Extension of the Limitation Period

Ontario Limitations Act - Section 13 - Extension of the Limitation Period

Palios v Wasilewski, 2016 CanLII 51829 (ON SCSM),

[101] A solicitor’s account is clearly a liquidated sum. I have found the email from Wasilewski does speak to compensation beyond that of the probate fees, bringing it within the broad parameters of s 13 (1). Looking at s 13 (9), it was also made to the person with the claim [Palios]. Under s 13 (10), the acknowledgment has to be in writing. Mr Diduch accepted an email could so qualify.

[102] This does not, however, end the analysis. In interpreting s 13, the courts have outlined certain additional requirements to confirm any alleged acknowledgment, reflecting the fact s 13 is an exception, extending a limitation period.

[103] In RZCD Law Firm LLP v Associated Credit & Collection Agencies, [2013] O.J. No. 6449, Deputy Judge Kurz dealt with sundry unpaid invoices. One of the matters for determination was whether there had been an unambiguous acknowledgment in writing relative the unpaid invoices within the two year limitation, thereby resetting the limitation period.

[104] After reviewing case law, Deputy Judge Kurz ruled he had to determine

a) if the acknowledgement was in writing

b) whether it was signed and

c) if it was unambiguous [para 30].

On the facts, it was determined the last of a series of emails about paying the outstanding accounts was within two years of when the action was commenced. The debtor was not entitled to rely on a limitation defence concerning most of the unpaid invoices.

[105] There is some ambiguity in the cases as to how specific any acknowledgment need be re the sum owed. In RZCD, the debt was for $13,680.13. An email from the debtor had noted in part “’It’s like $13K!!!’”. Deputy Judge Kurz ruled same amounted to an unambiguous acknowledgment “…that a certain debt is owing” [at para 35]. If applied to the within action, as the Plaintiff’s Claim was issued on December 23, 2013, within two years of the purported May 31, 2012 acknowledgment, it would not be statute-barred.

Amending a Claim after the Expiry of Limitations

Ioannou v. Evans, 2008 CanLII 117 (ON SC),

[26] Generally speaking, the problems associated with the joinder of a party after the expiry of a limitation period arise in two situations. In the first situation, the plaintiff wishes to amend his or her statement of claim to join an additional or substitute plaintiff whose claim against the existing defendants would be statute barred if that new plaintiff were commencing a new action. The first situation is not the situation of the case at bar, but it is the situation is some of the classic cases. In the second situation, the plaintiff wishes to amend his or her statement of claim to join a new defendant who would otherwise have a limitation period defence. The second situation is the situation that Honda confronts in the case at bar. The same law applies to both situations because the identical legal problem to be solved is whether an amendment that will deny a defendant his or her limitation period defence should be allowed.

[27] In Mazzuca v. Silvercreek Pharmacy Ltd., supra, a majority of the Court of Appeal confirmed that where a plaintiff seeks to amend his or her pleading to join a party after the expiry of a limitation period, the plaintiff must show both the absence of prejudice to the defendant and also special circumstances.

[28] Prejudice to the defendant refers to harm that cannot be compensated for by costs or an adjournment and that arise from the amendment other than the harm of the defendant losing the right to rely on the limitation period defence. In other words, if apart from the loss of the limitation period defence, the defendant suffers no non-compensable harm by the amendment, then he or she suffers no prejudice.

[29] In his concurring judgment in Mazzuca v. Silvercreek Pharmacy Ltd., Laskin, J.A. argued that as a matter of precedent and policy, the special circumstance prerequisite should be dispensed with and the focus should only be on non-compensable prejudice. His colleagues did not agree about the role of special circumstances, but Laskin, J.A.’s judgment provides a helpful analysis of how to determine whether the defendant would be prejudiced by the joinder of a party after the expiry of a limitation period. Laskin, J.A. stated in paragraph 75 of his judgment:

"Thus, when it comes to amendments under rule 26.01, the focus is on whether non-compensable prejudice would result. And, importantly, the mere expiry of a limitation period by itself is not the kind of prejudice that would defeat an amendment. Instead, the court must evaluate prejudice in light of the two main purposes of a limitation period: first, defendants should have a fair opportunity to prepare an adequate defence and at some point should no longer have to preserve or seek out evidence for that defence; and second, at some point defendants should be free of claims that might affect their economic, social or personal interests. See Garry D. Watson, "Amendment of Proceedings After Limitation Periods" (1975), 53 Can. Bar Rev. 237 at pp. 272-73."

[30] In Deaville v. Boegeman, supra, MacKinnon, A.C.J.O. stated that the expiry of a limitation period creates a presumption of prejudice to the defendant that the plaintiff can displace or the defendant can confirm with evidence but the onus was on the plaintiff to show absence of prejudice. MacKinnon, A.C.J.O. stated at pg. 730:

"Some courts have suggested that in applications of the nature of the one in the instant case, limitation periods can be ignored. Limitation periods, however, were not enacted to be ignored. It has also been suggested that the mere bringing of such an application as in the instant case immediately shifts the burden of establishing prejudice to the defendant. I do not agree. In my view, the expiry of the limitation period creates a presumption, however slight in some cases, of prejudice to the defendant. It may be that the mere recitation of the facts and history of the case makes it clear there is no prejudice to the defendant and it can be inferred that he knew, within the limitation period, of the case and the nature of the claims now being made against him. Alternatively the defendant may file material which establishes prejudice. If matters are left in balance, the usual rules apply and the applicant upon whom the burden lies has not discharged that burden. The facts of the case and the claims and the history of the dealings with the defendant are within the knowledge of the plaintiff and there is no unfairness in placing upon the plaintiff the burden of establishing those facts."

[31] There is a presumption of prejudice after the passage of a limitation period, however slight, which may be rebutted with evidence that within the limitation period the defendant or his or her insurers knew of the plaintiff’s case and the nature of the claims being made against the defendant: Wong v. Adler, supra, at para. 13; Swain Estate v. Lake of the Woods Hospital, supra. It makes sense that knowledge of the claim rebuts prejudice because with knowledge, the defendant has a fair opportunity to prepare an adequate defence and has less reason to anticipate the repose provided by a limitation period.

Sax v. Rick Aurora, 2019 ONSC 3573 (CanLII),

[10] The parties agree that in finding that the statement of claim gave Royal LePage notice of the factual matrix to support a derivative action within the limitation period, the motion judge failed to correctly apply 1186708 Ontario Inc. v. Gerstein, 2016 ONSC 1331 (hereinafter “Gerstein”), which followed the law set out in Canadian Imperial Bank of Commerce v. Green; IMAX Corporation v. Silver; and Celestica Inc. v. Trustees of the Millwright Regional Council, 2015 SCC 60 (CanLII) (the "CIBC Trilogy").

[11] The decision of the Supreme Court in the CIBC Trilogy leaves no room for doubt that the doctrine of nunc pro tunc cannot be used to cure an expired limitation period and is not available where a motion seeking leave

[12] In the result, the order of the motion judge will stand subject to Paragraphs 2 and 3 being replaced with the following:

2. This Court Orders that derivative claims arising before April 11, 2015, being two years prior to the filing of the motion for leave, are statute barred.

3. The Plaintiff is granted leave, effective April 11, 2017, to commence and prosecute a derivative action on behalf of 2349336 Ontario Ltd. against Royal LePage West Realty Group Ltd. as set out in the Amended Amended Statement of Claim attached hereto as Appendix “A”.”