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Appellate courts squabble over monetary jurisdiction

|Written By By Julius Melnitzer

You'd think that with all the legal brainpower on Ontario's two appellate courts, the Divisional Court and the Court of Appeal, someone could figure out the relative appellate jurisdiction of these courts — especially the monetary jurisdiction.

'You'd think everybody could have got together over a case like this,' says Philip Cho of the appellate courts' jurisdictional squabble.
'You'd think everybody could have got together over a case like this,' says Philip Cho of the appellate courts' jurisdictional squabble.

But if you thought that, you'd be wrong. Just ask the parties in Laredo Construction v. Sinnadurai. The version of justice to which they were treated amounted to little more than a unsightly catfight between the Divisional Court and the Court of Appeal.

"You'd think everybody could have got together over a case like this," says Philip Cho of Toronto's Papazian Heisey Myers, who represented the plaintiff Baskaran Sinnadurai.

As it turns out, neither the parties nor the judges managed to do so.

Laredo, released in December, arose after the parties were unable to come to terms when their house purchase and sale transaction collapsed. Sinnadurai demanded return of his $15,000 deposit, but Laredo refused to comply.

Sinnadurai sued and Laredo did not respond. Sinnadurai obtained default judgment of $15,000.

Laredo moved to set aside the default judgment, but Justice William Somers of the Superior Court dismissed the motion.

After Laredo appealed to the Court of Appeal, the company's counsel, Paul Starkman of Stevenson Barristers in Concord, Ont., concluded that the appeal should have been brought in Divisional Court.

Starkman brought a motion seeking a transfer of the appeal to the Divisional Court. Justice Susan Lang of the Court of Appeal, in chambers, granted the unopposed motion.

At the Divisional Court hearing, however, the panel raised the issue of jurisdiction on its own motion, and decided that it did not have jurisdiction.

After considering s. 19(1)(a)(i) of the Courts of Justice Act, which provides that an appeal lies to the Divisional Court from a final order of a Superior Court judge "for a single payment of not more than $25,000, exclusive of costs," the panel ordered the case transferred back to the Court of Appeal.

Justice Theodore Matlow, writing for the Divisional Court, ruled that the Divisional Court had no jurisdiction because the order in the case was not in form or substance an order "for a single payment" rather, it was simply an order dismissing the motion to set aside the default judgment.

Matlow reasoned that the Divisional Court should not follow Lang's "implicit recognition that we do not have jurisdiction without further consideration of the issue by the Court of Appeal."

While noting that the Divisional Court was "always respectful and almost without exception bound by decisions made by judges of the Court of Appeal," the unusual circumstances of the case justified the re-transfer back to the Court of Appeal.

The "unusual circumstances" included:

·    The order was based on a submission founded on an erroneous premise by counsel for the appellants;

·    The motion was unopposed;

·    Lang gave her decision without reasons and without reference to s. 19; and

·    The Divisional Court had "frequently held" in similar cases that it did not have jurisdiction; if followed, Lang's ruling would have a "disruptive impact" on the Divisional Court.

When the matter returned for hearing before a full panel of the Court of Appeal, it quickly became apparent that the unanimous court had little concern for the "disruptive impact" on its brethren below.

Justice Jean-Marc Labrosse, writing also for justices Marc Rosenberg and Eileen Gillese, noted pointedly that the Divisional Court had raised a matter "that had already been determined by a single judge of the Court of Appeal."

He called the reasons for re-transferring the case to the Court of Appeal "questionable."

"In particular, I know of no authority to support the proposition that an order of a higher court made 'without opposition and without opposing argument' or 'made without reasons and without explicitly indicating that it was made after specific consideration of' a section of an act is a lesser type of order that can be overturned by a lower court," Labrosse wrote.

He added: "If the Divisional Court's intention was to have the law clarified, it is not achieved by overruling a higher court.

"More importantly, in my view, the Divisional Court seems to have [forgotten] the parties in this exercise. The hearing before the Divisional Court was the fourth judicial proceeding in this case."

"This is the fifth hearing, in which the bills of costs submitted, on a partial indemnity basis, are in the amount of $13,897.75 for Laredo and $14,932.455 for Sinnadurai. And if this appeal were returned to the Divisional Court, it would be the sixth proceeding. All of this for a judgment of $15,000.

"It would have been far more in the interest of justice had the appeal been dealt with in accordance with the order of Lang J.A. The system of justice has not served the parties well."

The only problem, it turns out, is that in the Court of Appeal's opinion, the Divisional Court did have jurisdiction.

"The question [in determining jurisdiction] must be asked: 'What is being dismissed?'" Labrosse wrote. "The answer is that a motion to set aside a default judgment 'for a single payment of not more than $25,000, exclusive of costs,' is being dismissed.

This interpretation brought the appeal "squarely" within the Divisional Court's jurisdiction.

So what to do?

In what must have been a hastily arranged affair, the panel had the Chief Justice of the Superior Court appoint its members as judges of the Divisional Court for the hearing of the appeal — which, almost incidentally, it seems, was dismissed.

But if it was the Divisional Court that made the decision, are other panels of the Divisional Court bound to follow it?

It was bound to be interesting. And it was.

Less than a month after Laredo came down, a Court of Appeal panel composed of Justices Kathryn Feldman and Harry Laforme and, ironically, Lang, sent yet another case back to the Divisional Court on the issue of monetary jurisdiction.

In Sepe v. Monteleone, the trial judge denied Mario Sepe's claim for $12,146 and awarded judgment on Guiseppe and Enza Monteleone's counterclaim of $23,387.

Sepe, who appeared in person, appealed to the Divisional Court, which ruled that the matter was outside its jurisdiction. The court reasoned that a case involving a combination of payments ordered and claims dismissed that totaled more than $25,000 was within the jurisdiction of the Court of Appeal.

But the Court of Appeal didn't see it that way.

"The proper approach to the interpretation of s. 19(1)(a) is not to try to reconcile what may sometimes appear to be anomalous results [in the jurisprudence]," the court concluded, "but to apply the wording of the section and to follow the result of that application by appealing to the designated court in each case."

Mark Penfold, who represented the Monteleones, says he didn't raise the issue with the Divisional Court.

"I was about to break down weeping when I thought that the Court of Appeal might send this back to the Divisional Court," he told Law Times.

Fortunately for the parties, compassion ran as high with this panel as it did with the Laredo panel. Even though this was (only!) the parties' third judicial hearing, the court saw fit to have itself reconstituted as the Divisional Court yet again and reduced the Monteleones' award to $7,114.

"I guess the Court of Appeal is sending the message that it doesn't want things coming to them that shouldn't be coming to them," Penfold says.

But it keeps happening. Perhaps the Supreme Court of Canada should take a crack at it and straighten everyone out.

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