Court File and Parties
Court File Nos.: CV-19-620301-CL; CV-19-620285; CV-19-620326; CV-19-620288 Date: 2022-08-19 Superior Court of Justice – Ontario Commercial List
Court File No.: CV-19-620301-CL Between: AssessNet Inc., Plaintiff And: Taylor Leibow Inc., in its capacity as Trustee of the Bankrupt Estate of Lucio Anthony Ferro and Julie Savage, Defendants
Court File No.: CV-19-620285-CL Between: AssessNet Inc., Plaintiff And: Jane Poproski, Jane Poproski Professional Corporation, Andrew Rudder, Ellen Helden and 1312788 Ontario Limited c.o.b. under the tradenames Lawyers’ Support Services, Future Health Institute and DVD Productions, Defendants
Court File No.: CV-19-620326-CL Between: AssessNet Inc., Plaintiff And: Robert Hooper, Bayview Personal Injury Lawyers, Jane Poproski, Jane Poproski Professional Corporation, Andrew Rudder, Ellen Helden and 1312788 Ontario Limited c.o.b. under the tradenames Lawyers’ Support Services, Future Health Institute and DVD Productions, Defendants
Court File No.: CV-19-620288-CL Between: AssessNet Inc., Plaintiff And: Jane Poproski, Jane Poproski Professional Corporation, Bayview Personal Injury Lawyers, Ellen Helden and 1312788 Ontario Limited c.o.b. under the tradenames Lawyers’ Support Services, Future Health Institute and DVD Productions, Defendants
Before: Kimmel J.
Counsel: Peter Waldmann, for the Plaintiff, AssessNet Inc. Doug Smith, for the Defendants, Taylor Leibow Inc. (in its capacity as Trustee of the Bankrupt Estate of Lucio Anthony Ferro) and Julie Savage Michael Kestenberg, for the Defendants, Jane Poproski, Jane Poproski Professional Corporation, Bayview Personal Injury Lawyers and Andrew Rudder Marek Tufman, for the Defendants, Ellen Helden and 1312788 Ontario Limited c.o.b. under the tradenames Lawyers’ Support Services, Future Health Institute and DVD Productions
Heard: April 21, 2022 and June 1, 2022
Endorsement (defendants’ motions for summary judgment)
Introduction
1AssessNet Inc. (“AssessNet” or the “Plaintiff”) has commenced four separate actions (the “Actions”) arising out of the bankruptcy and subsequent death of Lucio Anthony Ferro (“Ferro” or the “bankrupt”). The defendants1 have brought motions for summary judgment in each of the Actions seeking their dismissal. They allege there is no genuine issue for trial, primarily because the Actions are barred by the limitation periods applicable to the various asserted causes of action.
2The plaintiff’s claims in the Bankruptcy Trustee Action and the S. 38 BIA Action (as defined hereinafter), for the most part, relate to the defendants’ conduct between Ferro’s death on June 12, 2015 and December 2015. AssessNet relies upon the principle of discoverability to rebut the presumption that the limitation period began to run in that time frame. AssessNet maintains that there is no obvious or identifiable “triggering event” outside of the applicable limitation period preceding the commencement of each Action and points to examples of information discovered within the limitation timeframes.
3The defendants counter that the presumption is not rebutted because AssessNet knew or ought to have known of facts giving rise to a plausible inference of liability prior to December 2015. The Actions were all commenced more than two years after that.
4The limitations issues raised in the Copyright Action and Client Assigned Claims Action (as defined hereinafter) arise from different conduct over broader time periods, extending after 2015.
Summary of Outcome
5For the reasons that follow in this endorsement, summary judgment is granted in two of the Actions. The Bankruptcy Trustee Action is dismissed. Summary judgment is also partially granted in respect of the Client Assigned Claims Action, with a single exception of one assigned claim that was settled in 2017 that should proceed in small claims court if it is going to be pursued.
6Summary judgment is denied in the s. 38 BIA Action and the Copyright Action.
Factual Background and Timeline Leading to the Actions
The Bankruptcy and Dealings with AssessNet
7Ferro was a self-employed lawyer who operated Ferro & Company (“Ferro & Co.” or the “Firm”), a sole-proprietor law practice in the city of Hamilton. On March 12, 2015, Ferro made an assignment in bankruptcy for the general benefit of his creditors with the Official Receiver (the “Bankruptcy”).
8On March 12, 2015 the defendant, Taylor Leibow Inc. (“Taylor Leibow”) was appointed trustee in bankruptcy (“Trustee”) of the Firm’s estate in the bankruptcy (the “Estate”). The defendant Julie Savage (“Savage”) assumed carriage of the mandate for Taylor Leibow.
9AssessNet is a medical assessment services company. It supplied medical reports to Ferro & Co. for its clients’ personal injury claims (the “Medical Reports”) and was one of Ferro’s creditors. AssessNet’s principal, Dr. Adriano Persi (“Persi”) was appointed as one of the Estate’s inspectors. AssessNet filed a proof of claim with the Trustee in respect of an unsecured claim in the amount of $1,435,984.36. Ian Wollach (“Wollach”), an accountant with Collins Barrow Toronto Valuations Inc. (now with RSM Canada LLP), was the other inspector. Persi and Wollach are referred to together as the “Inspectors” and individually each as an Inspector.
10Prior to the Bankruptcy, in 2014 AssessNet commenced an action against the Firm for payment of alleged unpaid invoices for Medical Reports (the “2014 Action”). This action was stayed by the Bankruptcy.
11Persi acknowledges that he instructed AssessNet’s lawyer, David Jackson (“Jackson”) of the law firm Simpson Wigle LAW LLP, to assert a claim for breach of copyright with respect to the Medical Reports against the Firm in the 2014 Action. He also acknowledges that he consulted a copyright lawyer at the time for that specific purpose.
12AssessNet later commenced 58 separate small claims actions against clients of Ferro & Co. for the non-payment of its invoices rendered to the Firm in connection with those clients’ personal injury claims.
The Role of Poproski and Helden post-Bankruptcy
13The Trustee, as a non-lawyer, was not permitted by the Law Society of Upper Canada (“LSUC”), as it was then known, to operate the Ferro & Co. law firm or its trust accounts. The LSUC granted permission to Ferro’s associate, Jane Poproski (“Poproski”), to do so.
14After Ferro’s death, Poproski ran the legal aspects of Ferro & Co. The non-client research and office management aspects of the law firm continued to be administered by Ferro’s former spouse, Ellen Helden (“Helden”), through her holding company 1312788 Ontario Ltd. (“131 Ontario”).
Timeline
15The following timeline of events provides helpful factual background and context:
March 12, 2015: Ferro made an assignment in bankruptcy with the Official Receiver. Taylor Leibow was appointed as the Trustee in Bankruptcy.
April 1, 2015: First meeting of Estate creditors. Persi and Wollach were appointed as Inspectors of the Estate. Jackson, who previously acted for AssessNet, began providing advice as counsel for the bankrupt Estate/Trustee at Persi’s request. Jackson also continued to provide legal advice to Persi and AssessNet in respect of the Bankruptcy.
June 12, 2015: Ferro died.
June – August, 2015: Poproski considered purchasing the practice of Ferro & Co., its property and assets. Poproski agreed with the LSUC and the Trustee to manage the firm’s bank account and Client Files since the Trustee was not permitted to do so by the LSUC.
July 27, 2015: As of this date (and continuing thereafter), the Inspectors actively engaged with the Trustee and Savage and often disagreed with the proposed courses of action and activities. The Inspectors complained with increasing intensity thereafter about the Trustee and Savage’s handling of the Estate, and about the conduct of Poproski and Helden.
October 13, 2015: The Trustee advised the Inspectors that Helden and/or 131 Ontario were receiving payments from client settlements, which Helden claimed were being used to pay overhead expenses.
November 3, 2015: The Trustee obtained an order from Justice Hainey which, among other things, compelled production of records from Ferro & Co. and approved the sale of Ferro & Co.’s largest asset, its client files (the “Client Files”).
November 3, 2015: The Trustee received an unsolicited offer from Poproski to purchase the Firm’s practice and assets. This was communicated to the Inspectors on November 4, 2015.
November 15, 2015: Poproski and another lawyer submitted a formal offer to purchase the Client Files.
December 5, 2015: The Trustee prepared a Request for Offers, inviting proposals for the purchase of the Client Files.
December 18, 2015: At the 9th meeting of Inspectors, Savage presented three offers received by the Trustee for the sale of the Client Files.
December 23, 2015: On the instructions of the Inspectors, the Trustee entered into a Bill of Sale with Gluckstein Personal Injury Law (“Gluckstein”) to transfer the Estate's right, title and interest in the Client Files in exchange for 25% of the fees generated from the Client Files.
December 2015: Poproski incorporated her own professional corporation: Bayview Personal Injury Lawyers. Andrew Rudder (“Rudder”) worked for her for a period of time thereafter. Poproski, her professional corporation and Rudder together are referred to as the “Lawyer Defendants”.
December 2015: Poproski entered into an arrangement with Gluckstein regarding her continued handling of some Client Files.
December 1, 2015: The Trustee was granted online access to the Ferro & Co. network and to all the Firm’s files.
December 29, 2015: The Trustee discovered that the remote access to Ferro & Co.’s electronic client and accounting records, that had been arranged, in part, for Gluckstein, was cut off on December 24, 2015. According to Poproski, this was done to protect the clients, pending a transition plan for the Client Files.
January 6, 2016: Access to the electronic client and accounting records of Ferro & Co. was restored.
January 16, 2016: The Trustee identified a concern that Helden may have improperly used funds in 131 Ontario’s bank account, which was being used as the operating account for Ferro & Co., after the Trustee gained access to bank account records that disclosed that the account balance had been reduced from $409,792.55 (as of December 23, 2015) to $111,000.00 (as of January 22, 2016). According to the Trustee, this review did not indicate any payments to Poproski outside the normal payroll.
January 21, 2016: AssessNet was referred to a copyright lawyer.
January 28, 2016: The Trustee obtained an ex parte order compelling Helden's company, 131 Ontario, to turn over to the Trustee all funds on deposit in its bank account.
January 29, 2016: The Trustee reported the concerns about the 131 Ontario bank account to the Inspectors.
Jan/Feb. 2016: Poproski entered into an independent lease agreement with the former landlord of Ferro & Co. to lease its premises and continued to use the firm’s phone number and office equipment.
February 22, 2016: Gluckstein advised the Trustee that many of the Client Files that had been subject to the Bill of Sale had already been settled (of the 542 listed files only 250 remained open). The Trustee advised the Inspectors of this.
March 4, 2016: An Inspectors’ meeting was held, at which potential claims against Poproski and Helden were discussed, including s. 38 BIA claims.
March 9, 2016: AssessNet served the Trustee with notice that it intended to assert a claim against the Estate in respect of its alleged copyright interest in the AssessNet Medical Reports prepared for Ferro & Co. former clients (the “Former Clients”).
March 22, 2016: AssessNet provided formal notice that any implied permission for the use of its Medical Reports in connection with the handling or settlement of the Client Files was revoked.
March 22, 2016: The Trustee provided confirmation to the Inspectors that there were no personal service or employment agreements between Ferro & Co. and the Lawyer Defendants and Helden, pre-or post-bankruptcy.
March 22, 2016: The Trustee requested that Persi and Wollach resign as Inspectors. Persi, because he had threatened to sue the Estate for alleged copyright infringement. Wollach, on the basis of his alleged misconduct as an Inspector.
March 28, 2016: Wollach advised the Trustee that he would not resign. Instead, he moved for a resolution to replace the Trustee at the next meeting of Estate creditors.
April 26, 2016: The Trustee’s report indicates that actions against the Lawyer Defendants and Helden should be brought by the Estate rather than by specific creditors under s. 38 of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3 (the “BIA”).
April 29, 2016: At a meeting of Estate creditors, they voted to remove Taylor Leibow as Trustee to appoint A. Farber & Partners Inc. (“Farbers”) as the new trustee in bankruptcy.
April – June, 2016: Further details of funds received by the Lawyer Defendants and Helden drawn from, or owed to, the Firm are disclosed to the Inspectors.
March 22, 2017: Counsel for AssessNet wrote to Farbers, in its capacity as the new trustee in bankruptcy, to request that Farbers either bring an action against the Lawyer Defendants, Helden and the former Trustee, or consent under s. 38 of the BIA to an assignment of such causes of action to AssessNet. In that letter, counsel specifically stated that the causes of action concern a period from March 12, 2015 to December 23, 2015.
April 18, 2017: Farbers advised that the Trustee intended to pursue claims against the Lawyer Defendants and Helden.
May 15, 2017: Farbers later advised that the Trustee would be open to creditors pursuing s. 38 BIA claims against the Lawyer Defendants, Helden and the former Trustee and Savage.
November 2017: In the material filed by AssessNet on its s. 38 BIA leave motion, Persi stated that the claims “concern the post-bankruptcy period between March 12, 2015 to and including December 22, 2105 (the “Time Period”) and conclude when the Trustee entered into a contract to assign the Ferro & Company client files to Gluckstein Personal Injury Lawyers Professional Corporation”.
2017/2018: AssessNet sued various Ferro & Co. Former Clients in small claims court for payment of its outstanding invoices to the Firm for Medical Reports prepared by AssessNet in connection with those Former Clients’ claims. AssessNet later settled its claims against the Former Clients in exchange for, inter alia, an assignment of any claims that those Former Clients had against the Firm.
Timeline of the Actions
16Further particulars of the timing of, and causes of action asserted in, each of the Actions that the defendants seek to have dismissed on these summary judgment motions are as follows:
November 14, 2017: AssessNet obtained an order pursuant to s. 38 of the BIA authorizing it to commence proceedings in its own name, and at its own expense, against the Lawyer Defendants and Helden and 131 Ontario, and authorizing Farbers to assign to AssessNet the following rights of action or rights in respect of property or after acquired property of the Bankrupt:
a. Unjust preferences, fraudulent conveyances, breach of trust, knowing receipt of trust funds, knowing assistance of breach of trust, conversion or transfers at undervalue against Ellen Helden, 1312788 Ontario Limited Ontario, Jane Poproski and Andrew Rudder with respect to fees and disbursements or any other monies received by them or received by Ferro & Company with respect to the personal service contracts of Lucio Anthony Ferro or Ferro & Company subsequent to the date of bankruptcy of Lucio Anthony Ferro to and including December 22, 2015; and
b. Claims for surplus income due to the Trustee by the deceased Estate of Lucio Anthony Ferro, Ellen Helden in her personal capacity and in her capacity as executrix of the deceased Estate of Lucio Anthony Ferro, 1312788 Ontario Limited and Jane Poproski pursuant to s. 68 of the Act.
December 20, 2017: AssessNet issued a Statement of Claim under court file number CV-17-588893 (now CV-19-620288 CL) (the “s. 38 BIA Action”).
December 20, 2017: AssessNet commenced an action against the Lawyer Defendants, Helden and 131 Ontario under court file number CV-17-588892 (now CV-19-620326-00CL) under the Copyright Act, R.S.C. 1985, c. C-42, for breach of the copyright in its Medical Reports alleged to have been improperly used by or for the benefit of the Lawyer Defendants and Helden and 131 Ontario after Ferro died (the “Copyright Action”).
March 13, 2018: AssessNet obtained an order granting leave under s. 215 of the BIA to commence an action against the Former Trustee (Taylor Leibow and Savage) and issued a Notice of Action under court file number CV-18-593381 and a statement of claim on May 3, 2018 (now CV-19-620301 CL) (the “Bankruptcy Trustee Action”). This action alleges that the Trustee was negligent and breached its fiduciary duties by: (i) failing to take possession of the books, records, documents and property of the Estate; (ii) allowing Ferro's widow, Helden, and his associate, Poproski, to carry on the business of Ferro & Co. after the date of the Bankruptcy; (iii) allowing Ferro & Co. to settle files after the onset of the Bankruptcy; and (iv) failing to market the client files of Ferro & Co. properly.
March 19, 2018: AssessNet commenced an action against the Lawyer Defendants, Helden and 131 Ontario, based on assignments of claims from Former Clients of Ferro & Co. regarding alleged illegal billings in connection with Client File settlements under court file number CV-18-594267 (now CV-19-620285) (the “Client Assigned Claims Action”).
The Test for Summary Judgment
17The defendants move for summary judgment under Rule 20 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (the “Rules”). Rule 20.01(3) allows a defendant, after the delivery of a statement of defence, to move for summary judgment to dismiss all or part of a claim. Rule 20.04 provides that the court shall grant summary judgment if satisfied that there is no genuine issue requiring a trial.
18The framework for determining summary judgment motions comes from the Supreme Court of Canada in Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, at paras. 47 and 66. It requires that the judge be confident that the court has the evidence to make the factual findings required to adjudicate the dispute (by applying the law to the facts) and to reach a fair and just determination on the merits: Hryniak, at para. 49. This can be considered in light of the goals of timelines, affordability, and proportionality.
19A motion for summary judgment is decided in two stages:
a) The judge should first determine if there is a genuine issue requiring a trial based only on the evidence before him or her without using the fact-finding powers in subrule 20.04(2.1) of the Rules.
b) If there appears to be a genuine issue requiring a trial, Rule 20.04(2.1) permits the motion judge, at his or her discretion, to: (1) weigh the evidence, (2) evaluate the credibility of a deponent, or (3) draw any reasonable inference from the evidence unless it is in the “interest of justice” for these powers to be exercised only at trial.
Hryniak, at para. 66.
20There will be no genuine issue requiring a trial when the motion 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.
21Nor will there be a genuine issue requiring a trial if the summary judgment process provides the motion judge with the evidence required to fairly and justly adjudicate the dispute and is a timely, affordable and proportionate procedure. See Hryniak, at paras. 49, 66. The court may use the expanded fact-finding powers available under Rule 20.04(2.1) to resolve these issues if that will leave no genuine issue requiring a trial: see Trotter v. Trotter, 2014 ONCA 841, 122 O.R. (3d) 625, at para. 75; 2212886 Ontario Inc. v. Obsidian Group Inc., 2018 ONCA 670, 83 B.L.R. (5th) 186, at para. 34, but is not required to do so. When Rule 20.04(2.1) is engaged, the court must consider whether it is in the interest of justice for the enhanced fact-finding powers to be exercised only at trial.
22In a more recent decision of this court, Myers, J. provides instructive examples of questions that the court may consider if it appears that there may be a genuine issue requiring a trial and the enhanced fact-finding powers are engaged:
(a) Will making findings of fact on the evidence before the court provide a fair and just result as compared to a mini-trial or a trial?
(b) Does the material before the court illuminate the factual issue sufficiently to allow the judge to make findings of fact and credibility?
(c) Is there something missing that is needed for basic fairness despite the fact that the parties chose not to put that evidence forward?
(d) Do considerations of the litigation as a whole mandate some further process before making factual or credibility findings?
Oxygen Working Capital Corp. v. Mouzakitis, 2021 ONSC 1907, at para. 42
23The party responding to a summary judgment motion must adduce coherent evidence based on an organized set of facts to show that there is a genuine issue to be tried on admissible evidence. The responding party must “lead trump or risk losing” or, in other words, put their best foot forward. The court is entitled to assume that all the evidence that the parties intend to rely upon at trial is before the court on the summary judgment motion: Broadgrain Commodities Inc. v. Continental Casualty Company, 2018 ONCA 438, 80 C.C.L.I. (5th) 23, at para. 7; Mazza v. Ornge Corporate Services Inc., 2016 ONCA 753, 62 B.L.R. (5th) 211, at para. 9; James v. Chedli, 2021 ONCA 593, at para. 31; Sweda Farms Ltd. v. Egg Farmers of Ontario, 2014 ONSC 1200, at para. 26, aff’d 2014 ONCA 878.
24Bald assertions do not give rise to a genuine issue requiring a trial. See Trotter Estate, at para. 73.
25While the ultimate onus on a summary judgment motion rests on the moving party, once a limitations defence and initial presumption has been raised by the defendant, the evidentiary onus of establishing at least a genuine issue for trial regarding discoverability shifts onto the plaintiff. See Silva v. Biasini, 2020 ONSC 8035, at para. 32
Analysis
26The question of whether there is a genuine issue requiring a trial to determine whether any of the Actions were commenced after the applicable limitations periods expired is fact specific and must be considered by looking at the arguments raised in respect of each Action.
The Bankruptcy Trustee Action
a) The Limitations Arguments
27This action was commenced (after leave was obtained pursuant to s. 215 of the BIA) by Notice of Acton on March 13, 2018. It is governed by the two-year limitation period in s. 4 of the Limitations Act, 2002, S.O. 2002, c. 24, Schedule B (the “Limitations Act”).
Section 4 provides:
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.
Section 5(1) states that a claim is discovered on the earlier of:
a) the day when 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 these matters referred to in clause (a).
28Section 5(2) of the Limitations Act presumes that a plaintiff had knowledge of the above factors on the day the act or omission took place. The plaintiff bears the onus of showing that either the plaintiff or their agents lacked the requisite knowledge and ought not to have known the requisite facts prior to the expiry of the limitation period. See: Pepper v. Sanmina-Sci Systems (Canada) Inc., 2017 ONSC 1516, 65 C.C.L.I. (5th) 248, at para. 59.
29As observed by Perell J. in Tender Choice Foods Inc. v. Versacold Logistics Canada Inc., 2013 ONSC 80, at paras. 60 and 61:
60Discovery does not depend upon awareness of the totality of the defendant’s wrongdoing. Section 5(1)(a) of the Limitations Act, 2002 prescribes that discovery occurs when the plaintiff knows or ought to know of an injury caused by an act or omission of the defendant and having regard to the nature of the injury legal proceedings would be an appropriate way to seek a remedy. For the limitation period to begin to run, it is enough for the plaintiff to have prima facie grounds to infer that the defendant caused him or her harm, and certainty of a defendant's responsibility for the act or omission that caused or contributed to the loss is not a requirement: Kowal v. Shyiak, 2012 ONCA 512, at para. 18; Gaudet v. Levy, supra.
61The circumstance that a potential claimant may not appreciate the legal significance of the facts does not postpone the commencement of the limitation period if he or she knows or ought to know the existence of the material facts, which is to say, the constitute factual elements of his or her cause of action. Error or ignorance of the law or legal consequences of the facts does not postpone the running of the limitation period: Nicholas v. McCarthy Tétrault, [2008] O.J. No. 4258 (S.C.J.), aff’d [2009] O.J. No. 686 (C.A.), leave to appeal to S.C.C. ref’d [2009] S.C.C.A. 476. [emphasis in original.]
30AssessNet argues that it did not have sufficient knowledge of the injury, loss or damage that the Estate had suffered as a result of the alleged negligence and breaches of fiduciary duties of the Trustee and Savage prior to March 13, 2016. Persi attests that, even though he was an Inspector, he lacked knowledge and experience in bankruptcy matters and was dependent upon advice and direction from his lawyer, Jackson, to advise him about these matters. He then argues that this advice was tainted because Jackson was in a conflict, having also been engaged to advise the Trustee in the Bankruptcy. He claims Jackson misled him into believing that Savage and the Trustee were behaving appropriately.
31AssessNet also argues that it could only have known that a legal proceeding was the appropriate means to seek a remedy after the Trustee and Savage were replaced by Farbers on April 29, 2016, less than two years prior to the issuance of the Notice of Action on March 13, 2018.
32The Trustee and Savage maintain that AssessNet had, or could have, discovered the claims asserted against them in the Bankruptcy Trustee Action well before March 13, 2016. The alleged negligence and breaches of fiduciary duties were the subject of complaints from the Inspectors dating back to late July 2015. These complaints eventually culminated in the replacement of the Trustee on April 29, 2016. AssessNet knew that, despite the Inspectors’ concerns, the Trustee was permitting Helden (and 131 Ontario) to continue to be involved in the management of the Firm and the Lawyer Defendants to continue to be involved in the handling and management of the Client Files throughout the period from June to December 2015.
33The Trustee and Savage maintain that the Inspectors were aware that this conduct might have caused some injury, loss or damage to the Estate through disclosures made to the Inspectors (including Persi) by, at the very latest, January 29, 2016 (regarding the conduct of Helden and 131 Ontario) and February 22, 2016 (regarding the conduct of the Lawyer Defendants).
34Neither the type, nor the extent, of damage needs to be known to start a limitation period running. As stated in Grant Thornton LLP v. New Brunswick, 2021 SCC 31, 461 D.L.R. (4th) 613, at paras. 3 and 47:
3[A] claim is discovered when the plaintiff has knowledge, actual or constructive, of the material facts upon which a plausible inference of liability on the defendant's part can be drawn. It follows from this standard that a plaintiff does not need knowledge of all the constituent elements of a claim to discover that claim ...
47[E]ndorsing the Court of Appeal's approach that to discover a claim, a plaintiff needs knowledge of facts that confer a legally enforceable right to a judicial remedy, including knowledge of the constituent elements of a claim, would move the needle too close to certainty. A plausible inference of liability is enough ....
See also: Hamilton (City) v. Metcalfe & Mansfield Capital Corporation, 2012 ONCA 156, 347 D.L.R. (4th) 657, at paras. 54-70.
35The relevant question for the purposes of discovering a negligence claim, including a claim for professional negligence, is whether a plaintiff knows enough to draw a plausible inference of liability to support an allegation of negligence. This includes an act or omission said to have been in breach of a duty of care that caused some injury, loss or damage.
36There is no prima facie requirement for the provision of an expert report before the time begins to run on a limitation period in a claim for professional negligence: Lawless v. Anderson, 2011 ONCA 102, 276 O.A.C. 75; Soper v. Southcott, 39 O.R. (3d) 737; McSween v. Louis, 132 O.R. (3d) 304, at para. 45.
37This proposition was very recently reaffirmed by our Court of Appeal. The Court noted that the Limitations Act does not distinguish between meritorious and non-meritorious claims: Andrews v. Pattison, 2022 ONCA 267, at para. 8. A plaintiff must act with due diligence in acquiring the facts grounding a claim. Both direct and circumstantial evidence constitute evidence of a plaintiff's knowledge. Constructive knowledge will be imputed to a plaintiff where “the plaintiff ought to have discovered the material facts by exercising reasonable diligence.” Grant Thornton, at para. 44; Crombie Property Holdings Ltd. v. McColl-Frontenac Inc., 2017 ONCA 16, 406 D.L.R. (4th) 252, at para. 42.
38Taylor Leibow, and Savage have an expert report from Uwe Manski, an experienced Licensed Insolvency Trustee, who opined that the Trustee in no way acted improperly in the administration of the Estate.
39Conversely, the plaintiff has an expert report from Bruce Caplan that is critical of the Trustee’s conduct in respect of the Estate. The existence of these reports is noted, but their substance is not relied upon in the determination of the issues raised on the present motions for summary judgment. The “discoverability” of the causes of action that these reports deal with, for negligence and breach of fiduciary duties, is not dependent on the existence of an expert opinion as to liability.
b) Summary Judgment Analysis
40In seeking leave of the court for an assignment of the various causes of action pursuant to s. 38 of the BIA, Persi specifically swore that the claims for which he was seeking an assignment, “concern the post-bankruptcy period between March 12, 2015 to, and including, December 22, 2015 (“Time Period”) and conclude when the Trustee entered into a contract to assign the Ferro & Company client files to Gluckstein Personal Injury Lawyers Professional Corporation ...”.
41The claims against the Trustee and Savage are predicated on their alleged mishandling of the Bankruptcy, culminating in the assignment of the Client Files to Gluckstein on December 23, 2015, and their failure to properly monitor and act in relation to the alleged misconduct of the Lawyer Defendants and Helden.
42Section 5(2) of the Limitations Act presumes that a plaintiff has knowledge of a claim on the day the act or omission took place. The acts and omissions that are the subject of the assigned claims against the Trustee and Savage in the Trustee Bankruptcy Action all occurred between June and December 2015, more than two-years prior to the commencement of the Bankruptcy Trustee Action.
43Thus, the onus shifts to AssessNet to establish that there is a genuine issue requiring a trial about whether it knew (s. 5(1)(a) of the Limitations Act), or reasonably ought to have known (s. 5(1)(b) of the Limitations Act), prior to March 13, 2016 that the Estate had suffered injury, loss or damages caused by the negligence or breaches of fiduciary duties of the Trustee and Savage.
44Persi attests, despite the Inspectors’ contemporaneous and continuing complaints about the conduct of the Trustee and Savage, that he (and by extension, AssessNet) did not have actual knowledge that the Trustee and Savage were damaging the Estate, and that a legal proceeding was an appropriate recourse of the injury, loss or damage caused by these claims, prior to March 13, 2016. AssessNet argues that on the spectrum of “discoverability” discussed in Grant Thornton, what Persi, a person inexperienced in bankruptcy matters who claims to have been dependent on the advice of Savage and Jackson (a lawyer who is alleged to have been conflicted and also advising the Trustee), knew or ought reasonably to have known prior to March 13, 2016 is on the speculative end of the spectrum. It asserts that any prospect of injury, loss or damage was only conjecture or speculation until after the Trustee was replaced on April 29, 2016.
45Bald assertions by Persi of a lack of full knowledge, appreciation or understanding of the injuries, losses or damages are not sufficient to rebut the presumption under s. 5(2) of the Limitations Act in any case (see Trotter, at para. 73).
46However, even if Persi’s bald assertions are accepted, AssessNet must still satisfy the court that a reasonable person with the same abilities and in the same circumstances (as Persi, AssessNet’s representative) would not have reasonably known of some ensuing injury, loss or damage prior to March 13, 2016 to avoid objective discoverability under s. 5(1)(b) of the Limitations Act.
47Having considered AssessNet’s arguments and assertions about the discoverability of the claims asserted in the Bankruptcy Trustee Action, I find that they are misaligned with the evidentiary record of contemporaneous events. By the end of February 2016, AssessNet was aware that there were far fewer Client Files available to be purchased by Gluckstein than had been expected. They were concerned about the possible diversion of some Client Files and other Estate assets by the Lawyer Defendants and Helden (through 131 Ontario), which the plaintiff blamed upon the mishandling of the Bankruptcy by the Trustee and Savage.
48The email correspondence that Persi was party to dating back as early as July 2015, and thereafter, paints a very different picture than the one that AssessNet urges the court to find. I will not review each and every example, but some examples that run contrary to AssessNet’s assertions include:
a. The Inspectors were aware that Poproski and Rudder had been permitted by the Trustee to continue to operate the firm and that they were handling and settling Client Files. The Inspectors started complaining about this to the Trustee dating back to late July or early August 2015.
b. Wollach wrote an email to Persi on October 16, 2015 in which he stated that he had spoken to a trustee from Collins Barrow and that Savage had handled the Bankruptcy improperly “from beginning to end.” Persi responded on the same day as follows: “I am curious as to your discussion with your internal trustee. Yes, I would like to be involved with your telephone conference ...”
c. Having reviewed the transcript of Poproski’s examination by the Trustee in November 2015, Persi had also formed the view as of January 2016 that Poproski had been “active and aggressive in settling files.”
d. The Trustee’s concerns about dissipation of the Operating Account by Helden (through 131 Ontario) was known to the Inspectors by January 29, 2016.
e. The information regarding the lower than anticipated number of active Client Files actually available for assignment to Gluckstein was known to the plaintiff by February 22, 2016.
49I reject AssessNet’s characterization of the communications that Persi (and therefore AssessNet) was party to in the latter half of 2015, and in January and February of 2016, as mere speculation or conjecture about the possibility of negligence or breaches of fiduciary duties by the Trustee and Savage causing potential injury, loss or damage to the Estate. “A plausible inference of liability is enough.” I find that there is sufficient evidence from which such an inference can be drawn in this case. See Grant Thornton, at para. 47.
50The Supreme Court went on to say (at para. 48) that:
[I]n a claim alleging negligence, a plaintiff does not need knowledge that the defendant owed it a duty of care or that the defendant’s act or omission breached the applicable standard of care. Finding otherwise could have the unintended consequence of indefinitely postponing the limitation period. After all, knowledge that the defendant breached the standard of care is often only discernable through the document discovery process or the exchange of expert reports, both of which typically occur after the plaintiff has commenced a claim. (see Grant Thornton, at para. 48).
51Just because more facts came to the attention of Persi and AssessNet after March 13, 2016, does not mean that facts already known were not sufficient to start the limitation period. That applies to facts said by AssessNet to have been first disclosed in a March 31, 2016 email: that there were no contracts with former employees of the law firm, including the Lawyer Defendants and Helden, and that they had not provided invoices to the Trustee for their services rendered pre-and post-Bankruptcy.
52In Gordon Dunk Farms Limited v. HFH Inc., 2021 ONCA 681, 16 C.C.L.I. (6th) 289, at para. 34, the Court of Appeal confirmed “[a] plaintiff need not know the exact act or omission by the defendant that caused the loss in order to start the limitation period running.”
53Neither the claims nor the expected damages need to be fully developed and known for the limitation period to start running. While there must be some discoverable injury, loss or damage, the full nature and extent does not have to be determined. For the limitation period to begin, it is enough for the plaintiff to have prima facie grounds to infer that the defendant caused him or her harm (see Tender Choice Foods, at para. 60). I find that AssessNet had sufficient knowledge from which to draw a plausible inference of liability of the Trustee and Savage by February 22, 2016.
54There is no pleading of fraudulent concealment as against the Trustee or Savage, nor does the record disclose any basis for such to be asserted. Fraudulent concealment (including Jackson and Savage’s alleged collusion against AssessNet’s interests) was nonetheless argued as a basis for preventing the limitation period from running until as late as after documentary disclosure was provided in the course of this proceeding. The plaintiff relies upon Giroux Estate v. Trillium Health Centre, 74 O.R. (3d) 341, at paras. 22 and 28-29; Canadian Red Cross Society, Re, 2005 35481 (ON SC).
55Even if fraudulent concealment could be shown to be an available argument on a generous reading of the pleadings (which it has not been), the known and, by definition, unconcealed facts detailed above have been found to be sufficient to start the limitation period. New (allegedly fraudulently concealed) facts that came to light could have been raised in support of a cause of action advanced within that limitation period, but they do not re-start the clock on a limitation period that was already running for the same cause of action.
56The earlier known and unconcealed communications clearly indicate a much more advanced assessment of these potential claims, giving rise to a plausible inference of liability and rebutting the bald denials relied upon by AssessNet.
57Consistent with this, later communications in 2017 disclose an awareness that time was running out on these claims. On March 22, 2017, AssessNet’s counsel wrote:
As these causes of action concern a period from March 12, 2015 to December 23, 2015, we would have to be concerned about limitations issues, so would ask that this matter be given immediate consideration and that the Trustee of the Lou Ferro Estate either pursue these causes of action or advise that the Trustee will not pursue them and will consent to assigning these causes of action to AssessNet to permit seeking to obtain the required s. 38 and s. 215 authorization from the Superior Court of Justice in Bankruptcy and Insolvency.
58Similar concerns about limitations issues were expressed in April 2017 about the urgency surrounding the plaintiff obtaining an assignment of claims from Farber pursuant to s. 38 of the BIA. It is thus perplexing, and unexplained, why AssessNet waited until March of 2018 to seek leave of the court to take an assignment from Farber of the Estate’s claims against the Trustee and Savage and pursue them.
59I have no difficulty in finding, based on the contemporaneous communications in 2015 and 2016 (prior to March 13, 2016), that there is no genuine issue requiring a trial as to whether the two-year limitation period had lapsed before the commencement of the Bankruptcy Trustee Action on March 13, 2018. It lapsed by at least February 22, 2018, and therefore this action is statute barred and should be dismissed as against the Trustee and Savage.
60I do not need to resort to the fact-finding powers in Rule 20.04(2.1) to reach this conclusion. I have reached this conclusion based on findings of fact available to me from the contemporaneous records reflecting communications that the plaintiff was privy to, as detailed above.
61This is not negated by AssessNet’s arguments that other unique features of this case give rise to a genuine issue for trial on the discoverability question, namely that:
a. It relied upon the advice of Jackson, who was also acting (in a position of conflict) for the Trustee, and who defended the actions of the Trustee and Savage in the face of the Inspectors’ concerns; and
b. It would not be appropriate to ask the Trustee to commence a proceeding against itself, and therefore a proceeding could not be an appropriate means to seek a remedy for the alleged negligence and breaches of fiduciary duties of the Trustee and Savage until after the Trustee had been replaced by Farbers in April 2016.
i. The Alleged Lawyer’s Conflict
62The potential conflict of the lawyer Jackson is a red herring. Jackson’s role and engagement by the Trustee was not hidden from AssessNet; to the contrary, it was Persi who asked the Trustee to seek advice from Jackson, undoubtedly because AssessNet expected that Jackson would provide another line of insight to AssessNet about the Bankruptcy.
63AssessNet now asserts that, while there may be cases where parties with access to the advice of lawyers and other professionals have been imputed with the objective knowledge that their advisors would have had (see HOOPP Realty Inc v. Emery Jamieson LLP, 2020 ABCA 159, 5 Alta. L.R. (7th) 213, and Silva), the complication of its lawyer Jackson also advising the Trustee and defending the Trustee’s actions gives rise to a triable issue in this case about what implications can be drawn from Jackson’s involvement.
64Persi and AssessNet claim to have been “misled” by Jackson having affirmed Savage’s own advice to them that she was acting in accordance with her duties and responsibilities. However, concerns were being raised and accusations continued to be made by the Inspectors in the relevant Time Period against the Trustee and Savage, irrespective of any advice that Jackson may have been providing to AssessNet. The Inspectors consistently and contemporaneously recorded their views that the Trustee and Savage were not behaving appropriately. The record discloses that the Inspectors (and AssessNet) had access to other professional advisors.
65If AssessNet believes it sought and received an independent opinion from Jackson about the Trustee’s conduct that it now questions and seeks to challenge, that is a matter between AssessNet and Jackson, who has not been afforded the opportunity to speak for himself in the context of this motion.
66It has been held that the limitation period does not start to run in a solicitor’s negligence case where the loss or damage depends on the outcome of an underlying case (see, for example, the case of Georgian Properties Corporation v. Robins Appleby LLP, 2022 ONCA 245, 468 D.L.R. (4th) 476, relied upon by AssessNet). However, I was not directed to any authority for the suggestion that AssessNet is making, that the potential negligence or breach of duty of the solicitor advising the plaintiff can delay the running of the limitation period for the plaintiff’s claims against a third party.
ii. The Replacement of the Trustee
67Nor do I agree with the suggestion by AssessNet that there is a genuine issue for trial about whether the limitation period only started to run after the Trustee was replaced by Farbers in April 2016.
68As a starting point, AssessNet has not satisfied me that the first time that it actually knew, having regard to the nature of the injury, loss or damage, that a legal proceeding would be an appropriate means to seek to remedy against the Trustee was not until after the Trustee had been replaced. This is contrary to the evidence in which proceedings against the Trustee were being considered prior to April 29, 2016, based on all the same facts that I have already found were known to the plaintiff prior to March 13, 2016.
69Further, AssessNet points to no authority for the proposition that it would not have been appropriate to ask the Trustee to commence a proceeding against itself. That is the basis on which it seeks to bring its claims in the Bankruptcy Trustee Action within s. 5(1)(a)(iv) of the Limitations Act.
70That it might have been awkward to ask the Trustee to so does not mean that seeking leave to commence a proceeding would not have been appropriate. Even if the plaintiff preferred to wait until the Trustee had been replaced to make this request for the Trustee to be sued, in the circumstances of this case, there was plenty of time after the Trustee was replaced and before the expiry of the limitation period in which to commence this action. The plaintiff was alive to this concern and expressly addressed it in its counsel’s correspondence in 2017, well before the limitation period expired.
71Replacing the Trustee was within the control of the Inspectors and, in the circumstances of this case, taking AssessNet’s position to its logical conclusion would give rise to the same concern that the Supreme Court expressed in Grant Thornton (at para. 48) of indefinitely postponing the running of the limitation period.
72This is not a situation where the Trustee was undertaking a “repair” of an identified problem, such that it might be resolved without the necessity of a proceeding. Nor is this a situation in which an alternative resolution process had been invoked, which are the recognized circumstances in which the uncertainty about whether a legal proceeding was an appropriate means of recovery might delay the running of the time for discovery of a claim. See Ridel v. Goldberg, 2019 ONCA 636, 147 O.R. (3d) 23, at para. 71; see also Brown v. Baum, 2016 ONCA 325, 397 D.L.R. (4th) 161, at para. 20; and 407 ETR Concession Co. Ltd. v. Day, 2016 ONCA 709, 133 O.R. (3d) 762, at paras. 39-40, 34, 45, 48 cited in Beniuk v. Leamington (Municipality), 2020 ONCA 238, 150 O.R. (3d) 129, at paras. [58-61].
73There is no genuine issue requiring a trial on the questions of whether the limitation period for the Bankruptcy Trustee Action was postponed because of Jackson’s involvement with both the Trustee and AssessNet or pending the removal of the Trustee.
c) Summary Judgment Granted
74The summary judgment process has provided me with the evidence to fairly and justly adjudicate the limitations issue. I find that granting summary judgment and dismissing the Bankruptcy Trustee Action now is the proportionate, more expeditious and less expensive means to achieve a just result in this case where, as I have found, there is no genuine issue requiring a trial. See Hryniak, at paras. 49, 66.
75The Bankruptcy Trustee Action is dismissed, with costs.
The s. 38 BIA Action
76The s. 38 BIA Action was commenced on December 20, 2017 against the Lawyer Defendants, Helden and 131 Ontario following a November 14, 2017 assignment order in the Bankruptcy Proceeding. This s. 38 BIA Action is for alleged improper benefits taken from the Estate in the form of surplus income, settlement proceeds and/or fraudulent conveyances.
a) The Limitations Arguments
77The same two-year limitation period under the Limitations Act applies to s. 38 BIA Action as to the Bankruptcy Trustee Action.
78The same analysis applies here insofar as the claims against the Trustee and Savage in the Bankruptcy Trustee Action are, by and large, predicated on their failure to identify and take action to prevent or seek recourse on behalf of the Estate for the alleged misconduct of the Lawyer Defendants and Helden that are the subject of the s. 38 BIA Action. There are three arguments, however, that could lead to a different outcome in the limitations analysis as it relates to the s. 38 BIA Action:
a. First, AssessNet argues that there is a triable issue as to whether it knew, or ought to have known, by December 20, 2015 about the injuries, losses and damage said to have been suffered as a result of the alleged negligence and fraudulent actions of the Lawyer Defendants and Helden (approximately three months earlier than the commencement of the limitation period in the Bankruptcy Trustee Action).
b. Second, but related to the first point, there are allegations of self-dealing and fraudulent conveyances, which if concealed (for example, because of the lack of co-operation from the Lawyer Defendants and Helden), might toll the running of the limitation period (or extend it). It is specifically alleged the Poproski withheld information about the actual number of unsettled Client Files on the list that was prepared and provided to Gluckstein prior to December 20, 2015 and that Helden withheld information about transactions in the 131 Ontario bank account that was being used as the Firm’s bank account.
c. Third, AssessNet maintains that, as late as April 2016, the Trustee was recommending that the Estate take actions against the Lawyer Defendants and Helden (and 131 Ontario). AssessNet argues that it was not feasible or necessary for it to consider seeking leave to commence such a proceeding while the Trustee was considering doing so.
79The Lawyer Defendants and Helden2 argue that by October 16, 2015 (or by December 1, 2015 at the latest) claims against them were not only being contemplated by the Trustee, but were also being discussed by the Inspectors internally, giving rise to a plausible inference of liability (breach of duty causing injury, loss or damage) for discoverability purposes.
80They further argue that the fact that the Trustee was considering making claims that were then assigned to AssessNet does not “toll” the limitation period. If the Trustee was considering these claims, they were clearly discoverable. Nor can the allegations of fraud toll or extend the running of the limitation period if the court is satisfied that there was a plausible inference of liability in respect of those claims, such that they were, in fact, discovered earlier, even if the evidence was amplified by facts that came to light later.
b) Summary Judgment Analysis
i. Preliminary Procedural Issue
81An initial objection was raised by AssessNet to any motion for summary judgment by Helden, who served only a Notice of Motion seeking the dismissal of all three Actions against her and 131 Ontario (c.o.b. under various tradenames) with no supporting affidavit or factum of her own.
82Motions are expected to be supported by evidence contained in a motion record (see Rule 37.10 of the Rules). The notice of motion delivered on behalf of Helden and 131 Ontario specifies the evidence to be relied upon and refers to “such other materials as counsel may advise and this court may permit.” However, no motion record attaching the affidavits relied upon was ever served.
83The summary judgment motions of all defendants in all of the Actions were timetabled and scheduled to be heard together, even though no consolidation order has been made. To the extent that materials were filed by the other moving defendants that contain evidence and arguments relevant to the determination of this motion, I consider that evidence to be properly before the court and that it may be considered, having regard to Rule 1.04. This is the most proportionate, expeditious and least expensive manner of proceeding in this case.
ii. The Timing of A Plausible Inference of Liability and Alleged Lack of Co-Operation
84The communications reviewed in connection with the Bankruptcy Trustee Action identify concerns about the same conduct of the Lawyer Defendants and Helden (and 131 Ontario) that are the subject of the s. 38 BIA Action. By way of summary, these communications disclose that, as a result of concerns raised by the Inspectors, the Trustee suggested as early as July 15, 2015 that the creditors could bring a s. 38 BIA claim. Correspondence in August, September and October 2015 reveals that the Inspectors were aware of, and displeased with, the conduct of the Lawyer Defendants, Helden and 131 Ontario and how they were handling the Client Files and managing the Firm.
85After identifying what Wollach considered to be improprieties by Poproski, including regarding her handling of Client Files and billings, in an email dated October 16, 2015, Wollach suggests to Persi that they sue Poproski because she had insurance. The Inspectors also contemplated suing Helden in November 2015.
86The conduct complained of, and the contemplation of litigation arising from it, give rise to a presumption that AssessNet knew of the existence of a cause of action by the Estate against the Lawyer Defendants and Helden and 131 Ontario before December 20, 2015.
87In its arguments against this presumption, AssessNet maintains that the contemplation of litigation in 2015 was predicated on mere conjecture or speculation and that the evidence from which it might reasonably have discovered any injury, loss or damage only came to light in 2016. Persi did not meet with a lawyer to discuss the possible claims against Helden and the Lawyer Defendants until March 2016. AssessNet argues that the any suggestion of a plausible inference of their liability prior to that raises a genuine issue requiring a trial.
88AssessNet places significant reliance upon later communications; in particular, January, February and March 2016. These communications are said to have substantiated the earlier, more speculative concerns, about the injuries, losses or damages caused by the Lawyer Defendants and Helden. This included information as to how few Client Files remained to be settled, a fact that came to light after the sale of the Client Files to Gluckstein closed. AssessNet also argues that the financial irregularities that came to light in early 2016 mark the earliest point at which there could be a plausible inference of liability (breach of duty causing injury, loss or damage) for discoverability purposes.
89AssessNet further contends that any delay in the discovery of such injury, loss or damage should be attributed to the lack of co-operation that the Trustee encountered when attempting to deal with the Lawyer Defendants and Helden in 2015 (which they dispute). The disclosures in 2016—said to give rise to a genuine issue requiring a trial of the limitations defences—are alleged to have been made only after various court orders were sought and obtained by the Trustee. That the Lawyer Defendants and Helden dispute the allegations that they were not co-operating simply adds another layer to the issues requiring a trial on their limitation defences.
90The Lawyer Defendants and Helden counter that the timeline propounded by the Lawyer Defendants and Helden blurs the distinction between the point at which there was a plausible inference of some injury, loss or damage and the point at which the injury, loss or damage could be quantified. The latter is not needed to start the limitation period. They emphasize that neither the full extent nor the type of damage need be known to start the limitation running on a cause of action in tort. See Peixeiro v. Haberman, [1997] 3 S.C.R. 549, at para. 38.
91I find that there is a genuine issue requiring a trial as to whether the Trustee/Estate, the Inspectors, and by extension AssessNet, the eventual assignee of the Estates causes of action against the Lawyer Defendants and Helden and 131 Ontario, knew or ought reasonably to have known before December 20, 2015 that the conduct that was the subject of the concerns raised had caused injury, loss or damage to the Estate.
92As I have found earlier in this endorsement in relation to the Bankruptcy Trustee Action (that is predicated upon the same alleged misconduct of the Lawyer Defendants and Helden and 131 that is the subject of the s. 38 BIA Action), the facts known to AssessNet in January and February 2016 gave rise to a plausible inference of liability. This occurred once the Client Files were reviewed and the initial feedback about them was received from Gluckstein, as well as certain other disclosures were made about financial irregularities. While there was cause for suspicion, speculation and conjecture about this earlier, it is not clear that what the record on this motion discloses to have been known by December 20, 2015 rose to the level of a plausible basis for liability.
93To find the existence of such an inference prior to December 20, 2015 would require a more in depth contextual analysis of the available records and information at that time. Contrary to what the Lawyer Defendants and Helden argue, the mere fact that AssessNet had access to the firm’s electronic databases is not enough for this inference to be drawn. For example, the court might be assisted by more nuanced evidence about the nature of the data, how it was organized, its volume and what could have been reasonably reviewed by the Trustee between December 1 and December 20, 2020, among other things.
94In the circumstances of this case, the difference between the information available as of December 20, 2015 (two years before the s. 38 BIA Action was commenced) and the information available as of March 13, 2016 (two years before the Bankruptcy Trustee Action was commenced) is sufficiently material to give rise to a genuine issue requiring a trial.
95There is also a genuine issue requiring a trial as to the timing of disclosures about other financial irregularities and benefits that may have been received by the Lawyer Defendants and Helden. The accusations made against them regarding their lack of co-operation and transparency in 2015 is a genuine issue requiring a trial. This is a point of factual contention that will likely require credibility assessments better suited to determination with the benefit of viva voce evidence.
96This is not a situation where the use of the expanded fact-finding powers available under Rule 20.04(2.1) will enable the court to resolve the discoverability issue summarily:
a. It is not apparent that making findings of fact on the evidence before the court will provide a fair and just result, as compared to a mini-trial or trial.
b. It is not apparent that the material before the court sufficiently illuminates the factual issues to be determined to allow the court to make findings of fact and credibility about what was disclosed about the Client Files and other financial dealings between the Lawyer Defendants and Helden and the Estate, when it was disclosed and why it was not disclosed earlier.
c. This would be a close call that should not be made on a written record in a case in which allegations of self-dealing, lack of co-operation and transparency and other improprieties are made against professionals; it warrants a record based on viva voce evidence that allows for the necessary factual and credibility assessments to be made.
See Oxygen Working Capital, at para. 42. See also Trotter Estate, at para. 75; Obsidian Group Inc., at para. 34.
97The court is not required to resort to the enhanced fact-finding powers to make up for evidentiary shortcomings (see Silva, at para. 23, citing: Broadgrain Commodities Inc. v. Continental Casualty Company (CNA Canada), 2018 ONCA 438, 80 C.C.L.I. (5th) 23, at para. 8). I decline to do so.
98The motion for summary judgment seeking the dismissal of the s. 38 BIA Action is denied. The plaintiffs have raised a genuine issue for trial on the limitations defences, which means that the entirety of the claims and defences will go to trial.
iii. Claims Contemplated by the Trustee
99The evidence discloses that the Trustee was contemplating a proceeding against the Lawyer Defendants and Helden in January 2016. A trial would not have been required to conclude that the claims were, or ought to have been discoverable by then, or to conclude that it was, or ought to have been apparent, that a proceeding was an appropriate means of remedying the injury loss or damage. However, that is not outside the two-year limitation period applicable to the s. 38 BIA Action.
100Although I do not need to decide the point because I have already determined that there is a genuine issue requiring a trial in the s. 38 BIA Action, I do not agree with the suggestion by AssessNet that the limitation period for its s. 38 BIA assigned claims did not start running while the Trustee was considering making these claims on behalf of the Estate. This is based on the theory that it would not have been appropriate or necessary for AssessNet to do so if the Trustee was going to. These are assigned claims and the limitation period is unaffected by who ultimately brings them.
101Section 12(1) of the Limitations Act provides that, for the purpose of clause 5(1)(a), in the case of a proceeding commenced by a person claiming through a predecessor in right, title or interest, the person shall be deemed to have knowledge of the matters referred to in that clause on the earlier of the following:
a. The day the predecessor first knew or ought to have known of those matters.
b. The day the person claiming first knew or ought to have known of them.
102Section 12(3) of the Limitations Act imports the objective knowledge of a reasonable predecessor into the discoverability analysis for assigned claims.
The Copyright Action
103According to the plaintiff, the Copyright Action was commenced on December 20, 2017. AssessNet claims copyright in its Medical Reports and asserts that only Ferro & Co. had a licence or permission to use them.
104In the 2014 Action, AssessNet had instructed Jackson (acting as AssessNet’s lawyer) to assert a claim for breach of copyright against the Firm. This was never done, even after a copyright lawyer was consulted. AssessNet is now not disputing that the Firm had an implied licence to use the Medical Reports in connection with the Client Files to which they pertained, even if the Firm had not paid the invoices for the Medical Reports.
105On this motion, AssessNet clarified that it is claiming breach of the copyright in respect of the alleged unlicenced use of the Medical Reports after March of 22, 2016. The claims in the Copyright Action are now said not to be about use of these reports by or on behalf of the Firm, although claims in that regard were previously contemplated, not only in connection with the 2014 Action but also during the Bankruptcy.
106Now what is alleged in the Copyright Action, based on AssessNet’s submissions on this motion, is that the Medical Reports were improperly used to settle Client Files after AssessNet gave notice on March 22, 2016 to the Lawyer Defendants and Helden and 131 Ontario revoking any permission for the continued use of and reliance upon its Medical Reports, and after the Client Files had been transferred to Gluckstein. A similar notice was not sent to Gluckstein, implying that Gluckstein continued to have permission to use those reports in connection with the Client Files assigned to it.
107Poproski claims that she (and her professional corporation, and lawyers working with her, including Rudder) were operating under an agreement with Gluckstein in their continued handling and settlement of the Client Files.
a) The Limitations Arguments
108AssessNet relies upon the three-year limitation period under the Copyright Act applies, rather than the two-year limitation period contained in the Limitations Act. This is not seriously contested by the defendants to the Copyright Action.
109The Copyright Act states, at s. 43.1, that:
Limitation or prescription period for civil remedies
43.1(1) Subject to subsection (2), a court may award a remedy for any act or omission that has been done contrary to this Act only if
(a) the proceedings for the act or omission giving rise to a remedy are commenced within three years after it occurred, in the case where the plaintiff knew, or could reasonably have been expected to know, of the act or omission at the time it occurred; or
(b) the proceedings for the act or omission giving rise to a remedy are commenced within three years after the time when the plaintiff first knew of it, or could reasonably have been expected to know of it, in the case where the plaintiff did not know, and could not reasonably have been expected to know, of the act or omission at the time it occurred.
b) Summary Judgment Analysis
110The Copyright Action is not based on assigned claims. It is predicated on the alleged unlicenced use of the Medical Reports by the Lawyer Defendants to settle Client Files.
111Although AssessNet says the Trustee was advised that any sale of the Client Files to Gluckstein would not include a licence to use AssessNet’s Medical Reports, a formal notice revoking the implied licence to use the Medical Reports was not delivered by AssessNet until March 22, 2016 and, at that time, it was directed to the Lawyer Defendants. That was less than three years before the Copyright Action was commenced on December 20, 2017.
112Even if the earlier date of the closing of the assignment of the Client Files to Gluckstein on December 23, 2015 is considered, that was also (just) less than three years before the commencement of the Copyright Action. The contemplation of claims against the Firm for breach of copyright in connection with the 2014 Action, while more than three years before the commencement of the Copyright Action, is predicated on a different alleged misuse by the Firm that appears to be answered by an implied licence that had not been revoked
113It is the defendant’s initial onus on a summary judgment motion to identify an event outside the limitation period. If successful, the onus shifts to the plaintiff to identify a later point of discoverability. With the added clarity around the implied licence in favour of the Firm, there is no obvious triggering event for the running of the limitation period more than three years before the commencement of the Copyright Action.
114The Lawyer Defendants still ask the court to dismiss the Copyright Action on this summary judgment motion, based on its alleged (lack of) merit. They maintain that AssessNet has not put its best foot forward and has failed to adduce evidence of any actual use of the Medical Reports by the defendants in connection with any Client Files, after either of the possible identified trigger dates of December 23, 2015 (sale to Gluckstein) or March 22, 2016 (notice revoking permission).
115The defendants argue that bald assertions are not enough to substantiate AssessNet’s claims in the Copyright Action. This presumes that the onus has shifted to the plaintiff to establish its claim. However, once the issues were reframed there is no presumption in this case that the Copyright Action was commenced after the expiry of the applicable limitation period, and the onus is on the defendants at first instance to put their best foot forward if they seek the dismissal of these claims.
116From a summary judgment perspective, it is the defendants who have not put their best foot (or feet) forward. They have not proffered even a bald denial in their own evidence that the Medical Reports were not used by them in connection with their handling and settlement of the Client Files after December 23, 2015 or after March 22, 2016. They argue that Poproski could have been asked about this when she was cross-examined by the plaintiff on this motion, but this, again, presupposes that the initial onus rests on the plaintiff in this summary judgment motion to prove its claim.
117AssessNet argues that, where the defendants have not denied the use of the Medical Reports in the impugned period for purposes of this motion (clarified to be from and after March 22, 2016), the court can and should infer that its Medical Reports were used in connection with the settlement of any Client Files thereafter, giving rise to a genuine issue requiring a trial as to whether that use was unlawful and/or the extent of loss or damages caused. In connection with the Client Assigned Claims Action there is evidence of at least one Client File having been settled by the Lawyer Defendants in 2017, which could further support such an inference.
118The evidentiary record is further complicated by Poproski’s assertion that she had implied permission, through her arrangement with Gluckstein, to use the Client Files; however, the evidence is less than robust on this point as well.
119I am not prepared to dismiss the Copyright Action based on an absence of evidence about the use of any of AssessNet’s Medical Reports between March 22, 2016 and the commencement of the Copyright Action in December 2017. In the absence of any substantive evidence from either side, I find that the defences raised in this action require a trial to be determined. The court is not assisted by the enhanced fact-finding powers. Where the evidence is lacking I do not consider it to be in the interests of justice to draw inferences to make any final decision, especially since the readily available inference would not assist the moving party on this summary judgment motion.
120The state of the evidentiary record is in part due to the fact that the grounds for summary judgment in the Copyright Action have evolved and been reframed in the course of this motion. This has left the court ill-equipped to decide the merits of this claim, even with the availability of enhanced fact-finding powers.
121The motion for summary judgment dismissing the Copyright Action is dismissed.
The Client Assigned Claims Action
122Defences have been delivered by all moving defendants in all actions, except that Helden and 131 Ontario have not delivered a defence in the Client Assigned Claims Action and have been noted in default. The court was not advised of any steps taken by them to set aside the noting in default. Therefore, they cannot move at this time for summary judgment in this action, even though the same analysis would apply to the claims against them as to the claims against the other defendants on the limitations issue.
123The Client Assigned Claims Action is predicated on assignments that AssessNet received from some Former Clients of their claims the Firm for accounts rendered that included fees arguably charged in a manner contrary to the Solicitors Act, R.S.O. 1990, c. S. 15. AssessNet sued certain Former Clients for payment of AssessNet’s unpaid invoices rendered to Ferro & Co. AssessNet settled its claims against these Former Clients and received, as part of that settlement, an assignment of these Former Clients’ claims regarding alleged illegal billings.
a) Limitations Analysis
124The Client Assigned Claims Action was commenced on March 19, 2018, with some assigned claims added in a July 27, 2020 amendment.
125Section 12 of the Limitations Act makes it clear that the assignment of the claims of Former Clients to AssessNet did not extend the limitation period for the commencement of the Client Assigned Claims Action.
126As referenced earlier in this endorsement, s. 12(1) of the Limitations Act provides that, for the purpose of clause 5(1)(a), in the case of a proceeding commenced by a person claiming through a predecessor in right, title or interest, the person shall be deemed to have knowledge of the matters referred to in that clause on the earlier of the following:
a. The day the predecessor first knew or ought to have known of those matters.
b. The day the person claiming first knew or ought to have known of them.
127Section 12(3) of the Limitations Act imports the objective knowledge of a reasonable predecessor into the discoverability analysis for assigned claims.
128The Client Assigned Claims Action was commenced on March 19, 2018. According to the Lawyer Defendants, the record discloses that all but one of the assigned client claims were settled, and the Ferro & Co. final invoices were rendered, prior to March 19, 2016 (most before December 2015).3 The invoices rendered to the Former Clients clearly break down how the accounts were rendered and the different components of the billings. They clearly delineate that the Former Clients are being “charged” for the costs that were paid as part of their settlements. The Lawyer Defendants rely on the established principle that ignorance of the law does not delay the commencement of a limitation period.
129AssessNet argues that the Former Clients did not know that to do so was contrary to the Solicitors Act, and that the failure of the defendants to disclose this to them postponed the running of the limitation period on a theory of fraudulent concealment.
130There is also evidence of planned complaints by the Inspectors and/or the Trustee to the LSUC about the Lawyer Defendants and Helden (a paralegal) regarding “illegal” over-billing in as early as October 2015. The defendants argue this “knowledge” on the part of the assignee started the running of the limitation period for purposes of the Client Assigned Claims Action, even if it not started to run for the Former Client assignors.
b) Summary Judgment Analysis
131The limitation period for the assigned claims by Former Clients against their lawyer in relation to accounts rendered is presumed to have commenced at or about the time of the settlement when the final invoice and billing was rendered to the client. If the claim settled more than two years before the Client Assigned Claims Action was commenced, it is presumptively out of time.
132As this court has previously held, “[e]rror or ignorance of the law or legal consequences of the facts does not postpone the running of the imitation period.” See in Tender Choice Foods (at para. 61):
The circumstance that a potential claimant may not appreciate the legal significance of the facts does not postpone the commencement of the limitation period if he or she knows or ought to know the existence of the material facts, which is to say, the constitute [sic] factual elements of his or her cause of action.
133On this basis, all but the one identified Assigned Client Claim is out of time as they were all settled more than two years before the commencement of the Client Assigned Claims Action.4
134The Lawyer Defendants propose that the assigned claim in respect of the single Client File that settled in January 2017, within the two years prior to the commencement of this action, be stayed and that leave be granted for that claim (valued at less than $5,000 in costs paid under the settlement said to have been unlawfully charged to the Former Client in addition to a $9,565.55 contingency fee) to proceed in small claims court.
135AssessNet attempts to get around the presumption of the Former Clients’ earlier knowledge of these assigned claims by its plea of fraudulent concealment in this action, for example at para. 33 of the Amended Statement of Claim:
The Plaintiff pleads that the Lawyer Defendants’ deliberate failure to disclose their obligations to the Assignors under the Act and Regulation and that the Assignors' contingency agreements were unenforceable, postponed discovery by the Assignors of their rights to make a claim and constitutes fraudulent concealment, which justifies tolling the running of any statutes of limitations until such time as the Assignors became aware of what was not disclosed lo them.
136On this basis, it is argued that the start of the limitation period was delayed and did not begin until the Former Clients were told much later—starting in or about April 2021 by a lawyer representing the plaintiff—that the billing practices in connection with the Client Files were unlawful. No authority is provided by AssessNet for the proposition that a failure to disclose something, even by a fiduciary, can be equated with fraudulent concealment.
137The Lawyer Defendants argue that it would have to be demonstrated that there is a triable issue that the defendants and/or the Firm concealed from the Former Clients their right of action either actively or by the manner of wrongdoing. See Zeppa v. Woodbridge Heating & Air-Conditioning Ltd., 2019 ONCA 47, 144 O.R. (3d) 385, at para. 62.
138They further argue that to raise a genuine issue requiring a trial on the fraudulent concealment point, AssessNet must put forward some basis for the court to conclude that there might have been active concealment of the alleged illegality. It has not done so.
139The court is left with the evidence of the Former Clients having been provided with a full breakdown of the accounting for the fees charged in the accounts rendered. There is no suggestion that anything was said to them that discouraged them from informing themselves of the law and challenging the lawyer’s accounts.
140Furthermore, and in any event, AssessNet has not attempted to address the other aspect of s. 12 of the Limitations Act, which provides that the limitation period will begin to run on the earlier of either the date when the Former Clients (the predecessors) knew or ought to have known of the reasonable inference of liability, or the date when AssessNet (the person claiming) knew or ought to have known this. In the latter regard, the record discloses that Persi was aware of and considering reporting the Lawyer Defendants to the LSUC for illegal billing practices in October of 2015, more than two years before March 19, 2018 or July 27, 2020. The existence of this plausible inference of liability on the part of AssessNet has not been challenged on the evidence, as the plaintiff’s entire focus was on the knowledge of the assignors (Former Clients) and alleged fraudulent concealment from them.
141The plaintiff has not put its best foot forward to rebut the presumption that the limitation periods for these assigned claims from Former Clients started to run when the claims of the Former Clients were settled, or to counter the evidence that the Inspectors considered the billing practices of the Firm, being carried on by the Lawyer Defendants, to be illegal in October 2015, giving rise to a plausible inference of liability. The expired limitation period was not resurrected (or restarted) by the assignment of the claims of these Former Clients to AssessNet.
142I find that there is no genuine issue requiring a trial of the Client Assigned Claims Action for any claims that were settled more than two years before the commencement (or Amendment) of the Client Assigned Claims Action. They were commenced out of time and are barred by the Limitations Act. I do not need to resort to the enhanced fact-finding powers to come to this decision.
143The summary judgment process has provided me with the evidence to fairly and justly adjudicate the limitations issue. I find that granting partial summary judgment and dismissing the Client Assigned Claims Action now is the proportionate, more expeditious and less expensive means to achieve a just result in this case where, as I have found, there is no genuine issue requiring a trial. See Hryniak, at paras. 49, 66.
144The Client Assigned Claims is dismissed in respect of all but the one claim (Tesone) that was settled within two years of the commencement of this action; the action as it relates to that one claim is stayed and leave is granted for that claim to be pursued in small claims court.
Final Disposition and Costs
145Summary judgment is granted dismissing the Bankruptcy Trustee Action and the Client Assigned Claims Action (except for the Tesone assigned claim). It is not granted in respect of the Copyright Action, based on the clarified period to which the claims in that action apply, and it is not granted in respect of the s. 38 BIA Action.
146With respect to the Actions that are continuing, if the parties consider that there may be some benefit to an order for directions or terms under Rule 20.05, a case conference may be scheduled before me for consideration of directions or terms proposed by any party, since these were not canvassed in the written or oral submissions on the summary judgment motions.
147The parties exchanged their costs outlines and uploaded them onto CaseLines by July 15, 2022, as they were directed to do at the conclusion of the hearing of the summary judgment motions. It was agreed that they would try to resolve costs after receiving the court’s decision, failing which they would be given an opportunity to make page limited written cost submissions.
148The parties are asked to advise the court by September 6, 2022 if an agreement has been reached in respect of the costs of any of the motions for summary judgment.
149If no agreement is reached, any party seeking costs from any other party in connection with the summary judgment motion in any Action shall deliver a brief written cost submission of no more than 6 pages double-spaced, together with their costs outline and any offers to settle relied upon, by September 16, 2022. These submissions shall separately address costs being claimed by the filing party in any Action and shall specify, with reference to their Costs Outline, the scale and quantum of costs sought for each Action and the basis for same. To be clear, there shall be one cost submission from each party who is seeking costs from any other party, that is no more than 6 pages double-spaced and addresses, within that page limit, the costs of each Action in which they are sought.
150Any party against whom costs are sought in respect of any motion for summary judgment in any Action may deliver a brief responding cost submission of no more than 6 pages double-spaced, together with their costs outline referable and any offers to settle relied upon, by September 26, 2022. This submission shall separately address costs being claimed against them in each Action.
151Any party seeking costs may deliver a brief reply cost submission of no more than 2 pages double-spaced by September 30, 2022 to reply to any responses received in respect of the costs of the summary judgment motion in any Action sought by them.
152All cost submissions and cost outlines shall be filed with the court in the normal course and uploaded onto CaseLines. Electronic PDF copies shall also be sent to my judicial assistant at linda.bunoza@ontario.ca
153This endorsement and the orders and directions contained in it shall have immediate effect as a court order without the necessity of the formal issuance and entry of an order. Any party may take out a formal order in any of the Actions, if so advised, by following the procedure under Rule 59.
Kimmel J.
Date: August 19, 2022
A similar argument for summary judgment dismissing the Copyright Action was also raised, insofar as it was originally asserting claims against the defendants in their personal capacities for actions undertaken by them in the course of their employment with the Firm. That was clarified during the summary judgment motion not to be the case, when AssessNet acknowledged that the claims in the Copyright Action were limited to settlements entered into after the Client Files had been assigned to Gluckstein, and not during the period in which the defendants claimed to be employees of the Firm.
Footnotes
- All defendants except Robert Hooper named in action number CV-19-620326-CL.
- Counsel for Poproski and her affiliated companies took the lead on these arguments. However, the factual record and timeline on the summary judgment motions for the dismissal of the s. 38 BIA Action are equally applicable to all the Lawyer Defendants and to Helden (and her company 131 Ontario). Accordingly, the arguments and analysis are considered in this endorsement on behalf of all of them together.
- The Tesone claim was finally settled in January 2017 and asserted by AssessNet, following its assignment, less than two years later on March 19, 2018.
- Many of these claims were settled before the Client Files were assigned to Gluckstein. The Lawyer Defendants raise as a further argument for summary dismissal of this action against them that the claims for over billing lie against the Firm, not against them personally when acting in the course of their employment with the Firm. The factual issues raised by this defence (starting with the question of whether the Lawyer Defendants were employees of the Firm in the relevant Time Period during the Bankruptcy and before the Client Files were assigned to Gluckstein) and carrying through to whether the accounts rendered in the period after Ferro died that are the subject of the Client Assigned Claims Action are also tied up in the alleged misconduct in the s. 38 BIA Action) could not be resolved in a fair and just manner on this record, even using the court’s enhanced fact-finding powers under Rule 20.04(2.1). However, those factual issues do not need to be resolved at all given the court’s determination that these claims were commenced too late and that summary judgment should be granted on the limitations argument.