Court File and Parties

Court of Appeal for Ontario Date: 20220124 Docket: C69229

Benotto, Huscroft and Miller JJ.A.

Between Laurentide Kitchens Inc. Plaintiff (Appellant)

and

Homestars Inc. Defendant (Respondent)

and

Between Docket: C69287 Lucvaa Ltd. Plaintiff (Appellant)

and

Homestars Inc. Defendant (Respondent)

Counsel: Gavin J. Tighe and Daria Risteska, for the appellants Maanit Zemel, for the respondent

Heard: November 29, 2021

On appeal from the order of L.S. Ntoukas, Administrative Judge of the Small Claims Court, dated February 17, 2021.

Benotto J.A. :

[1] Does the Administrative Judge of the Small Claims Court have jurisdiction to make an order under s. 137.1 of the Courts of Justice Act, R.S.O. 1990, c. C.43 (“CJA”)? [1] The appellants submit that she does not because the issue was determined by this court in Bruyea v. Canada (Veteran Affairs), 2019 ONCA 599, 439 D.L.R. (4th) 193. The respondent submits that the jurisdiction issue decided in Bruyea was limited to deputy judges of the Small Claims Court and does not extend to the Administrative Judge.

[2] Two appeals, heard together, raised this issue. For the reasons that follow, I would allow the appeals. I conclude that the Administrative Judge of the Small Claims Court does not have jurisdiction to make an order under s. 137.1. That jurisdiction lies only with a Superior Court judge.

BACKGROUND

(1) The defamation actions

[3] The respondent Homestars Inc. operates a website, on which consumers post reviews of contractors and providers of home improvement services. Negative reviews were posted against the appellants Lucvaa Ltd. and Laurentide Kitchens Inc. On May 30, 2018, Lucvaa and Laurentide Kitchens sued Homestars in Small Claims Court.

[4] Homestars brought motions against each appellant to dismiss their actions under s. 137.1 of the CJA. The motions were scheduled to be heard before a deputy judge on April 30, 2019.

(2) Bruyea is released

[5] Two and a half months after the motions were scheduled, the decision in Bruyea was released. This court concluded that deputy judges do not have the jurisdiction to make orders under s. 137.1 of the CJA. Deputy judges are lawyers who are appointed by the regional senior judge of the Superior Court, with the approval of the Attorney General, usually for a term of three years. Bruyea has been followed by this court in other cases which have confirmed that only Superior Court judges can make orders under s. 137.1.

(3) Application to the Superior Court

[6] Homestars applied to the Superior Court and sought to have a Superior Court judge assigned to hear the motion. Under the CJA s. 22(3), all Superior Court judges are also judges of the Small Claims Court. On October 17, 2019, the matter came before a Superior Court judge in civil practice court. He endorsed the record that the action would remain in Small Claims Court and “an administrative judge of the Small Claims Court should hear these motions”.

[7] There is one Administrative Judge of the Small Claims Court. As will be discussed below, this was a position created by the legislature in 2017.

(4) Decision of the Administrative Judge

[8] On February 27, 2020, the motions came before the Administrative Judge. The appellants challenged her jurisdiction, and it was argued as a preliminary matter.

[9] In her written reasons, released a year later on February 17, 2021, the Administrative Judge concluded that the Superior Court judge’s endorsement settled the issue of jurisdiction, and she would hear the motions when the court resumed operations. The appellants appeal this order.

STATUTORY AND JURISPRUDENTIAL BACKGROUND

[10] There are statutory and jurisprudential principles that frame the issue of jurisdiction.

(5) Statutory principles

[11] The statutory framework is found in ss. 137.1, 87.2 and 24 of the CJA.

Section 137.1

[12] Section 137.1 was enacted in 2015 to promote and protect freedom of expression on matters of public interest by allowing a defendant to move at an early stage to dismiss proceedings that adversely affect that expression. The section is as follows:

Dismissal of proceeding that limits debate

Purposes

137.1 (1) The purposes of this section and sections 137.2 to 137.5 are,

(a) to encourage individuals to express themselves on matters of public interest;

(b) to promote broad participation in debates on matters of public interest;

(c) to discourage the use of litigation as a means of unduly limiting expression on matters of public interest; and

(d) to reduce the risk that participation by the public in debates on matters of public interest will be hampered by fear of legal action. 2015, c. 23, s. 3.

Definition, “expression”

(2) In this section,

“expression” means any communication, regardless of whether it is made verbally or non-verbally, whether it is made publicly or privately, and whether or not it is directed at a person or entity. 2015, c. 23, s. 3.

Order to dismiss

(3) On motion by a person against whom a proceeding is brought, a judge shall, subject to subsection (4), dismiss the proceeding against the person if the person satisfies the judge that the proceeding arises from an expression made by the person that relates to a matter of public interest. 2015, c. 23, s. 3.

No dismissal

(4) A judge shall not dismiss a proceeding under subsection (3) if the responding party satisfies the judge that,

(a) there are grounds to believe that,

(i) the proceeding has substantial merit, and

(ii) the moving party has no valid defence in the proceeding; and

(b) the harm likely to be or have been suffered by the responding party as a result of the moving party’s expression is sufficiently serious that the public interest in permitting the proceeding to continue outweighs the public interest in protecting that expression. 2015, c. 23, s. 3.

No further steps in proceeding

(5) Once a motion under this section is made, no further steps may be taken in the proceeding by any party until the motion, including any appeal of the motion, has been finally disposed of. 2015, c. 23, s. 3.

No amendment to pleadings

(6) Unless a judge orders otherwise, the responding party shall not be permitted to amend his or her pleadings in the proceeding,

(a) in order to prevent or avoid an order under this section dismissing the proceeding; or

(b) if the proceeding is dismissed under this section, in order to continue the proceeding. 2015, c. 23, s. 3.

Costs on dismissal

(7) If a judge dismisses a proceeding under this section, the moving party is entitled to costs on the motion and in the proceeding on a full indemnity basis, unless the judge determines that such an award is not appropriate in the circumstances. 2015, c. 23, s. 3.

Costs if motion to dismiss denied

(8) If a judge does not dismiss a proceeding under this section, the responding party is not entitled to costs on the motion, unless the judge determines that such an award is appropriate in the circumstances. 2015, c. 23, s. 3.

Damages

(9) If, in dismissing a proceeding under this section, the judge finds that the responding party brought the proceeding in bad faith or for an improper purpose, the judge may award the moving party such damages as the judge considers appropriate. 2015, c. 23, s. 3.

[13] As provided for under s. 137.2(2), the s. 137.1 motion is to be heard within 60 days after the notice of motion is filed with the court. Section 137.1(5) provides that the s. 137.1 motion stays the underlying defamation action until the motion has been finally determined, including on appeal. Section 137.1 also provides provisions for the imposition of costs and damages.

[14] The detailed process to determine whether a s. 137.1 motion will succeed involves a framework and a shifting burden that was described in 1704604 Ontario Ltd. v. Pointes Protection Association, 2020 SCC 22, 449 D.L.R. (4th) 1, at para. 18:

In brief, s. 137.1 places an initial burden on the moving party – the defendant in a lawsuit – to satisfy the judge that the proceeding arises from an expression relating to a matter of public interest. Once that showing is made, the burden shifts to the responding party – the plaintiff – to satisfy the motion judge that there are grounds to believe the proceeding has substantial merit and the moving party has no valid defence, and that the public interest in permitting the proceeding to continue outweighs the public interest in protecting the expression. If the responding party cannot satisfy the motion judge that it has met its burden, then the s. 137.1 motion will be granted, and the underlying proceeding will be consequently dismissed. It is important to recognize that the final weighing exercise under s. 137.1(4)(b) is the fundamental crux of the analysis … legislative debates emphasized balancing and proportionality between the public interest in allowing meritorious lawsuits to proceed and the public interest in protecting expression on matters of public interest. Section 137.1(4)(b) is intended to optimize that balance. [Emphasis added.]

[15] The evidence before the motion judge must comply with the section to establish the expression of public interest, the merits of the claim, the validity of the defences and then the proper balancing and proportionality between public interest in allowing the matter to proceed and protecting expression. This typically involves an exchange of affidavits, cross-examinations and extensive submissions.

Sections 87.2 and 24

[16] In 2017, the Burden Reduction Act, 2017, S.O. 2017, c. 2 amended the CJA to create the position of Small Claims Court Administrative Judge. Ten years earlier, the Civil Justice Reform Project had recommended that an administrative judge be appointed to ensure that trial and settlement conferences lists were properly organized in the Small Claims Court. The official debates refer to “creating the position of Small Claims Court administrative judge to improve our Small Claims Court processes and ensure that any dispute, big or small, is handled fairly and smoothly by our courts”. [2]

[17] When the Burden Reduction Act was passed, s. 87.2 was added to the CJA:

Small Claims Court Administrative Judge

87.2 (1) The Lieutenant Governor in Council may, on the recommendation of the Attorney General, appoint a person who meets the qualifications set out in subsection 42 (2) as Small Claims Court Administrative Judge. 2017, c. 2, Sched. 2, s. 18.

[18] The qualifications in s. 42(2) are those for a provincial court judge.

[19] Section 24 of the CJA was also amended to add the Administrative Judge in s. 24(2)(c):

Composition of court for hearings

24 (1) A proceeding in the Small Claims Court shall be heard and determined by one judge of the Superior Court of Justice. R.S.O. 1990, c. C.43, s. 24 (1); 1996, c. 25, s. 9 (17).

Other judicial officials who may preside

(2) Despite subsection (1), a proceeding in the Small Claims Court may also be heard and determined by,

(a) a provincial judge who was assigned to the Provincial Court (Civil Division) immediately before the 1st day of September, 1990; [5]

(b) a deputy judge appointed under section 32; or

(c) the Small Claims Court Administrative Judge appointed under section 87.2. 2017, c. 2, Sched. 2, s. 3.

(6) Jurisprudential principles

[20] This court has considered ss. 327.1 and 24(1) and (2) of the CJA in connection with the jurisdiction to make the order in question here.

[21] In practice, virtually all matters in the Small Claims Court are heard by deputy judges. In Bruyea the issue before this court was whether a deputy judge of the Small Claims Court has jurisdiction to make an order under s. 137.1. Writing for the court in Bruyea, Nordheimer J.A. reviewed the structure of the Small Claims Court and the specific provisions of s. 137.1. At para. 12, he wrote the following:

Of importance for the current issue is the wording of s. 137.1(3) that reads:

On motion by a person against whom a proceeding is brought, a judge shall, subject to subsection (4), dismiss the proceeding against the person if the person satisfies the judge that the proceeding arises from an expression made by the person that relates to a matter of public interest. [Emphasis added.]

Subsections 137.1(4), (6), (7), (8) and (9) also all refer to “judge”.

[22] Nordheimer J.A. concluded that the use of the word “judge” without reference to “deputy judge” was a clear marker that deputy judges do not have jurisdiction to make the order. He found at para. 26 that “the Small Claims Court must find its jurisdiction in a statute” and therefore “[a]bsent express statutory authority, the Small Claims [C]ourt has no jurisdiction”.

[23] Bruyea was referred to by this court in Nanda v. McEwan, 2020 ONCA 431, where the Chief Justice concluded, at para. 12, that only a Superior Court judge had jurisdiction to make the order:

Subsequent to the motion judge’s decision, this court held in Bruyea v. Canada (Veteran Affairs), 2019 ONCA 599, 147 O.R. (3d) 84, that a deputy judge of the Small Claims Court has no jurisdiction to make an order under s. 137.1, as that jurisdiction rests with a “judge”, meaning a Superior Court judge.

[24] In Ontario College of Teachers v. Bouragba, 2021 ONCA 508, at paras. 6-8, this court, in considering the proper appeal route for a s. 137.1 order, also confirmed that only a Superior Court judge has jurisdiction to make the order:

Mr. Bouragba submits that an appeal of the Order lies to this court pursuant to CJA s. 6(1)(d), which states that “an appeal lies to the Court of Appeal from … (d) an order made under section 137.1.”

We disagree. An order “made under section 137.1” within the meaning of CJA s. 6(1)(d) is an order made by a “judge” of the Superior Court of Justice. This is clear from the language of s. 137.1, which authorizes a “judge” to make orders that: (i) dismiss a proceeding (s. 137.1(3)); (ii) refuse to dismiss a proceeding (s. 137.1(4)); (iii) amend a pleading (s. 137.1(6)); (iv) award costs (s. 137.1(7) and (8); or award damages to the moving party (s. 137.1(9)). [Emphasis added.]

ISSUE ON APPEAL

[25] The issue on appeal is whether the Administrative Judge of the Small Claims Court has jurisdiction to make an order pursuant to s. 137.1 of the CJA. [3] [4]

ANALYSIS

[26] I come to the conclusion the Administrative Judge does not have the authority to make an order under s. 137.1. I say this for three reasons: (i) the authority was not given by statute; (ii) this court has determined that only Superior Court judges have the jurisdiction; and (iii) the s. 137.1 process is not consistent with the rules and procedures in the Small Claims Court.

[27] I will address each reason in turn.

(7) No statutory authority

[28] In 2017, the Burden Reduction Act amended the CJA to create the position of Administrative Judge. Section 137.1 had been in effect for two years. Although the legislature made other consequential amendments to the CJA to reflect this change, the legislature did not amend s. 137.1(3) to include the Administrative Judge. For ease of reference, s. 137.1(3) provides:

On motion by a person against whom a proceeding is brought, a judge shall, subject to subsection (4), dismiss the proceeding against the person if the person satisfies the judge that the proceeding arises from an expression made by the person that relates to a matter of public interest. [Emphasis added.]

[29] The respondent submits that this does not matter because, in effect, the Administrative Judge should be considered a provincial court judge. The CJA provides that her qualifications and compensation for the position are the same as a provincial court judge. Section 87.2(1) provides that the Administrative Judge must meet “the qualifications set out in subsection 42(2)”, which are the qualifications for a provincial court judge. Section 87.2(7) of the CJA provides that the Administrative Judge is “deemed to be a provincial judge” for purposes of compensation:

Compensation

(7) The salary, pension benefits, other benefits and allowances of the Small Claims Court Administrative Judge are subject to the recommendations of the Provincial Judges Remuneration Commission and, for the purpose, the Small Claims Court Administrative Judge is deemed to be a provincial judge under the framework agreement set out in the Schedule to this Act. 2017, c. 2, Sched. 2, s. 18. [Emphasis added.]

[30] The reference to ss. 42(2) and 87.2(7) does not assist the respondent. On the contrary, these amendments show that the legislature was alive to changes that were required as a result of s. 87.2 and chose not to amend the definition of judge in s. 137.1(3). This is a marker of an intent to omit the jurisdiction. By providing that the Administrative Judge have the same qualifications and be paid in accordance with provincial court judges, the Legislature did not expand jurisdiction to s. 137.1. Rather, for purposes of compensation only, the Administrative Judge is “deemed to be” a provincial court judge.

[31] The respondent further submits that s. 24(2) provides the authority for the Administrative Judge to make orders under s. 137.1. For ease of reference, I include the relevant portion of the section again:

(2) Despite subsection (1), a proceeding in the Small Claims Court may also be heard and determined by,

(a) a provincial judge who was assigned to the Provincial Court (Civil Division) immediately before the 1st day of September, 1990; [5]

(b) a deputy judge appointed under section 32; or

(c) the Small Claims Court Administrative Judge appointed under section 87.2. 2017, c. 2, Sched. 2, s. 3.

[32] The respondent submits that the words “may also be heard and determined by” give the Administrative Judge authority to make orders under s. 137.1.

[33] I do not agree.

[34] First, s. 24 does not confer the authority to make orders under s. 137.1. Note that “deputy judges” are also included in s. 24(2)(b). If the respondent’s submission were correct, jurisdiction would also be conferred on deputy judges. We know from the analysis in Bruyea that deputy judges do not have jurisdiction.

[35] Second, the respondent’s position would effectively expand the Administrative Judge’s authority beyond that of the Small Claims Court. For example, she would have the power to grant injunctions or appoint receivers. This too was considered and definitively dealt with in Bruyea, at paras. 17 and 18:

Further, if one was to accede to the suggestion that the use of the term “judge” in the CJA was intended to include deputy judges, then that result creates difficulties with respect to other sections of the CJA. One such section is s. 101(1) of the CJA which reads:

In the Superior Court of Justice, an interlocutory injunction or mandatory order may be granted or a receiver or receiver and manager may be appointed by an interlocutory order, where it appears to a judge of the court to be just or convenient to do so. [Emphasis added.]

Since the Small Claims Court is a branch of the Superior Court of Justice, if the term “judge” includes deputy judges, then s. 101(1) would give authority to deputy judges to grant injunctions or appoint receivers. To my knowledge, it has never been suggested that the Small Claims Court has ever had jurisdiction to grant interlocutory injunctions or to appoint receivers, nor am I aware of any case where the Small Claims Court has purported to exercise that jurisdiction. Indeed, in 936464 Ontario Ltd c.o.b. Plumbhouse Plumbing & Heating v. Mungo Bear Ltd. (2003), 74 O.R. (3d) 45 (Div. Ct.), it was concluded that the Small Claims Court is not empowered to grant “any other form of equitable relief, such as injunctions”: at para. 29.

[36] This reasoning with respect to deputy judges applies equally to the Administrative Judge.

(8) This court’s decisions have settled the issue

[37] The respondent submits that Bruyea is limited to deputy judges and does not apply to the Administrative Judge. As I have outlined, the analysis in Bruyea is equally applicable to the Administrative Judge.

[38] In any event, post-Bruyea this court has stated that only Superior Court judges have the jurisdiction to make orders under s. 137.1: see Nanda v. McEwan, at para. 12 and Ontario College of Teachers, at para. 7.

[39] The Administrative Judge is not a Superior Court judge.

[40] The respondent submitted that the endorsement of the Superior Court judge conferred jurisdiction on the Administrative Judge. I do not agree. In light of the jurisprudence, he had no authority to do so. In any event, it is clear from the record that the attendance in – what is usually – a busy practice court involved scheduling. The jurisdiction issue was not brought to his attention.

[41] I turn to the final reason that the Administrative Judge lacks jurisdiction.

(9) Section 137.1 and the Rules of the Small Claims Court

[42] A third reason confirms my view that the legislature did not intend to confer jurisdiction on the Administrative Judge. The s. 137.1 process is not consistent with the rules and procedures in the Small Claims Court.

[43] The Small Claims Court is a branch of the Superior Court of Justice. The court embodies the foundations of access to justice: informality, affordability, timely resolution, accessibility for self-represented people and active judicial engagement. By providing access to justice, the court has an important role in the administration of justice for the province. The court handles nearly half of the civil disputes in the province. It provides a cost-effective forum for civil disputes involving less than $35,000. To achieve these objectives, all questions of fact and law are to be determined in a summary way. Rule 1.03(1) of the Rules of the Small Claims Court, under the CJA, provides:

These rules shall be liberally construed to secure the just, most expeditious and least expensive determination of every proceeding on its merits in accordance with section 25 of the Courts of Justice Act. O. Reg. 258/98, r. 1.03 (1).

[44] These hallmarks of the Small Claims Court, as enshrined in its rules, are incompatible with the provisions of s. 137.1. A s. 137.1 analysis requires the detailed process of shifting burdens with respect to merits, proportionality and public interest, which involves exchange of affidavits and cross-examinations. Motions are not encouraged in the Small Claims Court. The Rules of Small Claims Court do not provide for cross-examination on affidavits. Under s. 137.1, costs of an unsuccessful motion are presumptively full indemnity. The limit on costs for a motion in Small Claims Court, absent special circumstances, is $100. The limit on costs after trial is 15% of the award. Small Claims Court jurisdiction is limited to $35,000. Contrary to these limits of Small Claims Court, s. 137.1 provides extensive powers with respect to damages.

[45] The s. 137.1 motion must be heard within 60 days and stays the underlying action. Appeals go directly to the Court of Appeal. This does not comply with r. 1.03.(1) of the Rules of the Small Claims Court.

[46] The Small Claims Court provides timely justice to litigants in matters under $35,000. I conclude that the legislature did not intend to inject complex interim proceedings into its summary process. Doing so would frustrate the objectives of the Rules of the Small Claims Court.

CONCLUSION

[47] For these reasons, the appeals are allowed with costs to the appellants in the amount of $15,000 all inclusive.

Released: January 24, 2022 “MLB” “M.L. Benotto J.A.” “I agree Grant Huscroft J.A.” “I agree B.W. Miller J.A.”

Footnotes

[1] Commonly referred to as the “Anti-SLAPP” provision.

[2] Official Report of Debates (Hansard) October 5, 2016

[3] The respondent had submitted that the order under appeal was interlocutory and so the proper appeal route was to the Divisional Court. Because the issue engaged jurisdiction, the panel heard the appeal.

[4] The respondent has framed the issue before this court as “disrespectful” to the Administrative Judge personally because it implies that she is not “real judge”. These submissions were ill founded. The issue is a question of law: jurisdiction.

[5] This provision is of no moment since currently there are no such provincial court judges.