CITATION: Holtzman v. Suite Collections Canada Inc., 2013 ONSC 4240

DIVISIONAL COURT FILE NO.: DC-11-00001939-000

DATE: July 3, 2013

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

BETWEEN:

Kelly Holtzman

Plaintiff (Respondent)

– and –

Suite Collections Canada Inc., Dane Aromolaran, TransGlobe Property Management Services Limited

Defendants (Appellants)

Barry C. Fick, for the Plaintiff (Respondent)

T. Reid, for the Defendants (Appellants)

HEARD: June 18, 2013

A. The Context

[1] Kelly Holtzman and Brandon McAvoy rented an apartment at 200 Sandringham Crescent, London, Ontario.

[2] Ms. Holtzman and Mr. McAvoy decided to part company.

[3] Property manager TransGlobe Property Management Services (“TransGlobe”) responded to Ms. Holtzman’s notice that she was vacating the unit by letter dated August 16, 2007.

[4] Ms. Holtzman was advised that she “had been removed from the lease” and that Mr. McAvoy had assumed the remainder of the term.

[5] That should have ended Ms. Holtzman’s involvement with the unit. It didn’t.

[6] Years passed. To her surprise Ms. Holtzman received notice from the defendant Suite Collections Canada Inc. (“Suite Collections”).

[7] Ms. Holtzman and Mr. McAvoy were named. The July 31, 2010 notice commenced with these words:

Re: Court Order#SWL-08598 – Tenancy at 200 Sandringham Crs. #412 London On Due and Payable Immediately: 3247.59

[8] Rent was not in arrears during Ms. Holtzman’s tenure.

[9] The document continued:

This is your final notice to settle your delinquent account.

[10] Ms. Holtzman was advised that if payment was not forthcoming Suite Collections would “register with Equifax Canada in the next 5 days” and that the registration “will hinder your Credit ability for a minimum of 6 years”.

[11] Ms. Holtzman retained a lawyer, Brian Phillips. On August 10, 2010, Mr. Phillips wrote to Suite Collections. He advised that Ms. Holtzman had no obligation to pay the claimed arrears and cautioned Suite Collections that no steps should be taken to “register” the account with Equifax Canada as it had threatened. He demanded a formal apology and $2,500 in damages because, he claimed, Ms. Holtzman “has missed several hours of work, [suffered] a large degree of mental anguish and loss of sleep, along with the legal expense of my sending this letter.”

[12] That letter crossed with a further written demand from Suite Collections. It required payment by a stipulated date and indicated that “the above debt is now registered with Equifax Canada and will continue to affect you (sic) credit ability for a minimum of 6 years.”

[13] The almost instantaneous response from Mr. Phillips was followed by an even faster reply from Suite Collections. The August 12, 2010 fax from Dane Aromolaran of Suite Collections said, in part:

…if indeed your client was release (sic) from the lease, by all mean (sic)…please, (sic) forward me…proof so we can resolve this matter amicably…In the interim I have sent an email to the client…to confirm this.

[14] On September 13, 2010, Mr. Phillips wrote to Suite Collections again. In part, he said:

I would think that it is you and your company that is obliged to verify that [Kelly Holtzman] was, in fact, indebted to Trans Globe. I can’t imagine that Trans Globe retained you to pursue her. I also can’t imagine that anyone would pursue her under a Tribunal Order, in which she was not a party, unless they failed to read the Order.

[15] The solicitor promised that legal proceedings would follow “for damages based upon your reckless and negligent actions.”

[16] On September 14, 2010, Suite Collections advised Mr. Phillips that it had “just confirmed with the client that your client ‘Kelly Holtzman’ was indeed removed from the lease.” Mr. Aromolaran advised “I have sent a fax to Equifax Canada that the file was registered in error and has to be removed ASAP. My apologizes (sic) for the mistake…”[^1]

[17] Ms. Holtzman commenced her Small Claims Court action on October 29, 2010. She sought damages in the amount of $10,000 “consisting of $5,000.00 in General Damages and $5,000.00 Exemplary Damages”. She alleged that “all of the defendants have been reckless and negligent in their actions” and had breached two sections of a regulation made under the authority of the Collection Agencies Act, R.S.O. 1990, c. C.14.

[18] After an unsuccessful settlement conference, the matter was set down for trial on April 26, 2011.

[19] Trial was to take place on October 25, 2011. Deputy Judge Brenda Yeates presided.

[20] Agents appeared on behalf of both sides. Ms. Roguska attended on behalf of the defendants. She advised the court that they had retained a lawyer, Rob Winterstein, to represent them. Ms. Roguska requested an adjournment. She explained the reason in these words:

…because of his conflict with schedule. He was – something came up unexpectedly…

[21] After a fairly lengthy discussion with both agents, the Deputy Judge declined the request and required that the scheduled trial proceed.

[22] Ultimately, Ms. Roguska indicated that she was not in a position to proceed with the trial and “so I will just step down.” That led to this exchange:

THE COURT: That’s fine. We will go ahead today.

MS. ROGUSKA: Okay.

THE COURT: And so you are not taking part then?

MS. ROGUSKA: I am unable to. I am not ready. I am not familiar with this matter. It would be prejudicial for the defendant (sic) if I proceed. I’m not prepared for that.

[23] Ms. Roguska was given permission to leave. She elected to observe but did not participate in the process that followed.

[24] The Deputy Judge indicated that the trial “is going to be treated like an assessment of damages”, heard evidence from Ms. Holtzman, retired for approximately thirty minutes and gave brief oral reasons.

[25] For reasons I will come to Ms. Holtzman was awarded general damages of $1,500, punitive or exemplary damages in the amount of $1,500 and $1,000 for costs.

[26] The defendants appeal from that decision.

[27] They maintain that the Deputy Judge erred in declining the adjournment request and in assessing damages as she did.

B. Respondent’s Preliminary Oral Motion

[28] Mr. Fick appeared for Ms. Holtzman. He submitted that this court lacks jurisdiction to hear the appeal because the appellants did not exhaust an alternative, available remedy: Ketelaars v. Ketelaars, 2011 ONCA 349 and Halow Estate v. Halow, Sr. (2002), 2002 41790 (ON CA), 59 O.R. (3d) 211 (C.A.).

[29] He argued that the appellants had two such avenues:

i. First, they could have moved to set aside or vary the judgment pursuant to rule 17.01 (4) of the Small Claims Court Rules, O. Reg. 258/98;

ii. Second, the defendants could have made a motion for a new trial within 30 days pursuant to rule 17.04 (1).

[30] I disagree. Neither rule is applicable.

[31] Rule 17.01 (4) gives the Small Claims Court authority to “set aside or vary…a judgment obtained against a party who failed to attend at the trial.” [Italics added]

[32] The defendants did attend: through an agent. The defendants were missing their lawyer and witnesses but had retained Ms. Roguska to appear. Indeed, at one point Ms. Roguska advised the court that “I don’t have witnesses, but I will – I will try to proceed.” After a recess, she changed her mind.

[33] Similarly, a motion for a new trial under rule 17.04 (1) was destined to fail. Such an order can only be made if the moving party satisfies the court that there was either a purely arithmetical error in the calculation of the damages awarded or if the court failed to consider relevant evidence that was unavailable and could not reasonably have been expected to be available at trial: see rule 17.04 (5). Neither precondition is in play.

[34] The refusal to grant an adjournment request is properly the subject of an appeal.

C. The Appeal

i. The Adjournment Request

[35] The appellants maintain that the Deputy Judge erred in declining the adjournment request because: the matter had not been adjourned before, counsel of the defendants’ choice was unavailable, a cost award would have amply compensated Ms. Holtzman and only a short delay would have been occasioned.

[36] The appellants rely on Bhimji Khimji v. Dhanani, 2004 12037 (Ont. C.A.). In a dissenting judgment, Laskin J.A. wrote at para. 14:

A trial judge enjoys wide latitude in deciding whether to grant or refuse the adjournment of a scheduled civil trial. The decision is discretionary and the scope for appellate intervention is correspondingly limited. In exercising this discretion, however, the trial judge should balance the interests of the plaintiff, the interests of the defendant and the interests of the administration of justice in the orderly processing of civil trials on their merits. In any particular case, several considerations may bear on these interests. A trial judge who fails to take account of relevant considerations may exercise his or her discretion unreasonably and if, as a result, the decision is contrary to the administration of justice, then the appellate court is justified in intervening.

[37] Rule 17.02 of the Small Claims Court Rules addresses adjournments. It provides as follows:

(1) The court may postpone or adjourn a trial on such terms as are just, including the payment by one party to another of an amount as compensation for inconvenience and expense.

(2) If the trial of an action has been adjourned two or more times, any further adjournment may be made only on motion with notice to all the parties who were served with the notice of trial, unless the court orders otherwise.

[38] As can be seen, the rule does not list factors that are to be considered by the court. The analysis is particularly fact specific.

[39] The facts that were known to the Deputy Judge concerning the adjournment request were the following:

i. The court had no advance notice of the adjournment request;

ii. Ms. Holtzman’s agent had been advised of the request late in the day on Thursday, October 20, 2011;

iii. The parties had been unable to negotiate the terms of an adjournment;

iv. According to the pleadings, liability and damages were in issue. Ms. Holtzman had taken a day off work to participate in the trial. Notably, two other witnesses were in attendance. Although they were not called when the issues at trial were confined to an assessment of damages, one of them had travelled from Mississauga; and

v. A settlement conference had been held in February and the matter was set down for trial in April, 2011.

[40] I am of the view that the Deputy Judge’s decision to proceed with the trial was amply supported. I have reached that conclusion for several reasons:

i. First, the decision of the Deputy Judge to decline the adjournment request was discretionary and is entitled to deference;

ii. Second, the trial date was not a surprise. It had been known for months;

iii. Third, the defendants filed no evidence in support of their request for an adjournment. In fairness, Ms. Roguska indicated to the Deputy Judge that she was in possession of a letter from Mr. Winterstein. While not offered expressly, it appears Ms. Roguska had the letter in hand and would have been able to provide a copy if asked; and

iv. Fourth, the letter would not have strengthened Ms. Roguska’s argument. The Appeal Book and Compendium included a copy of an October 21, 2011 letter from Mr. Winterstein to Suite Collections. It included the words “Our File No. Pending”. The body of the letter read as follows:

Thank you for retaining the undersigned to act for Suite Collections Canada Inc. and Dane Aromolaran with respect to the above matter. Unfortunately, I have another trial scheduled for the (Toronto) Small Claims Court on October 25, 2011 and am not available to attend at the trial of the above matter.

[41] It is clear that the defendants did not retain counsel until October 21 despite knowing that an October 25, 2011 trial date was looming. The defendants’ approach to the process compounded the problem. The defendants did not allow for the very real possibility that the request would be denied. Submissions were not made by Zoran Kozarac, the agent that had prepared the defence and appeared at the settlement conference on behalf of the defendants but Ms. Roguska who conceded that she was “not familiar with this matter.” The defendants sent no one who could testify if their effort to obtain a postponement failed.

[42] Defendants cannot simply assume that an adjournment request will be granted: even if the trial has not been adjourned before.

[43] The Practice Direction as to Trial Dates and Adjournments dated June 9, 1999 applies to the Small Claims Court as well. Paragraph 1 (1) reads:

Where a date for trial…of a matter has been set by the Superior Court of Justice…the trial…is expected to take place on that date.

[44] The Practice Direction outlines its three objectives:

i. To ensure that trial lists are respected;

ii. To reduce court delays, the waste of court resources and the unnecessary expense and inconvenience to the public that adjournments cause – especially those requested late; and

iii. To assist parties in having adequate representation by a lawyer acceptable by them.

[45] For the reasons given, the defendants did not respect the trial list.

[46] An adjournment would have caused a delay. Mr. Reid suggested any adjournment would have been of short duration. No evidence to support that statement was provided and it is a dubious one at best. Court dates – especially trial dates – are precious. The Small Claims Court is a very busy court. That is particularly so after the increase in its monetary jurisdiction in January, 2010.

[47] Ms. Holtzman and her witnesses would have been inconvenienced by an adjournment and court resources would have gone to waste.

[48] Importantly, the defendants offered no explanation for their failure to retain and instruct counsel earlier. It is obvious from the evidence that Suite Collections was no stranger to the courtroom.

[49] I recognize that the trial judge was told that Ms. Holtzman would have consented to an adjournment had the appellants paid $350 on account of costs. The fact is that they did not pay – or agree to pay – any sum. The appellants could not reasonably have expected the Deputy Judge to be influenced by the terms of a rejected offer.

[50] In short, I am satisfied the Deputy Judge balanced the interests of the plaintiff, the defendants and the administration of justice and came to an appropriate conclusion. The inability of the court to address all aspects of this matter “on the merits” was because of the defendants’ delay in retaining counsel and its failure to fully prepare its agent for or send potential witnesses to trial.

[51] A contested adjournment of a trial is, rightfully, reluctantly granted. Good, sufficient and compelling reasons must be provided. They were not in this case.

[52] An additional matter is of concern to me. Having reviewed Mr. Winterstein’s letter, another fact is very clear. The twice made representation by the defendants’ agent that Mr. Winterstein’s inability to attend trial in London was due to something that “came up unexpectedly” was false.

[53] Mr. Reid submitted the error was an innocent one. I will simply say that Mr. Winterstein’s letter is clear. It spoke of a prior – rather than recent – commitment. The appellants’ representative should not have exaggerated its contents.

[54] The Deputy Judge’s decision to proceed with the trial does not warrant appellate intervention.

ii. The Damage Award

[55] As noted, the Deputy Judge awarded Ms. Holtzman $1,500 on account of general damages and a like amount for punitive or exemplary damages. The appellants challenge that award but did not question the amount ($1,000) awarded for costs.

[56] In argument Mr. Reid conceded that if the Deputy Judge’s decision to proceed with the trial was upheld, Ms. Holtzman had proven that she had retained Mr. Phillips to deal with Suite Collections and incurred a bill in the amount of $565 as a result. While not identified in the claim specifically, I am satisfied that it was appropriate to include that amount in the damage award. As J.W. Quinn J. wrote in Brighton Heating & Air Conditioning Ltd. v. Savoia (2006), 2006 1667 (ON SCDC), 79 O.R. (3d) 386 (S.C.J.) at para 40:

…in the Small Claims Court, a liberal, non-technical approach should be taken to pleadings. Therefore, unpled relief may be granted…so long as supporting evidence is not needed beyond what was adduced at trial…provided that, in all the circumstances, it is not unfair to grant such relief…

[57] Mr. Reid submitted that there was no factual or legal basis for any additional award. With respect to damages the Deputy Judge said:

Most of the evidence led today dealt with the history of this case. There were a number of exhibits filed and dates of letters received and sent were noted. Very little evidence was led as to the damages suffered by Ms. Holtzman. She lost two days’ work apparently, in attending to this matter and was annoyed and frustrated, but there seems to be no evidence of substantial harm to Ms. Holtzman because of the registration of this judgment with Equifax. She has not applied for any credit since this event occurred. General damages for that reason will be minimal.

Punitive damages based on the actions of Suite Collections due to their negligence, I find to be present. They did not comply with portions of sections 21 and 22 of regulation 74 made under the Collections Agency (sic) Act. I find that Ms. Holtzman was wronged. To most people, your credit rating is precious. It’s very important, and it affects your life; however, as I stated before, there has been no substantial harm that was brought forward in this case today. That has happened.

In fact, [the] Equifax registration may already have been lifted. We don’t know that, and it would have been helpful to know whether that has occurred.[^2]

I am awarding nominal damages to Ms. Holtzman in the amount of $1,500 and punitive damages, or exemplary damages in the amount of $1,500. Costs, I have added the various costs provided earlier[^3] and I award costs of $1,000.

[58] Ms. Holtzman’s claim used the words “reckless” and “negligent”. It was grounded in tort.

[59] Recently in PreMD v. Ogilvy Renault LLP, 2013 ONCA 412, the Court of Appeal addressed the measure of damages for a law firm’s negligence and breach of contract. With respect to the former claim, Laskin J.A. wrote at para. 65:

The ordinary measure of damages in tort is reliance damages. The court tries to put the injured party in the position it would have been in had the tort not been committed.

[60] Counsel for the respondent submitted the entire damage award should stand but struggled mightily to find evidentiary support for anything but the item the appellants have conceded. He acknowledged that Ms. Holtzman had not sought credit after Suite Collections’ report to Equifax and that she did not know whether Suite Collections had contacted Equifax to withdraw it. As noted, Suite Collections had promised to do so.[^4]

[61] Mr. Fick also agreed that Ms. Holtzman could not be compensated for missing work to attend the settlement conference and trial. In any event, the amount said to have been lost on account of wages was never provided.

[62] That left him with Ms. Holtzman’s evidence that the actions of Suite Collections caused her to be “very annoyed and frustrated” and “very stressed”.

[63] The factum filed on behalf of Ms. Holtzman maintained, in para. 28, that:

It is trite law that these [items] are recognized as heads of compensable damages. The Respondent gave evidence testifying to these matters…Clearly, the Trial Judge accepted her evidence and awarded damages accordingly.

[64] No authority was cited.

[65] Writing on behalf of the court in Healey v. Lakeridge Health Corporation, 2011 ONCA 55 at para. 60, Sharpe J.A. noted that the weight of authority supported the proposition that persons claiming psychological injury “are required to show that they suffer from a recognizable psychiatric illness.” In applying the principles, Sharpe J.A. wrote at paras. 64-65:

The harm revealed by the evidence was not “serious trauma or illness that amounted to more than “upset, disgust, anxiety, agitation or other mental stages that fall short of injury” or that was “serious and prolonged and [rising] above the ordinary annoyances, anxieties and fears that people living in society routinely, if sometimes reluctantly, accept.

…there are strong policy reasons for imposing some sort of threshold…The law quite properly insists upon an objective threshold to screen such claims and to refuse compensation unless the injury is serious and prolonged.

[66] Such evidence was entirely absent here.

[67] The decision to award punitive or exemplary damages is similarly unsustainable. As noted, the Deputy Judge stated that “the same were payable based on the actions of Suite Collections due to their negligence.”

[68] Negligence is not a reason to award such damages. It is well established that “punitive damages are designed to address the purposes of retribution, deterrence and denunciation.”[^5]

[69] In Honda Canada Inc. v. Keays, 2008 SCC 39, [2008] 2 S.C.R. 362, Bastarache J. wrote at page 63:

…punitive damages are restricted to advertent wrongful acts that are so malicious that they are deserving of punishment on their own. This distinction must guide judges on their analysis. [Italics added]

[70] Selective evidence was led. The Deputy Judge was not referred to Suite Collection’s first notice dated July 4, 2011 or to the letter of September 14, 2011 admitting an error, apologizing and promising immediate remedial action.

[71] Even so, there was nothing in the evidence – or in the Deputy Judge’s findings – that warranted retribution, deterrence and denunciation. Suite Collections was aggressive and sloppy. Many would add an adjective to that description. However, there was no evidence of an advertent or malicious act.

[72] The Deputy Judge concluded that Suite Collections had failed to comply with sections 21 and 22 of the regulation made pursuant to the Collection Agencies Act but did not identify the subsections involved, the manner in which they were contravened or what, if anything, flowed from the breach.

[73] The actions of Suite Collections were undoubtedly frustrating. Ms. Holtzman had no part to play in the creation of or responsibility for the rental arrears. She should not have been troubled with Mr. McAvoy’s issue for even an instant. However, an award of punitive damages in response to careless conduct is not, in my view, appropriate or sustainable in law.

D. The Judgment against Mr. Aromolaran and TransGlobe

[74] I also agree with the appellants that judgment should not have been granted against Mr. Aromolaran. The basis for a claim against him was never articulated. Mr. Aromolaran was described in Ms. Holtzman’s pleading as the “contact” at Suite Collections.

[75] In the defence, Suite Collections admitted that he was its employee. It specifically requested that he be removed from the action. I recognize that the defence was struck by the Deputy Judge. However, even if the allegations in the claim were accepted as true, there was no legal basis to impose personal liability on Mr. Aromolaran.

[76] However, the judgment against TransGlobe was sustainable. Ms. Holtzman alleged that TransGlobe was liable for a failure “to properly instruct Suite Collections.” The defence did not differentiate between the two corporate defendants in any meaningful respect.[^6] There was a basis to impose liability on both entities.

E. Conclusion and Costs

[77] For the reasons given, the appeal is allowed in part. The award of punitive or exemplary damages is set aside. The award on account of general damages is reduced to $565. Interest should accrue in accordance with the Courts of Justice Act from November 7, 2010 onward.[^7] Insofar as Mr. Aromolaran is concerned, the action is dismissed.

[78] Success on the appeal has been divided. In the circumstances, there shall be no costs of the appeal.

“Justice A.D. Grace”

Grace J.

Released: July 3, 2013

[^1]: The August 12, September 13 and September14, 2010 communications were not made exhibits at trial. They were appended to the claim. [^2]: The copy of a fax addressed to Equifax Canada requesting removal of Ms. Holtzman dated September 14, 2010 appended to the defence was not referred to the Deputy Judge. It is not clear whether the fax was actually sent or not. [^3]: I do not know what costs were awarded earlier or why. [^4]: See note 2 above. [^5]: Whiten v. Pilot Insurance Co., [2002] 1(S.C.R.) 595; Fidler v. Sun Life Assurance Co. of Canada, 2006 SCC 30, [2006] 2 S.C.R. 3. [^6]: In fact, it simply indicated that TransGlobe had assigned the file for collection. [^7]: Mr. Phillips’ account is dated October 7, 2010. Interest should accrue commencing 30 days after that date.