CITATION: Mundenchira Inc., et al v. Punnasseril et al, 2022 ONSC 311
COURT FILE NO.: DC-20-0000-17-000
DATE: 2022 01 13
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
B E T W E E N:
MUNDENCHIRA INC., JOICE MUNDENCHIRA and SISLY MUNDENCHIRA
Satish Mandalagiri, for the Appellants/Plaintiffs
Appellants/Plaintiffs
- and -
JOSEPH PUNNASSERIL, LAISY VARKEY and JAISIL PUNNASSERIL
Respondents/Defendants
Darrell Paul, for the Respondents/Defendants
HEARD October 22, 2021
REASONS FOR JUDGMENT
Fowler Byrne J.
[1] On February 3, 2020, Deputy Judge M. S. Malicki of the Brampton Small Claims Court dismissed the Appellant’s claim. The Appellants have appealed that judgment and seek a new trial.
I. Grounds of Appeal
[2] The Appellants claim the following errors on the part of the Deputy Judge:
a) He made an error in law by dismissing the Plaintiffs’ claim in a motion for “non-suit”, which is not a remedy available in the Small Claims Court and outside of the jurisdiction of the Deputy Judge;
b) He made an error in law by applying the incorrect legal test in the motion for non-suit;
c) He made an error in law by not following the correct procedure on the motion for non-suit; and,
d) He made an error in fact and law when he accepted the allegations set out in the Defence, without supporting evidence.
II. Standard of Review
[3] The standard of review applicable in appeals from an order of a judge is set out in Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235.
[4] On questions of law, the standard is correctness.
[5] On questions of fact, the standard is palpable and overriding error. A palpable and overriding error is where a finding of fact is clearly wrong, unreasonable, or unsupported by the evidence and the error affected the result of the motion or trial. This applies whether there is direct proof of the fact in issue or indirect proof of facts from which the fact in issue has been inferred: H.L. v. Canada (Attorney General), 2005 SCC 25, [2005] 1 S.C.R. 401, at paras. 53-56. Absent such a finding, deference is given to the trier of fact who was able to observe witnesses and hear the evidence firsthand: Housen, at para. 10.
[6] On questions of mixed fact and law, there is a spectrum. Where there is an extricable legal principle, the standard of review is correctness, but with respect to the application of the correct legal principles to the evidence, the standard is palpable and overriding error: Gebremariam v Gebregiorgis, 2017 ONSC 2000 (Div. Ct), at para 4; Housen at para. 26-36.
[7] On appeal, the appellate court may order a new trial but is also free to make its own order and replace the opinion of the trial judge with its own: Housen at para. 8.
III. Background
[8] The Appellant, Mundenchira Inc. (“Mundenchira”), is an Ontario corporation carrying on the business of real estate investment and management. The Appellant, Joice Mundenchira (“Joice”) and the Appellant, Sisly Mundenchira (“Sisly”) are directors of Mundenchira Inc.
[9] The Respondent, Laisy Varkey (“Laisy”) and the Respondent, Joseph Punnasseril (“Joseph”) are husband and wife, and the Respondent, Jaisil Punnasseril (“Jaisil”) is their son.
[10] This case involved the purchase and sale of a condominium, namely Unit 410, 210 Simcoe St., Toronto (“the Property”).
[11] Mundenchira and Sisley purchased the Property from a developer pursuant to an agreement of purchase and sale on September 20, 2011, before the condominium was built and ready for occupancy (“the Sale Agreement”). The total cost, with upgrades, was $406,232.27. After occupancy in January 2015, but before the scheduled closing on March 31, 2015, Mundenchira and Sisley decided to assign the Sale Agreement. They reached out to friends in their community and Joseph expressed an interest to take over the Sale Agreement.
[12] The Appellants claim that all discussions regarding the assignment were between Joice and Joseph, neither of whom were ever on title to the Property. Joice maintains he told Joseph that he would assign the Sale Agreement to him for $97,000. This would cover the Appellant’s deposits, upgrades and occupancy and other miscellaneous costs. Joice claims that none of the Respondents ever asked for a breakdown of the amount.
[13] When the closing date for the purchase of the Property arrived, Joseph was only able to pay $40,000. Nonetheless, it was agreed that they would proceed with the assignment, and that when the Property was sold, they would split the profits equally. Accordingly, the assignment by Mundenchira and Sisly proceeded, and the Property was purchased by Jaisil and Laisy, as tenants in common.
[14] A number of documents were signed by the parties. On March 8, 2015, an Assignment of Agreement of Purchase and Sale - Condominium, was signed by Mundenchira and Sisly as assignors and by Jaisil as assignee, showing that $80,980 were paid in deposits to date. It also showed a $5,000 deposit that all agree was never paid. In addition, a Consent and Assignment Agreement was signed with the developer on March 24, 2015, showing Laisy and Jaisil to be the assignees. This Consent and Assignment Agreement indicated that the Plaintiffs had paid $82,312.27 in deposits and upgrades.
[15] No agreement was ever signed by any of the parties with respect to their alleged joint investment in the Property nor how their respective interests in the Property were to be paid out upon its sale.
[16] After the closing, Joice and Joseph continued to cooperate and rented the Property for the next two years. Rental payments were used to pay for the mortgage and upkeep of the Property.
[17] In or around March 2017, the Property was listed for sale. Jaisil and Laisy entered into an agreement of purchase and sale for the Property, which closed on May 2, 2017. The property sold for $498,000.
[18] The problems started shortly thereafter. A number of days after the sale closed, Joseph provided a written breakdown of each parties’ income and expenses associated with the Property and determined that he owed Joice the sum of $57,920, which he paid by cheque. Joice claims that significantly more is owed but reduced his claim to $25,000 to bring it within the jurisdiction of the Small Claims Court. In essence, this dispute is centred on each parties’ calculation of what is owed.
[19] In the Claim, the Appellants assert a breach of an oral agreement regarding the division of profits associated with the Property, and that the Respondents were unjustly enriched by the transaction. The Respondents claimed they have paid to the Appellants all that they were obligated to.
IV. The Trial
[20] The trial proceeded before Deputy Judge Malicki on September 13, 2019. By the end of the first day, the Appellant’s only witness, Joice, had finished his evidence, and the Appellants indicated their case was closed. The matter was adjourned to November 22, 2019, where it was anticipated that the Respondents would call their witnesses and then closing argument would be made.
[21] Instead, on the morning of November 22, 2019, counsel for the Respondents indicated that they had reviewed the transcript from September 13, 2019, and have decided, rather than call evidence, they would bring a motion for a non-suit. Relying on the Ontario Court of Appeal decision of F.L. Receivables Trust v. Cobrand Foods Ltd., 2007 ONCA 425, counsel for the Respondents further indicated that the Respondents have elected to not call any evidence and want simply to proceed with the motion. Counsel for the Appellants did not object to the motion proceeding.
[22] Before the parties proceeded with the motion, the Deputy Judge clarified the procedure going forward:
THE COURT: Mr . Chaitram [counsel for Defendants], you, you have elected not to call evidence.
MR . CHAITRAM: That 's right , Your Honour.
THE COURT: Correct? And your submissions on the non-suit include your final submissions with respect to this whole proceeding. Correct?
MR. CHAITRAM: That' s right.
THE COURT: So I can take it that whatever you 've told me not only covers your position on the non-suit itself but on your argument s regarding the final disposition of this matter . Correct?
MR. CHAITRAM: That ' s correct . And this is final submission and .. .
THE COURT: Yeah . All right. I just want to make sure that 's clear on the record . Small Claims Court rules, as you well know, are to be interpreted in a way that reduces the cost and expenses to the clients, gets the matters done expeditiously, so I want to make sure that we're dealing with everything right now and your submissions and Mr. Luthra's [counsel for the Plaintiffs], so that I have the complete arguments on the basis of which I can make my decision .
MR. CHAITRAM: Thank you , Your Honour.
[23] The Deputy Judge then invited the parties to make submissions on both the motion for non-suit and the claim itself. After hearing both parties’ submissions, the Deputy Judge adjourned the matter to February 3, 2020. On that day, he provided oral reasons and dismissed the Appellant’s claim.
[24] In his oral reasons, the Deputy Judge made it clear that he heard submissions on both the non-suit and the merits of the entire case. He then reviewed the evidence in relation to the Appellant’s claims for breach of an oral contact and unjust enrichment.
[25] With respect to the claim for unjust enrichment, the Deputy Judge found that the claim for unjust enrichment failed. While he found, on the evidence, an enrichment by the Respondents and a corresponding deprivation by the Appellants, he also found there was a juristic reason for this enrichment; namely, the written assignment agreement.
[26] With respect to the claim for breach of contract, he found, on the evidence, that there was no enforceable oral contract between the parties as claimed. The Deputy Judge held that there was no written agreement outlining the details and, correspondingly, there was no consensus ad idem between the parties as to the division of the monies upon the sale of the Property. As he indicated, “[…] it is up to the plaintiff to satisfy me on the balance of probabilities that there was an oral contract that he could enforce. I find that the plaintiff did not satisfy this burden of proof and for that reason I am dismissing the claim.”
[27] After he finished his oral decision, the Deputy Judge indicated that the matter was decided on a non-suit motion and awarded costs accordingly.
V. Analysis
A. Jurisdiction of Small Claims Court
[28] The Appellants argue that the Small Claims Court does not have the jurisdiction to hear a motion for non-suit.
[29] I disagree. The Small Claims Court is a statutory court that derives its jurisdiction solely from the Courts of Justice Act, R.S.O. 1990, c.C.43. S. 23 of the Courts of Justice Act states specifically that the Small Claims Court has jurisdiction in any action for the payment of money or the recovery of property that does not exceed the prescribed limit. Clearly, the Appellant’s claim was for the recovery of money within the prescribed limit, and thus was properly before that court.
[30] Rule 15, of the Small Claims Court Rules also provide for motions. Usually they are on notice, but the court can dispense with notice if the circumstances of the motion make it not necessary (r. 15.03), or if the court finds that it is in the interest of justice (r. 2.02) to dispense with notice. Of note, is that the Appellants did not raise the issue of notice at the trial, not did they cite lack of notice as a ground of appeal.
[31] Finally, the history of the Small Claims Court is one of progressive development toward providing increased access to justice. The Small Claims Court is a place where people can have ready and inexpensive access to civil justice. Procedures are simpler and matters are decided in a summary way under relaxed rules of evidence: Grover v Hodgins, 2011 ONCA 72, 103 O.R. (3d) 721, at 46-47.
[32] Accordingly, I find that the hearing of a motion for a non-suit is within the jurisdiction of a Small Claims Court’s Deputy Judge and was properly heard here.
B. Legal Test for Motion for Non-Suit
[33] The Appellants argue that the Deputy Judge made an error in law by applying the incorrect legal test in the motion for non-suit.
[34] I agree. A motion for “non-suit” refers to a motion brought by the Defendant at the close of the Plaintiff’s evidence to dismiss the action on the ground that the Plaintiff has failed to make out a case for the Defendant to answer. In responding, the Plaintiff must show on this motion that it put forward a prima facie case which, if believed, would allow the trial judge to decide in its favour: FL Receivables Trust 2002-A, at para. 12, 15.
[35] When considering a motion for non-suit, a judge must take into consideration the Plaintiff’s most favourable facts from the evidence led at trial, as well as all supporting inferences. The judge must then decide whether the inferences that the Plaintiff seeks in their favour can be drawn from the evidence adduced if the trier of fact chose to accept it. In order to set aside the granting of a non-suit, the Appellant must show that there is evidence which, if believed, would form the basis for a prima facie case: Calvin Forest Products v. Tembec Inc., 2006 12291 (ON CA), 208 O.A.C. 336 (C.A.) at para. 13-14, citing Sopinka, Lederman, and Bryant in The Law of Evidence (2nd ed.).
[36] On a motion for non-suit, the trial judge undertakes a limited inquiry. If the Plaintiff puts forward some evidence on all elements of its claim, the judge must dismiss the motion. If assessing whether the Plaintiff has made out a prima facie case, the judge must assume the evidence to be true and must assign the most favourable meaning to the evidence capable of giving rise to the competing inferences: FL Receivables, at para. 34-35.
[37] Upon reviewing the oral reasons of the Deputy Judge, it is clear that he reviewed the merits of the Plaintiffs’ claim “on the balance of probabilities.” He indicated his knowledge of the correct legal test on a non-suit on the day the matter was argued, but never mentioned it when he released his oral reasons. It is clear from his reasons that he did not review the evidence in light of the test set out above but skipped right to reviewing the merits of the case for his final decision. The legal test for a non-suit was, therefore, never applied to the facts.
C. Correct Procedure for Motion for Non-Suit
[38] The Appellants also assert that the Depute Judge made an error in law by not following the correct procedure on the motion for non-suit.
[39] If a Defendant moves for a non-suit, they must elect whether they will call any evidence. If they elect to call evidence, then the trial judge will reserve their judgment until the end of the case. If the Defendant elects not to call any evidence, then the judge should rule on the motion immediately after it is argued: See FL Receivables, at para. 13.
[40] I see no error on the part of the Deputy Judge. He correctly identified the procedure to follow and did so. The Respondents elected to not call evidence, so he proceeded with hearing their final arguments on both the motion and the action itself. He released his decision thereafter.
D. Error of Fact and Law
[41] The Appellants alleged that the Deputy Judge made an error of mixed fact and law when he accepted the allegations set out in the Defence, without any supporting evidence.
[42] I disagree and see no error on the part of the Deputy Judge. His findings of fact, as set out in his reasons for judgment, are clearly supported by the evidence presented by the Appellants. Joice gave evidence and filed three exhibits. The Appellants had completed their case. The Deputy Judge then applied these facts to the applicable law and made his decision. He rejected Joice’s oral evidence, considering the written contracts that Joice also entered into evidence. He specifically indicated that there was no certainty of terms, which he was entitled to find after hearing from Joice alone. Granted, he did not apply the facts to the motion for non-suit; however, he did correctly apply them on his final determination of the claim.
[43] With respect to the claim for unjust enrichment, the Deputy Judge was also entitled to find that there was a juristic reason because of the written contracts that Joice entered into evidence. He rejected Joice’s oral evidence in favour of the documentary evidence. These are findings of fact which are supported by the evidence to which he is entitled deference. The Respondents were not required to give evidence for these findings to be made.
VI. Should A New Trial be Ordered?
[44] Although I have found an error in law, I do not find that a new trial is warranted.
[45] When an appeal is allowed, the appellate court may make a new order or decision that ought to have been made or order a new trial. A new trial should not be ordered unless a substantial wrong or miscarriage of justice as occurred: s.134 CJA.
[46] This stringent standard reflects the underlying policy that new trials ordinarily are contrary to public interest. They cause increased costs and delay the resolution of claims and, therefore, should be avoided unless plainly required by the interests of justice: FL Receivables at para. 17.
[47] In the case before me, no substantial wrong or miscarriage of justice has occurred. The Deputy Judge made it clear, both when he heard submissions on November 22, 2019, and when he released his oral reason, that he was rendering his decision on both the non-suit and the trial as a whole. Given that the Respondents elected to not call any evidence, he had all the necessary evidence before him to decide the issues raised in the Claim. Unfortunately, while he indicated at the end of his reasons that the matter was decided by a non-suit motion, it was clear from the introductory portion of his reasons, that he was considering both the non-suit and the action in its entirety.
[48] Given the error of law, I do have the power to make a new order. Section 134(4) of the CJA, allows me to dispense with a new trial and draw inferences of facts from the evidence given at trial, as long as it is not inconsistent with a finding of fact that was not set aside. I am able to do this on the record.
[49] I agree with the Deputy Judge in that the evidence presented by Joice regarding the terms of the alleged oral contract were far from clear. He indicated in his evidence that Joseph never asked for the basis of his alleged costs of $97,000 in 2015, nor did he ever provide them to him prior to trial. I had difficulty in reviewing his evidence to understand the exact sum he was seeking, nor did he provide sufficient evidence to support those costs. I also echo the Deputy Judge’s comments that it was unusual for an experienced businessman to not record his agreement in writing. He could have taken title jointly with the Respondents or created a Memorandum of Understanding but failed to do so. The formal assignment agreement was the perfect forum in which to outline the exact nature of the compensation he was expecting, but he failed to do so.
[50] With respect to the claim for unjust enrichment, I again agree with the findings of fact made by the Deputy Judge that there was a juristic reason for the Respondents’ enrichment - the assignment agreement. The Respondent’s took over the Appellant’s responsibilities under the Sale Agreement. The Respondents alone took title and obtained a mortgage and all the responsibilities associated with it. Had the parties not been able to secure tenants or if they were unable to meet the mortgage payments, the Respondents alone would have been liable to the mortgagee, not the Appellants.
[51] Accordingly, while the Deputy Judge erred in failing to directly address the test for non-suit, I agree with his findings of fact with respect to unjust enrichment and contract law and agree that the Claim should be dismissed.
VII. Conclusions
[52] Accordingly,
a) This appeal is allowed;
b) The Appellant’s claim is dismissed; and,
c) The parties are encouraged to resolve the issue of costs themselves. If they are unable, the parties shall serve and file their written costs submissions, which shall not exceed two pages, single-sided and double spaced, plus their Costs Outline, no later February 7, 2022; the parties may file written responding costs submissions, with the same size restrictions, no later than February 21, 2022.
Fowler Byrne J.
Released: January 13, 2022
CITATION: Mundenchira Inc., et al v. Punnasseril et al, 2022 ONSC 311
COURT FILE NO.: DC-20-0000-17-000
DATE: 2022 01 13
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
B E T W E E N:
MUNDENCHIRA INC., JOICE MUNDENCHIRA and SISLY MUNDENCHIRA
Appellants/Plaintiffs
- and -
JOSEPH PUNNASSERIL, LAISY VARKEY and JAISIL PUNNASSERIL
Respondents/Defendants
REASONS FOR JUDGMENT
Fowler Byrne J.
Released: January 13, 2022