ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: (Belleville) CV-11-0001-00
DATE: November 2, 2012

BETWEEN:

DURABLA CANADA LTD. Plaintiff – and – JUST ENERGY and UNION GAS LIMITED Defendants

R. Steven Baldwin, for the Plaintiff

Adrian Lang/Vanessa Voakes, for the Defendants

RULING ON MOTION

PEDLAR, J

1This is a motion by the plaintiff for leave to appeal to the Divisional Court from the costs decision of Mr. Justice R. Scott, dated February 24, 2012.

2The grounds on which leave may be granted are set out in Rule 62.02(4)(a)(b):

Leave to Appeal from Interlocutory Order of a Judge

62.02 (1) Leave to appeal to the Divisional Court under clause 19(1)(b) of the Act shall be obtained from a judge other than the judge who made the interlocutory order. O.Reg.171/98,s.23(1).

Grounds on Which Leave May be Granted

(4) Leave to appeal shall not be granted unless,

(a) there is a conflicting decision by another judge or court in Ontario or elsewhere on the matter involved in the proposed appeal and it is, in the opinion of the judge hearing the motion, desirable that leave to appeal be granted; or

(b) there appears to the judge hearing the motion good reason to doubt the correctness of the order in question and the proposed appeal involves matters of such importance that, in his or her opinion, leave to appeal should be granted, R.R.O. 1990, Reg. 194, r.62.02(4) .

3The plaintiff commenced a proceeding on or about January 4 th , 2011, seeking the recovery of alleged overpayments to Just Energy relating to the delivery of natural gas to the plaintiff for the use in their manufacturing business.

4Just Energy claims to have had a contract for the supply of energy with the plaintiff for a number of years and the plaintiff states that it had no such contract and never had any knowledge of any existence of such a contract. Just Energy is an energy marketing business. The plaintiff claims that it has been overcharged by Just Energy in view of the fair market value for the delivery of natural gas while Just Energy relies on a fixed price agreed upon pursuant to the disputed contract.

5Just Energy defended the claim on the basis that the contract was valid and counterclaimed on the basis of a penalty provision in the said contract.

6On April 19 th , 2011, just over a month after the close of pleadings, the plaintiff served its notice of motion seeking summary judgment for declaratory relief that it was not bound by the Energy Contract and a judgment against Just Energy for damages and reimbursement for alleged improper charges levied against it.

7In support of that motion, the plaintiff tendered affidavits sworn by Kevin Kent, president of the plaintiff corporation, and Ken Reynolds, the plant manager for the plaintiff’s manufacturing plant. Both affidavits were signed and sworn April 19 th , 2011.

8In the Reynolds affidavit, Mr. Reynolds categorically denied ever having spoken to, or even heard of, Just Energy.

9In response, Just Energy brought a cross-motion seeking dismissal of the action commenced by the plaintiff based on the expiration of a limitation period and, also, a cross-motion seeking an order that the energy contract was valid and binding and improperly terminated by the plaintiff, and seeking compensation as provided in the contract for such termination.

10In support of its cross-motion, Just Energy tendered the affidavit of Duncan Stiles, which included as an exhibit, the transcripts of recorded telephone calls between Just Energy and both of the plaintiff’s affiants, Mr. Kent and Mr. Reynolds, spanning a three year period.

11These recordings clearly demonstrated that Mr. Reynolds had, indeed, both known of, and spoken with Just Energy on several occasions.

12During cross-examinations on their affidavits, both Mr. Kent and Mr. Reynolds provided testimony which conflicted with their sworn affidavit evidence. The affidavits had disputed that the plaintiff had received or signed the delivery card for a contract renewal notice, on which the defendant, Just Energy, was relying. Mr. Kent testified no one at the plaintiff’s business ever received the 2007 Renewal Letter. The recorded phone conversations between Mr. Reynolds and Just Energy in July and August, 2007, however, relay Mr. Reynolds acknowledging receiving a Renewal Letter on behalf of the plaintiff. Mr. Reynolds, in spite of having categorically denied that he ever spoke to anyone at Just Energy, was forced to concede that he was recorded speaking to them several times. He continued his position that he could not recall numerous conversations with Just Energy representatives, but he took no issue with the authenticity and accuracy of the recorded calls. When faced with this inconsistent evidence on these very significant issues, the plaintiff chose to proceed with its motion for summary judgment in the face of such clear inconsistencies.

13The motions were first scheduled for hearing on December 22 nd , 2011. On that date, only the plaintiff’s motion was heard as there was insufficient time to argue the one cross-motion with which Just Energy chose to proceed.

14By the return date of the motions on December 22 nd , 2011, the Court of Appeal for Ontario had only recently, on December 5 th , 2011, released their decision in Combined Air Mechanical Services Inc. v. Flesch , 2011 ONCA 764 .

15The Combined Air decision was the first opportunity the Court of Appeal had to deal with the many issues surrounding the amendments to Rule 20 of the Civil Rules of Practice, which relate to motions for summary judgment.

16At the return of the motions on December 22 nd , 2011, Just Energy advised that it was withdrawing the portion of its cross-motion on liability as a result of the Combined Air ruling by the Court of Appeal. Just Energy did, however, wish to proceed with the portion of its cross-motion for summary judgment on the limitations issue only. That cross-motion was then later heard on February 9 th , 2012, because of time constraints on December 22 nd , 2011.

17Counsel for Just Energy took the position on December 22 nd , 2011, that in the ordinary course, people should complete affidavit of documents and discovery before bringing motions for summary judgment.

18The transcript of the hearing on December 22 nd , 2011, at pages 96 to 98, as contained in the responding motion record at Tab 8, shows that counsel for Just Energy made the following comments:

We have no affidavits of documents. We’ve had no discovery on any of the issues. They rushed to judgment and it shouldn’t be permitted...indeed had we had Combined Air in hand before my friends brought the motion, we may well have moved, as the Court of Appeal suggests, to stay the summary judgment motion on the basis of prematurity... In my submission, it’s precisely on that basis, Your Honour, that you can conclude that my friend’s motion is inappropriate for summary judgment.... Now I should say in candour, Your Honour, Just Energy brought two motions for summary judgment; one on the limitation period but in the alternative, we’ve submitted on our motion that you can conclude that there is a valid contract and that Durabla is bound. In my submission, based on the Combined Air test, you also can’t make that determination...so in fairness, we’re in the same position as the plaintiffs...Neither of the motions on the merits of this case can be determined on a summary basis.

19It should also be noted that at page 75 of the transcript within one page of the beginning of argument, counsel for Just Energy advised the court that:

The only motion before you today that you can determine on a summary basis is the question of the limitation period.

20It is inaccurate then for the plaintiff to state in its writing submissions regarding costs that Just Energy only withdrew their cross-motion on liability much later during the course of the motion hearing and was, in fact, attempting to misrepresent that fact to the court in their written submissions on costs, dated February 15 th , 2012, at page two. Those suggestions are made by the plaintiff in their costs submissions dated February 16 th , 2012, and are contained from about the middle of paragraph 8 through to the end of paragraph 10. Counsel is cautioned against making such allegations against other counsel without the advantage of a transcript. I note the transcript of the December 22 nd , 2011 motion hearing was not available until July of 2012.

21At the outset of the hearing of the cross-motion on February 9 th , 2012, the motions judge provided oral reasons dismissing the plaintiff’s motion for summary judgment in view of the contradictory evidence provided on the motion which gave rise to credibility issues that could not be determined on affidavit evidence and required a trial to resolve.

22The motions judge released his decision on the cross-motion on February 13 th , 2012. He ruled that the motion could not be granted until the parties, at the very least, conducted discoveries in order to narrow the issues and perhaps allow the plaintiff an opportunity to refine its story. The cross-motion was adjourned sine die on ten days notice.

23The parties then had the opportunity to provide both written and oral submissions on costs with respect to the plaintiff’s failed motion for summary judgment and costs were ultimately ordered in favour of Just Energy on a substantial indemnity basis.

24The plaintiff did not appeal the decision of Justice Scott in dismissing the motion, but is seeking leave to appeal only the ruling on costs.

25I now return to the test set out in Rule 62.02(4). It is clear the amendments to Rule 20 have eliminated the presumption that substantial indemnity costs be awarded against an unsuccessful moving party in a motion for summary judgment. The amended rule confers permissive authority on the court to impose such costs on any party where the court is of the opinion that such party has acted unreasonably in bringing or responding to a summary judgment motion or where a party has acted in bad faith or for the purpose of delay.

26I am unable to find that the plaintiff has met the onus required for leave pursuant to Rule 62.02(4)(a) by showing that there is a conflicting decision by another judge or court in Ontario, or elsewhere, on the matter and that it is desirable that leave to appeal be granted.

27Clearly, that rule does not simply mean another decision where only partial indemnity costs have been granted on a failed motion for summary judgment because the granting of costs is a very discretionary matter and would have to be analyzed to take into account the factors set out in Rule 57 and the amended Rule 20.

28A conflicting decision for the purpose of this rule is one in which a different principle has been chosen by another court on the matter involved in the proposed appeal. It is not simply a matter that two courts have exercised their discretion to produce different results.

29The matter involved in the plaintiff’s proposed appeal is whether Justice Scott erred in awarding costs on substantial indemnity basis. The plaintiff has not pointed to any decision by another court which states that substantial indemnity costs could not be awarded using the very principles used by Justice Scott in making his award.

30Justice Scott states the following in his costs ruling of February 24 th , 2012, at paragraphs 11 through to 15:

11Durabla argued that as Just Energy had abandoned the first of its two cross-motions and effectively had its second cross-motion dismissed as premature, it should be denied its costs. It was submitted that at the very least, the parties should bear their own costs.

12Were the reasons for the withdrawal of the first cross-motion and the finding that the second cross-motion was premature determined to be as a result of independent actions by Just Energy or its counsel through no fault originating with Durabla, I would tend to agree with counsel for Durabla. However, it became obvious during the first motion that the plaintiff had initially filed misleading materials and later contradictory evidence was presented in the form of further affidavits by Durabla or through the cross-examinations in a “rush to justice” and to “shoe horn” the facts into an existing authority.

13At its very worst the plaintiffs’ evidence was perjured and, at the very least, it demonstrated a disregard for the veracity of the evidence put before the court.

14Simply put, the strategy adopted by Durabla had the affect of undermining any ability by Just Energy to effectively deal with either the initial motion by Durabla or its own cross-motions. The result was predictable from the outset. Once confronted with these seemingly major inconsistencies, Durabla chose to nevertheless press on with its doomed motion. By so doing, Just Energy was obliged to bring its cross-motions.

15Given all the circumstances, the defendant is entitled to its costs and when considered in the context of all the sub-sections of Rule 57.01 of the Rules of Civil Procedure, there is good reason to award costs on a substantial indemnity basis.

31I am required to also consider, in light of the motion judge’s ruling as set out above, whether pursuant to Rule 62.02(4)(b) there appears to be good reason to doubt the correctness of the order in question and whether the proposed appeal involves matters of such importance that in my opinion leave to appeal should be granted.

32Rule 20.06 gives the court the power to fix and order payment of costs on a motion for summary judgment by a party on a substantial indemnity basis if the party acted unreasonably or in bad faith for the purpose of delay. I find no evidence to suggest that the plaintiff herein acted in bad faith for the purpose of delay. There is no suggestion in the motion judge’s ruling that he considered the plaintiff having acted in bad faith for the purpose of delay. A reading of paragraphs 10 through 15 inclusive of his decision of February 24 th , 2012, clearly leads one to the conclusion that he found the plaintiff had acted unreasonably by bringing this motion for summary judgment prematurely and by filing sworn affidavits that he found to be misleading and later contradictory evidence in the form of further affidavits and cross-examinations. The motion’s judge found that strategy undermined the ability of Just Energy to effectively deal with either the initial motion by the plaintiff or its own cross-motions. He also found that the plaintiff, once confronted with these seemingly major inconsistencies, chose to nevertheless press on with its doomed motion.

33Those findings by the motion’s judge entitled him under Rule 20.06 to find that the plaintiff had acted unreasonably in bringing this motion and, when considered in the context of all the subsections of Rule 57.01, as referred to in paragraph 15 of his decision, entitled him to award costs on a substantial indemnity basis.

34The defendant, Just Energy, relied on the recent decision of this court in 1352164 Ontario Ltd. v. Mikhail Holdings Ltd ., 2012 ONSC 4820 , wherein Justice McDermid found that the plaintiffs ought to have known that their motion stood virtually no chance of success because of the multiple factual issues for trial raised by the material they had filed and as such awarded costs to the defendants on a substantial indemnity basis. Justice McDermid made the following statements at paragraphs 6, 7 and 10:

The plaintiffs took the risk of launching an arguing the motion for summary judgment with full knowledge of the danger of losing and being ordered to pay costs. In my opinion, it should have been obvious, especially given the principles enunciated in Combined Air Mechanical Services Inc. v. Flesch , 2011 ONCA 764 , 2011 CarswellOnt 13515, that pursuing the motion was almost certain to fail and was unreasonable and that costs would be granted on a substantial indemnity basis.

35The plaintiff’s motion for leave to appeal the cost ruling of the motion’s judge is denied. It has failed to meet the tests under Rule 62.02(4) (a) or (b).

36The defendant, Just Energy, is again entitled to its costs of this motion. If the parties cannot agree on the amount of those costs, then the defendant, Just Energy, may provide written submissions within 30 days, together with a draft bill of costs, with a 10 day right of reply to the plaintiff. Such written submissions not to exceed three typed pages plus a draft bill of costs.

37I thank counsel for their assistance in dealing with this matter.