CITATION: Terra Scapes Landscape Construction Inc. v. Ashtaryeh, 2022 ONSC 4178

DIVISIONAL COURT FILE NO.: 878/21

DATE: 20220718

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

BETWEEN:

Rod Ashtaryeh

Appellant/Defendant

– and –

Terra Scapes Landscape Construction Inc.

Respondent/Plaintiff

Duncan MacFarlane, for the Appellant

J. Leigh Daboll, for the Respondent

HEARD: May 9, 2022

Nishikawa J.

REASONS FOR DECISION

Overview

[1] The Appellant defendant, Rod Ashtaryeh, appeals from the judgment of Deputy Judge F. Guilebault of the Small Claims Court made on October 12, 2021 (the “Judgment”). The deputy judge granted judgment in favour of the Respondent plaintiff, Terra Scapes Construction Inc., in the amount of $27,580.00, which was the outstanding amount on an invoice for landscaping services.

[2] The Appellant challenges the fairness of the trial process and the adequacy of the deputy judge’s reasons. The Appellant also appeals on the grounds that the deputy judge made palpable and overriding errors in her assessment of the evidence.

[3] For the reasons detailed below, the appeal is allowed.

Factual Background

The Contract

[4] The Appellant is the owner three adjoining properties in the Niagara region.

[5] The Respondent is a corporation engaged in landscaping work and, at the time, had been in operation for approximately twelve years.

[6] On March 19, 2019, the Appellant and Respondent entered into a contract for the Respondent to “install complete soft and hard landscape as laid out in the plan and scope provided on a new development property” (the “Contract”). The total contract price was $94,192.00 including HST.

[7] Under the sub-heading, “Changes”, the Contract states that “[a]ny changes in the design or Contract whether the changes result in additional time, cost or neither, must be made in writing and signed by both parties.”

[8] The Contract further states that the “Customer is responsible for securing all necessary permits. Unless specified in writing, TerraScapes Landscape Construction Inc. is not responsible for code violation made at Customer request.”

The Dispute

[9] The Respondent carried out the landscaping work at the Appellant’s property. It is undisputed that during the course of the project, various changes were made, including changes to the grading.

[10] After completing the work, on June 28, 2019, the Respondent tendered a final invoice for $47,580. The Appellant paid $20,000 of that amount.

[11] In August 2019, the Town of Niagara (the “Town”) inspected the property, and advised the Appellant that the landscaping was not in accordance with the grading plan. The Appellant contacted the Respondent to seek its assistance in addressing the Town’s requirements. The Respondent would not assist, however, because the outstanding invoice had not been paid.

[12] The Appellant was required to hire a surveyor, engineers and to remedy the landscaping to meet the Town’s requirements, resulting in approximately $91,000 in additional costs. Certain of the landscaping had to be dug up and re-done.

[13] On November 14, 2019, the Respondent brought a claim in the Small Claims Court against the Appellant for the balance on the invoice, $27,580.

The Proceeding Before the Deputy Judge

[14] Both the Appellant and the Respondent were self-represented in the proceeding below. The following description of the trial before the deputy judge is based on the “Extract of Proceedings” filed on appeal.

[15] At the hearing, on October 12, 2021, the deputy judge called upon the Respondent to give evidence. The Respondent’s representative, Richard Lof, was affirmed, and then read a written statement. The deputy judge then asked Mr. Lof to turn to the attachments to the claim and asked questions about the contract and invoice, and whether he wished to have the attachments marked into evidence. The deputy judge went through the documents with Mr. Lof, who described each of the documents and, in many cases, the purpose for which he was relying on them. A total of six documents were marked into evidence. The deputy judge then told the Mr. Lof to step down.

[16] Next, the deputy judge advised the Appellant that “it’s your time now to put in your defence.” Mr. Ashtaryeh was affirmed, and then gave his account. The deputy judge asked if the Appellant had a defendant’s claim, to which he responded that he did not because the remedial work had just been completed. The deputy judge did not ask the Appellant if he had any documents that he wished to enter into evidence.

[17] The deputy judge then gave Mr. Lof an opportunity to reply. Mr. Lof disputed the Appellant’s account and expanded on his earlier testimony. The Respondent’s testimony in reply included argument as well as testimony on factual matters that were not proper reply, including extra work that the Respondent had done for the Appellant.

[18] Before retiring to deliberate, the deputy judge had the attachments to the Appellant’s defence marked as an exhibit. The documents included photographs of the property and invoices relating to the additional expenses. Unlike the Respondent, however, the deputy judge did not give Mr. Ashtaryeh an opportunity to explain the documents or the purpose for which they were submitted.

The Judgment

[19] After approximately 45 minutes, the deputy judge returned to deliver the Judgment. After summarizing the parties’ respective positions and the relevant provisions of the contract, the deputy judge stated as follows:

Changes were made to the contract, therefore, according to the contract the plaintiff is not responsible for code violations and this is according to the contract. I find that evidence is lacking on who initiated the changes or whether or not the plaintiff conveyed to the defendant that a customer’s changes were in violation of the plan. However, the defendant provided the plan to the plaintiff.

Why would the plaintiff request changes? This is a contract case and I must assess the evidence and the contract as placed in front of me as evidence. There was a contract signed by both parties. No changes were in writing, however, both parties admit that changes were made.

I am satisfied that the defendant presented himself as a general contractor and I am satisfied that the defendant actually requested the changes.

Therefore, pursuant to the contract in front of me, judgment is for the plaintiff in the amount of $27,580. He has requested no cost and no interest and therefore there should be no cost and no interest.

Issues

[20] This appeal raises the following issues:

(a) Did the deputy judge deprive the Appellant of procedural fairness by failing to allow cross-examination?

(b) Are the deputy judge’s reasons adequate?

(c) Did the deputy judge make a palpable and overriding error in her assessment of the evidence?

Analysis

Standard of Review

[21] The parties agree that the applicable standard of review of the deputy judge’s findings is palpable and overriding error. A “palpable” error is an error that is plainly seen. An “overriding” error is an error that is sufficiently significant to vitiate the challenged findings of fact: Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235, at paras. 1, 6. An example of a palpable error is a finding made in the absence of evidence or misapprehension of relevant evidence: Waxman v. Waxman (2004) 2004 39040 (ON CA), 186 O.A.C. 201, at para. 296.

[22] On issues of procedural fairness, the question is whether the proceeding before the deputy judge was procedurally fair.

Procedural Fairness

[23] The Appellant submits that the proceeding before the deputy judge was unfair because he was not given an opportunity to cross-examine the Respondent. The Respondent disagrees.

[24] In considering the procedural fairness issue, it is necessary to keep in mind the particular mandate and context of the Small Claims Court, as highlighted by the Court of Appeal in Maple Ridge Community Management Limited v. Peel Condominium Corporation, 2015 ONCA 520, at paras. 34-35:

The Small Claims Court plays a vital role in the administration of justice in the province by ensuring meaningful and cost effective access to justice for cases involving relatively modest claims for damages. In order to meet its mandate, the Small Claims Court’s process and procedures are designed to ensure that it can handle a large volume of cases in an efficient and economical manner.

Failing to take the Small Claims Court context into account only serves to restrict access to justice by unnecessarily imparting formality and delay into a legal process that is designed to be informal and efficient.

[25] In Riddell v. Huynh, 2021 ONSC 7112, Kristjanson J. of this court observed that the emphasis on accessible, affordable justice is reflected in the provisions that govern Small Claims Court hearings. Under s. 25 of the Courts of Justice Act, R.S.O. 1990, c. C.43, the “Small Claims Court shall hear and determine in a summary way all questions of law and fact and may make such order as is considered just and agreeable to good conscience.” Under s. 25, a “deputy judge has discretion to admit as evidence relevant documents and oral testimony regardless of whether or not the evidence is given or proven under oath or affirmation or admissible in evidence in any other court.”

[26] The Respondent relies on Earthcraft Landscape Ltd. v. Clayton, 2002 NSSC 259, at para. 14, in which the Nova Scotia Supreme Court held that the absence of cross-examination was not a breach of the principles of natural justice. In that case, the court observed that there were no authorities squarely on the issue of whether the principles of natural justice require a Small Claims Court to provide for formal cross-examination. While there was no cross-examination, the adjudicator had put the issues raised by each party to the other and effectively cross-examined the witnesses. The court found that “it is the substance, rather than the form, of cross-examination that is essential.”

[27] The parties were not able to direct me to any Ontario cases addressing the question of whether the failure to provide for cross examination in a trial before the Small Claims Court is a breach of procedural fairness.

[28] In Chanachowicz v. Winona Wood Ltd., 2016 ONSC 160, Hill J. found that the conduct of the trial by a deputy judge of the Small Claims Court was a miscarriage of justice, and set aside the judgment. In that case, the deputy judge had curtailed the defendant’s cross-examination of the plaintiff’s witnesses, erroneously excluded evidence, and did not permit the defendant to make closing submissions. The failure to permit the self-represented defendant to make closing submissions was found to be a sufficiently egregious error and denial of fundamental justice to allow the appeal.

[29] In respect of cross-examination, Hill J. noted, at para. 68, that: “[e]ffective cross-examination is recognized as the core of a fair trial and the right to cross-examine witnesses, while not absolute, should be without significant and unwarranted restraint.” (Internal citations and quotations omitted.) The curtailing of cross-examination by the defendant was an element of the unfairness of the trial as a whole. Hill J. provided the following guidance on the conduct of a trial involving self-represented litigants before the Small Claims Court, at paras. 78-79:

The claims before the trial court were relatively straightforward. The quantum of damages claimed by the respective parties were not significant. But to litigants before the court, fair resolution of their disputes was important. The trial judge’s sense that the trial should be completed in a day was entirely reasonable.

Not simply from the advantage of hindsight, but as a prudent practice in presiding over litigation involving one or more self-represented litigants, the court should routinely, at the outset of trial, provide instructions and information about trial procedure…, caution about adherence to the pleadings, preliminary review of what the parties consider the live issues to be, the expected manner of their discharge of proof of essential facts, discussion of admissions and agreed facts and documentary exhibits and testimonial evidence of witnesses not appearing, information to a defendant that he can prosecute his Defendant’s Claim in part through cross-examination of plaintiff witnesses, consultation about a trial timetable, etc.

[30] In this case, while recognizing that the Small Claims Court must hear and determine all questions of law and fact “in a summary way” and making allowances for the informality and efficiency necessitated in proceedings before it, I nonetheless find that the deputy judge’s failure to allow cross-examination was a breach of procedural fairness.

[31] In the circumstances of this case, the absence of cross-examination of either party was a significant gap giving rise to unfairness in the trial. That is because there was conflicting evidence as to how the changes to the project came about, whether they were requested by the Appellant and whether the Respondent brought to the Appellant’s attention that the changes would result in non-compliance with the grading plan. The Respondent testified that the changes were all made at the Appellant’s request. The Appellant testified that he provided feedback about aesthetics, such as the location of trees and plants, and not about grading, for which he relied on the Respondent’s expertise.

[32] The deputy judge found that the evidence as to who initiated the changes and whether the Respondent informed the Appellant that they were contrary to the plan was “lacking.” She nonetheless inferred that since there would be no reason for the Respondent to make the changes, the changes were made at the Appellant’s request. In order to make this inference, however, the deputy judge had to reject the Respondent’s evidence that he did not request changes to the grading plan. In making her findings, the deputy judge clearly preferred the evidence of the Respondent over the evidence of the Appellant. However, in the absence of cross-examination, the basis for preferring the Respondent’s evidence is not clear.

[33] Similarly, in awarding damages of $27,580 to the respondent, the deputy judge accepted that this represented the amount owing under the Contract. However, the Appellant disputed the amount owing. The Appellant’s evidence was that, even leaving aside the issue of the changes to the scope and plan, the balance owing was $21,676.08 and not $27,580, as the Respondent claimed. Again, there was conflicting evidence on a key issue. Neither party had the opportunity to test the other party’s assessment of damages through cross-examination. In awarding the Respondent the entire amount, the deputy judge must have preferred the Respondent’s evidence; she simply accepted that the amount sought by the Respondent was the balance due on the contract. The documents in evidence showed, however, that the Appellant disputed the balance owing, even without taking into consideration the grading issue and the additional costs.

[34] In my view, where there is conflicting testimonial evidence, trial fairness requires that the parties be afforded an opportunity to cross-examine each other’s witnesses. In this case, in preferring the Respondent’s evidence over the Appellant’s, the deputy judge in effect made credibility findings without explicitly stating so. Without cross-examination, however, the basis for finding one party more credible than the other is not apparent. The approach of the deputy judge was inappropriate and led to unfairness in the proceeding.

[35] This is not to suggest that procedural fairness requires formal cross-examination in every trial before the Small Claims Court. I agree with the finding in Earthcraft that it is the substance, rather than the form of cross-examination that is required. The issue is whether the evidence has been tested, whether by cross-examination by the opposing party or by questions from the adjudicator. In this case, the deputy judged posed a few questions, however, they related to the parties’ positions, and cannot be considered a testing of the evidence. Each party’s evidence was untested by cross-examination or otherwise.

[36] In addition, I find that the unfairness was compounded by the fact that Mr. Lof was given an opportunity to explain each of the documents that the Respondent sought to have entered into evidence and the Appellant was not. The Appellant’s documents were entered only as an after-thought, after the evidentiary portion of the hearing had been concluded. Moeover, there is nothing in the Judgment to suggest that the deputy judge considered the documents, or if she did not consider them, why they were not relevant.

[37] Accordingly, I find that the proceeding before the deputy judge lacked procedural fairness and that the Judgment must be set aside.

[38] Given my conclusions above, it is unnecessary for me to consider the other grounds of appeal.

Conclusion

[39] Accordingly, the appeal is allowed. The judgment is set aside, and a new trial before a different deputy judge of the Small Claims Court is ordered.

[40] The Appellant seeks partial indemnity costs of the appeal in the amount of $3,717.30, including disbursements of $807.00 and HST. The Respondent’s partial indemnity costs, including disbursements and HST, are $3,774.43.

[41] As the successful party, the Appellant is entitled to costs. The amount sought is fair and reasonable. Costs of the appeal are fixed at $3,717.30, payable by the Respondent within 30 days.

“Nishikawa J. “

Released: July 18, 2022

CITATION: Ashtaryeh v. Terra Scapes Landscaping Inc., 2022 ONSC 4178

DIVISIONAL COURT FILE NO.: 878/21

DATE: 20220718

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

Nishikawa J.

BETWEEN:

Rod Ashtaryeh

Appellant/Defendant

• and -

Terra Scapes Landscaping Inc.

Respondent/Plaintiff

REASONS FOR JUDGMENT

Released: July 18, 2022