Enforcement of Quebec Judgments

Under the Reciprocal Enforcement of Judgments Act, there is a simple procedure to enforce judgments arising out of the courts of the common-law provinces. By “common law provinces”, I mean all the provinces except Quebec (the province of Quebec has a civil law system).

Enforcing a judgment from Quebec is similar to enforcing a judgment from any foreign jurisdiction. Basically the common law principles for enforcing judgments apply. This includes ensuring that the foreign court had jurisdiction to grant the judgment. Additionally, the judgment must have been properly obtained under the rules of the foreign court and the court must adhere to the principles of natural justice. If these principles are satisfied, then the likelihood of a Quebec judgment (any foreign judgment for that matter) being enforced in Ontario is high.

For a recent example, see the case of De Abreu v. Bayley 2012 ONSC 5445. Here, the court granted the order to enforce the Quebec judgment even though the defendant was not served personally. She was served by substituted service. The court was satisfied that the rules of the Quebec court had been followed.

Prior to enforcing any foreign judgment, it is important to address any potential issues of fairness, as this will be a concern for the court.

Tip: Enforcing Landlord and Tenant Board Judgments

Are you a landlord with an order for payment of arrears from the Landlord and Tenant Board? Is the tenant refusing to pay? There is no reason to relitigate in the Small Claims court. Instead, simply file your order in the Small Claims court. By filing the order, it will be considered like a judgement from the Small Claims court. Consequently, the order can be enforced just like any other Small Claims judgment.

Contracts Can Be Written On Toilet Paper

The National Post has a nice review on a BC Court of Appeal contract case. The Court of Appeal upheld a contract that was written on a sheet of lined paper (not quite tissue paper – but the point applies). The contract was for the sale of shares in a company. The sale price was $1.5 million. The Court of Appeal applied basic contract principles and the legal concept of “a reasonable man” and held that the contract was valid. You can find the case here.

When lawyers write contracts, the language tends to be quite technical and archaic. Most persons without legal training have no clue what the a particular term of a contract is for. There is a reason for writing a contract in legalistic language – for the same reason doctors use medical jargon – for clarity. More specifically, for clarity when dealing with other lawyers. Other lawyers can understand the archaic language. Of course, there is the element of tradition, but the main benefit of legalistic language is for other lawyers to understand what the contract is saying. Additionally, a lawyer who is writing a contract presumably is familiar with case law and other legal principles that should be addressed. They draft contracts with these principles in mind.

This is where I believe lay persons who are writing contracts may make mistakes. If you want to write a good contract without legal help, do not use legal language. Use plain language. Cover the essential areas and make sure that value is exchanged. This is the best way of ensuring that the contract will be enforced.

And above all, be clear on what you are agreeing to.

By doing this, you may just become great at drafting your own contracts.

Small Claims Court Is Not a Court of Equity

Decisions in Chancery
The National Post recently posted an article about the Small Claims Court. You can read it here. It is a pretty good article about how the Small Claims Court works.

However, we read this in the article:

Small claims court is what lawyers call a court of equity. This means that where fairness demands, it can be flexible.

This is a technical error – the Small Claims Court is not a “court of equity”. In law, the words “courts of equity” have a very special meaning. “Equity” was a system of law that developed out of the decisions from the Chancellor several hundreds of years ago. The common law had become very formalistic and many people could simply not get justice due to the formal legal rules. So they would appeal to the king who would transfer the case to the Chancellor. The Chancellor would make decisions according to the justice of the case, or according to “his conscience”. Examples of equitable orders include specific performance and injunctions (common law courts could only order payment of money). It is out of the Chancellor’s court (or the Court of Chancery) that we get the ideas of trusts and trustees.

The result was that in England there were two court systems – the common law and the courts of equity, with their own judges. These two courts were later fused so that now, every judge is empowered to give orders in equity. This idea of fusion was imported into Ontario.

The Small Claims Court is not a court of equitable. In fact, it is specifically mandated not to give equitable orders. The court can only make orders for the payment of money and for the recovery of possession of property. Any other order, and the court would be acting outside of its legal authority.

So while the Post’s point is basically correct (the Small Claims Court is a flexible court), it is simply not correct to say lawyers refer to it as a court of equity.

You Have A Right To Display Crap On Your Property

Man being squashed by a big footThe city government did not like how M was keeping his 100 acre property.  There were cars, equipment and other items on the property.  Some of this spilled over on to a municipal  road allowance.  So the city decided to take action.  It simply could not allow this eyesore to continue.

So they sent in the enforcers.  everywhere and it was unsightly.  It entered the road allowance and part of M’s property.  It removed some of the chattels.  Then it added the cost of the clean up to M’s tax bill.  It then sought a court order to have force M to clean up his property.

Now what could possibly be wrong with what the city did? Well thing about this- what if M was your neighbour? What would you have done? Would you have the right to clean up his property and then charge him for it?

As the British judge Lord Denning said in Southam v Smout [1964] 1QB 308 quoting William Pitt, 1st Earl of Chaltham

“The poorest man may in his cottage bid defiance to all the forces of the Crown. It may be frail—its roof may shake—the wind may blow through it—the storm may enter—the rain may enter—but the King of England cannot enter—all his force dares not cross the threshold of the ruined tenement.” So be it—unless he has justification by law.

 

This was a clear case of trespass by the city. M had not broken any laws or zoning by-laws. So the city simply had no right to enter his property, much less to clean it up and send him the bill. The city cannot take action against you simply because they do not like what you did. They can only do so if you are breaking the law.

We still live in a nation that is ruled by laws, not by the desires of the government or its representatives.

The trial judge here thought that this was a case of an overzealous city employee and a citizen who did not like government authority. He felt this was a case that should not have occurred. He refused to give costs to M even though M, effectively, won the case.

Here is the problem with that: the city sued M, not the other way around. There is no way that M could have avoided the lawsuit (other than complying with the request of the city). So while the action probably should not have occurred, it is difficult to see how this was M’s fault.

Luckily for M, the Court of Appeal reversed this ruling and awarded him costs.

You can read more on the CanLii website.

Supreme Court of Canada Confirms The Duty to Mitigate

Canadian Law

In contract law, it can be difficult to prove damages. There are many reasons for this – one of them is the duty to mitigate damages. The Supreme Court recently reaffirmed this duty. Basically, this duty requires a plaintiff to take reasonable steps to ensure that his damages are reduced. If a defendant breaches a contract and the plaintiff suffers a loss as a result of that breach, then the defendant will generally have to compensate the plaintiff for the consequential losses. However, the plaintiff cannot just decide to do nothing and sue for his loss – the plaintiff has to try to mitigate his losses. If he succeeds in mitigating his losses, his damages reduce accordingly. In fact, he may actually not have a cause of action because he suffered no damages (although one is entitled to get the expenses of mitigating damages). If he fails to mitigate his losses, the amount of damages awarded will be reduced accordingly. As the Supreme Court said in another case, ““[l]osses that could reasonably have been avoided are, in effect, caused by the plaintiff’s inaction, rather than the defendant’s wrong.”

The duty applies even in a unique situation where a company was created specifically for purchasing a particular property. In Southcott Estates v. TCD School Board a company was created by a land developer for the sole purpose of purchasing a land from the school board. The board breached the contract and did not complete the sale. The land developer bought other property but the actual plaintiff, the subsidiary company, did not do anything to mitigate its losses. The Supreme Court held (McLachlin C.J. dissenting) that the actual corporation that suffered the loss was required to mitigate it’s loss. It was not sufficient for the land developer to do so on its own behalf. Basically, the fact that the plaintiff was created for the sole purpose of purchasing that property was irrelevant to its obligation to mitigate its losses – “Those who choose the benefits of incorporation must bear the corresponding burdens”.

The Court also confirmed that the duty to mitigate applies even if one is applying for specific performance of the contract. However, if specific performance is available, then this may affect whether it is reasonable to mitigate. The doctrine of specific performance allows a contract to be fulfilled if damages would not be sufficient remedy. In land transactions, land is often seen as unique, and so a specific performance order requiring the sale to be completed is often granted by the court. However, in modern real estate, land is not necessarily unique as traditionally regarded by the common law. If money will compensate sufficiently, then specific performance will not be available. Here, the plaintiff tried to argue that because it had asked for specific performance, it did not have to mitigate its losses. The Supreme Court held that if the plaintiff had a substantial justification or a substantial and legitimate interest a refusal for not purchasing property may be reasonable. Essentially, the court is saying that where property is being bought as an investment property, then the land is unlikely to be unique and money will be a sufficient remedy.

The Supreme Court upheld the Court of Appeal’s judgment and awarded nominal damages of $1 to the plaintiff. The Chief Justice would have allowed the appeal as she thought the plaintiff did not act unreasonably in failing to mitigate its loss.

I do not believe this will be a very influential case. However, it is useful in showing strategies to take in contract cases. The question of whether to mitigate is hard one and will certainly depend on the circumstances of each case. But generally, it is not a good idea to do nothing at all, as this will certainly give the defence the opportunity to say that one ought to have taken steps to reduce the damages. At the minimum, it would seem to me that a plaintiff should investigate what it would take to reduce its losses.

The Importance of Defending A Claim

Defence
If you are being sued, whether in the Superior Court of Justice or the Small Claims Court, you have a limited time within which to file your defence to the statement of claim. If you were served in Ontario, then you usually have 20 days to respond. If you are outside Ontario but in Canada or the USA, you have 40 days. If served elsewhere in the world, you have 60 days within which to file your defence.

These are very important timelines. If you fail to meet this timeline, then the plaintiff becomes entitled to note you in default and then obtain default judgment against you. The default judgment can be set aside on a motion but it is not guaranteed that the motion will succeed. If you fail on that motion, and subject to any appeal, YOU JUST LOST YOUR CASE. So it is important to ensure that the deadline is met. If the deadline cannot be met for any reason, you can always ask the plaintiff’s counsel for a reasonable indulgence. You can also file a Notice of Intent to Defend. These are simple actions, but they are very important in preserving your rights.

What if you have no defence at all?

Many times you feel that you have no defence when in fact you do. The reason is that unless you understand and know the law, you really cannot be sure that you will lose. Your liability is based not on the facts of the case per se, but on the evidence and the law. Evidence and facts are not the same thing. And the law does not always make sense based on what the facts are. So that is why we have a court system. It is not for you to decide whether you are liable or not – it is the court. The parties can, and usually do, decide to settle a case or parts of it, but underlying the whole system is the fact that the court is person responsible for deciding who is liable.

As an example, look at debt cases involving loans. Many times, one a debtor is sued by a creditor, the debtor has no defence to the claim. The debtor either borrowed the money or not. If the loan was made and not repaid then the case appears to be slam dunk. But what about the Limitation Act? If two years have passed since the loan was due or since the last payment, then the debt may be unrecoverable at law even though there is no doubt that the debtor borrowed funds and failed to repay as agreed. Additionally, a loan transaction is generally made by contract, so if the rules of contract were not complied with, the loan may be invalid and may be unrecoverable. If the debtor was a minor or incapacitated, then the loan may be invalid. If the debtor did not understand the loan transaction, again it may be that the loan is invalid for that reason.

So you can see, even in a clear case, you may have an arguable defence. And many times that is all you need.

Now even if you do not have an arguable defence, it is still a good idea to defend a case. If you do not defend and are noted in default, you will have no right to know what is happening in the action. If the claimant falsely inflates the amount owed, you may well not be able to argue against it. If the claimant leaves out some crucial fact, you may not have the opportunity to point this out to the court. Remember, your defence does not have to dispute all of the matters in the statement of claim, just the things you disagree with.

It is usually best to defend a case and not be noted in default. The claimant/plaintiff can ask for summary judgment if you have no real defence. But you have to get notice of everything that is happening. So make sure to stick to the timeline, and file a defence.

If you are sued and are not sure what to do, give me a call at 416-840-6279. For a limited time, I am providing free consultations to new clients. This will allow you to get an idea of some of your options.

Your Day In Court – A Brief Look At The Small Claims Court

Justice
The Small Claims Court is, quite literally, the “people’s court”. Most persons should find that the procedures in that venue are relatively simple and easy to follow. One still has to do a lot of reading, but the court staff is usually helpful and usually will assist with procedures. You can also get a paralegal or a friend to assist you if you feel that your case is too complicated. However, if you are going to go to court, it is best to be as familiar with the rules as you can. Read as much information as possible, so that you can determine what is the best approach to win your case.

The basic procedure is that a plaintiff files a claim in the court. Then the plaintiff has to get the document served on the defendant personally and file the document with proof of service in the court. It is best to do this as soon as possible. If six months pass, you will need to bring a motion to request permission to extend the time for service. After the defendant is served, he or she has twenty days to file a defence. Failure to do so will allow the plaintiff to note the defendant in default and then apply for default judgment. If the defendant files a defence, a settlement conference will be scheduled by the court. At the settlement conference, a judge will attempt to get the case settled. If the settlement conference is unsuccessful, a trial date will be set. At trial, each party present their case and the judge makes a decision and grants judgment accordingly (the “judge” in the Small Claims Court is usually a “deputy judge” and is probably a lawyer who does this part time. There are very few full time judges).

A judgment can be appealed if the amount on the claim is in excess of $2,500. The appeal is made to a single judge in the Divisional Court.

Some things that you should remember are:

  • you cannot get an injunction or other mandatory order in this court;
  • You can only get a judgment for money.The current monetary limit in Small Claims is $25,000. You can, however, make a claim for a recovery of property if the property does not exceed the value of $25,000;
  • Costs usually goes to the winning party. Except in exceptional circumstances, costs should not exceed 15% of the amount claimed plus disbursements;
  • If you are self represented and are successful, you can request an “inconvenience fee” of up to $500
  • The Attorney General of Ontario has some good resources on how to pursue or defend a Small Claims Court action. You find a Small Claims Court guide here. If you need forms, you can find Small Claims Court forms on this website. The Rules of the Small Claims Court (the law that governs procedure in this court) can be found on the canlii.org website.

    Note – If your matter is worth more than $25,000 you can still bring it in the Small Claims Court, as long as you agree to abandon any amount above $25,000. For instance, if you are owed $30,000, you can make the claim in Small Claims Court but only claim $25,000. If you wish to claim the whole amount, but your case is worth less than $100,000, then you can bring an action in the Superior Court under the Simplified Procedure Rules. The Simplified Procedure Rules is very similar to the Small Claims Court, but the legal rules are more strictly applied than in the Small Claims Court. The judge presiding at trial is an actual judge of the Superior Court of Justice, not a lawyer who works in the court part time. However, the procedure is usually less expensive than an ordinary procedure case and many actions are determined within 12 months.

    Long Arm Of The Law – Foreign Litigation Can Reach You In Canada

    Kingfisher
    If one is sued in a foreign country, it is not really a good idea to ignore that foreign litigation.  If you do, there is a chance that foreign default judgment could be awarded against you.  Worse, that foreign default judgment may be enforced right here in Canada.

    In Amtim Capital Inc. v. Appliance Recycling Centers of America, an Ontario corporation was sued in Minnesota. It immediately began proceedings in Ontario. The Ontario Corporation did not respond to the action, and a default judgment was issued against it. The question arose as to whether Minnesota or Ontario was the most convenient forum for the action. The Court of Appeal held in favour of the Ontario Corporation and said that Ontario was the most convenient forum. However, the court left open the issue of whether the Minnesota judgment raised the doctrine of res judicata (ie the action has already been determined). By ignoring the Minnesota action, the Ontario Corporation may well have forfeited any rights to carry on the Ontario action.

    Similarly, in Sincies Chiementin S.p.A. v. King an Italian court found that an Ontario lawyer was liable for his professional conduct as a lawyer in a failed joint venture. The Ontario lawyer did not attorn to the jurisdiction of the Italian court. The plaintiff sought to enforce the judgment in Ontario. The Court of Appeal granted the request and dismissed the lawyer’s appeal against summary judgment.

    If sued in a foreign jurisdiction, one has to think carefully on how to respond. Just remember that any judgment will probably be enforceable in Canada. If dealing with foreign business, it may make sense to have these matters governed by a contract between the parties. One solution is to provide for arbitration of any disputes. Arbitration can reduce potential legal costs and bring certainty on what to do in the event of a dispute.

    Transferring Your Rights In A Lawsuit – Is it legal?

    The funding of litigation is a very difficult subject. Litigants who do not have deep pockets, seek to fund litigation in many ways. Thus you have contingency fee agreements with lawyers. There are also corporations who will fund litigation in the an appropriate case. Parties may not realize that many such schemes are, in fact, illegal. They offend the rule against maintenance and champerty.

    In civil litigation, maintenance and champerty are ancient words which describe, in crude terms, pursuing a legal action for reasons other than compensation for a genuine loss. Maintenance refers to intermeddling in a lawsuit. It is hard to define but basically refers to giving assistance or encouraging litigation by someone who is disinterested in the actual lawsuit and who has no lawful justification to do so. Champerty is a subset of maintenance and occurs when a party to the lawsuit agrees to give a share of the proceeds of the action to the maintainer.

    The law has always been hostile to both maintenance and champerty. This is more than just a rule against ambulance chasing. In fact, it is one of the reasons why lawyers could not take matters based on contingency fees (the contingency can be seen as champertous as it encourages litigation and the lawyer get a part of the final proceeds of the litigation). So hostile was the law to these actions, that maintenance and champerty were made into criminal actions. In the 14th century, England had a law that said:

    “champertors be they that move pleas or suits or cause to be moved either by their own procurement or by others and sue them at their proper costs for to have part of the land in variance or part of the gains”.

    In Ontario, this law was adopted in 1897, with the additional provision that “all champertous agreements are forbidden, and invalid.”

    However, this strict application of the law was seen as archaic. As originally stated, maintenance and champerty may have been necessary in different times, but in today’s world it can cause injustice. Genuine attempts to right a wrong will be lost if this ancient law is applied strictly. In one sense, this law can be seen as discriminating against the poor. Schemes such as legal aid would probably be caught under strict application of these rules. Contingency fee agreements were once illegal under these principles.

    The courts have been slowly buckling to the pressure of modernizing the law and has been lowering the bar on what constitutes maintenance and champerty. The legislature has basically been doing the same as well. For example, contingency fees are now legal under the Solicitors Act of Ontario. One should note though, that the law is still hostile to maintenance and champerty, and agreements will still be made invalid in an appropriate case. For instance, contingency fees are not allowed in criminal matters not family law matters. Indeed, the courts sometimes are not sure whether a particular case savours of maintenance. Now, though, the Court of Appeal has lowered the bar even lower while seeking to clarify the rules.

    In an interesting case, Ma v Ma, 2012 ONCA 408 the Court of Appeal had to deal with a situation where a litigator did not have the means to pursue litigation. A minority shareholder of a corporation sued the corporation alleging that the corporation was acting oppressively towards him as a minority shareholder. He lives in Shanghai and is elderly and found it difficult to pursue the litigation. He made an absolute assignment of his shares in writing to the appellant of his shares. The appellant was a former employee of the company and was also the sister of the majority shareholder. The assignment also included his interest in the litigation.

    The lower court held that the assignment was invalid. This decision was upheld on appeal to the Divisional Court. The reason for the dismissals was that the action was now being pursued by a shareholder who was not a shareholder at the time actions complained of had taken place.

    The Court of Appeal overturned this decision. The court followed the British Columbia Court of Appeal case of Fredrickson v. Insurance Corporation of British Columbia which held that an “assignment of a cause of action for non-personal tort is generally valid if the assignee has a sufficient pre-existing interest in the litigation to negate any taint of champerty or maintenance.” The Court also adopted the House of Lord’s decision in Trendtex Trading Corporation and Another v. Credit Suisse, [1980] Q.B. 629 where it was held that the court should look at the totality of the transaction. In the assignment is of a right or a proprietary interest and the cause of action is ancillary to that right or proprietary interest, then the assignment should be upheld.

    Ultimately, the question is whether the transaction “savours of maintenance”.

    In this present case, where there was an assignment of the all the plaintiff’s interest in the company along with his interest in the cause of action, there assignment was valid. The cause of action was ancillary to the actual assignment of the shares. Since the transfer was only for $1, if the action is successful, it may look as if the assignee obtained a windfall. But the shares may actually be worthless since the shares will not be worth more than $1 if legal action is not taken. Also, the assignee is accepting the risks of litigation. It is not for the court to look into whether the bargain was appropriate.

    So, can you transfer your cause of action to another person? Each case has to be looked at individually. However, if there is some other proprietary interest or right that is being transferred, then you may be able to do so. It is likely though, that the assignment is simply to allow litigation, it may well savour of maintenance and be invalid.

    What to do if you wish to assign your interests in litigation? The best that can be said is that if what is being transferred is simply a cause of action, it may very well be illegal. However, if there is some legitimate reason for the transfer, other than the cause of action, then the transfer may be upheld under scrutiny.