Dispositions without a trial: a quick Canadian primer

November 2015 | SPOTLIGHT | LITIGATION & DISPUTE RESOLUTION

Financier Worldwide Magazine

Litigation is the bane of most, if not all individuals and businesses. Nobody wants to spend exorbitant amounts of money on legal fees to become entangled in courts over several years. Nevertheless, sometimes litigation is the only choice, whether you are a plaintiff or defendant. For example, commencing a legal proceeding may be the only viable option to collect on a debt owed to you. On the other hand, a party may commence litigation against you, and defending the action may be the only means of ensuring that there is no judgment against you, even if the claim appears meritless. However, these realities do not lessen the costs or angst associated with taking an action to trial, which can take several years in any Canadian jurisdiction.

In Canada, there are several means of disposing of a legal action without a trial, especially if you are confident that your position is clearly the right one. The two most common means are bringing either a motion to strike a claim or defence, or a motion for summary judgment. Although the rules of procedure vary from province to province, Canada’s appellate courts have set out principles that apply to these motions regardless of jurisdiction. This article will discuss the case law and practical considerations concerning these motions, with reference to Ontario’s procedural rules.

Motion to strike

In Ontario, the Rules of Civil Procedure (Rules) allow for a motion to strike an opposing party’s pleadings under Rule 21.01(1)(b). Naturally, there is a high bar for success on these motions, since courts are reluctant to strike a claim or defence in its entirety without hearing the matter on the merits. The moving party must demonstrate that it is ‘plain and obvious’ that the opposing side’s pleadings are deficient and disclose no reasonable cause of action or defence. Canada’s Supreme Court, in R v Imperial Tobacco Canada Ltd, [2011] SCJ No 42, clarified that “[a]nother way of putting the test is that the claim has no reasonable prospect of success. Where a reasonable prospect of success exists, the matter should be allowed to proceed to trial”.

Notably, on a Rule 21.01(1)(b) motion, the court will assume the facts pleaded by the other side to be true, and no evidence is admissible, except for documents that are an integral part of the pleadings, and that are incorporated by reference. Furthermore, even if the moving party has strong arguments about the deficiencies in a party’s pleadings, if it appears they could be potentially fixed, Canadian courts will often give the responding party leave to amend their pleadings. Ontario’s Rule 26.01 provides that the court shall grant leave to amend a pleading on such terms as are just, unless non-compensable prejudice would result.

Consequently, unless you are confident that there are no material facts in dispute between you and the responding party, a Rule 21 motion may be impractical. If accepting the opposing party’s pleadings as true would defeat or obscure your legal arguments, it would likely no longer be ‘plain and obvious’ that they would have no chance of success at a trial. A Rule 21 motion would be more advisable if there was a substantial agreement on the facts, and the dispute between you and the opposing party was confined to legal arguments. For example, if two parties’ pleadings were largely consistent on the facts surrounding a commercial agreement, and there was simply a legal dispute over an issue such as whether there was a breach of contract on those facts, then a Rule 21 motion may be an efficient means of having a judge decide the real issue in dispute, and conclude the action.

Motion for summary judgment

Ontario’s Rule 20 allows for a party to move for summary judgment and dispose of a case if “the Court is satisfied that there is no genuine issue requiring a trial with respect to a claim or defense”. Under this rule, a defendant may have a case dismissed, and a plaintiff may obtain a judgment without going through a trial. This rule allows the motions judge to admit and weigh evidence, assess credibility, and draw inferences for the purpose of determining the motion. It is noteworthy, then, that on a summary judgment motion, both factual and legal issues may be in dispute, and the parties are free to lead affidavit evidence and, if the judge orders it, lead viva voce evidence as well.

In the landmark case of Hyrniak v Mauldin, 2014 SCC 7, the Supreme Court of Canada called for a “culture shift” to increase the availability and use of summary judgment motions. The court clarified that these motions should be used not only to weed out unmeritorious claims, but also as a significant alternative model of adjudication to save parties and the judicial system from full trials where they are unwarranted.

Since the Hyrniak case, a moving party can succeed on a summary judgment motion if the motions judge can: (i) make the necessary findings of fact; (ii) apply the law to the facts; and (iii) dispose of the case in a way that is a proportionate, more expeditious and less expensive means to achieve a just result than going to trial. Motions judges must assess whether this is possible in two stages. At the first stage, they must determine if there is a genuine issue requiring a trial on the basis of the written record before the court, including any affidavit evidence and transcripts that have been filed. If, based on this material, it appears there is an issue requiring a trial, then the judge must assess whether a trial can be avoided using her or his powers to weigh evidence, evaluate credibility, hear oral evidence and draw inferences. If, using these powers, the trial judge can come to a fair disposition of the case, she or he should do so. If this is not possible, then the matter should proceed to a trial.

Pursuing a summary judgment motion can be a cost effective litigation strategy. It has significant appeal as a cheaper and faster way to have your day in court. Furthermore, it lacks the constraints of a Rule 21 motion. Factual issues can be contested, and evidence can be led in both written and oral form. These motions are especially advisable in cases where there are not voluminous amounts of evidence or myriad witnesses, which could result in highly complex issues that require a trial for resolution. In larger, more complex cases, where there may indeed be issues requiring a trial, parties should seek directions from the court ahead of time, to allow the motions judge to manage the time, costs and procedure of the motion. Failure to seek these instructions could result in the court making a costs order against you.

Conclusion

The preceding discussion on Rules 20 and 21 provides some guidance on whether it is worth it to pursue these forms of relief. However, parties should approach these motions with some caution: while they are cheaper than a trial, they are still expensive, and a failed motion will have had the unintended effect of delaying the proceeding, and increasing all parties’ costs. If the facts of a case are largely undisputed, and there is a simple, threshold legal issue which can narrow the case or be determinative, a Rule 21 motion may be advisable. If some evidence is required and there are some contentious factual issues or documentary evidence is needed to resolve a dispute, then a summary judgment motion may be advisable, especially in the post-Hyrniak era.

Sarit E. Batner is a partner and Justin H. Nasseri is an associate at McCarthy Tétrault LLP. Ms Batner can be contacted on +1 (416) 601 7756 or by email: sbatner@mccarthy.ca. Mr Nasseri can be contacted on +1 (416) 601 7884 or by email: jnasseri@mccarthy.ca.

Sarit E. Batner and Justin H. Nasseri

McCarthy Tétrault LLP