Ontario: Appealing s. 5 analyses

Nicholson v. McDougall is a reminder that the omission of a s. 5 analysis isn’t necessarily a ground for appeal:

[31]           There is no reference to s. 5 at all, or any of its detailed requirements, in the Reasons for Decision.  I agree with the respondent that this omission from the Reasons for Decision is not sufficient to grant this appeal.  The Deputy Judge could have implicitly applied s. 5, including the presumption in s. 5(2), without expressly referring to it.  To assess whether the Deputy Judge did so and therefore complied with the Limitations Act requirements, I begin with the law regarding s. 5(2) and then I will move to how it applies in this case.

Ontario: the Divisional Court on the nunc pro tunc doctrine

The Divisional Court has confirmed that the entitlement to an order granting leave nunc pro tunc to commence a derivative action under s. 26 of the Business Corporations Act requires bringing the leave motion within the limitation period.

In 1186708 Ontario Inc. v. Gerstein, the appellants appealed from the order dismissing their motion as statute-barred arguing that the Supreme Court decision in Green (which set out the principles of the nunc pro tunc doctrine) applies only to leave applications under the Securities Act and not under other statutes.

The Divisional Court disagreed.  There was no basis not to apply the Court’s analysis in Green regarding the Securities Act to the Business Corporations Act (and probably any other statute). 

Ontario: r. 21 motions and limitation defences

Can you bring a r. 21 motion to strike a claim as statute-barred before delivering a statement of defence? Yes, the Divisional Court confirmed in Amrane v. York University, but only where it is plain and obvious that the plaintiff could assert no additional facts that would alter the limitations analysis:

[14]           I agree with the motion judge that the expiry of a limitation period is normally a defence that must be pleaded. However, as the Court of Appeal recognized in Beardsley v. Ontario, 2001 CarswellOnt. 4137 at para. 21, in those cases where it is plain and obvious from a review of the claim that no additional facts could be asserted that would alter the conclusion that a limitation period had expired, it would be unduly technical to require the delivery of a statement of defence.

See also this summary from Justice Stinson’s decision in Clark v. Ontario (Attorney General):

[12]        By way of response the plaintiffs argue that, save in exceptional cases (of which this is not one) courts do not entertain motions to decide limitation period issues prior to service of a statement of defence. In any event, they further contend, there are live factual issues that bear on the limitation issue, which are expressly raised in the statement of claim and preclude determination of the question on a pleadings-based motion such as this.

[13]        Strong authority for the former proposition can be found in Beardsley v. Ontario Provincial Police (2001), 2001 CanLII 8621 (ON CA),57 O.R. (3d) 1 (C.A.) where the Court of Appeal stated as follows (at paras 21 and 22):

[21]      The motion to strike based on the expiry of a limitation period could only be made pursuant to Rule 21.01(1)(a), which provides that a party may move for the determination of a question of law “raised by a pleading”. The expiry of a limitation period does not render a cause of action a nullity; rather, it is a defence and must be pleaded. Although we agree that it would be unduly technical to require delivery of a statement of defence in circumstances where it is plain and obvious from a review of a statement of claim that no additional facts could be asserted that would alter the conclusion that a limitation period had expired [for example expiry of the two-year limitation period under the Highway Traffic Act … in connection with a claim for property damage only, in circumstances where it is clear the discoverability rule does not apply] , a plain reading of the rule requires that the limitation period be pleaded in all other cases. See Pollakis v. Corner (1975), 1975 CanLII 597 (ON SC), 9 O.R. (2d) 691 (H.C.J.).

[22]           Plaintiffs would be deprived of the opportunity to place a complete factual context before the court if limitation defences were determined, on a routine basis, without being pleaded. Adherence to rules that ensure procedural fairness is an integral component of an appearance of justice. The appearance of justice takes on an even greater significance where claims are made against those who administer the law. …

[14]        More recently, Brown J. observed in Portuguese Canadian Credit Union Ltd. v CUMIS General Insurance (2010), 2010 ONSC 6107 (CanLII), 104 O.R. (3d) 16 (S.C.J.) as follows (at para. 33):

… I do not accept the submission of the Credit Union that its Rule 21 motion falls within the category of cases alluded to inBeardsley “where it is plain and obvious from a review of a statement of claim that no additional facts could be asserted”. InBeardsley the possibility of bringing a Rule 21.01(1)(a) motion before the close of pleadings was discussed in the context of a determination as to whether an action was statute-barred – for example, such as in cases where the injuries suffered in a car accident occurred on a date certain and nothing more could be said about that fact. That type of case is a far cry from the complex claim asserted in this proceeding. [Footnote omitted.]

[15]        In Canadian Real Estate Assn. v. American Home Assurance Co., 2015 ONCA 389 (CanLII) (at para. 2) the Court of Appeal again reminded us that “the exception in Beardsley … must be confined to cases that involve no legal or factual complexities.”

 

Ontario: Appealing from an order dismissing an OBCA claim as statute-barred

An appeal from a final order made under the Business Corporations Act is to the Divisional Court even where the order dismisses the proceeding as statute-barred.

In 1186708 Ontario Inc. v. Gerstein, the plaintiffs brought a motion under s. 246 of the Business Corporations Act.  The motion judge found it statute-barred by the expiry of the limitation period.  The Court of Appeal held that the Divisional Court had jurisdiction:

[7]         Under s. 6(1)(b) of the Courts of Justice Act, R.S.O. 1990, c. C.43, an appeal lies to this court from “a final order of a judge of the Superior Court of Justice, except … an order from which an appeal lies to the Divisional Court under another Act” (emphasis added).  Under s. 255 of the OBCA, “[a]n appeal lies to the Divisional Court from any order made by the court under this Act.”
[8]         There is no dispute that the Order is a final order.
[9]         Paragraph 1 of the Order flowed from a motion for leave to commence a derivative action under s. 246 of the OBCA.  We acknowledge that the claim was found to be statute-barred and leave refused on that basis.  We also acknowledge that the determination that the claim was statute-barred was made under the Limitations Act, 2002, not the OBCA.  However, para. 1 of the Order disposed of the motion which was brought under s. 246 of the OBCA.  Given the broad scope afforded to s. 255 of the OBCA in this court’s jurisprudence, it is our view that para. 1 of the Order is an order within the meaning of s. 255 of the OBCA: see Amaranth L.L.C. v. Counsel Corp. (2004), 2004 CanLII 10897 (ON CA), 71 O.R. (3d) 258 (C.A.); and Ontario Securities Commission v. McLaughlin, 2009 ONCA 280 (CanLII), 248 O.A.C. 54.