Creative (or obnoxious?) use of the Rules of Civil Procedure

Ontario: the consequences of failing to plead discovery in reply

The defendant in Anisman v. Drabinsky argued that the plaintiff could not argue discovery in response to a limitations defence because he hadn’t served a Reply pleading the material facts of discovery.  The court rejected this (very optimistic argument) argument:

[17]           Finally, Defendants’ counsel submits that the Plaintiff’s factum makes improper reference to his response to the Defendants’ limitation argument. It is the Defendants’ position that since the Plaintiff never issued a Reply pleading in response to the limitation point raised in the Statement of Defence, the Plaintiff is prohibited from arguing any defence to the limitation challenge. Defendants’ counsel therefore asks that those paragraphs be struck from the Plaintiff’s factum.

[19]           The Plaintiff may not have a pleading to support his point, but there is evidence in the record that has been fairly adduced that supports it. The Court of Appeal has expressly held that under such circumstances it would be an error to proceed on the basis suggested by Defendants’ counsel: “Again, this was a summary judgment motion, the resolution of which depended on a consideration of the evidence adduced by the parties, and not their pleadings:” Collins v Cortez, 2014 ONCA 685, at para 12.

[20]           The Plaintiff here seeks summary judgment, and it is incumbent on me to consider the record as a whole rather than to focus narrowly on the pleadings alone. I therefore find no reason to redact or excise any portion of the evidentiary record or any factum.

[46]           The Statement of Claim herein was issued on June 18, 2019, some 3 years and 9 months after the impugned transfer of title. Defendants’ counsel submits that the 2-year limitation period under the Limitations Act, 2002 was missed by the Plaintiff. Defendants’ counsel further submits that the Defendants having pleaded a limitation defence, it was incumbent on the Plaintiff to serve a Reply pleading. He argues that failing that, the Plaintiff is foreclosed from including anything in the present Motion Record by way of a response to the limitation defence.

[47]           Counsel for the Defendants relies on Rule 25.08 for the proposition that a Reply pleading is necessary in these circumstances. That Rule provides:
25.08 (1) A party who intends to prove a version of the facts different from that pleaded in the opposite party’s defence shall deliver a reply setting out the different version, unless it has already been pleaded in the claim.

(2) A party who intends to reply in response to a defence on any matter that might, if not specifically pleaded, take the opposite party by surprise or raise an issue that has not been raised by a previous pleading shall deliver a reply setting out that matter…

[48]           It is evident from the wording of both parts of Rule 25.08 that it is the element of surprise that determines whether or not a Reply is required. That is, the Defendants must not be taken by surprise by facts of which they were unaware.

[49]           This court has long noted that, “[i]f a limitation defence is raised, the plaintiff should, where appropriate, serve a reply raising any facts and contentions relied upon to rebut the defence and pleading the basis for any discretion that the court may have in the matter”: D.S. Park Waldheim Inc. v Epping (1995), 1995 CanLII 7091 (ON SC), 24 OR (3d) 83 (Gen Div), quoting Graham Mew, The Law of Limitations (Markham: Butterworths, 1991), p. 54. This is particularly the case where “the plaintiff…relies on…the doctrine of discoverability…[which] depends on an unresolved question of fact”: Epping, at 85.
[50]           The Plaintiff makes a number of arguments in response. In the first place, he submits that there is nothing in his response to the limitation point that will take the Defendants by surprise. Secondly, he contends that the cause of action pleaded in the Statement of Claim was not discovered by him until substantially later, and that there was nothing in the conduct of the parties that would have tipped him off that a transfer of title had taken place with respect to the Property.
[51]           The Plaintiff points out that the Statement of Claim herein was served with a Certificate of Pending Litigation, which the Plaintiff had obtained on an ex parte basis at the outset. Since the Certificate was obtained without notice to the Defendants, the Plaintiff also served them at the same time with his Motion Record in support of the Certificate, as required. That Motion Record contained an affidavit sworn by the Plaintiff setting out how he had discovered the transfer of title. At paragraph 8 of his affidavit, served together with the Statement of Claim on June 25, 2019, the Plaintiff stated:
On September 11, 2015, shortly after my request for payment of August 24, 2015, Mr. Drabinsky transferred his interest in his house at 478 Spadina Road (the ‘Property’) to his wife. I learned of this transfer on April 20, 2019, before I examined Mr. Drabinsky in aid of execution.

[52]           The circumstances and date of discovery – i.e. that he first learned of the transfer when he searched title in preparation for an examination in aid of execution on the judgment he had obtained on November 15, 2018 – are the crucial facts on which the Plaintiff relies in responding to the limitation defence. It is this brief statement of fact that would likely have been contained in a Reply had one been served.  Given that it was contained in the package of materials served together with the Statement of Claim and Certificate of Pending Litigation, the Defendants were on notice in much the same way as they would have been had the sentence been repeated in a Reply pleading.

[53]           It is the Defendants’ position that if the relevant facts did not find their way into a Reply, they are to be ignored in assessing the merits of the limitation defence. I do not accept that position. To ignore what was in the Plaintiff’s motion record and affidavit because it was not repeated in a Reply would be to elevate form over substance to an unacceptable degree: Marshall v Watson Wyatt & Co., 2002 CanLII 13354, at para 25 (Ont CA).
[54]           As is evident from the narrative in Part II above, prior to the examination in aid of execution there was nothing to prompt the Plaintiff to search title of the Property. Mr. Drabinsky consistently lead him to believe that he would be receiving payment imminently, and even provided him with replacement cheques when the previous ones became stale-dated. Further, Mr. Drabinsky was more than just another debtor; he was a rather renowned debtor who was very much in the public eye. It did not occur to the Plaintiff (or, presumably, to any other creditors) that Mr. Drabinsky would be denuding himself of substantial assets such as the Property. As the Plaintiff submits, there is only a duty to investigate when there is something that leads one to investigate: Fennell v Deol, 2015 ONSC 4835, para 8.

Ironically, the issue was moot because the plaintiff was seeking to recover land, which means the ten-year RPLA limitation period applied.

Ontario: Court of Appeal says (again) that r. 21 isn’t for limitations defences

The Court of Appeal’s decision in Clark v. Ontario (Attorney General) is another emphatic instruction not to bring motions for judgment on a limitations defence under r. 21:

[40]      The second problem is that the Attorney General seeks to use a r. 21.01(1)(a) motion to assert the Limitations Act defence that it has not pleaded. That rule involves the determination of a question of law raised in a pleading, and it is clear that the application of the Limitations Act is not a matter of law. This point has been made by this court on several occasions. For example, in Beardsley this court stated as follows, at paras. 21-22:

The motion to strike based on the expiry of a limitation period could only be made pursuant to rule 21.01(1)(a), which provides that a party may move for the determination of a question of law “raised by a pleading”. The expiry of a limitation period does not render a cause of action a nullity; rather, it is a defence and must be pleaded.

…

Plaintiffs would be deprived of the opportunity to place a complete factual context before the court if limitation defences were determined, on a routine basis, without being pleaded. Adherence to rules that ensure procedural fairness is an integral component of an appearance of justice. The appearance of justice takes on an even greater significance where claims are made against those who administer the law.

[41]      Despite these remarks, this court stated in Beardsley that it would be “unduly technical” to require a statement of defence to be delivered if “it is plain and obvious from a review of the statement of claim that no additional facts could be asserted that would alter the conclusion that a limitation period had expired”: at para. 21. To the extent that this comment created an exception, it was extremely limited in scope, as the example given makes clear: the expiry of the two-year limitation period under the Highway Traffic Act, R.S.O. 1990, c. H. 8, in connection with a claim for property damage only, in circumstances in which the panel noted that the discoverability rule clearly did not apply.

[42]      Although this court has not categorically precluded the use of r. 21.01(1)(a) on limitations matters in subsequent cases, in several cases it has sought to discourage its use. In Metropolitan Toronto Condominium Corporation No. 1352 v. Newport Beach Development Inc., 2012 ONCA 850 (CanLII), 113 O.R. (3d) 673, at para. 116, Laskin J.A. said that a defendant could move to strike a claim based on a limitation defence“[o]nly in the rarest of cases” if the defendant has yet to deliver a statement of defence. A fuller explanation was provided in Salewski v. Lalonde, 2017 ONCA 515 (CanLII), 137 O.R. (3d) 762, at para. 42, in which the panel stated that “this court’s comment in Beardsley” had “likely been overtaken by the enactment of the Limitations Act, 2002”. The court in Salewski further limited the effect of the Beardsley comment by stating that it “was never intended to apply to a case that is legally or factually complex”: at para. 42.

[43]      Significantly, the panel in Salewski stated at para. 45 that, because the basic limitation period is now premised on the discoverability rule, the application of which raises mixed questions of law and fact, “[w]e therefore question whether there is now any circumstance in which a limitation issue under the Act can properly be determined under rule 21.01(1)(a) unless pleadings are closed and it is clear the facts are undisputed”.

[44]      The situation contemplated in Salewski – the close of pleadings and the absence of any factual dispute – is very narrow, and this court has continued to discourage the use of r. 21.01(1)(a) motions on limitations matters. In Brozmanova v. Tarshis, 2018 ONCA 523 (CanLII), 81 C.C.L.I. (5th) 1, at para. 19, this court emphasized that “[t]he analysis required under s. 5(1) of the Limitations Actgenerally requires evidence and findings of fact to determine. It does not involve a ‘question of law’ within the meaning of rule 21.01(1)(a).” Justice Brown described reliance on r. 21.01(1)(a) to advance a limitation period defence as “a problematic use of the rule”, one that risks unfairness to a responding plaintiff: at paras. 17, 23.

Ontario: Court of Appeal says don’t use r. 21.01(1)(a) to advance limitations defences

In Brozmanova v. Tarshis, the Court of Appeal has brought certainty to the question of whether a defendant may advance a limitations defence in a r. 21.01(1)(a) motion.  The answer is no.   Rule 21.01(1)(a) is for the determination of questions of law.  The expiry of the limitation period is a question of fact (or mixed fact and law).  Further, evidence is not admissible without leave under r. 21.01(1)(a), which puts the plaintiff in the unfair position of needing to seek leave to admit the evidence relevant to the limitations defence when it should be admissible as of right:

[10]      The Rules of Civil Procedure make available two sets of procedural devices by which a party can seek to dispose finally of a proceeding on a contested basis.

[11]      One set is evidence-based, under which the parties adduce evidence by various means, on the basis of which the court decides whether to grant or dismiss a proceeding. The Rules permit or offer several standard evidence-based procedural devices by which to obtain such a final adjudication on the merits: (i) the conventional trial; (ii) the hybrid trial; (iii) two forms of summary judgment – rules 20.04(2)(a) and 20.04(2)(b); and (iv) a rule 38 application.

[12]      The second set of procedural devices enables a party to ask the court to determine a question of law that may dispose of all or part of a proceeding. These law-based devices include: (i) a rule 22 special case; (ii) rule 21.01(1)(a), where a question of law is raised by a pleading; and (iii) rule 21.01(1)(b), where a pleading discloses “no reasonable cause of action or defence”.

[13]      The law-based character of the devices available under rules 21.01(1)(a) and (b) is reinforced by the limits placed on the use of evidence on motions brought under those rules. No evidence is admissible on a “no reasonable cause of action” motion; nor is evidence admissible on a “question of law” motion, except with leave of the judge or on consent of the parties: rule 21.01(2).

[14]      The rationale for these prescriptions is a simple one: the allegations asserted in the pleading, which the court must accept as provable at trial, are sufficient to determine the question of law or whether the pleading discloses a cause of action or defence recognized by law: see Hunt v. Carey Canada Inc., 1990 CanLII 90 (SCC), [1990] 2 S.C.R. 959, at pp. 980, 988 and 990-991. No further facts are required to determine the legal sufficiency of the claim.

[15]      In the present case, Dr. Tarshis was sued for conduct as a medical practitioner. He and Ms. Brown are represented by a law firm with long experience in representing medical practitioners. They sought to dismiss Ms. Brozmanova’s action relying on two law-based rules: 21.01(1)(a) and (b).

The “question of law” under rule 21.01(1)(a)

[16]      The “question of law” the respondents raise under rule 21.01(1)(a) is that Ms. Brozmanova commenced her action outside of the two-year limitation period.

[17]      Relying on rule 21.01(1)(a) to advance a limitation period defence is a problematic use of the rule. Some decisions of this court characterize the issue of whether a plaintiff has commenced a proceeding within the limitation period as one involving a question of fact: Pepper v. Zellers Inc. (2006), 2006 CanLII 42355 (ON CA), 83 O.R. (3d) 648 (C.A.), at para. 19; and Arcari v. Dawson, 2016 ONCA 715 (CanLII), 134 O.R. (3d) 36, at para. 9, leave to appeal refused, [2016] S.C.C.A. No. 522. Others describe it as involving a question of mixed fact and law: Salewski v. Lalonde, 2017 ONCA 515 (CanLII), 137 O.R. (3d) 762, at para. 45; and Ridel v. Goldberg, 2017 ONCA 739 (CanLII), at para. 12. Regardless, it does not involve a question of law.

[18]      In the basic case, the court must ascertain “the day on which the claim was discovered”: Limitations Act, 2002, S.O. 2002, c. 24, Sched. B, s. 4 (the “Limitations Act”). This, in turn, requires making two findings of fact: (i) the day on which the person first knew of the four elements identified by s. 5(1)(a)(i)-(iv) of the Limitations Act;[1] and (ii) under s. 5(1)(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” s. 5(1)(a). The earliest of the two dates is the date on which the claim is discovered: s. 5(1).

[19]      The analysis required under s. 5(1) of the Limitations Act generally requires evidence and findings of fact to determine. It does not involve a “question of law” within the meaning of rule 21.01(1)(a).

[20]      Yet, here the respondents invoked a law-based rule to establish a largely fact-based defence. I recognize, as respondents’ counsel submits, that some jurisprudence exists that has allowed a defendant to resort to rule 21.01(1)(a) to determine its limitations defence “where it is plain and obvious from a review of a statement of claim that no additional facts could be asserted that would alter the conclusion that a limitation period had expired”: see the commentary on rule 21.01(1)(a) in Todd. L. Archibald, Gordon Killeen & James C. Morton, Ontario Superior Court Practice, 2018 (Toronto: LexisNexis Canada, 2017), at p. 1128. See also Paul M. Perell & John W. Morden, The Law of Civil Procedure in Ontario, 3d ed. (Toronto: LexisNexis Canada, 2017), at p. 611.

[21]      However, courts must always remember that permitting a defendant to move under 21.01(1)(a) to establish a limitations defence could prove unfair to a plaintiff, especially a self-represented one. By selecting rule 21.01(1)(a) as the procedural means to adjudicate its fact-based limitations defence, a defendant puts a plaintiff in the position where she cannot, as of right, file evidence to explain when she discovered her claim. Instead, she must seek leave of the court.

[22]      A plaintiff who risks the dismissal of her action on the basis of a limitations defence should not have to ask a court for permission to file evidence on the issue of when she discovered her claim. She should be entitled to do so as of right. It is unfair for a defendant to attempt, tactically, to deprive her of that right and put her to the unnecessary expense (and risk) of asking permission to do so.

[23]      Notwithstanding the jurisprudence that opens the rule 21.01(1)(a) door to some efforts to prove a limitations defence, in my respectful view such an approach risks working an unfairness to a responding plaintiff. Requiring a defendant to move under an evidence-based rule – either rule 20 (summary judgment) or rule 51.06(2) (concerning admissions of the truth of facts in a pleading) – avoids such potential unfairness and is to be preferred.

This strikes me as an excellent, well-reasoned decision.

The Court also noted that it would have been available to the defendant to move under r. 51.06(2) on the basis that the plaintiff had admitted discovery of her claim in the statement of claim:

[34]      The material facts pleaded by Ms. Brozmanova at paras. 8-9 and 15-16 of her statement of claim were admissions of the truth of certain facts. She clearly pleaded that in 2009, as a result of dealing with an insurance company on a matter regarding her ankle injury, she discovered that her OHIP record contained entries for billings by Dr. Tarshis, which she alleges were fraudulent.

[35]      Given the admissions in her pleading, it would have been open to the respondents to move on those admitted material facts to dismiss the claim on the basis that Ms. Brozmanova had discovered it in 2009 and therefore the action was statute-barred: rules 20 or 51.06(2).[3] In 2009, she knew that some “damage” had occurred within the meaning of s. 5(1)(a) of the Limitations Act because she knew that her actual position was worse than her position before: Hamilton (City) v. Metcalfe & Mansfield Capital Corporation, 2012 ONCA 156 (CanLII), 290 O.A.C. 42, at para. 42. That the “damage” she discovered in 2009 was not the same damage for which she sought recovery in her action – her alleged inability in 2015 to purchase travel insurance – does not matter. Knowledge of “some damage” is sufficient for the cause of action to accrue and to start the limitation period: Hamilton, at para. 61.

While I’ve not seen a limitation defence advanced using this procedure, it makes good sense for those rare circumstances where a plaintiff unwittingly pleads facts that demonstrate discovery of a claim.

 

Ontario: limitation defences and r. 21

In Salewski v. Lalonde, the Court of Appeal casts doubt on whether there is any circumstance where r. 21.01(1)(a) is appropriate for determining a limitations issue except where pleadings have closed and the facts are undisputed:

[45]      However, the basic limitation period established by the Limitations Act, 2002 is now premised on the discoverability rule. The discoverability rule raises issues of mixed fact and law: Longo v. MacLaren Art Centre, 2014 ONCA 526 (CanLII), 323 O.A.C. 246, at para. 38. We therefore question whether there is now any circumstance in which a limitation issue under the Act can properly be determined under rule 21.01(1)(a) unless pleadings are closed and it is clear the facts are undisputed. Absent such circumstances, we are sceptical that any proposed limitation defence under the Act will involve “a question of law raised by a pleading” as required under rule 21.01(1)(a).

Ontario: Don’t bring limitations motions under r. 21.01(3)(d)

Does the expiry of the limitation period entitle a party to move under rule 21.01(3)(d) for an order staying or dismissing an action on the basis that the action is frivolous or vexations or an abuse of process?

Almost certainly not.  Evidence-based motions are the appropriate procedure for addressing a limitations defence, and these are brought pursuant to rule 20.

This is Justice Faieta’s review of the relevant jurisprudence in Kantor v. Fry:

[41]           However, the Defendant did not provide any case law precedent that support the use of Rule 21.01(3)(d) to stay or dismiss a claim on the basis of an expired limitation period.  While Rule 21.01(3)(d) was not specifically addressed, it is doubtful that such authority exists given that in Beardsley v. Ontario Provincial Police (2001), 2001 CanLII 8621 (ON CA),57 O.R. (3d) 1 (C.A.) the Ontario Court of Appeal  stated, at para. 21, that:

The motion to strike based on the expiry of a limitation period could only be made pursuant to Rule 21.01(1)(a), which provides that a party may move for the determination of a question of law “raised by a pleading”. [Emphasis added.]

[42]           In my view, where the determination of whether a claim is defeated by a limitation period turns on disputed facts, the better approach is a motion for a summary judgment using the tools that Rule 20.04 of the Rules of Civil Procedureprovides to resolve disputed facts.

[43]           In Boutin v. Co-operators Life Insurance Co. (1999), 1999 CanLII 2071 (ON CA), 42 O.R. (3d) 612 (C.A.), the Ontario Court of Appeal stated, at paras. 19-22:

To understand the scope of Rule 21, it is important to take into account the difference among Rules 20, 21 and 22, all of which seek to shorten or eliminate trials and thus reduce the cost of litigation. These rules are clearly related in their function, but they are not randomly interchangeable.

On a motion under Rule 20 the motions judge must determine that there is or is not a genuine issue for trial: see Irving Ungerman Ltd. v. Galanis (1991), 1991 CanLII 7275 (ON CA), 4 O.R. (3d) 545 (C.A.). That determination is based on the evidence filed on the motion. It is not based on the pleadings, apart from any admissions in the pleadings. Thus, a party responding to a summary judgment motion cannot sit back and rely on the pleadings. See 1061590 Ontario Ltd. v. Ontario Jockey Club (1995), 1995 CanLII 1686 (ON CA), 21 O.R. (3d) 547 (C.A.). Because of the provisions of Rule 20.04(4), if the only genuine issue for trial is a question of law, the motions judge may determine the question of law and grant judgment accordingly. Rule 20.04(4) provides that this will be done only where there are no facts in dispute which may give rise to a genuine issue for trial.

Motions under Rule 21 and 22 are different from summary judgment motions under Rule 20. Motions under Rules 21 and 22 focus on questions of law raised by the pleadings (Rule 21.01(1)(a)), or stated by agreement of the parties (Rule 22.01(1)). A Rule 22 motion brought by the agreement of the parties will, as a result of the provisions of Rule 22.04(a), be accompanied by an agreed statement of fact to the extent that facts are necessary “to enable the court to determine the question stated.” Rule 21.01(2) provides that there be no evidence on a motion under Rule 21.01(1)(a) “except with leave of a judge or on consent of the parties.” Since Rule 21.01(1)(a) requires that the question of law be raised by the pleadings there will generally be no need for evidence on a Rule 21.01(1)(a) motion. It seems clear to me that it was for this reason that the drafters of the Rules provided that there should be no evidence on a motion under Rule 21.01(1)(a), except for cases in which leave is granted or there is consent.

I do not think that the issue whether the policy limitation period is a bar to the appellant’s action is a question of law that should have been resolved on a Rule 21.01(1)(a) motion. As the motions judge’s endorsement indicates, the application of the limitation period in this case depends upon findings of fact for its resolution. This is also apparent from the appellant’s reply to the respondent’s statement of defence.  In my opinion, whether the respondent is entitled to rely on the limitation period in the policy has a significant factual component and is thus a matter which should be addressed at trial, not on a Rule 21.01(1)(a) motion. [emphasis added]

[44]           Finally, in Greatrek Trust S.A./Inc. v. Aurelian Resources Inc., [2009] O.J. No. 611, Justice D.M. Brown (as he then was) stated, at para. 19:

Further, an unhealthy devotion to Rule 21 motions exists at the present time in the Toronto Region. Too many parties regard Rule 21 motions as abbreviated surrogates for motions for summary judgment. Rule 21 motions are not even close cousins to motions for summary judgment. Summary judgment motions permit courts to review evidence in order to test the merits of a case – albeit a limited form of testing at present, but more robust testing will occur with the implementation of the improved Rule 20 on January 1, 2010: O. Reg 438/08. Rule 21 motions, by contrast, “focus on questions of law raised by the pleadings”: Boutin v. Co-operators Life Insurance Co. (1999), 1999 CanLII 2071 (ON CA), 42 O.R. (3d) 612 (C.A.), para. 21. As Osborne J.A. noted in Boutin, in most cases the application of a limitation period “depends upon findings of fact for its resolution”: para. 22. Evidence-based motions offer the more appropriate procedure by which to deal with the applicability of limitation defences. [Emphasis added.]