Court of Appeal for Ontario

Date: 2017-12-06 Docket: C63905

Judges: Strathy C.J.O., Juriansz and Huscroft JJ.A.

Between

Michael Drakoulakos Plaintiff (Appellant)

and

Martha Stirpe a.k.a. Martha Drakoulakos, Mark Stirpe and 1166054 Ontario Limited Defendants (Respondents)

Counsel

Daniel Zacks and Robert Drake, for the appellants

Ronald Bohm, for the respondents

Heard

December 4, 2017

On Appeal

On appeal from the judgment of Justice Paul M. Perell of the Superior Court of Justice, dated May 16, 2017.

Reasons for Decision

[1] This is an appeal from the summary judgment dismissing the appellant's action for a declaration that his daughter holds assets in a numbered company in trust for him. The other respondents are the daughter's husband and the company.

[2] In 1996, the appellant incorporated the company making his daughter the sole shareholder and conveying a taxi license to the company. In 2003 he conveyed a second taxi license to the company. The appellant alleges the company was intended to hold the taxi licenses for tax purposes and the assets were meant to pass to his daughter only upon his death. The respondent daughter alleges the first license was a gift upon her graduation from university, and the second license was a gift upon the birth of her first child.

[3] On the motion below, both parties proceeded on the basis that the claim related to a bare trust and that the limitation period was governed by the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B. The respondents took the position the appellant discovered his claim by 2004 and no later than December 9, 2010. The appellant's position on the motion was that his claim was discovered on December 9, 2010, and that a mental or psychological condition rendered him incapable of commencing an action within two years of that date.

[4] The motion judge decided the case on a different basis than the parties had argued. First, he decided that the claim related to a resulting trust. Second, he decided that the appellant's claim was known or ought to have been known in 2002. He observed this was more than 15 years before the action was commenced and thereupon dismissed the action as statute barred. He did not consider the application of the transition provisions of the Limitations Act, 2002.

[5] The appellant argues, and counsel for the respondents properly concedes, that on the facts found by the motion judge there is no limitation period for a claim against the trustee of a resulting trust for property still in the possession of the trustee. The two prerequisites for the application of the transitional provision in s. 24(6) of the present Act are satisfied: there was no limitation period for such a claim under the former Act and the claim was discovered before January 1, 2004.

[6] The respondents submit that the appeal should be dismissed for two reasons. First, they submit the appellant should be held to his concession before the motion judge that his claim would be statute barred but for the application of s. 7 of the Limitations Act, 2002, which provides the limitation period does not run during any time during which the person with the claim is incapable of proceeding because of a physical, mental or psychological condition. Second, they submit that the appellant should not be permitted to advance a new argument on appeal.

[7] In our view, the appellant's concession must be understood in the context in which it was made. The concession was made in the context that he was claiming a bare trust and that the discoverability date was after the coming into force of the Limitations Act, 2002.

[8] Further, it is our view that it is appropriate and in the interests of justice that we entertain the appellant's argument. The appellant did not have the opportunity to advance the argument in the court below, his underlying claim is equitable in nature, the argument raises a pure question of law, the record provides a complete evidentiary basis for the determination of the argument, and there is no prejudice to the respondents.

[9] Once the motion judge decided to proceed on a framework different from the one on which the parties had presented argument, he was obligated to apply the correct law to it. As noted, the parties agree that the correct law applicable to the facts found by the motion judge is that no limitation period applies to the appellant's claim for property still in the possession of a trustee of a resulting trust.

[10] We do not agree with the respondents' argument that they are prejudiced because they were unable to raise the equitable defence of laches before the motion judge. The only basis on which the respondents brought a motion seeking summary judgment was their limitations defence. They may raise the defence of laches at trial or on another motion if they so wish. It would not be appropriate for this court to deal with the matter on appeal.

[11] The appeal is allowed, the order of the motion judge is set aside, and replaced with an order dismissing the respondents' motion. In the circumstances, the costs of the motion and of the appeal will be in the cause.

"G.R. Strathy C.J.O."

"R.G. Juriansz J.A."

"Grant Huscroft J.A."