



COURT OF APPEAL FOR ONTARIO

CITATION: Salewski v. Lalonde, 2017 ONCA 515

DATE: 20170620

DOCKET: C62705

Simmons, Rouleau and Roberts JJ.A.

BETWEEN

Doyle Salewski Inc. in its capacity as Trustee in
    Bankruptcy Golden Oaks Enterprises Inc. and Joseph Gillis Jean Claude Lacasse

Plaintiff (Respondent)

and

Monique Lalonde and Paul Lalonde

Defendants (Appellants)

AND BETWEEN

Doyle Salewski Inc. in its capacity as Trustee in
    Bankruptcy Golden Oaks Enterprises Inc. and Joseph Gillis Jean Claude Lacasse

Plaintiff (Respondent)

and

Lorne Scott

Defendant (Appellant)

Alyssa Tomkins and Anne M. Tardif, for the appellants

Robert De Toni and John D. Dempster, for the respondent

Heard: May 2, 2017

On appeal from the judgment
    of Justice Stanley J. Kershman of the Superior Court of Justice, dated August
    22, 2016, with reasons reported at 2016 ONSC 5313.

By the Court:

[1]

The appellants appeal from an order dismissing a motion made on behalf
    of themselves and others to strike all or part of several statements of claim
    and granting a cross-motion permitting amendments to several statements of
    claim.

[2]

At the appeal hearing, we raised the question
whether
    the order under appeal is final or interlocutory and whether this court has
    jurisdiction to entertain the appeal. After hearing submissions, we reserved
    our decision on the jurisdiction issue. We then heard the substantive arguments
    on appeal and indicated that if we concluded the order is interlocutory, we
    would seek permission from the Chief Justice of the Superior Court to
    reconstitute ourselves as a panel of the Divisional Court.

[3]

For reasons we will explain, we have concluded that the
    order under appeal is interlocutory and that accordingly, this court has no
    jurisdiction to entertain the appeal. We have also concluded that the
    appellants motion was premature and that as a result this is not an
    appropriate case in which to seek permission to reconstitute ourselves as a
    panel of the Divisional Court. The appeal is therefore quashed.

Background

[4]

The appellants are among the defendants in several
    actions in which the respondent, as trustee in bankruptcy of the promoters of
    an alleged Ponzi scheme, is seeking to recover monies allegedly paid out as
    part of the scheme.

[5]

According to the facts as pleaded, the respondent, Doyle Salewski
    Inc. (DSI), is a trustee in bankruptcy acting in its capacity as trustee in
    bankruptcy of Golden Oaks Inc. and Jean Claude Lacasse, and was appointed as
    such on July 26, 2013.

[6]

In its statements of claim, issued in July 2015, DSI alleges
    that, in 2010 or early 2011, Golden Oaks began a real estate rent-to-own
    program under which individuals could rent dwellings with an option to purchase.
    However, DSI claims that, following investigation, it learned that Golden Oaks
    was engaged predominately in the business of selling promissory notes to
    investors and that this activity generated over 96% of its revenue. According
    to DSI, Golden Oaks was never profitable and the promissory notes it and
    Lacasse issued offered interest rates of up to 66,981% on an annualized basis.
    DSI also claims that there was a referral scheme in place under which referral
    commissions were paid to various parties who referred investors to Golden Oaks.

[7]

In its action against the appellants, Monique Lalonde and Paul
    Lalonde (collectively the Lalondes), DSI alleges that the Lalondes entered
    into usurious promissory notes with Golden Oaks under which they loaned money
    to Golden Oaks at usurious rates of interest and that the Lalondes knew or
    ought to have known that Golden Oaks was operating at a massive loss and could
    not withstand payment of the usurious rates of interest. DSI states that the
    interest paid to the Lalondes came from investments by other investors and not
    Golden Oaks business operations. DSI claims that the usurious interest paid by
    Golden Oaks is misappropriated monies of stakeholders which should be
    returned to DSI, representing the interests of all stakeholders. DSI relies on
    s. 347 of the
Criminal Code
and claims the return of usurious interest
    based on the doctrine of unjust enrichment.

[8]

In its action against the appellant, Lorne Scott, DSI alleges
    that Scott is a licensed real estate agent and that he received commissions
    from Golden Oaks for referring investors to Golden Oaks. DSI claims that the
    commissions are unlawful and contrary to the
Securities Act
, R.S.O.
    1990, c. S.5, because Scott is not licensed to sell promissory notes, or receive
    remuneration for their sale.  DSI claims that the commissions paid by Golden
    Oaks are misappropriated monies of stakeholders which should be returned to
    DSI, representing the interests of all stakeholders. In addition, and among
    other causes of action, DSI relies on unjust enrichment to claim recovery of
    commissions paid to Scott.

[9]

In addition to its actions against the appellants, DSI commenced
    over 20 other actions, some in Small Claims Court and some in the Superior
    Court, seeking to recover usurious interest and/or unlawful commissions in
    relation to the Golden Oaks program.

The Motion to Strike

[10]

By agreement among the parties, the appellants moved
    on behalf of themselves and other defendants sued by the respondent. Among
    other things, the appellants claimed an order striking the claims for usurious
    interest and unlawful commissions and also striking amendments made to the
    Scott statement of claim prior to service.

[11]

In their notice of motion, the appellants relied
    on rules 21.01(1)(b), 25.06, 26.01 and 37 of the
Rules of Civil
    Procedure
, R.R.O. 1990, Reg. 194
. They also sought an
    order that the result on the motion apply to the claims for usurious interest
    and unlawful commissions in the actions involving the other defendants on whose
    behalf they had agreed to bring the motion.

The Formal Order

[12]

In relation to the motion to strike the claims
    for usurious interest and unlawful commissions, the formal order states:

THIS COURT ORDERS that the Defendants motion
    for striking the claim for receipt of Usurious Interest and Unlawful
    Commissions be and is hereby dismissed.

[13]

The formal order also includes paragraphs delineating
    the claims to which it applies, dismissing a motion to strike a conspiracy
    claim in the Scott action and granting the respondent leave to amend its
    statements of claim in various actions.

The Parties Positions concerning the
    Final/Interlocutory Issue

(i)

The appellants position

[14]

The appellants submit that the order under
    appeal is final because, in their written and oral submissions on the motion,
    they sought a determination of a question of law under rule 21.01(1)(a) that
    the usurious interest claims and the unlawful commissions claims are statute
    barred.

[15]

Rule 21.01(1)(a) provides that a party may move
    before a judge for the determination, before trial, of a question of law raised
    by a pleading where the determination of the question may dispose of all or
    part of the action, substantially shorten the trial or result in a substantial
    saving of costs.

[16]

Relying on
Beardsley v. Ontario
(2001), 57 O.R. (3d) 1 (C.A.), at para. 21, the appellants argued before
    the motion judge that a claim can be struck under rule 21.01(1)(a) based on the
    expiry of a limitation period where it is plain and obvious from a review of a
    statement of claim that no additional facts could be asserted that would alter
    the conclusion that a limitation period had expired.

[17]

The appellants assert that they sought
    determination of the legal issue that the respondents claims for unjust enrichment
    are statute-barred on the basis that the bankrupts are a predecessor of the
    trustee under s. 12 of the
Limitations Act
,
2002
,
    S.O. 2002, c. 24, Sched. B
(the Act). Under s. 12, where a
    proceeding is commenced by a person claiming through a predecessor in right,
    title or interest, the basic limitation period established under ss. 4 and 5(1)
of the Act runs
from the earlier of the day the predecessor
    (in this case, the bankrupts) first knew or ought to have known about their
    claim or the day the person commencing the proceeding (in this case, the
    respondent) first knew or ought to have known about the claim.

[18]

Before the motion judge, the appellants argued that
    the claims for usurious interest and unlawful commissions formed part of the
    property of the bankrupts as defined in s. 67 of the
Bankruptcy and
    Insolvency Act
, R.S.C. 1985, c. B-3 (the BIA), and,
    upon bankruptcy, vested in the trustee under s. 71 of that act. Further, based on
    the facts as pleaded (or as revealed by documents referred to in the statement
    of claim), it is clear that the unjust enrichment claims are statute-barred and
    that no other facts could be pleaded that would alter that conclusion.

[19]

The last promissory note the bankrupts issued to
    the Lalondes was dated February 22, 2013 and was repayable by April 8, 2013. According
    to the appellants, on a plain reading of s. 5(1) of the Act, the limitation
    period began to run from the date the promissory notes came due. Similarly, the
    last commission payment to Scott was made on March 5, 2013, and under s. 5(1)
    the basic limitation period runs from that date. In both instances, the statements
    of claim were issued on July 23, 2015, which is beyond the two-year limitation
    period set out in the Act.

[20]

Relying on ss. 30(1)(d), 67 and 71 of the BIA,
Giffen
    (Re)
, [1998] 1 S.C.R. 91, and
Lefebvre (Trustee
    of); Tremblay (Trustee of)
, 2004 SCC 63, [2004] 3 S.C.R.
    326, the appellants submit that, where claims such as these are advanced by a
    trustee in bankruptcy, there can be no question but that the trustee in
    bankruptcy steps into the shoes of the bankrupt and does not bring the action
    in a representative capacity on behalf of the unsecured creditors. As the
    bankrupts gave the alleged usurious promissory notes and paid the alleged
    unlawful commissions, there can also be no question that they knew of their
    potential claims when they paid the sums at issue.

[21]

The appellants argue that the motion judge's
    reasons disclose that, in dismissing their motion to strike, he finally
    determined that (i) the respondent is not a person advancing its claims through
    a predecessor in right, title or interest under s. 12 of the Act, and (ii) the
    limitation clock therefore runs based on the respondents knowledge of the
    claims, rather than the bankrupts knowledge of the claims. As an example, they
    point to paras. 132 to 134 of the motion judges reasons, where he said:

It was not until the Trustees Fourth Report
    dated May 30, 2014 that the Trustee was able to confirm with certainty that
    usurious interest rates and unlawful commissions were being received.

Notwithstanding the arguments put forward by
    the [appellants] that the [respondents] claims are statute-barred because
    discoverability is based on the date that Golden Oaks discovered or should have
    discovered the claim, the Court finds that because of the fraudulent scheme,
    the matter was not discoverable or discovered until the Fourth Report was
    prepared in May 2014. Therefore, the Court finds that the discoverability clock
    ran from the time that the Fourth Report was prepared.

All of the Trustees Statements of Claim were
    issued by July 2015. Therefore, the Court finds that these claims are not
    statute barred.

[22]

The appellants assert that the motion judges
    finding that the respondent is not a person claiming through a predecessor under
    s. 12 of the Act will make that issue
res judicata
or subject to issue estoppel. Accordingly, as the appellants will
    be barred from raising that defence in the future, the motion judges order is
    a final order:
Ball v. Donais
(1993), 13 O.R.
    (3d) 322 (C.A.), at p. 324.

(ii)

The respondents position

[23]

At the appeal hearing, respondents counsel
    indicated they had initially advised the appellants counsel that they took the
    position the order under appeal is interlocutory. However, they later withdrew
    that objection because they believed that the order permitting the respondent
    to amend its statements of claim is final and gives rise to a claim of
res
    judicata
or issue estoppel on the question forming the
    subject matter of the appellants appeal. The respondent therefore did not
    raise jurisdiction as an issue in its factum filed on the appeal.

[24]

Following colloquy with the panel at the appeal
    hearing, the respondents counsel withdrew their assertion that the question
    forming the subject matter of the appeal is subject to a claim of
res
    judicata
or issue estoppel.

Discussion

[25]

We reject the appellants submission that the
    order under appeal is a final order for three reasons.

[26]

First,
    none of the notice of motion, the motion judges reasons or the formal order
    delineates the precise legal issue the appellants say has been determined. As we
    have explained, the appellants did not rely on rule 21.01(1)(a) in their notice
    of motion and the formal order simply dismisses the motion to strike. Although
    the motion judges reasons contain certain findings, the reasons do not include
    a disposition section in which the motion judge formally invokes rule
    21.01(1)(a) and purports to determine a question of law.

[27]

While not necessarily determinative, in general, the content of a
    formal order is integral to determining whether the order is final or
    interlocutory:
Ashak v. Ontario (Director, Family Responsibility Office)
,
    2013 ONCA 375, 115 O.R. (3d) 401, at para. 13. Moreover, it is trite law that
    an appeal lies from the formal order, not the underlying reasons:
Grand
    River Enterprises v. Burnham
(2005), 197
    O.A.C. 168 (C.A.), at para. 10.

[28]

In this case, the notice of motion to strike invoked only rule
    21.01(1)(b) and the formal order simply dismisses the motion. On the face of
    these documents, the order under appeal is interlocutory:
S.(R.) v. H.(R.)
(2000), 52 O.R. (3d) 152 (C.A.).

[29]

Moreover,
    even accepting that the appellants motion could proceed under rule 21.01(1)(a)
    for a determination that the limitation period for the unjust enrichment claims
    had expired, it does not follow that dismissal of the appellants motion results
    in a binding determination that the limitation period had not expired.

[30]

Rather, this court will look to the formal order and the
    underlying reasons to assess whether the order is final or interlocutory. For
    example, in
Ball
, in holding that an order dismissing a motion under
    rule 21.01(1)(a) was final, this court noted that the motion judge 
determined

    that the action was not statute-barred under
s.
    180(1) of the
Highway Traffic Act
,
    R.S.O. 1980, c. 198
, and 
made an order accordingly
. The
    formal order in that case included the motion judges determination that the
    action was not barred by that provision:
S.(R.)
, at para. 17.

[31]

Second,
    although the motion judge referred in his reasons to the appellants
    submissions premised on rule 21.01(1)(a), we are not persuaded that, read
    fairly, his reasons for dismissing their request for a determination that the
    limitation period for the unjust enrichment claims had expired reveal an
    intention to make a binding determination that: (i) in advancing its claims,
    the respondent was not a person claiming through a predecessor in right, title
    or interest (namely, the bankrupts) within the meaning of s. 12 of the Act; or
    (ii) that the limitation period for advancing the unjust enrichment claims had not
    expired
.

[32]

The appellants motion to strike was made based on the allegations
    contained in the statement of claim, prior to the close of pleadings and prior
    to a defence being delivered. As the motion judge recognized, this required
    that he proceed on an assumption that the allegations contained in the
    statement of claim are true.

[33]

The appellants position on the motion was that the unjust
    enrichment claims could be struck as statute-barred
under
rule 21.01(1)(a) because it is plain and
    obvious from a review of the statement of claim that no additional facts could
    be asserted that would alter the conclusion that a limitation period has
    expired. If the motion judge accepted that position, it was the appellants
    assertion that he could properly find the unjust enrichment claims were
    statute-barred.

[34]

However, even assuming that assertion is correct, it does not follow
    that, if he rejected the appellants submissions, the motion judge could make a
    binding declaration that the limitation period had not expired. That is because
    the motion judge was not in a position, on a pleadings motion, to make binding
    determinations of fact. At best, he could posit circumstances in which the
    limitation period would not have expired. His reasons must be read in this
    context.

[35]

Accordingly, although the motion judge may have expressed a conclusion
    that the respondents limitation period had not expired, and although that
    conclusion may have been premised, at least in part, on a further implicit
    conclusion that, in the context of the Ponzi scheme the respondent alleges, the
    respondent was not a person claiming through the bankrupts as predecessors
    under s. 12 of the Act, those conclusions could serve as no more than the
    motion judges explanation for rejecting the appellants motion to strike based
    on the expiry of a limitation period. The motion judge was not in a position to
    find that a Ponzi scheme as alleged by the respondent existed. Considered in their
    proper context, any conclusions expressed by the motion judge cannot be read as
    binding determinations giving rise to
res judicata
or issue estoppel.

[36]

Again,
    our conclusion in this respect is reinforced by the fact that the motion judge
    did not include a disposition section in his reasons invoking rule 21.01(1)(a)
    and purporting to make a binding declaration, in addition to the fact that the
    formal order simply dismisses the appellants motion to strike.

[37]

In
    a similar context, namely, orders dismissing a motion for summary judgment
    where a party claims that a motion judge has made binding determinations of
    fact or law, this court has said that a court proposing to exercise its powers
    to make such determinations under either rule 20.04(4) or (5) should
    specifically invoke the rule and that, reference to the rule, as well as the
    particular determination made, should form part of the formal order:
Ashak
,
    at paras. 8, 11, 13;
Skunk v. Ketash
, 2016 ONCA 841, 94 C.P.C. (7th)
    141, at paras. 35-36.

[38]

Although
    failure to do so is not determinative in the summary judgment context, this
    court has also said that in the absence of an express indication by the motion
    judge that any conclusions expressed in dismissing a motion for summary
    judgment are intended to be binding on the parties, it should be presumed that
    they are not:
Skunk
, at para. 58.

[39]

This
    is because the motion judges conclusions in dismissing a summary judgment
    motion are often simply a means of expressing why he or she dismissed the
    motion  and the force with which a motion judge expresses conclusions should
    not determine whether an order is interlocutory or final. Moreover, holding
    formal orders to be final where they do nothing more than dismiss a summary
    judgment motion could lead to confusion and uncertainty about the effect of
    reasons for judgment and appropriate appeal routes:
Skunk
, at paras.
    56-58, 60;
Ashak
, at para 11.

[40]

In
    our view, the same considerations apply in this case. As we have said, the appellants
    did not serve a notice of motion invoking rule 21.01(1)(a) or detailing the
    precise legal ruling they sought. The precise ruling the appellants say the
    motion judge made does not appear in his reasons or in the formal order.
    Holding that the motion judges reasons constitute a final order giving rise to
res judicata
or issue estoppel in relation to a particular issue in
    these circumstances could lead to confusion about the effect of reasons for
    judgment and resulting appeal routes.

[41]

Third,
    and in any event, we are not satisfied that the motion judge had authority to
    make a binding determination
under
rule
    21.01(1)(a) in this case. His decision should not therefore be treated as doing
    so.

[42]

In
    our view, this courts comment in
Beardsley
about the ability to seek
    a ruling under rule 21.01(1)(a) concerning a limitations defence prior to the
    close of pleadings has likely been overtaken by the enactment of the
Limitations
    Act, 2002
, in cases where the Act applies. We are also of the view that
    the comment in
Beardsley
was never intended to apply to a case that is
    legally or factually complex.

[43]

In
Beardsley
, at para. 21,

this court explained that the expiry
    of a limitation period does not render a cause of action a nullity, but rather,
    it is a defence that must be pleaded. This court went on to say that it would
    be unduly technical to require delivery of a statement of defence in
    circumstances where it is plain and obvious from a review of a statement of
    claim that no additional facts could be asserted that would alter the
    conclusion that a limitation period had expired.

[44]

To
    support this statement, in a footnote tied to para. 21, this court gave the
    example of the expiry of a two-year limitation period under the
Highway
    Traffic Act
, R.S.O. 1990, c. H. 8, in connection with a claim for
    property damages only,
where it is clear the discoverability rule does not
    apply
 (emphasis added).

[45]

However,
    the basic limitation period established by the
Limitations Act, 2002
is now premised on the discoverability rule. The discoverability rule raises
    issues of mixed fact and law:
Longo v. MacLaren Art Centre
, 2014 ONCA
    526, 323 O.A.C. 246, at para. 38. We therefore question whether there is now
    any circumstance in which a limitation issue under the Act can properly be
    determined under rule 21.01(1)(a) unless pleadings are closed and it is clear
    the facts are undisputed. Absent such circumstances, we are sceptical that any
    proposed limitation defence under the Act will involve a question of law
    raised by a pleading as required under rule 21.01(1)(a).

[46]

In
    any event, as we have said, in our view, this courts comment at para. 21 of
Beardsley
was never intended to apply in a situation such as this, where the fact
    situation is not straightforward and has not been fully defined by the
    pleadings, and where the respondent seeks to advance what may be a novel claim.
    In particular, although the respondent has delivered a statement of claim, it
    is not yet clear what allegations it will make in response to a limitations
    defence, for example, whether explicit allegations of fraud will be made and against
    whom such allegations, if any, will be made,
i.e.
, against the
    bankrupts or against the bankrupts and the appellants. See also:
Tran v.
    University of Western Ontario
, 2016 ONCA 978, at paras. 19 to 21.

[47]

The
    respondents claim may be novel, at least in part, because rather than
    asserting that it stands in the shoes of the bankrupts or that representative
    claims for unjust enrichment are authorized in this case by statute, the
    respondent, as trustee in bankruptcy, purports to act in a representative
    capacity for unsecured creditors because the claims are premised on fraudulent
    conduct of the bankrupts. As we have said, the allegations of fraud are not yet
    clearly defined  but they could be more clearly defined in a reply responding
    to a limitations defence.

[48]

Further,
    it is also not clear to what extent the respondent will rely, in responding to
    any limitations defences, on assertions about when the bankrupts, or either of
    them, knew or ought to have known that a proceeding would be an appropriate
    means to seek a remedy within the meaning of s. 5(1) of the
Limitations
    Act, 2002
. Any such assertions may well raise issues of mixed fact and
    law.

[49]

As
    indicated above, the example on which this court relied in the footnote tied to
    para. 21 of
Beardsley
was neither legally nor factually complex.
Beardsley
pre-dated the enactment of the
Limitations Act, 2002
, and the example this
    court posited involved a straightforward, undisputed fact situation in which
    the cause of action had accrued and to which the discoverability rule did not
    apply. That is not this case.

[50]

In
    our view, the appellants motion was premature. We conclude that the motion
    judge could not properly have made a final determination of the limitations
    issue in favour of the appellants prior to the close of pleadings and without
    the benefit of a more fulsome record. In these circumstances, his reasons for
dismissing
the appellants motion should not be read as a final determination of the
    limitations issue in favour of the respondent giving rise to
res judicata
or issue estoppel.

[51]

Particularly
    in light of our conclusion that the appellants motion was premature, this is
    not an appropriate case to seek permission from the Chief Justice of the
    Superior Court to reconstitute ourselves as a panel of the Divisional Court to
    dispose of the substantive issues on appeal. We also note that the parties did
    not address the issue of leave. In the case of an interlocutory order made
    outside of Toronto, a request for leave must be made to a single judge of the
    Superior Court: ss. 19(1) and 21(3) of the
Courts of Justice Act
,
    R.S.O. 1990, c. C. 43; rule 62.02. Moreover, no right of appeal exists until
    leave has been granted:
Hillmond Investments Ltd. v. Canadian Imperial Bank
    of Commerce
(1996), 29 O.R. (3d) 612 (C.A.), at p. 620.

Disposition

[52]

Based
    on the foregoing reasons, the appeal is quashed. Given that the issue of
    jurisdiction was raised by the panel at the appeal hearing, we decline to award
    costs.

Released:

JUN 20 2017                                             Janet
    Simmons J.A.

PR                                                             Paul
    Rouleau J.A.


L.B.
    Roberts J.A.


