Federal: The limitation of actions under s. 31 of the Expropriation Act

In Canada v. Milne, the Federal Court of Appeal held that no limitation period applies to an action under s. 31(1)(a)(i) of the Expropriation Act:

[3]  The central issue before the motion judge was the proper interpretation of subparagraph 31(1)(a)(i) of the Expropriation Act – whether it provides that there is no limitation period, and thus ousts the operation of subsection 39(1) of the Federal Courts Act, or merely establishes a point in time after which an action may be commenced, subject to the limitation period determined in accordance with subsection 39(1) (in this case the limitation period prescribed by the Ontario Act). Paragraph 31(1)(a) of the Expropriation Act reads as follows (underlining added):

31 (1) Subject to section 30, 31 (1) Sous réserve de l’article 30:
(a) a person entitled to compensation in respect of an expropriated interest or right may, a) une personne qui a droit à une indemnité pour un droit ou intérêt exproprié peut:
(i) at any time after the registration of the notice of confirmation, if no offer under section 16 has been accepted by him, and (i) après l’enregistrement de l’avis de confirmation, si elle n’a accepté aucune offre faite en vertu de l’article 16,
(ii) within one year after the acceptance of the offer, in any other case, (ii) dans un délai d’un an à compter de l’acceptation de l’offre, dans tout autre cas,
commence proceedings in the Court by statement of claim for the recovery of the amount of the compensation to which he is then entitled; or engager des procédures devant le tribunal par voie d’exposé de la demande pour le recouvrement du montant de l’indemnité à laquelle elle a alors droit;

[4]  The motion judge applied the “modern approach” to statutory interpretation endorsed by the Supreme Court in Rizzo & Rizzo Shoes Ltd. (Re), [1998] 1 S.C.R. 27 at para. 21, 1998 CanLII 837 (SCC), 1998 CanLII 837. He read the words used in subparagraph 31(1)(a)(i) – “at any time after” – in their statutory context and in light of the object and purpose of expropriation legislation.

[5]  Applying this approach, he found the words to be clear and unambiguous. He noted the Supreme Court’s holding in Toronto Area Transit Operating Authority v. Dell Holdings Ltd., [1997] 1 S.C.R. 32 at 46, 1997 CanLII 400 (SCC), 1997 CanLII 400, that expropriation legislation (there the Ontario statute) “should be read in a broad and purposive manner in order to comply with the aim of the Act to fully compensate a land owner whose property has been taken,” and observed that if accepted, the Crown’s position could deprive a land owner of compensation. He interpreted the provision as expressly stating that no limitation period applies, so that subsection 39(1) of the Federal Courts Act does not incorporate Ontario limitations legislation by reference. He also took into account the decision of the Alberta Court of Appeal in Calgary (City) v. Lafarge Canada Inc.1995 ABCA 313 (CanLII) at para. 15, 169 A.R. 363, in which the Court gave the same meaning to the phrase “at any time” as it appeared in Alberta expropriation legislation. He therefore determined that the action was not statute-barred.

[6]  In addition, the motion judge considered whether there is a discrepancy between the English text of subparagraph 31(1)(a)(i), which uses the phrase “at any time after,” and the French text, which uses “après.” Relying on dictionary definitions, he concluded that there is no discrepancy: both texts convey the meaning of “whatever time.” He therefore found it unnecessary to apply the rules, set out in R. v. Daoust2004 SCC 6 (CanLII) at paras. 26-31, [2004] 1 S.C.R. 217, that govern the interpretation of bilingual legislation where the two versions are discordant.

[7]  The Crown now appeals to this Court, submitting that the motion judge erred in interpreting subparagraph 31(1)(a)(i) as providing that there is no limitation period, and in failing to interpret it as merely establishing the point after which an action for compensation may be commenced, subject to the limitation period incorporated by subsection 39(1) of the Federal Courts Act. The issue of statutory interpretation raised by the appeal is an issue of law, subject to the correctness standard of appellate review.

[8]  In my view the conclusion of the motion judge was correct, substantially for the reasons that he gave. I will briefly address only one element of his reasons, as well as one aspect of the Crown’s submissions in this Court that represents a change in position from that argued before the motion judge.

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).