COURT OF APPEAL FOR ONTARIO

CITATION: Baylin Technologies Inc. v.
    Gelerman, 2021 ONCA 45

DATE: 20210126

DOCKET: C68066

Doherty, Nordheimer and Harvison
    Young JJ.A.

BETWEEN

Baylin
    Technologies Inc. and 2385796 Ontario Inc.

Applicants (Appellants)

and

David
    Gelerman

Respondent (Respondent)

AND BETWEEN

Spacebridge
    Inc., Advantech AMT Corp., Advantech Wireless Do Brasil Produtos de Telecomunicações
    Ltda., Advantech Wireless (EMEA) Ltds. and David Gelerman

Applicants (Respondents)

and

Baylin
    Technologies Inc.
, Advantech Wireless Technologies
    Inc. (formerly Baylin Technologies Holdings Canada Inc.), Advantech Wireless
    Technologies (USA) Inc. (formerly Baylin Technologies (USA) Inc.), Advantech
    Wireless Technologies (EMEA) Limited (formerly Baylin Technologies (EMEA) Limited),
2385796 Ontario Inc.
, Jeffrey Royer, Randy Dewey, Janice Davis, Barry
    Reiter, Donald Simmonds, Harold Wolkin, David Saska and Davies Ward Philips
    & Vineberg LLP

Respondents (
Appellants
)

Steve J. Tenai and Miranda Spence, for
    the appellants

Jason Wadden and Jesse-Ross Cohen, for
    the respondents

Linda Plumpton, James Gotowiec and
    Adrienne Oake for the intervener, Toronto Stock Exchange

Susan Kushneryk and Eric Morgan for the
    intervener, The Canadian Coalition for Good Governance

Heard: December 17, 2020 by
    video conference

On appeal from the orders of Justice Laurence
    A. Pattillo of the Superior Court of Justice dated January 23, 2020, with
    reasons reported at 2020 ONSC 404.

Nordheimer J.A.:

A.

Overview

[1]

The appellants, Baylin Technologies Inc. and
    2385796 Ontario Inc. ("2385796"), brought an application before the
    Ontario Superior Court of Justice (Commercial List). They sought an order
    requiring David Gelerman to tender his resignation as a director of Baylin, as
    required under Baylins majority voting policy, along with other declaratory
    relief.

[2]

Prior to the appellants application, David Gelerman
    and the corporate respondents had brought an application seeking a declaration
    that Gelerman was not required to tender his resignation because of alleged
    oppressive conduct by the appellants and others, and for an order directing the
    release of certain shares held by Spacebridges lawyers, as trustees, for
    consulting fees pursuant to a consulting agreement between Baylin and
    Spacebridge (the Consulting Agreement).

[3]

The applications were heard together on October
    29, 2019 and decided in a single set of reasons released on January 23, 2020.
[1]

B.

Background

(1)

The Asset Purchase Agreement

[4]

Pursuant to an asset purchase agreement in
    January 2018 (the APA), Baylin acquired from Spacebridge and its affiliates
    the undertaking and assets of Spacebridges satellite and radio frequency,
    terrestrial microwave and antenna equipment and services business. Gelerman was
    the founder of Spacebridge and its President and CEO.

[5]

Negotiations over the APA lasted several months
    following the signing of a non-binding indication of interest between Baylin
    and Spacebridge at the end of August 2017. As part of the indication of
    interest, a support letter was delivered by 2385796 (Baylins majority shareholder)
    to Baylin in early August 2017 stating that it would be prepared to support the
    proposed transaction between Baylin and Spacebridge (formerly called Advantech
    Wireless Inc.). The indication of interest provided for Gelerman to serve in a
    senior consulting role reporting directly to Baylins President and CEO.

[6]

The APA was eventually negotiated and signed on
    January 17, 2018. Paragraph 4.16 of the APA is of particular relevance to the
    issues raised. It reads, in part:

Gelerman Director Nomination

(a) Subject to Gelerman meeting, at all
    applicable times, the requirements of the TSX and Applicable Laws, Baylin
    shall:

(i) following the Closing Date request of its
    board of directors to appoint Gelerman to such board of directors, to hold such
    position until the first annual general meeting of holders of Baylin Common
    Shares that occurs following the Closing; and

(ii) at each of the 2018 and 2019 annual
    general meetings of holders of Baylin Common Shares, Baylin shall nominate
    Gelerman for election to its board of directors and shall honestly and in good
    faith, subject to Applicable Law, assist Gelerman to obtain the votes necessary
    to secure membership on the board of directors of Baylin

(2)

The Consulting Agreement

[7]

It was a condition to the closing of the APA that
    Baylin enter into the Consulting Agreement with Spacebridge. The Consulting
    Agreement provided for consulting services to be provided by David Gelerman, in
    his capacity as Chief Technology Officer, and Stella Gelerman, in her capacity
    as Special Advisor, to Baylin or its affiliates for a term ending on December
    31, 2019. The Consulting Agreement provided for annual payments of $1.25
    million for an aggregate fee over the two-year term of the Consulting Agreement
    of $2.5 million, paid equally in cash and Baylin shares.

[8]

More specifically, the Consulting Agreement
    provided for the payment of the consulting fees as follows:

Base Fee
.
    Baylin shall pay to the Consultant a fee of $1,250,000 (Canadian Dollars) per
    annum for the duration of the Term (the
Fee
) in respect of the
    Consulting Services. The Fee shall be paid as follows:

(a) by delivery to, or to the direction of,
    the Consultant on the final business day of each March, June, September and
    December that occurs in the 24 month period following the Effective Date, the
    sum of $156,250; and

(b) by delivery to Davies Ward Phillips &
    Vineberg LLP (
DWPV
), as trustee for the Consultant, on the Effective
    Date, such number of common shares in the capital of Baylin (the
Baylin Common
    Shares
) as is equal to:

(1) one million two hundred and fifty thousand
    dollars ($1,250,000); divided by,

(2) the volume weighted average price of the
    Baylin Common Shares traded on the facilities of the Toronto Stock Exchange
    during the five (5) trading day period ending on the last trading day prior to
    the Effective Date,

which shares shall be held by DWPV and
    released to the Consultant in accordance with Section 3.2.

[9]

Section 3.2 of the Consulting Agreement provided
    as follows:

Restricted Shares
. On the date hereof, Baylin shall deliver the Baylin Common Shares
    referred to in Section 3.1(b) in eight (8) equal parts, each part to be issued
    on a separate share certificate. The eight (8) share certificates shall be
    released by DWPV and delivered to the Consultant, as to one certificate in each
    instance, at each of the Effective Date and thereafter on the final business
    day of each March, June, September and December that occurs in the 20 month
    period following the Effective Date.

(3)

Majority Voting Policy

[10]

Baylin was listed on the Toronto Stock Exchange
    (TSX). The TSX maintains rules for listed companies, which are set out in the
    TSX Company Manual (TSX Manual). Issuers such as Baylin must comply with the
    TSX Manual in order to maintain their listing on the TSX.

[11]

The TSX first proposed adding a majority voting
    requirement to the TSX Manual in September 2011. The effect of a majority
    voting requirement is that it requires a person, who has been elected as a
    director, to nonetheless submit his/her resignation, if s/he does not receive
    50%+1 of the total votes cast. As further explained below, this requirement was
    necessary to avoid the effects of the plurality voting requirements that are
    currently contained in corporate statutes, such as the
Business
    Corporations Act
, R.S.O. 1990, c. B.16 (
OBCA
).

[12]

The stated rationale for the addition of a
    majority voting requirement was, in part, that majority voting policies
    support good governance by providing a meaningful way for security holders to
    hold directors accountable and remove underperforming or unqualified
    directors.
[2]
At the time, the TSX did not propose to make majority voting mandatory. In
    October 2012, the TSX issued a Notice of Approval for the amendments. The
    amendments became effective on December 31, 2012.

[13]

Subsequently, the TSX decided that it would make
    the majority voting requirement mandatory for issuers that did not have a
    majority shareholder. The TSX issued a Notice of Approval for the mandatory Majority
    Voting Requirement in February 2014. The amendment became effective on June 30,
    2014. Section 461.3 of the TSX Manual requires every issuer to adopt a majority
    voting policy that provides, in part:

a) any director must immediately tender his or
    her resignation to the board of directors if he or she is not elected by at
    least a majority (50% +1 vote) of the votes cast with respect to his or her
    election;

b) the board shall determine whether or not to
    accept the resignation within 90 days after the date of the relevant security holders
    meeting. The board shall accept the resignation absent exceptional
    circumstances;

[14]

The exception for exceptional circumstances is
    an issue in this appeal. As part of its process for implementing mandatory
    majority voting, the TSX had attempted to provide some guidance on what would
    constitute exceptional circumstances. For example, the TSX Staff noted in a
    2017 Staff Notice that they would contact an issuer to discuss the exceptional
    circumstances that are present when a board determines to reject a directors
    resignation. The TSX said that each situation would be reviewed on a
    case-by-case basis, taking into account the unique factors applicable to each
    issuer. The 2017 Staff Notice stated that exceptional circumstances would be
    expected to meet a high threshold. It provided some examples of what might meet
    that threshold. One of the examples was that an issuer would not be compliant with
     commercial agreements regarding the composition of the Board as a result of
    accepting the Subject Directors resignation. However, the 2017 Staff Notice
    did not require issuers to incorporate any or all of the listed circumstances
    into their own policies.

[15]

As a result of another acquisition made by
    Baylin in June 2018, which was after the Spacebridge acquisition, Baylin ceased
    to have a majority shareholder. It was therefore required to adopt a Majority
    Voting Policy in order to comply with the TSX rules.

[16]

Baylins majority voting policy was unanimously
    approved by Baylins Board of Directors in mid-March 2019. David Gelerman was a
    director of Baylin and voted in favour of the policy. Baylins majority voting
    policy states that, [i]f a director receives more withheld votes than for
    votes at any shareholders meeting where shareholders vote on the uncontested election
    of directors, the director must immediately submit to the Board his or her
    resignation, to take effect upon acceptance by the Board.

[17]

In terms of exceptional circumstances for not
    accepting a directors resignation, the Baylin majority voting policy said:

In determining whether to accept the
    resignation, the Board will consider various matters including, but limited to,
    if: (I) acceptance of the resignation would result In the Company not being
    compliant with its Articles, By-laws, and securities law requirements regarding
    the composition of the Board; (II) the resigning director is a key member of an
    established, active special committee which has a defined term or mandate and
    accepting the resignation of such director would jeopardize the achievement of
    the special committee's mandate; or (III) majority voting was used for a
    purpose inconsistent with the policy objectives of the Toronto Stock Exchange.

[18]

It will be noted that the Baylin majority voting
    policy did not expressly include non-compliance with commercial agreements
    regarding the composition of the Board as an exception to its policy.

(4)

The 2019 Annual General Meeting

[19]

As time passed after the completion of the APA,
    difficulties arose between Gelerman and Jeffrey Royer. Royer was the Chairman
    of the Board of Baylin. He was also the sole director and officer of the
    appellant, 2385796, Baylin's largest shareholder.

[20]

On March 23, 2019, as part of its obligation to
    assist Gelerman to continue as a director in accordance with the APA, as noted
    above, Baylins Lead Director and Chair of its Corporate Governance and
    Compensation Committee, wrote to Gelerman on behalf of that committee. The
    letter notified Gelerman that pursuant to the APA, he would be nominated for
    election at the 2019 Annual General Meeting (scheduled for May 14, 2019). However,
    the letter further notified Gelerman that 2385796 did not intend to vote in
    favour of his re-election and, without that support, it was not expected that
    Gelerman would be re-elected. The letter further suggested that Gelerman may
    choose to contact 2385796 Ontario Inc. (via Jeff Royer) to discuss that
    shareholders concerns with your continuing as a director for the ensuing
    year. Gelerman says that he never received the letter that was sent by email.
    As a consequence, he did not respond to the letter.

[21]

Gelerman did not make any effort to contact
    Royer, or any other director, to discuss the election or ask for any
    assistance. Royers evidence was that, given that lack of communication, he decided
    that 2385796 would not vote in favour of Gelermans re-election as a director
    of Baylin.

[22]

At the Annual General Meeting, Gelerman only
    received approximately 29% of the eligible votes for his re-election. 2385796,
    and other shareholders, withheld their votes relative to Gelermans election.
    Gelerman did not submit his resignation as required by Baylins majority voting
    policy. Consequently, Baylins Board never considered whether it would accept
    the resignation.

[23]

Instead, the two applications I mentioned at the
    outset were commenced.

(5)

The claim for set-off

[24]

An additional issue arises. Pursuant to section
    8.1 of the APA, Spacebridge agreed to indemnify Baylin and its affiliates from
    all damages arising from any incorrect representation in the APA. Indemnity
    claims seeking damages in the millions of dollars have been made by Baylin
    against Spacebridge. Under section 8.8 of the APA, Baylin may set-off any
    indemnification amount to which it may be entitled under the APA against
    "amounts otherwise payable by Baylin to Spacebridge.

[25]

On May 8, 2019, Baylin wrote to Spacebridge and
    gave notice pursuant to section 8.8 of the APA of its intention to exercise the
    right of set-off for certain indemnity claims against any amounts payable under
    the Consulting Agreement. Those indemnity claims are the subject of separate
    proceedings between the parties.

C.

THE DECISION BELOW

[26]

The application judge found that Baylins
    majority voting policy did not comply with the TSX majority voting requirement.
    He also found that the policy had been introduced for reasons other than
    compliance with the TSX requirement. The application judge found that the
    Baylin majority voting policy did not comply with the TSX majority voting
    policy in three respects. He said, at para. 39:

The Policy is not, however, the Majority
    Voting Requirement required by the TSX or even "substantially" the
    Majority Voting Requirement required by the TSX. It differs in three material
    respects: 1) The TSX Requirement refers to the majority of votes cast at the
    meeting whereas the Policy is not based on votes cast but rather on
    "withheld votes"; 2) the TSX Requirement does not limit what may
    constitute "Exceptional Circumstances" which the board must find to
    not accept the resignation and allow the director to continue whereas the
    Policy restricts the Board's determination of Exceptional Circumstances to
    consideration of three circumstances only; and 3) as will be seen, in
    restricting the Exceptional Circumstances to the three enumerated
    circumstances, the Policy excludes the TSX's specific example of exceptional
    circumstances concerning "commercial agreements regarding the composition
    of the Board".

[27]

The application judge then considered the
    oppression remedy under s. 248 of the
OBCA
. He found that the evidence
    established that, among other things, both Spacebridge and Gelerman had an
    expectation arising from the background leading up to the APA, and the terms of
    the APA itself, that Gelerman would be a director of Baylin for the two-year
    period. The application judge also found that they had a reasonable expectation
    that Baylin would act honestly and in good faith in assisting Gelerman to be
    elected to the Baylin Board for the two years in issue.

[28]

The application judge went on to find that Baylin's
    actions in presenting the majority voting policy to the Board at the March 13,
    2019 meeting, on the basis that the Policy was required by the TSX, was not
    accurate. Indeed, he found that it was misleading and false. The application
    judge also found it to be a breach of Gelerman's reasonable expectations as a
    director and that it was oppressive, unfairly prejudicial to, and disregarded Gelermans
    role as a director. The application judge also found that the majority voting policy
    was very clearly not the TSX's Majority Voting Requirement.

[29]

The application judge went further and concluded
    that he was satisfied that the reason the majority voting policy was drafted in
    the manner it was, was to enable the removal of Gelerman as a director of
    Baylin.

[30]

As a consequence of his conclusions, the
    application judge set aside the majority voting policy.

[31]

On the issue of set-off, the application judge
    found that the indemnification clause in section 8.8 of the APA applied to any amounts
    otherwise payable" by Baylin to the Spacebridge Group arising from the
    transaction, including amounts payable under the Consulting Agreement.

[32]

However, the application judge also found that,
    in respect of the share portion of the consulting fee under the Consulting
    Agreement, once the shares were delivered to Davies Ward Philips & Vineberg
    (DWPV) in trust, that portion of the fee was paid by Baylin. Since the shares
    had been paid, in the view of the application judge, they were not amounts
    otherwise payable and, thus, were not amounts subject to set-off.

D.

Analysis

(1)

Mootness

[33]

Before turning to the issues raised, I must
    address the submission of Gelerman that this matter is moot because he remained
    a director of Baylin for the time he claimed he was entitled to while these
    proceedings were underway.

[34]

I do not accept that the issues raised in this
    case are now moot because of that passage of time. The application judge did
    not simply determine that Gelerman was entitled to remain as a director of
    Baylin. He also held that Baylins majority voting policy was flawed, and he
    set it aside. That latter determination remains binding on Baylin. Unless
    reversed, Baylin will have to design a new majority voting policy, because the
    rules of the TSX require it to have such a policy. Baylins rights are
    therefore still affected by the decision:
Mental Health Centre
    Penetanguishene v. Ontario
, 2010 ONCA 197, 260 O.A.C. 125, at para. 35.

[35]

In addition, there is a recognized exception to
    the strict application of the mootness principle in cases which raise an issue
    of public importance regarding which a resolution is in the public interest:
Borowski
    v. Canada (Attorney General)
, [1989] 1 S.C.R. 342, at p. 361. The
    submissions of the interveners in this case satisfy me that there are matters
    of public importance involved in this case and that their resolution will be in
    the public interest as they will assist corporate governance of public
    companies in Ontario generally.

(2)

The Majority Voting Policy

[36]

The parties are agreed on one point and that is
    that the application judge erred in his conclusion regarding the effect of
    votes withheld in the election of a director under a majority voting policy. The
    application judge held that votes withheld are not votes cast and therefore do
    not count in the election results. In reaching this conclusion, the application
    judge misunderstood the TSX policy. The TSX policy is clear that votes withheld
    are votes against a director. To conclude otherwise would mean that any
    director who received even a single vote in favour would have achieved more
    than 50%+1 of the votes cast. Indeed, in the single favourable vote scenario,
    the director would have received 100% of the votes cast, if the application
    judges interpretation were to be accepted.

[37]

The approach taken by the TSX, of considering
    withheld votes as votes against for the purposes of a majority voting policy,
    was necessary to avoid the effects of the plurality voting requirements that
    are currently contained in statutes, such as the
OBCA
, that govern the
    election of directors. Under plurality voting, shareholders must either vote
    for a director or they must withhold their vote.
[3]
A withheld vote has no effect under the statute. It is as if the vote was not
    cast. Consequently, under the prevailing statute, a director is elected if only
    one vote is cast for that director, regardless of the number of withheld votes.

[38]

The purpose behind adopting a majority voting
    policy for publicly traded companies was to provide a meaningful way for
    security holders to hold directors accountable and remove underperforming or
    unqualified directors.
[4]
In order to accomplish that purpose, the majority voting policy was designed to
    consider votes withheld as votes against a director. If that then resulted in
    the director receiving less than 50%+1 of the votes cast, the policy required
    that director, although technically elected under the statute, to tender
    his/her resignation. The Board of Directors was then required to accept that
    resignation, absent exceptional circumstances.

[39]

The application judges misunderstanding of this
    central aspect of the TSX majority voting policy infected his approach to, and
    view of, the Baylin majority voting policy. That error led to another. The
    application judge went on to conclude that the Baylin voting majority policy also
    did not comply with the TSX policy because the Baylin policy stipulated only three
    situations that would constitute exceptional circumstances.

[40]

Again, the application judge misunderstood the
    requirements of the TSX majority voting policy. The TSX policy provides that,
    in a situation where a director is required to tender his resignation, that
    resignation must be accepted by the Board of Directors, absent exceptional
    circumstances. The TSX policy does not stipulate what will, or will not, constitute
    exceptional circumstances. Rather, the TSX policy left the determination of
    exceptional circumstances to be dealt with on a case-by-case basis. Indeed, it
    is the practice of the TSX to review any corporations invocation of
    exceptional circumstances as justifying its refusal to accept a directors
    resignation.

[41]

However, in order to assist its members in
    applying the TSX majority voting policy, the TSX provided some examples of
    circumstances that might constitute exceptional circumstances, and thus justify
    the refusal by a Board of Directors to accept a directors resignation. The
    2017 TSX Staff Notice said, on this subject:

Examples of exceptional circumstances may
    include:

 the issuer would not be compliant with
    corporate or securities law requirements, applicable regulations or commercial
    agreements regarding the composition of the Board as a result of accepting the
    Subject Director's resignation;

 the Subject Director is a key member of an
    established, active Special Committee which has a defined term or mandate (such
    as a strategic review) and accepting the resignation of such Subject Director
    would jeopardize the achievement of the Special Committee's mandate; or

 majority voting was used for a purpose
    inconsistent with the policy objectives of the Majority Voting Requirement.

[42]

Two things are clear from this Notice. One is
    that there is no requirement for a majority voting policy to delineate what
    will, or will not, constitute exceptional circumstances. The other is that the
    TSX was providing examples of circumstances that may constitute exceptional
    circumstances. Whether those circumstances, or any others, would in fact
    constitute exceptional circumstances was to be determined on the particular
    facts of any given case.

[43]

All of that said, there is nothing in the TSX
    policy that precludes a corporation from stipulating, in advance, what it will
    consider as exceptional circumstances. Indeed, the intervener,
The Canadian Coalition for Good Governance
, submits that the narrower the exceptional circumstances exception
    is made in any given policy, the more it promotes the purpose of such policies,
    which is to hold directors accountable to shareholders. Whether any stipulated
    exceptional circumstance would be accepted by the TSX will, of course, have to
    await a review at the time that the exceptional circumstance is invoked. However,
    advanced warning of what a corporation would accept as exceptional
    circumstances will benefit individual directors in knowing where they stand in
    terms of compliance with the policy.

[44]

The application judge erred in finding that
    Baylins adoption of specified exceptional circumstances in some fashion
    constituted a violation of, or unacceptable departure from, the TSX majority
    voting policy. In fact, Baylins adoption of those specified exceptional
    circumstances advanced the purpose that underlies majority voting policies. It
    also, as I have said, gave fair notice to directors as to what Baylin would
    consider exceptional circumstances should the issue arise.

[45]

The application judge also found that the Baylin
    majority voting policy did not meet the requirements of the TSX majority voting
    policy because the Baylin policy did not contain the exception regarding
    commercial agreements regarding the composition of the Board. This critique
    of the Baylin policy suffers from the same error that I just set out regarding the
    application judges approach to the exceptional circumstances category
    generally. Baylin was not required by the TSX voting majority policy to include
    commercial agreements as an exceptional circumstance.

[46]

It follows from all of the above that the
    application judge erred in concluding that the Baylin majority voting policy
    did not comply with the TSX policy on majority voting. The opposite conclusion,
    that the Baylin policy was compliant, is the only one that can be properly drawn
    from the record.

(3)

Oppression

[47]

The application judge moved from his conclusions
    regarding the Baylin majority voting policy to the issue of oppression. He
    concluded that both Gelerman and Spacebridge had a reasonable expectation that
    Gelerman would be a director for the two-year period of the earn-out. He then
    concluded that Baylins actions in adopting the majority voting policy were
    misleading and false and that the policy was drafted for the purpose of
    removing Gelerman as a director.

[48]

The application judges finding regarding the
    reasonable expectations of Gelerman and Spacebridge are findings of fact that
    are entitled to deference from this court. They may only be interfered with if
    a palpable and overriding error is demonstrated.

[49]

In my view, Baylin has demonstrated such an
    error. I begin with the fact that reasonable expectations are to be viewed on
    an objective, not subjective, basis. As the Supreme Court of Canada said in
BCE
    Inc. v. 1976 Debentureholders
, 2008 SCC 69, [2008] 3 S.C.R. 560, at para.
    62:

As denoted by "reasonable", the
    concept of reasonable expectations is objective and contextual. The actual
    expectation of a particular stakeholder is not conclusive. In the context of
    whether it would be "just and equitable" to grant a remedy, the
    question is whether the expectation is reasonable having regard to the facts of
    the specific case, the relationships at issue, and the entire context,
    including the fact that there may be conflicting claims and expectations.

[50]

I do not quarrel with the finding that Gelerman might
    himself have believed that he would remain a director for the two-year period.
    However, that expectation was not objectively reasonable, at least not by the
    time of the 2019 Annual General Meeting. I say that for two main reasons.

[51]

First, Gelerman knew that Royer had control over
    2385796, which was the majority shareholder of Baylin at the time that he
    entered into the APA. Gelerman did not have any undertaking from Royer, or from
    2385796, to support him as a director. As observed in
BCE Inc.
, at
    para. 78, one of the factors to be considered in determining whether an expectation
    is objectively reasonable is whether the claimant could have taken steps to
    protect itself against the prejudice it claims to have suffered. Gelerman
    could have negotiated for a commitment from Baylin, and its majority
    shareholder, as part of the APA, that he would be a director for the two-year
    period, but he did not. In fact, such a commitment was requested during the
    negotiation of the APA but was expressly rejected. All that Gelerman obtained,
    as part of the APA, was an undertaking by Baylin that it would nominate
    Gelerman for election to its shareholders and would honestly and in good faith
    assist Gelerman to obtain the votes necessary for election. I would add that
    the APA was negotiated between the parties, all of whom were represented by
    experienced lawyers. As a general proposition, it will be difficult for a party
    to advance that it had a reasonable expectation regarding a particular result
    that is above and beyond that for which the party negotiated:
Casurina
    Limited Partnership v. Rio Algom Ltd.

(2004), 181 O.A.C. 19, at
    para. 26.

[52]

With respect to the latter promise of good faith,
    Royer had obligations in his position as an officer of the majority shareholder
    that were separate and apart from his obligations as Chairman of Baylin.
    Indeed, it would have been improper for Royer to act in a manner contrary to
    the interests of the majority shareholder in order to further the interests of
    Baylin. Gelerman knew, or should have known, that Royer was obliged to act as
    he thought best in exercising his duties as the sole officer and director of
    the majority shareholder.

[53]

Second, Gelerman had been warned by Baylin that
    he did not have the support of Royer for election at the 2019 Annual General
    Meeting. He was urged to seek out Royer and have a discussion with him about the
    problems between them before the vote was held. Gelerman made no effort to do
    so. While Gelerman maintains that he did not receive the letter which contained
    this warning, it is difficult to foist any blame onto Baylin for that failure. I
    would add that it is somewhat telling, on this point, that there was a
    follow-up letter sent by Baylin on this issue that Gelerman also did not
    respond to.

[54]

In any event, it is hard to believe that, even
    without this warning, Gelerman would have been unaware of Royers attitude
    towards him, and the problem that it posed for his position as a director,
    given what had transpired at different Board meetings prior to the 2019 Annual
    General Meeting, much of which is set out in Gelermans own affidavit. I note that
    the application judge found as a fact that Royer had a general dislike for
    Gelermans approach to being a director. The potential impact of that fact, in
    terms of him continuing as a director, could not have been lost on Gelerman.

[55]

The application judge moved from his findings
    about reasonable expectations to his conclusion that Baylin acted oppressively
    against Spacebridge and Gelerman. However, his oppression conclusion appears to
    be based entirely on the adoption of the majority voting policy. The errors
    that the application judge made respecting the majority voting policy, as I
    have detailed above, clearly drove his conclusion regarding what he saw as
    oppressive conduct.

[56]

On the subject of oppressive conduct, and the majority
    voting policy, the application judge made certain additional findings that are
    problematic. One is that the application judge drew an adverse inference
    against Baylin because it did not reveal the legal advice that it had received
    regarding the presentation and passage of the majority voting policy. The legal
    advice that Baylin received was clearly privileged, as the application judge
    acknowledged. It is difficult to rationalize that fact with the criticism that
    the application judge leveled against Baylin, on more than one occasion in his
    reasons, for its failure to reveal legal advice that it was entitled to keep
    privileged. There is also no evidence that Gelerman ever asked what legal
    advice had been received, at the time that the matter came before the Board of
    Directors. Indeed, there is no evidence that Gelerman asked any questions about
    the background to the policy at the Board meeting, when he voted in favour of
    the majority voting policy.

[57]

The application judge also concluded that the
    majority voting policy was passed for the purpose of removing Gelerman as a
    director. However, the basis for this conclusion is the application judges
    erroneous understanding of the background to, and need for, the majority voting
    policy. While the application judge acknowledged that Baylin was required to
    implement a majority voting policy, he does not appear to have given any weight
    to that fact in his analysis. Rather, in his oppression analysis, the
    application judge repeated his error about votes withheld not being votes
    against. He also relied on the absence of the commercial agreement exception as
    an exceptional circumstance which repeated his misunderstanding of the policy
    requirements respecting exceptional circumstances.

[58]

Finally, the application judge found that the
    Baylin majority voting policy was contrary to the TSXs Majority Voting
    Requirement. In fact, the Baylin majority voting policy complied with the TSX
    requirement. The application judges conclusion that the Baylin policy is
    oppressive and unfairly prejudicial and unfairly disregards both Gelermans and
    Spacebridges reasonable expectations arises from his misunderstanding of the
    policy. It is a conclusion that is fundamentally flawed and cannot stand. It
    also led to a palpable and overriding error respecting his finding of oppression.

(4)

Set-off

[59]

As explained above, the set-off issue arises
    from a combination of the APA and the Consulting Agreement. Baylin has asserted
    claims for indemnity against Spacebridge in the millions of dollars. Those
    claims are being contested in separate proceedings. At the same time, Baylin
    was obliged to pay Gelerman, and his wife, $2.5 million over two years pursuant
    to the Consulting Agreement. Baylin claims the right to set-off its indemnity
    claims against the amounts that had not as yet been paid, under the Consulting
    Agreement, when it gave notice of its indemnity claims. It did so on May 8,
    2019. More specifically, Baylin claims the right to set-off its claims against
    the five share certificates that had been delivered to DWPV, but which had not,
    as of that time, been released to Gelerman and his wife.

[60]

As noted above, $1.25 million of the consulting
    fees were to be paid by way of eight share certificates that were delivered to DWPV
    and to be released by them in quarterly installments. The dates of the installments
    were March, June, September and December in each of 2018 and 2019. The share
    certificates for March, June and September 2018 were released. The share
    certificates for December 2018 and March 2019 were not released, apparently
    because DWPV required the consent of Baylin to do so and that consent was not
    forthcoming, the reason for which is not entirely clear. Once Baylin gave
    notice of its set-off claim in May 2019, none of the June, September and
    December 2019 share certificates were released.

[61]

On this issue, the application judge found, at
    para. 67, that:

Based on the above wording and having regard
    to the wording of para. 8.8 together with the entire APA and the other agreements
    forming part of the purchaser and sale transaction, I am satisfied that the
    right to set-off is not limited to amounts payable under the APA but rather
    encompasses any "amounts otherwise payable" by Baylin to the
    Spacebridge Group arising from the transaction. That would include amounts
    payable under the Consulting Agreement.

[62]

I agree with the application judges conclusion on
    this point. The words amounts otherwise payable are clearly broad enough to
    capture payments due under the Consulting Agreement.

[63]

However, the application judge went on to
    conclude that delivery of the share certificates to DWPV constituted payment by
    Baylin of the amounts due under the Consulting Agreement and, thus, those
    amounts were no longer amounts otherwise payable to which the indemnity claim
    could attach.

[64]

I do not agree with the application judges
    conclusion in this regard. The amounts due under the Consulting Agreement were
    not paid by Baylin simply by delivering the share certificates to DWPV. The
    whole structure of the Consulting Agreement was that the amounts due under it
    were to be paid out over a two-year period. The share certificates were
    delivered at the outset, but were not to be released by DWPV until the
    quarterly dates arrived, as I have explained above. Consistent with the
    structure and intent of the Consulting Agreement, the amounts payable under it
    were not paid until the share certificates were released. That has not happened
    with respect to the five share certificates held by DWPV. The amounts represented
    by those share certificates have not been paid as a consequence and, thus,
    those amounts remain payable.

[65]

The difficulty that is then presented is whether
    Baylins claim for amounts under the indemnity agreement can be set-off against
    the claim by Gelerman for delivery of the share certificates under the
    Consulting Agreement. Unfortunately, there does not appear to be any relevant
    caselaw that deals with the issue of whether share certificates can be the
    subject of a set-off claim in circumstances similar to those presented in this
    appeal.

[66]

I begin by noting that in
Telford v. Holt
,
    [1987] 2 S.C.R. 193, Wilson J. confirmed, at p. 204, that legal set-off
    requires mutual debts. Similarly, Wilson J. held, at p. 206, that equitable
    set-off is only available in respect of money sums. These observations have
    been noted with approval in the few cases that actually deal with non-monetary
    claims, including
Dresser Industries Inc. v. Vos
(1985), 60 A.R. 226
    (Master), a case cited in argument by the respondent.

[67]

If Baylin was asserting legal or equitable
    set-off, it does not appear that such a right could be maintained since the
    concepts of debt and money sums do not appear to be broad enough to include
    share certificates or the shares themselves. While shares represent intangible
    property with value, as Kevin McGuinness concludes in
Canadian Business
    Corporations Law,
3rd ed. (Toronto: Butterworths, 2017), at §18.388,
    shares of a corporation do not themselves constitute debt obligations owed to
    the shareholder. The relationship between the corporation and the shareholder
    is not one of debtor/creditor. He also concludes, at §18.42, that shares are
    not a sum of money. I am prepared to accept, for the purposes of this appeal,
    that those conclusions are correct.

[68]

However, Baylin does not assert legal or
    equitable set-off. Rather, it asserts a contractual right of set-off arising
    from section 8.8 of the APA. Contractual rights of set-off are not limited by
    the requirements of debts and money sums. On this point, Kelly Palmer, in
The
    Law of Set-Off in Canada

(Aurora: Canada Law Book, 1993), at p.
    263, notes that the normal rules of set-off such as mutuality, liquid debts and
    connected debts do not apply and that the parties are free to contract for
    whatever result they wish. He concludes that agreements to set-off which
    would, aside from the agreement, not be granted relief due to the absence of
    the requirements of set-off, will be upheld.

[69]

This view, that the technical requirements of
    legal and equitable set-off do not apply to contractual set-off, finds support
    in certain comments of the Supreme Court of Canada in
Caisse populaire
    Desjardins de l'Est de Drummond v. Canada
,

2009 SCC 29, [2009] 2
    S.C.R. 94. Although the primary issue in that case was whether the agreement
    between the parties constituted a security interest for purposes of s. 244(1.3)
    of the
Income Tax Act
, Rothstein J., at para. 22, commented on
    contractual compensation or set-off, stating:

Contractual compensation achieves a similar
    goal to legal compensation or legal or equitable set-off, the discharge of
    mutual debts. However, contractual compensation achieves this goal through
    mutual consent.
It provides the contracting parties with a self-help remedy
    that avoids the technical requirements of legal compensation or legal or
    equitable set-off:
see J.-L. Baudouin and P.-G. Jobin, Les obligations (5th
    ed. 1998), at para. 981, and K. R. Palmer,
The Law of Set-Off in Canada

(1993),

at pp. 263-64. Both a contract providing for a right of
    compensation in Quebec and a contract providing for a right of set-off in the
    common law provinces are to be interpreted by a court in a manner that gives
    effect to the intentions of the parties as reflected in the words of the
    contract. [Emphasis added.]

[70]

I see no reason in principle why the money sum
    rule should be treated any differently from other technical legal or equitable
    set-off requirements such as mutuality, liquid debts and connected debts, none
    of which apparently apply in the contractual set-off context. Accordingly, in
    my view, the parties to a contract are free to contract for the set-off of
    moneys worth or property. Put simply, a contract can override legal and
    equitable set-off principles.

[71]

The question then is whether section 8.8 of the
    APA accomplishes that result. I believe that it does. The principles of
    contractual interpretation are well-known. They were recently summarized by the
    Supreme Court of Canada in

Resolute FP Canada Inc. v. Ontario (Attorney
    General)
,
2019 SCC 60, 444 D.L.R. (4th) 77, at para. 74:

This Court has described the object of
    contractual interpretation as being to ascertain the objective intentions of
    the parties (
Sattva
, at para. 55). It has also described the object of
    contractual interpretation as discerning the parties reasonable expectations
    with respect to the meaning of a contractual provision (
Ledcor
, at
    para. 65). In meeting these objects, the Court has signalled a shift away from
    an approach to contractual interpretation that is dominated by technical rules
    of construction to one that is instead rooted in practical[ities and]
    common-sense (
Sattva
, at para. 47). This requires courts to read a
    contract as a whole, giving the words used their ordinary and grammatical
    meaning, consistent with the surrounding circumstances known to the parties at
    the time of formation of the contract (
ibid
.).

[72]

Section 3.1 of the Consulting Agreement clearly
    indicates that the Baylin common shares form part of the consideration for the
    consulting services. The Baylin common shares are ascribed a value that
    comprises part of the total annual compensation. They represent, in the
    ordinary sense of the words, amounts that are payable under the Consulting
    Agreement. That conclusion is consistent with the conclusion reached by the
    application judge (with which I agree) regarding the meaning of the words amounts
    otherwise payable under section 8.8 of the APA.

[73]

Considering the ordinary meaning of the words of
    the agreements in context, the common-sense interpretation of the provisions
    requires the release of each individual share certificate on a particular date
    to represent an actual payment to the respondent in consideration of the
    services that have been performed. That means that Baylin should have been
    permitted to set-off the share certificates that had not been released, representing
    amounts not yet paid but due, following Baylins notice of its
    indemnification claims at the time of the application.

E.

CONCLUSION

[74]

The appeal is allowed, the orders below are set
    aside, and in their place, orders are granted:

a.

declaring that Baylin's majority voting policy
    is in accordance with the TSX's majority voting requirement and that Baylin's
    majority voting policy remains in force;

b.

declaring that Gelerman was required to have
    submitted his resignation to the Baylin board for consideration following the
    2019 Annual General Meeting;

c.

that the remaining share certificates shall not
    be released from trust, pending the determination of Baylin's indemnity claims
    against Spacebridge, the consent of the parties, or further order of the Superior
    Court of Justice.

[75]

The appellants are entitled to their costs of
    the appeal fixed in the agreed amount of $25
,000
inclusive of disbursements and HST. If the parties cannot agree on
    the disposition of the costs below, they may make written submissions on that
    issue. The appellants shall file their written submissions within 10 days of
    the release of these reasons and the respondents shall file their submissions
    within 10 days thereafter. Each sides submissions shall be limited to five
    pages (excluding bills of costs) and no reply submissions shall be filed.

Released: January 26, 2021 DD

I.V.B.
    Nordheimer J.A.

I
    agree. Doherty J.A.

I
    agree. Harvison Young J.A.

[1]
While the issue was not raised before us, I note that appeals from
    orders made under the
Business
    Corporations Act
, R.S.O. 1990, c. B.16 lie to the Divisional Court: s.
    255. However, since relief beyond the parameters of the
Business
    Corporations Act
was sought and determined in the orders below, this court
    has jurisdiction to hear the appeal:
Courts of Justice Act
, R.S.O. 1990,
    c. C.43, s. 6(2).

[2]
Ontario Securities Commission, TSX Request for Comment, Amendments
    to Part IV of the TSX Company Manual in
OSC
    Bulletin
, 34:36 (September 9, 2011), 34 OSCB 9500, p. 9502

[3]

See, for example, s. 27 of the General regulation under the
OBCA
, R.R.O. 1990,
    Reg. 62, which states: A form of proxy shall provide a means for the
    shareholder to specify that the shares registered in the shareholders name
    shall be voted or withheld from voting in respect of the appointment of an
    auditor, the remuneration of the auditor or the election of directors.

[4]
Ontario Securities Commission, TSX Request for Comment, Amendments
    to Part IV of the TSX Company Manual in
OSC
    Bulletin
, 34:36 (September 9, 2011), 34 OSCB 9500, p. 9502


COURT OF APPEAL FOR ONTARIO

CITATION: Bank of Montreal v.
    Georgakopoulos, 2021 ONCA 60

DATE: 20210201

DOCKET: C67262

Strathy C.J.O., Zarnett and
    Sossin JJ.A.

BETWEEN

Bank of
    Montreal

Plaintiff (Respondent)

and

Peter Georgakopoulos and Anka
    Georgakopoulos

Defendants (Appellants)

Peter Georgakopoulos and Anka
    Georgakopoulos, acting in person

Christopher J. Staples, for the
    respondent

Heard: January 25, 2021 by video conference

On
    appeal from the judgment of Justice Jane Ferguson of the Superior Court of
    Justice, dated June 11, 2019, and from the costs order, dated July 26, 2019.

REASONS FOR DECISION

[1]

The appellants appeal from the judgment that was
    granted against them on a motion for summary judgment that was brought by the
    respondent (the Bank).

[2]

The judgment ordered the appellants to pay the
    Bank $342,316.74, representing advances the appellants had received from the
    Bank and interest thereon. It declared an equitable mortgage in favour of the Bank
    over property owned by the appellant, Peter Georgakopoulos (Peter), described
    as 300 Front Street West, Suite 4501, Toronto (the Toronto Property), to
    secure these amounts. It ordered Peter to pay a further sum of $28,072.89 to
    the Bank, representing a credit card debt, and interest thereon. And it
    dismissed the appellants counterclaim.

[3]

On appeal, the appellants raise what are
    essentially four arguments. First, they argue that the motion judge lacked
    jurisdiction to deal with any aspect of the Banks claims. Second, they argue
    that the evidence proffered by the Bank was wrongly accepted by the motion
    judge and did not justify summary judgment. Third, they argue that the motion
    judge lacked the authority to declare an equitable charge against the Toronto
    Property, given the nature of  Peters  title to it. Fourth, they argue that
    their counterclaim was improperly dismissed.

[4]

We do not accept the appellants arguments.

[5]

As to jurisdiction, the Banks action was for
    (i) repayment of amounts it alleged had been drawn by the appellants under a
    line of credit facility, after the facility was supposed to have been cancelled
    and after the security the appellants had provided for loans under the Line of
    Credit Agreement had been discharged; (ii) an equitable mortgage to secure
    those amounts; and (iii) payment by Peter of a credit card debt. The Superior
    Court of Justice has subject matter jurisdiction over all those claims. As this
    court stated in
80 Wellesley St. East Ltd. v. Fundy Bay Builders Ltd.
,
    [1972] 2 O.R. 280 (C.A.), at 282, except where there is a specific provision to
    the contrary, the Superior Courts jurisdiction is unrestricted in substantive
    law in civil matters. Nor is there merit to the appellants argument that there
    was an absence of personal jurisdiction over them, or that they have sovereign
    immunity.

[6]

As to the evidence, we are not persuaded that
    the motion judge committed any reversible error in concluding that there was no
    genuine issue requiring a trial. A motion judges conclusion that there is no
    genuine issue requiring a trial is one of mixed fact and law which, in the
    absence of extricable legal error, will only be disturbed on appeal for
    palpable and overriding error:

Hryniak v. Mauldin
,

2014 SCC 7, [2014] 1 S.C.R.
    87, at paras. 80-84.

[7]

Although the appellants say the Banks evidence
    was inadmissible hearsay, the respondents primary evidence was that of a Bank
    employee who swore that this matter was within her responsibility, and that the
    facts she deposed to were within her personal knowledge or determined from the
    face of documents exhibited to her affidavit.
[1]
The motion judge was not legally required to disregard this evidence.

[8]

As to the sufficiency of the evidence, it is
    important to consider both what the Banks evidence was, and what other
    evidence there was.

[9]

The Banks evidence was that a Line of Credit
    Agreement had been entered into between the Bank and the appellants in 2008. It
    provided for a demand credit facility of up to $295,000, secured by a mortgage
    on the appellants property in Oakville. The appellants repaid the loan on
    August 6, 2015, out of the proceeds of sale of the Oakville property, and the
    mortgage on the Oakville property was discharged. The credit facility was
    supposed to be blocked by the Bank, so there could be no further advances, but
    by mistake it was not. The appellants then drew another $295,000, which they
    were not authorized to do, and which they did not repay.

[10]

The Banks evidence was also that it never
    intended to lend funds to the appellants on an unsecured basis, and that the
    appellants had no reason to believe that the Bank would do so, given the terms
    of the Line of Credit Agreement and the fact that, earlier in 2015, the appellants
    had approached the Bank for mortgage financing for a new property. In July
    2015, Peter purchased the Toronto Property, and, after August 6, 2015, when the
    unauthorized drawings from the Bank took place, paid off another lenders
    mortgage on that Property. The motion judge found the Banks funds were used to
    pay the other mortgage.

[11]

Finally, the Banks evidence was that Peter had
    not repaid his credit card debt in a sum exceeding $28,000.

[12]

As for evidence to the contrary, the motion
    judge found there to be none. She stated that the appellants had proffered no
    evidence contradicting the evidence of [the Bank] or the advances of money
    received by them.

[13]

It was accordingly open to the motion judge to
    conclude that there was no genuine issue requiring a trial and to grant summary
    judgment for repayment of the amounts advanced and the credit card debt. Her
    conclusion is not tainted by any palpable and overriding error.

[14]

We also find no reversible error in the motion
    judges conclusion that there was no genuine issue requiring a trial as to
    whether to grant a declaration of an equitable mortgage. She adverted to the
    correct legal test for granting such relief as set out by this court in
Elias
    Markets Ltd. (Re)
(2006), 274 D.L.R. (4th) 166 (Ont. C.A.), at paras.
    63-65. It was open to her on the Banks evidence to infer a common intention
    that advances would be secured against real property, and to consider the
    Toronto Property as coming within that common intention, given the prior
    dealings about mortgage financing for a new property and Peters use of the
    funds drawn from the Bank to pay down a mortgage on the newly acquired Toronto Property.
    As the motion judge noted, the appellants had provided no coherent evidence
    in response.

[15]

Finally, we reject the appellants submission
    that there is no jurisdiction to declare an equitable charge over the Toronto
    Property, given that Peter is the owner of this property as verified by title
    records. The power to grant an equitable charge is well established: see
Elias
.
    The mortgagor or chargor under such a charge will necessarily be the title
    holder.

[16]

The motion judge also did not err in finding
    that there was no genuine issue requiring a trial with respect to whether the counterclaim
    should be dismissed. The motion judge found that no evidence in support of it
    had been proffered.

[17]

Shortly prior to the hearing of the appeal, the
    appellants submitted an affidavit and a document entitled Bills of Equity,
    which were accepted for filing on the basis that it would be up to the panel to
    decide whether to admit them. The Bills of Equity are irrelevant. The affidavit
    consists essentially of argument and does not meet the test for admission of
    fresh evidence.

[18]

The appeal is accordingly dismissed. The Bank is
    entitled to its costs of the appeal fixed in the sum of $7,000, inclusive of
    disbursements and applicable taxes.

G.R. Strathy
    C.J.O.

B.
    Zarnett J.A.

Sossin
    J.A.

[1]
She also said that any information derived from others was believed
    and the source of it disclosed, although no such information was specifically
    identified in the affidavit.


COURT OF APPEAL FOR ONTARIO

CITATION: Beaudoin Estate v. Campbellford
    Memorial Hospital, 2021 ONCA 57

DATE: 20210129

DOCKET: C67072

MacPherson,
    Zarnett and Jamal JJ.A.

BETWEEN

The Estate of Garry
    Frederick Beaudoin, by his Estate Trustee Shirley Beaudoin,
Shirley Beaudoin,
    Michele Locke, Rece Locke, by Litigation Guardian
Michele Locke and Peter Gage
    Locke, by Litigation Guardian Michele Locke

Plaintiffs (Appellants)

and

Campbellford Memorial
    Hospital,
Dr. Jaun Bothma, Dr. Jaun
    Bothma Medicine Professional Corporation,
Dr. Thomas Chalmers
    Brown, Dr. Norman Richard Bartlett
and N. Bartlett Medicine
    Professional Corporation

Defendants (Respondents)

Iain A.C. MacKinnon, Justin S. Linden
    and Michael Lacy, for the appellants

Colin Chant, for the respondent,
    Campbellford Memorial Hospital

Brian Kolenda and Jessica Kras, for the
    respondents, Dr. Jaun Bothma, Dr. Jaun Bothma Medicine Professional
    Corporation, Dr. Thomas Chalmers Brown, Dr. Norman Richard Bartlett and N.
    Bartlett Medicine Professional Corporation

Heard: November 27, 2020 by video conference

On appeal from the order of Justice William
    S. Chalmers of the Superior Court of Justice, dated May 16, 2019, with reasons reported
    at 2019 ONSC 3025.

Jamal J.A.:

A.

OVERVIEW

[1]

Section 38(3) of the
Trustee
    Act
, R.S.O. 1990, c. T.23 prescribes that certain actions brought on
    behalf of a deceased person must be brought within two years of the persons
    death. Case law has recognized that this two-year limitation period may be
    tolled or suspended when the defendant fraudulently conceals the existence of
    the plaintiffs cause of action. The issue in this appeal is whether an
    allegation of fraudulent concealment was appropriately determined as a question
    of law, based on the pleadings alone, under r. 21.01(1)(a) of the
Rules of
    Civil Procedure
, R.R.O. 1990, Reg. 194.

[2]

The appeal involves a
    medical malpractice claim brought by the estate of the late Garry Beaudoin and by
    his wife, daughter, and grandchildren as claimants under the
Family Law Act
,
    R.S.O. 1990, c. F.3 (appellants), against Campbellford Memorial Hospital, two
    emergency room doctors, and a diagnostic radiologist (respondents). They
    assert that Mr. Beaudoin was negligently diagnosed and treated at the Hospital on
    January 3, 4, and 5, 2015, leading to a delay in surgery that could have saved his
    life. Mr. Beaudoin passed away on January 9, 2015.

[3]

The appellants did not issue
    a statement of claim until April 27, 2017 (April 2017 claim)  about two
    years and three months after Mr. Beaudoin died. The claim has been amended
    several times since then.

[4]

The respondents delivered
    their statements of defence between July and October 2017. They denied negligence
    and asserted that the action was statute-barred because it had not been brought
    within the two-year limitation period under s. 38(3) of the
Trustee Act
.
    They then delivered a motion under r. 21.01(1)(a) for an order dismissing the
    action as statute-barred.

[5]

The appellants responded by
    amending their claim in July 2018 (July 2018 claim) to plead that the
    respondents fraudulent concealment tolled the limitation period. They alleged that
    in March 2015 they had requested and paid for Mr. Beaudoins complete
    medical records from the Hospital. Medical records were given to them in May
    and June 2015, but did not include computerized tomography (CT) imaging conducted
    on January 3, 2015, which showed an obstruction and/or occlusion of Mr.
    Beaudoins mesenteric artery, which supplies blood to the intestines. The CT imaging
    was not disclosed to the appellants until May 2017, more than two years later.
    The appellants claim that the fraudulent concealment of the CT imaging prevented
    them from knowing that they had a cause of action against the respondents until
    May 2017  about a month after they had issued the April 2017 claim. They claim
    that had the CT imaging been disclosed when it was requested, they would have
    been able to sue before the limitation period expired. The appellants also
    amended their claim to allege breach of contract and breach of the
Personal
    Health Information Protection Act, 2004
, S.O. 2004, c. 3, Sched. A (
PHIPA
)
    arising from the delayed disclosure of the CT imaging.

[6]

The respondents r.
    21.01(1)(a) motion proceeded on the basis of the July 2018 claim and was
    granted in part. The motion judge struck out the claims under the
Trustee
    Act
as statute-barred, ruling that the appellants could not rely on
    fraudulent concealment to toll the limitation period because there was no
    causal connection between the alleged improper concealment of the CT imaging and
    the appellants failure to sue within the limitation period. He therefore
    dismissed the action as against the three doctors. However, he allowed the
    claims for breach of contract and breach of the
PHIPA
to continue
    against the Hospital.

[7]

The appellants now appeal
    the motion judges decision.

[8]

For the reasons that follow,
    I would allow the appeal. The motion judge erred in deciding a disputed factual
    question of fraudulent concealment as a question of law under r. 21.01(1)(a)
    whether the respondents failure to disclose the CT imaging prevented the
    appellants from reasonably discovering their cause of action before the
    limitation period expired. Because the facts pleaded in the July 2018 claim must
    be assumed to be true and are not patently ridiculous or manifestly incapable
    of proof, it is not plain and obvious that the negligence claims are
    statute-barred. I would therefore allow the claims pleaded in the July 2018
    claim to proceed.

B.

The facts as pleaded

[9]

The facts as pleaded in the July
    2018 claim  which on a motion under r. 21.01(1)(a) must be assumed to be
    true, unless they are patently ridiculous or manifestly incapable of proof  are
    as follows:

·

On January 2, 2015, at 2:38 a.m., Mr. Beaudoin
    went to the Emergency Department of the Campbellford Memorial Hospital,
    complaining of sudden pain in his lower back and abdomen. The respondent Dr. Jaun
    Bothma examined
him and
    diagnosed degenerative disc disease, even though no radiographic evidence
    supported this finding. Mr. Beaudoin was discharged at 4:50 a.m.

·

On January 3, 2015, in
    the early afternoon, Mr. Beaudoin returned to the Hospital. He now complained of
    acute abdominal pain, nausea, vomiting, no bowel movement for three days, and being
    unable to keep food down. Dr. Bothma examined Mr. Beaudoin again and this
    time ordered a CT scan. The radiologist report of the respondent Dr. Thomas Brown
    recorded that some slightly dilated fluid-filled small bowel loops are shown
    in the distal small bowel, but noted that no definite evidence of an acute
    small bowel obstruction is seen at the present time.

·

On January 4, 2015, at
    8:26 p.m., Mr. Beaudoin went to the Hospital a third time. He complained of abdominal
    pain, bloating, and no bowel movement for five days. Dr. Brown, who reviewed X-ray
    images, noted in his report multiple slightly dilated small bowel loops in the
    mid-abdomen (small bowel obstruction), and concluded that while the changes
    in the small bowel may be due to an ileus the possibility of a developing low
    small bowel obstruction is not excluded.

·

On
    January 5, 2015, Mr. Beaudoin was sent for further imaging. The radiologists report
    recorded evidence of bowel ischemia
[
[1]
]
with new portal venous gas
    identified in the small bowel mesentery and with the liver. Small bowel
    obstruction secondary to superior mesenteric artery occlusion with diffusely
    dilated, fluid and air filled small bowel loops. Mr. Beaudoin was transferred
    to the Peterborough Regional Health Centre (PRHC) for emergency surgery.
    During the surgery, it was determined that almost the entirety of his small
    bowel was ischemic
,
and was showing
    signs of non-viability, and that he would not survive
.

·

Four days
    later, on January 9, 2015, Mr. Beaudoin died.

·

In early
    March 2015, the appellants paid for Mr. Beaudoins complete medical records
    from the Hospital and the PRHC. Medical records were provided in May and June 2015,
    but were not complete: they excluded the imaging from the diagnostic tests
    performed, including, but not limited to, the CT imaging from January 3, 2015.
    The CT imaging was not provided until May and June 2017, after the appellants had
    retained a lawyer who wrote to the Hospital and the PRHC. The CT imaging from January
    3, 2015 revealed an occlusion and/or obstruction of the superior mesenteric
    artery.

·

Mr. Beaudoin died because of the respondents
    failure to identify an occlusion and/or obstruction of his mesenteric artery on
    the CT imaging from January 3, 2015. Had the occlusion and/or obstruction of
    the mesenteric artery not been ignored, Mr. Beaudoin would have received
    treatment that would have saved his life.

·

The doctrine of fraudulent concealment
tolled
the limitation period under the
Trustee Act
. The appellants were
    unaware, and could not have been aware, of Dr. Brown's negligent failure to
    identify the mesenteric artery obstruction until they received the actual CT imaging
    from the Hospital in May 2017.

·

Lastly, the
    appellants contracted with the Hospital to provide Mr. Beaudoins complete
    medical records, including the CT imaging, when they ordered and paid for those
    records. The Hospital breached its contract with the appellants and its
    statutory duties under the
PHIPA
by failing to provide the CT
    imaging in May or June 2015. If the appellants claims are statute-barred under
    the
Trustee Act
, the appellants are entitled to the
    same damages they would have been entitled to had the claim been brought within
    the limitation period. But for the Hospitals misconduct and breach of contract,
    the respondents would have discovered the respondents negligence within two
    years of Mr. Beaudoins death and would not face a limitation period
    issue.

C.

The Motion Judges Decision

[10]

The motion judge granted the
    respondents motion under r. 21.01(1)(a) to dismiss the appellants claims in
    negligence and their derivative claims under the
Family Law Act
as
    statute-barred under s. 38(3) of the
Trustee Act
. He held that the
    appellants plea of fraudulent concealment did not suspend the limitation
    period in s. 38(3), because there was no causal connection between the allegedly
    concealed CT imaging from January 3, 2015 and the appellants failure to sue within
    the limitation period. He concluded that the appellants knew about their cause
    of action even before the CT imaging was disclosed in May 2017, because they
    had sued the respondents in the April 2017 claim. He therefore dismissed the
    negligence and derivative claims against all the respondents and dismissed the
    action against the three doctors.

[11]

However, the motion judge
    ruled that the appellants claims against the Hospital for breach of contract
    and breach of the
PHIPA
could not be resolved on the motion under r.
    21.01(1)(a) and therefore allowed those claims to continue.

D.

DISCUSSION

[12]

The issue on this appeal is
    whether the motion judge correctly decided, as a question of law under r.
    21.01(1)(a), that the facts pleaded in the July 2018 claim could not support a
    finding of fraudulent concealment to suspend the limitation period in s. 38(3)
    of the
Trustee Act
. Before turning to that question, I will first
    summarize the applicable legal principles.

(a)

The Applicable Legal Principles

(i)

The test under r. 21.01(1)(a)

[13]

Rule 21.01(1)(a) allows a
    party to move for a determination, before trial, of a question of law raised
    by a pleading in an action, where such determination may dispose of all or part
    of the action, substantially shorten the trial, or result in a substantial
    saving of costs. No evidence is admissible on a motion under r. 21.01(1)(a),
    except with leave of a judge or on consent of the parties: r. 21.01(2)(a).

[14]

The main principles applicable
    to a motion to determine a question of law under r. 21.01(1)(a) are well known:

1.

The test under r. 21.01(1)(a) is whether the
    determination of the issue of law is plain and obvious, which
is the same test that
applies under r. 21.01(1)(b)
    for whether the pleading should be struck because it discloses no reasonable
    cause of action or defence:
Transamerica Life Canada Inc. v. ING Canada
    Inc.
(2003),
68 O.R. (3d) 457 (C.A.), at para. 37
;
Paul M. Perell
    & John W. Morden,
The Law of Civil Procedure in
    Ontario
,

4th ed. (Toronto: LexisNexis Canada, 2020), at para.
    6.168
.

2.

The facts pleaded in the statement of claim are
    assumed to be true, unless they are patently ridiculous or manifestly incapable
    of proof:
Paton Estate v. Ontario Lottery and Gaming Corporation (Fallsview
    Casino Resort and OLG Casino Brantford)
, 2016 ONCA 458, 131 O.R. (3d) 273,
    at para. 12.

3.

The statement of claim should be read
as
generously
as possible
to
    accommodate any drafting inadequacies in the pleading. If the claim has some
    chance of success, it should be permitted to proceed:
R. v. Imperial
    Tobacco Canada Ltd.
, 2011 SCC 42, [2011] 3 S.C.R. 45, at paras. 17-22.

(ii)

The standard of review

[15]

The standard of review of a
    motion judges determination under r. 21.01(1)(a) is correctness, because
    under this rule the court is asked to determine a question of law:
Das v.
    George Weston Limited
, 2018 ONCA 1053, 43 E.T.R. (4th) 173, at para. 65,
    leave to appeal refused, [2019] S.C.C.A. No. 69.

(iii)

The two-year limitation period in s. 38(3)
    of the

Trustee Act

[16]

The respondents rely on the
    limitation period in s. 38 of the
Trustee Act
. Section 38(1) of the
Trustee
    Act
provides that, except in cases of libel and slander, the executor or
    administrator of any deceased person may maintain an action for all torts or injuries
    to the person or to the property of the deceased person. Section 38(3)
    provides that no action under s. 38 shall be brought after the expiration of
    two years from the death of the deceased.

[17]

There is no dispute that the
    following legal principles apply regarding s. 38(3) of the
Trustee Act
:

1.

Claims brought by the deceaseds dependents under s. 61 of the
Family
    Law Act
are governed by the same limitation period in s. 38(3) of the
Trustee
    Act: Camarata v. Morgan
, 2009 ONCA 38, 94 O.R. (3d) 496, at para. 9;
Smith
    Estate v. College of Physicians and Surgeons of Ontario
(1998), 41 O.R.
    (3d) 481 (C.A.), at p. 488, leave to appeal refused, [1998] S.C.C.A. No. 635.

2.

Section 38(3) of the
Trustee Act
prescribes a hard or
    absolute limitation period triggered by a fixed and known event  when the
    deceased dies  and expires two years later:
Levesque v. Crampton Estate
,
    2017 ONCA 455, 136 O.R. (3d) 161, at para. 51;
Bikur Cholim Jewish
    Volunteer Services v. Penna Estate
, 2009 ONCA 196, 94 O.R. (3d) 401, at
    para. 25.

3.

The discoverability principles under the
Limitations Act, 2002
,
    S.O. 2002, c. 24, Sched. B do not apply to toll the limitation period under s.
    38(3) of the
Trustee Act: Giroux Estate v. Trillium Health Centre
(2005), 74 O.R. (3d) 341 (C.A.), at para. 33;
Bikur Cholim
, at para.
    26; and
Levesque
, at para. 47. Although this can sometimes be harsh, since
    a claim under the
Trustee Act
can be time-barred even before it is
    discovered, this can be mitigated by common law rules, such as the doctrine of
    fraudulent concealment:
Levesque
, at para. 56;
Bikur Cholim
,
    at para. 25.

[18]

Here, Mr. Beaudoin died on
    January 9, 2015, but the action was not brought until April 27, 2017  just
    over two years and three months after his death. The claims under the
Trustee
    Act
and the derivative family law claims would therefore be statute-barred,
    unless the appellants can invoke a common law rule to suspend the limitation
    period, such as the doctrine of fraudulent concealment.

(iv)

The doctrine of fraudulent concealment

[19]

The Supreme Court of Canada
    recently addressed the doctrine of fraudulent concealment in
Pioneer Corp.
    v. Godfrey
, 2019 SCC 42, 437 D.L.R. (4th) 383. Brown J. for the majority described
    fraudulent concealment as an equitable doctrine that prevents limitation
    periods from being used as an instrument of injustice: at para. 52, citing
M.
    (K.) v. M. (H)
, [1992] 3 S.C.R. 6
, at pp. 58-59.
    He stated that [w]here the defendant fraudulently conceals the existence of a
    cause of action, the limitation period is suspended until the plaintiff
    discovers the fraud or ought reasonably to have discovered the fraud, and noted
    that it is a form of equitable fraud  which is not confined to the
    parameters of the common law action for fraud: at para. 52. See also
M. (K.)
,
    at p. 56;
Giroux Estate
, at para. 28.

[20]

Pioneer
was released a few months after the motion
    judges decision here. The motion judge had cited
Colin v. Tan
, 2016
    ONSC 1187, 81 C.P.C. (7th) 130, at para. 45, to suggest that fraudulent
    concealment has three constitutive element[s]:

(1) the defendant and plaintiff have a special
    relationship with one another; (2) given the special or confidential nature of
    the relationship, the defendants conduct is unconscionable; and (3) the
    defendant conceals the plaintiffs right of action either actively or the right
    of action is concealed by the manner of the wrongdoing
.

[21]

In
Pioneer
,
    however, Brown J. explained that although fraudulent concealment can apply when
    there is a special relationship between the parties, a special relationship is
    not required: at para. 54. Instead, fraudulent concealment can apply whenever
    it would be, for
any
reason
,
unconscionable
for the defendant to rely on the advantage gained by
    having concealed the existence of a cause of action (emphasis in original).

[22]

With this background, I now
    turn to consider the facts pleaded in the July 2018 claim and the parties arguments.

(b)

Application to This Case

(i)

The motion judges reasons on
    fraudulent concealment

[23]

The motion judge accepted
    that the July 2018 claim pleaded a special relationship between the parties: a
    patient-hospital relationship and a patient-doctor relationship, both involving
    Mr. Beaudoin. The respondents do not contest this, and I see no basis to disturb
    this conclusion. In any event, based on
Pioneer
, a special
    relationship was not required to establish fraudulent concealment.

[24]

The motion judge also ruled
    that the July 2018 claim pleaded that the respondents engaged in unconscionable
    conduct by actively concealing and withholding from the appellants the CT imaging
    taken on January 3, 2015 and their errors until that imaging was disclosed in May
    2017. The respondents also do not contest this conclusion. I see no error in it
    either.

[25]

This takes me to the key
    point of contention on this appeal: whether, on the facts pleaded, the motion
    judge erred in finding that the respondents alleged wrongdoing in concealing
    the CT imaging prevented the appellants from reasonably discovering their cause
    of action before the limitation period expired.

[26]

The motion judge ruled that
    the CT imaging did not add anything of significance to the [appellants]
    knowledge. He found no differences of consequence between the facts pleaded
    in the April 2017 claim, before the CT imaging was disclosed, and the July 2018
    claim, after it was disclosed. He concluded that although the CT imaging was
    potentially important evidence, the appellants knew about their cause of action
    against the respondents even before the imaging was disclosed:

I am of the view that there are no differences
    of consequence between the allegations made in the [April 2017 claim] and the
    amended claims prepared after the [appellants] received the actual CT images. In
    both, it is alleged that as a result of failures related to the CT scan, the
    [respondents] did not properly diagnose Mr. Beaudoin.

The information allegedly concealed consisted
    of the actual CT imaging. The actual CT images
did
    not add anything
of significance to the [appellants] knowledge.
    Although the actual images may be important evidence, the images were not
, in this case
, necessary for the [appellants] to
be aware of
a cause of action as against the
    [respondents].

Based on the allegations in the [April 2017
    claim], the [appellants] had sufficient material facts to know
that
there was a claim in negligence against the
    [respondents]
for the manner in which
Mr. Beaudoin
    was treated. The facts
necessary
to base a
    cause of action against the [respondents] were known to the [appellants] before
    the actual CT scans were received.

I therefore find
that
there is no causal connection between the information
that was
allegedly concealed and the [appellants]
    failure to
bring the action
within the
    limitation period. Based on the allegations set out in the [April 2017 claim],
    the [appellants]
were aware of
the cause of
    action even
in the absence of
the allegedly
    concealed material. Therefore the third element of the doctrine of Fraudulent
    Concealment is not satisfied.

[27]

In essence, the appellants
    contend that the motion judge erred in two respects: (1) his ruling that the
    conditions for fraudulent concealment were not met involves a question of fact,
    not law, and thus should not have been determined on a motion under r.
    21.01(1)(a); (2) the facts pleaded in the July 2018 claim relating to causation
    were not patently ridiculous or manifestly incapable of proof.

[28]

I will address each point in
    turn.

(1)

Did the motion judge err in deciding the question
    of fraudulent concealment as a question of law under r. 21.01(1)(a)?

[29]

As I will explain, the motion
    judge erred in deciding the question of fraudulent concealment as a question of
    law under r. 21.01(1)(a).

[30]

This court has underscored
    that a motion under r. 21.01(1)(a) is not the proper procedural vehicle for
    weighing evidence or making findings of fact: see e.g.,
McIlvenna v.
    1887401 Ontario Ltd.
, 2015 ONCA 830, 344 O.A.C. 5, at paras. 19-20;
Andersen
    Consulting v. Canada (Attorney General)
(2001), 150 O.A.C. 177 (C.A.), at
    para. 35.

[31]

This court has applied this general
    principle in a long line of cases in which it has discouraged using r.
    21.01(1)(a) to determine limitation period issues except in very narrow circumstances
    where pleadings are closed and the facts relevant to the limitation period are
    undisputed:
Kaynes v. BP p.l.c.
, 2021 ONCA 36, at para. 74;
Beardsley
    v. Ontario
(2001), 57 O.R. (3d) 1 (C.A.), at para. 21;
Tran v.
    University of Western Ontario
, 2016 ONCA 978, 410 D.L.R. (4th) 527, at
    paras. 18-21; and
Salewski v. Lalonde
, 2017 ONCA 515, 137 O.R. (3d)
    762, at paras. 42-45.

[32]

The rationale for this position
    was recently explained by Feldman J.A. in
Kaynes
, at para. 81. She
    noted that discoverability issues are factual and it is unfair to the plaintiff
    for a motion judge to make such factual findings on a motion to determine a
    question of law under r. 21.01(1)(a), because that rule prohibits evidence on
    the motion except with leave of the court or on consent:

In establishing the main rule that a claim
    should not normally be struck out as statute-barred using r. 21.01(1)(a), the
    courts have noted that discoverability issues are factual and that the rule is
    intended for legal issues only where the facts are undisputed. It would
    therefore be unfair to a plaintiff where the facts are not admitted, to use
    this rule, which does not allow evidence to be filed except with leave or on
    consent. But where a plaintiffs pleadings establish when the plaintiff
    discovered the claim, so
that
the issue is
    undisputed, then the courts have allowed r. 21.01(1)(a) to be
used as
an efficient method of striking out claims
    that have no chance of success,
in accordance with
the
    principle approved in
Knight v. Imperial Tobacco Canada Ltd.
, 2011 SCC
    42, [2011] 3 S.C.R. 45, at para. 19.

[33]

Thus, a factual dispute
    about the discovery date of a cause of action precludes the use of r.
    21.01(1)(a) to determine whether a limitation period subject to discoverability
    has expired, because this rule is limited to determining questions of law
    raised by a pleading. If the parties have joined issue on disputed facts on the
    limitations issue, the preferable procedure might be a motion for summary
    judgment under r. 20, which provides the court with certain fact-finding powers:
Kaynes
, at para. 80;
Brozmanova v. Tarshis
, 2018 ONCA 523, 81
    C.C.L.I. (5th) 1, at paras. 21, 23, and 35; and r. 20.04(2.1).

[34]

These principles about the
    limited scope for using r. 21.01(1)(a) to address discoverability under the
Limitations
    Act, 2002
also apply to fraudulent concealment. Just as factual issues should
    not be decided in relation to discoverability on a motion under r. 21.01(1)(a),
    they should also not be decided in relation to fraudulent concealment. To do so
    would be unfair to a plaintiff when no evidence is admissible on such a motion
    except with leave of the court or on consent.

[35]

This approach is supported
    by this courts decision in
Giroux Estate.
That case involved an
    appeal from a decision on a r. 21.01(1) motion refusing to strike as
    statute-barred a claim against a urologist brought by the deceased patients
    estate. The estate alleged that the urologist had fraudulently concealed his
    failure to properly treat a malignant tumour in the bladder of the deceased,
    who died as a result. The urologist submitted that
he could not be said to have concealed a fact of which the estate
    was already aware when the limitation date expired.
This court agreed that the facts as pleaded were capable of
    supporting a finding of fraudulent concealment, and so the action should not be
    struck as statute-barred. Although Moldaver J.A. (as he then was) for this
    court acknowledged that the inferences the urologist urged the court to draw from
    the pleadings as to why the claim was statute-barred may be borne out at the
    end of the day, he highlighted that the case was just at the pleadings stage: at
    paras. 37, 41.

[36]

The operative question is
    thus whether the pleadings here raise a factual dispute about the application
    of the doctrine of fraudulent concealment. I conclude that they do. The factual
    dispute concerns causation: whether there is a causal connection between the
    allegedly concealed CT imaging and the appellants failure to sue within the
    limitation period. The appellants assert such a causal connection; the
    respondents deny it. The motion judge found no causal connection, concluding
    that the CT images did not add anything of significance to the [appellants]
    knowledge, and that the facts necessary to base a cause of action against the
    [respondents] were known to the [appellants] before the actual CT scans were
    received.

[37]

But causation involves a
    factual inquiry:
Clements v. Clements
, 2012 SCC 32, [2012] 2 S.C.R.
    181, at para. 13;
Ediger v. Johnston
, 2013 SCC 18, [2013] 2 S.C.R. 98,
    at para. 29; and
Campbell v. Bruce (County)
, 2016 ONCA 371, 349 O.A.C.
    302, at para. 55, leave to appeal refused, [2016] S.C.C.A. No. 325. Such a factual
    issue should generally not be determined on a motion to determine a question of
    law under r. 21.01(1)(a).

[38]

The motion judges finding
    that the CT imaging did not add anything of significance to the [appellants]
    knowledge is also problematic. The CT imaging was not in evidence, either on
    the motion or this appeal.

[39]

However, the respondent
    doctors assert in their factum that the April 2017 claim provides definitive
    evidence that the [a]ppellants had knowledge of their cause of action as of
    April 27, 2017. They note that courts have considered prior pleadings in
    motions under r. 21.01(1)(a), citing
Metropolitan Toronto Condominium Corp.
    No. 1352 v. Newport Beach Development Inc.
,

2012
    ONCA 850, 113 O.R. (3d) 673, at paras. 111-13 and
Torgerson et al. v. Nijem
, 2019 ONSC 3320
.
But neither of those
    cases purports to authorize a court to make a factual finding on a disputed point
    on a motion under r. 21.01(1)(a). The appellants assert that issuing a statement
    of claim is not necessarily determinative of their knowledge of a cause of
    action, and that the April 2017 claim simply reflected their suspicion that a
    cause of action may have existed. The case law requires knowledge of the cause
    of action, not mere suspicion. For example, in
Pioneer
, at para. 53, Brown
    J. cited approvingly
T.P. v. A.P.
, 1988 ABCA 352, 92 A.R. 122, though
    on a different point, in which the Alberta Court of Appeal discussed fraudulent
    concealment and stated that [s]uspicion is not knowledge: at para. 15. See
    also
Zeppa v. Woodbridge Heating & Air-Conditioning Ltd.
, 2019
    ONCA 47, 144 O.R. (3d) 385, at para. 41, leave to appeal refused, [2019]
    S.C.C.A. No. 91;
Lawless v. Anderson
, 2011 ONCA 102, 276 O.A.C. 75, at
    paras. 21-28; and
Kaynes
, at para. 56. Because this is a fact-based
    analysis and both parties positions depend on evidence, this factual dispute cannot
    be decided on a motion under r. 21.01(1)(a).

[40]

The respondents contest this
    conclusion with their second argument. They say that the motion judge was
    entitled to find no causation between the non-disclosure of the CT imaging and
    the failure to sue within the limitation period because the July 2018 claim
    pleads facts about causation that are patently ridiculous or manifestly incapable
    of proof. I will address this argument next.

(2)

Was it open to the motion judge to find
    that the facts as pleaded in the July 2018 claim relating to causation were
    patently ridiculous or manifestly incapable of proof?

[41]

There are two problems with the
    respondents argument that the motion judge was entitled to find that the facts
    pleaded in the July 2018 claim relating to causation are patently ridiculous or
    manifestly incapable of proof.

[42]

The first problem is that
    the motion judge did not purport to apply the standard of patently ridiculous
    or manifestly incapable of proof. He instead made a factual finding against
    the appellants on causation based on the pleadings alone. As I have already
    explained, this was an error. A motion under r. 21.01(1)(a) is not the proper procedural
    vehicle for weighing evidence or making findings of fact.

[43]

The second problem is that, assuming
    the facts pleaded in the July 2018 are taken as true, the plea of fraudulent
    concealment is not patently ridiculous or manifestly incapable of proof.

[44]

The Supreme Court of
    Canadas decision in
Operation Dismantle v. The Queen
, [1985] 1 S.C.R.
    441 remains the leading case on the type of allegation that is manifestly
    incapable of proof. At issue was whether to strike out, as disclosing no
    reasonable cause of action, a statement of claim. The key allegation was that
    the decision of the federal cabinet to permit the United States to test cruise
    missiles in Canada would threaten the lives and security of Canadians by
    increasing the risk of nuclear conflict, and would thus violate s. 7 of the
Canadian
    Charter of Rights and Freedoms
. The claim pleaded such a causal link
    through a series of reactions by various foreign powers, including arms
    agreements becoming unenforceable, Canada becoming the target of a nuclear
    attack, an increased likelihood of a pre-emptive strike or accidental firing,
    and escalation of the nuclear arms race. Dickson J. (as he then was) for the
    majority of the Supreme Court ruled, at p. 455, that he did not need to assume
    that the plaintiffs allegations were true because they were by their very
    nature incapable of proof:

We are not
, in my
    opinion,
required  to take as true the appellants allegations
concerning
the possible consequences of
the testing of
the cruise missile. The rule that the
    material facts in a statement of claim must be taken as true
for the purpose of determining whether
it discloses
    a reasonable cause of action does not require that allegations based on
    assumptions and speculations be taken as true.
The very nature of such an
    allegation is that it cannot be proven to be true by the adduction of evidence.
    It would, therefore, be improper to accept that such an allegation is true. No
    violence is done to the rule where allegations, incapable of proof, are not
    taken as proven
. [Emphasis added.]

[45]

Pleaded facts are incapable
    of proof when proof is inherently impossible:
P.K. v. Desrochers
(2001), 151 O.A.C. 341 (C.A.), at para. 4, leave to appeal refused, [2002]
    S.C.C.A. No. 81. Pleaded facts that are merely difficult to prove are not incapable
    of proof:
Spar Roofing & Metal Supplies Ltd. v. Glynn
, 2016 ONCA
    296, 401 D.L.R. (4th) 318, at para. 44.

[46]

Here, the essence of the appellants
    fraudulent concealment allegation is that had the CT imaging been disclosed
    rather than fraudulently concealed when it was requested in May and June 2015,
    then, as pleaded in the July 2018 claim, the appellants would have sued within
    two years of [Mr. Beaudoins] death and would not be faced with the limitation
    defence advanced by the [respondents].

[47]

This allegation is not of
    such a nature that it cannot be proven to be true by the adduction of
    evidence, nor is it patently ridiculous. On the contrary, it is the sort of factual
    issue that courts adjudicate regularly based on evidence when limitation period
    issues arise. Undoubtedly, that the appellants issued the April 2017 claim
    before receiving the CT imaging will be among the facts considered by the court
    deciding the fraudulent concealment issue. The allegation that the appellants
    would have sued before the limitation period expired had the CT imaging been
    disclosed when it was requested may be hard to prove or it may be easy to prove,
    but it is provable, depending on the evidence. This court should not speculate on
    what a trier of fact would decide based on evidence it has not seen.

[48]

This court applied the
    doctrine of fraudulent concealment where a defendants conduct was alleged to have
    been responsible for a plaintiffs delay in filing a claim in
Halloran v.
    Sargeant
(2002),
163 O.A.C.
    138 (C.A.).
Mr. Halloran, who was
    terminated from his employment because of a corporate reorganization, took an
    unreduced early pension instead of a special severance package based on false information
    provided by his employer that the pension option exceeded his statutory
    entitlement. In 1994, a group of employees who had also chosen the pension
    option succeeded in a claim for severance pay in addition to a pension, a claim
    that the Divisional Court upheld in 1995. In 1995, Mr. Halloran learned about the
    courts decision in a newspaper article, and in 1996, he sued for severance and
    termination pay. The referee dismissed the claim as statute-barred under s. 82
    of the
Employment Standards Act
, R.S.O. 1990, c. E.14, which imposed a
    two‑year limitation period. Mr. Hallorans application for judicial
    review was granted, and the employers appeal to this court was dismissed.

[49]

Armstrong J.A. held that the
    referee erred in refusing to apply the doctrine of fraudulent concealment to
    toll the limitation period. He found that because the company made a
    misrepresentation that caused the employee to act to his detriment, it was
    unconscionable for it to invoke the limitation period when it was responsible
    for the delay in filing the claim. At para. 34, Armstrong J.A. concluded:

In my view, the
limitation period in s. 82 (2) should not have commenced until Mr.
    Halloran
became aware that
severance money
    under the
Act
was due to him which was
either
December 2, 1995 [when he read a newspaper account about the courts
    decision in favour of the employees] or perhaps earlier, on March 23, 1994
    [when he read a newspaper account about the employees claim and learned that a
    pending decision was expected to go in favour of the employees]. Either of the
aforementioned
dates bring him within the time
    prescribed in s. 82 (2).

[50]

Armstrong J.A. added, at
    para. 36, that [t]he same conduct of the company that amounted to fraudulent
    concealment resulted in Mr. Halloran doing nothing. He had no apparent reason
    to consult a lawyer based upon what he was told by the company.

[51]

Here, the appellants similarly
    allege that the respondents fraudulent concealment was responsible for their delay
    in filing a claim. Based on a long line of authorities, they should have a
    chance to support this allegation with evidence.

[52]

If, based on the evidence,
    the court finds fraudulent concealment for some or all of the period between
    when the CT imaging was requested and when it was disclosed, the court will
    then have to decide when the limitation clock starts to run or, having started
    to run, when it stops and when it starts up again:
Giroux Estate
, at para.
    28, n. 6. These determinations would all factor into the assessment of whether
    the appellants negligence and derivative family law claims are statute-barred.

[53]

As a result, I conclude that
    the appellants plea of fraudulent concealment is neither patently ridiculous nor
    manifestly incapable of proof. It therefore should not have been rejected on a
    motion under r. 21.01(1)(a).

E.

Disposition

[54]

I would allow the appeal, set
    aside the order of the motion judge, and award the appellants costs of the
    appeal in the claimed amount of $15,000 all inclusive.

Released:
January
    29, 2021 (J.C.M.)

M. Jamal
    J.A.

I
    agree. J.C. MacPherson J.A.

I
    agree. B. Zarnett J.A.

[1]

Ischemia is an
inadequate
blood supply to part of the body.