Party Accused Of Fraud Says Trial Judge Did Not Review Evidence Appropriately
December 12, 2022
A dispute over the details of a contract or a party’s failure to comply with a contract might lead to litigation between two parties.
In some cases, a commercial dispute might be a matter of “he said, she said,” in which one party says something did or didn’t happen while another does. A recent decision from the Court of Appeal of Alberta shows how courts might approach such situations and how they will weigh the evidence or a lack of evidence. This case is also noteworthy because it allows us to understand that a denial to dismiss an action does not equal a ruling in favour of the plaintiff. In some cases, this one included, a full trial may be needed to fully understand and examine evidence from both parties.
Recycling company says they paid for recyclables that were not delivered
The parties involved in the dispute included a recycling corporation collecting used containers from bottle depots where individuals drop recyclables off. The recycling corporation was the respondent in the decision. When an individual drops a recyclable container off at a depot, they are given a refund on their deposit, which the respondent then refunds for the depot (which means the respondent is ultimately responsible for providing refunds given to people who return recyclables). The issue between the respondent and three appellant companies (“the appellants”) came about after the respondent alleged that the appellants and their employees conspired to submit false invoices to the respondent to receive refunds on deposits that were never actually distributed to individuals.
Specifically, the respondent said that the depots never dropped off any recyclables associated with the invoices in which the appellants requested repayment of customer deposits. The respondent pursued a claim against the appellants for damages arising from allegations of conspiracy, false misrepresentation, negligent misrepresentation, lack of consideration, and unjust enrichment.
The proceedings are under case management, and after reviewing the evidence available, the case management judge recommended that the issue warrant a trial. The appellants appealed this decision asking for summary dismissal.
Appellants argue case management judge should not have recommended a trial
The position of the appellants has three elements. The first is that the case management judge made an error in finding that the case against the appellants had merit, that there was no triable issue, and that there was no merit to the appellant’s case. The second was that the case management judge erred in ignoring competing evidence and gaps in the record. The final element of their appeal was that the case management judge erred by finding there was a triable issue as to whether or not the 15 loads in question were ever delivered to the respondent.
The court noted that most of the evidence presented to the case management judge was video footage of the family they ran. The respondents said their evidence showed that no deliveries were made during the relevant times that the appellants said they delivered shipments to the respondent. The video evidence was described as showing that 15 loads the respondents said were delivered over a period of 56 days and never arrived. The case management judge reviewed this as well as the report of a forensic accounting investigation.
During this review, the case management judge found genuine issues for trial, primarily because she was not satisfied with the balance of probabilities that the alleged fraud did not occur. She also wrote she was not convinced it was more probable than not that the loads were delivered. However, the case management judge was not able to conclude as to whether the deliveries were made and decided that they would best be left to a full trial.
Should there have been a summary dismissal?
The court started its analysis by laying out the legal test for summary dismissal as established by the Court of Appeal of Alberta in a 2018 decision. The decision states,
“The legal test for summary dismissal is subject to review for correctness. Where the summary dismissal application depends on assessment of the facts, the case management judge’s assessment of the facts, the application of the law to those facts, and the ultimate determination on whether summary resolution is appropriate are all entitled to deference…While there is a discretionary element to summary disposition, the discretion is not unbridled and it must be exercised in a manner consistent with the underlying principles, having regard to the reasonable expectations of and fairness to both of the parties.”
The appellants argued that they established they paid out deposits on those 15 missing shipments to individuals who returned recyclables and that their internal systems showed the deliveries were made. The court summarized its position: “Since the deliveries were made, no fraud can be established.”
However, the court pointed out that the case management judge acknowledged the shortcomings of the video evidence, writing in her decision that a video purporting to show no delivery does not automatically trump other evidence records. But again, the case management judge didn’t favour the respondent. Instead, she ruled that a trial would be needed to work through the evidence. Just because the case management judge did not dismiss the case as the appellant asked does not mean she ruled in favour of the respondents. The court agreed that the case management judge thoroughly reviewed the evidence and applied the law to the facts. As a result, the appeal was dismissed.
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