Canada: Does Summary Judgment By Agreement Require A Different Legal Test?

As civil trials become more expensive, Canadian Courts are looking for different ways to resolve parties' disputes. One of these mechanisms is the summary judgment motion.

In 2014, the Supreme Court of Canada called for a litigation "culture shift" in its decision Hryniak v. Mauldin, 2014 SCC 7. Hryniak encouraged motions for summary judgment as a more efficient means of claims adjudication. The summary judgment motion is now commonplace.

Under Rule 20.04(2) of Ontario's Rules of Civil Procedure, R.R.O. 1990, Reg. 194, a Court shall grant summary judgment in two contexts:

  1. where the Court is satisfied that there is no genuine issue requiring a trial (set out in Rule 20.04(2)(a)); or
  2. where the parties agree to have all or part of the claim determined by summary judgment and the Court is satisfied that it is "appropriate" to grant summary judgment (as set out in Rule 20.04(2)(b)).

In the first circumstance, under Rule 20.04(2)(a), one of the parties argues that there are genuine issues requiring a full trial and summary judgment ought not to be granted.

In the second circumstance, under Rule 20.04(2)(b), the parties agree that the claim (or part of it) can be resolved by summary judgment. This aspect of the summary judgment motion is on consent of both parties. The Court must then decide, in light of the parties' agreement, if it is nevertheless "appropriate" to grant judgment on the record.

Since Rule 20.04(2) has come into force, the Ontario Superior Court has debated whether these two discrete applications of summary judgment give rise to different legal tests.

A recent decision of the Ontario Superior Court, Unique Lighting & Control Corp. v. Green Services Canada Ltd., 2019 ONSC 4438, suggests not.

Two Paths to Summary Judgment

The facts of Unique Lighting are straightforward.

The defendant installer of lighting equipment, Green Services Ltd. ("Green Services"), entered into a contract with a supermarket chain to install lighting at its stores.

Under this contract, Green Services had to purchase its lighting supplies from the plaintiff lighting supplier, Unique Lighting ("Unique").

Green Services began ordering lighting supplies from Unique for the supermarket, but allegedly failed to pay Unique for its invoices rendered.

Unique ultimately started a lawsuit against Green Services, and its individual officers, the Greens, for the failure to pay the invoices.

The Greens, in their personal capacity, moved for summary judgment alleging that they could not be held personally liable for the debts of the corporation, Green Services. By contrast, Unique argued that John Green, one of the officers of Green Services, could be held jointly liable with Green Services for the unpaid debt. Unique agreed that this discrete issue could be resolved on the Greens' motion for summary judgment.

However, the parties disagreed about whether Unique's claim against the defendant corporation, Green Services, could also be resolved by way of summary judgment.

With respect to Unique's action against Green Services, the Court had to decide, under the first circumstance set out under Rule 20.04(2)(a), if there was a "genuine issue requiring a trial".

However, with respect to Unique's action against John Green, the parties agreed that this issue could be adjudicated by way of summary judgment. The second circumstance under Rule 20.04(2)(b) applied: notwithstanding the agreement of the parties, the Court nonetheless had to decide whether it was "appropriate" to grant summary judgment.

At first glance, then, two different legal tests seemed to apply: in the action against the defendant corporation, Green Services, the Court had to decide if there was a "genuine issue requiring a trial". In the action against John Green, however, the Court had to adjudicate whether summary judgment was "appropriate".

Summary Judgment is Always Summary Judgment

The Court in Unique Lighting began its analysis by noting that Ontario Courts have not resolved the issue of whether the two applications of summary judgment require different legal tests. Since this case raised both applications of Rule 20.04(2)(a) & (b), the Court had no choice but to resolve the legal debate.

The Court held that the two uses of summary judgment did not attract different legal standards. Rather, Rules 20.04(a) & (b) had to be "read together":

...There are two interwoven paths to summary judgment. Despite the agreement of the parties, Rule 20.04(2)(b) sensibly empowers the court to decline summary judgment if it is not satisfied "that it is appropriate". Of course, if there remains a "genuine issue for trial"...it can never be "appropriate to grant summary judgment"...

Thus, the fact that Rule 20.04(2)(b) invoked summary judgment by agreement of the parties was irrelevant to the legal test, which still remains whether there is a "genuine issue requiring a trial":

...although Rule 20.04(2)(b) provides an alternative route to summary judgment, it does not establish a different standard. It does not enable the parties to compel a summary judgment where there is a genuine issue that the interests of justice require the full procedural machinery of a trial to resolve...

The ultimate question the court must decide remains the same whether the route to summary judgment is Rule 20.04(2)(a) or Rule 20.04(2)(b). That being, whether or not there is a genuine issue requiring a trial...In this case, both motions for summary judgment turn on that very same question.

The Court held that it could resolve both summary judgment motions on the record. The motion by the Greens was granted and the action against them personally was dismissed. Summary judgment was also granted in favour of Unique against the defendant corporation, Green Services, for the amount owing under the invoices.

A Consistent Approach

The decision in Unique Lighting maintains the doctrinal consistency of Rule 20.04(2).

To have two different legal tests apply to summary judgment, depending on whether or not the parties agreed that their issues could be resolved on a summary judgment motion, would result in varying standards of justice depending on the parties' level of co-operation. There are no good policy reasons to justify such an approach.

Moreover, having different legal tests apply in the two circumstances under Rule 20.04(2)(a) & (b) could undermine the ultimate jurisdiction of the Courts. If the parties could simply "agree" to summary judgment under Rule 20.04(2)(b), without the Court's input on whether there are in fact genuine issues requiring a trial, one can envision circumstances where a Court would be required on the parties' consent to resolve an issue the complexity of which requires the full machinery of a civil trial.

Unique Lighting therefore preserves a necessary coherence under Rule 20.04(2).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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