Court File and Parties

Court File No.: 97-CU-122206 Date: 20180808 Superior Court of Justice - Ontario

Re: “Sanokr-Moskva” LLC, Plaintiff And: Tradeoil Management Inc., Defendant

Before: Pollak J.

Counsel: Harvey S. Dorsey, for the Plaintiff F. Scott Turton, for the Defendant

Heard: May 10, 2018

Endorsement

[1] The Plaintiff, “Sanokr-Moskva” LLC, moves for summary judgment of an action for the recognition, enforcement and payment pursuant to an Arbitration Award (“Arbitration Award”) dated March 7, 1997 made by the International Commercial Arbitration Court of the Trade Industry Chamber of the Russian Federation in favour of the Plaintiff against the Defendant, for the following amounts:

(a) $1,062,432.38 U.S. dollars;

(b) Interest at the rate of 5% per annum from November 1994 to and including December 31, 1994 on the amount of $1,062,432.38 U.S. dollars;

(c) Interest at the rate of 15% per annum from January 1, 1995 until and including the date of payment of and on the amount of $1,062,432.38 U.S. dollars.

(d) $1,237.62 U.S. dollars;

(e) $2,500.00 U.S. dollars;

(f) $11,882.72 U.S. dollars.

[2] There is a claim for set-off by the Defendant properly pleaded in the statement of defence. There is no pleading by the Moving Party with respect to this set-off claim.

[3] The Plaintiff moves only on one of its claims, for enforcement of a foreign document and does not move for judgment on its claim for breach of contract. The effect of this is to leave the Plaintiffs’ alternate claim for breach of contract to be dealt with at trial should this motion for summary judgment be unsuccessful. Such claim, however, raises the same issues that are being considered before this Court on this motion for summary judgment.

[4] In addition to its submission on the lack of appropriateness of the summary judgment procedure in this action, the Defendant also argues that there are many genuine issues requiring trial, namely:

(a) the validity of the submission to arbitration;

(b) the set-off issue;

(c) whether the contract dispute is within the scope of the submission to arbitration; and

(d) who is the contracting party.

[5] Briefly, the allegations in this action are that in 1997 the Defendant found out about arbitration in Russia that was adjudicated without its knowledge. The Defendant alleges fraudulent conduct of the persons acting for “Sanokr Moskva” on its commercial dealings. The Defendant argues that the arbitration award was “procured by fraud” and/or there was no valid submission to arbitration.

[6] The Moving Party advances extensive evidence and argument on the merits of its claim at arbitration.

[7] Conversely, the Defendant has also advanced extensive evidence and argument to refute these claims and to argue that the evidentiary record before this Court shows that almost all of the evidence is in dispute on all of the major issues. The Plaintiff argues that this Court can determine all of these conflicts on the basis of the affidavit evidence alone, and that it is clear that its main argument ought to succeed.

[8] The Plaintiff argues the “competence competence” principle to refute all of the Defendants arguments and submits that this court can find on the basis of the record before it that there is no merit to the set-off claim of the Defendant. However as I have noted above, there is no pleading by the Moving Party to deny that the Defendant is entitled to its relief requested in the set-off claim.

[9] On this motion for summary judgment the Plaintiff also seeks to strike out the affidavit evidence of the expert retained by the Defendant for various grounds, including that the expert affidavit does not comply with the rules with respect to ensuring the independence of the expert and there is also a further challenge on the validity of the content of the expert’s opinion. Most of the affidavit evidence on the record is in Russian, and on some of the evidence, neither of the parties have used certified translators. Rather the daughter of one of the parties and the wife of the other party has translated some of the evidence. The Moving Party argues that the rules differ between the requirements for translation on a motion for summary judgment and those set out in a trial.

[10] In the case of Hryniak v. Mauldin, 2014 SCC 7, [2014] S.C.R. 87, at para. 66, wherein the Supreme Court of Canada gave us a roadmap of the approach to follow on a motion for summary judgment. The court held that:

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.

[11] The Ontario Court of Appeal stated in Baywood Homes Partnership v. Haditaghi, 2014 ONCA 450, 120 O.R. (3d) 438, at paras. 35 and 37, that the advisability of a staged summary judgment process must be assessed in the context of the litigation as a whole. The Court noted that in a staged summary judgment process there was a risk that a trial judge would develop a fuller appreciation of the relationships and the transactional context than the motion judge, which can force a trial decision that would be implicitly inconsistent with the motion judge’s finding, even though the parties would be bound by that finding. This process, in such context, would risk inconsistent findings and substantive injustice. At paras. 44-45 the court stated:

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.

[12] In Butera v. Chown, Cairns LLP, 2017 ONCA 783, the Ontario Court of Appeal considered the appropriateness of motions for summary judgment that will determine some of the issues, but will not dispose of the action as a whole. The Ontario Court of Appeal cautioned parties and judges about the limits and problems associated with partial summary judgment motions. It was held that the motion judge committed an extricable error in principle in failing to consider whether partial summary judgment was appropriate in the context of the litigation as a whole. In particular, the court was concerned about inconsistent findings on the motion and at trial and the fact that the effect of the partial summary judgments did not achieve the intended benefits of proportionality, timelines and affordability. Rather, such motions result in delay, greater expenses, and wasted judicial resources.

[13] The Court stated that partial summary judgment motions tend to defeat the stated objectives of proportionality, timeliness and affordability underlying Hryniak.

[14] It was held that a partial summary judgment motion should be considered a “rare procedure” that is reserved for issues that can be easily bifurcated from the main action and that can be dealt with expeditiously and in a cost-effective manner.

[15] The Court reasoned that this approach is entirely consistent with the Supreme Court’s comments in Hryniak as follows:

[26] The pre-Hryniak appellate jurisprudence on partial summary judgment limited its availability. At para. 3 of Corchis v. KPMG Peat Marwick Thorne, [2002] O.J. No. 1437 (C.A.), this court applied Gold Chance International Ltd. v. Daigle & Hancock, [2001] O.J. No. 1032 (S.C.J.) to state that:

[P]artial summary judgment ought only to be granted in the clearest of cases where the issue on which judgment is sought is clearly severable from the balance of the case. If this principle is not followed, there is a very real possibility of a trial result that is inconsistent with the result of the summary judgment motion on essentially the same claim.

[27] Since Hryniak, this court has considered partial summary judgment in Baywood Homes Partnership v. Haditaghi, 2014 ONCA 450, 120 O.R. (3d) 438 and in Canadian Imperial Bank of Commerce v. Deloitte & Touche, 2016 ONCA 922, 133 O.R. (3d) 561. Baywood was decided in the context of a motion for summary judgment on all claims, but where only partial summary judgment was granted. CIBC involved a motion for partial summary judgment.

[28] In both Baywood and CIBC, the court analyzed the issue from the perspective of whether (i) there was a risk of duplicative or inconsistent findings at trial and whether (ii) granting partial summary judgment was advisable the context of the litigation as a whole. In both cases, the court held that partial summary judgment was inadvisable in the circumstances.

[29] The caution expressed pre-Hryniak in Corchis is equally applicable in the post-Hryniak world. In addition to the danger of duplicative or inconsistent findings considered in Baywood and CIBC, partial summary judgment raises further problems that are anathema to the stated objectives Hryniak.

[30] First, such motions cause the resolution of the main action to be delayed. Typically, an action does not progress in the face of a motion for partial summary judgment. A delay tactic, dressed as a request for partial summary judgment, may be used, albeit improperly, to cause an opposing party to expend time and legal fees on a motion that will not finally determine the action and, at best, will only resolve one element of the action. At worst, the result is only increased fees and delay. There is always the possibility of an appeal.

[31] Second, a motion for partial summary judgment may be very expensive. The provision for a presumptive cost award for an unsuccessful summary judgment motion that existed under the former summary judgment rule has been repealed, thereby removing a disincentive for bringing partial summary judgment motions.

[32] Third, judges, who already face a significant responsibility addressing the increase in summary judgment motions that have flowed since Hryniak, are required to spend time hearing partial summary judgment motions and writing comprehensive reasons on an issue that does not dispose of the action.

[33] Fourth, the record available at the hearing of a partial summary judgment motion will likely not be as expansive as the record at trial therefore increasing the danger of inconsistent findings.

[34] When bringing a motion for partial summary judgment, the moving party should consider these factors in assessing whether the motion is advisable in the context of the litigation as a whole. 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. Such an approach is consistent with the objectives described by the Supreme Court in Hryniak and with the direction that the Rules be liberally construed to secure the just, most expeditious, and least expensive determination of every civil proceeding on its merits.” [emphasis added]

[16] Having regard to these cautions, during the hearing of this motion, the Court raised the question of whether this motion for partial summary judgment was appropriate, in light of the claim for set-off in the Defence and the fact that the Plaintiff advances only one of its claims on this motion, resulting in the Plaintiffs claim for breach of contract proceeding to trial, if the Plaintiff is not successful on this motion. The Plaintiff submits that the Court should hear and consider the motion for summary judgment, because this is the most cost effective and expeditious way to proceed. The Defendant’s position is that this motion should be dismissed as this partial summary judgment raises the concerns set out by our Court of Appeal and as there are genuine issues requiring a trial.

[17] I do not think that it is necessary for the Court to rule on the issue of the propriety and the sufficiency of the evidence on the record. It is clear to this court that the cautions set out by our Court of Appeal with respect to the dangers of hearing inappropriate motions for summary judgment are applicable in this case.

[18] I do not find that the limited issues plead before the Court by the Plaintiff to enforce the foreign judgment “are issues that may be readily bifurcated from the other issues and claims made in the action and that may be dealt with expeditiously and in a cost effective manner” [emphasis added]. If the claim for enforcement of the award is not successful, the Plaintiff’s claim for breach of contract remains to be adjudicated. This claim raises almost all of the issues raised in this motion.

[19] Further, as mentioned above, there is a set-off claim in this Action which the moving party, of the foreign award, the claim for set-off remains - has not responded to in its pleading and which, on the basis of the evidentiary record, cannot be dismissed by this Court. Even if the Plaintiff is successful on its claim for enforcement, which has the effect of leaving the set-off claim to proceed to trial. Regardless of any potential rulings on this motion, all of the cautions set out by our Court of Appeal are applicable, namely:

(1) the risk of inconsistent findings on the motion and at trial;

(2) that the partial summary judgment may not achieve the intended benefits of proportionality, timelines and affordability; and

(3) that such motion may result in delay, greater expenses, and wasted judicial resources.

[20] For all of the above-noted reasons, this motion is dismissed.

[21] There is one further practical issue. The Supreme Court of Canada in Hryniak also held, at para. 78, that:

Where a motion judge dismisses a motion for summary judgment, in the absence of compelling reasons to the contrary, she should also seize herself of the matter as the trial judge.

In my view, this is an appropriate case for me to follow the Supreme Court’s direction. I must, however, qualify this to recognize the practical reality of our court's ability to schedule trials in a timely and expeditious manner. I will not be seized of this trial if the effect of my unavailability would be to delay the hearing of the trial between the parties. If it is possible to do so without adverse delay or consequences to the parties, I seize myself of the trial of this matter as directed by the Supreme Court of Canada.

Costs

[22] If the parties are unable to agree on costs, they may make brief written submissions to me no longer than three pages in length. The Defendant’s submissions are to be delivered by 12:00 p.m. on August 15, 2018, and the Plaintiff’s submissions are to be delivered by 12:00 p.m. on August 22, 2018. Any reply submissions are to be delivered by 12:00 p.m. on August 27, 2018.

Pollak J. Date: August 8, 2018