One of the ways a limitation period can now be postponed in Ontario occurs where a plaintiff relies on the "superior knowledge" of the defendant who is seeking to remedy the plaintiff's loss.
The classic example involves a defendant physician who engages in further treatment of the plaintiff, following the physician's alleged negligence, in an effort to eliminate or mitigate the plaintiff's injuries. In such cases, the plaintiff may not be required to commence her action for medical malpractice while her physician is still involved in the process of treating her. In other words, under section 5(1)(a)(iv) of Ontario's Limitation Act, such an action is not yet "legally appropriate".
A recent decision of the Ontario Court of Appeal, Zeppa v. Woodbridge Heating and Air Conditioning Ltd., 2019 ONCA 47, suggests, however, that in order for the limitations clock to be postponed under section 5(1)(a)(iv), the plaintiff must show actual and continued reliance on the defendant's superior knowledge and abilities while the defendant is seeking to remedy the plaintiff's loss.
How the Story Unfolded
Zeppa involved an action by the plaintiffs against the defendant installation company for improperly installing an HVAC system in their home.
From the moment the defendant completed the installation of the HVAC system in late 2006, the plaintiffs began to experience problems with the system's operation. The defendant acknowledged that the plaintiffs had made complaints to it by May, 2007.
According to the plaintiffs, the defendant claimed that issues with the HVAC were the result of improper maintenance and not with the system itself. Accordingly, the defendant persuaded the plaintiffs to enter a two-year maintenance program with the defendant starting on June 1, 2007. Problems with the HVAC system continued throughout the maintenance program, however. The plaintiffs did not renew the maintenance contract with the defendant when it expired in May, 2009.
On discovery, one of the plaintiffs testified that by the summer of 2009, he knew that the defendant had been "lying to [him] from day one...about maintenance". The plaintiffs claimed that defendant last performed work on the HVAC system in September, 2009.
The plaintiffs ultimately contacted the manufacturer of the HVAC system. In November, 2010, the manufacturer wrote to the plaintiffs informing them that the manufacturer "had received many phone calls regarding the installation" of the HVAC system by the defendant. The manufacturer alleged that the defendant "contractor did not follow the manufacturer's directions on this installation and application".
In late 2010, the plaintiffs received reports from a number of environmental companies assessing mould in their home. Ultimately, an environmental company produced a report to the plaintiffs on February 16, 2012, proposing that the mould growth was due to the humidity in the residence caused by the improper installation of the HVAC system.
The plaintiffs started their action against the defendant on February 21, 2012.
The Plaintiff's Action Was Statute-Barred
On a motion for summary judgment brought by the defendants to dismiss the action as statute-barred, the defendants argued that the plaintiff discovered their claim well prior to 2010, i.e. more than two years before they commenced their action in February, 2012.
The motion judge agreed with the defendant and dismissed the action.
In reaching this conclusion, the motion judge noted that the limitation clock did not run under section 5(1)(a)(iv) of the Limitations Act during the two-year term of the maintenance contract between the plaintiffs and the defendant, i.e. between 2007 and 2009. This was because the plaintiffs were then "relying on the superior knowledge and expertise" of the defendants.
However, the motion judge noted that by the Fall of 2009, the plaintiffs were consulting other HVAC companies and were "no longer relying on good faith efforts of [the defendant] to remedy the concerns".
The plaintiffs appealed the motion judge's decision to the Court of Appeal.
Court of Appeal Requires Plaintiffs' Actual and Continued Reliance on the Defendant's Knowledge and Expertise
A majority of the Court of Appeal (per Strathy C.J.O and Brown JJ.A.) upheld the motion judge's decision.
The majority began by noting that in a 2017 decision, Presidential MSH Corporation v. Marr Foster & Co., 2017 ONA 325, the Court of Appeal recognized two situations in which section 5(1)(a)(iv) of Ontario's Limitation Act could postpone the running of the limitation period. It may not be "legally appropriate" for a plaintiff to commence a civil action against the defendant where:
- the plaintiff relies on the superior knowledge and expertise of the defendant, especially where the defendant undertakes efforts to ameliorate the plaintiff's loss; or
- there is an alternative dispute resolution process which has not yet run its course and which offers an adequate alternative to the commencement of a civil action.
In this way, section 5(1)(a)(iv) deters needless litigation by a plaintiff who, in either scenario above, seeks to avoid litigation by trying to resolve their problem without recourse to a civil action.
The majority of the Court of Appeal upheld the motion judge's finding that while the limitations clock did not begin to run during the term of the maintenance contract, because the plaintiffs were relying on the defendant's superior skills and expertise to resolve their HVAC problems, the plaintiffs were no longer relying on such superior knowledge by the Fall of 2009.
The majority held that the motion judge's findings were firmly anchored in the evidence.
By late 2009, the plaintiffs had many different companies in their house seeking to remedy the HVAC system. By that point in time, the plaintiffs knew they would have to revamp the whole HVAC system. Since the plaintiffs did not commence their action within two years of this time, the action was statute-barred.
Notably, in dissent, Justice Feldman held that the motion judge had erred in finding that the plaintiffs were no longer relying on the defendant to remedy their HVAC issues by the Fall of 2009. The dissent noted that the motion judge's factual findings were "contradictory and inconsistent".
While the motion judge found that the HVAC system was still functioning in the Fall of 2010 and that the plaintiffs had met with the defendant about the problem in late 2010, the motion judge at the same time held that by late 2009, the plaintiffs knew the system was not functioning properly and the plaintiffs were "no longer looking to [the defendant] to remedy the situation".
In the dissent's view, the motion judge "never explained why it would have been appropriate to bring a legal proceeding [against the defendant] in 2009 when the HVAC system was still working until the fall of 2010".
Proof of Actual and Continued Reliance is Required to Postpone the Limitation Period under Section 5(1)(a)(iv)
The lesson of Zeppa is that in order for a plaintiff to rely on the "superior knowledge" element of section 5(1)(a)(iv) to postpone the running of the limitation period, there must be unequivocal evidence that during the relevant period, the plaintiff was continuously relying on the defendant's skill and expertise to remedy the plaintiff's loss.
Absent clear evidence of such ongoing reliance by the plaintiff, the limitations clock continues to tick. The plaintiff may not be able to make use of section 5(1)(a)(iv).
While the purpose of section 5(1)(a)(iv) may be to prevent needless litigation during the time that the plaintiff is seeking to resolve its problems by way of an alternative method to litigation, such as reliance on the defendant's remedial efforts, Zeppa requires the plaintiff to act with diligence and start litigation when the defendant's remedial efforts prove fruitless.
A failure to do so risks the conclusion that the plaintiff was no longer relying on the defendant's superior knowledge and expertise.
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.
