Chang et al. v. Boulet, 2012 ONSC 6382

Chang et al. v. Boulet [Indexed as: Chang v. Boulet]

113 O.R. (3d) 518
2012 ONSC 6382

Ontario Superior Court of Justice,
Métivier J.

November 9, 2012

Limitations -- Discoverability -- Plaintiff being within limitation period of facts giving rise to cause of action against lawyer -- Statements by lawyer that problem would be fixed not preventing limitation period from running.

The plaintiffs sued the defendant lawyer for damages for negligence. The defendant brought a motion for summary judgment dismissing the claim as statute-barred as the plaintiffs were aware of the facts underlying the action no later than September 8, 2006, but did not commence the action until September 24, 2008. The plaintiffs argued that they did not discover that they had a cause of action until May 2007 as they had been lulled into believing that the matter would be fixed by virtue of the defendant's statements.

Held, the motion should be granted.

Once a plaintiff is aware that he or she has an actionable claim, the limitation period will run even if the plaintiff is discouraged from starting an action, providing that he or she is not prevented from starting the action. The plaintiffs were clearly aware on September 8, 2006 that they had a cause of action against the defendant, and stated in an e-mail to the defendant on that date that they would be taking legal action. The Limitations Act, 2002, S.O. 2002, c. 24, Sch. B is not meant to protect individuals who know that they have an actionable claim, but delay the commencement of a legal action.

MOTION for summary judgment dismissing an action.

Cases referred to
Hamilton (City) v. Metcalfe & Mansfield Capital Corp., [2012] O.J. No. 1099, 2012 ONCA 156 , 290 O.A.C. 42, 347 D.L.R. (4th) 657, 212 A.C.W.S. (3d) 832, affg [2010] O.J. No. 5696, 2010 ONSC 7184 (S.C.J.) , consd
Charette v. Trinity Capital Corp., [2012] O.J. No. 2328, 2012 ONSC 2824 (S.C.J.) ;
Sheeraz v. Kayani (2009), 2009 47571 (ON SC) , 99 O.R. (3d) 450, [2009] O.J. No. 3751, 180 A.C.W.S. (3d) 626 (S.C.J.), distd

Other cases referred to
Combined Air Mechanical Services Inc. v. Flesch (2011), 108 O.R. (3d) 1, [2011] O.J. No. 5431, 2011 ONCA 764 , 286 O.A.C. 3, 97 C.C.E.L. (3d) 25, 14 C.P.C. (7th) 242, 13 R.P.R. (5th) 167, 211 A.C.W.S. (3d) 845, 93 B.L.R. (4th) 1, 10 C.L.R. (4th) 17;
Ghaffari v. Asiyaban, [2012] O.J. No. 2402, 2012 ONSC 2724 (S.C.J.) ;
Kowall v. Shyiak, [2012] O.J. No. 3420, 2012 ONCA 512 , 296 O.A.C. 352, 13 C.L.R. (4th) 7;
Toronto Standard Condominium Corp. No. 1789 v. Tip Top Lofts Development Inc., [2011] O.J. No. 6131, 2011 ONSC 7181 , 17 R.P.R. (5th) 158 (S.C.J.)

Statutes referred to
Business Corporations Act, R.S.O. 1990, c. B.16, s. 248 [as am.]
Limitations Act, 2002, S.O. 2002, c. 24, Sch. B [as am.], ss. 4 , 5 , (1) (a)(iv), 11 [as am.], (1)
Rules and regulations referred to
Rules of Civil Procedure, R.R.O. 1990, Reg. 194 [page519]

David Dwoskin, for plaintiffs.
Heather J. Williams and Lisa Renaud, for defendant.

1MÉTIVIER J.: -- The moving party, the defendant, Michel Rolland Boulet ("Boulet"), brings this motion for summary judgment on the basis that the plaintiffs' action is statute- barred by the Limitations Act, 2002, S.O. 2002, c. 24, Sch. B .

2In the action, the plaintiffs seek damages from the defendant lawyer, Boulet, for alleged negligence, breach of contract and/or breach of fiduciary duty in the transaction involving the purchase of shares in 1577833 Ontario Inc. ("157"), a corporation that owned and operated Mexicali Rosa's restaurant located at 1800 Bank Street in Ottawa, Ontario (the "restaurant"). There were three shareholders at that time and two of them were selling their shares. The third shareholder was to buy enough shares to make him a 50 per cent owner.

3The plaintiffs seek $500,000 in general damages as well as special damages in an unspecified amount for the loss they allege they have suffered as a result of the plaintiff, 6499082 Canada Inc. ("649"), having received a 49 per cent share ownership in the restaurant as opposed to the 50 per cent share ownership which the plaintiffs intended.

4In his statement of defence, the defendant has denied that he was retained by the plaintiffs, denied any negligence and further stated that the plaintiff suffered no damages; he also relied on the Limitations Act, 2002 defence.

5The moving party states that the claim was discovered by Tim Chang ("Chang"), the operating mind of 649, no later than September 8, 2006. The plaintiffs state that the discovery came much later, in May of 2007, as they had been lulled into believing and hoping that the matter would be fixed by virtue of the lawyer's statements.

6The question to determine is whether the plaintiffs failed to commence their action before the second anniversary of the date on which the claim was discovered. The plaintiffs issued their statement of claim on September 24, 2008.

Background Facts

7In or around January 2006, the defendant, Boulet, was retained by an individual named Gray Johnson ("Johnson") to represent Johnson regarding the purchase of additional shares in 157, the company that owned and operated Mexicali Rosa's restaurant. [page520]

8At the time of Boulet's retainer, Johnson owned 41 per cent of the shares in 157, or 41 shares. The other 59 per cent of the shares were owned by individuals named Patrick Cheung ("Cheung") and Todd Masse ("Masse"), who owned 34 and 25 shares, respectively, and wanted to sell these.

9The corporate plaintiff in this action, 649, was to purchase some of the shares owned by Cheung and Masse. Collectively, Johnson and 649 were to buy 100 per cent of the shares owned by Cheung and Masse.

10It was Chang's intention to purchase 50 per cent of the shares through 649 and it was the intention of Johnson, who was actually running the restaurant at the time, to become the other 50 per cent shareholder.

11Boulet was a frequent patron of the restaurant and while there one day, he was approached by Johnson to help him and Chang achieve their goal.

12Their dealings took place almost entirely in the restaurant. On one occasion, Chang visited Boulet's office in order to give him money for his purchase of shares.

13The actual drafting of the final share purchase agreement was undertaken by a lawyer from Toronto, who represented one of the sellers, Todd Masse.

14Chang participated directly in all negotiations with the vendors relating to the share purchase. He never relinquished his negotiating power. These negotiations took place between January and July 2006.

15Both Chang and Johnson negotiated directly with the vendors and the lawyer for one of them. Boulet did no actual negotiation.

16Chang deposited $57,796.60 into Boulet's trust account on February 28, 2006 and a further $10,000 on March 9, 2006 on account of the purchase of shares. These moneys were paid to the vendors.

17Boulet states that Chang frequently gave him instructions and demands, usually involving speeding up the matter. He also states that his response to these would be to communicate with Johnson on issues raised and then to follow the instructions that he received from Johnson.

18Chang is a sophisticated businessman who previously owned other businesses. He is a member of the Charter Institute of Management Accountants, is a Certified Payroll Manager, a Certified Management Accountant and a Certified Financial Planner.

19Chang was leaving on holidays to Hawaii early in February of 2006 and wished to finalize matters before he left, so he [page521] met with Boulet in the restaurant. He alleges he signed a share purchase agreement. Chang asserts that he was told that the agreement, which he signed on behalf of 649, was to be further amended and that there were handwritten notations on the copy he signed. He says he did not receive a copy of the document he signed.

20Boulet denies this categorically. No documents, not even in draft form, were available until February 27, 2006.

21Boulet denies that he told Chang "to sign the share Purchase Agreement, even though it was not in final form, and that I would make changes to it after he signed it".

22Boulet deposes that "neither the Share Purchase Agreement nor any of the documents relating to the transaction was prepared by me. The Share Purchase Agreement which was signed by Tim Chang was sent to me by Todd Masse's Toronto lawyer in August 2006. The Share Purchase Agreement had already been signed by Todd Masse when I received it and when I received it, it was in final form." That agreement bears the date of August 20, 2006.

23Boulet further states that Chang signed the share purchase agreement in August 2006, along with a number of other documents, including two promissory notes; two share pledge agreements; and two security agreements.

24These documents all bear various dates between August 15 to 20, 2006.

25There is a board resolution of 649 authorizing Chang to sign the purchase of shares agreement which bears the date of June 26, 2006. Boulet says this would not have been necessary if Chang had in fact signed a share purchase agreement in February 2006. Chang points to a board resolution to the same effect dated February 2, 2006 on which Chang relies to support his position of a signature in February 2006.

26Boulet further denies that he received instructions from Johnson to amend the share purchase agreement so that Johnson would become a 51 per cent shareholder. He states that when he received the documents relating to the transaction from Masse's lawyer, they already reflected 51 per cent ownership for Johnson and 49 per cent ownership for Chang's company.

27Chang states that the share purchase agreement was finalized and signed by Johnson while he was vacationing in Hawaii in February. Johnson says that he signed the document in August 2006. The document bearing Johnson's signature is dated August 2006. [page522]

28Boulet states that the share purchase agreement was not amended after Chang signed it.

29As to the execution of the documents, Boulet says that Chang advised him that he had read the final share purchase agreement before signing it in August 2006. He further asserts that he cautioned Chang of the advisability of obtaining independent legal advice in relation to the transaction. Chang denies that. He states that he verified with Boulet that 649 would get 50 per cent of the shares and that Boulet confirmed this. Boulet denies such confirmation.

30The effect of the agreement signed in August 2006 was that Johnson would own 51 per cent of the shares of the corporate entity owning the restaurant and that 649, Chang's company, would own 49 per cent of the shares. That is clear on the face of the document.

31The relevant portion of the agreement is as follows:

In consideration of the payment of the Purchase Price pursuant to Section 1.2 hereof: (a) Masse shall hereby sell, assign and transfer on the Closing Date: i. 15 Common Shares in the capital of the Corporation to 6499082; and ii. 10 Common Shares in the capital of the Corporation to Johnson; (b) Cheung shall sell, assign and transfer 34 Common Shares in the capital of the Corporation to 6499082 on the Closing Date,

and the Purchasers shall purchase from the Vendors the Subject Shares, being the only shares in the capital of the Corporation legally and beneficially owned by the Vendors.

32On September 7, 2006, Todd Blair ("Blair"), president of the Mexicali Rosa's franchise, sent an e-mail to Masse, which was forwarded to Chang on the same day, which clearly stated that Johnson was the majority shareholder.

33When did Chang actually discover this state of affairs as to his true holdings in the restaurant?

34On September 7, 2006, the following exchange of e-mails took place: [page523]

First e-mail message:

Michel Boulet

From: todd [information omitted]
Sent: Thursday, September 07, 2006 3:36 PM
To: Pat Cheang (E-mail); Mexicali Rosa's2, 'Michel Boulet', Tim Chang
Cc: Todd Blair(Mexi's)
Subject: FW: Agreement fro Gray to sign

Guys,

Please see Todd Blair's e mail release providing o.k. to proceed with the deal.

Regards. Todd

------ Original Message ------

From: Todd Blair [information omitted]
To: Todd Masse
Sent: Thu Sep 07 16:19:17 2006
Subject: RE: Agreement fro Gray to sign

Hello Gentlemen

This is to inform you that you can go ahead with the completion of your deal. I don't want to hold this up in any way. Gray is the majority shareholder and is also the individual who executed the franchise documents originally. Any further deals where Gray's ownership is less than 51% would obviously need to be agreed by the franchise company.

Yours truly,

Todd Blair
President

Second e-mail message:

------ Original Message ------

From: todd [information omitted]
Sent: September 7, 2006 4:36 PM
To: Pat Cheang (E-mail); Mexicali Rosa's2; 'Michel Boulet'; Tim Chang
Cc: Todd Blair(Mexi's)
Subject: FW: Agreement fro Gray to sign

Guys,

Please see Todd Blair's e mail release providing o.k. to proceed with the deal.

Regards. Todd [page524]

35Mr. Chang responded the next day, September 8, 2006:

Michel Boulet

From: Tim Chang [information omitted]
Sent: Friday, September 08, 2006 8:41 AM
To: 'todd'; 'Pat Cheang (E-mail)'; 'Mexicali Rosa's2', 'Michel Boulet'
Cc: 'Todd Blair(Mexi's)'
Subject: RE: Agreement fro Gray to sign

Gentlement

Gray and my companies are equal partners, 50% to 50%. Who changed the agreement, I am not away [aware]. Don't tell me lawyer or Gay, change the terms. I won't not proceed with less than 50%, period.

Tim

36On the same day, September 8, 2006, Chang sent an e-mail to Boulet:

Michel Boulet

From: Tim Chang [information omitted]
Sent: Friday, September 08, 2006 3:20 PM
To: 'Michel Boulet'; 'Gray (1800 Bank) (E-mail)'
Cc: 'Todd Masse'; Pat Cheang (E-mail)'
Subject: Fraudulent transaction

Michel

Since I read the email message from Todd Masse regarding 51% for Gray this morning, I was shocked why is happen? All negotiations from day 1 is 50%:50%. Who instructed the change? I trusted everybody in good faith and signed the agreement (without even reading it, that was the same documents 6 months ago, I assumed) prior to my holiday while you are still making amendments to the agreement. Neither you nor Gray told me about the change. I and my partner never want to be less than 50%, period. I do not categorize this as fraudulent as yet, after Todd Masses assured me that Gray is not the type of creepy character. I signed the agreement in good faith, in fact, I provided Michel with a board resolution prior to signing, clearly

Gray came with excuses saying that Todd Blair will not agree unless 51% is held by him and the existing franchise agreement specified one person must hold 51%; the same agreement has none of you holding majority. I guessed Gray assumed I am a kid, mentally retarded. Whatever excuses, I was not informed and never agreed to it. I would have to continue legal action against Gay [Gray] and Todd Blair re- Clarence. I was very dispointed [disappointed] with Gray whom I helped financially fight Todd Blair until their Clarance money is paid to Gray or continue their fight in court. That could explain why gray is finding excuses to delay signing shareholders' agreement and IOU re-payment for Clarence. I and my partner are pretty well off to get fight till the end to obtain our rights. [page525]

I hereby notified all of you that this agreement is obtained by deceit and fraudulent. It is null and void. I will proceed with my own lawyer for legal action.

Bye!

Tim Chang

37At his examination for discovery, Chang stated that he believed that Blair, the president of the Mexicali Rosa franchise, would not "have had a problem" with 649 becoming a 50 per cent shareholder. Boulet's view was that Blair, who had already been embroiled in litigation with Chang, would not accept Chang as the majority shareholder. This hearsay evidence is not corroborated in any way and I reject it.

38However, Chang did not proceed to litigate because he asserts that Boulet advised him to be patient while he, Boulet, attempted to resolve the 49-51 issue, and while Boulet took steps to ensure the resolution of that issue, Chang did not believe that he had sustained any injury, loss or damage.

39However, the focus of the negotiations for resolution was a satisfactory shareholder agreement between Gray and Chang only. The negotiations dragged on for many months, but while the parties were occasionally close, they could never come to a final agreement.

40Early in 2007, Chang retained Kevin Kavanagh ("Kavanagh") at Francis, Kavanagh, Newman & Loubert LLP to contact Boulet and resolve the matter. Kavanagh had also represented Chang sometime earlier, in 2005 or 2006, in a failed attempt to buy into another Mexicali Rosa's franchise where Chang had litigated against Blair.

41Chang, on May 26, 2007, made a formal complaint about Boulet to the Law Society of Upper Canada. On August 8, 2008, the Law Society reported to Chang that their investigation sought to determine

-- whether the lawyer was in a conflict of interests by preferring the interests of one of his shareholder clients over the interests of another of his shareholder clients;

-- whether the lawyer failed to account to you; and

-- whether he failed to serve you.

42The conclusions of the investigation by the Law Society, as reported in August 2008, was that "[t]he evidence supports that the Lawyer was retained by Johnson to represent his position in the sale of the shares." [page526]

43But they also found that "there is evidence suggesting the lawyer breached the Law Society's Rules of Professional Misconduct [Conduct]". Boulet should have "made it clearer and sooner and preferably documented it in writing, that he was not representing you". Further, it found that "the Lawyer should have formally accounted to you as you did pay the Lawyer money in trust for a client".

44As a result, Boulet was cautioned by the Law Society.

45On May 31, 2007, Chang instructed Kavanagh to commence an application under s. 248 of the Ontario Business Corporations Act, R.S.O. 1990, c. B.16 to, at a minimum, obtain a court order for production of 157's financial records, operating statements and budgets, and seek a reimbursement of profits improperly allegedly taken by Johnson.

46Chang had a lawyer prepare and file a notice of action as of September 12, 2008. This was subsequently discontinued in 2009.

47He then began the within lawsuit on September 24, 2008.

Analysis

48Section 4 of the Limitations Act, 2002 states that a basic limitation period of two years runs from the day a claim is discovered. A claim is defined as "a claim to remedy an injury, loss or damage that occurred as a result of an act or omission".

49Section 5 states:

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).

50It is the position of the moving party, that, based on the examination for discovery of Chang as of September 8, 2006, Chang [page527] (a) thought that Johnson and Boulet had done something that had hurt him; (b) believed that Johnson or Boulet or both of them had changed the share purchase agreement after Chang had signed it; (c) believed that Boulet had done something behind his back that had harmed him; (d) believed the share purchase agreement had been obtained by deceit and was fraudulent; (e) believed that when he said in his e-mail of September 8, 2006 that the share purchase agreement had been obtained by deceit and was fraudulent, that he believed Boulet had been "part of that"; (f) that in his e-mail of September 8, 2006, Chang was informing Johnson and Boulet that he was planning to sue them; (g) that as of 3:20 p.m. on September 8, 2006, Chang was planning to sue Boulet; (h) that as of September 8, 2006, Chang was planning to sue both Johnson and Boulet because he believed that both of us "committed deceit or fraud of whatever, or negligence however you call it"; (i) that as of September 8, 2006, Chang thought a lawsuit was the appropriate way to deal with Johnson and Boulet in relation to the share purchase agreement because ours is a "legalistic society", and because "the other party will know that you are serious" if you have a legal letter in place right away.

51Chang, however, states in his statement of claim that, on or about May 26, 2007, he "first learned that 649 was not in fact a 50% shareholder but only a 49% shareholder". This claim is contradicted by other evidence, including his own. As one example, the only share purchase agreement signed by both parties is one that bears the date of August 20, 2006.

52Much of the evidence of Chang appears to be contradicted and, accordingly, I find his credibility to be impugned. His version of facts is inconsistent with documents and e-mails. On the other hand, in assessing credibility as I am entitled to do in deciding a summary judgment motion, I find Boulet's evidence to be credible, logical and supported by documentary evidence. [page528]

53Johnson swore an affidavit in support of much of Chang's position, but does not say he heard the conversation at the time of the alleged February signing. He deposes to much of what Chang "believed", and I find the reliability of his evidence and the weight to be accorded is therefore minimal.

54Johnson also states that, in February, Chang was very busy and in a hurry when he signed the document in the restaurant. However, it appears that Johnson, while he may have been in the restaurant, was not present with Chang and Boulet at the actual signing meeting.

55Chang's position is that he could not have discovered the injury or loss since as of shortly after September 8, 2006, he believed that things would work out and confirms that Boulet worked hard at making an agreement happen. He refers to the lawyer as acting as a mediator.

56Boulet agrees that after Chang learned of his 49 per cent, he offered to try to help the parties by preparing a shareholders' agreement between Chang's company and Johnson and his company. He denies ever acting as a mediator.

57There is evidence that Boulet wrote to Chang's lawyer discouraging him from litigation and urging that they attempt to work things out.

58What is the effect of Boulet's requests not to litigate? Does it have an impact on the "day on which the claim was discovered".

59Once a cause of action has occurred, the limitation period will run even if the plaintiff is discouraged from starting an action, providing that it is not prevented from starting an action: see Hamilton (City) v. Metcalfe & Mansfield Capital Corp., [2012] O.J. No. 1099, 2012 ONCA 156 , 290 O.A.C. 42, at para. 24 . At para. 51, further, it is immaterial if the plaintiff did not appreciate the significance or legal consequences of the relevant facts. What is important is that the plaintiff understood relevant facts.

60It is clear from the decision of Justice Frank, the motion judge in Hamilton (City) v. Metcalfe & Mansfield Capital Corp., [2010] O.J. No. 5696, 2010 ONSC 7184 (S.C.J.) , as later upheld by the Ontario Court of Appeal, that the Limitations Act, 2002 is meant to protect individuals who cannot know that they have an actionable claim. I agree with the submission of counsel for Boulet that the Act is not meant to protect individuals, such as Chang, who know they have an actionable claim, but delay the commencement of a legal action. At paras. 35 and 36, the court stated:

The City submits that it was not until the collapse of the Accord that it knew that a proceeding would be an appropriate means to seek remedy its loss, and therefore the limitation period commenced on January 10, 2008. [page529]

The problem with this argument is that it places an interpretation on section 5(1)(a)(iv) of the Limitations Act that is not supportable, in my view. This interpretation would mean, for example, that even though a person knew all that was necessary for his or her claim to have been discovered, but believed that negotiations would be the most effective means of obtaining recovery of the loss and believed that initiating a claim might prejudice those negotiations, the limitation period would not have begun.

61In Kowall v. Shyiak, [2012] O.J. N0. 3420, 2012 ONCA 512 , a general contractor built a new house. The homeowners independently contracted with third parties for installation of exterior finishing. Water leakage and damage occurred. The motion judge dismissed the summary judgment motion based on the Limitation Act, 2002 defence on the basis that discoverability delayed the start of the two-year s. 4 period until expert reports were in. He found that the plaintiffs did not have sufficient knowledge of the damage. The Court of Appeal found this decision in error since they held that no expert reports were required in order to advance a claim for damages. (The Limitation Act, 2002 was not enacted to be ignored.)

62However, due to the inherent dependence in lawyer-client relationships, assurances by counsel that alleged errors will be fixed and there will be no need for a claim will, in appropriate circumstances, serve to suspend the discoverability date.

63However, a claim may not be discoverable as an appropriate means to remedy negligent actions by a lawyer, as contemplated by s. 5(1)(a)(iv) of the Act due to an ongoing lawyer-client relationship and the reliance of the client on the lawyer. In support of this proposition, the plaintiffs rely on the cases of Charette v. Trinity Capital Corp., [2012] O.J. No. 2328, 2012 ONSC 2824 (S.C.J.) , at paras. 109-12 ; and Sheeraz v. Kayani (2009), 2009 47571 (ON SC) , 99 O.R. (3d) 450, [2009] O.J. No. 3751 (S.C.J.), at paras. 48-50 , 54, 57 and 58.

64In Charette, supra, the defendants included the promoters of a program featuring a leveraged charitable donation which was to obtain a tax credit that would exceed the actual cash outlay. The tax credits which were to be available were later disallowed by the CRA. The defendant law firm had represented the plaintiff and others during the objection and appeal process following the disallowance of those tax credits. The plaintiff Charette found himself in the middle of a high- stakes dispute with CRA which the court found entitled him to expect candour and undivided loyalty from his law firm. The law firm continued to act for Charette, advising him that his position was correct, that the CRA's position was wrong and that he had no legal obligation to pay the taxes CRA said were owing. The court held [at para. 112] that even a "sophisticated taxpayer" could be found at [page530] trial to not know that damage had occurred and that a legal proceeding against the law firm would be an appropriate remedy.

65The facts in the case at bar are entirely different from those in Charette, supra. I find that the relationship with Boulet was not similar in any way to that described in the case. Chang was completely aware, as of September 8, 2006, that he had actually purchased 49 per cent of the shares, which was the injury he knew he had suffered, and stated that he intended to sue Boulet, although, at that time, he also intended to sue Johnson. Chang was not relying or depending on Boulet and had assumed a direct role in the negotiation. A sophisticated businessman who does not read a document he signs does so at his peril.

66Sheeraz, supra, must also be distinguished. There, the plaintiff, although he had obtained a second opinion on the matter from another lawyer, remained dependent on his lawyer. Some of the comments in the case are no longer applicable, after the amendments to the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 and Combined Air Mechanical Services Inc. v. Flesch (2011), 108 O.R. (3d) 1, [2011] O.J. No. 5431, 2011 ONCA 764 , 286 O.A.C. 3 case.

67The application of the discoverability rule is now permitted: see Ghaffari v. Asiyaban, [2012] O.J. No. 2402, 2012 ONSC 2724 (S.C.J.) , a very recent case, where Justice Ferguson says [at para. 11]: "One consequence of the powers exercisable by a motion judge under the rules is an enhanced ability to determine discoverability issues on summary judgment motions because the fact finding restrictions under the old rule 20 have been very significantly loosened."

68The plaintiffs further submit that the involvement of Boulet as a third party triggers s. 11 of the Limitations Act, 2002 , which sets out:

11(1) If a person with a claim and a person against whom the claim is made have agreed to have an independent third party resolve the claim or assist them in resolving it, the limitation periods established by sections 4 and 15 do not run from the date the agreement is made until, (a) the date the claim is resolved; (b) the date the attempted resolution process is terminated; or (c) the date a party terminates or withdraws from the agreement.

(2) For greater certainty, a person or entity that provides resolution of claims or assistance in resolving claims, on an impartial basis, is an independent third party no matter how it is funded.

69In Toronto Standard Condominium Corp. No. 1789 v. Tip Top Lofts Development Inc., [2011] O.J. No. 6131, 2011 ONSC 7181 (S.C.J.) , the court found that settlement discussions [page531] entered into by parties did not involve an agreement to have an independent third party assist in resolving their claim and thus did not fall within s. 11(1) of Limitations Act, 2002 .

70I find that, similarly here, there was no agreement with an independent third party, as the section requires, and not even an implicit agreement that the limitation period would not run until Johnson and Chang had worked out their differences.

Conclusion

71There is both an objective and a subjective element to the trigger point of the limitation period, which is when the plaintiffs knew or ought to have known they had a cause of action.

72In the circumstances of this case, both these elements are satisfied by the state of Chang's knowledge on September 8, 2006. His e-mail of September 8, 2006 clearly sets out his knowledge of what he had just discovered and that a lawsuit was an appropriate method to pursue.

73Accordingly, there is nothing that interfered with the running of the limitation period.

74The plaintiffs' claim is barred by s. 4 of the Limitations Act, 2002 , and is not preserved by discoverability issues under s. 5 or third party involvement under s. 11 .

75The summary judgment motion is granted and the plaintiffs' claim is dismissed.

Costs

76If the parties do not agree on costs, I will receive brief (maximum of three pages) written submissions. From the moving party within ten days; from the responding party within ten days thereafter and a reply, if necessary, within five days.