COURT FILE NO.: CV-18-611547
DATE: 20201203
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Margaret Boryczka Gupta, Shashikant Gupta, Michael Anthony Kettles, and Michele Anne Kettles
Plaintiffs
– and –
Lindal Cedar Homes Ltd., and Axmith & Company Limited also known as Axmith & Company Ltd. formerly known as Bestwood Homes Limited
Defendants
G. Brown, for the Plaintiffs/Responding Parties
H. Jones and K. Phung, for the Defendant/Moving Party, Lindal
K. Movat for the Defendant, Axmith & Company Limited also known as Axmith & Company Ltd. formerly known as Bestwood Homes Limited
HEARD: November 13, 2020
O’BRIEN, J.
REASONS FOR DECISION
Overview
[1] On October 19, 2020, I released Reasons for Decision with respect to a motion by the Defendant, Lindal Cedar Homes Ltd. (“Lindal”), to stay this action in favour of arbitration. I granted the motion and stayed the action on the basis of an arbitration clause in an agreement that Lindal argued was binding on the parties. The agreement, a Purchase and Sale Agreement (“PSA”), was for the purchase of the design and materials for a cottage. Charles Kettles, the father of two of the Plaintiffs, purchased the materials and design in 1994. Twenty years later, he transferred title in the cottage to his two children and their spouses, the Plaintiffs. In this action, the Plaintiffs allege that they discovered significant wood rot throughout the cottage. Lindal, which supplied the materials and design for the cottage, brought the motion for a stay arguing that the Plaintiffs were bound by the arbitration provision in the PSA.
[2] I found that there was an arguable case that an arbitration agreement existed, that the parties were bound by it, and that the subject matter of the dispute fell within the scope of the arbitration agreement. I also found there were no grounds on which I should refuse to stay the action, including in that I did not consider the arbitration agreement to have been unconscionable. The Reasons for Decision are found at Gupta v. Lindal Cedar Homes Ltd., 2020 ONSC 6333 (“Reasons”).
[3] Following the release of my Reasons, but prior to costs being determined or an order being issued, the Plaintiffs wrote to the court to request a formal reconsideration of my Reasons. The Plaintiffs now rely on a provision of the Consumer Protection Act, 2002, S.O. 2002, c. 30 Sched. A (“CPA”), which they submit has the prospect of changing my Reasons entirely. Neither the particular provision now relied upon, nor the CPA more generally, was raised or cited by either party on the original motion.
[4] I then held a case conference to determine next steps. I requested that the Plaintiffs bring a motion to raise their concerns, whether relying on the court’s inherent jurisdiction or on the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, to ensure I received full submissions and oral argument on the issue. The Plaintiffs then brought the within motion, in which they request that the court exercise its inherent jurisdiction to reconsider, amend or correct the Reasons on the basis of the CPA.
[5] The only issue on this motion is whether the court should exercise its inherent jurisdiction to reconsider, amend or correct the Reasons for Decision. For the reasons that follow, I conclude that it should not.
Principles with respect to the court’s jurisdiction to reconsider
[6] The court has an inherent jurisdiction to adjust a litigation result after judgment in some circumstances, other than through proper appellate review or as contemplated by r. 59.06.[^1] However, this should occur only in “unusual and rare circumstances where the interests of justice compel such a result”: Susin v. Chapman, [2004] O.J. No. 2935 (C.A.), at para. 10. Finality in litigation is to be encouraged and fostered. The discretion to re-open a matter should be resorted to “sparingly and with the greatest care”: 671122 Ontario Ltd. v. Sagaz Industries Canada Inc., 2001 SCC 59, [2001] 2 S.C.R. 983, at para. 61.
[7] In Schmuck v. Reynolds-Schmuck (2000), 2000 ONSC 22323, 46 O.R. (3d) 702 (S.C.J.) at para. 25, Himel, J. emphasized the limited circumstances in which a reconsideration should occur, stating: “It is my view that a party who wishes a reconsideration would have to establish that the integrity of the litigation process is at risk unless it occurs, or that there is some principle of justice at stake that overrides the value of finality in litigation, or that some miscarriage of justice would occur if such a reconsideration did not take place.”
[8] In Gore Mutual Insurance Co. v. 1443249 Ontario Ltd., (2004) 2004 ONSC 27736, 70 O.R. (3d) 404 (“Gore”), at paras. 7-8, Karakatsanis, J. (as she then was) was prepared to re-open her decision in a situation where it was “obvious an error was made by all counsel and by the court.” It was a “case of a clear error.” It was “obvious” that the statutory provision now raised would have changed her determination and all counsel conceded that the provision previously relied upon had no application to the case. Karakatsanis, J. concluded at para. 8 that the “interests of justice are not served by requiring an appeal on a clear error of law that followed inaccurate and incomplete legal submissions of counsel.”
[9] In Scott, Pichelli & Easter Ltd. et al. v. Dupont Developments Ltd. et al., 2019 ONSC 6789, Sossin, J. (as he then was) noted at para. 13 that a “motion for reconsideration is more likely to be successful where the parties agree that an error has occurred, and less likely to be successful where the subject matter of the alleged error remains contested by the parties.”
[10] Taking these authorities into account, I will consider whether, in this case, the interests of justice require a reconsideration of my Reasons. Specifically, I will consider whether the failure to consider the provisions of the CPA was a “clear error” that would have changed my determination and whether the interests of justice otherwise require me to reconsider my decision.
Do the interests of justice compel the court to reconsider the Reasons?
A. Statutory provisions
[11] In my Reasons, I concluded that the action should be stayed on the basis of s. 7(1) of the Arbitration Act, 1991, S.O. 1991, c. 17 (“Arbitration Act”), which requires the court to stay a proceeding in certain circumstances. I found that, pursuant to the analysis under s. 7(1), the matters in dispute should be referred to arbitration. Further, I concluded that the arbitration clause was not invalid pursuant to s. 7(2) of the Arbitration Act on the basis of unconscionability.
[12] The Plaintiffs now rely on s. 7 of the CPA, which was not raised by any party at the original motion before me. Section 7 specifically limits the effect of arbitration provisions in consumer agreements and, in that context, limits the application of s. 7(1) of the Arbitration Act. It provides:
7(1) The substantive and procedural rights given under this Act apply despite any agreement or waiver to the contrary.
(2) Without limiting the generality of subsection (1), any term or acknowledgment in a consumer agreement or a related agreement that requires or has the effect of requiring that disputes arising out of the consumer agreement be submitted to arbitration is invalid insofar as it prevents a consumer from exercising a right to commence an action in the Superior Court of Justice given under this Act.
(5) Subsection 7(1) of the Arbitration Act, 1991 does not apply in respect of any proceeding to which subsection (2) applies unless, after the dispute arises, the consumer agrees to submit the dispute to arbitration.
B. No clear error that would have changed the outcome
[13] The central question before me, then, is whether it is obvious that s. 7(1) of the Arbitration Act does not apply to the Plaintiffs because of the protections provided to consumer agreements in s. 7 of the CPA.
[14] Lindal submits that s. 7 of the CPA does not apply in the circumstances of this case. It submits that the Plaintiffs are not entitled to protection under the CPA, as they were not “consumers” involved in a “consumer transaction,” as defined in that act. The only transaction they were involved in was a private transaction with Charles Kettles to obtain title for the cottage property twenty years after the PSA. Lindal further submits that the evidence does not prove that either Mr. Kettles or Lindal were in Ontario at the time of entering into the PSA, as required by the CPA. Lindal has a number of further arguments that are related to its position that the Plaintiffs were not “consumers” involved in the initial consumer transaction, including that the CPA does not therefore have retroactive effect with respect to them, and that the Plaintiffs acquired real property (i.e. the cottage, rather than the materials for the cottage), which is exempted from the CPA. I do not address these latter arguments given my conclusion below that, in any event, the CPA does not apply to the Plaintiffs’ cause of action.
[15] I am not entirely persuaded by Lindal’s argument that the Plaintiffs do not qualify as “consumers” involved in a “consumer transaction” under the CPA. Section 1 defines a “consumer” as “an individual acting for personal, family or household purposes and does not include a person who is acting for business purposes.” There is no dispute that Charles Kettles would have been a consumer. The real question is whether the Plaintiffs could be considered consumers who benefit from having been party to a “consumer agreement” as referenced in s. 7(2). A consumer agreement is defined in relevant part as “an agreement between a supplier and consumer in which, (a) the supplier agrees to provide goods or services for payment….” A “consumer transaction” includes a consumer agreement. It means “any act or instance of conducting business or other dealings with a consumer, including a consumer agreement.”
[16] In my Reasons, I found there was an arguable case that the Plaintiffs were assigns of the PSA and therefore bound by the arbitration provision. If the Plaintiffs are potentially bound by the PSA’s arbitration provision when they themselves did not originally enter into the PSA, it seems fitting to also afford them the benefit of a protection that would have been available to the original consumer. In other words, if the Plaintiffs were sufficiently parties to the PSA to be subject to the arbitration provision, they should be parties to a degree that affords them protection from the arbitration provision as well. Further, there is an argument that an assign of a “consumer agreement” can fall within the definition of “consumer” for the purposes of the CPA, given the purpose of the legislation to protect consumers and restore the balance of power between merchants and consumers: Richard v. Time Inc., 2012 SCC 8, at paras. 50, 160; Ramdath v. George Brown College, 2012 ONSC 6173, at para. 36.
[17] However, I do not need to decide whether the Plaintiffs are consumers for the purposes of this motion. Even if the Plaintiffs are considered “consumers” under the legislation, it is not clear that the CPA otherwise applies to their claim. First, in order for the CPA to apply, the transaction in issue needs to have occurred in Ontario. Subsection 2(1) provides: “Subject to this section, this Act applies in respect of all consumer transactions if the consumer or the person engaging in the transaction with the consumer is located in Ontario when the transaction takes place.”
[18] In this case, the Plaintiffs did not provide clear evidence that one of the parties was in Ontario when they entered into the transaction. At the time of the purchase, Mr. Kettles lived in Ypsilanti, Michigan. The Plaintiffs’ evidence was that discussions between Mr. Kettles and Lindal’s vice-president took place in the United States. Lindal’s registered office is in Nova Scotia, with the parent corporation located in Washington State.
[19] However, the transaction might have been between Mr. Kettles and Lindal’s local dealer. Lindal’s evidence on the motion was that all its sales were done through local dealers. There was a dispute as to whether the local dealer was Bestwood Homes Limited (“Bestwood”), as asserted by Lindal, or the Defendant, Axmith & Company Ltd. (“Axmith”), which the Plaintiffs submitted was a successor to Bestwood. In any event, Lindal’s evidence was that Mr. Kettles ordered Lindal material from Bestwood, which was a local dealer that serviced most of Ontario at the time. In spite of this, I am not prepared to infer that the Bestwood representative was specifically located in Ontario at the time of the transaction, given that, as further discussed below, Lindal did not have notice of the CPA when preparing its evidence. It therefore was not alerted to the need to provide precise evidence as to where the local dealer was at the time the PSA was entered into. Lindal also was not alerted to of the importance of providing other details of the transaction – for example, how and to whom payment was made, which could impact a determination of the “person engaging in the transaction with the consumer,” as set out in s. 2(1).
[20] There is a second reason for rejecting the application of s. 7 of the CPA. Critically, the Plaintiffs have not shown that their claim against the Defendants falls within the scope of matters protected by the CPA. Subsection 7(2) of the CPA does not prevent all causes of action arising from a consumer agreement from being referred to arbitration. Rather, it prevents only the requirement to submit a dispute to arbitration that arises from a right under the CPA. It states that any term in a consumer agreement that has the effect of requiring a dispute under the agreement to be submitted to arbitration is invalid “insofar as it prevents a consumer from exercising a right to commence an action in the Superior Court of Justice given under this Act” (emphasis added).
[21] The rights set out in the CPA are specifically detailed and designed to address concerns about practices that are unfair to consumers. They include, at their broadest, “unfair practices,” defined in s. 14(1) as “a false, misleading or deceptive representation.” They also include rights specific to certain types of agreements, such as future performance agreements, time share agreements, internet agreements, and credit agreements. In other words, the CPA does not protect consumers from arbitration clauses in all possible transactions involving consumers.
[22] There are other detailed requirements under the CPA. For example, if an agreement was entered into while a person engaged in an unfair practice, the consumer may seek rescission of the agreement and/or damages (s. 18(1)). The consumer is first required to give notice within one year (s. 18(3)). If a consumer has delivered notice and has not received a satisfactory response, the consumer may commence an action in the Superior Court of Justice (s. 18(8) and (9)). However, the court may disregard the requirement to give notice if it is in the interest of justice to do so (s. 18(15)).
[23] It is not obvious that the Plaintiffs’ dispute with Lindal falls within the scope of the rights protected by the CPA. The Statement of Claim alleges that Lindal and Axmith owed a duty of care to ensure the cottage was constructed in a good and workmanlike manner with skilled labour, professional design, and materials that were free of defects. It alleges that they failed this duty in a number of ways, all related to structure and design. The Statement of Claim also alleges that the Defendants failed in a duty to warn Charles Kettles and subsequent purchasers of the cottage, such as the Plaintiffs, of the dangerous situation at the cottage. Finally, the Statement of Claim alleges that the Defendants provided a lifetime structural warranty on Lindal’s products.
[24] The Plaintiffs have not attempted to argue that the allegations fall within the specific rights set out in the CPA. They submit instead that s. 7 of the CPA does not require a focus on the specific rights in the act, a position I reject. In my view, the allegations in the Statement of Claim do not fall squarely within the rights granted by the CPA. The allegations are primarily about the quality of the materials and design provided and about the failure to warn; they are not obviously about false or misleading representations. The Plaintiffs have not, for example, pleaded negligent misrepresentation. The Plaintiffs also have not provided any evidence or argument that they met the notice requirements in the CPA or that the requirement to give notice should be disregarded.
[25] In short, it is far from clear that the Plaintiffs’ claim falls within a “right to commence an action in the Superior Court of Justice given under this Act.” Therefore, I do not consider this to be a case of a clear error that would have changed the determination on the motion.
C. The interests of justice do not otherwise compel a reconsideration
[26] The interests of justice do not otherwise compel a reconsideration of the motion. It would not be just to apply the CPA in the circumstances of this case given that Lindal had no notice of it at the motion. The Plaintiffs did not raise it in their factum, oral argument or motion record. The Plaintiffs also did not plead the CPA in its Statement of Claim. The Plaintiffs submit that this is because they did not acknowledge the existence of an agreement between Lindal and Charles Kettles. Further, Lindal did not file a Statement of Defence before bringing this motion, so the Plaintiffs have not filed a Reply.
[27] I understand why the Plaintiffs did not plead the CPA in the Statement of Claim. However, the fact is that there was no mention of the statute whatsoever until after the release of my Reasons. Lindal did not have any opportunity to make strategic decisions about how to present its evidence and case, realizing that the CPA would be raised. After the fact, they are now limited to evidence that was filed when this statute was not in issue. For example, Lindal may have sought to lead more precise evidence about the details of transactions with purchasers, including the location of Lindal representatives or its local dealer when entering into agreements. To the extent the Plaintiffs were relying on the statutory provisions regarding false and misleading representations, Lindal may have sought to provide more specific evidence regarding whether representations were made to purchasers.
[28] This case is distinguishable from Gore, relied on by the Plaintiffs. There, when originally argued, the case had centered on the Insurance Act, R.S.O. 1990, c. I.8. The error that resulted in reconsideration was that the wrong provisions of the Insurance Act had been relied upon. Further, all parties agreed there had been an error. Here, the Plaintiffs are attempting to raise an entirely new statutory regime that was not pleaded and was not in issue at the motion. This case is not one of those rare circumstances where the motion should be reopened.
Disposition
[29] The motion is dismissed.
[30] The parties have provided me with their costs outlines for both motions. Lindal may provide any additional submissions of no more than four pages within 14 days of the date of this decision. The Plaintiffs will have 7 further days to provide responding submissions with the same limitation on length. The submissions may be sent to my judicial assistant, Anna Maria Tiberio.
O’Brien, J.
Released: December 3, 2020
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Margaret Boryczka Gupta, Shashikant Gupta, Michael Anthony Kettles, and Michele Anne Kettles
Plaintiffs/Responding Parties
– and –
Lindal Cedar Homes Ltd., and Axmith & Company Limited also known as Axmith & Company Ltd. formerly known as Bestwood Homes Limited
Defendants/Moving Parties
REASONS FOR DECISION
O’Brien, J.
Released: December 3, 2020
[^1]: Rule 59.06 does not apply in this case, given that no order has been issued.