Noton Enterprises Limited v. Philpott's Realty Co. Limited

IN THE COURT OF APPEAL OF NEWFOUNDLAND AND LABRADOR Citation: Noton Enterprises Limited v. Philpott’s Realty Co. Limited, 2022 NLCA 38 Date: June 17, 2022 Docket Number: 202001H0027 BETWEEN: NOTON ENTERPRISES LIMITED APPELLANT AND: PHILPOTT’S REALTY CO. LIMITED RESPONDENT Coram: Goodridge, Butler and Knickle JJ.A. Court Appealed From: Supreme Court of Newfoundland and Labrador, General Division 201104G0322 Appeal Heard: March 15, 2022 Judgment Rendered: June 17, 2022 Reasons for Judgment by: Butler J.A. Concurred in by: Goodridge and Knickle JJ.A. Counsel for the Appellant: Paul D. Dicks Q.C. and Megan S. Reynolds Counsel for the Respondent: Kevin F. Stamp Q.C. Page 2 Authorities Cited: CASES CITED: Curtis v. Smith’s Home Centre Ltd., 2009 NLCA 14, 286 Nfld. & P.E.I.R. 113; Fillatre v. Fillatre, 2016 NLCA 69, 1 C.A.N.L.R. 314; Langor v. Spurrell (1997), 157 Nfld. & P.E.I.R. 301 (NFCA); Szeto v. Dwyer et al., 2010 NLCA 36, 297 Nfld. & P.E.I.R. 311; Buckle v. Newfoundland and Labrador Board of Commissioners of Public Utilities, 2022 NLCA 28; Brook Construction (2007) Inc. v. North Atlantic Cement and Construction Ltd., 2020 NLCA 42; Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235; Marco Ltd. v Newfoundland Processing Ltd. et al. (1995), 130 Nfld. & P.E.I.R 308 (Nfld. S.C. (T.D.)); Marco Ltd. v. Newfoundland Processing Ltd. et al. (1995), 130 Nfld. & P.E.I.R. 317 (Nfld. S.C. (T.D.)); Dalley v. Northern Arm (Town), 2016 NLTD(G) 68, 381 Nfld. & P.E.I.R. 286; Community Mental Health Initiative Inc. v. Summit Lounge Ltd. 2018 NLCA 42, 3 C.A.N.L.R. 150; Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87; CHC Helikopter Services AS et al. v. Cougar Helicopters Inc. et al. (2002), (filed: August 27, 2002, Docket No. 2001 01T No. 2710) (NLSC (TD)). STATUTES CONSIDERED: Bankruptcy and Insolvency Act, RSC 1985, c. B-3; Registration of Deeds Act, 2009, SNL 2009, c. R-10.01, section 37; Registration of Deeds Act, R.S.N. 1990, c. R-10, section 10. RULES CONSIDERED: Rules of the Supreme Court, 1986, SNL 1986, c. 42, Schedule D, rule 17A; Court of Appeal Rules, NLR 38/16, rule 8(2)(b). BUTLER J.A.: INTRODUCTION [1] Noton Enterprises Limited (“Noton”) applied for summary trial pursuant to rule 17A of the Rules of the Supreme Court, 1986, SNL 1986, c. 42, Schedule D, on the discrete issue of ownership of Lot 83, Humber Valley Resort, Pasadena, Newfoundland and Labrador. [2] The application was dismissed by the judge on the basis that there were genuine issues for which a conventional trial was required. (Decision of Applications Judge, Appeal Book Volume 1, Tab 5, page 67). [3] Noton appeals alleging that the judge erred in law and/or fact in concluding that the summary trial procedure was inappropriate. Page 3 BACKGROUND [4] While Noton described the question it had proposed to be addressed at summary trial as “simple”, it arose from a complicated set of circumstances and events occurring over the 11 year period between March 1999 and April 2010. [5] Humber Valley Resort Corporation (“HVRC”) was incorporated on March 22, 1999. Subsequent to its incorporation, HVRC acquired freehold and leasehold interests in large parcels of land on Deer Lake in Western Newfoundland in order to develop a four season resort (the “Resort”). [6] Rex Philpott was involved in the Resort’s development. He owned Philpott’s Realty Co. Limited (“PRL”); he was a director of HVRC (and remained so until 2006); he was also a director of Humber Valley Construction Limited (“HVCL”) and Canex Development Corporation Limited (“Canex”). Canex owned all the common shares issued in HVRC, and PRL owned 50% of the common shares in Canex. [7] In 2004 a chalet was built on Lot 83 of the Resort to Rex Philpott’s specifications. PRL asserts that it acquired the lot and chalet from HVRC on December 31, 2005 at a purchase price of $1,300,000.00. [8] PRL asserts that the consideration was initially by promissory note and that the debt secured by the promissory note was satisfied by transactions associated with a corporate merger. Mr. Philpott’s Affidavit described PRL’s purchase of Lot 83 as arising from a “complicated restructuring” involving “highly complex details of the re-organization, restructuring and merger and acquisition arrangements …advised and guided by skilled specialist advisors in the fields of mergers and acquisitions, corporate accounting,…” (Appeal Book of the Appellant, Volume 8, Tab 11, at paras. 4-8). [9] The deed of conveyance to PRL was not registered until April 12, 2010. [10] The merger described in Mr. Philpott’s Affidavit resulted in the creation of a new corporation (“Newfound NV”) incorporated on August 1, 2006 under the laws of the Netherlands. [11] Through a series of transactions that are set out in detail in the Statement of Claim, Newfound NV became the sole shareholder of HVRC. Page 4 [12] On July 3, 2008, Newfound NV entered into a finance agreement with Equity Trust Trustee & Agency Services B.V., as trustee for the benefit of Jayne McGivern and Agilo Limited, acting as delegate investment manager for Agilo Master Fund Limited (the “Secured Parties”), under which the Secured Parties agreed to advance up to £15,000,000.00 of secured loans to Newfound NV (the “Secured Loans”). [13] Various subsidiaries of Newfound NV, including HVRC, agreed to be guarantors for the secured loans on July 3, 2008. The guarantors, including HVRC, executed various security documents, including a Collateral First Realty Mortgage, wherein the Secured Parties acquired a first, fixed ranking security and charge over all of the personal and real property assets in the various subsidiaries, including HVRC. This Collateral Mortgage secured various properties described in the attached Schedules. PRL asserts that Lot 83 was within the parcel described on Schedule A-2 and that the only security the Secured Parties took on this portion was the roadways. The relevant portion of the Schedule states: This Collateral Mortgage shall apply in respect of: … 2. All roadways contained within those pieces or parcels of land described in Schedules “A-2” and “A-3” which pieces or parcels comprise part of Humber Valley Resort, in the Province of Newfoundland and Labrador, but not including any other pieces or parcels of land within that parcel … (Appeal Book, Volume 5, Tab 5, page 760) [14] On December 5, 2008, HVRC and related entities filed an Assignment in Bankruptcy pursuant to the Bankruptcy and Insolvency Act, RSC 1985, c. B-3. On the same day, Ernst & Young Inc. (“Ernst & Young”) was appointed bankruptcy trustee. The parties agree that the Secured Parties authorized Ernst & Young to sell the assets secured by the above referenced collateral mortgage. [15] 61839 Newfoundland & Labrador Limited (“61839”) was incorporated on February 11, 2010 for the purpose of purchasing the Resort’s assets. The shareholders of 61839 are Noton and Oke Consultants Ltd. One of the directors is Kathleen Watton. At all material times, Graham Watton, Q.C. was counsel to both 61839 and Noton. Page 5 [16] Between December 23, 2009 and March 11, 2010, Graham Watton on behalf of 61839 negotiated for the purchase of the assets of HVRC and related entities from Ernst & Young and the Secured Parties. [17] The Indenture that was executed by Ernst & Young as Grantor and 61839 as Grantee on March 11, 2010 contained caveats to Ernst & Young’s conveyance of the properties described in Schedule “A”. The transfer was stated to be “SUBJECT NEVERTHELESS to the reservations, charges and provisos and conditions against the aforementioned land whether registered or otherwise.” The deed provided that Ernst &Young had not encumbered the land but “makes no other covenant … as to title … of the Property …”. Schedule “A” to the Indenture specified that Ernst & Young was conveying “any and all interest the Grantor may have in and to” the various properties listed. Specifically, paragraph 8 referenced “Any and all interest the Grantor may have in and to” various listed lots which included Lot 83. However a subsequent clause on Schedule “A” stated “SAVING AND EXCEPTING therefrom any conveyances, lots, realty interests, transfers or assignments by … Humber Valley Resort Corporation … prior to the date of this Indenture.” (Appeal Book Vol. 6, Tab 6, pages 986-992) [18] On March 11, 2010, Graham Watton on behalf of 61839 received the deed of conveyance and other executed documents. On the same day, for the consideration of $1,825,000.00, Noton purchased from 61839 a large portion of the lands that 61839 alleges it had obtained under the Trustee’s deed. The deed from 61839 to Noton referenced Lot 83. [19] Noton did not register the deed. [20] At the time of the 2010 transactions, Noton asserts that neither it nor 61839 was aware that PRL was in possession of an unregistered deed for Lot 83 from HVRC dated December 31, 2005. Noton asserts further that both 61839 and Noton believed that Lot 83 was a vacant lot which was included in the assets secured by the Secured Parties and conveyed by Ernst & Young to 61839. [21] Upon discovering on or about April 2 – 4, 2010 that a chalet had been constructed on Lot 83, Graham Watton, on behalf of Noton, wrote Rex Philpott, director of PRL on April 9, 2010 requesting that PRL deliver up possession of Lot 83. Page 6 [22] Upon receipt of this correspondence, PRL immediately proceeded to register its deed of conveyance from HVRC for Lot 83 on April 12, 2010, at 2 p.m. as Number 385111. [23] The deed of conveyance from 61839 to Noton (also for Lot 83) was registered at 2:10 p.m., April 12, 2010, as number 385119 only eight instruments behind PRL’s deed. PROCEDURAL HISTORY [24] On December 23, 2011, Noton issued its Statement of Claim seeking a declaration that it was the owner of Lot 83. [25] PRL filed its defence in February 2012. [26] More than five and a half years later, on August 2, 2017, Noton filed a Summary Trial Application supported by the Affidavits of Kathleen and Graham Watton with attached exhibits. Noton asserted that there was no genuine issue for trial raised by PRL which would defeat Noton’s claim that it was a bona fide purchaser for value and the lawful owner of Lot 83 as of March 11, 2010. [27] On September 28, 2017 Rex Philpott, on behalf of PRL, filed an Affidavit with attached exhibits in support of PRL’s challenge to Noton’s claim to proceed by way of Summary Trial. [28] The matter was heard on September 25, 26 and 27, 2018, and January 8 and 9, 2019. On February 28, 2020, the judge dismissed Noton’s application on the basis that there were genuine issues requiring a conventional trial. Specifically the judge determined that the matter could only be adjudicated fairly to both parties by a full trial which allows for direct examination and cross examination of the main players to test their credibility and that accusations by both parties that the other engaged in fraudulent, improper, wrongful, illegal or unlawful acts were not appropriate for consideration and determination in the summary trial process (Decision of Applications Judge, Appeal Book, Volume 1, Tab 5, pages 67-68.). POSITIONS OF THE PARTIES [29] I will state below Noton’s principal claims and PRL’s respective response to each. [30] Noton claimed that, amongst other things: Page 7  It was a bona fide purchaser for value of Lot 83 without notice of PRL’s deed.  Pursuant to section 37 of the Registration of Deeds Act, 2009 SNL 2009, c. R-10.01, the PRL deed was neither “proved” nor “registered” and was “fraudulent and void … as against a subsequent purchaser…”.  Noton was entitled to the benefit of the longstanding principle of sheltering because 61839 had deeds from the Secured Parties and Ernst & Young (who had priority under the registry laws over PRL’s unregistered deed.)  PRL had not paid any consideration for Lot 83 at the time it obtained the deed dated December 31, 2005. The deed was back-dated and PRL’s presentation of a false statement disentitled it to equitable relief.  Lot 83 was referenced as one of the lots in Schedule ‘A’ to the draft deed of conveyance sent to Graham Watton on February 5, 2010. Noton admits that Mr. Watton requested additional assets be added to Schedule ‘A’ but asserts that this request did not include Lot 83. [31] PRL however claimed that, amongst other things:  Noton had not proven it was a bona fide purchaser for value without notice of Lot 83 because had it (or 61839) done due diligence in the examination of HVRC’s business records (of which it had custody), or the properties themselves, it would have been clear that Lot 83 was transferred to and occupied by Rex Philpott long before 2010.  Noton could not avail of section 37 of the Registration of Deeds Act because Noton did not have an actual interest in Lot 83 when it registered the deed.  Noton could not avail of the doctrine of sheltering for several reasons. The Secured Parties could only assign property upon which they had a charge and Lot 83 was not part of their security; Lot 83 had been sold by HVRC prior to its bankruptcy and the Trustee could only sell assets owned by HVRC at the date of bankruptcy; further, the caveats and exclusions in the Trustee deed would exclude Lot 83.  PRL was a prior purchaser for value of Lot 83 and had established through corporate records that the initial consideration was by promissory Page 8 note which had been satisfied by transactions associated with the corporate merger.  There was wrongdoing in the 2010 transactions. PRL relied upon an email from Ernst & Young dated October 4, 2010 advising that at the time of closing of the transaction between Ernst & Young and 61839, 61839 had requested that Lot 83 be included in the Trustee’s deed, a request to which Ernst & Young took no issue because “the purchaser was aware [Ernst & Young] offered no representation as to what, if any, interest [Ernst & Young] possessed”. ISSUES [32] The following issues will be addressed in this appeal. 1. Was the appeal filed within the time period specified? 2. What is the standard of review? 3. Did the judge err in dismissing the rule 17A Application? ANALYSIS Issue 1 – Was the appeal filed within the time period specified? [33] Rule 8(2)(b) of the Court of Appeal Rules, NLR 38/16, applies and states: 8. (2) A notice of appeal shall be filed with the Court … (b) in an uncompleted matter, within 10 days after the order appealed from has been filed in the court appealed from. [34] In Curtis v. Smith’s Home Centre Ltd., 2009 NLCA 14, 286 Nfld. & P.E.I.R. 113, this Court addressed the time limits for filing a notice of appeal from judgment on a summary trial. In that case, the judge had determined that the matter could be disposed of by summary trial; the summary trial was held and the judge dismissed the plaintiff’s action. On appeal, this Court held that “once the judge makes that determination, and acts on it, the interlocutory nature of the proceeding comes to an end” (para. 30); “There is no longer a proceeding pending in the Trial Division as between the parties in respect of those issues… [and] … an order, granting judgment after summary trial, cannot be said to be an order in an interlocutory proceeding ...” (para. 31). Page 9 [35] Unlike the facts in Curtis, in the within case, the judge determined that a summary trial was inappropriate. As a result, there remains “a proceeding pending in the Trial Division as between the parties in respect of those issues” (Curtis, at para. 31). This appeal is therefore an “uncompleted matter” requiring a notice of appeal “be filed with the Court … within 10 days after the order appealed from has been filed in the court appealed from.” (Court of Appeal Rules, rule 8(2)(b)). [36] The order in this case, while dated February 28th, 2020 was not filed with the Trial Division until July 19, 2021; the Notice of Appeal however was filed in this Court on March 24th, 2020 and it is therefore compliant with rule 8(2)(b). [37] PRL argues however that “the delay in the filing of the order was without excuse, as a result of the Appellant’s lack of action, and is against [the] spirit of the Rules of the Supreme Court, 1986”. PRL proposes therefore that “the appropriate timeline for determination under the Court of Appeal Rules begins at the rendering of the oral decision of Furey J. on February 28, 2020, or in the alternative on March 5, 2020 when [Noton was] provided with the proposed order that was subsequently filed” (Respondent’s Factum, at para. 31). [38] I do not find PRL’s submission on this issue compelling. First, rule 8(2)(b) does not speak to alternative commencement dates for the filing of a notice of appeal. Secondly, PRL had options available to it relative to Noton’s delay in filing the order in the court below (including an application to settle the form of the order) which it did not pursue. Further, PRL acknowledged that it was aware as of March 19, 2020 that Noton intended to file a notice of appeal (Respondent’s Factum, at para. 25). It follows that there would be no prejudice to PRL. [39] I would therefore dismiss Noton’s request for an order that the appeal is out of time and I would proceed to address the appeal on its merits. Issue 2 – What is the Standard of Review? [40] Noton’s appeal asserts that the judge erred in law and/or fact on numerous grounds related to his conclusion that it was inappropriate to proceed to summary trial. [41] This Court has addressed the standard of review on an appeal from a discretionary order on many occasions. In Fillatre v. Fillatre, 2016 NLCA 69, 1 C.A.N.L.R. 314, citing Langor v. Spurrell (1997), 157 Nfld. & P.E.I.R. 301 Page 10 (NFCA) at para. 32 and Szeto v. Dwyer et al., 2010 NLCA 36, 297 Nfld. & P.E.I.R. 311, at paras. 25-26, this Court determined that: [16] … Appeals of discretionary decisions can only succeed if the Judge “exceeded his or her jurisdiction, failed to apply or misapplied an applicable principle, made a palpable and overriding error in his or her appreciation of the facts, or the failure (of an appellate court) to interfere would cause a manifest injustice ... . [42] More recently see Buckle v. Newfoundland and Labrador Board of Commissioners of Public Utilities, 2022 NLCA 28, at para. 41. [43] This applies to the exercise of discretion at what has become known as the “threshold question stage” of an application under rule 17A. See Brook Construction (2007) Inc. v. North Atlantic Cement and Construction Ltd., 2020 NLCA 42, at para. 101. [44] In the within case there is no assertion of either an exercise of discretion beyond jurisdiction or a manifest injustice. [45] The standard of review to the issues raised on this appeal from the judge’s discretionary order would be correctness where the assertion is an error of law or principle and would be palpable and overriding error where the issue involves an alleged failure to appreciate factual matters (Buckle, at para. 43). The latter category would include questions and mixed fact and law unless an extricable error of law is identified (Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235, at paras. 34-37). Issue 3 – Did the Judge err in dismissing the rule 17A application? [46] In making their submissions to the judge, counsel agreed that the principles that should guide the court were stated in Marco Ltd. v Newfoundland Processing Ltd. et al. (1995), 130 Nfld. & P.E.I.R 308 (Nfld. S.C. (T.D.)), [Marco No. 1], Marco Ltd. v. Newfoundland Processing Ltd. et al. (1995), 130 Nfld. & P.E.I.R. 317 (Nfld. S.C. (T.D.)), [Marco No. 2], and Dalley v. Northern Arm (Town), 2016 NLTD(G) 68, 381 Nfld. & P.E.I.R. 286. The judge relied upon these decisions in his analysis. [47] The judge’s decision was given orally on February 28, 2020 prior to this Court’s decision in Brook Construction on December 11, 2020. In Brook Construction this Court also endorsed Marco No. 1, Marco No. 2 and Dalley. In addition the Court clarified the guiding principles for a Summary Trial application and provided a “suggested Decision Tree” aimed to assist judges with the Page 11 summary trial process (see paras. 34-35, 45, 147, and Schedule). While the judge did not have the benefit of the clarification provided in Brook Construction, he was nevertheless guided by the appropriate jurisprudence and the principles expressed therein. The Threshold Test [48] Both the majority and dissent in Brook Construction endorsed the suggested Decision Tree (paras. 45 and 147). [49] There are two threshold questions to be answered on a summary trial application. The first is: Has [the] applicant complied with the formal requirements of rule 17A and put forward an evidentiary basis for his or her position which, if unanswered will potentially establish all or part of the claim? (Brook Construction, Schedule) [50] The judge was aware that this was the first question he must address. While he did not make a clear declaration, it can be inferred from what he did say that he was satisfied that Noton had put forward the appropriate evidentiary basis for its assertion that Noton was entitled to a declaration of ownership to Lot 83. [51] The judge therefore appropriately moved to the second threshold question to which the bulk of his reasoning relates: Is there any apparent reason (other than considerations that can be properly dealt with under rule 17A.03(2)) evident at this stage making it inappropriate to deal with some or all of the issues by Summary Trial? (Brook Construction, Schedule) [52] Some additional comments from Brook Construction inform the exercise of discretion at the threshold stage of a summary trial application. This Court identified that: [91] The purpose of applying a threshold test to an application for summary trial is to weed out at a preliminary stage those cases which, because of the way in which the application has been made, or the nature and complexity of the case, in terms of issues or parties, or its timing, it is clear that the purpose of the rule will not be met by allowing the application to proceed. … Page 12 [96] At the threshold question stage, the focus is on the more general question of whether the summary trial, as a process, is appropriate to be invoked at all. Thus, for example, it might be suitable to have a summary trial for one discrete issue but the presence of a substantial number of other interconnected issues that would likely not be capable of being resolved other than by a conventional trial, might nevertheless lead to the conclusion that the summary trial process would not result in resolution of enough of the outstanding issues to make it efficacious to invoke the summary trial process at all, or, as mentioned in Hryniak, it might “run the risk of duplicative proceedings or inconsistent findings of fact” (para. 60). The Judge’s Decision [53] The judge’s oral decision referenced the factual matrix and relevant context. He noted the lengthy procedural history and that the Application had consumed five hearing days. He summarized the facts on which Noton relied for its assertion that it had met the onus which lay upon it on the first threshold question. The judge recognized that if the answer to the first question was ‘yes’, the onus would then shift to PRL to establish that there was a genuine issue requiring a conventional trial which would make it inappropriate to deal with the issues by summary trial. [54] In Marco No. 2 at para. 76, the court identified several principles applicable to an application for summary trial. Principle 9 stated: There will be a “genuine issue for trial” if the issue in question is not spurious and the issue relates to a material fact or point of law that is necessary to be decided to resolve the ultimate controversy between the parties… . [55] Notwithstanding the discrete and assertedly “simple” question posed, at pages 6-12 of his Decision, the judge identified numerous issues relating to a material fact or point of law that would need to be addressed in the process of determining who owned Lot 83. Neither was characterized as spurious. These included:  Whether Noton was “entitled to the benefit of the legal and equitable registered title vested in the numbered company, 61839, on March 11, 2010” which would require consideration of the doctrine of sheltering as applied in Gray v. Coughlin, (1891) 18 S.C.R. 553.  Whether the operation of the Registration of Deeds Act, 2009, required PRL to establish that Noton had “nothing short of actual notice, such notice as makes it a fraud on the part of a purchaser to insist on the registry laws …” in order to support PRL’s position that it owned Lot 83. Page 13  The effect of bankruptcy law on the conveyance by Ernst & Young.  The effect of the purpose (to prevent fraud and secret conveyances) of section 10 of the Registry of Deeds Act, R.S.N. 1990, c. R-10 (currently section 37 Registration of Deeds Act, 2009) on PRL’s failure to register its December 2005 deed until PRL learned from Mr. Watton that 61839 had purchased the Resort assets and Noton had purchased some of them from 61839.  Whether it was possible to give a declaration of title outside of a Quieting of Titles application.  Interpretation of the deed from Ernst & Young and whether title to Lot 83 was included given the caveat included in Schedule A thereto which exempted property previously conveyed by HVRC.  Whether the assignment from the Secured Parties “was executed in accordance with the applicable legislation in this province” because it was, on its face executed by a different entity listed as making the assignment.  Whether, given that Kathleen Watton was the directing mind of Noton which acquired the property from 61839, the directing mind of 61839 who acquired it from the Secured Parties, and the holder of all records of HVRC, Noton could claim to be a bona fide purchaser for value without notice.  The effect of a conveyance of “any and all interests the vendor has in and to the pieces or parcels of land” being the language of the deed from 61839 to Noton. [56] Consistent with the purpose of the threshold stage and the general question “of whether the summary trial, as a process, is appropriate to be invoked at all” (Brook Construction, at paras. 91, 96), the judge appropriately characterized the case as “challenging and involved” (21). [57] Making appropriate reference to the nature of the litigation, the multiple questions to be addressed in the determination of who owned Lot 83 and the specific credibility challenges identified by the parties that would have a bearing on the questions of fact or points of law, the judge concluded that PRL had “raised some serious and legitimate questions” (21). Consistent with the Page 14 divergent positions of the parties summarized earlier and their respective claims of wrongdoing, the judge found that accusations of fraud were not “appropriate for consideration and determination in the summary trial process”. The judge concluded that he was “convinced… [the] matter [could] only be adjudicated fairly to both parties by a full trial which allows for direct examination and cross-examination of the main players to test their credibility, and it would also allow for a full testing of the intention and effect of the various deeds regarding Lot 83.” [58] In answer to what this Court endorsed in Brook Construction as the second threshold question in the exercise of his discretion, the judge’s decision clearly identified reasons “evident at this stage making it inappropriate to deal with some or all of the issues by Summary Trial” (Brook Construction, Schedule). [59] In Community Mental Health Initiative Inc. v. Summit Lounge Ltd. 2018 NLCA 42, 3 C.A.N.L.R. 150, this Court addressed the criteria for the grant of summary judgment motions as restated in Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, and applied them in the context of an appeal from a summary trial application (paras. 10-12). I note in particular paragraphs 49 and 50 of Hryniak: [49] There will be no genuine issue requiring a trial when the judge is able to reach a fair and just determination on the merits on a motion for summary judgment. This will be the case when the process (1) allows the judge to make the necessary findings of fact, (2) allows the judge to apply the law to the facts, and (3) is a proportionate, more expeditious and less expensive means to achieve a just result. [50] These principles are interconnected and all speak to whether summary judgment will provide a fair and just adjudication. When a summary judgment motion allows the judge to find the necessary facts and resolve the dispute, proceeding to trial would generally not be proportionate, timely or cost effective. Similarly, a process that does not give a judge confidence in her conclusions can never be the proportionate way to resolve a dispute. It bears reiterating that the standard for fairness is not whether the procedure is as exhaustive as a trial, but whether it gives the judge confidence that she can find the necessary facts and apply the relevant legal principles so as to resolve the dispute. [60] The judge’s conclusion is consistent with this guidance from Hryniak. The judge exercised his discretion judicially and it is entitled to deference. It is well established in what the judge said that the proposed summary trial process did not give the judge confidence that he could “find the necessary facts and Page 15 apply the relevant legal principles so as to resolve the dispute” (Hryniak, at para. 50). [61] In the unreported decision of Orsborn, C.J. in CHC Helikopter Services AS et al. v. Cougar Helicopters Inc. et al. (2002), (filed: August 27, 2002 Docket No. 2001 01T No. 2710) (NLSC (TD)), a summary trial application was rejected on a similar basis. Orsborn C.J. referred to the importance of having the full factual matrix and relevant context: [65] …I do not feel sufficiently comfortable in interpreting the Dry Lease and the HMDC contract in the context only of what has been put before the court…. … [69] …[I]n this particular set of complicated and complex circumstances, the ‘factual matrix’ surrounding the negotiation and formation – and indeed the subsequent operation and administration – of the Dry Lease and related commercial agreements between Cougar and the Norwegian companies provides an essential context and backdrop to the questions… … [71] …dealing specifically with the bare wording of the Dry Lease provisions relating to the second helicopter would run the risk of ignoring relevant context. This is a risk I am not prepared to take. [62] Despite a comprehensive and lengthy record, five hearing days during which several witnesses were cross examined and submissions were received, the judge was left with unanswered questions arising from the context. Similar to CHC Helikopter Services, the judge was not comfortable proceeding on the basis of what had been placed before him nor was he prepared to take the risk of ignoring relevant context that he concluded would only come from a conventional trial. [63] It has not been established that the judge made either a palpable and overriding error in his appreciation of the facts or failed to apply or misapplied the legal principles applicable to the threshold stage of the rule 17A application in concluding as he did, that the matter was inappropriate for Summary Trial. [64] I would therefore dismiss the appeal. Page 16 COSTS [65] The judge concluded that the application was not unreasonable and ordered costs in the cause. His conclusion is supported by rule 17A.05(2) of the Rules of the Supreme Court, 1986, which states that where: … the applying party obtains no relief, the Court shall fix the opposite party’s costs of the application on a solicitor and client basis … unless the Court is satisfied that the bringing of the application, although unsuccessful, was nevertheless reasonable … . [66] No error is reflected in the judge’s cost award. [67] On this appeal, Noton has been unsuccessful and costs would normally follow the cause. However, as addressed earlier herein, this is an uncompleted matter. In these circumstances I would also order costs in the cause. _____________________________ G. D. Butler J.A. I concur: _____________________________ W. H. Goodridge J.A. I concur: _____________________________ F. J. Knickle J.A.