Good afternoon.
Following are our summaries of the civil decisions of the Ontario Court of Appeal for the week of of August 9, 2021.
There were only two substantive civil decisions this week. Dass v. Kay deals with discoverability and the "appropriate means" test in s. 5 of the Limitations Act, 2002. McEwen (Re) confirms that defendants to choses in action belonging to bankrupts that are assigned by a trustee under section 38 of the BIA do not have standing to contest the assignment of the chose in action. Only creditors have standing.
Have a great weekend.
John Polyzogopoulos
Blaney McMurtry LLP
416.593.2953 Email
Table of Contents
Civil Decisions
Keywords: Torts, Defamation, Injurious Falsehood, Civil Procedure,Limitation Periods, Discoverability, Appropriate Means, Summary Judgment, Limitations Act, 2002, 2002, c. 24, Sched. B, ss. 4, 5, Grant Thornton LLP v. New Brunswick, 2021 SCC 31, Sosnowski v. MacEwan Petroleum Inc., 2019 ONCA 1005, Longo v. MacLaren Art Centre Inc., 2014 ONCA 526, Brown v. Baum, 2016 ONCA 325, Presidential MSH Corp. v. Marr, Foster & Co. LLP, 2017 ONCA 325, Peixeiro v. Haberman, [1997] 3 S.C.R. 549, Hamilton (City) v. Metcalfe & Mansfield Capital Corporation, 2012 ONCA 156, Brozmanova v. Tarshis, 2018 ONCA 523, Smith v. Union of Icelandic Fish Producers Ltd., 2005 NSCA 145, Brown v. Baum, 2016 ONCA 325, 407 ETR Concession Co. Ltd. v. Day, 2016 ONCA 709, Foster & Co. LLP, 2017 ONCA 325, A.I. Ogus', The Law of Damages (London, Butterworths, 1973)
Keywords: Bankruptcy and Insolvency, Property of the Bankrupt, Choses in Action, Assignment, Contracts, Insurance, Duty of Good Faith, Bad Faith Claim, Civil Procedure, Standing, Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, s. 38, Alfano v. KPMG Inc. (1999), 7 C.B.R. (4th) 47 (Ont. Gen. Div.), Carroll (Litigation guardian of) v. McEwen, 2016 ONSC 2075, Carroll v. McEwen, 2018 ONCA 902, Coroban Plastics Ltd., Re (1994), 10 B.C.L.R. (3d) 52 (C.A.), Davidson (Re), 2021 ONCA 135, DeGroote v. Canadian Imperial Bank of Commerce (1996), 45 C.B.R. (3d) 132 (Ont. Gen. Div.), Dominion Trustco Corp., Re (1997), 50 C.B.R. (3d) 84 (Ont. C.A.), Dundas v. Zürich Canada, 2012 ONCA 181, Holley v. Gifford Smith Ltd, 26 D.L.R. (4th) 230 (Ont. C.A.), Indcondo Building Corp. v. Sloan, 2012 ONCA 502, Isabelle v. Royal Bank of Canada, 2008 NBCA 69, Jolub Construction Limited, Re (1993), 21 C.B.R. (3d) 313 (Ont. Gen. Div.), Mercure v. Marquette & Fils Inc., [1977] 1 S.C.R. 547, Perron-Malenfant v. Malenfant (Trustee of), [1999] 3 S.C.R. 375, Polar Products Inc. v. Hongkong Bank of Canada (1992), 14 C.B.R. (3d) 225 (B.C.S.C.), Shaw Estate v. Nicol Island Development Incorporated, 2009 ONCA 276, Smith v. Pricewaterhousecoopers Inc., 2013 ABCA 288, Zammit, Re (1998), 3 C.B.R. (4th) 191 (Ont. Gen. Div.)
CIVIL DECISIONS
[Strathy C.J.O., Brown and Miller JJ.A]
Counsel:
O. G. Barnwell, for the Appellants
K. T. Duong, For the Respondents
Keywords: Torts, Defamation, Injurious Falsehood, Civil Procedure,Limitation Periods, Discoverability, Appropriate Means, Summary Judgment, Limitations Act, 2002, 2002, c. 24, Sched. B, ss. 4, 5, Grant Thornton LLP v. New Brunswick, 2021 SCC 31, Sosnowski v. MacEwan Petroleum Inc., 2019 ONCA 1005, Longo v. MacLaren Art Centre Inc., 2014 ONCA 526, Brown v. Baum, 2016 ONCA 325, Presidential MSH Corp. v. Marr, Foster & Co. LLP, 2017 ONCA 325, Peixeiro v. Haberman, [1997] 3 S.C.R. 549, Hamilton (City) v. Metcalfe & Mansfield Capital Corporation, 2012 ONCA 156, Brozmanova v. Tarshis, 2018 ONCA 523, Smith v. Union of Icelandic Fish Producers Ltd., 2005 NSCA 145, Brown v. Baum, 2016 ONCA 325, 407 ETR Concession Co. Ltd. v. Day, 2016 ONCA 709, Foster & Co. LLP, 2017 ONCA 325, A.I. Ogus', The Law of Damages (London, Butterworths, 1973)
facts:
The appellants appeal from the motion judge's dismissal of their action on a motion for summary judgment. The motion judge concluded that the appellants' claims were statute-barred under the Limitations Act.
In early 2015, the respondents were asked by their client, the brother of the individual appellant, to secure financing for a $6 million purchase of a commercial property in Toronto. The appellant and one of his companies were listed as the guarantors. The appellants knew nothing about this credit application. The application to secure financing by the individual appellant's brother was ultimately unsuccessful. The individual appellant first learned of the application upon his own unsuccessful negotiation for financing with the same lending institution. The appellant alleged that the failure of his credit application was the result of the improper action of the respondents and his brother. The appellants issued a statement of claim seeking damages for the reputational and commercial harm suffered. They argued that the unauthorized loan application caused the appellants' commercial lender to refuse to do business with them. Implicit in that refusal was the irreparable reputational injury to the individual appellant. The motion judge determined that by August 21, 2015, the appellants were aware of all material facts required to advance their claim. The statement of claim was not issued until April 27, 2018, more than two years from that date, and therefore the action was statute-barred.
issues:
(1) Did the motion judge err in law by misinterpreting s. 5 of the Limitations Act, 2002?
(2) Did the motion judge make a palpable and overriding misapprehension of fact?
holding:
Appeal dismissed.
reasoning:
(1) No
The motion judge did not err in her articulation or application of the discoverability principle as codified in s. 5(1) Limitations Act, 2002. A claim is discovered when the material facts that are actually or constructively known by a plaintiff enable the plaintiff to determine that it has prima facie grounds to infer liability on the defendant or enable the plaintiff to draw a plausible inference of liability. The motion judge looked to an email dated August 21, 2015, from the appellant to his lawyer as proof of the requisite knowledge that the claim was discovered by that date.
The appellants' claim did not fall within the two categories recognized by case law that act to delay the start of the limitations period: (i) where a plaintiff relied on a defendant's superior knowledge and expertise, especially where the defendant took steps to ameliorate the loss; and (ii) where the parties have engaged an alternative dispute resolution process offering an adequate remedy and it has not been completed.. The appellants proposed another situation 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. The appellants essentially proposed that where plaintiffs know they have been wronged or suffered damage at the hands of the defendants, but doubt they will be able to marshal the evidence to prove the claim and are unsure whether the scale of the eventual commercial loss will make an action remunerative, that seeking redress by litigation was not the "appropriate means", and therefore the limitation period was extended. The Court rejected such an approach.
(2) No
The motion judge made no error in finding that the individual appellant had knowledge in July 2015 that his reputation had been damaged and that the disadvantageous interest rate he later paid was a direct consequence of this injury.
[Juriansz, Huscroft and Jamal JJ.A.]
Counsel:
H. Chaiton and A. Rachlin, for the Appellant
J. Y. Obagi, for the Respondents
Keywords: Bankruptcy and Insolvency, Property of the Bankrupt, Choses in Action, Assignment, Contracts, Insurance, Duty of Good Faith, Bad Faith Claim, Civil Procedure, Standing, Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, s. 38, Alfano v. KPMG Inc. (1999), 7 C.B.R. (4th) 47 (Ont. Gen. Div.), Carroll (Litigation guardian of) v. McEwen, 2016 ONSC 2075, Carroll v. McEwen, 2018 ONCA 902, Coroban Plastics Ltd., Re (1994), 10 B.C.L.R. (3d) 52 (C.A.), Davidson (Re), 2021 ONCA 135, DeGroote v. Canadian Imperial Bank of Commerce (1996), 45 C.B.R. (3d) 132 (Ont. Gen. Div.), Dominion Trustco Corp., Re (1997), 50 C.B.R. (3d) 84 (Ont. C.A.), Dundas v. Zürich Canada, 2012 ONCA 181, Holley v. Gifford Smith Ltd, 26 D.L.R. (4th) 230 (Ont. C.A.), Indcondo Building Corp. v. Sloan, 2012 ONCA 502, Isabelle v. Royal Bank of Canada, 2008 NBCA 69, Jolub Construction Limited, Re (1993), 21 C.B.R. (3d) 313 (Ont. Gen. Div.), Mercure v. Marquette & Fils Inc., [1977] 1 S.C.R. 547, Perron-Malenfant v. Malenfant (Trustee of), [1999] 3 S.C.R. 375, Polar Products Inc. v. Hongkong Bank of Canada (1992), 14 C.B.R. (3d) 225 (B.C.S.C.), Shaw Estate v. Nicol Island Development Incorporated, 2009 ONCA 276, Smith v. Pricewaterhousecoopers Inc., 2013 ABCA 288, Zammit, Re (1998), 3 C.B.R. (4th) 191 (Ont. Gen. Div.)
facts:
Traders General Insurance Company ("Traders") made a motion to set aside an order made under s. 38 of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3 ("BIA"), indicating it was "improperly described" as Aviva Canada Inc. in the Plaintiff's bad faith action. Traders' motion sought an order reversing the decision of the trustee to allow the proof of claim filed by the Plaintiff; setting aside the s. 38 order granting the Plaintiff leave to commence proceedings against Traders; and setting aside the trustee's assignment of the bad faith claim of action to the Plaintiff.
The motion judge dismissed Traders' motion on the basis that (1) it lacked standing to attack the trustee's acceptance of the proof of claim and assignment of the bad faith action because Traders was not an "aggrieved party" under s. 37 of the BIA; and (2) it lacked standing to challenge the s. 38 order because Traders fell under the general rule that defendants do not have standing to challenge a s. 38 order.
On appeal, Traders did not seek to rely on its s. 37 argument. Traders sought only to appeal from the dismissal of Traders' motion to set aside the s. 38 order on the basis that an exception to the general rule applied to it in this case, and that it therefore had standing to challenge the s. 38 order.
issues:
(1) Did the motion judge err in holding that Traders had no standing to challenge the s. 38 order?
(2) Should the s. 38 order be set aside because the Plaintiffs were not creditors of the Respondents?
(3) Should the s. 38 order be set aside because the bad faith claim was not property of the bankrupts and therefore could not be assigned by the trustee?
holding:
Appeal dismissed.
reasoning:
(1) No
Under Shaw Estate v. Nicol Island Development Incorporated, 2009 ONCA 276, the established rule is that a defendant to an action assigned by a trustee under s. 38 has no standing to contest the assignment, subject to limited exceptions. Traders argued that the limited exceptions from Shaw were not exhaustive and that Isabelle v. Royal Bank of Canada, 2008 NBCA 69, recognized a different exception to the general rule that applied in this case.
The Court rejected Traders' argument, stating that the exception discussed in Isabelle was unrelated to standing to challenge a s. 38 assignment. Rather, Isabelle addressed standing at the s. 38 assignment motion itself. In Isabelle, the court established that where a proposed defendant is also a creditor, a motion judge has a narrow discretion to grant that proposed defendant standing on the s. 38 motion if it "raises a discrete and genuine issue of law that if decided in favour of the potential defendant might well avoid the need to defend a lawsuit that should never have been commenced in the first place".
The court found that the circumstances in the case at bar were different, and that it was a mistake to consider the court's comments from Isabelle without their proper context. The court held that the comments in Isabelle apply only to a proposed defendant who is at a s. 38 hearing because they are also a creditor.
The conclusion that Traders had no standing to challenge the s. 38 assignment dictated the appeal must be dismissed, and therefore the Court was without jurisdiction to consider the other two issues. However, the Court went on to address the other two issues in case it erred in its standing analysis.
(2) No
Traders argued that the Plaintiffs were not creditors of the
bankrupt and therefore a s. 38 order could not be made authorizing
them to proceed against Traders, as s. 38 outlines an order can
only be made in favour of a creditor.
The Court rejected this argument, outlining that the question of
whether the Plaintiff was a creditor of the bankrupt was a question
of fact before the s. 38 motion judge, which would be reviewed as a
finding of fact on appeal.
The Court concluded that based on the evidence that had been before
the motion judge, the motion judge could have been satisfied the
Plaintiff was a creditor for the purposes of s. 38.
(3) No
Traders argued that the s. 38 motion should be set aside on the
basis that the bad faith claim was not property of the bankrupts
because it did not devolve to them before they were discharged as
required by s. 67(1)(c) of the BIA.
The Court rejected this argument, outlining that in Dominion
Trustco Corp., Re (1997), 50 C.B.R. (3d) 84 (Ont. C.A.), the
court held that where the trustee consents to a s. 38 order, the
merits of the action are irrelevant at the s. 38 motion. Thus,
Traders' argument claiming that the bad faith claim was not
property of the bankrupt would have to be addressed within the
action itself; it had no bearing on the s. 38 motion itself
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be ought about your specific circumstances.
