



COURT OF APPEAL FOR ONTARIO

CITATION: Doyle Salewski Inc. v. BDO Canada Limited, 2016
    ONCA 748

DATE: 20161014

DOCKET: C61708

Feldman, Simmons and Lauwers JJ.A.

BETWEEN

Doyle Salewski Inc., in its capacity as
    court-appointed interim receiver of Impact Tool & Mould Inc. and in its
    personal capacity

Plaintiff (Respondent)

and

BDO Canada Limited, formerly BDO Dunwoody Limited
    in its capacity as Trustee in Bankruptcy of Impact Tool & Mould Inc. and in
    its personal capacity

Defendant (Appellant)

Gerard Chouest and Julia Lefebvre, for the appellant

Dale Denis and Jason Dutrizac, for the respondent

Heard: August 26, 2016

On appeal from the order of Justice Marc A. Garson of the
    Superior Court of Justice, dated January 4, 2016.

ENDORSEMENT

[1]

The appellant, BDO Canada Limited, is the trustee in bankruptcy of
    Impact Tool & Mould Inc., appointed at the behest of, and funded by a
    competitor of, Impact in Windsor Ontario, Unique Tool and Gauge Inc. The within
    action was commenced in London by the respondent, Doyle Salewski Inc. (DSI), the
    interim receiver of Impact, for alleged improprieties by BDO in the conduct of
    the bankruptcy, which improprieties added significant cost to the
    administration of the receivership, where there were no funds available in the
    estate to pay those costs or to justify the trustees actions.

[2]

The within action is referred to by the motion judge as the London
    action. There is also a long-outstanding Windsor application under s. 37 of
    the
Bankruptcy and Insolvency Act
, R.S.C. 1985, c. B-3 (
BIA
), to
    determine whether DSI is a creditor of the estate of Impact. That application
    had not proceeded when this motion was heard.

[3]

The appellants motion for summary judgment under Rule 20 on the basis
    that the claim was statute barred was dismissed, as was its motion under Rule
    21 to strike portions of the claim as an abuse of process on the basis of issue
    estoppel. The London action was therefore allowed to proceed. On appeal we would
    not interfere with the conclusions reached by the motion judge.

[4]

The London action was commenced on January 18, 2010, with leave granted
    under s. 215 of the
BIA
on May 5, 2010. It claims breach of fiduciary
    duty by BDO between 2003 and 2007 for actions including: making false
    statements in affidavits, pursuing commercially unreasonable courses of action,
    making unfounded allegations against the interim receiver, failing to act
    impartially and in good faith among creditors, and initiating frivolous and vexatious
    court proceedings.

[5]

The motion judge noted that in his cross-examination, Mr. Doyle, the
    president of DSI, acknowledged that he was aware of the following by the end of
    2007: false statements in a BDO in an affidavit, BDO had pursued a commercially
    unreasonable course of action through 2007, BDO had made serious allegations
    against DSI as interim receiver, BDO had allowed itself to be used by Unique
    and did not act in good faith and impartially, and BDO had initiated frivolous
    and vexatious court proceedings.

[6]

However, it was not until 2008 or 2009 that DSI received an un-redacted
    copy of the Jackson Report that was in the possession of BDO. That report
    disclosed that contrary to BDOs position alleging an improvident sale by DSI of
    the assets of Impact, its expert information was that the liquidation values of
    the Impact assets were low. Further, it was not until December 2009 that DSI
    received BDOs final Statement of Receipts and Disbursements, and learned for
    the first time that significant fees had been paid to the Unique estate
    inspector, Mr. OBrien, for special services; the amount of fees paid to BDO;
    and that significant fees in the amount of $216,548.21 had been paid to the
    solicitor for the estate directly by Unique.

[7]

The motion judge found that although DSI was suspicious at an earlier
    time, the material facts contained in the Jackson report and the evidence
    contained in the [Statement of Receipts and Disbursements] were evidence that
    Unique had, in some manner, taken over the administration of the Estate from
    BDO. An earlier request by DSI for a copy of the Jackson Report was denied by
    BDO.

[8]

The motion judge first concluded that the discoverability of the claim
    was a genuine issue requiring a trial. However, he then turned to consider the
    enhanced fact-finding powers of a motion judge to weigh the evidence and make
    credibility findings. He concluded that he had sufficient evidence to decide
    the issue.

[9]

He found that DSI had suspicions of the malfeasance it alleges against BDO
    and had made numerous efforts to obtain the information it needed to confirm
    its suspicions but was stonewalled by BDO, which refused to disclose the
    Jackson report and its receipts and disbursements report. His conclusion is
    contained in paras. 96 and 97 of his reasons:

BDOs behaviour in withholding or not distributing pertinent
    and relevant information to DSI prevented DSI from discovering the material
    facts upon which this claim is based.

Although DSI was suspicious in 2006 and 2007 that BDO had (i)
    made false statements and omitted relevant facts in an affidavit; (ii) was
    pursuing a commercially unreasonable course of action; (iii) had made serious
    allegations about the behaviour of DSI, and (iv) was being influenced by
    Unique, these suspicions were unsupported by material facts.

[10]

The motion judge noted that breach of a duty of care by a court officer
    should not be alleged without sufficient facts. We add that that principle is reflected
    in the statutory requirement in s. 215 of the
BIA
requiring leave to sue
    a trustee in bankruptcy.

[11]

While we do not agree with the implicit suggestion by the motion judge
    that the commencement of the limitation period may be assessed differently when
    officers of the court are involved, we see no error in the motion judges
    finding that DSI did not have knowledge of sufficient facts prior to January
    18, 2008 [two years before the claim was issued] to properly allege a claim for
    breach of fiduciary obligations against BDO, and his conclusion that the
    action is therefore not statute-barred.

[12]

The motion judge explained that the appellants second motion for abuse
    of process was based on whether DSI was seeking to claim costs for issues
    already dealt with in previous orders in this action and in the Windsor
    application. The motion judge concluded that he could not determine on the
    record which costs awards in the relevant timeframe were the subject of the
    London action. He therefore dismissed the motion. There is no basis for this
    court to interfere with the motion judges finding on this issue.

[13]

The appeal is therefore dismissed with costs fixed in the agreed amount
    of $20,000 inclusive of disbursements and HST.

K. Feldman J.A.

Janet Simmons J.A.

P.
    Lauwers J.A.


