{"id":882,"date":"2019-02-03T21:47:11","date_gmt":"2019-02-04T01:47:11","guid":{"rendered":"http:\/\/limitations.ca\/?p=882"},"modified":"2019-02-03T21:56:05","modified_gmt":"2019-02-04T01:56:05","slug":"ontario-court-of-appeal-says-that-the-limitations-act-applies-to-claims-not-causes-of-action","status":"publish","type":"post","link":"http:\/\/limitations.ca\/?p=882","title":{"rendered":"Ontario: Court of Appeal says that the Limitations Act applies to claims, not causes of action"},"content":{"rendered":"

Justice Strathy’s decision in Apotex Inc. v. Nordion (Canada) Inc.<\/a> is one of the most important limitations decisions from the Court of Appeal since the Limitations Act<\/a> came into force.\u00a0 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).<\/p>\n

This distinction is most often missed by Ontario courts., which generally treat the cause of action and the “claim” as interchangeable for limitations purposes.\u00a0 I have written about this issue extensively (see this, for example<\/a>), including the problems that result.<\/p>\n

Justice Strathy noted one of those problems.\u00a0 Because damage is always an element of the “claim” but not of any cause of action based on conduct that is actionable per se<\/em>, they accrue differently.\u00a0 A breach of contract is the most common example:<\/p>\n

\n

[<\/a>84]\u00a0\u00a0\u00a0Before the reform of limitations law brought about by the\u00a0LA 2002<\/em>, the previous statute, the\u00a0Limitations Act<\/em>,\u00a0R.S.O. 1990, c. L.15<\/a>, looked to when the cause of action arose (an expression not used in the\u00a0LA 2002<\/em>) to determine the commencement of the limitation period. The \u201ccause of action\u201d 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,\u00a0The Law of Limitations<\/em>, 3d ed. (Toronto: LexisNexis, 2016) at \u00a79.6;\u00a0Robert Simpson Co. Ltd. et al v. Foundation Co. of Canada Ltd. et al<\/em>\u00a0(1982),\u00a01982 CanLII 1750 (ON CA)<\/a>,\u00a036 O.R. (2d) 97 (C.A.)<\/span>, at p. 105<\/span>;\u00a0Schwebel v. Telekes<\/em>,\u00a01967 CanLII 163 (ON CA)<\/a>,\u00a0[1967] 1 O.R. 541 (C.A.)<\/span>, at p. 544<\/span>.<\/p>\n

[<\/a>85]\u00a0\u00a0\u00a0This 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:\u00a0Mars Canada Inc. v. Bemco Cash & Carry Inc.<\/em>,\u00a02018 ONCA 239<\/span>\u00a0(CanLII)<\/a>,\u00a0140 O.R. (3d) 81<\/span>, at para. 32<\/span>.<\/p>\n

[<\/a>86]\u00a0\u00a0\u00a0Under the\u00a0LA 2002<\/em>, 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 \u201cact or omission\u201d \u2013 the breach of contract itself \u2013 is not the only factor to be considered in determining when a claim is discovered under the\u00a0LA 2002<\/em>. Instead, the date on which the plaintiff knew of the occurrence of the act or omission is only\u00a0one<\/span>\u00a0factor to be determined. In addition to that factor, the person with the claim must also know that the \u201cinjury, loss or damage had\u00a0occurred<\/span>\u201d (s. 5(1)<\/a>(a)(i)), that it was\u00a0caused or contributed to<\/span>\u00a0by the act or omission (the breach of contract) (s. 5(i)(a)(ii)), and that the act or omission was\u00a0that of the defendant<\/span>\u00a0(s. 5(1)<\/a>(a)(iii)).<\/p>\n

[<\/a>87]\u00a0\u00a0\u00a0As 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 \u201cact or omission\u201d), unless it is proven that the person with the claim did not know of one or more of the matters set out in\u00a0s. 5(1)<\/a>(a), and that a reasonable person would not have known of those matters.<\/p>\n

[<\/a>88]\u00a0\u00a0\u00a0A 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 \u201cthe injury, loss or damage\u201d had occurred or, if it had occurred, they did not know that it was caused by an act or omission of the defendant \u2013 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\u00a0some damage<\/span>\u00a0has occurred. In\u00a0Hamilton (City) v. Metcalfe & Mansfield Capital Corp.<\/em>,\u00a02012 ONCA 156<\/span>\u00a0(CanLII)<\/a>,\u00a0290 O.A.C. 42<\/span>, at paras. 59-61<\/span>, this court adopted the common law rule expressed in\u00a0Peixeiro v. Haberman<\/em>,\u00a01997 CanLII 325 (SCC)<\/a>,\u00a0[1997] 3 S.C.R. 549<\/span>, at para. 18<\/span>, that \u201csome damage\u201d is sufficient to start the running of the limitation period.<\/p>\n<\/blockquote>\n

Justice Strathy set out the impact this has on a limitations analysis for a breach of contract: 91-92<\/p>\n

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[<\/a>91]\u00a0\u00a0\u00a0First, 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 \u201cact or omission\u201d) on which the claim is based: see Mew, Rolph & Zacks,\u00a0<\/em>at \u00a79.5, citing to\u00a0NFC Acquisition L.P. v. Centennial 2000 Inc.<\/em>, 2010 ONSC 733, 67 B.L.R. 218, at paras. 29-30, affirmed in\u00a02011 ONCA 43<\/span>\u00a0(CanLII)<\/a>,\u00a078 B.L.R. (4th) 11<\/span><\/span>;\u00a0Hopkins v. Stockman<\/em>,\u00a02013 SKCA 118<\/span>\u00a0(CanLII)<\/a>,\u00a0427 Sask. R. 4<\/span>, at para. 10<\/span>. As van Rensburg J.A. noted in\u00a0Morrison v. Barzo,\u00a0<\/em>at paras. 33, 49, the application of the test in\u00a0s. 5(1)<\/a>(a) requires the identification or definition of the claims at issue. This is a necessary starting point.<\/p>\n

[<\/a>92]\u00a0\u00a0\u00a0Second, 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 \u201cact or omission\u201d will not start the limitation period running unless injury, loss or damage has occurred and has been discovered (s. 5(1)<\/a>(a)(i)).<\/p>\n<\/blockquote>\n

To understand the significance of this decision, compare it to the Court’s description of discovery in Lawless<\/a><\/em>:<\/p>\n

[22]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 The principle of discoverability provides that \u201ca 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.\u00a0 This principle conforms with the generally accepted definition of the term \u2018cause of action\u2019 \u2013 the fact or facts which give a person a right to judicial redress or relief against another\u201d:Aguonie v. Galion Solid Waste Material Inc<\/em>. (1998),\u00a01998 CanLII 954 (ON CA)<\/a>, 38 O.R. (3d) 161 (C.A.), at p. 170.<\/p><\/blockquote>\n

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.\u00a0\u00a0Apotex<\/em>, together with recent decision in\u00a0Gillham<\/em><\/a>, suggests that the Court is moving away from the misconception that underlies reliance on\u00a0Lawless<\/em>.\u00a0\u00a0\u00a0<\/em><\/p>\n

Two other points:<\/p>\n

    \n
  1. Justice Strathy’s decision begins with s. 2 of the Limitations Act.\u00a0 Because this is the provision that determines the application of the Limitations Act, this is the correct starting point for any limitations analysis.\u00a0 However, you rarely see courts considering it.<\/li>\n
  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.\u00a0 It was a deliberate decision.\u00a0 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.\u00a0 This also allowed for universal limitation periods, rather than limitation periods for different categories of causes of action.<\/li>\n<\/ol>\n

     <\/p>\n","protected":false},"excerpt":{"rendered":"

    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.\u00a0 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 … Continue reading Ontario: Court of Appeal says that the Limitations Act applies to claims, not causes of action<\/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":[202,171,466,293,43,335],"class_list":["post-882","post","type-post","status-publish","format-standard","hentry","category-ontario","tag-claim","tag-causes-of-action","tag-claims-not-causes-of-action","tag-ontario-act-s-2","tag-ontario-court-of-appeal","tag-really-terrific-limitations-analyses"],"_links":{"self":[{"href":"http:\/\/limitations.ca\/index.php?rest_route=\/wp\/v2\/posts\/882","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=882"}],"version-history":[{"count":3,"href":"http:\/\/limitations.ca\/index.php?rest_route=\/wp\/v2\/posts\/882\/revisions"}],"predecessor-version":[{"id":885,"href":"http:\/\/limitations.ca\/index.php?rest_route=\/wp\/v2\/posts\/882\/revisions\/885"}],"wp:attachment":[{"href":"http:\/\/limitations.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=882"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/limitations.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=882"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/limitations.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=882"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}