On January 23, 2014, the Supreme Court of Canada released companion decisions in Hyrniak v. Mauldin (Hyrniak) and Bruno Appliance and Furniture Inc. v. Hyrniak (Bruno Appliance) reforming the test for summary judgment motions previously adopted by the Court of Appeal for Ontario and broadening the circumstances under which judges may entertain such motions.  In doing so, the Supreme Court of Canada made clear that access to justice concerns necessitate a more proportionate approach to dispute resolution and that summary judgment motions can be a viable alternative in appropriate circumstances to presumptively ordering a trial.

The decision in Hyrniak grants judges more latitude to use the Rules of Civil Procedure to develop procedures to resolve disputes more efficiently.  While the decision’s emphasis on access to justice and proportionality are in line with the stated broader goals of class proceedings legislation which also include access to justice as well as judicial economy, it remains to be seen whether the decision in Hyrniak will lead to an increase in the use of summary judgment motions in class proceedings.   

BACKGROUND

In both Hyrniak and Bruno Appliance, investors had alleged fraud against supposed Canadian traders and their lawyer. The Maudlin Group (a group of American investors) met with Hyrniak, his associate, and their lawyer. The investors claimed that Hyrniak convinced them to invest $1.2M with his company. Hyrniak’s associate and lawyer also met with the principal of Bruno Appliance, and the allegation was that they convinced him to invest $1M as well.  Hyrniak’s company then pooled the money with various funds and wired it to several entities and an offshore bank. The money was not invested, and neither the Maudlin Group nor Bruno Appliance received a return (although a nominal amount was returned to the Maudlin Group years later). Each brought an action in fraud against the defendants and motions for summary judgment which were heard together.

Decision of the Motion Judge

In Hyrniak, the motion judge used his powers under Rule 20.04(2.1) and found that there was “no genuine issue requiring a trial” in the fraud claim against Hyrniak and granted summary judgment against him. The motion judge considered the four elements of the tort of civil fraud and found that all had been met. [1] There was no credible evidence to support Hyrniak’s claim that he was a legitimate trader, or his claim that the funds had been stolen from him.

The motion judge reached the same conclusion in Bruno Appliance, even though Hyrniak was not present at certain discussions with the investor. In both cases, the summary judgment motions were dismissed against Hyrniak’s associate and lawyer, as the claims involved factual issues that could not be resolved on the record.

Decision of the Court of Appeal

The Court of Appeal for Ontario overturned the motion judge’s finding in Bruno Appliance finding that to determine whether Hyrniak had committed civil fraud would require a finding that Hyrniak himself made a misrepresentation that induced Bruno Appliance to invest – it was not enough for him to have been aware of, and benefit from, the fraud. The Court of Appeal held that the motion judge failed to identify the need for a misrepresentation and had not found that Hyrniak made one. Therefore, there was a genuine issue requiring a trial as to the alleged fraudulent conduct.

The Court of Appeal upheld the motion judge’s decision in Hyrniak, but found that it was not an appropriate case for summary judgment. To determine whether the interests of justice allowed the motion judge to use the powers in Rule 20.04, the Court of Appeal found that the motion judge was required to ask whether a full appreciation of the evidence and issues that is required to make dispositive findings could be achieved by way of summary judgment, or whether this full appreciation could only be achieved by way of a trial. The Court of Appeal also found that the question of whether there is a “genuine issue requiring a trial” is a legal one, reviewable on a correctness standard, while any factual determinations made by the motion judge would attract deference.

DECISION OF THE SUPREME COURT OF CANADA

The Supreme Court of Canada dismissed the appeal in Bruno Appliance, following the reasons from the Court of Appeal and also dismissed the appeal in Hyrniak, but in that case, revisited and reformed the test for when the use of summary judgment motions may be appropriate.

Writing for the Court, Justice Karakatsanis reviewed the importance of the fair and just resolution of disputes as a core value of the Canadian legal system. She found that “undue process and protracted trials, with unnecessary expense and delay, can prevent the fair and just resolution of disputes.” She then provided extensive guidance on the use of the summary judgment procedures in Rule 20.04:

20.04 (2) The court shall grant summary judgment if,

(a) the court is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence

Powers

(2.1)  In determining under clause (2)(a) whether there is a genuine issue requiring a trial, the court shall consider the evidence submitted by the parties and, if the determination is being made by a judge, the judge may exercise any of the following powers for the purpose, unless it is in the interest of justice for such powers to be exercised only at a trial:

1. Weighing the evidence.

2. Evaluating the credibility of a deponent.

3. Drawing any reasonable inference from the evidence.

Justice Karakatsanis found that more expansive use of summary judgment procedures, tailored to the needs of the parties, will promote timely and affordable resolutions of disputes. This was the original intent when the new Rules were enacted in 2010. Justice Karakatsanis acknowledged that an involved summary judgment motion could be long and expensive but noted that it still may be proportionally less onerous than a trial.

The Supreme Court of Canada found that the “full appreciation” test that had been adopted by the Court of Appeal for Ontario limited the use of summary judgment motions to instances where a “full appreciation of the evidence” could be achieved”, and was unduly restrictive.  Justice Karakatsanis wrote, “[o]n a summary judgment motion, the evidence need not be equivalent to that at trial, but such that the judge is confident she can fairly resolve the dispute”. 

A Revised Analytical Framework

Justice Karakatsanis laid out the analytical framework to be followed on a motion for summary judgment under Rule 20.04:

  • The motion judge should first determine if there is a genuine issue requiring trial based only on the evidence before her, without using the new fact-finding powers. 
  • There will be no genuine issue requiring a trial if the summary judgment process provides her with the evidence required to fairly and justly adjudicate the dispute and is a timely, affordable and proportionate procedure, under Rule 20.04(2)(a). 
  • If there appears to be a genuine issue requiring a trial, she should then determine if the need for a trial can be avoided by using the new powers under Rules 20.04(2.1) and (2.2) (i.e., the power to call oral evidence). 
  • She may, at her discretion, use those powers, provided that their use is not against the interest of justice. 
  • Their use will not be against the interest of justice if they will lead to a fair and just result and will serve the goals of timeliness, affordability and proportionality in light of the litigation as a whole.

The Supreme Court of Canada also provided guidance on the standard of review on appeals of orders granting summary judgment and accorded a higher level of deference to the decision of the motion judge than the Court of Appeal had, finding that it is a question of mixed fact and law whether there is a genuine issue requiring a trial, and the decision should not be overturned absent palpable and overriding error. The question of whether it is in the “interest of justice” for the motion judge to exercise the new fact-finding powers provided by Rule 20.04(2.1) is also a question of mixed fact and law which attracts deference, as it depends on the relative evidence available at the summary judgment motion and at trial, the nature, size, complexity and cost of the dispute and other contextual factors.

The motion judge’s decision should not be disturbed unless the motions judge has misdirected herself, or come to a decision that is so clearly wrong that it resulted in an injustice. However, the failure to apply the correct legal test to make out a cause of action will be reviewed on a correctness standard.

Ultimately, the Supreme Court of Canada found that the motion judge in Hyrniak did not make a palpable and overriding error in granting summary judgment. He found no credible evidence that Hyrniak was a legitimate trader, so it was clear there was no genuine issue requiring a trial. Further, the Court found that it was within the motion judge’s purview, and was not an error, to use the fact-finding powers afforded by Rule 20.04(2.1); the record was sufficient for him to make a “fair and just determination and a timely resolution of the matter was called for.” The appeal was therefore dismissed.