Ontario: The Court of Appeal reminds that limitations defences are affirmative

 

Two aspects of the Court of Appeal decision in Abrahamovitz v. Berens are noteworthy.

First, the court explains why the expiry of the limitation period is a defence that must be pleaded in enough detail to makes this a candidate for leading decision on the principle:

[30]      This court explained in Beardsley v. Ontario (2001), 2001 CanLII 8621 (ON CA)57 O.R. (3d) 1 (C.A.), at para. 21 that “the expiry of a limitation period does not render a cause of action a nullity; rather, it is a defence and must be pleaded”. See also:Strong v. Paquet Estate (2000), 2000 CanLII 16831 (ON CA)50 O.R. (3d) 70 (C.A.), at paras. 35-37Tran v. University of Western Ontario2016 ONCA 978 (CanLII)410 D.L.R. (4th) 527, at para. 18; and Salewski v. Lalonde2017 ONCA 515 (CanLII)137 O.R. (3d) 750, at para. 43.

[31]      There are two aspects to the statement from Beardsley. One is that from a procedural fairness point of view, a plaintiff is entitled to plead in response to a limitations defence, so that if a motion is brought to dismiss the claim, the court will have all the facts relied on to assess discoverability, or whatever other factors a plaintiff may wish to raise in response: Beardsley, at para. 22;Strong Estate, at para. 38Metropolitan Toronto Condominium Corp. No. 1352 v. Newport Beach Development Inc.2012 ONCA 850 (CanLII)113 O.R. (3d) 673, at paras. 115-116; and Greatrek Trust S.A./Inc. v. Aurelian Resources Inc.[2009] O.J. No. 611 (Ont. S.C.J.), at para. 18.

[32]      The requirement that an affirmative defence, including a limitations defense, be pleaded to avoid surprise to the opposite party is reflected in r. 25.07(4) of the Rules of Civil Procedure, which provides:

In a defence, a party shall plead any matter on which the party intends to rely to defeat the claim of the opposite party and which, if not specifically pleaded, might take the opposite party by surprise or raise an issue that has not been raised in the opposite party’s pleading.

[33]      The second aspect of the statement from Beardsley, however, is more germane to this case. A limitations defence is “just that, a defence”: Lacroix (Litigation Guardian of) v. Dominique2001 MBCA 122 (CanLII)202 D.L.R. (4th) 121, at para. 18. A defendant chooses whether or not to rely on a limitations defence, but is not obliged to do so: Graeme Mew, Debra Rolph, & Daniel Zacks, The Law of Limitations, 3rd ed. (Toronto: LexisNexis Canada Inc., 2016) p.166. See e.g.: Strong Estate, at paras. 35-40; and Girsberger v. Kresz (2000), 2000 CanLII 22406 (ON SC)50 O.R. (3d) 157 (C.A.), at para. 13.

[34]      The fact that the choice belongs to the defendant is codified in s. 22 of the Limitations Act, 2002, which allows a limitation period to be suspended or extended by agreement.

[35]      This is a very important and useful provision that allows parties to a potential claim to suspend the running of a limitation (toll the limitation period) to allow them to conduct investigations or settlement discussions, without pressure on the claimant to commence the action unnecessarily. It promotes judicial economy and is cost-effective for the parties.

[36]      Obviously, this provision would be ineffective if another party could assert the limitation period in spite of the defendant’s agreement to toll the limitation period, or if the action became a nullity on the expiry of the limitation period. See for example, Schreiber v. Lavoie (2002), 2002 CanLII 49430 (ON SC)59 O.R. (3d) 130 (S.C.J.), where a third party was not entitled to rely on r. 29.05(1) (a rule which allows a third party to plead a defence not raised by the defendant) to assert a limitations defense that the defendant had expressly agreed it would not rely on.

Second, there is a reminder that special circumstances doctrine is of no application:

[24]      I would not accept this argument for two reasons. First, the Estate has not commenced any proceeding or claimed any relief. The essence of this argument amounts to invocation of the old common law doctrine of special circumstances that no longer applies under the Limitations Act, 2002. See: Joseph v. Paramount Canada’s Wonderland2008 ONCA 469 (CanLII)90 O.R. (3d) 401. The Estate is essentially saying that because all of the facts have already been pleaded in the action, there is no surprise and no prejudice to the defendants (or other parties) to allow the Estate to be added as a party now, even though the limitation period has expired.

Ontario: More on adding defendants (and some pedantry)

Bhatt v. Doe has a good analysis of adding a defendant to proceeding after the presumptive expiry of the limitation period.  If you want to cite a recent decision, this is a good option.

In the spirit of pedantry I have two quibbles.  First, this:

[11]           The passing of a limitation period is fatal to a motion to add a party (Limitations Act2002, s. 21(1)). The doctrine of special circumstances is no longer applicable (Joseph v. Paramount Canada’s Wonderland(2008), 2008 ONCA 469 (CanLII)90 O.R. (3d) 401 at paras. 27 and 28 as cited in Parent v. Janandee Management Inc.[2009] O.J. No. 3763 (Master) at para. 29).

It’s now ten years since the Court of Appeal held that the special circumstances doctrine is no longer generally available.  Why do bar and bench feel compelled to make this point?   Who still argues special circumstances?

Second, this:

[12]           With respect to claims pursuant to the provisions of unidentified automobile coverage, discoverability is triggered when the insured knew or ought to have known about the material facts on which the claim is based. As stated by Justice Mackinnon in July v. Neal1986 CanLII 149 (ON CA)[1986] O.J. No. 1101 (C.A.) at para. 16:

…I have concluded that the time begins to run under such circumstances as the instant case, when the material facts on which the claim is based have been discovered or ought to have been discovered by the plaintiff by the exercise of reasonable diligence: Central Trust Co. v. Rafuse et al. [reported 1986 CanLII 29 (SCC)31 D.L.R. (4th) 481], Supreme Court of Canada, released October 9 1986 – Le Dain J. (for the court) at p. 99 [p.535 D.L.R.].

See also July at para. 32, Hier v. Allstate Insurance Co. of Canada1988 CanLII 4741 (ON CA)[1988] O.J. No. 657 (C.A.) at para 35Galego v. State Farm Mutual Automobile Insurance Co.2005 CanLII 32932 (ON SCDC)[2005] O.J. No. 3866 (Div.Ct.) at paras. 8 and 9Wilkinson v. Braithwaite[2011] O.J. No. 1714 (S.C.J.) at paras. 31-35.

With respect to any claim, s. 5 of the Limitations Act determines discovery.  There is no “trigger” beyond knowledge of the discovery matters.  Cases decided under the former limitations scheme, and applying the common law discovery rule, are not helpful because, as here, they cause the court to frame the issue incorrectly.

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.

 

Ontario: limitation period applies to adding third party defendants to a main claim

Klein v. Stiller considers whether the plaintiff undertook sufficient due diligence to discover her slip and fall claim against a security firm.  What makes this otherwise standard limitations issue noteworthy is Master Dash’s commentary on the potential implication of the Occupiers’ Liability Act on a statute-barred claim.

The plaintiff argued that there would be no harm in adding the security firm to her action despite the expiry of the presumptive limitation period because it was already a third party defendant.  Master Dash was not satisfied that this was a valid justification to add the firm (it’s not), but considered the practicalities of adding the firm.

He noted that section 6 of the Occupiers’ Liability Act exempts occupiers from liability for damage caused by work they reasonably entrusted to an independent contractor.  It could potentially  exempt the defendants to the main claim from liability; if so, they would have no reason to seek indemnity  from the security firm by third party proceeding.  There would then be no third party claim against the security firm, and so the third party claim against the security firm couldn’t be a reason to allow the plaintiff to add it to the main action.

This makes sense.  The problem is that its premise is invalid.  The analysis assumes that there could be a circumstance where a plaintiff could add a party to a claim despite the expiry of the limitation period, in this case because of the Occupiers Liability Act or the fact of third party claim.  Not so: with the abolition of the the doctrine of special circumstances (for claims subject to the Limitations Act, but maybe not for claims subject to the Trustee Act), without exception a plaintiff cannot add a party to an action once the claim is statute-barred .

 

 

Alberta: Are there special circumstances?

In RVB Managements Ltd. V. Rocky Mountain House (Town), the Court of Appeal set out the special circumstances exception to statute-barred causes of action:

[21]           Under the analytical approach, the court presumes that amendments adding a new cause of action after the expiry of the limitation period will not be allowed, even in the absence of prejudice, unless the party seeking amendment can show special circumstances (see Graeme Mew, The Law of Limitations, 2nd ed. (Markham: Lexis Nexis, 2004) at 69). Courts have interpreted special circumstances to mean circumstances where all the facts required to support the claim had already been pled, there is no need to reopen discoveries, and most importantly, there is no possibility that the defendant would be prejudiced (Mew at 76).

[22]           In the case at bar “special circumstances” are not made out. When a trial has unfolded on the basis of evidence preferred in respect of issues set out in the pleadings, a new issue that sees the light of day for the first time in written argument post-trial, will almost inevitably operate prejudicially.  (See the general rule in Cels v. Railway Passenger Assurance Co. (1909), 11 WLR 706, at page 711-712, cited in Litemor Distributors (Edmonton) Ltd. v. Midwest Furnishings & Supplies Ltd., 2005 ABQB 520 (CanLII) at paras 19-21). It follows that if, as the appellants maintain, a functional rather than an analytical approach is warranted in this case, the trial judge did not err by dismissing the appellants’ application to amend their pleadings.

Curiously, the special circumstances exception no longer exists in Ontario, though its reformed limitation regime is similar to Alberta’s.