Court File and Parties
COURT FILE NO.: CV-16-544965; and CV-16-546354 DATE: 20190722 ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
Court File No. CV-16-544965 MICHAEL SHTAIF Plaintiff (Respondent) â and â STEVENSONS LLP Defendant (Moving Party)
AND BETWEEN:
Court File No. CV-16-546354 EUGENE BOKSERMAN Plaintiff (Respondent) â and â STEVENSONS LLP Defendant (Moving Party)
Counsel: Michael Shtaif, Self-represented Carlo Di Carlo, for the Defendant (Moving Party), Stevensons LLP Eugene Bokserman, Self-represented
HEARD: December 7, 2018
REASONS FOR DECISION
Justice J. Copeland
[1] The defendant brings a motion for summary judgment in two companion actions. The plaintiffsâ claims are virtually identical. The claims involve allegations of professional negligence on the part of the law firm that represented them in a civil fraud trial.
[2] The defendant argues that the plaintiffsâ claims must fail on the basis that they are barred by issue estoppel. The defendant argues that the central issue in the claims has already been decided adversely to the plaintiffs in the appeal of the underlying civil fraud case. In the alternative, the defendant argues that if the technical requirements of issue estoppel are not found to be established, it would be an abuse of process to allow the plaintiffs to pursue their claims.
[3] Subsequent to the service of the defendantâs summary judgment motion, the plaintiffs filed a cross-motion arguing that if the claims as pleaded are barred by the doctrine of issue estoppel, they ought to be permitted to amend their claims to raise other allegations to which the doctrine of issue estoppel would not apply. The defendant argues that leave to amend the claims should not be granted, as most of the proposed amendments raise new claims after the expiration of the limitation period, and the balance of the proposed amendments are either frivolous, or also barred by issue estoppel.
[4] In the result, for reasons I explain below, I find that the plaintiffsâ claims are barred by the doctrine of issue estoppel.
[5] I further reject the plaintiffsâ motion for leave to amend their pleadings. Most of the proposed amendments raise new claims after the expiration of the limitation period. The balance of the proposed amendments are either frivolous, or are also barred by issue estoppel.
The Plaintiffsâ claims against the defendant and the background to these actions
[6] The defendant acted as the plaintiffsâ solicitor in a civil action concerning allegations of fraud (the âMidland fraud actionâ). That action involved claims against the plaintiffs that they engaged in fraudulent misrepresentation, breach of fiduciary duty, and conspiracy.
[7] The defendant was retained by the plaintiffs in 2009 to defend the Midland fraud action, and to prepare a counterclaim. In their defence in the Midland fraud action, the plaintiffs denied all of Midlandâs claims against them.
[8] In the Midland fraud action, the plaintiffs were ultimately found liable for fraud. The trial judge found that the Midland plaintiffs had successfully made out claims of fraudulent misrepresentation, conspiracy, and breach of fiduciary duty against Mr. Shtaif, and a claim of fraudulent misrepresentation against Mr. Bokserman. The trial judge awarded damages against Mr. Bokserman in the amount of US $1.5 million, and against Mr. Shtaif in the amount of US $59.6 million: see reasons of Sanderson J., February 19, 2014, 2014 ONSC 997.
[9] The plaintiffs appealed the decision of Sanderson J. to the Court of Appeal. The defendant declined to represent the plaintiffs in that appeal. The plaintiffs engaged new counsel for the appeal.
[10] One of the grounds raised in the appeal was that the rule in Foss v. Harbottle (1843), 67 E.R. 189, provided a complete answer to the fraud claim, and on that basis the appeal should be allowed: see decision of the Court of Appeal, 2017 ONCA 320 at para. 12. The rule in Foss v. Harbottle provides that individual shareholders have no cause of action for wrongs done to a corporation.
[11] The Court of Appeal upheld the findings of fraudulent misrepresentation and conspiracy against Mr. Shtaif, and fraudulent misrepresentation against Mr. Bokserman in a decision rendered April 20, 2017, 2017 ONCA 320. However, it reduced the amount of damages awarded against Mr. Shtaif to US $8.3 million. In upholding the findings of liability, the Court of Appeal expressly rejected the argument that the rule in Foss v. Harbottle applied to the facts of the Midland fraud action: 2017 ONCA 320 at paras. 116-120.
[12] On January 21, 2016 and February 10, 2016, the plaintiffs launched claims against the defendant alleging solicitorâs negligence. The claims are virtually identical. Both allege that the defendant was negligent by failing to raise the rule in Foss v. Harbottle as a defence to the Midland fraud action. Both claims alleged that the defendantâs failure to raise the rule in Foss v. Harbottle caused them to suffer damages. The claims are also pleaded as breach of contract, arguing that it was an implied term of the contract between the plaintiffs and the defendant that he would provide competent legal services. In substance the breach of contract allegation is the same as the professional negligence allegation, and is also based on the failure to raise Foss v. Harbottle.
[13] I have reviewed the statements of claim of both plaintiffs, which are virtually identical. I accept the argument made by the defendant that all of the material facts pleaded relate to the claim that it was negligent for the defendant not to raise the Foss v. Harbottle issue in the previous trial. Put differently, the statements of claim do not raise any other allegation of solicitorâs negligence apart from the Foss v. Harbottle issue.
[14] As I will outline below, the central argument of the defendant in this summary judgment motion is that the plaintiffs raised the issue of the application of Foss v. Harbottle in their appeal in the Midland fraud action, and the Court of Appeal decided that the rule in Foss v. Harbottle was not applicable to the case. The defendant argues that the Court of Appeal decision on this issue creates an estoppel against the plaintiffs now raising the issue in their claims against the defendant, or that it is an abuse of process for the plaintiffs to make this claim in the face of the Court of Appeal decision. In other words, in light of the Court of Appealâs finding that the rule in Foss v. Harbottle had no application to the Midland Fraud action, the defendant cannot have been negligent for failing to plead it as a defence or raise it in the trial.
Note Regarding procedural history of this motion
[15] Oral argument of this motion was heard on December 7, 2018. Whether the Court of Appeal judgment which is said to create the estoppel was a final decision was a live issue before me. During the course of the oral argument, the plaintiffs made the submission that the Court of Appeal decision was not final because they had filed a leave application to the Supreme Court.
[16] This submission by the plaintiffs during the motion was the first that counsel for the defendant had heard of this leave application, since the defendant was not directly a party to that proceeding.
[17] The plaintiffs were not able to clarify during the oral hearing which Court of Appeal decision they were seeking leave to appeal in relation to (as they had sought two reconsiderations of the Court of Appealâs decision, both of which were dismissed by the Court of Appeal).
[18] As a result, after hearing full argument, I adjourned the hearing of the motions in order for counsel for the defendant and the plaintiffs to provide further written submissions about the Supreme Court leave application. I also indicated that once I had received those submissions, I would advise if I would direct a further oral hearing.
[19] I note that the documentation provided by the plaintiffs at the oral hearing of the motion in relation to the leave application indicated that the Supreme Court had not yet accepted the application for leave to appeal or assigned it a file number, and that the documents submitted were under review.
[20] Counsel for the defendant provided further written submissions in relation to the status of the Supreme Court leave application on January 31, 2019.
[21] I advised on February 8, 2019, that I did not require further oral argument, and I would take the decision under reserve. I further requested that the plaintiffs and counsel for the defendant advise me of any decision by the Supreme Court on the leave application, or any further correspondence sent by the Supreme Court.
[22] On February 25, 2019, Mr. Shtaif submitted by email a letter from the Registry of the Supreme Court of Canada, dated February 15, 2019, indicating that the application for leave to appeal had been accepted for filing, and assigned a court file number (No. 38507).
[23] On May 2, 2019, Mr. Shtaif advised by email that the Supreme Court had dismissed the leave application that day (Court file No. 38507, May 2, 2019). I note that the decision dismissing the application for leave to appeal clearly states that the application was in relation to the Court of Appeal decision of September 11, 2018, 2018 ONCA 743. This was the plaintiffsâ second motion for reconsideration of the Court of Appealâs decision.
Law in relation to summary judgment
[24] In considering whether there is a genuine issue requiring a trial, I must consider if the summary judgment process, in particular, the record on the motion: (1) allows me to make the necessary findings of fact, including any necessary findings of credibility; (2) allows me to apply the law to the facts; and, (3) if summary judgment is a proportionate, more expeditious and less expensive means to achieve a just result. If I find that there are genuine issues requiring a trial, and the record on the motion as it stands is insufficient to allow me to determine the genuine issues requiring a trial, I must consider if I can decide the issues using the fact-finding resources available under the summary judgment rule: Hryniak v. Mauldin, [2014] 1 S.C.R. 87, 2014 SCC 7.
[25] The parties to a motion for summary judgment must put their best foot forward. The motion judge should assume that the record on the motion contains, in some form, all of the evidence which would be available for a trial. Self-serving affidavits containing bald allegations or denials without providing supporting evidence or detail are not sufficient to create a genuine issue for trial. Sweda Farms v. Egg Farmers of Ontario, 2014 ONSC 1200 at paras. 26-27, 33, affirmed, 2014 ONCA 878.
[26] For reasons I explain below, I find that I am able to make the necessary findings of fact, and apply the law to the facts on a motion for summary judgment in relation to the issue of whether the plaintiffsâ claims are barred by the doctrine of issue estoppel or by abuse of process. I note that this is not a summary judgment motion which requires significant fact-finding or assessment of issues of credibility. Rather, it is a matter of assessing the legal impact of the Court of Appeal decision in the Midland fraud action on the plaintiffsâ claims against the defendant. I find that summary judgment is a proportionate, more expeditious, and less expensive means to justly resolve this matter than a trial.
The Law in relation to issue estoppel
[27] The doctrine of issue estoppel and the related doctrine of abuse of process exist to prevent the harm caused to the administration of justice by the unnecessary relitigation of issues already finally decided by the courts. The doctrines aim to prevent duplicative litigation, inconsistent results, wasteful use of court resources, and costs to parties which result from relitigating matters already decided: Danyluk v. Ainsworth Technologies Inc., [2001] 2 S.C.R. 460, 2001 SCC 44 at para. 18; Toronto (City) v. CUPE, [2003] 3 S.C.R. 77, 2003 SCC 63 at paras. 22-32, 35-55.
[28] The doctrine of issue estoppel requires a court to consider four issues (Danyluk at paras. 25, 33):
(i) Has the same question been decided in a prior proceeding? (ii) Was the decision which is said to create the estoppel a final decision? (iii) Were the parties to the previous decision or their privies the same persons as the parties to the proceedings in which the estoppel is raised, or their privies? (iv) If the first three criteria are met, should the court exercise its discretion not to apply issue estoppel?
Application of the law to the plaintiffsâ claims â Is there a genuine issue requiring a trial regarding the defence of issue estoppel?
[29] Considering the record before me on the motion, I find that there is no genuine issue requiring a trial regarding the defence of issue estoppel. For this reason, there is no genuine issue requiring a trial regarding liability.
(i) The Same question was decided in the prior proceeding as the plaintiffs now raise in this proceeding
[30] This aspect of the analysis requires me to compare the claims currently advanced by the plaintiffs, as set out in their statements of claim, to the issue decided by the Court of Appeal in its decision regarding the Midland fraud action.
[31] I have reviewed the statements of claim of both plaintiffs. In substance the claims of both plaintiffs are claims of solicitorsâ negligence, which raise as the only alleged negligence the failure to raise Foss v. Harbottle in the Midland fraud action. The statements of claim contain no allegations of material fact of other actions (or omissions) taken by the defendant in its representation of them that are alleged to have been negligent.
[32] I turn then to the Court of Appeal decision in the Midland fraud action. The Court of Appeal considered the Foss v. Harbottle issue at paragraphs 106-120 of its reasons of April 20, 2017. The Court of Appeal upheld the decision of the trial judge.
[33] In relation to the Foss v. Harbottle issue, the Court of Appeal made three holdings: (i) that the Foss v. Harbottle issue had not been raised at trial, and it would be unfair to allow the appellants (who included the plaintiffs in the matter before me) to raise the issue for the first time on appeal (at paras. 106-115); (ii) that reliance on Foss v. Harbottle was inconsistent with the position the appellants took at trial in their counterclaim (at paras. 106-115); and, (iii) that in any event, the principles in Foss v. Harbottle had no application on the facts of the Midland fraud action because the claims at issue were personal claims of the shareholder, not claims based on alleged harms to the corporation (at paras. 116-120). The defendant argues that the third of these holdings is a decision which creates an estoppel in the actions before me (or gives rise to an abuse of process if the plaintiffs are permitted to pursue their claims).
[34] I accept the defendantâs argument that in holding that the principle Foss v. Harbottle did not apply to the facts of the Midland fraud action, the Court of Appeal decided facts that are essential to the plaintiffsâ current claim of solicitorâs negligence against the defendant in a manner that has the effect that the plaintiffsâ claims against the defendant cannot be sustained.
[35] Without getting into every aspect of the cause of action for solicitorâs negligence, two elements that are essential to such a claim are: (i) that the solicitorâs conduct fell below the standard of a reasonably competent lawyer in the circumstances (i.e., breach of the duty of care); and (ii) that the solicitorâs conduct in breaching the duty of care caused damage to his former client. I will address each of these issues in turn.
[36] First, in this case, in order for the defendantâs conduct in not raising the Foss v. Harbottle issue in the Midland fraud action to be found to fall below the standard of a reasonable lawyer, it would be necessary to find that the principle in Foss v. Harbottle had some application to the Midland fraud action. Put differently, if the principle in Foss v. Harbottle had no application to the Midland fraud action, then the defendant could not be negligent for failing to raise it as a defence in the trial proceedings. The Court of Appeal decision in the Midland fraud action held that the principle in Foss v. Harbottle had no application to the action.
[37] Second, in light of the Court of Appealâs holding that the principle in Foss v. Harbottle had no application to the Midland fraud trial, the actions of the defendant in failing to raise it as a defence in the fraud trial could not be found to have caused any damage to the plaintiffs.
[38] For these reasons, I find that the decision of the Court of Appeal in the Midland fraud action that the rule in Foss v. Harbottle had no application to the case decided the same issue that the plaintiffs seek to raise in their negligence actions against the defendant.
(ii) The Decision said to create the estoppel is final
[39] The decision which is said to create the issue estoppel is the Court of Appeal decision of April 20, 2017, 2017 ONCA 320. I am satisfied that it is a final decision.
[40] The plaintiffs twice sought reconsideration of the Court of Appeal decision of April 20, 2017. The Court of Appeal rejected both of these motions for reconsideration: January 15, 2018, 2018 ONCA 33; and September 11, 2018, 2018 ONCA 743. I note that in the decision dismissing the second motion for reconsideration, the Court of Appeal also ordered that the plaintiffs could not initiate any further proceedings in that court unless they first paid their outstanding costs of the appeal and the first motion to reconsider, and obtained leave from the panel of the Court of Appeal that heard the appeal to bring the proceeding.
[41] The plaintiffs did not seek leave to appeal to the Supreme Court of Canada of either the Court of Appeal decision of April 20, 2017 [1], or the first motion for reconsideration. As noted above, the plaintiffs sought leave to appeal from the Court of Appealâs decision dismissing their second motion for reconsideration (September 11, 2018, 2018 ONCA 743). The Supreme Court of Canada dismissed that leave application on May 2, 2019.
[42] The defendant argues that whether or not leave were granted, a leave application in relation to the Court of Appeal dismissing the plaintiffsâ second motion for reconsideration (a decision released September 11, 2018) could not change the finality of the initial Court of Appeal decision of April 20, 2017, particularly as neither motion for reconsideration raised the Foss v. Harbottle issue. This argument has much force, but I do not need to decide this issue on this basis, since leave to appeal was not granted. Even if it were theoretically possibly for a decision granting leave from the second reconsideration motion to affect the finality of the initial Court of Appeal decision of April 20, 2017 (a proposition which I doubt), since leave was not granted by the Supreme Court of Canada from any of the Court of Appeal decisions, they are all now final decisions.
[43] Thus, I find that the Court of Appeal decision of April 20, 2017 is a final decision.
(iii) The Parties to both proceedings are the same or their privies
[44] There is no question that the plaintiffs were parties to the Midland fraud appeal that gave rise to the Court of Appeal decision said to create the issue estoppel, and also are parties to action in which the defendant brings the summary judgment motion. The plaintiffs were represented by counsel in the Court of Appeal proceedings which gave rise to the decision said to create the estoppel. In this sense there is no unfairness to the plaintiffs in a finding that they are bound by the Court of Appeal decision.
[45] The only issue with respect to whether the parties are the same is whether it matters that the defendant in this action was not a party in the Court of Appeal proceedings regarding the Midland fraud action. That is, even though the defendant was not a party to the Midland fraud appeal, is he a privy such that issue estoppel can apply?
[46] The Supreme Court of Canada has held that the concept of privity should be applied with some flexibility: Danyluk at para. 60; Ontario v. OPSEU, [2003] 3 S.C.R. 149, 2003 SCC 64 at para. 11; Toronto v. CUPE at paras. 25-32.
[47] In my view there is sufficient privity for the doctrine of issue estoppel to apply. The Court of Appealâs holding on the Foss v. Harbottle issue raised in the appeal of the Midland fraud action has a direct impact on at least one issue in the plaintiffsâ solicitorâs negligence action against the defendant. Although the Court of Appeal was not called upon to rule in the Midland fraud appeal on the issue of whether the defendant in these actions was negligent, it did rule on whether the rule in Foss v. Harbottle applied to the Midland fraud action. As outlined above, the Court of Appeal ruled that the rule in Foss v. Harbottle had no application to the Midland fraud action. In my view, the current action and the Midland fraud action are sufficiently factually linked that the defendant is a privy on this issue.
[48] The link can be seen by considering the impact on the present litigation had the Court of Appeal reached the opposite conclusion, and held in the Midland fraud action that the rule in Foss v. Harbottle did apply to the Midland fraud action. Had the Court of Appeal made that holding, in my view, the defendant in these actions would not have been able to challenge that holding in the negligence action. He would be free to argue that his representation of the plaintiffs in the other action was not negligent, but it would be a collateral attack on the Court of Appeal decision in the Midland fraud appeal to argue that the rule in Foss v. Harbottle did not apply (had the Court of Appeal held that it did). In that sense, in my view, the defendant is sufficiently privy to the Midland fraud appeal proceedings for issue estoppel to apply.
(iv) Discretion not to apply issue estoppel
[49] In the circumstances of this case, I find that it is not appropriate to exercise my discretion not to apply issues estoppel. The case law on this supports the proposition that courts should be cautious in exercising their discretion not to apply issue estoppel where the other three criteria for its application are met (at least where the prior decision at issue is the decision of a court, as opposed to an administrative tribunal): Danyluk at paras. 62-63, 68-81.
[50] In the circumstances of this case, I find that there would be no injustice caused to the plaintiffs in applying the doctrine of issue estoppel. The plaintiffs were represented by counsel in the appeal to the Court of Appeal in the Midland fraud action that resulted in the Court of Appealâs decision of April 20, 2017 that the defendant argues creates the issue estoppel. There was a two-day appeal hearing. The Court of Appeal issued a lengthy and considered decision.
[51] For these reasons, I find that the plaintiffsâ claims of solicitorâs negligence and breach of contract are barred by the doctrine of issue estoppel. As such, there is no genuine issue requiring a trial on the issue of liability.
Abuse of process
[52] In the event that I am wrong that the technical doctrine of issue estoppel applies, I find that allowing the plaintiffs to pursue their claim of solicitorâs negligence based on the failure to raise Foss v. Harbottle would amount to an abuse of process.
[53] In this context, the doctrine of abuse of process is concerned with similar principles as issue estoppel, including judicial economy, consistency, finality, and the reputation of the administration of justice. I note that the Supreme Court has endorsed the application of the doctrine of abuse of process in cases where there may be a technical issue about whether the same parties or their privies requirement for issue estoppel is met, but where it is clear an issue has already been finally decided, and it would not cause unfairness to the parties to prevent relitigation of the issue: Toronto v. CUPE at para. 37.
[54] In this case, in light of the Court of Appealâs holding at paragraphs 116-120 of the Midland fraud appeal decision that the principle in Foss v. Harbottle had no application to the case, in my view it would be an abuse of process to allow the plaintiffs to proceed with their claims that the defendant was negligent in not raising the Foss v. Harbottle issue in that case at trial.
[55] The plaintiffsâ claims relying on Foss v. Harbottle engage the central concerns that the doctrines of issue estoppel and abuse of process are designed to guard against. The Court of appeal has already decided that Foss v. Harbottle had no application to the Midland fraud trial. Allowing the plaintiffs to relitigate this issue would result in either the waste judicial resources by allowing the issue to be litigated again, or potentially lead to inconsistent findings: Toronto v. CUPE at para. 51.
[56] Thus, even if the plaintiffsâ claims of solicitorâs negligence and breach of contract are not barred by the doctrine of issue estoppel, they are barred by the doctrine of abuse of process. As such, there is no genuine issue requiring a trial on the issue of liability.
The Plaintiffsâ motion to amend their claims
[57] The plaintiffs argue in the alternative that if the claims as pleaded are barred by the doctrine of issue estoppel, they ought to be permitted to amend their claims to raise other allegations to which the doctrine of issue estoppel would not apply. I reject this argument. In my view the limitation period to add new claims to the plaintiffsâ actions has clearly expired.
[58] The defendant argues that the majority of amendments the plaintiffs now seek are statute barred. They deal with allegations about the defendantâs conduct during the trial of the Midland fraud action. As such, the plaintiffs would have been aware of the issues at the latest when the trial judge rendered judgment on February 19, 2014. The defendant argues that the balance of the proposed amendments are frivolous.
[59] The law is not in dispute that the plaintiffs require leave of the court to amend their pleadings at this stage of the proceedings. Pursuant to rule 26.01, leave to amend pleadings shall be granted unless the responding party can show that it would suffer non-compensable prejudice: 1588444 Ontario Ltd. v. State Farm, 2017 ONCA 42 at para. 25.
[60] Non-compensable prejudice will arise where the amended pleadings are scandalous, frivolous, vexatious, an abuse of the courtâs process, or otherwise disclose no reasonable cause of action. A presumption of prejudice will also arise where a plaintiff seeks to amend his pleading to add a new cause of action after a limitation period has expired. Further particulars of an allegation already pleaded, or alternative relief based on facts already pleaded may be allowed by way of amendment after a limitation period has expired. However, amendments cannot add new material facts, or a fundamentally different cause of action: Frohlick v. Pinkerton Canada Limited, 2008 ONCA 3 at paras. 16-24; Dee Ferraro Ltd. v. Pellizzari, 2012 ONCA 55.
[61] In considering an issue of whether leave to amend should not be granted because a limitation period has expired, a court should engage in a two-step analysis: (i) has the limitation period expired on the new proposed claims? (ii) if so, can the facts pleaded in the initial claim sustain the new cause(s) of action â that is, are their enough material facts pleaded in the initial claim to support the new claims?
[62] The relevant dates for considering the limitation period issue are the following:
- The defendant was retained by the plaintiffs in September 2009;
- The Midland fraud trial ended in June 2013;
- Sanderson J. rendered judgment in the Midland fraud trial, finding the plaintiffs liable, on February 19, 2014;
- Mr. Shtaif commenced his action against the defendant on January 21, 2019;
- Mr. Bokserman commenced his action against the defendant on February 10, 2016;
- The Court of Appeal released its decision on the Midland fraud appeal on April 20, 2017;
- Counsel for the defendant wrote to the plaintiffs on June 5, 2018 regarding dates for a civil practice court attendance to schedule this summary judgment motion. On August 24, 2018 the motion date was scheduled in civil practice court;
- The plaintiffs served their cross-motion seeking leave to amend their pleadings on October 15, 2018, along with their response to the defendantâs summary judgment motion.
[63] Following the analysis set out above, I first consider whether the limitation period has expired on the proposed new claims. I find that it has.
[64] Pursuant to s. 4 of the Limitation Act, 2002, S.O. 2002, c. 24, sch. B, there is a two year limitation period applicable to the claims raised by the plaintiffs, running from the day on which the claims were discovered.
[65] Pursuant to s. 5(2) of the Act, a claim is presumed to have been discoverable by the plaintiff on the day the act or omission at issue took place, unless the contrary is proved.
[66] I find that in relation to the plaintiffsâ claims for solicitorâs negligence, the act or omission at issue, or the damage caused occurred either during the time the defendant represented the plaintiffs in the Midland fraud trail, or at the latest when Justice Sanderson rendered her decision on February 19, 2014 (when damages would have crystalized if there was negligence on the part of the solicitor).
[67] The burden is on the plaintiffs to show why the new proposed claims were not discoverable by the time Justice Sanderson rendered her judgment: Arcari v. Dawson, 2016 ONCA 715 at para. 10. The plaintiffs have not introduced any evidence to rebut the presumption that the claims were discoverable by the time Justice Sanderson rendered her decision on February 19, 2014. Indeed, the plaintiffs began their actions against the defendant in solicitorâs negligence and breach of contract based on the Foss v. Harbottle issue in January 2016 and February 2016. They did not bring their motion to amend their claims until more than two-and-a-half years after serving their claims. If they could discover the claims sufficiently to serve statements of claim in January and February 2016, it is difficult to see how they could not discover the claims they now seek to bring by way of amendment two-and-a-half years later.
[68] Nor do I accept the argument, relying on s. 5(1)(a)(iv) of the Limitation Act, 2002, that it was not appropriate for the plaintiffs to bring their claims until the Court of Appeal decision was released on April 20, 2017.
[69] Whether a court will find that a plaintiff knew that bringing an action was âappropriateâ in the sense of s. 5(1)(a)(iv) will depend on the specific factual or statutory setting of each case. In other words, assessment of the appropriateness of bringing a claim under s. 5(1)(a)(iv) very much turns on the facts of each case: 407 ETR Concession Company Limited v. Day, 2016 ONCA 709 at para. 34.
[70] The fact that the plaintiffs launched their claims over a year prior to the release of the Court of Appeal decision shows that they were aware of the allegations they wanted to raise, and felt it was appropriate to raise them before the Court of Appeal rendered its decision: Coveley v. Thorsteinssons LLP, 2018 ONSC 4804 at para. 52.
[71] I note as well that this case does not involve a situation where there was delay initiating a claim because a defendant lawyer, or other professional, was still assisting the client to resolve the issue upon which the claim is now based: Presidential MSH Corporation v. Marr Foster & Co. LLP, 2017 ONCA 325 at para. 26; Brown v. Baum, 2016 ONCA 325 at para. 18. In this case, the defendant ceased acting for the plaintiffs after the trial judgement was rendered, and the plaintiffs retained new counsel for the appeal.
[72] Nor do I accept the plaintiffsâ argument that their damages arising out of the Midland action did not crystalize until the Court of Appeal released its decision on April 20, 2017. A party does not need to know the exact monetary extent of its loss in order for a limitation period to run. All that is required is that the party be aware that it has suffered some damage: Peixeiro v. Haberman, [1997] 3 S.C.R. 549, 1997 SCC 56 at para. 18; Hamilton (City) v. Metcalfe & Mansfield Capital Corp., 2012 ONCA 156 at paras. 54, 61.
[73] I turn then to the second issue, whether the facts pleaded in the initial claims can sustain the new proposed causes of action.
[74] In my view, the new claims cannot be sustained by the facts pleaded in the initial statements of claim. The initial statements of claim plead only facts related to the alleged negligence of failing to raise the Foss v. Harbottle issue. They do not including pleadings of material facts to support other acts or omissions by the defendant which could amount to negligence.
[75] The amendments the plaintiffs now seek to make to their claims raise a catalog of fundamentally new allegations of negligence, which are factually distinct from the Foss v. Harbottle issue raised in the initial statements of claim. I do not propose to enumerate all of the new claims. They are well set-out in the defendantâs factum on the motion at paragraphs 61, 62 and 66. I agree that most of the proposed amendments are based on different material facts than those pleaded to ground the negligence claim in the initial statements of claim. Thus, they cannot be added now outside the limitation period. Further, the balance of the proposed amendments are either frivolous, or to the extent that a few of them attempt to flesh out the Foss v. Harbottle argument are subject to the doctrine of issue estoppel, as I have set out above.
[76] As these are factually new allegations, and are brought after the expiration of the limitation period, I find they are statute barred.
[77] Finally, the plaintiffs argue that they repeatedly indicated by email to counsel for the defendant that they may at some point amend their claim to add further claims, and these emails were sent before the expiration of the limitation period (the emails are dated January 26, 2016, and May 2 and 3, 2016). The plaintiffs did not include these emails in their motion records; however, counsel for the defendant did not object to the emails being handed up to me to supplement the record during the oral argument of the motions.
[78] The fact that the plaintiffs sent these emails is not disputed. However, I accept the defendantâs argument, and find as a fact, that the defendant never agreed or consented to new claims being added to the claim outside the limitation period. The defendant never waived the application of the limitation period.
[79] For these reasons, I find that leave to amend the statements of claim should not be granted.
Conclusion
[80] I am satisfied that the defendant should prevail on the summary judgment motion. There is no issue requiring a trial in relation to liability. The plaintiffsâ claims are based on an allegation that the defendant was negligent in failing to raise the rule in Foss v. Harbottle in the defence of the Midland fraud action. But the Court of Appeal has finally determined that the rule in Foss v. Harbottle had no application in the Midland fraud action.
[81] I also reject the plaintiffsâ motion for leave to amend their pleadings.
[82] For these reasons, the defendantâs motions for summary judgment is granted. The plaintiffsâ motion for leave to amend their pleadings is dismissed. The plaintiffsâ actions are dismissed.
Costs
[83] I did not hear submissions regarding costs during the hearing of the motion. If the parties are unable to come to agreement regarding costs, I will receive submissions in writing on the following schedule. The defendant may file its cost outline and written submission by August 23, 2019. The plaintiffs may file their cost outlines and submissions by September 20, 2019. All costs submissions are limited to a costs outline, and three pages of submissions.
Justice J. Copeland
Released: July 22, 2019
COURT FILE NO.: CV-16-544965; and CV-16-546354 DATE: 20190722 ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN: MICHAEL SHTAIF Plaintiff (Respondent) â and â STEVENSONS LLP Defendant (Moving Party) -and- EUGENE BOKSERMAN Plaintiff (Respondent) -and- STEVENSONS LLP Defendant (Moving Party)
REASONS FOR DECISION Justice J. Copeland
Released: July 22, 2019
[1] One of the other defendants to the Midland fraud action, Gregory Roberts, did seek leave to appeal from the initial Court of Appeal decision of April 20, 2017. That application for leave to appeal was dismissed by the Supreme Court of Canada on December 21, 2017, court file no. 27653.