Ontario: another good “abilities and circumstances” analysis

 

The decision in Service Mold + Aerospace Inc. v. Khalaf is another good example of the court’s assessment of a plaintiff’s abilities and circumstances for a limitations analysis.  The fact that the plaintiff had no background or education in bookkeeping, accounting, or finances informed the court’s analysis of when the plaintiff could reasonably discover a fraud committed by his bookkeeper.

It’s also a noteworthy decision for the dubious (and unsuccessful) position taken by the defendant:

[21]           TD Bank acknowledges that the plaintiffs did not actually discover the fraud until early 2015 and relies on s. 5(1)(b).  The position of TD Bank is as follows:

1.         The plaintiffs ought to have discovered the claim at least by 2009 or 2010.  TD Bank takes the position that bookkeeper fraud is a well-known risk and a prudent businessman would have measures in place to control it.  Mr. Schuurman, in effect, turned a blind eye to the risk. TD Bank therefore invites me to dismiss the action.

To discover a claim, the plaintiff must know that the defendant has caused or contributed to his loss (and there is no “claim” as defined by the Limitations Act until loss occurs).  Whether the plaintiff was blind or not to a risk that ultimately resulted in his loss, until the loss occurred, the claim was not discoverable.  This position might support a contributory negligence argument, but it’s immaterial to a limitations defence.

Ontario: a good “abilities and circumstances” s. 5(1)(b) analysis

Lewis v. Plaskos is noteworthy for its findings regarding the plaintiff’s abilities and circumstances for the purposes of a discovery analysis.  The court doesn’t often make these findings explicitly (though it should).

The court found that plaintiff had the abilities of her experienced medical malpractice lawyer, and a reasonable experienced medical malpractice would be alert to the possibility that physician’s notes are incomplete.  It was accordingly unreasonable for the plaintiff, through her lawyer, not to consider the possibility and make the accordant inquiries:

[49]           The focus of the dispute is on sub-section 5(1)(b), Limitations Act, 2002.  In particular, the issue is whether the analysis of hospital records by Ms. McCartney has met the test of being objectively reasonable.

[50]           After the firm was retained by the plaintiffs, Ms. McCartney was assigned the task of reviewing the hospital records.  In that process, she was looking to see what was or was not done and why.  Ms. Cartney was considering who was responsible.  She knew this was a case of potential delayed diagnosis.  Those responsible were to be named as defendants in the statement of claim.

[51]           There are three preliminary matters that are of concern, namely delay, the state of the hospital records and the lack of notes by Ms. McCartney.

[52]           The hospital records were received by Ms. McCartney on or about October 14, 2011.  Thirteen months later, in November 2012, the review of those records commenced.  While Ms. McCartney was on a working maternity leave during part of that period of time, presumably meaning part-time attendance at the office and with responsibility for other files as well, the review process should have commenced much earlier.  Mr. Michael also had carriage of the file.  Other junior lawyers in the firm could have been asked to assist.

[53]           There is always a danger in waiting until the presumptive limitation period is about to expire.  The process can become rushed.  Due diligence was not met.

[54]           It is now known that Dr. Cameron failed to fully record her involvement with Ms. Lewis, particularly her consultation with Dr. Plaskos.

[55]           Litigation lawyers, particularly those involved in personal injury and medical malpractice cases, routinely review physician’s notes and hospital records.  These lawyers are aware of the dangers in conducting such review regarding illegible handwriting, abbreviated terms and incomplete recording.  The failure of physicians to fully record matters pertaining to a patient is often a topic in the litigation process, including at trial.  In the absence of records, physicians often have difficulty recalling specific events and discussions.

[56]           In my view, Ms. McCartney and Mr. Michael, both experienced medical malpractice lawyers, would have, or should have, been alert to the possibility the physician’s notes were incomplete.

[57]           The only contemporaneous note made by Ms. McCartney during her review and analysis of the hospital records was the summary previously mentioned.  The summary is incomplete, making no mention of her conclusions as now presented on this motion and lacking detail as to the analytical process undertaken.  Hence, on cross-examination, Ms. McCartney was unable to recall her state of mind when reviewing the records and the details of her thought process.  Like physicians, lawyers need to record all details of their involvement for future use.

[58]           The first step in the review process is to determine what was recorded.  When part of the record contains handwritten notes, the lawyer looks to see if such are legible.  There was a legitimate concern with Dr. Cameron’s handwriting and use of abbreviated terms.  Ms. McCartney and Mr. Michael, for example, looked at a key word and correctly concluded it to be “refused”.  “Radiol” was considered to be radiologist or radiology department.  When there is any concern as to what was written, it requires inquiry of the record keeper.

[59]           There are two conclusions Ms. McCartney made that are of critical importance.  First, she considered the phrase “will discuss with radiologist or radiology department re:  imaging” as connected to the preceding note “will check post void residual”.  Second, Ms. McCartney determined “MRI refused as normal rectal tone and no bilateral leg weakness” as Dr. Cameron declining to order an MRI.  Such are possible interpretations or conclusions but there are others that, in my view, are far more reasonable.

[60]           Just as physicians arrive at a “differential diagnosis” following examination of a patient, so too must a lawyer consider all reasonable options in their analysis of a case.

[61]           Connecting “will discuss with radiologist or radiology department re:  imaging” to “post void residual” is too restrictive.  The more reasonable interpretation is that Dr. Cameron was going to seek assistance in determining what further imaging tests were required.  At this point, Dr. Cameron was aware the lumbar x-ray, as interpreted by Dr. Plaskos, was inconclusive having regard to the nature of Ms. Lewis’ complaints.

[62]           Dr. Cameron’s note is all recorded under the time of 18:00 hours.  Ms. McCartney incorrectly assumed this represented one event.  But there are gaps in the recording and, having regards to the words used, it is more likely the record should have been seen as several separate recordings.

[63]           In this regard, the words “MRI refused” invites the question “by whom”.  Ms. McCartney’s conclusion that Dr. Cameron refused her own request is not reasonable.  It is contrary to normal use of English language and, as it follows the note “will discuss with radiologist …” with a gap in between, leads to the inference someone else is involved.  At a minimum, there are a number of possible interpretations and each must be pursued.  Indeed, Ms. McCartney acknowledged in cross-examination that one possible interpretation was that the MRI had been refused by someone else, but such a possibility did not occur to her at the time of her review.  It should have.

[64]           The failure to order an MRI in a timely fashion is central to the plaintiffs’ case.  Ms. McCartney knew that Dr. Plaskos was involved in interpreting an x-ray of Ms. Lewis on January 2, 2011, as had been requested by Dr. Reesor.  Ms. McCartney also knew that emergency department physicians will sometimes consult a radiologist as to what imaging to order or for an urgent MRI.  These factors, and others previously addressed, meant Ms. McCartney had to consider all reasonable scenarios.  Instead, she arrived at a conclusion without examining reasonable alternatives.  Her analysis, in result, was incomplete.

[65]           I conclude the analysis of hospital records by Ms. McCartney was not objectively reasonable, particularly having regard to her abilities and experience as a medical malpractice lawyer.

[66]           The cause of action occurred on January 2, 2011.  The limitation issue is with discoverability and so the presumptive limitation date of January 2, 2013 does not apply.

[67]           The statement of claim was issued on October 7, 2014.  Was it discoverable prior to October 7, 2012?  I conclude it was.  The medical records were received in October 2011.  A diligent review would have led to further inquiry.  The potential claim against Dr. Plaskos, in my view, was discoverable by December 31, 2011 and certainly long before October 7, 2012.

[68]           In result, I conclude the limitation period had expired prior to the statement of claim being issued.  The claim against Dr. Plaskos is statute-barred by operation of Section 5Limitations Act, 2002.  The claim against him must be dismissed.  I so order.

 

Ontario: Court of Appeal emphasises that discovery is contextual

The Court of Appeal’s decision in Fehr v. Sun Life Assurance Company of Canada is noteworthy for it its emphasis on the contextual nature of the discovery analysis:

[173]   However, when it came to assessing the limitation period defences applicable to the individual plaintiffs, the motions judge did not engage in a detailed examination of these idiosyncrasies. In particular, he did not consider the impact of each plaintiff’s circumstances and experiences on the critical issue of when each plaintiff discovered his or her claim or knew or ought to have known of the requisite facts grounding their claim. He failed to engage in an individualized and contextual analysis, and, instead, applied a broad presumption as to when they ought to have known of certain alleged misrepresentations.

[174]   An individualized and contextual analysis was necessary in this case for the very reason that misrepresentation claims are not generally amenable to class actions: people receive, process, and act upon written and verbal statements in different ways. Their behaviour varies depending upon a variety of factors, including their own particular circumstances, what specific representations and information they received and from whom, how they understood or processed those representations and information, the extent to which they relied upon them, and their own wishes and intentions.

[175]   An individualized and contextual analysis was particularly important in this case because, among other things: (a) there is a relationship of vulnerability between insurer and insured; (b) many of the plaintiffs are unsophisticated with respect to the insurance industry; (c) the insurance policies are complicated and not easily understood; (d) misrepresentations were made to some consumers and not others; (e) some or all of these misrepresentations were made by individuals on whom the plaintiffs might reasonably rely; (f) there is no evidence that the insurer expressly corrected the misrepresentations; and (g) the insurer may have reinforced or made further misrepresentations, to some or all of the plaintiffs, during the life of the policies.

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.