Smith v The Toronto-Dominion Bank, 2023 SKCA 81

Court of Appeal for Saskatchewan Docket: CACV4010 Citation: Smith v The Toronto-Dominion Bank , 2023 SKCA 81 Date: 2023-07-24 Between: Kristopher Smith Appellant (Respondent) And The Toronto-Dominion Bank Respondent (Plaintiff) Before: Richards C.J.S., Tholl and Kalmakoff JJ.A. Disposition: Appeal allowed Written reasons by: The Honourable Chief Justice Richards In concurrence: The Honourable Mr. Justice Tholl The Honourable Mr.

Justice Kalmakoff On appeal from: QBG 163 of 2021, Regina (Sask QB) Appeal heard: February 14, 2023 Counsel: Kristopher Smith appearing on his own behalf Michael Marschal for the Respondent Richards C.J.S. I. INTRODUCTION [ 1 ] The Toronto-Dominion Bank [TD Bank] sued Kristopher Smith for arrears on a loan. Mr. Smith, who is self-represented, then filed a statement of defence pleading that he had not entered into an agreement for the amount claimed. This led TD Bank to apply to strike the statement of defence on the ground that it did not disclose a reasonable defence.

A Queen’s Bench Chambers judge granted TD Bank’s application on the basis that a denial of the amount said to be owing under a contract is not a reasonable defence. [ 2 ] Mr. Smith now appeals from the Chambers decision. As explained below, I accept that the Chambers judge erred and would allow this appeal. II. BACKGROUND [ 3 ] On January 25, 2021, TD Bank caused a statement of claim to be issued. TD Bank alleged that, on August 11, 2016, it had entered into a contract with Mr. Smith whereby it had loaned him $85,044.96. [ 4 ] The statement of claim further alleged that, as of January 21, 2021, Mr.

Smith owed $53,540.80 on the loan but had neglected or refused to pay that amount. TD Bank sought judgment in the amount of $53,540.80 with interest from January 22, 2021. [ 5 ] Mr. Smith filed a statement of defence on March 31, 2021. In it, he said that he had not entered into any loan agreement with TD Bank for $85,044.96 but that, through Saskatoon Motor Products, he had entered into an agreement for a loan of $60,000.00 at 0% interest to be repaid over seven years.

The body of his statement of defence is set out below: I , the defendant, Kristopher Smith (hereafter referred to as Kris Smith), residing in Saskatoon , Saskatchewan , did not enter into an agreement with the Plaintiff, The Toronto-Dominion Bank (hereafter referred to as TD Bank) for a loan of $85,044 . 96 (the “ loan”). I, Kris Smith, entered into an agreement with TD Bank through Saskatoon Motor Products (hereafter referred to as SMP) for the sum of $60 , 000.00 at 0% interest , to be paid over seven years.

As part of the agreement, I traded my 2014 Chevrolet diesel truck to SMP, under the condition that the auxiliary fuel tank and pump system be returned to me for the purpose of me selling the auxiliary tank and system. The SMP agent/sale supervisor was Rob Bryant, who resided in Saskatoon at the time. I allege fraud and theft on his part. Upon learning of the sum of money for which I was indebted, a sum that far exceeded $60,000 . 00, I contacted Rob Bryant. He took no action to rectify the issue and denied any wrongdoing.

I, Kris Smith, spoke with several lawyers in Saskatoon in regards to pursuing an action against SMP and Rob Bryant. To take such action would be costly, with no guarantee of my claim being satisfied. In the following years, I tried several times to speak with the manager at SMP, both in person and via phone call. I received no audience from the manager . My wish was to have SMP honor the deal as negotiated: $60,000.00 to be paid over seven years at 0% interest, with either my auxiliary fuel tank system returned or to have $3500.00 paid to me or deducted from the agreed loan of $60,000 . 00 .

As I received no response from SMP , I took the action of withholding payment in order that this issue result in response from SMP , through TD Bank . [ 6 ] TD Bank filed an application seeking to have Mr. Smith’s statement of defence struck on the basis that it did not deny he was liable for the debt in issue or that he was in default. As a result, TD Bank argued that no reasonable defence had been disclosed. The

notice of application also alleged that the statement of defence was frivolous and should be struck on that basis as well. III. THE CHAMBERS DECISION [ 7 ] The Chambers judge quoted the relevant provisions of The Queen’s Bench Rules , in particular Rule 7-9. It provides that a statement of defence that discloses no reasonable defence may be struck out. The Chambers judge also referred to some of the authorities that speak to the grounds for striking a statement of defence.

In particular, the Chambers judge noted, and quoted from, Royal Bank of Canada v 4445211 Manitoba Ltd. , 2015 SKQB 261 , 483 Sask R 149 [ Royal Bank ], for the proposition that “a denial of the amount owing under a contract is not a reasonable defence” (at para 10). The Chambers judge then concluded her analysis by writing as follows: [11 ] Mr. Smith asserts that h e signed a contract on different term s . However, he has not produced the contract he claims to have signed. TD Bank has produced the Contract establishing the terms it relie s upon in this action. [12] Mr.

Smith claims fraud and theft by an agent of Sa skatoon Motor Products, not by TD Bank. He acknowledges that when his complaints to Saskatoon Motor Products went nowhere , he withheld payment on the lo a n with TD Bank. [13] At best , Mr. Smith i s conte s tin g the amount owing to TD Bank under a loan he acknowledges receivin g . I a g ree with TD Bank t hat Mr. Smith has not raised a defence that has a reasonable chance of success. Put another way , it is plain and obvious that Mr. Smith’s defence cannot succeed. [14] TD Bank’s application is allowed. Mr.

Smith ’ s statement of defence is struck in its entirety, with costs to TD Bank. IV. ANALYSIS [ 8 ] In order to assess the merits of Mr. Smith’s appeal, it is necessary to address the following issues: (

a) what is the governing standard of review? and (

b) did the Chambers judge err in finding that Mr. Smith had not pled a reasonable defence? A. What is the standard of review? [ 9 ] TD Bank suggests it is well established that orders striking pleadings are discretionary in nature and that, accordingly, the standard of review applicable here is the one that applies in the appeal of a discretionary decision.

In this regard, TD Bank cites Clements v Preece , 2014 SKCA 128 at para 5 , 446 Sask R 294. [ 10 ] On reviewing the decisions of this Court that have dealt with questions concerning the striking of pleadings on the basis that they do not disclose a reasonable cause of action, or defence, it becomes apparent that they are not entirely consistent.

A very few older decisions, including Clements v Preece , suggest that, in considering a decision to strike (or not strike) a pleading on this basis, the applicable standard of review is the one applied with respect to the appeal of a discretionary decision. [ 11 ] However, the very large majority of the Court’s decisions, and all of its more recent decisions – somehow overlooked by TD Bank – indicate that the correctness standard of review is applicable.

See: Merchant Law Group LLP v Slusar , 2022 SKCA 75 at para 24 ; Harsch v Saskatchewan Government Insurance , 2021 SKCA 159 at para 16 , [2022] 2 WWR 675; Bhagaloo v M2 Construction & Development Ltd. , 2021 SKCA 168 at para 28 , [2022] 3 WWR 179; Yashcheshen v Canada (Attorney General) , 2021 SKCA 116 at para 73 ; Taheri v Buhr , 2021 SKCA 9 at para 23 , 456 DLR (4th) 306; Harpold v Saskatchewan (Corrections and Policing) , 2020 SKCA 98 at para 21 ; McLean v McLean , 2019 SKCA 15 at para 24 , [2019] 5 WWR 67; Reisinger v J.C.

Akin Architect Ltd. , 2017 SKCA 11 at para 27 , [2017] 8 WWR 532; Canada (Attorney General) v Merchant Law Group LLP , 2017 SKCA 62 at para 17 , [2017] 10 WWR 664; Boart Longyear Inc. v Mudjatik Enterprises Inc. , 2016 SKCA 22 at para 26 , [2016] 5 WWR 40; Filson v Canada (Attorney General) , 2015 SKCA 80 at para 22 , 388 DLR (4th) 66; Hope v Gourlay , 2015 SKCA 27 at para 16 , 384 DLR (4th) 235; Rekken Estate v Health Region #1 , 2015 SKCA 36 at paras 11–12 , [2015] 6 WWR 90. [ 12 ] Accordingly, I will proceed on the basis that the correctness standard of review applies in this case.

Clements v Preece is no longer good law to the extent that it speaks to the standard of review to be employed in considering a decision about whether a pleading should be struck on the basis that it discloses no cause of action, or defence, as the case might be. B. Did Mr. Smith plead a reasonable defence? [ 13 ] As noted, Queen’s Bench Rule 7-9 provides that a statement of defence may be struck out if it discloses no reasonable defence. The same principles apply to striking a statement of defence on this basis as apply to striking a statement of claim on the basis that it discloses no reasonable cause of action.

This means several things. First, a statement of defence should be struck only if, assuming that the defendant proves everything alleged, there is no reasonable chance of success. Second, the jurisdiction to strike a statement of defence should be exercised only in plain and obvious cases where the matter is beyond doubt. Third, the court should consider only the statement of defence, the particulars provided pursuant to a demand and any document referred to in the statement of defence upon which the defendant must rely in order to establish its case. [ 14 ] In his oral submissions, Mr.

Smith explained his position as being that “no contract exists”, i.e., that the contract on which TD Bank bases its claim does not exist. This is consistent with the key passage in his statement of defence alleging that he “did not enter into an agreement with [TD Bank] for a loan of $85,044.96”. Rather, Mr. Smith’s position, as asserted in his statement of defence, is that he entered into “an agreement with TD Bank through Saskatoon Motor Products … for the sum of $60,000.00 at 0% interest, to be paid over seven years”. As a result, Mr.

Smith denies being liable for the amount claimed by TD Bank. [ 15 ] That said, there can be no doubt that Mr. Smith’s statement of defence is less than crystal clear. It goes on, from the passages

quoted above, to indicate that Mr. Smith’s real objective is to have Saskatoon Motor Products honour the deal that he says it negotiatedwith him for a $60,000.00 loan to be repaid over seven years at 0% interest. He indicates that he withheld payment to TD Bank in order toforce Saskatoon Motor Products to respond to his concerns. This might be read as suggesting that Mr. Smith somehow thinks he has twoagreements – one with Saskatoon Motor Products and one with TD Bank. However, despite this ambiguity, the best and fairest reading ofthe statement of defence as a whole is that Mr.

Smith alleges he did not enter into the agreement relied on by TD Bank as the basis of itsclaim. Whether Mr. Smith can ultimately make out that position is, of course, an entirely different matter. [16] I respectfully conclude, therefore, that the Chambers judge erred when she held, at paragraph 13 of her Fiat, that “[a]t best, Mr.Smith is contesting the amount owing to TD Bank under a loan he acknowledges receiving”. In fact, the statement of defence says Mr.Smith did not enter into the agreement alleged by TD Bank to be the basis of its claim.

In other words, this is not a contest about theamount owing under an agreement that both parties acknowledge to be in place. It is, given the statement of defence, a contest aboutwhether the agreement alleged by TD Bank does or does not exist. As a result, I conclude the Chambers judge came at the application tostrike Mr. Smith’s statement of defence from the wrong angle. [17] I note, as well, that the Chambers judge erred by putting stock in the fact that, while TD Bank had filed the contract said toestablish its claim against Mr. Smith, Mr. Smith had failed to produce the contract that he says is in place.

It must be remembered that thiswas an application to strike Mr. Smith’s statement of defence because it revealed no reasonable defence. By effectively expectingMr. Smith to produce the agreement he says is in play, and by weighing its absence from the record against the agreement produced byTD Bank, the Chambers judge strayed into a line of analysis that was in the nature of a

summary judgment application. However, theissue she had to grapple with was not whether Mr. Smith could prove that he had entered into an agreement for a $60,000.00 loan with aninterest rate of 0% and repayable over seven years. It was whether, in his statement of defence, he had pled a reasonable defence to TDBank’s claim. In my view, he had done that.

A denial of the existence of the loan agreement relied on by TD Bank is a reasonable defenceto its claim. [18] Finally, and additionally, I find it necessary to say a word about the Chambers judge’s reference to the idea that “a denial of theamount owing under a contract is not a reasonable defence” and her invocation of that notion as the basis for striking Mr. Smith’sstatement of defence. [19] There are a number of Queen’s Bench cases that use language to the effect that a denial of the amount owed under anagreement is not a defence.

Royal Bank, the decision relied on by the Chambers judge in her Fiat, is a good example. There, Danyliuk J.wrote as follows: [23] As to the former, the denial of the amounts owed is not a defence. It only places into issue the calculations of the plaintiff. Thereare not any substantive matters of fact or law put into dispute by the defendants. The case law is clear that in such circumstances, areference (under current rule 6-58) can be ordered to determine the amounts owing. There is no triable issue.

Similar kinds of statements can be found in cases such as Porcupine Credit Union Ltd. v Szydlowski, 1992 CarswellSask 613 (WL) (QB)at paras 25–28 [Porcupine Credit Union]; Farm Credit Canada v 101181565 Saskatchewan Ltd., 2018 SKQB 280 at para 14;International Capital Corp. v 590188 Saskatchewan Ltd., 2001 SKQB 325 at paras 16–18; Roynat Inc. v Northland Properties Ltd.(1993), (SK KB), [1994] 2 WWR 43 (Sask QB) at para 52; Toronto Dominion Bank v Mitchelson, 2015SKQB 305 at paras 10, 11 and 16, 80 CPC (7th) 363; Singh v 1329369 Alberta Ltd., 2015 SKQB 294 at para 7, 80 CPC (7th) 200; InputCapital Corp. v TKN Company Farm Ltd., 2021 SKQB 275 at para 50; Canada (Attorney General) v Blerot, 2001 SKCA 18, 203 Sask R73. [20] However, and this is the point overlooked by the Chambers judge, in none of those cases did a judge simply strike thestatement of defence – full-stop – and leave the defendant open to having judgment entered against it for the full amount claimed by theplaintiff.

Rather, the judges in those cases struck the statement of defence and, at the same time, either (

a) ordered an accounting todetermine the amount owing by the defendant, i.e., to determine whether the amount owing was what was claimed by the plaintiff orsome lesser amount as alleged by the defendant, or (

b) expressly opened the door for the defendant to make an application for anaccounting. Thus, by way of illustration, after writing the paragraph in Royal Bank that is quoted above, Danyliuk J. went on to indicatethat “[t]he denial of the precise sum owed does not constitute a valid defence, and should be dealt with by way of a reference” (at para 27,emphasis added). [21] It follows from all of this that, even if Mr.

Smith’s statement of defence could be taken as doing no more than contesting thecalculation of the amount he owes to TD Bank, the Chambers judge nonetheless erred by failing to direct a reference to determine theamount owing. [22] As an important side note here, it should be remembered that a reference for an accounting will not be appropriate when thematter to be put to the local registrar involves anything more than a question of straightforward calculation or accounting.

If, for example,there is evidence to be weighed or a dispute over the effect of a contractual term to be resolved, such matters should be addressed by thejudge. See: Lilwall v Stockford, (SK CA), [1934] 3 WWR 746 (Sask CA); Dominion Dry Goods Company v Klotz, (SK CA), [1923] 2 WWR 1086 (Sask CA); Hasper v Shauer, (SK CA), [1922] 2 WWR 212 (Sask CA). [23] One final observation is necessary.

I find it difficult to understand how an assertion in a statement of defence that the amountclaimed by the plaintiff is not the amount owing under an agreement can be seen as not revealing a reasonable defence with the result thatthe statement of defence should be struck out.

This idea seems to trace back to Coghill v Bloomquist, (SK KB), [1946] 2WWR 463 (Sask KB), where, without citing any supporting authority or offering any analysis, Bigelow J. simply said, at paragraph 2, “Ifthe defendant thinks the plaintiff is claiming too much, that is not a defence to the action; he has his remedy on a reference under Rule446”. But, this approach is incorrect.

What if, by way of example, a plaintiff claims one million dollars is owing under a loan agreementand the defendant acknowledges the fact of the agreement in its statement of defence but pleads that the loan has been fully repaid and thatnothing further is owing? Can it be said that the defendant has no reasonable defence to the claim simply because the only live issue is theamount owing? Surely not.

The defendant may have pled no defence insofar as the existence of the loan agreement is concerned but itobviously has pled a valid defence – a complete defence – in respect of the plaintiff’s claim, i.e., in respect of the assertion that onemillion dollars is owing.

[24] In my respectful view, the judges who have struck out a statement of defence on the basis that “the denial of the amounts owedis not a defence” have been actually saying, at least in substance, that the nature of the defence does not warrant the use of court time toeffect a resolution of the case and that, instead, the matter should be referred to the local registrar for a calculation of the amount owing.Indeed, Grotsky J. touched directly on this point in Porcupine Credit Union when he wrote that “[w]here, as here, the substantive issuesare clearly not in dispute and the only concerns raised by the statement of defence are capable of being established by way of a reference… there is no triable issue which justifies the defendant being allowed to defend on the basis of the subject statement of defence” (at para27).

Going forward, this would be the more appropriate way for a judge to express the rationale for opting for the reference route. [25] Relatedly, I would think that a judge should not go so far as to actually strike out a statement of defence simply because theonly matter that it puts in issue is the amount owing under an agreement. Once it is accepted that a denial of the amount owing is in fact areasonable defence, then the basis for striking out the statement of defence disappears.

As McIntyre J. said in something of a lone butaccurate voice in Farm Credit Corporation v Mann (1999), (SK KB), 182 Sask R 259 (QB) at para 13, “a disputeover the amount owing is clearly not a matter to be struck on an application under Rule 173(a) [now Rule 7-9(2)(a)]”. None of this, ofcourse, will make any practical difference to the bottom-line resolution of a plaintiff’s claim. It will still be awarded the amountdetermined by the local registrar to be owing by the defendant. But, leaving the statement of defence to stand is more analyticallyappropriate, or more sound in principle, than striking it out. V.

CONCLUSION [26] I conclude that Mr. Smith’s appeal should be allowed. [27] The Chambers judge did not deal with TD Bank’s alternative argument to the effect that Mr. Smith’s statement of defenceshould be struck because it is frivolous. Nor was this issue addressed in the argument before our Court by either Mr. Smith or TD Bank.Accordingly, I would remit this matter to the Court of King’s Bench so that it can consider the question of whether Mr. Smith’s statementof defence should be struck on that basis. [28] It is apparent that Mr.

Smith invested a reasonable amount of time in preparing his materials for this appeal. I would award himcosts in the amount of $500.00. “Richards C.J.S.” Richards C.J.S.I concur. “Tholl J.A.” Tholl J.A.I concur. “Kalmakoff J.A.” Kalmakoff J.A.