COURT FILE NO.: CV-13-0928-00
DATE: 2013-09-27
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
7155662 CANADA LIMITED o/a XTREME STEEL & PROFILES
Domenic Saverino, for the Plaintiff
Plaintiff
- and -
OMEGA LIFT MANUFACTURING INC.
Mauro Marchioni, for the Defendant
Defendant
HEARD: September 27, 2013,
at Brampton, Ontario
Price J.
Reasons For Order
NATURE OF MOTION
[1] The defendant, Omega Lift Manufacturing Inc. (“Omega”), more than two months after receiving the plaintiff, Xtreme Steel & Profiles (“Extreme Steel”)’s motion for summary judgment, and four days before the motion was to be heard, delivered a responding affidavit, with five exhibits, one comprising two volumes of documents with over 22 tabs, setting out detailed facts alleging “various discrepancies, inconsistencies, and other misrepresentations in the invoices and accounting records supplied by the Plaintiff,” which it describes as “creative accounting”, outlined in very general terms in its Statement of Defence five months earlier.
[2] Xtreme Steel now seeks an adjournment for the purpose of delivering reply evidence and cross-examining the affiant of Omega’s affidavit. Additionally, it submits that it is now evident, having regard to the material Omega has filed, that the motion will require more than an hour to argue and should therefore be scheduled for a long motion date.
[3] Omega opposes Xtreme Steel’s request to file further material, and has indicated that it will consent to cross-examinations of the affiants on their affidavits only if Xtreme Steel undertakes that it will not deliver any evidence in reply to Omega’s affidavit. Omega refuses to give this undertaking.
[4] Xtreme Steel’s request for adjournment, for the first time since Rule 20 was amended, expanding the court’s powers to make findings of credibility in a motion for summary judgment, raises the procedural issue of whether the moving party in a motion for summary judgment should be entitled to deliver an affidavit in response to the facts set out in the respondent’s affidavit.
BACKGROUND FACTS
[5] Extreme Steel is a wholesale supplier of steel products. Omega was its customer. Extreme Steel, in its Statement of Claim dated March 4, 2013, asserts that it delivered material to Omega and that Omega failed to pay its invoices, amounting to $549,746.70, in spite of repeated promises to do so.
[6] Omega, in its Statement of Defence dated April 17, 2013, asserts that Extreme Steel delivered its materials outside of the time period within which it had agreed to do so, and within which Omega required them to satisfy the terms of its contract with a third party. Omega asserts that Extreme Steel is therefore not entitled to payment of its invoices and, in any event, is liable for a loss of $168,000.00 that Omega suffered as a result of its failure to deliver the materials to its third party customer. Omega claims a legal and equitable set-off for this loss, although it does not counter-claim for it.
[7] Additionally, Omega, in five paragraphs of its Statement of Defence, asserts that it discovered “various discrepancies, inconsistencies and other misrepresentations in the invoices and accounting records supplied by the Plaintiff to the Defendant in support of amounts claimed to be due and owing by the Defendant to the Plaintiff, dating back to November 2011.” In particular, Omega states that invoices already paid by it have been listed as due and owing, that certain materials for which it was invoices, and the amounts of which are claimed as due and owing, were never delivered by Extreme Steel, and that various materials supplied to it were never ordered. As a result, it denies that it is indebted to Extreme Steel in the amount alleged.
[8] On July 16, 2013, Extreme Steel delivered a motion record for a motion for summary judgment, for hearing today. On September 23, more than five months after receiving the motion record, and four days before the hearing, Omega delivered an affidavit with five exhibits, one of which consists of numerous documents under 22 tabs, with the details of its allegations of accounting irregularities described in general terms in its Statement of Defence.
[9] Upon receiving Omega’s material, Extreme Steel requested an adjournment of the motion so that it could deliver a reply affidavit and cross-examine the affiant of Omega’s affidavit. It also proposed that the motion be scheduled for hearing on a long motion date, as it now appeared likely that the argument of the motion would require two hours.
[10] Omega refused Extreme Steel’s request. It asserted that Extreme Steel was not entitled to deliver a reply affidavit and that it would consent to cross-examination of the affiants of the affidavits only if Extreme Steel undertook not to delivery any evidence in reply. Extreme Steel declined to give this undertaking.
ISSUE
[11] Extreme Steel’s request for adjournment raises, for the first time since Rule 20 was amended to give expanded powers to the court to make findings of credibility in motions for summary judgment, whether the party who has brought a motion for summary judgment is entitled to deliver affidavits in reply to the responding party’s affidavit.
PARTIES’ POSITIONS
[12] Extreme Steel submits that it has been taken by surprise by the detailed evidence that Omega has delivered only four days before the hearing of its motion. It says that it is entitled, on general principles of fairness, to respond to Omega’s allegations, the details of which are set out for the first time in Omega’s affidavit, and to cross-examine on the affiant of that affidavit.
[13] Omega opposes Extreme Steel’s request, arguing that Rule 20 does not permit the moving party in a motion for summary judgment to deliver reply evidence. It submits that to permit the moving party to deliver an affidavit would enable it to “split its case” in the motion and that it should be restricted to cross-examining the affiant of the responding party’s affidavit on his evidence.
ANALYSIS AND EVIDENCE
Legislation
[14] The procedure in a motion for summary judgment is governed by Rule 20.01. It provides, in part:
20.01(1) A plaintiff may, after the defendant has delivered a statement of defence or served a notice of motion, move with supporting affidavit material or other evidence for summary judgment on all or part of the claim in the statement of claim.
[15] The evidence on a motion under Rule 20.01 is governed by Rule 20.02. It provides:
20.02(1) An affidavit for use on a motion for summary judgment may be made on information and belief as provided in subrule 30.01(4), but, on a hearing of the motion, the court may, if appropriate, draw an adverse inference from the failure of a party to provide the evidence of any person having personal knowledge of contested facts.
(2) In response to affidavit material or other evidence supporting a motion for summary judgment, a responding party may not rest solely on the allegations or denials in the party’s pleadings, but must set out, in affidavit material or other evidence, specific facts showing that there is a genuine issue requiring a trial.
[16] The court, in a motion for summary judgment, applies the test and exercises powers set out in Rule 20.04. It provides:
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; or
(b) the parties agree to have all or part of the claim determined by a summary judgment and the court is satisfied that it is appropriate to grant summary judgment.
(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:
Weighing the evidence.
Evaluating the credibility of a deponent.
Drawing any reasonable inference from the evidence.
(2.2) A judge may, for the purposes of exercising any of the powers set out in subrule 2.1, order that oral evidence by presented by one or more parties, with or without time limits on its presentation.
Jurisprudence
[17] The Court of Appeal in Combined Air Mechanical Services Inc. v. Flesch, (2011),[^1] an appeal from which is currently on reserve by the Supreme Court, provided guidance as to interpretation of the broader powers given to a judge under Rule 20, as recently amended. It stated, in part:
In deciding if these powers should be used to weed out a claim as having no chance of success or be used to resolve all or part of an action, the motion judge must ask the following question: can the full appreciation of the evidence and issues that is required to make dispositive findings be achieved by way of summary judgment, or can this full appreciation only be achieved by way of a trial?
Thus, in deciding whether to use the powers in rule 20.04(2.1), the motion judge must consider if this is a case where meeting the full appreciation test requires an opportunity to hear and observe witnesses, to have the evidence presented by way of a trial narrative, and to experience the fact-finding process first-hand. Unless full appreciation of the evidence and issues that is required to make dispositive findings is attainable on the motion record – as may be supplemented by the presentation of oral evidence under rule 20.04(2.2) – the judge cannot be “satisfied” that the issues are appropriately resolved on a motion for summary judgment.
By adopting the full appreciation test, we continue to recognize the established principles regarding the evidentiary obligations on a summary judgment motion. The Supreme Court of Canada addressed this point in Lameman, at para. 11, where the court cited Sharpe J.’s reasons in Transamerica Life Insurance Co. of Canada v. Canada Life Assurance Co. 1996 ON SC 7979, (1996), 1996 7979 (ON SC), 28 O.R. (3d) 423 (Gen. Div.), at p. 434, in support of the proposition that “[e]ach side must ‘put its best foot forward’ with respect to the existence or non-existence of material issues to be tried.” This obligation continues to apply under the amended Rule 20. On a motion for summary judgment, a party is not “entitled to sit back and rely on the possibility that more favourable facts may develop at trial”: Transamerica, at p. 434.[^2] [Emphasis added]
[18] In providing for the motion record to be supplemented, at the motion judge’s discretion, by oral evidence, Rule 20 makes it clear that it was not intended that the plaintiff bringing a motion for summary judgment was necessarily to be restricted to the facts set out in its initial motion record. The Rule’s objective of enabling the court to determine whether it can gain a full appreciation of the facts without the necessity of a full trial is best served by the court exercising its discretion on a case by case basis to determine what evidence, beyond the affidavits initially filed by each party, will best enable it to make that determination.
[19] Combined Air involved a motion for summary judgment in an action commenced under the simplified procedure set out in Rule 76. Slightly different considerations arise in that context The Court of Appeal stated, in this regard:
When a judge is faced with a contested motion for summary judgment in a simplified procedure action that requires exercising the powers in rule 20.04(2.1), the judge will not only have to apply the full appreciation test, but will also need to assess whether entertaining the motion is consistent with the efficiency rationale reflected in the simplified procedures under Rule 76.[^3]
[20] Even in a Simplified Procedure case, where the court is likely to exercise its discretion to entertain supplementary evidence more narrowly, the court has permitted a moving plaintiff in a motion for summary judgment to deliver reply affidavits. In Elliott v. Gead Inc., (1998), Herold J. stated:
There is no specific provision in Rule 76 with respect to reply affidavits on motions for summary judgment. A conservative reading of rule 76.06(8) might suggest that no further material is contemplated. On the other hand, paras. (9) and (10) of the same rule, together with the case-law which has developed, clearly require both parties to put their best foot forward on the summary judgment motion. Rule 76.01(3) provides that except where Rule 76 provides otherwise the usual rules applying to an action apply to the simplified procedure.
Counsel and I were unable to locate a rule specifically providing for responding affidavits in an ordinary motion or application but the practice is almost universal. The practice is implicitly if not explicitly authorized by the provisions of rule 39.02(3) which deal with the timing of service of affidavits. Obviously, the rule does not apply directly to the simplified procedure because cross-examinations are not permitted. Rule 76.06(16), para. 8, dealing with the procedure at a summary trial, permits any proper reply evidence to be adduced with leave of the trial judge.
In 1061590 Ontario Ltd. v. Ontario Jockey Club, 1995 1686, 21 O.R. (3d) 547, 43 R.P.R. (2d) 161 (C.A.), Osborne J.A. wrote “a respondent on a motion for summary judgment must lead trump or risk losing”. To carry this analogy further, using a similar game of chance, I would suggest that a moving party cannot check and bump, but he should be able to bet and raise.
I am of the view that the rules do not prohibit reply affidavits and as such they should be permitted. If I am wrong in this conclusion, I would exercise my discretion, referring by analogy to rule 76.06(16), para. 8 and also to the facts of this particular case by permitting it….[^4]
[21] Cases decided since Elliot v. Gead Inc. reflect the fact that the court’s practice is to permit the moving party in a motion for summary judgment to deliver reply evidence. In Horton Plaza Inc. v. Richtree Inc., (2002), an action involving a commercial lease in which both parties moved for summary judgment, Sutherland J., dismissing the motions, noted defendant’s counsel’s argument that the court should draw an adverse inference from the moving plaintiff’s failure to deliver a reply affidavit:
I shall return to the question as to the submission of the defendant that, because the plaintiff saw fit not to cross-examine Colin West on his supplementary affidavit or to serve and file any material in reply or to seek an adjournment for the purposes, it should be inferred that the plaintiff does not disagree with the above-quoted paragraphs of that supplementary affidavit.[^5] [Emphasis added]
[22] In Geo. Forrest Int. Afrique S.P.R.L. v. Forsys Metals Corp., (2010), the defendant moving for summary judgment delivered such affidavits. Lederman J., the motion judge, while granting leave to examine the affiant under rule 39.03, stated: “Forsys did not deliver its reply affidavits in support of its motion for summary judgment until August 9, 2010, almost two months outside the court approved timetable.”[^6] Similarly, Master Polika gave directions for the delivery of reply material by the moving plaintiff in a motion for summary judgment in 1508270 Ontario Ltd. v. Laudervest Developments Ltd., (2006).[^7]
[23] While Rule 37.10, governing the material for use on motions, provides only that each party shall deliver its motion record with a copy of all affidavits and other material served by any party for use on the motion, does not specifically address what affidavits may be delivered by each party, and in what order, it is my view that the court may apply subrule 14(20) of the Family Law Rules by analogy:
14(2) The following restrictions apply to evidence for use on a motion, unless the court orders otherwise:
The party making the motion shall serve all the evidence in support of the motion with the notice of motion.
The party responding to the motion shall then serve all the evidence in response.
The party making the motion may then serve evidence replying to any new matters raised by the evidence served by the party responding to the motion.
No other evidence may be used.
[24] While the court has discretion to depart from this protocol, the party seeking to depart from it should, in the interests of fairness, bear the onus of justifying this. In Children’s Aid Society of Toronto v. B.B., 2012 ONCJ 646, S.B. Sherr J. stated, in this regard:
Subrule 14(20) of the rules sets out a clear process for the introduction of evidence at a motion. Compliance with this process should be the rule and not the exception. The onus is on the party seeking leave to introduce evidence not falling within paragraphs 1-3 of the sub-rule to justify its admission.[^8] [Emphasis added]
[25] Justice Sherr cited his earlier decision in Fakhim v. Shirazi, (2007), for the appropriate procedure for a party to follow when seeking admission of an additional affidavit pursuant to subrule 14(20):
If a party is seeking leave to admit an affidavit pursuant to subrule 14(20), the best practice is to serve and file a motion with supporting material. If the other party or parties do not consent to the admission of the affidavit, these motions should generally not be submitted by over-the-counter motions under clause 14(6)(e.2) [procedural, uncomplicated or unopposed matters] of the rules via Form 14B. A Form 14 motion seeking leave to file the affidavit is preferred so that submissions as to admissibility can be made in open court, as well as any requests for adjournment (and terms of adjournment) that may result from the admission of the affidavit. If it is impractical to bring this motion prior to the hearing of the primary motion (which I understand will often be the case), then this motion should be returnable on the same day as the date for the hearing of the primary motion and the confirmation form sent to the court should indicate that the introduction of the affidavit will be in issue. The affidavit should not be filed without prior leave of the court.[^9]
[26] Although the moving party did not follow this procedure in Children’s Aid Society v. B.B., Justice Sherr nevertheless admitted the moving party’s reply affidavit. He stated:
Notwithstanding the procedural irregularity, the court has the discretion to admit the affidavit and “to order otherwise” as described in subrule 14 (20). In paragraphs 7 and 8 of Fakhim, supra, I wrote as follows:
7 In Winton v. Lofranco 2004 7043 (ON SC), (2004), 7 R.F.L. (6th) 444, 2004 7043, [2004] O.J. No. 3418, 2004 CarswellOnt 3346 (Ont. S.C.), Justice Susan G. Himel allowed a party to file an additional affidavit at a motion and held, at paragraph [20], that the court should take an expansive rather than a technical approach to the admission of evidence when children are involved, provided the evidence is relevant, necessary and probative to the matters in issue.
8 In determining whether all or part of an affidavit should be admitted into evidence, despite the evidentiary restrictions in subrule 14(20), the court needs to strike a balance between the importance of ending the delivery of duelling affidavits on motions and the importance of receiving all relevant evidence.[^10] [Emphasis added]
[27] In the present case, Xtreme Steel is faced for the first time with the details of the allegations raised in the Statement of Defence. It would be unfair to require it to proceed to the hearing of the motion without having the opportunity to reply and to cross-examine the affiant on it. Giving it this opportunity will best ensure that the judge hearing the motion can determine whether the full appreciation of the evidence and issues that is required to make dispositive findings can be achieved by way of summary judgment, or whether that full appreciation can only be achieved by way of trial.
[28] Omega, in the circumstances, should properly have acceded to Xtreme Steel’s request for an adjournment to permit it to deliver reply evidence, especially having regard to the fact that the hearing of the motion, even if leave to deliver such evidence were not granted, would require an amount of time that the court can only accommodate on a long motion date. Omega will therefore be required to pay Xtreme Steel’s costs wasted by the parties’ appearance.
CONCLUSION AND ORDER
[29] Based on the foregoing, it is ordered that:
The plaintiff’s motion for summary judgment is adjourned to after March 19, 2014, for hearing as a long motion for an estimated time of two hours.
The plaintiff has leave to deliver reply evidence in affidavit form by October 31, 2013.
The parties have leave, after November 30, 2013, to cross-examine on each other’s affidavits.
The plaintiff shall deliver its factum by December 30, 2013.
The defendant shall deliver a fresh factum by January 20, 2014.
The defendant shall pay the costs of today’s attendance, thrown away, on a partial indemnity scale, fixed at $750.00, within 60 days.
Price J.
Released: September 27, 2013
COURT FILE NO.: CV-13-0928-00
DATE: 2013-09-27
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
7155662 CANADA LIMITED o/a XTREME STEEL & PROFILES
Plaintiff
- and -
OMEGA LIFT MANUFACTURING INC.
Defendant
REASONS FOR ORDER
Price J.
Released: September 27, 2013
[^1]: Combined Air Mechanical Services Inc. v. Flesch (2001), 108 O.R. (3d) 1 (C.A.), 2011 ONCA 764, leave to appeal granted, with Robert Hryniak v. Fred Mauldin et al., 2012 36231 (SCC), and Bruno Appliance and Furniture, Inc. v. Robert Hryniak, 2012 36262 (SCC) [^2]: Combined Air Mechanical Services Inc. v. Flesch, supra, paras. 49 to 58 [^3]: Combined Air Mechanical Services Inc. v. Flesch, supra, paras. 255 to 258 [^4]: Elliott v. Gead Inc., 1998 ON SC 146666, per Herold J., paras. 2 to 7 [^5]: Horton Plaza Inc. v. Richtree Inc., 2002 17131 (ON SC), per Sutherland J., para. 33 [^6]: Geo. Forrest Int. Afrique S.P.R.L. v. Forsys Metals Corp., 2010 5670 (ON SC), per Lederman J., para. 31 [^7]: 1508270 Ontario Ltd. v. Laudervest Developments Ltd., (2006), 28728 (ON SC), per Master Polika, para. 17 [^8]: Children’s Aid Society of Toronto v. B.B., 2012 ONCJ 646, S.B. Sherr J., para. 53 [^9]: Fakhim v. Shirazi, 2007 126 (ONCJ), per Sherr J., para. 9 [^10]: Children’s Aid Society of Toronto v. B.B., 2012 646 (ONCJ), per Sherr J. , para. 56