CITATION: Autometric Autobody Inc. v. High Performance Coatings Inc., 2014 ONSC 6073
DIVISIONAL COURT FILE NO.: DC-13-0062-00 DATE: 20141020
ONTARIO SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
Hambly, D. Brown and Gilmore JJ.
BETWEEN:
Autometric Autobody Inc. Plaintiff (Respondent)
– and –
High Performance Coatings Inc. Defendant (Appellant)
No one appearing for the Respondent G. Barosan, for the Appellant
HEARD at Brampton: October 20, 2014
D. Brown J. (Orally)
I. Nature of Appeal
[1] High Performance Coatings Inc. (“HPC”) commenced a Small Claims Court action against Autometric Autobody Inc. on January 13, 2011 seeking liquidated damages in the amount of $22,927.70 for goods sold and delivered (the “SCC Claim”). On February 21, 2011, Autometric filed a Statement of Defence and, as well, initiated a Defendant’s Claim seeking damages of $25,000 alleging that HPC had agreed, in May 2009, to remove and sell certain Autometric equipment and to pay it the sale proceeds (the “SCC Counterclaim”). Autometric alleged that in June, 2010, it had told HPC either to return the removed equipment or to pay it the sale proceeds, which HPC failed to do. Autometric also alleged that some paint purchased from HPC at some unspecified date was defective, resulting in an unspecified loss of revenue to it.
[2] The trial of HPC’s SCC Claim was scheduled to take place on July 6, 2012. Two weeks before the trial date, on June 20, 2012, Autometric commenced an action against HPC in the Superior Court of Justice seeking an increased amount of $45,783.10 for the breach of the May, 2009 removal/sale agreement and supply of defective paint (the “SCJ Action”).
[3] On July 4, 2012 a Deputy Judge heard a motion by Autometric for leave to amend its SCC Counterclaim to increase the damages claimed to $45,783.10 – the same amount sought in the new SCJ action – and for leave to transfer its SCC Counterclaim to the Superior Court because the amount of the amended counter-claim exceed the monetary jurisdiction of that court. The affidavits filed by Autometric in support of its amendment motion and its transfer motion were sworn by a law clerk from its counsel’s office and did not attach any documentary evidence to support the increased claim of $45,783.10. The Deputy Judge adjourned the motion to the judge hearing HPC’s trial on July 6, 2012. On that day the Deputy Judge adjourned the matter and directed Autometric to proceed with its contemplated transfer motion before August 15, 2012.
[4] That motion was argued before Snowie J. of the Superior Court of Justice on August 30, 2012. The motions judge granted the motion, ordered both the SCC Claim and Counterclaim to be transferred to the Superior Court of Justice and tried together with the SCJ Action. The motions judge also ordered HPC to pay Autometric costs in the amount of $2,711.63. In support of that order, the motions judge made the following endorsement:
This court has an inherent jurisdiction to transfer actions to and from the Small Claims Court. This matter is presently before the Small Claims Court. There is a claim and counterclaim. Autometric has reviewed their accounts and as a result is seeking to amend their quantum of damages sought. This quantum takes them outside of the jurisdiction of the Small Claims Court. As a result, the Small Claims Court has referred them to the Superior Court. Having read the material and heard argument from both counsel, this Court makes the following findings: (1) There is no prejudice to the defendant (High Performance) as they are not taken by surprise. There is no new cause of action. This is simply an increase in the quantum of damages sought. The new quantum sought is based upon the facts already pled. The claim is identical except for the quantum.
As such, this Court orders that the relief sought in paragraphs 1 + 2 of the notice of motion dated July 24, 2012, is granted.
By order made May 31, 2013, Belleghem J. granted leave to appeal from the order of the motions judge.
[5] Autometric did not file any responding materials on this appeal or appear at the hearing of the appeal.
II. Analysis
[6] The Small Claims Court exists to provide claimants with a forum in which claims for the payment of money or the recovery of possession of personal property which do not exceed $25,000 may be heard and determined in a “summary way” and where the court “may make such order as is considered just and agreeable to good conscience.”[^1] The importance placed by the Legislature on the availability of such a summary adjudicative process for civil claims of modest amounts finds reflection in s. 107 of the Courts of Justice Act which gives great weight to the decision of the plaintiff to commence a claim within the monetary jurisdiction of the Small Claims Court. Sections 107(2) and (3) of the Courts of Justice Act provide that a Small Claims Court proceeding shall not be transferred to the Superior Court of Justice “without the consent of the plaintiff in the proceeding in the Small Claims Court” nor may a proceeding in the Small Claims Court be required to be asserted by way of counterclaim in a Superior Court proceeding “without the consent of the plaintiff in the proceeding in the Small Claims Court”.
[7] In Vigna v. Toronto Stock Exchange[^2] this Court recognized that a judge of the Superior Court of Justice possesses the inherent jurisdiction to transfer a Small Claims Court action to the Superior Court without the consent of the plaintiff, but only in the “rare” case. The holding in Vigna must be understood in its context – a “test case” commenced by an indirect holder of Bre-X shares who wanted to litigate the issue of the duties owed by stock exchanges to investors. Other actions which raised the same issue had been commenced in the Superior Court of Justice, so it was not surprising that the Divisional Court concluded that the complex issues raised by the Small Claims Court proceeding – which would require expert evidence to adjudicate - should be considered together with the Superior Court actions.
[8] In Vigna this Court described the inquiry a motions judge must make when considering whether to exercise the Court’s inherent jurisdiction to transfer a Small Claims Court action to the Superior Court:
We do not mean it to be taken that a transfer should be made in every case where it is requested. It is important for the court to scrutinize the issues raised where such a request is made to determine whether those issues are capable of being justly and fairly resolved by the procedures available in Small Claims Court. In many if not most cases the Small Claims Court procedures will suffice. This particular case is, in our view, one of the exceptions where the issues raised are of such a nature and complexity that the available procedures are insufficient for their just and fair determination on the merits.[^3]
[9] In the present case, the motions judge did not make the inquiry directed by this Court in the Vigna case. Instead, the motions judge focused only on whether the transfer of the SCC Claim would prejudice HPC. I conclude, with respect, that the motions judge exercised the discretion which she enjoyed as a matter of inherent jurisdiction on wrong principles and thereby committed a reviewable error. The motions judge failed to inquire whether the issues raised in the SCC Claim and Counterclaim were capable of being justly and fairly resolved by the procedures available in the Small Claims Court.
[10] Had the proper inquiry been made, it is clear from the pleadings that the SCC Claim and Counterclaim raised issues which were more than capable of being justly and fairly resolved by Small Claims Court procedures. Neither the SCC Claim nor Counterclaim were complex: the Claim was for goods sold and delivered, and the Counterclaim for an accounting of the sale proceeds for the equipment sold by HPC and an unquantified loss caused by allegedly defective paint supplied. This Small Claims Court proceeding was precisely the type of case meant for adjudication in the Small Claims Court.
[11] I conclude that the motions judge exercised her discretion on wrong principles, and therefore the appeal is allowed and the August 30, 2012 Order is set aside. The SCC Claim and SCC Counterclaim shall continue in the Small Claims Court.
[12] In its appeal HPC did not seek any relief in respect of Autometric’s SCJ Action. Allowing the appeal would result in concurrent proceedings in the Small Claims Court and the Superior Court of Justice. However, as Gordon J. observed in Vista Sudbury Hotel Inc. v. Double T Earth Moving Ltd., such a result is contemplated by s. 107 of the CJA:
Vista has not cited any case which would allow for relief under Section 107(1)(d) absent the consent of the plaintiff in the Small Claims Court proceeding. That is probably for good reason. Section 107 clearly contemplates coincident actions in the Small Claims Court and the Superior Court of Justice that may involve common parties, common issues of fact and common issues of law. The section clearly contemplates the existence in these two courts of separate actions involving claims for relief arising out of the same transactions or occurrences. It would be fair to assume that the drafters of this legislation were also aware of section 138 which seeks to avoid multiplicity of actions. Notwithstanding, the legislation prohibits the requested order unless the plaintiff in the Small Claims Court action consents.
One might reasonably conclude that policy considerations concerning the right of a Small Claims Court plaintiff to get his or her matter heard expeditiously and inexpensively in the Small Claims Court was thought to override concerns about res judicata, potentially conflicting findings, and multiplicity of proceedings.[^4]
[13] In its Notice of Appeal HPC sought an order denying Autometric’s request to increase the quantum of damages sought in its SCC Counterclaim beyond the jurisdictional limit of the Small Claims Court. The Order appealed from did not deal with that issue, therefore it would not be appropriate for this Court to entertain HPC’s request on that issue.
[14] Over two years have now elapsed since the trial date originally fixed for the Small Claims Court proceeding. Such a delay is inconsistent with the purpose of that Court. The Small Claims Court proceeding should go to trial as soon as reasonably possible.
[15] The Respondent, Autometric, shall pay the Appellant, HPC, partial indemnity costs of the appeal fixed in the amount of $5,000.00.
___________________________ D. Brown J.
Hambly J.
Gilmore J.
Released: October 20, 2014
Autometric Autobody Inc. v. High Performance Coatings Inc., 2014 ONSC 6073
DIVISIONAL COURT FILE NO.: DC-13-0062-00 DATE: 20141020
ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT
Hambly, D. Brown and Gilmore JJ.
BETWEEN:
Autometric Autobody Inc. Plaintiff (Respondent)
– and –
High Performance Coatings Inc. Defendant(Appellant)
REASONS FOR JUDGMENT
D. Brown J.
Released: October 20, 2014
[^1]: Courts of Justice Act, R.S.O. 1990, c. C.43, ss. 23 and 25. [^2]: [1998] O.J. No. 4924 [^3]: Ibid., para. 7. [^4]: 2011 ONSC 3454, paras. 13 and 14.