Court of Appeal for Ontario

Date: 2021-08-11 Docket: C68041

Strathy C.J.O., Brown and Miller JJ.A.

Between:

Paul Dass, 1218934 Ontario Limited and 2169460 Ontario Limited Plaintiffs (Appellants)

And:

Mark Kay & CFO Capital Defendants (Respondents)

Counsel: Osborne G. Barnwell, for the appellants Kim T. Duong, for the respondents

Heard: February 10, 2021 by video conference

On appeal from the judgment of Justice Judy A. Fowler Byrne of the Superior Court of Justice, dated January 17, 2020.

B.W. Miller J.A.:

A. Overview

[1] The appellants appeal from the motion judge’s dismissal of their action on a motion for summary judgment. The motion judge concluded that the appellants’ claims were statute-barred under the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B. The appellants argue that in reaching that conclusion, the motion judge committed multiple errors of law and palpable and overriding errors of fact.

[2] For the reasons that follow, I conclude that the motion judge did not err and that the appeal should be dismissed.

B. Background

[3] The appellant Paul Dass is the principal of the two corporate appellants, 1218934 Ontario Limited and 2169460 Ontario Limited. In these reasons, I will refer to Paul Dass as “Mr. Dass”, and Mr. Dass and the two corporate appellants as, collectively, “the appellants”.

[4] The respondent Mark Kay is a mortgage broker and the principal of the respondent CFO Capital, which carries on business as a mortgage brokerage.

[5] In early 2015, the respondents were asked by their client Jaswant Dass, brother of Mr. Dass, to secure financing for the $6 million purchase of a commercial property on Drew Road in Toronto. The respondents submitted the loan application to Roynat Capital (“Roynat”), an affiliate of the Bank of Nova Scotia (“Scotiabank”). The loan application listed Mr. Dass and his company 1829131 Ontario Inc. (“Teletime”), which is not a party to this appeal, as guarantors. The loan application also indicated that Teletime would be the tenant and included Teletime’s financial statements in support (the “Drew Road Application”).

[6] Mr. Dass, however, knew nothing about the Drew Road Application. He had never agreed to guarantee the loan, was not involved in any way with the purchase, had no intention of leasing the property, and had not authorized the disclosure of the financial statements. Jaswant Dass was ultimately unsuccessful with the Drew Road Application. [1]

[7] Mr. Dass first learned about the Drew Road Application in July 2015, during his own negotiations with Roynat. He was seeking financing for the purchase of a commercial property on Wolfedale Road, Mississauga (the “Wolfedale Application”).

[8] A financial officer at Roynat, Chad Pitre, brought the Drew Road Application to Mr. Dass’s attention on July 24, 2015. Mr. Dass responded that he was not involved with the Drew Road Application and he had never agreed to guarantee the loan. Mr. Pitre provided Mr. Dass with the name of the brokerage that sent the Drew Road Application to Roynat’s office - the respondent CFO Capital.

[9] Mr. Dass testified that from the time he first heard from Mr. Pitre about the Drew Road Application on July 24, he was concerned that it could interfere with the Wolfedale Application. He testified, however, that he thought he could manage the situation with Roynat.

[10] Roynat later declined the Wolfedale Application. Mr. Dass testified that in August, Mr. Pitre told him that the Application was refused because Roynat no longer wanted to finance his type of business - not because of his association with the Drew Road Application.

[11] Nevertheless, on August 21, 2015, after receiving the news, Mr. Dass sent an email to his lawyer, copying Mr. Pitre, a representative of CFO Capital, and others. In the email, he complained that the refusal was the result of “improper action by the broker and Jaswant Dass” that harmed his reputation in the eyes of Roynat. He expressed concern that he could lose millions of dollars in business as a result and asked his lawyer’s opinion as to whether he could pursue criminal charges against Jaswant Dass and CFO Capital. The email, in its entirety, read as follows:

Hi, Osborne

Please see attached fraud application filed to Roynat the lender by Broker called CFO GROUP, who were hired by Jaswant Dass for his business loan requisition. And my name is written the loan application without my authority and broker filed this application without my consent.

I had request filed to Roynat for my business requirements, this week i got call from Roynat officer that application is declined.

I had 3 loan requirements in last 3 years and Roynat full filled without problems.

My request with Roynat was submitted in May 2015, Roynat officer gave me term sheet also gave me term sheet for loan with few pending items.

Roynat officer told me he spoke to the higher persons in-charge at Roynat all looks good, every thing changed when application was submitted by mortgage broker on behalf of Jaswant Dass to Roynat in July, since then all have changed i started to get calls from Roynat that the application sent by Jaswant’s broker might mess up my loan request.

And in my thinking mine and my companies image got deteriorated in the view of the lender Roynat due to improper action by the broker and Jaswant Dass.

Jaswant Dass lied to my accountant to take my financial information.

Due to this stupid action by broker and Jaswant could end up i lose the property required for my business expansion. And it will result in MILLIONS OF DOLLARS OF LOSS IN BUSINESS.

PLEASE ALSO ADVISE ME IF I CAN GO TO LOCAL POLICE STATION, IF POSSIBLE TO FILE FRAUDULENT CASE AGAINST THE BROKER INVOLVED AND JASWANT DASS

Paul Dass [sic]

[12] Around this time, Mr. Dass was also attempting to finalize a loan from Scotiabank to refinance another property, located at Dixie Road, Mississauga (the “Dixie Road Application”).

[13] When Roynat denied the Wolfedale Application, Mr. Dass turned to Scotiabank. Scotiabank ultimately denied both the Wolfedale Application and the Dixie Road Application.

[14] Mr. Dass eventually secured financing for the Wolfedale property through other lenders, although at a higher interest rate than what was offered by Roynat, and completed the purchase. He also obtained financing for the Dixie Road property at a higher rate than what was initially offered by Scotiabank.

[15] Mr. Dass stated that in January 2018, when it was time to renew the loan for the Wolfedale property, he approached Roynat and Scotiabank again. At this time, representatives of each allegedly explained that he had been blacklisted due to the Drew Road Application submitted by CFO Capital in 2015.

C. Procedural History

[16] The appellants’ statement of claim was issued on April 27, 2018. In it, the appellants described their claim as seeking damages for the reputational and commercial harm suffered by the appellants and caused by the respondents’ submission of the Drew Road Application:

The claim seeks damages for the unauthorized use of personal information by the defendants in a loan application put forward, seemingly, on behalf of the individual plaintiff and his corporate interests. The unauthorized loan application was made to the plaintiffs’ commercial lenders for financing. That unauthorized application caused the plaintiffs’ commercial lender to refuse to do business with them. Implicit in that refusal is the irreparable reputational injury to the individual plaintiff.

[17] The respondents brought a motion for summary judgment on the basis that the appellants’ claim was statute-barred, having been brought outside the two-year limitation period established by s. 4 of the Limitations Act, 2002.

[18] The motion judge accepted that the claim was suitable for summary judgment and dismissed the action as statute-barred.

[19] The motion judge found that the appellants:

• knew on July 24, 2015 of the unauthorized use of their information in the Drew Road Application;
• knew on July 27, 2015 of the respondent CFO Capital’s involvement; and
• had concluded, by August 21, 2015, that Mr. Dass would suffer financial loss as a result of the Drew Road Application, as evidenced by Mr. Dass’s email on that date to his counsel.

[20] Accordingly, the motion judge found that by August 21, 2015, the appellants were aware of all of the material facts required to advance their claim. As the statement of claim was not issued until April 27, 2018, more than two years later, the action was statute-barred.

D. Issues on Appeal

[21] The appellants raise two grounds of appeal, alleging: (i) the motion judge erred in law by misinterpreting s. 5 of the Limitations Act, 2002 and (ii) the motion judge made palpable and overriding misapprehensions of fact.

E. Analysis

(1) The Law – The Limitations Act, 2002

[22] Section 4 of the Limitations Act, 2002 states: “[u]nless this Act provides otherwise, a proceeding shall not be commenced in respect of a claim after the second anniversary of the day on which the claim was discovered.”

[23] The determination of when a claim was discovered is governed by s. 5:

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). 2002, c. 24, Sched. B, s. 5 (1).

Presumption

(2) A person with a claim shall be presumed to have known of the matters referred to in clause (1) (a) on the day the act or omission on which the claim is based took place, unless the contrary is proved. 2002, c. 24, Sched. B, s. 5 (2).

[24] Although the Limitations Act, 2002 essentially codified the existing discoverability principle (Grant Thornton LLP v. New Brunswick, 2021 SCC 31, at para. 35), s. 5(1)(a)(iv) added a new factor to that analysis – the appropriateness of bringing a proceeding. This factor is central to this appeal.

[25] This court’s jurisprudence interpreting s. 5(1)(a)(iv) was recently distilled into three principles by Hourigan J.A. in Sosnowski v. MacEwan Petroleum Inc., 2019 ONCA 1005, 441 D.L.R. (4th) 393, at paras. 16-19.

[26] First, the determination of whether a proceeding is an appropriate means to seek to remedy an injury, loss, or damage depends on the factual and statutory context of each case: Sosnowski, at para. 16.

[27] Second, this court has recognized two non-exclusive factors that can operate to delay the date on which a claimant would know that a proceeding would be an appropriate means to remedy a loss: (i) when the plaintiff relied on the defendant’s superior knowledge and expertise, particularly where the defendant has taken steps to ameliorate the plaintiff’s loss; and (ii) “where an alternative dispute resolution process offers an adequate remedy, and it has not been completed”: Sosnowski, at para. 17.

[28] Third, “appropriate” means that it is legally appropriate to bring a proceeding, rather than practically advantageous. This third principle excludes from consideration many practical and tactical reasons a claimant might have for not commencing a proceeding at an earlier time when it was legally appropriate to do so, such as the belief that the claim might be difficult to prove. Put differently, “[a]ppropriate does not include an evaluation of whether a civil proceeding will succeed”: Sosnowski, at paras. 18-19.

(2) Standard of Review

[29] The determination of whether a limitation period has expired is a question of mixed fact and law and the motion judge’s conclusion is entitled to deference in the absence of a palpable and overriding error in her assessment of the evidence: Longo v. MacLaren Art Centre Inc., 2014 ONCA 526 at para. 38.

(3) Issue 1: The Motion Judge Did Not Err in Law in Her Analysis under s. 5 of the Limitations Act, 2002

(i) The Appellants’ Argument

[30] The appellants argue that the motion judge erred in her interpretation of s. 5 of the Limitations Act, 2002. They allege that she erred in her understanding of what it means for a person to have discovered that damage has occurred and that, pursuant to s. 5(1)(a)(iv), “a proceeding would be an appropriate means to seek to remedy it”, including by: (i) unreasonably restricting her analysis to whether the appellants had knowledge of the facts that established the cause of action; (ii) overlooking the additional requirement in s. 5 that a complainant know that the defendant caused the complainant damage or loss; and (iii) improperly concluding that Mr. Dass had assumed he would suffer financial loss.

[31] In particular, the appellants argue that they did not know that CFO Capitol’s actions had resulted in any loss worth pursuing until 2018, when they were advised by Roynat that the appellants had been blacklisted due to the Drew Road Application.

[32] The appellants claimed that Mr. Dass knew in 2015 that Jaswant Dass and CFO Capital had submitted a fraudulent loan application falsely claiming that Mr. Dass and his company agreed to guarantee the loan. Mr. Dass’s evidence was that he believed his reputation was tarnished by the Drew Road Application and that he would face a significant financial loss as a result. That loss would be the lost opportunity to expand his business and the loss resulting from higher financing costs.

[33] However, Mr. Dass testified that in August 2015, he had no evidence to prove his suspicion that his inability to obtain financing was the result of the respondents’ conduct. He believed it to be the case, but the lenders denied it. This created an evidential problem. He sought counsel from his lawyer, who advised him that an action against the respondents would be unlikely to succeed given the absence of evidence that the respondents had caused his loss. He was told that an action was therefore inadvisable.

[34] On Mr. Dass’ evidence, it was not until 2018, when he approached Roynat for the renewal of the mortgage for Wolfedale, that he knew he had suffered any loss. At that time, a representative of Roynat told him that he had been blacklisted in 2015 because of the Drew Road Application. Armed with that knowledge, he commenced his action.

(ii) The Motion Judge Did Not Err

[35] The motion judge did not err in her articulation or application of the discoverability principle as codified in s. 5(1). As recently restated by the Supreme Court, a claim is discovered when the material facts that are actually or constructively known by a plaintiff enable the plaintiff to determine that it has prima facie grounds to infer liability on the part of the defendant or, equivalently, enable the plaintiff “to draw a plausible inference of liability on the part of the defendant”: Grant Thornton, para. 45. The motion judge found, largely on the strength of the August 21, 2015 email, that Mr. Dass had the requisite knowledge by that date. The email speaks for itself, and the motion judge made no error in finding that the claim was discovered by that date.

[36] Section 5(1)(a)(iv), as the appellants note, postpones the start of the limitation period until a claimant knows that “a proceeding would be an appropriate means to seek to remedy” an injury, loss, or damage.

[37] The appellants argue that the motion judge erred by rejecting the proposition that an assessment of the appropriateness of litigation, within the meaning of 5(1)(a)(iv), includes an assessment of the prospect of the success of litigation, particularly where the party has relied on an assessment of merits by legal counsel.

[38] For the reasons given below, I do not agree that the motion judge erred.

[39] First, as explained above, the case law interpreting s. 5(1)(a)(iv) has, to date, recognized two situations delaying the start of the limitation period: (i) where a plaintiff relied on a defendant’s superior knowledge and expertise, especially where the defendant took steps to ameliorate the loss; and (ii) where the parties have engaged an alternative dispute resolution process offering an adequate remedy and it has not been completed. The appellants do not come within either situation.

[40] Claimants such as the appellants who have relied on the advice of their legal counsel are not in an analogous position to claimants who have relied on the assessment of their situation provided by defendants. The case law recognizes that it would be unreasonable to discourage claimants from reasonably relying on a defendant’s good-faith efforts to remedy an issue and thereby potentially avoiding the need for a lawsuit: Brown v. Baum, 2016 ONCA 325, 397 D.L.R. (4th) 161, at paras. 18, 24; Presidential MSH Corp. v. Marr, Foster & Co. LLP, 2017 ONCA 325, 135 O.R. (3d) 321, at paras. 20, 26. Here, the appellants have been in no way dependent on the respondents for information, an understanding of their position in relation to Roynat or any other lender, or efforts to remedy the damage they claim to have suffered. The appellants accordingly never delayed bringing an action on that basis.

[41] Neither have the appellants engaged in an alternative dispute resolution process with the respondents, such that it would be unfair not to take that process into account under s. 5(1)(a)(iv): 407 ETR Concession Co. Ltd. v. Day, 2016 ONCA 709, 133 O.R. (3d) 762, at para. 40, leave to appeal refused, [2016] S.C.C.A. No. 509; Presidential, at paras. 28-29.

[42] The appellants are not, of course, restricted to the two categories of cases identified to date that delay the start of the limitation period. But if they cannot bring themselves within those two categories they must propose another set of circumstances in which it could be said, on a principled basis, that a person with a claim could not have known that an action would be an appropriate means to remedy the injury, loss, or damage.

[43] What the appellants have proposed is, in effect, an expansion of the class of matters under s. 5(1)(a)(iv) to include any situation where plaintiffs know they have been wronged or suffered damage at the hands of the defendants, but doubt they will be able to marshal the evidence to prove the claim and are unsure whether the scale of the eventual commercial loss will make an action remunerative.

[44] This proposal has been considered and rejected by courts repeatedly: Sosnowski, at para. 19; Peixeiro v. Haberman, [1997] 3 S.C.R. 549, at para. 18. The motion judge made no error in not accepting it. To give s. 5(1)(a)(iv) the meaning that the appellants propose would substantially reduce the certainty the Limitations Act, 2002 is intended to provide.

[45] Second, as the respondents argue, the appellants’ argument conflates the concepts of “damage” and “damages”. The difference has been explained by the Nova Scotia Court of Appeal in Smith v. Union of Icelandic Fish Producers Ltd., 2005 NSCA 145, 238 N.S.R. (2d) 145, at para. 119, adopting A.I. Ogus’ explanation given in The Law of Damages (London, Butterworths, 1973), at p. 2: “‘damages’ should connote the sum of money payable by way of compensation …, while the use of ‘damage’ is best confined to instances where it refers to the injury inflicted by the tort or breach of contract” (emphasis in original). See also Hamilton (City) v. Metcalfe & Mansfield Capital Corporation, 2012 ONCA 156, 347 D.L.R. (4th) 657, at para. 55; Brozmanova v. Tarshis, 2018 ONCA 523, at para. 35.

[46] The limitation period does not commence only when one can ascertain what damages one would be entitled to as a remedy, such that one would be better able to assess whether litigation would be an attractive option.

[47] Accordingly, I reject the appellants’ arguments under this ground of appeal. The motion judge did not err in law in her interpretation of the Limitations Act, 2002.

(4) Issue 2: The Motion Judge Did Not Commit Any Palpable and Overriding Errors in Her Analysis Under s. 5 of the Limitations Act, 2002

[48] The appellants argue that the motion judge made palpable and overriding errors of fact in her characterization of the loss that the appellants claim to have suffered.

[49] The appellants argue that there were two separate claims: (i) damages for Mr. Dass’ loss of reputation, quantified at $200,000 and (ii) damages for the higher interest costs payable by the appellant corporations, quantified at $500,000. The appellants argue that the motion judge only considered the latter.

[50] They further argue that the motion judge erred in finding that the appellants knew they had suffered damage in July 2015, and by ignoring the fact that Mr. Dass sought legal advice to determine whether he should commence an action.

[51] I do not agree that the motion judge made any error.

[52] The motion judge made no error in finding that Mr. Dass knew in July 2015 that his reputation had been damaged by the actions of CFO Capital and that a proceeding was an appropriate means of seeking a remedy. The losses incurred by the corporate appellants as a result of having to pay disadvantageous interest rates were a direct consequence of Mr. Dass’ loss of reputation caused by the Drew Road Application. The motion judge found that Mr. Dass knew this in July 2015. That finding was open to her.

[53] Similarly, the motion judge did not overlook any aspect of the appellants’ claim. She linked Mr. Dass’ alleged loss of reputation and the increased cost of borrowing incurred by the corporate appellants because they were, in fact, linked. The loss of reputation resulted in the increased carrying costs.

[54] Finally, the suggestion that the motion judge overlooked the argument that the appellants relied on the advice of legal counsel, and that this reliance should have been considered under s. 5(1)(b) as a matter of when “a reasonable person with the abilities and in the circumstances of the person with the claim first ought to have known”, is of no assistance. On appeal, the issue is not what a reasonable person would have known, but what Mr. Dass in fact knew. That the appellants relied on the advice of legal counsel is not relevant to any matter in issue.

F. Disposition

[55] I would dismiss the appeal and award the respondents costs of the appeal in the amount of $18,000, inclusive of HST and disbursements.

Released: August 11, 2021 “G.R.S.” “B.W. Miller J.A.” “I agree. G.R. Strathy C.J.O.” “I agree. David Brown J.A.”

[1] CFO Capital eventually submitted another loan application on behalf of Jaswant Dass to the Royal Bank of Canada. This application, which did not name the appellants or Mr. Dass’ non-party company in any capacity, was approved and the purchase of the Drew Road property closed on November 4, 2015.