COURT FILE NO.: 16-69767

DATE: 2019/11/27

ONTARIO

SUPERIOR COURT OF JUSTICE

B E T W E E N:

Calvin Ramsarran, Gloria Ramsarran, Trisha Ramsarran, Tennelle Ramsarran and Renee Ramsarran

Plaintiffs

– and –

Assaly Asset Management Corporation a.k.a. 2225394 Ontario Limited Corporation, Thomas Assaly, Brent Timmons, BrazeauSeller LLP, Paul Howard, Howard, Kelford & Dixon, The Toronto-Dominion Bank and TD Waterhouse Canada Inc.

Defendants

Leonard Max for the Plaintiffs/Responding Parties

Stephen Cavanagh for the Defendants/Moving Parties, Brent Timmons and BrazeauSeller LLP

Erin Durant and Calvin Hancock for the Defendants/Moving Parties, Paul Howard and Howard, Kelford & Dixon

HEARD: October 17, 2019

REASONS FOR decision

RYAN BELL j.

Overview

[1] The plaintiffs were shareholders of Tri-Ten Holdings Limited, the owner and operator of a retirement home in Smiths Falls, Ontario. In April 2010, through a share purchase transaction, the plaintiffs sold the retirement home to Assaly Asset Management Corporation. Paul Howard of Howard, Kelford & Dixon acted on behalf of the plaintiffs on the transaction. Brent Timmons of BrazeauSeller LLP acted on behalf of Assaly.

[2] Prior to closing, an issue arose regarding Tri-Ten’s tax liabilities. Rather than delay the closing of the transaction, the parties agreed to amend the share purchase agreement by requiring Assaly to deposit $109,000 with TD Waterhouse to be held in trust until the tax liabilities were determined. The transaction closed on April 30, 2010.

[3] In August 2016, the plaintiffs commenced these proceedings by Notice of Action. The plaintiffs plead that Mr. Howard breached his duty to the plaintiffs by relying on a written representation made by Mr. Timmons regarding the monies to be held in trust, and by failing to report to the plaintiffs regarding the trust arrangements and the closing of the share purchase agreement. The plaintiffs plead that Mr. Timmons and BrazeauSeller are liable for fraudulent misrepresentation. The other claims against Mr. Timmons and BrazeauSeller were struck by Gomery J. in December 2017.

[4] Assaly has been noted in default.

[5] Mr. Howard, Mr. Timmons, and their respective law firms move for summary judgment dismissing the claims against them. These defendants say that the plaintiffs’ claims are statute-barred pursuant to the Limitations Act, 2002, S.O. 2002, c. 24, Sch. B., and that there is no genuine issue requiring a trial on the issue of discoverability. Mr. Timmons and BrazeauSeller also submit that there is no genuine issue requiring a trial with respect to the fraudulent misrepresentation claim against them because the plaintiffs have failed to lead any evidence in support of their claim.

[6] The plaintiffs assert that the discoverability test was not met until September 2018, when the plaintiffs were served with TD Waterhouse’s motion record and the affidavit of the investment advisor who confirmed no trust account was created and no trust account exists. The plaintiffs submit that there is the possibility of a finding of fraudulent concealment at trial, and that there is a genuine issue requiring a trial on the issue of discoverability.

[7] At the outset of the hearing, on consent, I dismissed the action as against The Toronto-Dominion Bank and TD Waterhouse. The TD Bank defendants did not participate in the motions for summary judgment.

[8] For the following reasons, the motions for summary judgment are granted. The action as against Mr. Howard, Mr. Timmons, and their respective law firms is dismissed.

Summary Judgment

[9] Rule 20.04(2)(a) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 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.” A judge hearing a motion for summary judgment has the power to weigh evidence, evaluate the credibility of a deponent, and draw reasonable inferences from the evidence (rule 20.04(2.1)).

[10] There will be no genuine issue requiring a trial when the judge is able to reach a fair and just determination on the merits on a motion for summary judgment. This will be the case when the process allows the judge to make the necessary findings of fact, allows the judge to apply the law to the facts, and is a proportionate, more expeditious and less expensive means to achieve a just result than going to trial (Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, at paras. 4 and 49).

[11] As summarized by Corbett J. in Sweda Farms Ltd. v. Egg Farmers of Ontario, 2014 ONSC 1200 (aff’d 2014 ONCA 878), at para. 33, on a motion for summary judgment, the court should undertake the following analysis:

(i) assume that the parties have placed before it, in some form, all of the evidence that will be available for trial;

(ii) on the basis of this record, decide whether it can make the necessary findings of fact, apply the law to the facts, and thereby achieve a fair and just adjudication of the case on the merits; and

(iii) if the court cannot grant judgment on the motion, the court should decide those issues that can be decided in accordance with the principles described in (ii), identify the additional steps that will be required to complete the record to enable the court to decide any remaining issues, and in the absence of compelling reasons to the contrary, seize itself of the further steps required to bring the matter to a conclusion.

[12] Both parties are required to put their best evidentiary foot forward on a motion for summary judgment. A responding party cannot rely on the possibility that better evidence will arise at trial (790668 Ontario Inc. v. D’Andrea, 2014 ONSC 3312, at para. 117, aff’d 2015 ONCA 557, 446 O.A.C. 383).

[13] The test on a summary judgment motion based on when a plaintiff’s claim was discovered for limitation purposes is whether there is a genuine issue respecting discoverability that requires a trial. Where the evidence on the discoverability issue is “less than clear,” the judge should refuse summary judgment (Filbey v. Ashe, 2018 ONSC 4615, at para. 46, citing Lindhe v. Chalte, 2015 ONSC 2821, at para. 26).

[14] Mr. Howard and Mr. Timmons each filed affidavits in support of their respective motions. The plaintiffs filed the affidavit of their solicitor, Richard Bosada, who was retained in June 2013. Each of the affiants was cross-examined. The plaintiffs also rely on excerpts from an affidavit of Dave Thomson of TD Waterhouse. I am satisfied that based on this record, I can find the necessary facts, using the rule 20.04(2.1) powers where necessary, and apply the law to those facts to achieve a just result.

The Allegations in the Fresh as Amended Statement of Claim

[15] The plaintiffs allege that Mr. Howard, as their lawyer on the transaction, acted negligently or recklessly in relying on Mr. Timmons’ representation that the monies had been deposited with TD Waterhouse to be held in trust, and in failing to obtain a solicitor’s undertaking prior to closing. The plaintiffs plead that Mr. Howard breached his fiduciary duty to the plaintiffs, his duty of care, and his duty of good faith and loyalty. The plaintiffs also allege that Mr. Howard’s failure to report to the plaintiffs regarding the trust arrangements and the closing of the transaction constitutes a breach of the duties owed to his clients. As Mr. Howard’s employer, Howard, Kelford & Dixon is said to be a party to Mr. Howard’s alleged breaches, and jointly and severally liable for them.

[16] The plaintiffs allege that Mr. Timmons’ representation to Mr. Howard that Assaly had deposited $109,000 with TD Waterhouse was false, and that Mr. Timmons acted intentionally in making the misrepresentation. As Mr. Timmons’ employer, BrazeauSeller is alleged to be a party to Mr. Timmons’ intentional misrepresentation, and jointly and severally liable on this basis.

Discoverability Issue

[17] Given the plaintiffs’ obligation to put their best evidentiary foot forward in response to the motions for summary judgment, and their onus to rebut the presumption contained in s. 5(2) of the Limitations Act, 2002, I am entitled to assume that there would be no additional evidence at trial to assist the plaintiffs on this issue. Based on the record before me, I am satisfied that there is no genuine issue requiring a trial on the discoverability of the claims against Mr. Howard, Mr. Timmons, and their respective law firms.

[18] Section 4 of the Limitations Act, 2002 sets out the basic limitation period: “[u]nless 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.”

[19] Subsections 5(1) and (2) provide:

(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).

(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.

[20] The plaintiffs submit that their claim for fraudulent misrepresentation against Mr. Timmons and BrazeauSeller raises the possibility of a fraudulent concealment finding at trial. If the plaintiffs intended to suggest that the equitable principle of fraudulent concealment requires an analysis separate from the discoverability analysis under the Limitations Act, 2002, I reject this submission.

[21] In Zeppa v. Woodbridge Heating & Air-Conditioning Ltd., 2019 ONCA 47, 144 O.R. (3d) 385, the Court of Appeal for Ontario confirmed at para. 71 that “there is no independent work for the principle of fraudulent concealment to perform in assessing whether a plaintiff has commenced a proceeding within the basic two-year limitation period” provided for in s. 4 of the Limitations Act, 2002. This is because,

the elements of the discoverability test set out in ss. 5(1)(a) and (b) address the situation where a defendant has concealed its wrong-doing. If a defendant conceals that an injury has occurred, or was caused by or contributed to by its act or omission, or that a proceeding would be an appropriate means to seek to remedy it, then it will be difficult for the defendant to argue that the plaintiff had actual knowledge of those facts until the concealed facts are revealed. Whether the plaintiff ought to have known of those matters, given their concealment, is a matter for inquiry under s. 5(1)(b).

[22] In other words, the analysis required by s. 5(1) of the Limitations Act, 2002 captures the effect of a defendant’s concealment of facts material to the discovery of a claim (Zeppa, at para. 72).

[23] The chronology of events is central to the question of when the claims against Mr. Howard, Mr. Timmons, and their respective law firms are presumed to have been discovered, and whether the plaintiffs have rebutted that presumption. That chronology is as follows:

• On April 22, 2010, Mr. Howard wrote to Mr. Timmons to confirm the parties’ agreement that the $109,000 would be paid to Canada Trust, and that from the $109,000, any monies owing for taxes in Tri-Ten would be paid, with the balance being repaid to Mr. Ramsarran.

• On April 29, 2010, Mr. Timmons advised Mr. Howard in writing that Assaly had deposited $109,000 with TD Waterhouse to be held in trust.

• On April 30, 2010, the plaintiffs and Assaly entered into an Amending Agreement to their Share Purchase Agreement, which provided in s. 2.02 that on closing, Assaly was required to pay $109,000 to “Canada Trust … in trust.” The funds were to be held until the tax liability of Tri-Ten was determined.

• The transaction closed April 30, 2010.

• At least three contentious issues arose between the plaintiffs and Assaly post-closing. The plaintiffs retained litigation counsel. In December 2011, Mr. Howard provided a complete copy of his transaction file to the plaintiffs’ litigation counsel.

• On July 6, 2012, the plaintiffs issued a statement of claim against Assaly. Paragraph 9 of that statement of claim alleges:

In addition, with respect to the tax adjustment referred to in paragraphs 5 and 6 herein, the Ramsarrans understand that the tax liability of Tri-Ten for income taxes, other taxes, assessments and penalties thereon has been determined and that an amount is due to be returned to them from the $109,000 deposited with Canada Trust. However, Assaly has failed to pay to the Ramsarrans the sums due to them and has failed to provide any supporting documentation to show the taxes that are due and owing.

• On May 6, 2013, Mr. Howard provided the plaintiffs’ litigation counsel with a copy of his April 22, 2010 letter to Mr. Timmons and a copy of the Amending Agreement. Mr. Howard wrote to litigation counsel that “[w]e have of course assumed that Mr. Timmons would honour the position taken by his client and ensure that the money has been paid in. We have not received actual proof in this regard.”

• Mr. Bosada was retained by the plaintiffs in June 2013.

• On August 22, 2013, Mr. Howard advised Mr. Bosada that he never provided a reporting letter to the plaintiffs.

• On August 30, 2013, Mr. Bosada acknowledged receipt of Mr. Howard’s file and requested “any information respecting the trust account that was to be opened at the Toronto Dominion Bank/TD Waterhouse which I previously inquired of you.”

• Mr. Howard responded to Mr. Bosada on September 5, 2013:

The trust account was to have been put together by the solicitors for the Purchaser. Unfortunately, we did not obtain an undertaking and it would appear from your correspondence that the monies have not been held in trust, although perhaps you would confirm any correspondence with Mr. Timmins [sic].

• By letter dated September 9, 2013, Mr. Howard provided Mr. Bosada with a copy of Mr. Timmons’ email of April 29, 2010.

• According to Mr. Bosada’s dockets, he was engaged with the file in April 2014 (“Tc with Bank file letter to T.D. Water House TC with Calvin re status report”), in April 2015 (“letter to Timmons”), and in August 2016 (“Report to Calvin re limitation period and claim to be issued”).

• In March 2016, Mr. Bosada advised that he had instructions to commence an action, with the “defendants to that action…to be determined.” The notice of action was issued on August 26, 2016.

[24] As is evident from the fresh as amended statement of claim, the basis of the plaintiffs’ fraudulent misrepresentation claim against Mr. Timmons and BrazeauSeller is Mr. Timmons’ April 29, 2010 email to Mr. Howard (defined as “the misrepresentation” in the claim) in which Mr. Timmons advised as follows:

The purchaser has deposited $109,000 with TD Waterhouse to be held in trust pending determination of the tax liability of the Corporation. The determination will be completed by the end of May. Once the tax liability is determined by an assessment of CRA, the balance will be returned immediately to the Vendors.

[25] Accordingly, the act or omission on which the claim against Mr. Timmons and BrazeauSeller is based took place on April 29, 2010 and, pursuant to s. 5(2) of the Limitations Act, the plaintiffs are presumed to have known of the matters referred to in s. 5(1)(a) on that date, unless the contrary is proved.

[26] The acts or omissions by Mr. Howard on which the plaintiffs’ claim is based are his reliance on Mr. Timmons’ letter of April 29, 2010, his failure to obtain a solicitor’s undertaking, and his failure to provide a reporting letter in connection with the transaction. These acts or omissions took place on or about the closing of the transaction, that is, April 30, 2010. Therefore, with respect to the claims against Mr. Howard and Howard, Kelford & Dixon, pursuant to s. 5(2), the plaintiffs are presumed to have known of the matters referred to in s. 5(1)(a) on April 30, 2010, unless the contrary is proved.

[27] The plaintiffs advance at least three possible dates of discovery of their claims. In his affidavit, Mr. Bosada states that as of the filing of the notice of action – August 2016 – “I still had not been able to discover the facts that would fully meet the discoverability test set out in … s. 5(1).” On cross-examination, Mr. Bosada stated that it would be the plaintiffs’ position in responding to the motions for summary judgment that the first time “we learned” that there was no trust account was in September 2018, when the plaintiffs were served with TD Waterhouse’s motion record. In the fresh as amended statement of claim, the plaintiffs plead that “on or about August 27, 2014” BrazeauSeller provided its “final position” and refused to disclose any information regarding the trust account. The plaintiffs plead that at that point, they inferred that no trust account was ever established and that Mr. Timmons’ representation in his April 29, 2010 letter was untrue.

[28] Each of these three dates postdates the closing of the transaction by more than four years. In my view, the plaintiffs appear to have “confuse[d] the issue of when a claim is discovered with the process of assembling the necessary evidentiary support to make the claim ‘winnable’” (Lawless v. Anderson, 2011 ONCA 102, [2011] O.J. No. 519 (C.A.), at para. 36). To discover a claim, the plaintiffs need only have in their possession sufficient facts upon which they could allege negligence or fraudulent misrepresentation. Additional information gleaned through litigation procedures will support the claim and help to assess the risk of proceeding; however, that information is not needed to discover the claim (Lawless, at para. 36; McSween v. Louis, (2000), 2000 CanLII 5744 (ON CA), 132 O.A.C. 304, at para. 19).

[29] In any event, the plaintiffs bear the onus of leading evidence to displace the statutory presumption in s. 5(2) (Bergen v. Fast Estate, 2018 ONCA 484, at para. 10). The plaintiffs must establish that the claim was not discovered until some other date, based on the criteria set out in s. 5(1)(a) (JC v. Farant, 2018 ONSC 2692, at 18). They have failed to do so.

[30] There was no evidence from any of the plaintiffs as to their state of knowledge of the underlying acts or omissions. The plaintiffs filed only the affidavit of Mr. Bosada who was retained in June 2013, more than three years after the transaction closed. In his affidavit, Mr. Bosada recounts the following as to Calvin Ramsarran’s state of knowledge at that point in time:

[Mr. Ramsarran] said he and his daughters had sold a long term care facility … that Paul Howard had acted on the sale transaction; that he had not received anything from Paul Howard by way of a reporting letter or otherwise, respecting the closing; that he was under the impression he was owed approximately $115,000 that he never received from the closing….

[31] As to what the plaintiffs knew and when they knew it in the three-year period preceding his involvement in the file, Mr. Bosada’s affidavit is silent. What the record does reveal is that Mr. Howard provided a complete copy of his transaction file to the plaintiffs’ litigation counsel in December 2011. The file would have contained the correspondence between Mr. Howard and Mr. Timmons regarding the monies to be held in trust from which Tri-Ten’s tax liabilities would be paid, with the balance to be paid to the plaintiffs. It would have been evident from that file that no reporting letter was prepared, and that no solicitor’s undertaking was obtained with respect to the monies that were to have been deposited and held in trust. And from Mr. Howard’s file, the plaintiffs (or their litigation counsel) would have been aware of Mr. Timmons’ April 29, 2010 email to Mr. Howard.

[32] The plaintiffs’ claim against Assaly in July 2012 confirms the plaintiffs knew the amount that was to have been paid into trust, the purpose for the payment, and the fact that after payment of Tri-Ten’s tax liabilities, the balance was to have been paid to them. The plaintiffs knew that they had not been paid the balance owed to them and they knew that they had not received any supporting documentation to show what taxes were owed by Tri-Ten. They knew that Mr. Howard was their solicitor on the transaction and that Mr. Timmons had acted for Assaly.

[33] As the Court of Appeal for Ontario stated in Fennell v. Deol, 2016 ONCA 249, at para. 23, “a plaintiff is required to act with due diligence in determining if he has a claim, and a limitation period is not tolled while a plaintiff sits idle and takes no steps to investigate the matters referred to in s. 5(1)(a).” There is scant evidence in the record as to the steps taken by Mr. Bosada after he was retained. The plaintiffs have provided no evidence as to the investigative steps they took in the three-year period before they retained Mr. Bosada. What is evident from the record is that the plaintiffs’ investigations in the two-year period following the closing of the transaction resulted in their July 2012 claim against Assaly.

[34] The plaintiffs have failed to rebut the statutory presumption of knowledge under s. 5(2). Accordingly, the plaintiffs’ claims were discoverable when the acts or omissions took place, that is, on April 29, 2010 in the case of Mr. Timmons and BrazeauSeller, and on or about April 30, 2010 in the case of Mr. Howard and his firm. The two-year limitation period would run from those dates and expired on or about the end of April 2012. The action was not commenced until August 2016, more than four years later. The claims against Mr. Howard, Mr. Timmons, and their respective firms are therefore statute-barred. For this reason, these claims are dismissed.

The Fraudulent Misrepresentation Claim

[35] Fraudulent misrepresentation is established where the following elements are present: (i) a false representation of fact by the defendant to the plaintiff; (ii) knowledge the representation was false, absence of belief in its truth, or recklessness as to its truth; (iii) an intention that the plaintiff act in reliance on the representation; (iv) the plaintiff acts on the representation; and (v) the plaintiff suffers a loss as a result (Midland Resources Holding Limited v. Shtaif, 2017 ONCA 320, 135 O.R. (3d) 481, at para. 162).

[36] In this case, the plaintiffs have led no evidence that Mr. Timmons made a false representation with knowledge that the representation was false, in the absence of belief in the truth of the representation, or that he was reckless as to the truth of the representation.

[37] Mr. Timmons’ uncontradicted evidence is that he believed what he had been told by his client: “I would not have said it if I believed it was false” and “I believe it was correct.” He says that Assaly advised him on April 20, 2010, and again in subsequent discussions prior to closing, that the corporation had deposited $109,000 with TD Waterhouse to be “available and reserved” for the transaction. Mr. Timmons relied on his client’s advice and communicated the information to Mr. Howard on April 29, 2010.

[38] Mr. Timmons’ belief was reinforced when he received written confirmation from Mr. Thomson of TD Waterhouse on April 30, 2010 that “$190,000 [sic] was on deposit and available should they be required for this purchase.” Although the letter from TD Waterhouse refers to a corporation other than Assaly, there is no evidence or suggestion that this letter was written in relation to another transaction. I reject the plaintiff’s submission that Mr. Timmons was reckless as to the truth of his representation because the statements “available and reserved” and “on deposit and available” are not the same as “in trust.”

[39] I am satisfied that there is no genuine issue requiring a trial on this claim – the sole claim – against Mr. Timmons and BrazeauSeller. For this additional reason, the action against them is dismissed.

Conclusion

[40] There is no genuine issue requiring a trial with respect to these defendants. Their motions for summary judgment are granted. The action is dismissed with costs, as against Mr. Howard and Howard, Kelford & Dixon, and as against Mr. Timmons and BrazeauSeller.

[41] If the parties are unable to agree on costs of the motions and the action, they may make written submissions limited to a maximum of three pages. The defendants shall deliver their costs submissions by December 6, 2019. The plaintiffs shall deliver their responding costs submissions by December 16, 2019. If no submissions are received within this timeframe, the parties will be deemed to have settled the issue of costs as amongst themselves.

Madam Justice Robyn M. Ryan Bell

Released: November 27, 2019

COURT FILE NO.: 16-69767

DATE: 2019/11/27

ONTARIO

SUPERIOR COURT OF JUSTICE

B E T W E E N:

Calvin Ramsarran, Gloria Ramsarran, Trisha Ramsarran, Tennelle Ramsarran and Renee Ramsarran

Plaintiffs

– and –

Assaly Asset Management Corporation a.k.a. 2225394 Ontario Limited Corporation, Thomas Assaly, Brent Timmons, BrazeauSeller LLP, Paul Howard, Howard, Kelford & Dixon, The Toronto-Dominion Bank and TD Waterhouse Canada Inc.

Defendants

REASONS FOR DECISION

Ryan Bell J.

Released: November 27, 2019