{"id":358,"date":"2016-01-25T10:49:03","date_gmt":"2016-01-25T14:49:03","guid":{"rendered":"http:\/\/limitations.ca\/?p=358"},"modified":"2016-01-25T10:49:03","modified_gmt":"2016-01-25T14:49:03","slug":"supreme-court-says-no-plaintiffs-dont-need-to-control-when-they-commence-actions","status":"publish","type":"post","link":"https:\/\/limitations.ca\/?p=358","title":{"rendered":"Supreme Court says no, plaintiffs don’t need to control when they commence actions"},"content":{"rendered":"

In Canadian Imperial Bank of Commerce v. Green<\/a><\/em>, the Supreme Court rejected a basic principle of limitations law: the plaintiff must always be in control of when it commences a\u00a0proceeding.<\/p>\n

This appeal concerned the interaction of the limitation period in section 138 of the Ontario Securities Act<\/a><\/em> and section 28 of the Class Proceedings Act<\/a><\/em>, which suspends the limitation period applicable to all the causes of action asserted in a class proceeding.<\/p>\n

Section 138.3 creates a cause of action for misrepresentations regarding shares trading in the secondary\u00a0market. A plaintiff, most often a representative plaintiff in a class proceeding, can only commence a section 138.3 claim with leave, and has three years from the date of the misrepresentation to obtain leave and do so.\u00a0 In Sharma v. Timminco<\/a><\/em>, the Court of Appeal held that a claim for damages under section 138.3 is statute-barred if the plaintiff does not obtain leave to commence it within the limitation period, and that section 28 of the Class Proceedings Act <\/em>did not operate in respect of a 138.3 claim until leave is\u00a0obtained.<\/p>\n

The Timminco <\/em>decision was problematic. Its effect was to require representative plaintiffs to move for and obtain leave to commence a section 138.3 claim within three years, but the plaintiffs could not control the timeliness. Obtaining leave within three years was challenging, if not impossible.\u00a0 Even if a plaintiff brought the motion in good time, the defendant could initiate procedural steps resulting in delay, and court availability could affect the timing of the hearing and the rendering of the decision.\u00a0 In the context of limitations jurisprudence, this was both novel and perverse: plaintiffs did\u00a0not control whether they commenced their action in time.<\/p>\n

In this action, the Court of Appeal reversed itelf and set aside Timminco<\/em>\u2019s interpretation of the Class Proceedings Act<\/em>, holding instead that when a representative plaintiff brings a section 138.3 claim within the limitation period, pleads section 138.3 together with the facts that found the claim, and pleads an intent to seek leave to commence, the claim has been \u201casserted\u201d for the purposes of the Class\u00a0<\/em>Proceedings Act<\/em>, and the limitation period is thereby suspended for all class members.<\/p>\n

Subsequently,\u00a0the legislature amended the Securities Act so that the limitation period is suspended on the filing of a motion for leave. \u00a0 However, the issue remained live for actions commenced\u00a0before the amendments,\u00a0and so the Supreme Court heard the appeal.\u00a0 In a lengthy decision from a fractured court, it\u00a0overturned the Court of Appeal’s decision.<\/p>\n

From a limitations perspective, the noteworthy aspect of the decision is the court’s willingness to accept that a plaintiff will not in all circumstances retain control of bringing its action in time.\u00a0 This was a foremost concern for\u00a0the Court of Appeal.<\/p>\n

Justice C\u00f4t\u00e9 stated\u00a0that requiring the plaintiff to have unilateral control over whether a\u00a0claim is brought in time is\u00a0misplaced, and fails to acknowledge\u00a0that “modern limitation periods” balance the rights of the plaintiffs and the defendants:<\/p>\n

[79]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0The Court of Appeal wrote that the effect of\u00a0Timminco<\/em>, namely that a plaintiff does not unilaterally control whether his or her claim is brought within the limitation period (because of the starting point of the limitation period or because of delays caused by the defendant or the court), was \u201cforeign to the concept of a limitation provision\u201d (para. 27). In my view, the Court of Appeal failed to appreciate not only that modern limitation periods flow from an exercise in balancing the rights of plaintiffs and defendants, but also that the legislature undertook that balancing exercise in designing the limitation period in question.\u00a0Section\u00a0138.14<\/a>\u00a0OSA<\/a><\/em>\u00a0does not have an internal suspension mechanism, and the limitation period begins to run regardless of knowledge on the plaintiff\u2019s part, be it on when a document containing a misrepresentation is released, when an oral statement containing a misrepresentation is made, or when there is a failure to make timely disclosure. The scheme is exacting and even harsh, but it is structured in this manner to balance the interests of plaintiffs, defendants and long-term shareholders.<\/p><\/blockquote>\n

This reasoning is hard to understand.\u00a0 The very nature of limitation periods requires a balancing of plaintiff and defendant rights, and the courts engaged with this balance frequently under the pre-modern legislation (that is, the former Limitations Act).\u00a0 See for example the Supreme Court decision in Peixeiro v. Haberman<\/a>\u00a0<\/em>(1997):\u00a0“Whatever interest a defendant may have in the universal application of a limitation period must be balanced against the concerns of fairness to the plaintiff who was unaware that his injuries met the conditions precedent to commencing an action”.<\/p>\n

\u00a0<\/strong>In any event, this balance between plaintiff and defendant rights is normally a matter of the length of a limitation period\u2014allow the plaintiff sufficient time to commence her claim, but not so much time that the defendant will suffer prejudice. Here it seems that the balance means taking some control over the running of time and handing it the defendant.\u00a0 Perversely, this gives the defendant an incentive to delay the commencement of the claim (in this case, by delaying the application for leave).<\/p>\n

It seems Justice C\u00f4t\u00e9 understood the perversion, because he dismisses it:<\/p>\n

[81]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0Like Goudge J.A in\u00a0Timminco<\/em>,\u00a0<\/em>I am unwilling to rely upon an isolated purpose of limitation periods, taken out of context, in order to give priority to one stakeholder over others, particularly where the legislature was so clearly alive to these considerations in making the choices it made generally for Part XXIII.1\u00a0OSA<\/a><\/em>, and more specifically for\u00a0s.\u00a0138.14<\/a>.<\/p><\/blockquote>\n

His solution to potential injustice is a nunc pro tunc order<\/em>.\u00a0 An order granting leave to proceed with an action is available nunc pro tunc <\/em>where leave is sought prior to the expiry of the limitation period.<\/p>\n

[85]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0The courts have inherent jurisdiction to issue orders\u00a0nunc pro tunc<\/em>. In common parlance, it would simply be said that a court has the power to backdate its orders. This power is implied by\u00a0rule 59.01<\/a>\u00a0of the\u00a0Rules of Civil Procedure<\/a><\/em>: \u201cAn order is effective from the date on which it is made,\u00a0unless it provides otherwise<\/u>\u201d.<\/p>\n

 <\/p>\n

[90]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0In fact, beyond cases involving the death of a party or a slip, the courts have identified the following non-exhaustive factors in determining whether to exercise their inherent jurisdiction to grant such an order: (1) the opposing party will not be prejudiced by the order; (2) the order would have been granted had it been sought at the appropriate time, such that the timing of the order is merely an irregularity; (3) the irregularity is not intentional; (4) the order will effectively achieve the relief sought or cure the irregularity; (5) the delay has been caused by an act of the court; and (6) the order would facilitate access to [citations omitted[. None of these factors is determinative.<\/p>\n

 <\/p>\n

[93]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0Thus, subject to the equitable factors mentioned above, an order granting leave to proceed with an action can theoretically be made\u00a0nunc pro tunc<\/em>\u00a0where leave is sought prior to the expiry of the limitation period. One very important caveat, identified by Strathy J., is that a court should not exercise its inherent jurisdiction where this would undermine the purpose of the limitation period or the legislation at issue.<\/p>\n

 <\/p>\n

[94]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0This is because, as with all common law doctrines and rules, the inherent jurisdiction to grant\u00a0nunc pro tunc<\/em>orders is circumscribed by legislative intent. Given the long pedigree of the doctrine and of\u00a0rule 59.01<\/a>, to which I have referred, it has been held that the legislature is presumed to have contemplated the possibility of a\u00a0nunc pro tunc<\/em>\u00a0order:McKenna<\/em>, at para. 27;\u00a0Parker<\/em>, at pp. 286-87;\u00a0New Alger Mines<\/em>, at pp.\u00a0570\u201171. However,\u00a0nunc pro tunc\u00a0<\/em>orders will not be available if they are precluded by either the language or the purpose of a statute. None of the other equitable factors listed above, including the delay being caused by an act of the court, can be relied on to effectively circumvent or defeat the express will of the legislature.<\/p><\/blockquote>\n

The practical reality is that there are very few circumstances in which plaintiff won’t be fully in control of when it commences its action.\u00a0 Nevertheless, the court’s willingness to depart from this basic, common sense limitations principle on rather dubious grounds is troubling.<\/p>\n

You may find the decision helpful\u00a0for its high-level summaries of the doctrine of special circumstances (paras. 112-113) and the purpose of limitation periods (paras. 57-58).<\/p>\n","protected":false},"excerpt":{"rendered":"

In Canadian Imperial Bank of Commerce v. Green, the Supreme Court rejected a basic principle of limitations law: the plaintiff must always be in control of when it commences a\u00a0proceeding. This appeal concerned the interaction of the limitation period in section 138 of the Ontario Securities Act and section 28 of the Class Proceedings Act, … Continue reading Supreme Court says no, plaintiffs don’t need to control when they commence actions<\/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":[4,178],"tags":[180,49,183,181,182,179],"class_list":["post-358","post","type-post","status-publish","format-standard","hentry","category-ontario","category-supreme-court","tag-bad-news-for-limitations-law","tag-class-proceedings-act","tag-nunc-pro-tunc","tag-ontario-securities-act","tag-ontario-securities-act-s-138","tag-supreme-court-of-canada"],"_links":{"self":[{"href":"https:\/\/limitations.ca\/index.php?rest_route=\/wp\/v2\/posts\/358","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/limitations.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/limitations.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/limitations.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/limitations.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=358"}],"version-history":[{"count":1,"href":"https:\/\/limitations.ca\/index.php?rest_route=\/wp\/v2\/posts\/358\/revisions"}],"predecessor-version":[{"id":359,"href":"https:\/\/limitations.ca\/index.php?rest_route=\/wp\/v2\/posts\/358\/revisions\/359"}],"wp:attachment":[{"href":"https:\/\/limitations.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=358"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/limitations.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=358"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/limitations.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=358"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}