



COURT OF APPEAL FOR ONTARIO

CITATION: Thermal Exchange Service Inc. v.
    Metropolitan Toronto Condominium Corporation No. 1289, 2022 ONCA 186

DATE: 20220307

DOCKET: C68529

Doherty, Miller and Sossin JJ.A.

BETWEEN

Thermal Exchange Service Inc.

Plaintiff (Respondent)

and

Metropolitan Toronto Condominium
    Corporation No. 1289

Defendant (Appellant)

Robert B. Cohen, for the appellant

Neal H. Roth, for the respondent

Heard: October 25, 2021 by video conference

On appeal from the judgment of Justice Andra
    Pollak of the Superior Court of Justice, dated July 7, 2020, with reasons
    reported at 2020 ONSC 2977.

REASONS
    FOR DECISION


[1]

This appeal concerns the application of s.
    5(1)(a)(iv) of the
Limitations Act
,
2002
, S.O. 2002, c. 24,
    Sched. B, and specifically, when the respondent Thermal Exchange Service Inc.
    (Thermal Exchange) knew that a proceeding would be an appropriate means to
    seek to remedy a loss resulting from the appellant Metropolitan Condo Corp.s (the
    Condo Corp) non-payment of its invoices. It is a question that can only be
    answered in the specific context of the parties legal relationship and their business
    dealings.

[2]

From 2002 to 2015, Thermal Exchange serviced the
    HVAC units in the Condo Corp.s building at 168 Simcoe St. in Toronto. The Condo
    Corp. does not dispute that the work was done at its request, or that it was
    done satisfactorily. Neither does it dispute that many of Thermal Exchanges
    invoices were not paid. Its sole defence at trial was that Thermal Exchange
    brought this action out of time, and the action is now barred by the
Limitations
    Act
.

[3]

Thermal Exchanges understanding was that it was
    contracting with the Condo Corp. rather than the individual unit owners. At
    trial, the Condo Corp. conceded the contractual relationship, and accepted that
    but for the limitations defence, it would be liable to pay the invoices.
    However, at all relevant times the Condo Corp.s property manager operated on a
    different understanding, which was only communicated to Thermal Exchange in 2016:
    that the Condo Corp. was not ultimately liable for paying the invoices, and was
    only obligated to pay if and when it was able to collect payment from the unit
    owners on whose behalf the work was done.

[4]

In August 2017, Thermal Exchange brought the
    action.

[5]

Following a hybrid summary trial, the trial
    judge held that Thermal Exchange had brought the action as soon as it knew that
    an action would be an appropriate means to remedy the Condo Corp.s
    non-payment, even though many of the unpaid invoices had been issued many years
    before the action was brought  some going back as far as 2008. The action was therefore
    not barred by the
Limitations Act
. The trial judge found the Condo
    Corp. owed $86,055.49 to Thermal Exchange, arising from invoices issued between
    2008 and 2015. For the reasons that follow, the Condo Corp.s appeal is
    dismissed.

Background

[6]

Thermal Exchange received work orders from the
    Condo Corp.s property manager, Helen Da Ponte, performed the work she requested,
    and invoiced the Condo Corp. Each of Thermal Exchanges invoices stated that
    payment was due within 30 days from the date of the invoice. However, the Condo
    Corp. typically made payment much later than this  often 300 days later. Thermal
    Exchange continued to provide services on request and tender fresh invoices.

[7]

The trial judge found that Thermal Exchange was
    operating on the basis that the Condo Corp. had one running account, and
    whenever funds were received, they were credited to that one account. This
    finding is central to the trial judges conclusion. The Condo Corp. challenges the
    finding as a palpable error. As we explain below, we do not agree.

[8]

There was conflicting evidence as to Thermal
    Exchanges billing practices. From 2008 forward, Thermal Exchange stopped
    sending individual invoices to the Condo Corp. for each work order, and began
    sending a single, semi-annual batch invoice. Mr. Pintaric, the president of
    Thermal Exchange, testified this was done at the request of the property
    manager, Ms. Da Ponte. Ms. Da Ponte answered that not only was this not at her
    request, it created additional work for her, as it required her to assign the
    correct work orders to their respective unit owners. The trial judge made no
    findings as to who initiated the change in billing practice, but as stated
    above, found that the indebtedness of the Condo Corp. was in the nature of a
    running account.

[9]

At trial, Mr. Pintaric and Ms. Da Ponte each testified
    as to different understandings of how the Condo Corp. processed the invoices.
    Mr. Pintarics assumption was that the Condo Corp. paid the invoices out of its
    operating budget, and then sought reimbursement from the unit owners on whose
    behalf the work was done. But he had no knowledge of the Condo Corp.s internal
    affairs. Ms. Da Pontes evidence was that the Condo Corp. received
    the invoices from Thermal Exchange and in turn invoiced the owner of the unit
    for which the work had been done. If the Condo Corp. received payment from the
    unit owner, it would in turn pay Thermal Exchange; if it didnt, it wouldnt.

[10]

As mentioned earlier, Ms. Da Pontes
    understanding of the nature of the Condo Corp.s contractual obligation to
    Thermal Exchange was mistaken. Thermal Exchange first became aware of it on November
    4, 2016, when Ms. Da Ponte advised Mr. Pintaric via email that the Condo Corp. was
    not responsible for paying the invoices, and that the invoices are
    charge-backs to the unit owners for payment once they receive the copy of the
    invoice.

[11]

There was conflicting evidence at trial as to what
    arrangements, if any, had been made between Thermal Exchange and Ms. Da Ponte regarding
    payment. The evidence of Mr. Pintaric was that he had several conversations
    with Ms. Da Ponte about the non-payment of invoices, and she would invariably
    tell him that she was terribly busy and unable to attend to the matter
    immediately, but was working on the invoices. The trial judge found that the assurances
    that she was working on it led Thermal Exchange to the reasonable belief
    that [its] problem could and would be remedied without the need to have a recourse
    to the courts. Prior to the November 4 email, Mr. Pintaric had believed 
    reasonably in the view of the trial judge  that payment was more or less a
    matter of encouraging Ms. Da Ponte to do her job and complete
    whatever paperwork was needed at her end. There had been no refusal to pay and
    no suggestion of inability to pay.

[12]

The trial judge accepted Mr. Pintarics evidence
    that by October 2015, he thought a demand letter from his lawyer might stir Ms.
    Da Ponte to process the invoices. In November 2016, Ms. Da Ponte unexpectedly informed
    Thermal Exchange that the Condo Corp. was not responsible for payment. In
    December 2016, Ms. Da Ponte made a concerted effort to bring the account up to
    date, mailing demand letters to each unit owner with a copy of the Thermal
    Exchange invoices for work specific to that unit. The Condo Corp. was able to
    recover a substantial sum from the unit owners from this effort, which it paid
    to Thermal Exchange.

[13]

On August 17, 2017 Thermal Exchange filed its
    statement of claim, seeking damages for services supplied, breach of agreement,
    and unjust enrichment in the amount of $122,105.34. By the time of trial, the amount
    outstanding had been reduced to $86,055.49.

[14]

The central issue at trial was discoverability:
    specifically, when Thermal Exchange first determined that a proceeding would be
    an appropriate means to remedy its claim, per s. 5 (1)(a)(iv) of the
Limitations
    Act
.

[15]

The trial judge concluded, relying upon
Presley
    v. Van Dusen
, 2019 ONCA 66, 144 O.R. (3d) 305, that Thermal Exchange
    would not have known a proceeding was an appropriate means to seek a remedy
    until October 2015, when it realized it would have to instruct its counsel to
    commence legal proceedings:

the assurances made by the property manager
    and the superintendent of the [Condo Corp.] that they were working on it did
    lead the Plaintiff to the reasonable belief that his problems could and would
    be remedied without the need to have a recourse to the courts I find that the Plaintiff
    did not know and that a person in its situation would not reasonably have known
    that a proceeding would be an appropriate means to seek a remedy until the time
    when he realized that [the Plaintiff] would have to instruct counsel for the
    Plaintiff to commence legal proceedings against the [Condo Corp.].

[16]

Since the civil action was commenced within two
    years of the demand letter, the trial judge held, the limitations defence
    failed.

Issues on appeal

[17]

The appellant submits that the trial judge:

1.

Erred in her application of the legal
    principles in
Presley v. Van Dusen
;

2.

Erred in finding that the claim was first
    discoverable as of the date of the demand letter in October 2015;

3.

Erred in finding that the running account
    suspended the commencement of the limitation period;

4.

Applied the wrong standard to Thermal Exchange to
    rebut the presumption; and

5.

Erred in not considering the defence of laches.

Analysis

(1)

The application of s. 5(1)(a)(iv) of the
Limitations Act

[18]

The
Limitations Act
provides:

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).  2002, c. 24, Sched. B,
s. 5 (1)
.

5 (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.  2002, c. 24, Sched. B,
    s. 5 (2).

[19]

The trial judge held that Thermal Exchange was
    obligated, pursuant to s. 5(2) of the
Limitations Act
, to rebut
    the statutory presumption that that the claim was discovered on the date that
    the act or omission on which the claim is based took place. To rebut the
    presumption, a plaintiff must establish that its claim was not discovered until
    some other date, employing the four cumulative criteria listed in s. 5(1)(a).

[20]

The trial judge found that the first three criteria
    of discoverability were satisfied as of the date Thermal Exchange first became
    aware that its invoices were unpaid. This would be 30 days after the invoices
    were rendered. For the trial judge, the only remaining issue was therefore when
    Thermal Exchange knew that a proceeding would be an appropriate means to seek
    to remedy [the loss]. She concluded that this was the date that Thermal
    Exchange instructed its lawyer to send the demand letter in October 2015.

[21]

Significantly, the trial judge found that the
    nature of the commercial relationship between the parties was that there was a
    single running account, and whenever Thermal received funds from the Condo
    Corp, it was credited to that account. The trial judge accepted the evidence of
    Mr. Pontaric that he sincerely believed the Condo Corp. had been dealing with
    him in good faith and that Ms. Da Pontes statements that she was
    working on it, meant that his invoices would eventually be paid. He did not
    realize until her email of November 4, 2015 that she was, on behalf of the
    Condo Corp., taking the position that payment by Condo Corp. would be
    contingent on payment by the unit owner.

[22]

The Condo Corp. argued on appeal that the trial
    judge erred in holding that the Ms. Da Pontes assurances were analogous to the
    class of cases summarized in
Presley v. Van Dusen
, drawing on
Presidential
    MSH Corp. v. Marr, Foster & Co. LLP,
2017 ONCA 325, 135 O.R. (3d) 321,
    where a plaintiff postpones bringing an action because of assurances by a
    defendant  who has a superior understanding of the problem  that the
    defendant can remedy the matter, such that litigation would not be necessary.
    The Condo Corp. argues that this case is nothing like
Van Dusen
, given
    that: (1) Thermal Exchange was not relying on the Condo Corp. to fix a
    mechanical problem beyond the expertise of Thermal Exchange; (2) the Condo
    Corp. never promised unequivocally to pay the invoices, but was simply
    stringing a creditor along; and (3) Thermal Exchange waited substantially
    longer to begin a proceeding than the plaintiff in
Van Dusen
did.

[23]

We do not agree that the trial judge erred in
    her analysis. There is nothing in the reasoning in
Van Dusen
that
    would restrict its application to comparative expertise over mechanical
    problems. The salient aspect is that the defendant created a problem, the remedy
    for which was beyond the reach of the plaintiffs understanding, and led the plaintiff
    to rely on it for the remedy. Analogous to the situation in
Van Dusen
,
    the Condo Corp. created a barrier to Thermal Exchange receiving payment (it would
    not pay unless it first received payment from the unit owners, and was not
    taking any steps to getting the unit owners to pay), prevented Thermal Exchange
    from understanding the nature of the problem, and led Thermal Exchange to believe
    that it would take care of the problem.

[24]

The second and third points of purported differentiation
    with
Van Dusen
have little traction given the trial judges finding
    that the juridical relation between Thermal Exchange and the Condo Corp. was
    that of a running account. In the context of a running account, it is
    significant that the Condo Corp. gave Thermal Exchange no reason to believe it was
    disputing the invoices, and that the delays in payment were the result of other
    demands on the property managers time. Given that the indebtedness was
    incurred in the course of a running account, the temporal period is of less
    significance than it was in circumstances such as in
Van Dusen
.

(2)

Date of the demand letter

[25]

The Condo Corp. argues that the trial judge
    erred in finding that the limitation period started in October 2015, when
    Thermal Exchange instructed its solicitor to send a demand letter threatening
    legal action. The Condo Corp. argues that this date was chosen randomly by the
    trial judge, and is inconsistent with the evidence of Mr. Pintaric as to when
    he actually believed he could sue, and when a reasonable person in the
    situation of Thermal Exchange would have known that the commencement of a
    proceeding would be appropriate. We agree that the trial judge erred in finding
    that the limitation period began to run when Mr. Pintaric instructed his lawyer
    to send the demand letter. Nevertheless, and as we explain below, this
    conclusion does not assist the Condo Corp. as we find that the limitation
    period began to run
after
this date.

[26]

Mr. Pintarics evidence was that the threat of
    litigation was more or less idle  it did not reflect a conviction that an
    action was appropriate, but was a means to encourage Ms. Da Ponte to
    reprioritize her time in favour of processing the Thermal Exchange invoices. On
    his evidence, it was not until the November 4, 2016 email from Ms. Da Ponte, in
    which she first communicated the position that the Condo Corp. was not
    obligated to pay, that he first became aware of the nature of the problem he
    was facing, and became conscious that a proceeding would be an appropriate
    means to seek to remedy that problem. From the evidence on the record, supported
    by the trial judges finding that the Condo Corp. was maintaining a running
    account, the time when he realized that [he] would have to instruct counsel
    for the Plaintiff to commence legal proceedings was not the time he first met
    with counsel, nor when the demand letter was issued, but only when Ms. Da Ponte
    advised in the email of November 4, 2016 that the Condo Corp.s position was
    that it had no obligation to pay the invoices. The action was commenced within
    two years of this date and the limitations defence therefore fails.

(3)

The running account

[27]

The Condo Corp. argues that the trial judges
    finding that the account was a running account was a palpable and overriding
    error, contradicted by an Excel spreadsheet jointly tendered by the parties as
    an exhibit. The spreadsheet documents for each invoice rendered from December
    31, 2008 to June 30, 2017, the invoice number, the amount, and whether payment
    had been received. The Condo Corp. submits that the spreadsheet contradicts the
    argument that there was a running account, as it demonstrates that payments were
    attributed to particular invoices.

[28]

The spreadsheet was not tendered as an
    accounting record of either party, although both parties agreed to its accuracy
    in terms of stating the accounts that were rendered and the payments that were
    made. It is not evidence of how Thermal Exchange understood the nature of the Condo
    Corp.s account with it, and therefore does not contradict the trial judges
    finding. The trial judges finding that the Condo Corp. had a running account
    with Thermal Exchange was supported by the evidence of Mr. Pintaric and the
    practice of batch invoicing. The finding was open to her and we would not
    disturb it.

(4)

Did the trial judge apply the wrong standard?

[29]

The Condo Corp. submits that the trial judge
    erred in law by applying the wrong standard for Thermal Exchange to meet to
    rebut the presumption under s. 5(2). The trial judge described the onus as
    very low. The Condo Corp. points to case law from this Court which
    characterizes the onus as relatively low.

[30]

Nothing in this litigation turns on the
    distinction between these two modifiers.

(5)

Laches

[31]

The trial judge did not address the Condo Corp.s
    defence of
laches
. However, the argument could not have succeeded
    given the trial judges factual findings with respect to the
Limitations
    Act
defence. She found that it was reasonable for a person in the position
    of Thermal to rely on the assurances of the property manager and hold off
    commencing an action. Having made that finding, a
laches
defence was
    not available.

DISPOSITION

[32]

The appeal is dismissed. If the parties cannot
    agree on costs, they may make brief written submissions not exceeding 3 pages
    each, in addition to a bill of costs, within 14 days of the release of these
    reasons.


Doherty
    J.A.

B.W.
    Miller J.A.

Sossin
    J.A.


