Alberta – court reverses summary judgment order, refers parties to trial, suggests parties consider arbitration – #151

In Prestige Granite & Marble Inc v. Maillot Homes Inc, 2018 ABQB 1040, Madam Justice Michele H. Hollins reversed a Master’s order granting summary judgment on the basis that court rules allowed parties to present new evidence on appeal of the order and, in doing so, “amplified” their case sufficiently to justify a trial on the merits. Hollins J. suggested that the parties consider “private arbitration” in lieu of continuing in court should settlement fail. The suggestion likely reflects the court’s perception that arbitration would provide a more suitable resolution of the issues still in dispute and would avoid the layers of appeals and compensate for the delays associated with amplifying one’s position.

The underlying dispute stemmed from the parties’ contract providing that Prestige Granite & Marble Inc. (“Prestige”) cut and install various tile and granite pieces in properties constructed by Maillot Homes Inc. (“Maillot”). Before the work was completed, Maillot terminated the contract and sought another party to complete it. Prestige liened the properties and Maillot applied to the court to discharge the liens by payment into court. Prestige responded by filing a civil action for payment. Both Prestige and Maillot applied to a Master for summary judgment.

By June 14, 2018 order, the Master dismissed Prestige’s application and granted summary judgment in favour of Maillot. Prestige appealed the order under Rule 6.14(3) of the Alberta Rules of Court, Alta Reg 124/2010 provides for an appeal “on the record” but expressly provides for “additional evidence”:

6.14(3) An appeal from a master’s judgment or order is an appeal on the record of proceedings before the master and may also be based on additional evidence that is, in the opinion of the judge hearing the appeal, relevant and material.

Prestige on appeal added significant facts.

[9] When Prestige lost, it appealed to this Court and filed a June 26, 2018 Affidavit of Yaakov (Jack) Babadjanov, the principal of Prestige, which contested each and every one of the cost items said by Maillot to be legitimately incurred in the $68,000 of remedial costs. That Affidavit and the transcript of his cross-examination transcript thereon are obviously material and relevant and therefore I am bound to consider them.

Hollins J. disputed the common reference to appeals of a Master’s order as being an “appeal de novo”. She referred to Bahcheli v. Yorkton Securities Inc., 2012 ABCA 166 in which the Alberta Court of Appeal sought to characterize the nature of an appeal of a Master’s decision to the Court of Queen’s Bench. She refined which appeals were an “appeal de novo” and those which were not. She observed that the Court of Appeal in Bahcheli v. Yorkton Securities Inc. spoke more to the standard of review and not to what evidence was permissible. She agreed that “if you have the ability to amplify the record from below and the appeal is thus based on something different than the evidence before the Master”, then the standard of review changes.

[6] With respect to my colleagues, I do not read Justice Cote’s words [in Bahcheli v. Yorkton Securities [2012] ABCA 166] as saying that an appeal from the Master to our Court is an automatically an appeal de novo but rather that the low threshold for the introduction of new evidence on appeal means that the true “appeal on the record” will be the exception rather than the rule.

The issues raised in the appeal before Hollins J. point to the procedural layering created by court rules and which produced an unfortunate situation for parties involved in a dispute. In addition to being able to pass first before a Master and then before the Court of Queen’s Bench (and then on to an appeal potentially), the appeal from the Master’s order provided Prestige as the losing party an express opportunity to “amplify” its case on appeal.

[7] The ability of parties to amplify the record virtually at will has created an undesirable scenario that is becoming too common. Parties will run their summary judgment applications before the Masters in Chambers without due consideration to putting their “best [evidentiary] foot forward”, knowing that once the Master has pointed out the evidentiary gaps, they can simply fill those gaps and re-run their application in this Court. That is precisely what happened in this case.

Arbitration eliminates this type of layering.

Hollins J. considered the role of summary judgment set out by Hryniak v. Mauldin, [2014] 1 SCR 87, 2014 SCC 7 and Alberta courts’ approach, including the “underlying principle that the determination of contested, material facts may still require a trial”. See Windsor v. Canadian Pacific Railway Ltd., 2014 ABCA 108, para. 16 and Stefanyk v. Sobeys Capital Incorporated, 2018 ABCA 125, para. 11.

[18] While I am mindful of the usefulness of summary judgment in the appropriate cases and agree that the culture shift towards a more efficient and accessible system of civil justice is not just laudable but a necessity, I must still be guided by doing what is fair and just to both parties.

[19] The factual disputes between the parties involve completely irreconcilable assertions. These are not merely self-serving assertions with no air of reality, which might be dealt with on such a motion. Rather, these are statements which must be explored in a forum that allows for the testing of this evidence and of the witnesses’ credibility. It would be no more “fair and just” to decide for one party than another based on this material.

[20] While the Defendant has argued from a purely mathematical vantage point, embedded in those calculations are findings of fact concerning the Defendant’s appropriate off-sets, which assertions are now the subject of diametrically opposed Affidavits. These matters must be left for the trial judge.

[21] One of the consequences of allowing virtually any new evidence to be filed on appeal is that cases which were suitable for summary judgment before the Master may no longer be so before this Court. That is the case here. This new evidence has created genuine triable issues and rendered this matter wholly inappropriate for disposition by way of summary judgment.

Perhaps Hollins J. was also mindful that arbitration is designed to avoid appeals from one level to another and that, even on appeal, parties cannot “amplify” their cases, Hollins J. closes her reasons with a modest suggestion.

[22] In the result, the appeal from the Order of Master Farrington dated June 14, 2018 is allowed and this matter is directed to trial. If the parties cannot settle their claims, they may wish to consider proceeding by way of private arbitration or in the Provincial Court, Civil Division, given the amounts at issue. It is just a shame that these factual discrepancies were not presented and investigated earlier, before the time and money was expended on two chambers applications that did not advance the action.

Hollins J. refused to grant costs in favour of Appellant notwithstanding its success on appeal. See 1808882 Alberta Ltd v. Moderno Ventures Ltd, 2018 ABQB 1000 and Alberta Finance & Mortgage Corporation v. Bruce Steel Erectors Ltd, 2018 ABQB 907.  “In this case, while the Plaintiff successfully appealed the Master’s Order, all that has really happened is that the parties have now exchanged the evidence necessary to allow them to resolve matters or properly prepare for trial.