Limitations

Legislation Sections

• Limitations Act, 2002, S.O. 2002, c. 24, Sched. B
• Real Property Limitations Act, R.S.O. 1990, c. L.15

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.