Seeking Summary Judgment

Ontario has changed its Rules of Civil Procedure governing summary judgment, with the intention of making justice quicker and more affordable in suitable cases. Rule 20 Summary Judgment of the Rules of Civil Procedure was changed

in Ontario effective Jan. 1, 2010. In Combined Air Mechanical Services v. Flesch, the Ontario Court of Appeal held that the amended Rule 20 provides judges with expanded powers to summarily decide issues by weighing evidence, evaluating credibility and drawing inferences. At the heart of these changes is the touchstone of proportionality, requiring courts to make orders and give directions that are proportionate to the importance and complexity of the issues and the amount involved.

In theory, Combined Air provides a “middle of the road” approach and much needed clarity. For the insurance industry, the new summary judgment affects risk assessment and reserves for legal expenses. Insurers are directly affected by these motions in defence, subrogation and coverage matters. If suitably brought, these motions facilitate the efficient and earlier resolution of disputes. If improperly brought, however, these motions may increase costs and delay litigation.

The 2010 changes in Ontario emerged following widespread calls for legal reform and the recommendations of The Honourable Coulter Osborne in his 2007 Civil Justice Reform Project: Summary of Findings & Recommendations. Osborne recommended, among other things, the adoption of a new summary trial mechanism similar to the former Rule 18A in British Columbia. The intent was to provide judges with the authority to convert an unsuccessful summary judgment motion to a summary trial application in appropriate cases.

After the 2010 changes came into effect, however, Ontario trial courts struggled with the interpretation of the summary judgment rule. Approaches ranged from broad to more restrictive. These trial decisions came to a head in Combined Air, in which the five-member panel of the Ontario Court of Appeal reached a tipping point similar to the experience in British Columbia several decades ago. In Inspiration Management Ltd. v. McDermid St. Lawrence Ltd. (1989), the British Columbia Court of Appeal interpreted the former — and then new — Rule 18A, holding that motion judges should fully consider all of the evidence and summarily decide the issues if they could fairly and justly find the facts necessary to do so. More recently, British Columbia revised its civil procedure, effective July 1, 2010, restructuring the former Rules 18 and 18A and renaming them to become Rules 9-6 and 9-7.

Ontario’s “Full Appreciation” Test

In Combined Air, the Ontario Court of Appeal heard appeals in five different matters as well as submissions on Rule 20 by a number of interveners, including the Attorney General of Ontario, the Ontario Bar Association, Ontario Trial Lawyers’ Association and the Advocate’s Society. The court describes its own decision as a “new departure and a fresh approach” to summary judgment, and distinguishes between three types of cases in which summary judgment might be granted. The first type is when the parties agree to the motion and the judge has no reason to deny the same. The second type of case is when the claims or defences are without merit and have no chance of success by proceeding to trial.

The third type of case is the most controversial. Judges can now summarily dispose of cases on the merits, but only if the trial process is not required in the interests of justice. For this third type of case, the “full appreciation” test is the new threshold to be reached before judges can exercise their expanded powers. This new threshold requires “total familiarity” with the evidence and issues so that the judge can safely determine the matter on the motion record. To meet this threshold, judges should consider whether they can accurately weigh the evidence and draw inferences without the benefit of the “trial narrative,” particularly without directly hearing witnesses or having the guidance of counsel while weighing the evidence.

The court raises an “important caveat” to the principle: the parties in summary judgment motions must put their best foot forward and lead trump, or risk losing. Responding parties in complicated actions must first have the opportunity to benefit from document production and discoveries, which are the most efficient means of developing a complete evidentiary record. When faced with a premature record, the responding party may seek preliminary directions from a motions judge and even dismiss or stay the motion. In many cases, the nature and complexity of issues will require document production and discoveries before full appreciation can be achieved. In this regard, the court found that the mini-trial provision within Rule 20 allows oral evidence in limited cases at the discretion of judges only, and not as a means for parties to introduce further evidence.

The court took further efforts to describe the hallmarks of cases not appropriate for summary judgment:

• A voluminous motion record.

• Many witnesses providing evidence.

• Different theories of liability advanced against each of the defendants.

• Numerous findings of fact required to decide the motion.

• Credibility determinations that lie at the heart of the dispute.

• An absence of reliable documentation to assess the credibility of witnesses.

Summary judgment might be suitable when the issues are narrow and discrete, and when the parties have produced their relevant documents and have had the opportunity of examinations for discovery of adverse parties. Judges should have a high degree of confidence that the evidence in the motion record is complete and reliable, and that a trial is unnecessary in the interests of justice.

Returning to the five cases in Combined Air, the Court of Appeal upheld the trial judge’s dismissal of the action by summary judgment in Flesch, in which the action was based upon a restrictive covenant in an acquisition agreement. The trial judge was correct to order oral evidence so as to assess a bid document and confirm the defendant was not competing against the plaintiff. In Misek, the Court of Appeal upheld the trial judge’s dismissal of the plaintiff’s action, in which the action was based upon a prescriptive easement over the defendant’s property. The court emphasized the absence of direct evidence of the property use over the years.

In Bruno, the Court of Appeal overturned the trial judge’s decision granting summary judgment against the defendant Hryniak in a fraud action to recover investment funds. The Court of Appeal found that a trial was required, noting the extensive evidence, the number of witnesses and complex legal issues. The trial judge had also erred in failing to consider an element required for fraud. In the related case of Mauldin, the Court of Appeal upheld the trial judge’s summary judgment as against the same defendant, noting the interests of justice and the clear findings of fact against the defendant.

In Parker, the Court of Appeal upheld the trial judge’s dismissal of the summary judgment motion in a Rule 76 simplified procedure action involving a construction project and damage to neighbouring properties. This type of procedure, which applies to claims of $100,000 or lower, is considered timely and efficient by its very nature.

British Columbia’s approach

Under the former Rule 18A of the Supreme Court Rules, summary judgment was allowed if the issues were not too complex, did not involve credibility issues so as to require a trial or if such motions were not brought too close to the trial date. Courts would not be expected to decide the matter
summarily unless they could fairly and justly find the facts necessary to decide the issue.

Under Rule 9-6 Summary Judgment of the British Columbia Civil Rules, restructured and renamed in 2010, courts may pronounce judgment or dismiss a claim or cross-claim where there is no genuine issue for trial. Rule 9-6(3)(b) requires affidavit material or other evidence showing there is no genuine issue for trial. The courts also have discretion to award special costs when a party acted in bad faith or primarily for the purpose of delay.

Where matters may not be appropriate for summary judgment, they may be appropriate for summary trial. Rule 9-7 provides for a summary trial and allows the tendering of evidence by affidavit evidence, responses to interrogatories, discoveries, admissions or expert reports. A summary trial must be heard at least 42 days before the scheduled trial. Under this rule, the court may grant judgment in favour of any party, either upon an issue or generally, unless the court is unable on the whole of the evidence to find the facts necessary to decide the issues of fact or law, or if the court is of the opinion that it would be unjust to decide the issues on the application.

Impact on the insurance industry

Summary judgment motions directly affect litigation in areas of insurance in Ontario and British Columbia. Insurers will wish to adapt to these new trends and consider summary judgment motions as an important tool by which, for example, they can reduce the risk of exposure in defence cases or increase the likelihood of recovery in subrogation. Insurers may wish to account for the cost of these motions in reserving for legal expenses.

These motions directly affect insurers in situations in which they have become parties to litigation and seek to dismiss claims brought against them or their agents — for example, in matters of coverage or reaching policy limits. Case law in Ontario and British Columbia indicates that summary judgment may be amenable to issues relating to expiry of limitation periods and the interpretation of contracts or insurance policies. On the other hand, issues of misrepresentation, fraud, and bad faith typically raise credibility issues and require the forensic machinery of a trial.

To benefit practically from summary judgment, insurers will wish to gather key evidence from the insured at an early stage, including documents and witness statements. In some cases, summary judgment may be brought before the considerable expense of discoveries. In most cases, however, these motions should not be brought until after discoveries. Insurers should also consider the effect of cross-claims and third party claims for contribution and indemnity, which can be broader than those in the main actions. The expiration of the limitation period is another consideration, especially if responding parties can circumvent a summary judgment by issuing new claims. In cases in which the stakes are high, summary judgment motions have an inherent value in fleshing out the opposing party’s position. The downside is disclosing one’s own case and exposing witnesses to cross-examination on their affidavits.

Summary judgment plays an increasingly important role in the efficient disposition of litigation. In Ontario and British Columbia, for example, judges have expanded powers and authority to summarily decide issues in the interests of justice and in light of proportionality. In Ontario, the new threshold of “full appreciation” guides litigants who contemplate a motion for summary judgment.