Executive Summary: Key Legal and Evidentiary Issues

• Default judgment for unpaid legal fees was set aside by the Small Claims Court based on evidence of the respondent’s longstanding mental illness and its impact on his participation in the proceedings.
• The law firm’s attempt to challenge the Small Claims Court’s interlocutory order by judicial review raised limits on using judicial review as a substitute appeal route in Small Claims practice.
• Alleged errors of law and fact by the Deputy Judge, including reliance on hearsay psychiatric evidence and treatment of the mental health evidence, were found to amount to an impermissible “appeal by another name.”
• Claims of procedural unfairness centred on refusal of an adjournment, the handling of counsel changes mid-hearing, and the inability to cross-examine the psychiatrist were assessed against the Small Claims Court’s mandate to proceed in a summary, expeditious way.
• The law firm failed to establish irreparable harm or justify what was effectively execution before judgment by trying to freeze sale proceeds of the respondent’s home pending judicial review.
• The balance of convenience favoured releasing funds to the respondent rather than preserving security for a judgment the law firm had not yet obtained, leading to dismissal of the stay motion with costs.

Factual background of the lawyer–client fee dispute

The dispute arose out of a lawyer–client relationship that began in 2020. Sutherland Law Professional Corporation acted for Carmine Coccimiglio in a legal matter and later sued him in the Small Claims Court for unpaid legal fees. The firm claimed $17,449.79 for outstanding invoices and related charges, alleging that these amounts remained unpaid despite demand. In response, Mr. Coccimiglio filed a Defence in October 2022 contesting the fees and attacking the quality and transparency of the legal services. He alleged that the firm failed to follow his instructions, performed work he had not authorized, and did not disclose that the lawyer handling his file was subject to disciplinary proceedings before the Law Society of Ontario that could lead to suspension or licence revocation. This background framed the conflict as both a fees collection action and a contest over professional conduct and quality of service, although the Divisional Court motion ultimately turned on procedural, not substantive, issues.

Default judgment and the Small Claims Court proceedings

The Small Claims Court process deteriorated when Mr. Coccimiglio did not attend three scheduled settlement conferences in 2023. Following the third non-attendance on October 6, 2023, the presiding Deputy Judge ordered that his defence be struck. He was then noted in default on November 3, 2023. On January 16, 2024, Deputy Judge Mohan granted default judgment in favour of Sutherland Law for $21,618.95. That amount represented the original claim for unpaid fees plus prejudgment interest and costs. At that point, the firm had a default judgment it intended to enforce against Mr. Coccimiglio’s assets.

The motion to set aside default judgment and mental health evidence

In February 2025, Mr. Coccimiglio moved to set aside the default judgment. He filed an affidavit explaining that he had a longstanding history of mental illness and was experiencing a serious mental health episode during the period when he missed the settlement conferences. He also stated that he only became aware of the default judgment recently, again linking that delay to his mental health condition. To support his account, he attached a letter from psychiatrist Dr. Wood Hill, who confirmed that the respondent suffered from persistent psychiatric illnesses and expressed the view that he was eligible for any legal or social consideration available based on that psychiatric profile. Shortly before the hearing, the law firm filed an affidavit from a law clerk emphasizing that the defendant had not mentioned mental illness in his original Defence. On the day of the motion, Mr. Coccimiglio swore and filed a second affidavit asserting that the firm had in fact known of his mental health issues during the retainer. A second letter from Dr. Hill stated that, in light of the respondent’s psychiatric history, it was not surprising that he had missed a pre-trial matter. The motion to set aside thus turned on whether the defaults could fairly be excused in light of mental illness and whether the statutory test in rule 11.06 of the Rules of the Small Claims Court was satisfied.

Conduct of the Small Claims Court motion hearing

The motion was heard by videoconference before Deputy Judge Patel. Counsel appeared for both sides. For the law firm, a lawyer, Mr. Janmohamed, attended and explained he was stepping in for other counsel with carriage of the matter. For the respondent, counsel Kenneth Alexander appeared. Mr. Alexander made his submissions first. When it was time for the applicant law firm to respond, Mr. Janmohamed advised that his instructions were to seek an adjournment so that another lawyer, Mr. Frustaglio, could argue the motion on a different date. There had been no formal adjournment motion, no advance notice to the registrar, and no earlier mention of any adjournment request when the docket was vetted. The Deputy Judge refused the adjournment request. Part way through the hearing, another lawyer for the firm, Mr. Anand, joined the videoconference, but the Deputy Judge did not permit him to argue and insisted that Mr. Janmohamed proceed. Submissions were then made on behalf of the law firm. At the conclusion of the hearing, Deputy Judge Patel granted the motion, finding that the requirements in rule 11.06 for setting aside default judgment were met, effectively restoring the defendant’s opportunity to defend the fees claim on the merits.

Disposition of sale proceeds and the writ of execution

In February 2025, while the Small Claims motion was pending, Mr. Coccimiglio sold his home. The net sale proceeds were held in trust by his real estate lawyers, Levy Zavet. Before the motion to set aside was heard, respondent’s counsel proposed that an amount equal to the default judgment be transferred to his trust account pending the outcome of the motion. Instead of agreeing to a neutral holdback, counsel for Sutherland Law, Mr. Frustaglio, demanded that Levy Zavet pay the funds to his firm under a writ of execution that had issued based on the default judgment. Levy Zavet refused to release the funds to either side, electing to hold them pending the outcome of the motion to set aside the judgment. After the Small Claims Court granted the motion and set aside the default judgment, Mr. Janmohamed wrote to Levy Zavet asserting that the firm intended to seek judicial review and a stay of the Small Claims order. He asserted the real estate lawyers were obligated to continue withholding the funds until the judicial review and stay motion were finally resolved, and he warned they would be held liable for any funds disbursed sooner. Respondent’s counsel took the opposite position and argued that once the writ of execution was effectively undone with the default judgment, the funds should be released to the respondent as the beneficial owner.

Judicial review, stay motion and limits on interlocutory review

Sutherland Law then commenced an application for judicial review in the Divisional Court, attacking the Small Claims Court’s interlocutory order that set aside the default judgment. At the same time, it brought the motion that led to this decision: a request for a stay of the Small Claims Court order so it could preserve the sale proceeds in trust while the judicial review was heard. On the stay motion, the Divisional Court applied the familiar RJR-MacDonald three-part test for interlocutory relief: serious issue to be tried, irreparable harm, and balance of convenience. The court noted that this is a discretionary stay pending judicial review and that weakness in one branch can sometimes be offset by strength in another, but the overarching question is whether granting a stay would be in the interests of justice. On the “serious issue” prong, the law firm advanced over 30 grounds, effectively alleging that the Deputy Judge misapplied legal principles, gave insufficient weight to certain facts (such as repeated notices of the settlement conferences and the absence of mental illness allegations in the Defence), and improperly relied on hearsay psychiatric evidence. The Divisional Court emphasized that this was not an appeal; section 31 of the Courts of Justice Act allows appeals from Small Claims Court only from final orders, not interlocutory ones. Judicial review of interlocutory Small Claims decisions will only rarely be appropriate, typically where the court has acted without jurisdiction or denied procedural fairness. The judge held that most of the alleged errors were, in substance, an attempt to appeal through the back door—“an appeal by a different name”—and thus did not amount even to a low-threshold “serious issue” for the purposes of a stay.

Alleged procedural unfairness and the Small Claims mandate

A narrower portion of the law firm’s case alleged denial of procedural fairness. It focused on three points: the refusal to permit cross-examination of Dr. Hill, the refusal of the last-minute adjournment request, and the refusal to allow Mr. Anand to argue once he joined the videoconference. In assessing this, the Divisional Court highlighted the statutory mandate of the Small Claims Court to hear and determine matters “in a summary way,” which necessarily involves streamlined, expeditious procedure. Against that backdrop, the judge concluded there had been no request to cross-examine Dr. Hill, so there could be no complaint that such an opportunity was denied. Likewise, refusing an adjournment sought without notice, in the middle of a hearing, fell squarely within the Deputy Judge’s discretion and did not amount to a breach of natural justice. The only aspect that caused concern was the refusal to allow Mr. Anand to make submissions when he attended mid-hearing. While the court found this difficult to understand, it held that, on a preliminary view, this procedural fairness claim only barely cleared the very low “not frivolous or vexatious” threshold needed to show a serious issue. Even with that limited foothold, the stay motion still had to satisfy irreparable harm and balance of convenience.

Irreparable harm, execution before judgment and balance of convenience

On irreparable harm, the law firm argued that if the funds in Levy Zavet’s trust account were released to Mr. Coccimiglio, he would be unable to pay his debts and any later judgment in the firm’s favour would be uncollectable. The court found this submission internally inconsistent: if the alleged harm was non-payment of a money judgment, that is, by definition, a monetary loss that can be quantified. The real concern was that the respondent might be judgment-proof. In substance, the firm was seeking what amounted to execution before judgment—a highly exceptional remedy that courts grant only where strong evidence supports freezing or attaching assets in advance. All the firm had was evidence that the respondent had mentioned financial difficulties. That, the judge found, fell far short of what is required for such extraordinary relief and did not meet the irreparable harm branch of the test. On balance of convenience, the court weighed the firm’s desire to preserve potential security for a possible future judgment against the respondent’s right to access the proceeds of his own home once there was no longer a valid default judgment or operative writ of execution. It found that the balance clearly favoured the respondent, who was entitled to use his funds absent an enforceable judgment. The law firm was effectively asking the court to protect a judgment it did not have while simultaneously using judicial review to attack the very order that had set aside its default judgment.

Outcome and costs in favour of the respondent

The Divisional Court dismissed Sutherland Law’s motion for a stay without even calling on counsel for the respondent to respond, signalling how weak the motion was viewed. While the judge declined to make a direct order compelling Levy Zavet to release the funds because the firm was not a party to the proceedings, he recorded applicant’s counsel’s acknowledgement that, if the motion was dismissed, the real estate lawyers had no legal authority to continue holding the funds in trust. The court then turned to costs. It noted that the law firm had filed a 720-page record and pursued the stay motion aggressively, even though its judicial review application only barely exceeded the frivolous or vexatious threshold and the stay motion itself was effectively devoid of merit. The court concluded the motion was frivolous, if not vexatious, and fixed costs in a single, all-inclusive amount. In the result, the successful party on the motion was the respondent, Carmine Coccimiglio, and the court ordered Sutherland Law Professional Corporation to pay him total costs of $9,000.00, inclusive of all amounts, within 30 days.