CITATION: Royal Bank of Canada et al v. Belisle et al, 2019 ONSC 7360
DIVISIONAL COURT FILE NO.: DC-18-020
DATE: 2019-12-17
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
B E T W E E N:
Royal Bank of Canada
K. Commisso, for the Respondent
Respondent
- and -
Claude Belisle
W. Wieckowski, for the Appellant
Appellant
-AND BETWEEN-
Claude Belisle
W. Wieckowski, for the Appellant
Appellant
-and-
MacNeil Motors Inc., Royal Bank of Canada and Egan Pahtayken
K. Commisso, for the Respondents
Respondents
HEARD: December 3, 2019 at Thunder Bay, Ontario
Mr. Justice W. D. Newton
Decision On Appeal
Overview
[1] Mr. Belisle appeals the decision of Deputy Judge Cleghorn granting judgment against him in favour of the Royal Bank of Canada (“RBC”) and dismissing his Defendant’s Claim.
The Facts
[2] Mr. Belisle is ordinarily a resident within the judicial district of Thunder Bay.
[3] In 2015, Mr. Belisle was working in Saskatchewan and was approached by a then friend, Egan Pahtayken, to assist with the purchase of a vehicle.
[4] On February 2, 2015, Mr. Belisle attended at McNeil Motors (“the dealership”) in Martensville, Saskatchewan and executed a fixed rate conditional sales agreement for the purchase of a vehicle. The purchase price was financed through a loan from the Royal Bank of Canada.
[5] Contrary to the documents he signed, Mr. Belisle thought that he was “co-signing” for Mr. Pahtayken.
[6] Mr. Pahtayken defaulted in making payments and the bank sued Mr. Belisle. Initially, Mr. Belisle failed to defend and was noted in default. He moved to set aside the default and sought a stay, arguing that the jurisdiction was properly Saskatchewan. Deputy Judge Babcock set aside the noting of default and denied the stay, ruling that the Small Claims Court had jurisdiction on a personal debt.
[7] Mr. Belisle delivered a Defendant’s Claim against the RBC, the dealership, and Mr. Pahtayken. The Defendant’s Claim was served on the RBC and the dealership, but not Mr. Pahtayken. Only the RBC defended the Defendant’s Claim.
[8] At trial, Mr. Belisle again argued that the Ontario Small Claims Court did not have jurisdiction to enforce a contract entered into in Saskatchewan but, that if the court did have jurisdiction to enforce this debt in Ontario, then the court also had jurisdiction to adjudicate the claims in his Defendant’s Claim against the RBC and the dealership.
The Reasons
[9] Deputy Judge Cleghorn concluded that the court did have jurisdiction pursuant to the Rules of the Small Claims Court, O. Reg 258/98 to enforce the contract against Mr. Belisle but did not have jurisdiction with respect to the claim against the dealership. Although the RBC defended the Defendant’s Claim, Deputy Judge Cleghorn dismissed the Defendant’s Claim without reasons.
[10] In granting judgment against Mr. Belisle, Deputy Judge Cleghorn noted that Mr. Belisle “offered no evidence that there is any misrepresentation made by McNeil Motors or the Royal Bank regarding the contract.” He acknowledged Mr. Belisle’s belief that he was executing documents as “co-signer on the loan” and noted that it was “puzzling that the defendant does not appreciate that he would be liable for the amounts owing under either scenario if Mr. Pahtayken did not make payments on the vehicle loan.” Deputy Judge Cleghorn was satisfied that the benefit conferred to Mr. Belisle’s friend was the consideration for the contract.
The Issues on Appeal
[11] Mr. Belisle’s issues and the RBC’s responses are:
a) Did the trial judge err in saying that the court had jurisdiction to hear the Claim by the RBC, but the same court did not have jurisdiction to hear Belisle’s Defendant’s Claim brought against the RBC for the same matter?
RBC argues that the court did have jurisdiction to hear the claim against Mr. Belisle. RBC acknowledges that the trial judge’s reasons are silent with respect to the RBC’s defence to the Defendant’s claim but that Defendant’s claim was more likely dismissed for lack of merit based on the trial judge’s finding of lack of misrepresentation.
b) Did the trial judge err in finding that there was consideration given by the RBC to Belisle for entering into the RBC Fixed Cap Rate Conditional Sales Contract?
RBC argues that the consideration was the advancing of funds to allow the purchase.
c) Did the trial judge err in finding that there were no representations made by the dealership or the RBC?
RBC argues that there was no evidence of any representations and that this is confirmed by Mr. Belisle’s testimony.
d) Did the trial judge err in failing to find an agency relationship between the RBC and the dealership?
RBC argues that it is unclear what effect a finding of agency would have given that there was no evidence of misrepresentation.
[12] Mr. Belisle, in oral argument, also argued that he should have been entitled to judgment against the dealership in default of its appearance.
Analysis and Disposition
Standard of Review
[13] In Cheadles v. Zanewycz, 2016 ONSC 7909 at para. 4, the Divisional Court succinctly set out the standard of review:
The standard of review on an appeal from judge’s order is set out in Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235. On questions of law, the standard is correctness. On questions of fact, the standard is palpable and overriding error. On questions of mixed fact and law, the Court stated that there is a spectrum. Where there is an extricable legal principle, the standard of review is correctness. However, with respect to the application of the correct legal principles to the evidence, the standard is palpable and overriding error.
Jurisdiction
[14] The relevant Rules of the Small Claims Court, O. Reg 258/98 are:
RULE 6 FORUM AND JURISDICTION
Place of Commencement and Trial
6.01 (1) An action shall be commenced,
(a) in the territorial division,
(i) in which the cause of action arose, or
(ii) in which the defendant or, if there are several defendants, in which any one of them resides or carries on business; or
(b) at the court’s place of sitting that is nearest to the place where the defendant or, if there are several defendants, where any one of them resides or carries on business. O. Reg. 78/06, s. 8 (1).
Application of Rules to Defendant’s Claim
10.05 (1) These rules apply, with necessary modifications, to a defendant’s claim as if it were a plaintiff’s claim, and to a defence to a defendant’s claim as if it were a defence to a plaintiff’s claim. O. Reg. 258/98, r. 10.05 (1).
Exception
(2) However, when a person against whom a defendant’s claim is made is noted in default, judgment against that person may be obtained only in accordance with rule 11.04. O. Reg. 258/98, r. 10.05 (2); O. Reg. 56/08, s. 2.
RULE 11 DEFAULT PROCEEDINGS
Noting Defendant in Default
11.01 (1) If a defendant to a plaintiff’s claim or a defendant’s claim fails to file a defence to all or part of the claim with the clerk within the prescribed time, the clerk may, when proof is filed that the claim was served within the territorial division, note the defendant in default. O. Reg. 78/06, s. 24.
Service Outside Territorial Division
(3) If all the defendants have been served outside the court’s territorial division, the clerk shall not note any defendant in default until it is proved by an affidavit for jurisdiction (Form 11A) submitted to the clerk, or by evidence presented before a judge, that the action was properly brought in that territorial division. O. Reg. 78/06, s. 24.
Default Judgment, Defendant’s Claim
11.04 If a party against whom a defendant’s claim is made has been noted in default, judgment may be obtained against the party only at trial or on motion. O. Reg. 78/06, s. 24. [Emphasis added.]
[15] As Mr. Belisle resides in the District of Thunder Bay, the conclusion that the Small Claims Court has jurisdiction is correct. See Rule 6.01(1)(a)(ii).
[16] The Deputy Judge discussed the Defendant’s Claim against Mr. Pahtayken and the dealership and noted that, as the dealership had not filed a defence, the dealership had not attorned to the jurisdiction. The Deputy Judge dismissed the Defendant’s Claim without mention of the RBC who had defended. It is conceivable that, as the RBC argues, the Deputy Judge dismissed the claim by Mr. Belisle against the RBC because the claim had no merit. However, the absence of reasons requires me to speculate as to the rationale for the dismissal. The failure to give reasons on the claim against the RBC is an error and this matter is to be returned to the Deputy Judge to give reasons with respect to the dismissal of the Defendant’s Claim against the RBC.
[17] As to the argument that Mr. Belisle should have been granted judgment against the dealership, the reasons given by the Deputy Judge are correct. When a party does not defend, as the Deputy Judge notes, the “court does not gain or acquire jurisdiction where it lacks same.” See Rules 10.05(2), 11.01 and 11.04. The court must be satisfied of jurisdiction before granting judgment in default.
[18] The Defendant’s Claim sued for “misrepresentation and negligence” by the RBC, its agent, and the dealership. Following Club Resorts Ltd v Van Breda, 2012 SCC 17, [2012] 1 S.C.R. 572, [2012] 1 R.C.S. 572, [2012] S.C.J. No. 17, [2012] A.C.S. no. 17, the presumptive connecting factors favour Saskatchewan as the jurisdiction for the claim against the dealership. The Deputy Judge was correct in not granting default judgment against the dealership.
Consideration
[19] Similarly, there was no palpable or overriding error in concluding that the benefit conferred on Mr. Belisle’s friend was sufficient consideration:
20 Consideration for a contractual promise can consist of: (a) a benefit conferred on the other contracting party; (b) a benefit conferred on a third party; (c) a detriment suffered. See Bank of Nova Scotia v. Heilgarth (1986), 1986 1264 (BC CA), 32 D.L.R. (4th) 158 (B.C.C.A.); Royal Bank of Canada v. Kiska (1967), 1967 154 (ON CA), 63 D.L.R. (2d) 582 (Ont.C.A.). Quick Credit v 1575463 Ontario Inc (cob Yorktown Auto Collision), [2010] O.J. No. 5700, 2010 ONSC 7227, 78 BLR (4th) 234, 196 ACWS (3d) 983, 2010 CarswellOnt 9980.
Representations
[20] The Deputy Judge noted that Mr. Belisle “offered no evidence that there is any misrepresentation made by McNeil Motors or the Royal Bank regarding the contract.” In fact, in examination in chief, Mr. Belisle indicated that his friend, Egan Pahtayken wanted Mr. Belisle to “co-sign for him” on a car purchase, and that he “had every intention” of co-signing for Mr. Pahtayken. Mr. Belisle testified that he did not read the contract documents but admitted that if he did, he would have realized that he was not co-signing for a loan but purchasing the car.
[21] On cross-examination Mr. Belisle stated:
Q. But you went into the dealership because as a result of your conversation with Egan thinking that you are co-signing?
A. Mm-hmm
Q. Because Egan had told you, you are co-signing?
A. Yes.
Q. Not anyone else?
A. Yeah, that’s right.
[22] Mr. Belisle also acknowledged in cross-examination that he was just told to sign in various places at the dealerships.
[23] In oral argument on this appeal, Mr. Belisle argued that the representations were the representations made in the contract, the contract that Mr. Belisle admitted he did not read.
[24] Accordingly, there is no palpable and overriding error with respect to the Deputy Judge’s finding that there were no representations.
[25] I agree with counsel for the RBC that the conclusion with respect to representation also disposes of any agency arguments.
Conclusion
[26] For reasons given, the appeal is dismissed except that this matter is to be returned to the Deputy Judge to give reasons as to the dismissal of the Defendant’s Claim against the RBC. No further evidence is to be accepted. I will leave it in the discretion of the Deputy Judge to determine whether further submissions are required.
“Original signed by”
The Hon. Mr. Justice W.D. Newton
Released: December 17, 2019
CITATION: Royal Bank of Canada et al v. Belisle et al, 2019 ONSC 7360
DIVISIONAL COURT FILE NO.: DC-18-020
DATE: 2019-12-17
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
Royal Bank of Canada
Respondent
- and -
Claude Belisle
Appellant
-AND BETWEEN-
Claude Belisle
Appellant
-and-
MacNeil Motors Inc., Royal Bank of Canada and Egan Pahtayken
Respondents
DECISION ON APPEAL
Newton J.
Released: December 17, 2019
/lvp