-mail account.

Second, only the version with the offensive text was included in Exhibit 1, tendered by Joey Beenz to the court at the commencement of trial in support of its claim. Third, only the version without the offensive text that has since been marked as Exhibit 2 was provided by Joey Beenz to the Neon Defendants pursuant to the document production order previously made in this litigation. [ 10 ] Ms. Caylor could not, at the time the anomaly surfaced, offer any explanation for there being two versions of the same e-mail string, both printed from Joey Beenz’ e-mail account.

She was therefore directed to investigate the matter and come prepared to address it at the continuation. EVIDENCE GIVEN REGARDING THE SUBJECT DOCUMENT ON THE SECOND DAY OF TRIAL [ 11 ] Ms. Caylor was re-sworn on the second day of trial and she gave further evidence on the issue of there being two versions of the subject document. She really had little more to say than she said before. Her testimony was that in preparing Exhibit 1 she had simply copied documents that had previously been printed from her computer and that she had disclosed to the Neon Defendants before as required by a production order.

She explained that, regrettably, the hard drive on that computer “crashed” some time ago and that, despite her best efforts, she has not been able to recover the missing data from it. [ 12 ] Ms. Caylor suggested in her testimony that Mr. Di Stasio may have sent two e-mails on the same date and within the same minute—one with the offensive content and one without it—such that Joey Beenz actually received two differing copies of it bearing the same date and time stamp. She offered this as a possible explanation for there being two, differing hard copies of the e-mail string now before the court.

However, she could not account for the fact that the one that found its way into Exhibit 1 had the offensive content and the one that she had disclosed previously to the Neon Defendants did not. [ 13 ] In his evidence on the point, Mr. Di Stasio was clear and emphatic in his denial that he had sent two e-mails to Joey Beenz on the same subject matter, containing almost identical textual content. He testified that he would never have sent an e-mail to Joey Beenz containing the offensive content.

He also stated that his computer’s hard drive was still fully functional and that he was certain that a forensic examination of it would confirm that only one version of the subject e-mail was sent to Joey Beenz on June 2, 2010, and that that was the version lacking the offensive content. [ 14 ] I posed some questions to Ms. Caylor about the steps she had taken, in the wake of the discovery of the anomaly, to assure herself and the court that the remainder of the many documents she has tendered in Exhibit 1 are free of similar problems.

She responded by saying that, given the failure of her computer’s hard drive, she could no longer check hard copies against electronic files. Ms. Caylor gave evidence that she believed that the rest of the documents upon which Joey Beenz relies in Exhibit 1 are true and accurate records of her company’s dealings with the Neon Defendants, although she conceded that she has not conducted a detailed, page-by-page, line-by-line assessment of the documents in her copy of Exhibit 1 in that regard. FACTS FOUND [ 15 ] I find, based upon the evidence canvassed above, the following facts: (

a) Both versions of the subject e-mail that are now before the court came from the records of Joey Beenz and they were created on June 2, 2010, while the parties were attempting to overcome the problems with the functionality of the Electronic Sign; (

b) Only the version containing the offensive content was included in Exhibit 1, tendered as evidence at trial on behalf of Joey Beenz;

(

c) Only the version lacking the offensive content was included in the documents disclosed by Joey Beenz to the Neon Defendantsearlier in these proceedings pursuant to a document production order; and (

d) The only version of the subject e-mail that is genuine—that is, that was actually sent by Mr. Di Stasio—is the version that does notcontain the offensive content. THE CLEAN HANDS DOCTRINE [16] As I have noted, in raising complaint regarding the above-noted document anomaly, the Neon Defendants have in effect invokedthe equitable clean hands doctrine. What the Clean Hands Doctrine Encompasses [17] It is said that he who comes to court seeking equity must come with clean hands. As Romilly P.C.J. put it in the admittedly moreserious case of M.R. Smith Limited/Imperial Oil v.

Maple Leaf Disposal Ltd. et al., 2003 BCPC 27: “I should state that there is a time honoured doctrine that a Claimant must come to Court with ‘clean hands’.

The introduction intoevidence of a document which I find contains a forged signature and was tampered with after it was purported to have been entered intoin my opinion contravenes that doctrine and on that basis alone the Claimant should be denied success in its claim.” (at para. 15) [18] Where unclean hands are alleged, the party seeking to invoke the equitable doctrine (here, the Neon Defendants) must be able toshow that the conduct complained of relates to a “situation in which the alleged act of impropriety being raised against the plaintiff[here, Joey Beenz] is linked to the very subject matter of the dispute”: Rowland v.

Vancouver Community College, [2001] B.C.J. No.1901 at para. 42 (C.A.) (QL) quoting Toronto (City of) v. Polai, (ON CA), [1970] 1 O.R. 483 per Schroeder J.A., at p.493 (C.A.) (QL), aff'd in its result (SCC), [1973] S.C.R. 38. Does the Provincial Court have Equitable Jurisdiction? [19] In R.K. v. McBride, [1994] B.C.J. No. 2791 (Prov.

Ct.), Mondin P.C.J.—referring to provisions in the Law and Equity Act,R.S.B.C. 1996, c. 253, and to an inherent procedural jurisdiction that exists in the Provincial Court as a statutory court—acknowledgedthe existence of a circumscribed equitable jurisdiction in the Provincial Court (see, especially, para. 28). His Honour’s reasoning in thepart of that decision dealing with the availability of equitable remedies has received a favourable assessment in the academic literature:see the discussion in L.A. Taylor and D.M.

Wood, “Equitable Jurisdiction of the Provincial Court of Alberta (Civil Division)”, (1996) 35Alta. L. Rev. 592 at pp. 29-30 (QL pagination) regarding the equitable jurisdiction of the Provincial Court of British Columbia. [20] R.K. v. McBride was specifically concerned with controls, sourced partly in equity, which the court had been asked to assert overits own record—an issue not on foot in this case.

However, I adopt the general reasoning of Mondin P.C.J. regarding the equitablejurisdiction in the Provincial Court of British Columbia and its sources for the purposes of the present analysis. [21] In approaching his conclusion that the Provincial Court does have a measure of equitable jurisdiction, Mondin P.C.J. made thisobservation in R.K. v.

McBride, with which I also respectfully agree: “... it would work a very real hardship if it were determined that this court does not possess the substantive equitable jurisdiction which itpresently exercises routinely, whether in granting damages for unjust enrichment or in quantum meruit, or in maintaining equitabledefences like estoppel.” (at para. 26) [22] In addition to that which is acknowledged in the reasoning found in R.K. v.

McBride, I would also add that, in my view, when theLegislature employed the word “just” in section 2(1) of the Small Claims Act, R.S.B.C. 1996, c. 430, it made a specific statutory grant oflimited, equitable jurisdiction to the Provincial Court in small claims proceedings. That

section provides as follows: “The purpose of this Act and the Rules is to allow people who bring claims to the Provincial Court to have them resolved and to haveenforcement proceedings concluded in a just, speedy, inexpensive and simple manner.” (emphasis added) [23] The word “just,” by its plain and ordinary meaning as revealed in its dictionary definition, carries—among others—an equitableconnotation. The various

definitions offered for the word “just” as an adjective in the Shorter Oxford English Dictionary include these: “Consonant with the principles of moral right; equitable; fair. Of rewards, punishments, etc.: Merited ... Constituted by law or by equity,lawful, rightful; legally valid ...” (emphasis added) [24] This court, speaking through Brecknell, P.C.J. (as he then was), has also previously acknowledged in a criminal context that theword “just” incorporates notions of equity: see R. v. Polischuk, 2003 BCPC 76 , [2003] B.C.J. No. 669 at para. 3 (Prov.

Ct.)(QL). [25] All of the foregoing propels me to the conclusion that, as a judge of the Provincial Court, I do possess the necessary equitablejurisdiction to accede to an argument invoking the clean hands doctrine if I am persuaded on the evidence that: (

a) a claimant has come before the court with unclean hands in the sense that it has engaged in impugnable conduct that is linked to thevery subject matter of the subject dispute; and (

b) given the claimant’s unclean hands, it would be unjust for the court to permit the claimant to proceed with its claim against thedefendant notwithstanding its unclean hands. APPLICATION OF THE CLEAN HANDS DOCTRINE IN THIS CASE [26] In the present case, Joey Beenz has placed before the court under tab 7 (tagged 7A) a document that, if accepted as genuine,

would have reflected poorly upon the Neon Defendants. It is a document that, as I have stated earlier, conveys a dismissive and cavalier attitude on the part of the Neon Defendants toward the concerns being expressed elsewhere in the e-mail string by Joey Beenz about the performance of the Electronic Sign it sold to Joey Beenz, its warranty terms, and the like. [ 27 ] I have found, as a fact, that that document is not genuine. It has no probative value whatsoever.

If it had been accepted as genuine, it would have had a prejudicial effect upon the Neon Defendants’ interests in the trial of this action. [ 28 ] The offending document was placed in evidence by Joey Beenz in support of its claim against the Neon Defendants. Unquestionably it relates to dealings between the parties concerning the performance of the very Electronic Sign that is at issue in this proceeding.

It is thus most certainly “linked to the very subject matter of the dispute”. [ 29 ] I have also found as a fact that both versions of the subject e-mail string were printed by Joey Beenz from the e-mail account of Joey Beenz. As to its prejudicial content, the anomalous version did not originate with the Neon Defendants, even though, on its face, it appears to have done so.

I have found as a fact that the genuine version of the subject e-mail—which I emphasise was also taken from Joey Beenz’ documentary archive but does not contain the prejudicial content—was produced earlier to the Neon Defendants by Joey Beenz pursuant to a document production order. However, that genuine version was not tendered in evidence at trial by Joey Beenz in support of its claim.

I have found as a fact that the non-genuine version of the subject e-mail was not disclosed to the Neon Defendants pursuant to the earlier document production order, but that it was tendered by Joey Beenz as evidence at trial. [ 30 ] Ms. Caylor, for Joey Beenz, cannot account for the presence of the anomaly in the non-genuine version of the subject e-mail string that was printed from her computer. She speculates that two versions must have issued, almost simultaneously, from the Neon Defendants’ e-mail account and been received by Joey Beenz.

However, she does not offer any plausible explanation as to how that could occur as a practical matter. Most importantly, she cannot explain—if, indeed, two versions did issue from the Neon Defendants’ e-mail account and arrive in Joey Beenz’ e-mail inbox—how it can be that only the version lacking the prejudicial content was disclosed in advance of trial and only the version containing the prejudicial content was tendered as evidence at trial. [ 31 ] As I have noted, I queried Ms.

Caylor as to whether she had made a thorough and detailed survey of the many other documents that have been tendered in Exhibit 1 by Joey Beenz in support of its claim against the Neon Defendants, and whether she could assure the court that nothing else in those documents is similarly “contaminated” (to use Mr. Di Stasio’s word).

She could not give that assurance, in part because her computer’s hard drive failure prevents her from retrieving the electronic versions of the e-mails in question and in part because, as she acknowledged, she did not conduct a “page by page, line by line” review of the contents of her copy of Exhibit 1 following the discovery made on the first day of trial. [ 32 ] I do not consider it appropriate that the Neon Defendants should be put to the expense and inconvenience of scrutinising and second-guessing all of the many documents—many of them e-mail strings—upon which Joey Beenz relies in asserting its claim against them in this case.

To require that would be unjust and would impose undue hardship on the Neon Defendants. Neither do I consider it appropriate that the court should be put to the task of placing the claimant’s documentary evidence figuratively under a microscope in order to discern any other anomalies that might be revealed on the kind of line-by-line examination that Ms. Caylor declined to perform.

CONCLUSION AND ORDER [ 33 ] The emergence of a non-genuine e-mail in the evidence of Joey Beenz bearing prejudicial content that did not originate with the Neon Defendants (although it appears to do so) has shaken the confidence of the court in the evidence being tendered by Joey Beenz in support of its claim against the Neon Defendants.

With the court’s confidence so undermined, it cannot justly requiring the defendants to attempt to defend an action in which the case against them has been shown to be based in part upon evidence the integrity of which has been called into question. [ 34 ] In all the circumstances I consider that this case presents a proper occasion for the court to invoke its limited equitable jurisdiction to deny Joey Beenz recovery on its claim against the Neon Defendants—a claim which, in part, seeks the equitable remedy of rescission—on the basis that Joey Beenz has not come before the court to assert its claim with clean hands. [ 35 ] Joey Beenz’ claim against the Neon Defendants is accordingly dismissed. [ 36 ] Pursuant to Rule 20(2)(

b) of the Small Claims Rules , the Neon Defendants are entitled to be reimbursed the $50 fee they paid to file their Reply and I order that Joey Beenz pay that amount to the personal defendant, Mr. Di Stasio, by Thursday, December 1, 2011 at the latest. [ 37 ] Order accordingly. ________________________ Thomas S. Woods, P.C.J.