CITATION: 620369 Ontario Inc. v. Borroto, 2020 ONSC 7204
COURT FILE NO.: 59368/19
DATE: 2020-11-24
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
B E T W E E N:
620369 Ontario Inc. c.o.b. as Herman’s Building Centres
Plaintiff/Appellant
- and -
Alejandro Sosa Borroto c.o.b.as Exclusive Roofing also known as Alejandro Borroto Sosa a.k.a. Alex Sosa Borroto
Defendant/Respondent
COUNSEL:
C. Critch, for the Appellant
No one appearing for the Respondent
HEARD: November 10, 2020
THE HONOURABLE MR. JUSTICE J.R. HENDERSON
DECISION ON APPEAL
INTRODUCTION
[1] This is an appeal by the plaintiff/appellant (hereinafter called “the appellant”) from the written decision of Small Claims Court Deputy Judge T. Marshall (“the motions judge”), dated December 2, 2019. The appeal comes before this court in accordance with s.31 and s.21(2)(b) of the Courts of Justice Act.
[2] The appellant had delivered a motion for default judgment in action 5252/19 that was returnable before the motions judge in St. Catharines Small Claims Court on November 26, 2019.
[3] Counsel for the appellant, Rachel Goerz, appeared in court on that date to make submissions on the motion. The defendant/respondent (hereinafter called “the respondent”) did not file any responding material and did not appear on the motion. On the return of the motion, the motions judge raised concerns about the manner in which the appellant had brought the motion and about the territorial jurisdiction for action 5252/19.
[4] By way of a written Endorsement dated December 2, 2019, the motions judge dismissed action 5252/19, ordered that two other claims issued by the appellant, namely action 5029/19 and action 5344/19, were to be stayed until the motions judge heard submissions regarding jurisdiction, and ordered that the motions judge would be seized of any other claims issued by the appellant against defendants who did not carry on business in St. Catharines.
[5] It is the appellant’s position that by proceeding in this manner, the motions judge made errors in law and in fact. In particular, the appellant submits that the motions judge erred by categorizing the appellant’s motion for default judgment as an abuse of process, erred by failing to abide by rule 12 of the Rules of The Small Claims Court, O. Reg. 258/98, (the “Rules”), erred by dismissing action 5252/19 without any authority to do so, and erred by making orders regarding matters and actions that were not before the court.
BACKGROUND
[6] The appellant and the respondent entered into a contract whereby the appellant agreed to supply building materials to the respondent for use in the respondent’s roofing business. Pursuant to the contract, building materials were supplied to the respondent by the appellant; however, the respondent failed to pay his account to the appellant.
[7] On September 18, 2019, the appellant commenced action 5252/19 by issuing a claim in the St. Catharines Small Claims Court. The appellant claimed the balance owing by the respondent in the amount of $5,510.65, plus prejudgment interest at the rate of 42.57 percent per annum, as set out in the contract.
[8] After the respondent had been served with the claim, the appellant prepared and delivered a motion for default judgment dated November 6, 2019, which was returnable in motions court on November 26, 2019. The respondent was noted in default on November 19, 2019.
[9] The respondent was served with the motion for default judgment, but the respondent did not file any material in response to the motion and did not appear on the return date for the motion.
[10] On November 26, 2019, Ms. Goerz appeared before the motions judge to make submissions with respect to the motion for default judgment. However, without prior notice to the appellant or to Ms. Goerz, the motions judge raised concerns about several aspects of the appellant’s claim and the appellant’s motion.
[11] In particular, the motions judge questioned Ms. Goerz as to whether it was permissible procedure for the appellant to deliver the motion for default judgment before the respondent had been noted in default. The motions judge further raised a concern about whether the action was properly within the territorial jurisdiction of the St. Catharines Small Claims Court as the respondent did not carry on business in St. Catharines. Still further, the motions judge referenced his earlier decision, known as 620369 Ontario v. Azad Construction, in which the motions judge had dealt with a similar jurisdiction issue in a case that also involved this appellant and Ms. Goerz.
[12] In his written Endorsement, the motions judge elaborated on these concerns. Further, throughout his Endorsement the motions judge expressed his displeasure with the conduct of the appellant and Ms. Goerz.
[13] Regarding his concern about the procedure followed in bringing this motion, the motions judge stated in his Endorsement that the appellant had not complied with rule 11 of the Rules. The motions judge found that rule 11 set out two separate procedural options for the appellant, but that the appellant was improperly attempting to use a combination of these two options.
[14] At paragraph 6 of his Endorsement, the motions judge wrote “Ms. Goerz thinks she can attend to make submissions on what is in effect a basket motion, handed in over the counter. She cannot do so.”
[15] Further, in reference to the procedural issue, at paragraph 14 the motions judge wrote “There was one more highly irregular procedure relative [to] this motion record. Same sought judgment by an assessment procedure against a Defendant who had not been noted in default. The motion record is dated November 6, 2019. The Defendant was noted in default on November 19, 2019. I have never had a self-represented litigant do anything that completely wrong, putting the cart before the horse. I had to press Ms. Goerz three times before she conceded the approach taken was improper.”
[16] On the issue of the territorial jurisdiction, the motions judge stated that rule 6 was a complete code regarding the territorial jurisdiction in which a plaintiff may issue a claim. On this issue the motions judge relied on the decision made by Deputy Judge Winny regarding territorial jurisdiction in Cash 4 You Corp. v. Power, [2014] O.J. No. 2131.
[17] At paragraph 7 the motions judge wrote, “The most significant concern is the evident decision to ignore the decision of Deputy Judge Winny in Cash 4 You, followed by Deputy Judge Branoff in Indcom and adopted by me in the Azad decision. There is no other possible conclusion to reach than the Plaintiff, through counsel, has chosen to ignore a practice point against its perceived interest.”
[18] The opinion of the motions judge regarding the appellant’s claim and the conduct of counsel is summarized in his comments at paragraph 15, as follows, “What makes the blatant lack of respect for an order from this Court more shocking is the relative simplicity in these technological days of e-filing a Plaintiff’s Claim… The whole approach adopted by the Plaintiff, presumably on the instruction of Ms. Goerz, is simply wrong and misguided.”
[19] Further, in his Endorsement the motions judge referred to other claims that had been issued by the appellant in the St. Catharines Small Claims Court. It is important to note that in his discussions with Ms. Goerz in motions court the motions judge did not inform Ms. Goerz that he had concerns about any other claim made by the appellant.
[20] However, in his Endorsement at paragraph 12 the motions judge stated that he had caused a search to be made of the St. Catharines Small Claims Court records for any similar claims made by the appellant. The search disclosed that the appellant had two other outstanding actions in the St. Catharines Small Claims Court, action 5029/19 and action 5344/19, which named defendants who did not carry on business in St. Catharines. In his Endorsement, the motions judge made orders with respect to these two other actions.
[21] The final order of the motions judge is set out at paragraph 17 of the Endorsement. In summary, the motions judge ordered:
a) Action 5252/19 is dismissed,
b) The Plaintiff may not seek to recover any costs thrown away,
c) No further steps are to be taken in action 5029/19 and action 5344/19 until counsel provides written submissions with respect to the issue of jurisdiction,
d) Any presently scheduled motions are to be removed from the court list, and
e) The Clerk of the court is to review any further claim from this Plaintiff to make sure that any defendant carries on business in St. Catharines, and if not to schedule any proceedings in that action before the motions judge.
THE STANDARD OF REVIEW
[22] An appellate court should not interfere with the decision of a lower court, unless that court was clearly wrong. In that respect, see the decisions in Stein et al. v. ‘ Kathy K’ et al. (The Ship), 1975 146 (SCC), [1976] 2 S.C.R. 802 at p. 804, and Sathaseevan v. Suvara Travel Canada Inc., [1998] O.J. No. 1055, at para. 6.
[23] If an appeal is based upon an error of law, the standard of review is that of correctness. If the appeal is based upon an error of fact, the standard of review is a palpable and overriding error. Further, if there is an alleged error of mixed fact and law, the standard of review is a palpable and overriding error. See the case of Housen v. Nikolaisen, 2002 SCC 33, [2002] S.C.J. No. 31.
[24] Furthermore, if a party raises an issue of procedural fairness, it is not necessary to engage in a standard of review analysis. Rather, it is for the appellate court to determine whether the requisite level of procedural fairness has been accorded, taking into account the factors in Baker v. Canada (Minister of Citizenship and Immigration), 1999 699 (SCC), [1999] 2 S.C.R. 817. In Canada (Citizenship and Immigration) v. Khosa, 2009 SCC 12, at para. 43, Binnie J. confirmed that the standard of review was correctness for issues of procedural fairness.
ANALYSIS
[25] Counsel for the appellant submits that the motions judge made several errors of law, or errors of mixed law and fact.
[26] The appellant’s primary, and most substantial, submission is that the motions judge erred in law by failing to follow the protocol set out in rule 12.02(4) in exercising his power to stay or dismiss an action on his own initiative.
[27] Rule 12.02 reads, in part, as follows:
12.02 (2) In connection with an order striking out or amending a document under subrule (1), the court may do one or more of the following:
In the case of a claim, order that the action be stayed or dismissed.
In the case of a defence, strike out the defence and grant judgment.
2.1 In the case of a motion, order that the motion be stayed or dismissed.
- Impose such terms as are just.
(3) The court may, on its own initiative, make the order referred to in paragraph 1 of subrule (2) staying or dismissing an action, if the action appears on its face to be inflammatory, a waste of time, a nuisance or an abuse of the court’s process.
(4) Unless the court orders otherwise, an order under subrule (3) shall be made on the basis of written submissions in accordance with the following procedures:
The court shall direct the clerk to send notice by mail to the plaintiff that the court is considering making the order.
The plaintiff may, within 20 days after receiving the notice, file with the court a written submission, no more than four pages in length, responding to the notice.
If the plaintiff does not file a written submission that complies with paragraph 2, the court may make the order without any further notice to the plaintiff or to any other party.
If the plaintiff files a written submission that complies with paragraph 2, the court may direct the clerk to send a copy of the submission by mail to any other party.
A party who receives a copy of the plaintiff’s submission may, within 10 days after receiving the copy, file with the court a written submission, no more than four pages in length, responding to the plaintiff’s submission, and shall send a copy of the responding submission by mail to the plaintiff, and, on the request of any other party, to that party.
(Emphasis added)
[28] In summary, rule 12 permits a Deputy Judge on his/her own initiative to make orders staying or dismissing an action if that Deputy Judge is of the opinion that the action appears on its face to be inflammatory, a waste of time, a nuisance, or an abuse of process.
[29] I accept the appellant’s submission that the motions judge in this case found that the conduct of the appellant and Ms. Goerz constituted an abuse of process. The motions judge did not use that precise term, but the statements made in his Endorsement clearly show that the motions judge believed that the appellant was attempting to engage in sharp practice, contrary to recognized court procedures. Accordingly, I find that the motions judge indirectly found that action 5252/19, and the two other identified actions, constituted an abuse of process.
[30] I accept that a finding by a motions judge that an action constitutes an abuse of process engages rule 12.02(3), which gives the motions judge the power to take steps to control or rectify the abuse of process on his own initiative. However, if the motions judge embarks upon this task, I find that the judge must follow the five steps set out in rule 12.02(4), unless the court orders otherwise.
[31] If the procedure in rule 12.02(4) is followed correctly, the alleged offending party would receive timely notice of the allegations and would have the opportunity to make submissions with respect to same. The steps set out in rule 12.02(4) were not followed by the motions judge in this case.
[32] I acknowledge that the first words in rule 12.02(4) permit a judge to order that the procedure set out in the rule does not apply, and one might argue that I should infer from the Endorsement that the motions judge indirectly made such an order in this case. However, I find that if the motions judge had intended to eliminate or circumscribe the appellant’s statutory rights, it was incumbent upon the motions judge to specifically state that he was making such an order and to provide cogent reasons for the order. He did neither in this case.
[33] Moreover, in the circumstances of this case, there does not appear to be any foundation for an order that the procedure set out in rule 12.02(4) should not apply. That is, the draconian remedy of a complete dismissal of an action in these circumstances should only be imposed after proper notice has been given to the alleged offending party and that party has had an opportunity to make submissions. To order otherwise would be to endorse a procedure that is not fair or just. The same analysis applies to an order to stay actions that are not before the court. Thus, I find that the motions judge was required to follow the steps set out in rule 12.02(4) in these circumstances before he stayed or dismissed any action.
[34] In summary, I find that Ms. Goerz appeared in Small Claims Court on November 26, 2019, intending to make submissions on a motion for default judgment. The motions judge did not receive her submissions on that motion; rather, the motions judge raised issues with respect to the manner in which the motion was brought and with respect to the jurisdiction for the action itself.
[35] Ms. Goerz had no notice that the motions judge would raise these issues in open court and had no notice that the motions judge intended to make rulings on these issues in respect of action 5252/19, or in respect of other actions brought by the appellant that were not before the court on that date. The confrontation of appellant’s counsel in a courtroom does not constitute sufficient notice or provide sufficient opportunity to make submissions.
[36] I find that the motions judge erred by failing to comply with the steps set out in rule 12.02(4), thereby depriving the appellant of notice of the contentious issues and the opportunity to make cogent submissions. I also find that this failure to follow the steps set out in rule 12.02(4) constitutes an error in law.
[37] In my view, this overarching error in law by the motions judge permeates the entire decision of the motions judge. Therefore, for this reason alone, the decision of the motions judge must be set aside.
[38] On this appeal I will not make any decision as to whether the motion for default judgment was brought in a manner that complied with the Rules. In addition, I will not make any decision as to whether the appellant’s action was properly brought within the territorial jurisdiction of the St. Catharines Small Claims Court. Those issues were never fully canvassed at the Small Claims Court level as counsel was not given the opportunity to make fulsome submissions. Those issues remain outstanding.
[39] Further, I question whether the motions judge had the authority in any event to order the Clerk to search the court records for claims that may involve defendants who did not carry on business in St. Catharines. Similarly, I question whether the motions judge had the authority to order that he would be seized of other claims that were not before the motions judge. On this appeal I will not make any finding with respect to these two questions about the authority of the motions judge, except to say that if the motions judge had such authority, in my view it should only be exercised in accordance with procedural fairness.
CONCLUSION
[40] For all of these reasons, on this appeal, I make the following orders:
The orders made by the motions judge at paragraph 17 of his Endorsement dated December 2, 2019, are set aside in their entirety,
Action 5252/19, action 5029/19, and action5344/19 are to be reinstated and will proceed in accordance with the Rules,
Deputy Judge T. Marshall is not seized of any of the above-mentioned actions, and is not currently seized of any other claim issued by the appellant in the St. Catharines Small Claims Court, and
There will be no costs of this appeal.
[41] For clarity, I make no ruling regarding the procedural regularity or the territorial jurisdiction of the three above-mentioned actions. The continuation of these three actions remains subject to any future rulings on these issues.
J. R. Henderson J.
Dated: November 24, 2020