Focus On

LIMITATION OF ACTIONS - When time begins to run - Discoverability

Friday, April 03, 2020 @ 9:18 AM  


Lexis Advance® Quicklaw®
Appeal by the plaintiff from summary judgment dismissing her action for oppression remedy as statute barred. The appellant along with two others, including the respondent, were shareholders in a drycleaning business. The respondent was responsible for running the day to day operations of the business. Between March and August 2011, the appellant regularly attended and checked on the business. In June 2011, the appellant was advised that the business could no longer afford to pay rent but did not believe it. In July 2011, the appellant was told by the respondent of a proposed sale of the business for $20,000 to which she agreed. In September 2011, the appellant attended at the premises to find a new drycleaning business operating there under a different name. In February 2012, she obtained a corporate profile that revealed the respondent had filed Articles of Dissolution for the business in October 2011. She commenced the present action in October 2013 for damages, punitive damages and an accounting. She alleged the respondent engaged in oppressive conduct by unilaterally dissolving the business without the appellant’s approval or knowledge, by failing to pay her any of the proceeds of sale and by failing to account for any of the profits since June 2010. The motion judge found that by September 2011, the appellant knew or ought to have known that she suffered loss or damage because she knew at that point that the business was gone, a new drycleaning business with new owners was operating at the premises, and she received no money from any sale or transfer of the business or any dividends from the operations. The appellant argued that even if some of the oppressive acts or omissions complained of in her statement of claim were discoverable more than two years before she commenced her action, the dissolution of the corporation without any authorization from her or any notice to her was not statute barred.

HELD: Appeal allowed in part. The corporate dissolution claim was not statute barred. The other claims were properly dismissed as statute barred. The appellant alleged singular discrete oppressive acts rather than ongoing oppression. The profits distribution claim, the sale claim and the corporate dissolution claim were each singular discrete oppressive acts. The motion judge appropriately focused on the facts of which the appellant was aware as of September 2011. The motion judge was entitled to find that the sale claim and the profits distribution claim were discoverable by September 2011. The appellant did not need to know that the corporation was dissolved to discover that she had a potential claim for oppression for an improper transfer or sale of the business, or a potential claim for oppression for a failure to pay profits. The corporate dissolution claim was not, however, discoverable in September 2011 as the corporate dissolution had not yet occurred. It also did not follow from the motion judge’s findings that the corporate dissolution claim should have been discovered before October 2011.

Zhao v. Li, [2020] O.J. No. 671, Ontario Court of Appeal, K.N. Feldman, D.M. Brown and B. Zarnett JJ.A., February 13, 2020. Digest No. TLD-March302020010