Rule 20.01 of the Ontario Rules of Civil Procedure sets out the procedure to follow when any party feels they have a good case for summary judgment. The Rule contemplates such motions being brought to resolve all, or only one part, of the claim or defence. The question that arises is when is the granting of a partial summary judgment appropriate? The test remains as always “is there a genuine issue for trial” but are there any special considerations when dealing with a partial summary judgment?
A Case on Point
The plaintiff companies (A & B) were designers and manufacturers of injection molds. They discovered that a former employee (C), a bookkeeper, had defrauded them both of nearly a million dollars. The fraud was committed in two ways. The first was a series of unauthorized payroll payments made directly to personal accounts. The second method was the use of forged cheques again deposited to the employee’s personal accounts.
A & B sued C of course, but also made a claim against their bank (D). The claims against C were somewhat moot as any recovery was most unlikely. The real target was D. The claims made against D were as follows:
- The payroll diversion was said to have occurred through the negligence of D;
- The forged cheques issue was also pleaded in negligence against D, but importantly to the result, there also was a claim of strict liability under section 48 of the Bills of Exchange Act.
The position of D was that it owed no duty to A & B in the circumstances, had not breached any duty if one existed and that the acts complained of were forgiven or excused by the terms of the Business Banking Agreement (BBA) between the parties.
More importantly to the issue of granting partial summary judgment, D accepted that it was strictly liable for the forged cheques unless its BBA or Limitations Act defence prevailed. The limitations defence was based on the fact that the forgeries had occurred more than two years before the action.
The Decision on the Motion
A & B brought a motion for summary judgment. They were partially successful on their forged cheque claim against D. This was a strict liability situation, and as a result, the finding was that there was no genuine issue to be tried. The reasons included the conclusion that the BBA was not available as a defence to this claim as there was no evidence that one was ever signed between the parties. The limitations defence was more difficult as it required oral evidence be given before the discoverability issue could be decided. As a result, a mini-trial was ordered after which it was found that the limitations period did not begin to run until less than two years before the commencement of the action.
D appealed to the Ontario Court of Appeal (ONCA). Its position was that the lower level decision misapplied the discoverability test, erred in finding that there was no evidence to support the BBA defence, and, most importantly that it was an error to proceed with, or grant, partial summary judgment in the circumstances.
The appeal was successful. The ONCA held that partial summary judgment should only be granted where the motion judge is satisfied that the issues being resolved on a partial summary judgment can be readily and easily separated from the issues which are to proceed to trial.
The ONCA relied on its previous decision in Butera v. Chown, Cairns LLP wherein the risks of partial summary judgment were laid out being increased delay, more considerable expense and most critically, the possibility of inconsistent findings made at trial on a complete record.
The ONCA accepted that the standard of review was as set out by the Supreme Court of Canada (SCC) in Hryniak v. Maudlin, stating that the exercise of powers under the new summary judgment rule attracts appellate deference. Further, that the question as to whether there is a genuine issue for trial is a question of mixed fact and law; in the absence of an extricable error in principle, or palpable and overriding error, this determination should not be disturbed on appeal.
The ONCA made it clear that the issues surrounding a partial summary judgment are more complex than those dealing with a complete disposition. They repeated the concern of the SCC in Hryniak that partial summary judgments run the risk of duplicative proceedings and inconsistent findings of fact at trial. They noted that such motions also run the risk of defeating the real goal of such motions being the loss of proportionate, timely and affordable justice.
The motions judge erred in not considering these issues and only referencing the principles and tests on a motion in all matters. There was a failure to evaluate the risk of overlapping evidence properly. The onus is not on any party to prove or establish any overlap. Instead, the court must first satisfy itself that the issues before it can be readily separated without causing any overlap before proceeding to consider a partial summary judgment.
The limitations defences should not have been separated and dealt with in exclusion to one another. Much of the same evidence would be needed to determine the duty and discoverability issues. The risk of both duplication and inconsistent findings was very real.
Most importantly, the judge at the lower level failed to realize that the BBA was pleaded as a defence to both claims. There was, therefore, a real risk of inconsistent findings.
This case is also illustrative of the delay that partial summary judgment entails. Through no fault of anyone, the summary judgment motion has delayed the trial by close to two years, leaving aside the seven months it has taken to hear the appeal. The motion judge spent over 12 months deliberating to write two decisions, a significant expenditure of judicial resources. The delay was predictable and not given adequate consideration, particularly when the motion judge came to appreciate after the April 25, 2017 hearing that the summary judgment motion would require the scheduling, conduct and determination of a mini-trial before the trial itself would move forward.
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