Hryniak v. Mauldin: Where Are We Now

As of this writing, the Supreme Court of Canada decision in Hryniak v. Mauldin, 2014 SCC 7, has been referred to in 21 matters at the Court of Appeal for Ontario. Most of those are brief endorsements that do not warrant review. The significant references are set out below:

King Lofts Toronto Inc. v. Emmons, 2014 ONCA 215, involved a claim for solicitor’s negligence in the context of a large real estate transaction. The motions judge granted the plaintiff summary judgment. The Court addressed the circumstances in which a summary judgment motion can be brought. In this case, the motion was appropriate from a cost and efficiency standpoint having regard to the litigation as a whole:

“The Supreme Court of Canada in Hryniak v. Mauldin has approved a culture shift requiring judges to manage the process in line with the principle of proportionality in the application of Rule 20. This action involves a claim for $106,000 arising out of a multi- million dollar transaction. The principles of proportionality and sensible management of the court process support the motion judge’s ruling.”

Miller Group Inc. v. James, 2014 ONCA 335, involved the right of a defendant to indemnity from a co-defendant based on an implied oral agreement. The Court held that the issue could properly be determined with the use of the mini-trial procedure. In doing so, the Court returned to the test of when a mini-trial is appropriate originally set out in Combined Air Mechanical Services Inc. v. Flesch, 2011 ONCA 764:

“The issue of whether the Miller Group can establish an implied oral agreement with the Sernoskies for indemnification is one that can and should be determined, if necessary pursuant to the procedure contemplated by rule 20.04(2.2). This is a narrow and discrete issue involving oral evidence from a small number of witnesses that can be gathered in a manageable period of time and in which evidence is likely to have a significant impact on whether summary judgment is warranted.”

Baywood Homes Partnership v. Haditaghi, 2014 ONCA 450, involved consolidated actions arising out of a complicated series of real estate transactions. The motions judge granted judgment dismissing part of the claim on the basis of a signed release. He refused judgment on the balance of the claim for payment of promissory notes, on the basis that the parties falsified documents. The Court set aside the decision granting judgment, and in doing so addressed the circumstances in which summary judgment is appropriate where there are credibility issues. Once again, the Court returned to themes originally expressed in Combined Air:

“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.”

Harris v. Leikin Group Inc., 2014 ONCA 479, involved an action against a corporation, its accountants and lawyers, alleging the withholding of information in the context of a purchase of the plaintiffs’ shares. The motions judge dismissed the claim against one of the defendants on a motion for summary judgment, and subsequently ordered a focussed, hybrid trial to deal with the balance of the claims. Following an eight day trial, he granted judgment dismissing the claims. The Court endorsed the motion judge’s approach of ordering a hybrid trial to salvage the resources put into the earlier motion for summary judgment:

“Second, it is my view that both the letter and the spirit of the judge’s directions fell squarely within what the Supreme Court of Canada contemplated in Hryniak v. Mauldin, at paras. 76-77: ‘Rules 20.05(2)(a) through (p) outline a number of specific trial management orders that may be appropriate. The court may: set a schedule; provide a restricted discovery plan; set a trial date; require payment into court of the claim; or order security for costs. The court may order that: the parties deliver a concise summary of their opening statement; the parties deliver a written summary of the anticipated evidence of a witness; any oral examination of a witness at trial will be subject to a time limit or; the evidence of a witness be given in whole or in part by affidavit. These powers allow the judge to use the insight she gained from hearing the summary judgment motion to craft a trial procedure that will resolve the dispute in a way that is sensitive to the complexity and importance of the issue, the amount involved in the case, and the effort expended on the failed motion.’ It seems to me that Karakatsanis J. was urging judges to do exactly what the judge did in this case. After considering the voluminous material filed on the summary judgment motions, he concluded the case could fairly and properly be decided on the basis of a trial focussed on the specific issues that required viva voce evidence.

The appellants submit that while Hryniak modified this court’s decision in Combined Air in some respects, it did not disturb this court’s instruction, at para. 65, that while the court may use rule 20.05 ‘to salvage the resources that went into the summary judgment motion,’ the rule ‘should not be applied so as to effectively order a trial that resembles the motion that was previously dismissed….[T]he trial ought not to be simply a reconfiguration of the dismissed motion.’

I cannot agree that the trial in this case was ‘simply a reconfiguration of the dismissed motion.’ The trial judge did ‘salvage the resources that went into the summary judgment motion’ and he afforded the parties considerable latitude in the presentation of the case. Indeed, the appellants did not complain about any aspect of the procedure during the trial.”

Longo v. MacLaren Art Centre, 2014 ONCA 526, involved a claim for damages caused to a sculpture owned by the plaintiff. The issue was when the plaintiff ought to have discovered the claim. The motions judge dismissed the action on the basis that it was statute barred. The Court overturned the decision, finding the motions judge had misapprehended the evidence:

“Given the motion judge’s finding regarding the September telephone call, Ms. Fynbo’s evidence is of particular importance. It is clear that the statement in her affidavit regarding the phone call is hearsay. The respondent chose not to provide evidence from Mr. Lister and offered no explanation as to why his evidence was unavailable. While determining a case based on hearsay is troublesome, it is permissible pursuant to rule 20.02(1).

The motion judge was permitted to rely upon hearsay, but he could not make a finding that was based on a misapprehension of the evidence. In my view, the motion judge erred in concluding that Ms. Fynbo clearly remembered the telephone call.

In reaching that conclusion, the motion judge referred to Ms. Fynbo’s cross-examination wherein she conceded that she could not recall the details of the alleged conversation, including the extent and cause of the damage. However, he ignored her testimony wherein she conceded that she could not recall a specific conversation with Mr. Lister in which he informed her that he had had a conversation with Mr. Johnson. The highest she could put the matter was that she and Mr. Lister “must have” had such a conversation. Therefore, the trial judge’s conclusion that Ms. Fynbo “clearly” remembered the conversation was a palpable error.

This error qualifies as an overriding error because it permeates the balance of the motion judge’s analysis. Based on that finding, he concluded that, despite the fact that the October 19, 2007 email did not include any reference to Walking Man, it must have been understood to reference that work because ‘at that point in time, no one was talking about any other piece of art with damage, deterioration, or condition problems’. Clearly that conclusion is based on his finding that Mr. Johnson had been told about the damage the previous month.”

Density Group Limited v. HK Hotels LLC, 2014 ONCA 605, involved an appeal of a summary judgment order holding that the director of a corporation was not personally liable in a claim alleging breach of a joint venture. The Court began by noting that Hryniak “greatly expands the use of the summary judgment process for the resolution of civil disputes.” The Appellant argued that regardless of the outcome, the action would have to go forward against the corporate defendant, thus rendering summary judgment inappropriate. The Court disagreed:

“Here Density argues that it was not in the ‘interest of justice’ to determine Mr. Kallan’s personal liability on the motion because, regardless of the outcome of the motion, a trial is still necessary to determine virtually the same issues between Density and HKH.

While that is true, it is not the only consideration. The motion judge’s decision resolved Mr. Kallan’s personal liability. The record discloses that he is an active, experienced businessman involved in the hotel industry. I am sure that to him, having his personal liability determined at this stage is preferable to waiting perhaps years for a trial to resolve an action that was commenced more than five years ago. The threat of a lawsuit continuing to hang over his head, where damages claimed against him are ‘well in excess of $10,000,000.00’, may well have an impact on his ability to carry on his business affairs.”

Trotter Estate, 2014 ONCA 841, involved a complicated factual dispute between siblings regarding the disposition of their parents’ estate. There were allegations of undue influence and claims of the production of false invoices. The motion judge granted summary judgment and dismissed the action, finding that the undue influence claims were based on “bald allegations.” The Court of Appeal set aside the motion judge’s decision, emphasizing that the summary judgment process must be reserved for appropriate cases:

“These changes were designed and implemented to improve access to justice by providing a mechanism to resolve issues more expeditiously than through a traditional trial. In appropriate cases, the motion for summary judgment provides an alternative model of adjudication that has the benefit of streamlining the process for litigants and making the civil justice system more accessible and affordable.

However, 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. There is a risk that, in an effort to dispose of the case, the evidence will not be properly analysed. The Supreme Court affirmed in Hryniak, at para. 28, that “[t]he principal goal remains the same: a fair process that results in a just adjudication of disputes…

The evidence in this case was extensive and conflicting. The allegations were not bald and the motion could not be resolved on the basis that there was no genuine issue requiring trial on the face of the evidence alone. Rather, credibility assessments, a weighing of the evidence and possibly oral evidence were required. The motion judge’s conclusory findings do not provide the analysis or reasoning necessary to support her ultimate conclusion that there was no undue influence.

In my view, the conflicts in this case could not be resolved on the basis of the written record before the motion judge. While summary judgment may have been appropriate had the motion judge exercised her powers under rule 20.04(2) to hear oral evidence, she did not seek to do so. Her order must be quashed.”

Not surprisingly, Hryniak v. Mauldin has received a great deal of attention in the Superior Court of Justice, where judges have taken to heart the need for a “culture shift” referred to by the Court. An early decision of Justice Perell, The Trustees of the Drywall Acoustic Lathing and Insulation Local 675 Pension Fund. SNC-Lavalin Group Inc. 2014 ONSC 660 (S.C.J.), seems to me to be particularly noteworthy:

“Proportionality recognizes that perfection is the enemy of the good. Naturally enough, a litigant wants to know everything that might possibly be known to prove his or her case and a litigant wants to know everything about their opponent’s case so as to not be taken by surprise and to be ready to disprove the opponent’s case. But what a litigant wants is not necessarily what he or she needs, and the development and settling of a Discovery Plan should be approached by needs not wants.

And what goes for discovery and disclosure needs must be approached having regard to the proportionality principle that means that a litigant – and more precisely his or her advocate – must be re-cultured to accept that the adversary system needs far less in procedure than a perfectionist and sometimes obsessed advocate might wish for.”

More recently, in Bosworth v. Coleman, 2014 ONSC 4832 (S.C.J.), Justice Myers was faced with a motion to vary an agreement between the parties limiting the length of trial to ten days in exchange for a cap on damages. The defendant’s new counsel considered the trial would take considerably longer, thus pushing the action onto a long trial list. Justice Myers disagreed:

“Counsel for the plaintiffs proposes to file a very large number of medical reports at trial and to call 3 or 4 experts to give live testimony. Counsel for the defendants proposes to cross-examine a large number of those witnesses. The time involved in conducting all of those examinations, if not scheduled, would exceed the time which the parties have agreed to commit to the trial. Neither counsel has proposed mechanisms to ensure that their clients receive the proportionate, timely and affordable resolution of their dispute that they want. Are all of the painstaking examinations of seven years of medical treatment records really required? Can they not be summarized? Do any proposed in- court examinations involve facts rather than credibility and, if so, might they be conducted out-of-court before the trial? Might it be possible for counsel to conduct shorter, tailored examinations? Might opening and closing arguments be submitted in writing or be made briefly? Can examinations-in-chief be adduced by will-say or affidavit? The latter is often used in trials on the Commercial List while the former is used in nearly all civil trials in the United Kingdom.

The defendants’ counsel submitted that it is the role of counsel to determine if the trial will extend more than 10 days. This is an anachronistic view. Improving access to the civil justice system requires all users of the system (litigants, counsel, judges and administrators) to focus on ensuring that the system provides fair and just processes short of the unaffordable, painstaking trial of yester-year.

Issues can be limited to those that matter. Examinations can be brief and focused. It may take more work for counsel to prepare a short examination. Any lawyer can raise every possible issue and ask every possible question. It takes little preparation to ask “What happened next?” as one leads a witness through a chronological book of documents. Doing so is easier and perhaps less risky than actually focusing on the key issues and determining a strategy to deal with them briefly and efficiently. Yet, counsel are expected to exercise such judgment for their clients.

At minimum, the culture shift required by the Supreme Court of Canada makes efficiency a key priority in trial planning. It is very much the role of the court and the clients to promote access to justice by working with counsel to make trials shorter, run more efficiently, and thereby more affordable, timely and proportionate. For their part, judges will have to be prepared to increase their involvement and time commitment to assist the parties and counsel in case management. This will require appropriate administrative support as was also recognized by Karakatsanis J. in Hryniak, at para. 79.”

Legal commentators have also taken up the call for a culture shift. In a case comment on Hryniak v. Mauldin in the summer 2014 edition of The Advocates’ Journal, Jonathan Lisus emphasized the need for the litigation bar to adapt its approach in light of the decision:

“Hryniak need not herald the demise of the conventional trial. But the trial bar would be foolish to ignore the message it carries. That message is that the bench is losing confidence in the ability of counsel to deliver justice to litigants through the plenary trial. It is incumbent on the trial bar to embrace this message and employ Hryniak as a tool to revive it, or some substantial part of it. The discretion the Supreme Court conferred on the modern advocate and superior court judges affords us the opportunity to rebuild the confidence lost in the conventional trial…

The decision is ours. We either adapt our practices and approach – and apply Hryniak, and the manner in which it has been embraced across the country, as a springboard to persuade RSJs, local administrative judges and the gatekeepers in Rule 20 courtrooms that the trial process can and does work – or we resign ourselves to a glorified motions practice.”

If Hryniak v. Mauldin is interpreted in a way that ensures the civil justice system operates in a more efficient manner, that litigants cut down on pre-trial procedures and that judges make use of the decision to enhance the conventional trial, it will have served a useful purpose.