ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
BETWEEN:
HALTON REGIONAL POUND FACILITY AND ROYAL WINDSOR COLLISION CENTRE
Adam Jarvis, for the Plaintiff (Appellants)
Plaintiff (Appellant)
- and -
JOHN HOLLAND, PAULINE GAGNON, MICHAEL PADMORE AND DAVID MELICSON
Michal C. Baura, for the Defendants (Respondents)
Defendants (Respondents)
HEARD: March 21, 2014
REASONS FOR DECISION
EMERY J
1The appellant Halton Regional Pound Facility (“Halton”) appeals from an order made by Deputy Judge L. Oliver in each of four actions heard together and dismissed on June 18, 2013. The appellant Royal Windsor Collision Centre (“Royal Windsor”) was an additional plaintiff in Court File No. DC-13-80 (the “Gagnon action”), one of the actions dismissed by the learned deputy judge.
2The four appeals were consolidated and heard at the same time pursuant to the Order made by Madam Justice Donohue on August 12, 2013. Each of them concern common issues with respect to the application of the Repair and Storage Lien Act (the “RSLA”) to the evidence, and because the learned deputy judge dismissed those claims on a nonsuit motion before they had completed their case.
3The appellants seek an order to set aside the dismissal of each action and an order from this court directing a new trial of those claims.
BACKGROUND
4Each of the four respondents was the owner of a motor vehicle that had been involved in an accident of some sort within the City of Mississauga. On each occasion, a towing company by the name of Westside Towing and Recovery Inc. (“Westside”) appeared at the scene on an unsolicited basis and towed the owners’ motor vehicle. Each time, Westside would have the owner sign a towing invoice and permission to tow a vehicle form required by the relevant bylaw of the City of Mississauga.
5In each of the four cases, Westside towed the motor vehicle to Halton’s yard at 2247 Royal Windsor Drive in Oakville. This location in Oakville was just across the border between the Regional Municipalities of Halton and Peel that separates the City of Mississauga from the Town of Oakville.
6According to the evidence given at trial, the owner or insurer of the motor vehicle would then attend at Halton to sign an invoice for storage. That invoice would also include a towing fee. David Smart, the consultant for Halton who testified at trial on its behalf, explained that Halton paid Westside in cash for towing services and had essentially taken an assignment for that amount. It is an important part of Halton’s appeal that each motor vehicle owner or their insurer signed a contractual document with Halton separate and apart from Westside’s initial towing invoice.
7In the actions against the respondents Holland, Padmore and Melicson, the motor vehicles were found to be damaged beyond repair and written off. In each of those actions, Halton claims for storage of the salvage at $80 a day in addition to the towing charges it paid to Westside. In the Gagnon action, the motor vehicle was found to be repairable. In addition to the claim for payment of the towing fee and the storage charges incurred by Halton, Royal Windsor repaired that motor vehicle and invoiced that owner for making those repairs. Halton and Royal Windsor respectively claimed possessory liens under the RSLA for amounts owing from the owner of each motor vehicle.
8The Dominion of Canada General Insurance Company (“The Dominion”) insured each of the four motor vehicles. Pursuant to section 24 of the RSLA, The Dominion paid a deposit into court as security for the claimants’ lien in order to dispute the lien, recover that particular motor vehicle for salvage or for return to the owner and to stop incurring further storage charges. In each of the four applications for an initial certificate under section 24. The Dominion disputed the claim for the storage and repair of that motor vehicle on the basis that Halton had charged excessive and unreasonable amounts for towing and storage that were not in line with the normal or industry accepted charges in the area. In respect of Royal Windsor, The Dominion stated that Ms. Gagnon had been pressured into signing the work order for Royal Windsor while she was still hospitalized.
9The plaintiffs commenced their actions for full payment of all invoices rendered and liens asserted under the RSLA against the money deposited in court by The Dominion on behalf of the insureds. Each action named the specific owner of that motor vehicle as a defendant. Although each owner was named as the defendant in the action relating to a specific lien, The Dominion and its address also appeared in the address box for that defendant.
10The Dominion defended each action on behalf of the insured named as the defendant. In each defence, The Dominion pleaded as follows:
- At no time did the Dominion communicate and/or agree to pay the towing and storage fees for the subject motor vehicle following the motor vehicle accident from which the amounts claimed in the plaintiffs claim arise. The proper party to this action is the owner, there is no privity of contract between the Dominion and the Plaintiff.
11It would appear from reading each defence in its entirety that The Dominion disputed the amount charged for the towing and storage claimed as the primary defence. In the case of Gagnon, The Dominion also pleaded that no contract had been formed between Royal Windsor and Gagnon on contract law principles or because the defendant owner had rescinded the work order under the Consumer Protection Act.
12In the course of the cross-examination of David Smart, the court ordered the agent presenting the case on behalf of the plaintiff to show her entire file to counsel for the defendants. After that review, counsel for the defendants took the position that he was seeing various documents for the first time and that those documents created issues about whether the plaintiffs were entitled to a lien in the first place. He argued that the original owners signed the towing invoice and permission to tow forms required by the City of Mississauga with Westside, and not with Halton. On the basis of section 1(2) of the RSLA, counsel for the defendants argued that Halton was not entitled to assert a lien at all. Section 1(2) of the Act states as follows:
Repair, etc., by third party
(2) The following rules apply where an article is left for repair, storage or storage and repair and the article is forwarded by the person with whom the article is left to some other person for the repair, storage or storage and repair:
The person with whom the article was left shall be deemed to have performed the services and to be entitled to the rights of a repairer or storer against the person who left the article unless,
i. there is a written agreement between the person who left the article and the person with whom it was left that there is no lien, or
ii. the person with whom the article was left has agreed to act as agent for the person who left the article in forwarding it to an identified repairer or storer for the repair, storage or storage and repair.
- Unless subparagraph ii of paragraph 1 applies, the person to whom the article was forwarded does not have a lien under this Act. R.S.O. 1990, c. R.25, s. 1 (2).
13The plaintiffs took the position that the Halton invoice signed by the owner or by The Dominion as their agent in each case was a separate contract giving rise to a new lien that was separate and distinct from the towing invoice with Westside. In the course of discussion on the record with the court about what the new documents might mean to the case, counsel for the defendants made the following submission:
So, there are a couple of ways we can proceed from here. My respectful submission, it would be appropriate to dismiss the case and have to bring a new case that actually deals with the things we’re dealing with, and at the interim, the insurance companies should to be able to take their money back out of Court and this can start as a regular piece of litigation for breach of contract, if that is indeed what it is. Alternatively, if you’re not inclined to dismiss the cases, the files should be copied in their entirety, front and back, and this matter should be adjourned to another day with new witness lists. …
ANALYSIS
14The reason for Deputy Judge Oliver’s decision to dismiss the actions were as short as they were succinct:
Are right, I will read you my endorsement. These four actions proceeded to trial today; there was one witness for both plaintiffs, Mr. Smart. Although asked about his relationship with the companies for whom he works as a consultant, it was not until pressed under cross-examination that he acknowledged that his wife was the owner of one of the plaintiff companies. The claims in this case all relate to vehicles that were in motor vehicle accidents.
In each case, the same tow truck company attended at the scene unsolicited. In each case, the tow truck company took the vehicles to the plaintiffs’ company or companies. The defendant, accident victims, left the vehicles with the tow truck drivers and did not express a choice or desire as to where the vehicles were taken.
In these circumstances then, it is clear that Section 1(2) of the Repair and Storage Liens Act is the appropriate legislative provision under which these cases are to be decided.
In the middle of cross-examination of Mr. Smart, it became apparent that there had been documents of relevance that had not previously been produced. After having finally had the ability to fully review these documents, defendants counsel moved that the claims, as plead, be dismissed.
After hearing submissions, I am satisfied that the claims as framed are not properly before this Court. I was not convinced after hearing the plaintiffs’ evidence in-chief that the claims were properly framed in that the plaintiffs knew full well that they were dealing with the insurance company, but they have sued the individual drivers of the vehicles. Even if the drivers could bind the insurance company, which they cannot, the claims ought to have been framed as against the insurance company. The plaintiffs knew they were dealing with the insurance company. The authorization to undertake the repair or storage in the first place, ought to have come from for even been affirmed by the insurance company. There is no evidence to suggest that this was done.
These defendants clearly left their vehicles with the tow truck company who then, on their own accord, elected to take the vehicles to the plaintiff company or companies. Mechanically then, the claims are not properly pled and are dismissed. All funds paid into Court to the credit of these actions shall be returned and/or paid out to Dominion Insurance.
15The question before this court is whether the learned deputy judge erred by finding that each of the actions was not framed between the proper parties, or in making that determination before the plaintiff had completed its case on a nonsuit motion. If the learned deputy judge erred in one or both ways, this court must then determine if as a result there has been a miscarriage of justice that requires a new trial of those actions.
PROPER PARTIES
16Counsel on this appeal agree that the standard of review on the issue whether the learned deputy judge erred in her conclusions that either the wrong plaintiff had been named as the party who has claimed the lien against each motor vehicle, or the wrong defendant had been named on the basis of privity of contract is a question of fact or mixed fact and law. Accordingly, they agree the standard of appellate review is whether the learned deputy judge made a palpable and overriding error.
17Counsel for the appellants argue that the learned deputy judge dismissed the actions on the basis that she found the wrong party was named as the defendant in each claim. The appellants took from the reasons for judgment that the learned deputy judge concluded in each action that The Dominion was the proper defendant, not the owner of that motor vehicle. Counsel for the respondents took the view that the court had dismissed each claim because Westside and not Halton or Royal Windsor had lien rights, and therefore only Westside could be the proper plaintiff. In this curious circumstance where the findings of the learned deputy judge have been read different ways, it is necessary to determine if an arguable case can be made that the proper parties were named to the extent possible on the limited evidence given at trial.
18Rule 18.02 of the Rules of the Small Claims Court provides that a document that has been served at least 30 days before the trial date on all other parties who were served with the notice of trial should be received in evidence, unless the trial judge orders otherwise. The documents attached to the plaintiff’s claim in each action were the Westside invoice signed by the owner, permission to tow a vehicle signed by the owner, application for an initial certificate under section 24 of the RSLA and the Halton invoice signed by the owner or the representative of The Dominion as the owner’s agent. In the Gagnon action, the work order for Royal Windsor was signed by Mrs. Gagnon. These documents were received in evidence under Rule 18.02.
19The appellants relied upon the Westside invoices in each action to establish the lien claims. In the course of the cross-examination of David Smart, the learned deputy judge ordered Halton to disclose all files on each claim to counsel for the defendant. It was at this time that the terms and conditions attached to the Halton invoices were first disclosed.
20The appellants take the position that the learned deputy judge based her decision to dismiss the actions for the reason that the wrong defendant had been named in those actions. In my view, the deputy judge could have been clearer in her reasons for decision. If this was the basis for dismissing each action, I find that the learned deputy judge made a palpable and overriding error as it is clear and obvious from the documents attached to the claims under Rule 18.02 that the towing invoice created a contract between Westside and each owner for the sole purpose of towing that particular motor vehicle from the accident site. The question becomes whether the Halton invoice created a contractual relationship between Halton and each motor vehicle owner for at least the storage of that motor vehicle to give lien rights to Halton under the RSLA.
21The RSLA separates those liens available to a repairer from those available to a storer. Each type of lien is subject to the existence of an agreement or an underlying circumstance contemplated by the statute in the absence of an agreement. For the purposes of this appeal, section 3(1) relating to a repairer lien and subsection 4(1) and (3) relating to a storers lien read as follows:
Repairer’s lien
- (1) In the absence of a written agreement to the contrary, a repairer has a lien against an article that the repairer has repaired for an amount equal to,
(a) the amount that the person who requested the repair agreed to pay;
(b) where no such amount has been agreed upon, the fair value of the repair; or
(c) where only part of a repair is completed, the fair value of the part completed,
and the repairer may retain possession of the article until the amount is paid. R.S.O. 1990, c. R.25, s. 3 (1).
Storer’s lien
- (1) Subject to subsection (2), a storer has a lien against an article that the storer has stored or stored and repaired for an amount equal to,
(a) the amount agreed upon for the storage or storage and repair of the article;
(b) where no such amount has been agreed upon, the fair value of the storage or storage and repair, including all lawful claims for money advanced, interest on money advanced, insurance, transportation, labour, weighing, packing and other expenses incurred in relation to the storage or storage and repair of the article,
and the storer may retain possession of the article until the amount is paid. R.S.O. 1990, c. R.25, s. 4 (1).
When lien arises
(3) A storer’s lien arises and takes effect when the storer receives possession of the article for storage or storage and repair, except that no storer’s lien arises with respect to repair if the storer was required to comply with sections 56 and 57, subsection 58 (1) and section 59 of the Consumer Protection Act, 2002, if applicable, and the storer has not done so. 2006, c. 19, Sched. G, s. 10 (2).
22In the case of Royal Windsor, the authorities have established that a work order may pre-authorize the repair work to be done and the lien that may arise in the event of nonpayment even if a specific amount for the repair work is not set out: Dean Capital Corporation v. Genea Automobiles Limited 1996 10241 (SCJ).
23In Halton’s case, the invoice signed by each owner or by The Dominion as his or her agent was either a subsequent contract or an acknowledgement of indebtedness for the storage of the article, and contained the amounts required by statute for a possessory lien. Even if section 1(2) has some applicability to the facts, section 4(4) addresses circumstances where a storer receives an article from a party other than the owner. In that situation, the storer is required to give the notice required by sections 4(4)(c) and 4(5) to any person who is an owner or who has an interest in the article within 60 days of taking possession. If the storer does not, section 4(6) limits the storage claims to 60 days: Giorgianni v. Schaer and Stacey 2007 ONCA 111. Section 4(4) reads as follows:
Notice to owner, etc., in certain cases
(4) Where the storer knows or has reason to believe that possession of an article subject to a lien was received from a person other than,
(a) its owner; or
(b) a person having its owner’s authority,
the storer, within sixty days after the day of receiving the article, shall give written notice of the lien,
(c) to every person whom the storer knows or has reason to believe is the owner or has an interest in the article, including every person who has a security interest in the article that is perfected by registration under the Personal Property Security Act against the name of the person whom the storer knows or has reason to believe is the owner; and
(d) in addition to the notices required by clause (c) where the article is a vehicle,
(i) to every person who has a registered claim for lien against the article under Part II of this Act,
(ii) to every person who has a security interest in the vehicle that is perfected by registration under the Personal Property Security Act against the vehicle identification number of the vehicle, and
(iii) if the vehicle is registered under the Highway Traffic Act, to the registered owner. R.S.O. 1990, c. R.25, s. 4 (4).
24It would appear from the transcript of trial proceedings that the learned deputy judge did not consider these sections, or how they might apply to the evidence given up to the point she dismissed the actions. In doing so, the trial judge made a palpable and overriding error.
25I find the documents attached to the claims to be sufficient to create a contractual relationship between Halton and each owner, and in the case of the Gagnon action, as between Mrs. Gagnon and Royal Windsor. Where an owner did not sign the Halton invoice, The Dominion signed that invoice as agent for the owner to create the contractual relationship. Therefore, each of the four actions correctly named the motor vehicle owner as the proper defendant. This conclusion is supported by The Dominion’s position pleaded in the defence filed for each owner that the owner was the proper defendant named.
26The question whether the learned deputy judge made a palpable and overriding error in her finding of fact that Halton and Royal Windsor were not the properly named plaintiffs as lien claimants is more problematic.
27The respondents refer the court to the decision in Argiris v. Di Marco 2000 CarswellOnt 4855 (SCJ) as authority to determine the entitlement to lien rights under the RSLA where an article has been forwarded to a third party. In that case, the owner of the motor vehicle, Argiris wished to offer his 1976 Corvette Stingray for sale by putting it on display at the place of business of his friend, Chris Mithis. Subsequently, Mithis rented his shop to a third party Miscas who moved the car to the residence of one Di Marco. After the Corvette had been moved to the Di Marco residence, Di Marco sent a notice to Argiris advising him that he would allow up to 30 days without charging storage, and after that he would charge $15 per day.
28Justice Hoilett found that the evidence fell short of establishing on a balance of probabilities the existence of a lien because there was no evidence of any contract between Argiris as the vehicle owner and Di Marco as the ultimate storer, or any evidence of a contract entered into between Di Marco and a properly authorized agent for Argiris. Justice Hoilett also found that the notice to charge for storage allegedly given by Di Marco failed to comply with the notice provisions of the Act. The court consequently found that Di Marco had failed to establish the existence of a lien, primarily on the basis that there was no contract between the car owner and the ultimate storer.
29Argiris can be distinguished on the facts from the four actions under appeal. The Halton invoice constitutes a new or intervening contract between Halton and each car subsequent to any invoice signed by that owner with Westside. Unfortunately, the terms and conditions of the Halton invoice were not attached to each claim to be received in evidence under Rule 18.02. Whether the learned deputy judge erred by not permitting those terms and conditions to be introduced as an exhibit at trial during the cross-examination of David Smart, or whether those terms and conditions could have been introduced as exhibit at trial had the plaintiffs been given the opportunity to re-examine David Smart or through another witness they might have called cannot be determined from the record.
NONSUIT
30Whether the learned deputy judge erred by hearing the defendant’s motion for a nonsuit before the plaintiffs had completed their case is a question of law. The standard of appellate review is therefore one of correctness.
31I must first determine if the defendant made a motion for nonsuit at all. Counsel for the defendant, after reviewing the files of the plaintiff’s, proposed that the actions either be dismissed in order that the plaintiffs or other parties might bring a new case that actually dealt with the matters at issue, or alternatively that the plaintiffs’ files be copied in their entirety and that the matter “be adjourned to another day with new witness lists”. The learned deputy judge either chose between those two alternatives or brought the motion for nonsuit on her own initiative.
32Rule 12 provides for the amendment, striking out, stay or dismissal of a claim or defence. Rule 12.02(1) and (2) read on June 18, 2013 as follows:
Motion to Strike out or Amend a Document
12.02 (1) The court may, on motion, strike out or amend all or part of any document that,
(a) discloses no reasonable cause of action or defence;
(b) may delay or make it difficult to have a fair trial; or
(c) is inflammatory, a waste of time, a nuisance or an abuse of the court's process. O. Reg. 78/06, s. 26.
(2) In connection with an order striking out or amending a document under subrule (1), the court may do one or more of the following:
In the case of a claim, order that the action be stayed or dismissed.
In the case of a defence, strike out the defence and grant judgment.
Impose such terms as are just. O. Reg. 78/06, s. 26.
33Rule 15.01 requires that a motion shall be made by notice of motion and supporting affidavit. The notice of motion and supporting affidavit shall be served on every party at least seven days before the hearing date. If the defendant made a motion for dismissal of each action on the basis that the plaintiffs had no reasonable cause of action, this motion should have been made on notice under Rule 12.02 and not in the middle of trial. Further, the motion was not brought in accordance with Rule 15.01.
34If the motion was truly a motion for a nonsuit at law and not a motion to dismiss the action for having no reasonable cause of action, the common law rules relating to a nonsuit apply. The Court of Appeal in FL Receivables Trust 2002-A v. Cobrand Foods Ltd., 2007 ONCA 425 set out the limited inquiry for the court on a nonsuit as follows:
35 On a non-suit motion, the trial judge undertakes a limited inquiry. Two relevant principles that guide this inquiry are these. First, if a plaintiff puts forward some evidence on all elements of its claim, the judge must dismiss the motion. Second, in assessing whether a plaintiff has made out a prima facie case, the judge must assume the evidence to be true and must assign "the most favourable meaning" to evidence capable of giving rise to competing inferences. …
35It is customary then for the court to put the defendant moving for a nonsuit to the election of whether to call evidence. If the defendant elects not to call evidence, the motion is determined then and there. If the defendant elects to call evidence, the trial judge normally reserves the decision on the motion to the end of trial.
36Here, the learned deputy judge did not put the defendant to the election of calling evidence at all.
37The FL Receivables Trust case also makes it clear that a motion for nonsuit should only be made after the plaintiff completes its case. Here, the learned deputy judge made her ruling before the plaintiff closed the case in each action.
38The learned trial judge should not have dismissed the actions before hearing all of the plaintiffs’ case. The court must have that evidence to determine if the facts, if accepted, will be found in the plaintiffs favour. In Bu v. Xie 2013 ONSC 6365, Justice Himel, on an appeal of a Small Claims Court dismissal of the plaintiff’s claim on a nonsuit motion following the plaintiff’s case, stated that:
7 On a motion for non-suit in a civil action, the trial judge must decide whether a reasonable trier of fact could find in the plaintiff's favour if he or she believed the evidence given in the trial up to that point. The issue is not whether to accept the evidence but whether the inference that the plaintiff seeks in his favour could be drawn from the evidence adduced if the trier of fact chose to accept it. The ruling by the trial judge on a non-suit motion is a question of law: see Bryant, Lederman and Feurst, The Law of Evidence in Canada, Third Edition (LexisNexis: Toronto, 2009) at p. 183.
39It is a fundamental rule of fairness that the court shall not decide an action on issues not contained in the pleadings: Rodaro v. Royal Bank of Canada 2002 41834 (Ont. C.A.) and also Bulut v. Carter, 2014 ONCA 424.
40In the four actions on this appeal, the issue of whether Halton and Royal Windsor were the proper lien claimants was not pleaded in defence of those actions. All that was pleaded in each instance was a denial that the essential elements had not been agreed upon to form a contract. The issue of whether those plaintiffs were the proper lien claimants was therefore not squarely before the learned deputy judge and consequently not an appropriate basis for the dismissal of those actions.
41For these reasons, I find that the learned deputy judge erred in law by considering that a nonsuit motion was before her in the course of Mr. Smart’s cross-examination, and by granting that motion to nonsuit the plaintiffs.
DISPOSITION
42Not every appeal results in an order for a new trial. Section 134(6) of the Courts of Justice Act provides that the court should order a new trial only where “some substantial wrong or miscarriage of justice has occurred”. In view of my findings, the question then becomes whether there has been a substantial wrong or miscarriage of justice that requires a new trial.
43I find that a new trial is required. The plaintiffs were surely taken by surprise when the “proper party” issue emerged, and when it took on increasing importance at trial. There may have been a different result had they had been given notice of the issue in a defence, more time to prepare, or an opportunity to call more evidence to address the issue at trial. The plaintiffs were denied this procedural fairness by the court, even if inadvertently. Counsel for the defendants offered two alternatives for the court to consider in the course of his submissions at trial, one of them being to adjourn the trial to receive the plaintiffs’ file disclosed to him at the hearing, and then to resume the trial with new witness lists. The outcome of the appeal effectively takes this route.
44If the pleadings require amendment and further documents are required as attachments under Rule 18.02, it is incumbent on the parties to properly frame and document their case for the new trial.
45In view of the foregoing, there will be the following orders:
The dismissal in each of the four actions is hereby set aside.
The plaintiffs in each action are granted leave to amend the claim by July 11, 2014. Each plaintiff shall serve the amended claim on counsel for the defendant immediately upon amending each claim.
The defendant in each amended claim shall have leave to amend each defence by July 25, 2014.
I order a new trial of each claim.
The security paid into court pursuant to section 24 of the RSLA in each action shall remain in court until judgment after the trial of each claim.
The costs of the trial on June 18, 2013 and of the new trial are reserved to the deputy judge hearing the new trial.
The trial of the four actions shall be heard together.
46If the parties cannot agree on the costs of this appeal, I invite submissions from the appellants by July 11, 2014 and submissions from counsel for the respondents by July 25, 2014. Each submission shall consist of no more than four pages, to be faxed to Judges’ Chambers at 905-456-4834 to the attention of my Judicial Assistant, Sherry McHady. If submissions are not received by July 25, 2014 then the question of costs shall be deemed to be resolved as between the parties.
__________________________
EMERY J
Released: June 26, 2014
CITATION: Halton Regional Pound Facility v. Holland, 2014 ONSC 3776
COURT FILE NO.: DC-13-79, DC-13-80, DC-13-81 & DC-13-82
DATE: 2014 06 26
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
HALTON REGIONAL POUND FACILITY AND ROYAL WINDSOR COLLISION CENTRE
Plaintiff (Appellant)
- and -
JOHN HOLLAND, PAULINE GAGNON, MICHAEL PADMORE AND DAVID MELICSON
Defendants (Respondents)
REASONS FOR DECISION
EMERY J
Released: June 26, 2014