Ontario

Ontario: a limitations defence appropriate for r. 21(1)(a)

The decision in Kaynes v. BP, PLC is a rare example of a limitation defence appropriately determined on a r. 21(1)(a) motion:

[68]           In my opinion, as explained below, there are no material facts that could be pleaded or any discoverability issues that could or would postpone the running of the limitation period for the fraudulent misrepresentation cause of action. It is plain and obvious that all of the possible claims arising from the Deepwater Horizon disaster were discovered by June 1, 2012. In my opinion, as explained below, the case at bar is one of those cases where pursuant to rule 21.01 (1)(a), the court can and should strike a claim as statute barred.

The defendants had also moved for judgment based on admissions in the Statement of Claim pursuant to r. 51.06(2).  Plainly, they had heeded the Court of Appeal’s direction in Brozmanova v. Tarshis to move under this rule where the allegations in the Statement of Claim entitle the defendant to judgment on a limitations defence.  Having allowed the motion to strike, the court didn’t consider r. 51.06(2) relief, which from a limitations law perspective is unfortunate because to my knowledge it would have been the first instance of a r. 51.06(2) limitations analyses.

The decision also provides an excellent overview of the distinction between the cause of action and the claim in the limitations scheme:

[73]           Before the enactment of the current Limitations Act, 2002, a limitation period commenced when a cause of action accrued and when the cause of action was discovered.

[74]           There are over a hundred causes of action and there were rules for when a cause of action accrued and rules about when an accrued cause of action was discovered. Prior to the enactment of s. 5(1)(a)(iv) of the current Limitations Act, 2002, the judge-made discoverability principle governed the commencement of a limitation period. The discoverability principle stipulated that a limitation period begins to run only after the plaintiff has the knowledge, or the means of acquiring the knowledge, of the existence of the material facts that would support a claim for relief; i.e. knowledge of the factual constituent elements of a cause of action.[24] The discoverability principle conforms with the idea of a cause of action being the fact or facts which give a person a right to judicial redress or relief against another.[25]

[75]           A cause of action is a set of facts that entitles a person to obtain a judgment in his or her favour from a court exercising its common law, equitable or statutory jurisdiction.[26] In Ivany v. Financiere Telco Inc.,[27] and 1309489 Ontario Inc. v. BMO Bank of Montreal,[28] Justice Lauwers observed that the idea of cause of action is used in two related senses: (1) it identifies a factual matrix from which claims or complaints arise; and (2) it identifies the legal nature of those claims, which is the nominal or technical meaning of cause of action.

[76]            With the enactment of the Limitations Act, 2002, a limitation period commences when a “claim” is discovered”. The words “cause of action” do not appear in the Act, and the goal of the legislators was that for the purpose of determining when a limitation period began to run, “claim” and “claim” discovery would replace cause of action accrual and cause of action discovery. [29] This goal, however, was not achieved and the case law continues to use the idea of a cause of action in association with the idea of a “claim” under the Act. Under the Act, a claim is discovered on the earlier of two dates: the day on which a plaintiff either knew or ought to have known the constitutive elements of the claim and that a proceeding in Superior Court would be an appropriate means to seek a remedy.[30]

[77]           This continued connection between the ideas of claims as defined by the Limitations Act, 2002 and causes of action as understood under statutes and in law and equity is understandable, because civil procedure requires a plaintiff to plead the material facts of a viable cause of action and just pleading that the defendant’s conduct harmed the plaintiff does not provide the plaintiff with a remedy for his or her legal grievance or give the defendant notice of the cause of action that he or she must defend.

[78]           Section 1 of the Limitations Act, 2002 defines “claim” to mean: “a claim to remedy an injury, loss or damage that occurred as a result of an act or omission”. A claim is a function of cause of action, which is the fact or facts which give a person a right to judicial redress or relief against another.[31] In Lawless v. Anderson,[32] the Court of Appeal stated at paras. 22-23:

  1. The principle of discoverability provides that “a cause of action arises for the purposes of a limitation period when the material facts on which it is based have been discovered, or ought to have been discovered, by the plaintiff by the exercise of reasonable diligence. This principle conforms with the generally accepted definition of the term “cause of action” — the fact or facts which give a person a right to judicial redress or relief against another”….
  2. Determining whether a person has discovered a claim is a fact-based analysis. The question to be posed is whether the prospective plaintiff knows enough facts on which to base an allegation of negligence against the defendant. If the plaintiff does, then the claim has been “discovered”, and the limitation period begins to run: seeSoper v. Southcott(1998), 1998 CanLII 5359 (ON CA), 39 OR (3d) 737 (C.A.) and McSween v. Louis (2000), 2000 CanLII 5744 (ON CA), 132 OAC 304 (C.A.).

[79]           Although functionally closely related to causes of action, a claim as defined under the Limitations Act, 2002 is somewhat different from a cause of action. A cause of action has discrete constituent elements. For example, as noted above, negligent misrepresentation has five specific constituent elements, but a claim under the Limitations Act, 2002 has just two generic elements; namely: (1) and act or omission of misconduct; and (2) injury, loss or damage caused by the misconduct. Strictly speaking, the application of the Limitations Act, 2002 does not require identifying the cause of action, it requires only determining whether the plaintiff has discovered wrongful conduct and harm for which a lawsuit would be appropriate to remedy the harm. Another  difference between claims and causes of action is that all claims have the element of damages, but some causes of action are actionable without damages having occurred. The cause of action for contract, for instance, requires a contract and a breach of the contract; damages, which typically do occur when a contract is breached, are, however, not a constituent element of the cause of action for breach of contract. Another difference is that no causes of action have appropriateness of a lawsuit as a constituent element, which is a factor in what counts for a discovered claim under the Limitations Act, 2002. A subtle deviation between claim and cause of action is that discovery of a claim under the Limitations Act, 2002 requires the plaintiff to have knowledge of an occurrence of injury caused by the defendant’s misconduct for which a law suit would be an appropriate means to seek a remedy, but discovery of a cause of action under the common law requires the plaintiff to have knowledge that the defendant’s conduct occasioned the material facts of the constituent elements of a particular cause of action.

[80]           All of the above reveals that the relationship between claim and cause of action is subtle and sometimes confusing. When a proceeding would be an appropriate means to seek to remedy, it is not enough for the plaintiff to just plead a claim as defined under the Limitations Act, 2002, he or she must still plead a reasonable cause of action. To assert a cause of action so as to interrupt a limitation period, the pleading must allege the facts necessary to identify the constituent elements of the cause of action.[33]

[81]           With some statutory adjustment, the discoverability principle continues to operate for claims, and the principle has been codified by the Limitations Act, 2002.  Discoverability has been adjusted by s. 5(1)(a)(iv), and thus subject to s. 5(1)(a)(iv), a limitation period commences at its earliest when the plaintiff discovers the underlying material facts or, alternatively, when the plaintiff ought to have discovered those facts by the exercise of reasonable diligence, but because of s. 5(1)(a)(iv), discoverability may be postponed.

[82]           Under the Limitations Act, 2002, the discoverability of a claim for relief involves the identification of the wrongdoer, and also, the discovery of his or her acts or omissions that constitute liability.[34] It is not enough that the plaintiff has suffered a loss and has knowledge that someone might be responsible; the identity and culpable acts of the wrongdoer must be known or knowable with reasonable diligence.[35]

[83]           For the limitation period to begin to run, it is not necessary that the plaintiff know the full extent or quantification of his or her damages; rather, the period begins to run with the plaintiff’s subjective or objective appreciation of being damaged, i.e., of being worse off than before the defendant’s conduct.[36]

[84]           Section 5(1)(a)(iv) of the Limitations Act, 2002 adjusts the operation of the discoverability principle, and s. 5(1)(a)(iv) can have the effect of delaying the commencement of the running of limitation period. Where a person knows that he or she has suffered harm; i.e., when the plaintiff knows the elements of ss. 5(1)(a)(i),(ii), and (iii), the delay lasts until the day when a proceeding would be an “appropriate” means to remedy the harm having regard to the nature of the injury, loss or damage.

[85]           The appropriateness factor of 5(1)(a)(iv) introduces some uncertainty in the operation of the Limitations Act, 2002 but it also introduces some flexibility and fairness in the application of the discovery principle, which presumptively operates against the claimant as soon as a cause of action becomes objectively apparent.[37] In Markel Insurance Co. of Canada v. ING Insurance Co. of Canada,[38] the Court of Appeal held that for s. 5(1)(a)(iv) to have a delaying effect, there must be a juridical reason for the person to wait; i.e., there must be an explanation rooted in law as to why commencing a proceeding was not yet appropriate. Appropriateness must be assessed on the facts of each particular case, including taking into account the particular interests and circumstances of the plaintiff.[39]

[86]           Subject to the adjustment made by s. 5(1)(a)(iv), with respect to the basic limitation period of two years under the Limitations Act, 2002, a claim is “discovered” on the earlier of the date the claimant knew – a subjective criterion – or ought to have known – an objective criterion – about the claim.[40] Pursuant to s. 5(2) of the Act, the discovery of a claim presumptively occurs for the plaintiff on the date of the act or omission, but the plaintiff may rebut the presumption by demonstrating that he or she could only have reasonably discovered the underlying material facts after the date of the act or omission.

This is the impact of the distinction:

[88]           Applying these principles to the circumstances of the immediate case, pursuant to the Limitations Act, 2002 around June 1, 2010, presumptively and also subjectively and objectively factually, Mr. Kaynes discovered he had a “claim” against BP. He subjectively knew that BPs misconduct had caused him harm and he knew that court proceedings would be appropriate. For the purpose of the commencement of limitation periods, it was not necessary for Mr. Kaynes to put a cause of action name to his “claim”. Whatever way the statement of claim was later framed to name a cause of action, the “claim” to which the cause of action was connected had been discovered in 2010 and the limitation period clock was running.

[89]           In other words, having discovered a “claim” in 2010, Mr. Kaynes had two years to plead the misconduct connected to the claim by pleading the material facts of negligence, negligent misrepresentation, fraudulent, misrepresentation, an oppression remedy, nuisance, or whatever. For the purpose of commencing a proceeding, however he might label his claim as a cause of action in a statement of claim, the limitation period for the “claim” was running by June 1, 2010. As it happened, albeit late, in November 2012, Mr. Kaynes pleaded a cause of action for negligent misrepresentation in Ontario, and he gave his claim a cause of action name, but regardless of its name in accordance with the principles of the Limitations Act, 2002, the negligent misrepresentation claim was already statute barred. A fraudulent misrepresentation claim had it been pleaded in November 2012 in Ontario would also have been statute barred.

The court also found that uncertainty as regards forum does not impact on appropriateness (consistent with Lilydale Cooperative Limited v. Meyn Canada Inc., which held similarly but isn’t cited in the decision):

[90]           In a creative argument, Mr. Kaynes, however, argues that his April 2012 action in Alberta was a timely claim in Alberta, with which I would agree, and until the Alberta court declined to take jurisdiction with respect to that claim, which did not occur until November 2012, it could not be said that a claim in Ontario had been discovered until November 2012. In this regard, he submits that under s. 5 (1)(a)(iv) of Ontario’s Limitation Act, 2002, it was only after Alberta declined to take jurisdiction that it could be said that proceedings in Ontario were appropriate and thus until the November decision in Alberta, the claim in Ontario had not been discovered.

[91]           This argument, however, does not work because the appropriateness of a proceeding in Ontario is not determined by the inappropriateness of a proceeding somewhere else. If any, the decision in Alberta, confirmed that Ontario was the appropriate forum for proceedings against BP.

 

Ontario: unusual misnomer motions

Here’s an interesting question: can you add a defendant to a proceeding with leave to plead a limitations defence and then move to correct the misnaming of that defendant as a John Doe (and avoid the limitations defence)?  Yes, held the court in Janet Campagiorni et al. v. Lyne Legare et al.

The plaintiffs obtained leave to add a defendant to their proceeding with leave to the defendant to plead a limitations defence.  The added defendant moved for judgment on the limitations defence; in response, the plaintiffs moved to correct the misnaming of the defendant as John Doe (that is, they had originally named John Doe as a defendant to the proceeding, and took the position that John Doe was actually the defendant they had added).  The defendant opposed the misnomer motion as an abuse of process: it was an “improper attack” on the court’s order adding the defendant. The court rejected the argument:

[43]      The plaintiff brings a cross motion for misnomer on the basis that the pleadings be corrected to accurately reflect the correct name of a party identified but misnamed in the litigation from the outset. Dr. Bednar argues this motion should be dismissed as an abuse of process and is nothing more than an improper attack on the previous order of this court to add Dr. Bednar as a defendant on the condition that a limitation defence was still a live issue at a later date.

[44]      The courts have made it abundantly clear that litigants may not have endless opportunities to seek the same remedy using different legal arguments in front of different triers of fact. See Alberta v. Pocklington Foods Inc., 1995 ABCA 111, at para. 8.

[45]      I am of the view this is a different situation even though the issue may become moot depending on the decision of the trial judge on the issue of discoverability regarding the appropriate limitation period.

[46]      I prefer the reasoning in Loy-English v. Fournier, 2018 ONSC 6212. In that medical malpractice case John Doe was in the claim as a defendant for various allegations of negligence. When the names of the doctors were eventually discovered the presumptive limitation period had expired, and a summary judgment motion was brought. The court concluded that a misnomer motion could have been brought at the same time as the summary judgment motion, putting all issues and all remedies clearly before the court. The court found that the suggestion that the failure to bring a misnomer motion was an abuse of process, was not valid and stated at para. 14, “the plaintiff is entitled to take all reasonable steps to preserve her rights against the expiry of a limitation period”.
[47]      The court further added “taking various parallel prophylactic steps to avoid the application of the Limitations Act was not an abuse of process or in any event was not worthy of an extreme sanction such as a stay of proceedings.” See: Loy-English v. The Ottawa Hospital et. al., 2019 ONSC 6075, at para. 28. Further the court stated at para. 14, “Even if the manner in which this litigation has been pursued is characterized as abusive, the response should be proportionate and does not follow that loss of the right to litigate is a proportionate remedy.” I agree and any sanction required can ultimately be dealt with by way of costs.
[48]      I further conclude that the issue of misnomer, if it becomes relevant, can best be dealt with by the trial judge hearing all of the evidence on the limitation defence and such other evidence as counsel feel is appropriate on the misnomer issue.

Ontario: misnomer and the John Doe doctor

The decision in Tschirhart v. Grand River Hospital is a good example of a misnomer analysis in regards if a John Doe doctor .  It’s worth noting that the court rejected the doctor’s argument that the Statement of Claim couldn’t satisfy the litigation finger test because it didn’t plead that the plaintiff was seen in the emergency department where the doctor worked:

[36]           In my view, the reasonable person reviewing the Statement of Claim and having knowledge of the facts would know that the “litigating finger” was pointed at Dr.  Benhabib. Assessing the Statement of Claim, I am satisfied that the allegations as against Dr. Benhabib are pleaded with sufficient particularity such that Dr. Benhabib’s insurer and representative, the CMPA, would have known that the litigating finger was pointed at him. Namely, the Statement of Claim sets out the Plaintiff’s name, the name of the hospital he attended (GRH), the date he attended GRH, the symptoms he presented and the fact that he underwent a triage assessment, was examined and sent home without further testing (para. 10).  The Statement of Claim also sufficiently sets out the causes of action and basis for liability (paras.14-15).

[37]           The CMPA, Dr. Benhabib’s insurer, a “relevant person” with access to the relevant notes and records, received the Statement of Claim when the named doctors were served and would have known by reading it that the litigating finger was pointed at the emergency room physician who saw the Plaintiff on April 30, 2015 at GRH and could have easily and quickly ascertained from the ER Records and/or further inquiries of GRH that it was Dr. Benhabib. I also conclude that had he received the Statement of Claim, Dr. Benhabib, who also had access to the relevant notes and records including the ER Records, could have easily and quickly determined that he was the intended emergency physician. As he admitted on cross-examination, although he did not initially remember the Plaintiff, he was able to consult the ER Records to determine that he had in fact seen the Plaintiff on April 30, 2015 at GRH (Cross-examination of Dr. Benhabib held June 3, 2019, Questions 30-43). This conclusion is supported by the fact that, although not a representative of Dr. Benhabib, GRH was able to identify Dr. Benhabib as the emergency room physician who saw the Plaintiff, pleaded this in its Statement of Defence, advised him accordingly and confirmed his identity on examination for discovery.
[38]           In my view, the facts of this case are analogous to Ormerod. In particular, Dr. Benhabib’s name was illegible in the ER Records, however, he could be identified easily and quickly by his insurer and representative, the CMPA, by reviewing the ER Records and/or making inquiries of GRH. I do not accept Dr. Benhabib’s submissions that misnomer does not apply because he and his insurer had to make additional inquiries. Consistent with Ormerod and Spirito, the fact that his insurer could have easily identified him from the ER Records or other inquiries as the physician who saw the Plaintiff as pleaded is sufficient to establish that it would have known that the litigating finger was pointed at him.
[39]           I also reject Dr. Benhabib’s submission that the Statement of Claim is vague and non-specific because it does not explicitly state that the Plaintiff was seen in the emergency department at GRH. The fact that the Statement of Claim states that the Plaintiff “underwent a triage assessment and examination” and “was sent home without further testing” is sufficiently specific. This finding is supported by Dr. Benhabib’s evidence on cross-examination:

It also provides a comprehensive summary of misnomer principles at paras. 15-27.

 

Ontario: the principles of mva “threshold” claims

Dimech v. Osman contains a useful summary of the limitation of claims for non-pecuniary losses arising from a motor vehicle accident:

[14]      Under s. 4(1) of the Limitations Act, 2002 a person loses the right to sue for a claim two years after she “discovers” the claim. Under s. 5(2) of the Limitations Act, 2002 a plaintiff injured in a car accident will be presumed to have discovered her claim on the day of the accident unless she proves that she did not discover the claim that day and that a reasonable person with her abilities and in her circumstances would not have discovered the claim until a later time.

[15]      While one might normally think that being injured in a car accident automatically gives one a claim or the right to sue, that is not necessarily the case. Under s.267.5(5) of the Insurance Act, RSO 1990, c I.8 a person injured in a car accident in Ontario can only sue for non-pecuniary losses if the accident caused her to suffer “permanent serious impairment of an important physical, mental or psychological function.” This is commonly referred to as the “threshold”. If a plaintiff cannot prove that her injuries meet the threshold, her claim for non-pecuniary loss will be dismissed.

[16]      While a plaintiff can sue for pecuniary loss without meeting the threshold, case law provides that for the limitation period to commence in Ontario in relation to a motor vehicle accident lawsuit in which both pecuniary

and non-pecuniary damages are claimed, the plaintiff must have known or ought reasonably to have known that she could likely meet the threshold so as to have the right to sue. In Ioannidis v. Hawkings 1998 CanLII 14822 (ON SC), Justice Langdon held that for the two-year limitation period to start running, there must be,

…a sufficient body of evidence available to be placed before a judge that, in counsel’s opinion, has a reasonable chance of persuading a judge, on the balance of probabilities that the injury qualifies.

[17]      The question of when the limitation period commences is a question of fact. See: Farhat v Monteanu, 2015 ONSC 2119 (CanLII), at para. 33. It requires a finding of a date when a plaintiff or her lawyer knew or ought reasonably to have known that she had a reasonable chance to prove that she suffered permanent serious impairment of an important physical, mental or psychological function as a result of the car accident.

The decision also provides an example of the consequences of failing to adduce the evidence material to the limitation of these claims:

[18]      There is no evidence from Mr. Bekiaris as to whether he, as the plaintiff’s counsel, had formed an opinion during the 37-day pre-limitation period window that the plaintiff had a reasonable chance of persuading a judge that his injuries would meet the threshold. I offered Mr. Bekiaris an opportunity to consider refraining for acting as counsel on this motion both due to this evidentiary issue and in consideration of the fact that if the defendants succeed in having this action dismissed, Mr. Bekiaris could possibly face a claim for having missed the limitation period. He determined to proceed as counsel.

 [22]      With no evidence from counsel, and no evidence of any contemporaneous prognosis from a doctor, I am left to try to determine by inference whether the plaintiff or his counsel ought reasonably to have known that his injuries reasonably could have met the threshold during the 37-day pre-limitation period window.

 [26]      The defendants argue that with the burden lying on the plaintiff to prove that he could not reasonably have discovered his claim in the 37-day pre-limitation period window, it was incumbent upon him to adduce evidence to show that he or his counsel acted with diligence by asking a doctor for a prognosis. The defendants argue that the plaintiff has failed to prove that he asked any doctor whether his injuries were likely to permanently seriously impair an important function right up to the time that the claim was issued. As such, he cannot meet his burden to show that he acted with diligence as required to rebut the presumption in s. 5(2) of the Limitations Act, 2002.

 [29]      Like the plaintiff, the defendants have adduced no evidence to establish that a reasonable person, in the first 37 days after this type of accident, suffering injuries like those of the plaintiff, would likely know that he or she is likely to meet the threshold. There is no expert prognosis. There is no evidence about whether in the 37-day pre-limitation period window the plaintiff’s counsel ought to have concluded that he had a sufficient body of evidence to provide a reasonable chance of persuading a judge that the plaintiff’s injuries will meet the threshold.

 [31]      In my view, the defendants have not met their evidentiary burden to allow me to fairly and justly adjudicate the limitation period issue summarily. While there may perhaps be cases where a plaintiff’s injuries are so severe that they can confidently be said to meet the threshold from day one, I cannot tell if this is such a case. The defendants have given me the plaintiff’s medical records. But I have nothing to allow me to draw an inference that the plaintiff or his lawyer ought to have concluded in the first 37 days after the accident that the injuries met or were likely to meet the threshold at some time in future.

 [32]      Similarly, while I was able to conclude at first instance in Yasmin that the plaintiff had not diligently pursued a claim on the facts, I have nothing to allow me to reach the same conclusion here and now. I do not know if a reasonable patient 37 days into treatment ought to have been asking his doctors for long term prognoses about serious impairment of important functions. Neither is there any evidence before me to let me weigh or conclude whether a reasonable personal injury lawyer ought to have been seeking reports from the doctors about threshold issues within the 37-day pre-limitation period window.

Ontario: the consequences of failing to plead discovery in reply

The defendant in Anisman v. Drabinsky argued that the plaintiff could not argue discovery in response to a limitations defence because he hadn’t served a Reply pleading the material facts of discovery.  The court rejected this (very optimistic argument) argument:

[17]           Finally, Defendants’ counsel submits that the Plaintiff’s factum makes improper reference to his response to the Defendants’ limitation argument. It is the Defendants’ position that since the Plaintiff never issued a Reply pleading in response to the limitation point raised in the Statement of Defence, the Plaintiff is prohibited from arguing any defence to the limitation challenge. Defendants’ counsel therefore asks that those paragraphs be struck from the Plaintiff’s factum.

[19]           The Plaintiff may not have a pleading to support his point, but there is evidence in the record that has been fairly adduced that supports it. The Court of Appeal has expressly held that under such circumstances it would be an error to proceed on the basis suggested by Defendants’ counsel: “Again, this was a summary judgment motion, the resolution of which depended on a consideration of the evidence adduced by the parties, and not their pleadings:” Collins v Cortez, 2014 ONCA 685, at para 12.

[20]           The Plaintiff here seeks summary judgment, and it is incumbent on me to consider the record as a whole rather than to focus narrowly on the pleadings alone. I therefore find no reason to redact or excise any portion of the evidentiary record or any factum.

[46]           The Statement of Claim herein was issued on June 18, 2019, some 3 years and 9 months after the impugned transfer of title. Defendants’ counsel submits that the 2-year limitation period under the Limitations Act, 2002 was missed by the Plaintiff. Defendants’ counsel further submits that the Defendants having pleaded a limitation defence, it was incumbent on the Plaintiff to serve a Reply pleading. He argues that failing that, the Plaintiff is foreclosed from including anything in the present Motion Record by way of a response to the limitation defence.

[47]           Counsel for the Defendants relies on Rule 25.08 for the proposition that a Reply pleading is necessary in these circumstances. That Rule provides:
25.08 (1) A party who intends to prove a version of the facts different from that pleaded in the opposite party’s defence shall deliver a reply setting out the different version, unless it has already been pleaded in the claim.

(2) A party who intends to reply in response to a defence on any matter that might, if not specifically pleaded, take the opposite party by surprise or raise an issue that has not been raised by a previous pleading shall deliver a reply setting out that matter…

[48]           It is evident from the wording of both parts of Rule 25.08 that it is the element of surprise that determines whether or not a Reply is required. That is, the Defendants must not be taken by surprise by facts of which they were unaware.

[49]           This court has long noted that, “[i]f a limitation defence is raised, the plaintiff should, where appropriate, serve a reply raising any facts and contentions relied upon to rebut the defence and pleading the basis for any discretion that the court may have in the matter”: D.S. Park Waldheim Inc. v Epping (1995), 1995 CanLII 7091 (ON SC), 24 OR (3d) 83 (Gen Div), quoting Graham Mew, The Law of Limitations (Markham: Butterworths, 1991), p. 54. This is particularly the case where “the plaintiff…relies on…the doctrine of discoverability…[which] depends on an unresolved question of fact”: Epping, at 85.
[50]           The Plaintiff makes a number of arguments in response. In the first place, he submits that there is nothing in his response to the limitation point that will take the Defendants by surprise. Secondly, he contends that the cause of action pleaded in the Statement of Claim was not discovered by him until substantially later, and that there was nothing in the conduct of the parties that would have tipped him off that a transfer of title had taken place with respect to the Property.
[51]           The Plaintiff points out that the Statement of Claim herein was served with a Certificate of Pending Litigation, which the Plaintiff had obtained on an ex parte basis at the outset. Since the Certificate was obtained without notice to the Defendants, the Plaintiff also served them at the same time with his Motion Record in support of the Certificate, as required. That Motion Record contained an affidavit sworn by the Plaintiff setting out how he had discovered the transfer of title. At paragraph 8 of his affidavit, served together with the Statement of Claim on June 25, 2019, the Plaintiff stated:
On September 11, 2015, shortly after my request for payment of August 24, 2015, Mr. Drabinsky transferred his interest in his house at 478 Spadina Road (the ‘Property’) to his wife. I learned of this transfer on April 20, 2019, before I examined Mr. Drabinsky in aid of execution.

[52]           The circumstances and date of discovery – i.e. that he first learned of the transfer when he searched title in preparation for an examination in aid of execution on the judgment he had obtained on November 15, 2018 – are the crucial facts on which the Plaintiff relies in responding to the limitation defence. It is this brief statement of fact that would likely have been contained in a Reply had one been served.  Given that it was contained in the package of materials served together with the Statement of Claim and Certificate of Pending Litigation, the Defendants were on notice in much the same way as they would have been had the sentence been repeated in a Reply pleading.

[53]           It is the Defendants’ position that if the relevant facts did not find their way into a Reply, they are to be ignored in assessing the merits of the limitation defence. I do not accept that position. To ignore what was in the Plaintiff’s motion record and affidavit because it was not repeated in a Reply would be to elevate form over substance to an unacceptable degree: Marshall v Watson Wyatt & Co., 2002 CanLII 13354, at para 25 (Ont CA).
[54]           As is evident from the narrative in Part II above, prior to the examination in aid of execution there was nothing to prompt the Plaintiff to search title of the Property. Mr. Drabinsky consistently lead him to believe that he would be receiving payment imminently, and even provided him with replacement cheques when the previous ones became stale-dated. Further, Mr. Drabinsky was more than just another debtor; he was a rather renowned debtor who was very much in the public eye. It did not occur to the Plaintiff (or, presumably, to any other creditors) that Mr. Drabinsky would be denuding himself of substantial assets such as the Property. As the Plaintiff submits, there is only a duty to investigate when there is something that leads one to investigate: Fennell v Deol, 2015 ONSC 4835, para 8.

Ironically, the issue was moot because the plaintiff was seeking to recover land, which means the ten-year RPLA limitation period applied.

Ontario: dubious equitable arguments won’t overcome the Trustee Act limitation period

The decision in Zacharias Estate v. Giannopoulos is an example of futile equitable arguments made to avoid the application of the Trustee Act limitation period.  The plaintiff estate commenced a proceeding to recover money from the defendant more than two years after the death.  The estate relied on the special circumstances doctrine; the court dismissed the argument because special circumstances applies only to the addition of a party to a proceeding:

[42]           Despina submits that the plaintiffs’ claim is barred by the limitations provision contained in s. 38 (3) of the Trustee Act, RSO 1990, c. T. 23 which states:

 “An action under this section shall not be brought after the expiration of two years from the death of the deceased.”

[43]           In other words, the limitation period begins to run at the time of that death, not from the time the estate trustee discovers the claim:  Levesque v Crampton Estate, 2017 ONCA 455, 2017 CarswellOnt 8319 at paras. 55-56; Giroux Estate v Trillium Health Centre, 2005 CarswellOnt 241 at para. 28.

 [44]           While the rule may, at first blush, seem harsh, it was a specific policy choice.  At common law, any claim by the deceased would have been extinguished on death.  As a compromise to this draconian rule, the legislature provided a two-year limitation period which is not subject to the discoverability principle:  Giroux at para. 25.
 [45]           George died on February 19, 2015.  The claim was issued on December 29, 2017, 2 years and 10 months after George’s death.
 [46]           The Saccals admit they discovered the transfer to Despina between January and March 2016.  That left them approximately one year to commence an action within the limitation period.
 [47]           The plaintiffs resist the application of a limitation period by relying on doctrine of special circumstances.  That doctrine however, is limited to adding, after the expiry of a limitations period, a party or cause of action to a claim that was commenced within the limitations period.  The doctrine does not allow a party to commence a new proceeding after the expiry of the limitations period:  Graeme Mew, The Law of Limitations, 3d ed. (Toronto: LEXIS-NEXIS, 2016).

The estate also relied on the fraudulent concealment doctrine (because why not?).  The court set out the elements of the doctrine and found that none of them applied. There was no special relationship, there was no unconscionable conduct, and there was no concealment.  One wonders about the strategy that leads to making two limitations arguments plainly bound to fail; it will be interesting to see how the court awards costs.  These are the material fraudulent concealment arguments:

[48]           The plaintiffs also rely on the doctrine of fraudulent concealment to avoid the limitation period.  The doctrine of fraudulent concealment is an equitable principle:

“aimed at preventing a limitation period from ‘operating as an instrument of injustice.’ When applicable, it will ‘take a case out of the effect of the statute of limitation’ and suspend the running of the limitation clock until such time as the injured party can reasonably discover the cause of action”:  Giroux at para 28.

[49]           For the doctrine of fraudulent concealment to apply, the plaintiffs must establish that:

(a)               the defendants and plaintiffs had a special relationship with one another;

(b)               given the special or confidential nature of the relationship, the defendants’ conduct is unconscionable; and

(c)               the defendants concealed the plaintiffs’ right of action actively or the right of action is concealed by the manner of the defendants’ wrongdoing:  Estate of Graham v Southlake Regional Health Centre, 2019 ONSC 392, at para. 88.

[50]           As set out below, none of these elements apply.

(a)               No Special Relationship

[51]           The plaintiffs assert that Despina owes the estate $700,000 and that there is a special relationship between an estate trustee and debtor to the estate.

[52]           If the plaintiffs are correct, then a special relationship would, by definition, be created whenever estate trustees asserted that someone owed the estate money.  That would effectively put an end to the two-year limitation period in the Trustee Act.

[53]           In the alternative, the Saccals submit that Despina created a special relationship, by creating an extended parent-child relationship with them.  To support this extended parent-child relationship, the plaintiffs point to the fact that Despina arranged to let the Saccals know about their father’s condition.  In addition, the plaintiffs point to a number of other allegations to support the parent-child relationship including the following:  George told Despina that he wanted to leave money for his grandchildren.  Despina placed a note on the file at the funeral home not to permit the Saccals access.  Despina attended with the Saccals at George’s office and was present when they searched for the will.  Despina contacted an estates solicitor friend of the Deceased (James Daris) and told the Saccals that the Deceased did not have a will.

[54]           I cannot see how these additional allegations amount to creating a parent-child relationship between Despina and the Saccals.  The essence of a special relationship is one of closeness, trust or dependence.

[55]           Despina was a stranger to the Saccals.  She had never met them until they appeared at the hospital a couple of days before George died.  The plaintiffs have introduced no evidence to suggest that there was any type of relationship of particular trust or confidence between them and Despina.  If the plaintiffs are correct and they were aware that Despina had left some type of note at the funeral home to restrict the Saccals access, that would belie any type of special relationship.

[56]           Moreover, the Saccals’ own conduct belies any special relationship.  On April 28, 2015 their lawyer wrote to Despina saying:

“… You have taken upon yourself to represent to the public that you are a common-law spouse of the Deceased, our clients strongly dispute and deny that status.  You are hereby forbidden to approach any persons with which the Deceased had any business dealings or other relationships and make any further misleading or inappropriate representations or warranties to the effect that you have any relationship with the Deceased, beyond having had normal social interaction or friendship with the Deceased.  Any communication that you intend to make regarding your relationship to the Deceased or viz the Estate should be made only through this office.”

[57]           “Forbidding” Despina to have any contact with anyone who had any relationship with George and demanding that Despina make any statement about her relationship with George only through counsel to the Saccals would appear to belie any special relationship.  It is noteworthy that the letter was sent at least 8 months before the Saccals became aware of the $700,000 transfer to Despina.

(b)               Defendant’s Conduct Is Not Unconscionable

[58]           The plaintiffs have not established that Despina’s conduct was unconscionable.

[59]           In their factum, the plaintiffs make bald allegations that Despina was deceitful towards them but do not say how.

[60]           They have pointed to no instance in which they asked a question of Despina to which she gave a false or misleading answer.  Their real complaint appears to be that Despina did not volunteer that she had received a $700,000 payment from George.  I do not find Despina’s failure to volunteer that information to be unconscionable.  At the time of the interactions, Despina was clearly grief stricken.  She had no knowledge of George’s financial affairs and no knowledge of whether he had a will, what the terms of the will might be and who the executor might be.  She did not know the Saccals and knew only that George had been estranged from them for over 20 years and did not want to see them.  In those circumstances it cannot be said that the failure to volunteer, out of the blue, that George had given her $700,000 is unconscionable.

[61]           As noted earlier, the plaintiffs merely point to a series of suspicions they have.  In paragraph 26 of their factum, the plaintiffs begin seven successive sentences with the word “suspiciously” followed by a circumstance that the plaintiffs deem to be questionable.  By way of example they state:  “Suspiciously, no power of attorney or will were located.”  It is not particularly suspicious to fail to locate a will if none exists. That people die without a will is not, in itself suspicious.  It is a common occurrence.

[62]           Beginning a series of sentences with the adjective “suspiciously” does not convert mistrust on the plaintiffs’ part into unconscionable conduct on the defendant’s part.

(c)               No Fraudulent Concealment 

[63]           The third element of the doctrine of fraudulent concealment is that the defendant have concealed the plaintiffs’ right of action either actively or by the manner of the defendant’s wrongdoing:  Estate of Graham v Southlake Regional Health Centre, 2019 ONSC 392, at para. 88.

[64]           There was no active concealment on Despina’s part.  The plaintiffs have pointed to no conduct that made it more difficult for them to discover their alleged cause of action apart from the fact that Despina did not volunteer the receipt of a payment from George.  There was no duty on her to volunteer that information.  As noted above, her lack of disclosure was understandable and acceptable.

[65]           Despina’s uncontradicted evidence is that she had no information about George’s estate, assets, liabilities or general financial matters while alive or after his death.  In those circumstances she could not have hidden anything from the Saccals.

[66]           The plaintiffs have not brought themselves within any exception to s. 38 (3) of the Trustee Act, as a result of which the limitation period contained in s. 38 (3) of that statute applies and the action should be dismissed as statute barred.

Ontario: Court of Appeal holds no limitation period for applications for a declaration on a codicil’s validity

In Piekut v. Romoli, the Court of Appeal held that no limitation period applies to an application for a declaration on the validity of a codicil.

The motion judge held that such an application is a proceeding for a declaration without consequential relief and therefore free from limitation pursuant to s. 16(1)(a) of the Limitations Act.

The court rejected the appellant’s argument that the basic limitation period applied:

[11]      We do not accept this submission. Both Leibel and Birtzu are readily distinguishable from this appeal.

 [12]      In Leibel, Greer J. acknowledged the potential application of s. 16(1)(a) of the Limitations Act, but held that it did not apply because the applicants had clearly sought consequential relief in addition to a determination of the validity of the will. This consequential relief included: an Order revoking the grant of the Certificate of Appointment of Estate Trustees with a Will; an Order removing the Estate Trustees; an Order that the Estate Trustees pass their accounts; an Order appointing an Estate Trustee During Litigation; and an Order for damages in negligence against the drafting solicitor and her law firm. In addition, in Leibel the primary will of the deceased had been probated. Birtzu had a similar fact pattern.
 [13]      In contrast, in this case Helen sought none of this consequential relief. Nor has anyone done anything to propound the will. It sat there for seven years, presumably because the siblings were all trying to work out their disagreements. In these circumstances, Helen was entitled to seek declaratory relief, simply to establish the validity, or lack of validity, of the codicils – to define the rights of the parties in order to avoid future disputes.

As I wrote regarding the motion judge’s decision, this is the correct outcome by the wrong reasoning.

No limitation period applied to the proceeding because it didn’t pursue a “claim”.  The Limitations Act applies to “claims” pursued in court proceeding (s. 2).  If there’s no “claim”, no limitation period applies.  “Claims” derive from causes of action.  If there’s no cause of action, there’s no “claim”.

There’s no cause of action asserted in an application for a declaration regarding the validity of a codicil (or a will).  Accordingly, the applicants were not pursuing a “claim” in a court proceeding, and no limitation period applied to it.

Statutory limitation periods have always applied to causes of action, which is why there was no suggestion that they applied to will challenges under the former scheme.  The confusion arises from misapprehending the universality of the basic limitation period.  It is universal in that applies to all causes of action, not because it applies to every proceeding.

Ontario: the Court of Appeal on the commencement of benefit denial claims

The Court of Appeal’s decision in Clarke v. Sun Life Assurance Company of Canada is another addition to the jurisprudence considering when time runs for a benefits denial claim.  It delineates the extent to which a denial must be unequivocal to cause the claimant to know the insurer has breached the benefit obligation.

The appellant made a claim for long-term disability benefits after she stopped working due to health problems in 2011. By letter of March 19, 2012, Sun Life denied her claim and advised that three levels of appeal were available. She appealed. By letter of February 24, 2014, Sun Life advised the appellant that it had approved the benefits for a period ending in April 2013 but was otherwise denying her claim.

The motion judge found that the February 2014 letter was not a sufficiently clear denial to cause the appellant to know that she had sustained damage (the benefits denial). The Court of Appeal overturned this finding.  The letter informed the appellant that Sun Life was denying her benefits, which is the breach that founded her cause of action.  More explicit correspondence was unnecessary:

[15]      The motion judge started her analysis under the Limitations Act, 2002 by considering the date the injury, loss or damage occurred: ss. 5(1)(a)(i) and (b). The motion judge did not accept Sun Life’s submission that the February 24, 2014 letter marked the time at which Ms. Clarke first knew that an injury, loss or damage had occurred. She described the letter as “equivocal” and noted that it “did not use the language of refusal or denial”: at para. 21. She concluded that it was “not clear that the words used by the Sun Life letter of February 24, 2014 [were] a denial of disability benefits that amounted to ‘injury, loss or damage’”: at para. 23. She ultimately found, at para. 30, that the limitation period commenced with the denial communicated to Ms. Clarke by Sun Life on June 19, 2017, notwithstanding that that letter also did not use language of denial.

[16]      With respect, the motion judge erred in law by failing to apply the principle stated by this court in Pepper v. Sanmina-Sci Systems (Canada) Inc., 2017 ONCA 730, [2018] I.L.R. I-5996, at para. 1, that an insured has a cause of action for breach of contract against her insurer when the insurer stops paying long-term disability benefits. In its February 24, 2014 letter, Sun Life informed Ms. Clarke that her disability benefits terminated as of April 25, 2013, which was the date the “Own Occupation” benefits period ended. Sun Life went on to state that it would not pay “Any Occupation” benefits. Accordingly, by February 24, 2014, a “loss, injury or damage” had occurred that would have been known to a reasonable person with the abilities and in the circumstances of Ms. Clarke: Limitations Act, 2002, ss. 5(1)(a)(i) and (b).
[17]      I note that in reaching her conclusion on s. 5(1)(a)(i), the motion judge relied on the decision of the Divisional Court in Western Life Assurance Company v. Penttila, 2019 ONSC 14, 144 O.R. (3d) 198. The motion judge appears to have misapplied Western Life Assurance on the issue of when an insured knows that a loss, injury or damage has occurred. As that decision clearly stated, at para. 17, the parties agreed that for the purposes of s. 5(1)(a)(i) the insured knew that a loss had occurred on the date her benefits came to an end, which is the governing principle as stated in Pepper.

The decision also describes the findings of fact required by s. 5(1) and (2) of the Limitations Act:

[19]      The discoverability analysis required by ss. 5(1) and (2) of the Act contains cumulative and comparative elements.

[20]      Section 5(1)(a) identifies the four elements a court must examine cumulatively to determine when a claim was “discovered”. When considering the four s. 5(1)(a) elements, a court must make two findings of fact:
(i)      The court must determine the “day on which the person with the claim first knew” all four of the elements. In making this first finding of fact, the court must have regard to the presumed date of knowledge established by s. 5(2): “A person with a claim shall be presumed to have known of the matters referred to in clause (1) (a) on the day the act or omission on which the claim is based took place, unless the contrary is proved”; and

(ii)      The court must also determine “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 four elements identified in s. 5(1)(a).

Armed with those two findings of fact, s. 5(1) then requires the court to compare the two dates and states that a claim is discovered on the earlier of the two dates: see Nasr Hospitality Services Inc. v. Intact Insurance, 2018 ONCA 725, 142 O.R. (3d) 561, at paras. 34-35.

The motion judge erred by failing to make “any specific finding about either”:

[22]      The motion judge’s reasons disclose that she failed to make any specific finding about either date.

Ontario: Court of Appeal on the limitation of anticipatory breach claims

The Court of Appeal decision in Glen Schnarr & Associates Inc. v. Vector (Georgetown) Limited summarises the principles of the limitation of claims arising from the anticipatory repudiation of a contract:

[29]      Anticipatory repudiation occurs when a contracting party, “by express language or conduct, or as a matter of implication from what he has said or done, repudiates his contractual obligations before they fall due”: G.H.L. Fridman, The Law of Contract in Canada, 6th ed. (Toronto: Carswell, 2011), at p. 585. The parties concede that LDGL by its correspondence of October 2004 did just that.

 [30]      However, an anticipatory repudiation of a contract does not, in itself, terminate or discharge a contract; it depends on the election made by the non-repudiating party: Guarantee Co. of North America v. Gordon Capital Corp., 1999 CanLII 664 (SCC), [1999] 3 S.C.R. 423, at p. 440; Brown v. Belleville (City), 2013 ONCA 148, 114 O.R. (3d) 561, at para. 42. As Cronk J.A. stated in the latter decision at para. 45:
 It appears to be settled law in Canada that where the innocent party to a repudiatory breach or an anticipatory repudiation wishes to be discharged from the contract, the election to disaffirm the contract must be clearly and unequivocally communicated to the repudiating party within a reasonable time. Communication of the election to disaffirm or terminate the contract may be accomplished directly, by either oral or written words, or may be inferred from the conduct of the innocent party in the particular circumstances of the case: McCamus, at pp. 659-61. [Emphasis added.]

[31]      In Chitty on Contracts, 28th ed. (London: Sweet and Maxwell, 1999), Vol. 1, at p. 25-012, the authors write:

 Acceptance of a repudiation must be clear and unequivocal and mere inactivity or acquiescence will generally not be regarded as acceptance for this purpose. But there may be circumstances in which a continuing failure to perform will be sufficiently unequivocal to constitute acceptance of a repudiation. It all depends on the “particular contractual relationship and the particular circumstances of the case.”

[32]      This commentary was accepted by this court in Brown v. Belleville, at para. 48, and by the Nova Scotia Court of Appeal in White v. E.B.F. Manufacturing Ltd., 2005 NSCA 167, 239 N.S.R. (2d) 270, at para. 91.

 [33]      The limitation period then depends on the election that is made in response to an anticipatory repudiation: Ali v. O-Two Medical Technologies Inc., 2013 ONCA 733, 118 O.R. (3d) 321, at para. 22-27; Hurst v. Hancock, 2019 ONCA 483, at para. 19.

Ontario: Court of Appeal holds s. 51(1) of the SABS is subject to discoverability

Is the limitation period in (the repealed) s. 281.1(1) of the Insurance Act and s. 51(1) of the Statutory Accident Benefits Schedule subject to discoverability? Yes, held the Court of Appeal in Tomec v. Economical Mutual Insurance Company.

Section 51(1) provided that “A mediation proceeding or evaluation under section 280 or 280.1 or a court proceeding or arbitration under section 281 shall be commenced within two years after the insurer’s refusal to pay the benefit claimed.”

Economical argued that the refusal to pay a benefit is a specific event that isn’t tied to the cause of action and therefore isn’t subject to discoverability. The court rejected this argument and found that the refusal to pay a benefit is an element of the cause of action:

[35]      I would not give effect to this argument. It is contrary to the admonition from the Supreme Court in Pioneer at para. 36 that:

In determining whether a limitation period runs from the accrual of a cause of action or knowledge of the injury, such that discoverability applies, substance, not form, is to prevail: even where the statute does not explicitly state that the limitation period runs from ‘the accrual of the cause of action’, discoverability will apply if it is evident that the operation of a limitation period is, in substance, conditioned upon accrual of a cause of action or knowledge of an injury.

[36]      The refusal to pay a benefit is clearly tied to the appellant’s cause of action. Absent a refusal to pay the benefit sought, there cannot be a claim made for mediation or an evaluation. Thus, the refusal to pay a benefit and the ability to make a claim are inextricably intertwined in the cause of action. The refusal cannot be stripped out of the cause of action and treated as if it is independent from it.

[37]      This distinguishes the case at bar from the situations in Ryan and Levesque. In both those cases, the courts were considering limitation periods that were wholly independent from the cause of action. The commencement of the limitation period was tied to the date of the deceased’s death. In contrast, the applicable limitation period in this case is tied to the accrual of the cause of action.

My only quibble is with the court’s discussion of the cause of action. What does it mean to be “tied” to a cause of action? A cause of action arises from certain factual elements (for example, the five elements of negligent misrepresentation, or the one element of a breach of contract). It’s imprecise to discuss a fact being “inextricably intertwined in the cause of action”; it’s either an element of the cause of action or it isn’t.

The decisions also has a rare example of an absurdity analysis in the context of limitation provision interpretation:

[46]      Statutes are to be interpreted in a manner that does not lead to absurd results. An interpretation is absurd if it “leads to ridiculous or frivolous consequences, if it is extremely unreasonable or inequitable, if it is illogical or incoherent, or if it is incompatible with other provisions or with the object of the legislative enactment”: Rizzo & Rizzo Shoes Ltd. (Re), 1998 CanLII 837 (SCC), [1998] 1 S.C.R. 27, 36 O.R. (3d) 418, at para. 27.

[47]      Here, the decisions below thrust the appellant into a Kafkaesque regulatory regime. A hard limitation period would bar the appellant from claiming enhanced benefits, before she was even eligible for those benefits. However, if the appellant had not claimed any benefits until she obtained CAT status in 2015, she would not be caught by the limitation period: Machaj v. RBC General Insurance Company, 2016 ONCA 257, at para. 6. Alternatively, if the appellant had coincidentally obtained CAT status before 2012, the hard limitation period would not bar her claim for enhanced benefits.
[48]      This outcome is absurd. There is no principled reason for barring the appellant’s claim for enhanced benefits in the first scenario but allowing the claim in the second and third scenario. To do so would effectively penalize the appellant for accessing benefits she is statutorily entitled to, or for developing CAT status too late.