Small Claims Court Redemption: Decisions Not Held to Same Standard of Review as the Superior Court

September 1st, 2015 by

By Ivan Merrow

Over the past several years one Small Claims Court Deputy Judge’s decision has gone the distance: his trial decision was overturned by the Divisional Court but was then reinstated in the Ontario Court of Appeal (ONCA). The appeals concerned the sufficiency of the Deputy Judge’s reasons. Were the reasons for his judgment detailed enough to be reviewable on appeal? If not, then the Deputy Judge’s decision would be sent back for retrial. So began the series of cases styled Maple Ridge Community Management Ltd. v. Peel Condominium Corporation No. 231, with important commentary on the Small Claims Court, the standard of review, and a unique appellate context.

The ONCA overruled the Divisional Court in the July 2015 decision, ultimately deciding the Deputy Judge’s brief reasons were sufficient for appellate review. The ONCA also confirmed the Small Claims Court’s unique role promoting access to justice in Ontario and stated that Small Claims Court judges’ reasons should be reviewed in a manner consistent with that court’s informal and high-volume context. Time will tell if the ONCA’s comments in Maple Ridge will protect Deputy Judges’ decisions from judicial review in the future.

Background

The case concerns a dispute between a property management company (Maple Ridge) and a condominium corporation. The two parties had a management agreement in place. The condominium corporation terminated the agreement with no notice to Maple Ridge. In their agreement, termination without notice was allowed when “[t]he Manager is insubordinate, reckless, or grossly negligent in performing its duties.” Maple Ridge did not believe its behaviour qualified as insubordinate, reckless, or grossly negligent. The property management company sued the condominium corporation in Small Claims Court for its 60 days’ pay in lieu of notice.

The main issue at trial was whether Maple Ridge’s behaviour was “insubordinate, reckless, or grossly negligent.” The Deputy Judge considered the condominium corporation’s seven grounds for terminating the agreement, which included “engage[ing] in a roof replacement project without contracting an engineering professional to oversee the project” and “provid[ing] ‘inconclusive’ information to the roofing contractor… resulting in an incorrect placement that voided the associated warranty.”

Lower Court Judgments

The Small Claims Court Deputy Judge reviewed the evidence, set out definitions, and consulted a leading Canadian treatise on tort law. He considered whether each of the condominium corporation’s seven grounds could constitute “insubordinate, reckless, or grossly negligent” behaviour, and whether there was evidence to support them.  Importantly, he also assessed the factors cumulatively. His final decision read:

Notwithstanding that the grounds relied on by the Defendant in terminating the Agreement, may not have been sufficient individually to meet the tests outlined above, although in some cases I believe they were, I am satisfied that when taken together they are sufficient to constitute insubordination, recklessness and/or gross negligence entitling the Defendant to terminate the Agreement without notice pursuant to paragraph 16.5(c).

The Small Claims Court rejected Maple Ridge’s claim for pay in lieu of notice. Maple Ridge disagreed and appealed to the Divisional Court.

The Divisional Court agreed with Maple Ridge’s argument that the Deputy Judge’s reasons were insufficient for meaningful review for two main reasons: (1) the Deputy Judge did not point out what behaviour actually triggered the termination clause; and (2) he did not explain why the actions were collectively “insubordinate, reckless, or grossly negligent,” even though the actions did not trigger the term individually.

The Ontario Court of Appeal’s Decision

The condominium corporation successfully appealed the Divisional Court’s decision at the ONCA, winning on three grounds:

  1. The Divisional Court misapplied the standard to determine “sufficiency of reasons;”
  2. The Divisional Court did not give enough thought to the trial record; and
  3. The Divisional Court did not consider “the Small Claims Court context in which the decision was rendered.”

The Divisional Court had previously found the Deputy Judge’s decision did not adequately describe “what” was decided and “why” it was decided that way. (The “what” and “why” method of describing the sufficiency requirement originated in a 2010 ONCA decision styled Law Society of Upper Canada v. Neinstein.) The ONCA disagreed, holding that the Divisional Court did not give enough credit to the Deputy Judge’s decision. Considering both the Deputy Judge’s one-paragraph conclusion and the preceding seven pages of reasons, the ONCA found there was enough to determine the “what” and “why.”


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