COURT FILE NO.: CV-13-492414
DATE: 20210212
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
JEFFREY HALL and JENNIFER KERR
Plaintiffs
– and –
ZHONG-ZHI LOU, THE CORPORATION OF THE CITY OF TORONTO, FCT TITLE INSURANCE LTD., NOVEX INSURANCE COMPANY, INTACT INSURANCE COMPANY, AND QI LOU
Defendants
- and -
RAYMOND LIU and HANG JIE CONSTRUCTION & RENOVATIONS INC.
Third Parties
John Bruggeman, for the Plaintiffs
Christopher G.T. Tan, for the Defendant, Qi Lou
Kristen Franz, for the Defendant, City of Toronto
Adam Zasada, for the Defendant, FCT Title Insurance Ltd.
W. Colin Empke, for the Defendants, Intact Insurance Company and Novex Insurance Company
Theresa Hartley, for the Third Parties, Raymond Liu and Ramondo Engineering
Josiah MacQuarrie, for the Third Parties, Hang Jie Construction & Renovation Inc. and the Fourth Party, Ming Jie Jang
- and –
MING JIE JANG and HANG JIE CONSTRUCTION AND RENOVATIONS INC.
Fourth Parties
HEARD: February 3, 2021
Papageorgiou j.
[1] The defendant Qui Lou (“Ms. Lou”) seeks summary judgment dismissing the case against her on the basis that the action against her is outside the applicable limitation period.
[2] The plaintiffs Jeffrey Hall (“Mr. Hall”) and Jennifer Kerr (“Ms. Kerr”) say that Ms. Lou fraudulently concealed her involvement in the matters at issue such that their claim against her was not discoverable until August 16, 2018. They brought their motion to add Ms. Lou on January 15, 2019. Accordingly, if they could not discover the claim until August 16, 2018, the claim would not be statute-barred.
[3] The plaintiffs take the position that this case is not suitable for resolution on a summary judgment motion because the factual findings required to determine whether or not the limitation period expired will call for multiple findings of fact, based on conflicting evidence and that a summary judgment motion cannot serve as an adequate substitute.
The Action
[4] This action relates to matters that took place in 2011. Specifically, Mr. Hall and Ms. Kerr purchased real property located at 504 Concord Avenue (the “Property”) from the defendant Zhong-Zhi Lou (“Zhong-Zhi”) on or about October 20, 2011 with the transaction closing on November 10, 2011.
[5] In or around November 29, 2011, after Mr. Hall and Ms. Kerr took possession, they allege that significant flooding occurred. Between 2011 and 2012, they confirmed that the cause was structural defects and building code violations due to faulty/fraudulent renovations.
The Claims
[6] On November 7, 2013, Mr. Hall and Ms. Kerr commenced this action against Zhong-Zhi, the City of Toronto and three insurers (the “Claim”). It alleges that:
a. There was deliberate non-compliance with the building code and building permits to secure post construction approvals from the City of Toronto inspectors (para. 12);
b. The renovations/finishes were done in such a fashion as to hide significant construction defects, including significant mould growing behind interior walls so that building inspectors would be fooled and they could obtain approvals from City of Toronto inspectors after renovations were completed, and construction defects were deliberately hidden, to the extent that building inspectors would be fooled (para. 13); and
c. The alleged breaches were caused by the negligence of Zhong-Zhi, or his agents, employees or contractors and constituted a fundamental breach of the contract of sale (paras. 15, 18).
[7] The moving party, Ms. Lou, is the daughter of Zhong-Zhi.
[8] Mr. Hall and Ms. Kerr served a motion to add Ms. Lou as a defendant on January 15, 2019 (the “Amended Claim”). On November 4, 2019, Ms. Lou consented to an Order adding her as a party without prejudice to her right to raise any defence including the expiration of a limitation period defence. The Amended Claim pleads that:
a. Ms. Lou was Zhong-Zhi’s daughter (para. 8A);
b. Ms. Lou was either an equitable owner, or co-owner and anticipated receiving proceeds from the sale (para. 9A);
c. Ms. Lou retained and directed the contractor in question on the extent of the renovations and/or willfully ignored or countenanced cosmetic cover-ups of the deficient and incomplete structural and mechanical renovations that were made and willfully made misrepresentations to the City of Toronto Building Inspectors and falsified the extent of repairs and renovations (para. 9B);
d. Ms. Lou overlooked or assisted her father in displaying cosmetic repairs, while alleging structural and full renovations in order the flip the property for a profit (para. 9C);
e. The breaches were caused as a result of the negligence, deceit or malfeasance of the Defendant Zong-Zhi Lou, with the knowledge and participation of the Defendant Qi Lou, or their agents, employees, contractors or subcontractors consisting of but was not limited to the following (para. 16).
[9] What the plaintiffs have done is added Ms. Lou as an alleged owner, and added allegations that she participated in activities (e.g. directing the renovation) that lead to the loss already pleaded in the Claim, and then added the claim of deceit which had not been specifically pleaded before. (In that regard, although the Claim refers to the conduct being deliberate, only the causes of action of negligent misrepresentation and breach of contract are pleaded.)
What is the test on a summary judgment motion?
[10] In accordance with r. 20.04(2) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (the “Rules”), the court shall grant summary judgment if:
(a) the court is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence; or
(b) the parties agree to have all or part of the claim determined by a summary judgment and the court is satisfied that it is appropriate to grant summary judgment.
[11] In determining whether there is a genuine issue requiring a trial, the court shall consider the evidence submitted by the parties and a judge may exercise any of the following powers under r. 20.04(2.1): (1) weighing the evidence; (2) evaluating the credibility of a deponent; and (3) drawing any reasonable inference from the evidence.
[12] The Supreme Court of Canada in Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, at para. 49, explained when there will be no genuine issue for trial:
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: (1) allows the judge to make the necessary findings of fact, (2) allows the judge to apply the law to the facts, and (3) is a proportionate, more expeditious and less expensive means to achieve a just result.
[13] In order to defeat a motion for summary judgment, the responding party must put forward some evidence to show that there is a genuine issue requiring a trial. A responding party on a summary judgment motion cannot rest solely on allegations in a pleading. Each side must “put their best foot forward” with respect to the existence or non-existence of material issues to be tried: Sweda Farms v. Egg Farmers of Ontario, 2014 ONSC 1200, at paras. 32-33, aff’d 2014 ONCA 878.
[14] Furthermore, “the motion judge is entitled to presume that the evidentiary record is complete and there will be nothing further if the issue were to go to trial”: Tim Ludwig Professional Corporation v. BDO Canada LLP, 2017 ONCA 292, 137 O.R. (3d) 570, at para. 54. Parties must present sufficiently precise evidence to show there is a genuine issue for trial: “a summary judgment motion cannot be defeated by vague references as to what may be adduced if the matter is allowed to proceed to trial”: Diao v. Zhao, 2017 ONSC 5511, at para. 18.
The Limitations Act
[15] Sections 4 and 5 of the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B, provide as follows:
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.
Demand obligations
(3) For the purposes of subclause (1) (a) (i), the day on which injury, loss or damage occurs in relation to a demand obligation is the first day on which there is a failure to perform the obligation, once a demand for the performance is made.
Same
(4) Subsection (3) applies in respect of every demand obligation created on or after January 1, 2004.
[16] A typical summary judgment motion involving the basic limitation period requires the court to determine whether the record enables making a series of findings of fact on the following:
a. Presumption: the day on which the act or omission on which the claim is based occurred is the date the plaintiff is presumed to know of the matters listed in ss. 5(1)(a)(i)-(iv) of the Limitations Act;
b. Actual knowledge: the date of actual knowledge under s. 5(1)(a), but only if the plaintiff’s evidence proves contrary to the presumptive date;
c. Objective knowledge: the s. 5(1)(b) objective knowledge date, based on the reasonable person with similar abilities and circumstances analysis; and
d. Which of the actual knowledge and objective knowledge dates is earlier, for that earlier date will be the day on which the plaintiff discovered the claim for the purposes of applying the basic limitation period of two years.
Nasr Hospitality Services Inc. v. Intact Insurance, 2018 ONCA 725, 142 O.R. (3d) 561, at paras. 34-35 (“Nasr”); Morrison v. Barzo, 2018 ONCA 979, 144 O.R. (3d) 600, at para. 29 (“Morrison”).
The Presumptive date
[17] Pursuant to s. 5(1)(2) and Nasr, the presumptive date for when the plaintiffs knew of the elements set out in s. 5(1)(a) is the date when the alleged acts or omissions occurred. In my view, this would have been at the latest when the purchase closed on November 10, 2011, as at that point all the alleged acts and omissions would be complete.
Actual knowledge: s. 5(1)(a)
[18] The plaintiffs have rebutted the above presumption because they have given evidence that they did not know that the loss or damage was caused by faulty workmanship until they received an engineer’s report on February 12, 2012. Further, they have given evidence that they did not have actual knowledge of Ms. Lou’s involvement at the time of the loss. Their evidence is that until they received a reporting letter from their counsel, Mr. Kostyniuk, on August 16, 2018, (the “August 2018 Reporting Letter”) they believed that Ms. Lou was only providing interpretation services to her father during the construction process because she fraudulently concealed her involvement.
[19] As noted above, the plaintiffs served their motion to add Ms. Lou as a party on January 15, 2019. Therefore, for the claim to be statute-barred, they would have to have had actual or objective knowledge in accordance with ss. 5(1)(a) and (b) of the Limitations Act, respectively, more than two years prior to January 15, 2019 which is prior to January 15, 2017.
[20] It is well-established that where there has been a fraudulent concealment of the existence of a cause of action, the limitation period will not start to run until the plaintiff discovers the fraud or until the time when, with reasonable diligence, they ought to have discovered it. The fraudulent concealment necessary to toll or suspend the operation the limitations statute need not amount to deceit or common-law fraud: Guerin v. The Queen, [1984] 2 S.C.R. 335, at p. 390.
[21] Accordingly, I will proceed to analyze s. 5(1)(b).
Objective knowledge: s. 5(1)(b)
[22] Even when a plaintiff alleges and establishes fraudulent concealment, the test for when the limitation period begins to run is still based upon when 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 5(1)(a).
[23] In this case, I am analyzing the two issues distinctly because it is important to understand the specific acts of alleged fraudulent concealment to undertake the discoverability analysis.
[24] For a finding of fraudulent concealment to be made, the defendant must hide, secret, cloak, camouflage, disguise, or cover-up the conduct or identity or the wrongdoing. The word fraudulent is used in its equitable sense to denote conduct by the defendant such that it would be unconscionable for her to avail herself of a lapse of time. If the plaintiffs were unaware of their cause of action because of the wrong of the defendant, then the court will refuse to allow a limitation defence: Zeppa v. Woodbridge Heating & Air-Conditioning Ltd., 2019 ONCA 47, 144 OR (3d) 385, at paras. 61-62.
[25] The fraudulent concealment alleged is that Ms. Lou has an undisclosed interest in the Property and impersonated her mother with contractors and the building inspector with the deliberate intention of hiding the fact that it was she who gave contractors instructions to perform faulty work and that it was she who misled the inspector to improperly obtain a permit after the work was done. As noted above, the plaintiffs say that their claim against Ms. Lou was not discoverable until they received the August 2018 Reporting Letter, which recommended adding Ms. Lou as a defendant.
[26] There are significant evidentiary problems with these assertions:
a. On the record before me, there is no evidence that Ms. Lou has any undisclosed legal or beneficial interest in the Property or from which any such proper inference could be made, apart from the fact that she is Zhong-Zhi’s daughter and as a family member she may have had some interest in assisting her parents in achieving the best price. If this is the interest asserted, as will be seen below, the plaintiffs knew she was Zhong-Zhi’s daughter since approximately 2012;
b. The August 2018 Reporting Letter does not set out any information from which a proper inference could be made that Ms. Lou fraudulently concealed any involvement with the Property. The only statements that tangentially relate to Ms. Lou in the redacted Reporting Letter produced by the Plaintiffs are that letters were sent to Ms. Lou for translation to her father and were not returned, and that when the building inspector was examined for discovery on August 16, 2016, he made references to someone on site who spoke English (which the letter then infers must have been Ms. Lou). Notably, when the inspector was examined for discovery, he did not give any evidence that he was misled as to Ms. Lou’s identity or role and as will be seen, he knew exactly who she was;
c. Apart from what is in the August 2018 letter, in Mr. Hall’s affidavit he says that in August 2018 he was advised by Mr. Kostyniuk that after reviewing transcripts and other materials, he became suspicious of Ms. Lou’s involvement. In particular, the records showed that the inspector had spoken to a woman and Mr. Kostyniuk did not think that Zhong-Zhi’s wife spoke English well enough to speak to the inspector; therefore, he believed it must have been Ms. Lou and that she was pretending to be her mother.
Frankly, I agree with Ms. Lou’s counsel that this is quite a leap of logic. There is no compelling evidence before me that Zhong-Zhi’s wife did not have sufficient facility with the English language to speak to the inspector at all, and it is quite a leap to jump to the conclusion that she did not based on her name or relationship to Zhong-Zhi, and that, therefore, Ms. Lou must have been pretending to be her mother in communications with the inspector. Furthermore, the contemporaneous documents show that the inspector specifically knew that Ms. Lou was Zhong-Zhi’s daughter—and therefore she could not have been pretending to be her mother. There is a handwritten note made by the building inspector on an inspection report dated April 28, 2011 which says, “Spoke to Kay [sic] the daughter of owner told them to stop work.”
[27] In my view, there is no evidence of any fraudulent concealment of anything by Ms. Lou, even applying a very low standard of proof.
[28] With respect to discoverability, there is compelling evidence that the plaintiffs knew or ought to have known that they had a potential claim against Ms. Lou well before January 15, 2017.
[29] Discoverability does not require exact certainty of a claim, but only that the facts are sufficient for a “potential claim”. It is not necessary for a plaintiff to know the “precise cause” of the injury. It is enough for the plaintiff to have prima facie grounds to infer that the defendants caused harm. Certainty of the defendants’ responsibility for the act/omission that caused the loss is not a requirement for the limitation period to run: Szanati v. Melnychuk, 2016 ONSC 1293, 129 O.R. (3d) 605, at para. 31; McSween v. Louis (2000), 132 O.R. (3d) 304, at para. 51 (Ont. C.A.); Brown v. Wahl, 2015 ONCA 778, 128 O.R. (3d) 588, at para. 18.
[30] Whether the plaintiff has acted with due diligence is also relevant. A plaintiff is required to act with due diligence in determining if she has a claim. 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): Fennell v. Deol, 2016 ONCA 249, at para. 23. However, a lack of due diligence on its own is insufficient to fix a plaintiff with objective knowledge of a claim: Morrison, at para. 4.
[31] The following evidence and admissions support that the plaintiffs knew or ought to have known that Ms. Lou was involved with the marketing and renovations of the Property in some respect and that they had a potential claim against her well before January 15, 2017, and at the latest by May 4, 2013:
a. … They knew Ms. Lou was involved in the marketing and sale of the Property and that she participated in the negotiations of the Agreement of Purchase and Sale (“APS”) at the time it was signed in 2011;
b. When the APS was executed in 2011, they only spoke to Ms. Lou and not Zhong-Zhi;
c. When Mr. Hall was cross examined for this motion, he confirmed that as of early 2012 he knew that Ms. Lou was involved in the renovations of the Property:
37-38
Q: So prior to August 2018, is it your position that, prior to August 2018, you didn’t have any idea of suspicion, inkling or inference, that Qi Lou was involved, as a participant, in the renovations?
A: I was aware prior to the date you mentioned.
Q. Okay, when were you aware?
A: When I obtained the inspection documents. That would have been early 2012, I obtained the inspection documents from the City of Toronto.
d. On March 24, 2013, Ms. Kerr wrote an email to the Mike Holmes’ show on both plaintiffs’ behalf regarding a proposal to have the problems with their home televised on his show. On May 4, 2013 they sent an email to the Mike Holmes’ show attaching a chronology with information from their “lawyers, [their] neighbours and the structural engineer involved.” This chronology contained the following information:
“Vendor’s daughter is referred to several times in City of Toronto inspection reports;
“Vendor allegedly does not speak English and his daughter, who ran the renovation, acted as his translator.” [Emphasis added].
“Vendor’s realtor was overheard during a phone conversation with the vendor (or likely his daughter who spoke English) that “you don’t understand; this is really bad.”
[32] Regarding the plaintiff’s argument that their claim was not discoverable until they received the August 2018 Reporting Letter, when Mr. Hall and Ms. Kerr were cross-examined as to what information they received which allowed them to discover their alleged claim against Ms. Lou in August 2018, they could not answer and continually deferred to their counsel. Mr. Kostyniuk has not provided an affidavit in this proceeding which explains how the August 2018 Reporting Letter provided new information previously unknown which alerted them to the possibility of a claim against Ms. Lou.
[33] Although the plaintiffs say that the date of discoverability is based upon the August 2018 Reporting Letter, at the motion they relied upon cross-examination evidence of the contractor conducted afterwards in March 2019 as evidence they could not have discovered their claim earlier. They say that the contractor gave evidence that Ms. Lou gave him instructions.
[34] Proffering this evidence is illogical because they had already brought their motion to add Ms. Lou at the time they obtained this evidence, so it could not have been required to make their claim discoverable. Further, it does not support any claim that that Ms. Lou fraudulently concealed her involvement and pretended to be her mother, let alone all of the inferences which the plaintiffs draw that she was deliberately giving the contractor instructions to him to perform faulty work.
[35] The plaintiffs also rely upon the subsequent examination for discovery of the same contractor conducted on October 9, 2020 where he indicated it was his recollection that it was Ms. Lou’s responsibility to communicate with the building inspector although he did not recall actually seeing her do so. He also gave evidence that he believed the inspector left his business card behind and that it was given to Ms. Lou although again he did not specifically recall. Again, this evidence cannot support an argument that the plaintiffs’ claim was undiscoverable until they had it, because they had already started their claim against Ms. Lou at that point.
[36] In any event, this evidence is at best vague and does not support any inference that Ms. Lou was impersonating her mother or had any interest in the property. Indeed, in the remainder of his examination, the contractor testified that he understood Ms. Lou was acting as a representative of her father, and that she never gave him any specific instructions as to structural elements of the basement or the thickness of the materials (these are some of the issues with the basement). He testified that it was a fair statement that Zhong-Zi and Ms. Lou gave him instructions as to the final product they wanted and left the details up to him. When counsel asked the contractor to clarify whether the instructions he received were from Ms. Lou or Zhong-Zhi, he said he could not recall.
[37] On the record before me, there are no additional significant facts contained in the August 2018 Reporting Letter or that the plaintiffs learned in August 2018, that provided the plaintiffs with more information than they already had as of May 4, 2013. That is, as of May 4, 2013, they already knew Ms. Lou was Zhong-Zhi’s daughter, they knew Ms. Lou was involved in some respect (she is listed on the inspection reports which they had and as noted above there is specific notation that she spoke to the inspector) and they knew she was a person on the construction site who spoke English and provided direction to those involved with the renovation. The plaintiffs have inferred that because of these facts that she must have had an undisclosed interest and been an active participant in alleged deceit. Even if these inferences are reasonable, they are based upon facts they already knew as of May 4, 2013. In my view, any subsequent facts set out in the August 2018 Reporting Letter or that they gleaned along the way were at most minor and were not required for them to have drawn these inferences. And as I have said above, there is absolutely no evidence that she was impersonating her mother.
[38] Even if I accept that the evidence they subsequently obtained from the contractor’s cross-examination or discovery was required for discoverability, (which I do not accept since that is an illogical proposition as they had already brought a motion to add Ms. Lou as a party before they obtained any information from the contractor), the evidence they now rely upon from the contractor could have been obtained earlier with the exercise of due diligence. The flood occurred in 2011. Clearly, since the claim was based upon faulty construction, a reasonable plaintiff would be attempting to locate the contractor. Indeed Zhong-Zhi brought a third party claim against the contractor on May 14, 2014. Even giving the plaintiffs until the end of 2014 to make inquiries of the contractor, the limitation period would have expired at the end of 2016, which is still out of time.
[39] The plaintiffs argue that there is a credibility issue which requires a trial, namely the extent of Ms. Lou’s involvement. They argue that that a fair reading of the contractor’s evidence suggests Ms. Lou’s involvement was more significant than what she admits. Ms. Lou still contends that she was only providing interpretation services. The plaintiffs are misunderstanding the nature of the genuine issue they must raise on this motion. What they are referring to are credibility issues relating to the underlying claim they wish to assert against Ms. Lou. There may very well be credibility issues if the action against her were permitted to proceed. The fact that she does not concede their claims is not evidence of fraudulent concealment for the purposes of this motion, nor is the claim against her undiscoverable until she admits wrongdoing. No claim would ever be discoverable if this were the test.
[40] This is a summary judgment motion on the issue of whether the claim against Ms. Lou is statute-barred. The plaintiffs must raise a genuine issue which requires a trial as to whether their potential claim against Ms. Lou was undiscoverable because of her fraudulent concealment, or otherwise was undiscoverable, two years prior to when they commenced their claim against her on January 15, 2019.
[41] There is simply no persuasive basis in the record before me which supports either directly, or by way of proper and reasonable inference, that Ms. Lou fraudulently concealed her involvement in the renovation by pretending to be her mother, thus rendering the potential claim against her undiscoverable until January 15, 2017.
[42] The plaintiff is obligated to put its best foot forward. The plaintiffs have not raised any genuine issue requiring a trial.
[43] In my view, the evidence in this motion demonstrates on a balance of probabilities that by May 4, 2013, at the latest a reasonable person with the abilities and in the circumstances of the plaintiffs ought to have inferred or ought to have known, that: (a) damage (flooding in the basement) had occurred on November 29, 2011; (b) this damage was caused by or contributed to by faulty renovations, misrepresentations to the City of Toronto Building Inspector, and/or misrepresentations in the marketing and sale of the Property; (c) Ms. Lou had participated in the acts/omissions as a person who was involved in the marketing and sale and the renovations in some respect and, as such, they had a potential claim against her; and (d) that a legal proceeding would be an appropriate means to seek relief. I note that there was no argument on this last element.
[44] Therefore, for the claim not to be statute-barred, they would have had to commence it by May 4, 2015, which is almost four years prior to when they did. As such, the claim is statute-barred.
[45] As such, summary judgment is granted to the defendant, Ms. Lou, dismissing this claim against her as being statute-barred.
[46] Costs submissions shall be made as follows:
a. Ms. Lou within 7 days of the date of these reasons;
b. The plaintiffs within 7 days thereafter.
Papageorgiou J.
Released: Feb 12, 2021
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
JEFFREY HALL and JENNIFER KERR
Plaintiffs
– and –
ZHONG-ZHI LOU, THE CORPORATION OF THE CITY OF TORONTO, FCT TITLE INSURANCE LTD., NOVEX INSURANCE COMPANY, INTACT INSURANCE COMPANY, AND QI LOU
Defendants
- and -
RAYMOND LIU and HANG JIE CONSTRUCTION AND RENOVATIONS INC.
Third Parties
- and –
MING JIE JANG and HANG JIE CONSTRUCTION AND RENOVATIONS INC.
Fourth Parties
REASONS FOR JUDGMENT
Papageorgiou J.
Released: Feb 12, 2021