Ontario

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. Domljanovic, 2015 ONCA 889, 129 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 343, 44 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. Clark, 2008 ONCA 343, 44 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. Canada, 2003 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 371, 387 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. Holt, 1987 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. Beausoleil, 2019 ONCA 407, 34 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 6359, 134 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 585; Madrid v. Ivanhoe Cambridge Inc., et al., 2010 ONSC 2235 and Kesian v. The City of Toronto, 2016 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) 463; Johnson v. Wunderlich (1986), 1986 CanLII 2618 (ON CA), 34 D.L.R. (4th) 120; Hier 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. Grybas, 2014 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 Canada, 2012 ONCA 218, 109 O.R. (3d) 652; and Schmitz v. Lombard General Insurance Company of Canada, 2014 ONCA 88, 118 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. Rafuse, 1986 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.

 

Ontario: the limitations implications of withdrawing a claim

Curtis v. The Bank of Nova Scotia is a recent authority for the principle that removing a claim from a pleading causes the limitation period to continue running.  A plaintiff can’t reintroduce the claim if the limitation period has expired:

[22]       Mr. Curtis’ present Further Fresh As Amended Statement of Claim contains a series of paragraphs concerning what Mr. Curtis calls “bad faith breach of contract.” Having reviewed these paragraphs, I have concluded that they are primarily a reintroduction of the wrongful and constructive dismissal claim Mr. Curtis voluntarily removed from his pleading in January, 2016 almost four years ago. As such, its reintroduction at this point represent a violation of the two year limitation period under the Limitations Act, namely the introduction of a cause of action long after the expiration of the limitation period. Whether Mr. Curtis originally pleaded this cause of action is immaterial. He removed it in January, 2016, four years ago, and cannot now reintroduce it.

Ontario: the Trustee Act doesn’t supersede the RPLA

Wilkinson v. The Estate of Linda Robinson is a reminder that the Trustee Act does not supersede the RPLA.  An estate’s claim for the recovery of an interest in real property is subject to the RPLA, not the Trustee Act:

[19]           The position of the Estate that the Trustee Act is an absolute bar to the constructive trust claim is not borne out by the prior cases or by the legislation. The Estate takes the position that if the parties were alive, the ten-year rule would apply, but since the death of Robinson, the limitation period becomes two years.

 [20]           While there is no doubt that section 38(3) of the Trustee Act is a hard limitation, there is no jurisprudence to demonstrate that the Real Property Limitations Act should not apply in cases of a constructive trust as has already been determined by the Court of Appeal in McConnell v. Huxtable.
 [21]           In Rolston v. Rolston, 2016 ONSC 2937, the Court was asked to consider whether the Plaintiff’s claim for constructive trust was barred by the limitation period in s.38(3) of the Trustee Act. The claims were brought some seven years after the date of death. In considering what limitation period would apply to actions for unjust enrichment seeking a remedial constructive trust, Leach J., accepted at paras 58 and 59 that section 38 of the Trustee Act was intended to apply not only to tort actions, but to other “personal” actions. However he went on to note that the Trustee Act was entirely dependent on provisions of the Limitations Act, that the same legislation confirms that it does not apply to claims pursued in proceedings to which the Real Property Limitations Act applies and that as confirmed by the Court of Appeal in McConnell v. Huxtable, claims for unjust enrichment and associated remedies of constructive trust are governed by section 4 of the Real Property Limitations Act.
 [22]           The heading of the applicable section in the Trustee Act refers to claims in tort. This is not a tort claim. This is an action for an interest in property.
 [23]           A simple analysis is that the Real Property Limitations Act is dealing with a right to land, not with a wrong against a person. This case, as in McConnell v. Huxtable, deals with a right to property.

Ontario: appealing from an arbitrator’s limitations decision

The decision in Tall Ships Landing Devt. Inc. v. City of Brockville is a rare example of an appeal to the court from an arbitrator’s limitations decision pursuant to ss. 45(2) and 46(1) of the Arbitation Act, 1991.  The arbitrator found the claim statute-barred without determining when the claims became discoverable or considering the claimant’s appropriateness argument. The application judge held that that the arbitrator’s reasons were inadequate, and asked for further submissions on the appropriate remedy:

[51]           In addition to finding that Tall Ships had waived its right to dispute the City’s determination of its remediation claims the Arbitrator also concluded that its claims were time-barred.  For Tall Ships to successfully challenge the dismissal of the claims, it must also show that he erred on the limitations issue.

[52]           In rejecting Tall Ships’ submissions on limitations, the Arbitrator stated summarily that the remediation claims “were certainly well beyond the two-year limitation period”.  He did not address Tall Ships’ argument that it would not have been legally appropriate for it to sue the City at the time. He did not make any finding about when the claims became discoverable.
[53]           The City contends that the Arbitrator’s failure to provide more detailed reasons is not an error of law.  It says that the Arbitrator did not need to elaborate on the limitations issue, because his conclusions on that issue were self-evident.  I disagree.
[54]           The Supreme Court has cautioned that adequacy (or rather inadequacy) of reasons is not, in of itself, a basis for quashing an arbitral award; Newfoundland and Labrador Nurses’ Union v. Newfoundland and Labrador (Treasury Board), 2011 SCC 62, [2011] 3 S.C.R. 708, at para. 14.
[55]           Tall Ships’ counsel points out that the decision in Newfoundland Nurses was not made in the context of an appeal from an arbitral award governed by the Arbitration Act, and that s. 38(1) of the Act explicitly requires that an arbitral award must state the reasons on which it is based.  It also relies on cases (Kalatzis v. Daniels, 2002 CarswellOnt 8527 (ONSC); Peters v. D’Antonio, 2016 ONSC 7141) where arbitrators provided no reasons at all.
[56]           In my view, s. 38(1) must be read in light of the principles articulated in Newfoundland Nurses, because the reasoning in that case is not at odds with the obligation to provide reasons.  The question explored by Justice Abella in that case was rather: when are the stated reasons sufficient?  The key passage in Newfoundland Nurses at para. 16 on this point applies equally in the context of a review under the Arbitration Act:
Reasons may not include all the arguments, statutory provisions, jurisprudence or other details the reviewing judge would have preferred, but that does not impugn the validity of either the reasons or the result under a reasonableness analysis.   A decision-maker is not required to make an explicit finding on each constituent element, however subordinate, leading to its final conclusion… .  [I]f the reasons allow the reviewing court to understand why the tribunal made its decision and permit it to determine whether the conclusion is within the range of acceptable outcomes, the Dunsmuir criteria are met.  [Internal citations omitted, emphasis added.]

[57]           Applying this test, I must consider whether the Arbitrator’s reasons permit me to understand why he concluded that Tall Ships’ remediation claims were time-barred.

[58]           Section 4 of the Limitations Act, 2002, SO 2002, c 24, Sch B. (the “Limitations Act”) provides that the applicable limitation period begins to run only when a claim is discoverable.  In its written submissions to the Arbitrator, Tall Ships argued that discoverability did not begin to run when it received the City’s responses to its claims, because it did not suffer any immediate loss.   It further argued that it would have been inappropriate for it to initiate a legal proceeding against the City at the time.
[59]           The Ontario Court of Appeal has consistently held that consideration of when a proceeding was an appropriate means to remedy a claim is an essential element in the discoverability analysis.  Failure to consider s. 5(1)(a)(iv) of the Limitations Act is an error of law: Presley v. Van Dusen, 2019 ONCA 66, at para. 15, and the decisions cited therein.
[60]           I infer, based on the Arbitrator’s summary handling of this issue, that he agreed with the City’s submission that the starting point for the two-year limitation period was Tall Ships’ receipt of the City’s responses to the claims.   There is nothing in the reasons, however, that allows me to understand, or even speculate, as to why the Arbitrator concluded that the claims were discoverable at that time.  He does not indicate any basis for finding that Tall Ships sustained a loss, as required under s. 5(1)(a)(i) of the Limitations Act, or that it was appropriate for it to begin legal proceedings at the time, as required under s. 5(1)(a)(iv).  As aptly noted by counsel for Tall Ships, a judge may be required to connect the dots but there must be dots to connect, and there are none here.
[61]           I conclude that the Arbitrator failed to provide any meaningful reasons for the rejection of Tall Ships’ limitation argument, and that there is nothing to indicate that he turned his mind to the discoverability issue.  His failure to comply with s. 38(1) of the Arbitration Act permits the court to set the award aside under s. 46(1)(7).  This was not a mere technical noncompliance with the Act, but an error which undermines the fairness of the arbitral process and the ability of the court to ascertain whether the Arbitrator’s award falls within the range of reasonable outcomes.

[187]      The Arbitrator’s errors were not trivial. They had a clear impact on the outcome of the arbitration. The Awards therefore cannot stand. I am not however in a position to vary the Awards.

[188]      Recognizing this, counsel for both parties at the hearing before me agreed that, if I concluded that the Arbitrator had made serious, reversible errors, I should solicit further submissions from them on the appropriate remedy. This would give the parties the opportunity to assess the best course of action in light of my reasons.  I expect that the parties will also wish to make submissions on costs.
[189]      I accordingly direct the parties, through counsel, to contact the trial management office in Ottawa to schedule a case management conference before me as soon as reasonably possible, so that a timetable for submissions on remedy and costs may be ordered. I encourage counsel to communicate with each other in advance of the case conference to see if they are able to agree on a timetable and cost order for my review and endorsement.