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Small Claims Court (Ontario) Law
(01 October 2011)

Chapter 3 - Jurisdiction

  1. Overview
  2. In rem versus In personam Actions
  3. Jurisdiction and Limitation Defence Distinguished
  4. Jurisdiction and Status of Parties
  5. Jurisdiction over Remedy Sought
    (a) Overview
    (b) Monetary Limit of Court
    (c) Orders and Interim Orders for Recovery of Personal Property
    (d) Repair and Storage Lien Act Applications
    (e) Charter Remedies
    (f) Human Rights Code Remedies
    (g) The Small Claims Court, Equity and Restitution
    . Equity
    . The Governing Statutes
    . Mungo Bear
    . Restitution
  6. Geographical Jurisdiction (Venue)
    (a) Overview
    (b) General Venue Criteria
    (c) Ontario v Extra-Provincial Jurisdiction
    (d) Local Ontario Court Venue
  7. Bankruptcy of Defendant
  8. Subject-Matter Jurisdiction Delegated to Other Tribunals
    (a) Overview
    (b) Examples
    . Ontario Labour Relations Board
    . Rental Housing Tribunal
    . Copyright Violation
    . Human Rights Code (Ontario)
    . Worker's Compensation (now "Workplace Safety and Insurance")
    . Family Law Proceedings
    . Condominium Act
    . Class Proceedings Act
    . Construction Liens
________________________________________


1. Overview

"Jurisdiction" is a broad term that refers to the authority of the court to hear and adjudicate on disputes before it. Jurisdiction generally relates to the following factors of the dispute: geography, subject-matter, parties and remedies.

If a court "lacks jurisdiction" to hear a dispute, the dispute cannot proceed there. But while the defendant in such a situation may be relieved to learn that, it is likely that the matter can be raised in another forum, such as a different court or a tribunal - or in a different province or country, for that matter. Of course the new forum will have its own rules of jurisdiction and procedure that the plaintiff must satisfy. Practically and tactically the matter of jurisdiction can have huge consequences to the outcome of a dispute.

The typical response of a court when faced with a Claim over which it lacks jurisdiction is to issue a "stay" (suspension) of the proceedings before it [CJA s.106]. A stay is different from a dismissal, which might be interpreted as a final resolution of the issues on the merits. A dismissal gives the defendant the defence argument of "res judicata" (issue already adjudicated) or "cause of action estoppel" in another forum, while a stay does not.

Sometimes a higher court or another forum itself is deciding the issue of its jurisdiction over the subject-matter of the case. In that case a stay in another court, such as Small Claims court, may be only temporary in effect - pending outcome of the decision of that other forum.


2. In rem versus In personam Actions

An important - though somewhat obscure - initial distinction important to understanding jurisdictional issues is the difference between an action "in personam" and an action "in rem". They are distinguished by the type of remedies sought in the case.

An action "in personam" seeks a remedy which effects the rights of the parties with respect to each other, such as a damages lawsuit for money. An action "in rem" effects rights as against the rest of the world, such as a declaration as to the ownership of property. There are mixtures of the two, for example divorce is considered to be "quasi in rem" as it clearly effects the rights between two parties but also effects rights against others as it renders the parties free to marry again.

For purposes of the Small Claims Court, the distinction between "in rem" and "in personam" action is important for the issues of remedial jurisdiction and territorial jurisdiction, and is mentioned in those discussion below.


3. Jurisdiction and Limitation Defence Distinguished

Here's another important clarification. While most people would agree that there is a difference between a jurisdictional issue and a defence issue, the difference is not always so clear.

A common legal situation in which a court is sometimes (and improperly) said to "lose jurisdiction" is when the commencement of the legal proceeding is said to be too late, or that the plaintiff has "missed a "limitation period". Most people are aware that there is a 'statute of limitations' which says how long a plaintiff has to sue (actually there is one main Limitations Act and numerous other limitation periods spread throughout various pieces of legislation). Limitations are very like questions of jurisdiction in effect, but technically are "defences" to a claim.

While loss of jurisdiction and expiration of a limitation period both may have the effect of barring a proceeding, the distinction between them does have some practical difference. Jurisdictional issues are ones that the court will wish to be satisfied about itself before it proceeds. The court should not wait for a jurisdictional issue to be raised by a party by way of "defence".

For example, if two inexperienced parties show up at Small Claims Court ready to argue whether an injunction should be granted, the court should decide - without motion by either party and without it being pleaded in the statement of defence -that the court has no jurisdiction over that remedy because it is reserved to the Superior Court of Justice as an "equitable remedy" [CJA s.96(3)].

On the other hand if two parties show up ready to argue a negligence case the material facts of which occurred ten years prior to the lawsuit being commenced - and the defendant has not included a limitation defence in their pleadings - then the court could proceed with the case ignoring the limitation issue, and not lose jurisdiction by doing so. [Note: practically most courts would inquire into such an issue on their own: see the Mungo Bear case elsewhere in this chapter].

The full subject of limitations law is complex and beyond the scope of this program, but I link here to a useful Law Society website for reference:

Limitations Act (Ontario)


4. Jurisdiction and Status of Parties

Another area in which the term "jurisdiction" can become confusing is where the court lacks the authority to hear and decide a case because of the status or identity of an involved party.

A clear example would be that the Small Claims Court - in fact no provincial court -has jurisdiction to adjudicate issues between provinces, or between Canada and a province. Such actions are within the jurisdiction of the Federal Court of Canada [CJA s.148]. There are numerous other proceedings against the federal government that must be conducted in Federal Court [Crown Liability and Proceedings Act (Cda), s.21]. However, as the case of Luo v Canada (AG) (1997) 33 OR (3d) 300 (Div Ct, 1997) illustrates, the Small Claims court has jurisdiction to consider a tort action (there is was "negligent misrepresentation") against the federal Crown as long as the subject-matter of the dispute was not exclusively assigned to the federal court.

There may be other situations that have the same effect as a loss of jurisdiction by the court. For instance, many parties are granted various forms of "immunity" from lawsuits because of who or what they are. While it is beyond the scope of the present work to fully explore the law of immunity, you will likely have heard of some examples. These can include diplomatic immunity, immunity from defamation claims by members of the legislature for things said in the legislature, Crown immunity, judge and judicial officer immunity, and many more.


5. Jurisdiction over Remedy Sought

(a) Overview

The Small Claims Court is not a court of "plenary" (full) jurisdiction. It may only make orders within its limited remedial jurisdiction, as set out below.

Recall the discussion of "in personam" versus "in rem" orders above. Do NOT show up in Small Claims court seeking an "in rem" remedy such as a a claim for an injunction, a court declaration of right, a divorce, clarification of legal title to land, trying to replace the executor on a will. For these and most other specialized or unusual remedies you will be sent elsewhere [CJA s.97-99].

The remedial jurisdiction of the Small Claims court is only as set out in this section.

(b) Monetary Limit of Court

The monetary remedial jurisdiction of the Small Claims Court is limited to claims in an amount up to $25,000 Reg 626/00.

A cause of action shall not be split into two or more proceedings in order to bring it within the court's jurisdiction [R6.02].

It has however been held that where two parties on one side of a contract join in one proceeding to sue the other side then the combined total of judgments may exceed the limit as there are two causes of action in that situation - and thus R6.02 is not offended [Kent v Conquest Vacations (Div Ct, 2005)]. That case involved a couple who purchased a travel package from a travel agency.

Further, in KNP Headwear v Levinson [2005] O.J. No. 5438 (Div Ct) a plaintiff sued an individual in two separate actions for an amount in total which exceeded the Small Claims court limit. The claims were for personal guarantees of invoices liabilities to two corporations, both controlled by the defendant guarantor. The Divisional Court held that given the separate legal identities of the corporations and the separate personal guarantees that there were at least two causes of action and therefore no exceeding of the monetary limit of the court nor any splitting of proceedings as is prohibited under R6.02. The court cited and favoured the reasoning in Kent v Conquest Vacations, above.

The technique used to keep a case within the monetary limit of the court is called "abandoning the excess". It is discussed further in the chapter "Pleadings". In Helsberg v Sutton Group Achiever's Realty Inc. [2002] O.J. No. 2311 (Div Ct) the plaintiff sued for an amount over the monetary limit of the court, and did not 'abandon the excess' to keep the case within the court's monetary limit. While the amount that the judge ultimately awarded was within the jurisdiction of the court, the Divisional Court set aside the judgment as the court lacked jurisdiction over the amount CLAIMED. The Divisional court further held that an increase in monetary jurisdiction that became effective after judgment but before the appeal ruling did not have retrospective effect. Although it was not necessary to the result, the court further stated that a change in monetary limit was not procedural in nature, so presumably even if the monetary limit amendment was made before trial it would still have refused to allow the claim to proceed in Small Claims Court for lack of jurisdiction.
Note:
Where legislation is amended in the course of a proceeding, the law distinguishes between "procedural" changes which may be applied retrospectively in the proceeding, and "substantive" changes, which may not: see the Legislation Act, 2006, s.51.
The reasoning in Helsberg is quite formalistic and would not likely have allowed an amendment before trial to change the amount claimed after the monetary limit changed, the initial action having lacked jurisdiction. The court's conclusions on this issue were endorsed by the Divisional Court again in Rock, Water and Sky Inc v Cain [2004] O.J. No. 5451 (Div Ct).

(c) Orders and Interim Order for the Recovery of Personal Property

As well, the Small Claims court may make orders for the recovery of possession of personal property of a value up to $25,000 [CJA s.23(1)]. This type of remedy governs specific personal property - such as a pet animal or a ring. The jurisdiction to award possession of personal property is the only "in rem" jurisdiction (see the discussion above) that the Small Claims court has.
Note:
All courts are prohibited from making orders for recovery of personal property against the provincial Crown (ie. Ontario) [Proceedings Against the Crown Act, s.15] but in lieu are authorized to make "an order declaring that the claimant is entitled, as against the Crown, to the property claimed or to the possession thereof". This provision may conflict with the Small Claims Court's lack of jurisdiction over declaratory remedies (see s.2, above). To my knowledge this issue has not been conclusively litigated.
Interestingly, when the plaintiff is seeking possession of personal property which they allege was unlawfully taken or is being unlawfully detained, the court has extended authority make to order for "interim possession" of the property at issue [CJA s.104(1)]. This means that it may be possible to get an order for possession of the property before the ultimate legal issue of entitlement is decided.

A party seeking interim possession should proceed by way of motion (see chapter "Motions") and should be aware of their liability for damages if they ultimately lose on the issue at trial [CJA s.104(2)].

Getting such an order is not a simple thing. In Easy Home v Rogalski [2004] OJ #533 (Ont Small Claims Court, 2004) the court dismissed a motion to the court to obtain a "writ of delivery" when no claim had been filed or judgment had yet be obtained. The plaintiff was apparently seeking an interim order for the possession of personal property under s.104 of the CJA. The court dismissed the action as premature, noting that a Writ of Delivery was a form of enforcement mechanism which presupposed the plaintiff already having an order or judgment for that relief. The court encouraged the plaintiff to file a Claim in the normal course, and then to make an interim motion within that proceeding.

This suggested route is procedurally sound but of little tactical help in dealing with a defendant who might hide, convey or destroy the personal property upon being notified of the proceeding. What is needed is a pre-commencement, interim, ex parte (ie. without notice to the other party) motion analogous to an "interlocutory injunction" as in the Superior Court.

As is noted in the chapter "Motions", pre-commencement motions may be made by virtue of the definition of "motion" in s.1 of the CJA: "motion" means a motion in a proceeding or an INTENDED proceeding, and ex parte motions (without notice) may be made by virtue of the court's authority to waive compliance with Rules (ie. the rule requiring service of a motion and a Claim).

I am unaware of any established procedure for such a remedy. However - on speculation - a possible procedure for obtaining quick seizure of specific personal property MIGHT be, before filing a Claim, an ex parte motion to the court for:
  • leave of the court under R2.02 not to serve the motion or Claim until the property is seized by the bailiff (this is permission for the motion being ex parte);

  • an order for interim recovery of possession of the personal property.
Supporting evidence would logically include an affidavit setting out the possessory claim and the reason why ex parte interim possession is necessary (ie. the risk to the property of following the normal procedure) - perhaps in the form of an attached Claim, the allegations of which are attested to as true in the affidavit.

If and when such an interim order is obtained it should immediately be followed by an attendence at the court office and a request to the court clerk for a "Writ of Delivery" (see Ch.16: "Collection") - NOT for a "Writ of Seizure and Sale of Personal Property" (the latter of which is is a method of obtaining property for sale to pay off a judgment debt). Prudence would suggest that the request and supporting affidavit for the request for the Writ (different from the affidavit in support of the motion) be ready for immediate filing after the court's ruling on the motion.

As well, the court in Rogalski also alludes to the possibility of a damage bond by the plaintiff in such case - paid into the court as security for damages in the event that the full case, once heard, goes against the plaintiff: s.104(2) CJA. This is similar to interlocutory injunction practice in the Superior Court. A plaintiff should be aware of and ready to comply with any such conditions imposed by the court. Posting bonds as a substitute for paying money into court is discussed in Ch.16: "Collection".

Anyone seeking this an uncommon remedy would be well-advised to communicate extensively with the court clerk and the bailiff - perhaps in writing - beforehand to accomodate any further procedures they may require. It is very likely that the clerk will want to discuss the issue with a judge, and in some cases you may have to convince the court that it has the jurisdiction to make such an order.

(d) Repair and Storage Lien Act Applications

The Small Claims court may also hear and decide applications regarding chattel property (personal property, as opposed to real estate) seizure and lien disputes under the Repair and Storage Lien Act, insofar as they are within the court's monetary jurisdiction (ie. money judgments to $25,000 and recovery of personal property to a value of $25,000). Special procedures govern such applications and a full review of that statute is beyond the scope of this program.

(e) Charter Remedies

A Small Claims court may also, with some important restrictions, consider issues under the Canadian Charter of Rights and Freedoms, where they properly arise in a case and where the remedy sought is within its jurisdiction. There is much confusion amongst laypersons as to when the Charter can be argued, so below I list some basic principles about when (and only when) the Charter may be argued in a case:
  • the Charter can be argued ONLY against the actions of a government or a government agent acting within their authority OR against common law or statute law (and regulations) which are being or could be applied against the party arguing the Charter right;

  • arguing the Charter in Small Claims court does NOT expand the remedial jurisdiction of that court. The remedy can still only be a maximum of $25,000 damages or return of personal property to that value.

  • Charter "damages" in Small Claims court [under s.24(1) of the Charter] are generally only available against government actions, not against legislation (or regulations) that a party feels violates the Charter. The remedy against legislation (or regulations) that violate the Charter is by way of "declaration" in the Superior Court of Ontario.
Further, a party is not entitled to argue the Charter at all unless they comply with the Notice of Constitutional Question requirements as follows [CJA s.109]:
  • service of the Notice of Constitutional Question on both provincial and federal Attorneys-General (as well as the normal parties to the proceeding);

  • service of the Notice shall be made "as soon as the circumstances requiring it become known and, in any event, at least fifteen days before the day on which the question is to be argued, unless the court orders otherwise";

  • once the Attorneys-General are properly served they are parties to the case, "entitled to adduce evidence and make submissions to the court in respect of the constitutional question", entitled to any Notices of Appeal "in respect of the constitutional question", and entitled to appeal the same themselves.
There may be some relief regarding limitation periods when in suing public authorities under the Charter. The Divisional Court in Collins v Brantford (City) Police Services Board [2000] OJ #727 (QL), citing The Ontario Court of Appeal in Prete v The Queen in Right of Ontario (1993) 110 DLR (4th) 94, ruled that the [then] six month Public Authorities Protection Act limitation did not apply to damage claims for Charter violations.

Charter law is quite specialized and complex. Parties without competent legal representation should study the issue long and hard before involving Charter law in their case.

(f) Human Rights Code Remedies

As noted above, the Charter of Rights and Freedoms applies against discrimination by government action or against discriminatory legislation. Where the alleged discrimination is primarily committed by a non-governmental party then the applicable law is that of the Human Rights Code (Ontario) (although the Code also applies to governmental discrimination).

Procedurally however, cases involving a substantial element of human rights issues have been very difficult to advance. In 1978 the Supreme Court of Canada in Bhaduria v Seneca College (SCC, 1978) held that no one may sue for discrimination in the regular courts, but must place their complaint entirely with the Human Rights Commission process. Cases involving issues of both human rights and other causes of action are themselves mixed in result - courts sometimes considering the human rights issues and sometimes not. Hopefully this inclination will change as a result of the recent case of Tranchemontagne v Director (ODSP) (SCC, 2007) - which is discussed in more detail in the Isthatlegal ODSP Guide at Ch.12, s.8.

Further, the Code and its administration has in past proven to be an abysmal failure. Taking the fiscal year 2002-3 as an example - only 13 cases, out of 1,954 "closed" by the Commission - were resolved by way of actual Tribunal hearings. While the Commission claims most of the balance as successfully "mediated", dismissed or withdrawn, lawyers practicing in the field condemn the Commission's caseload-reduction focus as fanatical to the point of denying basic principles of natural justice.

At the date of writing (June 2008) a new HRC has been passed into law which promises to remedy these chronic problems. This revised law is the subject of a new Isthatlegal.ca Legal Guide:

Human Rights (Ontario) Law

(g) The Small Claims Court, Equity and Restitution

. Equity

Historically, the main Ontario court was originally derived from the merger of the old English "common law" and "Chancery" Courts [CJA s.11]. The Chancery courts had what is called "equitable jurisdiction", which meant that they could take a broad view of the situation and, if the situation merited, grant exceptions and special remedies such as injunctions that were not necessarily consistent with the common law (judge-made precedent law). Basically they could make exceptions if they thought that it would be fair to do so, or - more accurately - 'not fair not to do so'.

For equity to apply a number of criteria had to be met, the main being that the party seeking equitable "relief" had to have "clean hands". That is, their behaviour could not be tainted by any significant wrong-doing, legal or moral. Other criteria and rules too numerous to mention in the present program might also apply before equitable relief would be granted.

Perhaps the most that can be said about equity at the present is that when a party's case reflects their moral innocence - ie. no significant bad faith behaviour and no wrong-doing on their part - then that party may argue that it be excepted from the strict application of common law rules which otherwise might work against them [CJA s.96(2)]. It is of course for the court to determine whether such an equitable exception may be made [CJA s.146].

However the domination of equity is not complete. The case of Travel Machine Ltd v Madore [1983] OJ #250 (Ont HCJ, 1983) stands for the proposition that equitable jurisdiction cannot override statute law. There the issue was whether a Small Claims court could overrides a Statute of Frauds defence to a Claim suing on a guarantee allegation on the basis that the guarantee was not written.

As well, in A-G Canada v Khimani 50 OR (2d) 476 (Div Ct, 1985) the federal Attorney General sued on an immigration sponsorship bond when the visitor overstayed her welcome. Initially the Small Claims judge summarily dismissed the proceeding, citing (then) s.57 of the Small Claims Courts Act which directed that court to make such order as is considered "just and agreeable to equity and good conscience" [Note:
Similar jurisdiction is now found in s.25 and 96(1) of the Courts of Justice Act]. However the Divisional Court allowed the appeal on the grounds that the broad equitable jurisdiction provided under s.57 did not give license to the court to otherwise disregard the law, as was the case here. The Khimani case can be challenged as was not considered in light the s.96(2) express overriding of the common law.

. The Governing Statutes

Small Claims courts have jurisdiction to apply "rules of equity" [CJA s.96(1)], but not to grant "equitable relief, unless otherwise provided": s.96(3). Equitable relief includes such things as injunctions, declarations, specific performance (ie. specifically-ordered behaviour such as conveyance of property) and some specialized remedies involving trusts [CJA s.96(3)].

Note that the Small Claims court's jurisdiction to order the recovery of personal property up to a value of $25,000 is a classic equitable remedy that apparently takes advantage of the exception within s.96(3) above. Basically however any remedies OTHER than a monetary award up to $25,000 - and orders for the recovery of personal property up to that value - are beyond the jurisdiction of Small Claims Court.

. Mungo Bear

Until the decision in 936464 Ontario Limited cob as Plumbhouse Plumbing & Heating v Mungo Bear Limited 74 OR (3d) 45 (Ont Div Ct, 2003) ("Mungo Bear") it was widely held that the s.96(3) prohibition on equitable relief in the Small Claims court also barred the use of what might be called "equitable causes of action". The court in Mungo Bear however clarified that equitable causes of action might be advanced in Small Claims Court as long as the ultimate form of remedy granted was within the jurisdiction of the court. Thus such exotic law as "restitution", "constructive trusts" and any other equitable causes of action could be asserted as long as the resultant order was only in the nature of monetary damages up to $25,000 or return of personal property to that value. [Note: equitable causes of action are only discussed in this Guide in passing].

The trial court in Mungo Bear, failing to find a contract which grounded the monetary recovery sought by the plaintiff, was nontheless impressed by the valuable work that had been performed for the benefit of the defendant. It resorted to the doctrine of "quantum meruit" [Note: "quantum meruit" translates roughly as "in the quantity merited"] to compensate the plaintiff for the value of the work performed. This is a doctrine of "restitution", or compensation of "unjust enrichment".

Discussing (and lamenting) the mixed historical origins of the doctrine of restitution in both equity and common law, the Divisional court in Mungo Bear ultimately found that quantum meruit was a "quasi-contractual" doctrine and as such not equitable (though noting that similar doctrines were equitable in origin). Thus s.96(3) was avoided.

However the court realized the importance of the issue to Small Claims court practice and continued to state that even if quantum meruit were an equitable remedy, the Small Claims court had jurisdiction to grant it, so as long as the ultimate form of remedy was still within the Small Claim court's jurisdiction. The court drew a distinction between the classical equitable remedies such as injunctions and declarations on the one hand, and the granting of $25,000 monetary and property recovery awards [CJA s.23, Reg 626/00, s.1] on the other hand - the latter of which are clearly within the jurisdiction of the Small Claims court. In essence the court held that an equitable cause of action that results ONLY in a below-limit monetary award or recovery of personal property award - is within the jurisdiction of the Small Claims court.

Recently the Ontario Court of Appeal (the next higher court) at least partially affirmed the principles set out in Mungo Bear. In Koliniotis v Tri Level Claims Consultants Ltd [2005] OJ #3381 (QL) (Ont CA) the Court of Appeal held that a 20% contingency fee agreement between a WSIB (Workplace Safety and Insurance Board) claimant and a paralegal were void as "champertous" [Note: "champerty" is when an "individual become(s) involved in the litigation of another person for an improper motive and that the individual share in the profits of the litigation."] However the Court supported an award in a lesser amount which is considered fair compensation under the quasi-contractual, restitutionary doctrine of "quantum meruit".

. Restitution

The law of restitution is extensive and complex and is beyond the range of the present program. However - simply it is a cause of action - grounded neither in contractual or tort - which compensates for "unjust enrichment". Its elements are generally considered to be:
  • deprivation of plaintiff,

  • resultant enrichment by defendant,

  • no juridical reason for the deprivation (ie. no legitimate authorization for the deprivation and enrichment, such as a court order or contract).
For instance, if A accidentally forgets his wallet at B's house there is no contract or tort basis for recovery of it or the money within it. However restitution might provide a remedy.

Similarly, if A performs $5,000 worth of work on B's car and it turns out that the contract for payment cannot legally be enforced for some technicality, then A might sue for restitution on a "quantum meruit" basis which would estimate the value of her labour.

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