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: 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.