Stever v. Rainbow International Carpet Dyeing & Cleaning Co. et al.

[Indexed as: Stever v. Rainbow International Carpet Dyeing & Cleaning Co.]

Ontario Reports

Ontario Superior Court of Justice,

Goldstein J.

January 22, 2013

114 O.R. (3d) 473 | 2013 ONSC 241

Case Summary

Civil procedure — Summary judgment — Defendant in breach of contract action bringing motion for summary judgment dismissing action as statute-barred — Plaintiff moving to strike summary judgment motion on basis of prematurity — Motion to strike dismissed — Motion to strike summary judgment motion should be granted only in clearest of cases — Plaintiff relying on discoverability principle but its affidavit material not putting its best foot forward on that issue — Matter not complicated — Summary judgment motion having reasonable chance of success.

The plaintiff sued the defendant for damages for breach of contract and misrepresentation. The defendant brought a motion for summary judgment dismissing the action as statute-barred. Discoveries had not yet taken place. The plaintiff moved to strike the summary judgment motion on grounds of prematurity.

Held, the motion to strike should be dismissed.

A motion to strike a summary judgment motion should be granted only in the clearest of cases. The plaintiff was relying on the discoverability principle, but the facts relating to discoverability were largely within the plaintiff's knowledge, and its affidavit material did not put its best foot forward on that issue. The summary judgment motion had a reasonable chance of success. The matter was not complicated, and a record could be built that would leave a judge with sufficient evidence to make a decision on a summary judgment motion.

Cases referred to

Ghaffari v. Asiyaban, [2012] O.J. No. 2402, 2012 ONSC 2724 (S.C.J.), apld

George Weston Ltd. v. Domtar Inc.; 1318214 Ontario Ltd. v. Sobeys Capital (2012), 112 O.R. (3d) 190, [2012] O.J. No. 4123, 2012 ONSC 5001, 354 D.L.R. (4th) 121 (S.C.J.); Vine Hotels Inc. v. Frumcor Investments Inc. (2004), 2004 ON SCDC 45966, 73 O.R. (3d) 374, [2004] O.J. No. 4997, 193 O.A.C. 79, 29 R.P.R. (4th) 321, 135 A.C.W.S. (3d) 718 (Div. Ct.), consd

Other cases referred to

Combined Air Mechanical v. Flesch (2011), 108 O.R. (3d) 1, [2011] O.J. No. 5431, 2011 ONCA 764, 286 O.A.C. 3, 97 C.C.E.L. (3d) 25, 14 C.P.C. (7th) 242, 13 R.P.R. (5th) 167, 211 A.C.W.S. (3d) 845, 93 B.L.R. (4th) 1, 10 C.L.R. (4th) 17; [page474] Liu v. Silver (2010), 101 O.R. (3d) 702, [2010] O.J. No. 1608, 2010 ONSC 2218 (S.C.J.)

Rules and regulations referred to

Rules of Civil Procedure, R.R.O. 1990, Reg. 194

MOTION by the plaintiff to strike the defendant's summary judgment motion.

David Alderson and Robert Kalanda, for plaintiff/responding party.

Tariq Remtulla, for defendants/moving parties.

[1] GOLDSTEIN J.: — The plaintiff was in the carpet cleaning business. He was a franchisee of the defendant Rainbow International Carpet Dying & Cleaning Co. ("Rainbow"). The franchise agreement was signed in 1995. The business relationship ended in 2001. At the time the franchise agreement was signed, the defendants Rosen, Alberti and Appel were principals of Rainbow. The plaintiff continued to clean carpets using the Rainbow brand. He was eventually sued by Rainbow in Federal Court for trademark infringement. The plaintiff alleges breach of contract and material misrepresentations in his statement of claim in this court.

[2] The defendants have brought a motion for summary judgment. That motion is scheduled to take place on two days in June 2013. The plaintiff seeks to strike the motion for summary judgment on grounds of prematurity. There have been no discoveries. The plaintiff further says that the issues are complex, and that it is a waste of time and resources to spend time on a summary judgment motion where the judge will not be able to obtain "a full appreciation of the evidence".

[3] In contrast, the defendants say that it is the plaintiff who is wasting time and resources. They say that this case can be resolved solely on the basis of the limitations defence set out in the pleadings alone. They say that there is no need for time-consuming and expensive discoveries and other pre-trial procedures where a pure legal issue is involved. They disagree that there are complex discoverability issues that require discoveries, productions and a trial on the merits.

[4] A motion for summary judgment should only be struck in the clearest of cases. This is not the clearest of cases. The motion to strike the summary judgment motion is dismissed. [page475]

Analysis

When is it appropriate to strike a summary judgment motion?

[5] In Combined Air Mechanical Inc. v. Flesch (2011), 108 O.R. (3d) 1, [2011] O.J. No. 5431, 2011 ONCA 764, the Court of Appeal laid out three categories of cases that are amenable to summary judgment:

cases where the parties agree that it is appropriate to determine the action by way of summary judgment (para. 41);

cases where the claim or defence can be shown to be without merit (para. 42);

cases where the attributes of the trial process are not required to resolve the action (para. 44).

[6] The first and second categories of cases existed prior to the amendments to the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 in 2010; the third category came about as a result of those amendments.

[7] The Court of Appeal went on in greater detail to describe those cases where a trial is not required to resolve the litigation, and to provide guidance to judges on summary judgment motions as to when the attributes of the trial process are necessary: Combined Air Mechanical, supra, at paras. 47-51. The Court of Appeal also recognized that not every case is amenable to a summary judgment motion, and it is this observation that is at the heart of this motion [at para. 58]:

Moreover, the record built through affidavits and cross-examinations at an early stage may offer a less complete picture of the case than the responding party could present at trial. As we point out below, at para. 68, counsel have an obligation to ensure that they are adopting an appropriate litigation strategy. A party faced with a premature or inappropriate summary judgment motion should have the option of moving to stay or dismiss the motion where the most efficient means of developing a record capable of satisfying the full appreciation test is to proceed through the normal route of discovery. This option is available by way of a motion for directions pursuant to rules 1.04(1), (1.1), (2) and 1.05.

[8] The Court of Appeal did not describe a test for determining when a summary judgment motion should be stayed. In Ghaffari v. Asiyaban, [2012] O.J. No. 2402, 2012 ONSC 2724 (S.C.J.), J.E. Ferguson J. addressed this issue [at para. 14]:

I agree with the defence submissions as to the test a party must meet in order to obtain a stay (I was told that there is no case law yet on the point) which is as follows: [page476]

(i) the court should look at the motion for summary judgment and the reasonable chances of success in determining whether a stay is appropriate. The party seeking the stay should put their best foot forward as they would on a motion for summary judgment to say there is a genuine issue requiring a trial or why the matter is too complicated for the motion judge to ascertain the full appreciation of the case;

(ii) the court then ought to determine whether the matter is complicated; what are the issues; the nature of the evidence and law to determine the issues; and whether the case can be determined without the necessity of a full trial; and

(iii) only in the clearest of cases should the court impose a stay.

[9] In George Weston Ltd. v. Domtar Inc.; 1318214 Ontario Ltd. v. Sobeys Capital (2012), 112 O.R. (3d) 190, [2012] O.J. No. 4123, 2012 ONSC 5001 (S.C.J.), D. Brown J. examined the issue of when a stay of a summary judgment motion is appropriate. He examined the pre- and post-Combined Air Mechanical case law regarding motions to strike summary judgment motions. Ultimately, he favoured a case management approach to the scheduling of summary judgment motions. In doing so, he drew a distinction between summary judgment motions made before discoveries and after discoveries [at paras. 55-56]:

Accordingly, where a judge faces a request to schedule a lengthy summary judgment motion before the parties have embarked upon or completed discoveries, factors to take into account would include

(i) the nature and complexity of the issues raised in the action;

(ii) the extent of the record the parties are likely to develop if a summary judgment motion proceeds prior to the completion of productions and discoveries;

(iii) whether a record so built through a summary judgment motion will offer a less complete picture of the case than the responding party could present at trial and, if it would, in what respects;

(iv) would the responding party to the summary judgment motion enjoy the equivalent access to key documents as would exist through the documentary discovery process?

(v) would the responding party be able to examine the representative of the party which it would have selected for purposes of examination for discovery?

(vi) whether the most efficient means of developing a record capable of satisfying the full appreciation test given the nature and complexity of the issues in play is to proceed through the normal route of discovery; and

(vii) whether the most efficient means of satisfying the full appreciation test would be to develop a modified discovery plan, incorporating elements of traditional discovery and the preparation of a summary judgment record, with a view to proceeding to a [page477] non-conventional trial which would ensure the just, most expeditious and least expensive determination of the case on its merits.

Where a request is made to schedule a lengthy summary judgment motion following the completion of the production and discovery process concerns about the appropriateness of such a motion relate not so much to the quality of the record developed in light of the nature and complexity of the issues -- the parties will have availed themselves of the discovery rights accorded by the Rules -- but (i) to whether any "upside" exists to spending client money and judicial time conducting a motion-based review of a case's merits when the parties can set the action down for and proceed to trial; and (ii) to whether the summary judgment process, in the circumstances of the case, will provide an appropriate means for effecting a fair and just resolution of the dispute by allowing the trier of fact to gain a full appreciation of the issues before the court. Put another way, the focus of the case-management analysis should be on (i) whether the proposed summary judgment motion will assist the efficient resolution of the proceeding or (ii) whether the issues raised by the action are suitable for disposition by way of a summary judgment motion. As I wrote in an earlier endorsement in the 1318214 Ontario Ltd. v. Sobeys Capital Inc. proceeding [at para. 14]:

. . . I think that on an attendance to schedule a lengthy Post-Discovery summary motion the ultimate question is whether the interest of justice is best served by scheduling such a motion or by requiring, instead, that the parties proceed to trial.

[10] D. Brown J. noted but did not comment on the test posited by J.E. Ferguson J. in Ghaffari v. Asiyaban.

[11] I note that the George Weston and Sobeys Capital cases arose in the context of the Toronto Commercial List, where the Court's Practice Direction gives a considerable amount of leeway to Commercial List judges to case manage individual matters. More routine matters, such as the one before me, do not benefit from the extensive attention that Commercial List judges can provide. The procedural history of this motion provides an example. On May 25, 2012, the parties attended Motion Scheduling Court where the defendants attempted to have the summary judgment motion set down. Low J. dismissed the request on the grounds that there was an outstanding motion for particulars. She permitted the defendants to renew the request after that motion was dealt with. The parties re-attended Motion Scheduling Court on August 24, 2012 before Pollak J. The defendants again sought to schedule their summary judgment motion. The plaintiff resisted again, on the grounds that the issues were complex and discoveries had not yet commenced, let alone been completed. Motion Scheduling Court is not the place to have full and leisurely argument on an issue. Pollak J. set down this motion for directions instead.

[12] This motion also illustrates the tension inherent in a motion to strike a summary judgment motion. In order to [page478] determine whether the record is sufficient for a judge to obtain a full appreciation of the evidence, I need to actually review the record. If I dismiss the motion to strike, another judge will do the same thing. (That judge may well come to a different view and decide that he or she cannot obtain a full appreciation of the evidence and dismiss the summary judgment motion in favour of a trial. Reasonable people may take a different view of a particular evidentiary record and neither will be obviously wrong.) In any event, two judges will have reviewed the same record in order make a similar decision. This sort of thing ought to be strongly discouraged. It is a waste of judicial resources. It also provides extra ammunition to litigants with deep pockets. This was also D. Brown J.'s view: George Weston, supra, at paras. 47-49.

[13] I therefore agree that motions to strike summary judgment motions should only be granted in "the clearest of cases". The "clearest of cases" test is one of long standing. Its use in this area will encourage litigants to take a very hard look at the merits of the proposed motion to strike by setting the bar high. Where appropriate, costs sanctions should also be employed.

Application to this case

[14] At first blush, it would appear that this is an ideal case to dispose of by way of summary judgment before too many resources are wasted. The contract at issue between the plaintiff and Rainbow appears was negotiated in 1995. According to the defendants, the plaintiff stopped complying with the contractual terms in 2001 and there was a formal notice of termination in 2003. Thus, the defendants say that the breach of contract, if there was a breach, took place some nine years prior to the issuing of the statement of claim. In November 2011, Rainbow commenced an action against the plaintiff in Federal Court for trademark infringement. Rainbow alleges in that action that the plaintiff continued to use its trademark even after the termination of the contract.

[15] The plaintiffs say it is not that simple. They say that it was only when the Federal Court action was commenced that they realized that there had been misrepresentations by the defendants. They say that they need discovery of the defendant's documents and witnesses in order to establish the misrepresentations.

[16] I turn now to applying the test set out in Ghaffari v. Asiyaban.

[17] Does the summary judgment motion have a reasonable chance of success? In my view, the defendants have a reasonable chance of success on the summary judgment motion. The [page479] plaintiff's material mostly consisted of an affidavit asserting the reasons why discoveries are necessary, and laying out the attempts of the defendants to resist going forward with discoveries. That material did not constitute the "best foot forward" in terms of whether there is a genuine issue for trial. The plaintiff intends to respond to the limitations issues raised by the defendants by raising discoverability issues. The plaintiff points to documents in the possession of the defendants which may assist. Discoverability, however, is something that, on its face, is mostly within the knowledge of the plaintiff.

[18] In Vine Hotels Inc. v. Frumcor Investments Inc. (2004), 2004 ON SCDC 45966, 73 O.R. (3d) 374, [2004] O.J. No. 4997 (Div. Ct.), a motion for summary judgment was dismissed. The issue was the applicability of a limitation period. Speaking for the Divisional Court, Himel J. stated [at para. 36]:

Generally speaking, where an issue of discoverability arises in relation to a statutory limitation period that is central to the disposition of the matter, it is not appropriate to resolve the matter by way of a summary judgment motion. Where there are material facts in dispute as to the commencement of the limitation period, the matter must be remitted to the trial judge: see Aguonie v. Galion Solid Waste Material Inc. et al. (1998), 1998 ON CA 954, 38 O.R. (3d) 161 (C.A.) at 171; Home Savings & Loan Corp. v. Linton (1999), 1999 ON CA 1832, 120 O.A.C. 316 (C.A.), at para. 6.

[19] The defendants argue that Vine Hotels is no longer good law after the 2010 amendments to the Rules of Civil Procedure and the Court of Appeal's decision in Combined Air Mechanical. Instead, they rely on B.A. Allen J.'s decision in Liu v. Silver (2010), 2010 ONSC 2218, 101 O.R. (3d) 702, [2010] O.J. No. 1608 (S.C.J.), and in particular this comment [at para. 19]:

It is also important to note that the amendments to the Rules offer judges on summary judgment motions broader scope to deal with evidentiary issues. Pitt, J. of this court posited in a recent decision, and I agree, that the issue whether it is appropriate to address the issue of discoverability on a summary judgment motion needs to be revisited in light of the broader powers afforded judges under the amended Rules the authority to weigh evidence, evaluate credibility, and draw any inference from the evidence. [Zwaigenbaum v. Scher, 2010 ONSC 559, Court File No. 09-CV-369646].

[20] It is not necessary for me to decide whether Vine Hotels is still good law for the purposes of this motion. It is enough to simply note that, as B.A. Allen J. in Liu v. Silver also noted, the broader powers granted under the new summary judgment rules give more scope for a judge to make findings of fact and evaluate credibility. Thus, discoverability on this summary judgment motion cuts both ways: the facts are largely within the knowledge of the plaintiff, but at the same time it is unresolved [page480] whether material facts of this nature are best left to the trial judge. A judge with a full record on a summary judgment motion will be in a position to evaluate the impact of the new rules on discoverability issues. Given the record at this point, the summary judgment motion has a reasonable chance of success.

[21] Is the matter complicated? I am not persuaded that the matter is complicated. The defendant is relying solely on the limitations defence set out in the pleadings. Given that this is a matter of breach of contract and negligent misrepresentation, there is nothing to stop the plaintiff from simply setting out sworn evidence of when and how the impugned conduct was discovered. Although, as the Court of Appeal cautioned in Combined Air Mechanical, affidavits and cross-examinations are not always an appropriate substitute for the discovery process, in this case I am satisfied that a record can be built that would leave a judge with sufficient evidence to make a decision on a summary judgment motion.

[22] Is this the clearest of cases? Given that the summary judgment motion has a reasonable chance of success, and the matter is not complicated, I find that this is not the clearest of cases and that a stay is not warranted.

Disposition

[23] The motion is dismissed. The summary judgment motion will go ahead. At the hearing, I received costs submissions from the parties. The parties may file further material and cross-examine. If they are unable to agree on a timetable, they may attend before a master. Costs are payable to the defendants. In their costs outline, the defendants ask that costs be fixed at $2,429.50 on a partial indemnity basis. Although there may be cases where, in motions to strike summary judgment motions, it is appropriate to award costs on a substantial indemnity basis, this is not one of them. I exercise my discretion and fix costs in the amount of $2,429.50.

Motion dismissed.

End of Document