Court File and Parties
COURT FILE NO.: CV-22-00679129 DATE: 2023-05-03 SUPERIOR COURT OF JUSTICE - ONTARIO
RE: MEI SUN, Plaintiff – and – WENMING CHENG a.k.a. REX CHENG, HAITAO WANG a.k.a. JAMES WANG, PEACELAND REALTY GROUP INC., a.k.a. ROYAL LEPAGE PEACELAND REALTY and HOMELIFE BEST CHOICE REALTY INC., Defendants
BEFORE: Justice E.M. Morgan
COUNSEL: Andrew Jia, for the Plaintiff Evan Farrugia, for the Defendants, Rex Cheng and Homelife Best Choice Realty Inc. Gavin Tighe and Scott Gfeller, for the Defendants, James Wang and Peaceland Realty Group Inc.
HEARD: May 2, 2023
MOTION for summary judgment
Endorsement
[1] The Defendants move under Rule 20 of the Rules of Civil Procedure for an Order dismissing the action. They submit that the Plaintiff commenced the action beyond the two-year limitation period allowed under the Limitations Act, 2002, SO 2002, c. 24, Sch. B.
[2] The events leading to the claim are related to a residential real estate Agreement of Purchase and Sale entered into on September 14, 2016 (the “Agreement”). Pursuant to the Agreement, the Plaintiff was the purchaser of a new home to be built and the vendor was the builder, Teefy Developments (Bathurst Glen) Limited (“Teefy”). The transaction was set to close on or around July 9, 2018, which was later extended to October 10, 2018, but the Plaintiff defaulted and so the sale never closed.
[3] By way of background, the Defendants, James Wang and Rex Chang, are real estate agents who were involved in the aborted sale transaction. The corporate Defendants are their respective brokerage firms. As Plaintiff’s counsel describes it at paragraph 2 of his factum: “Mr. Wang brought the Plaintiff, Mei Sun (‘Ms. Sun’), to a preconstruction sales event. Mr. Cheng was the broker with a cooperation agreement between the builder, [Teefy] and Ms. Sun.”
[4] The Plaintiff has brought an action against Mr. Wang and Mr. Cheng for their breaches of fiduciary duty and negligence. The Statement of Claim was issued on March 30, 2020.
[5] In her affidavit filed in response to the present motion, the Plaintiff sets out the basis of the claim. There are a number of specific factual allegations made in her pleading, but the essence of the cause of action lies in the Defendants’ alleged misrepresentation, and the Plaintiff’s consequent misunderstanding, of their legal relationship.
[6] In short, Plaintiff contends that she did not know, but only lately discovered, that the Defendants were her own agents and owed her fiduciary duties as a result of that status. Plaintiff’s counsel submits that the Plaintiff did not commence an action against the Defendants at an earlier time as she did not know their status as her real estate agents.
[7] Although there appears to be a clerical error in repeating Mr. Cheng’s first and last name instead of Mr. Wang’s, Plaintiff’s counsel puts the allegation against the individual Defendants succinctly, but forcefully, at paragraph 25 of his factum:
Mr. Rex and Mr. Cheng [ sic ] have clearly concealed from Ms. Sun the true nature of their relationship.
[8] More specifically, as summarized at paragraphs 14 (c) and (d) of Plaintiff’s counsel’s factum, the allegations against the Defendants are premised on an essential factual foundation:
c. She has always believed that Rex Cheng was Teefy’s sales person, and has maintained that position throughout the Teefy Action and the appeals thereof.
d. She did not know Mr. Wang was acting as her agent until in or around November 5, 2020 when she received a document that she ‘signed’; a commission agreement between her and Mr. Wang.
[9] The Plaintiff concedes that more than two years passed between the events in question and the issuance of the Statement of Claim. However, she submits that the doctrine of discoverability, as embodied in section 5(1) of the Limitations Act, brings the claim within the two-year limitation period. It is the Plaintiff’s position that she did not discover the real relationship between herself and the Defendants until a much later time, and thus was not aware of the existence of a claim based on the Defendants’ breach of duties to her until the discovery date.
[10] Citing Zeppa v. Woodbridge Heating & Air-Conditioning Ltd., 2019 ONCA 47, Plaintiff’s counsel argues that the principle of fraudulent concealment is inherent in the discoverability principle. He submits that where, as here, there has been fraudulent concealment of material facts on which the claim is based, a Plaintiff will not have discovered or presumably been able to discover the cause of action. Plaintiff’s counsel elaborates on this point at paragraphs 28-29 of his factum:
Despite the discoverability principle doing the heavy lifting in the analysis, is useful to consider the principle of equity behind fraudulent concealment; namely that a Defendant ought not be able to rely on his own concealment to toll the limitations period.
It is manifestly unjust to allow Mr. Cheng and Mr. Wang to claim that Ms. Sun ought to have known that they were her agents when they:
a. Testified under oath in the Teefy action that they were not her agents;
b. Did not provide any agreement between themselves and Ms. Sun;
c. Attempted to distance themselves from the transaction;
d. Did not act in the manner expected of an agent for Ms. Sun;
e. Failed to explain to Ms. Sun their role in the transaction.
[11] The “Teefy action” referred to by Plaintiff’s counsel preceded the current action by several years. That litigation, being Court File No. 00000221-0000, was brought by Teefy as vendor under the Agreement against the Plaintiff as defaulting purchaser, claiming damages in respect of the default. The Statement of Claim in the Teefy action was issued on November 16, 2018. That action was defended by the Plaintiff in the present action, Ms. Sun. She was represented throughout the Teefy action by counsel (albeit by different counsel than her counsel in the present action).
[12] The Teefy action proceeded all the way to trial, resulting in a judgment in Teefy’s favour rendered February 2, 2021: Teefy Developments v. Sun, 2021 ONSC 853. Ms. Sun was ordered to pay Teefy compensation in the amount of $194,155.60 in respect of her breach of the Agreement.
[13] Both sets of Defendants’ counsel point out that Ms. Sun’s pleading as defendant in the Teefy action mirrors her pleading as Plaintiff in the present action. Despite now saying that she was unaware that Mr. Cheng and Mr. Wang were her real estate agents and owed her any duties, in her Statement of Defence in the Teefy action the Plaintiff made it clear that Mr. Cheng was her agent who she alleged breached his duties to her. Paragraphs 6-8 of Ms. Sun’s Statement of Defence in Teefy state:
On the date of signing at the sales office, Sun was pressured into signing the APS, by five to six real estate agents, all of whom exercised mental pressure, undue pressure, and compulsion toward Sun. The Plaintiffs real estate sales team took advantage of her vulnerability. They pressured Sun into signing the contract without explaining to the full terms of the contract and most importantly, did not explain the cooling period to her. Within the cooling period, the Sun contacted her real estate agent, Rex Cheng, demanded to cancel the contract. Rex then made the misrepresentation to Sun, stating that it was too late to cancel it and that she had to carry out the contract. Sun was given the wrong information about her rights to cancel the contract.
Rex Cheng, is Sun’s agent, who is involved the APS. He consequently made the warranty that he would be able to assign the property to a different owner, which he has failed to do.
Consequently, Sun is forced to purchase this property on closing date as her agent failed to carry out his duty to assign the property.
[14] It would seem that at a later point in the Teefy action, Ms. Sun changed her view of Mr. Cheng, and although she never changed her pleading she testified that she thought he was the vendor’s agent rather than hers. Ms. Sun now has changed her mind again, pleading that, as stated by the court in Teefy, Mr. Cheng was her agent after all. It is fair to say that Ms. Sun’s various positions in respect of Mr. Cheng did not impress the Teefy court: “There is nothing in this record to support Ms. Sun’s submission that she was reasonable in believing that Mr. Cheng was Teefy’s agent”: Id., at para 107.
[15] Whatever Ms. Sun may have believed – that is, whether she expressed her real view in her pleading or in her contrary testimony – it is certain that in defending the Teefy action she was alive to the issue of Mr. Cheng’s status as agent. As another illustration of her obvious awareness of the issue, Ms. Sun brought a summary judgment motion in the Teefy action seeking to dismiss the claim. That motion was unsuccessful and, as indicated, the Teefy action was ultimately resolved by trial. However, the reasons for judgment dismissing the summary judgment motion are instructive; there, too, the court noted that the very issues pleaded in the present action were front and centre in the Teefy action: Teefy Developments v. Sun, 2020 ONSC 5210, at para 42:
However, Ms. Sun raises six issues that she submits require a trial:
Was Mr. Cheng Teefy’s agent?
Did Teefy’s other agents force her into signing the agreement?...
[16] As for the Plaintiff’s claim that she did not know Mr. Wang was acting as her agent, that is for the most part contradicted by her Statement of Claim in the present action. At paragraph 10 of her claim, the Plaintiff pleads that she herself introduced Wang into the transaction as her agent:
Sun contacted Wang, an agent that she had communicated in the past and asked Wang for assistance in representing her as a real estate agent in her search for a property.”
Wang was agreeable to assisting Sun with her real estate needs.
In assisting Sun, Wang introduced a new development project in the City of Vaughan. The builder/vendor for this development was Teefy Developments (Bathurst Glen) Limited.
[17] To say that it never occurred to the Plaintiff that Mr. Wang might have been her real estate agent is a position that strains all credulity. To say that she could not have known him to have been her agent is simply impossible in the face of her own pleading. As the Court of Appeal instructed in Findlay v. Holmes, at para 28, “[t]he discoverability principle provides that a limitation period will not begin to run until the plaintiff has knowledge of the material facts upon which the cause of action is based; however, the plaintiff must act with reasonable diligence. [emphasis added]
[18] Citing three Supreme Court of Canada cases, Justice Perell reiterated in Nicholas v. McCarthy Tetrault, that the discoverability principle governs the start of a limitation period and provides that the relevant time period begins to run only after the plaintiff has knowledge, or “the means of acquiring the knowledge” of the existence facts that would support the claim: see Kamloops v. Nielson, [1984] 2 SCR 2; Central Trust Co. v. Rafuse, [1986] 2 SCR 147; Peixeiro v. Haberman, [1997] 3 SCR 549. Thus, a limitation period commences when the plaintiff discovers or, through the exercise of reasonable diligence ought to have discovered, the underlying material facts of the claim.
[19] There is no merit to the Plaintiff’s assertion that she could not have discovered that the Defendants were her agents when she had herself claimed them as her agents in the predecessor litigation. It is patently obvious that she could have discovered those facts through the exercise of reasonable diligence; she pleaded them herself. Her previous Statement of Defence and her current Statement of Claim both demonstrate that the Plaintiff knew or ought to have known the existence of facts that made the Defendants her agents and which form the foundational elements of her present claim.
[20] The Plaintiff’s comeback argument to this is that until judgment was rendered in the Teefy action, it could not be said definitely that the Defendants were her agents. With respect, that confuses knowledge of the material facts on which the claim is based with knowledge of the legal conclusion to be drawn from those facts.
[21] There is no point of fact that the Plaintiff learned during the course of the Teefy litigation and ultimate trial that she did not know at the time of the transaction itself and, certainly, at the time of her pleading at the outset of the Teefy action. And if she did not definitively know the Defendants’ status as her agents when she issued her Statement of Defence in Teefy, she certainly ought to have known it; again, she pleaded it. A party cannot claim that a fact that she specifically pleads was at the same time hidden such that she did not know of its existence.
[22] In short, the Plaintiff knew precisely what she and all of the Defendants did in the series of events leading to the aborted real estate transaction. The only thing that she did not know until the Teefy judgment was what conclusions a court would draw from those facts.
[23] Moreover, the Plaintiff had ample opportunity to bring the present Defendants into the Teefy action by means of a third-party claim. For reasons of her own, and while fully represented by counsel, she did not do so. And while she could certainly have started a new action against the present Defendants at an earlier period of time, there is nothing about her state of knowledge since the outset of this dispute that prevented her from doing so within the two-year period required by the Limitations Act.
[24] To allow this proceeding to be commenced past the applicable limitation period on the grounds that the claim was not “discovered” at an earlier stage would be to stretch the notion of discoverability into an unrecognizable shape. It would also permit endless sequential litigation, since the implication is that one can litigate a set of facts, but for limitation purposes one has not “discovered” those facts until the judgment is written. As this court put it in Lang Michener v. King, 2017 ONSC 1917, at para 27: “Litigation is not a reiterative process: there is one trial at which each party presents its entire case. Then there is a judgment, which finally decides the case, including all matters which were raised in, or could have been raised in, the case.”
[25] In Soper v. Southcott (1998), 39 OR (3d) 737, the Court of Appeal instructed that where a defendant pleads a statutory limitation period, the plaintiff has the burden of proving that the cause of action arose within the limitation period. The Court went on to reason that where a defendant brings a motion for summary judgment and can satisfy the court that there is no issue of fact necessary to evaluate that the limitation issue that requires a trial, the defendant will have satisfied the requirements of Rule 20. In my view, that is the case here.
[26] All of the facts that are material to the claims put forward in the present Statement of Claim were known at the outset of the Teefy action. Even accounting for the pause in limitation periods during the COVID-119 pandemic, more than two years has passed between Ms. Sun’s Statement of Defence in Teefy and her Statement of Claim herein. The Defendants’ limitation defence has been made out.
[27] Before concluding, I will note that during the course of this motion Plaintiff’s counsel has made reference to two documents – a February 26, 2020 mortgage approval letter and a November 2, 2020 Referral Agreement – that the Plaintiff contends are fraudulent documents that contained a forgery of her signature. It is Plaintiff’s counsel’s submission that these documents were only unearthed during the course of the Teefy action, and were not known to the Plaintiff at the time of the aborted real estate transaction or at the outset of the Teefy claim.
[28] Counsel for Mr. Wang contends that the Referral Agreement, which is the only one of the two on which Mr. Wang’s name appears, is a red herring. That document addresses the shared commission earned by Mr. Wang and Mr. Cheng, and contains nothing which gives rise to a cause of action for the Plaintiff. As for the mortgaged approval letter, both counsel are of the view that it is irrelevant since the mortgage was never granted as the purchase and sale transaction was aborted.
[29] Counsel for the Plaintiff submits that these documents are warning flags which, had they been discovered earlier, may have changed the course of events. The Referral Agreement, according to Plaintiff’s counsel, would have alerted the Plaintiff to the fact that the two Defendants were collaborating as her agent. The mortgage approval letter, again according to Plaintiff’s counsel, would have alerted the Plaintiff to the fact that she had signed an Agreement beyond her financial means, which might have lessened her damages to Teefy. In any case, Plaintiff’s counsel contends, these forgeries/frauds were discovered by the Plaintiff when they were produced in during the course of the Teefy litigation and within two years of the issuance of the present Statement of Claim.
[30] Having said all of that, reference to forged documents has come as a bit of surprise to counsel for both Defendants. As Mr. Cheng’s counsel pointed out in his reply submissions, the supposed forgery/fraud with respect to these two documents is not pleaded by the Plaintiff. The present Statement of Claim – i.e. the one which the Defendants are here seeding to dismiss – is limited to claims of negligence and breach of fiduciary duty. No fraudulent or forged documents are mentioned in that pleading.
[31] There is no defence to the forgery and/or fraud allegation, and no cross-examination on this allegation by the Plaintiff was ever conducted, because it did not exist prior to Plaintiff’s counsel serving his factum. It forms no part of the present claim.
[32] A cause of action not contained in the Plaintiff’s pleading cannot be analyzed or defended and, accordingly, can be struck out on motion by a defendant: Balanyk v. University of Toronto, at para 49. It cannot be raised by a plaintiff during the argument of a summary judgment motion in a last ditch effort to salvage an otherwise out-of-time claim.
Disposition
[33] The action is limitation barred. It is hereby dismissed.
Costs
[34] All three parties have submitted Cost Outlines. Counsel for Mr. Cheng seeks a total of $5,593.78 while counsel for Mr. Wang seeks a total of $11,861.27, both on a partial indemnity scale. For his part, counsel for the Plaintiff would seek $7,750.00, also on the basis of partial indemnity.
[35] Although the request by Mr. Wang’s counsel is slightly higher than the others, all three of the Costs Outlines are modest and reasonable. Neither of the Defendants’ cost request would take the Plaintiff by surprise given how close they are to each other.
[36] Using round numbers for convenience, the Plaintiff shall pay costs to Rex Cheng and Homelife Best Choice Realty Inc. in the all-inclusive amount of $5,500. The Plaintiff shall also pay costs to James Wang and Peaceland Realty Group Inc. in the all-inclusive amount of $11,800.
Date: May 3, 2023 Morgan J.
