



COURT OF APPEAL FOR ONTARIO

CITATION: Presidential MSH Corporation v. Marr Foster &
    Co. LLP, 2017 ONCA 325

DATE: 20170424

DOCKET: C62490

Cronk, van Rensburg and Pardu JJ.A.

BETWEEN

Presidential MSH Corporation
(formerly The Martin Schmerz Holding Corporation)

Plaintiff (Appellant)

and

Marr, Foster & Co. LLP and Larry Himmelfarb

Defendants (Respondents)

Allan Sternberg and Daniella Murynka, for the appellant

Michael E. Girard, for the respondents

Heard: January 20, 2017

On appeal from the order of Justice Sean F. Dunphy of the
    Superior Court of Justice, dated July 6, 2016.

Pardu J.A.:

A.

INTRODUCTION

[1]

The appellant, Presidential MSH Corporation, appeals
    from summary judgment dismissing its action against the respondents, its former
    accountant Larry Himmelfarb and his firm Marr, Foster & Co. LLP, on the
    ground that the action was barred by passage of a limitation period.

[2]

The respondents

filed the appellants corporate tax returns after their due date. As
    a result, the Canada Revenue Agency (CRA) denied tax credits that would have
    been available had the returns been filed on time. The appellant

suffered damages of approximately
    $550,000 in unpaid taxes, interest and penalties.

[3]

The appellant received the CRAs Notices of Assessment
    disallowing each of the claimed credits on April 12, 2010. When Martin Schmerz,
    a principal of Presidential, got the notices, he immediately asked Himmelfarb
    what to do and how to fix the problem.

[4]

The motion judge inferred that Himmelfarb
    advised Schmerz to retain a tax lawyer to determine how to solve the tax
    problem but did not advise him to obtain legal advice about a professional
    negligence claim against the respondents.

[5]

Schmerz did retain a tax lawyer on April 15,
    2010, but there was no discussion of a possible action against the respondents.
    The lawyer filed a Notice of Objection to the CRA assessments, as well as an
    application for discretionary relief. Himmelfarb

helped the appellant

prepare its appeals to the CRA by drafting the application for
    relief and helping the appellant and its lawyer with whatever else they needed,
    until at least November 2011.

[6]

By letter dated May 16, 2011, the CRA responded
    to the Notice of Objection advising that it intended to confirm the assessments.
    It did in fact confirm them on July 7, 2011.

[7]

The motion judge found that, as late as July
    2011, there was still a reasonable chance that the application for
    discretionary relief would mitigate some or all of the appellants loss.

[8]

On August 1, 2012, the appellant issued its statement
    of claim against the accountants. This was more than two years after the
    initial denial by CRA of the credits, but within two years of CRAs refusal to
    alter the assessments in response to the Notice of Objection.

B.

reasons of the motion judge

[9]

The motion judges decision to grant summary
    judgment against the appellant turned on the application of the
    discoverability provision in s. 5(1) of the
Limitations
    Act
,
2002
, S.O.
    2002, c. 24, Sched. B (the
Act
):

5. (1)
A claim is
    discovered on the earlier of,

(a) the day on which the
    person with the claim first knew,

(i) that the injury, loss or damage had occurred,

(ii) that the injury, loss or damage was caused by
    or contributed to by an act or omission,

(iii) that the act or omission was that of the
    person against whom the claim is made, and

(iv) that, having regard to the nature of the
    injury, loss or damage, a proceeding would be an appropriate means to seek to
    remedy it; and

(b) the day on which a
    reasonable person with the abilities and in the circumstances of the person
    with the claim first ought to have known of the matters referred to in clause
    (a).

[10]

More particularly, it turned on when the
    appellant first knew that, having regard to the nature of its loss, a
    proceeding would be an appropriate means to seek to remedy it under s.
    5(1)(a)(iv) of the
Act
or, given its
    circumstances and abilities, it ought reasonably to have known this under s.
    5(1)(b).

[11]

The appellant argued before the motion judge
    that a proceeding against the respondents was not appropriate before August 1,
    2010 for three reasons:

1.

No one, including the respondents, had advised it of the possibility
    of a claim against the respondents;

2.

Himmelfarb was actively assisting the appellant
    in its efforts to eliminate its loss by appealing to the CRA; and

3.

The assessments were not confirmed until July,
    2011.

[12]

In his reasons, at para. 67, the motion judge
    defined the issue as whether any or all of these three factors, alone or in
    combination, might reasonably be supposed to have hidden from the plaintiff the
    realization that a proceeding would be an appropriate means to seek a remedy
    for the loss. He concluded that they did not.

[13]

The appellant relied on
Brown v. Baum
, 2016 ONCA 325, 348 O.A.C. 251. In
Brown
, this court upheld the decision of a motion judge that it was not
    legally appropriate for the plaintiff to sue her doctor for professional
    negligence while the doctor was attempting to ameliorate complications
    resulting from a surgery he performed on the plaintiff. The motion judge held
    that
Brown
did not assist the appellant
    because, as he stated at para. 77 of his reasons, the doctor continued to
    treat the patient for the very injury that gave rise to the claim.

[14]

The motion judge appeared to reason that the
    appellants claim would have been appropriate, even while the CRA appeal was
    still ongoing, because the appeal would not have fully eliminated the
    appellants claim against the respondents.
In particular, it would not
    have eliminated the appellants claim for the costs of retaining a tax lawyer
    to prosecute it
:

In the present case, the plaintiff prudently sought to mitigate
    the harm caused by the missed filing deadline through multiple applications for
    administrative relief from CRA and the Minister. If successful, those avenues
    would have reduced or eliminated the tax liability that gave rise to this
    claim.
The relief sought would not have eliminated the
    claim entirely since the professional advice needed to pursue those remedies
    was not without cost and it could not be said whether CRA would grant any of
    the relief sought
. Those applications had some chance of success, but
    ought not to have deterred a duly diligent plaintiff from considering what other
    avenues lay open. The plaintiff did in fact hire litigation counsel to do just
    that in March 2011 prompted  on the record before me  by no other fact than
    the passage of several months without a favourable reply from CRA. [Emphasis
    added.]

[15]

Finally, the motion judge applied this courts
    ruling in
Markel Insurance Company of Canada v. ING Insurance
    Company of Canada
, 2012 ONCA 218, 109 O.R. (3d) 652. In
Markel
, Sharpe J.A. stated, at para. 34, that the term appropriate in s.
    5(1)(a)(iv) of the
Act
means legally
    appropriate. He reasoned:

To give appropriate an evaluative gloss, allowing a party to
    delay the commencement of proceedings for some tactical or other reason beyond
    two years from the date the claim is fully ripened and requiring the court to
    assess the tone and tenor of communications in search of a clear denial would,
    in my opinion, inject an unacceptable element of uncertainty into the law of
    limitation of actions.

[16]

The appellant renews its arguments on s.
    5(1)(a)(iv) of the
Act
before this court,
    submitting that a proceeding against the respondents was not appropriate before
    August 1, 2010 and after the CRA appeal finally ran its course.

C.

ANALYSIS

(1)

The purpose of s. 5(1)(a)(iv) of the
Act

[17]

The motion judge did not have the benefit of this
    courts decision in
407 ETR Concession Company
    Limited v. Day
, 2016 ONCA 709, 403 D.L.R. (4th)
    485. In that case, Laskin J.A. discussed the purpose of s. 5(1)(a)(iv) of the
Act
. He noted, at para. 48:

[I]t seems to me one reason why the legislature added appropriate
    means as an element of discoverability was to enable courts to function more
    efficiently by deterring needless litigation. As my colleague Juriansz J.A.
    noted in his dissenting reasons in
Hare v. Hare
, courts take
    a dim view of unnecessary litigation. [Citation omitted.]

Laskin J.A. also noted, at para. 33,
    that the appropriateness criterion in s. 5(1)(a)(iv) was not an element of the
    former limitations statute or the common law discoverability rule, and that
    this added element 
can have the effect  of postponing the start date
    of the two-year limitation period beyond the date when a plaintiff knows it has
    incurred a loss because of the defendants actions.


[18]

Laskin J.A. stated, at para. 34, that whether an
    action is appropriate depends on the specific factual or statutory setting of
    each individual case. Because of this, case law applying s. 5(1)(a)(iv) is of
    limited assistance. And in
Brown
,

Feldman J.A. noted that there any
    many factual issues that will influence the outcome: at para. 21. Further,
    when  s. 5(1)(b) of the
Act
is
    applied
, the determination whether legal action
    would be appropriate   takes into account
what a reasonable person with
    the abilities and in the circumstances of the plaintiff ought to have known.
    Section 5(1)(b) is described as a modified objective test in
Ferrera
    v. Lorenzetti, Wolfe Barristers and Solicitors
, 2012 ONCA 851, 113
    O.R. (3d) 401, at para. 70.

[19]

While I agree that whether a plaintiff ought to have known whether a
    proceeding would have been an appropriate means to seek to remedy damage,
    injury or loss will turn on the facts of each case and the abilities and
    circumstances of the particular plaintiff, prior case law can assist in
    identifying certain general principles. I turn now to certain of those principles.

(2)

The effect of assistance by the defendant to eliminate the loss

[20]

First, the cases suggest that a legal proceeding against an expert
    professional may not be appropriate if the claim arose out of the
    professionals alleged wrongdoing but may be resolved by the professional himself
    or herself without recourse to the courts, rendering the proceeding unnecessary.

[21]

Brown
is a leading example of the suspension of a limitation
    period under s. 5(1)(a)(iv) in these circumstances. In
Brown
, the plaintiff
    suffered severe complications from a breast reduction surgery performed by the
    defendant, Dr. Baum, in March 2009. Dr. Baum performed a series of surgeries between
    May 2009 and June 2010 in an attempt to improve the outcome of the initial
    surgery. The patient brought an action against Dr. Baum, alleging lack of
    informed consent, in June 2012, three years after the initial breast reduction
    surgery but within two years of his last ameliorative surgery. Dr. Baum brought
    a motion for summary judgment to dismiss the action as statute-barred.

[22]

The motion judge held that the limitation period did not commence until
    June 2010, when the last ameliorative surgery was performed. The patients
    proceeding was not appropriate while Dr. Baum continued to treat her.

[23]

This decision was upheld on appeal to this court. Feldman J.A. held, at
    para. 18, that it would not have been appropriate for the patient to sue Dr.
    Baum while he was trying to fix the complications that arose in the original
    surgery because he might have been successful in correcting the complications
    and improving the outcome of the original surgery. Feldman J.A. further stated
    that it is not simply an ongoing treatment relationship that will prevent the
    discovery of the claim under s. 5. In this case, it was the fact that the
    doctor was engaging in good faith efforts to remediate the damage and improve
    the outcome of the initial surgery. This could have avoided the need to sue:
    para. 24.

[24]

Brown
was soon followed in
Chelli-Greco v. Rizk
, 2016
    ONCA 489. A patient sued her dentist for professional negligence within two
    years of her last appointment with the dentist. The dentist moved for summary
    judgment. He argued that the patients claim was time-barred because it was
    discovered more than two years before it was commenced, when the patient first
    complained of dental work performed by the dentist and demanded reimbursement.

[25]

The motion judge denied summary judgment, finding that the patients
    decision to continue treatment with the dentist beyond the date of her
    complaint was based on the dentists endeavours to repair his deficient dental
    work. On appeal, this court stated at para. 4: Given this finding, we see no
    error in the motion judge's conclusion that the respondents action was not
    discovered until after the treatment and the dentist-patient relationship had
    ended and that her action was not statute-barred as a result.

[26]

Resort to legal action may be inappropriate in cases where the
    plaintiff is relying on the superior knowledge and expertise of the defendant, which
    often, although not exclusively, occurs in a professional relationship.
    Conversely, the mere existence of such a relationship may not be enough to
    render legal proceedings inappropriate, particularly where the defendant, to
    the knowledge of the plaintiff, is not engaged in good faith efforts to right
    the wrong it caused. The defendants ameliorative efforts and the plaintiffs
    reasonable reliance on such efforts to remedy its loss are what may render the
    proceeding premature.

[27]

Finally, I note that cases in which a defendant who is an expert
    professional attempts to remedy a loss that a plaintiff has discovered and
    alleges was caused by the defendant (engaging the potential application of s.
    5(1)(a)(iv)) are distinct from  cases in which courts have held that  a client
    has not discovered a potential claim for solicitors negligence until being
    advised by another legal professional about the claim: see
Ferrara
, at
    para. 70; and
Lauesen v. Silverman
, 2016 ONCA 327, 130 O.R. (3d) 665,
    at paras. 25-31. In the latter category of cases, the issue is whether the
    plaintiff knew or ought reasonably to have known
injury, loss or damage
had occurred (under s. 5(1)(a)(i)) that was
caused by or contributed to by
    an act or omission of the defendant
(under ss. 5(1)(a)(ii) and (iii)). Section
    5(1)(a)(iv) comes into focus where the plaintiff knew or ought reasonably to
    have known of his or her loss and the defendants causal act or omission, but
    the plaintiff contends the limitation period was suspended because a proceeding
    would be premature. Although discoverability under more than one subsection of
    s. 5(1)(a) may be engaged in a single case, it is important not to collapse the
    analysis of discoverability of loss or damage and the defendants negligence or
    other wrong with the determination whether legal action is appropriate although
    other proceedings to deal with the loss may be relevant to both questions.

(3)

The effect of other processes which may
    eliminate the loss

[28]

A second line of cases interpreting and applying s. 5(1)(a)(iv) of the
Act
involves a plaintiffs pursuit of other processes having the potential to
    resolve the dispute between the parties and eliminate the plaintiffs loss.

[29]

This approach to discoverability is consistent with  the
    rule in administrative law that it is premature for a party to bring a court
    proceeding to seek a remedy if a statutory dispute resolution process offers an
    adequate alternative remedy and that process has not fully run its course or
    been exhausted: see
Volochay v. College of Massage Therapists of
    Ontario
, 2012 ONCA 541, 111 O.R. (3d) 561, at paras.
    61-70.

[30]

In
407 ETR Concession Company,
for example
,
the
    plaintiff operated a public toll highway. It was authorized under the
Highway
    407 Act, 1998
, S.O. 1998, c. 28, to collect tolls from those who used the
    highway.
There were two methods to collect unpaid tolls: the
    first by civil action and the second by a statutory license plate denial
    process.
In the latter process, the Registrar of Motor Vehicles would
    not validate or issue a drivers permit to any person with an outstanding debt
    owed to the plaintiff.

[31]

The plaintiff sued the defendant in 2013 for unpaid
    tolls incurred through use of the highway between 2008 and 2010. The defendant
    had been put into the statutory license denial process, and his drivers permit
    expired in 2011, after which it was not renewed by the Registrar. He argued
    that the plaintiffs claim was time-barred because it was discovered in 2013,
    outside the limitation period.

[32]

This court held that a civil action was not an
    appropriate means for the plaintiff to recover the unpaid tolls until 2011,
    when the usually effective license plate denial process had run its course:
    para. 39. Given the statutory process, it would have been inappropriate to
    require the plaintiff to prematurely resort to court proceedings while the
    statutory alternative process was ongoing, which might make the proceedings
    unnecessary. In fixing the date when a proceeding is legally appropriate under
    s. 5(1)(a)(iv) of the
Act
, [i]f the claim is
    the kind of claim that can be remedied by another and more effective method
    provided for in the statute, then a civil action will not be appropriate until
    that other method has been used: para. 39.

[33]

Lipson v. Cassels Brock & Blackwell LLP
,
2013 ONCA 165
, 114
    O.R. (3d) 481, is a case that dealt with tax advice and dispute resolution through
    the courts.

[34]

In
Lipson
, the plaintiff and 900 taxpayers donated cash and
    timeshare weeks to registered athletic associations through a Timeshare Tax
    Reduction Program. The promotional material for the program included an opinion
    prepared by the defendant law firm. The defendant stated that it was unlikely
    that Canada Customs and Revenue Agency (CCRA) could successfully deny tax
    credits. However, in 2004, the CCRA notified the plaintiff that it intended to
    disallow his claim for tax credits. Two of the other donors launched
    proceedings as a test case to challenge the CCRAs disallowance. The test case
    settled in 2008 on the basis that the donors would receive tax credits for
    their actual cash donations but not for their donations of timeshare weeks.

[35]

In 2009, the plaintiff commenced a proposed class action for solicitors
    negligence and negligent misrepresentation based on the defendants opinion
    that it was unlikely that the CCRA could successfully deny the tax credits the
    plaintiff anticipated receiving. The defendant opposed certification on the
    grounds that the class members claims were statute-barred. It argued that the
    claims were discoverable in 2006, when the CCRA disallowed the tax credits. The
    motion judge agreed and the plaintiff appealed.

[36]

This court allowed the appeal. It held that it was not clear that the
    plaintiffs claim was discovered in 2004, when the validity of the defendants
    opinion was first challenged by taxation authorities, because discovery of a
    potential problem with the opinion was not discovery of a negligence claim.
    There was merit in the plaintiffs allegation that he did not discover his
    claim until the two representative test cases were settled in 2008. His
    pleadings did not demonstrate that he knew the CCRAs challenge to his credit
    claim would likely be successful prior to 2008. That could not have been
    determined until the conclusion of the dispute with the CCRA.

[37]

Goudge and Simmons JJ.A identified two issues with the motion judges
    reasons:

On the one hand, although the motion judge seems to acknowledge
    that the notices of disallowance were not a final disposition of the tax credit
    issue  and therefore at best provided notice of a potential claim  he appears
    to have concluded that all class members should have known when they received
    the notices of disallowance that the CCRA could successfully challenge their
    claims for tax credits and that the action therefore became statute-barred at
    that time.

Further, the motion judge appears to have treated the class
    members' knowledge that they were incurring professional fees to challenge the
    CCRA's denial of the claimed tax credits as a relevant factor affecting the
    commencement of the limitation period.

In our view,
neither the fact that the
    CCRA was challenging the claimed tax credits nor the fact that the class
    members may have been incurring professional fees to challenge the CCRAs
    denial of the tax credits is determinative of when the class members reasonably
    ought to have known they had suffered a loss as a result of a breach of the
    standard of care on the part of Cassels Brock
.

As pleaded in the fresh as amended statement of claim, the
    Cassels Brock opinion was that it was unlikely that the CCRA could successfully
    deny the claimed tax credits.
Accordingly, the fact of a
    CCRA challenge to the tax credits did not, in itself, mean the challenge would
    likely be successful or make the Cassels Brock opinion invalid
. Further,
    even accepting that receipt of the notices of disallowance prompted class
    members to obtain professional advice and to launch test case litigation to
    challenge the denial of the tax credits, that conduct does not demonstrate when
    class members knew, or ought reasonably to have known, that the test case
    litigation would not likely be entirely successful. [Citations omitted.]
    [Emphasis added.]

[38]

I note that, although the court in
Lipson
did not explicitly
    address the appropriateness criterion in s. 5(1)(a)(iv) of the
Act
,
    its reasoning would be accurately described as holding that the plaintiff did
    not discover that a proceeding against the defendant was necessary or
    appropriate until the tests cases were resolved in 2008. Before then, and
    particularly in 2004, the mere fact that the taxation authorities had resisted
    the plaintiffs tax credits claim did not give the plaintiff knowledge that commencing
    a proceeding against the defendant in court would be necessary or an appropriate
    means to recover his losses.

[39]

Non-administrative, alternative processes have also been seen in other
    cases as having the potential to resolve a dispute, thus rendering a court
    proceeding inappropriate or unnecessary.

[40]

For example, in
Independence Plaza 1 Associates, L.L.C. v.
    Figliolini
, 2017 ONCA 44
,
a plaintiff sued on a foreign judgment in Ontario. The defendant,
    the foreign judgment debtor, said that the plaintiffs action was time barred. The
    issue was whether the plaintiffs claim on the foreign judgment was discovered
    at the time of the foreign trial judgment or at the time of the decision on the
    appeal from that judgment in the foreign jurisdiction.

[41]

This court held that the claim was not discovered, and
    thus the limitation period did not begin to run, until the foreign appeal
    process had run its course. This was because it was not legally appropriate for
    the plaintiff to commence a legal proceeding in Ontario until then. Strathy C.J.O.
    observed at para. 77:

In the usual case, it will not be legally appropriate to
    commence a legal proceeding on a foreign judgment in Ontario until the time to
    appeal the judgment in the foreign jurisdiction has expired or all appeal
    remedies have been exhausted.
The foreign appeal process
    has the potential to resolve the dispute between the parties. If the judgment
    is overturned, the debt obligation underlying the judgment creditors
    proceeding on the foreign judgment disappears.

[42]

In
Figliolini
, Strathy C.J.O. approved of the reasoning of
    Chiappetta J. in
U-Pak Disposals (1989) Ltd. v. Durham (Regional
    Municipality)
, 2014 ONSC 1103.
U-Pak
involved a motion to amend a statement of claim, including to add
    plaintiffs
in a proceeding against the defendant municipality. The
    defendant had issued a request for tender for the contracting of waste disposal
    services for residents of the municipality. The defendant argued that the
    claims of the new proposed plaintiffs, which arose out of alleged wrongdoing by
    the defendant in the tender process, were statute-barred, as  they would be
    added  more than two years after the tender process began but less than two years
    after it concluded.

[43]

Master Abrams disagreed. She permitted the amendment of the statement of
    claim, and the defendant to plead the limitation period. She held that there
    was a plausible argument the claim was not discoverable until the tender process
    ended: see 2013 ONSC 6535.

[44]

Her decision was upheld by Chiappetta J., who wrote, at paras. 24-25:

The Master concluded that legally appropriate could be
    interpreted to include circumstances where the commencement of a proceeding
would affect a legal relationship between the parties
.
    The legal implications for taking action during the course of an active tender
    process were known to the Plaintiff; under the terms of the tender, Durham
    Region would have been within its legal right to disqualify the Plaintiff and
    the proposed plaintiffs' bid.

In my view, the Master correctly concluded there is a
    potentially successful argument to be made by the prospective plaintiffs that
    their claims were not legally appropriate until the whole tender process
    expired because a claim during the process would legally disqualify them from
    continuing to participate in the very process that may upon its completion form
    the foundation of the claim. If this argument were accepted, the proposed
    plaintiffs could not have had a viable claim as of [the date of the first
    alleged wrongdoing by the defendant in the tender process] because the
    appropriate means element of discoverability had not yet crystallized.
    [Emphasis added.]

Thus,
U-Pak
provides another example of a
    scenario in which it may not be appropriate or necessary for a plaintiff to
    commence a court proceeding while an alternative process that could potentially
    affect or eliminate its dispute with the defendant remains ongoing.

[45]

Many of the cases dealing with the effect of alternative processes on
    the appropriateness of a court proceeding have applied the concept of a
    proceeding being legally appropriate articulated by this court in
Markel
.
Markel
involved a dispute between sophisticated insurers claiming
    indemnity under statutory loss transfer rules. The limitations issue that arose
    concerned whether a legal proceeding was inappropriate while settlement
    discussions between the parties were ongoing and thus, whether a claim was not
    discovered until these negotiations broke down.

[46]

Recall that, in
Markel
, the court held that the term
    appropriate in s. 5(1)(a)(iv) means legally appropriate. This
    interpretation avoided entangling courts in the task of having to assess [the]
    tone and tenor of communications in search of a clear denial that would
    indicate the breakdown of negotiations between the parties. That would permit a
    plaintiff to delay the discoverability of a claim for some tactical or other
    reason and inject an unacceptable element of uncertainty into the law of
    limitation of actions (at para. 34).

[47]

Similarly, in
407 ETR Concession Company
, at para. 47, Laskin
    J.A. stated that the use of the term legally appropriate in
Markel
signified that a plaintiff could not claim it was appropriate to delay the
    start of the limitation period for tactical reasons,
or
    in circumstances that would later require the court to decide when settlement
    discussions had become fruitless
 (emphasis added).

[48]

These cases instruct that if a plaintiff relies on the exhaustion of
    some alternative process, such as an administrative or other process, as suspending
    the discovery of  its claim, the date on which that alternative process has run
    its course or is exhausted must be reasonably certain or ascertainable by a court.
    In
Markel
, the date on which settlement discussions between the
    parties ran their course, and thus the date on which the plaintiffs claim was
    purportedly discovered, was not sufficiently certain or ascertainable by the
    court. By contrast, in
Figliolini
it was reasonably certain that the
    foreign appeal process had been exhausted on the day that the foreign appellate
    court had released its judgment, and in
Lipson
it was reasonably
    certain that the CCRA appeal process ran its course on the date that the 2008
    test cases were settled.

(4)

Application to this case

[49]

In the present case, I conclude that the motion judge erred in holding
    that the appellant knew or ought to have known that its proceeding was
    appropriate as early as April 2010, when it received the CRAs Notices of
    Assessment disallowing its tax credits. In my view, the proceeding was not
    appropriate, and the plaintiffs underlying claim was not discovered, until May
    2011, when the CRA responded to the appellants Notice of Objection and advised
    that it intended to confirm its initial assessments. The motion judge erred at
    para. 67 of his reasons by equating knowledge that the defendants had caused a
    loss with a conclusion that a proceeding would be an appropriate means to seek
    a remedy for the loss. I say this for the following reasons.

[50]

First, the motion judge erred in distinguishing the present case from
Brown
when applying the appropriateness criterion under s. 5(1)(a)(iv) of the
Act
.
    The  appellant looked to its professional advisors, the respondents, to provide
    accounting and tax advice. It relied on the respondents advice to retain a tax
    lawyer to object to the CRAs Notices of Assessment. As did the doctor in
Brown
,
    Himmelfarb attempted to ameliorate the loss to the appellant that the
    respondents caused in failing to file the appellants tax returns in time.

[51]

Himmelfarbs involvement in the appellants appeal to the CRA was not
    trivial. The motion judge held at para. 78 of his reasons that Himmelfarb's
    role was of a supporting nature only and that he was not directing the case.
    While this may be true, it unduly discounts Himmelfarbs role in attempting to
    resolve the appellants dispute with the CRA. Himmelfarb recommended that the
    appellant obtain a tax lawyers advice.
He drafted the
    application for discretionary relief. He helped the appellant and its lawyer
    with whatever else they needed.

[52]

Had Himmelfarb, together with the tax lawyer that he
    advised the appellant to enlist in aid, prosecuted the CRA appeal successfully,
    the appellants loss would have been substantially eliminated, and it would
    have been unnecessary to resort to court proceedings to remedy it. The fact
    that the appellant would have been unable to recover the fees it paid the tax
    lawyer, except through litigation, is in my view inconsequential. It is the
    claim that is discoverable, not the full extent of damages the plaintiff may be
    able to recover. It would not have been appropriate under s. 5(1)(a)(iv) of the
Act
for the appellant to commence a proceeding
    until Himmelfarbs ameliorative efforts concluded
.

[53]

Similarly, the CRA appeal process had the potential to eliminate the
    appellants loss. As an alternative process to court proceedings, it could have
    resolved the dispute between the appellant and the respondents. These results
    would have made a proceeding unnecessary. It would not have been appropriate
    for the appellant to commence a proceeding until the CRA appeal process was
    exhausted in May 2011.

[54]

Likewise, this courts decision in
Markel
, as interpreted in
407
    ETR Concession Company
, about the meaning of the concept of a proceeding
    being legally appropriate under s.
5(1)(a)(iv) of the
Act
supports rather than undermines the appellants position in this
    case. This is not a case where the claimant sought to toll the operation of the
    limitation period by relying on the continuation of an alternative process
    whose end date was uncertain or not reasonably ascertainable. It was clear that
    the end date of the CRA appeal in this case was May 16, 2011, when the CRA responded
    to the appellants Notice of Objection advising that it intended to confirm the
    assessments. In my view, the motion judge erred in invoking
Markel
to dismiss the appellants claim as time barred.

D.

disposition

[55]

Accordingly, I would allow the appeal, set aside the order of the motion
    judge and dismiss the motion for summary judgment.  I would award costs of the appeal
    to the appellant in the agreed sum of $15,000.00, inclusive of disbursements
    and taxes.

Released: 
GP APR 24
    2017


G. Pardu J.A.

I agree. E.A. Cronk
    J.A.

I agree. K. van
    Rensburg J.A.


