IN THE SUPREME COURT OF NOVA SCOTIA
Citation: VFC Inc. v. MacLean, 2009 NSSC 314
Date: 20090624
Docket: Pic 309502
Registry: Pictou
Between:
VFC Inc.
Appellant
v.
Robert S. MacLean
Respondent
D E C I S I O N
Judge: The Honourable Justice Douglas L. MacLellan
Heard: June 24th, 2009, in Antigonish, Nova Scotia
Written Decision: October 27, 2009
Counsel: Richard A. Bureau, Esq., for the appellant
Robert MacLean, not present, nor represented by counsel
By the Court: (Orally)
[1] This is an appeal by VFC Inc. from a decision of Adjudicator Ray O’Blenis of the Small Claims Court. That decision is dated February 27th, 2009, and dismissed the applicant’s claim because the Adjudicator held that the Smalls Claims Court did not have jurisdiction to hear the claim.
[2] The claim by VFC was based on a Conditional Sales Contract entered into by the defendant Robert S. MacLean when he purchased a vehicle from Bob Allen Auto Sales Limited in New Glasgow. That contract is dated December 8th, 2006 and is signed by the defendant Mr. MacLean and a representative of Bob Allen Auto Sales. It reflects the purchase of a vehicle for $11,599.00 which when the license fee was added the total was $13,799.51.
[3] The contract called for 130 bi-weekly payments of $189.87 each, making the total amount payable if all payments were made of $24,671.40. The interest rate in the contract is disclosed as being 25.9%.
[4] The claim filed by VFC Inc. on January 13th, 2009, indicated that the defendant failed to make all the required payments on the Conditional Sales Contract and as a result the full amount of the contract became due and payable. It claimed the sum of $10,052.52 plus interest of $1,447.39 to January 12, 2009 and per diem interest thereafter of $7.13.
[5] Based on the fact that the defendant did not file a defence to the claim after being served in the required time period, VFC applied to the Adjudicator for Quick Judgment as is permitted under the Small Claims Court Act. That application was reviewed by the Adjudicator, and he dismissed the claim because of lack of jurisdiction. His order is dated March 4th, 2009.
[6] Following the filing of this appeal from that decision based on an error of law by the Adjudicator, he filed a summary of findings dated April 16th, 2009. In the summary of findings the Adjudicator made findings of fact:
1. I found as a fact the defendant (respondent) purchased from Bob Allen Auto Sales Limited a 2003 GMC Sonoma motor vehicle on or about December 8th, 2006.
2. I found as a fact the defendant entered into a Conditional Sales Contract for the said motor vehicle on December 8th, 2006 and the contract was signed by the defendant, as Buyer and by the Dealer, Bob Allen Auto Sales.
[7] The Adjudicator then goes on to quote from the Conditional Sales Contract and also from the Nova Scotia Small Claims Court Act, specifically Section 5(1) and he concluded. He said:
The defendant entered into a Conditional Sales Contract with Bob Allen Auto Sales Ltd. on December 8th, 2006. Following the purchase of the vehicle by the defendant, Bob Allen Auto Sales Ltd. assigned the Conditional Sales Contract to the claimant, VFC Inc.
In this case and in the circumstances, it is clear that VFC Inc was not one of the “original parties to the contract” as required by s. 5 of the Small Claims Act.
[8] The Adjudicator then referred to the case which I will discuss later in this decision that is McGraw v. Merchant Retail Services Limited (1990), NSR (2d) 240. After quoting from that case the Adjudicator concluded:
I found, in these circumstances, the claimant was not one of the “original parties to the contract” and therefore, pursuant to s 5(1) of the Act the Small Claims Court did not have jurisdiction to hear the matter. For these reasons, the claim was dismissed.
[9] On this appeal it is submitted by the appellant that the Adjudicator erred when he held that because VFC was not one of the original signatories to the contract that it therefore was not an original party to the contract.
[10] Section 5(1) of the Small Claims Court Act provides as follows:
To better effect the intent and purpose of this Act and to prevent the procedure provided by this Act being used by a corporate person to collect a debt or a liquidated demand where there is no dispute, no partnership within the meaning of the Partnerships and Business Names Registration Act and no corporation may succeed upon a claim pursuant to this Act in respect of a debt or liquidated demand unless the claimant is one of the original parties to the contract or tort upon which the claim is based or unless the claim is raised by way of set-off or counterclaim.
[11] The appellant here has submitted a brief to the Court and has made oral submissions today. The respondent did not contest the Small Claims action and has not appeared after being notified of this appeal hearing.
[12] Counsel for the appellant has referred me to a number of cases from Adjudicators of the Small Claims Court and from the County Court, which at the time of the decisions dealt with Small Claims appeals.
[13] The case upon which the Adjudicator in this case based his decision is McGraw v. Merchant Retail Services Limited (supra) by Palmeter, J. of the County Court. In that case, Judge Palmeter held that in circumstances where a contract involving a revolving account for the purchase of furniture was assigned to the claimant upon notice to the customer and after default the claimant could not proceed in Small Claims Court because of Section 5(1). That was based on his view that the claimant was not an original party to the contract and that the assignment of the account did not make it an original party.
[14] In reviewing that case of Judge Palmeter, I note that the Adjudicator in the case had relied on a case also from the County Court. That is the case of Superior Acceptance Corporation v. Clarence R. Pyke (1986) “C” SN 15448, a decision of now Justice Simon J. MacDonald, who at that time was a Judge of the County Court. That case does not have a citation but is a Sydney case being SN 155448 and is dated May 7th, 1987.
[15] In that case, MacDonald, J. held that where a direct sales contract indicated that the contract was being assigned to Superior Acceptance and that payments should be made to Superior, the Small Claims Court would have jurisdiction despite Section 5(1) of the Act.
[16] Palmeter, J. in considering the Adjudicator’s decision based on that case, said that he disagreed with Judge MacDonald’s decision in Superior, and that he was, in any regard, not bound by a decision of the Court provided that Court was at the same level as he was, which would be the case.
[17] Counsel here has also provided me with another case from Judge Simon MacDonald, who at that time was on the County Court. That is the case of MacDonald v. White (1984) 63 NSR (2d) 173. In that case Judge MacDonald was once again dealing with the issue of Section 5(1) of the Act and he held in overturning an Adjudicator’s decision that an insurance company with a subrogated claim against the defendant could proceed in Small Claims Court despite Section 5(1).
[18] It is apparent, therefore, that I have before me conflicting decisions of the County Court on this issue. I have been encouraged by counsel for the appellant to actually look at the Conditional Sales Contract in this case. When I do so, I note that on the face of the document it very clearly indicated VFC Inc. Conditional Sales Contract. The document is dated December 8th, 2006 and is signed by the defendant Mr. MacLean. The document is also signed by a person indicating that he/she is signing on behalf of Bob Allen Auto Sales.
[19] Obviously these two parties are the two parties to the contract, however, the contract clearly is headed with the name VFC Inc. with an address in Ontario. It indicates clearly that Bob Allen Auto Sales is the dealer selling the vehicle and it also provides the following:
In this Contract, you, your, yours and the Buyer means each person who signs this Contract as a Buyer, Co-buyer or Co-signor. We, our, us, and the Dealer mean the company that sells you the Vehicle, until when the Dealer transfers its right under this Contact to VFC Inc. (“VFC”) and then we, our, and us means VFC, the company to which you owe payment under this Contract.
[20] Based on the wording of the contract, the defendant was aware that VFC Inc. was directly involved with providing the funds for the purchase of the vehicle and that he must repay VFC these funds, plus interest, over the course of the contract. He clearly knew that the contract was to be assigned to VFC.
[21] I accept the argument of the appellant here that despite not having actually signed the contract VFC was an original party to the contract as that concept can be interpreted in the legislation, and therefore avoid the prohibition set out in Section 5(1) of the Act. I do not believe that Section of the Act was ever intended to prohibit a party, such as VFC, from taking action on the contract which the defendant willingly entered into. I believe the section was mainly intended to prohibit collection agencies, which purchase contracts after default, from proceeding in Small Claims Court. Such companies normally would have nothing to do with the original contract and therefore should be prohibited from proceeding in Small Claims Court.
[22] Based on my interpretation of the words of the contract and the facts before me, I find that the Adjudicator erred when he found that the action here was prohibited because of Section 5(1).
[23] I would therefore allow the appeal and in light of the fact that the jurisdictional issue was the only issue which prohibited the Adjudicator from granting Judgment, I would in the circumstances grant the appellant the Judgment originally requested from the Adjudicator.
[24] Mr. Bureau, if you can confirm it, but I understand based on the materials that the amount requested on the Quick Judgment was the sum of $12,134.00 which included interest to February 16th, 2009 plus costs.
[25] Mr. Bureau: I am just having a quick look at the request. I think that’s the right number. I just want to make 100 percent sure.
[26] The Court: I’m looking at the draft order, I believe, that was sent in to the Adjudicator.
[27] Mr. Bureau: That’s correct.
[28] The Court: $12,134.00.
[29] Mr. Bureau: That is the amount. Thank you.
[30] The Court: In light of the comments of counsel on the importance of the issue to his client he is not requesting any costs on the appeal and no costs will be awarded. Thank you very much, Mr. Bureau, an interesting issue.
J.