IN THE SMALL CLAIMS COURT OF NOVA SCOTIA
Cite as: J.P. Morgan Chase Bank v. McCann, 2008 NSSM 10
2007
Claim No. 285948
Date: 20080122
BETWEEN:
J.P. MORGAN CHASE BANK, N.A.
CLAIMANT
- and -
SHERI McCANN
DEFENDANT
DECISION
[1] This case involves a claim by J.P. Morgan Chase Bank on a credit card account. The essential issue is whether Section 5(1) of the Nova Scotia Small Claims Court Act applies to the facts and thus bars the Claimant from proceeding. Section 5(1) reads as follows:
5(1) 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 Partnership 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.
[2] This is not the first time this Claimant has dealt with this issue before the Small Claims Court. I refer to the case of J.P. Morgan Chase Bank, N.A. v. Petrovici and the decision of Adjudicator Parker dated November 27, 2006, (reported at 249, N.S.R (2D) 297), and a subsequent decision of Adjudicator Barnett dated July 23, 2007, NSSM 33. In both of those cases the claim was dismissed.
[3] The essential facts have not changed since then - Sears Canada Inc. sold its credit and financial services operations to J.P. Morgan Chase Bank, N.A. which, according to Sears National Manager, Legal Counsel and Corporate Compliance, included “...without limitation, substantially all the assets of Sears Canada Bank”. In his letter of May 4, 2006, he also states:
I confirm that all receivables in respect of accounts issued by Sears Canada Bank or its predecessors became the property of Chase on November 15, 2005. All accounts issued since that date were issued directly by Chase.
[4] It is clear to me from this that Sears Canada Inc. and Sears Canada Bank sold all of its assets which, obviously would have included the credit card portfolio. That is, the right to claim against all holders of Canadian Sears credit cards existing as at November 15, 2005.
[5] In such circumstances, it seems beyond question that J.P. Morgan Chase Bank, N.A. cannot assert that it is one of the “...original parties to the contract” as required by Section 5.
[6] I do not think the analogy to subrogation assists the Claimant here. As noted in the MacDonald v. White case (1984 Carswell N.S. 78 (NS County Court)), Judge MacDonald pointed out in paragraph 14 that in such cases of subrogation, “...the action must be brought in the name of the insured and, as well, any judgment that would be received would be in favour of the insured but, in fact, it is received on behalf of the insurer.” [Emphasis Added]
[7] I also do not think the Claimant is assisted by the comments of Adjudicator Parker in the following passage:
Certainly there is no problem with subrogated claims with insurers and it also seems logical that one party who is not privy to a contract can change into an original party through amalgamation, purchasing shares and possibly purchasing assets of another which is the case here.
[8] I do not think there is any question but that an amalgamated corporation has by law, all the rights and liabilities of the amalgamating companies. Also, when there is a share purchase there really is no change in law with respect to the corporation in which the shares are held. It remains the same corporate entity and has all the rights and obligations that it previously did including credit card receivables if that was owned by one of the amalgamating companies.
[9] The last phrase “possibly purchasing assets of another” is the situation that we have here. With respect, I do not see how purchasing assets by one corporation of the other would somehow mean that Chase has essentially become Sears. With all respect, I think the proposition advanced by the Claimant’s counsel here is entirely at odds with recognized principles of corporate and commercial law.
[10] At page two of the submission, counsel attempts to distinguish the McGraw case by saying that in McGraw the seller assigned the agreement and here the original agreement was purchased. With respect, there is no meaningful distinction in such a case between an assignment of an agreement and a purchase of an agreement. They are synonymous terms for the identical legal concept.
[11] For the above reasons, the claim is hereby dismissed.
[12] I note that the Claimant has now made several attempts to advance claims which, on their face, are outside of this Court’s jurisdiction by virtue of Section 5(1). While, it may be thought that the Small Claims Court is applying too strict an analysis in this regard, it should be emphasized that this Court is a statutory creation and therefore is bound, jurisdictionally, to what the legislature has prescribed in the enabling statute - the Nova Scotia Small Claims Court Act. Section 5(1) draws a jurisdictional line and, on the facts of this case, it is very clear which side of the line the Claimant lands on.
[13] I would also note, that it would appear there is no jurisdictional impediment to prosecuting such claims in the Supreme Court.
DATED at Halifax, Nova Scotia, this 22nd day of January, 2008.
Michael J. O’Hara
Adjudicator
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