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PROCEEDINGS - Practice and procedure - Limitation periods

Tuesday, February 11, 2020 @ 8:37 AM  

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Appeal by the defendants from trial judgment finding them liable on their personal guarantees respecting the amounts owed on 25 mortgages. Cross-appeal by the plaintiff from the trial judge’s decision reducing the amount owing on the guarantees by 50 per cent to account for the proceeds of a settlement received by her. The plaintiff sued the lawyer who acted for her on these and other transactions for negligence. The allegations of negligence included but were not limited to failure to obtain proper security for her mortgage investments. That action was settled for a global sum. The trial judge reduced the amount owing on the guarantees by 50 per cent to account for the proceeds of the settlement and to avoid double recovery.

HELD: Appeal dismissed. Cross-appeal allowed. The trial judge did not err in finding that the applicable statutory limitation period for the claim on the guarantees was 10 years pursuant to the Real Property Limitations Act and not the two-year period in the Limitations Act. The guarantees fell within “any other instrument to repay the whole or part of any money secured by a mortgage” in s. 43(1) of the Real Property Limitations Act. The trial judge erred in reducing the amounts owed under the guarantees. The facts of this case did not at this point engage the double recovery or double satisfaction principle. The trial judge’s determination that a 50 per cent reduction was appropriate was entirely speculative. The appellants did not establish that their liability under the guarantees was reduced by satisfaction of the guaranteed debt. The trial judge’s finding that the guarantees were valid and enforceable was not consistent with his finding that 50 per cent of the settlement should be attributed to the claim on the guarantees. Until the plaintiff achieved full or substantial satisfaction of the debt she was owed, there could be no question of double recovery.

Hilson v. 1336365 Alberta Ltd., [2019] O.J. No. 6423, Ontario Court of Appeal, D.H. Doherty, R.J. Sharpe and L.B. Roberts JJ.A., December 18, 2019. Digest No. TLD-February102020004