Executive Summary – Key Legal & Evidentiary Issues

• Repeated evidentiary deficiencies: The appellant failed to sufficiently supplement the record with new, detailed evidence after its first summary trial application was dismissed due to vague and unsupported affidavit material.

• Rule 9-7(16) discretion: Central issue involved the court’s discretion under Rule 9-7(16) to permit a second summary trial, requiring a material change addressing prior deficiencies.

• No requirement for respondent evidence: The appeal challenged the chambers judge’s ability to rule without a substantive response from the respondent, but the Court clarified no such obligation exists under the rule.

• Fresh evidence inadmissible: Appellant's attempt to introduce a draft letter as new evidence was denied for failing to meet the legal criteria for fresh evidence under the Palmer test.

• Complexity of the underlying dispute: The matter involved contested facts and contract interpretation, making it unsuitable for summary resolution, despite being framed as a debt claim.

• Proportionality and efficiency concerns: The chambers judge found no procedural efficiency or fairness advantage in allowing another summary trial, particularly given the long litigation history and significant claim amount (~$2.6 million).

Facts of the Case

This case arises from a construction dispute between Direct Horizontal Drilling Inc. (“Direct”) and North American Construction Management Ltd. (“North American”) concerning the construction of two natural gas pipelines—referred to as NPS 24 and NPS 20—under the Fraser River in British Columbia.

North American had been hired by Terasen Gas Inc. (now FortisBC Energy Inc.) and subcontracted Direct to perform horizontal drilling work. On July 25, 2010, an incident occurred on the NPS 24 line involving a disconnection of the drill head, which halted the completion of the project. Following this event, Direct ceased work on NPS 24 and moved on to NPS 20, while North American completed the NPS 24 pipeline.

Direct later sued North American for approximately $2.6 million in unpaid invoices related to both pipeline projects. North American counterclaimed for the costs of completing the NPS 24 line and raised arguments tied to another related contract governed under an Alberta action.

Direct initially applied for summary trial in 2017, asserting the matter was a straightforward debt claim. That application was dismissed in 2018 by Justice Marzari due to insufficient and unclear evidence, such as vague affidavits and invoices lacking proof that the services were rendered. Justice Marzari also ruled that the matter was not suitable for summary trial.

In 2024, Direct attempted to file a second summary trial application using largely the same materials along with a new affidavit. However, it did not seek leave to do so under Rule 9-7(16) of the Supreme Court Civil Rules, which is required when a summary trial has already been denied. North American objected, arguing that leave was necessary and that the matter remained unsuitable for summary determination. The leave application was subsequently heard and dismissed by Justice Shergill in the Supreme Court of British Columbia.

Arguments and Court’s Analysis

On appeal, Direct argued that the chambers judge erred by dismissing its leave application without considering the fact that North American had not filed new responding evidence. It also sought to introduce fresh evidence—a draft letter from North American to Terasen Gas—indicating the incident on NPS 24 was not caused by Direct’s fault. Direct claimed this letter contradicted North American’s position in litigation.

The Court of Appeal, in reasons authored by Madam Justice Fisher and unanimously concurred by two other justices, dismissed the appeal and upheld the chambers judge’s ruling. The Court emphasized the following:

• Rule 9-7(16) Leave Standard: An applicant seeking leave for a second summary trial must address the evidentiary deficiencies that caused the first application to fail. The Court found that Direct’s additional evidence (a new affidavit by a supervisory employee) failed to cure the prior gaps, particularly regarding what happened on the job site and whether the contractual obligations were met.

• No Need for Respondent Evidence: The Court rejected Direct’s claim that North American’s lack of response should weigh against it. The burden to justify leave under Rule 9-7(16) rests solely on the applicant, and there is no procedural requirement for the opposing party to file evidence in response.

• Fresh Evidence Denied: The draft letter Direct wanted to introduce as new evidence failed the Palmer test, which requires due diligence and materiality. The Court noted that Direct had been slow in litigating its claim and obtained the letter only after the leave application was denied. Moreover, the letter did not fundamentally change the evidentiary landscape or address the deficiencies previously identified.

• Nature of the Dispute: The Court found that the dispute was not a mere debt claim but a contract dispute requiring factual determinations, contract interpretation, and possibly credibility assessments—matters not suitable for summary trial without a more robust evidentiary record.

• Proportionality and Efficiency: With $2.6 million at stake and the litigation already ongoing since 2011, the Court agreed with the chambers judge that little efficiency would be gained from proceeding via summary trial. A conventional trial remained the more suitable path for resolving the matter.

Outcome

The British Columbia Court of Appeal dismissed Direct’s appeal, denied the admission of fresh evidence, and affirmed the chambers judge’s discretionary decision to refuse leave for a second summary trial under Rule 9-7(16). The Court held that the evidentiary and procedural deficiencies identified in the first summary trial had not been adequately addressed and that a conventional trial would better serve the interests of justice and efficiency.