COURT FILE NO.: CV-12-447584
MOTION HEARD: 20160222
REASONS RELEASED: 20160226
SUPERIOR COURT OF JUSTICE – ONTARIO
BETWEEN:
LOUISE TALBOT
Plaintiff
and
JEFFREY NOURSE and 2255588 ONTARIO INC., and 2207500 ONTARIO INC.
Defendants
BEFORE: MASTER D. E. SHORT
COUNSEL: Cameron Fiske Fax Nos. (416) 231-6630 and (416) 830-5820
-for moving Defendant Nourse
Kenneth Alexander Fax No. (416) 929-6885
-for the Plaintiff
Heard: February 22, 2016
Reasons for Decision
peremptory adj. (15c) 1. Final; absolute; conclusive; incontrovertible <the king's peremptory order>
Black’s Law Dictionary 9th Edition.
I. Relief Sought
[1] The defendant Jeffrey Nourse and his companies moves to amend their Statement of Defence in this 2012 action to add a new ground of defence based upon Section 13 of the Limitations Act, 2002.
[2] While originally a number of other claims and parties were involved in this action, it appears the matter has devolved to claims based upon amounts set out in two promissory notes dated September 8, 2010.
[3] This motion is brought in the shadow of a full day summary judgment motion scheduled for March 11, 2016.
[4] The moving parties rely upon Rule 26 which (with my emphasis added) provides:
GENERAL POWER OF COURT
26.01 On motion at any stage of an action the court shall grant leave to amend a pleading on such terms as are just, unless prejudice would result that could not be compensated for by costs or an adjournment.
WHEN AMENDMENTS MAY BE MADE
26.02 A party may amend the party’s pleading,
(c) with leave of the court
[5] I am satisfied that the court still has a discretion with respect to the requested amendments, notwithstanding the “shall” by virtue of the request for “leave” from the court.
II. The [Limitations Act, 2002](https://www.canlii.org/en/on/laws/stat/so-2002-c-24-sch-b/latest/so-2002-c-24-sch-b.html)
[6] The defendants now seek to assert that the promissory notes are unenforceable as the claims are predicated on an acknowledgment of a previous indebtedness, which took place outside the two-year period contemplated by the Act. In this regard the Limitations Act provides in part, in section 13 of the Act:
Acknowledgments
- (1) If a person acknowledges liability in respect of a claim for payment of a liquidated sum, the recovery of personal property, the enforcement of a charge on personal property or relief from enforcement of a charge on personal property, the act or omission on which the claim is based shall be deemed to have taken place on the day on which the acknowledgment was made. Interest
(4) A debtor’s performance of an obligation under or in respect of a security agreement is an acknowledgment by the debtor of liability in respect of a claim by the creditor for realization on the collateral under the agreement.
(8) Subject to subsections (9) and (10), this section applies to an acknowledgment of liability in respect of a claim for payment of a liquidated sum even though the person making the acknowledgment refuses or does not promise to pay the sum or the balance of the sum still owing.
Restricted application
(9) This section does not apply unless the acknowledgment is made to the person with the claim, the person’s agent or an official receiver or trustee acting under the Bankruptcy and Insolvency Act (Canada) before the expiry of the limitation period applicable to the claim. (10) Subsections (1), (2), (3), (6) and (7) do not apply unless the acknowledgment is in writing and signed by the person making it or the person’s agent.
(11) In the case of a claim for payment of a liquidated sum, part payment of the sum by the person against whom the claim is made or by the person’s agent has the same effect as the acknowledgment referred to in subsection (10).
[7] As noted above Rule 26 provides that the court shall allow amendments to a statement of defence generally.
[8] In my view, the section is still subject to some control by the court in determining whether or not the proposed amendment has any real prospect of being effective with respect to the resolution of the matters in issue between the parties.
[9] Proportionality in my view, directs that is an overriding concern the court needs to determine whether or not it is appropriate to allow a specific amendment.
III. Amendments Sought
[10] In this case the defendant in a 2012 action seeks on the eve of a motion for Summary Judgment to amend their statement of defence, which was originally filed on May 25, 2012. The affidavit filed by counsel of record for the defendant sets out extracts of cross examinations that took place with respect to the pending motion for summary judgment. Those examinations were upon affidavits filed when there had been no suggestion from either side that there was any possibility of a limitation defence in this case.
[11] The proposed amendment to the statement of defence as set out as an exhibit to counsel’s affidavit seeks to make this change to the existing statement of defence which, in substance, originally denied that the promissory notes had been signed by any of the defendants.
[12] There is only a very small amendment actually sought in terms of number of words to be added. However, the impact of the amendment can be potentially very significant in the manner in which this case is to proceed from this point in time.
[13] The requested alterations to the pleading are set out as follows:
The Defendants deny that the Promissory Note~~s ~~ for $200,000 ~~and $80,000 ~~alleged in the Statement of Claim
werewas executed as claimedand deny that any amounts on account of the notes were paid into the Defendants' bank accounts. Alternatively, the Defendants plead and rely upon the Limitations Act, 2002, S.O. 2002, c 24, Sch B, as amended. In any event, the Defendants plead that any amounts that might be owing to Talbot against these notes arc more than offset by the amounts misappropriated by Talbot from the Stores.After September 8, 2010, the Defendants paid a sum of $150,000 to Talbot, thereby repaying the $80,000 as well as making an overpayment of $70,000 to Talbot.
[14] It thus appears that the denial of the $80,000 indebtedness is being withdrawn but the $200,000 indebtedness claimed is said(in the alternative) to have been sued upon outside the two-year period
IV. The Long and Winding Road
[15] To date at least 10 Superior Court Justices and Masters have been involved in it. This four year old case that is still at the pleadings stage.
[16] On March 1, 2012, the plaintiff issued her statement of claim against Mr. Nourse and his numbered companies. Numerous other parties were added as defendants by counterclaim, by way of a pleading delivered on May 25, 2012. The defendants then filed a notice of change of solicitors, shortly thereafter on July 18, 2012.
[17] On April 16, 2013 a case conference was held before, Madam Justice Low to schedule a motion by the plaintiff for summary judgment. On May 8, 2013. Master Peterson granted an order removing a different firm as solicitors of record for the defendants.
[18] The summary judgment motion record was filed on July 18, 2013 for the motion for summary judgment scheduled for August 12, 2013 before. Mr. Justice Firestone. At that time the motion was adjourned with the annotation “continued to later date.”.
[19] The motion for summary judgment came back before. Mr. Justice Whittaker on December 13, 2013, and apparently was adjourned again. The next notation on the case history indicates that a responding motion record was filed by the defendants, on April 25, 2014.
[20] The motion for summary judgment was then scheduled to come on before. Mr. Justice O’ Marra on May 6, 2014. It apparently was adjourned once more.
[21] At this stage a status notice had to be dealt with as the action had not been set down for trial within 2 years of its commencement.
[22] Next on August 14, 2014, Justice Carol Brown had the matter before her. It was again adjourned within an endorsement: “Any further Adjournments will require attendance before a judge…”
[23] Madam Justice Himel then convened a case conference on October 7, 2014. It would seem that, at that time the motion for summary judgment was scheduled for one half day to proceed on January 15, 2015.
[24] The parties failed to deal with the status notice when a status hearing scheduled for October 17 before Master Hawkins was not attended. On February 24, 2015, the action appears to have been dismissed for delay. Notwithstanding the pending motion for summary judgment.
[25] Master Dash restore the action on an unopposed basis on August 7, 2015 and established a timetable.
[26] Based on the case history, it would appear that throat this entire period, no counsel formally were on the record for the defendant Mr. Nourse and his company.
[27] On September 4, 2015, counsel for the plaintiff attended a case conference in front of Mr. Justice McEwen. The case history reflects that a one-day summary judgment motion was scheduled at that time for December 10, 2015.
[28] Three days before the scheduled date of that motion, the firm presently representing Mr. Nourse filed a Notice of Appointment of Solicitor with respect to the three defendants.
[29] Perhaps not surprisingly, they requested an adjournment of the motion for summary judgment, which was launched two and half years earlier.
[30] The motion which had been confirmed by counsel for the plaintiffs. Three days before the appointment of the new solicitor resulted in Mr. Justice Grant Dow making an endorsement which read in part:
“…motion adjourned on consent to March 11, 2016. …. The motion date of March 11, 2016 is peremptory to the defendants, meaning that the motion proceeds whether or not Jeffrey Nourse or the two corporate defendants have legal representation.…”
[31] Now in the face of that endorsement, a notice of motion to amend the statement of defence was filed on February 5, 2016 and scheduled for a 60 minute hearing before me on February 22, 2016. At that hearing, the argument in fact , ran more than two hours
[32] Counsel for the defendants asserts that Rule 26 obliges me to permit the amendment.
[33] Counsel for the plaintiff resists.
[34] I have set out the foregoing history as it typifies what is becoming too often an endemic approach to motions. The puck simply seems to be being pushed further down the ice without coming to meaningful conclusions.
[35] My interpretation of Rule 1.04 and the requirement that it outlines the general principle to be followed in interpreting the rules compels me to hold that “the Puck Stops Here”.
V. Nature of Claim
[36] In order to clarify the factual elements involved in the portion of the claim, which is being addressed in the summary judgment motion, I am setting out portions of the two promissory notes executed before and witnessed by a bank employee. The smaller note reads in part:
“PROMISSORY NQTE
September 8, 2010
PRINCIPAL SUM: $80,000.00
FOR VALUE RECEIVED Jeffrey Nourse (the "Borrower") and 2255588 Ontario Inc promises to pay to or to the order of Louise Talbot, her successors and assigns (the "Lender"). the principal sum $80,000.00 in lawful money of Canada at Toronto, Ontario or at such other place as the Lender may designate by notice in writing to the Borrower.
Principal shall be due and payable from cash and receivable receipts that will be deposited on behalf of the company following the date of this Promissory Note (the "Payment Date") as priority payments until total amount is paid in full. No other payments from this account will be made until debt is fully repaid.”
[37] I understand that the plaintiff withdrew $80,000 from her bank and had that money placed in the individual defendants account on September 8, 2010, I note that the plaintiff’s motion record reflects atTab A ,page 13 a $80,000 deposit on September 8, 2010 to the account of the defendant 2255588 Ontario, the co-debtor on the above note.
[38] The second note is similar, but has somewhat different payment terms: Inc.
“PROMISSORY NOTE
September 8, 2010
PRINCIPAL SUM: $200,000.00
FOR VALUE RECEIVED Jeffrey Nourse (the "Borrower") and 2255588 Ontario Inc promises to pay to or to the order of Louise Talbot, her successors and assigns (the "Lender"), the principal sum $200,000.00 in lawful money of Canada at Toronto, Ontario or at such other place as the Lender may designate by notice in writing to the Borrower.
Principal shall be due and payable from cash and receivable receipts that will be deposited on behalf of the company in equal monthly instalments of $ 10,000 following 3 months from the: date of this Promissory Note (the "Payment Date") until total amount is paid in full or anytime thereafter upon mutual consent of the borrower and the lender.
In the event that the Borrower disposes of all or substantially all of his shares of BSML Inc., or 2255588 Ontario Inc prior to the Payment Date, the Borrower shall pay to the Lender the sum of $200,000 in full and final satisfaction of all principal and interest owning hereunder, such sum to be paid and received in recognition of the fact that the within loan has permitted 2255588 Ontario Inc.to fund the expenses of 2255588 Ontario Inc.”
[39] The Statement of Claim asserted claims for a number of matters but commences with these claims:
STATEMENT OF CLAIM
- The Plaintiff, Ms. Talbot, claims against the Defendants, Mr. Jeffrey Nourse and 2255588 Ontario Inc.:
a. Payment in the sum of $70, 000.00 representing balance on the principal amount of $200,000.00 loaned to the Defendants by way of a promissory note dated
September 8, 2010;
b. Payment in the sum of$60, 000.00 representing principal amount loaned to the Defendants by way of a promissory note dated September 8, 2010;
[40] the statement of claim was issued on March 1, 2012, at least five months prior to the two year anniversary of the date reflected on the face of the notes
VI. Proposed Amendments
[41] The plaintiff seeks these specific amendments (together with other consequent amendments) to refer to two “defendants” rather than a single “defendant” throughout the pleading: The proposed amended version would thus read:
“THE PARTIES:
The Defendants deny that the Promissory Note~~s ~~ for $200,000 ~~and $80,000 ~~alleged in the Statement of Claim
werewas executed as claimedand deny that any amounts on account of the notes were paid into the Defendants' bank accounts. Alternatively, the Defendants plead and rely upon the Limitations Act, 2002, S.O. 2002, c 24, Sch B, as amended. In any event, the Defendants plead that any amounts that might be owing to Talbot against these notes arc more than offset by the amounts misappropriated by Talbot from the Stores.After September 8, 2010, the Defendants paid a sum of $150,000 to Talbot, thereby repaying the $80,000 as well as making an overpayment of $70,000 to Talbot.
[42] It is clear from the deleted portions and the additions proposed that originally the defence in paragraph 43 denied that either of the promissory notes had been executed by Mr. Nourse. The amendments now reflect that the $200,000 note is denied, but the $80,000 note is acknowledged and asserted to have been repaid.
[43] In my view, the limitation defence has no merit, having regard to the circumstances surrounding the notes I am therefore not prepared to allow the amendment sought to paragraph 43 with respect to paragraph 44. That defence does not rely on limitation, but rather is a factual assertion.
[44] . Obviously I cannot tie the hands of the parties or the judge hearing the motion; however I am prepared to permit that amendment as I do not believe that it will have a significant impact on the summary judgment motion scheduled for later in this fortnight which would mandate an adjournment
VII. Jurisprudence
[45] In coming to my conclusions I have considered the helpful analysis of the law involing promises to pay and the Limitation Act by Justice Perell in. Skuy v. Greenough Harbour Corp., 2012 ONSC 6998, 10 B.L.R. (5th) 146; 224 A.C.W.S. (3d) 200; 2012 CarswellOnt 15633
[46] In particular he observes at paragraph 35 of his reasons:
“The effect of the amendment to the Limitations Act is that all demand obligations are treated the same way, and the limitation period for a demand obligation begins to run only from when a demand is made: Peca v. Peca, 2011 ONSC 770 (S.C.J.); Toronto-Dominion Bank v. Formstructures Inc., 2012 ONSC 2256 (S.C.J.); Quick Credit v. 1575463 Ontario Inc. (c.o.b. Yorktown Auto Collision), 2010 ONSC 7227 (S.C.J.), affd. 2012 ONCA 221 (Ont. C.A.).
[47] In the present case there is no personal evidence from Mr. Nourse with respect to any demand for payment.
[48] P.A. Daley J addressed pleading amendments requested by the plaintiff after a number of days on an ongoing trial in Kay v. Caverson, 2010 ONSC 6743; 196 A.C.W.S. (3d) 632; 2010 CarswellOnt. While the amendments were with respect to adding a claim rather than a defence, I believe proportionality still dictates that his observations are of relevance in this case.
[49] There he found that material facts to the amendments sought had not been plead to date and the case had been conducted on the basis of that existing factual matrix. Given the lengthy and unexplained delay by the plaintiff prejudice to the defendants was presumed to be present. In particular his Honour noted:
“6 No explanation is provided by the plaintiff in her affidavit as to why the amendments are sought at this time, nor as to the delay in moving to amend her statement of claim.”
[50] In the present case no sworn evidence from the individual Defendant. The sole affidavit filed is sworn by his new counsel thus precluding any meaningful cross-examination.
[51] Justice Daley refers to helpful passages from Court of Appeal decisions.
17 Rule 26.01 is mandatory, but contemplates an exception where prejudice would result which could not be compensated for by costs or an adjournment.
18 Generally the burden of establishing that the required level of prejudice would result is on the party opposing the amendment. As was stated by Moldaver J. A. in Andersen Consulting Ltd. v. Canada (Attorney General) 2001 8587 (ON CA), [2001] O.J. No. 3576 (C.A.), at para. 37, the test for granting leave to amend a pleading is one of presumptive approval rather than presumptive refusal:
Amendments like those sought in the present case should be presumptively approved unless they would occasion prejudice that cannot be compensated by costs or an adjournment; they are shown to be scandalous, frivolous, vexatious or an abuse of the courts process; or they disclose no reasonable cause of action.
19 It was further held by the Court Of Appeal in Family Delicatessen Ltd. v. London (City), 2006 5135 (ON CA), [2006] O.J. No. 669 (C.A.), at para. 6:
While delay is not in and of itself a basis for refusing an amendment, there must come a point where the delay is so long and the justification so inadequate that some prejudice to the defendants will be presumed absent a demonstration by the party seeking the amendment that there is in fact no prejudice despite the lengthy and unexplained delay.
20 In Ontario Securities Commission v. MacLachlan, [2009] O.J. No. 1993 (Div. Ct.), in considering the decision in Family Delicatessen Ltd., the Divisional Court noted that the principle set out above is not limited to cases in which the plaintiff seeks amendments to pleadings under circumstances where a limitation period has expired. The motion judge in the court below, [2008] O.J. No. 5279, stated that the moving party in those circumstances must lead evidence to support both the proposed amendments and evidence to support his claim that he was otherwise unable to make this motion until the time it was brought. The Divisional Court, in Ontario Securities Commission, indicated that the moving party did not have to introduce evidence in support of the merits of the substantial elements of the proposed new matters pleaded, but rather the party was required to offer some explanation for the delay in seeking the amendments and to consider the presence or absence of prejudice to the opposite party. [my emphasis added throughout]
[52] From my perspective the defendants in the present case (by virtue of the upcoming motion being peremptory to them) have “no opportunity to force an adjournment” by reformulating their defence. In this regard Justice Daley observes:
23 Where there is no opportunity for an adjournment or cross examination on a new position that would be advanced, if leave were granted to amend a pleading, non-compensable prejudice would result. Amendments should not be allowed that are late and substantially alter the case to be met or to "cooper up" a case after a first run: Robinson v. Robinson 1989 4165 (ON SC), [1989], 70 O.R. (2d) 249 (H.C.J.), at para. 255-6, varied on other grounds, 1993 8491 (ON CA), [1993] O.J. No. 2172 (C.A.); Pace v. DelZotto, [1996] O.J. No. 143 (Gen.Div.) at para. 5-10.
[53] In my view, given the lengthy and unexplained delay by the defendant, prejudice to the plaintiff must be presumed to be present, absent any evidence from the defendants that there is in fact no prejudice to the defendants in spite of the lengthy and unexplained delay. In the circumstances, I find that the prejudice present cannot be compensated for by costs or an adjournment.
VIII. Conclusion
[54] I would have preferred to have had more time to address the issues in this motion and to elaborate on my decision. However, having regard to the timing of the summary judgment motion, and the inordinate delays to date. These reasons will have to do.
[55] I am rejecting the defendant’s motion to amend to assert a limitation defencefor four reasons.
[56] Firstly, in my view, a motion that, as peremptory to the defence may not be derailed by raising previously on asserted defenses which will otherwise probably necessitate another adjournment. No new facts have arisen and a number have lawyers have acted for the plaintiff for the defendant, who could have asserted this possible defence. As a consequence I believe, the defendant is estopped from adding this new defence in the face of a peremptory order.
[57] Secondly, it is my view that there was a novation of the debt owed to the plaintiff by virtue of the signing of the two promissory notes, which on their face acknowledged good consideration. Moreover, I am not convinced that there was a demand made with respect to the indebtedness existing prior to the signing of the promissory notes, which would have started the two-year limitation period running more than two years before. This action was commenced.
[58] The acknowledged receipt of the $80,000 sum which gave rise to the now not denied promissory note is more than enough consideration for the enforceability of the second promissory note in the amount of $200,000.
[59] It is somewhat disingenuous for the plaintiff to have denied signing both notes until expert evidence indicated otherwise, and then to try to indicate that if the note was signed it was not within the two-year period under section 13 nine of the limitations act, flowing from an acknowledgment. Paragraph
[60] I am satisfied that the limitation act, does not and would not provide a defence that was tenable in this case.
[61] Thirdly I believe the doctrine of latches can apply in situations such as this. Parties cannot simply wait to the last minute, and then latch on a new defence to restart the process. The plaintiff relied upon the defenses asserted and spent funds to meet that case, our Rules ought not to facilitate unending “ragging of the puck” with the consequent wasting of valuable judicial resources.
[62] Lastly, it is my view, having regard to the entire circumstances of this case that my obligation under rule 1.04 to strive to ensure the expeditious resolution of cases such as this.
[63] When I first commenced practicing specially endorsed writ’s for promissory notes, led to prompt judgments. The record of this case, under the present rules does not reflect well on our current civil litigation system.
[64] In my view the direction of rule 1.04 that the Rules are to be liberally construed to secure the just, most expeditious and least expensive determination of this civil proceeding on its merits dictates that the defendants’motion in this instance should fail.
IX. Disposition
[65] In substance, the defendant has been unsuccessful in its motion. I have permitted an amendment to paragraph 44 of the proposed statement of defence which may need to be slightly altered to reflect the refusal of changes to the preceding paragraph. In any event. I regard the defendant as still receiving an indulgence by the allowance of that amendment.
[66] The plaintiff has succeeded in maintaining its motion. Date for its motion for summary judgment and in my view, is entitled to partial indemnity costs with respect to this motion.
[67] At the conclusion of the argument before me, I indicated to counsel that based on their cost outlines I felt $5000 (all in)would be a appropriate quantum to be paid to the winning party. I am therefore directing that the sum of $5000 be paid by the defendant Nourse to the plaintiff within 30 days of this order.
R.132/DS __________________
Master D.E. Short