Discoverability, Due Diligence, and the Impact of the Covid-Adjusted Limitation Period

In McAuley v. Canada Post Corporation, 2021 ONSC 4528 (Ont. S.C.J.)., Justice Boswell clarified the rules of discoverability, due diligence, and the impact of the suspension of all limitation periods ordered in the midst of the Covid-19 pandemic. In a motion to amend a claim to add additional parties past the expiry of the presumed date of discovery, Boswell J. ruled in favour of the opposing parties, who argued that the plaintiff had failed to act with due diligence to discover the claim against them. When addressing the Covid-adjusted limitation period, which suspended all limitation periods from March 16, 2020 to September 14, 2020, Justice Boswell stated it simply: “those days do not get counted in the calculation of the limitation period”.

The plaintiff in this action suffered a broken ankle after a slip and fall on a municipal sidewalk in Huntsville in December 2017. The sidewalk was adjacent to a Canada Post Corporation (“CPC”) building. The plaintiff initially commenced an action against the municipality only in April 2018.  Immediately following the fall, it had been brought to the plaintiff’s attention that an eavestrough on the side of the CPC building was not properly maintained. Photographs of the faulty eavestrough were taken by the plaintiff’s wife around that time; however, the plaintiff failed to mention this to his counsel until November 2018.  Thereafter, CPC was put on notice and the plaintiff was advised of the use of a property manager for the premises, JLL. By early February 2019, plaintiff’s counsel was advised that JLL had subcontracted its tasks to Heritage Property Services (“Heritage”), who had retained Always Handy Property Management Ltd. (“Always Handy”) to act as the winter maintenance contractor.

On March 6, 2019, the plaintiff commenced a second action against CPC. The municipality and Heritage were added as third parties, and Always Handy was added as a fourth party, along with JLL. Following documentary disclosure between January 10 and March 13, 2020, the plaintiff sought to amend the claim to add the municipality, JLL, Heritage, and Always Handy as defendants to the main action. The plaintiff claimed it was not until that time that he was alerted to the contractual obligations of the third and fourth parties. The motion was initiated on January 28, 2021, and was opposed by both Heritage and Always Handy on the basis that the limitation period had expired.

In this case, the court found that the actual date of discovery was when the plaintiff’s lawyer was advised of the involvement of Heritage and Always Handy in February 2019. It was further determined that the plaintiff’s failure to notify his counsel of the faulty eavestrough until 11 months after his injury amounted to a lack of due diligence. The court found that a reasonable person in the plaintiff’s circumstances would have provided this information soon after retaining counsel in early 2018. Had the plaintiff done so, the chain of events would have led to a discovery of the claim against Heritage and Always Handy by April 30, 2018.

The determined discovery date of the claim meant that the expiry of the limitation period should have occurred on April 30, 2020. However, all limitation periods in Ontario were suspended during that time, due to the Order made by the provincial government under s. 7.1(2) of the Emergency Management and Civil Protection Act, R.S.O. 1990, c. E.9., Reg. 73/20 (“Reg. 73/20”). As aforementioned, Reg. 73/20 was in force from March 16 to September 14, 2020. The plaintiff argued, and the court agreed, that the impact of Reg. 73/20 was to extend the running of the limitation period by 183 days. The court stated that “all limitation periods subject to the regulation were extended by roughly six months”.

Heritage argued that this was the incorrect interpretation of Reg. 73/20; however, the court noted that Heritage had failed to articulate why this was incorrect, other than to suggest that the revocation of the regulation effectively revoked any benefit it otherwise may have conferred. This was, clearly, not accepted by the court. Had an alternative opposing argument been advanced that acknowledged the suspension of limitation periods during the 183 days (i.e. that all limitation periods which would have elapsed during this time expired on the date the regulation was revoked), the outcome on this issue may have been different.

Regardless, Heritage and Always Handy were successful in opposing the plaintiff’s motion to add them to the main action, due to the expiry of the limitation period. As JLL and the municipality did not oppose the plaintiff’s motion, an order was granted to add them as defendants to the main action.

This case serves as an excellent example of the obligations imposed on a plaintiff to exercise diligence and keep their counsel informed of all information of which they become aware. As well, the case, importantly, clarifies that all limitation periods subject to Reg. 73/20 were extended by 183 days.

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Recently, the Ontario Court of Appeal (“ONCA”) unanimously upheld the Ontario Superior Court of Justice’s decision in Malik v Attia, 2020 ONCA 787 (“Malik v Attia”). In doing so, the Appellate court provided guidance on the appropriate use of partial summary judgments, outlining a list of requirements that should be satisfied prior to seeking this motion.

In Malik v Attia, a Seller listed two neighbouring properties to be sold together. Subsequently, two Buyers entered into an agreement with the Seller for the purchase and sale of each of the properties but were unable to secure firm mortgage financing. Consequently, the Seller commenced an action against the Buyers for breach of contract and for the forfeiture of the deposit. Two years later, the Seller moved for a summary judgment on her claim.

At the initial summary hearing, the motion judge determined that there was no genuine issue regarding the breach that would warrant a trial. The breach of contract, indisputably, occurred when the Buyers were unable to close on the transaction. As such, the motion judge, concluded that this case was one of the exceptional circumstances where a partial summary judgment would be an appropriate remedy. Subsequently, the motion judge bifurcated this action and directed the remaining issues of damages and the forfeiture of the deposit for trial.

The Buyers’ appealed.

The ONCA strongly disagreed with the decision to seek, and hear, this motion for a partial summary judgment. The Court stated this process had increased the cost and further delayed the final resolution of this matter, contrary to the objectives of summary judgments.

However, the Appellate court did not set aside the decision. ONCA determined that while this partial summary judgment was a costly and timely endeavour, it was not grounds for judicial interference.

For summary judgments to truly be a “faster and cheaper” way to access the civil court system, the Court of Appeal concluded that there needed to be a system in place to triage. That way, the adjudicator would be able to determine a case on its merits once and for all instead of a myriad of partial decisions.

To assist with this, ONCA provided the following criteria for motion judges to consider when determining whether a motion for partial summary judgment is appropriate:

1. Demonstrate that dividing the determination of this case into several parts will prove cheaper for the parties;
2. Show how partial summary judgment will get the parties’ case in and out of the court system more quickly;

• Establish how partial summary judgment will not result in inconsistent findings by the multiple judges who will touch the divided case.

This case cautions counsel seeking a partial summary judgment to (re)consider whether it is the appropriate avenue for achieving proportionate, timely and affordable justice for their client. As such, this decision is likely to result in fewer motions for partial summary judgment being brought and even less heard.

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Vicarious Liability: A Broker’s Personal Promise Does Not Bind the Brokerage

In Ceballos v. Pearl Hospitality Inc., 2020 ONSC 769, FCL LLP Associate, Sienna Molu obtained a favourable decision for the defendant brokerage after persuading the Ontario Superior Court that there was no genuine issues requiring trial. The court agreed that, contrary to the plaintiffs’ claim, the broker could not bind the defendant brokerage for a personal promise he made to the plaintiffs, without the express authority or knowledge of the brokerage.

In this case, the plaintiffs alleged that when securing their second mortgage, their mortgage broker, Mr. Lewis promised them a reimbursement of $5,000.00. This amount was never paid. The plaintiffs asserted that the brokerage, Mortgage Centre Canada (“MCC”), should be held vicariously liable for Mr. Lewis’s breach of agreement. Ms. Molu brought a motion for summary judgment to dismiss the claim against MCC. The court granted the motion.

In deciding this case, the court deliberated on two issues: whether there was an agreement between Mr. Lewis and the plaintiffs and beyond that, whether if there was an agreement, Mr. Lewis had the authority to bind MCC. The court declared that even if there was an agreement, this did not automatically establish the liability of MCC. Mr. Lewis’s intention was to do a personal favour for the plaintiffs and he did so without seeking the approval of MCC.

Vicarious liability of a company for the wrongful acts of its agents can only be established if the agent has the ostensible or apparent authority to bind the company. In addition, the agent or employee must commit the act in the course of their employment. An employer however, is not generally liable for wrongful acts committed by an independent contractor. In this case, Mr. Lewis was an independent contractor, and he acted beyond the scope of his employment. The plaintiffs failed to show that MCC authorized the agreement or that it was closely connected to any authorized acts. As such, the plaintiffs failed to establish a cause of action against MCC.

Arguably, this case stands for two important points: first, that to hold the brokerage vicariously liable for the negligence of the broker, the brokerage must have provided actual or ostensible authority to broker to bind the brokerage; and second, that a brokerage will not be held vicariously liable for unauthorized acts committed by an employee, unless said acts are closely connected to authorized acts.

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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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