CITATION: Elia v. Alizadeh, 2017 ONSC 7002
COURT FILE NO.: 01-CV-205661
DATE: 20171122
SUPERIOR COURT OF JUSTICE – ONTARIO
RE: PAUL ELIA, FURL INVESTMENTS LIMITED, FURL AUTOMOTIVE INC. and HIGHCASTLE INVESTMENTS LIMITED, Plaintiffs
AND:
SHAHIN ALIZADEH, DOWNTOWN AUTOMOTIVE INC., KING PARLIAMENT AUTOMOTIVE INC., 997350 ONTARIO INC. (FORMERLY KNOWN AS KING TOYOTA INC.), KEY HOLDINGS INC., 1007006 ONTARIO LIMITED, CINA HULL, CHARISMA MARKETING INC., 1390835 ONTARIO LIMITED and MPI INVESTMENT CORP., Defendants
BEFORE: SANFILIPPO J.
COUNSEL: Andrea J. Sanche, for the Plaintiffs/ Moving Parties
Michael Simaan, for the Defendants/ Responding Parties
HEARD: November 17, 2017
REASONS FOR DECISION
A. Overview
[1] The plaintiffs seek summary judgment in relation to amounts advanced in eighteen loans, fourteen of which were documented by promissory notes and four of which are undocumented. The first loan was advanced on July 12, 1990 and the eighteenth loan was advanced on August 4, 1995. The eighteen loans involve principal amounts totaling $811,300.
[2] The plaintiffs submit that the total amount re-paid by the defendants is $279,000 with the last repayment being made on November 18, 1998. The defendants contend that $296,250 has been repaid with the last repayment being made in January 1999.
[3] The plaintiffs claim that the amount outstanding on the fourteen loans supported by promissory notes is $1,702,435.52, of which $1,125,670.16 consists of interest computed to May 2016. They submit that the outstanding amount in relation to the four loans unsupported by any documentation is $175,000 plus interest which, in the absence of any documented interest term, is sought on the pre-judgment interest rate set by the Courts of Justice Act.
[4] The plaintiffs submit that amounts totaling $761,300 were advanced by certain of the plaintiffs to certain of the defendants in the time period from July 12, 1990 to August 4, 1995. The defendants raise copious issues, including: proof of the amounts advanced; whether the demand loans promised to be repaid by the personal defendant were converted to shareholder loans capable of being pursued only from certain of the corporate defendants whose financial viability is either unknown or suspect; disputes in the accounting of the repayments made; disagreement on the allocation of repaid amounts to principal or to interest or to both; and disagreement on the quantification of amounts said to be outstanding. The defendants also contend that certain of the claims are limitation barred.
[5] Complicating this matter is that the plaintiffs did not, at any time in the period from 1990 to 2016, forward to the defendants a demand, supported by an accounting, of the amounts considered outstanding on the entirety of this portfolio of loans. A reconciliation was prepared by the plaintiffs’ controller in May 2016 and provided then for the first time to the defendants.
[6] For the reasons set out herein, this matter is not capable of summary determination under Rule 20.04(2)(a) of the Rules of Civil Procedure, even with the tools provided by Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87. As a result, this motion for summary judgment is dismissed.
B. The Two-Part Test for Summary Judgment
[7] The 2010 amendments to the Rules of Civil Procedure modified Rule 20.04(2) so that the test for summary judgment was changed from whether there is a “genuine issue for trial” to whether there is a “genuine issue requiring a trial”. Together with the principles stated in Hryniak, a clear movement was presented to enhance access to justice through a more expeditious and summary manner than trial.
[8] Rule 20.04(2)(a) provides that if a court is satisfied that there is no genuine issue requiring a trial with respect to a claim, the court shall grant summary judgment. In Hryniak, the Supreme Court held, at para. 49, that there is no genuine issue for trial in the following circumstances:
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.
[9] On a motion for summary judgment, the judge should first determine if there is a genuine issue requiring a trial based only on the evidence presented without turning to the fact-finding powers in Rule 20.04(2.1). This involves analysis of the factual record and granting a summary judgment if there is sufficient evidence to fairly and justly determine the dispute. In the result, the summary judgment is a timely, affordable and proportionate procedure.
[10] If the judge determines that there is a genuine issue requiring a trial, the judge may determine whether the need for a trial can be avoided by using the powers under Rules 20.04(2.1) and (2.2), namely: (1) weighing the evidence, (2) evaluating the credibility of a deponent, and (3) drawing any reasonable inference from the evidence.
[11] In a motion for summary judgment, “[e]ach side must ‘put its best foot forward’ with respect to the existence or non-existence of material issues to be tried”: Canada (Attorney General) v. Lameman, 2008 SCC 14, [2008] 1 S.C.R. 372, at para. 11, citing Transamerica Life Insurance Co. of Canada v. Canada Life Assurance Co. (1996), 1996 CanLII 7979 (ON SC), 28 O.R. (3d) 423 (Ont. Gen. Div.), at p. 434.
[12] A court is entitled to assume that the record on a motion for summary judgment contains all the evidence that would be presented at trial: Sweda Farms Ltd. v. Egg Farmers of Ontario, 2014 ONSC 1200, [2014] O.J. No. 851, at para. 27, aff’d 2014 ONCA 878, [2014] O.J. No. 5815, leave to appeal dismissed, [2015] S.C.C.A. No. 97.
[13] The task therefore is to assess whether the case presented for summary determination has any genuine issue requiring trial. If so, an assessment must then be made whether any such genuine issue can be determined fairly and justly on the current record by weighing the evidence, evaluating credibility and drawing reasonable inferences.
C. The Dispute Regarding Amounts Advanced and Repaid
The Eighteen Loans
[14] Throughout the 1980s and 1990s, the plaintiff Paul Elia (“Elia”) and the defendant Shahin Alizadeh (“Alizadeh”) were close friends. Elia was a Toronto-based businessman and investor, principally in real estate who carried on his business activities through a number of companies, including the plaintiff corporations Furl Investments Limited (“Furl Investments”), Furl Automotive Inc. and Highcastle Investments Limited (“Highcastle”).
[15] Alizadeh was a Toronto-based businessman principally involved in car dealerships, including as a principal of the defendant corporations Downtown Automotive Inc. (“Downtown Automotive”), King Parliament Automotive Inc. (“King Parliament”), 997350 Ontario Inc., which is referred to as “King Toyota” and 1007006 Ontario Limited. The defendant Key Holdings Inc. (“Key Holdings”) is Alizadeh’s holding company.
[16] Commencing on July 12, 1990, Elia agreed to advance funds to Alizadeh to assist and support his friend in financial challenges that he was experiencing in the operation of his car dealerships, including the following (the “Three 1990-1991 Loans”):
Loan #1: A loan advanced by Furl Investments on July 12, 1990, in the amount of $100,000, secured by a promissory note, payable on demand, whereby Alizadeh and Key Holdings agreed to repay Elia with interest at the rate of 1% per annum over the annual prime commercial rate of the Hong Kong Bank of Canada (the “HKBC”);
Loan #2: A loan advanced by Furl Investments on August 24, 1990, in the amount of $100,000, secured by a promissory note, payable on demand, whereby Alizadeh and Key Holdings agreed to repay Furl Investments with interest at the rate of 1% per annum over the annual prime commercial rate of the HKBC;
Loan #3: A loan advanced by Furl Investments on January 22, 1991, in the amount of $41,000, secured by a promissory note, payable on demand, whereby Alizadeh and Key Holdings agreed to repay Furl Investments with interest at the rate of 1% per annum over the annual prime commercial rate of the HKBC.
[17] As no payment on the Three 1990-1991 Loans had been made from their inception, Alizadeh testified that in or around May, 1992 he offered to repay to Elia the full amount outstanding on the Three 1990-1991 Loans. According to Alizadeh, Elia declined this invitation, proposing instead that Elia retain these funds in exchange for providing Elia with an ownership interest in Downtown Automotive and King Parliament.
[18] Elia disputes that such an agreement was entered into with Alizadeh in May 1992 or at all. There is no documentation pertaining to this alleged agreement. There is no evidence in the record concerning the status of Downtown Automotive and King Parliament to give context to a determination of the conflicting evidence provided by Elia and Alizadeh on this issue.
[19] In or about August 1992, Elia supported Alizadeh in establishing a new Toyota dealership that would become King Toyota. Elia located the sites for the sales and service departments of King Toyota and acted as project manager during the construction of the dealership. Alizadeh was to be the dealer principal. Elia understood from Alizadeh that he or his company Furl Investments was to receive a thirty percent shareholding in the business of King Toyota while Alizadeh was to have a seventy percent shareholding.
[20] Elia claims that he did not receive any share certificates in King Toyota and did not execute any shareholders agreement. Elia submits that no documentation was implemented that would be consistent with Elia being a minority shareholder in King Toyota. Again, the record does not contain evidence concerning the surrounding circumstances affecting King Toyota to give context to the determination of the conflicting evidence provided by Elia and Alizadeh on this issue.
[21] There is a genuine issue concerning whether the character of the Three 1990-1991 Loans was modified in the period from May 1992 to August 1992 through the formulation of a joint business enterprise on the part of Elia and Alizadeh in relation to King Toyota, as submitted by Alizadeh. Elia and Alizadeh concur that they had an agreement to engage in the business of a car dealership but Elia is adamant that any such agreement had no effect on the Three 1990-1991 Loans, or indeed any subsequent loans, such that Alizadeh remained personally liable to Elia. Alizadeh testified that the obligations in relation to the Three 1990-1991 Loans and all subsequent loans was modified to reflect his joint business with Elia in the King Toyota car dealership.
[22] Elia testified that in the Summer of 1992 he caused Furl Investments to advance further funds to Alizadeh and Key Holdings, even though no payments had been received on the Three 1990-1991 Loans. Two such demand loans were advanced to Alizadeh and Key Holdings on the strength of demand promissory notes as follows (the “Two 1992 Loans”):
Loan #4: A loan advanced by Furl Investments on June 16, 1992, in the amount of $50,000, secured by a promissory note, payable on demand, whereby Alizadeh and Key Holdings agreed to repay Furl Investments with interest at the rate of 1% per annum over the annual prime commercial rate of the Canadian Imperial Bank of Commerce (the “CIBC”);
Loan #5: A loan advanced by Furl Investments on July 2, 1992, in the amount of $75,000, secured by a promissory note, payable on demand, whereby Alizadeh and Key Holdings agreed to repay Furl Investments with interest at the rate of 1% per annum over the annual prime commercial rate of the CIBC.
[23] Elia testified that commencing in the Fall of 1992 and continuing to July 9, 1993, he caused Furl Investments to advance eight more loans totaling $220,300, to Alizadeh but also to King Toyota, as follows (the “Eight 1992-1993 King Toyota Loans”):
Loan #6: A loan advanced by Furl Investments on October 16, 1992, in the amount of $16,300, secured by a promissory note, payable on demand, whereby Alizadeh and King Toyota agreed to repay Furl Investments with interest at the rate of 1% per annum over the annual prime commercial rate of the CIBC;
Loan #7: A loan advanced by Furl Investments on November 3, 1992, in the amount of $24,000, secured by a promissory note, payable on demand, whereby Alizadeh and King Toyota agreed to repay Furl Investments with interest at the rate of 1% per annum over the annual prime commercial rate of the CIBC;
Loan #8: A loan advanced by Furl Investments on November 21, 1992, in the amount of $45,000, secured by a promissory note, payable on demand, whereby Alizadeh and King Toyota agreed to repay Furl Investments with interest at the rate of 1% per annum over the annual prime commercial rate of the CIBC;
Loan #9: A loan advanced by Furl Investments on December 2, 1992, in the amount of $32,500, secured by a promissory note, payable on demand, whereby Alizadeh and King Toyota agreed to repay Furl Investments with interest at the rate of 1% per annum over the annual prime commercial rate of the CIBC;
Loan #10: A loan advanced by Furl Investments on December 16, 1992, in the amount of $12,500, secured by a promissory note, payable on demand, whereby Alizadeh and King Toyota agreed to repay Furl Investments with interest at the rate of 1% per annum over the annual prime commercial rate of the CIBC;
Loan #11: A loan advanced by Furl Investments on January 25, 1993, in the amount of $10,000, secured by a promissory note, payable on demand, whereby Alizadeh and King Toyota agreed to repay Furl Investments with interest at the rate of 1% per annum over the annual prime commercial rate of the CIBC;
Loan #12: A loan advanced by Furl Investments on February 26, 1993, in the amount of $30,000, secured by a promissory note, payable on demand, whereby Alizadeh and King Toyota agreed to repay Furl Investments with interest at the rate of 1% per annum over the annual prime commercial rate of the CIBC;
Loan #13: A loan advanced by Furl Investments on July 29, 1993, in the amount of $50,000, secured by a promissory note, payable on demand, whereby Alizadeh and King Toyota agreed to repay Furl Investments with interest at the rate of 1% per annum over the annual prime commercial rate of the CIBC.
[24] Elia testified that these demand loans included a personal covenant by Alizadeh to repay. On cross-examination, Elia conceded that he admitted to King Toyota’s accountant, in response to a letter dated March 14, 1995, that the sum of $389,050 advanced by Furl Investments, including the Eight 1992-1993 King Toyota Loans, were shareholder advances. Elia is adamant, however, that any characterization of these loans as shareholder advances did not derogate from the personal covenant on the part of Alizadeh to repay as contained in the promissory notes.
[25] Alizadeh’s testimony is opposite. He testified that he had an agreement with Elia that the demand loans supported by promissory notes were to be exchanged for a shareholding interest in King Toyota and, variously, Downtown Automotive and King Parliament. Apart from the single letter by the accountant referred to above, there is nothing in writing that supports any such agreement, thereby causing this to be a stark credibility dispute between Elia and Alizadeh.
[26] Elia testified that he assisted in the organization of King Toyota’s physical premises and deferred in receiving any payment on a portfolio of loans advanced in the period from July 12, 1990 to May 1993. At the same time, Alizadeh continued to execute promissory notes containing a personal covenant to repay Furl Investments notwithstanding Alizadeh’s evidence that the amounts so advanced were not in the nature of personal loans but rather shareholder advances.
[27] There is a genuine issue concerning whether the Two 1992 Loans and the Eight 1992-1993 King Toyota Loans were agreed to be treated as shareholder advances, as contended by Alizadeh, for the purpose of a joint business enterprise or whether, as Elia testified, they retained their character as promissory notes with a covenant on the part of Alizadeh to repay. This is an important issue because King Toyota stopped operating in 2000.
[28] The first evidence of any repayment on any of the loans was on May 25, 1993. Alilzadeh states that Elia became nervous with unrelated issues and developments affecting the financial integrity of Ontario-based car dealerships in general and sought to resile from their joint business enterprise. Elia contends that he simply wanted the repayment to which he was entitled on the demand loans.
[29] Starting on May 25, 1993, and continuing to February 1995, Alizadeh caused his companies to make sporadic monthly payments to Furl Investments of $7,000 on most, but not every month. No payments were made for the remainder of 1995, except November 1995, and no payments at all were made in 1996. Payments resumed in April 1997 and, but for June 1997, continued through to January 1998.
[30] Elia admitted that Furl Investments has received the sum of $279,000 in loan repayments. Alizadeh testified that he or his companies have repaid the sum of $296,500. In support of his position, Alizadeh has produced bank records containing missing entries documenting payments that Elia nonetheless acknowledges having received and banking records showing payments that Elia denies having received. This presents a genuine issue concerning the amount of repayment. Although the monetary discrepancy of $17,000 might seem modest, it is amplified considerably with the accumulation of interest over the many years since payment was demanded.
[31] On the payments acknowledged to have been received, there is a dispute concerning the allocation of the payments. Elia submits that the repayments are to be applied first to principal and then to interest. Alizadeh challenges this on the basis that the Three 1990-1991 Loans make no provision for the application of funds received in repayment as between principal and interest. Elia relies on the term contained in the promissory notes implemented in the Two 1992 Loans and the Eight 1992-1993 King Toyota Loans to validate the application of repayments first to interest and then to principal, with the result that none of the principal on any of the loans is said to have been repaid and thereby continues to generate interest. Given the significant passage of time, this is a large monetary issue due to continued accumulation of interest.
[32] There is a genuine issue concerning the application of the repayments to the outstanding amounts, particularly whether the repaid amount is attributed first to interest or to principal or equally to both.
[33] On July 29, 1993, at or about the same time as Elia had demanded repayment from Alizadeh and had just begun receiving monthly payments of $7,000, Elia caused Furl Investments to advance funds to Downtown Automotive as follows (the “1993 Downtown Automotive Loan”):
Loan #14: A loan advanced by Furl Investments on July 29, 1993, in the amount of $50,000, secured by a promissory note, payable on demand, whereby Downtown Automotive agreed to repay Furl Investments with interest at the rate of 1% per annum over the annual prime commercial rate of the CIBC.
[34] Some five days later, on August 4, 1993, Downtown Automotive repaid Furl Investments the sum of $50,000. Alizadeh testified that this repayment was in relation to the earlier of the Two 1992 Loans: namely, Loan #4. This evidence would suggest that Alizadeh caused Downtown Automotive to borrow from Furl Investments, on July 29, 1993, on the strength of a promissory note to which Alizadeh is not a party, the sum of $50,000 to repay a 1992 loan in the amount of $50,000 in regard to which Alizadeh was personally indebted to Furl Investments. On the other hand, Elia testified that the 1993 Downtown Automotive Loan was borrowed by Downtown Automotive for an unknown purpose lasting some five days and then promptly repaid.
[35] There is a genuine issue concerning the application of the repayment of $50,000 by Downtown Automotive on August 4, 1993, in terms of whether this repayment caused Loan #14 to be repaid or caused Loan #4 to be repaid. This has an impact both on the quantum of interest that is alleged to be owed and on the activation of a limitation period for purpose of assessment of which of the claims may be statute barred.
[36] In the period from December 31, 1993 to August 4, 1995, Elia testified that he caused Furl Investments, and in one case Highcastle, to advance four further loans to King Toyota, unsecured and undocumented as follows (the “Four 1993-1995 Unsecured Loans”):
Loan #15: A loan advanced by Furl Investments to King Toyota on December 31, 1993, in the amount of $50,000;
Loan #16: A loan advanced by Furl Investments to King Toyota on May 13, 1994, in the amount of $30,000;
Loan #17: A loan advanced by Furl Investments to King Toyota on May 13, 1994, in the amount of $80,000;
Loan #18: A loan advanced by Highcastle to King Toyota on August 4, 1995, in the amount of $15,000.
[37] There is no record of repayment on any of the Four 1993-1995 Unsecured Loans.
The Limitation Issue
[38] Alizadeh submits that the plaintiffs’ claims on certain of the loans are limitation barred. Under s. 46(1)(g) of the former Limitations Act, R.S.O. 1990, c. L.15, where a loan is payable on demand, the action for their collection must be commenced within six years: Hare v. Hare (2006), 2006 CanLII 41650 (ON CA), 83 O.R. (3d) 766 (Ont. C.A.), at para. 11. A demand note matures for all purposes upon its delivery: Royal Bank v. Hogg (1929), 1929 CanLII 417 (ON CA), [1930] 2 D.L.R. 488 (Ont. C.A.). However, the Court of Appeal determined in St. Hilaire v. Kravacek (1979), 1979 CanLII 1705 (ON CA), 26 O.R. (2d) 499 (Ont. C.A.), that payment upon the demand note has the effect of re-starting the limitation period, stating at p. 503: “[i]t is familiar law that a payment by a debtor to his creditor, from which a new promise to pay the debt may be inferred, has the effect of starting afresh the running of a period of limitation.”
[39] In order to determine the limitation defence, it is necessary first to determine which payments are attributable to which loans and at what time. The plaintiffs submit that the limitation period “starts afresh” not just in relation to actual payment of a debt but also upon acknowledgment of a debt. To support this submission, a factual determination is required concerning when the defendants acknowledged an ongoing debt obligation to the plaintiffs sufficient to re-activate the limitation clock. This is another reason why the determination of the timing of payment by Alizadeh, through his various companies, to Elia is a genuine issue.
The Evidentiary Record
[40] The record does not allow for a determination of the quantum of interest to be assessed to each of the loans. The Three 1990-1991 Loans generate interest at the rate of 1% per annum over the annual prime commercial rate of the HKBC. There is no evidence in the record concerning the prime commercial rate of the HKBC at the material times. Similarly, the Two 1992 Loans and the Eight 1992-1993 King Toyota Loans generate interest at the rate of 1% per annum over the annual prime commercial rate of the CIBC but there is no evidence in the record of the CIBC interest rate at the material times. As such, the record does not allow for an assessment of the plaintiffs’ demand for judgment in the amount of $1,702,435.52 as calculated to November 2016, in which $1,125,670.16 consists of interest, because the governing interest rates are not established.
[41] The claim for judgment in regard to the Four 1993-1995 Unsecured Loans, being entirely undocumented, do not state an interest charge.
[42] The plaintiffs tendered a chart entitled “Summary of Notes Receivables” bearing date of production of May 2016, and supporting excel spreadsheets, also to May 2016 (the “May 2016 Ledgers”). The May 2016 Ledgers are annexed as an exhibit to Elia’s affidavit of November 2, 2016. Elia testified that they were prepared by an unnamed controller at the offices of one of Elia’s companies and were then reviewed by Elia’s accountant, Doug Shrigley. No affidavit evidence was tendered from Mr. Shrigley concerning the calculations that he had reviewed.
[43] The May 2016 Ledgers are tendered for consideration of a key point: the value of the claim for which judgment is sought. As Brown J., as he then was, stated in Beach v. Toronto Real Estate Board, 2010 ONSC 30001, 97 C.P.C. (6th) 127, at para. 5: “[a]lthough the rules permit a party to include evidence based on information and belief in an affidavit in support of a motion, the inclusion of hearsay evidence on a key point is not proper. Direct evidence should be filed.”
[44] The calculations made by Elia’s unidentified controller concerning the value of the interest computations for which judgment was sought is inadmissible hearsay when purported to be introduced into evidence through annexation to Elia’s affidavit. There is no identification of the author of the accounting computations and reconciliation and no ability to cross-examine thereon. The inadmissibility of this evidence creates an insufficiency in the record in regard to the assessment of damages. Last, it was noted that the May 2016 Ledgers are current only as of May 2016 and do not allow for any understanding of the value of this claim to the date of the summary judgment motion.
D. Discussion
Application of the Two-Part Summary Judgment Test
[45] Returning then to the two-part summary judgment test, the first step is to ask whether “there is a genuine issue requiring trial based only on the evidence … without using the new fact-finding powers”: Hryniak, at para. 66.
[46] The long-standing dispute between former friends Elia and Alizadeh is marred by informality in the loan arrangements, imprecision in their dealings, absence of confirmatory recordings and the evidentiary vagaries that invariably occur in litigation that is well into its second decade. This has given rise to copious genuine issues requiring trial, specifically those identified in paragraphs 21, 27, 30, 32, 35 and 39 of these Reasons.
[47] The second step is then to determine whether “the need for a trial can be avoided by using the new powers under Rules 20.04(2.1) and (2.2)”: Hryniak, at para. 66. My exercise of these powers is discretionary. If the genuine issues that have been identified cannot be determined by weighing the evidence, evaluating credibility of the affiants of the affidavit evidence forming the evidentiary record and drawing reasonable inferences, then the motion must be dismissed and the matter advanced to trial.
[48] At the foundational core of the dispute is a glaring credibility dispute that requires contextual framing and viva voce evidence to determine. Elia and Alizadeh are business people who have a radically different version of events in their capacities as lender/borrower, creditor/debtor or co-investors. The evidentiary record lacks contextual evidence pertaining to Downtown Automotive, Parliament Automotive and, most importantly, King Toyota as would be required to assess the credibility issue. By way of example, if King Toyota was a viable car dealership operation at the time that Alizadeh claims that Elia converted his promissory note loans to shareholder advances, this would have an impact on assessment of credibility. The determination of whose evidence will be accepted is critical and best conducted at trial.
[49] The decision of the Court of Appeal in Baywood Homes Partnership v. Haditaghi, 2014 ONCA 450, 120 O.R. (3d) 438, is instructive. Here, the court reversed a motion judge’s granting of summary dismissal of an action alleging fraud while ordering that a full trial be conducted on the counterclaim that sought recovery of amounts alleged to be owing on promissory notes. In reversing, the court held that the motion judge failed to assess the advisability of the summary judgment process in the overall context of the litigation. The Court of Appeal’s statement on the circumstances in which a credibility issue requires a full trial for determination is particularly applicable to the current case. Lauwers J.A., for the court, stated as follows at paras. 44-45:
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.
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.
[50] I have determined that the genuine issues identified are not capable of being determined on the evidentiary record available on this motion. The evidentiary record lacks evidence required to inform the determination of the issues raised, including the factual matrix in which the critical events occurred.
[51] In the event that any of the genuine issues are considered to have been capable of determination without trial, I would nonetheless have declined to dissect and determine any such discrete genuine issues on the basis that partial summary judgment would not have been fair, just or efficient due to the issues being interconnected. In this regard, I am guided by the Court of Appeal’s statement on the inappropriateness of partial summary judgment in circumstances where the issues raised by the action are intertwined and where not all can be determined summarily, particularly the following statement by Lauwers J.A. at para. 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 transactional context than the motions judge. That could force a trial decision on the promissory notes that would be implicitly inconsistent with the motion judge’s finding that the Third Release is fully valid and effective, even though the parties would be bound by that finding. The process, in this context, risks inconsistent findings and substantive injustice.
[52] A similar, if not renewed, caution against partial summary judgment was made by the Court of Appeal in Butera v. Chown, Cairns LLP, 2017 ONCA 783, where a motion judge’s award of partial summary judgment was set aside on the basis that partial summary judgment was not appropriate in the context of the litigation as a whole. As the claim that was summarily dismissed by the motion judge was intertwined with the claims that would proceed to trial, it was efficient that all claims proceed to trial. The court stated as follows at para. 34:
A motion for partial summary judgment should be considered to be a rare procedure that is reserved for an issue or issues that may be readily bifurcated from those in the main action and that may be dealt with expeditiously and in a cost effective manner.
E. Disposition
[53] Not every case is appropriate for summary determination. As was stated by Benotto J.A. in Trotter Estate (2014), 2014 ONCA 841, 122 O.R. (3d) 625, at para. 49: “the fact that the new process of adjudication is well-intentioned and can be beneficial cannot impose an imperative on the court to use it in every case.”
[54] The issues raised by this action are not capable of being determined on summary motion on the basis of Rule 20, even with the tools made available by Hryniak. The determination of certain of the copious issues identified would not be efficient and could lead to inconsistent results in the adjudication at trial of the remainder of the issues as they are intertwined. A trial is required where all issues can be adjudicated on a full record. This motion is dismissed.
F. Costs
[55] The parties agreed that the successful party on the summary judgment motion would be entitled to a cost award in the amount of $15,000, all inclusive. As such, the costs of this motion are awarded to the defendants in the amount of $15,000, all inclusive, fixed and payable forthwith.
Sanfilippo J.
Date: November 22, 2017