A Judgment Set Aside for Improper Service of a Claim

The Dispute

A lender had put money into business dealings with a former associate and was owed a sum in the mid five figures. The borrower could not be found at the house that land title and corporate records both gave as the address, so the claim went ahead without any response and judgment followed. Almost a year later the borrower surfaced, saying they had been living overseas throughout, and asked the court to undo everything.

The Parties’ Positions

The defendants applied to set aside the judgment and every order that preceded it, on the ground that they had never been validly served with the originating pleading or with the application materials that followed. They relied on Ming Sun Benevolent Society v. Philippine Women Centre of B.C. for the proposition that a judgment obtained in a proceeding that was not properly served cannot stand and must be treated as a nullity. They tendered passport pages placing the individual defendant outside Canada on the date the process server deposed to having served them personally. They drew attention to the response to civil claim filed in their name, which bore a signature unlike the individual defendant’s own and gave an address for service that the individual defendant deposed was unknown to them.

The plaintiff resisted the application on the criteria in Miracle Feeds v. D. & H. Enterprises Ltd., submitting that the defendants had to satisfy each of them. Those criteria ask whether the failure to respond was wilful or deliberate, whether the application followed promptly once the judgment came to light, and whether a defence worthy of investigation is shown. The plaintiff pointed to Lee v. Zhou, in which a default judgment was left standing after substitutional service, and to the defendants having advanced nothing at all on the third criterion. On the service itself, the plaintiff maintained an entitlement to rely on the process server’s affidavits, and observed that the exhibited passport pages carried no identifying markings.

The Court’s Decision

The court found that the individual defendant had not been personally served, treating the passport evidence placing them outside Canada as conclusive. It observed that the server had deposed only that the exhibited photograph was a true likeness of the person the server was asked to serve, and not of the person actually served. It found that the defendants had not filed the response to civil claim, without finding who had, and held that the substitutional service order had been obtained at least in part on the false premise that they had.

The court set aside the judgment and the orders preceding it as nullities, and granted the defendants leave to file responses within twenty-one days. It declined to award the successful defendants their costs, ordering them payable in the cause, and a judgment for the amount claimed reverted to an unresolved claim to be tried on its merits.

Key Lessons for Judgment Creditors and Absent Defendants

• Read an affidavit of service for what it actually deposes. The server swore only that the exhibited photograph was a true likeness of the person the server was asked to serve, not of the person actually served.
• Confirm a corporate defendant’s registry status before serving an amended pleading. Service at the registered and records office was effective while the company existed, but the company was dissolved for failure to file. Section 346(2)(b) of the Business Corporations Act allows service on a person who was a director or senior officer immediately before dissolution, or in the manner the court orders.
• Ground an application for substituted service on facts that will survive scrutiny. The order permitting service by mailbox rested in part on a response to civil claim filed after service of the amended pleading, and every order that followed fell with it.
• Do not treat an unopposed judgment as the end of the exposure. The orders were set aside two years after the claim was filed, and the costs were ordered payable in the cause rather than to the successful applicants.

The outcome of this application turned on the evidence of service before the court and on the record as it then stood. A similar application may resolve differently.

ATAC LAW acts for claimants and for defendants in civil and commercial litigation in British Columbia.

Conducted by Siwei Xu, Associate Lawyer at ATAC LAW, who acted for the plaintiff in this matter. Their practice includes civil and commercial litigation, construction disputes and residential tenancy matters.