Author: Dan

Ontario: If you sue, you’ve discovered your claim

Limitations issues have a way of encouraging creative but hopeless arguments.

Take for example Richards v. Sun Life Assurance Company of Canada.  The plaintiff argued that the first clear and unequivocal denial of his benefits claim was contained in the defendant insurer’s statement of defence.  Justice Bale had none of this:

[19]           As previously noted, the plaintiff argued that the first clear and unequivocal denial of his claim was contained in Sun Life’s statement of defence. Assuming this to be the case, “clear and unequivocal denial” cannot be the applicable test, since the plaintiff would then have commenced his action prior to discovering his claim, a logically inconsistent result.

By commencing a proceeding in respect of a claim, a claimant necessarily acknowledges discovery of the claim.  It is, as Justice Bale put it, logically fraught to both assert a claim and an argument that you have yet to discover it.

Justice Bale’s decision also contains a helpful discussion of rolling limitation periods:

[25]           The plaintiff argues that a rolling limitation period applies, and that the plaintiff is only barred from claiming the disability benefits that would have been payable more than two years before the action was commenced. I disagree.

[26]           A rolling limitation period may apply to claims for periodic payments, in cases where the issue is whether certain payments to which the plaintiff is entitled have been made (e.g. payments of rent), as opposed to cases where the issue is whether the plaintiff was entitled to the periodic payments in the first place. In the former type of case, the material facts will have arisen on a periodic basis, and it will not be unfair to require a defendant to litigate those facts during the applicable limitation period following the date upon which an individual payment became due. However, in the latter type of case, the material facts will have arisen at the time that the plaintiff alleges he or she first became entitled to periodic payments, and it would be unfair to require the defendant to litigate those facts, for a potentially unlimited period of time.

[27]           In the present case, the issue is whether the plaintiff was entitled to disability benefits, at the time of his application to Sun Life, and the concept of a rolling limitation period does not apply.

Ontario: Common law discoverability, and how it applies to the Competition Act

In Fanshaw College v. AU Optronics, Justice Grace held that the limitation period applicable to Competition Act claims is subject to discoverability. We wrote about it here.  The Court of Appeal has upheld this decision.

The appellant argued that the discoverability principle shouldn’t apply for the same reason that it doesn’t apply to section 38(3) of the Trustee Act: the limitation period is linked to a fixed event (in the case of the Trustee Act, death).  The Court rightly rejected this argument.  The limitation period in section 36(4)(a)(i) is linked to the accrual of the cause of action—the wrongful conduct—not a fixed event.  The term “conduct” in section 36(4)(a)(i) refers to the conduct giving rise to damages mentioned in section 36(1) (the statutory cause of action) and is a constituent element of the cause of action that is subject to the limitation period.

Apart from its significance to the competition bar, the decision is noteworthy because it includes a thorough discussion of the common law discoverability principle.  Common law discoverability became mostly academic in Ontario when the legislature codified it into sections 4 and 5 of the Limitations Act, but it remains relevant in certain circumstances.  I’m involved in a proceeding (ever more like Jarndyce and Jarndyce) that is subject to the previous limitations scheme and common law discoverability.

This is the Court’s discussion of discoverability:

[32]      The discoverability principle is a common law rule providing that “a cause of action arises for 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”: Central Trust Co. v. Rafuse, 1986 CanLII 29 (SCC), [1986] 2 S.C.R. 147, at p. 224; see also Graeme Mew, Debra Rolph & Daniel Zacks, The Law of Limitations, 3rd ed. (Toronto: LexisNexis Canada Inc., 2016), at p. 75.

[33]      Discoverability is also an interpretive rule relevant to the construction of limitation statutes: Ryan v. Moore, 2005 SCC 38 (CanLII), [2005] 2 S.C.R. 53, at para. 23. As explained below, it provides certain presumptions for courts interpreting statutory limitation periods.

[34]      The approach for determining whether a particular statutory limitation period is subject to the discoverability principle was discussed by Twaddle J.A. in Fehr v. Jacob (1993), 1993 CanLII 4407 (MB CA), 14 C.C.L.T. (2d) 200 (Man. C.A.), at p. 206:

[T]he judge-made discoverability rule is nothing more than a rule of construction. Whenever a statute requires an action to be commenced within a specified time from the happening of a specific event, the statutory language must be construed. When time runs from “the accrual of the cause of action” or from some other event which can be construed as occurring only when the injured party has knowledge of the injury sustained, the judge-made discoverability rule applies. But, when time runs from an event which clearly occurs without regard to the injured party’s knowledge, the judge-made discoverability rule may not extend the period the legislature has prescribed.

The Supreme Court of Canada has endorsed this passage in Peixeiro v. Haberman, 1997 CanLII 325 (SCC), [1997] 3 S.C.R. 549, at para. 37, and in Ryan, at para. 23.

[35]      Ryan is the latest statement from the Supreme Court of Canada on this issue. In that decision, at para. 24, Bastarache J. concluded as follows:

Thus, the Court of Appeal of Newfoundland and Labrador is correct in stating that the rule is “generally” applicable where the commencement of the limitation period is related by the legislation to the arising or accrual of the cause of action. The law does not permit resort to the judge-made discoverability rule when the limitation period is explicitly linked by the governing legislation to a fixed event unrelated to the injured party’s knowledge or the basis of the cause of action.

[36]      The applicability of discoverability is a matter of statutory construction. The jurisprudence noted above only provides presumptions and, in Ryan, at para. 23, Bastarache J. cautioned against applying the principle automatically or “systematically without a thorough balancing of competing interests”.

 

Ontario: Stopping time when adding a new claim to a proceeding

 

A limitations practice tip—when amending a pleading to add a new claim, it’s the filing of the motion record that stops time running, not service of the motion record.  Master Albert recently made this point in Becerra v. Ronchin:

 

41)  The limitations clock does not stop running until a proceeding is launched. In the case of a motion to amend a pleading, the proceeding is launched either when the motion record is served (arguably) or more correctly when the motion record is filed with the court.  This is akin to the issuance of an action or application stopping the limitations clock where a plaintiff is launching a fresh proceeding. Service of an intention to issue a proceeding prior to issuance does not initiate the proceeding. Similarly, service of a notice of motion together with a without prejudice letter and without a motion record does not constitute the launching of a proceeding to amend a pleading in an existing action.

Ontario: statutory limitation periods apply to will challenges

Justice DiTomaso’s decision in Taylor-Reid v. Taylor is another that cites Leibel for the principle that will challenges are subject to the basic limitation period.  The issue is gradually becoming settled.  These are the relevant paragraphs:

[106]      Even if Andrea could demonstrate a genuine issue for trial based on evidence of actual “physical damage” and/or that services were actually performed pursuant to an actual agreement, Andrea is statute barred from commencing a claim against the Estate pursuant to s. 4 of the Limitations Act, 2002 and the case of Leibel v. Leibel.

[107]      In the case of Leibel v. Leibel, the court determined that, in a Will challenge, the limitation period commences on the date of death, being September 22, 2011.  This, however, is subject to the discoverability rule outlined in s. 5 of theLimitations Act, 2002.  In Leibel v. Leibel, the Plaintiff (Will challenger) was found to have discovered the claim within 60 days of the date of death and, since the claim was commenced outside of the two year limitation period, it was statute barred.

Ontario: Adverse possession is a limitations issue

Justice McKinnon’s decision in Osman v. Heath sets out nicely the principles of adverse possession.  Perhaps surprisingly to those who don’t practice in the area, these are limitations principles determined by the Real Property Limitations Act.  Here are the relevant paragraphs:

The Law

[49]           The cases on adverse possession are legion and each case turns on its own set of particular facts. In Ontario, adverse possession claims are governed by sections 4, 13, and 15 of the Real Property Limitations Act, R.S.O. 1990, c. L.15, which establishes a ten-year limitation period in which a dispossessed owner must bring an action to recover possession once a right to possession has accrued. By section 15, when a person has not attempted to recover the land within ten years after the right to bring an action or make entry or distress accrued, the right and title of the owner of the land is extinguished. A person claiming a possessory title as against the legal owner must establish the following:

  1.    Actual possession for the statutory period;
  2.    That such possession was with the intention of excluding the true owner; and
  3.    That the true owner’s possession was effectively excluded for the statutory period: Pflug v. Collins, 1951 CanLII 80 (ON SC), [1952] O.R. 519 (Ont. H.C.); Marotta v. Creative Investments Ltd. (2008), 69 R.P.R. (4th) 44 (Ont. S.C.); Keefer v. Arillotta (1976), 1976 CanLII 571 (ON CA), 13 O.R. (2d) 680 (C.A.).

[50]           The claimant must meet each of these three criteria and time will begin to run against the owner from the last date when all three are satisfied: Masidon Investments Ltd. v. Ham (1984), 1984 CanLII 1877 (ON CA), 45 O.R. (2d) 563 (C.A.).

[51]           Marotta is a particularly helpful decision; it sets out in detail the applicable law, and I shall briefly follow the analysis employed in that decision.

Actual possession

[52]           The claimant must establish actual possession for the ten-year period and the acts of possession must be open, notorious, constant, continuous, adverse and exclusive of the right of the true owner. In Teis v. Ancaster (Town) (1997),1997 CanLII 1688 (ON CA), 35 O.R. (3d) 216 (C.A.), at paras. 14, 16, Laskin J.A. explained the requirement of open and notorious possession in these words:

First, open possession shows that the claimant is using the property as an owner might. Second, open possession puts the true owner on notice that the statutory period had begun to run. Because the doctrine of adverse possession is based on the true owner’s failure to take action within the limitation period, time should not run unless the delay can fairly be held against the owner….

 

The element of adversity means that the claimant is in possession without the permission of the owner. If the claimant acknowledges the right of the true owner then the possession is not adverse.

[…]

[57]           Further, the “inconsistent use” test does not apply to cases of honest unilateral mistake: Cunningham v. Zebarth Estate (1998), 71 O.T.C. 317 (Ont. Gen. Div.). The “inconsistent use” test does not apply in circumstances in which the person in possession operates under the honestly held belief that he or she is the rightful owner of the property or in cases where the legal owner and person in possession operate under a mutual mistake as to title or boundaries. In such cases, an inference may be drawn that the occupier is in possession of the land with the intention of excluding all others including the legal owners.

[…]

Actual exclusion of the true owners

[59]           The final part of the test for possessory title requires that the true owner be excluded from possession. In analyzing this subject, the conduct of the owners in relation to the land is considered.

[60]           As I have stated, the true owners had effectively abandoned the large shed certainly when the business was moved to another location in Kemptville, and probably during the 1980s. When the Doucettes acquired the Residential Property they closed off all entrances to the large shed on the side of the Commercial Property. It was effectively sealed off from access by the true owner. The sealing off was accomplished openly and notoriously. The entire building was raised and leveled, concrete was poured, and work was carried out on the exterior. Photos show Mr. Doucette on a ladder performing renovations to the exterior of the large shed. The true owners had been excluded from the large shed since at least 1990.

Ontario: The impact of a lost SJM on a limitations defence

A defendant moves for summary judgment on the basis of an expired limitation period.  The motion judge dismisses the motion.  What impact does the dismissal have on the defendant’s limitations defence?

The answer, according to the Court of Appeal in Vanden Bussche Irrigation & Equipment Limited v. Kejay Investments Inc., is that an order dismissing the motion and nothing more has no impact on the defendant’s limitations defence:

[8]         In Ashak v. Ontario (Family Responsibility Office), 2013 ONCA 375 (CanLII), this court, based on identical wording in the order, held at para. 7, that the order was not a final order because, “a decision under Rule 20 determines only that a genuine issue requiring a trial exists. Accordingly to the extent that a motion judge may purport to make findings of fact in reasons for judgment dismissing a Rule 20 motion, such findings do not have binding effect.”

[9]         The court in Ashak further noted at paras. 8-11 that while a court has the power to make binding determinations of fact under rule 20.05 when dismissing a motion for summary judgment if a court proposes to exercise that power the motion judge should say so and the formal order should reflect that. A similar power to make a binding determination of law likely exists under rule 20.04(4), but again, if the motion judge purports to exercise that power, the judge should specifically invoke and reference the rule and the legal determination made should form part of the formal order.

The order taken out from the summary judgment motion stated: “THIS COURT ORDERS that the Defendant’s motion is hereby dismissed.”  Accordingly, it could have no impact on the defendant’s limitations defence at trial:

[11]      In this case, the motion judge did not specifically invoke and reference the rule giving him the power to make a binding determination nor does the order taken out reflect any determination on the issue of the limitation period. Although the limitation period defence was the only issue before the motion judge and he purported to decide it, he also refused to grant summary judgment on the claim to the plaintiff and sent the matter on for trial. It does not appear that there would be any reason for him to do so unless he was of the opinion that there was a genuine issue requiring a trial respecting the limitation period.

[12]      In the result, I have concluded that the motion judge’s determination that the limitation period had not run is not binding and is not a final order. Accordingly, were I to grant leave to file a notice of appeal, this court would not have jurisdiction to entertain the appeal and for this reason the motion is dismissed.

Ontario: adding a party post expiry of the presmuptive limitation period

Edit, September 2016: Having just drafted a factum for a motion to add a defendant after the expiry of the presumptive limitation period, I realise some qualifications are necessary to this post.  First, Klein is problematic because it’s without a discussion of evidence filed by the defendant setting out steps the plaintiff might have taken to discover its claim.  Second, while Tarra discusses this aspect of seeking leave (see paragraph 53, quoted below), it merely quotes the leading case, Wakelin v. Gourley.  Tarra is also problematic because it uses the language of causes of action, which has no place in a limitations analysis for reasons that we’ve discussed in some detail.  I continue to find the most helpful cases to be Higgins, Wakelin, and Lima.  I’ll pay more attention going forward!

There are two recent decisions that set out nicely the principles for adding a party to an action after the expiry of the presumptive limitation period.

The first decision is from the Divisional Court in Klein v. G4S Secure Solutions (Canada) Ltd.  In upholding a decision from Master Short, which we wrote about here, Justice Stewart provides this summary of the law:

[22]           The expiry of a limitation period gives rise to a presumption of prejudice to the proposed defendant, which must be addressed by the bringing of a motion by the plaintiff to add the proposed new party.  To rebut this presumption of prejudice and raise a genuine discoverability issue, it is incumbent on the plaintiff to lead evidence showing that the identity of the proposed added party was not known, or could not reasonably have been known, within the presumptive limitation period.  That requires not only evidence of when the plaintiff actually knew that the party was an appropriate defendant, but also evidence as to when the plaintiff ought to have so known (see:  Pepper v. Zellers, supra; Sloan v. Shave Heating Ltd. (2010)2010 ONSC 3871 (CanLII), O.J. No. 3002 (S.C.J.)).

[23]           This due diligence requirement is not satisfied by waiting for someone else to advise as to the correct party defendant.  Counsel must give evidence of steps taken to ascertain the identity of the proposed defendant.  Where there is a failure to demonstrate the steps taken to obtain information regarding the possible liability of the proposed defendant, this lack of evidence may result in a proper inference that no such steps were taken (see:  Lokett v. Bontin, 2011 ONSC 2098 (CanLII), [2011] O.J. No. 1530 (S.C.J.); Wakelin v. Gourley [2006] O. J. No. 1442 (Div. Ct.)).

[24]           Reasonable efforts to discover the identity of the parties responsible must be made and disclosed in a supporting affidavit by the party seeking to add a new defendant after the initial two-year period.  In most cases, a lawyer’s’ affidavit listing the attempts made by the lawyer to obtain information to substantiate the assertion that the party was reasonably diligent is expected (see: Wolkowicz v. Avignon Inc., 2011 ONSC 5899 (CanLII), 2011 ONSC 5899 (S.C.J.)).

This is helpful.  This area of limitations law has developed rather piecemeal so that the relevant principles are, as these paragraphs make evident, in a multiple decisions.

When drafting a factum for a motion to add a party, you couldn’t do much better than to use the following from Master Pope’s decision in Tarra Engineering Inc. v. Naghshbandi (especially paragraph 53, which deftly articulates the more nuanced aspect of the analysis):

Limitation Period

[47]           The applicable limitation period is contained in section 4 of the Limitations Act, 2002, S.O. 2002, c. 24, Schedule B:

                        Unless this Act provides otherwise, a proceeding shall not be commenced in respect of a claim after the second anniversary of the day on which the claim was discovered.

[48]           Section 5 of that Act addresses the requirements that must be considered to determine when a claim is “discovered”:

A claim is discovered on the earlier of,

(a)      the day on which the person with the claim first knew,

(i)      that the injury, loss or damage had occurred,

         (ii)  that the injury, loss or damage was caused by or contributed to by an act or omission,

(iii) that the act or omission was that of the person against whom the claim is made, and

(iv)  that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it; and

(b)    the day on which a reasonable person with the abilities and in the circumstances of the person with the claim first ought to have known of the matters referred to in clause (a).

[49]           Section 5(2) contains a presumption that a person with a claim is presumed to have known of the matters referred to in clause (1) (a) on the day the act or omission on which the claim is based took place, unless the contrary is proved.

[50]           Lastly, section 21 prohibits the addition of a new party to an existing action after the limitation period has expired.

[51]           The authorities are clear that when a party is seeking to apply the discoverability rule, the court should afford a degree of latitude to that party before declaring that the limitation period has begun to run.  In practical terms, the question is not whether the moving party believes, for example, that his injury meets the criteria but whether there is a sufficient body of evidence available to be placed before a judge that, in counsel’s opinion, has a reasonable chance of persuading a judge, on the balance of probabilities that the injury qualifies.  Therefore, when such a body of material has been accumulated, then and only then should the limitation begin to run.  (Wong v. Adler (2004), 2004 CanLII 8228 (ON SC), 70 O.R. (3d) 460 (S.C.J.))

[52]           The authorities are also clear that it is not appropriate for a motions judge or master to resolve a limitation issue where the application of the discoverability rule is central to its resolution, for the following reasons.  It is a question of fact when the cause of action arose and thus when the limitation period commenced.  The applicability of the discoverability rule is premised on the finding of these facts; that is, when Naghshbandi discovered that he had a cause of action against TESC or, when through the exercise of reasonable diligence, he ought to have known he had a cause of action against TESC.  These facts constitute genuine issues for trial and as such, it is not appropriate for a motions judge or master to assume the role of a trial judge by resolving them.

[53]           The motions judge or master must examine the evidentiary record before it determines if there is an issue of fact or of credibility on the discoverability allegation.  As long as the moving party puts in evidence steps taken to ascertain the identity of the tortfeasor and gives a reasonable explanation on proper evidence as to why such information was not obtainable with due diligence, then that will be the end of the enquiry and the proposed party will normally be added with leave to plead a limitations defence.  This is not a high threshold.  If the moving party fails to provide any reasonable explanation that could on a generous reading amount to due diligence the motion will be denied.  If the moving party puts in evidence of steps taken but the proposed party also provides evidence of further reasonable steps that the moving party could have taken to ascertain the information within the limitation period, then the court will have to consider whether the moving party’s explanation clearly does not amount to due diligence.  If there is any doubt whether the steps taken by the moving party could not amount to due diligence then this is an issue that must be resolved on a full evidentiary record at trial or on summary judgment.  The strength of the moving party’s case on due diligence and the opinion of the master or judge hearing the motion whether the moving party will succeed at trial on the limitations issue is of little or no concern on the motion to add the party.  The only concern is whether a reasonable explanation as to due diligence has been provided such as to raise a triable issue.  (Wakelin v. Gourley, [2006] O.J. No. 1442 (Ont. Div. Ct.))

 

 

Ontario: insurers have no obligation to give notice of the limitation period

In Usanovic v. La Capitale Life Insurance Company, the plaintiff argued that the defendant insurer owed him a duty of good faith that included an obligation to provide him with notice of the limitation period.

Justice Broad rejected this argument in a well-reasoned decision.  After reviewing the jurisprudence, he concluded that no such obligation exists:

[40]           It would appear that, at its highest, the obligation of good faith and fair dealing arguably carries with it a positive obligation on an insurer to inform its insured of the nature of the benefits available under the policy. There is a marked difference, however, between imposing on an insurer a positive obligation to advise with respect to rights and benefits internal to the policy and the imposition of an obligation to advise with respect to the application of law external to the policy, such as pursuant to the Limitations Act.

[41]           In my view the court should be circumspect in extending the common law to impose positive obligations of general application on parties, particularly where the implications of so doing are unknown. The law of insurance is broadly occupied by legislation and in my view it should be left to the legislature to regulate, if it deems it necessary and appropriate, the nature and extent of information which must be given by insurers to their insureds upon denial of benefits, including the existence and details of applicable limitation periods.

[42]           I find that there was no obligation in law on the defendant to advise the plaintiff of the applicable limitation period in the Limitations Act.

The decision also includes a good overview of the jurisprudence considering whether a denial of benefits is clear and unequivocal.  See paras. 20-28.

 

Ontario: s. 237 of the Municipal Act

The Court of Appeal’s decision in Foley v. St. Marys (Town) is one of the few cases that involve the limitation period in section 273(5) of the Municipal Act:

[28]      To summarize, a party may commence proceedings to quash a bylaw under s. 273 of the Municipal Act, 2001 by way of application. Such a proceeding is captured by the statutory one year limitation period. Alternatively, a party may commence an application or an action for declaratory relief. Such a proceeding is distinct from the statutory remedy of quashing a bylaw under s. 273, and as such, is not captured by the one year limitation period.

This is not particularly revelatory stuff, but it’s unusual enough issue to be of note.

Ontario: when no investigation is a reasonable investigation

 

Galota v. Festival Hall Developments Limited is a noteworthy, well-reasoned limitations decision from the Court of Appeal holding that in the circumstances, it was reasonable for the plaintiff to have taken no steps to discover her claim for about five years after her injury.

The plaintiff fell off a dance stage at a bar and broke her arm.  She sued the bar and its insurer defended.  The bar then closed, and the bar’s insurer became insolvent.

After learning of the insurer’s insolvency, the plaintiff sued the bar’s landlord.  She argued that she couldn’t have discovered her claim against the landlord until examination for discovery of the bar’s representative.  It was then that she learned the landlord participated in the design and construction of the dance stage from which she fell.

The bar moved for summary judgment to dismiss the action on the basis that it was statute-barred by the expiry of the limitation period.  The bar argued that the claim against it was discoverable well before examinations for discovery.

The motion judge agreed with the plaintiff.  He found that she wasn’t put on notice of the potential involvement of the landlord in the design and construction of the dance floor until examinations for discovery, and didn’t show a want of diligence in investigating the landlord’s potential involvement before then.

On appeal, the landlord challenged the motion judge’s finding that the plaintiff exercised sufficient due diligence on the basis that she took no steps at all to investigate her claim until three and a half years after her accident.  The landlord also challenged the trial judge’s call for expert evidence on the standard of care of a solicitor prosecuting an occupier’s liability claim.

The Court of Appeal upheld the motion judge’s decision.  The Court accepted the plaintiff’s position and held that the expert evidence was not material.

Justice Laskin cited the Court’s decision in Fennell for the principle that a plaintiff’s failure to take reasonable steps to investigate a claim is not a stand-alone or independent ground to find a claim out of time.  The reasonable steps a plaintiff ought to have taken to discover her claim is merely a consideration in deciding when a claim is discoverable under section 5(1)(b) of the Limitations Act.

The record supported the motion judge’s conclusion that there were no steps the plaintiff reasonably ought to have taken that would have enabled her to discover her claim against the Landlord before her lawyer examined the bar’s representative for discovery:

[24]      In substance, the motion judge found that there were no steps Ms. Galota reasonably ought to have taken that would have enabled her to discover her claim against Festival Hall before her lawyer examined a representative of Republik in November 2009. Some may view the motion judge’s finding to be questionable. But all these cases are very fact-specific. And the motion judge’s finding is a finding of fact, which in my opinion is well supported by the record, and therefore to which we should defer: Burtch, at para. 22; Longo, at para. 38.

Some aspects of Just Laskin’s analysis will be of interest, particularly to the personal injury bar:

  • The plaintiff had no need to pursue the landlord. Her claim against the bar was an insured claim.  The bar’s insurer responded to it and appointed an adjuster to investigate.  Accordingly, the plaintiff “had every reason to believe the insurer would settle her claim or pay any judgment she obtained after a trial […] the need to pursue another party would hardly have seemed reasonable.”  It would have been unreasonable for her to foresee the insurer’s insolvency.
  • While the bar and its insurer had no obligation to notify the plaintiff about the landlord’s potential liability, their failure to do so is a practical consideration in a section 5(1)(b) analysis. The insurer’s adjuster didn’t suggest that the landlord or any other party was potentially liable for her injury.  The bar didn’t allege that the landlord bore any responsibility or take third party proceedings against it.  Prior to examinations for discovery, neither the bar nor the adjuster suggested that there had been renovations to the bar and that the landlord had involvement in them.  The Court adopted Justice Lauwers’s point in Madrid v. Ivanhoe that a naked denial of liability doesn’t trigger a duty on the plaintiff to make further enquiries:

[27]      Second, the insurer’s adjuster never suggested that Festival Hall or any other party was potentially liable for Ms. Galota’s injury. Similarly, in its statement of defence, Republik did not allege Festival Hall bore any responsibility and Republik did not take third party proceedings against Festival Hall or anyone else. Indeed, before the examinations for discovery neither the adjuster nor Republik ever suggested there had been extensive renovations of the nightclub or that Festival Hall was involved in those renovations. I do not suggest either the insurer or Republik had any obligation to notify Ms. Galota about the potential liability of Festival Hall, but their failure to do so is a practical consideration supporting the motion judge’s finding. As Lauwers J. (as he was then) said in Madrid v. Ivanhoe, 2010 ONSC 2235(CanLII), 101 O.R. (3d) 553, at para. 17:

  • If Ivanhoe’s insurance adjuster had advised the plaintiff that liability was being denied because another party was liable, then the plaintiff’s duty to make further inquiries would have been triggered. But, on the actual facts of this case, a naked denial of liability should not trigger a duty on the plaintiff to make further inquiries.
  • On the date of her injury, the plaintiff couldn’t have known that the landlord was an “occupier” of the bar.  Perhaps the plaintiff’s lawyer should have obtained a title search early in the litigation, but this wouldn’t have determined whether the landlord was an occupier.  This would depend on the terms of its lease with the bar. The lease was not a public document, and the plaintiff had no automatic ability to require the landlord to produce it before litigation. Even if she had obtained the lease earlier in the litigation, she could only have discovered her claim against the landlord when she applied the lease to the facts that the landlord extensively renovated the bar, and the renovations might have breached the Building Code.  The plaintiff only learned of these facts after examinations for discovery.
  • Justice Laskin found that expert evidence is not needed to decide when a claim is discoverable under section 5(1)(b).

Curiously, Justice Laskin described the test in section 5(1)(b) as objective.  This is a departure from the Court’s more accurate description of it as “modified-objective” in Ridel and Ferrara. The “reasonable person” component of the test is modified by the subjective component of “with the abilities and in the circumstances of the claimant.”  Presumably, this was just inadvertence.

The Court’s decision also includes this potentially helpful summary of certain principles of discovery under section 5:

[15]      Three points about these provisions are relevant to the submissions on appeal:

  • Section 5(1)(b) codifies the common law rule of discoverability. If s. 5(1)(b) applies, the two year limitation period will run from a date later than the date the plaintiff was injured.
  • Under s. 5(1)(b), a plaintiff “first ought to have known” of the claim when the plaintiff has enough evidence or information to support an allegation of negligence, including facts about an act or omission that may give rise to a cause of action against a possible tortfeasor: Zapfe v. Barns (2003), 2003 CanLII 52159 (ON CA), 66 O.R. (3d) 397 (C.A.), at paras. 32-33; Burtch v. Barnes Estate (2006), 2006 CanLII 12955 (ON CA), 80 O.R. (3d) 365, at para. 24. The plaintiff cannot delay the start of the limitation period until he or she knows with certainty that a defendant’s act or omission caused the injury or damage: Longo v. MacLaren Art Centre Inc., 2014 ONCA 526 (CanLII),323 O.A.C. 246, at para.
  • The rebuttable presumption in s. 5(2) means that a plaintiff has the onus of showing that the rule of discoverability in s. 5(1)(b) applies: Fennell v. Deol, 2016 ONCA 249(CanLII), at para. 26