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Small Claims Default Judgement

The first step in any BC Provincial Court case, often referred to as Small Claims, is for the defendant(s) to be served with a Notice of Claim. It is a requirement that if served within BC a Defendant must file a Reply within 14 days. If served outside BC the time period is 30 days. If a defendant fails to file a Reply within the required time frame the Claimant can apply for default judgement against them. If a Reply is filed and the court proceedings continue a party can still acquire default for failure of the opposing party to attend the settlement conference, trial conference or trial. The court may grant default judgement with or without a hearing depending on the damages claimed. If a hearing is required the Claimant is not required to notify the Defendant. A default judgement has the same force and effect as a judgement after a trail and a party can rely upon it immediately to enforce payment.

If a default judgement is taken out against a party then can apply to have the judgement set aside. If successful the matter would proceed forward as if default had never been attained. Often the party who default was granted against will have to pay the expenses the other party incurred to attain default. A party applying to set aside default must inform the court the reason they failed to file or attend, any reason for a delay in applying to set aside the default and the facts that support their claim or defence. When deciding whether or not to set aside a default judgement the court considers the principals as set out in Miracle Feeds v. D. & H. Enteprises Ltd., (1979), 10 B.C.L.R that the party who defaults is against:

1) Did not wilfully or deliberately fail to enter an appearance or file a defence to the claims;

2) Made the application to set aside the default judgement as soon as reasonably possible after obtaining knowledge of the defaults judgements, or can provide an explanation for any delay in the application being brought; and

3) Has a meritorious defence, or at least a defence worth of investigation.

As the delay in bringing the application is a consideration it is important to ensure that immediately upon becoming aware of a default judgement that you take steps to have it set aside.

It is essential that if you are named as a defendant in a Small Claims action that you file a Reply within the prescribed time frame and attended all court hearings including the settlement conference. Even if you are successful in having a default order overturned you will likely have to pay the expenses relating to the default order and if you are unsuccessful the other party will have a judgement then can enforce against without you being able to present your defence to the claim.

Court Costs

By Stuart Cappus

Court costs, known more simply as “costs”, are an amount of money meant to compensate a party for the time and expense of having to participate in a Supreme Court case. When a party has a lawyer, costs help offset the party’s legal fees. Generally, only the party who is successful is entitled to costs, which are payable by the unsuccessful party. A party does not have to win at trial to be successful. If a case settles before trial and involves the payment of money from the defendant to the plaintiff, the plaintiff is still entitled to costs. Conversely, if a plaintiff discontinues a lawsuit against a defendant, the defendant would be entitled to costs.

The amount a successful party will receive for costs depends on the stage of the litigation at which the case resolves and the difficulty of the case. For each step in the litigation, the Supreme Court Civil Rules provides a range of units that the successful party can claim. The more time spent or work done on a particular step, the more units the party can rightfully claim. Those units are then multiplied by one of three set dollar amounts. The more difficult the case, the higher dollar amount the party can attempt to claim. The product of this equation is the amount of money the party will receive as costs for that particular step. For example, if a party claims 5 units for exchanging documents at a rate of $110 per unit, the party could be entitled to $550 + tax for the time and expense of having to exchange documents.

If the parties cannot agree to the amount of costs payable, they can apply to a Registrar of the Court to assess the amount of costs the successful party should receive.

It should be noted that there are a number of rules relating to a party’s entitlement to costs, the amount and when they are to be paid. If you have questions about costs in a Supreme Court civil case, contact one of our civil litigators for a consultation.

Guaranteeing/Co-Signing Loans

It is important when signing as either a co-signer or guarantee that you review both the loan agreement and the borrower’s ability to repay the loan. It is vital that you discuss with the borrower there ability to make the loan payments and request documentation to show their financial position. It may feel awkward to discuss this with family and friends but it is important to take these additional steps if you are placing yourself at financial risk by co-signing their loan. You should always consider why the borrower needs a co-signor/guarantor.

You should also review your own financial situation to determine if you could make the loan payments yourself if the borrower is unable. Having to pay an additional loan, even for a short period, could place you in financial difficulties yourself. Often co-signers/guarantors assume that if they do have to incur any costs that the borrower will reimburse them for these expenses. It is important to remember however if the borrower has been unable to meet their financial obligations under the loan agreement they may not be able to pay any costs and expenses you incur.

It is important when reviewing the loan agreement to look at the size of the deposit being paid and the total amount of the loan as compared to the property value. Different forms of property depreciate at different rates and this should be considered when entering into any loan agreement. The loan agreement should be reviewed for penalty and acceleration clauses in order to determine what amounts may potentially be owing upon default. All co-signors and guarantors should understand that the lender can potentially come after them for any short-fall in the loan and the costs incurred by the lender in collecting against the property.

A potential co-signor/guarantor should be mindful of the fact that co-signing or guaranteeing a loan can also affect their own credit score and restrict their ability to access financing in the future regardless of if the borrower defaults or not. It is important to ensure if you do decide to co-sign/guarantee a loan that you are kept aware of the loan amount and terms. Request that the lender provide you directly with monthly statements in order to known in advance of any potential issues. Often people think that they will only have to co-sign/guarantee the loan for a short time once the borrower increases their credit score. It is important to remember that unless the loan is paid off or refinanced it is at the discretion of the lender to remove a co-signor/guarantor from a loan. If signing as a co-signor/guarantor it is important to receive legal advice regarding the loan agreement as each agreement can have unique terms that may affect your decision to co-sign.

Small Claims Jurisdiction

It is important before commencing any legal action in the Provincial Court of British Columbia often referred to as the Small Claims court that the action is within the jurisdiction of the court. If you file in the wrong court it can have significant repercussions such as your case being dismissed and being unable to file in another court or jurisdiction due to the limitation period passing.

The first a most well-known jurisdictional issues with the Small Claims court is with regards to the monetary limit. The Court is unable to hear matters in which the amount claimed is in excess of $35,000 unless the claimant waives their right to any award over that amount. Furthermore, if the amount claimed is less than $5,000 then it should likely proceed in the new Civil Resolution Tribunal unless a specific exemption exists to refer it back to Small Claims.

The authority of the Provincial Court to hear a claim comes from section 3 of the Small Claims Act, RSBC 1996 C430 which allows the court to hear claims for debt, damages, recovery of personal property and specific performance of an agreement relating to personal property or services.

The Provincial Court does not have jurisdiction to hear claims relating to libel and/or slander, malicious prosecution, title to land, enforcement of foreign judgments, recovery of property under the Personal Property Security Act, bankruptcy, trade mark and any matter in which the jurisdiction has been granted to another court or body by a statute.

The Provincial Court does have jurisdiction to hear matters as they relate to enforcing or interpreting a will or assisting with probate as these matters have been directly granted to the Supreme Court of British Columbia by enabling statute. Similarly human right complaints, work safe complaints and tenancy matters are within the jurisdiction of their tribunals and agencies.

Similarly some employment disputes are only within the jurisdiction of Employment Standards such as request for parole documentation and work conditions/policies. Unpaid wages are however within the jurisdiction of the Provincial Court unless the employee has already received a determination from the employment standards branch relating to the unpaid wages or the matter has proceeded before the Employment Standards Tirbunal.

It is important to ensure before commencing any legal action that the court or tribunal in which you are acting has jurisdiction to hear your claim.

Derivative Actions

By Stuart Cappus

Many people operate businesses through corporations. The law considers corporations to be persons separate and apart from the individuals who create, own and operate them. The individuals involved in the ownership and management of a corporation can be broken down into three categories: shareholders, directors and officers. Shareholders own the corporation by virtue of owning shares in the corporation. A shareholder can own anywhere from 1 share to 100% of the shares of a corporation. Directors are elected by shareholders to oversee the activities and general management of the corporation. Finally, officers are appointed by the directors to manage the day-to-day operations of the corporation.

Given their status as persons under the law, corporations can sue and be sued by others. However, for a variety of reasons, the directors of a corporation may refuse or neglect to sue someone who has wronged the corporation. Because the value of the corporation and, by extension, its shares can be negatively impacted by management failing to prosecute a legal action, shareholders should be rightfully concerned if and when this happens. And because the alleged wrong was committed against the corporation and not the shareholder, the shareholder cannot simply sue the alleged wrongdoer in his own name.

Fortunately, the Business Corporations Act provides an avenue of recourse to shareholders who find themselves in such a situation. Section 232 allows shareholders and directors of a corporation to apply to court for permission to prosecute a lawsuit in the name of the corporation. This is called a derivative action. Before a court will grant such permission, the shareholder or director must establish that (a) they have used reasonable efforts to cause the corporation’s directors to prosecute the lawsuit; (b) they have given the corporation notice of their application; (c) they are acting in good faith; and (d) it is in the best interests of the corporation to prosecute the lawsuit.

From a practical standpoint, derivative actions will almost always be pursued by a minority shareholder. That is because a majority shareholder can simply elect new directors who will do what he tells them to if the former directors refuse or neglect to comply with his request.

Civil Resolution Tribunal

The BC government has announced its intent to bring in a cap of $5,500 for pain and suffering on minor injury claims as part of series of reforms for ICBC. The cap is currently scheduled to come into effect on April 1, 2019. Crucial to this alteration in the structure of injury claims will be what is considered a minor injury and what is a major injury. All that has been announced is that concussions, broken bones and serious injuries will not be classified as minor. Any disagreements between ICBC and injuries individuals regarding if their injury is minor or not will be determined by the Civil Resolution Tribunal.

Currently the Civil Resolution Tribunal handles small claims disputes under $5,000 and strata property disputes. The process is entirely online and starts with the parties using a program called the solution explorer to determine the nature of the dispute and if the Civil Resolution Tribunal is the appropriate tribunal to hear the matter. The solution explorer also provides access to factual sheets depending on the nature of claims and self-help tools. If the solution explorer is not able to help a party resolve the matter they can proceed with filing a dispute. After filing a dispute and serving it upon the other party a tribunal member will be in contact online with both parties to attempt to help the parties negotiate a solution. If this is unsuccessful a separate tribunal member will hear the dispute and render a decision regarding the dispute. The hearing of the dispute is an entirely online process and requires parties to submit documents and statements regarding the dispute.

Currently the tribunal is composed of 2 full time members and 37 part time tribunal members who hear all the disputes filed with the tribunal. The part time tribunal members worked between ½ to 3 days a year in 2017.

It is currently unknown what if any types of alterations may be made to the Civil Resolution Tribunal in order to handle the new types of claims it will be hearing.

What Are Caps?

The attorney general of BC has recently indicated that personal injury caps may be implement in BC in response to the finance issues facing ICBC. Currently individuals in BC who are injured by a motorists have a right to sue for the damages they sustained as a result of the motorists negligence. Injury caps would limit the rights of an injured individual to seek damages from the negligent driver by arbitrarily setting the damages. Under the current system a judge and/or jury examines how a person has been injured in a collision before determining the appropriate damages to award. Individuals and injuries are unique and the impact that injuries have on a person’s life can be quite different. Often older individuals will struggle to recover from injuries as quickly and minor injuries can have a larger impact on their daily living. Under a cap system the amount of damages payable to an injured individual is set by the government and does not take into account the unique nature of the injuries or their impact on a person’s life. For anyone who has had to work through a worksafe claim in which their injuries were compared to a classification system this approach will seem familiar.

Some of the issues with a cap system include that the fact that the unique nature of the injuries are not taken into account and instead just compared to a classification system. The full extent of the pain and suffering caused by an individual’s injuries would not be considered and just the placement in the classification system. Injury caps remove a person’s ability to disagree with ICBC’s assessment of their injuries and their right to have their injuries assessed by a judge or jury. Injury caps will affect people with lower incomes more than others due to the high costs of challenging cap systems.

What is Cause?

An employer maintains the right to terminate an employee’s employment but is required under both the Employment Standards Act and common law to provide appropriate notice or pay in lieu of notice to terminated employees. Notice is not required if the employer terminates an employee within their probationary or if the employer has just cause to terminate the employee. If an employer is terminating within the probationary period they are still required to act in good faith with regards to their interactions with the employee.

Just cause is consider to be misconduct that is irreconcilable or inconsistent with an employee’s employment contract. A determination of if the conduct of an employee is irreconcilable or inconsistent with their employment contract is highly fact driven and will depend upon the exact nature of their contract, the unique nature of their employment, the professional standards related to the employment and the workplace in which the work. Employees who work with children or other vulnerable individuals or employees who have access to significant sensitive information regarding their employer or their employer’s customers will be held to different standards then those employees who do not. Common examples of cause include theft, dishonesty, using of drugs or alcohol in the workplace and assault or harassment of co-workers or supervisors. Insolences, poor performance and/or refusal to comply with employment instructions may amount to cause depending on the nature of the misconduct but it is important to remember that the burden to show that just cause existed rests with the employer and in cases this burden may not be meet. If the employee’s misconduct may not amount to conduct sufficient to fire for cause it is best to ensure that the employee has received clear instructions on their standards of their employment, that the misconduct is addressed with the employee and that the employee is provided a reasonable amount of time to correct the misconduct.

If an employee was not terminated for cause they have the right to pay in lieu or notice and could commence an action for wrongful dismissal. Employees have the option to file a complaint with the Employment Standards Branch for payment of notice as set out in the Employment Standards Act or to file a wrongful dismissal action in Supreme Court.

New Speculation & Foreign Buyer Taxes on Real Estate

The new budget announced by the BC government included a number of new taxes that will apply to BC properties and property transfers. The first announcements included a possible speculation tax on non-BC resident owned properties. Little details of the speculation tax have been announced but it is intended to capture property owners who do not earn income and primarily reside within BC. The intention appears to be to capture those that leave their homes vacant for the majority of the year while living out of country or out of province. The taxes will be levied at 0.5 per cent of a home’s assessed value for the 2018 tax year and will increases to 2.0 per cent in 2019. The government has announced that most homeowners will be exempt from the speculation tax. Those who primarily reside in their home, rent out their home or pay income taxes in BC will be exempt from the speculation tax. The most important factors regarding the speculation tax will be the possible exemptions to the taxes haven’t yet been announced.

The government has also announced an expansion of the foreign buyer tax that was implemented by the previous Liberal Government. The previous tax was set at 15% of the sale price of any property purchased by a foreign buyer in the greater Vancouver area. The new tax will be increased to 20% of the purchase price and broadens its application to the major population centres in BC including the Nanaimo region, greater Victoria and several areas of the Okanagan. The additional property tax will not have to be paid by foreign buyers if the sale completes before or on May 18, 2018 and the contract of purchase and sale is dated on or before February 20, 2018.

What is a Builder’s Lien

The Builder’s Lien Act, SBC 1997, C45, allows a builder to file a lien against the title of a property they have worked on and not received payment related to that work. The lien if registered is attached to the title of the property like any other encumbrance. If title for the property is pulled by a bank or potential buyer they will see the lien and be altered to the claim against the property. An individual or company can file a lien against a property if they have worked on or supplied material for that specific property and not been paid for those materials or work on that property. A lien must be filed quickly after work has been completed on the property as waiting too long may deprive an individual their right to file the lien. The most common deadline is 45 days from when the project is substantially completed but this timeline may be triggered earlier if certain events set out in the Builder’s Lien Act occur.

A lien gives an individual security for the work they have completed but does not on its own force the payment for the completed work however after a lien is filed the head contractor or owner may be willing to negotiate the release of the lien to end the dispute. If negotiations are unsuccessful a builder will have to commence a Supreme Court action to enforce their lien against the property. Upon filing an action to enforce the lien the builder can file a Certificate of Pending Litigation (CPL) against the property. Depending on the value of the unpaid work a builder may decide to sue in Small Claims Court instead of Supreme Court. If this path is chosen the action does not enforce lien itself but does allow for a breach of contract claim to be made against the party with whom the builder made the initial contract for work.

If no action is commenced within a year after a lien is filed against a property the lien can be discharged for lack of action. After a lien is filed a homeowner can also serve upon the builder a 21 days’ notice that requires them to file a Supreme Court action to enforce their lien within 21 days. If an action is not commenced the homeowner can then apply to have the lien discharged. If a Supreme Court Action is commenced a homeowner can apply to have the lien and CPL removed from the property in exchanged for depositing security for the lien with the court.