Canada: Why A Limitation Period Might Not Run Against Multiple Wrongdoers

A considerable amount of ink has been spilled about section 5(1)(a)(iv) of Ontario's Limitations Act, 2002. This section postpones the running of the two-year limitation period in civil actions where it is not yet "appropriate" for the plaintiff to commence their lawsuit.   

But in cases where there are multiple wrongdoers, when is it appropriate for the plaintiff to start an action against one or all of them? A recent decision of the Ontario Court of Appeal, Frederick v. Van Dusen, 2019 ONCA 66, offers some insight.

Don't Worry.  I'll Take Care of It.

Van Duzen involved a civil action resulting from a failed septic system. 

The plaintiffs retained the defendant installer to install the septic system in 2010. The municipal Health Unit approved it in 2010. 

In the Spring of 2011, the plaintiffs began noticing a smell emanating from the septic system. The installer tried to address the problem by replacing a sewage pipe.  

However, the smell re-emerged in the Spring of 2012. The installer reassured the plaintiffs that the smell was simply the result of wet weather.  

The smell persisted in the Spring of 2013, with effluent also flowing from the septic system. The installer re-attended the property and told the plaintiffs that the issue could be resolved by applying a load of sand to the septic bed. The installer stated he would return to conduct the work.

Ultimately, following several attempts to have the installer re-attend the property to apply the sand, the plaintiffs called the local health unit in April, 2015. Both the installer and the Health Unit inspected the septic system at that time.

On June 1, 2015, the Health Unit condemned the system and issued an order requiring the plaintiffs to replace it.

Not Appropriate to Start Action During "Ameliorative Efforts"

The plaintiffs commenced an action against the installer in August, 2015. The plaintiffs then added the Health Unit as a defendant in January, 2016.

At the Small Claims Court trial, the trial judge dismissed the plaintiffs' action as statute-barred, having been commenced outside the two-year limitation period.  

The Court held that by the Spring of 2013, when there was smell and effluent emerging from the septic system, a reasonable homeowner would have known that a loss or injury occurred.  

Notably, the trial judge failed to consider section 5(1)(a)(iv) of the Limitations Act. This section would have forced the Court to consider whether, despite the state of the plaintiffs' knowledge, it was legally appropriate for them to start their action.

The Divisional Court upheld the Small Claims' Court decision.

On appeal to the Court of Appeal, the Court reversed. 

The Court of Appeal held, amongst other things, that the trial judge failed to consider and apply section 5(1)(a)(iv) of the Limitations Act

Had the trial judge done so, she would have noted that it was not legally appropriate to commence an action against the installer while the plaintiffs were relying on the installer's superior knowledge and expertise and his reassurances that he could remedy the issues with the septic system.  

Applying one of the recognized categories under section 5(1)(a)(iv), the Court of Appeal made it clear that it was not legally appropriate for the plaintiffs to start a civil action in cases where an expert, i.e. the installer, was engaging in "amerliorative efforts" to rectify the problem that would have otherwise given rise to the civil action. 

On the Court's assessment, the plaintiffs would not have known that it was appropriate to start a lawsuit against the installer until the Winter of 2014 at the earliest. As this date was less than two years before the action was commenced in August, 2015, the action against the installer was not statute-barred.

Deterring Needless Litigation Against Multiple Defendants

As for the action against the Health Unit, the Court of Appeal held that it too was not statute-barred.

The Health Unit argued that, unlike the installer, it was not engaging in "ameliorative efforts" to repair the septic tank. According to this theory, the limitation period could not be postponed under section 5(1)(a)(iv) against the Health Unit because "ameliorative efforts only delay the running of the limitation period against the potential wrongdoer who is performing [the ameliorative efforts], not against other potential wrongdoers".

The Court of Appeal rejected the Health Unit's position.

First, the Court held that the discoverability of a civil action depends not on the defendants' fault or who is responsible for any gap in the plaintiff's knowledge, but instead on what the plaintiff knew or ought to have known. 

In this case, if it was inappropriate for the plaintiffs to start an action against the installer until they knew he was unwilling or unable to fix it, it was also inappropriate to start an action against the Health Unit at an earlier date. 

Where there are multiple potential wrongdoers and only one of them is performing ameliorative efforts, it may not be appropriate for the plaintiffs to commence an action against all the defendants until it is clear that those ameliorative efforts are failing. 

The Court's approach is consistent with the underlying purpose of section 5(1)(a)(iv), which is to deter needless litigation:

This interpretation is consistent with the purpose of section 5(1)(a)(iv)...namely to deter needless litigation. The interpretation...the Health Unit urges upon us would encourage needless litigation. On the Health Unit's interpretation, in order to avoid having their claim be limitations-barred, the [plaintiffs] would have had to commence a claim against the Health Unit at a time when they reasonably believed that the problem was readily fixable and [the installer] was going to fix it.

The Court distinguished between this case and a case where the plaintiff alleges that it is not appropriate to start an action against one defendant until they pursue claims against another defendant first. Rather, in this case, the plaintiffs were alleging that it was appropriate for them to delay commencing their action against the Health Unit until it was clear that the installer was unable to fix a problem which he assured them was repairable. Once it was clear that the septic system could not be repaired by the installer, the action against both the installer and the Health Unit was appropriate. 

Multiple Wrongdoers and Ameliorative Efforts

The Van Dusen case adds a new dimension to the law governing section 5(1)(a)(iv) of the Limitations Act.

In cases where there are multiple defendants, and one of the defendants is seeking to rectify the issue that could give rise to the plaintiff's action, the plaintiff's action against all defendants may not be "appropriate" until those ameliorative efforts are exhausted first.

While it is arguable that the effect of the Court's decision in Van Dusen could postpone the running of the limitation period for years, the case promotes a necessary flexibility in deciding when plaintiffs should start civil actions. 

It makes no sense to require plaintiffs to commence litigation against certain defendants when others are engaged in the process of resolving the underlying issue that could give rise to the cause of action in the first place. 

If the purpose of section 5(1)(a)(iv) is to prevent unnecessary litigation, Van Dusen achieves this result.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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