If you are a franchisor and one of your franchisees has sued you, should you seek summary judgment for any amount the franchisee owes you? Or should you avoid the costs of summary judgment and wait to have this issue determined at trial?

In Hino Truck Centre (Toronto) Ltd. v. Hino Motors Canada Ltd., the Court found that while the franchisor was entitled to judgment on the amounts owed by the franchisee, payment of the damages would be stayed until the remainder of the action was determined. The plaintiff had argued that their claim represented an equitable set-off against the franchisor’s claim. However, the Supreme Court of Canada has said that a counterclaim must be "so clearly connected with the demand of the plaintiff that it would be manifestly unjust to allow the plaintiff to enforce payment without taking into consideration the counterclaim." In this case, the Ontario court found that the defence of equitable set-off for damages could not be used as two claims did not deal with substantially the same subject matter. Had the set-off claim been permitted, the Court would not have granted judgment to the defendant. The claim and counterclaim would then have both proceeded to trial.

Furthermore, on January 1, 2010 (which was after the above decision), the Rules of Civil Procedure in Ontario have changed making summary judgment motions more accessible in order to resolve more disputes at the early stages of an action. Moving parities will also be subject to fewer cost consequences arising from unsuccessful summary judgment motions.

Summary judgment can therefore play an important role in litigation. A successful motion means that, before the trial has even begun, the plaintiff is operating from a deficit position which provides the defendant with some needed leverage and incentive to either settle or advance the lawsuit more quickly.