Court of Appeal for Ontario

Citation: 2019 ONCA 702 Date: September 10, 2019 Docket: C66089

Judges: Lauwers, van Rensburg and Roberts JJ.A.

Parties

Between

Williams Distinctive Gems Inc. Appellant (Plaintiff)

and

Advantex Dining Corporation, Advantex Marketing International Inc. and Canadian Imperial Bank of Commerce Respondent (Defendants)

Counsel

Alec McLennan, for the appellant

William A. Chalmers, for the respondent

Hearing and Appeal

Heard: August 26, 2019

On appeal from: The order of Justice Michael R. Gibson of the Superior Court of Justice, dated September 28, 2018, and his costs order, dated January 4, 2019.

Reasons for Decision

[1] Overview of Appeal

The appellant appeals from the dismissal of its action against the respondent, Canadian Imperial Bank of Commerce ("CIBC"), following CIBC's motion for summary judgment. The motion judge found that the appellant's claim against CIBC, its former bank, was discoverable no later than December 2012 and since these proceedings were commenced in July 2017, more than two years later, it was statute-barred.

[2] Costs Appeal

The appellant also seeks leave to appeal the costs order of $50,000 that the motion judge granted in favour of CIBC.

[3] Disposition Summary

For the reasons that follow, we dismiss the appeal from the dismissal of the appellant's claim against the respondent but allow the appeal from the costs order.

Facts

[4] Marketing Agreement

The appellant is a small company that carries on a jewelry business. In June 2012, it entered into a marketing agreement with Advantex. At that time, the appellant executed a marketing plan and a pre-authorized payment authorization by which the appellant agreed to pay as a fee to Advantex 14% of its future sales made through customers' use of CIBC credit cards.

[5] Alleged Misrepresentation

The appellant submits that it did not read any of the marketing plan documents when its representative signed them because of the alleged misrepresentations of Aaron Bougenim, a representative of Advantex, concerning the nature of the marketing plan and the fees to be paid to Advantex. Specifically, the appellant says that Mr. Bougenim misrepresented that fees would only be payable on new customer purchases and not all purchases using CIBC credit cards. The appellant claims it discovered the misrepresentations (which it says are binding on CIBC) when it noticed payment irregularities on its statement in December 2015.

[6] Breach of Fiduciary Duty Claim

The appellant further submits that it only discovered a claim for breach of fiduciary duty against CIBC in May 2018 when it cross-examined CIBC's representative in relation to CIBC's motion and learned that CIBC had a pre-existing and overarching agreement with Advantex that it failed to disclose to the appellant. According to the appellant, the motion judge erred in dismissing the action without dealing with this claim.

[7] Appellant's Position

The appellant argues that the motion judge therefore erred in finding its action was statute-barred against CIBC and that the action should go on to trial.

Analysis

[8] Court's Response

We do not accept these submissions.

[9] Applicable Legal Framework

While there is no challenge to the appellant's position that it did not actually and earlier discover its claims against CIBC, the determinative question is when, pursuant to s. 5(1)(b) of the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B., the appellant ought to have discovered its claims.

[10] Limitation Period Analysis

As ss. 4 and 5 of the Limitations Act, 2002 provide, the basic two-year limitation period begins to run on the day the claim was discovered. The date of discovery is the earlier of the two dates under s. 5(1) of the Act: when (a) the person with the claim first had knowledge of, or (b) a reasonable person with the abilities and in the circumstances of the person with the claim first ought to have had knowledge of, the matters referred to in ss. 5(1)(a)(i) to (iv). If either of these dates is more than two years before the claim was issued, the claim is statute-barred. See: Fennell v. Deol, 2016 ONCA 249, 97 M.V.R. (6th) 1, at para. 20.

[11] Admissions on Cross-Examination

In the present case, the appellant made several admissions through its principal, Keith Williams, on his cross-examination in this application that undermined its position on discoverability. In particular, Mr. Williams admitted that: he knew the fees to Advantex were fixed at 14%; he regularly reviewed the appellant's sales and knew within three months of signing on to the marketing program that there were no new customers; and, had he read the marketing documents when he signed them, he would have known, as he later did when he actually did read them, that the marketing program did not reflect the discussions that he had had with Advantex's representative. In our view, the appellant's admissions amply supported the motion judge's conclusion that had the appellant acted reasonably, it would have discovered its claim against the CIBC by December 2012.

[12] Separate Claims Argument

At the hearing of the appeal, the appellant argued that each sale to a customer represented a separate claim and restarted the limitation period. We do not accept this submission. As pleaded, the appellant's claim is based on the allegation that Advantex and CIBC misrepresented the marketing program at the time the appellant entered into it in June 2012. As a result, it is the date on which the appellant actually or ought to have discovered the misrepresentation that is relevant.

[13] Breach of Fiduciary Duty Claim

With respect to the appellant's allegation of breach of fiduciary duty, we see no error in the motion judge's dismissal of the claim against CIBC as pleaded. The appellant's notice of application and statement of claim do not contain such a claim. The appellant did not seek to amend its claim either before or at CIBC's motion for summary judgment or ask to adjourn the motion in order to enable it to do so. As a result, the motion judge was entitled to dispose of the motion for summary judgment on the basis of the pleadings and materials before him, not on suppositions about what might be pleaded or proved in the future: Canada (Attorney General) v. Lameman, 2008 SCC 14, [2008] 1 S.C.R. 372, at para. 19.

Costs

[14] Error in Costs Award

Turning finally to the costs awarded by the motion judge, we agree that he erred in awarding $50,000 in partial indemnity costs to CIBC. In our view, he failed to apply the principle of proportionality.

[15] Proportionality in Simplified Procedure

This was an action under the simplified procedure. It is well established that the limited monetary ceiling for actions under the simplified rules translates into reduced costs orders: Trafalgar Industries of Canada Ltd. v. Pharmax Ltd., 64 O.R. (3d) 288 (S.C.), at paras. 5-7. The appellant claimed damages of $63,071.17. CIBC chose to bring a summary judgment motion and conduct a lengthy cross-examination of the appellant's principal. It should have been within CIBC's contemplation that its costs, if successful, would be limited and that it was required to exercise constraint in its expenditure of costs or risk not being compensated. The motion judge failed to advert to these factors in keeping with the principle of proportionality and awarded costs that were excessive and unreasonable.

[16] Revised Costs Award

As a result, the amount of costs that would be fair, reasonable and proportionate in the circumstances of this simplified procedure case is $25,000, inclusive of disbursements and applicable taxes.

Disposition

[17] Appeal Decision

For these reasons, the appeal from the dismissal of the appellant's claim against CIBC is dismissed but its appeal from the costs order is allowed. We substitute $25,000 to be paid by the appellant to CIBC for its partial indemnity costs on the motion for summary judgment.

[18] Costs on Appeal

As success is divided on this appeal, we order no costs.

P. Lauwers J.A.

K. van Rensburg J.A.

L.B. Roberts J.A.