CITATION: Vaughan v. May, 2021 ONSC 6814

DIVISIONAL COURT FILE NO.: DC-2020-2026

DATE: 2021/10/14

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

M.G. Ellies R.S.J.

BETWEEN:

Joanne Vaughan

Appellant

– and –

Killian May and Corporation of the City of North Bay

Respondents

Self-represented

Sabrina Lucenti, for the Respondent, Killian May

Matthew Leef, for the Respondent, City of North Bay

HEARD: October 8, 2021

REASONS FOR DECISION

OVERVIEW

[1] Ms. Vaughan appeals the dismissal of her Small Claims Court (“SCC”) action against the respondents. The action was dismissed by a deputy judge under r. 12.02(3) of the Rules of the Small Claims Court, O. Reg. 258/98 on the basis that it was commenced after the expiry of the applicable limitation period and that it would, therefore, be a waste of time to allow it to proceed to trial.

[2] In my view, the appeal should be allowed. With respect, it was procedurally unfair to dismiss the action on the basis of the expiry of the limitation period when the deputy judge appears to have solicited written submissions from the parties under r. 12.02(4) on the basis that the action was an abuse of process.

BACKGROUND

[3] The SCC action arose out of Mr. May’s representation of Ms. Vaughan in connection with charges laid in 2012 by the City of North Bay (“the City”) against Ms. Vaughan and her husband under the City’s Residential Rental Housing By-law. The City accused Ms. Vaughan and her husband of operating a rental property without a valid licence. Ms. Vaughan alleges that Mr. May acted without her authority in resolving the charges by entering a plea of not guilty on her behalf and agreeing not to contest the facts alleged in an agreed statement of facts. The uncontested trial led to a finding of guilty, a suspended sentence against Ms. Vaughan, and the withdrawal of the charge against her husband.

[4] Ten days after the uncontested trial, on May 11, 2015, Ms. Vaughan launched an appeal to the Ontario Court of Justice under the Provincial Offences Act, R.S.O. 1990, c. P.33 (the “POA”). The appeal proceeded to a hearing two years later, in May 2017. During the hearing, Mr. May was summoned as a witness by counsel for the City and cross-examined by a paralegal acting on behalf of Ms. Vaughan. The appeal judge dismissed the appeal, finding that Ms. Vaughan had instructed Mr. May to proceed as he did.

[5] Ms. Vaughan sought to appeal the matter further. In March 2018, the Court of Appeal for Ontario dismissed Ms. Vaughan’s application for leave to appeal. Brown J.A. found that Ms. Vaughan was attempting to raise an issue of fact, not of law, and that Ms. Vaughan had not pointed to any misapprehension of the evidence by the appeal judge, nor to any palpable and overriding error on his part (2018 ONCA 319).

[6] The matter did not end there, however. Ms. Vaughan commenced the SCC action on May 15, 2019. In the claim, she alleges that City inspectors entered the rental premises illegally and that Mr. May acted against her express instructions, among other things. Defences were filed on behalf of both respondents, in which they each pleaded that the action was “inflammatory, a waste of time, a nuisance and an abuse of the court’s process” (to quote Mr. May’s defence) and that it was barred by the expiry of the limitation period under the Limitations Act, 2002, S.O. 2002, c. 24.

[7] Following a settlement conference held on November 8, 2019, the deputy judge made an endorsement in which he wrote:

Both defendants have pleaded that these proceedings should be dismissed under Rule 12.02 on the basis of the Claim being, inter alia, inflammatory, a nuisance, and an abuse of the Court’s process. Accordingly, it is hereby ordered that the provisions of Rule 12.02(3) and (4) now be followed and completed.

[8] Rule 12.02 of the Rules of the Small Claims Court provides:

12.02 (1) The court may, on motion, strike out or amend all or part of any document that,

(a) discloses no reasonable cause of action or defence;

(b) may delay or make it difficult to have a fair trial; or

(c) is inflammatory, a waste of time, a nuisance or an abuse of the court’s process.

(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:

1. In the case of a claim, order that the action be stayed or dismissed.

2. 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.

3. 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:

1. The court shall direct the clerk to send notice by mail to the plaintiff that the court is considering making the order.

2. 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.

3. 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.

4. 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.

5. 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.

[9] The deputy judge directed that the clerk of the court send a copy of the order to Ms. Vaughan. In addition, a formal notice was sent, indicating that a deputy judge was considering dismissing the claim under r. 12.02(3) “because it appears on its face that it may be inflammatory, a waste of time, a nuisance or an abuse of the court’s process.” In accordance with r. 12.02(4), Ms. Vaughan filed written submissions and the respondents filed written submissions in reply.

[10] On January 9, 2020, the deputy judge released his reasons, in which he wrote (at pp. 5 and 6):

It is clear that any cause of action by the Plaintiff against the Defendants arose and was discovered (as that term is defined in the Limitations Act, 2002) in May of 2015 when, as she alleges, the conduct and result of the POA proceedings were not completed in accordance with her approval, instructions and agreement.

Considering all of the above, and that the provisions of the Limitations Act, 2002 are not discretionary, it is therefore the opinion of this Court that the Plaintiff’s Claim against both of the Defendants herein has no chance of success at trial and that permitting the matter to proceed further would be a waste of time within the meaning of Rule 12.02(1)(c).

[11] The deputy judge dismissed Ms. Vaughan’s claim and ordered her to pay costs to the respondents.

ISSUES

[12] Ms. Vaughan raises several grounds of appeal. I find it necessary to deal with only one of them, namely: whether she was denied procedural fairness in the process leading up to the dismissal of her claim.

ANALYSIS

[13] It is a fundamental principle of natural justice that a party be given an opportunity to be heard before a decision is made. For lawyers and judges, this fundamental principle is captured in the Latin phrase audi alteram partem: Kane v. University of British Columbia, 1980 10 (SCC), [1980] 1 S.C.R. 1105, at para. 24. In my respectful view, the procedure followed in the case at bar failed to provide Ms. Vaughan with this opportunity because of the way in which the deputy judge called for written submissions.

[14] As I noted above, the respondents pleaded both that Ms. Vaughan’s claim was inflammatory, etc. (the “abuse of process defence”) and that it was barred by the Limitations Act, 2002 (the “limitations defence”). The deputy judge’s endorsement of November 8, 2019, referred to only one of these grounds for dismissing Ms. Vaughan’s claim. Nowhere in his endorsement did he refer to the limitations defence. It is not surprising, therefore, that Ms. Vaughan did not address it in her written submissions. And yet, that was the basis on which the deputy judge dismissed her claim.

[15] The respondents argue that the limitations defence is subsumed within abuse of process defence under r. 12.02(1)(c). They argue that it is a waste of time to permit a claim that is statute barred from proceeding to trial: Van de Vrande v. Butkowsky, 2010 ONCA 230, at paras. 24 and 25. That may be true. However, in this case, the parties pleaded the limitations defence separately from the abuse of process defence and the deputy judge referred to only one of them in his November 8 endorsement.

[16] That the deputy judge’s November 8 endorsement appeared to request submissions only on the abuse of process defence is borne out by the fact that Ms. Vaughan was not the only party to fail to address the limitation defence. So, too, did counsel for Mr. May. In her written submissions, counsel argued that “this action is the latest attempt by the plaintiff to re-litigate the issues already raised at the [POA] appeal” (para. 9), that the action “is an abuse of the court’s process” (para. 9), and that the action “exhibits all the hallmarks of a vexatious proceeding” (para. 10). While it is possible that these submissions were merely designed to respond to those of Ms. Vaughan, that possibility demonstrates that Ms. Vaughan addressed only the abuse of process defence.

[17] Counsel for the City was the only person to address the limitation argument in his written submissions under r. 12.02. As contemplated by the rule, those submissions were delivered after Ms. Vaughan delivered hers. Counsel for Mr. May submits that Ms. Vaughan could have asked for an opportunity to reply to those submissions. However, there is no provision in r. 12.02(4) providing for that opportunity.

[18] In my respectful view, the deputy judge decided to dismiss Ms. Vaughan’s claim on the basis of a defence that she was not asked to address. That was unfair. As a result, the dismissal order must be set aside.

[19] I agree that there is merit to both the limitations and the abuse of process defences. However, once a breach of the rules of natural justice has been shown, there is no “curative proviso” as there is, for example, in criminal appeals. In all but exceptional circumstances, the matter must be remitted to the decision maker, in this case, the SCC: Persaud v. Canada (Minister of Citizenship & Immigration), 2011 FC 31, at para. 19.

CONCLUSION

[20] Ms. Vaughan was deprived of the right to make written submissions under r. 12.02(4) with respect to the ground upon which the deputy judge ultimately dismissed her claim. As a result, the matter must be remitted to the SCC. The dismissal order is therefore set aside and the matter shall proceed to a settlement conference before a different deputy judge.

[21] To be clear, the deputy judge presiding at the settlement conference is free to engage the provisions of r. 12.02(3), if he or she sees fit. However, the deputy judge should make it clear whether he or she is considering dismissing Ms. Vaughan’s claim on the limitation defence, the abuse of process defence, or both.

COSTS

[22] Ms. Vaughan has been successful on the appeal. Ordinarily, she would be entitled to her costs.

[23] During the hearing, I inquired as to the amounts each party might seek if successful. I have now received a bill of costs from Ms. Vaughan and costs outlines from the respondents. Ms. Vaughan seeks costs on what I believe is a full indemnity scale in the amount of $10,980. This is more than the partial indemnity costs incurred by the City and less than the partial indemnity costs incurred by Mr. May.

[24] I see no reason to award Ms. Vaughan costs on a full indemnity basis. In my view, a fair and reasonable partial indemnity costs award would be $5,000, all-inclusive, given the monetary limits of the SCC.

[25] However, because of my view of the merits of the defences raised by the respondents, I do not believe that Ms. Vaughan’s costs should be paid regardless of who wins at trial (“in any event of the cause”). Instead, I believe that they should only be paid in the event that Ms. Vaughan is successful in her claim (“in the cause”), and I so order, subject to the discretion of the trial judge.

M.G. Ellies R.S.J.

Released: October 14, 2021

CITATION: Vaughan v. May, 2021 ONSC 6814

DIVISIONAL COURT FILE NO.: DC-2020-2026

DATE: 2021/10/14

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

JOANNE VAUGHAN

– and –

KILLIAN MAY AND CORPORATION OF THE CITY OF NORTH BAY

REASONS FOR DECISION

M.G. Ellies R.S.J

Released: October 14, 2021