



COURT OF APPEAL FOR
    ONTARIO

CITATION:

Frenchmen's Creek Estates
    Inc. v. Tuckernuck Mortgage Administration Inc., 2012 ONCA 579

DATE: 20120907

DOCKET:  C54698

Goudge, Cronk and Epstein JJ.A.

BETWEEN

Frenchmens
    Creek Estates Inc.,

550075
    Ontario Inc. and Joseph Zawadzki

Applicants (Appellants)

and

Tuckernuck
    Mortgage Administration Inc.,

Tuckernuck
    Mortgage Administration Inc., In Trust,


Mathews
    Southwest Developments Limited,

MSW
    Dallas Limited and Bruce Bent

Respondents (Respondents)

William P. Dermody and Angela L. Papalia, for the
    appellants

Mark A. Klaiman, for the respondents

Heard: May 8, 2012

On appeal from the order of Justice Dale Parayeski of the
    Superior Court of Justice dated October 28, 2011.

By the Court:

[1]

The appellants
    appeal from that part of the order of the motion judge dismissing their motion
    to add four defendants to their application in which they claim damages
    allegedly arising from the registration of improper foreclosure orders against
    their property.  The respondents, Tuckernuck Mortgage Administration Inc., in
    Trust, and Tuckernuck Mortgage Administration Inc., are respectively the trust
    that held the mortgage upon which the foreclosure orders were obtained and the
    trustee of the trust.  Two of the proposed defendants, Ruth Kerbel and the
    estate of Michael Finkelstein, are the beneficiaries of the trust. The motion
    judge held that the other two proposed defendants, Martin Bernholtz and Jeffrey
    Kerbel, are the trustees of the trust.

[2]

At the conclusion
    of the hearing of the appeal, the appeal was dismissed with reasons to follow. 
    These are those reasons.

FACTS

[3]

In 2001, first
    and second mortgages were registered against property owned by the appellants.
    Tuckernuck Mortgage Administration Inc., in trust, (the Trust) was the
    mortgagee of both mortgages. In 2006, the Trust obtained two
ex parte

foreclosure orders on the affidavit evidence of Martin
    Bernholtz. These orders were subsequently set aside by this court as the first
    mortgages, under which the foreclosure orders had been obtained, had previously
    been paid in full.

[4]

On January 22,
    2007, by notice of application, the appellants commenced this proceeding
    claiming damages arising out of the foreclosure orders, arguing that the orders,
    allegedly based on improper affidavit evidence of Mr. Bernholtz, prevented the
    sale of the property to a third party.

[5]

On August 4,
    2011, the appellants moved in the Superior Court of Justice for an order
    converting their application to an action and adding four new proposed
    defendants.

[6]

On consent, the appellants
    obtained an order permitting them to convert the application into an action and
    file a statement of claim.  However, the motion judge accepted the respondents
    position that the claim against the four individuals was statute-barred and
    therefore dismissed the request to add them as defendants to the
    newly-constituted proceeding.

[7]

It was common
    ground that the applicable limitation period is two years.  The primary contentious
    issue before the motion judge and before this court is discoverability  the
    date when it could be said that the appellants knew or reasonably ought to have
    known of their claim against the proposed defendants.

[8]

The appellants
    argued that they only became aware of the true identities of the trustees and
    beneficiaries of the trust in August 2009. On that basis, the proposed
    amendment, notice of which was provided on April 4, 2011, was in time.

[9]

However, the
    motion judge, on the evidence before him, found as a fact that the appellants
    were aware as of February 19, 2007 that Ruth Kerbel and Michael Finkelstein
    were the sources of the mortgage funds and the beneficiaries of the trust, as
    they were identified as such in Martin Bernholtzs affidavit of that date. The
    motion judge also found that the appellants were aware of Martin Bernholtzs
    role as a trustee throughout, as the foreclosure orders were obtained on his
    affidavit.

[10]

While Jeffrey
    Kerbel was not named in Martin Bernholtzs affidavit, the motion judge held
    that the claim against him was statute-barred. The motion judge found as a fact
    that the appellants knew, or with little effort could have known, of Jeffrey
    Kerbels involvement well before cross-examining him in August 2009. In oral
    argument, the appellants did not dispute this finding.

[11]

The findings of
    fact made by the motion judge are adequately supported by the record.  It
    follows that his conclusions concerning the operation of the limitation period
    to prevent the addition of the proposed defendants are unassailable.

[12]

As an alternative
    argument, the appellants now seek to resile from their concession before the
    motion judge that the applicable limitation period is two years. The appellants
    submit that, given that the statement of claim in the newly-formatted action
    seeks only declaratory relief against the proposed defendants, the limitation
    period is actually ten years.  This submission is based on s. 4 of the
Real Property Limitations Act
, R.S.O. 1990, c. L. 15, which
    provides that an action to recover land must be brought within ten years.

[13]

The appellants argue
    that they seek a return of their equity of redemption and the removal of the
    mortgages registered against the land. According to the appellants, this is an
    action to recover land.

[14]

This argument is
    based on a narrow interpretation of the relief sought against the proposed
    defendants in para. 1 (d)(i-x) of the statement of claim.  While each aspect of the claim against the proposed defendants involves a
    request for a declaration, as noted by the motion judge at para. 22 of his
    reasons, the nature of the requested declarations is inextricably combined with
    claims for compensatory relief. Looking at the context of the dispute from a
    practical perspective, as did the motion judge, and in the light of the
    agreement between the parties that the relevant limitation period was two
    years, there is no merit to the argument that the applicable limitation period is
    ten years.

[15]

As previously
    noted, the appellants also argue that the proposed defendants are necessary
    parties to the action and therefore, in the interests of having a full
    determination of all issues in one proceeding, their addition is warranted.

[16]

The basis upon which
    the appellants contend that the proposed defendants are necessary parties is
    that their interests are engaged and they therefore should be bound by any
    judgment.  The appellants offer no applicable authority to support the proposition
    that this should override the expiry of the limitation period. To the extent
    that this argument relies on there being special circumstances that justify the
    addition of the proposed defendants outside the limitation period, it fails for
    a number of reasons.  It is necessary only to point out that this court in
Joseph v. Paramount Canadas
    Wonderland
, 2008
    ONCA 469, 294 D.L.R. (4
th
) 141, held that the doctrine of special
    circumstances did not survive the enactment of the
Limitations Act
, 2002
, S.O. 2002, c. 24, Sch. B.

[17]

Finally, while
    not pressed in oral argument, we agree with the motion judges finding that
    this is not a case of misnomer.  A reading of the notice of application would
    not make clear to those having knowledge of the facts that the appellants were
    claiming against any party other than those specifically named. The appellants
    are not seeking to correct the name of a party; rather, they are seeking to add
    parties.

[18]

In summary, the
    appellants knew or reasonably ought to have known the identity and involvement
    of the proposed defendants well within the prescribed period and took no steps
    to add them. As a result, their claim is statute-barred.  There is no other
    basis upon which their addition is warranted.

[19]

It is for these
    reasons that the appeal has been dismissed, with costs to the respondents as
    agreed-upon in the amount of $7,500, inclusive of disbursements and applicable
    taxes.

S.T. Goudge J.A.

"E.A. Cronk J.A.

Gloria J. Epstein J.A.


