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

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

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

Ontario: The finality of motions to add defendants

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

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

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

These are the relevant paragraphs:

[7]         The distinction between a final and interlocutory order for the purposes of determining the appropriate appellate forum is not always easy to make: see Salewski v. Lalonde2017 ONCA 515 (CanLII)Azzeh v. Legendre2017 ONCA 385 (CanLII).  In the present context, the order will be said to be final if it deprives WSP of a substantive defence.  If WSP can no longer rely on the Limitations Act defence, the order is final.  However, if WSP can raise the Limitations Act defence at trial, the order is not final. To determine whether the order is final or interlocutory, one must examine the terms of the order, the motion judge’s reasons for the order, the nature of the proceedings giving rise to the order, and other contextual factors that may inform the nature of the order.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Ontario: the 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) 3212017 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. Day2016 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: Appealing s. 5 analyses

Nicholson v. McDougall is a reminder that the omission of a s. 5 analysis isn’t necessarily a ground for appeal:

[31]           There is no reference to s. 5 at all, or any of its detailed requirements, in the Reasons for Decision.  I agree with the respondent that this omission from the Reasons for Decision is not sufficient to grant this appeal.  The Deputy Judge could have implicitly applied s. 5, including the presumption in s. 5(2), without expressly referring to it.  To assess whether the Deputy Judge did so and therefore complied with the Limitations Act requirements, I begin with the law regarding s. 5(2) and then I will move to how it applies in this case.

Ontario: challenging discovery analyses on appeal

In Frederick v. Van Dusen, the Divisional Court reminds us that the court (in this case, a deputy judge of the Small Claims Court) need not make explicit findings with respect to the discovery matters:

[12]           Subsection 5(1) provides that a claim is discovered on the earlier of the day on which the plaintiff first knew of the matters set out in subsection 5(1)(a) and the day on which a reasonable person with the abilities and in the circumstances of the plaintiff ought to have known of the matters referred to in subsection 5(1)(a).  The Deputy Judge found that the date on which the reasonable person with the abilities and in the circumstances of Mr. Frederick ought to have known of the matters set out in subsection 5(1)(a) was the spring of 2013.  Having made this determination under subsection 5(1)(b) of the Act, there was no requirement for the Deputy Judge to make an explicit finding as to what Mr. Frederick and Ms. Presley actually knew in relation to subsection 5(1)(a)(iv).

Ontario: The impact of a lost SJM on a limitations defence

A defendant moves for summary judgment on the basis of an expired limitation period.  The motion judge dismisses the motion.  What impact does the dismissal have on the defendant’s limitations defence?

The answer, according to the Court of Appeal in Vanden Bussche Irrigation & Equipment Limited v. Kejay Investments Inc., is that an order dismissing the motion and nothing more has no impact on the defendant’s limitations defence:

[8]         In Ashak v. Ontario (Family Responsibility Office), 2013 ONCA 375 (CanLII), this court, based on identical wording in the order, held at para. 7, that the order was not a final order because, “a decision under Rule 20 determines only that a genuine issue requiring a trial exists. Accordingly to the extent that a motion judge may purport to make findings of fact in reasons for judgment dismissing a Rule 20 motion, such findings do not have binding effect.”

[9]         The court in Ashak further noted at paras. 8-11 that while a court has the power to make binding determinations of fact under rule 20.05 when dismissing a motion for summary judgment if a court proposes to exercise that power the motion judge should say so and the formal order should reflect that. A similar power to make a binding determination of law likely exists under rule 20.04(4), but again, if the motion judge purports to exercise that power, the judge should specifically invoke and reference the rule and the legal determination made should form part of the formal order.

The order taken out from the summary judgment motion stated: “THIS COURT ORDERS that the Defendant’s motion is hereby dismissed.”  Accordingly, it could have no impact on the defendant’s limitations defence at trial:

[11]      In this case, the motion judge did not specifically invoke and reference the rule giving him the power to make a binding determination nor does the order taken out reflect any determination on the issue of the limitation period. Although the limitation period defence was the only issue before the motion judge and he purported to decide it, he also refused to grant summary judgment on the claim to the plaintiff and sent the matter on for trial. It does not appear that there would be any reason for him to do so unless he was of the opinion that there was a genuine issue requiring a trial respecting the limitation period.

[12]      In the result, I have concluded that the motion judge’s determination that the limitation period had not run is not binding and is not a final order. Accordingly, were I to grant leave to file a notice of appeal, this court would not have jurisdiction to entertain the appeal and for this reason the motion is dismissed.

Ontario: Condo owners take note, a special assessment may not be a demand obligation

Valentina Vasilescu Tarko et al. v. Metropolitan Toronto Condominium Corporation 626 (MTC 626) et al. holds that a special assessment levied on a condo owner is not a demand obligation within the meaning of section 5(3) of the Limitations Act, 2002. The section provides as follows:

Demand obligations

For the purposes of subclause (1) (a) (i), the day on which injury, loss or damage occurs in relation to a demand obligation is the first day on which there is a failure to perform the obligation, once a demand for the performance is made.

Because the assessment provided a date for repayment, it wasn’t a demand obligation:

The appellants suggested that the Special Assessment was subject to s. 5(3) of the Limitations Act concerning demand obligations. A debt obligation that does not specify a date for repayment is a demand obligation. See Skuy v. Greenough Harbour Corp., 2012 ONSC 6998 (CanLII), 10 B.L.R. (5th) 146, at para. 31. The 2011 Special Assessment was made payable in three instalments, the first of which was July 1, 2011. Accordingly, the Special Assessment was an obligation which did specify a date when it was payable and it is not therefore a demand obligation. Section 5(3) of the Limitations Act has no application.

In his decision, Justice Marrocco also emphasised that there is no requirement for a limitations decision to refer to the specific wording of the Limitations Act,2002:

The appellants argued that the Deputy Judge’s oral reasons did not refer to the specific wording of the Limitations Act. The Deputy Judge was not required to refer to the specific wording of the Limitations Act.  A review of the oral reasons reveals that the Deputy Judge considered the relevant factors set out in s. 5(1) of the Limitations Act in deciding to stay the appellants’ claim. The Court of Appeal in Ali v. Triple 3 Holdings Inc., 2002 CanLII 45126, at para. 4,¸stated that “an appellate court should not presume that the judge of first instance was not aware of or failed to apply the appropriate legal test merely because the test is not explicitly set out in the judge’s reasons.” A judge’s reasons are adequate if they demonstrate that judge has considered the relevant factors and important issues in the case. In R. v. Sheppard, 2002 SCC 26 (CanLII), [2002] 1 S.C.R. 869, at para. 42, the Supreme Court quoted with approval the words of Major J. in R. v. R.(D.), [1996[ 2 S.C.R. 191: “where the reasons demonstrate that the trial judge has considered the important issues in a case, or where the record clearly reveals the trial judge’s reasons, or where the evidence is such that no reasons are necessary, appellate courts will not interfere.”

This is a point that bears remembering when considering whether to appeal from a limitations judgment, particularly from a judgment of the Small Claims Court.