Court of Appeal Decision of the Week

Beyond Hyrniak: Closing the Barn Doors on Summary Judgment Motions or, Closing After the Cattle Have Taken Off?

Case: Berscheid v Federated Co-operatives et al, 2018 MBCA 27 (CanLII)

Keywords: Summary Judgment; Cattle Supplements; Hryniak v Mauldin, 2014 SCC 7 (CanLII)

Synopsis:

The Appellant, Mr. Berscheid, operates a cattle farming operation. The Respondent, Federated Co-operatives Limited manufactures supplements for cattle. The supplements are sold to the Appellant by the Respondent, Swan Valley Consumers Co-Op.

There is no dispute the supplements were defective (not manufactured according to the specifications provided and for Sale of Goods Act, CCSM c S10 purposes). The Respondents concede this point in an amended statement of defence. The Appellant submits the defective supplements cause damages to his herd in excess of $810,000. He also submits this is an appropriate case for summary judgment. The Respondents seek further disclosure and production of information in order to properly evaluate and assess the claim for damages.

The Motions Judge denies the Appellant’s motion for summary judgment, orders a trial on the issues of causation and quantum of damages. Although the Motions Judge finds against the Respondents on the issue of liability, the Appellant is ordered to provide further disclosure and participate in examinations for discovery. The Court of Appeal dismisses the Appellant’s appeal, with costs to the Respondents.

Importance:

The decision is notable here because the Court of Appeal provides a stark warning against the use of summary judgment motions – an indication, perhaps, of changing judicial attitudes to their utility in the wake of Hryniak v Mauldin, 2014 SCC 7 (CanLII)?

Citing Homestead Properties (Canada) Ltd v Sekhri et al, 2007 MBCA 61 (CanLII) at para. 15, the Court of Appeal set out the applicable test to be applied on a motion for summary judgment as follows:

When a plaintiff moves, he must prove, on a prima facie basis, that his action will succeed. If he meets that burden, then the defendant has the burden to establish that there is a genuine issue for determination. If he fails to do so, summary judgment granting the claim will follow. As was made clear in Blanco et al. v. Canada Trust Co. et al., 2003 MBCA 64 (CanLII), 173 Man.R. (2d) 247 at para. 62, regardless of who is the moving party, the analysis is a two-step process. (See at para. 11).

The Court of Appeal noted that the decision on a motion for summary judgment is highly discretionary. As such, the Court affirmed (citing Perth Services Ltd v Quinton et al, 2009 MBCA 81 (CanLII) at para. 28; and Lodge et al v Red River Valley Mutual Insurance Company et al, 2017 MBCA 76 (CanLII)) that such decisions should not be interfered with unless “…there is a finding of misdirection on the law or the facts or unless the decision is so clearly wrong as to yield an unjust result”. (See para. 13). The Court of Appeal held that similar reasoning applied to orders relating to disclosure and production of information in a civil proceeding. (See para. 14).

In this case, the Court of Appeal found the Appellant’s materials were “very difficult to understand”, and required further expert evidence and analysis of the applicable data:

So, for example, for reasons unrelated to the defective supplements, Berscheid implemented a change in his operation in the 2008 production year. Did this have an impact on the weight gain of the cows? During the summer months, the defective supplements were not fed to the cows. Did this have an impact on the weight gain and subsequent financial loss? Obviously, the parties have differing views on this, none of which is clear from the documentary evidence filed, especially in view of Berscheid’s refusal to provide complete disclosure of his financial records. Berscheid’s own consultant, Lyle McNichol (McNichol), in his affidavit sworn April 24, 2014, opined that, “I am of the opinion that trace mineral deficiencies are very complex”. (See para. 20).

It is interesting to note that, although the Court of Appeal determined the Motions Judge had erred with respect to his articulation of the test for causation (incorrectly stating plaintiffs must demonstrate that a breach of contract is the sole cause of the plaintiff’s loss), the Court refused to weigh in and definitively provide the correct statement of the law: “…the exact nature of the test and its application to these facts is best left for the trial judge”. (See para. 22). Is it somewhat ironic that the Court refused to clearly state the test for causation in this case (thereby opening the barn doors wide to further litigation on this important question of law) in light of the Court’s earlier admonition that motions for summary judgment have the potential to “unduly complicate matters”? (See para. 1).

Ultimately, however, the Court of Appeal determined there was no basis to overturn the decision of the Motions Judge. Steel J.A. confirmed the order while offering some comfort to the Appellant – that an “appropriate motion” made pursuant to QB Rules and the Court of Queen’s Bench Act, CCSM c C280 could ensure his participation in further disclosure/discovery does not compromise his competitive edge in the marketplace. (See para. 27).

At a minimum, the decision is evidence that the Court of Appeal is developing a more sophisticated understanding of “proportionality” in this context (though it may also simply reflect a more focused understanding of para. 32 in Hryniak – that summary judgment motions can slow down proceedings if used incorrectly):

Although complexity in and of itself will not necessarily preclude the possibility of summary judgment, cases which are factually complex, with conflicting evidence from a number of witnesses and a voluminous record, are not generally well-suited to determination on a summary basis. (See para. 34).

For Steel J.A., the use of a motion for summary judgment in this case had “the opposite effect intended” by the Supreme Court of Canada in Hryniak – that summary judgment rules should be interpreted broadly to ensure fair access to the affordable, timely and just adjudication of claims. Rather, the Court of Appeal determined summary judgment had “unduly complicate[d] matters”. (See para. 1).

Counsel for the Appellant: Timothy Berscheid (on his own behalf)

Counsel for the Respondents: Ross McFadyen and Kelsey McIntyre (Thompson Dorfman Sweatman LLP, Winnipeg)

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Posted: Tuesday, April 03, 2018