This case arose out of a dispute about “knock for knock” or “no-fault” provisions in a contract between the parties that purported to exclude or limit liability of the Respondent (“Precision”) driller for the failure of the Appellant’s (“Yangarra”) well. A Master had granted Summary Judgment to Precision finding that Yangarra’s set-off Defence and Counterclaim were barred by the no-fault clause of the contract. The Master’s Decision was upheld on Appeal to a Justice of the Court of Queen’s Bench. Yangarra appealed to the Court of Appeal.

The Court noted that Rule 7.3 allows a party to apply for Summary Judgment when there is no defence to a claim, or part of it, and that “[t]here will be no genuine issue requiring a trial when the judge is able to reach a fair and just determination on the merits”. Yangarra argued that Precision’s conduct amounted to fraudulent misrepresentation and that the Court below neither identified nor applied the proper test for fraud. The Court noted and followed recent appellate authority with respect to evidentiary matters in a Summary Judgment Application:

… The onus is first on the defendant to bring forward evidence indicating an absence of merit. If that is done, the plaintiff must provide some evidence of "merit", which often involves demonstrating that there are difficult questions of fact or law that cannot fairly be resolved summarily. The plaintiff is not required, at this stage, to demonstrate that the action will succeed, or to show that there is merit on a balance of probabilities. The application for summary dismissal can successfully be resisted without proving the case to the normal civil standard.

The Court assessed the available evidence with respect to fraud, and considered whether the Court of Queen’s Bench applied the proper test for fraudulent misrepresentation. The Court of Appeal, Paperny J.A. dissenting, overturned the Court of Queen’s Bench Decision, and held that a Trial Judge would be in the best position to assess whether the evidence with respect to the allegations of fraud would “warrant the intervention of public policy”.