CITATION: Vandermarel Investment Corporation v. Silver 2015 ONSC 2773
COURT FILE NO.: CV-12-463620
DATE: 20150430
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
VANDERMAREL INVESTMENT CORPORATION
Plaintiff
– and –
SILVER & GOREN, GERALD SILVER, CASSELS BROCK & BLACKWELL LLP and LORNE SALTMAN
Defendants
James Renihan, for the Plaintiff
Christopher L. Hluchan, for the Defendants Silver & Goren and Gerald Silver
William S. O’Hara, for the Defendants Cassels Brock & Blackwell LLP and Lorne Saltman
HEARD: April 27, 2015
ENDORSEMENT
DIAMOND J.:
Overview
[1] In this action, the plaintiff Vandermarel Investment Corporation (“VIC”) seeks damages for negligence on the part of two sets of defendants: Gerald Silver and his firm Silver & Goren (“Silver”) and Lorne Saltman and Cassels Brock & Blackwell LLP (“Saltman”).
[2] The Statement of Claim alleges that Silver was VIC’s accountant and financial advisor, and failed to submit a refund application by a specified deadline with Canada Revenue Agency (“CRA”) thereby causing VIC to incur substantial damages including additional interest and penalties.
[3] The claim further alleges that Saltman was VIC’s solicitor retained to, inter alia, pursue additional appeals and other relief from CRA after Silver missed the said deadline. VIC further alleges that during the currency of his retainer, Saltman breached his duty of care to advise VIC of its possible claim against Silver, and thus “potentially” (as that word is used in the claim) prejudiced VIC’s ability to seek recovery from Silver.
[4] The Statement of Claim was issued on September 17, 2012. This proceeding was set down for trial in early February 2015 and the trial is now scheduled to commence on January 18, 2016 and last up to 7 days.
[5] Contemporaneous with this matter being scheduled for trial, Silver advised the plaintiff and Saltman that he intended to bring a motion for summary judgment seeking an order dismissing the claim against Silver by reason of a failure on the part of the plaintiff to commence this action within the two year period set forth in the Limitations Act 2002 S.O. 2002, c.24 (the “Limitations Act”).
[6] Silver’s summary judgment motion has been scheduled to be argued on July 7-8, 2015 (second date if necessary).
[7] The plaintiff brings this motion seeking directions concerning Silver’s pending summary judgment motion, and in particular for an order staying Silver’s summary judgment motion for reasons set out hereinafter.
[8] I note that at the outset of argument of this motion, I asked counsel for the parties whether the provisions of Rule 48.04 of the Rules of Civil Procedure applied to this motion, and in particular whether Silver would need leave pursuant to Rule 48.04(1) to bring his summary judgment motion. I was advised by counsel for all parties that Silver did not consent to the action being placed on the trial list in the absence of his stated intentions to pursue his summary judgment motion, and as a result Rule 48.04 was not being relied upon.
The Facts
[9] For the purposes of this motion, the following paragraphs summarize the salient facts found in the record filed before this Court.
[10] As a result of VIC declaring a dividend on its common shares in July 2006, certain sale proceeds were subject to double taxation by CRA. In order to avoid that unfortunate result, VIC was entitled to a refund of the dividend tax but needed to file an application for that refund on or before July 31, 2009. VIC alleges that it was not aware of this CRA deadline.
[11] Silver did not apply for the refund until September 30, 2009, two months after the CRA deadline. As a result, CRA disallowed the refund and VIC consequently owed CRA over $1,000,000.00 inclusive of interest and penalties.
[12] VIC alleges that Silver was responsible for applying for the refund, and never advised VIC that there even was any such deadline. VIC further alleges that by failing to file by the CRA deadline, Silver was negligent in the performance of his duties owed to VIC.
[13] After the refund was disallowed, VIC retained Saltman with a view to obtaining consequential and/or additional relief from CRA including the launching of any necessary appeals. At the outset of Saltman’s retainer, VIC instructed Saltman to preserve any claim(s) it might have against Silver. According to VIC, Saltman agreed to do so.
[14] VIC alleges that Saltman and Silver have been friends for over 30 years, and as a result Saltman was in a position of conflict of interest that was never disclosed to VIC.
[15] VIC alleges that Saltman took no steps to preserve the claim(s) against Silver. In June 2012, VIC learned from Saltman that CRA had rejected the additional reviews of the refund disallowance as pursued by Saltman, and upon receiving that news VIC inquired of Saltman whether it was time to commence legal proceedings against Silver.
[16] In the claim, VIC’s position is that if the limitation period for commencing legal proceedings against Silver did expire, Saltman failed to preserve the claim against Silver as instructed and failed to advise VIC about the limitation period at any time.
[17] As stated above, the Statement of Claim was issued on September 13, 2012. The examinations for discovery of the parties were completed during the week of September 16, 2013. An unsuccessful mediation took place on March 21, 2014.
[18] After the unsuccessful mediation, VIC served and filed a Trial Record. The trial certification form arrived several months later, and that form was circulated by VIC to counsel for Silver and counsel for Saltman in early July 2014 for the necessary input.
[19] At that time, Saltman expressed an intention to issue third party claims against VIC’s directors and Silver. Saltman took the position that until pleadings were closed in the third party claim (which was in fact issued), it was premature for the parties to complete the trial certification form.
[20] As a result of Saltman’s position, the parties participated in negotiations which culminated in an agreement whereby VIC’s claim was amended as against Saltman and the third party claim was discontinued. This agreement was concluded in or around January 2015.
[21] At that time, the parties revisited the completion of the trial certification form. On February 4, 2015, and in response to Mr. Renihan’s suggestion that the trial of this proceeding could be completed in 5 days, Mr. Hluchan delivered an e-mail stating that he was expecting to receive instructions from Silver to bring a motion for summary judgment, and that motion would have to be factored into any proposed trial dates.
[22] In terms of the timing for the trial itself, Mr. Hluchan advised that he was available during the January-April 2016 period.
[23] In response to Mr. Hluchan’s e-mail, Mr. Renihan advised as follows:
“Thanks Chris. I will amend the form accordingly. The scheduling of a trial in January-April is sensible to me.
Obviously you are free to bring a summary judgment motion if you wish, but it seems like an expensive diversion to me. The trial will take place mere months after the summary judgment motion, so there is little advantage in that respect. Your client will obviously still be a critical witness at trial, so it will not relieve him of that obligation. I would not be surprised if a judge was inclined to let the matter go to trial when it is ready to be heard shortly after the motion.”
[24] Approximately two weeks later, Mr. Hluchan confirmed that he had indeed received instructions from Silver to bring a summary judgment motion seeking to dismiss the claim against Silver on the basis that this proceeding was not commenced within the time periods prescribed in the Limitations Act.
Silver’s Summary Judgment Motion
[25] There is no dispute that Silver’s pending summary judgment motion is returnable approximately six months before the trial of this action will commence. The pre-trial of this action is scheduled to take place on November 30, 2015.
[26] As at the date of the hearing of this motion, Silver had delivered its motion record for the summary judgment motion. Neither VIC nor Saltman have delivered responding materials on the summary judgment motion.
[27] Without commenting upon the merits of Silver’s pending summary judgment motion, that motion is essentially based upon what Silver alleges to be admissions made by VIC’s authorized representative William Vandermarel at his examination for discovery held on September 18, 2013. It is Silver’s position that based upon those admissions, VIC knew or ought to have known as early as November 2009, and as late as January 2010, that VIC had a cause of action in negligence against Silver.
[28] Mr. Hluchan advised that apart from the admissions at Mr. Vandermarel’s examination for discovery, no further substantive evidence was being tendered by Silver at the return of its pending summary judgment motion.
The Applicable Law – Summary Judgment
[29] Rule 20.04(2)(a) of the Rules of Civil Procedure provides that the Court shall grant a summary judgment if the Court is satisfied that “there is no genuine issue requiring a trial with respect to a claim or defence”. As a result of the amendments to Rule 20 introduced in 2010, the powers of the Court to grant summary judgment have been enhanced to include, inter alia, weighing the evidence, evaluating the credibility of a deponent and drawing any reasonable inference from the evidence.
[30] In Hryniak v. Mauldin 2014 SCC 7, the Supreme Court of Canada held that on a motion for summary judgment the Court must first determine whether there is a genuine issue requiring a trial based only upon the record before the Court, without using the fact-finding powers set out in the 2010 amendments. The Court must review the factual record and only grant summary judgment if there is sufficient evidence to justly and fairly adjudicate the dispute, and summary judgment would be an affordable, timely and proportionate procedure
[31] As held by Justice Dunphy in Fraser v. Canerector Inc. 2015 ONSC 2138, with the release of Hryniak the Supreme Court of Canada has issued a “clarion call” requesting that the courts “be more robust in their willingness to grapple with issues and resolve them in a reasonable but cost-effective manner”.
[32] The Court of Appeal for Ontario subsequently held in Baywood Homes Partnership v. Haditaghi 2014 ONCA 450 that summary judgment is appropriate where it will lead to a fair and just result and will serve the goals of timeliness, affordability and proportionality in light of the litigation as a whole (my emphasis). The Court is obliged to assess the advisability of a summary judgment process in the context of the litigation as a whole. As stated by the Supreme Court of Canada in Hryniak:
“The “interests of justice” inquiry goes further, and also considers the consequences of the motion in the context of the litigation as a whole. For example, if some of the claims against some of the parties will proceed to trial in any event, it may not be in the interest of justice to use the new fact-finding powers to grant summary judgment against the single defendant. Such partial summary judgment may run the risk of duplicative proceedings or inconsistent findings of fact and therefore the use of the powers may not be in the interest of justice. On the other hand, the resolution of an important claim against a key party could significantly advance access to justice, and be the most proportionate, timely and cost effective approach.”
Position of the Moving Parties
[33] It is the position of VIC and Saltman that Silver’s pending summary judgment motion will not result in a more timely or affordable resolution of the issue(s) in this proceeding, and should thus not proceed.
[34] VIC and Saltman rely upon the decision of Justice Brown (as he then was) in 1318214 Ontario Limited v. Sobeys Capital Incorporated 2012 ONSC 2784 (S.C.J.). In that case, Justice Brown stated that Rule 20 does give a party an “automatic right to bring a post-discovery summary judgment motion”. Simply put, the moving party ought to demonstrate that the summary judgment would be the “just, most expeditious and least expensive method of resolving the proceeding”.
[35] VIC and Saltman submit that Silver’s pending summary judgment motion has been scheduled for two days due to the fact that viva voce may be required, and that regardless of the outcome of Silver’s pending summary judgment motion, Silver himself will still have to testify at the trial of this proceeding. As a result, Vic and Saltman contend that even if Silver is successful on his pending summary judgment motion, the amount of trial time saved by such a result would be minimal at best.
[36] VIC and Silver also rely upon the decision of Mr. Justice Strathy (as he then was) in Charette v. Trinity Capital Corporation 2012 ONSC 2824. In Charette, several defendants brought motions for summary judgment within a class action proceeding. The plaintiff had sued multiple defendants arising from, inter alia, advice provided to the plaintiff (and others) with respect to tax donations made to a charitable foundation through a Donation Program. Ultimately, Canada Revenue Agency disallowed the purported tax benefits offered by the Donation Program, and the plaintiff sought compensation from, inter alia, his lawyers and accountants for negligent advice and service.
[37] In dismissing the motions for summary judgment brought by the lawyers (“FMC”) and the accountants (“BDO”), Justice Strathy found as follows:
“Instead, the evidence suggests that FMC continue to act for Chrette and re-assured him, through BBK, that FMC’s opinion was right, CRA’s position was wrong and that he had no legal obligation to pay the taxes CRA claimed were owing. Charette was not advised that there was a limitation period within which he was required to use FMC and the other defendants or that his payment of the CRA assessment might have the effect of crystalizing his damages and triggering the commencement of the limitation period.”
[38] Justice Strathy went on to find that while the factual circumstances relating to the accountants and the lawyers were different, their positions were “so intertwined” that it would not be in the interest of justice to resolve the claims against both of them by way of summary judgment.
[39] In support of VIC’s motion, Saltman submits that the question of the role of Silver is part of a continuing narrative as that term was used by Justice Lederer in Yusuf v. Cooley 2014 ONSC 6501 (S.C.J.), and since it is not possible to “sever the actions of Silver from the fabric of the case as a whole”, Silver`s pending motion for summary judgment should not proceed.
[40] Silver argues that his motion is timely and he has not delayed in bringing his summary judgment motion, as his intentions to proceed with that motion were conveyed to VIC and Saltman before the trial of this proceeding was scheduled.
[41] Silver further submits that since the costs associated with the marshalling of the evidence in support of his pending summary judgment motion have already been incurred (i.e. through the discovery process), a successful summary judgment will significantly reduce Silver’s potential future costs, and even reduce the future costs to be incurred by VIC and Saltman.
[42] As neither VIC nor Saltman have yet to deliver responding materials to his pending summary judgment motion, Silver contends that the positions of VIC and Saltman are based upon speculation. Silver’s pending summary judgment motion is based upon the admissions allegedly made by Mr. Vandermarel’s at VIC’s discovery, and thus the Limitations Act issue can be easily addressed by the judge hearing the summary judgment motion.
Decision
[43] To begin, unlike the motions for summary judgment in the Chrette and Yusuf decisions, Silver`s pending summary judgment motion is not premised upon the merits of this proceeding. On the contrary, it is solely based upon whether the Limitations Act applies to the facts of this case to preclude VIC from pursuing its claims against Silver. Accordingly, the Charette and Yusuf decisions are distinguishable on their facts.
[44] I do not agree with the submission of VIC and Saltman that Silvers pending summary judgment motion is “not timely”. While it is arguable that Silver could have pursued his pending motion for summary judgment before the trial certification form was finalized, I accept Mr. Hluchans submission that, from a strategic point of view, he needed to take a “wait and see” approach while the fallout resulting from the issuance of Saltman`s third party claim unfolded. Silver was being added as a third party by Saltman, and the factual landscape which existed up to that point was at risk of changing. Potential motions and further discovery could have arisen out of the third party claim.
[45] Indeed, counsel for the parties used that ten month period to focus their efforts upon narrowing the issues for trial, and ultimately entering into an agreement protecting each party’s rights and interests in the main action.
[46] While there is a small risk that an appeal or motion for leave to appeal arising from the disposition of Silver`s pending summary judgment motion may threaten to delay the trial of this proceeding, for the reasons expressed below, in my view the potential benefits outweigh any such risk.
[47] The trial of VIC’s claim will no doubt necessitate calling Silver as a witness, as VIC’s claim against Saltman is dependent upon the trial judge finding that (a) Silver was negligent in the fulfillment of his duties owed to VIC, and more importantly (b) had Silver fulfilled those duties, VIC would have obtained its refund from CRA and not suffered the consequential damages.
[48] The Limitations Act defence, if successful, puts an end to the claim against Silver. Traditionally, Limitations Act defences are typically pursued by resorting to motions brought under Rule 20 or 21 as the case requires.
[49] The trial of this proceeding will no doubt “resolve everything”. However, a successful summary judgment motion will “resolve everything” insofar as VIC`s claims for liability and damages against Silver.
[50] In my view, the issue of whether the limitation period expired by the time VIC commenced this proceeding is not interwoven with the facts supporting VIC’s claims against Saltman, which ironically are claims in negligence for failure to commence this very proceeding against Silver. In the continuing narrative of the events giving rise to this proceeding, those scenes involving the facts which inform the issue of a Limitations Act defence are both few and isolated, and more importantly readily severable from the “fabric of the case as a whole”.
[51] While the trial time may not be significantly reduced, a successful summary judgment motion would narrow the legal issues to be decided by the trial judge, and would also result in Silver reducing or avoiding significant expense associated with attending a trial currently scheduled for seven days.
[52] If not heard on July 7-8, 2015, Silver’s pending summary judgment motion could very well be argued at the opening of trial, thereby delaying and potentially adjourning the trial itself if sufficient time/days are not available.
[53] If Silver wishes to argue that he should be extracted from this litigation by reason of the claim not being commenced in accordance with the Limitations Act, on the facts of this record I see no substantive reason to force him to respond to the proceeding on its merits.
[54] For these reasons, VIC’s motion for directions and for an Order staying Silver’s pending summary judgment motion is dismissed.
[55] Costs of this motion are reserved to the judge hearing Silver’s summary judgment motion.
Diamond J.
Released: April 30, 2015
CITATION: Vandermarel Investment Corporation v. Silver 2015 ONSC 2773
COURT FILE NO.: CV-12-463620
DATE: 20150430
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
VANDERMAREL INVESTMENT CORPORATION
Plaintiff
– and –
SILVER & GOREN, GERALD SILVER,
CASSELS BROCK & BLACKWELL LLP and
LORNE SALTMAN
Defendants
ENDORSEMENT
Diamond J.
Released: April 30, 2015