ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: CV-12-470945

DATE: 20151216

BETWEEN:

DELOITTE & TOUCHE LLP
Plaintiff

– and –

RICHARD KUIPER and SOUTH RIVER POWER CORPORATION
Defendants

Christopher J. Thiesenhausen, for the Plaintiff

Robert J. Kennaley, for the Defendants

HEARD: November 19, 2015

ENDORSEMENT

HOOD j.

nature of Motion

[1] This is a motion for summary judgment brought by the defendants to have the plaintiff’s claim dismissed as being statute-barred. The claim was issued on December 28, 2012. The defendants argue that the plaintiff’s claim was discovered before December 28, 2010, being two years before the issuance of the claim. In response, the plaintiff argues firstly that there was an acknowledgment of the debt which extended the commencement of the limitation period. The plaintiff also argues, on the basis of promissory estoppel, that the defendants are estopped from raising a limitation defence. It argues that its claim was issued on a timely basis.

[2] The plaintiff also brings a cross-motion to dismiss the defendants’ counterclaim for damages for breach of contract or negligence as being statute-barred. The defendants acknowledge that if they are successful on their motion to dismiss the plaintiff’s claim, their counterclaim should also be dismissed as being out of time.

[3] For the following reasons, I find that the plaintiff’s claim is statute-barred, and accordingly dismiss both the claim and counterclaim.

Factual Background

[4] In 2009, the defendants were involved in litigation over a partnership interest. On or around June 17, 2009, the plaintiff was engaged to review certain financial information, to provide a report and to provide litigation support services. There is a dispute, which is not material for the purposes of the motion before me, as to whether both defendants engaged the plaintiff or whether it was the corporate defendant alone.

[5] The plaintiff rendered a total of five invoices starting on September 18, 2009. The last invoice was rendered April 29, 2010. Pursuant to both an engagement letter signed by the plaintiff and the corporate defendant and the invoices themselves, payment was due when the invoices were rendered. The five invoices total $143,620.84.

[6] There was no payment. In April, 2011, through a series of emails, the plaintiff became aware that the defendants’ legal counsel was contemplating taking steps to protect their legal accounts by asserting a solicitor’s lien. The plaintiff was asked by the defendants’ legal counsel whether they wished its own accounts to be included. The plaintiff asked that they include their accounts in any claim. On October 6, 2011, the plaintiff formally demanded payment. The defendants responded on October 24, 2011, complaining about the amount being charged and the overall service provided.

[7] On December 28, 2012, the plaintiff issued its claim suing the defendants for $143,620.84.

Discovery of Claims

[8] The defendants take the position that the plaintiff’s claim was discovered long before December 28, 2010.

[9] It is clear from the engagement letter and paragraph 5d of the General Business Terms, which forms part of the engagement letter, that “All invoices shall be due and payable when rendered”. The invoices themselves provide that “Accounts shall be due and payable when rendered”. The engagement letter and invoices further provide that interest shall be charged and be payable at 18% per annum from 30 days after the invoice date. In its claim, the plaintiff claims interest in accordance with the engagement letter and invoices. As well, the engagement letter specifically provides that the plaintiff’s “fees and expenses are not contingent upon the final resolution of the matters that are the subject of this engagement”.

[10] Accordingly, I find that the plaintiff discovered the claims set out in its invoices by no later than the date of the last invoice or April 29, 2010. The plaintiff therefore had until April 29, 2012, to commence its claim on its outstanding invoices. It did not do so until December 28, 2012.

[11] The plaintiff makes two arguments to avoid its claim being statute-barred:

(i) The defendants acknowledged the debt within the meaning of s. 13 of the Limitations Act, 2002, SO 2002, c. 24, Sch. B (the Act) thereby extending the commencement of the limitation period; and/or

(ii) Promissory estoppel applies so as to avoid the application of the Act.

I will deal with each argument in turn.

Section 13 of the Act

[12] Section 13 of the Act overrides s. 4 of the Act. It provides at subsection (1) that “if a person acknowledges liability in respect of a claim for payment of a liquidated sum… the… omission on which the claim is based shall be deemed to have taken place on the date on which the acknowledgment was made”. At subsection (10) it further provides that the acknowledgment must be in writing and signed by either the debtor or the debtor’s agent.

[13] The plaintiff acknowledges that there is nothing from the debtor’s agent. The plaintiff relies on a letter of October 24, 2011, signed by the defendant, Kuiper, as an acknowledgment of the debt within the meaning of s. 13. It is in writing. It is signed by Kuiper. It is not signed by South River Power Corporation which arguably is the debtor based upon the engagement letter. However, for the purposes of this analysis, I will take the letter to be on behalf of both defendants.

[14] In Middleton v. Aboutown Enterprises Inc., [2008] O.J. No. 3608 (S.C.J.) there was a promisory note that had $412,500 outstanding on it. Prior to any claim being made, the defendants sent a letter and an unsigned release to the plaintiff purporting to offer $50,000 in exchange for an executed release. Justice Lederer stated at para. 11 of Middleton that in order to be an acknowledgment for the purposes of the Act, the acknowledgment must, at a minimum, have to demonstrate and confirm the amount of the debt that remained owing. Justice Lederer’s decision has been followed in a number of other decisions.

[15] In Montcap Financial Corp. v. Schyven, 2011 ONSC 4030 at para. 27, and in Skuy v. Greennough Corporation, 2012 ONSC 6998 at para. 56, Justice Perell in both instances referred to Middleton and stated that an acknowledgment for the purposes of the Act of an indebtedness for a liquidated sum “must, at a minimum, confirm and concede the amount that remains owing”. In West York International Inc. v. Importanne Marketing Inc., 2012 ONSC 6476, Justice DiTomaso at paragraph 92 referenced Middleton and Montcap, and repeated Justice Perell’s wording that the acknowledgment “must, at a minimum, confirm and concede the amount that remains owing”.

[16] Justice Lederer’s decision in Middleton was appealed. While the appeal was dismissed in a four paragraph endorsement, see: Middleton v. Aboutown Enterprises Inc., 2009 ONCA 466, the Court stated in its endorsement that it did not accept the statement that to stand as an acknowledgment, the letter and Release would, at a minimum, have to demonstrate and confirm the amount of the debt that remained owing. It would seem that the appeal decision was not drawn to the attention of either Justices Perell or DiTomaso based upon their adoption of Justice Lederer’s wording in their decisions.

[17] Unfortunately, the Court of Appeal does not say what part of Justice Lederer’s statement it did not accept. However, the Court went on to say at para. 1 that with respect to the alleged acknowledgment documentation, it “did not constitute a clear and unequivocal acknowledgment of the debt claimed, with a proposal to satisfy it, as opposed to a mere offer to settle a claim, without acknowledging that $412,500, or indeed any amount, remained owing in respect of the promissory note”.

[18] Using the wording of the Court of Appeal, I cannot find that the letter herein of October 24, 2011, was a clear and unequivocal acknowledgment of the debt claimed. Nor does the letter contain a proposal to satisfy the debt. There is no acknowledgment of $143,620.84, or any amount owing in respect of the invoices. If anything, it was a letter of complaint addressed to the plaintiff complaining that the invoices were not in accordance with the initial estimate and that they lacked detail. The defendants also raised some tax issues which they said were not drawn to their attention by the plaintiff. Accordingly, I am unable to find that the defendants acknowledged the debt within the meaning of s. 13 of the Act, thereby extending the commencement of the limitation period.

[19] I note that when the plaintiff received this letter, it still had approximately five months in which to issue its claim. It failed to do so.

Promissory Estoppel

[20] The plaintiff also argues that the defendants are estopped from relying on a limitation period defence on the basis of promissory estoppel. Promissory estoppel, if proven, can operate as an answer to a limitation defence.

[21] In Maracle v. Travellers Indemnity Co. of Canada, 1991 58 (SCC), [1991] 2 S.C.R. 50 at para. 13, Justice Sopinka sets out the requirements for promissory estoppel:

The principles of promissory estoppel are well settled. The party relying on the doctrine must establish that the other party has, by words or conduct, made a promise or assurance which was intended to affect their legal relationship and to be acted on. Furthermore, the representee must establish that, in reliance on the representation, he acted on it or in some way changed his position.

[22] The defendants argue that there is no evidence to support promissory estoppel, that there is no evidence of a waiving of the limitation period, and there is no detrimental reliance by the plaintiff or that the plaintiff changed its position in some way. I agree.

[23] Mr. Low in his affidavit on behalf of the plaintiff states that during the course of the mediation on February 23, 2010, he discussed the plaintiff’s accounts with Mr. Kuiper. At that point there were three outstanding accounts which totaled $116,810. He states that Mr. Kuiper promised to pay the plaintiff’s accounts out of any settlement funds. He also acknowledges that the settlement reached at the mediation was tentative.

[24] This promise is so unclear that I fail to see how the plaintiff could say that it affected their legal relationship. The settlement from which the funds for payment were to come was tentative. There was no assurance it would happen. Mr. Low knew this. No assurance was being made by Mr. Kruiper. The engagement letter provided that the payment of fees was not contingent upon the final resolution of the matters that were the subject of the engagement. The fees were due whether there was a settlement or not.

[25] Following the mediation, the plaintiff issued two further accounts totaling $26,809. These accounts were noted to be due when rendered, as were the previous ones. There was no suggestion from the plaintiff that these accounts or any of the previous accounts were now only to be paid at some tentative future date. The subsequent accounts I find to be evidence that there was no promise made at the mediation affecting the legal relationship. These subsequent accounts also show that the plaintiff did not change its position in reliance on the purported representation.

[26] Even if there was a promise to pay in the future, this is not sufficient for the purposes of promissory estoppel herein. There must be more. There was no direct evidence nor was there evidence from which a promise not to rely on the limitation period could be inferred. There is no evidence of a knowing waiver of a limitation defence by the defendants. At best the plaintiff thought it would be paid at some unknown time in the future. An admission of liability is not, on its own, sufficient to estop a defendant from relying on a limitation period as a defence, see: Leblanc and Royle Enterprises Inc. v. United States Fidelity & Guaranty Co. (1994), 1994 1255 (ON CA), 17 OR (3d) 704 (Ont. C.A.).

[27] There is no evidence put forward by the plaintiff of a change in position or detrimental reliance. This is a requirement for promissory estoppel, see: Technicore Underground Inc. v. Toronto (City), 2012 ONCA 597 at para. 70. The plaintiff continued to invoice as before. The invoices were due when rendered, not at some future date.

[28] I also cannot lose sight of the fact that the plaintiff is a highly sophisticated entity, well able to look after its own interests. Further, it knew shortly after the mediation on April 14, 2010 through a series of emails that the defendants were unhappy and the settlement transaction was in jeopardy. The plaintiff knew then that if a promise had been made which created a promissory estoppel, which I have found there was not, that that promise was now seriously in jeopardy as were its accounts.

[29] While clear then, it was made abundantly clear in April, 2011, again through a series of emails that the defendants were not about to pay the accounts. The lawyers were taking steps to secure their fees from the defendants and the lawyers suggested that the plaintiff should too. The plaintiff asked that the lawyers also include its outstanding invoices in any claim brought by them. The plaintiff admits that on April 19, 2011, it knew it would have to sue to obtain payment. No explanation is given as to why it then took until December 28, 2012 to issue a simple boilerplate statement of claim to collect on their accounts.

[30] Even if there was a waiver of the limitation period based upon a promissory estoppel, the defendants were entitled to resile from their promise. It was not a final and irrevocable promise. The plaintiff could be put into its previous position upon the promise being revoked. If the promise was revoked on April 14, 2010, this was prior to the commencement of the limitation period. If the promise was revoked on April 19, 2011, I am not prepared to find that the limitation period of two years was reset on April 19, 2011, and that the plaintiff then had to April 19, 2013, to issue its claim. I am advised by counsel that they were unable to locate any case law on this point or anything that establishes that once the promisor resiles from his promise, the promise gets a further two years in which to sue. In my view, resiling from a promise is not like an acknowledgment under s. 13 of the Act which has the effect of starting a new limitation period. The plaintiff was given ample notice of the defendants’ position. The plaintiff had more than a reasonable amount of time to commence its claim within the existing limitation period. It failed to do so.

The Counterclaim

[31] While it is unnecessary for me to do so, having found that the claim is statute-barred, the parties argued the issue of whether the counterclaim is statute-barred. I find that it is not.

[32] The counterclaim is one of equitable set-off. As found in Canada Trustco Mortgage Co. v. Pierce, 2005 15706 (ON CA), equitable set-off as a defence is not subject to a statutory limitation period. If the plaintiff had been able to proceed with its claim, the defendants were free to rely on equitable set-off as a defence to diminish the plaintiff’s claim. The defendants were not seeking damages over the amount of the plaintiff’s claim but merely to eliminate any claim made bythe plaintiff.

Costs

[33] As to costs, the parties agreed before me that $11,000, inclusive of tax and disbursements, was a fair and reasonable amount for the motion before me, and that a fair and reasonable amount for the action as a whole, including the motion, was $15,000, again inclusive of tax and disbursements. Accordingly the plaintiff is to pay the defendants costs in the amount of $15,000 inclusive of tax and disbursements within 30 days of today’s date.

Hood J.

Date: December 16, 2015