COURT FILE NO.: CV-18-0033-00 DATE: 2020/05/15 ONTARIO SUPERIOR COURT OF JUSTICE

B E T W E E N:

DOMINIC PERODEAU and SCARLETT PERODEAU Plaintiffs – and – TD CANADA TRUST and TD INSURANCE Defendants

Self-represented

Jeffrey Kukla, for the Defendant TD Canada Trust Arie Odinocki, for the Defendant TD Insurance HEARD: July 29, 2019

The text of the original Reasons for Decision on Motion for Summary Judgment was amended on May 15, 2020 and the description of the amendment is appended

AMENDED REASONS FOR DECISION ON MOTION FOR SUMMARY JUDGMENT

Corthorn J.

Introduction

[1] Since 2010, the plaintiffs have suffered a series of misfortunes including job losses, business failure, health issues, and, in May 2016, a house fire. The plaintiffs were unable to make premium payments on a home and automobile insurance policy issued to them by the Primmum Insurance Company (“the Policy” and “Primmum”, respectively). The plaintiffs were also unable to fulfil their payment obligations on a mortgage granted to them by TD Bank and registered on the title to the plaintiffs’ home (“the Mortgage”, “the Bank”, and “the Property”, respectively).

[2] In February 2014, Primmum sent a registered letter to the plaintiffs. Therein, Primmum advised that, effective March 3, 2014, the Policy would be terminated for non-payment. On March 6 and 13, 2014, Primmum sent follow-up letters to the plaintiffs addressing the outstanding premium payment and/or the termination of the Policy. Primmum is misnomered in this action as “TD Insurance”.

[3] On November 14, 2017, the Bank was granted summary judgment with respect to the mortgage debt (“the 2017 Motion”). In the oral reasons given, Justice MacLeod,

• granted judgment in favour of the Bank for the sum of $194,253.85,
• gave the Bank the option of proceeding with a reference to determine the amount, if any, over and above the $194,253.85 owing on the Mortgage, and
• granted a stay of 30 days on the judgment for possession of the Property, following which the Bank was to bring a motion for a writ of possession.

[4] The plaintiffs commenced this action on January 22, 2018. They seek damages in a seven-figure amount. In addition to damages, the plaintiffs request an order that the writ of possession be stayed until this action is heard in its entirety. The plaintiffs also requested that they be permitted to make payments on the Mortgage.

[5] The plaintiffs allege that Primmum breached a fiduciary duty it owed to the Bank with respect to home insurance on the Property. The plaintiffs allege that Primmum was required to satisfy itself that the Property was insured prior to the plaintiffs renewing the Mortgage in December 2014. The plaintiffs’ claim against Primmum is not based on either breach of the Policy or entitlement to coverage under the Policy for the May 2016 fire loss.

[6] The plaintiffs also allege that the Bank breached a fiduciary duty owed to them to “caution” them at the time of renewal of the Mortgage. The plaintiffs allege that the Bank had an obligation to inform them, before the Mortgage was renewed, that (a) there was no home insurance on the Property, and (b) there existed the potential for the plaintiffs to be personally responsible to pay for losses that might be incurred.

[7] For the purpose of this motion, the damages claimed by the plaintiffs in this action are categorized as follows:

• Diminution, by $150,000, in the value of the Property because of the uninsured fire loss;
• Past and future loss of income for Mrs. Perodeau totalling $600,000;
• The loss, as a result of the fire, of $200,000 in personal possessions; and
• The cost of repair and renovation in the amount of $263,000.

[8] In defence of the action, Primmum denies that it owed a fiduciary duty to the Bank with respect to insurance on the Property. In addition, Primmum relies on the termination of the Policy in March 2014 or, in the alternative, the lapse of the Policy because it was not renewed in November 2014.

[9] The Bank denies the existence of a fiduciary obligation owed to the plaintiffs with respect to insurance on the Property at the time of renewal of the Mortgage. In addition, the Bank relies on the decision of Justice MacLeod and takes the position that the doctrine of res judicata applies. Lastly, the Bank alleges that any claim against it is statute-barred.

[10] Both defendants move for summary judgment and request that the claims against them be dismissed in their entirety, with costs (“the Motions”).

Motions for Summary Judgment

[11] The Motions are made pursuant to Rule 20 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. Summary judgment shall be granted if “the court is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence”: r. 20.04(2)(a).

[12] In Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, at para. 49, the Supreme Court of Canada stated that:

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.

[13] To determine whether there is a genuine issue requiring a trial, the court must consider the evidence submitted by the parties: r. 20.04(2.1). The court has the discretion to exercise additional powers, unless it is in the interests of justice that such powers be exercised only at trial: ibid. The additional powers available are to (a) weigh the evidence, (b) evaluate the credibility of a deponent, and (c) draw any reasonable inference from the evidence.

The Plaintiffs’ Response to the Motions

[14] The plaintiffs are familiar with the process on a motion for summary judgment. A copy of the transcript from the 2017 Motion is included in each moving party’s record. Based on the transcript, I find that, as of the fall of 2017, the Perodeaus were aware of the requirement to respond to a motion for summary judgment with affidavit evidence: r. 20.02(2).

[15] I draw an inference and find that, having been through the summary judgment process once before, the plaintiffs were aware of the requirement to respond to the Motions with affidavit evidence. In addition (a) the plaintiffs have, over time, had the assistance of a paralegal, (b) they were served with the moving parties’ respective motion records more than three months prior to the return date for the Motions, and (c) they had sufficient time to respond with affidavit evidence if they intended to do so.

[16] On the return of the Motions, Mr. Perodeau demonstrated familiarity with and an understanding of the Rules of Civil Procedure. I find that the plaintiffs are experienced litigants with an understanding of civil procedure.

[17] The plaintiffs chose not to deliver any affidavit evidence in response to the Motions. Instead they delivered a document titled “Motion Record”, which consists of 21 documents described as “Exhibits”. On the return of the 2017 Motion, Mr. Perodeau gave viva voce evidence. On the return of the Motions, neither of the plaintiffs gave viva voce evidence.

The Issues

[18] The issues to be determined on the Motions are:

1. Did a fiduciary duty exist as between either Primmum and the Bank or the Bank and the plaintiffs?
2. Does the doctrine of res judicata apply to the issues raised by the plaintiffs in response to the Motions?
3. Are the plaintiffs’ claims against the Bank statute-barred?
4. Do the plaintiffs’ claims against Primmum fail because of an effective termination of the Policy or because the Policy lapsed?

Issue No. 1 – Did a fiduciary duty exist as between either Primmum and the Bank or the Bank and the plaintiffs?

a) Fiduciary Duty, as Alleged, Between Primmum and the Bank

i) Positions of the Parties

[19] In both written and oral argument, Primmum submitted that it did not owe a fiduciary duty to either the Bank or the plaintiffs. The plaintiffs do not, however, allege that Primmum owed them a fiduciary duty of any kind. Therefore, with respect to Primmum, I restrict determination of this issue to whether there existed a fiduciary duty as between Primmum and the Bank.

[20] Primmum’s position is that the fiduciary duty alleged by the plaintiffs, as between it and the Bank, could only have existed on an ad hoc basis. Primmum submits that the four prerequisites for the existence of a fiduciary duty on an ad hoc basis are not present in this case: see Elder Advocates of Alberta Society v. Alberta, 2011 SCC 24, [2011] 2 S.C.R. 261, at paras. 27-36.

[21] The plaintiffs delivered a factum in response to the Motions. In their factum, the plaintiffs did not address the existence of the fiduciary duties upon which they rely in their statement of claim.

ii) The Law

[22] In Elder Advocates, the Supreme Court of Canada reviewed the criteria to be met for the existence of a fiduciary duty on an ad hoc basis. The four primary criteria identified by the Court are

1. vulnerability arising from the relationship between the alleged fiduciary and the other person (para. 27),
2. an undertaking given by the alleged fiduciary to the other person to act in the latter’s best interests (paras. 30-32),
3. a defined person or class of persons who must be vulnerable to the fiduciary because the fiduciary has a discretionary power over the person or class (para. 33), and
4. the existence of a “legal or substantial practical interest of the beneficiary or beneficiaries that stands to be adversely affected by the alleged fiduciary’s exercise of discretion or control” (para. 36).

[23] In Elder Advocates, the Supreme Court relied on its decision in Frame v. Smith, [1987] 2 S.C.R. 99 to define what is meant by “vulnerability”. The dissenting reasons of Wilson J. in Frame were adopted and applied by the Court in International Corona Resources Ltd. v. Lac Minerals Ltd., [1989] 2 S.C.R. 574. In those decisions, including at p. 136 of Frame, the hallmarks of vulnerability are outlined as follows:

Relationships in which a fiduciary obligation have been imposed seem to possess three general characteristics:

(1) The fiduciary has scope for the exercise of some discretion or power. (2) The fiduciary can unilaterally exercise that power or discretion so as to affect the beneficiary’s legal or practical interests. (3) The beneficiary is peculiarly vulnerable to or at the mercy of the fiduciary holding the discretion or power.

[24] I turn to the application of those principles to the circumstances in this matter.

iii) Analysis

[25] There is no evidence to support a finding that a relationship of any kind existed between Primmum and the Bank with respect to insurance on the Property at the time of the renewal of the Mortgage. In the absence of such a relationship, it is not possible for the plaintiffs to satisfy the four criteria for the existence of a fiduciary relationship between Primmum and the Bank on an ad hoc basis.

[26] As has already been noted, the plaintiffs did not file any affidavit materials in response to the Motions. Their motion record includes several pages of a printed version of what appears to be communication with the Bank’s online help desk. The plaintiffs rely on those documents to support their argument that the Bank required proof of insurance at the time of the renewal of the Mortgage. Even if those documents were properly before the court (I find that they are not), they are insufficient to support a finding that the Bank required proof of insurance at the time of the renewal of the Mortgage.

[27] The online communication appears at Exhibit “O” of the plaintiffs’ motion record. The communication includes an email exchange and an exchange of text messages.

[28] The email exchange is dated November 2014 – a matter of weeks before the plaintiffs renewed the Mortgage. The email exchange addresses the obligation of a borrower to arrange insurance on the property as a condition of the Bank issuing a mortgage. The email exchange does not address the renewal of a mortgage and is therefore not relevant to Issue No. 1. In any event, the email response from the Bank concludes with the following statement: “Any information provided is current as of the date and time indicated and is subject to change without notice.”

[29] The text messages that appear in Exhibit “O” are not dated. The subject of the text messages is the requirement, if any, of a borrower to provide the Bank with proof of property insurance at the date of renewal of a mortgage. It appears that the first names of the people exchanging text messages are “Dominic” (making the inquiry) and “Derek” (responding on behalf of the Bank). The date of the exchange of text messages is not identified.

[30] Mr. Perodeau’s first name is Dominic. The plaintiffs ask the court to infer that the messages at Exhibit “O” represent a pre-renewal inquiry from Mr. Perodeau to the Bank. I do not, however, draw such an inference. Even if that inference were drawn, there is nothing in the text messages exchanged to support the plaintiffs’ position with respect to the alleged fiduciary duty as between Primmum and the Bank.

[31] There is nothing in the text messages suggesting any one or more of the following points:

a) The plaintiffs understood that it was no longer their obligation to maintain insurance on the Property; b) The Bank would take the steps necessary to arrange insurance on the Property; and c) Primmum and the Bank would, as between them, address the issue of insurance on the Property.

[32] In summary, the evidence, including any inferences that might be drawn, does not support the plaintiffs’ position with respect to the existence of a fiduciary obligation owed by Primmum to the Bank with respect to insurance on the Property at the time of the renewal of the Mortgage.

iv) Conclusion

[33] The plaintiffs’ claim based on the existence of a fiduciary relationship between Primmum and the Bank does not raise a genuine issue requiring a trial. A fair and just determination on the merits can be reached on the motion. Determining this portion of Issue No. 1 in that manner is a proportionate, more expeditious, and less expensive means than would be a trial to achieve a just result. The plaintiffs’ claim against Primmum based on the existence of a fiduciary duty as between it and the Bank is dismissed.

b) Fiduciary Duty, as Alleged, Between the Bank and the Plaintiffs

i) Positions of the Parties

[34] At paragraph 17 of their statement of claim, the plaintiffs allege that the Bank “had a fiduciary duty to [them] to caution them that they had no home insurance on the premises prior to signing the renewal of the mortgage and the potential liability to them for all losses incurred.” In its statement of defence, the Bank denies that allegation.

[35] On the Motions, the Bank submits that its relationship with the plaintiffs is one of debtor and creditor; no special relationship or exceptional circumstances existed to elevate the Bank’s relationship with the plaintiffs to that of a fiduciary. The Bank’s position is that it did not give an undertaking to the plaintiffs that it would arrange insurance on the Property. Lastly, the Bank submits that it acted in good faith and is entitled to exercise its power of sale.

[36] The plaintiffs did not address this issue in their factum or with any degree of specificity in their oral argument.

ii) The Law

[37] It is well-settled law that the relationship between a lender bank and its borrower customer is “a purely commercial relationship of creditor and debtor”: Pierce v. Canada Trustco Mortgage Co. (2005), 253 D.L.R. (4th) 79 (Ont. C.A.), at para. 27. In the absence of a special relationship or exceptional circumstances, so as to give rise to a fiduciary duty, a lender owes no duty to the borrower in the making of a loan: ibid.

[38] In Baldwin v. Daubney (2006), 83 O.R. (3d) 308 (C.A.) (“Baldwin No. 2”), the Court of Appeal relied extensively on the reasons of Spence J. and upheld his decision at first instance granting summary judgment in favour of the defendant financial institutions. Spence J. addressed why the risk of borrowing falls to the customer. He concluded that “it is the borrower who decides to take the loan and so creates whatever foreseeable risk may thereby arise”: Baldwin v. Daubney (2005), 78 O.R. (3d) 693 (Ont. S.C.), at para. 87 (“Baldwin No. 1”). Spence J. also concluded that, absent evidence of a customer’s reliance in some way on the bank, the relationship between the bank and the customer “does not fit within an existing category that is recognized as giving rise to a duty of care”: ibid, at para. 88.

[39] The Court of Appeal rejected the appellants’ submission that the respondent financial institutions owed the appellant borrowers “a fiduciary duty to advise them about the loans”: Baldwin No. 2, at para. 15. Once again, the Court of Appeal relied on the reasons of Spence J. At para. 66 of the decision at first instance, he explained why a fiduciary duty does not exist between the bank and its customer:

The reason that there is no fiduciary duty is simple. A fiduciary duty arises where a relationship between the parties, such as trustee and beneficiary, is established in order to give one party the responsibility to look out for the best interests of the other. The relationship between a lender and a borrower is not of that kind. Rather, it is a typical commercial relationship in which the interests of the parties are not the same; each party seeks to secure its own interest and can reasonably believe only that the other party is doing the same.

[40] Before turning to the substantive analysis, I first address the evidence upon which the Bank relies in support of its motion.

iii) The Thomas Affidavit

[41] Evidence by affidavit on a motion or an application is governed by r. 39.01 of the Rules of Civil Procedure. The contents of affidavits for use on motions are specifically addressed in r. 39.01(4). It provides that “[an] affidavit for use on a motion may contain statements of the deponent’s information and belief, if the source of the information and the fact of the belief are specified in the affidavit.” On a motion for summary judgment, a party may rely on an affidavit based on information and belief: r. 20.02(1).

[42] The Bank relies on the affidavit of Martha Thomas (“Thomas Affidavit”). I find that the Thomas Affidavit complies with r. 39.01(4). Despite making that finding, there are certain aspects of the affidavit that, in my view, warrant comment.

[43] Ms. Thomas describes herself as an employee of the Bank. She does not provide her title – at present or historically. She does not state whether, at any time, she had personal involvement with the plaintiffs in granting the Mortgage or in renewing the Mortgage. It is not clear whether Ms. Thomas’ evidence about the status of the Mortgage and as to the steps taken following the plaintiffs’ default is within her personal knowledge or is based on a review of the relevant documents and files.

[44] Ms. Thomas’ evidence with respect to the plaintiffs’ interactions with a representative of the Bank is based on information and belief. The source of the relevant information is Patricia Fluke. Ms. Fluke is described by Ms. Thomas as “the employee at TD Bank [who] assisted the plaintiffs with the renewal of the [Mortgage] in 2014”. There is no evidence as to Ms. Fluke’s title, role, or responsibilities with the Bank as of that time.

[45] Ms. Thomas does not say whether Ms. Fluke was still an employee of the Bank when the Thomas Affidavit was being prepared. No explanation is provided as to why there is no affidavit from Ms. Fluke attesting to her interaction with the plaintiffs when the Mortgage was renewed in 2014.

[46] On a motion for summary judgment, the court has the discretion to draw an adverse inference if a party relies on evidence based on information and belief and fails to provide the evidence of a person having personal knowledge of contested facts: r. 20.02(1). The plaintiffs did not deliver any responding affidavits. Ms. Thomas’ evidence is entirely uncontested. In the absence of responding affidavits, I do not draw an adverse inference from the Bank’s failure to provide evidence from a person with first-hand knowledge of the circumstances on the renewal of the Mortgage in 2014.

iv) Analysis

[47] Ms. Thomas’ uncontradicted evidence is that the Bank does not require proof of insurance on the renewal of a mortgage. It is also her uncontradicted evidence that, at no time during the renewal process,

a) were the plaintiffs advised that the Bank “would be arranging, or maintaining, insurance coverage on the Property”, or b) did the plaintiffs advise the Bank’s representative that they were relying on the Bank to arrange or maintain insurance coverage on the Property.

[48] Turning to the terms of the Mortgage, there is nothing in either the original mortgage agreement or the renewal documents that is indicative of the existence of the fiduciary duties upon which the plaintiffs’ claims in this action are based (i.e., including the alleged fiduciary duty from Primmum to the Bank). The relevant documents are evidence of a relationship between a lender and a borrower.

[49] Section 7.08 of the Mortgage addresses insurance on the Property. For example,

• s. 7.08 (a) states that the obligation to “take out and keep in force insurance on the Property” is on the borrower. The risks against which the borrower is required to insure the Property include fire; and
• if the borrower does not take out any or satisfactory insurance, the Bank is entitled, of its own volition, to take out insurance on the Property. The premiums for any insurance taken out by the Bank are added to the mortgage debt: ss. 7.08 (d), (g), and (h).

[50] The renewal documents executed by the plaintiffs and by the Bank’s representative (Ms. Fluke) state that the terms of the existing Mortgage are renewed. Immediately above the parties’ respective signatures appears the following statement: “All of the terms and conditions of your Mortgage, except those changed by this Agreement will remain in full force and effect.”

[51] As noted by the motions judge in Baldwin, No. 1, a loan agreement is entered into on the consent of the parties. The borrower chooses to take the risk of entering into the loan: para. 87.

[52] With respect to the relationship between the Bank and the plaintiffs, I make the following findings:

a) the plaintiffs chose to renew the Mortgage, without relying on the Bank; b) the plaintiffs were fully aware of the risks of borrowing when renewing the Mortgage, including those associated with the lack of insurance on the Property; and c) at the time of renewal of the Mortgage, the plaintiffs’ relationship with the Bank remained that of lender and borrower. The relationship was not elevated to one involving a fiduciary duty from the Bank to the plaintiffs.

[53] In summary, the plaintiffs have not established that, at the time of renewal of the Mortgage, the Bank owed a fiduciary obligation to the plaintiffs.

v) Conclusion

[54] The plaintiffs’ claim based on the existence of a fiduciary duty owed to them by the Bank does not raise a genuine issue requiring a trial. A fair and just determination on the merits can be reached on the motion. Determining the issue in that manner is a proportionate, more expeditious, and less expensive means than would be a trial to achieve a just result. The plaintiffs’ claim against the Bank based on the existence of a fiduciary duty is dismissed.

Issue No. 2 – Does the doctrine of res judicata apply to the issues raised by the plaintiffs in response to the Motions?

a) Positions of the Parties

[55] The Bank’s position is that, based on the decision of Justice MacLeod on the 2017 Motion, the doctrine of res judicata applies to bar the plaintiffs’ claims against it. The Bank submits that the plaintiffs raise the same issues in the present action as they did in defence of the Bank’s mortgage enforcement action. In addition, the Bank submits that, if the court concludes that any of the issues raised by the plaintiffs are new, then, those issues ought to have been raised by the plaintiffs in defence of the mortgage enforcement action.

[56] The plaintiffs’ position is that the doctrine of res judicata does not apply in the circumstances.

b) The Law

[57] Res judicata has two main branches: (1) cause of action estoppel, and (2) issue estoppel. In their evidence treatise, authors Lederman and Bryant summarize the two branches or principles addressed by the doctrine of res judicata: see The Law of Evidence in Canada, 5th ed (Markham: LexisNexis Canada Inc., 2018), at §19.92-§19.95.

[58] The first principle is the prevention of a “contradiction of that which was determined in the previous litigation by prohibiting the re-litigation of issues already addressed”: ibid, at §19.92. Issue estoppel precludes the re-litigation of issues previously decided in court by another proceeding.

[59] At paragraph 23 of Toronto (City) v. C.U.P.E., Local 79, 2003 SCC 63, [2003] 3 S.C.R. 77, the Supreme Court of Canada set out the three criteria to be met for issue estopped to be invoked:

1. The issue in the present action must be the same as the issue decided in the prior proceeding,
2. The judicial decision in the prior proceeding must be a final one, and
3. The parties to both proceedings must be the same or be privies of the same parties.

[60] The second principle requires parties to bring forward in the first proceeding all of the claims and defences with respect to the cause of action at issue. If a party fails to do so, they will be barred from asserting those claims and defences in a subsequent action: ibid, at §19.93. The second principle specifically addresses cause of action estoppel.

c) Analysis

[61] Included as an exhibit to the Thomas Affidavit is a copy of the unsworn affidavit upon which the plaintiffs attempted to rely at the 2017 Motion. On the return of that motion, Mr. Perodeau swore to the truth of the contents of his affidavit, gave viva voce evidence, and was cross-examined by the Bank’s counsel.

[62] Based on the contents of the Perodeau Affidavit and the reasons of Justice MacLeod on the 2017 Motion, I find that the plaintiffs raise the same issues in response to the Motions as they did in response to the 2017 Motion. Those issues include the prohibitive cost to the plaintiffs of insurance on the Property, the alleged failure of the Bank to “reach out” to the plaintiffs about the lack of insurance on the Property, and the Bank’s renewal of the Mortgage when there was no insurance on the Property.

[63] Justice MacLeod addressed the issues raised by the plaintiffs with respect to insurance on the Property. He rejected the arguments made by the plaintiffs in that regard and found in favour of the Bank.

[64] In response to the 2017 Motion, the plaintiffs did not allege the existence of a fiduciary duty from the Bank to the plaintiffs with respect to insurance on the Property. I find, however, that either they should have done so or that they did so but did not call it by that name. In other words, if it can be said that the allegation of the existence of the fiduciary duty is new, this is only because the plaintiffs have chosen to give a different label (or a label at all) to an allegation previously made.

[65] I find that the issues raised by the plaintiffs in this action do not disclose any new cause of action. Rather, the plaintiffs raise assertions that were raised or that could and should have been raised in defence of the enforcement action and in response to the 2017 Motion: see Murphy v. National Bank of Canada, 2012 ONSC 1360, at para. 30.

d) Conclusion

[66] I find that the doctrine of res judicata applies to bar the plaintiffs from proceeding with the present action. The Bank is entitled to a summary judgment dismissing the action against it.

Issue No. 3 – Are the plaintiffs’ claims against the Bank statute-barred?

a) Position of the Parties

[67] In addition, or in the alternative to the positions taken with respect to Issues No. 1 and 2, the Bank relies on the discoverability principle set out in s. 5 of the Limitations Act, 2002, S.O. 2002, c. 24, Sch. B (the “Act”). The Bank submits that the plaintiffs discovered the cause of action set out in their statement of claim more than two years prior to the date on which that document was issued by the court and, as a result, the action against the Bank is statute-barred. The Bank’s position is that, if the plaintiffs have a cause of action against the Bank, they knew, or ought to have known, of all of the relevant factors to support that claim no later than March 2014 when the Policy was terminated.

[68] The plaintiffs did not respond to the limitation defence.

b) The Law

[69] Section 4 of the Act sets out the basic limitation period and provides 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.” Section 5, upon which the Bank relies, addresses the parameters for the ‘discovery’ of a claim. Sub-section 5(1) provides as follows:

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 by an act or omission, (iii) that the act or omission was 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).

[70] When addressing the parameters set out in s. 5(1)(a)(i)-(iv), the court applies a subjective test and assesses the plaintiffs’ actual knowledge as to the relevant facts. Under s. 5(1)(b), the court applies an objective test and measures the plaintiffs’ conduct against that expected of a reasonable person: see Liu v. Silver, 2010 ONSC 2218, 101 O.R. (3d) 702, at para. 9, aff’d 2010 ONCA 731.

[71] A plaintiff who seeks to establish that the limitation period began to run on a date other than as prescribed under s. 5(1) has the onus of rebutting that presumption: s. 5(2). To rebut that presumption, the plaintiff must lead evidence: Liu, at para. 10.

[72] “Damage” and “damages” are distinct terms. As explained by the Court of Appeal at para. 54 of its decision in Hamilton (City) v. Metcalfe & Mansfield Capital Corporation, 2012 ONCA 156, 347 D.L.R. (4th) 657, “[damage] is the loss needed to make out the cause of action … damage is the condition of being worse off than before … [d]amages, on the other hand, is the monetary measure of the extent of that loss.”

[73] When did the plaintiffs know, or when ought they to have known, of the “damage” needed to make out their cause of action against the Bank?

c) Analysis

[74] For the reasons set out above under Issue No. 1, I find that, as of March 2014, or, at the very latest, December 2014 (on renewal of the Mortgage), the plaintiffs knew that they (a) did not have insurance on the Property, (b) were in breach of the term of the Mortgage which imposed on them the obligation to insure the Property, (c) had renewed the Mortgage on the original terms, and (d) were worse off than they had previously been. With respect to item (d), the plaintiffs knew that they were at risk of exposure for the full amount owing on the Mortgage in the event of a loss that would otherwise have been covered by insurance on the Property.

[75] In support of their claim against the Bank, the plaintiffs do not rely on any conduct on the Bank’s part that post-dates the renewal of the Mortgage.

[76] I find that the limitation period for the plaintiffs’ claim against the Bank, as framed in their statement of claim, began to run on the date of renewal of the Mortgage at the latest. The statement of claim in this action was issued in January 2018 – more than three years after the renewal of the Mortgage.

d) Conclusion

[77] I find that the plaintiffs’ action against the Bank is statute-barred. On the basis of the limitation defence, the Bank is entitled to summary judgment dismissing the plaintiffs’ claims against it.

Issue No. 4 – Do the plaintiffs’ claims against Primmum fail because of an effective termination of the Policy or because the Policy lapsed?

a) Position of the Parties

[78] Primmum relies on the termination of the Policy effective March 2014 as a bar to the plaintiffs’ claims against it. In the alternative, Primmum submits that, if the termination of the Policy was not effective, then the Policy lapsed; in December 2014, when they renewed the Mortgage, the plaintiffs were aware that the Policy had lapsed.

[79] As has already been noted, the plaintiffs’ claim against Primmum is not made pursuant to the terms of the Policy. The plaintiffs did not respond to this aspect of Primmum’s argument on the Motions.

b) The Humphrey Affidavit

[80] The only evidence before the court with respect to the termination or lapse of the Policy is from Primmum. The insurer relies on an affidavit from Francesca Humphrey (“the Humphrey Affidavit”). As of January 2019, when her affidavit was sworn, Ms. Humphrey was a Team Manager in Primmum’s Underwriting Operations Department.

[81] Ms. Humphrey does not state whether she was personally involved in any way with the Policy. Nor does she state how she gained knowledge of the events and documents discussed in her affidavit. Did she discuss the underwriting file for the Policy with any other Primmum employee? Or, did she garner knowledge from a review of that file?

[82] Regardless, Ms. Humphrey’s evidence addresses Primmum’s decision to terminate the Policy in early 2014, the lack of any premium payments thereafter, and the lapse, if necessary, of the Policy in November 2014. The plaintiffs do not dispute that they failed to pay the premiums required to keep the Policy in good standing. I am satisfied that Ms. Humphrey’s evidence is reliable with respect to the status of the Policy from March 2014 forward.

c) The Law and Analysis

[83] Based on Ms. Humphrey’s uncontested evidence, I make the following findings of fact:

• On February 14, 2014, Primmum sent a letter to the plaintiffs by registered mail.
• In that letter, the plaintiffs were advised that the Policy would be terminated effective March 3, 2014 because of the non-payment of the premium. The plaintiffs were informed of the amount of the payment required to re-instate the Policy.
• Documents dated March 3, 2014 were sent by regular mail from Primmum to the plaintiffs, in which the cancellation of the Policy was confirmed.
• Primmum sent a letter, dated March 6, 2014, by regular mail to the plaintiffs. Therein, the insurer demanded payment of the outstanding premium (i.e., to the date of termination).

[84] Based on the transcript from the 2017 Motion and Mr. Perodeau’s viva voce evidence before Justice MacLeod, I find as follows:

• As a result of roof damage to their home in 2011 and water damage to the home in 2012, the plaintiffs faced a significant increase in the premiums for insurance on the Property.
• The plaintiffs were ultimately unable to pay the premiums charged by Primmum.
• The plaintiffs were aware, as of the end of March 2014, that Primmum had terminated the Policy.

[85] Section 5 of the Policy required that Primmum give the plaintiffs 15 days’ notice of termination, if relying on registered mail. Although the termination letter is dated February 14, 2014, there is no evidence as to the date on which it was mailed or the date on which it was received, the latter either at the post office to which it was mailed or by the plaintiffs. It is therefore not possible to determine with precision when the plaintiffs received the letter.

[86] The plaintiffs do not dispute that they received any of the three letters sent in early 2014 by Primmum. I find that the February 14, 2014 letter was effective notice of termination on March 3, 2014 or a date shortly thereafter: see Clapp v. Travellers’ Indemnity Co., [1932] O.R. 116 (C.A.).

[87] If I am incorrect in finding that the Policy was effectively terminated by Primmum in March 2014, then I find that, in any event, the Policy lapsed as of November 2014. The Policy period was from November to November and ended on the 25th of the month. No premiums were paid subsequent to February 14, 2014.

[88] With no premiums paid by the plaintiffs to renew their lapsed Policy, no formal letter of termination was required to bring the Policy to an end: see Patterson v. Gallant, [1994] 3 S.C.R. 1080, at para. 38.

d) Conclusion

[89] As a result of the termination or lapse of the Policy, there was no coverage available to the plaintiffs under the Policy. Primmum is entitled to summary judgment dismissing the claims against it.

Order Made

[90] The relief sought on the Motions is granted. The plaintiffs’ claims as against each of Primmum and the Bank are dismissed.

Costs

[91] If either of the defendants, as successful parties on a motion for summary judgment, intend to seek the costs of their respective motions, then written submissions shall be delivered as follows:

a) The submissions shall be limited to a maximum of four pages, exclusive of a bill of costs; b) Written submissions shall comply with Rule 4 of the Rules of Civil Procedure; c) Hard copies of any case law or other authorities relied on shall be provided with the submissions and shall comply with Rule 4 of the Rules of Civil Procedure with respect to font size; d) The submissions, the documents referred to therein, and case law and other authorities shall be on single-sided pages; e) The moving party shall deliver its costs submissions by 4:00 p.m. on the twentieth business day following the date on which this ruling is released; f) The plaintiffs shall deliver their costs submissions by 4:00 p.m. on the thirtieth business day following the date on which this ruling is released; and g) The reply submissions, if any, of the moving party shall be delivered by 4:00 p.m. on the thirty-fifth business day following the date on which this ruling is released. Reply submissions shall comply with paragraphs (a) to (d) above.

Madam Justice Sylvia Corthorn

Released: May 15, 2020

APPENDIX

On page 10, at para. 51 “loss” has been changed to read “loan”.