



COURT OF APPEAL FOR ONTARIO

CITATION: Ridel v. Cassin, 2014 ONCA 763

DATE: 20141103

DOCKET: C57081

Strathy C.J.O., Feldman and Lauwers JJ.A.

BETWEEN

Jean-Marc Ridel, Nadine Suzanne Josephine Ridel
    and Marc H. Ridel

Plaintiffs/Defendant
    by Counterclaim

(Respondents/Appellants
    by Cross-Appeal)

and

Armando Cassin and E3M Investments Inc.

Defendants/Plaintiffs
    by Counterclaim

(Appellants/Respondents
    by Cross-Appeal)

Paul Le Vay and Naomi Greckol-Herlich, for the
    appellants

Philip Anisman, for the respondents

Heard: October 28, 2014

On appeal from the judgment of Justice Sarah Pepall of
    the Superior Court of Justice, dated April 17, 2013, with reasons reported at 2013
    ONSC 2279.

ENDORSEMENT

[1]

The trial judge awarded damages to the respondents for their losses
    arising out of unauthorized investment trading by the appellants. The
    appellants argue that the action was barred by the limitation period under s.
    5(1) of the
Limitations Act, 2002
,
    S.O. 2002, c. 24, Sched. B
. They abandoned their argument that the
    trial judge erred in her determination of causation. The respondents
    cross-appeal and seek to recover their payment of taxes on capital gains they
    incurred through the unauthorized investments. For the reasons that follow, we
    dismiss the appeal and allow the cross-appeal.

The Appeal

[2]

The appellants concede that in the course of the trial judges extensive
    reasons she analyzed the subjective element of discoverability under s. 5(1) (a)
    of the
Limitations Act, 2002
. Counsel argues, however, that she did
    not advert to the objective element of the test under s. 5(1) (b).

[3]

We disagree. The trial judges reasons fully support the conclusions in
    the following three paragraphs of her decision:

262

I have found that the Plaintiffs were not
    familiar with the significant components of their NCAFs when their accounts
    were opened. Furthermore, they were far from sophisticated. While it is the
    case that the Plaintiffs received trading slips and monthly account statements
    from e3m, they had no idea that Mr. Cassin was not entitled to do much of what
    he did including trading without instructions, completing the NCAFs without
    meaningful input from the Plaintiffs, investing in unsuitable securities for them,
    adopting ridiculous risk factors relative to their individual profiles and
    engaging in other negligent conduct. The Plaintiffs did not know, nor could
    they have known, that the Defendants had failed to comply with securities
    regulations and standards. The Plaintiffs thought their losses had arisen
    solely because of a fallen market, not because they had a wayward RR and an
    investment dealer that had abdicated its responsibilities. Mr. Ridel knew that
    losses had occurred but did not know that the Defendants had caused or
    contributed to them. This is consistent with the absence of any complaints from
    the Plaintiffs.

263

The Plaintiffs did not have the requisite
    knowledge contemplated by section 5(1) (a) until Mr. Sandler informed them of
    the improper handling of their accounts.

264

Furthermore, in my view, a reasonable person with
    the abilities and in the circumstances of the Plaintiffs ought not to have
    known of the matters described in s. 5(1) (a) of the
Limitations Act, 2002
,
    in the years 1999 and 2000 and following. Their claims are not barred by any
    limitation period.

[4]

In our view, by using the very language of s. 5(1)(b) in the final
    quoted paragraph, the trial judge shows that she  applied the correct test,
    which has been described as a modified objective test:
Ferrara v.
    Lorenzetti, Wolfe Barristers and Solicitors
, 2012 ONCA 851, 113 O.R. (3d)
    401, at para. 70. Her determination is entitled to deference.

[5]

The appellant argued that Mr.
    Ridels conversation with Mr. Cassin in July 2004 showed that he had an
    understanding of his investments; since he had the ability in July 2004 to make
    that inquiry with due diligence there is no basis for the argument that
    discoverability principles could justify a delay of two years before he asked a
    new adviser to look into his losses.

[6]

We reject that submission.
    The trial judge was clearly aware of that conversation, in which no
    wrongdoing was disclosed or discussed, and took it into account in reaching her
    conclusion that a reasonable person with Mr. Ridels knowledge and abilities
    would not with due diligence have discovered the appellants wrongdoing any
    sooner.

[7]

We dismiss the appeal.

The Cross-Appeal

[8]

On the cross-appeal the respondents seek to recover the amounts that
    they were obliged to pay as capital gains tax on the initially profitable investment
    transactions pursued by the respondents. The trial judge held, at para. 265:

This claim was not asserted until the Statement of Claim was
    amended on August 18, 2009, well after the Plaintiffs had obtained professional
    advice on the handling of their accounts and their financial losses. The claim
    for taxes is barred by the two year limitation period.

[9]

We allow the cross-appeal. The amendment increased the amount claimed by
    almost $100,000 to reflect the result of the investment strategies adopted by Mr.
    Cassin. These strategies were characterized in the following manner in the
    statement of claim:

He adopted high risk strategies involving short term trading
    that generated commissions disproportionate to the profits earned and
substantial
    capital gains
. In doing so, he breached his duties as a fiduciary, was
    negligent, and failed to comply with the standards required of registrants
    under the
Securities Act
and with the Rules of the IDA. [The amendment
    is underlined.]

[10]

The
    evidence amply bears out the accuracy of this statement, as set out in the trial
    judges reasons. In our view, this was not the assertion of a new cause of
    action, which would have been barred by the
Limitations Act, 2002
, but
    was simply a claim for additional damages arising from an existing cause of
    action:
Bazkur v. Coore
, 2012 ONSC 3468;
Ivany v. Financiere Telco
    Inc.
, 2011 ONSC 2785, at paras. 26-33. The tax liability arose out of the
    wrongful and unauthorized trading activity of the appellants:
Hunt v. TD
    Securities
(2003), 66 O.R. (3d) 481, at para. 193. It was a dead loss to the
    respondents that is simply to be added to the loss of their investment money.

[11]

The
    respondents are entitled to the amount claimed on the cross-appeal together
    with pre-judgment interest from February 9, 2010, which is the date on which the
    taxes were paid.

[12]

Costs
    are fixed in the agreed amount of $25,000, payable to the respondents.

G. R. Strathy C.J.O.

K. Feldman J.A.

P. Lauwers J.A.


