v. Ambershaw Metallics Inc. et al 2022 ONSC 7129
COURT FILE NO.: CV-21-00000240-0000
DATE: 2022-12-15
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
Bending Lake Iron Ore Corporation
Henry Wetelainen Jr.
Henry Wetelainan Jr. as a Shareholder in
Bending Lake Iron Group Limited
Robert MacRae counsel of record for the
Plaintiffs (not appearing)
Clayton Wetelainan
Plaintiffs
- and -
Ambershaw Metallics Inc. et al
Fladgate Exploration Consulting Corporation
Alen Raoul
D.P.S. Rajan
Farber & Partners Inc.
Legacy Hill Resources Ltd.
Jasmine Salamon, for the Defendant Fladgate Exploration Consulting Corporation
Defendants
HEARD: September 29, 2022,
at Thunder Bay, Ontario via Zoom
Mr. Justice J.S. Fregeau
Endorsement on Motion to Dismiss
INTRODUCTION
[1] Bending Lake Iron Group Limited (“BLIG”) is an early-stage iron ore mine development company whose major asset was a mine site located northwest of Thunder Bay, Ontario in the Kenora Mining Division (the “Mine Site”). BLIG owned 100% of the iron ore deposit at the Mine Site.
[2] BLIG was founded by Henry Wetelainen Jr., who was at all material times the President, CEO and a major shareholder of BLIG. Clayton Wetelainen was at all material times a director and officer of BLIG. Mr. Wetelainen Jr. incorporated Bending Lake Iron Ore Corporation (“BLIOC”).
[3] In the Statement of Claim, BLIG appears to allege three causes of action against Fladgate Exploration Consulting Corporation (“Fladgate”):
Conversion and/or detinue in relation to certain drill cores;
Intentional or negligent acts of Fladgate in relation to the drill cores; and
Breach of professional responsibilities purported to be owed by Fladgate to BLIG.
[4] BLIG’s claim also requests “an interim order requiring the Defendants to pay to the plaintiffs the sum of $20,000,000.00.
[5] On this motion, Fladgate seeks an order striking or dismissing the plaintiffs’ claims as against Fladgate pursuant to Rule 21.01 of the Rules of Civil Procedure. In the alternative, Fladgate seeks an order that the plaintiffs’ claims as against Fladgate are statute barred by operation of the Limitations Act. 2002, S.O. 2002, c. 24. In the further alternative, Fladgate moves for summary judgment dismissing the action as against Fladgate pursuant to Rule 20.
[6] Mr. MacRae, counsel of record for the plaintiffs, has not appeared on this motion and no material has been filed by the plaintiffs in response to this motion. Mr. Henry Wetelainen Jr. appeared on the return of this motion and advised the court that Mr. MacRae was in the hospital. Mr. Wetelainen Jr. requested an adjournment of this motion to retain alternate counsel. The request for an adjournment was denied.
BACKGROUND
[7] Between 2008 and 2011, Fladgate was advised by BLIG that it was the owner of certain drill cores (the “disputed drill cores”) stored and located at 201 Hardisty Street, Thunder Bay (“201 Hardisty”). The disputed drill cores are the subject of this action.
[8] In 2008 and again in 2011, Fladgate was engaged by BLIG to examine the disputed cores and to prepare two separate consulting reports in respect to them. At no time during the completion of either of these reports did any employee or agent of Fladgate examine the disputed drill cores anywhere other than at 201 Hardistry or remove any of the disputed drill cores from 201 Hardistry. None of Fladgate’s employees or agents have, since December 31, 2011, at the latest, viewed, examined, removed, seized or otherwise touched in any way any of the disputed drill cores
[9] Fladgate fulfilled its obligations to BLIG in respect of the two projects and delivered the required reports in 2008 and 2011 respectively. The relationship between BLIG and Fladgate is limited to the completion of these two reports.
[10] Fladgate has not had a contractual relationship, or any other relationship, with BLIG since 2011 at the latest. But for a past contractual relationship with the defendant, Ambershaw Metallics Inc. (“Ambershaw”) in respect to ore unrelated to the disputed drill cores, which relationship concluded in April 2019, Fladgate has never had a contractual, or any other relationship, with any of the other plaintiffs in this action.
[11] Fladgate does not currently, nor has it ever previously, had in its possession any of the disputed drill cores nor has it ever removed or assisted in the removal of any of the disputed drill cores from 201 Hardistry.
FLADGATE’S POSITION
[12] Fladgate submits that the Statement of Claim fails to disclose a reasonable cause of action as against Fladgate and should therefore be struck pursuant to Rule 21.01(1)(b).
[13] Fladgate draws the court’s attention to Rule 25.06(8) and submits that when fraud, breach of trust, malice or intent are alleged, the pleading must contain full particulars in support of the allegations. Fladgate contends that such allegations must be specifically and distinctly pled so that the party against whom the allegations are made is aware of the case to be met.
[14] Fladgate suggests that the torts of detinue and conversion require a plaintiff to show that the alleged conduct of the defendant which gave rise to the claim was intentional – the mere fact of possession, absent intention, is not sufficient to establish a conversion. Detinue in particular requires a plaintiff to establish that the defendant has actual possession of the subject property at the relevant time and that the defendant has refused to return the property to the plaintiff, according to Fladgate.
[15] Fladgate submits that the plaintiffs have not, in the Statement of Claim, pled any material facts evidencing an intent of Fladgate relating to the claims for conversion or detinue. Nor have the plaintiffs pled any facts which purport to evidence Fladgate’s intentional or deliberate interference with the disputed drill cores inconsistent with or in repudiation of the plaintiffs’ rights to same, according to Fladgate.
[16] Fladgate submits that the claim also fails to disclose any facts upon which the plaintiffs can show that the disputed drill cores were ever at any point in Fladgate’s possession or that Fladgate refused to deliver the disputed drill cores to the Plaintiffs.
[17] Fladgate submits that the Statement of Claim thus fails to disclose any reasonable cause of action as against Fladgate in relation to the claims in conversion or detinue and that it should therefore these claims should be dismissed.
[18] As to the plaintiffs’ claim in negligence, Fladgate submits that the Statement of Claim fails to plead any material facts suggesting that Fladgate owed a duty of care to the plaintiffs, that Fladgate breached any duty of care resulting in damages to the Plaintiffs or that any of the plaintiffs suffered any actual loss.
[19] Fladgate submits that the only relationship of any kind between any of the Plaintiffs and Fladgate is that between BLIG and itself, which relationship concluded December 31, 2011, at the latest.
[20] Fladgate submits that the Statement of Claim also fails to disclose any reasonable cause of action as against Fladgate as it relates to any claims alleging negligent actions on the part of Fladgate and that it should therefore be dismissed.
[21] Fladgate submits that the application of a limitation period in circumstances which do not rely on any disputed facts is a point of law that may be raised on a motion prior to trial under Rule 21.01(1)(a). Fladgate notes that the claims against it in the Statement of Claim are subject to the basic two-year limitation period set out in the Limitations Act, 2002, SO 2002, c. 24.
[22] Fladgate submits that if it did owe a duty of care to any of the plaintiffs, such duty of care could only have been owed to BLIG pursuant to the 2008 and 2011 consulting reports it was engaged to prepare and deliver to BLIG. Fladgate further contends that if there is a cause of action against it in conversion and/or detinue, same could only have occurred during the preparation of the 2008 and 2011 consulting reports.
[23] Fladgate contends that a limitation period begins to run from the date a plaintiff knew or ought to have known that a cause of action existed through the exercise of reasonable diligence and that a limitation period presumptively begins to run when the cause of action arises, unless a claimant can establish the contrary.
[24] Fladgate suggests that all material facts underlying the plaintiffs’ claims against it were known or ought to have been known by the plaintiffs by the end of 2011 at the latest. The Statement of Claim in this action was issued July 5, 2021, over 10 years after the latest date in which the alleged causes of action could have arisen against Fladgate. Fladgate pled in its Statement of Defence and Crossclaim that any claims against it in the Statement of Claim are statute barred by the presumptive limitation period.
[25] Fladgate submits that the plaintiffs have not pled any facts in the Statement of Claim in support of a contention that the presumptive discovery date for the running of the limitation period for any of the alleged acts or omissions of Fladgate occurred after 2011 or on any date within two years of the issuance of the Statement of Claim. Fladgate notes that the plaintiffs have not delivered a Reply to address the principle of discoverability.
[26] Given the foregoing, Fladgate submits that the plaintiffs’ action as against Fladgate is statute barred by the Limitations Act, 2002 and ought to be dismissed.
DISCUSSION
[27] The plaintiffs have not responded to this motion and the evidence of Fladgate on this motion is uncontradicted.
[28] I accept the submissions of Fladgate that the claims as against Fladgate should be dismissed because they fail to disclose a reasonable cause of action in conversion, detinue or negligence. I further accept that the plaintiffs’ claims as against Fladgate should be dismissed because they are statute barred.
[29] Rule 21.01(1)(b) provides a court with jurisdiction to strike out a pleading if it fails to disclose a reasonable cause of action.
[30] The torts of conversion and detinue require a plaintiff to show that a defendant has intentionally exercised control over personal property of a plaintiff in a manner which repudiates the plaintiff’s rights to same. The mere fact of possession, when unaccompanied by intention, is not sufficient to establish conversion. The tort of detinue requires a plaintiff to establish that a defendant has actual possession of disputed property at the relevant time and that the defendant refused to deliver the property to the plaintiff.
[31] The Statement of Claim in this action is devoid of any alleged facts which evidence Fladgate’s intentional or deliberate interference with the disputed drill cores which is inconsistent with or which repudiates the plaintiffs’ rights to the disputed drill cores.
[32] The Statement of Claim fails to allege any facts in support of an allegation that the disputed drill cores were ever in Fladgate’s possession or that Fladgate ever at any time refused to deliver the disputed drill cores to the plaintiffs.
[33] In my view, the Statement of Claim thus fails to disclose any reasonable cause of action as against Fladgate in relation to the claims in conversion and detinue. These claims are therefore dismissed.
[34] The essential elements for an action in negligence are that a defendant owed a duty of care to a plaintiff, that the defendant breached that duty of care and that the plaintiff suffered damages as a result of the defendant’s breach of the duty of care.
[35] In this action, the Statement of Claim fails to plead any material facts in support of an allegation that Fladgate owed a duty of care to any of the plaintiffs, that Fladgate breached any duty of care or that the plaintiffs suffered any damages as a result of an alleged breach of a duty of care owed to them by Fladgate.
[36] The Statement of Claim therefore fails to disclose a reasonable cause of action as against Fladgate in negligence and any such claims are dismissed.
[37] The claims of the plaintiffs as against Fladgate are subject to the two-year limitation period set out in the Limitations Act, 2002. This limitation period presumptively begins when the cause of action arises unless the plaintiff can establish otherwise pursuant to the principle of discoverability.
[38] Any cause of action that the plaintiffs allege as against Fladgate can only be in relation to the consulting reports prepared by Fladgate for the plaintiffs and delivered to them in 2008 and 2011. This action was issued in July 2021, in excess of 10 years after the latest date on which any alleged cause of action against Fladgate arose.
[39] Fladgate raised the limitation issue in its Statement of Defence and Cross claim. Fladgate did not file a Reply and thus has not asserted the discoverability principle is response to Fladgate’s position on this issue.
[40] In my view, the plaintiffs’ action as against Fladgate is statute-barred and therefore dismissed on that basis.
COSTS
[41] Three separate motions, comprising all defendants, have been brought in this action. The decisions on the three motions have disposed of the plaintiffs’ claims against all defendants and all defendants have sought their costs on a substantial indemnity basis in various amounts, jointly and severally as against all plaintiffs.
[42] The three motions all sought similar and related relief and were, in my view, of similar complexity. It is obvious to me that a significant amount of time was required by all counsel in drafting the comprehensive and well-organized materials for these motions. It is appropriate in these circumstances that the costs awarded be in similar amounts.
I order that the plaintiffs pay to Fladgate, on a joint and several basis, the costs of this motion fixed in the amount of $9,000.00, inclusive of fees, disbursements and HST.
The Honourable Mr. Justice J.S. Fregeau
Released: December 16, 2022
v. Ambershaw Metallics Inc. et al 2022 ONSC 7129
COURT FILE NO.: CV-21-00000240-0000
DATE: 2022-12-16
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
Bending Lake Iron Ore Corporation et al
Plaintiffs
- and –
Ambershaw Metallics Inc. et al
Defendants
ENDORSEMENT ON MOTION
TO DISMISS
Fregeau J.
Released: December 16, 2022
dg/