Executive Summary: Key Legal and Evidentiary Issues

• Limitation period for the realtor’s proposed third-party/counterclaim based on alleged default under a private mortgage, including the discovery date of the claim (December 24, 2021).
• Effect, if any, of the separate Wasim Investments Action and its appeal on tolling or suspending the two-year basic limitation period under the Limitations Act, 2002.
• Characterization of the proposed pleading as a third-party claim for contribution and indemnity versus a counterclaim for enforcement of the private mortgage.
• Whether settlement-related discussions and scheduling communications between counsel could suspend the running of the limitation period under s. 11(1) of the Limitations Act.
• Admissibility and impact of “fresh evidence” on appeal when no formal motion to adduce fresh evidence is brought.
• Proper approach to costs in the Court of Appeal where the appellant is unsuccessful and attempts to fold outstanding motion-level costs into appellate costs.

Facts of the case

The dispute arises out of a residential real estate transaction in Brampton, Ontario. The respondents, Vijaya Prabakaran Sree Ranganathan and Keerthana Raguraman, were purchasers of a house and used the appellant, Azhar Wasim, as their realtor. In connection with the purchase, they entered into a private mortgage (the “Private Mortgage”) with the appellant. The respondents later alleged that their own realtor, the appellant, had defrauded them into buying the property and claimed losses connected with the Private Mortgage arrangement. In February 2022, the respondents commenced an action in the Superior Court of Justice (the “Original Action”) against three defendants: the appellant personally, Right at Home Realty Inc. Brokerage, and the Real Estate Council of Ontario (RECO). They sought damages arising from the alleged fraud and from the financial consequences of the Private Mortgage structure that accompanied the purchase. The appellant delivered a statement of defence in the Original Action on March 8, 2022. His pleaded position included an allegation that the respondents had defaulted under the Private Mortgage on December 24, 2021. That allegation later became critical for determining when he first discovered his own claim for recovery under the loan.

The Wasim Investments Action and the abuse of process finding

Instead of asserting his financial claim related to the Private Mortgage within the Original Action, the appellant caused a corporation he owns, Wasim Investments Ltd., to commence a separate proceeding. In that second lawsuit, Wasim Investments Ltd. sued the respondents and their corporation, Saaral South Indian Restaurant Corp., alleging breach of the Private Mortgage loan agreement (the “Wasim Investments Action”). That second action effectively sought to litigate the same Private Mortgage issues but through a separate corporate plaintiff, rather than through the appellant personally and within the framework of the Original Action. In November 2023, the Superior Court struck the Wasim Investments Action as an abuse of process. The court held that the issues in that proceeding were duplicative of those in the Original Action and risked inconsistent results if both matters were allowed to proceed. The abuse of process finding reflected concern about parallel litigation over the same mortgage and related disputes. The appellant (through Wasim Investments Ltd.) appealed that abuse of process ruling. In June 2024, the Court of Appeal for Ontario dismissed the appeal and confirmed that the Wasim Investments Action should not proceed.

The motion for leave to issue the Subject Claim

After the appeal in the Wasim Investments Action was dismissed, the appellant tried a different procedural route. He moved in the Original Action for leave to issue what was framed as a third-party claim for contribution and indemnity (the “Subject Claim”). In substance, however, the proposed pleading was not a classic third-party claim shifting liability to another defendant; it was effectively a counterclaim against the existing plaintiffs. The Subject Claim sought to enforce the Private Mortgage by alleging that the respondents had defaulted on their obligations under that mortgage and that the appellant was entitled to relief on that basis. The respondents opposed the motion primarily on limitations grounds. They argued that the two-year basic limitation period under s. 4 of the Limitations Act, 2002 had expired before the appellant sought leave to issue the Subject Claim. On the face of the appellant’s own pleadings, the alleged default under the Private Mortgage – and thus discovery of his claim – occurred on December 24, 2021. The motion judge accepted that date as the discovery date and concluded that the two-year limitation period expired on December 24, 2023. Because the appellant had not sought leave to issue the Subject Claim before that date, the judge found that the claim was statute-barred.

Arguments on tolling and the impact of related proceedings

The appellant did not dispute that the underlying claim was discovered on December 24, 2021. Instead, he argued that the running of the limitation period was suspended or tolled by events tied to the Wasim Investments Action and related discussions between counsel. One line of argument was that the period between the November 2023 judgment striking the Wasim Investments Action and the June 2024 dismissal of the appeal should not count towards the limitation clock. In essence, he claimed that the limitation period for his personal Subject Claim in the Original Action should have been paused while his corporation, Wasim Investments Ltd., pursued the appeal of the abuse of process decision. The motion judge rejected that position. The key point was that the appellant, in his personal capacity, was not a party to the Wasim Investments Action. Because the corporate proceeding was technically separate, and he personally was not a litigant in that action, proceedings in that case – including the motion to strike and the subsequent appeal – did not operate to suspend the limitation period for his personal Subject Claim in the Original Action. Even on a generous approach to the dates, the judge concluded that the limitation period had expired by July 29, 2024, well before the appellant actually brought his motion for leave. The appellant also suggested that settlement discussions and attempts to schedule his motion had a tolling effect under s. 11(1) of the Limitations Act. That provision can suspend the limitation period where the parties agree to attempt to resolve the claim. However, the motion judge found there was no proper basis to treat those events as suspending the limitation period applicable to the Subject Claim.

The appeal to the Court of Appeal

On appeal, the appellant advanced two principal arguments. First, he asserted that there were settlement discussions between June 28, 2023 and November 16, 2023 in the context of the Wasim Investments Action that should be treated as negotiations to resolve the claim within the meaning of s. 11(1) of the Limitations Act. On his theory, those discussions would suspend or toll the running of the limitation period for the Subject Claim in the Original Action. Second, he challenged the motion judge’s factual finding that he had not tried to bring his motion for leave before July 29, 2024. He maintained that, from July 22, 2024 onward, the parties were engaged in efforts to schedule the motion, and that this showed he was acting within time or in a manner that should protect him from the expiry of the limitation period. Both arguments, however, relied on new material that had not been put before the motion judge. The appellant attempted to rely on this material on appeal without bringing a proper motion to admit fresh evidence. The Court of Appeal emphasized that, without such a motion, the additional material was inadmissible. Because the evidence underpinning both grounds of appeal could not be considered, the absence of admissible evidentiary support was fatal to his case.

Why the fresh evidence and settlement arguments failed

The Court of Appeal went further and held that, even if the new material had been admitted as fresh evidence, it would not have changed the outcome. As to settlement, the court examined the nature of the discussions that took place in 2023. They were not aimed at resolving the merits of any substantive claim but were directed to procedural matters – essentially, how the Original Action and the Wasim Investments Action would be argued or managed. They did not involve an agreement or attempt to “resolve the claim” in the sense required by s. 11(1) of the Limitations Act. Accordingly, they did not suspend the running of the limitation period. Regarding the scheduling discussions said to have occurred from July 22, 2024 onward, the Court of Appeal stressed that these communications could not overcome the motion judge’s primary conclusion: the limitation period for the Subject Claim expired two years after discovery, on December 24, 2023. The appellant’s earlier attempt to extend that date by relying on the appeal in the Wasim Investments Action had already been rejected on the ground that he was not a party to that separate proceeding. Once that was accepted, any later discussions in mid-2024 were moot, because by then the limitation period had already expired. In short, neither the settlement framework nor the late effort to schedule the motion could cure the fundamental problem that the Subject Claim was out of time.

Outcome and costs award

The Court of Appeal dismissed the appeal and upheld the motion judge’s order refusing leave to issue the Subject Claim on limitation grounds. The respondents remained free to pursue their Original Action alleging fraud and related losses tied to the Private Mortgage, while the appellant’s attempt to assert his own enforcement-type claim under that mortgage within the same action came to an end. On costs, the respondents filed a bill showing partial indemnity costs of about $11,500, but that figure improperly included what appeared to be outstanding costs from the motion below. The Court of Appeal held that appellate costs are not the vehicle for recovering unpaid lower-court costs and adjusted the figure accordingly. It ordered the appellant, Azhar Wasim, to pay the successful respondents, Vijaya Prabakaran Sree Ranganathan and Keerthana Raguraman, costs in the total amount of $10,327.42, all inclusive, as the monetary award in their favour in this appeal.