February 2017 – Under the Limit

Ontario: the Court of Appeal can’t let go of the cause of action

The Court of Appeal’s endorsement in Kolosov v. Lowe’s Companies Inc. reads as if it were delivered 15 years ago when the former Limitations Act was still in force.

The Court of Appeal states the following about the law of the limitation of the intentional torts of false arrest and false imprisonment:

[11] The law in relation to the commencement of the limitation period for the intentional torts of false arrest and false imprisonment, and associated Charter breaches, is well settled. As Chiappetta J. noted in Fournier-McGarry (Litigation Guardian of) v. Ontario, 2013 ONSC 2581 (CanLII), at para. 16:

A claim for the common law torts of false arrest, false imprisonment and breach of Charter rights arising there-from crystallizes on the date of arrest (see, Nicely v. Waterloo Regional Police Force, 1991 CanLII 7338 (ON SC), [1991] O.J. No. 460 (Ont. Div. Ct.), para. 14; Fern v. Root, 2007 ONCA 79 (CanLII),[2007] O.J. No. 397 (Ont. C.A.), para. 102).

In other words, the Court is stating that the limitation period commences when the cause of action accrues, the cause of action in question accrued on the date of the arrest, and so this is when the limitation period commenced, and no fact (such as when full police disclosure occurred), could alter this analysis.

This is plainly wrong. Where to begin? Let’s try first principles:

The Limitations Act applies to all claims pursued in court proceedings.
The Limitations Act applies to claims, not causes of action. The language “cause of action” does not appear in the Limitations Act. The accrual of a cause of action hasn’t determined the commencement of limitation period since 2004 when the Limitations Act came into force.
Section 5 determines the commencement of the limitation period. It’s a factual analysis. A fact such as when full police disclosure occurs may well have an impact on the discovery analysis.

This kind of anachronistic analysis does the law no favours. The limitations scheme is confusing enough ; wonky outlier decisions like this aren’t helpful.

Ontario: discovery doesn’t require knowledge of culpability

Update: The Supreme Court denied leave to appeal.

In Dale v. Frank, the Court of Appeal reiterated that discovery of a claim doesn’t require knowledge that the defendant’s act or omission was culpable. To require a plaintiff to know with certainty that the defendant’s wrongful conduct caused her injuries would require her to come to a legal conclusion as to the defendant’s liability. This is too a high a bar, and not what s. 5(1) of the Limitations Act requires.

The Appellants also argued that the motion judge erred by failing to consider s. 5(1)(a)(iv) of the Limitations Act in her analysis. The Court of Appeal rejected this argument. The reasons permitted the inference that the motion judge considered this discovery matter:

[9] We are not persuaded by this submission. Although the motion judge did not undertake a distinct analysis under this provision, her conclusion that each of the appellants knew or ought to have known of the other elements in s. 5(1)(a) was sufficient to infer that she also concluded that the appellants knew or ought to have known that a proceeding would be an appropriate means to seek a remedy for their losses even before the 2011 press release about Dr. Frank.

Unfortunately, in making this point the Court quoted its decision in Lawless for the principle that discovery requires the prospective plaintiff to know the material facts necessary to make a claim. Knowledge of the material facts of the claim does not include knowledge of the matter in s. 5(1)(a)(iv)—that a claim is an appropriate remedy to the loss. It’s disappointing to see the Court of Appeal continuing to rely on Lawless, given the mischief it causes.

Ontario: due diligence and motions to add a defendant

The Court of Appeal recently held in Fennell and Galota that the plaintiff’s due diligence is only factor in the discovery analysis. This introduced some uncertainty into the test for determining whether to add a defendant after the presumptive expiry of the limitation period, which is, essentially, whether the plaintiff exercised sufficient due diligence to found a discovery argument.

Last June, in Wong v. Salivan Landscape Ltd., Master Haberman held that due diligence is no longer a consideration in determining whether to add a defendant.

[31]         The Court of Appeal has recently asked similar questions in Fennell v. Deol, 2016 ONCA 249 (CanLII). There, Stewart J. concluded that while due diligence is a factor that informs the analysis of when a claim ought to have been reasonably discovered, lack of due diligence is not a separate and independent reason for dismissing a plaintiff’s claim as statue-barred.

[32]         Though the issue arose in Fennel in the context of an appeal from a summary judgment motion dismissing the claim against Deol, in my view, a similar approach should be taken in the context of a motion to add a party after the expiry of the presumptive limitation period. A motion should not be dismissed on the basis of a lack of diligence.

[33]         Even before Fennell, the court had already sought to dilute the somewhat heavy onus that some case law had thrust on plaintiffs as a means of demonstrating their due diligence. As Baltman J. noted (in Welsch v. Peel Standard Condominium Corp. No. 755, 2013 ONSC 7611 (CanLII)),Lauwers J. (as he then was) stated in Madrid v. Ivanhoe Cambridge Inc. 2010 ONSC 2235 (CanLII), that it is not in the interests of justice to impose an overly muscular level of pre-discovery due diligence; the parties should not have to conduct a pre-discovery form of discovery.   Baltman J. confirmed that as each case is unique and will turn on its own facts, whether the steps taken in each case will be sufficient will also vary.

Arguably, this rejects about twelve years of jurisprudence beginning with Master Dash’s decision in Wong v. Adler. That’s problematic. The purpose of Master Dash’s test is to require something more of a plaintiff than a mere invocation of discoverability to obtain leave to add a defendant after the presumptive expiry of the limitation period. Master Dash required the plaintiff to establish reasonable due diligence to ensure there would be some substance to the discoverability argument. It’s not clear what test Master Haberman proposed to use, if any, instead.

I don’t think that the Court of Appeal intended to change. I agree with Justice Emery’s analysis in Fontanilla v. Thermo Cool Mechanical:

[34]      The Court of Appeal agreed. Galota does not change the law regarding the expectation that a party will exercise reasonable diligence to determine the facts that would support a claim for which a proceeding may be brought to seek a remedy. The court inGalota relied on the decision of Justice Van Rensburg in Fennell v. Deol,2016 ONCA 249 (CanLII). The court in Fennellrecognized that, although due diligence is a factor that the court must consider at the time a claim ought reasonably to have been discovered, lack of due diligence is not in and of itself a reason for dismissing a plaintiff’s claim as statute barred.

[35]      Instead, due diligence must be considered a part of the analytical process to determine on an objective basis the day on which a reasonable person with abilities and in circumstances of the person affected by the claim first would have known of the matters referred to in s. 5(1)(a) to bring an action. As Justice Van Rensburg explained in Fennell at paragraph 24:

[24]      Due diligence is part of the evaluation of s. 5(1)(b). In deciding when a person in the plaintiff’s circumstances and with his abilities ought reasonably to have discovered the elements of the claim, it is relevant to consider what reasonable steps the plaintiff ought to have taken. Again, whether a party acts with due diligence is a relevant consideration, but it is not a separate basis for determining whether a limitation period has expired.

I expect the courts will prefer Justice Emery’s approach.

Ontario: r. 21 motions and limitation defences

Can you bring a r. 21 motion to strike a claim as statute-barred before delivering a statement of defence? Yes, the Divisional Court confirmed in Amrane v. York University, but only where it is plain and obvious that the plaintiff could assert no additional facts that would alter the limitations analysis:

[14] I agree with the motion judge that the expiry of a limitation period is normally a defence that must be pleaded. However, as the Court of Appeal recognized in Beardsley v. Ontario, 2001 CarswellOnt. 4137 at para. 21, in those cases where it is plain and obvious from a review of the claim that no additional facts could be asserted that would alter the conclusion that a limitation period had expired, it would be unduly technical to require the delivery of a statement of defence.

See also this summary from Justice Stinson’s decision in Clark v. Ontario (Attorney General):

[12]      By way of response the plaintiffs argue that, save in exceptional cases (of which this is not one) courts do not entertain motions to decide limitation period issues prior to service of a statement of defence. In any event, they further contend, there are live factual issues that bear on the limitation issue, which are expressly raised in the statement of claim and preclude determination of the question on a pleadings-based motion such as this.

[13]      Strong authority for the former proposition can be found in Beardsley v. Ontario Provincial Police (2001), 2001 CanLII 8621 (ON CA),57 O.R. (3d) 1 (C.A.) where the Court of Appeal stated as follows (at paras 21 and 22):

[21]      The motion to strike based on the expiry of a limitation period could only be made pursuant to Rule 21.01(1)(a), which provides that a party may move for the determination of a question of law “raised by a pleading”. The expiry of a limitation period does not render a cause of action a nullity; rather, it is a defence and must be pleaded. Although we agree that it would be unduly technical to require delivery of a statement of defence in circumstances where it is plain and obvious from a review of a statement of claim that no additional facts could be asserted that would alter the conclusion that a limitation period had expired [for example expiry of the two-year limitation period under the Highway Traffic Act … in connection with a claim for property damage only, in circumstances where it is clear the discoverability rule does not apply] , a plain reading of the rule requires that the limitation period be pleaded in all other cases. See Pollakis v. Corner (1975), 1975 CanLII 597 (ON SC), 9 O.R. (2d) 691 (H.C.J.).

[22]         Plaintiffs would be deprived of the opportunity to place a complete factual context before the court if limitation defences were determined, on a routine basis, without being pleaded. Adherence to rules that ensure procedural fairness is an integral component of an appearance of justice. The appearance of justice takes on an even greater significance where claims are made against those who administer the law. …

[14]      More recently, Brown J. observed in Portuguese Canadian Credit Union Ltd. v CUMIS General Insurance (2010), 2010 ONSC 6107 (CanLII), 104 O.R. (3d) 16 (S.C.J.) as follows (at para. 33):

… I do not accept the submission of the Credit Union that its Rule 21 motion falls within the category of cases alluded to inBeardsley “where it is plain and obvious from a review of a statement of claim that no additional facts could be asserted”. InBeardsley the possibility of bringing a Rule 21.01(1)(a) motion before the close of pleadings was discussed in the context of a determination as to whether an action was statute-barred – for example, such as in cases where the injuries suffered in a car accident occurred on a date certain and nothing more could be said about that fact. That type of case is a far cry from the complex claim asserted in this proceeding. [Footnote omitted.]

[15]      In Canadian Real Estate Assn. v. American Home Assurance Co., 2015 ONCA 389 (CanLII) (at para. 2) the Court of Appeal again reminded us that “the exception in Beardsley … must be confined to cases that involve no legal or factual complexities.”