Jaldhara v. Hussain, 2018 ONSC 6715

Court File and Parties

CITATION: Jaldhara v. Hussain, 2018 ONSC 6715 COURT FILE NO.: DC-17-0003-00 DATE: 2018-11-08

ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT

B E T W E E N:

Archana Jaldhara Appellant/Defendant

• and -

Shahid Hussain Respondent/Plaintiff

Counsel: Satish Mandalagiri, for the Appellant S. Faisal, for the Respondent

HEARD: March 9, 2018

Endorsement

BARNES J.

INTRODUCTION

1On November 29, 2016, Deputy Judge E. Nadler, after a trial, awarded the Respondent (Mr. Hussain) $24,500.00 against the Appellant (Ms. Jaldhara). Ms. Jaldhara appeals this decision. The appeal is dismissed for the reasons which follow.

BACKGROUND FACTS

2Mr. Hussain and his wife planned to leave Canada in early 2015. In January 2015, Mr. Hussain and Ms. Jaldhara entered into an agreement. Ms. Jaldhara agreed to purchase property from Mr. Hussain for $29,000.00.

3The property are listed in 3 categories, in a promissory note, which served as a contract, as follows:

1. Personal home furnishings;
2. Kid Chill furniture;
3. 2003 Honda Civic

4The Honda Civic was later removed from the transaction.

THE ISSUES

5Ms. Jaldhara submits that the trial judge erred in fact and law as follows:

1. the trial judge failed to appreciate that even if the transaction was a sale Mr. Hussain did not have any title to sell the property to Ms. Jaldhara, thus the trial judge made an error of fact and law;
2. the trial judge failed to notice that Mr. Hussain was using Ms. Jaldhara’s store as a place to sell his unsold property and did not sell his property to Ms. Jaldhara and thus erred in fact and law. That is she received the property on consignment;
3. the trial judge applied the concept of agency even though this concept was not pleaded by Mr. Hussain;
4. the trial judge ignored the pleadings and the law;
5. the trial judge wrongly applied the principle of nemo dat quod non habet;
6. the trial judge did not properly consider Ms. Jaldhara’s evidence and misapplied the law.

6Ms. Jaldhara abandoned her ground of appeal alleging that the trial judge was in error when he construed the promissory note as a bill of sale.

DISCUSSION

7Ms. Jaldhara alleges “errors” of mixed fact and law. The standard of review of a finding of fact is palpable and overriding error. Where the error can be traced to an error of law the standard of correctness is applied: Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235, at paras. 31-36 (S.C.C.).

8A useful conceptual framework for disentangling questions of mixed fact and law is as follows: “Simply put what happened or what were the circumstances is a question of fact, and whether the facts found satisfy a legal standard is a question of law: Morden and Perell – The Law of Civil Procedure in Ontario, 2nd Edition, at page 973.

9Unless a court grants an amendment, a party cannot rely on a claim or defence it has not pleaded: Kalkinis (Litigation Guardian of) v. Allstate Insurance Co. of Canada (1998), 1998 6879 (ON CA), 41 O.R. (3d) 528 (Ont. C.A.).

10Litigants in small claims court are routinely unrepresented and cannot be held to the same high standards of pleading as in the Superior Court. In small claims court legal concepts such as the very many varieties of cause of action are unfamiliar to these litigants. Under such circumstances, the Deputy Judge should have latitude to determine the legal issues that emerge from these facts “and bring his or her legal expertise to bear in resolving those issues”: 936464 Ontario Ltd. v. Mungo Bear Ltd., 2003 72356 (ON SC).

DISCUSSION

11The trial judge made findings of fact that were open to him to make on the basis of the evidence before him. The findings do not constitute palpable and overriding errors and are entitled to deference. The trial judge had the benefit of observing the witnesses at trial. An appellate court is unable to conduct such an assessment. The trial judge was in error in introducing a pivotal and determinative concept not pleaded by Mr. Hussain

12At trial, Ms. Jaldhara testified that she was a new immigrant, was unaware and did not understand the written agreement. Mr. Hussain drafted it and asked her to sign. She said the property was supplied to her store for her to hold and sell for Mr. Hussain. She said the promissory note of $29,000.00 was for the furniture which was to be held for sale at her store. Mr. Hussain was to assemble the furniture for sale but he failed to do so. The furniture is still unassembled and in boxes at her store.

13Ms. Jaldhara also testified that she did not sign the promissory note in her personal capacity but signed it on behalf of her company, 24438501 Ontario Inc. Mr. Hussain left the property at her store with the intent that the property be sold. Ms. Jaldhara said the cheques she gave to Mr. Hussain were an advance payment for property already sold.

14Mr. Hussain testified that the furniture had been previously purchased from China, by a friend, a Mr. Siddiq, for sale by his wife’s company, Itan Traders Ltd. (Itan). Mr. Hussain first testified that he owned the property. On further questioning he stated that his wife’s company, Itan, owned the property. Additional questioning revealed that Mr. Siddiq “fronted” the money to buy the property for sale. This was in reference to the kid chill furniture. He said Mr. Siddiq did this for Mr. Hussain and for Mr. Hussain’s wife.

15Ms. Jaldhara submits that the evidence unequivocally shows that she was vulnerable due to her new status in Canada. She did not know what she was signing and her evidence should have been accepted by the trial judge.

16It was open to the trial judge to make adverse findings of credibility against Mr. Hussain, particularly in light of the “shifting” testimony on ownership of the property, and to accept the testimony of Ms. Jaldhara, however, there were difficulties with Ms. Jaldhara’s testimony which the trial judge described as follows: there was nothing in the promissory note to indicate that she obtained the goods on consignment; no evidence that what she paid for was restricted to the “kid-chill” furniture; nothing to show that the transaction was with her business; the cheques had been drawn in her personal capacity and not in her business capacity; there was nothing in the promissory note to indicate that the furniture was to be assembled and no evidence that Ms. Jaldhara’s store could accommodate the furniture even if they were assembled: Reasons for Judgment, paragraphs 8 and 9.

17The trial judge did not accept Ms. Jaldhara’s evidence that she was vulnerable and duped by Mr. Hussain. Instead, he found that she was experiencing some “buyer’s remorse”. These findings are open to him on the evidence and do not constitute palpable and overriding error. There is no basis to interfere.

18As noted, it was open to the trial judge to have make adverse findings of credibility against Mr. Hussain due to his shifting testimony on ownership. The trial judge had the benefit of observing the witnesses and elected not to do that. Instead, the trial judge raised the concept of nemo dat quod non habet; the principle that a person who does not own property cannot confer title to the property without the true owner’s permission.

19Mr. Hussain conceded that he did not own the property. He said his wife’s company Itan owned the furniture; he was not an officer or employee of Itan; his wife authorized him to sell the furniture; he and his wife asked a friend, Mr. Siddiq, to “front” the money to buy the furniture from China; Mr. Siddiq agreed. He and his wife still owe Mr. Siddiq money for the furniture. Ms. Jaldhara said Mr. Hussain never disclosed this to her during their discussions.

20Mr. Hussain did not provide any proof of the purchase by Mr. Siddiq; proof of importation of the furniture into Canada or proof that his spouse had authorized him to sell the furniture. It is up to the trial judge to decide what weight to give Mr. Hussain’s evidence. The trial judge could decide to accept all or part of Mr. Hussain’s evidence and the weight to be attributed to it.

21The trial judge gave Mr. Hussain’s evidence full weight and found that the “kid chill” items were owned by Mr. Hussain’s wife’s business, Itan. The trial judge found that Mr. Siddiq purchased, paid for the furniture and arranged to have the furniture shipped directly to Canada. Upon arrival in Canada both Mr. Hussain and his wife attempted to sell the furniture in Canada: Reasons for Judgment, paragraphs 10 and 11.

22The trial judge concluded that Mr. Hussain was an agent of both his wife and Itan. He had a special interest in selling all the property because he and his spouse were departing Canada and could not take any property with them: Reasons for Judgment, paragraph 13. These are findings open to the trial judge to make from the evidence and do not constitute a palpable and overriding error.

23As an agent of an undisclosed principal, Mr. Hussain can sue Ms. Jaldhara where: 1) the agent is personally liable for the contract; 2) the agent has “some special property in the subject matter of the contract, a lien on it, or some beneficial interest in the completion of the contract”.

24Gerald Fridman in Canadian Agency Law (2009), at page 156 explains the concept as follows:

Although, as a general rule, an agent is not a party to a contract made on behalf of a principal, just as there are some instances in which the agent may be personally liable on such contract, so there are instances in which the agent may personally sue the third party. The most important instance is where the agent is personally liable on the contract, for it is only reasonable and just that an agent from whom a remedy for breach of contract can be sought by the third party should be able to enforce the contract. However, it is not necessary for the agent to have contracted personally in order to be able to sue the third party if the agent has some special property in the subject-matter of the contract, or a lien upon it, or some beneficial interest in the completion of the contract.

25It follows that the agent of the undisclosed principal, who satisfies any of the criteria described, cannot escape liability by asserting that she or he is only the agent for the undisclosed principal and cannot personally be sued to enforce the contract.

26The trial judge correctly applied the concept of agency under the doctrine of undisclosed principal and concluded that Mr. Hussain was an agent of an undisclosed purchaser with a special interest in the sale of the property because he and his wife sold the property because they were leaving Canada. Therefore, as an agent of an undisclosed principal (Itan and his spouse) Mr. Hussain can sue to enforce the contract.

INTRODUCTION OF THE CONCEPT OF AGENCY

27The entire pleadings of Mr. Hussain was premised on his assertion of his position as owner of the property. He asserted that from his position as owner flowed the legal remedies he sought. Mr. Hussain did not plead the concept of agency arising from the doctrine of undisclosed principal.

28Absent some special circumstances it is unfair for a case to be decided on an issue not identified by the parties in the pleadings. Under such circumstances the case may be dismissed or a new trial may be ordered where judgment has been granted on the basis of an unpleaded claim or defence: Garfin v. Mirkopoulos, 2009 ONCA 421, [2009] O.J. No. 2038 at para. 20 (Ont. C.A.); see also Kalkinis supra.

29An exception to this general rule was carved out in recognition of the special circumstances, in a majority of small claims cases, where many of the litigants are unrepresented and unaware of legal rules and concepts. In these instances, Deputy Judges should have latitude to determine the legal issues that emerge from the facts pleaded and “bring their legal expertise to bear in resolving those issues”: 936464 Ontario Ltd. v. Mungo Bear Ltd. supra. This is not the circumstance in this case. Both parties were represented by paralegals. I take judicial notice that paralegals are licenced by the Law Society of Ontario and must adhere to educational and licensing requirements stipulated by the Society. Under these circumstances, the trial judge was in error in raising an issue not raised in the pleadings by Mr. Hussain.

30However, the trial judge made the finding on the concept of agency as an alternative to a finding that the Respondent is an owner. For reasons previously articulated the trial judge was not in error in reaching this alternative conclusion. Therefore, the appeal is dismissed.

COSTS

31Should the parties be unable to agree on costs, a cost outline of no more than 3 pages shall be submitted for the court’s consideration within 20 days.

Barnes J.

Released: November 8, 2018

CITATION: Jaldhara v. Hussain, 2018 ONSC 6715 COURT FILE NO.: DC-17-0003-00 DATE: 2018 11 08

ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT

B E T W E E N:

Archana Jaldhara Appellant/Defendant

• and -

Shahid Hussain Respondent/Plaintiff

ENDORSEMENT

Barnes J.