Ontario Court of Appeal – Page 5

Ontario: Easements by prescription

The Court of Appeal decision in Hunsinger v. Carter contains a statement of the principles of establishing an easement by prescription (which, as I like to point out, is a limitation issue):

(1)         Establishment of an easement by prescription

[9]         An easement by prescription can arise either under s. 31 of the Real Property Limitations Act, R.S.O. 1990, c. L.15, or pursuant to the doctrine of lost modern grant. Both have the same four requirements, which were properly recognized by the application judge: i) a dominant tenement that enjoys the benefit of the easement and a servient tenement whose owner suffers some use of its land; ii) the properties cannot be owned by the same person; iii) the benefit of the easement must be reasonably necessary for the enjoyment of the dominant tenement; and iv) there must be 20 or 40 years’ (see: Kaminskas v. Storm, 2009 ONCA 318 (CanLII), 95 O.R. (3d) 387, at paras. 31-36) continuous, uninterrupted, open, and peaceful use enjoyed without obtaining the permission of the servient tenement owner. See: Henderson et al. v. Volk et al. (1982), 1982 CanLII 1744 (ON CA), 35 O.R. (2d) 379 (C.A.).

[10]      After a property has been registered under the Land Titles system, a pre-existing prescriptive easement over the land can be established if the four criteria can be proved to have been met before the land was transferred into Land Titles: Carpenter v. Doull-MacDonald, 2017 ONSC 7560 (CanLII), at paras. 54-55.

Ontario: the interaction of representation orders and the Limitations Act

Can a party obtain a r. 12.08 representation order after the expiry of the limitation period? No, held the Court of Appeal in United Food and Commercial Workers Canada, Local 175, Region 6 v. Quality Meat Packers Holdings Limited.

If you’re unfamiliar with the rule, the court’s summary is helpful:

(i)           Rule 12.08

[27]      Rule 12.08 states:

Where numerous persons are members of an unincorporated association or trade union and a proceeding under the Class Proceedings Act, 1992 would be an unduly expensive or inconvenient means for determining their claims, one or more of them may be authorized by the court to bring a proceeding on behalf of or for the benefit of all.

[28]      There is little reported case law dealing with the application of Rule 12.08. Indeed, the parties did not point to any cases that directly deal with the issue here, namely, whether a representation order can be obtained under Rule 12.08 following the expiry of a limitation period.

[29]      However, there are several points worth mentioning about Rule 12.08.

[30]      First, Rule 12.08 falls under Rule 12, which is entitled “Class Proceedings and Other Representative Proceedings”.

[31]      Second, it is engaged where a person or persons seek to bring a claim on behalf of or for the benefit of all members of an unincorporated association or trade union. The rule addresses the problems facing unincorporated associations and trade unions seeking to sue in their own names.

[32]      Third, Rule 12.08 is meant to provide for a less costly and more convenient procedure than the Class Proceedings Act, 1992, S.O. 1992, c. 6 (“CPA”). Indeed, in determining whether to authorize a representative action under Rule 12.08, the court will take a similar approach to that taken in determining whether a class action should be certified under the CPA: see Ginter v. Gardon (2001), 2001 CanLII 28052 (ON SC), 53 O.R. (3d) 489 (S.C.), at para. 14; Ottawa (City) Police Assn. v. Ottawa (City) Police Services Board, 2014 ONSC 1584 (CanLII), 55 C.P.C. (7th) 183, at para. 38 (Div. Ct.).

[33]      Fourth, the rule is discretionary. One or more members of an unincorporated association or trade union “may be authorized by the court” to bring a proceeding on behalf of or for the benefit of all. Thus, unless and until authorization is granted, no representative proceeding may be brought.

[34]      Fifth, the rule is silent on the question of limitation periods.

The plaintiff argued that under the Limitations Act, the representative plaintiff need only have commenced a proceeding within two years of discovery, a representation motion is not a proceeding, and anyway the court can make a representation order nunc pro tunc. The court rejected these arguments:

[46]      First, under Rule 12.08, authorization is required “to bring a proceeding on behalf of or for the benefit of all” members of a trade union or unincorporated association. As I noted earlier, under s. 4 of the Limitations Act, “a proceeding shall not be commenced in respect of a claim after the second anniversary of the day on which the claim was discovered.” Reading Rule 12.08 harmoniously with s. 4, the limitation period does not stop running for the claims of class members until a proceeding has been brought on their behalf and that does not happen unless and until court authorization has been granted under Rule 12.08.

[47]      Second, Caetano is effectively arguing that Rule 12.08 suspends the limitation period – that once a proposed representative commences a proposed representative proceeding, the limitation period is suspended on behalf of all members of the trade union or unincorporated association. That, as explained above, is the situation under the CPA where s. 28 expressly suspends any limitation period applicable to a cause of action asserted in favour of class members on the commencement of a proceeding. In contrast, Rule 12.08 is silent on the question of limitation periods and does not purport to extend, suspend or otherwise vary any limitation period applicable to claims asserted in favour of class members.

[48]      Third, the Supreme Court’s decision in Green supports the view that, without a tolling provision, any limitation period applicable to the claims advanced on behalf of class members continues to run until the court authorizes the claims to be brought by the representative plaintiff: Green, paras. 74, 174-175.

[49]      Finally, I would reject the argument that a nunc pro tunc order would be available in the circumstances of this case where leave was not sought prior to the expiry of the limitation period: see Green, at paras. 94-111.

[50]      I recognize that a representative action under Rule 12.08 is meant to provide a less onerous and less expensive alternative to bringing a class action and yet a proposed representative plaintiff may feel it is necessary to proceed under the CPA instead of Rule 12.08 to avoid any limitations problems even if it would be more expensive and less convenient to do so. My interpretation, therefore, may seem to be at odds with concerns about expense and convenience. However, as Côté J. observed in Green, at para. 75, “policy concerns, as compelling as they are, do not override the plain meaning of the text and the intent of the Ontario legislature.”

The court then considered another rather esoteric limitations issue: can the court make a representation order under r. 10.01 in respect of claims that are statute-barred? The answer: no.

Rule 10.01, for those who need a refresher, provides

[56] Rule 10.01 provides as follows:

In a proceeding concerning,

(a) the interpretation of a deed, will, contract or other instrument, or the interpretation of a statute, order in council, regulation or municipal by-law or resolution;

(b) the determination of a question arising in the administration of an estate or trust;

(c) the approval of a sale, purchase, settlement or other transaction;

(d) the approval of an arrangement under the Variation of Trusts Act;

(e) the administration of the estate of a deceased person; or

(f) any other matter where it appears necessary or desirable to make an order under this subrule,

a judge may by order appoint one or more persons to represent any person or class of persons who are unborn or unascertained or who have a present, future, contingent or unascertained interest in or may be affected by the proceeding and who cannot be readily ascertained, found or served.

The plaintiff argued that the because r. 10.01 representation orders are brought within an already commenced proceeding, if a representation order does not seek to add new parties, the Limitations Act does not bar the order. However, the court found that it seeks to add new claims, which engages the Limitations Act:

[61] While the Abreus do not seek to add parties to their action, the question is whether they can assert claims, through the device of a representation order, on behalf of persons who are not plaintiffs in the proceeding, after the limitation period in respect of such claims has already expired. The Abreus’ statement of claim seeks termination pay under the ESA and wrongful dismissal damages, as well as common employer and other declarations, and aggravated and punitive damages for themselves. It purports to assert claims for monetary amounts for approximately 125 other non-unionized former employees of the Defendants, relying on Rule 10.

[64] This court, however, has repeatedly held that parties cannot circumvent the Limitations Act by amending their pleadings to add additional claims: see Frohlick v. Pinkerton Canada Ltd. (2008), 2008 ONCA 3 (CanLII), 88 O.R. (3d) 401; Dee Ferraro Ltd. v. Pellizzari, 2012 ONCA 55 (CanLII), 346 D.L.R. (4th) 624; 1100997 Ontario Limited v. North Elgin Centre Inc., 2016 ONCA 848(CanLII), 409 D.L.R. (4th) 382. The addition of new statute-barred claims by way of an amendment to a statement of claim is conceptually no different than issuing a new and separate statement of claim that advances a statute-barred claim: Frohlick, at para. 24. An amendment will be statute-barred if, after the expiry of the limitation period, it seeks to advance “a fundamentally different claim based on facts not originally pleaded”: North Elgin Centre, at para. 23.

Ontario: some self-evident points on the timing of limitations defences

The Court of Appeal’s decision in Filice v. Complex Services Inc. is a reminder of certain commonsense, probably generally self-evident principles about the timing of limitations defences. Raise a limitations defence in response to an amendment motion (if there is one to raise) on the motion, and when you raise a limitations defence generally, it shouldn’t for the first time on appeal:

[55] There is no information in the record whether the issue of the limitations period was argued when the respondent sought leave to amend his statement of claim. That is where it ought to have been argued but I have to assume it was not. If so, it is, in my view, again too late to raise the issue in this court. However, even if it were open to the appellant to raise the issue now, I would not give effect to it. The appellant was on notice of the respondent’s essential claim, that is, that his dismissal was improper. Whether the claim is styled as wrongful dismissal or constructive dismissal, the appellant was fully aware of the nature of the claim it was facing within the two year limitation period.

Ontario: the Court of Appeal on failing the litigation finger test

The Court of Appeal’s decision Bertolli v. Toronto (City) is an example of a plaintiff failing to satisfy the litigation finger test in a misnomer matter. The court found that the correct defendant would not have known on reading the statement of claim that it was defendant the plaintiff intended to name.

[5] The appeal is dismissed. The delivery and content of the Notice of Claim were facts extraneous to the original accident, and not a record made by a participant or observer at the time of the accident who was in some way connected to the substituted defendants. Moreover, even when read in combination, the Notice of Claim and Statement of Claim were not capable of supporting an inference that the substituted defendants were the intended defendants. Absent reference to the pothole in the Notice of Claim and absent particulars of the precise location of the accident alleged in the Statement of Claim, the reasonable reader could not know, without further inquiry, that the documents referred to the same accident. Put simply, the Master’s inference that the substituted defendants would know they were the intended defendants was not available on any reasonable view of the evidence. The Master’s order was properly set aside.

I also note the court’s use of the language “substitute”. This, as the court held in Ormerod that a misnomer does not involve a substitution:

[27] In this case, after finding that Dr. Ferner was a misnomer for Dr. Graham, the motion judge applied [at para. 18] the standard that despite the inordinate delay, he should allow the correction of the misnomer unless “the defendant to be substituted did not have timely notice of the claim and will be unduly prejudiced in preparing a defence to the claim”. The motion judge’s reference to “the defendant to be substituted” is unfortunate because in the case of a misnomer, the amendment is made under rule 5.04(2) “to correct the name of a party incorrectly named”. The correction of a misnomer does not involve the substitution of one defendant for another. However, his reasons, read as a whole, make clear that he viewed the remedy as the correction of the misnaming or the misdescription of the emergency doctor rather than the substitution of Dr. Graham as a defendant for Dr. Ferner. The appeal was argued on that basis.

I confess that this always seemed an especially pedantic point, even for me (and also, apparently, for the court itself, which ignored it in Bertolli), but the point is nevertheless valid.

Ontario: The finality of motions to add defendants

The Court of Appeal in Prescott & Russell (United Counties) v. David S. Laflamme clarifies some interesting aspects of motions for to add a defendant after the presumptive expiry of the limitation period.

The motion judge held that the plaintiff could add the proposed defendant “as a party to the litigation since its actions to do so were within the limitation period” (presumably meaning that the plaintiff moved to add the proposed defendant within the limitation period). Like me, you might think this was a finding of timeliness precluding a limitations defence. Not so, held the Court of Appeal. The Order was without any language declaring the timeliness of the claims against the proposed defendant, and, notwithstanding the foregoing, the reasons were apparently without any language suggesting that the motion judge made a final determination regarding the limitations defence.

Because the Order did not preclude a limitations defence, it was not a final determination of the proposed defendant’s rights and therefore interlocutory.

These are the relevant paragraphs:

[7]         The distinction between a final and interlocutory order for the purposes of determining the appropriate appellate forum is not always easy to make: see Salewski v. Lalonde, 2017 ONCA 515 (CanLII); Azzeh v. Legendre, 2017 ONCA 385 (CanLII). In the present context, the order will be said to be final if it deprives WSP of a substantive defence. If WSP can no longer rely on the Limitations Act defence, the order is final. However, if WSP can raise the Limitations Act defence at trial, the order is not final. To determine whether the order is final or interlocutory, one must examine the terms of the order, the motion judge’s reasons for the order, the nature of the proceedings giving rise to the order, and other contextual factors that may inform the nature of the order.

[8]         Looking first at the order itself, there is nothing in the language to suggest that any final determination was made on theLimitations Act issue. The order, presumably drawn with the cooperation of counsel, makes no reference to the Limitations Act or any findings made in respect of that Act. The order simply allows the respondent to add WSP as a defendant.

[9]         The motion judge’s reasons contain no language suggesting that any finding made in respect of the application of the Limitations Act had application beyond the motion itself. The motion judge did not purport to decide the issue for any purpose other than the determination of the motion to add WSP as a party.

[10]      The nature of the motion is also relevant to the nature of the order arising from the motion. Some motions tend to generate final orders. For example, orders made on r. 21 motions brought to determine a question of law, will generally apply to the litigation as a whole. Depending on the question of law decided, the order may well be final. Motions to add parties that are successful, however, do not as a rule generate findings that are binding in the rest of the litigation.

[11]      We also cannot accept the contention that because the motion judge was required to make a finding as to the application of the Limitations Act, her finding must be regarded as binding in the litigation and therefore final. Section 21 of the Limitations Actforbids adding a party where the limitation period has expired. It does not foreclose adding a party absent an affirmative finding that the limitation period has not expired.

[12]      Having regard to the factors outlined above, we conclude that the trial judge’s determination that the action was brought within the limitation period was made for the purposes of the motion only. The motion judge was satisfied that, for the purposes of determining whether to add WSP as a party, the limitation period had not expired.

[13]      The order under appeal is interlocutory. This court has no jurisdiction to hear the appeal. WSP may, if so advised, seek leave to appeal in the Divisional Court, or it may raise the limitations argument at trial.

I confess that I’m not entirely persuaded by the Court’s reasoning. It’s settled law (or at least was settled until this decision) that on a motion for leave to add a defendant, the court can determine the timeliness of the claim. That is, the court can find that the plaintiff has established that it discovered its claim against the proposed defendant within the limitation period. The court would then make the order denying the proposed defendant leave to plead a limitations defence.

I wonder whether the issue here was nothing more than the plaintiff neglecting to insist on such language in the order given the motion judge’s finding that the plaintiff brought the motion in time.

Lastly, I indulge some pedantry in regards of legal sloppiness:

[3]         On the motion, the respondent contended that its claim against WSP was not reasonably discoverable until a date within the two year limitation period. WSP contended that the respondent had ample information upon which to base its claim years earlier. The motion judge accepted the respondent’s position, concluding, at para. 38:

Consequently, I find that the United Counties [respondent] can add WSP as a party to the litigation since its actions to do so were within the limitation period.

[4]         WSP appeals claiming that the motion judge erred in concluding that the claim could not reasonably have been discovered at a point beyond the applicable time limit under the Act. The respondent argues that the motion judge was correct in her analysis of the Limitations Act provisions. The respondent also raises a preliminary jurisdictional point. Counsel argues that the order under appeal is interlocutory and not final, meaning that any appeal lies with leave to the Divisional Court.

[5]         The respondent acknowledges that if the order is not final, the respondent cannot claim that the order is binding on the trial judge, meaning that WSP can re-litigate the limitation issue at trial. Counsel has raised the issue, however, because in his submission, the jurisprudence from this court dictates that the order is interlocutory and cannot be appealed to this court.

A claim is not discoverable within a limitation period. Pursuant to s. 4 of the Limitations Act, it is the discovery of a claim that causes the limitation period to run.

The proper question on these motions is whether the plaintiff discovered the claim within two years of the motion. This isn’t because the limitation period runs retrospectively two years from the date of the motion. Rather, it’s because discovery of the claim any earlier than two years from the motion means the limitation period commenced earlier than two years from the motion, and therefore expired before the motion.

Ontario: the evidentiary threshold for adding a defendant after the limitation period’s presumptive expiry

The Court of Appeal’s decision in Mancinelli v. Royal Bank of Canada is now a leading decision on the addition of a defendant to proceeding after the presumptive expiry of the limitation period. The Court set out the test, and held that it applies equally to limitations periods that are not subject to the discovery provisions in the Limitation Act:

[23]      When a person opposes a plaintiff’s motion to add it as a defendant on the basis of the apparent expiry of a limitation period, the motion judge is entitled to assess the record to determine whether, as a question of fact, there is a reasonable explanation on proper evidence as to why the plaintiff could not have discovered its claim through the exercise of reasonable diligence. If the plaintiff does not raise any credibility issue or issue of fact about when its claim was discovered that would merit consideration on a summary judgment motion or a trial and there is no reasonable explanation on the evidence as to why the plaintiff could not have discovered the claim by exercising reasonable diligence, the motion judge may deny the plaintiff’s motion: Arcari v. Dawson, 2016 ONCA 715 (CanLII), 134 O.R. (3d) 36, at para. 10.

[24]      However, the evidentiary threshold that must be met by a plaintiff on such a motion is low: Pepper v. Zellers Inc. (2006), 2006 CanLII 42355 (ON CA), 83 O.R. (3d) 648 (C.A.), at para. 14; Burtch v. Barnes Estate (2006), 2006 CanLII 12955 (ON CA), 80 O.R. (3d) 365, at paras. 26-27. The plaintiff’s explanation should be given a “generous reading”: Wakelin v. Gourley (2005), 2005 CanLII 23123 (ON SC), 76 O.R. (3d) 272, at para.15, aff’d 2006 CarswellOnt 286 (Div. Ct.). Whether the plaintiff and its counsel acted with reasonable diligence must be considered in context: Fanshawe College of Applied Arts and Technology v. Sony Optiarc Inc., 2014 ONSC 2856, at para. 45 (the “Fanshawe Pleadings Motion”.)

[25]      While Arcari, Pepper and Wakelin dealt with motions to add defendants that were opposed based on the apparent expiry of the limitation period under the Act, the same approach, and the same low threshold, is warranted where the motion is opposed or also opposed based on the apparent expiry of any statutory limitation period subject to the discoverability principle: see, for example, Fanshawe Pleadings Motion.

[…]

[30]      A plaintiff’s failure to take reasonable steps to investigate a claim is not a stand-alone or independent ground to find a claim out of time. Instead, the reasonable steps a plaintiff ought to take is a relevant consideration in deciding when a claim is discoverable under s. 5(1)(b): Galota v. Festival Hall Developments Ltd., 2016 ONCA 585 (CanLII), 133 O.R. (3d) (C.A.), at para. 23; Fennel v. Deol, 2016 ONCA 249 (CanLII), 265 A.C.W.S. (3d) 1029, at paras. 18, 24.

[31]      Where the issue on a motion to add a defendant is due diligence, the motion judge will not be in a position to dismiss the plaintiff’s motion in the absence of evidence that the plaintiff could have obtained the requisite information with due diligence, and by when the plaintiff could have obtained such information, such that there is no issue of credibility or fact warranting a trial or summary judgment motion: Wong v. Adler (2004), 2004 CanLII 8228 (ON SC), 70 O.R. (3d) 460 (Ont Master), at para. 45; Pepper, at para. 18.

The Court overturned the motion judge’s decision (which I noted for its summary of the relevant principles) for applying too high a standard to high an evidentiary threshold.

[26]      In the context of a motion to add defendants in a class action alleging a secret conspiracy brought before any statements of defence had been filed or any discoveries had taken place, the motion judge required the appellants to meet too high an evidentiary threshold.

[27]      Giving the requisite generous, contextual reading to the appellants’ explanation, the appellants provided a reasonable explanation why they could not have identified the respondents as co-conspirators before July 20, 2014. I note that in the Fanshawe Pleadings Motion, the motion judge permitted plaintiffs alleging a price-fixing conspiracy to amend their statement of claim to add defendants on evidence as to due diligence that essentially consisted of reviewing publically available documents, albeit a more detailed list of those documents was provided.

[28]      In the face of the appellant’s evidence of their search for other potential defendants, the respondents led no evidence of further reasonable steps that the appellants could have taken to ascertain their identities before July 20, 2014. Rather, the motion judge suggested that the appellants should have taken further steps to investigate whether the respondents were co-conspirators. At least some of the steps he suggested go beyond those a reasonable plaintiff would have taken in the circumstances, indicating that he held the appellants to too high an evidentiary standard. By way of example, it is not apparent how a plaintiff alleging a conspiracy that the defendants took active steps to conceal and that was conducted through secret “chats” could have possibly obtained the suggested Anton Pillar and Norwich orders. The evidentiary foundation required to obtain such orders is high.

[29]      Further, a representative plaintiff is not akin to the investigative arm of a regulator. Regulators often have investigative powers that civil plaintiffs do not. There was no evidence that any of the sophisticated regulators investigating the alleged conspiracy had identified any of the respondents as co-conspirators before the UBS proffer.

The decision is also noteworthy for what is arguably the addition of a new consideration to the test. The Court criticized the motion judge for having failed to determine with sufficient precision when the plaintiffs ought to have discovered their claim. Prior to this decision, I think it was generally understood that when a proposed defendant argues that leave is inappropriate based on evidence that the plaintiff could through reasonable diligence have discovered the claim within two years of the motion, it wasn’t necessary for the proposed defendant to provide an exact date on which discovery ought to have occurred. Going forward, should the court neglect to make a finding in regards of the date when discovery ought to have occurred, there may be ground for appeal:

[32] As the respondents appropriately conceded, there was no evidentiary foundation for the motion judge’s finding that the respondents’ identities as co-conspirators could have been established with reasonable diligence. The fact that UBS – one of the co-conspirators and a participant in the “collusive chats” – was able to identify other participants in the secret chats is no indication that the appellants, who were not co-conspirators, could have done so.

[33] Nor did the motion judge determine with sufficient precision by when the appellants ought to have discovered that they had a claim. As noted above, the appellants claim would be statute barred only if the s. 5(1)(b) date were before July 20, 2014. The motion judge found the identity of BMO and TD could have been established “before the expiry of the limitation period”. It is not clear what the motion judge meant by “the expiry of the limitation period”. The respondents submitted that the limitation period expired on December 31, 2015 (two years after the end of the alleged conspiracy period). If the motion judge’s intended finding were that the appellants could have established the identities of BMO and TD by December 31, 2015, then the appellants’ claim against them would not have been statute-barred.

Ontario: Court of Appeal says don’t use r. 21.01(1)(a) to advance limitations defences

In Brozmanova v. Tarshis, the Court of Appeal has brought certainty to the question of whether a defendant may advance a limitations defence in a r. 21.01(1)(a) motion. The answer is no. Rule 21.01(1)(a) is for the determination of questions of law. The expiry of the limitation period is a question of fact (or mixed fact and law). Further, evidence is not admissible without leave under r. 21.01(1)(a), which puts the plaintiff in the unfair position of needing to seek leave to admit the evidence relevant to the limitations defence when it should be admissible as of right:

[10]      The Rules of Civil Procedure make available two sets of procedural devices by which a party can seek to dispose finally of a proceeding on a contested basis.

[11]      One set is evidence-based, under which the parties adduce evidence by various means, on the basis of which the court decides whether to grant or dismiss a proceeding. The Rules permit or offer several standard evidence-based procedural devices by which to obtain such a final adjudication on the merits: (i) the conventional trial; (ii) the hybrid trial; (iii) two forms of summary judgment – rules 20.04(2)(a) and 20.04(2)(b); and (iv) a rule 38 application.

[12]      The second set of procedural devices enables a party to ask the court to determine a question of law that may dispose of all or part of a proceeding. These law-based devices include: (i) a rule 22 special case; (ii) rule 21.01(1)(a), where a question of law is raised by a pleading; and (iii) rule 21.01(1)(b), where a pleading discloses “no reasonable cause of action or defence”.

[13]      The law-based character of the devices available under rules 21.01(1)(a) and (b) is reinforced by the limits placed on the use of evidence on motions brought under those rules. No evidence is admissible on a “no reasonable cause of action” motion; nor is evidence admissible on a “question of law” motion, except with leave of the judge or on consent of the parties: rule 21.01(2).

[14]      The rationale for these prescriptions is a simple one: the allegations asserted in the pleading, which the court must accept as provable at trial, are sufficient to determine the question of law or whether the pleading discloses a cause of action or defence recognized by law: see Hunt v. Carey Canada Inc., 1990 CanLII 90 (SCC), [1990] 2 S.C.R. 959, at pp. 980, 988 and 990-991. No further facts are required to determine the legal sufficiency of the claim.

[15]      In the present case, Dr. Tarshis was sued for conduct as a medical practitioner. He and Ms. Brown are represented by a law firm with long experience in representing medical practitioners. They sought to dismiss Ms. Brozmanova’s action relying on two law-based rules: 21.01(1)(a) and (b).

The “question of law” under rule 21.01(1)(a)

[16]      The “question of law” the respondents raise under rule 21.01(1)(a) is that Ms. Brozmanova commenced her action outside of the two-year limitation period.

[17]      Relying on rule 21.01(1)(a) to advance a limitation period defence is a problematic use of the rule. Some decisions of this court characterize the issue of whether a plaintiff has commenced a proceeding within the limitation period as one involving a question of fact: Pepper v. Zellers Inc. (2006), 2006 CanLII 42355 (ON CA), 83 O.R. (3d) 648 (C.A.), at para. 19; and Arcari v. Dawson, 2016 ONCA 715 (CanLII), 134 O.R. (3d) 36, at para. 9, leave to appeal refused, [2016] S.C.C.A. No. 522. Others describe it as involving a question of mixed fact and law: Salewski v. Lalonde, 2017 ONCA 515 (CanLII), 137 O.R. (3d) 762, at para. 45; and Ridel v. Goldberg, 2017 ONCA 739 (CanLII), at para. 12. Regardless, it does not involve a question of law.

[18]      In the basic case, the court must ascertain “the day on which the claim was discovered”: Limitations Act, 2002, S.O. 2002, c. 24, Sched. B, s. 4 (the “Limitations Act”). This, in turn, requires making two findings of fact: (i) the day on which the person first knew of the four elements identified by s. 5(1)(a)(i)-(iv) of the Limitations Act;[1] and (ii) under s. 5(1)(b), “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 matters referred to in” s. 5(1)(a). The earliest of the two dates is the date on which the claim is discovered: s. 5(1).

[19]      The analysis required under s. 5(1) of the Limitations Act generally requires evidence and findings of fact to determine. It does not involve a “question of law” within the meaning of rule 21.01(1)(a).

[20]      Yet, here the respondents invoked a law-based rule to establish a largely fact-based defence. I recognize, as respondents’ counsel submits, that some jurisprudence exists that has allowed a defendant to resort to rule 21.01(1)(a) to determine its limitations defence “where it is plain and obvious from a review of a statement of claim that no additional facts could be asserted that would alter the conclusion that a limitation period had expired”: see the commentary on rule 21.01(1)(a) in Todd. L. Archibald, Gordon Killeen & James C. Morton, Ontario Superior Court Practice, 2018 (Toronto: LexisNexis Canada, 2017), at p. 1128. See also Paul M. Perell & John W. Morden, The Law of Civil Procedure in Ontario, 3d ed. (Toronto: LexisNexis Canada, 2017), at p. 611.

[21]      However, courts must always remember that permitting a defendant to move under 21.01(1)(a) to establish a limitations defence could prove unfair to a plaintiff, especially a self-represented one. By selecting rule 21.01(1)(a) as the procedural means to adjudicate its fact-based limitations defence, a defendant puts a plaintiff in the position where she cannot, as of right, file evidence to explain when she discovered her claim. Instead, she must seek leave of the court.

[22]      A plaintiff who risks the dismissal of her action on the basis of a limitations defence should not have to ask a court for permission to file evidence on the issue of when she discovered her claim. She should be entitled to do so as of right. It is unfair for a defendant to attempt, tactically, to deprive her of that right and put her to the unnecessary expense (and risk) of asking permission to do so.

[23]      Notwithstanding the jurisprudence that opens the rule 21.01(1)(a) door to some efforts to prove a limitations defence, in my respectful view such an approach risks working an unfairness to a responding plaintiff. Requiring a defendant to move under an evidence-based rule – either rule 20 (summary judgment) or rule 51.06(2) (concerning admissions of the truth of facts in a pleading) – avoids such potential unfairness and is to be preferred.

This strikes me as an excellent, well-reasoned decision.

The Court also noted that it would have been available to the defendant to move under r. 51.06(2) on the basis that the plaintiff had admitted discovery of her claim in the statement of claim:

[34] The material facts pleaded by Ms. Brozmanova at paras. 8-9 and 15-16 of her statement of claim were admissions of the truth of certain facts. She clearly pleaded that in 2009, as a result of dealing with an insurance company on a matter regarding her ankle injury, she discovered that her OHIP record contained entries for billings by Dr. Tarshis, which she alleges were fraudulent.

[35] Given the admissions in her pleading, it would have been open to the respondents to move on those admitted material facts to dismiss the claim on the basis that Ms. Brozmanova had discovered it in 2009 and therefore the action was statute-barred: rules 20 or 51.06(2).[3] In 2009, she knew that some “damage” had occurred within the meaning of s. 5(1)(a) of the Limitations Act because she knew that her actual position was worse than her position before: Hamilton (City) v. Metcalfe & Mansfield Capital Corporation, 2012 ONCA 156 (CanLII), 290 O.A.C. 42, at para. 42. That the “damage” she discovered in 2009 was not the same damage for which she sought recovery in her action – her alleged inability in 2015 to purchase travel insurance – does not matter. Knowledge of “some damage” is sufficient for the cause of action to accrue and to start the limitation period: Hamilton, at para. 61.

While I’ve not seen a limitation defence advanced using this procedure, it makes good sense for those rare circumstances where a plaintiff unwittingly pleads facts that demonstrate discovery of a claim.

Ontario: the defendant’s inability to satisfy a debt doesn’t make a proceeding inappropriate

Davies v. Davies Smith Developments Partnership is another decision from the Court of Appeal that delineates when a proceeding will be an appropriate remedy for a plaintiff’s loss. The defendant’s lack of funds to satisfy its debt to the plaintiff did not prevent a claim from being an appropriate remedy for the debt. The decision also reiterates the distinction between damage and damages:

[11]      In asserting that the limitation period had not expired, the appellant submits that: (a) the amount owing to the appellant was in dispute; (b) the profits could not be ascertained until the partnership’s projects had been completed; (c) an action was not an “appropriate” means to remedy the appellant’s loss because he knew the partnership did not have funds; and (d) there had been forbearance or novation, making it inappropriate to commence an action. The appellant submits that the claim was not discovered until 2011, when he realized that the respondent had made improper charges to his capital account.

[12]      We agree with the respondent that the first two submissions confuse “damage” with “damages”. The appellant knew by the end of June 2008 that he had suffered damage, even though the amount of his damages was a matter of dispute and had not been quantified: see Hamilton (City) v. Metcalfe & Mansfield Capital Corporation, 2012 ONCA 156 (CanLII), 347 D.L.R. (4th) 657, at paras. 54 and 58.

[13]      The third submission that the respondent did not have the funds to pay, while perhaps explaining the appellant’s conduct, did not stop the limitation period from running. The appellant’s claim was “fully ripened” by July 2008. The word “appropriate”, as it appears in s. 5 of the Limitations Act, means “legally appropriate”. The appellant cannot rely on his own tactical reasons for delaying the commencement of legal proceedings: see Markel Insurance Company of Canada v. ING Insurance Company of Canada, 2012 ONCA 218 (CanLII), 348 D.L.R. (4th) 744, at para. 34.

Ontario: the limitation of new causes of action

In David v. Easte Side Mario’s Barrie, the Court of Appeal quotes from The Law of Civil Procedure in Ontario for the principle that an alternative claim for relief arising out of the same facts is not a new cause of action for limitations purposes:

[32] And, quoting from Paul M. Perell & John W. Morden, The Law of Civil Procedure in Ontario, 3d ed. (Toronto: LexisNexis Canada, 2017), at p. 186:

A new cause of action is not asserted if the amendment pleads an alternative claim for relief out of the same facts previously pleaded and no new facts are relied upon, or amount simply to different legal conclusions drawn from the same set of facts, or simply provide particulars of an allegation already pled or additional facts upon [which] the original right of action is based.

See also 1100997 Ontario Limited, at para. 20.

Ultimately, the Court applied the “fundamentally different claim” test to conclude that the plaintiff wasn’t entitled to the amendment.

As I discussed when the Court of Appeal last addressed this issue, the “fundamentally different claim” test makes a lot of sense.

My complaint, which I recognise verges on pedantry, is that a cause of action analysis, and the casual use of the word “claim”, is problematic in the limitations context. The Limitations Act has nothing to do with causes of action, and, as I often note, does not appear in the Act. This is because the Act uses the language of “claim”, which reflects an intentional break with cause of action accrual as determinative of the commencement of time. Claims are not causes of action, and causes of action have very little do with the operation of the current limitations scheme. It’s unhelpful when the Court fails to account for this.

Ontario: the discovery provisions apply to contribution and indemnity claims

In Mega International Commercial Bank (Canada) v. Yung, the Court of Appeal held that the discovery provisions of the Limitations Act determine the commencement of the limitation period for contribution and indemnity claims. This is an excellent, sensible decision that resolves one of the last significant (and somewhat inexplicable) uncertainties about the Ontario limitations scheme.

A refresher: Section 4 provides the basic two-year limitation period that commences on when the plaintiff discovers the claim. Section 5(1) defines when discovery occurs. Section 5(2) provides a rebuttable presumption that it occurs on the date of the act or omission that gives rise to the claim. Section 15 provides that the ultimate 15-year limitation period commences on the date of that act or omission. Section 18 provides that for the purposes of s. 5(2) and s. 15, the date when a plaintiff serves a statement of claim on a defendant is the date of the act omission that gives rise to the defendant’s contribution and indemnity claim against another alleged wrongdoer.

There were two competing constructions of s. 18. One line of jurisprudence originating from Miaskowski (Litigation Guardian of) v. Persaud held that s. 18 prescribes an absolute two-year limitation period that commences always on the date of service of the statement of claim. Another line of jurisprudence originating from Demide v. Attorney General of Canada et al. held that s. 18 merely identifies the presumptive trigger date for the limitation period for contribution and indemnity claims, subject to the s. 5 discovery provisions.

I’ve long argued that Miakowski was plainly wrong, and its continued application was hard to understand. I noted with some satisfaction the trend toward preferring the Demide construction.

The Court in Mega International essentially adopted the reasoning in Demide. It applied the principles of statutory interpretation: the words in s .18 interpreted in their grammatical and ordinary sense do not establish an absolute limitation period. Rather, s. 18 works “hand in glove” with the provisions of s. 5(2) and s. 15 to identify the presumptive limitation period that applies in contribution and indemnity claims. It is not an exception to the basic limitation period in s. 4, but part of the integrated scheme established by s. 4 and s. 5.

The Court acknowledged the injustice in constructing s. 18 as imposing an absolute limitation period. It would allow for the possibility of claims becoming statute-barred before they are discoverable. The Court also noted the absence of any basis for recalibrating the balance between plaintiff and defendant rights the Act strikes for this particular category of claims only.