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Limitations - Discoverability - When Action is Appropriate Means - Collateral Remedies

Limitations - Discoverability - When Action is Appropriate Means - Remedial Behaviour by Defendant

Presidential MSH Corporation v. Marr Foster & Co. LLP (Ont CA, 2017)

This is a very useful case on the issue of when of limitation period begins to toll in light of remedial efforts by parties following the initial liability occurence. Here the issue was whether a negligence claim against an accountancy firm for late filing of a client's taxes began to run from the date of the Notice of Assessment or the later date at which that assessment was confirmed by CRA's response to the client's Notice of Objection (the first appeal stage). The motion judge applied the earlier date and granted the defendant's motion for summary judgment.

The case focussed on the portion of the discovery provisions [s.5(1)(a)(iv)] of the Limitations Act that reads "having regard to the nature of its… loss…, a proceeding would be an appropriate means to seek to remedy it". The court held that 'appropriate' in this provision could be read to extend time until collateral legal processes were concluded:
[17] The motion judge did not have the benefit of this court’s decision in 407 ETR Concession Company Limited v. Day, 2016 ONCA 709 (CanLII), 403 D.L.R. (4th) 485. In that case, Laskin J.A. discussed the purpose of s. 5(1)(a)(iv) of the Act. He noted, at para. 48:
[I]t seems to me one reason why the legislature added “appropriate means” as an element of discoverability was to enable courts to function more efficiently by deterring needless litigation. As my colleague Juriansz J.A. noted in his dissenting reasons in Hare v. Hare, courts take a dim view of unnecessary litigation. [Citation omitted.]
Laskin J.A. also noted, at para. 33, that the appropriateness criterion in s. 5(1)(a)(iv) was not an element of the former limitations statute or the common law discoverability rule, and that this added element “can have the effect … of postponing the start date of the two-year limitation period beyond the date when a plaintiff knows it has incurred a loss because of the defendant’s actions.”

[18] Laskin J.A. stated, at para. 34, that whether an action is appropriate depends on the specific factual or statutory setting of each individual case. Because of this, case law applying s. 5(1)(a)(iv) is of limited assistance. And in Brown, Feldman J.A. noted that “there any many factual issues that will influence the outcome”: at para. 21. Further, when s. 5(1)(b) of the Act is applied, the determination whether legal action would be appropriate takes into account what a reasonable person with the abilities and in the circumstances of the plaintiff ought to have known. Section 5(1)(b) is described as a modified objective test in Ferrera v. Lorenzetti, Wolfe Barristers and Solicitors, 2012 ONCA 851 (CanLII), 113 O.R. (3d) 401, at para. 70.

.....

[28] A second line of cases interpreting and applying s. 5(1)(a)(iv) of the Act involves a plaintiff’s pursuit of other processes having the potential to resolve the dispute between the parties and eliminate the plaintiff’s loss.

[29] This approach to discoverability is consistent with the rule in administrative law that it is premature for a party to bring a court proceeding to seek a remedy if a statutory dispute resolution process offers an adequate alternative remedy and that process has not fully run its course or been exhausted: see Volochay v. College of Massage Therapists of Ontario, 2012 ONCA 541 (CanLII), 111 O.R. (3d) 561, at paras. 61-70.
The court also usefully canvassed situations where behaviour of the defendant directed at eliminating or reducing the loss could also extend discovery [paras 2-27].
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