Setting Aside the Default Judgment
[23] The defendant submits that the default judgment should be set aside because he can satisfy each element of the test set out in the case of Miracle Feeds v. D & H Enterprises Ltd. [1979] BCJ 1965. He submits that:
a. His failure to file a response to civil claim was not wilful and deliberate;
b. His application to set aside the default judgment was made as soon as reasonably possible after he became aware of the judgment or he has a reasonable explanation for any delay; and
c. He has a meritorious defence or a defence worthy of investigation.
[24] With regard to the first submission, the defendant submits that he did not become aware of the notice of civil claim until September 28, 2016 and when he consulted a lawyer on September 29, 2016 he learned that default judgment had been sought. Accordingly, his failure to file a response to civil claim was not wilful or deliberate.
[25] As I have already noted, there is some dispute in the evidence as to when the defendant became aware of the notice of civil claim. He deposes in his Affidavit #1 that he did not become aware of the notice of civil claim until September 28, 2016 when his ex-wife gave it to him, having found it in a field on the property approximately a week earlier. However, the affidavit of Jon Duncan describes his meeting with the defendant on September 29, 2016 and says that the defendant advised him that he had been given a copy of the notice of civil claim by his ex-wife on September 26, 2016 after she found it posted on the fence with an order for alternative service. This is consistent with the evidence in the affidavit of service filed September 13, 2016 which includes a photograph of the notice of civil claim in a sealed envelope posted on the gate to the defendant’s Monte Creek property.
[26] The affidavit of Mr. Duncan also states that his office was contacted by the defendant on September 29, 2016 to obtain summary legal advice and he met with the defendant later that same day. I infer from this evidence that the defendant was aware of the urgency of obtaining legal advice with respect to the notice of civil claim but it is not clear why he did not do so immediately upon receipt on September 26, 2016. Had he done so, presumably he would have been able to file a response to civil claim within the time frame set out in Rule 3-3(3) of the Supreme Court Civil Rules.
[27] In my view, the discrepancy in the evidence as to when the defendant received the notice of civil claim raises a question as to whether the defendant’s failure to file a response to civil claim was wilful or deliberate.
[28] With respect to the second element of the test in Miracle Feeds, there is no dispute on the evidence that the defendant became aware on September 29, 2016 that the default judgment was about to be issued and he did not file his application to set aside the default judgment until April 3, 2017, a delay of more than six months. Counsel for the defendant submits that the reason for this delay is that the defendant misunderstood the advice from Jon Duncan with respect to the two year limitation period and erroneously believed that he would have two years to set aside the default judgment before it would have negative consequences for him. The defendant further submits that as soon as he realized that this belief was incorrect, he immediately retained counsel and took steps to set aside the default judgment.
[29] Counsel for the plaintiff submits that this explanation is neither reasonable nor credible. He points to the Exhibits “H” through “P” to the Affidavit #2 of Valerie Nevacshonoff, which set out the numerous civil actions in which the defendant has been a party since 1990. Counsel submits that the defendant is an experienced litigant and has previously been the subject of default judgment and represented himself during execution proceedings, most recently in 2007 in BC Supreme Court action No. S052576 (Vancouver Registry). Counsel for the plaintiff submits that the affidavit of Jon Duncan sets out clearly the advice he gave to the defendant regarding the need to make an application to set aside the default judgment quickly and that delay was an important factor in determining whether to set aside a default judgment. He submitted that that this court can infer from that evidence, together with the defendant’s considerable litigation experience, that the defendant was fully aware of the need to apply without delay to set aside the default judgment and he deliberately failed to do so. Counsel for the plaintiff submits that defendant’s assertion that he did not understand Mr. Duncan’s advice is not plausible and does not have the ring of truth.
[30] It is clear from the evidence that the defendant has had considerable litigation experience over the past 27 years, both with the assistance of counsel and as a self-represented litigant. He has prior experience with respect to default judgments and execution proceedings arising from a default judgment. He was involved in recent litigation leading up to his dealings with the plaintiff. In 2014, he was involved in estate litigation in this court as a self- represented litigant and in 2015 he was represented by counsel in the same matter when he unsuccessfully appealed the trial judge’s decision to the B.C. Court of Appeal. It is interesting to note in that case that the BC Court of Appeal rejected the assertion by the defendant that he did not and could not understand the nature of the application that he was facing or the evidentiary basis upon which it would proceed.
[31] I agree with the submission of counsel for the plaintiff that when I consider all of the evidence before me, the assertion by the defendant that his failure to act promptly to set aside the default judgment was due to an erroneous belief that he had two years to do so is not credible. There is evidence before me that the defendant received legal advice on September 29, 2016 that he needed to make application to the court to set aside the default judgment and he needed to so quickly. There is also evidence before me that the defendant was advised on September 29, 2016 that delay was an important factor in determining whether to set aside a default judgment. When that evidence is considered in the context of the defendant’s prior litigation experience, including his prior experience with execution proceedings following a default judgment, his explanation as to why he waited six months before bringing this application is quite simply not reasonable or believable.
[32] In my view, the defendant has failed to demonstrate that application to set aside the default judgment was made as soon as was reasonably possible after he became aware of the judgment or that he has a reasonable explanation for the delay.
[33] With respect to the final element of the test in Miracle Feeds, the defendant submits that he has a meritorious defence or a defence worthy of further investigation. He submits that there was no agreement with the plaintiff to buy back the plaintiff’s interest in Placer Mine Tenure #392342. The defendant denies that he made any misrepresentations to the plaintiff inducing him to enter into the purchase agreement and, if he did make any inaccurate representations, they were not negligently made and were not relied on by the plaintiff. The defendant deposes in his Affidavit #1 that he intends to bring a claim against the plaintiff and the Toops for losses that they have caused him.
[34] As I indicated to counsel for the defendant, the evidence before me, including the affidavit of the defendant and its exhibits, supports the submission of the plaintiff that the defendant did not have authority to sell to the plaintiff a 30% interest in Placer Mine Tenure #392342 because he was not the owner of that tenure. The Partnership Agreement contemplated the potential purchase of the tenure by the defendant if he exercised the option to purchase but there is no evidence that the option was ever exercised. In the absence of such evidence or a Bill of Sale transferring ownership of 70% of the tenure from Ethel and Gary Toop to the defendant, the only conclusion I can reach is that the defendant purported to transfer to the plaintiff something that he did not own.
[35] There is evidence from the plaintiff and his wife, Bonnie Labadie of an agreement between the plaintiff and the defendant on May 1, 2016 to buy back the plaintiff’s interest for $305,000. Although the defendant denies any such agreement, the text messages between Bonnie Labadie and the defendant which are attached to Affidavit #1of Bonnie Labadie appear to support the plaintiff’s assertion that the parties did reach an agreement. The agreement does not appear to have been conditional upon financing. Rather, the defendant requested that the agreement be reduced to writing to provide reassurance to his lender that the plaintiff would not change his mind again.
[36] There is also evidence that the defendant made various representations to the plaintiff, notably that he was the owner of 70% of Placer Mine Tenure #392342, and that the mine would be ready to run pay dirt through the wash plant in 2 to 3 weeks. Although the defendant denies telling the plaintiff that the mine would be in production in two to three weeks, the emails from the defendant attached as Exhibit “E” to Affidavit #1 of Brian Labadie include statements by the defendant that by early May there would be “gold in our box” and an estimate that there would be “about 2000 ounces in our box by Oct.”
[37] As the court noted in Hawkins v. Fernie One Outfitters Ltd. 2012 BCSC 84, a defence “worth of investigation” requires more than merely making an allegation. There must be sufficient detail to enable the judge “to correctly exercise his mind upon whether there is indeed such a defence:”
[38] In this case, the defendant’s material in support of his application does not rise to the level sufficient to satisfy me that he had a meritorious defence or a defence worthy of investigation.
[39] While I accept the submission of counsel for the defendant that the Miracle Feeds test is not to be applied inflexibly, after considering all of the evidence before me, I have concluded that the evidence of the defendant fails to establish any of the elements of the test. Even if I were to accept the submission of the defendant that his failure to file a response was not wilful or deliberate, his explanation for what is an inordinate delay in taking steps to set aside the default judgment is not credible or reasonable and his materials do not provide sufficient evidence for me to conclude that he has a meritorious defence or a defence worth of investigation.
Conclusion
[40] The defendant’s notice of application filed April 3, 2017 is dismissed in its entirety.
[41] The plaintiff is entitled to costs of the application, to be assessed.
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