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Monday Morning Case Bites for March 8, 2021

Last Week’s Court Rulings from the Alberta Court of Queen’s Bench, Court of Appeal and SCC.

Edited by Tony Slemko Q.C. & Steven Graham

Kubersky v Pomeroy (Pomeroy Group), 2021 ABQB 173
Summary Judgement

Frenchies Farm and Ranch Ltd. v Peace Hills Insurance Company – 2021 MBQB 33
Fire Loss | Proof of Loss | Willfully False Statement

Kubersky v Pomeroy (Pomeroy Group), 2021 ABQB 173

The Plaintiff brought a summary judgment application in the context of a wrongful dismissal action. The critical issue was whether a Master hearing a summary judgment application can weigh evidence in Chambers. The Master referenced the relevant portions of the Court of Queen’s Bench Act which set out a Master’s jurisdiction:

[5]               The starting point is Section 9(1)(a) of the Court of Queens Bench Act. That subsection provides that Masters in chambers have ‘the same power and may exercise the same jurisdiction as a Judge sitting in chambers’ subject to a number of exceptions set out later in the section; none of which apply here, except for 9(3)(b); which provides that the jurisdiction exercisable by a Master in chambers does not include ‘the determination of disputed or contentious questions of fact unless the parties agree to the disposition of the questions in chambers on affidavit evidence and without the trial of an issue or the hearing of oral evidence.

In the wake of the Weir-Jones decision on summary judgment, the Master described the current landscape:

[8]               The majority in Hannam note that the current Summary Judgment procedure has become quite ‘trial-like’. Summary Judgment applications and trials share the presumption that the best evidence is before the Court (Lameman at para 19). Issues are now resolved on a balance of probabilities (e.g. Sobeys at para 12; Hannam at paras 137-8 and para 175) and not on an older, higher standard that had been used since time pre-millennial.

[9]               The distinction between summary disposition and trials is further blurred, at least to the uninitiated, by requiring the person hearing the application to ‘find facts’ (e.g. Weir-Jones, para 21(b)); a point that is emphasized in Hannam (at paras 147-149). The effect of the decided cases is to bring the procedure in Alberta very much in line with Ontario’s Rule 20 (Ontario Rules of Civil Procedure Rules 20.04(2.1) and (2.2)), which formed the basis for the Hyrniak decision.

[10]           I acknowledge that these applications have become much more complex and have become somewhat like ‘trials in a box’ or ‘paper trials’; primarily because of the failure of the old ways to deal with civil disputes in a timely and cost-effective way.

[11]           Despite the complexity of these document-rich applications, Summary Judgment is not a trial. It is really a kind of prediction; though one with immediate and binding effects on the parties. Now the question is whether the ‘right’ to a trial should be denied and, conversely, whether a fair and just resolution is possible on the record presently before the Court. It is not an ‘adjudication’ (in the sense used in S.B.I.) where evidence is weighed and, for example, competing pieces of evidence are compared to determine which is true, or the more probable.

[12]           The exercise is really no different from any final application heard in chambers. Dismissal for delay is a good example. It too is not an ‘adjudication’ though it has a direct, immediate and final effect on the rights of the parties by depriving the plaintiff of the privilege of continuing their lawsuit. A Master considering, evaluating, or comparing evidence in a Summary Judgment application is not usurping the powers of a Section 96 Judge. A direct conflict in the evidence on a material point usually means a trial will be necessary. And the findings made at a Summary Judgment application (beyond the result itself) do not make the facts res judicata.

The Master then assessed some of the leading authorities on a Master’s jurisdiction and ability to weigh evidence:

[16]           In S.B.I. (at para 57) Justice Lieberman, writing for the Court, said:

“The Master would be exceeding his jurisdiction if he assessed damages in the sense that he weighed evidence to arrive at an amount… Here, however, there was no weighing of evidence…”.

The damages in that case were essentially liquidated damages.

[17]           In the Coffey decision at first instance (2017 ABQB 417), Master Farrington declined to determine pay in lieu of notice and found that a claim for damages and the counterclaim were not suitable for summary disposition. His decision was affirmed on appeal (2018 ABQB 898). The appeal decision came out before Weir-Jones and Hannam, at a time when there was division in the decided cases about the approach to Summary Judgment and the correct test to be used. It is the appeal decision that gives us trouble.

[18]           Coffey makes a number of pronouncements:

  1.    That it is inappropriate to weigh evidence at a Summary Judgment application whether it is before a Master or a Judge (para 45);
  2.    Weighing evidence is outside the jurisdiction of the Master and beyond the scope of the Summary Judgment rule (para 41); and
  3.    A Master is precluded by Section 9of the Court of Queen’s Bench Act and Section 96 of the Constitution Act from weighing evidence in reaching a determination of damages (para 21).

[19]           First of all, (and with respect) these pronouncements fail to grasp the ‘elusive distinction’ between summary disposition and trial referred to in paragraph 13, above. Summary disposition is neither a trial nor an adjudication (in the Section 96 sense). Second, and perhaps understandably, the case failed to anticipate the path of the law both in terms of the approach to summary disposition and the appropriate test to be used; though I acknowledge that the appeal decision did not turn on the correct test to be used (Coffey, para 20). As such, it now conflicts with the leading authorities from the Court of Appeal. Third, and again with respect, no stock can be placed in the constitutional pronouncements made in that case. Much of the dicta in Coffey seems to be premised on the assumption that summary disposition is an adjudication. Summary disposition does not try the rights of the parties. A Master hearing a summary disposition application is not weighing evidence in an adjudicative sense as a Judge would at trial.

[20]           The determination of damages in S.B.I., which were essentially liquidated, met ‘the third arm of the three-fold test’ for determining constitutionality which is to review the tribunal’s function as a whole in order to appraise the impugned function in its entire institutional context, as purposed by Dixon J in the Ontario Reference case (cited in S.B.I. at para 57). The part about weighing evidence to determine (unliquidated) damages is and remains only dicta.

[21]           The question in S.B.I. was whether the Master exceeded his jurisdiction in determining occupational rent for an overholding tenant. The Master there concluded there was no triable issue. The damages awarded were essentially liquidated. The issue did not involve general damages. The proper question to ask is whether finding damages in lieu of notice is subsidiary, or ancillary to the functions assigned to a Master in chambers pursuant to now s 9 of the Court of Queen’s Bench Act, Rule 7.3 and the Practice Directions mentioned above. The case tells us that the Court is to perform a three-part test to see whether jurisdiction thus conferred on a section 92.14 appointee infringes s 96 of the Constitution Act, 1867.

[22]           In Coffey, the constitutional issue was raised by the Master but apparently not by the parties. It, and the question of weighing evidence, became the central issue before the Judge, at the instance of the Court, despite the opposition by the appellant and in the absence of the Attorney General for Alberta. Despite this case being outside the scope of the ratio in S.B.I., the three-part test for constitutionality was not employed. The learned Justice disagreed with the Court of Appeal about whether the third part of the test applied to these circumstances at all (para 38).

The Master found no constitutional prohibition on ‘weighing evidence’, and that the notion of weighing evidence is not fully explained in some of the authorities.

[23]           There is no prohibition on ‘weighing evidence’ in Sections 92.14 or 96 of the Constitution Act 1867.

[24]           There is another point that is perhaps the most important. Neither S.B.I. nor Coffey explain what it means to ‘weigh evidence’, or why this should be a prohibited function for a Section 92.14 appointee; or, for that matter, something within the exclusive domain of a Section 96 Judge. At its widest, it is difficult to see how any decision could be reached without some weighing of evidence. Without any qualification or explanation, such a pronouncement would have the effect of rendering the entire Provincial Court (and perhaps, by extension, provincial Boards and Tribunals) illegal and unconstitutional. Like Masters, the Judges of that court and the members of the Tribunals are Section 92.14 appointees.

[25]           Such a wide pronouncement could also disable many of a Master’s day-to-day functions; such as, deciding value in a foreclosure case where there is competing evidence of value. Such a determination has final effect, for example, by setting an amount of a deficiency for an insured, or commercial mortgage.

The Master then cited Weir-Jones for the correct approach to summary judgment:

[31]           The procedure and approach is summarized at paragraph 47 of that case:

[47]      The proper approach to summary dispositions, based on the Hryniak v Mauldin test, should follow the core principles relating to summary dispositions, the standard of proof, the record, and fairness. The test must be predictable, consistent, and fair to both parties. The procedure and the outcome must be just, appropriate, and reasonable. The key considerations are:

a) Having regard to the state of the record and the issues, is it possible to fairly resolve the dispute on a summary basis, or do uncertainties in the facts, the record or the law reveal a genuine issue requiring a trial?

b) Has the moving party met the burden on it to show that there is either “no merit” or “no defence” and that there is no genuine issue requiring a trial? At a threshold level the facts of the case must be proven on a balance of probabilities or the application will fail, but mere establishment of the facts to that standard is not a proxy for summary adjudication.

c) If the moving party has met its burden, the resisting party must put its best foot forward and demonstrate from the record that there is a genuine issue requiring a trial. This can occur by challenging the moving party’s case, by identifying a positive defence, by showing that a fair and just summary disposition is not realistic, or by otherwise demonstrating that there is a genuine issue requiring a trial. If there is a genuine issue requiring a trial, summary disposition is not available.

d) In any event, the presiding judge must be left with sufficient confidence in the state of the record such that he or she is prepared to exercise the judicial discretion to summarily resolve the dispute.

To repeat, the analysis does not have to proceed sequentially, or in any particular order. The presiding Judge may determine, during any stage of the analysis, that summary adjudication is inappropriate or potentially unfair because the record is unsuitable, the issues are not amenable to summary disposition, a summary disposition may not lead to a “just result”, or there is a genuine issue requiring a trial.

[32]           This approach was reviewed, applied and reinforced by the majority in Hannam where the Court also set out some reforms that might enhance and improve the procedure.

The Master ultimately found the Plaintiff had been wrongfully terminated and awarded damages based on a notice period he determined reasonable on the evidence before him.

Frenchies Farm and Ranch Ltd. v Peace Hills Insurance Company – 2021 MBQB 33

The Plaintiffs suffered a total loss to their property and contents as a result of a fire, and sought to recover under their policy of insurance issued by the Defendant, Peace Hills. Upon notification of the loss, Peace Hills investigated and provided the Plaintiff with a schedule of loss form to complete. The Plaintiff first submitted the schedule of loss seeking the limits of the policy but without providing any information or identifying items lost in the fire. Peace Hills advised the Plaintiff that it could not accept the submitted proof of loss because it did not satisfy conditions under the policy.

A second proof of loss was submitted by the Plaintiff, which again contained no information regarding the amounts claimed under the policy aside from the Plaintiff seeking to recover “100% replacement cost”. The schedule of loss listed items, but provided no information as to when they had been purchased, how much was paid, or the source of replacement costs. This second schedule of loss was rejected, and Peace Hills advised the Plaintiff that no consideration would be given to the claim until a proper proof of loss with supporting documentation was submitted. The Plaintiff then commenced this action for coverage.

The Court set out the relevant statutory conditions which are deemed to be part of every insurance contract in Manitoba, in particular condition 6(1) which requires the insured to submit a proof of loss with detail on quantities and costs, and condition 7 which invalidates the claim if there is any fraud or willfully false statement in a statutory declaration made in support of the claim and condition 6.

The Court then cited the legal authority regarding false statements:

[15]      A false statement will violate statutory condition 7 if it is made knowlingly without belief in its truth, or recklessly without caring whether it is true or not. See Voloudakis v Allstate Insurance Co. of Canada [1998] O.J No. 354 (QL) at paragraph 69

The Court concluded the legal burden is on a balance of probabilities and needed to be satisfied “there is clear and cogent evidence with a degree of probability commensurate with the gravity of the allegation”.

Ultimately, the Court concluded that the Plaintiff had made a willfully false statement with the second submitted schedule of loss, which had the effect of vitiating the Plaintiff’s claim. The following elements were considered by the Court:

  • The content of the schedule of loss was “grossly exaggerated”;
  • The schedule failed to provide any particulars about the listed items, including where they were purchased, the date they were purchased, the purchase price and replacement price source;
  • The Court rejected the Plaintiff’s evidence that he had actually bought the items on the list, as the Plaintiff could provide no evidence as to where or when replacement items had been purchased;
  • The Court rejected the Plaintiff’s claim that he lacked proof of purchases because he did not use banks or other traceable funds;

The Court further noted that the Plaintiff was not a credible witness, with a number of inconsistent points in his evidence, and as such refused to believe many of the self-serving statements the Plaintiff gave in his testimony.

As such, the Court dismissed the Plaintiff’s claim.