Executive Summary: Key Legal and Evidentiary Issues

• Dispute focused on the existence and enforceability of an alleged oral contract for referral fees.

• Application of Ontario’s Limitations Act, 2002, to determine when the limitation period for claims began.

• Evaluation of whether the contract was ongoing or tied to individual referrals for limitation purposes.

• Analysis of evidence regarding the timing and nature of referral fee payments.

• Consideration of whether summary judgment was appropriate for claims barred by limitation periods.

• Determination of the sufficiency of evidence supporting the motion judge’s findings on knowledge and accrual of the cause of action.

Facts of the case

Frances Scanga and her corporation, Scangacann Inc., brought an action against Daniel J. Balena, a personal injury lawyer, seeking damages for unpaid referral fees. The appellants claimed that from 1984 to 2018, they had an oral contract entitling them to 10% of the gross settlement or award from over 130 lawsuits referred to Mr. Balena. While Mr. Balena admitted making payments for referrals, he denied the existence of any binding contract, asserting that all payments were made at his discretion.

Legal issues and policy terms

A central legal issue was the interpretation and application of the Limitations Act, 2002. The court had to decide whether the limitation period for each claim began when each referred lawsuit was settled and payment was not made, or only after the business relationship ended in 2018. The appellants argued that the contract was ongoing and that the cause of action did not accrue until the relationship concluded. The motion judge, however, found that the cause of action arose at the settlement of each referred lawsuit when the referral fee was not paid, as this was when Ms. Scanga became aware of the loss. The judge also addressed whether the contract was illegal or unenforceable, but determined that these issues required a trial.

Summary judgment and appeal

The motion judge granted partial summary judgment, dismissing claims for damages related to lawsuits settled before December 10, 2017, based on the ultimate and basic limitation periods in the Limitations Act. The appellants appealed, contending that the motion judge erred in his findings regarding the contract’s nature and the timing of when the cause of action accrued. They relied on case law suggesting that, for ongoing contracts, the limitation period should run from the delivery of the final account rather than from each individual breach.

Court of Appeal decision and outcome

The Court of Appeal for Ontario upheld the motion judge’s decision. The appellate court agreed that there was sufficient evidence to support the findings that Ms. Scanga was aware of when lawsuits were settled and that her entitlement to referral fees became due at that time. The court reaffirmed the principle that a cause of action accrues once damage is incurred, even if the full extent of damages is not immediately known. As a result, the appeal was dismissed.

Ruling and monetary award

The successful party in this case was the respondent, Daniel J. Balena. The Court of Appeal dismissed the appellants’ appeal and ordered them to pay costs to Mr. Balena in the amount of $15,000, inclusive of taxes and disbursements, as agreed by the parties. No further damages or monetary awards were granted to the appellants.