COURT FILE AND PARTIES

COURT FILE NO.: CV-13-107

DATE: 2013/10/16

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Action Auto Leasing & Gallery Inc., Plaintiff (Appellant)

AND:

Angela M. Crawford and Zachary J. Aho, Defendants (Respondents),

BEFORE: The Honourable Mr. Justice R. J. Nightingale

COUNSEL: Lindsay Kirk, Counsel for the Plaintiff (Appellant); no one appearing for the Defendants (Respondents)

Heard: September 19, 2013

ENDORSEMENT

[1] The Appellant Action Auto Leasing and Gallery Inc. ( “Action Auto”) appeals from the judgment of Deputy Judge Campbell dated February 20, 2013 which dismissed Action Auto’s motion for an assessment of damages and its action against the Respondents who had not defended the action and had been noted in default.

Motions Court Decision

[2] The facts established by Action Auto’s affidavit on the motion confirmed that Action Auto entered into a four-year written lease agreement with the Respondents for a used vehicle on March 24, 2010. The Respondents failed to make the lease payments as required and remedy the breach and as a result Action Auto repossessed the vehicle on November 26, 2010.

[3] Action Auto terminated the lease and sued for the deficiency balance of $9185.66 plus interest and costs on October 17, 2012 after the default by the Respondents continued. The Respondents, notwithstanding being personally served with Action Auto’s claim, failed to defend the action and were noted in default on January 10, 2013.

[4] Action Auto then filed its motion in writing with a supporting affidavit to have its damages assessed. Notwithstanding that Rule 11.03 (5) of the Small Claims Court rules confirms that it was not required to prove liability against the Respondents as they were noted in default, the Deputy Judge, without any further notice to Action Auto, dismissed its action and motion suggesting, among other things, that Action Auto had engaged in deceptive and unfair practices contrary to the Consumer Protection Act (“CPA”) and, accordingly, should be denied its actual damages under the lease.

[5] Because of the errors made by the Deputy Judge, with all due respect, his decision must be set aside.

Trial Decision

[6] This appeal was heard at the same time of an appeal by the same Plaintiff from another decision rendered one month earlier by the same Deputy Judge involving an identical lease with other lessees, which appeal decision of Action Auto Leasing & Gallery Inc. v. Canton is also released today. Unlike this undefended damages assessment motion, that defended action proceeded to trial on both liability and damages.

[7] The Deputy Judge provided reasons for his decision in this case that were almost identical to the reasons he made in that case and dismissed this action altogether even though liability for Action Auto’s damages in this case was deemed to be admitted.

[8] In my view, that deemed admission by the Respondents of their liability in law to Action Auto under the lease because of their default meant that they were admitting liability to it in all respects. They could not be alleging anything that would result in a denial of liability including a potential violation of the provisions of the CPA. Accordingly, the Deputy Judge should not have ignored that admission of liability of the Respondents under the lease including specific terms of the lease which determined the entitlement of the Action Auto to its damages payable by the Respondents.

[9] Even though the Deputy Judge in his reasons acknowledged that it was not necessary for Action Auto to prove liability (i.e. under the lease) because of the application of Rule 11.03 (5), he nevertheless found that the Respondents were not bound by the provisions of the lease due to Action Auto’s noncompliance with the CPA.

[10] The Deputy Judge accordingly made an error in law when he dismissed Action Auto’s claim because of allegations of nondisclosure, misrepresentation in the lease document itself and deceptive and unfair business practices under the CPA as the admission of liability by the Respondents meant that they were bound by the provisions of the lease. An error in law by the Deputy Judge is not entitled to deference by this court and accordingly his decision must be set aside.

[11] In addition, as was the case in the other Action Auto claim, the Deputy Judge found that there were no advances made to the Respondents under the lease, the capitalized amount was approximately $119 less than stated by Action Auto under the lease, the lease implicit finance charge was overstated by Action Auto in the amount of $1215 and the set up administration fee which attracted interest over the four years of the lease was a deceptive and unfair practice under the CPA. In my view, for the same reasons provided in this court’s decision in the other action and even more so as there was no defence filed or evidence provided by the Respondents in this claim, the Deputy Judge clearly misapprehended the relevant evidence before him and made speculative inferences from the evidence when there was no basis to do so. The factual errors in my view amount to a palpable and overriding error.

[12] Lastly, the Deputy Judge provided no notice to Action Auto that he was considering a dismissal of the claim altogether or a finding of no damages because of the alleged applicability of the CPA notwithstanding the admission of liability by the Respondents. Rule 11.03 (3) of the Small Claims Court Rules confirms that when the Deputy Judge finds that the Plaintiff’s affidavit is inadequate or unsatisfactory, he may order that a further affidavit be provided or assessment hearing be held.

[13] The Deputy Judge specifically found that the affidavit material was inadequate to enable him to assess the actual damages and stated he would have ordered that a further better affidavit be filed detailing what Action Auto did with the leased vehicle once it was repossessed had he not dismissed the claim.

[14] Accordingly, it is only reasonable to state that Action Auto would want and should have been provided the opportunity by the Deputy Judge to address any of the concerns he had with the provisions of the CPA, notwithstanding the admission of liability, which he contemplated could and in fact resulted in his dismissal of its claim. That lack of procedural fairness to Action Auto also requires that the Deputy Judge’s decision be set aside.

[15] Action Auto asked the Deputy Judge to find that the Respondents owed the deficiency balance of $9185.66 upon termination of the lease plus interest at 18% per year plus costs. It now suggests because of an admitted error it made adding $600 to the value of the vehicle for an automatic transmission, as noted by the Deputy Judge, the actual deficiency amount claimable is $8507.66.

[16] The Deputy Judge was not satisfied with the adequacy of the Action Auto’s affidavit material and in particular noted there was no evidence of whether the leased vehicle was sold, released or kept by it. The affidavit seem to follow a standard form simply repeating the allegations in the statement of claim but did not even refer to all of the paragraphs of the lease pursuant to which it was claiming its damages and the supporting relevant facts for each paragraph.

[17] For example, Action Auto’s witness simply stated that “the lease terminated with a deficiency of $9125.66 (the deficiency amount) left outstanding plus interest and costs in accordance with section 20 of the lease” and attached some exhibits.

[18] However, one of those exhibits titled the” Default Amount” claims as an additional amount an item of $2500 for a Residual Value with no explanation whatsoever of how it came to that amount and why the Respondents should be paying that amount when it is not receiving or purchasing the vehicle.

[19] Also, Action Auto did not say whether it sold the vehicle privately or by public auction or retained the vehicle in order to sell or lease it to another retail customer which could make a difference in the amount of credit the Respondents are entitled to against Action Auto’s damages under paragraph 20 of the lease.

[20] To that extent, I agree with the Deputy Judge that it is incumbent upon Action Auto to provide a further detailed affidavit explaining all those particular facts with all supporting documentation relating to each of its claims back to the specific enabling paragraph of the lease for the benefit of the court rather than have the Judge try to figure it out by guesswork. It would be helpful as well for Action Auto to explain if the vehicle was released, why those lease payments should not be deducted from Action Auto’s damages based on the provisions of lease and applicable case law.

[21] I do not have that required information which Action Auto can provide to the Small Claims Court by way of a more detailed affidavit.

Conclusion

[22] Accordingly, the decision of the Deputy Judge is set aside and the matter shall be referred back to another Judge of the Brantford Small Claims Court for assessment of the Appellant’s damages upon the Appellant providing a further and better affidavit as required herein.

[23] Given the amount in issue, the lack of particularity of the Appellant’s initial affidavit, the minimal time spent on the hearing of this appeal on the same day as the other similar Action Auto appeal, some duplication of information in both factums and the principle of the reasonable expectations of costs payable by the Respondents (who did not attend on this appeal although served with notice of the appeal), the Appellant is entitled to its costs of this appeal fixed in the amount of $1500 inclusive of HST and disbursements.

The Honourable Justice R. J. Nightingale

Date: October 16, 2013