



COURT OF APPEAL FOR ONTARIO

CITATION: Mega International Commercial
    Bank (Canada) v. Yung, 2018 ONCA 429

DATE: 20180507

DOCKET: C64010

Doherty, Paciocco and Nordheimer JJ.A.

BETWEEN

Mega International Commercial Bank (Canada)

Plaintiff

and

Tony Man Tung Yung (also known as Man Tung Yung)
    and Yvonne Pui Ling Lai

Defendants (Appellants)

and

Jimmy K. Sun and Sun & Partners

Third Parties (Respondents)

Eliot N. Kolers and Zev Smith, for the appellants

M. Scott Martin and Marco P. Falco, for the respondents

Heard: February 6, 2018

On appeal from the order of Justice Laurence A. Pattillo
    of the Superior Court of Justice, dated May 17, 2017, with reasons reported at 2017
    ONSC 1005.

Paciocco J.A.:

OVERVIEW

[1]

This is an appeal from a summary judgment dismissing the appellants third
    party claims for contribution and indemnity against the respondent lawyer and
    law firm as statute-barred.

[2]

Mr. Tony Man Tung Yung and Ms. Yvonne Pui Ling Lai commenced the
    underlying third party claims against their former lawyer, Mr. Jimmy K. Sun and
    his law firm, Sun & Partners, after Mega International Commercial Bank
    (Canada) (Mega International) sued Mr. Yung and Ms. Lai on personal guarantees
    they provided to Mega Internationals predecessor, International Commercial
    Bank of Cathay (Canada) (International Commercial). Those personal guarantees
    were given to secure financing for a Toronto development property that Mr. Yung
    and Ms. Lai were involved in. Mr. Yung and Ms. Lai claim that their lawyer, Mr.
    Sun, was instructed to obtain releases from those personal guarantees, but
    failed to do so  hence their claims for contribution and indemnity.

[3]

Mr. Yung and Ms. Lai did not sue Mr. Sun and his law firm until more
    than two years after Mega International served Ms. Lai with a claim against her
    on her personal guarantee. The motion judge held that s. 18 of the
Limitations
    Act, 2002
, S.O. 2002, c. 24, Sched. B establishes an absolute two-year
    limitation period for contribution and indemnity claims, which commenced when
    Ms. Lai was served with Mega Internationals claim. Hence, he found that Mr.
    Yungs and Ms. Lais third party claims were statute-barred.

[4]

There are two grounds of appeal. The first challenges the motion judges
    interpretation of s. 18 of the
Limitations Act, 2002
. The second
    contends that the motion judge erred in exercising his fact-finding powers
    under r. 20 of the
Rules of Civil Procedure
, R.R.O. 1990, Reg. 194
    (the 
Rules
). Mr. Yung and Ms. Lai argue that because of this second
    error, findings of fact made by the motion judge should not be relied upon in
    this appeal to overcome the motion judges error in interpreting s. 18.

[5]

For the reasons that follow, I agree that the motion judge
    misinterpreted s. 18. That section does not displace the discoverability
    principles found in ss. 4 and 5 of the
Limitations Act, 2002
.

[6]

I would further hold that the motion judges decision to grant summary
    judgment was made in error. As a result of his misunderstanding of s. 18, he
    did not have a full appreciation of the significance of the conflicting
    evidence and the facts central to the discoverability issue when he decided to
    grant summary judgment. Consequently, the findings of fact he made in his
    summary judgment cannot be relied upon to resolve the s. 18 discoverability
    issue against Mr. Yung and Ms. Lai.

[7]

I would therefore allow the appeal and remit the case to the Superior
    Court of Justice to proceed in accordance with these reasons and the
Rules
.

THE MATERIAL FACTS

A.

The Parties and the Project

[8]

Mr. Yung and Ms. Lai are married. From 1991 to 1995, the couple lived
    together in Toronto. However, since 1995, Mr. Yung has lived in Hong Kong while
    Ms. Lai continued to live in Toronto. They then separated in 1998 and have
    continued to live on separate continents since.

[9]

Mr. Sun had been doing legal work for Mr. Yung and Ms. Lai since the
    early 1990s. It is not contested that Mr. Yung, an experienced businessperson in
    Hong Kong, knew little English. He relied upon Mr. Sun to translate and explain
    relevant legal documents. Nor is it contested that Ms. Lai had few direct
    dealings with Mr. Sun. She depended largely on Mr. Yung to deal with Mr. Sun on
    her behalf.

[10]

In
    1993, Mr. Sun acted for Mr. Yung and Ms. Lai when they began to develop a mixed
    use, commercial and residential building at 207-209 Yonge St. (the Property).

[11]

The
    Property was owned by 1036846 Ontario Inc. The corporation was a bare trustee
    for the Yonge Trust. The trustee of the Yonge Trust was a British Virgin Islands
    corporation, Hastings Services Limited. The beneficiaries of the Yonge Trust
    were Mr. Yung, Ms. Lai, and certain of their family members. Mr. Yung and Ms.
    Lai were directors and officers of 1036846 Ontario Inc., the Yonge Trust, and
    Hastings Services Limited at various times.

B.

Four Material Events

[12]

Four
    events linked to the Property are relevant to this appeal: (1) the acquisition;
    (2) the International Commercial refinancing; (3) the 2006 restructuring; and
    (4) the power of sale and the Mega International claims on the personal
    guarantees.

(1)

The Acquisition

[13]

Few
    facts relating to the acquisition matter. It is sufficient to note that the development
    of the Property was initially financed by Grand Pacific Finance Corp. (Grand
    Pacific) and 366 Madison Inc. (Madison), two related corporations the
    principals of which were Mr. Michael Lin and Ms. Anne Chen, who Mr. Sun also
    acted for.

(2)

The International Commercial Refinancing

[14]

By
    2002 to 2003, the project was in financial difficulty. Mr. Yung and Ms. Lai had
    to refinance. They secured further funding from International Commercial in the
    form of a $10,400,000 loan to 1036846 Ontario Inc. and the Yonge Trust (the Mortgage).

[15]

Mr.
    Yung and Ms. Lai say that Mr. Sun provided legal advice to them in connection
    with this refinancing.

[16]

Mr.
    Sun disagrees. He contends that Mr. Yung and Ms. Lai negotiated the financing
    terms with International Commercial without his assistance. He claims that he
    acted solely for International Commercial on the refinancing after being asked
    by Mr. Yung and Ms. Lai to do so.

[17]

Some
    of the money obtained from International Commercial was used to partially repay
    the money owed to the original financiers, Grand Pacific and Madison. In
    return, Grand Pacific and Madison subordinated their mortgage security in
    favour of International Commercial. Mr. Yung and Ms. Lai also provided personal
    guarantees to International Commercial as additional security.

(3)

The 2006 Restructuring

[18]

The
    International Commercial refinancing did not solve the financial pressure on
    the development project. By October 2003, negotiations were underway between
    Mr. Sun and Mr. Lin to change the Grand Pacific and Madison arrangement. By
    December 2004, terms had been reached, leading to a restructuring in June of
    2006.

[19]

Mr.
    Sun acted as lawyer for all of the parties in this restructuring.

[20]

On
    April 6, 2006, Mr. Yung met with Mr. Eddie Ho Chow Mui, a Hong Kong lawyer
    licenced to practice in Ontario, and signed an Acknowledgment of Conflict of
    Interest and Consent relating to Mr. Suns role in the restructuring. Mr. Yung
    also signed a Certificate of Independent Legal Advice confirming that he fully
    understood the nature and effect of the transaction, and that he was signing
    the documents freely and voluntarily. Mr. Yung claims, however, that Mr. Mui
    did not translate the documents for him, and that he signed the documents under
    the direction of Mr. Sun.

[21]

Mr.
    Yung and Ms. Lai do not agree with Mr. Sun about the nature of the 2006
    restructuring that took place.

[22]

Mr.
    Yung and Ms. Lai claim that they transferred their beneficial interest in the
    project to Grand Pacific and Madison. Mr. Yung claims that it was his
    understanding that, in return, the personal guarantees he and Ms. Lai signed in
    favour of International Commercial would be replaced by personal guarantees
    from Mr. Lin and Ms. Chen, the principals of Grand Pacific and Madison. He says
    that these were the instructions he gave to Mr. Sun. Mr. Yung says that he
    understood that Grand Pacific and Madison were going to secure financing to
    repay International Commercial, thus nullifying the guarantees.

[23]

Mr.
    Yung claims that instead of paying off International Commercial as originally
    planned, Grand Pacific and Madison advised him that they had received
    International Commercials consent to be assigned the Mortgage such that they
    would take over the responsibility of repaying the loan advanced to 1036846
    Ontario Inc. and the Yonge Trust, and that Mr. Lin and Ms. Chen would take over
    the personal guarantees. Mr. Yung claims it was his understanding that this
    happened. He believed that the personal guarantees to International Commercial
    that he and Ms. Lai had signed were no longer in effect.

[24]

Mr.
    Sun does not accept this. He describes a more complex restructuring in which a
    new company, Yonge Linkage Limited, was created with Mr. Lin and Mr. Yung as
    its signing officers. Mr. Sun claims that 1036846 Ontario Inc. transferred its
    interest in the Property to Yonge Linkage Limited. The trust beneficiary did
    not change, but in this way control of the Property and the income generated
    therefrom was transferred to Grand Pacific through Mr. Lin. In return, Grand
    Pacific and Madison released Mr. Yung and Ms. Lai from the personal guarantees
    that Mr. Yung and Ms. Lai owed to Grand Pacific and Madison, but this had
    nothing to do with the personal guarantees that they provided to International
    Commercial.

[25]

More
    significantly, Mr. Sun disputes Mr. Yungs and Ms. Lais claims that he was
    instructed to secure releases of their personal guarantees to International
    Commercial. He says that such releases were never contemplated, and at no time
    did Mr. Lin or Ms. Chen provide replacement guarantees to International
    Commercial.

(4)

The Power of Sale and the Mega International Action

[26]

Whatever
    the restructuring arrangement was intended to be, it did not solve the
    projects financial challenges. By the summer of 2008, the Mortgage was in
    default. On July 16, 2008, Mega International, International Commercials
    successor corporation, issued a Notice of Sale under the Mortgage.

[27]

Soon
    after, Mr. Yung and Ms. Lai became aware that Mega International was claiming
    the right to come after them on their personal guarantees for any shortfall in
    the sale price achieved under a power of sale.

[28]

Mr.
    Yung claims that he was not alarmed when he learned that the guarantees might
    not have been cancelled by Mr. Sun since he thought the Property was worth much
    more than the outstanding mortgage amount. He claims that he asked Mr. Sun why
    the bank was unaware that the guarantees had been cancelled and that Mr. Sun
    told him he would check and get back to him, but never did.

[29]

Mr.
    Yung also claims that Mr. Sun advised him that he could protect himself by
    redeeming the Mortgage or purchasing the Property. As a result, Mr. Yung wrote
    to Mega International expressing interest in acquiring the Property, but no
    concrete offer was ever made.

[30]

Mr.
    Sun denies that Mr. Yung ever asked him about the cancellation of the
    guarantees. He acknowledges that he had advised Mr. Yung that he could protect
    himself from Mega Internationals claim by redeeming the Mortgage or acquiring
    the Property.

[31]

On
    December 11, 2009, Mega Internationals lawyers notified Mr. Yung and Ms. Lai
    about an impending sale to another purchaser. On December 18, 2009, Mega
    Internationals lawyers sent a letter to Ms. Lai outlining the proposed sale
    price and the amount owing on the Mortgage, making it clear that there would be
    a shortfall in the sale. The letter stated in material part, You and all other
    encumbrancers and guarantors have had a significant period of time in which to
    redeem, but have shown absolutely no indication of your ability or desire to
    redeem the mortgage.

[32]

In
    a December 22, 2009 letter signed by Ms. Lai under Mr. Yungs direction, Ms.
    Lai responded, Please clarify in the event that the property has been sold
    based on the terms that you referred to in your letter dated December 18, 2009,
    as a guarantor, am I liable for the shortfall of the actual outstanding amount
    of the mortgage? Ms. Lai and Mr. Yung claim that Mr. Sun drafted this December
    22, 2009 letter. Mr. Sun denies that he did.

[33]

Mr.
    Sun produced a document signed by Ms. Lai confirming that Mr. Suns firm did no
    more than translate the December 22, 2009 letter and could not provide her with
    legal advice. Ms. Lai claims that she signed this document because she was
    instructed by Mr. Yung to sign the documents that Mr. Sun presented to her.

[34]

On
    January 15, 2010, the Property was sold to another buyer for $8,000,000.00. By
    contrast, the amount required to redeem the Mortgage was $9,138,963.03.

[35]

On
    December 20, 2010, Mega International commenced the underlying action against
    Mr. Yung and Ms. Lai on their personal guarantees for the shortfall.

[36]

On
    January 6, 2011, Ms. Lai was served with a statement of claim against her as a
    guarantor of the Mortgage for $1,216,101.78. Mr. Yung, living out of the
    country, was not served.

[37]

Mr.
    Yung admits that he was made aware that Ms. Lai had been served. He says that
    he communicated with Mr. Sun about this. Mr. Yung claims that he relied on Mr.
    Suns advice that: (1) he and Ms. Lai had no exposure because the sale price
    was an improvident one given that the property was worth much more than the
    sale price and the property had never been listed for sale on MLS (Multiple
    Listings Service); (2) his own offer to purchase the property would insulate
    him from liability; and (3) that since he had never been served with a
    statement of claim, any judgment could be enforced only against Ms. Lai and she
    did not have assets in her name. Mr. Yung claims that Mr. Sun nonetheless
    advised that Ms. Lai, an Ontario resident, should defend the suit.

[38]

Mr.
    Sun denies that he told Mr. Yung not to worry about the personal guarantees.
    Mr. Sun says that he was not involved in giving advice on the power of sale
    after he advised Mr. Yung that he could protect himself by redeeming the Mortgage
    or purchasing the Property. He also says that he sent Ms. Lai to a litigation
    lawyer.

[39]

On
    March 2, 2011, Ms. Lai filed a statement of defence and cross-claim after
    consulting her litigation lawyer. She cross-claimed against Mr. Yung but made
    no third party claim against Mr. Sun or his firm.

[40]

Two
    years later, Mega International secured an order to serve Mr. Yung. Pursuant to
    that order, service was to be accomplished by substituted service by April 30,
    2013 through publication in the Toronto Star, in English in a Hong Kong
    newspaper, and by letter to Mr. Yung in care of Ms. Lai. Mr. Yung denies ever
    learning of the substituted service.

[41]

Mr.
    Yung claims that in October or November 2013, unprompted, Mr. Sun delivered his
    entire legal file to him and Ms. Lai, but it was missing documents relating to
    the 2004 agreement and the 2006 restructuring transaction. This caused Mr. Yung
    to be suspicious of Mr. Sun.

[42]

Based
    on the substituted service that was effected in April 2013, a default judgment
    was secured against Mr. Yung in 2015.

C.

The Claims Against Mr. Sun

[43]

Mr.
    Yung claims that he sought legal advice when he learned that a default judgment
    had been obtained against him. He says that it was only when he spoke to a lawyer
    that he learned he had been served by substituted service, and that he was informed
    for the first time that he had a cause of action against Mr. Sun and his firm
    for failing to follow his instructions, for improper legal advice, and for
    acting in a conflict of interest. It was after this occurred that Ms. Lai
    learned, through him, that she too had an action against Mr. Sun and Sun &
    Partners.

[44]

The
    parties agree that at no time had Mr. Sun told Mr. Yung that he might have a
    cause of action against him. Of course, Mr. Suns position is that Mr. Yung has
    no such cause of action, so why would he tell him that he did? Similarly, there
    is no suggestion that Mr. Sun advised Ms. Lai that she had a potential cause of
    action against him.

[45]

Mr.
    Yung managed to get the default judgment set aside, and on September 1, 2015,
    Mr. Yung and Ms. Lai instituted the underlying third party claims against Mr.
    Sun and his firm for contribution and indemnity. They allege that Mr. Sun
    and/or his firm, among other things:

(a)

had a conflict of interest in acting for both Grand Pacific and Madison
    at the same time as Mr. Yung and Ms. Lai;

(b)

failed to advise Mr. Yung and Ms. Lai of the conflict;

(c)

failed to replace or cancel Mr. Yungs and Ms. Lais personal guarantees
    to International Commercial as instructed and promised; and

(d)

failed to accurately and fairly advise Mr. Yung and Ms. Lai as to their
    potential liability under their personal guarantees, and the nature and value
    of the guarantees.

D.

The Summary Judgment

[46]

Mr.
    Sun and his firm moved for summary judgment seeking to dismiss the third party
    claims. Mr. Sun, Mr. Yung, and Ms. Lai presented affidavit evidence along with
    supporting documents. Transcripts of the cross-examination of Mr. Sun and Ms.
    Lai were put before the motion judge, along with Questions and Answers on
    Written Examination from Mr. Yung. No oral testimony was presented before the
    motion judge.

[47]

At
    para. 31 of his reasons, the motion judge recognized that the motion record
    contains conflicting evidence from Sun on the one hand and Yung and Lai on the
    other concerning their relationship and what took place between them in respect
    of the 2006 Restructuring and the Banks subsequent Action. He went on to find
    that summary judgment was nonetheless appropriate since the issues could be
    resolved based on the undisputed evidence and through the utilization of the
    powers under r. 20.04(2.1) to assess Mr. Yungs and Ms. Lais evidence.

[48]

The
    motion judge went on to make significant credibility findings against Mr. Yung
    and Ms. Lai. These included findings that, contrary to their claims:

(i)

Mr. Yung understood and consented to Mr. Sun acting for all parties in
    the 2006 restructuring (reasons, at para. 53);

(ii)

Mr. Yung and Ms. Lai knew by December 2009 that their personal guarantees
    to International Commercial had not been extinguished (reasons, at paras. 55
    and 58);

(iii)

Mr. Yung was an experienced developer and businessman who would have
    clearly known (and Lai by extension) that they had a claim against Sun for not
    following his instructions (reasons, at para. 56);

(iv)

Mr. Sun had not assured them that they had no liability concerning their
    personal guarantees (reasons, at paras. 59-63); and

(v)

Ms. Lai would have told Mr. Yung about his substituted service on or
    around April 29, 2013, the date she received the substituted service letter
    (reasons, at para. 63).

[49]

Based
    on these findings the motion judge ruled, at para. 49, that both Mr. Yungs and
    Ms. Lais third party claims were statute-barred by the absolute limitation
    period provided for in s. 18 of the
Limitations Act, 2002
:

The Statement of Claim was served on Lai sometime in early 2011,
    more than four years before the Third Party Claim was issued. It was served on
    Yung effective April 29, 2013, more than two years, four months prior to the
    Third Party Claim being issued. While, in my view, s. 18 provides that the date
    when the time begins to run is from the date of service of the Statement of
    Claim on Lai (the first wrongdoer), in either case the Third Party Claim was
    commenced more than two years from the service of the Statement of Claim and is
    accordingly statute barred.

[50]

He
    then went on to hold that there was no fraudulent concealment that would enable
    Mr. Yung and Ms. Lai to avoid the two-year limitation period. He reasoned that since
    Mr. Yung and Ms. Lai became aware in December 2009 of the facts material to
    their cause of action, nothing was concealed from them.

[51]

On
    that basis, summary judgment dismissing Mr. Yungs and Ms. Lais third party
    claims for contribution and indemnity was granted.

THE ISSUES

[52]

Mr.
    Yung and Ms. Lai appeal the summary judgment against them. Two general issues must
    be determined to resolve this appeal:

A.

Does s. 18 of the
Limitations Act, 2002
establish an absolute
    two-year limitation period or does it incorporate discoverability principles?

B.

If the discoverability principles under ss. 4 and 5 of the
Limitations
    Act, 2002
apply, should the motion judges findings relating to Mr. Yungs
    and Ms. Lais knowledge of their claims against Mr. Sun, made in the context of
    the fraudulent concealment determination, be relied upon to resolve the
    discoverability issue?

[53]

In
    resolving this latter issue it is also necessary to decide whether the motion
    judge erred in the way he used his summary judgment fact-finding powers.

ANALYSIS

A.      The Effect of the
Limitations
    Act, 2002
, Section 18

[54]

In
    my view, the motion judge erred in law in holding that the
Limitations Act,
    2002
, s. 18 creates an absolute limitation period of two years for the
    commencement of contribution and indemnity claims. Properly interpreted, s. 18
    works with other provisions of the
Limitations Act, 2002
to create a
    presumed start date for the running of the limitation period. That presumed
    limitation period start date will result in a claim for contribution or
    indemnity being statute-barred two years after the party seeking contribution
    or indemnity is served with a claim in the proceeding in which contribution or
    indemnity is sought, unless that party proves that the claim for contribution
    or indemnity was not discovered and was not capable of being discovered through
    the exercise of due diligence until some later date.

[55]

The
    scheme of the
Limitations Act, 2002
is important to this conclusion. Subject
    to a few exceptions, s. 4 creates a basic limitation period of two years
    commencing on the date the claim was discovered. Section 5(1) goes on to define
    when a claim was discovered, and s. 5(2) creates a rebuttable presumption to
    assist in applying discoverability principles. If a claim is not commenced within
    15 years of the day on which the wrong occurred, the ultimate limitation period
    defined in s. 15(2) will expire. Section 18 operates within this general
    scheme. These are the material provisions:

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 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.

[]

Ultimate limitation periods

15(1) Even if the limitation period established by any other
    section of this Act in respect of a claim has not expired, no proceeding shall
    be commenced in respect of the claim after the expiry of a limitation period
    established by this section.

General

(2) No proceeding shall be commenced in respect of any claim
    after the 15th anniversary of the day on which the act or omission on which the
    claim is based took place.

[56]

Section
    18 of the
Limitations Act, 2002
, the section directly in issue in this
    appeal, provides:

Contribution and indemnity

18(1) For the purposes of subsection 5(2) and section 15, in
    the case of a claim by one alleged wrongdoer against another for contribution
    and indemnity, the day on which the first alleged wrongdoer was served with the
    claim in respect of which contribution and indemnity is sought shall be deemed
    to be the day the act or omission on which that alleged wrongdoers claim is
    based took place.

Application

(2) Subsection (1) applies whether the right to contribution
    and indemnity arises in respect of tort or otherwise.

[57]

Decisions
    of the Ontario Superior Court of Justice are split on the proper interpretation
    of s. 18. The leading case favouring the absolute two-year limitation period
    interpretation preferred by the motion judge is
Miaskowski (Litigation
    guardian of) v. Persaud
, 2015 ONSC 1654, 51 R.P.R. (5th) 234, at paras.
    94-97, reversed in part 2015 ONCA 758, 393 D.L.R. (4th) 237. To the contrary,
Demide
    v. Attorney General of Canada et al.
, 2015 ONSC 3000, 47 C.L.R. (4th) 126,
    at paras. 84-95 is the most fully reasoned case holding that s. 18 simply
    identifies the presumptive trigger date for the limitation period for
    contribution and indemnity claims, subject to discoverability principles.

[58]

This
    court has not yet settled the matter. There are passages in
Canaccord
    Capital Corp. v. Roscoe
, 2013 ONCA 378, 115 O.R. (3d) 641 that appear to
    favour the absolute limitation period interpretation. By contrast, there are passages
    in

Placsek v. Green
, 2009 ONCA 83, 307 D.L.R. (4th) 441,
Waterloo
    Region District School Board v. Truax Engineering Ltd.
, 2010 ONCA 838, 103
    O.R. (3d) 81, and
Levesque v. Crampton Estate
, 2017 ONCA 455, 136 O.R.
    (3d) 161, reconsideration refused 2018 ONCA 75 that seem to support the
    presumptive trigger date interpretation. None of these cases, however, engage
    or purport to resolve the question of how s. 18 is to be interpreted.

[59]

The
    interpretation of s. 18 therefore falls to be determined by applying the
    principles of statutory interpretation affirmed in
Rizzo & Rizzo Shoes
    Ltd. (Re)
, [1998] 1 S.C.R. 27, at para. 21, citing E. A. Driedger,
Construction
    of Statutes
, 2nd ed. (Toronto: Butterworths, 1983), at p. 87:

Today there is only one principle or approach, namely, the
    words of an Act are to be read in their entire context and in their grammatical
    and ordinary sense harmoniously with the scheme of the Act, the object of the
    Act, and the intention of Parliament.

See also
Bell ExpressVu Ltd. Partnership v. Rex
,
    2002 SCC 42, [2002] 2 S.C.R. 559, at para. 26;
Indalex Ltd., Re
, 2013 SCC
    6, [2013] 1 S.C.R. 271, at para. 136; and
Schnarr v. Blue Mountain Resorts
    Limited
, 2018 ONCA 313, at para. 23.

[60]

I
    note that, as this issue involves a question of law with respect to statutory
    interpretation on appeal from a judicial decision, the standard of review is
    correctness:
Housen v. Nikolaisen
, 2002 SCC 33, [2002] 2 S.C.R. 235,
    at para. 8;
Harvey v. Talon International Inc.
, 2017 ONCA 267, 137
    O.R. (3d) 184, at para. 32; and
Blue Mountain
, at para. 22.

[61]

The
    words in s. 18, interpreted in their grammatical and ordinary sense, do not establish
    an absolute limitation period. The provisions in the
Limitations Act, 2002

that do establish finite limitation periods, such as ss. 4, 15(1), 15(2),
    and 15(3), direct that a proceeding shall not be commenced or no proceeding
    shall be commenced after a described limitation period. Section 18, on the
    other hand, does not use such language or speak in any other terms that can be
    read as imposing an absolute limitation period, nor does it even identify a
    time span that could serve as a limitation period.

[62]

On
    its face, s. 18 does no more than deem a fact without disclosing the
    significance of that deemed fact. Specifically, it directs that the day on
    which a party is served with the claim in respect of which they seek
    contribution or indemnity, is deemed to be the day the act or omission on which
    that alleged claim is based took place. As this court similarly described in
Levesque
,
    at para. 39, s. 18 is obviously intended to work harmoniously along with other
    provisions of the
Limitations Act, 2002

to give this deemed
    fact meaning.

[63]

In
    my view, s. 18 takes on meaning when it is linked to the
Limitations Act,
    2002
, s. 5(2). Subject to the absolute 15-year limitation period in s. 15(2),
    ss. 5(2) and 18 together establish the presumptive limitation period for
    contribution and indemnity claims

a presumptive limitation period that incorporates the
    discoverability principles outlined in ss. 4 and 5(1). I emphasize the
    interaction between ss. 5(2) and 18 for two reasons.

[64]

First,
    s. 18 is linked expressly to s. 5(2) in its opening phrase, For the purposes
    of subsection 5(2) and section 15. In my view, this opening phrase cannot be
    read as a direction to exclude contribution and indemnity claims from the
    operation of ss. 5(2) and 15, as was suggested in
Hughes v. Dyck
, 2016
    ONSC 901, 129 O.R. (3d) 495, at para. 37. The clause for the purposes of
    invokes these provisions. It simply cannot properly be read as dispensing with these
    provisions as if it said, Notwithstanding subsection 5(2) and section 15.

[65]

Second,
    the thing or fact that s.18 deems to have occurred is the same thing or fact that
    is used in s. 5(2) as the trigger for the presumptive limitation period in ss. 4
    and 5. Section 18 deems the day on which the first alleged wrongdoer was
    served with the claim in respect of which contribution or indemnity is sought
    [to be]
the day the act or omission on which the alleged
    wrongdoers claim is based took place
. Meanwhile, s. 5(2) treats 
the day the act or omission on which the claim is based took
    place
 to be the day on which a person with a claim is presumed to know that
    they have a claim within the meaning of s. 5(1). Section 5(2) is the only other
    provision in the
Limitations Act, 2002
apart from s. 18 that uses the
    operative phrase that I have underlined in the preceding sentences. The two
    sections are clearly meant to intersect and work together. In effect, s. 18
    provides the variable used in s. 5(2) as the trigger for the presumed
    limitation period for contribution and indemnity claims.

[66]

Put
    more directly, and incorporating s. 18s deemed fact into the text of s. 5(2):

A person with a claim [for contribution and indemnity] shall be
    presumed to have known of the matters referred to in clause (1)(a) on the day
    [on which that person was served with the claim in respect of which
    contribution or indemnity is sought], unless the contrary is proved.

[67]

Sections
    18 and 5(2), in my view, work hand in glove in contribution or indemnity claims.
    Together, these two provisions identify the presumptive limitation period that
    applies in contribution and indemnity claim cases.

[68]

In
    this way, s. 18 works not as an exception to the basic limitation period in
    s. 4 of the
Limitations Act, 2002
, but as part of the integrated
    scheme established by ss. 4 and 5.

[69]

The
    claim that s. 18 establishes an absolute limitation period also encounters
    difficulty, in my view, when its connection to s. 15 is considered. Section 15,
    of course, is the other
Limitations Act
, 2002
provision apart
    from s. 5(2) that s. 18 invokes expressly in its opening phrase, For the
    purposes of subsection 5(2) and section 15. As indicated, s. 15 imposes a
    15-year cap on all limitation periods, regardless of discoverability concerns. The
    difficulty is that if s. 18 does establish an absolute two-year limitation
    period, then s. 15s ultimate limitation period would not be relevant. Why then
    would s. 18 cross-reference s. 15? As a majority of the Supreme Court recently
    reaffirmed in
British Columbia Human Rights Tribunal v. Schrenk
, 2017
    SCC 62, [2017] 2 S.C.R. 795, at paras. 45-46, it is presumed that the
    Legislature avoids superfluous or meaningless words. There is a presumption
    that the words of a statute are to be interpreted in a way that avoids a mere
    surplusage of words.

[70]

In
    saying this, I am mindful that ss. 15(4) to 15(6) refine when limitation
    periods run, and that these provisions could work with an absolute two-year
    limitation period. In my view, it is unlikely that the Legislature would have
    invoked s. 15 in its entirety in s. 18 if it simply wanted these select
    subsections of s. 15 to apply to s. 18. The most logical conclusion is that all
    subsections of s. 15 that are capable of being interpreted harmoniously with s.
    18 were intended to work with s. 18.

[71]

The
    integrated legislative scheme I have just described is not only driven by the
    language of s. 18 and the
Limitations Act, 2002

taken as a
    whole, it is also in keeping with the object of the Act.

[72]

I
    appreciate that the
Limitations Act, 2002
was passed to promote
    certainty and finality, and that certainty and finality could better be
    achieved by a fixed limitation period in s. 18:
Miaskowski
, at para.
    95; and
Hughes
, at para. 37. As Sharpe J.A. pointed out in
Canaccord
    Capital
, at para. 17, however, the reform of the law of limitations in
    Ontario was aimed at creating a clear and cohesive scheme for addressing
    limitation issues, one that balances the plaintiffs right to sue with the
    defendants need for certainty and finality. As the basic limitation period
    in s. 4, combined with the discoverability principles in s. 5 demonstrate, that
    balance is generally achieved in the
Limitations Act, 2002
by adopting
    short limitations periods triggered by presumed knowledge of a claim, but
    subject to rebuttal based on the discoverability principles. There is no reason
    why a similar balance would not have been intended for contribution and
    indemnity claims.

[73]

Indeed,
    I agree with the observations of Leach J. in
Demide
, at para. 88.
    There is an element of injustice in using a limitation period to deny a claim
    that could not have been discovered with reasonable diligence, and the court
    should be reluctant to adopt a legislative interpretation that permits the
    possibility of such an injustice, unless that is the outcome clearly dictated
    by the legislation. In my view, that outcome is not clearly dictated by s. 18.
    On the contrary, the opposite outcome is indicated.

[74]

I
    would therefore hold that the motion judge erred in his interpretation of s.
    18. The two-year limitation period prescribed by ss. 4, 5(2), and 18 for
    contribution and indemnity claims presumptively begins on the date of service
    of a claim in respect of which contribution and indemnity is sought. That
    presumptive limitation period start date, however, can be rebutted by the
    discoverability principles prescribed in s. 5 of the
Limitations Act, 2002
.

[75]

There
    is a further problem with the motion judges interpretation of s. 18 that
    requires mention. At para. 49 of his reasons, he stated that the date when the
    time [against both Mr. Yungs and Ms. Lais claims] begins to run is from the
    date of service of the Statement of Claim on Lai (the first wrongdoer). The
    suggestion that the limitation periods for both Mr. Yung and Ms. Lai commenced
    with the service of Mega Internationals statement of claim upon Ms. Lai is incorrect.
    Mr. Yungs presumptive limitation period commences when he was served, not when
    Ms. Lai was served.

[76]

It
    is likely that the motion judge made this error by misinterpreting the
    reference in s. 18 to the first alleged wrongdoer. Properly understood, this
    is not a reference to the first wrongdoer to be served by a plaintiff in a case
    involving multiple wrongdoers. The term first alleged wrongdoer is meant to identify
    which of the two wrongdoers already mentioned in s. 18  the wrongdoer claiming
    contribution and indemnity and the wrongdoer that the contribution and
    indemnity claim is brought against  is being referred to in the balance of s. 18.
    It is helpful to reproduce and emphasize the relevant terms in s. 18 to make
    this point:

18(1) For the purposes of subsection 5(2) and section 15,
in the case of a claim by one alleged wrongdoer against another
for contribution and indemnity,
the day on which the
    first alleged wrongdoer was served
with the claim in respect of which
    contribution and indemnity is sought shall be deemed to be the day the act or
    omission on which that alleged wrongdoers claim is based took place.

[77]

The
    motion judge therefore erred when he stated that Mr. Yungs and Ms. Lais
    claims were barred by an absolute two-year limitation period that was triggered
    when Ms. Lai was served. He should have held that the presumptive limitation
    periods against Mr. Yung and Ms. Lai run separately, depending on when each of
    the them was served, and he should then have gone on to resolve the
    discoverability issue.

B.      Can the Motion Judges Fraudulent Concealment
    Findings be used as Indirect Discoverablity Findings such that Mr. Yungs and
    Ms. Lais claims are statute-barred?

[78]

In
    law, fraudulent concealment differs from discoverability in its focus and its
    requirements: compare,
e.g., Giroux Estate v. Trillium Health Centre
(2005), 74 O.R. (3d) 341 (C.A.), [2005] O.J. No. 226, at para. 29
per
Moldaver J.A. (as he then was), affirming (2004), 69 O.R. (3d) 689 (S.C.),
    [2004] O.J. No. 557 (describing fraudulent concealment); and
Lawless v.
    Anderson
, 2011 ONCA 102, 276 O.A.C. 75, at para. 22, citing
Aguonie v.
    Galion Solid Waste Material Inc.
(1998), 38 O.R. (3d) 161 (C.A.), [1998]
    O.J. No. 459, at p. 170 (describing the principle of discoverability). The motion
    judge nonetheless made a finding while addressing the fraudulent concealment
    claim that Mr. Sun relies on as resolving the discoverability issue in his
    favour. Specifically, the motion judge found, at para. 57 of his reasons, that
    there was no fraudulent concealment because Mr. Yung and Ms. Lai were aware of
    the essential facts giving rise to a claim against the alleged wrongdoer, Mr.
    Sun.

[79]

In
    my view, the finding that Mr. Yung and Ms. Lai were aware of the essential
    facts giving rise to a claim against Mr. Sun is not a finding of
    discoverability, within the meaning of the
Limitations Act, 2002
, s.
    5(1). I would not, therefore, utilize this holding to dismiss this appeal on
    the basis that the motion judge resolved the discoverability issue indirectly.

[80]

The
    reason the motion judges knowledge finding is not the same as a
    discoverability finding is because the knowledge finding does not resolve the discoverability
    consideration in s. 5(1)(a)(iv) of the
Limitations Act, 2002
with
    respect to whether the party with the claim knew that bringing the claim was
    legally appropriate:
Brown v. Baum
, 2016 ONCA 325, 397 D.L.R. (4th)
    161, at paras. 20-21; and
Prudential MSH Corporation v. Marr Foster &
    Co. LLP
, 2017 ONCA 325, 135 O.R. (3d) 321, at para. 54. This can be an
    important consideration where, as here, a party claims to be relying on the
    superior knowledge and expertise of the defendant [] in a professional
    relationship:
Prudential MSH Corporation
, at para. 26. The law is
    sensitive to the risks in solicitor-client cases that a lawyer can forestall or
    hide a cause of action against themselves through the advice they give:
Ferrara
    v. Lorenzetti
,
Wolfe Barristers and Solicitors
, 2012 ONCA
    851, 113 O.R. (3d) 401;
Lauesen v. Silverman
, 2016 ONCA 327, 130 O.R.
    (3d) 665. Indeed, this is the very claim that Mr. Yung and Ms. Lai are making.

[81]

It
    would not be appropriate in these circumstances to treat a finding that the
    defendants had knowledge of the main action as a finding that a third party
    claim against their lawyer was discoverable. The motion judge has not overtly
    addressed whether Mr. Yung or Ms. Lai knew it to be legally appropriate to
    bring their third party claims against Mr. Sun. This, in my view, is enough to
    dispose of the appeal.

[82]

However,
    even if it is implicit in the motion judges finding, that Mr. Yung and Ms. Lai
    knew about their claim and that they also knew it to be legally appropriate to
    sue Mr. Sun, I would not import the motion judges factual findings to resolve
    this appeal. In my view, the motion judge erred in principle in deciding to
    conduct the summary judgment motion in the way that he did. As a result, no deference
    is owed to the findings made.

[83]

Before
    identifying and explaining the error in principle I have referred to it is
    important to reaffirm that summary judgment motions under r. 20 are a
    significant alternative model of adjudication, available to improve access to
    justice:
Hryniak

v. Mauldin
, 2014 SCC 7, [2014] 1
    S.C.R. 87, at paras. 34-44. Indeed, where a summary judgment is sought, judges
    are obliged to grant summary judgment where they are satisfied that there is no
    genuine issue requiring a trial:
Hryniak
, at para. 68. There will be
    no genuine issue requiring a trial if the summary judgment process provides
    [the judge] with the evidence required to fairly and justly adjudicate the
    dispute and is a timely, affordable and proportionate procedure:
Hryniak
,
    at para. 66. Moreover, the fact-finding powers in rr. 20.04(2.1) and (2.2)  to
    weigh evidence, evaluate credibility, draw reasonable inferences, or receive
    selected oral evidence  are presumptively available to a summary judgment motion
    judge to use to fairly and justly adjudicate a claim at a motion for summary
    judgment:
Hryniak
, at para. 45.

[84]

Significantly,
    a motion judges exercise of the summary judgment rules attracts deference. Whether
    there is a genuine issue requiring a trial, or whether the fact-finding powers
    in rr. 20.04(2.1) and (2.2) should be used are questions of mixed fact and law.
    Unless the motion judge applies an incorrect principle of law or errs with
    respect to an extricable question of law, these decisions are reviewable only
    for palpable and overriding error:
Hryniak
, at paras. 81-83.

[85]

In
    spite of the deference owed to summary judgment motion judges, this may be one
    of those uncommon cases where, given the nature of the issues and the evidence
    required, the [motion judge] cannot make the necessary findings of fact, or
    apply the legal principles to reach a just and fair determination in a summary
    judgment motion:
Hryniak
, at para. 51. On the motion judges own assessment,
    it was not possible to resolve all the conflicting evidence in the summary judgment
    motion, including, for example, whether Mr. Sun wrote the December 22, 2009
    letter. The conflicting evidence spanned the entire relationship of the
    parties, involved successive complex corporate transactions, cast doubt on the
    content of client instructions, and went to the core of the nature and duration
    of a solicitor-client relationship.

[86]

I
    need not resolve whether this case was unsuitable for summary judgment, because
    even if it was a matter fit for summary judgment, in my view the motion judge committed
    an error of principle making it inappropriate for this court to rely on his
    factual findings about Mr. Yungs and Ms. Lais knowledge of their third party
    claims as dispositive of this appeal.

[87]

Specifically,
    the decision of the motion judge to grant summary judgment was undermined by
    his misinterpretation of the
Limitations Act, 2002
, s. 18. Simply put,
    that error clouded the motion judges understanding of the nature and
    complexity of the case he was being asked to resolve on summary judgment. Had he
    appreciated the nature of the dispute before him,
i.e.
, when Mr. Yung
    and Ms. Lai discovered that it was legally appropriate to commence a third
    party claim against their own lawyer, he may have found a genuine issue
    requiring a trial.

[88]

The
    application of an absolute limitation period, the primary issue the motion
    judge thought he was adjudicating, is generally a relatively straightforward
    factual issue. In contrast, determining discoverability, the issue the motion
    judge should have been adjudicating, is not a relatively straightforward factual
    issue. Indeed, it was believed for a time that, as a general rule,
    discoverability cases should not be decided using summary judgment because of
    their complexity:
Aguonie
, at para. 36. There is no longer a general
    rule to this effect after
Hryniak
,

given the more robust
    approach now being taken to summary judgment:
Charette v. Trinity Capital
    Corporation
, 2012 ONSC 2824, at paras. 69-70,
per
Strathy J. (as he
    then was); and
Kassburg v. Sun Life Assurance Co. of Canada
, 2014 ONCA
    922, 124 O.R. (3d) 171, at para. 52. Still, the basic point remains true.
    Discoverability cases do tend to be contentious and complex, and this can,
    depending on the circumstances, affect their suitability for summary judgment.

[89]

As
    I have indicated, this may be particularly so in claims brought by a client
    against their lawyer where reliance on the lawyer and the risk of abuse of
    power can make clients vulnerable to delaying legal action:
Ferrara
; and
Lauesen
.

[90]

While
    the motion judge did not expressly state that the absolute limitation period he
    believed to apply made the matter conducive to summary judgment, his introductory
    overview to his decision suggests that he took comfort from the absolute nature
    of the limitation period:

Based on the material filed, I am satisfied that the Third
    Party Claim can be determined by way of summary judgment. Section 18 of the Act
    sets out an absolute two year limitation period in respect of Yung and Lais
    Third Party Claim which begins to run from the time the defendants were served
    with the Statement of Claim in the action. As both Lai and Yung were served
    with the Statement of Claim more than two years before the Third Party Claim
    was commenced, the Third Party Claim was commenced after the limitation period
    had expired and cannot succeed.

[91]

Failing
    to appreciate the factual demands of a statutory provision when deciding to
    proceed by summary judgment can be an error in principle. For example, in
Miaskowski
    v. Persaud
, 2015 ONCA 758, 393 D.L.R. (4th) 237, at paras. 42-56,
    reversing in part 2015 ONSC 1654, 51 R.P.R. (5th) 234, the motion judge was
    found to have erred in principle in granting summary judgment without
    appreciating the full demands of the statutory provisions at issue. In that
    case, he did not properly consider the standards imposed by a relevant
    regulation, or whether a landlords statutory duty could be removed by the
    lease. These errors clouded his decision that there was no genuine issue requiring
    a trial.

[92]

The
    same is true here. In my view, the finding that Mr. Yung and Ms. Lai had
    knowledge of their causes of action against Mr. Sun was arrived at in a summary
    judgment motion held without a full appreciation of the complexity of the
    issues at stake. That finding of fact should therefore not be relied upon or
    equated to a finding that could dispose of the issue of discoverability for the
    purposes of the
Limitations Act, 2002
on summary judgment.

CONCLUSION

[93]

I
    would allow the appeal, set aside the summary judgment dismissing Mr. Yungs
    and Ms. Lais third party claims for contribution and indemnity, and order that
    the matter proceed in accordance with the
Rules
.

[94]

The
    parties have agreed on costs. In keeping with their agreement, I would reverse
    the costs order made by the motion judge, and order costs in the motion below
    to the appellants, together, in the amount of $25,000, inclusive of
    disbursements and applicable taxes. I would also award costs of this appeal to
    the appellants, together, in the amount of $25,000, inclusive of disbursements
    and applicable taxes.

Released: May 7, 2018 (D.D.)

David M. Paciocco J.A.

I agree. Doherty J.A.

I agree. I.V.B. Nordheimer
    J.A.


