Friday, September 4, 2009

Bad Faith Litigation // Abuse of Process

In Oz Optics Limited v. American Home Assurance Company, 2009 CanLII 18230 (ON S.C.) at
the action was scheduled for trial. Defendant's request for trial adjournment was denied. Defendant then moved for summary judgment and asked in its motion for the trial to be adjourned to accommodate the motion. The action was case managed.

"...[17] Later, on March 6th, 2009, American Home’s counsel contacted counsel for the plaintiff requesting suggested motion dates for either March or April for the contemplated motion to seek an adjournment of the trial. Mr. Cutler, in his affidavit in support of the plaintiff’s motion said:

I was advised by Mr. Snowden’s assistant that the purpose of the motion was American Home’s request for an adjournment of the trial date. On the sole basis that the motion was for an adjournment of the trial, I provided Mr. Snowden’s assistant with available motion dates in April 2009.

[18] However, on March 11, 2009, counsel wrote to Messrs Cutler and Santini as follows:

This follows our recent facsimile transmission and communications with the court, together with messages received from your respective offices. We confirmed your ability to argue a motion on April 14, next.

We are instructed to move for summary judgment and will be delivering our materials in the next short while.

[19] Mr. Victor argues that this letter is evidence of bad faith on the part of American Home. He submits that the motion for summary judgment, fundamentally, is nothing more than a strategic move by American Home to obtain the opposed adjournment. On the basis of the entire record, I conclude that Mr. Victor is correct. In my opinion, the summary judgment motion is a bad faith motion. American Home has offered no justification of significance to explain its failure to bring its motion on a timely basis or to resile from its early agreement concerning the trial date. American Home’s decision to launch the motion for summary judgment followed Mr. Cutler’s statement that he would not consent to the required adjournment. The absence of clear evidence of why this decision was reached when it was constitutes a compelling inference that the decision was made for tactical reasons...."

...[39] Obviously, it is up to the trial judge to determine how she or he will conduct the trial. However, it is clear to me that the defendants’ motion for an adjournment and for summary judgment is an abuse of process and that the motion for summary judgment, in all the circumstances, is a bad faith attempt to buttress the request for an adjournment of the trial.

[40] In these circumstances, the plaintiff’s motion to strike the defendants’ motion is, in my opinion, the appropriate remedy. (See also Then J.’s decision in Theodore Holdings Ltd. v. Anjay Ltd. (1993), 18 C.P.C. (3d) 160 (Ont. Ct. Gen. Div.) and see the judgment of Steele J. in Iona Corp. v. Aurora (Town), reflex, (1991), 3 O.R. (3d) 579 (Ont. Ct. Gen. Div))....

...[44] Counsel for American Home argues that, on a motion to strike the opposite party’s motion for summary judgment, a moving party cannot pre-emptively argue or assess the merits of a summary judgment motion. He relies on Cullity J.’s decision in Millgate Financial Corp. v. BF Realty Holdings Ltd., [2003] O.J. No. 1309 (S.C.J.) where he, Cullity J., dismissed motions by the defendants to stay, quash or dismiss motions by the plaintiff for summary judgment. The defendants argued that the plaintiff’s motion was frivolous, vexatious and an abuse of process. There, the facts were quite different than they are in the present case. Indeed, the defendants had earlier moved unsuccessfully to have the action stayed or dismissed. The defendants argued that the motions for summary judgment were attempts to re-litigate questions that had already been decided in the earlier motions. Cullity J. held that the plaintiff’s position was not so obviously without merit that the motion should be considered to be abusive of the court’s processes. He held that the defendants’ position was required to be dealt with at the hearing of the motions for summary judgment and not in advance. There was no case management issue before Cullity J. as there is here. Paragraph 12 of Cullity J.’s decision is, however, very relevant.

He said:

[12] The Rules of Civil Procedure do not expressly provide for motions to strike notices of motion and I believe that the interests of efficiency and finality provide good reasons for this. There is no close analogy between a motion to strike pleadings in an action and a motion to strike another motion that would require the issues raised in the former to be determined. It was, however, common ground among counsel that there must be such a jurisdiction to deal with clear cases of abuse of process.

[45] Cullity J. relied on the decision of Molloy J. in Meditrust Healthcare Inc. v. Shoppers Drug Mart, a Division of Imasco Retail Inc., [2000] O.J. No. 3762 (S.C.J.) and of Steele J., in Iona Corp. v. Aurora (Town), supra, where both justices held that the court has jurisdiction to dismiss or quash motions that are improperly brought.

[46] Cullity J. then went on to examine the concept of “abuse of process” as follows:

[14] In consequence, I believe I should deal with these motions on the basis that whether they succeed or fail will depend upon whether the grounds on which the defendants rely require the motions for summary judgment to be quashed as an abuse of process. In Canam Enterprises Inc. v. Coles 2000 CanLII 8514 (ON C.A.), (2000), 51 O.R. (3d) 481 (C.A.), Finlayson J.A. stated:

Abuse of process is a discretionary principle that is not limited by any set number of categories. It is an intangible principle that is used to bar proceedings that are inconsistent with the objectives of public policy. …

[47] Counsel for American Home relies on an extract from Molloy J.’s decision for the proposition that, on a motion to strike, a moving party cannot pre-emptively argue or assess the merits of a summary judgment motion. In my opinion, Molloy J.’s decision is not on point. In the circumstances of the case at bar I see no good reason to conclude that the plaintiff’s motion to strike the defendants’ motion should be and can be heard only by the judge before whom the motion for summary judgment and for an adjournment will be scheduled. The issue before me at this time is whether, given the timing of the request for an adjournment and the summary judgment motion, the defendants’ conduct constitutes an abuse of process and whether the motion for a summary judgment is a bad faith motion. The plaintiff is not seeking at this time to re-argue the merits of earlier motions made to the Court nor does the plaintiff seek a decision from me assessing the merits of the summary judgment motion. With respect, the judge before whom the defendants’ motion would ultimately be heard would be in no better position than I am to entertain and decide the plaintiff’s motion. In addition, time is of the essence – every day counts. The commencement of the trial is imminent. The plaintiff is entitled to have its motion determined immediately. I pause to note that last Friday I advised counsel in a facsimile transmission that I had decided to grant the requested stay.

[48] Obviously, the conduct of the trial will be under the control of the trial judge. He or she can, of course, deal with any further requests for an adjournment based on other grounds and can determine whatever other motions, if made, are properly brought before him/her.

[49] In the result, therefore, the plaintiff’s motion is allowed. An order will issue striking out the motion brought by the defendant, American Home Assurance Company, wherein it seeks summary judgment and/or an adjournment of the trial of this action...."

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