The Plaintiff bank (“RBC”) sued the Defendants (the “Simmers”) for outstanding amounts on a credit facility due to alleged defaults. The Simmers defended the claim and filed a Counterclaim, claiming that earlier misconduct by RBC, specifically the 2018 payout of a business mortgage, caused them financial hardship that ultimately led to the loan being called in 2020. The Applications Judge dismissed RBC’s Application for Summary Judgment and struck the Simmers’ Counterclaim as being statute-barred. Both parties appealed.

On Appeal, Devlin J. affirmed the striking of the Simmers’ Counterclaim pursuant to Rule 3.68(2)(b), finding it was plainly and obviously out of time. The Court held that the Simmers knew or ought to have known of both the alleged wrongful conduct and the resulting harm in January 2018, or shortly thereafter. Since the Counterclaim was filed February 2021, it fell outside the two-year limitation period pursuant to Section 3(1)(a) of the Limitations Act, RSA 2000, c L-12 (the “Act”).

The Simmers argued that Section 6(2) of the Act should permit their late-filed Counterclaim because it was intimately connected with RBC’s originating claim. However, the Court found that there was no link between the 2018 mortgage payout and the 2020 calling of the line of credit. These were separate transactions, and litigating the Counterclaim would require a new evidentiary record unrelated to RBC’s Claim. As such, Section 6(2) was inapplicable.

Pursuant to Rule 6.14, the Court performed a de novo review of the dismissal of the Summary Dismissal Application, and applied a standard of correctness. Devlin J. emphasized the culture shift in Summary Judgment Applications pursuant to Rule 7.3, noting that Summary Judgment is appropriate where the record allows the Court to make a fair disposition without Trial.

Applying these principles, the Court found that the Simmers were in a long-running default on their loan obligations, even assuming the existence of any oral interest-only payment arrangement with RBC.  The Simmers failed to make payments for over five years and did not produce credible evidence of any binding agreement for repayment forbearance. The Simmers’ defence - namely that the default alleged by RBC did not exist or were the products of RBC’s misconduct - lacked sufficient merit and failed to meet the evidentiary burden required to resist Summary Judgment.

In the result, the Simmers’ Appeal against the limitations Decision was dismissed. RBC’s appeal was allowed, and Summary Judgment was granted.