COURT OF APPEAL FOR ONTARIO

CITATION: Polla v. Croatian (Toronto) Credit Union Limited, 2020 ONCA 818

DATE: 20201218

DOCKET: C66800

van Rensburg, Pardu and Thorburn JJ.A.

BETWEEN

Ferdinando Polla

Plaintiff (Appellant)

and

Croatian (Toronto) Credit Union Limited, Zvonimir Josipovic, Stephen P. Kovacevic, Stanko Bingula, Anton Jurincic, Mato Menalo, Ante Mimica, Ignac Radencic, Joe Sertic, Josip Vinski, Deposit Insurance Corporation of Ontario, Retford & Bates LLP and Financial Services Commission of Ontario

Defendants (Respondents)

Benjamin Salsberg, for the appellant

Frank E.P. Bowman, Douglas B.B. Stewart and Deepshikha Dutt, for the respondents Zvonimir Josipovic, Stephen P. Kovacevic, Stanko Bingula, Anton Jurincic, Mato Menalo, Ante Mimica, Ignac Radencic and Joe Sertic

Sandra E. Dawe and Jonathan Miller, for the respondent Retford Lane Bates LLP

Heard: July 15, 2020 by videoconference

On appeal from the judgment of Justice Jane Ferguson of the Superior Court of Justice, dated March 13, 2019, with reasons reported at 2018 ONSC 1641.

van Rensburg J.A.:

A. Introduction

[1] This is an appeal from a judgment dismissing the appellant’s action. The appellant sued various parties to recover his lost investment of $5 million in the Croatian (Toronto) Credit Union Limited (the “CCU”). He had discontinued or dismissed his claims against the two regulators of the CCU, the Deposit Insurance Corporation of Ontario (“DICO”) and the Financial Services Commission of Ontario (“FSCO”), and he had obtained default judgment against Josip Vinski, the CCU’s former chief executive officer, who was bankrupt. The action proceeded to trial against the respondents, who were the members of the CCU’s board of directors (the “Board”) and CCU’s external auditors, Retford Lane Bates LLP (“RLB”), in respect of claims for misrepresentation in an offering statement, under the Credit Unions and Caisses Populaires Act, 1994, S.O. 1994, c. 11 (the “Act”), and common law negligence.

[2] After three weeks of trial, the appellant proposed to amend his Amended Statement of Claim to allege a misrepresentation in the offering statement that was not previously pleaded: essentially, that the offering statement’s description of the CCU’s lending services as based on a property’s “appraised value” was a materially untrue statement because the CCU often based residential mortgage loan approvals on the value provided in the property’s purchase and sale agreement, instead of obtaining an independent appraisal opinion. The appellant argued that it was not until midway through the trial that he discovered that some mortgage loans were being made by the CCU based on the price in purchase and sale agreements, and without appraisals. The parties agreed to continue with the trial and to argue the motion at its conclusion as part of their closing submissions. By the end of the trial, it was evident that the appellant’s original allegations of common law and statutory misrepresentation and negligence against the Board and RLB were not going to succeed, and the appellant’s closing submissions made it clear that he was only pursuing the statutory misrepresentation claim set out in his proposed amended pleading.[^1]

[3] The trial judge refused leave to the appellant to amend his pleading, on the basis that the amendment asserted a new claim for statutory misrepresentation that was statute-barred, and that, in any event, the respondents would be irreparably prejudiced if the amendment were permitted. She went on to decide the issues that would have required determination had leave to amend been granted, finding against the appellant on all issues in respect of both liability and damages. The trial judge concluded that the impugned passage in the offering statement was neither a misrepresentation, nor was it material. Even if there had been a material misrepresentation, the respondents were entitled to the statutory defence under s. 82(5) of the Act (they did not believe and had no reasonable grounds to believe that there had been a misrepresentation). Finding that the appellant would have known about the alleged misrepresentation at the time of his investment, the trial judge concluded that his deemed reliance was rebutted under s. 82(2) of the Act. She also determined that the loss of the appellant’s investment, which was the basis for his claim for damages, was not caused by the alleged misrepresentation, and that there was contributory negligence.

[4] The appellant raises a number of arguments on appeal, addressing the trial judge’s refusal to grant leave to amend, as well as her treatment of the various issues respecting liability and damages based on the misrepresentation claim set out in the proposed amendment.

[5] For the reasons that follow, I would dismiss the appeal. I see no error in the trial judge’s refusal to permit the appellant to amend the Amended Statement of Claim because the limitation period for his new statutory misrepresentation claim had expired. As the amendment was properly refused, it is unnecessary to address the appellant’s other grounds of appeal.

B. Facts

[6] The trial judge’s reasons for judgment set out a comprehensive account of the litigation, the appellant’s claims, the respondents’ defences, and the evidence at the trial. The facts relevant to this appeal can be briefly stated.

[7] The CCU was a financially troubled credit union. As a result of a cheque-kiting scheme (referred to by the parties and in the court below as the “Perfex fraud”), and the subsequent withdrawal of a significant number of member deposits, the CCU fell below its liquidity and capital requirements as prescribed under the Act, and increased its overdraft with Credit Union Central of Ontario (“CUCO”) to over $18 million. In order to continue operations, the CCU needed to address the overdraft and to borrow additional funds from CUCO. Working with the regulators and CUCO, CCU prepared a recovery plan. As part of the recovery plan, the CCU issued an offering statement dated May 23, 2008 with the primary purpose of raising at least $3.5 million so that it could overcome the deficiencies created by the Perfex fraud and re-establish lending activity.

[8] The appellant, a retired lawyer, was looking to get back into the mortgage business. The trial judge described the investment as a “dream come true” for the appellant, who wanted to arrange mortgage financing for his clients and earn referral fees. In June 2008, the appellant, through a family company, purchased 50,000 preferred shares of the CCU for $5 million.

[9] By July 23, 2008, and after receiving monies from various subscribers, the CCU had met its required liquidity and capital ratios and was approved to resume lending. In August 2008, the appellant obtained a mortgage loan for $2.7 million from the CCU. This was in addition to a $100,000 loan he had received, arranged by Mr. Vinski, before the CCU was approved to resume lending. Arnold Milan, who was a long-time member of the CCU and business partner of the appellant, and Mr. Milan’s wife also borrowed $2.6 million in August 2008.

[10] These loans, which were discovered by the Board in November 2008, caused the CCU to again fall below its liquidity requirements. The regulators responded with an investigation, resulting in the CCU being placed into administration and DICO taking over its operations in July 2009.

[11] Months after the CCU was placed into administration, and after Mr. Vinski had been suspended from his employment with the CCU, a fraudulent scheme referred to as the “Oklahoma Mortgage Fraud” (the “OMF”), was discovered. This was a complex fraud involving Mr. Vinski and various external parties, in which vacant properties were “flipped” from one fraudster to another at significantly inflated values. Mr. Vinski was convicted of fraud and sentenced to prison, but no one else at the CCU was suspected or charged for participation in the OMF.

[12] The assets of the CCU were eventually liquidated, and the appellant lost his investment.

The Action

[13] The appellant commenced an action in 2010, pleading common law negligence against the respondents. In March 2012, the statement of claim was amended (the “Amended Statement of Claim”) to plead that the appellant’s action against the respondents was also brought under s. 82 and related sections of the Act.

[14] The Act requires, among other things, that an offering statement provide “full, true and plain disclosure of all material facts relating to the securities that the credit union proposes to issue”: s. 77(3). Section 82 provides for a statutory cause of action for misrepresentation in an offering statement as follows:

82 (1) If an offering statement … contains a misrepresentation, a purchaser of a security shall be deemed to have relied upon the misrepresentation if it was a misrepresentation when the purchase was made.

(2) Subsection (1) does not apply if the purchaser knew about the misrepresentation when purchasing the security.

(3) The purchaser has a right of action for damages against,

(a) the credit union;

(b) every person, other than an employee of a credit union, who sells the security on behalf of the credit union;

(c) every director of the credit union at the time the offering statement … was filed with the Superintendent[^2];

(d) every person whose consent has been filed pursuant to a requirement of the regulations but only with respect to reports, opinions or statements that have been made by them; and

(e) every person who signed the offering statement … other than the persons included in clauses (a) to (d).

(5) A person who signed the disclosure certificate … or a director is not liable under this section if [the person] proves one of the following:

3. The person had no reasonable grounds to believe, and did not believe, that there had been a misrepresentation.

(6) In this section,

“misrepresentation” means,

(a) an untrue statement of material fact, or

(b) an omission to state a material fact that is required to be stated or that is necessary to make a statement not misleading in light of the circumstances in which it was made.

[15] The Amended Statement of Claim, at para. 12, asserts the following claims against the Board members:

12. The Plaintiff pleads that the Defendants, Zvonimir Josipovic, Stephen P. Kovacevic, Stanko Bingula, Anton Jurincic, Mato Menalo, Ante Mimica, lgnac Radencic and Joe Sertic negligently induced the Plaintiff to purchase shares in [CCU] in the following manner:

(a) They permitted an Offering Statement to go out to the public when they knew or ought to have known that it was misleading; in particular, they knew that the true financial difficulty of the Credit Union was not simply a consequence of a “member’s account deficiency”, but rather the result of a fraud or frauds perpetrated upon the Credit Union by its own officers in conspiracy with third parties;

(b) They permitted Josip Vinski to remain in a position of authority, speaking for [CCU] until April 30, 2009 when they were or ought to have been aware that he was unfit for the position and had already acted fraudulently in the "Oklahoma" mortgages described below and the Perfex matters. They knew or ought to have known that he was likely to mislead members of the public in the future, including those in the position of the Plaintiff herein;

(c) They permitted the mass redemption of term deposits in excess of $100,000.00 by the Credit Union in favour of their friends and acquaintances.

[16] Paragraph 15 of the Amended Statement of Claim asserts the following claims against RLB:

15. The Plaintiff pleads that the Defendant, [RLB] negligently induced the Plaintiff to invest in shares in [CCU] in the following manner:

(a) [RLB] failed to abide by the terms of its own engagement letter with [CCU] in failing to recognize the fraud perpetrated upon the Credit Union by the "Oklahoma" mortgage fraudsters as described in Superior Court action #CV-09-8471-00CL;

(b) [RLB] failed to recognize and indicate that loans in excess of [CCU’s] permissible limit of $300,000.00 had frequently been made;

(c) [RLB] negligently failed to recognize the absence of appraisals in the "Oklahoma" loan files of the Credit Union as described in Superior Court action #CV-09 8471-00CL;

(d) [RLB] prepared and delivered financial statements which they knew or ought to have known did not fairly represent, in all material respects, the financial position of the Credit Union.

[17] Although the Amended Statement of Claim pleads that the claim for damages is “at common law and pursuant to the provisions of the [Act]”, the only claim against the respondents in respect of a misrepresentation in an offering statement is as stated in para. 12(a) – that the offering statement was misleading “in particular, [the Board] knew that the true financial difficulty of the Credit Union was not simply a consequence of a ‘member’s account deficiency’, but rather the result of a fraud or frauds perpetrated upon the Credit Union by its own officers in conspiracy with third parties” (emphasis added).

[18] At the appellant’s examination for discovery in December 2011, an undertaking was given to set out the “misleading and/or misleading by omission statements in the [offering statement]”. The undertaking answers provided in March 2012 did not mention, expressly or by implication, any misstatement or omission relating to appraisals.[^3]

The Motion to Amend

[19] Approximately three weeks into the trial, the appellant sought to further amend the Amended Statement of Claim. He proposed to add the following paragraph:

11 A. The aforementioned Offering Statement provided, inter alia, at page 17, as follows:

“Lending Services

CCU [Croatian (Toronto) Credit Union Limited] is licensed by the FSCO as a Class 2 Credit Union under the Act. As part of its license, CCU is subject to certain limits on its lending. The Board has approved, and management follows, lending policies in all areas to minimize the risk of loan losses. These lending policies are in compliance with the Act and are applied by the Corporation’s Credit Committee. For Residential Mortgages, the Corporation will lend up to 95% of the appraised value of the property where an insurance company insures the mortgage. Otherwise, the loan will be limited to a maximum of 75% of the appraised value. The Corporation also has a recommended debt service level of 40% of the borrower’s available income.”

[20] The appellant also proposed to amend para. 12(a) of the Amended Statement of Claim to add to the pleading against the Board that they “knew that the Credit Union had made, and was continuing to make, mortgage loans without appraisals”, and to add a pleading against RLB, as para. 15(e):

(e) [RLB] consented to the attachment of the Audited Financial Statement of the [CCU] for the years 2015, 2016 and 2017 when they knew that the contents of the Offering Statement at page 17 thereof respecting “appraised values” were untrue and that the said financial statements were prepared on the basis that appraisals were not always required and taken by the credit union in respect of mortgage loans made and advanced by it. The Plaintiff pleads that such conduct is contrary to the provisions of s. 82 of the [Act] and the standard of care applicable to professional accountants in like circumstances.

[21] Essentially the representation that the appellant proposed to assert in his proposed amendment was that the CCU was making loans on the security of residential properties only in accordance with the terms of its credit policies, that is, where there had been an appraisal, and that this was a misrepresentation because the CCU’s practice was to proceed without appraisals in some circumstances. The appellant’s theory was that if the CCU had required appraisals to lend on residential properties, as represented in the offering statement, rather than using agreements of purchase and sale, the OMF would have been detected and the CCU would not have failed.

[22] The motion to amend was supported by the affidavit of one of the appellant’s lawyers (not his counsel on appeal). The lawyer deposed that it was determined only during the trial that the CCU was routinely and extensively lending on the security of residential mortgages without first obtaining appraisals of the subject properties, and that this was contrary to the representation concerning lending services as expressed at p. 17 of the offering statement. The lawyer deposed that the motion to amend was brought out of an abundance of caution, and that the proposed amendment consisted of facts that were known to the Board, that were never previously disclosed to the appellant and that already formed part of the existing factual matrix as pleaded in the Amended Statement of Claim. The lawyer confirmed under cross-examination out of court that in 2012, during the course of the proceedings, he and the appellant had received a copy of the CCU’s Board-approved 2002 credit policy, which disclosed that when making loans, purchase and sale agreements could substitute for an appraisal.

[23] On the suggestion and with the agreement of all counsel, the trial judge directed that the motion to amend would not be determined at the time it was brought, but that it would be argued by counsel as part of their closing submissions. Counsel for all parties confirm that this procedure was adopted in order to minimize further disruption to the trial schedule, and that the trial continued under the assumption that the amendment had been allowed for evidentiary purposes and the understanding that the motion was opposed.

[24] The trial judge noted that, by the end of the trial, the appellant was advancing only claims for statutory misrepresentation in relation to the misrepresentation that he sought to add in his motion to amend, and that he had abandoned his other claims in the action.[^4]

The Trial Judge’s Reasons for Refusing the Amendment

[25] The trial judge noted that the appellant proposed to amend the Amended Statement of Claim to allege a new misrepresentation – essentially, that the offering statement represented that the CCU always based its mortgages on the opinion of a professional appraiser, even though the Board knew that the CCU frequently approved mortgages based on an agreement of purchase and sale.

[26] The respondents opposed the amendment on the basis that this was a new and separate misrepresentation claim that was discoverable since 2012 when the appellant received a copy of the CCU’s 2002 credit policy, and that the two-year limitation period for asserting a claim in respect of this misrepresentation had accordingly expired. The respondents also opposed the amendment on the basis that it would cause them prejudice which could not be compensated for by costs.

[27] The trial judge agreed with the respondents that the proposed amendment sought to advance a new and separate misrepresentation claim. Referring to para. 12(a) of the Amended Statement of Claim, she observed that the appellant was pleading that the defendants were at fault for their failure to disclose a “fraud or frauds” from which the CCU was suffering. Although the factual matrix as pleaded set out the broad context in which this misrepresentation occurred, the act complained of was fundamentally different. While the existing pleading pleaded a misrepresentation in the offering statement, the proposed amendment was based on a “different act of the defendants, a separate alleged failure to disclose”: at para. 158. The trial judge observed that “the proposed amendment [alleged] an entirely separate misrepresentation or failure to disclose on the part of the defendants”, and that it “[was] not ‘part and parcel of the dealings’ already described in the existing amended statement of claim”: at para. 159.

[28] The trial judge concluded that the misrepresentation referred to in the proposed amendment was discoverable since 2012 when the appellant received the 2002 credit policy, which clearly noted that agreements of purchase and sale could be used to determine property values, and that this was not, as the appellant had argued, a “bombshell” that was dropped during the trial.[^5] A reasonable person would have assumed that the 2002 credit policy was in place at the time that the CCU distributed the offering statement, and “[i]f this had struck [the appellant] as giving rise to material misrepresentation in the [offering statement], he could have amended his statement of claim to add that allegation at that time”: at para. 160. The two-year limitation period under s. 4 of the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B had expired.

[29] The trial judge concluded that, in any event, the respondents, who had defended the action for eight years and into the trial based on the original pleaded misrepresentations, would suffer irreparable prejudice if she allowed an amendment that was raised only after the appellant and several other material witnesses had testified: at para. 162. She characterized the appellant’s attempt to amend his pleadings as a “wild goose chase”, and she stated that “[h]e [could not] evolve his claim mid-way during trial to address different acts by the defendants based on an entirely new theory of the case”: at para. 163.

C. Analysis

[30] The appellant asserts that the trial judge erred (1) in concluding that the proposed amendment was the pleading of a new claim which was statute-barred; and (2) in refusing the amendment in any event on the basis of prejudice to the respondents.

[31] The trial judge’s conclusion that the proposed amendment made a new claim is a legal determination, which is subject to the “correctness” standard of review on appeal: see Blueberry River First Nation v. Laird, 2020 BCCA 76, 32 B.C.L.R. (6th) 287, at paras. 20-21; Strathan Corporation v. Khan, 2019 ONCA 418, at paras. 7-8. Her conclusion that the limitation period had expired is a determination of mixed fact and law, that was based in this case on a finding of fact as to when the appellant ought to have known about the new misrepresentation, and reviewable on a standard of “palpable and overriding error”: see Longo v. MacLaren Art Centre, 2014 ONCA 526, 323 O.A.C. 246, at para. 38. The same deferential standard of review applies to the refusal of an amendment based on an assessment of prejudice: Tuffnail v. Meekes, 2020 ONCA 340, 449 D.L.R. (4th) 478, at para. 120, leave to appeal refused, [2020] S.C.C.A. No. 269.

[32] The general rule respecting the amendment of pleadings is that an amendment shall be granted at any stage of a proceeding on such terms as are just, unless prejudice would result that could not be compensated for by costs or an adjournment: Rules of Civil Procedure, R.R.O. 1990, Reg. 194, r. 26.01. The expiry of a limitation period in respect of a proposed new claim is a form of non-compensable prejudice, where leave to amend to assert the new claim will be refused: Klassen v. Beausoleil, 2019 ONCA 407, 34 C.P.C. (8th) 180, at para. 26.

[33] There is no real dispute between the parties about the applicable test. In 1100997 Ontario Limited v. North Elgin Centre Inc., 2016 ONCA 848, 409 D.L.R. (4th) 382, this court observed that an amendment to a statement of claim will be refused if it seeks to assert a “new cause of action” after the expiry of the applicable limitation period. As this court explained, at para. 19, in this context, a “cause of action” is “a factual situation the existence of which entitles one person to obtain from the court a remedy against another person” (as opposed to the other sense in which the term “cause of action” is used – as the form of action or legal label attached to a claim: see the discussion in Ivany v. Financiere Telco Inc., 2011 ONSC 2785, at paras. 28-33).

[34] The relevant principles are summarized in Paul M. Perell & John W. Morden, The Law of Civil Procedure in Ontario, 4th ed. (Toronto: LexisNexis Canada, 2020), at pp. 220-21, as follows:

A new cause of action is not asserted if the amendment pleads an alternative claim for relief out of the same facts previously pleaded and no new facts are relied upon, or amount simply to different legal conclusions drawn from the same set of facts, or simply provide particulars of an allegation already pled or additional facts upon [which] the original right of action is based.

This passage has been cited with approval by this court. See 1100997 Ontario Limited, at para. 20, Davis v. East Side Mario’s Barrie, 2018 ONCA 410, at para. 32, and Klassen, at para. 29.

[35] The appellant asserts that the trial judge erred when she characterized the proposed amendment as pleading a new cause of action. He argues that the facts that were pleaded in the Amended Statement of Claim – before the motion to amend was brought during the trial – were broad enough to encompass the statutory misrepresentation claim that was advanced during the trial. He submits that he was not asserting a new cause of action but simply a specific particular of his case that arose out of the factual matrix already pleaded: that there was an offering statement that contained misrepresentations. Specifically, he asserts that there was a “single instance of tortious conduct contravening the Act, namely the distribution of the [offering statement] to [the appellant].”

[36] I disagree.

[37] The necessary starting point is to consider the substance of the appellant’s claim before he sought the pleadings amendment. What acts or omissions that would give rise to the respondents’ liability were already at issue in the action? The court must determine whether the existing pleading already contains the factual matrix to support any claim to which the proposed amendment relates, or whether the amendment seeks to put forward additional facts that are necessary and material to a new and different claim.

[38] In conducting this assessment, the court must read the pleadings generously in favour of the proposed amendment: Klassen,at para. 30; Rabb Construction Ltd. v. MacEwen Petroleum Inc., 2018 ONCA 170, 29 C.P.C. (8th) 146, at para. 8. The existing pleadings, together with the proposed amendment, must be considered in a functional way – that is, keeping in mind that the role of pleadings is to give notice of the lis between the parties. As such, the question in this case is whether the respondents would reasonably have understood, from the Amended Statement of Claim and the particulars provided on discovery, that the appellant was pursuing a claim in respect of the matter addressed by the proposed amendment.

[39] The trial judge accepted that there was a connection between the facts pleaded in the Amended Statement of Claim and the proposed amendment, since the appellant was always pleading that there was a misrepresentation in the offering statement. As such the factual circumstances or “matrix” that were already pleaded provided the broad context in which the statutory misrepresentation referred to in the proposed amendment arose. The original pleading however alleged that the misrepresentation (by omission) was a failure to disclose frauds, while the proposed amendment was based on a different act of the respondents and a separate failure to disclose.

[40] There is no error here. The trial judge’s understanding of the appellant’s claims was based not only on her comparison of the proposed amendment to the Amended Statement of Claim. She knew that the appellant had further particularized his claims for misrepresentation (in 2012), at which time the misrepresentation referred to in the proposed amendment had not been raised. She also had the benefit of presiding over the trial, including the period leading up to the proposed amendment, when the claims that the appellant was pursuing had been set out and addressed in the evidence of the witnesses. All of this informed her conclusion that the appellant was seeking to “evolve his claim mid-way during trial to address different acts by the defendants based on an entirely new theory of the case”: at para. 163.

[41] The appellant’s existing claim was not, as he asserts before this court, a statutory claim in respect of a misleading offering statement. The distribution of the offering statement was not the “act or omission” that he was pursuing in his claim. Rather, he was pursuing a claim for statutory misrepresentation under the Act. The wording of s. 82 of the Act makes it clear that the claim is in respect of a misrepresentation (as defined by the Act) in an offering statement, and not in respect of the distribution of the offering statement itself. Section 82(1) provides for deemed reliance “upon the misrepresentation” (emphasis added) where the offering statement contains a misrepresentation if it was a misrepresentation when the purchase of securities was made. The statutory defences also relate to specific misrepresentations. Under s. 82(2), deemed reliance does not apply “if the purchaser knew about the misrepresentation when purchasing the security” (emphasis added). Section 82(5) provides that a person who signed the disclosure certificate or a director is not liable if the person proves “[t]he person had no reasonable grounds to believe, and did not believe, that there had been a misrepresentation” (emphasis added).

[42] Having pursued an action in respect of a statutory misrepresentation in an offering statement, it was not open to the appellant to change course in the middle of the trial – to advance a claim in respect of a new and different misrepresentation regarding the failure to obtain appraisals – that had not been pursued up to that point in the action. The existing pleading did not contain the factual matrix that would support the claim asserted in the proposed amendment. The proposed amendment, although related to the same offering statement, alleged an entirely different misrepresentation from what had been pleaded in the Amended Statement of Claim and particularized during the discovery process. As such, the trial judge was correct in concluding that the misrepresentation relating to the basis on which the CCU made loans was based on a different act of the respondents, a separate alleged failure to disclose, and as such was not “part and parcel of” the claims the appellant was advancing in his Amended Statement of Claim.

[43] Finally, the appellant challenges the trial judge’s conclusion that the misrepresentation claim that he proposed to advance in the amendment to his Amended Statement of Claim was discoverable in 2012. The appellant asserts that he only discovered this misrepresentation during the trial, after hearing the evidence of two Board witnesses and seeing the 2005 credit policy, and that, as such, his pleading is not statute-barred.

[44] This argument cannot succeed. While the appellant may only have adverted to the claim giving rise to the amendment in the course of the trial, the trial judge concluded that the alleged misrepresentation was discoverable in 2012 when the appellant received the Board-approved 2002 credit policy, which clearly noted that agreements of purchase and sale were being used to determine property values, and that after that point, a reasonable person would have assumed that the 2002 credit policy was in place when the offering statement was distributed. There is no reason to interfere with the trial judge’s conclusion that the new misrepresentation claim was discoverable in 2012. Her conclusion was fully supported by the evidence. As such the amendment of the Amended Statement of Claim to assert a new statutory misrepresentation claim was properly refused because that claim was statute-barred.

[45] The conclusion that the new misrepresentation claim, which was ultimately the only claim relied on by the appellant at trial, was properly dismissed because it was statute-barred is sufficient to dispose of this appeal.

D. Disposition

[46] For these reasons I would dismiss the appeal. I would award costs to the respondents in the amounts agreed between the parties: $45,000 to the Board respondents and $30,000 to RLB, both amounts inclusive of disbursements and applicable taxes.

Released: December 18, 2020 (“K.M.v.R.”)

“K. van Rensburg J.A.”

“I agree. G. Pardu J.A.”

“I agree. Thorburn J.A.”

[^1]: The reasons for judgment deal almost entirely with the statutory misrepresentation claim raised by the proposed amendment. The trial judge did however address and dismiss the appellant’s common law negligence claim against the Board notwithstanding that the appellant’s closing submissions focused only on the statutory misrepresentation claim raised by the proposed amendment: see paras. 176-186.

[^2]: The Act has since been amended to reflect the fact that the Financial Services Regulatory Authority of Ontario (“FSRA”) replaced FSCO and DICO, including replacement in this passage of the reference to the Superintendent (of FSCO) by the Chief Executive Officer (of FSRA): S.O. 2018, c. 8, Sched. 7, s. 5.

[^3]: This is from the trial judge’s reasons at para. 155(vi). The answers to undertakings were not part of the appeal record. According to the written submissions at trial by RLB, which were filed on the appeal, the appellant’s answers to undertakings pointed to the following instances of alleged misstatement or omission: (1) the 'Perfex fraud' is misdescribed in the Offering Statement; (2) the assets of the Credit Union are overstated by $8.2 million; (3) the Offering Statement does not disclose that there were mass redemptions of deposits in June and July, 2007; (4) the Offering Statement does not disclose that most of the commercial loan portfolio was a loan on one property in which Mr. Vinski had an interest; and (5) the Offering Statement does not disclose that Mr. Vinski operated without supervision by the Board of the Credit Union.

[^4]: Reasons for Judgment, at paras. 8 and 139. Notwithstanding that she regarded the other claims as having been abandoned, the trial judge’s reasons briefly addressed and dismissed the appellant’s common law negligence claim against the Board. See note 1 above.

[^5]: As the trial judge noted, the Board-approved credit policy that was in place when the offering statement was distributed was the 2005 credit policy, however, its relevant terms were essentially the same as the 2002 credit policy.