Court of Queen ’ s Bench of Alberta Citation: WestJet v ELS Marketing Inc., 2013 ABQB 666 Date: 20131113 Docket: 1001 00525 Registry: Calgary Between: WestJet Plaintiff/ Applicant - and - ELS Marketing Inc., Core Logistics International Inc., Core Logistics International Inc. Carrying on Business as ELS Marketing Limited Partnership and ELS Marketing Limited Partnership and ELS Marketing Limited Partnership Defendants/ Respondents _ ________________________________________ ______________ Reasons for Judgment of the Honourable Mr. Justice C.M. Jones _________________________________________ ______________ I.

Introduction [ 1 ] WestJet has sued the Respondents (collectively, “ELS”) for damages, alleging breach of contract. ELS has counterclaimed against WestJet and is also seeking, inter alia , damages for breach of contract. [ 2 ] WestJet has applied for judgment by

summary trial. ELS objects to this application. [ 3 ] I must decide if the issues between the parties are suitable for

summary trial and if

summary trial will facilitate resolution of these issues. If I answer “yes” to the first two questions, and therefore decide not to dismiss WestJet’s application for judgment by way of

summary trial, I must then decide whether the evidence before me provides me with the facts necessary to decide the issues of fact or law and whether it would be unjust to decide the issues on the basis of a

summary trial. I am at liberty to apply this protocol on an issue by issue basis, deciding that I may proceed to judgment by way of

summary trial on some, but not all, of the issues which form part of the claim.

II. Background [ 4 ] From 1996 to 2006, WestJet contracted with ELS to administer the shipping of cargo on WestJet aircraft. They entered into a series of fixed term agreements which allowed for renewal. [ 5 ] On October 5, 2006, WestJet and ELS entered into a further agreement, renewing their arrangement for the period January 1, 2006 to September 30, 2009 (the “Agreement”). [ 6 ] WestJet and ELS discussed further renewal of the Agreement in March and April of 2009.

They agreed to amend the date by which the parties would need to agree to an extension of the Agreement from March 31, 2009 to May 1, 2009: see Exhibit 3 to the Affidavit of Frank Esposito sworn January 14, 2013 (the “Esposito Affidavit”). [ 7 ] The Esposito Affidavit and exhibits attached thereto establish various points. 1. Exhibit 5 (email dated March 20, 2009 from Henry Nizynski, Director, International Sales and Alliances, WestJet to Frank Esposito, ELS): WestJet and ELS discussed WestJet’s plans to stop outsourcing cargo shipping and to “in source” this aspect of its business operations.

WestJet agreed to advise ELS of its plans in this regard by April 30, 2009. 2. Exhibit 8 (email dated April 15, 2009 from Duncan Bureau of WestJet to Frank Esposito of ELS): WestJet purported to extend the Agreement, otherwise expiring on September 30, 2009, until September 30, 2010. The third paragraph of this email starts with the words “The WestJet/ELS services agreement will be extended to September 30, 2010.”. 3.

Exhibit 8: WestJet was unhappy with ELS’s alleged lack of promptness in discharging its obligations to remit funds to WestJet within the 60 day period contemplated in the Agreement and to remit funds to WestJet service providers. 4. Exhibit 9: WestJet reaffirmed its intention to renew the Agreement until September 30, 2010. 5. Exhibit 11: By September 1, 2009, WestJet had decided to terminate the Agreement effective December 31, 2009.

A letter dated September 1, 2009 (the “Letter Agreement”) from Hugh Dunleavy, Executive Vice-President, Commercial Distribution, WestJet, to Frank Esposito indicated that WestJet considered that the Agreement would end on September 30, 2009 but was prepared to extend it to December 31, 2009, at which time WestJet would “transition this business in house effective January 01, 2010”. 6. Exhibit 13: ELS, having received the Letter Agreement, responded to WestJet. Frank Esposito sent an email to Hugh Dunleavy on September 4, 2009, in which he indicated, inter alia , that: (

a) Duncan Bureau had purported, on behalf of WestJet, to extend the Agreement to September 30, 2010; (

b) ELS was surprised to receive the Letter Agreement and Frank Esposito confirmed his understanding that the parties has agreed earlier to extend the Agreement to September 30, 2010; (

c) He believed it would be appropriate to “continue discussions together with a view to coming to an agreement on an appropriate renewal term that will allow for a smooth and seamless transition based on your decision to bring cargo in house”. 7. Exhibit 12: ELS executed the Letter Agreement on September 4, 2009 and returned it under cover of a letter dated September 8, 2009 from Frank Esposito to Hugh Dunleavy.

That cover letter stated that: This letter [the Letter Agreement] has been signed only as a courtesy to you and we are doing so subject to the content of our original response dated September 4, 2009 referencing our understanding from Duncan. As such we are not hereby waiving our rights pursuant to that letter.

We trust that we can proceed to negotiate and confirm the extension granted to us in the April 15, 2009 correspondence from Duncan Bureau, Vice President, Sales, Airline Partnerships & Owner [Esposito Affidavit, Exhibit 8], and that we will transition to your new model in a manner respectful of our clients, affected employees, ELS Marketing LP and one that is consistent with our long lasting and mutually beneficial relationship with WestJet. 8.

Exhibit 17: WestJet indicated that, while standing by its position that the Agreement would be terminated on December 31, 2009, it intended to “be flexible” in moving the December 31, 2009 termination date for the Agreement “to facilitate the orderly transition of activities to WestJet”. 9. Exhibit 18: WestJet advised its cargo handlers and agents by letter dated November 2, 2009 that ELS would not, as of January 1, 2010, be acting as WestJet’s representative.

This letter also invited cargo handlers and agents to advise WestJet if they wished to offer cargo handling services commencing January 1, 2010. [ 8 ] By way of

summary, the parties appear to have agreed in April of 2009 to extend the Agreement to September 30, 2010. Despite what appears to be an absence of discussion between the parties over the spring and summer of 2009, by September 2009 WestJet had decided to retract its indications that it was prepared to extend the Agreement to September 30, 2010. However, as noted in 8. above, WestJet’s precise intentions in this regard appear to have remained somewhat ambiguous. III. Pleadings A. WestJet Statement of Claim

[ 9 ] In its statement of claim filed January 13, 2010 (the “WestJet Statement of Claim”), WestJet alleged that ELS breached the Agreement. It points to articles 9.1, 9.2 and 11 which, respectively, provide:

ARTICLE 9.1 Events of Default: Each of the following events shall constitute an “ Event of Default ” hereunder, (

b) Either party shall fail to perform or observe any obligation to be carried out by it under this agreement and such failure to perform is not remedied within forty-five (45) days after receiving notice from the other party of such failure to perform.

ARTICLE 9.2 Occurrence of Default : Upon the occurrence of an event of default that is continuing, the other party may by written notice to the defaulting party declare this agreement to be terminated and the other party shall be entitled, in its sole discretion without further notice or further demand, to exercise all powers and remedies possessed by it according to law and in equity.

ARTICLE 11.1 Cancellation : This agreement may be cancelled by either party for non-performance of the other party upon forty-five (45) day written notice. [ 10 ] ELS’s alleged breaches of the Agreement are outlined at paragraph 8 of the WestJet’s Statement of Claim, and include, but are not limited to: a. failure to make payments to WestJet on a timely basis or at all; and b. failure to pay invoices on a timely basis or at all. [ 11 ] WestJet alleges that ELS was not paying amounts owed to WestJet under the Agreement in a timely fashion.

WestJet also alleges that ELS failed to pay shippers who had contracted with ELS to transport cargo via WestJet. It claims it was required to assume ELS’ obligations under these contracts. B. WestJet Amended Statement of Claim [ 12 ] WestJet filed an amended statement of claim on August 22, 2011 (the “Amended Statement of Claim”). The Amended Statement of Claim referred to

Article 2.1 of the Agreement which provided for monthly performance and operational reviews of various aspects of the relationship between the two parties. To the breaches of the Agreement enumerated in the WestJet Statement of Claim, the Amended Statement of Claim added the following: (

k) failing or refusing to provide all financial materials and other documentation to WestJet as required; (

l) failing or refusing to submit to an audit. [ 13 ] The Amended Statement of Claim sought damages for various breaches of contract, including, at para. 14, non-payment of cargo revenues in the amount of $2,700,000. This amount, WestJet claims in para. 16 of the Amended Statement of Claim, is a debt due and owing by ELS. C. ELS Statement of Defence and Counterclaim [ 14 ] ELS alleges at para. 3(

i) of its statement of defence and counterclaim (the “ELS Statement of Defence and Counterclaim”) that the Agreement was renewable at the option of ELS for a period of one year from September 30, 2009. It further alleges at para. 3(ii) that the Agreement was extended to September 30, 2010 and it refers to the agreement arising from this extension as the “Renewal Agreement”. [ 15 ] ELS asserts at para. 3(iii) of the ELS Statement of Defence and Counterclaim that WestJet wrongfully terminated the Renewal Agreement with effect from December 31, 2009.

It asserts at para. 3(iv) that WestJet’s wrongful termination of the Renewal Agreement operated to give WestJet “monopoly control of the market for air cargo transport in Canada”. ELS asserts at para. 4 that any funds otherwise owing to WestJet retained by it were in mitigation of its damages and that it is entitled to set off amounts retained by it against WestJet’s claims. [ 16 ] In the counterclaim portion of the ELS Statement of Defence and Counterclaim, ELS seeks a declaration that WestJet violated the Competition Act , R.S.C. 1985, c. 34 (the “ Competition Act ”). D.

WestJet Statement of Defence to Counterclaim [ 17 ] WestJet filed a statement of defence to counterclaim on June 14, 2010 (the “WestJet Statement of Defence to Counterclaim”). In addition to denying that the Agreement was extended to September 30, 2010, WestJet responds to ELS’ Amended [Further] Reply to Demand for Particulars, which referred to ss. 32 , 45 , 52 and 74.01 of the Competition Act . At para. 9 of the WestJet Statement of Defence to Counterclaim, WestJet denies that it violated the Competition Act .

Further, it asserts that this Court lacks jurisdiction to hear ELS’ claims under the Competition Act (para. 9.a.), that ELS did not properly plead the criminal offence provisions of the Competition Act that ELS alleges apply (para. 9.b.) and that other provisions of the Competition Act to which ELS refers in its Amended [Further] Reply to Demand for Particulars are beyond the jurisdiction of this Court. [ 18 ] In

summary, WestJet alleges, inter alia , that ELS is in breach of contract by not remitting monies owing in a timely fashion and by not fulfilling its financial record keeping and reporting responsibilities. ELS alleges that WestJet is in breach of contract by terminating the Agreement as of December 31, 2009, having earlier extended it to September 30, 2010. Obviously, it is important to understand whether we are dealing with breach (by ELS) of a contract which properly ended on December 31, 2009, or breach (by WestJet) of a contract that ended on September 30, 2010, or both.

IV. Case Management [ 19 ] I turn now to a brief discussion of case management efforts in this matter. Understanding how that process evolved in this case is significant as it informs my decision in respect of ELS’ request to deny judgment by way of

summary trial on the basis that it would be unjust to grant it. [ 20 ] WestJet requested the appointment of a case management judge on August 2, 2011. WestJet asserted in its letter to the Chief Justice that ELS had cancelled Questioning of WestJet’s officer on three occasions. It further alleged that ELS had not provided WestJet with its position on WestJet’s request to amend its Statement of Claim and had not responded to WestJet’s requests for ELS’ position regarding resort to case management.

ELS opposed the appointment of a case management judge. [ 21 ] Case management was ordered by Chief Justice Wittmann on September 7, 2011. Justice J.T. McCarthy was appointed case management judge. [ 22 ] Justice McCarthy, by Order dated September 20, 2012, directed ELS to provide answers to undertakings from the Questioning of ELS’ officer and to make arrangements to seek an Order to proceed by way of

summary trial. [ 23 ] Specifically, this Order directed counsel for ELS to both seek an Order directing that the matter be heard by

summary trial and seek judgment in respect of the claim itself, at the same time. That is, this Order expressly contemplated that both the application for judgment by way of

summary trial and the trial itself would proceed simultaneously. Counsel for WestJet, while not “consenting” to this Order, did “approve” of the Order as made. [ 24 ] Accordingly, early in the

summary trial process, ELS knew that both the application for

summary trial and the

summary trial itself would proceed simultaneously. This is significant as ELS argued that I was not required to determine both issues simultaneously, but that I could consider the merits WestJet’s application for judgment by way of

summary trial without conducting the trial itself. [ 25 ] ELS do not appear to have complied with Justice McCarthy’s direction to make application for

summary and seek judgment. On November 6, 2012, McCarthy J. directed that both the application for

summary trial and judgment in the main claim proceed on May 1, 2013. On November 7, 2012, WestJet filed Form 36, Application for

Summary Trial. His Lordship’s Order also directed that any affidavit ELS wished to file in opposition to the

summary trial and judgment be filed and served by January 15, 2013. [ 26 ] ELS failed to comply with this latter direction on time. The Esposito Affidavit eventually was served on WestJet on February 20, 2013. [ 27 ] As a result of ELS’ delay, Justice McCarthy was required to revise various deadlines set forth in his order of November 6, 2012.

On February 25, 2013, he ordered new dates for cross-examination on the Esposito Affidavit. [ 28 ] The matter had to be postponed from May 1, 2013 until June 13, 2013 as the Calgary Courts Centre experienced a bomb scare on May 1st. [ 29 ] Two days before the rescheduled trial, counsel for ELS indicated that he had fallen and that his injuries prevented him from appearing at trial. He sought an adjournment. Counsel for WestJet opposed the request for an adjournment.

By Order pronounced June 12, 2013, Justice McCarthy set the matter over to be heard by me on August 28 and 30, 2013, regardless of whether counsel for ELS was able to attend and awarded costs of $5000 against ELS, payable forthwith. [ 30 ] ELS’s objection to WestJet’s Application, though not filed until August 21, 2013, six days before the matter proceeded in front of me, appears to comply with the filing requirements of Rule 7.8(2). [ 31 ] Based on the foregoing, I am of the view that case management was needed to compel ELS to move forward with these proceedings.

At the hearing before me, ELS did not contest WestJet’s assertions that it had withheld monies otherwise owing to WestJet, but for ELS’ claims to equitable set-off. WestJet sought the Court’s assistance through case management in moving this matter towards resolution. V.

Summary Trial – The Legislative Framework [ 32 ] Procedures relating to

summary trial are found in Division 3 of

Part 7 of the Alberta Rules of Court (the “Rules”). The relevant Rules are Rules 7.5 to 7.10. [ 33 ] Rule 7.5 permits application to this Court for judgment by way of

summary trial, on one or more issues comprising an action. Application for judgment by way of

summary trial 7.5(1) A party may apply to a judge for judgment by way of a

summary trial on an issue, a question, or generally.

(2) The application must

a) be in Form 36,

b) specify the issue or question to be determined, or that the claim as a whole is to be determined,

c) include reasons why the matter is suitable for determination by way of

summary trial,

d) be accompanied with an affidavit or any other evidence to be relied on, and

e) specify a date for the hearing of the

summary trial scheduled by the court clerk, which must be one month or longer after service of notice of the application on the respondent.

(3) The applicant may not file anything else for the purposes of the application except

a) to adduce evidence that would, at trial, be admitted as rebuttal evidence, or

b) with the judge’s permission. [ 34 ] WestJet argues that this Rule permits it to seek judgment for damages it alleges it suffered as a result of ELS’ breach of the Agreement, without having to wait for ELS to proceed with its counterclaim. [ 35 ] Rule 7.6 requires the respondent to file and serve evidence upon which it intends to rely not less than 10 days before the “date scheduled for the hearing of the application”. I refer to this date as the “Hearing”. Response to application 7.6 The respondent to an application for judgment by way of a

summary trial must, 10 days or more before the date scheduled for the hearing of the application, file and serve on the applicant any affidavit or other evidence on which the respondent intends to rely at the hearing of the application. [ 36 ] The Esposito Affidavit was filed by ELS in support of its objection to proceeding by way of

summary trial. It seeks to establish that ELS was justified in believing that the Agreement had been extended to September 30, 2010. ELS argues that it suffered damages as a consequence of its reliance on WestJet’s assurances that the Agreement had been extended. [ 37 ] Rule 7.8(1) allows for objections. Objections may be advanced before or during the Hearing, but the respondent must give at least five days’ notice of its intention to object. Objections may be advanced on the basis that the particular issue in respect of which the applicant seeks judgment, or the applicant’s overall claim of which the particular issue is a part, is not suitable for a

summary trial. Objections may also be advanced on the basis that a

summary trial will not help to resolve the claim or any part of it. Objection to application for judgment by way of

summary trial 7.8(1) The respondent to an application for judgment by way of a

summary trial may object to the application at or before the hearing of the application on either or both of the following grounds: (

a) the issue or question raised in the claim, or the claim generally, is not suitable for a

summary trial; (

b) a

summary trial will not facilitate resolution of the claim or any part of it.

(2) Notice of the objection and anything on which the objector intends to rely must be filed and served on the applicant 5 days or more before the objection is scheduled to be heard.

(3) The judge must dismiss the objection if, in the judge’s opinion, (

a) the issue or question raised in the claim, or the claim generally, is suitable for a

summary trial, and (

b) the

summary trial will facilitate resolution of the claim or a part of it. [ 38 ] In my view, Rule 7.8(3), while purporting to require the applications judge to make a determination regarding the merits of an objection ignores the practical effect of these Rules. The applications judge actually may have to conduct the trial (or a substantial portion of it) in order to make the threshold determination, after the fact, that it was appropriate for the applicant to have sought judgment by way of

summary trial. Unless the judge is confident that, though the trial itself has not yet proceeded and no evidence has been submitted, he should grant the objection and dismiss the application, something akin to a trial needs to take place in order to decide the merits of the application for judgment. Evidence may need to be tendered and weighed and credibility assessed in order to respond to an objection to proceed by way of

summary trial. [ 39 ] Rule 7.9(1) provides that the applications judge who has conducted the

summary trial may dismiss the application for judgment or may grant it and give judgment. It is not clear what Rule 7.9(1) adds to the analysis in view of Rule 7.9(2). Rule 7.9(2) requires judgment be granted after a

summary trial except in three circumstances: (1) the application is dismissed (presumably in response to an objection); (2) there is insufficient evidence to allow judgment to be given; or (3) the result would be unjust. Decision after

summary trial 7.9(1) After a

summary trial, the judge may (

a) dismiss the application for judgment, or (

b) grant the application and give judgment in favour of a party, either on an issue or generally.

(2) Judgment must be granted after a

summary trial unless (

a) the application is dismissed,

(

b) on the evidence before the judge, the judge is unable to find the facts necessary to decide the issues of fact or law, or (

c) the judge is of the opinion that it would be unjust to decide the issues on the basis of the

summary trial. [ 40 ] Rule 7.11 provides that at any stage during an application for

summary trial, the Court my order a trial of the claim or of a particular issue forming part of the claim, giving directions regarding that trial or other procedural orders. Order for trial 7.11 A judge, at any stage of a

summary trial application, may (

a) order the trial of the action generally or on a question or issue and give directions with respect to preparation for trial and a trial date, or (

b) give any procedural order that the circumstances require. [ 41 ] While it may appear odd that it would be permissible to conduct a trial to determine if an objection to conducting the trial should be granted, these Rules allow the Court to assess the situation as argument proceeds, and, at any stage in the process, decide to carry on with the

summary trial or to terminate it and order a full trial. Indeed, completion of the

summary trial is no bar to an after the fact determination by the Court that it should not have proceeded in the first place. [ 42 ] Obviously, these provisions require the parties to do more than just, in the case of the applicant, prove its case on a balance of probabilities and, in the case of the respondent, resist the applicant’s attempts.

The parties are required to undertake those tasks while simultaneously addressing: 1. the suitability of the process they are actively engaged in for answering the questions before the Court; 2. whether the process they are actively engaged in is, in fact, operating to facilitate resolution of the claim being advanced; 3. whether the evidence being presented is sufficient to decide issues of fact and law; and 4. whether justice is being served. [ 43 ] In essence, the

summary trial process is, itself, on trial. [ 44 ] Not everyone believes the interests of justice are served by these Rules. Madame Justice Veit recently made these comments in Islam v. Mozumder , 2012 ABQB 773 , 37 CPC (7 th ) 185 (“ Islam ”) at para. 6 : This application illustrates serious problems caused by new Rule 7.5. Form 36 does not always adequately identify the real issues in dispute because it is only the applicant for

summary trial who frames the issues rather than both parties as in Form 37. The one-step process is only potentially quick if both parties consent to a

summary trial and the judge agrees that a

summary trial is appropriate; where, as here, the respondent does not agree to a

summary trial, or where a judge determines that the matter is not suited to

summary trial, the eventual hearing of the dispute by way of a conventional trial is considerably delayed. A conventional trial which could have been heard in December 2012 under the previous rule can now only be heard in March, 2013. The one-step procedure does not encourage litigants to resolve their dispute since the

summary trial provisions do not require a JDR or similar alternate dispute resolution processes prior to trial. As this particular situation highlights, the one-step system does not provide an efficient system of remedies since the considerable costs to the defendant, and his lawyer, of attending for one day in Edmonton from Calgary may not be able to be recovered in costs. The one-step process is not efficient from the perspective of the court's administration since one day of trial time is effectively lost where the parties do not agree to a

summary trial or the court determines that a

summary trial is not appropriate. Lastly, it contributes neither to the expectation of justice for the parties nor to the expected diligence of the judiciary to adopt a system in which the judge in a

summary trial is not provided in advance of what should be a short trial albeit with a considerable amount of affidavit evidence without any brief from the parties setting out what issues are contested and what treatment is requested of the issues. Our practice rules require a brief from the parties even for special chambers applications; the utility of a brief in advance of

summary trials, which will finally dispose of the dispute between the parties, is even more apparent. In

summary, the new Rule, which conflates the previous two-step system into one step, appears to undermine - rather than support - the purpose and intent of the new Rules as set out in Rule 1.2. [ 45 ] Later in her judgment, Justice Veit poses the question, “Why is Rule 7.8 counter-productive?”. She answers that question at para. 24: In my respectful view, the circumstances of this hearing illustrate why the re-casting of the former two-step process to have a

summary trial - the first step being the application for a

summary trial which was heard in morning chambers and could therefore be heard quickly and cheaply - into one step, although developed with the intent that it would prove to be an improvement to the process has, in actuality, made things worse for litigants. [ 46 ] In my view, Madame Justice Veit’s most compelling indictment of this process is to be found at para. 25 of her judgment. There, she notes: Allowing one party to apply for a

summary trial which triggers the setting of a one day trial by the court can, in the absence at least of agreement amongst the parties on the propriety of a

summary trial, lead to considerable additional cost and expense for the parties. Under the current system, all parties must have all of their witnesses present on the day scheduled by the court for the

summary trial even though the respondent has not agreed to a

summary trial process. In the circumstances here, where the defendant resides in Calgary and is represented by a lawyer from that city, the cost to all the parties of personal attendance in Edmonton for a one day trial which did not take place is much greater than was the cost, under the former system, of a morning chambers application to determine if a

summary

trial was appropriate. [Emphasis added.] [ 47 ] My understanding of her Ladyship’s overall concern with these Rules is that compression of what was a two-step process into one step not only exposes the parties, particularly a respondent who objects, to undesirable and unnecessary expense, delay and uncertainty, but places strain on the Court’s ability to achieve a just result. From commencement of the application to and after its conclusion, the application judge has to engage in an ongoing process of considering the limited evidence presented to determine if (

i) he or she has enough facts to decide the issues, (ii) it would be “unjust” to award judgment with respect to what is emerging during the course of the

summary trial, (iii) the issue being framed during the course of the

summary trial appears to be unsuitable for resolution by that mechanism and (iv) the

summary trial itself seems to be falling short in facilitating resolution of the issues. [ 48 ] I mention these concerns not to denigrate the obvious benefits of having access to expedited procedures in situations which clearly benefit from them, but rather to remind myself of the vigilance with which I must delineate the limits of their application so as not to give rise to a miscarriage of justice. Given these observations, it is no surprise that the parties have differing views regarding the appropriateness of applying the

summary trial procedure to these facts. VI. Parties’ Positions Regarding Appropriateness of

Summary Trial [ 49 ] WestJet’s position, as outlined in its pleadings, in its Application for

Summary Trial, in its brief (the “WestJet Brief”) and in argument, may be summarized as follows. WestJet asserts that ELS failed to remit moneys owing to WestJet in accordance with the Agreement and that this failure justified termination of the Agreement. WestJet notes that ELS has not seriously challenged the assertion that it failed to remit funds. Further, WestJet argues that its claim against ELS is not complex, that the evidence in support of that claim is clear and that it would be unjust to deny WestJet an opportunity to recover in a timely fashion the monies owing to it. [ 50 ] In respect of ELS’ arguments opposing

summary judgment, the substance of WestJet’s response is that it should not be denied its right to advance its claim against ELS on the basis that ELS may succeed in advancing a counterclaim. More specifically, WestJet argues that ELS’ counterclaim alleging Competition Act infractions is complex, is not appropriate for

summary trial and may be severed from WestJet’s breach of contract claims. Similarly, WestJet argues that a determination of whether WestJet has acted in breach of the Renewal Agreement, while arising from the same factual matrix as WestJet’s claim under the Agreement, may be decoupled from this application and conducted as a separate hearing. [ 51 ] Moreover, WestJet takes the position that ELS has been dilatory in pursuing its counterclaim and that WestJet should not be precluded from advancing its claim by ELS’ lack of diligence.

WestJet asserts that ELS has delayed the resolution of this matter and that there is no reasonable expectation that it will advance its case diligently. WestJet outlines several examples of ELS’ alleged “shortcomings” in its conduct of this matter, including the following:

(1) ELS’ initial refusal to grant WestJet’s request for an extension of time to file its Statement of Defence to Counterclaim pending ELS’ Reply to Demand for Particulars, necessitating an application for an extension and resulting in ELS’ consent to the extension the day before the application was to be heard;

(2) ELS’ failure to respond to undertakings provided at Questioning on January 10 and 11, 2011 and the steps WestJet was required to take to address that failure;

(3) ELS’ failure to provide its affidavit in opposition to the application for

summary trial by the date specified in Justice McCarthy’s November 6, 2012 Order and the resulting need to revise the dates His Lordship had previously set; and (4) repeated delays and cancellations of scheduled matters arising from the unavailability of ELS’ counsel. [ 52 ] In addition, counsel for WestJet brought to my attention that he has had difficulty in obtaining payment of the $5000 in costs ordered by Justice McCarthy on June 12, 2013.

Despite the fact that Justice McCarthy’s Order states that these costs are to paid “forthwith”, counsel for ELS responded to inquiries about those costs by exhorting his friend to be “patient” and asserting that “We don’t know yet how the case is going to turn out. It is conceivable that you will owe us costs.” In adverting to this exchange, I am mindful that (1) counsel for ELS objected to this having been brought to my attention on an ex parte basis and

(2) I do not know whether ELS has now paid these costs. Nevertheless, I am troubled by what appears to be a rather cavalier attitude to this Court’s orders, particularly in light of ELS’ previous failures to abide by deadlines set by Justice McCarthy. [ 53 ] Finally, WestJet submits that a

summary trial is a trial and if ELS wishes to contradict WestJet’s assertions, it must introduce evidence in support of its position. [ 54 ] For its part, ELS originally advanced the argument that this Court lacked jurisdiction to proceed with WestJet’s application, asserting that it was a nullity. ELS had contended that WestJet’s Form 36 lacked prescribed language alerting ELS to its right to object to WestJet’s application. In argument before me, counsel for ELS withdrew this objection. [ 55 ] Beyond that, ELS’ position, as outlined in its pleadings, in its Objection to Application for Judgment by Way of

Summary Trial (“Objection”), in its briefs filed April 19, 2013 (“ELS’ 1st Brief”) and August 22, 2013 (“ELS’ 2nd Brief”) and in argument, may be summarized as follows. [ 56 ] ELS suggests that, contrary to WestJet’s attempt to portray the matter as a claim based on a “contract debt”, this action involves more than a determination of whether ELS owes WestJet money under the Agreement. ELS argues that there are issues of fact and law, as well as evidentiary and credibility issues, in this matter that cannot be resolved by

summary trial. It asserts that a full trial is required.

[57] Further, ELS argues that it would be inappropriate for this Court to adjudicate WestJet’s claim without also determining ELS’counterclaim as the Agreement and the Renewal Agreement are parts of the same contractual relationship and the two claims aretherefore intertwined. ELS asserts that equity does not permit a claim and a counterclaim for equitable set off to be heard separatelywhen the claim and the cross-claim are closely intertwined and cites the following decisions: Telford v.

Holt (SCC),[1987] 2 SCR 193; Cam-Net Communications v Vancouver Telephone Co, 1999 BCCA 751, 71 BCLR (3d) 226; Federal Commerce andNavigation Ltd. v Molena Alpha Inc [1978] Q.B. 927 (U.K.C.A.); and Keltic Inc. v. Glenora Distillers

(1994) Ltd. (1996), 1996 NSCA225 , 155 N.S.R. (2d) 397. ELS then argues that properly addressing its counterclaim will require this Court to hear viva voceevidence, cross-examination and argument on the law of evidence, all of which requires that the matter proceed to a full trial. [58] Finally, ELS takes issue with the

summary trial process itself. It asserts that

summary trials are not trials in the “full sense ofthe word” and that they defeat the purpose of the trial process, which is the administration of justice: ELS 1st Brief, para. 16. ELS citesJM Stafford & Associates Ltd v Integrated Resources Photography Ltd (1985), 62 BCLR 60 (BC Co Ct) in support of its assertion thatthe

summary trial process may not yield an appropriate result because “procedural safeguards” may be lacking. Those proceduralsafeguards, ELS submits, include viva voce evidence and cross-examination. Reliance on mere affidavit evidence compromisesprocedural fairness. ELS quotes from the Court’s expression of concern with the operation of R. 18A of the Supreme Court Rules dealingwith

summary trials at para. 25: It becomes increasingly apparent that what R. 18A requires the court to do is prejudge whether statements in affidavits raise a conflict ofevidence which merits further investigation via full trial. In my view, R. 18A has the clear potential to undermine a litigant’s right to afair and complete hearing. VII. Analysis [59] Is judgment by way of

summary trial appropriate in these circumstances? The following points emerge from my review ofthe decided cases and commentary. [60] It is permissible to hear the request for

summary trial, to hear the

summary trial itself and to give final judgment in a singleproceeding: WA Stevenson & JE Côté, Civil Procedure Encyclopedia, Volume 2 (Juliber, 2003) (“CPE”) at p. 31-95. The comments ofJustice Veit in Islam also reflect that conclusion. [61] Complexity is not a bar to

summary trial: Compton Petroleum Corp v Alberta Power Ltd, 1999 ABQB 42, 242 AR 3(“Compton”) at para 18. [62] A judge hearing a

summary trial may decide some but not all of the issues: Canlan Investment Corp v Gettling, (1998), (BC CA), 37 BCLR (3d) 140 (CA) at paras 44, 45 and 49. However, conducting a

summary trial on part of the suit may becounter-productive, particularly where there is overlap in the key issues: see CPE at p. 31-99, Prevost v Vetter, 2002 BCCA 202, 100BCLR (3d) 44 and Islam at para. 19. [63] While it is not appropriate for the Court to decide a

summary trial solely on the basis of a choice between conflictingaffidavits, conflicting evidence is not, in and of itself, a bar to

summary trial if the conflict can be resolved by reference to otherevidence. See Compton at para. 13 and Inspiration Management Ltd v McDermid St Lawrence Ltd (1989), (BC CA),36 BCLR (2d) 202 (CA) at pp. 215-216. [64]

Summary trial may be appropriate even in situations where large amounts are sought: Mattu v Mattu, 2001 BCCA 140, 4 CPC (5th) 55 at paras 9-10; CIBC v Charbonnages de France International SA

(1994) BCLR (2d) 104 (CA) at para 108. [65] As discussed above, the application of Rule 7.9(2) requires me to answer two questions. First, am I able to find the factsnecessary to decide the issues of fact and law before me? Second, would it be unjust to decide those issues on the basis of the

summarytrial? To answer those questions, I must address the above-noted objections raised by ELS. I will deal with those objections slightly outof the order in which ELS raised them. [66] First, ELS asserts that the matter is too complex to be suited to

summary trial. I reject this assertion. Taken in isolation,WestJet’s claim is straightforward, involving only the proper

interpretation of s. 5.2 of the Agreement. Indeed, WestJet’s

interpretationof that provision was not challenged by ELS and ELS acknowledged having withheld funds that were owing to WestJet. Neither did ELSchallenge WestJet’s calculation of the amounts owing pursuant to its

interpretation. I do not consider it necessary to hear viva voce orexpert testimony to establish the correct

interpretation of the Agreement and, therefore, I am satisfied that WestJet’s claim, taken alone,is suitable for determination by

summary trial. [67] ELS’ third objection is that

summary trials lack necessary procedural safeguards and are not trials in the full sense of theword. As my reference above to Justice Veit’s comments in Islam indicates, I am not unsympathetic to the assertion that the

summarytrial process is flawed. Nevertheless, that is the framework currently set out in the Rules and attacking the process in general is not ananswer to the merits of WestJet’s application. To refuse an application for judgment by way of

summary trial on the basis that thesummary trial process itself is flawed would be to render that process altogether unavailable. ELS must answer WestJet’s application bydemonstrating that the

summary trial process is inappropriate to this particular case. [68] That brings me to ELS’ second objection, namely that it would be unjust to determine WestJet’s claim without alsodetermining ELS’ counterclaim which, in ELS’ submission, cannot be done without benefit of the full trial process. ELS argues that itwould be unjust to consider WestJet’s claim without simultaneously considering ELS’ counterclaim and that it would be an inefficientuse of Court resources to try these claims separately.

This objection directly raises the difficulties inherent in the current one-stepsummary trial process. [69] There are two aspects to ELS’ counterclaim. The first, being its arguments under the Competition Act, presents no real

difficulty. I am satisfied that this claim conveniently may be severed from the contract claims and presents no obstacle to determinationof WestJet’s claim on a

summary basis.

Therefore, I grant leave to ELS to proceed with this claim in any event of my determination ofthe rest of the matter. [70] The second, and more problematic, aspect of ELS’ counterclaim is its claim for breach of contract and/or equitable setoff.ELS argues, in effect, that it was WestJet that breached the Agreement by terminating the arrangement between the parties effectiveDecember 31, 2009, having previously indicated its intention to extend that arrangement to September 30, 2010. [71] The evidence before me indicates that there was some vacillation on WestJet’s part, even to the point of purporting toterminate the Agreement effective December 31, 2009 while still indicating its intention to be “flexible”.

However, while ELS avers thatit suffered damages as a result of WestJet’s alleged breach of the Renewal Agreement, it has put no evidence of such damages before thisCourt, insisting instead that the determination of its case must be made in a full trial. [72] To what extent, then, is ELS, as the respondent in an application for judgment by way of

summary trial, obliged to put forthevidence in support of its counterclaim? Can ELS avoid a

summary trial merely by raising the spectre of a counterclaim for breach ofcontract and/or equitable setoff without providing evidence in support thereof? [73] I have concluded that it cannot. Contrary to ELS’ third objection, the case law clearly establishes that, as the CPE puts it at p.31-96, “[A]

summary trial is a trial”. The ordinary burdens of proof apply, as stated by the Court in Compton at para. 12: The burden of proof to be met by an applicant for judgment under the

summary trial procedure is the same as that in a trial; the partyasserting the affirmative of an issue must prove it, on a balance of probabilities. [74] Accordingly, in my view, both parties to an application for judgment by way of

summary trial must come to Court armed withsufficient evidence to support their positions. The one-step process does not allow a respondent merely to object to the matter beingheard on a

summary basis while declining to provide evidence; he must be prepared for the

summary trial to proceed notwithstanding hisobjection. If that were not the case, raising the possibility of a defence or counterclaim would be sufficient to defeat any application forsummary trial. That cannot be the intent of the Rules. [75] In this case, ELS did not put before this Court any legal argument or meaningful evidence in support of its assertions that theAgreement and the Renewal Agreement are one contract, that WestJet was in breach and that it suffered damages as a result.

I was leftwith nothing more than vague assertions that a full trial was necessary so that counsel for ELS could call several witnesses, testcredibility and advance legal argument in support of ELS’ position. [76] WestJet having engaged the

summary trial process by applying under Rule 7.5, ELS had a responsibility to present evidencein support of its counterclaim and its position that a full trial is needed to resolve the issues before the Court. Had ELS put forwardevidence to give substance to its breach of contract and equitable setoff claims, I might have determined both claims on a

summary basisor I might have found that a full trial was necessary to do so. [77] In arriving at this conclusion, I am mindful that this approach places a considerable burden on the respondent to such anapplication.

However, I am also mindful of the admonition of Paperny J. (as she then was) in Compton at para. 15: I agree with McEachern CJBC in Inspiration Management, supra that “Chambers judges should be careful but not timid in using R. 18Afor the purpose for which it was intended” ... namely, the expedition of the administration of justice. [78] I am bolstered in my conclusion by Justice Paperny’s rejection in Compton of one party’s setoff argument.

She made thesecomments about that argument at para. 23: Alberta Power did not provide detail in its materials or oral argument as to the amount of, the nature of or the circumstances surroundinga potential right to set-off. A right to set-off must be established on a balance of probabilities: Reliable Truss v. Anco Lumber (1994), (MB KB), 93 Man. R. (2d) 149 (Q.B.). [Emphasis added.] [79] I note as well these comments from Macleod J. in Pears v Duncan Estate, 2008 ABQB 211, 55 CPC (6th) 226 at para 12: While the forms of evidence may differ the burdens of proof in a

summary trial are the same as any other trial. Since stages one and twoare being dealt with together it was common ground among all of the parties that, provided I found that this was an issue upon which Icould fairly adjudicate, I would be making the decision based upon the evidence before me. Accordingly, if the parties had evidence onthe issues to place before me it was their responsibility to do so. [80] In the result, I find that WestJet has proved its claim for breach of the Agreement and I grant judgment in its favour.

ELS hasfailed to prove its counterclaim based on breach of contract and equitable setoff and that portion of its counterclaim is dismissed withoutprejudice to ELS’ ability to pursue its counterclaim based on the Competition Act in a separate proceeding. [81] WestJet will have its costs of this application. Heard on the 28th day of August, 2013 and the 30th day of August, 2013. Dated at the City of Calgary, Alberta this 13th day of November, 2013.

C.M. Jones J.C.Q.B.A. Appearances: Don Dear, Q.C. McLennan Ross LLP for WestJet Robert B. White, Q.C. Robert B. White, Q.C. & Company for ELS