Month: December 2021

Ontario: Court of Appeal on the factual nature of an appropriateness analysis

In Fercan Developments Inc. v. Canada (Attorney General), the Court of Appeal emphasizes the factual nature of the s. 5(1)(a)(iv) analysis.  The decision is also an example of an appeal in related proceedings impacting on appropriateness.

The AGC brought an unsuccessful criminal forfeiture application against the plaintiffs.  Then the AGO commenced unsuccessful forfeiture proceedings under the Civil Remedies Act. Leave to appeal was refused and an appeal from a costs award failed. The plaintiffs sued the AGC and the AGO alleging malicious prosecution, negligent investigation, misfeasance in public office, and civil conspiracy.  The defendants moved for summary judgment on their limitations defence.  The motion judge found the proceeding didn’t become an appropriate remedy for the loss until at least the civil forfeiture proceedings had concluded.  This meant discovery occurred within two years of the plaintiffs commencing the action.

The defendants appealed.  They argued that motion judge’s decision “significantly expands the application” of s. 5(1)(a)(iv) beyond the two circumstances the court has recognized might impact on the appropriates of a proceeding as a remedy:

[15]      The appellants argue that the motion judge’s decision significantly expands the application of the “appropriate means” element of the discoverability test under s. 5(1)(a)(iv) beyond any previous jurisprudence from this court, and that it injects uncertainty into the law of limitations. They contend that the motion judge relied on irrelevant factors, and that she ought to have restricted her analysis to a consideration of whether the respondents were pursuing an alternative means of remedying their alleged losses, such that it was not yet appropriate for them to commence an action in respect of those losses.

The Court of Appeal rejected this argument and dismissed the appeal.  When a proceeding becomes appropriate is a question of fact, and there aren’t only two factual circumstances the impact on appropriateness:

[16]      We disagree. Contrary to the submissions of the appellants, the motion judge properly recognized that there were not simply two categories of cases in which it might not be legally appropriate to start a proceeding despite the claim having been discovered, within the meaning of s. 5(1)(a)(i)-(iii): Nasr, at para. 51. The motion judge did not err when she considered all of the relevant circumstances and not simply whether the forfeiture proceedings provided an alternative means for the respondents to remedy their alleged losses. She was required to consider the “nature of the injury, loss or damage” under s. 5(1)(a)(iv), as well as, under s. 5(1)(b), using a “modified objective” test, what a reasonable person with the abilities and in the circumstances of the respondents ought to have known: Presidential, at para. 18; Service Mold + Aerospace Inc. v. Khalaf, 2019 ONCA 369, 146 O.R. (3d) 135, at para. 32. While previous cases can assist in identifying certain general principles, whether a proceeding would have been an appropriate means to seek to remedy a claimant’s damage, injury or loss will turn on the facts of each case and the abilities and circumstances of the particular claimant: Presidential, at para. 19; ETR Concession Company, at para. 34.

The Court cautioned against conflating the considerations in s. 5(1)(a)(i)-(iii) with those in s. 5(1)(a)(iv).  Despite the plaintiffs’ knowledge of the first three discovery matters, it would have been premature for them to commence the action while responding to the state’s civil forfeiture proceedings.  If the forfeiture proceedings had been successful, the defendants would have had a strong to defence to the plaintiffs’ action.  Further, the costs decision implicated the defendants’ conduct, and the appeal from it challenged findings of the defendants’ misconduct:

[19]      In concluding that the time for commencement of an action against the AGC began to run “at the earliest” on June 26, 2014, the motion judge relied on the civil forfeiture proceedings that were commenced and pursued by the appellants against the respondents. She observed that the appellants, in undertaking such proceedings, were pursuing a process that, if successful, could have left the respondents with little to no loss to claim. We agree with the motion judge’s observation that it is important not to conflate the considerations under the first three elements of the discoverability test with the appropriate means element set out in s. 5(1)(a)(iv). The question is not, as the appellants suggest, whether an action could have been brought by the respondents, but when it was appropriate to do so. While knowledge of the extent of a plaintiff’s damages is not required under (i) to (iii), the motion judge was entitled to take into consideration the ongoing forfeiture proceedings that the parties were engaged in, when determining under s. 5(1)(a)(iv) whether it was appropriate for the respondents to bring an action. She concluded that, in the particular circumstances, it would have been premature to require the respondents to launch a lawsuit, as they were embroiled in the civil forfeiture application, a related matter brought against them “by the state with all of its resources”, which could have rendered their lawsuit non-viable and unworthy of pursuing.

[20]      We see no error in the motion judge’s determination that it was premature for the respondents to commence their action until after the civil forfeiture proceedings were completed on June 26, 2014. She came to this conclusion after considering all of the relevant circumstances. The facts were unusual. Despite the fact that the AGC was unsuccessful in obtaining an order for criminal forfeiture and was subject to an order for costs that was critical of its conduct, the provincial authorities commenced civil forfeiture proceedings with the same objective – to seize the proceeds of sale of the respondents’ properties. DC Hayhurst was involved in both sets of proceedings. If the civil forfeiture proceedings had been successful, no doubt all of the appellants would have had a strong defence to any action that was commenced by the respondents. The conclusion, on this record, that it was premature for the respondents to pursue a civil action while they were continuing to oppose the forfeiture proceedings, reveals no error.

[23]      The motion judge recognized that West J.’s costs decision “directly and explicitly addressed the conduct of the federal Crown”, and that he had determined that the Crown’s conduct “exhibited a marked and substantial departure from the reasonable standards expected of the Crown”. Nevertheless, she observed that costs against the Crown in such proceedings are a “rare and extraordinary remedy”, that the AGC’s appeal specifically sought to attack the findings of Crown misconduct, that there was precedent for this court taking a very different view, and accordingly, that there was a clear risk that West J.’s findings of misconduct might be rejected on appeal, which would have seriously undermined any action brought by the respondents. The fact that there was another ongoing proceeding – the appeal of West J.’s costs decision – that could have impacted the viability of the respondents’ action was relevant to the application of s. 5(1)(a)(iv) in the circumstances of this case.

 [25]      We see no palpable and overriding error in the motion judge’s conclusion that the time began to run under s. 5(1)(a)(iv) in respect of the claims against all appellants on April 14, 2016, when this court released its decision dismissing the appeal from West J.’s costs order. Again, the circumstances were highly unusual. The same parties were already involved in litigation commenced and pursued by the appellants, in which the appellants’ alleged misconduct had taken centre stage. In pursuing the appeal, the AGC did not accept and sought to overturn the findings of West J., ensuring that whether or not there was prosecutorial misconduct remained a live issue until it was determined by this court. As the motion judge reasonably observed, there was a clear risk of a successful appeal, which would have impacted the viability of an action based on the same allegations of prosecutorial misconduct.

[27]      After assessing the claims against all parties, it was open to the motion judge to conclude, as she did, that a successful appeal of the costs decision would have undermined the claims against all of the appellants, including the OPP Defendants. This was not, as the appellants contend, a tactical decision on the part of the respondents, as in Markel, or simply a question of a plaintiff waiting until the end of other proceedings that might improve their chances of success in a civil action, as in Sosnowski v. MacEwen Petroleum Inc., 2019 ONCA 1005, 441 D.L.R. (4th) 393. Rather, as in Winmill v. Woodstock (Police Services Board), 2017 ONCA 962, 138 O.R. (3d) 641, at para. 31, leave to appeal refused, [2018] S.C.C.A. No. 39, the result of the proceedings in which the parties were already involved, including the determination by this court of the prosecutorial misconduct allegations, would have been a “crucial, bordering on determinative factor” in whether the respondents had a civil claim to pursue.

Ontario: the time-bar in s. 8(2) of the Municipal Conflict of Interest Act

The Superior Court decision in Yorke et al. v. Harris considers the time-bar in s. 8(2) of the Municipal Conflict of Interest Act.  Technically, this isn’t a limitation period, but in case you’ve come here looking for one of the very few s. 8(2) decisions, this is the analysis:

[28]              An application may only be made within six weeks after the applicant became aware of the alleged contravention: see s. 8(2) of the MCIA. The strict time limit in the Act is meant to protect elected officials and ensure that applications are brought on a timely basis: see Hervey v. Morris, 2013 ONSC 956, 9 M.P.L.R. (5th) 96.

[29]              In this case, the application was brought more than six weeks after the impugned conduct. Mr. Lewis, corporate counsel for the Carpenters Union, provided an affidavit in support of the application. He deposed that he found out about the Resolution on January 17 or 18, 2019. However, there is no evidence of when he became aware of the fact that Councillor Harris’ wife worked for CLAC. Absent that information, there is no evidence of when he had knowledge of the alleged contravention.

[30]              The applicants state that they do not need to provide evidence of what was within their knowledge regarding the alleged contravention, and that the onus is always on the respondent who is raising the limitation period issue. On the other hand, the respondent states that the six-week timeline is a condition precedent to bringing the application, and that it is up to the applicants to establish that they only had knowledge within the six-week period.

[31]              The six-week period is to be calculated from when the applicants personally became aware of the alleged contravention. They must have knowledge that the councillor was present at a meeting when the matter in which he has a pecuniary interest was the subject of consideration, and that the councillor either failed to disclose his interest in the matter, took part in the discussion of, voted on any question about the matter, or attempted to influence the voting on the question: see Van Schyndel v. Harrell (1991), 1991 CanLII 7184 (ON SC), 4 O.R. (3d) 474 (Gen. Div.).

[32]              The respondent has the burden of establishing a contravention of the limitation period if they seek to enforce it. The respondent must be able to demonstrate, on a balance of probabilities, that the applicant had some knowledge which led him to have a reasonable subjective belief that a breach of the MCIA has occurred: see Hervey v. Morris.

[33]              In Methuku v. Barrow, 2014 ONSC 5277, 29 M.P.L.R. (5th) 143, the applicant adduced evidence that he only became aware of the potential issue engaging the question of whether or not the respondent was in a conflict when he read an article posted online. Although the court had suspicions about that evidence, it was not satisfied that the respondent had met the onus of establishing, on a balance of probabilities, that the applicant knew of the issue which would engage s. 5 of the MCIA at any earlier time than when he had testified to.

[34]              I agree with and adopt on the reasoning of Perell J. in MacDonald v. Ford, 2015 ONSC 4783, 41 M.P.L.R. (5th) 175. Section 8(2) of the MCIA (s. 9(1) of the former Act) creates a temporal condition precedent to be satisfied by the applicant. It can be labelled a limitation period but is not a conventional one that affords the respondent with a technical defence. The six-week period provided for in the Act considers only the subjective knowledge of the applicant, and thus there is no basis for applying the objective discovery principles in the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B. This finding comports with the court’s analysis in Hervey v. Morris and Methuku v. Barrow.

[35]              If the applicant had actual or constructive knowledge of the facts on which the alleged contravention of the MCIA is grounded more than six weeks before an application under the Act is issued, that application will be statute barred because it was not brought in time. An applicant should explain, in his or her application, when he or she acquired knowledge of the facts of the alleged contravention of the Act. Then the onus shifts to the respondent to prove that the applicant had actual or constructive knowledge at an earlier time, thus making the application untimely: see MacDonald v. Ford.

[36]              The applicants are required to lead evidence of when they became aware of the alleged contravention. Once the applicants have satisfied that onus, the burden of establishing a contravention of the limitation period shifts to the respondent.

[37]              In the case at bar, there is no evidence from the applicants as to when they acquired knowledge of the facts of the alleged contravention. Mr. Lewis (who is not an applicant) testified about when he found out about the Resolution, but did not provide evidence about when he learned of the alleged contravention. This is not evidence of when the applicants became aware of the relevant information.

[38]              The applicants have not met their initial onus of demonstrating that their application is timely. They have not satisfied the temporal condition precedent of the MCIA. The application is therefore dismissed.

Ontario: failing the litigation finger test

The Superior Court decision in Dealer’s Choice Preferred Collision Centre Inc. v. Kircher is noteworthy as an example of a party failing to establish the litigation finger test:

[19]           For these reasons, I conclude that the defendants, on receiving and reviewing the statement of claim, would have had no reason to think that the plaintiff pointing the “litigating finger” at them was other than the named plaintiff Dealer’s Choice Preferred Collision Centre Inc.. The plaintiff’s entire action is based on the May 6, 2013 Agreement with the defendants and the negotiated exclusion of Downtown Auto Collision Centre Limited from the Agreement eliminated any possible reason for the defendants to consider that Downtown Auto was the intended plaintiff. The fact that all parties to the May 6, 2013 Agreement were mistaken as to the status of Dealer’s Choice would not have given the defendants any reason to think that they were really being sued by Downtown Auto. The plaintiff is therefore not entitled to the amendment sought, and the motion is hereby dismissed.

Ontario: common law discovery and s. 4 of the RPLA

Khan v. Taji confirms that common law discovery applies to the limitation period in s. 4 of the Real Property Limitations Act.  It provides a good overview of the issue:

[72]           The defendants argue that the discoverability principle in s. 5 of the Limitations Act, 2002, has no application to s. 4 of the RPLA. They argue that the discoverability principle is a statutory construct, and does not apply unless expressly stated in the statute. In the absence of an express statement, the right to bring an action for the recovery of land first accrues the moment the trust is established, not on the date that a breach of trust is discovered.

[73]           There is no question that the application of the discoverability rule is a question of statutory interpretation, but the analysis is not as simple as that proposed by the defendants.  In Pexeiro v. Haberman, 1997 CanLII 325 (SCC), [1997] 3 S.C.R. 549 (S.C.C.), the Supreme Court of Canada dealt with the question of whether the discoverability rule applied to all limitation provisions or whether its application depended upon the actual wording of the statutory limitation. Major J. adopted the following statement from the Manitoba Court of Appeal in Fehr v. Jacob , at para. 37:

[T]he judge-made discoverability rule is nothing more than a rule of construction. Whenever a statute requires an action to be commenced within a specified time from the happening of a specific event, the statutory language must be construed. When time runs from “the accrual of the cause of action” or from some other event which can be construed as occurring only when the injured party has knowledge of the injury sustained, the judge-made discoverability rule applies. But, when time runs from an event which clearly occurs without regard to the injured party’s knowledge, the judge-made discoverability rule may not extend the period the legislature has prescribed. (Emphasis added)

[74]           In McCracken v. Kossar, 2007 CanLII 4875 (ON SC), Shaw J. concluded that the language of s. 4(1) of the RPLA did nor preclude the application of the discoverability rule, at para. 54:

Ms. Kossar submits that the discoverability principle does not apply to s. 4(1) of the Real Property Limitations Act. She quotes in support of her submission the words in s. 4(1), “… when the right to bring such action first accrued.” However, Fehr v. Jacob, cited with approval by Major J. in Pexeiro, refers to very similar language as leading to the possible application of the discoverability rule.

[75]           In any event, I note that s. 28 of the RPLA does expressly provide for a discoverability rule in cases of concealed fraud. Section 28 provides:

28.  In every case of a concealed fraud, the right of a person to bring an action for the recovery of any land or rent of which the person or any person through whom that person claims may have been deprived by the fraud shall be deemed to have first accrued at and not before the time at which the fraud was or with reasonable diligence might have been first known or discovered.

[76]           In the present case, the plaintiff has pleaded fraud with respect to the transfers of both properties.

Ontario: common law discovery doesn’t apply to s. 57 of the RTA

In Sharma v. Sandhu, the Divisional Court held that the common law discovery rule has no application to s. 57 of the Residential Tenancies Act:

[19]           I am also not persuaded that the common law principle of discoverability has any application when considering s. 57 of the RTA.

[20]           At para. 37 of Peixeiro v. Haberman 1997 CanLII 325 (SCC), [1997] S.C.J.  No. 31 the Supreme Court of Canada held that the discoverability rule is an interpretative tool for the construing of limitations statutes and ought to be considered each time a limitations provision is in issue. The court adopted the following passage from Fehr v. Jacob (1993) 1993 CanLII 4407 (MB CA), 14 C.C.L.T. (2d) 200 (Man. C.A.):

…When time runs from the “accrual of the cause of action” or from some other event which can be construed as occurring only when the injured party has knowledge of the injury sustained, the judge-made discoverability rule applies.  But, when time runs from an event which clearly occurs without regard to the injured party’s knowledge, the judge-made discoverability rule may not extend the period the legislature has prescribed.

[21]           Section 57(2) sets the time from which the clock runs from a precise event, namely, the date the tenant vacates the rental unit. The starting of the clock is in no way dependent upon the state of the tenant’s knowledge. It follows that the discoverability rule cannot be used as proposed by the appellants to extend the one-year period prescribed by the legislature.

It’s odd that the Court relied on Peixeiro instead of Pioneer, which is about 22 years more current and the leading decision on common law discovery.