Citation

CITATION : Conlon v. JP Quality Care, 2021 ONSC 1849

Court File and Parties

COURT FILE NO.: CV-20-518-0000 DATE: 20210311

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Sharon Conlon and David Conlon, Plaintiffs/Defendants by counterclaim AND JP Quality Care Construction Inc., Defendant/Plaintiff by counterclaim AND James Palmerton, Plaintiff by Counterclaim

BEFORE: Justice L. Sheard

COUNSEL: Brandon Carter, counsel for the Plaintiffs/Defendants by Counterclaim Juliet Montes, counsel for the Defendant/Plaintiffs by Counterclaim

HEARD: February 18, 2021

Endorsement

Overview

[1] In March 2018, the plaintiffs, Sharon and David Conlon (the “Conlons”), purchased a house in Kitchener that they sought to convert to a duplex (the “Property”). The Conlons hired JP Quality Care Construction Inc. (“JP”) to provide construction and renovation services related to the conversion.

[2] Work began on the Property in April 2018. The Conlons made payments to JP totalling $102,027.52. From time to time, the Conlons expressed a lack of satisfaction with JP’s work. However, the parties were able to resolve their concerns and JP continued to work with the Conlons until May 10, 2019.

[3] On May 10, 2019, the Conlons told JP to stop work on the Property. They alleged that there were deficiencies in the work carried out by JP and made no further payments. In December 2019, JP sued the Conlons in the Small Claims Court (the “SCC”) for $25,000 respecting unpaid invoices and payment for services and materials supplied (the “SCC Action”). JP also alleged that the Conlons had been unjustly enriched in the amount of $127,072.33, representing the value added to the Property by JP’s construction services and materials.

[4] Representing themselves, the Conlons served a defence in the SCC Action. In their 25-page pleading, the Conlons asserted that they incurred a total of $59,071.82 to complete or rectify the work that was done, or to be done, by JP. They also sought punitive damages of $10,000. The total amount claimed exceeds the $35,000 monetary jurisdiction of the SCC.

[5] On January 29, 2020, a motion was brought before Deputy Judge Lannan of the SCC, who allowed JP to increase its claim to $35,000. In addition, D.J. Lannan stayed the SCC Action until March 23, 2020 to allow the Conlons to decide whether to pursue a counterclaim in the SCC Action, which would be limited to $35,000, or to bring their own claim in the Superior Court.

[6] The Conlons hired a lawyer and on March 27, 2020 sued JP in the Superior Court (the “SCJ Action”), claiming damages in the amount of $148,125 for breach of contract, constructive or resulting trust, and unjust enrichment.

[7] The Conlons’ allegations in the SCJ Action mirror what is set out in their defence to the SCC Action. In their claim in the SCJ Action, the Conlons set out in detail the work that was to have been performed by JP, the alleged deficiencies in that work, and the facts underlying the damages claimed by the Conlons.

[8] JP also hired a lawyer, defended the SCJ Action and, with its principal, James Palmerton, (collectively “JP”), counterclaimed for $340,500. JP’s counterclaim does not repeat the claims made in the SCC Action, but seeks $340,500 in damages arising, in part, from the Conlons’ alleged interference with JP’s business and contractual relations, defamation, and the further amount of $100,000 for aggravated or punitive damages arising from the Conlons’ alleged “arrogant, high-handed, oppressive and vindictive treatment”.

Overlapping Issues in the Actions

[9] Based on the Conlons’ allegations in the SCJ Action, the court will be asked to determine most, if not all, of the same issues that are raised in the SCC Action, namely: what work was performed by JP?; was that work completed properly or at all?; and, are the Conlons entitled to payment from JP by way of a refund of monies paid and or damages?

[10] While JP’s counterclaim in the SCJ Action raises new issues not found in the SCC Action, the determination of JP’s counterclaim will likely require the court to make findings about the work performed by JP on the Property that would also be relevant in the SCC Action.

The Motion

[11] The Conlons brought this motion for an order either staying the SCC Action or transferring it to the Superior Court and consolidating it with the SCJ Action. The Conlons sought other relief on their motion. In the course of the hearing before me, JP consented to that relief.

[12] JP opposes the balance of the relief sought by the Conlons and wishes to pursue the SCC Action independently of the SCJ Action.

The Law

[13] The parties agree that this court has the jurisdiction to grant the relief sought by the Conlons.

[14] That jurisdiction is found in the ss. 106 and 107 of the Courts of Justice Act, R.S.O. 1990, c. C.43 (the “Act”) and in the Rules of Civil Procedure, R.R.O. 1990, Reg.194.

[15] I am also guided by s. 138 of the Act, which states:

As far as possible, multiplicity of legal proceedings shall be avoided.

[16] Section 106 of the Act allows the court to stay any proceeding on such terms as are just.

[17] Sections 107(1)(a) – (e) of the Act provide that 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 (c) for any other reason should be subject to an order under that section, the court may (d) transfer any of the proceedings to another court and require them to be consolidated or heard at the same time or one immediately after the other; or (e)(i) stay any of the proceedings until after the determination of any other of them; or (e)(ii) require the proceeding to be asserted by way of counterclaim.

[18] Orders made under ss. 107(1)(d) or (e)(ii) require the plaintiff’s consent. No consent is required to an order made under s.107 (e)(i), staying one of the proceedings.

[19] Courts have held that a judge of this court has jurisdiction to transfer an action from the SCC to the Superior Court, without the plaintiff’s consent, under the judge’s inherent power as a Superior Court judge to control the process of the Courts: see Vigna v. Toronto Stock Exchange (1998), 115 O.A.C. 393 (Ont. Div. Ct.).

[20] In Vigna, the court concluded that the plaintiff’s consent was not required by s. 107(1)(d) of the Act when the order sought was only that the action be transferred to the Superior Court without a request that it be consolidated with another action.

[21] The plaintiff in Vigna had suffered losses on his Bre-X shares and was bringing a test case against the Toronto Stock Exchange respecting the procedures to be followed before a stock is listed on a stock exchange. The court held that the issues raised by the plaintiff were complex and of “immense importance” to stock exchanges across Canada. As such, oral and documentary discovery was required as well as expert opinions. The court held at para. 5 that the summary procedures in the SCC were “never intended for such an action” and ordered the action to be transferred to the Superior Court.

[22] Vigna was followed in Kreppner v. HMQ, 2019 ONSC 6667, 47 C.P.C. (8th) 127. The court in Kreppner cited, with approval, the principle set out in Vigna that a transfer should not be made whenever requested, but should be granted only in exceptional cases in which the issues raised are of “such a nature and complexity” that the procedures in the SCC are insufficient for the just and fair determination of the action on its merits: see Kreppner, at para. 21, quoting from Vigna, at para. 7.

[23] Section 107 was also considered in Farlow v. Hospital for Sick Children (2009), 2009 63602 (ON SC), 100 O.R. (3d) 213 (Ont. S.C.). Following the death of a child, the plaintiffs in Farlow brought a medical malpractice claim against the hospital and doctors in the SCC. The defendants sought an order transferring the SCC claim to the Superior Court.

[24] The court listed five factors to be considered on the motion, which included: (i) the complexity of the issues; (ii) the importance of expert evidence to a determination of the case; (iii) the need for discovery; (iv) whether the case involves issues of general importance; and (v) the desire for a just and fair determination: see para. 20.

[25] The court weighed the five factors against the principle that a litigant should be free to choose to pursue a claim in the SCC, and that transferring the action to the Superior Court “may increase the costs for the litigants and have a negative impact on access to justice”: see para. 21. The court concluded that the action was not suitable to be heard in the SCC and transferred it to the Superior Court.

[26] In 4381840 Canada Inc. v. Charron, Langlois LLP et al., 2017 ONSC 5043, orders were sought to consolidate a total of 48 actions, some brought in the SCC and others in the Superior Court. Roger J. found that s. 107 did not allow the SCC actions to be transferred to the Superior Court without the consent of the plaintiff, who was not consenting, but that it did not preclude an order that the SCC actions be tried together with the actions brought in the Superior Court. After consolidating the SCC actions, he ordered that they be tried together with the actions brought in the Superior Court. That hybrid order is not sought here.

[27] In Sioux Lookout (Municipality) v. Goodfellow, 2010 ONSC 1812, the Municipality sought an order consolidating Mr. Goodfellow’s SCC actions with the Superior Court action brought by the Municipality. Mr. Goodfellow had commenced ten actions in the SCC, nine of which were against the Municipality of Sioux Lookout. The Municipality sued Mr. Goodfellow in the Superior Court and Mr. Goodfellow defended and counterclaimed.

[28] The court determined that the actions should be consolidated as they had common parties, questions of fact and law, and the claims for relief arose out of the same occurrences. Significantly, the court held that Mr. Goodfellow improperly divided his claim into ten separate actions, which should have been brought together. The court ordered Mr. Goodfellow’s SCC claims to be asserted by way of counterclaim in the Municipality’s Superior Court action.

[29] On this motion, the parties agree that the Farlow factors should be considered when determining whether to order the SCC Action to be transferred to the Superior Court and/or to be consolidated with or asserted by way of counterclaim in the SCJ Action.

Positions of the Parties

(a) The Conlons

[30] The Conlons submit that ss. 107(1)(a) and (b) are satisfied: there are two proceedings pending in different courts with a question of law or fact in common and which claim relief arising from the same transaction(s) or occurrence(s). They further submit that four of the five Farlow factors are met: (1) the issues raised are complex; (2) expert evidence will be important; (3) there is a need for examinations for discovery, not available in the SCC; and, (4) the transfer and consolidation is required for a just and fair determination of the case on its merits.

(i) Nature and Complexity of the Issues

[31] The Conlons submit that the issues raised in the SCC Action include whether JP completed its work in a proper and workmanlike manner; whether the Conlons are entitled to an accounting or tracing of monies and assets in respect of “all amounts and profits or benefits received or made by JP”; and/or, whether JP has been unjustly enriched at the expense of the Conlons. They assert that the nature and complexity of these issues is such that the procedures available in the SCC are insufficient for the fair and just determination of the claims on their merits.

(ii) Expert evidence

[32] The Conlons submit that expert evidence will be required to assess the quality of the work performed by JP and to determine whether JP was negligent. The Conlons rely on Crane Canada Co. v. Montis Sorgic Associates Inc., [2005] O.J. No. 6247 (Ont. S.C.), a product liability case in which the respondents alleged negligence in the design and manufacture of water tanks. In Crane, the court found that expert evidence would be complex and central to a determination of the claims and that the claims would be more appropriately dealt with in the Superior Court.

[33] The Conlons do not provide details of any expert opinions on which they may seek to rely but appear to rely on the notes and reports made by inspectors of the City of Kitchener, who identified apparent deficiencies in the work done on the Property.

(iii) The Need for Discovery

[34] Without providing details beyond what is set out in the pleadings, the Conlons assert that this is a case in which “an exact and careful investigation of fact is required”; discovery is desirable but unavailable in the SCC; and the issues between the parties ought to be dealt with in the Superior Court: see Livingston v. Ould (1976), 2 C.P.C. 41 (Ont. H.C.), at para. 10; Vigna, at para. 5.

(iv) Just and Fair Determination of the Claim

[35] The Conlons submit that it would be unfair and unjust to allow the issues between the parties to be determined in the SCC Action when the SCC procedures do not permit oral examinations for discovery or adequate notice to respond to expert evidence, and do not allow for continuous trial days.

[36] The Conlons repeat the submissions made in support of the transfer of the SCC Action to the Superior Court to support their request that the SCC Action be consolidated with the SCJ Action.

Alternative Relief Claimed: The Stay of the SCC Action

[37] Alternatively, the Conlons seek an order staying the SCC Action pursuant to the authority found in s. 106 of the Act, and under rr. 21.01(3)(c) and 6.01(a) - (e). The Conlons again rely upon s. 138 of the Act, in that multiplicity of legal proceedings should be avoided.

(b) JP’s Position

[38] The thrust of JP’s oral submissions is that the Conlons are attempting to bully JP and to delay or even prevent JP from collecting what it is owed, by forcing JP to pursue its claim in the Superior Court, where, JP asserts, it will take longer to get to trial and will be too costly for JP.

[39] JP disputes that the issues in this case are too complex to be fairly tried in the SCC. JP asserts that there is nothing unusual about this claim that relates to the construction and renovation of a residential duplex property and that it is readily distinguishable from Crane, Farlow and Vigna.

[40] JP compares this case to the recent decision in Segura Mosquera v. Rogers Communications Inc., 2020 ONSC 6024. In Segura, the plaintiff sued Rogers Communications for $1,858.83, alleging that she had been overcharged for wireless services. In Segura, unlike here, it was the plaintiff who sought to transfer her claim to the Superior Court. Rogers opposed Segura’s motion.

[41] The court dismissed Segura’s motion and, consistent with accepted jurisprudence, noted that the discretion to transfer an action from the SCC to the Superior Court should be exercised rarely. The court noted that each case should be considered on its own facts. A transfer made at the request of the defendant deprives the plaintiff of their choice of court, and, in the absence of compelling reasons for a transfer, the “jurisdictional legitimacy of the Small Claims Court” could be undermined, as a transfer assumes that “the procedures in that court are inadequate, when in fact they may be perfectly suitable for the resolution of a given dispute”: see paras. 7, 8 and 9.

Analysis

[42] I have considered the positions advanced by the parties respecting the Farlow factors. I have also considered whether policy reasons apply, namely, whether JP would be denied access to justice if the SCC Action were transferred to the Superior Court.

[43] I accept the submissions made by JP that the issues in the SCC Action are not complex and agree that they fall within the usual types of matters determined by the SCC.

[44] Respecting expert evidence, I am not persuaded by the Conlons that the expert evidence they might wish to call would necessitate the transfer of the SCC Action. Among other things, I note that the SCC rules contemplate the exchange of documents to be relied on at trial, including expert reports, in advance of a settlement conference: see Rules of the Small Claims Court, O. Reg. 258/98, r. 13.03.

[45] With respect to the fact that the SCC rules do not allow for examinations for discovery, I accept JP’s response that disclosure of the “relevant facts and evidence” may be obtained in the SCC, at a settlement conference. In addition, I note the amounts claimed in the SCJ Action are within the $200,000 monetary limit for simplified procedure claims under r. 76, which limits oral examinations to two hours.

[46] However, I do not accept JP’s assertion that JP will be denied access to justice if the SCC Action is transferred or consolidated: JP has retained counsel and has not only defended the SCJ Action, but has also asserted a significant counterclaim.

[47] An important and determinative fact in this case is that the Conlons cannot assert their counterclaim in the SCC Action: it exceeds the monetary cap. Therefore, if the Conlons were required to advance their claims against JP in the SCC Action, they would be forced to limit the amount claimed, effectively denying the Conlons access to justice. I assume that this was an issue identified by D.J. Lannan, who raised with the Conlons the option of issuing a claim in the Superior Court.

[48] If the SCC Action is neither transferred to the Superior Court nor stayed, the Conlons would be left to defend the SCC Action but, because of the monetary limits in that court, would have to separately pursue the SCJ Action to recover what is, in essence, a counterclaim. I find that unnecessary duplication of proceedings risks the possibility of inconsistent findings of fact and decisions and offends the policy objectives set out in s. 138 of the Act.

[49] Based on the record before me, I conclude as follows:

(1) this case is not one of the rare cases in which an action should be transferred to the Superior Court against the wishes of the plaintiff; (2) the Conlons are not using the SCJ Action as a way to prevent JP from pursuing its claim in the SCC but, rather, as a means to advance their claim in the Superior Court; (3) the Conlons cannot pursue their counterclaim in the SCC Action as it exceeds the monetary cap and, effectively, denies the Conlons access to justice in that court; (4) JP has retained counsel and will be pursuing a significant counterclaim in the SCJ Action - proceeding in the Superior Court will not lead to a denial of justice to JP; (5) the overlap of the issues raised in the SCC Action and the SCJ Action is such that it is foreseeable and likely that the outcome of the SCJ Action will resolve and determine the issues raised in the SCC Action; and (6) allowing both actions to proceed would be against the policy objectives under s. 138 of the Act and r. 1.04 of the Rules of Civil Procedure.

Disposition

[50] The Conlons’ motion for an order transferring the SCC Action to the Superior Court is denied, but I do make an order staying the SCC Action, pending the determination of the SCJ Action. This order is made without prejudice to the right of JP to amend its counterclaim, an option raised by counsel for the Conlons in oral submissions.

Costs

[51] I would urge the parties to agree on costs but if they cannot do so, then costs submissions may be made as follows:

1. within 14 days of the date of the release of this decision, the Conlons shall serve and file their written costs submissions, not to exceed 3 pages, double-spaced, together with a draft bill of costs and copies of any pertinent offers; and
2. JP shall serve and file their responding submissions of no more than 3 pages, double-spaced, together with a draft bill of costs and copies of any pertinent offers, within 7 days of the service upon them of the Conlons’ costs submissions.

[52] If no submissions are received within 21 days of the date of the release of this decision, the parties will be deemed to have resolved the issue of the costs and costs will not be determined by me.

L. Sheard J.

Date: March 11, 2021

COURT FILE NO.: CV-20-518-0000 DATE: 20210311 ONTARIO SUPERIOR COURT OF JUSTICE B E T W E E N: Sharon Conlon and David Conlon Plaintiffs (Defendants by Counterclaim)

• and – JP Quality Care Construction Inc. Defendant (Plaintiffs by Counterclaim)
• and – James Palmerton Defendant by Counterclaim ENDORSEMENT ON PLAINTIFF’S MOTION L. Sheard J. Released: March 11, 2021