Discovery

Ontario: the Court of Appeal on due diligence and discoverability

In Fennell v. Deol, the Court of Appeal clarified the role due diligence plays in the discovery analysis.  It’s a fact that informs the analysis, but not a separate and independent reason for dismissing a plaintiff’s claim as statute-barred.

Fennell was in a motor vehicle accident with the defendants.  He claimed against the defendant Shergill, and subsequently amended the statement of claim to add the defendant Deol.  Shergill served a statement of defence and crossclaim against Deol.  Deol moved for summary judgment to dismiss the claim on the basis of an expired limitation period.

Fennell argued that he discovered his claim when he received a medical report and learned that he met the Insurance Act threshold.  Justice Akhtar noted that Fennell’s discovery testimony indicated awareness of the seriousness of his injuries before receiving the report.  For Fennell to rely on discoverability to delay the commencement of the limitation period, Justice Akhtar held that he had to show due diligence in discovering his claim.  Fennell did not show sufficient due diligence, and had he acted diligently, he would have discovered his claim when he commenced his action against Shergill.  Justice Akhtar dismissed Fennell’s claim.

The Court of Appeal allowed Fennell’s appeal.  Justice Akhtar made a counting error (which is very easy for lawyers to do when it comes to limitations, and here I speak from ample experience).  If Fennell ought to have discovered his claim against Deol when he sued Shergill, the claim against Deol was in fact timely.

What makes Justice van Rensburg’s decision interesting is her discussion of Justice Akhtar’s error in focussing primarily on whether Fennell exercised due diligence, and in concluding that Fennel bore the onus to show due diligence to rebut the presumption that the limitation period ran from the date of the accident  (the statutory presumption in s. 5(2) of the Limitations Act).  To overcome the presumption, Fennell needed to prove only that he couldn’t reasonably have discovered that he met the statutory threshold on the date of the accident (s. 5(1)(b)), not that he exercised due diligence.

The fact that it wasn’t possible for Fennell to discover that he met the threshold on the date of the accident was enough to rebut the presumption.

Due diligence is the core of an analysis when determining whether to add a defendant to an action after the expiry of the presumptive limitation period (and then the threshold is low), but it is neither a standalone duty nor determinative of the section 5 discovery analysis:

[18]      While due diligence is a factor that informs the analysis of when a claim ought to have reasonably been discovered, lack of due diligence is not a separate and independent reason for dismissing a plaintiff’s claim as statute-barred.

[…]

[23]      Due diligence is not referred to in the Limitations Act, 2002. It is, however, a principle that underlies and informs limitation periods, through s. 5(1)(b). As Hourigan J.A. noted in Longo v. MacLaren Art Centre Inc., 2014 ONCA 526 (CanLII), 323 O.A.C. 246, at para. 42, a plaintiff is required to act with due diligence in determining if he has a claim, and a limitation period is not tolled while a plaintiff sits idle and takes no steps to investigate the matters referred to in s. 5(1)(a).

[24]      Due diligence is part of the evaluation of s. 5(1)(b). In deciding when a person in the plaintiff’s circumstances and with his abilities ought reasonably to have discovered the elements of the claim, it is relevant to consider what reasonable steps the plaintiff ought to have taken. Again, whether a party acts with due diligence is a relevant consideration, but it is not a separate basis for determining whether a limitation period has expired.

Ontario: don’t skip the argument

Hawthorne v. Markham Stouffville Hospital is a reminder from the Court of Appeal that a successful discovery argument requires both evidence and an explanation of the evidence’s connection to discovery of the claim.  It seems that filing documents and saying nothing about them won’t carry the day.

Hawthorne was a medical malpractice action.  The respondents moved to dismiss the appellant’s claim as barred by the expiry of the limitation period.  Their position was that the appellant ought to have discovered her claim when she obtained medical records from the respondent.

The motion judge granted summary judgment on the basis that the appellant did not rebut the Limitations Act‘s section 5(2) presumption that she discovered her claim on the date of the act or omission giving rise to it.  The appellant adduced no evidence relating to discoverability to rebut the statutory presumption.

On appeal, the appellant argued that the motion judge erred by failing to give effect to evidence that was available in the motion record, but not referred to in argument.

The Court of Appeal said no:

[8]         We do not give effect to this argument. The failure of the appellants to respond to the summary judgment motion with evidence to rebut the presumption in s. 5(2) of the Limitations Act, 2002 is fatal. Pleadings are not evidence. The appellants could not rest on the pleading of a timely discovery date in their third action, when confronted by a motion for summary dismissal based on the limitations argument.

[9]         The two receipts that were in the record (as part of the respondents’ materials), even if drawn to the attention of the motion judge, without any further evidence or explanation, could not have affected the result. Even if it might be reasonable to conclude that the appellants received medical records on the dates shown in the receipts for payment, this was not sufficient to overcome the statutory presumption. The receipts alone do not advance the appellants’ discoverability argument, in the absence of any explanation by Ms. Hawthorne linking what was in the records to the discovery of her claim.

Ontario: Officers of the court, slow down

That the courts discourage officers of the courts from immediately commencing litigation is a proper factor in a limitations analysis.

In Salewski Inc. v. BDO Canada Ltd., the defendant moved for summary judgment on a limitations defence.  The defendant was retained by a creditor to assign its debtor into bankruptcy.  The court appointed the defendant trustee in bankruptcy.  Friction developed between the defendant and the bankrupt’s interim receiver, the plaintiff.  The plaintiff claimed against the defendant for breach of fiduciary duty.  The defendant pleaded the expiry of the limitation period.

In denying the defendant’s motion, Justice Garson made some helpful observations about the effect of a trustee’s behavior on the commencement of the limitation period:

[77]           In my view, it is inappropriate to start the limitations clock while good faith efforts are ongoing to achieve a remedy.

[78]           Officers of the court should be discouraged from immediately commencing litigation and encouraged to discuss and negotiate differences.

[…]

[80]           The obstacles and delays erected by BDO throughout these proceedings have impeded the exercise of reasonable diligence on the part of DSI to discover the cause of action in this matter.  These obstacles are also sufficient to impact the start of the limitations clock.

[…]

[91]           It would be both unfair and improper for DSI to have been required to commence a legal action any earlier than 2009.  Both parties are officers of the court and should be discouraged from pursuing adversarial proceedings against each other until reasonable efforts to resolve the matter have been addressed.

[92]           To determine otherwise on the facts before me would send the wrong message regarding the duties of a trustee to act fairly and impartially to all creditors, even those opposing its SRD’s.  BDO should not benefit from their prior misconduct.

[93]           This court has and will continue to expect the highest standard of conduct on the part of trustees in the discharge of their duties to the court and the Estate:  see Murphy v. Sally Creek Environs Corporation, supra, at paras. 139, 151 and 155.

[…]

[96]           BDO’s behavior in withholding or not distributing pertinent and relevant information to DSI prevented DSI from discovering the material facts upon which this claim is based.

[97]           Although DSI was suspicious in 2006 and 2007 that BDO had (i) made false statements and omitted relevant facts in an affidavit; (ii) was pursuing a commercially unreasonable course of action; (iii) had made serious allegations about the behavior of DSI, and (iv) was being influenced by Unique, these suspicions were unsupported by material facts.

Ontario: Court of Appeal redefines the s. 5(1)(a)(iv) discovery criterion

In Clarke v. Faust, the Court of Appeal has held that the section 5(1)(a)(iv) discovery criterion requires the claimant to have “good reason to believe he or she has a legal claim for damages”.

Clarke is a solicitor’s negligence action.  The plaintiffs were injured in a motor vehicle accident.  They retained the defendant lawyer to represent them on their accident benefits and tort claim.  He issued a statement of claim on their behalf nine weeks after the second anniversary of the accident.

The plaintiffs then retained a new lawyer.  He told the plaintiffs that their claim was issued after the expiry of the presumptive limitation period, but this wasn’t necessarily fatal to their claim because of discoverability.

The new lawyer passed away and another lawyer took over.  This third lawyer also was also unconcerned by the potential limitations issue.  He took the position that until the plaintiffs obtained medical documentation they couldn’t know whether their injuries met the statutory threshold.  Defence counsel apparently agreed, and the defendants didn’t plead a limitations defence.

Subsequently, the defendants changed their mind and amended their defence to plead a missed limitation period.

The plaintiffs then sued their first lawyer for negligence.  He pleaded a limitations defence and moved for summary judgment.  He argued that the plaintiffs should be presumed to have known of their claim two years after the date of the motor vehicle accident, or in the alternative on the date when their second lawyer put him on notice of the limitations issue.   The plaintiffs argued that they suffered no damage until the defendants in the underlying action pleaded a limitations defence.

The motion judge accepted the defendant’s first argument in a muddled decision that Justice Juriansz criticised fairly, but harshly.  In fairness to the motion judge, all of the theories put forward by the parties were wrong.  I expect that she didn’t have much to work with.

Justice Juriansz found that the case turned on the application of section 5(1)(a)(iv) (“that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it”.  When the defendants in the underlying action delivered their defence, the plaintiffs knew that three lawyers were of the opinion that discoverability applied to their claim and that the defendants had not pleaded a missed limitation period.  Only when the defendants in the underlying action pleaded a missed limitation period did the defendants have any reason to know that commencing a legal proceeding was appropriate.  The claim was accordingly timely.

Here’s what makes this decision noteworthy:

  1. The court defines the knowledge required by section 5(1)(a)(iv): “That provision requires, in my view, a person to have good reason to believe he or she has a legal claim for damages before knowing that commencing a proceeding would be an appropriate means to seek to remedy the injury, loss or damage.”   Justice Juriansz doesn’t cite any authority for this conclusion, and on first consideration it’s seems a significant departure from the Court’s previous statement in Markel that this criterion requires only knowledge that a proceeding is “legally appropriate”.  There’s a material difference between knowing that a claim is legally appropriate and having good reason to believe there is a legal claim.  How does the need for the claimant to believe she has a legal claim sit with the long-settled principle that a claimant’s failure to appreciate the legal significance of a fact will not postpone the commencement of the limitation period (see for example Holley v. The Northern Trust Company, Canada or more recently Gatti v. Avramidis at para. 123)? It will be interesting to see how courts apply this new definition.
  2. The court didn’t compromise its section 5(1)(a) analysis by applying common law discovery jurisprudence (see for example the decision in Lawless). This is rare.
  3. The court acknowledged that the plaintiffs’ action may have been premature because there can be no limitations issue until there is a “claim” as defined by the Limitations Act, and a “claim” requires damage, which almost certainly cannot arise merely be virtue of pleading. Justice Juriansz suggests, correctly I think, that discovery of the claim against the defendant lawyer may not occur until there is a judgment in the underlying action (e.g., dismissing the action on the basis of a limitations defence and causing the plaintiffs damage).The plaintiffs did plead that they suffered damage when the defendants first asserted the limitations defence in the underlying action on the theory that it changed their bargaining position.  Justice Juriansz acknowledged the doubtfulness of this position.  If the lawyer didn’t miss the limitation period in the underlying action, he would not be liable for any damages, and whether he missed the limitation period is unknown until a court determines the issue.

 

Ontario: Discovery doesn’t require knowledge of liability

It’s a settled principle of discoverability that knowledge of liability isn’t necessary to commence the limitation period.  We now have a succinct statement of this principle from the Court of Appeal in Lochner v. Toronto:

[7]         The fact that Mr. Lochner does not know whether the defendants are culpable or liable for the disclosure does not prevent the limitation period from running. Knowledge of liability on the part of the injured person is not part of discoverability for the purposes of the running of the limitation period.  It is the lawsuit itself which is the process by which liability for an act is determined.

 

Alberta: The new limitation period for contribution claims explained

Whitecourt Power Limited Partnership v. Elliott Turbomachinery Canada Inc.  is the first Court of Appeal decision to consider the recent amendments to the Limitations Act establishing a limitation period specific to claims for contribution under the Tort-feasors Act.  These are the paragraphs discussing the amendments:

[33]           By amendment assented to on December 17, 2014 the Limitations Act now provides for limitation periods specific to claims for contribution under theTort-feasors Act.

[34]           Section 3 of the Limitations Act provides:

(1.1)  If a claimant who is liable as a tort‑feasor in respect of injury does not seek a remedial order to recover contribution under section 3(1)(c) of theTort‑feasors Act against a defendant, whether as a joint tort-feasor or otherwise, within

(a)  2 years after

(i)  the later of

(A)   the date on which the claimant was served with a pleading by which a claim for the injury is brought against the claimant, and

(B)   the date on which the claimant first knew, or in the circumstances ought to have known, that the defendant was liable in respect of the injury or would have been liable in respect of the injury if the defendant had been sued within the limitation period provided by subsection (1) by the person who suffered the injury,

if the claimant has been served with a pleading described in paragraph (A), …

whichever period expires first, the defendant, on pleading this Act as a defence, is entitled to immunity from liability in respect of the claim for contribution.

(1.2)  For greater certainty, no claim for contribution against a defendant in respect of damage referred to in section 3(1)(c) of the Tort‑feasors Act is barred by the expiry of a limitation period within which the person who suffered that damage could seek a remedial order.

[35]           The applicable Hansard (Bill 8 Justice Statutes Amendment Act, 2014, December 8, 2014) states:

Bill 8 proposes amendments to … clarify … when the discovery limitations period begins for a claim for contribution under the Tort-feasors Act. So when a plaintiff brings an action, they don’t have to list all the possible defendants who may have been responsible for the injury. However, the current law allows a defendant to bring a claim against another person that they believe is also responsible for the same injury to the plaintiff. This proposed change clarifies how the limitation period runs when a defendant brings a claim against another person responsible for the same injury to the plaintiff, and these wording changes are intended to further clarify this change. These clarifications were brought forward to us by the Law Society of Alberta, and the drafters of this amendment worked closely with the Law Society to ensure that every lawyer was satisfied with the new wording of this section.

[36]           In short, subsection 1.1 creates a specific limitation period for tort-feasors’ claims against each other, when previously the common law informed that issue. Subsection 1.2 clarifies that expiry of the limitation period as between the plaintiff and the third party no longer prevents the defendant from claiming contribution from another tort-feasor under the Tort-feasors Act. It gives the defendant two years from the later of the date served and discoverability to seek indemnity from other tort-feasors. Those subsections overcome the difficulties addressed by this court in Howalta and in Arcelormittal Tubular Products Roman SA v Fluor Canada Ltd, 2013 ABCA 279 (CanLII), 556 AR 188, and state the law as it was interpreted in Dean per Slatter J (as he then was). The amendments are deemed to have come into force on March 1, 1999.

[37]           The amendment makes clear who as between plaintiff and the defendant “ought to have known” that the third party was jointly liable for the claimant’s injury in order to satisfy the discoverability requirements of the Limitations Act. For statutory contribution under the Tort-feasors Act, the answer must now be the defendant. This also accords with Dean, in which the court said that discoverability was when the defendant ought to have known that the third party had a duty to contribute because of their joint liability. If so, the plaintiff’s knowledge of the third party’s joint liability is irrelevant.

[38]           The mechanics of litigation associated with third party claims (r 3.44) or statutory claims for contribution (r 3.43) appear to dictate that the statement of claim must be extant before a claim for contribution can be filed. In other words, service of the statement of claim is always the earliest date the limitations period can begin (absent a right of contribution independent of the claimant’s suit, which does not apply on these facts).

[…]

[41]           We note that subsection 3(1.1)(a)(i) contemplates discoverability later than service of the statement of claim. “Under the presumption against tautology, ‘[e]very word in a statute is presumed to make sense and to have a specific role to play in advancing the legislative purpose’ …. To the extent that it is possible to do so, courts should avoid adopting interpretations that render any portion of a statute meaningless or redundant”: Placer Dome Canada Ltd v Ontario (Minister of Finance), [2006] 1 SCR 715 at para 45, 2006 SCC 20 (CanLII). Applying this presumption, there must be circumstances when the discoverability limitation period post-dates service of the statement of claim.

Ontario: s. 9(1) of the Municipal Conflict of Interest Act is not a limitation period, sort of

Whatever impact the Ford brothers may have, who would have though that it would include limitations law? And yet here they are in MacDonald v. Ford, arguing that section 5 of the Limitations Act should inform the commencement of the time period set out in section 9(1) of the Municipal Conflict of Interest Act.  Justice Perell correctly concludes that it doesn’t, but through an analysis that gives rise to a new category of “non-conventional” limitation periods.  The one thing limitations law needed, of course, is a further complication.

Section 9(1) of the Municipal Conflict of Interest Act entitles an elector to apply to a judge for a determination of whether a member has contravened section 5 of the Act.  It imposes a time limit of six weeks “after it comes to his or her knowledge that a member may have contravened” the Act’s provisions.

The applicant brought an application under section 9(1) alleging that the Ford brothers contravened the Municipal Conflict of Interest Act by voting on seven matters before Toronto City Council and its committees despite conflicts of interest.

The Fords argued that section 9(1) “should be interpreted in a way that infuses it with the discoverability principles found in section 4 and 5 of the Limitations Act, 2002“.  In essence, they argued that the applicant objectively had knowledge of the alleged contraventions more than six weeks before commencing the application.  Given her “keen interest in municipal government”, with due diligence the applicant should have had the requisite knowledge within six weeks of the contraventions.

The applicant’s counterargument was that her application was timely because, on her uncontested testimony, she brought the Application within six weeks of subjectively obtaining knowledge of the contraventions.

Justice Perell held reasonably and, I think, correctly that because section 9(1) considers only the subjective knowledge of the applicant, there is no basis for applying the objective discovery principles in the Limitations   Act.  In any event, it would take some creativity to apply the section 5 discovery criteria to an application under section 9(1) of Municipal Conflict of Interest Act.  The claim (as defined by the Limitations Act) they contemplate is materially different than a section 9(1) application.

The issue is with how Justice Perell arrived at his conclusion.  He finds that section 9(1) is a “temporal condition precedent or qualifying criterion to an application”.  It “can be labelled a limitation provision but it is not a conventional one and its more accurately characterized as a qualification or condition precedent”:

[150]      In my opinion, the section of the Act that is a genuine conventional limitation period is the absolute limitation period described in s. 9(3) of the Act  [which provides that no application shall be brought after the expiration of the term of office of the member of council during which the contravention is alleged to have occurred]. In my opinion, s. 9(1) is a temporal qualification to the bringing of an application under the Act. It is for certain not a conventional limitation period of the like found in sections 4 and 5 of the Limitation Act, 2002. The language, purpose, and design of s. 9(1) of the Act are different from the language, purpose, and design of sections 4 and 5 of the Limitation Act, 2002.

 

[…]

 

[153]      As far back as pre-Confederation statutes, the Legislature intended that relators and electors not rest inactive when they come to have personal knowledge of contraventions of election law or of misconduct by municipal politicians. The policy imperatives here have little to do with the evidentiary and repose policies of limitation period statutes. Further, the review of the case law shows that s. 9(1) does not operate as a conventional limitation period to provide technical defences to a defendant and s. 9(1) does not foreclose late arriving electors, even recruited electors, from advancing an allegation that theAct has been contravened.

[154]      The case law shows that an application under the Municipal Conflict of Interest Act will be statute-barred based on subjective factors associated with the knowledge of a particular applicant. The case law shows that only if the applicant had subjective actual or constructive knowledge of the facts on which the alleged contravention of the Act is grounded more than six weeks before the application is issued will the claim be statute-barred.

The problem is, by the plain meaning of the Limitations Act, section 9(1) is a limitation period.  Section 19(1) of the Limitations Act provides that ” A limitation period set out in or under another Act that applies to a claim to which this Act applies is of no effect unless, (a) the provision establishing it is listed in the Schedule to this Act.  Section 9(1) and 9(3) of the Municipal Conflict of Interest Act are both listed in the schedule.  This would seem a very strong indication that the Legislature intended 9(1) to be a limitation period.

It was available for the Court to define section 9(1) as a limitation period without exposing it to the application of the Limitations Act‘s section 5 discovery provisions .  It’s long settled that these provisions don’t necessarily apply to schedule 19 limitation periods.  The limitation periods in the Trustee Act are examples; discoverability doesn’t operate to extend them (although for unrelated reasons).

By defining section 9(1) as a not conventional limitation period–a temporal condition precedent or qualifying criterion–Justice Perell effectively created a new category of quasi-limitation periods.  To my knowledge, no other Ontario jurisprudence has applied this concept or used this terminology.  It’s difficult to see the advantage of  introducing this new category; at best it further muddies the already fraught conceptual framework of the limitations regime.

As for the Ford brothers, their argument failed.  The application was timely:

[155]      Applying the above law to the circumstances of the immediate case, the uncontradicted evidence of Ms. MacDonald shows that her Application was timely. The Fords’ arguments of untimeliness would impose some sort of Sherlockian investigative duty on Ms. MacDonald to connect all the requisite facts because some of the facts were online in City records readily available to the inquiring mind of one Ms. MacDonald. As a matter of evidence, however, Ms. MacDonald has uncontested evidence about her state of knowledge at the time when she commenced her Application and based on her evidence each of her complaints is timely.

[156]      The Fords did not bring forward evidence, as did the respondents in Stephenson v. Hunt, Kay v. Ferguson, Alcock v. McDougald, and Hervey v. Morris, to show that the Applicant subjectively had earlier knowledge of the alleged contravention.

Ontario: arguing discoverability doesn’t require a Reply

After a lengthy summer break, Under the Limit returns.  Expect a flood of new posts this week and next.

We begin with a pleadings decision in which substance triumphed over form.  A plaintiff’s failure to deliver to a Reply to a Statement of Defence pleading a limitations defence won’t necessarily bar the plaintiff from making a discoverability argument.

The defendant in Pershad v. Lachan moved for the dismissal of the plaintiff’s action on the basis that it was statute-barred by the expiry of the limitation period.  She ventured the rather dubious argument that once she pleaded a limitations defence in her Statement of Defence, rule 25.08 of the Rules of Civil Procedure required the plaintiff to deliver a Reply setting out the facts that he intended to prove to establish the discovery of his claim within the limitation period.  The defendant submitted that the failure to do so was fatal to the plaintiff’s claim.

The plaintiff counterargued that a Reply was unnecessary because the facts pleaded in his Statement of Claim were sufficient to raise the issue of discoverability.

Justice Lococo held that if Statement of Claim had been insufficient to raise discoverability (it was not), the appropriate course of action would have been to grant leave to file a Reply or amended  Statement of Claim to remedy the deficiency.

 

Ontario: discovery applies to the limitation period for crossclaims

Justice Leach’s decision in Demide v. Attorney General of Canada et al. holds that the limitation period applicable to claims for contribution and indemnity is subject to discoverability.  This departs from the jurisprudence, which generally considers this to be a fixed two-year limitation period beginning on the date of service of the plaintiff’s claim.

Section 18(1) of the Limitations Act provides when this limitation period begins:

(1) For the purposes of subsection 5 (2) and section 15, in the case of a claim by one alleged wrongdoer against another for contribution and indemnity, the day on which the first alleged wrongdoer was served with the claim in respect of which contribution and indemnity is sought shall be deemed to be the day the act or omission on which that alleged wrongdoer’s claim is based took place.

Prior to this decision, I would have said that it was settled that this provision provides a two year limitation period for bringing crossclaims, running from deemed discovery on the date of the claim’s service, and not subject to extension by application of the section 5 discovery provisions.   As Justice Leach notes, this is the position of many of his colleagues on the Superior Court, including Justice Perell who articulated it eloquently in Miaskowski v. Persaud:

[81]           Pursuant to s. 18 of the Limitations Act, a claim for contribution and indemnity is deemed to be discovered on the date upon which the “first alleged wrongdoer was served with the claim in respect of which contribution and indemnity is sought,” and with this deeming provision, the limitation period expires two years after the date on which the claim is served.

Justice Perell’s analysis in Miaskowski turned on the language of section 18.  The word “deemed” is a declarative legal concept that is a “firmer or more certain assertion of discovery” than the rebuttable presumption of discovery contained within section 5(2).  Further, section 18 does not contain the moderating language “unless the contrary is proved” present in section 5(2), i.e. a person discovers a claim on the date of the act or omission unless she proves the contrary.

Justice Leach disagreed.  His reasoning also starts with the language of section 18.  In his view, approaching section 18 as a self-contained deeming provision ignores its opening words.  Those words provide expressly that the provision was enacted for “the purposes of subsection 5(2) and 15”, that is, to inform and dictate the meaning of those subsections.  When applying section 5(2) to claims for contribution and indemnity, section 18(1) dictates that the presumed commencement date for the two year limitation is the date of service of the claim for which contribution and indemnity is sought.  The defendant can rebut this presumption by proving the contary.

The reference to section 15, the ultimate limitation period, reinforces this conclusion.  If section 18 is an absolute two-year limitation period beginning on a fixed date, section 15 could have no application.  Only if the section 5 discovery provisions can delay the beginning of the limitation period is there need for an ultimate limitation period.

This is a very compelling analysis, and I’m persuaded that it’s correct even if it’s currently an outlier–the Court continues to deliver decisions like this one (see paragraph 58) based on section 18 being a fixed limitation period.  It will be interesting to see how the Court of Appeal determines the issue should it come before it.  I don’t expect that it will; it’s surely the rare case where a defendant through reasonable diligence can’t discover a crossclaim within two years of service of the plaintiff’s claim.

Should you be interested, these are the relevant paragraphs from Justice Leach’s decision:

 

[87]           […]  With great respect, I disagree with that view, as it seems to approach section 18 as if it were a self-contained deeming provision, and ignores the opening words of s.18(1).  In my opinion, those words make it clear that section 18 was not intended to operate as a “stand alone” limitation period, with independent application, or a provision to be viewed and read separately and in contrast to s.5(2).  Rather, section 18 expressly was enacted “For the purposes of subsection 5(2) and 15”, [emphasis added]; i.e., to inform and dictate the meaning to be given to certain concepts referred to in ss.5(2) and 15, when applying those sections.  In particular, when applying s.5(2) to claims for contribution and indemnity, s.18(1) dictates that the “day [of] the act or omission” referred to in s.5(2) shall be the day on which the first alleged wrongdoer was served with the claim in respect of which contribution and indemnity is sought.  Subsection 18(1) thereby dictates the relevant presumed starting point for the basic two year limitation period, in relation to the operation of s.5(2); a presumption that is still capable of being rebutted by proof to the contrary, pursuant to the provisions of s.5(2).  In particular, I see nothing in the language of s.18(1) that displaces or alters the natural meaning to be given to the other language of s.5(2).  Section 18 itself does not have or require language of presumption or proof to the contrary, in relation to operation of the basic limitation period, but this is because its inclusion in section 18 would have been unnecessary and redundant, given that such wording already is found in s.5(2), with which it is expressly and inextricably linked.  In my opinion, reading s.18(1) in conjunction with s.5(2), as the legislation intended, and substituting into s.5(2) only those concepts whose substitution is dictated by s.18(1), one finds that s.5(2) effectively reads as follows in relation to claims for contribution and indemnity:  “An alleged wrongdoer with a claim against another alleged wrongdoer for contribution and indemnity shall be presumed to have known of the matters referred to in clause 5(1)(a) on the day on which the first alleged wrongdoer was served with the claim in respect of which contribution and indemnity is sought,unless the contrary is proved.”  [Emphasis added.]   The presumption applicable to such claims is therefore rebuttable, not conclusive.

 

Moreover, that conclusion is reinforced by the fact that the opening words of s.18(1) refer not only to s.5(2) but also to section 15; i.e., the “ultimate limitation period” of 15 years.  As with s.5(2), s.18(1) informs and dictates the meaning to be given to certain concepts referred to in section 15.  In particular, s.18(1) informs the meaning to be given to “the day on which the act or omission on which the claims is based took place”, for the purposes of s.15(2).  In my opinion, reading s.15(2) in conjunction with s.18(1), as the legislation intended, and substituting into s.15(2) only those concepts whose substitution is dictated by s.18(1), one finds that s.15(2) effectively reads as follows, in relation to claims for contribution and indemnity:  “No proceeding shall be commenced in respect of any claim for contribution and indemnity after the 15th anniversary of the day on which the first alleged wrongdoer was served with the claim in respect of which contribution and indemnity is sought”.   I fail to understand how s.18(1) can be interpreted as creating a conclusive and “absolute” two year limitation period for contribution and indemnity claims, running from the date on which the first alleged wrongdoer was served with the underlying claim in respect of which contribution and indemnity is sought, when the legislature clearly contemplated the possibility that the operation of section 15 might be required to put an end to such possible claims fifteen years after service of the claim in respect of which contribution and indemnity is sought.  In my opinion, the obvious conclusion is that the legislature thought section 15 might be needed in relation to claims for contribution and indemnity for the same reason section 15 might be needed in relation to other claims; i.e., because operation of the applicable limitation period might be extended beyond the contemplated two year basic limitation period by considerations of discoverability.

 

[88]         Second, I cannot and do not disagree with Justice Perell’s view that an absolute two year limitation period for contribution and indemnity, (with no allowance whatsoever for possible lack of discoverability, even when capable of proof), would provide certainty and efficiency, which was definitely one of the policies underlying the reforms introduced in the Limitations Act, 2002, supra.   However, one could say that in relation to making any limitation period absolute.  As Justice Sharpe emphasized in Canaccord Capital Corp. v. Roscoe, supra, at paragraph 17, the overall goal of the legislation was the creation of a clear and comprehensive scheme for addressing limitation issues that would balance a defendant’s need for certainty with the plaintiff’s right to sue.  A review of the legislation suggests that, with indicated exceptions, the Legislature generally tried to strike that balance by imposition of a presumptive two year limitation period, capable of extension by demonstrable lack of discovery, (proof of which was the obligation of the claimant).  Although the legislature clearly felt that claims for contribution and indemnity warranted a measure of exceptional treatment, to encourage resolution of all claims arising from the wrong at the same time, it seems to me that the approach chosen by the legislature in that regard was the introduction of a modified presumption; i.e., one that moved the presumed starting date of the basic two year limitation period forward considerably, (from the much later starting dates permitted under the previous legislation), to the date on which the party seeking contribution and indemnity was served with the claim in respect of which contribution and indemnity is sought.  Such a party, who fails to approach the possibility of contribution and indemnity claims with due diligence during the ensuing presumptive two year limitation period, from that much earlier date, does so at that party’s considerable peril.  However, I see nothing in the legislation that suggests the legislature intended to go an extra step; i.e., by absolutely precluding any possibility whatsoever of an extension of time for a party capable of proving that a contemplated claim for contribution and indemnity was indeed incapable of being discovered, even with reasonable due diligence, within two years of the party being served with a statement of claim.  As emphasized by our Court of Appeal in Pepper v. Zellers Inc., 2006 CanLII 42355 (ON CA), [2006] O.J. No. 5042 (C.A.), the discoverability principle ensures that a person “is not unjustly precluded from litigation before he or she has the information to commence an action provided that the person can demonstrate he or she exercised reasonable or due diligence to discover the information”.  In my view, the court should be reluctant to adopt a legislative interpretation that effectively permits the possibility of such an injustice, unless that is the outcome clearly dictated by the legislation.   As demonstrated by the ultimate limitation period provisions of section 15, the legislature has the ability to make such an intention quite clear, when it has that intention.

 

[89]         Third, I similarly do not disagree with Justice Perell’s view that it would be a rare case that a defendant, exercising due diligence within two years of being served with a claim, would not know the parties against whom to claim contribution and indemnity.  However, rarity is not impossibility, and in my view, the rarity of such a possibility underscores the somewhat modest concession to fairness, (from a claimant’s point of view), of the Legislature making the limitation period for contribution and indemnity claims subject to discoverability.

Update: Miaskowski was appealed, but on unrelated issues.

Ontario: when it comes to a car accident, you can rely on the cops

In regards of discovering a claim for the purpose of the limitation period, a plaintiff can rely on the contents of a motor vehicle accident report prepared by the police at the scene of the accident.

In Lingard v. Milne-McIsaac, the plaintiff acted reasonably by relying on a statement in such a report that the defendant was insured.  It was reasonable for the plaintiff to assume that the police officer who completed the report asked the defendant for proof of insurance.  The Court of Appeal held that the plaintiff had no reason to treat insurance coverage as a live issue until he became aware that the defendant may not have coverage.