Declarations

Ontario: s. 16(1)(a) applies to a declaration of breach of Charter rights

In Selkirk et al. v. Trillium Gift of Life Network et al., the Superior Court held that an action seeking a declaration that Charter rights have been infringed could shelter within s. 16(1)(a) because it seeks no consequential relief:

[69]           The respondents argue that the relief sought relating to the death of Mr. Selkirk is statute barred. Mr. Selkirk died in 2010 and this application was commenced in 2015. They argue that a two-year limitation period applies to personal relief sought under s. 24(1) of the Charter.

[70]           In Ravndahl v. Saskatchewan, 2009 SCC 7, [2009] 1 S.C.R. 181, the court distinguished between the litigant’s personal remedies, brought by her as an individual, from an in rem remedy flowing from s. 52 of the Constitution Act, 1982. In that case, the appellant’s personal claim was statute barred, but her claim for a declaration of invalidity arising out of s. 52 was allowed to proceed.

[71]           In Alexis v. Darnley, 2009 ONCA 847, 100 O.R. (3d) 232, the Court of Appeal held that limitation periods of general application apply to an action brought by an individual for a personal remedy under s. 24(1) of the Charter. Pursuant to the Limitations Act, 2002, S.O. 2002, c. 24, Sch. B, the relevant limitation period is two years: Alexis, at para. 21.

[72]           Ms. Selkirk argues that the relief sought is not out of time. She relies on s. 16(1)(a) of the Limitations Act, 2002, which provides that there is no limitation period in respect of a proceeding for a declaration if no consequential relief is sought. She argues that she seeks a simple declaration that Mr. Selkirk’s rights were infringed, which does not pronounce any sanction against the respondents. She seeks no consequential relief.

[73]           In determining whether the relief sought is purely declaratory, the court asks the question: if it granted the declaration, and the defendant resisted the implementation of the declaration, could the plaintiff leave the court in peace and enjoy the benefits of the declaration without further resort to the judicial process?: Skylark Holdings Limited v. Minhas, 2017 ONSC 4599, at paras. 26, 28-29, Yellowbird v. Samson Cree Nation No. 444, 2008 ABCA 270, 433 A.R. 350, at paras. 45-47.

[74]           I agree with Ms. Selkirk that the personal remedies sought with respect to Mr. Selkirk’s rights are declaratory only. If the declaratory relief is granted, Ms. Selkirk could leave the court in peace and enjoy the benefits of the declaration without further resort to the judicial process.

[75]           This is because the declaration sought would, if granted, serve the purpose of vindicating Mr. Selkirk’s Charter rights, and recognize that public confidence in the Charter may be negatively impacted when state actors violate Charter rights, especially if doing so results in death. On its own, the vindication, if warranted, would have value.

[76]           Ms. Selkirk makes no claim for monetary compensation or any other consequential relief. If the declaratory relief is granted, the court’s role is complete.

[77]           I thus find that these claims are not statute-barred.

Ontario: there’s no limitation period for an application for a declaration of a codicil’s validity

 

In Piekut v. Romoli, the applicant sought a declaration as to whether codicils were valid. The respondent moved to dismiss the application as statute-barred. The court denied the motion on the basis that no limitation period applied pursuant to s. 16(1)(a), which prescribes no limitation period for a proceeding for a declaration if no consequential relief is sought.    The applicant was not seeking consequential relief:

[50]           I find that Helen’s question with respect to the validity of the codicils is restricted to declaratory relief. She is not seeking consequential relief. She is not asking the court to determine the ultimate beneficiary of Dundas St. properties or to vest the properties in any particular beneficiary or beneficiaries.

This is the correct outcome by the wrong reasoning.  No limitation period applied to the proceeding because it didn’t pursue a “claim”.  The Limitations Act applies to “claims” pursued in court proceeding (s. 2).  If there’s no “claim”, there’s no limitation period.  “Claims” derive from causes of action.  If there’s no cause of action, there’s no “claim”.

There’s no cause of action asserted in an application for a declaration regarding the validity of a codicil (or a will).  Accordingly, the applicants were not pursuing a “claim” in a court proceeding, and no limitation period applied to it.

Update! The Court of Appeal upheld this decision.

Ontario: the limitation of claims arising from solicitor’s undertakings

Lofranco v. Azevedo considers the limitation period applicable to claims arising from solicitor’s undertakings.

The plaintiff’s new personal injury lawyer undertook to protect the former lawyer’s reasonable account.  The limitation period for the claim to remedy the breach of the undertaking (that is, the failure to pay out the reasonable account) would commence only when the undertaking was revoked:

[40]           In my view, it is not open to the Estate to argue that the limitation period runs against the applicant.  Given my finding that there was a valid undertaking given on behalf of Mr. Pereira, as recently discussed by Quigley J. in Cozzi, at para. 62, the limitation period stops running once the undertaking is given, unless the undertaking is revoked:

63     First, Mr. Cozzi tries to counter that proposition by noting that Kilian D.J. correctly adopted the law that a personal undertaking from a solicitor is not discharged by notification. I agree. Moreover, I agree with the appellant on the general proposition that a solicitor’s undertaking and a client’s undertaking will continue to be enforceable without the interference of a limitation period: Sokoloff v. Mahoney. The Deputy Judge specifically recognized this in para. 17 when he quoted from para. 15 of Sokoloff as follows:

15 There is also clear case law that a solicitor’s undertaking as well as a client’s undertaking is enforceable, can be relied upon, and stops the clock running for the purpose of a limitation defence unless revoked. In Tembec Industries Inc. v. Lumberman’s Underwriting Alliance, (2001) 2001 CanLII 28252 (ON SC), 52 O.R. (3d) 334, [2001] O.J. No. 72 at paras 21-22, Ground J. held that an undertaking to pay a specified amount in damages gives rise to promissory estoppel where the recipient of the undertaking relied on it. Such reliance is expressly contemplated by a solicitor who gives an undertaking, as Wilton-Siegel J. held in Bogoroch & Associates v. Sternberg, [2005] O.J. No. 2522 at para 38.

The former lawyer also had “a charging lien” under the Solicitor’s Act to which no limitation period applied:

[42]           Another basis on which I would find that the limitation period does not run against the applicant is the nature of its interest in the funds held by the Azevedo Firm.  In Thomas Gold Pettinghill LLP, at paras. 88 and 89. Perell J. explained that, besides charging orders that can be made under the Solicitor’s Act, the Court has inherent jurisdiction “to charge assets recovered or preserved through the instrumentality of a lawyer for a client”.

[43]           Perell J. also noted, at para. 101, that, in circumstances where the Court is satisfied that the preconditions are met for a charging lien, the limitation periods in the Limitations Act, 2002, do not apply:

For present purposes, the three points to note from Justice Henry’s decision in Re Tots and Teens Sault Ste. Marie about a charging lien made under the court’s inherent jurisdiction are: first, the charging lien creates the proprietary interest of a secured creditor; second, subject to being declared, the charging lien is an inchoate interest that pre-dates the court’s declaration; and third, the charging lien is intrinsically declaratory in nature. The last point supports Cassel Brock’s argument that a charging lien comes within s. 16 (1) (a) of the Limitations Act, 2002 and is not subject to any limitation period.

[44]           I am satisfied that the applicant is entitled to a charging lien.  In Thomas Gold Pettinghill LLP, at para. 88, Perell J. explained that the preconditions for a charging lien are that “(a) the fund, or property, is in existence at the time the order is granted; (b) the property was recovered or preserved through the instrumentality of the lawyer; and (c) there must be some evidence that the client cannot or will not pay the lawyer’s fees”.

[45]           In this case:

(a)   the funds held in trust by the Azevedo constitute the fund;

(b)   the Lofranco Firm did some work on Mr. Pereira’s file.  While there is a dispute about the extent of the work done, there is no dispute that the firm was involved in moving the matter forward; and

(c)   It is evident from the position taken by the Estate on this application that it will not agree to pay the fees claimed by the Lofranco Firm.

[46]           Looking at the matter from a different perspective, both the Solicitor’s Act and the common law provide special protection to lawyers in recovering their fees in circumstances in which a plaintiff is successful, either through a settlement or by obtaining judgment. The undertaking Mr. Azevedo gave on Mr. Pereira’s behalf and the fact that Mr. Pereira consented to the money being held in trust by the Azevedo Firm once settlement was reached, in my view, constitute an acknowledgement by Mr. Pereira that he understood the Lofranco Firm’s proprietary interest in the funds. However, as discussed below, given that the undertaking was subject to the fees being reasonable and Mr. Pereira’s ability to assess the account, the issue remains whether the applicant is entitled to payment of its full account or whether the Estate is entitled to assess the account.

I’m not familiar with the jurisprudence cited for this conclusion.  A charging lien may well be declaratory, but surely here it would result in the consequential relief of the former lawyer being entitled to the disputed funds?

A declaration that results in consequential relief doesn’t fall within s. 16(1)(a).

 

Ontario: No, s. 16(1)(a) is not a secret loophole

Since the early days of the Limitations Act, plaintiffs have ventured the not especially clever argument that by seeking only a declaration they can engage the exception in s. 16(1)(a) of the Limitations Act for a proceeding for a declaration if no consequential relief is sought.

As two recent decisions remind us, this strategy is transparent and ineffective.

In Skylark Holdings Limited v. Minhas, the defendants moved to dismiss the plaintiffs’ proceeding as statute-barred.  In response, the plaintiffs moved to amend the statement of claim to limit the relief claimed to a declaratory judgment of legal and beneficial ownership of shares. In this way, the plaintiffs intended to engage s. 16(1)(a).  The motion judge agreed with the plaintiffs and found that the court could make declare ownership without consequential relief.

The Divisional Court granted the defendants’ appeal.  It followed the Court of Appeal’s recent decision in Alguire, delivered after the motion judge’s decision, and assessed the essential nature of the plaintiffs’ relief.  It concluded that the plaintiffs were attempting an “end run” around the limitation period:

 

[8]                This case was only decided after the motions judge made his decision and it is therefore not surprising that the motions judge did not conduct his analysis in accordance with the directions set out in the Court of Appeal’s decision.  This was an error of law.  To decide whether s. 16 (1)(a) is being used to circumvent an application limitation period, the motions judge was required to assess the essential nature of what the respondent is seeking.  In this case, the respondent claims to be entitled to a five per cent interest in 2012111 Ontario Inc. as a result of the fulfillment of the 2002 agreement.  Any entitlement that it has today flows from a contract – the meaning and enforceability of which is in dispute – but any cause of action that the respondent may have in respect of the 2002 contract is statute barred.

[9]               To overcome this difficulty, the respondent seeks to use the device of a declaration to do an end run around the applicable limitation period.

[10]           Moreover, were the respondent to obtain the declaration, the circumstances are akin to those found by Madam Justice Harvison Young in para. 16 of Bailey v. Canada (Attorney General), 2008 CanLII 53128 (ON SC).  It is readily apparent from the record that the declaration sought will be ineffective without further mandatory relief directed to the corporation or a shareholder to implement the shareholding interest if possible.  A determination that the respondent is entitled to a five per cent interest does not say from whom and by what means the shareholding interest is to be implemented.  Therefore, a declaration of entitlement alone is of no avail without further consequential relief which brings it outside s. 16 (1)(a) of the Limitations Act 2002.

Similarly, in Van Halteren v. De Boer Tool Inc., the Superior Court looked at the pith and substance of relief sought in regards of shares and determined that it was consequential:

[6]               Section 16.1 (1) of the Limitations Act, 2002 provides that there is no limitation period in respect of a proceeding for a declaration if no consequential relief is sought. The present claim, however, does not fall under that exception. The pith and substance of the claim is damages or a property interest in shares to compensate for $500,000 advanced to the defendant. No shares actually exist. It would be impossible for the court to make a declaration of rights with respect to shares that cannot be identified. The only meaningful remedy for the plaintiff would be in the nature of consequential relief. Accordingly the applicable prescription is the general limitation of two years after the cause of action is discovered or discoverable.

As an aside, the curious thing about s. 16(1)(a) is that it’s arguably unnecessary.  The Limitations Act applies to “claims” pursued in court proceedings, which are defined in s.1 as remedying loss resulting from wrongful conduct.  If a plaintiff doesn’t seek consequential relief, like damages, then the plaintiff isn’t pursuing a claim, and if there is no claim the Limitations Act doesn’t apply.

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) 321, 2017 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. Day, 2016 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: 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.