Court of Appeal for Ontario

Date: 2017-09-25 Docket: C63469

Judges: Sharpe, Rouleau and van Rensburg JJ.A.

Between

Jean-Marc Ridel, Nadine Suzanne Josephine Ridel and Marc H. Ridel Plaintiffs (Appellants)

and

Robert Goldberg Defendant (Respondent)

Counsel

Philip Anisman, for the appellants

Niklas Holmberg, for the respondent

Heard: September 18, 2017

On appeal from the order of Justice Glenn A. Hainey of the Superior Court of Justice, dated February 28, 2017.

Reasons for Decision

[1] The sole issue on this appeal is whether the motion judge erred in ruling on a Rule 21.01(1)(a) motion that the action was barred by the two-year limitation period.

[2] The facts before the motion judge were taken exclusively from the pleadings.

[3] This action was commenced more than two years after the appellants obtained a trial judgment against e3m Investments Inc. on April 17, 2013 for negligence, breach of contract and breach of fiduciary duty in relation to their investment accounts but within two years of the dismissal of e3m's appeal against that judgment.

[4] In the action against e3m, the trial judge found that the respondent Robert Goldberg, the president, CEO and sole director of e3m, had abdicated his responsibility to supervise the employee who handled the appellants' accounts.

[5] After e3m's appeal was dismissed, e3m made an assignment in bankruptcy. The appellants then obtained an order pursuant to s. 38 of the Bankruptcy and Insolvency Act, R.S.C., 1985, c. B-3, authorizing the assignment to them of the trustee's cause of action for damages incurred by e3m as a result of the respondent Goldberg's breach of duties of care and supervision. They then commenced this action.

[6] It is common ground that the appellants' claim is governed by a two-year limitation period. Pursuant to s. 12(1) of the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B, where, as in this case, a plaintiff claims "through a predecessor in right, title or interest" the plaintiff "shall be deemed to have knowledge of the matters referred to" in s. 5(1)(a) on the earlier of "the day the predecessor first knew or ought to have known of those matters" and "the day the person claiming first knew or ought to have known of them."

[7] Section 5(1) provides as follows:

5 (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 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).

[8] The appellants concede that both they and their predecessor had knowledge of items (i) to (iii) more than two years before the date on which this action was commenced and argue that the case falls to be decided under s. 5(1)(a)(iv), namely, the date on which it was known "that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it".

[9] Before the motion judge, the focus of the appellants' argument was the relevance of e3m's appeal to the calculation of the limitation period. They argued that until the appeal was decided, it would not have been appropriate for them to bring this action. Before this court, the appellants shifted ground. They no longer focus on the fact that an appeal was outstanding but argue that it cannot be said that e3m could or should have considered an action against Goldberg – e3m's own directing mind – until after e3m's bankruptcy. They rely on s. 5(1)(a)(iv) and argue "that, having regard to the nature of the injury, loss or damage, an action by e3m against Goldberg would" not have been "an appropriate means to seek to remedy it". The appellants also submit that before the bankruptcy, it would have been impossible for them to assert the claim they now assert on e3m's behalf.

[10] The respondent submits that the appellant's knowledge of the elements defined in s. 5(1) is dispositive of this appeal, relying on Indcondo Building Corporation v. Sloan, 2010 ONCA 890, 103 O.R. (3d) 445. However, in Indcondo, the action commenced under s. 38 asserted the same claim the s. 38 claimant had previously pleaded. Moreover, Indcondo did not have to consider the significance of s. 5(1)(a)(iv).

[11] In our view, it would not be appropriate for this court to rule on the issues raised by the parties on the limited record that is before us. As indicated, this was a Rule 21.01(1)(a) motion. We have only the pleadings. There is no evidence before the court concerning what has become the main focus of the appellants' submission, namely, the relationship between e3m and Goldberg and the control he is alleged to have exercised over e3m in relation to the claim advanced by the appellants. Nor is the record adequate to permit us to properly consider the application of Indcondo in the specific context of the facts of this case.

[12] In Salewski v. Lalonde, 2017 ONCA 515, this court observed, at para. 45, that as the discoverability issue is one of mixed fact and law, there may well be no circumstance "in which a limitation issue under the Act can properly be determined under rule 21.01(1)(a) unless pleadings are closed and it is clear that the facts are undisputed." In our view, a more complete record is required to permit the court to determine the issues raised by the parties on this appeal.

[13] Accordingly, without ruling in any way on those issues, we allow the appeal and set aside the order of the motion judge. This order does not purport to determine the limitation issue; rather it may be determined in the normal course, and on a proper factual basis, in these proceedings.

[14] The appropriate order as to costs is that the costs of the motion below and the costs of this appeal (agreed to be $10,000) be left in the discretion of the trial judge.

"Robert J. Sharpe J.A."

"Paul Rouleau J.A."

"K. van Rensburg J.A."