



COURT OF APPEAL FOR ONTARIO

CITATION: Van Halteren v. De Boer Tool Inc., 2018 ONCA 960

DATE: 20181129

DOCKET: C65232

Hoy A.C.J.O., Feldman and Huscroft JJ.A.

BETWEEN

Jacob Van Halteren

Plaintiff (Appellant)

and

De Boer Tool Inc.

Defendant (Respondent)

Anton M. Katz, for the appellant

Tyler H. McLean, for the respondents Gary De Boer,
    Marcia De Boer and De Boer Tool Inc.

Heard: November 16, 2018

On appeal from the order of Justice James A. Ramsay of
    the Superior Court of Justice, dated March 6, 2018, with reasons reported at
    2018 ONSC 1554, [2018] O.J. No. 1226 (Sup. Ct.).

REASONS FOR DECISION

Overview

[1]

This is an appeal from an order denying the appellant, Jacob Van
    Halteren, leave to amend his statement of claim.

[2]

The motion judge dismissed the appellants motion for leave to amend his
    statement of claim for two reasons, either of which would be a sufficient basis
    for dismissing the appellants motion. First, the motion judge found that the
    proposed amendments raised causes of action that were statute-barred by s. 4 of
    the
Limitations Act
, 2002, S.O. 2002, c. 24, Sched. B. Second, he
    found that the motion for leave to amend the statement of claim was an abuse of
    process. The appellant argues that both findings are tainted by reversible
    error.

[3]

The appellant also seeks leave to appeal the motion judges costs order.

[4]

For the reasons that follow, the appeal is dismissed and leave to appeal
    the costs order is denied.

Background

[5]

Some context is helpful before addressing the issues on appeal.

[6]

This litigation arose out of the appellants attempt to recover the $500,000
    he advanced to the respondent De Boer Tool Inc. (the Corporation) in 2002.

[7]

The appellant commenced his action by Notice of Action on October 17,
    2012. He issued his statement of claim on November 6, 2012.

[8]

The appellant initially based his action on a promissory note said to
    have been executed in 2008 (the 2008 Note). The appellants position, at this
    point in the litigation, was that he was a creditor of the Corporation and had
    not become a shareholder. In its statement of defence dated January 11, 2013,
    the Corporation took the position the 2008 Note was a forgery.

[9]

On May 28, 2013, the appellant sought leave to amend his statement of
    claim (the 2013 Statement of Claim). In particular, he sought to: (1) add the
    respondents Gary De Boer and Marcia De Boer (the directors, officers and shareholders
    of the Corporation) as defendants; and (2) in the alternative to his claim on
    the 2008 Note, plead entitlement to relief under the oppression remedy as a
    creditor or a security holder of the Corporation. The appellant further alleged
    that the De Boers paid themselves dividends on their shares of the Corporation
    to the exclusion of the appellant.

[10]

On
    December 2, 2013, Glithero J. denied the appellants motion for leave to amend
    his statement of claim on the basis that the appellants claims based on
    oppression were statute-barred by the
Limitations Act
,
2002
:
Van
    Halteren v. De Boer Tools Inc.,
2013 ONSC 6736, [2013] O.J. No. 5540 (Sup.
    Ct.).

[11]

Glithero
    J. held that there were no facts pled in the original statement of claim that
    could support a claim for relief in the nature of the oppression remedy. He
    noted that the appellant had taken the position throughout the lawsuit that he
    had never received any shares and relied on a promissory note. He wrote, at
    para. 26:

In my opinion, this is a case where a plaintiff faced with a
    denial of the promissory note upon which the action was originally based, seeks
    to avoid any problems which may arise from alleged forgery of the note, and
    instead switch to a new cause of action in respect of which the
Limitations
    Act
has expired.

[12]

The
    appellant did not appeal the order of Glithero J.

[13]

On
    August 20, 2014, Parayeski J. granted the appellant leave to amend his
    statement of claim, in order to advance a claim based on a separate promissory
    note issued by the Corporation in 2003 (the Original Note), which was re-signed
    by the parties on November 21, 2005. The Original Note was stated to be due on
    demand or by September 1, 2006, whichever came earlier. It was also stated to
    be in force until a share agreement is put in place. No shareholders
    agreement was put in place.

[14]

On
    August 5, 2015, Parayeski J. dismissed the appellants motion for summary
    judgment:
Van Halteren v. De Boer Tool Inc.
, 2015 ONSC 4939, [2015]
    O.J. No. 4136 (Sup. Ct.). He found that the action on the Original Note was
    statute-barred and that the 2008 Note was a forgery and could not ground a
    cause of action or serve as an acknowledgement of the underlying debt. Parayeski
    J.s order was upheld by this court on appeal:
Van Halteren v. De Boer Tool
    Inc.
, 2016 ONCA 559, [2016] O.J. No. 3709 (Sup. Ct.).

[15]

Parayeski
    J. had not dismissed the action. On September 13, 2016, the Corporation moved
    for summary judgment dismissing the action, based on the findings of Parayeski
    J.

[16]

In
    response to the Corporations motion for summary judgment, the appellant moved
    on October 7, 2016 to amend his statement of claim (the 2016 Statement of
    Claim) in order to add Gary De Boer as a defendant, to claim damages for
    fraud, and to seek a declaration that he owns 25% of the common voting shares
    of the Corporation.

[17]

In
    February 2018, before the motion was heard, the appellant sought to further
    amend his proposed statement of claim (the 2018 Statement of Claim). In the
    2018 Statement of Claim, the appellant seeks to add both Gary and Marcia De
    Boer as defendants and seeks a declaration that he is the owner of 12.5% of the
    common shares of the Corporation. He alleges that the respondents deceitfully
    concealed that he was a shareholder. He alleges that had he known he was a
    shareholder, he would not have elected to sue on the basis of a loan. He also
    alleges, seemingly in the alternative, that the De Boers falsely represented to
    him that they would recognize his interest as a shareholder. He repeats the
    allegation in the 2013 Statement of Claim that the Corporation paid dividends,
    but not to him, and again seeks relief under the oppression remedy provisions
    of the
Business Corporations Act
, R.S.O.
    1990, c. B. 16.


[18]

In
    particular, he pleads that the Corporations tax filings for the years 2004
    through 2010, which were disclosed to him on August 22, 2017, show that he is a
    shareholder, but that the Corporations tax returns for 2011 through 2016 show
    that he is no longer a shareholder. He also alleges that, some time after 2010,
    the De Boers converted, or caused the Corporation to convert, his shares.

[19]

The
    motion judge considered the 2018 Statement of Claim.

The Limitation Issue

[20]

The
    appellant asserts  both on this appeal and the motion below  that he only
    discovered his claim to an equity interest in the Corporation, and that his
    interest was converted by the respondents, when the Corporations tax filings
    for the 2004 to 2010 years were disclosed to him on August 22, 2017.
    Accordingly, he maintains that the shareholder based claims in the 2018
    Statement of Claim are not statute-barred.

[21]

The
    motion judge held that s. 16(1)(a) of the
Limitations Act
,
2002,
which
    provides that there is no limitation period in respect of a proceeding for a
    declaration if no consequential relief is sought, did not apply. In the motion
    judges view, the pith and substance of the claim is damages or a property
    interest in shares to compensate for the $500,000 advanced: at para. 6.
    Accordingly, the motion judge held that the applicable prescription was the
    general limitation period of two years after the cause of action is discovered
    or discoverable, pursuant to s. 4 of the
Limitations Act
,
2002
.
    The appellant does not challenge this finding.

[22]

The
    motion judge also found that the appellant discovered that his right to an
    interest in the Corporation, in any form, was disputed no later than later than
    April 8, 2014, when the appellant swore an affidavit in which he acknowledged
    the respondents admission that no shares had been issued to him: at para. 7.
    Since the appellant did not move until October 7, 2016 (more than two years
    after April 8, 2014) to amend his statement of claim to seek a declaration that
    he is or was a shareholder, and to seek consequential relief, his action was
    statute-barred.

[23]

Further,
    in the portion of his reasons addressing the issue of abuse of process, the
    motion judge held that it was
res judicata
that the cause of action
    with respect to the shares had been discovered by December 2, 2013, when
    Glithero J. dismissed the appellants earlier motion for leave to amend to seek
    relief as a shareholder under the oppression remedy: at para. 9.

[24]

On
    appeal, the appellant argues that the motion judge erred by considering the
    appellants own affidavit evidence in rejecting the appellants position that
    he did not discover his possible claim as a shareholder, within the meaning of
    s. 5 of the
Limitations Act
,
2002,
until the Corporations
    tax filings were produced to him in 2017.

[25]

We
    reject this argument. In any event, the motion judges finding was amply
    supported by more than the appellants affidavit evidence.

[26]

As
    the motion judge found, it is clear that the appellant had discovered that he
    had a possible claim as shareholder by December 2, 2013, when he brought his
    motion for leave to amend before Glithero J. to seek relief as a shareholder of
    the Corporation. Further, in his 2016 Statement of Claim, the appellant alleged,
    among other things, that: from 2003 to 2010 the Corporation had provided him
    with financial statements that did not disclose any indebtedness owing to him;
[1]
on November 5, 2010, Gary De Boer confirmed that the appellant had an equity
    interest in the Corporation; and, in 2016, the Corporations bankers had told
    him there was nothing in their files to indicate that he had any interest in
    the Corporation. Thus, based on the appellants own pleadings, he had
    discovered that he had a possible, but disputed, claim as a shareholder arising
    out of the non-payment of the $500,000 before August 22, 2017, when the
    Corporations tax filings were produced to him.

[27]

Given
    our conclusion that the motion judge correctly found that the proposed
    amendments raised causes of action that were statute-barred by s. 4 of the
Limitations
    Act
,
2002
, we need not address the motion judges finding that
    the appellants motion for leave to amend was an of abuse of process.

The Costs Order

[28]

As
    noted above, the appellant also seeks leave to appeal from the motion judges
    costs order.

[29]

Three
    motions were initially before the motion judge: (1) the appellants motion for
    leave to amend his statement of claim; (2) the Corporations motion to stay the
    action for non-payment of costs and/or for security for costs; and (3) the
    Corporations motion for summary judgment, dismissing the appellants action
    against it. The appellant paid the outstanding costs, and the Corporation
    accordingly did not proceed with the motion for security for costs.

[30]

Before
    the remaining motions were heard, the parties agreed that if the appellants
    motion for leave to amend were dismissed, his action would also be dismissed.
    Accordingly, having dismissed the motion for leave to amend, the motion judge
    dismissed the appellants action. The motion judge was left to address the
    issue of costs for the three motions, as well as the costs of the action.

[31]

The
    motion judge found that the appellant was unsuccessful and should pay the costs
    of the action and the three motions. He also concluded that the respondent was
    entitled to costs on a substantial indemnity scale, because the appellant had
    advanced unfounded allegations of fraud and attempted to bring claims that were
    obviously statute-barred. He noted that the respondents had made attempts to
    settle the case, even after the limitations period had expired. Further, he
    noted that the parties had appeared in court 12 times since this court upheld
    the order of Parayeski J. As a result, he concluded substantial indemnity costs
    were required to vindicate the integrity of the administration of justice. The
    motion judge considered the fact that money was advanced by the appellant and
    not repaid, but concluded that costs of $100,000 (less than the full amount
    claimed) were nonetheless appropriate.

[32]

On
    appeal, the appellant argues that the costs awarded were grossly excessive,
    particularly given that the money he advanced to the Corporation was not repaid.
    He also argues there is duplication across the respondents bills of costs for
    the various motions and for the action. He concedes that he had made
    allegations of fraud against the respondents,
[2]
and does
    not argue that the motion judge erred in principle in awarding costs on a
    substantial indemnity scale.

[33]

In
    exercising his discretion, the motion judge specifically considered that the
    money advanced by the appellant was not repaid. The motion judge also reduced
    the substantial indemnity costs the respondent sought by approximately 25%. In
    our view, that reduction must be attributable to, and is a reasonable reduction
    for, duplication of time across the various bills of costs that were before the
    motion judge. The appellant has not identified any error of principle or
    satisfied us that the costs award is plainly wrong. Accordingly, leave to
    appeal the costs order is denied.

Disposition

[34]

The
    appeal is dismissed and leave to appeal the costs order is denied.  The
    respondents shall be entitled to the costs of the appeal, fixed in the agreed
    amount of $12,000, inclusive of HST and disbursements.

Alexandra
    Hoy A.C.J.O.

K.
    Feldman J.A.

Grant
    Huscroft J.A.





[1]
Rather, the financial statements, at least for some years, showed the $500,000
    as forming part of shareholders equity.



[2]
In his 2018 Statement of Claim, the appellant acknowledges that, in addition to
    alleging fraud in his pleadings, he caused the De Boers to be criminally
    charged with fraud. The Crown subsequently dropped the charges.


