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Introduction

It sounds like trite advice to hear that a party must put their best foot forward on a motion for summary judgment. It is hard to believe this warning could ever be considered overused and consequently of little import, and therefore ignored. However, it continues to happen and most surprisingly by both plaintiffs and defendants. This omission, despite the clear expression by the Ontario Court of Appeal (ONCA) in Combined Air that it behooves the parties to put forth the necessary evidence to best allow the motions judge to gain a “full appreciation” of the matter.

The question of whether the evidence available to the court on a summary judgment motion allows for a “full appreciation” of the matter is highly fact-dependent and varies on a case by case basis.  As the Court of Appeal observed in Combined Air:

 “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”.

A Recent Case

The ONCA dealt with this issue recently in Extreme Venture Partners Fund LLP v. Varma. The portion of the decision we are concerned with deals with an appeal by the plaintiffs of the dismissal of their claim on a summary judgment motion against a business evaluator. The plaintiffs were the directors and shareholders of the business being evaluated for a management buy-out. The suit was founded in negligence. The plaintiff’s position was that the evaluation had significantly undervalued the company and that they had relied on the opined fair market value to their financial detriment. It was, therefore, their financial interest as shareholders that was at the root of the claim.

The business evaluator brought the motion to dismiss. The evidence used in support was the engagement letter. Based on its terms, the evaluator took the position that no duty of care was owed to the plaintiffs. The terms relied on were as follows:

  • Any report or opinion is not to be considered as a fairness opinion about any transaction;
  • The advice given is only provided to the company;
  • The opinion was not to be shown to, relied upon or discussed with any other party;
  • The opinion may not be disclosed to any third party or referred to publicly;
  • The option may not be used for any purpose not related to the Board of Directors review;
  • No non-contractual or fiduciary duties arise from the engagement;
  • The information used for the report was understood to be given by the company and relied upon by the evaluator without any independent verification or audit on the information provided; and
  • The company undertook to provide accurate and reliable information to the evaluator.

Motion Result

The plaintiffs offered no evidence at all on this aspect of the motion. As the motions judge had only the engagement letter to review, it was reasonably clear what the result would be. The action against the evaluator was dismissed as no duty to them as shareholders could arise based on the opinion given the express terms of the engagement letter.

Appeal Result

The plaintiff/appellants appealed, advancing that the motions judge erred in not finding a duty of care, failing to apply the proper evidentiary burden, the credibility of the defendant’s witness and that this was not an appropriate case for partial summary judgement. Each ground was unsuccessful. There could be no duty of care owed to the plaintiffs as shareholders based on the terms of the engagement letter. The appellants put forth no evidence and as a result, cannot now complain about the evidentiary burden. The respondents had proffered sufficient evidence to support their position. The respondent’s case rested entirely on the letter of engagement. The credibility of its witness was immaterial. Finally, this was not partial, but a complete dismissal of this aspect of the claim and was entirely appropriate.

The other aspects of their claim did proceed to trial. The ONCA was advised that the plaintiff’s damages had been recovered in full. This was another reason why there would be no order for a new trial.

Takeaways

Just one. Whenever faced with bringing or responding to a motion for summary judgment, put your best foot forward!

At Milosevic Fiske LLP, our team of Toronto corporate commercial lawyers regularly represent clients in complex commercial litigation matters ranging from straightforward contract and partnership disputes to complex multi-party commercial claims including dealing with claims of oppression. Over the years, our team of exceptional litigators has seen it all and has successfully fought for our clients’ rights. Our impressive track record speaks for itself.  Call us at 416-916-1387 or contact us online for a consultation.