Ridel v. Cassin, 2014 ONCA 763

By Strathy C.J.O., Feldman, Lauwers JJ.A
Ontario Court of Appeal
Oct 28, 2014


Jean-Marc Ridel, Nadine Suzanne Josephine Ridel and Marc H. Ridel

Plaintiffs/Defendant by Counterclaim

(Respondents/Appellants by Cross-Appeal)


Armando Cassin and E3M Investments Inc.

Defendants/Plaintiffs by Counterclaim

(Appellants/Respondents by Cross-Appeal)

Paul Le Vay and Naomi Greckol-Herlich, for the appellants

Philip Anisman, for the respondents

Heard: October 28, 2014

On appeal from the judgment of Justice Sarah Pepall of the Superior Court of Justice, dated April 17, 2013, with reasons reported at 2013 ONSC 2279.


[1]          The trial judge awarded damages to the respondents for their losses arising out of unauthorized investment trading by the appellants. The appellants argue that the action was barred by the limitation period under s. 5(1) of the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B. They abandoned their argument that the trial judge erred in her determination of causation. The respondents cross-appeal and seek to recover their payment of taxes on capital gains they incurred through the unauthorized investments. For the reasons that follow, we dismiss the appeal and allow the cross-appeal.

The Appeal

[2]          The appellants concede that in the course of the trial judge’s extensive reasons she analyzed the subjective element of discoverability under s. 5(1) (a) of the Limitations Act, 2002. Counsel argues, however, that she did not advert to the objective element of the test under s. 5(1) (b). 

[3]          We disagree. The trial judge’s reasons fully support the conclusions in the following three paragraphs of her decision:

262     I have found that the Plaintiffs were not familiar with the significant components of their NCAFs when their accounts were opened. Furthermore, they were far from sophisticated. While it is the case that the Plaintiffs received trading slips and monthly account statements from e3m, they had no idea that Mr. Cassin was not entitled to do much of what he did including trading without instructions, completing the NCAFs without meaningful input from the Plaintiffs, investing in unsuitable securities for them, adopting ridiculous risk factors relative to their individual profiles and engaging in other negligent conduct. The Plaintiffs did not know, nor could they have known, that the Defendants had failed to comply with securities regulations and standards. The Plaintiffs thought their losses had arisen solely because of a fallen market, not because they had a wayward RR and an investment dealer that had abdicated its responsibilities. Mr. Ridel knew that losses had occurred but did not know that the Defendants had caused or contributed to them. This is consistent with the absence of any complaints from the Plaintiffs.

263   The Plaintiffs did not have the requisite knowledge contemplated by section 5(1) (a) until Mr. Sandler informed them of the improper handling of their accounts.

264    Furthermore, in my view, a reasonable person with the abilities and in the circumstances of the Plaintiffs ought not to have known of the matters described in s. 5(1) (a) of the Limitations Act, 2002, in the years 1999 and 2000 and following. Their claims are not barred by any limitation period.

[4]          In our view, by using the very language of s. 5(1)(b) in the final quoted paragraph, the trial judge shows that she  applied the correct test, which has been described as a “modified objective test”: Ferrara v. Lorenzetti, Wolfe Barristers and Solicitors, 2012 ONCA 851, 113 O.R. (3d) 401, at para. 70. Her determination is entitled to deference.

[5]          The appellant argued that Mr. Ridel’s conversation with Mr. Cassin in July 2004 showed that he had an understanding of his investments; since he had the ability in July 2004 to make that inquiry with due diligence there is no basis for the argument that discoverability principles could justify a delay of two years before he asked a new adviser to look into his losses.

[6]          We reject that submission. The trial judge was clearly aware of that conversation, in which no wrongdoing was disclosed or discussed, and took it into account in reaching her conclusion that a reasonable person with Mr. Ridel’s knowledge and abilities would not with due diligence have discovered the appellant’s wrongdoing any sooner.

[7]          We dismiss the appeal.

The Cross-Appeal

[8]          On the cross-appeal the respondents seek to recover the amounts that they were obliged to pay as capital gains tax on the initially profitable investment transactions pursued by the respondents. The trial judge held, at para. 265:

This claim was not asserted until the Statement of Claim was amended on August 18, 2009, well after the Plaintiffs had obtained professional advice on the handling of their accounts and their financial losses. The claim for taxes is barred by the two year limitation period.

[9]          We allow the cross-appeal. The amendment increased the amount claimed by almost $100,000 to reflect the result of the investment strategies adopted by Mr. Cassin. These strategies were characterized in the following manner in the statement of claim:

He adopted high risk strategies involving short term trading that generated commissions disproportionate to the profits earned and substantial capital gains. In doing so, he breached his duties as a fiduciary, was negligent, and failed to comply with the standards required of registrants under the Securities Act and with the Rules of the IDA. [The amendment is underlined.]

[10]       The evidence amply bears out the accuracy of this statement, as set out in the trial judge’s reasons. In our view, this was not the assertion of a new cause of action, which would have been barred by the Limitations Act, 2002, but was simply a claim for additional damages arising from an existing cause of action: Bazkur v. Coore, 2012 ONSC 3468; Ivany v. Financiere Telco Inc., 2011 ONSC 2785, at paras. 26-33. The tax liability arose out of the wrongful and unauthorized trading activity of the appellants: Hunt v. TD Securities (2003), 66 O.R. (3d) 481, at para. 193. It was a dead loss to the respondents that is simply to be added to the loss of their investment money.

[11]       The respondents are entitled to the amount claimed on the cross-appeal together with pre-judgment interest from February 9, 2010, which is the date on which the taxes were paid.

[12]       Costs are fixed in the agreed amount of $25,000, payable to the respondents.

“G. R. Strathy C.J.O.”

“K. Feldman J.A.”

  • “P. Lauwers J.A.”