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“Do what I mean not what I say” and other judicial meanderings that are ‘purported findings’

God bless the client who allowed me to appeal this. Most would accept what happened and not risk the money that would follow when we lost but really won!

Here is why: as often happens during a motion the judge happily makes statements that are not needed to obtain the result being sought. Here the judge decided and was 100% sure that there was a security agreement. He did not need to do that to obtain the result he achieved but by being so sure that he was right he effectively titled the record in favor of the winning party for all time.

Never mind that this was an interlocutory order and there would be lots more to be said as the action proceeded, but the proclamation by the judge was there for all time during this action - and what were the chances that later in further motions and at trial that the certainty of the Judge could successfully be challenged much less overturned?

In the end the Court of Appeal saved the day by telling us that even though it looked like a final order it was not and we needed to insert words so that we could understand that the judge did not really mean what he said.

As I stood before the august panel of three judges in the Court of Appeal they challenged me and said surely you know this was an interlocutory order and you should be seeking leave in the Divisional Court. Of course they were right but…

I stood my ground and read them what the judge had said in his reasons and that was a final declaration for all time and my client would never be able to undo it.

They paused, exited the courtroom, regrouped and came back and heard me out. Then they issued this wonderful and very helpful decision that hopefully will remind all judges that it is difficult enough to explain judicial pronouncements and orders to clients without having to add: “he did not mean what he said”.

My client is my hero. Amen.

Here is the article about the decision:

Ontario Court of Appeal finds order was interlocutory, reaffirming precedent

Monday, June 12, 2017 @ 09:25 AM | By Paula Kulig

Courtesy of The Lawyer's Daily

The Ontario Court of Appeal has reaffirmed the leading precedent for determining whether an order is interlocutory or final, an issue faced by the courts that can be contentious.

In 2441472 Ontario Inc. v. Collicutt Energy Services 2017 ONCA 452, Justice Peter Lauwers, writing on behalf of Justices Russell Juriansz and C. William Hourigan, found against the numbered company (described as 244), which argued during an appeal of an order from a motion judge that the order was final.

The defendant, Collicutt Energy, raised the procedural issue before the justices, submitting that the order was interlocutory and therefore the appeal should have been brought to the Divisional Court, under s. 19(1) of Ontario’s Courts of Justice Act, not the appeal court. The three justices agreed.

Simon Stern, an associate professor at the University of Toronto’s law faculty who teaches civil procedure, said in an interview that whether an order is interlocutory or final can be contentious, “for the same reasons that the distinction between, say, ratio and dicta can be contentious. People will disagree about how essential a particular finding was, as to the resolution of the litigation, and there are instances where some finding does effectively resolve the litigation.”

Stern, who is also co-director of the Centre for Innovation Law and Policy, said the distinction is important to litigants “because there’s an appeal as of right from a final decision; moreover, only a final decision has binding effect that gives rise to res judicata. So if you want to appeal, or you want the decision to have a binding effect, you’d rather characterize it as final.”

The plaintiff, 244, purchased equipment — known as a heat and power package and chiller HVAC — from Collicutt for about $520,000. It failed to pay the full amount and then brought a lawsuit alleging that the equipment was late and inadequate. Its claim for damages concerns delay and unforeseen costs. Collicutt counterclaimed because it did not receive full payment.

During one of five motions before the motion judge, 244 “challenged Collicutt’s assertion that it had a valid purchase money security interest in the equipment under the Personal Property Security Act,” Justice Lauwers wrote, noting that 244 sought an order to have the PPSA registration declared void.

“The appellant argued on the motion ... that since the alleged security agreement was never signed by Collicutt, it is not a valid security agreement, and therefore it is not effective to create a security interest under the PPSA,” the appeal court wrote in its June 5 ruling.

The motion judge disagreed, ruling that there was a security agreement and dismissing 244’s motion for a discharge of Collicutt’s security interest in the heat and power package. The decision was appealed by 244 to the province’s top court. But Justice Lauwers wrote that because it agreed with Collicutt that the motion judge’s order was interlocutory and falls under the Divisional Court’s jurisdiction, it would not rule on the judge’s decision.

K. William McKenzie, who represented the appellant, said in an interview that his client will probably not appeal the motion judge’s order to Divisional Court. But he said the case raises concerns “because a motion judge ... has immense power to seem to tilt the result of litigation by making hard and fast interim rulings that are not easy to get rid of or explain away. These are often made long before the trial takes place and all the evidence is heard."

The security interest “was a contentious issue and [the motion judge] had neither seen all of the evidence nor heard any testimony,” said McKenzie, calling it a “hard finding."

The appeal court cited Hendrickson v. Kallio [1932] O.R. 675, which is seen as the leading case on whether an order is interlocutory or final.

“An interlocutory order is one that does not determine the real matter in dispute between the parties. It does not determine the very subject matter of the litigation, but rather only a collateral matter,” wrote Justice Lauwers. “The classic test is whether the order finally disposes of the rights of parties."

In concluding that the order was interlocutory, the court said, “The jurisdictional basis for this aspect of the motion, or any other aspect of it, was not pleaded. In particular, no sections of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, nor the PPSA were mentioned. The motion was not framed as a motion for summary judgment or the determination of an issue before trial.”

The court referred to Skunk v. Ketash 2016 ONCA 841, noting, “In the summary judgment context, this court has said that purported findings of fact or law by a motion judge who dismisses a summary judgment motion do not have binding effect in the subsequent proceeding unless the judge invokes the power to make such findings under rr. 20.04 or 20.05. ... A motion judge who intends to make such findings should specifically say so, and the order should refer to the relevant rule.”

Justice Lauwers wrote that in determining whether a valid security interest existed, the motion judge did not include “explicit language ... finally determining the enforceability of any agreement between the parties.”

“The motion judge simply expressed his reasoning for dismissing the motion. The formal order does not contain any final determinations, nor is there a disposition section in the reasons which purports to do so."

He also said whether the PPSA registration is valid “is not the real issue in dispute between the parties. The real issue is who owes what to whom in relation to the equipment and its alleged deficiencies.”

The University of Toronto’s Stern said the “most significant details” in the appeal court’s decision are its references to Skunk. “If a motion judge’s findings of fact or law, in a dismissal of a motion for summary judgement, have no binding effect without explicit reference to rr. 20.04 or 20.05, then I would think that very few such dismissals are going to turn out to have any binding effect, because it is hardly routine for judges to make explicit reference to those rules, in the course of such a dismissal.

“Presumably, this is how the Ontario Court of Appeal wants it, because they must be aware that motion judges don’t routinely accompany their findings with references to those rules.”

McKenzie, counsel for the appellant, said the appeal court decision “has now clarified things by saying that even though it looks like the interlocutory judge made a hard finding, that was actually only a ‘purported’ finding (i.e. it does not count in subsequent proceedings). In other words, even though the judge did not say that this was a purported finding or a non-binding finding made only for the purpose of his decision in the motion, the Court of Appeal decided that is what he is meant to have said."

Counsel for Collicutt, Howard Krupat and Brendan Clancy of DLA Piper (Canada) LLP, declined to comment.

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