Court of Appeal Decision of the Week

Summary Proceedings and the Court of Appeal: “Best Foot Forward” into Hryniak’s “Culture Shift”?

Case: Pyrrha Design Inc v Plum and Posey Inc, 2016 ABCA 12 (CanLII)

Keywords: Alberta Rules of Court; Procedural Fairness; Summary Disposition; Standard of Review; Sattva Capital Corp v Creston Moly Corp, 2014 SCC 53 (CanLII); Hryniak v Mauldin, 2014 SCC 7 (CanLII), [2014] 1 SCR 87.

Synopsis:

The Appellant Pyrrha Design Inc. and Respondents (Plum and Posey Inc. and Adrinna M. Hardy) are separately involved in the creation and distribution of synthetic jewelry. A settlement agreement requires the Respondents cease creating and selling jewelry with specific characteristics claimed as unique and protected by the Appellant.

The Appellant sues the Respondents pursuant to the agreement; claims a breach of its terms; applies for summary judgment. The Respondents do not cross-apply for summary dismissal, but do request this relief in their written brief. The Chambers Judge dismisses the Appellant’s summary judgment application and concludes the entire matter could be dismissed on a summary basis. The reason: as per Hryniak v. Mauldin, [2014] 1 SCR 87, 2014 SCC 7 (CanLII), this is the most efficient and proportionate way to proceed, and it is fair and just to proceed on the existing record.

The Appellant raises three issues on appeal:

  1. Did the chambers judge err in granting summary dismissal of the appellant’s claim in the absence of a formal application by the respondents?
  2. Did the chambers judge err in granting summary dismissal of the appellant’s claim on the record that was before the Court?
  3. Did the chambers judge err in interpreting the settlement contract?

The majority of the Court of Appeal dismisses the appeal, finding the Chambers Judge is to be commended for following Hryniak and prompting a required “culture shift”. It also finds there are no palpable and overriding errors to review. McDonald J.A. dissents, noting Hryniak does not give litigants carte blanche to disregard the Alberta Rules of Court, and finding this was done in the present case.

Importance:

Standard of Review

Citing Dingwall v Dornan, 2014 ABCA 89 (CanLII) at para. 19 and WP v Alberta, 2014 ABCA 404 (CanLII) at para. 16 (among others), the Court of Appeal found summary disposition by a Chambers Judge is discretionary – to be reviewed for reasonableness and entitled to deference, absent palpable and overriding error.

Critically, the majority framed the matter as a contractual interpretation case “on all fours” with Bighorn (Municipal District No 8) v Bow Valley Waste Management Commission, 2015 ABCA 127 (CanLII). The majority found the standard to be applied was palpable and overriding error because the case did not involve a standard form contract and there was no “extricable error of law” made by the Chambers Judge (see para. 7).

Adding to the growing list of decisions interpreting Sattva Capital Corp v Creston Moly Corp, 2014 SCC 53 (CanLII), the majority added “…correctness remains the appropriate standard of review when interpreting standard form contracts since the results would be expected to have an impact beyond the parties to a particular dispute and be of precedential value” (Note: the majority made explicit reference to the Vallieres v Vozniak, 2014 ABCA 290 (CanLII) line of authority for this proposition).

Analysis of Issues on Appeal

For the majority, the decision of Hryniak is an urging by the Supreme Court of Canada to effect a “culture shift” – that Courts are now obliged to resolve legal disputes in the most cost-effective and timely method available. As such, the Chambers Judge is to be “…commended, not criticized, for pursuing a cost-effective, timely final resolution to this litigation…as it simply serves no one’s interest to permit continuation of protracted and costly litigation when it can be properly disposed of summarily and entirely” (emphasis in original at para. 10).

Significantly, the Appellant conceded on appeal that it “put its best foot forward” before the Chambers Judge. The gravamen of the Appellant’s summary judgment claim was that certain photographic evidence proved breaches of the settlement contract. Conversely, the Respondent’s summary dismissal argument was that the photographs did not support the claim and that there had been no breach of the settlement agreement.

For the majority, the Appellant was really making a complaint of form over substance – that the Appellant was not in fact prejudiced by the Respondent’s failure to file and serve a formal notice of application for the summary dismissal (although, at para. 17, the majority accepts that in some circumstances, prejudice may be caused to the opposite party).

Since the majority frames the issue as a dispute over the interpretation of a contract, and the factual matrix surrounding the making of the settlement contract was not materially in dispute, it is possible to conclude the record before the Chambers Judge was not deficient:

“The chambers judge interpreted the contract in accordance with contractual interpretation principles, and she viewed with her own eyes the photographic evidence proffered by the appellant in support of its assertion that the respondents had breached the settlement contract. It was entirely within the ambit and purview of the chambers judge’s discretion and duty to decide for herself, in light of her interpretation of the settlement contract, whether the photographic evidence supported a breach of that contract” (see para. 24).

For the majority, this is a “prime example” of a case with no genuine issue requiring a trial because the summary process:

1) allowed the chambers judge to make the necessary findings;

2) allowed the chambers judge to apply the law to the facts; and

3) was a proportionate, more expeditious and less expensive means to achieve a just result (as per Hryniak).

Finally, the majority of the Court of Appeal could detect no error in the Chambers Judge’s analysis and no palpable and overriding errors.

Dissenting View

Typically, when a party loses a motion for summary judgment that party may still elect to contest the matter at trial. In the present case, the Appellant’s entire claim was dismissed in summary fashion – in circumstances where the Respondent had not cross-appealed for summary dismissal.

For McDonald J.A. in dissent, this raises questions of procedural fairness – questions which take the matter out of the Sattva discussion altogether (review on the palpable and overriding error standard); and allow for an application of the correctness standard.

Rule 1.2(1) of the Alberta Rules of Court states: “The purpose of these Rules is to provide a means by which claims can be fairly and justly resolved in or by a court process in a timely and cost effective way”.

McDonald J.A. refused to accept that Hryniak and Rule 1.2 give counsel or the parties carte blanche to disregard the requirement to cross appeal for the relief that was eventually granted by the Chambers Judge in this case – summary dismissal of the Appellant’s entire claim at their own motion for summary judgment.

In other words, the need for a “proportionate approach” to litigation should not come at the expense of procedural fairness and fundamental adherence to the Rules of Court. Significantly for McDonald J.A., at no time did counsel for the Respondent ever advise Appellant’s counsel by way of correspondence that he was also seeking summary dismissal of the Appellant’s entire action.

Moreover, McDonald J.A. highlights the fact that, on review of the transcript before the Chambers Judge, the Respondent did not clearly and unequivocally advise the court at the outset of the application that he was seeking dismissal of the claim and not simply seeking dismissal of the application for summary judgment (see the exchange between Appellant’s counsel and the Chambers Judge reproduced at para. 39).

Despite Rule 1.3(2) which says: “A remedy may be granted by the Court whether or not it is claimed or sought in an action”, McDonald J.A. finds the majority view ran contrary to the spirit behind these provisions – they should not be interpreted in a matter that improperly permits the granting of relief where it would be “unfair” to do so.

Counsel for the Appellant: Nicholas Ramessar (Carscallen LLP, Alberta) and T.P. Lo

Counsel for the Respondents: R. A. Smith

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Posted: Wednesday, February 17, 2016