Court File and Parties

Court File No.: CV-17-583110 Date: 2019-08-20 Superior Court of Justice – Ontario

Re: Royal Bank of Canada, Plaintiff (Responding Party) And: Peter Lendak, Defendant (Moving Party)

Before: Stinson J.

Counsel: Vic Rampersad, for the Royal Bank of Canada Peter Lendak, for himself

Heard: In writing, at Toronto

Reasons for Decision

[1] This is a collection action. The plaintiff sues to recover an alleged indebtedness of $5,000 advanced on a line of credit account and less than $14,000 alleged to be owing on a credit card debt. The total claim, therefore, is for less than $19,000, well within the $25,000 monetary jurisdiction of the Small Claims Court.

[2] The issue on this motion is whether the plaintiff should be permitted to continue to pursue this claim in the Superior Court of Justice in Toronto, where the action was started, even though the defendant lives in Northern Ontario, in the Town of Elliott Lake, which is located approximately 550 miles north of the courthouse in downtown Toronto. The plaintiff asserts that it should be entitled to proceed in the Superior Court in Toronto. The defendant asserts that it is oppressive and unfair for him to be required to come to Toronto, a six-hour drive from his place of residence, to defend the action. In this motion he seeks a stay of proceedings.

[3] For the reasons that follow, I have concluded that the appropriate course is to exercise the inherent jurisdiction of the court to direct that this proceeding be transferred to the Small Claims Court in Elliott Lake and thereafter prosecuted as a Small Claims Court action.

[4] This case has an unfortunately long procedural history, stemming in part from a combination of procedural decisions, misunderstandings and miscommunications on the part of both sides. To begin with, as I have noted, although the claim is within the monetary jurisdiction of the Small Claims Court, the plaintiff chose to commence proceedings in the Superior Court of Justice. No reason or explanation has been provided for that decision. Additionally, although the plaintiff was aware that the defendant lived in Northern Ontario, the statement of claim named Toronto as the place of trial.

[5] Not surprisingly, the defendant (who is not represented by counsel) was unhappy that he was being forced to defend a Superior Court lawsuit in Toronto for a Small Claims Court claim. He protested to plaintiff's counsel and, to their credit, plaintiff's counsel conceded that the dispute should more properly be litigated in the Small Claims Court. To that end, plaintiff's counsel proposed that that the matter be transferred to Small Claims Court. They prepared and forwarded to the defendant a form of written consent to transfer the proceeding, pursuant to s. 23(2) of the Courts of Justice Act, R.S.O. 1990, c. C.43. That provision states as follows:

s. 23(2) An action in the Superior Court of Justice may be transferred to the Small Claims Court by the local registrar of the Superior Court of Justice on requisition with the consent of all parties filed before the trial commences if,

(a) the only claim is for the payment of money or the recovery of possession of personal property; and

(b) the claim is within the jurisdiction of the Small Claims Court.

[6] Unfortunately, due to an innocent misunderstanding on the part of plaintiff's counsel, the form of consent that was prepared did not provide for the lawsuit to be transferred to the Small Claims Court that is located in Elliott Lake. Instead, it sought the defendant’s consent to transfer the proceeding to the Small Claims Court in the City of Sault Ste. Marie. Sault Ste. Marie is approximately 200 km west of Elliott Lake, or a 2-1/2 hour drive from the defendant’s residence.

[7] Once again, not surprisingly, the defendant was displeased that he was being asked to defend a claim at a court some 200 km away from his place of residence, instead of at the Small Claims Court in Elliott Lake. Rather than communicate to plaintiff's counsel a proposal that the matter be transferred to Elliott Lake and not to Sault Ste. Marie, he simply declined to sign the form of consent. Plaintiff's counsel therefore remained unaware of the option to have the case tried in Elliott Lake. Plaintiff's counsel also perceived that the defendant was being uncooperative and trying to delay the proceedings.

[8] In a further good faith effort to move the matter forward and to permit the defendant to defend the action in a Small Claims Court near to his residence (and still unaware of the option to move the case to Elliott Lake), plaintiff's counsel prepared and served a motion returnable before the Master in Toronto seeking an order to transfer the proceedings to Small Claims Court in Sault Ste. Marie. Unfortunately, the plaintiff’s motion was perceived by the defendant to be a manoeuvre designed to further inconvenience him since it (a) required him to attend in Toronto to respond to the motion and (b) sought a remedy that would force him to defend in Sault Ste. Marie, instead of Elliott Lake.

[9] As a result of the foregoing, the defendant grew mistrustful of plaintiff's counsel. When the defendant travelled to Toronto to oppose the plaintiff’s motion for a transfer to Small Claims Court in Sault Ste. Marie, he was also apparently under the mistaken impression that the Superior Court had no jurisdiction for any claims under $25,000 and that the proceeding commended by the plaintiff was a nullity. He therefore repeated his refusal that he was unprepared to consent to a transfer. This was interpreted by the Master to be a refusal by the defendant to consent to any transfer of the proceedings.

[10] I note the comments in the affidavit filed on this motion by one of plaintiff's counsel that he “personally attended, and attempted to move the matter to Elliott Lake Small Claims Court at the hearing." There is no mention of this in the Master’s endorsement, which recites that another representative – A. Mauti – and not the affiant, appeared for the plaintiff on the motion. What the endorsement does state is that the Master concluded that he had no jurisdiction to order the transfer in the face of the defendant’s opposition because the defendant was refusing to consent, as required by s. 23(2) of the Courts of Justice Act.

[11] The Master’s conclusion that he lacked jurisdiction appears to be at odds with the decision of Master MacLeod (as he then was) in Ali v. Schrauwen, 2011 ONSC 2158, where the following statement of the law appears (at para. 2):

It is open to the court to order this matter transferred to small claims court even when it is not on consent under s. 23 (2) of the Courts of Justice Act. See Shoppers Trust Co. v. Mann Taxi Management Ltd. (1993), 1993 CanLII 5487 (ON SC), 16 O.R. (3d) 192 (Gen. Div.). Indeed, in that case J. Macdonald J. was of the view that actions for amounts under the small claims limit should ordinarily be transferred. A similar conclusion was reached in Graves v. Avis Rent a Car Sytem Inc. (1993), 21 C.P.C. (3d) 391 (Gen Div). The power to transfer a case to the Small Claims Court over the objection of a party is grounded in the inherent jurisdiction of the court to supervise its own process and a master may exercise that jurisdiction. See Capano v. Rahm 2010 ONSC 3241 (SCJ); leave to appeal refused 2010 CarswellOnt 7425 (Div. Ct.)

[12] The decision in Ali v. Schrauwen and the cases cited in it do not appear to have been brought to the Master’s attention. Had they been, I am confident that despite the defendant’s opposition, the matter would have been transferred to Small Claims Court. And if (as the affiant asserts) the existence of the Small Claims Court in Elliott Lake had been mentioned to the Master, an order to transfer the case there would have resulted.

[13] In the wake of the Master’s decision (and the apparent inability to transfer the proceedings to Small Claims Court), the plaintiff decided to bring a motion for summary judgment in Superior Court in Toronto. That motion came before me in Motions Court in Toronto on April 11, 2019. Based on the materials and submissions before me it appeared that, if the motion were to proceed, oral evidence would be necessary in order to resolve credibility issues. Before me, the defendant renewed his objection to being forced to litigate the matter in Toronto. I adjourned the matter to allow the parties an opportunity to discuss the transfer of the matter to Small Claims Court in Elliott Lake, rather than returning again for further steps in the Superior Court in Toronto.

[14] In two subsequent telephone case conferences, it emerged that the defendant was willing to agree to transfer the matter to Small Claims Court in Elliott Lake, but the plaintiff was now opposed to a transfer. In the face of plaintiff’s refusal, defendant stated that he wished to bring a motion to stay the proceeding as an abuse of process. I therefore proposed to the parties that the defendant’s motion to stay be argued in writing and they agreed to that approach. This decision flows from their written submissions.

[15] The position of the defendant on this motion is that the plaintiff's commencement and prosecution of a claim of this magnitude in the Superior Court of Justice in Toronto, some 550 km away from his residence and the plaintiff's past conduct and current refusal to consent to a transfer of the proceedings to Small Claims Court in Elliott Lake, are vexatious and an abuse of the process of the court. The defendant further submits that a stay of proceedings would not cause an injustice to the plaintiff and would not be prejudicial.

[16] The defendant argues that, due to the amount of the claim, it should be litigated pursuant to the rules of the Small Claims Court and that the complex rules of the Superior Court make it even more difficult, expensive and unfair for him to represent himself and get a fair trial, especially given that he resides so far away from the court location chosen by the plaintiff. The defendant further argues that the conduct of the plaintiff in choosing Toronto as the place to commence proceedings, in naming Toronto as the place of trial, in attempting to “coerce” him into consenting to move the case to Sault Ste. Marie and in bringing multiple motions in Toronto (and forcing him to travel to Toronto to respond to them) amount to a course of vexatious and abusive conduct that warrant a stay of proceedings.

[17] For its part, the plaintiff denies that its conduct has been abusive or vexatious. It points to the fact that on several occasions its counsel attempted to convenience the defendant by agreeing to transfer the proceedings to Small Claims Court. However, the defendant did not respond and at one stage refused to consent to any transfer. As a consequence, the plaintiff has been forced to move the matter forward by way of a motion for summary judgment in the Superior Court. The plaintiff submits that the defendant’s motion does not satisfy the test for a vexatious proceeding and that the prerequisites for a stay are not made out.

[18] I agree with the plaintiff’s submission that its claim is not vexatious. In Salasel v. Cuthbertson, 2015 ONCA 115 (at para. 8), the Court of Appeal stated as follows:

Rule 21.01(3)(d) of the Rules of Civil Procedure permits a defendant to move to stay or dismiss an action on the ground that “the action is frivolous or vexatious or is otherwise an abuse of the process of the court”. Any action for which there is clearly no merit may qualify for classification as frivolous, vexatious or an abuse of process, with a common example being the situation where a plaintiff seeks to re-litigate a cause which has already been decided by a court of competent jurisdiction. A court only invokes its authority under rule 21.01(3)(d) or pursuant to its inherent jurisdiction to dismiss or stay an action in the clearest of cases: Currie v. Halton Regional Police Services Board (2003), 2003 CanLII 7815 (ON CA), 233 D.L.R. (4th) 657 (Ont. C.A.), at paras. 17 and 18.

[19] In the present case, based upon the evidence before me, the plaintiff's claim is not one that clearly lacks merit. Nor would I classify the plaintiff’s conduct of the litigation to date as either vexatious or a clear abuse of process. As noted previously, the matter has dragged on procedurally due to a series of unfortunate procedural decisions, misunderstandings and miscommunications; none of these rises to the standard of vexatious or abusive conduct.

[20] That said, the question remains whether this is a suitable case to be litigated in the Superior Court of Justice. The plaintiff has as much as acknowledged that it is not, given its previous willingness to consent to transfer the proceedings to Small Claims Court. It now relies on the supposed misconduct of the defendant to resist the transfer to which it previously was prepared to agree. Just as in the case of the conduct of the plaintiff, however, the conduct of the defendant was due to procedural decisions, miscommunications and misunderstandings, for which responsibility must be shared.

[21] As was observed by Jennings J. in Graves v. Avis Rent A Car System Inc., 1993 CarswellOnt 472, [1993] O.J. No. 2771, 21 C.P.C. (3d) 391 (a case cited by Master MacLeod in Ali v. Schrauwen) (at para.12):

It is clear to me that this court has inherent jurisdiction to govern its own process. It is equally clear to me that this court has an obligation to those who turn to it for relief to, in the words of r. 1.04 “secure the just, most expeditious and least expensive determination of every civil proceeding on its merits.” I cannot conceive of a less expeditious and more expensive way of determining a $2,400 property damage dispute than to require the parties to urge it forward to trial through the overcrowded corridors of the General Division. [underlining added]

[22] I also note the comments of John MacDonald J. in Shoppers Trust Co. v. Mann Taxi Management Ltd. (1993), 1993 CanLII 5487 (ON SC), 16 O.R. (3d) 192 (Gen. Div.) (a case that was also cited by Master MacLeod) as follows:

In my opinion, counsel acting in actions pending before this court and having a value of $6,000 or less (exclusive of interest and costs) [currently $25,000] should take the steps necessary to have such actions transferred to the Small Claims Court.

[23] I would agree with those comments, save in situations where there is some reasonable and rational ground for pursuing a such a claim in the Superior Court.

[24] Turning to the present case, the plaintiff has offered no reason or explanation for having commenced this proceeding in the Superior Court. Had it instead initiated proceedings in the Small Claims Court, I very much expect that it would have named the place of trial as Elliott Lake, as provided by r. 6.01(1)(b) of the Small Claims Court Rules, O. Reg. 258/98, which contemplates a Small Claims Court action being commenced and tried at the place of sitting that is nearest to the place where the defendant resides.

[25] It is undisputable that, through its inherent jurisdiction, the court has authority to control its own processes. If authority for that proposition is required, it may be found in the discussion of this topic by John MacDonald J. in Shoppers Trust Co. v. Mann Taxi Management Ltd. In the exercise of that jurisdiction, the court has an obligation to ensure that scarce court and judicial resources are deployed in a suitable and efficient fashion. Where other proceedings are available and suitable for the resolution of disputes, such as Small Claims Court proceedings, and absent good and valid reasons, the Superior Court should ordinarily direct claims within the monetary jurisdiction of that court to be litigated there. Failure to adhere to that principle, both by litigants and judges, would mean that the scarce resources of the Superior Court of Justice are being unduly overburdened.

[26] These principles are applicable to the present case. There is no reason or need for this case to be litigated in the Superior Court of Justice. I therefore direct that it be transferred to the Small Claims Court at Elliott Lake and henceforth proceed as a matter commenced there. I direct plaintiff's counsel to take the necessary steps to implement this directive and to arrange a telephone case conference with the presiding judge of that court to seek directions as to the next steps in the proceeding.

[27] Given the circumstances, I make no order as to the costs of the proceedings in the Superior Court of Justice.

Stinson J.

Date: August 20, 2019