Last December we reported on a case where the condominium corporation terminated a property management agreement for cause and without notice, relying on a clause in the agreement which allowed it to terminate if the manager was “insubordinate, reckless or grossly negligent in performing its duties.” The manager claimed that the condominium corporation did not have cause to terminate the contract and sued the corporation in Small Claims Court for $8,303.24, being two months of management fees.

After the manager’s case was dismissed, the manager appealed. The Divisional Court set aside the decision of the Small Claims Court judge on the basis that the trial judge did not adequately describe what conduct amounted to insubordination, recklessness and/or gross negligence and why he reached his conclusion, and for that reason, the Divisional Court was unable to conduct a meaningful review of the Small Claims Court decision. The Divisional Court ordered the parties to have a new trial before a different Small Claims Court judge.

Instead of going back to Small Claims Court, the condominium corporation appealed the Divisional Court decision. The Court of Appeal set aside the judgment of the Divisional Court and reinstated the decision of the Small Claims Court judge. The Court of Appeal concluded that the Small Claims Court judge had adequately considered the evidence and that the reasons for the decision were sufficiently clear. The Court of Appeal noted that the Small Claims Court judge had correctly considered the cumulative effect of the manager’s acts and omissions and “that multiple acts or omissions can rise to a level that one alone cannot reach”.

What makes this case interesting, is that the Court of Appeal‘s decision was influenced by the fact that the original decision was made in Small Claims Court. “Appellate consideration of Small Claims Court reasons must recognize the informal nature of the court, as well as the volume of cases it handles and its statutory mandate to deal with cases efficiently . . . . Just as oral reasons will not necessarily be as detailed as written reasons, reasons from the Small Claims Court will not always be as thorough as those in Superior Court decisions.” This recognition of the Small Claims Court context provides validation for Small Claims judgments that are somewhat informal and contain less detail than would be found in judgments from higher level courts.

The condominium corporation was awarded costs in the amount of $10,000 for the appeal to the Divisional Court and $7500 for the appeal to the Court of Appeal. This turned out to be a very expensive undertaking for the condominium manager: in addition to costs of $17,500 the manager had to pay its own legal costs. The total costs far exceeded the amount of the management fees that were at stake.