Executive Summary: Key Legal and Evidentiary Issues

• An associate judge's jurisdiction to refuse to set aside a default judgment was challenged as violating s. 96 of the Constitution Act, 1867, based on the 1991 Euro Ceramics precedent.

• The Court of Appeal found Euro Ceramics was decided per incuriam, as it misapplied the Supreme Court of Canada's decision in Victoria Medical Building and overlooked the endorsement of Polson Iron Works.

• Significant evolution in s. 96 jurisprudence since 1991, including changes to the appellate regime for associate judges, justified reconsidering the outdated precedent.

• Appellants' claim that the courts below misapprehended evidence regarding the delay in filing a response to civil claim was rejected as meritless.

• A preliminary procedural dispute arose over improper email service of the notice of appeal, resulting in an eight-day delay and an application for extension of time.

• The extension of time to serve the notice of appeal was granted on condition that the full judgment amount and outstanding costs orders be paid into court.

The underlying dispute and the parties involved

This case stems from a relatively modest debt claim of $24,155.91 filed by Alan Gilbert Smith, a shareholder of Voice Mobility International Inc. ("Voice"), a company based in Vancouver. The defendants are VM Agritech Limited (formerly MyCo Sciences Limited), a UK corporation, and Christopher J. Wightman, a director of VM Agritech who resides in the UK. In 2020, VM Agritech and Voice entered into a series of agreements concerning VM Agritech's acquisition of Voice, with the intention of taking VM Agritech public through Voice's public listing (the "Agreements"). On June 30, 2021, the last of the Agreements terminated without the transaction closing. Mr. Smith's claim was based on the allegation that VM Agritech had retained, or caused Voice to retain, legal representation for the Agreements, that VM Agritech had failed to pay the invoices for those services, and that Mr. Smith had paid $12,000 to a law firm in exchange for an assignment of the debt. On February 1, 2023, Mr. Smith filed his notice of civil claim.

The default judgment and the set aside application

Following extensive interlocutory proceedings — involving applications to set aside service and disputes over the court's jurisdiction — the appellants failed to file a response to civil claim within any applicable deadline. On February 6, 2024, Associate Judge Muir granted default judgment in favour of Mr. Smith in the amount of $24,155.91 together with $1,576.60 in pre-judgment interest. The appellants subsequently appeared before Muir A.J. on March 6, 2024, seeking to set aside that default judgment. Associate Judge Muir exercised her discretion and declined to do so, applying the well-established principles from Miracle Feeds v. D. & H. Enterprises Ltd.

The appeal to the Supreme Court of British Columbia

The appellants then appealed Muir A.J.'s refusal to the Supreme Court, where Justice Fitzpatrick dismissed the appeal. The appellants raised two arguments: first, that an associate judge lacks jurisdiction to decide an application to set aside a default judgment, relying on the BC Court of Appeal's 1991 decision in Euro Ceramics Tile Ltd. v. T & C Ceramic Tile Contractors; and second, that the courts below had misapprehended critical evidence concerning the timelines for the filing of a response to the notice of civil claim. Justice Fitzpatrick rejected both arguments, concluding that s. 11.3(2) of the Supreme Court Act, Practice Direction PD-50, and Rule 3-8(11) of the Supreme Court Civil Rules conferred the necessary power on associate judges. She found the relevance of Euro Ceramics was "very much in doubt" given the significant evolution of s. 96 jurisprudence and the changed appellate regime, describing the state of the law as "confusing and contradictory."

The extension of time application at the Court of Appeal

The appellants filed a notice of appeal on March 12, 2025, the deadline date, but attempted to serve it by email — a method not permitted under Rule 4(1) of the Court of Appeal Rules. The respondent challenged service, and the appellants properly served the notice eight days later on March 20, 2025. This necessitated an application for an extension of time before Justice MacNaughton in chambers on July 4, 2025. Applying the five-factor test from Davies v. CIBC, Justice MacNaughton found that the appellants had a bona fide intention to appeal, the respondent was not unduly prejudiced by the short delay, the respondent had been informed of the appeal on the filing date, and the appeal was not "doomed to fail." Notably, the court acknowledged that the inconsistent decisions on whether an associate judge has jurisdiction to set aside a default judgment warranted consideration by the Court of Appeal. The extension was granted, subject to the condition that the full judgment amount of $24,155.91 and two outstanding costs orders ($1,376.61 and $1,493.61) be paid into court.

The Court of Appeal's decision on the merits

On January 28, 2026, a three-judge panel of the BC Court of Appeal — Justices Harris, Warren, and Francis — heard the appeal on its merits and unanimously dismissed it on March 11, 2026. Writing for the court, Justice Harris held that Euro Ceramics was decided per incuriam for two key reasons. First, the Victoria Medical Building decision of the Supreme Court of Canada, upon which Euro Ceramics relied, did not actually stand for the proposition that associate judges lack jurisdiction to set aside default judgments; it dealt with an entirely different type of jurisdiction involving masters trying mechanics lien actions as full trial judges. Moreover, the Supreme Court of Canada in Victoria Medical Building had endorsed Polson Iron Works v. Munns, which confirmed that masters could determine there was no real issue to be tried and enter judgment accordingly — a function analogous to assessing whether a defence is worthy of investigation on a set aside application. The Court of Appeal in Euro Ceramics appeared to have been unaware of this endorsement and expressly noted that it had not received considered submissions from counsel on the jurisdiction issue.

The evolution of s. 96 jurisprudence

Justice Harris further agreed with the chambers judge that, even if Euro Ceramics had correctly applied the Supreme Court of Canada authority, the s. 96 jurisprudence had evolved sufficiently since 1991 to warrant reconsideration. The Court highlighted the Supreme Court of Canada's more recent articulation of how s. 96 protects the core jurisdiction of superior courts, particularly in Reference re Code of Civil Procedure (Que.), art. 35, 2021 SCC 27. The Court emphasized that the jurisdiction to decide whether to set aside a default judgment does not touch the core jurisdiction of s. 96 courts and that associate judges have historically facilitated the work of superior courts by handling procedural, administrative, and preparatory matters. Additionally, the legal regime governing appeals from associate judge decisions has changed materially: appeals now go first to a Supreme Court justice rather than directly to the Court of Appeal, enhancing judicial supervision of associate judge decisions.

The evidence misapprehension argument and the overall outcome

On the second ground of appeal regarding misapprehension of evidence, the Court found no merit whatsoever. The appellants had engaged in extensive procedural jockeying but had failed to file a response to civil claim within any possible cut-off date, and still, none had been filed. The conclusions drawn by both the associate judge and the Supreme Court justice were open to them and there was no basis to interfere. The appeal was dismissed in its entirety, with the respondent Mr. Smith prevailing. The default judgment in the amount of $24,155.91 plus $1,576.60 in pre-judgment interest remained in place in his favour, along with the costs orders previously awarded by the court below. No exact amount for appeal costs was specified in the decisions.