Ontario Court of Appeal

Ontario: S. 21 might include mistake as to identity

In Douglas v. Stan Fergusson Fuels Ltd., the Court of Appeal left open the possibility that s. 21 of the Limitations Act might be broad enough to include mistake as to identity rather than merely a misdescription:

[112]   In my view, while the test for misnomer may be broad enough to embrace a mistake as to the identity of the person who should have brought a suit (rather than a misdescription of the person suing),[8] it cannot do so in this case. This is because, as I have explained above, at the time State Farm chose to commence a claim, it did not have capacity to do so in its own name. As a result, it cannot be said that State Farm made a “mistake” in naming the Douglases as plaintiffs instead of itself.

Ontario: Rebutting presumptive discovery is the plaintiff’s burden

The Court of Appeal decision in O’Brien-Glabb v. National Bank of Canada states the principle that the plaintiff bears the onus of establishing the inappropriateness of a proceeding as part of a discovery argument:

[13]      We agree with the appellant that it was the respondent who bore the onus of leading evidence to establish on a balance of probabilities that a proceeding was not appropriate in 2010 (see: Miaskowski (Litigation guardian of) v. Persaud, 2015 ONCA 758(CanLII) at para 27; Fennell v. Deol, 2016 ONCA 249 (CanLII) at para16; and Galota v. Festival Hall Developments Ltd., 2016 ONCA 585 (CanLII) at para 15).

Even a vague familiarity with the operation of s. 5 of the Limitations Act means this principle is self-evident, but it’s nevertheless helpful to have it stated explicitly.

Ontario: rectification is a “claim”

The Court of Appeal’s decision in Alguire v. The Manufacturers Life Insurance Company is noteworthy for the following points:

It affirms that a request for rectification is a “claim” within the meaning of the Limitations Act:

[26]      In my view, Manulife’s request for rectification is a claim. It is more than just a denial of Mr. Alguire’s claim; it is an independent claim. Even if Mr. Alguire had not brought this proceeding, Manulife would have been entitled to bring an application seeking rectification of the Policy. Consequently, Manulife’s request goes beyond a mere defence and qualifies as a claim for rectification, which is equitable relief: Fairmont, at para.12. The Limitations Act applies to equitable claims: McConnell v. Huxtable, 2014 ONCA 86 (CanLII), 118 O.R. (3d) 561, at paras. 48-49.

This may be the correct result, but the court didn’t arrive at it by asking the correct question (at least not explicitly).  Section 1 of the Limitations Act defines “claim”: a claim to remedy damage resulting from wrongful conduct.  Accordingly, whether there is a claim is a matter of whether there is wrongful conduct and resulting damage.  It does not necessarily follow from a party seeking an order or declaration that there is a claim.  There are circumstances where a party asks the court to do something—for example to order the passing of accounts—without there having been wrongful conduct.

There’s another instance of confusion about the nature of the “claim”:

[34]      […] A claim, however, requires an act or omission of the person against whom it is made: Limitations Act, s. 5(1)(a)(iii). In this case, it is Mr. Alguire’s resiling from the parties’ intended agreement that grounds the rectification claim. Even though Manulife discovered the error in the paid-up values in the Policy in 2007, it did not know, and could not reasonably ought to have known, that Mr. Alguire would seek to resile from the parties’ intended agreement at some point in the future. Manulife therefore cannot be faulted for failing to act with due diligence.

It’s because of the s. 1 definition of “claim” that it requires wrongful conduct, not because s. 5(1)(iii) makes knowledge of the wrongful conduct the precondition of discovering a claim.

The Court follows Albertan authorities for the principle that s. 16(1)(a) should be narrowly construed:

[27]      The next issue is whether Manulife can rely on s. 16(1)(a) of the Limitations Act, which provides that there is no limitation period in respect of “a proceeding for a declaration if no consequential relief is sought.”

[28]      In the context of a limitation period analysis, declaratory relief should be narrowly construed so as to ensure that s. 16(1)(a) is not used as a means to circumvent applicable limitation periods: Joarcam, LLC v. Plains Midstream Canada ULC,2013 ABCA 118 (CanLII), 90 Alta. L.R. (5th) 208, at para. 7.

[29]       I conclude that this subsection is unavailable to Manulife in the circumstances of this case, as it is seeking consequential relief.  The remedy of rectification sought in this case has significant consequences for the parties and goes beyond clarifying the nature of a particular obligation. Mr. Alguire stands to receive significantly less money as a result of the rectification compared to what he argued he was entitled to on the Policy’s face.

The Court held that policy considerations cannot drive the results:

[33]      Finally, Mr. Alguire raises policy considerations in support of his submission that the claim for rectification is statute-barred.  Those considerations cannot, in the circumstances of this case, drive the result.  The Limitations Act was designed to promote certainty in the analysis of when claims are statute-barred.  The task of a reviewing court is to determine the applicable limitation period having regard to the legislation. A limitation period analysis is not a laches analysis where the court’s investigation is driven by the equities of the situation.

This prompts the obvious question: are there circumstances where policy considerations could inform a limitations analysis? I wouldn’t think so, and it seems like the real policy concern is avoiding the introduction of a new factor in the limitations analysis.  It’s easy to see how litigants might seize on this obiter as standing for the principle that there are circumstances where, in addition to the matters in s. 5(1), a court must consider the impact of policy on the commencement of time.

 

 

 

Ontario: the impact of an appeal on the appropriateness of a proceeding

When the success of an appeal in a related but separate proceeding (involving the same defendants) will eliminate damage, is a proceeding to remedy that damage inappropriate until the appeal’s determination?  No, held the Court of Appeal in Tapak v. Non-Marine Underwriters, Lloyd’s of London:

[13]      The second is to submit that the appeal against the other defendants, if successful, might have eliminated their losses and thus the appellants did not know that this action was “an appropriate means” to seek to remedy its losses until the appeal was dismissed, relying on s. 5(1)(a)(iv) of the Limitations Act, 2002 and Presidential MSH Corp. v. Marr, Foster & Co. LLP (2017), 135 O.R. (3d) 321, 2017 ONCA 325 (CanLII). In our view, s. 5(1)(a)(iv) is not intended to be used to parse claims as between different defendants and thus permit one defendant to be pursued before turning to another defendant. Rather, it is intended to address the situation where there may be an avenue of relief outside of a court proceeding that a party can use to remedy their “injury, loss or damage” – see, for example, 407 ETR Concession Co. v. Day, 2016 ONCA 709 (CanLII), 133 O.R. (3d) 762.

The Court also included a reminder that seeking a declaration in addition to consequential relief will not avoid a limitations defence by engaging s. 16(1)(a) of the Limitations Act:

[14]      The third is the argument that the appellants only sought declaratory relief and therefore, under s. 16(1)(a) of the Limitations Act, 2002, the two year limitation period does not apply. That argument cannot succeed because the claim in this action was not limited to declaratory relief. The claim also sought consequential relief, namely damages, so s. 16(1)(a) does not apply.

Ontario: the court will rarely consider limitations defences before pleadings clsoe

In Taylor v. Workplace Safety & Insurance Board, the Court of Appeal emphasised that only in rare cases will the court hear a motion to dismiss an action as statute-barred prior to the delivery of a defence:

[22]      Thus, it is not necessary to decide whether the motion judge was correct in holding that Taylor’s claim would be barred by the two year limitation period in the Limitations Act. We do note, however, that neither defendant has delivered a statement of defence. This court has held consistently that only in rare cases, if any, will we entertain a motion to dismiss an action as statute barred under the Limitations Act in the absence of a statement of defence. See Salewski v. Lalonde, 2017 ONCA 515 (CanLII), 137 O.R. (3d) 750, at paras. 42-46.

Ontario: the limitations act applies to claims in notices of objection

The Court of Appeal’s decision in Iaboni Estate v. Iaboni stands for the principle that a claim pursued in a notice of objection filed in an application to pass account is subject to the Limitations Act and capable of being time-barred.

[8]         At the hearing of the motion, Carlo consented to the passing of accounts from the time of the appointment of BNS, but not before. Mullins J. struck the notice of objection on three bases: (1) it was without merit, (2) it was an abuse of process for attempting to relitigate the subject matter of the appellant’s dismissed action; and (3) was time barred under the Limitations Act.

[9]         Carlo appeals the order of Mullins J., striking out the notice of objection.

[10]      We are not persuaded that the motions judge made any error. The appellant consented to the passing of accounts from the time of the appointment of BNS, and has not appealed that aspect of the order. Even if the appellant were able to identify errors with respect to the abuse of process and Limitations Act claims, the motions judge’s findings of fact on the merits are fatal to the appeal. She made findings that the appellant had not substantiated his suspicions with respect to the discharge of mortgage, the share certificate, or general dissipation of funds. She also found the evidence of the respondent Norma to be credible and reliable. Those findings are entitled to deference and are dispositive of the appeal.

Ontario: The knowledge required for discovery

This is a post purely to indulge my pedantry.  In Reece v. Toronto (Police Services Board), the Court of Appeal said this about discovery:

[5]         The motion judge correctly found that discoverability for the purpose of limitations is based upon knowledge of the facts necessary to support a claim and does not require knowledge of the law that supports the claim.

This isn’t quite right.  Discoverability for the purpose of limitations–what other purpose to does the principle have?–is codified in s. 5 of the Limitations Act and requires knowledge of the four discovery matters.  The facts necessary to support a claim are, pursuant to the definition in the s. 1 of the Limitations Act, but only two: wrongful conduct and resulting loss.  The existence of a claim and the discovery of a claim are different issues.

Ontario: The potential consequence of serving a Statement of Claim out-of-time

Scenario: A plaintiff pursues a claim by statement of claim issued within the limitation period, fails to serve the statement of claim within the time prescribed by the rules, the court refuses leave for late service, and if the plaintiff were to reissue the statement of claim the claim pursued in it would be statute-barred.  Is the claim out of time?  According to the Court of Appeal in Sultan v. Hurst, yes:

[1]         The appellant appeals the decision of the motion judge refusing to validate the late service of the statement of claim. The claim was issued within the two year limitation period following the accident, but was served more than two years after the expiry of the six month limit to serve a statement of claim set out in r. 14.08(1) of the Rules of Civil Procedure. By the time the claim was served, the limitation period had expired. Therefore, the practical effect of the motion judge’s order was to prevent the plaintiff from pursuing his claim.

I have trouble with this reasoning.  The proceeding in respect of the claim was commenced in time, which means there can be no limitations defence.  I gather that the motion judge found late service rendered the proceeding a nullity (or struck out the statement of claim?).  The motion judge’s decision isn’t available, so we can only speculate.  Either way, the impact of the decision was evidently that there was no longer a proceeding, and so it became necessary for the plaintiff to commence a new proceeding in respect of the same claim, but this new proceeding was out of time.

The Court of Appeal seems to have taken for granted that non-compliance with r. 14.08(1) nullifies (practically, if not technically) a proceeding.  I’m not sure this is necessarily so.

Ontario: Representation orders and misnomer

In Lawrence v. International Brotherhood of Electrical Workers (IBEW) Local 773, the Court of Appeal states that a request for a representation order to sue a trade union under r. 12.08 can be a request to correct a misnomer.  There was a dissent from Justice Hourigan:

[51]      Worse, the method chosen to achieve that result is ill-suited for its purpose. The motion judge found that the order the respondent sought was properly characterized as a motion to correct an error in the title of proceedings under r. 5.04(2). In my view, she erred in so finding. This is not a misnomer case, as there is no question that Local 773 was correctly named. This is a case where there has been non-compliance with a statutory requirement and a new party has been added. One need only look to the form of the order granted by the motion judge. She did not make an order under r. 5.04(2); rather she made a representation order.

Ontario: the Court of Appeal on the evidence required for discovery

It sometimes happens that I miss notable decisions.  And so, better late than never, I draw Crombie Property Holdings Limited v. McColl-Frontenac Inc. to your attention.

These are the noteworthy aspects of the Court of Appeal decision:

1.  It recaps the standard of review for limitations analyses:

[31]      The Supreme Court of Canada in Hryniak v. Mauldin, 2014 SCC 7 (CanLII), [2014] 1. S.C.R. 87, at para. 81, established the standard of review on appeal of a summary judgment. The court stated that, “[w]hen the motion judge exercises her new fact-finding powers under Rule 20.04(2.1) and determines whether there is a genuine issue requiring a trial, this is a question of mixed fact and law”, reviewable only for a “palpable and overriding error”, unless there is an “extricable error in principle”. Further, the question whether a limitation period expired prior to the commencement of an action is typically a question of mixed fact and law and therefore subject to review on a “palpable and overriding error” standard: Longo v. MacLaren Art Centre Inc., 2014 ONCA 526(CanLII), 323 O.A.C. 246, at para. 38. A “palpable and overriding error” is “an obvious error that is sufficiently significant to vitiate the challenged finding of fact”: Longo, at para. 39.

2.  It succinctly summarises the evidentiary burden on a summary judgment motion to dismiss on the basis of an expired limitation period:

[33]      In order to obtain a summary dismissal of the action, the moving parties were required to establish that there was no issue requiring a trial about their limitation defence. The specific issue was whether Crombie’s claim in respect of the environmental contamination of its property was “discovered” within the meaning of s. 5 of the Limitations Act, 2002 before April 28, 2012.

3.  It cites Van Allen for the principle that it is reasonable discovery and not the mere possibility of discovery the causes the limitation period to commence: see para. 35
It inaccurately describes the knowledge necessary to cause discovery of a claim:

[35]      The limitation period runs from when the plaintiff is actually aware of the matters referred to in s. 5(1)(a)(i) to (iv) or when a reasonable person with the abilities and in the circumstances of the plaintiff first ought to have known of all of those matters: Longo, at para. 41. The knowledge sufficient to commence the limitations clock has been described as “subjective” knowledge or “objective” knowledge.

This paragraph appears to conflate the amount of knowledge required by s. 5 with the subjectivity of the knowledge.  A claimant requires prima facie knowledge.  This is knowledge that is greater than suspicion but less than certainty.  See for example Brown v. Wahl at 15.  Then there is question of whether the plaintiff subjectively or subjectively-objectively had this knowledge (not purely objectively, as the Court suggests in this decision, because the question asked in s. 5(1)(b) is a “modified objective” test as it doesn’t ask about the knowledge of a reasonable person, but a reasonable person with the abilities and in the circumstances of the claimant.

Knowledge of a possible wrong (a mere suspicion) is insufficient for discovery of a claim; prima facie knowledge of an actual wrong is necessary:

[42]      That the motion judge equated Crombie’s knowledge of possible contamination with knowledge of actual contamination is apparent from her statement that “[a]ll the testing that followed simply confirmed [Crombie’s] suspicions about what had already been reported on” (at para. 31). It was not sufficient that Crombie had suspicions or that there was possible contamination. The issue under s. 5(1)(a) of the Limitations Act, 2002 for when a claim is discovered, is the plaintiff’s “actual” knowledge. The suspicion of certain facts or knowledge of a potential claim may be enough to put a plaintiff on inquiry and trigger a due diligence obligation, in which case the issue is whether a reasonable person with the abilities and in the circumstances of the plaintiff ought reasonably to have discovered the claim, under s. 5(1)(b). Here, while the suspicion of contamination was sufficient to give rise to a duty of inquiry, it was not sufficient to meet the requirement for actual knowledge. The subsurface testing, while confirmatory of the appellant’s suspicions, was the mechanism by which the appellant acquired actual knowledge of the contamination.