Court of Appeal for Ontario

Date: 2018-06-15 Docket: C64009

Judges: Strathy C.J.O., Feldman and Brown JJ.A.

Between

Walter Davies and CityGate (WD) Management Corp. Plaintiffs (Appellants/Respondents in Cross-Appeal)

and

Davies Smith Developments Partnership, Nelson Reis and PM Construct Inc. Defendant (Respondent/Appellant in Cross-Appeal)

Counsel

John E.F. Gibson and Paul Bates, for the appellants

Evan L. Tingley, for the respondent

Heard: June 11, 2018

On appeal from the judgment of Justice Peter J. Cavanagh of the Superior Court of Justice, dated June 19, 2017, with reasons reported at 2017 ONSC 3796.

Reasons for Decision

[1] The appellant Walter Davies retired from a partnership that carried on a construction business. The partners signed an agreement in June 2005, which called for his equity and his share in the profits of various projects to be paid to him between June 2005 and June 2008. The agreement included a schedule of payments to be made and the dates on which they were to be made.

[2] The payments were not made at the times set out in the schedule, because the respondent did not have sufficient funds to make them.

[3] There were disagreements over the quantification of the appellant's share of the profits. He commenced litigation in September 2012, some four years after the date the payments were to have been made.

[4] The trial judge found that the appellant's action was time-barred. His equity and share of the profits were due to him by June 2008. His claim was "discovered", within the meaning of s. 5 of the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B, when he did not receive the payments. This was more than four years before the action was commenced.

[5] The judge noted that the appellant's claim was based entirely on the respondent's breach of the June 2005 agreement. The statement of claim and the appellant's evidence were consistent in asserting that the monies owing to him were to be paid by June 2008.

[6] With knowledge that he had a cause of action against the respondent for breach of the agreement, instead of taking action to enforce payment, the appellant was content to receive draws against his share of the profits and to earn interest on the indebtedness.

[7] The trial judge found as a fact that the appellant knew by July 2008 that he had suffered injury, loss or damage; that the damage was caused by the failure of the respondent to make the payments set out in the agreement; and that it was legally appropriate for an action to be commenced. For his own reasons, he did not do so.

[8] Accordingly, the trial judge dismissed the appellant's action.

[9] We dismiss the appeal, substantially for the thorough and compelling reasons of the trial judge. His interpretation of the agreement – finding that it called for payment by the end of June 2008 – was based on the language of the agreement, interpreted in light of the factual matrix, and is entitled to deference. While it was agreed that the amounts set out in the agreement were estimates, the evidence does not support the appellant's submission that the payment dates set out in the schedule to the agreement were simply estimated dates. The appellant's own evidence is inconsistent with this assertion.

[10] Nor has the appellant demonstrated a palpable and overriding error in the trial judge's conclusion that the claim was discovered in July 2008.

[11] In asserting that the limitation period had not expired, the appellant submits that: (a) the amount owing to the appellant was in dispute; (b) the profits could not be ascertained until the partnership's projects had been completed; (c) an action was not an "appropriate" means to remedy the appellant's loss because he knew the partnership did not have funds; and (d) there had been forbearance or novation, making it inappropriate to commence an action. The appellant submits that the claim was not discovered until 2011, when he realized that the respondent had made improper charges to his capital account.

[12] We agree with the respondent that the first two submissions confuse "damage" with "damages". The appellant knew by the end of June 2008 that he had suffered damage, even though the amount of his damages was a matter of dispute and had not been quantified: see Hamilton (City) v. Metcalfe & Mansfield Capital Corporation, 2012 ONCA 156, 347 D.L.R. (4th) 657, at paras. 54 and 58.

[13] The third submission that the respondent did not have the funds to pay, while perhaps explaining the appellant's conduct, did not stop the limitation period from running. The appellant's claim was "fully ripened" by July 2008. The word "appropriate", as it appears in s. 5 of the Limitations Act, means "legally appropriate". The appellant cannot rely on his own tactical reasons for delaying the commencement of legal proceedings: see Markel Insurance Company of Canada v. ING Insurance Company of Canada, 2012 ONCA 218, 348 D.L.R. (4th) 744, at para. 34.

[14] As to the fourth submission, the appellant claims there was a novation of the agreement, whereby he agreed to postpone his claim in exchange for receipt of draws and accrual of interest. In effect, the appellant argues that the agreement was amended. The answer to this submission is: (a) it was not pleaded; (b) because it was not pleaded, no evidence was adduced with respect to it; and (c) the issue was not argued in the court below. In any event, there is no evidence that the parties agreed to amend the agreement or to replace it with a new agreement. Nor is there any evidence to support the argument that the appellant agreed to forbear from commencing an action in a way that would have suspended the operation of the limitation period: see Hamilton (City) v. Metcalfe & Mansfield, at paras. 74 and 75.

[15] For these reasons, the appeal is dismissed, with costs of $20,000, inclusive of disbursements and all applicable taxes. The cross-appeal is dismissed as moot. That said, it is our view that the cross-appeal had no merit, inasmuch as it challenged the trial judge's factual findings without demonstrating palpable and overriding error in the assessment of the evidence. We therefore award costs of the cross-appeal to the appellants (respondents on the cross-appeal), in the amount of $10,000, all-inclusive. That amount may be set off against the costs awarded on the appeal.

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

"K. Feldman J.A."

"David Brown J.A."