Dan – Page 24 – Under the Limit

Ontario: notice under the Proceedings Against the Crown Act

Conners v. Ontario considers compliance with the notice requirement of the Proceedings Against the Crown Act.

The plaintiff was assaulted by another inmate while incarcerated at a facility operated by Ontario. On the date of the incident, the corrections officer who found the plaintiff completed an accident/injury report. A nurse at the prison signed the report attesting to the injuries. The prison authorities obtained two statements from the plaintiff. They transferred the plaintiff to a hospital where hospital staff recorded his condition and course of treatment. Meanwhile, a manager at the prison maintained a log-book of the events.

The plaintiff argued that all of these events, taken together, constituted notice to Ontario of his claim.

Justice Corbett rejected this argument:

[22]         I do not accept this argument:

a.      the statements given by Mr Conners on the day of the incident do not contain any suggestion that Mr Conners considered that Ontario was to blame for the injuries he suffered at the hands of Mr McCartney.

b.      The discussions between Mr Conners and Mr Duffy in January 2010 concerned a possible claim by Mr Conners to the Criminal Injuries Compensation Board arising out of the conduct of Mr McCartney. There is no evidence that either Mr Conners or Mr Duffy raised the possibility of a claim by Mr Conners against Ontario, the prison, or persons working at or associated with the prison. Throughout, the discussion was premised on potential claims in respect to wrongdoing of Mr McCartney.

[23]         Mr Conners argues that this case is similar to Latta v. Ontario, where notice of the facts surrounding an injury were found to be sufficient to satisfy the requirements of s.7(1) of PACA, even though the notice did not expressly threaten a claim against the Crown for compensation.[4] In my view the cases should be distinguished.

[24]         Latta was a trip-and-fall case. Mr Latta tripped over a sand-filled bucket left in a dangerous place. As a result he fell down some concrete stairs and suffered serious back injuries. The court held that notice of the circumstances of the accident was sufficient in that case to be notice of a claim because the circumstances were such that the Crown was the obvious entity with legal responsibility for the inherently dangerous situation on its premises. That is simply not the case here: there is no obvious implication that an unprovoked attack by one inmate upon another is the result of any misconduct by the Crown.

[25]         In Latta, which was a “close case” (para. 31), the court found that there was “an element of complaint” in Mr Latta’s dealings with prison authorities at the time of the incident (para. 32). The court found:

… the appellant’s decision to inform prison officials about the accident and his identification of the actions of the Crown (leaving a bucket at the top of the stairs) as a cause of the accident entail a certain degree of “complaint”. It may not be, in explicit terms, the equivalent of “I fell down the stairs and it is your fault”; however, it goes beyond a simple “I fell down the stairs.” (para. 32)

In the case before me, there was nothing about Mr Conners conduct that could have led reasonable prison officials to have understood him to be implying “I was assaulted by McCartney and it is your fault.” Rather, what he said, in effect, was “I don’t know what happened because I was hit from behind”. He was told that McCartney did it and that a prosecution and claim for criminal injuries compensation was possible. These circumstances do not entail “a certain degree of ‘complaint’” about the prison or its employees.

[26]         In Latta the Court of Appeal also found that the circumstances described by Mr Latta in the Accident/Injury Report suggest, on their face, the potential for litigation. The court found:

The accident itself is a visual paradigm for a lawsuit: a man trips over a bucket being used as a doorstop at the top of some stairs, falls down the stairs and is injured…. Although the report does not use the word “claim”, the content of the report and the nature of the accident have, in my view, a strong indication of “potential claim” about them. (para. 34)

The circumstances of Mr Conners’ case are not a “visual paradigm for a lawsuit”. Unfortunately, assaults by prison inmates on other inmates are not unheard of. The agency for injury is an inmate, not the prison or its employees. Of course could imagine circumstances where it might be possible to assert a claim against a prison for failing to protect an inmate from a known threat. There is no evidence that Mr Conners complained of circumstances that could give rise to such a claim – circumstances that could carry with them the “element of complaint” that would give notice to the prison that Mr Conners was saying to the prison that he was injured in an assault “and it is your fault.”

The plaintiff also argued that the Crown had waived any non-compliance with PACA. Justice Corbett rejected these arguments well.

(a)   The Waiver Argument

[29]         The waiver argument cannot succeed for two reasons. First, neither the court nor government lawyers can waive the requirements of PACA. The requirements of PACA are mandatory and it is for the plaintiff to prove that he has complied with them.[5]

[30]         In any event, Ontario did plead and rely upon PACA in para. 21 of its original statement of defence: that which is expressly pleaded cannot be said to have been waived by the pleading.

(b)   The Admission Arguments

[31]         It would be possible (and in some cases desirable) for the Crown to admit that it has received the required notice under PACA. When this happens, the plaintiff will not be required to elicit proof at trial of compliance with the provision. But in the absence of a clear, unambiguous admission, compliance with PACA is a condition precedent for a claim against the Crown that is governed by PACA, and the plaintiff is required to prove compliance as part of its case in chief.

The decision includes a helpful summary of the notice requirement:

The Notice Requirements in PACA

[2]               Subsection 7(1) of PACA provides:

… no action for a claim shall be commenced against the Crown unless the claimant has, at least sixty days before the commencement of the action, served on the Crown a notice of the claim containing sufficient particulars to identify the occasion out of which the claim arose, and the Attorney General may require such additional particulars as in his or her opinion are necessary to enable the claim to be investigated.

[3]               Subsection 7(2) of PACA extends an applicable limitation period in certain circumstances where notice is required pursuant to subsection 7(1):

Where a notice of claim is served under subsection (1) before the expiration of the limitation period applying to the commencement of an action for the claim and the sixty-day period referred to in subsection (1) expires after the expiration of the limitation period, the limitation period is extended to the end of seven days after the expiration of the sixty-day period.

[4]               A notice of claim must be in writing and must include a complaint which, if not satisfied, could reasonably be anticipated to result in litigation against the Crown.[1] The focus is on the substance of what is communicated to the Crown rather than rigid formal requirements.[2]

[5]               Compliance with the sixty-day notice requirement in s.7(1) of PACA is mandatory. It cannot be abridged. An action commenced in violation of this requirement is a nullity. And the court has no discretion to relieve from this result.

Ontario: Appealing from an order dismissing an OBCA claim as statute-barred

An appeal from a final order made under the Business Corporations Act is to the Divisional Court even where the order dismisses the proceeding as statute-barred.

In 1186708 Ontario Inc. v. Gerstein, the plaintiffs brought a motion under s. 246 of the Business Corporations Act. The motion judge found it statute-barred by the expiry of the limitation period. The Court of Appeal held that the Divisional Court had jurisdiction:

[7]         Under s. 6(1)(b) of the Courts of Justice Act, R.S.O. 1990, c. C.43, an appeal lies to this court from “a final order of a judge of the Superior Court of Justice, except … an order from which an appeal lies to the Divisional Court under another Act” (emphasis added). Under s. 255 of the OBCA, “[a]n appeal lies to the Divisional Court from any order made by the court under this Act.”
[8]         There is no dispute that the Order is a final order.
[9]         Paragraph 1 of the Order flowed from a motion for leave to commence a derivative action under s. 246 of the OBCA. We acknowledge that the claim was found to be statute-barred and leave refused on that basis. We also acknowledge that the determination that the claim was statute-barred was made under the Limitations Act, 2002, not the OBCA. However, para. 1 of the Order disposed of the motion which was brought under s. 246 of the OBCA. Given the broad scope afforded to s. 255 of the OBCA in this court’s jurisprudence, it is our view that para. 1 of the Order is an order within the meaning of s. 255 of the OBCA: see Amaranth L.L.C. v. Counsel Corp. (2004), 2004 CanLII 10897 (ON CA), 71 O.R. (3d) 258 (C.A.); and Ontario Securities Commission v. McLaughlin, 2009 ONCA 280 (CanLII), 248 O.A.C. 54.

Ontario: The Court of Appeal on adding new claims to a proceeding

The Court of Appeal in 1100997 Ontario Limited v. North Elgin Centre Inc. sets out the test for amending a pleading to add a new claim outside a limitation period (making our last post rather unnecessary). The court will refuse an amendment when it seeks to advance after the expiry of the limitation period a “fundamentally different claim” based on facts not originally pleaded:

[19]      A cause of action is “a factual situation the existence of which entitles one person to obtain from the court a remedy against another person”: Letang v. Cooper, [1965] 1 Q.B. 232 (C.A.), at pp. 242-43, as adopted by this court in July v. Neal (1986), 1986 CanLII 149 (ON CA), 57 O.R. (2d) 129 (C.A.), at para. 23.

[20]      In Morden & Perell, The Law of Civil Procedure in Ontario, 2nd ed. (Markham: LexisNexis Canada Inc., 2014), at p. 142, the authors state:

A new cause of action is not asserted if the amendment pleads an alternative claim for relief out of the same facts previously pleaded and no new facts are relied upon, or amount simply to different legal conclusions drawn from the same set of facts, or simply provide particulars of an allegation already pled or additional facts upon which the original right of action is based. [Footnotes omitted.]

[21]      In Dee Ferraro Ltd. v. Pellizzari, this court noted the distinction between pleading a new cause of action and pleading a new or alternative remedy based on the same facts originally pleaded. The appellants had commenced an action against their lawyer claiming damages for breaches of contract, trust and fiduciary duty and for fraud and negligence. The appellants then sought to amend their pleading. This court, in overturning the motion judge’s dismissal of the motion to amend, concluded that the proposed amendments, such as claims for a mandatory order and a constructive trust over shares, could be made because they flowed directly from facts previously pleaded.

[22]      By contrast, a proposed amendment will not be permitted where it advances a “fundamentally different claim” after the expiry of a limitation period: Frohlick v. Pinkerton Canada Ltd. In that case, the court did not permit the plaintiff in a wrongful dismissal action to amend the statement of claim to assert a claim for damages for constructive dismissal on the basis that the limitation period had expired. This court dismissed the appeal. The amendment regarding constructive dismissal related to events that occurred prior to the events described in the original statement of claim that were unrelated to that claim. The defendant was unaware of the new allegations prior to the plaintiff seeking the amendments, and the events were not put in issue or encompassed within the original claim.

[23]      Based on the foregoing, an amendment will be refused when it seeks to advance, after the expiry of a limitation period, a “fundamentally different claim” based on facts not originally pleaded.

I think this is a sound conclusion. Allowing amendments so long as they don’t advance a fundamentally different claim based on the facts originally pleaded makes sense, though it doesn’t seem like much of a departure from the “same factual matrix” test. Indeed, later in the decision Justice van Rensburg refers to the factual matric concept:

[38] I therefore conclude that the proposed amendments contained in the statement of claim ought not to have been refused on the basis that they raised new claims based on new causes of action.

Perhaps this new formulation’s chief virtue is that it doesn’t necessarily require a cause of action analysis. Comparing claims is materially different than comparing causes of action. “Claim” is a defined term in the Limitations Act, whereas the words “cause of action” don’t appear at all in the Limitations Act, and particular causes of action and their accrual are immaterial to a limitations analysis. Mischief results when the court forgets this.

Other aspects of the decision are noteworthy. Justice van Rensburg concludes that when a notice of application commences a proceeding, the court should consider both the notice of application and the supporting affidavit material to determine whether a proposed amendment sets forth a new claim.

Justice van Rensburg follows the 1989 Court of Appeal decision in Energy Probe v. Canada (Attorney General) for the principle that affidavit materials on an application form part of the pleadings. The interesting question that arises from this principle is its interaction with the affirmative nature of a limitations defence. In an action, the defendant must plead the Limitations Act in the statement of defence. The plaintiff may then plead the facts supporting a discovery argument in reply. See the Court of Appeal decision in Collins.

Does this mean that the respondent to an application should “plead” the limitations defence in a responding affidavit? Should the applicant then plead the facts supporting a discovery argument in a reply affidavit? Increasingly, I’m of the mind that it’s impossible to square limitations law and application procedure (with certain exceptions, especially contested applications to pass accounts), but this is an issue (and likely an article) for another day.

Lastly, Justice van Rensburg also reminds us that an order refusing leave to amend a pleading to add a new claim outside a limitation period is a final order:

[17] In Energy Probe v. Canada (Attorney General) (1989), 1989 CanLII 258 (ON CA), 68 O.R. (2d) 449 (C.A.), leave to appeal refused 37 O.A.C. 160 (S.C.C.), in determining whether a cause of action was disclosed, this court stated that “affidavit materials on an application are to be considered as the pleadings” (at para. 10). Further, where oppression proceedings commenced by notice of application were converted into an action in Przysuski v. City Optical Holdings Inc., 2014 ONSC 3686 (CanLII), Perell J. refused to strike paragraphs of the statement of claim as raising unanticipated claims as an abuse of process because “[t]he Notice of Application should be read with its supporting affidavits and with the evidentiary record for the Application” (at para. 11).

Ontario: the limitation of adding new claims to a proceeding

Justice Nordheimer’s decision in Farmers Oil and Gas Inc. v. Ontario (Natural Resources) has a useful overview of the jurisprudence of amending a pleading to add a new cause of action after the expiry of the limitation period. It will be a good starting point if you encounter the issue:

[14]         As I have said, the central issue between the parties is whether the proposed amendments give greater clarity or particularity to the existing claim, or whether they advance new claims. On that point, the appellant relies heavily on the decision in 1309489 Ontario Inc. v. BMO Bank of Montreal (2011), 2011 ONSC 5505 (CanLII), 107 O.R. (3d) 384 (S.C.J.)where Lauwers J. addressed this same issue. In that decision, Lauwers J. referred to the two different approaches to determining whether a claim is a new cause of action. On the one hand, one can see a cause of action as a factual matrix. On the other hand, one can see a cause of action simply as the legal basis upon which the claim for relief is based. Lauwers J. concluded that the trend of the case law was to favour the broader factually oriented approach to the meaning of a cause of action. Under that broader approach, if the defendant has notice of the factual matrix underlying the claim being advanced, then amendments that arise out of, or do not depart from, that factual matrix do not constitute “new” causes of action that would not be allowed by way of amendment. On that point, Lauwers J. said, at para. 27:

A plaintiff is not required to name or specify the technical cause of action as an essential part of pleading; in saying this, I do not resile from the requirement noted in Morden and Perell, supra, that ordinarily the facts as originally pleaded, or as better particularized in the proposed new pleading, must be able to sustain the technical cause of action. [emphasis added]

[15]         A very short time later, Lauwers J. had to deal with this same issue a second time. In Sweda Farms Ltd. (c.o.b. Best Choice Eggs) v. Ontario Egg Producers, [2011] O.J. No. 4886 (S.C.J.) the plaintiff sought to amend the statement of claim to advance a conspiracy claim, along with other amendments. The defendant objected on the basis that any such claim was barred by the expiration of the limitations period. In allowing the amendments to be made, Lauwers J. again addressed the meaning of a cause of action and said, at para. 25:

I find that the broader, factually-oriented approach to the meaning of “cause of action” in interpreting and applying rule 26.01 is the correct approach. It is consistent with the trend of the cases and is also consistent with a purposive approach to the interpretation of limitations legislation. This means that the defendant’s basic entitlement is to have notice of the factual matrix out of which the claim for relief arises. In my view the existing set of pleadings raises the factual matrix of concern to the plaintiffs and within which the defendants’ possible liability is to be located. The proposed Fresh Statement of Claim simply reframes those allegations of fact.

[16]         The approach taken by Lauwers J. was tacitly approved by the Court of Appeal in Rausch v. Pickering (City),[2013] O.J. No. 5584 (C.A.) where Epstein J.A. said, at para. 95:

As Lauwers J. (as he then was) emphasized in BMO Bank of Montreal, at para. 27, as long as the existing pleading “raises the factual matrix of concern to the plaintiff and within which [the defendant’s] possible liability is to be located[,] it successfully asserts a cause of action within the meaning of rule 21.01(1)(b).” Thus, even if the plaintiff does not explicitly set out the technical cause of action on which it relies, if the facts as pleaded implicitly advance such a claim, the court ought not to strike the pleadings: BMO Bank of Montreal, at paras. 26-27.

[17]         I say that the approach was tacitly approved only because the issue that was before the Court of Appeal in Rauschhad less to do with the expired limitation period and more to do with whether the proposed amendment disclosed a cause of action.

[18]         The respondent, on the other hand, relies on a different line of cases beginning with Fuda v. Jim McIntosh Petroleum Engineering Ltd., [2013] O.J. No. 5208 (S.C.J.); aff’d. [2014] O.J. No. 2255 (C.A.) where Wilton-Siegel J. granted summary judgment dismissing certain claims, that had been added to the statement of claim by amendment, on the basis that the limitations period had expired. In addressing the issue whether the subsequent claims could be seen to have been part of the original claim, Wilton-Siegel J. said, at para. 310:

Given the principles set out above, I conclude that each of these causes of action were asserted for the first time in the 2013 Amendment dated February 8, 2013, other than the original cause of action based on the 2003 Reserve Report Representation, which was asserted in the Statement of Claim. The fact that both the cause of action asserted in the Statement of Claim and the four additional causes of action asserted in the 2013 Amendment lie in negligent misrepresentation is not sufficient to conclude that these remaining causes of action are contained in the Statement of Claim.

[19]         It is of some importance to this conclusion to be aware of how the Court of Appeal approached this conclusion. In dismissing the appeal, the court said, at para. 9:

The misrepresentation claims that were asserted after the expiry of the limitation period advanced new causes of action that were unconnected to the factual matrix pleaded in the original statement of claim. [emphasis added]

[20]         The respondent relies on two other authorities. One is Winnipeg (City) v. Entegra Credit Union Ltd., [2013] M.J. No. 10 (C.A.). In that case, the motion judge had permitted the plaintiff to amend its statement of claim. The motion judge found that the proposed amendments did not constitute new causes of action. The Court of Appeal reversed that finding. The Court of Appeal found that the motion judge had misunderstood the nature of the claim being advanced by the proposed amendments, that is, a separate and distinct claim for breach of contract that was “independent” of the existing claim.

[21]         The other authority is American Axle & Manufacturing, Inc. v. Durable Release Coaters Ltd., [2010] O.J. No. 2515 (S.C.J.) where the issue was whether certain claims at trial were barred by the expiration of a limitations period. The claims had been added to the statement of claim by way of amendment with the limitation period issue being expressly reserved for determination at trial. The trial judge, Newbould J. , found that those claims were barred by the limitation period, and were not saved by any suggestion that they were not “new” causes of action, but rather were encompassed within the same factual situation previously pleaded. In so concluding, Newbould J. said, at para. 50:

In my view the amendments do not plead alternative claims for relief arising out of the same facts previously pleaded. The new facts pleaded are relied upon to support new causes of action and new heads of damages arising from those new causes of action. While it is the same contract as previously pleaded that is claimed in the amendments to have been breached, the contractual provisions and breaches relied on in the amendment are different from the previous pleading and the breaches and resulting damages are different from those previously pleaded. They constitute new causes of action.

[22]           As may be obvious from the above, the distinction between the authorities relied upon by the appellant, and those relied upon by the respondent, turns on whether the proposed amendments do, or do not, arise out of the same facts, or the factual matrix, that was pleaded in the original statement of claim. If they do, then the amendments should be permitted. If they do not, and the limitations period has expired, then the amendments should be refused.

[23]         In determining this issue in this case, I must begin by reading the original statement of claim generously and with due allowance for drafting deficiencies – see Operation Dismantle Inc. v. Canada, 1985 CanLII 74 (SCC), [1985] 1 S.C.R. 441. In my view, it is clear from a generous reading of the statement of claim that the appellant’s original claim arises out of an alleged course of conduct between it and the Ministry that began in 1991, and continued through to 1995, when the new policy was adopted, and the alleged unfair dealing by the Ministry with the appellant came to light. It is clear that the appellant was, at all relevant times, interested in obtaining the near shore rights. The appellant claims that it did not take steps to acquire those rights only because the Ministry told it that it did not need to because, up until 1995, the Ministry was not in a position to grant those rights. What the appellant alleges, however, is that the Ministry did not tell it that companies could file applications for those rights and, specifically, that one company had filed for the very rights that the appellant was seeking.

[24]         When one then looks at the proposed amendments, they allege facts that are clearly part and parcel of these dealings. They arise out of the same factual matrix. In that respect, they fall into the Sweda and related line of cases and are thus distinguishable from the Fuda line of cases. They provide precisely the type of particulars regarding what was said, and between whom, that ought to have been part of the original statement of claim. What they do not do, however, is allege some new and distinct claim unrelated to that original claim.

Ontario: the Limitations Act doesn’t apply to claims before administrative tribunals

Mea Culpa! Given my take-away from this decision below, I clearly read it too quickly. It is actually one of the more remarkably wrong limitations decisions from the past several years, not least because it holds that any personal injury claim involving a tenant and a landlord is not subject to the Limitations Act, but the one year temporal limit in the Residential Tenenacies Act. It’s under appeal. (What follows may be the only thing right about the decision).

The Limitations Act plainly applies only to court proceedings and not claims brought before administrative tribunals. Should you ever need an authority for this proposition (aside from the plain meaning of s. 2), look to Justice Sloan’s decision in Letestu v. Ritlyn Investments:

[62] Section 2 of the Limitations Act makes it clear that the Limitations Act applies to “claims pursued in court proceedings”.

[63] Nowhere in the Limitations Act does it state that the Limitations Act applies to claims brought before administrative tribunals.

Ontario: It’s still a two-year limitation period for IRB claims

In Bonilla v. Preszler, the appellant argued that the respondent’s termination notice for her Income Replacement Benefits was not clear and unequivocal and that the applicable limitation period was “rolling”. This was a futile position and the Court of Appeal rejected it.

[10]      It is well established in this court’s case law that the limitation period is triggered by a single event, which is the refusal of an insurer to pay the IRB claimed: see e.g. Bonaccorso v. Optimum Insurance Company Inc., 2016 ONCA 34 (CanLII), 129 O.R. (3d) 544 and Sietzema v. Economical Mutual Insurance Company, 2014 ONCA 111 (CanLII), 118 O.R. (3d) 713. The appellant was informed on February 4, 2003 that she would not receive IRB after February 27, 2003. Even taking the later of these two dates, February 27, 2003, as the date of the refusal, the two-year limitation period expired February 27, 2005. The appellant’s action is several years late.

[11]      The appellant submits that this court’s prior cases are either distinguishable or are wrongly decided and offers several arguments in support. She submits that the limitation period covers only the amount of a benefit claimed, and not the nature of the benefit; that the cause of action for IRB is an “entitlement to indemnification”; that the amount claimed is limited to an amount accrued or crystallized, rather than future benefits; and that the common law discoverability rule applies.

[12]      We do not accept any of these arguments. In our view the operation of the limitation period under the legislation is clear and straightforward. It is well settled in the case law of this court, and it would be inappropriate for a three-judge panel of the court to overrule a prior decision of the court in any event. We note that the appellant requested, and was denied, a five-judge panel for this appeal.

Ontario: A limitations defence must be pleaded

In Singh v. Trump, Justice Perell dismissed a plaintiff’s claim as time-barred despite the defendants not pleading the Limitations Act, seeking leave to amend to plead it, or raising it in their written submissions. His reasons neither refer to the fact that the defence was not pleaded nor explain why, in the absence of the plea, he should invoke the Limitations Act.

In the circumstances, the Court of Appeal found that it was not appropriate for Justice Perell to invoke the Limitations Act and dismiss the claim as statute-barred. A limitations defence is an affirmative defence and must be pleaded. Justice Rouleau’s decision provides a helpful overview of the relevant jurisprudence:

[132]   This court has consistently held that “[t]he expiry of a limitation period is a defence to an action that must be pleaded in a statement of defence”: Collins v. Cortez, 2014 ONCA 685 (CanLII), [2014] O.J. No. 4753, at para. 10, per van Rensburg J.A. (citing S. (W.E.) v. P. (M.M.) (2000), 2000 CanLII 16831 (ON CA), 50 O.R. (3d) 70 (C.A.), at paras. 37-38, leave to appeal to S.C.C. refused, [2001] 149 O.A.C. 397). This requirement is embodied in rule 25.07(4) of the Rules of Civil Procedure, which Ontario courts have consistently held “applies to pleadings relating to limitations that might bar an action”: S. (W.E.) v. P. (M.M.), at para. 37. Rule 25.07(4) provides as follows:

In a defence, a party shall plead any matter on which the party intends to rely to defeat the claim of the opposite party and which, if not specifically pleaded, might take the opposite party by surprise or raise an issue that has not been raised in the opposite party’s pleading.

[133]   Justice Cronk explained the rationale behind the requirement that a party specifically plead a limitation period defence in Hav-A-Kar Leasing Ltd. v. Vekselshtein, 2012 ONCA 826 (CanLII), 225 A.C.W.S. (3d) 237, at para. 69:

The failure to raise substantive responses to a plaintiff’s claims until trial or, worse, until the close of trial, is contrary to the spirit and requirements of theRules of Civil Procedure and the goal of fair contest that underlies those Rules. Such a failure also undermines the important principle that the parties to a civil lawsuit are entitled to have their differences resolved on the basis of the issues joined in the pleadings.

[134]   In S. (W.E.) v. P. (M.M.), MacPherson J.A. confirmed that Ontario courts “have consistently held that rule 25.07(4) applies to pleadings relating to limitations that might bar an action”: at para. 37. He went on to explain that even though in that case the trial judge had given counsel time to prepare submissions on the issue after he raised it during closing arguments, it did not remove the potential prejudice to P:

If S had raised the issue in his pleadings, P might have tried to settle, or even have abandoned, her counterclaim. Either decision might have had costs consequences. Another potential source of prejudice arises from the fact that counsel for P might have adopted different tactics at trial. In particular, counsel might have called different or additional evidence to support an argument that the discoverability principle applied (at para. 38).

[135]   MacPherson J.A. also noted that at no time during trial, including during closing arguments when the trial judge raised the limitation issue, did S seek to amend his pleadings. Nor did he seek such an amendment during the appeal hearing.

[136]   In my view, the defendants’ failure, in this case, to plead a Limitations Act defence or even to seek an amendment to their pleading to do so is, as it was in S. (W.E.) v. P. (M.M.), fatal.

Ontario: an overview of Succession Law Reform Act limits

In Weigand v. Mohammed, Justice George considered whether to extend the limitation period in s. 61(1) of the Succession Law Reform Act. His decision sets out the statutory framework:

[2]               If permitted, the application would be brought under Part V of the SLRA.

[3]               Section 57 defines a dependent as any of the spouse, parent, or sibling of a deceased, and to whom the deceased was providing support or was under a legal obligation to provide support immediately before his or her death.

[4]               Section 58 provides that:

Where a deceased, whether testate or intestate, has not made adequate provision for the proper support of his dependants or any of them, the court, on application, may order that such provision as it considers adequate be made out of the estate of the deceased for the proper support of the dependants or any of them.

[5]               The limitation period is set out in s. 61(1):

Subject to (2), no application for an order under section 58 may be made after six months from the grant of letters probate of the will or of letters of administration.

[6]               The limitation period does not begin to run at any time during which the person with the claim is a minor.

[7]               My jurisdiction to grant an extension derives from (2):

The court, if it considers it proper, may allow an application to be made at any time as to any portion of the estate remaining undistributed at the date of the application.

The issue was whether in the circumstance of the case it would be proper to grant leave pursuant to s. 61(2). These is Justice George’s analysis:

[26]         In B(JDD) the court provides some guidance on how to apply and interpret s. 61(2) of the Act. I am to do so judicially and in a broad and liberal manner. I must consider the delay, the reasons for delay, and whether there would be prejudice to the estate’s ability to defend the proposed claim.

[27]         The question is does this situation bear review of whether the testator made adequate provision in his will for dependents? Not whether he has in fact done so, but is there a sufficient basis for a review. This requires a consideration of what is equitable, and whether or not the respondent acted “honestly, reasonably, and fairly”.

[28]         This is the applicant’s position in a nut shell. The respondent caused the delay through her misrepresentation, and has not acted honestly. They suggest there would be no prejudice to the estate as the respondent is the only beneficiary. No innocent third party beneficiaries would be put at risk.

[29]         The respondent relies upon the decisions in each of Re Assaf Estate, [2007] OJ No 4579; Blatchford v. Gardiner,[1999] OJ No 3478; and Su v. Lem, [2012] OJ No 1448, all Superior Court decisions. She claims that granting an extension would bring an injustice upon her, and in any event the assets have already been distributed.

[30]         She agrees the test is whether the situation bears review of the adequacy of provisions. She, however, stresses that this is a fact-dependent exercise, and that in these circumstances, a review is not warranted.

[31]         The easy thing to do would be to simply say there is a conflict in the evidence, which I cannot resolve at this stage, and therefore the broadest and most liberal thing to do would be to grant the extension and allow the application to go forward. This would, however, suggest an extension should be automatically granted. It is not that simple.

[32]         While it is true the reason for delay is a factor to consider, a request for an extension is not grounded solely in “good cause” being shown for the delay. The discretion to extend (or refuse) is a question of what is equitable between the parties, in all the circumstances. The respondent argues that the payment to the mother is the equitable outcome. The children have been provided for, and beyond that a testator can distribute their assets as they see fit.

[33]         What are the circumstances? First, there was a delay. The limitation period has passed. There is some dispute as to how long the delay was but that is of little consequence. Second, there is a conflict in the evidence as to the reason for delay, which I cannot resolve. In this respect there are essentially cross-allegations of bad faith. It is said the respondent lied when she promised to sell the home and distribute proceeds to the children. It has been suggested the applicant’s attempted to mislead the court by not mentioning the funds received by their mother. Third, and further to that last point, I accept the respondent paid to the applicant’s mother, specifically for child support and in order to comply with the divorce judgment, approximately $30,702.27. It is worth nothing that the mother released the respondent from any further claims upon receipt of the funds. Fourth, I accept the respondent’s accounting, and accept that the estate has for the most part been distributed. Fifth, the deceased had an obligation to pay child support at the time of death.

[34]         It would be wrong to allow the respondent to rely on the fact she has distributed the estate as a basis to not grant an extension. If the applicant’s version of events is true, and the respondent did indeed promise to sell the home and distribute the funds to them, than it would be unconscionable to allow her to defeat a claim by virtue of a passed limitation period. If this is true, the respondent would be estopped from relying on the limitation period, as it would be open to the court to find that the applicants relied on that representation to their detriment.

[35]         As I only have untested affidavits, I am unable to resolve the conflicts in the evidence. This weighs in favour of an extension.

[…]

[42]         The part of s. 61(2) that does give me pause is the reference to “any portion of the estate remaining undistributed at the date of the application”. This raises an interesting question. In the normal course, and some of the case law speaks to this, if the estate has been fully distributed an extension should not be granted. This makes sense. It would make the discretionary extension of the limitation period a pointless exercise. There is nothing left to distribute. However, in our instance, a misrepresentation by the executor is being alleged, who is also the sole beneficiary, who also happens to be in current possession of the estate’s main asset, the very asset which was the subject of the misrepresentation. It is inconceivable that the inclusion of this language was intended to shield administrators who engage in such behaviour. I am not saying this is what happened, but a trial judge could come to this conclusion on the evidence before me.

[…]

[45]         The applicant’s say they were deceived by the respondent. This is supported by Udo Weigand. Even though the respondent gives a different version, I am unable to reject that explanation. In circumstances like these, to refuse leave and not grant an extension, I would have to conclude that the prejudicial effect of an extension upon the respondent would outweigh the need to engage in a review and determine entitlement to support under s. 58. I can’t reach that conclusion.

Ontario: bad limitations analyses are why we can’t have nice things

Two recent decisions contain limitations analyses sufficiently flawed for me to ask that you indulge my pedantry. This lesson is titled A bad limitations analysis makes everyone lose.

In Lawyers’ Professional Indemnity Company v. Lloyd’s Underwriters, the analysis begins with a flawed premise resulting in more questions than the decision answers.

LawPro applied for a declaration that Lloyd’s was obliged to contribute to the defence costs of a common insured. Lloyd’s took the position that the LawPro’s claim for contribution was statute-barred. Justice James considered the issue:

[18] On the facts present here, the entitlement of the applicant to seek a contribution from the respondent has not proscribed. I base this view on my reading of section 5(1) of the Limitations Act and in particular sub-clause 5(1)(a)(iv). There is no mandated single point in time for the applicant to request a contribution from the respondent. For the LimitationsAct to apply, it would be necessary to conclude that the claim, having been “discovered” and the request for compensation having been rejected by the opposing party, “a proceeding would be the appropriate means to seek a remedy”. Put another way, when the applicant requested a contribution from the respondent and the respondent declined the request, was it appropriate for the applicant to respond by commencing an action? I would say not. Not enough was known to say that the claim had been discovered. It could equally be appropriate to await further developments in the claim against the insured and to defer bringing the matter to a head until more information is known and the facts had emerged with greater clarity.

“For the Limitations Act to apply…?”. This is a bad start. The Limitations Act applies to all claims pursued in court proceedings (subject to the s. 2 exceptions), not merely those that have been discovered.

The analysis ought to have begun with the the first question in any limitations analysis: is there claim? Limitation periods apply to proceedings commenced in respect of a claim. If a proceeding doesn’t advance a claim, it’s not subject to a limitation period.

Assuming LawPro did have a claim, the next question ought to have been determining the act or omission that the claim seeks to remedy. The date of the act or omission is when the presumptive limitation period commences.

If LawPro brought the application within two years of that date, its application was timely. If not, the next question ought to have been when a reasonable person with LawPro’s abilities and in its circumstances ought to have discovered the claim. For its application to be timely, LawPro would have needed to file it within two years of this date.

When LawPro ought to have discovered its claim required asking when it ought to have known of its loss, that wrongful conduct caused the loss, and that it was Lloyd’s wrongful conduct. It seems likely that it ought to have known all of this on the day of Lloyd’s refusal. We can’t be sure, because the limitations analysis doesn’t determine this.

Instead, there are conclusions without explanation. Not enough was known at the time of the refusal for the claim to have been discovered. What did LawPro not yet know? It was appropriate for LawPro to await further developments that would provide more information and greater factual clarity. What information and factual clarity did LawPro require? Why was it inappropriate for LawPro within the meaning of s. 5(1)(a)(iv) to use a proceeding as remedy for its loss on the date of Lloyd’s refusal? The analysis answers none of these questions. Perhaps it’s correct, but it’s impossible for the reader to know.

In Leblanc v. Glass, the plaintiff Leblanc claimed that the defendants Glass and Vitiello conspired to deprive her of properties and committed breach of trust. Vitiello moved for summary judgment on the basis that Leblanc’s claim was statute-barred.

Justice Hennessy framed the issue:

[9]               In order to determine the issue of discoverability, the following questions must be addressed. The answers will come from the pleadings, the productions or the examinations:

a.      What did Jonathan A. Glass tell Marie Leblanc? What did Marie Leblanc discover in Feb 2014?

b.      What did Jonathan A. Glass disclose that Marie Leblanc did not already know or could have known?

c.      Did the contents of Jonathan A. Glass’ disclosure amount to evidence of fraud, conspiracy or breach of trust against Civita Vitiello?

The discovery analysis may require answering these questions, but they are not the questions that determine discovery. Discovery, as we know, turns on knowledge of the matters in s. 5 of the Limitations Act. Again, to determine the date of discovery you ask, in this order, what is the act or omission that is the basis of the claim, and when would a reasonable person with the abilities and in the circumstances of the plaintiff have known of her loss, that an act or omission caused the loss, that the defendant caused the act or omission, and that a proceeding was an appropriate remedy for the loss.

Importantly, the common law discovery principle does not determine discovery within the meaning of the Limitations Act:

[21] The obligation is on the plaintiff is to use reasonable diligence in discovering the material facts in relation to the claim. The limitation period will run once the plaintiff knows the identity of the tortfeasor and that some damage has occurred. (Peixeiro v Haberman 1997 CanLII 325 (SCC), [1997] 3 S.C.R. 549, at para 18) The plaintiff is then required to lead sufficient evidence before the court showing that they exercised this reasonable diligence.

A plaintiff does not discovery her claim under the Limitations Act when she knows the identity of the wrongdoer and that some damage has occurred. She must also know that a proceeding is an appropriate remedy for her loss.

Lastly, it is long settled that the doctrine of special circumstances does not apply to the Limitations Act:

[34] The limitation period under s. 4 of the Limitations Act, 2002, S.O. 2002, c. 24, Sch. B applies. There are no special circumstances justifying an extension of the limitation.There is no reason to consider special circumstances, because the principle of special circumstances is of no application.

Muddled limitations analyses like these are not helpful to the parties or the jurisprudence.

Alberta: adding claims to a proceeding

This post marks the return of non-Ontario jurisprudence to Under the Limit. Our goal of reviewing appellate jurisprudence from all common law provinces proved overly ambitious for one person. So, I enlisted the assistance of my talented colleague Tyler Wentzell, and with his help we’re going to gradually return to the national scope we intended.

Acielo v. Condominium Plan 9022497 is the first Alberta Court of Appeal decision to consider the meaning of the language, “the time provided by law for the service of process” in s. 6(4) of Alberta’s Limitations Act. It settles conflicting jurisprudence and means that the limitation period for a claim added to a proceeding is the two-year general limitation period, plus one year. The added defendant must have “sufficient knowledge” of the claim within this three-year period.

This is the relevant portion of s. 6:

Claims added to a proceeding

6(1) Notwithstanding the expiration of the relevant limitation

period, when a claim is added to a proceeding previously

commenced, either through a new pleading or an amendment to

pleadings, the defendant is not entitled to immunity from liability

in respect of the added claim if the requirements of subsection (2),

(3) or (4) are satisfied.

[…]

(4) When the added claim adds or substitutes a defendant, or

changes the capacity in which a defendant is sued,

[…]

(b) the defendant must have received, within the limitation

period applicable to the added claim plus the time provided

by law for the service of process, sufficient knowledge of

the added claim that the defendant will not be prejudiced in

maintaining a defence to it on the merits.

The Court determined that “the time provided by law for the service of process” means the time period provided for in the rules to serve a statement of claim once issued. Under Alberta’s Rule 26, this is one year. This is a marked increase from other case law which had only added 20 days, the time period provided to serve a counterclaim.

Background and Chambers Decision

Ms. Acielo lived in a condo unit. In 2009, her landlord brought an action against her in Provincial Court for unpaid rent. Ms. Acielo’s defence and counterclaim pleaded that she had stopped paying rent because there was mold in her condo that had given her a lung condition.

In 2010, Mc. Acielo learned that her lung condition was likely permanent. Her physician told her that she had to move out. She provided her notice to move out. She applied to the Provincial Court to transfer the matter to the Court of Queen’s Bench, and to add the Condo Corporation as a defendant to her counterclaim. The Provincial Court allowed the transfer and amendment, and the Condo Corporation applied for a summary dismissal of the claim against it on the basis that it was out of time. The chambers judge held that the limitation period for the addition of the counterclaim was the two-year general limitation period plus 20 days, the period of time for service of a counterclaim. The chambers judge dismissed the claim against the Condo Corporation as out of time. Ms. Acielo appealed the decision.

The Appeal

The Alberta Court of Appeal discussed the discord in the case law regarding the length of time afforded under s. 6(4). The problem principally arises from the uses of the words “process” and “pleading” in the Limitations Act.

The Court concluded that the rule permitted two possible interpretations. The chambers judge had adopted the “narrow” interpretation: adding the amount of time required to serve the counterclaim. The “broad” interpretation, however, would add the length of time required to serve an originating process: one year. The Court held that a broad reading of the language was correct and more in line with public policy considerations.

The full year of additional time meant the claim against the Condo Corporation was timely. The Court allowed the appeal.