A very important decision regarding summary judgment

 Combined Air Mechanical Services Inc. v. Flesch, 2011 ONCA 764 was just released – it is a very important decision regarding summary judgment:

 Analysis of the Amended Rule 20

1.         Overview

[35]         By the time these appeals were argued, a well-developed body of jurisprudence from the Superior Court of Justice under the new Rule 20 was already in place: see e.g., Healey v. Lakeridge Health Corp., 2010 ONSC 725, 72 C.C.L.T. (3d) 261; Cuthbert v. TD Canada Trust, 2010 ONSC 830, 88 C.P.C. (6^th) 359; New Solutions Extrusion Corp. v. Gauthier, 2010 ONSC 1037; Hino Motors Canada Ltd. v. Kell, 2010 ONSC 1329; Lawless v. Anderson, 2010 ONSC 2723; Canadian Premier Life Insurance Co. v. Sears Canada Inc., 2010 ONSC 3834; Enbridge Gas Distribution Inc. v. Marinaccio, 2011 ONSC 2313; and Optech Inc. v. Sharma, 2011 ONSC 680, with supplementary reasons at 2011 ONSC 1081. We have carefully reviewed and considered the conflicting jurisprudence from the Superior Court. However, we have chosen not to comment on the relative merits of the various interpretative approaches found in this body of case law because our decision marks a new departure and a fresh approach to the interpretation and application of the amended Rule 20.

[36]         The amendments to Rule 20 are meant to introduce significant changes in the manner in which summary judgment motions are to be decided. A plain reading of the amended rule makes it clear that the Aguonie and Dawson restrictions on the analytical tools available to the motion judge are no longer applicable. The motion judge may now weigh the evidence, evaluate the credibility of a deponent, and draw any reasonable inference from the evidence in determining whether there is a genuine issue requiring a trial with respect to a claim or defence: see rule 20.04(2.1). Moreover, the new rule also enables the motion judge to direct the introduction of oral evidence to further assist the judge in exercising these powers: see rule 20.04(2.2).

[37]         As we shall go on to explain, the amended rule permits the motion judge to decide the action^[4] where he or she is satisfied that by exercising the powers that are now available on a motion for summary judgment, there is no factual or legal issue raised by the parties that requires a trial for its fair and just resolution.

[38]         However, we emphasize that the purpose of the new rule is to eliminate unnecessary trials, not to eliminate all trials. The guiding consideration is whether the summary judgment process, in the circumstances of a given case, will provide an appropriate means for effecting a fair and just resolution of the dispute before the court.

[39]         Although both the summary judgment motion and a full trial are processes by which actions may be adjudicated in the “interest of justice”, the procedural fairness of each of these two processes depends on the nature of the issues posed and the evidence led by the parties. In some cases, it is safe to determine the matter on a motion for summary judgment because the motion record is sufficient to ensure that a just result can be achieved without the need for a full trial. In other cases, the record will not be adequate for this purpose, nor can it be made so regardless of the specific tools that are now available to the motion judge. In such cases, a just result can only be achieved through the trial process.  This pivotal determination must be made on a case-by-case basis.

2.         The Types of Cases that are Amenable to Summary Judgment

[40]         Speaking generally, and without attempting to be exhaustive, there are three types of cases that are amenable to summary judgment. The first two types of cases also existed under the former Rule 20, while the third class of case was added by the amended rule.

[41]         The first type of case is where the parties agree that it is appropriate to determine an action by way of a motion for summary judgment. Rule 20.04(2)(b) permits the parties to jointly move for summary judgment where they agree “to have all or part of the claim determined by a summary judgment and the court is satisfied that it is appropriate to grant summary judgment.” We note, however, that the latter wording – “the court is satisfied” – affirms that the court maintains its discretion to refuse summary judgment where the test for summary judgment is not met, notwithstanding the agreement of the parties.

[42]         The second type of case encompasses those claims or defences that are shown to be without merit. The elimination of these cases from the civil justice system is a long-standing purpose well served by the summary judgment rule. As stated by the Supreme Court of Canada in Canada (A.G.) v. Lameman, 2008 SCC 14, [2008] 1 S.C.R. 372, at para. 10:

The summary judgment rule serves an important purpose in the civil litigation system.  It prevents claims or defences that have no chance of success from proceeding to trial.  Trying unmeritorious claims imposes a heavy price in terms of time and cost on the parties to the litigation and on the justice system.  It is essential to the proper operation of the justice system and beneficial to the parties that claims that have no chance of success be weeded out at an early stage.  Conversely, it is essential to justice that claims disclosing real issues that may be successful proceed to trial.

[43]         As we shall discuss further below,^[5] the amended Rule 20 has given the motion judge additional tools to assess whether a claim or defence has no chance of success at trial. 

[44]         Moreover, the amended Rule 20 now permits a third type of case to be decided summarily. The rule provides for the summary disposition of cases other than by way of agreement or where there is “no chance of success”. The prior wording of Rule 20, whether there was a “genuine issue for trial”, was replaced by “genuine issue requiring a trial”. This change in language is more than mere semantics. The prior wording served mainly to winnow out plainly unmeritorious litigation. The amended wording, coupled with the enhanced powers under rules 20.04(2.1) and (2.2), now permit the motion judge to dispose of cases on the merits where the trial process is not required in the “interest of justice”.

[45]         The threshold issue in understanding the application of the powers granted to the motion judge by rule 20.04(2.1) is the meaning to be attributed to the phrase “interest of justice”. This phrase operates as the limiting language that guides the determination whether a motion judge should exercise the powers to weigh evidence, evaluate credibility, and draw reasonable inferences from the evidence on a motion for summary judgment, or if these powers should be exercised only at a trial. The phrase reflects that the aim of the civil justice system is to provide a just result in disputed matters through a fair process. The amended rule recognizes that while there is a role for an expanded summary judgment procedure, a trial is essential in certain circumstances if the “interest of justice” is to be served. 

[46]         What is it about the trial process that certain types of cases require a trial for their fair and just resolution? In Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235, the majority decision of Iacobucci and Major JJ., at para. 14, quotes a passage from R.D. Gibbens in “Appellate Review of Findings of Fact” (1991-92), 13 Advocates’ Q. 445, at p. 446, which refers to the trial judge’s “expertise in assessing and weighing the facts developed at trial”.  The quoted passage states:  “The trial judge has sat through the entire case and his ultimate judgment reflects this total familiarity with the evidence.” The passage further notes that the trial judge gains insight by living with the case for days, weeks or even months. At para. 18, Iacobucci and Major JJ. go on to observe that it is the trial judge’s “extensive exposure to the evidence, the advantage of hearing testimony viva voce, and the judge’s familiarity with the case as a whole” that enables him or her to gain the level of appreciation of the issues and the evidence that is required to make dispositive findings.

[47]         As these passages reflect, the trial judge is a trier of fact who participates in the dynamic of a trial, sees witnesses testify, follows the trial narrative, asks questions when in doubt as to the substance of the evidence, monitors the cut and thrust of the adversaries, and hears the evidence in the words of the witnesses. As expressed by the majority in Housen, at para. 25, the trial judge is in a “privileged position”. The trial judge’s role as a participant in the unfolding of the evidence at trial provides a greater assurance of fairness in the process for resolving the dispute. The nature of the process is such that it is unlikely that the judge will overlook evidence as it is adduced into the record in his or her presence.   

[48]         The trial dynamic also affords the parties the opportunity to present their case in the manner of their choice. Advocates acknowledge that the order in which witnesses are called, the manner in which they are examined and cross-examined, and how the introduction of documents is interspersed with and explained by the oral evidence, is of significance. This “trial narrative” may have an impact on the outcome. Indeed, entire books have been written on this topic, including the classic by Frederic John Wrottesley, The Examination of Witnesses in Court (London: Sweet and Maxwell, 1915). As the author instructs counsel, at p. 63:

It is, perhaps, almost an impertinence to tell you that you are by no means bound to call the witnesses in the order in which they are placed in the brief.

It will be your task, when reading and noting up your case, to marshall your witnesses in the order in which they will best support your case, as you have determined to submit it to the [trier of fact].

[49]         In contrast, a summary judgment motion is decided primarily on a written record. The deponents swear to affidavits typically drafted by counsel and do not speak in their own words. Although they are cross-examined and transcripts of these examinations are before the court, the motion judge is not present to observe the witnesses during their testimony. Rather, the motion judge is working from transcripts. The record does not take the form of a trial narrative. The parties do not review the entire record with the motion judge. Any fulsome review of the record by the motion judge takes place in chambers.

[50]         We find that the passages set out above from Housen, at paras. 14 and 18, such as “total familiarity with the evidence”, “extensive exposure to the evidence”, and “familiarity with the case as a whole”, provide guidance as to when it is appropriate for the motion judge to exercise the powers in rule 20.04(2.1). In deciding if these powers should be used to weed out a claim as having no chance of success or be used to resolve all or part of an action, the motion judge must ask the following question:  can the full appreciation of the evidence and issues that is required to make dispositive findings be achieved by way of summary judgment, or can this full appreciation only be achieved by way of a trial? 

[51]         We think this “full appreciation test” provides a useful benchmark for deciding whether or not a trial is required in the interest of justice. In cases that call for multiple findings of fact on the basis of conflicting evidence emanating from a number of witnesses and found in a voluminous record, a summary judgment motion cannot serve as an adequate substitute for the trial process. Generally speaking, in those cases, the motion judge simply cannot achieve the full appreciation of the evidence and issues that is required to make dispositive findings.  Accordingly, the full appreciation test is not met and the “interest of justice” requires a trial.  

[52]         In contrast, in document-driven cases with limited testimonial evidence, a motion judge would be able to achieve the full appreciation of the evidence and issues that is required to make dispositive findings. Similarly, the full appreciation test may be met in cases with limited contentious factual issues. The full appreciation 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.

[53]         We wish to emphasize the very important distinction between “full appreciation” in the sense we intend here, and achieving familiarity with the total body of evidence in the motion record. 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 all of the evidence that has been put before them.

[54]         The point we are making is that a motion judge is required to assess whether the attributes of the trial process are necessary to enable him or her to fully appreciate the evidence and 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, without the ability to hear the witnesses speak in their own words, and without the assistance of counsel as the judge examines the record in chambers.

[55]         Thus, in deciding whether to use the powers in rule 20.04(2.1), the motion judge must consider if this is a case where meeting the full appreciation test requires an opportunity to hear and observe witnesses, to have the evidence presented by way of a trial narrative, and to experience the fact-finding process first-hand. Unless full appreciation of the evidence and issues that is required to make dispositive findings is attainable on the motion record – as may be supplemented by the presentation of oral evidence under rule 20.04(2.2) – the judge cannot be “satisfied” that the issues are appropriately resolved on a motion for summary judgment. 

[56]         By adopting the full appreciation test, we continue to recognize the established principles regarding the evidentiary obligations on a summary judgment motion. The Supreme Court of Canada addressed this point in Lameman, at para. 11, where the court cited Sharpe J.’s reasons in Transamerica Life Insurance Co. of Canada v. Canada Life Assurance Co.(1996), 28 O.R. (3d) 423 (Gen. Div.), at p. 434, in support of the proposition that “[e]ach side must ‘put its best foot forward’ with respect to the existence or non-existence of material issues to be tried.” This obligation continues to apply under the amended Rule 20. On a motion for summary judgment, a party is not “entitled to sit back and rely on the possibility that more favourable facts may develop at trial”:  Transamerica, at p. 434.

[57]         However, we add an important caveat to the “best foot forward” principle in cases where a motion for summary judgment is brought early in the litigation process.  It will not be in the interest of justice to exercise rule 20.04(2.1) powers in cases where the nature and complexity of the issues demand that the normal process of production of documents and oral discovery be completed before a party is required to respond to a summary judgment motion. In such a case, forcing a responding party to build a record through affidavits and cross-examinations will only anticipate and replicate what should happen in a more orderly and efficient way through the usual discovery process.

[58]         Moreover, the record built through affidavits and cross-examinations at an early stage may offer a less complete picture of the case than the responding party could present at trial. As we point out below, at para. 68, counsel have an obligation to ensure that they are adopting an appropriate litigation strategy. A party faced with a premature or inappropriate summary judgment motion should have the option of moving to stay or dismiss the motion where the most efficient means of developing a record capable of satisfying the full appreciation test is to proceed through the normal route of discovery. This option is available by way of a motion for directions pursuant to rules 1.04(1), (1.1), (2) and 1.05.

3.         The Use of the Power to Order Oral Evidence

[59]         It is necessary at this point to discuss the limits on the discretion of the motion judge to order oral evidence under rule 20.04(2.2) of the amended Rule 20. First, while the terminology of the “mini-trial” provides a convenient short form, this term should not be taken as implying that the summary judgment motion is a form of summary or hybrid trial. A summary judgment motion under the new rule does not constitute a trial. Mr. Osborne’s recommendation of adopting a summary trial mechanism was not adopted, and his recommendation relating to mini-trials was not accepted in full. Indeed, the term “mini-trial” did not find its way into the body of the rule. 

[60]         The discretion to order oral evidence pursuant to rule 20.04(2.2) is circumscribed and cannot be used to convert a summary judgment motion into a trial. Significantly, it is the motion judge, not counsel, who maintains control over the extent of the evidence to be led and the issues to which the evidence is to be directed. The distinction between the oral hearing under rule 20.04(2.2) and the narrative of an actual trial is apparent. The discretion to direct the calling of oral evidence on the motion amounts to no more than another tool to better enable the motion judge to determine whether it is safe to proceed with a summary disposition rather than requiring a trial.

[61]         In appropriate cases, the motion judge is empowered to receive oral evidence on discrete issues for purposes of exercising the powers in rule 20.04(2.1). In other words, the motion judge may receive oral evidence to assist in making the determination whether any of the issues raised in the action require a trial for their fair and just resolution. We discuss below, at paragraphs 101-103, the circumstances in which it will be appropriate to order the presentation of oral evidence. However, at this stage, we stress that the power to direct the calling of oral evidence under rule 20.04(2.2) is not intended to permit the parties to supplement the motion record. Nor can the parties anticipate the motion judge directing the calling of oral evidence on the motion.

[62]         The latter point requires that we address a practice issue in the Toronto Region. As a case management matter, parties to a summary judgment motion in Toronto are required to complete a summary judgment form, which includes questions about whether the parties intend to call viva voce evidence on an issue in dispute, and estimating the time required for such evidence. Although no doubt well-intentioned, these questions are misplaced in that they create the misconception that a summary judgment motion is in fact a summary trial.

[63]         A party who moves for summary judgment must be in a position to present a case capable of being decided on the paper record before the court. To suggest that further evidence is required amounts to an admission that the case is not appropriate, at first impression, for summary judgment. It is for the motion judge to determine whether he or she requires viva voce evidence under rule 20.04(2.2) “for the purpose of exercising any of the powers” conferred by the rule.  This is not an enabling provision entitling a party to enhance the record it has placed before the court. It may be that, for scheduling reasons, the oral evidentiary hearing will need to be held after the hearing of the main motion. Nonetheless, it is the purview of the motion judge, and the motion judge alone, to schedule this hearing, which is a continuation of the original motion and not a separate motion.

4.         Trial Management Under Rule 20.05

[64]         Rule 20.05 facilitates a greater managerial role for judges and masters in circumstances where a summary judgment motion is dismissed in whole or in part and where the court orders that the action proceed to trial expeditiously. The summary judgment court, having carefully reviewed the evidentiary record and heard the argument, is typically well-positioned to specify what issues of material fact are not in dispute and to define the issues to be tried. Rule 20.05(2) sets out a lengthy list of directions that a court may make with a view to streamlining the proceedings and empowers the court to make a variety of orders, including requiring the filing of a statement setting out what material facts are not in dispute, specifying the timing and scope of discovery, and imposing time limits on any oral examination of a witness at trial.^[6]

[65]         While the court may make use of the provisions in rule 20.05 to salvage the resources that went into the summary judgment motion, the court should keep in mind that the rule should not be applied so as to effectively order a trial that resembles the motion that was previously dismissed. For example, while rule 20.05(2)(f) provides that “the affidavits or any other evidence filed on the motion and any cross-examinations on them may be used at trial in the same manner as an examination for discovery”, these materials should not be treated as a substitute for the viva voce testimony of the witnesses in the trial judge’s presence.  Any trial management order flowing from a failed summary judgment motion must facilitate the conduct of a genuine trial that will permit the full appreciation of the evidence and issues required to make dispositive findings. In other words, the trial ought not to be simply a reconfiguration of the dismissed motion. 

[66]         Further, litigants must not look to rule 20.05 as a reason for bringing a motion for summary judgment or as a substitute for effective case management of the trial of an action. The newly-introduced Rule 50 permits parties to obtain orders and directions that will assist in ensuring that a trial proceeds efficiently.