Applying the full appreciation test
The Ontario Court of Appeal has handed down an important decision in Combined Air Mechanical Services Inc v Flesch,(1) in which it clarified the scope and availability of the summary judgment procedure in Ontario. The court has introduced a new legal test – the 'full appreciation' test, which directs when a court may resolve a case by way of summary judgment under Rule 20 of the Rules of Civil Procedure.
In January 2010 the rules were amended to make Ontario's court system more accessible to, and affordable for, litigants. A pillar of these reforms was the expansion of the court's powers to dispose of cases earlier, in summary judgment fashion. Amendments to Rule 20 expanded the ability of courts to grant summary judgment from when a case posed no "genuine issue for trial" to when a case posed no "genuine issue requiring a trial". Other amendments to Rule 20 conferred on the motion judge new authority to weigh evidence, make findings of credibility and draw inferences from the evidence in order to determine whether there is a genuine issue requiring a trial, and ultimately to grant summary judgment.
Lower courts diverged on what the new expanded powers meant. Some judges took an expansive approach to Rule 20. For example, in Healey v Lakeridge Health Corp(2) a judge held that unless there is a reason to defer to the trial judge, motion judges may use the new powers to make findings of fact. Other judges, however, chose a more restricted approach – in Cuthbert v TD Canada Trust(3) the court held that it is "not the role of the motions judge to make findings of fact for the purpose of deciding the action on the basis of the evidence presented on a motion for summary judgment".(4)
The Ontario Court of Appeal was given the opportunity to clarify the scope and availability of summary judgment in Flesch, a consolidation of five separate appeals.
The court held that summary judgment will be available in three situations:
- where the parties agree to have all or part of the claim determined by summary judgment motion;
- where the claims or defences are shown to have no chance of success; or
- where a trial is not required in the "interest of justice".
In the third category, a summary judgment motion will be granted if the court is able to "fully appreciate" all of the evidence needed to dispose of the case without resorting to a trial. This new approach requires a motion judge to conclude whether he or she can fully appreciate the issues in the case based on the motion record, as supplemented (if required) by limited oral evidence, or whether the attributes and advantages of the trial process are necessary to a fair resolution of the dispute.
The court highlighted important differences between the trial process and the use of the summary judgment procedure. A trial judge provides a greater level of fairness because he or she gains extensive exposure and familiarity with the evidence. The trial judge hears witness testimony viva voce (as spoken evidence), providing the opportunity to ask questions if in doubt. The trial judge will be exposed to trial narratives, allowing for a greater appreciation of the issues and evidence required to make findings. In contrast, a summary judgment motion is largely decided based on a paper record and studied by the judge in chambers, without the benefit of live witnesses or a trial narrative.
The court held that certain scenarios are more likely to meet the full appreciation test than others. Cases that involve multiple findings of fact or conflicting evidence or that require volumes of records, will not meet the test and will require a trial in the interest of justice. However, largely document-driven cases, which require limited testimonial evidence and have few contentious factual issues, permit a motion judge to gain a full appreciation of the case.
The court noted that the full appreciation test may be met even when oral testimony is required. The court cautioned that such oral testimony should be limited to situations where:
- there are a small number of witnesses;
- the oral evidence will have a significant impact on whether the summary judgment is granted; or
- the issues to be determined are narrow and discrete.
Applying the full appreciation test
Flesch was an action for an alleged breach of a non-competition covenant in an acquisition agreement. The motion judge granted summary judgment, dismissing the plaintiff's claim. The motion judge called for oral evidence during the motion, seeking clarification on a discrete issue. On appeal, the court upheld the motion judge's decision to hear oral evidence, stating that it allowed for the fair resolution of the motion.
In two companion cases, Mauldin v Hryniak and Bruno Appliance and Furniture v Hryniak, the plaintiffs sued for fraud, conspiracy and breach of contract in relation to a failed investment. The plaintiffs requested summary judgment on the motion. The motion was heard over four days and included oral evidence. The record consisted of 28 volumes of evidence. The motion judge granted partial summary judgment against one defendant in both actions, finding that he had defrauded the plaintiffs. However, summary judgment was refused against the other defendants. One of the moving parties presented a bill of costs totalling over C$1.3 million. The appeal court noted that in these cases, a full appreciation of the evidence could only be achieved by trial because the motion record was extensive, a large number of witness were required to give evidence and several findings of fact were required. Witness credibility was at the centre of the dispute. The court stated that while these cases should have required a trial, given that a decision had been reached, the defendant's appeal should be dismissed. However, the appeal in the other action was granted, because the judge failed to consider properly the legal test required for fraud.
In 394 Lakeshore Oakville Holdings Inc v Misek the motion judge had granted summary judgment in favour of the plaintiff relating to a prescriptive easement. The appeal court dismissed the appeal, noting that the legal principles were not in dispute, the documentary evidence was limited and few witnesses were required. Summary judgment was appropriate and the appeal was dismissed.
Parker v Casalese was a simplified procedure action for damages as a result of construction on a neighbour's property. The plaintiffs unsuccessfully moved for summary judgment. The court dismissed the appeal on the basis that the full appreciation test could not be met because of a lack of cross examination of key witnesses and a lack of detail related to damages.
The court's ruling has provided much-needed clarity as to when summary judgment is appropriate. Essentially, if a case is too complicated (from an evidentiary point of view), a trial will be required. On the other hand, a motion court judge does have the power to hear viva voce evidence to clarify simple issues. How this theoretical framework will unfold remains to be seen.
For further information on this topic please contact Michael D Schafler or John Zerucelli at Fraser Milner Casgrain LLP by telephone (+1 416 863 4511), fax (+1 416 863 4592) or email ([email protected] or [email protected]).