



COURT OF APPEAL FOR ONTARIO

CITATION:  Baywood Homes Partnership v. Haditaghi, 2014 ONCA
    450

DATE: 20140609

DOCKET: C57087

Rouleau, Lauwers and van Rensburg JJ.A.

BETWEEN

Baywood Homes
    Partnership, 2131059 Ontario Limited, 2206659 Ontario Limited,
    1367169 Ontario Limited and Ralph Canonaco

Plaintiffs (Appellants)

and

Alex
    Haditaghi, also known as Alex Vahid Haditaghi also known as Vahid Haditaghi,
    Majid Haditaghi, also known as Michael Haditaghi  also
    known as Mark Haditaghi, Moneylogix Group, Inc., Mortgagebrokers.com
    Inc., Moneylogix Group Inc., Mortgagebrokers.com
    Financial Group of Companies Inc., Gary
    Cilevitz, Michael Knarr, also known as Mike Knarr and Farideh, Ronhbakhsh, also
    known as Farideh Rouhbakhsh

Defendants (Respondents)

David W. Foulds and Jennifer A. Whincup, for the
    appellants

George J. Karayannides, for the respondents

Heard:  March 4, 2014

On appeal from the decision of Justice Edward P. Belobaba
    of the Superior Court of Justice, dated April 18, 2013, reported at 2013 ONSC
    2145.

Lauwers J.A.:

[1]

The motions judge granted summary judgment dismissing the appellants action,
    which alleged fraud and other impropriety, on the basis that it was precluded
    by the terms of a release that he accepted as valid. The motions judge did not,
    however, grant summary judgment on the respondents counterclaim on two
    promissory notes. Before refusing to grant summary judgment on the
    counterclaim, he conducted what he described as a half-day mini-trial in the
    exercise of his authority under rule 20.04(2.2) of the
Rules of Civil
    Procedure,
R.R.O. 1990, Reg. 194. After hearing the witnesses, he found
    that he was unable to conclude that the two promissory notes signed by the
    appellant in favour of the respondent were valid, and he referred the issue of
    their validity to trial.

[2]

For the reasons set out below, I would allow the appeal, set aside the
    judgment and require both the claim and counterclaim to proceed to trial.

A.

BACKGROUND

[3]

For convenience I will adopt the monikers used by the motions judge: Alex,
    for the defendant, Alex Haditaghi; Ralph for the plaintiff, Ralph Canonaco,
    and Frank for Ralphs brother, Frank Canonaco.

[4]

The litigation stems from a series of transactions related to a property
    in Barrie (the Mapleview Property). The contextual facts were summarized by
    the motions judge, at para. 5:

Ralph and his family are experienced home-builders; Alex is an
    expert mortgage broker.  The two of them, with their colleagues and through
    their respective companies, engaged in a series of transactions involving a
    property in Barrie over the course of the turbulent financial year that was
    2009. Disputes arose, giving rise to this litigation.  Initially, Alex sued
    Ralph on two promissory notes that Ralph had signed personally and Alex
    believed were due and owing, one for $750,000 and another for $500,000.  Ralph
    countered with a multi-million dollar lawsuit accusing Alex and certain of his
    companies and colleagues of fraud and other improprieties, and numerous breaches
    of agreement. The competing lawsuits were eventually consolidated into a single
    proceeding that now consists of Ralphs action and Alexs counterclaim on the
    two promissory notes (the Two PNs).

[5]

The resolution of this appeal requires a detailed exploration of the
    transaction history. The execution of a release, dated November 12, 2009, which
    the motions judge found to bar the appellants claims, as well as the execution
    of the two promissory notes around the same time, were bound up in the series
    of transactions that gave rise to what the motions judge characterized as
    admittedly false and fake documentation. The release at issue and the
    promissory notes were the product of the same business culture, which the
    motions judge described, at para. 17, as one in which the parties often
    ignored or worked around carefully drafted documentation or worse, fabricated
    such documentation when it was deemed necessary to do so.

[6]

The evidence shows that, over the course of 2009, Ralph and Alex engaged
    in a complex series of transactions, the results of which were beneficial to
    Alex but quite detrimental to Ralph. By December 2009, Alex had managed to
    leverage the Mapleview Property and the financial distress of the Mapleview Company,
    which was the registered owner of the Mapleview Property to great advantage,
    and, in particular, to satisfy an outstanding personal judgment against him; to
    acquire and dispose of valuable rights in the Mapleview Property; and to obtain
    promissory notes from Ralph, two of which remain outstanding in the total
    amount of $1,250,000. By contrast, Ralphs interest in the Mapleview Property was
    diminished in the series of transactions between the parties.

(1)

Alex Acquires the Mapleview Property

[7]

Around December 2008, Ralph was introduced to Alex and retained his
    services to secure mortgage financing for various projects of Baywood Homes
    Partnership (Baywood), a company beneficially owned by Ralph and his family
    members. On January 15, 2009, the parties signed a letter of interest. Alex was
    to secure $13 million in mortgage financing for Baywood and was to receive a
    $50,000 fee if he successfully obtained a mortgage commitment. The parties
    disagree on whether Alex actually discharged his obligations under their agreement:
    Ralph says Alex obtained a letter of understanding, not a firm mortgage
    commitment. Alex claims to have secured the mortgage commitment, but says the
    deal fell through because Ralph misrepresented the value and liabilities of
    Baywoods projects.

[8]

By the spring of 2009, Baywood faced financial pressure and refinancing
    was necessary. According to Ralph, Alex proposed to transfer the Mapleview
    Property to a public company controlled by Alex. Alex would then refinance the
    mortgages on the Mapleview Property. On May 11, 2009, the parties executed the
    first of two share purchase agreements (the First Share Purchase Agreement). Under
    this agreement, the public company controlled by Alex  Moneylogix U.S. 
    acquired the Mapleview Company  shares and, through it, the Mapleview Property.
    In exchange, Ralph received about 10 percent of the issued and outstanding
    shares in Moneylogix U.S. On May 20, 2009, in connection with the First Share
    Purchase Agreement, Ralph executed a release in favour of the Mapleview Company
    and an entity referred to as Moneylogix Group Inc.

[9]

After the closing of the First Share Purchase Agreement, Moneylogix U.S.
    assigned the Mapleview Company shares to its wholly-owned Canadian subsidiary,
    Moneylogix Ontario.

[10]

The
    effect of the First Share Purchase Agreement was to transfer control of the
    Mapleview Company to Alex. Ralph retained an indirect interest in the Mapleview
    Property through the shares he received in Moneylogix U.S. Ralph claims that,
    after the First Share Purchase Agreement, he learned for the first time that
    Moneylogix U.S. did not have any substantial assets apart from the Mapleview
    Company shares it had just acquired.

(2)

Alex Registers the Trisan Mortgage and Quitclaim

[11]

After
    the closing of the First Share Purchase Agreement, Alex caused a $950,000
    mortgage to be registered on the Mapleview Property, and provided an escrow
    quitclaim as security for the mortgage. The mortgage and escrow quitclaim were
    provided in favour of the Trisan Equitable Mortgage Corporation (Trisan), in
    satisfaction of an outstanding October 2007 judgment against Alex and several
    of his companies. In consideration for the registration of the mortgage and the
    escrow quitclaim, Moneylogix U.S. was released from the issuance of 15 million
    shares held back by the company and due to Alex.

[12]

Ralph
    claims that he was unaware of the mortgage and escrow quitclaim when they were
    provided. Ralph also claims that Alex defaulted on the existing Mapleview
    Property mortgages, allowed permits for the property to lapse, and failed to
    obtain new financing for the property as promised.

(3)

Ralph Re-Acquires the Mapleview Property

[13]

In
    August 2009, Ralph re-acquired the Mapleview Company shares. The parties
    disagree on what motivated this transaction. Ralph says that he was concerned
    with Alexs management of the Mapleview Property, and particularly the
    registration of the mortgage and quitclaim in favour of Trisan. He wanted to
    re-acquire the Mapleview Property before his investment was lost. Alex says he
    introduced Ralph to a social housing entity called Options for Homes, and Ralph
    wanted to re-acquire Mapleview with a view to developing it with that entity.
    In any event, on August 21, 2009, the parties executed the second of the share
    purchase agreements (the Second Share Purchase Agreement), by which Ralph
    re-acquired the Mapleview Company shares.

[14]

Under
    the terms of the Second Share Purchase Agreement, Alex retained: (1) a $2.53
    million mortgage secured against the Mapleview Property and Baywoods Lisgar
    property; (2) the right to fee simple ownership of 100 residential units on the
    Mapleview Property; and (3) the right to acquire a further 150 residential
    units (the Ancillary Rights). Alex testified at the mini-trial that the value
    of the Ancillary Rights exceeded $4 million. Ralph also executed a second
    release on behalf of the Mapleview Company in favour of Moneylogix Group Inc.

[15]

Thus,
    after the close of the Second Share Purchase Agreement, Ralph once again owned
    the Mapleview Company shares, but the Mapleview Property was encumbered by an
    additional mortgage, and Alex retained the Ancillary Rights in the Mapleview
    Property.

(4)

The Parties Execute the Option to Purchase

[16]

Following
    the Second Share Purchase Agreement, Ralph obtained new financing from 2219657
    Ontario Inc. (221). The principal of 221, Albert Soberano, required that Alex
    grant an option, in favour of 221, to purchase his Ancillary Rights in the
    Mapleview Property. On October 6, 2009, Alex granted 221 a 30-day option to
    purchase the Ancillary Rights for $2 million (the Option to Purchase).

[17]

Also
    on October 6, 2009, Alex and Ralph signed an exclusive mortgage arrangement
    (the Settlement Agreement), which provided that Ralph owed $500,000 to
    Mortgagebrokers.com, another of Alexs companies. Ralph executed a $500,000 promissory
    note in favour of Mortgagebrokers.com dated October 6, 2009. Ralph also
    executed a second promissory note also dated October 6, 2009, in the amount of
    $750,000, in favour of Moneylogix Group Inc. He executed a third promissory
    note dated October 6, 2009, in the amount of $245,240, in favour of Moneylogix
    Group Inc., which has been paid. There was some evidence to suggest that,
    notwithstanding the dates on the notes, they were actually executed in
    November, around the time that the Option to Purchase was exercised.

(5)

Ralph Executes the Third Release

[18]

221
    exercised the Option to Purchase on November 3, 2009. An assignment agreement
    was executed on November 16, 2009, which transferred the Ancillary Rights to a
    company related to 221. On November 12, 2009, Ralph personally and on behalf of
    the Mapleview Company executed a third release (the Third Release). According
    to Alex, the Third Release was signed in connection with the assignment of the
    Ancillary Rights. Ralph agrees that the Third Release was signed as part of the
    same series of transactions that gave rise to the promissory notes.

[19]

According
    to Alex, Ralph executed the promissory notes in connection with the Option to
    Purchase, in order to compensate Alex to some degree for the discrepancy
    between the value of the Ancillary Rights  over $4 million according to Alex 
    and the option price of $2 million.

[20]

Ralph
    took a different view of events, though he did not dispute that the promissory
    notes were related to the Option to Purchase. According to Ralph, he executed
    both notes as a favour to Alex, and Alex assured him that they would not be
    enforced. Ralph testified that the notes were a sham that enabled Alex to
    account to investors for the discrepancy between the value of the Ancillary Rights
    and the option price.

[21]

Regardless
    of which account is accurate, the parties agree that it was the Option to Purchase
    that motivated the promissory notes. The same Option to Purchase also gave rise
    to the Third Release: the option was exercised on November 3, 2009, the Third
    Release was executed on November 12, 2009, and the Ancillary Rights were
    assigned and transferred by way of an assignment agreement dated November 16,
    2009. In other words, the promissory notes and Third Release were part and
    parcel of the same series of transactions: the promissory notes were executed
    in connection with the grant of the Option to Purchase, and the Third Release
    was executed in connection with the exercise of that Option.

B.

The Decision under Appeal

[22]

After
    hearing the summary judgment motion, the motions judge ordered a mini-trial
    under rule 20.04(2.2) of the
Rules of Civil Procedure
. He explained
    his reason for doing so, at para. 14:

I wanted to hear more about the Two PNs from Ralph and Alex in person.
    I decided that a mini-trial would assist me in assessing their conflicting
    evidence and deciding whether the issue of enforceability could be adjudicated
    summarily.

At no time prior to the close of the mini-trial did
    the motions judge express a conclusion on any aspect of the summary judgment
    motion, though he directed the mini-trial relating only to the two promissory
    notes.

[23]

At
    the mini-trial, the motions judge heard from three witnesses who gave evidence
    about the promissory notes: Alex, Ralph, and Ralphs brother, Frank.  The
    motions judge rejected Franks evidence.  He then said, at para.14: for me,
    the contest came down to the PN documentation and to Alex and Ralphs
    explanations as to why the two PNs were signed.

[24]

The
    motions judge outlined the competing versions of the evidence, and then
    concluded, at paras. 17 -18:

As I have already noted, all of the documentary evidence before
    me supports Alexs version of events.  However, it became apparent as the
    mini-trial progressed, that in the business culture that had developed between
    them, Ralph and Alex often ignored or worked around carefully drafted
    documentation or worse, fabricated such documentation when it was deemed
    necessary to do so.

The best example, as already noted, is the $500,000 PN. The
    documentation shows that Ralph made the note payable to Alexs other public
    company, Mortgagebrokers.com. The documentation also explains that the money
    was being paid to Mortgagebrokers.com as a settlement for fees due and owing to
    this company.  However, none of this was true.  No fees were owing to
    Mortgagebrokers.com. The applicable settlement agreement that was signed by
    both Ralph and Alex was itself a fake document that had no connection with what
    was really happening.

[25]

As
    a result of the questions that he was left with after the mini-trial, the
    motions judge decided that a full trial on the enforceability of the promissory
    notes was necessary.  He explained, at paras. 21-23:

The problem for me is obviously the $500,000 PN and its related
    documentation.  I think its fair to say that but for the questions surrounding
    this particular promissory note, and given Ralphs uneven testimony at the
    mini-trial, I would likely have found in favour of the defendants and would
    have granted summary judgment on the Two PNs.  Should I now at least grant
    judgment on the $750,000 PN? In my view, this would neither be fair nor
    reasonable.  The Two PNs are interconnected, whosoever version is believed.  I
    cannot enforce one and send the other on to trial.

In sum, the mini-trial conducted under Rule 20.04(2.2)
    persuaded me that I am unable to achieve a full appreciation of the evidence
    that will be needed to make dispositive findings about the enforceability of
    the two PNs. This is a question that does not turn solely on the documentation,
    given that some of the documentation is admittedly false. A full and complete
    examination of why the parties did what they did is required in the interests
    of justice.  A trial judge will be in a better position to hear all of the
    evidence from all of the witnesses, including Ralphs lawyer and Alexs
    accountant, and make the appropriate findings.

I find that the enforceability of the Two PNs are genuine
    issues that require a trial.

[26]

The
    motions judge came to the conclusion, by contrast, that the Third Release was
    entirely authentic and valid.  He explained, at paras. 7-9:

During the course of the hearing of the motion for summary
    judgment, I was persuaded on the evidence before me that Ralph's action was
    completely precluded by the November 12, 2009 release agreement, referred to as
    the Third Release. The language is clear and comprehensive and can be
    objectively assessed. None of the arguments advanced by Ralph about the
    document's scope and content or its signatories are tenable. And, there is no
    credible evidence in the material before me that can seriously support the
    allegations of duress, unconscionability,
non est factum
or lack of
    consideration. On its face, the Third Release seems to be a complete bar to
    this action.

But the most telling and most persuasive indicator of its
    validity was Ralph's own testimony. During the cross-examination on his
    affidavit, Ralph admitted that "as of December 2009, there was a clean
    slate." He agreed that neither he nor any of his companies "had any
    claims against [Alex]."

Ralph's counsel points out that Ralph also added that
    "likewise [Alex] didn't have any claims against [me]." This
    additional qualifier deserves the following comment. If Ralph meant that the
    Third Release explicitly released any claims that Alex may have had as against
    him, that interpretation is demonstrably incorrect. If he meant, as is more
    likely, that he had a separate (perhaps earlier) understanding or agreement
    with Alex that Alex would not pursue him on the Two PNs, then this can be
    considered as a separate issue and will be, below.

[27]

The
    motions judge added, at paras. 11 -12:

I refer to the existence of fake documents while discussing
    the Third Release because Ralphs counsel tried to persuade me that the Third
    Release may also be tainted by these same concerns and thus  full review of the
    factual background was necessary, providing yet another reason why the entire
    matter should go to trial.  I acknowledge that, standing alone, the
    authenticity or intended purpose of the Third Release could well be doubted
    given the apparent use and prevalence of fake documentation. However, I am
    prepared to adjudicate the Release issue summarily, and in favour of Alex,
    mainly because of Ralphs clean state admissions on cross-examination as
    discussed above.

These admissions in my view, confirm both the authenticity and
    intended purpose of the Third Release.  By December 2009, as Ralph himself
    admitted, neither he nor his companies had any claims against Alex and his companies.
    And, given that all of the claims in the plaintiffs action relate to alleged
    breaches that predate the Release, and given that none of the legal defences
    advanced on the plaintiffs behalf (duress, unconscionability,
non est
    factum
and lack of consideration) can succeed on the record before me, I
    have no difficulty concluding that the plaintiffs action (except for the
    claims relating to the Two PNs, which I will explain shortly) is precluded and
    should be summarily dismissed.  [Footnote omitted.]

C.

THE POSITIONS OF THE PARTIES

[28]

The
    promissory notes and the Third Release were all signed at roughly the same time
    and in the context of the same series of transactions. The appellants argue
    that the motions judges misgivings about the reliability of the evidence on
    the promissory notes, which led him to order a trial on their enforceability,
    ought to have influenced his thinking on the validity of the release. The two
    promissory notes are interconnected, and so is the Third Release, which must
    also, the appellants assert, be infected with the same reliability worries.

[29]

The respondents submit that the process undertaken by the
    motions judge was consistent with the Supreme Court of Canadas decision in
Hryniak
    v. Mauldin
, 2014 SCC 7, even though it was released after this decision.
Hryniak
encourages motion judges to use the mini-trial referred to in
rule 20.04(2.2); the motions judge exercised his
    discretion to trigger the fact-finding mini-trial; and this court ought to
    defer to him. The respondents
point out that the motions judge
    focussed on the very issue of the validity of the Third Release, at paras.
    11-12 excerpted above, and assert that
he
    made no palpable and overriding error.

D.

ANALYSIS

(1)

The Standard of Review

[30]

In
Hryniak
, at para. 81, Karakatsanis J. ruled that
    the exercise of powers under the new summary judgment rule attracts appellate
    deference. The question as to whether there is a genuine issue for trial is a
    question of mixed fact and law; in the absence of an extricable error in
    principle, or palpable and overriding error, this determination should not be
    disturbed on appeal.

(2)

Summary Judgment under
Hryniak

[31]

In
Hryniak
the Supreme Court of
    Canada rejected this courts full appreciation test for summary judgment in
Combined
    Air Mechanical Services v. Flesch
, 2011 ONCA 764
,
ruling, at para. 4, that: in interpreting these
    provisions, the Ontario Court of Appeal placed too high a premium on the full
    appreciation of evidence that can be gained at a conventional trial. Karakatsanis
    J. stated, at para. 56, that: 
[w]hile I agree that a motion judge must
    have an appreciation of the evidence necessary to make dispositive findings,
    such an appreciation is not only available at trial.

[32]

Rule
    20.04(2.2) empowers motion judges to order that oral evidence be presented by
    one or more parties, under the heading of Oral Evidence (Mini-Trial). The
    summary judgment rules, as interpreted in
Hryniak
, do permit the
    fact-finding process to be staged, but only where, as noted by Karakatsanis J.,
    at para. 66, that: will lead to a fair and just result and will serve the
    goals of timeliness, affordability and proportionality in light of the
    litigation as a whole. She stated
,
at para. 63, that the power to order a mini-trial should be employed when it
    allows the judge to reach a fair and just adjudication on the merits and it is
    the proportionate course of action.

(3)

The Application of Hryniak to the Decision

[33]

In
    my view, the motions judge made a material error in principle in his approach
    to this motion in light of the Supreme Court of Canadas decision in
Hryniak
.
    He erred in failing to assess the advisability of the summary judgment process
    in the context of the litigation as a whole.


i.

The Litigation as a Whole

[34]

Karakatsanis
    J. noted, at para. 60:

The "interest of justice" inquiry goes further, and
    also considers the consequences of the motion in the context of the litigation
    as a whole. For example, if some of the claims against some of the parties will
    proceed to trial in any event, it may not be in the interest of justice to use
    the new fact-finding powers to grant summary judgment against a single
    defendant. Such partial summary judgment may run the risk of duplicative
    proceedings or inconsistent findings of fact and therefore the use of the
    powers may not be in the interest of justice. On the other hand, the resolution
    of an important claim against a key party could significantly advance access to
    justice, and be the most proportionate, timely and cost effective approach.

[35]

The
    motions judge was obliged to assess the advisability of a staged summary
    judgment process in the context of the litigation as a whole. This he failed
    to do.

[36]

As
    noted, the promissory notes and Third Release were part and parcel of the same
    series of transactions: the promissory notes were executed in connection with the
    grant of the Option to Purchase, and the Third Release was executed in
    connection with the exercise of that Option. Given that, the motions judges attempt
    to detach the Third Release from the web of paper that was, quite rightly,
    cause for the motions judges concern, was not the appropriate approach. If, as
    he concluded, the promissory notes were questionable because the parties
    fabricated and executed documents that did not reflect the true state of
    affairs, and were therefore not amenable to enforcement on a motion for
    summary judgment, then the same could well be true of the Third Release.

[37]

In
    the complex situation in this case, it is therefore entirely possible that the
    trial judge who hears the trial of the issue on the validity of the promissory
    notes will develop a fuller appreciation of the relationships and the
    transactional context than the motions judge. That could force a trial decision
    on the promissory notes that would be implicitly inconsistent with the motions
    judges finding that the Third Release is fully valid and effective, even
    though the parties would be bound by that finding. The process, in this
    context, risks inconsistent findings and substantive injustice.

[38]

In
    light of the factual connection between the promissory notes and Third Release,
    and Ralphs testimony, it was an error in principle for the motions judge to
    refer the enforceability of the promissory notes to trial while summarily determining
    the enforceability of the Third Release.


ii.

Ralphs Admission

[39]

In
    this case the motions judge relied heavily on certain admissions that were made
    by Ralph during cross-examination on his affidavit, but which only came before
    him by way of a transcript. The statements, which the motions judge
    characterized as fatal admissions, were never put to Ralph during the
    mini-trial; he had no opportunity to explain how his evidence on the promissory
    notes might square with, if it could, the statements that he made in the
    transcripted cross-examination.

[40]

In
    my view, it was inappropriate for the motions judge to distinguish between the
    promissory notes and the Third Release on the basis of de-contextualized
    transcript evidence.

[41]

I
    reproduce the exchange relied on by the motions judge:

Q. Okay, good. So by December of 2009 you believed that you had
    resolved all your disputes with Alex, right?

A. Yeah.

Q. And you werent  whatever you had signed and all the
    agreements that you had done with him, as far as you understood by December of
    2009 it was a clean slate, everything had been released, right? Right?

A. Everything was done. His mother didnt lose his house, I
    didnt lose the land. It cost a few bucks back and forth. Business was
    finished.

Q. And so your claims against him were done, right?

A. And him with me.

Q. Perfect. Thats what your understanding was as of December
    2009, that there was a clean slate, you no longer had any claims against him,
    and when I say you, Im talking about the Baywood entities, right? Right?

A. Yeah.

Q. And likewise he didnt have any claims against you, right?

A. Right.

The motions judge was prepared to summarily adjudicate
    the issue of the Third Release, unlike the promissory notes, on the basis of
    these clean slate admissions.

[42]

The
    clean slate admissions were not, however, made in relation to the Third
    Release, or any release, for that matter. There is no mention of the Third
    Release anywhere in this portion of the evidence. Rather, Ralph was asked about
    an email he sent to Alex before Christmas in December 2009, in which he thanked
    Alex for his support during a difficult period. Alex responded to Ralph and
    thanked him for his friendship. In connection with this email exchange, Ralphs
    evidence was that he believed the parties dealings to be at an end. Read in
    context, this evidence does not amount to an admission that the Third Release
    was intended to be a genuine agreement despite the parties culture of document
    fabrication.

[43]

The
    motions judges treatment of the clean slate admissions is also undermined by
    other portions of the cross-examination on Ralphs affidavit. Elsewhere in that
    cross-examination, Ralph responded to specific questions about the Third
    Release. That line of questioning included the following exchanges:

Q. You understood this to be a full and final release? Do you
    see that?

A. I dont know what I understood here. This was never
    explained to me.



Q. My question is, sir, did you understand that when you signed
    this document you were releasing Alex and Moneylogix for all of the problems
    you had with them prior 

A. No way.

Q. Prior to November 

A. No.

Q.  19, 2009?

A. No.

[44]

What
    happened here illustrates one of the problems that can arise with a staged
    summary judgment process in an action where credibility is important. Evidence
    by affidavit, prepared by a partys legal counsel, which may include voluminous
    exhibits, can obscure the affiants authentic voice. This makes the motion
    judges task of assessing credibility and reliability especially difficult in a
    summary judgment and mini-trial context. Great care must be taken by the motion
    judge to ensure that decontextualized affidavit and transcript evidence does
    not become the means by which substantive unfairness enters, in a way that
    would not likely occur in a full trial where the trial judge sees and hears it
    all.

[45]

Judges
    are aware that the process of preparing summary judgment motion materials and cross-examinations,
    with or without a mini-trial, will not necessarily provide savings over an
    ordinary discovery and trial process, and might not serve the goals of
    timeliness, affordability and proportionality (
Hryniak
at para. 66). Lawyer
    time is expensive, whether it is spent in court or in lengthy and nuanced
    drafting sessions. I note that sometimes, as in this case, it will simply not be
    possible to salvage something dispositive from an expensive and time-consuming,
    but eventually abortive, summary judgment process. That is the risk, and is
    consequently the difficult nettle that motion judges must be prepared to grasp,
    if the summary judgment process is to operate fairly.

E.

Disposition

[46]

For
    these reasons, I would allow the appeal, set aside the summary judgment, and
    refer both the claim and the counterclaim to trial. In view of the appellants
    success, I would fix costs of the appeal in the amount of $27,000 all-inclusive
    payable to the appellants. The motions judge awarded no costs, in view of
    divided success. I would refer the costs of the motion to the trial judge.

Released:  June 9, 2014 PR

P.
    Lauwers J.A.

I
    agree Paul Rouleau J.A.

I
    agree K. van Rensburg J.A.


