COURT FILE NO.: CV-13-473432
DATE: 20140926
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
DONALD WILLIAM HANCOCK
Plaintiff/Defendant by Counterclaim
– and –
MICHAEL HANCOCK and JANINE HANCOCK
Defendants
-and –
DONALD WILLIAM HANCOCK, DAPHNE AMES and STEPHEN DONALD HANCOCK
Defendants by Counterclaim
V. Ross Morrison and Natalie Schernitzki, for the Plaintiff/Defendants by Counterclaim (Responding Parties)
Ira Book, for the Defendants Michael Hancock and Janine Hancock (Moving Parties)
HEARD: 22 August 2014 at Toronto
REASONS FOR DECISION
(Motion for Summary Judgment)
MEW J.
[1] In March 2012, Donald Hancock, who is now 87 years old, transferred an investment portfolio with a book value of $1,298,721 to two of his children, Michael and Janine Hancock. No consideration was provided by Michael or Janine Hancock for the transfer.
[2] In June 2012, Michael and Janine Hancock purchased Donald Hancock’s residence from him for $560,000. The parties agreed this was a fair market value for the property, which carried a substantial mortgage.
[3] In this action, commenced on 4 February 2013, Donald Hancock alleges that he was coerced or unduly influenced to transfer the investments and the property to the defendants, that the defendants misrepresented to him what they would do on his behalf in return for the transfer, and that he remains the beneficial owner of the investments and the house.
[4] The defendants say there is no merit to the plaintiff`s allegations and move for summary dismissal of his action under Rule 20.04 of the Rules of Civil Procedure.
[5] The defendants have counterclaimed against Donald Hancock, their brother Stephen Hancock and their father’s life partner Daphne Ames. They allege that their father and brother have defamed them by stating or implying that the defendants misappropriated their father’s property or unduly influenced him to divest himself of his property for their own benefit and have left him in dire financial straits. They also allege that their brother and Ms. Ames have conspired against them by unduly influencing Donald Hancock to commence the main action which, if ultimately successful, will benefit both Stephen Hancock and Ms. Ames financially.
[6] The defendants also say there are no triable issues in relation to the counterclaim, and, accordingly, they seek summary judgment in that action too.
[7] There was originally another active defendant in the action. Andrew MacSkimming is a lawyer who provided independent legal advice to Donald Hancock in connection with the transfer of both the investments and the real property. The action against Mr. MacSkimming was dismissed on consent and without costs.
[8] All of the parties, including Mr. MacSkimming, have been examined for discovery. The motion materials include transcripts of those examinations as well as affidavits from Michael Hancock (consisting of 47 pages and having 84 exhibits), Donald Hancock, Stephen Hancock, Daphne Ames and Ferdinand Blom (a tax adviser).
The Parties’ Positions
[9] The defendants assert that this case is exactly the sort of matter that Karakatsanis J. had in mind as suited for summary judgment when she stated, in Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, at para. 50:
[50] When a summary judgment motion allows the judge to find the necessary facts and resolve the dispute, proceeding to trial would generally not be proportionate, timely or cost effective. Similarly, a process that does not give a judge confidence in her conclusions can never be the proportionate way to resolve a dispute. It bears reiterating that the standard for fairness is not whether the procedure is as exhaustive as a trial, but whether it gives the judge confidence that she can find the necessary facts and apply the relevant legal principles so as to resolve the dispute.
[10] The responding parties, pointing to the extensive record and the diametrically conflicting evidence relied on by the adverse parties, argue that this matter falls squarely into the class of cases that Lauwers J.A. was referring to in Baywood Homes Partnership v. Haditaghi, 2014 ONCA 450, 120 O.R. (3d) 438 at para. 44-45:
[44] What happened here illustrates one of the problems that can arise with a staged summary judgment process in an action where credibility is important. Evidence by affidavit, prepared by a party’s legal counsel, which may include voluminous exhibits, can obscure the affiant’s authentic voice. This makes the motion judge’s task of assessing credibility and reliability especially difficult in a summary judgment and mini-trial context. Great care must be taken by the motion judge to ensure that decontextualized affidavit and transcript evidence does not become the means by which substantive unfairness enters, in a way that would not likely occur in a full trial where the trial judge sees and hears it all.
[45] Judges are aware that the process of preparing summary judgment motion materials and cross-examinations, with or without a mini-trial, will not necessarily provide savings over an ordinary discovery and trial process, and might not “serve the goals of timeliness, affordability and proportionality” (Hryniak at para. 66). Lawyer time is expensive, whether it is spent in court or in lengthy and nuanced drafting sessions. I note that sometimes, as in this case, it will simply not be possible to salvage something dispositive from an expensive and time-consuming, but eventually abortive, summary judgment process. That is the risk, and is consequently the difficult nettle that motion judges must be prepared to grasp, if the summary judgment process is to operate fairly.
[11] The defendants put great stock in the dismissal of the action against Mr. MacSkimming. He had asked Donald Hancock whether he was being bullied or pressured into transferring his property. His notes reflect that Mr. Hancock answered “No. Absolutely not”. Donald Hancock had, subsequent to the transfer of the investments, executed an acknowledgment in which he confirmed that he had executed all of the documents related to the transfer voluntarily and not under any duress or undue influence by any party. The moving parties argue that the dismissal of the action against Mr. MacSkimming is strongly corroborative of the defence position in relation to the allegations of undue influence and the existence of a resulting trust.
[12] According to the defendants, no concerns about the transfers were expressed by Donald Hancock or anyone on his behalf until Daphne Ames and Stephen Hancock found out what had happened. Only then were claims of intimidation and coercion were levelled at Michael Hancock in what the defendants say is a contrived attempt to unwind the transfers.
[13] Donald Hancock claims that the way Michael spoke to him and the way that Michael would do things instilled fear into him. He says that the transfer of the investment portfolio in March 2012 only occurred after many months of coercion and undue influence, motivated by the defendants’ concern that Donald Hancock’s assets – and hence, their potential inheritance – was threatened by some significant tax liabilities that Donald was facing.
[14] It is uncontested that all parties anticipated that the defendants would continue to provide for Donald Hancock after the transfer of assets. Indeed, Donald continues to live in the house which he sold to the defendants. Expenses relating to the house are met by the defendants and Donald Hancock receives money from the defendants.
[15] But there is also no doubt that since the allegations of undue influence and coercion first arose, there has been a significant change in the relationship between the parties. In November 2012, for example, Michael Hancock wrote in an email to Mr. Blom, the tax adviser:
Just to advise you, the old man has flipped out, again, and there has been a complete breakdown in communications. He’s been calling my bankers and meeting my lawyers and all kinds of crazy stuff. Just found out today. Steve says he even wants to pay the CRA. I would have nothing to do with him if I were you because the Estate will not be responsible for any bills or debts he incurs.
[16] Around the same time, Michael Hancock left messages on his father’s telephone (recordings of which were played during the hearing of the motion) that were abusive, demeaning and threatening.
Analysis – Step One: Are there Genuine Issues Requiring Trial?
Main Claim
[17] Each of the parties points to evidence regarded as supportive of their respective positions. The issue on this motion is whether or not there are genuine issues requiring a trial. No genuine issue for trial will exist:
[W]hen the judge is able to reach a fair and just determination on the merits on a motion for summary judgment. This will be the case when the process (1) allows the judge to make the necessary findings of fact, (2) allows the judge to apply the law to the facts, and (3) is a proportionate, more expeditious and less expensive means to achieve a just result.
Hryniak at para. 49
[18] To reach a fair and just determination, the summary judgment process must, as already noted, give “the judge confidence that she can find the necessary facts and apply the relevant legal principles so as to resolve the dispute” (Hryniak, at para. 50)
[19] I am not confident that the present record enables me to determine any of the issues in dispute between the parties.
[20] For a start, there are serious issues of credibility to be resolved.
[21] The plaintiff will no doubt have to explain to a court why Mr. MacSkimming concluded that there was no undue influence when the plaintiff says that in fact there was.
[22] I do not regard the fact that a claim for professional negligence against Mr. MacSkimming was dropped necessarily means that his assessment was correct. It merely implies that, in undertaking his responsibilities as the provider of independent legal advice to Donald Hancock, he did not fall below the standard of care expected of him. He could still have been wrong in his assessment despite having exercised due care.
[23] The defendants will have to explain how the transfer to them of a substantial investment portfolio, without consideration, against the advice given by Mr. Blom and to apparent exclusion of their brother’ Stephen’s interests, was designed only to help their father protect his assets from creditors, and not to serve their personal interests.
[24] In particular, the words and actions of Michael Hancock will have to be considered, and an assessment likely made as to whether they disclose what Mr. Book described in argument as “frustration” or, as suggested by Mr. Morrison, part of a campaign of elder abuse.
Counterclaim
[25] The defendants’ claim for defamation is pleaded in the most general of terms. The responding parties (defendants by counterclaim) deny having made defamatory statements and, in the alternative, plead that their comments were fair, based on true (or substantially true) facts or that they were statements of opinion made without malice.
[26] The defendants’ evidence of defamation consists of little more than a regurgitation of the bald allegations contained in their counterclaim. They point, in addition, to notes of a telephone conversation involving Stephen Hancock overheard by Janine Hancock’s son, and to what they describe as an admission made by Stephen Hancock on his examination for discovery.
[27] The issue of the counterclaim engaged less than ten minutes of Mr. Book’s three plus hours of submissions (including reply), and a corresponding amount of attention from Mr. Morrison. Aside from an inadequate record to establish liability, insufficient evidence was presented that would have enabled me to assess a fair amount for damages.
[28] By reason of the foregoing, I also decline to grant the moving parties the summary judgment that they seek on their counterclaim because I cannot comfortably conclude that there is no triable issue regarding the liability of the responding parties based on the record before me.
Analysis – Step Two: Can the Need for Trial be Avoided Using Rule 20.04 Powers?
[29] Having concluded on the basis of the record before me that there are genuine issues for trial, I must consider whether, if the fact finding tools provided for by Rule 20.04(2.1) and (2.2) were to be deployed, the need for a trial could be avoided. The court may, in its 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.
Hryniak, at para. 66
[30] To gauge the utility of engaging the fact finding tools, it is appropriate to consider the process to date and, in particular, what the current evidentiary record consists of. If it is probable that adding oral testimony to the current record will muddy the waters further, rather than enable than enable a judge to find facts with confidence, it will be more just to press the reset button and proceed to trial.
[31] Examinations for discovery of the parties were conducted at an early stage: Andrew MacSkimming (13 June 2013); Donald Hancock (17 July 2013); Daphne Ames (17 July 2013), Michael Hancock (19 and 20 December 2013 and 27 May 2014), Janine Hancock (20 December 2013) and Stephen Hancock (18 July 2014).
[32] There are outstanding issues arising from undertakings and refusals given on a number of the examinations conducted to date.
[33] To date, there are approximately 870 pages of transcripts.
[34] I have already alluded to the affidavit evidence. Those affidavits have not been cross-examined on. However, with the exception of the tax adviser (Mr. Blom), the deponents have all been examined for discovery. All of the deponents of affidavits except for Stephen Hancock were examined for discovery before their affidavits were served (a continuation of Michael Hancock’s examination did take place after he had sworn the affidavit filed on this motion but the affidavit and its contents do not feature in the continued examination that was conducted).
[35] Counsel for the moving party wished to avoid further expense of cross-examining on affidavits, given the admissions made by the discovery witnesses.
[36] Unfortunately the discovery evidence does not, for the reasons already discussed, provide a sufficient basis for me to comfortably determine the dispute summarily.
[37] The defendants’ record consists of 1101 pages and the responding parties mustered 396 pages. The moving parties presented a 53 page factum. The responding parties’ factum was 34 pages.
[38] The summary judgment motion was set down for a one day hearing on a motion list. While counsel were able to complete their argument within the time allotted, there were numerous occasions during the course of argument when I was told that there was not enough time to take me to the evidence or the law.
[39] As Karakatsanis J. notes in Hryniak at para. 32:
While summary judgment motions can save time and resources, like most pre-trial procedures, they can also slow down the proceedings if used inappropriately. While judges can and should play a role in controlling such risks, counsel must, in accordance with the traditions of their profession, act in a way that facilitates rather than frustrates access to justice. Lawyers should consider their client’s limited means and the nature of their case and fashion proportionate means to achieve a fair and just result.
[40] Securing efficient dispute resolution is a mutual responsibility of all actors in the civil justice system. Judges will do the best they can with the case that is presented. But depending on whether there has been any judicial case management (and in the vast majority of cases there will not have been), the lawyers control the case that is presented to the court.
[41] Compiling a substantial evidentiary record and then, as in the present case, racing through the argument because insufficient time has been obtained to properly present the case, is sub-optimal.
[42] That said, the fact that there is a substantial evidentiary record in this case is not dispositive of its suitability for summary judgment. In some cases there will be a lot of paper but few issues of credibility or truly contentious factual disputes. Such cases are often particularly well suited to summary adjudication. Similarly, there will be other cases where, although there are evidentiary conflicts, they can be clearly identified and adequately dealt with either on a paper record or by having a mini-trial.
[43] Examinations for discovery are often conducted differently to examinations at trial or cross-examinations on affidavits. There is no evidence in chief of the witness to refer to. The examiner will often restrict the vigour and scope of the examination to obtain information that will assist in preparing for trial as well as to obtain admissions that read well on a transcript. Accordingly, the use of discovery transcripts on summary judgment motions, while permissible, has some limitations when it comes to the extent to which a judge can rely on such evidence to make findings, particularly when there is conflicting evidence or significant credibility issues.
[44] Furthermore, a substantial evidentiary record can sometimes, as noted by Lauwers J.A. in Baywood Homes, obscure the “authentic voice” of a witness in cases where credibility is important.
[45] I do not think the piecemeal approach of using mismatched affidavits and discovery transcripts, even with evidence from a mini-trial grafted on, would produce a fair and just outcome in this case. Indeed, none of the parties advocated that adducing further oral evidence at this stage would assist the court in making findings under Rule 20.04(2.1) if the court was unable to determine whether there was a genuine issue for trial based on the existing record.
[46] By far the most telling thing that happened at the hearing of the motion was the playing of recordings of messages left by Michael Hancock on his father’s voicemail. The tone of those recordings conveyed an aura which could not be discerned from the affidavits, the transcripts or the documents.
[47] For a judge to assess what is really going on in this case, he or she will have to not only listen to and read the evidence, but will also want to observe the demeanour of the witnesses in respect of the full range of the issues between the parties and to consider the human dynamics involved.
[48] Because of the nature and quality of the substantial evidentiary record in this case and the credibility issues that are patent, I have concluded that the use of the fact finding powers would not allow the court to reach a fair and just adjudication on the merits.
Result
[49] Ultimately, the motion has given me a sufficient flavour of this dispute to form the view that the trier of fact and law needs to see it all and hear it all in order to do justice between the parties.
[50] The motion is therefore dismissed.
[51] It would be preferable to get the case on to trial as soon as possible, with directions being given to ensure that the case is ready for trial.
Costs
[52] I was provided with costs summaries. They underscore the concern that a misconceived summary judgment motion can result in significant unnecessary expense. The moving parties assess their costs relating to the motion alone at $35,184.54 on a partial indemnity basis and $48,866.02 on a substantial indemnity scale. The responding parties seek $36,766.66 (partial indemnity).
[53] The moving parties shall pay the responding parties’ costs, which, having regard to the principles of proportionality, the factors set out in rule 57.01(1) and the guidance provided by the Court of Appeal in Boucher v. Public Accountants Council of Ontario, 2004 CanLII 14579 (ON CA), 71 O.R. (3d) 291 at para. 26 (the court should fix an amount that is fair and reasonable to the parties against whom costs are awarded rather than an amount fixed by reference the actual costs incurred by the successful litigant), I fix at $35,000 (inclusive of disbursements and HST).
[54] Having refused summary judgment, it seems to me that it would be appropriate for me to exercise the court’s powers under rule 20.05 to assist the action to proceed to trial as efficiently and expeditiously as possible. Counsel should contact my judicial assistant to schedule an appointment for that purpose.
Mew J.
Date: 26 September 2014
Correction made:
17 October 2014
In paragraph [54], second line: rule 25.05 has been amended to read rule 20.05.
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
DONALD WILLIAM HANCOCK
Plaintiff/Defendant by Counterclaim
– and –
MICHAEL HANCOCK and JANINE HANCOCK
Defendants
-and –
DONALD WILLIAM HANCOCK, DAPHNE AMES and STEPHEN DONALD HANCOCK
Defendants by Counterclaim
REASONS FOR DECISION
Mew J.
Released: 26 September 2014