Court of Appeal Decision of the Week

Summary Judgments: Cross-Examinations on Affidavits

Case: Ter Keurs Bros. Inc. v Last Mountain Valley (Rural Municipality), 2019 SKCA 10 (CanLII)

Keywords: Extracted Gravel; Summary Judgment; Right to Cross-Examination; Contractual Interpretation

Synopsis:

The Respondent Rural Municipality of Last Mountain Valley No. 250 in Saskatchewan (“Last Mountain”) applies for an Order declaring it to be the owner of processed gravel stockpiled on land owned by the Appellant, Ter Keurs Bros Inc.

The dispute centres on the interpretation of terms of an agreement concerning Last Mountain’s right to extract gravel and stockpile it on the Appellant’s land. The main issue: beyond the expiry of the parties’ agreement, is Last Mountain permitted to remove the gravel from the Appellant’s land?

Last Mountain applies for summary judgment pursuant to Rule 7-2 of The Queen’s Bench Rules and files 6 affidavits in support. (See para. 14). Though it concedes extracted gravel cannot remain on the Appellant’s land indefinitely, Last Mountain maintains its ownership rights are unaffected by the expiration of the parties’ agreement and seeks a reasonable period of time to haul it away, pursuant to Saskatoon Sand & Gravel Ltd v Steve et at, 1973 CanLII 940 (SK QB). (See para. 16).

The Appellant seeks an adjournment for time to address the summary judgment application (“additional time to marshal evidence in response”) and to strike one affidavit in its entirety and portions of the other five. If the affidavits are not struck, the Appellant alternatively seeks an order permitting cross-examinations. (See para. 18).

Despite determining there is no genuine issue requiring a trial, the Chambers Judge proceeds to deal with the summary judgment application on its merits; concludes Last Mountain is the lawful owner of the gravel (presumably on the basis of a profit à prendre, though that is not clear, as the Chambers Judge referenced a “residual licence to enter…for the purpose of removing the stockpiled gravel”. (See para. 20). The Appellant appeals against this decision on the basis the Chambers Judge erred in failing to allow it to cross-examine Last Mountain’s affiants. The Court of Appeal allows the appeal.

Importance:

This Court of Appeal decision is significant because it provides instruction as to how Chambers Judges should resolve applications to cross-examine in the context of summary judgment. The question in this case addressed the sufficiency of the Chambers Judge’s approach:

It is not apparent from the Court of Queen’s Bench file or from the written decision below how the Chambers judge dealt with and resolved Ter Keurs’ application to cross-examine the RM’s affiants. Interpreted most favourably, the Chambers judge appears to have been of the view that it was unnecessary to make a ruling in relation to the relief sought by Ter Keurs because the question raised by the RM’s summary judgment application concerned “matters of law that involve the proper interpretation of a contract”, which “[f]or the most part … do not even require evidence beyond the contents of the Gravel Agreement” (at para 3). (See para. 26).

“Somewhat surprisingly” to the Court of Appeal, the Chambers Judge did not rule on or comment on the Appellant’s application:

Presumably, the Chambers judge found it unnecessary to address these matters because she had concluded the substantive issue boiled down to a matter of contractual interpretation, which, she said, was a matter of law that did not require evidence beyond the Removal Agreement itself. This sort of reasoning also played into her determination that there was no genuine issue requiring a trial. (See para. 19).

The Court of Appeal acknowledged that, pursuant to Wallace v Canadian National Railway, 2009 SKQB 178 (CanLII); and Crown & Hand Pub Ltd. v Bank of America Corporation, 2013 SKQB 348 (CanLII), a party “does not have an automatic or inherent right to cross-examine an affiant on his or her affidavit” and that these principles apply in the context of summary judgment applications. (See paras. 27-28).

Nevertheless, the Court of Appeal noted that Rule 7-3(2) “signals the possibility of the responding party cross-examining an affiant in order to demonstrate that a genuine issue requiring a trial is evident from the circumstances of the case.” (See para. 29). For the Court, the “bottom line” (see para. 34) to be considered herein is that, before a Chambers Judge can justly and fairly resolve a matter, he or she must have confidence that the evidence before them satisfies certain principled requirements:

Framed in the context of the matter under appeal, the Chambers judge who heard this matter was obliged to consider the Ter Keurs application to cross-examine the RM’s affiants having regard to Rule 7-3, the “best foot forward” principle, the proportionality principle, the jurisprudence relating to cross-examination of affiants (particularly in a summary judgment context) and (as discussed below) the issues that emerged from the pleadings. In the end, although it was a discretionary decision, it was one which had to have been made with these principles in mind. Unfortunately, it does not appear as though any of this analysis was undertaken by the Chambers judge. (See para. 35).

Additionally, with respect to contractual interpretation, the Court of Appeal noted the following practical effects of Sattva Capital Corp. v Creston Moly Corp., 2014 SCC 53 (CanLII):

In practical effect, adoption of a common sense approach to the interpretation of contracts means that (i) the judicial exercise is no longer dominated by technical strictures, and (ii) evidence concerning the surrounding circumstances known to the parties at the time they entered into the contract is generally admissible with admission no longer restricted to instances of contractual ambiguity. What this means, the Court stated, is that contractual interpretation is to be regarded as a question of mixed fact and law:

[50]      … Contractual interpretation involves issues of mixed fact and law as it is an exercise in which the principles of contractual interpretation are applied to the words of the written contract, considered in light of the factual matrix. (See para. 39).

As such, in order to “properly interpret the terms of the Removal Agreement” in question, it was also necessary for the Chambers Judge to apply Sattva. (See para. 44). Applying Sattva, in this context, meant (for the Court): “…it was incumbent on her to fashion a process that would allow Ter Keurs to both probe the credibility of the RM’s affiants and explore the circumstances and issues that gave rise to the Removal Agreement” (See para. 53) and, as such, “…it is clear the Chambers judge should have allowed cross-examination of the RM’s affiants. Given this error, the decision under appeal must be set aside in its entirety”. (See para. 54).

Finally, by way of general comment on the nature of summary proceedings, the Court had the following message to impart to future jurists:

…a judge who hears the matter must not be too eager to embrace a process that superficially appears to be more expeditious and less expensive if, in the given circumstances, summary judgment is not capable of achieving a fair and just adjudication of the issues. The Supreme Court expressed this underlying concern in Hryniak in the following way:

[50]      These principles are interconnected and all speak to whether summary judgment will provide a fair and just adjudication. When a summary judgment motion allows the judge to find the necessary facts and resolve the dispute, proceeding to trial would generally not be proportionate, timely or cost effective. Similarly, a process that does not give a judge confidence in her conclusions can never be the proportionate way to resolve a dispute. It bears reiterating that the standard for fairness is not whether the procedure is as exhaustive as a trial, but whether it gives the judge confidence that she can find the necessary facts and apply the relevant legal principles so as to resolve the dispute. (See para. 55, C.A.).

Counsel for the Appellant: Patrick Hopf (Richmond Nychuk, Regina)

Counsel for the Respondent: William Howe and Tarissa Peterson (Linka Howe Law Offices, Regina)

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Posted: Wednesday, February 06, 2019