Court File and Parties

COURT FILE NO.: CV-16-566961 DATE: 20230621

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

ROBERT SALNA and NORTH LAKE ESTATES INC. Plaintiffs – and – 741980 ONTARIO LIMITED and ENZO RISI and ROSE RISI also known as ROSE FERRARO and BAYVIEW ESTATES INC. and ROCCO AUCIELLO and ANTONIETTA AUCIELLO and JIM POURGOUTZIDIS and MELISSA NUNES Defendants

Counsel: Sean N. Zeitz and James S. Quigley, for the Plaintiffs Arnie Herschorn, for the Defendants

HEARD: February 28, 2023

PAPAGEORGIOU J.

Nature of the actions

[1] This proceeding is a consolidated proceeding between CV-13-482508 commenced in 2013 by Robert Salna (“Salna”) and North Lake Estates Inc. (“North Lake”) against 741980 Ontario Limited (“741”) and Enzo Risi (“Risi”) (the “2013 Proceeding”) and CV-16-566961 commenced in 2016 by Salna against Risi, Rose Risi, 741, Bayview Estates Inc., Rocco Auciello, Antonietta Auciello, Jim Pourgoutzidis and Melissa Nunes (the “2016 Proceeding”). The consolidated proceeding is continued under Court File No. CV-15-566961. The title of proceeding is the same as the title of proceeding in the 2016 Proceeding.

[2] By way of background, the 2013 Proceeding claimed the existence of a partnership to build houses on land between Salna and 741 as well as misappropriation of partnership property/funds by Risi. The 2016 Proceeding claimed various heads of relief related to partnership properties, assets and/or opportunities which Salna claimed had been improperly misappropriated and/or transferred to third parties, and which he believed had not been included in a partial accounting he received in respect of the partnership. He sought orders setting aside such transfers, constructive trusts, certificates of pending litigation and injunctions in respect of such properties.

The summary judgment test

[3] In accordance with r. 20.04(2) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (the “Rules”), the court shall grant summary judgment if:

(a) the court is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence; or

(b) the parties agree to have all or part of the claim determined by a summary judgment and the court is satisfied that it is appropriate to grant summary judgment.

[4] In determining whether there is a genuine issue requiring a trial, the court shall consider the evidence submitted by the parties and a judge may exercise any of the following powers under r. 20.04(2.1): (1) weighing the evidence; (2) evaluating the credibility of a deponent; and (3) drawing any reasonable inference from the evidence.

[5] The Supreme Court of Canada in Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87 (“Hryniak”), at para. 49, succinctly explained when there will be no genuine issue for trial:

There will be no genuine issue requiring a trial when the judge is able to reach a fair and just determination on the merits on a motion for summary judgment. This will be the case when the process: (1) allows the judge to make the necessary findings of fact, (2) allows the judge to apply the law to the facts, and (3) is a proportionate, more expeditious and less expensive means to achieve a just result.

[6] In order to defeat a motion for summary judgment, the responding party must put forward some evidence to show that there is a genuine issue requiring a trial. A responding party on a summary judgment motion cannot rest solely on allegations in a pleading. Each side must “put their best foot forward” with respect to the existence or non-existence of material issues to be tried: Mazza v. Ornge Corporate Services Inc., 2016 ONCA 753, 62 B.L.R. (5th) 211, at para. 9. Furthermore, “a summary judgment motion cannot be defeated by vague references as to what may be adduced if the matter is allowed to proceed to trial”: Diao v. Zhao, 2017 ONSC 5511, at para. 18.

[7] The added wrinkle in this case is that the Orders I am being asked to make would result in partial summary judgment only.

Is Partial Summary Judgement Appropriate?

[8] As set out in Truscott v. Co-Operators General Insurance, 2023 ONCA 267, at para. 54:

Partial summary judgment is a rare procedure, reserved for an issue or issues that may readily be bifurcated from those in the main action, and that may be dealt with expeditiously in a cost-effective manner. It should only be granted in the clearest of cases where it will not give rise to associated risks of delay, expense, inefficiency and inconsistent findings.

[9] For the following reasons, I have concluded that this is an appropriate case for partial summary judgment.

[10] First, the way in which this matter ultimately came before me was a compromise reached by the parties. The Plaintiffs had originally brought a summary judgment motion on all issues.

[11] The parties exchanged voluminous materials, the majority of which addressed the quantum payable if the court found a partnership existed, as well as the terms of the partnership.

[12] In an effort to streamline the issues, the parties agreed to convert the Plaintiffs’ motion for summary judgment on all issues to a motion for a declaration that a partnership existed together with the Defendants bringing a cross motion to dismiss the Plaintiffs’ claim as statute-barred. If the Plaintiffs were unsuccessful on either of these issues, the action would be at an end and the complex issues regarding the quantum allegedly owed to the Plaintiffs would be at an end, subject to appeals. This would result in cost savings for the parties.

[13] In a Joint Submission dated April 27, 2023, the parties wrote to me advocating strenuously for these issues to be decided by way of partial summary judgment, pointing out that in Truscott, there was no agreement by the parties to decide some issues by way of partial summary judgment.

[14] In my view, the issues presented to me can be bi-furcated from the other issues and dealing with the issues in this way will not result in the associated risks of delay, expense, inefficiency and inconsistent findings. The issues are discrete.

[15] I cannot put it any better than they have:

On the facts of this particular case, the risks of delay, expense and inefficiency “go the other way” should this matter proceed in its entirety via trial. Access to justice and having justice done in a meaningful and timely manner, having regard to the 10+ year delay, supports proceeding with partial summary judgment.

Given the tortured history of this file spanning over a decade, with related litigation in the USA being monitored by a US judge and stayed on Mr. Salna’s commitment to prosecute the claims in Ontario in a timely manner, and noting the costs of the parties to date are well in excess of six-figures, which costs are expected to grow exponentially should the matter be directed to a full trial, all taken together having regard to Rule 20.04(2)(b) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 militates in favour of deciding the issues by way of partial summary judgment.

[16] I am satisfied that the record permits me to find facts, make credibility findings where required, and make the necessary inferences to decide the issues before me.

[17] I add that after the motion was argued, the parties wrote to me and advised that they had agreed that if the Plaintiffs were successful on both issues, it was appropriate for the remaining issues to be also decided by way of summary judgment as well. I will have more to say about this at the end.

General Background/Uncontested facts

[18] Risi is the president and director of 741. Risi is a builder by trade.

[19] In or around April 2005, 741 entered into the first of many agreements with North Lake to buy lots upon which 741 would build houses. North Lake is wholly owned by Salna.

[20] It is uncontested that sometime in 2005, 741 and Salna signed a one-page document called a partnership agreement (the “Partnership Agreement”). The written Partnership Agreement is signed but not dated.

[21] Between 2005 and 2009:

• Salna or companies controlled by Salna, including North Lake, sold lots to 741 by way of agreements of purchase and sale wherein North Lake, and later Salna, as seller, agreed to take back a first mortgage for the purchase price less the paid deposit.
• 741 put mortgages on the lots to Toronto-Dominion Bank (“TD”) in order to build houses.
• When the houses were completed, 741 sold the houses to ultimate home buyers.
• On receipt of the proceeds of sale, 741 paid off the purchase price for the lots as well as the TD mortgages on the properties.
• 741 and Salna divided equally between them monies left over after payment of the mortgages and the expenses of sale.

[22] 741 sold the last of the homes in September 2009.

[23] Risi took the position that despite the written Partnership Agreement, no partnership agreement existed. He argued that it was superseded by the sale agreements whereby Salna, or his related corporations, sold lots to 741 for consideration. He takes the position that if a partnership existed, the lots would have been contributed to 741 by Salna or his related corporations for free.

The Law

[24] Section 2 of the Partnerships Act, R.S.O. 1990, c. P. 5, defines “partnership” as follows:

Partnership is the relation that subsists between persons carrying on a business in common with a view to profit, but the relation between the members of a company or association that is incorporated by or under the authority of any special or general Act in force in Ontario or elsewhere, or registered as a corporation under any such Act, is not a partnership within the meaning of this Act.

[25] In Continental Bank of Canada v. R., [1998] 2 S.C.R. 298, at para. 22, the Supreme Court of Canada noted that s. 2 sets out three essential elements for a partnership: (1) a business, (2) carried on in common, (3) with a view to profit.

[26] Bastarache J. stated at para. 23:

The existence of a partnership is dependent on the facts and circumstances of each particular case. It is also determined by what the parties actually intended. As stated in Lindley & Banks on Partnership (17th ed. 1995), at p. 73: “in determining the existence of a partnership . . . regard must be paid to the true contract and intention of the parties as appearing from the whole facts of the case”.

[27] Justice Bastarache further observed, at para. 24, that the Court should look for certain indicia of a partnership:

The Partnerships Act does not set out the criteria for determining when a partnership exists. But since most of the case law dealing with partnerships results from disputes where one of the parties claims that a partnership does not exist, a number of criteria that indicate the existence of a partnership have been judicially recognized. The indicia of a partnership include the contribution by the parties of money, property, effort, knowledge, skill or other assets to a common undertaking, a joint property interest in the subject-matter of the adventure, the sharing of profits and losses, a mutual right of control or management of the enterprise, the filing of income tax returns as a partnership and joint bank accounts. (See A. R. Manzer, A Practical Guide to Canadian Partnership Law (1994 (loose-leaf)), at pp. 2-4 et seq. and the cases cited therein.)

[28] The Court in Backman v. R, 2001 SCC 10, [2001] 1 S.C.R. 367, at para. 26, confirms the principle in Continental and advocates for a practical approach in determining the existence of a partnership:

Courts must be pragmatic in their approach to the three essential ingredients of partnership. Whether a partnership has been established in a particular case will depend on an analysis and weighing of the relevant factors in the context of all the surrounding circumstances. That the alleged partnership must be considered in the totality of the circumstances prevents the mechanical application of a checklist or a test with more precisely defined parameters.

[29] In Partners in Psychiatry Inc. v. Canadian Psychiatric Assn., 2011 ONCA 109, at para. 3, the Court of Appeal followed the Supreme Court of Canada’s approach in Backman, inquiring as to whether the objective, documentary evidence and the surrounding circumstances, including what the parties actually did, were consistent with a subjective intention to carry on business in common with a view to profit.

[30] The Ontario Court of Appeal in Psychiatry was satisfied that the parties were carrying on a business, in common, with a view to profit, as both parties contributed money, knowledge and skill, they exercised mutual control of various aspects of the business and operations, and they shared the profits: Psychiatry, at para. 8. The absence of some common partnership indicia was not determinative given the totality of the circumstances: Psychiatry, at para. 9.

Admissions in the pleadings

[31] Rule 51.06(2) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 provides that where an admission of fact is made in a pleading, any party may make a motion to a judge for an order that it is entitled to without waiting for the determination of any other question, and the judge may make such order as is just.

[32] The original Statement of Defence in the 2013 Proceeding, which was consolidated with the 2016 Proceeding, specifically admitted the existence of a partnership between Salna and 741.

[33] In particular:

a) In paragraph 1 of the Statement of Defence in the 2013 Proceeding, the Defendants admitted paragraphs 12 & 14 of the Statement of Claim which stated as follows:

12. On or about December 2005 the Plaintiff Robert Salna and 741 Ontario entered into the Partnership Agreement with respect to the lots that were the subject of Agreements of Purchase and Sale and any lots that were subsequently acquired by 741 Ontario, and relating to the development and construction of residential homes on these lots.

13. The plaintiff pleads that as a partner, 741 Ontario owed a fiduciary duty or a duty of utmost good faith to the Plaintiff Robert Salna.

b) The Defendants made reference to the partnership in various paragraphs of their Statement of Defence in the 2013 Proceeding:

4. The defendants do not owe money to the plaintiffs either pursuant to the Partnership Agreement dated December, 2005 or otherwise.

5. Risi charged personal expenses to the partnership only after Salna did so. Salna charged $200,000 to the partnership account for expenses in connection with the renovation of a condominium owned by him, which was not partnership property. Then Risi began to charge personal expenses to the partnership, with Salna’s knowledge and acquiescence.

6. In the partnership accounting, the defendants credited Salna with the amounts charged by Risi to the partnership for personal and other expenses.

7. Any monies repaid by the Town of Richmond Hill to 741 by way of return of security deposits were repaid to 741’s bank account. Thus, the monies were accounted for in the partnership accounting. Risi and 741 remitted to the partnership all of the revenue earned by the partnership accounting.

9….This payment of $180,000 to North Lake Estates was a charge against Risi’s share of the partnership revenues and was accounted that way in the partnership accounting.

10. Risi “prepaid” North Lake Estates the sum of $180,000 and does not now owe the Partnership $180,000….

11. The plaintiffs claim that the defendants owe the plaintiffs money from the Partnership is based on a mistake…

12. In the result, the plaintiffs must credit the defendants with the earlier overcharge for the lots, which were not building lots but for which the plaintiffs charged 741 as if they were building lots. When the lots are accounted for properly, the defendants do not owe the plaintiffs money from the Partnership.

c) The Plaintiffs amended the Statement of Claim in the 2013 Proceeding in or around 2017 pursuant to a Court Order dated May 24, 2017. The amendments increased the damages, provided greater particulars of the accounting sought and added claims for a constructive trust and a tracing order—but otherwise did not change the overall claim upon which the Plaintiffs’ claim was based, that a partnership existed. In response, the Defendants filed an Amended Statement of Defence and Counterclaim where they began questioning the existence of the partnership in an indirect way. In that regard, new paragraphs 14, 16, 17, 18, 19 of the Amended Statement of Defence all began with the statement “if there was a partnership…” However, all of the paragraphs where the Defendants had referred to the partnership above, remained in the Amended Defence.

Interestingly, the Defendants did not formally withdraw their former admission to paragraph 12 of the Statement of Claim where the Plaintiffs had pleaded that a partnership exists. However, the Defendants made an alteration to the Statement of Defence without underlining it in that regard. Instead of admitting paragraph 12 of the Statement of Claim, the Defendants now indicated that they had no knowledge of paragraph 12 of the Statement of Claim.

It appears that the Plaintiffs did not notice the change with respect to the former admission of paragraph 12, at the time.

d) Paragraph 6 of the Statement of Defence in the 2016 Proceeding also admitted various paragraphs of the Statement of Claim which made reference to the partnership, including paragraphs 17, 18, 20, and 21. As well, specific paragraphs made reference to the existence of a partnership:

5. To the extent that the Lot 78 option and the Lot 522 option are partnership property, if at all, then the plaintiff and 741 may now deal with them as partnership property.

6. When 741 conveyed to Bayview the Lot 78 option and the Lot 522 option, it was unclear what was partnership property and what property the partners were entitled to deal with as their own and, pending a final accounting between the parties, is still unclear.

7. Lot 85, referred to in paragraph 35 of the amended statement of claim, was not partnership property. 741 was entitled to deal with Lot 85 as its own property.

8. If any partnership monies were appropriated by these defendants to their own use, which these defendants deny, the monies were appropriated by 741 not by Rose Risi. At various times, Enzo Risi used Rose Risi’s credit card to pay partnership expenses. Rose Risi has no involvement with the partnership and was not unjustly enriched.

9. Enzo Risi (a) denies that he misappropriated partnership property.

10. The plaintiff used approximately $238,983 of partnership monies for the purpose of renovating his own condominium at 11121 Yonge Street, Richmond Hill. Enzo Risi and 741 say that the plaintiff’s use of partnership funds for this purpose ought to be part of the overall accounting between the parties.

e) The Counterclaim in the 2016 Proceeding dated March 29, 2017, also referenced the partnership agreement as follows:

16. The plaintiff and the defendant 741980 Ontario Limited (“741”) entered into a written partnership agreement, as set out in paragraph 17 of the amended statement of claim.

17. The scope of the partnership agreement is unclear. The written partnership agreement refers to “lands in Plan 133, in the Town of Richmond Hill.” However, 741 and Risi made contributions towards the acquisition and development of lands in Plan 133 and lands other than lands in Plan 133, either by paying the deposit or by negotiating the purchase of the lands on the understanding that they would become partnership assets …

18. The performance of the partnership is also unclear. Although the written partnership agreement required the plaintiff to advance various lands to the partnership as part of the plaintiff’s contribution, the plaintiff generally sold the lands to 741. If the sales were accepted at face value, that would disentitle the plaintiff to a further share of partnership profits. The plaintiff would already have been compensated on payment to him of the sale price for the lands.

19. In the case of some of the lands, the plaintiff, directly or through a corporation or corporations, purported to enter into agreements of purchase and sale with 741or another corporation of Risi’s, at different points in time, agreeing at the earlier time to sell the lands at a lower price, and then agreeing at a later time to sell the same lands at a higher price. The ultimate conveyance from the plaintiff, directly or through a corporation or corporations to 741 was at the higher price. The plaintiff’s performance of the partnership agreement was again inconsistent with the existence of a partnership with respect to the lands. The lands are described in Schedule “A”, Part 3.

20. The written partnership agreement required the plaintiff to contribute any lands to the partnership at cost. In the case of some of the lands, the plaintiff sold the lands to 741 at a price reflecting the developed value of the lands rather than the cost of the lands, again contrary to the written partnership agreement. The lands are described in Schedule “A”, Part 4.

21. In the case of some of the lands, the plaintiff used ostensibly partnership lands for his own private purposes. During the partnership, the plaintiff was also attempting to fund an expensive divorce settlement with his then wife. In order to fund the settlement, the plaintiff mortgaged partnership lands and used the mortgage proceeds to fund the divorce settlement. 741 and Risi received no benefit when the proceeds of sale of the developed and built lands were used to repay the plaintiff’s mortgage lender. The lands are described in Schedule “A”, Part 5.

22. The plaintiff deliberately kept the ownership structure of the partnership as opaque as possible, so as to conceal from his then wife the extent of his holdings.

23. It was always the intent of the partnership that Risi be credited with a management salary for his work in developing and building on the lands contributed to the partnership by the plaintiff. However, the plaintiff did not credit Risi accordingly. Risi is entitled to credit for a management salary in the amount of $125,000 per year for the years 2005 to 2012, depending on the outcome of the accounting, payment by the plaintiff accordingly.

24. In some cases, 741 and Risi paid development charges that, pursuant to the written partnership agreement, the plaintiff should have paid. 741 and Risi are entitled to credit for payment of development charges in the amount of $527,000 that the plaintiff should have paid.

[34] A fair reading of the Defendants’ pleadings is that the Defendants admitted the existence of a partnership.

[35] What they disputed was the lands which it covered, its terms (e.g. whether Risi was entitled to a management salary, whether the agreement required North Lake to contribute lots for free or at cost), whether Salna or North Lake breached the partnership agreement because of mortgages Salna placed on the properties to fund Salna’s divorce settlement, and whether Risi or 741 are entitled to credits because of development charges which they paid. These are all arguments as to how the partnership agreement is to be interpreted.

[36] Notwithstanding these admissions, strictly speaking, the Plaintiffs may not have resort to r. 51.06(2) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 to obtain an Order that a partnership was formed based upon these admissions, because r. 51.06(2) expressly applies to admissions of fact. The question of whether a partnership exists is a question of mixed law and fact: Psychiatry, at para. 6.

[37] Nevertheless, the admission of mixed law and fact that a partnership existed contained throughout the Defendants’ pleadings, as set out above, is relevant because the Defendants failed to bring any motion to withdraw these admissions pursuant to r. 51.05 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (which applies to admissions of mixed fact and law and admissions of fact) [^1] in the context of a summary judgment motion where they were obliged to put their best foot forward.

[38] Had they brought such a motion they would have had to satisfy the following test: a) does the proposed amendment raise a triable issue; b) is there a reasonable explanation for the change in position; c) has the party wishing to withdraw the admission established that the withdrawal will not result in any prejudice that cannot be compensated for in costs? : Antipas v. Coroneos (1988), 29 C.C.L.I. 16 (Ont. H.C.), cited with approval in Szelazek Investments Ltd. v. Orzech; Dharsi Estate v. Manji, 2016 ONSC 703 (Div. Ct.). [^2]

[39] There is a sound policy reason for r. 51.05 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 and the test established pursuant to it. As set out by Saunders J. in Antipas, at para. 20: “in the interest of expedient and responsible litigation, a party should not be able to blow hot and cold”. The pleadings inform the conduct of the litigation. In this case, the way in which the Defendants pleaded their case caused the Plaintiffs to conduct the litigation on the basis that the only issues were the accounting, the proper interpretation or scope of the partnership and any misappropriations alleged. It was only in or around 2017 that they began questioning the existence of the partnership, altogether. They have had over five years to amend their pleadings and have not done so.

[40] Had they brought a motion to withdraw the admissions, in my view they would not have been able to satisfy the second requirement of providing a reasonable explanation for the change in position. When pressed on cross-examination, Risi could only say he had made a “mistake” when he said that the parties were partners in his pleadings, with no other details.

[41] Therefore, while the Plaintiffs may not have technical resort to r. 51.06(2) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 to seek judgment based on the admissions, the Defendants’ failure to bring a motion to withdraw this admission and satisfy the necessary test in past years, is fatal to their position that no partnership at all existed in the face of this summary judgment motion.

[42] In the event I am wrong, I will nevertheless consider whether there is a genuine issue that requires a trial, on the basis of the evidence that a partnership existed.

Admissions in affidavit material

[43] In paragraphs 5, 6 & 7 of Mr. Risi’s affidavit, sworn February 18, 2018, he admits the following:

5. All of the claims are based on a dispute as to an accounting of profits from a partnership between Salna and my company 741980 Ontario Limited.

6. In May, 2005, Salna and I first discussed forming a partnership to sell houses. Salna would contribute land, 741 would manage the development and building, and we would divide profits of sale equally between us.

7. The parties performed the partnership agreement as follows: (a) Salna or companies controlled by Salna (collectively "Salna"), owned vacant lots, most of them located on registered Plan 133, Town of Richmond Hill; (b) Salna made the lots available to the partnership by way of agreements of purchase and sale, pursuant to which Salna sold the lots to 741; (c) Salna put mortgages on the lots to Quest Ventures Ltd. or Quest Capital Inc. (collectively "Quest"). The mortgages were for Salna's private purposes, having nothing to do with the partnership; (d) 741 put mortgages on the lots to TD Bank in order to obtain funds to build houses; (e) 741 sold houses to ultimate buyers; (f) on receipt of the proceeds of sale, 741 paid off the mortgages on the properties; (g) 741 and Salna divided equally between them monies left over after payment of the mortgages and the expenses of sale.

[44] When these paragraphs were brought to Risi’s attention during his cross-examination, he indicated that he had been mistaken. The Defendants argued that it is irrelevant whether the parties thought a partnership existed and therefore, I should have no regard to Risi’s expressed views on the matter in his affidavit.

[45] Even if the above could be considered implicit admissions that a partnership existed, the Plaintiffs may not have resort to r. 51.06(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, which permits a party to obtain judgment on admissions of fact, because such admissions are at most admissions of mixed fact and law.

[46] However, the admissions from paragraphs 7(a) to 7(g) are all admissions of fact as to what the parties did and are relevant to the issue of whether they formed a partnership. As will be seen, these admissions are consistent with the other evidence as to what the parties actually did.

[47] I will be taking the admissions in paragraphs 7(a) to (g) into account in the overall analysis of whether there is a genuine issue as to whether a partnership existed.

Effect of a written partnership agreement

[48] In Continental, the Supreme Court held, at para. 25, that where the parties have entered into a formal written agreement to govern their relationship and hold themselves out as partners, the courts should determine whether the agreement contains the type of provisions typically found in a partnership agreement, whether the agreement was acted upon, and whether it actually governed the affairs of the parties.

[49] The following is the exact text of this agreement:

THIS AGREEMENT MADE THIS DAY OF , 2005

BETWEEN:

ROBERT SALNA of the first part

and

741980 ONTARIO LIMITED of the second part

WHEREAS the parties have agreed to develop lands in the Town of Richmond Hill together as a partnership

AND WHEREAS 741980 Ontario Limited has acquired lands in plan 133, in the Town of Richmond Hill

AND WHEREAS the parties seek by this agreement to resolve terms for the said partnership

NOW THEREFORE in consideration of the covenants and premises hereto the parties agree as follows:

1. Lands conveyed or to be conveyed by North Lake Estates Inc. to 741980 Ontario Limited in plan 133, in the Town of Richmond Hill shall comprise the partnership between the parties hereto.

2. 741980 Ontario Limited acknowledges that it is holding the partnership lands in trust for itself as to 50% and Robert Salna as to 50%.

3. The parties agree that all costs and all profits shall be shared equally.

4. In particular the parties agree that all development charges and expenses as well as revenue derived from the sale of the said lands or any part thereof shall be shared equally.

5. The parties agree that all books, records and accounts of such expenditures and revenues shall be disclosed to the other.

6. Each party shall have a right of indemnification for 50% of any expenditure upon production to the other of any receipt in substantiation of any expense related to the partnership.

[50] The executed Partnership Agreement contains all the three essential ingredients for a partnership as identified in Continental, at para. 22: (1) a business, (2) carried on in common, (3) with a view to profit.

[51] The admissions of fact in paragraphs 7(a) to (g) of Risi’s sworn affidavit dated February 18, 2018, set out above, demonstrate that the Partnership Agreement was acted upon and that it governed Salna and 741’s affairs. That is, North Lake and Salna sold land to 741, they developed land together over the years, sold houses and attempted to share costs and profits equally (although the reason for this litigation is that the costs and profits are alleged to not actually have been shared as required).

[52] Further, as will be set out in detail below, the evidence as to the parties’ conduct, even independent of the written Partnership Agreement or the admissions set out above, establish the three necessary criteria for a partnership.

[53] I will now address the three criteria based upon the evidence filed in the following order: 1) Was there a business? 2) Was it carried out with a view to a profit? and 3) Was it carried out in common?

Was there a business?

[54] Pursuant to s. 1(1) of the Partnerships Act, R.S.O. 1990, c. P. 5, “business” includes “every trade, occupation and profession”: see also Continental, at para. 28.

[55] Constructing homes for sale to purchasers constitutes a business within the meaning of the Partnerships Act.

Was the business carried on with a view to profit?

[56] The Supreme Court in Backman held, at para. 22, that determination of whether there exists a “view to profit” requires an inquiry into the intentions of the parties entering into the alleged partnership.

[57] The evidence establishes that as each home was sold, Salna and Risi attempted to share profits after the payment of expenses and mortgages by sharing left over revenues.

[58] There is no other explanation as to the purpose of the home building venture, it was clearly a “for profit” enterprise.

Was the business carried on in common?

[59] In this case, both parties contributed different skills and resources necessary for the success of the home construction business.

[60] Risi managed the day-to-day construction of the homes and controlled 741 as its sole director. 741 paid the expenses for the development and construction of the houses. 741 also maintained the records relating to the expenses and payments for the development of the lands and the construction of the houses and had sole signing authority for 741’s bank account.

[61] Salna contributed to the business in the following manner:

• He contributed at least $753,491.00 in cash to 741 to pay development charges.
• His relationship with TD Bank—in particular his being considered a “high end client” facilitated 741’s loan application with TD Bank for construction financing.
• He provided a personal guarantee to TD Bank regarding the loan(s) to 741 to obtain working capital for the venture.
• He provided almost 100 per cent vendor-take-back mortgage financing for the properties conveyed by North Lake, with ultimate payment delayed until the homes were sold.
• He subrogated these vendor-take-back mortgages to the TD Bank mortgages.
• At one point, Risi complained that 741’s unpaid GST liability would impair the business, so Salna provided 741 with the requisite funds to extinguish the debt, specifically the sum of $110,429.17 on March 19, 2007.
• He paid off property tax on at least one property after it was acquired by 741 (i.e. 39 Sylvan Crescent).
• He paid for Risi’s Fido cell phone account from December 2006 to December 2007 to permit Risi to conduct the business.
• He paid half of the development costs for the “Merton Street” properties sold in or around May and June 2009.
• He provided his knowledge of large-scale commercial financing, to assist and structure 741’s financing for the venture.
• He used his skill to assist in the selection of properties for development.
• He provided bookkeeping/accounting services to 741 and Risi at his own expense in regard to the property development. In that regard, while the extent of proper disclosure is disputed by Salna, as part of Risi’s limitation period motion, Risi specifically says that this bookkeeper was given full access to all of 741’s expenses, revenues and underlying documents to be Salna’s eyes and ears on the ground.

[62] Salna’s contributions above, and Risi’s acceptance of such contributions do not make commercial sense unless the parties were carrying on the business in common.

[63] As well, Risi took notes in order to assist with the calculation of profit distributions to him and Salna:

• In or around 2005, Risi prepared a budget for the undertaking in which he projected a $100,000 profit for each house constructed and provided this budget to Salna. There would be no reason to do so unless Salna was going to enjoy a portion of the profits.
• At some point which is disputed, Risi prepared a “rough” accounting in his own handwriting. In this accounting, Risi records that both he and Salna contributed the identical sums of $154,000.00 to 741 with the further notation “partnership equal advances”.

[64] These notes and calculations are consistent with the building construction being carried out in common.

The Parties’ Intentions

[65] There was a great deal of evidence lead, and arguments made, as to how the parties viewed the relationship. Their mere subjective intention cannot constitute a legally enforceable partnership if none existed based upon the criteria established in the Partnership Act, as further interpreted by the courts.

[66] As the Supreme Court explained in Continental:

The respondent argues that intending to constitute a valid partnership is not the same thing as intending to carry on business in common with a view to profit. I agree. The parties in the present case, however, set up a valid partnership within the meaning of s. 2 of the Partnerships Act, R.S.O. 1990, c. P. 5. They had the intention to and did carry on business in common with a view to profit. This conclusion is not based simply on the parties’ subjective statements as to intention. It is based on the objective evidence derived from the Partnership Agreement entered into by the parties. As Millett L.J. held in Orion Finance, supra, at p. 85:

The question is not what the transaction is but whether it is in truth what it purports to be. Unless the documents taken as a whole compel a different conclusion, the transaction which they embody should be categorised in conformity with the intention which the parties have expressed in them.

[67] In this case, the parties’ objective intention to carry on a business in common with a view to a profit can be discerned from the Partnership Agreement, the admissions, as well as the objective evidence of what they did in furtherance of the Partnership Agreement. In accordance with Continental, this court should not strain to find a conclusion inconsistent with the objective intention which the parties themselves have expressed in the Partnership Agreement.

[68] The Defendants’ main argument as to why there was no partnership is that there were purchase agreements entered into in respect of each lot upon which homes were constructed. They say that if a partnership had truly existed, Salna or North Lake would have contributed these lands to the partnership for free. They also point out that the term of the written Partnership Agreement that states that lands conveyed by North Lake “shall comprise the partnership between the parties hereto” is unclear.

[69] Further, they argue that any contributions made by Salna to development costs were required in any event because the purchase agreements pursuant to which the lands were sold required the vendor to pay some development costs. Finally, they complain that Risi was never paid a management fee.

[70] In my view, these arguments, do not disprove the existence of a partnership for a number of reasons.

[71] Section 24 of the Partnership Act, R.S.O. 1990, c. P. 5 sets out the rights and duties in relation to the partnership property “subject to any agreement express or implied between the parties”.

[72] Therefore, parties are free to establish a partnership agreement with terms which they choose, just as they can enter into business contracts or other business ventures with terms that they choose. A partnership agreement does not have to be equal; and all parties need not benefit financially equally. It may be that partners contribute different things or skills which they consider to be equal. Their agreement, where expressed, should govern, particularly in a case like this where the parties are sophisticated and could have negotiated other terms.

[73] I add that the signed written Partnership Agreement between Salna and 741 references land being conveyed by North Lake, but North Lake is not a party to the partnership. Therefore, the Partnership Agreement made a distinction between North Lake which is a separate corporation and Salna. It referenced North Lake conveying the land to 741 which would hold land in trust as to 50 per cent for Salna and 50 per cent for 741. The written agreement did not specify that any such lots would be conveyed for free. The Partnership Agreement also made no mention of a management fee.

[74] With respect to development charges, even if the agreements of purchase and sale required North Lake to pay certain development charges (which Salna disputes), that does not mean that Salna’s personal contribution of all development charges does not matter in the overall assessment of whether a partnership existed. Salna and North Lake are separate legal entities and point out that while Salna paid all development charges, the sale agreements only required North Lake to pay certain development charges.

[75] The main objection to there being a partnership is that Risi felt it was ultimately not as financially advantageous to him as he expected, either in the way it was structured or the way it was performed. In his affidavit he stated:

48. If Salna had made it clear to me at the beginning of the partnership that I would have to pay $2.2 million for land costs, and also pay half the cost of development in addition, all without receiving any remuneration for my services as a manager, I would not have entered into the partnership. Such a partnership would have made no financial sense for me.

[76] Making a bad bargain is not a defence to the issue of whether or not there was a partnership. In a record which comprises thousands of pages, the parties did not refer me to a single contemporaneous communication where Risi took issue with the way in which the parties were performing their arrangement at the time. 741 paid for the lots, Risi built houses, Salna paid development charges, was reimbursed for half and Risi was not paid a management fee. None of Risi’s complaints appear until after Salna asserted that he was owed money.

[77] Furthermore, building and other costs were not contributed by Risi for free but shared by the parties. It appears to me that the net effect of 741 paying for the land meant that they also shared the land cost because they only shared revenues after all costs were paid and any financing was repaid. I make the same point with respect to development charges. The fact that Salna was reimbursed for half of these charges meant that they shared them. As well, Salna was not paid for any of the time he devoted to their partnership. Recall that Salna also contributed the bookkeeper’s services for free. It is unclear why the arrangement was commercially unreasonable unless Salna contributed the land for free, paid all development charges on his own, and Risi received a management fee for the time and effort he contributed while Salna did not.

[78] I am satisfied that the evidence establishes that the parties had a partnership within the meaning of s. 2 of the Partnership Act, R.S.O. 1990, c. P. 5 and that there is no genuine issue requiring a trial with respect to whether a partnership existed.

[79] I add that when their Partnership Agreement is ultimately construed, and an accounting of profits takes place, the Defendants will still be able to pursue their arguments that their agreement implicitly or explicitly required the land to be contributed for free, that Salna should not have been reimbursed for development charges and that Risi should receive a management fee. The fact that they have these interpretive arguments does not detract from the existence of the partnership.

Is the claim as against the defendants Risi, Rose Risi, 741 and Bayview Estates statute barred?

The Limitations Act

[80] The following provisions are relevant to this matter: sections 4, 5 and 11 of the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B. These provisions provide as follows:

Basic limitation period

4. Unless this Act provides otherwise, a proceeding shall not be commenced in respect of a claim after the second anniversary of the day on which the claim was discovered.

Discovery

5. (1) A claim is discovered on the earlier of,

(a) the day on which the person with the claim first knew,

(i) that the injury, loss or damage had occurred,

(ii) that the injury, loss or damage was caused by or contributed to by an act or omission,

(iii) that the act or omission was that of the person against whom the claim is made, and

(iv) that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it; and

(b) the day on which a reasonable person with the abilities and in the circumstances of the person with the claim first ought to have known of the matters referred to in clause (a).

Presumption

(2) A person with a claim shall be presumed to have known of the matters referred to in clause (1) (a) on the day the act or omission on which the claim is based took place, unless the contrary is proved.

Demand obligations

(3) For the purposes of subclause (1) (a) (i), the day on which injury, loss or damage occurs in relation to a demand obligation is the first day on which there is a failure to perform the obligation, once a demand for the performance is made.

Same

(4) Subsection (3) applies in respect of every demand obligation created on or after January 1, 2004.

Attempted resolution

11 (1) If a person with a claim and a person against whom the claim is made have agreed to have an independent third party resolve the claim or assist them in resolving it, the limitation periods established by sections 4 and 15 do not run from the date the agreement is made until,

(a) the date the claim is resolved;

(b) the date the attempted resolution process is terminated; or

(c) the date a party terminates or withdraws from the agreement. 2002, c. 24, Sched. B, s. 11.

Same

(2) For greater certainty, a person or entity that provides resolution of claims or assistance in resolving claims, on an impartial basis, is an independent third party no matter how it is funded. 2006, c. 21, Sched. D, s. 1.

[81] A typical summary judgment motion involving the basic limitation period requires the court to determine whether the record enables making a series of findings of fact on the following:

a. Presumption: the day on which the act or omission on which the claim is based occurred is the date the plaintiff is presumed to know of the matters listed in ss. 5(1)(a)(i)-(iv) of the Limitations Act, 2002;

b. Actual knowledge: the date of actual knowledge under s. 5(1)(a) of the Limitations Act, 2002, but only if the plaintiff’s evidence proves contrary to the presumptive date;

c. Objective knowledge: the s. 5(1)(b) of the Limitations Act, 2002 objective knowledge date, based on the reasonable person with similar abilities and circumstances analysis; and

d. Which of the actual knowledge and objective knowledge dates is earlier, for that earlier date will be the day on which the plaintiff discovered the claim for the purposes of applying the basic limitation period of two years.

See Nasr Hospitality Services Inc. v. Intact Insurance, 2018 ONCA 725, 142 O.R. (3d) 561, at paras. 34-35; Morrison v. Barzo, 2018 ONCA 979, 144 O.R. (3d) 600, at para. 29.

[82] Consideration of whether an action should be dismissed due to a limitation period requires the court to make specific findings of fact based upon the record; assumptions as to the above are insufficient.

The Presumptive Date

[83] Pursuant to s. 5(1)(2) of the Limitations Act, 2002 and Nasr, the presumptive date for when the Plaintiffs knew of the elements set out in s. 5(1)(a) of the Limitations Act, 2002 is the date when the alleged acts or omissions occurred.

[84] The last home was sold in December 2009 and there were no further financial transactions entered into by the partnership. Therefore all relevant acts or omissions occurred prior to that date and the presumptive date is at the latest December 2009. This is more than two years prior to the commencement of the proceeding so there is no need to delve into this issue with more specificity.

Actual knowledge s. 5(1)(a)(i) – (iii) (Subject to s. 5(1)(a)(iv)) which is discussed below

[85] In his affidavit sworn February 26, 2018, Risi references all of the claims made by the Plaintiffs in the consolidated proceeding and states “All of the claims are based on a dispute as to an accounting of profits from a partnership between Salna and my company [741]”.

[86] Then he set out a chronology which he believed was relevant to the determination of when the limitation period had begun “for Salna’s various claims” and that he “[believed] that all of Salna’s claims are out of time”.

[87] These facts include:

• In August 2009, Risi’s accountant Frank Leonardelli (“Leonardelli”) met with Inga Gratcheva (“Gratcheva”) to review her partnership accounting to date. Gratcheva was Salna’s accountant as well as 741’s bookkeeper. Gratcheva’s notes indicated that Risi had deposited $942,711.02 into the partnership, withdrawn $1,328,289.40 and that $642,823.22 had to be clarified.
• In September 2009, Risi delivered copies of his wife’s Visa statements to clarify the $642,823.22; Risi said that he had been using her credit card to pay building and development costs.
• During the fall of 2009, Salna told Risi that 741 should pay development costs for the remaining lots for sale because Risi owed money to the partnership accounts.
• At the time, Stanley Fienberg (the partnership’s lawyer, and hereinafter “Fienberg”) brokered a compromise so that both parties took a little less than the parties expected so that the sales of the last homes could close.
• On December 18, 2009, Gratcheva sent Fienberg an email stating that Salna was owed $341,541.
• On January 21, 2010, Fienberg responded to Gratcheva’s email by delivering a “Reconciliation of Draws and Advances Bayview Homes” which concluded that no funds were owed to Salna but rather that Salna owed $53,433.
• On January 22 or 23, 2010, Gratcheva responded, and stated that Salna was owed $764,047.

[88] The Defendants argue that Salna had all the information he needed by August 2009 and certainly by January 2010 to commence a proceeding. In my view, that is to confuse when Salna had actual knowledge of the acts and omissions upon which his cause of action was based with when he had sufficient knowledge to know he had a plausible claim.

[89] In fact, Salna and Gratcheva did not have all of the relevant partnership information and backup documentation regarding building and other expenses in order to calculate a final reconciliation of partnership accounts. For example, they did not and still do not have the severance applications which set out: severance costs that Salna was obliged to pay, GST refund applications, invoices for MelCor Construction and the full particulars of the grading deposits.

[90] Therefore, although Salna and his bookkeeper Gratcheva believed that Salna was owed money as of January 2010, they were not in a position to have actual knowledge in the absence of production of all partnership documentation required to reconcile partnership accounts.

Objective knowledge s. 5(1)(b)

[91] In Grant Thornton LLP v. New Brunswick, 2021 SCC 31, [2021] S.C.J. No. 31, at paras. 42-46, the Supreme Court indicated that a claim is discovered when a plaintiff has knowledge, actual or constructive, of the material facts upon which a plausible inference of liability can be drawn. A plaintiff will have constructive knowledge when the evidence shows that the plaintiff ought to have discovered the material facts by exercising reasonable diligence.

[92] Salna has alleged that his claim was not discoverable because Risi maintained the documents for 741, and that many of these documents were never disclosed to him until this proceeding. He takes the position that Gratcheva was only a bookkeeper who did data entry based upon information given to her by Risi which included bank statements and cheques. He also provided evidence that as a result of this proceeding, he has received productions which showed that that funds were misappropriated because Risi paid personal expenses through 741 in a way which could not have been ascertained before. For example, even though the general ledger did list tax payments to the Town of Richmond, Risi lived in the Town of Richmond and so it was not apparent that he paid his personal expenses through 741 until productions were obtained. Salna gave evidence that he still does not have production of all relevant documents.

[93] It may be that he did not have all the documents necessary to determine the actual amount owing but this is not required.

[94] In my view, subject to s. 5(1)(a)(iv) of the Limitations Act, 2002 and s. 11 of the Limitations Act, 2002, as of January 2010, at the latest, as of January 2010 Salna had enough knowledge of the material facts upon which a plausible inference of liability could be made based upon Gratcheva’s calculations which continued to show that Salna was owed money. As well, Gratcheva could have sought the back up for the various expenses billed through 741.

[95] Salna did not commence the action until June 13, 2013 which is more than three and one half years afterwards.

The Mini-Trial

[96] By reasons dated May 8, 2023, I directed that a mini trial should occur, primarily in respect of conflicts in the evidence relevant to the applicability of s. 11 of the Limitations Act, 2002 and s. 5(1)(a)(iv) of the Limitations Act, 2002. Salna, Risi and Harold Niman (“Niman”) testified at the mini-trial which occurred on June 12, 2023.

[97] The disputed evidence was as follows.

[98] Salna had alleged in his affidavit material and cross examination out of court that after Gratcheva submitted her calculations on January 22, 2010, the parties agreed that Risi would retain a third accountant, Niman, to review the state of accounts and that if the third accountant determined that any amounts were owed, 741 would pay them. He said that Risi begged him to “leave that money in”; he would do an accounting and figure out how much was owed and then settle up with him. He said that right up to 2013, Risi had been assuring him that upon completion of the accounting, Salna would receive his fair share and “not to worry”. Salna stated that they had a partnership and so he “went on trust because you have to trust your partner”.

[99] Salna alleged that Risi purposively lulled him into a false sense with these promises.

[100] Risi denied that Niman was engaged to prepare an accounting, asserting that Niman was simply engaged to determine how Gratcheva had calculated her numbers. He also denied ever stating that he promised to pay any amounts found owing to Salna pursuant to said accounting.

[101] These issues, as well as facts engaged in the resolution of these issues, involved credibility issues.

[102] I foreshadow that I have not found Risi’s evidence credible on these issues, taking into account all of the evidence before me. One of these reasons is that he was evasive. As well, his evidence was internally inconsistent and also inconsistent with Niman’s evidence.

[103] Niman consistently testified that he had been retained to review Risi’s records and produce an accounting to Salna and Gratcheva with a view to reconciling the records. When examined out of court he stated:

Q. …I’m just trying to confirm that you were retained by Mr. Risi to perform an accounting with respect to the partnership.

A. And—well, to do—well, to do an accounting of—the records, yes.

Q. Okay, And then Mr. Risi came to see you, and I understand that you, then, were going to review Mr. Risi’s records that he says were this thick, and you were going to produce an accounting to Mr. Salna and his counsel with a view to reconciling the numbers; is that fair?

A. I believe so. I believe that’s fair.

[104] At the mini-trial, Niman stated:

A. I was asked to go over numbers by Mr. Risi and to come up with a number for the amounts owing by one party to another.

[105] Niman stated that his retainer began in January of 2011 which was within the limitation period which Risi urges upon me.

[106] While Niman was conducting his review, the parties continued to consider developing additional properties. There are emails dated September 2011 which relate to the planning approvals for lots known as Jonathan Court and Monarch. Salna states that he never would have given Risi permission to work on these properties if “a line had been drawn in the sand”, as now stated by Risi. Risi conceded that he intended the Jonathan Court and Monarch lots to be “partnership lots”.

[107] On November 15, 2011, the parties had the following email exchange:

Subject: accounting?

Salna: Dear [Risi], it has been three years since you started your accounting. When do you think your accountant will be finished his work so that we can determine how much that is owed to me?

Risi: Hi Rob it has been 1 year and he is still gathering paperwork. I will drop by tomorrow to see you. Thanx.

[108] Although Risi initially denied that he ever promised to conduct an accounting at all, or pay amounts found owing as a result of the accounting, in my view, this exchange is supportive of Salna’s evidence in that regard. Had Risi been of the view that there were no amounts owed to Salna, or that Niman was not in fact preparing an accounting, in my view, he would have said so in his response to Salna’s inquiry.

[109] As well, at the mini-trial, Risi conceded that he had instructed Niman to complete an accounting:

Q. Ok. Did you instruct Mr. Niman to complete the accounting with respect to the issues in dispute in this litigation?

A. We were working on it, yes.

[110] Risi was unable to get planning approval for Jonathan Court and Monarch in a timely manner and Salna sold the land to someone else on or about April 30, 2012. Salna gave Risi an opportunity to purchase the lands by matching the $600,000 offer, but Risi declined feeling the price was too high.

[111] The parties (including Niman, Gratcheva, Risi and Salna) then met on June 14, 2012 when Salna thought he would be receiving the accounting. Niman produced a one page summary which advised that 741 was owed $494,919.

[112] Salna secretly recorded this meeting so I infer he must have been concerned by this point. Both parties have referred to the transcript in argument and neither objected to my consideration of this transcript.

[113] Based on the 35-page transcript, it was a lengthy and amicable meeting where they reviewed various transactions with respect to various lots, as well as their positions on who should have been paying for various things, Risi’s claim for a management fee, and some of the provisions of the agreement which needed to be interpreted.

[114] I note that by this point, if the limitation period began to run in January 2010 or sooner as is alleged by Risi now, it would have already expired; however, no one raised any limitation period at this meeting.

[115] Because of the legal issues which Niman indicated he could not resolve and which he said were preventing him from completing the accounting, Risi proposed that they get two lawyers, Harold Maltz (“Maltz”) and Fienberg to further review and interpret the agreement.

[116] Risi had stated that the recording was cut off and in fact at the end he advised that he would not be providing any accounting at all. But this is inconsistent with the following facts.

[117] On June 25, 2013, the parties had this email exchange:

Salna: Dear [Risi] how does it look for [Niman] to complete the accounting for our housing profits on the various houses we worked together on? Can you find out the timing as to the completion date?

Risi: Hi, [Salna] I had to give him more money he said a few more weeks.

[118] Niman was explicitly asked if he had asked Risi to give him additional money at this time to complete the accounting and he indicated that he “did not recall that”. In addition, Niman had produced all his communications with Risi and there was no correspondence referencing any additional monies requested by Niman in 2013.

[119] When cross examined out of court, Risi explained the June 25, 2013 email as a reaction to his having heard that Salna was going to commence a claim and so when he received this email he just responded, “whatever way just to get him out of [his] hair.”

[120] When questioned further he stated, “I can’t remember exactly, that he had a claim ready and he was going to serve it to me. And that really made me upset. I thought we were discussing things and were going to go with [Fienberg] and [Niman], but-- it was a year later. I thought maybe he decided to give that up too. That’s what I was hoping.”

[121] What is interesting about the above, is that Risi’s comments, that he was upset because “I thought that we were discussing things and we were going to go with [Fienberg] and [Niman]”, shows that he thought they had put together an alternate way of attempting to resolve their accounting issues with Niman’s assistance. And this is precisely why Salna says he did not commence a claim immediately—that’s what he thought too.

[122] When cross examined out of court, Risi ultimately admitted that the June 25, 2013 email to Salna had been untruthful and that Niman was no longer working on the accounting.

[123] However, when asked about this at the mini trial, he would not agree that this email was untruthful and he was evasive. The following exchange took place.

Q. I am just asking you, do you agree with me that this email is not true.

A. What I said? I’m sorry, I don’t know what’s not true about it. I stated it in paper here so the email was true but what do you mean it’s not true.

Q. Mr. Salna emails you and asks you, how does it look for [Niman] to complete the accounting for housing profits on the various houses we work together, can you find out the timing as to completion date, and you respond less than an hour later, you say, “Hi Rob. I had to give him more money, he said a few more weeks. Enzo.” Was that true?

A. That’s what I said, yes.

Q. Was it true or was it not true?

A. I said this, yes.

[124] There was a lengthier exchange on this issue which need not be set out here, but Risi ultimately changed his position on this issue and contended that his June 2013 email was a truthful statement made out of anger. However, there is no evidence that Niman continued to work on the accounting after the June 2012 meeting.

[125] I was not referred to similar examples of inconsistencies, discrepancies or lack of truthfulness in Salna’s evidence. Therefore, I accept Salna’s evidence that they agreed that Niman would provide an accounting with a view to resolving the dispute.

[126] Because of the credibility issues which I have identified with respect to Risi’s evidence, I also accept Salna’s evidence that Risi promised that 741 would pay any amounts ultimately found owing to Salna.

The applicability of s. 11

[127] On its face, pursuant to s. 11 of the Limitations Act, 2002, to postpone the commencement of limitation period because of attempted resolution, the party seeking the postponement must establish: 1) an agreement; 2) to have a third party resolve or assist them in resolving the claim; 3) that the third party is independent; and 4) that the third party is impartial.

[128] Salna references Hodaie v. RBC Dominion Securities, 2011 ONSC 6881, 108 O.R. (3d) 140, at para. 30, where the court provided this analysis of s. 11 of the Limitations Act, 2002:

…the purpose of s. 11 is obvious. It is intended to encourage efforts to settle by providing that there is no limitation period penalty for plaintiffs who agree to enter into third party resolution processes. There is nothing in s. 11 that suggests that the suspension of the limitation period can be contracted out of. Otherwise, some plaintiffs might be unwittingly deprived of their actions by unscrupulous defendants.

[129] He also references Victory v. Sattar, 2017 ONSC 549, at para. 53, where the court made similar comments:

The purpose of s. 11 is to encourage efforts to settle by providing that there is no limitation period penalty for plaintiffs who agree to enter into third party resolution processes. Accordingly, the section is to be interpreted broadly: (see Sandro Steel Fabrication Ltd. v. Chiesa, 2013 ONSC 658 (Ont. S.C.J), at para 69).

[130] It is clear there was an agreement to have Niman review the accounting records, and the calculations provided by Gratcheva and Fienberg, and provide a third analysis.

[131] The main argument made by Risi is that Niman was not independent because he was retained by Risi; he relies primarily upon Salna’s evidence where Salna indicates that he became dissatisfied when they went to Niman’s office and there still wasn’t a proper accounting. He argues that if Niman had been retained by both of them and been truly independent, Salna could have instructed Niman himself to complete the accounting.

[132] He points out that all of the cases referenced by Salna involve what he considers truly independent third parties. In Hodaie, it was an ombudsman. In Sattar it was an independent body known as the Baha’i National Spiritual Assembly, as well as the Universal House of Justice. In Sandro Steel Fabrication, it was a mediator. [^3]

[133] In my view, the arguments made by Risi in this regard demonstrate too narrow a view of s. 11 of the Limitations Act, 2002, which is geared towards not penalizing parties when they are truly attempting to resolve a dispute with the assistance of a third party. I note that the section specifically indicates that it does not matter who pays that third party. Up until this accounting, Niman had never worked for either 741 or Risi.

[134] Niman’s evidence on this point is far more relevant than Risi’s. He was specifically asked whether he was Risi’s personal accountant and he said that he was not.

Q. Do you recall when you started to work as Mr. Risi’s accountant?

A. Sorry. I don’t. It’s ’11, ’12 in there, but I don’t recall the exact date.

Q. Okay.

A. As his accountant? No. This was on a specific project. It wasn’t as his accountant.

Q. Okay. And the specific project you referred to, was that the project that’s the subject of this litigation?

A. Correct.

Q. Okay. So is it fair to say that any work you did for Mr. Risi was not as his general accountant? It was with respect to the transactions involved in this litigation?

A. Correct.

[135] He was also impartial based upon the tape recording of the conversation they had on June 14, 2012. Niman was not advocating for Risi; he was attempting to analyze the documents and provide his own views, which he indicated he could not provide in the absence of the resolution of the interpretation issues. Had he been an advocate for Risi, he would not have sought clarification in this regard.

[136] Therefore, in my view, s. 11 of the Limitations Act, 2002 operates to suspend the limitation period. In my view, this attempted resolution was ongoing even after the June 14, 2012 meeting on either party’s evidence since Risi thought they would be proceeding to have Fienberg and Maltz involved, even though this never happened. In my view, this process was not concluded until Salna commenced his claim.

[137] I will proceed to consider s. 5(1)(a)(iv) of the Limitations Act, 2002 in the event I am wrong in my conclusion that Niman was independent within the meaning of s. 11 of the Limitations Act, 2002.

s. 5(1)(a)(iv)

[138] Even when the elements of ss. 5(1)(a)(i)-(iii) of the Limitations Act, 2002 are satisfied, s. 5(1)(a)(iv) of the Limitations Act, 2002 provides that a claim is not discovered until “having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it.” Pursuant to s. 5(1)(b) of the Limitations Act, 2002, this analysis is based upon when “a reasonable person with the abilities and in the circumstances of the person with the claim first ought to have known” this.

[139] Salna submits that the parties’ agreement to retain Niman made it legally appropriate to wait to commence the proceeding and I agree for the following reasons.

[140] In Das v. Kay, 2021 ONCA 565, at paras. 25-28, the Court of Appeal cited the following principles in interpreting s. 5(1)(a)(iv) of the Limitations Act, 2002:

(a) First, the determination of whether a proceeding is an appropriate means to seek to remedy an injury, loss, or damage depends on the factual and statutory context of each case; [Emphasis added]

(b) Second, two non-exclusive factors can operate to delay the date on which a claimant would know that a proceeding would be an appropriate means to remedy a loss: (i) when the plaintiff relied on the defendant’s superior knowledge and expertise, particularly where the defendant has taken steps to ameliorate the plaintiff’s loss; and (ii) where an alternative dispute resolution process offers an adequate remedy, and it has not been completed. Parties are not restricted to (i) and (ii) “But if they cannot bring themselves within those two categories they must propose another set of circumstances in which it could be said, on a principled basis, that a person with a claim could not have known that an action would be an appropriate means to remedy the injury, loss or damage”.

(c) Third, “appropriate” means that it is legally appropriate to bring a proceeding, rather than practically advantageous. This third principle excludes from consideration many practical and tactical reasons a claimant might have for not commencing a proceeding at an earlier time when it was legally appropriate to do so, such as the belief that the claim might be difficult to prove. Put differently, “[a]ppropriate does not include an evaluation of whether a civil proceeding will succeed.”

[141] See also Sosnowski v. MacEwen Petrolium Inc., 2019 ONCA 1005, 441 D.L.R. (4th) 393, at para. 16, and Beniuk v. Leamington (Municipality), 2020 ONCA 238, 50 O.R. (3d) 129, at paras. 60-61.

Analysis of First Circumstance in Das

[142] The first category identified by the Court is when a plaintiff is relying on the defendant to fix a problem in circumstances where a plaintiff is relying on the superior knowledge or expertise of the defendant which often, although not exclusively, occurs in a professional relationship: Presley v. Van Dusen a.k.a. Jack Van Dusen, 2019 ONCA 66, 144 O.R. (3d) 305.

[143] In my view, based upon the way in which this circumstance has been defined in the case law, it is not applicable here. Although 741 and Risi had some documentation which Salna did not have access to, they did not have any superior knowledge or expertise as defined in the case law; nor were they seeking to remedy an issue they had caused. Salna was sophisticated and had access to his own bookkeeper who could perform the necessary calculations. Indeed, she produced calculations in respect of amounts owed to Salna for this very summary judgment motion.

Analysis of Second Circumstance in Das

[144] The second circumstance has been defined within the case law, is when a plaintiff has resorted to an administrative process which might resolve the issue; for example circumstances like a plaintiff pursuing a tax assessment (e.g. Presidential MSH Corporation v. Marr, Foster & Co. LLP, 2017 ONCA 325, 135 O.R. (3d) 321).

[145] There is no administrative process here. Niman was only retained to provide an accounting and had no power to grant any particular remedy.

Analysis of Third Circumstance in Das

[146] As noted above, the determination of whether a proceeding is an appropriate means to seek to remedy an injury, loss, or damage depends on the factual and statutory context of each case. The above two accepted categories of cases typically involve another process of some sort. The Court of Appeal has indicated that the following underlying policy basis exists in respect of the first category: “it would be unreasonable to discourage claimants from reasonably relying on a defendant’s good faith efforts to remedy an issue and thereby potentially avoiding the need for a lawsuit” Das, at para. 40.

[147] At the same time, any principled basis must be in accordance with the direction in Sampson v. Empire (Binbrook Estates) Ltd., 2016 ONSC 5730, cited in Presley at para. 25 where it held that ongoing communications, investigations or negotiations are not sufficient.

[148] Thus, in my view, the following considerations apply with respect to the third category: the statutory and factual context of each particular case, reasonableness, reliance on a defendant’s apparent good faith efforts, the existence of another ongoing process, and the potential avoidance of the need for a lawsuit; but whatever that process is, it must go beyond mere communications, investigations or negotiations.

[149] In my view, if Salna cannot fit within s. 11 of the Limitations Act, 2002, then there is a principled basis to conclude that a reasonable person with a claim in Salna’s position would not have known that an action would be an appropriate means to remedy his injury, loss or damage until June 14, 2012 for the following reasons:

• Salna and 741 were partners conducting a business over the course of many years where they each paid expenses, and then shared revenues after the payment of the mortgages on the lots. The way in which they conducted their financial affairs meant that there would not be any understanding of what the final partnership accounts were for at least some time after the last home was sold.
• As noted above, as of January 2010, each of their accountants had provided competing calculations. Salna’s book-keeper, Gratcheva, concluded that 741 owed Salna money; Risi’s accountant Leonardelli as well as the partnership lawyer, Fienberg, concluded that Salna owed 741 money.
• As also noted, Risi and 741 agreed to retain a third accountant, Niman to provide an accounting with a view to reconciling the positions, taking into account all relevant partnership documentation, the bulk of which he had in his possession.
• This was consistent with his obligation pursuant to s. 28 of the Partnership Act, R.S.O. 1990, c. P. 5 whereby partners must render true accounts and full information:

Partners are bound to render true accounts and full information of all things affecting the partnership to any partner or the partner’s legal representative.

• Section 32 of the Partnership Act, R.S.O. 1990, c. P. 5 states:

Dissolution by expiry of term or notice

Subject to any agreement between the partners, a partnership is dissolved,

(a) if entered into for a fixed term, by the expiration of that term;

(b) if entered into for a single adventure or undertaking, by the termination of that adventure or undertaking; or

(c) if entered into for an undefined time, by a partner giving notice to the other or others of his or her intention to dissolve the partnership, in which case the partnership is dissolved as from the date mentioned in the notice as the date of dissolution, or, if no date is so mentioned, as from the date of the communication of the notice. R.S.O. 1990, c. P.5, s. 32.

• While this accounting was underway, no one delivered any notice of termination of the partnership, and the parties continued to explore new partnership properties as late as April 2012. Any accounting issues related to the appropriate distribution of partnership profits could have been resolved through the division of any additional partnership properties which they may have developed.
• The commencement of a legal proceeding pending this accounting would have undermined their ongoing business relationship.
• As noted, Risi was upset when Salna ultimately commenced the claim and stated: “And that really made me upset. I thought we were discussing things and were going to go with Stanley [Fienberg] and Harold [Niman]”. This was Salna’s understanding as well.
• At the mini trial, Risi’s counsel referred me to the general ledger for the partnership which involved thousands and perhaps tens of thousands of line items. It is an extremely complicated matter and it was in both parties’ interests to seek to resolve the matter through Niman’s accounting if they could, rather than pursue litigation.
• On June 14, 2012, when Salna received a one page summary instead of the promised accounting, and it appeared there were significant legal issues which prevented Niman from completing a full accounting, at that point a reasonable person would have known that a legal proceeding was the appropriate means to seek to remedy the loss or damage.

[150] In my view, these circumstances went well beyond mere communications, negotiations and investigations.

[151] The Plaintiffs commenced their claim on June 13, 2013, which is within two years of June 14, 2012; therefore, it is not statute barred.

[152] In their oral argument, the Defendants submitted that in the ordinary debtor/creditor situation, the Limitations Act protects debtors who are “stringing the creditor along”. I agree that in the ordinary debtor/creditor relationship, creditors must be vigilant and they may not be able to rely upon promises made by the debtor.

[153] But this was not an ordinary debtor/creditor situation. As I have found, this was a partnership where the parties owed each other fiduciary duties which include good faith, disclosure and honesty. Given that Risi maintained possession of a significant amount of the partnership documents, the fact that the partnership was ongoing, the complexity of the issues, as well as all other factors set out above, it was reasonable for Salna to think that they were still working together to resolve the accounting issues, using Niman, who would have access to these documents for such purpose.

[154] And in my view, it was an ongoing breach of 741’s fiduciary obligation to “string” Salna along with the ongoing promises of an accounting both before and after the June 14, 2012 meeting in the hopes that he would go away.

Conclusion

[155] In my view, there is no genuine issue that requires a trial in respect of whether the parties’ relationship was a partnership or whether Salna’s claims are statute barred. I conclude that the parties were partners and that Salna’s claim is not statute barred.

[156] I add that as a result of this summary judgment process, which began in 2018 and was admittedly cumbersome, the parties have now significantly simplified the remainder of the issues which they wish address through further summary judgment. They have provided me with an amended Notice of Motion which illustrates this.

[157] The issues that will remain in this case are: a) what the terms of the Partnership Agreement were (as there is a dispute as to how certain properties were to be dealt with, whether Salna was required to fund all development costs and contribute the land for free, and whether Risi or 741 was entitled to a management fee); b) whether there were any misappropriations, and/or taking of partnership properties and options by Risi, and then c) an accounting of how the profits should have been divided pursuant to the Partnership Agreement.

[158] They wish to use the same materials, supplemented by expert evidence, to address whether any amounts are owed to either Salna or Risi, who has a counterclaim in this matter.

[159] I will remain seized of this matter should the parties not resolve it and should it need to proceed to this further step.

[160] Given the fact that the motion materials were based upon the entire matter being resolved by way of summary judgment, and that this motion only proceeded at this stage on these two issues, it would be inappropriate to address costs at this point.

[161] Costs shall be reserved until the entire summary judgment motion is resolved. If the parties settle the action and they wish to address the costs of this portion of the motion, they may contact me to arrange for a timetable for the delivery of costs submissions on these issues thereafter.

Justice Papageorgiou Released: June 21, 2023

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

ROBERT SALNA and NORTH LAKE ESTATES INC. Plaintiffs – and – 741980 ONTARIO LIMITED and ENZO RISI and ROSE RISI also known as ROSE FERRARO and BAYVIEW ESTATES INC. and ROCCO AUCIELLO and ANTONIETTA AUCIELLO and JIM POURGOUTZIDIS and MELISSA NUNES Defendants

REASONS FOR JUDGMENT Papageorgiou J. Released: June 21, 2023

[^1]: Rule 51.05 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 states that an admission in a pleading may be withdrawn on consent or with leave of court. This is to be contrasted with r. 51.06(2) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 which specifically references admissions of fact. [^2]: Notably, Antipas and Dharsi involved motions to withdraw admissions of mixed fact and law pursuant to r. 51.05 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. [^3]: Salna also relies upon 1853491 Ontario Inc. v. Regional Waste North Inc., 2019 ONCA 37, wherein the Court of Appeal addressed s. 11 of the Limitations Act, 2002. In that case, the parties were involved in a waste disposal business and had a dispute. The motion judge had suspended the operation of the limitation period because the parties had reached an informal agreement to refer the dispute to a chartered accountant. He held that the tolling of the limitation period was terminated when one party had made it clear that they had withdrawn from this agreement. He also held that the defendants had issued their counterclaim (which added parties other than the plaintiffs) more than two years after one party had made it clear that they were withdrawing from the agreement to refer the dispute to a chartered accountant. The parties who had commenced the counterclaim appealed and argued that the tolling period was later than the motions judge had determined. The Court, at para. 10, indicated that the central issue was “a narrow one”. The Court upheld the motions judge. In my view, this case does not assist Salna because the Court of Appeal did not address the proper interpretation of s. 11 of the Limitations Act, 2002; in fact, the issue of whether the motions judge had properly extended the limitation period because of the referral to the chartered accountant was not even appealed or before the Court.