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Limitations Act - Burden of Proof. Essex Condominium Corporation No. 125 v. Heritage Park Villas Inc. [burden]
In Essex Condominium Corporation No. 125 v. Heritage Park Villas Inc. (Ont CA, 2024) the Ontario Court of Appeal allowed an appeal, this from a "partial summary judgment granted in favour of the respondents on the basis of a limitations defence" where "the motion judge erred by reversing the burden of proof on the issue of discoverability".
Here the court addresses the burden on defendants moving for summary judgment on a limitation defence:[15] Defendants who move for summary judgment on the basis of a limitations defence bear the burden of demonstrating that their defence can be made out without the need for a trial. In AssessNet Inc. v. Taylor Leibow Inc., 2023 ONCA 577, 168 O.R. (3d) 276, at paras. 34-36, van Rensburg J.A. explained:The expiry of a limitation period is raised by a defendant as an affirmative defence, and the defendant has the burden of proving that defence. When the issue is raised by a defendant in a summary judgment motion, the defendant has the onus of establishing that there is no issue requiring a trial with respect to the limitation period.
A defendant may rely on the presumption in s. 5(2) that the claim was discovered on the day the act or omission on which the claim is based took place. In order to rebut the presumption in s. 5(2) the plaintiff need only prove that its actual discovery of the claim within the meaning of s. 5(1)(a) was not on the date of the events giving rise to the claim. Once the presumption is rebutted, the burden remains on the defendant, who is asserting the defence, to prove that the plaintiff knew or ought reasonably to have known the elements of s. 5(1)(a) more than two years preceding the commencement of the proceeding.
Determining whether an action is statute-barred or declaring when a claim was discovered requires the court to make specific findings of fact about each element set out in s. 5 of the Limitations Act. [Citations omitted; emphasis added.] ....
(3) The motion judge incorrectly reversed the onus
[22] I agree with ECC 125 that the motion judge erred by incorrectly placing the burden on ECC 125 to show that its claim was not reasonably discoverable before December 30, 2014, rather than requiring the respondents to affirmatively establish that the claim was reasonably discoverable before this date.
[23] The motion judge fell into this error by following a line of lower court cases, pre-dating this court’s judgment in AssessNet, that incorrectly treated the presumption in s. 5(2) as applying to the issue of constructive knowledge under s. 5(1)(b), rather than only to the issue of actual knowledge under s. 5(1)(a). The motion judge quoted at length from one such case, Shukster v. Young et al., 2012 ONSC 4807, where Leach J. stated at para. 19:Pursuant to Rule 20, a party moving for summary judgment retains the overall burden of showing that there is no genuine issue requiring trial. However, where a Defendant moves for summary judgment in relation to a statutory limitation period, the evidentiary burden as to the discoverability issue and under Rule 20 effectively shifts to the responding party under section 5(2). [Emphasis added.] Citing Roni Excavating v. Paccar, 2013 ONSC 5192, at para. 23, the motion judge then asserted further that:[Section] 5(2) puts the onus on the plaintiff to satisfy the Court that it would be highly unlikely, if not impossible, to have obtained the necessary information with due diligence. [24] As AssessNet makes clear, these statements of the law are incorrect. The presumption in s. 5(2) of the Limitations Act applies only to the issue of actual knowledge under s. 5(1)(a), but not to the issue of constructive knowledge under s. 5(1)(b). Accordingly, in this case s. 5(2) did not shift the burden of disproving constructive knowledge to ECC 125. Rather, it remained the respondents’ burden to prove that a reasonable person in ECC 125’s position would have discovered the claim relating to HPVI’s unpaid common expense fees before December 30, 2014.
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[33] As I have already discussed, the question the motion judge should have asked himself was whether the respondents had proven that a reasonable person in Ms. Petruzzi’s situation would have acquired knowledge of the essential elements of ECC 125’s claim at some point before December 30, 2014. In order to find that the respondents had met this burden, the motion judge would have had to “make specific findings of fact about each element” in s. 5(1)(a) that supported the respondents’ position: AssessNet, at para. 36.
[34] Importantly, the motion judge’s finding that Ms. Petruzzi had not been duly diligent because she did not try to obtain the banking records was not sufficient on its own to establish the respondents’ limitations defence. As van Rensburg J.A. explained in Fennell v. Deol, 2016 ONCA 249, 97 M.V.R. (6th) 1, at para. 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. . AssessNet Inc. v. Ferro Estate
In AssessNet Inc. v. Ferro Estate (Ont CA, 2023) the Court of Appeal considered, and allowed, a limitations appeal by a creditor acting under court authority [under s.38 BIA, where "the trustee refuses or neglects to take the proceeding"].
In these quotes the court considered where the lower court judge erroneously "reversed the onus of proof, and required the appellant to establish that its claim was not discoverable within the meaning of s. 5(1) of the Limitations Act":[34] The expiry of a limitation period is raised by a defendant as an affirmative defence, and the defendant has the burden of proving that defence. When the issue is raised by a defendant in a summary judgment motion, the defendant has the onus of establishing that there is no issue requiring a trial with respect to the limitation period: Crombie Property Holdings Limited, at para. 33.
[35] A defendant may rely on the presumption in s. 5(2) that the claim was discovered on the day the act or omission on which the claim is based took place. In order to rebut the presumption in s. 5(2) the plaintiff need only prove that its actual discovery of the claim within the meaning of s. 5(1)(a) was not on the date of the events giving rise to the claim: Fennell v. Deol, 2016 ONCA 249, at para. 26; Morrison v. Barzo, 2018 ONCA 979, 144 O.R. (3d) 600, at para. 31; Ridel, at para. 28. Once the presumption is rebutted, the burden remains on the defendant, who is asserting the defence, to prove that the plaintiff knew or ought reasonably to have known the elements of s. 5(1)(a) more than two years preceding the commencement of the proceeding.
[36] Determining whether an action is statute-barred or declaring when a claim was discovered requires the court to make specific findings of fact about each element set out in s. 5 of the Limitations Act. If the record does not permit the summary judgment motion judge to make those findings with the certainty required by Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, then a genuine issue requiring a trial may exist: Nasr Hospitality Services Inc. v. Intact Insurance, 2018 ONCA 725, 142 O.R. (3d) 561, at paras. 34-39.
[37] In Nasr Hospitality Services Inc., at para. 35, Brown J.A. outlined the necessary findings of fact for a “typical summary judgment motion” considering a limitation period defence. However, when a creditor asserts a bankrupt’s claim taken by assignment under s. 38 of the BIA, the court must make necessary findings about when both the predecessor (i.e., the bankrupt) and the person claiming through the predecessor (i.e., the creditor) knew or ought to have known of the matters set out in ss. 5(1)(a)(i) to (iv).
(3) Analysis
(a) The Respondents, as Defendants Raising a Limitation Period Defence, Had the Burden of Proof
[38] The motion judge erred in her articulation and application of the burden of proof.
[39] The notice of action was issued on March 13, 2018. The respondents, relying on the communications between the inspectors and the respondents, argued that the claim was or ought to have been discovered before March 13, 2016. The motion judge accepted the evidence (which was not contested) that the claims concerned the post-bankruptcy period between March 12 and December 22, 2015, and she correctly treated these dates as the presumptive dates under s. 5(2). However, the motion judge then stated, at para. 28 of her reasons, that the effect of s. 5(2) of the Limitations Act is that the plaintiff bears the onus of showing that it lacked the requisite knowledge and ought not to have known the requisite facts prior to the expiry of the limitation period. This is incorrect.
[40] A plaintiff’s onus under s. 5(2) is to rebut the presumption that it had knowledge of the claim “on the day the act or omission on which the claim is based took place”. Accordingly, once it was established that AssessNet and its predecessor in right did not know about the claim between March 12 and December 22, 2015, then its burden under s. 5(2) was discharged. The onus then fell on the respondents to prove, under s. 12, that AssessNet or its predecessor knew or ought reasonably to have known of the matters set out in s. 5(1)(a) at least two years before the action was commenced.
[41] The motion judge also misstated the onus at para. 43 of her reasons when, after referring to the dates when the events that were the subject matter of the action took place, she said that the onus shifted to AssessNet to establish that there was a genuine issue requiring a trial about whether it knew or ought reasonably to have known prior to March 13, 2016 (two years before its action was commenced) that the bankrupt estate had suffered injury, loss or damage caused by the negligence or breaches of fiduciary duties of the respondents, and at para. 68 when she said that the appellant had not satisfied her that it first knew a legal proceeding would be appropriate after the trustee was replaced.
[42] The onus was on the respondents as defendants to establish the affirmative defence that the limitation period had expired. They also had the onus, as the moving parties on a summary judgment motion seeking to dismiss the claim, to show that there was no issue requiring a trial with respect to the expiry of the applicable limitation period. The obligation of the motion judge was then to make the necessary findings of fact with respect to the limitation period defence, and to the extent that she could not do so, she ought to have concluded that discoverability was a genuine issue requiring a trial and dismissed the summary judgment motion: Nasr, at paras. 34-39. . Maxwell v. Altberg
In Maxwell v. Altberg (Ont CA, 2023) the Court of Appeal considered the onus in a limitations matter, here in the context of an appeal from a dismissed summary judgment:[15] Second, she argues that the motion judge made a legal error that resulted in a reversal of the onus of proof. She submits that the motion judge erroneously relied on Findlay v. Holmes, (1998), 1998 CanLII 5488 (ON CA), 111 O.A.C. 319 (C.A.), at para. 25, for the proposition that where a limitation defence is pleaded the person seeking to enforce a right has the onus of showing that the action was brought within the limitation period. According to Ms. Altberg, that proposition applies at trial. She argues that on a motion for summary judgment, the moving party (here Mr. Maxwell) bore the onus of showing there is no genuine issue for trial regarding a limitation period defence: Noddle v. The Ontario Ministry of Health, 2019 ONSC 7337, at para. 58.
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[17] As this court stated in Soper v. Southcott (1998), 1998 CanLII 5359 (ON CA), 39 O.R. (3d) 737 (C.A.), at p. 742, if the person relying on the limitation period moves for summary judgment and satisfies the court that there is no issue of fact requiring a trial for its resolution, the limitation defence will have been made out, and summary judgment will be appropriate. . Nguyen v Economical Mutual Insurance Company
In Nguyen v Economical Mutual Insurance Company (Div Court, 2023) the Divisional Court held that the burden (onus) of proving the expiration of a limitation period lay on the party advancing it as a defence:[16] Whose onus was it provide when Ms. Nguyen received the denial letter? In its original decision the LAT recognized that the onus was on Economical to prove on a balance of probabilities that the limitation period had expired pursuant to s. 56 of the SABS. An essential fact that must be proved to satisfy this onus is when Ms. Nguyen actually received the March 13 denial letter as the two-year limitation period only begins to run on the date Ms. Nguyen was aware of the denial. Economical provided no evidence that Ms. Nguyen actually received the March 13 denial letter prior to the deemed date of receipt if it was mailed (March 20, 2018).
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[18] Secondly, the LAT faulted Ms. Nguyen for providing no evidence to support her assertion that the March 13 denial letter was mailed to her. In doing so it committed a second error of law by reversing the onus of proof for establishing that the limitation period had expired. The onus was not on Ms. Nguyen to prove when she received the denial letter and the limitation period started to run. It was on Economical. . Visic v. Elia Associates Professional Corporation
In Visic v. Elia Associates Professional Corporation (Ont CA, 2022) the Court of Appeal held that the burden (on a summary judgment motion) of showing an extension (well-)past the two-year limitation period lay on the plaintiff:[6] Given the appellant did not commence the action until 2018 – well outside the 2-year limitation period – the onus was on the appellant to adduce sufficient evidence to demonstrate that there was a genuine issue requiring a trial with respect to whether any of the factors listed in s. 5(1)(a) of the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B, postponed the commencement of the limitation period. ....
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