Saltsov et al. v. Rolnick, (2010) 262 O.A.C. 299 (DC)

• Judge: J. Wilson, Dambrot and Murray, JJ.A.
• Court: Superior Court of Justice of Ontario (Canada)
• Case Date: October 13, 2009
• Jurisdiction: Ontario
• Citations: (2010), 262 O.A.C. 299 (DC);2010 ONSC 914

Saltsov v. Rolnick (2010), 262 O.A.C. 299 (DC)

MLB headnote and full text

Temp. Cite: [2010] O.A.C. TBEd. AP.076

Leon Saltsov and 968831 Ontario Inc., formerly known as CashCode Co. Inc. (appellants) v. Abe Rolnick (respondent)

(30/09; 40/09; 2010 ONSC 914)

Indexed As: Saltsov et al. v. Rolnick

Court of Ontario

Superior Court of Justice

Divisional Court

J. Wilson, Dambrot and Murray, JJ.A.

April 19, 2010.

Summary:

Rolnick was hired as the president of CashCode to help sell the company. Saltsov, a shareholder and director of CashCode, brought an action against Rolnick for breach of fiduciary duty, breach of trust, inducing breach of contract and interference with economic relations. Rolnick demanded that certain conditions be satisfied or he would quit and sue for constructive dismissal. The conditions were not satisfied and Rolnick left his employment. More than three years later, Rolnick commenced a counterclaim against Saltsov based on Saltsov's involvement in CashCode's breach of the employment contract which led to Rolnick's departure. Rolnick also filed a third party claim against CashCode for breach of contract. CashCode and Saltsov brought motions pursuant to rule 21, asserting that Rolnick's claims were commenced more than two years after the cause of action arose and were barred by the Limitations Act, 2002. In the alternative, Saltsov and CashCode filed evidence in support of a rule 20 summary judgment motion, arguing that there was no genuine issue for trial with respect to the limitation issue.

The Ontario Superior Court, in a decision reported at [2008] O.T.C. Uned. S21, dismissed the motions. With respect to the rule 21 motions, the motions judge held that it was not plain and obvious that the claim was statute-barred. With respect to the rule 20 motions, the motions judge indicated that it would be fundamentally unjust for a party to obtain judgment dismissing a claim under rule 20 if the primary position of the party was that the claim failed to disclose a reasonable cause of action and should be struck under rule 21. Saltsov and CashCode appealed. The appeal raised the issues of (1) when a cause of action was discovered within the meaning of the Limitations Act, 2002; and (2) the relationship between rules 20 and 21. As a result of an argument made for the first time on appeal, there was also an issue as to whether Saltsov and CashCode were estopped from raising a limitations defence.

The Ontario Divisional Court, J. Wilson, J., dissenting in part, allowed the appeals and ordered that Rolnick's pleadings be struck. The rule 21 motions should have been successful because it was plain and obvious that Rolnick's claims were made outside the two year limitation period and were statute-barred. The motions judge also wrongly tied the outcome of the rule 20 motions to the success of the rule 21 motions. By doing so, the motions judge failed to consider summary judgment as alternative relief. If, based on his pleading, Rolnick had argued the estoppel defence in response to CashCode's rule 21 motion, and if the motions judge had been unwilling to strike his third party claim, CashCode's rule 20 motion for summary judgment should have succeeded because Rolnick filed no affidavit material and raised no triable issue.

Limitation of Actions - Topic 15

General principles - Discoverability rule - Application of - [See Limitation of Actions - Topic 2023 ].

Limitation of Actions - Topic 1528

Estoppel - Conduct - Admission or acknowledgement - Rolnick was hired as the president of CashCode to help sell the company - Saltsov, a CashCode shareholder and director, brought an action against Rolnick for breach of fiduciary duty, breach of trust, inducing breach of contract and interference with economic relations - Rolnick demanded that certain conditions be satisfied or he would quit - The conditions were not satisfied and Rolnick left his employment - More than three years later, Rolnick commenced a counterclaim against Saltsov based on Saltsov's involvement in CashCode's breach of the employment contract which led to Rolnick's departure - Rolnick also filed a third party claim against CashCode for breach of contract - CashCode and Saltsov brought motions pursuant to rule 21, asserting that Rolnick's claims were commenced more than two years after the cause of action arose and were statute-barred - In the alternative, they brought motions for summary judgment pursuant to rule 20, arguing that there was no genuine issue for trial with respect to the limitation issue - The motions were dismissed - On an appeal by Saltsov and CashCode, Rolnick raised an estoppel defence based on an understanding between the parties that funds ($2.2M) would be put aside to stand against his claim for commission relating to the sale of the company - The Ontario Divisional Court held that in the context of a rule 20 motion, Rolnick's estoppel defence did not raise a triable issue - The payment of money into a trust account was not an admission of liability or an acknowledgment that commission was owed - Rolnick's claim against the funds was specifically subject to final determination by a court or by arbitration - Nor was there any evidence that the setting aside of money sufficient to satisfy a claim was an admission of liability which could defer the running of the limitation period within the meaning of s. 13 of the Limitations Act - The payment of money into trust was made to increase "saleability" of the company, not to resolve the litigation or with the intention of deferring the running of the limitation period - See paragraphs 45 to 54.

Limitation of Actions - Topic 2023

Actions in contract - Actions for breach of contract - When time commences to run - The Ontario Divisional Court stated that "the established jurisprudence makes it clear that a cause of action for constructive dismissal arises when the employee elects to resign from his employment. A cause of action for constructive dismissal does not arise when an employer acts unilaterally in a manner which gives rise to the right of an employee to resign but where the employee does not resign. There would be some very significant practical problems if the courts accepted that a cause of action of constructive dismissal can be discovered before acceptance by the employee of the repudiation of the contract by the employer, that is, before the employee resigns" - See paragraphs 27 to 28.

Practice - Topic 2230

Pleadings - Striking out pleadings - Grounds - Failure to disclose a cause of action or defence - [See first Practice - Topic 5719 ].

Practice - Topic 5715.1

Judgments and orders - Summary judgments - Burden on respondent - [See second Practice - Topic 5719 ].

Practice - Topic 5719

Judgments and orders - Summary judgments - To dismiss action - The appellants brought motions pursuant to rule 21, asserting that the respondent's claims against them were barred by the Limitations Act, 2002 - In the alternative, the appellants filed evidence in support of a rule 20 summary judgment motion, arguing that there was no genuine issue for trial with respect to the limitation issue - The motions were dismissed - The Ontario Divisional Court held that the motions judge erred in dismissing the rule 20 motions for summary judgment on the basis that the "primary position" of the moving parties was that the respondent's claims should be struck under rule 21 as failing to disclose a cause of action - The motions judge effectively and incorrectly ruled out the ability of a party to seek dismissal of an action on alternative bases under rules 20 and 21 by linking the success of a rule 20 motion to that of a rule 21 motion brought at the same time - It was imperative that both rules be understood and applied as they were intended, i.e., as discrete and different ways of enabling a court to dispose of a case without the necessity of trial - The motions under rule 20 and 21 required a distinct and separate analysis - See paragraphs 36 to 38.

Practice - Topic 5719

Judgments and orders - Summary judgments - To dismiss action - The appellants appealed from the dismissal of their rule 20 summary judgment motions to dismiss the respondent's claims against them - The Ontario Divisional Court stated that it was difficult to understand the motions judge's conclusion that there were factual disputes sufficient to create a genuine issue for trial because the respondent did not file any affidavit material in response to the rule 20 motions - The respondent relied on the factual assertions in his pleadings without putting in affidavit evidence notwithstanding rule 20.04, which provided that the responding party "may not rest on the mere allegations or denials of the party's pleadings, but must set out, in affidavit material or other evidence, specific facts showing that there is a genuine issue for trial" - In those circumstances, it was not open to motions judge to conclude that there were sufficient facts in dispute to raise a triable issue - In so concluding, the motions judge ignored the provisions of rule 20.04 and committed an error of law - See paragraph 44.

Cases Noticed:

Farber v. Compagnie Trust Royal, [1997] 1 S.C.R. 846; 210 N.R. 161, consd. [para. 24].

Dick v. Canadian Pacific Ltd. (2000), 230 N.B.R.(2d) 39; 593 A.P.R. 39; 100 A.C.W.S.(3d) 251; 2000 NBCA 10, consd. [para. 26].

Oseen v. Chinook's Edge School Division No. 73 (2006), 397 A.R. 278; 384 W.A.C. 278; 2006 ABCA 286, refd to. [para. 27].

Transamerica Life Canada Inc. et al. v. ING Canada Inc., [2003] O.A.C. Uned. 565; 68 O.R.(3d) 457 (C.A.), refd to. [para. 39].

Lameman et al. v. Canada (Attorney General) et al., [2008] 1 S.C.R. 372; 372 N.R. 239; 429 A.R. 26; 421 W.A.C. 26; 292 D.L.R.(4th) 49; 2008 SCC 14, refd to. [para. 41].

Dawson et al. v. Rexcraft Storage and Warehouse Inc. et al. (1998), 111 O.A.C. 201; 164 D.L.R.(4th) 257 (C.A.), refd to. [para. 41].

McNaught v. Toronto Transit Commission et al. (2005), 194 O.A.C. 73; 74 O.R.(3d) 278 (C.A.), refd to. [paras. 45, 78].

R. v. Perka, Nelson, Hines and Johnson, [1984] 2 S.C.R. 232; 55 N.R. 1, refd to. [para. 45].

Mount Sinai Hospital Center et al. v. Quebec (Minister of Health and Social Services), [2001] 2 S.C.R. 281; 271 N.R. 104, refd to. [para. 49].

Maracle v. Travellers Indemnity Co. of Canada, [1991] 2 S.C.R. 50; 125 N.R. 294; 47 O.A.C. 333; 80 D.L.R.(4th) 652, refd to. [paras. 49, 115].

Wasauksing First Nation et al. v. Wasausink Lands Inc. et al. (2004), 184 O.A.C. 84 (C.A.), refd to. [para. 98].

R. v. Brown (A.R.R.), [1993] 2 S.C.R. 918; 155 N.R. 225; 141 A.R. 163; 46 W.A.C. 163; 105 D.L.R.(4th) 199, refd to. [para. 100].

R. v. Rollocks (R.) (1994), 72 O.A.C. 269; 19 O.R.(3d) 448 (C.A.), refd to. [para. 100].

R. v. L.G. (2007), 229 O.A.C. 89; 228 C.C.C.(3d) 194; 2007 ONCA 654, refd to. [para. 100].

Odhavji Estate et al. v. Woodhouse et al., [2003] 3 S.C.R. 263; 312 N.R. 305; 180 O.A.C. 201; 2003 SCC 69, refd to. [para. 103].

Freeman-Maloy v. Marsden et al. (2006), 208 O.A.C. 307; 79 O.R.(3d) 401 (C.A.), refd to. [para. 104].

Guarantee Co. of North America v. Gordon Capital Corp., [1999] 3 S.C.R. 423; 247 N.R. 97; 126 O.A.C. 1, refd to. [para. 105].

1061590 Ontario Ltd. v. Ontario Jockey Club et al. (1995), 77 O.A.C. 196; 21 O.R.(3d) 547 (C.A.), refd to. [para. 105].

Aguonie v. Galion Solid Waste Material Inc. et al. (1998), 107 O.A.C. 114; 38 O.R.(3d) 161 (C.A.), refd to. [para. 105].

Bank of Nova Scotia v. Christie, [2008] O.T.C. Uned. E97; 48 B.L.R.(4th) 216 (Sup. Ct.), refd to. [para. 109].

Shaw v. Embury, [2009] O.T.C. Uned. J27 (Sup. Ct.), refd to. [para. 109].

Joseph v. Paramount Canada's Wonderland (2008), 241 O.A.C. 29; 2008 ONCA 469, refd to [para. 112].

Fritsch v. Magee, [2009] O.T.C. Uned. D77; 2009 CarswellOnt 3345 (Sup. Ct.), refd to. [para. 116].

Xpress View Inc. v. Daco Manufacturing Ltd. (2002), 36 C.C.E.L.(3d) 78 (Ont. Sup. Ct.), refd to. [para. 121].

Johnston v. Wawanesa Mutual Insurance Co., 2006 CarswellOnt 4528, refd to. [para. 124].

Karais v. Guelph (City) (1992), 11 O.R.(3d) 89 (Gen. Div.), refd to. [para. 126].

Statutes Noticed:

Civil Procedure Rules (Ont.) - see Rules of Civil Procedure (Ont.).

Limitations Act, S.O. 2002, c. 24, sect. 1, sect. 4, sect. 5(1) [para. 30]; sect. 13(1) [para. 51]; sect. 24(1), sect. 24(2), sect. 24(5) [para. 17].

Rules of Civil Procedure (Ont.), rule 20, rule 21 [para. 1].

Authors and Works Noticed:

Bruce, Brian D., Work, Unemployment and Justice (1994), p. 127 [para. 25].

Sherstobitoff, Nicholas W., Constructive Dismissal, in Bruce, Brian D., Work, Unemployment and Justice (1994), p. 127 [para. 25].

Counsel:

Richard B. Swan and Jason W. Woycheshyn, for the appellant, Leon Saltsov;

Rocco DiPucchio and Andrew Winton, for the appellant, 968831 Ontario Inc., formerly known as CashCode Co. Inc.;

Brian A. Grosman and John R. Martin, for the respondent.

This appeal was heard on October 13, 2009, at Toronto, Ontario, before J. Wilson, Dambrot and Murray, JJ., of the Ontario Divisional Court. The judgment of the Divisional Court was released on April 19, 2010, including the following opinions:

Murray, J. (Dambrot, J., concurring) - see paragraphs 1 to 60;

J. Wilson, J., in partial dissent - see paragraphs 61 to 127.