As predecessor in interest, firm’s knowledge was imputed to appellants for limitations purposes

Appellants commenced action against broker and brokerage firm for negligence, breach of contract and breach of fiduciary duty in management of investment accounts in 2006 and obtained judgment in April 2013. In reasons for judgment, trial judge made comments critical of conduct of principal of brokerage firm, including his failure to properly supervise broker. Firm made assignment into bankruptcy in January 2015 and approximately 21 months later appellants, as judgment creditors of firm, obtained order permitting them to commence and prosecute action against principal in place of bankruptcy trustee and commenced action. Appellants brought for summary judgment, relying on judge’s finding of wrongdoing in previous action, and principal brought cross-motion for summary dismissal of claim on basis that it was statute-barred. Motions judge granted principal’s cross-motion to dismiss claim finding that appellants became aware of facts forming claim against principal in July 2006, even though they could not have brought action against principal until firm’s bankruptcy, and, alternatively, that limitation period began to run against firm in December 2006 when firm was served with statement of claim in prior action, or at very latest April 2013 when judgment was released. Appellants appealed. Appeal dismissed. Motions judge erred in concluding that limitation period ran against appellants because of their personal knowledge of relevant facts, when they had no capacity to sue in firm’s name until after firm was bankrupt. However, motions judge did not err in concluding, in alternative, that firm, as appellants’ predecessor in relation to claim, had discovered claim against principal more than two years before appellants commenced action. Whether or not principal’s control of firm was relevant to firm’s discovery of claim, by April 2013 at latest, committee of firm’s shareholders knew of facts underlying claim and ought reasonably to have known that action by or on behalf of firm would be appropriate. As predecessor in interest, firm’s knowledge was imputed to appellants for limitations purposes through application of s. 12(1) of Limitations Act, 2002 (Ont.). Action was time-barred.

Ridel v. Goldberg (2019), 2019 CarswellOnt 12382, 2019 ONCA 636, K. Feldman J.A., K. van Rensburg J.A., and M.L. Benotto J.A. (Ont. C.A.); affirmed (2018), 2018 CarswellOnt 11221, 2018 ONSC 3113, T. McEwen J. (Ont. S.C.J.).

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