Ontario: the limitation of uninsured motorist proceedings

Sarokin v. Zhang has a comprehensive summary of the limitation of uninsured motorist proceedings. It’s a good resource if you practice in the area:

[28]              Section 265 (1) of the Insurance Act (Ontario) sets out the mandatory provisions for uninsured automobile coverage to be contained in all Ontario automobile insurance policies:

 265 (1) Every contract evidenced by a motor vehicle liability policy shall provide for payment of all sums that,

(a) a person insured under the contract is legally entitled to recover from the owner or driver of an uninsured automobile or unidentified automobile as damages for bodily injuries resulting from an accident involving an automobile;

(b) any person is legally entitled to recover from the owner or driver of an uninsured automobile or unidentified automobile as damages for bodily injury to or the death of a person insured under the contract resulting from an accident involving an automobile; and

(c) a person insured under the contract is legally entitled to recover from the identified owner or driver of an uninsured automobile as damages for accidental damage to the insured automobile or its contents, or to both the insured automobile and its contents, resulting from an accident involving an automobile,

subject to the terms, conditions, provisions, exclusions and limits as are prescribed by the regulations.

 [29]              Regulation 676 under the Insurance Act sets out the applicable terms, conditions, provisions, exclusions and limits to payments under an automobile insurance policy pursuant to s. 265(1) of the Insurance ActSection 6 of Regulation 676 sets out the mandatory notice provisions for claims made under s. 265(1) of the Insurance Act:

 (1) A person entitled to make a claim in respect of the bodily injury or death of a person insured under the contract shall do so in accordance with this section.

(2) The claimant shall give the insurer written notice of the claim within thirty days after the accident or as soon as is practicable after that date.

(3) The claimant shall give the insurer, within ninety days after the accident or as soon as is practicable after that date, such proof as is reasonably possible in the circumstances of the accident, the resulting loss and the claim.

(4) The claimant shall provide the insurer upon request with a certificate of the medical or psychological advisor of the person insured under the contract stating the cause of the injury or death and, if applicable, the nature of the injury and the expected duration of any disability.

 [30]              The applicable limitation periods for claims under s. 265(1) are set out in section 8 of Regulation 676:

 (1) No person is entitled to bring an action to recover an amount provided for under the contract, as required by subsection 265 (1) of the Act, unless the requirements of this Schedule with respect to the claim have been complied with.

(2) An action or proceeding against an insurer in respect of loss or damage to the insured automobile or its contents shall be commenced within one year after the loss or damage occurs.

(3) An action or proceeding against an insurer in respect of bodily injury or death, or in respect of loss or damage to property other than the insured automobile or its contents, shall be commenced within two years after the cause of action arises.

 [31]              The leading case with respect the application of the Limitations Act to claims under OPCF 44R is Schmitz v. Lombard General Insurance Company of Canada, 2014 ONCA 86. Following its decision in Markel Insurance Co. of Canada v. ING Insurance Co. of Canada, 2012 ONCA 218, the Court of Appeal held that the limitation period for claims under OPCF 44R starts to run on the day after a demand for indemnity is made:

“[20] ….Once a legally valid claim for indemnification under the OPCF 44R is asserted, the underinsured coverage insurer is under a legal obligation to respond to it. To paraphrase and adapt Sharpe J.A.’s observations, at para. 27 of Markel, the claimant for indemnity under the OPCF 44R “suffers a loss from the moment [the insurer] can be said to have failed to satisfy its legal obligation [under the OPCF 44R]”. Thus, the claimant suffers a loss “caused by” the underinsured [page700] coverage insurer’s omission in failing to satisfy the claim for indemnity the day after the demand for indemnification is made.” (Schmitz at paras. 20 and 26)

[32]              Unlike the claim of an injured party against a tortfeasor, the cause of action for an insured’s claim against his or her own insurer for the insurer’s failure to indemnify pursuant to the unidentified motorist endorsement is for breach of contract which does not arise until the insurer breaches its insurance contract to indemnify by failing or refusing to pay the insured’s claim (Jones v. Doe et al, 2018 ONSC 4780 at paras. 25-26Chahine v. Grybas, 2014 ONSC 4698 at paras. 34-35Tucker v. Unknown Persons, 2015 NLCA 21 at paras. 38-39).

[33]              In Schmitzthe Court of Appeal rejected the insurer’s submission that the definition of discoverability in s. 17 of OPCF 44R applies, holding that both ss. 4-5 of the Limitations Act apply to determine the commencement of the limitation period for an OPCF 44R claim (Schmitz at para. 16). The Court of Appeal also held that insurers are not prejudiced as they could require that insureds provide timely notice pursuant to other provisions in OPCF 44R and other insurance contracts (Schmitz at para. 22). The Court of Appeal also rejected the insurer’s arguments that the limitation period should begin to run on the day a claimant accumulates a body of evidence that would permit it a reasonable chance of persuading a Judge that his or her claims will exceed the limits of their policy and that starting the limitation period when a demand for indemnification is made does not limit when the demand could or should be made such that an insured does not need to wait until the outcome of the trial is known (Schmitz at paras. 23-24).

[34]              Markel arose from a loss transfer claim made by one insurer against another seeking indemnification for statutory accident benefits paid to an insured. The Court of Appeal held that the earliest the limitation period can start to run is the date the first party insurer demands indemnification from the second party insurer (Markel at para. 36). However, the Court also held that a claim cannot be delayed for tactical or other reasons and must be commenced when it is “legally appropriate”:

“[34] This brings me to the question of when it would be “appropriate” to bring a proceeding within the meaning of s. 5(1)(a)(iv) of the Limitations Act. Here as well, I fully accept that parties should be discouraged from rushing to litigation or arbitration and encouraged to discuss and negotiate claims. In my view, when s. 5(1)(a)(iv) states that a claim is “discovered” only when “having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it”, the word “appropriate” must mean legally appropriate. To give “appropriate” an evaluative gloss, allowing a party to delay the commencement of proceedings for some tactical or other reason beyond two years from the date the claim is fully ripened and requiring the court to assess to tone and tenor of communications in search of a clear denial would, in my opinion, inject an unacceptable element of uncertainty into the law of limitation of actions.” (Markel at para. 34)

[35]              These issues were considered more recently by Justice LeMay in Howell v. Jatheeskumar, 2016 ONSC 1381, a case decided in the context of an OPCF 44R claim similar to the present case. In Howellplaintiff’s counsel sent a third party notice letter to the defendant’s presumptive insurer 7.5 months after the accident. Plaintiff’s counsel did not follow up with the presumptive insurer for 2 years and 4 months. At that time, the presumptive insurer advised that it was not the defendant’s insurer. Five months later, the plaintiff brought a motion to add the plaintiff’s own automobile insurer, TD.

[36]              LeMay J. held that that there were 3 possible outcomes. The court could determine that: i.) there was insufficient due diligence on the part of the Plaintiff and no other reason to extend the time limits thereby defeating any claim the plaintiff may have to extend the time limits as a result of the principles of discoverability; ii.) there was a triable issue about the issues of discovery and whether the claim was timely as a result of the application of the discoverability principles which could include whether there was any other statute under which the limitations period could be extended; or iii.) on the materials filed there was clearly an issue of discoverability that made the claim timely (Howell at para. 35).

 [37]              LeMay J. concluded that it was clear from Schmitz and Markel that there were good arguments available to the plaintiff to defeat any limitations defence advanced by TD:

37  In this case, the Plaintiff has a reasonable argument that the claim against TD General Insurance was not discoverable until August of 2015. However, there may be issues relating to the Plaintiff’s due diligence that TD General Insurance may wish to raise. As a result, I am prepared to find that this claim falls at least into the second category, that there was a triable issue about discovery. As a result, the claim should be amended.

38  The Plaintiff is not required to plead any discoverability issues at this stage (see Collins v. Cortez, supra at paragraph 15). Instead, if TD General Insurance raises a Limitations Act issue in its defence, then the Plaintiff will be required to plead the relevant facts on discoverability in reply to TD’s defence. (Howell at paras. 37-38)

Ontario: failing the litigation finger test

Reimer v. Toronto (City) is an example of failing to make out the litigation finger test.  The plaintiff in a slip and fall action named “John Doe Maintenance Company” as a defendant and sought leave to correct it to the name of the actual maintenance company.  However, she didn’t plead the particulars of the maintenance company’s alleged negligence with sufficient detail so that the company would know on reading the pleading that it was the intended defendant.  It’s a warning not to presume that the court will grant misnomer relief in regards of a John Doe in all circumstances.  These are the material paragraphs:

[14]           I accept that this is a situation where the plaintiff may be able to rely on the doctrine of misnomer. The plaintiff has named a defendant as John Doe Maintenance Company and it is permissible, if properly pleaded, for that one defendant named by pseudonym to stand in place of more than one person.

[15]           In my view, however, the key principle to be considered on this motion is described by Justice MacLeod in Loy-English as follows:

To be a misnomer, the plaintiff must clearly have intended to sue the proposed defendant. The pleading must be drafted with sufficient particularity that an objective and generous reading of the pleading would demonstrate that the “litigation finger” is pointing at the proposed defendant. To put this another way, the pleading must be sufficiently clear that a properly informed defendant reading the allegation would be able to recognize that he or she was the target of the allegation. The allegation must be clear and definite on its face and not held together through a series of assumptions about what the person reading the statement of claim might know.

[16]           Certainly, the plaintiff has identified the correct date and location of the accident at the beginning of her statement of claim. The proposed defendants were responsible for general sidewalk maintenance and sidewalk snow removal at that location on that date. At first glance, this appears to point the litigation finger at the proposed defendants.

[17]           However, the John Doe Maintenance Company defendant is not separately described, specified or identified in the initial pleading.[1] The plaintiff’s allegations of negligence are lumped together as applicable to all of the named defendants. The claim has not been drafted to particularize the specific rolls played by any of the unidentified persons. See Loy-English at paragraph 21b. This lack of particularity militates against a finding of misnomer.

[18]           The conclusion that the plaintiff’s claims are partly directed at Maple and Royal becomes even less obvious as the circumstances of the plaintiff’s accident are further particularized in the statement of claim. The location of the plaintiff’s accident is broadly defined as “at or near the intersection of Kennedy Road and Sheppard Avenue East”. The further particulars in the statement of claim state that the plaintiff fell twice. First, on the “sidewalk” when she stepped off the bus and then a second time when she “violently” fell on the “roadway” causing her to sustain personal injuries. It is not at all clear from the language of the pleading that the plaintiff was injured when she first fell on the sidewalk when exiting the bus. The roadway fall clearly suggests resulting injuries, but the roadway was the responsibility of Crupi and not the proposed defendants. The fact that this distinction is made in paragraph 4 of the statement of claim, but not elsewhere, leads to the conclusion, from reading the statement of claim, that the plaintiff’s injuries arose from the fall on the roadway and not the sidewalk.

[19]           In my view, the proposed defendants, when reading the statement of claim as a whole, would more likely conclude that the identity of the John Doe Maintenance Company defendant was Crupi alone and did not also include Maple and Royal. A fair reading of the statement of claim would not lead to the conclusion that the plaintiff must have meant Maple and Royal.

[20]           I have therefore concluded that the plaintiff has not satisfied her onus to show that Maple and Royal should be substituted for the defendant John Doe Maintenance Company on the basis of misnomer.

Ontario: Court of Appeal narrows the s. 5(1)(a)(iv) “alternative process” principle

The Court of Appeal decision in Beniuk v. Leamington (Municipality) is an important addition to s. 5(1)(a)(iv) appropriateness jurisprudence.

It has become popular to argue that an alternative dispute resolution process with a clear and identifiable conclusion delays the appropriateness of a civil proceeding as a remedy, and therefore discovery of a claim.  Beniuk holds that this isn’t the law: whether an alternative process impacts on appropriateness is a question of fact that the plaintiff must prove.

The appellant in Beniuk argued that the Court of Appeal’s decision in 407 ETR stands for the principle that when there is an alternative dispute resolution process, an action becomes an appropriate remedy only when the alternative process concludes.  It followed that that the limitation period or the appellant’s action didn’t not run until the OMB confirmed that it did not have jurisdiction over its cause of action: if the OMB assumed jurisdiction, there would have been no need for the action; therefore, the OMB hearing was an alternative process that until concluded rendered an action inappropriate.

Nope, held the court.

A limitation period doesn’t run whenever there is an ongoing alternative process.  Whether an alternative process delays the running of time turns on the particular facts of each case.  Evidence is necessary to explain the basis for pursuing the alternative process rather than commencing a proceeding.

[60]      407 ETR does not stand for a general principle that a limitation period will not begin to run whenever an alternative process that might resolve the matter has not yet run its course. It is a matter of evidence. Indeed, Laskin J.A. noted, at para. 34, that when an action is “appropriate” will depend on the specific factual or statutory setting of each individual case, and that case law applying s. 5(1)(a)(iv) is of limited assistance because each case will turn on its own facts. In 407 ETR, the court considered the evidence on the motion about the statutory scheme and the effectiveness of the administrative process before deciding that it would be reasonable for such a process to run its course before a civil proceeding was appropriate.

[61]      Recently, several cases considering the application of s. 5(1)(a)(iv) have come before this court. The court has emphasized, echoing the words of Laskin J.A. in 407 ETR, that when a proceeding is appropriate will turn on the facts of each case: see, for example, Nelson v. Lavoie2019 ONCA 43147 C.C.P.B. (2d) 1, at para. 25, and Ridel v. Goldberg, 2019 ONCA 636436 D.L.R. (4th) 453, at para. 71.

[62]      This case did not involve an alternative process available under a statutory scheme. It did, however, involve an alternative process that the appellants were pursuing, as in 407 ETR, against the same party.

[63]      The fact that a plaintiff chooses to pursue an alternative process does not in itself suspend the running of the limitation period under s. 5(1)(a)(iv). Whether an alternative process will have this effect will depend on the particular factual circumstances and the evidence before the court in determining the limitations issue. In this case, there was no evidence to explain why the appellants chose to pursue the OMB route rather than commencing both an OMB proceeding and a civil action.

[74]      As I have already observed, 407 ETR does not stand for the general principle that it will always be appropriate to wait until another process has run its course before commencing a civil action in respect of a claim which has otherwise been “discovered” under s. 5(1)(a)(i), (ii) and (iii). It is incumbent on a party asserting that it was reasonable to pursue a claim in another forum to explain why this approach was reasonable. That is what occurred, and was ultimately successful, in the 407 ETR case.

[75]      While one of the principles recognized in connection with s. 5(1)(a)(iv) is the deterrence of unnecessary litigation, a plaintiff is not entitled in all cases to pursue one route, and to expect the limitation period to be tolled in respect of any other claim it may have in respect of its loss or damage. Said another way, s. 5(1)(a)(iv) does not permit a party to engage in litigation in stages for the same wrong. An example is Lilydale Cooperative Limited v. Meyn Canada Inc.2019 ONCA 761439 D.L.R. (4th) 385, where this court considered the submission that a limitation period in respect of a third party claim in Ontario was suspended while the defendant was seeking to establish that Alberta was the correct forum for the litigation. Feldman J.A. rejected the argument that it was not legally appropriate to commence a legal proceeding while another resolution process that might resolve the matter was ongoing. She held that such an interpretation of “appropriate” was inconsistent with the purpose of the Limitations Act and could extend the limitation period well beyond the two-year threshold in an uncertain and unpredictable manner. There were also no significant savings to be achieved by not commencing the third party claim until the forum challenge was complete.

Here, the OMB wasn’t an alternative process, but an alternative forum, and the availability of multiple forums doesn’t impact on discovery because the law deems a party to know the applicable legal principles (that is, which forum is correct):
[70]      While I can appreciate why the appellants may have thought they had a claim for injurious affection, it has always been a principle of limitations law that a plaintiff knows, or could by the exercise of reasonable diligence, determine what legal principles apply. See, for example, Boyce v. Toronto Police Services Board2011 ONSC 53, aff’d: 2012 ONCA 230, leave to appeal refused: [2012] S.C.C.A. No. 265, where Low J. stated, at para. 23:
Section 5(1)(a)(iv) does not import an idiosyncratic limitation period calibrated by the claimant’s familiarity with or ignorance of the law. The test is an objective one. While it is possible to envisage that a new kind of right might arise that has not been hitherto protected, thus making it arguable that a civil proceeding might not be seen objectively as an appropriate means to seek to remedy, a battery causing personal injury is a classic example of the kind of wrong that is appropriate for redress by court action. A citizen is presumed to know the law of the land. [Emphasis added.]

This strikes me as a material and reasonable narrowing of the s. 5(1)(a)(iv) “alternative dispute resolution process” principle.  Whether an alternative process impacts on discovery is a question of fact, and the plaintiff will need to establish that it was reasonable in the circumstances to allow the process to complete before commencing a proceeding.  This should discourage some of the more creative alternative process arguments, of which I see many.

Also noteworthy is the confirmation that an action in nuisance or negligence for damages relating to real property is “an action to recover land” for the purpose of RPLA and subject to its ten-year limitation period:

[42]      Subsection 2(1)(a) of the Limitations Act provides that the Limitations Act does not apply to proceedings to which the RPLA applies. Section 4 of the RPLA provides for a ten-year limitation period for an action to recover land:

 No person shall make an entry or distress, or bring an action to recover any land or rent, but within ten years next after the time at which the right to make such entry or distress, or to bring such action, first accrued to some person through whom the person making or bringing it claims, or if the right did not accrue to any person through whom that person claims, then within ten years next after the time at which the right to make such entry or distress, or to bring such action, first accrued to the person making or bringing it.

[43]      When the elements that do not apply to this case are removed, s. 4 provides that “no person shall bring an action to recover any land, but within ten years after the time at which the right to bring any such action first accrued to the person bringing it.” The issue here is whether the appellants’ claim is an “action to recover land” within the meaning of the RPLA.

 [44]      The appellants point to the definition of “land” in s. 1 of the RPLA:
 “land” includes messuages and all other hereditaments, whether corporeal or incorporeal, chattels and other personal property transmissible to heirs, money to be laid out in the purchase of land, and any share of the same hereditaments and properties or any of them, any estate of inheritance, or estate for any life or lives, or other estate transmissible to heirs, any possibility, right or title of entry or action, and any other interest capable of being inherited, whether the same estates, possibilities, rights, titles and interest or any of them, are in possession, reversion, remainder or contingency; [Emphasis added.]

[45]      They rely on the term “messuages”, which refers to a dwelling house, its outbuildings, the area immediately surrounding the dwelling, and the adjacent land appropriate to its use: McConnell v. Huxtable2014 ONCA 86118 O.R. (3d) 561, at para. 14. The appellants also parse out and rely on the phrase “any…right…of…action”. Putting these pieces together, the appellants submit that an “action to recover land” includes an action to recover rights that run with the land, and that a cause of action for nuisance is tied to and arises out of the right to use and enjoy land without substantial interference. Accordingly, the appellants submit that a cause of action for nuisance is an incorporeal or intangible right that runs with the property and is captured by the definition of “land” in the RPLA. They point to a passage in Equitable Trust Co. v. 2062277 Ontario Inc.2012 ONCA 235109 O.R. (3d) 561, where Perell J. (sitting on this court ad hoc) stated that the RPLA is intended to cover actions “affecting” land: Equitable Trust, at para. 28.

 [46]      I do not accept the appellants’ submission. There is no support in the jurisprudence that an action in nuisance or negligence for damages relating to real property is “an action to recover land” for the purposes of the RPLA. That land or real property is involved in an action does not mean that the RPLA applies: Harvey v. Talon International Inc.2017 ONCA 267137 O.R. (3d) 184, at paras. 51-52. Typically, actions to recover land seek to assert property rights. And Perell J.’s remark from Equitable Trust that the RPLA covers actions “affecting” land has been commented on specifically by this court, and later by Perell J. himself, as a statement that should be interpreted narrowly and not out of the context of that case.

Lastly, I note that the court stated the standard of review with respect to each limitations issue.  For whatever reason, the court frequently omits an explicit standard of review analysis when considering limitations issues.  This approach is helpful and I hope to see more of it.

[41]      The motion judge’s conclusion that s. 4 of the RPLA does not apply to the appellants’ civil action is reviewable on a standard of correctness: Housen v. Nikolaisen2002 SCC 33[2002] 2 S.C.R. 235, at para. 8. For the reasons that follow, I agree with the motion judge’s conclusion on this issue.

[53]      The question of whether a limitation period expired prior to the issuance of a statement of claim is a question of mixed fact and law and subject to review on the standard of palpable and overriding error: Longo v. MacLaren Art Centre Inc.2014 ONCA 526323 O.A.C. 246, at para. 38. However, where there is an extricable error of principle, the standard of review is correctness: Housen, at paras. 8 and 36.

[79]      The appellants contend that the motion judge made a palpable and overriding error when he concluded that their claim was statute-barred even on the basis of what he described as a “rolling limitation period”. A “palpable and overriding error” is “an obvious error that is sufficiently significant to vitiate the challenged finding of fact”: Longo, at para. 39.

Ontario: misconceptions about misnomer

In Sora et al. v. Emerson Electrical Co. et al., the court reminds us that entitlement to misnomer relief doesn’t require establishing, as is sometimes argued, that the plaintiff intended to name the correct party and that the correct party knew subjectively that it was the intended defendant:

[21]           The plaintiffs issued their statement of claim before the expiry of the limitation period. The pseudonyms used, “John Doe Retailer” and “John Doe Installer” pointed at the Hurley defendants. The “litigation finger” test is satisfied. In Stechyshyn v. Domljanovic2015 ONCA 889129 O.R. (3d) 236 at para 1 the Court of Appeal clearly stated that showing due diligence is not required:

On a motion to correct the name of a 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: see Kitcher v. Queensway General Hospital (1997), 1997 CanLII 1931 (ON CA)44 O.R. (3d) 589 (C.A.), at paras 1 and 4; Lloyd v. Clark, 2008 ONCA 34344 M.P.L.R. (4th) 159, at para. 4.

[22]           While in many cases “coincidence” exists “between the plaintiff’s intention to name a party and the intended party’s knowledge that it was the intended defendant” [Lloyd v. Clark2008 ONCA 34344 M.P.L.R. (4th) 159 para. 4], this is not a necessary requirement to rely upon misnomer. The question is only whether a reasonable person reading the claim would recognize him or herself as the defendant: see Davies v. Elsby Brothers Ltd., [1960] 3 All E.R. 672[1961] 1 W.L.R. 170 (C.A.), at p. 676. To impose a notice requirement would be inconsistent with the broader application of misnomer and subrule 21(2) of the Limitations Act, 2002.

Ontario: the Court of Appeal on Crown Liability and Proceedings Act limitation period

In Brazeau v. Canada (Attorney General), the Court of Appeal held that a claim for damages arising from the adoption and maintenance of a federal regulatory policy regime that applies in all provinces arises “otherwise than in a province” and is therefore subject to the limitation period in s. 32 the Crown Liability and Proceedings Act.  Federal limitation principles apply to that limitation period:

[32]      We agree with the motion judge that the six-year federal limitation period applies to these claims. The claims for Charter damages in both cases are with respect to the adoption and maintenance of a federal regulatory policy regime regarding administrative segregation that applied in all provinces. In this sense, the claims for Charter damages arise “otherwise than in a province”: see Markevich v. Canada2003 SCC 9[2003] 1 S.C.R. 94. As found by the motion judge, the start date for claims in Brazeau is July 20, 2009, and in Reddock, it is March 3, 2011.

[33]      We do not, however, agree with how the motion judge dealt with the potential tolling of the limitation period for particular individuals. At para. 386 of Brazeau, the motion judge said it was open to individual claimants to rebut the running of “the six-year limitation period in accordance with the laws relating to prescription and the limitation of actions in force in a province”. If the federal limitation period applies, we do not understand how the tolling of that limitation period could be determined by provincial law. The Charter claims in both cases are governed by the federal limitation period and the jurisprudence relating to the tolling of that limitation period: see e.g., Doig v. Canada (Minister of National Revenue)2011 FC 371387 F.T.R. 156.

I confess that it’s not clear to me how s. 32 the Crown Liability and Proceedings Act can oust the application of the Limitations Act.  Claims against the Crown are not excluded from limitation in s. 2, and the CLPA limitation period isn’t in the Limitation Act’s s. 19 schedule of limitation periods that remain in force. I’ve never seen this conflict explained, though to be fair I haven’t read into it too deeply.

Ontario: Court of Appeal on the limitation of equitable set-offs

In 3113736 Canada Ltd. v. Cozy Corner Bedding Inc., the Court of Appeal explains why an equitable set-off is not subject to limitation:

[37]      I would not give effect to this argument. Although equitable set-off is a defence, it is one that arises from the defendant having a “cross-claim” that is closely connected to the plaintiff’s claim: Telford v. Holt1987 CanLII 18 (SCC)[1987] 2 S.C.R. 193, at p. 212. It is a way of raising, as a defence, a plaintiff’s liability to take into account a loss it occasioned to the defendant in reduction of the plaintiff’s claim. It is often referred to as a “claim for equitable set-off”: Canada Trustco Mortgage Co. v. Pierce (Estate Trustee of) (2005), 2005 CanLII 15706 (ON CA)254 D.L.R. (4th) 79 (C.A.), at para. 50, leave to appeal refused: [2005] S.C.C.A. No. 337.

Ontario: Court of Appeal on adding a claim after the limitation period’s expiry

 

The Court of Appeal decision in The Catalyst Capital Group Inc. v. Dundee Kilmer Developments Limited Partnership follows Klassen for its statement on adding a claim after the expiry of the limitation period:

[75]      I accept this submission. The governing principles were stated by this court in Klassen v. Beausoleil2019 ONCA 40734 C.P.C. (8th) 180, at paras. 27-30:

 An amendment [to a statement of claim] will be statute-barred if it seeks to assert a “new cause of action” after the expiry of the applicable limitation period: North Elgin, at paras. 19-23, 33; Quality Meat Packers, at para. 65. In this regard, the case law discloses a “factually oriented” approach to the concept of a “cause of action” — namely, “a factual situation the existence of which entitles one person to obtain from the court a remedy against another person”: North Elgin, at para. 19; Quality Meat Packers, at para. 65.

An amendment does not assert a new cause of action — and therefore is not impermissibly statute-barred — if the “original pleading … contains all the facts necessary to support the amendments … [such that] the amendments simply claim additional forms of relief, or clarify the relief sought, based on the same facts as originally pleaded”: Dee Ferraro, at paras. 4, 13-14; North Elgin Centre Inc., at paras. 20-21; East Side Mario’s Barrie, at paras. 31-32; Quality Meat Packers, at para. 65. Put somewhat differently, an amendment will be refused when it seeks to advance, after the expiry of a limitation period, a “fundamentally different claim” based on facts not originally pleaded: North Elgin, at para. 23.

The relevant principle is summarized in Paul M. Perell & John W. Morden, The Law of Civil Procedure in Ontario, 3rd ed. (Toronto: LexisNexis, 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.

In the course of this exercise, it is important to bear in mind the general principle that, on this type of pleadings motion, it is necessary to read the original Statement of Claim generously and with some allowance for drafting deficiencies: Farmers Oil and Gas Inc. v. Ontario (Ministry of Natural Resources)2016 ONSC 6359134 O.R. (3d) 390 (Div. Ct.), at para. 23.

Ontario: s. 5(1) requires specific factual findings

Cooper v. Toronto (City) follows Morrison v. Barzo for the principle that the court must answer the questions asked by s. 5(1)(a) and (b) of the Limitations Act.  The court found that a Master’s failure to make these specific findings was a reversible error:

[17]           The first ground of appeal is that the Master erred by dismissing the Motion without making findings regarding: (1) the date on which the plaintiff first knew the requisite elements of her claim against Hydro; and (2) when “a reasonable person with the abilities and in the circumstances of [the plaintiff] first ought to have known of such claim.” Such findings are a requirement before any finding that claims against a proposed defendant are statute-barred: see Morrison v. Barzo at para. 30.

[18]           I agree that the Master erred in law in dismissing the Motion without making either of these findings.

[19]           In dismissing the Motion without making the necessary findings of fact set out above to ground her decision, the Master erred in law by failing to apply the test as set out in Morrison v. Barzo. Accordingly, the Order must be set aside.
The decision also provides a good example of why taking the position that a particular step could have resulted in earlier discovery is not determinative of when discovery ought to have occurred.  Evidence that the step would have resulted in earlier discovery is necessary:
[27]           I pause to address the question of who has the onus of demonstrating that Cooper’s cause of action was actually discovered, or was reasonably discoverable, more than two years prior to the commencement of the Motion. While it is not made express in Fennell and Morrison, in circumstances such as the present where a plaintiff demonstrates a reasonable basis for concluding that a cause of action was discovered within the applicable limitation period, as a practical matter, a proposed defendant who asserts a limitation defence must demonstrate that the plaintiff had actual knowledge, or reasonably ought to have had knowledge, on an earlier date outside the limitation period.
 [28]           If the basis of the defendant’s position in such circumstances is not that the evidence demonstrates actual knowledge at an earlier date but rather that the plaintiff failed to conduct a duly diligent investigation, Morrison v. Barzo says that the plaintiff has the onus of providing a reasonable explanation for his or her failure to conduct any further investigation. As I understand the applicable case law including Skrobacky v. Frymer, in such event, a court may grant the defendant’s motion only if it finds the plaintiff’s explanation to be unreasonable. If, however, such a determination requires a finding of a material fact or a determination regarding the plaintiff’s credibility, a motions judge should not determine the reasonableness of the explanation without a trial to determine such matters. In such circumstances, therefore, the motions judge cannot make a determination of whether the plaintiff should reasonably have discovered his or her claim outside the applicable limitation period – that is, satisfied the plaintiff’s obligation of due diligence that is implicit in s. 5(1)(b) of the Limitations Act, 2002 – and must therefore dismiss the defendant’s motion.
 [29]           In my opinion, the Court finds itself in that position in the present circumstances.
 [30]           Cooper’s explanation for her failure to investigate the ownership of the Pole is essentially that her communications with the two most obvious potential defendants – the condominium corporation and the City – did not prompt a suggestion that Hydro might be the owner of the Pole. She says, in effect, that she was entitled to rely on the communication from the condominium corporation’s insurer and her communications with the City that suggested that the City was the owner in the absence of any suggestion to the contrary from the City until December 2016. Accordingly, Cooper’s argument proceeds on the basis that she never received any information that gave rise to a need to inquire further regarding the ownership of the Pole.
 [31]           Cooper submits that this is a reasonable explanation, given the low threshold for a reasonable explanation in the case law. She relies on the decisions in Galota v. Festival Hall Developments Ltd. et al., 2015 ONSC 6177; upheld 2016 ONCA 585Madrid v. Ivanhoe Cambridge Inc., et al., 2010 ONSC 2235 and Kesian v. The City of Toronto2016 ONSC 6461 as evidence of this low threshold and as exhibiting similar circumstances in which courts have concluded that the threshold had been satisfied.
 [32]           Hydro effectively argues that Cooper’s explanation is not reasonable in view of either or both of her receipt of the Article and the City’s denial of jurisdiction in its statement of defence. In my view, however, given the evidence before the Master and this Court, neither Cooper’s mere receipt of the Article, without evidence that she actually read it, nor the City’s denial of jurisdiction in its statement of defence were sufficient to fix her with knowledge that required a further investigation for the following reasons.
 [33]           The mere existence of the Article cannot be a basis for concluding that Cooper ought reasonably to have conducted a further investigation. This would require a finding, by inference or otherwise, that she read the Article such that she was aware, at a minimum, of the subject-matter of the Article even if she did not have knowledge of the specific facts set out therein. However, the Court’s conclusion above that a trial is required to determine whether Cooper read the Article precludes such a finding by this Court.
 [34]           Accordingly, Hydro’s second submission really turns on whether Cooper’s receipt of the City’s statement of defence was sufficient to require a further investigation. I accept that a specific denial of jurisdiction could, in some circumstances, have such a result.  However, in this case, the denial was only one of at least ten alternative defences asserted by the City in its statement of defence. In addition, the denial was not accompanied by the assertion of any specific facts supporting this defence nor did it identify Hydro as the owner of the Pole. It is not reasonable to assume that a plaintiff would identify a potential issue of ownership from a bald denial of jurisdiction in such circumstances.
 [35]           I also note that Hydro has identified a number of searches that it says would have revealed its ownership of the Pole if Cooper had conducted one or more of them. I do not doubt the utility of such searches. However, the issue is not whether such searches would have revealed Hydro’s ownership of the Pole but rather whether any searches were required, that is, put in the negative, whether Cooper’s failure to undertake any of these searches was unreasonable.
 [36]           In summary, the relevant evidence before the Court is limited to the following. The Pole was located on a City sidewalk. There is no evidence of any indication on the Pole that Hydro was the owner. There is also no evidence that Cooper ever read, or understood the contents of, the Article prior to May 15, 2017, which would have alerted her to Hydro’s ownership. Lastly, for a period of more than 44 months after Cooper put the City on notice of her claim, the City did not deny ownership of the Pole in any communication with Cooper or her counsel. In these circumstances, I conclude that the determination of whether Cooper has a reasonable explanation for her failure to investigate further the ownership of the Pole will require a trial of the issue regarding whether, and if so when, Cooper or her counsel read the Article.

 

Ontario: stop arguing common law discovery

The Divisional Court decision in Rooplal v. Fodor holds that the Limitations Act’s discovery provisions determine discoverability, not common law principles.  16 years after the Limitations Act came into force, this is a point that still needs making.

The motion judge had found the plaintiff’s proceeding timely, and the Divisional Court upheld her decision:

[4]               On the issue of discoverability, the parties relied on ostensibly conflicting lines of jurisprudence from the Court of Appeal for Ontario. On the one hand, were the cases decided before the Limitations Act had entered into force, finding that the limitation period begins to run when the material facts on which the claim is based have been discovered or ought to have been discovered by the plaintiff’s exercise of reasonable diligence (July v. Neal (1986), 1986 CanLII 149 (ON CA)32 D.L.R. (4th) 463Johnson v. Wunderlich (1986), 1986 CanLII 2618 (ON CA)34 D.L.R. (4th) 120Hier v. Allstate Insurance Co. of Canada (1988), 1988 CanLII 4741 (ON CA)51 D.L.R. (4th) 1; and Chambo v. Musseau (1993), 1993 CanLII 8680 (ON CA)15 O.R. (3d) 305. The other line of authority involves cases decided after the Limitations Act had entered into force, which, as explained in the Superior Court’s decision in Chahine v. Grybas2014 ONSC 4698, provided that the limitation period does not begin until the plaintiff makes an indemnification demand and the responding insurer fails to satisfy the claim (Markel Insurance Company of Canada v. ING Insurance Company of Canada2012 ONCA 218109 O.R. (3d) 652; and Schmitz v. Lombard General Insurance Company of Canada2014 ONCA 88118 O.R. (3d) 694, leave to appeal refused, [2014] S.C.C.A. No. 143). The defendants argued that the July line of cases sets out the proper discoverability analysis, while the plaintiff argued that the Markel line of cases sets out the proper analysis.

 [5]               The Motions judge ultimately determined that she was bound by the Markel line of authorities rather than the July line of cases because, while the latter is predicated on the common law principles of discoverability set out by the Supreme Court of Canada in Central Trust Co. v. Rafuse1986 CanLII 29 (SCC)[1986] 2 S.C.R. 147, the discoverability provisions in the Limitations Act govern the analysis in the present case rather than the common law principles before the Court of Appeal in the July line of cases.