



COURT OF APPEAL FOR ONTARIO

CITATION: Williams Distinctive Gems Inc. v. Advantex Dining
    Corporation, 2019 ONCA 702

DATE: 20190910

DOCKET: C66089

Lauwers, van Rensburg and Roberts JJ.A.

BETWEEN

Williams Distinctive Gems Inc.

Appellant (Plaintiff)

and

Advantex Dining Corporation,
Advantex Marketing International Inc.
and
Canadian Imperial Bank of Commerce

Respondent
(Defendants)

Alec McLennan, for the appellant

William A. Chalmers, for the respondent

Heard: August 26, 2019

On appeal from the order of Justice Michael R. Gibson of
    the Superior Court of Justice, dated September 28, 2018, and his costs order, dated
    January 4, 2019.

REASONS FOR DECISION

[1]

The appellant appeals from the dismissal of its
    action against the respondent, Canadian Imperial Bank of Commerce (CIBC),
    following CIBCs motion for summary judgment.  The motion judge found that the
    appellants claim against CIBC, its former bank, was discoverable no later than
    December 2012 and since these proceedings were commenced in July 2017, more
    than two years later, it was statute-barred.

[2]

The appellant also seeks leave to appeal the
    costs order of $50,000 that the motion judge granted in favour of CIBC.

[3]

For the reasons that follow, we dismiss the
    appeal from the dismissal of the appellants claim against the respondent but
    allow the appeal from the costs order.

[4]

The appellant is a small company that carries on
    a jewelry business. In June 2012, it entered into a marketing agreement with
    Advantex.  At that time, the appellant executed a marketing plan and a
    pre-authorized payment authorization by which the appellant agreed to pay as a
    fee to Advantex 14% of its future sales made through customers use of CIBC
    credit cards.

[5]

The appellant submits that it did not read any
    of the marketing plan documents when its representative signed them because of the
    alleged misrepresentations of Aaron Bougenim, a representative of Advantex, concerning
    the nature of the marketing plan and the fees to be paid to Advantex. 
    Specifically, the appellant says that Mr. Bougenim misrepresented that fees
    would only be payable on
new
customer
    purchases and not
all
purchases using CIBC credit cards.  The appellant claims
    it discovered the misrepresentations (which it says are binding on CIBC) when
    it noticed payment irregularities on its statement in December 2015.

[6]

The appellant further submits that it only
    discovered a claim for breach of fiduciary duty against CIBC in May 2018 when
    it cross-examined CIBCs representative in relation to CIBCs motion and
    learned that CIBC had a pre-existing and overarching agreement with Advantex
    that it failed to disclose to the appellant.  According to the appellant, the
    motion judge erred in dismissing the action without dealing with this claim.

[7]

The appellant argues that the motion judge
    therefore erred in finding its action was statute-barred against CIBC and that
    the action should go on to trial.

[8]

We do not accept these submissions.

[9]

While there is no challenge to the appellants
    position that it did not actually and earlier discover its claims against CIBC,
    the determinative question is when, pursuant to s. 5(1)(b) of the
Limitations
    Act, 2002
, S.O. 2002, c. 24, Sched. B., the appellant
    ought to have discovered its claims.

[10]

As ss. 4 and 5 of the
Limitations
    Act, 2002
provide, the basic two-year limitation period
    begins to run on the day the claim was discovered.  The date of discovery is
    the earlier of the two dates under s. 5(1) of the Act: when (a) the person with
    the claim first had knowledge of, or (b) a reasonable person with the abilities
    and in the circumstances of the person with the claim first ought to have had
    knowledge of, the matters referred to in ss. 5(1)(a)(i) to (iv).  If either of
    these dates is more than two years before the claim was issued, the claim is
    statute-barred.  See:
Fennell v. Deol
, 2016
    ONCA 249,
97 M.V.R. (6th) 1,
at
    para. 20.

[11]

In the present case, the appellant made several
    admissions through its principal, Keith Williams, on his cross-examination in
    this application that undermined its position on discoverability.  In
    particular, Mr. Williams admitted that:  he knew the fees to Advantex were
    fixed at 14%; he regularly reviewed the appellants sales and knew within three
    months of signing on to the marketing program that there were no new customers;
    and, had he read the marketing documents when he signed them, he would have
    known, as he later did when he actually did read them, that the marketing
    program did not reflect the discussions that he had had with Advantexs
    representative. In our view, the appellants admissions amply supported the
    motion judges conclusion that had the appellant acted reasonably, it would
    have discovered its claim against the CIBC by December 2012.

[12]

At the hearing of the appeal, the appellant
    argued that each sale to a customer represented a separate claim and restarted
    the limitation period.  We do not accept this submission.  As pleaded, the
    appellants claim is based on the allegation that Advantex and CIBC
    misrepresented the marketing program at the time the appellant entered into it
    in June 2012.  As a result, it is the date on which the appellant actually or
    ought to have discovered the misrepresentation that is relevant.

[13]

With respect to the appellants allegation of
    breach of fiduciary duty, we see no error in the motion judges dismissal of
    the claim against CIBC as pleaded.  The appellants notice of application and
    statement of claim do not contain such a claim.  The appellant did not seek to
    amend its claim either before or at CIBCs motion for summary judgment or ask
    to adjourn the motion in order to enable it to do so.  As a result, the motion
    judge was entitled to dispose of the motion for summary judgment on the basis
    of the pleadings and materials before him, not on suppositions about what might
    be pleaded or proved in the future:
Canada (Attorney General) v.
    Lameman
, 2008 SCC

14,
[2008] 1 S.C.R. 372
,
at para. 19.


[14]

Turning finally to the costs awarded by the
    motion judge, we agree that he erred in awarding $50,000 in partial indemnity
    costs to CIBC.  In our view, he failed to apply the principle of
    proportionality.

[15]

This was an action under the simplified procedure.
    It is well established that the limited monetary ceiling for actions under the
    simplified rules translates into reduced costs orders:
Trafalgar
    Industries of Canada Ltd. v. Pharmax Ltd.

(2003),
    64 O.R. (3d) 288 (S.C.), at paras. 5-7.  The appellant claimed damages of
    $63,071.17. CIBC chose to bring a summary judgment motion and conduct a lengthy
    cross-examination of the appellants principal. It should have been within CIBCs
    contemplation that its costs, if successful, would be limited and that it was
    required to exercise constraint in its expenditure of costs or risk not being
    compensated. The motion judge failed to advert to these factors in keeping with
    the principle of proportionality and awarded costs that were excessive and
    unreasonable.

[16]

As a result, the amount of costs that would be
    fair, reasonable and proportionate in the circumstances of this simplified procedure
    case is $25,000, inclusive of disbursements and applicable taxes.

Disposition

[17]

For these reasons, the appeal from the
    dismissal of the appellants claim against CIBC is dismissed but its appeal
    from the costs order is allowed.  We substitute $25,000 to be paid by the
    appellant to CIBC for its partial indemnity costs on the motion for summary
    judgment.

[18]

As success is divided on this appeal, we
    order no costs.

P. Lauwers J.A.

K. van Rensburg J.A.

L.B. Roberts J.A.


