Discovery

Alberta: Be wary of the ultimate limitation period

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The Court of Appeal’s decision in W.P. v. Alberta is a reminder of the finality of Alberta’s ultimate limitation period. It runs from of date of injury even when the claimant is unaware of the injury or incapable of discovering it. It pauses only in narrow circumstances.  It’s harsh.

The appellants were formerly resident students at the Alberta School for the Deaf. They alleged physical, sexual, and emotional abuse by their teachers, staff, and other students. They alleged that the abuse occurred at varying times between the early 1960s until 1991.

When the appellants applied for certification of the action as a class proceeding, Alberta cross-applied for summary judgment. Alberta submitted that the appellants commenced their action after the expiry of the ultimate limitation period in section 3(1)(b) of the Limitations Act (which I don’t quote here because it’s very long, but the link takes you right to it). The chambers judge agreed and dismissed the action.

Section (3)(1)(b) provides that if a claimant doesn’t seek a remedial order within ten years after the claim arose, the defendant is entitled to immunity from liability in respect of the claim. Time begins to run from the date of the negligent or wrongful act.  Because time runs from a fixed date, the discoverability principle doesn’t apply:

[29]           […] the ultimate limitation period tolls without regard to when the alleged harm occurred, or when the fact of its occurrence was discovered or even discoverable. Rather, it begins to run merely upon the occurrence of the breach of the duty – in this case, upon the occurrence of the alleged abuse. This is not only the plain effect of the statutory language, but was its anticipated and intended effect: Limitations, Alberta Law Reform Institute Report No 2007 ABCA 347 (CanLII), 55, December 1989 at 70-71, 425 AR 123

The act does provide for the suspension of the ultimate limitation period in two circumstances. Section 4 of the act suspends time while the defendant fraudulently conceals the occurrence of the injury:

4(1)  The operation of the limitation period provided by section 3(1)(b) is suspended during any period of time that the defendant fraudulently conceals the fact that the injury for which a remedial order is sought has occurred.

(2)  Under this section, the claimant has the burden of proving that the operation of the limitation period provided by section 3(1)(b) was suspended

Section 5 suspends time when the claimant is a “person under disability”, which, pursuant to the definition in section 1(h) is either a represented adult as defined in the Adult Guardianship and Trusteeship Act, a person for whom a certificate of incapacity is in effect under the Public Trustee Act, or an adult who is unable to make reasonable judgments in respect of the claim:

5(1)  The operation of the limitation periods provided by this Act is suspended during any period of time that the claimant is a person under disability.

(2)  The claimant has the burden of proving that the operation of the limitation periods provided by this Act was suspended under this section.

The appellants relied on both sections 4 and 5. They argued that the teachers and staff of the school concealed the injuries by instructing students to tell no one about the abuse and by providing inadequate education so that the students couldn’t communicate it.

The Court of Appeal laid out the three part test for establishing fraudulent concealment:

[34] […] to demonstrate fraudulent concealment, as alleged here, which suspends the running of the ultimate limitation period, the appellants must show (1) that Alberta (or its agents or servants) perpetrated some kind of fraud; (2) that the fraud concealed the fact of their injury; and (3) that the appellants each exercised reasonable diligence to discover the fraud.

The Court of Appeal found that the appellants couldn’t satisfy the test. Though the injuries caused by abuse of children often manifest slowly and imperceptibility so that “only the passage of time and maturity allows the victim to realize the magnitude of the harms suffered, and their cause”, this has no bearing on whether the injuries have been concealed.   The appellants had no evidence that they were laboring under a misapprehension of the fact of having suffered an injury:

[36] […] While they might not have known until later that they could sue, that is not the same thing as having the fact of the wrongful conduct and its effects deliberately concealed from them. Nor does being told at the time not to discuss the abuse support an allegation of fraudulent concealment of the fact of the injury. While the evidence here strongly suggests that each of the appellants were aware of the wrongfulness of the alleged acts well before the expiry of the ultimate limitation period, we need not decide that here. It suffices to conclude that the issue of fraudulent concealment is insufficiently meritorious to require a trial.

The Court of Appeal also rejected the appellants’ reliance on section 5:

The appellants do not say that they were represented adults under the Adult Guardianship and Trusteeship Act or persons subject to a certificate of incapacity under the Public Trustee Act. And, while each of them has encountered difficulties in life, they do not show how such difficulties rendered them unable to make reasonable judgments in respect of their claims. Even the facts alleged by EP with respect to her time spent in psychiatric hospital care, which might form part of an account of a disability which suspends the operation of the ultimate limitation period, is on its own insufficient to show that the issue has merit. We are not told, for example, what that care entailed, when she was in that care, or for how long.

The Court of Appeal concluded its analysis with a warning about the high bar for invoking sections 4 or 5:

It is difficult – and [the Legislature] intended that it be difficult – for plaintiffs to persuade a court that the ultimate limitation period should not run for a period of time. It will be a rare case where deliberate concealment of the fact of an injury, or a condition which disables a claimant from making reasonable judgments, can be established within the meaning of sections 4 and 5 of the Act.

I also note the Court of Appeal’s warning that a class proceeding has no special status that allows it to survive where it would otherwise be statute-barred:

[21]           Simply put, a class proceeding is just one procedural mode of advancing a claim. The mere fact that a claim is advanced by way of a class proceeding does not endow it with special status allowing it to survive where the same claim would otherwise be doomed. More particularly, it remains subject to all the tools furnished by Part 7 of the Rules of Court for resolving claims without a full trial, including summary judgment […].

 

[22]           The foregoing applies with equal force where the summary judgment application is based upon the expiry of a limitation period relative to the claim of a proposed representative plaintiff. Where a proposed representative plaintiff’s claim is shown to be time-barred, there is no good reason for permitting the issue of certification to continue consuming judicial and litigants’ resources. Indeed, there is good reason for not doing so, since the representative plaintiff must be a member of the class. Allowing a representative plaintiff’s clearly time-barred claim to proceed further would defy the Legislature’s intent that the class proceeding be brought only by someone with a personal stake in the outcome [internal citations omitted].

Ontario: Even highways are subject to limitation periods (plus a novel discovery argument)

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Readers of Under the Limit rejoice! There is now an answer to the question that worried us so while driving the 407: what limitation period applies to the collection of unpaid 407 tolls?

Not only did the Court answer this question in 407 ETR Concession Company v. Ira J. Day, it emphasised the universal application of the Limitations Act, 2002 and added a novel proportionality component to the discovery analysis.

Mr. Day refused to pay his 407 tolls.  Unfortunately, the cameras of the 407 ETR Concession Company are all-seeing, and so in June 2013 the 407 ETR commenced an action against Mr. Day for payment of $9,808, plus interest, owed for driving the 407 on 2,194 occasions.  Mr. Day admitted his use of the 407, but chose to fight a portion of the 407’s claim against him on the basis that it was statute-barred.  407 brought a r. 21 motion to determine the limitation issues. The 407 ETR was represented by a team of three from Lenczners led by Tom Curry.  Mr. Day was represented by a team of two captained by Ronald Manes of Torkin Manes.  The 407 is, evidently, serious business.

The 407 ETA’s argument was threefold. First, they argued that the Limitations Act, 2002 does not apply to claims brought by the 407 ETA. The basis for this position was the Highway 407 Act, which provides that “a toll and any related fee or interest is a debt owing to the owner, and the owner has a cause of action enforceable in any court of competent jurisdiction for the payment of that debt”.  If the legislature intended this debt to be like any other, the 407 ETA suggested, there would be no reason to specify separately that the 407 ETR has a cause of action to enforce the debt.  By implication, the cause of action is a stand-alone remedy available to the 407 ETA that is not subject to the Limitations Act, 2002 (presumably, the limiting principles of equity would still apply, though the 407 ETA doesn’t appear to have addressed this).

This is a problematic argument because it’s entirely at odds with a limitation period of general application. Justice Edwards rightly had none of it, noting that it “flies in the face” of the universal limitation period in section 4 of the act:

[41]      There is nothing from my review of the Limitations Act nor the Highway 407 Act which would explicitly exempt the 407 ETR from Ontario’s limitation regime, nor is there anything that prescribes a separate limitation period for the toll debt.  Presumptively the toll debt owed to the 407 ETR is, in my view, subject to sections 4 and 15 of the Limitations Act.

[…]

[43]      In my view it would take explicit language in the 407 Act, and or an exception provided for in the Limitations Act, to give to the 407 ETR an ability to make a claim free of any limitations defence.  No such language can be found in the 407 Act, nor is there any exception in the Limitations Act.

The 407 ETA’s second argument was that the applicable limitation period was 15 years pursuant to the transponder lease agreement Mr. Day signed. It argued that the agreement was valid under section 22 of the Limitations Act, 2002, which permits parties to extend a limitation period by agreement.

This argument also failed.  Section 22(5) allows for the variance and exclusion of limitation periods under the act in respect of “business agreements”. The act defines “business agreement” as “an agreement made by parties none of whom is a consumer as defined in the Consumer Protection Act, 2002”.  The Consumer Protection Act, 2002 defines a consumer as “an individual acting for personal, family or household purposes and does not include a person who is acting for business purposes.”

The lease agreement could not be a business agreement:

[51]      The application for the Transponder Lease signed by Mr. Day makes quite clear on its face that he is signing for personal use as opposed to business use.  The 407 ETR must have therefore known of the distinction between a consumer applying for a transponder in his personal capacity versus someone acting in his business capacity.  Mr. Day, when he leased the transponder, did so as a consumer as defined by the Consumer Protection Act.  As such, the 407 ETR cannot rely upon the 15 year limitation period set forth in the Transponder Lease Agreement, as the 407 ETR does not fall within the exception set forth in section 22(5)(1) of the Limitations Act given that it only applies in respect of business agreements.  The Transponder Lease Agreement as signed by Mr. Day was not a business agreement.

This serves as a reminder to carefully word agreements excluding the Limitations Act, 2002.

The 407 ETA’s last argument was that the limitation period commenced when Mr. Day’s license plate went into “denial”, and not, as Mr. Day argued, on the date the 407 ETA issued each invoice. The Highway 407 Act empowers the 407 ETR to ask the Registrar of Motor Vehicles to deny the renewal of a license plate associated with outstanding 407 invoices.

Justice Edwards undertook a discovery analysis. He focussed on the criterion in section 5(1)(a)(iv) of the Limitations Act, 2002, whereby a party must discover that, “having regard to the nature of the injury,  loss or damage, a proceeding would be an appropriate means to seek to remedy it”:

[57]           It would be difficult to argue that the 407 ETR would not have the means to discover when an invoice is unpaid.  In this age of computers it would undoubtedly be possible for the 407 ETR to have available to it the necessary information to determine that with the non-payment of an invoice 30 days after its issuance, that in fact “injury, loss or damage had occurred”.  To require the 407 ETR to issue a claim for every unpaid invoice would not be an effective means, nor would it be an appropriate means to seek its remedy.  The invocation of section 5(1)(a)(iv) of the Limitations Act is not a question of discoverability, but rather an application of proportionality, common sense and the effective means emphasized by the Divisional Court in 407 ETR Concession Company Limited (supra).

To my knowledge, this is a novel reading of section 5(1)(a)(iv). If there’s a standard definition of “appropriate”, it’s “legally appropriate” (see Markel Insurance Company of Canada v. ING Insurance Company of Canada at para. 34). This section is mostly invoked to delay the commencement of a limitation period while the underlying damage, though discovered, is trivial and a claim for damages is legally inappropriate. Here the issue isn’t the triviality of the 407 ETR’s damage, but the burden of imposing a limitation period that would oblige it to commence thousands of claims.

If this proportionality approach to section 5(1)(a)(iv) finds traction, I look forward to seeing how the courts determine the balance. If the prospect of thousands of actions means a claim is not legally appropriate, what of the prospect of just a thousand actions, or five hundred, or fifty? How much burden must there be to prevent a claimant from discovering its claim?

Another implication of Justice Edwards’s analysis is to give the 407 ETR control of the commencement of the limitation period.  It’s the 407 ETR that initiates a plate denial.  In theory, the 407 ETR could wait years before causing the limitation period to run, subject only to the 15 year ultimate limitation period, and enjoy the benefit of accruing interest.  This gives defendants no security that they “will not be held to account for ancient obligations”, a fundamental purpose of limitations legislation (see M.(K.) v. M.(H.)).  

 

 

BC: When it comes to death, there is no temporal elasticity (at least for limitation periods)

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Generally, the discovery rule won’t extend a limitation period tolled by a fixed event like death; for these limitation periods there is, in the words of the Ontario Court of Appeal, “no temporal elasticity” (See Waschkowski v. Hopkinson Estate at paras. 8 and 9). In Buhr v. Manulife Financial, the BC Court of Appeal affirmed this principle by finding that the discovery rule can’t extend the limitation period applicable to claims against an insurer for death benefits.

Burh claimed against her deceased husband’s insurer for death benefits. On appeal, the insurer argued that the expiry of the limitation period in section 65 of the former Insurance Act barred the claim.

Section 65 provided that “proceedings against an insurer for the recovery of insurance money must not be commenced […] more than 6 years after the happening of the event on which the insurance money becomes payable”.

The Court accepted the insurer’s argument:

[T]he limitation period in this case began to run from the date of Mr. Mattern’s death, regardless of when Ms. Buhr became aware of potential claims. The event on which the insurance money becomes payable, contemplated in s. 65 of the former Insurance Act, is death in cases involving death benefits. The statute designates a fixed event, unrelated to the plaintiff’s knowledge of a cause of action, to start the limitation period, requiring commencement of an action within six years. The discoverability rule does not operate to extend the prescribed period.

In 2012, section 76 of the current Insurance Act replaced section 65. It provides as follows:

76 (1) Subject to subsections (2) and (5), an action or proceeding against an insurer for the recovery of insurance money payable in the event of a person’s death must be commenced not later than the earlier of

(a) 2 years after the date evidence is furnished under section 73, and

(b) 6 years after the date of the death.

The explicit reference to the date of death in section 76(1)(b) means that the discovery rule cannot extend this limitation period. Although the claimant in Buhr evidently required more than six years to bring her claim, six years is three times as generous as the two year limitation period in Ontario’s Trustee Act, which also begins to run from the date of death. I acknowledge that she is unlikely to find this aspect of Canadian limitations jurisprudence consoling.

Ontario: The Court of Appeal reminds us to respond to limitations defences by delivering a reply

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The Court of Appeal decision in Collins v. Cortez is a reminder that plaintiffs may respond to a limitations defence by delivering a reply.  Plaintiffs needn’t plead facts supporting a discovery argument in the Statement of Claim in anticipation of a limitations defence.

In Collins, Cortez moved to dismiss Collins’s personal injury claim on the basis that it was commenced two years after her accident and statute-barred by the expiry of the limitations period. Justice Gordon granted the motion. He gave effect to the presumption in section 5(2) of the Limitations Act, 2002 that the limitation period commenced on the date of accident. He held that because Collins did not plead discoverability facts in her Statement of Claim, she couldn’t make out a section 5(1) discoverability argument.

The Court of Appeal allowed Collins’s appeal:

In the normal course, if a limitations defence is raised, as here, in a statement of defence, and the plaintiff relies on the discoverability principle, the material facts relevant to discoverability should be pleaded in reply. I disagree with the conclusion of the motion judge that the appellant was required to plead the facts relevant to discoverability in her statement of claim. The expiry of a limitation period is a defence to an action that must be pleaded in a statement of defence. As such, discoverability, which is relevant to the limitations defence, need not be anticipated by a plaintiff and addressed in her statement of claim [citations omitted].

Update: Failing to deliver a Reply won’t necessarily bar a plaintiff from arguing discoverability.

Ontario: In loss transfer claims, each request for indemnification has its own limitation period

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Economical Mutual Insurance Company v. Zurich Insurance Company has brought certainty to the limitation of loss transfer claims between insurers. In a loss transfer claim, each Request for Indemnification is an independent cause of action with its own limitation period.

The facts are straightforward. A person was injured in a motor vehicle accident in July 2005.  Economical responded to her accident benefits claim and made payments to her. The truck that struck this person was insured by Zurich. Economical provided a Notice of Loss Transfer to Zurich in November 2005. Economical subsequently forwarded four Requests to Indemnification to Zurich in January 2006, February 2008, November 2009, and a final one in December 2011. Zurich didn’t pay. Economical commenced arbitration.

Zurich’s position was that the limitation period had expired. It argued that the limitation period commenced on the date of Economical’s first Request for Indemnification and Economical commenced arbitration more than two years later.

The arbitrator rejected this argument.  She relied on the Court of Appeal decision in Federation Insurance Company of Canada v. Kingsway General Insurance Company, [2012] OJ No 1505, in which the Court held that the limitation period for a loss transfer claim runs from the date of the Request for Indemnification, to conclude that each request is a distinct claim subject to its own limitation period, not the limitation period applicable to the first request.

Justice Lederer upheld the arbitrator’s decision. He found that Zurich sought to treat the loss transfer as if it were based on the underlying tort, “the negligence that was the cause of the motor vehicle accident”, when it’s not a tort but a statutory cause of action.

Justice Lederer relied on State Farm Mutual Automobile Insurance Co. v. Dominion of Canada General Insurance Co., a case decided under the old limitation act, for the principle that there is “no reason to apply the principles of limitation that have been developed in the common law of torts” to statutory causes of action. Instead, he reasoned, it’s more appropriate to apply the principles developed in the law of in contract:

The better analogy is to claims in contract, say for the payment of rent under a lease or for some product purchased over time. If a tenant or purchaser stops paying monthly rent or installments and no action is commenced for more than two years after the first payment is missed, it would not be the case that the landlord or the seller would lose out on its ability to sue for every and all future failures to pay. Rather, the entitlement to sue would remain for all payments not made within the preceding two years.

[…]

The limitation period should not be applied as it would be in common law torts. The proposition that no new action or claim would have to be commenced is equally true in the analogy to contract claims to which I referred earlier. If a claim is made for a failure to pay rent or to make periodic payments in the furtherance of the purchase of some product, it is unlikely that a new claim would be required for each failure that occurs after an action has begun.

There’s no faulting this conclusion: if each Request for Indemnification is a new cause of action as the Court of Appeal held in Federation Insurance, then each request has its own limitation period. However, the analysis is a surprising reversion to the previous limitation regime. The Court’s consideration of whether a loss transfer claim is better analogised to a claim in tort or contract could almost make a lawyer nostalgic for the days when the classification of an action was the first step in determining the applicable limitation period.

Since 2004, the law hasn’t distinguished between actions that sound in contract, tort, equity, or anything: the Limitations Act, 2002 applies alike to all claims “to remedy an injury, loss or damage that occurred as a result of an act or omission”.

Also since 2004, it’s section 5 of the Limitations Act, 2002 that determines when a limitation period commences:

Discovery

(1) A claim is discovered on the earlier of,

(a) the day on which the person with the claim first knew,

(i) that the injury, loss or damage had occurred,

(ii) that the injury, loss or damage was caused by or contributed to by an act or omission,

(iii) that the act or omission was that of the person against whom the claim is made, and

(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; and

(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 clause (a). 2002, c. 24, Sched. B, s. 5 (1).

Presumption

(2) A person with a claim shall be presumed to have known of the matters referred to in clause (1) (a) on the day the act or omission on which the claim is based took place, unless the contrary is proved. 2002, c. 24, Sched. B, s. 5 (2).

The question under section 5 is when Economical suffered its loss—non-payment of the Requests for Indemnification. This was apparently on the date of the requests. Because the requests are individual losses and not one loss, by operation of section 5(2), the limitation period for each is presumed to have commenced on its date.

Zurich’s non-payment of Economical’s first Request for Indemnification couldn’t have commenced the limitation period for subsequent requests, because Economical couldn’t have suffered a loss for non-payment until it made the request (assuming, as appears to have been the case, that it doesn’t follow from the non-payment of one request that the insurer won’t pay the subsequent requests).

A first party-party insurer like Economical could of course rebut the section 5(2) presumption and argue pursuant to section 5(1) that it discovered its loss on a later date . For example, a first-party insurer may only disover that the second-party insurer won’t pay a request sometime after the request is made (see G.J. White Construction Ltd. v. Palermo (1999), 7 C.L.R. (3d) 13).

It’s anyone’s guess why the Court rejected a section 5 analysis in favour of the old classification of actions approach. My theory is that counsel are very fond of The Law of Limitations and insist on using it until there is a new edition, which, thankfully, is forthcoming.

Ontario: Being Slovenian affects when you discover a claim

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Slovenians may discover claims against each other more slowly than claims against people of other nationalities.  In Miletic v. Jaksic, Justice Price inferred from the “power-distance index” that the Slovenian national culture created a relationship of dependency between two Slovenians , and that this dependency had an impact on when one discovered his claim against the other.

Justice Price’s decision summarises the general facts nicely:

[1]         Bozidar Miletic emigrated from Slovenia to Canada in 1996.  In 2002, he began working as a machinist for George and Nada Jaksic, also natives of Slovenia, at a machine shop that the Jaksics had owned and operated since 1984.

[2]         On September 21, 2006, Mr. Miletic entered into an agreement with the Jaksics whereby he believed the machine shop business, Micro Precision Machining Limited, was sold to him.  In fact, the shares of the business were never transferred to him, and the Jaksics continued to manage it.

[3]         Mr. Miletic, believing that he now owned the machine shop business, and that the Jaksics worked for him, made payments to them as salary and/or installment payments of the purchase price for his shares.  It wasn’t until Nada Jaksic died in February 2010 that Mr. Miletic first gained access to the business’ financial records, and learned that it had owed substantial tax arrears, even when he had entered into his agreement to buy it, and was in dire financial difficulty.

[4]         When Mr. Miletic consulted James Wheeler, the lawyer he thought had acted for both him and the Jaksics in the sale of the business to him, he discovered that Mr. Wheeler had represented only the Jaksics, and was now not prepared to assist him. He therefore retained another lawyer, who began the present action on his behalf, to recover the funds he had paid to the Jaksics.

[5]         Mr. Jaksic and his wife’s estate counterclaimed for the unpaid balance of the purchase price for the business. They now bring the present motion, pursuant to Rule 20.04 of the Rules of Civil Procedure, for summary judgment dismissing Mr. Miletic’s action against them on the ground that it is statute barred and discloses no cause of action. They also move for summary judgment against Mr. Miletic on their counterclaim

The Jaksics argued that the limitation period commenced in 2006 when Mr. Miletic purchased Micro Precision and ought to have discovered his claim. Justice Price rejected this argument and found that the claim was not discoverable until June 2010:

[93]      Mr. Miletic’s relationship with the Jaksics did not break down until June 2010.  In so far as his ownership of Micro Precision was concerned, Mr. Miletic had no reason to suspect foul play until after Ms. Jaksic died and he discovered that:

(1)    Mr. Wheeler had not, in fact, been his lawyer;

(2)    The shares were not transferred to him in 2006;

(3)   The Jaksics had not resigned as directors at that time;

(4)   The company had owed a substantial tax liability throughout the period from when the Agreement was signed until 2010.

[94]      While Mr. Miletic would have liked to see the Jaksics leave the company, he did not consider it proper to force them out.  He continued to pay Mr. Jaksic a salary until May 2010.  Had he known that he had a claim against the Jaksics, he would have stopped paying their salaries.  I find that that it was not until June 2010, when he retained Mr. Garvey, that Mr. Miletic knew that he had a cause of action against the Jaksics or Mr. Wheeler.

[95]      Mr. Miletic’s relationships with Mr. Wheeler and the Jaksics were ones of dependence.  The Jaksics were older than Mr. Miletic, they had been his employers, and had been officers and directors of Micro Precision, with intimate knowledge of its business, since 1984.  Both Mr. Miletic and the Jaksics were Slovenian, and the evidence supports an inference that the Slovenian culture which they shared is high in the power-distance index [citation to http://geert-hofstede.com/slovenia.html].

[96]      I find that, at the very least, Mr. Miletic relied heavily on the Jaksics to handle the financial affairs of the business, and that he relied on both them and Mr. Wheeler in concluding that he had become the owner of Micro Precision in 2006. This Court, in Sheeraz et al. v Kayani et al., found that s. 5 of the Limitations Act must be interpreted in a way that takes account of a relationship of dependence [quotation ommitted]

[97]      I find, in all the circumstances, including Mr. Miletic’s dependence on the defendants, that his claim was not discoverable until June 2010.

What distinguishes this decision is Justice Price’s recognition of the power-distance index (curiously, apparently without the benefit of any expert evidence). A CanLII search suggests that this is a first in Canadian jurisprudence. Mr. Miletic’s counsel Anser Farooq deserves credit for a novel argument.

The index is a component of the cultural dimension theory developed by the Dutch social psychologist Geert Hofstede. This theory analyses systematic differences in national cultures on four primary dimensions: power distance (PDI), individualism (IDV), uncertainty avoidance (UAI) and masculinity (MAS).

The Hofstede Centre, which hosts the website cited by Justice Price, defines power distance:

Power distance deals with the fact that all individuals in societies are not equal – it expresses the attitude of the culture towards these inequalities amongst us. Power distance is defined as the extent to which the less powerful members of institutions and organisations within a country expect and accept that power is distributed unequally.

This is the Hofstede Centre’s power distance ranking for Slovenia:

Slovenia scores high on this dimension (score of 71) which means that people accept a hierarchical order in which everybody has a place and which needs no further justification. Hierarchy in an organization is seen as reflecting inherent inequalities, centralization is popular, subordinates expect to be told what to do and the ideal boss is a benevolent autocrat.

Should you be curious, Canada has a score of 39. Here, we are told, hierarchy exists for convenience.

It remains to be seen whether the cultural dimension theory gains traction as a factor in the discovery analysis. On its face, the theory is compelling. Any plaintiff would be pleased to envoke a high power-distance index to defeat a limitation defence (Malaysians take note: your national culture has the highest index at 104).  Nevertheless, this case can only go so far as a precedent; it’s evident that the power index theory wasn’t determinative in the analysis.  The facts were such that had the parties been native Canadians (or Austrians, with an index of 10) rather than Slovenians, Mr. Miletic would still have commenced the action in time.

 

 

Ontario: Will challenges subject to the two-year limitation period

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The Superior Court has ruled on the application of the Limitations Act, 2002 to will challenges. The general two-year limitation period in section 4 of the act applies, subject to the section 5 discovery provisions.

Leibel v. Leibel involved two wills. The wills left a specific asset to the testatrix’s son Blake, and divided the remaining assets equally between Blake and her other son Cody. Blake applied for a declaration that the wills were invalid, and Cody and other respondents moved for an order dismissing the application on the basis that it was statute-barred by the expiry of the limitation period.

Justice Greer held that limitation period began running in June 2011, the date of the testatrix’s death , because a will speaks from death (see paras. 36 and 50). However, Just Greer found that Blake discovered his claim within the meaning of section 5 about a month later in July 2011:

In applying the “discoverability principle,” Blake had the knowledge to commence a will challenge on or before July 31, 2011. By that date he knew the following facts:

(a)   Prior to Eleanor’s death Blake knew that Eleanor [the testatrix] had recovered from lung cancer but now had brain cancer.

(b)   He knew Eleanor had changed her previous Wills.

(c)   He knew the date of Eleanor’s death, as Lorne had called him and Cody on that date.

(d)   He received copies of the Wills prior to July 31, 2011, and he knew who the Estate Trustees were under the Wills.

(e)   He knew what Eleanor’s assets were. He had at least a sense of her income, as she had been sending him monthly cheques before the date of her death and had a sense of the value of her assets.

(f)   He signed corporate documents for a company now owned by her Estate prior to July 31, 2011.

(g)   He had communicated with Ms. Rintoul [a lawyer] about his concerns and she gave him the names of three estates counsel to consider, as independent legal advisors.

Blake, therefore, had all of the information needed to begin a will challenge. He chose, instead, to take many of his benefits under the Wills before he commenced his Application (see para. 39).

By the time Blake brought his application in September 2013, the limitation period had expired.

Justice Greer rejected Blake’s argument that no limitation period applied to his will challenge pursuant to section 16(1)(a) of the act because his challenge did not seek consequential relief. This is noteworthy. Prior to this decision, it was widely considered that this section would apply to a will challenge. Consider a passage from Anne Werker’s influential 2008 article on limitation periods in estate actions:

It has been suggested that the 15-year absolute limitation period applies to will challenges. I do not agree. Section 16(1)(a) of the new Act expressly states that there is no limitation period in respect of “a proceeding for a declaration if no consequential relief is sought”.

In particular, it was thought that where a distribution had not been undertaken before the will challenge, no consequential relief would be necessary and so no limitation period would apply. (See Anne Werker, “Limitation Periods in Ontario and Claims by Beneficiaries”, (2008) 34:1 Advocates’ Q at 24-28).

Justice Greer held that the legislature did not intend for section 16(1)(a) to exclude will challenges from the two-year limitation period:

To say that every next-of-kin has an innate right to bring on a will challenge at any time as long as there are assets still undistributed or those that can be traced, would put all Estate Trustees in peril of being sued at any time. There is a reason why the Legislature replaced the six-year limitation in favour of a two-year limitation. (See para. 52).

In any event, Justice Greer found that the order Blake sought did ask for consequential relief:

Although subsection 16 (1) (a) of the Act says there is no limitation period in respect of a proceeding for a declaration if no consequential relief is sought, Blake’s will challenge claims consequential relief in that it asks for an Order revoking the grant of the Certificate of Appointment of Estate Trustees with a Will issued to Roslyn and Lorne, asks for an Order removing them as Estate Trustees, asks for an Order that they pass their accounts as Estate Trustees, and for an Order appointing an Estate Trustee During Litigation.  In addition, Blake asks for declarations relating to the revocation of Eleanor’s December 12, 2008 Wills and for an Order in damages in negligence against Ms. Rintoul and her law firm, and for Orders disclosing Eleanor’s medical records and her legal records.  Consequential relief is clearly sought by Blake (see para. 28).

This decision should have a significant impact on how the estates bar approaches will challenges, and it will be interesting to see whether there is an appeal. Meanwhile, it’s likely that it will influence estates jurisprudence in other jurisdictions with limitations provisions equivalent to section 16(1)(a), for example section 2(1)(d) of the BC Limitation Act.