COURT FILE NO.: CV-12-443718 DATE: 20181005
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
CRAIG HURST Plaintiff – and – JAMES HANCOCK, DARWIN PRODUCTIONS INC. and TRADEPOINT 360 INC. Defendants
Counsel: Manjit Singh, for the Plaintiff Katrina Marciniak, for the Defendants James Hancock and Darwin Productions Inc. Tim Gleason, for the Intervenors, Graham Partners LLP, Graham, Wilson & Green and HGR Graham Partners LLP
HEARD: July 25, 2018
Cavanagh J.
REASONS FOR JUDGMENT
Introduction
[1] The plaintiff Craig Hurst commenced an action for damages and other relief against his former employer Darwin Productions Inc. (“Darwin”) and its principal James Hancock (“Hancock”). The plaintiff also sued Tradepoint 360 Inc. (“Tradepoint”).
[2] The defendants move for summary judgment dismissing the action on the ground that the plaintiff’s claims were commenced outside of the two-year limitation period provided in the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B. In the alternative, the defendants seek partial summary judgment with respect to some of the plaintiff’s claims as having been commenced outside of the two-year limitation period.
[3] The plaintiff’s former lawyers, Graham Partners LLP, Graham Wilson & Green and HGR Graham Partners LLP intervened in the action and filed a factum and made submissions on this motion in support of the position taken by the plaintiff. I address the submissions of the intervenors as part of my reasons addressing the plaintiff’s submissions.
[4] For the following reasons, I grant the defendants’ motion and dismiss the plaintiff’s action as statute barred.
Background Facts
[5] The plaintiff was employed by Darwin from June 2007 until December 2009. Darwin is a technology company that specialized in implementing software applications for commercial organizations. Specifically, Darwin sold certain proprietary software (the “Intellectual Property”). Hancock is a principal of Darwin and he was the developer of the Intellectual Property.
[6] The employment agreement between Darwin and the plaintiff was made orally and there was no written contract of employment.
[7] With respect to the terms of his employment contract, the plaintiff’s evidence is that in June 2007 he accepted a full-time position with Darwin for $15,000 per month in wages and that it was agreed that $10,000 per month in wages were to be deferred for a period of 24 months for stock in Darwin equal to a 12% equity interest. The plaintiff’s evidence is that after the 24 month period ended, he continued to work for Darwin for the agreed-upon $15,000 per month in wages.
[8] The plaintiff’s evidence is that Darwin failed to honour its employment contract with him and that during and after the 24 month period of deferred wages, Darwin failed to pay him the agreed-upon salary ($5,000 per month during the 24 month period and $15,000 per month thereafter). The plaintiff’s evidence is that because of budget constraints, it was agreed between Darwin and him that the wages that Darwin owed to him would be paid at a later date, which date was not fixed.
[9] The plaintiff alleges that Darwin sold some or all of its shares to Tradepoint and he claims an equity interest in Tradepoint.
[10] With respect to the terms of the plaintiff’s employment contract, Hancock’s evidence is that the plaintiff would receive an income of $5,000 per month and, upon completion of two years of full-time service, the plaintiff would become entitled to receive a 12% shareholding interest in Darwin.
[11] On November 16, 2009 the plaintiff’s lawyers, Graham Wilson & Green (“GWG”) wrote to the lawyers for Darwin and Hancock. In that letter, GWG advised that the plaintiff’s unpaid compensation and expenses total $127,377.30 and, in addition, the plaintiff has earned a 12% ownership interest in Darwin. GWG advised that they understand that Darwin has been in negotiations with another entity concerning a possible merger or other business combination and that the plaintiff has concerns regarding ownership of Darwin’s proprietary “Tradepoint” software. The plaintiff’s lawyers requested (i) confirmation of the amount owing to the plaintiff together with a plan for payment that is fair to all parties, (ii) a valid share certificate representing the plaintiff’s 12% equity ownership stake in Darwin, and (iii) confirmation that ownership of the Intellectual Property is held by Darwin. The plaintiff’s lawyers advised that once they had received the foregoing, the plaintiff was prepared to discuss his ongoing role with Darwin on terms that are satisfactory to all concerned.
[12] The plaintiff’s evidence is that on November 23, 2009 he met with Hancock to discuss his continuing role within Darwin and, at that meeting, Hancock admitted that he owned a 12% share of Darwin. Following that meeting, on November 27, 2009 the plaintiff wrote a letter, via email, to Hancock outlining the discussions that took place at the meeting and providing his responses to some of the issues that were raised. The same day, he sent another letter, via email, to Hancock outlining his continuing and future role with Darwin. On November 30, 2009, Hancock responded to the plaintiff’s letters. On December 3, 2009, in response to Hancock’s email, the plaintiff responded in a letter, via email, including a reiteration of his equity interest in Darwin. On December 8, 2009, Hancock sent a letter in response to the second of the plaintiff’s November 27, 2009 letters regarding his continuing role with Darwin.
[13] In addition to this response, on December 8, 2009 Hancock also responded by email to the plaintiff’s December 3, 2009 email through insertions into the text of the body of the plaintiff’s email. On his cross-examination, Hancock confirmed that this response was sent on December 8, 2009. In this response, Hancock addressed the statement made by the plaintiff in his December 3, 2009 email that “... this does not alter our agreement regarding my having earned a 12% equity ownership in the Company ...” Hancock responded “[a]s for the 12% there was never a successfully written executed agreement by partners for this 12%”. Hancock also addressed the question of ownership of the Intellectual Property and wrote “[a]s you were made aware in the fall of 2007, approximately six months after coming on board, the IP resides in James Hancock’s name and is used by Darwin …” Hancock addressed the compensation to be paid to the plaintiff and wrote “[n]o one received any increase in compensation nor did any compensation ever ‘Revert back to $15,000 per month’ since it was never at that level to begin with”.
[14] On December 10, 2009, GWG sent another letter to the lawyers for Darwin and Hancock and advised that the issues in question remained unresolved. GWG requested a response to the three matters referred to in their letter of November 16, 2009. GWG advised that a negotiated settlement of the outstanding matters is preferable for all concerned, however, “should a satisfactory response not be forthcoming promptly, Mr. Hurst will pursue his legal remedies vigorously”.
[15] On January 11, 2010, Darwin’s lawyers wrote to GWG. They disputed that there was any agreement to pay the plaintiff more than $5000 per month or “an amount that the collected receivables will allow payment of”. They disputed that the plaintiff had become entitled to a 12% share interest in Darwin and expressed that Darwin is prepared to acknowledge some entitlement to an interest without any commitment to the extent of this interest. They advised that the Intellectual Property ownership resided with Hancock personally and was licensed to Darwin.
[16] The plaintiff commenced the within action by Notice of Action that was issued on January 10, 2012. A statement of claim dated February 8, 2012 was later filed.
Analysis
[17] Rule 20.04 of the Rules of Civil Procedure provides that the court shall grant summary judgment if it is satisfied that there is no genuine issue requiring a trial. There will be no genuine issue requiring a trial when the judge is able to reach a fair and just determination on the merits on a motion for summary judgment. This will be the case when the process (1) allows the judge to make the necessary findings of fact, (2) allows the judge to apply the law to the facts, and (3) is a proportionate, more expeditious and less expensive means to achieve a just result: Hryniak v. Maudlin, 2014 SCC 7 at para. 49.
[18] The plaintiff makes three claims in his statement of claim:
a. First, the plaintiff claims damages for breach of contract for the unpaid salary amounts that he claims are owing to him under his employment contract. The plaintiff makes no claim for unpaid salary for a period after December 2009.
b. Second, the plaintiff claims a declaration that he owns a 12% equity interest in Darwin and remedies for oppression (that the plaintiff agreed on cross-examination relate to Darwin’s failure to issue share certificates for the 12% equity interest to which he was entitled), including an order that Darwin issue to the plaintiff a share certificate representing 12% of the equity of Darwin.
c. Third, the plaintiff seeks a declaration that the IP is owned by Darwin, and not Hancock.
[19] The defendants submit that the plaintiff discovered that he had a claim by the end of 2009 at the latest and, therefore, that his action is statute barred.
[20] The Limitations Act, 2002 provides, in section 4, that “[u]nless this Act provides otherwise, a proceeding shall not be commenced in respect of a claim after the second anniversary of the day on which the claim was discovered.”
[21] Section 5 of the Limitations Act, 2002 provides:
(1) A claim is discovered on the earlier of,
(a) the day on which the person with the claim first knew,
(i) that the injury, loss or damage had occurred,
(ii) that the injury, loss or damage was caused by or contributed to an act or omission,
(iii) that the act or omission is that of the person against whom the claim is made, and
(iv) that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it; and
(b) the day on which a reasonable person with the abilities and in the circumstances of the person with the claim first ought to have known of the matters referred to in clause (a).
[22] In Tender Choice Foods Inc. v. Versacold Logistics Canada Inc., 2013 ONSC 80, Perell J. summarized the legal principles that relate to the discoverability principle under the Limitations Act, 2002:
52 The discoverability principle governs the commencement of a limitation period and stipulates that a limitation period begins to run only after the plaintiff has the knowledge, or the means of acquiring the knowledge, of the existence of the facts that would support a claim for relief [citations omitted].
53 The date upon which the plaintiff can be said to be in receipt of sufficient information to cause the limitation period to commence will depend on the circumstances of each particular case [citations omitted].
54 With respect to the basic limitation period of two years under the Limitations Act, 2002, a claim is “discovered” on the earlier of the date the claimants knew -a subjective criterion - or ought to have known - an objective criterion - about the claim. The discoverability principle conforms with the idea of a cause of action being the fact or facts which give a person a right to judicial redress or relief against another [citations omitted].
55 The plaintiff is required to act with due diligence in acquiring facts in order to be fully apprised of the material facts upon which a claim can be based [citations omitted].
56 Thus, a limitation period commences when the plaintiff discovers the underlying material facts or, alternatively, when the plaintiff ought to have discovered those facts by the exercise of reasonable diligence.
57 The discoverability of a claim for relief involves not only the identification of the tortfeasor but also the discovery of an act or omission that constitute liability [citation omitted]. It is not enough that the plaintiff has suffered a loss and has knowledge that someone might be responsible; the identity and culpable acts of the wrongdoer must be known or knowable with reasonable diligence [citations omitted].
58 The question is whether the prospective plaintiff knows enough facts to base a cause of action against the defendant, and, if so, then the claim has been discovered and the limitation period begins to run [citations omitted].
59 However, the discovery of a claim does not depend upon the plaintiff knowing that his or her claim is likely to succeed; the limitation period runs from when the prospective plaintiff has or ought to have had, knowledge of a potential claim, and the later discovery of facts which change a borderline claim into a viable one does not postpone the discovery of the claim [citations omitted].
60 Discovery does not depend upon awareness of the totality of the defendant’s wrongdoing. Section 5(1)(a) of the Limitations Act, 2002 prescribes that discovery occurs when the plaintiff knows or ought to know of an injury caused by an act or omission of the defendant and having regard to the nature of the injury legal proceedings would be an appropriate way to seek a remedy. For the limitation period to begin to run, it is enough for the plaintiff to have prima facie grounds to infer that the defendant caused him or her harm, and certainty of a defendant’s responsibility for the act or omission that caused or contributed to the loss is not a requirement [citations omitted].
61 The circumstance that a potential claimant may not appreciate the legal significance of the facts does not postpone the commencement of the limitation period if he or she knows or ought to know the existence of the material facts, which is to say, the constitute factual elements of his or her cause of action. Error or ignorance of the law or legal consequences of the facts does not postpone the running of the limitation period [citations omitted].
Is the plaintiff’s claim for damages for unpaid wages in relation to a “demand obligation”?
[23] With respect to his claim for unpaid salary, the plaintiff submits that the parties had mutually agreed that the difference between what the plaintiff had earned and what he was paid by Darwin represented a demand obligation, and that no claim arose until the plaintiff made a demand for payment. The plaintiff relies upon section 5(3) of the Limitations Act, 2002 which provides that the day on which injury, loss or damage occurs in relation to a demand obligation is the first day on which there is a failure to perform the obligation, once a demand for the performance is made.
[24] In support of this submission, the plaintiff points to paragraph 11 of the affidavit of Hancock in which he states:
When it became clear that the company couldn’t reliably pay the principles (sic) it was agreed that the difference between the $5000/month and what would be paid would form a debit for the company that would be paid off in proportion to shares when the company was able and everyone agreed. When Mr. Hurst accepted his position with Darwin he was clearly aware that the company had no financial backing other than a small BDC loan and was not in a position to pay a fixed salary to any person involved in the commercialization/start up of the business. To the extent that the success or failure of the corporation was never positively assured, Hurst’s involvement with the company was at best speculative in nature.
On his cross-examination, Hancock was asked about this paragraph and he described the amounts owed for salaries as “theoretical debts on the company that would only be actualized when the company was able to pay them”.
[25] Darwin and Hancock dispute that the plaintiff’s claim for unpaid salary was an obligation that required a demand before it was enforceable. They deny that an agreement was made that the plaintiff would be paid for salary owed to him at some indeterminate date in the future, on demand. They rely upon evidence from the plaintiff’s his cross-examination where he agreed that he was not paid what he was owed every single month. On his cross-examination, the plaintiff, through his legal counsel, answered that the plaintiff claimed unpaid wages owed until December 9, 2009, and that he did not discover that Darwin and Hancock would not honour the obligation to pay past wages until January 2010.
[26] In his affidavit sworn April 18, 2013 the plaintiff stated that “[t]hroughout all relevant times, DPI did not dispute owing me my deferred unpaid wages until my legal counsel at the time received a letter from DPI’s legal counsel, Mr. Thompson, dated January 11, 2010”.
[27] It is a matter of contract interpretation and a matter of the legal nature of the obligation that determines whether an actual demand is necessary to enforce the obligation, that is, whether a demand is a constituent element of the cause of action to enforce the debt obligation is essentially a matter of interpretation of the debt contract. In other words, a document that states it is payable “on-demand” does not always require an actual demand to be made before the demand obligation can be enforced; it depends on the nature of the obligation and the construction of the document. Where the debt obligation is not a demand obligation, the commencement of the limitation period will depend upon the date when the lender is aware or ought to have been aware that he or she may sue to enforce the loan because there has been a breach of contract: Skuy v. Greennough Harbour Corporation, 2012 ONSC 6998 at paras. 42-43.
[28] In his affidavit sworn April 18, 2013 the plaintiff referred to the unpaid wages that he was owed by Darwin. The plaintiff states in his affidavit that, because of budget constraints, he agreed with Darwin that the wages that Darwin owed to him would be paid at a later date, which date was not fixed. The plaintiff did not say that these unpaid wages were not payable until a formal demand was made, and he did not describe the obligation to pay unpaid wages as a demand obligation. The first time that the plaintiff described the unpaid wages as a “demand obligation” was in an affidavit sworn on June 11, 2018, after he was cross-examined, which was delivered as part of a document entitled “Answers to Undertakings on Cross-Examination”.
[29] In the June 11, 2018 affidavit, the plaintiff purported to “clarify” answers that he gave on his cross-examination, including clarification of his seeking legal assistance in November of 2009. In this affidavit, the plaintiff explained his thinking when he retained legal counsel and in relation to what the plaintiff described as a “demand obligation” for unpaid salary.
[30] It is clear that this new affidavit was sent following cross-examination in order to try to qualify the plaintiff’s evidence given on cross-examination and to bolster the legal theory that would be advanced that his claim for unpaid salary was, in fact and law, a demand obligation. This is not permissible under r. 39.02(2) of the Rules of Civil Procedure, without leave. I do not admit this new affidavit from the plaintiff into evidence on this motion, and I disregard its contents.
[31] Even if I accept that the Plaintiff and Darwin agreed to defer payment of any earned but unpaid wages owed to the plaintiff to an unspecified future date because of Darwin’s financial circumstances, there is no evidence from either the plaintiff or the defendants that they agreed that the obligation to pay wages was a demand obligation. Neither of the plaintiff (until his June 11, 2018 affidavit that I rule to be inadmissible) or Hancock described the obligation to pay wages as one that required a demand from the plaintiff.
[32] The obligation by Darwin to pay unpaid salary that was earned by the plaintiff was owed each month that the salary was earned and unpaid. The plaintiff’s evidence is that he knew that he had a claim for unpaid salary each month from June 2007 to December 2009, even though the plaintiff and Hancock may have agreed that, as a practical matter, unpaid wages would not be paid until Darwin was financially able to do so. When I consider the plaintiff’s evidence and Hancock’s evidence in relation to the plaintiff’s contract of employment and the nature of Darwin’s obligation to pay any wages owed to the plaintiff, I conclude that this was not a demand obligation, and no demand was required before it could be enforced.
Do the plaintiff’s claims arise from the letter of January 11, 2010 from the lawyers for Hancock and Darwin?
[33] The plaintiff submits that, in any event, he did not know that he had a claim in relation to unpaid salary or his equity interest in Darwin until his lawyers received the January 11, 2010 letter from the lawyers for Darwin and Hancock in which they disputed the plaintiff’s entitlement to unpaid salary and a 12% equity interest in Darwin, and in which they maintained that the Intellectual Property was owned by Hancock. The plaintiff submits that the legal remedies that he claims in this action differ from the legal remedies referred to in his lawyers’ December 10, 2009 letter, and that they are founded on a new cause of action, because they arise from the defendants’ denial through their lawyers’ January 11, 2010 letter of the remedies claimed in GWG’s December 10, 2009 letter.
[34] The defendants dispute that the plaintiff only knew of his claims for unpaid salary and for a 12% equity interest in Darwin when his lawyers received the January 11, 2010 letter from the lawyers for Darwin and Hancock. The defendants rely upon the correspondence from GWG of November 16 and December 10, 2009 as evidence that the plaintiff knew by no later than December 2009 that he had a claim against Darwin and Hancock for the relief claimed in the statement of claim. In particular, they point to the language in GWG’s letter dated December 10, 2009 expressing an intention to pursue “legal remedies” should a satisfactory response to this and the previous letter not be forthcoming as evidence that the plaintiff knew by the date of this letter that he had a claim against Darwin and Hancock. They rely upon Sampson v. Empire (Binbrook Estates), 2016 ONSC 5730 in which the court considered that the plaintiffs in that case had threatened legal action as evidence that they were aware of their claims: Sampson, at para. 43.
[35] In addition, the defendants rely upon evidence given by the plaintiff when he was cross-examined in relation to statements made in his statement of claim in litigation that he commenced against his former legal counsel, GWG. In the plaintiff’s statement of claim in his action against GWG, he pleaded at paragraph 5:
On or about November 2009, the Plaintiff retained the services of Graham Law Firm to pursue recovery for damages against his former employer and the corporation, and its majority shareholder, in which he owns certain shares (hereinafter referred to as the “Legal Action”). The Plaintiff sought, among other things, unpaid wages owing, compensation in lieu of reasonable notice of termination, compensation for termination without just cause, production of a share certificate confirming his shareholder rights, and confirmation that the corporation in which he owned shares, his former employer, owns particular highly valuable intellectual property.
On his cross-examination, the plaintiff was asked whether he adopts the statements in paragraph 5 of his statement of claim against GWG as true and he answered that he does.
[36] At the time that GWG was retained in November 2009, the plaintiff was still employed by Darwin, so he would not have had a claim at that time for damages for compensation in lieu of notice of the termination of his employment. I accept that this may affect the evidentiary value of the plaintiff’s answer insofar as it relates to this claim. I do not agree that I should disregard the admission made by the plaintiff insofar as it relates to the other claims that are referenced in paragraph 5 of the original statement of claim. This answer could have been clarified through re-examination, if considered necessary. There was no re-examination.
[37] The plaintiff amended his statement of claim in the action against GWG on July 17, 2018 pursuant to r. 26.02(b) of the Rule of Civil Procedure, with the consent of GWG. The language in paragraph 5 of the amended pleading differs from the language in the original statement of claim, which the plaintiff adopted on his cross-examination. The plaintiff pleads in his amended statement of claim that he retained the services of GWG “to assist him in receiving written confirmation of his shareholding interest in his corporate employer, written confirmation that his corporate employer had ownership of the corporation’s intellectual property, and written confirmation of the debt his employer owed to him ...” The plaintiff removed the statement in his original statement of claim, upon which he had been cross-examined, that the plaintiff retained the services of GWG “to pursue recovery for damages ...” in a proposed legal action.
[38] The plaintiff submits that the defendants, in making their submission with respect to paragraph 5 of the original statement of claim, intentionally misquoted the plaintiff’s claim against GWG. I disagree. The fact that this amendment was made, on consent of GWG, does not affect the evidence given by the plaintiff on his cross-examination when he adopted as true the statements made in paragraph 5 of his original pleading.
[39] In his June 11, 2018 affidavit that was delivered after he was cross-examined, the plaintiff also included additional statements with respect to the amendment of his statement of claim against GWG, including statements that the “previous iteration” of his statement of claim was drafted in a way as to allow for the “possible misconstruing of the timeline of my previous counsel’s mandate”. This affidavit was clearly an attempt to diminish the effect of the admission made on cross-examination that the plaintiff adopted paragraph 5 of his original statement of claim against GWG. I have ruled that this affidavit is not admissible in evidence on this motion and I disregard these statements.
[40] Hancock and Darwin had challenged the plaintiff’s claims before GWG’s December 10, 2009 letter was sent, including through the email sent by Hancock on December 8, 2009 that included a denial that the plaintiff was entitled to a salary of $15,000 per month, that did not accept the plaintiff’s entitlement to a 12% equity interest because there was never a “successfully written executed agreement” for this 12% interest, and that stated that the Intellectual Property resides in Hancock’s name. This email was provided in response to undertakings from the cross-examination of Hancock. There was no written response from the plaintiff before GWG’s letter of December 10, 2009.
[41] The intervenors submit that because the December 8, 2009 email from Hancock to the plaintiff was produced as part of answers to undertakings given on Hancock’s cross-examination, the plaintiff had no right to file further evidence to address this email and, as a result, I do not have a full appreciation of the facts. I disagree. The plaintiff’s counsel cross-examined Hancock on his answers to undertakings, including the December 8, 2009 email from Hancock. The plaintiff did not request leave to provide a further affidavit to address this email. He must be taken to have been satisfied with the evidentiary record that was before me.
[42] The fact that Darwin and Hancock refused to address the plaintiff’s claims to his satisfaction through their lawyers’ January 11, 2010 letter does not create a new cause of action. In Markel Insurance Company of Canada v. ING Insurance Company of Canada, 2012 ONCA 218, the Court of Appeal addressed the proposition that was advanced that the first party insurer had not suffered a loss until the second party insurer unequivocally denied the claim. The Court of Appeal disagreed with this proposition and held that the first party insurer suffers a loss from the moment the second party insurer can be said to have failed to satisfy its legal obligation to satisfy the claim. The Court of Appeal then considered the word “appropriate” in s. 5(1)(a)(iv) of the Limitations Act, 2002 and, at para. 34, cautioned that “[t]o give ‘appropriate’ an evaluative gloss, allowing a party to delay the commencement of proceedings for some tactical or other reason beyond two years from the date the claim is fully ripened and requiring the court to assess the tone and tenor of communications in search of a clear denial would, in my opinion, inject an unacceptable element of uncertainty into the law of limitation of actions”. In my view, this caution applies to this motion. Ongoing communications between the parties in relation to claims do not extend a limitation period: Sampson, at para. 44.
[43] For these reasons, I do not accept the plaintiff’s submission that the January 11, 2010 letter from the defendants’ lawyers responding to the November 16 and December 10, 2009 letters from GWG created a new cause of action that is the actual cause of action upon which the plaintiff’s claims in the action are founded.
Is the plaintiff’s claim to an equity interest in Darwin subject to s. 16(1)(a) of the Limitations Act?
[44] With respect to his claims for declaratory relief, the plaintiff relies upon s. 16(1)(a) of the Limitations Act, 2002 that provides:
There is no limitation period in respect of … a proceeding for a declaration if no consequential relief is sought.
The plaintiff submits that there is no limitation period in respect of his claim for a declaration that he owns a 12% equity interest in Darwin or his claim for issuance of a valid share certificate representing this interest.
[45] In Skylark Holdings Limited v. Minhas, 2018 ONSC 1568 (Div. Ct.), the issue on appeal was whether there is a genuine issue requiring a trial that a limitation period had expired where there was a claim for declaratory relief in relation to share ownership. The Divisional Court relied upon the decision of the Court of Appeal in Alguire v. The Manufacturers Life Insurance Company (Manulife Financial), 2018 ONCA 202 that held that in the context of a limitation period analysis, declaratory relief should be narrowly construed so as to ensure that s. 16(1)(a) of the Limitations Act, 2002 is not used as a means to circumvent applicable limitation periods. The Divisional Court held that in order to decide whether section 16(1)(a) is being used to circumvent an applicable limitation period, the motions judge was required to assess the essential nature of what the party was seeking. The Divisional Court held that it was readily apparent that the declaration sought would be ineffective without further mandatory relief directed to the corporation or a shareholder to implement the shareholding interest, if possible. The Divisional Court held that, therefore, a declaration of entitlement alone is of no avail without further consequential relief which brings it outside of section 16(1)(a) of the Limitations Act, 2002.
[46] The plaintiff’s claim for a declaration that he owns a 12% equity interest in Darwin would be ineffective without further mandatory relief to implement the shareholding interest. The plaintiff sought such consequential relief in the statement of claim by asking for an order that Darwin issue him a valid share certificate for his 12% equity interest. The plaintiff’s claims for declaratory relief in relation to his 12% equity interest in Darwin are not subject to s. 16(1)(a) of the Limitations Act, 2002.
Conclusions
[47] The letters from GWG in November and December 2009 and the plaintiff’s adoption of paragraph 5 of his original statement of claim against GWG make it clear that the plaintiff knew of facts that gave rise to claims for legal remedies against the defendants in November and December 2009. The plaintiff had been told that there was a dispute concerning the unpaid salary that he claimed was owed to him. When the plaintiff advised Hancock that there was an agreement regarding his having earned a 12% equity interest in Darwin, Hancock conveyed his disagreement by responding that there was never an executed written agreement for this 12% equity interest. The plaintiff had been informed that the defendants’ position was that the Intellectual Property was held in the name of Hancock.
[48] By no later than December 10, 2009, the plaintiff had prima facie grounds to know that Darwin and Hancock had caused him harm, and he had retained legal counsel to pursue his legal remedies. The plaintiff was not entitled to wait for a clear denial of the claims made in GWG’s December 10, 2009 letter, and he did not need to be aware of the totality of the defendants’ wrongdoing, or all of the facts supporting the claim, in order for his claims to be discovered.
[49] I am satisfied that the evidentiary record allows me to make the necessary findings of fact and to apply the law to those facts in a way that achieves a just result. For the reasons I have given, I conclude that there is no genuine issue requiring a trial in relation to whether, by no later than December 10, 2009 when GWG’s letter was sent advising that the plaintiff will pursue his legal remedies vigorously if a satisfactory response was not received, the plaintiff knew (i) that injury, loss or damage had occurred, (ii) that the injury, loss or damage was caused by or contributed to an act or omission, (iii) that the act or omission was that of the defendants, and (iv) that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it.
[50] The plaintiff commenced his action on January 10, 2012. This is after the second anniversary of the day on which the plaintiff’s claims were discovered. There is no genuine issue requiring a trial in relation to whether the plaintiff’s action is statute barred.
[51] The plaintiff brought a separate motion that was returnable at the hearing of the defendants’ motion for summary judgment for an order for leave to file an amended statement of claim to particularize their request for an order piercing the corporate veil to hold Hancock liable for acts of Darwin. The defendants oppose this motion. At the hearing of the motion for summary judgment, I asked counsel to advise me of any agreement concerning the motion to amend the statement of claim and I advised that I would take any agreement into account if I dismissed the defendants’ motion for summary judgment. Counsel advised that the defendants were not able to provide their position with respect to the plaintiff’s pleading amendment motion until my decision on the motion for summary judgment is released.
Disposition
[52] For the foregoing reasons, the defendants’ motion for summary judgment is granted and the plaintiff’s action is dismissed as statute barred.
[53] As a result of this decision, it is not necessary for me to make any direction or order in relation to the plaintiff’s motion for leave to amend his statement of claim.
[54] If the parties are unable to resolve costs, the defendants may make written submissions within 15 days. The plaintiff and the intervenors may make responding submissions within 15 days thereafter. If so advised, the defendants may make brief reply submissions within five days thereafter.
Cavanagh J.
Released: October 5, 2018
