Court File and Parties

COURT FILE NO. CV-19-00631280-0000 DATE: 20210506 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN: GEORGIAN PROPERTIES CORPORATION Plaintiff – and – ROBINS APPLEBY LLP, LEOR MARGULIES and ANTHONY ROMANELLI Defendants

Counsel: Milton Davies and Samantha Green, lawyers for the Plaintiff Peter Wardle and Evan Rankin, lawyers for the Defendant

HEARD: February 24, 2021

Reasons for Decision

G. DOW, J.

[1] The defendants seek dismissal of this action by summary judgment on the basis it was commenced beyond the time permitted under the Limitations Act, S.O. 2002, c. 24 Sched. B. The parties agreed the circumstances fall within the principles outlined in Hryniak v. Mauldin, 2014 SCC 7.

[2] I have been asked to determine not only whether there is a genuine issue for trial but dispose of the issue of whether the defendants have a Limitations Act, supra defence to the claims for damages by Georgian Properties Corporation (“GPC”). The defendants are GPC’s former solicitors, Leor Margulies and Anthony Romanelli who were a partner and associate respectively at Robins Appleby LLP and performed legal services now complained of during the time period in question.

Background

[3] GPC issued this Statement of Claim on November 19, 2019 alleging negligence in the drafting of documents for distribution to purchasers of a 112 unit condominium built by predecessor business predecessors to GPC beginning in 2005. This also included drafting what has become known as:

a) the HVAC Mortgage between the builder and the condominium corporation in the amount of $2,122,000.00 with interest at 10% per year for a 15-year term;

b) the Parking Mortgage between the builder and the condominium corporation in the amount of $1,026,375.00 with interest at 10% per year; and

c) the Promissory Note arising from the builder paying the land transfer tax due of $90,034.26 with repayment interest at 12% per year.

[4] The condominium corporation, which became known as Toronto Standard Condominium Corporation 2051 (“TSCC 2051”) was registered February 1, 2010 and turned over to its elected unit holders by the business predecessors of GPC on April 12, 2010. Following the turnover, TSCC 2051 refused to make payments on the HVAC and Parking mortgages and Promissory Note which resulted in litigation. That litigation concluded with the Court of Appeal’s decision released January 24, 2019 which upheld the decision of Justice Akbarali released May 31, 2018. That decision awarded the predecessor businesses of GPC only about $1,625,000.00 of the approximate $7 million it was seeking.

[5] The May 31, 2018 decision of Justice Akbarali substantially reduced the award GPC was seeking. Justice Akbarali found the disclosure documents confusing and “replete with grammatical errors and missing words” (at paragraph 78). Justice Akbarali found sections of the Condominium Act, S.O. 1998 c. 19 had not been complied with and concluded an oppression remedy was appropriate.

[6] It was not argued before the Court of Appeal that the findings of Justice Akbarali were not raised by the parties. In fact, within the Reasons of Justice Akbarali, it is clear TSCC 2051 submitted the mortgages were oppressive based on the inadequate disclosure and the Promissory Note was void for a variety of reasons including provisions of the Condominium Act, supra, as consumer protection legislation, being designed to avoid the developer bettering its position at the expense of the condominium corporation.

[7] In fact, the material utilized in that summary judgment motion by counsel for the parties (and to be clear, not the counsel before me) was subject to dispute.

[8] On July 7, 2017, Justice Akbarali released her Endorsement in response to GPC’s motion to strike out portions of TSCC 2051’s factum. That Endorsement addressed the 15 “groupings” (at paragraph 14) of submissions in TSCC 2051’s factum which GPC sought to have struck on the basis they were “outside the pleadings”.

[9] The very first group dealt with “the sufficiency of disclosure” and were permitted to remain (at paragraphs 15-17 of Justice Akbarali’s Endorsement). The “adequacy of disclosure” is repeated in subsequent groupings (at paragraphs 20, 23, 27, 36 and 42). The claim the Promissory Note was void was also permitted to remain (at paragraphs 50 to 52 of Justice Akbarali’s Endorsement).

Analysis

[10] The Limitations Act, supra, sets a two-year limit for an action to be commenced after “the claim was discovered”. Section 5 details the parameters for determining when a claim is discovered. As this Statement of Claim was issued November 19, 2019, the question becomes whether it can be shown GPC knew or reasonably ought to have known it had a claim against Robins Appleby LLP (and the lawyers involved) before November 19, 2017.

[11] GPC relied on the very recent decision of the Court of Appeal in Kaynes v. BP p.l.c., 2021 ONCA 36. This decision reviewed the important differences between “claim” as opposed to “cause of action”. A claim must include injury, loss or damage caused by another’s act or omission (at paragraph 40). GPC submits that until Justice Akbarali’s May 31, 2018 decision it had not suffered any loss. Further, the principals of GPC, Anthony and Eugene Maida deposed, without cross-examination, their steadfast belief in the success of the action against TSCC 2051. In this regard, counsel for GPC also relied, in part, on GPC’s rejecting a $3.5 million settlement offer in November, 2017.

[12] I do not interpret the decision in Kaynes v. BP p.l.c., *supra* in that manner. This decision repeats when or whether a party has discovered a claim is subject to a fact based analysis (at paragraph 56). At the risk of oversimplification, GPC held three debt instruments which, as of April, 2010 were not being paid. It was suffering a loss. Its action to enforce payment against TSCC 2051 was disputed. Clearly, as of the Endorsement of Justice Akbarali on July 7, 2017, GPC was specifically made aware a reason for the dispute was the prospect that the disclosure to unit holders was inadequate and the Promissory Note was void. Equally clear, the loss it was facing could be the result of an act or omission of the individuals or law firm that drafted the documents GPC was relying on. That is, if TSCC 2051’s defence and allegations were correct, GPC had a claim against Robins Appleby LLP and the lawyers involved at the firm for any shortfall in its recovery.

[13] Counsel for GPC also relied on Ferrara v. Lorenzetti, Wolfe Barristers and Solicitors, 2012 ONCA 851 where the Court of Appeal again noted the commencement of the limitation period will depend on the particular facts. In concluding Ferrara was not out of time, the majority reasons relied on the defendant’s lawyers’ course of conduct to establish discoverability of the claim to when what was called the deficiency claim was decided. It did so on the basis of the involved lawyer, Schwartz’s ongoing advice that his opinion was correct and failing to advice Ferrara, his client, that he might have made a mistake. I was not referred to any evidence of this type of conduct by Leor Margulies or Anthony Romanelli extending to or beyond November 19, 2017. The last invoice from Robins Appleby LLP to which I was referred was dated December 30, 2016 (Exhibit 34, affidavit of Eugene Maida). The most recent email between litigation counsel for GPC in the earlier action and Robins Appleby was between April 5, 2017 to May 7, 2017 (Exhibits 35 to 39 of the affidavit of Eugene Maida).

[14] An issue was raised about Eugene Maida’s refusal to waive solicitor and client privilege regarding their prospects of success in the earlier action. I agree with counsel for GPC that no inference should be drawn from that refusal. I would distinguish the conclusion reached in Ferrara v. Lorenzetti, Wolfe Barristers and Solicitors, *supra* on the factual finding in that case on the basis no one told Ferrara he had a negligence claim against Schwartz until the Reasons were released in what was called the deficiency action. In the matter before me, Justice Akbarali’s refusal to strike portions of TSCC 2051’s factum about the disclosure complaints reiterated GPC having a claim against Robins Appleby.

[15] Counsel for GPC also raised the pleading by Robins Appleby in defending this action that Justice Akbarali was incorrect as support for its position GPC had no knowledge or a basis for a claim against Robins Appleby until Justice Akbarali’s decision of May 31, 2018. I do not accept that position because pleadings are only allegations (and subject to evidence to support same). The likelihood of proving Justice Akbarali to be incorrect appears to be problematic given the analysis and reasons of the Court of Appeal’s accepting the decision of Justice Akbarali).

[16] Counsel for GPC relied on the comments in 407 ETR Concession Company Limited v. Day, 2016 ONCA 709 which reviewed Section 5(1)(a)(iv) of the Limitations Act, supra and when “a proceeding would be an appropriate means to seek remedy”. That decision repeated each case will turn on its own facts (at paragraph 34). It also stated courts could operate more efficiently by deterring needless litigation (at paragraph 48). It found in favour of an extended time to commence an action on the basis of “another and more effective method provided for in a statute.” That is, unpaid 407 ETR bills were subject to a statutory process for collection leading up to non-renewal of vehicle license permits (at paragraph 40). The court concluded the 407 ETR was entitled to wait “until a statutorily authorized process has been completed” (at paragraph 47). That is not the situation before me. To the contrary, with the amounts owed and not being paid to GPC and the issues reasons for the refusal to pay joined in the earlier action, GPC or its principals ought to have known it was at some risk of non-recovery of what it was owed. The risk of not recovering what it was owed could be as a result of conduct by Robins Appleby and its lawyers. As a result, GPC had a claim, in the alternative, against those lawyers and that law firm.

[17] This approach was repeated in Presidential MSH Corporation v. Marr Foster & Co. LLP, 2017 ONCA 325. While counsel for GPC submitted it also held that bringing a court proceeding before an “adequate alternative remedy” (at paragraph 29) had not run its course and to be premature, I would again distinguish that decision and its application to situations where there exists “a statutory dispute resolution process”.

[18] The issue was similarly raised in Ridel v. Goldberg, 2019 ONCA 636. I have relied on the reasoning in that decision to find GPC knew or ought to have known it had a claim with a proceeding available as an appropriate means to seek a remedy before Justice Akbarali’s May 31, 2018 decision was released. That matter also involved prior litigation. The analysis of the Court for discoverability followed, as I do in this matter, that:

i) loss or damage had occurred -- GPC was not being paid on its mortgages and Promissory Note;

ii) that loss or damage was caused by an act or omission -- TSCC 2051 was maintaining the disclosure regarding the mortgages was deficient and the Promissory Note was void given the manner in which the documents were drafted;

iii) the act or omission if the documents were deficient -- was that of Robins Appleby and its lawyers; and

iv) a proceeding was an appropriate means to remedy it -- either adding Robins Appleby and its lawyers as defendants in the action decided by Justice Akbarali or commence a separate action (presumably to be tried together) with damages to be assessed in the alternative (at paragraph 69).

[19] Following oral submissions, on March 18, 2021, counsel for GPC forwarded by email to my assistant, the summary judgment motion decision of the reasons of the Court of Appeal in Ramadhin v. New Venture Group Inc., 2018 ONCA 6. Counsel indicated a belief the decision was of sufficient importance that ought to be brought to my attention and had consulted with counsel for Robins Appleby LLP and its lawyers before forwarding it. That case involved determining whether the limitation period in the sale of real property to realize an unpaid mortgage began when the Agreement of Purchase and Sale of the property (arranged by the unpaid lender) was signed or when the transaction closed. In dismissing the appeal, the Court accepted the reasoning that “Damage is an essential element of the tort of negligence”. As a result, no cause of action existed until title is transferred, that is, the transaction closed. With respect, the factual matrix before me is different and distinguishes that decision. As stated, a loss was occurring in the matter before me as of April, 2010 when payments were not made.

[20] To allow this action to proceed would be to permit litigation in stages. As stated in Ridel v. Goldberg, *supra*, this type of litigation which should not be used to “delay the commencement of a limitation period for purposes of S.5(1)(a)(iv) (at paragraph 78).

Conclusion

[21] I find GPC knew or ought to have known no later than July 7, 2017 it had a claim against Robins Appleby and its lawyers for which a proceeding was the appropriate remedy. As a result, this action is barred by application of section 4 of the Limitations Act, supra and is dismissed.

Costs

[22] The Costs Outline of counsel for Robins Appleby and the lawyers sought $25,448.70 plus HST of $3,308.33 and disbursements, including HST of $1,725.22 for a total of $30,482.25. This was far less than the Costs Outline of GPC in the amount of $81,638.00 for partial indemnity fees, HST of $10,612.94 and disbursements of $143.56 for a total of $92,394.50. The difference appears to be in the hourly rates being used. The parties agreed that there was no basis to award other than partial indemnity costs. I award the defendants its costs totaling $30,482.25 inclusive of fees, HST and disbursements, payable forthwith.

Mr. Justice G. Dow Released: May 6, 2021