Executive Summary: Key Legal and Evidentiary Issues

• Alka Singh purchased airline tickets for her sister and niece, whose flight was delayed, and she sought to recover costs by having their claims assigned to her.
• Central to the appeal was whether the assignment of the claims was valid under the Conveyancing and Law of Property Act, R.S.O. 1990, c. C.34 ("CLPA").
• The motion judge incorrectly held that the CLPA applied only to real property, an error conceded by respondent's counsel on appeal.
• Contrary to the motion judge's finding, it was not plain and obvious that the assigned claims were champertous, as the appellant had a potential pre-existing financial interest in the matter.
• Familial relationships and the appellant's payment of the tickets were relevant factors that the motion judge failed to properly weigh in assessing motive.
• Denying leave to amend the pleadings without first considering whether the deficiencies could be remedied through amendment was a further legal error.

Facts of the case

On September 2, 2023, Alka Singh purchased Air Canada airline tickets for her sister, Priyanka Singh, and her niece, Zara Singh, to travel from Winnipeg, Manitoba to New Delhi, India to attend a family wedding. The flight was scheduled to depart on December 3, 2023, with stopovers in Toronto and Munich, arriving in New Delhi the following day. The Munich airport had been closed on December 2, 2023 due to heavy snowfall and resumed operations on December 3, 2023. Rather than landing in Munich as planned, the aircraft was re-routed to St. John's, Newfoundland. Priyanka and Zara then flew to Toronto and directly to New Delhi, by which time they had missed their connecting flight to Varanasi and had to pay for hotel accommodation. Their luggage did not arrive with them and was not delivered until December 12, 2023, requiring them to purchase replacement items. Air Canada denied their compensation claim, attributing the delay to bad weather beyond its control. The appellant and her relatives disputed this, noting that the airport closure had occurred before the flight even departed.

Assignment of the claims and procedural background

On February 5, 2024, Priyanka and Zara executed written assignments of their claims against Air Canada to the appellant for nominal consideration of $10 per assignment, citing the fact that the appellant had paid for the tickets. Notice of the assignments was provided to Air Canada, and the assignments were purportedly made pursuant to the CLPA. The appellant filed a Statement of Claim on February 4, 2024, which she later amended on October 16, 2024, seeking $35,000 in damages for various causes including misrepresentation, negligence, breach of contract, breach of duty of good faith and fair dealing, and other related claims, with the total for all claims capped at $35,000.

On August 8, 2024, Air Canada brought a motion to strike the claim under r. 12.02(1) of the Rules of the Small Claims Court, on the grounds that the claim disclosed no reasonable cause of action, was contrary to the rule against champerty and maintenance, and constituted a waste of time and abuse of process. During the hearing on December 13, 2024, the appellant offered to amend her claim to comply with the Montreal Convention, 1999, limiting it to damages relating to flight delay, out-of-pocket expenses, and baggage delay — reducing the total claim to $18,800.

Policy terms and legal provisions at issue

The CLPA was central to the assignment's validity. Section 1 of the Act defines "property" to include "real and personal property, a debt, a thing in action, and any other right or interest," and "conveyance" to include an assignment made on "any other dealing with or for any property." Air Canada argued the CLPA applied only to real property; the motion judge agreed. On appeal, the court found this interpretation plainly wrong and noted that respondent's counsel conceded the error in oral argument. The rules against champerty and maintenance were also at issue. As articulated in McIntyre Estate v. Ontario (Attorney General) (2002), 61 O.R. (3d) 257 (C.A.), maintenance involves "wanton or officious intermeddling" in another's litigation without interest or justification, while champerty is an aggravated form where the maintainer also shares in the litigation's proceeds. Motive is a determinative factor; where the alleged maintainer has a legitimate reason and no improper motive, no champerty or maintenance arises.

Court's reasoning and analysis

Justice Schreck identified several legal errors in the motion judge's decision. First, the conclusion that the CLPA was limited to real property was incorrect on the face of the statute and unsupported by the case law relied upon. The decision in 80 Mornelle Properties Inc. v. Malla Properties Ltd., 2010 ONCA 850, was concerned with whether a vendor's right to a property tax assessment refund ran with the land upon sale — it did not stand for the general proposition that the CLPA is confined to real property interests.

Second, the motion judge's finding that the appellant was motivated by profit was unreasonable. No evidence was adduced on the motion, so it had to be decided on the pleadings, which the court was required to accept as true unless patently ridiculous or incapable of proof. The pleadings clearly stated that the appellant sought to recover her own costs, not to profit. Moreover, the potential for profit is not determinative of champerty unless the assignee lacks a prior financial interest.

Third, the motion judge erred in dismissing the significance of the appellant's payment for the tickets. The proper question was whether it was plain and obvious that the appellant had no pre-existing financial interest — and it was not. Recouping her own expenditure could constitute a sufficient financial interest to negate any inference of maintenance. The court also noted that familial relationships may constitute a justifying motive or excuse, citing Banglar Progoti Ltd. v. Ranka Enterprises Inc., [2009] O.J. No. 1470 (S.C.J.).

Finally, the motion judge erred by denying leave to amend the pleadings only after concluding they should be struck, rather than first considering whether amendment could address any deficiencies. Consistent with the approach in PMC York Properties v. Siudak, 2022 ONCA 635, leave to amend should be denied only in the clearest of cases, and this was not such a case.

Ruling and overall outcome

The Ontario Superior Court of Justice (Divisional Court), per Justice Schreck, allowed the appeal, set aside the order striking the pleadings, and remitted the matter to the Small Claims Court. The appellant, Alka Singh, was granted leave to amend her statement of claim. On the issue of costs, while the appellant sought partial indemnity costs of $9,625.00, the court noted Air Canada's aggressive stance in the proceedings below — where it had sought $7,655.00 in costs and characterized the appellant as having acted unreasonably. Taking all circumstances into account, the court fixed costs at $7,000.00, inclusive of taxes and disbursements, to be paid by Air Canada to the appellant within 30 days.