Can the Small Claims Court Hear Cases and Make An Order Regarding Equity Rights?

A Judge In the Small Claims Court Does Have the Authority to Adjudicate an Equity Rights Case If the Remedy Sought Is Limited to Monetary Compensation or Return of Property.


Understanding Small Claims Court Equity Rights Jurisdiction

Small Claims Court Includes Jurisdiction to Award Equitable Relief Compensation Significant debate among legal practitioners often arises as to whether the Small Claims Court holds jurisdiction for claims involving equity rights.  Although the debate arises regularly, the answer to this question appears as well addressed whereas it appears clear that the Small Claims Court holds jurisdiction over any Action, rather than Application, where the relief sought is for payment of money or the return of property.

The Law

The Courts of Justice Act, R.S.O. 1990, c. C.43 at section 23(1) grants to the Small Claims Court the power to adjudicate on cases containing issues as follows:


23 (1) The Small Claims Court,

(a) has jurisdiction in any action for the payment of money where the amount claimed does not exceed the prescribed amount exclusive of interest and costs; and
(b) has jurisdiction in any action for the recovery of possession of personal property where the value of the property does not exceed the prescribed amount.

As to how broad the issues that may arise and be within the authority of a judge hearing cases in the Small Claims Court, the case of Ontario Deputy Judges Association v. Ontario, 2005 CanLII 42263 (“ODJA”) said:


[18] Deputy judges can hear a wide range of cases and have broad jurisdiction over proceedings involving the Canadian Charter of Rights and Freedoms, defamation, creditors' rights, intellectual property claims, estate litigation, and medical malpractice, among others.  Deputy judges also exercise a form of equitable jurisdiction, which adds to their role and responsibilities as judicial officers.  The Small Claims Court can hear and determine all questions of law and fact and may make orders considered just and agreeable to good conscience.

The same view stated in ODJA was very well reasoned and articulated by the Divisional Court in 936464 Ontario Ltd.  v. Mungo Bear Ltd., 2003 CanLII 72356 and by the Court of Appeal in Grover v. Hodgins, 2011 ONCA 72 which said:


[9] The defendant's jurisdictional argument is based on s. 96(3) of the Act, which reads as follows:

(3) Only the Court of Appeal and the Superior Court of Justice, exclusive of the Small Claims Court, may grant equitable relief, unless otherwise provided.

[10] The defendant submits that quantum meruit is an equitable claim, and that jurisdiction over the granting of equitable relief is expressly outside the jurisdiction of the Small Claims Court pursuant to this section.

[11] Reliance is placed on the decision of Desotti J. in Caranci v. Ford Credit Canada Leasing Ltd. (November 14, 2002), London, Docket No. 1280 (Div. Ct.). At para. 1 of that decision, Desotti J. says the following:

The learned Small Claims Court judge has made a palpable error in granting an equitable remedy of unjust enrichment and then confused this equitable relief with the law of damages. Section 96 of the Courts of Justice Act precludes a Small Claims Court from granting equitable remedies. Unjust enrichment and the law of restitution are both equitable remedies.

[12] The problem with the defendant's argument is that it proceeds on the erroneous assumption that quantum meruit is an equitable remedy. While some types of unjust enrichment are equitable in origin (such as constructive trust, which has undergone rapid growth in family law in recent years), quantum meruit is in fact derived from the common law.

[13] The remedy of quantum meruit has its roots in quasi-contract, which constitutes a third class of the common law distinct from contract or tort, as is made clear at para. 630 of Halsbury's Laws of England (4th ed.):

Any civilised system of law is bound to provide remedies for cases of what has been called unjust enrichment or unjust benefit, that is, to prevent a man from retaining the money of, or some benefit from, another which it is against conscience that he should keep. Such remedies in English law are generically different from remedies in contract or in tort, and are now recognized to fall within a third category of the common law which has been called quasi-contract or restitution.

For historical reasons, quasi-contract has traditionally been treated as part of, or together with, the law of contract. Yet independently, equity has also developed principles which are aimed at providing a remedy for unjustifiable enrichment. It may be that today these two strands are in the process of being woven into a single topic in the law, which may be termed "restitution." (Footnotes omitted)

[14] The precise origin for the remedy of quantum meruit is traced by Peter D. Maddaugh and Prof. John D. McCamus in their work The Law of Restitution (Aurora: Canada Law Book, 1990). In Chapter 4, entitled "Common Law Remedies", the authors discuss the remedies made available at common law that were pursued through the common counts of indebitatus assumpsit. At p. 68 those remedies are summarized:

The process whereby the common counts of indebitatus assumpsit came to be utilized to grant quasi-contractual recovery for the value of benefits conferred in cases where there was no contractual relationship between parties, either express or implied-in-fact, has been described in an earlier chapter. The four principal counts employed for this purpose were the claims for money had and received, money paid, quantum meruit and quantum valebat.

[15] This represents a complete answer to this ground of appeal. In granting relief based on quantum meruit, the deputy judge was utilizing a common law remedy, not an equitable one, so that s. 96(3) of the Act does not come into play.

[16] While this analysis is sufficient to dispose of this ground of appeal, it is not entirely satisfactory because it fails to answer the important question that was argued on this appeal. Do deputy judges have access to the large and well-developed body of equitable principles in deciding cases that come before them?  Will they be required, in the heat of a long trial list, to consult dusty textbooks to determine the precise lineage of any particular legal concept before they can confidently apply it?

[17] The potential for confusion and uncertainty if such were to be the case is enormous. The case at bar provides a good example. While I have concluded that quantum meruit is derived from the common law, it forms part of a larger body of remedies under the category of unjust enrichment, which has both equitable and common law roots. Given the extent to which principles of equity and common law have merged in modern times, reconstructing the family tree for some legal remedies could be very difficult.

[18] Even with respect to quantum meruit itself, the authorities are often contradictory as to its nature. The term is defined in Black's Law Dictionary, 7th ed. (St. Paul: West 1999) as follows: "At common law, a count in an assumpsit action to recover payment for services rendered to another person." However, the term is further defined as follows:

"Quantum meruit is still used today as an equitable remedy to provide restitution for unjust enrichment. It is often pleaded as an alternative claim in a breach-of-contract case so that the plaintiff can recover even if the contract is voided."

[19] In the leading constructive trust case of Peter v. Beblow, 1993 CanLII 126 (SCC), [1993] 1 S.C.R. 980, [1993] S.C.J. No. 36, at p. 987 S.C.R., McLachlin J. (as she then was) considered quantum meruit to be an equitable remedy:

"Unjust enrichment" in equity permitted a number of remedies, depending on the circumstances. One was a payment for services rendered on the basis of quantum meruit or quantum valebat. Another equitable remedy, available traditionally where one person was possessed of legal title to property in which another had an interest, was the constructive trust.

[20] It is, therefore, worthwhile to pose the following question: if I am wrong and quantum meruit is an equitable remedy, does it lie outside the jurisdiction of the Small Claims Court to award the payment of money based on that ground of relief?

[21] The answer, in my view, can be found in the words of the Act.

[22] I begin with s. 96(1), which reads as follows:

96(1) Courts shall administer concurrently all rules of equity and the common law.

[23] The word "court" is not defined in the Act, but s. 22(1) provides that the Small Claims Court is continued as a branch of the Superior Court of Justice. It is, therefore, clearly a court and thus, pursuant to s. 96(1), it is empowered and directed to administer concurrently all rules of equity and the common law. If the legislature intended to exclude the Small Claims Court from the operation of this subsection, they would have done so, as they did in s. 96(3).

[24] I then move to a consideration of s. 96(3), which was reproduced earlier. That section says that only the Court of Appeal and the Superior Court of Justice, exclusive of the Small Claims Court, have jurisdiction to grant equitable relief, unless otherwise provided. It is these final three words that are of critical importance to the question under consideration. There is not a blanket prohibition against the Small Claims Court granting equitable relief, but instead a qualified one that will permit the exercise of that power if it is otherwise provided.

[25] Finally, I move to a consideration of s. 23 of the Act, which reads as follows:

23(1) The Small Claims Court,

(a) has jurisdiction in any action for the payment of money where the amount claimed does not exceed the prescribed amount exclusive of interest and costs; and

(b) has jurisdiction in any action for the recovery of possession of personal property where the value of the property does not exceed the prescribed amount.

[26] The prescribed amount in this jurisdiction is $10,000. Thus, s. 23(1)(a) gives the Small Claims Court jurisdiction to deal with any action for the payment of money, so long as the amount claimed does not exceed $10,000. In my view, the legislature has, in this section, "otherwise provided" as contemplated in s. 96(3). The words "any action" could not be more broadly written, and on their plain meaning encompass both common law claims and equitable claims. There is no reason to restrict the interpretation of these words to include common law claims only. The only restriction is that the relief claimed in any action founded in equity must be the payment of money only, and not some other form of equitable relief, such as an injunction, rectification, and so on.

[27] This view is reinforced by considering s. 23(1)(b), which expressly gives jurisdiction to the Small Claims Court to make orders for the recovery of possession of property worth $10,000 or less. The remedy of an order for the delivery up of possession of personal property is clearly equitable in nature:

see I.C.F. Spry, The Principles of Equitable Remedies: Specific Performance, Injunctions, Rectification and Equitable Damages, 4th ed. (Toronto: Carswell, 1990), at p. 52; Duke of Somerset v. Cookson (1753), 3 P. Wms 390, 24 E.R. 114; In Re Wait, [1927] 1 Ch. 606, [1926] All E.R. Rep 433; Dewhurst v. McCoppin, [1870] O.J. No. 288, 17 G.R. 572 (Ch. Ct.). In the common law action in detinue, a court could order that the defendant pay the value of a chattel wrongfully retained or deliver the chattel itself, at the defendant's option, but if the plaintiff was not interested in monetary compensation and insisted on restitution of the chattel itself, he had to seek such relief from the courts of equity: General & Finance Facilities Ltd. v. Cooks Cars, [1963] 2 All E.R. 314, [1963] 1 W.L.R. 644 (C.A.), at p. 318 All E.R.

[28] However, through s. 23(1)(b), the legislature has chosen to bestow this equitable jurisdiction on the Small Claims Court, so long as the value of the property is within its monetary jurisdictional limits. In so doing, the legislature has once again "otherwise provided" as contemplated in s. 96(3).

[29] This interpretation allows s. 96(1), s. 96(3) and s. 23 to operate as a coherent package. To restate, the courts are authorized under s. 96(1) to concurrently administer all rules of equity and the common law. This would not make sense as applied to the Small Claims Court if s. 96(3) represented a blanket prohibition against hearing equitable claims. It does, however, make sense when s. 96(3) is interpreted to mean that the Small Claims Court may grant equitable relief where otherwise provided. This consistent package of legislation is completed by s. 23, which authorizes the Small Claims Court to deal with all claims, both at common law and equity, but limits its ability to grant equitable relief to two forms only: orders for the payment of money, and orders for the recovery of possession of personal property. The Small Claims Court is not empowered to grant any other form of equitable relief, such as injunctions, declarations and specific performance (unless, perhaps, the performance involves nothing beyond the payment of money or the delivery of possession of personal property, within the applicable limits).

[30] To complete the picture, one might also consider s. 97 of the Act, which reads as follows:

97. The Court of Appeal and the Superior Court of Justice, exclusive of the Small Claims Court, may make binding declarations of right, whether or not any consequential relief is or could be claimed.

[31] Notable by their absence are the words "unless otherwise provided". It is clear that, unlike s. 96(3), the legislature did here intend to create a blanket prohibition against the Small Claims Court making declaratory judgments. Thus, if a claim for the payment of money depended on the court first making a declaration of right, such a claim would be outside the jurisdiction of the Small Claims Court even if the amount claimed was within its monetary jurisdiction.

[32] Deputy Judge Searle arrived at a similar conclusion to the one I have arrived at in two separate decisions, although his reasoning differs in some respects. In the first, Prtenjaca v. Fox, [2001] O.J. No. 1901, 9 C.L.R. (3d) 141 (S.C.J.), the plaintiff's claim was based on unjust enrichment, which the deputy judge considered to be an equitable claim. He noted that, by virtue of s. 96(1), he was required to administer all rules of equity, but felt that he was precluded by s. 93(3) from granting equitable relief. He proceeded to draw a distinction between "rules" and "relief" and concluded that the Small Claims Court could make an award of damages without granting equitable relief.

[33] As already discussed, the assumption that unjust enrichment is an equitable claim is one that is open to debate. In addition, it is unnecessary to draw the distinction deputy judge Searle has drawn between rules and relief to justify making a monetary award. If an equitable claim is allowed and money is awarded, it is artificial to suggest that the award is "damages" (presumably common law in origin) and not "equitable relief". If the claim is equitable in nature, surely the relief that flows from allowing that claim would retain the same character.

[34] While awarding damages is usually a common law form of relief, it must be recognized that ordering the payment of money is also one form of equitable relief, among many. For example, courts of equity can award money to supplement the equitable remedies of specific performance and rescission: Paul Perell, The Fusion of Law and Equity (Toronto: Butterworths, 1990), at p. 75; Kupchak v. Dayson Holdings Co., sub nom. Dayson Holdings Co. v. Palms Motel Ltd. (1965), 1965 CanLII 497 (BC CA), 53 D.L.R. (2d) 482, 53 W.W.R. 65 (B.C.C.A.). Another example is found in Peter v. Beblow, supra, where the court considered two equitable options for compensating the appellant for her moneys- worth contributions: a monetary award or an interest in property.

[35] It appears that Deputy Judge Searle made the distinction he did because he felt that s. 96(3) restricted him to awarding common law damages only. As noted above, however, s. 96(3) is not a blanket prohibition against granting equitable relief. The legislature has authorized the Small Claims Court to grant the equitable relief of a monetary payment, so long as it is within the prescribed limits.

[36] The second decision is Szeib v. Team Truck Centres - Freightliner, [2001] O.J. No. 2208, [2001] O.T.C. 439 (S.C.J.). Here Deputy Judge Searle relied on s. 23 of the Act to conclude that he had jurisdiction to grant relief from forfeiture of a deposit, placing specific emphasis on the broad phrase "any action" as I have done above. He also postulates several interesting hypotheticals, such as where a party pays the sum of $450 to the wrong recipient under a mistake of fact. He suggests that it could not have been the intention of the legislature that the payor must claim the return of that small sum by action in the Superior Court of Justice merely because the power to relieve against the unjust enrichment of the recipient is equitable in origin. I agree with those comments.

[37] Counsel were unable to find any cases on point other than the three that have been referred to above. In my own research, I did discover one additional case from the Newfoundland Court of Appeal that dealt with somewhat similar issues, Popular Shoe Store Ltd. v. Simoni, 1998 CanLII 18099 (NL CA), [1998] N.J. No. 57, 503 A.P.R. 100 (C.A.). While the facts are somewhat complicated, the issue relevant to the case at bar was whether the Small Claims Court had jurisdiction to order the return of a quantity of shoes, as opposed to granting monetary relief only.

[38] Green J.A., speaking for the court, referred to s. 3(1) of the Small Claims Act, R.S.N.L. 1990, c. S-16, which conferred jurisdiction to adjudicate "upon a claim for debt, whether payable in money or otherwise, or for damages, including damages for breach of contract, where the amount claimed does not exceed $3,000 ...". He noted that this section did not include a jurisdiction to grant non-monetary remedies, such as specific relief in the form of the transfer or return of property. Since the Small Claims Court was a creature of statute, without the inherent jurisdiction of a superior court, he concluded that, in the absence of an express conferral of jurisdiction, it must be concluded that it did not exist. Thus, the court had no jurisdiction to order the return of the shoes.

[39] Since the issues in both Popular Shoes and the case at bar are statute-driven, and since the statutes are markedly different, this case is of little assistance. One obvious difference is that the Small Claims Courts in Ontario have express jurisdiction to make orders for the possession of property. Two other differences are, however, equally compelling. The first is that s. 3(1) of the Newfoundland Small Claims Act sets out the specific types of claims that the court has jurisdiction over, whereas our s. 23 gives it jurisdiction over "any action for the payment of money". The other is that there is nothing comparable in their Act to our s. 96(1), authorizing and directing the court to concurrently administer all rules of common law and equity.

[40] I cannot leave this section of my reasons without referring back to the decision of Desotti J. in Caranci v. Ford Credit Canada Leasing Limited, supra. It is apparent from his endorsement that Desotti J. was not referred to s. 23 of the Act, which has played a pivotal role in the analysis I have undergone. For that reason, I respectfully decline to follow that decision.

[13] By order dated February 22, 2010, this court granted leave to appeal. II. The Issues (1) Does a deputy judge of the Small Claims Court have jurisdiction to grant equitable relief?  (2) Did the deputy judge err in granting judgment on the basis of unjust enrichment in this case?  (3) Did the deputy judge err in finding that the appellants were not bound by contract to contribute to the legal costs of the British Columbia action?  III. Analysis

[14] I will first deal with the decision of the Divisional Court. The reasons, set out above in their totality, contain no reference to the case being decided. As such, they do not permit any meaningful appellate review and therefore constitute legal error: see R. v. Brown (2002), 2002 CanLII 41599 (ON CA), 61 O.R. (3d) 619, [2002] O.J. No. 3882 (C.A.), at para. 30. I must therefore approach my analysis on the basis of its being a review of the decision of the trial judge.

[15] It is logical to start with the issue raised by this court concerning the scope of the equitable jurisdiction of the Small Claims Court.

1. Does the Small Claims Court have jurisdiction to grant equitable relief?

a. The legislation

[16] The Small Claims Court is a statutory court that derives its jurisdiction solely through the Courts of Justice Act, R.S.O. 1990, c. C.43Section 23 is of primary relevance in this appeal, while s. 96 is also informative to the analysis.

[17] Section 23 is the section of the Act that sets out the jurisdiction of the Small Claims Court:

23(1) The Small Claims Court,

(a) has jurisdiction in any action for the payment of money where the amount claimed does not exceed the prescribed amount exclusive of interest and costs; and

(b) has jurisdiction in any action for the recovery of possession of personal property where the value of the property does not exceed the prescribed amount.

[18] Section 96, in dealing with the equitable jurisdiction of all courts, provides as follows:

96(1) Courts shall administer concurrently all rules of equity and the common law.

(2) Where a rule of equity conflicts with a rule of the common law, the rule of equity prevails.

(3) Only the Court of Appeal and the Superior Court of Justice, exclusive of the Small Claims Court, may grant equitable relief, unless otherwise provided.

b. The jurisprudence

(i) The Superior Court

[19] The case most often cited in support of the proposition that the Small Claims Court has jurisdiction to grant equitable relief is the decision of the Divisional Court in 936464 Ontario Ltd. v. Mungo Bear Ltd. (2003), 2003 CanLII 72356 (ON SCDC), 74 O.R. (3d) 45, [2003] O.J. No. 3795 (Div. Ct.), in which a remedy based on quantum meruit was in issue. Heeney J., at paras. 12-15, concluded that notwithstanding that quantum meruit is part of the restitutionary group of remedies, its origins can be found in the common law and therefore the court does not need equitable jurisdiction to award it.

[20] However, in extensive obiter dicta, Heeney J. went on, in paras. 20-40, to canvass the equitable jurisdiction of the Small Claims Court.

[21] Heeney J. noted [at para. 9] that while s. 96(3) specifically excludes the Small Claims Court from the list of courts able to grant equitable relief, it does so with the proviso found in the words "unless otherwise provided". He reasoned that s. 23(1)(a) provides otherwise in the words "any action" -- wording sufficiently broad so as to encompass both common law claims and equitable claims. He therefore concluded that the only meaningful restriction on the jurisdiction of the Small Claims Court was that the relief claimed must be for the payment of money or the return of property, the value of which falls within the monetary limit prescribed by regulation.

[22] Two subsequent decisions adopted the reasoning of Heeney J. in relation to the jurisdiction of the Small Claims Court to grant equitable relief, although, as in the case of Mungo Bear, the analysis was not necessary for either decision: 311874 Ontario Ltd. (c.o.b. Grossi Plumbing & Heating) v. 1461763 Ontario Ltd. (c.o.b. Per Bacco Ristorante), [2006] O.J. No. 2779 (S.C.J.); and Tang v. Jarrett, 2009 CanLII 13631 (ON SCDC), [2009] O.J. No. 1282, 251 O.A.C. 123 (Div. Ct.).

[23] While a number of other decisions of the Superior Court have implicitly and explicitly held that the Small Claims Court has jurisdiction to consider equitable claims for relief, there appears to be no binding authority for that proposition.

(ii) The Small Claims Court

[24] A review of Small Claims Court decisions suggests that the court has been operating on the basis that it has jurisdiction to consider claims for equitable relief and, in appropriate cases, to grant it.

[25] In Szeib v. Team Truck Centres -- Freightliner, [2001] O.J. No. 2208, [2001] O.T.C. 439 (Sm. Cl. Ct.), Searle Deputy J. specifically considered the jurisdictional issue and held that the Small Claims Court has jurisdiction to grant relief from forfeiture, a form of equitable relief. In a myriad of other cases, the Small Claims Court has, without any analysis of jurisdiction, considered and awarded (or rejected after consideration) remedies in equity, particularly based on unjust enrichment: see, for example, P & G Electronics Ltd. v. Scottish and York Insurance Co., [1992] O.J. No. 2707 (Sm. Cl. Ct.); Gula v. Ontario Hydro, [1995] O.J. No. 2392 (Sm. Cl. Ct.); Michael Davies Plymouth Chrysler Ltd. v. Shabsove, [1995] O.J. No. 5017 (Sm. Cl. Ct.); Bell, Baker v. Wong, [1996] O.J. No. 5443 (Sm. Cl. Ct.); Canada Post Corp. v. Asquith, [1999] O.J. No. 5583 (Sm. Cl. Ct.); 1346597 Ontario Ltd. v. Riddiford, [2007] O.J. No. 5502 (Sm. Cl. Ct.); Causeway View Road South Assn. v. Foster, [2009] O.J. No. 3496, 91 R.P.R. (4th) 314 (Sm. Cl. Ct.).

c. Analysis of the equitable jurisdiction of the Small Claims Court

[26] Strictly speaking, my determination set out below that the respondents' claims in contract and in unjust enrichment must fail is sufficient to dispose of the matter. However, the law concerning the jurisdiction of the Small Claims Court to grant equitable relief is unsettled [and] is a matter of some importance. Furthermore, decisions of the Small Claims Court infrequently reach our court. Therefore, in my view, it is appropriate to provide an analysis of the issue.

[27] The resolution of whether the Small Claims Court has jurisdiction to grant equitable relief involves basic statutory interpretation. According to the well-known case of Rizzo & Rizzo Shoes Ltd. (Re) (1998), 1998 CanLII 837 (SCC), 36 O.R. (3d) 418, [1998] 1 S.C.R. 27, [1998] S.C.J. No. 2, at para. 21, the analysis must focus on the words of the relevant statutory provisions, read in their entire context and in their grammatical and ordinary sense and interpreted harmoniously with the scheme and the object of the Act and with the legislature's intention.

[28] I start with the wording of the relevant statutory provisions, taken in context.

[29] As stated above, s. 23 of the Courts of Justice Act is the section that delineates the jurisdiction of the Small Claims Court. It gives the court jurisdiction in any action for the payment of money or the recovery of possession of personal property with a value within the prescribed limit. This is a wide grant of jurisdiction. I agree with Heeney J. in Mungo Bear that the wording "any action" is sufficiently broad so as to encompass both common law and equitable claims.

[30] But, this observation begs the very question at issue -- whether this wording is also broad enough to include jurisdiction to grant equitable remedies. In my view, it is.

[31] I agree with Heeney J., at para. 29 of Mungo Bear, that s. 23, s. 96(1) and s. 96(3) are to be read as a "coherent package". As discussed above, s. 23 of the Act is broad enough to allow the Small Claims Court to deal with claims in common law and equity. Under s. 96(1), the courts, including the Small Claims Court, are authorized to concurrently administer all rules of equity and the common law. It would be irrational for the legislators to give the Small Claims Court authorization to administer rules of equity and deal with claims in equity and then specifically preclude the court from granting any equitable relief. It only makes sense if the wording "where otherwise provided" in s. 96(3) is interpreted to mean that the Small Claims Court is able to grant equitable relief within the limits of its jurisdiction set out in s. 23: namely, to order the payment of money or the return of personal property.

[32] Notwithstanding the availability of this interpretation of the plain language of the Courts of Justice Act, it is clear from the jurisprudence that there has been some uncertainty involving the reconciliation of the broad wording in s. 23 of the Act with the apparent limitation expressed in s. 96(3).

[33] This takes me to legislative intent.

[34] The legislative history of the relevant provisions of the Courts of Justice Act, particularly ss. 96(3) and 96(1), is available as a tool for determining the intention of the legislature: Rizzo (Re), at para. 31.

[35] In 1984, the Courts of Justice Act, 1984, S.O. 1984, c. 11 replaced the Judicature Act, R.S.O. 1980, c. 223. In Ontario Civil Practice, 1996 (Scarborough, Ont.: Carswell, 1995), Watson and McGowan usefully provide Ministry commentary that accompanied changes to the Courts of Justice Act. In the commentary accompanying the 1984 Act, the Attorney General clarified that the statement in s. 109(1) (now s. 96(1)) "courts shall administer concurrently all rules of equity and the common law" was intended to encompass the meaning of the statement in the Judicature Act that courts shall recognize all claims and defences, whether arising under the common law or equity. This means that all courts, including the Small Claims Court, have the ability to consider equitable claims, such as a claim based on unjust enrichment.

[36] Section 96(3) grants the superior court broad jurisdiction to award equitable relief. When the Courts of Justice Act was enacted in 1984, the Small Claims Court was part of the provincial court system. Section 109(3) (now s. 96(3)), which granted equitable jurisdiction to the superior courts of the province, did not apply to the Small Claims Court. However, in 1989, important changes were made to the organization of the Ontario court system. With the passage of Bill 2, An Act to amend the Courts of Justice Act, 1984, S.O. 1989, c. 55, 2d Sess., 34th Leg., Ontario, 1989 (assented to November 15, 1989), the Small Claims Court became a branch of the newly created Ontario Court (General Division), part of the province's superior court.

[37] Of particular interest in terms of the 1989 legislative changes is that the first version of Bill 2 included a provision that "the Court of Appeal, the Unified Family Court and the Ontario Court (General Division), excluding the Small Claims Court, may grant equitable relief, unless otherwise provided" (emphasis added).

[38] However, the Standing Committee on Administration of Justice approved an amendment to Bill 2 striking out the words "excluding the Small Claims Court". The representative of the Attorney General explained to the Committee that the reference to the Small Claims Court was being removed because it was unnecessary (Ontario, Legislative Assembly, Standing Committee on Administration of Justice, Transcripts of Meetings (July 31, 1989) at J-5 (Steven Offer)):

As members of the committee will be aware, the jurisdiction of the Small Claims Court is limited to two aspects: first, for the payment of money and, second, for the return of personal property.

Having said that, we have an amendment before us to section 15, which speaks to subsection 109(3) [now s. 96(3)] of the Courts of Justice Act. Basically, this amendment talks to the granting of equitable relief. This amendment is saying that we want to exclude the Small Claims Court's jurisdiction from subsection 109(3), which talks to the granting of equitable relief. We believe that that is not necessary, because the Small Claims Court does not have jurisdiction under that matter.

[39] The Standing Committee similarly amended the proposed s. 110 (now s. 97) (declarations of right) and s. 114(1) (now s. 101(1)) (interlocutory injunctions, mandatory orders and receivers) by removing the words "excluding the Small Claims Court". The rationale for these amendments was the same: the Small Claims Court has not been provided the jurisdiction in s. 23(1) to grant declarations of right or injunctive relief so it was considered unnecessary to specifically exclude the court from these provisions.

[40] Despite the government's assertion that the words "excluding the Small Claims Court" were unnecessary, the 1989 amendments created some confusion as to whether the Small Claims Court had been provided with jurisdiction to grant equitable relief.

[41] This confusion is reflected in Ontario Civil Practice, 1990 (Toronto: Carswell, 1990), where Watson and McGowan queried whether the Small Claims Court had been given equitable jurisdiction by the 1989 changes, in the following observations:

Apparently the rationale for the amendment [to Bill 2]
(deleting the specific exclusion with regard to the Small Claims Court) was that since the Small Claims Court is a court of limited jurisdiction, it has only that jurisdiction which is conferred on it by statute, and the relevant statutory provision does not confer general equitable jurisdiction on the Small Claims Court: see s. 22 [now s. 23]. The competing argument is that by s. 21(1) [now s. 22(1)] the Small Claims Court is made a branch of the General Division and as such is now one of the courts enumerated in s. 109(3) [now s. 96(3)].

[42] The second change of significance took place in 1994, when Bill 136, An Act to amend the Courts of Justice Act and to make related amendments to the Freedom of Information and Protection of Privacy Act and the Justices of the Peace Act, S.O. 1994, c. 12, 3rd Sess., 35th Leg., Ontario, 1994 (assented to June 23, 1994), amended both ss. 96(3) and 97 by inserting the words "exclusive of the Small Claims Court". There was no discussion of these changes in either the legislative or committee debates.

[43] This insertion appears to have prompted Watson and McGowan to remove their earlier comment about the potential ambiguity concerning whether the Small Claims Court could grant equitable relief in Ontario Civil Practice, 1996 (Scarborough, Ont.: Carswell, 1995). In its place, they provided Ministry commentary from the 1994 amendments saying that "sections 96(3) and 97 of the Act were amended to make it clear that the Small Claims Court cannot give equitable relief or a declaratory judgment".

[44] In my opinion, the series of changes to s. 96(3) and s. 97 in which the reference to the Small Claims Court was proposed to be included, removed and then later inserted demonstrate that the legislative drafters struggled with how to make it clear that the Small Claims Court, once it became part of the superior court with the 1989 reorganization, did not acquire that court's broad jurisdiction to grant equitable relief. It follows that the ultimate decision to include the words "exclusive of the Small Claims Court" in ss. 96(3) and 97, was to clarify that the Small Claims Court's becoming a part of the superior court did not alter the court's jurisdiction.

[45] This conclusion is reinforced by an examination of the purpose of the Small Claims Court itself.

[46] The history of the Small Claims Court is one of progressive development toward providing increased access to justice. The origins of the Small Claims Court in Ontario may be found in 1792, when the first provincial Parliament of Upper Canada determined that to "contribute to the conveniency of the inhabitants of this province, to have an easy and speedy method of recovering small debts", a separate court was required (An act for the more easy and speedy recovery of small debts, 1792 (Upper Canada), 32 Geo. III, c. 6). Courts of Request were established and empowered to hear and determine matters of debt up to 40 shillings, and to "decree as to them should seem just in law and equity". Thus, right from the inception of the Courts of Request, it is clear that the legislature, in establishing the Small Claims Court, intended to provide "conveniency" -- increased access to justice.

[47] In the report by Ontario Civil Justice Review, First Report (Toronto: Ministry of the Attorney General, 1995), the authors noted the following: "Frequently referred to as the 'people's court', today's Small Claims Court in Ontario is seen as the one place where a private citizen can have ready and inexpensive access to civil justice." The Small Claims Court is more hospitable to the ever-increasing number of self- represented litigants. Procedures are simpler in the Small Claims Court; matters are decided in a summary way under relaxed rules of evidence. There are limits on the costs that may be recovered by a successful party in the Small Claims Court. These features contribute to an increase in the accessibility of our system of justice.

[48] Interpreting the words of the Courts of Justice Act in such a way as to restrict the jurisdiction of the Small Claims Court in a manner that would preclude it from awarding equitable relief in resolving claims properly before it would run counter to this important objective.

[49] It follows that the interpretation of the Courts of Justice Act provisions relevant to the jurisdiction of the Small Claims Court that is in keeping with the wording of the Act and is consistent with the intent of the legislature, apparent not only from the legislative amendments but also from the rationale behind establishing the court itself, is that the Small Claims Court has jurisdiction to award legal or equitable relief where the relief requested is a monetary payment under the limit of $25,000 or the return of personal property valued within that limit.

Summary Comment

Contrary to some beliefs, the jurisdiction of the Small Claims Court does include equitable rights issues; however, such jurisdiction is limited to claims seeking relief only in the form of compensation by way of money or via the return of property.

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