{"id":853,"date":"2018-10-30T08:48:32","date_gmt":"2018-10-30T12:48:32","guid":{"rendered":"http:\/\/limitations.ca\/?p=853"},"modified":"2018-10-30T08:48:43","modified_gmt":"2018-10-30T12:48:43","slug":"ontario-when-a-tax-appeal-doesnt-render-a-claim-against-lawyers-inappropriate","status":"publish","type":"post","link":"http:\/\/limitations.ca\/?p=853","title":{"rendered":"Ontario: when a tax appeal doesn’t render a claim against lawyers inappropriate"},"content":{"rendered":"

In Coveley v. Thorsteinssons LLP<\/em><\/a>, the plaintiffs sued their former lawyers for negligently prosecuting tax appeals.\u00a0 The defendant lawyers moved for summary judgment dismissing the claim as statute-barred. The court refused to accept the plaintiffs’ s. 5(1)(a)(iv) appropriateness argument that the defendants’ prosecution of the tax appeals operated to delay their discovery of the claim:<\/p>\n

[<\/a>45]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0Thorsteinssons relies upon a decision of Mew J. in\u00a0J.C. v. Farant<\/i>,\u00a02018 ONSC 2692 (CanLII)<\/span><\/a><\/span>. In\u00a0Farant<\/i>, Mew J. decided a motion for summary judgment seeking dismissal of an action for professional negligence against lawyers who represented the plaintiff in an historical sexual abuse claim on the ground that it is statute barred. The outcome of the motion turned on\u00a0s. 5(1)<\/a>(a)(iv) of the\u00a0Limitations Act, 2002<\/a><\/i>. Mew J. observed at para. 72 of his decision that the focus of s. 5(1)(a)(iv) of the\u00a0Limitations Acts, 2002<\/i>\u00a0is on the specific factual or statutory setting of each individual case and, as a result, appellate decisions which have considered and applied the provision are not always easy to reconcile.<\/p>\n

[<\/a>46]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0In his review of the jurisprudence under\u00a0s. 5(1)<\/a>(a)(iv) of the\u00a0Limitations Act, 2002<\/a><\/i>, Mew J. cited the decision of the Court of Appeal in\u00a0Gravelle (CodePro Manufacturing) v. Denis Grigoras Law Office<\/i>,\u00a02018 ONCA 396 (CanLII)<\/span><\/a><\/span>. In\u00a0Gravelle<\/i>, the appellant commenced an action alleging that the respondents provided erroneous advice in respect of an agreement of purchase and sale, specifically, as to the enforceability of a binding arbitration agreement the appellant had with the purchaser under North Carolina law. The appellant gave notice of his claim but did not commence his action until over four years later. The appellant argued on appeal that it was appropriate for him to delay bringing his action until the arbitration proceedings involving the purchaser were completed, as it would have avoided unnecessary litigation if he had been successful in those proceedings. The Court of Appeal disagreed, noting that this was not a case in which the appellant was pursuing alternative means of resolving his negligence action against his former solicitors, the respondents. The Court of Appeal held that the appellant\u2019s tactical decision to wait until the arbitration proceedings were completed before bringing his action was his to make, but this decision did not delay the commencement of the limitation period.<\/p>\n

[<\/a>47]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0Mew J. cited the\u00a0Gravelle<\/i>\u00a0decision as one that reinforces the principle that \u201ca tactical decision to delay the commencement of proceedings will not, absent other factors \u2013 such as the pursuit of alternative means to resolve the very claim that is the subject of the action \u2013 delay the running of time\u201d:\u00a0Farant<\/i>at para. 87.<\/p>\n

[<\/a>48]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0The factual circumstances disclosed by the evidence on the motion before me are unlike those in\u00a0Presidential<\/i>\u00a0in material respects. In\u00a0Presidential<\/i>, Pardu J.A. relied upon the fact that the appellant looked to its professional advisors to provide accounting and tax advice, and the appellant relied on the accountant\u2019s advice to retain a tax lawyer to object to CRA\u2019s Notices of Assessment. The accountant who had filed the tax returns late was involved in the strategy that was recommended to the appellant and that it pursued. The accountant continued to be involved in the alternative process that had been recommended by the accountant while this process was running its course.<\/p>\n

[<\/a>49]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0The evidence on the motion before me is very different. Thorsteinssons informed Michael and Stella in September and October 2010, respectively, that their tax appeals were weak. Soon after this advice was given, Thorsteinssons, although initially willing to continue to represent the plaintiffs through the trial of their tax appeals (on a\u00a0pro bono<\/i>\u00a0basis with an associate acting as trial counsel), sought and obtained an order, that was not opposed, removing the firm as counsel of record for the plaintiffs on November 12, 2010. Thorsteinssons was not thereafter involved in the litigation strategy that the plaintiffs pursued. The plaintiffs retained new counsel for their tax appeals and they were represented by new counsel through the trial of the tax appeals and an appeal of the trial decision. Thorsteinssons does not agree that incorrect advice was given and, unlike the facts in\u00a0Presidential<\/i>, the firm did not provide advice to the plaintiffs about what to do to solve the problem of incorrect advice having been given. The plaintiffs\u2019 decisions to pursue the tax appeals and to wait until after the trial of the tax appeals before starting an action were made after the professional relationship between Thorsteinssons and the plaintiffs had ended, and were not recommended by Thorsteinssons. The fact that Thorsteinssons continued to represent the plaintiffs until November 12, 2010, and that before this date the firm had expressed a willingness to continue to represent the plaintiffs at the trial of their tax appeals, does not affect the plaintiffs\u2019 knowledge by no later than October 27, 2010 that Thorsteinssons\u2019 advice was that both appeals were weak, and that this advice conflicted fundamentally with earlier advice, upon which the plaintiffs maintain they relied, that the appeals were strong and likely to succeed.<\/p>\n

[<\/a>50]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0I regard these factual circumstances to be more like those in\u00a0Gravelle<\/i>. In\u00a0Gravelle<\/i>, the appellant knew of the claim against his former solicitors for allegedly improper advice. The solicitors were not involved in the appellant\u2019s decision to pursue arbitration against the purchaser or the appellant\u2019s decision to wait until the conclusion of the arbitration before starting an action against the solicitors for professional negligence. As I have noted, the Court of Appeal concluded that the appellant\u2019s decision not to bring his action until the arbitration proceedings were completed did not delay the commencement of the limitation period. The same reasoning applies to the facts on the motion before me.<\/p>\n

[<\/a>51]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0In addition, I regard as significant that Stella and Michael did not state in their affidavits that they decided to delay commencing a claim against Thorsteinssons while they were pursuing the tax appeals because, if they were successful, the losses resulting from their claims against Thorsteinssons would have been substantially or entirely eliminated. If this was the reason for delaying commencement of the action, I would expect evidence of this fact to have been provided.<\/p>\n

[<\/a>52]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0I also regard as significant that the plaintiffs did not wait for the trial decision in their tax appeals before commencing an action against Thorsteinssons. The trial of the tax appeals was held in October 2012 and the Tax Court of Canada released the judgment dismissing the tax appeals more than one year later, on December 20, 2013. The action against Thorsteinssons was commenced on November 2, 2012, soon after the trial of the tax appeals and before the release of the Tax Court of Canada\u2019s decision. This evidence is inconsistent with the position advanced by the plaintiffs that a legal proceeding against Thorsteinssons was not an appropriate means to seek to remedy the loss caused by incorrect legal advice given by Thorsteinssons until the alternative process upon which the plaintiffs rely, the tax appeals, had run its course.<\/p>\n

[<\/a>53]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0The pursuit of tax appeals that, according to the plaintiffs\u2019 evidence, they regarded as weak and unlikely to succeed, does not amount to an alternative process that had the reasonable potential to resolve the dispute between the parties and eliminate the plaintiffs\u2019 loss. The plaintiffs\u2019 pursuit of the tax appeals does not postpone the time when they first knew or reasonably ought to have known that, having regard to the nature of the injury, loss or damage that they claim was caused by their reliance on Thorsteinssons\u2019 advice, an action would be an appropriate means to seek to remedy their claim.<\/p>\n

[<\/a>54]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0For these reasons, I conclude that by no later than October 27, 2010, the plaintiffs first knew or reasonably ought to have known that an action against Thorsteinssons would be an appropriate means to seek to remedy their claim against Thorsteinssons for giving incorrect advice about the merits of the tax appeals. The plaintiffs\u2019 claim was discovered by no later than October 27, 2010. The action was commenced more than two years later. There is no genuine issue requiring a trial in relation to whether the action is statute barred.<\/p>\n<\/blockquote>\n","protected":false},"excerpt":{"rendered":"

In Coveley v. Thorsteinssons LLP, the plaintiffs sued their former lawyers for negligently prosecuting tax appeals.\u00a0 The defendant lawyers moved for summary judgment dismissing the claim as statute-barred. The court refused to accept the plaintiffs’ s. 5(1)(a)(iv) appropriateness argument that the defendants’ prosecution of the tax appeals operated to delay their discovery of the claim: … Continue reading Ontario: when a tax appeal doesn’t render a claim against lawyers inappropriate<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[85,144,9,45,229,515,490],"class_list":["post-853","post","type-post","status-publish","format-standard","hentry","category-ontario","tag-appropriateness","tag-discoverability-principles","tag-discovery","tag-ontario-act-s-51aiv","tag-professional-negligence","tag-solicitors-negligence","tag-whats-not-appropriate"],"_links":{"self":[{"href":"http:\/\/limitations.ca\/index.php?rest_route=\/wp\/v2\/posts\/853","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/limitations.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/limitations.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/limitations.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/limitations.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=853"}],"version-history":[{"count":2,"href":"http:\/\/limitations.ca\/index.php?rest_route=\/wp\/v2\/posts\/853\/revisions"}],"predecessor-version":[{"id":855,"href":"http:\/\/limitations.ca\/index.php?rest_route=\/wp\/v2\/posts\/853\/revisions\/855"}],"wp:attachment":[{"href":"http:\/\/limitations.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=853"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/limitations.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=853"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/limitations.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=853"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}