Executive Summary: Key Legal and Evidentiary Issues

• Whether the plaintiff discovered, or ought reasonably to have discovered, its claim more than two years before issuing the action under sections 4 and 5 of the Limitations Act, 2002
• Extent to which the November 30, 2022 reconciliation email and attached spreadsheet gave the plaintiff sufficient knowledge to draw a plausible inference of liability and loss
• Impact of defendants’ own acknowledgment that further reconciliation and “collaborative work” were required on the assessment of discovery and limitation defences
• Adequacy of the evidentiary record on a summary judgment motion, particularly the absence of correspondence between November 30, 2022 and September 25, 2023
• Proper use of the court’s summary judgment powers under Rule 20 in light of Hryniak v. Mauldin and the need for fact-finding on discoverability dates
• Allocation of partial indemnity costs following an unsuccessful summary judgment motion brought by the defendants

Facts of the case

Payment Solution Providers Holding Inc. (PSPH) is a holding company that owns PSP Services Inc. and Payment Services Interactive Gateways Inc., the latter referred to as New Gateway. All of these entities are controlled by a single individual, Danny Gurizzan, who is the sole shareholder and director. New Gateway operates an online payment gateway used to process credit and debit card payments for merchants, meaning it sits at the core of a payments processing ecosystem that relies on accurate settlement of large transaction flows. On the defendants’ side, Peoples Trust Company (Peoples) is the parent of Peoples Payment Solutions Ltd. (PPS), which in turn is the parent company of Payment Services Interactive Gateway Inc., referred to as Old Gateway. PPS provides payment processing solutions, including card processing services, and Old Gateway historically ran the merchant payment gateway business whose assets were later sold to PSPH. In March 2022, PSPH purchased the assets of Old Gateway pursuant to an asset purchase agreement. Under that agreement, the plaintiff acquired Old Gateway’s merchant payment processing software and was assigned Old Gateway’s merchant agreements. PSPH then transferred the purchased assets and undertakings to New Gateway, so that New Gateway became the operating entity for the payment gateway business going forward. A central feature of the relationship was the handling and reconciliation of settlement accounts through which merchants’ funds moved. Initially, settlement files for the business were processed under a settlement account controlled by Peoples at the Bank of Montreal (the “old settlement account”), where funds were commingled with other monies. Subsequently, Peoples opened a new settlement account at Desjardins (the “new settlement account”), and the parties began a migration process to move New Gateway merchants’ settlement flows from the old account to the new one. The intended end-state was that, after a cutover date, settlement funds for New Gateway merchants would both be deposited into and disbursed from the new settlement account, eliminating the split between deposit and disbursement accounts. The planned cutover was to be completed by close of business on November 30, 2022. In the period between the opening of the new settlement account and the cutover date, some deposits were made into the new settlement account even though associated merchant disbursements were still made from the old settlement account. The parties disagreed as to who directed or controlled these flows. PSPH denied that it or New Gateway ever instructed Peoples to disburse funds from the old settlement account during that transition period, and argued that any misalignment between incoming deposits and outgoing payments was due to Peoples’ own processes, which Peoples designed and controlled. According to PSPH, operational responsibility for receiving funds and facilitating merchant payments was not transferred to it until around March 2023. Peoples maintained that, to address the misalignment, it periodically transferred incoming funds from the new settlement account back to the old settlement account to ensure there was sufficient money in the old account to meet disbursement obligations. All of this fed into a complex settlement reconciliation exercise that lay at the heart of the dispute. On November 30, 2022, the cutover date, Peoples sent PSPH an email at 7:31 p.m. attaching a large spreadsheet and purporting to reconcile the balances between the settlement accounts. Peoples stated that it had determined the opening balance for the New Gateway CAD settlement account at Desjardins, setting out supporting figures under various tabs in the report, and advised that it was transferring $4,417,371.72 from the new Desjardins settlement account back to its Bank of Montreal account. From December 1, 2022 onward, settlement funds for New Gateway transactions were to be both deposited into and disbursed from the new settlement account. The November 30 email is important because it both framed Peoples’ reconciliation position and contained an express acknowledgement that the picture was incomplete. Peoples identified categories such as “Collateral – To Be Reviewed” and “Build to Reserve” and noted the reports were not accurate or needed further clarification, expressly inviting a “call/working session” to identify active merchants, collateral amounts and details of certain accounts. In other words, the defendants themselves accepted that the figures were subject to further collaborative work and validation. PSPH took the position that the opening balance for the new settlement account, as reported in the November 30 email and spreadsheet, was lower than it expected. According to Mr. Gurizzan’s evidence, once Peoples’ settlement account was migrated to the New Gateway settlement account at Desjardins, PSPH undertook to “reverse engineer” the settlement accounts because the opening balance figure did not align with its expectations. PSPH claimed that it was not in control of the detailed data or methodology Peoples used to calculate the balance as of November 30, 2022 and that considerable analysis was required to determine whether there had in fact been any shortfall and, if so, in what amount. The plaintiff said this work was both extensive and time-consuming. PSPH maintained that it did not actually discover a deficiency until on or about September 25, 2023, when its reconciliation work was completed. On that date there was an email exchange between the parties. Peoples wrote to PSPH about a note in PSPH’s financial statements. The note stated that the company was disputing discount fees, gateway fees and other service revenues with the sponsor bank, and that, while management expected a positive resolution and ultimate collection, no amount had been recognized in the financial statements because the outcome was not reliably predictable and collectability was not reasonably assured. PSPH’s response email linked this note directly to what it described as the discrepancy in the beginning balance of the settlement account “from day of acquisition” into the PSI Gate (New Gateway) settlement account. PSPH asserted that a Peoples representative, Lucy, had insisted that this opening value was zero, but PSPH maintained this was incorrect and said this had been “demonstrated to be incorrect.” PSPH also indicated that its auditors expected approximately $9.3 million to be transferred to its settlement account and that the note was required for audit reasons. PSPH referred to a meeting at its offices where the “delta” had been demonstrated and indicated its team would work with Peoples to “complete and close off on this item.” Notably, neither party placed before the court any correspondence between November 30, 2022 and September 25, 2023, despite referring to communications during that period. The absence of this evidence became significant when the court assessed whether it could fix the dates on which PSPH discovered its claim. On December 19, 2024, PSPH issued its statement of claim. It sought a declaration that the defendants had breached the asset purchase agreement, an order directing a full reconciliation of the new settlement account, and damages for breach of contract and unjust enrichment. The central factual and legal battleground concerned whether there was a shortfall in merchant settlement funds owed to PSPH/New Gateway arising out of the migration process, and when PSPH knew or ought to have known that it had a viable claim.

The motion and limitation period issue

The defendants brought a motion for summary judgment in the Ontario Superior Court of Justice, asking the court to dismiss the claim in its entirety on the basis that it was barred by the basic two-year limitation period in section 4 of the Limitations Act, 2002. The issue on the motion was not whether there was actually a shortfall or breach of the agreement, but whether PSPH’s claim had been discovered more than two years before the action was commenced and was thus out of time. Section 5 of the Limitations Act sets out the test for discoverability. A claim is discovered when the plaintiff first knows that an injury, loss or damage has occurred, that it was caused or contributed to by an act or omission, that the act or omission was that of the person against whom the claim is made, and that, having regard to the nature of the loss, a proceeding would be an appropriate means to remedy it. The Act contains a presumption that the plaintiff knew of these matters on the day the act or omission occurred, unless the contrary is proved. The defendants argued that the relevant act or omission and the associated loss were discoverable, and indeed discovered, on November 30, 2022, when the cutover occurred and Peoples provided the reconciliation email and spreadsheet. In their submission, PSPH knew at that time that the opening balance was lower than expected and that any disagreement about the figures went to quantum only, not to the existence of a loss. They characterized PSPH as having actual knowledge of an injury on November 30, 2022, even if it did not yet know the precise amount. Under well-established limitation law, the defendants said, knowledge of some loss is enough to start time running; a plaintiff need not know its full monetary exposure before the limitation period begins. PSPH responded that on November 30, 2022 it did not know whether there was any compensable loss at all. It asserted that its concern at that time amounted to suspicion and expectation rather than knowledge. Without control over the data and methodology Peoples used in its reconciliation, and given Peoples’ own admission in the email that the figures were incomplete and further work was needed, PSPH maintained that it could not reasonably determine on that date whether there was a genuine shortfall. The plaintiff said it only came to understand that there was an actual deficiency after it completed its own extensive analysis, which it dated to around September 25, 2023. The motion therefore turned on whether PSPH had, or ought reasonably to have had, sufficient knowledge of the material facts by November 30, 2022 to draw a plausible inference of liability, as articulated by the Supreme Court of Canada in Grant Thornton LLP v. New Brunswick. The court was required to consider both PSPH’s subjective (actual) knowledge and what a reasonable person in its circumstances, exercising reasonable diligence, would have known, including whether earlier suspicion triggered the duty to investigate.

Summary judgment framework and evidentiary gaps

In addressing the motion, the court applied the modern summary judgment framework under Rule 20 of the Rules of Civil Procedure and the Supreme Court’s guidance in Hryniak v. Mauldin. The judge first had to determine whether the record allowed the dispute about discoverability and limitation to be fairly and justly resolved without a trial, using only the conventional fact-finding powers. If a genuine issue remained, the court then had to ask whether the extended summary judgment powers, such as weighing evidence or drawing inferences, could resolve it in a manner consistent with the interests of justice. The court emphasized that the moving party bears the evidentiary burden to show there is no genuine issue requiring a trial and that parties on summary judgment are required to put their best foot forward. Determining whether an action is statute-barred is inherently fact-specific and requires the court to make findings about each element of discoverability under section 5 of the Limitations Act. If the record does not allow these findings to be made with the level of certainty mandated by Hryniak, then summary judgment is not appropriate. A critical problem in this case was the incomplete evidentiary record. The parties chose, for their own strategic reasons, not to adduce any communications between November 30, 2022 and September 25, 2023, despite both relying on the course of dealings during that timeframe to support their respective positions on discoverability. The judge noted that litigants can make strategic choices about what evidence to file, but those choices may limit what the court can reliably determine on a paper record. Here, the missing correspondence significantly hampered the court’s ability to pinpoint the dates when PSPH first knew of an injury, first linked it to the defendants’ acts or omissions, and first realized that legal proceedings were an appropriate response.

Analysis of discoverability

The court first considered the statutory presumption that PSPH knew of its claim on the date of the act or omission, which the defendants said was November 30, 2022. It then examined whether PSPH had rebutted that presumption by showing that it did not, in fact, meet the section 5(1)(a) knowledge criteria on that date. Peoples’ own November 30 email was pivotal. The message expressly acknowledged that the reconciliation figures were not final. It noted that certain reports, such as the “Collateral – To Be Reviewed” tab, were inaccurate and dated back many years, and that other entries, such as those in the “Build to Reserve” tab, needed further clarification. Peoples signaled that there “may be some additional funds owed” to PSPH and requested collaborative work to validate amounts and resolve the open issues. The judge reasoned that this context meant that, as of November 30, 2022, it was genuinely uncertain whether there was any shortfall at all, or whether any apparent discrepancy would be eliminated once the collaborative reconciliation work was completed. PSPH’s observation that the balance appeared “lower than expected” could be interpreted as a reaction of surprise or disappointment rather than a conclusion that damage had definitely occurred. Given that the defendants themselves anticipated the figures might rise after further reconciliation, it was not clear that PSPH could reasonably infer an actual loss as opposed to a provisional accounting position subject to correction. Based on this, the court held that PSPH had successfully rebutted the statutory presumption that it discovered its claim on November 30, 2022. The judge accepted that PSPH’s actual discovery within the meaning of section 5(1)(a) occurred sometime after that date. Once the presumption was displaced, the burden shifted back to the defendants to prove that PSPH either actually knew, or ought reasonably to have known, all of the elements of discoverability more than two years before December 19, 2024, the date the claim was issued. The court found that on the limited record before it, this burden had not been met. There was insufficient evidence to determine, with the certainty required for summary judgment, the precise date on which PSPH first knew that injury, loss or damage had occurred. The judge was only able to say that this likely happened at some point between November 30, 2022 and September 25, 2023. Likewise, the court could not confidently pinpoint when PSPH first knew that any loss was caused or contributed to by an act or omission of the defendants, again concluding that this likely fell within the same undefined window.

Appropriateness of legal proceedings and objective knowledge

Another important branch of the analysis concerned when PSPH knew or ought to have known that litigation was an appropriate means to seek a remedy for the alleged shortfall. The requirement that legal proceedings be a “legally appropriate” remedy recognizes that parties are not expected to rush to court where other reasonable avenues—such as contractual dialogue, further reconciliation, or negotiated adjustments—are still meaningfully in play. The Ontario Court of Appeal has held that this part of the discoverability test depends heavily on the factual and statutory context and is designed to discourage needless litigation without turning the analysis into an assessment of the likely success of a civil claim. In this case, the judge held that the sparse record did not allow a reliable determination of when PSPH either concluded, or reasonably ought to have concluded, that collaboration with Peoples was no longer sufficient and that a lawsuit had become the legally appropriate vehicle for resolving the dispute. The same evidentiary deficiencies prevented the court from fixing the date of “objective” knowledge under section 5(1)(b), that is, the point at which a reasonable person with PSPH’s abilities and in its circumstances would first have known the necessary facts. Because the court could not determine either the subjective or objective dates with precision, it was impossible to decide which of them came first and thus when the claim was actually discovered for limitation purposes.

Outcome and costs

Faced with these unresolved factual questions and an incomplete evidentiary record, the judge concluded that it was not possible to fairly and justly adjudicate the limitation defence on a summary judgment motion. The court held that there remained a genuine issue requiring a trial with respect to discoverability under section 5 of the Limitations Act. In particular, the court found that: PSPH had rebutted the presumption that it discovered its claim on November 30, 2022; the defendants had not discharged their onus to prove that PSPH knew or ought reasonably to have known the material facts more than two years before commencing the action; and the summary judgment record did not permit the court to make the necessary factual findings about knowledge of loss, causation, and the appropriateness of legal proceedings with the level of certainty demanded by Hryniak. As a result, the court dismissed the defendants’ motion for summary judgment. The dismissal was without prejudice to the defendants’ right to raise the limitation defence at trial, where a full factual record, including the missing communications and additional evidence on the reconciliation process, can be explored. The court then turned to costs. Costs are discretionary and must be fair, reasonable, and proportionate, taking into account the result, the complexity and importance of the issues, and the principle of indemnity. The plaintiff, as the successful party on the motion, sought a modest partial indemnity award of $6,181.10, inclusive of HST and disbursements. This amount was significantly lower than the costs claimed by the defendants and reflected the fact that PSPH, as the responding party, had filed a less extensive record and factum. The judge found the amount requested to be fair, reasonable, and proportionate, and one that the moving parties could reasonably have anticipated as a potential consequence of an unsuccessful motion. Accordingly, the court ordered the defendants to pay PSPH costs fixed at $6,181.10, inclusive of HST and disbursements, within 30 days. Thus, at this stage of the litigation, the plaintiff, Payment Solution Providers Holding Inc., emerged as the successful party on the summary judgment motion, with its claim allowed to proceed to trial and a total monetary award in its favour consisting solely of costs in the amount of $6,181.10, with no damages yet determined or awarded.