Executive Summary: Key Legal and Evidentiary Issues

• The central issue was whether the appellant's claims were barred by the 15-year ultimate limitation period under s. 15 of the Limitations Act, 2002.
• Wilful concealment under s. 15(4)(c) was invoked by the appellant to toll the limitation period, based on a Whistleblower Note and the Douglas Memorandum he later received.
• The court held that s. 15(4)(c) tolls the ultimate limitation period only where a defendant's concealment or misleading actually prevented the plaintiff from discovering the claim.
• According to his own pleadings, the appellant knew the essential facts underlying his claims by 2004 at the latest, defeating the wilful concealment argument.
• Whether "wilful concealment" requires active conduct by a defendant, rather than passive nondisclosure, was left undecided for a future case.
• On the cross-appeal, the motion judge's "no costs" order was set aside as an error in principle because it was made without inviting submissions from the parties.

Facts of the case

Scott Paterson, a prominent investment banker, joined Yorkton Securities Inc. in 1995 and eventually became its Chair and Chief Executive Officer. He pleaded that under his leadership Yorkton outranked RBC Dominion Securities Inc. ("RBC DS") as Canada's top technology underwriter, and that the two firms competed for business, with Yorkton often prevailing. Commencing in or about 1998, he alleged, he came under a series of unwarranted personal and professional attacks, including negative press coverage, negative marketing pitches to Canadian corporate issuers, and an investigation and administrative proceeding by the Ontario Securities Commission ("OSC"). He claimed that the respondents — Royal Bank of Canada, RBC DS, and several of their directors, senior officers, and employees — pressured regulators to investigate him and Yorkton and persuaded the media to publish negative articles. The OSC proceedings culminated in settlement agreements and orders that, among other things, required Paterson to sell his interest in Yorkton at book value, be reprimanded, be suspended from acting as a director or officer of a reporting issuer for two years, be prohibited from trading in securities for six months, and pay a fine and costs to the OSC. In 2004, journalist Peter C. Newman told Paterson that confidential sources had said RBC and many of its senior executives hated him, had encouraged the Canadian business press to attack him, and had caused the OSC to investigate him. Paterson pleaded that he lacked sufficient evidence to sue until he received an anonymous "Whistleblower Note" attaching a November 20, 1998 memo on RBC DS letterhead from Deputy Chairman Bryce Douglas (the "Douglas Memorandum"), which described Paterson as obnoxious and suggested that "if you can give him a push to help him over the edge it might be energy well spent." Paterson commenced his action on May 13, 2022, claiming $250 million in general and aggravated damages for civil conspiracy, defamation, injurious falsehood, and interference with economic relations, special damages to be determined, and $25 million in punitive and exemplary damages. The motion judge struck the Statement of Claim as time-barred and as an abuse of process, and ordered each side to bear its own costs. Paterson appealed, and the respondents sought leave to cross-appeal the costs order.

Statutory provisions at issue

The dispute turned on s. 15 of the Limitations Act, 2002, which provides that no proceeding shall be commenced after the 15th anniversary of the day on which the act or omission on which the claim is based took place. Under s. 15(4)(c), this ultimate limitation period does not run during any time in which the person against whom the claim is made either (i) wilfully conceals from the claimant the fact that injury, loss or damage has occurred, that it was caused or contributed to by an act or omission, or that the act or omission was that of the person against whom the claim is made, or (ii) wilfully misleads the claimant as to the appropriateness of a proceeding as a means of remedying the injury, loss or damage. Under s. 15(5), the burden of proving that subsection (4) applies rests on the person with the claim. Paterson relied on para. 107A of his Statement of Claim, which pleaded that the defendants wilfully concealed from him that his injury was caused by their wrongful conduct and wilfully misled him and the business community to believe he would have no legal claim because his losses would appear to be the result of independent journalists, regulators, and other third persons.

The court's reasoning and analysis

Writing for the Court of Appeal, van Rensburg J.A. held that, properly interpreted, the exception in s. 15(4)(c) interrupts the ultimate limitation period only where the defendant's concealment or misleading has prevented the plaintiff from discovering the claim. There is a "causative element" to wilful concealment: the plaintiff must be ignorant of the cause of action because of the defendant's misconduct. If the claimant has sufficient knowledge of the facts, the limitation period is no longer tolled regardless of the defendant's efforts at concealment. Because the Statement of Claim contained no allegations of acts or omissions after 2002, and given the transition provisions of the Act, the ultimate limitation period would have expired on January 1, 2019 — before the 2022 commencement of the action — absent wilful concealment. The court agreed with the motion judge that Paterson's own pleadings showed he knew of the respondents' alleged conduct at the time the events occurred, including specific incidents in which representatives of RBC and RBC DS called him unethical, and that the 2004 Newman conversation informed him of the very facts he alleged were concealed — that the respondents had encouraged the press to attack him and caused the OSC to investigate him. The pleadings therefore disclosed more than mere suspicion. Nothing in para. 107A or the paragraphs it enumerated spoke, even indirectly, of concealment from Paterson; indeed, the pleadings indicated the respondents acted openly. The court found it unnecessary to decide whether s. 15(4)(c) requires active conduct rather than passive nondisclosure, leaving that question for a future case, and expressly declined to endorse the motion judge's abuse of process findings, resting its decision solely on the limitation period. On the costs cross-appeal, the court held that the motion judge committed an error in principle by making a "no costs" order — based on the animus toward Paterson displayed in the Douglas Memorandum — without giving the parties an opportunity to make submissions.

Ruling and overall outcome

The Court of Appeal dismissed Paterson's appeal, granted the respondents leave to appeal costs, and allowed their cross-appeal, making the respondents — Royal Bank of Canada, RBC Dominion Securities Inc., and the individual defendants — the successful parties. The court set aside the "no costs" order and directed Paterson to pay the respondents $51,746.77 for partial indemnity costs of the motion, together with costs of $25,000 on the appeal and $5,000 on the cross-appeal, all amounts inclusive of disbursements and applicable taxes — a total of $81,746.77 in the respondents' favour.