COURT FILE NO.: CV-16-557932

DATE: 2018/09/04

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Nygård International Partnership

Plaintiff

– and –

Hudson’s Bay Company

Defendant

Richard I. Good and Brad Adams for the Plaintiff

Eliot N. Kolers and Jordon Moss for the Defendant

HEARD: August 17, 2018

PERELL, J.

REASONS FOR DECISION

A. Introduction

[1] The Plaintiff, Nygård International Partnership, moves for an amendment to its Statement of Claim. The Defendant, Hudson’s Bay Company (“HBC”), moves for a summary judgment dismissing Nygård’s action on the grounds that the action, including its proposed amended claim, is statute-barred by the Limitations Act, 2002.[^1]

[2] On the cross-motions, HBC conceded that save to the extent that the proposed amendments to the Statement of Claim are statute-barred, it had no objection to Nygård’s Statement of Claim being amended.

[3] For the reasons that follow, I grant Nygård’s motion, in part, and I grant HBC’s summary judgment motion, in part. I declare that Nygård’s claims are statute-barred save for merchandise sales that occurred after February 1, 2016.

B. Facts

[4] HBC is a department store in Canada, the U.S., and Europe. Nygård is a partnership registered in Manitoba that distributes women’s clothing and clothing accessories.

[5] On February 1, 2003, HBC and Nygård signed a Master Merchandise Vendor Agreement (“MMVA”). The terms of the MMVA are incorporated by reference into specific agreements between Nygård and HBC. For present purposes, the following provisions of the Agreement are pertinent:

Rebates, discounts, allowances and other monetary terms owed by Vendor will be subtracted from amounts payable to Vendor on each payment by HBC or it payment agent to Vendor. Major discrepancies will be reviewed and adjusted when they arise. All discrepancies for the current calendar year received in writing will be investigated and adjusted, if proven true, within 30 days.

Any amounts owing to HBC and/or Zellers Inc. (collectively “the HBC Parties”) by Vendor or any of Vendor’s subsidiaries, affiliates, or associates (as defined in the Ontario Business Corporations Act) (each of which is a “Vendor Entity”) may be offset against any amounts owing by the HBC Parties, howsoever or whenever arising to any Vendor Entity or to any other vendor operating out of the same business premises or business address as any Vendor Entity. Vendor shall pay to HBC interest, commencing 30 days after the earlier of (a) when the amounts are due, (b) demand for payment or (c) return of merchandise to Vendor, at a rate of 15% per annum or any amounts owing to any HBC Party or any Vendor Entity.

[6] On December 1, 2006 and on June 1, 2008, pursuant to the MMVA, HBC and Nygård entered into Consignment Agreements for Nygård’s Allison Daley brand of merchandise. On January 1, 2011, pursuant to the MMVA, HBC and Nygård entered into a Consignment Agreement for the Nygård’s Peter Nygård Collection brand of merchandise.

[7] Under the Consignment Agreements, HBC acted as Nygård’s agent for the sale of the consigned merchandise, and HBC agreed to pay Nygård a percentage of the “out the door” selling price of merchandise with the selling price calculated net of taxes and discounts. The price for the merchandise were based on Nygård’s “NR5 model” under which Nygård set the price, the markdowns of the price, and the schedule for markdowns.

[8] Under the Consignment Agreements, HBC was required to report sales of the merchandise to Nygård via an “EDI852” sales report. After a sale, on the next business, HBC was required to pay Nygård a defined percentage of the "out the door" selling price of the merchandise. If payment was not made after the day following the prior day's sales, the payment due to Nygård was recalculated by an increase of .5% for each week of delay in payment.

[9] Using the Allison Daley Consignment Agreement as the illustration, for present purposes, the pertinent provisions of the agreement are set out below:

CONSIGNMENT AGREEMENT- NYGARD 2008

THIS AGREEMENT ("Agreement”) is made as of June 1, 2008 (the “Effective Date”) between NYGARD INTERNATIONAL PARTNERSHIP ("Nygård” and HUDSON'S BAY COMPANY (“HBC"). For the purpose of this Agreement HBC shall be deemed to Include ZELLERS INC.

WHEREAS Nygård wishes to provide HBC, and HBC wishes to receive, merchandise upon consignment subject to the terms and conditions of this Agreement;

AND WHEREAS the parties have signed:

(a) a Master Merchandise Vendor Agreement ("MMVA”);

(b) an Electronic Data Interchange Agreement (“EDI”), which Includes HBC's standard purchase order terms and conditions; (collectively the “Related Agreement”) attached as Schedule A.

NOW THEREFORE In consideration of good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows.

1. CQNSIGNMENT

1.1 HBC to be consignee – HBC, as consignee, shall act as Nygård’s agent for the sale of the type(s) of consignment merchandise (the "Consignment Merchandise'') as described under the Consignment Merchandise Vendor Number in the MMVA.

1.2 Nygård’s NR5 Model - The consignment program governed by this Agreement shall be based on Nygård’s NR5 Model, attached as Schedule B, provided that in the event of any inconsistency between Nygård’s NR5 Model and the terms of this Agreement, the terms of this Agreement shall govern.

1.3 Pre-ticketing of Consignment Merchandise - Nygård shall, at its cost, pre-ticket all Consignment Merchandise with retail prices and UPC codes.

1.11 Sales reports and payment - Sales of Merchandise shall be reported by HBC to daily via an EDI852 sales report. On the next business day (i.e. Monday will include Friday/Saturday/Sunday), HBC shall pay Nygård an amount equal to 60% of the "out the door" selling price (which, for clarity, is net of taxes and discounts) as stated in the sales report, via electronics funds transfer (collectively, the “Nygård Payments"); the balance being the commission to HBC (the “Commission”).

If payments are delayed until after the 7th day after prior days sales, the payment to Nygård is to increase by .5% for each week of delay (i.e. if the payment is 8 days late, the payment to Nygård will be 60.5% of the "out the door" selling price and if the payment is 15 days late the payment will be 61%).

1.12 MMVA - Regardless of the terms of the MMVA, no discount or payment term of the MMVA shall apply in connection with the Consignment Merchandise. Notwithstanding the foregoing, Nygård shall pay HBC an amount equal to 1% of the aggregate payments in accordance with this Consignment Agreement, to be paid and calculated in the same manner and frequency as if such payment were a "Volume Incentive Rebate Rate" under section 1(1) of the MMVA. To be eligible for such Consignment VIA payment, Nygård Payments must be at least $6.6 million from June 1, 2008 to January 31, 2009 and at least $10.8 million from February 1, 2009 to January 31, 2010.

For clarity, regardless of the terms of the MMVA, none of the discount or payment terms of the MMVA (e.g. early booking or early payment discounts, Co-op advertising etc.) shall apply in connection with the Consignment Merchandise.

HBC confirms that its intention is to move to automation of the dally sales reporting and to dally EFT payments, and that will make commercially reasonable efforts to do so by February 1, 2009.

1.13 No reductions or charge-backs - Except as may be specifically set out herein in section 1.12 above, no amounts or charge-backs will be deducted or applied to reduce payments to Nygård, including amounts for HBC administration costs, any non-compliance or audit charges and any other HBC assessments not approved in writing by Nygård.

6.1 This Agreement constitutes the entire agreement between the parties with respect to its subject matter and supersedes all prior agreements and understandings both formal and informal, and it shall not be varied without the written agreement of both parties.

[10] As will shortly appear, there is a major dispute between the parties about whether in selling the consigned goods, HBC was restricted to markdowns prescribed by Nygård’s “NR5 model” or whether it could also factor into the “out the door” selling price discounts for HBC’s coupons, senior discounts, Bay Day discounts, HBC card sales, employee discounts, etc. The major dispute was that HBC was making these deductions to the “out the door” price, but Nygård submits that this practice breached the Consignment Agreements.

[11] In November 2011, HBC learned that for the previous year, there had been what it described as a computation error in its accounting system. HBC realized that it been paying for the consignment merchandise based on the gross price rather than a net price that factored in its own discounts for coupons, etc. HBC determined that $474,000 had been overpaid on the Allison Daley Consignment Agreement merchandise and $607,000 had been overpaid on the Peter Nygård Collection Consignment Agreement merchandise; i.e., based on its own revised calculations, HBC believed that it had overpaid by approximately $1.0 million.

[12] Pausing here in the narrative, here it should be noted that while Nygård provided the starting price for the merchandise, it left it to HBC to record the “out the door” price of the merchandise, and Nygård did not know whether HBC was applying its own discounts until HBC reported that it was taking these discounts, which it was shortly to do. However, that is not to say that Nygård’s Accounts Receivable Department was not tracking payments from HBC - it was; nor is it to say that while undoubtedly difficult, Nygård could not have audited or sampled the HBC payments to determine whether HBC was abiding by the NR5 model. It should be recalled that Nygård set the price, the markdowns of the price, and the schedule for markdowns.

[13] Returning to the narrative, on November 15, 2011, HBC unilaterally setoff the amount of the alleged overpayments against the payments then due to Nygård under the various assignment agreements. Around the same time, HBC had its subsidiary Zellers do the same thing because it also had an Assignment Agreement with Nygård.

[14] On November 16, 2011, HBC forward Nygård a debit statement with respect to the Peter Nygård Collection Consignment Agreement, and on November 24, 2011, Aude Frestel, a Project Manager in Nygård’s IT (Information Technology) Department, sent Verna Barr at HBC an email message and inquired why HBC had made a payment transmission of $0.

[15] On December 2, 2011, Ms. Barr responded to Ms. Frestel that HBC had been paying based on gross sales instead of net sales and the $0 total was done to update the difference between the gross and net dollar amounts.

[16] Ms. Frestel passed on HBC’s December 2, 2011 message to Keith Merkel, who was the President and the acting CFO of Nygård, and to Sandra Wadge, a Credit Manager at Nygård, and to Len Nicolas of Nygård, another employee, and Ms. Frestel asked if she or the Accounts Receivable Department should follow up.

[17] It appears that Ms. Frestel did not know that earlier in the day Ms. Wadge had sent an email message to Margaret Franchilli of HBC’s Finance Department indicating that $1,788,270.51 was owing to Nygård. Ms. Franchilli responded also on December 2, 2011, as follows:

Hi Sandra

Re, Vendor #036708/50561/55631 Consignment discrepancies

The above accounts were in a debit balance as a result of recent correcting adjustments made by HBC. For P1 2010 to P9 2011 your consignment payments were erroneously paid on Gross Sales and should have been paid on Net Sales. You were paid using a sales table that was not reduced by employee discounts, coupons, savings cards, senior days etc. resulting in an overpayment to your company.

The attached file shows the $ amounts of the above deductions.

Margaret

[18] In her email message, Ms. Franchilli sent a file attachment showing credit memos of: (a) $535,578.89 for the Alisson Daley Consignment; (b) $408,679.81 for the Peter Nygård Collection Consignment Agreement; and (c) $350,215.97 for Zellers, the HBC subsidiary, which, as noted above, also had a Consignment Agreement with Nygård.

[19] It appears that Mr. Merkel also followed up on the matter of the setoff being claimed by HBC. On December 16, 2011, Mr. Merkel sent an email message to Stuart Auld and Donald Watros of HBC. Relying on clauses 1.11 and 1.13 of the Consignment Agreements, Mr. Merkel disputed that HBC was entitled to make the setoffs it had made, and he demanded immediate payment.

[20] On January 2, 2012, HBC sent an email message and reiterated its explanation for the setoffs and on January 3, 2012, Mr. Merkel responded that the matter was being turned over to Nygård’s attorney. However, it seems that Nygård did not carry through with this threat insofar as HBC was concerned.

[21] In January 2012, Nygård did commence an action with respect to the merchandise sold at Zellers. HBC was winding down its Zellers business, and in its law suit against Zellers, Nygård was advancing a variety of claims approaching $50 million, including the $350,215.97 claim for the Zellers’ Consignment Agreement setoff.

[22] The Zellers litigation promptly settled. On January 30, 2012, Nygård and HBC signed an agreement that resolved the action. Mr. Merkel signed for Nygård. Rick Wenzel, who was Nygård’s Executive Vice-President Marketing, was involved in the negotiations that led to the settlement.

[23] The Zellers Settlement Agreement contained an entire agreement clause, and one of matters settled was the calculation of the "out the door" selling price of the Consignment Agreement with Zellers. The Zeller’s Settlement Agreement specified that the “out the door” selling price was to be calculated as being net only of taxes and the prescribed markdowns and that HBC agreed to pay $416,677.45 for the consignment merchandise that had been delivered to Zellers.

[24] Under the Zellers Settlement Agreement, HBC also agreed to assign certain intellectual property rights to Nygård and to pay Nygård: (a) $160,413.15 for outstanding accounts receivables; (b) $2,787,182.43 for markdowns exceeding the average markdown rate; and (c) $11,297,283 for unsold inventory. The Zellers Agreement did not address or release Nygård’s claims with respect to the setoffs taken by HBC with respect to the Allison Daley Consignment Agreement and the Peter Nygård Collection Consignment Agreement.

[25] In so far as the HBC and Nygård Consignment Agreements are concerned, while HBC is a party to the Agreement, the Zellers Agreement is an agreement only about Nygård’s and Zellers’ discrete accounts. However, in a contested issue, Nygård’s position is that it was understood that the agreed-upon formula for the “out the door” selling price was intended to apply on an ongoing basis to the ongoing Allison Daley Consignment Agreement and the Peter Nygård Collection Consignment Agreement between HBC and Nygård. HBC denies that the Zellers Agreement settled the discrete dispute between HBC and Nygård.

[26] In any event, in January 2012, notwithstanding Mr. Merkel’s threat, Nygård, did not sue HBC with respect to the amounts that Nygård regarded as unpaid for the Alisson Daley Consignment Agreement or the Peter Nygård Collection Consignment Agreement, and after January 2012, HBC continued its new practice of factoring in its own discounts when calculating the “out the door” price of the Nygård merchandise it was selling at HBC stores.

[27] As of the end of January 2012, from HBC’s perspective, whatever issues there were between Nygård and Zellers had been resolved by settlement and the issues between HBC and Nygård had been resolved by HBC’s unilateral action of taking setoffs.

[28] As of the end of January 2012, from Nygård’s perspective, it understood that the matter of approximately $1.0 million of setoffs taken by HBC was not resolved, but it mistakenly believed that there was no ongoing dispute about the go-forward methodology for determining the “out the door” price of the consignment merchandise. From Nygård perspective, it wished the approximately $1.0 million to be paid, but it was concerned about alienating its business relationship with HBC, which could cancel the consignment arrangement on six months’ notice.

[29] On May 17, 2012, Randi Feno of HBC’s Finance Department sent an email to David Walsh, a Nygård Vice-President, who had succeeded Mr. Merkel as Nygård’s CFO, with information regarding the consignment payments. Mr. Feno suggested a meeting. The same day, Mr. Walsh responded with the following email message:

Randi,

Thanks for the information. One of the breakdowns I was interested in looking at was on the original payment what was the reductions and adjustments required to come to the revised payment. From my understanding the wrong “net” was communicated and therefore paid to us. The net had to be adjusted for various discounts that were either not captured at the till or the wrong file was originally communicated to us. Is there a way to get this information? This information really does not give me anything new. Was the payment adjustment a result of employee discounts? Or other types of discounts? Can we discuss on the phone around 10 am (CST) Friday? I would prefer not to wait next week. Thanks,

David Walsh

[30] Nothing of moment happened through the winter and spring of 2012 until May 31, 2012, when Debbie Surgenor, a Nygård Project Manager in the Finance Department, after reviewing Nygård data reported to Mr. Walsh that the only issue was whether HBC should be paying before or after coupons, senior discounts, HBC card sales, employee discounts, etc.

[31] On June 1, 2012, Mr. Walsh sent an email message to, among others, Jim Bennett, Nygård’s Vice-Chair with an update on the state of the HBC accounts receivable. Mr. Walsh reported that with penalties, Nygård had a claim against HBC of $2.3 million. Mr. Walsh suggested that a plan was necessary and that a decision was needed about how to proceed. His email message stated:

[…] 3. The consignment overpayment deduction is both good and bad news. We have reconciled and validated HBC over paid use these items. We have been clearly overpaid, the additional margin was recognized as a plug in our AS400 system. The EDI file we received was missing the discounts, we have tied this fact back to HBC BIS system which is the amount out of their till. HBC has not been able to communicate to us the specific nature and amount of these discounts. The consignment agreements (there is more than one) could swing either way if we were to go to battle with HBC, we may need an assessment from Abe. The agreement is specific we are to paid from the EDI data. HBC cannot reproduce correct EDI data, therefore, we can argue we are to be paid on this information. In addition, the agreement HBC is not authorized to deduct or apply to reduce payments to Nygård not approved in writing by Nygård. Something they done twice. Against us is the fact the selling price is defined in the agreement as the “out the door net of sales and discounts as stated in the sales report.” In short HBC messed up and sent us paid us on the wrong data, we were overpaid but paid as per the agreement and they are in breach due to withholding payments without our written approval.

4 Based on these facts, we will need to discuss as a group to come up with a game plan to proceed. How badly do we want his money at the risk of damaging the relationship. Perhaps the starting position is the overpayment plus penalty. First fallback position is forgive the penalty and last position is 50/50 split on the error? After this it have to be a call by management to go the legal route.

David Walsh

[32] In any event, throughout 2012, HBC rebuffed Nygård demands for payment. In its answers to undertakings, Nygard confirmed that it did not commence legal proceedings in 2012 against HBC since it was trying to build its business with HBC.

[33] On October 5, 2012, Mr. Walsh sent an internal email message to, among others, Vice-Chair Bennett and Rick Wenzel, who was Nygård’s Executive Vice-President Marketing, to report again, among other things, about the $1 million of setoffs taken by HBC. The email message stated:

[…] 4. That is the good news – the bad news I have continued to push HBC on our position that the Gross/Net EDI deduction of $1 million taken last year with no success. I had a meeting with HBC and L&T CFO and Senior VP Finance last week with no offer or movement in their position. They have offered to engage Deloitte to give us an independent report on the internal controls of the BIZ system and an assessment that we have been paid correctly. Said I would get back to them.

[34] As may be observed from Mr. Walsh’s email message, HBC did offer to engage Deloitte & Touche to provide an independent report about the calculation of the “out the door” price for the merchandise, and Nygård agreed to this approach.

[35] Thus, Nygård agreed with HBC to retain Deloitte & Touche to conduct a review. The cost of the report was shared with HBC paying the lion’s share of $10,000 and Nygård contributing $700.

[36] On February 12, 2013, Deloitte & Touche reported that save for a $41 discrepancy, HBC’s recalculation of the “out the door” price had been correct. The Deloitte & Touche report, however, reported only on the accuracy of the deductions made by HBC. Deloitte & Touche was not asked and it did not opine on whether HBC’s deductions for coupons, etc. was in accordance with HBC’s Consignment Agreements with Nygård.

[37] By February 2013, Mr. Walsh understood that HBC regarded the matter as finally resolved. Mr. Walsh knew that Nygård would have to sue to affect any change in HBC’s position. For audit purposes, Nygård claimed a write-off of the approximately $1.0 million allegedly owed by HBC. It, however, continued to internally prepare invoices for the accruing claim against HBC, but it did not sent the invoices. The invoices were only with respect to the setoff amounts.

[38] On September 6, 2013, in an email message exchange, Mr. Bennett, Nygård’s Vice-Chair, asked Mr. Walsh about the $1 million that had never been collected from HBC, and Mr. Walsh replied: “After [HBC] completed their independent audit on the transaction the CFO made it very clear to me this issue was closed unless we want to take to legal.”

[39] In late September 2015, Mr. Walsh abruptly left Nygård and Ahileas Tsekouras, became acting CFO, a position that became official in March 2016.

[40] Meanwhile, the sales of merchandise under the Consignment Agreements continued until November 15, 2013 when HBC gave Nygård six months’ written notice that effective 2014, it would be reducing its consignment purchases in connection with the Peter Nygård Collection merchandise. The notice, however, indicated that HBC would continue selling Allison Daley Consignment merchandise as well as Bianca Nygård and Nygård Slims brands merchandise.

[41] Another approximately six months passed, until May 2014, when energized by the reduction in sales in relation to the Peter Nygård Collection, Mr. Tsekouras revived the issue of the setoffs. Between May 21, 2014 and March 1, 2016, Nygård repeatedly demanded payment of the setoffs: visualize the following correspondence: (a) May 21, 2014, Mr. Tsekouras to Michael Meuwissen, HBC’s Senior Vice President; (b) August 7, 2015, Mr. Tsekouras to Mr. Meuwissen; (c) September 10, 2015, Mr. Tsekouras to Mel Mitzel, HBC Senior Vice President, Finance; (d) October 13, 2015, Mr. Tsekouras to Mr. Mitzel; (e) October 20, 2015, Mr. Tsekouras to Mr. O'Neill, Vice President, Finance; and (f) November 5, 2015, Mr. Tsekouras to Mr. O'Neill.

[42] Mr. Tsekouras’ email message of August 7, 2015 to Mr. Meuwissen is illustrative of Nygård’s demands; it stated:

Michael,

1. The January 27, 2012 settlement agreement between Nygård and [HBC] detailed the definition of net “out the door” selling price. This amount was determined to be the sales through the cash register WITHOUT reference to additional discounts such as discount cards, or senior’s day.

2. Nygård has previously invoiced [HBC] for the differences in payment received versus the agreed upon amount pursuant to the settlement agreement in the amounts of: Peter Nygård $473,756.30; Allison Daley $607,484.30; Total $1,081,240.60.

3. As this amount was deducted and not paid back to Nygård in subsequent discussions, additional interest has accrued up to July 31, 2015 in the amounts of: Peter Nygård $460,220.41; Allison Daley $590,127.73; Total $1,050,348.14.

4. Repeated efforts to conclude this issue have been NON-RESPONSIVE by [HBC] – interest has been accruing DAILY on this outstanding balance and the total balance owing as July 31, 2015 is $2,131,588.74. This outstanding balance of $2,131,588.74 has to be paid in FULL by FRIDAY, AUGUST 14, 2015.

5. If you require any other information to execute payment (i.e. invoice copies, etc. by that date do not hesitate to contact me.

6. Regards,

Ahileas Tsekouras

[43] Notwithstanding the various demands for payment, HBC did not pay, and on March 1, 2016, Richard Good, Nygård’s lawyer, wrote D. Stephen Lawson, HBC’s Senior Legal Counsel, and asserted that Nygård regarded HBC’s failure to pay as a breach of the Consignment Agreements. Mr. Good’s letter stated:

Attention: D. Stephen Lawson

Senior Legal Counsel

Dear Sir:

Re: Nygård International Partnership ("Nygård International") and Hudson's Bay Company ("the Bay")

We act for Nygard International which is owed $2,288,368.77 as of February 29, 2016 for product provided by our client and sold by the Bay since November 10, 2011. That amount includes: (1) $473, 756. 30 plus interest on improperly taken discounts or markdowns of $528,915.07 for a total of $1,002,671.37 for the sale of Peter Nygård fashions; and (2) $607,484.43 plus interest on improperly taken discounts or markdowns of $678,212 for the sale of Allison Daley moderates for a total of $1,285,697.40.

By way of background, the very issue giving rise to the foregoing claim arose in a law suit which Nygård International commenced on December 12, 2011 against the Bay, including Zellers Inc. for an amount in excess of $30,000,000.00 (Ontario Superior of Court of Justice, Court File No. CV-11-441732). That suit was settled by an agreement effective January 30, 2012 ("Settlement Agreement"). One of the components of the agreement which was resolved was a dispute between our client and the Bay about the definition and appropriate calculation of the net "out the door" selling price for each garment under the standard form wording of the Bay's consignment agreement.

Because of the breach of that Settlement Agreement by the Bay and its violation of the clearly established practice between the parties, Nygard International has suffered loss and damage at a minimum in the amount of $2,288,368.77.

Our client's Chief Financial Officer, Ahileas Tsekouras has been advancing this unresolved claim in a vigorous but respectful way for almost two years but each contact name with the Bay which he received has deflected him and referred him to another person, Unfortunately, it has become clear that your client's officials have no intention of addressing this matter just as they did not prior to the inception of the December 2011 lawsuit.

Sadly, our client has concluded that another claim may have to be initiated in the Ontario Superior Court of Justice or the Manitoba Court of Queen's Bench. Accordingly, this is your notice that if by close of business March 7, 2016, a duly authorized representative of the Bay has not contacted Mr. Tsekouras to enter into good faith negotiations with Nygård International, then we have instructions to commence litigation. This offer to negotiate is made with the reservation of our client's right to claim the full amount as described above together with any other category of loss or damage which it has suffered.

Yours truly,

FILLMORE RILEY LLP

[44] On March 28, 2016, Mr. Lawson responded to Mr. Good and to Mr. Tsekouras. On behalf of HBC, he advised that the matter of the setoffs had been discussed and had been resolved in 2013. Mr. Lawson’s email message stated:

Dear Richard,

We have reviewed the matter in your letter dated March 1, 2016 (the "Letter"). In speaking with Tim O'Neill, a VP in our Finance department, he confirmed that in early 2013 he was asked to get involved with the same issue raised in the Letter. At the time Mr. O'Neill worked with Mr. David Walsh, who we understand was Nygard's CFO at the time. To facilitate a resolution of the issue, HBC suggested engaging Deloitte to look into the issue, with HBC agreeing to pay Deloitte's fee for their independent work. Deloitte reviewed the process pursuant to which discounts were being taken and concluded that all was in order. This was discussed with Mr. Walsh at the time who was in agreement.

We are happy to schedule a call with Mr. Tsekouras […]

[45] On August 4, 2016, Nygård commenced this action against HBC alleging breach of contract, breach of fiduciary duty, breach of the duty of good faith, unjust enrichment, detinue, and breach of the Zellers Settlement Agreement. The various causes of action are based on breaches of duty in relation to HBC’s “Unauthorized Markdowns”.

[46] In the August 4, 2016 Statement of Claim, Nygård pleaded that in recalculating the “out the door” selling price, HBC had breached the Consignment Agreements by applying Unauthorized Markdowns in excess of the markdowns prescribed by the NR5 model.

[47] The Unauthorized Markdowns were comprised of $607,484.30, inclusive of HST, for the Allison Daley Consignment merchandise and $473,560.30, inclusive of HST, for the Peter Nygård Collection Consignment merchandise.

[48] Nygård also claimed in addition to its damages based on the Unauthorized Markdowns payment of the amount owing for the Unauthorized Markdowns calculated by an increase of 0.5% weekly.

[49] After the action was commenced, HBC continued to purchase merchandise under the consignment agreements until January 1, 2017.

[50] On November 8, 2017, Mr. Mitzel was examined for discovery. During his examination, Mr. Mitzel testified that after November 2012, when HBC transmitted payments to Nygård, it factored into the “out the door” price, HBC’s coupons, senior discounts, HBC card sales, employee discounts, etc.

[51] For the motions now before the court, Mr. Tsekouras deposed that until the examination of Mr. Mitzel, Nygård was unaware that HBC had changed its EDI852 protocol on a go-forward basis to transmit sales calculations based on net sales as opposed to gross sales. Mr. Tsekouras testified that until Mr. Mitzel’s discovery, Nygård believed that as a result of the Zeller’s Settlement, HBC was calculating the “out the door” selling price based exclusively on the NR5 model without HBC’s coupons, senior discounts, HBC card sales, employee discounts, etc.

[52] On November 10, 2017, Mr. Tsekouras was examined for discovery.

[53] On February 2, 2018, Nygård brought a motion to amend its Statement of Claim to claim damages for the ongoing Unauthorized Markdowns; i.e., for the deductions in the “out the door” price that HBC continued to make when it calculated the consignment payments to Nygård between December 2011 and January 1, 2017.

[54] In support of that application, Mr. Tsekouras deposed that Nygård’s communications with HBC were only in regard to HBC’s chargeback taken in November 2011 and that Nygård had no knowledge that HBC was continuing to deduct the unauthorized markdowns from the consignment payments. Further, he deposed that Nygård believed that the settlement agreement of January 27, 2017 resolved on a go-forward basis the dispute relating to how the selling price for the consignment merchandise was to be calculated and that, therefore, Nygård believed that the Unauthorized Markdowns would not continue until it discovered the contrary as a result of reviewing Mr. Mitzel’s examination for discovery.

[55] In the proposed Amended Statement of Claim, Nygård seeks damages for breach of contract and breach of duties and an accounting of all amounts wrongfully withheld in respect of Ongoing Unauthorized Markdowns. In the alternative to damages and the accounting, Nygård claimed damages for breach of the Settlement Agreement between the Plaintiff and Defendant in the amount of $1,081,240.60, inclusive of HST, plus the additional amounts due in respect of ongoing Unauthorized Markdowns.

[56] In paragraph 22 of both the original Statement of Claim and of the proposed Amended Statement of Claim, Nygård pleads a series of breaches of contract. Nygård claims that every week a new and increased amount is owed to it under the Consignment Agreements and, therefore, the failure to pay the recalculated amount is a new breach of contract for which HBC is liable. Paragraph 22 of the proposed Amended Statement of Claim states:

22. In addition, as HBC has withheld payments due to Nygård under both the [Allison Daley] Consignment Agreement and the [Peter Nygård] Consignment Agreement and dating from the 7th day following the date payment first became due, HBC has been and is liable to pay Nygård the total amount of the Chargeback increased by 0.5% each week. As payment remains outstanding, every week a new and increased amount is owed to Nygård under the Consignment Agreements and failure to pay the amount owed in that week is a breach of contract.

[57] In the proposed amended Statement of Claim, Nygård pleads a claim for the on-going Unauthorized Markdowns. Paragraph 25.1 and 25.2 of the pleading states:

25.1 In addition to the foregoing, following November 2011, unbeknownst to Nygård and without any authority for doing so under and in breach of the [Allison Daley] and [Peter Nygård] Consignment Agreements, HBC continued to unlawfully apply discounts in excess of the Prescribed Markdowns to the ongoing payments that were being made to Nygård for the sale of the Consignment Merchandise (the Ongoing Unauthorized Markdowns”). Nygård did not at any time approve the Ongoing Unauthorized Markdowns.

25.2 Nygård says that in continuing to apply Ongoing Unauthorized Markdowns HBC is liable for a continuous and ongoing breach of the [Allison Daley] and [Peter Nygård] Consignment Agreements for which Nygård is entitled to damages in an amount to be determined at the trial of this action.

[58] In the proposed Amended Statement of Claim, Nygård pleads breach of the January 2011 Settlement Agreement involving Zellers as an alternative basis for relief. Paragraphs 39 to 44 of the Amended Statement of Claim state:

BREACH OF SETTLEMENT AGREEMENT

39. On January 27, 2012, Nygård and HBC reached a binding agreement to settle a dispute between the parties, including with respect to the appropriate calculation of the net “out the door” selling price (the “Settlement Agreement”).

40. The Settlement Agreement contained, amongst other things, a term expressing the agreement of the parties that the “out the door” selling price was to be calculated as being net only taxes and Prescribed Markdowns approved by Nygård pursuant to the NR5 model. The agreed-upon calculation of the “out the door” selling price contained in the Settlement Agreement was intended to apply on an ongoing basis to all Nygård merchandise given the identical language contained in other agreements between the parties.

41. In accordance with the terms of the Settlement Agreement, HBC paid Nygård a sum representing the “out the door” selling price, which was net only taxes and Prescribed Markdowns, for the sale of Carroll Reed and Pure Merchandise.

42. However, and despite HBC’s reimbursement to Nygård for the sale of Carroll Reed and Pure Merchandise on the basis of the agreed-upon calculation of the “out the door” selling price, HBC has failed to fully implement and follow the Settlement Agreement through its refusal to reimburse Nygård for the Chargeback and the additional amounts due and owing in respect of Ongoing Unauthorized Markdowns.

43. On multiple occasions, Nygård has demanded that HBC comply with the definition and appropriate calculation of “out the door” selling price as established in the Settlement Agreement. To date, HBC has not complied and has refused and/or neglected to respect the terms of the Settlement Agreement.

44. Nygård therefore claims the alternate relief set out in paragraph 1 herein.

C. Discussion

1. Is the Case Appropriate for a Summary Judgment?

[59] 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.” 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:

20.04 (2.1) 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:

1. Weighing the evidence.

2. Evaluating the credibility of a deponent.

3. Drawing any reasonable inference from the evidence.

[60] In Hryniak v. Mauldin[^2] and Bruno Appliance and Furniture, Inc. v. Hryniak,[^3] 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 introduced 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 granting a summary judgment if there is sufficient evidence to fairly and justly adjudicate the dispute and a summary judgment would be a timely, affordable and proportionate procedure.

[61] 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 interest of justice. Their use will not be against the interest 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. To grant summary judgment, on a review of the record, the motions judge must be of the view that sufficient evidence has been presented on all relevant points to allow him or her to draw the inferences necessary to make dispositive findings and to fairly and justly adjudicate the issues in the case.[^4]

[62] 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 advanced their best case and that the record contains all the evidence that the parties will present at trial.[^5] Thus, if the moving party meets the evidentiary burden of producing evidence on which the court could conclude that there is no genuine issue of material fact requiring a trial, the responding party must either refute or counter the moving party’s evidence or risk a summary judgment.[^6]

[63] In my opinion, in the immediate case, there are no genuine issues requiring a trial and the case at bar is an appropriate case for a summary judgment on the issue of whether Nygård’s claim is statute-barred in whole or in part. It is further my opinion that if there were genuine issues requiring a trial, then there is a more than adequate evidentiary record to decide the genuine issues and it would be in the interests of justice to do so.

[64] On the issue of whether Nygård’s claims are in whole or in part statute-barred, I am confident that based on the ample evidentiary record place before the court, I can fairly and accurately make all the findings of fact necessary to decide the issue. In my opinion, there is no need to have resort to the forensic machinery of a trial to determine whether and when Nygård discovered it had a claim against HBC. There is no prospect of inconsistent findings of fact or inconsistent legal determinations if I find, as I do that, that Nygård’s claim is statute-barred in part. The issue of the discoverability of Nygård’s claim is independent of the substantive merits of Nygård’s claim.

[65] Nygård’s substantive claim is essentially a matter of contract interpretation, and it is further my opinion that had Nygård brought a cross-motion for summary judgment (or alternatively had it proceeded by application instead of by action), then, the merits of Nygård’s claim could also have been summarily decided based on the evidentiary record now before the court.

[66] There is an ample evidentiary record, and there are no “he said, she said” issues of credibility, about either the discoverability of the claim or the merits of a claim that is essentially a matter of contract interpretation. The court has a full understanding of the factual nexus of the making of the Consignment Contract and the interpretation of those contracts would resolve the issue of whether or not the Consignment Agreements were breached.

[67] However, because Nygård did not bring a cross-motion for a summary judgment, I shall not discuss the merits of Nygård’s various causes of action. I do recommend that if the parties cannot settle the matter, one or the other of them should bring another summary judgment motion to resolve the contract interpretation issue. Once that issue was resolved, then the accounting issues could be resolved too.

[68] For the purposes of the motions now before the court, I shall assume without deciding that HBC breached the Consignment Agreements in its calculation of the “out the door” prices for the merchandise.

2. The Discoverability of Claims

[69] Limitation periods exist for three purposes: (1) to promote accuracy and certainty in the adjudication of claims; (2) to provide fairness to persons who might be required to defend against claims based on stale evidence; and (3) to prompt persons who might wish to commence claims to be diligent in pursuing them in a timely fashion.[^7] These purposes are described as the certainty, evidentiary and diligence rationales.

[70] The relevant provisions of the Limitations Act, 2002 are sections 1, 4, and 5, which are set out below:

Definitions

1. 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

4. 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

5. (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.

[71] Prior to the enactment of s. 5(1)(a)(iv) of the current Limitations Act, 2002, the judge-made discoverability principle governed the commencement of a limitation period. The discoverability principle stipulated 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.[^8] 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.[^9]

[72] Section 1 of the Limitations Act, 2002 defines "claim" to mean: "a claim to remedy an injury, loss or damage that occurred as a result of an act or omission." A claim is a cause of action, which is the fact or facts which give a person a right to judicial redress or relief against another.[^10] In Lawless v. Anderson,[^11] the Court of Appeal stated at paras. 22-23:

22. The principle of discoverability provides that "a cause of action arises for the purposes of a limitation period when the material facts on which it is based have been discovered, or ought to have been discovered, by the plaintiff by the exercise of reasonable diligence. This principle conforms with the generally accepted definition of the term “cause of action” -- the fact or facts which give a person a right to judicial redress or relief against another"....

23. Determining whether a person has discovered a claim is a fact-based analysis. The question to be posed is whether the prospective plaintiff knows enough facts on which to base an allegation of negligence against the defendant. If the plaintiff does, then the claim has been "discovered", and the limitation period begins to run: see Soper v. Southcott (1998), 1998 CanLII 5359 (ON CA), 39 OR (3d) 737 (CA) and McSween v. Louis (2000), 2000 CanLII 5744 (ON CA), 132 OAC 304 (CA).

[73] The discoverability principle continues to operate, and indeed has been codified by the Limitations Act, 2002, but its operation has been adjusted by s. 5(1)(a)(iv), and thus subject to s. 5(1)(a)(iv), a limitation period commences at its earliest 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, but because of s. 5(1)(a)(iv), discoverability may be postponed.

[74] Subject to the adjustment made by s. 5(1)(a)(iv), with respect to the basic limitation period of two years under the Limitations Act, 2002, a claim is “discovered” on the earlier of the date the claimant knew - a subjective criterion - or ought to have known - an objective criterion - about the claim.[^12]

[75] The discoverability of a claim for relief involves the identification of the wrongdoer, and also, the discovery of his or her acts or omissions that constitute liability.[^13] It is not enough that the plaintiff has suffered a loss and has knowledge that someone might be responsible; the identity and culpable acts of the wrongdoer must be known or knowable with reasonable diligence.[^14]

[76] For the limitation period to begin to run, it is not necessary that the plaintiff know the full extent or quantification of his or her damages; rather, the period begins to run with the plaintiff’s subjective or objective appreciation of being damaged, i.e., of being worse off than before the defendant’s conduct.[^15]

[77] To rely on the discoverability principle to extend the running of a limitation period, the plaintiff must demonstrate that he or she exercised reasonable or due diligence to discover the material facts.[^16] However, while due diligence is a factor that informs the analysis of when a claim ought to have reasonably been discovered, lack of due diligence is not a separate and independent reason for concluding that a plaintiff’s claim is statute-barred. The idea rather is that when a reasonable person with the abilities and in the circumstances of the plaintiff would acquire facts to become knowledgeable about the claim, the limitation period does not stop running if the plaintiff takes no steps to investigate whether he or she has a claim.[^17]

[78] When a limitation period defence is raised, the onus is on the plaintiff to provide evidence to show that its claim is not statute-barred and that it behaved as a reasonable person in the same or similar circumstances using reasonable diligence in discovering the facts relating to the limitation issue.[^18] What a reasonable person in the same or similar circumstances of the plaintiff knew or ought to have known is a question of fact.[^19] The objective test under paragraph 5(1)(b) requires considering the abilities and circumstances of the plaintiff and whether a person in the same or similar circumstances would have been alerted to the elements of a claim.[^20] The discoverability principle requires reasonable diligence by the plaintiff,[^21] and a defendant may succeed on a motion for a summary judgment where there is no genuine issue requiring a trial that the plaintiff ought through due diligence to have known that he or she had a claim.[^22]

[79] Section 5(1)(a)(iv) of the Limitations Act, 2002 adjusts the operation of the discoverability principle, and s. 5(1)(a)(iv) can have the effect of delaying the commencement of the running of limitation period. Where a person knows that he or she has suffered harm; i.e., when the plaintiff knows the elements of ss. 5(1)(a)(i),(ii), and (iii), the delay lasts until the day when a proceeding would be an “appropriate” means to remedy the harm having regard to the nature of the injury, loss or damage.

[80] The appropriateness factor of 5(1)(a)(iv) introduces some uncertainty in the operation of the Limitations Act, 2002 but it also introduces some flexibility and fairness in the application of the discovery principle, which presumptively operates against the claimant as soon as a cause of action becomes objectively apparent.[^23] In Markel Insurance Co. of Canada v. ING Insurance Co. of Canada,[^24] the Court of Appeal held that for s. 5(1)(a)(iv) to have a delaying effect, there must be a juridical reason for the person to wait; i.e., there must be an explanation rooted in law as to why commencing a proceeding was not yet appropriate. Appropriateness must be assessed on the facts of each particular case, including taking into account the particular interests and circumstances of the plaintiff.[^25]

[81] Where a breach of contract involves a failure to perform an obligation scheduled to be performed periodically; for example, a requirement to make quarterly deliveries or payments, a failure to perform any such gives rise to a breach and a claim as from the date of each individual breach.[^26] Where there is an obligation to make periodic payments or to perform an obligation periodically, the limitation period bars claims for breach of contract for damages incurred outside of the limitation period, but the limitations statute does not bar timely claims for damages that are suffered within the limitation period.[^27] Where there is a continuing breach of contract, the limitation period applies on a rolling basis and commences each day a fresh cause of action accrues and runs two years from that date.[^28] For example, if a tenant failed to pay rent for three years, and then the landlord commenced an action for the unpaid rent, the claim for the first year of the rent arrears would be statute barred.

[82] The concept of a continuing breach was explained by Justice Dixon, as he then was, in Larking v. Great Western (Nepean) Gravel Ltd. (in Liquidation),[^29] as follows:

If a covenantor undertakes that he will do a definite act and omits to do it within the time allowed for the purpose, he has broken his covenant finally and his continued failure to do the act is nothing but a failure to remedy his past breach and not the commission of any further breach of his covenant. His duty is not considered as persisting and, so to speak, being for ever renewed until he actually does that which he promised. On the other hand, if his covenant is to maintain a state or condition of affairs, as, for instance, maintaining a building in repair, keeping the insurance of a life on foot, or affording a particular kind of lateral or vertical support to a tenement, then a further breach arises in every successive moment of time during which the state or condition is not as promised, during which, to pursue the examples, the building is out of repair, the life uninsured, or the particular support unprovided.

[83] The concept of a continuing breach may be difficult in application, and applying the concept depends upon determining the meaning of the contract promise and determining whether it may be breached once, and for once for all, or whether it is continuing to be breached until the promise is made good.[^30] It also may be a matter, as in the case at bar, of determining whether the contract can be breached more than once with each breach constituting a discrete breach of contract with a discrete limitation period.

3. Discussion and Analysis

[84] I find as a fact and it was not disputed that in November 2012, Nygård had a claim for breach of the Consignment Agreements. There is no genuine issue requiring a trial that pursuant to s. 5(2) of the Limitations Act, 2002 Nygård is presumed to have discovered this claim in November 2012, unless Nygård proved the contrary. However, I find as a fact that Nygård did not prove the contrary; there is no genuine issue that Nygård has not rebutted the presumption set out in s. 5(2) of the Limitations Act, 2002.

[85] Apart from the presumption of s. 5(2) of the Limitations Act, 2002, I find as a fact that in November 2012, when HBC told (1) Ms. Frestel, Nygård’s IT Project Manager, (2) Mr. Merkel, Nygård’s President and CFO, (3) Mr. Nicolas, a Nygård employee, and (4) Ms. Wadge, a Nygård Credit Manager, that HBC was setting off approximately $1.0 million against its payment obligations under the Consignment Agreements, Nygård subjectively knew that: (a) it had suffered a loss; (b) the loss was caused by an act or omission; namely, a breach of the Consignment Agreements; (c) that HBC was the source of the act causing the loss; i.e., it had breached the Consignment Agreements; and (d) that having regard to the nature of the loss that suing HBC would be an appropriate means to seek a remedy the breach of contract. Mr. Merkel said as much when he threatened to sue in his January 3, 2012 email message.

[86] Thus, the claim was discovered and the limitation period for the approximately $1.0 million in setoffs began to run in January 2012. The limitation period had expired by January 2014, long before Nygård commenced its action. Thus, this portion of Nygård’s claims or causes of action, all of which are associated with the breach of the Consignment Agreements, is statute-barred.

[87] In particular, I find as a fact that Nygård does not have a claim in detinue. Nygård had a claim for a contract debt. Nygård’s claim is for money payable under a contract. While as a consignor, Nygård might have a claim in detinue for its personal property in the merchandise, it is not claiming return of the merchandise and Nygård has no proprietary or possessory interest in HBC’s money. There is no specified fund of money earmarked or designated for Nygård, and I see no basis for a claim in detinue, which is a proprietary - not a contractual - claim.

[88] I find as a matter of mixed fact and law that HBC’s November 2012 breach of contract; namely its unilaterally setting off approximately $1.0 million, an act that HBC – but not Nygård – regarded as recovering overpayments, was not a rolling or continuous breach of contract. It was a periodic breach of contract.

[89] HBC’s act in November 2012 was not self-renewing breach of contract perpetually being repeated every succeeding week by reason of the provision in the Consignment Agreements that recalculated the amount of the payment if payment was delayed. HBC’s payment was not delayed; HBC was simply not making the payment, and HBC was immediately liable to be sued for default in payment and that cause of action was perfected in January 2012. The limitation period for that cause of action began to run in November 2012. HBC’s continued failure to pay the delayed payment is not the commission of a perpetual breach of the Consignment Contract.

[90] Pursuant to s. 4 of the Limitations Act, 2002, a proceeding shall not be commenced in respect of a claim after the second anniversary of the day on which the claim was discovered. Nygård’s claim for the setoffs is statute-barred.

[91] Turning to Nygård’s claims other than its claim for the setoffs, I find as a fact that up until November 8, 2017, when Mr. Mitzel was examined for discovery as HBC’s representative, that Nygård did not subjectively know that starting in November 2012 and continuing past the Zellers’ Settlement in January 2013, HBC was reducing the “out the door” price of merchandise by coupons, senior discounts, Bay Day discounts, HBC card sales, and employee discounts, etc. I conclude that the executives at Nygård genuinely - but mistakenly - believed that after the Zellers Settlement that HBC would discontinue the practice of reducing the “out the door” price by coupons, etc. HBC’s practice, however, continued and Nygård was subjectively ignorant of the on-going practice. However, I find that there is no genuine issue requiring a trial, and I find as fact that what HBC was doing was knowable with reasonable diligence; therefore, the limitation period for the ongoing breaches of the Consignment Agreements began to run as a series of discrete breaches, each with a two-year limitation period.

[92] HBC never agreed to reverse the setoffs it had taken on its Consignment Agreements. Once the alleged glitch in its technology was identified, HBC never agreed to revert to the former methodology of calculating the “out the door” price for the Allison Daley Consignment Agreement or the Peter Nygård Collection Consignment Agreement. From the outset, HBC explained to Nygård that HBC regarded its former practice of not deducting the coupons etc., from the “out the door” price as a glitch in its information technology system that it had fixed.

[93] After HBC advised Nygård that it had fixed its system, HBC never said that it was restoring the system to return to calculating prices based on Nygård’s NR5 model. It is not the case that Nygård had no way of determining how HBC was calculating the amounts due and owing under the Consignment Agreements or what discounts had been applied to the selling price. All it had to do was ask rather than assume that everything was okay. On the motion for summary judgment, Nygård led no evidence as to inquiries, audits, or reconciliations of the consignment payments notwithstanding that HBC had informed Nygard that consignment payment should be paid on net sales and not on gross sales.

[94] A reasonable consignor doing the scale of business being conducted by Nygård would have confirmed that it was receiving proper payment. Nygård, however, never confirmed or even asked whether HBC’s methodology had reverted exclusively to the NR5 model. Angry and obsessed with collecting the $1.0 million in setoffs, myopically, Nygård overlooked the bigger picture that HBC was noticeably going forward and making deductions for coupons, etc.

[95] It was unreasonable and showed a remarkable lack of due diligence for Nygård to believe that the Zellers Settlement had resolved the dispute about how to calculate the “out the door price” for all the Consignment Agreements. Compensation for the Zellers’ Consignment Agreement setoffs represented less than 1.0% of Zellers Settlement compensation. If Nygård believed that the Zellers Settlement had resolved the dispute about how to calculate the “out the door price” for the HBC Consignment Agreements, which were not being released by the Zellers Settlement, then it should have verified or made any inquiries to ensure that HBC had re‑reconfigured its technology on a go-forward basis, which HBC patently was not doing.

[96] In other words, I find as a fact that using reasonable diligence, Nygård would and should have known that HBC was continuing its practice of deducting coupons etc. from the “out the door” price of the consignment merchandise. With reasonable diligence, Nygård would have discovered its claim.

[97] I find as a fact that with each successive consignment payment made by HBC after January 2013 that the limitation period for that discrete payment began to run. Visualize, when HBC made its consignment payment or payments in January 2013 and underpaid, then Nygård had two years to sue with respect to that January 2013 consignment underpayment.

[98] To be clear, there was no continuing breach but there was a series of periodic breaches. For example, if there was Bay Day sale in January 2013 that reduced the “out the door” price on consignment merchandise, then there was a discrete breach of a periodic payment due under the Consignment Agreements, for which there would be a two-year limitation period. However, HBC’s underpayment for the February 2013 consignment, if any, would be the commission of a further discrete breach of the Consignment Agreements for which there would be a discrete two-year limitation period. In the case at bar, there is no genuine issue for trial that there was no breach of a continuous obligation but there was a breach of a requirement to make periodic payments and thus a series of individual breaches with individual limitation periods.[^31]

[99] I should add that the result in the case at bar would be the same, even if HBC’s breach of contract was characterized as a continuous breach because the two-year limitation period would simply roll, and it would bar claims going back more than two years from the commencement of the action. What Nygård was actually attempting to argue was some form of perpetual or perpetuating cause of action that has no limitation period. There is no such type of limitation period.

[100] When Nygård commenced its action on August 4, 2016, it did not include a claim for the ongoing series of breaches of the Consignment Agreements and thus some of its claims for periodic breaches of contract were already statute-barred. In 2018, Nygård requested an amendment to its Statement of Claim in 2018. When Nygård brought its motion to amend, it tolled the running of the limitation period for the remaining series of breach of contract claims. As noted above, all these claims were either presumptively discovered or found as a fact to have been discovered at the time of the consignment payment with its miscalculation of the “out the door” price. The result of this analysis of the ongoing claims is that for claims that came into existence before February 2, 2016, the claims are statute-barred and for claims that came into existence after February 2, 2016, the claims are not statute-barred.

D. Conclusion

[101] For the above reasons, I grant Nygård’s motion, in part, and I grant HBC’s summary judgment motion, in part. I declare that Nygård’s claims are statute-barred save for merchandise sales that occurred after February 2, 2016.

[102] There has been divided success on the motions. I order the costs of both motions to be costs in the cause.

Perell, J.

Released: September 4, 2018

COURT FILE NO.: CV-16-557932

DATE: 2018/09/04

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Nygård International Partnership

Plaintiff

– and –

Hudson’s Bay Company

Defendant

REASONS FOR DECISION

PERELL J.

Released: September 4, 2018

[^1]: S.O. 2002, c. 24, Sched. B. [^2]: 2014 SCC 7. [^3]: 2014 SCC 8. [^4]: Campana v. The City of Mississauga, 2016 ONSC 3421; Ghaeinizadeh (Litigation guardian of) v. Garfinkle Biderman LLP, 2014 ONSC 4994, leave to appeal to Div. Ct. refused, 2015 ONSC 1953 (Div. Ct.); Lavergne v. Dominion Citrus Ltd., 2014 ONSC 1836 at para. 38; George Weston Ltd. v. Domtar Inc., 2012 ONSC 5001. [^5]: Dawson v. Rexcraft Storage & Warehouse Inc., 1998 CanLII 4831 (ON CA), [1998] O.J. No. 3240 (C.A.); Bluestone v. Enroute Restaurants Inc. (1994), 1994 CanLII 814 (ON CA), 18 O.R. (3d) 481 (C.A.); Canada (Attorney General) v. Lameman, 2008 SCC 14, [2008] 1 S.C.R. 372 at para. 11. [^6]: Toronto-Dominion Bank v. 466888 Ontario Ltd., 2010 ONSC 3798. [^7]: M. (K.) v. M. (H.), 1992 CanLII 31 (SCC), [1992] 3 SCR 6; Novak v. Bond, 1999 CanLII 685 (SCC), [1999] 1 SCR 808; Frohlick v. Pinkerton Canada Ltd. (2008), 2008 ONCA 3, 88 OR (3d) 401 (CA); Independence Plaza 1 Associates, L.L.C. v. Figliolini, 2017 ONCA 44. [^8]: Kamloops v. Nielson (1984), 1984 CanLII 21 (SCC), 10 D.L.R. (4th) 641 (S.C.C.); Central Trust Co. v. Rafuse (1986), 1986 CanLII 29 (SCC), 31 D.L.R. (4th) 481 (S.C.C.); Peixeiro v. Haberman, 1997 CanLII 325 (SCC), [1997] 3 S.C.R. 549. [^9]: Lawless v. Anderson, 2011 ONCA 102 at para. 22; Aguonie v. Galion Solid Waste Material Inc. (1998), 1998 CanLII 954 (ON CA), 38 OR (3d) 161 at p. 170 (C.A.). [^10]: Lawless v. Anderson, 2011 ONCA 102 at para. 22; Aguonie v. Galion Solid Waste Material Inc., (1998), 1998 CanLII 954 (ON CA), 38 OR (3d) 161 at p. 170 (C.A.). [^11]: 2011 ONCA 102. [^12]: Ferrara v. Lorenzetti, Wolfe Barristers and Solicitors, 2012 ONCA 851 at paras. 33 and 70. [^13]: Aguonie v. Galion Solid Waste Material Inc., (1998), 1998 CanLII 954 (ON CA), 38 OR (3d) 161 (C.A.); Ladd v. Brantford General Hospital (2007), 2007 CanLII 45921 (ON SC), 88 OR (3d) 124 (S.C.J.). [^14]: Mark v. Guelph (City) (2011), 2010 ONSC 6034, 104 O.R. (3d) 471 (S.C.J.); Zurba v. Lakeridge Health Corp. (2010), 2010 ONSC 318, 99 OR (3d) 596 (S.C.J.); Greenway v. Ontario (Minister of Transportation) (1999), 1999 CanLII 14797 (ON SC), 44 OR (3d) 296 (Gen. Div.). [^15]: Pickering Square Inc. v. Trillium College Inc., 2014 ONSC 2629, aff’d 2016 ONCA 179; Hamilton (City) v. Metcalfe & Mansfield Capital Corp., 2012 ONCA 156. [^16]: Pollari v. Famous Players Limited Partnership, 2015 ONSC 5121, aff’d 2016 ONCA 180; Longley v. General Motors of Canada Ltd. (2008), 2008 CanLII 10527 (ON SC), 90 O.R. (3d) 536 (S.C.J.); Pepper v. Zellers Inc. (2006), 2006 CanLII 42355 (ON CA), 83 O.R. (3d) 648 (C.A.); Zapfe v. Barnes (2003), 2003 CanLII 52159 (ON CA), 66 O.R. (3d) 397 (C.A.); Soper v. Southcott (1998), 1998 CanLII 5359 (ON CA), 39 O.R. (3d) 737 (C.A.). [^17]: Fennell v. Deol, 2016 ONCA 249; Galota v. Festival Hall Developments Ltd., 2016 ONCA 585, aff’g 2015 ONSC 6177; Longo v. MacLaren Art Centre Inc., 2014 ONCA 526. [^18]: Unegbu v. WFG Securities of Canada Inc., 2015 ONSC 6408, aff’d 2016 ONCA 501; Fontanilla Estate v. Thermo Cool Mechanical, 2016 ONSC 7023; Durham (Regional Municipality) v. Oshawa (City), 2012 ONSC 5803; Bolton Oak Inc. v. McColl-Frontenac Inc., 2011 ONSC 6567; Pepper v. Zellers Inc. (c.o.b. Zellers Pharmacy) (2006), 2006 CanLII 42355 (ON CA), 83 O.R. (3d) 648 (C.A.); Bhaduria v. Persaud (1998), 1998 CanLII 14846 (ON SC), 40 O.R. (3d) 140 (Gen. Div.). [^19]: Arcari v. Dawson, 2016 ONCA 715; Lima v. Moya, 2015 ONSC 324, aff’d 2015 ONSC 3605 (Div. Ct.). [^20]: Ontario Flue-Cured Tobacco Growers Marketing Board v. Rothmans, Benson & Hedges, Inc., 2016 ONSC 3939 (Ont. Div. Ct.); Webb v. TD Waterhouse Canada Inc., 2016 ONSC 7153. [^21]: Peixeiro v. Haberman, 1997 CanLII 325 (SCC), [1997] 3 S.C.R. 549; Lawless v. Anderson, 2011 ONCA 102; Barry v. Pye, 2014 ONSC 1937. [^22]: Pollari v. Famous Players Limited Partnership, 2015 ONSC 5121; Slack v. Bednar, 2014 ONSC 3672; Barry v. Pye, 2014 ONSC 1937; White v. Mannen, 2011 ONSC 1058. [^23]: Pepper v. Sanmina-Sci Systems (Canada) Inc., 2017 ONSC 1516. [^24]: 2012 ONCA 218. [^25]: Winmill v. Woodstock Police Services, 2017 ONCA 962; Independence Plaza 1 Associates, L.L.C. v. Figliolini, 2017 ONCA 44; 407 ETR Concession Co. v. Day, 2016 ONCA 709, rev’g 2014 ONSC 6409; Kadiri v. Southlake Regional Health Centre, 2015 ONSC 621 aff’d, 2015 ONCA 847; U-Pak Disposals (1989) Ltd. v. Durham (Regional Municipality), 2014 ONSC 1103. [^26]: Pickering Square Inc. v. Trillium College Inc., 2016 ONCA 179 at para. 24; Smith v. Empire Life Insurance Co. (1996), 1996 CanLII 8134 (ON SC), 19 CCEL (2d) 171 (Ont. Gen. Div.), leave to appeal refused, [1996] O.J. No. 3113 (C.A.). [^27]: Pickering Square Inc. v. Trillium College Inc., 2014 ONSC 2629, aff’d 2016 ONCA 179; Smith v. Empire Life Insurance Co., 1996 CanLII 8134 (ON SC), [1996] O.J. No. 1009 (Gen. Div.); Wallace v. Wallace, 2012 BCSC 1216. [^28]: Pickering Square Inc. v. Trillium College Inc., 2016 ONCA 179; Goorbarry v. Bank of Nova Scotia (c.o.b. Scotiabank), 2011 ONCA 793; Wilson’s Truck Lines Ltd. v. Pilot Insurance Co. (1996), 1996 CanLII 1012 (ON CA), 31 O.R. (3d) 127 (C.A.). [^29]: (1940), 64 C.L.R. 221 at 236 (Aust. H.C.). [^30]: Larking v. Great Western (Nepean) Gravel Ltd. (in Liquidation), (1940) 64 C.L.R. 221 at p. 236 (Aust. H.C.); Bridgesoft Systems Corp. v. British Columbia, 2000 BCCA 313. [^31]: Pickering Square Inc. v. Trillium College Inc., 2016 ONCA 179 at para. 24 (Ont. C.A.); Smith v. Empire Life Insurance Co. (1996), 1996 CanLII 8134 (ON SC), 19 CCEL (2d) 171 (Ont. Gen. Div.), leave to appeal refused, [1996] O.J. No. 3113 (C.A.).