Category: Ontario

Ontario: two common sense constructions of s. 18

One of the few really consequential unresolved limitations issues is whether the commencement of the limitation period for claims for contribution and indemnity commences always on the day of service of the statement of claim in the proceeding for which contribution and indemnity is sought, or on discovery of the claim for contribution and indemnity.

I’ve long argued that this was a silly debate, and notwithstanding a line of jurisprudence suggesting otherwise, there can be no serious question that s. 18 merely change the event that triggers the presumptive discovery of the limitation from the act or omission giving to the claim to the service of the statement of claim.

Two recent decisions have interpreted s. 18 this way.

In Murphy v. Hart, Justice Monahan reviewed the leading decisions on both sides of the debate and then explains, persuasively, why Demide‘s construction of s. 18 is correct:

[28]           The Hart Defendants rely in particular on the judgment of Perell J. in Miaskowski (Litigation Guardian of) v. Persaud.[3] In Miaskowski, Perell J. was of the view that section 18 of the Act provides that a claim for contribution and indemnity is “deemed to be discovered” on the date upon which the “first alleged wrongdoer was served with the claim in respect of which contribution and indemnity is sought.” Perell J. placed particular emphasis on the use of the word “deemed” in section 18 which, he noted, was a “declarative legal concept [that is] a firmer or more certain assertion of the discovery of a claim than the rebuttable presumption of discovery contemplated by section 5 of the Limitations Act, 2002.” He further observed that section 18 did not contain the moderating language “unless the contrary is proved” that is found in section 5(2) of the Act. In his view, “by using the language of a deeming provision without any reference to the deeming of discovery of the claim being rebuttable, the Legislature intended to impose an absolute two year limitation period with respect to claims for contribution and indemnity.”

[29]           In Perell J.’s view, this approach would bring certainty and efficiency to the law of limitations, while remaining consistent with the policy purposes of the Act. He also noted that it would be a rare case where a defendant would not know whom to sue for contribution and indemnity, and the period of two years following service of the underlying claim would provide “ample time” to exercise due diligence to determine against whom to claim.

[30]           Perell J.’s reasons in Miaskowski have been followed in a number of subsequent decisions of this Court.[4] However it should also be noted that a different interpretation of the effect of section 18 was taken by Leach J. of this Court in Demide v. Canada (Attorney General).[5] In Demide, Leach J. held that section 18 of the Act merely determines the relevant presumed starting point for the basic two year limitation period for purposes of section 5(2), a presumption that was still capable of being rebutted by proof to the contrary. Although section 18 does not include language referring to “proof to the contrary”, Leach J. observed that the inclusion of such wording in section 18 was unnecessary given that this wording was already found in section 5 (2). He also noted that interpreting section 18 as establishing an absolute two-year limitation period for claims for contribution and indemnity would make the ultimate limitation period in section 15 redundant.

[31]           Leach J. accepted that an absolute two-year limitation period for contribution and indemnity claims would provide certainty and efficiency, which was one of the policies underlying the 2002 reforms to the Act. But, as he observed, the same could be said in relation to making any limitation period absolute. In Leach J.’s view, the overall goal of the legislation was to strike a balance between a defendant’s need for certainty with the plaintiff’s right to sue. The legislature generally tried to strike that balance by imposing a presumptive two-year limitation period, capable of extension by demonstrable lack of discovery, proof of which was the obligation of the claimant. While it might be a rare case that a defendant, exercising due diligence within two years of being served with the claim, would not know against whom to bring a claim for contribution and indemnity, rarity is not impossibility. In fact, the rarity of such a possibility underscored for Leach J. the somewhat modest concession to fairness of making the limitation period for contribution and indemnity claims subject to discoverability.

[32]           With due respect to the contrary view, I prefer the interpretation adopted by Leach J.

[33]           First, this interpretation is consistent with the plain meaning of the relevant provisions. As discussed earlier, section 18 is merely an interpretive provision. It specifies the date upon which the act or omission on which a claim for contribution and indemnity is deemed to have taken place. But section 18 is not a substantive provision purporting to limit the commencement of legal proceedings and, as such, it cannot operate as a “stand-alone” limitation period.

[34]           It is true that section 18 utilizes the term “deemed” rather than language referring to a rebuttable presumption or the possibility of “proof to the contrary”. But it is important to be clear about what is being “deemed” through this provision. As discussed earlier, section 18 does not deem a claim to have been “discovered” on the date of service of the underlying statement of claim; rather it deems the “date of the act or omission upon which the claim is based” to be the date of service of the underlying statement of claim. While the “date of the act or omission upon which the claim is based” is certainly a key date in the determination of the date upon which a claim is “discovered”, that determination can only be made through the application and operation of sections 5(1)(a), (1)(b) and 5(2) of the Act, which would necessarily include consideration of the qualifying language “unless the contrary is proved” as found in section 5(2).

[35]           Presumably, the legislature did not include language referring to “proof to the contrary” in section 18 because it did not want to leave any room for argument or doubt on the question of the date upon which the presumption in section 5 (2) have effect in cases of claims for contribution and indemnity. But the absence of any reference to a “rebuttable presumption” in section 18 does not in any way suggest that the presumption in section 5(2) should be ignored or read out of the Act.

[36]           As Leach J. pointed out in Demide, if section 18 is interpreted as creating an absolute two-year limitation period for claims for contribution and indemnity, section 15 of the Act is thereby rendered redundant. Yet this could not have been the intention underlying section 18 since it expressly referred to section 15. Unlike section 5(2), section 15 does not make reference to a rebuttable presumption or provide the possibility of proof to the contrary. Therefore, the effect of section 18 in relation to section 15 is to provide an absolute 15 year limitation period for claims for contribution and indemnity, commencing on the date of the service of the statement of claim against the first alleged wrongdoer.

[37]           It is a well-established principle of statutory interpretation that the legislature does not intend to produce consequences which would render a statute illogical or incoherent, or which render some aspects of it pointless or futile.[6] In my view, it would be illogical and incoherent for the legislature to provide that claims for contribution and indemnity are subject to an absolute two-year limitation period, while simultaneously providing that the same claims are subject to an absolute 15 year limitation period. The legislature cannot have intended to say “X” and “not-X” at the same time.

[38]           While there have been differing views expressed regarding the effect of section 18 in relation to section 5(2), a recent decision of the Court of Appeal suggests that the principle of discoverability does in fact apply to claims for contribution and indemnity, although the Court did not expressly deal with that issue in its reasons. In Fennell v. Deol,[7] a driver in a four vehicle accident had commenced a personal injury claim against one of the other drivers (“Shergill”) on August 16, 2012. On October 20, 2014, Shergill served a statement of defence and cross-claim, asserting a claim for contribution and indemnity against a third driver involved in the accident. Shergill’s claim for contribution and indemnity was commenced more than two years from the date he was served with the original statement of claim. The Court of Appeal noted that the two-year limitation period presumptively ran from the date Shergill was served with the statement of claim. Nevertheless, because Shergill neither knew nor ought to have known of the facts necessary for his cross-claim prior to October 20, 2012, his cross-claim was timely for purposes of the Act.

[39]           Further support for this approach to section 18 is provided by comments made by Simmons J.A. in Placzek v. Green,[8] where she observed that, when read in combination with section 4 and section 15, section 18 “establishes the date of service of the injured party’s statement of claim as the presumed commencement date for the basic two-year limitation period in the actual commencement date for the ultimate 15 year limitation period with respect to contribution and indemnity claims.” The use of the word “presumed” is significant, since it suggests that the combined effect of section 18 and section 5 (2) is to create a rebuttable presumption, capable of being displaced by lack of actual knowledge.

[40]           In short, I conclude that the principle of discoverability does apply to claims for contribution and indemnity under the Act.

In Marjadsingh v. Toronto Transit Commission v. Kahlon, Master Jolley took a similar approach:

[17]           While most cases have found that the limitation period for contribution claims is not extended by the discovery principle, the court requires more than a tallying up of the number of decisions for and against that proposition to make such a determination.

[18]           The two divergent lines of authority are found in Miaskowski v Persaud2015 ONSC 1654 (CanLII) on the one hand and Demide v. Canada2015 ONSC 3000 (CanLII) on the other.  In Miaskowski, the court held that the discoverability principle does not apply to section 18 of the Limitations Act, 2002.Demide took the contrary position.

[19]           The preamble to subsection 18(1) of the Limitations Act, 2002 states that the section is “for the purposes of subsection 5(2) and section 15”.  Subsection 5(2) legislates a presumption about when a party had knowledge of the events giving rise to a claim.  It provides that a party is presumed to know the elements in subsection 5(1) on the date they occurred (the “presumed discovery date”).  Subsection 18(1) then deals with the presumed discovery date for contribution claims.  It provides that the presumed discovery date for a claim for contribution is the date when the party first had knowledge or was aware it was being sued, i.e. the date it was served with the claim.  In either case, the purpose of the section is to set a presumed discovery date.

[21]           Two earlier Court of Appeal decisions that discussed subsection 18(1) spoke in terms of the limitation period being “presumed” to run from service to the statement of claim.  (Waterloo Region District School Board v. CRD Construction Ltd.2010 ONCA 838 (CanLII) at paragraphs 23-24; Placzek v. Green2009 ONCA 83 (CanLII), [2009] O.J. No. 326 at paragraph 24 (C.A.)).  They did not directly address whether the presumption was conclusive or rebuttable.

[22]           As a policy matter, the courts accept that parties should not be deprived of their right to sue before they know, or reasonably should know, they have a claim.  I would find it as problematic to deprive a third party who did not and could not have discovered its claim for contribution and indemnity within two years of the claim being served on it as it would be to deprive a plaintiff of the right to pursue a claim that it did not or could not discovered within the two year presumptive limitation period, unless the legislation clearly dictated that result.

[23]           The courts have accepted that subsection 18(1) can just as easily be read to include a discoverability period as read to mean a fixed limitation period (for instance, Hughes v. Dyck2016 ONSC 901 (CanLII) at para 37).  Absent a determination by the Court of Appeal that section 18(1) is to be read as an absolute limitation period that is not subject to the principle of discoverability, I would interpret the section, as did Mr. Justice Leach, as providing a rebuttable presumption.  I do not see this interpretation to undermine the principles of efficiency and certainty underlying the Limitations Act any more than does the recognition of the discoverability principle to a main claim. I find it to be consistent with the policy of not depriving parties of their claims before they are even aware of them.  I adopt the following language from Demide:

88.  As Justice Sharpe emphasized in Canaccord Capital Corp. v. Roscoe, [2013 ONCA 378] at paragraph 17, the overall goal of the legislation was the creation of a clear and comprehensive scheme for addressing limitation issues that would balance a defendant’s need for certainty with the plaintiff’s right to sue.  A review of the legislation suggests that, with indicated exceptions, the Legislature generally tried to strike that balance by imposition of a presumptive two year limitation period, capable of extension by demonstrable lack of discovery, (proof of which was the obligation of the claimant).  Although the legislature clearly felt that claims for contribution and indemnity warranted a measure of exceptional treatment, to encourage resolution of all claims arising from the wrong at the same time, it seems to me that the approach chosen by the legislature in that regard was the introduction of a modified presumption; i.e., one that moved the presumed starting date of the basic two year limitation period forward considerably, (from the much later starting dates permitted under the previous legislation), to the date on which the party seeking contribution and indemnity was served with the claim in respect of which contribution and indemnity is sought.  Such a party, who fails to approach the possibility of contribution and indemnity claims with due diligence during that ensuing presumptive two year limitation period, from that much earlier date, does so at that party’s considerable peril.  However, I see nothing in the legislation that suggests the legislature intended to go an extra step; i.e., by absolutely precluding any possibility whatsoever of an extension of time for a party capable of providing that a contemplated claim for contribution and indemnity was indeed incapable of being discovered, even with reasonable due diligence, within two years of the party being served with a statement of claim.  As emphasized by our Court of Appeal in Pepper v. Zellers Inc., 2006 CanLII 42355 (ON CA), [2006] O.J. No. 5042 (C.A.), the discoverability principle ensures that a person “is not unjustly precluded from litigation before he or she has the information to commence an action provided that the person can demonstrate he or she exercised reasonable or due diligence to discover the information”.  In my view, the court should be reluctant to adopt a legislative interpretation that effectively permits the possibility of such an injustice, unless that is the outcome clearly indicated by the legislation.

[24]           A number of the cases on this issue, including Miaskowski, have noted that it would be a “rare case” where a defendant would not know the parties against whom to claim contribution and indemnity within the limitation period.  Those cases rely on that rarity as a basis for finding the limitation period to be absolute.  If indeed it would be a “rare case”, then I would posit that the risk of wreaking havoc on a statutory regime by allowing the third party in those few cases to rebut the presumption is slight.

[25]           Miaskowski was influenced by the fact that subsection 18(1) does not refer to the presumption being rebuttable but uses deeming language to determine when the limitation period runs.  Absent mention of the presumption being rebuttable, Perell, J. was of the view that the limitation period was absolute.  The court in Demide also considered the fact that subsection 18(1) did not reference the limitation period being rebuttable.  I agree with Mr. Justice Leach’s analysis at paragraph 87 in Demide that there was no need to provide for the rebuttal language in subsection 18(1) as it is already present in subsection 5(2).

[26]           Subsection 5(2) provides a presumed discovery date for non-contribution claims, the date of the occurrence.  Subsection 18(1) changes only the meaning of the presumed discovery date in subsection 5(2) to the date on which a claim was served, in the case of contribution claims.  On my reading, I see nothing that would remove from subsection 5(2), and therefore subsection 18(1), the last part of the subsection, the ability of a party to “prove to the contrary” that the presumed discovery date was a different date.  The ability to rebut the “presumed discovery date”, whether it be the date of the occurrence under subsection 5(2) or the date of service of the claim under section 18, remains intact.

[27]           As to section 15, it provides an ultimate limitation period whereby no proceeding shall be commenced in respect of a claim after the 15thanniversary of the day on which the act or omission on which the claim is based took place.  For contribution and indemnity claims, subsection 18(1) deems the date on which “the act or omission took place” to be the date of service of the claim on the third party, as opposed to the “act or omission” that set the litigation wheels in motion.  I agree with Leach, J. that there would be no reason to reference section 15 in the preamble to subsection 18(1) if claims for contribution and indemnity were invariably barred two years after the date of service of the claim.  The ultimate 15 year limitation period and the reference to section 15 would be redundant.

[28]           For these reasons, I find the limitation period in subsection 18(1) of the Limitations Act, 2002 to be rebuttable rather than conclusive.

I understand that Marjadsingh is under appeal.  I am hopeful the Court of Appeal will uphold it and bring some certainty (and common sense) to the issue.

 

Ontario: No, s. 16(1)(a) is not a secret loophole

Since the early days of the Limitations Act, plaintiffs have ventured the not especially clever argument that by seeking only a declaration they can engage the exception in s. 16(1)(a) of the Limitations Act for a proceeding for a declaration if no consequential relief is sought.

As two recent decisions remind us, this strategy is transparent and ineffective.

In Skylark Holdings Limited v. Minhas, the defendants moved to dismiss the plaintiffs’ proceeding as statute-barred.  In response, the plaintiffs moved to amend the statement of claim to limit the relief claimed to a declaratory judgment of legal and beneficial ownership of shares. In this way, the plaintiffs intended to engage s. 16(1)(a).  The motion judge agreed with the plaintiffs and found that the court could make declare ownership without consequential relief.

The Divisional Court granted the defendants’ appeal.  It followed the Court of Appeal’s recent decision in Alguire, delivered after the motion judge’s decision, and assessed the essential nature of the plaintiffs’ relief.  It concluded that the plaintiffs were attempting an “end run” around the limitation period:

 

[8]                This case was only decided after the motions judge made his decision and it is therefore not surprising that the motions judge did not conduct his analysis in accordance with the directions set out in the Court of Appeal’s decision.  This was an error of law.  To decide whether s. 16 (1)(a) is being used to circumvent an application limitation period, the motions judge was required to assess the essential nature of what the respondent is seeking.  In this case, the respondent claims to be entitled to a five per cent interest in 2012111 Ontario Inc. as a result of the fulfillment of the 2002 agreement.  Any entitlement that it has today flows from a contract – the meaning and enforceability of which is in dispute – but any cause of action that the respondent may have in respect of the 2002 contract is statute barred.

[9]               To overcome this difficulty, the respondent seeks to use the device of a declaration to do an end run around the applicable limitation period.

[10]           Moreover, were the respondent to obtain the declaration, the circumstances are akin to those found by Madam Justice Harvison Young in para. 16 of Bailey v. Canada (Attorney General), 2008 CanLII 53128 (ON SC).  It is readily apparent from the record that the declaration sought will be ineffective without further mandatory relief directed to the corporation or a shareholder to implement the shareholding interest if possible.  A determination that the respondent is entitled to a five per cent interest does not say from whom and by what means the shareholding interest is to be implemented.  Therefore, a declaration of entitlement alone is of no avail without further consequential relief which brings it outside s. 16 (1)(a) of the Limitations Act 2002.

Similarly, in Van Halteren v. De Boer Tool Inc., the Superior Court looked at the pith and substance of relief sought in regards of shares and determined that it was consequential:

[6]               Section 16.1 (1) of the Limitations Act, 2002 provides that there is no limitation period in respect of a proceeding for a declaration if no consequential relief is sought. The present claim, however, does not fall under that exception. The pith and substance of the claim is damages or a property interest in shares to compensate for $500,000 advanced to the defendant. No shares actually exist. It would be impossible for the court to make a declaration of rights with respect to shares that cannot be identified. The only meaningful remedy for the plaintiff would be in the nature of consequential relief. Accordingly the applicable prescription is the general limitation of two years after the cause of action is discovered or discoverable.

As an aside, the curious thing about s. 16(1)(a) is that it’s arguably unnecessary.  The Limitations Act applies to “claims” pursued in court proceedings, which are defined in s.1 as remedying loss resulting from wrongful conduct.  If a plaintiff doesn’t seek consequential relief, like damages, then the plaintiff isn’t pursuing a claim, and if there is no claim the Limitations Act doesn’t apply.

Ontario: Rebutting presumptive discovery is the plaintiff’s burden

The Court of Appeal decision in O’Brien-Glabb v. National Bank of Canada states the principle that the plaintiff bears the onus of establishing the inappropriateness of a proceeding as part of a discovery argument:

[13]      We agree with the appellant that it was the respondent who bore the onus of leading evidence to establish on a balance of probabilities that a proceeding was not appropriate in 2010 (see: Miaskowski (Litigation guardian of) v. Persaud, 2015 ONCA 758(CanLII) at para 27; Fennell v. Deol, 2016 ONCA 249 (CanLII) at para16; and Galota v. Festival Hall Developments Ltd., 2016 ONCA 585 (CanLII) at para 15).

Even a vague familiarity with the operation of s. 5 of the Limitations Act means this principle is self-evident, but it’s nevertheless helpful to have it stated explicitly.

Ontario: Does the limitations act apply to Notices of Objection?

In the Wall Estate, the court held that the Limitations Act does not apply to a claim asserted in a beneficiary’s Notice of Objection to Accounts:

[1]               The discreet issue for consideration at this motion is as follows:  Can an estate trustee move to strike a beneficiary’s Notice of Objection to Accounts in the face of the estate trustee’s Application to Pass Accounts, based on the Limitations Act, 2002, or laches or acquiescence?  For reasons that follow, I am satisfied that the beneficiary, Elizabeth Wall, is not barred from filing an objection to the accounts for the entire period under administration.

Marjorie Wall died in 2005.  The objector was Elizabeth Wall, her daughter and beneficiary of the estate.  Marjorie left the bulk of her estate to her two children in trust until they attained the age of 60 years.  Both children were under 60 at the time of Marjorie’s death.  The trustee had absolute discretion to pay funds to the children during their lifetime prior to reaching 60.  If they didn’t reach 60, the will provided that the estate’s residue was to be divided amongst nieces and nephews.  Elizabeth was 54 at the time of the application, so she had a vested interested in the discretionary trust and a contingent interest in the residue of the estate.

In response to her objection, the trustee took the position that he was not required to address it because it was time-barred, either by the Limitations Act or equity.

The court disagreed.  Relying on the decision in Armitage, the court reasoned that if a passing of accounts doesn’t fit the definition of a “claim” in the Limitations Act, neither does a Notice of Objection:

[31]           Based on the facts in Armitage, Hourigan J.A. found that the passing of accounts does not fit within the definition of a claim within the Limitations Act, 2002.  In my view, if the passing of accounts does not constitute a claim, I am not satisfied that a Notice of Objection is a claim.  In filing a Notice of Objection, the beneficiary is seeking answers to questions about steps taken by the estate trustee during the currency of an administration of an estate.  Answers to those questions may assist the beneficiary in consenting to the passing of accounts without the necessity of a formal hearing.  An absence of consent will require a formal hearing.  A formal hearing will assist the court in determining if the fees sought and investment steps taken are appropriate under all the circumstances.

[32]           The objections taken at their highest may result in a reduction or loss of compensation for the estate trustee or other remedies.  In this case, if the objections are successful to any extent, no additional funds would be payable immediately to Elizabeth as beneficiary of the discretionary trust.  The corpus of the estate would be enlarged, increasing the funds available for the discretionary trust, and ultimately, could increase the amount available to be paid to Elizabeth, but only if she survives to age 60.  On the facts here, I am not satisfied that the Notice of Objection rises to the level of a “claim” as contemplated by the Limitations Act, 2002.

This reasoning is problematic.  The threshold question is whether the Notice of Objection contains a “claim”.  If so, as the Limitations Act applies to all claims pursued in court proceedings, it would limit the claim pursued in the Notice of Objection.  Section 1 of the Limitations Act defines “claim”:  “a claim to remedy an injury, loss or damage that occurred as a result of an act or omission”.  Accordingly, answering the threshold question requires assessing whether the elements that comprise a claim—wrongful conduct and resulting damage—are present.

In Armitage, the Court of Appeal found that an attorney for property’s application to pass accounts was not a “claim”. The application did not seek a remedy for any damage, but rather court approval of the attorney’s conduct.

The decision Wall does not quote the definition of “claim” and does not explicitly consider its elements. Rather, it reasons that if the application to pass accounts in Armitage was not a “claim”, then neither was the Notice of Objection.  This is not a sound limitations analysis.

Indeed, the decision certainly gives the impression that the Notice of Objection was “claim”.  In it, Elizabeth alleged that the trustee had wrongfully carried out his duties resulting in a diminution of the funds available to her; in other words, she sought to remedy damage resulting from wrongful conduct.

It may be that the court arrived at the correct decision, but from a limitations perspective it’s a very dubious decision.

Update!

Leigh Sands kindly brought to my attention Iaboni Estate v. Iaboni in which an application judge considered a limitations defence raised in response to a notice of objection without any suggestion that this is an unsettled area of the law:

Did the limitation periods expire, such that the claims made in his Notice of Objection are out of time?

[32]           The objections of Mr. C. Iaboni that the trustee ‘excluded’ many valuable assets such as a mortgage, two businesses, a condo and life insurance policy from the estate of Lidia Iaboni and that when Lidia Iaboni became disabled, her husband’s wealth evaporated and the applicant has no interest in marshalling this wealth is, in part, a complaint about the administration of Umberto Iaboni’s affairs, between the onset of his disability in 2006 and his death in 2010 and latterly a complaint about the administration of his mother’s affairs between the onset of her disability in 2006/2007 and before her death in 2012. His allegations in the Notice of Objection filed in his mother’s estate, as outlined above were in substance the same as those made in the litigation he initiated on December 15, 2010.  All of the transactions about which he complains were disclosed to him no later than the accounting delivered on behalf of his siblings pursuant to the Minutes of Settlement, with the possible exception of the discharge of the mortgage on his sister’s home, which was a matter of public record.  His civil action was dismissed on May 15, 2013.

[33]           It appears, therefore, that Mr. C. Iaboni’s Notice of Objection raises issues as particularized above that are outside of the 2-year period within which they may have been pursued.

The Court of Appeal upheld the decision:

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

It is certainly arguable that this decision is determinative of the issue, even if the court determined it without analysis or acknowledgement that it is the subject of debate.

However, Matthew Furrow, who is a far greater authority on these issues than me, disagrees.  He notes that really, all the Court held was that the facts were dispositive of the appeal, and not the limitations analysis.  I think he’s right, which means uncertainty remains.

 

 

 

Ontario: the limitation of applications to recover real estate advances

In Scicluna v. Solstice Two Limited, the Court of Appeal reminds us that an application to recover monies advanced in a real estate purchase is subject to the Real Property Limitations Act:

[25]      Although the application judge should have responded overtly in her decision to Solstice’s limitation period defence, she was clearly correct to reject it. In my view, Yim v. Talon International Inc., 2017 ONCA 267 (CanLII), 137 O.R. (3d) 184 confirms that Ms. Scicluna’s claim is governed by the 10 year limitation period in s. 4 of the Real Property Limitations Act, R.S.O. 1990, c. L.15(“RPLA”), not by the Limitations Act. I reject Solstice’s attempt to distinguish this case based on the factual difference that Yim dealt with a deposit whereas the “forfeited money” claimed by Solstice is no longer a deposit. The RPLA governs actions to recover “land”, and “land” is defined in s. 1 as including “money to be laid out in the purchase of land”. Ms. Scicluna’s application to recover monies advanced in a real estate purchase falls under that definition regardless of whether it is properly characterized as a deposit.al

Ontario: rectification is a “claim”

The Court of Appeal’s decision in Alguire v. The Manufacturers Life Insurance Company is noteworthy for the following points:

It affirms that a request for rectification is a “claim” within the meaning of the Limitations Act:

[26]      In my view, Manulife’s request for rectification is a claim. It is more than just a denial of Mr. Alguire’s claim; it is an independent claim. Even if Mr. Alguire had not brought this proceeding, Manulife would have been entitled to bring an application seeking rectification of the Policy. Consequently, Manulife’s request goes beyond a mere defence and qualifies as a claim for rectification, which is equitable relief: Fairmont, at para.12. The Limitations Act applies to equitable claims: McConnell v. Huxtable, 2014 ONCA 86 (CanLII), 118 O.R. (3d) 561, at paras. 48-49.

This may be the correct result, but the court didn’t arrive at it by asking the correct question (at least not explicitly).  Section 1 of the Limitations Act defines “claim”: a claim to remedy damage resulting from wrongful conduct.  Accordingly, whether there is a claim is a matter of whether there is wrongful conduct and resulting damage.  It does not necessarily follow from a party seeking an order or declaration that there is a claim.  There are circumstances where a party asks the court to do something—for example to order the passing of accounts—without there having been wrongful conduct.

There’s another instance of confusion about the nature of the “claim”:

[34]      […] A claim, however, requires an act or omission of the person against whom it is made: Limitations Act, s. 5(1)(a)(iii). In this case, it is Mr. Alguire’s resiling from the parties’ intended agreement that grounds the rectification claim. Even though Manulife discovered the error in the paid-up values in the Policy in 2007, it did not know, and could not reasonably ought to have known, that Mr. Alguire would seek to resile from the parties’ intended agreement at some point in the future. Manulife therefore cannot be faulted for failing to act with due diligence.

It’s because of the s. 1 definition of “claim” that it requires wrongful conduct, not because s. 5(1)(iii) makes knowledge of the wrongful conduct the precondition of discovering a claim.

The Court follows Albertan authorities for the principle that s. 16(1)(a) should be narrowly construed:

[27]      The next issue is whether Manulife can rely on s. 16(1)(a) of the Limitations Act, which provides that there is no limitation period in respect of “a proceeding for a declaration if no consequential relief is sought.”

[28]      In the context of a limitation period analysis, declaratory relief should be narrowly construed so as to ensure that s. 16(1)(a) is not used as a means to circumvent applicable limitation periods: Joarcam, LLC v. Plains Midstream Canada ULC,2013 ABCA 118 (CanLII), 90 Alta. L.R. (5th) 208, at para. 7.

[29]       I conclude that this subsection is unavailable to Manulife in the circumstances of this case, as it is seeking consequential relief.  The remedy of rectification sought in this case has significant consequences for the parties and goes beyond clarifying the nature of a particular obligation. Mr. Alguire stands to receive significantly less money as a result of the rectification compared to what he argued he was entitled to on the Policy’s face.

The Court held that policy considerations cannot drive the results:

[33]      Finally, Mr. Alguire raises policy considerations in support of his submission that the claim for rectification is statute-barred.  Those considerations cannot, in the circumstances of this case, drive the result.  The Limitations Act was designed to promote certainty in the analysis of when claims are statute-barred.  The task of a reviewing court is to determine the applicable limitation period having regard to the legislation. A limitation period analysis is not a laches analysis where the court’s investigation is driven by the equities of the situation.

This prompts the obvious question: are there circumstances where policy considerations could inform a limitations analysis? I wouldn’t think so, and it seems like the real policy concern is avoiding the introduction of a new factor in the limitations analysis.  It’s easy to see how litigants might seize on this obiter as standing for the principle that there are circumstances where, in addition to the matters in s. 5(1), a court must consider the impact of policy on the commencement of time.

 

 

 

Ontario: Technicalities will not preclude misnomer relief

The plaintiffs in Galanis v. Kingston General Hospital commenced a proceeding by notice of action within the limitation period, and served the statement of claim outside the limitation period.  When the plaintiffs sought to add defendants on the basis of misnomer, the defendants took the novel position that the court could only look at the notice of action when applying the “litigation finger” test.  The court had none of this rather dubious argument:

[6]               The plaintiffs rely on the doctrine of misnomer. They allege that they did not know the names of the proposed defendants when the notice of action was issued. This evidence is uncontradicted.

[7]               Dr. Pattee does not oppose the motion nor does Ms. Rafuse. Drs. Dodge and Ali do, asserting that the doctrine of misnomer does not apply to them in the circumstances and that, because the limitation period had expired by the date the statement of claim was filed, they should not be added as defendants.

[8]               The short answer to this motion is found in the opening paragraph of Stechysyn v. Domljanovic, 2015 ONCA 889 (CanLII) :

On a motion to correct the name of the defendant on the basis of misnomer, as long as the true defendant would know on reading the statement of claim he was the intended defendant, a plaintiff need not establish due diligence in identifying the true defendant within the limitation period: Kitcher v. Queensway General Hospital(1997), 1997 CanLII 1931 (ON CA), 44 O.R. (3d) 589 (C.A.), at paras. 1 and 4; Lioyd v. Clark, 2008 ONCA 343 (CanLII), 44 M.P.L.R. (4th) 159, at para.4.

[9]               Drs. Dodge and Ali advance the novel position that I can look only at the notice of action and, if I am restricted to that pleading, the requisite “litigation finger” points solely at Dr. Pattee. Alternatively, I should exercise my residual discretion and not allow the addition of Dr. Dodge because, at the time of the alleged malpractice, he was a resident in anesthesiology, acting under Dr. Pattee’s direction. Although this submission is not made on behalf of Dr. Ali in the factum, counsel urged me in oral submissions to do the same because of his limited involvement in the care of Ms. Galanis.

[10]           There is no reported decision that makes the distinction between a notice of action and statement of claim relied upon by the proposed defendants. The decisions in Stechysyn and Spirito Estate v. TrilliumHealth Centre, 2008 ONCA 762 (CanLII), both say that, as long as a litigation finger is pointing from the statement of claim, that is sufficient. I consider these decisions binding on me even when the proceeding is commenced by a notice of action.

The court also rejected the proposed defendants’ argument that the plaintiffs using a singular rather than plural pseudonym was of some consequence:

[12]           The fact that a singular, not plural, pseudonym was used is of no moment; to accede to the proposed defendants’ argument that only one party can be substituted if “Doe” rather than “Does” appears in the title of proceedings would be to allow form to triumph over substance.  In this regard, I rely on subrules 1.04(1) and 2.01(1)(a) of the Rules of Civil Procedure.

 

Ontario: Adding a party after the presumptive expiry of the limitation period requires evidence

The decision in Laurent-Hippolyte v. Blasse et al. is a reminder that on a motion to add a party after the presumptive expiry of the limitation period, the plaintiff needs to file evidence of due diligence:

[21]           TWD argues that the motion must be dismissed because the Plaintiff nor any other affiant has provided any evidence as to discoverability during the relevant time period – that being the two-year period after the date of loss. TWD asserts that the absence of any such evidence is fatal to the motion.

[22]           I agree with TWD. There is absolutely no evidence in this case as to what occurred between the date of loss and the time that the Statement of Claim was issued.  While I accept that Plaintiffs should not be required to send pro forma letters and that the expectations placed on unrepresented Plaintiffs to identify tortfeasors should be low, this does not mean that a Plaintiff can succeed on these motions with absolutely no evidence on the issue.

[23]           At the very least the Plaintiff, or other affiant, could have explained what was happening in the relevant two-year period and/or describe the abilities that the Plaintiff did or did not have in pursuing the Claim. Without any evidence to this effect, a Court cannot determine, as stated in section 5(1)(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).” I was provided with no evidence on the Plaintiff’s abilities or circumstances. I have no evidence of diligence or an explanation for any lack of diligence. When was counsel retained? What steps did counsel take if counsel was retained? If no steps were taken, why not?

Ontario: the impact of an appeal on the appropriateness of a proceeding

When the success of an appeal in a related but separate proceeding (involving the same defendants) will eliminate damage, is a proceeding to remedy that damage inappropriate until the appeal’s determination?  No, held the Court of Appeal in Tapak v. Non-Marine Underwriters, Lloyd’s of London:

[13]      The second is to submit that the appeal against the other defendants, if successful, might have eliminated their losses and thus the appellants did not know that this action was “an appropriate means” to seek to remedy its losses until the appeal was dismissed, relying on s. 5(1)(a)(iv) of the Limitations Act, 2002 and Presidential MSH Corp. v. Marr, Foster & Co. LLP (2017), 135 O.R. (3d) 321, 2017 ONCA 325 (CanLII). In our view, s. 5(1)(a)(iv) is not intended to be used to parse claims as between different defendants and thus permit one defendant to be pursued before turning to another defendant. Rather, it is intended to address the situation where there may be an avenue of relief outside of a court proceeding that a party can use to remedy their “injury, loss or damage” – see, for example, 407 ETR Concession Co. v. Day, 2016 ONCA 709 (CanLII), 133 O.R. (3d) 762.

The Court also included a reminder that seeking a declaration in addition to consequential relief will not avoid a limitations defence by engaging s. 16(1)(a) of the Limitations Act:

[14]      The third is the argument that the appellants only sought declaratory relief and therefore, under s. 16(1)(a) of the Limitations Act, 2002, the two year limitation period does not apply. That argument cannot succeed because the claim in this action was not limited to declaratory relief. The claim also sought consequential relief, namely damages, so s. 16(1)(a) does not apply.