Really terrific limitations analyses

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 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: the limitation of claims on foreign judgments

 

In Independence Plaza 1 Associates, L.L.C. v. Figlioni, the Court of Appeal held that the basic two-year limitation period applies to a claim on a foreign judgment in Ontario, and begins to run, at the earliest, when the time to appeal the judgment has expired or, if there is an appeal, the date of the appeal decision.  Section 5 of the Limitations Act can operate to delay discovery of the claim.

This is a terrific decision from Justice Strathy that settles one of the last unresolved limitations issues.  I wrote about the issue in a now out-of-date section of the Law of Limitations.  Conflicting jurisprudence held that the basic limitation period applied (correctly, I suggested), and that as a proceeding to enforce an order no limitation period applied at all (utterly wrongly, I suggested, in more measured language).      

Justice Strathy’s analysis turns on a close reading of the Limitations Act.  His decision begins with the following: “The correct approach to resolving the two questions raised by this appeal begins and ends with the provisions of the Limitations Act, 2002, which is a comprehensive and exhaustive scheme for dealing with limitation periods”.  I would offer, gently, that the correct approach to a limitations question always begins and ends with the Limitations Act’s provisions, which courts rather often forget, but this mustn’t detract from the really excellent analyses.

The analyses begins where limitations analyses should—with section 2, which describes the application of the Limitations Act:

[31]   Because the proceeding on the New Jersey judgment brought by the respondent in this appeal is a “claim pursued in a court proceeding,” it falls within the comprehensive and exhaustive scheme of the statute.

Having found that the Limitations Act applies, Justice Strathy turned to the application of s. 16(1)(b).

[33]   I turn now to the first question raised in this appeal – whether there is any limitation period applicable to a proceeding on a foreign judgment. Section 16(1) of the Limitations Act, 2002, which had no counterpart in the former statute, created a class of claims that are subject to no limitation period, rather than the “basic” two-year limitation period or the “ultimate” fifteen-year limitation period.

[42]   It falls to this court, as a matter of first impression, to interpret whether s. 16(1)(b) applies to a proceeding on a foreign judgment. The words of s. 16(1)(b) are to be read in light of the language of the provision as a whole, their context within the statutory scheme, and the purposes of the Limitations Act, 2002: see R. v. Hajivasilis, 2013 ONCA 27 (CanLII), 114 O.R. (3d) 337, at para. 23; and Ayr Farmers Mutual Insurance Co. v. Wright, 2016 ONCA 789 (CanLII), at paras. 26, 28-29, 31-32.

[43]   First, therefore, I consider the language of s. 16(1)(b) as a whole.

[44]   Phrases serving parallel functions and associated by the disjunction “or” in a statutory provision influence each other’s meaning. The parallelism “invites the reader to look for a common feature among the terms” to resolve any ambiguities: Ruth Sullivan, The Construction of Statutes, 6th ed. (Markham: LexisNexis, 2014), at p. 230. The Supreme Court has stated that “a term or an expression should not be interpreted without taking the surrounding terms into account” in order to identify a “common thread”: Opitz v. Wrzesnewskyj, 2012 SCC 55 (CanLII), [2012] 3 S.C.R. 76, at paras. 40, 43.

[45]   In my view, the term “order of a court” in s. 16(1)(b) takes its meaning, in part, from the parallel phrase immediately associated with it – namely, “any other order that may be enforced in the same way as an order of a court” (emphasis added). I observe that a similar parallel phrase is found in s. 19(1) of the Statutory Powers Procedure Act, R.S.O. 1990, c. S.22, which provides that “[a] certified copy of a tribunal’s decision or order in a proceeding may be filed in the Superior Court of Justice by the tribunal or by a party and on filing shall be deemed to be an order of that court and is enforceable as such” (emphasis added).

[46]   The “common feature” or “common thread” linking these parallelisms is the concept of enforceability. Section 16(1)(b) of theLimitations Act, 2002 applies to court orders and to other orders, such as those of persons exercising a statutory power of decision, that are enforceable in the same way as a court order.

[47]   This common thread within s. 16(1)(b) does not extend to foreign judgments. The domestic judgments contemplated by the provision are directly enforceable in Ontario by means of the execution procedures in r. 60 of the Rules of Civil Procedure, including writs of seizure and sale, garnishment, or the appointment of a receiver: Lax, at para. 21. By contrast, like an order of a foreign arbitral tribunal, the debt obligation created by a foreign judgment cannot be directly enforced in Ontario in the absence of reciprocal enforcement legislation such as REJA or REJUKA. A proceeding in Ontario must be brought first: see Lax at paras. 11-13; Yugraneft at para. 45; Chevron Corp. v. Yaiguaje, 2015 SCC 42 (CanLII), [2015] 3 S.C.R. 69, at para. 43. That proceeding may result in a judgment or order of the Ontario court. The resulting order may be enforced as an order of the court, with no applicable limitation period.

[48]   Thus, the judgment of a foreign court is one step removed from being an order of a court for the purpose of s. 16(1)(b) of theLimitations Act, 2002. It is not on the same level as an order of an Ontario court or any other order, such as an order of an Ontario statutory decision maker, which may be enforced as an order of a domestic court. This was adverted to by Feldman J.A. in Lax, at para. 31, in explaining why she did not agree with the approach taken by Cumming J. in Girsberger:

[A]s long as only domestic judgments can be enforced by execution and the other methods discussed above, and therefore foreign judgments must be transformed into domestic judgments or registered before they are enforceable as domestic judgments, there is not parity of treatment.

[49]   There are good reasons for giving different treatment for limitations purposes to the enforcement in Ontario of a judgment of an Ontario court, on the one hand, and a judgment of a foreign court, on the other hand. The principle of territorial sovereignty means that the judgment of a court has effect only inside the territory in which the court is located and cannot be enforced outside its borders: Stephen G.A. Pitel & Nicholas S. Rafferty, Conflict of Laws, 2d ed. (Toronto: Irwin Law, 2016), at p. 162. The extraterritorial enforcement of a court’s order is not a legitimate exercise of state power: see Tolofson v. Jensen, 1994 CanLII 44 (SCC), [1994] 3 S.C.R. 1022, at p. 1052; Club Resorts Ltd. v. Van Breda, 2012 SCC 17 (CanLII), [2012] 1 S.C.R. 572, at para. 31;Chevron, at paras. 47-48; and Endean v. British Columbia, 2016 SCC 42 (CanLII), 401 D.L.R. (4th) 577, at para. 45.

[50]   Thus, while a domestic judgment can be enforced as of right in Ontario, it is necessary to bring a proceeding on a foreign judgment. If that proceeding is successful, it will give rise to an Ontario judgment which can be directly enforced in the province.

[51]    Furthermore, a judgment creditor who brings an Ontario proceeding on a foreign judgment must show that the foreign court had jurisdiction and that the judgment is final and for the payment of money (or that it would be appropriate for the Ontario court to recognize it as enforceable within the province even if it is interlocutory or non-monetary): see Pro Swing; Chevron; and Cavell Insurance Co. (Re) (2006), 2006 CanLII 16529 (ON CA), 80 O.R. (3d) 500 (C.A.), at para. 41.

[52]   The foreign judgment debtor is entitled to raise defences to the proceeding, such as fraud, denial of natural justice and public policy: see Beals. These defences “distinguish foreign judgments from local judgments, against which the sole recourse is an appeal”: Janet Walker & Jean-Gabriel Castel, Canadian Conflict of Laws, loose-leaf (Rel. 54-3/2016 Pub.5911), 6th ed. (Toronto: LexisNexis, 2005), at para. 14.3.

[53]   I conclude that the language of s. 16(1)(b) of the Limitations Act, 2002 suggests that the term “order of a court” refers to an order of a domestic court.

[54]   Second, I consider the statutory context of s. 16(1)(b) of the Limitations Act, 2002.

[55]   Section 16(1)(b) also takes its meaning from the surrounding provisions of s. 16. When statutory provisions are grouped together, the legislature is presumed to have drafted each with the others in mind: Inland Revenue Commissioners v. Hinchy,[1960] A.C. 748 (H.L.), at p. 766. They tend to illuminate each other’s meaning because they “share a single idea”: Ruth Sullivan,Statutory Interpretation, 3d ed. (Toronto, Irwin Law, 2016), at p. 175.

[56]   The other provisions grouped together in s. 16 pertain to claims such as family law support awards, sexual assault claims and government claims that are considered so important that, for one policy reason or another, they should have no limitation period at all. For example, the policy reason underlying the exemption for sexual assault claims “is grounded in the likelihood that the dynamic of the relationship will impede the autonomy of the victim”: Boyce v. Toronto (City) Police Services Board, 2011 ONSC 53(CanLII), at para. 40, aff’d, 2012 ONCA 230 (CanLII).

[57]   In this context, it is important to identify the policy reason for including claims “to enforce an order of a court” in the subset of claims that have no limitation period under s. 16. In my view, the reason is that such claims have already passed a limitations hurdle under Ontario law – a court order can only be obtained if the underlying cause of action giving rise to it was not time-barred.

[58]   This was the policy reason suggested by the British Columbia Law Reform Commission, in its 1974 Report on Limitations, for the argument that no limitation period should apply to claims to enforce domestic court orders. As quoted by Newbury J.A. inYoung v. Verigin, at para. 7, the commission wrote:

Furthermore, the successful plaintiff cannot be said to have slept on his rights. He has taken action, and as a consequence recovered judgment. It might be argued, with considerable justification, that no limitation period whatsoever should exist with respect to the enforcement of judgments. It may seem unfair that the plaintiff who has been put to the trouble and expense of obtaining a judgment to enforce a right or obligation should face a further limitation period with respect to the exercise of his rights under the judgment. Why should he not be free to pursue his rights under the judgment at his leisure if he so chooses?

[59]   It follows that the term “order of a court” in s. 16(1)(b) should be interpreted as referring to an order of a domestic court only. A proceeding on a foreign judgment has not passed any Ontario limitations hurdle. If the action on the foreign judgment is successful, it results in an Ontario judgment, which is subject to no limitation period. But that can only be justified if the underlying cause of action based on the foreign judgment has already passed a limitations hurdle in Ontario.

[60]     I find support for this conclusion in the Report of the Ontario Law Reform Commission on the Limitation of Actions (Toronto: Department of the Attorney General, 1969), at pp.50-51. The report stated, at p. 49, that there was good reason to apply the longer twenty-year limitation period in the former Limitations Act to actions on domestic judgments because, in terms later adopted by the British Columbia report, “the successful plaintiff cannot be said to have slept on his rights. He has taken action and, as a consequence, recovered judgment.” However, the report nevertheless recommended that foreign judgments should remain subject to the six-year limitation period governing debts in the former Limitations Act, notwithstanding the artificiality of treating them as simple contract debts.

[61]   It is also noteworthy that several provinces have subjected foreign judgment proceedings to a special limitation period that is distinct from the one that applies to proceedings on domestic judgments. British Columbia’s Limitation Act subjects “local” judgment proceedings to a ten year limitation period in s. 7, but it deals with “extraprovincial judgments” separately. Section 2(1)(l) of Manitoba’s The Limitation of Actions Act, C.C.S.M., c L150, treats “Canadian judgments” differently from other judgments. Newfoundland sets a six-year limitation period on an action “to enforce a foreign judgment” and a ten-year period on actions to enforce a judgment of a court in the province: see Limitations Act, S.N.L. 1995, c. L-16.1, s. 6(1)(g). And Prince Edward Island’sStatute of Limitations, R.S.P.E.I. 1988, c. S-7, s. 2(1)(f) distinguishes between “extraprovincial judgments” and other judgments.

[62]   The statutory context therefore suggests that the language of s. 16(1)(b) of the Limitations Act, 2002 is confined to orders of domestic courts.

[63]   Third, and finally, I consider s. 16(1)(b) in light of the purposes of limitations statutes.

[64]   It would be contrary to the purposes of limitations statutes to interpret s. 16(1)(b) as exempting foreign judgments from any limitation period. If it were always possible to bring a proceeding on a foreign judgment in Ontario without time limitation, no matter when and where it was obtained, the debtor would be indefinitely exposed to the prospect of defending such proceedings in Ontario. As was pointed out in the Ontario Law Reform Commission’s report at p. 50, problems associated with the preservation and reliability of evidence are especially pronounced for foreign judgment debtors. This militates in favour of having some limitation period apply to proceedings on foreign judgments. As well, exempting such proceedings from a limitation period would not encourage diligence or reasonable dispatch on the part of the foreign judgment creditor, who, unlike domestic judgment creditors, has not already surmounted an Ontario limitations hurdle.

[66]   I conclude, therefore, that s. 16(1)(b) of the Limitations Act, 2002 does not apply to proceedings on foreign judgments, and the applicable limitation period for the respondent’s proceeding on the New Jersey judgment at issue in this appeal is the basic two-year period in s. 4. The result is that time begins to run when the claim is “discovered” within the meaning of s. 5. I turn to that question next.

Justice Strathy then considered when time begins to run on a claim on a foreign judgment in Ontario:

[70]   The test under the Limitations Act, 2002 is not whether the judgment is “final”; it is when the claim is discovered, a fact that is ascertained through the application of s. 5(1), aided by the presumption in s. 5(2).

[71]   I acknowledge the point made by Newbould J. in PT ATPK that, in the context of s. 5(1) of the Limitations Act, 2002, a proceeding on a foreign judgment does not fall particularly neatly into the definition of “claim” as “a claim to remedy an injury, loss or damage that occurred as a result of an act or omission.” However, the statute was meant to be comprehensive and exhaustive.Section 2(1) provides that it applies to “claims pursued in court proceedings,” and s. 4 provides that the basic two-year limitation period applies “unless this Act provides otherwise.”

[72]   The words “injury, loss or damage” in s. 5(1) can reasonably refer to the debt obligation created by a foreign judgment and owed by the foreign judgment debtor to the creditor. The “act or omission” can reasonably refer to the debtor’s failure to discharge the obligation once it became final. Viewed in this light, s. 5(1) can reasonably be viewed as applying to a proceeding on a foreign judgment.

[74]   Section 5(1) provides that a claim is discovered on the earlier of: (a) the day on which the claimant first knew, among other things, “that having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it”; and (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 clause (a)”. The test in s. 5(1)(a) has been referred to as a “subjective test” because it looks to the claimant’s actual knowledge, and the test in s.5(1)(b) as a “modified objective” test because it looks to what a reasonable person with the abilities and in the circumstances of the claimant ought to have known: see Ferrera v. Lorenzetti Wolfe Barristers and Solicitors, 2012 ONCA 851 (CanLII), 113 O.R. (3d) 401, at para. 70; and Crombie Property Holdings Limited v. McColl-Frontenac Inc. (Texaco Canada Limited), 2017 ONCA 16 (CanLII), at para. 35.

[75]   In 407 ETR Concession Co. v. Day, 2016 ONCA 709 (CanLII), at para. 48, Laskin J.A. explained that “one reason why the legislature added ‘appropriate means’ [in s. 5(1)(a)] as an element of discoverability was to enable courts to function more efficiently by deterring needless litigation.” “Appropriate” means “legally appropriate.” For example, a tactical choice to delay commencement of a proceeding to engage in settlement discussions after a loss, injury or damage is known does not make the proceeding inappropriate: Markel Insurance Co. of Canada v. ING Insurance Co. of Canada, 2012 ONCA 218 (CanLII), 109 O.R. (3d) 652, at para. 24.

[76]   Appropriateness must be assessed on the facts of each case, and case law applying s. 5(1)(a)(iv) is of limited assistance:Brown v. Baum, 2016 ONCA 325 (CanLII), 348 O.A.C. 251, at para. 41. However, it is noteworthy that courts have held that a proceeding is not legally appropriate until other mechanisms for resolving a dispute, such as a statutory remedial process, have been exhausted: see 407 ETR, at para. 40; U-Pak Disposals (1989) Ltd. v. Durham (Regional Municipality), 2014 ONSC 1103(CanLII), at paras. 22-25; Kadiri v. Southlake Regional Health Centre, 2015 ONSC 621 (CanLII), at paras. 52-57, aff’d, 2015 ONCA 847 (CanLII); and Mew, at pp. 95-96.

[77]   In the usual case, it will not be legally appropriate to commence a legal proceeding on a foreign judgment in Ontario until the time to appeal the judgment in the foreign jurisdiction has expired or all appeal remedies have been exhausted. The foreign appeal process has the potential to resolve the dispute between the parties. If the judgment is overturned, the debt obligation underlying the judgment creditor’s proceeding on the foreign judgment disappears.

[79]   To regard a claim based on the foreign judgment as discoverable and appropriate only when all appeals have been exhausted is also consistent with the observations of Rothstein J. in Yugraneft. He stated, at para. 57, that the limitation period to enforce a foreign arbitral judgment under Alberta’s Limitations Act starts to run when the time to appeal the judgment has expired or, where an appeal is taken, the date of the appeal decision.

[79]   To regard a claim based on the foreign judgment as discoverable and appropriate only when all appeals have been exhausted is also consistent with the observations of Rothstein J. in Yugraneft. He stated, at para. 57, that the limitation period to enforce a foreign arbitral judgment under Alberta’s Limitations Act starts to run when the time to appeal the judgment has expired or, where an appeal is taken, the date of the appeal decision.

[80]   Finally, as the application judge noted, this approach avoids the risk of multiplicity of proceedings by not requiring the judgment creditor to commence a proceeding on a foreign judgment in Ontario before all proceedings in the foreign jurisdiction have run their course. It furthers the purpose of s. 5(1)(a)(iv) of the Limitations Act, 2002 by deterring the unnecessary litigation that may result from commencing an Ontario proceeding on a foreign judgment that is subsequently overturned.

[82]   In a particular case, a claim based on a foreign judgment may not be discovered under s. 5 of the Limitations Act, 2002 until such time as the judgment creditor knew or ought to have known that the judgment debtor had exigible assets in Ontario and could be served with process: see Yugraneft at paras. 49. 58, 61. As s. 5(1)(b) makes clear, the discoverability assessment, including the appropriateness criterion, must take account of the factual context and the plaintiff’s actual circumstances, and I reiterate that each case must be decided on its own facts: see 407 ETR, at paras. 34, 45-46.

These are the other noteworthy aspects of the decision:

  • Justice Strathy uses the language of proceeding—”When does time begin to run a proceeding”.  This is the correct way to engage with the commencement of time, because the Limitations Act bars proceedings, not claims or causes of action.  One sees this accuracy, and the accordant conceptual clarity, quite infrequently.
  • Justice Strathy provides a succinct overview of the purposes of statutes of limitations, which is now the leading Ontario authority for the principles (and, forgive me for adding, cites the Law of Limitations):

[19]   Limitations statutes reflect public policy about efficiency and fairness in the justice system. There are three broad policy justifications for limitation statutes: Manitoba Metis Federation Inc. v. Canada (Attorney General), 2013 SCC 14 (CanLII), [2013] 1 S.C.R. 623, at paras. 231-234.

[20]   First, they promote finality and certainty in legal affairs by ensuring that potential defendants are not exposed to indefinite liability for past acts: Hare v. Hare (2006), 2006 CanLII 41650 (ON CA), 83 O.R. (3d) 766 (C.A.), at para. 41. They reflect a policy that, after a reasonable time, people should be entitled to put their business and personal pasts behind them and should not be troubled by the possibility of “stale” claims emerging from the woodwork.

[21]   Second, they ensure the reliability of evidence. It is inefficient and unfair to try old claims because evidence becomes unreliable with the passage of time. Memories fade, witnesses die and evidence gets lost. After a reasonable time, people should not have to worry about the preservation of evidence: K.M. v. H.M., 1992 CanLII 31 (SCC), [1992] 3 S.C.R. 6, at p. 30.

[22]   Third, and related to this, limitation periods promote diligence because they encourage litigants to pursue claims with reasonable dispatch.

[23]   Other justifications have been given, including the interest in the efficient use of public resources through the expeditious resolution of disputes and the desirability of adjudicating disputes on the basis of contemporary values and standards: see Graeme Mew, The Law of Limitations, 3d ed. (Toronto, LexisNexis, 2016), at pp. 16-18.

  • Justice Strathy also provides a very succinct overview of the legislation history of the Limitations Act:

[28]    The Limitations Act, 2002 was the culmination of several attempts, beginning in the late 1960s, to reform, consolidate and simplify the law of limitations in Ontario. The history of those attempts was set out by Weiler J.A. in York Condominium Corp. No. 382 v. Jay-M Holdings Ltd., 2007 ONCA 49 (CanLII), 84 O.R. (3d) 414, at paras. 27-30. See also McConnell v. Huxtable, 2013 ONSC 948 (CanLII), 113 O.R. (3d) 727, at paras. 62-73, aff’d, 2014 ONCA 86 (CanLII).

[29]   The purpose of the new statute was to replace a complex, obscure and confusing regime of multiple limitation periods with a simple and comprehensive scheme. The new scheme consists of a basic two-year limitation period applicable to most claims, an “ultimate limitation period” of fifteen years and a statutorily-enshrined discoverability principle. It was intended to promote certainty and clarity in the law of limitation periods: see Dilollo Estate (Trustee of) v. I.F. Propco Holdings (Ontario) 2013 ONCA 550 (CanLII), 36 Ltd., 2013 ONCA 81, 117 O.R. (3d) 81, at para. 61.