Author: Dan

Ontario: prejudice from an expired limitation period, and special circumstances

Estate of John Edward Graham v. Southlake Regional Health Centre is a medmal decision noteworthy for its consideration of prejudice arising from the expiry of a limitation period, and a rare application of the special circumstances doctrine to the Trustee Act limitation period.

The parties agreed that the two-year limitation period in s. 38(3) of the Trustee Act applied to the proceeding and had expired.  The plaintiffs relied on special circumstances to overcome its expiry.  The defendant argued that the plaintiffs had failed to rebut the presumption of prejudice arising from the expiry of a limitation period, and that there were no special circumstances.

The court found that the plaintiff had rebutted the presumption of prejudice.  The consideration that informed this finding are worth noting:

[59]           As the Court of Appeal in Mazzuca summarized:

Both the related jurisprudence and the rules themselves thus underscore a simple, common-sense proposition:  that a party to litigation is not to be taken by surprise or prejudiced in non-compensable ways by late, material amendments after the expiry of a limitation period.  If such surprise or actual prejudice is demonstrated on the record, an amendment generally will be denied.[10]

[60]           The Court of Appeal has repeatedly confirmed that the loss of a limitation defence gives rise to a presumption of prejudice.[11]

[61]           In our case, Dr. Law had no notice of the litigation prior to the expiration of the litigation period.  I find an inference of prejudice to him is warranted.

[62]           I accept Dr. Law had no knowledge of this action or that any issue had been raised concerning the case until February 15, 2017 when he was contacted by Scott Graham – approximately six years after the expiration of the limitation period (February 9, 2011).

[63]           Dr. Law submits that prejudice does arise from such a long delay and an inference of prejudice is warranted.  It is submitted the plaintiffs’ motion must fail on the basis of the plaintiffs’ failure to rebut the presumption of prejudice.

[64]           I disagree.  Notwithstanding the long passage of time and the inference raised in favour of Dr. Law, I find the plaintiffs have rebutted the presumption of prejudice.  I do not agree that the presumption of prejudice is unassailable solely due to the passage of time.  There are other factors to be weighed.  Dr. Law has not offered any evidence to show any non-compensable prejudice if the amendment is granted.  Rather, the evidentiary record on this motion establishes the following:

  •     Medical records from Southlake, including x-ray imaging are preserved by Southlake and remain in each of the parties’ legal files;
  •     Counsel for the proposed defendant, Dr. Law, has collaborated with counsel for the defendant, Dr. Gannage, in accessing pleadings and documents;
  •     The claim against Dr. Gannage (ER physician), for negligently reading the x-ray is the same as the claim against the proposed defendant radiologist, Dr. Law;
  •     This case does not have a complicated or highly contentious factual matrix.  The critical issue is whether the proposed defendant, Dr. Law, negligently missed a retained medical sponge when reviewing the x-ray.  No new cause of action or relief is being raised;
  •     The same medical evidence to be relied on by the plaintiffs to prove their claims remains in the possession of the defendants to defend the action.  The defendants are compellable witnesses to attend for trial;
  •     All defendants continue to practice health care in Ontario;
  •     The action against Dr. Law is tenable in law;
  •     Dr. Law is a proper defendant to be added, since there are multiple expert reports indicating he was responsible for negligently misreading the x-rays and not seeing the radiopaque surgical sponge;
  •     No trial date has been set;
  •     All defendants will have sufficient time to prepare their defences;
  •     Dr. Law will have the benefit of the work and investigation done by his co-defendants; and,
  •     There are no steps in the prosecution or defence of this action that will be thwarted through lack of evidence or information.

[65]           For these reasons, I find the plaintiffs have met their onus and have rebutted the presumption of prejudice.

The court also found special circumstances:

[66]           Dr. Law submits that the plaintiffs have not established special circumstances.  I disagree.  Where the presumption of prejudice has been rebutted, as in this case, the plaintiffs still bear the onus to demonstrate that there are special circumstances which justify the addition of Dr. Law as a party defendant.

[67]           Dr. Law submits that no special circumstances exist in this case to justify this court exercising its power to set aside the functioning of an applicable limitation period.

[68]           The special circumstances doctrine was considered in Wisniewski v. Wismer and Wohlgemut, a decision of Edwards J. for oral reasons given on February 1, 2018.

[69]           In Wisniewski, as in our case, the plaintiffs sought to add the proposed defendants (radiologists) after the expiration of the limitation period set out in s. 38(3) of the Trustee Act.  The parties agreed that the discoverability principle did not apply to this limitation period, as they did in our case.  Further, the parties agreed that the limitation period had expired.

[70]           As in our case, the plaintiffs submitted that the proposed defendants be added and pleadings be amended, all after the expiration of the limitation period on the basis of the Doctrine of Special Circumstances.

[71]           Dr. Law submits there are no special circumstances here to warrant the exercise of the court’s discretion.

[72]           In Wisniewski, Edwards J. was not satisfied that the plaintiffs had rebutted the presumption of prejudice.  Further, he also found there was no evidence to suggest the plaintiffs and their counsel were precluded from commencing a claim against the proposed defendants within the applicable limitation period due to a lack of information.

[73]           The key finding in Wisniewski was that almost five months prior to the expiry of the limitation period, the plaintiffs were in possession of x-ray reports and that plaintiffs’ counsel had the necessary information to conclude the proposed defendants should be added as defendants.  Edwards J. found there were no special circumstances that would justify the exercise of the extraordinary remedy to add a party after the expiry of the limitation period and he dismissed the motion to add the proposed defendants to amend the statement of claim.

[74]           I am of the view that Wisniewski is distinguishable from our case.  In Wisniewski, the plaintiffs knew the deceased had been radiographed before the limitation period expired.  In our case, the radiographs were provided to the plaintiffs, not at the outset, but approximately six and a half years later.

[75]           The plaintiffs in our case were precluded from commencing an action against Dr. Law, since they never knew any radiograph existed or that Dr. Law interpreted such a radiograph.

[76]           I find there was no knowledge Dr. Law took a radiograph or radiographs of Mr. Graham and interpreted those images until the plaintiffs were advised by counsel for Southlake, provided to Scott Graham with the CD under cover of the letter dated February 23, 2015, which Scott Graham reviewed on April 12, 2015.  This critical disclosure occurred over four years after the expiration of the limitation period being two years after the date of Mr. Graham’s death on February 8, 2009.

[77]           This disclosure by Southlake came “out of the blue”.  No explanation was provided to this court by anyone, especially by the defendants for such late production.  This disclosure was critical as it enabled Scott Graham to see the radiograph for the first time and connect what he viewed with what he was subsequently told about the Clinical Consultation Report during his conversation with Southlake’s counsel on July 20, 2015.  All of this concerned the possible involvement of Dr. Law.

[78]           Contrary to the findings in Wisniewski, in our case it cannot be said that the plaintiffs had been “handicapped” by their own “inaction”.  In our case, the plaintiffs not only requisitioned a care conference to identify the parties responsible for the critical choking incident, but also they quickly sought to obtain and assess all relevant medical records through submitting a timely records request at the outset and well within the limitation period.

[79]           In our case, the CD and program to access the CD, and disclosure of the x-ray or x-rays were inexplicably not produced until well after the limitation period had expired.  There is no question that the defendants failed to disclose at the care conference that radiographs of Mr. Graham were taken by Dr. Law and that Southlake, despite receiving a records request in 2008, failed to disclose the key x-ray until 2015.

[80]           While Dr. Law was unaware of this action until he was contacted by Scott Graham in February 2017, the chronology of events provides a satisfactory explanation as to what was done after February 2017, including some unnecessary and mistaken proceedings, the delivery of a draft amended statement of claim, the request for consent adding Dr. Law as a party defendant and the plaintiffs’ ultimately being compelled to bring this motion.

[81]           I find the plaintiffs have established special circumstances which are exceptional in nature.  The late, critical and unexplained disclosure by Southlake in 2015, well after the expiration of the limitation period provided the plaintiffs with the revelation of Dr. Law’s involvement in the treatment of Mr. Graham.  I find the facts establish that the plaintiffs were unaware of Dr. Law’s involvement until April and again in July 2015.

Ontario: an alternative resolution process that didn’t impact on the limitation period

Soleimani v. Rolland Levesque provides an example of an alternative resolution process that doesn’t render a proceeding an inappropriate remedy pursuant to s. 5(1)(a)(iv) of the Limitations Act.

Th action involved claims between neighbouring property owners arising out of alleged contamination of the plaintiffs’ property by hydrocarbons flowing from the defendant’s property.  Following the discovery of the contamination, the plaintiffs notified the Ministry of the Environment (MOE), which  became involved in addressing the contamination.

In response to the defendant’s limitations defence, the plaintiffs argued that the MOE’s involvement was a reasonable means to attempt to remediate the damage, and a claim wasn’t an appropriate remedy for that damage until eight years later when expert investigation directed by the MOE (and funded by the defendant) determined the source of the contamination.

The court rejected this argument.  The MOE’s involvement was not part of a dispute resolution process or mechanism: the MOE acts at its own discretion, it has no power to award damages, and the there could be no certainty as to when its involvement would come to an end:

[45]           In considering whether the MOE’s interventions in this case constitute a legally appropriate means to remedy the plaintiffs’ damages it is necessary to recognize that the provisions of the EPA do not provide a dispute resolution process or mechanism.  The steps the MOE chooses to take are in the MOE’s discretion.  The MOE has no power to award damages or compensation to the plaintiffs.  Neither the previsions of the EPA nor the facts of this case allow the court to say with any certainty when the MOE’s involvement would come to an end so as to determine when the limitation period might commence.

[46]           Moreover the MOE intervention cannot result in a declaration of responsibility for the contamination nor can it award damages for stigma nor the full recovery of legal, engineering and other costs and expenses nor damages for other economic losses, all as claimed in the plaintiffs’ statement of claim.

[47]           On the other hand, I recognize that the MOE has substantial powers in the exercise of their discretion to require the defendants to investigate the cause of and remediate contamination on both the defendants’ and the plaintiffs’ lands and to direct that this be done at the defendants’ cost.

[48]           The EPA broadly empowers the MOE to make orders to clean up contamination and prevent the discharge of contaminants into the environment.  For instance, pursuant to section 17 of the EPA, the Director has the power to issue “remedial orders” where a person has caused or permitted a contaminant to be discharged into the natural environmental.  This section empowers the Director to order that person to repair the injury or damage:

Where any person causes or permits the discharge of a contaminant into the natural environment, so that land, water, property, animal life, plant life, or human health or safety is injured, damaged or endangered, the Director may order the person to,

a)            Repair the injury or damage;

b)           Prevent the injury or damage; or

c)            Where the discharge has damaged or endangered or is likely to damage or endanger existing water supplies, provide temporary or permanent alternate water supplies.

[49]           Pursuant to section 157.1 of the EPA, a provincial officer can also order a person who owns or who has management or control or property to take “preventive measures” to:

(a)           Prevent or reduce the risk of a discharge of a contaminant into the natural environment;

(b)         Prevent, decrease or eliminate an adverse affect that may result from:

(i)            The discharge of a contaminant from the undertaking, or

(ii)           The presence or discharge of a contaminant in, on or under the property.

[50]           In determining whether a court action is an appropriate remedy pursuant to s. 5(1)(a)(iv) of the Act, Laskin J.A. in ETR Concession instructed that the court should consider (a) the nature of the plaintiffs’ loss; (b) the circumstances of the plaintiffs, and (c) efficiency of the court.

[51]           This is an environmental claim.  The major dispute between the parties has been, at least until very recently, whether the pollutants are emanating from the defendants’ land onto the plaintiffs’ land or, as the defendants claim, from the plaintiffs’ land onto the defendants’ land.  On the facts of this case, there can be no doubt that the MOE’s interventions have provided a means to determine the source of the contamination and remedial orders have been made.

[52]           The plaintiffs submit that given their particular situation, the MOE interventions may substantially reduce the plaintiffs’ damages and therefore it would be inappropriate to require the plaintiffs to prematurely resort to court proceedings while the regulatory process under the EPA is ongoing.

[53]           In my view the principal difficulty with the plaintiffs’ position is that there is no reasonable basis to ascertain when the MOE’s involvement will end.  To date, it has gone on in excess of eight years with no end point in site.  I agree with the defendants’ submission that the EPA does not in any sense establish an alternative adjudication or dispute resolution process for contamination claims.  While the MOE has significant remedial powers to direct the investigation and remediation of ground water contamination, these powers are outside the land owners’ control and are discretionary in nature.  These powers do not include any right to award economic damages or to grant declaratory orders, which is a significant component of the relief sought in this action.

[54]           The plaintiffs have argued that the limitation period should not run until the causation question was resolved (within the last two years) concerning the direction of flow of the contaminants.  They suggest that prior to resolving that issue it would have been unreasonable to commence court proceedings.

[55]           The plaintiffs emphasize the benefits they have achieved by allowing the MOE to deal with the contamination.  Thanks to the MOE exercising its statutory powers to direct the investigation and remediation of the groundwater contamination, the plaintiffs have avoided the considerable engineering costs of investigating the problem, of obtaining experts’ reports and of soil removal and other remedial measures.  They have also avoided or lessened the litigation risk of a possible determination that the contamination emanated from their own property, rather than the defendants’ property.

[56]           In effect, the plaintiffs can be said, in retrospect, to have made a wise economic choice in leaving the contamination issue in the hands of the MOE.  However this was manifestly a tactical decision made by the plaintiffs to avoid the costs and litigation risks of investigating their claim and establishing their case on liability and damages.  They chose to stand back for some four years prior to commencing this action to allow the MOE to move matters forward.  The case law is clear that tactical decisions will not toll the limitation period, see Markel and Presidential MSR.  As Mew J. observed in J.C. v. Farant at para 87:

Another recent decision, Gravelle (CodePro Manufacturing) v. Denis Grigoras Law Office, 2018 ONCA 396 (CanLII), reinforced the principle that a tactical decision to delay the commencement of proceedings will not, absent other factors – such as the pursuit of alternative means to resolve the very claim that I the subject matter of the action – delay the running of time.  At para. 6, the Court of Appeal stated:

 The appellant decided for tactical reasons not to bring his action against the respondents until the arbitration proceedings were completed.  He was entitled to make this choice, but he must live with the consequences of it.

[59]           In my view this position is untenable and inconsistent with the appellate case law binding on this court.  The circumstances triggering the running of the limitation cannot be a moving target incapable of being ascertained with the level of reasonable certainty required.  This would create a situation in which the plaintiffs essentially determine when the limitation period commences.

[61]           In my opinion the approach advocated by the plaintiffs and the intervenors ignores the requirement that the appropriate means exception in sub-section 5(1)(a)(iv) of the Act be restricted to factual situations in which the alternate avenue of redress is legally appropriate in the sense that the courts must not be required to interpret the parties’ communications or negotiations or, be required to analyze the significance of the technical findings of ongoing engineering studies and importantly, there needs to be a fixed end point.

Reconsidering mistakes of law and discoverability

Samuel Beswick, a Harvard legal scholar, studies the impact a mistake of law has on the discovery of a claim.  In Under the Limit‘s first guest post, he makes a compelling argument for reconsidering how Canadian limitations law might alter its approach to mistakes of law in the discovery analysis.

Mistake of law as a basis for extending the limitation period?

Common law countries have long determined that discoverability governs limitation on actions “grounded on” mistake (as the former Alberta statute put it) or that seek “relief from the consequences of” mistake (as the English Limitation Act provides). Back when the law of unjust enrichment was thought to allow restitution only for mistakes of fact, discoverability provisions had not much to do with mistakes of law. Now that the mistake-of-law bar has been abandoned, it is apt to ask: when can a mistake of law be discovered?

In England, this problem has driven multi-billion-pound-sterling unjust enrichment litigation, spurring private law scholars and confounding courts. The answer that the English courts have given, succinctly put in FII Test Claimants v HMRC, is that:

[372] … [I]n the case of a point of law which is being actively disputed in current litigation the true position is only discoverable … when the point has been authoritatively resolved by a final court.

I have recently sought to show that England’s answer to the discoverability of mistakes of law is arbitrary, jurisprudentially strained, internally inconsistent, and effects bad policy.

What’s remarkable (albeit it hasn’t to date been remarked on) is that this doctrine is also totally contradictory to Canadian precedent on this issue. The position in Canada, summarized in Hill v Alberta, is that:

[9] … Discoverability refers to facts, not law. Error or ignorance of the law, or uncertainty of the law, does not postpone any limitation period.

In Canada, time runs on mistake-of-law claims whether or not a claimant has discovered their mistake. This causes other problems, which I have endeavoured to draw out in a recent paper.

There is, however, a middle ground between England’s “authoritative judgment” understanding of limitation on mistakes of law and Canada’s “exception” to the discoverability principle, a full account of which will be appearing in the LQR. The short answer, though, is this: mistakes as to the law should be considered discoverable once a claimant is in a position to plead them in a statement of claim. Discoverability is not about finding out one’s legal position from a court. It is about having adequate time to be able to plead one’s case to a court.

 

Ontario: the limitation of breach of resulting trust claims

In Sinclair v. Harris, the plaintiff argued that no limitation period applies to claims for breach of a resulting trust relating to real property.  The court rejected this argument and found that the ten-year limitation period in s. 4 the RPLA applies. The defendant relied on a dubious interpretation of the Court of Appeal decision in Drakoulakos, in which some unlikely facts allowed me to make a successful s. 24 argument:

[18]           The first issue that needs to be resolved is what limitation period, if any, is applicable in this case.  There is a stark difference in the position of the parties.  The plaintiffs submit that no limitation is applicable to a resulting trust in equity.  The defendants submit that a 10-year limitation period applies to this trust.

[19]           The definition of a resulting trust is succinctly stated in Waters’ Law of Trusts in Canada 4th Ed.:

Broadly speaking, a resulting trust arises whenever legal or equitable title to property is in one party’s name, but that party is under an obligation to return it to the original title owner, or to the person who paid the purchase money for it.

See Pecore v. Pecore, 2007 SCC 17 (CanLII) at para. 20.

[20]           The responding parties argue that the plaintiffs’ action should be dismissed because any resulting trust established on the evidence is statute barred.  They rely upon the 10-year limitation period found in s. 4 of the Real Property Limitations Act, R.S.O. 1990, c. L.15 (“RPLA”):

No person shall make an entry or distress, or bring an action to recover any land or rent, but within ten years next after the time at which the right to make such entry or distress, or to bring such action, first accrued to some person through whom the person making or bringing it claims, or if the right did not accrue to any person through whom that person claims, then within ten years next after the time at which the right to make such entry or distress, or to bring such action, first accrued to the person making or bringing it.

[21]           In McConnell v. Huxtable, 2014 ONCA 86 (CanLII), Rosenberg J.A. traced the history of the law of limitations in this province. With respect to s. 4, he held that it applied to constructive trusts where the claimant did not have any interest in the property until so declared by the court.  In other words, it applied to an equitable interest in land through the imposition of a constructive trust.

[22]           In Waterstone Properties Corp. v. Caledon (Town), 2017 ONCA 623 (CanLII), the court made it clear that the 10-year limitation period in s. 4 did not just apply to claims for the possession of land but would encompass claims of ownership of land advanced by way of a resulting trust (at para. 32):

The words “action to recover any land” in s. 4 of the RPLA are not limited to claims for possession of land or to regain something a plaintiff has lost. Rather, “to recover any land” means simply “to obtain any land by judgment of the Court” and thus these words also encompass claims for a declaration in respect of land and claims to the ownership of land advanced by way of resulting or constructive trust: Hartman Estate v. Hartfam Holdings Ltd., 2006 CanLII 266 (ON CA), [2006] O.J. No. 69, at para. 56; McConnell v. Huxtable, 2014 ONCA 86 (CanLII), 118 O.R. (3d) 561, at paras. 38 – 39.

[23]           The plaintiffs rely on the case of Drakoulakos v. Stirpe, 2017 ONCA 957 (CanLII).  This was an appeal of a summary judgment motion whereby the motions judge granted summary judgment on the basis that the claim was statute barred based on the basic limitation period of the Limitations Act 2002. In that case, more than 15 years had passed since the plaintiff had known or ought to have known he had an action arising from a resulting trust.  The Court of Appeal overturned the decision because there was no limitation period for a claim based upon the transitional provisions of the Limitations Act 2002, where there was no limitation period for the claim against the trustee of a resulting trust or property still in the possession of the trustee under the former Act and the claim was discovered before January 1, 2004.

[24]           These comments, which are relied upon by the plaintiffs to support their position that there are no limitations for any resulting trust, must be read with care. The Ontario Court of Appeal was dealing with the application of the transitional provisions when it came to a resulting trust.  They were not making broad statements that are applicable to the facts before me. I further see Drakoulakos as distinguishable.  In that case, the court was dealing with taxi licenses and shares in a company.  It was unconnected to any real property. Thus, the Real Property Limitations Act would have no application to it. Similarly, in McConnell v. Huxtable, (at para. 41) Rosenberg J.A. held that s. 4 did not apply where the claimant was seeking an interest in a pension or a business. See also The Equitable Trust Co. v. Marsig, 2012 ONCA 235 (CanLII) at para. 19.  I see no conflict in these authorities.

[25]           Likewise, comments made in McCracken v. Kossar, 2007 CanLII 4875 (ON SC), [2007] O.J. No. 664 (S.C.J.) at para. 36, relied upon by the plaintiff, that queries whether equitable trusts are subject to the RPLA have now been overtaken by the appellate authorities noted above, and must be viewed in that light.

[26]           The plaintiffs submit that the limitation period does not apply since the claim is not about land but it is about the monies that Ms. Rock gave the defendants.  I cannot agree.  First of all, it is clear from the statement of claim and the evidence that this claim is about a resulting trust in a piece of real property.  The monies were expressly given to the defendants so that they could purchase the home and land.  This is not a case where Ms. Rock gave a sum of money which was unrelated to any real property to the defendants.  Here the connection is clear and direct.  Further, to try and distinguish the defendants’ authorities on this basis is futile.  In most real property transactions, money is involved.  The RPLA cannot simply be avoided by an attempt to characterize the transaction as being about money and not land. The fact that the plaintiffs are not actually seeking the return of the Beeton property or any other piece of real property, does not avoid the application of s. 4 given what they are seeking is “money to be laid out in the purchase of land” which fits within the definition of “land” under the RPLA: Harvey v. Talon International Inc., 2017 ONCA 267 (CanLII) at paras. 50 to 54 (dealing with a return of a deposit on the purchase of land); Scicluna v. Solstice Two Ltd., 2018 ONCA 176 (CanLII) at para. 25 (dealing with relief from forfeiture of a deposit for the purchase of land); Goldhar Estate v. Mann, [2016] O.J. No. 6872 (S.C.J.) (holding that the Act applied to equitable mortgage).

[27]           In short, the plaintiffs’ claim is an action to recover land and as such falls within s. 4 of the RPLA.

Ontario: the codification of the discovery rule is not semantics (blog pedantry)

The decision in Loy-English v. Fournier requires some gentle criticism for its description of the limitations scheme:

[40]           Before turning to the evidence, I will just mention that counsel for the intervenor provided me with a useful review and critique of much recent jurisprudence. I have not found it necessary to address the argument that there is a difference between the time when a cause of action accrues at common law and the day when a claim is discovered under the Act.  I need not seek to resolve what counsel identifies as inconsistency in the jurisprudence and failure of courts to recognize the extent to which the Act has changed the common law.

[41]           I will just observe that in the seminal decision of Peixiero v. Haberman, the Supreme Court of Canada endorsing the principle of discoverability in connection with Ontario’s motor vehicle regime uses language suggesting a cause of action under Ontario law only “accrues” when it is possible to determine that the injuries exceed the threshold.[18]  In Lawless v. Anderson our Court of Appeal declared that “the principle of discoverability provides that a cause of action arises for the purposes of a limitation period when the material facts on which it is based have been discovered, or ought to have been discovered, by the plaintiff by the exercise of reasonable diligence.” The court went on to define “cause of action” as “the fact or facts which give a person a right to judicial redress or relief against another.”[19]  Arguably, the effect of the Act is to identify discoverability as a constituent component of a cause of action in Ontario but this is largely a question of semantics.

[42]           The important point is the rationale underlying the discoverability principle. A limitation statute should not be construed to run before the plaintiff could reasonably know that she had a viable cause of action.  It is this rationale that is codified in s. 5 of the Act.  Whether the cause of action can be said to have arisen at an earlier date, knowledge that there is a cause of action and a legal proceeding is an appropriate avenue for relief is a component of discoverability.  All four statutory components are necessary to trigger the running of the limitation period.

  1. It’s not arguable that the Limitations Act makes discoverability a constituent element of a cause of action, nor is the argument one of semantics.  At common law, the discoverability rule relates to the accrual of a cause of action, not the elements of a cause of action.  The rule provides that a cause of action accrues when the plaintiff discovers its material elements.  Section 5 of Limitations Act contains a codified discoverability rule that applies to “claims”, a defined term, not causes of action.  It also doesn’t make discoverability an element of a cause of action or “claim”, but determinative of when discovery occurs.  This isn’t at all an issue of semantics.  “Claims” and causes of action are not interchangeable, a point made recently by the Court of Appeal.
  2. It is not so that the Limitations Act prevents time from running before a plaintiff can reasonably know that she has a viable cause of action.  Knowledge of the elements of a cause of action will not result in discovery of a “claim” under the Limitations Act.  This is because the s. 5(1)(a)(iv) discovery matter—the appropriateness of a proceeding as a remedy—is not an element of any cause of action, and also because discovery requires knowledge of damage, and damage is not an element of any cause of action based on conduct that is actionable per se (like breach of contract).

Ontario: another good “abilities and circumstances” analysis

 

The decision in Service Mold + Aerospace Inc. v. Khalaf is another good example of the court’s assessment of a plaintiff’s abilities and circumstances for a limitations analysis.  The fact that the plaintiff had no background or education in bookkeeping, accounting, or finances informed the court’s analysis of when the plaintiff could reasonably discover a fraud committed by his bookkeeper.

It’s also a noteworthy decision for the dubious (and unsuccessful) position taken by the defendant:

[21]           TD Bank acknowledges that the plaintiffs did not actually discover the fraud until early 2015 and relies on s. 5(1)(b).  The position of TD Bank is as follows:

1.         The plaintiffs ought to have discovered the claim at least by 2009 or 2010.  TD Bank takes the position that bookkeeper fraud is a well-known risk and a prudent businessman would have measures in place to control it.  Mr. Schuurman, in effect, turned a blind eye to the risk. TD Bank therefore invites me to dismiss the action.

To discover a claim, the plaintiff must know that the defendant has caused or contributed to his loss (and there is no “claim” as defined by the Limitations Act until loss occurs).  Whether the plaintiff was blind or not to a risk that ultimately resulted in his loss, until the loss occurred, the claim was not discoverable.  This position might support a contributory negligence argument, but it’s immaterial to a limitations defence.

Ontario: the limitation period in s. 51 of the SABS is not subject to discoverability

In Tomec v. Economical Mutual Insurance Company, the Divisional Court held that the limitation period in s. 51 of the Statutory Accident Benefits Schedule is not subject to common law discovery or the discovery provisions in s. 5 of the Limitations Act.  It is a “hard” limitation period in that it runs from a fixed event, which is the refusal to pay the benefit claimed.

Update! The Court of Appeal overturned this decision.  Discoverability doesn’t apply.

Ontario: a good “abilities and circumstances” s. 5(1)(b) analysis

Lewis v. Plaskos is noteworthy for its findings regarding the plaintiff’s abilities and circumstances for the purposes of a discovery analysis.  The court doesn’t often make these findings explicitly (though it should).

The court found that plaintiff had the abilities of her experienced medical malpractice lawyer, and a reasonable experienced medical malpractice would be alert to the possibility that physician’s notes are incomplete.  It was accordingly unreasonable for the plaintiff, through her lawyer, not to consider the possibility and make the accordant inquiries:

[49]           The focus of the dispute is on sub-section 5(1)(b), Limitations Act, 2002.  In particular, the issue is whether the analysis of hospital records by Ms. McCartney has met the test of being objectively reasonable.

[50]           After the firm was retained by the plaintiffs, Ms. McCartney was assigned the task of reviewing the hospital records.  In that process, she was looking to see what was or was not done and why.  Ms. Cartney was considering who was responsible.  She knew this was a case of potential delayed diagnosis.  Those responsible were to be named as defendants in the statement of claim.

[51]           There are three preliminary matters that are of concern, namely delay, the state of the hospital records and the lack of notes by Ms. McCartney.

[52]           The hospital records were received by Ms. McCartney on or about October 14, 2011.  Thirteen months later, in November 2012, the review of those records commenced.  While Ms. McCartney was on a working maternity leave during part of that period of time, presumably meaning part-time attendance at the office and with responsibility for other files as well, the review process should have commenced much earlier.  Mr. Michael also had carriage of the file.  Other junior lawyers in the firm could have been asked to assist.

[53]           There is always a danger in waiting until the presumptive limitation period is about to expire.  The process can become rushed.  Due diligence was not met.

[54]           It is now known that Dr. Cameron failed to fully record her involvement with Ms. Lewis, particularly her consultation with Dr. Plaskos.

[55]           Litigation lawyers, particularly those involved in personal injury and medical malpractice cases, routinely review physician’s notes and hospital records.  These lawyers are aware of the dangers in conducting such review regarding illegible handwriting, abbreviated terms and incomplete recording.  The failure of physicians to fully record matters pertaining to a patient is often a topic in the litigation process, including at trial.  In the absence of records, physicians often have difficulty recalling specific events and discussions.

[56]           In my view, Ms. McCartney and Mr. Michael, both experienced medical malpractice lawyers, would have, or should have, been alert to the possibility the physician’s notes were incomplete.

[57]           The only contemporaneous note made by Ms. McCartney during her review and analysis of the hospital records was the summary previously mentioned.  The summary is incomplete, making no mention of her conclusions as now presented on this motion and lacking detail as to the analytical process undertaken.  Hence, on cross-examination, Ms. McCartney was unable to recall her state of mind when reviewing the records and the details of her thought process.  Like physicians, lawyers need to record all details of their involvement for future use.

[58]           The first step in the review process is to determine what was recorded.  When part of the record contains handwritten notes, the lawyer looks to see if such are legible.  There was a legitimate concern with Dr. Cameron’s handwriting and use of abbreviated terms.  Ms. McCartney and Mr. Michael, for example, looked at a key word and correctly concluded it to be “refused”.  “Radiol” was considered to be radiologist or radiology department.  When there is any concern as to what was written, it requires inquiry of the record keeper.

[59]           There are two conclusions Ms. McCartney made that are of critical importance.  First, she considered the phrase “will discuss with radiologist or radiology department re:  imaging” as connected to the preceding note “will check post void residual”.  Second, Ms. McCartney determined “MRI refused as normal rectal tone and no bilateral leg weakness” as Dr. Cameron declining to order an MRI.  Such are possible interpretations or conclusions but there are others that, in my view, are far more reasonable.

[60]           Just as physicians arrive at a “differential diagnosis” following examination of a patient, so too must a lawyer consider all reasonable options in their analysis of a case.

[61]           Connecting “will discuss with radiologist or radiology department re:  imaging” to “post void residual” is too restrictive.  The more reasonable interpretation is that Dr. Cameron was going to seek assistance in determining what further imaging tests were required.  At this point, Dr. Cameron was aware the lumbar x-ray, as interpreted by Dr. Plaskos, was inconclusive having regard to the nature of Ms. Lewis’ complaints.

[62]           Dr. Cameron’s note is all recorded under the time of 18:00 hours.  Ms. McCartney incorrectly assumed this represented one event.  But there are gaps in the recording and, having regards to the words used, it is more likely the record should have been seen as several separate recordings.

[63]           In this regard, the words “MRI refused” invites the question “by whom”.  Ms. McCartney’s conclusion that Dr. Cameron refused her own request is not reasonable.  It is contrary to normal use of English language and, as it follows the note “will discuss with radiologist …” with a gap in between, leads to the inference someone else is involved.  At a minimum, there are a number of possible interpretations and each must be pursued.  Indeed, Ms. McCartney acknowledged in cross-examination that one possible interpretation was that the MRI had been refused by someone else, but such a possibility did not occur to her at the time of her review.  It should have.

[64]           The failure to order an MRI in a timely fashion is central to the plaintiffs’ case.  Ms. McCartney knew that Dr. Plaskos was involved in interpreting an x-ray of Ms. Lewis on January 2, 2011, as had been requested by Dr. Reesor.  Ms. McCartney also knew that emergency department physicians will sometimes consult a radiologist as to what imaging to order or for an urgent MRI.  These factors, and others previously addressed, meant Ms. McCartney had to consider all reasonable scenarios.  Instead, she arrived at a conclusion without examining reasonable alternatives.  Her analysis, in result, was incomplete.

[65]           I conclude the analysis of hospital records by Ms. McCartney was not objectively reasonable, particularly having regard to her abilities and experience as a medical malpractice lawyer.

[66]           The cause of action occurred on January 2, 2011.  The limitation issue is with discoverability and so the presumptive limitation date of January 2, 2013 does not apply.

[67]           The statement of claim was issued on October 7, 2014.  Was it discoverable prior to October 7, 2012?  I conclude it was.  The medical records were received in October 2011.  A diligent review would have led to further inquiry.  The potential claim against Dr. Plaskos, in my view, was discoverable by December 31, 2011 and certainly long before October 7, 2012.

[68]           In result, I conclude the limitation period had expired prior to the statement of claim being issued.  The claim against Dr. Plaskos is statute-barred by operation of Section 5, Limitations Act, 2002.  The claim against him must be dismissed.  I so order.

 

Ontario: Court of Appeal says that the Limitations Act applies to claims, not causes of action

Justice Strathy’s decision in Apotex Inc. v. Nordion (Canada) Inc. is one of the most important limitations decisions from the Court of Appeal since the Limitations Act came into force.  It’s the first decision to make explicit that the Limitations Act doesn’t apply to causes of action, but to “claims” (as defined in s. 1 of the Limitations Act).

This distinction is most often missed by Ontario courts., which generally treat the cause of action and the “claim” as interchangeable for limitations purposes.  I have written about this issue extensively (see this, for example), including the problems that result.

Justice Strathy noted one of those problems.  Because damage is always an element of the “claim” but not of any cause of action based on conduct that is actionable per se, they accrue differently.  A breach of contract is the most common example:

[84]   Before the reform of limitations law brought about by the LA 2002, the previous statute, the Limitations Act, R.S.O. 1990, c. L.15, looked to when the cause of action arose (an expression not used in the LA 2002) to determine the commencement of the limitation period. The “cause of action” for breach of contract accrued on the date of the breach and the limitation period began to run on that date: see Graeme Mew, Debra Rolph & Daniel Zacks, The Law of Limitations, 3d ed. (Toronto: LexisNexis, 2016) at §9.6; Robert Simpson Co. Ltd. et al v. Foundation Co. of Canada Ltd. et al (1982), 1982 CanLII 1750 (ON CA), 36 O.R. (2d) 97 (C.A.), at p. 105; Schwebel v. Telekes, 1967 CanLII 163 (ON CA), [1967] 1 O.R. 541 (C.A.), at p. 544.

[85]   This was the case whether or not damages had yet been incurred. Damages are not an essential element of the cause of action for breach of contract: Mars Canada Inc. v. Bemco Cash & Carry Inc., 2018 ONCA 239 (CanLII), 140 O.R. (3d) 81, at para. 32.

[86]   Under the LA 2002, the limitation period for breach of contract does not necessarily run from the date of the breach. As I have observed, in contrast to the former statute, the date of the “act or omission” – the breach of contract itself – is not the only factor to be considered in determining when a claim is discovered under the LA 2002. Instead, the date on which the plaintiff knew of the occurrence of the act or omission is only one factor to be determined. In addition to that factor, the person with the claim must also know that the “injury, loss or damage had occurred” (s. 5(1)(a)(i)), that it was caused or contributed to by the act or omission (the breach of contract) (s. 5(i)(a)(ii)), and that the act or omission was that of the defendant (s. 5(1)(a)(iii)).

[87]   As a result of the presumption under s. 5(2), the limitation period begins to run on the date of the breach (being the date of the “act or omission”), unless it is proven that the person with the claim did not know of one or more of the matters set out in s. 5(1)(a), and that a reasonable person would not have known of those matters.

[88]   A plaintiff with a claim for breach of contract may displace the presumption in s. 5(2) if, for example, they establish that they did not know that “the injury, loss or damage” had occurred or, if it had occurred, they did not know that it was caused by an act or omission of the defendant – the breach of contract. But it is well-settled that the person need not know the extent of the injury, loss or damage to trigger the commencement of the limitation period. It is enough that they know that some damage has occurred. In Hamilton (City) v. Metcalfe & Mansfield Capital Corp., 2012 ONCA 156 (CanLII), 290 O.A.C. 42, at paras. 59-61, this court adopted the common law rule expressed in Peixeiro v. Haberman, 1997 CanLII 325 (SCC), [1997] 3 S.C.R. 549, at para. 18, that “some damage” is sufficient to start the running of the limitation period.

Justice Strathy set out the impact this has on a limitations analysis for a breach of contract: 91-92

[91]   First, to determine when a claim is discovered in a breach of contract case, it is necessary to examine the terms of the contract and the nature of the alleged breach (the “act or omission”) on which the claim is based: see Mew, Rolph & Zacks, at §9.5, citing to NFC Acquisition L.P. v. Centennial 2000 Inc., 2010 ONSC 733, 67 B.L.R. 218, at paras. 29-30, affirmed in 2011 ONCA 43 (CanLII), 78 B.L.R. (4th) 11; Hopkins v. Stockman, 2013 SKCA 118 (CanLII), 427 Sask. R. 4, at para. 10. As van Rensburg J.A. noted in Morrison v. Barzo, at paras. 33, 49, the application of the test in s. 5(1)(a) requires the identification or definition of the claims at issue. This is a necessary starting point.

[92]   Second, in many cases, the act or omission, causation, and the injury, loss or damage will occur simultaneously, and will be discovered simultaneously. But this will not always be the case. In some cases, discovery of the “act or omission” will not start the limitation period running unless injury, loss or damage has occurred and has been discovered (s. 5(1)(a)(i)).

To understand the significance of this decision, compare it to the Court’s description of discovery in Lawless:

[22]         The principle of discoverability provides that “a cause of action arises for the purposes of a limitation period when the material facts on which it is based have been discovered, or ought to have been discovered, by the plaintiff by the exercise of reasonable diligence.  This principle conforms with the generally accepted definition of the term ‘cause of action’ – the fact or facts which give a person a right to judicial redress or relief against another”:Aguonie v. Galion Solid Waste Material Inc. (1998), 1998 CanLII 954 (ON CA), 38 O.R. (3d) 161 (C.A.), at p. 170.

Here the Court describes discovery in terms of knowledge of the material facts of the cause of action, which is a statement of common law discovery, not discovery as codified in s. 5 of the Limitations Act.  Apotex, together with recent decision in Gillham, suggests that the Court is moving away from the misconception that underlies reliance on Lawless.   

Two other points:

  1. Justice Strathy’s decision begins with s. 2 of the Limitations Act.  Because this is the provision that determines the application of the Limitations Act, this is the correct starting point for any limitations analysis.  However, you rarely see courts considering it.
  2. It would have been helpful for the Court to include a paragraph explaining why the cause of action does not feature in the Limitations Act.  It was a deliberate decision.  The Legislature sought to resolve the enormous problems inherent in cause of action accrual by converting all causes of action into one unit, the claim.  This also allowed for universal limitation periods, rather than limitation periods for different categories of causes of action.

 

Ontario: Court of Appeal says death is not a “condition”

In Lee v. Ponte, the Court of Appeal held that death does not trigger the application s. 7 of the Limitations Act.

Section 7 suspends the limitation period when the claimant “is incapable of commencing a proceeding in respect of the claim because of his or her physical, mental or psychological condition”.  The appellant in Lee argued that this provision could extend the limitation period for an estate trustee to bring a claim that the deceased person had before death:

[5]         The appellant urges that s. 7 should be interpreted to apply when the person having the claim dies before commencing proceedings. He argues that a deceased person is incapable of commencing a proceeding in respect of the claim because of his or her physical, mental or psychological condition. He submits that the same policy concerns for allowing additional time for a litigation guardian to be appointed and take over the management of the affairs of the incapable person apply to an estate trustee. He points out that it takes time for an estate trustee to review the affairs of the deceased, and to obtain probate.

The Court rejected this argument:

[6]         We are not persuaded the motion judge erred by dismissing the claim as statute barred. The grammatical and ordinary sense of the words of s. 7 are simply not elastic enough to apply to a deceased person and to construe an estate trustee to be a litigation guardian.

This is a very sensible response to a doubtful argument.  It’s plain that the Legislature didn’t intend that a “physical, mental or psychological condition” should be so broad as to encompass the condition of being dead.  Besides, it’s the Trustee Act that limits the pursuit of a deceased person’s claim.  The appellant didn’t rely on this provision, probably because it wouldn’t have helped, but it should be the starting point when considering the limitation of a deceased’s person claim.