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RTA - Small Claims Court Jurisdiction

. Nicholls v. Zsiga

In Nicholls v. Zsiga (Div Ct, 2021) the Divisional Court considered a court-LTB jurisdictional mess where parties at the LTB under a mediated settlement [where you can except RTA provisions under RTA 194(2)] agreed to leave some issues to the small claims court, even though the issues were within the LTB's exclusive jurisdiction. The result was a minor absurdity were the minor quantum case was sent back down to the court nine years after the settlement:
[18] Nightingale J., sitting as a single judge of the Divisional Court in Morrison v. Rose, 2018 ONSC 3635 (CanLII), considered a situation where a settlement before the LTB contemplated that certain claims, even though they fell within the jurisdiction of the LTB, “would be resolved all at once in the same forum in Small Claims Court” along with other claims which, the LTB held, were not within its jurisdiction. The Small Claims Judge in that case declined to hear the LTB matters. Nightingale J. found that the trial judge erred in not following the direction of the LTB.

[19] Morrison, however, is distinguishable. In Morrison, the LTB made a finding that it did not have jurisdiction over certain claims. In order to avoid a multiplicity of proceedings, the LTB declined jurisdiction over other claims that it could have heard, so as to allow all the interrelated claims to be dealt with all at once in one proceeding. This is consistent with the approach taken by a full panel of the Divisional Ct. in Trinidade v. Jantzi, 2021 ONSC 1927. There, the Court held that the LTB can, and should, decline jurisdiction in favour of proceedings already underway in the Superior Court of Justice where it is necessary to prevent an abuse of process. In both cases, the reasons are founded on provisions of the Statutory Powers Procedure Act. These cases stand for the proposition that the LTB’s exclusive jurisdiction may yield in certain circumstances where it is necessary in the interests of justice.

[20] Here, however, there is no comparable issue. There is no suggestion that the mediated settlement of some of the plaintiff’s claims before the LTB, and the deferral of LTB jurisdiction over others, was necessary to prevent an abuse of process. Indeed, as the deputy judge found, the plaintiff’s maintenance claims could have been brought before the LTB.

[21] This case raises the narrow question, apparently for the first time, whether, as part of a mediated settlement before the LTB, the parties can agree, and the LTB can endorse, implicitly if not explicitly, that a proceeding otherwise within the jurisdiction of the LTB can proceed before the Small Claims Court.

[22] Section 194(2) is confined to a very narrow set of circumstances. The parties must agree, as part of a mediated settlement before the LTB, to an action which might otherwise contravene a provision of the RTA and the LTB must be prepared to countenance that mediated settlement as being, not only in the party’s interests but in the broader public interest as well. It will be the rare case where this confluence of interests will align in this way. It will be the even rarer case (or perhaps never) where the LTB, in the role of mediator, will countenance the deferral of its jurisdiction over a residential tenancy claim in the absence of some compelling reason to do so. Within that narrow set of circumstances, however, the scope of the provision appears broad: “despite subsection 3(1) … a settlement mediated under this section may contain provisions that contravene any provision under this Act.”

[23] While the most obvious form of LTB endorsement of a mediated settlement would be, as it was in Morrison, an express order or finding of the LTB, s. 194(2) does not require that; it is sufficient to come within the purview of s. 194(2) that a settlement mediated under the LTB’s auspices has been reached and accepted by the LTB.

[24] Unambiguous proof of the preconditions for the application of s. 194(2) would, absent an express order of the LTB, also be rare. Here, the contents of para. 34 of the ASF, supported by the defendant’s conduct in failing to raise any objection to Small Claims Court jurisdiction, meets the required threshold under s. 194(2).

[25] While there are “policy” concerns around undermining the broad and necessary effect of s. 3 of the RTA and the LTB’s exclusive jurisdiction under s. 168(2), these concerns are mitigated by the narrow, highly unusual set of circumstances necessary to come within the s. 194(2) exception. I must also consider, in weighing this broader concern, the fact that the parties have, apparently in good faith, invested a huge amount of time, energy and cost in the Small Claims Court trial. A great deal of time has gone by since the events in question. The plaintiff’s access to the LTB is, by now, time-barred. The parties are entitled to have an adjudicated end to this dispute, one way or another.

[26] In these unique circumstances, I find that the plaintiff’s claim falls within the purview of s. 194(2). This constitutes an exception to the otherwise overarching jurisdiction of the LTB in this case and the prohibition against “contracting out”. The evidence supports the conclusion that the LTB, implicitly at least, endorsed the parties’ agreement in a mediated settlement. The Small Claims Court, as a result, has jurisdiction to hear and decide this dispute on the merits.

[27] The plaintiff asks the Divisional Court to go further and to decide the case on the merits. I can think of no circumstance in which an appellate court would do such a thing unless, perhaps, the legal question of jurisdiction was the only issue in dispute. Here, everything is in dispute. It was the substance of those disputes that took six days of trial before the deputy judge.

[28] The deputy judge heard all of the evidence, reviewed all of the documents and considered all of the submissions. Only he can assess the reliability, credibility and weight of the evidence and arguments. My conclusion, that in the unique and highly unusual circumstances of this case, the Small Claims Court has jurisdiction to resolve this dispute, is in no way a comment on any aspect of the merits of the plaintiff’s claim or the defendant’s defence. That is for the deputy judge, and the deputy judge alone, to decide.

[29] For these reasons, I remit the matter to the deputy judge to decide the claim on the merits.

[30] I am compelled to say, by way of concluding observation, that the resources and cost of these proceedings has been completely out of proportion to the matters and amounts in issue. There has never been, as far as I can tell, any formal effort to settle this case. The parties reached a settlement of the LTB proceeding with the assistance of a mediator. They would be well advised to reach a settlement in this one as well. To this end, I strongly recommend, as a precondition to the matter being remitted to the deputy judge for a decision on the merits, that the parties attend (and share the cost of) a mediation before a private mediator to engage in a bona fide, concerted effort to resolve this matter without the need for further legal/judicial proceedings.


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Last modified: 26-04-23
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