REASONS FOR JUDGMENT

(On appeal from the decision of Deputy Judge Oliver,

dated October 11, 2018)

André J.

[1] The appellant company appeals a decision of Small Claims Court Deputy Judge Oliver in which the deputy judge held that a claim by the respondent 7194145 Canada Ltd. was not statute barred and allowed the name of the respondent’s director to be added to the respondent’s claim against the appellant.

SUMMARY OF THE FACTS

[2] The appellant is a sole proprietorship operated by Mr. Volodymyr Liskovskyi. The appellant worked as a subcontractor for the respondent company.

[3] On February 24, 2015, there was a workplace altercation between Mr. Liskovskyi and Mr. Vitaliy Shevchenko during which Mr. Liskovskyi punched Mr. Shevchenko in the mouth. The police were called, and Mr. Liskovskyi was charged with assault but acquitted on June 10, 2016.

[4] Mr. Shevchenko was taken to the hospital on February 24, 2015, where he received stitches and was told to go see a dentist.

[5] On February 25, 2015, Mr. Shevchenko went to Dr. Anna Halarewicz, a dental surgeon, for a dental examination. The doctor advised Mr. Shevchenko that as a result of the incident two of his teeth needed to be extracted and set a date of March 4, 2015 for the extraction. The extraction took place as scheduled.

[6] On May 7, 2015, Mr. Shevchenko had a medical consultation with Dr. David Hanmer regarding two implants.

[7] On December 8, 2015, Dr. Hanmer surgically placed two implants in Mr. Shevchenko’s mouth. On April 12, 2016, crowns were placed on the two implants.

[8] Mr. Shevchenko’s dental issues continued until at least July 2018.

[9] The appellant filed a claim in the Small Claims Court on January 20, 2017, claiming $5,209 in damages for unpaid invoices.

[10] The respondent filed his defence on February 22, 2017.

[11] The respondent filed a claim in Small Claims Court on March 3, 2017 for medical damages arising out of the workplace altercation. The defendant’s claim was amended on July 19, 2017, to cross out Mr. Liskovskyi’s name from the “also known as” box for LV Windows 13 and instead to explicitly include Mr. Liskovskyi as Defendant Number 2.

[12] Prior to the start of trial, the legal representative for the appellant commenced a preliminary motion to dismiss the defendant’s claim with three distinct arguments, namely:

a) the assault took place on February 24, 2015 and the defendant brought his claim on March 3, 2017, outside of the limitation period;

b) the defendant’s claim as commenced by the corporate defendant cannot join a personal claim by the director; and

c) the defendant’s claim was res judicata since the issues were already decided in criminal court.

[13] The deputy judge denied all three preliminary motions and allowed the defendant’s claim to proceed.

[14] The deputy judge found that in the plaintiff’s claim the appellant was entitled to $4,013.00. She found that in the defendant’s claim the respondent was entitled to $17,720.35. After setting off the judgment amounts, she ruled that the net amount owed to the respondent was $13,720.35 plus $3,000.00 in costs.

JUDGMENT OF THE SMALL CLAIMS COURT JUDGE

[15] With respect to the plaintiff’s claim that the defendant’s claim was statute barred, the trial judge concluded at p. 17 that:

With respect to the limitation period, while the assault may have occurred on February the 24th, 2015, the full extent of the defendant’s damages were not known until well after and may not be fully known at this point, I find the defendant has brought this action well within any limitation period.

[16] The trial judge further concluded, with respect to the argument that it was improper for the defendant to have joined a personal claim to that commenced by the corporate defendant, that:

On the second argument, it is true that the personal defendant ought properly to have issued a separate claim and then had it joined with this one. That technicality does not detract from the fact that the plaintiff has knowledge of the claim being advanced.

I agree with the submissions of the defendant that the small claims court rules are to be literally construed to security, just, most expeditious and least expensive determination of every proceedings. It would not be just at this late date to require the personal defendant to commence a new action. I will allow this action to proceed.

Finally, with respect to the res judicada argument, with respect, the criminal Court was being asked to determine criminal culpability for an assault. The Crown would have had no interest in or need for information relating to the defendant’s dental expenses. This matter relates to the plaintiff’s civil liability for damages arising out of his alleged actions on February the 24th, 2015. These are at law distinct and separate issues. I find the principle of res judicada does not apply.

ANALYSIS

[17] This appeal raises the following issues:

a) What is the appropriate standard of review?

b) Did the learned deputy judge err in law by finding that the respondent’s claim was not statute barred?

c) Did the learned deputy judge err in permitting the respondent to add the name of its director to the respondent’s claim?

d) Does the doctrine of equitable set off apply in this matter?

Issue 1: What is the appropriate standard of review?

[18] The standard of review on a question of law is correctness while that on questions of fact is palpable and overriding error. On questions of mixed fact and law, the standard of review is correctness where there is an extricable legal principle: Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235.

Issue 2: Did the learned deputy judge err in law by finding that the respondent’s claim was not statute barred?

The Law

[19] Section 31 of the Courts of Justice Act, R.S.O. 1990, c. C.43, provides that:

An appeal lies to the Divisional Court from a final order of the Small Claims Court in an action,

(a) for the payment of money in excess of the prescribed amount, excluding costs; or

(b) for the recovery of possession of personal property exceeding the prescribed amount in value.

[20] Section 4 of the Limitations Act 2002, S.O. 2002, c. 24, Sched. B, states that “a proceeding shall not be commenced in respect of a claim after the second anniversary of the day on which the claim was discovered.”

[21] Section 5 of the Limitations Act sets out when a claim is discovered, as follows:

5 (1) A claim is discovered on the earlier of,

(a) the day on which the person with the claim first knew,

(i) that the injury, loss or damage had occurred,

(ii) that the injury, loss or damage was caused by or contributed to by an act or omission,

(iii) that the act or omission was that of the person against whom the claim is made, and

(iv) that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it; and

(b) the day on which a reasonable person with the abilities and in the circumstances of the person with the claim first ought to have known of the matters referred to in clause (a).

[22] In Sampson v. Empire (Binbrook Estates Ltd.), 2016 ONSC 5730, at paras. 37-44, Glithero J. noted the following:

[37] The first factor relating to the discovery of a claim commences on the day on which the person with the claim first knew that the “injury, loss or damage had occurred”. Once a plaintiff knows that some damage has occurred then the claim has been discovered and it is not required that the plaintiff know the extent of the damage or the exact type of damage: Peixeiro v. Haberman, [1997] 3 S.C.R. 549 at para. 18.

[38] It is sufficient if the plaintiff knows “enough facts on which to base an allegation of negligence”, or I would add breach of contract, and the plaintiff is not required to know all the facts supporting the claim in order for it to be discovered: Lawless v. Anderson, 2011 ONCA 102 at para. 23. That case also stands for the proposition that the plaintiff need not know the precise cause of the damage. Rather, additional information supporting the claim may be useful in assessing whether or not to proceed, but is not necessary in order to “discover” the claim: see also Howden Power North America Inc. v. A. Swent & Sons Ltd. at paras. 50-51.

[41] As to ss. (iii), the statute does not require certainty of the defendant’s responsibility for the act or omission giving rise to the claim, and rather it is sufficient if there be shown prima facie grounds to infer the act or omission to be that of the other party: Gaudet v. Levy (1984), 47 O.R. (2d) 577 (H.C.); Kowal v. Shyiak, 2012 ONCA 512 at para. 18.

Application of the Law to the Facts

[23] The main thrust of the deputy judge’s decision is that “the full extent of the defendant’s damages were not known until well after and may not be fully known at this point”. To the extent that the deputy judge concluded that the limitation period commenced only when the full extent of the damages was known, then she erred in law in so finding. That conclusion runs contrary to s. 5(1)(a)(i) and (ii) of the Limitations Act. The respondent knew that he had suffered an injury to his mouth and specifically his teeth, on February 24, 2015. He was referred to his dentist to ascertain the extent of the damage to his teeth. On February 25, 2015, his dentist advised him of the need for the extraction of two of his teeth. The respondent knew on February 24, 2015 that some damage had occurred. To that extent, the claim was discovered on February 24, 2015 rather than on March 3, 2015, the date when Mr. Shevchenko’s teeth were extracted. As indicated in Peixeiro v. Haberman, [1997] 3 S.C.R. 549, at para. 18, it was not required that the respondent know the full extent of the damage or the exact type of damage for the limitation “clock” to begin to run.

[24] I therefore conclude that the learned deputy judge erred in law when she found that the limitation period only commenced to run when the defendant found out the full extent of the damage caused by the appellant.

Issue 3: Did the learned deputy judge err in permitting the respondent to add the name of its director to the respondent’s claim?

The Law

[25] Rule 1.04(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, provides that the rules should be “liberally construed to secure the just, most expeditious and least expensive determination of every proceeding on its merits.” This is in accordance with s. 25 of the Courts of Justice Act.

[26] Rule 2.01 of the Small Claims Court Rules, O. Reg. 258/98, provides that:

A failure to comply with these rules is an irregularity and does not render a proceeding or a step, document or order in a proceeding a nullity, and the court may grant all necessary amendments or other relief, on such terms as are just, to secure the just determination of the real matters in dispute.

Application of the Law to the Facts

[27] It was open to the learned deputy judge to find that the plaintiff had prior knowledge of the claim being advanced by Mr. Shevchenko and was therefore not prejudiced by her decision to allow Mr. Shevchenko’s name to be added as a defendant. The Small Claims Court Rules permit the amendment if it is in the interest of justice. In my view, it was in the interest of justice for both claims to be adjudicated at the same time. I therefore find that the deputy judge did not err in her decision to allow the respondent’s director to be added to the defendant’s claim.

Issue 4: Does the doctrine of equitable set off apply?

The Law

[28] Section 111(2) of the Courts of Justice Act provides that mutual debts may be set off against each other, even if they are of a different nature.

[29] In 1808059 Ontario Ltd. v. Galaxy Entertainment Inc., 2015 ONSC 1214, at para. 17, the court noted that:

Equitable setoff is an available remedy where a defendant’s cross-claim is liquidated or unliquidated and whether or not it arises out of the same contract. Agway Metals Inc. v. Dufferin Roofing Ltd., [1991] O.J. No. 9, 46 C.P.C. (2d) 133 (Ont. Gen. Div.) aff’d [1994] O.J. No. 3671, 30 C.P.C. (3d) 295 (Ont. C.A.).

[30] In Holt v. Telford, [1987] 2 S.C.R. 193, the Supreme Court of Canada set out the following preconditions for the granting of the remedy of an equitable set off:

a) there must be some equitable basis to resist the plaintiff’s claim;

b) the equitable ground must go to the essence of the plaintiff’s claim; and

c) it would be manifestly unjust to enforce the plaintiff’s claim without taking into consideration the defendant’s claim.

[31] In Canada Trustco Mortgages Co. v. Pierce Estate (2005), 254 D.L.R. (4th) 79 (Ont. C.A.), the Court of Appeal for Ontario held that an equitable set off provides a complete defence to a statutory limitation period.

Application of the Law to the Facts

[32] Whether the respondent can claim an equitable set off is dependent on the answers to the preconditions set out in Holt v. Telford.

a) Is there some equitable basis to resist the plaintiff’s claim?

[33] The respondent owed money for work done by the appellant. In order to recover the outstanding debt, Mr. Liskovskyi got into a physical altercation with Mr. Shevchenko during which he punched Mr. Shevchenko, causing injuries. In my view, there is an equitable basis for Mr. Shevchenko to resist the appellant’s claim given his claim for damages against Mr. Shevchenko. To that extent, this condition has been satisfied.

b) Does the equitable claim go to the essence of the plaintiff’s claim?

[34] In my view it does, given that the conflict which resulted in the injuries is inextricably linked to the appellant’s claim for unpaid wages. These unpaid wages formed the basis of the dispute between the two men that resulted in the February 24, 2015 incident.

[35] For the above reasons, this condition has been satisfied.

c) Would it be manifestly unjust to enforce the plaintiff’s claim without taking into consideration the defendant’s claim?

[36] It would be manifestly unjust to enforce the appellant’s claim against the respondent without taking into consideration the latter’s claim. There is no dispute that the appellant punched the respondent and caused the injuries in question.

[37] The appellant’s counsel submits that the deputy judge had no jurisdiction to deal with the respondent’s claim for damages given that Mr. Liskovskyi was acquitted of the assault charge.

[38] I disagree for the following reasons. The criminal trial dealt with issues of culpability while the civil proceeding dealt with issues of liability. The standard of proof in each matter is markedly different. Furthermore, in the civil proceedings, there could be an apportionment of responsibility, unlike in a criminal trial. For these reasons, the issue of res judicata does not apply.

[39] For the above reasons, this condition has been satisfied. Accordingly, the deputy judge did not err in applying the doctrine of equitable set off in this case.

CONCLUSION

[40] While I find that the trial judge erred in law by holding that the respondent’s claim was not statute barred, she properly allowed the respondent to add the name of its director to its claim and properly applied the doctrine of equitable set off against the appellant’s claim. For these reasons, the appeal is denied.

COSTS

[41] The appellant seeks costs of $3,000 inclusive while the respondent seeks costs of $2,000 inclusive. The respondent has been substantially successful in this appeal. The issues were moderately complex and the appeal did not involve a considerable amount of court time. In my view, costs fixed in the amount of $1,500 inclusive are fair and reasonable in this matter. The appellant must pay this amount to the respondent within six (6) months of today’s date.

André J.

Released: May 22, 2020

CITATION: LV Windows v. 7194145 Canada Ltd., 2020 ONSC 3177

COURT FILE NO.: DC-18-0087-00

DATE: 20200522

ONTARIO

SUPERIOR COURT OF JUSTICE

B E T W E E N:

LV WINDOWS 13

and -

7194145 CANADA LTD.

REASONS FOR JUDGMENT

André J.

Released: May 22, 2020

LV Windows v. 7194145 Canada Ltd., 2020 ONSC 3177

Case Summary

REASONS FOR JUDGMENT

SUMMARY OF THE FACTS

JUDGMENT OF THE SMALL CLAIMS COURT JUDGE

ANALYSIS

Issue 1: What is the appropriate standard of review?

Issue 2: Did the learned deputy judge err in law by finding that the respondent’s claim was not statute barred?

The Law

Application of the Law to the Facts

Issue 3: Did the learned deputy judge err in permitting the respondent to add the name of its director to the respondent’s claim?

The Law

Application of the Law to the Facts

Issue 4: Does the doctrine of equitable set off apply?

The Law

Application of the Law to the Facts

a) Is there some equitable basis to resist the plaintiff’s claim?

b) Does the equitable claim go to the essence of the plaintiff’s claim?

c) Would it be manifestly unjust to enforce the plaintiff’s claim without taking into consideration the defendant’s claim?

CONCLUSION

COSTS

Judge

Counsel

Parties

Areas of Law

Fact Patterns

Financial Outcomes

Issues

Statutory Provisions 6

Legal Tests 2

Legislation 4