Limitations
Discovery Principle
Cooper v. Toronto (City), 2019 ONSC 7486 (CanLII)
[17] The first ground of appeal is that the Master erred by dismissing the Motion without making findings regarding: (1) the date on which the plaintiff first knew the requisite elements of her claim against Hydro; and (2) when “a reasonable person with the abilities and in the circumstances of [the plaintiff] first ought to have known of such claim.” Such findings are a requirement before any finding that claims against a proposed defendant are statute-barred: see Morrison v. Barzo at para. 30.
[18] I agree that the Master erred in law in dismissing the Motion without making either of these findings. Although the Master determined the Motion on the ground of a lack of a reasonable explanation, it is not clear whether the Master proceeded on the basis that Cooper had actual knowledge as of July 4, 2014, based on having obtained the Article on that date, or accepted that Cooper did not have actual knowledge until May 2017 but proceeded on the basis that she ought to have had knowledge on or about June 30, 2014 or July 4, 2014 as a result of receipt of one or both of the City’s statement of defence and the Article,. The reference to the delivery of the Article to her counsel may even suggest that the Master proceeded on the basis that she had neither until such time as her counsel received the Article. In any event, there is no finding regarding the date on which Cooper first had actual knowledge, and, more importantly, there is no finding regarding the date on which Cooper reasonably ought to have had knowledge of her cause of action against Hydro.
[19] In dismissing the Motion without making the necessary findings of fact set out above to ground her decision, the Master erred in law by failing to apply the test as set out in Morrison v. Barzo. Accordingly, the Order must be set aside.
[27] I pause to address the question of who has the onus of demonstrating that Cooper’s cause of action was actually discovered, or was reasonably discoverable, more than two years prior to the commencement of the Motion. While it is not made express in Fennell and Morrison, in circumstances such as the present where a plaintiff demonstrates a reasonable basis for concluding that a cause of action was discovered within the applicable limitation period, as a practical matter, a proposed defendant who asserts a limitation defence must demonstrate that the plaintiff had actual knowledge, or reasonably ought to have had knowledge, on an earlier date outside the limitation period.
[32] Hydro effectively argues that Cooper’s explanation is not reasonable in view of either or both of her receipt of the Article and the City’s denial of jurisdiction in its statement of defence. In my view, however, given the evidence before the Master and this Court, neither Cooper’s mere receipt of the Article, without evidence that she actually read it, nor the City’s denial of jurisdiction in its statement of defence were sufficient to fix her with knowledge that required a further investigation for the following reasons.
[33] The mere existence of the Article cannot be a basis for concluding that Cooper ought reasonably to have conducted a further investigation. This would require a finding, by inference or otherwise, that she read the Article such that she was aware, at a minimum, of the subject-matter of the Article even if she did not have knowledge of the specific facts set out therein. However, the Court’s conclusion above that a trial is required to determine whether Cooper read the Article precludes such a finding by this Court.
[34] Accordingly, Hydro’s second submission really turns on whether Cooper’s receipt of the City’s statement of defence was sufficient to require a further investigation. I accept that a specific denial of jurisdiction could, in some circumstances, have such a result. However, in this case, the denial was only one of at least ten alternative defences asserted by the City in its statement of defence. In addition, the denial was not accompanied by the assertion of any specific facts supporting this defence nor did it identify Hydro as the owner of the Pole. It is not reasonable to assume that a plaintiff would identify a potential issue of ownership from a bald denial of jurisdiction in such circumstances.
Rooplal v. Fodor, 2019 ONSC 7211 (CanLII)
[4] On the issue of discoverability, the parties relied on ostensibly conflicting lines of jurisprudence from the Court of Appeal for Ontario. On the one hand, were the cases decided before the Limitations Act had entered into force, finding that the limitation period begins to run when the material facts on which the claim is based have been discovered or ought to have been discovered by the plaintiff’s exercise of reasonable diligence (July v. Neal (1986), 1986 CanLII 149 (ON CA), 32 D.L.R. (4th) 463; Johnson v. Wunderlich (1986), 1986 CanLII 2618 (ON CA), 34 D.L.R. (4th) 120; Hier v. Allstate Insurance Co. of Canada (1988), 1988 CanLII 4741 (ON CA), 51 D.L.R. (4th) 1; and Chambo v. Musseau (1993), 1993 CanLII 8680 (ON CA), 15 O.R. (3d) 305. The other line of authority involves cases decided after the Limitations Act had entered into force, which, as explained in the Superior Court’s decision in Chahine v. Grybas, 2014 ONSC 4698 (CanLII), provided that the limitation period does not begin until the plaintiff makes an indemnification demand and the responding insurer fails to satisfy the claim (Markel Insurance Company of Canada v. ING Insurance Company of Canada, 2012 ONCA 218 (CanLII), 109 O.R. (3d) 652; and Schmitz v. Lombard General Insurance Company of Canada, 2014 ONCA 88 (CanLII), 118 O.R. (3d) 694, leave to appeal refused, [2014] S.C.C.A. No. 143). The defendants argued that the July line of cases sets out the proper discoverability analysis, while the plaintiff argued that the Markel line of cases sets out the proper analysis.
[5] The Motions judge ultimately determined that she was bound by the Markel line of authorities rather than the July line of cases because, while the latter is predicated on the common law principles of discoverability set out by the Supreme Court of Canada in Central Trust Co. v. Rafuse, 1986 CanLII 29 (SCC), (1986) 2 S.C.R. 147, the discoverability provisions in the Limitations Act govern the analysis in the present case rather than the common law principles before the Court of Appeal in the July line of cases.
[6] We agree with the reasoning of the Motions Judge and would dismiss the appeal.
Heidenreich v Snell, 2013 CanLII 82848 (ON SCSM),
19. The statutory limitation period is two years from discovery under s. 4 of the Limitations Act, 2002, S.O. 2002, c. 24, Sch. B. Discovery is defined by s. 5(1) and s. 5(2) creates a rebuttable presumption that discovery occurs on the date of the act or omission unless the contrary is proved. Discovery under s. 5(1) has both an objective and a subjective component: Northdurft v. Canroof Corp. Inc. (2013), 305 O.A.C. 27 (Div. Ct.), at para. 22.
23. It is well-established that for discovery of a claim to occur for limitation purposes, the precise nature and extent of the damages need not be ascertained or certain. All that is need is for the fact of some actionable damage to be known with reasonable certainty. See Peixeiro v. Haberman, 1997 CanLII 325 (SCC), [1997] 3 S.C.R. 549 at para. 18: “Neither the extent of damage nor the type of damage need be known. To hold otherwise would inject too much uncertainty into cases where the full scope of the damages may not be ascertained for an extended time beyond the general limitation period."
Fillo v Jaklic, 2016 CanLII 90739 (ON SCSM),
16. Discovery of a claim is a statutory concept defined under s. 5 of the Limitations Act, 2002, and contains both a subjective and an objective component: Northdurft v. Canroof Corp. Inc. (2013), 305 O.A.C. 27 (Div. Ct.), at para. 22. In each case the court must determine when the plaintiff had knowledge of the matters listed in s. 5(1)(a), and if necessary when the plaintiff ought to have had such knowledge under s. 5(1)(b), applying the rebuttable presumption under s. 5(2). Those matters include knowledge that a legal proceeding would be an appropriate means to seek a remedy, which in some scenarios may mean that an initial period of investigation and inquiry may be allowed before discovery is deemed in law to have occurred: Everding v. Skrijel (2010), 2010 ONCA 437 (CanLII), 100 O.R. (3d) 641 (C.A.). The duration of any such period, or in other words the delay from the events to discovery, is not subject to any specific fixed period but can vary significantly on the facts of each case.
PAPASTAMOS v JORDAN, 2013 CanLII 54060 (ON SCSM),
21. Limitations law is substantive in nature and the court is duty-bound to give effect to the statute-law enacted by the legislature. While it may be seen as tempting in a case like this to find for the plaintiff, I can see no legitimate way to avoid the effect of the Limitations Act, 2002 on this claim. As Maloney J. held some years ago, it is not open to the Small Claims Court to disregard the law of limitations: R. v. Bennett (1992), 1992 CanLII 7554 (ON SC), 8 O.R. (3d) 651 (Div. Ct.).
24. The two-year limitation period runs from discovery of the claim. Discovery is defined by s. 5(1) of the Act. One element of discovery, under s. 5(1)(a)(iv), is when the plaintiff first knew “than, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it”. That aspect of discovery under s. 5(1) was addressed in Everding v. Skrijel (2010), 2010 ONCA 437 (CanLII), 100 O.R. (3d) 641 (C.A.).
25. Under s. 5(1)(b), discovery can occur earlier than actual discovery if “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)” is earlier than that date. In other words, discovery has both a subjective and an objective component: see Northdurft v. Canroof Corp. Inc. (2013), 305 O.A.C. 27 (Div. Ct.), at para. 22.
Bernard v Bravo Cement Contracting (Windsor) Inc, 2013 CanLII 72710 (ON SCSM),
28. The discoverability point in time is not based on the subjective feelings of the potential Plaintiff and when he or she comes to the realization that they have to sue for relief or remedy. To do so would create too much uncertainty and enable potential Plaintiffs to manipulate the time period that is intended to be objective and a standard that is capable of external determination. The test is when the Plaintiff ought to have been aware of the facts that give rise to a claim. Section 5.(1)(b) of the Limitations Act, 2002 includes the words, “a reasonable person” and “first ought to have known” thereby instilling and confirming an objective element. In this case, this occurred when the Defendant stopped working on the project and the Plaintiff was dissatisfied with the state of completion and quality. This did not occur in April of 2011 as the Plaintiff implies, but this was present and evident during October of 2010 and as I have found, at the latest, no later than November 6, 2010.
[59] Once a cause of action has occurred, the limitation period will run even if the plaintiff is discouraged from starting an action, providing that it is not prevented from starting an action: see Hamilton (City) v. Metcalfe & Mansfield Capital Corp., 2012 ONCA 156 (CanLII), [2012] O.J. No. 1099, 2012 ONCA 156, 290 O.A.C. 42, at para. 24. At para. 51, further, it is immaterial if the plaintiff did not appreciate the significance or legal consequences of the relevant facts. What is important is that the plaintiff understood relevant facts.
[61] In Kowall v. Shyiak, (2012) O.J. N0. 3420, 2012 ONCA 512 (CanLII), 2012 ONCA 512, a general contractor built a new house. The homeowners independently contracted with third parties for installation of exterior finishing. Water leakage and damage occurred. The motion judge dismissed the summary judgment motion based on the Limitation Act, 2002 defence on the basis that discoverability delayed the start of the two-year s.4 period until expert reports were in. He found that the plaintiffs did not have sufficient knowledge of the damage. The Court of Appeal found this decision in error since they held that no expert reports were required in order to advance a claim for damages. (The Limitation Act, 2002 was not enacted to be ignored.)
Clancy v 2228200 Ontario Inc., 2018 CanLII 64435 (ON SCSM),
14.As a matter of general principle, I see no contract law justification for a rigid common law rule that accountants or other professionals generally, or Mr. Clancy in particular, are obligated to issue invoices for ongoing matters at specific intervals such as 30 or 60 days or longer. There are many reasons why it might be more practical, more fair, better for professional-client relations, and better for the client not to have such a rule imposed on the parties by implication of the common law. In this case, the defence submits that Mr. Clancy ought to have issued his invoice within a month or two of the last services billed for, which were provided in mid-December 2013. Therefore, the defence submits that the limitation period started prior to the actual invoice date of June 30, 2014 and the claim issued two years less a day later is barred by limitation.
20. When an invoice is issued and delivered and is payable within 30 days, one might expect the failure of the customer to pay would trigger the start of the limitation period on the 31st day. However the inherent flexibility of the discovery concept under s. 5(1) has led some courts to conclude that for limitation purposes, failure to pay an invoice that is payable within 30 days does not start the limitation period until 60 days have passed: New Tec Building Envelopes Ltd. v. Deciantis Construction Ltd. (2015), 340 O.A.C. 127 (Div. Ct.), at para. 25. There is no absolute rule concerning when the limitation period for nonpayment of an invoice starts to run. When the common law implies a reasonable time, that is done on a case-by-case basis depending on the particular facts. That is consistent with the inherently subjective aspects that are built into the statutory concept of discovery. See Everding v. Skrijel (2010), 2010 ONCA 437 (CanLII), 100 O.R. (3d) 641 (C.A.), dealing with discovery under the Limitations Act, 2002; and Waschkowski v. Hopkinson Estate (2000),2000 CanLII 5646 (ON CA), 47 O.R. (3d) 370 (C.A.), discussing the “temporal elasticity” of the common law discoverability rule.
22. Mr. Clancy’s view was that invoicing was a matter within his discretion. There is certainly a discretion involved, assuming the retainer agreement is silent on the matter. The problem lies in identifying any limit on the professional’s discretion to defer billing. In Bougadis Chang LLP v. 1231238 Ontario Inc., supra, the file had been concluded but the invoice was not delivered until just over two years later and the action was not commenced until three years and eight months after the file was concluded. In those circumstances my colleague Prattas D.J. found the professional’s claim for services rendered to be barred by limitation. He concluded at para. 27:
Promissory Estoppel & Limitations
Bain v Morton, 2014 CanLII 74053 (ON SCSM),
Cases dealing with the question [of promissory estoppel] in this Court include Conwest Exploration Company Limited v. Letain, 1963 CanLII 35 (SCC), [1964] S.C.R. 20, and John Burrows Ltd. v. Subsurface Surveys Ltd., 1968 CanLII 81 (SCC), [1968] S.C.R. 607, in which Ritchie J., at p. 615, speaking for the Court, cited the judgment of Lord Denning in Combe v. Combe, [1951] 1 All E.R. 767:
In the case of Combe v. Combe, Lord Denning recognized the fact that some people had treated his decision in the High Trees case as having extended the principle stated by Lord Cairns and he was careful to restate the matter in the following terms:
The principle, as I understand it, is that where one party has, by his words or conduct, made to the other a promise or assurance which was intended to affect the legal relations between them and to be acted on accordingly, then, once the other party has taken him at his word and acted on it, the one who gave the promise or assurance cannot afterwards be allowed to revert to the previous legal relations as if no such promise or assurance had been made by him, but he must accept their legal relations subject to the qualification which he himself has so introduced, even though it is not supported in point of law by any consideration, but only by his word.
It seems clear to me that this type of equitable defence cannot be invoked unless there is some evidence that one of the parties entered into a course of negotiation which had the effect of leading the other to suppose that the strict rights under the contract would not be enforced, and I think that this implies that there must be evidence from which it can be inferred that the first party intended that the legal relations created by the contract would be altered as a result of the negotiations.
In Ontario, promissory estoppel can operate as an answer to a limitation period defence and rebut this defence. See, for example, Whorpole Estate v. Echelon General Insurance Co., [2011] O.J. No. 1644 at par. 14.
In my view, the requirements of promissory estoppel have not been met by the plaintiff in this case. Assuming that the defendant made the promises to pay, I do not think that the habitual nature of the promises to pay over a period of three years changed the plaintiff’s legal relations with the defendant. In 2008, the plaintiff made 4 separate payments to the defendant ranging from $30 to $350. In 2009, the plaintiff made 21 separate payments to the defendant ranging from $40 to $475. In 2010, she made 19 separate payments to the defendant ranging from $50 to $1,000. I do not think that the plaintiff delayed suing the defendant because of the alleged repeated promises to pay. There was no suggestion in the plaintiff’s evidence that she intended to sue the defendant if he breached his promises to pay. She knew that he did not have the money to repay and she kept supplying the defendant with money despite the breached promises to pay. Taking into account the common sense guideline of Yanosik J. set out in Landry, supra, I conclude that this part of the claim is statute-barred.
Sections 13 (9) and 13 (10) referred to in section 13 (8) provide that the debt must be acknowledged in writing, signed by the debtor before the expiry of the limitation period, and given to the person with the claim or the person’s agent. See Lopez v. Bromley, [2012 O.J. No. 368 (S.C.J.)] at par. 21. See also West York International Inc. v. Importanne Marketing Inc., (2012) O.J. No. 5395 (S.C.J.) at par. 92. The text messages may be viewed as being in writing. See Leoppky v. Meston, (2008) A.J. No. 55 (Q.B.) at par. 35-41. However, the acknowledgment is not signed and was made after the expiry of the limitation period. The acknowledgment, therefore, cannot revive the barred debt.
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”.”
Limitations as a Substantive Right
Tolofson v. Jensen; Lucas (Litigation Guardian of) v. Gagnon, (1994) 3 SCR 1022, 1994 CanLII 44 (SCC),
This pragmatic approach is illustrated by Block Bros. Realty Ltd. v. Mollard (1981), 1981 CanLII 504 (BC CA), 122 D.L.R. (3d) 323 (B.C.C.A.). In that case the issue was whether the requirement of s. 37 of the Real Estate Act, R.S.B.C. 1979, c. 356, that a real estate agent be licensed in British Columbia, should be categorized as procedural or substantive. The parties had executed a real estate listing agreement in Alberta for land situated in British Columbia. The plaintiff, an agent licensed in Alberta, sold the land to Alberta residents. The defendant vendor failed or refused to pay the commission. The plaintiff sued in British Columbia. The lex causae was Alberta. The defendant pleaded that the British Columbia licensing requirement was procedural. The court, however, ruled that it was substantive, notwithstanding that the section read: "A person shall not maintain an action . . .", language traditionally relied on for a finding that a statute is procedural because it purported to extinguish the remedy, but not the right. The court expressly relied on policy reasons for its decision. It stated at pp. 327-28:
If, however, the contract is governed by the law of Alberta and if the contract is valid under the law of Alberta, the characterization of s. 37 as procedural would deprive the plaintiff of the opportunity to enforce his legal rights in a British Columbia Court. The only purpose of s. 37 is to enforce the licensing sections, and it should be examined in this context. I think that legislation should be categorized as procedural only if the question is beyond any doubt. If there is any doubt, the doubt should be resolved by holding that the legislation is substantive.
This approach makes sense to me. It is right to say, however, that it is significantly different from the early common law position as it relates to statutes of limitation.
The common law traditionally considered statutes of limitation as procedural, as contrasted with the position in most civil law countries where it has traditionally been regarded as substantive. The common law doctrine is usually attributed to the seventeenth century Dutch theorist Ulrich Huber, whose celebrated essay De conflictu legum diversarum in diversis imperiis (1686), became known in England during the reign of William and Mary (see Edgar H. Ailes, "Limitation of Actions and the Conflict of Laws" (1933), 31 Mich. L. Rev. 474, at p. 487; and Ernest G. Lorenzen, "Huber's De Conflictu Legum" (1919), 13 Ill. L. Rev. 375, reprinted in Ernest G. Lorenzen, Selected Articles on the Conflict of Laws (1947), at p. 136). By the early nineteenth century, the doctrine was firmly established in England and in the United States. From the cases and academic commentary of the time (see, for example, Huber v. Steiner (1835), 2 Bing. N.C. 202, 132 E.R. 80; Leroux v. Brown (1852), 12 C.B. 801, 138 E.R. 1119; Nash v. Tupper, 1 Caines 402 (N.Y.S.C. 1803); Ernest G. Lorenzen, "Story's Commentaries on the Conflict of Laws -- One Hundred Years After" (1934), 48 Harv. L. Rev. 15, reprinted in Selected Articles, supra, at p. 181), one can glean the two main reasons for the ready acceptance of this doctrine in Anglo/American jurisprudence. The first was the view that foreign litigants should not be granted advantages that were not available to forum litigants. This relates to the English preference for the lex fori in conflict situations. The second reason was the rather mystical view that a common law cause of action gave the plaintiff a right that endured forever. A statute of limitation merely removed the remedy in the courts of the jurisdiction that had enacted the statute.
Such reasoning mystified continental writers such as M. Jean Michel (La Prescription Libératoire en Droit International Privé, Thesis, University of Paris, 1911, paraphrased in Ailes, supra, at p. 494), who contended that "the distinction is a specious one, turning upon the language rather than upon the sense of limitation acts . . . ." In the continental view, all statutes of limitation destroy substantive rights.
I must confess to finding this continental approach persuasive. The reasons that formed the basis of the old common law rule seem to me to be out of place in the modern context. The notion that foreign litigants should be denied advantages not available to forum litigants does not sit well with the proposition, which I have earlier accepted, that the law that defines the character and consequences of the tort is the lex loci delicti. The court takes jurisdiction not to administer local law, but for the convenience of litigants, with a view to responding to modern mobility and the needs of a world or national economic order. ...
Disposition
The appeal should be allowed with costs throughout. The appellants' application for a declaration that the proper choice of law to be applied is the law of Saskatchewan and that the Saskatchewan limitation period is substantive should be granted, and the action should be referred to the Supreme Court of British Columbia Chambers for determination.
Limitations - Extinguishing Rights and Title to Debt
Markevich v. Canada, (2003) 1 SCR 94, 2003 SCC 9 (CanLII)
Per McLachlin C.J. and Iacobucci, Major, Bastarache, Binnie, Arbour and LeBel JJ.: The six‑year limitation period prescribed by s. 32 of the CLPA bars the Crown from collecting the respondent’s federal tax debt. First, as a law of general application, s. 32 presumptively applies on a residual basis to all Crown proceedings. The breadth of the provision’s application can be narrowed only by an Act of Parliament that has “otherwise provided”, either expressly or impliedly, for limitation periods. The Income Tax Act (“ITA”) does not provide for limitation periods within its collection provisions, and the legislative silence with regard to prescription in these provisions, interpreted in conjunction with the express language used in the ITA’s assessment provisions, supports the finding that Parliament intended that limitation provisions of general application apply to the Minister’s collection of tax debts. A purposive interpretation of the ITA confirms this conclusion. Furthermore, the certainty, evidentiary and diligence rationales for limitation periods do not offend the principles of horizontal and vertical equity that should in part govern the ITA and are directly applicable to the collection of tax debts. Second, the ordinary meaning of the phrase “proceedings...in respect of a cause of action” in s. 32 encompasses the statutory collection procedures of the Minister. It would be incongruous to find that s. 32 was intended to apply to the court action but not to the statutory collection procedures that serve the identical purpose. The rationales that support the application of limitation provisions to Crown proceedings apply equally to both the court and non‑court proceedings at issue here. To exclude s. 32’s application to proceedings that are equivalent in purpose and effect to a court action would frustrate the object and aim of the provision. The legislative history of s. 32 also supports the inference that Parliament intended its application to extend beyond proceedings in court. Third, on both a plain and purposive reading of s. 32, the cause of action in this case arose “otherwise than in a province”. Tax debts created under the ITA arise pursuant to federal legislation and create rights and duties between the federal Crown and residents of Canada or those who have earned income within Canada. The debt may arise from income earned in a combination of provinces or in a foreign jurisdiction. The debt is owed to the federal Crown, which is not located in any particular province and does not assume a provincial locale in its assessment of taxes.
[47] Section 3(5) of the B.C. Limitation Act applies a limitation period of six years to actions for which prescription is not “specifically provided for” in another Act. Under s. 1 of the B.C. Limitation Act, an action is defined as including “any proceeding in a court and any exercise of a self help remedy”. I agree with both the motions judge and the Court of Appeal that the term “self help remedy” encompasses the statutory collection procedures available under the B.C. ITA. A statutory collection procedure is a self help mechanism by which the Minister is able to effect a result that could otherwise be achieved only through an action in court. As well, the B.C. ITA does not specifically provide for limitation periods in its collection provisions.
[48] Consequently, the province’s right to pursue collection proceedings under the B.C. ITA is subject to the limitation period set out in s. 3(5) of the B.C. Limitation Act. Moreover, pursuant to s. 9(1) of the B.C. Limitation Act, on the expiration of the limitation period, the province’s right and title to the tax debt is extinguished, and pursuant to s. 9(3), the province’s right and title to interest on the tax debt is extinguished.
[49] As noted above, the federal Crown’s right to collect provincial taxes in this case is no greater than the right delegated to it by the province. Since the province’s collection rights are subject to expiry six years after the underlying cause of action arose, so too are the collection rights of the federal Crown as its agent.
[50] The cause of action here consisted of the tax debt and the expiry of the delay period allowing collection action to be taken on September 16, 1986. The Minister undertook no action in the six years after that date to effect a renewal of the limitation period. Consequently, as of September 16, 1992, the federal Crown became statute-barred from collecting the provincial tax debt. As well, the right and title of any claimant to the respondent’s provincial tax debt, and its accrued interest, were extinguished on that date.
HOOPP Realty Inc v Guarantee Company of North America, 2019 ABCA 443 (CanLII)
Effect of the Expiry of the Limitation Period
[13] The Guarantee Company argues that the expiry of the limitation period against Clark Builders has the effect of extinguishing any debt owed by Clark Builders to HOOPP Realty. Since that underlying debt has been extinguished, and since the obligations of The Guarantee Company are only collateral to those of Clark Builders, The Guarantee Company has no remaining obligation.
[14] As the trial judge noted (trial reasons at paras. 51-99) in Alberta the expiry of the limitation period does not necessarily extinguish the underlying debt, but only bars the remedy against the particular defendant. The Limitations Act, RSA 2000, c. L-12, s. 3 provides that: “. . . the defendant, on pleading this Act as a defence, is entitled to immunity from liability in respect of the claim”. These are not words of “extinguishment”, and they were deliberately recommended by the Institute of Law Research and Reform: trial reasons at para. 54.
[15] The appellant relies on other cases, including Tolofson v Jensen, 1994 CanLII 44 (SCC), [1994] 3 SCR 1022. The action in Tolofson arose from a motor vehicle accident in Saskatchewan. The limitation period for motor vehicle accident claims had expired in Saskatchewan, but the plaintiff sued in British Columbia where it had not expired. The issue arose because under conflicts of laws rules, if limitation periods were “procedural” they would be determined by the lex fori, being British Columbia. If limitation periods were “substantive”, they were determined by the proper law of the tort, in this case the law of Saskatchewan. The Supreme Court determined that limitation periods for a tort claim should be treated as substantive for conflict of law purposes, meaning that Saskatchewan law would apply. It did not follow that limitation periods served to “extinguish” the debt. Whatever the effect of the Saskatchewan limitation period (i.e. whether it extinguished the debt, or merely barred the remedy) it was the same whether the lawsuit was in British Columbia or Saskatchewan. Tolofson is not relevant to this appeal.
[16] Another case referred to was Markevich v Canada, 2003 SCC 9 (CanLII), [2003] 1 SCR 94. This case held that a federal tax debt was barred by the expiry of the limitation period. The Court stated in passing at para. 41:
- . . . Limitation periods have traditionally been understood to bar a creditor’s remedy but not his or her right to the underlying debt. In my view, this is a distinction without a difference. For all intents and purposes, the respondent’s federal tax debt is extinguished.
This observation was true in the sense that as between the particular debtor (the taxpayer) and the creditor (Revenue Canada) there was no remaining method of collecting the debt, whether it was extinguished or whether the remedy was merely barred. However, stating as a general proposition that this is a “distinction without a difference” is merely circular. There is only no difference if the law chooses to define the effect of the limitation period that way. As this appeal points out, there can be a distinction between extinguishing the debt and barring the remedy.
[17] In summary, the trial judge correctly determined that under Alberta law the expiration of a limitation period does not result in the complete extinguishment of the underlying obligation. Accordingly, the expiry of the limitation period against Clark Builders does not provide an answer to the essential question raised in this appeal.
