John Edward Frederick Gibson

A retired partner sought recovery of his equity and share of profits from a construction partnership pursuant to a June 2005 retirement agreement.

The agreement provided for payment between June 2005 and June 2008 according to a specified schedule.

The payments were not made as scheduled due to insufficient funds.

The partner commenced litigation in September 2012, over four years after the payment deadline.

The trial judge found the action time-barred under the Limitations Act, 2002, determining that the claim was discovered when payments were not received by June 2008.

The Court of Appeal upheld this decision, rejecting arguments that the limitation period had not commenced because the amount was disputed, profits could not be ascertained, or there had been forbearance or novation.

The plaintiffs, Walter Davies and CityGate (WD) Management Corp., brought an action against Davies Smith Developments Partnership for damages arising from an alleged breach of an agreement concerning equity payout and profit sharing.

The defendant argued the claim was statute-barred under the Limitations Act, 2002.

The court found that the plaintiffs had discovered their claim by July 2008, at the latest by September 2, 2010, and therefore, the action commenced on September 6, 2012, was beyond the two-year limitation period.

Consequently, the plaintiffs' claim was dismissed.

The defendant's counterclaim was also dismissed as no overpayment was proven.

The defendants moved for an order awarding costs after the plaintiff discontinued its action.

The court found that the plaintiff's action was commenced without justification, was speculative, frivolous, and vexatious, and made serious unsubstantiated allegations against both defendants, including breaches of contractual and fiduciary obligations.

The court applied the principles of costs law and factors under Rule 57.01(1) of the Rules of Civil Procedure, concluding that the plaintiff's conduct warranted a substantial indemnity award.

The motion for costs was granted, with specific amounts awarded to each defendant.