Court of Appeal for Ontario

Date: November 20, 2017 Docket: C63720

Judges: Cronk, Huscroft and Nordheimer JJ.A.

Between

Collins Barrow Toronto LLP Applicant (Respondent)

and

Augusta Industries Inc. Respondent (Appellant)

Counsel

Leo Klug, for the appellant

Elliot S. Birnboim and Bettina Xue Griffin, for the respondent

Heard and released orally: November 17, 2017

On appeal from: the judgment of Justice Jasmine Akbarali of the Superior Court of Justice, dated March 30, 2017.

Reasons for Decision

[1] Augusta Industries Inc. appeals from the judgment awarded in favour of Collins Barrow Toronto LLP on invoices delivered for services rendered as the auditors for Augusta Industries Inc. The appellant submits that the application judge ought to have converted the application into an action because the appellant alleged that the respondent had been negligent in the provision of its services. There is also a secondary argument that certain of the outstanding invoices are barred through expiration of the applicable two-year limitation period: Limitations Act, 2002, S.O. 2002, c. 24, Sched. B.

[2] The application judge concluded that it was open to her to determine the respondent's claim under r. 14.05(3)(d) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 on the basis that the claim arose from the determination of rights that depend on the interpretation of a contract. While we note that the formal Notice of Application refers to r. 14.05(3)(h), that did not preclude the application judge from relying on the sub-rule that she did to determine the matter. In both subject years, the respondent had been engaged by the appellant pursuant to terms of written engagement letters. We see no error in the application judge's conclusion in that regard.

[3] The application judge also concluded that the reasons advanced by the appellant to convert the application into an action were insufficient. In particular, she noted that the appellant had not adduced any expert evidence supporting its allegation of negligence; much of the appellant's evidence was hearsay (or double hearsay); and that there was no reliable evidence that the appellant had suffered any damages. In light of these deficiencies, the application judge concluded that there was no reason to postpone the determination whether the appellant was liable to the respondent on the unpaid invoices. Again, we see no error in the application judge's ruling on this issue.

[4] Finally, in terms of the limitation period, the application was launched on April 14, 2016. The application judge concluded that the first two invoices in dispute were the subject of an express agreement in the January 2014 engagement letter that they would be "settled" by April 15, 2014. As a consequence, claims on those two invoices were not barred by the two-year limitation period. This interpretation was both available and reasonable on the language of the engagement letter. The application judge's interpretation of the engagement letter is owed deference by this court.

[5] The other two invoices in dispute are dated April 9, 2014 and April 11, 2014. The application judge pointed out that the engagement letters expressly provided that invoices only became delinquent once 45 days had expired from their delivery. The application judge concluded that the limitation period for these two invoices did not commence until 45 days after they were delivered. We agree with her conclusion in that regard. It is consistent with the express wording of the engagement letters and also with existing case law that provides that the limitation period on an invoice does not begin to run until a reasonable period of time has expired for payment of the invoice: see, for example, G.J. White Construction Ltd. v. Palermo, [1999] O.J. No. 5563 (S.C.J.).

[6] In our view, this conclusion is not inconsistent with the recent decision in Pellerin Savitz LLP v. Serge Guindon, 2017 SCC 29, in which Gascon J. makes it very clear that the conclusion on the commencement of a limitations period is highly fact-specific and that a judge's conclusion in that regard is entitled to "great deference" (para. 11). In addition, we note that Pellerin was concerned with the interpretation of the Civil Code of Quebec.

[7] We also agree with the application judge that determining the issue of the appellant's liability for the unpaid invoices did not prevent the appellant from commencing a claim in negligence. Indeed, the appellant advises that it has now done precisely that. In the interests of expediency, there was no reason to delay the determination of liability on the unpaid invoices pending any determination of the negligence claim.

[8] Accordingly, the appeal is dismissed. The respondent is entitled to its costs of the appeal fixed in the amount of $5,000, inclusive of disbursements and HST.

"E.A. Cronk J.A."

"Grant Huscroft J.A."

"I.V.B. Nordheimer J.A."