Out of the wilderness of summary judgments

by Elaina Adams | September 1, 2012 1:33 pm

[1]By David I. Bristow QC, LSM, C.Arb
In the May 2010 issue of Construction Canada, this author wrote an article—“Ontario: The New Rules of Practice”—that examined how changes in the province were intended to reduce costs and delay in litigation, and facilitate the early and fair resolution of disputes. Two years after the rule has become law, the question is whether it is working.

One of the changes was the provision of a summary judgment in litigation cases without a trial (Section 20 of the Rules of Civil Procedure). The Rule 20 amendments took up some four and a half pages; they were bound to attract the scent of controversy, and lawyers quickly engaged in swarms of summary judgment cases.

Judges of our courts had different views of what Rule 20 meant, cases dragged on in the summary judgment process and, if there was no resolution, the parties had to then proceed to a trial. Legal expenses and time lost were, in some instances, catastrophic. In one case, the legal expenses on a summary judgment motion requested by the plaintiff were some $1.7 million. In this author’s view, the new Section 20 was not working as hoped.

On December 5, 2011, Ontario’s highest court—the Court of Appeal—rendered a landmark decision on summary judgments in Combined Air Mechanical Services Inc. v Flesch, 2011 ONCA 764. Five separate cases on the subject were heard and a 111-page judgment was delivered on the law as a whole and on each particular case. The importance of the matter was noted, as a five-judge panel was constituted (not the usual panel of three). Twenty-six counsel appeared on the appeal.

The decision opened with this statement, almost a pointed cry for help: “Both the bench and the bar have turned to this court for clarification for what the amended rule does and does
not accomplish.”

The court stated it had reviewed and considered the conflicting reasons from the lower courts and said it was not even going to comment on the merits of the various interpretations “because our decision marks a new departure and a fresh approach to the interpretation and application of the amended Rule 20.” In other words, this could be bluntly interpreted as “what we say, goes.”

What did the court say?
The court found the standard of review that applies to granting or denying a motion for summary judgment is as to whether there is a “genuine issue requiring a trial”—a legal determination. The court set out three types of cases that would be amenable to
summary judgments:

• where the parties agree it is appropriate to determine an action by way of motion for summary judgment (if the court is satisfied it is not appropriate, it may refuse summary judgment notwithstanding the agreement of the parties);
• claims and defenses shown to be without merit or having no chance of success at trial; and
• when the motion judge disposes of cases on the merits where the trial process is not required “in the interest of justice.”

The meaning of “interest of justice” leads to the “full appreciation” test as outlined by the Ontario Court of Appeal, and the judge must ask herself or himself whether the full appreciation of the evidence and issues required to make a dispositive finding be achieved by way of summary judgment or only through trial.

In cases that call for multiple findings of fact on the basis of conflicting evidence emanating from a number of witnesses, the court found a summary judgment motion rarely served as an adequate substitute for the trial process. Generally speaking, the motion judge simply cannot achieve the full appreciation of the evidence and issue required to make this dispositive finding. A motion judge is required to assess whether the attributes of a trial process are necessary to enable him or her to fully appreciate the evidence in the issues posed by the case.

In making this determination, the motion judge is to consider, for example, whether he or she can accurately weigh and draw inferences from the evidence without the:

• benefit of the trial narrative;
• ability to hear witnesses speak in their own words; and
• assistance of counsel as the judge examines the records in chambers.

Full appreciation
Unless there is full appreciation of the evidence and issues required to make this dispositive finding attainable on the motion record as may be supplemented by the presentation of oral evidence, the judge cannot be “satisfied” the issues are appropriately resolved on a motion for summary judgment. Accordingly, the full appreciation test is not met and the “interest of justice” requires a trial.

The court found a case with limited testimonial evidence and with limited contentious factual issues may meet the test. Further, it held the test may also be met in cases where the record can be supplemented to the requisite degree at the motion judge’s direction by hearing oral evidence on discrete issues. Simply being knowledgeable about the entire content of the motion record is not the same as fully appreciating the evidence and issues in a way that permits a fair and just adjudication of the dispute. The full appreciation test requires motion judges to do more than simply assess if they are capable of reading and interpreting the evidence put before them.

[2]

In adopting the full appreciation test, the court said each side must put its best foot forward with respect to the existence (or non-existence) of material issues to be tried. A party is not entitled to sit down and rely on the possibility more favourable facts may develop at trial. Further, it would not be in the interests of justice to exercise Rule 20 powers in cases where the nature and complexity of the issues demand the normal process of productions of documents and oral discovery be completed before a party is required to respond to a summary judgment motion.

In appropriate cases, the court went on to state that the motion judge is empowered to receive oral evidence on discreet issues; this is to assist in making the determination whether any of the issues raised in the action require a trial for their fair and just resolution. It is not intended to permit the parties to supplement the motion record.

The parties cannot anticipate the motion judge directing the calling of oral evidence on the motion. Allowing oral evidence is not an enabling provision entitling a party to enhance the record it has placed before the court. It may be that an oral evidentiary hearing would need to be held after the hearing of the main motion. The oral evidence may be presented by one or more parties with or without time limits on its presentation. Further, the court stated an order for oral evidence will generally be appropriate where the motion judge concludes the exercise of the powers conferred by Rule 20 will be facilitated by hearing the oral evidence of a limited number of witnesses on one or more specific, discrete, and likely determinative issues.

To go to trial or not…
In determining whether there is a genuine issue requiring a trial, the court must consider the evidence submitted by the parties, and the judge may exercise any of the following powers for the purpose, unless it is in the interest of justice for such powers to be exercised only at a trial:

• weighing the evidence;
• evaluating a deponent’s credibility; and
• drawing any reasonable inference from the evidence.

While not wishing to be taken as establishing an exhaustive list of when a judge may choose to make a summary judgment order, the court indicated it would be appropriate when:

• oral evidence can be obtained from a small number of witnesses and gathered in a manageable period;
• any issue to be dealt with by presenting oral evidence is likely to have a significant impact on whether the summary judgment motion is granted; and
• any issue is narrow and discrete enough to be separately decided without being enmeshed with other issues on the motion.

The court cautioned litigants they must not look to Rule 20 for bringing a motion for summary judgment as a substitute for effective case management of the trial of an action. The court noted the newly introduced Rule 50 permits parties to obtain orders and directions that assist in ensuring a trial proceeds efficiently.

The court noted the onus is now on the party seeking substantial indemnity costs to convince the court the other side acted unreasonably or in bad faith. Before the amendment, substantial indemnity costs were usually awarded to the responding party when the motion for summary judgment was dismissed. This removes a disincentive to litigants from using the summary judgment procure by eliminating the presumption they will face substantial indemnity cost for bringing an unsuccessful motion for summary judgment.

Where the matter is more of a matter of legal principle toward errors of law, the standard of review is correctness. When legal principles and facts are inextricably, significant deference must be afforded. Any factual determination by the motion judge in deciding the motion would attract review on the deferential standard of palpable and overriding error.

The court held it is not necessary for a motion judge to try to categorize the type of case in question. A statement of claim may include a cause of action which the motion judge finds has no chance of success, but the same claim may exert another cause of action that the motion judge is satisfied. This raises issues that can safely be decided using the full appreciation test.

Conclusion
As of this writing, there are four different categories of summary judgment motions:

• those contemplating summary judgment motions;
• those with motions pending;
• those with appeals to the divisional court pending; and
• those with appeals to the Court of Appeal pending.

The question is, will the judgment of the Court of Appeal bring more motions or reduce their numbers, and will these motions aid in decreasing time and expense in litigation in the interest of justice? In other words, will the three pillars of justice—time, expense, and quality—be enhanced? At the time of this writing, the issue is on its way to the Supreme Court of Canada. Perhaps another interim report is in order, another two years from now…

David I. Bristow, QC, LSM, C.Arb., is a member of Team Resolution, a Toronto-based alternative dispute resolution group. He is a former counsel to a national Canadian law firm, where he headed the construction law group, and is a co-author of Construction Builders’ and Mechanics’ Liens in Canada. Bristow was the founding chair of the Ontario Bar Association (OBA) Construction Law Section and a past chair of the Canadian Bar Association (CBA) Construction Law Section. In 2002, he received the Law Society of Upper Canada Medal, the Golden Jubilee Medal of Queen Elizabeth II, and the Giffin Award for outstanding service to the construction industry. Bristow can be contacted via e-mail at bristow@gsnh.com.

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