On
The Court of Appeal's decision provides much-welcomed support in the jurisprudence for timely access to justice when creditors seek to enforce liquidated claims.
The Court of Appeal reiterated that the summary judgment process is “tailor-made” to enforce liquidated claims against debtors and guarantors.2 Absent a genuine issue requiring a trial, the court should be reluctant to deny a creditor's access to the summary judgment procedure.
The Court of Appeal made additional, helpful comments regarding summary judgment procedure, particularly where there is an outstanding third-party claim, including:
- Clarifying the broad scope of a motion judge's use of the enhanced fact-finding powers under Rule 20.04(2.1)3 and (2.2).4
- Reiterating that absent an error of law or palpable and overriding error of fact or mixed fact and law, the exercise of powers under Rule 20.04(2.1) attracts deference, and a determination that there is no genuine issue for trial should not be disturbed on appeal.5
- Non-party witnesses, including a third party, can be ordered to give oral evidence as part of a mini-trial under Rule 20.04(2.2).6
- Confirming that a third-party claim is a different proceeding, and that summary judgment which completely disposes of the main action is not partial summary judgment.7
- Where a third-party claim remains undecided, explaining that: (i) there has to be a “realistic” risk of inconsistent findings in order to give the motion judge pause before granting summary judgment in the main action; and (ii) “fanciful” suggestions of potential inconsistent findings are not sufficient.8
The Court of Appeal's decision also serves as an important reminder of the valuable role which case management orders can serve in combating any assertions which may later be made by defendants at a summary judgment motion that the process was somehow unfair.
Brief Underlying Facts and Motion Judge's Decision
The appellants/defendants were the borrower and guarantors of a loan from
At the time of the underlying loan transaction, the same lawyer (the “Third Party”) acted on behalf of both
After
In contravention of these case management orders, the appellants failed to take steps to move the Third-Party Claim forward. The Court of Appeal noted that: “The case management orders leading up to the hearing of the summary judgment motion add important context to the appellants' grounds of appeal.”9
On the eve of
At the hearing of
After hearing the live evidence of the appellants and the Third Party, the motion judge granted summary judgment to
In its decision released on
Appeal Grounds and
The appellants appealed on three primary grounds.
- Rule 20.04(2.2) permits a summary judgment motion judge to order oral evidence at a mini-trial from a non-party, which includes a defendant to a third-party claim;
- The motion judge's findings did not create a “realistic” risk of inconsistent findings of fact in the Third-Party Claim nor did his decision constitute partial summary judgment; and
-
The appellants' interests were not prejudiced by the granting of summary judgment in the main action prior to the determination of their Third-Party Claim. The outstanding Third-Party Claim was not a barrier to granting summary judgment in favour of
TD Bank in the main action.
i. No Error in Ordering Live Evidence at a Mini-Trial From the Third Party
The appellants' first ground of appeal was that the motion judge was not entitled to order oral evidence from the Third Party, because the Third Party was not a party to the main action. The appellants' submission was based on an incorrect and restrictive reading of Rule 20.04(2.2):
(2.2) A judge may, for the purposes of exercising any of the powers set out in subrule (2.1), order that oral evidence be presented by one or more parties, with or without time limits on its presentation. [emphasis included in the
The appellants submitted that Rule 20.04(2.2) only permits oral evidence to be given by one of the parties. Since the Third Party was not a party to the main action, the appellants' submitted that the motion judge erred in ordering oral evidence to be given by the Third Party at the mini-trial.
The Court of Appeal resoundingly rejected this submission, holding that:10
“…On its face, the rule states that oral evidence can be “presented” by one or more parties. It does not state that evidence can only be given by parties.” [emphasis included in the
The Court of Appeal confirmed that permitting the court to order a party to present evidence from a non-party on a mini-trial is entirely consistent with the
“…The clear purpose of r. 20.04(2.2), as shown in the authoritative caselaw interpreting it, is to permit a motion judge to order the parties to present oral evidence from appropriate sources where it is likely to allow the judge to reach a fair and just adjudication on the merits in an appropriate manner.”
ii. No Realistic Risk of Inconsistent Findings
The second primary ground of appeal raised by the appellants was that the motion judge's use of his enhanced fact-finding powers to order oral evidence from the Third Party was contrary to the interests of justice, given that the Third-Party Claim remained to be determined. The appellants' submitted that in making findings of fact and credibility relating to the Third Party, the motion judge created a risk of inconsistent findings of fact and granted partial summary judgment given that the Third-Party Claim remained to be determined.
The Court of Appeal rejected these arguments for several reasons. Importantly, the
The Court of Appeal also confirmed that because the summary judgment motion disposed of the entire claim between
The Court of Appeal rejected the appellants' submissions that there was a realistic risk of inconsistent findings or possible prejudice to the appellants, concluding that:
- The motion judge found that the appellants were not credible or reliable witnesses and that their affidavit evidence contained obviously incorrect and misleading information. Further, statements in their affidavits were contradicted or undermined by their oral evidence in the mini-trial. In light of the appellants' evidence, the
Court of Appeal found that any suggestion that there is a risk of inconsistent findings in the Third-Party Claim is “fanciful.” For there to later be different findings of fact, the appellants' evidence would have to “somehow be different” in the third-party proceeding. The Court of Appeal found that there was no realistic or credible explanation for how the appellants' evidence would be fundamentally different in the third-party proceeding and, in any event, the appellants were required to put their best foot forward in response toTD Bank's summary judgment motion.15 -
The Third-Party Claim is in negligence. It was a term of the
TD Bank loan that its security be registered in a first priority position. The appellants failed to explain how, in light of that term, the issue of whether they discussed priorities with the Third Party will impact their claim that he failed to meet the standard of care.16
iii. No Error in Granting Judgment While Third-Party Claim Remained Undecided
The appellants' third primary ground of appeal was that it was not in the interests of justice to grant
The Court of Appeal rejected this submission. The appellants had not counterclaimed or made a set-off claim against
“…[The motion judge] properly considered the evidentiary record and the nature, size and complexity of the action. He provided careful and thorough reasons for proceeding with a mini-trial. All the witnesses who testified had sworn affidavits and [had] been cross-examined or examined pursuant to r. 39.03. Therefore, proceeding with that evidentiary record, supplemented by further oral testimony, was entirely efficient and proportionate.”
In concluding that the Third-Party Claim was not a barrier to granting summary judgment, the
Finally, the
Key Takeaways
To summarize, the
- Rule 20 remains a tailor-made procedure for liquidated claims by creditors against borrowers and guarantors;
- Rule 20.04(2.2) empowers a motion judge to order evidence from non-parties on a mini-trial and such use is appropriate if it furthers a fair and just adjudication on the merits;
- A third-party claim is a separate proceeding and the test for partial summary judgment will not apply where a motion for summary judgment is brought which will completely determine the main action; and
- A risk of inconsistent findings needs to be “realistic.” Where a party is locked into their evidence on the summary judgment motion, it is not realistic for a party to baldly assert that their own evidence will be substantially different at a later hearing in the third-party proceeding.
The Court of Appeal's decision provides helpful guidance for creditors on how to ensure the efficient advancement of liquidated claims in the summary judgment process.
The Court of Appeal's decision also serves as a helpful reminder of the procedural steps which plaintiffs can utilize in the months leading up to a summary judgment motion, in order to pre-empt procedural defences which might otherwise be raised by defendants at the hearing of the summary judgment motion that the process was somehow unfair or caused prejudice.
Footnotes
1. 2275518
2.
3] Rule 20.04(2.1) of the Ontario Rules of Civil Procedure.
4. Rule 20.04(2.2) of the Ontario Rules of Civil Procedure provides that the summary judgment motion judge “may, for the purposes of exercising any of the powers set out in subrule (2.1), order that oral evidence be presented by one or more parties, with or without time limits on its presentation.”
5.
6.
7.
8.
9.
10.
11. Hryniak v. Mauldin, 2014 SCC 7 (CanLII), [2014] 1 SCR 87 at paras. 63 and 66.
12.
13.
14.
15.
16.
17.
18.
19.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
Mr
M5J 2T9
E-mail: koliveira@airdberlis.com
URL: www.airdberlis.com
© Mondaq Ltd, 2024 - Tel. +44 (0)20 8544 8300 - http://www.mondaq.com, source