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Assignment - Legal (CLPA)

As can be seen below, assignment cases often revolve around the provisions of the Conveyancing and Law of Property Act (CLPA).

. Hazout v. The Attorney General of Ontario

In Hazout v. The Attorney General of Ontario (Div Court, 2023) the Divisional Court considers whether Ontario, which is not normally subject to a limitation period [under s.16(1)(j) and s.16(2) Limitations Act] nonetheless is subject to the standard s.4 two-year limitation where it takes assignment or has direct standing as a guarantor (which was also found) of a debt:
[4] Mr. Hazout submits that Ontario was not a party to the loan agreement and only gained its standing to bring the action as an assignee. He emphasizes that an assignee to an agreement stands in the shoes of an assignor and is subject to the benefits and burdens of the underlying agreement. In his submission, this means that, on assigning the loan, Ontario remained subject to the burden of the two-year limitation period that would have applied to the bank.

[5] I do not accept these submissions. At the outset, I have some concern about addressing these arguments on appeal. They were not directly raised before the Deputy Judge. The Deputy Judge found that Ontario was exempt from a statutory limitation period, but Mr. Hazout did not specifically argue that Ontario was bringing the action as an assignee. Therefore, the Deputy Judge did not have an opportunity to rule on the nature of Ontario’s standing to bring the action.

[6] If it is appropriate to reach a determination on this point by review of the documents, I would dismiss Mr. Hazout’s arguments. By way of background, Ontario is not subject to the general two-year limitation period set out in s.4 of the Limitations Act, 2002, S.O. 2002, c. 24, Schedule B (the “Act”). Paragraph 16(1)(j) of the Act, read together with s. 16(2), provide that “[t]here is no limitation period in respect of” a proceeding brought by the Crown in respect of claims relating to “the administration of social, health or economic programs.” There is no dispute that the New Ventures Program constitutes such a program.

[7] Contrary to Mr. Hazout’s submission, Ontario was not limited to starting the action as an assignee of the loan agreement. Instead, Ontario was also a guarantor of the loan. Section 4 of the loan agreement, signed by Mr. Hazout, provides that the loan is guaranteed by the Province of Ontario. In consideration of that guarantee, Mr. Hazout agreed “to indemnify the Province of Ontario upon demand for all payments made by the Province of Ontario pursuant to the Guarantee.”

[8] As a guarantor, Ontario had an independent right to be indemnified for the loan. As Hunt J.A. explained (in concurring reasons) in Canada (A.G.) v. Becker, 1998 ABCA 283, 223 AR 59, at paras. 32-39, the right to indemnity is different from a subrogated in that it permits the guarantor to sue in its own name. See also Ormston v. Manchester, 2019 ONSC 6529, at para. 14.
. Landmark Vehicle Leasing Corporation v. Mister Twister Inc.

In this case, Landmark Vehicle Leasing Corporation v. Mister Twister Inc. (Ont CA, 2015), which was a dispute over auto leases, the court identifies passages of the Conveyancing and Law of Property Act (CLPA), RSO 1990 that applied. A notice of a CLPA assignment (which is 'legal' as opposed to 'equitable') is required to be in express writing, which it was not. Consequently the 'assignor' (the one who sold the debt) need be joined in the action against the debtor, although the court rules may except that requirement:

[9] The Conveyancing and Law of Property Act, R.S.O. 1990, c. C.34, applies to the lease assignments. Section 53(1) reads in part:
Any absolute assignment made on or after the 31st day of December, 1897, by writing under the hand of the assignor, … of any debt or other legal chose in action of which express notice in writing has been given to the debtor … is effectual in law, subject to all equities that would have been entitled to priority over the right of the assignee if this section had not been enacted, to pass and transfer the legal right to such debt or chose in action from the date of such notice, and all legal and other remedies for the same, and the power to give a good discharge for the same without the concurrence of the assignor. [Emphasis added.]
[10] Section 53(1) requires “express notice in writing” to the debtor. Although there is some ambiguity in her reasons, it would appear that the trial judge found that Mr. Blazys had express notice of the assignment, but not notice in writing. Ross Wemp Leasing therefore did not assign the leases to Landmark in law: see 80 Mornelle Properties Inc. v. Malla Properties Ltd., 2010 ONCA 850 (CanLII), 327 D.L.R. (4th) 361, at para. 22. Ross Wemp Leasing did, however, assign the leases to Landmark in equity. An equitable assignment does not require any notice, let alone written notice: Bercovitz Estate v. Avigdor, [1961] O.J. No. 20 (C.A.), at paras. 16, 25.

[11] The appellants, relying on DiGuilo v. Boland, 1958 CanLII 92 (ON CA), [1958] O.R. 384 (C.A.), aff’d, [1961] S.C.C.A. vii, argue that as the appellants did not have written notice of the assignment, Landmark could not sue on its own. Instead, Landmark had to join Ross Wemp Leasing in the action. The appellants argue that the failure to join Ross Wemp Leasing requires that the judgment below be set aside.

[12] DiGuilo does in fact require that the assignor of a chose in action be joined in the assignee’s claim against the debtor when the debtor has not received written notice of the assignment. The holding in DiGuilo tracks rule 5.03(3) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194:
In a proceeding by the assignee of a debt or other chose in action, the assignor shall be joined as a party unless,

(a) the assignment is absolute and not by way of charge only; and

(b) notice in writing has been given to the person liable in respect of the debt or chose in action that it has been assigned to the assignee. [Emphasis added.]
[13] Yet the assignee’s failure to join the assignor does not affect the validity of the assignment or necessarily vitiate a judgment obtained by the assignee against the debtor. Rule 5.03(6) reads:
The court may by order relieve against the requirement of joinder under this rule.
[14] The joinder requirement is intended to guard the debtor against a possible second action by the assignor and to permit the debtor to pursue any remedies it may have against the assignor without initiating another action: DiGuilo, at p. 395. Where the assignee’s failure to join the assignor does not prejudice the debtor, the court may grant the relief in rule 5.03(6): see Gentra Canada Investments Inc. v. Lipson, 2011 ONCA 331 (CanLII), 106 O.R. (3d) 261, at paras. 59-65, leave to appeal refused, [2011] S.C.C.A. No. 327.


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Last modified: 03-10-23
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