CITATION: 2270739 Ontario Ltd. v. 1499998 Ontario Inc., 2017 ONSC 5913
COURT FILE NO.: DC-16-00004-00
DATE: 2017-09-19
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
BETWEEN:
2270739 ONTARIO LTD. carrying on business as DEBT BUYER$ Plaintiff (Respondent)
– and –
1499998 ONTARIO INC. carrying on business as PROPERTY MANAGEMENT CO. Defendant (Appellant)
Mark A. Bumstead, for the Respondent
William H. Procter, for the Appellant
HEARD: August 16, 2017 in Belleville, ON
HURLEY, P
REASONS FOR decision
Introduction
[1] This is an appeal by the defendant from the decision of Deputy Judge Millard dated November 8, 2016 granting judgment in favour of the plaintiff for damages of $3,600.77, prejudgment interest in accordance with the Courts of Justice Act, R.S.O. 1990, c.C. 43, and costs of $1,086.
[2] R.J. Kennedy Electric Ltd. (“Kennedy”) and J Ramsay Construction (“Ramsay”) did work in August 2014 at 227 Big Hill Road, Seeley's Bay, a property owned by the appellant. Kennedy is an electrical contractor and Ramsay an excavation company. Ramsay dug a trench that severed an electrical line which Kennedy then repaired. The appellant did not pay their bills of, respectively, $1,090.50 and $2,510.27. The two companies assigned the debts to the respondent, which commenced a Claim in the Belleville Small Claims Court in December 2015. In its Defence, the appellant admitted hiring Kennedy to do the work at the property but denied legal responsibility for payment of its bill on the basis that Kennedy or its contractors caused the damage that had to be repaired and that it did not agree to pay Kennedy for this work. There was no specific reference to Ramsay in the Defence.
[3] Following a short trial at which the principals of Kennedy (Robert Kennedy), Ramsay (James Ramsay) and the appellant (Isaac Berman) testified, Deputy Judge Millard gave oral reasons for decision. She found that the appellant’s employee had actual or implied authority to hire Ramsay to do the additional trenching that caused the damage and that the excavation was done in a reasonable and workmanlike manner. She further found that Kennedy was hired by the appellant to repair the damage. There was no issue at trial about the quality of Kennedy's work. She rejected the appellant’s contention that it did not have to pay their bills due to the damage to the property because Ramsay’s contract with the appellant specifically excluded liability for such damage.
[4] In its Notice of Appeal, the appellant raised the following grounds of appeal:
(i) the trial judge erred in law by accepting hearsay evidence with respect to the formation of a contract for the provision of goods and services.
(ii) the trial judge erred in law in that the evidence submitted did not establish on a balance of probabilities that there had been any contract for services between the defendant and any of the alleged parties.
(iii) the trial judge erred in law in ordering costs based on an offer to settle for which proof was not provided that the offer had actually been served.
[5] Additional grounds were stated in the appellant’s factum in respect of the assignments:
(i) they were defective in that they identified the debtors as 1499998 Ontario Inc., also known as Property Management Co. in the Robert Kennedy assignment and identified 1499998 Ontario Inc. in the Ramsay Construction assignment but there were no invoices from these companies to the entities identified in the assignments.
(ii) the respondent wrongfully attempted to substitute 1499998 Ontario Inc. as the debtor and there was no evidence that an amended invoice, or any invoice at all, was sent to 1499998 Ontario Inc.
[6] The appellant’s counsel sought leave at the hearing of the appeal to rely upon these grounds pursuant to the subrule 61.08(2) of the Rules of Civil Procedure.
The Law
[7] In Housen v. Nikolaisen 2002 SCC 33, [2002] 2 SCR 235, the court stated at para. 36:
“To summarize, a finding of negligence by a trial judge involves applying a legal standard to a set of facts, and thus is a question of mixed fact and law. Matters of mixed fact and law lie along a spectrum. Where, for instance, an error with respect to a finding of negligence can be attributed to the application of an incorrect standard, a failure to consider a required element of a legal test, or similar error in principle, such an error can be characterized as an error of law, subject to a standard of correctness. Appellate courts must be cautious, however, in finding that a trial judge erred in law in his or her determination of negligence, as it is often difficult to extricate the legal questions from the factual. It is for this reason that these matters are referred to as questions of mixed law and fact. Where the legal principle is not readily extricable, then the matter is one of “mixed law and fact" and is subject to a more stringent standard. The general rule, as stated in Jaegli Enterprises, supra, is that, where the issue on appeal involves the trial judge’s interpretation of the evidence as a whole, it should not be overturned absent palpable and overriding error.”
[8] Contractual interpretation involves issues of mixed fact and law and therefore attracts appellate deference: Callidus Capital Corporation v. McFarlane, 2017 ONCA 626 at para. 36 and RBC Dominion Securities Inc. v. Crew Gold Corporation, 2017 ONCA 648 at para. 29.
[9] In the recent decision of Maple Ridge Community Management Ltd v. Peel Condominium Corporation No. 231, 2015 ONCA 520, Hourigan, J.A. said this about the Small Claims Court at paras. 34 – 35:
[34] The Small Claims Court is mandated under s. 25 of the Courts of Justice Act, R.S.O. 1990, c. C.43, to “hear and determine in a summary way all questions of law and fact and may make such order as is considered just and agreeable to good conscience.” The Small Claims Court plays a vital role in the administration of justice in the province by ensuring meaningful and cost effective access to justice for cases involving relatively modest claims for damages. In order to meet its mandate, the Small Claims Court’s process and procedures are designed to ensure that it can handle a large volume of cases in an efficient and economical manner.
[35] Reasons from the Small Claims Court must be sufficiently clear to permit judicial review on appeal. They must explain to the litigants what has been decided and why: Doerr v. Sterling Paralegal, 2014 ONSC 2335, at paras. 17-19. However, appellate consideration of Small Claims Court reasons must recognize the informal nature of that court, as well as the volume of cases it handles and its statutory mandate to deal with these cases efficiently. In short, in assessing the adequacy of the reasons, context matters: Massoudinia v. Volfson, 2013 ONCA 29, at para. 9. Just as oral reasons will not necessarily be as detailed as written reasons, reasons from the Small Claims Court will not always be as thorough as those in Superior Court decisions. Failing to take the Small Claims Court context into account only serves to restrict access to justice by unnecessarily imparting formality and delay into a legal process that is designed to be informal and efficient.
[11] A costs award should be set aside on appeal only if the trial judge has made an error in principle or if the costs award is plainly wrong: Hamilton v. Open Window Bakery Ltd., 2004 SCC 9 at para. 27.
Analysis
[12] A finding that a contract exists between the parties and the terms of that contract are questions of mixed fact and law and the standard of review is palpable and overriding error. There was no such error on the part of the trial judge in this case. She accepted the evidence of Robert Kennedy and James Ramsay, preferring it over that of Mr. Berman.
[13] In addition to the testimony of the witnesses, there were documents attached to the Claim and made exhibits at the trial which supported the existence of the contracts and the terms of them: one was a document entitled “contract” under the letterhead of Ramsay which bears the signature of a person identified as an employee of Mr. Berman and the second, an email from the same person to Robert Kennedy authorizing his company to carry out the work at the property.
[14] The appellant also admitted in the Defence that it hired Kennedy. Its legal representative at trial did not seek leave to withdraw the admission. It was reasonable for the trial judge to conclude that the appellant also hired Ramsay given the evidence of Robert Kennedy and James Ramsay that they dealt with the same individual, who they both knew from past experience to be an employee of Mr. Berman.
[15] I agree with the respondent that the defence being raised in this appeal, which is that it was a another corporation, and not the appellant, which hired Kennedy and Ramsay was not pleaded in the Defence and cannot be raised for the first time on appeal as a defence to the Claim. The appellant’s legal representative at trial (not Mr. Procter) did not seek an amendment to the Defence nor raise this issue during the trial. Rather, the defence that was identified in the pleadings and advanced at trial was that Kennedy and Ramsay were responsible for the damage to the property and this constituted a legal excuse for not paying them. The trial judge disagreed, which was a reasonable finding available to her on the evidence.
[16] With respect to the appellant’s argument that the trial judge erred in accepting hearsay evidence about the formation of the contract, she was permitted to do so because of s. 27 of the Courts of Justice Act. Moreover, I have serious doubt that it was inadmissible hearsay evidence as it was not introduced for the truth of its contents but to support the finding that the person Robert Kennedy and James Ramsay dealt with had the express or implied authority of the appellant to hire their companies.
[17] There is no merit to the appeal of the costs award. The respondent’s representative at trial said that the offer had been served on the paralegal that was acting for the appellant before the trial and provided a copy of it to the trial judge. The appellant’s representative claimed that she had not seen it before the trial but also said this:
Ms. Priest: But, anyway, I don't have this document, I'm sorry Your Honour.
The Court: Well, you’ve seen it now.
Ms. Priest: Yeah. I realize, but it's for…
The Court: I assume you're not saying that he is lying.
Ms. Priest: No.
The Court: No. Okay.
Ms. Priest: Not at all.
[18] Even in the absence of an offer to settle, I would not consider the amount to be plainly wrong, as it must be to warrant appellate intervention, nor did the trial judge make any error in principle.
[19] As stated above, the appellant also alleged in its factum that the assignments were legally defective. This was not pleaded in the Defence, raised at trial or identified as a ground of appeal in the Notice of Appeal and, as a result, can only be considered by me if I grant leave to the appellant to rely upon it at this appeal: subrule 61.08(2) of the Rules of Civil Procedure.
[20] Mr. Proctor argued that I should grant leave because the trial judge herself adverted to the assignments at the conclusion of the evidence.
[21] I decline to do so because the prejudice to the respondent is substantial and cannot be compensated for in costs. Should leave be granted and the appeal allowed on this ground, the Claim would be dismissed and the respondent would be barred, by operation of the Limitations Act, 2002, S.O. 2002, c.24 Sch. B from commencing another proceeding based on new assignments that name, in the appellant’s view, the correct debtor company.
[22] This would be most unfair. The appellant was represented by two licensed paralegals during the litigation; one prepared the pleadings and the other acted for it at trial. There is nothing in the record about Mr. Berman’s experience with the legal system but he testified at the trial that he operates businesses in Canada and the United States and receives 200 letters a day. It is reasonable to infer that he is a successful and intelligent businessman who would know to instruct his legal representatives that the assignments named a company which did not owe a debt to either Kennedy or Ramsay. There has been no allegation made that his legal representatives were incompetent or failed to follow his instructions in either preparing the Defence or at trial.
[23] Even if I granted leave, I would have upheld the trial judge’s ruling that the assignments were valid. Although she did not explain this particular conclusion, it is apparent from her reasons for decision that she found the appellant owed money to Kennedy and Ramsay. With the exception of the dispute over whether the right company was identified in the assignments, the other formal requirements under s. 53(1) of the Conveyancing Law and Property Act, R.S.O. 1990, c. C.34 were met: 1124980 Ontario Inc. v. Liberty Mutual Insurance Company and Inco Ltd, 2003 45266 (ONSC) at para. 44.
Conclusion
[24] There was a trial on the merits. Witnesses who had personal knowledge of the facts testified. The trial judge accepted the evidence of the respondent’s witnesses and delivered a concise judgment on the day of the trial that addressed the issues raised at it. Sitting on appeal, I am not, as Mr. Bumstead aptly put it, a “do over court”.
[25] The appeal is dismissed. If the parties cannot agree on costs, the respondent will serve and file with the trial coordinator its written submissions on costs, not to exceed two pages, within 15 days of the release of this decision. The appellant has 10 days from receipt of the respondent’s submissions to serve and file its reply submissions, which are also not to exceed two pages.
Hurley, J
Released: September 29, 2017
COURT FILE NO.: DC-16-0004-00
DATE: 2017-09-19
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
2270739 ONTARIO LTD. carrying on business as DEBT BUYER$
Plaintiff
(Respondent)
– and –
1499998 ONTARIO INC. carrying on business as PROPERTY MANAGEMENT CO.
Defendant
(Appellant)
APPEAL DECISiON
Hurley, P.
Released: September 29, 2017