Beware the backfire

Beware the backfire
Since Ontario’s Rules of Civil Procedure were amended in January 2010, summary judgment has become a far more attractive option than it was before. Gone are the heightened cost consequences imposed upon the losing party, and courts have been given stronger forensic tools to assess the cases before them. Given these changes, practitioners are now far more likely to counsel their clients to consider a motion for summary judgment than they were before the rule change.
There are undoubtedly advantages to seeking summary judgment under the new rules. Given the parties’ obligation to put their best foot forward, a motion for summary judgment can be an effective way of flushing out the opponent’s case. Indeed, as plaintiff’s counsel, one might not see a downside to a motion for judgment. A lawyer is a hero if the motion succeeds. If it fails, there’s always trial.

However, many in the profession are not aware that failing on a motion for summary judgment can result in more than the mere dismissal of the motion for judgment, but could result in a dismissal of a claim or an action in its entirety, even in the absence of a cross-motion for dismissal. This is a risk that counsel should draw to the attention of their clients and should carefully consider before cavalierly filing a summary judgment motion.

In Ontario, it is clear that a judge hearing a summary judgment motion can make an order that neither party explicitly asked for. This authority was recognized in a 1996 decision of the Supreme Court of Canada in Manulife Bank of Canada v. Conlin. Manulife related to a mortgage default. Originally, there was a guarantor of the mortgage, however, the mortgage was renewed and the guarantor did not sign the renewal document. When the mortgagor defaulted, the bank sued both the mortgagee and the original guarantor of the mortgage, and it successfully sought summary judgment.

No cross-motion was brought to dismiss the action. The Ontario Court of Appeal reversed the judgment, dismissing the action against the guarantor in its entirety. The Supreme Court of Canada dismissed the appeal from that decision, holding: 1) the Court of Appeal could make any order that the court of first instance could make; and 2) the court of first instance had the jurisdiction to dismiss the action, even absent a cross-motion for judgment.

In 2001, after the Manulife decision, the Ontario Court of Appeal decided Whalen v. Hillier, where the question of the court’s jurisdiction to grant relief that was not sought by either party on a summary judgment motion, was put directly to the court. In Whalen, the court held that the rules (as they then read) permitted a judge, where there is no genuine issue for trial, or where the only issue is a question of law, to determine that issue and “grant judgment accordingly,” either for or against the moving party. The court reached a similar conclusion in 2005 in Vytlingam v. Farmer.

The jurisprudence set out above gives rise to new and under-appreciated risks for litigants in Ontario under the new summary judgment regime. Judges have been given more tools to determine summary judgment motions. They can make findings of credibility, weigh evidence, and make inferences. The true scope of these powers, it is anticipated, will be clarified in the eagerly awaited decision of the Ontario appeal court in Mauldin v. Cassels Brock & Blackwell LLP, however judges can clearly have enhanced fact-finding powers to be applied either in determining whether there is a genuine issue for trial, or in respect to the resolution of the issues raised by the motion.

Given the mandatory language of Rule 20.04(2) that the court “shall” grant judgment if there is no genuine issue requiring a trial or if the question before the court is one of law, there is a heightened risk that a judge using his or her new forensic tools to make an adverse finding against a moving party that might prove so detrimental to that party’s case that it is determinative. As a result, counsel should be extremely careful to avoid errors and omissions by truly putting the best possible case forward to ensure that, if a court issues a “backfire” judgment, it is done with the benefit of a full record.

Moreover, given the uncertainty surrounding the extent of the court’s new powers on summary judgment motions, counsel should discuss with their clients all of the potential outcomes of a motion for summary judgment, including the backfire. One can easily envision how disgruntled a client would be to find their action dismissed without being warned of the possibility and after their lawyer advised them to seek summary judgment.

The potential for a backfire can also be used tactically against unwary counsel. The onus is on a moving party to prove its claims (or defence), and in doing so it must put its best foot forward; the court expects that it will have the evidence before it that would be called at trial. A situation may arise in which counsel for the moving party does not include a key piece of evidence, or provides weak evidence on a key point, in his or her motion materials. Rather than bring a cross-motion to dismiss the action, which would likely highlight the missing or weak evidence in time for the moving party to “cooper up” its case, it may be preferable to simply raise the Manulife line of cases in a responding factum, well after the moving party is in a position to tender further evidence.

The “backfire” has great potential: as a landmine for the uninformed lawyer, and as a weapon for the clever lawyer. Given the increasing importance of summary judgment in Ontario, it is critical that counsel ensure that both they and their clients understand this little-known but significant issue.

Matthew Diskin is a litigation lawyer at Heenan Blaikie LLP in Toronto.

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