COURT OF APPEAL FOR ONTARIO

CITATION: Cross Bridges Inc. v. Z-Teca Foods Inc., 2016 ONCA 27

DATE: 20160112

DOCKET: C60509

MacPherson, Pepall and Hourigan JJ.A.

BETWEEN

Cross Bridges Inc.

Plaintiff

(Appellant)

and

Z-Teca Foods Inc.

Defendant

(Respondent)

Romesh Hettiarachchi, for the appellant

Julian Binavince, for the respondent

Heard: January 6, 2016

On appeal from the order of Justice Michael G. Emery of the Superior Court of Justice, dated June 3, 2015.

ENDORSEMENT

[1] The appellant lent money to the respondent pursuant to the terms of a loan agreement. The appellant made demand for payment on October 21, 2009. Under the loan agreement, full payment was required within 60 days of demand. Subsequently, the respondent made certain payments to the appellant, the last of which was a cheque in payment of interest. The cheque was dated and deposited by the appellant on January 10, 2011. On January 13, 2011, the TD Bank issued a notice that the cheque did not clear because of insufficient funds. The representative of the appellant deposed that while he believed he received that notice on or after January 18, 2011, he conceded that he had no idea when it was received.

[2] The appellant issued its statement of claim on January 17, 2013. It claimed damages for the debt owing under the parties’ loan agreement (the “debt claim”). It also claimed damages for breach of another contract which was not the subject matter of the summary judgment motion or this appeal. In its statement of defence, the respondent pleaded that the debt claim was barred due to the expiry of the two year limitation period under the Limitations Act, 2002, S.O. 2002, c. 24.

[3] The appellant brought a motion for summary judgment requesting an order that it had commenced its debt claim prior to the expiry of the limitation period and that the only genuine issue in the action was the amount of its entitlement. The respondent did not bring a cross-motion for summary judgment.

[4] The motion judge held that the limitation period started to run on January 10, 2011, when the cheque was presented to the bank for payment. He concluded that the debt claim was statute barred because it was commenced more than two years later on January 17, 2013. The motion judge therefore dismissed the appellant’s motion. He granted partial summary judgment in favour of the respondent and dismissed the appellant’s debt claim.

[5] The appellant appeals from this decision. It advanced three grounds of appeal. No argument relating to waiver of default was asserted before us. In addition, in oral argument, the appellant did not pursue its argument that partial summary judgment should not have been awarded in the absence of advance notice. That said, given that the appellant had sought the declaration that its debt claim was not barred by the respondent’s limitation defence, no surprise or prejudice arose from the granting of partial summary judgment dismissing the appellant’s debt claim on that basis.

[6] Turning to the grounds argued, first, the appellant submits that the motion judge erred in finding that the limitation period ran from the date of presentation rather than the date that the appellant received notice that the cheque was dishonoured.

[7] The limitation period began to run 60 days after demand under the loan agreement. This was December 20, 2009, as demand was made on October 21, 2009. However, the limitation clock could be reset by an acknowledgement of liability prior to the expiry of the limitation period: s. 13 of the Limitations Act, 2002.

[8] Here the respondent last acknowledged the indebtedness under the loan agreement on January 10, 2011. That was the date of the cheque and the date it was presented to the TD Bank for payment. The appellant was suing on the loan agreement, not the cheque. The receipt of the notice of dishonour did not serve to extend the time period within which the appellant was required to commence proceedings. As such, the motion judge correctly concluded that the two year limitation period began to run from January 10, 2011.

[9] Secondly, the appellant submits that the limitation defence should be unavailable because the respondent admitted his indebtedness in his cross-examination on his affidavit filed in the summary judgment proceedings.

[10] We disagree. Read in its totality, the admission of indebtedness by the respondent was qualified and stated to be subject to the limitation period defence. In addition, under s. 13(9) of the Limitations Act, 2002, for an acknowledgement to reset the limitation clock, it must be made before the expiry of the limitation period applicable to the claim. Here, the cross-examination occurred long after the expiry date.

[11] Lastly, the appellant seeks leave to appeal the costs award. He argues that the motion judge erred in not permitting a set-off of the adverse costs award against the admitted indebtedness.

[12] Leave to appeal a costs award will not be granted except in obvious cases where the appellant convinces the court that there are "strong grounds upon which the appellate court could find that the judge erred in exercising his discretion": Brad-Jay Investments Ltd. v. Szijjarto, 2006 42636 (ON CA), 218 O.A.C. 315 (Ont. C.A.) at para. 21.

[13] There was no requirement on the motion judge to order set-off. No supporting materials were provided to him and he determined that an all inclusive figure of $15,164 in costs was fair and reasonable. In light of the appellant’s lack of success, we see no reason to interfere.

[14] As agreed, the appellant shall pay the respondent’s costs fixed in the amount of $9,000 inclusive of disbursements and HST.

“J.C. MacPherson J.A.”

“S.E. Pepall J.A.”

“C.W. Hourigan J.A.”