Butera et al. v. Chown, Cairns LLP
[Indexed as: Butera v. Chown, Cairns LLP]
Ontario Reports
Court of Appeal for Ontario
Juriansz, Pepall and B.W. Miller JJ.A.
October 13, 2017
137 O.R. (3d) 561 | 2017 ONCA 783
Case Summary
Appeal — Grounds — Appellant franchisee suing franchisor for damages for misrepresentation — Motion judge A granting defendant's motion for summary judgment on basis that action was statute-barred and making obiter finding that there was no misrepresentation — Court of Appeal dismissing appellant's appeal on limitations ground and not addressing misrepresentation issue — Appellant suing his own lawyers for solicitors' negligence and lost opportunity damages — Motion judge B erring in granting partial summary judgment dismissing claim relating to misrepresentation on basis that appellant did not appeal motion judge A's misrepresentation finding and therefore there could be no missed opportunity — Appeal from motion judge A's judgment including appeal from misrepresentation finding.
Civil procedure — Summary judgment — Partial summary judgment — Motion for partial summary judgment appropriate only in rare cases where issue or issues may be readily bifurcated from those in main action and dealt with expeditiously and in cost-effective manner.
Facts
The appellant, a franchisee, sued the franchisor for damages for breach of contract, misrepresentation, negligence and breaches of the Arthur Wishart Act (Franchise Disclosure) 2000, S.O. 2000, c. 3. The franchisor moved for summary judgment on the basis that the two-year limitation period had expired. The appellant conceded that the applicable limitation period was two years. The motion judge ("motion judge A") granted the motion and dismissed the action as statute-barred. In obiter, he determined that there was no misrepresentation. The appellant appealed. Among other grounds of appeal, the appellant argued for the first time that the applicable limitation period was six years. The franchisor moved successfully to strike that ground of appeal on the basis that it had not been advanced before motion judge A. The Court of Appeal dismissed the appeal on the basis that the action was barred by the two-year limitation period. The court did not address the misrepresentation issue. The appellant then sued the respondents, his lawyers in the original action, for negligence, claiming that in the original action, the respondents had failed to take the position that a six-year limitation period applied, with the result that the appellant had lost the opportunity to argue the merits of his claims in negligence, misrepresentation, breach of contract and breaches of the Act. The respondents moved successfully for partial summary judgment dismissing that portion of the damages claim relating to misrepresentation. The motion judge ("motion judge B") found that the appellant had not appealed motion judge A's misrepresentation conclusion and therefore there could be no lost opportunity. The appellant appealed.
Held, the appeal should be allowed.
Motion judge B erred in law in framing the issue as an analysis of whether there was an appeal from the "finding" of no misrepresentation. An appeal is from an order or a judgment, not from the reasons for decision. The appellant appealed from the judgment of motion judge A and asked that it be set aside. As a matter of law, that included the claims based on misrepresentation.
Motion judge B also erred in failing to consider whether this was an appropriate case for partial summary judgment. A motion for partial summary judgment should be considered to be a rare procedure that is reserved for an issue or issues that may be readily bifurcated from those in the main action and that may be dealt with expeditiously and in a cost-effective manner. In this case, had the litigation as a whole been considered, partial summary judgment would not have been an appropriate award as it would not serve the objectives of proportionality, efficiency and cost effectiveness.
Cases Referred To
Hryniak v. Mauldin, [2014] 1 S.C.R. 87, [2014] S.C.J. No. 7, 2014 SCC 7, considered
Butera v. Mitsubishi Motors Corp., [2013] O.J. No. 6658, 2013 ONCA 99, affirming [2012] O.J. No. 4097, 2012 ONSC 4980 (S.C.J.)
Combined Air Mechanical Services Inc. v. Flesch, [2010] O.J. No. 4130, 2010 ONCA 633
Corchis v. KPMG Peat Marwick Thorne, [2002] O.J. No. 1437
Glennie v. McD. & C. Holdings Ltd., [1935] S.C.R. 257, [1935] S.C.J. No. 2
Gold Chance International Ltd. v. Daigle & Hancock, [2001] O.J. No. 1486, [2001] O.T.C. 266
Statutes Referred To
Arthur Wishart Act (Franchise Disclosure), 2000, S.O. 2000, c. 3
Rules and Regulations Referred To
Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rules 1.04(1), (1.1), 20.04(2.1), 20.05(1)
Authorities Referred To
Lange, Donald J., The Doctrine of Res Judicata in Canada, 4th ed. (Markham, Ont.: LexisNexis, 2015)
Appeal
APPEAL from the order of Belobaba J., [2016] O.J. No. 2744, 2016 ONSC 3134 (S.C.J.) granting partial summary judgment.
Counsel:
Neil G. Wilson, for appellants.
John D. Campbell, for respondents.
Judgment
The judgment of the court was delivered by
PEPALL J.A.:
(1) Introduction
[1] This appeal concerns an award of partial summary judgment arising from an action by the appellants against their former solicitors, the respondents. The respondents had acted for the appellants in a prior lawsuit that was dismissed due to a successful limitations period defence. As a result, the appellants sued the respondents for solicitors' negligence and lost opportunity damages. The respondents brought a motion for partial summary judgment to dismiss that portion of the appellants' damages claim relating to misrepresentation. The judgment was granted. The appellants now appeal. For the reasons that follow, I would allow the appeal.
(2) Facts
(a) The Original Action
[2] The appellant Luciano Butera is the sole owner and operator of the appellant 1515404 Ontario Inc., a Mitsubishi Motors franchisee operating as Niagara Mitsubishi, and of the appellant Canterra Property Holdings Inc. (collectively referred to as the "appellants"). When their dealership failed, the appellants sued various Mitsubishi companies ("Mitsubishi") for damages for breach of contract, misrepresentation, negligence and breaches of the provisions of the Arthur Wishart Act (Franchise Disclosure), 2000, S.O. 2000, c. 3.
[3] Mitsubishi moved for summary judgment on the basis that the applicable two-year limitation period had expired. In the alternative, it sought an order for summary judgment dismissing some of the appellants' claims on the merits. The appellants conceded that the applicable limitation period was two years.
[4] Justice Hambly granted summary judgment to Mitsubishi and dismissed the appellants' action. He decided, with reasons reported at [2012] O.J. No. 4097, 2012 ONSC 4980 (S.C.J.), that there was no genuine issue for trial due to the passage of the two-year limitation period applicable to the appellants' claims. In addition, in obiter, he determined that the appellants had no evidence that the information presented to them by Mitsubishi was inaccurate or that Mitsubishi did not honestly believe their own predictions of success. He concluded that the predictions made by Mitsubishi were opinions about the future that were honestly held and did not amount to misrepresentations. He also found that the entire agreement and release provisions in the dealer licence agreement were complete defences to the appellants' claims and that the Arthur Wishart Act did not apply. If the Act did apply, Mitsubishi "made no misrepresentation which would give the [appellants] a cause of action [under s. 7 of the Act]".
[5] He ordered the appellants to pay $150,000 in costs of both the action and the summary judgment motion on a partial indemnity scale, inclusive of disbursements and applicable tax.
[6] The appellants appealed from Hambly J.'s dismissal of their action and asked that the judgment be set aside. In their grounds for appeal, among other things, they took the position for the first time that a six-year limitation period was applicable. Mitsubishi successfully moved to strike that ground of appeal on the basis that the appellants had raised a new issue that they had not advanced before Hambly J.
[7] This court then dismissed the appellants' appeal. It agreed with Hambly J. that the action was time-barred by the two-year limitation period. In its endorsement, reported at [2013] O.J. No. 6658, 2013 ONCA 99, the court stated:
Without going into the overall merits of the plaintiffs' claim, we are satisfied that the motion judge was in a position to have a "full appreciation" of the record for purposes of determining -- as he did -- the factual issue of whether, and as of when, the plaintiff knew or ought to have known the basis of his claim. The motion judge decided this date was April 11, 2005 at the latest and the action was not commenced until October 31, 2007, more than two years after the claim was discovered. It is therefore statute barred.
The court therefore only addressed the issue of the limitation period and did not comment on Hambly J.'s findings made in obiter or otherwise deal with the merits of the appellants' claims except to say it was not going to consider them.
(b) The Solicitors' Negligence Action
[8] The appellants then sued the respondents, their solicitors in the action against Mitsubishi, for negligence. The appellants stated that in the original action, the respondents had failed to take the position that a six-year limitation period applied rather than the two years found by Hambly J. As such, they had lost the opportunity on appeal to argue the merits of their claims against Mitsubishi. They claim $5 million in damages flowing from their lost opportunity to argue the merits of their claims in negligence, misrepresentation, breach of contract and breaches of the Arthur Wishart Act.
[9] The respondents defended the solicitors' negligence action and moved for summary judgment asking that the entire action be dismissed. They subsequently advised that they were only going to argue that there was no genuine issue requiring a trial on the issue of common law and statutory misrepresentation and therefore were seeking a partial summary judgment.
(c) Motion Judge's Decision
[10] The respondents' motion for partial summary judgment proceeded before Belobaba J. He framed the analysis, at para. 10 of his reasons, as follows:
The [solicitors'] motion turns on whether there was an appeal from Justice Hambly's finding that there was no misrepresentation. If the misrepresentation finding was appealed, then the [appellants] arguably lost the opportunity to argue and possibly prevail on this ground. But if it was not appealed, then no such opportunity was lost.
[11] Before Belobaba J., the respondents argued that the appellants did not appeal Hambly J.'s misrepresentation conclusion and therefore there could be no lost opportunity. The appellants argued to the contrary.
[12] Justice Belobaba agreed with the respondents' position. He examined the grounds of appeal that had been advanced by the respondents on behalf of the appellants and concluded that there was no indication of any intention to appeal the finding that there were no misrepresentations. Accordingly, the appellants did not lose any opportunity to pursue an appeal on this ground. He therefore allowed the motion for partial summary judgment and dismissed the damages claim arising out of the common law and statutory misrepresentations allegedly made.
(3) Issues on Appeal
[13] There are two issues to consider. First, did the motion judge err in concluding that the appellants had not appealed the misrepresentation finding? Second, and in any event, did he err in failing to consider the advisability of an award of partial summary judgment?
[14] For the following reasons, I would allow the appeal on both grounds.
(4) Analysis
(a) Appeal of Hambly J.'s Judgment
[15] The appellants submit that the motion judge erred in failing to conclude that the appellants had appealed Hambly J.'s entire decision. The respondents argue that the appellants did not raise misrepresentation as a specific ground of appeal. Justice Hambly made a factual finding that no misrepresentation was made and this finding was not challenged on appeal. Issue estoppel precluded the appellants from relitigating the issue of misrepresentation as it was finally determined in the underlying action. There was no lost opportunity.
[16] In my view, the motion judge erred in law in framing the issue as an analysis of whether there was an appeal from the "finding" of no misrepresentation. While issue estoppel may be based on reasons alone (see Donald J. Lange, The Doctrine of Res Judicata in Canada, 4th ed. (Markham, Ont.: LexisNexis, 2015), at pp. 16-18), an appeal is from an order or a judgment, not from the reasons for decision: Fram Elgin Mills 90 Inc. v. Romandale Farms Ltd. (2016), 131 O.R. (3d) 455, [2016] O.J. No. 2791, 2016 ONCA 404, at para. 33; and Glennie v. McD. & C. Holdings Ltd., [1935] S.C.R. 257, [1935] S.C.J. No. 2, at p. 268 S.C.R.
[17] Here, the appellants appealed from the judgment of Hambly J. and asked that it be set aside. As a matter of law, this included the claims based on misrepresentation.
[18] That conclusion is dispositive.
[19] However, I would also note that one of the four grounds of appeal that was advanced by the appellants was that Hambly J. had erred in his application of the then-applicable full appreciation test enunciated by the Court of Appeal in Combined Air Mechanical Services Inc. v. Flesch, [2010] O.J. No. 4130, 2010 ONCA 633. It is inconceivable to me that had this court found in favour of the appellants on the limitation issue, the panel would not have gone on to consider the misrepresentation claims. Put differently, to the extent that the notice of appeal lacked specific detail, it was implicit that the appellants were appealing the judgment that encompassed misrepresentation. The appellants' factum filed before the Court of Appeal was replete with references to misrepresentation. No one would have been caught by surprise.
[20] Lastly, I would also observe that Hambly J.'s decision was anchored in his conclusion regarding the expiry of the two-year limitation period. He stated, at para. 20 of his reasons, that if he were wrong in his conclusion on the limitation period, he would go on to assess the other arguments advanced. However, as it turned out, he was not wrong in his conclusion and his comments on the issue of misrepresentation were obiter.
[21] For these reasons, I would allow the appeal on this first ground of appeal.
(b) Partial Summary Judgment
[22] I now turn to the second ground of appeal which relates to the granting of partial summary judgment.
[23] In Hryniak v. Mauldin, [2014] 1 S.C.R. 87, [2014] S.C.J. No. 7, 2014 SCC 7, the Supreme Court rewrote the law on summary judgments. Justice Karakatsanis, writing for a unanimous court, commenced her analysis by stating: "Ensuring access to justice is the greatest challenge to the rule of law in Canada today." She described accessibility as being achievable through justice that is proportionate, timely and affordable. As noted in that decision, rule 1.04(1) and (1.1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 specifically codify the proportionality principle:
1.04(1) These rules shall be liberally construed to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits.
(1.1) In applying these rules, the court shall make orders and give directions that are proportionate to the importance and complexity of the issues, and to the amount involved, in the proceeding.
[24] The Superior Court of Justice has since considered a multitude of summary judgment motions using the principles established in Hryniak.
[25] Hryniak does not address partial summary judgment per se except in the context of exercising the enhanced fact-finding powers contained in rule 20.04(2.1). In that regard, Karakatsanis J. observed that it may not be in the interests of justice to use the new fact-finding powers to grant summary judgment against a single defendant if the claims against other parties will proceed to trial in any event. Such partial summary judgment runs the risk of duplicative proceedings or inconsistent facts. On the other hand, Karakatsanis J. noted that the "resolution of an important claim against a key party could significantly advance access to justice, and be the most proportionate, timely and cost effective approach".
[26] The pre-Hryniak appellate jurisprudence on partial summary judgment limited its availability. At para. 3 of Corchis v. KPMG Peat Marwick Thorne, [2002] O.J. No. 1437, this court applied Gold Chance International Ltd. v. Daigle & Hancock, [2001] O.J. No. 1486, [2001] O.T.C. 266 to state that
partial summary judgment ought only to be granted in the clearest of cases where the issue on which judgment is sought is clearly severable from the balance of the case. If this principle is not followed, there is a very real possibility of a trial result that is inconsistent with the result of the summary judgment motion on essentially the same claim.
[27] Since Hryniak, this court has considered partial summary judgment in Baywood Homes Partnership v. Haditaghi (2014), 120 O.R. (3d) 438, [2014] O.J. No. 2745, 2014 ONCA 450 and in Canadian Imperial Bank of Commerce v. Deloitte & Touche (2016), 133 O.R. (3d) 561, [2016] O.J. No. 6319, 2016 ONCA 922. Baywood was decided in the context of a motion for summary judgment on all claims, but where only partial summary judgment was granted. CIBC involved a motion for partial summary judgment.
[28] In both Baywood and CIBC, the court analyzed the issue from the perspective of whether (i) there was a risk of duplicative or inconsistent findings at trial; and (ii) whether granting partial summary judgment was advisable in the context of the litigation as a whole. In both cases, the court held that partial summary judgment was inadvisable in the circumstances.
[29] The caution expressed pre-Hryniak in Corchis is equally applicable in the post-Hryniak world. In addition to the danger of duplicative or inconsistent findings considered in Baywood and CIBC, partial summary judgment raises further problems that are anathema to the stated objectives underlying Hryniak.
[30] First, such motions cause the resolution of the main action to be delayed. Typically, an action does not progress in the face of a motion for partial summary judgment. A delay tactic, dressed as a request for partial summary judgment, may be used, albeit improperly, to cause an opposing party to expend time and legal fees on a motion that will not finally determine the action and, at best, will only resolve one element of the action. At worst, the result is only increased fees and delay. There is also always the possibility of an appeal.
[31] Second, a motion for partial summary judgment may be very expensive. The provision for a presumptive cost award for an unsuccessful summary judgment motion that existed under the former summary judgment rule has been repealed, thereby removing a disincentive for bringing partial summary judgment motions.
[32] Third, judges, who already face a significant responsibility addressing the increase in summary judgment motions that have flowed since Hryniak, are required to spend time hearing partial summary judgment motions and writing comprehensive reasons on an issue that does not dispose of the action.
[33] Fourth, the record available at the hearing of a partial summary judgment motion will likely not be as expansive as the record at trial, therefore increasing the danger of inconsistent findings.
[34] When bringing a motion for partial summary judgment, the moving party should consider these factors in assessing whether the motion is advisable in the context of the litigation as a whole. A motion for partial summary judgment should be considered to be a rare procedure that is reserved for an issue or issues that may be readily bifurcated from those in the main action and that may be dealt with expeditiously and in a cost-effective manner. Such an approach is consistent with the objectives described by the Supreme Court in Hryniak and with the direction that the Rules be liberally construed to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits.
[35] Lastly, I would observe the obvious, namely, that a motion for partial summary judgment differs from a motion for summary judgment. If the latter is granted, subject to appeals, it results in the disposal of the entire action. In addition, to the extent the motion judge considers it advisable, if the motion for summary judgment is not granted but is successful in part, partial summary judgment may be ordered in that context.
[36] Turning then to the substance of the second ground of appeal, the appellants submit that granting partial summary judgment on the misrepresentation issue provides minimal, if any, efficiency as the action is proceeding to trial on the negligence, breach of contract and Arthur Wishart Act claims. The misrepresentation claims are largely intertwined with these other claims and partial summary judgment risks inconsistent results.
[37] The respondents reject these submissions, arguing that rule 20.05(1) recognizes the utility of partial summary judgment. The motion judge's decision is entitled to deference and was appropriate for the litigation as a whole.
[38] As explained in Hryniak, the exercise of powers under the summary judgment rule generally attracts deference. Here the motion judge made an extricable error in principle in failing to consider whether partial summary judgment was appropriate in the context of the litigation as a whole. As the appellants point out, the action is proceeding to trial on the Arthur Wishart Act claims, which include allegations of a breach of the duty of fair dealing and deficient disclosure, the claims in negligence and for breach of contract. These claims are intertwined with the misrepresentation claims. An award of partial summary judgment in these circumstances may lead to inconsistent results to the extent the misrepresentation claims were not barred due to a limitation period. On the other hand, had the litigation as a whole been considered, partial summary judgment would not have been an appropriate award as it would not serve the objectives of proportionality, efficiency and cost effectiveness.
(5) Disposition
[39] For these reasons, I would allow the appeal and set aside the award of partial summary judgment. I would order the respondents to pay $12,500 in costs of the appeal on a partial indemnity scale, inclusive of fees, disbursements and applicable tax. I would set aside the costs of $25,000 awarded by the motion judge to the respondents and, in the absence of agreement between the parties which is encouraged, remit the costs to him to reconsider in light of this decision.
Appeal allowed.