Ontario: prejudice from an expired limitation period, and special circumstances

Estate of John Edward Graham v. Southlake Regional Health Centre is a medmal decision noteworthy for its consideration of prejudice arising from the expiry of a limitation period, and a rare application of the special circumstances doctrine to the Trustee Act limitation period.

The parties agreed that the two-year limitation period in s. 38(3) of the Trustee Act applied to the proceeding and had expired.  The plaintiffs relied on special circumstances to overcome its expiry.  The defendant argued that the plaintiffs had failed to rebut the presumption of prejudice arising from the expiry of a limitation period, and that there were no special circumstances.

The court found that the plaintiff had rebutted the presumption of prejudice.  The consideration that informed this finding are worth noting:

[59]           As the Court of Appeal in Mazzuca summarized:

Both the related jurisprudence and the rules themselves thus underscore a simple, common-sense proposition:  that a party to litigation is not to be taken by surprise or prejudiced in non-compensable ways by late, material amendments after the expiry of a limitation period.  If such surprise or actual prejudice is demonstrated on the record, an amendment generally will be denied.[10]

[60]           The Court of Appeal has repeatedly confirmed that the loss of a limitation defence gives rise to a presumption of prejudice.[11]

[61]           In our case, Dr. Law had no notice of the litigation prior to the expiration of the litigation period.  I find an inference of prejudice to him is warranted.

[62]           I accept Dr. Law had no knowledge of this action or that any issue had been raised concerning the case until February 15, 2017 when he was contacted by Scott Graham – approximately six years after the expiration of the limitation period (February 9, 2011).

[63]           Dr. Law submits that prejudice does arise from such a long delay and an inference of prejudice is warranted.  It is submitted the plaintiffs’ motion must fail on the basis of the plaintiffs’ failure to rebut the presumption of prejudice.

[64]           I disagree.  Notwithstanding the long passage of time and the inference raised in favour of Dr. Law, I find the plaintiffs have rebutted the presumption of prejudice.  I do not agree that the presumption of prejudice is unassailable solely due to the passage of time.  There are other factors to be weighed.  Dr. Law has not offered any evidence to show any non-compensable prejudice if the amendment is granted.  Rather, the evidentiary record on this motion establishes the following:

  •     Medical records from Southlake, including x-ray imaging are preserved by Southlake and remain in each of the parties’ legal files;
  •     Counsel for the proposed defendant, Dr. Law, has collaborated with counsel for the defendant, Dr. Gannage, in accessing pleadings and documents;
  •     The claim against Dr. Gannage (ER physician), for negligently reading the x-ray is the same as the claim against the proposed defendant radiologist, Dr. Law;
  •     This case does not have a complicated or highly contentious factual matrix.  The critical issue is whether the proposed defendant, Dr. Law, negligently missed a retained medical sponge when reviewing the x-ray.  No new cause of action or relief is being raised;
  •     The same medical evidence to be relied on by the plaintiffs to prove their claims remains in the possession of the defendants to defend the action.  The defendants are compellable witnesses to attend for trial;
  •     All defendants continue to practice health care in Ontario;
  •     The action against Dr. Law is tenable in law;
  •     Dr. Law is a proper defendant to be added, since there are multiple expert reports indicating he was responsible for negligently misreading the x-rays and not seeing the radiopaque surgical sponge;
  •     No trial date has been set;
  •     All defendants will have sufficient time to prepare their defences;
  •     Dr. Law will have the benefit of the work and investigation done by his co-defendants; and,
  •     There are no steps in the prosecution or defence of this action that will be thwarted through lack of evidence or information.

[65]           For these reasons, I find the plaintiffs have met their onus and have rebutted the presumption of prejudice.

The court also found special circumstances:

[66]           Dr. Law submits that the plaintiffs have not established special circumstances.  I disagree.  Where the presumption of prejudice has been rebutted, as in this case, the plaintiffs still bear the onus to demonstrate that there are special circumstances which justify the addition of Dr. Law as a party defendant.

[67]           Dr. Law submits that no special circumstances exist in this case to justify this court exercising its power to set aside the functioning of an applicable limitation period.

[68]           The special circumstances doctrine was considered in Wisniewski v. Wismer and Wohlgemut, a decision of Edwards J. for oral reasons given on February 1, 2018.

[69]           In Wisniewski, as in our case, the plaintiffs sought to add the proposed defendants (radiologists) after the expiration of the limitation period set out in s. 38(3) of the Trustee Act.  The parties agreed that the discoverability principle did not apply to this limitation period, as they did in our case.  Further, the parties agreed that the limitation period had expired.

[70]           As in our case, the plaintiffs submitted that the proposed defendants be added and pleadings be amended, all after the expiration of the limitation period on the basis of the Doctrine of Special Circumstances.

[71]           Dr. Law submits there are no special circumstances here to warrant the exercise of the court’s discretion.

[72]           In Wisniewski, Edwards J. was not satisfied that the plaintiffs had rebutted the presumption of prejudice.  Further, he also found there was no evidence to suggest the plaintiffs and their counsel were precluded from commencing a claim against the proposed defendants within the applicable limitation period due to a lack of information.

[73]           The key finding in Wisniewski was that almost five months prior to the expiry of the limitation period, the plaintiffs were in possession of x-ray reports and that plaintiffs’ counsel had the necessary information to conclude the proposed defendants should be added as defendants.  Edwards J. found there were no special circumstances that would justify the exercise of the extraordinary remedy to add a party after the expiry of the limitation period and he dismissed the motion to add the proposed defendants to amend the statement of claim.

[74]           I am of the view that Wisniewski is distinguishable from our case.  In Wisniewski, the plaintiffs knew the deceased had been radiographed before the limitation period expired.  In our case, the radiographs were provided to the plaintiffs, not at the outset, but approximately six and a half years later.

[75]           The plaintiffs in our case were precluded from commencing an action against Dr. Law, since they never knew any radiograph existed or that Dr. Law interpreted such a radiograph.

[76]           I find there was no knowledge Dr. Law took a radiograph or radiographs of Mr. Graham and interpreted those images until the plaintiffs were advised by counsel for Southlake, provided to Scott Graham with the CD under cover of the letter dated February 23, 2015, which Scott Graham reviewed on April 12, 2015.  This critical disclosure occurred over four years after the expiration of the limitation period being two years after the date of Mr. Graham’s death on February 8, 2009.

[77]           This disclosure by Southlake came “out of the blue”.  No explanation was provided to this court by anyone, especially by the defendants for such late production.  This disclosure was critical as it enabled Scott Graham to see the radiograph for the first time and connect what he viewed with what he was subsequently told about the Clinical Consultation Report during his conversation with Southlake’s counsel on July 20, 2015.  All of this concerned the possible involvement of Dr. Law.

[78]           Contrary to the findings in Wisniewski, in our case it cannot be said that the plaintiffs had been “handicapped” by their own “inaction”.  In our case, the plaintiffs not only requisitioned a care conference to identify the parties responsible for the critical choking incident, but also they quickly sought to obtain and assess all relevant medical records through submitting a timely records request at the outset and well within the limitation period.

[79]           In our case, the CD and program to access the CD, and disclosure of the x-ray or x-rays were inexplicably not produced until well after the limitation period had expired.  There is no question that the defendants failed to disclose at the care conference that radiographs of Mr. Graham were taken by Dr. Law and that Southlake, despite receiving a records request in 2008, failed to disclose the key x-ray until 2015.

[80]           While Dr. Law was unaware of this action until he was contacted by Scott Graham in February 2017, the chronology of events provides a satisfactory explanation as to what was done after February 2017, including some unnecessary and mistaken proceedings, the delivery of a draft amended statement of claim, the request for consent adding Dr. Law as a party defendant and the plaintiffs’ ultimately being compelled to bring this motion.

[81]           I find the plaintiffs have established special circumstances which are exceptional in nature.  The late, critical and unexplained disclosure by Southlake in 2015, well after the expiration of the limitation period provided the plaintiffs with the revelation of Dr. Law’s involvement in the treatment of Mr. Graham.  I find the facts establish that the plaintiffs were unaware of Dr. Law’s involvement until April and again in July 2015.

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: the Trustee Act limitation period trumps s. 18 of the Limitations Act

The Court of Appeal has held that when one joint tortfeasor has died and the other makes a crossclaim for indemnity against her estate, s. 38(3) of the Trustee Act limits the claim, not the Limitations Act’s s. 18 contribution and indemnity provision.

Justice Strathy’s decision in Levesque v. Crampton Estate is well-reasoned, and I think, correct.

Unfortunately, it missed an opportunity to resolve a limitations issue of more widespread application: whether the s. 5 discovery provisions apply to s. 18.    In Miaskowski v. Persaud, the court concluded that s. 18 is a self-contained deeming provision that imposes an absolute two-year limitation period for claims for contribution and indemnity.  The court’s analysis turns on the word “deemed” in s. 18, which, “as a declarative legal concept is a firmer or more certain assertion of the discovery of a claim than the rebuttable presumption of discovery contemplated by section 5”.

The problem with this analysis is that it fails to consider that s. 18 was expressly enacted “For the purposes of subsection 5(2) and section 15”, that is, to inform and dictate the meaning to be given to the concepts referred to in those sections when applying them.

This is the point made in detail by Justice Leach in Demide v. Attorney General of Canada et al.  Justice Leach systematically analysed the flaws in Miaskowski’s reasoning.   She concluded that the purpose of s. 18 is to provide when time begins to run for the basic and ultimate limitation periods in claims for contribution and indemnity.  It deems the day of service of the statement of claim giving rise to the claim for contribution and indemnity to be the commencement of the ultimate limitation period and the presumptive commencement of the basic limitation period.

The language Justice Strathy uses could support either construction.  He writes  that s. 18 “provides that a claim for contribution and indemnity is ‘discovered’ and, therefore, the limitation period begin to run, on the day on which the wrongdoer seeking indemnity is served with the plaintiff’s claim.”  Does this mean the limitation period begins to run presumptively, or begins to run in all circumstances?

Paragraph 17 tends to suggest that it runs in all circumstances:

[17]      Thus, the general two-year limitation period runs from the date that the party claiming contribution and indemnity is served with the claim in respect of which contribution is sought.

My hope is that when the Court of Appeal directly considers the matter, Justice Leach’s analysis will prevail.  Miaskowksi is at odds with a common sense reading of the Limitations Act as a whole, and introduces unnecessary and unhelpful complexity into the limitations scheme.

 

 

Ontario: A Trustee Act Refresher

Justice Newbould’s decision in John C. Chapling v. First Associates Investments Inc. et al. provides a useful summary of the limitation of actions under the section 38 of the Trustee Act:

[10]           First Associates relies on the two year limitation period contained in the Trustee Act, RSO 1990, c T.23:

38. (1) Except in cases of libel and slander, the executor or administrator of any deceased person may maintain an action for all torts or injuries to the person or to the property of the deceased in the same manner and with the same rights and remedies as the deceased would, if living, have been entitled to do, and the damages when recovered shall form part of the personal estate of the deceased; but, if death results from such injuries, no damages shall be allowed for the death or for the loss of the expectation of life, but this proviso is not in derogation of any rights conferred by Part V of the Family Law Act.

 (2) Except in cases of libel and slander, if a deceased person committed or is by law liable for a wrong to another in respect of his or her person or to another person’s property, the person wronged may maintain an action against the executor or administrator of the person who committed or is by law liable for the wrong.

 (3) An action under this section shall not be brought after the expiration of two years from the death of the deceased.

[11]           This limitation period is a strict one and the discoverability rule has no application. See Ryan v. Moore 2005 SCC 38 (CanLII), [2005] 2 S.C.R. 53 at para. 31:

31     In my view, the case that best assists this Court in the present matter is the one giving rise to the Ontario Court of Appeal’s decision in Waschkowski v. Hopkinson Estate (2000), 2000 CanLII 5646 (ON CA), 47 O.R. (3d) 370. The court had to determine the possible application of the discoverability rule to s. 38(3) of theTrustee Act, R.S.O. 1990, c. T.23, the statutory provision in Ontario permitting an action in tort by or against the estate of a deceased person and limiting the period during which such actions may be commenced. Abella J.A., as she then was, concluded, at para. 16, that the discoverability rule did not apply to the section since the state of actual or attributed knowledge of an injured person in a tort claim is not germane when a death has occurred. She explained at paras. 8-9:

 In s. 38(3) of the Trustee Act, the limitation period runs from a death. Unlike cases where the wording of the limitation period permits the time to run, for example, from “when the damage was sustained” (Peixeiro) or when the cause of action arose (Kamloops), there is no temporal elasticity possible when the pivotal event is the date of a death. Regardless of when the injuries occurred or matured into an actionable wrong, s. 38(3) of the Trustee Act prevents their transformation into a legal claim unless that claim is brought within two years of the death of the wrongdoer or the person wronged.

The underlying policy considerations of this clear time limit are not difficult to understand. The draconian legal impact of the common law was that death terminated any possible redress for negligent conduct. On the other hand, there was a benefit to disposing of estate matters with finality. The legislative compromise in s. 38 of the Trustee Act was to open a two-year window, making access to a remedy available for a limited time without creating indefinite fiscal vulnerability for an estate. [Emphasis in original.]

[12]           Section 38(1) refers to “an action for all torts or injuries to the person or to the property of the deceased”. It has been held that this language covers claims in tort, contract and breach of fiduciary duty. See Lafrance Estate v Canada (Attorney General) (2003), 2003 CanLII 40016 (ON CA), 64 OR (3d) 1 (C.A.) in which claims were made by native persons who when children were sent to residential schools in Northern Ontario. Some of the persons had died and claims were made by their estates. Some of the claims made were for unpaid wages caused by forced labour. It was argued on behalf of the estates that these claims were contractual in nature and that as a claim for breach of contract could be sustained at common law, such claims did not depend upon the existence of the Trustee Act and, therefore, were not statute-barred. That argument did not succeed. The Court stated:

[54]   In determining whether the estate claims fall within the scope of s. 38(1) of the Trustee Act, the focus is not upon the form of the action but, rather, the nature of the injury. The question to be asked in determining its applicability is whether the alleged wrong constituted an injury to the deceased person. See Smallman v. Moore, 1948 CanLII 4 (SCC), [1948] S.C.R. 295, [1948] 3 D.L.R. 657, and Roth v. Weston Estate (1997),1997 CanLII 1125 (ON CA), 36 O.R. (3d) 513, 20 E.T.R. (2d) 69 (C.A.).

[55]   Whether the claim for forced labour is framed in tort, contract, quasi-contract or breach of fiduciary duty, the claim is for injury of a personal nature. The core of the alleged wrongdoing is the failure of those running the residential schools to compensate the deceased persons for the work they were forced to perform. In other words, the claims arise out of the treatment that the deceased plaintiffs endured at the residential schools. As such, the claims for forced labour are within the meaning of “injuries to the person”. Accordingly, they fall squarely within the provisions of s. 38(1) of the Trustee Act and are subject to the applicable two-year limitation period in s. 38(3).

[56]   The same analytical approach applies to the estate claims for breach of fiduciary duty. Again, the focus is not upon the form of the action but whether the alleged wrong constitutes an injury to the person. It is apparent that the alleged breaches of fiduciary duty are said to have inflicted injury upon the deceased persons and therefore the claims for breach of fiduciary duty are within the ambit of s. 38(1).

Justice Newbould also rejected the argument that the word “injury” in section 38(1) does not apply to claims for pure economic loss.

 [14]           The plaintiff relies on the case of English Estate v. Tregal Holdings Ltd. [2004] OJ No 2853 in which a deceased had transferred shares in one company to another and a claim had been made by her estate against the two companies and several officers for oppression and fraud. Pepall J. (as she then was), held that the word “injury” in section 38(1) of theTrustee Act did not apply to claims for pure economic loss. She stated:

[23]   Counsel were unable to locate any Ontario cases that were precisely on point. Adopting the British Columbia Court of Appeal decision in Alberni District Credit Union v. Cambridge Properties Ltd., 1985 CanLII 567 (BC CA), [1985] B.C.J. No. 1829, the Alberta Court of Appeal in Guest v. Bonderove & Co.[1988] A.J. No. 323 held that the word “injury” imported something in the nature of physical injury or damage and pure economic loss was not included.

[24]   In examining the nature of the injury, I am unable to conclude that the wrongs alleged constitute an injury to Ms. English or her property of the type contemplated by section 38(1) of the Act. In my view the claims in this action are not for injury of a personal nature. They therefore are not captured by section 38(1) of the Act and hence are not barred by section 38(3).

[15]           I have difficulty with this decision and would not follow it. The Guest case referred to in English Estate dealt with the limitations legislation in Alberta that provided a two year limitation period for an action “for trespass or injury to real property or chattels”. It was held that these words did not encompass an action alleging pure economic loss without injury to the real property in question. That language is not the language of section 38(1) of our Trustee Act. The Alberni case referred to involved British Columbia legislation providing for a two year limitation period “for damages in respect of injury to person or property, including economic loss arising from the injury” and a claim relating to damaged property. It was held that “injury” imported something in the nature of physical injury or damage and as the building had not been injured, the limitation period did not apply. There was no discussion of whether pure economic loss would constitute an injury to the person. The case did to raise the issue raised in this case.

[16]           Section 38(1) of the Trustee Act does not contain any language that suggests that the claims made in this case are not actions “for all torts or injuries to the person or to the property of the deceased”. The property of the deceased, being her money, was allegedly destroyed in value due to the wrongful acts of Mr. Monaghan. Black’s Law Dictionary includes in the definition of “injury” the “violation of another’s legal right, for which the law provides a remedy; a wrong or injustice” and “any harm or damage”. That is broad enough to include the claims here for damages arising from the actions of Mr. Monaghan who was a registered investment advisor with First Associates.

[17]           In Lafrance Estate it was held that the claim for unpaid wages fell within section 38(1) of the Trustee Act. I recognize the claim as pleaded arose from being required to perform forced labour, but it was a claim for economic damages.

[18]           Section 38(2) of the Trustee Act applies to claims against the estate of a deceased who committed “a wrong to another in respect of his or her person or to another person’s property”. Bikur Cholim Jewish Volunteer Services v. Penna Estate 2009 ONCA 196 (CanLII) involved a claim against a deceased’s estate arising out of economic loss allegedly caused to the plaintiff. It was held that section 38(3) applied to bar the claim. The point as to whether the claim involved a “wrong to another in respect of his person or another person’s property” was not an issue directly raised, but the premise of the decision was that causing an economic loss was a “wrong”. While section 38(2) of the Trustee Act does not include the word “injury” and section 38(1) does not include the word “wrong”, in principle there is no reason why the two should be treated differently. As stated in Black’s Law Dictionary, injury includes a wrong.

[19]            I conclude that the claims asserted in this case fall within the language of section 38(1) of the Trustee Act, and are statute barred under section 38(3) unless there is reason otherwise as claimed by the plaintiff.

 

Ontario: Remember, the Trustee Act doesn’t supersede the Limitations Act

The Plaintiffs in Kakinoki et al. v. Islam et alsought leave to add a defendant notwithstanding the expiry of the presumptive limitation period.  They submitted that the limitation period in section 38(3) of the Trustee Act excludes the application of the section 4 general limitation period in the Limitations Act.  However, it’s settled law that the Trustee Act doesn’t  supersede the Limitations Act.  That the doctrine of special circumstances applies to the Trustee Act but not the Limitation Act is of no consequence.

Justice Dunphy helpfully summarised the interaction between the Limitations Act and the Trustee Act:

[25]           The relief sought by the plaintiffs, ostensibly grounded in s. 38 of the Trustee Act, would produce an outcome diametrically opposite to one that a straightforward reading of s. 38 would lead one to suppose.  Section 38(1) of the Trustee Act modifies the rule of the common law which had the sometimes harsh effect of making a defendant better off should an injured person succumb to his or her injuries.  As a result of s. 38, their claim can be taken up by the executor or trustee “in the same manner and with the same rights and remedies as the deceased would, if living, have been entitled to do”.  I have already found that Mr. Kur, who survived the accident, lost the right to pursue the Township of King by reason of s. 4 of the Limitations Act.  It would be anomalous indeed if s. 38 of the Trustee Act, while purporting only to vest in the executor the same rights as the deceased Mr. Kakinoki would have had if he had survived the tragedy, instead potentially vested higher rights in his estate and those claiming thought it.  Such a reading would turn s. 38 on its ear and is not one which the plain wording of s. 38 compels.  It does not purport to exclude the operation of other limitation periods, but imposes another limitation period which may well prove shorter in some cases.

 

[26]           In the case of Camarata, supra, the Court of Appeal found (at para. 8):

 

“Section 38(3) of the Trustee Act does not have the effect of tolling a limitation period that excludes the limitation period made applicable to the action by ss. 4 and 5 of the Limitations Act.  Section 38(3) creates a second limitation period that operates in addition to any limitation period that would have applied had the deceased been able to carry on with the action.  In some circumstances s. 38(3) will effectively shorten what would otherwise be the applicable limitation period….Section 38(3) cannot extend the limitation period what would have been applicable had the deceased not died and been able to carry on with his action” (emphasis added).

 

[27]           Camarata has found that both limitation periods must be applied and that the Trustee Act does not supercede the Limitations Act.  This is consistent not only with precedent but with the plain words of the statute and common sense.  Thus, even if I were to be moved to exercise discretion to soften the application of the Trustee Act, I can do nothing to mitigate the application of the Limitations Act.

 

[28]           Section 20 and 21 of the Limitations Act also demand this same conclusion and preclude me from granting the requested amendment adding the Township of King to the Kakinoki action:

 

“20. This Act does not affect the extension, suspension or other variation of a limitation period or other time limit by or under another Act.

 

  1. (1) If a limitation period in respect of a claim against a person has expired, the claim shall not be pursued by adding the person as a party to any existing proceeding.”

 

[29]           Section 38(3) of the Trustee Act and Section 4 of the Limitations Act both provide for a two year limitation period which, given the death of Mr. Kakinoki on the day of the accident, happen to coincide with each other precisely (subject to extensions of the latter limitation due to possible discoverability issues which do not apply to Trustee Act claims).  The Trustee Act by its terms does not purport to extend, vary or suspend the Limitations Act.  To the contrary, they both apply a two year period.   The doctrine of special circumstances allowing what is, in effect, a nunc pro tunc amendment to pleadings to avoid the application of the Trustee Act can hardly be characterized as an extension, variation or suspension under another Act as referred to in s. 20 of the Limitations Act and, accordingly, s. 21 thereof precludes me from adding the Township of King to this existing proceeding as requested in this motion.

 

[30]           Accordingly, on the basis of Camarata, supra, and s. 21 of the Limitations Act, I must dismiss the plaintiffs’ motion to add Township of King as a defendant at this stage in the proceedings given the passage of the limitation period under s. 4 of the Limitations Act.