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 585Madrid v. Ivanhoe Cambridge Inc., et al., 2010 ONSC 2235 and Kesian v. The City of Toronto2016 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: some pedantry in response to the Court of Appeal decision in Rumsam

The Court of Appeal’s decision in Rumsam v. Pakes overturned the motion judge’s order granting the plaintiff leave to add a doctor as a defendant to the proceeding.  The doctor had opposed the motion on the basis of an expired limitation period.  The motion judge found the proceeding timely.

The Court’s conclusion seems right to me, but it contains some statements of law that are problematic and require comment.

First, there is this description of s. 5(1)(b):

[30]      As of August 29, 2013, Ms. Rumsam was obliged to exercise reasonable diligence to secure the name of the second doctor to satisfy the requirement in s. 5(b) [sic] of the Limitations Act that a “cause of action arises for the purposes of a limitation period when the material facts on which it is based have been discovered, or ought to have been discovered, by the plaintiff by the exercise of reasonable diligence” (emphasis added): Lawless, at para. 22.

This is not an accurate description of s. 5(1)(b).  That section provides that discovery occurs “the day on which a reasonable person with the abilities and in the circumstances of the person with the claim first ought to have known of the matters referred to in clause (a)”.

What paragraph 30 describes is common law discovery.  Discovery as codified in s. 5(1)(b) differs from common law discovery in two material ways.  First, the knowledge required by s. 5(1)(b) isn’t the material facts of a cause of action, but the four discovery matters in s. 5(1)(a); while these may accord generally with some causes of action, they don’t accord with many others (like breach of contract, which doesn’t have “injury, loss or damage” as a material fact.  Second, the knowledge is modified-objective, not purely objective; it’s the knowledge of a reasonable person with the abilities and in the circumstances of the plaintiff.

It’s unfortunate that the Court of Appeal continues to treat common law discovery as the same as statutory discovery.  Relatively recent Court of Appeal jurisprudence distinguishing the “claim” form the “cause of action” has been promising (see Apotex and Gillham Bay), but apparently without the impact one might have hoped for.

Then there is this summary of conclusions:

[33] In conclusion:

1. A claim must be brought within two years of a claim being “discovered”.

2. A claim is discovered when the claimant first knew the injury occurred, that it was caused by an act or omission, that the act or omission was caused by the person against whom the claim is made, and that there was loss.

3. The injury was sustained on July 11, 2007, so normally the limitation period would have expired on July 11, 2009.

4. Given that Ms. Rumsam did not turn 18 until June 4, 2010, the presumptive limitation period did not begin to run until that date.

5. The limitation period would have expired on June 4, 2012, but for the discoverability principle.

6. By August 29, 2013 at the latest, Ms. Rumsam knew all of the material facts except the name of the “second clinic physician” in question.

7. By August 29, 2013 at the latest, she was required to exercise reasonable diligence to get the name within the two-year period as she knew she likely had a claim against this person for her injuries, and August 29, 2013 was “the day on which a reasonable person with the abilities and in the circumstances of the person with the claim first ought to have known of the matters referred to” as set out in s. 5(1)(b) of the Limitations Act.

8. The onus to prove reasonable diligence is on Ms. Rumsam.

9. She failed to exercise reasonable diligence as no steps were taken for at least a year.

10. As such, as the court held in Safai, there is no basis to extend the limitation period for more than two years as, from August 29, 2013, Ms. Rumsam knew of the likely claims and was in a position to ascertain the name by reasonable diligence.

Let’s go through the issues.

  1. A claim must be brought before the expiry of the limitation period, not within two years of discovery. Discovery causes the limitation period to commence, but it’s not determinative of its expiry.  There are multiple circumstances in which the limitation period will stop running—for a example a tolling agreement—so that it will expire more than two years from its commencement.
  2. Discovery does not require knowledge that an injury has occurred and that there was a loss, because for limitations purposes in injury and loss are effectively the same thing. There Limitations Act always refers to “injury, loss or damage”; “injury” never has a separate function from “loss” (which prompts the question why the act uses this language–I suspect it was intended by the drafters to signal that the act applies to all causes of action regardless of whether they require damage to be actionable).  In any event, all that discovery requires with respect to damage is knowledge that “injury, loss or damage” has occurred, so knowledge of injury or loss alone will suffice.
  3. There is no presumptive limitation period. There is basic limitation period in s. 4 that commences presumptively on the date of the act or omission that gives rise to the claim pursuant to s. 5(2). This is because of the “discoverability principle”, not despite it.  Section 5(2) creates a presumption that discovery occurs on the date of the act or omission, which the plaintiff can rebut.  The s. 5 discovery provisions always determine the commencement of the basic limitation period.


Ontario: the Court of Appeal on the evidence required for discovery

It sometimes happens that I miss notable decisions.  And so, better late than never, I draw Crombie Property Holdings Limited v. McColl-Frontenac Inc. to your attention.

These are the noteworthy aspects of the Court of Appeal decision:

1.  It recaps the standard of review for limitations analyses:

[31]      The Supreme Court of Canada in Hryniak v. Mauldin2014 SCC 7 (CanLII), [2014] 1. S.C.R. 87, at para. 81, established the standard of review on appeal of a summary judgment. The court stated that, “[w]hen the motion judge exercises her new fact-finding powers under Rule 20.04(2.1) and determines whether there is a genuine issue requiring a trial, this is a question of mixed fact and law”, reviewable only for a “palpable and overriding error”, unless there is an “extricable error in principle”. Further, the question whether a limitation period expired prior to the commencement of an action is typically a question of mixed fact and law and therefore subject to review on a “palpable and overriding error” standard: Longo v. MacLaren Art Centre Inc.2014 ONCA 526(CanLII)323 O.A.C. 246, at para. 38. A “palpable and overriding error” is “an obvious error that is sufficiently significant to vitiate the challenged finding of fact”: Longo, at para. 39.

2.  It succinctly summarises the evidentiary burden on a summary judgment motion to dismiss on the basis of an expired limitation period:

[33]      In order to obtain a summary dismissal of the action, the moving parties were required to establish that there was no issue requiring a trial about their limitation defence. The specific issue was whether Crombie’s claim in respect of the environmental contamination of its property was “discovered” within the meaning of s. 5 of the Limitations Act, 2002 before April 28, 2012.

3.  It cites Van Allen for the principle that it is reasonable discovery and not the mere possibility of discovery the causes the limitation period to commence: see para. 35
It inaccurately describes the knowledge necessary to cause discovery of a claim:

[35]      The limitation period runs from when the plaintiff is actually aware of the matters referred to in s. 5(1)(a)(i) to (iv) or when a reasonable person with the abilities and in the circumstances of the plaintiff first ought to have known of all of those matters: Longo, at para. 41. The knowledge sufficient to commence the limitations clock has been described as “subjective” knowledge or “objective” knowledge.

This paragraph appears to conflate the amount of knowledge required by s. 5 with the subjectivity of the knowledge.  A claimant requires prima facie knowledge.  This is knowledge that is greater than suspicion but less than certainty.  See for example Brown v. Wahl at 15.  Then there is question of whether the plaintiff subjectively or subjectively-objectively had this knowledge (not purely objectively, as the Court suggests in this decision, because the question asked in s. 5(1)(b) is a “modified objective” test as it doesn’t ask about the knowledge of a reasonable person, but a reasonable person with the abilities and in the circumstances of the claimant.

Knowledge of a possible wrong (a mere suspicion) is insufficient for discovery of a claim; prima facie knowledge of an actual wrong is necessary:

[42]      That the motion judge equated Crombie’s knowledge of possible contamination with knowledge of actual contamination is apparent from her statement that “[a]ll the testing that followed simply confirmed [Crombie’s] suspicions about what had already been reported on” (at para. 31). It was not sufficient that Crombie had suspicions or that there was possible contamination. The issue under s. 5(1)(a) of the Limitations Act, 2002 for when a claim is discovered, is the plaintiff’s “actual” knowledge. The suspicion of certain facts or knowledge of a potential claim may be enough to put a plaintiff on inquiry and trigger a due diligence obligation, in which case the issue is whether a reasonable person with the abilities and in the circumstances of the plaintiff ought reasonably to have discovered the claim, under s. 5(1)(b). Here, while the suspicion of contamination was sufficient to give rise to a duty of inquiry, it was not sufficient to meet the requirement for actual knowledge. The subsurface testing, while confirmatory of the appellant’s suspicions, was the mechanism by which the appellant acquired actual knowledge of the contamination.


Ontario: discovery doesn’t require knowledge of culpability

Update: The Supreme Court denied leave to appeal.

In Dale v. Frank, the Court of Appeal reiterated that discovery of a claim doesn’t require knowledge that the defendant’s act or omission was culpable.  To require a plaintiff to know with certainty that the defendant’s wrongful conduct caused her injuries would require her to come to a legal conclusion as to the defendant’s liability.  This is too a high a bar, and not what s. 5(1) of the Limitations Act requires.

The Appellants also argued that the motion judge erred by failing to consider s. 5(1)(a)(iv) of the Limitations Act in her analysis. The Court of Appeal rejected this argument.  The reasons permitted the inference that the motion judge considered this discovery matter:

[9]         We are not persuaded by this submission. Although the motion judge did not undertake a distinct analysis under this provision, her conclusion that each of the appellants knew or ought to have known of the other elements in s. 5(1)(a) was sufficient to infer that she also concluded that the appellants knew or ought to have known that a proceeding would be an appropriate means to seek a remedy for their losses even before the 2011 press release about Dr. Frank.

Unfortunately, in making this point the Court quoted its decision in Lawless for the principle that discovery requires the prospective plaintiff to know the material facts necessary to make a claim.  Knowledge of the material facts of the claim does not include knowledge of the matter in s. 5(1)(a)(iv)—that a claim is an appropriate remedy to the loss.  It’s disappointing to see the Court of Appeal continuing to rely on Lawless, given the mischief it causes.


Ontario: modified objective discovery

Justice Parfett’s decision in Fernandes v. Goveas is a textbook example of applying the modified objective test in a discovery analysis.

Section 5(1)(b) of the Limitations Act contains the test.  This provision asks when a reasonable person (the objective component) with the abilities and in the circumstances of the claimant (the modifying subjective component) first ought to have known of the discovery criteria in section 5(1)(a).

The facts in Fernandes were unusually sordid.  The plaintiff sued her sister for unpaid wages and damages for wrongful dismissal, leading Justice Parfett to observe “This case is a lesson in why family should not always be treated ‘like family’.  The Plaintiff in this case was misled, overworked and underpaid by her family.”

This is how Justice Parfett applied the test:

[16]           A reasonable person is defined at s. 5(1)(b) of the Limitations Act as someone ‘with the abilities and in the circumstances of the person with the claim’.  In this case, that means someone who

  •                  Was not born in Canada;
  •                  Spoke only minimal English;
  •                  Was living exclusively in the home of her employers and had little social interaction outside the family;
  •                  Trusted her employers implicitly given they were family;
  •                  Had a moderate education;
  •                  Was diagnosed as autistic and noted as having problems with speech and social interactions.


[21]           In my view […The Plaintiff’s] language, psychological and social limitations created a situation where the Plaintiff was unable to exercise due diligence in order to discover the state of her financial affairs until after she left the Defendant’s employ.