Category: Ontario

Ontario: The limitation period in s. 138.14 of the Securities Act is event-based

The Court of Appeal upheld the decision in Kaynes v. BP, P.L.C., which I wrote about here, holding that the limitation period in s. 138.14 of the Securities Act is event-based, and doesn’t commence until a public correction of a misrepresentation occurs.

[14]      The limitation period in s. 138.14 reads as follows:

138.14 (1) No action shall be commenced under section 138.3,

(a)     in the case of misrepresentation in a document, later than the earlier of,

(i)      three years after the date on which the document containing the misrepresentation was first released, and

(ii)      six months after the issuance of a news release disclosing that leave       has been granted to commence an action under section 138.3 or under comparable legislation in the other provinces or territories in Canada in respect of the same misrepresentation;

(b)     in the case of a misrepresentation in a public oral statement, later than the earlier of,

(i)      three years after the date on which the public oral statement containing the misrepresentation was made, and

(ii)      six months after the issuance of a news release disclosing that leave       has been granted to commence an action under section 138.3 or under comparable legislation in another province or territory of Canada in respect of the same misrepresentation; and

***

[15]      This is an event triggered limitation period, which commences on the making of the oral statement or the release of the impugned document. It is designed to run without regard to the plaintiff’s knowledge of the facts giving rise to the cause of action: Canadian Imperial Bank of Commerce v. Green, 2015 SCC 60 (CanLII), at paras. 66 and 180. The motion judge correctly found that for the eleven alleged misrepresentations made more than three years before the issuance of the appellant’s statement of claim the limitation period had expired.

[16]      The appellant’s primary submission on appeal is that s. 138.3(6) of the Act operates to extend the limitation period in the case of multiple misrepresentations. That subsection provides as follows:

(6) In an action under this section,

(a) multiple misrepresentations having common subject matter or content may, in the discretion of the court, be treated as a single misrepresentation; and

(b) multiple instances of failure to make timely disclosure of a material change or material changes concerning common subject matter may, in the discretion of the court, be treated as a single failure to make timely disclosure. 2002, c. 22, s. 185; 2004, c. 31, Sched. 34, s.12(7).

[17]      The appellant argues that treating the allege misrepresentations as a single misrepresentation would have the effect of extending the three-year limitation period for claims arising from the eleven out-of-time statements. In our view, the motion judge did not err in rejecting this argument. We reach this conclusion for the following reasons.

[18]      First, there is nothing in the language of s. 138.3(6) that suggests that it is intended to modify the clear event triggered limitation period provided in s. 138.14.

[19]      Second, the appellant submits that the motion judge erred in failing to take into consideration the “twin goals of investor protection and the deterrence of corporate misconduct” in his interpretation the Act.  That view of the policy objectives of the Act is too narrow.  As Cote J. noted in CIBC, at para. 69, the policy considerations are more nuanced, “Part XXIII.1 OSA strikes a delicate balance between various market participants. The interests of potential plaintiffs and defendants and of affected long-term shareholders have been weighed conscientiously and deliberately in light of a desired precise balance between deterrence and compensation.”

[20]      Part of the balance struck by the three year event driven limitation period was to protect subsequent shareholders from claims based on alleged misrepresentations made to previous shareholders.

[21]      Third, we agree with the motion judge’s conclusion that the legislative history of s. 138.3(6) demonstrates that it was enacted at as a consequence of an Ontario Securities Commission response to a Request for Comments. It is plain from that submission that the section was designed to protect issuers from multiple rights of action or multiple liability for essentially the same misrepresentation repeated on a number of occasions.

[22]      Finally, we note that even if the appellant is correct and s. 138.3(6) was intended to modify the limitation period analysis, it is arguable that in the case of multiple misrepresentations treated as a single misrepresentation the limitation period would run from the date the misrepresentation was first made.  Subsection 138.14 mandates that the running of the limitation period commences when the document is first released. Applied literally in this case, the result would be that the limitation period for all fourteen misrepresentations commenced in 2007 and the claims based on all of the documents would be statute-barred.

Ontario: the limitation of stand-alone mortgage guarantees

In Hilson v. 1336365 Alberta Ltd., the court determined, for the first time, the limitation period for a stand-alone mortgage guarantee agreement. A stand-alone guarantee that affects or relates to an interest in land, and includes covenants to pay money secured by a mortgage, is subject to a ten year limitation period under s. 43(1) the Real Property Limitation Act.

[41]           The application of a predecessor provision to s. 43(1) of the Real Property Limitations Act (being s. 49(1)(k) of the Limitations Act, R.S.O. 1914, c. 75) was considered by the Ontario Court of Appeal in Martin v. Youngson (1924), 55 O.L.R. 658 (C.A.).  In that case, the mortgagee commenced an action against the guarantor of the mortgage more than ten years after the mortgage became due.  If the predecessor to s. 43(1) did not apply, the limitation period would have been 20 years.   Pursuant to s. 49(1)(b) of the predecessor statute, the 20-year limitation period applied to “an action under a bond, or other indenture, except upon a covenant contained in an indenture of mortgage”.  The guarantee covenant in Martin was contained in the mortgage indenture, which the guarantor had executed.  At p. 663, the court found that the applicable limitation period was ten years, as indicated below:

Dealing now with the successive points argued by the appellant, I think that this is “an action upon a covenant contained in an indenture of mortgage,” and therefore comes within sec. 49, subsec. 1(k), of the Limitations Act. The whole document, exhibit 1, is an indenture of mortgage. I express no opinion as to what would be the proper conclusion if the guaranty were contained in a separate collateral document. That point can be decided when it arises. But, so far as this action is concerned, it seems to me that it falls precisely within the words of the statute, and therefore that the period of limitation is 10 years, and not 20. [Emphasis added.]

[42]           In its 2012 decision in Equitable Trust, the Ontario Court of Appeal considered and affirmed its previous decision in Martin.  As in Martin, the issue in Equitable Trust was the applicable limitation period where the guarantee covenant was contained in the mortgage indenture that the guarantor signed, rather than in a “separate collateral document”.  Counsel did not bring to my attention any subsequent decision that considered whether the ten-year limitation period would apply to a claim under a guarantee covenant in a separate document, the issue that Martin expressly left outstanding.

[43]           In Equitable Trust, the guarantor argued that the limitation period for the guarantee contained in the mortgage was two years, based on the following reasoning.  The guarantee covenant in that case was a demand obligation governed by ss. 5(3) and (4) of the Limitations Act, 2002.  Those provisions were intended to apply to all demand obligations, including a demand guarantee obligation contained in a mortgage indenture.  The court rejected that argument.  Relying on s. 2(1)(a) of the Limitation Act, 2002, the court held that the ten-year limitation period in the Real Property Limitations Act applied.  In doing so, the court stated as follows (at paras. 27, 28, 30 and 31):

27        … [T]he effect of s. 2(1)(a) of the Limitations Act, 2002 is to preclude the limitation periods of that Act from applying when the Real Property Limitations Act applies. Put simply, the Limitations Act, 2002, was enacted to deal with limitation periods other than those affecting real property.

28        A guarantee given in conjunction with a mortgage transaction affects real property law rights. Guarantors, if they have made payments toward the mortgage debt, need to be served in mortgage enforcement proceedings because they have an equity of redemption and an interest in the mortgaged property…. [Case citations omitted.]

…

30        It is true that it may not always be easy to determine whether a particular guarantee … is subject to the Limitations Act, 2002 or, like the guarantee in the case at bar, is subject to the Real Property Limitations Act. However, it does not follow that all guarantees should be treated the same way. It has been the case historically that guarantees associated with land transactions have different limitation periods from guarantees associated with contract claims. Moreover, as already noted, it is my view that the Legislature intended that all limitation periods affecting land be governed by the Real Property Limitations Act.

31        The mortgage enforcement practice, as demonstrated in the case at bar, is to give guarantors notice of power of sale proceedings. In my view, it would cause much more confusion and uncertainty in the law, if the limitation period for enforcing the mortgage debt was different from the limitation period for enforcing guarantees of that debt. [Emphasis added].

[44]           In its subsequent decision in Zabanah v. Capital Direct Lending Corp., 2014 ONCA 872 (CanLII), 123 O.R. (3d) 350, the Court of Appeal acknowledged that it was appropriate to circumscribe the expansive expression in Equitable Trust (at para. 30) of the legislative intent that “all limitation periods affecting land be governed by the Real Property Limitations Act.”  In Zabanah, the assignee of a mortgage was unable to recover the amount due under the mortgage either from the mortgagor or upon the sale of the mortgaged property.  The assignee sued the original mortgagee for negligence and breach of contract.  Summary judgment was granted, dismissing the action against the original mortgagee on the basis that the action had not been commenced within the two-year limitation period in the Limitations Act, 2002.  The assignee argued on appeal that the ten-year limitation period in Real Property Limitations Act applied, relying on the statement in Equitable Trust that all limitation periods affecting land were governed by that statute.  The appeal court held that the motion judge was correct that the two-year limitation period applied.  The court distinguished Equitable Trust on that basis that the assignee’s action against the original mortgagee “is simply a negligence and contract claim, and is not a claim to an interest in land, as in [Equitable Trust].”

[45]           Defence counsel argued that as in Zabanah, the plaintiff’s claim against the Lightles under the stand-alone guarantees was a contract claim, not a claim to an interest in land.  By the same reasoning, the two-year limitation period would apply to the plaintiff’s claim against the Lightles under those agreements, according to the defence.

[46]            Defence counsel also argued that s. 43(1) of the Real Property Limitation Act does not apply because the stand-alone guarantees do not constitute an “other instrument … to repay the whole or any part of any money secured by a mortgage.”  While the term “instrument” is not defined in the Real Property Limitation Act, defence counsel referred to other statutory provisions to support his argument that the term “instrument” should be read as being limited to an instrument that affects or relates to an interest in land.  In his submission, the stand-alone guarantees did not fall within the meaning of “instrument” as that term was used in s. 43(1).

[47]           In particular, defence counsel referred to the definition of “instrument” in s. 1 of the Registry Act, R.S.O. 1990, c. R.20, as follows:

“instrument” includes every instrument whereby title to land in Ontario may be transferred, disposed of, charged, encumbered or affected in any other way, and, without limiting the generality of the foregoing, includes … a deed, conveyance, mortgage, assignment of mortgage, certificate of discharge of mortgage, … a contract in writing, … and every notice, caution and other instrument registered in compliance with an Act of Canada or Ontario;

[48]           Under s. 22 of the Registry Act, any instrument as defined in s. 1 may be registered under that Act, subject to specified exceptions.  As well, under s. 23 of that Act, the land registrar may refuse to accept for registration any instrument that, in the registrar’s opinion, does not affect or relate to an interest in land.  On the same basis, the registrar may refrain from recording part of a registered instrument.  As defence counsel also noted, there is no definition of “instrument” in the Land Titles Act, but s. 81 of that Act is to the same effect as s. 23 of the Registry Act.  Under s. 81 of the Land Titles Act, the land registrar may refuse to register all or part of an instrument on the basis that it does not affect or relate to an interest in land.

[49]           Applying the foregoing legislative provisions, it is clear that only instruments that affect or relate to an interest in land are capable of being registered under the Land Titles Act or the Registry Act.  Registration under those statutes provides public notice relating to ownership and other interests in real property in Ontario, and provides the basis for determining the priority of those interests.  What was not clear to me was why the meaning of instrument for registration purposes was determinative (or even relevant) when interpreting the meaning of that term for purposes of determining the limitation period for court proceedings, as set out in s. 43(1) of the Real Property Limitation Act.

[50]           In any case, plaintiff’s counsel did not dispute that the term “instrument” in s. 43(1) should be interpreted as meaning an instrument that affects or relates to an interest in land.  As explained further below, I agree with plaintiff’s counsel that the stand-alone guarantees are instruments that affect or relate to an interest in land, applying the reasoning of the Court of Appeal in Equitable Trust.  As well, by their terms, the stand-alone agreements include covenants “to repay … money secured by a mortgage”, that is, the second mortgages between the plaintiff and the corporate defendants.  Accordingly, I have concluded that the limitation period for the plaintiff’s claim under the stand-alone guarantees was ten years.

This reasoning seems sound to me, but I find the real property limitations scheme as arcane as everyone else.

Ontario: simplified procedure and summary judgment motions on limitations defences

Cornacchia v. Rubinoff illustrates the difficulties of moving for summary judgment on limitations defences in simplified procedure actions.  This is because there are no cross-examinations on affidavits under simplified procedure. The court denied the motion on the basis that the simplified procedure did not permit the findings of fact required by the limitations defence:

[3]               An important factor in the argument on the motion is that the underlying claim was commenced under the simplified procedure provided in rule 76.  As a result, pursuant to rule 76.04(1), cross-examination on the affidavits filed on the motion is not permitted.  A further implication of the fact that the underlying action is brought under the simplified procedure rules, is that it can be expected to be a relatively short trial.

[4]               For reasons that I will explain, I find that the combination of two procedural aspects of this motion lead me to conclude that the limitation period issue in this case is not an appropriate issue for summary judgment, either in favour of the defendant, or in favour of the plaintiff.  I find that in the absence of cross-examination on the affidavits filed on the motion, particularly the plaintiff’s affidavit, the record on this motion does not allow me to make the necessary findings of fact and credibility to fairly dispose of the motion.

[30]           I find that the absence of cross-examination on the affidavits filed in the motion, raises concerns for my ability to make the necessary findings of fact and credibility to dispose of the motion, for the following reasons.

[31]           In order to assess the subjective branch of the analysis – when the plaintiff first knew that the four criteria in s. 5(1)(a)(i) to (iv) were met – the court must make factual findings about what information the plaintiff knew when, and his subjective belief about that information in relation to the criteria in s. 5(1)(a)(i) to (iv).

[32]           This assessment involves making findings of credibility about the plaintiff’s evidence on the motion.  I note that counsel for the defendant was clear during the course of argument that she was relying on both the subjective and objective branches of the Limitations Act analysis.

[40]           Concept Plastics does not hold that summary judgment will never be available on a simplified procedure matter due to the unavailability of cross-examination on the affidavits filed for the motion.  Rather, in Concept Plastics the Court of Appeal signaled the need for caution in considering summary judgment motions in simplified procedure matters, due to the unavailability of cross-examination.  Where a motions judge is considering a summary judgment motion in a simplified procedure matter, the judge should consider if there is unfairness as a result of the unavailability of cross-examination.  If the motions judge grants the motion, the judge should explain why and how the potential unfairness due to the unavailability of cross-examination is addressed by the materials filed on the motion: see Concept Plastics at paragraphs 24-25.

Ontario: the limitation of new causes of action

In David v. Easte Side Mario’s Barrie, the Court of Appeal quotes from The Law of Civil Procedure in Ontario for the principle that an alternative claim for relief arising out of the same facts is not a new cause of action for limitations purposes:

[32]      And, quoting from Paul M. Perell & John W. Morden, The Law of Civil Procedure in Ontario, 3d ed. (Toronto: LexisNexis Canada, 2017), at p. 186:

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.

See also 1100997 Ontario Limited, at para. 20.

Ultimately, the Court applied the “fundamentally different claim” test to conclude that the plaintiff wasn’t entitled to the amendment.

As I discussed when the Court of Appeal last addressed this issue, the “fundamentally different claim” test makes a lot of sense.

My complaint, which I recognise verges on pedantry, is that a cause of action analysis, and the casual use of the word “claim”, is problematic in the limitations context.  The Limitations Act has nothing to do with causes of action, and, as I often note, does not appear in the Act.  This is because the Act uses the language of “claim”, which reflects an intentional break with cause of action accrual as determinative of the commencement of time.  Claims are not causes of action, and causes of action have very little do with the operation of the current limitations scheme.  It’s unhelpful when the Court fails to account for this.

Ontario: the limitation of claims for unidentified motorist coverage

The decision in Sukhu v. Bascombe holds that the limitation period for a claim for the unidentified motorist coverage in OPCF 44R does not run until the responding insurer refuses to satisfy a demand to indemnify.

[17]      In Schmitz v. Lombard General Insurance Company of Canada, 2014 ONCA 88 (CanLII); leave to appeal refused, [2014] SCCA No. 143, the Court of Appeal was dealing with the question of when the limitation period began to run for an indemnity claim under the underinsured motorist coverage provided by OPCF 44R optional endorsement to the standard form automobile insurance policy in Ontario. The Court of Appeal applied the reasoning in Markel and concluded that the limitation period does not begin to run until a demand to indemnify has been made and the responding insurer has failed to satisfy the claim. See Schmitz at paragraphs 22 to 26.

[18]      The reasoning behind Markel and Schmitz was applied in the decision of Justice Lofchik in Chahine v. Grybas, 2014 ONSC 4698 (CanLII). Justice Lofchik was faced with a motion involving facts very similar to the facts before the court on this motion. The plaintiff was involved in an accident and sued the other driver. After the claim was issued, the defendant’s lawyer advised the plaintiff’s lawyer that there was an unidentified motorist involved who may have been responsible for the accident. The plaintiff later confirmed this by obtaining a complete copy of the police report.

[19]      The plaintiff then brought a motion to add his own insurer pursuant to the unidentified motorist coverage in OPCF 44R of his policy. Justice Lofchik considered the provisions of the Limitations Act and the decisions of the Court of Appeal in Markel and Schmitz. He concluded that the same reasoning applied to unidentified motorist coverage. The limitation period for unidentified motorist coverage does not begin to run until a demand to indemnify has been made and the responding insurer has failed to satisfy the claim. See Chahine at paragraphs 36 to 39.

[20]      The plaintiffs also rely on the decision of Justice Leitch in Platero v. Pollock, 2015 ONSC 2922 (CanLII) which followed the decision in Chahine and also relied on the analysis of the Court of Appeal in Markel and Schmitz. See Platero at paragraphs 33 to 35.

[21]      TTC Insurance relies primarily on four decisions of the Court of Appeal. Those decisions are July v. Neal, 1986 CanLII 149 (ON CA), [1986] OJ No. 1101 (CA); Johnson v. Wunderlich, 1986 CanLII 2618 (ON CA), [1986] OJ No. 1251 (CA); Hier v. Allstate Insurance Co. of Canada, 1988 CanLII 4741 (ON CA), [1988] OJ No. 657 (CA) and Chambo v. Musseau, 1993 CanLII 8680 (ON CA), [1993] OJ No. 2140 (CA). Those decisions stand for the proposition that the limitation period for a claim under the unidentified motorist coverage of a policy of insurance begins to run when a plaintiff knew or ought to have discovered the accident involved the negligence of an unidentified motorist. TTC Insurance argues that these cases are binding authority and have represented the law of Ontario for decades.

[22]      The difficulty I have with the argument of TTC Insurance is that all of the Court of Appeal cases it relies upon were decided prior to the enactment of the current Limitations Act. They were also obviously decided before the decisions of the Court of Appeal in Markel and Schmitz.

[23]      The decisions in Chahine and Platero considered specific provisions and language of the current Limitations Act within the context of the Markel and Schmitz decisions. Both judges came to the conclusion that the limitation period for unidentified motorist coverage indemnity claims does not begin to run until a demand to indemnify has been made and the responding insurer has failed to satisfy the claim. I am unable to distinguish those decisions from the case before the court on this motion. They appear to be binding on this court.

[24]      TTC Insurance cited the contrary decision of Justice Sosna in Wilkinson v. Braithwaite, 2011 ONSC 2356 (CanLII) which held that the limitation period began to run when the plaintiff knew or ought to have discovered that the accident involved the negligence of an unidentified motorist. Although that decision involved the application of the current Limitations Act, it was decided before the Court of Appeal made its decisions in Markel and Schmitz. For this reason, the decisions in Chahine and Platero are to be preferred.

[25]      TTC Insurance also relies on the decision of Master McAfee in Bhatt v. Doe, 2018 ONSC 950 (CanLII), 2018 ONSC 950 (Master) in which she applied the July decision. The decisions in Chahine and Platero are not mentioned by Master McAfee and nor are the Markel and Schmitz Court of Appeal rulings. I do not know whether those cases were considered by her. In any event, the decision of another master is of persuasive value only. I am not bound to follow it, especially in the face of contrary decisions of a judge.

[26]      Counsel for TTC Insurance also suggested that the Chahine and Platero decisions were simply incorrect. TTC Insurance submits that the judges hearing those motions did not have the benefit of the earlier Court of Appeal decisions cited by TTC Insurance on this motion. If they had those decisions, those cases might have been decided differently. That may or may not be the case. I do not know. However, it is not the role of this court to question those decisions or the basis on which they were decided. Justices Lofchik and Leitch decided precisely the same issue as the one before me, having regard to specific provisions of the current Limitations Act and within the context of Markel and Schmitz. Decisions of a judge are binding on a master. In my view, I am bound to follow the decisions of Justices Lofchik and Leitch.

The decision also underscores the futility of relying on s. 16(1)(a) to avoid a limitations defence.  This is not an especially clever argument, has been made many times, and I’m pretty sure never succesfully:

 [12]           I do not accept the plaintiffs’ first argument involving section 16 of the Limitations Act. Section 16(1)(a) states that there is no limitation period in respect of a proceeding for a declaration if no consequential relief is sought. This is not the situation on this motion. The proposed pleading states that TTC Insurance must pay Ms. Sukhu’s damages in the event they are found to have been caused by the negligence of the unidentified motorist. This is obviously consequential relief, namely the payment of damages. See Tapak v. Non-Marine Underwriters, Lloyd’s of London, 2018 ONCA 168 (CanLII) at paragraph 14. The Court of Appeal has also emphasized that declaratory relief must be read narrowly so that section 16(1)(a) is not used as a means to circumvent a limitation period. See Alguire v. Manufacturers Life Insurance Company (Manulife Financial), 2018 ONCA 202 (CanLII) at paragraph 28.

Ontario: the limitation of assessing solicitor bills

Gardiner Roberts v. Canada International Distributing Inc. provides a useful overview of the operation of the time limit (which is not strictly a limitation period) in s. 3 of the Solicitors Act. In particular, it underscores the importance that an account be final in order to trigger the running of time:

[28]           Section 3 of the Solicitors Act provides that where the retainer is not disputed and there are no special circumstances, a client may obtain an order for:  a) the delivery and assessment of the solicitor’s bill; or b) for the assessment of a bill already delivered, within one month from its delivery.

[29]           Gardiner Roberts argues that it provided its “‘final’ account, i.e. the last account” on November 30, 2016.  This, it is argued, is more than one month before Cana sought an assessment.  Thus, Cana is not able to obtain an assessment under s. 3.

[30]           Cana counters that the “last” account is not a “final” account; Gardiner Roberts has refused to render a final account in order to deprive Cana of its ability to assess the accounts.  Cana is entitled to have a final bill delivered and an assessment of the bill, which would include all interim accounts rendered.

[31]           When assessing the submissions of counsel, I keep in mind that the purpose of the Solicitors Act and the assessment process is “to regulate the legal profession and protect the public in their dealings with solicitors”: Laushway Law Office v. Simpson, 2011 ONSC 4155 (CanLII), at para. 143.

[32]           As explained by Sharpe J.A. in Price v. Sonsini, 2002 CanLII 41996 (ON CA), [2002] O.J. No. 2607 (C.A.), at para. 19:

Public confidence in the administration of justice requires the court to intervene where necessary to protect the client’s right to a fair procedure for the assessment of a solicitor’s bill.  As a general matter, if a client objects to a solicitor’s account, the solicitor should facilitate the assessment process, rather than frustrating the process.

[33]           With this legal framework in mind, I have concluded that Cana is entitled to an assessment. Gardiner Roberts has failed to render a final bill: the November 30 account sent by Gardiner Roberts is an interim account, as were all previous accounts rendered by the law firm.  Given Gardiner Roberts’ failure to render a final account, it was open to Cana to obtain an order pursuant to s. 3(a) for the delivery of a final bill and an assessment.   All of the interim accounts were related to the same matter, and therefore the limitation period flows from the date of delivery of the final account.  Thus, Cana is entitled to an assessment of all of the accounts, even though many of them were paid.

Gardiner Roberts has Failed to Render a Final Bill

[34]           Following the November 30 account, Gardiner Roberts prepared written submission on costs.  Gardiner Roberts seemed (at least initially) to view the costs submissions as simply a continuation of the ongoing work being done on the Standard Innovation matter.  This seems clear from the email of Mr. Wolch on November 21, where he said “… I must also prepare submissions with respect to costs…”  Indeed, it is difficult to see the costs submissions following a lengthy trial as being anything other than part and parcel of the same matter.

[35]           Despite repeated requests by Cana, Gardiner Roberts has refused to provide a bill for the work done on the costs submissions.  Cana argues that Gardiner Roberts cannot simply refuse to render a bill for this final work done, in order to circumvent Cana’s right to an assessment under s.3 of the Solicitors Act.  I agree.  Cana properly moved pursuant to s. 3(a) of the Solicitors Act for the delivery of the final account.

            The Limitation Period Flows From the Final Account

[36]           Upon delivery of such final account, Cana is entitled to an assessment of all previous interim accounts.  As noted in Price v. Sonsini, at para. 15, where interim accounts are rendered in connection with the same matter, the limitation period for assessment under the Solicitors Act begins to run from the date of the final account, even if some of the interim accounts have been paid.

The Accounts Rendered Thus Far Have Been Interim Accounts

[37]           In Shapiro, Cohen, Andrews, Finlayson v. Enterprise Rent-a-Car Co., 1998 CanLII 1043 (ON CA), [1998] O.J. No. 727 (C.A.), at para. 14, the Court of Appeal referred to a number of factors that supported the motions judge’s conclusion in that case that all accounts rendered prior to the final account were interim accounts.  Most of those factors apply to the present case.  For example:

•        All accounts relate to once piece of litigation.  The accounts all involve the action against Standard Innovation.  It was the same matter; they are part of a continuum.  This is illustrated by the fact that all accounts said “Re: Standard Innovation” and had the same file number.

•        None of the account were marked as final accounts.  Moreover, the retainer agreement specifically said that the firm would render interim accounts and reserved the right to take into account the result achieved in the final account.

•        Considerable adjustments were at times made to the accounts.  According to Gardiner Roberts, it wrote off more than $70,000 because of request for discounts by Cana.  An example of such a discount occurred on December 9, 2011.  On that date, Mr. Wolch agreed to reduce the amount owed by Cana by $20,000.  But in reducing the account, Mr. Wolch noted that if the firm was successful in the matter, and recovered a reasonable amount, that this money would be repaid.  This supports that the accounts were interim, not final.

•        Cana was led to believe that the work on the interlocutory injunctions would not be lost.

•        Given the nature of the services, Cana could only appreciate the services performed at the end of the retainer.  This is highlighted in the retainer agreement, where Gardiner Roberts reserved the right to take into account the results obtained in determining its final account.

[38]           Looking at these factors, I find that the accounts rendered thus far have been interim. No final bill has been delivered.  Gardiner Roberts cannot avoid s. 3 of the Solicitors Act by refusing to render a final account.  I find that pursuant to s. 3(a) Gardiner Roberts is required to deliver a bill.  The limitation period for the interim accounts rendered flows from the final bill.  Thus, Cana is not time barred from an assessment of the interim accounts in this matter, even where those accounts have been paid.

[39]           I turn now to the alternative submission raised, which is that there are special circumstances which justify an assessment of the accounts.

The decision also describes the test for special circumstances:

[40]           Where there are special circumstances, pursuant to s. 4(1) of the Solicitors Act a client may obtain an assessment of an account more than 12 months after it was delivered.  This applies whether the bills are paid or unpaid.  Further, pursuant to s. 11 of the Solicitors Act, a client may obtain an assessment of bills already paid within 12 months of delivery of an account, if the special circumstances of the case appear to require the assessment.  For bills rendered within 12 months, but that remain unpaid, the court has inherent jurisdiction to order an assessment: Enterprise Rent-a-Car, at para. 8.

[41]           There is a presumption that payment of a bill constitutes implied acceptance of its reasonableness.  This presumption, however, is rebuttable.  As noted in Enterprise Rent-a-Car, at para. 19, the presumption is refuted to some extent by the fact that clients cannot be expected to bring an assessment while the lawyer is representing them, as they would not wish to alienate the lawyer.

[42]           In Enterprise Rent-a-Car, at para. 21,  the Court outlined a number of factors showing that the special circumstances test had been met in that case.  Similar factors can be found in the present case, including the following:

•        Cana was not familiar with commercial litigation nor with injunctions;

•        Cana understood that if the interlocutory injunction were granted, it would effectively resolve the dispute and end the litigation, and the work done would contribute significantly to trial preparation;

•        Cana did not give instructions to proceed at all costs; to the contrary, Cana communicated to Gardiner Roberts that it expected that the firm would keep legal costs within reason;

•        It is unrealistic to expect that Cana should have sought to have the bill assessed during the course of an ongoing matter such as this case;

•        Cana could only have appreciated the nature of the services at the conclusion of the retainer.   This is supported by the retainer agreement, which specified that Gardiner Roberts may take into account the result obtained in the final bill;

•        Cana was not aware that it could seek to have its accounts reviewed until it retained new lawyers.  As noted in Enterprise Rent-a-Car, at para 20, lawyers “should take the opportunity to inform their clients of their right to an assessment at appropriate times during the solicitor-client relationship.”  Gardiner Roberts, however, failed to advise Cana of its right to have its accounts assessed, even when Cana had raised objection to certain accounts;

•        Gardiner Roberts billed Cana more than $1 million, without achieving any success.

[43]           In light of the above factors, I find that the test for special circumstances has been met.   Cana is entitled to an assessment of the accounts rendered by Gardiner Roberts pursuant to ss. 4(1) and 11 of the Solicitors Act.

 

 

Ontario: the discovery provisions apply to contribution and indemnity claims

In Mega International Commercial Bank (Canada) v. Yung, the Court of Appeal held that the discovery provisions of the Limitations Act determine the commencement of the limitation period for contribution and indemnity claims.  This is an excellent, sensible decision that resolves one of the last significant (and somewhat inexplicable) uncertainties about the Ontario limitations scheme.

A refresher: Section 4 provides the basic two-year limitation period that commences on when the plaintiff discovers the claim.  Section 5(1) defines when discovery occurs.  Section 5(2) provides a rebuttable presumption that it occurs on the date of the act or omission that gives rise to the claim.  Section 15 provides that the ultimate 15-year limitation period commences on the date of that act or omission.   Section 18 provides that for the purposes of s. 5(2) and s. 15, the date when a plaintiff serves a statement of claim on a defendant is the date of the act omission that gives rise to the defendant’s contribution and indemnity claim against another alleged wrongdoer.

There were two competing constructions of s. 18.  One line of jurisprudence originating from Miaskowski (Litigation Guardian of) v. Persaud held that s. 18 prescribes an absolute two-year limitation period that commences always on the date of service of the statement of claim.  Another line of jurisprudence originating from Demide v. Attorney General of Canada et al.  held that s. 18 merely identifies the presumptive trigger date for the limitation period for contribution and indemnity claims, subject to the s. 5 discovery provisions.

I’ve long argued that Miakowski was plainly wrong, and its continued application was hard to understand.  I noted with some satisfaction the trend toward preferring the Demide construction.

The Court in Mega International essentially adopted the reasoning in Demide.  It applied the principles of statutory interpretation: the words in s .18 interpreted in their grammatical and ordinary sense do not establish an absolute limitation period.  Rather, s. 18 works “hand in glove” with the provisions of s. 5(2) and s. 15 to identify the presumptive limitation period that applies in contribution and indemnity claims.  It is not an exception to the basic limitation period in s. 4, but part of the integrated scheme established by s. 4 and s. 5.

The Court acknowledged the injustice in constructing s. 18 as imposing an absolute limitation period.  It would allow for the possibility of claims becoming statute-barred before they are discoverable.  The Court also noted the absence of any basis for recalibrating the balance between plaintiff and defendant rights the Act strikes for this particular category of claims only.

Ontario: the limitation of claims arising from assault and battery

 

The Court of Appeal granted the plaintiff’s appeal in Brown v. Woodstock.  The motion judge had found his claims statute-barred based on jurisprudence holding that a cause of action for damages for false arrest, false imprisonment, and breach of Charter rights crystallizes on the date of arrest, and that the limitation period for an assault or battery runs from the date assault or battery occurred.  I though it want’t a very good limitations decision, because cause of action accrual has nothing to do with the commencement of time.

The court followed its decision in Winmill as the basis for overturning the summary judgment:

[5]         In our view, Winmill cannot be distinguished from this case on the basis that the charges in this case are different, or that the prosecution of the appellant ended with his entering into a peace bond rather than an acquittal. Nor is it relevant that Winmill was also concerned with a claim for negligent investigation. The key point is that, as in Winmill, the battery action is essentially a mirror image of the criminal charge the appellant was facing. As a result, it was open to the appellant to await the outcome of the criminal proceedings against him before finally deciding whether to bring his action, regardless of when he first formed the intention to sue.

[6]         Specifically, the discovery date for the appellant’s action was October 22, 2015 – the date the criminal charges him were brought to a conclusion with a peace bond. The appellant had two years from that date in which to bring his action. Therefore, the appellant’s action, which was commenced May 13, 2016, is not time barred. The respondent fairly concedes that, if the claim in battery is to proceed, then it is appropriate to reinstate the entire action, with the exception of the appellant’s claim for malicious prosecution, which the appellant has abandoned.

Ontario: The Court of Appeal reminds that limitations defences are affirmative

 

Two aspects of the Court of Appeal decision in Abrahamovitz v. Berens are noteworthy.

First, the court explains why the expiry of the limitation period is a defence that must be pleaded in enough detail to makes this a candidate for leading decision on the principle:

[30]      This court explained in Beardsley v. Ontario (2001), 2001 CanLII 8621 (ON CA), 57 O.R. (3d) 1 (C.A.), at para. 21 that “the expiry of a limitation period does not render a cause of action a nullity; rather, it is a defence and must be pleaded”. See also:Strong v. Paquet Estate (2000), 2000 CanLII 16831 (ON CA), 50 O.R. (3d) 70 (C.A.), at paras. 35-37; Tran v. University of Western Ontario, 2016 ONCA 978 (CanLII), 410 D.L.R. (4th) 527, at para. 18; and Salewski v. Lalonde, 2017 ONCA 515 (CanLII), 137 O.R. (3d) 750, at para. 43.

[31]      There are two aspects to the statement from Beardsley. One is that from a procedural fairness point of view, a plaintiff is entitled to plead in response to a limitations defence, so that if a motion is brought to dismiss the claim, the court will have all the facts relied on to assess discoverability, or whatever other factors a plaintiff may wish to raise in response: Beardsley, at para. 22;Strong Estate, at para. 38; Metropolitan Toronto Condominium Corp. No. 1352 v. Newport Beach Development Inc., 2012 ONCA 850 (CanLII), 113 O.R. (3d) 673, at paras. 115-116; and Greatrek Trust S.A./Inc. v. Aurelian Resources Inc., [2009] O.J. No. 611 (Ont. S.C.J.), at para. 18.

[32]      The requirement that an affirmative defence, including a limitations defense, be pleaded to avoid surprise to the opposite party is reflected in r. 25.07(4) of the Rules of Civil Procedure, which provides:

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.

[33]      The second aspect of the statement from Beardsley, however, is more germane to this case. A limitations defence is “just that, a defence”: Lacroix (Litigation Guardian of) v. Dominique, 2001 MBCA 122 (CanLII), 202 D.L.R. (4th) 121, at para. 18. A defendant chooses whether or not to rely on a limitations defence, but is not obliged to do so: Graeme Mew, Debra Rolph, & Daniel Zacks, The Law of Limitations, 3rd ed. (Toronto: LexisNexis Canada Inc., 2016) p.166. See e.g.: Strong Estate, at paras. 35-40; and Girsberger v. Kresz (2000), 2000 CanLII 22406 (ON SC), 50 O.R. (3d) 157 (C.A.), at para. 13.

[34]      The fact that the choice belongs to the defendant is codified in s. 22 of the Limitations Act, 2002, which allows a limitation period to be suspended or extended by agreement.

[35]      This is a very important and useful provision that allows parties to a potential claim to suspend the running of a limitation (toll the limitation period) to allow them to conduct investigations or settlement discussions, without pressure on the claimant to commence the action unnecessarily. It promotes judicial economy and is cost-effective for the parties.

[36]      Obviously, this provision would be ineffective if another party could assert the limitation period in spite of the defendant’s agreement to toll the limitation period, or if the action became a nullity on the expiry of the limitation period. See for example, Schreiber v. Lavoie (2002), 2002 CanLII 49430 (ON SC), 59 O.R. (3d) 130 (S.C.J.), where a third party was not entitled to rely on r. 29.05(1) (a rule which allows a third party to plead a defence not raised by the defendant) to assert a limitations defense that the defendant had expressly agreed it would not rely on.

Second, there is a reminder that special circumstances doctrine is of no application:

[24]      I would not accept this argument for two reasons. First, the Estate has not commenced any proceeding or claimed any relief. The essence of this argument amounts to invocation of the old common law doctrine of special circumstances that no longer applies under the Limitations Act, 2002. See: Joseph v. Paramount Canada’s Wonderland, 2008 ONCA 469 (CanLII), 90 O.R. (3d) 401. The Estate is essentially saying that because all of the facts have already been pleaded in the action, there is no surprise and no prejudice to the defendants (or other parties) to allow the Estate to be added as a party now, even though the limitation period has expired.

Ontario: S. 21 might include mistake as to identity

In Douglas v. Stan Fergusson Fuels Ltd., the Court of Appeal left open the possibility that s. 21 of the Limitations Act might be broad enough to include mistake as to identity rather than merely a misdescription:

[112]   In my view, while the test for misnomer may be broad enough to embrace a mistake as to the identity of the person who should have brought a suit (rather than a misdescription of the person suing),[8] it cannot do so in this case. This is because, as I have explained above, at the time State Farm chose to commence a claim, it did not have capacity to do so in its own name. As a result, it cannot be said that State Farm made a “mistake” in naming the Douglases as plaintiffs instead of itself.