Court File and Parties
COURT FILE NO.: CV-14-505345 DATE: 2019-05-27 SUPERIOR COURT OF JUSTICE - ONTARIO
RE: MARKPLAN INC., EDWARD CONROY and MARYON REBECCA CONROY, Plaintiffs AND: SAM OSMAN, MAGAZINE ACQUISITION CORP., KAIROS TRANSMEDIA INC., SPILLWALL PRODUCTIONS INC., and WILLIAM STUART, Defendants
BEFORE: Schabas J.
COUNSEL: Stewart Thom, Counsel, for the Plaintiffs David Fogel, Counsel, for the Defendants
HEARD: May 15, 2019
Endorsement
[1] This is a motion for summary judgment by the plaintiff, seeking to dismiss a counterclaim issued in September 2018 on the basis that it is statute-barred under the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B.
[2] The litigation arises out of a dispute over the sale of assets of a business by Markplan Inc. to Magazine Acquisition Corp (“MAC”) in 2011. The facts giving rise to the counterclaim arose no later than the fall of 2012 when the plaintiffs withheld payment of a government subsidy from the defendants, which it is said is contrary to the sale agreement.
[3] A number of lawsuits have arisen from the fallout between the parties.
[4] An action for wrongful dismissal was brought by Edward and Rebecca Conroy against some of the defendants (MAC and Kairos Transmedia, Inc.) in January 2013, which was defended and includes a counterclaim against Edward and Rebecca Conroy seeking relief which overlaps with the relief sought in the counterclaim before me. This action is now ready for trial, but has been adjourned pending the outcome of this motion since, if the counterclaim can proceed, the defendants by counterclaim will seek consolidation of this proceeding with the employment action.
[5] In April 2013, Sam Osman, who financed MAC’s acquisition of the assets of Markplan, commenced an action in Alberta against the plaintiffs seeking relief that overlaps with the counterclaim in the employment litigation and this action. That action was dismissed on jurisdictional grounds by the Alberta Court of Queen’s Bench on May 11, 2017, and that result was upheld by the Alberta Court of Appeal on June 11, 2018.
[6] In August 2018, a proceeding was commenced by Osman in Texas seeking similar relief to that sought in Alberta and in the counterclaim in the employment action. This action has been dismissed by a court in Texas.
[7] The plaintiffs commenced this action in Ontario in 2014. However, the action did not advance and no steps were taken in it until September 2018, when the defendants served the statement of defence and counterclaim that is the subject of this motion.
[8] As noted, the facts giving rise to the counterclaim arose no later than the fall of 2012, and the defendants knew of it at or around that time, as can be seen in their pleadings in the employment and Alberta actions in 2013. Accordingly, the counterclaim in question is brought long after the two year limitation period under the Limitations Act and the plaintiffs therefore bring this motion to have the counterclaim dismissed.
[9] The defendants/plaintiffs by counterclaim raise four grounds on which they submit the counterclaim should proceed. In the reasons that follow, I address and reject each of those grounds, and grant summary judgment dismissing the counterclaim.
1. Was There A Tolling Agreement?
[10] It is asserted that there was a tolling agreement between the parties. Between December 2014 and February 2015, there were communications between counsel arising from the motion to dismiss the Alberta action. This included a forbearance by the plaintiffs in requiring a defence to this action, and an agreement “freezing any further steps” in all the actions “to facilitate discussions regarding potential for resolution.” Those discussions foundered not long after, in early 2015. There was no discussion of tolling of limitation periods, or of forbearance respecting any counterclaim. Indeed, to the extent that limitation periods were addressed at all in the correspondence, it was by the defendants, whose counsel noted that if the Alberta action was dismissed then an action would be commenced in Texas where “the relevant limitation period…is four years.”
[11] The law is clear that an enforceable tolling agreement under s. 22 of the Limitations Act must be “an express and bilateral agreement between the parties that contains a clear and unambiguous request by one party to toll a limitation period and an equally clear and unambiguous affirmative response by the other”: see PQ Licensing S.A. v. LPQ Central Canada Inc., 2018 ONCA 331 at para. 40. The Court of Appeal has also held that “a mere promise to forbear does not suspend a limitation period”: Hamilton (City) v. Metcalfe & Mansfield Capital Corp., 2012 ONCA 156 at para. 80.
[12] The correspondence between counsel in this case does not meet the threshold of certainty required for a tolling agreement. It never mentions tolling the Ontario limitation period, or the possibility of a counterclaim, and the “freezing” point is about all the actions pending settlement discussions which did not last. Further, the defendants were alive to the concerns about limitations by referring to the Texas limitation period, but did not address the Ontario limitation period.
[13] If there was any doubt about a lack of agreement, it was later reflected in a submission made by the plaintiffs in the Alberta proceeding in which plaintiffs’ counsel, in addressing the loss of juridical advantage issue, noted that “Mr Osman was advised in August of 2013 of the Defendants’ [plaintiffs in this proceeding] intention to challenge the appropriateness of the forum of Alberta, yet he took no steps to either commence an action in an alternative jurisdiction in order to protect his rights or seek to negotiate a tolling agreement.” This submission was made in a brief served on June 30, 2016. If Mr. Osman and the defendants thought before then that they had a tolling agreement, they ought to have raised it at that time. They did not, and instead waited an additional two years and three months before serving the impugned defence and counterclaim in this action.
[14] In sum, there was no agreement to toll the Ontario proceeding and any possible counterclaim.
2. Did This Action Only Become “Appropriate” Following The Dismissal Of The Alberta Action?
[15] The defendants submitted that s. 5(1)(a)(iv) of the Limitations Act applies, which provides that a claim is only “discovered…on the day on which the person first knew…that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it”. It is asserted that the counterclaim only became appropriate following the final dismissal of the Alberta action by the Alberta Court of Appeal on June 11, 2018.
[16] This section of the Act requires a consideration of whether it was “legally appropriate”, i.e. there must be a reason for the delay rooted in law; it cannot be for “tactical reasons or in circumstances that would later require the Court to decide when settlement discussions had become fruitless”: 407 ETR Concession Co. v Day, 2016 ONCA 709 at para. 47; Federation Insurance Co. of Canada v. Markel Insurance Co. of Canada, 2012 ONCA 218 at para. 34.
[17] The courts have identified two categories in which a delay may be legally appropriate. The first is when a claimant may be relying on a defendant to fix the problem or rectify the harm where the defendant has superior knowledge of the situation, such as may arise between a patient and her surgeon. The second is when the plaintiff is pursuing other legal processes, such as statutory administrative procedures that have the potential to resolve the dispute. This second category accords with the administrative law rule that resort to courts should only be made following the completion of all administrative procedures: Presidential MSH Corp. v. Marr, Foster & Co. LLP, 2017 ONCA 325 at paras. 20 – 29; 407 ETR Concession Co. v Day, 2016 ONCA 709.
[18] In this case, it is submitted that the second category applies. I disagree. Mr. Osman, who is directing this litigation, made a tactical decision to sue in Alberta, and was alive to the limitation issues in other jurisdictions where the defendants might also sue. Indeed they were already asserting similar claims against at least some of the plaintiffs in the counterclaim in the employment action in Ontario. Alberta did not provide a statutory, administrative law route to obtain relief, but was chosen based on a position Mr. Osman took, that Alberta was the agreed jurisdiction – a position immediately disputed by the plaintiffs and rejected by the Court of Queen’s Bench which found “as a fact that Mr Conroy did not agree on behalf of Markplan to Alberta as the choice of law and venue.”
[19] Nor is this a case like Independence Plaza 1 Associates, LLC v. Figlioni, 2017 ONCA 44, which dealt with enforcement of a foreign judgment where the limitation period runs from the final conclusion and judgment of the foreign proceeding. The difference there is the foreign court, like an administrative body, had jurisdiction and it was legally appropriate to complete that proceeding before commencing a proceeding in Ontario.
[20] The defendants submit that it was legally appropriate to wait for the conclusion of the Alberta jurisdiction issue in order to avoid multiplicity of proceedings. No authority was provided to me to support this proposition. Counsel also submitted that there was a concern that had the counterclaim proceeding been commenced in Ontario it might have prejudiced their position that Alberta was the appropriate jurisdiction.
[21] There are two things to say about these positions. First, the concern about how asserting the counterclaim in Ontario might have impacted the Alberta court’s receptiveness to assuming jurisdiction is a tactical consideration, not a legal consideration. As to the concern about multiplicity of proceedings, this arises whenever there is a dispute over jurisdiction and forum, and litigants must make decisions as to how to protect their positions in the possible forums for resolving the dispute. The alternative, advanced by the defendants in this case, is that time only begins to run in a second, or other jurisdiction after the first, or subsequent jurisdiction, has finally determined that it should not hear the case. And if there was a third jurisdiction, presumably the claimant could wait and bring an action after a second jurisdiction has been rejected. This would negate the purpose of limitation periods.
[22] The application of section 5(1)(a)(iv) “depends on the specific factual setting of each individual case”: Nasr Hospitality Services Inc. v. Intact Insurance, 2018 ONCA 725 at para. 46. Here, both the legal concerns outlined above, and the specific facts in this case which involved a tactical decision by Mr. Osman to seek relief in Alberta and not assert the claim in Ontario in the face of a well-founded objection, not to mention all the other factors pointing to Ontario as the appropriate jurisdiction, make application of the section untenable.
3. Are The Plaintiffs Estopped From Objecting To The Counterclaim?
[23] The defendants also submitted that the plaintiffs are estopped by their conduct from objecting to the counterclaim, relying on the same correspondence as they did in asserting there was a tolling agreement. This argument has no support and, in any event, is rebutted by the plaintiffs’ position taken in 2016 in its brief to the Court of Queen’s Bench that there was no tolling agreement.
4. Is This An Appropriate Case For Summary Judgment?
[24] Finally, the defendants submit that this is not an appropriate case for summary judgment. I am mindful that granting summary judgment on the basis of a limitations defence requires making findings of fact, as I have done above. Counsel submits that this ought not to be done without hearing evidence from the parties and counsel as to the nature of the agreement that he submits is a tolling agreement.
[25] However, in this case the two main protagonists – Osman and Eric Conroy – have provided evidence by way of affidavit and put their best foot forward through the documentary records produced. I have not been directed to any evidence that would further assist me and am satisfied that I can reach a fair and just determination based on the record. The test for a tolling agreement is a high one which is not met and there is nothing to suggest further evidence would change that conclusion. The application of section 5(1)(a)(iv) of the Limitations Act is largely, though not exclusively, a legal question based on facts which are clear on the record and which will not change at trial.
[26] Accordingly, a trial is not required and the motion is granted. The counterclaim is dismissed.
[27] The plaintiffs requested, if I dismissed the counterclaim, that I grant them leave to discontinue the action. However, at the hearing of the motion I was advised that this will happen administratively in any event. Since there was no motion to discontinue before me, I leave the future of the action, if any, to the usual procedures.
5. Costs
[28] As to costs, the plaintiffs presented a bill of costs showing actual time and disbursements totaling $56,591.60. Counsel submitted an appropriate partial indemnity award which would be 60% of that, or approximately $34,000. The defendants provided a costs outline on a partial indemnity scale seeking $22,184.25, and took issue with portions of the plaintiffs’ bill.
[29] The Court has broad discretion when determining the issue of costs under Rule 57. The overall objective is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular circumstances, rather than an amount fixed by actual costs incurred by the successful litigant: Boucher v. Public Accountants Counsel for Ontario, (2004), 71 OR (3d) 291 (CA). I have considered these factors, as well as the principle of proportionality, keeping in mind that the Court should seek to balance the indemnity principle with the fundamental objective of access to justice.
[30] As the plaintiffs were successful, they should have their costs on a partial indemnity basis. I fix costs of the motion at $28,000, including disbursements and taxes.
Schabas J. Date: May 27, 2019