Court of Appeal for Ontario

Citation: Fuda v. Jim McIntosh Petroleum Engineering Ltd., 2014 ONCA 378 Date: 2014-05-12 Docket: C57984

Before: Gillese, van Rensburg and Hourigan JJ.A.

Between

Salvatore Fuda Plaintiff (Appellant in Appeal)

and

Jim McIntosh Petroleum Engineering Ltd., Echo Energy Canada Inc., Gary Conn, Robert Moore, Robert Gilmore, and David Johnstone Defendants (Respondents in Appeal)

Counsel: Ronald G. Chapman, for the appellant Garry W. Gibbs, for the respondent Jim McIntosh Petroleum Engineering Ltd. Linda Smits, for the respondent Robert Gilmore Catherine Patterson, for the respondents Gary Conn, Robert Moore and David Johnstone

Heard: May 5, 2014

On appeal from the order of Justice Herman J. Wilton-Siegel of the Superior Court of Justice, dated November 6, 2013.

Endorsement

[1] This appeal arises out of an investment made by the appellant, Salvatore Fuda, a former director and chairman of the board of the respondent, Echo Energy Canada ("Echo"), in shares of the corporation by way of participation in a private placement. The investment became worthless after a receiver was appointed over Echo's assets in October 2010.

[2] The appellant brought a motion for summary judgment on his claims of negligent misrepresentation against three former directors of Echo (the respondents Gary Conn, Robert Moore and Daniel Johnstone), its former chief financial officer (the respondent Robert Gilmore), and its former petroleum engineering consultant (the respondent Jim McIntosh Petroleum Engineering Ltd., "McIntosh").

[3] The respondents, Messrs. Conn, Moore, and Johnstone, brought a cross-motion seeking summary judgment dismissing the appellant's claims against them. The sole ground for the relief sought was that the action was commenced outside the applicable limitation period. McIntosh also brought a cross-motion relying upon the expiry of the relevant limitation period and asserting that there was no evidence of reliance on any alleged representation made by it. Gilmore did not bring a formal cross-motion but sought summary judgment in his favour based upon the court's inherent jurisdiction.

[4] In very thorough reasons, the motion judge dismissed the appellant's motion for summary judgment on the basis of the existence of genuine issues requiring a trial. That part of the order has not been appealed.

[5] The motion judge granted the respondents' cross-motions for dismissal on the basis of the operation of the Limitations Act, 2002, S.O. 2002, c. 24 and, "in addition and in the alternative," exercised the court's inherent jurisdiction to grant summary judgment in the respondents' favour, other than with respect to one of the appellant's claims against Messrs. Conn, Moore, and Johnstone, which was slated for a mini-trial pursuant to Rule 20.04(2.2).

[6] The appellant appeals this part of the motion judge's decision and submits that the motion judge erred in: (i) his application of the Limitations Act and refusal to permit the appellant to amend his statement of claim; (ii) his statement of the law regarding directors' liability for negligent misrepresentation; and (iii) his finding that a previous order of Morawetz J. precluded the appellant from making certain claims.

[7] In our view, the motion judge made no error in concluding that the misrepresentation claims were statute barred. Accordingly, we would dismiss the appeal.

[8] It was clear on the record before the motion judge that the appellant was aware of all the material facts underlying his misrepresentation claims more than two years before they were made in his amended statement of claim.

[9] Further, there was no basis for the court to permit the appellant to amend his statement of claim as asserted by the appellant. The misrepresentation claims that were asserted after the expiry of the limitation period advanced new causes of action that were unconnected to the factual matrix pleaded in the original statement of claim. Regard to allegations made in a separate proceeding commenced by Echo or in Echo's crossclaim is of no assistance to the appellant. Those were claims asserted by a party other than the appellant and they cannot amount to notice that the appellant intended to pursue similar claims. Therefore, the claims amounted to new causes of action and were statute-barred.

[10] As the appellant's counsel fairly conceded on the hearing of the appeal, if he were to fail on the limitation period issue, it would be unnecessary to consider the appellant's submissions regarding directors' liability for negligent misrepresentation and the effect of the previous order of Morawetz J. We agree. The issue of whether a director can owe a duty to other directors in circumstances such as these is one that warrants consideration in a case where the matter has been squarely raised and argued.

[11] Accordingly, the appeal is dismissed. The respondents are entitled to their costs on a partial indemnity scale which we fix, inclusive of disbursements and H.S.T., as follows: $19,000 for the respondent McIntosh, $11,500 for the respondent Robert Gilmore, and $15,000 for the respondents Gary Conn, Robert Moore and David Johnstone.

"E.E. Gillese J.A."

"K. van Rensburg J.A."

"C. William Hourigan J.A."