Discoverability principles

Ontario: another good “abilities and circumstances” analysis

 

The decision in Service Mold + Aerospace Inc. v. Khalaf is another good example of the court’s assessment of a plaintiff’s abilities and circumstances for a limitations analysis.  The fact that the plaintiff had no background or education in bookkeeping, accounting, or finances informed the court’s analysis of when the plaintiff could reasonably discover a fraud committed by his bookkeeper.

It’s also a noteworthy decision for the dubious (and unsuccessful) position taken by the defendant:

[21]           TD Bank acknowledges that the plaintiffs did not actually discover the fraud until early 2015 and relies on s. 5(1)(b).  The position of TD Bank is as follows:

1.         The plaintiffs ought to have discovered the claim at least by 2009 or 2010.  TD Bank takes the position that bookkeeper fraud is a well-known risk and a prudent businessman would have measures in place to control it.  Mr. Schuurman, in effect, turned a blind eye to the risk. TD Bank therefore invites me to dismiss the action.

To discover a claim, the plaintiff must know that the defendant has caused or contributed to his loss (and there is no “claim” as defined by the Limitations Act until loss occurs).  Whether the plaintiff was blind or not to a risk that ultimately resulted in his loss, until the loss occurred, the claim was not discoverable.  This position might support a contributory negligence argument, but it’s immaterial to a limitations defence.

Ontario: a good “abilities and circumstances” s. 5(1)(b) analysis

Lewis v. Plaskos is noteworthy for its findings regarding the plaintiff’s abilities and circumstances for the purposes of a discovery analysis.  The court doesn’t often make these findings explicitly (though it should).

The court found that plaintiff had the abilities of her experienced medical malpractice lawyer, and a reasonable experienced medical malpractice would be alert to the possibility that physician’s notes are incomplete.  It was accordingly unreasonable for the plaintiff, through her lawyer, not to consider the possibility and make the accordant inquiries:

[49]           The focus of the dispute is on sub-section 5(1)(b), Limitations Act, 2002.  In particular, the issue is whether the analysis of hospital records by Ms. McCartney has met the test of being objectively reasonable.

[50]           After the firm was retained by the plaintiffs, Ms. McCartney was assigned the task of reviewing the hospital records.  In that process, she was looking to see what was or was not done and why.  Ms. Cartney was considering who was responsible.  She knew this was a case of potential delayed diagnosis.  Those responsible were to be named as defendants in the statement of claim.

[51]           There are three preliminary matters that are of concern, namely delay, the state of the hospital records and the lack of notes by Ms. McCartney.

[52]           The hospital records were received by Ms. McCartney on or about October 14, 2011.  Thirteen months later, in November 2012, the review of those records commenced.  While Ms. McCartney was on a working maternity leave during part of that period of time, presumably meaning part-time attendance at the office and with responsibility for other files as well, the review process should have commenced much earlier.  Mr. Michael also had carriage of the file.  Other junior lawyers in the firm could have been asked to assist.

[53]           There is always a danger in waiting until the presumptive limitation period is about to expire.  The process can become rushed.  Due diligence was not met.

[54]           It is now known that Dr. Cameron failed to fully record her involvement with Ms. Lewis, particularly her consultation with Dr. Plaskos.

[55]           Litigation lawyers, particularly those involved in personal injury and medical malpractice cases, routinely review physician’s notes and hospital records.  These lawyers are aware of the dangers in conducting such review regarding illegible handwriting, abbreviated terms and incomplete recording.  The failure of physicians to fully record matters pertaining to a patient is often a topic in the litigation process, including at trial.  In the absence of records, physicians often have difficulty recalling specific events and discussions.

[56]           In my view, Ms. McCartney and Mr. Michael, both experienced medical malpractice lawyers, would have, or should have, been alert to the possibility the physician’s notes were incomplete.

[57]           The only contemporaneous note made by Ms. McCartney during her review and analysis of the hospital records was the summary previously mentioned.  The summary is incomplete, making no mention of her conclusions as now presented on this motion and lacking detail as to the analytical process undertaken.  Hence, on cross-examination, Ms. McCartney was unable to recall her state of mind when reviewing the records and the details of her thought process.  Like physicians, lawyers need to record all details of their involvement for future use.

[58]           The first step in the review process is to determine what was recorded.  When part of the record contains handwritten notes, the lawyer looks to see if such are legible.  There was a legitimate concern with Dr. Cameron’s handwriting and use of abbreviated terms.  Ms. McCartney and Mr. Michael, for example, looked at a key word and correctly concluded it to be “refused”.  “Radiol” was considered to be radiologist or radiology department.  When there is any concern as to what was written, it requires inquiry of the record keeper.

[59]           There are two conclusions Ms. McCartney made that are of critical importance.  First, she considered the phrase “will discuss with radiologist or radiology department re:  imaging” as connected to the preceding note “will check post void residual”.  Second, Ms. McCartney determined “MRI refused as normal rectal tone and no bilateral leg weakness” as Dr. Cameron declining to order an MRI.  Such are possible interpretations or conclusions but there are others that, in my view, are far more reasonable.

[60]           Just as physicians arrive at a “differential diagnosis” following examination of a patient, so too must a lawyer consider all reasonable options in their analysis of a case.

[61]           Connecting “will discuss with radiologist or radiology department re:  imaging” to “post void residual” is too restrictive.  The more reasonable interpretation is that Dr. Cameron was going to seek assistance in determining what further imaging tests were required.  At this point, Dr. Cameron was aware the lumbar x-ray, as interpreted by Dr. Plaskos, was inconclusive having regard to the nature of Ms. Lewis’ complaints.

[62]           Dr. Cameron’s note is all recorded under the time of 18:00 hours.  Ms. McCartney incorrectly assumed this represented one event.  But there are gaps in the recording and, having regards to the words used, it is more likely the record should have been seen as several separate recordings.

[63]           In this regard, the words “MRI refused” invites the question “by whom”.  Ms. McCartney’s conclusion that Dr. Cameron refused her own request is not reasonable.  It is contrary to normal use of English language and, as it follows the note “will discuss with radiologist …” with a gap in between, leads to the inference someone else is involved.  At a minimum, there are a number of possible interpretations and each must be pursued.  Indeed, Ms. McCartney acknowledged in cross-examination that one possible interpretation was that the MRI had been refused by someone else, but such a possibility did not occur to her at the time of her review.  It should have.

[64]           The failure to order an MRI in a timely fashion is central to the plaintiffs’ case.  Ms. McCartney knew that Dr. Plaskos was involved in interpreting an x-ray of Ms. Lewis on January 2, 2011, as had been requested by Dr. Reesor.  Ms. McCartney also knew that emergency department physicians will sometimes consult a radiologist as to what imaging to order or for an urgent MRI.  These factors, and others previously addressed, meant Ms. McCartney had to consider all reasonable scenarios.  Instead, she arrived at a conclusion without examining reasonable alternatives.  Her analysis, in result, was incomplete.

[65]           I conclude the analysis of hospital records by Ms. McCartney was not objectively reasonable, particularly having regard to her abilities and experience as a medical malpractice lawyer.

[66]           The cause of action occurred on January 2, 2011.  The limitation issue is with discoverability and so the presumptive limitation date of January 2, 2013 does not apply.

[67]           The statement of claim was issued on October 7, 2014.  Was it discoverable prior to October 7, 2012?  I conclude it was.  The medical records were received in October 2011.  A diligent review would have led to further inquiry.  The potential claim against Dr. Plaskos, in my view, was discoverable by December 31, 2011 and certainly long before October 7, 2012.

[68]           In result, I conclude the limitation period had expired prior to the statement of claim being issued.  The claim against Dr. Plaskos is statute-barred by operation of Section 5, Limitations Act, 2002.  The claim against him must be dismissed.  I so order.

 

Ontario: Court of Appeal emphasises that discovery is contextual

The Court of Appeal’s decision in Fehr v. Sun Life Assurance Company of Canada is noteworthy for it its emphasis on the contextual nature of the discovery analysis:

[173]   However, when it came to assessing the limitation period defences applicable to the individual plaintiffs, the motions judge did not engage in a detailed examination of these idiosyncrasies. In particular, he did not consider the impact of each plaintiff’s circumstances and experiences on the critical issue of when each plaintiff discovered his or her claim or knew or ought to have known of the requisite facts grounding their claim. He failed to engage in an individualized and contextual analysis, and, instead, applied a broad presumption as to when they ought to have known of certain alleged misrepresentations.

[174]   An individualized and contextual analysis was necessary in this case for the very reason that misrepresentation claims are not generally amenable to class actions: people receive, process, and act upon written and verbal statements in different ways. Their behaviour varies depending upon a variety of factors, including their own particular circumstances, what specific representations and information they received and from whom, how they understood or processed those representations and information, the extent to which they relied upon them, and their own wishes and intentions.

[175]   An individualized and contextual analysis was particularly important in this case because, among other things: (a) there is a relationship of vulnerability between insurer and insured; (b) many of the plaintiffs are unsophisticated with respect to the insurance industry; (c) the insurance policies are complicated and not easily understood; (d) misrepresentations were made to some consumers and not others; (e) some or all of these misrepresentations were made by individuals on whom the plaintiffs might reasonably rely; (f) there is no evidence that the insurer expressly corrected the misrepresentations; and (g) the insurer may have reinforced or made further misrepresentations, to some or all of the plaintiffs, during the life of the policies.

Ontario: Court of Appeal affirms that discovery of a cause of action isn’t discovery of a claim

The Court of Appeal decision in Gillham v. Lake of Bays (Township) is noteworthy for two  reasons.

First, it uses the concept of the “claim” (which is the language of the Limitations Act) rather than the concept of the “cause of action” (which is not the language of the Limitations Act) for its limitations analysis.  See for example para. 20:

[20]      The overarching question in the discoverability analysis under s. 5 of the Act is whether the claimant knew or reasonably should have known, exercising reasonable diligence, the material facts stipulated under s. 5(1)(a) that give rise to a claim: Ferrara v. Lorenzetti, Wolfe Barristers and Solicitors, 2012 ONCA 851 (CanLII), 113 O.R. (3d) 401, at para. 32. Section 1 of the Act defines a claim as “a claim to remedy an injury, loss or damage that occurred as a result of an act or omission”. Section 2(1) provides that the Act “applies to claims pursued in court proceedings” (with certain enumerated exceptions that do not apply here).

(A slight quibble: the s. 5(1)(a) matters do not give rise to a claim.  Only two facts—an act or omission resulting in injury, loss, or damage—give rise to a claim pursuant to its definition in s. 1.  Knowledge of the s. 5(1)(a) matter results in discovery of the claim.)

It even puts “cause of action” in quotation marks–presumably to distinguish it from a claim–in the context of stating that knowledge of the material facts of a cause of action is not discovery of a claim:

[33]      The motion judge erred in failing to undertake an analysis of the criterion under s. 5(1)(a)(iv) of the Act. That the appellants might have a “cause of action” against the defendants, as the motion judge found, is not the end of the analysis under s. 5(1) of the Act. As this court said in Kudwah v. Centennial Apartments, 2012 ONCA 777 (CanLII), 223 A.C.W.S. (3d) 225, at para. 2:

It is important when considering a limitation period claim to appreciate that the terms of the 2002 Act must govern. A court considering the limitation claim must address the specific requirements of s. 5 of the Act, particularly on the facts of this case, the requirement of s. 5(1)(a)(iv).

 

Second, it acknowledges the accrual of a claim as the starting point of the limitations analysis, and that discovery of the claim requires knowledge that a proceeding is an appropriate remedy for the loss:

[34]      Therefore, the motion judge had to consider whether the appellants had a claim as defined under the Act. In considering whether the appellants knew or should have known that they had a claim, the motion judge had to go on to consider whether, having regard to the nature of the injury, loss or damage, the appellants knew or should have known that a proceeding would be an appropriate means to seek to remedy it. This omission by the motion judge is an error of law: Har Jo Management Services Canada Ltd. v. York (Regional Municipality), 2018 ONCA 469 (CanLII), at paras. 21 and 35.

[35]      Section 5(1)(a)(iv) represents a legislative addition to the other factors under the discoverability analysis. As Laskin J.A. explained in 407 ETR Concession Company Limited v. Day, 2016 ONCA 709 (CanLII), 133 O.R. (3d) 762, leave to appeal to SCC refused, [2016] S.C.C.A. No. 509, at paras. 33-34:

The appropriateness of bringing an action was not an element of the former limitations statute or the common law discoverability rule. This added element can have the effect – as it does in this case – of postponing the start date of the two-year limitation period beyond the date when a plaintiff knows it has incurred a loss because of the defendant’s actions.

Also, when an action is “appropriate” depends on the specific factual or statutory setting of each individual case: see Brown v. Baum, 2016 ONCA 325 (CanLII), 397 D.L.R. (4th) 161, at para. 21. Case law applying s. 5(1)(a)(iv) of the Limitations Act, 2002 is of limited assistance because each case will turn on its own facts.

This is a very welcome statement from the Court of Appeal.  It’s a step away from the misapplication of common law discovery principles to limitations analyses that has caused a great deal of confusion and uncertainty.

Lastly, the decision finds that it was appropriate for the plaintiffs to “wait and see” in the context of a construction dispute before commencing a proceeding.  I often see it argued that Presidential stands for the principle that there are only two circumstances in which a proceeding will be an inappropriate remedy—where the defendant undertakes good faith ameliorative efforts or there is an alternative dispute resolution process. This is a misapprehension of the law, as this decision demonstrates.  Here’s the key analysis:

[37]      Here, the motion judge failed to consider “the specific factual or statutory setting” of the case before him and determine whether it was reasonable for the appellants not to immediately commence litigation but to “wait and see” if the 1 ¼ inch sinking of the deck pier observed in 2009 would worsen over time or if the issue would resolve once the stone retaining wall had settled, as had been suggested to the appellants by Mr. MacKay. Neither Royal Homes nor Mr. MacKay believed the problem was serious, or due to the manner of construction. This evidence does not support the conclusion that the appellants knew or ought to have known in 2009 that their loss was not trivial and initiating legal proceedings was the appropriate means to remedy their loss.

 

Ontario: when a tax appeal doesn’t render a claim against lawyers inappropriate

In Coveley v. Thorsteinssons LLP, the plaintiffs sued their former lawyers for negligently prosecuting tax appeals.  The defendant lawyers moved for summary judgment dismissing the claim as statute-barred. The court refused to accept the plaintiffs’ s. 5(1)(a)(iv) appropriateness argument that the defendants’ prosecution of the tax appeals operated to delay their discovery of the claim:

[45]           Thorsteinssons relies upon a decision of Mew J. in J.C. v. Farant, 2018 ONSC 2692 (CanLII). In Farant, Mew J. decided a motion for summary judgment seeking dismissal of an action for professional negligence against lawyers who represented the plaintiff in an historical sexual abuse claim on the ground that it is statute barred. The outcome of the motion turned on s. 5(1)(a)(iv) of the Limitations Act, 2002. Mew J. observed at para. 72 of his decision that the focus of s. 5(1)(a)(iv) of the Limitations Acts, 2002 is on the specific factual or statutory setting of each individual case and, as a result, appellate decisions which have considered and applied the provision are not always easy to reconcile.

[46]           In his review of the jurisprudence under s. 5(1)(a)(iv) of the Limitations Act, 2002, Mew J. cited the decision of the Court of Appeal in Gravelle (CodePro Manufacturing) v. Denis Grigoras Law Office, 2018 ONCA 396 (CanLII). In Gravelle, the appellant commenced an action alleging that the respondents provided erroneous advice in respect of an agreement of purchase and sale, specifically, as to the enforceability of a binding arbitration agreement the appellant had with the purchaser under North Carolina law. The appellant gave notice of his claim but did not commence his action until over four years later. The appellant argued on appeal that it was appropriate for him to delay bringing his action until the arbitration proceedings involving the purchaser were completed, as it would have avoided unnecessary litigation if he had been successful in those proceedings. The Court of Appeal disagreed, noting that this was not a case in which the appellant was pursuing alternative means of resolving his negligence action against his former solicitors, the respondents. The Court of Appeal held that the appellant’s tactical decision to wait until the arbitration proceedings were completed before bringing his action was his to make, but this decision did not delay the commencement of the limitation period.

[47]           Mew J. cited the Gravelle decision as one that reinforces the principle that “a tactical decision to delay the commencement of proceedings will not, absent other factors – such as the pursuit of alternative means to resolve the very claim that is the subject of the action – delay the running of time”: Farantat para. 87.

[48]           The factual circumstances disclosed by the evidence on the motion before me are unlike those in Presidential in material respects. In Presidential, Pardu J.A. relied upon the fact that the appellant looked to its professional advisors to provide accounting and tax advice, and the appellant relied on the accountant’s advice to retain a tax lawyer to object to CRA’s Notices of Assessment. The accountant who had filed the tax returns late was involved in the strategy that was recommended to the appellant and that it pursued. The accountant continued to be involved in the alternative process that had been recommended by the accountant while this process was running its course.

[49]           The evidence on the motion before me is very different. Thorsteinssons informed Michael and Stella in September and October 2010, respectively, that their tax appeals were weak. Soon after this advice was given, Thorsteinssons, although initially willing to continue to represent the plaintiffs through the trial of their tax appeals (on a pro bono basis with an associate acting as trial counsel), sought and obtained an order, that was not opposed, removing the firm as counsel of record for the plaintiffs on November 12, 2010. Thorsteinssons was not thereafter involved in the litigation strategy that the plaintiffs pursued. The plaintiffs retained new counsel for their tax appeals and they were represented by new counsel through the trial of the tax appeals and an appeal of the trial decision. Thorsteinssons does not agree that incorrect advice was given and, unlike the facts in Presidential, the firm did not provide advice to the plaintiffs about what to do to solve the problem of incorrect advice having been given. The plaintiffs’ decisions to pursue the tax appeals and to wait until after the trial of the tax appeals before starting an action were made after the professional relationship between Thorsteinssons and the plaintiffs had ended, and were not recommended by Thorsteinssons. The fact that Thorsteinssons continued to represent the plaintiffs until November 12, 2010, and that before this date the firm had expressed a willingness to continue to represent the plaintiffs at the trial of their tax appeals, does not affect the plaintiffs’ knowledge by no later than October 27, 2010 that Thorsteinssons’ advice was that both appeals were weak, and that this advice conflicted fundamentally with earlier advice, upon which the plaintiffs maintain they relied, that the appeals were strong and likely to succeed.

[50]           I regard these factual circumstances to be more like those in Gravelle. In Gravelle, the appellant knew of the claim against his former solicitors for allegedly improper advice. The solicitors were not involved in the appellant’s decision to pursue arbitration against the purchaser or the appellant’s decision to wait until the conclusion of the arbitration before starting an action against the solicitors for professional negligence. As I have noted, the Court of Appeal concluded that the appellant’s decision not to bring his action until the arbitration proceedings were completed did not delay the commencement of the limitation period. The same reasoning applies to the facts on the motion before me.

[51]           In addition, I regard as significant that Stella and Michael did not state in their affidavits that they decided to delay commencing a claim against Thorsteinssons while they were pursuing the tax appeals because, if they were successful, the losses resulting from their claims against Thorsteinssons would have been substantially or entirely eliminated. If this was the reason for delaying commencement of the action, I would expect evidence of this fact to have been provided.

[52]           I also regard as significant that the plaintiffs did not wait for the trial decision in their tax appeals before commencing an action against Thorsteinssons. The trial of the tax appeals was held in October 2012 and the Tax Court of Canada released the judgment dismissing the tax appeals more than one year later, on December 20, 2013. The action against Thorsteinssons was commenced on November 2, 2012, soon after the trial of the tax appeals and before the release of the Tax Court of Canada’s decision. This evidence is inconsistent with the position advanced by the plaintiffs that a legal proceeding against Thorsteinssons was not an appropriate means to seek to remedy the loss caused by incorrect legal advice given by Thorsteinssons until the alternative process upon which the plaintiffs rely, the tax appeals, had run its course.

[53]           The pursuit of tax appeals that, according to the plaintiffs’ evidence, they regarded as weak and unlikely to succeed, does not amount to an alternative process that had the reasonable potential to resolve the dispute between the parties and eliminate the plaintiffs’ loss. The plaintiffs’ pursuit of the tax appeals does not postpone the time when they first knew or reasonably ought to have known that, having regard to the nature of the injury, loss or damage that they claim was caused by their reliance on Thorsteinssons’ advice, an action would be an appropriate means to seek to remedy their claim.

[54]           For these reasons, I conclude that by no later than October 27, 2010, the plaintiffs first knew or reasonably ought to have known that an action against Thorsteinssons would be an appropriate means to seek to remedy their claim against Thorsteinssons for giving incorrect advice about the merits of the tax appeals. The plaintiffs’ claim was discovered by no later than October 27, 2010. The action was commenced more than two years later. There is no genuine issue requiring a trial in relation to whether the action is statute barred.

Ontario: the limitation of unpaid invoice claims

In Newman Bros. v. Universal Resource Recovery Inc., the defendant ventured a dubious limitations defence based on the argument that a plaintiff who delivers multiple invoices has to commence a separate action in regards of those invoices.  The court rejected it:

[26]      The defendants submit that the limitation period begins to run under this particular contract 16 days after the delivery of each invoice, and therefore separate actions would have to be commenced at different times whenever there was a delay in the payment of a particular invoice. I reject such an argument as not commercially reasonable, unduly onerous on the parties, and a potential waste of judicial resources.

[27]     As was stated in 407 ETR at para. 39:

A civil action becomes appropriate when 407 ETR has reason to believe it will not otherwise be paid – in other words, when the usually effective license plate denial process has run its course. Thus the date when a vehicle permit expires for failure to pay a toll debt is the date a civil action is an appropriate means to recover a debt. This date starts the two-year limitation period.

 [28]      I accept the position of the plaintiff that it trusted the defendants, it did not want to jeopardize a long standing business relationship and it believed, from the promises made, that payment would be forthcoming and in fact some were. That in my view was a reasonable basis, and reasonable consideration to forebear on issuing the claim to see if further payments would be forth coming.

[29]       I conclude that I have not been persuaded by the defendants, based on the record before me, that the legally appropriate time to sue was two years after the August 2009 payment. Indeed, I find the argument of the plaintiff has merit. It was promised further funds, there were no objections to the invoices submitted or the work done, and it received further funds in May 2011after receiving such promises of payment.

[31]     Based on this record one would have difficulty thinking that the defendants thought the May 31, 2011 payment was all they potentially owed, or that, the plaintiff thought that that payment had satisfied the debt (see s. 13(1) of the Limitations Act, 2002; see also Buik Estate v. Canasia Power Corp., 2014 ONCA 2959 at paras. 13-15).

This seems like a sound analysis, and one which underscores that a plaintiff doesn’t necessarily discover a claim arising from unpaid invoices on the date the invoices become due and aren’t paid (though note that the impact of s. 13—an acknowledgment—is unrelated to discovery).

Ontario: s. 5(1)(a)(iv) and doctor-patient relationships

The decision in Kram v. Oestreicher is an example of a circumstance where a proceeding did not become an appropriate remedy while a doctor was attempting to remedy his error:

[125]      In my view, the circumstances here are analogous to those before the Court of Appeal in both Presidential MSH Corporation and Brown v. Baum. Assuming that I had concluded that Oestreicher was civilly liable for the manner in which the June 15, 2009 surgery was carried out, he was engaged in good faith efforts to remedy any damage caused for at least the next 14 months. This was reflected in the three subsequent surgeries he performed, the last of which occurred on August 17, 2010. Moreover, it is clear that Kram was relying on Oestreicher’s superior knowledge and expertise throughout this time period.

[126]      In my view, it would have been premature, and therefore inappropriate, for Kram to have commenced a legal action while Oestreicher’s good-faith efforts to remedy any negative effects from the June 15, 2009 surgery were ongoing. I conclude that the two-year limitation period in respect of her claims began to run, at the earliest, on August 17, 2010. She commenced this proceeding within two years of that date. Accordingly, Kram’s claims are not barred by the operation of the Act.

 

Ontario: the timing of amendments to plead discoverability

Marvelous Mario’s Inc. et al. v. St. Paul Fire And Marine Insurance Co.  provides authority for the principle that an amendment to plead discoverability is available at any time:

[52]           The plaintiffs’ pleading is silent as to discoverability. Recognizing the gap in their pleading, the plaintiffs have moved for an order allowing them to amend their pleading to plead discoverability. St. Paul takes no position on the motion. Rule 26.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194allows for an amendment to be made at any time, even after the conclusion of trial: Hardy v. Herr, 1965 CanLII 225 (ON CA), [1965] 2 O.R. 801 (Ont. C.A.), at para. 2. Discoverability was an issue thoroughly canvassed at trial. I see no prejudice to St. Paul in granting the amendment. Accordingly, the plaintiffs’ motion to amend their statement of claim to plead discoverability is granted.

All of that said, it’s worth noting that the facts setting up a discovery argument are properly pleaded in reply.

Ontario: Court of Appeal reminds us that arbitration doesn’t suspend the limitation period

 

In Gravelle (CodePro Manufacturing) v. Denis Grigoras Law Office, the Court of Appeal held that a party who writes a letter with the subject line “Notice of Pending Legal Malpractice Action”, and advises that “a statement of claim is currently being drafted against yourself […] such as to avoid the expiration of the applicable statute of limitation periods”, has discovered his claim.

If the party subsequently pursues arbitration in lieu of an action, that will not have the effect of suspending the commencement of the limitation period:

[6]         This is not a case in which the appellant was pursuing alternative means of resolving his negligence allegations against his former solicitors, the respondents. The appellant decided for tactical reasons not to bring his action against the respondents until the arbitration proceedings were completed. He was entitled to make this choice, but he must live with the consequences of it. The motion judge made no error in concluding that the appellant discovered his claim by November 23, 2009. The fact that a notice of possible claim has been delivered “may be considered by a court in determining when the limitation period in respect of the person’s claim began to run”: Limitations Act, 2002, s. 14(3).

This is a useful s. 5(1)(a)(iv) decision because it provides an example of the kind of tactical consideration that does not prevent a proceeding from being an appropriate remedy.

It’s also an interesting counterpoint to this decision.

Ontario: sometimes issuing a statement of claim doesn’t mean discovery of the claim

 

Is commencing a proceeding in respect of a claim determinative of the discovery of that claim?  Not always, according to the Court of Appeal in Har Jo Management Services Canada Ltd. V. York (Regional Municipality).

Flood waters flowing from adjacent land, which the respondent municipality had expropriated for a construction project, damaged the appellant’s property.

In 2011, the appellant commenced proceeding before the Ontario Municipal Board claiming damages for injurious affection in respect of the expropriation.

On June 3, 2013, the appellant sent a letter to the respondent stating that its activities on the adjacent land caused the flooding and resulting damage.  The respondent denied causing the flooding on June 28, 2013.

The appellant commenced an action two years form the respondent’s denial.  The respondent pleaded a limitations defence and move for summary judgment .

The Statement of Claim tracked the language of the appellant’s claim to the respondent.  The Motion Judge found that the appellant knew of his claim on the day he issued it.

Not so, held the Court of Appeal.  The Expropriations Act provides for damages for injurious affection and gives the OMB exclusive jurisdiction to award such damages.  If the flooding damage was caused by the respondent’s construction, the Superior Court would have no jurisdiction to hear the claim.

The appellant’s evidence explained that, to the extent the damage from the flood properly formed part of a claim for damages for injurious affection under the Expropriations Act, it would be part of the appellant’s existing OMB claim.  The action was merely “out of an abundance of caution” in case it turned out that the flooding was not caused by the respondent’s construction, but by some other factors that did not meet the definition of injurious affection.

There was no suggestion that something other than the construction might have caused the flooding until the respondent’s June 28, 2013 letter.  It was on this date that that appellant knew that a proceeding was an appropriate remedy for a claim against the respondent and not a proceeding before the OMB.

The curious aspect of this decision is that issuing a statement of claim (or even drafting the statement of claim) was not determinative of the discovery of the claim it pleads.  There is authority for the principle that it is logically inconsistent for a plaintiff to commence an action before discovering a claim.  See also s. 14(3) of the Limitations Act.

It’s certainly hard to understand how a court could find that a statement of claim does not indicate discovery of the claim pleaded in it, or that objective discovery can occur after subjective discovery.

Here, the Court seems to have avoided this problem by finding that the appellant’s evidence demonstrated that the statement of claim did not indicate subjective discovery of the claim.  This is likely to happen very rarely, and I expect that this decision will be an outlier.

I think the limitations defence might have been avoided if the statement of claim (which I haven’t seen) had pleaded explicitly that it advanced a claim only in regards of the damage that was not within the OMB’s exclusive jurisdiction.