Court File and Parties
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN: BRIAN WAYNE FLIGHT c.o.b. as HERITAGE PAINTERS & SERVICES, Plaintiff
– and –
THE BANK OF NOVA SCOTIA, Defendant
-and-
JULIE LEBLANC, Third Party
COUNSEL: Tara Vasdani for the plaintiff Joe Wahba for the defendant Jason Squire for the third party
HEARD: September 27, 2023 virtually, October 2, 5, 10, 12 and 20, 2023 in writing.
KOEHNEN J.
REASONS FOR JUDGMENT
Overview
1The defendant and the third party move to strike out the statement of claim and the third party claim against them as disclosing no cause of action under Rule 21.01(b) and 21.01(3)(b) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 and as being frivolous, vexatious or an abuse of process under Rule 25.11 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194.
2I grant the motion for the reasons set out below. The new claim amounts to a collateral attack on an earlier court order which found that the limitations period for the matters at issue expired on January 9, 2020. The claim at issue here was issued on December 21, 2021. That sort of collateral attack also amounts to an abuse of process.
3In addition, quite apart from the earlier court ruling, the claim is time-barred because it complains about conduct which the plaintiff knew occurred more than two years before the statement of claim was issued.
4As a result, I order that the statement of claim and the ensuing amendments be struck out without leave to amend.
Background Facts
5The plaintiff, Brian Flight, operated a sole proprietorship business in London Ontario in respect of which he used the third party, his former spouse Julie Leblanc, as his bookkeeper. Mr. Flight gave Ms. Leblanc both a power of attorney over his bank accounts as well as electronic access to the bank accounts by sharing his password with her. Ms. Leblanc is alleged to have defrauded Mr. Flight thereby causing him to file several assignments in bankruptcy and/or proposals under the Bankruptcy and Insolvency Act. [1]
6Mr. Flight initially sued Ms. Leblanc. That action was dismissed by Justice Mitchell because, at the time the statement of claim was issued, Mr. Flight was an undischarged bankrupt. As a result, the ability to commence an action lay with Mr. Flight’s bankruptcy trustee and not with Mr. Flight. Mitchell J. also determined that Mr. Flight’s claim was discovered on January 9, 2018, [2] and that the two-year limitation period under Section 4 of the Limitations Act, 2002 [3] expired on January 9, 2020. [4] Justice Mitchell’s decision was upheld by the Court of Appeal for Ontario. [5] The Plaintiff sought leave to appeal to the Supreme Court of Canada. Leave was denied on July 27, 2023. [6]
7It appears that some sort of claim was commenced against Ms. Leblanc by either Mr. Flight or his bankruptcy trustee which did result in some sort of recovery from Ms. Leblanc.
Analysis
8There was debate at the hearing about which statement of claim was at issue on the motion. The moving parties say the relevant claim is that attached as Exhibit OO to the affidavit of Adrienne McKillen sworn March 31, 2023. The plaintiff says it is document 006 of the plaintiff’s documents posted on CaseLines which was also marked as Exhibit A to the Cross-Examinations. The relevant document is the one that Justice Centa specified in his capacity as case management judge as being the third amended claim. Neither side has walked me through the mechanics of what was before Justice Centa to demonstrate that the claim they allege to be relevant is the claim at issue. Nor has either side walked me through the differences between the two documents to indicate what the differences are or why they matter. I have reviewed both claims and find that the version I use does not matter. The additional amendments the plaintiff made in document 006 on CaseLines have no bearing on the issues before me. My decision and reasons would be the same regardless of which version of the statement of claim I based them on. To ensure that all parties know what paragraph numbers I am referring to, I will refer to those in Exhibit OO to the affidavit of Adrienne McKillen.
9Mr. Flight’s current action was commenced on December 21, 2021. As noted above, Mitchell J. found that the limitations period for matters arising out of the alleged theft by Ms. Leblanc expired on January 9, 2020.
The Power of Attorney Issue
10The plaintiff tries to avoid the effect of the finding of Justice Mitchell by arguing that the current action is based on the proposition that the Bank of Nova Scotia (“BNS” or the “Bank”) advised Mr. Flight on January 29, 2018, that Ms. LeBlanc’s power of attorney on his BNS accounts had been removed when in fact it was not removed until almost 2 years later on January 16, 2020. In oral argument, counsel for Mr. Flight stated: “This action is based entirely on Bank of Nova Scotia’s failure to revoke the power of attorney.”
11Mr. Flight submits that as a result of the Bank’s failure to remove the power of attorney in a timely manner, the limitations period against the Bank does not begin to run until January 16, 2020.
12The difficulty with that proposition is that Mr. Flight does not allege that Ms. Leblanc made any further withdrawals from the bank account after BNS told Mr. Flight in 2018 that Ms. Leblanc’s power of attorney had been removed. Indeed, the evidence is to the contrary and shows that Mr. Flight’s new bookkeeper changed the account password in January 2018 once the alleged fraud had been discovered and that Ms. Leblanc made no further withdrawals from the account after that point. Mr. Flight admitted on cross-examination that he is alleging misuse of his accounts only before 2018. [7]
13The statement of claim does not particularize any damage arising from the alleged failure to revoke the power of attorney nor could Mr. Flight’s counsel point to any such damage in oral argument.
14In his cross-examination and in his answers to undertakings, Mr. Flight described the damages he is seeking from BNS as those resulting from:
a. His Consumer Proposal of February 22, 2021. b. The potential for further theft beyond that which was reported by BNS to Mr. Flight, but which occurred from 2008 to 2017. c. Loss of Business Income from 2019 to 2021 totalling $385,562.88. d. Legal fees of $176,375.28 in relation to the losses incurred from the alleged fraud.
15All of those claims arise out of the alleged fraud that that Mr. Flight discovered in January 2018 and are therefore time-barred.
16In Grant Thornton LLP v. New Brunswick, 2021 SCC 31, [8] the Supreme Court of Canada held that a claim is discovered when the plaintiff has actual or constructive knowledge of the material facts upon which a plausible inference of liability on the defendant’s part can be drawn. As a result, the plaintiff does not have to know the specific quantum of damages to discover the claim and have the limitations period begin to run.
17In Garland v. Consumers’ Gas Co., 2004 SCC 25, [9] the Supreme Court of Canada held:
The doctrine of collateral attack prevents a party from undermining previous orders issued by a court or administrative tribunal.... Generally, it is invoked where the party is attempting to challenge the validity of a binding order in the wrong forum, in the sense that the validity of the order comes into question in separate proceedings when that party has not used the direct attack procedures that were open to it (i.e., appeal or judicial review).
18Here, the action would amount to a collateral attack on the finding of Mitchell J. about the expiry of the limitation period. Mr. Flight raises the issue of the power of attorney simply to avoid the finding of Mitchell J. The power of attorney provides no basis for avoiding her finding for the reasons set out above.
19In Fuhgeh v. Stewart, 2021 ONSC 3053, [10] the Divisional Court of Ontario described the doctrine of abuse of process as follows:
In Currie v. Halton Regional Police Services Board, [11] the Ontario Court of Appeal stated:
27Abuse of process has been described as an “intangible principle that is used to bar proceedings that are inconsistent with the objectives of public policy”: Currie, at para. 16, citing Finlayson J.A. for the majority in Canam Enterprises Inc. v. Coles (Ont. C.A.), 51 O.R. (3d) 481, rev’d on other grounds, 2002 SCC 63, [2002] S.C.R. 307. Goudge J.A. for the minority in Canam wrote, at paras. 55-56:
The doctrine of abuse of process engages the inherent power of the court to prevent the misuse of its procedure, in a way that would be manifestly unfair to a party to the litigation before it or would in some other way bring the administration of justice into disrepute.
One circumstance in which abuse of process has been applied is where the litigation before the court is found to be in essence an attempt to relitigate a claim which the court has already determined.
20Here, the issue of the limitations period has already been determined. The present action is an attempt to relitigate it and therefore amounts to an abuse of process.
Claims in Addition to the Power Of Attorney Claim
21The Third Amended Statement of Claim raises additional claims against BNS that are not immediately related to the power of attorney. I turn to those here. By way of overview, all are time-barred based on the decision of Mitchell J. In addition, the claims based on these additional causes of action should also be struck out because they are time-barred in their own right quite separate and apart from the findings of Justice Mitchell.
22Mr. Flight alleges that in February 2018 he received reports from the Bank’s fraud department proving that the theft had gone on for longer than the 23 months initially thought. [12] In May 2018, at the request of Mr. Flight, BNS sent additional reports to him substantiating the theft. [13] Mr. Flight then alleges that the bank “confirmed that there were additional theft amounts to be discovered and accounted for from 2003 to 2011.” [14]
23In paragraphs 23-37 of his Third Amended Statement of Claim, the plaintiff describes a series of communications between himself and the Bank about assistance the Bank allegedly promised to provide in connection with the fraud investigation. The plaintiff then alleges that the bank breached its duties to him by failing to investigate the fraud. [15]
24The culmination of the discussions between the plaintiff and the Bank about its assistance in investigating the fraud is described in paragraph 35 of the Third Amended Statement of Claim as follows:
Following many email requests for an update by the Plaintiff, the Plaintiff did not hear back from Mr. Vail until February 20, 2019. Mr. Vail stated, “it has been recommended by our legal department that we do not send anything until we are asked for the information by the police. If they could send a request to me at this e-mail I will have the required statements to them in a few days”.
25It is noteworthy that the Third Amended Claim does not allege that the Bank failed or refused to answer any request by the police department. It is also noteworthy that the Bank told Mr. Flight on February 20, 2019 that it would not provide information to him but would only provide information to the police. Assuming the alleged failure to investigate gave Mr. Flight a cause of action (which was not argued on the motion), then the limitation period on that claim began running on February 20, 2019 and would normally have expired on February 20, 2021. Even if I add an additional 182 days to the limitation period because of the Covid-19 pandemic as provided by the Emergency Management and Civil Protection Act, [16] the limitations period would have expired on August 21, 2021. As noted earlier, this claim was not commenced until December 21, 2021.
26Next, the plaintiff alleges that the Bank acted negligently because it failed to properly supervise Ms. Leblanc in the discharge of her duties as bookkeeper. [17] The alleged duty is described as follows in paragraph 50 of the Third Amended Statement of Claim:
The Defendant owes a duty of care to persons whose monies are tendered for transfer and processing. In order to fulfil that duty of care, the Defendant must take proper steps and have proper procedures in place to ensure the monies drawn are properly reviewed and cleared, and that such monies are deposited into actual tax or business accounts, and not into a personal account. The Defendant failed to take any proper steps or to have in place any proper procedures in reviewing the e-transfers, and allowed the e-transfers to be deposited into personal accounts not affiliated with the Plaintiff.
27Assuming such a duty even exists on the part of the Bank, which was not argued on the motion, the plaintiff would have been aware of the alleged breach of that alleged duty when it became aware of the alleged fraud of Ms. Leblanc in 2018. This complaint would therefore also be caught by the limitation period as found by Mitchell J. Alternatively, the plaintiff would certainly have been aware of the alleged breach by February 20, 2019 when the Bank declined to provide any further assistance. The claim alleges no further facts discovered after January 20, 2018 which would give rise to a new claim.
28Moreover, the plaintiff says that the sole purpose of the investigation was to assist him in pressing criminal charges against Ms. Leblanc. Given the absence of any limitations period on criminal charges, the plaintiff is not prejudiced. He or the police could still pursue criminal charges if warranted.
29Finally, the plaintiff also claims that the Bank owed him fiduciary duties. That claim is time-barred for the same reason that the Bank’s alleged failure to investigate is time-barred. The breach of duty would have been clear as of February 20, 2019 when the bank declined to engage any further with Mr. Flight on the investigation. This of course assumes that the Bank even owed the plaintiff fiduciary duties. This too was not argued on the motion but would appear to be contrary to the generally accepted view that the relationship between a bank and its customers is one of debtor and creditor, not one of fiduciary and beneficiary. [18]
30The plaintiff submits that the limitations defences do not apply because he was engaged in ameliorative proceedings with the Bank from January 2018 until February 2022. The plaintiff submits that these steps made court proceedings inappropriate under section 5(1)(iv) of the Limitations Act until it was obvious that the Bank had not revoked the power of attorney and would not investigate or assist the Plaintiff. Even if the communications between the plaintiff and the Bank amounted to ameliorative proceedings for purposes of the Limitations Act, their ameliorative nature would have ceased as of February 20, 2019 when the Bank made it clear that it would not provide the plaintiff with further information. As a result, the limitations period would have begun to run on that date. As noted earlier the issue of the power of attorney is a red herring because the plaintiff has admitted that he is not seeking damages for any conduct after the beginning of 2018.
Disposition and Costs
31For the reasons set out above, I grant the Bank’s motion and strike out the statement of claim and its ensuing amendments. Given the time at which the various causes of action arose as set out above, the claim is incapable of remediation by further amendment. I therefore strike the statement of claim and the ensuing amendments without any further leave to amend.
32Although no time was spent on the issue, the plaintiff also sought summary judgment against the Bank. Given that I dismiss the claim as disclosing no cause of action, as being a collateral attack on the order of Justice Mitchell and as being an abuse of process, the plaintiff’s motion for summary judgment would automatically fail. In addition, the plaintiff has advanced no basis before me on which it could succeed on a motion for summary judgment.
33BNS seeks costs on a substantial indemnity basis which it asks me to fix at $72,636.73 including disbursements and HST. In the alternative, it seeks partial indemnity costs of $54,434.69 including HST and disbursements. BNS also asks that the costs, or a portion of them, be payable by the plaintiff’s lawyer personally.
34Ms. Leblanc seeks costs of $21,482.43.
35The respondent’s substantial indemnity costs come to $15,002.67. The total claim was for $500,000 in damages.
36It strikes me that BNS is entitled to costs on a substantial indemnity scale. There was much unnecessary procedural wrangling in this proceeding, primarily at the instance of the plaintiff. From the outset, the action was unfounded. Counsel argued that the plaintiff’s claim turned on the bank’s failure to rescind the power of attorney. Mr. Flight admitted on cross-examination that no damages arose from that. The plaintiff submitted several iterations of amended statements of claim. Each suffered from similar fatal flaws. Each required time and analysis by BNS.
37The plaintiff then complained that BNS had delivered a large motion record shortly before the plaintiff’s factum was due, that BNS was relying on that untimely motion record and that the plaintiff suffered prejudice as a result. In response, I allowed the plaintiff to deliver further written submissions to point out what new portions of the motion record BNS was relying on that prejudiced the plaintiff. Although the plaintiff delivered supplementary written submissions and referred to five exhibits that it says were new in the late delivered motion record, the Bank’s argument did not turn on any of those exhibits nor was I taken to any of those exhibits during oral argument. As a result, the time spent by BNS responding to the post hearing submissions was unnecessary.
38It does strike me, however, that BNS had some duplication in its legal team. The lawyers working on the matter and their years of call were Allan Weiss (1988), Evan L. Cappe (2007), Jessica Parise (2015), and Joe Wahba (2017). This was easily a matter that could have been handled by one senior lawyer supervising one junior lawyer. In my view it could also probably have been handled by a single intermediate lawyer and an articling student. I would therefore remove the time of one of the senior lawyers and of Ms. Parise. Doing so removes approximately $10,000 plus HST of $1,300 from the costs outline. That reduces the Bank’s costs to $61,336.73.
39I am also mindful that in determining costs the court should engage in more than a mathematical calculation of hours times fees. The amount must still be one that is reasonably within the expectations of the parties. While there was a fair bit of work involved in the motion including preparing extensive materials, several case conferences, considerable history to set out, and the presentation of somewhat flexible legal concepts like limitations periods, issue estoppel, res judicata and abuse of process, I would nevertheless reduce the Bank’s costs to $50,000 to reflect what, in my view, would correspond more closely to the reasonable expectations of the parties in a case such as this.
40Those costs will be payable by the plaintiff and not plaintiff’s counsel. Although there was a fair bit of mutual recrimination between counsel, this does not strike me as a matter in which it is appropriate to hold Ms. Vasdani personally responsible for costs.
41In my view, it would not be appropriate to award Ms. Leblanc any costs even though I recognize that that Mitchell J. awarded costs in favour of Ms. Leblanc in the earlier proceeding. The real issue in the current action was between the plaintiff and BNS. The plaintiff agreed that the third party claim against Ms. Leblanc was effectively time-barred. I would have thought that one could easily have come to an accommodation with the Bank to have it agree to dismiss the third party claim without costs if the Bank’s motion was successful. Moreover, it does appear from the materials before me that Ms. Leblanc may well have engaged in inappropriate transactions. Although I make no final adjudication in that regard, the record before me suggests that this was the case. As a result, in my view, it is more appropriate for Ms. Leblanc to bear her own costs.
Koehnen J.
Released: November 16, 2023