Ontario Act s. 5

Ontario: Court of Appeal on the factual nature of discovery

The Court of Appeal decision in Albert Bloom Limited v. London Transit Commission contains a great statement on the factual nature of the s. 5(1)(a) analysis.  When a claimant knows the s. 5(1)(a) discovery matters is fact-specific and there’s little value in comparing the unique facts of one case to another:

 

[31]      To be clear, the determination of when a claimant obtains actual knowledge of a claim is case-specific. Little is to be gained from comparing the unique circumstances of one case to another. There is no bright-line test that establishes when a party has actual knowledge of a claim. Instead, the totality of factual circumstances will dictate how and when a claimant obtains actual knowledge. In the present case, the motion judge undertook a detailed analysis of the factual circumstances. The evidence she relied on was uncontested, and I do not understand LTC to be arguing that the motion judge committed any palpable and overriding errors of fact.

The decision also shows the consequences of admitting facts material to the discovery analysis in a pleading. The plaintiff argued that such an admission was ignorable “boilerplate”, but filed no evidence to support this argument (also note that the Court found that an affidavit’s double hearsay was inadmissible):

 

[32]      There is another unique circumstance in this case that supports the motion judge’s finding regarding actual knowledge. It is the plea in the statement of defence and crossclaim that the contamination was caused by a previous owner of the LTC property. That fact clearly distinguishes this case from Crombie, where there was no such plea.

[33]      On the motion and this appeal, LTC attempts to explain away that pleading: it was just a “standard pleading” and did not reflect its actual state of knowledge at the time of the filing of the statement of defence and crossclaim. However, the evidence that counsel had informed the affiant in the affidavit filed by LTC that this was a standard pleading was double hearsay. Contrary to what the affiant stated in her affidavit, on cross-examination, she testified that she had never been provided with this information by LTC’s counsel. In fact, she had received the information from her predecessor at LTC, who apparently was told the information by legal counsel. This evidence was therefore inadmissible on the motion.

[34]      LTC asserts, “[t]here was absolutely no evidence on the record before the Motions Judge to suggest that this pleading was other than a boilerplate pleading commonly set out in environmental defences without any factual knowledge attributable to LTC” : Factum, para. 27.  This submission reflects a fundamental misunderstanding of the onus on the motion. LTC’s onus was not met by asserting that there was no evidence that this was not a boilerplate pleading. LTC had an obligation to adduce compelling and admissible evidence that it was boilerplate and thus could be ignored. It failed to adduce that evidence.

Ontario: Court of Appeal on the limitation of aniticatory breach actions

In Fram Elgin Mills 90 Inc. V Romandale Farms Limited, the Court of Appeal summarised the limitation of anticipatory breach actions:

[258]   An anticipatory breach of contract occurs when one party to a contract, by express language or conduct, or as a matter of implication from what it has said or done, repudiates its contractual obligations before they fall due: Ali v. O-Two Medical Technologies Inc., 2013 ONCA 733, 118 O.R. (3d) 321, at para. 22, citing G.H.L. Fridman, The Law of Contract in Canada, 6th ed. (Toronto: Carswell, 2011), at p. 585.

[259]   An anticipatory breach does not, in itself, terminate the contract. Once the offending party shows its intention not to be bound by the contract, the innocent party has a choice. The innocent party may accept the breach and elect to sue immediately for damages, in which case the innocent party must “clearly and unequivocally” accept the repudiation to terminate the contract. Alternatively, the innocent party may choose to treat the contract as subsisting, continue to press for performance, and bring the action only when the promised performance fails to materialize. However, by choosing the latter option, the innocent party is bound to accept performance if the repudiating party decides to carry out its obligations: Ali, at para. 24.

[260]   Section 4 of the Limitations Act provides that “a proceeding shall not be commenced in respect of a claim after the second anniversary of the day on which the claim was discovered.” Section 5(1)(a) sets out the factors for determining when a party discovers a claim. However, where the innocent party does not accept the repudiation of the contract, the limitation period does not begin to run until the breach actually occurs: Ali, at paras. 26-27.

Ontario: the (non)impact of patience on discovery

The Superior Court decision in Zenner v. Hermanns reminds us that patience will not delay discovery of a claim:

[40]         Zenner’s explanation that he was a “patient” person is not an adequate, or appropriate, response. Patience may well be a virtue, but patience does not override limitation laws and cannot be used as an excuse for not taking steps to pursue one’s rights. As stated in Longo v. MacLaren Art Centre, 2014 ONCA 526 at para. 42:

A plaintiff is required to act with due diligence in determining if he has a claim. A limitation period will not be tolled while a plaintiff sits idle and takes no steps to investigate the matters referred to in s. 5(1)(a). While some action must be taken, the nature and extent of the required action will depend on all of the circumstances of the case, as this court noted in Soper v. Southcott (1998), 1998 CanLII 5359 (ON CA), 111 O.A.C. 339, at p. 345 (C.A.):

Limitation periods are not enacted to be ignored. The plaintiff is required to act with due diligence in acquiring facts in order to be fully apprised of the material facts upon which a negligence or malpractice claim can be based….

Ontario: Court of Appeal on the factual nature of an appropriateness analysis

In Fercan Developments Inc. v. Canada (Attorney General), the Court of Appeal emphasizes the factual nature of the s. 5(1)(a)(iv) analysis.  The decision is also an example of an appeal in related proceedings impacting on appropriateness.

The AGC brought an unsuccessful criminal forfeiture application against the plaintiffs.  Then the AGO commenced unsuccessful forfeiture proceedings under the Civil Remedies Act. Leave to appeal was refused and an appeal from a costs award failed. The plaintiffs sued the AGC and the AGO alleging malicious prosecution, negligent investigation, misfeasance in public office, and civil conspiracy.  The defendants moved for summary judgment on their limitations defence.  The motion judge found the proceeding didn’t become an appropriate remedy for the loss until at least the civil forfeiture proceedings had concluded.  This meant discovery occurred within two years of the plaintiffs commencing the action.

The defendants appealed.  They argued that motion judge’s decision “significantly expands the application” of s. 5(1)(a)(iv) beyond the two circumstances the court has recognized might impact on the appropriates of a proceeding as a remedy:

[15]      The appellants argue that the motion judge’s decision significantly expands the application of the “appropriate means” element of the discoverability test under s. 5(1)(a)(iv) beyond any previous jurisprudence from this court, and that it injects uncertainty into the law of limitations. They contend that the motion judge relied on irrelevant factors, and that she ought to have restricted her analysis to a consideration of whether the respondents were pursuing an alternative means of remedying their alleged losses, such that it was not yet appropriate for them to commence an action in respect of those losses.

The Court of Appeal rejected this argument and dismissed the appeal.  When a proceeding becomes appropriate is a question of fact, and there aren’t only two factual circumstances the impact on appropriateness:

[16]      We disagree. Contrary to the submissions of the appellants, the motion judge properly recognized that there were not simply two categories of cases in which it might not be legally appropriate to start a proceeding despite the claim having been discovered, within the meaning of s. 5(1)(a)(i)-(iii): Nasr, at para. 51. The motion judge did not err when she considered all of the relevant circumstances and not simply whether the forfeiture proceedings provided an alternative means for the respondents to remedy their alleged losses. She was required to consider the “nature of the injury, loss or damage” under s. 5(1)(a)(iv), as well as, under s. 5(1)(b), using a “modified objective” test, what a reasonable person with the abilities and in the circumstances of the respondents ought to have known: Presidential, at para. 18; Service Mold + Aerospace Inc. v. Khalaf, 2019 ONCA 369, 146 O.R. (3d) 135, at para. 32. While previous cases can assist in identifying certain general principles, whether a proceeding would have been an appropriate means to seek to remedy a claimant’s damage, injury or loss will turn on the facts of each case and the abilities and circumstances of the particular claimant: Presidential, at para. 19; ETR Concession Company, at para. 34.

The Court cautioned against conflating the considerations in s. 5(1)(a)(i)-(iii) with those in s. 5(1)(a)(iv).  Despite the plaintiffs’ knowledge of the first three discovery matters, it would have been premature for them to commence the action while responding to the state’s civil forfeiture proceedings.  If the forfeiture proceedings had been successful, the defendants would have had a strong to defence to the plaintiffs’ action.  Further, the costs decision implicated the defendants’ conduct, and the appeal from it challenged findings of the defendants’ misconduct:

[19]      In concluding that the time for commencement of an action against the AGC began to run “at the earliest” on June 26, 2014, the motion judge relied on the civil forfeiture proceedings that were commenced and pursued by the appellants against the respondents. She observed that the appellants, in undertaking such proceedings, were pursuing a process that, if successful, could have left the respondents with little to no loss to claim. We agree with the motion judge’s observation that it is important not to conflate the considerations under the first three elements of the discoverability test with the appropriate means element set out in s. 5(1)(a)(iv). The question is not, as the appellants suggest, whether an action could have been brought by the respondents, but when it was appropriate to do so. While knowledge of the extent of a plaintiff’s damages is not required under (i) to (iii), the motion judge was entitled to take into consideration the ongoing forfeiture proceedings that the parties were engaged in, when determining under s. 5(1)(a)(iv) whether it was appropriate for the respondents to bring an action. She concluded that, in the particular circumstances, it would have been premature to require the respondents to launch a lawsuit, as they were embroiled in the civil forfeiture application, a related matter brought against them “by the state with all of its resources”, which could have rendered their lawsuit non-viable and unworthy of pursuing.

[20]      We see no error in the motion judge’s determination that it was premature for the respondents to commence their action until after the civil forfeiture proceedings were completed on June 26, 2014. She came to this conclusion after considering all of the relevant circumstances. The facts were unusual. Despite the fact that the AGC was unsuccessful in obtaining an order for criminal forfeiture and was subject to an order for costs that was critical of its conduct, the provincial authorities commenced civil forfeiture proceedings with the same objective – to seize the proceeds of sale of the respondents’ properties. DC Hayhurst was involved in both sets of proceedings. If the civil forfeiture proceedings had been successful, no doubt all of the appellants would have had a strong defence to any action that was commenced by the respondents. The conclusion, on this record, that it was premature for the respondents to pursue a civil action while they were continuing to oppose the forfeiture proceedings, reveals no error.

[23]      The motion judge recognized that West J.’s costs decision “directly and explicitly addressed the conduct of the federal Crown”, and that he had determined that the Crown’s conduct “exhibited a marked and substantial departure from the reasonable standards expected of the Crown”. Nevertheless, she observed that costs against the Crown in such proceedings are a “rare and extraordinary remedy”, that the AGC’s appeal specifically sought to attack the findings of Crown misconduct, that there was precedent for this court taking a very different view, and accordingly, that there was a clear risk that West J.’s findings of misconduct might be rejected on appeal, which would have seriously undermined any action brought by the respondents. The fact that there was another ongoing proceeding – the appeal of West J.’s costs decision – that could have impacted the viability of the respondents’ action was relevant to the application of s. 5(1)(a)(iv) in the circumstances of this case.

 [25]      We see no palpable and overriding error in the motion judge’s conclusion that the time began to run under s. 5(1)(a)(iv) in respect of the claims against all appellants on April 14, 2016, when this court released its decision dismissing the appeal from West J.’s costs order. Again, the circumstances were highly unusual. The same parties were already involved in litigation commenced and pursued by the appellants, in which the appellants’ alleged misconduct had taken centre stage. In pursuing the appeal, the AGC did not accept and sought to overturn the findings of West J., ensuring that whether or not there was prosecutorial misconduct remained a live issue until it was determined by this court. As the motion judge reasonably observed, there was a clear risk of a successful appeal, which would have impacted the viability of an action based on the same allegations of prosecutorial misconduct.

[27]      After assessing the claims against all parties, it was open to the motion judge to conclude, as she did, that a successful appeal of the costs decision would have undermined the claims against all of the appellants, including the OPP Defendants. This was not, as the appellants contend, a tactical decision on the part of the respondents, as in Markel, or simply a question of a plaintiff waiting until the end of other proceedings that might improve their chances of success in a civil action, as in Sosnowski v. MacEwen Petroleum Inc., 2019 ONCA 1005, 441 D.L.R. (4th) 393. Rather, as in Winmill v. Woodstock (Police Services Board), 2017 ONCA 962, 138 O.R. (3d) 641, at para. 31, leave to appeal refused, [2018] S.C.C.A. No. 39, the result of the proceedings in which the parties were already involved, including the determination by this court of the prosecutorial misconduct allegations, would have been a “crucial, bordering on determinative factor” in whether the respondents had a civil claim to pursue.

Ontario: s. 5(1)(a)(iv) and the limitation of false arrest and imprisonment claims

Vu v. Attorney General of Canada considers the limitation of a claim arising from false arrest and imprisonment, and in particular the impact of s. 5(1)(a)(iv) of the Limitations Act on the analysis:

[30]           Not surprisingly, the defendant takes the position that the limitation period commenced when Vu was detained, on June 27, 2013.  At that time, they say, he must have known that his arrest and detention were wrongful.  Alternatively, the defendant argues that Vu would certainly have known it was wrongful by July 9, 2013, following the second detention hearing when the ID accepted the evidence contained in McNamara’s Statutory Declaration.

[31]           The plaintiff, on the other hand, asserts that the limitation period runs from the date of his release from detention in Vietnam, on October 8, 2014.  The plaintiff argues that he could not have initiated his claim for false imprisonment when first arrested and the act of wrongful detention was still ongoing. Plaintiff’s counsel analogized this to suing for battery while the knife is still in your arm. Further, the plaintiff claims that the CBSA represented to him many times that his release from immigration detention was “imminent,” yet he remained detained for a total of 15 months, without knowing or being able to know for how long he would remain in custody.

[32]           The defendant relies upon Kolosov v. Lowe’s Companies Inc., 2016 ONCA 973, O.J. No. 6702 (“Kolosov”), in which the Court of Appeal seems to accept that the limitation period commences on the first date of detention, stating at para. 11:

The law in relation to the commencement of the limitation period for the intentional torts of false arrest and imprisonment … is well-settled. As Chiapetta J. noted in Fournier-McGarry (Litigation Guardian of) v. Ontario, 2013 ONSC 2581 at para. 16,

 A claim for the common law torts of false arrest, false imprisonment and breach of Charter rights arising therefrom crystallizes on the date of arrest (see Nicely v. Waterloo Regional Police Force,  1991 CanLII 7338 (ON SC), [1991] O.J. No. 460 (Ont. Div. Ct.), at para. 14).

 [33]           The plaintiff, on the other hand, cites a conflicting Court of Appeal decision, Mackenzie v. Martin, 1952 CanLII 85 (ON CA), [1952] O.R. 849 (Ont. C.A.), at paras. 6-8, aff’d 1954 CanLII 10 (SCC), [1954] S.C.R. 361 (S.C.C.), which refers to case law dating back to the 18th century, and states that the limitation period for a false imprisonment claim commences upon the date of release. To my knowledge, while the case is dated, Mackenzie v. Martin has never been overturned.

[34]           The conflict is not easily resolved by the jurisprudence.  In Fournier-McGarry (Litigation Guardian of) v. Ontario, at para. 16, Chiapetta J. relied on Nicely v. Waterloo Regional Police Force (“Nicely”) in making her statement that the Court of Appeal subsequently adopted in Kolosov. However, while the Divisional Court held in Nicely, at para. 15, that the test “is as of the date of arrest and imprisonment,” it was discussing the question of liability and the grounds for arrest when the arrest took place, not the limitation period. This point was not addressed by Chiapetta J. in Fournier-McGarry, or by the Court of Appeal in Kolosov, both of which simply accept the statement as dealing with limitation periods. Elsewhere, the Divisional Court in Nicely suggested, at paras. 8-9, that the time period begins to run when the tort is “complete,” or upon release. In Nicely, however, the arrest, detention and release all occurred on the same day, as was also the case in Fournier-McGarry.

[35]           Ferri v. Root, 2007 ONCA 79, O.J. No. 397, leave to appeal refused, [2007] S.C.C.A. No. 175 (“Ferri”), is another, more recent, case in which the plaintiff was arrested and released on the same day. There, the Court of Appeal, at para. 102, reiterated the finding in Nicely that “the test for these torts is at the date of arrest and imprisonment,” but addressed the limitation period in the same context that it arose in Nicely, which was under s. 7 of the Public Authorities Protection Act, R.S.O. 1990, c. P.38. (“PAPA”). That Act required that an action be “commenced within six months next after the cause of action arose or in case of continuance of injury or damages within six months after the ceasing thereof” (emphasis added). Accordingly, the Court in Ferri, at para. 103, concluded that the injury of false imprisonment ceased when the plaintiff was released.

[36]           There is also the concern that a false arrest and an unlawful imprisonment may not occur at the same time. One may be lawfully arrested but unlawfully detained, or a detention that is lawful at the outset may become unlawful at a subsequent point in time. For example, a lawful immigration detention can become unlawful due to its conditions, its length, procedural fairness, or if it is “no longer reasonably necessary to further the machinery of immigration control:” Chaudhary v. Canada (Minister of Public Safety & Emergency Preparedness), 2015 ONCA 700, 127 O.R. (3d) 401, at paras. 81, 86; Re Charkaoui, 2007 SCC 9, [2007] 1 S.C.R. 350, at para. 123; Scotland v. Canada (Attorney General), 2017 ONSC 4850, 139 O.R. (3d) 191.

[37]           The plaintiff submits that the approach in Mackenzie v. Martin is also consistent with the law in the United States, where time runs from the date of release, not the date of detention: Milliken v. City of South Pasadena, 158 Cal. Rptr. 409, 412 (Cal. Ct. App. 1979); Donaldson v. O’Connor, 493 F.2d 507, 529 (5th Cir. 1974).

[38]           While I have concerns with the broad application of Kolosov urged on me by the defendant, I do not need to resolve the conflict in the cases in this matter. This case does not arise under the PAPA, which would cause me to consider a continuing injury. Rather, since section 5(1)(a) of the Limitations Act establishes a four-part test, I regard Kolosov as simply setting up a presumption (which was not rebutted in that case) that the cause of action arose on the date of arrest and detention or, at latest, the date of the second detention hearing, but it does not address all four parts of the test. This means I must still consider when the plaintiff had sufficient facts on which to base an allegation of wrongful arrest and detention, and whether, “[h]aving regard to the nature of the loss or damage, a proceeding would have been an appropriate means to seek to remedy it.”

[46]           In this case, however, the plaintiff did not delay the bringing of his claim for reasons of strategy. Rather, in the absence of the memorandum disclosing that McNamara’s Statutory Declaration was incorrect, he simply had no claim to bring. At the ID hearing on July 9, 2013, Vu tried to persuade the tribunal that he was in compliance with his terms of release and that the CBSA was mistaken, but the tribunal preferred McNamara’s more detailed evidence and made a finding of fact against the plaintiff. The plaintiff was without any evidence to rebut that finding until the disclosure on June 10, 2015. At no point during the hearing on July 9, 2013, or at any subsequent hearing, did McNamara reveal that she had relied on an interpreter; rather, the evidence in her Statutory Declaration (which itself was only disclosed in January 2014) was that the she and the witness had spoken to each other in English.

 [47]           Further, prior to receiving the memorandum in June 2015, Vu was pursuing other, more pressing and appropriate remedies, including detention reviews, the spousal sponsorship application, and attempts to address living arrangements for his infant daughter.  I find, as the Court of Appeal did in Presidential MSH Corporation v. Marr, Foster & Co. LLP, 2017 ONCA 325, 135 O.R. (3d) 321 (“Presidential MSH Corporation”), at para. 32, that “it would have been inappropriate to require the plaintiff to prematurely resort to court proceedings while the statutory alternative process was ongoing, which might make the proceedings unnecessary.” Moreover, a lawsuit would not have achieved Vu’s objective of being released.
 [48]           Had Vu known of the evidence that McNamara’s Statutory Declaration was incorrect when he was in custody, he undoubtedly would have raised that before the ID. Although he did not seek to review the ID’s detention order in the Federal Court, as his counsel explained Vu had good reasons not to do so: he accepted the CBSA’s representations that his removal was “imminent,” and perceived that making an application would have been a waste of time and money and might have delayed his deportation due to the CBSA’s need to defend the claim.  Further, as the Supreme Court of Canada observed recently in Canada (Public Safety and Emergency Preparedness) v. China, 2019 SCC 29, 433 D.L.R. (4th) 381, at paras. 61-67, judicial review of an Immigration Division decision is challenging.  The onus is squarely on the applicant to establish the decision is unreasonable, leave is required, and remedies are limited. Instead of releasing an applicant, Karakatsanis J. noted, at para. 65 that even a successful judicial review “will generally result in an order for redetermination, requiring further hearings to obtain release and thereby extending detention” (emphasis added).

[52]           In this case, however, rather than the contents of the disclosure having a negligible impact on the reasonable and probable grounds for Vu’s arrest and detention, the revelation that McNamara had used an interpreter while interviewing the witness was not merely a finding of helpful evidence – it was a finding that turned the evidence against Vu on its head, as it threw doubt on the veracity of the testimony that was used to justify the arrest and detention. This was evidence upon which the Tribunal clearly relied during the July 9, 2013 hearing and throughout Vu’s fifteen months in detention. As a result, I do not accept the defendant’s submission that the disclosure of the memorandum in June 2015 was simply something that strengthened an already “discovered” claim: see, e.g., Sosnowski, at paras. 19, 27-29. The plaintiff’s affidavit might have invited this argument where he stated that only after the June 13, 2016 disclosure he became “confident that my detention had been unlawful.” However, that date was in fact when the government actually settled the bond litigation, one year after the memorandum was released to him in June 2015. In any event, in my view this statement was simply recognition that he now had a basis for a civil action for damages, something that, it is to be remembered, is not to be embarked upon lightly. As the Supreme Court stated in Novak v. Bond,  1999 CanLII 685 (SCC), [1999] 1 S.C.R. 808 (S.C.C.), at para. 85:

Litigation is never a process to be embarked upon casually and sometimes a plaintiff’s individual circumstances and interests may mean that he or she cannot reasonably bring an action at the time it first materializes. This approach makes good policy sense. To force a plaintiff to sue without having regard to his or her own circumstances may be unfair to the plaintiff and may also disserve the defendant by forcing him or her to meet an action pressed into court prematurely.

[55]           Applying these principles, in my view, a lawsuit for damages over Vu’s arrest and detention was not an “appropriate means” to redress the wrong done to him when he was arrested and held in custody until he obtained the disclosure in June 2015 that the CBSA had misled the ID. This was many months after he had been removed from Canada. Prior to receiving that information, Vu appropriately pursued other avenues to address his detention and removal, relied on the good faith of the CBSA and the ID process, and did not have grounds for suing for damages. A lawsuit would have been premature, and therefore was not an appropriate means under s. 5(1)(a)(iv) until June 2015.

Ontario: s. 5(1) requires specific factual findings

Cooper v. Toronto (City) follows Morrison v. Barzo for the principle that the court must answer the questions asked by s. 5(1)(a) and (b) of the Limitations Act.  The court found that a Master’s failure to make these specific findings was a reversible error:

[17]           The first ground of appeal is that the Master erred by dismissing the Motion without making findings regarding: (1) the date on which the plaintiff first knew the requisite elements of her claim against Hydro; and (2) when “a reasonable person with the abilities and in the circumstances of [the plaintiff] first ought to have known of such claim.” Such findings are a requirement before any finding that claims against a proposed defendant are statute-barred: see Morrison v. Barzo at para. 30.

[18]           I agree that the Master erred in law in dismissing the Motion without making either of these findings.

[19]           In dismissing the Motion without making the necessary findings of fact set out above to ground her decision, the Master erred in law by failing to apply the test as set out in Morrison v. Barzo. Accordingly, the Order must be set aside.
The decision also provides a good example of why taking the position that a particular step could have resulted in earlier discovery is not determinative of when discovery ought to have occurred.  Evidence that the step would have resulted in earlier discovery is necessary:
[27]           I pause to address the question of who has the onus of demonstrating that Cooper’s cause of action was actually discovered, or was reasonably discoverable, more than two years prior to the commencement of the Motion. While it is not made express in Fennell and Morrison, in circumstances such as the present where a plaintiff demonstrates a reasonable basis for concluding that a cause of action was discovered within the applicable limitation period, as a practical matter, a proposed defendant who asserts a limitation defence must demonstrate that the plaintiff had actual knowledge, or reasonably ought to have had knowledge, on an earlier date outside the limitation period.
 [28]           If the basis of the defendant’s position in such circumstances is not that the evidence demonstrates actual knowledge at an earlier date but rather that the plaintiff failed to conduct a duly diligent investigation, Morrison v. Barzo says that the plaintiff has the onus of providing a reasonable explanation for his or her failure to conduct any further investigation. As I understand the applicable case law including Skrobacky v. Frymer, in such event, a court may grant the defendant’s motion only if it finds the plaintiff’s explanation to be unreasonable. If, however, such a determination requires a finding of a material fact or a determination regarding the plaintiff’s credibility, a motions judge should not determine the reasonableness of the explanation without a trial to determine such matters. In such circumstances, therefore, the motions judge cannot make a determination of whether the plaintiff should reasonably have discovered his or her claim outside the applicable limitation period – that is, satisfied the plaintiff’s obligation of due diligence that is implicit in s. 5(1)(b) of the Limitations Act, 2002 – and must therefore dismiss the defendant’s motion.
 [29]           In my opinion, the Court finds itself in that position in the present circumstances.
 [30]           Cooper’s explanation for her failure to investigate the ownership of the Pole is essentially that her communications with the two most obvious potential defendants – the condominium corporation and the City – did not prompt a suggestion that Hydro might be the owner of the Pole. She says, in effect, that she was entitled to rely on the communication from the condominium corporation’s insurer and her communications with the City that suggested that the City was the owner in the absence of any suggestion to the contrary from the City until December 2016. Accordingly, Cooper’s argument proceeds on the basis that she never received any information that gave rise to a need to inquire further regarding the ownership of the Pole.
 [31]           Cooper submits that this is a reasonable explanation, given the low threshold for a reasonable explanation in the case law. She relies on the decisions in Galota v. Festival Hall Developments Ltd. et al., 2015 ONSC 6177; upheld 2016 ONCA 585; Madrid v. Ivanhoe Cambridge Inc., et al., 2010 ONSC 2235 and Kesian v. The City of Toronto, 2016 ONSC 6461 as evidence of this low threshold and as exhibiting similar circumstances in which courts have concluded that the threshold had been satisfied.
 [32]           Hydro effectively argues that Cooper’s explanation is not reasonable in view of either or both of her receipt of the Article and the City’s denial of jurisdiction in its statement of defence. In my view, however, given the evidence before the Master and this Court, neither Cooper’s mere receipt of the Article, without evidence that she actually read it, nor the City’s denial of jurisdiction in its statement of defence were sufficient to fix her with knowledge that required a further investigation for the following reasons.
 [33]           The mere existence of the Article cannot be a basis for concluding that Cooper ought reasonably to have conducted a further investigation. This would require a finding, by inference or otherwise, that she read the Article such that she was aware, at a minimum, of the subject-matter of the Article even if she did not have knowledge of the specific facts set out therein. However, the Court’s conclusion above that a trial is required to determine whether Cooper read the Article precludes such a finding by this Court.
 [34]           Accordingly, Hydro’s second submission really turns on whether Cooper’s receipt of the City’s statement of defence was sufficient to require a further investigation. I accept that a specific denial of jurisdiction could, in some circumstances, have such a result.  However, in this case, the denial was only one of at least ten alternative defences asserted by the City in its statement of defence. In addition, the denial was not accompanied by the assertion of any specific facts supporting this defence nor did it identify Hydro as the owner of the Pole. It is not reasonable to assume that a plaintiff would identify a potential issue of ownership from a bald denial of jurisdiction in such circumstances.
 [35]           I also note that Hydro has identified a number of searches that it says would have revealed its ownership of the Pole if Cooper had conducted one or more of them. I do not doubt the utility of such searches. However, the issue is not whether such searches would have revealed Hydro’s ownership of the Pole but rather whether any searches were required, that is, put in the negative, whether Cooper’s failure to undertake any of these searches was unreasonable.
 [36]           In summary, the relevant evidence before the Court is limited to the following. The Pole was located on a City sidewalk. There is no evidence of any indication on the Pole that Hydro was the owner. There is also no evidence that Cooper ever read, or understood the contents of, the Article prior to May 15, 2017, which would have alerted her to Hydro’s ownership. Lastly, for a period of more than 44 months after Cooper put the City on notice of her claim, the City did not deny ownership of the Pole in any communication with Cooper or her counsel. In these circumstances, I conclude that the determination of whether Cooper has a reasonable explanation for her failure to investigate further the ownership of the Pole will require a trial of the issue regarding whether, and if so when, Cooper or her counsel read the Article.

 

Ontario: stop arguing common law discovery

The Divisional Court decision in Rooplal v. Fodor holds that the Limitations Act’s discovery provisions determine discoverability, not common law principles.  16 years after the Limitations Act came into force, this is a point that still needs making.

The motion judge had found the plaintiff’s proceeding timely, and the Divisional Court upheld her decision:

[4]               On the issue of discoverability, the parties relied on ostensibly conflicting lines of jurisprudence from the Court of Appeal for Ontario. On the one hand, were the cases decided before the Limitations Act had entered into force, finding that the limitation period begins to run when the material facts on which the claim is based have been discovered or ought to have been discovered by the plaintiff’s exercise of reasonable diligence (July v. Neal (1986), 1986 CanLII 149 (ON CA), 32 D.L.R. (4th) 463; Johnson v. Wunderlich (1986), 1986 CanLII 2618 (ON CA), 34 D.L.R. (4th) 120; Hier v. Allstate Insurance Co. of Canada (1988), 1988 CanLII 4741 (ON CA), 51 D.L.R. (4th) 1; and Chambo v. Musseau (1993), 1993 CanLII 8680 (ON CA), 15 O.R. (3d) 305. The other line of authority involves cases decided after the Limitations Act had entered into force, which, as explained in the Superior Court’s decision in Chahine v. Grybas, 2014 ONSC 4698, provided that the limitation period does not begin until the plaintiff makes an indemnification demand and the responding insurer fails to satisfy the claim (Markel Insurance Company of Canada v. ING Insurance Company of Canada, 2012 ONCA 218, 109 O.R. (3d) 652; and Schmitz v. Lombard General Insurance Company of Canada, 2014 ONCA 88, 118 O.R. (3d) 694, leave to appeal refused, [2014] S.C.C.A. No. 143). The defendants argued that the July line of cases sets out the proper discoverability analysis, while the plaintiff argued that the Markel line of cases sets out the proper analysis.

 [5]               The Motions judge ultimately determined that she was bound by the Markel line of authorities rather than the July line of cases because, while the latter is predicated on the common law principles of discoverability set out by the Supreme Court of Canada in Central Trust Co. v. Rafuse, 1986 CanLII 29 (SCC), [1986] 2 S.C.R. 147, the discoverability provisions in the Limitations Act govern the analysis in the present case rather than the common law principles before the Court of Appeal in the July line of cases.

 

Ontario: the principles of mva “threshold” claims

Dimech v. Osman contains a useful summary of the limitation of claims for non-pecuniary losses arising from a motor vehicle accident:

[14]      Under s. 4(1) of the Limitations Act, 2002 a person loses the right to sue for a claim two years after she “discovers” the claim. Under s. 5(2) of the Limitations Act, 2002 a plaintiff injured in a car accident will be presumed to have discovered her claim on the day of the accident unless she proves that she did not discover the claim that day and that a reasonable person with her abilities and in her circumstances would not have discovered the claim until a later time.

[15]      While one might normally think that being injured in a car accident automatically gives one a claim or the right to sue, that is not necessarily the case. Under s.267.5(5) of the Insurance Act, RSO 1990, c I.8 a person injured in a car accident in Ontario can only sue for non-pecuniary losses if the accident caused her to suffer “permanent serious impairment of an important physical, mental or psychological function.” This is commonly referred to as the “threshold”. If a plaintiff cannot prove that her injuries meet the threshold, her claim for non-pecuniary loss will be dismissed.

[16]      While a plaintiff can sue for pecuniary loss without meeting the threshold, case law provides that for the limitation period to commence in Ontario in relation to a motor vehicle accident lawsuit in which both pecuniary

and non-pecuniary damages are claimed, the plaintiff must have known or ought reasonably to have known that she could likely meet the threshold so as to have the right to sue. In Ioannidis v. Hawkings 1998 CanLII 14822 (ON SC), Justice Langdon held that for the two-year limitation period to start running, there must be,

…a sufficient body of evidence available to be placed before a judge that, in counsel’s opinion, has a reasonable chance of persuading a judge, on the balance of probabilities that the injury qualifies.

[17]      The question of when the limitation period commences is a question of fact. See: Farhat v Monteanu, 2015 ONSC 2119 (CanLII), at para. 33. It requires a finding of a date when a plaintiff or her lawyer knew or ought reasonably to have known that she had a reasonable chance to prove that she suffered permanent serious impairment of an important physical, mental or psychological function as a result of the car accident.

The decision also provides an example of the consequences of failing to adduce the evidence material to the limitation of these claims:

[18]      There is no evidence from Mr. Bekiaris as to whether he, as the plaintiff’s counsel, had formed an opinion during the 37-day pre-limitation period window that the plaintiff had a reasonable chance of persuading a judge that his injuries would meet the threshold. I offered Mr. Bekiaris an opportunity to consider refraining for acting as counsel on this motion both due to this evidentiary issue and in consideration of the fact that if the defendants succeed in having this action dismissed, Mr. Bekiaris could possibly face a claim for having missed the limitation period. He determined to proceed as counsel.

 [22]      With no evidence from counsel, and no evidence of any contemporaneous prognosis from a doctor, I am left to try to determine by inference whether the plaintiff or his counsel ought reasonably to have known that his injuries reasonably could have met the threshold during the 37-day pre-limitation period window.

 [26]      The defendants argue that with the burden lying on the plaintiff to prove that he could not reasonably have discovered his claim in the 37-day pre-limitation period window, it was incumbent upon him to adduce evidence to show that he or his counsel acted with diligence by asking a doctor for a prognosis. The defendants argue that the plaintiff has failed to prove that he asked any doctor whether his injuries were likely to permanently seriously impair an important function right up to the time that the claim was issued. As such, he cannot meet his burden to show that he acted with diligence as required to rebut the presumption in s. 5(2) of the Limitations Act, 2002.

 [29]      Like the plaintiff, the defendants have adduced no evidence to establish that a reasonable person, in the first 37 days after this type of accident, suffering injuries like those of the plaintiff, would likely know that he or she is likely to meet the threshold. There is no expert prognosis. There is no evidence about whether in the 37-day pre-limitation period window the plaintiff’s counsel ought to have concluded that he had a sufficient body of evidence to provide a reasonable chance of persuading a judge that the plaintiff’s injuries will meet the threshold.

 [31]      In my view, the defendants have not met their evidentiary burden to allow me to fairly and justly adjudicate the limitation period issue summarily. While there may perhaps be cases where a plaintiff’s injuries are so severe that they can confidently be said to meet the threshold from day one, I cannot tell if this is such a case. The defendants have given me the plaintiff’s medical records. But I have nothing to allow me to draw an inference that the plaintiff or his lawyer ought to have concluded in the first 37 days after the accident that the injuries met or were likely to meet the threshold at some time in future.

 [32]      Similarly, while I was able to conclude at first instance in Yasmin that the plaintiff had not diligently pursued a claim on the facts, I have nothing to allow me to reach the same conclusion here and now. I do not know if a reasonable patient 37 days into treatment ought to have been asking his doctors for long term prognoses about serious impairment of important functions. Neither is there any evidence before me to let me weigh or conclude whether a reasonable personal injury lawyer ought to have been seeking reports from the doctors about threshold issues within the 37-day pre-limitation period window.

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: the Court of Appeal on the commencement of benefit denial claims

The Court of Appeal’s decision in Clarke v. Sun Life Assurance Company of Canada is another addition to the jurisprudence considering when time runs for a benefits denial claim.  It delineates the extent to which a denial must be unequivocal to cause the claimant to know the insurer has breached the benefit obligation.

The appellant made a claim for long-term disability benefits after she stopped working due to health problems in 2011. By letter of March 19, 2012, Sun Life denied her claim and advised that three levels of appeal were available. She appealed. By letter of February 24, 2014, Sun Life advised the appellant that it had approved the benefits for a period ending in April 2013 but was otherwise denying her claim.

The motion judge found that the February 2014 letter was not a sufficiently clear denial to cause the appellant to know that she had sustained damage (the benefits denial). The Court of Appeal overturned this finding.  The letter informed the appellant that Sun Life was denying her benefits, which is the breach that founded her cause of action.  More explicit correspondence was unnecessary:

[15]      The motion judge started her analysis under the Limitations Act, 2002 by considering the date the injury, loss or damage occurred: ss. 5(1)(a)(i) and (b). The motion judge did not accept Sun Life’s submission that the February 24, 2014 letter marked the time at which Ms. Clarke first knew that an injury, loss or damage had occurred. She described the letter as “equivocal” and noted that it “did not use the language of refusal or denial”: at para. 21. She concluded that it was “not clear that the words used by the Sun Life letter of February 24, 2014 [were] a denial of disability benefits that amounted to ‘injury, loss or damage’”: at para. 23. She ultimately found, at para. 30, that the limitation period commenced with the denial communicated to Ms. Clarke by Sun Life on June 19, 2017, notwithstanding that that letter also did not use language of denial.

[16]      With respect, the motion judge erred in law by failing to apply the principle stated by this court in Pepper v. Sanmina-Sci Systems (Canada) Inc., 2017 ONCA 730, [2018] I.L.R. I-5996, at para. 1, that an insured has a cause of action for breach of contract against her insurer when the insurer stops paying long-term disability benefits. In its February 24, 2014 letter, Sun Life informed Ms. Clarke that her disability benefits terminated as of April 25, 2013, which was the date the “Own Occupation” benefits period ended. Sun Life went on to state that it would not pay “Any Occupation” benefits. Accordingly, by February 24, 2014, a “loss, injury or damage” had occurred that would have been known to a reasonable person with the abilities and in the circumstances of Ms. Clarke: Limitations Act, 2002, ss. 5(1)(a)(i) and (b).
[17]      I note that in reaching her conclusion on s. 5(1)(a)(i), the motion judge relied on the decision of the Divisional Court in Western Life Assurance Company v. Penttila, 2019 ONSC 14, 144 O.R. (3d) 198. The motion judge appears to have misapplied Western Life Assurance on the issue of when an insured knows that a loss, injury or damage has occurred. As that decision clearly stated, at para. 17, the parties agreed that for the purposes of s. 5(1)(a)(i) the insured knew that a loss had occurred on the date her benefits came to an end, which is the governing principle as stated in Pepper.

The decision also describes the findings of fact required by s. 5(1) and (2) of the Limitations Act:

[19]      The discoverability analysis required by ss. 5(1) and (2) of the Act contains cumulative and comparative elements.

[20]      Section 5(1)(a) identifies the four elements a court must examine cumulatively to determine when a claim was “discovered”. When considering the four s. 5(1)(a) elements, a court must make two findings of fact:
(i)      The court must determine the “day on which the person with the claim first knew” all four of the elements. In making this first finding of fact, the court must have regard to the presumed date of knowledge established by s. 5(2): “A person with a claim shall be presumed to have known of the matters referred to in clause (1) (a) on the day the act or omission on which the claim is based took place, unless the contrary is proved”; and

(ii)      The court must also determine “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 four elements identified in s. 5(1)(a).

Armed with those two findings of fact, s. 5(1) then requires the court to compare the two dates and states that a claim is discovered on the earlier of the two dates: see Nasr Hospitality Services Inc. v. Intact Insurance, 2018 ONCA 725, 142 O.R. (3d) 561, at paras. 34-35.

The motion judge erred by failing to make “any specific finding about either”:

[22]      The motion judge’s reasons disclose that she failed to make any specific finding about either date.