SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: CV-12-448497
DATE: 20121219

RE: Panther Film Services Inc. and Diane Freitas (Plaintiffs/Responding Parties) and Fred Tayar and Associates Professional Corporation, Fred Tayar, Mindy Ilene Tayar and Colby Stuart Linthwaite (Defendants/Moving Parties)

BEFORE: Justice Beth Allen

COUNSEL:
Pathik Baxi, for the Plaintiffs/Responding Parties

Sandra L. Secord, for the Defendants/Moving Parties

HEARD: December 13, 2012

ENDORSEMENT

BACKGROUND

[ 1 ] This is a motion brought under Rule 20 of the Rules of Civil Procedure by the defendant lawyers seeking a dismissal of the underlying action (“the Underlying Action”) for being brought outside the two-year limitation period allowed under the Limitations Act, 2002 for an action in negligence

[ 2 ] The plaintiffs Panther Film Services Inc. and Diane Freitas (“the Plaintiffs”) are the past clients of the defendants who are an incorporated law firm and individual lawyers employed with the firm (“the Lawyers”). Diane Freitas is a principal of the corporate plaintiff. The Lawyers represented the Plaintiffs from 2004 until 2008 in relation to actions against a bank and an investment firm (“the Bank Action”). On motion before a Master on October 15, 2008, the Lawyers sought to be removed from the record and were permitted to do so by order of Master Brott issued on December 15, 2008. The Plaintiffs retained new counsel and on December 22, 2008 they transferred their file to the new lawyer.

[ 3 ] The Plaintiffs were delinquent in paying the Lawyers’ bill and on April 2, 2009 the Lawyers issued a statement of claim seeking over $125,000 for legal services rendered (“the Fees Action”). The Plaintiffs filed a statement of defence on May 22, 2009 claiming negligence against the Lawyers for their handling of the Plaintiffs’ case in the Bank Action.

[ 4 ] The parties agreed to have the Fees Action converted to an Assessment Hearing. The Assessment Hearing commenced on October 15, 2010 and was scheduled to proceed on subsequent dates in January, May and June 2011. Before the Hearing was to resume in May 2011, the assessment officer recused himself for having received privileged information from Ms. Freitas. The Hearing was re-scheduled for 10 days starting on March 12, 2012.

[ 5 ] On March 9, 2012, the Plaintiffs commenced the Underlying Action against the Lawyers claiming negligence in their handling of the Bank Action.

THE ISSUE

[ 6 ] Are the Lawyers entitled to summary judgment against the Plaintiffs on the basis they commenced their action in negligence outside the two-year limitation period allowed under the Limitations Act, 2002 ?

ANALYSIS

[ 7 ] There are principles that guide the determination of when an order for summary judgment is appropriate when a limitation defence is raised. Applying the requirements of Rule 20, where a defendant moves for summary judgment in relation to a statutory limitation period, in order for the plaintiff to successfully resist the motion, they must adduce evidence of material facts related to the limitation period requiring a trial for determination. The defendant has the legal burden to prove there is no genuine issue requiring a trial. The evidentiary burden is then on the plaintiff to establish evidence of a triable issue. [ Soper v. Southcott , [1998] O.J. No. 2700 (Ont. C.A.) at para. 14] .

[ 8 ] The plaintiff must “lead trump or risk losing” and demonstrate their case has a real chance of success at trial. The motions court is entitled to assume the evidence contained in the record is all the evidence the parties would rely on if the matter proceeded to trial. [ 1061590 Ontario Limited v. Ontario Jockey Club (1995), 1995 1686 (ON CA) , 21 O.R. (3d) 547 at 557 (Ont. C.A.), and Dawson v. Rexcraft Storage and Warehouse Inc . (1998), 1998 4831 (ON CA) , 164 D.L.R. (4 th ) 257, at 265, (Ont. C.A.)].

[ 9 ] If the defendant satisfies the court there are no issues of fact required to be tried in relation to the limitation period, the defendant will succeed in obtaining summary judgment. [ Soper , supra , at para. 14]. Simply because the discoverability rule is raised does not, in itself, mean a genuine issue for trial exists precluding it from being decided on a motion for summary judgment. It is appropriate and necessary for the motions judge to consider facts contained in the record in order to decide whether a genuine issue requiring a trial exists. [ Stell v. Obedkoff (1999), 1999 14815 (ON SC) , 45 O.R. (3d) 120 (Ont. S.C.J.), at 123-124].

[ 10 ] The Court of Appeal fashioned a new test to assess when an order for summary judgment under Rule 20.04 (2.1) is appropriate.

We find the passages set out in Housen , at paras. 14 and 18, such as “total familiarity with the case as a whole”, “extensive exposure to the evidence” and “familiarity with the case as a whole”, provide guidance as to when it is appropriate for the motion judge to exercise the powers in Rule 20.04(2.1). In deciding if these powers should be used to weed out a claim as having no chance of success or be used to resolve all or part of an action, the motion judge must ask the following question: can the full appreciation of the evidence and the issues that is required to make dispositive findings be achieved by way of summary judgment, or can this full appreciation only be achieved by way of a trial?

We think this “full appreciation test” provides a useful benchmark for deciding whether or not a trial is required in the interest of justice.

[ Combined Air Mechanical Services Inc. v. Flesch , 2011 ONCA 764 , at paras. 50 and 51 , (Ont. C. A.) ]

[ 11 ] The limitation period is set out in s. 4 of the Limitations Act , 2002 which provides a proceeding shall not be commenced after the second anniversary of the day on which the claim was discovered. Section 5 sets out the rules to determine when a claim was discovered. Section 5 provides:

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).

(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.

[ 12 ] The discoverability rule in s. 5 has the effect of delaying the running of the limitation period until the point at which the party making the claim discovers they have a cause of action. However, there is a presumption that must be rebutted by the party seeking to rely on the discoverability doctrine. That party must rebut the presumption they knew they had a claim on the day of the incident.

[ 13 ] The Lawyers argue the Plaintiffs knew they had a claim in negligence on May 22, 2009 when they filed their statement of defence in the Fees Action. They asserted negligence in their defence on the basis of the Lawyers’ alleged substandard handling of the Bank Action.

[ 14 ] In their statement of defence in the Fees Action, the Plaintiffs plead the following: they deny the Lawyers followed instructions resulting in unnecessary legal costs and delay; they deny instructing the Lawyers to incur the amount of legal fees claimed; they assert the Lawyers’ handling of the litigation in the Bank Action fell far below the standard of care of a solicitor with over 20 years’ practice; they assert the Lawyers had a fiduciary duty to provide competent legal advice; they assert the Lawyers breached its duty of care. Without limiting the generality of their negligence claim, the Plaintiffs allege five examples of the Lawyers’ professional negligence as follows: the Lawyers delayed the claim four years resulting in prejudice to the Plaintiffs; they delayed in setting the matter down for trial according to the Plaintiffs’ instructions causing unnecessary costs; they failed to keep the Plaintiffs updated with respect to the action; they failed to provide the Plaintiffs copies of pleadings or motion records; and they gave carriage of the file to an incompetent junior associate.

[ 15 ] In essence, the pleadings in the Plaintiffs’ statement of claim in the Underlying Action are not fundamentally different from its pleadings in the Fees Action. The Plaintiffs’ pleadings in the Underlying Action are based, among other grounds, in negligence, that the Lawyers owed a duty of care : to advise them in a manner consistent with a reasonably competent solicitor; to ensure the solicitors providing advice and legal services were sufficiently qualified and that they provided guidance and supervision to lawyers who worked on the case; to conduct the appropriate research in relation to the issues; to ensure the Plaintiffs were fully informed in a timely manner; to warn of any possible risks associated with a particular course of action; to ensure that all steps taken or agreements made by the Lawyers were proper and fully authorized by the Plaintiffs; and to protect the interests of the Plaintiffs in the course of the Lawyers’ dealings with the defendants in the Bank Action.

[ 16 ] The Plaintiffs in essence take the position they did not know the nature, extent and impact of the Lawyers’ negligence until they cross-examined the Lawyers during the Assessment Hearing on October 12 and 15, 2010 and January 5 - 6, 2011. To support that argument the Plaintiffs rely on a chart made an exhibit to Ms. Freitas’ affidavit which purports to contain the facts or evidence from the Assessment Hearing that the Plaintiffs say alerted them to a cause of action in negligence. When the Plaintiffs gained knowledge of those facts is the point at which, in their view, the limitation period should have begun to run.

[ 17 ] However, in order to postpone the triggering of the limitation period a new fact is required to be discovered. [ Morton v. Cowan , [2001] O.J. No. 4635 , Court File No. 5465/98, at paras. 41-44, (Ont. S.C.J.)]. I agree with the Lawyers’ view that the Plaintiffs did not adduce any new material facts after the expiry of the prescribed two-year period that would warrant the application of the discoverability doctrine.

[ 18 ] I find that overall the Plaintiffs’ chart simply reiterates in more detail the allegations pleaded in their statement of defence in the Fees Action. In summary, the chart points out the Lawyers’ use of junior inexperienced counsel to attend proceedings; the Lawyers’ failure to inform the Plaintiffs in a timely fashion; the Lawyers’ failure to advise the Plaintiffs on steps in the litigation such as points when resolution might have occurred; the Lawyers giving incompetent advice about steps and litigation strategies that prejudiced the Plaintiffs; the Lawyers’ failure to get authorization and to advise the Plaintiffs of the high cost of steps in the proceedings and to explain billings.

[ 19 ] Courts have determined that where a limitation defence has been asserted, the plaintiff has the evidentiary burden to prove the claim was issued within the limitation period. [ Findlay v. Holmes , 1998 5488 (ON CA) , [1998] O.J. No. 2796, at para 25 , (Ont. C.A.); McSween v. Louis , 2000 5744 (ON CA) , [2000] O.J. No. 2076, at para. 37 , (Ont. C.A.)]. The plaintiff must not only satisfy a subjective test but must also satisfy an objective one. That is, the limitation period begins to run, (a) when the plaintiff had actual knowledge of the fact or facts upon which negligence is alleged or (b) when the plaintiff ought to have reasonably known the fact or facts upon which the negligence is alleged. The second test requires the plaintiff to be evaluated in accordance with the standard of the steps a reasonable person would take to obtain the knowledge. Such a determination is fact driven, to be decided based on the particular circumstances of each case. [ Gaudet et al. v. Levy et al ., 1984 2047 (ON SC) , [1984] O.J. No. 3312 577, at 582, (Ont. H.C.J.)].

[ 20 ] I agree with the Lawyers’ position that the record discloses that the Plaintiffs knew or ought to have known they had an action in negligence against the Lawyers in May 2009. I find the statement of defence in the Fees Action discloses the Plaintiffs’ actual knowledge of their claim in negligence. The Plaintiffs have not shown the discovery of any fundamentally new facts after that date. It is not enough for the Plaintiffs to make the bald subjective assertion that they did not know they had a claim. The question is whether a reasonable person standing in the Plaintiffs’ shoes with the information the Plaintiffs had in May 2009 would have known they had a cause of action in negligence. I think the resounding answer to that question is yes.

[ 21 ] A plaintiff is not allowed to delay the running of the limitation period until they know the full nature and extent of the claim. I believe that is the approach the Plaintiffs are taking.The Supreme Court of Canada in Peixeiro v. Haberman held:

Once the plaintiff knows that some damage has occurred and has identified the tort feasor, the cause of action has accrued. Neither the extent of the damage nor the type of damage need be known. To hold otherwise would be to inject too much uncertainty into cases where the full scope of damages may not be ascertained for an extended time beyond the general limitation period.

[ Peixeiro v. Haberman, [1997] 151 D.L.R. (4 th ), at para. 18, (S.C.C)]

[ 22 ] Courts have held that a plaintiff seeking to rely on the discoverability doctrine must have exercised reasonable diligence in discovering the material facts. The Ontario Court of Appeal has held a claim is discovered or ought to be discovered when a plaintiff is in power, possession and control of all the information necessary to the plaintiff and their advisors exercising due diligence to bring an action [ Bourne v. Saunby (1988), 1998 1394 (ON CA) , 38 O.R. (3d) 555 (Ont. C.A.)].

CONCLUSION

[ 23 ] I find a full appreciation of the evidence and the issues that are required to determine the limitation issue is achieved in this case by way of summary judgment. The Lawyers have succeeded in meeting the legal burden of demonstrating there is no issue raised in the record with respect to the limitation period that must be determined by a trial. The Plaintiffs on their part have failed to show on the record before the court that there is a triable issue. The Plaintiffs have commenced their action against the Lawyers outside the prescribed two-year limitation period.

[ 24 ] For all the above reasons, I grant summary judgment.

COSTS

[ 25 ] Counsel submitted Bills of Costs. The Lawyers were successful on the motion. In accordance with the principle that costs should follow the event, they are entitled to an award of costs.

[ 26 ] The Ontario Court of Appeal set out the principle that the objective of a determination on costs is to fix an amount the unsuccessful party is required to pay that is fair and reasonable rather than an amount reflecting the actual costs of the successful party. The quantum of costs allowed must be fair, within the reasonable expectations of the parties, and in accord with the principles set out by the Court of Appeal in Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 14579 (ON CA) , 71 O.R. (3d) 291 (Ont. C.A.).

[ 27 ] This is a case in which partial indemnity costs are appropriate.

[ 28 ] The Lawyers claim total partial indemnity costs of $29,885.18 inclusive of disbursements and HST. The Plaintiffs would seek total partial indemnity costs of $9,827.87 inclusive of disbursements and HST.

[ 29 ] I find the fees charged by the Lawyers to be somewhat excessive. The motion was not a complex one. The law on summary judgment motions involving a limitation defence is well settled. I find in the preparation of the case the Lawyers employed the services of more lawyers than I believe was necessary for such a motion. Fees were billed for two senior lawyers, a more junior lawyer, an articling student and two law clerks with fees totalling $25,147.50. Five hours were estimated and billed for a senior counsel’s attendance on the motion. The motion was not so lengthy, lasting under one and a half hours.

[ 30 ] I find an award of $10,000 inclusive of disbursements and HST to be more appropriate, payable within 30 days of this Order.

ORDER

[ 31 ] Order accordingly.

Allen J.

Date: December 19, 2012