Sticks and Stones Communications Inc v Hole's Greenhouses & Gardens Ltd, 2015 ABQB 774

Court of Queen ’ s Bench of Alberta Citation: Sticks and Stones Communications Inc v Hole's Greenhouses & Gardens Ltd, 2015 ABQB 774 Date: 20151207 Docket: 1403 06103 Registry: Edmonton Between: Sticks and Stones Communications Inc. Plaintiff - and - Hole's Greenhouses & Gardens Ltd. Defendant _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice Robert A. Graesser _______________________________________________________ Introduction [ 1 ] This is an appeal from a decision of Master Wacowich dismissing the Plaintiff’s application for

summary judgment. Background [ 2 ] There are obviously facts in dispute between the parties. Affidavits were exchanged for the purposes of this

summary judgment application, and there were extensive cross-examinations on these affidavits. The following narrative is either common to both parties, or comes by way of admissions from the parties. [ 3 ] Sticks and Stones Communications Inc. is an advertising and communications agency. Hole’s Greenhouses & Gardens is a retail greenhouse and merchandiser operating in St. Albert, Alberta. [ 4 ] The parties entered into an agreement dated October 1, 2013 under which Hole’s contracted with Sticks and Stones to provide various services to Hole’s for a monthly retainer of $30,000, not including GST. Sticks and Stones were entitled to recover

certain disbursements in addition to the fee retainer. Simple interest was agreed to be paid on amounts 30 days past due at 2 percent per month. [ 5 ] The Agreement, described as a “Fixed Fee Agreement”, was for a term of three months, being October, November and December, 2013. After December, 2013, the Agreement was to continue automatically on a month-to-month basis. [ 6 ] Either party could terminate the Agreement on providing written notice to the other. [ 7 ] Sticks and Stones commenced work under the Agreement at the beginning of October, and invoiced Hole’s $30,000 plus GST on October 1.

Work continued by Sticks and Stones until March, 2014 when Sticks and Stones ceased performing any further services effective March 13, 2014. [ 8 ] The Agreement was never terminated by Hole’s. [ 9 ] From October 1, 2013 until and including March 13, 2013, Sticks and Stones invoiced Hole’s a total of $142,480.07 inclusive of fees (or retainers), disbursements and GST. [ 10 ] Hole’s was slow in making payment to Sticks and Stones. The first payment was not made until December 16, 2013 when Hole’s paid $15,000. Approximately $10,000 was paid on January 2, 2014.

A further $5,000 was paid on January 21, 2014 and $10,000 was paid on March 14, 2014. The payments made total $40,215.623. [ 11 ] The unpaid balance of the invoices is $102,264.45 [ 12 ] It is not in dispute that over the period Sticks and Stones was providing services to Hole’s, Hole’s was experiencing financial difficulties and was in negotiations with creditors to restructure its debt. [ 13 ] The relationship disintegrated over February and March. Sticks and Stones ceased work.

There were some settlement discussions between the parties, leading to Sticks and Stones commencing this action on April 25, 2014. [ 14 ] Hole’s defended the action on May 15, 2014. There is no counterclaim. [ 15 ] I assume that the parties have exchanged affidavits of records. No questioning has taken place, and the only progress in the action has been in relation to this

summary judgment application. Prior to the application before Master Wacowich, that included cross- examination of Francis Winder, an officer of Sticks and Stones, on his affidavit in support of

summary judgment. [ 16 ] For the purposes of the application before the Master, Sticks and Stones opted to not cross-examine William Hole, an officer of Hole’s, on his affidavit in opposition to Sticks and Stones’ application. [ 17 ] Following the Master’s decision and before the application before me, Sticks and Stones’ counsel cross-examined Mr. Hole. Issues in Dispute [ 18 ] Hole’s claims that Sticks and Stones breached its obligations to Hole’s by not performing the required services under the Agreement.

Hole’s says that it expected Sticks and Stones to produce a marketing plan, web strategy and to assist in the recruitment of an in-house marketing professional. No marketing plan nor web strategy were produced during the time Sticks and Stones performed work under the Agreement.

No steps were taken to recruit an in-house marketing person. [ 19 ] While Hole’s acknowledges that Sticks and Stones performed some services under the Agreement and was entitled to some payment, it disputes any obligation to pay the whole amount of the retainer. [ 20 ] It seeks to set off from the amounts claimed by Sticks and Stones the loss of value of the marketing plan and web strategy. [ 21 ] Sticks and Stones denies any breach of its obligations, and says that it performed everything aske of it by Hole’s.

Hole’s personnel (other than the officer who swore the affidavit and was questioned) contacted Sticks and Stones personnel directly and had Sticks and Stones provide various services. [ 22 ] Sticks and Stones claims that there was no issue taken with the quality or timeliness of their work until March, 2014. While Hole’s claims that an issue was raised in December, 2014, its officer was uncertain about that when questioned.

No documentation of any concerns or complaints before March, 2014 has been put in evidence. [ 23 ] Sticks and Stones through Francis Winder says that it prepared a web strategy but had not yet turned it over to Hole’s. Mr. Winder says that Sticks and Stones did provide a marketing strategy. Hole’s disputes that the Powerpoint presentation done for him constituted a marketing strategy.

He was expecting something more comprehensive. [ 24 ] Sticks and Stones put in evidence settlement discussions in March, 2014, ostensibly to show the lack of any dispute by Hole’s over the quality or quantity of Sticks and Stones’ work. For the purposes of this decision, I do not consider any of those communications. Counsel should not have put such communications in evidence without the proper foundation. [ 25 ] Settlement discussions are privileged, whether they say “without prejudice” or not.

There are some circumstances where such communications may lose their privilege, such as to prove that settlement occurred. I need not discuss exceptions here, as no exception applies to the communications included in the materials before me.

Decision of Master Wacowich [26] Master Wacowich reviewed the case law submitted to him and concluded on the evidence before him that a trial wasnecessary to resolve the factual contest between the parties as to whether or not Sticks and Stones had provided the required servicesunder the Agreement. [27] He was particularly influenced by the fact that Mr.

Hole’s affidavit had not been challenged by way of cross-examination. [28] Master Wacowich referred to Master Schlosser’s decision in 1214777 Alberta Ltd v 480955 Alberta Ltd, 2014 ABQB 301,and stated at pages 35 and 36 of the transcript of the proceedings before him: The evidence that Mr. Hole, in his affidavit swore and not cross-examined on, indicates that Sticks and Stones provided some servicespursuant to the terms of the contract but failed to provide at least to the satisfaction of Hole’s marketing plan, any web designs orrecruitment of a candidate for an in-house marketing position with Hole’s.

Winder’s in his cross-examination and affidavit disputes that to some effect but it seems to from my review of the evidence that there is avalid dispute based on what was actually provided and what was to be provided and what the fair market value is. But, still I have todetermine whether there is in fact any issue of merit.

Now counsel for the respondent, Hole’s, takes the strong position that Hole’s was not cross-examined on the affidavit and should have.Counsel for the applicant takes the strong position that there is some evidence before the Court indicating that Hole’s did not complainabout the services provided and did so at a later date. And, in so many words, is refusing to pay an amount validly owed to them as acontract. But the issue is, is it validly owed? Were the services provided, the ones contracted for? ...

While there is no onus on a party to examine the opposing party on their affidavit, it strikes me that the better view is that there wherethere is a dispute on the evidence, which there most often is, that a cross-examination on the affidavit should occur to test what isdeposed to in the affidavit. In this case, in my view, there is a requirement for viva voce evidence, both on the facts and on the credibilityof witnesses giving evidence. Under that view, it would not be fair to grant

summary judgment without having the matter dealt with attrial on the merits. It was a well argued case and it was a difficult case which cases are when they come down to one simple fact. I have given my decision. Standard of Review [29] The parties are agreed that the standard of review on this appeal is correctness, following Gudzinski Estate v Allianz GlobalRisks US Insurance Company Limited, 2012 ABCA 5 and Bahcheli v Yorkton Securities Inc, 2012 ABCA 166. Law [30] The guiding law on

summary judgment has changed over the last short while, with the Supreme Court of Canada’s decision inHryniak v Mauldin, 2014 SCC 7. That decision, especially at para 28, directed a fresh approach to

summary judgment and

summarydismissal, has effectively done away with the old tests for

summary judgment: “beyond doubt” or “plain and obvious”. [31] The Alberta Court of Appeal applied Hryniak in Windsor v Canadian Pacific Railway, 2014 ABCA 108. [32] The Masters have, in Alberta, been the primary interpreters and appliers of Hyrniak because of the nature of their work.Master Schlosser synthesized the approach to

summary judgment applications where there are contested facts in 1214777 Alberta Ltd v480955 Alberta Ltd At paras 16 and 17 he stated: [16] If we put these decisions together, the approach that now ought to be taken toward

summary determination is as follows. I amdrawing remarks of Master MacLeod in the Pammett decision and those of Wakeling, J., (as he then was) in the Proper Cat case. Thenew approach has been described as the “roadmap approach”. As I see it, the Alberta roadmap is as follows: [17] The starting point (as found in the Windsor decision para. 13 and Hryniak at para. 49) is ‘to examine the record to see if adisposition that is fair and just to both parties can be made on the exis ting record’.

The court is to look at the record and the dispute todecide whether it is essential to the resolution of the dispute that the court see the witnesses. If the answer is yes, the matter must go totrial. If the initial answer is ‘no’, the court is to engage in a six step process: 1. The court is to presume that the best evidence from both sides is before the court. (e.g. Canada v. Lameman, 2008 SCC 14 ,2008 1 SCR 372, at 378 and 382). The decided cases tell us that

summary judgment applications have to be decided on the evidencebefore the court and not on what the evidence might be. Parties are required to put their best foot forward. This reinforces the importanceof treating

summary judgment applications advisedly and with due caution. The only caveat that might apply here is that if the

summaryjudgment application is before a Master and the losing party does not like the Master’s opinion, it is not so difficult to patch up theevidence on appeal. 2. As a corollary to number 1, the court is to ask whether a negative inference can be drawn from the absence of evidence on certainpoints.

3. Next, the court should look at the complete package and ask whether all of the evidence is admissible. Rule 13.18 (3), for example,tells us that we can’t use hearsay for a final application. 4. Next, the court should ask whether there is a conflict in the evidence and, if so, whether, (

a) the conflict has been resolved on crossexamination: Janvier v 834474 Alberta Ltd., 2010 ABQB 800 , or, (b), whether the evidence giving rise to the conflict is purelyself-serving and is otherwise unsupported: Guaranty v. Gordon, 1999 SCC. Self serving evidence does not give rise to a triable issue. 5. The next step is to examine the evidence. As Master MacLeod said in the Pammett decision: [28] There are subtle distinctions here. The court may assess the sufficiency of the evidence admissibility of evidence and reliability ofevidence without access to enhanced fact finding powers.

The court may also apply the law to the facts without deciding a genuinequestion of law. (emphasis added) [33] Assessing the sufficiency of the evidence will also involve considering whether the issue can fairly be decided on the factualrecord before the court (Tottrup v Clearwater Municipal District (99) (2007) 2006 ABCA 380 , 68 Alta L.R. (4th) 237 at 242and Gayton v Lacasse, 2010 ABCA 123 at para. 11). 6.

Having performed that evidentiary exercise, as Master MacLeod further says in the Pammett case: (and see Proper Cat at paras. 61-64, 69): [31] A plaintiff will be entitled to judgment if the plaintiff can prove all elements of the cause of action and the defendant either has nodefence or is missing critical elements of proof necessary to maintain that defence. A defendant will be entitled to judgment if theplaintiff cannot prove an essential element of its cause or if the defendant has a complete defence. [34] Proper Cat was approved by the Court of Appeal in Access Mortgage Corporation

(2004) Limited v Arres Capital Inc.,2014 ABCA 280. [35] In WP v Alberta, 2014 ABCA 404, the Court of Appeal stated at para 26: [26]

Summary judgment is therefore no longer to be denied solely on the basis that the evidence discloses a triable issue.

The questionis whether there is in fact any issue of “merit” that genuinely requires a trial, or conversely whether the claim or defence is so compellingthat the likelihood it will succeed is very high such that it should be determined summarily: Windsor at para 16; Beier at paras 56, 59-68and 70. [36] The Court of Appeal further discussed Hyrniak in 776826 Alberta Ltd. v Ostrowercha, 2015 ABCA 49, holding at para 11 to13: [11] Stated another way, in order for the non-moving party's case to have merit, there must be a genuine issue of a potentially decisivematerial fact in the case which cannot be summarily found against the non-moving party on the record revealed by the “fair and justprocess”.

The mere assertion of a position by the non-moving party in a pleading or otherwise, or the mere hope of the non-moving partythat something will turn up at a trial, does not suffice.

The key is whether the circumstances require a viva voce evidence in order toproperly resolve the case: see Canada v Lameman, 2008 SCC 14 at paras 10 to 11, [2008] 1 SCR 372. [12] The concept of "merit" in this respect is to be distinguished from the test for striking out pleadings under Rule 3.68 which involvesdeciding "whether there is any reasonable prospect that the claim will succeed, erring on the side of generosity in permitting novelclaims to proceed.": compare Ernst v Alberta (Energy Resources Conservation Board), 2014 ABCA 285 at paras 13 to 15, 85CELR (3d) 39, under motion [2014] SCCA No 497 (QL). [13] As to the substantive aspect of the test, then, this Court has also put the test for

summary dismissal into the following terms in W.P., at para. 26:

Summary judgment is therefore no longer to be denied solely on the basis that the evidence discloses a triable issue. The question iswhether there is in fact any issue of "merit" that genuinely requires a trial, or conversely whether the claim or defence is so compellingthat the likelihood it will succeed is very high such that it should be determined summarily: Windsor at para 16; Beier at paras 56, 59-68and 70. [37] In Attila Dogan Construction v AMEC Americas Limited, 2015 ABQB 120, Wittmann CJ added to the

interpretation ofHyrniak at para 52: [52] To this set of principles I would add some further points of direct application to the

Summary Applications sought here. It isimportant to understand that the principle of proportionality and what has been described as the less stringent test for

summary judgmentin Alberta does not affect the evidentiary requirements for such applications. As discussed in further detail below, affidavit evidencesworn in support of

summary judgment must comply with the provisions of the ARC and these are unaffected by Hryniak and Windsor.Furthermore, a self-serving affidavit in and of itself is not sufficient to create a triable issue in the absence of detailed facts andsupporting evidence: Guarantee Co. of North America v Gordon Capital Corp., (SCC), [1999] 3 SCR 423, at para 31.Finally, the principle of proportionality will require that the procedure used to adjudicate the dispute should fit the nature of the claim,but proportionality has more than one aspect.

The magnitude of the claim in terms of monetary value may have some place in thisanalysis, but the nature of the claim will as well. It has been recognized, for example, that disputes over the

interpretation of aninstrument, such as a contract, may lend themselves particularly well to

summary judgment: Tottrup v Clearwater (Municipal District99), 2006 ABCA 380 . [38] On the contract

interpretation issue, Sticks and Stones cites Sattva Capital Corp v Creston Moly Corp, 2014 SCC 53, and the

new approach to contractual

interpretation mandated by that decision at para 47: [47] Regarding the first development, the

interpretation of contracts has evolved towards a practical, common-sense approach notdominated by technical rules of construction. The overriding concern is to determine “the intent of the parties and the scope of theirunderstanding” (Jesuit Fathers of Upper Canada v. Guardian Insurance Co. of Canada, 2006 SCC 21 , [2006] 1 S.C.R. 744, atpara. 27, per LeBel J.; see also Tercon Contractors Ltd. v. British Columbia (Transportation and Highways), 2010 SCC 4 ,[2010] 1 S.C.R. 69, at paras. 64-65, per Cromwell J.).

To do so, a decision-maker must read the contract as a whole, giving the wordsused their ordinary and grammatical meaning, consistent with the surrounding circumstances known to the parties at the time offormation of the contract. Consideration of the surrounding circumstances recognizes that ascertaining contractual intention can bedifficult when looking at words on their own, because words alone do not have an immutable or absolute meaning: No contracts are made in a vacuum: there is always a setting in which they have to be placed. . . .

In a commercial contract it is certainlyright that the Court should know the commercial purpose of the contract and this in turn presupposes knowledge of the genesis of thetransaction, the background, the context, the market in which the parties are operating. (Reardon Smith Line, at p. 574, per Lord Wilberforce) Mediation Issue [39] Hole’s raises on this application the presence of the dispute resolution clause in the Agreement, and cites Babcock & WilcoxCanada Ltd v Agrium Inc, 2005 ABCA 82. [40] Hole’s statement of defence states at paras 7-9: 7.

It is a further term of the Agreement and a condition precedent to the commencement of any action by the Plaintiff for recoverypursuant to the Agreement that the Plaintiff and Defendant refer any disputes to non-binding mediation prior to the commencement ofany actions to enforce any claims arising under the Agreement. 8. The Plaintiff has failed and neglected to submit the disputes as set forth in the Statement of Claim to non-binding mediation. 9.

In the circumstances, the Plaintiff does not have the right to commence and maintain this action. [41] The mediation clause in the Agreement was raised before the Master, however counsel stated “I won’t go into the mediationclause”, referencing it as non-binding. Counsel then criticized Sticks and Stones for not following the terms of the Agreement [42] It is not clear to me what Hole’s purpose is in again raising the mediation clause. They do not specifically seek a stay. Noapplication for a stay has been brought by them.

Hole’s has taken no steps itself to enforce the mediation clause. [43] The statement of defence suggests that mediation is essentially a condition precedent to Sticks and Stones being able to makea claim and proceed with the lawsuit. [44] There is a difference between non-binding mediation and binding arbitration. The former is essentially unregulated; the latteris governed by the Arbitration Act, RSA 2000, c A-43. [45] Agrium v Babcock has been recently considered in AG Clark Holdings v HOOPP Realty Inc, 2014 ABCA 20. In that case,the Court of Appeal stated at para 7: [7] The appeal must be dismissed.

The chambers judge correctly interpreted this Court’s decision in Babcock & Wilcox, which holdsthat if the parties have agreed that they must arbitrate a dispute, but one party has issued a statement of claim and has not commencedarbitration within the limitation period for arbitration, then the court must strike out the claim.

Applying the decision to the facts beforehim, the chambers judge correctly concluded that HOOPP was barred by the Limitations Act from pursuing its claim. [46] I suppose it is open to Hole’s to raise mediation at any stage, but in my view, if Hole’s wanted to or wants to seek a stay ofproceedings until mediation has been carried out, it is too late in the context of this

summary judgment application. I do not think theycan fully participate in the

summary judgment process and still argue that the presence of a dispute resolution clause prevents the Courtfrom granting

summary judgment. In any event, this clause does not. [47] At a minimum, a cross-application for a stay should have been brought immediately in response to the

summary judgmentapplication. For the sake of efficiency and proportionality, such an application should have been brought well in advance of the

summaryjudgment application being heard, as a stay application could have easily been dealt with in morning chambers and would not have had towait months for a special application, as is the case with special applications before the Masters or a Justice in chambers. [48] For the purposes of this application, therefore, it is appropriate to ignore the dispute resolution clause, and I do so. Positions of the Parties Sticks and Stones [49] Sticks and Stones argues that it has met the test for

summary judgment as:

a) There is no dispute on the terms of the Fixed Fee Agreement;

b) There is no dispute on the outstanding amount owed to Sticks and Stones by pursuant to the invoices issued; and

c) There is no evidence of any weight or probative value that Sticks and Stones failed to perform its obligations under the Fixed FeeAgreement. Hole’s [50] Hole’s argues that Sticks and Stones does not meet the new Hyrniuk test because it has demonstrated that its defence hasmerit. In particular, Hole’s notes that Mr.

Hole was not cross-examined on the key issues of fact, namely Hole’s allegations that Sticksand Stones failed to perform three aspects of the services, namely the provision of the marketing plan, the creation of a web strategy andthe hiring of an in-house marketing person. [51] There is conflicting evidence on the marketing plan and the web strategy; there is no evidence to contradict Mr. Hole on theissue of the marketing person. [52] According to Hole’s, these factual issues can only be resolved fairly by a trial.

Factual Issues and Analysis [53] Sticks and Stones argues that any factual issues were effectively resolved by its cross-examination of Mr. Hole. It is clear thatMr. Hole was unable or unwilling to put any more “meat on the bones” to Hole’s defence, and he provided no evidence of anycomplaints about Sticks and Stones’ services prior to the termination of the relationship in March, 2014. [54] On cross-examination, Mr.

Hole did not resile from his position that Hole’s expected a marketing plan in a format different tothe presentation that was made, and Hole’s expected a web strategy to be delivered at some time before the Agreement was terminated inMarch. [55] He was disappointed that there was no progress on finding a suitable in-house marketing professional but was not cross-examined on his concerns over this issue. [56] These are clearly contractual

interpretation issues. The Agreement is skimpy on the description of the Services to be providedby Sticks and Stones. I do not think that there is any major disagreement between the parties as to what Sticks and Stones was to do forHole’s. The real disagreement appears to be over the timing of performance of these services. [57] It is unclear as to the extent Sattva has further gutted the parol evidence rule. It certainly appears to invite evidence of thenegotiations and discussions between the parties to aid in the

interpretation of the contract. [58] Mr. Rowan, on behalf of Hole’s, argues that the failure of Mr. Dhir to cross-examine Mr. Hole on the marketing professionalissue is fatal to Sticks and Stones’s

summary judgment application. He cites Schiff, Evidence in the Litigation Process, 1978, Toronto:Carswell Company Limited, at page 209 and in particular the passage relating to Browne v Dunn, (1893) 1893 CanLII 65 (FOREP), 6 R.67, (HL): When the opponent has not attacked the witness’s testimony on a particular issue either by cross-examination or by introducingindependent contradictory evidence, courts have invoked Browne v. Dunn to support a variety of conclusions. Some judges have assertedthat the trier of fact is bound to accept the witness’s testimony on the issue.

Other judges have regarded counsel’s failure as a weightyfactor at least justifying (if not obliging) acceptance. Yet others have barred counsel from urging the trier to disbelieve the witness. Onlyrarely has a court in the Commonwealth appeared to reject Browne outright. [59] Phipson on Evidence, 2000, London Sweet & Maxwell, at p 253 is cited to support the proposition that: As a rule, a party should put to each of his opponent’s witnesses in turn so much of his own case as concerns that particular witness, or inwhich he had a share...

If he asks no questions he will generally be taken to accept the witness’s account... [60] In Barrowman v Ranchland Asphalt Services Ltd, [1981] AJ No 41, 1981 CarswellAlta 213, Master Funduk considered thefailure to cross-examine on a particular point raised in the examination-in-chief at para 50: 50 However, cross-examination also has inherent risks. One of those may be, in appropriate circumstances, an adverse inference drawnfrom the failure to cross-examine on particular points raised in the evidence-in-chief.

Conceptually, there is no reason why the Courtcannot draw an adverse inference if the cross-examination on the affidavit does not deal with the substantive issue or issues raised on theapplication for which the affidavit has been tendered. [61] In the same case, I note that Master Funduk noted at para 66: 66 Failure of a defendant to bring forth evidence does not constitute evidence where no case has been made out against him, but where aprima facie case has been made out the defendant's failure to bring forth evidence may be the subject of an inference that his testimony orevidence if given would not support the defence raised: Mudrazia v.

Holjevac, (ON SC), [1970] 1 O.R. 275. [62] Here, Hole’s has, in my view, put forward a “bare bones” statement of defence. Mr. Hole’s affidavit is similarly “bare bones”in its allegations of breach by Sticks and Stones. [63] There is nothing at all other than his oral evidence to support his view of Sticks and Stones’ obligations under the Agreement.

[ 64 ] When I review Mr. Hole’s affidavit and the transcript of the cross-examination on it, I am less than impressed with Mr. Hole’s evidence. On the fundamental issue of whether he had legitimate concerns over the quality of Sticks and Stones’ services, he was unable to provide any documentation of any concerns.

He is unable to put a date on expressing any concerns to Sticks and Stones. [ 65 ] He said that he “believes” it was in December, 2013 (at p 36) but at p 38 says “we didn’t see work to say we were unsatisfied”. [ 66 ] The best that can be said of his evidence as to complaints is that he may have enquired about the status of the marketing plan and the web strategy, but nothing was said about that being a default under the Agreement until after Sticks and Stones stopped work because of non-payment. [ 67 ] Mr. Hole was clearly incorrect as to when Sticks and Stones stopped performing work.

He testified at p 15 that “services stopped sometime early in January” (as far as he could remember). [ 68 ] Yet Mr. Winder’s uncontradicted evidence is that Sticks and Stones was still receiving requests for services from Hole’s personnel until March 10, 2014. Sticks and Stones’ invoices and the backup for them show that considerable work was done throughout January and February and that Sticks and Stones continued to incur significant disbursements in those months. [ 69 ] Mr. Hole was either mistaken in his information as to when Sticks and Stones stopped work, or he was untruthful. It does not matter which.

Either result makes his evidence unreliable as to whether there is a serious issue to be tried requiring a contest of evidence by way of a trial. [ 70 ] The importance of this is that Mr. Hole tied the issue of payment (non-performance of services) with the timing of Sticks and Stones stopping work. [ 71 ] Sticks and Stones stopped work in March, 2014.

That is obviously the first time Hole’s ever complained about Sticks and Stones not having earned its retainer over the previous five months. [ 72 ] It is, in my view, most telling that no complaints were made to Sticks and Stones before March, 2014 as to the quality or timeliness of its work. The contract

interpretation issues raised by Hole’s only surfaced for the first time after Sticks and Stones stopped work. [ 73 ] It may well be that Sticks and Stones did not perform its obligations perfectly. That is not clear from the wording of the written agreement between the parties. It is clear that after Sticks and Stones ceased work and demanded full payment, Hole’s expressed dissatisfaction. [ 74 ] However, the chronology leads to the inference (which I am entitled to draw from the evidence) that the main difficulty was that Hole’s required Sticks and Stones’ services but was unable to pay for them.

Sticks and Stones started work and had to wait until nearly the end of January before it got paid most (but not all) of the payment due for October. [ 75 ] For some reason, Sticks and Stones elected to continue to provide services in the face of continued non-payment, although the cross-examinations indicate that while Sticks and Stones was concerned about non-payment and Hole’s gave continuous assurances of future payments. [ 76 ] Mr. Hole’s cross-examination demonstrates that from December 24, 2013 until at least February 25, 2014, he was telling Mr.

Winder that he could not make payments because he was still waiting for financing (p 91). Mr. Winder was stalled off in trying to meet with Mr.

Hole from February 25 until March 10 (transcript, pp 80-96). [ 77 ] It is always easy to apply hindsight, but it is abundantly clear that Hole’s was successful in stalling off Sticks and Stones and getting needed services at a time Hole’s was unable to pay for them. [ 78 ] It must be particularly galling for Sticks and Stones to realize after the fact that it had been stalled, and now faces significant delays in payment that can now only be addressed by pursuing costly and time consuming litigation. [ 79 ] And the stall continues.

I do not suggest that Hole’s is doing anything in this litigation that it is not entitled to. Hole’s is able to sit back and insist that Sticks and Stones prove its case. It is able to argue that it has a setoff on its

interpretation of the Agreement, and that there are issues that are not capable of being fairly resolved summarily. A trial is arguably necessary to determine any credibility issues between Mr. Winder and Mr. Hole. [ 80 ] It is significant that the first step in the Proper Cat analysis is that the Court is to presume that the best evidence from both sides is before the Court. [ 81 ] If the evidence put forward by Mr. Hole on behalf of Hole’s is the best evidence it has, their defence against Sticks and Stones appears slim if not hopeless. [ 82 ] Hole’s has, in my view, an extremely dubious claim for setoff.

It professes to be unhappy with the marketing plan that was presented to it. There is nothing in writing such as meeting minutes, correspondence or emails expressing any concerns or criticisms. Hole’s says that Sticks and Stones was in default of its obligations by not producing a web strategy. Sticks and Stones says it had prepared a web strategy but hadn’t yet presented it to Hole’s.

There is an unanswered allegation that Sticks and Stones was to have been assisting Hole’s in finding an in-house marketing professional. [ 83 ] Hole’s has deliberately not quantified the value of the services it acknowledges receiving and says that is for the trial process and likely expert evidence. That is likely because Hole’s knows that if it does so, Sticks and Stones would likely be given judgment for the acknowledged value of its services, leaving the balance of its claim and Hole’s counterclaim to be assessed at trial, although Hole’s

has not actually counterclaimed. [ 84 ] I do not know why Hole’s hints at the dispute resolution clause and Sticks and Stones’ failure to follow it, other than to stall off resolution of the matter. If it had any serious interest in following the Agreement and resolving the matter, it would have been very easy for Hole’s to push for mediation and to apply for a stay pending the required mediation. It has not done so. [ 85 ] In the circumstances of this case, I have two options.

If I think there is some merit to Hole’s defence, or that Sticks and Stones has not proven its claim to the required degree, I can dismiss the application and require the matter to go to trial. If I am satisfied that Sticks and Stones has proved its claim and there is no arguable merit to Hole’s defence and counterclaim, I can give

summary judgment to Sticks and Stones. Decision [ 86 ] I am satisfied that Sticks and Stones has proven on a balance of probabilities that it provided the services it believed it was required to provide until March 14. It provided services in the face of significant non-payment. As at the time they stopped working for Hole’s they had provided five and a half months’ services and had received a month’s worth of payment. [ 87 ] Hole’s has provided no credible explanation for why it did not complain about Sticks and Stones’ services until March, 2014.

I can only conclude that if it did indeed have legitimate concerns, it laid in the weeds, likely recognizing that any complaints or criticisms would stop the flow of work that it needed and was either unable or unwilling to pay for. [ 88 ] It is reminiscent of Wimpy asking for a hamburger today, promising to pay for it on Tuesday, not paying for it on Tuesday because he was short of funds, or the Tuesday following or the Tuesday after that, and when finally pressed for payment, saying he didn’t have to pay because he didn’t enjoy the hamburger. [ 89 ] In the face of any real or legitimate dissatisfaction, it would have been reasonable for Hole’s to have given notice of non- renewal or termination sometime before the end of December.

On the facts before me, there is no credibility to Hole’s after-the-fact criticisms of Sticks and Stones’ performance. The absence of any complaint and encouraging Sticks and Stones to continue to perform without any change in its method of performance strongly suggests a lack of good faith on the part of Hole’s. [ 90 ] Good faith performance is part of the law of contract since Bhasin v Hrynew , [2014] 3 SCR 494, 2014 SCC 71 .

It seems to me that Hole’s actions (or inactions) speak loudly as to the absence of merit in its defence, and its actions of impliedly promising future payment and requesting ongoing services with no intention to ultimately pay for them at the agreed rate demonstrates an absence of good faith. [ 91 ] It also seems to me that Bhasin no longer countenances a party laying in the weeds with concerns over performance while continuing to receive or accept goods or services from the supplier (if the law ever allowed such conduct). [ 92 ] While I am doubtful that Sticks and Stones performed their services with the same vigour as the months without payment wore on, there is nothing apart from the bald statements provided by Mr.

Hole in his affidavit opposing the application proving that Sticks and Stones did not provide sufficient services to earn its monthly retainer. [ 93 ] In the end I do not see sufficient merit to Hole’s expressed concerns to have the litigation continue. No specific exception was taken by Hole’s to the disbursements charged by Sticks and Stones.

I find that Sticks and Stones has proven its claim on a balance of probabilities, and applying the new case law following Hyrniuk , Hole’s has not satisfied the burden on it to show a meritorious defence on the merits. [ 94 ] In other words, I have determined that Hole’s has not demonstrated on the evidence before me that there is any issue of merit that genuinely requires a trial, and Sticks and Stones has satisfied me that its claim is sufficiently compelling, and the likelihood it will succeed is very high such that it should be determined summarily: 776826 Alberta Ltd v Ostrowercha at para 13 . [ 95 ] It is now necessary to demonstrate more than an argument.

To be successful, Hole’s has to firstly demonstrate some sort of uncertainty in the Agreement, get past the entire agreement clause in the Agreement (para 6.13), get past the parol evidence rule and then have their evidence believed over the evidence put forward by Sticks and Stones. [ 96 ] I am not convinced that there is any uncertainty in the Agreement, other than Hole’s arguement that the services were inadequately described in the Agreement and that they were to include preparation of a marketing plan, internet strategy and the hiring of a marketing professional presumably by December 31 or sooner.

A weak case is made weaker by the presence of a strong entire- agreement clause. [ 97 ] Following a Proper Cat analysis, I conclude:

a) There is sufficient evidence to determine the matter;

b) I do not draw a negative inference against Sticks and Stones for failing to cross-examine on Mr. Hole’s concerns that no marketing professional was recruited;

c) The necessary evidence is admissible; indeed the evidence I excluded was evidence proffered by Sticks and Stones;

d) There is no essential contradiction in the evidence, other than the parties’ after-the-fact

interpretations of Sticks and Stones’ obligations;

e) I have examined the evidence, being the affidavits and the cross-examinations on them; and

f) The plaintiff has proven all elements of its case, and the defendant has not put forward sufficient credible evidence to support its defence. [ 98 ] I thus allow the appeal and grant judgment to Sticks and Stones in the amount claimed. Interest and Costs [ 99 ] Sticks and Stones seeks interest at the amount specified in the Agreement: 2 percent per month. Although not specifically pled in Hole’s defence, I have some concerns about this claim in the context of s 4 of the Interest Act , RSC 1985, c I-15 .

I am prepared to award Sticks and Stones interest under the Judgment Interest Act , RSA 2000, c J-1, but if it wants interest at a higher level, I will reserve jurisdiction to deal with that issue. Written argument might be submitted within 30 days from the date of this decision, with response within 15days. [ 100 ] Similarly, Sticks and Stones seeks solicitor and client costs. They reference para 2.3 in the Agreement which speaks of “attorney fees, court costs or other costs incurred in collection of delinquent accounts” being payable.

I am uncertain if that meets the required standard for payment of solicitor and client costs. I am prepared to award Sticks and Stones costs on the appropriate column under

Schedule C of the Rules of Court, but if they want costs on a higher scale, they will have to address that issue before me as with interest. [ 101 ] I am mindful that limitation periods have not necessarily expired. If Hole’s is intent on pursuing its claim for damages as a result of deficient performance by Sticks and Stones, it may still have some ability to do so. Observations [ 102 ] This case illustrates tensions between efficiency and fairness. As a result of changes in the Alberta Rules of Court (with the addition of the Foundational Rules) and changes to the law of

summary judgment flowing from Hryniak , it can much less frequently be said that every litigant has a right to his or her day in court, if the day in court includes viva voce evidence or a trial. [ 103 ] Masters and trial courts are being urged to and are required to decide matters on a more

summary basis, which means that fewer and fewer civil matters are actually going to trial. That is appropriate from a societal point of view having regard to the delays inherent in civil litigation and the extraordinary costs of civil litigation. [ 104 ] There is also a tension regarding the standard of review from Masters’ decisions. Court of Appeal

interpretations of the new Rules of Court have perpetuated the old “correctness” standard of review, such that an appeal from a Master’s decision is essentially a do-over. Because of the relative ease in introducing new evidence, the initial application before the Master can be seen as a trial run in many cases. [ 105 ] Here, the statement of claim in this action was issued on April 25, 2014. It took until April 20, 2015 to prepare for and argue the application before the Master. It took another five and a half months to get this appeal heard. But for this decision granting

summary judgment, if I had dismissed the application and directed that the matter proceed to trial, it is unlikely that the trial could be heard before the beginning of 2017, at the earliest. [ 106 ] Much of the delay is institutional, in that there are too few Masters and too few judges to deal with the volume of litigation, such that special applications (which are necessary to deal with matters like

summary judgment) are booked months down the road. Trial wait times for straightforward civil matters are now a year or more from trial readiness. [ 107 ] Those are simply the realities facing civil litigants. The effectiveness of initiatives such as those mandated by Hryniuk are severely limited by scarce court resources. Heard on the 7 th day of October, 2015. Dated at the City of Edmonton, Alberta, this 7 th day of December, 2015. Robert A. Graesser J.C.Q.B.A.

Appearances: Sandeep K. Dhir and Jason J. Kully Field LLP for the Plaintiff/Appellant Kentigern A. Rown, Q.C. Ogilvie LLP for the Defendant/Respondent