In Clarke v. Faust, the Court of Appeal has held that the section 5(1)(a)(iv) discovery criterion requires the claimant to have “good reason to believe he or she has a legal claim for damages”.
Clarke is a solicitor’s negligence action. The plaintiffs were injured in a motor vehicle accident. They retained the defendant lawyer to represent them on their accident benefits and tort claim. He issued a statement of claim on their behalf nine weeks after the second anniversary of the accident.
The plaintiffs then retained a new lawyer. He told the plaintiffs that their claim was issued after the expiry of the presumptive limitation period, but this wasn’t necessarily fatal to their claim because of discoverability.
The new lawyer passed away and another lawyer took over. This third lawyer also was also unconcerned by the potential limitations issue. He took the position that until the plaintiffs obtained medical documentation they couldn’t know whether their injuries met the statutory threshold. Defence counsel apparently agreed, and the defendants didn’t plead a limitations defence.
Subsequently, the defendants changed their mind and amended their defence to plead a missed limitation period.
The plaintiffs then sued their first lawyer for negligence. He pleaded a limitations defence and moved for summary judgment. He argued that the plaintiffs should be presumed to have known of their claim two years after the date of the motor vehicle accident, or in the alternative on the date when their second lawyer put him on notice of the limitations issue. The plaintiffs argued that they suffered no damage until the defendants in the underlying action pleaded a limitations defence.
The motion judge accepted the defendant’s first argument in a muddled decision that Justice Juriansz criticised fairly, but harshly. In fairness to the motion judge, all of the theories put forward by the parties were wrong. I expect that she didn’t have much to work with.
Justice Juriansz found that the case turned on the application of section 5(1)(a)(iv) (“that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it”. When the defendants in the underlying action delivered their defence, the plaintiffs knew that three lawyers were of the opinion that discoverability applied to their claim and that the defendants had not pleaded a missed limitation period. Only when the defendants in the underlying action pleaded a missed limitation period did the defendants have any reason to know that commencing a legal proceeding was appropriate. The claim was accordingly timely.
Here’s what makes this decision noteworthy:
- The court defines the knowledge required by section 5(1)(a)(iv): “That provision requires, in my view, a person to have good reason to believe he or she has a legal claim for damages before knowing that commencing a proceeding would be an appropriate means to seek to remedy the injury, loss or damage.” Justice Juriansz doesn’t cite any authority for this conclusion, and on first consideration it’s seems a significant departure from the Court’s previous statement in Markel that this criterion requires only knowledge that a proceeding is “legally appropriate”. There’s a material difference between knowing that a claim is legally appropriate and having good reason to believe there is a legal claim. How does the need for the claimant to believe she has a legal claim sit with the long-settled principle that a claimant’s failure to appreciate the legal significance of a fact will not postpone the commencement of the limitation period (see for example Holley v. The Northern Trust Company, Canada or more recently Gatti v. Avramidis at para. 123)? It will be interesting to see how courts apply this new definition.
- The court didn’t compromise its section 5(1)(a) analysis by applying common law discovery jurisprudence (see for example the decision in Lawless). This is rare.
- The court acknowledged that the plaintiffs’ action may have been premature because there can be no limitations issue until there is a “claim” as defined by the Limitations Act, and a “claim” requires damage, which almost certainly cannot arise merely be virtue of pleading. Justice Juriansz suggests, correctly I think, that discovery of the claim against the defendant lawyer may not occur until there is a judgment in the underlying action (e.g., dismissing the action on the basis of a limitations defence and causing the plaintiffs damage).The plaintiffs did plead that they suffered damage when the defendants first asserted the limitations defence in the underlying action on the theory that it changed their bargaining position. Justice Juriansz acknowledged the doubtfulness of this position. If the lawyer didn’t miss the limitation period in the underlying action, he would not be liable for any damages, and whether he missed the limitation period is unknown until a court determines the issue.
