Action Auto Leasing v. Robillard and Payne, 2011 ONSC 3264

CITATION: Action Auto Leasing v. Robillard and Payne, 2011 ONSC 3264

DIVISIONAL COURT FILE NO.: 1896-11

LONDON SMALL CLAIMS COURT FILE NO.: SC-10-393

DATE: 2011-05-27

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

BETWEEN:

ACTION AUTO LEASING & GALLERY INC.

Plaintiff (Appellant)

– and –

SANDRA L. ROBILLARD and DARREN PAYNE

Defendants (Respondents)

COUNSEL:

E. Assini, for the Plaintiff (Appellant)

No-one appearing for the Defendants (Respondents)

HEARD: April 5, 2011 at London

REASONS FOR JUDGMENT ON A MOTION

HEENEY J.:

[1] This motion raises an interesting question concerning the right of a party to appeal to the Divisional Court from a decision of a Deputy Judge of the Small Claims Court. The issue is of considerable importance given that the monetary jurisdiction of the Small Claims Court was recently increased to $25,000.

[2] The question can be stated as follows: where a plaintiff claims an amount in excess of “the prescribed amount” of $2,500, but recovers judgment for an amount that is less than $2,500, does the plaintiff have a right of appeal?

[3] Ms. Assini, counsel for the plaintiff, conceded that the law appeared to indicate that her client had no right of appeal, and therefore brought the matter before this court by way of a motion for leave to appeal.

[4] To understand the question before the court, it is necessary to first review the governing legislation. Section 31 of the Courts of Justice Act, R.S.O. 1990, c. C.43, as amended by S.O. 2009, c. 33 Schedule 2, provides as follows:

31. An appeal lies to the Divisional Court from a final order of the Small Claims Court in an action,

(a) for the payment of money in excess of the prescribed amount, excluding costs; or

(b) for the recovery of possession of personal property exceeding the prescribed amount in value.

[5] The “prescribed amount” is defined in O. Reg. 244/10 as follows:

Appeal Limit

2. A final order of the Small Claims Court may be appealed to the Divisional Court if the order is for,

(a) the payment of money in excess of $2,500, excluding costs; or

(b) the recovery of possession of personal property exceeding $2,500 in value.

[6] The facts of the case can be quickly summarized. The plaintiff commenced an action in Small Claims Court for the amount of $7,551.12, arising out of a default on a motor vehicle lease entered into with the defendants. At trial on Feb. 22, 2011, before Deputy Judge Lella, judgment was granted in favour of the plaintiff for $1,500 plus costs of $175. A transcript of the reasons for judgment was not available when this motion was argued, but it appears that the Deputy Judge accepted the defendants’ evidence that they did not read the lease, and went on to hold that they were not bound by its terms.

[7] The plaintiff wishes to appeal that decision, and seeks judgment for the full amount of $7,551.12 as claimed.

[8] As indicated, counsel for the plaintiff was of the view that the law was against her. To begin with, on a plain reading of O. Reg. 244/10, the order of the Deputy Judge was for $1,500. This is obviously not an order for the payment of money in excess of $2,500.

[9] Ms. Assini also, quite properly, brought to my attention the decision of Craig J. in Lawry v. Eggett (c.o.b. H. Eggett and Sons), [1978] O.J. No. 1032 (S.C. Div. Ct.), even though it did not favour her client’s position. In that case, the plaintiff had sued for $584.38, and recovered judgment for $200. At the time the claim was instituted, s. 108(1)(a) of the Small Claims Court Act provided that an appeal lies “in an action or garnishee proceeding where the sum in dispute exceeds $200, exclusive of costs”.

[10] At para. 3, Craig J. said the following:

What is the "sum in dispute"? It has been held constantly in this province that the "sum in dispute" is the amount of the judgment appealed against and the amount of the original claim is immaterial whether the appeal is by the plaintiff or the defendant. Glover v. Ogden, 1932 120 (ON CA), [1932] O.R. 709; Timmins v. Pamour Porcupine Gold Mines Ltd., 1940 332 (ON CA), [1940] O.W.N. 261; Coburn v. Little, [1959] O.W.N. 73.

[11] This passage was subsequently quoted with approval by Potts J. in Texaco Canada v. Dagenais, 1983 CarswellOnt 542 (S.C. Div. Ct.).

[12] If Lawry is an accurate statement of the law, it may be fatal to the plaintiff’s appeal. I say “may” because the wording of the governing statute has changed since Lawry was decided, as will be discussed below. However, after reviewing the line of cases cited by Craig J., as well as the authorities referred to therein, I am convinced that it is not an accurate statement of the law.

[13] The seminal decision is Lambert v. Clarke, [1904] O.J. No. 116 (H.C.J. Div. Ct). At the time that case was decided, an appeal would not lie unless “the sum in dispute upon the appeal” exceeded $100. The claim of the plaintiff was for $100.75. However, judgment was granted for the sum of $83.90 only.

[14] The defendant sought to appeal the judgment against him. In ruling that there was no right of appeal because the amount in dispute did not exceed $100, Meredith C.J. said the following, at para. 10:

If the appellant should succeed on his appeal, he would be relieved of $83.90, and no more; and if he should fail, he would remain liable for that sum, and no more. The matter in dispute is his liability to pay $83.90.

[15] That reasoning is perfectly sound. It was an appeal by the defendant, not by the plaintiff. Thus, the only number that mattered was the amount of the judgment against the defendant. Since the worst that could happen to the defendant was that he would be made to pay $83.90, and the best that could happen is that he would be relieved from paying that same amount, that clearly was the sum in dispute, and it was lower than the statutory threshold of $100.

[16] However, this reasoning is capable of being read as standing for the proposition that it is the amount of the judgment, and not the amount of the claim, that governs whether leave to appeal lies. It is that interpretation that appears to have culminated in Craig J.’s statement of the law in Lawry. However, such an interpretation fails to take account of the fact that Lambert was an appeal by the defendant, where the amount originally claimed by the plaintiff no longer mattered. It cannot be applied to an appeal by a plaintiff, where the amount originally claimed remains very important to the appeal.

[17] Suppose that the plaintiff’s claim in Lambert had been dismissed in its entirety, and the plaintiff, not the defendant, had appealed. The amount in dispute on the appeal would have been $100.75, since that is the amount that the plaintiff stood to recover if he succeeded on the appeal. That sum exceeded the statutory amount, and thus the plaintiff should have a right of appeal. However, the amount of the judgment awarded by the court at trial in this scenario would have been $0. If one were to apply Lawry, the plaintiff would have been denied the right of appeal, because the amount of the judgment appealed against was below the statutory amount.

[18] The next case on point is Glover v. Ogden, 1932 120 (ON CA), [1932] O.R. 709 (C.A.), which was specifically cited by Craig. J. in Lawry. It involved a motor vehicle accident, where the plaintiff sued for $65, being the amount of damage to his car, while the defendant counterclaimed for $120, being the amount of damage his vehicle sustained. The trial judge split liability 80/20 in the defendant’s favour, so that the plaintiff recovered 20% of his claim for $65, being $13, and the defendant recovered 80% of his claim for $120, being $96.

[19] At the time, a right of appeal only existed if the sum in dispute exceeded $100. At paras. 5 and 6 of the decision, Middleton J.A. discussed how the sum in dispute was to be calculated:

So far as the appeal of the plaintiff is concerned, his claim was for $65. He has recovered $13. He now seeks to recover the difference, $52. This is the amount in dispute on this appeal. So far as he is appealing from the judgment upon the counterclaim against him the amount involved is $96. Unless he can add these two sums together and treat these two separate proceedings as one, it is plain he has no right of appeal.

So far as the defendant’s appeal is concerned, the amount in dispute on the plaintiff’s claim is the $13 which has been awarded to him. So far as the appeal relates to his own counterclaim it was originally $120, but has been allowed at $96, so that there is on this appeal on the counterclaim only $24 involved. An addition of the amount involved upon both the claim and counterclaim will still leave the total involved in this appeal below the sum requisite.

[20] Middleton J.A. went on to apply earlier authorities to rule that the claim and counterclaim were separate, and the amounts in dispute on each could not be added together so as to meet the statutory threshold for appeal.

[21] For purposes of the present case, however, the important point is how the sum in dispute was calculated. Craig J. in Lawry specifically cited this case as authority for the proposition that the amount in dispute was the amount of the judgment appealed against, and stated that the amount of the claim was immaterial. That is, however, only true with respect to an appeal by a defendant, as was the case in Lambert. The plaintiff’s appeal of the judgment against him on the counterclaim (as defendant-by-counterclaim) was the amount actually awarded against him of $96. Similarly, the defendant’s appeal of the judgment against him on the claim was the amount actually awarded against him of $13.

[22] However, the calculation was completely different as to the sum in dispute on the appeal by the plaintiff, and on the appeal by the plaintiff-by-counterclaim as well. In both cases, it was the difference between the amount claimed and the amount recovered. Thus, the amount of the claim (or counterclaim) was entirely material to this calculation.

[23] In both cases, the simple analysis offered by Meredith C.J. in Lambert clarifies the issue. What is the result if the appellant succeeds or fails? If a defendant succeeds on an appeal of a judgment against him, he will be relieved from paying the amount of the judgment, and therefore that is the amount in dispute. If a plaintiff succeeds on an appeal where he initially recovered less than he claimed, he stands to recover the difference between what he originally claimed and the amount he was awarded at trial. That difference is the sum in dispute on the appeal.

[24] The next case cited by Craig J. in Lawry was Timmins v. Parmour Porcupine Gold Mine, 1940 332 (ON CA), [1940] O.W.N. 261, 1940 CarswellOnt 158 (C.A.). There, the plaintiff appealed the complete dismissal of its claim. At trial, the plaintiff had formally abandoned part of its claim, thereby reducing the amount originally claimed to $110. Then the plaintiff, by its own evidence, further reduced the amount that could be recovered to the sum of $90. The Court of Appeal ruled that the plaintiff had no right of appeal, because the amount in dispute did not exceed $90, which was less than the statutory threshold of $100.

[25] Once again, this case does not stand for the proposition articulated by Craig J. in Lawry. The court did not focus on the amount of the judgment awarded, which was $0. Instead, they looked at the maximum amount claimed by the plaintiff, and since that amount was below the threshold, there was no right of appeal. Once again, it could be said that if the plaintiff succeeded on the appeal, the most it would recover would be the difference between what it was claiming ($90), and the amount it was awarded ($0). That difference represents the amount in dispute on the appeal, and was below the statutory amount.

[26] The final case cited by Craig J. in Lawry was Coburn v. Little, [1959] O.W.N. 73, [1959] O.J. No. 42 (C.A.). It involved a motor vehicle accident. The trial judge assessed the damages of the plaintiff at $200, and of the defendant at $75, and found them equally negligent, with the result that the plaintiff was awarded $100 on the claim and the defendant $37.50 on the counterclaim. The plaintiff appealed, asking for his full damages and the dismissal of the counterclaim.

[27] At para. 3, Morden J.A. said the following:

An appeal lies to this Court from a Division Court "in an action or garnishee proceeding where the sum in dispute exceeds $100.00 exclusive of costs". The plaintiff seeks on the appeal to have his damages increased by $100.00 and this is the sum which is "in dispute" within the meaning of sec. 108(a) and not the amount of his assessed damages: See Glover v. Ogden (1932) 1932 120 (ON CA), O.R. 709 where Middleton J.A. discusses all the earlier authorities. The amount awarded on the counterclaim and in dispute on this appeal cannot be added to the $100.00 in dispute on the claim to give this Court jurisdiction: Hrenovich v. Lesperance et al (1936) 1936 279 (ON CA), 3 D.L.R. 510. Before sec. 109 applies, there must be a sum exceeding $100.00 in dispute on either the claim or counterclaim on the appeal.

[28] Once again, it is clear that this case does not support the proposition articulated by Craig J. in Lawry. The sum in dispute was held to be the amount by which the plaintiff sought to have his damages increased on appeal. As in all of the other cases reviewed above concerning an appeal by a plaintiff, this amounts to the difference between the amount claimed and the amount awarded at trial.

[29] I am satisfied that Craig J. misunderstood the authorities that he cited, and that the principle of law that he articulated in Lawry is simply wrong. The correct principle that emerges from those cases is that the sum in dispute, on an appeal by a plaintiff, is the difference between the amount claimed and the amount awarded at trial. The sum in dispute on an appeal by a defendant is the amount awarded against him at trial.

[30] Applied to the case at bar, the plaintiff claimed $7,551.12 and was awarded $1,500 at trial. The sum in dispute on the appeal is the difference between those two amounts, or $6,051.12. Put another way, if the plaintiff is successful on the appeal, it will recover an additional $6,051.12. That amount, therefore, is the sum in dispute. It is well above the prescribed amount of $2,500.

[31] That does not end the matter, however. All of the cases discussed above were decided with respect to statutory provisions that no longer apply. Section 31 of the Courts of Justice Act is the provision that currently applies, and it is reproduced above. The predecessor section, which was amended by S.O. 2009, c. 33 Schedule 2, was identical to the current version, except that “$500” stood in place of the words “the prescribed amount”. Prior to the amendments, therefore, it was not necessary to look to a regulation to determine the statutory threshold, because it was fixed by the statute itself. Now, one must refer to the regulation to find that the threshold amount has been fixed at $2,500.

[32] The wording of the section is, at first glance, somewhat confusing. Ignoring for the moment a claim for recovery of property, is the section saying that an appeal will lie from a final order made in an action where the amount claimed is in excess of $2,500? Or is it saying that an appeal will only lie from a final order for the payment of money in excess of $2,500? If the former is correct, then a right of appeal lies, since the amount claimed in the action was $7551.12. If the latter is correct, though, no appeal lies since the court made an order for the payment of $1,500 only.

[33] In a case not cited by the plaintiff, the predecessor to s. 31 was interpreted to mean the former, although there was no analysis on the point. In Walford v. Stone & Webster Canada LP, 2006 37409 (ON SCDC), 2006 CarswellOnt 6873, 217 O.A.C. 166 (S.C.J.), the plaintiff had sued for $10,000. His claim was dismissed in its entirety, and he was ordered to pay the defendant’s costs. After finding no merit to the appeal of the dismissal of the plaintiff’s claim, Power J. went on to analyze whether leave to appeal was required to appeal the trial judge’s decision on costs. At paras. 19 and 20, he said the following:

The starting point in the analysis of this issue is s. 31 of the Courts of Justice Act R.S.O. 1990 c. C.43. Section 31 reads as follows:

Appeals

31. An appeal lies to the Divisional Court from a final order of the Small Claims Court in an action,

(a) for the payment of money in excess of $500, excluding costs; or

(b) for the recovery of possession of personal property exceeding $500 in value.

In his statement of claim, Dr. Walford claims damages in excess of $10,000.00. Therefore, he has an appeal as of right with respect to the dismissal of his action by the trial judge. Section 31, as will be noted, says nothing about an appeal from a costs award. [Emphasis added]

[34] The right of appeal with respect to the dismissal of the action was not determined by the amount of the final order made by the trial court, which was $0. Instead, it was determined by the amount claimed in the action, which was $10,000.

[35] I agree entirely with Power J.’s approach, and this interpretation accords with the wording of the section. If the legislature had wanted to restrict the right of appeal to judgments in excess of $500, it would have said this: “an appeal lies to the Divisional Court from a final order of the Small Claims Court for the payment of money in excess of $500”. Instead, it said this: “an appeal lies to the Divisional Court from a final order of the Small Claims Court in an action for the payment of money in excess of $500”.

[36] The words “in an action” cannot be presumed to be mere surplusage. The only way to give meaning to those words is to conclude that the monetary amount that is specified relates to the amount claimed in the action, and not to the final order of the Small Claims Court that was actually made at trial. I therefore interpret this predecessor to s. 31 to mean that where a plaintiff, in an action, seeks either the payment of more than $500, or the recovery of personal property having a value exceeding $500, a right of appeal lies with respect to a final order made in that action.

[37] Has anything changed by virtue of the amendments to s. 31 made by S.O. 2009, c. 33 Schedule 2 ? Nothing should have changed. The amendments merely replaced “$500” with “the prescribed amount”. The words “in an action” remain. However, the wording of the regulation that prescribes the amount does create confusion. O. Reg. 244/10 is reproduced above. It says that an order may be appealed to the Divisional Court “if the order is for, (a) the payment of money in excess of $2,500, excluding costs; or (b) the recovery of possession of personal property exceeding $2,500 in value”. The words “in an action” have disappeared.

[38] The regulators have clearly gone beyond what the statute requires. All that s. 31 requires is that a monetary amount be prescribed by regulation. Nothing more than a mere number is called for. The regulation, however, purports to rewrite s. 31 in a manner that is completely inconsistent with it.

[39] As written, the regulation would only permit an appeal where the actual final order by the Small Claims Court was for the payment of more than $2,500, or for the return of property worth more than $2,500. This would mean that a plaintiff who claimed $25,000 in his action, but has his claim dismissed in its entirety at trial, would be denied any right of appeal. Since the final order of the court was for $0, and since that is less than $2,500, no appeal would lie. Such a result would have enormous implications with respect to access to justice, and is patently absurd.

[40] No less absurd is the result where the claim is not dismissed in its entirety, but judgment is awarded for an amount far below what is claimed, as in the case at bar. If a plaintiff sued for $25,000, and recovered judgment for only $100, the strict wording of the regulation would mean that he would have no right of appeal, because the final order was for the payment of money less than $2,500. The legislature could not have intended that a plaintiff be denied the right of appeal in such a case, particularly given that caselaw spanning almost 100 years makes it clear that the sum in dispute on such an appeal would be $24,900.

[41] I am satisfied that there is a clear and unavoidable conflict between s. 31 of the Courts of Justice Act and s. 2 of O. Reg. 244/10. In such a case, the statute must prevail. Ruth Sullivan, in Sullivan on the Construction of Statutes, 5th ed. (Markham: LexisNexis, 2008) states at p. 341:

The presumption of coherence applies with respect to regulations as well as statutes. It is presumed that regulatory provisions are meant to work together, not only with their own enabling legislation but with other Acts and other regulations as well. In so far as possible the courts seek to avoid conflict between statutory and regulatory provisions and to give effect to both. Where conflict is unavoidable, normally the statutory provision prevails.

[42] See also Friends of Oldman River Society v. Canada (Minister of Transport), 1992 110 (SCC), [1992] 1 S.C.R. 3.

[43] In my view, the operative part of O. Reg. 244/10 is the establishment of “the prescribed amount” at the sum of $2,500, for purposes of s. 31. However, to the extent that the regulation purports to prescribe a narrower right of appeal than that which is provided for in s. 31, it is inoperative.

[44] Accordingly, I interpret s. 31, in combination with O. Reg. 244/10, to mean that where a plaintiff, in an action, seeks either the payment of more than $2,500, or the recovery of personal property having a value exceeding $2,500, a right of appeal lies with respect to a final order made in that action.

[45] Applied to the case at bar, the plaintiff, in its action, sought the payment of $7,551.12. Since this is more than the prescribed amount of $2,500, the plaintiff has a right of appeal from the final order made in that action. No leave to appeal is necessary.

[46] The time for filing a notice of appeal is extended to 30 days from this date, and the time for perfecting the appeal is extended to 30 days from the date of receipt of the transcript of the proceedings at trial or 60 days from this date, whichever is later.

[47] The plaintiff does not seek an order for costs in its motion. Given the novelty of the point at issue, and given that the defendants did not appear and oppose the motion, this is not a case for costs in any event.

“T. A. Heeney J.”

Mr. Justice T. Heeney

Released: May 27, 2011

CITATION: Action Auto Leasing v. Robillard and Payne, 2011 ONSC 3264

DIVISIONAL COURT FILE NO.: 1896-11

LONDON SMALL CLAIMS COURT FILE NO.: SC-10-393

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

BETWEEN:

ACTION AUTO LEASING & GALLERY INC.

Plaintiff (Appellant)

– and –

SANDRA L. ROBILLARD and DARREN PAYNE

Defendants (Respondents)

REASONS FOR JUDGMENT ON A MOTION

Heeney J.

Released: May 27, 2011