ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: CV-08-00365112-000
DATE: 20151102
BETWEEN:
IPEX INC.
Plaintiff
– and –
LUBRIZOL ADVANCED MATERIALS CANADA, INC. and LUBRIZOL ADVANCED MATERIALS, INC.
Defendants
Benjamin Zarnett and Suzy Kauffman, for the Plaintiff
Peter E.J. Wells and Joanna Vatavu, for the Defendants
HEARD: October 21, 2015
ENDORSEMENT
Diamond J.:
Overview
[1] In October 2008, the plaintiff commenced this action against the defendants for damages for breach of contract arising from the manufacture and supply of allegedly defective composite plastic pipe products. This proceeding is related to another action previously commenced by the plaintiff in August 2006 against the company who sourced the raw materials to the defendants’ predecessor.
[2] In the spring of 2012, the defendants brought a motion for summary judgment seeking an order dismissing the plaintiff’s claim on the basis that there were no genuine issues requiring a trial. By endorsement released on May 18, 2012, Justice Belobaba dismissed the defendants’ motion for summary judgment. The defendants then unsuccessfully moved before Justice Pardu in the Divisional Court for leave to appeal from the order of Justice Belobaba in late September 2012.
[3] The Defendants have now scheduled a second motion for summary judgment which (a) essentially seeks the same relief, and (b) is premised upon the essential same grounds, as their first motion for summary judgment. The defendants’ position is that the decision of Justice Belobaba was based, at the time, on the Court of Appeal for Ontario’s interpretation of Rule 20.04 in Combined Air Mechanical Services Inc. v. Flesch (2011) 2011 ONCA 764, 108 O.R. (3d) 1 (C.A.), and given the subsequent “clarion call” issued by the Supreme Court of Canada in Hryniak v. Mauldin 2014 SCC 7, the defendants’ pending motion for summary judgment should proceed anew under a post-Hryniak assessment.
[4] As the defendants’ pending motion for summary judgment is not scheduled to proceed until March 2016, the plaintiff has brought this motion seeking an order precluding the defendants from proceeding with the specific “second chance” portions of their pending motion for summary judgment.
[5] For the reasons set out hereinafter, I agree with the plaintiff and grant the relief sought.
Summary of Relevant Facts
[6] The grounds in support of the defendants’ first motion for summary judgment were twofold:
a) the plaintiff’s claim was subject to disclaimer of liability clauses contained in supply agreements between the parties (“the disclaimer defence”), and
b) the plaintiff’s claim was statute barred having been commenced more than two years after being “discovered” within the meaning of the Limitations Act 2002 S.O. 2002, c.24 (“the limitation defence”).
[7] In dismissing the defendants’ original motion for summary judgment, Justice Belobaba held as follows:
a) with respect to the disclaimer defence,
i) the language used in the disclaimer of liability clauses did exclude liability for the plaintiff’s claim in negligence,
ii) the language used in the disclaimer of liability clauses did not exclude liability for breach of the condition of fitness for purpose (as per section 15(1) of the Sale of Goods Act R.S.O. 1990 c. S1), and
iii) even if the disclaimer of liability clauses applied, the parties did not conduct their business in accordance with the terms and conditions of the agreements, and thus the issue of post-contractual conduct (which could result in an amendment of the agreements so that it no longer represents the intentions of the parties) was a genuine issue for trial.
b) with respect to the limitation defence,
i) as the plaintiff’s action is primarily a claim for indemnity, section 18 of the Limitations Act provides that the limitation period begins to run on the day on which the first alleged wrongdoer (i.e. the plaintiff) was served with the claim in respect of which contribution and indemnity is sought. That date occurred in the fall of 2007. Accordingly, the commencement of this action in October 2008 was not in breach of the two year limitation period, and
ii) the first time that the plaintiff knew or should have known that customer claims about defective piping were attributable to products supplied by the defendants was in March 2008 or, at the earliest, in the fall of 2007. The commencement of this action in October 2008 was thus within the two-year limitation period.
[8] Of note, in Justice Belobaba’s final paragraphs he dismissed the defendants’ motion for summary judgment but concluded as follows:
“The limitations argument does not succeed with respect to the claims relating to the 2002 Supply Agreement. The disclaimer clause argument succeeds with regard to the plaintiff’s negligence claim but does not succeed with regard to the s. 15(1) fitness for purpose claim. The s. 15(1) trade-name proviso does not apply. The issue of post-contractual conduct is a genuine issue requiring a trial.”
[9] Although not fully clear, it appears to me that the limitation defence was arguably dismissed by Justice Belobaba altogether, therefore rendering such a finding to be final in nature. This is consistent with the Court of Appeal for Ontario’s decision in Ball v. Donais (1993) 1993 8613 (ON CA), 13 O.R. (3d) 322 (C.A.) wherein the Court held that when a decision precludes a defendant's entitlement to raise thereafter, as a defence to this action, a plaintiff's failure to sue within the limitation period, that decision is a final order and thus an appeal lies to the Court of Appeal for Ontario.
[10] The defendants took a different view and sought leave to appeal the decision of Justice Belobaba from the Divisional Court. By oral reasons released on September 24, 2012, Justice Pardu (as she then was) dismissed the defendants’ motion for leave to appeal and held:
“These issues do not raise questions of conflicting decisions on matters of principle. Whether or not the motion judge was correct in all respects regarding the construction of these contracts, his conclusions as to the effect of conduct, that is to say resolution of some claims and whether knowledge had been established to start a limitation period running raises issues particular to these parties. None of his conclusions are res judicata. Requiring the defendants in this case to proceed to trial does not raise issues of broad public importance nor issues relevant to the development of the law and the administration of justice.”
[11] Again, based upon Justice Belobaba’s findings on the first motion for summary judgment, it is unclear to me whether the limitation defence is in fact still a live issue for trial, although Justice Pardu did state that, in general, none of Justice Belobaba’s “conclusions” are res judicata. Query whether those conclusions include the limitation defence or are restricted to the “construction and effect of the contracts”.
[12] In any event, the defendants’ pending second motion for summary judgment seeks to revisit both the disclaimer and limitation defences. In addition to relying upon their alleged ability to request a post-Hryniak assessment of their motion, the defendants have also produced a document which is identified as an internal complaint form (created by the plaintiff) relating to the defendants’ products. The document is dated May 12, 2006 and is being relied upon by the defendants to support their argument that the “trend” of alleged defective products was known to the plaintiff as early as 2006.
[13] During argument, I asked counsel for the parties to confirm when this 2006 complaint was produced by the plaintiff to the defendants in this litigation (i.e. before or after the first motion for summary judgment). While neither counsel could accurately provide that answer to me at the time, they subsequently delivered a joint letter to me confirming that the 2006 complaint was delivered by the plaintiff to the defendants in February 2011.
Rule 20.04
[14] For the disposition of this motion, it is important to review, albeit briefly, the relevant jurisprudence under Rule 20.04.
[15] As part of the implementation of various changes to the Rules of Civil Procedure as recommended by the report of former Associate Chief Justice Osborne release in November 2007, the Civil Rules Committee proposed a series of amendments to the Rules which came into force by regulation effective January 1, 2010.
[16] Rule 20.04 was one of the many amended rules. The new Rule 20.04 provided that the court shall grant summary judgment if it is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence (as opposed to previously needing to be satisfied that there is “no genuine issue for trial”). The new Rule 20.04 also provided the court with a series of enhanced fact-finding powers, including the weighing the evidence, the evaluation of the credibility of a deponent, and the power to order that oral evidence be presented by one or more parties, with or without time limits on its presentation for the purpose of making the necessary findings of fact (the “mini-trial”).
[17] When the defendants’ first motion for summary judgment proceeded before Justice Belobaba, the governing test at that time was articulated by the Court of Appeal for Ontario in Combined Air. The Court of Appeal emphasized that the purpose of the new rule is to eliminate unnecessary trials, not to eliminate all trials, and that the guiding consideration is whether the summary judgment process will provide an appropriate means for effecting a fair and just resolution of the dispute before the court.
[18] The Court of Appeal created a “full appreciation test” to be applied by the motions judge in determining whether or not a trial is required in the interests of justice. The motions judge was to ask: can a full appreciation of the evidence and issues 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? Unless full appreciation of the evidence and issues was attainable on the motion record, the judge could not be satisfied that the issues could be resolved by way of a motion.
[19] Subsequent to the Combined Air decision, and after Justice Belobaba’s dismissal of the defendants’ motion for summary judgment, the Supreme Court of Canada released Hryniak and established a road map in terms of how a motions judge should approach a motion for summary judgment. The Court must first determine whether there is a genuine issue requiring a trial based only upon the evidence filed with the Court and without using the new fact finding powers set out in the 2010 amendments. Summary judgment will thus be available if there is sufficient evidence to justly and fairly adjudicate the dispute, with the motion being an affordable, timely and proportionate procedure.
[20] If the Court finds the presence of a genuine issue requiring a trial, the motions judge must then determine if the need for a trial can be avoided by using the new, enhanced powers described previously herein.
Decision
[21] In my view, there are several reasons why the plaintiff’s motion must succeed.
a) Hryniak is retroactive
[22] The Rule 20 amendments all occurred before the defendants’ first motion for summary judgment. This is not a case where the rule was amended after Justice Belobaba’s decision, and thus a potential substantive legislative is presumed to only apply prospectively, rather than retroactively or retrospectively (in the absence unless there is a clear indication to the contrary in the legislation).
[23] As held by the Supreme Court of Canada in British Columbia v. Imperial Tobacco Canada Ltd. 2005 SCC 49, 2005 S.C.C. 49, a court ruling which changes the law from what it was previously thought to be operates retrospectively as well as prospectively, and will have a retrospective effect so far as the parties to the particular dispute are concerned.
[24] I echo and rely upon the comments of Justice Wilson in Jimenez v. Romeo 2005 47748 (S.C.J.) when she stated:
“The plaintiff and intervenor concede that common law as it develops applies retroactively to outstanding matters not yet determined and, if a case is appealed, until it is finally determined. Once a case has been finally determined or disposed of by dismissal, or by exhausting all potential routes of appeal, the principle of retroactivity of new law cannot apply. To do so would create chaos, uncertainty, and would totally undermine the principle of finality.
The law is constantly changing. If final orders were to be set aside when there was a change in the law, there would be no finality to litigation. Litigants could never be certain that matters before the court would be brought to a close.”
[25] The defendants unsuccessfully sought leave to appeal from Justice Belobaba’s decision, and exhausted their routes of appeal. To the extent that the defendants submit that the legal test under Hryniak is substantially different than under Combined Air, such a submission must be rejected as the test under Hryniak is applied retroactively and was, effectively, the law at the time of Justice Belobaba’s decision. The defendants cannot obtain a “second kick at the can” simply due to the test under Rule 20.04 being further clarified by the Supreme Court of Canada. To hold otherwise would allow litigants to reopen summary judgment decisions decided under the new Rule 20.04 up to the release of Hryniak and run counter to the Supreme Court of Canada’s stated primary objective in terms of maximizing limited judicial resources.
b) A post-Hryniak assessment would make no difference
[26] In dismissing the defendants’ first motion for summary judgment, Justice Belobaba agreed with the defendants’ characterization of the record, and stated as follows:
“I agree with LZAM that, in principle, this case is amenable to summary judgment. It is primarily a case of statutory and contractual interpretation. The documentary evidence is limited and not factually contentious. There are only two witnesses. Their affidavits are short, and the transcripts of their cross-examinations are about 50 pages each in length. The record is such that a motions judge can achieve a full appreciation of the evidence and issues required to make dispositive findings.”
[27] Justice Belobaba did what the Supreme Court of Canada ultimately directed a motions judge to do: he first determined whether there was a genuine issue requiring a trial based only upon the evidence filed with the Court and without using the new fact finding powers. It was the defendants who argued before him that he was in possession of all the relevant evidence necessary to make his determination. Justice Belobaba considered that evidence, and found that he did not need to avail himself of the new fact finding powers to conclude that the disclaimer and limitation defences failed.
[28] The only “new” evidence being relied on by the defendants in their pending second motion for summary judgment is the 2006 complaint. While the 2006 complaint was not before Justice Belobaba on the first summary judgment motion, it was nevertheless already produced by the plaintiff and available to the defendants at the time. As held by Justice Fitzpatrick in 1510610 Ontario Inc. v. Man-Shield 2011 ONSC 302 (S.C.J.), given the onus on a moving party seeking summary judgment (whether under Combined Air, Hryniak or before either decision) it is not just the responding party who has an obligation to “lead trump or risk losing”. The court must always assume that the parties have put their best foot forward and placed all relevant evidence in the record.
[29] The defendants omitted to include the 2006 complaint in the record before Justice Belobaba. Even though I believe that the 2006 complaint would likely not have impacted the result before Justice Belobaba (as one complaint does not establish a “trend”), the defendants did not comply with their obligation to lead trump (or trump as they see it) and cannot be permitted to revisit the matter by way of second motion for summary judgment.
c) Res judicata/Issue estoppel
[30] Regardless of whether Justice Belobaba’s decision precludes the defendants from raising the limitation defence at trial, the Court of Appeal for Ontario’s decision in V.K. Mason Construction Ltd. v. Canadian General Insurance Group Ltd. 1998 14615 (ON CA), [1998] O.J. No. 5291 (C.A.) makes it clear that his finding that there are genuine issues for trial is res judicata.
[31] Thus the issue sought to be litigated on the pending motion for summary judgment is the same as the one decided by Justice Belobaba, which was a “final” decision in so far as his finding of genuine issues for trial. The parties to both motions are the same, and thus the conditions for issue estoppel are met.
[32] Again, the pending motion for summary judgment does not contain any new facts which were previously not discoverable by the defendants. I see no reason to exercise my residual discretion to refuse to apply the doctrine of issue estoppel as there is no unfairness or injustice to the defendants.
d) Abuse of process
[33] The doctrine of abuse of process engages the Court’s inherent power to prevent the misuse of its procedure in a way that would bring the administration of justice into disrepute.
[34] In Behn v Moulton Contracting Ltd. 2013 SCC 26, the Supreme Court of Canada recently, quoted approvingly from the dissent of Goudge J.A. in Canam Enterprises Inc. v. Coles (2000) 2000 8514 (ON CA), 51 O.R. (3d) 481 (C.A.) when he stated that “one circumstance in which abuse of process has been applied is where the litigation before the court is found to be in essence an attempt to re-litigate a claim which the court has already determined.”
[35] In my view, the defendants’ pending motion for summary judgment engage the principles of abuse of process and are contrary to the interests of justice.
[36] Accordingly, the plaintiff’s motion is granted and I make the following order:
• The defendants’ pending motion for summary judgment shall proceed only with respect to the grounds set out in paragraphs (a) – (d) of their Notice of Motion dated July 24, 2015, and,
• The balance of the relief sought by the defendants in their Notice of Motion dated July 24, 2015 is dismissed.
Costs
[37] At the conclusion of the hearing, counsel for the parties agreed that costs of this motion would be awarded to the successful party in the all-inclusive amount of $16,316.79.
[38] I therefore order the defendants to pay the plaintiff its costs of this motion in the amount of $16,316.79.
Diamond J.
Released: November 2, 2015
COURT FILE NO.: CV-08-00365112-000
DATE: 20151102
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
IPEX INC.
Plaintiff
– and –
LUBRIZOL ADVANCED MATERIALS CANADA, INC. and LUBRIZOL ADVANCED MATERIALS, INC.
Defendants
ENDORSEMENT
Diamond J.
Released: November 2, 2015