Decision ‘finally closes the chapter’ on jurisdiction to hear anti-SLAPP motion, counsel says

Law360 Canada (January 31, 2022, 3:26 PM EST) --

In a decision regarding anti-SLAPP motions, the Ontario Court of Appeal has determined that the administrative judge of the small claims court “does not have jurisdiction to make an order under s. 137.1” of Courts of Justice Act (CJA) and this “jurisdiction lies only with a Superior Court judge.” Counsel for the appellants said the decision “finally closes the chapter on this issue as to whether these motions are appropriate in small claims court and the answer is no, they’re not.”

In Laurentide Kitchens Inc. v. Homestars Inc., 2022 ONCA 48 two appeals, heard together, raised the issue of jurisdiction. 

The appellants, Lucvaa Ltd. and Laurentide Kitchens Inc., submitted that the administrative judge did not have jurisdiction “because the issue was determined by this court in Bruyea v. Canada (Veteran Affairs), 2019 ONCA 599.” On the other hand, the respondent, Homestars Inc., submitted that “the jurisdiction issue decided in Bruyea was limited to deputy judges of the Small Claims Court and does not extend to the Administrative Judge.”

According to court documents, Homestars Inc. “operates a website, on which consumers post reviews of contractors and providers of home improvement services.”

“Negative reviews were posted against the appellants,” the court noted, so in May 2018 “Lucvaa and Laurentide Kitchens sued Homestars in Small Claims Court.”

In response, Homestars brought motions to dismiss both actions under s. 137.1 of the Courts of Justice Act. The motions, the court noted, were “scheduled to be heard before a deputy judge on April 30, 2019.”

However, a couple of months after the motions were scheduled, the Court of Appeal released its decision in Bruyea, which “concluded that deputy judges do not have the jurisdiction to make orders under s. 137.1 of the CJA.”

“Deputy judges are lawyers who are appointed by the regional senior judge of the Superior Court, with the approval of the Attorney General, usually for a term of three years. Bruyea has been followed by this court in other cases which have confirmed that only Superior Court judges can make orders under s. 137.1,” the court explained.

According to court documents, Homestars “applied to the Superior Court and sought to have a Superior Court judge assigned to hear the motion.” The court noted that “[U]nder the CJA s. 22(3), all Superior Court judges are also judges of the Small Claims Court.”

In October 2019, the issue came before a Superior Court judge in civil practice court. According to court documents, the judge “endorsed the record that the action would remain in Small Claims Court and ‘an administrative judge of the Small Claims Court should hear these motions.’ ”

The court noted there is “one Administrative Judge of the Small Claims Court” and it’s “a position created by the legislature in 2017.”

In February 2020, the motions were brought before the administrative judge, Justice Laura Ntoukas. According to court documents, the appellants challenged Justice Ntoukas’ jurisdiction and “it was argued as a preliminary matter.”

Justice Ntoukas concluded that “the Superior Court judge’s endorsement settled the issue of jurisdiction, and she would hear the motions when the court resumed operations.” The appellants appealed the order to the Ontario Court of Appeal.

Justice Mary Lou Benotto, writing for the Court of Appeal, reviewed the statutory framework in ss. 137.1, 87.2 and 24 of the CJA, noting that “Section 137.1 was enacted in 2015 to promote and protect freedom of expression on matters of public interest by allowing a defendant to move at an early stage to dismiss proceedings that adversely affect that expression.”

“In practice,” she wrote, “virtually all matters in the Small Claims Court are heard by deputy judges.”

“In Bruyea the issue before this court was whether a deputy judge of the Small Claims Court has jurisdiction to make an order under s. 137.1,” she added, noting that in that decision Justice Ian Nordheimer “reviewed the structure of the Small Claims Court and the specific provisions of s. 137.1.”

She pointed to paragraph 12 of Bruyea, where Justice Nordheimer wrote: “Of importance for the current issue is the wording of s. 137.1(3) that reads: On motion by a person against whom a proceeding is brought, a judge shall, subject to subsection (4), dismiss the proceeding against the person if the person satisfies the judge that the proceeding arises from an expression made by the person that relates to a matter of public interest. [Emphasis added.] Subsections 137.1(4), (6), (7), (8) and (9) also all refer to ‘judge.’ ”

Justice Nordheimer, she explained, “concluded that the use of the word ‘judge’ without reference to ‘deputy judge’ was a clear marker that deputy judges do not have jurisdiction to make the order.”

“He found at para. 26 that ‘the Small Claims Court must find its jurisdiction in a statute’ and therefore “[a]bsent express statutory authority, the Small Claims [C]ourt has no jurisdiction,’ ” she added.

Justice Benotto determined that “the Administrative Judge does not have the authority to make an order under s. 137.1” for three reasons: “(i) the authority was not given by statute; (ii) this court has determined that only Superior Court judges have the jurisdiction; and (iii) the s. 137.1 process is not consistent with the rules and procedures in the Small Claims Court.”

With regards to the first reason, she noted that in 2017 “the Burden Reduction Act amended the CJA to create the position of Administrative Judge” and “Section 137.1 had been in effect for two years.”

“Although the legislature made other consequential amendments to the CJA to reflect this change, the legislature did not amend s. 137.1(3) to include the Administrative Judge,” she added.

On appeal, the respondent submitted that “the words ‘may also be heard and determined by’ give the Administrative Judge authority to make orders under s. 137.1.” But Justice Benotto did not agree.

“First,” she wrote, “s. 24 does not confer the authority to make orders under s. 137.1.”

“Note that ‘deputy judges’ are also included in s. 24(2)(b). If the respondent’s submission were correct, jurisdiction would also be conferred on deputy judges. We know from the analysis in Bruyea that deputy judges do not have jurisdiction,” she explained, adding that secondly, “the respondent’s position would effectively expand the Administrative Judge’s authority beyond that of the Small Claims Court.”

With regards to her second reason, Justice Benotto stressed that “the analysis in Bruyea is equally applicable to the Administrative Judge.”

“In any event, post-Bruyea this court has stated that only Superior Court judges have the jurisdiction to make orders under s. 137.1,” she added, noting that “the Administrative Judge is not a Superior Court judge.”

In her final reason, Justice Benotto emphasized that the “s. 137.1 process is not consistent with the rules and procedures in the Small Claims Court.”

“The Small Claims Court is a branch of the Superior Court of Justice. The court embodies the foundations of access to justice: informality, affordability, timely resolution, accessibility for self-represented people and active judicial engagement. By providing access to justice, the court has an important role in the administration of justice for the province. The court handles nearly half of the civil disputes in the province. It provides a cost-effective forum for civil disputes involving less than $35,000,” she explained, noting that “[To] achieve these objectives, all questions of fact and law are to be determined in a summary way.”

“These hallmarks of the Small Claims Court, as enshrined in its rules, are incompatible with the provisions of s. 137.1,” she added, noting that a s. 137.1 analysis “requires the detailed process of shifting burdens with respect to merits, proportionality and public interest, which involves exchange of affidavits and cross-examinations.”
“Motions are not encouraged in the Small Claims Court. The Rules of Small Claims Court do not provide for cross-examination on affidavits. Under s. 137.1, costs of an unsuccessful motion are presumptively full indemnity. The limit on costs for a motion in Small Claims Court, absent special circumstances, is $100. The limit on costs after trial is 15% of the award. Small Claims Court jurisdiction is limited to $35,000. Contrary to these limits of Small Claims Court, s. 137.1 provides extensive powers with respect to damages,” she stressed.

“The Small Claims Court provides timely justice to litigants in matters under $35,000. I conclude that the legislature did not intend to inject complex interim proceedings into its summary process. Doing so would frustrate the objectives of the Rules of the Small Claims Court,” she decided, with Justices Grant Huscroft and Bradley Miller in agreement, in a decision released Jan. 24.

Gavin Tighe, a senior partner at Gardiner Roberts LLP and counsel for the appellants with Daria Risteska, said the decision highlights “an interesting discussion about the jurisdiction of the court and the fact that provincially appointed judges derive their jurisdiction from statute.”

He noted the decision also “requires us to look at the proportionality of these kinds of motions.”

“And proportionality, I know it’s a broad topic, but if the process for the motion is more than the process of the action, the motion’s probably not a good idea. And that applies across the board to any type of motion, not just [under] section 137.1,” he added.

Tighe noted that small claims court is “colloquially referred to as the Peoples’ Court.”

“It’s a court, generally speaking, where you don’t need a lawyer. My client did not have a lawyer until this motion was brought,” he said, stressing that “these types of motions are extremely complicated” and “involve substantial legal issues.”

“They’re just antithetical to the whole notion of the small claims court, which is simple access to justice where lay people don’t need to run up expenses [for] legal counsel and they can still get a fair day in court,” he added.

Maanit Zemel, a partner at Zemel van Kampen LLP and counsel for the respondent, noted that in July 2019, the Court of Appeal “released its decision in Bruyea v. Canada, in which it held that deputy judges of the small claims court cannot hear anti-SLAPP motions.”

“Based on that decision, my client HomeStars, sought to have its anti-SLAPP motions heard by a Superior Court judge. However, the Superior Court refused that request and ordered that HomeStars bring its motion to the administrative judge of the small claims court,” she explained, noting that “in this appeal decision, the Court of Appeal disagreed.”

The Court of Appeal “basically held that the administrative judge of the small claims court does not have jurisdiction to hear anti-SLAPP motions. Only a Superior Court Judge can hear anti-SLAPP motions, even if the underlying action is brought in small claims court,” she said, adding that this “decision represents a blow to access to justice and freedom of expression.”

“For one, the decision creates more work for Superior Court of Justice judges (which already face significant backlogs), as they will now have to hear anti-SLAPP motions from the small claims court as well. Moreover, the logistical hurdles in scheduling these motions may be too complex to navigate for many small claims court defendants, who are often self-represented. As a result, defendants in SLAPP proceedings brought at the small claims court may decide not to bring anti-SLAPP motions because of the cost and procedural complexity involved in having them heard by a Superior Court judge. Thus, the purpose of the anti-SLAPP provisions — to promote and protect freedom of expression — is hindered,” she added.

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