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The Importance of Discretion on a Summary Judgment Motion: Briggs v. Rints et al, 2010 ONSC 4051 (CanLII)

 

By: Rachel Moses

Minden Gross LLP, a member of MERITAS Law Firms Worldwide.

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Overview

The plaintiff, John Briggs (“Briggs”), was successful in obtaining judgment against his former employer - the defendant, Treco Machine and Tool Limited (“Treco Ltd.”).  Briggs was not able to collect under the judgment because Treco Ltd. filed for bankruptcy one month after the judgment was granted.

Briggs believed that the assets of Treco Ltd. were transferred to a new company, Treco Machine Inc. (“NewCo."), to avoid payment and leave Briggs with nothing more than a paper judgment.

Briggs sued Treco Ltd., Newco., Robert Rints (“Rints”), the operating mind of Treco Ltd. and Newco, and Rint’s personal holding company for, among other things, fraudulent transfers and oppression under section 248 of the Ontario Business Corporations Act.  Briggs sought summary judgment under the new Rule 20 which came into effect on January 1, 2010.

The Honourable Mr. Justice Belobaba refused to grant Briggs summary judgment because “the relatively complicated analysis of why Rints did what he did and, in particular, why he put Treco Ltd. into bankruptcy cannot be resolved herein and cannot be adequately or fairly conducted via the confines of a “mini-trial” under new Rule 20.04(2.2).”

Facts

Briggs was fired without notice by Rints after working for almost 39 years for Treco Ltd.  Briggs sued for wrongful dismissal and obtained judgment for $80,000 in damages and $20,000 in costs.  Treco Ltd. did not satisfy the judgment and one month later filed for bankruptcy. 

Rints, owned and controlled Treco Ltd. and a personal holding company, 12875781 Ontario (“128”).  After Briggs commenced his lawsuit for wrongful dismissal, Rints took steps that arguably were designed to bullet-proof himself and his companies.  Specifically, Rints transferred a substantial amount of money from Treco Ltd. to 128, arranged to have 128 take over Treco Ltd.’s real property mortgage and security agreement from Royal Bank of Canada, sold whatever assets he could, incorporated NewCo. with almost the same name, directed Treco Ltd. suppliers to reroute payments to 128 or NewCo. and placed Treco Ltd. into receivership and then bankruptcy.

Rints argued that summary judgment could not be granted because of factual uncertainties and unanswered questions with respect to, among other things, the transfer of assets to 128 pursuant to a general security agreement given by Treco Ltd. in favour of 128 and the causes or triggers of Treco Ltd.’s insolvency.

Interestingly, many of the “unanswered questions” or “factual uncertainties” asserted by Rints as the reason for not granting summary judgment were because Rints refused to provide answers to these questions when cross-examined.  Justice Belobaba declined to draw an adverse inference “from this brazen lack of disclosure under new Rule 20.04(2.1) and conclude that the information was refused because it would obviously support the allegations of oppression” and reinforce Brigg’s claim. 

In the end, Justice Belobaba denied summary judgment because of the “complicated analysis of why Rints did what he did” but stated that this was “a close call”. 

Significance of Decision

The significance of the decision is that Briggs, despite losing the summary judgment motion, was still successful overall.  This is because Justice Belobaba exercised his discretion under the new Rule 20.05(2)(o) and (p) and directed that the defendants pay into Court an amount to cover the wrongful dismissal judgment and the partial costs of the upcoming trial.  Justice Belobaba made this order, which would not have been permitted under the old summary judgment rule, because of his “concern that further steps may be taken by Rints between now and the trial to move assets out of reach and unfairly prejudice Briggs who may well prevail at trial.”

This is an important development because it signals the Court’s willingness to use the new powers under Rule 20 and make summary judgment a much more effective remedy.  Here, the plaintiff, Briggs, was able to secure the amount of his judgment under the wrongful dismissal claim, plus partial costs for the upcoming trial.  Ultimately, summary judgment is no longer a zero-sum game.