CITATION: Essa v. Panontin, 2017 ONSC 507
COURT FILE NO.: CV-07-0276
DATE: 2017-01-20
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
JONATHAN ESSA in his personal capacity and as Executer of the Estate of REGINALD ESSA,
Christopher D.J. Hacio, for the Plaintiffs
Plaintiffs
- and -
LARRY PANONTIN, ROBERT PANONTIN and MILLS MANUFACTURING ACRYLIC PRODUCTS LIMITED,
Alex W. Demeo, for the Defendants
Defendants
HEARD: September 20, 2016,
at Thunder Bay, Ontario
Platana J.
Decision on Motion
Overview
[1] This is a Motion for Summary Judgment in which the Plaintiffs are seeking dismissal of the Defendants’ Counterclaim and that portion of the Defendants’ Statement of Defence which seeks to set-off the alleged debts claimed by the Defendants in their Counterclaim and another separate Action from any and all amounts owed by the Plaintiffs in their Action. The Plaintiffs take the position that they satisfied their indebtedness under the Guarantees in question prior to the Defendants issuing their Counterclaim. The Plaintiffs also take the position that the two-year limitation period during which the Defendants had to commence their Counterclaim relating to the Guarantees in question expired prior to the Defendants issuing their Counterclaim. In addition, the Plaintiffs take the position that the issues raised in the Counterclaim are res judicata. Finally, the Plaintiffs take the position that the claims advanced by the Defendants in their Counterclaim and set-off claim are raised in a prior legal proceeding and that it would therefore be an abuse of process to allow the Defendants’ subsequent proceeding to continue.
Relevant Facts
[2] The parties have presented different relevant facts for consideration in this Motion. From those, common facts to be considered are:
The parties were involved in a business relationship in bars and restaurants, particularly East Side Mario’s in the City of Thunder Bay. The Defendants’ involvement was as investors. The Defendants generally received shares in various companies.
The Defendants’ claim to have invested over 1 million dollars.
In the course of their dealings, the Plaintiff, in his personal capacity, went bankrupt. At that time, he held a beneficial and ownership interest in a 1 million dollar life insurance policy on the life of a former business partner.
In order to support the business, at various times, the Defendant Larry signed 11 different bank loans guarantees for the Plaintiffs’ business between 1998 and 2005.
In July 2004, the Plaintiffs agreed to transfer to the Defendants a 50% beneficial and ownership interest in the above-noted life insurance policy. There is a dispute between the policies as to the reason the transfer of the half-interest to the Defendants.
Between 1998 and 2005, the Defendant Larry, together with the Plaintiffs, signed loan guarantees to the Royal Bank of Canada (“RBC”) and Toronto-Dominion Bank (“TD”).
The franchisor of East Side Mario’s, in 2007, was threatening to close the business for arrears of rent and franchise fees. The Defendants then agreed to assume the liability to the franchisor in return for the remaining 20% interest in the life insurance policy. The point in dispute between the parties in the action is whether the agreement was to assume both the liability to the franchisor, and to the banks for the Guarantees totalling $201,584.33.
RBC brought a motion for summary judgment for $122,673.01 and TD for $73,806.00.
The parties then, independently, settled the claims of TD with the parties cross-claiming against each other. The Defendants are now seeking to recover money from the Plaintiffs on the TD guarantee.
The Plaintiffs negotiated with RBC, who eventually agreed to discontinue their action as against the Plaintiffs.
At or around the same time, the Defendants settled the RBC action, independently from the Plaintiffs. The Defendants paid RBC $141,000 in exchange for discontinuing the action, and an assignment of the Bank’s security interest against the franchisor and the Plaintiffs.
The Defendants took an assignment of all security/guarantees from RBC, and then demanded payment from the Plaintiffs for the amount they had paid to RBC to satisfy the action and Guarantees. The Assignment of Guarantees that the Defendants obtained from RBC contained the following terms and conditions:
that RBC agreed to sell, transfer and assign the guarantees in question and all the benefits and advantages to be derived therefrom to the Defendants; and
the Defendants were accepting the Assignment from RBC on an “as is, where is” basis without any warranty or representation from RBC with respect to the enforceability of any of the debt instruments referred to therein.
The Plaintiffs issued the claim in this action on June 29, 2007. Negotiations began.
The insurance policy proceeds became payable in August 2009.
In September 2009, the Plaintiffs obtained an order, without notice, extending the time for service of the Statement of Claim, and represented to the Court in an affidavit that:
Mr. Jonathan Essa cannot think of how the Defendants may have been prejudiced in this matter. The Defendants have been aware of the Plaintiffs’ position in this matter since early 2006. The Plaintiffs are not aware of the Defendants taking any action in the matter as a result of the Plaintiffs not serving their Claim by the end of 2007.
The Order provided “…that this Order is without prejudice to the Defendants to raise any defences which arise out of this Order or the Plaintiffs late service of the Statement of Claim in this matter.”
The Defendants motion to set aside the order extending time for service was dismissed on March 18, 2011, with the court indicating that based on representations, there did not appear to be any prejudice or unfairness to the Defendants that required the order to be set aside.
50% of the policy was paid to the Defendant Larry. The other 50% was held in trust pursuant to Court Order.
The Defendants issued their Counterclaim on June 24, 2010, on the basis of the Assignment they took from RBC.
On February 15, 2015, the Defendants obtained an order on motion brought to amend their pleadings to include a set-off.
The Defendants had already issued a Counterclaim against the Plaintiff, Jon Essa, in action 06-CV-313912P03, commenced against them by TD in 2006, seeking the same relief as they seek in their Counterclaim and set-off claims in this Action.
On April 12, 2015, the Plaintiffs moved for partial summary judgment dismissing the Defendants Counterclaim based on the expiry of a limitation period.
The Issues
[3] The Plaintiffs frame the issues to be resolved as:
Did the limitation period regarding the Defendants’ Counterclaim expire prior to the Counterclaim being initiated?
[4] The Defendants include the issues of:
Does the defence of set-off raise a genuine issue for trial?
Is there a genuine issue for trial as to whether the Plaintiffs are estopped from relying upon or have waived any applicable limitation period applicable to the Counterclaim?
Plaintiffs’ Position
[5] The Plaintiffs rely on Rule 20.04 and the Limitation Act 2002, s. 4 and 5 to argue that there is no genuine issue requiring a trial. Mr. Hacio submits that I must consider the chance of success of the Counterclaim succeeding, and in making that determination, I am able to make dispositive findings based on the evidence that the Counterclaim should be dismissed: Sutton v. Balinsky, 2015 ONSC 3081, [2015] O.J. No. 3935; Hryniak v. Mauldin, 2014 SCC 7, [2014] S.C.J. No. 7. He notes that in Hryniak, a court may apply the fact finding powers under Rule 20.04 unless it is in the interest of justice for them to be exercised only at a trial.
[6] Mr. Hacio submits that the case law is clear: a Counterclaim is an independent cause of action that has a two-year limitation period. The Defendants did not commence their Counterclaim until more than two years after the following events occurred:
the Banks made their demand for payment under the Guarantees in question;
the Defendants accepted an Assignment of the RBC security under the same terms and conditions under which RBC held such security;
the Defendants paid off the TD Guarantees; and
the Defendants made a demand for payment under the Guarantees from the
Plaintiffs.
[7] He notes that there was no event which occurred after the events referred to above that would have reactivated the two-year limitation period during which the Defendants had to commence their Counterclaim. When the Defendants purchased the RBC security, they became subject to the same limitation period as RBC against the Plaintiffs. RBC made their demand for payment from the Plaintiffs in 2005, and Mr. Hacio submits that is when the limitation period started to run, and, therefore, expired in 2007. The Defendants did not commence their Counterclaim until 2010, about three years after the limitation period had expired.
[8] Mr. Hacio submits that Sutton stands for the proposition that the Limitations Act 2002, bars the Counterclaim and that is sufficient for a dismissal without any further proceeding on that issue. He argues that the doctrine of “special circumstances” no longer applies to limitation periods under the Act: Joseph v. Paramount Canada’s Wonderland, 2008 ONCA 469. He further submits that a Counterclaim is an independent cause of action and is subject to its own limitation period, and that period is two years: Penn-Co Construction Canada (203) Ltd. v. Constance Lake, [2011] O.J. No. 450.
[9] With respect to the Guarantees under which the Defendants claim, he argues that a guarantee is an assignment of rights under a contract from one person to another, and that an assignee can acquire no greater rights then were held by the assignor at the time of the assignment: McGuiness, The Law of Guarantees (3rd ed. 2013) pages 153-155. He argues that where the contract establishing the Guarantee requires the making of a demand for payment on the surety, the limitation period for an action against the surety, which he says is two years, runs from the date of making the demand, rather than from the date on which the principal defaulted in payment. In the absence of such a provision, the limitation period runs from the date of the principal’s default.
[10] He submits this is an appropriate case for this Court to resolve the issues in dispute on a Motion for Summary Judgment. There are no material or genuine issues in dispute that require a trial to resolve. The courts in Ontario have been encouraged to dismiss claims that were not initiated before the expiry of the applicable limitation period.
[11] He further notes that the parties agree they signed the Guarantees in question, that the RBC security was assigned to the Defendants and that the Defendants were bound by all the defences that the Plaintiffs could have raised against RBC; that the Defendants paid off the TD Guarantees; that the Defendants settled their differences with TD and RBC without any involvement or input from the Plaintiffs; that the Plaintiffs separately and independently resolved the differences with TD and RBC; that the TD and RBC actions were dismissed and discontinued as against the Plaintiffs; that the Plaintiffs received a full and final release from TD with respect to the TD Guarantees; that the Defendants did not commence their Counterclaim until more than two years after the Banks made their demands for payment; that the Defendants did not commence their Counterclaim until more than two years after they purchased the RBC security, paid off TD, and made a demand for payment from the Plaintiffs relating to the TD and RBC payments; that the Defendants are suing for the full amount they paid to TD and RBC subject to the Defendants overpaying RBC; and that the Defendants are seeking the exact same relief against the Plaintiffs in relation to the TD Guarantees in two separate Actions, one commenced in Thunder Bay and one commenced in Toronto.
[12] He argues that the Defendants’ Counterclaim indicates that the Defendants are seeking “contribution and indemnity” in relation to the TD Guarantees. He notes that the essence of the Defendants’ Counterclaim as it relates to the TD Guarantees is a breach of contract claim. He submits that even if the Defendants’ Counterclaim is a claim for “contribution and indemnity,” the limitation period for a claim for “contribution indemnity” is two years: Waterloo Region School Board v. CRD Construction Ltd., 2010 ONCA 838. In either case, the Defendants missed the applicable limitation period to commence their Counterclaim, and the Counterclaim should be dismissed on this basis.
[13] With respect to the basis for a dismissal of the Counterclaim on the basis of res judicata, he relies upon McGuiness, The Law of Guarantees, (3rd Ed. 2013) at pages 1103—1115 to argue that a judgment between parties is final and conclusive, not only as to the matters dealt with, but as to questions which the parties had an opportunity of raising in that case. He argues that the Plaintiffs settled the Actions commenced against them by TD and RBC. The TD Claim was dismissed. The RBC Claim was discontinued. The Plaintiffs received a release from TD. The Defendants did not receive anything from either TD or RBC when they settled those Actions which protected the Plaintiffs. The Defendants have stated that they were protecting only their own interests when they settled the TD and RBC Actions. That being the case, the Defendants no longer have any cause of action as against the Plaintiffs in relation to the Guarantees in question. Any such causes of action were extinguished when the Plaintiffs settled and resolved the TD and RBC Actions.
[14] He further submits that the best position the Defendants can argue is that they are entitled to one half of the joint debts. The Defendants are, on the other hand, suing for the full amount they paid to RBC and TD. These amounts are not legally owing to the Defendants by the Plaintiffs. The Defendants have acknowledged that fact yet continue to pursue recovery with full amounts they paid to RBC and TD.
[15] With respect to the dismissal on the basis of abuse of process, Mr. Hacio relies on Behn v. Moulton Contracting Ltd., 2013 SCC 26, at para. 40, where the Supreme Court stated that the Court may resort to the doctrine to prevent a misuse of its procedure “in a way that would be manifestly unfair to a party to the litigation before it or would in some other way bring the administration of justice into disrepute.” He submits the principle is that a party should not seek to accomplish indirectly what they chose not to seek directly: Sutton.
[16] With respect to the law of set-off, Mr. Hacio relies on the principle as set out in Holt v. Telford, 1987 CanLII 18 (SCC), [1987] 2 S.C.R. 193 and noted in Ang v. Premium Staffing, 2015 ONCA 821 and Zucchetti v. Natfil Inc., [2011] O.J. No. 1694, as follows:
The party relying on a set-off must show some equitable ground for being protected against his adversary’s demands;
The equitable ground must go to the very root of the Plaintiff’s Claim before a set-off will be allowed;
A cross-claim must be so clearly connected with the demand of the Plaintiff that it would be manifestly unjust to allow the plaintiff to enforce payment without taking into consideration the cross-claim;
The plaintiff's claim and the cross-claim need not arise out of the same contract; and
Unliquidated claims are on the same footing as liquidated claims.
A court will not allow an equitable set-off claim where it would not be unfair or unjust to treat the defendant’s counterclaim is an independent claim from that of the plaintiffs.
[17] He relies on Goma v. Raghunandan, [2011] O.J. No. 4916, as authority that a defendant cannot claim contribution and indemnity against another party by pleading equitable set-off in a statement of defence unless the defendant’s claim goes to the root of the claim they are seeking to set-off against. He references section 111 of the Courts of Justice Act and Green v. Mirtech International, [2009] O.J. No. 385, and Nib-Wing Construction Co. v. LeBrun Northern Contracting Ltd., [1998] O.J. No. 3846, in submitting that set-off requires that both obligations be liquidated debts or money demands which can be ascertained with certainty, and that both debts constitute mutual cross-obligations (as between the parties). He argues that set-off in law is not available in response to a claim which sounds in damages, and that it does not apply where the parties enter into a contract which was not intended to be subject to any outstanding issues, equities, legal, or equitable set-offs as between them.
[18] He notes that a claim for contribution or indemnity has a two year limitation period that is presumed to run from the date when the person who seeks contribution and indemnity is served with the plaintiff’s claim in the main action giving rise to its claim over: Waterloo Region District School Board v. CRD Construction Ltd., 2010 ONCA 838.
[19] As to the request for dismissal based on a multiplicity of proceedings and abuse of process, Mr. Hacio submits that parties must, as far as possible, avoid the multiplicity of legal proceedings, and that courts must promote judicial economy. A party is not entitled to seek the same relief in two separate legal proceedings and the second action should be dismissed: Courts of Justice Act, s. 138; Maynes v. Allen-Vanguard Technologies Inc., 2011 ONCA 125; Attayee v. Pickering, 2015 ONSC 7701, [2015] O.J. No. 6617. He notes the Defendants’ set-off claim seeks the exact same relief as the Defendants’ Counterclaim. The Defendants have no cause of action as against the Plaintiffs in relation to the Guarantees because the Plaintiffs resolved their differences with TD and RBC. Alternatively, the applicable limitation period for the Defendants to pursue the Plaintiffs under the security and Guarantees in question has expired. The Defendants cannot therefore set off debts against the amounts owing to the Plaintiffs that no longer exist. The set-off claim should be dismissed on that basis.
[20] Further, he argues that with respect to duplicity of proceedings, the Defendants already have a separate Action for which they are seeking the exact same damages from the Plaintiffs. This Court should not allow the Defendants to have a multiplicity of proceedings. Doing so will increase the cost of resolving the dispute between the parties and could result in inconsistent decisions from different courts. Allowing the Defendants to continue with their two Actions would be an abuse of process and would bring the administration of justice into disrepute. The set-off claim should be dismissed on this basis.
[21] Also, Mr. Hacio notes the Defendants allege that there is no connection whatsoever between the agreement they reached with the Plaintiffs and their set-off claim. They allege that they agreed to take care of Prime Restaurants in exchange for receiving the $500,000.00 life insurance policy. They say there is no connection whatsoever between that agreement and the RBC and TD Guarantees and security. The Defendants’ set-off claim does not go to the “very root of the Plaintiffs Claim.” It would be manifestly unjust to allow the Defendants to continue with their set-off claim. The Plaintiffs’ claim and the Defendants’ set-off claim are not mutual cross obligations. The Defendants set-off Claim should be dismissed on this basis.
Defendants’ Submissions
[22] Mr. Demeo submits that this is not an appropriate circumstance for partial summary judgment. He notes in Rule 20.04(2)(a) that summary judgment motions must be granted where there is no genuine issue requiring a trial, and that no such genuine issue will arise where, given the nature of the issues and the evidence required, the judge cannot make the necessary findings of fact and apply the relevant legal principle so as to resolve the dispute: Hryniak.
[23] He submits that the use of summary judgment would be against the interest of justice if the use of such power did not lead to a fair and just result and would not serve the goals of timeliness, affordability and proportionality in light of the litigation as a whole: Hryniak (para. 66). The motion must be assessed in the context of the litigation as a whole, as partial summary judgment may risk inconsistent findings of fact: Baywood Homes Partnership v. Haditaghi, [2014] ONCA 450, at paras. 33-38. He references the same decision to caution that great care must be taken in considering credibility issues as outlines in affidavits in support of such motions.
[24] He relies on Hryniak for the proposition that this case presents an unmeritorious motion, and that I should decline to exercise my discretion, without engaging in the full inquiry usually appropriate for consideration: Hryniak, at para. 65. He submits that the relief sought to dismiss the Counterclaim on the basis of the expiry of a limitation period, particularly considering an agreement between the parties to extend such period as between themselves, is not in the best interest of justice and does not serve the goal of timeliness, affordability, and proportionality: Hryniak, para. 66. Mr. Demeo argues that there is a genuine issue requiring a trial as to whether the Plaintiffs waived, or are estopped, from relying upon any limitation period to defeat the Counterclaim.
[25] The Defendants submit that the defence of set-off does raise a genuine issue for trial. Mr. Demeo argues that equitable set-off requires a connection or relationship between the claims or the parties which are so closely interconnected that it would be manifestly unjust to allow the Plaintiffs to enforce his claim without taking into account the Defendants’ claim. He relies on Green v. Mirtech International, [2009] O.J. No. 385 to propose that the overriding principle is what will ensure fair dealing between the parties. He argues that an ongoing business relationship between parties can give rise to a sufficiently close connection, even if the two claims between the parties arise out of distinct transactions: Nicolou v. McLennon & Associates, [2013] O.J. No. 1200. He notes that the claim for set-off is based upon losses incurred by the Defendants in protecting the parties from creditor liabilities as required by the alleged contract. The liabilities, he argues, arise out of the close business relationship between the parties over a ten year period.
[26] Further, he argues that the Defendants are claiming set-off for monies paid on joint creditor liabilities and for premiums paid on the life insurance policy, which gives rise to the main Action which gives surety entitlement to claim to recover from fellow sureties: Canadian Encyclopedic Digest, Guarantee, Indemnity and Standby Letters of Credit.
[27] As to the issue of waiver, or estoppel in the Counterclaim, the Defendants rely upon the fact that after representing to the court on two separate motions (to extend the time for service of the Statement of Claim, and the Motion to appeal the Order), the Defendants would not be prejudiced by permitting service of their Statement of Claim almost two years out of time and they now change their position in an effort to dismiss the Defendants’ Counterclaim. Mr. Demeo cites the decision in Lovitt Estate v. New Brunswick (1910), S.C.R. 106, for the proposition that the overriding concern for fairness and the prevention of injustice requires that the Plaintiffs be estopped from changing their position that negotiations were ongoing and that any limitation period was not in effect. Further, he submits that the Plaintiffs having taken a position of “no prejudice to the Defendants” in the two motions and cannot now resile from that position, taking the position that the Defendant is estopped because of the limitation period: Norsask Forest Products Inc. v. Iron, (Sask. C.A.) [1993] S.J. No.163 (CA).
[28] Further, he argues that I have an inherent and residual discretion to prevent an abuse of process where the Plaintiffs take a different stand in regard to the Defendants’ rights when they succeeded in inducing the court to grant them relief to extend the time for service: Carlson (re) [2010] A.J. No. 1306 (Seta Q.B.).
[29] In summary, the Defendants argue that the motion for partial summary judgment should be dismissed in the interest of fairness and justice in order to obtain a fair and just resolution of the proceeding, and that the Plaintiffs, by their conduct and representations to earlier courts, cannot at this stage rely on a limitation period defence to the Counterclaim. He argues that the Defendants’ Counterclaim and defence of set-off are inextricably entwined with the core issue in dispute, and that the Counterclaim cannot be taken out of the larger context of the litigation as a whole.
[30] Additionally, the Defendants submit that there is an issue between the parties as to intentional non-disclosure of business records, which the Plaintiffs originally claimed were lost, and subsequently revealed that they were in the possession of Plaintiffs’ counsel, but were not considered to be relevant. Mr. Demeo submits that it would be a substantive injustice to decide the Plaintiffs Motion for Summary Judgment in the face of this non-disclosure.
Legislation and Case Law
[31] Rule 20.04(2) provides that the court shall grant summary judgment if the court is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence. In considering the evidence submitted, the judge may weigh evidence, evaluate credibility of a deponent and draw any reasonable inference from the evidence.
[32] As stated in Hryniak v. Mauldin, 2014 SCC 7, [2014] S.C.J. No.7:
[19] The Court of Appeal concluded that, given its factual complexity and voluminous record, the Mauldin Group’s action was the type of action for which a trial is generally required. There were numerous witnesses, various theories of liability against multiple defendants, serious credibility issues, and an absence of reliable documentary evidence. Moreover, since Hryniak and Peebles had cross-claimed against each other and a trial would nonetheless be required against the other defendants, summary judgment would not serve the values of better access to justice, proportionality, and cost savings.
[33] At paras. 49-51:
[49] There will be no genuine issue requiring a trial when 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.
[50] These principles are interconnected and all speak to whether summary judgment will provide a fair and just adjudication. 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.
[51] Often, concerns about credibility or clarification of the evidence can be addressed by calling oral evidence on the motion itself. However, there may be cases where, given the nature of the issues and the evidence required, the judge cannot make the necessary findings of fact, or apply the legal principles to reach a just and fair determination.
[34] In considering the “interest of justice” at para. 53 the Court in Hryniak stated:
[53] To determine whether the interest of justice allowed the motion judge to use her new powers, the Court of Appeal required a motion judge to ask herself “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?” (para. 50).
[58] This inquiry into the interest of justice is, by its nature, comparative. Proportionality is assessed in relation to the full trial. It may require the motion judge to assess the relative efficiencies of proceeding by way of summary judgment, as opposed to trial. This would involve a comparison of, among other things, the cost and speed of both procedures. (Although summary judgment may be expensive and time consuming, as in this case, a trial may be even more expensive and slower.) It may also involve a comparison of the evidence that will be available at trial and on the motion as well as the opportunity to fairly evaluate it. (Even if the evidence available on the motion is limited, there may be no reason to think better evidence would be available at trial.)
[59] In practice, whether it is against the “interest of justice” to use the new fact-finding powers will often coincide with whether there is a “genuine issue requiring a trial”. It is logical that, when the use of the new powers would enable a judge to fairly and justly adjudicate a claim, it will generally not be against the interest of justice to do so. What is fair and just turns on the nature of the issues, the nature and strength of the evidence and what is the proportional procedure.
[60] The “interest of justice” inquiry goes further, and also considers the consequences of the motion in the context of the litigation as a whole. For example, if some of the claims against some of the parties will proceed to trial in any event, it may not be in the interest of justice to use the new fact-finding powers to grant summary judgment against a single defendant. Such partial summary judgment may run the risk of duplicative proceedings or inconsistent findings of fact and therefore the use of the powers may not be in the interest of justice. On the other hand, the resolution of an important claim against a key party could significantly advance access to justice, and be the most proportionate, timely and cost effective approach.
[66] On a motion for summary judgment under Rule 20.04, the judge should first determine if there is a genuine issue requiring trial based only on the evidence before her, without using the new fact-finding powers. There will be no genuine issue requiring a trial if the summary judgment process provides her with the evidence required to fairly and justly adjudicate the dispute and is a timely, affordable and proportionate procedure, under Rule 20.04(2)(a). If there appears to be a genuine issue requiring a trial, she should then determine if the need for a trial can be avoided by using the new powers under Rules 20.04(2.1) and (2.2). She may, at her 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.
[35] In Baywood Homes Partnership v. Haditaghi, 2014 ONCA 450, the Court stated,
[33] In my view, the motions judge made a material error in principle in his approach to this motion in light of the Supreme Court of Canada’s decision in Hryniak. He erred in failing to assess the advisability of the summary judgment process in the context of the litigation as a whole.
[37] In the complex situation in this case, it is therefore entirely possible that the trial judge who hears the trial of the issue on the validity of the promissory notes will develop a fuller appreciation of the relationships and the transactional context than the motions judge.
[36] In Fritsch v. Magee, [2009] O.J. No. 2432, dealing with a promissory note in the context of a limitation period, the Court stated:
[24] In the decision of Maracle v. Travellers Indemnity Co. of Canada, 1991 CanLII 58 (SCC), [1991] 2 S.C.R. 50, the Supreme Court of Canada in considering the application of promissory estoppel in the context of a limitation period set out three factors to be considered:
(1) the defendant has, by words or conduct, made a promise or assurance intended to affect the legal relationship between the parties and to be acted on;
(2) it can be inferred from their words and conduct that they intended not to rely on a limitation.; and
(3) the plaintiff missed the limitation in reliance on this promise.
[32] On the limited and equivocal evidence before me, particularly as it relates to the defendant’s knowledge and intentions, I am of the view that it would be unjust to decide the applicability of the limitation period on this motion. In my view, a more fulsome evidentiary record is required and as such the issue of whether or not the limitation period was waived by words or conduct or whether the doctrine of promissory estoppel applies should be determined by trial in accordance with Rule 76.07 (9).
[37] In Lovitt Estate v. New Brunswick (1910), S.C.R. 106, at para. 18:
There is a doctrine of the law that one may not approbate and reprobate, play fast and loose, gain an advantage by assuming one position and escape the correlative burden by assuming another and inconsistent position. Gandy v. Gandy (30 Ch. D. 57.), at p.82.
[38] In McIntosh v. Parent, 1924 CanLII 401 (ON CA), [1924] O.J. No.59, the Ontario Court of Appeal noted:
It has been well said that the law prevents the parties from taking inconsistent attitudes before the Courts. It is not open to the defendant here to contend in this action that these damages might have been recovered in the former action, where he contended in that former action (or what amounts to the same thing has taken advantage of a judgment so declaring) that the damages could not be recovered in that action as being after the date of the writ.
Discussion
[39] This Action was started by the Plaintiffs in June 2007, nearly 10 years ago. As I noted in an earlier decision on costs in a motion in this file, what started as a relatively straightforward action in contract, has developed into a long-standing file, with extensive materials having been filed by both sides in a number of motions. It is currently set down for trial, and is being actively trial-managed.
[40] Rule 20 and the decision in Hryniak are clearly designed to assist parties and the court to eliminate or reduce time for a trial, where the elements of the Rule and the factors in Hryniak are established. Hryniak establishes that there is no genuine issue requiring a trial when the judge is able to reach a fair and just determination on the merits of the motion. This will be the case when i) necessary findings of fact can be made; ii) the judge can apply the facts to the law; and, iii) the summary judgment is a proportionate, more expeditious, and less expensive means to achieve a just result. As Hryniak notes, these principles are all interconnected. The use of the procedure must be such as to give the judge confidence on finding the facts, and applying the law.
[41] Hryniak further dealt with the interest of what meaning is to be given to “the interest of justice,” when it noted that a motion judge should be able to fully appreciate the evidence and issues. It may be that a full appreciation can only be achieved by way of a trial. The court noted that the inquiry is comparative, and that proportionality is assessed in relation to the full trial. A motion judge must assess the relative efficiencies of proceeding by way of summary judgment as opposed to a trial. What is fair and just turns on the nature of the issues, the nature and strength of the evidence, and what is the proportional procedure (paras. 58-59).
[42] Further, the inquiry must also consider “the consequences of the motion in the context of the litigation as a whole. For example, if some of the claims of the parties will proceed to trial in any event, it may not be in the interest of justice to use the new fact-finding powers to grant summary judgment against a single defendant.” Although that is not the relief claimed here, I take from that statement of the Court that if a trial is going to be necessary in any event on other issues, summary judgment may not serve the goals of timeliness, affordability, and proportionality in light of the litigation as a whole.
[43] This case has become more complicated than was necessary from its early stages when a motion to extend the time for service became necessary. Thereafter, motions were dealt with involving discovery issues and other procedural matters.
[44] The Counterclaim, which is the subject of this Motion to Dismiss, was issued on June 24, 2010, nearly seven years ago.
[45] This Motion is based on facts which were known at the time and was not brought until April 2015.
[46] There are a number of reasons argued by the Plaintiffs for the dismissal. The focus appears to be that the limitation period has expired. There is, in my view, a basis for further evidence which may be of assistance in determining the reasons, and agreement if any, from the Plaintiffs to extend that period of time. The parties have argued opposite positions on the effect of any waiver, if one is so found. I cannot make a confident determination on the material before me as to whether the issue of waiver should be given effect to. Further fact-finding is appropriate.
[47] Furthermore, from the nature of the materials and the arguments presented, it seems to me that with respect to many of the facts regarding the Guarantees (when demanded, when paid, and how much) are not in major disagreement between the parties or will not require a significant amount of trial time to establish.
[48] There is a further issue with respect to an apparently duplicate action involving TD Bank in another Region. While referencing that action, counsel presented no material, nor were they able to provide me with any indication of the current status of that matter. That is a fact which is unknown to me, and may well be relevant in the overall context of the litigation between the parties.
[49] Equally, there is a gap in evidence as to the applicability of previous business dealings between the parties, which may be relevant to the determination of the interconnection between the parties for the purpose of determining whether the relationship was such that set-off can be applied.
[50] There are, in my view, evidentiary gaps which do not permit me to find and apply facts to the law. A fuller determination of facts would allow that application to be made.
[51] In the context of this case, I also look at the issue of whether granting summary judgment would achieve a fair and just result. As noted in Hryniak, what is fair and just turns on the nature and strength of the evidence and what is the proportional procedure.
Ruling
[52] The circumstances of this case are such that after seven years an issue was raised with respect to fairness in light of earlier representations as to no prejudice. Further, this case will have to proceed to trial on the main Action and is set down to do so. In any event, a fair and just result is best achieved by dismissing this Motion and allowing the matter to proceed to trial with the Defendants being able to present their Counterclaims.
Costs
[53] Unless otherwise resolved between the parties, the Plaintiffs’ counsel shall provide the Defendants’ counsel and file brief written submission (not to exceed five pages) with a cost outline within 14 days of release of these reasons. The Defendants’ counsel will have an opportunity to respond with brief written submissions (not to exceed five pages) to be provided to the Plaintiffs’ counsel and filed with the court within 14 days of receipt of the Plaintiffs’ submissions. The Plaintiffs’ counsel will have the opportunity to reply with brief written submissions within seven days thereafter. Should either party or both counsel prefer to make oral submissions, an appointment may be sought within 14 days from the trial co-ordinator. Written submissions are to be forwarded to me at my chambers at 125 Brodie Street North, Thunder Bay, ON, 6th floor. In the event that no submissions are received or no appointment is sought from the trial co-ordinator within the timeframe specified herein, the parties will be deemed to have settled the issue of costs as between themselves.
______”original signed by”
The Hon. Mr. Justice T.A. Platana
Released: January 20, 2017
CITATION: Essa v. Panontin, 2017 ONSC 507
COURT FILE NO.: CV-07-0276
DATE: 2017-01-20
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
JONATHAN ESSA in his personal capacity and as Executer of the Estate of REGINALD ESSA,
Plaintiffs
- and -
LARRY PANONTIN, ROBERT PANONTIN and MILLS MANUFACTURING ACRYLIC PRODUCTS LIMITED,
Defendants
DECISION ON MOTION
Platana J.
Released: January 20, 2017
/sab