



COURT OF APPEAL FOR ONTARIO

CITATION: Fercan Developments Inc. v. Canada
    (Attorney General), 2021 ONCA 251

DATE: 20210422

DOCKET: C67707 & C67710

van Rensburg, Pardu and Huscroft
    JJ.A.

BETWEEN

Fercan Developments Inc. and
    GRVN Group Inc.

Plaintiffs/Responding Parties

(Respondents)

and

Attorney General of Canada, Her
    Majesty the Queen in Right of Ontario on Behalf of the Ontario Provincial
    Police, and Stuart Hayhurst

Defendants/Moving Parties

(Appellants)

Judie Im and Baaba Forson, for the
    appellants, Ontario Provincial Police and Stuart Hayhurst

Joël Robichaud and James
    Schneider, for the appellant, The Attorney General of Canada

William Friedman, Patrick
    Bakos, Judy G. Hamilton, Brian H. Greenspan and Naomi M. Lutes, for the
    respondents, Fercan Developments Inc. and GRVN Group Inc.

Heard: in writing, with
    supplementary submissions in writing

On appeal from the judgment of Justice Heather
    McArthur of the Superior Court of Justice, dated October 10, 2019, with reasons
    reported at 2019 ONSC 5780.

REASONS FOR DECISION

[1]

The sole issue on these appeals is whether the
    motion judge erred when she concluded, in applying s. 5(1)(a)(iv) of the
Limitations
    Act, 2002
, S.O. 2002, c. 24, Schedule B (the 
Limitations Act
),
    that the limitation period had not expired for the respondents claims against
    the appellants, and she refused to dismiss their claims asserted in the
    consolidated action as statute-barred.

[2]

For the reasons that follow, we dismiss the
    appeals.

FACTS

[3]

The respondents, Fercan Development Inc.
    (Fercan) and GRVN Group Inc. (GRVN), brought actions in the Superior Court against
    the appellants, the Attorney General of Canada (the AGC), Her Majesty the
    Queen in Right of Ontario on Behalf of the Ontario Provincial Police and Detective
    Constable (DC) Stuart Hayhurst (together, the OPP Defendants), claiming
    malicious prosecution, negligent investigation, misfeasance in public office
    and civil conspiracy.

[4]

The actions arose out of the appellants
    unsuccessful attempts to obtain forfeiture of certain properties of the
    respondents which housed large scale marihuana grow operations, and the net
    proceeds of those properties. As the motion judge observed, [t]he facts
    leading to [the] summary judgment motion have spawned significant litigation
    over the course of almost a decade. There have been numerous judicial decisions
    detailing the various twists and turns this matter has taken over the years.

[5]

The motion judge set out much of the relevant
    chronology in her reasons. It is sufficient here to provide only the following
    brief outline:

·

The AGC brought an application for forfeiture
    under the
Controlled Drugs and Substances Act
, S.C. 1996, c. 19 (the criminal forfeiture application). DC
    Hayhurst, an OPP officer, swore affidavits in support of the criminal
    forfeiture application and he testified at the hearing.

·

On September 11, 2013, West J. of the Ontario
    Court of Justice dismissed the criminal forfeiture application. West J. stated,
    among other things, that the evidence overwhelmingly leads to the conclusion
    that Fercan and GRVN, or the directing minds of those corporations, are
    innocent of any complicity or collusion.

·

DC Hayhurst referred the matter to the Attorney
    General of Ontario (the AGO), which commenced forfeiture proceedings under
    the
Civil Remedies Act
,

S.O. 2001
, c.
    28 (the civil forfeiture application). On April 23, 2014, the AGO was
    unsuccessful in its motion to preserve the proceeds of the respondents
    properties for the civil forfeiture application. Leave to appeal this decision
    was refused on June 26, 2014.

·

On June 25, 2014, West J. granted the
    respondents application for costs of the criminal forfeiture application,
    concluding that there had been a marked and unacceptable departure from the
    reasonable standard expected of the Crown, and that, in the unique
    circumstances of this case, costs should be awarded. On January 21, 2015, he
    ordered the AGC to pay the respondents costs of $570,000.

·

On April 14, 2016 this court dismissed an appeal
    of the costs order of West J., upholding his findings of Crown misconduct, and
    concluding that the Crown had exercised the coercive power of the state and
    forced the respondents to participate in a lengthy and onerous proceeding to
    defend their legitimate property interests and had launched a completely
    meritless application:
R. v. Fercan Developments
    Inc.
,

2016 ONCA 269, 130 O.R. (3d) 321, at
    paras. 125, 128.

·

The respondents commenced an action against the
    AGC on May 31, 2016, and against the OPP Defendants on September 19, 2016.
[1]
The two actions were
    consolidated in January 2017.

SUMMARY JUDGMENT MOTION

[6]

The appellants moved for summary judgment to
    dismiss the actions. The issue was whether the respondents claims against the
    appellants were discovered, or ought reasonably to have been discovered, within
    the meaning of ss. 5(1)(a) and (b) of the
Limitations Act
, more than
    two years before each action was commenced. The appellants argued that the
    two-year limitation period ran from September 11, 2013, the date that West J.
    dismissed the AGCs criminal forfeiture application.

[7]

The respondents filed an affidavit in response
    to the motions. The principal of Fercan, after setting out the chronology of
    the proceedings, stated that it was not until this court upheld the finding of
    West J. of a marked and unacceptable departure from the reasonable standards
    expected from the prosecution, that it appeared there would be finality to the
    numerous interrelated proceedings and that it would be appropriate for Fercan
    to bring a claim for damages against the various government entities resulting
    from the forfeiture proceedings. There was no cross-examination on the
    affidavit.

[8]

The motion judge concluded that the first three
    elements of the discoverability test, pursuant to ss. 5(1)(a)(i), (ii) and
    (iii) of the
Limitations Act
, were met as of September 11, 2013, findings
    that are not challenged on appeal. It was at that point that the respondents
    knew they had suffered injury, loss or damage that had been caused by the acts
    or omissions of the appellants. The motion judge observed that the respondents
    at that time were aware that they were innocent third-parties who had been
    forced to defend their legitimate property interests in a meritless application
    in onerous and lengthy proceedings and that [t]hey also knew, or ought to
    have known, that the criminal forfeiture proceedings had terminated in their
    favour.

[9]

The motion judge turned to consider s.
    5(1)(a)(iv): when did the respondents know, or when ought they reasonably to
    have known that, having regard to the nature of the injury, loss or damage, a
    proceeding would be an appropriate means to seek to remedy it?

[10]

The motion judge concluded that, pursuant to s.
    5(1)(a)(iv), it was not appropriate to commence proceedings until, at the
    earliest,
June 26, 2014
, when the civil forfeiture proceedings came to
    an end. This meant that the action against the AGC on May 31, 2016 was not
    statute-barred. The motion judge went on to find that it was not appropriate to
    commence proceedings, and the respondents claims against all appellants were not
    discovered, until
April 14, 2016
, when this court upheld the costs order
    of West J. This meant that the action against the OPP Defendants, which was
    commenced on September 19, 2016, was also commenced within the applicable limitation
    period.

THE APPEALS

1.

Standard of Review

[11]

Whether a limitation period expired before an
    action was commenced is a question of mixed fact and law, and subject to review
    on appeal based on a palpable and overriding error:
Longo v. MacLaren Art
    Centre Inc.
, 2014 ONCA 526, 323 O.A.C. 246, at para. 38;
Kassburg v.
    Sun Life Assurance Company of Canada
, 2014 ONCA 922, 124 O.R. (3d) 171, at
    para. 40. This is the case whether the determination is made at trial or in a
    motion for summary judgment:
Crombie Property Holdings Ltd. v.
    McColl-Frontenac Inc.
, 2017 ONCA 16, 406 D.L.R. (4th) 252, at para. 31,
    leave to
appeal
refused, [2017] S.C.C.A. No. 85. Findings of fact by the court
    below are subject to review on a palpable and overriding error standard. A
    palpable and overriding error is an obvious error that is sufficiently
    significant to vitiate the challenged finding of fact:
Longo
, at
    para. 39. However, where there is an extricable error of principle, the
    standard of review is correctness:
Housen v. Nikolaisen
, 2002 SCC 33, [2002]
    S.C.R. 235, at paras. 8, 36.

[12]

Contrary to the appellants arguments, this is
    not a case that involves the interpretation of a statutory provision, namely s.
    5(1)(a)(iv) of the
Limitations Act
, where the standard of review is
    correctness. Nor, as we explain, is there any demonstrated error of law or
    principle in the trial judges analysis, or any palpable and overriding error
    in her findings of fact or her application of the legal test to such findings.

2.

The Legal Test

[13]

The motion judge applied the correct legal
    framework. Citing
Nasr Hospitality Services Inc. v. Intact Insurance
,
    2018 ONCA 725, 142 O.R. (3d) 561, she recognized that determining whether an
    action is statute-barred or declaring when a claim was discovered requires the
    court to make specific findings of fact about each element set out in s. 5 of
    the
Limitations Act
, and she went on to make such factual findings.

[14]

After concluding that the first three elements
    of the discoverability test under ss. 5(1)(a)(i), (ii) and (iii) were met as of
    September 11, 2013, the motion judge addressed s. 5(1)(a)(iv). In doing so, she
    cited the relevant jurisprudence from this court, noting that the determination
    under s. 5(1)(a)(iv) is a fact-specific exercise (
407 ETR Concession
    Company Limited v. Day
, 2016 ONCA 709, 133 O.R. (3d) 762, at para. 34,
    leave to appeal refused, [2016] S.C.C.A. No. 509) and that the issue was
    whether the limitation period should be suspended because a proceeding would
    be premature (
Presidential MSH Corporation v. Marr Foster & Co. LLP
,
    2017 ONCA 325, 135 O.R. (3d) 321, at para. 27). The motion judge recognized
    that s. 5(1)(a)(iv) reflects that parties should be discouraged from rushing to
    litigation, while delay for tactical reasons would not suspend the running of
    the limitation period:
Markel Insurance Company of Canada v. ING Insurance
    Company of Canada
, 2012 ONCA 218, 109 O.R. (3d) 652, at para. 34.

[15]

The appellants argue that the motion judges
    decision significantly expands the application of the appropriate means
    element of the discoverability test under s. 5(1)(a)(iv) beyond any previous
    jurisprudence from this court, and that it injects uncertainty into the law of
    limitations. They contend that the motion judge relied on irrelevant factors,
    and that she ought to have restricted her analysis to a consideration of
    whether the respondents were pursuing an alternative means of remedying their
    alleged losses, such that it was not yet appropriate for them to commence an
    action in respect of those losses.

[16]

We disagree. Contrary to the submissions of the
    appellants, the motion judge properly recognized that there were not simply two
    categories of cases in which it might not be legally appropriate to start a
    proceeding despite the claim having been discovered, within the meaning of s.
    5(1)(a)(i)-(iii):
Nasr
, at para. 51. The motion judge did not err when
    she considered all of the relevant circumstances and not simply whether the
    forfeiture proceedings provided an alternative means for the respondents to remedy
    their alleged losses. She was required to consider the nature of the injury,
    loss or damage under s. 5(1)(a)(iv), as well as, under s. 5(1)(b), using a
    modified objective test, what a reasonable person with the abilities and in
    the circumstances of the respondents ought to have known:
Presidential
,

at para. 18;
Service Mold + Aerospace Inc. v. Khalaf
, 2019 ONCA
    369, 146 O.R. (3d) 135, at para. 32. While previous cases can assist in identifying
    certain general principles, whether a proceeding would have been an appropriate
    means to seek to remedy a claimants damage, injury or loss will turn on the
    facts of each case and the abilities and circumstances of the particular
    claimant:
Presidential
, at para. 19;
ETR Concession Company
,
    at para. 34.

3.

Application of the Test to the Facts

[17]

As already noted, the motion judge first found
    that the respondents knew or ought to have known that an action would be an
    appropriate means under s. 5(1)(a)(iv) in the circumstances of this case,
    at the earliest, on
June 26, 2014
, when the civil forfeiture proceedings
    came to an end (which meant that the action against the AGC was not
    statute-barred). The motion judge went on to conclude the respondents did not
    know, nor ought to have known, that an action would be an appropriate means
    until
April 14, 2016
, when this court upheld the costs order of West J.
    (which meant that the action against the OPP Defendants was also commenced
    within the applicable limitation period).

[18]

We are not persuaded that any palpable and
    overriding error has been demonstrated by the appellants in respect of either
    date.

A.

The June 26, 2014 date

[19]

In concluding that the time for commencement of
    an action against the AGC began to run at the earliest on June 26, 2014, the
    motion judge relied on the civil forfeiture proceedings that were commenced and
    pursued by the appellants against the respondents. She observed that the
    appellants, in undertaking such proceedings, were pursuing a process that, if
    successful, could have left the respondents with little to no loss to claim. We
    agree with the motion judges observation that it is important not to conflate
    the considerations under the first three elements of the discoverability test
    with the appropriate means element set out in s. 5(1)(a)(iv). The question is
    not, as the appellants suggest, whether an action
could have
been
    brought by the respondents, but when it was
appropriate
to do so. While
    knowledge of the extent of a plaintiffs damages is not required under (i) to
    (iii), the motion judge was entitled to take into consideration the ongoing
    forfeiture proceedings that the parties were engaged in, when determining under
    s. 5(1)(a)(iv) whether it was appropriate for the respondents to bring an
    action. She concluded that, in the particular circumstances, it would have been
    premature to require the respondents to launch a lawsuit, as they were embroiled
    in the civil forfeiture application, a related matter brought against them by
    the state with all of its resources, which could have rendered their lawsuit non-viable
    and unworthy of pursuing.

[20]

We see no error in the motion judges determination
    that it was premature for the respondents to commence their action until after
    the civil forfeiture proceedings were completed on June 26, 2014. She came to
    this conclusion after considering all of the relevant circumstances. The facts
    were unusual. Despite the fact that the AGC was unsuccessful in obtaining an
    order for criminal forfeiture and was subject to an order for costs that was
    critical of its conduct, the provincial authorities commenced civil forfeiture
    proceedings with the same objective  to seize the proceeds of sale of the
    respondents properties. DC Hayhurst was involved in both sets of proceedings. If
    the civil forfeiture proceedings had been successful, no doubt all of the
    appellants would have had a strong defence to any action that was commenced by
    the respondents. The conclusion, on this record, that it was premature for the
    respondents to pursue a civil action while they were continuing to oppose the
    forfeiture proceedings, reveals no error.

[21]

Accordingly, in upholding the motion judges
    conclusions with respect to the June 26, 2014 date, we reject the AGCs
    argument that the action against it was statute-barred.

B.

The April 14, 2016 date

[22]

The motion judge concluded that the actions
    against all of the appellants were commenced in time because the time only
    began to run under s. 5(1)(a)(iv) in respect of the claims against all appellants
    on April 14, 2016, when this court dismissed the appeal of the order of West J.
    awarding costs of the criminal forfeiture proceedings against the AGC.

[23]

The motion judge recognized that West J.s costs
    decision directly and explicitly addressed the conduct of the federal Crown,
    and that he had determined that the Crowns conduct exhibited a marked and
    substantial departure from the reasonable standards expected of the Crown.
    Nevertheless, she observed that costs against the Crown in such proceedings are
    a rare and extraordinary remedy, that the AGCs appeal specifically sought to
    attack the findings of Crown misconduct, that there was precedent for this
    court taking a very different view, and accordingly, that there was a clear
    risk that West J.s findings of misconduct might be rejected on appeal, which
    would have seriously undermined any action brought by the respondents. The fact
    that there was another ongoing proceeding  the appeal of West J.s costs
    decision  that could have impacted the viability of the respondents action
    was relevant to the application of s. 5(1)(a)(iv) in the circumstances of this
    case.

[24]

The motion judge rejected the argument that the
    AGCs appeal of the costs order was relevant only to the running of the
    limitation period against the AGC, and not against the OPP Defendants. She
    noted the connection between the OPP Defendants and the AGC in advancing the
    criminal forfeiture application. We do not agree with the appellants
    contention that she erred in treating the OPP Defendants and the AGC as if they
    were one entity. Instead, she properly referred to the substantial similarities
    between the claims advanced against all of the appellants, and the specific
    allegations of misconduct against the OPP Defendants in the course of the
    criminal forfeiture proceedings. She concluded that the conduct and actions of
    DC Hayhurst were at issue in both the criminal forfeiture costs decision and
    the civil litigation, and that this courts decision on the costs appeal could
    have impacted the viability of an action against the OPP Defendants.

[25]

We see no palpable and overriding error in the
    motion judges conclusion that the time began to run under s. 5(1)(a)(iv) in
    respect of the claims against all appellants on April 14, 2016, when this court
    released its decision dismissing the appeal from West J.s costs order. Again,
    the circumstances were highly unusual. The same parties were already involved
    in litigation commenced and pursued by the appellants, in which the appellants
    alleged misconduct had taken centre stage. In pursuing the appeal, the AGC did
    not accept and sought to overturn the findings of West J., ensuring that
    whether or not there was prosecutorial misconduct remained a live issue until
    it was determined by this court. As the motion judge reasonably observed, there
    was a clear risk of a successful appeal, which would have impacted the viability
    of an action based on the same allegations of prosecutorial misconduct.

[26]

As for the claims against the OPP Defendants,
    they are without question intertwined with the claims against the AGC in the
    now consolidated action. The actions of DC Hayhurst, who is alleged to have
    been directly involved in the criminal forfeiture proceedings and to have taken
    the lead in initiating the civil forfeiture proceedings, were part of the misconduct
    found by West J. in awarding costs against the AGC.

[27]

After assessing the claims against all parties,
    it was open to the motion judge to conclude, as she did, that a successful
    appeal of the costs decision would have undermined the claims against all of
    the appellants, including the OPP Defendants. This was not, as the appellants
    contend, a tactical decision on the part of the respondents, as in
Markel
,
    or simply a question of a plaintiff waiting until the end of other proceedings
    that might improve their chances of success in a civil action, as in
Sosnowski
    v. MacEwen Petroleum Inc.
, 2019 ONCA 1005, 441 D.L.R. (4th) 393. Rather,
    as in
Winmill v. Woodstock (Police Services Board)
, 2017 ONCA 962, 138
    O.R. (3d) 641, at para. 31, leave to appeal refused, [2018] S.C.C.A. No. 39,
    the result of the proceedings in which the parties were already involved,
    including the determination by this court of the prosecutorial misconduct
    allegations, would have been a crucial, bordering on determinative factor in
    whether the respondents had a civil claim to pursue.

[28]

Accordingly, in upholding the motion judges
    conclusions with respect to the April 14, 2016 date, we reject the appellants arguments
    that the claims against them asserted in the now consolidated action are statute-barred.

DISPOSITION

[29]

For these reasons, the appeals are dismissed. The
    respondents are entitled to their costs of the appeals against the appellants.

[30]

If the parties are unable to agree on the amount and/or
    allocation of such costs, the court will receive written submissions limited to
    three pages each (in addition to the respondents costs outline), as follows:
    from the respondents within 20 days of these reasons, and from the appellants
    within 15 days thereafter, with reply submissions, if any, within ten days of
    receipt of the submissions from both respondents. Written costs submissions are
    to be sent to the court electronically at the following email address: coa.e-file@ontario.ca.

K.
    van Rensburg J.A.

G.
    Pardu J.A.

Grant
    Huscroft J.A.





[1]
On
    June 15, 2016 the respondents had served the OPP Defendants with a Notice of
    Claim under s.
7 of the
Proceedings Against the Crown Act
, R.S.O. 1990, c.
    P.27, as amended.


