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4. Unless this Act provides otherwise, a proceeding shall not be commenced in respect of a claim after the second anniversary of the day on which the claim was discovered. [March 30, 2020] . Scott v. Golden Oaks Enterprises Inc.
In Scott v. Golden Oaks Enterprises Inc. (SCC, 2024) the Supreme Court of Canada dismissed a civil litigation appeal, here where the main question was "how the common law doctrine of corporate attribution should be applied to a “one-person” corporation controlled by its sole officer, shareholder, and directing mind".
Here the court comments on the purpose of the Ontario Limitations Act:[76] The purpose of the Limitations Act, 2002, like other modern limitations statutes, is to balance the interests of plaintiffs and defendants by promoting the established certainty, evidentiary, and diligence rationales underlying limitation periods (Canadian Imperial Bank of Commerce v. Green, 2015 SCC 60, [2015] 3 S.C.R. 801, at para. 57; Novak v. Bond, 1999 CanLII 685 (SCC), [1999] 1 S.C.R. 808, at paras. 64-67). The certainty rationale seeks “to promote accuracy and certainty in the adjudication of claims”; the evidentiary rationale seeks “to provide fairness to persons who might be required to defend against claims based on stale evidence”; and the diligence rationale seeks “to prompt persons who might wish to commence claims to be diligent in pursuing them in a timely fashion” (Green, at para. 57, citing P. M. Perell and J. W. Morden, The Law of Civil Procedure in Ontario (2nd ed. 2014), at p. 123).
[77] More specifically, the purpose of discoverability rules, such as s. 5(1)(a) of the Limitations Act, 2002, is “to avoid the injustice of precluding an action before the person is able to raise it” (Peixeiro v. Haberman, 1997 CanLII 325 (SCC), [1997] 3 S.C.R. 549, at para. 36, per Major J.; see also Grant Thornton LLP, at para. 29). . Haider v. Rizvi
In Haider v. Rizvi (Ont CA, 2023) the Court of Appeal considered an important issue about a central trigger of the main s.4 Limitations Act, that of a the need for a "proceeding":Basic limitation period
4 Unless this Act provides otherwise, a proceeding shall not be commenced in respect of a claim after the second anniversary of the day on which the claim was discovered. In this case, the parties had ostensibly settled litigation but left the final drafting of a release to later (in this case much later), as is commonly the practice. In this case, while there were Minutes of Settlement which dealt with most of the material terms, the balance of the release was assumed to follow 'standard' (presumably, 'standard to the profession') terms.
So when active problems arose in the terms of release but after the two-year limitation period, the court faced the issue of how - procedurally - to treat the settlement, ie. as a motion within the existing (but now in abeyance) case file or as a new litigation file. Here, this perhaps seemingly unimportant procedural issue made a difference because if it were the latter (ie. a new 'proceeding') then the limitation would have something to count itself by in terms of limitations. If not, then the claim was already commenced at the beginning of the 'settled' case:2. The appellant does not have a limitation period defence to the delivery of a release
[25] The appellant argues that the motion judge erred in refusing to dismiss the motion on the basis that the respondent’s claim for a Full and Final Mutual Release was statute-barred. He contends that the claim for performance of the Minutes of Settlement was a new cause of action, that required the commencement of a new proceeding, or at least the amendment of pleadings in the existing action, which could not occur more than two years after the date of the settlement agreement.
[26] First, I note that the appellant has identified no error in the motion judge’s conclusion that the respondent’s claim arose only at the time that the appellant refused to deliver any release at all, and not at the time the Minutes of Settlement were signed or while the parties were in negotiations about the content of the release. On that factual finding, there was no question of the expiry of a limitation period.
[27] Second, and in any event, I see no basis for the appellant to rely on the expiry of a limitation period in this case. It is unnecessary to address whether and in what circumstances a limitation period might bar subsequent proceedings or claims to enforce aspects of a settlement agreement: in this case we are concerned only with the delivery of a release. As I have already noted, the delivery of a release was properly sought in the context of a motion in an ongoing action. The respondent was not required to start a new action or to amend his pleadings to seek an order for an exchange of releases as part of the completion of the settlement.
[28] Even if no Full and Final Mutual Release had been delivered, the respondent was released by the terms of the Minutes of Settlement, subject only to the Undertaking. The settlement of a claim implies an obligation to furnish a release absent agreement to the contrary: Hodaie v. RBC Dominion Securities, 2012 ONCA 796, at para. 3; Fieguth, at pp. 121-122; Bogue v. Bogue (1999), 1999 CanLII 3284 (ON CA), 46 O.R. (3d) 1 (C.A.), at para. 13; Umholtz v. Umholtz (2004), 2004 CanLII 14183 (ON SC), 238 D.L.R. (4th) 736 (Ont. S.C.), at p. 738. So long as the settlement remains on foot, it will bar subsequent proceedings that fall within its terms. The absence of a signed release makes no practical difference to the finality of a settlement: see e.g., Gedco Excavating Ltd. v. Aqua-Tech Dewatering Co., [2014] O.J. No. 2513 (S.C.), at paras. 26-28.
[29] I would therefore reject this ground of appeal. . Kaynes v. BP p.l.c.
In Kaynes v. BP p.l.c. (Ont CA, 2021) the Court of Appeal considers basics of limitations law, in particular the shift [with the Limitations Act, 2002] from 'cause of action' to 'discoverability of a claim' [paras 36-58].
. Winmill v. Woodstock (Police Services Board)
In Winmill v. Woodstock (Police Services Board) (Ont CA, 2017) the Court of Appeal makes this useful tactical point:[17] I begin with a structural point. In a single case where a plaintiff alleges different torts, it is possible and permissible for different limitation periods to apply to the different torts: see West v. Ontario, 2015 ONCA 147 (CanLII), at paras. 2-3. . Independence Plaza 1 Associates, L.L.C. v. Figliolini
In Independence Plaza 1 Associates, L.L.C. v. Figliolini (Ont CA, 2017) the court expounded generally on the history and purposes of limitation periods in litigation:D. ANALYSIS
[17] The correct approach to resolving the two questions raised by this appeal begins and ends with the provisions of the Limitations Act, 2002, which is a comprehensive and exhaustive scheme for dealing with limitation periods: Intact Insurance Co. of Canada v. Lombard General Insurance Co. of Canada, 2015 ONCA 764 (CanLII), 128 O.R. (3d) 658, at paras. 53-56, leave to appeal to S.C.C. refused, [2016] S.C.C.A. No. 10 and [2016] S.C.C.A. No. 11.
[18] Accordingly, I will begin my analysis by explaining the purpose of statutes of limitation. I will then examine the relevant provisions of the former Ontario Limitations Act, R.S.O. 1990, c. L.15, and their interpretation in the case law. Finally, I will discuss the legislative history of the Limitations Act, 2002 and the relevant provisions of the statute. Against this background, I will address the two questions raised by this appeal.
(1) Discussion
(i) The purposes of statutes of limitation
[19] Limitations statutes reflect public policy about efficiency and fairness in the justice system. There are three broad policy justifications for limitation statutes: Manitoba Metis Federation Inc. v. Canada (Attorney General), 2013 SCC 14 (CanLII), [2013] 1 S.C.R. 623, at paras. 231-234.
[20] First, they promote finality and certainty in legal affairs by ensuring that potential defendants are not exposed to indefinite liability for past acts: Hare v. Hare (2006), 2006 CanLII 41650 (ON CA), 83 O.R. (3d) 766 (C.A.), at para. 41. They reflect a policy that, after a reasonable time, people should be entitled to put their business and personal pasts behind them and should not be troubled by the possibility of “stale” claims emerging from the woodwork.
[21] Second, they ensure the reliability of evidence. It is inefficient and unfair to try old claims because evidence becomes unreliable with the passage of time. Memories fade, witnesses die and evidence gets lost. After a reasonable time, people should not have to worry about the preservation of evidence: K.M. v. H.M., 1992 CanLII 31 (SCC), [1992] 3 S.C.R. 6, at p. 30.
[22] Third, and related to this, limitation periods promote diligence because they encourage litigants to pursue claims with reasonable dispatch.
[23] Other justifications have been given, including the interest in the efficient use of public resources through the expeditious resolution of disputes and the desirability of adjudicating disputes on the basis of contemporary values and standards: see Graeme Mew, The Law of Limitations, 3d ed. (Toronto, LexisNexis, 2016), at pp. 16-18.
(ii) The former Limitations Act, R.S.O. 1990, c. L.15
[24] Section 45(1)(g) of the former Limitations Act contained a six-year limitation period for an action on a simple contract or debt. A long line of cases held that an action on a foreign judgment was an action on a simple contract debt for limitations purposes and therefore subject to that six-year limitation period: see Lax, at para. 11; Rutledge v. United States Saving & Loan Co. (1906), 37 S.C.R. 546, at p. 547; and Bedell v. Gefaell (No. 1), 1938 CanLII 92 (ON CA), [1938] O.R. 718 (C.A.), at p. 720. This view was based on the fiction of an implied promise by the foreign judgment debtor to pay the amount of the judgment. As Feldman J.A. noted, at para. 13 of Lax, this fiction was necessary because, “unlike a domestic judgment, a foreign judgment cannot be directly enforced [in Ontario] by execution. Rather, an action must be brought to enforce the debt it creates.”
[25] Section 45(1)(c) of the former Limitations Act also contained a twenty-year limitation period on an “action upon a judgment or recognizance.” In Lax, at paras. 20-25, Feldman J.A. confirmed that this provision did not apply to an action on a foreign judgment. It applied to an action brought in order to toll the limitation period to enforce a domestic judgment using the execution procedures set out in r. 60 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194.
[26] The practice of bringing an action on a domestic judgment to toll the limitation period for its enforcement within the province was discussed by the British Columbia Court of Appeal in Young v. Verigin, 2007 BCCA 551 (CanLII), 72 B.C.L.R. (4th) 332, at paras. 4-8. Newbury J.A. observed that in British Columbia, the limitation period for an action on a domestic judgment for the payment of money was reduced from twenty to ten years by the Limitations Act, S.B.C. 1975, c. 37, s. 3(2)(f). That provision was then amended by the Enforcement of Canadian Judgments and Decrees Act, S.B.C. 2005, c. 29, by inserting the word “local” before the word “judgment,” presumably to clarify that the provision did not apply to foreign judgments: see Limitation Act, S.B.C. 2012, c. 13, s. 7(a).
[27] In Lax, this court rejected the suggestion of Cumming J., in obiter, in Girsberger v. Kresz (2000), 2000 CanLII 22329 (ON SC), 47 O.R. (3d) 145 (S.C.), at paras. 30-50, aff’d on other grounds, (2000), 2000 CanLII 22406 (ON SC), 50 O.R. (3d) 157 (C.A.), that the historical classification of foreign judgments as simple contract debts should be abandoned in order to give “full faith and credit” to foreign judgments on the basis of comity, order and fairness. Cumming J.’s suggestion would have subjected foreign judgments to the twenty-year limitation period in s. 45(1)(c) of the former Limitations Act.
(iii) The history of the Limitations Act, 2002
[28] The Limitations Act, 2002 was the culmination of several attempts, beginning in the late 1960s, to reform, consolidate and simplify the law of limitations in Ontario. The history of those attempts was set out by Weiler J.A. in York Condominium Corp. No. 382 v. Jay-M Holdings Ltd., 2007 ONCA 49 (CanLII), 84 O.R. (3d) 414, at paras. 27-30. See also McConnell v. Huxtable, 2013 ONSC 948 (CanLII), 113 O.R. (3d) 727, at paras. 62-73, aff’d, 2014 ONCA 86 (CanLII).
[29] The purpose of the new statute was to replace a complex, obscure and confusing regime of multiple limitation periods with a simple and comprehensive scheme. The new scheme consists of a basic two-year limitation period applicable to most claims, an “ultimate limitation period” of fifteen years and a statutorily-enshrined discoverability principle. It was intended to promote certainty and clarity in the law of limitation periods: see Dilollo Estate (Trustee of) v. I.F. Propco Holdings (Ontario) 2013 ONCA 550 (CanLII), 36 Ltd., 2013 ONCA 81, 117 O.R. (3d) 81, at para. 61.
(iv) The Limitations Act, 2002
[30] The following provisions of the Limitations Act, 2002 are relevant:Definitions
In this act …
“claim” means a claim to remedy an injury, loss or damage that occurred as a result of an act or omission;
Application
(1) This Act applies to claims pursued in court proceedings other than … [not applicable].
…
Basic Limitation Period
4. Unless this Act provides otherwise, a proceeding shall not be commenced in respect of a claim after the second anniversary of the day on which the claim was discovered.
Discovery
5. (1) A claim is discovered on the earlier of,
(a) the day on which the person with the claim first knew,
(i) that the injury, loss or damage had occurred,
(ii) that the injury, loss or damage was caused by or contributed to by an act or omission,
(iii) that the act or omission was that of the person against whom the claim is made, and
(iv) that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it; and
(b) the day on which a reasonable person with the abilities and in the circumstances of the person with the claim first ought to have known of the matters referred to in clause (a).
Presumption
(2) A person with a claim shall be presumed to have known of the matters referred to in clause (1) (a) on the day the act or omission on which the claim is based took place, unless the contrary is proved.
…
No limitation period
16. (1) There is no limitation period in respect of,
…
(b) a proceeding to enforce an order of a court, or any other order that may be enforced in the same way as an order of a court; [31] Because the proceeding on the New Jersey judgment brought by the respondent in this appeal is a “claim pursued in a court proceeding,” it falls within the comprehensive and exhaustive scheme of the statute.
[32] The Limitations Act, 2002 eliminated its predecessor’s twenty-year limitation period for an action “upon a judgment or recognizance.” However, it included a “proceeding to enforce an order of a court or any other order that may be enforced in the same way as an order of a court” in the proceedings for which there is no limitation period under s. 16(1). . Apotex Inc. v. Nordion (Canada) Inc.
In Apotex Inc. v. Nordion (Canada) Inc. (Ont CA, 2019) the Court of Appeal conducts a general review of limitations law since the changes brought about by Limitations Act, 2002:[73] After many years of attempts at reform, the LA 2002 brought about a sea- change in the law of limitation periods in Ontario. That change has spread to other Canadian jurisdictions and its impacts are still being felt as its implications are clarified. The statute replaced “a complex, obscure and confusing regime of multiple limitation periods with a simple and comprehensive scheme”: see Independence Plaza 1 Associates, L.L.C. v. Figliolini, 2017 ONCA 44 (CanLII), 136 O.R. (3d) 202, at para. 29; msi Spergel Inc. v. I.F. Propco Holdings (Ontario) 36 Ltd., 2013 ONCA 550 (CanLII), 310 O.A.C. 282, at para. 61. It did away with a patchwork of different limitation periods, of various lengths, and put in place a uniform and considerably shorter limitation period of two years for most actions. It also codified the common law “discoverability” principle as the trigger for the commencement of the limitation period.
[74] The LA 2002 applies to “claims pursued in court proceedings” other than those enumerated in s. 2(1). A “claim” is defined in s. 1 as: “a claim to remedy an injury, loss or damage that occurred as a result of an act or omission”.
[75] Section 4 sets out the general two-year limitation period:Unless this Act provides otherwise, a proceeding shall not be commenced in respect of a claim after the second anniversary of the day on which the claim was discovered. [76] Thus, under the LA 2002, the limitation period runs when the claim is “discovered”.
[77] Section 5(1) provides that a claim is discovered on the earlier of,
(a) the day on which the person with the claim first knew,
(i) that the injury, loss or damage had occurred,
(ii) that the injury, loss or damage was caused by or contributed to by an act or omission,
(iii) that the act or omission was that of the person against whom the claim is made, and
(iv) that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it; and
(b) the day on which a reasonable person with the abilities and in the circumstances of the person with the claim first ought to have known of the matters referred to in clause (a).
[78] As this court observed in Longo v. MacLaren Art Centre Inc., 2014 ONCA 526 (CanLII), 323 O.A.C. 246, at para. 41, the items listed in s. 5(1)(a) are conjunctive:The limitation period does not begin to run until the putative plaintiff is actually aware of all of those matters or until a reasonable person, with the abilities and in the circumstances of the plaintiff, first ought to know of all of those matters. See also Crombie Property Holdings Ltd. v. McColl-Frontenac Inc., 2017 ONCA 16 (CanLII), 406 D.L.R. (4th) 252, at para. 35, leave to appeal refused, [2017] S.C.C.A. No. 85.
[79] To state an obvious point of importance in this case, the effect of ss. 5(1)(a)(i), (ii) and (iii) is that it is not sufficient that the plaintiff knows that he or she has suffered damage. The plaintiff must also know that the damage was caused by an act or omission of the defendant.
[80] Subsection 5(1)(a)(iv) adds an additional requirement not found in the former legislation: the person with the claim must know “that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it”.
[81] Subsection 5(1)(a) has been described as a “subjective” test, because it looks to the claimant’s subjective knowledge. On the other hand, s. 5(1)(b) has been described as a “modified objective” test because it looks to what a reasonable person with the abilities and in the circumstances of the plaintiff ought to have known: see Independence Plaza, at para. 74; Ferrera v. Lorenzetti, Wolfe Barristers and Solicitors, 2012 ONCA 851 (CanLII), 113 O.R. (3d) 401, at para. 70; Presidential, at para. 18.
[82] Section 5(2) creates a statutory presumption that a claim is discovered on the day the relevant act or omission took place:A person with a claim shall be presumed to have known of the matters referred to in clause (1) (a) on the day the act or omission on which the claim is based took place, unless the contrary is proved. [83] To overcome this presumption, the plaintiff may point to evidence to establish that the claim was “discovered” on a date other than the date on which the “act or omission” took place. As this court observed in Morrison v. Barzo, 2018 ONCA 979 (CanLII), at para. 31: “The presumption is displaced by the court’s finding as to when the plaintiff subjectively knew he had a claim against the defendants”.
Commencement of the limitation period for breach of contract
[84] Before the reform of limitations law brought about by the LA 2002, the previous statute, the Limitations Act, R.S.O. 1990, c. L.15, looked to when the cause of action arose (an expression not used in the LA 2002) to determine the commencement of the limitation period. The “cause of action” 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, The Law of Limitations, 3d ed. (Toronto: LexisNexis, 2016) at §9.6; Robert Simpson Co. Ltd. et al v. Foundation Co. of Canada Ltd. et al (1982), 1982 CanLII 1750 (ON CA), 36 O.R. (2d) 97 (C.A.), at p. 105; Schwebel v. Telekes, 1967 CanLII 163 (ON CA), [1967] 1 O.R. 541 (C.A.), at p. 544.
[85] This 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: Mars Canada Inc. v. Bemco Cash & Carry Inc., 2018 ONCA 239 (CanLII), 140 O.R. (3d) 81, at para. 32.
[86] Under the LA 2002, 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 “act or omission” – the breach of contract itself – is not the only factor to be considered in determining when a claim is discovered under the LA 2002. Instead, the date on which the plaintiff knew of the occurrence of the act or omission is only one factor to be determined. In addition to that factor, the person with the claim must also know that the “injury, loss or damage had occurred” (s. 5(1)(a)(i)), that it was caused or contributed to by the act or omission (the breach of contract) (s. 5(i)(a)(ii)), and that the act or omission was that of the defendant (s. 5(1)(a)(iii)).
[87] As 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 “act or omission”), unless it is proven that the person with the claim did not know of one or more of the matters set out in s. 5(1)(a), and that a reasonable person would not have known of those matters.
[88] A 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 “the injury, loss or damage” had occurred or, if it had occurred, they did not know that it was caused by an act or omission of the defendant – 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 some damage has occurred. In Hamilton (City) v. Metcalfe & Mansfield Capital Corp., 2012 ONCA 156 (CanLII), 290 O.A.C. 42, at paras. 59-61, this court adopted the common law rule expressed in Peixeiro v. Haberman, 1997 CanLII 325 (SCC), [1997] 3 S.C.R. 549, at para. 18, that “some damage” is sufficient to start the running of the limitation period.
[89] To summarize, under the LA 2002, the limitation period does not begin to run until all of the factors enumerated in s. 5(1)(a) have been satisfied, unless a reasonable person ought to have known of their existence at an earlier date (s. 5(1)(b)). In breach of contract cases, those factors include knowledge that some injury, loss or damage was caused by or contributed to by the act or omission that is the breach of contract.
[90] I make two concluding observations before turning to the circumstances of this case.
[91] First, 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 “act or omission”) on which the claim is based: see Mew, Rolph & Zacks, at §9.5, citing to NFC Acquisition L.P. v. Centennial 2000 Inc., 2010 ONSC 733, 67 B.L.R. 218, at paras. 29-30, affirmed in 2011 ONCA 43 (CanLII), 78 B.L.R. (4th) 11; Hopkins v. Stockman, 2013 SKCA 118 (CanLII), 427 Sask. R. 4, at para. 10. As van Rensburg J.A. noted in Morrison v. Barzo, at paras. 33, 49, the application of the test in s. 5(1)(a) requires the identification or definition of the claims at issue. This is a necessary starting point.
[92] Second, 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 “act or omission” will not start the limitation period running unless injury, loss or damage has occurred and has been discovered (s. 5(1)(a)(i)).
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