



COURT OF APPEAL FOR ONTARIO

CITATION:
Ferrara v. Lorenzetti,
    Wolfe Barristers and Solicitors,
2012 ONCA 851

DATE: 20121204

DOCKET: C54978

Laskin, Sharpe and Epstein JJ.A.

BETWEEN

Antonio Ferrara, Cesan Mechanical
    Limited and 973976
    Ontario Limited

Plaintiffs (Appellants)

and

Lorenzetti, Wolfe Barristers and
    Solicitors, and Stephen
    A. Schwartz

Respondents (Respondents)

Ronald Birken, for the appellants

Michael R. Kestenberg and Aaron Hershtal, for the
    respondents

Heard: June 6, 2012

On appeal from the order of Justice Beth A. Allen of the Superior
    Court of Justice, dated January 6, 2012, with reasons reported at 2012 ONSC 151.

Epstein J.A. (Dissenting):

I.        OVERVIEW

[1]

The issue in this appeal is whether the appellants negligence action
    against the respondents, their former solicitors, is statute-barred.  More
    specifically, the focus is on the determination of the discoverability date 
    the date when it can be said that the appellants knew or reasonably ought to
    have known of their claim against the respondents.  The respondents moved under
    rule 20 of the
Rules of Civil Procedure
,
    R.R.O. 1990, Reg. 194, for judgment dismissing the action as being out of
    time.  The motion judge sided with the respondents and dismissed the action. 
    This appeal is from that decision.

[2]

The motion judge held that the discoverability date was September 19,
    2006, when an action was commenced that brought into question the legal work
    the respondents performed for the appellants in a real estate transaction.  It
    followed from this conclusion that on June 28, 2011, when the appellants sued
    the respondents for professional negligence in relation to that transaction,
    their claim was statute-barred.

[3]

The motion judge also held that the action was an abuse of process, and
    on that additional basis concluded that it should not be allowed to proceed.

[4]

On appeal, the appellants challenge both of these conclusions.

[5]

For the reasons that follow, I would dismiss the appeal.

II.       BACKGROUND FACTS

[6]

The following is a summary of the relevant facts.  None are contested.

[7]

The dispute between the parties began with an agreement of purchase and
    sale of a one-half interest in co-tenancy lands (the Property) that was held
    in trust by King Line Investments. The appellant, Cesan Mechanical Limited,
    with other co-tenants, owned shares in the Property.   In July 2004 Cesan
    offered to purchase the Property and assigned that offer to the appellant,
    973976 Ontario Limited ("973"). The appellant, Antonio Ferrara, is
    the principal and owner of both corporate appellants.  In August 2004, another
    co-tenant made a matching offer.  This offer was assigned to Gason
    Investments.  In the result, each of the 973 offer and the Gason offer became
    proportionate offers to purchase a 50% interest in the Property.

[8]

In order to reduce the land transfer tax on 973's purchase, King Line
    and 973 agreed that in the statement of adjustments involving that aspect of
    the sale of the Property, King Line would credit 973 with an amount equal to
    six times the value of one unit of the co-tenancy (the Rollover Credit).

[9]

The 973 and Gason Offers were scheduled to close in February 2005.
    However, Greenbelt legislation was enacted that adversely affected the
    Propertys development potential and both 973 and Gason refused to close.   As
    a result, on May 9, 2005 King Line brought an action against 973 and Gason (the
    Breach of Contract Action).

[10]

This
    action was settled by Minutes of Settlement in June 2005. The Minutes of
    Settlement provided that 973 would purchase the entire Property in two
    transactions: one on the same terms as 973s February 2005 offer, (the First
    Transaction), and the other on terms similar to the Gason offer.

[11]

After
    closing, a disagreement arose over the Minutes of Settlement and the parties
    intention concerning the Rollover Credit.  King Lines position, if accurate,
    would mean that an error was made in the statement of adjustments and 973 would
    owe King Line $432,926.27.  Unable to persuade 973 of its position, on
    September 19, 2006, King Line commenced an action against 973 for judgment in
    the amount of $432,926.27, and against King Line's real estate solicitors in
    the First Transaction (the Cosman firm) for damages based on professional
    negligence (the Deficiency Action). 973 defended the Deficiency Action on the
    basis that no mistake was made: the statement of adjustments accurately
    reflected the transaction as contemplated in the Minutes of Settlement.  973
    also counter-claimed against King Line for damages arising from a lien King
    Line had registered against the Property. In its reply and defence to
    counterclaim, King Line alleged that the statement of adjustments did not
    accurately reflect the agreement recorded in the Minutes of Settlement.

[12]

Ferrara
    reviewed documentation surrounding the Deficiency Action with his lawyer and
    respondent in this action, Stephen A. Schwartz.  At that point it was apparent
    that King Line was taking the position that the statement of adjustments had
    been improperly prepared, which, if correct, would mean that the appellants
    would suffer a loss.

[13]

The
    appellants retained Graham Smith of Goodmans to represent them in the
    Deficiency Action.  On November 21, 2001, Goodmans delivered a statement of
    defence and counterclaim on behalf of the appellants.  In July 2008 Kevin
    Sherkin of Levine Sherkin Boussidan Barristers started acting for the
    appellants.  Finally, sometime before the commencement of the trial the
    appellants retained Paul Pape as trial counsel.

[14]

The
    trial of the Deficiency Action began on June 22, 2009, before Belobaba J.  The
    issue for determination was whether the parties intended the Rollover Credit to
    be a term and condition of the agreement upon which the First Transaction was
    based.  In his decision released on July 2, 2009, the trial judge found in King
    Lines favour and held that the Rollover Credit was not a term and condition
    of the agreement:
King Line Investments Inc.
    v. 973976 Ontario Ltd.
, [2009] O.J. No. 2747. This decision was
    upheld by the Court of Appeal on May 12, 2010:
King Line Investments Inc. v. 973976 Ontario Ltd.
, 2010 ONCA
    345, [2010] O.J. No. 1984.

[15]

On
    June 28, 2011 the appellants, represented by Michael Kestenberg of Kestenberg,
    Lipkus, Seigel LLP, commenced this action based on the respondents negligence
    in acting for them in the preparation of the Minutes of Settlement and in
    ensuring that the settlement agreement was properly implemented in the First
    Transaction.  They claim damages in the amount of the judgment against them in
    the Deficiency Action and related costs.

[16]

The
    respondents brought the summary judgement motion on the grounds that the
    appellants claim in solicitors negligence is statute-barred by the
Limitations Act, 2002
, c. 24 as amended
    (the 
Act
").

III.      REASONS of the motion
    judge

(i)

Is the action statute-barred?

[17]

The
    appellants argued that the limitation period was triggered by the July 2, 2009
    decision of Belobaba J., thereby placing their statement of claim within the
    statutory window.  The respondents position was that the appellants knew or
    ought to have known that they had a claim against them with the initiation of
    the Deficiency Action in September 2006.  The action was therefore out of time.

[18]

The
    motion judges analysis focused on Ferraras objective knowledge  when a
    reasonable person in his position ought to have known about a potential claim
    against the respondents. At para. 42, she held that there were various points
    in time and occurrences before July 2009 which would cause a reasonable person
    to believe they had a claim against their lawyer.  In the next paragraph, she
    made the following important finding:

I accept the [respondents] position that on an objective
    standard a reasonable person in Ferrara's position would have been alerted to a
    possible claim against Schwartz with the issuance of the claim in the
    [Deficiency Action] on September 19, 2006. After all, the central issue in that
    action was the negligence of King Line's real estate [solicitors] in preparing the
    statement of adjustments which was prepared with Schwartz's involvement.
    Ferrara knew at that time the material facts on which their current claim
    against Schwartz is based. [Citation omitted].

[19]

The
    motion judge considered the appellants argument that, prior to the release of
    Belobaba J.s decision, it was not reasonable for Ferrara to have known that
    the appellants had a claim against the respondents.  Ferrara, a relatively
    unsophisticated man, had been Schwartzs client for 20 years.  Schwartz was intimately
    involved in the entire transaction.  It was reasonable, therefore, for Ferrara
    to trust Schwartz and rely on his repeated assurances that the legal work performed
    for the appellants was correct. The reasonableness of this reliance, they
    argued, was reinforced because, as Ferrara stated in his affidavit, none of the
    experienced litigation lawyers representing the appellants throughout the
    resolution of this dispute  Smith, Sherkin or Pape  recommended that any
    action be taken against Schwartz.

[20]

The
    motion judge rejected these arguments pointing to the fact that the appellants
    had been savvy enough to sue King Lines lawyers, had retained three
    litigation counsel before the date two years prior to the initiation of this
    action in June of 2011.  The motion judge also held that the appellants
    arguments were further impeded by the fact that they had not adduced sufficient
    evidence to support a finding that it was reasonable for them to ignore the
    implications of the Deficiency Action and what followed.

[21]

Relying
    on the decision of Molloy J. in
Kenderry-Esprit
    (Receiver of) v. Burgess, MacDonald, Martin and Younger,
53 O.R.
    (3d) 208, the motion judge held that the proceeding had been brought out of
    time and dismissed the action.

(ii)

Would allowing the solicitors negligence
    action to proceed amount to an abuse of process?

[22]

Although
    the motion judges conclusion that the limitation period was triggered by the
    commencement of the Deficiency Action was dispositive of the matter, she
    nonetheless considered the respondents alternative argument  that this action
    was an abuse of process.

[23]

Here,
    too, the motion judge agreed with the respondents that the same issues to be
    decided in this solicitors negligence action had already been finally
    determined in the Deficiency Action, giving rise to the possibility of
    inconsistent results.

[24]

Again
    relying on Kenderry, the motion judge concluded that the action constituted an
    abuse of process and should not be allowed to proceed.

Iv.     ISSUES

[25]

The
    appellants submit that the motion judge erred:

i.    in
    finding that a reasonable client in the circumstances of the appellants would
    have discovered its claim against the respondents prior to July 2, 2009; and

ii.  in
    concluding that this action constituted an abuse of process.

V.      ANALYSIS

Rule 20 Considerations

[26]

The
    motion judge correctly reviewed the current state of the law pertaining to
    motions for summary judgement and specifically the application of these legal
    principles where dismissal is sought on the basis of an action being
    statute-barred.

[27]

The
    January 1, 2010 amendment to rule 20 gave the court broader authority than
    allowed under the predecessor rule to weigh evidence, evaluate the credibility
    of witnesses and draw any reasonable inference from the evidence. The test
    under rule 20.04(2)(a) is whether there is a "genuine issue requiring a
    trial".

[28]

The
    implications of these changes were extensively considered in this courts
    recent decision in
Combined Air Mechanical
    Services Inc. v. Flesch
, 2011 ONCA 764, 108 O.R. (3d) 1.  At paras.
    50 and 5, the court held:

[that] the passages set out in
Housen [v. Nikolaisen]
,
    at paras. 14 and 18, such as "total familiarity with the case as a
    whole", "extensive exposure to the evidence" and
    "familiarity with the case as a whole", provide guidance as to when
    it is appropriate for the motion judge to exercise the powers in Rule 20.04
    (2.1). In deciding if these powers should be used to weed out a claim as having
    no chance of success or be used to resolve all or part of an action, the motion
    judge must ask the following question: can the full appreciation of the
    evidence and the issues that is required to make dispositive findings be
    achieved by way of summary judgment, or can this full appreciation only be
    achieved by way of a trial?

We think this "full appreciation test" provides a
    useful benchmark for deciding whether or not a trial is required in the
    interest of justice. [Citation omitted.]

[29]

As
    a result of rule 20.04 (2.1), the motion judge can weigh evidence, make
    credibility findings and draw inferences.

Given
    these expanded rights to assess evidence, a motion judge can now determine
    summary judgment when discoverability is a central issue:
Tims Meat, Deli & Grocery Inc. v. Dubinsky,
2010 ONSC 3829, at

para. 22.

[30]

It
    follows that here, the appellants, to successfully defend the motion for
    summary judgment, had to adduce evidence of material facts showing a genuine
    issue to be tried concerning the commencement of the limitation period.  They
    had to put forward their best evidence capable of demonstrating that a trial
    was required in order to determine the discoverability date.

Is the action statute-barred?

Legal principles

[31]

Section
    4 of the
Act
establishes a basic
    limitation period of two years after the day on which the claim is discovered.

[32]

According
    to the principle of discoverability, a cause of action arises for purposes of
    a limitation period when the material facts on which it is based have been
    discovered by the plaintiff by the exercise of reasonable diligence:
Central Trust Co. v. Rafuse
, [1986] 2
    S.C.R. 147 at 224.  This principle is codified in s. 5 of the Act, which reads:

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).

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.

[33]

Subsection
    5(1)(a) is a subjective test.  It requires a determination of when the claimant
    had actual knowledge of the material facts constituting the cause of action. 
    Subsection 5(1)(b) is an objective test.  It requires a determination of when a
    reasonable person in the claimants position would have been alerted to the
    elements of the claim.

[34]

This
    takes me to the centre of the storm: the Deficiency Action and the decision of
    Molloy J. in
Kenderry
, a case
    involving strikingly similar facts, upon which much argument and, as previously
    mentioned, the motion judges reasoning, were based.

[35]

In
    that case, Kenderry, the plaintiff, was a condominium developer.  It brought an
    action against its former solicitor for negligence in the preparation of an
    addendum to a purchase agreement. A dispute between Kenderry and the purchaser
    over the interpretation of the addendum ended in a trial in which the purchaser
    was successful  the trial judge held that the addendum did not reflect
    Kenderrys intention.  As a result, Kenderry sued its solicitor.  On the
    solicitors motion for summary judgment dismissing the action on the basis that
    it was statute-barred, Kenderry submitted that the claim was only discovered
    when judgment was delivered in favour of the purchaser.

[36]

Molloy
    J. concluded that the limitation period began to run when it was reasonably
    clear to Kenderry that there was a problem with the addendum.  She held that
    by the time Kenderry filed its defence and counterclaim it should have been
    aware that, if it were wrong in its interpretation and the purchasers were
    right, it had a potential claim against its solicitors.  Molloy J. also found
    that due to the Addendums lack of complexity, Kenderry must also be taken to
    have been reasonably aware of the possibility that the Purchasers would be
    successful:
Kenderry
at para.
    20.

[37]

In
    her reasons, Molloy J. considered the application of the general
    discoverability rule in
Central Trust
,
    expressing the view that
the decision
does
    not stand for the proposition that the limitation period is necessarily
    triggered by the initiation of an action challenging the validity of a document
    prepared by a solicitor, but rather that the commencement of such an action is
    the earliest possible date for discoverability.  She wrote:

Once the issue of invalidity [of a document] is raised, the
    plaintiff is on notice that there may be a problem and must exercise reasonable
    diligence to determine whether there are facts giving rise to a cause of
    action. The date upon which the plaintiff can be said to be in receipt of
    sufficient information to cause the limitation period to commence will depend
    on the circumstances of each particular case. [Emphasis added.]

See also
Indcondo
    Building Corp. v. Steeles-Jane Properties Inc.
, 14 C.P.C. (5th)
    117, at para. 14.

[38]

Molloy
    J.s reasoning in
Kenderry
is compelling. 
    However, it is important to note that she made a point of emphasizing that the
    limitation period in a solicitors negligence action does not necessarily
    commence when a proceeding is initiated challenging the solicitors legal
    work.  As in all cases, the determination of the commencement of the limitation
    period will depend on the particular facts.

Application of the Legal Principles to the
    Facts

[39]

The
    Deficiency Action, commenced in September 2006, centred on the differences
    between King Line and 973 arising out of the Minutes of Settlement and the
    actions taken in implementation of that agreement  all of which was the work
    product performed by their respective solicitors.    King Line, in its
    statement of claim, alleged that its solicitors had been negligent and claimed
    damages against the Cosman firm arising specifically out of its approving the
    outdated and inappropriate statement of adjustments prepared by 973. This
    reference to 973, of necessity, had to mean its solicitors, the respondents. In
    its reply and defence to counterclaim, King Line went further and explicitly
    implicated the respondents by referring to their participation in the
    preparation of the impugned statement of adjustments.

[40]

Strictly
    applied, the reasoning in
Kenderry
would support the conclusion that the Deficiency Action provided Ferrara with
    sufficient appreciation of the material facts to understand that the appellants
    had a claim against the respondents.  In September 2006, Ferrara understood the
    issues in the Deficiency Action.  He understood that the legal services the
    respondents provided the appellants in relation to what was in dispute were
    being challenged.  He understood that the appellants would suffer a loss if
    King Line were to be successful in that action.

[41]

However,
    as counselled by Molloy J. in
Kenderry
,
    each case must be determined having regard to its own circumstances.

[42]

As
    they did before the motion judge, on appeal the appellants argue that the
    circumstances here are distinguishable in a material way.  They submit that
    before the release of Belobabas reasons, they had no reason to believe that
    they were actually exposed to a loss let alone that they had a claim against
    the respondents.  In fact, they had every reason to believe otherwise. 
    Schwartz,  who was directly involved in the transaction and who had been
    Ferraras lawyer for over 20 years, assured him from the start and indeed all
    the way through the Deficiency Action litigation, that King Line would not
    succeed.  Moreover, according to Ferraras affidavit evidence, none of the
    litigation lawyers who had acted for the appellants throughout the proceedings
    recommended that they sue the respondents.

[43]

With
    respect, I am of the view that the motion judge erred in holding that the
    appellants knew or ought to have known they had a claim against the respondents
    at the time the Deficiency Action was initiated. The objective assessment of
    the discoverability date required a determination of when a reasonable person
    with the abilities and in the circumstances of Ferrara, first ought to have
    known not only of his loss (or potential loss) but also of the fact that the
    act or omission causing the loss was that of the respondents.  To conclude that
    when the Deficiency Action was commenced a reasonable person in Ferraras
    circumstances ought to have known that he would suffer a loss that was caused
    by the respondents, would be to say that it was reasonable for Ferrara to have
    distrusted his lawyer simply on the basis that his advice had been called into
    question.

[44]

The
    very nature of the adversary process demonstrates the perversity of such a
    conclusion.  Litigation is premised on opposing views.  Each party represented
    by counsel is presumably relying on the advice of his or her counsel that their
    position has merit.  Through the litigation process, this advice is implicitly
    being challenged.  To tell the appellants that they made the mistake of relying
    on their own lawyers and then allow these lawyers to use this erroneous
    reliance to support their position that the action was commenced out of time
    would reward a particularly pernicious violation of solicitor-client trust.

[45]

However,
    in my view, the reasonableness of the appellants forbearance to sue the
    respondents changed when they retained litigation counsel to represent them 
    Goodmans in November of 2006, followed by Sherkin in 2008 and Pape, just prior
    to trial.

[46]

Ferrara
    says in his affidavit that these lawyers did not suggest to him that the
    appellants had a claim against the respondents. This assertion is difficult to
    accept.  First, it begs the question of why these lawyers and their firms have
    not been named as defendants in this action.  Second, given the issues raised
    in the Deficiency Action and the way in which they were described by Belobaba
    J., the implication being that it should have been relatively easy for Schwartz
    to have identified his error, and the level of experience of these lawyers, it
    is a difficult assertion to accept without clear and convincing evidence.

[47]

If
    Ferraras assertion is not accepted then he has no explanation as to why, after
    seeking the counsel of not one but three other senior lawyers, it remained
    reasonable for him not to appreciate that he had a claim against the
    respondents until the decision of Belobaba J. was released.

[48]

But
    for Ferraras bald assertion there was no such evidence.  As mentioned, there
    was nothing in the record from the lawyers.  No affidavits were filed.  No
    documents were produced.  No explanation for this lack of evidence was
    provided. By failing to adduce any further evidence the appellants asked the
    motion judge to make a finding critical to their defence to the motion that was
    not supported by the quality of evidence mandated by the rule and by the
    jurisprudence.

[49]

In
Combined Air
, at para. 56, this
    court reinforced the warning previously expressed in
Transamerica Life Insurance Co. of Canada v. Canada
    Life Assurance Co.
(1996), 28 O.R. (3d) 423 at 434 (Gen. Div.),
    that a party is not entitled to sit back and rely on the possibility that more
    favourable facts may develop at trial.  Each side must advance their best case
    and put forward the evidence on which they rely with respect to the material
    issues to be tried.   The court is entitled to assume that the parties have met
    this obligation:
1061590 Ontario Ltd. v.
    Ontario Jockey Club
, 21 O.R. (3d) 547 (C.A.) and
Dawson v. Rexcraft Storage and Warehouse Inc.
(1998), 164 D.L.R. (4th) 257 at 265, (Ont. C.A.).

[50]

In
    my view, a bald assertion, even one that remains unchallenged, made in
    circumstances such as this where supporting evidence must be presumed to be
    readily available, cannot defeat a motion for summary judgment. The parties
    must lead evidence that the court can weigh and from which it can draw
    inferences.

[51]

Here, the respondents had the burden of leading trump or risk losing. 
    They failed to lead trump  evidence from their lawyers  and lost.

[52]

I
    agree, therefore, that this action is statute-barred.  However, I do so for
    reasons that differ slightly from those of the motion judge.  In my view, when
    the Deficiency Action was commenced it was reasonable for the appellants to
    rely on the assurances of Schwartz.  It therefore cannot be said that they
    reasonably should have known they had a claim against the respondents. 
    However, the evidence does not support a finding that after the appellants
    retained independent litigation counsel, continuing to maintain this position
    remained reasonable.

[53]

I
    would therefore not give effect to this ground of appeal.

Abuse of Process

[54]

While
    in the light of my conclusion concerning the operation of the limitation period
    to preclude this actions proceeding, it is not necessary to consider the abuse
    of process issue, a brief comment is warranted.

[55]

The
    authority to dismiss an action that is an abuse of process derives from rule
    21.01(3)(d) of the
Rules of Civil Procedure
as well as the inherent jurisdiction of the courts. In
Toronto (City) v. Canadian Union of Public Employees
    (C.U.P.E.), Local 79
, 2003 SCC 63, [2003] 3 S.C.R. 77
,
the Supreme Court held at para. 35 that
    [j]udges have an inherent and residual discretion to prevent an abuse of the
    courts process. This concept of abuse of process was described at common law
    as proceedings unfair to the point that they are contrary to the interest of
    justice. (Citation omitted).


[56]

Arbour
    J., writing the principal reasons for the majority, also stated at para. 37
    that:

Canadian courts have applied the doctrine of abuse of process
    to preclude relitigation in circumstances where the strict requirements of
    issue estoppel (typically the privity/mutuality requirements) are not met, but
    where allowing the litigation to proceed would nonetheless violate such
    principles as judicial economy, consistency, finality and the integrity of the
    administration of justice.

[57]

As
    I previously noted, the motion judge, in concluding that this action would be
    an abuse of process, again relied on
Kenderry
. 
    In that case Molloy J., in considering the abuse of process argument, noted
    Finlayson J.A.s reasoning in
Canam
    Enterprises Inc. v. Coles
(2000), 51 O.R. (3d) 481, affd 2002 SCC
    63, [2002] 3 S.C.R. 307, at para. 34, that:

[T]he Courts must be vigilant to ensure that our system does
    not become clogged with unnecessary, repetitious litigation. To allow the
    defendant to retry the issue  would be a classic example of abuse of process
    and a waste of the time and resources of the litigants and the Court. The
    retrying of the issues in this case would also erode the principle of finality
    that is crucial to the proper administration of justice.

[58]

As
    found by the motion judge, the appellants were raising an issue that could have
    been raised in the Deficiency Action and there was a danger of inconsistent
    findings if the proceeding were to continue.

[59]

I
    agree.  The appellants did not bring the respondents into the Deficiency Action
    when they were able to.  As indicated, the record does not contain evidence
    explaining why they failed to take this step when they could have and should
    have. This failure not only potentially leads to inconsistent results but also
    may compromise the respondents ability to defend the action due to the fact
    that the appellants, in their statement of claim and reply have pleaded issue
    estoppel.  Given the absence of evidence supporting an explanation why this
    step was not taken within time, I would not interfere with the exercise of the
    motion judges discretion to dismiss this action based on abuse of process.

[60]

I
    would therefore not give effect to this ground of appeal.

VI.     DISPOSITION

[61]

For
    these reasons, I would dismiss the appeal.  The respondents are entitled to
    their costs.  I would fix these costs in the amount of $7,500, including
    interest and applicable taxes.

Gloria Epstein
    J.A.




Laskin
    J.A.:

A.

introduction

[62]

I
    have read the reasons of my colleague, Epstein J.A., and I am unable to agree
    with them.

[63]

The
    principal question on this appeal is: should Ferrara have discovered his claim
    for damages for Schwartzs alleged negligence before July 2, 2009, the date of
    the judgment of Belobaba J. in the deficiency action?  My answer is no.  A
    secondary question is: should this action be dismissed as an abuse of process? 
    Again, my answer is no.

[64]

Accordingly,
    I would allow the appeal, dismiss Schwartzs motion for summary judgment, and
    grant Ferraras cross-motion, by declaring that his action is not barred by the
Limitations Act, 2002
.

B.

the  motions

[65]

Both
    Schwartz and Ferrara moved for summary judgment.  Both before the motion judge
    and in this court they agreed that the date Ferraras claim against Schwartz
    was discoverable could and should be decided by summary judgment.  Were it not
    for their agreement, I might have been inclined to dismiss both motions and
    order a trial.

[66]

However,
    I accept the parties agreement.  Thus, we have three choices for the date when
    Ferraras claim was discoverable:

(1)

September 2006 - The motion judge says Ferraras claim was discoverable
    on the date the statement of claim was issued in the deficiency action.

(2)

November
    2006 - Epstein J.A. disagrees with the motion judge and says the claim was
    discoverable on the date Ferrara retained litigation counsel in the deficiency
    action.

(3)

July
    2009 - Ferrara says the claim was discoverable on the date Belobaba J. released
    his decision in the deficiency action.

[67]

For
    the reasons that follow, I accept Ferraras position.

C.

background facts

[68]

My
    colleague has concisely summarized the relevant facts.  Several of these facts
    deserve emphasis.  They are as follows:

(1)

As my colleague points out, Ferrara was a relatively unsophisticated
    client.  He was 60 years old, worked as a plumbing contractor and had little
    formal education.

(2)

The solicitor-client relationship between Schwartz and Ferrara was
    long-standing.  Schwartz had acted for Ferrara for over 20 years.

(3)

Schwartz continuously and repeatedly assured Ferrara that he, Schwartz,
    was right, and that Ferrara was entitled to a rollover credit.  Schwartz gave
    Ferrara these assurances not only before the deficiency action began but, as well,
    throughout the course of that action.

(4)

Schwartz never once advised Ferrara that he may have been wrong or may
    have made a mistake.

(5)

Schwartz did not fulfill his professional obligation to inform his
    client, Ferrara, of his possible error.  Rule 6.09 of the Law Society of Upper
    Canadas
Rules of Professional Conduct
requires that when a lawyer
    discovers an error that may be damaging to the client, the lawyer shall
    promptly inform the client of the error.  Schwartz did not comply with Rule
    6.09.

(6)

Ferrara gave evidence that none of the three litigation lawyers he
    retained in the deficiency action recommended suing Schwartz.  Ferrara was not
    cross-examined on his evidence and Schwartz filed no contradictory evidence.

(7)

Ferrara maintains that Schwartz participated actively in the deficiency
    litigation and helped to direct the defence.  At the very least, Schwartz testified
    in support of his position that the minutes of settlement authorized the
    rollover credit in favour of his client, Ferrara.

(8)

Ferraras action against Schwartz was commenced less than two years
    after the decision of Belobaba J.

D.

analysis

(1)

Ferraras claim against Schwartz was not
    discoverable before July 2, 2009

[69]

Ferrara
    was required to start his action within two years of the day on which his claim
    against Schwartz was discovered.  Section 5 of the
Limitations Act, 2002
sets out when a claim is discovered.  Subsections 5(1) and (2) state:

(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).

(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.

[70]

Ferrara
    maintains that he did not know he had a claim against Schwartz until Belobaba
    J.s decision in the deficiency action.  However, I agree with the motion judge
    and Schwartz that the date Ferraras claim was discoverable turns on the
    modified objective test in s. 5(1)(b) of the Act.  And I accept that Ferrara
    must meet the presumption in s. 5(2).  In my opinion, Ferrara has shown that a
    reasonable person with his abilities and in his circumstances would not have
    known he had a claim against Schwartz until July 2, 2009, the date of Belobaba
    J.s decision.

[71]

My
    colleague relies on Molloy J.s comment in
Kenderry-Esprit (Receiver of) v.
    Burgess, MacDonald, Martin and Younger
(2001), 53 O.R. (3d) 208,
at para. 19: The date upon which the
    plaintiff can be said to be in receipt of sufficient information to cause the
    limitation period to commence will depend on the circumstances of each particular
    case.

[72]

I
    agree with this comment.  In the present case, two circumstances in
    combination support my conclusion that Ferraras claim against Schwartz was not
    discoverable before July 2, 2009: Schwartzs repeated assurances that he was
    right; and Ferraras uncontradicted evidence that no one told him otherwise. 
    The combination of these two circumstances distinguishes this case from the
    other cases relied on by Schwartz.

[73]

First,
    Schwartzs assurances.  Schwartz repeatedly told Ferrara, even during the
    deficiency action itself, that Ferrara was entitled to a rollover credit. 
    Never once did he tell Ferrara that he may have been wrong.  So, Schwartzs
    position comes down to this:

I told you all along that I was right and that you were
    entitled to the rollover credit; I never told you that I may have made a
    mistake; and I never complied with my professional obligation under r. 6.09 of
    the
Rules of Professional Conduct
to inform you of my possible error. 
    However, you should still have known that you had a claim against me once the
    deficiency action started.

Respectfully, it ill lies for Schwartz to take this
    position.  I doubt any lawyer would have been justified taking this position
    against his own client, but certainly not a lawyer who had acted for his client
    for over 20 years and no doubt gained the complete trust and confidence of the
    client during that long relationship: see
Sheeraz v. Kayani
(2009), 99 O.R. (3d) 450
, at paras.
    48-49;
Charette v. Trinity Capital Corp.
, 2012 ONSC 2824, 2012 D.T.C.
    5100, at paras. 97-102.

[74]

Second,
    Ferraras uncontradicted evidence.  Ferrara gave evidence, unchallenged, that
    no one  not Schwartz and not any of the three litigation lawyers he retained
    in the deficiency action  told him that he had a potential claim in negligence
    against Schwartz.  Nonetheless, Schwartz, the motion judge and my colleague give
    Ferraras evidence virtually no weight because it is not buttressed by the
    evidence of the three litigation lawyers.

[75]

Schwartz
    says that Ferraras evidence is self-serving and an adverse inference should
    be drawn because of the absence of affidavit evidence from the three litigation
    lawyers.  The motion judge, at para. 48 of her reasons, said that Ferraras
    evidence is a bald assertion and does not comply with his obligation to put
    his best foot forward.  Similarly, Epstein J.A. says that [Ferraras]
    assertion is difficult to acceptwithout clear and convincing evidence and
    that [b]ut for Ferraras bald assertion there was no such evidence.

[76]

I
    would make two points in response.  First, I think it unfair to criticize Ferrara
    for a bald assertion.  The assertion of a negative, that something did not
    occur, is necessarily bald.  Invariably the person making the assertion can
    say little more than that it did not happen.

[77]

Second,
    I do not accept that to meet his obligation to put his best foot forward,
    Ferrara was obliged to file the affidavits of his three litigation lawyers.  He
    gave sworn evidence that none of the said litigation counsel recommended that
    any action be taken against Schwartz either by way of third party action
    against Schwartz or otherwise.  By giving this evidence he impliedly waived
    the right to claim solicitor-client privilege for any advice his litigation
    counsel may have given him about suing Schwartz in negligence.

[78]

In
R. v. Youvarajah
, 2011 ONCA 654, 107 O.R. (3d) 401, this court discussed
    the circumstances under which a party may have impliedly waived
    solicitor-client privilege, at paras. 147 and 153:

[A]n implied waiver of solicitor-client privilege may occur
    where fairness requires it and where some form of voluntary conduct by the
    privilege holder supports a finding of an implied or objective intention to
    waive it.



[I]mplied waiver has been found to occur in situations where a
    party brings the suit or raises an affirmative defence that makes his intent
    and knowledge of the law relevant[Internal citations omitted.]

[79]

Ferrara
    voluntarily disclosed that in his communications with his three litigation
    lawyers he was not advised he had a potential claim against Schwartz.  This
    disclosure made his knowledge of whether he could sue Schwartz a relevant issue. 
    His disclosure, thus, showed an implied intention to waive his solicitor-client
    privilege.

[80]

Schwartz,
    therefore, could have cross-examined Ferrara on the advice he received.  But
    Schwartz chose not to do so.  Schwartz could have subpoenaed the litigation
    counsel and examined them to obtain their evidence for the motions.  Schwartz
    chose not to do so.  And Schwartz could have sought to file their affidavit evidence
    in reply.  Again, he chose not to try to do so.  In my view, Ferraras evidence
    that no one told him he had a negligence claim against Schwartz is entitled to
    considerable weight.

[81]

The
    combination of Schwartzs repeated assurances that he was right and had not
    made a mistake, and Ferraras unchallenged evidence that no one told him about
    a potential negligence claim against Schwartz, support my conclusion that the
    claim was not discoverable before July 2, 2009.

(2)

This action is not an abuse of process

[82]

The
    motion judge also dismissed this action as an abuse of process.  In her view,
    Ferraras failure to name Schwartz as a defendant in the deficiency action
    raised the possibility of inconsistent results.  Epstein J.A. agrees with the
    motion judge.  She notes that there is no evidence in the record explaining why
    the appellants elected not to join the respondents when they could have and
    should have.

[83]

I
    do not consider this action an abuse of process.  First, the evidence in the
    record explains why Ferrara did not join Schwartz as a defendant in the
    deficiency action.  It is the same evidence that explains why Ferrara did not
    discover his claim against Schwartz earlier.  That evidence is Schwartzs
    repeated assurances that he was correct about the rollover credit, and Ferraras
    unchallenged assertion that none of his litigation counsel told him to sue
    Schwartz.  In this sense, the abuse of process argument fails for the same
    reason as the discoverability argument.

[84]

Second,
    the possibility of inconsistent results between the two actions is
    non-existent.  The only issue in the present action is whether Schwartz was
    negligent.  That Ferrara is not entitled to a rollover credit was conclusively
    determined in the deficiency litigation.  A court determining Schwartzs
    potential negligence will not be required to consider whether Belobaba J.s
    conclusion on the rollover credit was correct.

[85]

Finally,
    Schwartz cannot claim unfairness because he was not a named defendant in the
    deficiency litigation.  He participated actively in that litigation.  He
    testified in support of his opinion that his client Ferrara was entitled to a
    rollover credit.  In effect, he stood in his clients shoes.  He has not
    suggested that, if he had been sued and had his own counsel, he could have led
    any additional evidence, or made any different or additional arguments. 
    Accordingly, I see no basis to dismiss this action as an abuse of process.

E.

conclusion

[86]

I
    would allow the appeal.  In my opinion, the claim against Schwartz was not
    discoverable before July 2, 2009, the date of the decision of Belobaba J. in
    the deficiency action.  Accordingly, Ferraras action against Schwartz is not
    barred by the
Limitations Act, 2002
.  Further, in my view, this action
    is not an abuse of process.

[87]

I
    would set aside the order of the motion judge.  In its place I would order that
    Schwartzs summary judgment motion be dismissed, that Ferraras cross-motion be
    allowed, and that Ferraras action is not statue-barred.  Ferrara is entitled
    to his costs of this appeal and the motions in the agreed-upon amounts of
    $7,500 and $8,500, inclusive of disbursements and applicable taxes.

Released:
Dec. 4, 2012                                          John
    Laskin J.A.

JL                                                                     I
    agree Robert Sharpe J.A.


