CITATION: Mercedes-Benz v. Zhang, 2015 ONSC 986
DIVISIONAL COURT FILE NO.: DC-13-00556-00
DATE: 20150213
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
BETWEEN:
Mercedes-Benz Financial Services Canada Corporation, A Business Unit of DCFS Canada Corp.
Ron Aisenberg, for the Plaintiff/ Respondent in Appeal
Plaintiff/Respondent in Appeal
- and -
Yin Zhang
Jeffrey Radnoff, for the Defendant/Appellant in Appeal
Defendant/Appellant in Appeal
HEARD: February 6, 2015
EDWARDS J:
[1] This is an appeal of a decision of Deputy Judge Gollom released on April 17, 2013 awarding the plaintiff judgment against the defendant for the sum of $18,969.15 plus interest, fixed at the rate of 20 percent per annum from March 8, 2011 through April 17, 2012 and thereafter with post-judgment interest fixed at 20 percent per annum.
[2] The plaintiff’s claim arises out of a lease of a 2008 Mercedes-Benz ML350 (“the vehicle”). The lease is dated June 17, 2008. The monthly lease payments required payments by the defendant in the amount of $1,128.51.
[3] It would appear that until the fall of 2009 the defendant made the required lease payments. For reasons that do not concern this appeal it would appear that the defendant, for whatever reason, was unable to continue with the lease payments and entered into some kind of arrangement with a Mr. Drummond, her landlord. The facts found by the deputy judge in this regard are as follows:
Drummond was the landlord for the premises occupied by the defendant’s company. The lease payments for the premises also fell into arrears. In order to settle the arrears Drummond incorporated Levico and assumed the assets of the defendant’s company. Thereafter both the defendant and her sister worked for Levico. Levico agreed with the defendant to cover the defaulted lease payments for the car. It submitted two payments to the plaintiff, each in the amount of $1,203.51 on November 6, 2009, and January 7, 2010. The cheques included principal and accumulated interest. The cheques were accepted by the plaintiff. Drummond acknowledged that Levico did not take an assignment of the lease, and that it was not a party to the lease. [My emphasis]
[4] On December 11, 2009, the defendant was arrested by the police for shoplifting. The police obtained a search warrant to search the vehicle and located it in a parking lot. As a result of that search various items were seized that were alleged to have been stolen. The police seized the vehicle, and the plaintiff received a letter from the York Regional Police Department on January 5, 2007 advising of the seizure and seeking further information about the lease between the plaintiff and the defendant. To this point in time the defendant had not advised the plaintiff that the vehicle had been seized.
[5] The defendant was sent a Notice of Repossession on February 26, 2010. The notice was sent to the defendant’s last known address. It was the defendant’s evidence that she did not receive the notice. The defendant did, however, in her evidence at trial confirm that she resided at the address to which the notice had been sent.
[6] On January 14, 2010, Drummond contacted the plaintiff. During the course of this telephone call the plaintiff’s employee advised that it would not accept any further payments until the criminal matter involving the defendant was resolved. Entered into evidence was an email from Drummond to the plaintiff dated August 29, 2011, which purported to be a recitation of what had occurred back in January 2010 between the plaintiff and Drummond. It is, of course, important to note that Drummond is not the defendant dealing with the plaintiff in January 2010. The defendant still remained the lessee of the vehicle. There had been no assignment of the lease to Drummond.
[7] It was argued on behalf of the defendant that the plaintiff agreed and/or represented on January 14, 2010 that once the criminal charges involving the defendant were resolved the plaintiff would continue to honour the lease. It was argued on behalf of the defendant that the communications between the plaintiff and Drummond, which are memorialized in the email of August 29, 2011, reflected a representation that was made by the plaintiff and relied upon by Drummond pursuant to which the plaintiff was obliged to reinstate the lease once the criminal charges have been resolved involving the defendant. In the defendant’s factum it is argued that:
Had he (i.e. Drummond) been told at the time that the lease was terminated, he then could have taken some steps under the Lease to minimize his loss. Mercedes prevented him from doing this. Mercedes is estopped from its own conduct from now claiming a deficiency.
[8] Dealing with these issues the deputy judge found as follows:
The car was sold by auction on March 17, 2010. The criminal charges were dropped on March 3, 2010. The Notice was sent to the defendant on February 26, 2010. Based upon paragraph 4 of the defence; Drummond’s evidence at trial; and the emails exchanged between Drummond and DiMarco I find that Drummond was told by the plaintiff that it could not accept payments on the lease due to the criminal action, and that Drummond advised the plaintiff that when the criminal matter was resolved Levico would continue to make the payments. The plaintiff did not agree to this nor did it agree to contact Drummond once the criminal charges were resolved. Considering that the criminal charges were disposed of on March 3, 2010, one would expect either Drummond or the defendant to immediately contact the plaintiff to update it on the disposition and, thereafter attempt to solve the problems surrounding the lease. This did not happen with the result that the car was sold by auction pursuant to the default provisions contained in clause 17 5) of the lease.
[9] The standard of review for issues of law is correctness. See Housen v. Nikolaisen, 2002 SCC 33. The standard of review for findings of fact is that the findings ought not to be reversed unless it can be established that the trial judge made a palpable and overriding error. See Housen v. Nikolaisen, supra. The palpable and overriding error test can only be met if the findings are clearly wrong, or can properly be characterized as unreasonable and unsupported by the evidence. See H.L. v. Canada (A.G.), 2005 SCC 25 at paragraphs 55 through 56. The standard of review for findings of mixed fact and law is on a spectrum between correctness and palpable and overriding error. See Housen v. Nikolaisen, supra.
[10] There is nothing from the evidence that has been put before me on this appeal that can cause this court to come to the conclusion that the deputy Small Claims Court judge made a palpable and overriding error in coming to the factual conclusions that he did, as reflected in the above-noted quotation.
[11] It was also argued on behalf of the defendant that the plaintiff’s actions should be dismissed because the plaintiff’s pleading was defective. In that regard, the plaintiff’s action was based on the default of the defendant by reason of the act of default as set forth in paragraph 17 (2) of the lease. The default was based on the failure of the defendant to make a payment when it was due. The action, as it unfolded before the deputy Small Claims Court judge, was also based on an act of default where the vehicle was impounded or seized by any “governmental authority”. In this regard the vehicle had been impounded by the York Regional Police and, therefore, pursuant to section (5) of the Lease Agreement there was an act of default entitling the plaintiff to terminate the lease.
[12] The issue with respect to the alleged defective pleading was raised as an issue before the deputy Small Claims Court judge, and was addressed in his Reasons as follows:
The plaintiff relied upon a default resulting from the seizure of the vehicle by the police. This was not set out in the claim although it did allege default resulting from arrears in payment, in paragraph 11 of the Claim, which entitled it to repossess the car. The defendant relied, in part, upon the alleged failure of the plaintiff to deliver the Notice to the defendant. This was not raised in the Defence. The defendant submits that the claim should be dismissed by reason of the failure of the plaintiff to comply with rule 7.01(2)(ii) of the Rules of the Small Claims Court. Both the plaintiff and the defendant delivered and exchanged factums in which the respective issues above were raised. Evidence was led at trial on both of these issues. The Defence dealt in detail with the issue of the seizure of the car. The issues were thoroughly canvassed.
[13] Appended to the Respondent’s Compendium was a document entitled “Law Memo” dated July 10, 2012, which was filed by counsel for the defendant prior to the commencement of trial. The Law Memo contained a section dealing with the alleged defective pleading. This issue was clearly anticipated as something that would have to be dealt with at trial and was, in my view, properly disposed of by the deputy Small Claims Court judge as reflected in his Reasons quoted above.
[14] The defendant also raised in argument before this court an issue that was raised during the course of the trial concerning the suggestion by the defendant that she had not received the Notice of Repossession. When the matter initially came before the Small Claims Court this issue had not been raised in the defendant’s statement of defence. An adjournment was necessitated to allow the plaintiff an opportunity to deal with the question of whether the notice had in fact been properly sent to the defendant. This resulted in a factual dispute that was resolved in the Reasons of the deputy Small Claims Court judge as follows:
During her testimony the defendant did not explain her failure to either contact the plaintiff to advise it of the seizure of the car or to inform it that the criminal charges were withdrawn on March 3, 2010. The defendant did not explain her failure to respond to the phone calls and documents sent to her by the plaintiff. I prefer the evidence of the plaintiff’s witnesses to the defendant’s evidence with respect to the delivery of the Notice. I also reiterate that the issue of the delivery of the notice was not set out in the Defence.
[15] The findings of fact as set forth above with respect to the delivery of the notice, are findings that can only be reversed if it is established that the trial judge made a palpable and overriding error. The palpable and overriding error can only be established if the findings are clearly wrong or can properly be characterized as unreasonable and unsupported by the evidence. From my review of the evidence in this regard, the findings of fact are more than established from the evidence and cannot be reversed as having been established to be clearly wrong or unreasonable and unsupported by the evidence.
[16] Counsel for the defendant argues that because the plaintiff had accepted a payment (from Drummond) after default, such a payment was consistent with a purported representation or oral agreement pursuant to which the plaintiff could not resile. Specifically it was argued that the plaintiff, based on the alleged representations made in Drummond’s email, the plaintiff had intentionally caused or permitted the defendant to believe that the plaintiff would not be relying on the alleged act of default. This argument can be disposed of by quoting from the Reasons of the deputy Small Claims Court judge as follows:
On cross-examination the defendant acknowledged that she was not a party to the discussions between Drummond and the plaintiff; that she did not sign any document authorizing Drummond to speak with the plaintiff until July 26, 2011; and that she did not receive copies of the emails exchanged between Drummond and DiMarco. There is no evidence that the defendant appointed Drummond as her agent for dealing with the plaintiff prior to the written authorization dated July 26, 2011. There may have been an agreement between the defendant and Drummond whereby Levico agreed to make the lease payments to the plaintiff but this was not binding on the plaintiff. The defendant gave no evidence to establish that she either instructed Drummond to contact the plaintiff on January 14, 2010 or to enter into any agreement with the plaintiff to restore the lease after the criminal charges were resolved.
[17] In order for the defendant to succeed with an argument based on promissory or equitable estoppel, the defendant must establish the following:
(a) that there was an existing legal relationship between the parties;
(b) that there was a clear and unambiguous promise or representation by statement or conduct, made by the party against whom the estoppel is raised establishing the party’s intent to be bound by the statement or conduct;
(c) that there was reliance by the party raising the estoppel upon the statement or conduct of the party against whom the estoppel is raised; and
(d) that the party to whom the representation was made must have acted upon it to his or her detriment.
[18] The issue of promissory or equitable estoppel was dealt with by the deputy Small Claims Court judge in his Reasons as follows:
In this case the alleged promise was made to Drummond with whom there was no pre-existing legal relationship. The defendant was not privy to the promise and therefore cannot rely on it to her benefit. Neither Drummond nor the defendant relied on the alleged promise by taking or refraining to take any actions. There is no evidence to establish that the defendant suffered any prejudice or detriment. Either the defendant or Drummond should have contacted the plaintiff as soon as the criminal charges were resolved but failed to do so. Accordingly, I find that the estoppel argument does not apply.
The defendant submits that the plaintiff connived the default and took advantage of its own improper conduct, specifically by advising Drummond that it would not enforce its rights whether directly or through silence and then created a default. The defendant defaulted on the lease when she failed to make the lease payments, and when the car was seized by the police. On the evidence before me, I find that the plaintiff did not agree with Drummond that it would not enforce its rights. There is no basis upon which to find that the plaintiff connived the default.
[19] The findings of fact by the deputy Small Claims Court judge with respect to the issue of promissory or equitable estoppel are more than made out in the evidence. There is no reason to interfere with the Reasons of the deputy Small Claims Court judge in that regard.
[20] For the reasons set forth above the appeal is dismissed. The respondent is entitled to its costs. I received submissions from the parties at the completion of argument. Counsel for the respondent suggested that the respondent, if it was successful, would be seeking costs fixed in the amount of $6,000. Counsel for the appellant had suggested that if the appellant was unsuccessful, that a reasonable figure to award to the respondent would be the sum of $2,500. On fixing costs of this appeal I am mindful that this was a small claims court action, albeit an appeal to a single judge of the Divisional Court. The principles of proportionality, nonetheless, should apply. I am also mindful that in fixing costs the Court of Appeal in Boucher v. The Public Accountants Council for the Province of Ontario, 71 O.R. (3d) 291, has made it clear that costs should be fixed from the perspective of what the losing party would reasonably have expected to pay. Under the circumstances I am fixing costs payable by the appellant in the amount of $5,000 inclusive of HST and disbursements.
Justice M.L. Edwards
Released: February 13, 2015
CITATION: Mercedes-Benz v. Zhang, 2015 ONSC 986
DIVISIONAL COURT FILE NO.: DC-13-00556-00
DATE: 20150213
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
JUSTICE M.L. EDWARDS
BETWEEN:
Mercedes-Benz Financial Services Canada Corporation, A Business Unit of DCFS Canada Corp.
Plaintiff/Respondent in Appeal
- and –
Yin Zhang
Defendant/Appellant in Appeal
REASONS FOR JUDGMENT
Released: February 13, 2015