The Court of Appeal in Dass v. Kay, 2021 ONCA 565, was recently asked to reconsider the dismissal of a claim that was found to be statute barred pursuant to the Limitations Act, 2002. The appellant in this case is the principal of two corporations, and the respondent was the principal of a mortgage brokerage.
In 2015, the mortgage brokerage was asked by the appellant’s brother to secure financing to purchase a commercial property on Drew Road in Toronto. The Drew Road mortgage application listed the appellant as a guarantor and provided that one of his companies would be the tenant. The Drew Road mortgage application ultimately was denied by Roynat, an affiliate of Scotiabank, although the real issue was that the appellant was never advised of the Drew Road mortgage application, and that the appellant had never agreed to be a guarantor or tenant. The appellant only discovered the Drew Road mortgage application when he was trying to secure financing from Roynat for his own purposes. The Drew Road mortgage application was brought to the applicant’s attention by Roynat on July 24, 2015, and he denied any knowledge or involvement with the application to Roynat then. The appellant’s mortgage application was also ultimately denied by Roynat and he was advised by Roynat that the denial had nothing to do with the appellant’s association with the Drew Road mortgage. On August 21, 2015, the appellant sought advice from his lawyer on the basis that he believed that his mortgage application was rejected because of the improper Drew Road mortgage application, and that the mortgage broker and his brother have harmed his reputation with Roynat. His lawyer’s advice in 2015 was that the appellant had no evidence to prove that the mortgage broker’s actions resulted in the denial of the appellant’s mortgage, and it was the lawyer’s view that an action against the mortgage broker was inadvisable because it was unlikely to succeed. Meanwhile, the appellant was also attempting to borrow from Scotiabank, and he was denied by Scotiabank as well. The appellant was eventually able to secure financing but at much higher interest rates than those offered by Roynat and Scotiabank.
In 2018, when the appellant’s financing was due for renewal, the appellant approached Roynat and Scotiabank again. This time, the appellant was told that he had been “blacklisted” due to Drew Road mortgage application. Thereafter, the appellant issued a statement of claim on April 27, 2018 which sought damages for the reputational and commercial harm suffered by the appellant as a result of the mortgage broker’s submission of the Drew Road mortgage application.
The motions judge found that the appellant knew on July 24, 2015 of the unauthorized application, that he knew on July 27, 2015 of the mortgage broker’s involvement, and that he knew by August 21, 2015 that he suffered financial loss as a result of the unauthorized application because of the appellant’s email to his lawyer. Of note, the Court of Appeal’s analysis of section 5(1)(a)(iv) of the Limitation Act, 2002 is found at paras. 22-28 of the decision.
First, the determination of whether a proceeding is an appropriate means to remedy an injury, loss, or damage depends on the factual and statutory context.
Second, the Court has recognized two non-exclusive factors that can operate to delay matters: (i) when the plaintiff relied on the defendant’s superior knowledge and expertise, particularly where the defendant has taken steps to ameliorate the plaintiff’s loss, and (ii) where there is an alternative dispute resolution process for an adequate remedy that has not yet been completed.
Third, the “appropriate means” factor has nothing to do with the viability of a claim, or any other practical and tactical reasons for waiting.
While the appellant contented that he was not advised of being “blacklisted” until 2018, this does not fall under the two non-exclusive factors set out above. The limitation period does not commence only when one is able to assess whether litigation would be an attractive option (para. 46). Moreover, the appellant’s reliance on the legal advice that he received in 2015 is irrelevant to the limitations analysis (para. 54).
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Today on Hull on Estates, Ian M. Hull and Doreen So discuss the recent Court of Appeal decision in Levesque v. Crampton Estate, 2017 ONCA 455, and the two-year, from death, limitation in section 38 of the Trustee Act.
A recent decision of Penny J. (Re Estate of Viola Eva Gyorgy, unreported, May 6, 2014) reviews the issue of limitation periods as they apply to dependant support claims.
Under the Succession Law Reform Act (“SLRA“) s. 61(1), no application for dependant support may be made after six months from the grant of letters probate of the will or of letters of administration. Section 61(2) of the SLRA provides that the court may allow an application to be made any time as to any portion of the estate remaining undistributed at the date of the application.
As noted in Gyorgy, the Supreme Court of Canada in Gilles v. Althouse, 1974 CanLII 206 confirmed that the six month limitation serves to limit a claim made after six months to the remaining, undistributed portion of the estate.
As stated by Penny J., “In my view, the six month limitation does not, therefore, operate like a typical limitation to bar any proceedings at all. The court is afforded discretion to grant leave to commence application provided it does not involve assets of the estate which have already been distributed.”
Penny J. went on to consider the fact that the Applicant had explained why the application was not commenced within the six month period following probate, and found that there was no prejudice in allowing the application to proceed with respect to the undistributed portion of the estate. (None of the assets of the estate had, in fact, been distributed.) Leave to proceed with the application was granted.
The decision also addresses other common issues that arise in dependant support claims, such as interim support, removal of the existing estate trustees, and the right of estate trustees to be indemnified from the estate for costs of defending the application.
I will post the link to the decision once it is available.
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Litigation lawyers live in fear and sober respect of the limitation period. We all know that missing a statutory limitation period can be the kiss of death. Given the right circumstances, however, there is one light in the dark that can overcome the shadow of both statutory limitations and common law laches arguments.
Fraudulent concealment is a common law doctrine that operates in equity to defeat limitations defences where:
1) The defendant and plaintiff are engaged in a special relationship with one another;
2) Given the special or confidential nature of their relationship, the defendant’s conduct amounts to an unconscionable thing for the one to do towards the other; and
3) The defendant conceals the plaintiff’s right of action, either actively, or as a result of the manner in which the act that gave rise to the right of action is performed.
Fraudulent concealment is not a rule of construction like the discoverability rule. It is an equitable principle that prevents a limitation period from operating “as an instrument of injustice”. It is aimed at preventing unscrupulous defendants who stand in a special relationship with the injured party from using a limitation provision as an instrument of fraud. See Giroux Estate v. Trillium Health Centre, 2005 CanLII 1488 (ON C.A.)
The fraudulent concealment necessary to postpone a limitation period need not amount to deceit or common law fraud. It is sufficient if the conduct, having regard to some special relationship between the parties, is an unconscionable thing for the one to do towards the other. See Guerin v. The Queen,  2 S.C.R. 335
For more information on limitation periods and an excellent in-depth analysis of the effect of the Limitations Act, 2002, see Anne Werker, “ Limitation Periods in Ontario and Claims by Beneficiaries” (2008) 34:1 The Advocates Quarterly, 1.
Perhaps now would be a good time to take a minute to check on a few limitation periods – just in case!
Sharon Davis – Click here for more information on Sharon Davis.
A recent decision from British Columbia, Desbiens v. Bernacki, 2008 BCSC 696 is a good reminder that a limitation period is a shield, not a sword.
In Desbiens, the deceased had four children from a first marriage. After his first wife left him, he placed three of his children in foster care; one child was adopted. The deceased never provided financially for his children. He eventually married his second wife. His Will left his entire estate to his second wife. His executrix later learned of the existence of the four children and found addresses for them among the deceased’s belongings. She mailed notices in the form prescribed by British Columbia’s Estate Administration Act, along with copies of the Will. None of the children received the notices, as the addresses were outdated. The executrix did not apply to the court for directions and apparently took no active steps to verify the addresses or the current whereabouts of the children. Three years after the deceased’s death, three of the children commenced an pplication under British Columbia’s Wills Variation Act. The executrix and second wife sought to have their application dismissed, on the basis that the limitation period had expired.
The Court ultimately concluded that the executrix and the second wife were estopped from invoking the limitation period defence. The Court held that the executrix did not meet the statutory degree of diligence required when giving notice and failed to "deliver" the notices as required by the Estate Administration Act. Simply mailing the notices to unconfirmed addresses was insufficient, and the executrix should have made reasonable inquiries into the current whereabouts of the children.
Have a great day!
Bianca La Neve