INTRODUCTION

[1] A receiver for Crate Marine Sales Limited (the “Company”) was appointed under the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, on December 8, 2014. The receiver commenced this action on March 30, 2015. On March 31, 2015, this court approved the receiver’s sale of the Company’s assets to 2450902 Ontario Limited (“245”). 245 directed that title to the purchased assets other than the land, including the interest in this action, be transferred to its affiliate, Krates Keswick Inc. (“KKI”).

[2] In this action, KKI claims damages in the amount of $271,736.33 in respect of arrears for the payments of goods and services provided by the Company to the defendant Brian Miller (“Miller”) from April 24, 2007 to December 1, 2014. These goods and services include: 1) the sale of two boats; 2) the rental of boat slips on an annual basis; and 3) maintenance services and fuel for these boats.

[3] Miller defends this action on the basis that he has paid the invoices (including work orders) by various means, including cash and the provision of landscaping services. Miller, in his counterclaim, seeks an order for possession of his boat, which remains in KKI’s possession.

[4] Miller brings this motion for partial summary judgment. He submits that KKI is barred by the application of the two-year limitation period set out in s. 4 of the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B, from bringing this action for payment of invoices issued before March 30, 2013 (i.e. more than two years before the commencement of this action). Those invoices comprise almost the entirety of this claim. Miller also submits that KKI’s claim should be struck pursuant to Rule 15.04 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, as it failed to strictly comply with Justice Hainey’s Order, dated March 9, 2016, which required KKI to appoint new counsel: see Krates Keswick Inc. v. A. Farber & Partners, 2016 ONSC 1619.

[5] The parties raise the following issues:

(1) Is a motion for summary judgment appropriate in these circumstances?

(2) Is KKI’s claim in respect of the invoices and work orders with dates of completion between April 24, 2007 and December 12, 2012, for the period prior to March 31, 2013 (“2007-2012 Invoices”), barred under the Limitations Act, 2002?

a. Were the claims against Miller not discoverable until the receiver was appointed in November 2014?

b. Did Miller make part payments in respect of the 2007-2012 Invoices, which reset the limitation period?

(3) Should the claim be struck under Rule 15.04 of the Rules of Civil Procedure for KKI’s failure to appoint new counsel in a timely manner?

[6] For the reasons, described below, I have granted Miller’s motion for summary judgment, but have dismissed the other relief sought.

ISSUE #1: IS A MOTION FOR SUMMARY JUDGMENT APPROPRIATE IN THESE CIRCUMSTANCES?

[7] The introduction of the proportionality principle (see Rule 1.04(1) of the Rules of Civil Procedure) and other amendments to the Rules of Civil Procedure, reflects a “culture shift” that requires civil disputes to be resolved in a manner that increases access to the civil justice system by promoting faster and cheaper, as well as just, resolutions: see The Honourable Coulter A. Osborne, Q.C., Summary of Findings and Recommendations of the Civil Justice Reform Project (November 2007), and in particular recommendations 5 and 19 related to summary dispositions and proportionality, respectively.

[8] If used appropriately, a motion for summary judgment serves to increase access to justice. Perhaps the most significant consequence of these amendments is that a “full appreciation” of the evidence is no longer necessary in order to determine a motion for summary judgment on its merits. The question now is whether the court’s appreciation of the evidence is sufficient to rule on the merits of a motion: see Sweda Farms Ltd. v. Egg Farmers of Ontario, 2014 ONSC 1200, at para. 34, aff’d 2014 ONCA 878, leave to appeal dismissed, [2015] S.C.C.A. No. 97. In Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, the Supreme Court of Canada stated at para. 49:

There will be no genuine issue requiring a trial when the judge is able to reach a fair and just determination on the merits on a motion for summary judgment. This will be the case when the process (1) allows the judge to make the necessary findings of fact, (2) allows the judge to apply the law to the facts, and (3) is a proportionate, more expeditious and less expensive means to achieve a just result.

[9] In response to affidavit material or other evidence supporting a motion for summary judgment, a responding party may not rest solely on the allegations or denials in the party’s pleadings, but must set out, in affidavit material or other evidence, specific facts showing that there is a genuine issue requiring a trial: see Rule 20.02(2). Each side must “put its best foot forward” with respect to the existence or non-existence of material issues to be tried: see Papaschase Indian Band No. 136 v. Canada (Attorney General), 2008 SCC 14, [2008] 1 S.C.R. 372, at para. 11. A court is entitled to assume that the record contains all the evidence that the parties would present if the matter proceeded to trial: see Aronowicz v. EMTWO Properties Inc., 2010 ONCA 96, 98 O.R. (3d) 641, at paras. 17-19.

[10] A court may exercise any of the following powers for the purpose of determining whether there is a genuine issue requiring a trial, unless it is in the interest of justice for such powers to be exercised only at a trial:

Weigh the evidence.
Evaluate the credibility of a deponent.
Draw any reasonable inference from the evidence.
Order that oral evidence be presented by one or more parties for the purposes of exercising the above powers: see Rules 20.04(2.1) and 20.04(2.2) of the Rules of Civil Procedure.

[11] KKI submits that there are serious conflicts between the affidavit and documentary evidence filed in this motion, and that this action “cries out” for further production and discoveries to attempt to resolve the conflicting evidence. It submits that it is very likely that a large number of issues, such as the negotiation of the landscape work performed by Miller, will turn on the credibility of witnesses.

[12] Miller adduced the following evidence:

(1) Affidavits of Brian Miller, sworn August 14, 2015 and September 14, 2015;

(2) Affidavit of Steven Crate, sworn May 4, 2016;

(3) Affidavit of Nancy Winlove-Smith, sworn June 2, 2016; and

(4) Affidavit of Gerald T. Miller, sworn July 27, 2016.

[13] KKI adduced the following evidence:

(1) Affidavit of Benn-Jay Spiegel, sworn September 4, 2015; and

(2) Affidavit of Allan Lyons, sworn June 15, 2016.

[14] None of the affiants were cross-examined.

[15] As noted earlier, this court is entitled to assume on a motion for summary judgment that the parties have provided the court with all of the evidence that is required to determine the motion. Despite asserting the need for cross-examination, and having had plenty of time to conduct such cross-examinations, KKI has chosen not to cross-examine Miller or any other affiant.

[16] I am satisfied that the question of whether KKI’s claim in respect of the 2007-2012 Invoices is barred under the Limitations Act, 2002, does not raise a genuine issue requiring a trial, and that I am able to make a fair and just determination of the motion for summary judgment in these circumstances.

ISSUE #2: IS KKI’S CLAIM IN RESPECT OF THE 2007-2012 INVOICES BARRED UNDER THE LIMITATIONS ACT, 2002?

[17] Generally, an action must be commenced within two years of the discovery of the claim. The pertinent provisions are ss. 4 and 5 the Limitations Act, 2002, which state:

Definitions

In this Act…

“claim” means a claim to remedy an injury, loss or damage that occurred as a result of an act or omission…

Basic limitation period

Unless this Act provides otherwise, a proceeding shall not be commenced in respect of a claim after the second anniversary of the day on which the claim was discovered…

Discovery

(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).

Presumption

(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.

Demand obligations

(3) For the purposes of subclause (1) (a) (i), the day on which injury, loss or damage occurs in relation to a demand obligation is the first day on which there is a failure to perform the obligation, once a demand for the performance is made.

Same

(4) Subsection (3) applies in respect of every demand obligation created on or after January 1, 2004.

[18] The policy reasons for limitation periods have been described by the Supreme Court of Canada in the following manner:

There comes a time when a potential defendant should be secure in his reasonable expectation that he will not be held to account for ancient obligations;
Once a limitation period has lapsed, a potential defendant should no longer be concerned about the preservation of evidence relevant to the claim;
A plaintiff is expected to act diligently and not "sleep on their rights".

See M. (K.) v. M. (H.), [1992] 3 S.C.R. 6, at paras. 21-24.

Were the claims not discoverable until the receiver was appointed?

[19] An accounts receivable statement dated January 2, 2015 (the “A/R Statement”), was provided by the receiver to Miller. The line items relate to invoices and work orders. The attached invoices and work orders provide that, “All invoices payable upon completion.” The list on the A/R Statement shows the date of completion recorded on the invoices and work orders. There are about 43 line items in the 2007-2012 Invoices, which total $265,265.96. The A/R Statement shows that no payments were made towards any of the 2007-2012 Invoices except for two invoices/work orders in respect of which part payments were made.

[20] KKI submits that the claims against Miller were not discoverable by the Company because the Company’s accounting records were kept in “an extreme state of disarray” and, therefore, the limitation period should be tolled. No case law was provided by KKI in support of its position. The fact that the Company kept poor accounting records is no justification for tolling the limitation period in respect of the 2007-2012 Invoices.

[21] KKI also submits that Greg Crate and Steven Crate, the principals of the Company, concealed from the Company the fact that they received cash and services from Miller in payment of the invoices from the Company and that they kept this information hidden from the Company which, on the evidence, means from their sister given that she was the only other person with an interest in the Company. There is no evidence of this alleged concealment.

[22] Steven Crate’s affidavit, at paras. 1 and 4, states:

I was the president and director of Crate Marine Sales Ltd. from 2005 until the Company was purchased as part of receivership proceedings. The Company was beneficially owned by me, my brother Greg and sister Lynn. We were the sole directors and shareholders of the Company.…

My brother and I have been dealing with Brian Miller as a customer of the Company since at least 2007.

[23] Lynn Marko, Greg and Steven Crate’s sister, states in her affidavit, at para. 12, that she oversaw the Company’s bookkeeping operations.

[24] Even if there was a misappropriation of the Company’s assets, there is no evidence that Miller had any part in this alleged duplicity. No case law was provided by KKI to support its position that the limitation period should be tolled in respect of the 2007-2012 Invoices in the circumstances.

[25] In any event, if the Company was unaware of the payments made by Miller, then it should have acted on collecting what it believed to be unpaid invoices. Instead, it took no legal action. Assuming KKI’s position that the A/R Statement is accurate (despite the fact that it is contested by Miller), then the Company knew in respect of the 2007-2012 Invoices before December 13, 2012, that it had suffered a loss; it knew that the loss was caused by a failure to pay an invoice that was due and payable; it knew that Miller had failed to pay it; and it knew that the appropriate means was to commence an action to recover the amount due and payable. In short, the Company knew or ought to have known that the requirements of s. 5(1)(a) of the Limitations Act, 2002 had been satisfied by December 13, 2012.

[26] Further, under s. 5(2) of the Limitations Act, 2002, I find that the Company is presumed to have known of the matters described in s. 5(1)(a) of the Limitations Act, 2002, by December 13, 2012. KKI has not rebutted this presumption.

Did Miller make annual payments in respect of the 2007-2012 Invoices, which extended the limitation period?

[27] KKI submits that Miller made part payments on account and, therefore, the limitation period should be extended under s. 13 of the Limitations Act, 2002 which provides:

(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.…

(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). [Emphasis added.]

[28] The A/R Statement shows that payments were made by Miller on October 8, 2014 and on September 6, 2014. However, there is no evidence that these payments, or any part payments, were made in respect of the 2007-2012 Invoices after January 1, 2013. Further, Miller’s unchallenged evidence is that he paid his accounts in full at the end of each calendar year. At paras. 8, 9 and 10 of his second affidavit of September 14, 2015, Miller states:

At the end of each year I would meet with one of Steven or Steven and Greg Crate to settle up and rectify any balance owing to the Company for the previous year. We had this practice of reconciling our account since 2007 and on numerous occasions these meetings were held in my home with Steven Crate. If there were any amounts due and owing by me to the Company (and I deny there were), the Company would have known about these outstanding amounts owing on invoices and could have demanded or collected those amounts from me at that time or any time. No steps were ever taken to do so and after each annual reconciliation I started the next year with a zero balance owing to the Company, as confirmed to me by the directors of the Company. It does not appear that any of these annual reconciliations and payments were ever properly reflected in the books and records of the Company.

There are only 2 payment credits that show up on my AR Statement after June 2010 (September and October 2014). I settled my 2014 fees in 2015 slip fees with Steve Crate in September, 2014. The notes reflecting the balance owing and credit into the next year ($314.36 credit going into 2015) are found at page 182 of Mr. Speigel’s affidavit.

In all my dealings with the Company since 2007 it was Steven and Greg Crate who represented themselves as the owners and operators of the Company. We maintained a good relationship and while often we bickered over the costs of various services we always came to an agreement at the end of the year. If Steven or Greg Crate benefited personally from me or my company that is an issue between themselves and the Company. It has nothing to do with me.

[29] Steven Crate supports Miller’s evidence. In particular, his affidavit, at para. 5, states:

At the end of each year, my brother and/or I would meet with Mr. Miller to settle his past year’s account. We had this practice since 2007.

[30] There is no evidence to support KKI’s assertion that any part payments were made by Miller in respect of the 2007-2012 Invoices after March 31, 2013. I accept the unchallenged and uncontradicted evidence that Miller paid his accounts in full at the end of each calendar year. Thus, the 2007-2012 Invoices were paid no later than the end of 2012.

ISSUE #3: SHOULD THE CLAIM BE STRUCK UNDER RULE 15.04?

[31] The law firm that had represented KKI in this action was removed as lawyer of record by Order of Justice Hainey dated March 9, 2016. The effect of the Order is to require KKI to appoint a new lawyer of record within 30 days after being served with the Order, failing which the court may dismiss this action. These provisions reflect Rule 15.04(6) and (7) of the Rules of Civil Procedure.

[32] Miller submits that KKI’s claim should be dismissed because it did not appoint a new lawyer of record until June 10, 2016, even though it was required to do so by May 19, 2016, given that it was served with Justice Hainey’s Order on April 19, 2016.

[33] In my view, the relief sought would be draconian given the lack of any evidence of prejudice to Miller as a result of the failure to strictly comply with Justice Hainey’s Order. Accordingly, I dismiss this aspect of Miller’s motion.

CONCLUSIONS

[34] I hereby grant Miller’s motion for partial summary judgment. I find that KKI’s claim in respect of the 2007-2012 Invoices is barred by the Limitations Act, 2002.

[35] I direct that the parties make efforts to come to agreement on costs, failing which Miller shall deliver his costs submissions within one week of today’s date and KKI shall deliver its costs submissions within two weeks of today’s date. These submissions shall be no longer than three pages, exclusive of each party’s outline of costs.

Mr. Justice M. D. Faieta

Released: October 28, 2016

CITATION: Krates Keswick Inc. v. Brian Miller, 2016 ONSC 6467

COURT FILE NO.: CV-15-524934

DATE: 20161017

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

KRATES KESWICK INC.

Plaintiff

– and –

BRIAN MILLER

Defendant

REASONS FOR DECISION

Mr. Justice M. D. Faieta

Released: October 28, 2016

Krates Keswick Inc. v. Brian Miller, 2016 ONSC 6467

Case Summary

INTRODUCTION

ISSUE #1: IS A MOTION FOR SUMMARY JUDGMENT APPROPRIATE IN THESE CIRCUMSTANCES?

ISSUE #2: IS KKI’S CLAIM IN RESPECT OF THE 2007-2012 INVOICES BARRED UNDER THE LIMITATIONS ACT, 2002?

Were the claims not discoverable until the receiver was appointed?

Did Miller make annual payments in respect of the 2007-2012 Invoices, which extended the limitation period?

ISSUE #3: SHOULD THE CLAIM BE STRUCK UNDER RULE 15.04?

CONCLUSIONS

Counsel

Parties

Areas of Law

Fact Patterns

Financial Outcomes

Issues

Statutory Provisions 5

Legal Tests 1

Legislation 3