Legal Blog: Five Liners

15-Yr Limitation and Wills

Tessaro v. Gora 2025 Ont SCJ

A lawyer drafted a will that had an ambiguous residual clause. The beneficiaries under each interpretation settled the issue between themselves and both sued the lawyer for the damages that they incurred because of the ambiguity causing the settlement. The lawyer drafted the will in 1991. The beneficiaries commenced their actions in 2019 and 2020. The beneficiaries had no problem meeting the basic two-year rule under the Limitations Act, 2002 because they did not know of the problem until after the testator died in 2018 and, indeed, until their settlement in 2024. However, the motion judge decided that s.15(2) of the Act precluded their actions because the 15-year absolute limitation period, which started January 1, 2004, had expired.

Consumer Proposal Annulled

Re Singh 2024 Ont SCJ (AJ)

A consumer proposal may be annulled under s. 66.31(1) of the BIA – even after the trustee has been discharged and the debtor has paid everything he promised to pay – if the debtor were not eligible to file a consumer proposal in the first place or the court’s approval were obtained by fraud. In this case, the debtor did not notify the trustee of the creditor’s judgment and the amount of that judgment meant that the debtor owed more than $250,000, the limit for a consumer proposal. The associate judge annulled the proposal.

Bankruptcy Survival

Brinkman Bankruptcy 2023 Ont SCJ

By way of a motion in the bankruptcy action, brought almost immediately after the trustee’s discharge, a creditor sought a declaration that that her judgment survived bankruptcy. The creditor had given the bankrupt funds to invest in a specific corporation; he did not do so and pocketed the money. The judge granted the declaration pursuant to s. 178(1)(d) of the BIA.

Mistake

Espartel Investments Limited v. MTCC 993 2024 Ont CA

Condo corporation had been paying inflated invoices relating to shared electricity since 2006. Its consultant caught the invoicing mistake in 2017 after the condo had paid $730,000 too much. The defendant argued that the condo should have caught the overcharge earlier such that most of it was statute barred. The trial judge held that it was not actually apparent and that a reasonable defendant would not have caught the mistake. The Court of Appeal upheld the decision. The court noted that the fact that the errors were capable of being discovered did not necessarily start the limitations clock. The test is reasonable discoverability, not the mere possibility of discovery. The court ordered the return of the funds, based on unjust enrichment.

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Registration Complete

Gay Company Limited v. 962332 Ontario Inc. 2023 Ont SCJ

Under the Land Registry Reform Act and the Land Titles Act the registration of an instrument is complete only when the registrar certifies it. Once certified, the instrument takes its date and time from when it was originally submitted for registration. Until an instrument is certified, the party requesting its registration may withdraw it. Accordingly, in this case when a discharge of lien was registered in error, the registering party had the right to withdraw it before certification.

Oppression

Pereira v. TYLT Technologies Inc. 2023 Ont CA

The corporation’s founder and officer, director, and shareholder was fired by his co-founder and an outside director and removed as a director. His unvested shares were to be purchased pursuant to a shareholders’ agreement at a nominal value. Regardless of the shareholders’ agreement and that an employment agreement allowed the termination, the Court of Appeal noted that the oppression remedy, which was equitable, requires not just a legalistic analysis, but a determination of whether the actions of the majority were “fair.” The court found that the founder could reasonably expect that he would continue in his role with the corporations at least until his shares were fully vested. The court remitted the matter to be heard by way of a trial to determine whether the majority acted properly so that it was in the best interests of the corporation to divest the founder of a further role in the corporation and the unvested shares.

Limitation Refreshed

Anderson Sheet Metal Ltd. v. Comtract Compressors Inc. 2023 Ont SCJ

Under s. 13(1) of the Limitations Act, the start date of a limitations period can be “refreshed” by way of an acknowledgment of liability from the debtor. The acknowledgment may be made by way of email, but must be made before the original limitation period expires. In this case, the creditor sent a statement of account, referencing a number of invoices, and asked when more payments would be forthcoming; the debtor responded, “we have obviously been having some difficulties in paying off this account. I will see what I can send you in the next week or so.” That was enough for the judge to conclude that the limitation period re-started from the date of that response and that any invoices that had not expired at that date had a new two-year limitation period.

Limitations and Assigned Action

AssessNet Inc.  v. Taylor Leibow Inc., bankruptcy trustee 2023 Ont CA

Creditor sued debtors’ former bankruptcy trustee. It first needed to obtain a s. 38 order and an order granting leave to do so under s. 215 of the BIA. The trustee claimed that the action was statute barred. Section 12 of the Limitations Act deals with an assigned action (including an action under s. 38 which was assigned from the current trustee in bankruptcy) has to be brought within 2 years from earlier of the dates that the predecessor and the claimant first knew or ought to have known of the matters in issue. In this case, the fact that the creditor’s representative was an inspector of the bankrupt estate was irrelevant because an inspector owes a duty to act in the best interests of the estate, not in its own best interests and suing the then trustee was not in the best interests of the estate. Further, the claimant was not able to sue the trustee until it obtained the s. 38 and s. 215 orders and the action was commenced within two years of obtaining them.

Unjust Enrichment

Sase Aggregate Ltd. v. Langdon 2023 Ont CA

Husband stole money from his employer. The employer sued wife claiming that the stolen money went into the renovations of wife’s house. The court found that the wife demonstrated that she used money from legitimate sources to fund the renovations and that there was therefore no unjust enrichment – other than about $177,000 for which wife could not account.  The court held that wife did not knowingly receive the fraudulent funds or knowingly assist husband in his fraudulent conduct. Although stolen money went into their joint account, it was immediately moved to third parties and wife knew nothing about the deposits or the transfers. For whatever reason, the employer was not able to trace where the funds ultimately went.

Firm Settlement

ADT Security Service v. Fluent Home 2023 Ont SCJ (Div Ct)

The parties settled at a pretrial and informed the pretrial judge that it was a firm and binding agreement. The defendant then raised issues about the release and wanted payment terms that had not previously been discussed. The court noted that if parties settle litigation and then disagree on non-essential terms of the settlement, the court imposes reasonable terms. The court held that 30 days for payment was reasonable and that the precise wording of the release, on which the parties ultimately agreed, was not an essential term in the context of the settlement.