Ontario: Court of Appeal says don’t use r. 21.01(1)(a) to advance limitations defences

In Brozmanova v. Tarshis, the Court of Appeal has brought certainty to the question of whether a defendant may advance a limitations defence in a r. 21.01(1)(a) motion.  The answer is no.   Rule 21.01(1)(a) is for the determination of questions of law.  The expiry of the limitation period is a question of fact (or mixed fact and law).  Further, evidence is not admissible without leave under r. 21.01(1)(a), which puts the plaintiff in the unfair position of needing to seek leave to admit the evidence relevant to the limitations defence when it should be admissible as of right:

[10]      The Rules of Civil Procedure make available two sets of procedural devices by which a party can seek to dispose finally of a proceeding on a contested basis.

[11]      One set is evidence-based, under which the parties adduce evidence by various means, on the basis of which the court decides whether to grant or dismiss a proceeding. The Rules permit or offer several standard evidence-based procedural devices by which to obtain such a final adjudication on the merits: (i) the conventional trial; (ii) the hybrid trial; (iii) two forms of summary judgment – rules 20.04(2)(a) and 20.04(2)(b); and (iv) a rule 38 application.

[12]      The second set of procedural devices enables a party to ask the court to determine a question of law that may dispose of all or part of a proceeding. These law-based devices include: (i) a rule 22 special case; (ii) rule 21.01(1)(a), where a question of law is raised by a pleading; and (iii) rule 21.01(1)(b), where a pleading discloses “no reasonable cause of action or defence”.

[13]      The law-based character of the devices available under rules 21.01(1)(a) and (b) is reinforced by the limits placed on the use of evidence on motions brought under those rules. No evidence is admissible on a “no reasonable cause of action” motion; nor is evidence admissible on a “question of law” motion, except with leave of the judge or on consent of the parties: rule 21.01(2).

[14]      The rationale for these prescriptions is a simple one: the allegations asserted in the pleading, which the court must accept as provable at trial, are sufficient to determine the question of law or whether the pleading discloses a cause of action or defence recognized by law: see Hunt v. Carey Canada Inc.1990 CanLII 90 (SCC), [1990] 2 S.C.R. 959, at pp. 980, 988 and 990-991. No further facts are required to determine the legal sufficiency of the claim.

[15]      In the present case, Dr. Tarshis was sued for conduct as a medical practitioner. He and Ms. Brown are represented by a law firm with long experience in representing medical practitioners. They sought to dismiss Ms. Brozmanova’s action relying on two law-based rules: 21.01(1)(a) and (b).

The “question of law” under rule 21.01(1)(a)

[16]      The “question of law” the respondents raise under rule 21.01(1)(a) is that Ms. Brozmanova commenced her action outside of the two-year limitation period.

[17]      Relying on rule 21.01(1)(a) to advance a limitation period defence is a problematic use of the rule. Some decisions of this court characterize the issue of whether a plaintiff has commenced a proceeding within the limitation period as one involving a question of fact: Pepper v. Zellers Inc. (2006), 2006 CanLII 42355 (ON CA), 83 O.R. (3d) 648 (C.A.), at para. 19; and Arcari v. Dawson2016 ONCA 715 (CanLII), 134 O.R. (3d) 36, at para. 9, leave to appeal refused, [2016] S.C.C.A. No. 522. Others describe it as involving a question of mixed fact and law: Salewski v. Lalonde2017 ONCA 515 (CanLII), 137 O.R. (3d) 762, at para. 45; and Ridel v. Goldberg2017 ONCA 739 (CanLII), at para. 12. Regardless, it does not involve a question of law.

[18]      In the basic case, the court must ascertain “the day on which the claim was discovered”: Limitations Act, 2002, S.O. 2002, c. 24, Sched. B, s. 4 (the “Limitations Act”). This, in turn, requires making two findings of fact: (i) the day on which the person first knew of the four elements identified by s. 5(1)(a)(i)-(iv) of the Limitations Act;[1] and (ii) under s. 5(1)(b), “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” s. 5(1)(a). The earliest of the two dates is the date on which the claim is discovered: s. 5(1).

[19]      The analysis required under s. 5(1) of the Limitations Act generally requires evidence and findings of fact to determine. It does not involve a “question of law” within the meaning of rule 21.01(1)(a).

[20]      Yet, here the respondents invoked a law-based rule to establish a largely fact-based defence. I recognize, as respondents’ counsel submits, that some jurisprudence exists that has allowed a defendant to resort to rule 21.01(1)(a) to determine its limitations defence “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”: see the commentary on rule 21.01(1)(a) in Todd. L. Archibald, Gordon Killeen & James C. Morton, Ontario Superior Court Practice, 2018 (Toronto: LexisNexis Canada, 2017), at p. 1128. See also Paul M. Perell & John W. Morden, The Law of Civil Procedure in Ontario, 3d ed. (Toronto: LexisNexis Canada, 2017), at p. 611.

[21]      However, courts must always remember that permitting a defendant to move under 21.01(1)(a) to establish a limitations defence could prove unfair to a plaintiff, especially a self-represented one. By selecting rule 21.01(1)(a) as the procedural means to adjudicate its fact-based limitations defence, a defendant puts a plaintiff in the position where she cannot, as of right, file evidence to explain when she discovered her claim. Instead, she must seek leave of the court.

[22]      A plaintiff who risks the dismissal of her action on the basis of a limitations defence should not have to ask a court for permission to file evidence on the issue of when she discovered her claim. She should be entitled to do so as of right. It is unfair for a defendant to attempt, tactically, to deprive her of that right and put her to the unnecessary expense (and risk) of asking permission to do so.

[23]      Notwithstanding the jurisprudence that opens the rule 21.01(1)(a) door to some efforts to prove a limitations defence, in my respectful view such an approach risks working an unfairness to a responding plaintiff. Requiring a defendant to move under an evidence-based rule – either rule 20 (summary judgment) or rule 51.06(2) (concerning admissions of the truth of facts in a pleading) – avoids such potential unfairness and is to be preferred.

This strikes me as an excellent, well-reasoned decision.

The Court also noted that it would have been available to the defendant to move under r. 51.06(2) on the basis that the plaintiff had admitted discovery of her claim in the statement of claim:

[34]      The material facts pleaded by Ms. Brozmanova at paras. 8-9 and 15-16 of her statement of claim were admissions of the truth of certain facts. She clearly pleaded that in 2009, as a result of dealing with an insurance company on a matter regarding her ankle injury, she discovered that her OHIP record contained entries for billings by Dr. Tarshis, which she alleges were fraudulent.

[35]      Given the admissions in her pleading, it would have been open to the respondents to move on those admitted material facts to dismiss the claim on the basis that Ms. Brozmanova had discovered it in 2009 and therefore the action was statute-barred: rules 20 or 51.06(2).[3] In 2009, she knew that some “damage” had occurred within the meaning of s. 5(1)(a) of the Limitations Act because she knew that her actual position was worse than her position before: Hamilton (City) v. Metcalfe & Mansfield Capital Corporation2012 ONCA 156 (CanLII), 290 O.A.C. 42, at para. 42. That the “damage” she discovered in 2009 was not the same damage for which she sought recovery in her action – her alleged inability in 2015 to purchase travel insurance – does not matter. Knowledge of “some damage” is sufficient for the cause of action to accrue and to start the limitation period: Hamilton, at para. 61.

While I’ve not seen a limitation defence advanced using this procedure, it makes good sense for those rare circumstances where a plaintiff unwittingly pleads facts that demonstrate discovery of a claim.

 

Ontario: limitation defences and r. 21

In Salewski v. Lalonde, the Court of Appeal casts doubt on whether there is any circumstance where r. 21.01(1)(a) is appropriate for determining a limitations issue except where pleadings have closed and the facts are undisputed:

[45]      However, the basic limitation period established by the Limitations Act, 2002 is now premised on the discoverability rule. The discoverability rule raises issues of mixed fact and law: Longo v. MacLaren Art Centre2014 ONCA 526 (CanLII)323 O.A.C. 246, at para. 38. We therefore question whether there is now any circumstance in which a limitation issue under the Act can properly be determined under rule 21.01(1)(a) unless pleadings are closed and it is clear the facts are undisputed. Absent such circumstances, we are sceptical that any proposed limitation defence under the Act will involve “a question of law raised by a pleading” as required under rule 21.01(1)(a).