Dan – Page 30 – Under the Limit

Ontario: no, Schmitz v. Lombard hasn’t been overturned

For the insurance bar, two points are worth noting in Justice Faieta’s decision in Buurman v. The Dominion of Canada General Insurance Company.

First, the limitation periods in section 5.9.3 of OAP 1, section 8(3) of the Schedule to Ontario Regulation 676, and section 17 of OPCF 44R don’t trump the basic section 4 limitation period in the Limitations Act. This is because these limitation periods are not included in the Limitations Act’s section 19 schedule. This seems self-evident, but the defendant apparently thought it was an argument worth venturing.

Second, unsurprisingly, Justice Faieta found that the Court of Appeal decision in Lingard v. Milne-McIsaac didn’t overturn its decision Schmitz v. Lombard, which remains binding:

[17] Dominion submits that the last sentence of paragraph 11 of the Lingard decision should be read as deciding that the limitation period for a claim for indemnity against an insurer under OCPF 44R begins when the insured discovers that the other vehicle was uninsured …

[18] It is my view that Schmitz was not overturned in Lingard for at least two reasons. First, the focus of the Lingard decision was not whether the limitation period had expired. The issue before the Court was whether the Plaintiff had acted diligently in seeking to add its insurer as a Defendant. Accordingly, the Court’s findings regarding the commencement of the limitation period appear to be obiter. On the other hand, in Schmitz the sole issue before the Court was the time at which the limitation period begins to run for an indemnity claim under OCPF 44R. Second, unlike Schmitz, in Lingard the Court’s finding regarding the commencement of the limitation period is unsupported by any analysis. Nor does it appear that Schmitz was drawn to the Court’s attention in Lingard.

Ontario: Is it really a new cause of action?

You can’t amend a claim to assert a new cause of action if the cause of action is statute-barred. The question is, when’s an amendment a new cause of action?

In Beauchamp v. Gervais, Justice Dunphy sets out the following test:

[23] The preceding authorities establish that in order to qualify as something other than a new cause of action the proposed amendments must, in substance, be: (i) an alternative claim for relief, or a statement of different legal conclusions based on no new facts or not going beyond the factual matrix from which the original claim arose; (ii) better particulars of the claims already made; (iii) a correction of errors in the original pleading; or (iv) the assertion of a new head of damage arising from the same facts. If the amendments cannot be characterized in one of these ways, the amendments should not be permitted, in order to not deny a defendant the right to rely upon a limitations statute.

This paragraph follows a lengthy summary of the relevant jurisprudence that’s worth reading if you’re considering the issue.

Ontario: Possible removal of limitation periods for sexual assault

Ontario is moving to abolish the limitation period for civil claims based on sexual assault and, in certain cases, non-sexual assault.

Tracy MacCharles, the Minister Responsible for Women’s Issues, introduced Bill 132, Sexual Violence and Harassment Action Plan Act (Supporting Survivors and Challenging Sexual Violence and Harassment) for first reading on October 27, 2015. It was accepted for further debate.

The act would repeal all existing provisions in the Limitations Act relating to sexual assault (primarily section 10), and add the following to section 16, which lists proceedings that have no limitation period:

Clause 16 (1) (h) of the Act is repealed and the following substituted:

(h) a proceeding based on a sexual assault;

(h.1) a proceeding based on any other misconduct of a sexual nature if, at the time of the misconduct, the person with the claim was a minor or any of the following applied with respect to the relationship between the person with the claim and a person who committed, contributed to, consented to or acquiesced in the misconduct:

           (i) the other person had charge of the person with the claim,

          (ii) the other person was in a position of trust or authority in relation to the person with the claim,

         (iii) the person with the claim was financially, emotionally, physically or otherwise dependent on the other person;

(h.2) a proceeding based on an assault if, at the time of the assault, the person with the claim was a minor or any of the following applied with respect to the relationship between the person with the claim and a person who committed, contributed to, consented to or acquiesced in the assault:

           (i) they had an intimate relationship,

          (ii) the person with the claim was financially, emotionally, physically or otherwise dependent on the other person;

What’s most interesting, at least at this preliminary stage, is section 16(1)(h)(2). The category of people in an intimate relationship that involves financial, emotional, physical, or other dependence is very broad. Unless “dependence” is given a narrow meaning, it’s a category that could in theory include every romantic relationship.

You can follow the bill’s progress here.

The Toronto Star published an article describing what the government intends the legislation to accomplish.

Ontario: the limitation of mortgage enforcement

Curiously, posts about the Real Property Limitations Act receive the most views on Under the Limit. My guess is that this reflects the murkiness of the Act more than people’s interest in it. The Act is Part I of the former Limitations Act, renamed, but otherwise unchanged from its antiquated and impermeable glory. When the Ontario limitations regime was being reformed, a complete review of limitations was too time-consuming, and so review of the real property limitation periods was abandoned to avoid delaying the other reforms. Should you be interested, the legislative history is detailed here at paragraphs 27-33.

In the spirit of catering to my market, I present the decision in 552439 Ontario Limited v. Forbes Building Material Limited for its summary of the section 23(1) limitation period for mortgage enforcement:

Real Property Limitations Act

−      Paragraph 23(1) of the Real Property Limitations Act provides for a ten-year limitation period for the enforcement of a mortgage. It reads as follows:

23(1) “4. No action shall be brought to recover out of any land or rent any sum of money secured by any mortgage or lien, or otherwise charged upon or payable out of the land or rent, or to recover any legacy, whether it is or is not charged upon land, but within ten years next after a present right to receive it accrued to some person capable of giving a discharge for, or release of it, unless in the meantime some part of the principal money or some interest thereon has been paid, or some acknowledgment in writing of the right thereto signed by the person by whom it is payable, or the person’s agent, has been given to the person entitled thereto or that person’s agent, and in such case no action shall be brought but within ten years after the payment or acknowledgment, or the last of the payments or acknowledgments if more than one, was made or given.”

−      It is the nature of the mortgage which will determine when the ten-year period is triggered. The limitation cannot pass before the mortgagee has any right to enforce. The limitation runs from the earliest time at which repayment can be required.

−      While there are exceptions, on a demand mortgage, the cause of action accrues upon execution of the mortgage.

– Mortgage Insurance Co. of Canada v. Grant 2009 ONCA 655 (CanLII), [2009] O.J. No. 3769

– Alter v. Csontos [2004] O.J. No. 1590

– Cioccio v. Cioccio [2005] O.J. No. 1182

−      If the terms of the mortgage provide for payment upon the happening of a specific contingency, then the cause of action arises upon the happening of the contingency. Thus, the ten-year statutory limitation does not run until the contingency is satisfied.

– Re Gould Ex Parte Garvey 1940 CanLII 89 (ON CA), [1940] O.R. 250 (Ont. C.A.)

– Canada Mortgage and Housing Corp. v. 447136 British Columbia Ltd. [2014] B.C.J. No. 497

Ontario: amending a pleaded date of discovery (you can do it)

Here’s a novel limitations issue. A plaintiff intends to plead that he discovered his claim within the limitation period, but inadvertently pleads that he discovered it on an earlier date so that the claim is statute-barred. Is the plaintiff entitled to amend the Statement of Claim to plead the correct date, assuming there’s no noncompensable prejudice to the defendant, or is he in effect amending to add a statute-barred claim?

Master Pope held in Islam v. Tadin that it’s just a regular amendment, and the defendant who doesn’t consent to it wrongly seeks advantage from another lawyer’s slip (i.e., a jerk).

The plaintiff’s Statement of Claim in Islam pleaded that he discovered his claim against the defendants in June 2011. This meant that the limitation period expired in June 2013 and before he issued the Statement of Claim.

The defendants’ pleaded a limitations defence. Immediately after service of the Statement of Defence, the plaintiff advised defence counsel that the date of discovery pleaded in the Statement of Claim was a factual error. The plaintiff served a proposed amended Statement of Claim, but the defendants refused their consent to the amendment.

The defendants’ position was that the plaintiff wasn’t entitled to amend his pleading to bring the claim within the limitation period. Just as the expiry of a limitation period gives rise to a presumption of prejudice, an amendment that makes a statute-barred claim timely gives rise to the same presumption of prejudice. The expiry of the presumptive limitation period in section 5(2) of the Limitations Act gave rise to a further presumption of prejudice.

If there was any logic to these arguments, it’s hard to tell from the decision. One senses that Master Pope wasn’t impressed with them, noting with what I imagine was some irritation that “a great deal of material was filed and time spent on the defendants’ submissions”. In any event, Master Pope rejected them.

The plaintiff was not seeking to add claim beyond the limitation period, or even a claim at all. The issue of the expired limitation period arose when the plaintiff served the Statement of Claim, not because of the proposed amendments. The amendment did not engage section 5(2) at all. The presumptive limitation period wasn’t at issue, but when the plaintiff pleaded he had subjectively discovered the claim.

Master Pope also took note of the circumstances of the motion. Plaintiff’s counsel immediately sought consent for the amendment. The plaintiff filed an uncontested affidavit stating that the date of discovery pleaded in the Statement of Claim was unintentional and incorrect. In her view, the motion “was unnecessary given the mandatory wording of rule 26.01 and the fact that there was no case law to support the defendants’ position. She awarded substantial indemnity costs against the defendant.

Ontario: Discovery doesn’t require knowledge of liability

It’s a settled principle of discoverability that knowledge of liability isn’t necessary to commence the limitation period. We now have a succinct statement of this principle from the Court of Appeal in Lochner v. Toronto:

[7] The fact that Mr. Lochner does not know whether the defendants are culpable or liable for the disclosure does not prevent the limitation period from running. Knowledge of liability on the part of the injured person is not part of discoverability for the purposes of the running of the limitation period. It is the lawsuit itself which is the process by which liability for an act is determined.

Ontario: time not suspended by a litigation guardian’s conflict of interest

The basic limitation period doesn’t run when the claimant is a minor or incapable person, except when the claimant is represented by a litigation guardian (see sections 6, 7, and 8 of the Limitations Act).

If the litigation guardian discovers that she has a conflict of interest, she must take steps to have a new litigation guardian appointed. The conflict of interest will not suspend the running of the limitation period.

Per Justice Sweeny in Socha v. Peninsula Towing & Recovery:

[24] The conflict of interest which is said to arise as a result of being named a defendant to a counterclaim cannot absolve a litigation guardian of his or her responsibilities to a minor. The conflict of interest may be seen as an indication that the litigation guardian has an“interest adverse” to the minor (see Murray v. Children’s Centre Thunder Bay & Murray, 2010 ONSC 845 (CanLII), at para. 25). However, the existence of a counter-claim or the potential liability of a parent has not precluded a parent from representing a minor as a next friend (the precursor to a litigation guardian) as was the case in Beckerson and Beckerson v. Dougherty, 1953 CanLII 129 (ON SC), [1953] O.R. 303.

[25] In my view, a litigation guardian is not relieved of his or her duties to the minor or incapable person because he or she finds that his or her interest may be adverse. If that situation does arise, the litigation guardian should take steps to have a new litigation guardian appointed. The conflict should not have the effect of suspending the running of the limitation period.

Manitoba: The Court of Appeal sets out the s. 15(2) test

In Laing v. Sekundiak, the Manitoba Court of Appeal defined the test under section 15(2) of the The Limitations of Action Act.

Manitoba’s limitation scheme is semi-reformed. It doesn’t have a general limitation period, but it does have a codified discoverability rule. It’s a curious rule in that a plaintiff can apply (pursuant to section 14(1) of The Limitations of Action Act to the Court for leave to begin or continue an action up to twelve months after the discovery of “material facts of a decisive character upon which the action is based”.

Section 15(2) sets out the evidentiary requirements to obtain leave on a section 14(1) application:

Where an application is made under section 14 to begin or to continue an action, the court shall not grant leave in respect of the action unless, on evidence adduced by or on behalf of the claimant, it appears to the court that, if the action were brought forthwith or were continued, that evidence would, in the absence of any evidence to the contrary, be sufficient to establish the cause of action on which the action is to be or was founded apart from any defence based on a provision of this Act or of any other Act of the Legislature limiting the time for beginning the action.

There has been some uncertainty as to the test created by this section. The Court has held at times that the evidence must be sufficient to establish a reasonable chance of success, a prima facie case, and a reasonable prospect of success.

In the view of Justice Hamilton, these were merely different ways of saying that same thing: “[T]o be successful, an applicant seeking leave must adduce sufficient evidence to establish a prima facie case and that means demonstrating a case that has a reasonable chance of success.”

Alberta: The new limitation period for contribution claims explained

Whitecourt Power Limited Partnership v. Elliott Turbomachinery Canada Inc. is the first Court of Appeal decision to consider the recent amendments to the Limitations Act establishing a limitation period specific to claims for contribution under the Tort-feasors Act. These are the paragraphs discussing the amendments:

[33] By amendment assented to on December 17, 2014 the Limitations Act now provides for limitation periods specific to claims for contribution under theTort-feasors Act.

[34]         Section 3 of the Limitations Act provides:

(1.1) If a claimant who is liable as a tort‑feasor in respect of injury does not seek a remedial order to recover contribution under section 3(1)(c) of theTort‑feasors Act against a defendant, whether as a joint tort-feasor or otherwise, within

(a) 2 years after

(i) the later of

(A)   the date on which the claimant was served with a pleading by which a claim for the injury is brought against the claimant, and

(B)   the date on which the claimant first knew, or in the circumstances ought to have known, that the defendant was liable in respect of the injury or would have been liable in respect of the injury if the defendant had been sued within the limitation period provided by subsection (1) by the person who suffered the injury,

if the claimant has been served with a pleading described in paragraph (A), …

whichever period expires first, the defendant, on pleading this Act as a defence, is entitled to immunity from liability in respect of the claim for contribution.

(1.2) For greater certainty, no claim for contribution against a defendant in respect of damage referred to in section 3(1)(c) of the Tort‑feasors Act is barred by the expiry of a limitation period within which the person who suffered that damage could seek a remedial order.

[35]         The applicable Hansard (Bill 8 Justice Statutes Amendment Act, 2014, December 8, 2014) states:

Bill 8 proposes amendments to … clarify … when the discovery limitations period begins for a claim for contribution under the Tort-feasors Act. So when a plaintiff brings an action, they don’t have to list all the possible defendants who may have been responsible for the injury. However, the current law allows a defendant to bring a claim against another person that they believe is also responsible for the same injury to the plaintiff. This proposed change clarifies how the limitation period runs when a defendant brings a claim against another person responsible for the same injury to the plaintiff, and these wording changes are intended to further clarify this change. These clarifications were brought forward to us by the Law Society of Alberta, and the drafters of this amendment worked closely with the Law Society to ensure that every lawyer was satisfied with the new wording of this section.

[36]         In short, subsection 1.1 creates a specific limitation period for tort-feasors’ claims against each other, when previously the common law informed that issue. Subsection 1.2 clarifies that expiry of the limitation period as between the plaintiff and the third party no longer prevents the defendant from claiming contribution from another tort-feasor under the Tort-feasors Act. It gives the defendant two years from the later of the date served and discoverability to seek indemnity from other tort-feasors. Those subsections overcome the difficulties addressed by this court in Howalta and in Arcelormittal Tubular Products Roman SA v Fluor Canada Ltd, 2013 ABCA 279 (CanLII), 556 AR 188, and state the law as it was interpreted in Dean per Slatter J (as he then was). The amendments are deemed to have come into force on March 1, 1999.

[37]         The amendment makes clear who as between plaintiff and the defendant “ought to have known” that the third party was jointly liable for the claimant’s injury in order to satisfy the discoverability requirements of the Limitations Act. For statutory contribution under the Tort-feasors Act, the answer must now be the defendant. This also accords with Dean, in which the court said that discoverability was when the defendant ought to have known that the third party had a duty to contribute because of their joint liability. If so, the plaintiff’s knowledge of the third party’s joint liability is irrelevant.

[38]         The mechanics of litigation associated with third party claims (r 3.44) or statutory claims for contribution (r 3.43) appear to dictate that the statement of claim must be extant before a claim for contribution can be filed. In other words, service of the statement of claim is always the earliest date the limitations period can begin (absent a right of contribution independent of the claimant’s suit, which does not apply on these facts).

[…]

[41]         We note that subsection 3(1.1)(a)(i) contemplates discoverability later than service of the statement of claim. “Under the presumption against tautology, ‘[e]very word in a statute is presumed to make sense and to have a specific role to play in advancing the legislative purpose’ …. To the extent that it is possible to do so, courts should avoid adopting interpretations that render any portion of a statute meaningless or redundant”: Placer Dome Canada Ltd v Ontario (Minister of Finance), [2006] 1 SCR 715 at para 45, 2006 SCC 20 (CanLII). Applying this presumption, there must be circumstances when the discoverability limitation period post-dates service of the statement of claim.

Ontario: Determining limitations defences before trial advances justice

In Sutton v. Balinsky, Justice Dunphy, who’s delivering consistently excellent limitations decisions, eloquently describes the policy goals advanced by determining limitations defences prior to trial:

[113] The Limitations Act is a statute of repose and the policy of the Act is that claims barred by it should not be subject to further inquiry. By its very nature, a limitation period bids the meritorious claim to sleep undisturbed alongside the meritless. Reserving judgment on a limitations defence until after a full trial has subjected the parties to a thorough investigation into the merits of a claim that the Limitations Act has decreed should be allowed to rest undisturbed defeats the policy of the Limitations Act to a degree. If the facts underlying an allegation that an action is barred under the Limitations Act can properly be brought as a summary judgment motion under Rule 20.04 of the Rules of Civil Procedure, it seems to me to advance the policy of the Act to do so and the interests of justice will tend to weigh against requiring a trial in such circumstances. That is not to say that every such case should necessarily proceed by way of summary judgment without first ascertaining whether justice can be done in doing so or whether a trial is necessary. I do however suggest that it is appropriate to recognize the public policy underlying the Limitations Act when making the decision as to whether the interests of justice require a trial and consider it as a factor to be weighed. A factor to be considered does not rise to the level of presumption. Neither plaintiff nor defendant interests are served by undergoing a lengthy trial on numerous issues when the entire matter could potentially be resolved by a consideration of only a few. The policy of the Limitations Act is thus a factor but cannot be presumed to be the controlling one in considering the requirements of justice in a particular case.

Justice Dunphy also conveniently summarises the major principles of discoverability under the Limitations Act. Notably, the summary is untainted by principles applicable to common law discoverability only.

[146]      Our courts have developed a considerable body of case law since 2002 under the new Limitations Act and the case law under the old still has application as regards many issues. Several themes that have consistently emerged from that jurisprudence that are of particular relevance here include:

a.      it is not necessary to have all of the facts underlying the complete claim – it is enough to have sufficient facts to bring a claim: Tender Choice Foods Inc. v. Versacold Logistics Canada Inc., 2013 ONSC 80 (CanLII) at para. 55-61;

b.      It is enough that the plaintiff has prima facie grounds to infer that a defendant’s actions caused or contributed to her loss even if the responsibility of each of multiple possible defendants is not yet known – certainty is not a requirement: Longo v. MacLaren Art Centre Inc.,2014 ONCA 526 (CanLII) at para. 44 and Johnson v. Studley, 2014 ONSC 1732 (CanLII) at para. 61;

c.      “Neither the extent of damage nor the type of damage need be known. To hold otherwise would inject too much uncertainty into cases where the full scope of the damages may not be ascertained for an extended time beyond the general limitation period”: per Major J. in Peixero v. Haberman, 1997 CanLII 325 (SCC), 1997 3 S.C.R. 549 at para. 18;

d.      “error or ignorance of the law or legal consequences of the facts does not postpone the running of the limitation period”: per Perell J. inNicholas v. McCarthy, 2008 CanLII 54974 (ON SC), 2008 CanLII 54974 (Ont. S.C.) at para. 27-29, aff’d 2009 ONCA 692 (CanLII), leave to appeal denied 2010 CanLII 12967 (SCC);

[147]      A corollary of these principles is the over-arching obligation of due diligence. Limitation periods are designed to incent claimants not to sleep on their rights. Ignorance of the law is not an excuse if the facts giving rise to legal claims are known. A party alerted to circumstances where a reasonably prudent person of similar abilities and in the same circumstances would seek professional advice must do so or risk having the claim struck as being out of time. Knowledge of the existence of damage, its source and a reasonable understanding of who is or might be expected to be responsible for some of it at least is enough.