Beacon Hall Golf Club v. Rogers

Ontario Reports

Ontario Superior Court of Justice,

Gilmore J.

January 16, 2014

119 O.R. (3d) 72 | 2014 ONSC 318

Case Summary

Civil procedure — Transfer of proceedings — Golf club suing defendant in Small Claims Court for balance owing for membership dues and other items — Defendant counterclaiming for $35,000 (representing value of his equity membership that plaintiff had allegedly confiscated) and alleging that plaintiff had breached its fiduciary duty to him — Defendant moving to transfer matter to Superior Court of Justice under Rule 76 of simplified procedure — Motion granted — Both parties having advantage in Superior Court of expanded discovery, consideration of equitable claims and use of experts — Transfer also avoiding multiplicity of proceedings.

The plaintiff golf club sued the defendant in Small Claims Court for the balance owing for membership dues and other items. The defendant counterclaimed for $35,000, which he contended represented the value of his equity membership that the plaintiff had confiscated due to its unilateral introduction of initiation fees and failure to provide adequately for capital membership. The defendant brought a motion to transfer the action and counterclaim to the Superior Court of Justice under Rule 76 of the simplified procedure.

He did not wish to waive the amount of his counterclaim in excess of the Small Claims Court jurisdiction of $25,000. Moreover, he was claiming that the plaintiff had breached its fiduciary duty to him, and he submitted that the Small Claims Court did not have jurisdiction to determine that issue or to accept expert evidence of the value of his equity membership in the club.

Held, the motion should be granted.

In the Superior Court, both parties would have the advantage of expanded discovery, the consideration of equitable claims and the use of experts. The defendant had raised legitimate issues which may well transcend the interests of his own membership in the club. Furthermore, if he was forced to commence an action in Superior Court, the club would likely respond with a claim for dues and fees, resulting in a multiplicity of actions. [page73 ]

Vigna v. Toronto Stock Exchange, [1998] O.J. No. 4924, 115 O.A.C. 393, 28 C.P.C. (4th) 318, 1998 CarswellOnt 4560 (Div. Ct.); Vista Sudbury Hotel Inc. v. Double T. Earth Moving Ltd., [2011] O.J. No. 2695, 2011 ONSC 3454 (S.C.J.), consd

Statutes referred to

Courts of Justice Act, R.S.O. 1990, c. C.43, s. 107(1) (d), (2), (3)

Rules and regulations referred to

Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rules 1.04, (1), 76

MOTION to transfer proceedings to the Superior Court of Justice.

Thomas I. MacLennan, on behalf of Tony Lafazanis, for plaintiff/defendant by counterclaim/responding party.

Craig Losell, for defendant/plaintiff by counterclaim/ moving party.

Endorsement of GILMORE J.: —

Overview

[1] This is the defendant's (Mr. Rogers') motion to transfer his counterclaim and the plaintiff's (Beacon Hall's) action in Small Claims Court to the Superior Court of Justice, under Rule 76 of the simplified procedure [of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194] and to consolidate the proceedings.

[2] Mr. Rogers seeks to transfer the matter because his counterclaim exceeds the monetary jurisdiction of the Small Claims Court and he does not wish to reduce his claim. Mr. Rogers submits that it is expedient that the claim and counterclaim be heard together to avoid a multiplicity of proceedings. As Beacon Hall refuses to consent to the transfer, the within motion is necessary.

[3] Beacon Hall's position is that they are suing Mr. Rogers as a former club member for dues, pro shop and restaurant charges. The matter is simple and they should not be forced to a higher court and incur more expenses when they are properly pursing a debt within the Small Claims Court jurisdiction.

Background

[4] Beacon Hall issued a claim in Small Claims Court against Mr. Rogers for $20,868.22 in February 2013. Their claim related to a balance owing on account by Mr. Rogers to Beacon Hall for membership dues, food and pro shop items, which were provided by the club to Mr. Rogers. A detailed statement of account showing a breakdown of the amount owing was attached to Beacon Hall's claim, as per the procedure in Small Claims Court. [page74 ]

[5] Mr. Rogers defended the claim by filing a defence and counterclaim on April 2, 2013. Mr. Rogers' counterclaim sought $35,000, which he contended represented the value of his equity membership that Beacon Hall had confiscated due to their unilateral introduction of initiation fees and their failure to provide adequately for capital maintenance. The change in the equity arrangement with members unilaterally introduced by Beacon Hall's board of directors was not the agreement that Mr. Rogers had with the club that he joined. He claimed that he would not have joined the club if the changes in the equity membership were known to him at the time of joining as the equity component was very important to Mr. Rogers.

[6] Beacon Hall's counsel requested that Mr. Rogers waive the amount of his counterclaim in excess of the Small Claims Court jurisdiction of $25,000, but Mr. Rogers refused to do so. Mr. Rogers then indicated he intended to bring the within motion to transfer the matter to Superior Court. Counsel for Beacon Hall refused to consent to the transfer and, as such, in June 2013, dates for the within motion were sought, and ultimately a hearing date of December 19, 2013 was agreed upon by counsel.

Position of the Moving Party, Mr. Rogers

[7] Counsel on behalf of Mr. Rogers submitted that his client became an equity member of Beacon Hall in 1998, and paid approximately $55,000 for his membership. Mr. Rogers alleged that the club failed to provide adequately for capital maintenance and that the board of directors breached its fiduciary duty to existing members when it unilaterally introduced initiation fees, which essentially confiscated the equity of the existing members.

[8] When Mr. Rogers decided to sell his membership, the club refused to settle for a full return on his equity, but instead terminated his membership in January 2013. In addition, the club continued to invoice Mr. Rogers for his membership dues after termination, but before his membership had been sold.

[9] Mr. Rogers' position is that the club had breached his fiduciary duty to him by confiscating his equity interest and failing to fairly value his equity membership.

[10] Counsel for Mr. Rogers submits that Small Claims Court does not have the jurisdiction to determine issues related to a breach of fiduciary duty or to accept expert evidence of the value of Mr. Rogers' equity membership in the club. Further, the valuation, when set off against the claim, may exceed the monetary jurisdiction of the Small Claims Court. The issues raised by the counterclaim require documentary discovery, as well as the [page75 ]opinion of experts. The procedure in Small Claims Court is therefore inadequate.

[11] Mr. Rogers submits that there are issues which are of importance to both him and other members with respect to whether the club adhered to its by-laws and obligations in relation to the unilateral termination of his membership while continuing to charge him fees. Mr. Rogers is unaware as to whether or not his membership has been sold and credited. He produced statements of account from Beacon Hall, dated September 30, 2013, October 31, 2013 and November 30, 2013. The October statement shows that all outstanding amounts to the club were reversed and the November statement shows that Mr. Rogers does not show any amounts. However, he has not been able to confirm with the club the exact meaning of these accounts, nor did counsel for Beacon Hall indicate at the motion that the account statements were sufficient to settle their claim. Counsel for Mr. Rogers submits that documentary discovery is therefore required, as well as the opinion of an expert on the value of Mr. Rogers' equity interest. The Small Claims Court procedure of simply attaching documents to the claim is insufficient in this case, given the equitable issues raised.

Position of Beacon Hall

[12] Mr. MacLennan, on behalf of Beacon Hall, argued that Mr. Rogers has not proceeded appropriately and that he should have started a separate proceeding in Superior Court. Mr. MacLennan argued that the framework for dealing with different proceedings in different courts is set out in s. 107(1) (d) of the Courts of Justice Act, R.S.O. 1990, c. C.43, which reads as follows:

107(1) Where two or more proceedings are pending in two or more different courts, and the proceedings,

(a) have a question of law or fact in common;

(b) claim relief arising out of the same transaction or occurrence or series of transactions or occurrences; or

(c) for any other reason ought to be the subject of an order under this section,

an order may, on motion, be made,

(d) transferring any of the proceedings to another court and requiring the proceedings to be consolidated, or to be heard at the same time, or one immediately after the other, or,

(e) requiring any of the proceedings to be, [page76 ]

(i) stayed until after the determination of any other of them, or

(ii) asserted by way of counterclaim in any other of them.

(2) A proceeding in the Small Claims Court shall not be transferred under clause (1)(d) to the Superior Court of Justice without the consent of the plaintiff in the proceeding in the Small Claims Court.

(3) A proceeding in the Small Claims Court shall not be required under subclause (1)(e)(ii) to be asserted by way of counterclaim in a proceeding in the Superior Court of Justice without the consent of the plaintiff in the proceeding in the Small Claims Court.

[13] Since Beacon Hall has not consented, there is no statutory authority allowing the transfer of the matter to Small Claims Court. A plaintiff who properly pursues their case in Small Claims Court should be allowed to continue their action. A counterclaim strategy by a defending party should not force them into Superior Court.

Analysis and Ruling

[14] The issue in this case is whether the court's inherent jurisdiction to control court process includes the transfer of a matter to Small Claims Court with underlying facts such as these.

[15] In Vigna v. Toronto Stock Exchange,[^1] the Divisional Court was satisfied that it was open to a judge of the General Division (now the Superior Court of Justice) to transfer a matter from the Small Claims Court to the General Division in appropriate circumstances without the consent of the plaintiff in the Small Claims Court proceedings.[^2]

[16] In that case, the Small Claims Court plaintiff commenced an action against the Toronto Stock Exchange in the Toronto Small Claims Court and conceded that it was a test case in which the plaintiff hoped to have certain procedures followed by the Toronto Stock Exchange held to judicial scrutiny. At the time of filing the Small Claims Court claim, there were six actions already commenced in the General Division arising out of the Bre-X case and awaiting certification as class actions. The court found that the issues raised by the plaintiff in the Small Claims Court action were complex and involved the participation of additional parties. The court also found the duties owed by a stock exchange to its investors is an issue of importance, not just to the Toronto Stock Exchange, but to other stock exchanges across Canada and to the investment community. As the [page77 ]summary procedures available in Small Claims Court were inappropriate for the determination of the issues raised in that claim, the court held that a transfer to the General Division was appropriate.

[17] The court also relied on rule 1.04 (now rule 1.04(1)) of the Rules of Civil Procedure, which sets out that those rules are to be liberally construed to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits. The court in Vigna relied on the wording of this rule with respect to ensuring that justice was done between the parties.

[18] Of interest as well is the case of Vista Sudbury Hotel Inc. v. Double T. Earth Moving Ltd.[^3] In that case, Double T. brought a Small Claims action against Vista for unpaid invoices. Vista brought an action in the Superior Court against Double T. for breach of contract and other relief. Double T. made a counterclaim in the Superior Court action for the same unpaid accounts claimed in the Small Claims Court action and for further loss of profits. Vista subsequently brought a motion for an order transferring the Small Claims Court matter to the Superior Court of Justice. It was not disputed that the two actions involved the same parties and arose out of the same of facts.

[19] In Vista, the court considered whether it had the jurisdiction to make the requested transfer under s. 107(1) (d), (2) and (3). The plaintiff, Double T., had not consented to the transfer and the court found that Vista was seeking relief under s. 107(1)(d). The court found that Vigna was distinguishable because the Divisional Court found that the relief claimed did not fall under s. 107(1)(d) and the consent of the plaintiff was not required. The court in Vista adverted to policy considerations with respect to the right of a Small Claims Court plaintiff to have a matter heard expeditiously and inexpensively in Small Claims Court, which would override concerns about res judicata, conflicting findings and any multiplicity of proceedings. The court held that the effect of the requested order would be to force the plaintiff to adjudicate his or her claim in Superior Court in concert with another Superior Court action or as a counterclaim in a Superior Court action and that the consent of the plaintiff was a precondition to such transfer. Without consent, the court declined to make the requested order.

[20] I agree with counsel for Mr. Rogers that this is not a case where a consolidation is being requested. No Superior Court action currently exists. A multiplicity of actions or res judicata [page78 ]will not be an issue if the requested order is made. The Small Claims Court matter will simply be transferred to the Superior Court and both parties will have the advantage of expanded discovery, the consideration of equitable claims and the use of experts.

[21] It is my view that the determinations in Vigna must prevail with respect to the most expeditious and least expensive determination of civil proceedings. While forcing a matter into Superior Court by way of counterclaim is not a litigation strategy that is to be condoned, I find that Mr. Rogers has raised legitimate issues, which may well transcend the interests of his own membership in the club. Further, if Mr. Rogers is forced to commence an action in Superior Court, the response to it will likely be a claim by the club for their dues and fees, clearly resulting in a multiplicity of actions.

[22] In all the circumstances, I find that the requested order shall be granted and the matter shall forthwith be transferred from Small Claims Court to the Superior Court of Justice in Newmarket.

[23] If the parties cannot agree on costs, I will receive written submissions on a seven-day turnaround, commencing with the moving party, followed by responding submissions, then reply submissions, if any, commencing 14 days from the date of release of this endorsement. Cost submissions shall be no more than two pages in length, exclusive of any costs outline or offers to settle. All costs submissions shall be delivered via e-mail through my assistant at jennifer.beattie@ontario.ca If no submissions are received within 35 days of the release date, the issue of costs will be deemed to have been settled as between the parties.

Motion granted.

Notes

[^1]: [1998] O.J. No. 4924, 1998 CarswellOnt 4560 (Div. Ct.).

[^2]: Ibid, para. 1.

[^3]: [2011] O.J. No. 2695, 2011 ONSC 3454 (S.C.J.).

End of Document