Conflict of laws

Ontario: is limitations law procedural in Ontario? (probably)

Lo Faso and Ferracuti contains the following statement on the substantive nature of limitation periods:

[17]          The defendants argue that the prejudice caused by the expiry of the limitation period makes the amendments untenable. The Supreme Court of Canada has held limitation periods are fundamentally substantive, and not procedural in nature. In para. 35 of Castillo v. Castillo, 2005 SCC 83 (CanLII), [2005] 3 S.C.R. 870, Justice Bastarache, in a separate yet concurring decision with the majority, held that “limitation periods have the effect of cancelling the substantive rights of plaintiffs, and of vesting a right in defendants not be sued in such cases…” Justice Bastarache referred also to the decision of Justice La Forest in Tolofson v. Jensen, [1994] 3 S.C.R. 1002 (SCC), where he stated that limitation periods are, by the very nature, substantive as they determine the rights of both of the parties in a cause of action. As Justice La Forest explained, “they destroy the right of the plaintiff to bring suit and vest a right in the defendant to be free from suit”.

I don’t think this is correct law in Ontario.  At common law, limitation periods are procedural so that the expiry of a limitation period is a procedural bar to asserting a cause of action, but doesn’t extinguish the cause of action.  The Limitations Act arguably recognises this implicitly:

Conflict of laws

23 For the purpose of applying the rules regarding conflict of laws, the limitations law of Ontario or any other jurisdiction is substantive law.

This provision is only necessary if the limitations law of Ontario is otherwise procedural.

To be fair, all of this is largely academic outside of conflicts .  I’ve been involved in just one case in the last five years where the impact of an expired limitation period mattered.

Ontario: an expired time-bar doesn’t make a jurisdiction inappropriate

The decision in Leon v. Volkswagen stands for the principle, potentially useful in jurisdictional disputes, that a foreign jurisdiction may be more appropriate than Ontario even if the proceding would be time-barred in the foeign jurisdiction:

[50]         Indeed, Canadian courts have done exactly that. Even where the proposed Ontario action was time-barred in the foreign jurisdiction, our courts have deferred to comity and to the more appropriate (foreign) forum.

Nova Scotia: a limitations decision is not res judicata of the same issue elsewhere

In Coady v. Quadrangle Holdings Ltd., the Nova Scotia Court of Appeal held that a final decision on a limitations issue is not res judicata of the same issue in another jurisdiction. An order dismissing a cause of action as statute-barred in Alberta did not bar the same cause of action in Nova Scotia.

Quadrangle sued Coady in Nova Scotia. Coady brought a motion for a stay on the basis that Nova Scotia had no jurisdiction, and that in any event, Alberta was the preferable jurisdiction. The motion judge declined to decide the jurisdiction issue, but found that Alberta was the preferable forum and granted an unconditional stay.

Quadrangle then sued Coady in Alberta. The Alberta Court of Queen’s Bench dismissed the claim on the basis that it was statute-barred by the expiry of the limitation period.

Coady registered the Alberta dismissal order as an order of the Supreme Court of Nova Scotia pursuant to the Enforcement of Canadian Judgment and Decrees Act (“ECJDA“).

Quadrangle moved to revive the stayed Nova Scotia claim. The motion judge lifted the stay.  Coady appealed.

The Court of Appeal held that the motion was entitled to lift the stay:

[32]           Whether to lift Justice Coady’s stay was a matter of discretion for Justice Moir. He exercised that discretion in favour of Quadrangle because its case could not be heard in Alberta and that was not drawn to Justice Coady’s attention when the stay was granted. The action in Nova Scotia was timely […] None of the “forum shopping” or like concerns expressed by Lord Goff in Spiliada are present here. Accordingly, one cannot say that Justice Moir applied incorrect principles. Nor can it be a patent injustice that Quadrangle’s case be heard, rather than stifled, because of a limitation period in Alberta of which no one was apparently aware.

Coady raised another, clever if rather dubious argument.  He took the position that the Nova Scotia action was res judicata due to the registration of the Alberta order in Nova Scotia under the ECJDA. He argued that Nova Scotia courts are not permitted to “look behind” the Alberta dismissal or consider its merits.  By virtue of sections 6 and 8(3) of the ECJDA, the motion judge could not even examine the reasons to see what issues were decided by the Alberta Court in dismissing the action.

Quadrangle countered with the Ontario Court of Appeal decision in Wolfe v. Pickar, which stands for the proposition that a foreign judgment is not res judicata if it has not pronounced on the merits of the case. The Court noted that, arguably, decisions registered under the ECJDA enjoy  greater protection that foreign judgments, but cited a 1980 Ontario Superior Court decision, Vancouver Island Helicopters Ltd. v. Robertshaw Controls Co. et al., for its statement that “The dismissal of an action in one province on the basis of the expiry of the limitation period is not a dismissal on the merits and does not bar another action in another province with a longer limitation period.”

The Court rejected Coady’s argument. Registration of the Alberta dismissal order in Nova Scotia did not bar the Nova Scotia action; it just affirmed that Quadrangle could not sue Coady in Alberta:

 [54]           […] in this case, Quadrangle is not attempting to limit the effect of the Alberta dismissal or even to treat it differently than a decision from a Nova Scotia court. In contrast, Mr. Coady is attempting to use it as evidence of res judicata and, for that reason, it is wholly appropriate to consider the reasons for the decision to determine what it in fact decided. The ECJDA does not alter the rules of evidence in this regard.

 

[55]           All Justice McCarthy decided was that Quadrangle could not sue Mr. Coady in Alberta. This is obvious from the relevant language of the registered order:

 

The Application by Blair Coady for Summary Judgment dismissing the claims against Blair Coady based upon the Limitations Act is granted.

 

[56]           Registration of the order in Nova Scotia does not bar the action by Quadrangle against Mr. Coady everywhere for all purposes and all time. It simply affirms that Quadrangle could not sue Mr. Coady in Alberta. It says nothing about whether it could be done in Nova Scotia. Justice McCarthy did not decide which law properly applied to resolution of the dispute. It does not offend the purposes of the legislation or the principle of comity to confine Justice McCarthy’s decision to what he actually decided.

One wonders whether if Quadrangle had first sued in Alberta, it could have commenced a new action in Nova Scotia (rather than reviving a stayed action) once the Alberta action was dismissed.  Vancouver Island Helicopters and the Court’s statement that the Alberta order says nothing about what could be done in Nova Scotia suggests that Quadrangle could.  On the other hand, the fact that Quadrangle had first sued in Nova Scotia undoubtedly influenced the Court’s reasoning. It will be interesting to see how the courts follow this decision.