IN THE SUPREME COURT OF NOVA SCOTIA
Citation: Surrette Battery Company v. McNutt , 2003 NSSC 6
Date: 20030113
Docket: SH 180884A
Registry: Halifax
Between:
Surrette Battery Company Limited
Appellant
v.
Timothy McNutt and Timothy Leeman
(Trading as TNT New & Used ATV's, Parts
and Accessories, a registered partnership)
Respondents
Judge: The Honourable Justice Arthur J. LeBlanc
Heard: Appeal July 19, 2002, in Halifax, Nova Scotia
Counsel: J. Scott Barnett, for the Appellant
No appearance, for the Respondents
By the Court:
[1] The Claimant, Surrette Battery, appeals the decision of Adjudicator, W. Augustus Richardson, denying its request for a Quick Judgment pursuant to s. 23(1) of the Small Claims Court Act, and s. 14 of the Small Claims Court Forms and Procedures Regulations.
Background
[2] Surrette Battery supplied goods to the Defendants. When the Defendants failed to pay the account, Surrette Battery initiated a claim under the Small Claims Court Act for the recovery or payment of $3,630.94. The Notice of Claim and Form of Defence was served on Mr. McNutt on behalf of the Defendant. The Defendant did not file a Defence within the time period allowed in the Act.
[3] Surrette Battery filed an Application and Supporting Affidavit pursuant to Section 23(1) of the Small Claims Court Act for a Quick Judgment. Both Mr. McNutt and Mr. Leeman were served with the application for a quick judgment.
[4] Mr. Richardson denied the application for a Quick Judgment claiming that there were substantial issues that the Claimant had not addressed.
[5] The Claimant appeals to this court claiming that the adjudicator incorrectly interpreted s. 23(1) of the Small Claims Court Act.
[6] In his decision, the Adjudicator noted that the documentary evidence consisted of an Affidavit sworn by Audrey Marshall, who was responsible for Surrette Battery Company Limited’s accounts receivable, in which she stated that the claim was personally served on the Defendant McNutt, that ten days had passed without any communication from the Defendants and without a defence being filed and that no payments had been credited to the Defendants’ account. The affidavit went on to break down the claim. The documentation supporting the claim was composed of invoices issued by the Claimant to TNT New & Used ATVs, Parts.
[7] The Adjudicator commented on the nature of Quick Judgment, at paras. 4-6 of the decision:
This Court frequently sees these types of quick judgment applications. The Affidavits recite the fact that the Defendant has been served and that no Defence has been filed. They then go on to assert that the claim of the Claimant (for whatever it is) is “true and accurate”.
However, such Affidavits rarely provide particulars as to such things as:
a. was there a contract, and if so what are the particulars;
b. if the contract was for the purchase and supply of goods, were those goods supplied, and if so when;
c. whether or not there has been any communication between the parties as to the suitability of the goods or services that were or had been supplied;
d. how it is that the deponent of the Affidavit knows or can swear as to the accuracy of the statements contained in the Notice of Claim; or
e. evidence establishing that the Defendants against whom the claim is made are the same as the entity to whom the goods or services were provided.
In short, the assumption on these kinds of applications often seems to be that because the application is one for “quick judgment” it is not necessary to provide the type of sworn evidence that would otherwise be necessary to establish the merits of the Claimant’s claim had the matter proceeded to trial.
[8] In this case, he pointed out, there was no evidence that “TNT New and Used ATV’s, Parts” (to whom the invoices were addressed) was a partnership, as alleged in the Claim, or that McNutt and Leeman were partners or that they were trading and operating under the name “TNT New and Used ATV’s, Parts and Accessories” as was stated in the Claim. This lack of detail meant that the Affidavit was insufficient to establish the “merits of the claim” as required by s. 23(1), and was fatal to the Application.
[9] The issue before me is whether Mr. Richardson incorrectly interpreted s. 23(1) of the Small Claims Court Act.
[10] The purpose of the Small Claims Court Act is to deal with claims within its monetary jurisdiction in an informal and expeditious manner. Prior to 1994, unlike the Civil Procedure Rules adopted pursuant to the provision of the Nova Scotia Judicator Act, there was no manner by which claimants could obtain default judgment where the defendant had failed to file a defence. The Nova Scotia Court Structure Task Force recommended to the Provincial Legislature that it adopt a provision whereby claimants could obtain a quick judgment. This recommendation was reviewed by the Legislature. However, the provisions adopted by the Legislature differ significantly from the Task Force recommendations.
[11] The Nova Scotia Small Claims Court Act was amended in 1992 with the adoption of the current s. 23, which states:
Default of defence
23 (1) Where a defendant has not filed a defence to a claim within the time required by the regulations and the adjudicator is satisfied that
(a) each defendant was served with the claim and the form of defence and with notice of the time and place of adjudication; and
(b) based on the adjudicator's assessment of the documentary evidence accompanying the claim, the merits of the claim would result in judgment for the Claimant,
the adjudicator may, without a hearing, make an order against the defendant.
Setting aside of default order
(2) Where a defendant against whom an order has been made pursuant to subsection (1) appears, upon notice to the Claimant, before the adjudicator who made the order and the adjudicator is satisfied that
(a) the defendant has a reasonable excuse for failing to file a defence within the time required; and
(b) the defendant appeared before the adjudicator without unreasonable delay after learning of the order,
the adjudicator may set aside the order and set the claim down for hearing.
Default of appearance at hearing
(3) Where a defendant has filed a defence but does not appear at the hearing and the adjudicator is satisfied that the defendant has been served with notice of the time and place of the hearing, the adjudicator, if satisfied on the evidence as to the case of the Claimant, may, in the absence of the defendant, make an order against the defendant.
Powers of adjudicator
(4) Where a defendant against whom an order has been made pursuant to subsection (3) appears, upon notice to the Claimant, before the adjudicator who made the order and the adjudicator is satisfied that
(a) the defendant has a reasonable excuse for not appearing at the hearing; and
(b) the defendant appeared before the adjudicator without unreasonable delay after learning of the order,
the adjudicator may set aside the order and set the claim down for hearing. 1992, c. 16, s. 121; 1996, c. 23, s. 38.
[12] Subsequently, the Minister proclaimed the Small Claims Court Forms and Procedures Regulations. Regulation 14 provides that applications for Quick Judgment shall be in Form 6. The Regulations also specify the form of affidavit and notice to be employed.
[13] Although the Claimant filed its application for Quick Judgment in the manner presented, Adjudicator Richardson denied the application.
[14] In its appeal, the Appellant argues that the adjudicator committed an error in law and jurisdiction in refusing to grant Quick Judgment.
Standard of Review
[15] The standard of review is correctness. Where the determination by the adjudicator did not involve findings of fact and his findings were not based upon evidentiary rulings, then the issue is one of law and the standard of review is correctness: DeWitt v. Crop and Livestock Insurance Commission (NS) (1996), 157 N.S.R. (2d) 60 (SC).
Basis of Error
[16] The Appellant claims that Mr. Richardson ignored the purpose of the Small Claims Court, that is, to provide informal and inexpensive settlement of disputes, within its monetary jurisdiction. The Appellant adds that parties before the Small Claims Court are frequently unrepresented and pleadings may not reflect appropriate causes of action.
[17] As a result, the adjudicator should consider what the appropriate legal claim is after making inquiries of the Claimant and Defendant without relying on the straight forms before him. Otherwise, decisions might be based upon technicalities. See Oasis Motor Home Rentals v. Thomas, (2001) N.S.R. (2d) 42 (S.C.).
[18] The Appellant also relies on the Interpretation Act. Section 9(5) of the Act makes every enactment remedial and requires it to be interpreted so as to ensure the attainment of its object. As a result, s. 23(1)(b) must be construed purposively as having been enacted to remedy the problems caused by the lack of a default type procedure in the Small Claims Court Act. Although there are no decided cases on point, the Appellant refers to a decision of this court in Clarke v. Collier (P.F.) & Son Ltd., (1993) 129 N.S.R. (2d) 113 (S.C.). This decision provided that before Default Judgment could be entered, it was necessary to hold a hearing, even where no defence was filed. However, in Moody Brothers Groceteria v. Benjamin, (1982) 54 N.S.R. (2d) 423, Hall, J. stated that there was no need for sworn evidence to be adduced where no defence had been filed. Once the court was satisfied that the service of the documents had been effected, that the notice period had elapsed and that the merits of the claim would have resulted in a judgment for the Claimant, then it was appropriate to give default judgment without the need for the Claimant or his solicitor to give sworn evidence.
[19] Given the finding in Moody Brothers Groceteria, supra, the Appellant argues that the adjudicator ignored the purpose of the Act. There is no question that the application was made in the form provided in the regulations. In fact, the Legislature, through the Minister, has expressly stated what is to be contained in an affidavit in proof of application for Quick Judgment. The argument is continued by the Appellant as follows:
That it could not have been of the intention of the Legislature to require the Claimant seeking quick judgment to provide the kind of particulars apparently required by the adjudicator.
[20] If the adjudicator's interpretation were correct, the Appellant says, lay claimants would not have an opportunity to obtain Quick Judgment without waiting for a full hearing.
[21] Furthermore, the Appellant argues, protection exists for defendants because there is an opportunity if they feel aggrieved by the decision of the adjudicator to apply to set aside a Default Order. Prior to 1994, when no Default or Quick Judgment provisions existed, adjudicators had to deal with situations where the Claimant was seeking judgment without a defence being filed. At pages 426-427, the following relevant passage appears in Moody Brothers Groceteria, supra:
....It is clearly not the purpose of the Act to make the procedure in cases where the defendant does not contest the claim more cumbersome and time consuming [than] proceeding by default in the other courts of this Province that have jurisdiction to adjudicate respecting civil claims...
Clearly there is no requirement that evidence be adduced under oath or otherwise in proof of the claim where the defendant does not appear nor is it necessary that a hearing or a trial be held. All that is required is that the adjudicator be satisfied as to the merits of the Claimants’ claim. This may be accomplished by a multitude of means, including the representations made by counsel respecting the particulars of his client's claim from the usual place of counsel at the counsel table. In my opinion, this would be an appropriate method of proceeding - at least in cases where the subject of the claim is a “liquidated demand”...
Where an assessment of damages is required undoubtedly it would be necessary for an adjudicator to hear evidence under oath.
[22] The Appellant relies on Moody, supra, to support its argument that in order to obtain Quick Judgment, all that is required is for the Appellant to give notice and to make use of the affidavits and other forms appearing as Form 6 in the Regulations.
[23] In order to more fully understand the Appellant’s position, it is important to understand that the Quick Judgment provisions came about in 1994. As I have indicated, the form or substance of the provisions is significantly different from that proposed by the Task Force. The Task Force made the following comments respecting its suggestion for a small claims default procedure:
The claim served on the defendant should contain:
(a) a notice of the requirement to file a simple defence; and
(b) a form for filing a simple defence, if the defendant intends to defend the claim.
If the defendant files such a notice but does not show up for the hearing, the plaintiff proceeds, as now, to lay a basis for the claim before the adjudicator and, if successful, obtains judgment.
If the defendant does not file a defence within the fixed time, the plaintiff can obtain a default judgment without a hearing by:
(a) proving service of the claim; and
(b) submitting a synopsis of the claim.
If the adjudicator is satisfied there is some basis for the claim, a judgment can be awarded to the plaintiff.
[24] As I have already stated, s. 23 is somewhat different from the recommendations.
[25] Section 23(1)(b) requires that the adjudicator be satisfied, based on an assessment of the documentary evidence, that the merits of the claim would result in judgment for the Claimant. This does not precisely reflect the approach suggested in the Task Force report. However, the Appellant claims that the s. 23 provisions should be interpreted in light of the Task Force report. That is, that the Legislature intended to provide a mechanism for Default Judgment less onerous than a full hearing, but more onerous than is required in the Supreme Court under Civil Procedure Rule 12. The Appellant also notes the different standards required under ss. 23(1) and 23(3). Under s. 23(3) the Claimant must satisfy the adjudicator of its case on the evidence, as opposed to satisfaction on assessment of documentary evidence that the merits would result in judgment for the Claimant. Thus, where a defence is filed, s. 23(3) would seem to demand that the adjudicator be satisfied that the Claimant’s evidence addresses any defences raised in the defence.
[26] However, in instances where there is no defence filed, as in this case, the adjudicator should not consider possible defences. The Appellant argues that if s 23(1) required all potential defences to be rebutted, Quick Judgment would be more difficult to obtain in cases where no defence was filed than where one was filed. The Appellant claims that this would be absurd. The Appellant maintains that the detailed particulars required by Adjudicator Richardson would mean that most unrepresented parties will never be able to obtain Quick Judgment in the Small Claims Court. The Appellant also argues that most of the issues identified by the adjudicator amount to speculation about potential defences that could have been raised by the Defendant. Since the Defendant did not file a defence, he should not be in a better position than one who had filed a defence but failed to appear for a hearing.
[27] In determining the proper interpretation of s. 23(1), I have considered the various default provisions that apply in the courts having jurisdiction over small civil claims in other provinces. In general, those courts have the power to give a default judgment analogous to that available under our Civil Procedure Rules, though the precise terminology differs from province to province. In other words, where there is proof of service of the claim and the Defendant fails to file a defence, the Claimant is entitled to Default Judgment. In some cases, the statutes make this procedure available only where the claim is for a “debt or liquidated demand” (to use the words of s. 40 of the Alberta Provincial Court Act).
[28] For instance, under Ontario’s Rules of the Small Claims Court (pursuant to the Courts of Justice Act) a defendant who fails to file a defence within the prescribed time may be noted in default by the clerk upon proof of service: R. 11.01(1). If a defendant is noted in default, the clerk may enter judgement in respect of a claim “for a debt or liquidated demand in money”: R. 11.02(1). The defendant in default may move to have the court set aside the noting of default or entry of default judgment “on such terms as are just”: R. 11.06(1).
[29] Having concluded the analysis of relevant Quick or Default Judgment proceedings in other provinces, I am left to determine what is the appropriate approach to be taken in Nova Scotia.
[30] It is important to remember that the invoices for the goods were supplied to the Defendant under the name T.N.T. New and Used ATV’s, Parts, whereas the claim was brought against Timothy McNutt and Timothy Leeman carrying on business under the trade name T.N.T. New and Used ATV’s, Parts and Accessories.
[31] Adjudicator Richardson expressed his concern that only Mr. McNutt had been served with the application. Mr. Barnett maintained in his pre-trial brief the service of one partner is adequate to effect service on a partnership or on all members of the partnership. Despite Mr. Richardson’s concern about the lack of proper service on all of the members of the partnership, the Appellant informed the court that the Quick Judgment proceedings have been withdrawn as against Mr. Leeman. Therefore, there is no issue as to service of Mr. McNutt, as he was clearly served with the Notice of Claim. I agree with Mr. Barnett that if Mr. Richardson had been informed, as I have been, that no proceedings were being taken against Mr. Leeman, he would likely have been satisfied that this issue had been resolved.
[32] As to the other concerns addressed by Mr. Richardson, I find that he considered that the documents supporting the claim were simply invoices issued by the Claimant to the Defendant, known as T.N.T. New and Used ATV’s, Parts.
[33] The Adjudicator claims that the Appellant's affidavit did not allege the particulars of the contract, for instance, whether the goods alleged to have been supplied were in fact supplied, whether there was an acceptance of the goods, whether they were of satisfactory quality or quantity and whether the deponent was a person in a position to attest to the accuracy of these claims. Furthermore, Mr. Richardson was concerned that the Defendant had failed to establish that the claim was against the same entity to whom the goods were delivered. He concluded that it was necessary to establish the merits of the claim as if the matter had proceeded to trial and include all of this information in the sworn affidavit.
[34] In rejecting the application for Quick Judgment, Mr. Richardson made reference to the fact that the invoices attached to the affidavit in support of the application were directed to T.N.T. New and Used ATV’s, Parts, while the Notice of Claim issued against both Timothy McNutt and Timothy Leeman, trading as T.N.T. New and Used ATV’s, Parts and Accessories, their registered partnership.
[35] It appears to me that Mr. Richardson’s primary concern is that there was no evidence that T.N. T. New and Used ATV’s, Parts and Accessories is a partnership, that Mr. McNutt and Mr. Leeman were partners at the time the contract was made or that they were trading or operating under the name of T.N.T. New and Used ATV’s, Parts and Accessories.
[36] The issue which I have to consider is whether the documentary evidence accompanying the claim, and the claim itself are sufficient to establish that the merits of the claim would result in judgment to the Claimants.
[37] Mr. Barnett argues that the forms provided in the regulations are the forms that were completed and presented to the adjudicator. Assuming for the moment that Mr. McNutt was served with the Notice of Claim to which was attached the invoices, what additional steps must the Claimant take either in the Notice of Claim or in the Affidavit in Support of the Application for Quick Judgment to satisfy the adjudicator that the amount represented by the invoices and statements is in fact for the goods that were delivered or supplied to that particular Defendant? I suggest that little more could be done and, after all, Mr. McNutt had some responsibility to respond to the claim by filing a defence. In the event that a Quick Judgment was granted, he could apply pursuant to s. 23(2) to have it set aside.
[38] As to whether there was a contract, Mr. Barnett argues the pleadings alleged that goods were sold and delivered and that the pleadings are deemed to be true unless there is evidence to the contrary.
[39] In paragraph 5 of the Statement of Claim, the Claimant alleges that the claim is against the Defendant, including Mr. McNutt, for payment of the liquidated sum of $3,630.94, being the balance of goods sold and delivered by Surrette Battery to the defendant.
[40] I am satisfied that such a particular in the Notice of Claim would be sufficient to establish, prima facie, that there was a contract between the Claimant and the Defendant McNutt. I have already mentioned that the amount of the claim is set out in the claim itself and is confirmed in the affidavit. As the claim is for a “debt or liquidated demand” should the adjudicator have proceeded summarily? If it were not a liquidated demand, obviously there would need to be further proof for assessment of damages, either by affidavit or viva voce evidence.
[41] As to whether Adjudicator Richardson is incorrect in requiring proof that the goods were suitable once the claimant alleges that the goods were sold and delivered and that none of the goods were paid for, I would draw an inference, absent any evidence or claim to the contrary, that the goods were indeed suitable. As to whether any of the goods were returned, the Notice of Claim claims for the entire amount of the outstanding shipment of goods. This is confirmed in the affidavit which states that none of the goods were paid for and that no credits have been issued to the Defendant. Again, the Defendant did not file a defence. He is presumed to have received the goods in question and to have returned nothing.
[42] In her affidavit, Ms. Marshall identifies herself as being responsible for the Claimant's accounts receivable and states that she has personal knowledge of the facts deposed to except where otherwise stated. In para. 5 she claims that no payments have been credited to this account. Furthermore, in para. 6, she provides a breakdown of the Claimant’s claim, including the amount of the debt, credits if any, and additional claims such as costs, cost of service and interest to date. I believe that the affidavit and the Notice of Claim address the issue of whether goods were returned. It is clear that none of the goods were returned for credit, otherwise, they would have been noted in Ms. Marshall's affidavit.
[43] Unlike the Adjudicator, I am satisfied that Ms. Marshall, with responsibility for the accounts receivable, would be privy to any goods being returned. Any goods returned by Mr. McNutt would be for credit to his account. If Mr. McNutt had in fact returned any goods, I believe he would have taken upon himself to verify the accuracy of the claim in the Statement of Claim. He would have reviewed the invoices, the statements and he would have checked to see whether any goods returned for credit in fact had been credited to his account. As I have said before, Mr. McNutt had a responsibility to address the claim being made against him. Any credits to which he was entitled which were not reflected either in invoices or in the statement would be reflected in a credit note and included in the Statement of Claim. Failing that, Mr. McNutt had a responsibility to bring this to Surrette Battery Company Limited's attention or to file a defence. Since he failed to do so, the claim, prima facie, stands on its own.
[44] I conclude, based on an assessment of the documentary evidence accompanying the claim, that the merits of the claim would result in judgment for the Claimant if a trial had been held consistent with a review of the invoices, a review of the claim as set out in the Statement of Claim and the supporting affidavit on the application. Do these documents prima facie establish a claim? I believe they do.
[45] I therefore believe that Mr. Richardson was in error and therefore award Quick Judgment to the Plaintiff against Mr. McNutt in the amount of $3,630.94.
J.