Author: Dan

Ontario: technicalities aren’t your friend

Here we have yet another example of the principle that relying on technicalities will rarely carry the day.

In Daly Square Inc. v. 1786097 Ontario Inc., the plaintiff moved for summary judgment dismissing a counterclaim as statute-barred.  The plaintiff had not requested this relief in its notice of motion, but did provide the expiry of a limitation period as a ground for relief.  The defendant (and plaintiff by counterclaim) relied on the notice of motion to argue that the motion to dismiss the counterclaim was not properly before the court.

The court, not surprisingly, had none of it:

[15]           It seems that this problem could have been avoided if the parties had clarified the issue and agreed to adjourn the motion, if necessary. The defendants were obviously aware before they prepared their factum that the limitation period applicable to the counterclaim was an issue. They responded to the issue in their factum and did not request an adjournment. Nonetheless, in these circumstances, I do not feel that it would be “just” to consider the request to dismiss the counterclaim when the request was not made in the notice of motion and the defendants are saying that they would have responded differently if it had been. However, it would not an “expeditious” or the “least expensive” approach simply to refuse to consider the limitation period when both parties have now devoted considerable time to the issue; doing so would likely prompt the plaintiff to bring a further motion, resulting in more expense and delay.

Ontario: the court will rarely consider limitations defences before pleadings clsoe

In Taylor v. Workplace Safety & Insurance Board, the Court of Appeal emphasised that only in rare cases will the court hear a motion to dismiss an action as statute-barred prior to the delivery of a defence:

[22]      Thus, it is not necessary to decide whether the motion judge was correct in holding that Taylor’s claim would be barred by the two year limitation period in the Limitations Act. We do note, however, that neither defendant has delivered a statement of defence. This court has held consistently that only in rare cases, if any, will we entertain a motion to dismiss an action as statute barred under the Limitations Act in the absence of a statement of defence. See Salewski v. Lalonde, 2017 ONCA 515 (CanLII), 137 O.R. (3d) 750, at paras. 42-46.

Ontario: the limitations act applies to claims in notices of objection

The Court of Appeal’s decision in Iaboni Estate v. Iaboni stands for the principle that a claim pursued in a notice of objection filed in an application to pass account is subject to the Limitations Act and capable of being time-barred.

[8]         At the hearing of the motion, Carlo consented to the passing of accounts from the time of the appointment of BNS, but not before. Mullins J. struck the notice of objection on three bases: (1) it was without merit, (2) it was an abuse of process for attempting to relitigate the subject matter of the appellant’s dismissed action; and (3) was time barred under the Limitations Act.

[9]         Carlo appeals the order of Mullins J., striking out the notice of objection.

[10]      We are not persuaded that the motions judge made any error. The appellant consented to the passing of accounts from the time of the appointment of BNS, and has not appealed that aspect of the order. Even if the appellant were able to identify errors with respect to the abuse of process and Limitations Act claims, the motions judge’s findings of fact on the merits are fatal to the appeal. She made findings that the appellant had not substantiated his suspicions with respect to the discharge of mortgage, the share certificate, or general dissipation of funds. She also found the evidence of the respondent Norma to be credible and reliable. Those findings are entitled to deference and are dispositive of the appeal.

Ontario: The knowledge required for discovery

This is a post purely to indulge my pedantry.  In Reece v. Toronto (Police Services Board), the Court of Appeal said this about discovery:

[5]         The motion judge correctly found that discoverability for the purpose of limitations is based upon knowledge of the facts necessary to support a claim and does not require knowledge of the law that supports the claim.

This isn’t quite right.  Discoverability for the purpose of limitations–what other purpose to does the principle have?–is codified in s. 5 of the Limitations Act and requires knowledge of the four discovery matters.  The facts necessary to support a claim are, pursuant to the definition in the s. 1 of the Limitations Act, but only two: wrongful conduct and resulting loss.  The existence of a claim and the discovery of a claim are different issues.

Ontario: The potential consequence of serving a Statement of Claim out-of-time

Scenario: A plaintiff pursues a claim by statement of claim issued within the limitation period, fails to serve the statement of claim within the time prescribed by the rules, the court refuses leave for late service, and if the plaintiff were to reissue the statement of claim the claim pursued in it would be statute-barred.  Is the claim out of time?  According to the Court of Appeal in Sultan v. Hurst, yes:

[1]         The appellant appeals the decision of the motion judge refusing to validate the late service of the statement of claim. The claim was issued within the two year limitation period following the accident, but was served more than two years after the expiry of the six month limit to serve a statement of claim set out in r. 14.08(1) of the Rules of Civil Procedure. By the time the claim was served, the limitation period had expired. Therefore, the practical effect of the motion judge’s order was to prevent the plaintiff from pursuing his claim.

I have trouble with this reasoning.  The proceeding in respect of the claim was commenced in time, which means there can be no limitations defence.  I gather that the motion judge found late service rendered the proceeding a nullity (or struck out the statement of claim?).  The motion judge’s decision isn’t available, so we can only speculate.  Either way, the impact of the decision was evidently that there was no longer a proceeding, and so it became necessary for the plaintiff to commence a new proceeding in respect of the same claim, but this new proceeding was out of time.

The Court of Appeal seems to have taken for granted that non-compliance with r. 14.08(1) nullifies (practically, if not technically) a proceeding.  I’m not sure this is necessarily so.

Ontario: Prescriptive easements (are a limitations issue)

Carpenter v. Doull-MacDonald well summarises the principles of prescriptive easements, which you may be surprised to learn is a limitations issue.  Section 31 and 32 of the Real Property Limitations Act govern the establishment of prescriptive easements:

[40]           As adjusted by the Land Titles Act,[15] discussed below, a prescriptive easement may be established in two ways under the Real Property Limitations Act,[16] and a third way pursuant to what is known as the doctrine of lost modern grant. At common law, prescription was based on the legal fiction that if there were 20 years of uninterrupted use by the owner of the dominant tenement, it could be presumed that there had been a grant of an easement and that the grant had been lost.[17]

[41]           The relevant provisions of the Real Property Limitation Act are set out below:

  1. No claim that may be made lawfully at the common law, by custom, prescription or grant, to any way or other easement, or to any water course, or the use of any water to be enjoyed, or derived upon, over or from any land or water of the Crown or being the property of any person, when the way or other matter as herein last before-mentioned has been actually enjoyed by any person claiming right thereto without interruption for the full period of twenty years shall be defeated or destroyed by showing only that the way or other matter was first enjoyed at any time prior to the period of twenty years, but, nevertheless the claim may be defeated in any other way by which it is now liable to be defeated, and where the way or other matter as herein last before-mentioned has been so enjoyed for the full period of forty years, the right thereto shall be deemed absolute and indefeasible, unless it appears that it was enjoyed by some consent or agreement expressly given or made for that purpose by deed or writing.
  2. Each of the respective periods of years mentioned in sections 30 and 31 shall be deemed and taken to be the period next before some action wherein the claim or matter to which such period relates was or is brought into question, and no act or other matter shall be deemed an interruption within the meaning of those sections, unless the same has been submitted to or acquiesced in for one year after the person interrupted has had notice thereof, and of the person making or authorizing the same to be made.

[42]           Section 31 of the Real Property Limitations Act sets a 20-year period or a 40-year period for the creation of prescriptive easements. The period of alleged prescriptive use is specified to be the period immediately before the commencement of an action.[18] For an easement created by the doctrine of lost modern grant, the duration of use does not have to be a 20-year or 40-year period immediately preceding the bringing of an action.[19] The doctrine of lost modern grant establishes that where there has been 20 years of uninterrupted enjoyment of an easement and such enjoyment has all the necessary qualities to fulfill the requirements of prescription, the law will adopt the legal fiction that such a grant was made.[20] The nature of the enjoyment of the land necessary to establish an easement under the doctrine of lost modern grant is exactly the same as that required to establish an easement by prescription under a statute of limitations.

[43]           To establish a prescriptive easement, the claimant must demonstrate a continuous, uninterrupted, open and peaceful use of the land, without objection by the owner.[21] To acquire an easement by prescription under a statute of limitations or under the doctrine of lost modern grant, the claimant’s use of the land must be “as of right” or, as described in the old authorities, “nec vi, nec clam, nec precario”—“without violence, without stealth (secrecy), without permission”.

[44]           To say that the use of the easement must be “as of right,” is to say that the enjoyment of the easement is not just permissive (i.e., not just a licence) and the owner of the dominant tenement must actually manifest an ownership right; i.e., an entitlement to use the easement.[22] A claimant may rely on the use of predecessor owners to make up the requisite period of “as of right” use.[23]

[45]           During the 20-year period under the Real Property Limitations Act or pursuant to the doctrine of lost modern grant, the owner of the servient tenement’s oral or written consent or permission defeats any claim for a prescriptive easement.[24] During the 40-year period under the Real Property Limitations Act, a written but not an oral consent will defeat any claim for a prescriptive easement.[25]

[46]           The Ontario Law Reform Commission Report on Limitation of Actions stated that “as of right” means that the claimant must show that he or she enjoyed the easement “as if entitled to it.”[26] In the English case of De La Warr v. Miles,[27] Brett, L.J. said that “as of right” meant “that he who asserts a prescriptive right claims as having a right to do it without the Lord’s permission, and that he has so done it without that permission.”[28] The Ontario Law Reform Commission in its report, states at p. 143:

The person claiming the easement must show that the owner of the land has acquiesced in his enjoyment. The latter must have acquiesced yet not given permission. It is not easy to tell whether or not there was, in fact, acquiescence in a particular case.

[47]           The theory behind a claim for an easement based on prescription under a limitations statute or under the doctrine of lost grant is that the evidence establishes that the owner of the servient tenement has with knowledge consented or acquiesced to the establishment of an incorporeal ownership interest in land by the owner of the dominant tenement as opposed to licensing the use of the land without conferring an ownership interest in it.[29] Use by permission or licence is insufficient for establishing a prescriptive easement.[30] The theory was explained in Sturges v. Bridgman[31] by Thesiger, LJ. as follows:

Consent or acquiescence of the owner of the servient tenement lies at the root of prescription, and of the fiction of a lost grant, and hence the acts or user, which go to the proof of either the one or the other, must be, in the language of the civil law, nec vi nec clam nec precario; for a man cannot, as a general rule, be said to consent to or acquiesce in the acquisition by his neighbour of an easement through an enjoyment of which he has no knowledge, actual or constructive, or which he contests and endeavours to interrupt, or which he temporarily licenses.

[51]           The threshold for meeting the criteria for establishing a prescriptive easement under the Limitations Act or by lost modern grant is high, and courts are hesitant to recognize an easement by prescription because doing so would permit a landowner’s neighbourly accommodation of sufferance to ripen into a legal burden on his or her lands without compensations.[40] Use permitted by neighbourliness and enjoyed on that basis is insufficient to establish an easement by prescription.[41]

Ontario: Appealing s. 5 analyses

Nicholson v. McDougall is a reminder that the omission of a s. 5 analysis isn’t necessarily a ground for appeal:

[31]           There is no reference to s. 5 at all, or any of its detailed requirements, in the Reasons for Decision.  I agree with the respondent that this omission from the Reasons for Decision is not sufficient to grant this appeal.  The Deputy Judge could have implicitly applied s. 5, including the presumption in s. 5(2), without expressly referring to it.  To assess whether the Deputy Judge did so and therefore complied with the Limitations Act requirements, I begin with the law regarding s. 5(2) and then I will move to how it applies in this case.

Ontario: Limitations Act applies to Federal entities

In Amir-Afzal v. ICC, the applicant sought an order under s. 253 of the Canada Not-For-Profit Corporation Act declaring a by-law of the Immigration Consultants of Canada Regulatory Counsel (“ICC”) oppressive.  The ICC raised a limitations defence.  The applicant argued that the Limitations Act did not apply to the proceeding on the basis of inter-jurisdictional immunity:

[31]           Before the Court was asked to determine whether the provisions of the Limitations Act applied to the specific facts in this application, the Applicant took the position that the Limitations Act does not apply in law to an application under section 253 of the Act because the Act is legislation enacted by the federal government to regulate corporation with national objects, and the provincial Limitations Act operates in conflict with the Act.  Specifically, the Applicant argued that the inter-jurisdictional immunity doctrine prevents the Limitations Act – as provincial legislation of general application – from regulating entities that fall within matters exclusively assigned to the federal government.

Justice Diamond rejected this argument in a well-reasoned decision:

[37]           Turning to the Act itself, there is no explicit or implicit limitation period contained therein relating to the right to bring an oppression remedy application under section 253.  In argument, it was pointed out that there are other types of limitation periods within the Act such as the following:

Section Limitation
145(5) An action to enforce the liability of a director for any payments contrary to the Act may not be commenced after two years from the date of the resolution authorizing the payment.
146(3) An action against a director for an employee’s wages may not be commenced after two years of the director ceasing to hold the position of director.
263(2) No prosecution for an offence under the Act may be instituted later than two years after a time when the subject matter of the complaint arose.

[38]           The Applicant argues that by prescribing the above limitations within the Act, and leaving the oppression remedy section silent on the issue of the limitation periods, the federal government explicitly or implicitly chose not to impose any time limit upon commencing oppression remedy actions under section 253 of the Act.  In my view, this is a far too simplistic approach to the issue, as the net result of the Applicant’s argument would be that there is no limitation period upon the right to bring an oppression remedy action under section 253.  A closer look at the test for inter-jurisdictional immunity must thus be undertaken.

[39]           Does the Limitations Act trench into key aspects of a federal undertaking, namely not-for-profit corporations?  In my view, it does not.  Even if it did, the Limitations Act certainly does not impair the exercise of the subject federal power, let alone in any serious or significant way.

[40]           The “core” of the Act is not tied to the regulation of rights and obligation of corporation members.  The Applicant’s right to pursue a statutory remedy under the Act against ICC is not an essential part of the law governing not-for-profit corporations.  The purpose of the Act is to allow the incorporation of, or continuance of bodies corporate as, corporations without share capital for the purpose of carrying on legal activities throughout Canada.  The Applicant has taken a far too narrow view of the Act in order to render its application to the lowest, individual/member level.  The Limitations Act does not, directly or indirectly, regulate any issues under federal jurisdiction.

[41]           If anything, the application of the Limitations Act to section 253 of the Act creates a defence for non-for-profit corporations that it otherwise would not have under the Act itself.  How can providing a not-for-profit corporation with a defence amount to an impairment?  In my view, and in furtherance of the administration of justice in this province, the Ontario legislature can determine the time limits within which Ontario courts can consider legal proceedings even if it regulates the procedure applicable to a cause of action under the Act.

[42]           Finally, to the extent that the Applicant advanced a paramountcy argument in support of his position, the Limitations Act does not frustrate the purpose of the Act in any way.  As such, I do not find the presence of any operational conflict between the provisions of the Act and the Limitations Act.

Ontario: The capacity provisions of the Limitations Act

The decision in Hengeveld v. Ontario (Transportation) contains a rare consideration of the Limitation Act’s s. 7 capacity provision.  The issue was whether to add a defendant after the presumptive expiry of the limitation period, which meant it was unnecessary for the court to undertake a complete s. 7 analysis .  Still, it’s worth reviewing when considering capacity .