2017 ONSC 2813
COURT FILE NO.: CV- 16-67897 DATE: 20170515
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
STARCALL WIRELESS COMMUNICATIONS INC. AND STARCALL II INC. Plaintiffs – and – BELL MOBILITY INC. Defendant
Counsel: Thomas G. Conway for the Plaintiffs Noel Peacock for the Defendants
HEARD: March 30, 2017
RULING ON MOTION FOR SUMMARY JUDGMENT
Toscano Roccamo J.
Overview
[1] This is a motion for summary judgment under Rule 20 of the Rules of Civil Procedure, R.R.O 1990, Reg. 194, brought by Starcall Wireless Communications Inc. and Starcall II Inc. (hereinafter “Starcall Companies”).
[2] The Starcall Companies commenced an action against Bell Mobility (hereinafter “Bell”) to recover monies that it paid to Bell under protest, to facilitate a sale of its assets to a third-party. This payment was made to satisfy a debt that Bell alleged was owed by the Starcall Companies. The Starcall Companies deny any indebtedness to Bell on the basis that Bell has failed to prove any debt was owed. In the alternative, the Starcall Companies argue that if a debt owed, it has become statute-barred.
[3] Bell seeks a dismissal of the Starcall Companies motion for summary judgment and requests an order granting summary judgment in its favour, dismissing the action.
The Issues
[4] The issues before the Court are as follows:
a) Is there a genuine issue requiring a trial? b) Was there a debt outstanding from the Starcall Companies to Bell as of 2014? c) If there was a debt owing, was it a demand obligation? d) Would collection of a debt nevertheless be statute-barred by the Limitations Act, 2002, S.O. 2002, c 24, Sch. B.?
Factual Background
[5] Canadians can access a variety of Bell wireless devices and plans from various sources, including independent dealers. Through Dealership Agreements, Bell contracts with dealers to operate stores under its brand. Dealers earn commissions on sales they make.
The Dealership Agreements
[6] The Starcall Companies entered into Dealership Agreements with Bell or its predecessor, Bell Distribution Inc. (BDI), and operated stores in Smiths Falls, Barrhaven and Stittsville, Ontario. The Agreements were periodically renewed.
[7] The Starcall Companies executed three agreements (2004 Agreements) with Bell for each of its locations—two in June 2004 and one in December 2004.
[8] Though set to expire in 2009, the 2004 Agreements were extended until a new agreement was reached in 2011 (2011 Agreement). These Agreements covered several topics, including the reconciliation process, whereby dealers and Bell would compare financial records of their dealings with each other and resolve their differences in relation to sales commissions owing by Bell to the dealers.
[9] Several clauses in the Agreements are at issue in this matter:
- Dealers waived the right to dispute discrepancies in reconciliation if they failed to notify Bell within 120 days of the occurrence. Once notified of a reconciliation dispute, Bell had to respond within 60 days of receiving notice (2004 Agreements and 2011 Agreement). The August 2004 Dealer Compensation Statement also indicates that dealer disputes with paid commissions were to occur within a quick, albeit different timeline of 90 days.
- Dealers were obligated to maintain records of subscriber contact information and contracts for 10 years. There was no obligation to maintain records not directly related to customers (2004 Agreements).
- The dealers had to obtain Bell’s consent before assigning its interest in a Dealer Agreement to a third party. Consent was not to be unreasonably withheld or delayed (2004 Agreements).
- Certain rights and obligations were to survive the expiration or termination of each Dealer Agreement, including the above provisions (2004 Agreements and 2011 Agreement).
- Each party had a duty to exercise due diligence in verifying reports and written communications sent by Bell to identify discrepancies related to commission payments, credits and other calculations about the sale of Bell products and services (2011 Agreement).
[10] The 2011 Agreement was to supersede all Agreements, except any provisions relating to Bell’s cash advances to dealers for In-Store Price Reductions (ISPRs). Section 23.10 of the 2011 Agreement reads as follows:
For greater clarity and certainty, neither this clause nor the Agreement shall supersede any separate agreements made between BDI or Bell Mobility and Dealer for the distribution of Apple products through the Stores, any agreements by BDI or Bell Mobility to advance the Dealer funds for In Store Price Reduction amounts or the Confidential Minutes of Settlement dated May 10, 2011 among certain dealers and Bell Mobility.
In-Store Price Reductions (ISPRs)
[11] In 2003, Bell began a special promotion for customers who bought and activated devices in dealer stores. Dealers would discount Bell phones at the point of sale, then Bell would refund the discount to them. To alleviate the financial pressure on dealers who waited up to a month for reimbursement, Bell began advancing payments as credit against ISPRs. Advances were clawed back in the reconciliation of commission statements issued by Bell to its dealers.
[12] Bell claims that it maintained an internal accounting system which it recorded cheque numbers, dates, amounts, and line item descriptions pertaining to ISPR advances. The only evidence of this is offered in Exhibit M of its motion record, which appears to be an undated document with some line entries.
[13] According to Bell, the document generated by its internal accounting archives shows that it issued two ISPR advances in cheques to the Starcall Companies, along with their commissions:
- Cheque 115657— Full amount of $57,622.28, including ISPR advance of $32,744.
- Cheque 115658— Full amount of $72,595.45, including ISPR advance of $44,784.
[14] The cumulative total of ISPR advances issued to the Starcall Companies was $77,528. Bell’s archival records show that the Starcall Companies cashed these cheques on November 16 and November 18, 2004 respectively. Bell has no copies of the cashed cheques or independently verifiable evidence corroborating the advances.
[15] Terms of the ISPR advances in 2004 were set out in an August 2004 “Dealer Compensation Statement” and a November 2004 statement called the “ISPR Advance Update Information.” The August 2004 Statement provided as follows:
Subsidized Marketing Plans
In subsidized in-store price reduction marketing programs, BDI agrees to a revolving line of credit advance equal to the Bell World or Bell Mobility location’s monthly reimbursement amounts, to soften the cash flow impact to them, and ease the reconciliation to the end of the promotion. [Emphasis Added].
[16] The November 2004 statement stipulated that “This advancement will be maintained throughout the duration of this promotion.” [Emphasis Added].
[17] The November 2004 statement also advised that Bell would increase ISPR advances as of that month, but claw back advances from May 2004 prior to the increase in November 2004.
[18] Dealers were sent monthly commission summaries from Bell in which several notices of general application were included. Commission summaries from January 2009, November 2011 and November 2012 included a notice on claw backs. The January 2009 statement was explicitly addressed to “All Bell Dealers,” and all statements included the following provision:
ISPR Advance—Between March 2003 and November 2005 advances were made to compensate dealers for ISPR being reduced in store. This is a reminder that the outstanding amounts are advances and are subject to chargeback.
The Asset Sale and Account Reconciliation
[19] The Starcall Companies negotiated an asset sale for $375,000 on February 4, 2014, with a closing date of March 3, 2014. Pursuant to the Dealership Agreement, the Starcall Companies informed Bell of the impending sale and sought consent. On Bell’s request, the closing date was moved to March 17, 2014.
[20] On or about March 7, 2014, Mr. Michel Dubuc, Senior Manager, Planning and Development for Bell, provided a first draft of a Consent and Termination Agreement, which required the Starcall Companies to remit $77,528 for allegedly outstanding advances they received in November 2004. The Starcall Companies asked for particulars of this amount and were notified on March 11, 2014 that it was the total carried over from the cheques issued on November 15, 2004.
[21] On March 14, 2014, Mr. Dubuc sent the Starcall Companies examples of generic notices included with commission summaries to dealers whereby dealers were advised that ISPR advances are subject to chargeback.
[22] The Starcall Companies questioned a debt owed to Bell and asserted that any such debt would in any event have been proscribed by the passage of time. Bell made its consent to the asset sale conditional on the repayment of the alleged debt. The Starcall Companies paid the amount under protest to save the pending asset sale from collapse.
Issues & Analysis
a) Is there a genuine issue requiring a trial?
[23] The Parties agree there is no genuine issue requiring a trial. Both claim a right to summary judgment against the other.
[24] Rule 20.04(2)(a) of the Rules of Civil Procedure provides that the court shall grant summary judgment if “the court is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence.”
[25] With amendments to Rule 20 introduced in 2010, the powers of the court to grant summary judgment have been enhanced. Rule 20.04(2.1) states:
In determining under clause (2) (a) whether there is a genuine issue requiring a trial, the court shall consider the evidence submitted by the parties and, if the determination is being made by a judge, the judge may exercise any of the following powers for the purpose, unless it is in the interest of justice for such powers to be exercised only at a trial:
- Weighing the evidence.
- Evaluating the credibility of a deponent.
- Drawing any reasonable inference from the evidence.
[26] In Hryniak v. Mauldin, 2014 SCC 7, the Supreme Court of Canada held that on a motion for summary judgment under Rule 20, the court should first determine if there is a genuine issue requiring trial based only on the evidence in the motion record, without using the fact-finding powers enacted when Rule 20 was amended in 2010. The analysis of whether there is a genuine issue requiring a trial should be done by reviewing the factual record and summary judgment should be granted if there is sufficient evidence to fairly and justly adjudicate the dispute and a summary judgment would be a timely, affordable and proportionate procedure.
[27] If, however, there appears to be a genuine issue requiring a trial, then the court should determine if the need for a trial can be avoided by using the powers under rules 20.04(2.1) and (2.2). As a matter of discretion, the motions judge may use those powers, provided that their use is not against the interests of justice. Their use will not be against the interests of justice if their use 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.
[28] Corbett J. provided a useful summary of the Hryniak v. Mauldin approach in Sweda Farms Ltd., v. Egg Farmers of Ontario, 2014 ONSC 1200, where he stated at paras. 33 and 34:
- As I read Hryniak, the court on a motion for summary judgment should undertake the following analysis:
The court will assume that the parties have placed before it, in some form, all of the evidence that will be available for trial;
On the basis of this record, the court decides whether it can make the necessary findings of fact, apply the law to the facts, and thereby achieve a fair and just adjudication of the case on the merits;
If the court cannot grant judgment on the motion, the court should: a. Decide those issues that can be decided in accordance with the principles described in 2), above; b. Identify the additional steps that will be required to complete the record to enable the court to decide any remaining issues; c. In the absence of compelling reasons to the contrary, the court should seize itself of the further steps required to bring the matter to a conclusion.
- The Supreme Court is clear in rejecting the traditional trial as the measure of when a judge may obtain a “full appreciation” of a case necessary to grant judgment. Obviously greater procedural rigour should bring with it a greater immersion in a case, and consequently a more profound understanding of it. But the test is now whether the court’s appreciation of the case is sufficient to rule on the merits fairly and justly without a trial, rather than the formal trial being the yardstick by which the requirements of fairness and justice are measured.
[29] Hryniak v. Mauldin does not alter the principle that the court will assume that the parties have placed before it, in some form, all of the evidence that will be available for trial. The court is entitled to assume that the parties have respectively advanced their best case and that the record contains all the evidence that the parties will respectively present at trial: Dawson v. Rexcraft Storage & Warehouse Inc. (1998), 111 O.A.C 201 (C.A.); Bluestone v. Enroute Restaurants Inc. (1994), 18 O.R. (3d) 481 (C.A.); Canada (Attorney General) v. Lameman, 2008 SCC 14, [2008] 1 S.C.R. 372, at para. 11. The onus is on the moving party to show that there is no genuine issue requiring a trial, but the responding party must present its best case or risk losing: Pizza Pizza Ltd., v. Gillespie (1990), 75 O.R. (2d) 255 (Gen. Div.); Transamerica Life Insurance Co. of Canada v. Canada Life Assurance Co. (1996), 28 O.R. (3d) 423 (Gen. Div.), aff’d [1997] O.J. No. 3754 (C.A.).
[30] In Hryniak v. Mauldin, although the Supreme Court of Canada commanded a very robust summary judgment procedure, it did not foreclose lower courts from simply dismissing the summary judgment motion and ordering that the action be tried in the normal course. Indeed, where there are genuine issues for trial and the lower court concludes that employing the enhanced forensic tools of the summary judgment procedure would not lead to a fair and just determination of the merits, the court should not decide the matter summarily; Mitusev v. General Motors Corp., 2014 ONSC 2342, at para. 79; Gon (Litigations Guardian of) v. Bianco, 2014 ONSC 7086 at paras. 41-47.
[31] On a motion for summary judgment, parties must put their best foot forward or risk a loss: Sweda Farms at para. 26.
[32] While parties have raised both factual and legal issues in the record before me, by the exercise of the powers enumerate in Rule 20.04 (2.1), they have persuaded me that the summary judgment procedure is the most timely, affordable, and proportionate procedure by which to dispose of this motion, and obviates the need for a trial.
b) Was there a debt outstanding from the Starcall Companies to Bell as of 2014?
Position of the Parties
[33] The existence of a debt is a factual question. The parties rest their positions on past practice and the evidence of the debt owing, or lack thereof.
[34] The Starcall Companies take issue with Bell’s evidence of a debt for several reasons. Bell’s very limited evidence of the alleged debt has been solely generated from its internal accounting system. Bell offers no independent third party verification of a debt. An examination of internal database screenshots that Bell relies on shows columns for timeframes spanning between November 2004 and March 2009. While the November 2004 column shows a balance, all other columns are blank. The Starcall Companies argue that Bell is unable to rule out an interpretation of the records to the effect that the debt was not carried forward, because it was clawed back by Bell, in accordance with its process of periodic reconciliation of commissions paid reconciliation of commission paid against the ISPR advance owing.
[35] After over ten years, neither party has retained source records for the period in question. As such, Bell cannot demonstrate that it did not claw back the amounts owing as of November 2004.
[36] Both the 2004 Agreements and the 2011 Agreement required the Starcall Companies to dispute any discrepancies in Bell’s accounting within 120 days of the occurrence. The Starcall Companies suggest an inference may be drawn that no reconciliation process occurred because no amount was owing to Bell after November 2004. Any notification of a dispute by the Starcall Companies within 120 days was arguably unnecessary because Bell had followed its practice to claw back advances as it went along.
[37] Bell argues that its internal database has consistently shown an outstanding ISPR debt. Bell maintained an accounting system that included cheque numbers, amounts, dates, and line item descriptions pertaining to the ISPR advances. In addition, Bell argues that dealers received monthly summaries from Bell advising them that their ISPR advances were subject to chargebacks. Although Bell has been unable to produce all monthly summaries sent to the Starcall Companies after 2004, Bell maintains that generic statements sent to all dealers in January 2009, November 2011 and November 2012 explicitly referred to advances made between 2003 and 2005.
[38] Bell relies on its records to argue that the ISPR cheques from November 2004 were received by the Starcall Companies and deposited in the bank. Bell further argues that the deposit is proof that the Starcall Companies intended to adhere to the terms of the ISPR advances. Bell maintains that it is implausible that the Starcall Companies would not have noticed an additional $77,528 on their commission cheques. In any event, Bell argues that the Starcall Companies were obliged by the 2011 Agreement to review and verify reports from Bell.
Analysis
[39] While Bell has presented some evidence of an amount initially advanced to the Starcall Companies, evidence as to an outstanding debt carried forward after November 2004 is lacking. Bell’s own record keeping is deficient and offers no evidence that the Starcall Companies acknowledged any debt carried forward. The Starcall Companies’ reliance on Bell’s practice to claw back any ISPR advances within months of their making is consistent with the Agreement in place at the relevant time, and makes commercial sense.
[40] The 2004 and 2011 Agreements reflect that dealers were to raise reconciliation issues within 120 days. I infer that the reconciliations, if necessary, would have occurred within a narrow timeframe.
[41] I pause to note that, in the course of argument, I questioned whether cross-examination of Bell’s affiant Michel Dubuc, or a short trial was required to elicit evidence in relation to Mr. Dubuc’s allegation that Bell had a practice of carrying forward interest-free the dealers’ indebtedness for ISPR advances for indeterminate periods of time until dealers sought Bell’s consent to terminate or assign their rights under the Dealers Agreements. Both counsel submitted that, given the passage of time, the best evidence of the relevant circumstances was contained in the record and that costs associated with cross-examination of the affiants or a trial for the issue would not afford a timely, affordable or proportionate procedure to dispose of the action.
[42] As such, in the exercise of my powers under Rule 20.04(2.1), I draw a negative inference in the absence of any evidence to corroborate Bell’s alleged practice, and note that it fails to reconcile with the relevant provisions in the Agreements in support of timely reconciliation of chargebacks against commissions to dealers.
[43] Bell’s internal database screenshots show a balance for November 2004, and then show no amount outstanding until March 2009. Bell’s evidence of a debt carried forward is inconclusive. I echo the reasoning in Sweda Farms at para. 26: parties in summary judgment motions must present the best possible evidence of the claim that they advance. In support of Bell’s assertion of a debt, there is insufficient evidence supporting the carry forward of any advances not already clawed back against commissions as would be expected, such as notices to the Starcall Companies of the overdue amount, or correspondence confirming the debt. That Bell would simply waive its right to set off the outstanding advances against commissions regularly paid to the Starcall Companies over the timeframe in question and carry forward any debt interest-free makes little commercial sense.
[44] The only notices of ISPR advances that Bell relies on to support a claim for chargebacks are general statements relating to ISPR advances automatically sent to all dealers, none of which specified an amount of indebtedness owed by any one dealer.
[45] With the passage of time and the disposal of records, it is hardly surprising that the Starcall Companies have no record of any debt nor institutional memory of the events in question.
[46] I would, therefore, find that a debt has not been proven. In the event that I am found to be in error, I have considered whether the alleged advances were a demand obligation for the purposes of the application of the statutory limitation period.
c) If there was a debt owing, was it a demand obligation?
Position of the Parties
[47] Both parties argue that proper classification of the obligation, if any, found owing to Bell must be construed by reference to the wording of the August and November 2004 statements on advances.
[48] The Starcall Companies posit that the allegedly unpaid ISPR advances, if proven, would not be a demand obligation because repayment usually occurred within the time period associated with any one promotion. By contrast, Bell rests its case on the fact that no repayment date was specified, making the loan a demand obligation.
Analysis
[49] Assuming that Bell has proven an outstanding indebtedness owed to it by the Starcall Companies, it is necessary to determine the character of any indebtedness, whether a demand obligation or not, in order to determine whether the collection of the debt was barred by the passage of a limitations period.
[50] The Bills of Exchange Act, R.S.C. 1985, c.B-4, s. 22 defines a debt as payable on demand when
(a) …expressed to be payable on demand or on presentation; or (b) [when] no time for payment is expressed.
[51] Conversely, section 23 of the Bills of Exchange Act states that a bill is “payable at a determinable future time, within the meaning of this Act, that is expressed to be payable (a) at sight or at a fixed period after date or sight; or (b) on or at a fixed period after the occurrence of a specified event that is certain to happen, though the time of happening is uncertain.”
[52] In summary, an obligation expressly payable on demand or without any timeline for payment is a demand obligation, in the usual case, whereas an obligation that arises at a fixed date or after the occurrence of a certain event is not: Skuy v. Greennough Harbour Corporation, 2012 ONSC 6998, at para. 31.
[53] In this matter, the nature of the obligation at issue can arguably be discerned from the 2004 statements on ISPR advances, as well as the commission statements from 2009, 2011, and 2012. The August 2004 statement from Bell to all dealers states that credit advances equal to a dealer’s monthly reimbursements would be provided to soften the cash flow implications of a promotion. Although the wording in the statement did not provide a precise timeline for repayment, it appears to suggest the obligation turns on the occurrence of an event, its purpose being to “ease the reconciliation to the end of the promotion.” The November 2004 statement from Bell stipulates that Bell would increase ISPR advances as of that month, but claw back advances from May 2004. It concludes by noting that the advances would be maintained throughout the promotion. There is no dispute that dealer promotions were not indefinite. Their timeframe was limited to a period of months.
[54] There appears to be an unresolved contradiction from evidence of three commission summaries to dealers that Bell relies on to maintain that outstanding advances issued between March 2003 and November 2005 were subject to claw backs. It is unclear, however, why Bell would remind dealers that outstanding advances were subject to claw backs between 5 and 8 years after the fact, and then take no steps to claw the payments back, in accordance with stated intentions.
[55] No evidence was presented of any “reminders” of Bell’s ISPR policy between 2005 and the January 2009 Commission Statement.
[56] Other transactions between Bell and dealers referenced by the commission statements adhered to significantly tighter timelines. The 2012 Commission summary stated that Bell itself would make ISPR payments in December 2012 to dealers on account of new activations and hardware upgrades for the month of November. Most transactions on the commission statements occurred over a period of between one and six months.
[57] The nature of an obligation can be determined by its characteristics and documentation: Bank of Nova Scotia v. Williamson, 2009 ONCA 754. Furthermore, contracts are to be read as a whole, giving effect to the intention of the parties evidenced by the circumstances of the agreement: Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53.
[58] I conclude from all of the circumstances brought to light in the record before me that, if a debt was owing by the Starcall Companies to Bell, it would not have been a demand obligation. Several factors support this inference:
- By Bell’s own evidence, repayment of the advances was clawed back from the commissions paid to its dealers. As such, repayment itself was not dependent on a demand. Rather, it was the expectation of the parties and entirely within Bell’s control to deduct advances from commission payments to dealers, as they fell due.
- The reconciliation process would have been of no effect and purpose if Bell were within its rights to indefinitely carry forward a debt until such time as no records or evidence were available to afford the dealer a reasonable opportunity to dispute the quantum of any debt.
- While the August and November 2004 communiqués from Bell outlining the terms of the ISPR advances do not mention that payments are to be made “on demand,” an inference in keeping with commercial expectations between the parties is that the custom was to retrieve advances within months, rather than after a prolonged or indefinite period of time. The August 2004 statement provided that the ISPR advances were made to “ease the reconciliation to the end of the promotion,” while the November 2004 statement advised that “This advancement will be maintained throughout the duration of this promotion.” Although there was no fixed date for repayment, the expectation of the parties consistent with commercial realities was that Bell would claw back the ISPR advance at the end of the promotion and from commissions payable. This inference is consistent with Bell’s evidence that the ISPR promotion would have ended in 2004. While the Starcall Companies have no record as to the particulars of this promotion, based on the evidence of both parties, promotions lasted a matter of weeks or a few months and reconciliation would have occurred shortly thereafter.
[59] I, therefore, find that a debt, if any, owed by the Starcall Companies to Bell, was not a demand obligation. If I am in error, I would go on to consider whether a demand obligation would in any event have been barred by the Limitations Act, 2002.
d) Is collection of the debt statute-barred by the Limitations Act, 2002?
Position of the Parties
[60] The Starcall Companies argue that whether or not any debt owing to Bell was a demand obligation, Bell’s claim was advanced after any applicable limitation period would have expired.
[61] They argue that if this was not a demand obligation, the cause of action would have expired as of November 2006. The Starcall Companies posit that a similar outcome should apply if there was evidence of a demand obligation outstanding.
[62] Citing the Court of Appeal in Hare v. Hare (2006), 83 O.R. (3d) 766 (Ont. C.A.), the Starcall Companies argue that a demand loan becomes fully mature and payable when it is made. Therefore, the limitations period would have commenced in November 2004, as per the previous s. 15(6)(c) of the Limitations Act, 2002, which was in force at the time of the alleged advances.
[63] Although the legislature retroactively revised the Act on November 27, 2008 to apply from January 1, 2004 so as to provide that a default on a demand obligation would occur from the date a demand was made, the Starcall Companies argue that this did not revive Bell’s cause of action on the debt, if any is found owing.
[64] The Starcall Companies rely on Bank of Nova Scotia v. Williamson, 2009 ONCA 754 at paras. 12 to 14 to maintain that, where a demand is a condition precedent for liability, the demand is not necessary to crystallize the debt. This decision was rendered after the November 2008 amendment.
[65] The Starcall Companies argue that the expiration of a limitation period is a vested right that cannot be withdrawn by retroactive legislation. They rely on the Supreme Court of Canada decision in Martin v. Perrie, [1986] 1 S.C.R. 41, in support of this proposition.
[66] In further support of their cause, the Starcall Companies point to the reasoning of Belobaba J., in Berry v. IPC Securities Corp. at para. 17:
The “demand obligation” amendments in s. 5(3) and (4) of the Limitations Act, 2002 only came into force in November, 2008 and cannot be interpreted as reviving a cause of action against IPC or Igra after Berry’s action had already become statute-barred. This would amount to the retrospective application of legislation to destroy parties’ accrued rights – namely, to mount a limitation period defence. This is not permitted absent clear language that such was the legislative intent – and no such language exists in ss. 5(3) and (4).
[67] Bell’s position is that a demand obligation is at issue and as such is governed by the revised amendment to the Limitations Act, 2002, which reads:
5 (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.
5 (4) Subsection (3) applies in respect of every demand obligation created on or after January 1, 2004. (Emphasis added)
[68] Because the alleged advances were made in November 2004, Bell argues that the retroactive amendments to the Limitations Act, 2002 would apply to this case, with the result that the limitation period did not begin to run until March 2014, when the first demand for payment was made.
[69] Bell argues that the decision in Berry is distinguishable for several reasons. First, the promissory note in question was not a demand obligation and the demand was not established on or after January 1, 2004.
[70] Bell also points to the decision in J.I.V Enterprises Inc. v. Vaseleniuck, 2015 ONSC 4570 where the Court applied the retroactive provisions on demand obligations in a matter where guarantees were made in December 2004.
Analysis
[71] The relevant provisions of the Limitations Act, 2002, are produced below:
- 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). s. 5 (1).
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. 2008, c. 19, Sched. L, s. 1.
(4) Subsection (3) applies in respect of every demand obligation created on or after January 1, 2004. 2008, c. 19, Sched. L, s. 1
[72] Prior to November 2008, the Limitations Act, 2002 provided that the limitation period for a demand obligation began to run when the default occurred:
15(6) For the purposes of this section, the day an act or omission on which a claim is based takes place is,
(b) in the case of a series of acts or omissions in respect of the same obligation, the day on which the last act or omission in the series occurs; (c) in the case of a default in performing a demand obligation, the day on which the default occurs.
[73] Perell J. provides a comprehensive summary of the current state of the law on limitation periods and demand obligations in Skuy v. Greenough Harbour Corp, 2012 ONSC 6998 at paras. 29-45. Paragraphs 33 and 35 are particularly relevant:
The amendment to the Act overruled the common law rule for demand promissory notes and for demand mortgages, which rule was that the limitation period began to run immediately upon the delivery of the demand promissory note: Hare v. Hare (2006), 83 O.R. (3d) 766 (C.A.), at para. 11; Bank of Nova Scotia v. Williamson, supra at para. 12…
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.).
[74] The Starcall Companies question the effect to be given to s. 5(4) of the Limitations Act, 2002, which provides that demand loans created on or after January 1, 2004 become payable on demand, not from advancement.
[75] I do not accede to the Starcall Companies’ retrospectivity argument.
[76] Statutes are presumed not to have a retroactive effect unless the language of the act expressly or by necessary implication deems it such: Gustavson Drilling (1964) Ltd., v M.N.R., [1977] 1 SCR 271 at 279. More specifically, as explained in Graeme Mew, Debra Rolph & Daniel Zacks, The Law of Limitations, 3d ed (Toronto: LexisNexis, 2016), s. 4, §1.66, where an accrued limitation benefit would be lost to a retroactive application, such an application should fail unless the legislature has specifically indicated an intention to impair an existing right to the defence.
[77] The wording of s. 5(4) is clear that it is to apply to “every demand obligation created on or after January 1, 2004”. I find that the legislature intended to extinguish limitations defences that had accrued to parties under the original provisions of the Limitations Act, 2002 that had been in force between January 1, 2004 and November 26, 2008.
[78] Retroactivity is also as a result of necessary implication: the purpose of the Limitations Act, 2002 is to define the timeline within which an action must be brought. Expanding the new timeline for demand obligations to cover a period where a cause of action had expired by law implies a clear intent to hinder accrued rights.
[79] Other courts have adopted the approach of expanding a retroactive application of the Limitations Act, 2002 to claims that would have expired prior to the amendment: Shaw v. Anderson, 2010 ONSC 1164 at para. 18 where a loan advanced in 2002 was successfully demanded in 2009. See also T-D Bank v. Formstructures, et al, 2012 ONSC 2256 and J.I.V. Enterprises Inc. v Vaseleniuck, 2015 ONSC 4570.
[80] Consequently, had I found a debt owing from the Starcall Companies and determined it to be a demand obligation, I would find that the loan would have become payable on demand and that the limitations period would have commenced from this point. The demand in this case was made by way of the letter sent on or about March 7, 2014 by Bell asking Starcall Companies to remit $77,528.
Disposition
[81] For the reasons set out above, I find that there is no genuine issue requiring a trial, and grant the Starcall Companies’ motion for summary judgment in the amount of $77,528, together with prejudgment interest in accordance with the Courts of Justice Act, R. S.O. 1990, c C.43, as against Bell.
Costs
[82] If the parties are unable to agree on costs, I will dispose of the matter upon receipt of written submissions from each side of no more than three pages in length, along with any Offers to settle and Costs Outlines within 30 days.
Toscano Roccamo J.
Date: May 15, 2017
2017 ONSC 2813