CITATION: Drakoulakos v. Stirpe, 2017 ONSC 2971
COURT FILE NO.: CV-12-470005
DATE: 20170516
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
MICHEL DRAKOULAKOS
Plaintiff
– and –
MARTHA STIRPE a.k.a. MARTHA DRAKOULAKOS, MIKE STIRPE and 1166054 ONTARIO LIMITED
Defendants
Daniel Zacks for the Plaintiff
Ronald Bohm for the Defendants
HEARD: April 26, 2017
PERELL, J.
REASONS FOR DECISION
A. INTRODUCTION
[1] The Defendant Martha Stirpe, née Drakoulakos, is the wife of the Defendant Mike Stirpe, and the daughter of the Plaintiff Michel Drakoulakos and his estranged wife Ageliki Drakoulakos. The Stirpes are the principals of the Defendant 1166054 Ontario Limited.
[2] In his action, Mr. Drakoulakos seeks a declaration that his daughter holds 1166054 Ontario Limited in trust for him. He alleges that she is a bare trustee who breached her trust by not conveying ownership to him.
[3] The Defendants move to have Mr. Drakoulakos’ claim of ownership of 1166054 Ontario Limited dismissed as statute-barred under the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B.
[4] Mr. Drakoulakos denies that his action is untimely, and he relies on s. 7 (1) of the Limitations Act, 2002, which provides that the limitation period does not run during any time in which the person with the claim is incapable of commencing a proceeding in respect of the claim because of his or her physical, mental, or psychological condition.
[5] For the reasons that follow, I grant the Defendants’ motion and dismiss the action.
B. FACTUAL BACKGROUND
[6] It is not disputed that Mr. Drakoulakos has mental health problems including a personality disorder, erratic behaviour, and anger management issues. Whether his mental health problems rise to the level of suspending the running of the limitation period is a seriously contested issue. However, for reasons that will become apparent in the discussion portion of these Reasons for Decision, I need not resolve this controversy or the other major conflicts in the evidence of the parties.
[7] 1166054 Ontario Limited was incorporated on January 1, 1996 with the then unmarried Martha Drakoulakos as the sole shareholder, director, and officer of the corporation. Mr. Drakoulakos’ version of the creation of the company is that he owned the corporation and the taxi licences and that his daughter was a bare trustee. He says that he always owned, managed, and controlled the corporation. He says that 1166054 Ontario Limited was only to become his daughter’s property after his death. The purpose of the bare trust was to minimize the tax on his death.
[8] 1166054 Ontario Limited was incorporated by Mr. Drakoulakos’ lawyer. There is no trust deed or document indicating that the corporation was being held in trust.
[9] Mrs. Stirpe’s version of the facts is that the corporation, along with a taxi licence (plate #2302), was a gift from her parents to celebrate her graduation from university. She says that her parents told her that the corporation and the taxi licence were a gift. She says that in February 2003, before the birth of her first child, a daughter, and Mr. Drakoulakos’ first grandchild, he purchased a second taxi licence (plate #2902) for 1166054 Ontario Limited, as another gift.
[10] Mrs. Stirpe says her father undertook to manage the corporation until 2000, when she married, and then she and her husband took control of the corporation as an investment holding company. Mr. Stirpe has a master’s degree in engineering, and he is in the business of home building. The Stirpes say that they used 1166054 Ontario Limited to invest in real estate and that these investments were financed by mortgaging their own home for a line of credit of $640,000.
[11] Mr. Drakoulakos disputes that the Stirpes used 1166054 Ontario Limited as a holding company. He says that until December 2010, he had full and sole control over the corporation’s assets and affairs.
[12] Beginning in 2002, and every year following, from time to time, Mr. Drakoulakos would have a temper tantrum and demand “his company” or “his money” back. In his own factum, he states:
- In the early 2000s, Michel developed the practice of invoking [1166054 Ontario] during family arguments. As Martha and Mark deposed, Michel would in a fit of rage “say things like he was going to take the company back.” Martha and Mark rely on Michel’s testimony from his examination for discovery that he demanded “his money back” ten times since 2002.
[13] Until 2010 and the incident discussed below, Mr. Drakoulakos’ outbursts and demands were suffered or ignored without any action taken by his daughter, who did not take his demands as other than a manifestation of her father’s anger and ill-temperament.
[14] On November 19th, 2010, there was a very intense and emotive meeting of the family. It appears that around this time, Mr. Drakoulakos and his wife were in the throes of a marriage breakdown and that he was in the throes of a mental breakdown. At the family meeting, he again demanded all his money back from his daughter, and when Mr. and Mrs. Stirpe refused to comply, he yelled and screamed declaring: “I’ll fix you, you’ll see”.
[15] This outburst may have been the last straw for Mrs. Drakoulakos, who separated and moved out of the matrimonial home to live with her daughter and to commence divorce proceedings.
[16] Mr. Drakoulakos followed up his threat by hiring a lawyer, Mr. James Koumarelas, who on November 30, 2010, wrote Mrs. Stirpe (née Drakoulakos) as follows:
Dear [Mrs. Stirpe]
Re: 1166054 Ontario Ltd.
I am counsel for your father, Michel Drakoulakos. I understand that you are the sole shareholder, director and officer of the above noted corporation. My client advises that he has at all material times been the true owner of such corporation and as such has been solely responsible for the management and operation of such corporation, making you a bare trustee.
On behalf of my client, I write to request that the necessary arrangements be made transferring the ownership of such corporation into his name. I further understand that the corporation is indebted to you by way of a mortgage/line of credit against your property, the payments of which have always been made by the corporation. In this regard, my client is willing to pay out the balance owing on such mortgage/line of credit as a condition of transferring ownership of the corporation.
I advise you to seek your own legal counsel in this regard so that this matter may be finalized expeditiously. I await to hear from you or your lawyer in this respect.
[17] On December 7, 2010, Mr. Drakoulakos went to Scarborough Grace Hospital where he presented as “suicidal/homicidal” and where he was involuntarily admitted as a psychiatric patient. The treating physician diagnosed him as suffering from mixed personality disorder with narcissistic features. The physician noted that Mr. Drakoulakos had impaired judgment, and that he had expressed a desire to kill his wife, his daughter, and himself. On December 9, 2010, an occupational therapist gave Mr. Drakoulakos a cognitive assessment test, and she concluded that he demonstrated cognitive impairment, and that his insight and judgment seemed impaired.
[18] Meanwhile, in response to Mr. Koumarelas’ letter, Mrs. Stirpe retained Robert H. Blackburn who responded with the following letter on December 9, 2010:
I represent Martha Drakoulakos and I am in receipt of your letter dated November 30, 2010. I believe that your client is currently unwell and has been hospitalized. My client advises that her father has misapprehended the situation. Your client has never had any ownership interest in the corporation.
[19] On December 10, 2010, against the advice of the treating physician, Mr. Drakoulakos left the hospital. He went home and did not emerge for 10 days.
[20] On December 20, 2010, Mr. Drakoulakos checked his mail for the first time since his hospitalization and discovered a letter from Mr. Koumarelas which enclosed Mr. Blackburn’s letter. Mr. Drakoulakos says that he felt devastated and he attempted to take his own life by drug overdose.
[21] On the morning of December 29, 2010, Mr. Drakoulakos went to St. Michael's Hospital. He was again admitted as an involuntary psychiatric patient. He was discharged the following day.
[22] It seems that Mr. Koumarelas was never given instructions to respond to Mr. Blackburn’s letter or to commence an action and that Mr. Drakoulakos did not respond to Mr. Koumarelas’ request to provide documentary evidence to show who controlled the corporation. Mr. Koumarelas closed his file in March 2011, after urging Mr. Drakoulakos to retain another lawyer as soon as possible if he wished to pursue a claim against his daughter.
[23] Thus, the matter of the ownership of 1166054 Ontario Limited languished for some time, almost two years, until Mr. Drakoulakos retained a new lawyer. Mr. Drakoulakos retained Harvey Starkman of Basman Smith LLP in 2012, and an action was commenced on December 13th, 2012.
[24] On January 10, 2013, the Defendants delivered their Statement of Defence and Counterclaim in which they pled a limitations period defence and a defence on the merits.
[25] On February 21, 2013, Mr. Drakoulakos delivered his Reply and Defence to Counterclaim.
[26] Examinations for discovery were held in December 2013.
[27] In April 2016, the Defendants brought this motion for summary judgment.
[28] To resist the summary judgment motion, Mr. Drakoulakos retained Dr. William Johnson, a psychiatrist to opine on his capacity to commence an action in December 2010. Without seeing, assessing or testing Mr. Drakoulakos, Dr. Johnson provided an opinion dated August 12th, 2016.
[29] In reply to Dr. Johnson’s opinion, the Defendants’ expert Dr. Michel Silberfeld, an accomplished psychiatrist with extensive experience and scholarship in the field of the legal tests of capacity, met with, assessed and tested Mr. Drakoulakos. Dr. Silberfeld’s opinion in his report dated December 6th, 2016, was that Mr. Drakoulakos was not incapable of commencing an action.
[30] Dr. Johnson delivered a supplementary report and withdrew much of his original opinion, including his principal diagnosis that the Plaintiff was cognitively impaired and would not have improved, but rather only worsened, until the end of the year. Dr. Johnson’s revised opinion was that Mr. Drakoulakos was unlikely to be capable of commencing a proceeding at least at some points during the material time.
C. DISCUSSION AND ANALYSIS
1. Statutory Provisions
[31] The relevant provisions of the Limitations Act, 2002 are sections 1, 4, 5, and 7, which are set out below:
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
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.
Incapable persons
- (1) The limitation period established by section 4 does not run during any time in which the person with the claim,
(a) is incapable of commencing a proceeding in respect of the claim because of his or her physical, mental or psychological condition; and
(b) is not represented by a litigation guardian in relation to the claim.
Presumption
(2) A person shall be presumed to have been capable of commencing a proceeding in respect of a claim at all times unless the contrary is proved.
2. The Defendants’ Argument
[32] The Defendants make three arguments in support of their contention that Mr. Drakoulakos’ claim is statute-barred.
[33] The Defendants’ first argument is that Mr. Drakoulakos discovered his claim against his daughter to regain ownership of 1166054 Ontario Limited at least by 2004, when the current Limitations Act, 2002, with its two-year limitation period came into force and, therefore, his claim is long statute-barred.
[34] Second, the Defendants argue that Mr. Drakoulakos discovered his claim on November 19, 2010, when he threatened his daughter and, therefore, his December 13, 2013 Statement of Claim is untimely, and the claim is statute-barred.
[35] Third, the Defendants argue that they are entitled to rely on December 9, 2010 as the date when the claim was discovered, and they submit that Mr. Drakoulakos has not met the onus on him to rebut the statutory presumption in s. 5 of the Limitations Act, 2002 that the claim was discovered on December 9, 2010 making the December 13, 2013 Statement of Claim untimely. In this last regard, the Defendants submit that Mr. Drakoulakos has failed to prove that he can rely on s. 7 of the Act to suspend the running of the limitation period.
3. Mr. Drakoulakos’ Argument
[36] Mr. Drakoulakos makes one argument that his claim against his daughter for ownership of 1166054 Ontario Limited is timely and not statute-barred. Mr. Drakoulakos concedes that his claim is statute-barred, unless he has the protection of s. 7 of the Act, but he submits that he does have the protection of s. 7.
[37] Mr. Drakoulakos’ argument is that his claim was discovered on December 9, 2010 when Mrs. Stirpe, through Mr. Blackburn, refused to acknowledge that she held 1166054 Ontario Limited as a bare trustee and thus breached the trust. It is a fundamental premise in Mr. Drakoulakos’ argument that before December 9, 2010, he had no claim in respect of which he could have commenced a proceeding.
[38] Mr. Drakoulakos thus admits that the limitation period would expire on December 9, 2012, unless the running of the limitation period was suspended during a period of incapacity, which he asserts was the case. Mr. Drakoulakos relies on s. 7 of the Limitations Act, 2002 and he submits that the evidence establishes that there was at least a four-day period of incapacity and, therefore, the limitation period was extended until at least December 13, 2012 making his action timely.
4. Analysis
[39] The Defendants did not move for a summary judgment on the substantive merits of their defence and rely only on the technical defence of the Limitations Act, 2002, and thus for the purposes of these Reasons for Decision, I can assume that the Defendants have no defence on the merits.
[40] In my opinion, Mr. Drakoulakos’ argument relying on s. 7 of the Limitations Act, 2002 that his claim is not statute-barred is a clever argument. However, it contains a fatal flaw, and I rather agree with the Defendants’ argument that Mr. Drakoulakos discovered his claim against his daughter to regain ownership of 1166054 Ontario Limited at least by 2004, when the current Limitations Act, 2002, with its two-year limitation period, came into force and, therefore, his claim is long statute-barred.
[41] In my opinion, the key question is: “When did the limitation period begin to run?”
[42] The discoverability principle governs the commencement of a limitation period and stipulates that a limitation period begins to run only after the plaintiff has the knowledge, or the means of acquiring the knowledge, of the existence of the facts that would support a claim for relief: Kamloops v. Nielson (1984), 1984 CanLII 21 (SCC), 10 DLR (4th) 641 (S.C.C.); Central Trust Co. v. Rafuse (1986), 1986 CanLII 29 (SCC), 31 DLR (4th) 481 (S.C.C.); Peixeiro v. Haberman, 1997 CanLII 325 (SCC), [1997] 3 S.C.R. 549. Thus, a limitation period commences when the plaintiff discovers the underlying material facts or, alternatively, when the plaintiff ought to have discovered those facts by the exercise of reasonable diligence.
[43] The discoverability principle conforms with the idea of a cause of action being the fact or facts which give a person a right to judicial redress or relief against another: Lawless v. Anderson, 2011 ONCA 102 at para. 22; Aguonie v. Galion Solid Waste Material Inc. (1998), 1998 CanLII 954 (ON CA), 38 O.R. (3d) 161 at 170 (C.A.).
[44] A cause of action is a set of facts that entitles a person to obtain a judgment in his or her favour from a court exercising its common law, equitable or statutory jurisdiction: 1309489 Ontario Inc. v. BMO Bank of Montreal, 2011 ONSC 5505 at paras. 18-28; Dumoulin v. Ontario (2004), 2004 CanLII 848 (ON SC), 71 O.R. (3d) 556 (S.C.J.). In Ivany v. Financiere Telco Inc., 2011 ONSC 2785 at paras. 26-33 and 1309489 Ontario Inc. v. BMO Bank of Montreal, 2011 ONSC 5505 at paras. 18-28, Justice Lauwers observed that the idea of cause of action is used in two related senses: (1) it identifies a factual matrix from which claims or complaints arise; and (2) it identifies the legal nature of those claims, which is the nominal or technical meaning of cause of action.
[45] Mr. Drakoulakos’ claim is to assert that he is the beneficial owner of the shares of 1166054 Ontario Limited. Mr. Drakoulakos knew the material facts for that claim against his daughter by 2002, when he began his repeated demands to take back the corporation. Subjectively, Mr. Drakoulakos may not have appreciated the legal significance of those material facts but, the law treats him as appreciating the legal significance of the material facts.
[46] On the assumption that there is no substantive merit to the Defendants’ defence, the material facts in the immediate case constitute a claim for a resulting trust. A resulting trust arises when title to the property is in one party's name, but that party, because he or she is a fiduciary or gave no value for the property, is under an obligation to return it to the original title owner: Pecore v. Pecore, 2007 SCC 17; Andrade v. Andrade, 2016 ONCA 368. In Kerr v. Baranow, 2011 SCC 10, [2011] 1 S.C.R. 269, at para. 12, Justice Cromwell stated that it has been settled law since at least 1788 in England that the trust of a legal estate results to the person who advances the purchase money.
[47] The presumption of advancement between parents and adult children was abolished by the Supreme Court in Pecore v. Pecore, supra at para. 36.
[48] Mr. Koumarelas’ demand letter of November 30, 2010 was a guess and a bluff about a breach of trust claim. Mr. Drakoulakos’ instructions to his lawyers was that 1166054 Ontario Limited was incorporated as a bare trust, but there are no supporting documents and only Mr. Drakoulakos’ word for it, which word is contradicted by the rest of his family. From this bluff, Mr. Drakoulakos’ present counsel fashions the argument that a bare trust was breached and that the material facts for a claim were only discovered after Mr. Koumarelas’ demand letter was rebuffed by Mr. Blackburn. This argument, however, has the flaw that Mr. Drakoulakos knew or ought to have known from at least 2002 that his claim was for a resulting trust.
[49] The circumstance that a potential claimant may not appreciate the legal significance of the facts does not postpone the commencement of the limitation period if he or she knows or ought to know the existence of the material facts, which is to say the constituent elements of his or her cause of action. Error or ignorance of the law or legal consequences of the facts does not postpone the running of the limitation period: Coutanche v. Napoleon Delicatessen (2004), 2004 CanLII 10091 (ON CA), 72 O.R. (3d) 122 (C.A.); Nicholas v. McCarthy Tétrault LLP, 2008 CanLII 54974 (ON SC), [2008] O.J. No. 4258 (S.C.J.), affd 2009 ONCA 692, [2009] O.J. No. 4061 (C.A.); Liu v. Silver, 2010 ONSC 2218, affd 2010 ONCA 731; Holley v. Northern Trust Co., Canada, 2014 ONSC 889; Pickering Square Inc. v. Trillium College Inc. 2014 ONSC 2629, affd 2016 ONCA 179.
[50] It is now over 15 years since Mr. Drakoulakos knew or ought to have known that he had a claim for ownership of 1166054 Ontario Limited, and, in my opinion this claim is statute-barred. Accordingly, the Defendants’ motion for a summary judgment should be granted.
D. CONCLUSION
[51] For the above reasons, the motion for a summary judgment is granted. If the parties cannot agree about the matter of costs, they may make submissions in writing beginning with the Defendants’ submissions within 20 days from the release of these Reasons for Decision, followed by Mr. Drakoulakos’ submissions within a further 20 days.
Perell, J.
Released: May 16, 2017
CITATION: Drakoulakos v. Stirpe, 2017 ONSC 2971
COURT FILE NO.: CV-12-470005
DATE: 20170516
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
MICHEL DRAKOULAKOS
Plaintiff/Respondent
– and –
MARTHA STIRPE a.k.a. MARTHA DRAKOULAKOS, MIKE STIRPE and 1166054 ONTARIO LIMITED
Defendants/Applicants
REASONS FOR DECISION
PERELL J.
Released: May 16, 2017