Ontario Court of Appeal

Ontario: A defendant’s expertise can impact on discovery even when the defendant isn’t a professional

 

The Court of Appeal’s decision in Presley v. Van Dusen is a reminder that a s. 5 analysis requires making findings with respect to each s. 5(1) discovery matter, and reliance on a defendant’s expertise may delay the appropriateness of a proceeding even when the defendant is not a professional.

This was an appeal from an appeal from a Small Claims Court trial decision.  The trial judge found that he could determine the commencement of the limitation period without considering s. 5(1)(a)(iv):

[9]         The trial judge did not consider the s. 5(1)(a)(iv) criterion as to when the appellants did know or should have known that a proceeding would be an appropriate means to remedy their claim. He gave the following reason for not considering s. 5(1)(a)(iv): “It is not necessary for me to make any determination under that subsection and I do not do so as I only have to find the earliest date and I have no difficulty, as I have said, in finding that that date was the spring of 2013.”

This is plainly an error of law; you can’t determine discovery without considering all four discovery matters.

The Divisional Court nevertheless upheld the trial judge’s decision.  Having determined when a reasonable person ought to have known of the discovery matters pursuant to s. 5(1)(b), it found that there was no requirement for the trial judge to make an explicit finding as to when the plaintiff ought to have known the matter in s. 5(1)(a)(iv).

The Court of Appeal overturned the Divisional Court’s order.  It was an error for the trial judge not to consider s. 5(1)(a)(iv).  The law required the trial judge to consider all four discovery matters:

[14]      The analysis of both the trial judge and the Divisional Court judge of ss. 5(1)(a)(iv), 5(1)(b) and s. 5(2) of the Limitations Act is flawed. The trial judge explicitly stated that he was not considering s. 5(1)(a)(iv). A determination under s. 5(1)(b) as to the date a reasonable person would have discovered the claim requires consideration of all four “matters referred to in clause (a)”. Similarly, the finding that there was insufficient evidence to rebut the presumption under s. 5(2) that the plaintiff knew all the matters referred to in s. 5(1)(a) cannot stand as there was no consideration of s. 5(1)(a)(iv).

[15]      This court has repeatedly held that consideration of when a proceeding was an appropriate means to remedy a claim is an essential element in the discoverability analysis and that failure to consider s. 5(1)(a)(iv) is an error of law: Gillham v. Lake of Bays (Township), 2018 ONCA 667 (CanLII), 425 D.L.R. (4th) 178, at paras. 33-34; Kudwah v. Centennial Apartments, 2012 ONCA 777(CanLII), at paras. 1-2; Har Jo Management Services Canada Ltd. v. York (Regional Municipality), 2018 ONCA 469 (CanLII), 91 R.P.R. (5th) 1, at paras. 21 and 35.

It’s common for the court to making a determination under s. 5(1)(b) without making explicit findings as to the plaintiff’s knowledge of the discovery matters (though I think everyone benefits from explicit findings).  What makes this case unusual, and something of an outlier, is that the trial judge made this s. 5(1)(b) determination while finding that it was unnecessary to consider one of the discovery matters.  That’s the kind of error that seems especially prevalent in the Small Claims Court.

The Court of Appeal undertook its own s. 5(1)(a)(iv) analysis, which is noteworthy for emphasising that the superior knowledge and expertise that might engage s. 5(1)(a)(iv) is not restricted to strictly professional relationships.  Accordingly, the plaintiffs could reasonably rely on the expertise of a person licensed to install septic systems:

[21]      These principles are applicable to the facts of this case. Van Dusen is licenced to install septic systems. The appellants contracted with him because of his special training and expertise. While the respondents argue he may not qualify as “an expert professional”, there can be no question he did have expertise upon which the appellants reasonably relied.

[22]      Moreover, reliance on superior knowledge and expertise sufficient to delay commencing proceedings is not restricted to strictly professional relationships: Presidential, at para. 26. I acknowledge that the previous cases where this court has made a finding that it was reasonable for the plaintiff to rely on the defendant’s superior knowledge and expertise have concerned defendants belonging to traditional expert professions. For instance, Brown v. Baum, 2016 ONCA 325 (CanLII), 397 D.L.R. (4th) 161, involved a physician, Chelli-Greco v. Rizk, 2016 ONCA 489 (CanLII), involved a dentist, and Presidential MSH involved an accountant. However, recent Superior Court decisions have applied the superior knowledge and expertise prong of Presidential MSH to persons who are members of non-traditional professions or who are not professionals at all. For instance, in YESCO Franchising LLC v. 2261116 Ontario Inc., 2017 ONSC 4273 (CanLII), the court found that s. 5(1)(a)(iv) applied in a franchisor-franchisee relationship where the franchisees relied on the franchisor’s superior knowledge and expertise, even though the franchisor was not a member of an expert profession. Similarly, in Barrs v. Trapeze Capital Corp., 2017 ONSC 5466 (CanLII), aff’d 2019 ONSC 67 (Div. Ct.) (CanLII), the Superior Court and the Divisional Court found that s. 5(1)(a)(iv) applied to investors who relied on the superior knowledge and expertise of their investment portfolio managers.

 

Ontario: Court of Appeal says that the Limitations Act applies to claims, not causes of action

Justice Strathy’s decision in Apotex Inc. v. Nordion (Canada) Inc. is one of the most important limitations decisions from the Court of Appeal since the Limitations Act came into force.  It’s the first decision to make explicit that the Limitations Act doesn’t apply to causes of action, but to “claims” (as defined in s. 1 of the Limitations Act).

This distinction is most often missed by Ontario courts., which generally treat the cause of action and the “claim” as interchangeable for limitations purposes.  I have written about this issue extensively (see this, for example), including the problems that result.

Justice Strathy noted one of those problems.  Because damage is always an element of the “claim” but not of any cause of action based on conduct that is actionable per se, they accrue differently.  A breach of contract is the most common example:

[84]   Before the reform of limitations law brought about by the LA 2002, the previous statute, the Limitations Act, R.S.O. 1990, c. L.15, looked to when the cause of action arose (an expression not used in the LA 2002) to determine the commencement of the limitation period. The “cause of action” for breach of contract accrued on the date of the breach and the limitation period began to run on that date: see Graeme Mew, Debra Rolph & Daniel Zacks, The Law of Limitations, 3d ed. (Toronto: LexisNexis, 2016) at §9.6; Robert Simpson Co. Ltd. et al v. Foundation Co. of Canada Ltd. et al (1982), 1982 CanLII 1750 (ON CA), 36 O.R. (2d) 97 (C.A.), at p. 105; Schwebel v. Telekes, 1967 CanLII 163 (ON CA), [1967] 1 O.R. 541 (C.A.), at p. 544.

[85]   This was the case whether or not damages had yet been incurred. Damages are not an essential element of the cause of action for breach of contract: Mars Canada Inc. v. Bemco Cash & Carry Inc., 2018 ONCA 239 (CanLII), 140 O.R. (3d) 81, at para. 32.

[86]   Under the LA 2002, the limitation period for breach of contract does not necessarily run from the date of the breach. As I have observed, in contrast to the former statute, the date of the “act or omission” – the breach of contract itself – is not the only factor to be considered in determining when a claim is discovered under the LA 2002. Instead, the date on which the plaintiff knew of the occurrence of the act or omission is only one factor to be determined. In addition to that factor, the person with the claim must also know that the “injury, loss or damage had occurred” (s. 5(1)(a)(i)), that it was caused or contributed to by the act or omission (the breach of contract) (s. 5(i)(a)(ii)), and that the act or omission was that of the defendant (s. 5(1)(a)(iii)).

[87]   As a result of the presumption under s. 5(2), the limitation period begins to run on the date of the breach (being the date of the “act or omission”), unless it is proven that the person with the claim did not know of one or more of the matters set out in s. 5(1)(a), and that a reasonable person would not have known of those matters.

[88]   A plaintiff with a claim for breach of contract may displace the presumption in s. 5(2) if, for example, they establish that they did not know that “the injury, loss or damage” had occurred or, if it had occurred, they did not know that it was caused by an act or omission of the defendant – the breach of contract. But it is well-settled that the person need not know the extent of the injury, loss or damage to trigger the commencement of the limitation period. It is enough that they know that some damage has occurred. In Hamilton (City) v. Metcalfe & Mansfield Capital Corp., 2012 ONCA 156 (CanLII), 290 O.A.C. 42, at paras. 59-61, this court adopted the common law rule expressed in Peixeiro v. Haberman, 1997 CanLII 325 (SCC), [1997] 3 S.C.R. 549, at para. 18, that “some damage” is sufficient to start the running of the limitation period.

Justice Strathy set out the impact this has on a limitations analysis for a breach of contract: 91-92

[91]   First, to determine when a claim is discovered in a breach of contract case, it is necessary to examine the terms of the contract and the nature of the alleged breach (the “act or omission”) on which the claim is based: see Mew, Rolph & Zacks, at §9.5, citing to NFC Acquisition L.P. v. Centennial 2000 Inc., 2010 ONSC 733, 67 B.L.R. 218, at paras. 29-30, affirmed in 2011 ONCA 43 (CanLII), 78 B.L.R. (4th) 11; Hopkins v. Stockman, 2013 SKCA 118 (CanLII), 427 Sask. R. 4, at para. 10. As van Rensburg J.A. noted in Morrison v. Barzo, at paras. 33, 49, the application of the test in s. 5(1)(a) requires the identification or definition of the claims at issue. This is a necessary starting point.

[92]   Second, in many cases, the act or omission, causation, and the injury, loss or damage will occur simultaneously, and will be discovered simultaneously. But this will not always be the case. In some cases, discovery of the “act or omission” will not start the limitation period running unless injury, loss or damage has occurred and has been discovered (s. 5(1)(a)(i)).

To understand the significance of this decision, compare it to the Court’s description of discovery in Lawless:

[22]         The principle of discoverability provides 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.  This principle conforms with the generally accepted definition of the term ‘cause of action’ – the fact or facts which give a person a right to judicial redress or relief against another”:Aguonie v. Galion Solid Waste Material Inc. (1998), 1998 CanLII 954 (ON CA), 38 O.R. (3d) 161 (C.A.), at p. 170.

Here the Court describes discovery in terms of knowledge of the material facts of the cause of action, which is a statement of common law discovery, not discovery as codified in s. 5 of the Limitations Act.  Apotex, together with recent decision in Gillham, suggests that the Court is moving away from the misconception that underlies reliance on Lawless.   

Two other points:

  1. Justice Strathy’s decision begins with s. 2 of the Limitations Act.  Because this is the provision that determines the application of the Limitations Act, this is the correct starting point for any limitations analysis.  However, you rarely see courts considering it.
  2. It would have been helpful for the Court to include a paragraph explaining why the cause of action does not feature in the Limitations Act.  It was a deliberate decision.  The Legislature sought to resolve the enormous problems inherent in cause of action accrual by converting all causes of action into one unit, the claim.  This also allowed for universal limitation periods, rather than limitation periods for different categories of causes of action.

 

Ontario: Court of Appeal says death is not a “condition”

In Lee v. Ponte, the Court of Appeal held that death does not trigger the application s. 7 of the Limitations Act.

Section 7 suspends the limitation period when the claimant “is incapable of commencing a proceeding in respect of the claim because of his or her physical, mental or psychological condition”.  The appellant in Lee argued that this provision could extend the limitation period for an estate trustee to bring a claim that the deceased person had before death:

[5]         The appellant urges that s. 7 should be interpreted to apply when the person having the claim dies before commencing proceedings. He argues that a deceased person is incapable of commencing a proceeding in respect of the claim because of his or her physical, mental or psychological condition. He submits that the same policy concerns for allowing additional time for a litigation guardian to be appointed and take over the management of the affairs of the incapable person apply to an estate trustee. He points out that it takes time for an estate trustee to review the affairs of the deceased, and to obtain probate.

The Court rejected this argument:

[6]         We are not persuaded the motion judge erred by dismissing the claim as statute barred. The grammatical and ordinary sense of the words of s. 7 are simply not elastic enough to apply to a deceased person and to construe an estate trustee to be a litigation guardian.

This is a very sensible response to a doubtful argument.  It’s plain that the Legislature didn’t intend that a “physical, mental or psychological condition” should be so broad as to encompass the condition of being dead.  Besides, it’s the Trustee Act that limits the pursuit of a deceased person’s claim.  The appellant didn’t rely on this provision, probably because it wouldn’t have helped, but it should be the starting point when considering the limitation of a deceased’s person claim.

Ontario: Court of Appeal on adding a party after the presumptive expiry of the limitation period

The Court of Appeal decision in Morrison v. Barzo sets out in detail the test for adding a party to a proceeding after the presumptive expiry of the limitation period.  It’s now the leading decision on the subject.

To obtain leave, the plaintiff must first rebut the presumption in s. 5(2) of the Limitations Act by leading evidence as to the date of subjective discovery.  The plaintiff doesn’t need to show evidence of due diligence; due diligence is immaterial to subjective discovery:

[31]      The evidentiary burden on a plaintiff seeking to add a defendant to an action after the apparent expiry of a limitation period is two-fold. First, the plaintiff must overcome the presumption in s. 5(2) that he or she knew of the matters referred to in s. 5(1)(a) on the day the act or omission on which the claim is based took place, by leading evidence as to the date the claim was actually discovered (which evidence can be tested and contradicted by the proposed defendant). The presumption is displaced by the court’s finding as to when the plaintiff subjectively knew he had a claim against the defendants: Mancinelli, at para. 18. To overcome the presumption, the plaintiff needs to prove only that the actual discovery of the claim was not on the date the events giving rise to the claim took place. It is therefore wrong to say that a plaintiff has an onus to show due diligence to rebut the presumption under s. 5(2): Fennell, at para. 26.

Second, the plaintiff must establish a prima facie discovery argument by leading evidence as to why the claim couldn’t have been discovered through reasonable diligence:

[32]      Second, the plaintiff must offer a “reasonable explanation on proper evidence” as to why the claim could not have been discovered through the exercise of reasonable diligence. The evidentiary threshold here is low, and the plaintiff’s explanation should be given a “generous reading”, and considered in the context of the claim: Mancinelli, at paras. 20 and 24.

This is not a due diligence analysis.  While a plaintiff’s due diligence is relevant to the finding under s. 5(1)(b), the absence of due diligence is a not a separate basis for dismissing a claim as statute-barred.  This is so whether the expiry of the limitation period is at issue in a motion for summary judgment or in a motion to add a defendant.

When a claimant ought reasonably to have discovered a claim requires an evidentiary foundation.  The court can’t say merely that the claim was discoverable before the expiry of the limitation period without explaining why.  It may be that the court can only determine when discovery ought to have occurred at a later stage of the proceeding.  In such a case, the motion to add the defendant should be granted, with leave for the defendant to plead a limitation defence:

[30]      Reasonable discoverability of a claim under s. 5(1)(b) that precludes adding a party contrary to s. 21(1) requires an evidentiary foundation. The court must be satisfied that a reasonable person in the plaintiff’s circumstances ought to have discovered the claim, and the date of such reasonable discovery must be determined. It is not sufficient for the court to say that the claim was discoverable “before the expiry of the limitation period”, without explaining why. It may be that the date of reasonable discoverability can only be determined at a later stage in the proceedings, at trial or on a summary judgment motion. In such a case, the motion to add the defendant should be granted, with leave for the defendant to plead a limitation defence: Mancinelli, at paras. 31 and 34.

Conceptually, I recognise the distinction between the court assessing the plaintiff’s due diligence in investigating the claim against the proposed defendant, and the court assessing whether the plaintiff could through reasonable diligence have discovered the claim against that defendant.  However, in practice, I suspect this is a distinction without a difference.  In both cases, the plaintiff will lead evidence of the steps taken to investigate the claim—due diligence—and argue that she did what was reasonable to investigate the claim and still didn’t discover it.  The proposed defendant will lead evidence of some other step the plaintiff could have taken and argue that it was a reasonable step and would have led to discovery.  And so the adequacy of due diligence is always in issue.

The Court also make important points about the findings that are necessary in a limitations analysis.  The court must identify the claims in question, and then find when they were discovered.  This requires a specific finding of fact that answers the question asked by s. 5(1)(b):

[60]      Instead, the motion judge was required, after clearly defining the nature of the claims against the respondents on the evidence, and after finding no actual knowledge of the claims, to make a specific finding of fact as to when a reasonable person “with the abilities and in the circumstances” of the appellants “first ought to have known of the matters referred to in clause (a)”.

Ontario: Court of Appeal on adverse possession and prescriptive easements

The Court of Appeal decision in Majewsky v. Veveris restates two real property principles:

  1. Adverse passion can be established with respect to lands registered under the Land Titles Act by possession meeting the necessary requirements during any continuous ten-year period prior to registration in Land Titles.
  2. To acquire a prescriptive easement whether under the doctrine of lost modern grant or by prescription under the RPLA, the claimant must demonstrate use that is continuous, uninterrupted, open, and peaceful for a period of 20 years.

Ontario: the Court of Appeal on s. 36(8) of the Building Code Act

 

Nothern Bruce Peninsula (Municipality) v. Dolson considers the limitation period in s. 36(8) of the Building Code Act for proceedings under that Act.  I don’t think it’s technically a civil limitations issues, and I’ve never encountered it before.  Still, I’m all for completeness, so if you’re looking for a s. 36(8) authority, here you go.

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: Court of Appeal affirms that discovery of a cause of action isn’t discovery of a claim

The Court of Appeal decision in Gillham v. Lake of Bays (Township) is noteworthy for two  reasons.

First, it uses the concept of the “claim” (which is the language of the Limitations Act) rather than the concept of the “cause of action” (which is not the language of the Limitations Act) for its limitations analysis.  See for example para. 20:

[20]      The overarching question in the discoverability analysis under s. 5 of the Act is whether the claimant knew or reasonably should have known, exercising reasonable diligence, the material facts stipulated under s. 5(1)(a) that give rise to a claim: Ferrara v. Lorenzetti, Wolfe Barristers and Solicitors, 2012 ONCA 851 (CanLII), 113 O.R. (3d) 401, at para. 32. Section 1 of the Act defines a claim as “a claim to remedy an injury, loss or damage that occurred as a result of an act or omission”. Section 2(1) provides that the Act “applies to claims pursued in court proceedings” (with certain enumerated exceptions that do not apply here).

(A slight quibble: the s. 5(1)(a) matters do not give rise to a claim.  Only two facts—an act or omission resulting in injury, loss, or damage—give rise to a claim pursuant to its definition in s. 1.  Knowledge of the s. 5(1)(a) matter results in discovery of the claim.)

It even puts “cause of action” in quotation marks–presumably to distinguish it from a claim–in the context of stating that knowledge of the material facts of a cause of action is not discovery of a claim:

[33]      The motion judge erred in failing to undertake an analysis of the criterion under s. 5(1)(a)(iv) of the Act. That the appellants might have a “cause of action” against the defendants, as the motion judge found, is not the end of the analysis under s. 5(1) of the Act. As this court said in Kudwah v. Centennial Apartments, 2012 ONCA 777 (CanLII), 223 A.C.W.S. (3d) 225, at para. 2:

It is important when considering a limitation period claim to appreciate that the terms of the 2002 Act must govern. A court considering the limitation claim must address the specific requirements of s. 5 of the Act, particularly on the facts of this case, the requirement of s. 5(1)(a)(iv).

 

Second, it acknowledges the accrual of a claim as the starting point of the limitations analysis, and that discovery of the claim requires knowledge that a proceeding is an appropriate remedy for the loss:

[34]      Therefore, the motion judge had to consider whether the appellants had a claim as defined under the Act. In considering whether the appellants knew or should have known that they had a claim, the motion judge had to go on to consider whether, having regard to the nature of the injury, loss or damage, the appellants knew or should have known that a proceeding would be an appropriate means to seek to remedy it. This omission by the motion judge is an error of law: Har Jo Management Services Canada Ltd. v. York (Regional Municipality), 2018 ONCA 469 (CanLII), at paras. 21 and 35.

[35]      Section 5(1)(a)(iv) represents a legislative addition to the other factors under the discoverability analysis. As Laskin J.A. explained in 407 ETR Concession Company Limited v. Day, 2016 ONCA 709 (CanLII), 133 O.R. (3d) 762, leave to appeal to SCC refused, [2016] S.C.C.A. No. 509, at paras. 33-34:

The appropriateness of bringing an action was not an element of the former limitations statute or the common law discoverability rule. This added element can have the effect – as it does in this case – of postponing the start date of the two-year limitation period beyond the date when a plaintiff knows it has incurred a loss because of the defendant’s actions.

Also, when an action is “appropriate” depends on the specific factual or statutory setting of each individual case: see Brown v. Baum, 2016 ONCA 325 (CanLII), 397 D.L.R. (4th) 161, at para. 21. Case law applying s. 5(1)(a)(iv) of the Limitations Act, 2002 is of limited assistance because each case will turn on its own facts.

This is a very welcome statement from the Court of Appeal.  It’s a step away from the misapplication of common law discovery principles to limitations analyses that has caused a great deal of confusion and uncertainty.

Lastly, the decision finds that it was appropriate for the plaintiffs to “wait and see” in the context of a construction dispute before commencing a proceeding.  I often see it argued that Presidential stands for the principle that there are only two circumstances in which a proceeding will be an inappropriate remedy—where the defendant undertakes good faith ameliorative efforts or there is an alternative dispute resolution process. This is a misapprehension of the law, as this decision demonstrates.  Here’s the key analysis:

[37]      Here, the motion judge failed to consider “the specific factual or statutory setting” of the case before him and determine whether it was reasonable for the appellants not to immediately commence litigation but to “wait and see” if the 1 ¼ inch sinking of the deck pier observed in 2009 would worsen over time or if the issue would resolve once the stone retaining wall had settled, as had been suggested to the appellants by Mr. MacKay. Neither Royal Homes nor Mr. MacKay believed the problem was serious, or due to the manner of construction. This evidence does not support the conclusion that the appellants knew or ought to have known in 2009 that their loss was not trivial and initiating legal proceedings was the appropriate means to remedy their loss.

 

Ontario: Easements by prescription

 

The Court of Appeal decision in Hunsinger v. Carter contains a statement of the principles of establishing an easement by prescription (which, as I like to point out, is a limitation issue):

(1)         Establishment of an easement by prescription

[9]         An easement by prescription can arise either under s. 31 of the Real Property Limitations Act, R.S.O. 1990, c. L.15, or pursuant to the doctrine of lost modern grant. Both have the same four requirements, which were properly recognized by the application judge: i) a dominant tenement that enjoys the benefit of the easement and a servient tenement whose owner suffers some use of its land; ii) the properties cannot be owned by the same person; iii) the benefit of the easement must be reasonably necessary for the enjoyment of the dominant tenement; and iv) there must be 20 or 40 years’ (see: Kaminskas v. Storm, 2009 ONCA 318 (CanLII), 95 O.R. (3d) 387, at paras. 31-36) continuous, uninterrupted, open, and peaceful use enjoyed without obtaining the permission of the servient tenement owner. See: Henderson et al. v. Volk et al. (1982), 1982 CanLII 1744 (ON CA), 35 O.R. (2d) 379 (C.A.).

[10]      After a property has been registered under the Land Titles system, a pre-existing prescriptive easement over the land can be established if the four criteria can be proved to have been met before the land was transferred into Land Titles: Carpenter v. Doull-MacDonald, 2017 ONSC 7560 (CanLII), at paras. 54-55.

Ontario: the interaction of representation orders and the Limitations Act

 

Can a party obtain a r. 12.08 representation order after the expiry of the limitation period? No, held the Court of Appeal in United Food and Commercial Workers Canada, Local 175, Region 6 v. Quality Meat Packers Holdings Limited.

If you’re unfamiliar with the rule, the court’s summary is helpful:

(i)           Rule 12.08

[27]      Rule 12.08 states:

Where numerous persons are members of an unincorporated association or trade union and a proceeding under the Class Proceedings Act, 1992 would be an unduly expensive or inconvenient means for determining their claims, one or more of them may be authorized by the court to bring a proceeding on behalf of or for the benefit of all.

[28]      There is little reported case law dealing with the application of Rule 12.08. Indeed, the parties did not point to any cases that directly deal with the issue here, namely, whether a representation order can be obtained under Rule 12.08 following the expiry of a limitation period.

[29]      However, there are several points worth mentioning about Rule 12.08.

[30]      First, Rule 12.08 falls under Rule 12, which is entitled “Class Proceedings and Other Representative Proceedings”.

[31]      Second, it is engaged where a person or persons seek to bring a claim on behalf of or for the benefit of all members of an unincorporated association or trade union. The rule addresses the problems facing unincorporated associations and trade unions seeking to sue in their own names.

[32]      Third, Rule 12.08 is meant to provide for a less costly and more convenient procedure than the Class Proceedings Act, 1992, S.O. 1992, c. 6 (“CPA”). Indeed, in determining whether to authorize a representative action under Rule 12.08, the court will take a similar approach to that taken in determining whether a class action should be certified under the CPA: see Ginter v. Gardon (2001), 2001 CanLII 28052 (ON SC), 53 O.R. (3d) 489 (S.C.), at para. 14; Ottawa (City) Police Assn. v. Ottawa (City) Police Services Board, 2014 ONSC 1584 (CanLII), 55 C.P.C. (7th) 183, at para. 38 (Div. Ct.).

[33]      Fourth, the rule is discretionary. One or more members of an unincorporated association or trade union “may be authorized by the court” to bring a proceeding on behalf of or for the benefit of all. Thus, unless and until authorization is granted, no representative proceeding may be brought.

[34]      Fifth, the rule is silent on the question of limitation periods.

The plaintiff argued that under the Limitations Act, the representative plaintiff need only have commenced a proceeding within two years of discovery, a representation motion is not a proceeding, and anyway the court can make a representation order nunc pro tunc. The court rejected these arguments:

[46]      First, under Rule 12.08, authorization is required “to bring a proceeding on behalf of or for the benefit of all” members of a trade union or unincorporated association. As I noted earlier, under s. 4 of the Limitations Act, “a proceeding shall not be commenced in respect of a claim after the second anniversary of the day on which the claim was discovered.” Reading Rule 12.08 harmoniously with s. 4, the limitation period does not stop running for the claims of class members until a proceeding has been brought on their behalf and that does not happen unless and until court authorization has been granted under Rule 12.08.

[47]      Second, Caetano is effectively arguing that Rule 12.08 suspends the limitation period – that once a proposed representative commences a proposed representative proceeding, the limitation period is suspended on behalf of all members of the trade union or unincorporated association. That, as explained above, is the situation under the CPA where s. 28 expressly suspends any limitation period applicable to a cause of action asserted in favour of class members on the commencement of a proceeding. In contrast, Rule 12.08 is silent on the question of limitation periods and does not purport to extend, suspend or otherwise vary any limitation period applicable to claims asserted in favour of class members.

[48]      Third, the Supreme Court’s decision in Green supports the view that, without a tolling provision, any limitation period applicable to the claims advanced on behalf of class members continues to run until the court authorizes the claims to be brought by the representative plaintiff: Green, paras. 74, 174-175.

[49]      Finally, I would reject the argument that a nunc pro tunc order would be available in the circumstances of this case where leave was not sought prior to the expiry of the limitation period: see Green, at paras. 94-111.

[50]      I recognize that a representative action under Rule 12.08 is meant to provide a less onerous and less expensive alternative to bringing a class action and yet a proposed representative plaintiff may feel it is necessary to proceed under the CPA instead of Rule 12.08 to avoid any limitations problems even if it would be more expensive and less convenient to do so. My interpretation, therefore, may seem to be at odds with concerns about expense and convenience. However, as Côté J. observed in Green, at para. 75, “policy concerns, as compelling as they are, do not override the plain meaning of the text and the intent of the Ontario legislature.”

The court then considered another rather esoteric limitations issue: can the court make a representation order under r. 10.01 in respect of claims that are statute-barred? The answer: no.

Rule 10.01, for those who need a refresher, provides

[56]      Rule 10.01 provides as follows:

In a proceeding concerning,

(a) the interpretation of a deed, will, contract or other instrument, or the interpretation of a statute, order in council, regulation or municipal by-law or resolution;

(b) the determination of a question arising in the administration of an estate or trust;

(c) the approval of a sale, purchase, settlement or other transaction;

(d) the approval of an arrangement under the Variation of Trusts Act;

(e) the administration of the estate of a deceased person; or

(f) any other matter where it appears necessary or desirable to make an order under this subrule,

a judge may by order appoint one or more persons to represent any person or class of persons who are unborn or unascertained or who have a present, future, contingent or unascertained interest in or may be affected by the proceeding and who cannot be readily ascertained, found or served.

The plaintiff argued that the because r. 10.01 representation orders are brought within an already commenced proceeding, if a representation order does not seek to add new parties, the Limitations Act does not bar the order.  However, the court found that it seeks to add new claims, which engages the Limitations Act:

[61]      While the Abreus do not seek to add parties to their action, the question is whether they can assert claims, through the device of a representation order, on behalf of persons who are not plaintiffs in the proceeding, after the limitation period in respect of such claims has already expired. The Abreus’ statement of claim seeks termination pay under the ESA and wrongful dismissal damages, as well as common employer and other declarations, and aggravated and punitive damages for themselves. It purports to assert claims for monetary amounts for approximately 125 other non-unionized former employees of the Defendants, relying on Rule 10.

[64]      This court, however, has repeatedly held that parties cannot circumvent the Limitations Act by amending their pleadings to add additional claims: see Frohlick v. Pinkerton Canada Ltd. (2008), 2008 ONCA 3 (CanLII), 88 O.R. (3d) 401; Dee Ferraro Ltd. v. Pellizzari, 2012 ONCA 55 (CanLII), 346 D.L.R. (4th) 624; 1100997 Ontario Limited v. North Elgin Centre Inc., 2016 ONCA 848(CanLII), 409 D.L.R. (4th) 382. The addition of new statute-barred claims by way of an amendment to a statement of claim is conceptually no different than issuing a new and separate statement of claim that advances a statute-barred claim: Frohlick, at para. 24. An amendment will be statute-barred if, after the expiry of the limitation period, it seeks to advance “a fundamentally different claim based on facts not originally pleaded”: North Elgin Centre, at para. 23.