FCL LLP Partner, Kim Duong, acting for the respondents, successfully appeared before the Ontario Court of Appeal in Dass v. Kay, 2021 ONCA 565, on issues involving the interpretation of the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B. (“Limitations Act”).

The appellants raised two grounds of appeal alleging: (i) the motion judge erred in law by misrepresenting s. 5 of the Limitations Act, 2002, and (ii) the motion judge made palpable and overriding misapprehensions of fact. The arguments between the appellants and respondents centered on the new factor added to the analysis of the discoverability principle, s.5(1)(a)(iv) the appropriateness of a bringing a proceeding.

The appellants, in their arguments, proposed an expansion of the class of matters under s. 5(1)(a)(iv) to include any situation where plaintiffs know they have been wronged or suffered damage at the hands of the defendants, but doubt they will be able to marshal the evidence to prove the claim and are unsure whether the scale of the eventual commercial loss will make an action remunerative.
The case law has recognized two situations delaying the start of the limitation period: (i) where a plaintiff relied on a defendant’s superior knowledge and expertise, especially where the defendant took steps to ameliorate the loss; and (ii) where the parties have engaged an alternative dispute resolution process offering an adequate remedy and it has not been completed. However, the Court of Appeal held that in the case at hand, the appellants did not come within either situation.

The Court of Appeal was clear in stating that appellants were not restricted to the two categories of cases identified to date that delay the start of the limitation period. But if they cannot bring themselves within those two categories, they must propose another set of circumstances in which it could be said, on a principled basis, that a person with a claim could not have known that an action would be an appropriate means to remedy the injury, loss, or damage.

In agreeing with the respondents’ arguments, the Court of Appeal held that “the limitation period does not commence only when one can ascertain what damages would be entitled to as a remedy, such that one would be better able to assess whether litigation would be an attractive option.”

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FCL LLP Partner, Kim Duong successfully argued a summary judgment motion involving issues of limitation and solicitor-client privilege.

In CFO Capital et al. ats Paul Dass et al., the plaintiffs sought damages for fraud, professional negligence and reputational injury alleged to have been caused by the defendants. In addition to the denial of any and all allegations of wrongdoing, the defendants asserted that the plaintiffs’ claim had breached the two year limitation period.

While the plaintiffs became aware of the material facts required to advance a claim, they waited over two and a half years before commencing the action. The plaintiffs argued that the evidence they had available at that time was insufficient to be successful in an action.  However, the Court in agreeing with the defendants, held that the absolute success of a claim, or the exact amount of damages claimed is not required to trigger the limitation period.

In doing so, the Court referred to the recent Court of Appeal decision, Sosnowski v. MacEwan, which set out three main principles in interpreting when it is “appropriate” to commence an action:

1. To determine if an action is the appropriate means to seek to remedy
   a loss or damage depends on the specific factual and/or statutory
   setting of each case;
2. Two circumstances have been accepted as delaying the date on
   which a claim is discovered under this subsection: when the plaintiff
   relies on the superior knowledge and expertise of the defendant, or
   where an alternative dispute resolution process offers an adequate
   remedy, and it is not complete; and
3. The word “appropriate” means “legally appropriate”. In other words,
   “appropriate” does not include an evaluation of whether a civil
   proceeding will succeed.

Ultimately, the Court was satisfied that there was no genuine issue requiring a trial and granted summary judgment in favor of the defendants.

The plaintiffs have indicated they intend to appeal this decision. Stay tuned for the decision of the Court of Appeal on this matter.

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No Expiry Date on an Insurer’s Duty to Defend

by Samah Rahman

In Reeb v. The Guarantee Company of North America (2019 ONCA 862), the Ontario Court of Appeal confirms that an insurer’s duty to defend is an ongoing commitment – it does not expire during the life of a policy.

In this case, a 14-year old defendant was sued in another action in negligence for injuring the plaintiff, while playing with a BB gun at the defendant’s home. The defendant’s separated parents, along with the father’s current spouse, each had homeowner’s insurance policy. The mother’s insurer, RSA, took the position that the existence of concurrent policies implicated all three insurers to share equally in the defence costs. The other two insurers declined coverage alleging that the accident was intentional, and therefore, excluded under policy terms.

RSA brought an application for a declaration that: a) the other two insurers had a duty to defend, and b) the insurers had an obligation to pay an equal one-third share of ongoing defence costs. The court granted the application.

The insurers appealed on two grounds:

1. RSA’s application for contribution to the defence costs was statute-barred under the Limitations Act, 2002, because the application was brought two-years after the insurers refused to defend; and
2. RSA’s application exceeded the specific contractual limitation periods found in their respective insurance policies.

The Court of Appeal dismissed the appeal and upheld the lower court’s decision. On each issue the court said:

1. The duty to defend is an ongoing obligation to be applied on a “rolling” basis”; since RSA only seeks contribution on a going-forward basis, no limitation period attaches; and
2. The contractual limits found in the policy itself are not applicable. Insurance policies are not analogous to business agreements because policy holders are consumers.

This is a flagship case for insureds who seek to rely on the duty to defend owed to them by insurers. This duty is triggered as needed; it is not subject to the two year limitation period if the contributions are sought on a going-forward basis.

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