Court File and Parties

COURT FILE NO.: CV-21-2686

DATE: 2022-12-07

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Royal Bank of Canada, Plaintiff

AND:

Chanpreet Singh and Go To Loans Inc., Defendants

BEFORE: J.E. Mills J.

COUNSEL: G. Bowden, for the Plaintiff

S. Walker, for the Defendants

HEARD: November 30, 2022

Endorsement

[1] Royal Bank commenced this proceeding on September 24, 2021, to enforce a debt against the defendant Chanpreet Singh, and for damages as against Go To Loans Inc. (“GTL”) for improvident sale, negligence, conversion, unjust enrichment and interference with contractual relations. Both claims were within the jurisdiction of the Small Claims Court, but the action was brought before the Superior Court of Justice pursuant to the simplified procedures permitted by Rule 76 of the Rules of Civil Procedure. Default judgment was taken out against Mr. Singh on November 10, 2021. When enforcement efforts against Mr. Singh were frustrated, GTL was served with the Statement of Claim. GTL filed a defence to the action on April 14, 2022.

[2] GTL commenced a proceeding before the Brampton Small Claims Court pursuant to s. 23 of the Repair and Storage Liens Act (“RSLA”) on July 19, 2021. The application seeks to discharge the security interest of Royal Bank registered pursuant to the Personal Property Securities Act (“PPSA”) against a 2018 Dodge Charger SXT, bearing VIN 2C3CDXHG0JH220381. The PPSA lien is in respect of a conditional sales contract signed by Mr. Singh in the amount of $34,877.46 advanced to finance his purchase of the vehicle. GTL asserts a RSLA lien against the vehicle in the amount of $4,250, registered on September 8, 2020. On February 17, 2021, GTL exercised its enforcement rights and seized the vehicle.

[3] Royal Bank now seeks an order to transfer the Small Claims Court application to the Superior Court to be joined with this proceeding on the basis a Deputy Judge does not have jurisdiction to grant declaratory or equitable relief resulting in the discharge of a lien registered pursuant to the PPSA.

[4] Section 25 of the RSLA provides that any court of appropriate monetary jurisdiction may hear an application brought under the RSLA to adjudicate repair and storage lien issues. It is this provision that confers jurisdiction on the Small Claims Court to decide RSLA matters within its monetary jurisdiction, as confirmed by Dew Estate v. MCM Towing, 2014 CanLII 77444. The PPSA does not confer jurisdiction to the Small Claims Court to adjudicate issues related to PPSA liens. Disputes which seek a discharge of security are within the exclusive jurisdiction of the Superior Court of Justice (s. 67(1) PPSA).

[5] To be clear, this is not a priorities dispute. Royal Bank concedes that if GTL proves the validity of its RSLA lien, it will have priority over the PPSA lien. The question being posed is whether the Small Claims Court has the jurisdiction or authority under the RSLA to discharge a properly perfected security interest registered under the PPSA. That is the relief sought by GTL in the application before the Small Claims Court.

[6] GTL relies on the Dew Estate v. MCM Towing decision which held that the Small Claims Court does have jurisdiction to discharge liens in order to effect the delivery of personal property clear of any lien encumbrances. That decision was in respect of only one RSLA lien claimant. It addressed the correct process for determining a dispute regarding possessory and non-possessory RSLA liens, and the discharge of a lien upon payment of monies into court. The jurisdiction of the Small Claims Court to discharge a lien was held not to be an equitable remedy, but rather a legal, statutory remedy established by s. 12(1)(c) of the RSLA. This however is in respect of only RSLA liens. The decision did not consider the interplay of RSLA and PPSA liens nor did it address the jurisdiction of the Small Claims Court to discharge any other liens registered on title, specifically a PPSA lien. The Dew Estate v. MCM Towing decision is distinguishable on its facts.

[7] GTL may bring an application to the Small Claims Court to prove the validity and priority of its RSLA lien, but it cannot seek the discharge of Royal Bank’s PPSA lien. If the PPSA lien is to be discharged, in accordance with s.67(1) of the PPSA, that relief must proceed before the Superior Court of Justice.

[8] Section 107(2) of the Courts of Justice Act expressly prohibits the transfer of a Small Claims Court matter to the Superior Court without the consent of the plaintiff. The right of a plaintiff to proceed with a claim in Small Claims Court is absolutely protected. The rationale for the rule and the risks of a multiplicity of proceedings were considered in Vista v. Double T, 2011 ONSC 3454 at para. 11. GTL does not consent to the transfer of its matter to the Superior Court.

[9] As found in Segura Mosquera v. Rogers Communications Inc., 2020 ONSC 6024 (aff’d 2021 ONCA 826, at paras. 12-13), a transfer to the Superior Court of a matter within the jurisdiction of the Small Claims Court should be rarely granted and only in circumstances where a claim is not capable of being justly and fairly resolved using the procedures available in the Small Claims Court. There must be compelling reasons for the transfer, otherwise permitting a transfer may undermine the jurisdictional legitimacy of the Small Claims Court. The party seeking the transfer bears the onus to establish it is necessary, having regard to such considerations as the complexity of the litigation, the role and importance of pre-trial discovery and expert evidence, whether the case raises issues of general importance, and the desire for a just and fair determination. The reasons cannot be for an improper collateral purpose which effectively provides one party with a strategic advantage in the litigation.

[10] Both matters in this litigation are within the monetary jurisdiction of the Small Claims Court. Initially, Royal Bank sought an order to transfer this action to the Small Claims Court as GTL refused to provide its consent without requiring the payment of substantial costs. Royal Bank then filed an Amended Notice of Motion to instead require the GTL action to be transferred to the Superior Court on the basis the Small Claims Court does not have jurisdiction to grant the relief sought by GTL. I have concluded that submission is correct.

[11] In most circumstances a lack of jurisdiction to grant the relief sought would be a compelling reason to transfer the action, but I am of the view the appropriate course is to first permit GTL the opportunity to amend its application before the Small Claims Court. If GTL intends to continue to seek a discharge of the Royal Bank’s PPSA lien, it must obtain that relief from the Superior Court. Presumably then, the transfer may be done on consent.

[12] As found by Kurz J. in Canaccede Credit LP v. Schulz-Hallihan 2021 ONSC 4851 at para. 10, this court has the inherent authority to transfer a matter commenced in the Superior Court to the Small Claims Court even without the consent of the parties. The Royal Bank action against GTL is within the monetary jurisdiction of the Small Claims Court and is capable of being properly adjudicated by a Deputy Judge. For the reasons expressed in Canaccede, I exercise my inherent and statutory jurisdiction and order the Royal Bank action against GTL be transferred to the Brampton Small Claims Court.

[13] As there was mixed success on the motion, there shall be no costs to either party.

J. E. Mills J.