HOT TOPICS IN SMALL CLAIMS COURT presented by J. Sebastian Winny on Saturday, April 28, 2018 for members of the Ontario Paralegal Association This presentation will address five subjects which are topical for Small Claims Court practice: 1. Update on Discovery and Related Motions 2. Update on Jurisdiction in Residential Tenancy Matters 3. Expert Evidence 4. Anti-SLAPP motions (CJA s. 137.1) 5. Proving Damages 1. UPDATE ON DISCOVERY AND RELATED MOTIONS In last year s presentation on this issue I opened my written remarks with the following: Discovery in Small Claims Court? Really? Well, yes. Or no. Or wait and see. Important developments have occurred since May 2017, but quite possibly that comment remains generally applicable. In July 2017 the Court of Appeal dismissed the appeal in Riddell v Apple Canada Inc., 2017 ONCA 590, affirming the Divisional Court s decision that in exceptional cases where necessary for a proper determination of the case at trial, the Small Claims Court has jurisdiction to make an order for inspection of property before trial under Rule 32 of the Rules of Civil Procedure. The reasons are brief and essentially agree with the reasons given by the Divisional Court. The question then becomes, what is the significance of Riddell v. Apple Canada Inc.?
-2- The Court of Appeal, like the Divisional Court, was only dealing with the question of Rule 32 orders. The decision contains no suggestion that the Small Claims Court has jurisdiction to grant other motions under the Rules of Civil Procedure. Therefore, for example, it remains that there is no jurisdiction to grant rule 30.10 motions, because Elguindy v. St. Joseph s Health Care, [2016] O.J.No. 2742 (Div. Ct.), remains the sole binding authority on that specific point. Just as Rule 32 was the narrow issue in Riddell, the Court of Appeal itself pointed out in that case that the narrow issue in its earlier decision in Van de Vrande v. Butkowsky (2010), 99 O.R. (3d) 641 (C.A.), was the availability in Small Claims Court of motions for summary judgment under Rule 20 of the Rules of Civil Procedure. Therefore, going forward, when confronted with a question whether the Small Claims Court has jurisdiction to grant a remedy not contemplated by the Small Claims Court Rules, but which is based on the Rules of Civil Procedure, we must look for binding authority dealing with the specific form of motion. Recall the principle of stare decisis (the rule of precedent). If there is no binding authority, first instance caselaw may be considered. But be careful. For example, Garg v. Raywal L.P., [2014] O.J. No. 3686 (Sm. Cl. Ct.), is no longer good law as it was overruled in Riddell. But the fact that the Small Claims Court has jurisdiction to make a Rule 32 order does not mean that such orders will be readily available. The Divisional Court in Riddell defined the court s jurisdiction narrowly. In Schafer v. Wagner, [2016] O.J. No. 6693 (Sm. Cl. Ct.), a motion for a Rule 32 order was dismissed on the basis that the evidence did not support the necessity for such an order in that case. In some ways the Divisional Court s decision in Riddell is the strongest indicator to date of how limited is the scope of discovery in Small Claims Court. Specifically, the court: confirmed that the Small Claims Court s mandate is to provide expeditious and low-cost resolutions under CJA s. 25;
-3- cited with approval its earlier decision in Elguindy v. St. Joseph s Health Care holding that there are no rule 30.10 motions in Small Claims Court; confirmed that there are no examinations for discovery in Small Claims Court; confirmed that document discovery rights are very limited ; specified that the document discovery obligations include the following: (i) (ii) (iii) to attach to pleadings copies of any documents on which the claim or defence is based, to produce any additional documents on which the party intends to rely at trial 14 days before the settlement conference, and to serve at least 30 days before trial any documents intended to be introduced at trial under rule 18.02. The reality is that deputy judges are divided in the approach they may favour towards discovery-type motions in Small Claims Court: some will tend to resist adding to the available steps in Small Claims Court proceedings, while others may favour discovery-type orders based on a certain view of fairness based on the Rules of Civil Procedure. With respect to motions to compel production of documents by a party, there is no appellate decision on point and the first instance caselaw is divided. The most recent decision holding that there are no such motions in Small Claims Court is Fiuza v. Creekside Real Estate Group Inc., 2018 CanLII 6671 (Ont. Sm. Cl. Ct.), applying Norquay Developments Ltd. v. Oxford County Housing Corp., [2010] O.J. 274 (Sm. Cl. Ct.). The contrary view is supported by Burke v. Lauzon Sound and Automation Inc., [2016] O.J. No. 2914 (Sm. Cl. Ct.). Note however that the Riddell case is not necessarily over. An application for leave to appeal to the Supreme Court of Canada is pending: [2017] S.C.C.A. No. 470. That leave decision should be released in approximately mid-2018.
-4-2. UPDATE ON JURISDICTION IN RESIDENTIAL TENANCY MATTERS Two recent cases deserve mention by way of update to my remarks on this subject in May 2017. First is the December 2017 decision of Justice Bloom in Brydges v. Johnson, [2017] O.J. No. 6473 (Div. Ct.). This was an appeal from the Small Claims Court at Guelph which had awarded damages to the plaintiff/landlord for arrears of rent and damage to the rental unit. On appeal the main issue was the jurisdiction of the Small Claims Court over the claim for rental arrears. In that case the landlord had served an N4 Notice to End a Tenancy Early for Non-Payment of Rent and the tenants had vacated, so no application was launched before the Landlord and Tenant Board. The tenants argued that the exclusive jurisdiction of the Board was triggered so the Small Claims Court had no jurisdiction over that claim. Justice Bloom rejected that position, holding that s. 87(1)(b) of the Residential Tenancies Act, 2006, was determinative of the point. It provides that a landlord may apply to the board for an order for arrears of rent if the tenant is in possession of the rental unit. Therefore the board would not have had jurisdiction and the Small Claims Court s jurisdiction was not ousted by s. 168(2) of the Act. A caution however: in Brydges v. Johnson an N4 was served but no application to the board was launched. It does not deal with the alternative scenario where an application was launched while the tenants continued in possession, and the tenants vacated after the application was launched. Second is Caledon Hills Realty Ltd. v. Rosario, [2018] O.J. No. 544 (Sm. Cl. Ct.). One of the issues was jurisdiction over the plaintiff/landlord s claim for damage to the rental unit. Section 89(1) of the Act (like s. 87) provides that the landlord may apply to the board in such a case if the tenant is in possession of the rental unit. The court considered the argument that if the landlord could have launched an application to the board while the tenants continued in possession, but in fact did not do so, that was sufficient to trigger the exclusive jurisdiction of the board and oust the jurisdiction of the court.
-5- Deputy Judge Marentette rejected the notion that if the damage to the rental unit was discoverable while the tenants continued in possession, that is enough to trigger the board s jurisdiction. In fact no application was made to the board in that case and therefore the court s jurisdiction was not ousted. The court was careful to note at para. 21 that the result could be different in situations where the claim was or could have been addressed in an application that was in fact made to the board. Deputy Judge Marentette is by no means alone in rejecting the discoverability analysis in this type of case. His reasons for judgment should be considered persuasive in future. 3. EXPERT EVIDENCE Section 27(1) of the Courts of Justice Act permits the Small Claims Court to admit as evidence and act upon any relevant evidence. Section 27(2) states that this applies regardless of whether the evidence is given under oath or affirmation or is admissible in any other court. Expert Reports The usual and most cost-effective way to present expert evidence in Small Claims Court is to use rule 18.02, serving a written expert report at least 30 days before trial. The party serving the report must be sure to have included in the report, or appended to the report, the name, telephone number and address for service of the expert, and a summary of the expert s qualifications as required by rule 18.02(3). The purpose of rule 18.02 is to permit documents to be filed as evidence without calling the author to testify in-chief: Guillemette v. Dube (1974), 6 O.R. (2d) 663 (Div. Ct.); O Connell v. Custom Kitchen & Vanity (1986), 56 O.R. (2d) 57 (Div. Ct.); Parkkari v. Lakehead Aluminium Ltd. (2014), 324 O.A.C. 8 (Div. Ct.). The party served with such a report then has the right to summons the expert to attend trial for cross-examination, under rule 18.02(4).
-6- It was recently held to be an error of law for a trial judge to discount the weight to be given to an expert report merely because the report was filed under rule 18.02 instead of calling the expert to testify in-person: Deverett Law Offices v. Pitney, [2017] O.J. No. 5513 (Div. Ct.), at para. 10. Dispensing with the need for in-person testimony is the very purpose of rule 18.02. In-Person Expert Evidence The other way to present expert evidence is to call the expert to testify in-person. Does a party who intends to present in-person expert evidence have an obligation to serve a written report in advance of trial? The answer will be different depending on who you ask. In my opinion the simple and correct answer is that the Small Claims Court Rules contain no equivalent to rule 53.03 of the Rules of Civil Procedure or rule 23(23) of the Family Law Rules. Those rules specifically require, as a prerequisite to calling an expert to give in-person evidence at trial, that the expert s evidence be served in advance of trial in the form of an expert report. In Small Claims Court there is no such rule and the expense of obtaining an expert report will be disproportionate in many cases. Even in the Superior Court of Justice, certain forms of expert evidence can be given without advance service of a report: see Westerhof v. Gee Estate (2015), 124 O.R. (3d) 721 (C.A.), where rule 53.03 was interpreted as not covering so-called participant experts such as treating physicians. And occasionally in that court, the requirement for service of a report may even be dispensed with: see Pavao v. Pinarreta (1995), 40 C.P.C. (3d) 84 (Ont. Div. Ct.). The procedure in Small Claims Court must make sense when compared to the procedure in the Superior Court of Justice, and given that our court has no rule 53.03. In Hervieux v. Huronia Optical (2016), 348 O.A.C. 205 (C.A.), a settlement conference judge ordered the plaintiff to serve an expert report by a certain date, but he failed to comply. On
-7- motion under rule 12.02 the claim was then dismissed on the basis that the plaintiff had no expert evidence to support his claim of professional negligence, and would have no such evidence at trial. On appeal to the Divisional Court that dismissal order was set aside. On further appeal the Court of Appeal agreed with the Divisional Court although for somewhat different reasons. The Court of Appeal held that the failure to serve a report did not justify dismissal for lack of evidence of the standard of care, because non-service of a report did not preclude the plaintiff from presenting other opinion evidence at trial through in-person witnesses such as treating physicians. There is no specific reference to rule 18.02 in the Court of Appeal s decision. But at paragraph 9 the court states that the Small Claims Court has the jurisdiction to alter the time deadlines provided under the Small Claims Court Rules... The uncertainty associated with the settlement conference judge s order in that case was not resolved (probably the point was not argued). The question is, can a settlement conference judge order a party to retain an expert and produce and serve an expert report which that party otherwise did not intend? It is one thing to simply extend the time for serve under rule 18.02. If a party intends to use that rule for an expert report, extending time is uncontroversial. But if the party did not intend to use that rule, does the court have jurisdiction to order the party to serve a report? The Small Claims Court has no jurisdiction to make a mandatory order or injunction: Moore v. Canadian Newspapers Co. Ltd. (1989), 34 O.A.C. 328 (Div. Ct.). How then can the court order someone to go out and hire an expert, pay that expert what may be a fee of $5,000 or more, and serve a report pursuant to an optional rule that party did not intend to use? In my opinion that was the question which needed answering in Hervieux, but unfortunately the appeal does not appear to have been argued on that footing. At the Divisional Court level, clarification is found in Riddell v. Apple Canada Inc., [2016] O.J. No. 4934 (Div. Ct.), affirmed 2017 ONCA 590, application for leave to appeal filed [2017]
-8- S.C.C.A. No. 470. At paragraph 21 the court stated:... Unlike the Rules of Civil Procedure, the Small Claims Court Rules do not require, as a prerequisite to calling an expert witness, that an expert report be delivered to the other side: Steckley v. Haid, [2009] O.J. No. 2014 (Sm. Cl. Ct.)... Therefore, when the point arises in practice and your client does not want or intend to pay for an expert report but intends to call the in-person evidence of that expert, there are authorities from the appellate level to support such a position. Be aware, however, that some and perhaps many deputy judges will feel an inclination to use the procedure under the Rules of Civil Procedure simply because that is what they are familiar with as lawyers. For example in Prohaska v. Howe, [2016] O.J. No. (Div. Ct.), the experienced trial judge ordered service of an expert report. Trial was significantly delayed by reason of that order, but eventually trial proceeded after service of a report. The trial judge then required a formal voir dire and ruled that the expert was unqualified and the main parts of his evidence were excluded. On appeal the Divisional Court basically held that rule 18.02 gave the Small Claims Court a discretion to apply rule 53.03 of the Rules of Civil Procedure and to treat admission of expert evidence the same way as if it were a trial in the Superior Court of Justice. Later in 2016 a different approach was taken in Untinen v. Dykstra (2016), 70 C.L.R. (4 th ) 202 (Ont. Div. Ct.). The trial judge had allowed expert evidence from an in-person witness, without prior service of an expert report and without conducting a voir dire. On appeal the Divisional Court found no error on this issue. The Divisional Court made the following key points: parties should serve an expert report before trial but rule 18.02 does not require that it is wrong to apply rule 53.03 of the Rules of Civil Procedure in Small Claims Court In light of the recent decision by a three-judge panel of the Divisional Court in Riddell, and given
-9- the Court of Appeal in that case agreed with the Divisional Court s reasoning, it should be apparent that the old-fashioned view that rule 53.03 should apply in Small Claims Court, is no longer good law. However the institutional tendency of deputy judges to resort to the Rules of Civil Procedure may persist. Advocates in Small Claims Court should understand this issue and the above-noted cases to address this problem when it arises, as undoubtedly it will in future cases. 4. ANTI-SLAPP MOTIONS (CJA S. 137.1) These amendments to the Courts of Justice Act came into force in December 2015. SLAPP is short for Strategic Litigation Against Public Participation. While it is not limited to defamation proceedings, s. 137.1 is generally aimed at strategic defamation claims. It provides a method for early and summary dismissal of such claims, on motion, based on considerations of public policy. Freedom of expression can be protected by early dismissal of such cases. The section contains no specific indication that it is restricted to actions in the Superior Court of Justice. In my view it applies in Small Claims Court proceedings. Under s. 137.1(3) a defendant may make a motion to a judge to dismiss the proceeding against the defendant if he or she satisfies the judge that the proceeding arises from an expression made by the person that relates to a matter of public interest. All the defendant has to prove is that the proceeding arises from an expression (which is defined very broadly in s. 137.1(2)) and that the expression relates to a matter of public interest. If those two elements are proved, the proceeding shall be dismissed, unless the plaintiff satisfies the judge of the elements listed in s. 137.1(4). The real focus then shifts to plaintiff s reverse onus under s. 137.1(4), which provides: (4) A judge shall not dismiss a proceeding under subsection (3) if the responding party
-10- satisfies the judge that, (a) there are grounds to believe that, (i) the proceeding has substantial merit, and (ii) the moving party has no valid defence in the proceeding; and (b) the harm likely to be or have been suffered by the responding party as a result of the moving party s expression is sufficiently serious that the public interest in permitting the proceeding to continue outweighs the public interest in protecting that expression. There is as yet no appellate decision considering s. 137.1 (although a number of appeals are currently under reserve with the Court of Appeal). What we have so far are a handful of first instance decisions from the Superior Court of Justice. These include: Able Translations Ltd. v. Express International Translations Inc. (2016), 410 D.L.R. (4 th ) 380 (Ont. S.C.J.) Progressive Conservative Party of Ontario v. Karahlios, [2017] O.J. No. 6738 (S.C.J.) Montour v. Beacon Publishing Inc., [2017] O.J. No. 4618 (S.C.J.) New Dermamed Inc. v. Sulaiman, 2018 ONSC 2517 United Soils Management Ltd. v. Barclay, 2018 ONSC 1372 Dealing with such a motion requires some familiarity with the law of defamation. For example, where the plaintiff seeks to prove that the defendant has no valid defence under s. 137.1(4)(a)(ii), the potential defences in issue could include fair comment or qualified privilege. The legislation creates a variety of procedures including an automatic stay until the motion is concluded, an automatically-expedited appeal process and specific costs provisions. 5. PROVING DAMAGES
-11- Small Claims Court has a wide discretion to admit and act on any evidence, including evidence that might be inadmissible in other courts. Courts of Justice Act s. 27 only requires the court to exclude evidence that is rendered inadmissible by statute or that is protected by the law of privilege. Like any other issue, damages where alleged by a plaintiff must be proved. The onus of proof is on the plaintiff and the standard of proof is the balance of probabilities. We are concerned here with the general principles of proof relating to compensatory damages (other than damages for defamation which are subject to a special presumption that damages occurred). In many instances, damages may be assessed by estimation rather than by any more precise or mathematical analysis. But to be capable of estimation, the damages must nevertheless be proved by the evidence. The court may only estimate damages where the evidence yields a rational basis for estimation, as opposed to a mere guess or speculation: Martin v. Goldfarb (1998), 41 O.R. (3d) 161 (C.A.). Damages must be proved to have been caused by the defendant s actionable conduct, whether it is a contract case, a tort case or otherwise. Causation is generally analysed using the but for rule confirmed in Resurfice Corp. v. Hanke, [2007] 1 S.C.R. 333. It must be shown that but for the actionable act or omission, the damages would not have been sustained. In loss of property or damaged property cases, the usual measure of damages is the loss of actual cash value, which generally requires consideration of depreciation or betterment: Bookman v. U-Haul Co. (Canada) (2007), 229 O.A.C. 194 (Div. Ct.).
-12- In personal injury cases, the thin skull and crumbling skull metaphors can often be useful, and illustrate the causation analysis and its compensatory focus: Athey v. Leonati, [1996] 3 S.C.R. 458. Issues which arise in Small Claims Court on the question of proof of damages are addressed in the following cases: Boardwalk General Partnership v. Hourani, [2009] O.J. No. 4983 (Sm. Cl. Ct.) Sumner v. Crease (2012), 22 R.P.R. (5 th ) 136 (Ont. Sm. Cl. Ct.) Kitchener-Wilmot Hydro Inc. v. Sturm, [2014] O.J. No. 337 (Sm. Cl. Ct.) Pekurar v. Hummingbird Farms Ltd., [2015] O.J. No. 378 (Sm. Cl. Ct.) Stamm Investments Ltd. v. Contant, [2016] O.J. No. 353 (Sm. Cl. Ct.) Macdonald v. Genereux-Partridge, [2016] O.J. No. 2816 (Sm. Cl. Ct.) Wallis v. Gallant, [2018] O.J. No. 1514 (Sm. Cl. Ct.)