Ontario: prejudice from an expired limitation period, and special circumstances

Estate of John Edward Graham v. Southlake Regional Health Centre is a medmal decision noteworthy for its consideration of prejudice arising from the expiry of a limitation period, and a rare application of the special circumstances doctrine to the Trustee Act limitation period.

The parties agreed that the two-year limitation period in s. 38(3) of the Trustee Act applied to the proceeding and had expired.  The plaintiffs relied on special circumstances to overcome its expiry.  The defendant argued that the plaintiffs had failed to rebut the presumption of prejudice arising from the expiry of a limitation period, and that there were no special circumstances.

The court found that the plaintiff had rebutted the presumption of prejudice.  The consideration that informed this finding are worth noting:

[59]           As the Court of Appeal in Mazzuca summarized:

Both the related jurisprudence and the rules themselves thus underscore a simple, common-sense proposition:  that a party to litigation is not to be taken by surprise or prejudiced in non-compensable ways by late, material amendments after the expiry of a limitation period.  If such surprise or actual prejudice is demonstrated on the record, an amendment generally will be denied.[10]

[60]           The Court of Appeal has repeatedly confirmed that the loss of a limitation defence gives rise to a presumption of prejudice.[11]

[61]           In our case, Dr. Law had no notice of the litigation prior to the expiration of the litigation period.  I find an inference of prejudice to him is warranted.

[62]           I accept Dr. Law had no knowledge of this action or that any issue had been raised concerning the case until February 15, 2017 when he was contacted by Scott Graham – approximately six years after the expiration of the limitation period (February 9, 2011).

[63]           Dr. Law submits that prejudice does arise from such a long delay and an inference of prejudice is warranted.  It is submitted the plaintiffs’ motion must fail on the basis of the plaintiffs’ failure to rebut the presumption of prejudice.

[64]           I disagree.  Notwithstanding the long passage of time and the inference raised in favour of Dr. Law, I find the plaintiffs have rebutted the presumption of prejudice.  I do not agree that the presumption of prejudice is unassailable solely due to the passage of time.  There are other factors to be weighed.  Dr. Law has not offered any evidence to show any non-compensable prejudice if the amendment is granted.  Rather, the evidentiary record on this motion establishes the following:

  •     Medical records from Southlake, including x-ray imaging are preserved by Southlake and remain in each of the parties’ legal files;
  •     Counsel for the proposed defendant, Dr. Law, has collaborated with counsel for the defendant, Dr. Gannage, in accessing pleadings and documents;
  •     The claim against Dr. Gannage (ER physician), for negligently reading the x-ray is the same as the claim against the proposed defendant radiologist, Dr. Law;
  •     This case does not have a complicated or highly contentious factual matrix.  The critical issue is whether the proposed defendant, Dr. Law, negligently missed a retained medical sponge when reviewing the x-ray.  No new cause of action or relief is being raised;
  •     The same medical evidence to be relied on by the plaintiffs to prove their claims remains in the possession of the defendants to defend the action.  The defendants are compellable witnesses to attend for trial;
  •     All defendants continue to practice health care in Ontario;
  •     The action against Dr. Law is tenable in law;
  •     Dr. Law is a proper defendant to be added, since there are multiple expert reports indicating he was responsible for negligently misreading the x-rays and not seeing the radiopaque surgical sponge;
  •     No trial date has been set;
  •     All defendants will have sufficient time to prepare their defences;
  •     Dr. Law will have the benefit of the work and investigation done by his co-defendants; and,
  •     There are no steps in the prosecution or defence of this action that will be thwarted through lack of evidence or information.

[65]           For these reasons, I find the plaintiffs have met their onus and have rebutted the presumption of prejudice.

The court also found special circumstances:

[66]           Dr. Law submits that the plaintiffs have not established special circumstances.  I disagree.  Where the presumption of prejudice has been rebutted, as in this case, the plaintiffs still bear the onus to demonstrate that there are special circumstances which justify the addition of Dr. Law as a party defendant.

[67]           Dr. Law submits that no special circumstances exist in this case to justify this court exercising its power to set aside the functioning of an applicable limitation period.

[68]           The special circumstances doctrine was considered in Wisniewski v. Wismer and Wohlgemut, a decision of Edwards J. for oral reasons given on February 1, 2018.

[69]           In Wisniewski, as in our case, the plaintiffs sought to add the proposed defendants (radiologists) after the expiration of the limitation period set out in s. 38(3) of the Trustee Act.  The parties agreed that the discoverability principle did not apply to this limitation period, as they did in our case.  Further, the parties agreed that the limitation period had expired.

[70]           As in our case, the plaintiffs submitted that the proposed defendants be added and pleadings be amended, all after the expiration of the limitation period on the basis of the Doctrine of Special Circumstances.

[71]           Dr. Law submits there are no special circumstances here to warrant the exercise of the court’s discretion.

[72]           In Wisniewski, Edwards J. was not satisfied that the plaintiffs had rebutted the presumption of prejudice.  Further, he also found there was no evidence to suggest the plaintiffs and their counsel were precluded from commencing a claim against the proposed defendants within the applicable limitation period due to a lack of information.

[73]           The key finding in Wisniewski was that almost five months prior to the expiry of the limitation period, the plaintiffs were in possession of x-ray reports and that plaintiffs’ counsel had the necessary information to conclude the proposed defendants should be added as defendants.  Edwards J. found there were no special circumstances that would justify the exercise of the extraordinary remedy to add a party after the expiry of the limitation period and he dismissed the motion to add the proposed defendants to amend the statement of claim.

[74]           I am of the view that Wisniewski is distinguishable from our case.  In Wisniewski, the plaintiffs knew the deceased had been radiographed before the limitation period expired.  In our case, the radiographs were provided to the plaintiffs, not at the outset, but approximately six and a half years later.

[75]           The plaintiffs in our case were precluded from commencing an action against Dr. Law, since they never knew any radiograph existed or that Dr. Law interpreted such a radiograph.

[76]           I find there was no knowledge Dr. Law took a radiograph or radiographs of Mr. Graham and interpreted those images until the plaintiffs were advised by counsel for Southlake, provided to Scott Graham with the CD under cover of the letter dated February 23, 2015, which Scott Graham reviewed on April 12, 2015.  This critical disclosure occurred over four years after the expiration of the limitation period being two years after the date of Mr. Graham’s death on February 8, 2009.

[77]           This disclosure by Southlake came “out of the blue”.  No explanation was provided to this court by anyone, especially by the defendants for such late production.  This disclosure was critical as it enabled Scott Graham to see the radiograph for the first time and connect what he viewed with what he was subsequently told about the Clinical Consultation Report during his conversation with Southlake’s counsel on July 20, 2015.  All of this concerned the possible involvement of Dr. Law.

[78]           Contrary to the findings in Wisniewski, in our case it cannot be said that the plaintiffs had been “handicapped” by their own “inaction”.  In our case, the plaintiffs not only requisitioned a care conference to identify the parties responsible for the critical choking incident, but also they quickly sought to obtain and assess all relevant medical records through submitting a timely records request at the outset and well within the limitation period.

[79]           In our case, the CD and program to access the CD, and disclosure of the x-ray or x-rays were inexplicably not produced until well after the limitation period had expired.  There is no question that the defendants failed to disclose at the care conference that radiographs of Mr. Graham were taken by Dr. Law and that Southlake, despite receiving a records request in 2008, failed to disclose the key x-ray until 2015.

[80]           While Dr. Law was unaware of this action until he was contacted by Scott Graham in February 2017, the chronology of events provides a satisfactory explanation as to what was done after February 2017, including some unnecessary and mistaken proceedings, the delivery of a draft amended statement of claim, the request for consent adding Dr. Law as a party defendant and the plaintiffs’ ultimately being compelled to bring this motion.

[81]           I find the plaintiffs have established special circumstances which are exceptional in nature.  The late, critical and unexplained disclosure by Southlake in 2015, well after the expiration of the limitation period provided the plaintiffs with the revelation of Dr. Law’s involvement in the treatment of Mr. Graham.  I find the facts establish that the plaintiffs were unaware of Dr. Law’s involvement until April and again in July 2015.

Ontario: The Court of Appeal reminds that limitations defences are affirmative

 

Two aspects of the Court of Appeal decision in Abrahamovitz v. Berens are noteworthy.

First, the court explains why the expiry of the limitation period is a defence that must be pleaded in enough detail to makes this a candidate for leading decision on the principle:

[30]      This court explained in Beardsley v. Ontario (2001), 2001 CanLII 8621 (ON CA)57 O.R. (3d) 1 (C.A.), at para. 21 that “the expiry of a limitation period does not render a cause of action a nullity; rather, it is a defence and must be pleaded”. See also:Strong v. Paquet Estate (2000), 2000 CanLII 16831 (ON CA)50 O.R. (3d) 70 (C.A.), at paras. 35-37Tran v. University of Western Ontario2016 ONCA 978 (CanLII)410 D.L.R. (4th) 527, at para. 18; and Salewski v. Lalonde2017 ONCA 515 (CanLII)137 O.R. (3d) 750, at para. 43.

[31]      There are two aspects to the statement from Beardsley. One is that from a procedural fairness point of view, a plaintiff is entitled to plead in response to a limitations defence, so that if a motion is brought to dismiss the claim, the court will have all the facts relied on to assess discoverability, or whatever other factors a plaintiff may wish to raise in response: Beardsley, at para. 22;Strong Estate, at para. 38Metropolitan Toronto Condominium Corp. No. 1352 v. Newport Beach Development Inc.2012 ONCA 850 (CanLII)113 O.R. (3d) 673, at paras. 115-116; and Greatrek Trust S.A./Inc. v. Aurelian Resources Inc.[2009] O.J. No. 611 (Ont. S.C.J.), at para. 18.

[32]      The requirement that an affirmative defence, including a limitations defense, be pleaded to avoid surprise to the opposite party is reflected in r. 25.07(4) of the Rules of Civil Procedure, which provides:

In a defence, a party shall plead any matter on which the party intends to rely to defeat the claim of the opposite party and which, if not specifically pleaded, might take the opposite party by surprise or raise an issue that has not been raised in the opposite party’s pleading.

[33]      The second aspect of the statement from Beardsley, however, is more germane to this case. A limitations defence is “just that, a defence”: Lacroix (Litigation Guardian of) v. Dominique2001 MBCA 122 (CanLII)202 D.L.R. (4th) 121, at para. 18. A defendant chooses whether or not to rely on a limitations defence, but is not obliged to do so: Graeme Mew, Debra Rolph, & Daniel Zacks, The Law of Limitations, 3rd ed. (Toronto: LexisNexis Canada Inc., 2016) p.166. See e.g.: Strong Estate, at paras. 35-40; and Girsberger v. Kresz (2000), 2000 CanLII 22406 (ON SC)50 O.R. (3d) 157 (C.A.), at para. 13.

[34]      The fact that the choice belongs to the defendant is codified in s. 22 of the Limitations Act, 2002, which allows a limitation period to be suspended or extended by agreement.

[35]      This is a very important and useful provision that allows parties to a potential claim to suspend the running of a limitation (toll the limitation period) to allow them to conduct investigations or settlement discussions, without pressure on the claimant to commence the action unnecessarily. It promotes judicial economy and is cost-effective for the parties.

[36]      Obviously, this provision would be ineffective if another party could assert the limitation period in spite of the defendant’s agreement to toll the limitation period, or if the action became a nullity on the expiry of the limitation period. See for example, Schreiber v. Lavoie (2002), 2002 CanLII 49430 (ON SC)59 O.R. (3d) 130 (S.C.J.), where a third party was not entitled to rely on r. 29.05(1) (a rule which allows a third party to plead a defence not raised by the defendant) to assert a limitations defense that the defendant had expressly agreed it would not rely on.

Second, there is a reminder that special circumstances doctrine is of no application:

[24]      I would not accept this argument for two reasons. First, the Estate has not commenced any proceeding or claimed any relief. The essence of this argument amounts to invocation of the old common law doctrine of special circumstances that no longer applies under the Limitations Act, 2002. See: Joseph v. Paramount Canada’s Wonderland2008 ONCA 469 (CanLII)90 O.R. (3d) 401. The Estate is essentially saying that because all of the facts have already been pleaded in the action, there is no surprise and no prejudice to the defendants (or other parties) to allow the Estate to be added as a party now, even though the limitation period has expired.

Ontario: Remember, the Trustee Act doesn’t supersede the Limitations Act

The Plaintiffs in Kakinoki et al. v. Islam et alsought leave to add a defendant notwithstanding the expiry of the presumptive limitation period.  They submitted that the limitation period in section 38(3) of the Trustee Act excludes the application of the section 4 general limitation period in the Limitations Act.  However, it’s settled law that the Trustee Act doesn’t  supersede the Limitations Act.  That the doctrine of special circumstances applies to the Trustee Act but not the Limitation Act is of no consequence.

Justice Dunphy helpfully summarised the interaction between the Limitations Act and the Trustee Act:

[25]           The relief sought by the plaintiffs, ostensibly grounded in s. 38 of the Trustee Act, would produce an outcome diametrically opposite to one that a straightforward reading of s. 38 would lead one to suppose.  Section 38(1) of the Trustee Act modifies the rule of the common law which had the sometimes harsh effect of making a defendant better off should an injured person succumb to his or her injuries.  As a result of s. 38, their claim can be taken up by the executor or trustee “in the same manner and with the same rights and remedies as the deceased would, if living, have been entitled to do”.  I have already found that Mr. Kur, who survived the accident, lost the right to pursue the Township of King by reason of s. 4 of the Limitations Act.  It would be anomalous indeed if s. 38 of the Trustee Act, while purporting only to vest in the executor the same rights as the deceased Mr. Kakinoki would have had if he had survived the tragedy, instead potentially vested higher rights in his estate and those claiming thought it.  Such a reading would turn s. 38 on its ear and is not one which the plain wording of s. 38 compels.  It does not purport to exclude the operation of other limitation periods, but imposes another limitation period which may well prove shorter in some cases.

 

[26]           In the case of Camarata, supra, the Court of Appeal found (at para. 8):

 

“Section 38(3) of the Trustee Act does not have the effect of tolling a limitation period that excludes the limitation period made applicable to the action by ss. 4 and 5 of the Limitations Act.  Section 38(3) creates a second limitation period that operates in addition to any limitation period that would have applied had the deceased been able to carry on with the action.  In some circumstances s. 38(3) will effectively shorten what would otherwise be the applicable limitation period….Section 38(3) cannot extend the limitation period what would have been applicable had the deceased not died and been able to carry on with his action” (emphasis added).

 

[27]           Camarata has found that both limitation periods must be applied and that the Trustee Act does not supercede the Limitations Act.  This is consistent not only with precedent but with the plain words of the statute and common sense.  Thus, even if I were to be moved to exercise discretion to soften the application of the Trustee Act, I can do nothing to mitigate the application of the Limitations Act.

 

[28]           Section 20 and 21 of the Limitations Act also demand this same conclusion and preclude me from granting the requested amendment adding the Township of King to the Kakinoki action:

 

“20. This Act does not affect the extension, suspension or other variation of a limitation period or other time limit by or under another Act.

 

  1. (1) If a limitation period in respect of a claim against a person has expired, the claim shall not be pursued by adding the person as a party to any existing proceeding.”

 

[29]           Section 38(3) of the Trustee Act and Section 4 of the Limitations Act both provide for a two year limitation period which, given the death of Mr. Kakinoki on the day of the accident, happen to coincide with each other precisely (subject to extensions of the latter limitation due to possible discoverability issues which do not apply to Trustee Act claims).  The Trustee Act by its terms does not purport to extend, vary or suspend the Limitations Act.  To the contrary, they both apply a two year period.   The doctrine of special circumstances allowing what is, in effect, a nunc pro tunc amendment to pleadings to avoid the application of the Trustee Act can hardly be characterized as an extension, variation or suspension under another Act as referred to in s. 20 of the Limitations Act and, accordingly, s. 21 thereof precludes me from adding the Township of King to this existing proceeding as requested in this motion.

 

[30]           Accordingly, on the basis of Camarata, supra, and s. 21 of the Limitations Act, I must dismiss the plaintiffs’ motion to add Township of King as a defendant at this stage in the proceedings given the passage of the limitation period under s. 4 of the Limitations Act.