Canada: Summary Judgment Denied On Limitations Issue With Limited Record – Cash Store's Professional Advisors Must Proceed To Trial

Last Updated: May 7 2019
Article by Laura M. Wagner

Most Read Contributor in Canada, July 2019

The plaintiff 1511419 Ontario Inc., formerly known as the Cash Store Financial Services Inc. ("Cash Store"), has sued its former auditor, KPMG LLP; financial advisor, Canaccord Genuity Corp.; and legal advisors, Cassels Brock & Blackwell LLP (collectively, the "Defendants") in three separate actions. The lawsuits all relate to professional services provided by the Defendants to Cash Store with respect to a loan purchase and note offering in January 2012 (the "January 2012 Transaction").

Cash Store was in the business of arranging payday loans for its customers, ostensibly funded by third party lenders ("TPLs"). Cash Store has acknowledged that its management sought to maximize profits with its TPLs by circumventing payday lending laws. This scheme was concealed from the company's payday borrowers and regulators.

In the January 2012 Transaction, Cash Store completed a note offering issuing $132.5 million in senior secured notes and used approximately $116 million of the proceeds to acquire the existing loan portfolio held by its TPLs. The Defendants all provided Cash Store with professional assistance with respect to the January 2012 Transaction. Within a few months of the transaction, Cash Store knew that the valuation of the purchased loan portfolio had dropped significantly. It was ultimately determined that the fair market value of the loan portfolio was far less than the $116 million Cash Store paid for it. An internal investigation was commenced with the assistance of outside advisors that identified problems with the January 2012 Transaction.

On April 15, 2014, Cash Store was granted CCAA protection by order of Morawetz R.S.J. and a Litigation Trustee was appointed. Seven months later, on November 27, 2014, Cash Store commenced its three separate actions against the Defendants. A fourth action against the company's officers and directors was commenced the same day and settled in September 2015.

The Defendants all moved for summary judgment to dismiss their respective actions as statute-barred. They argued that Cash Store knew or ought to have known of its claim shortly after the January 2012 Transaction, and in any event more than two years before November 27, 2014. They also argued that by failing to adduce any evidence from its former officers and directors, Cash Store had failed to put its best foot forward to rebut the presumption in s. 5(2) of the Limitations Act that it discovered its claim upon the closing of the January 2012 Transaction on January 31, 2012.

Justice McEwen dismissed all three motions for summary judgment. Although he said he appreciated the Defendants' desire to deal with the limitation period issues summarily and end what would no doubt be protracted and expensive litigation, he concluded that there was a genuine issue of discoverability requiring trial in all three actions. The case was too complicated to be dealt with summarily based on the "voluminous" yet limited record before him.

Justice McEwen followed the process set out in Nasr Hospitality Services Inc. v. Intact Insurance ("Nasr") for a summary judgment motion involving a limitation period. He held that he had to determine whether the record enabled him to make a series of findings of fact, with the certainty required by Hryniak v. Mauldin, as follows:

  1. the date the plaintiff is presumed under s. 5(2) to know the matters listed in ss. 5(1)(a)(i)-(iv) of the Limitations Act, i.e., the day on which the act or omission on which the claim is based occurred;
  2. the date of actual knowledge under s. 5(1)(a), in the event the evidence proves the contrary of the presumptive date
  3. the s. 5(1)(b) objective knowledge date, based on the reasonable person with similar abilities and circumstances analysis; and
  4. which of the actual knowledge and objective knowledge dates is earlier, for that will be the day on which the plaintiff "discovered" the claim for purposes of applying the basic limitation period of two years.

The Defendants focused on what they argued was Cash Store's lack of due diligence in investigating its claims. Justice McEwen, however, noted that the plaintiff's due diligence in investigating its claim forms part of the objective knowledge analysis under s. 5(1)(b), but is not relevant to the s. 5(1)(a) actual knowledge analysis. And the plaintiff is not required to demonstrate due diligence to rebut the presumptive date in s. 5(2).

Justice McEwen found that the limited record put forward by the parties enabled him to determine that January 31, 2012 was the presumptive knowledge date, but did not allow him to complete the rest of the Nasr analysis. Although the parties had filed 13 separate briefs with the court (not including facta, case briefs, and subsequent written argument), and the total record exceeded 1,500 pages including dozens of exhibits, Justice McEwen noted repeatedly that the affidavit evidence was very limited. No party had filed affidavit evidence from anyone directly involved in the January 2012 Transaction. This omission precluded Justice McEwen from sorting out the relationships between the parties and when Cash Store knew or ought to have known about its claims. He was not prepared to find on the basis of the limited record put forward by both parties that Cash Store had failed to put its best foot forward or that it had failed to rebut the presumption in s. 5(2).

Citing recent Court of Appeal decisions in Mega International Commercial Bank (Canada) v. Yung and Mason v. Perras Mongenais, Justice McEwen noted that "discoverability cases tend to be contentious and complex and not necessarily suitable for summary judgment – particularly in cases involving professional negligence". In this case, Justice McEwen held that the "complicated fact pattern involving allegations of professional negligence ... precludes me from concluding that it would be fair and just, on a limited record, to determine the issue of the limitation period in a case brought against professional advisors."


Once thought of as a prime example of the type of discrete issue ripe for summary determination, even limitation period defences are having a tough time in motions court these days. Going forward, lawyers and other professional advisors sued for professional negligence in particular may find it challenging to get themselves out of an action on a summary basis based on a limitations defence. Where there are any issues of discoverability, the extensiveness of the motion record, including the availability of affidavit evidence from those directly involved, will be key to whether or not the court will be willing to engage with the issue on a summary basis, or will punt the issue to trial.

About BLG

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions