



COURT OF APPEAL FOR ONTARIO

CITATION: Galota v. Festival Hall Developments Limited, 2016
    ONCA 585

DATE: 20160721

DOCKET: C61253

Laskin, Gillese and Roberts JJ.A.

BETWEEN

Maria Galota

Plaintiff (Respondent)

and

Festival Hall Developments
    Limited
, Walter Rosati and Louis Yam Man Chu

Defendants (
Appellant
)

Jay Skukowski and Alex Reyes, for the appellant

William G. Scott and Barbara Opalinski, for the
    respondent

Heard: May 17, 2016

On appeal from the judgment of Justice David L. Corbett
    of the Superior Court of Justice, dated October 6, 2015, with reasons reported
    at 2015 ONSC 6177.

Laskin
    J.A.:

A.

Overview

[1]

On this appeal we must answer a single question: did the motion judge
    err by finding that the claim of the respondent Maria Galota against the
    appellant Festival Hall was not discoverable until three and a half years after
    the accident in which she was injured?

[2]

On May 13, 2006, Ms. Galota broke her right arm when she fell off an elevated
    dance floor at Republik Nightclub. The nightclub was located in a building in
    downtown Toronto. Republik was a tenant in the building; Festival Hall was the
    landlord and owner.

[3]

Ms. Galota retained a lawyer immediately after her accident and, in December
    2007, sued Republik for damages for negligence. She claimed that she was
    injured by the unsafe condition of the dance floor. She alleged that the raised
    dance floor was not equipped with appropriate barriers or handrails, was not
    properly lit, and did not have appropriate traction. She did not initially sue
    Festival Hall.

[4]

The claim against Republik was an insured claim and Republiks insurer,
    Leeds Insurance Company Ltd., appointed an adjuster. The adjuster investigated
    the claim and was in contact with Ms. Galotas lawyer. Republik defended the
    action and in May 2008, two years after the accident, delivered a statement of defence.
    Neither the adjuster nor Republik in its defence alleged that Festival Hall or
    any other party was responsible for Ms. Galotas injuries.

[5]

On November 11, 2009, a representative of Republik was examined for
    discovery. Ms. Galotas lawyer then learned for the first time that before
    opening, Republik had extensively renovated the nightclub, including the dance
    floor from which Ms. Galota fell, and that Festival Hall may have had some
    involvement in the renovations.

[6]

Unfortunately for Ms. Galota, Republik Nightclub closed in March 2009.
    Then, in March 2011, Ms. Galotas lawyer learned that Republiks insurer Leeds
    became insolvent. On November 10, 2011, a day less than two years from the
    examination for discovery of Republik and five and a half years after her
    accident, Ms. Galota sued Festival Hall for negligence as an occupier of the
    nightclub.

[7]

Festival Hall moved for summary judgment to dismiss the action on the
    ground that it was started more than two years after Ms. Galotas claim was
    discoverable, and so was barred by s. 4 of the
Limitations Act, 2002
,
    S.O. 2002, c. 24, Sched. B. The motion judge had to decide when Ms. Galota
    ought to have known Festival Hall had any potential liability for the unsafe
    condition of the dance floor. Ms. Galota contended the date was the day Republiks
    representative was examined for discovery. Therefore, the two year limitation
    period ran from that date and her claim was not out of time. Festival Hall
    contended that if Ms. Galotas claim was not discoverable on the day of the
    accident, it was certainly discoverable well before the day Republik was
    examined for discovery had Ms. Galota investigated Festival Halls potential
    liability with reasonable diligence. As she did not do so, her action was out
    of time.

[8]

The motion judge sided with Ms. Galota. He made the following important
    finding at para. 23 of his reasons:

I conclude that the plaintiff was not put on notice of, and did
    not show a want of diligence in investigating the potential involvement of, the
    landlord in the design and construction of the elevated dance floor.

[9]

On appeal, Festival Hall makes two submissions. Its main submission is
    that the motion judge erred by finding Ms. Galota did not show a want of
    diligence because she took no steps at all to investigate a claim against
    Festival Hall until at least three and a half years after her accident. Ms.
    Galotas position is that the motion judges finding is a finding of fact,
    reasonably supported by the evidence, and thus entitled to deference on appeal.

[10]

Festival Halls secondary submission is that the motion judge erred by
    using his expanded powers on a motion for summary judgment to call for expert
    evidence on the standard of care of a solicitor prosecuting an occupiers
    liability claim. Ms. Galotas position is that Festival Hall did not object to
    the motion judges order for expert evidence.

[11]

On Festival Halls main submission, I agree with Ms. Galotas position.
    On its secondary submission, the expert evidence called was not material. The
    motion judge did not rely on it, beyond considering the possible investigative
    steps recommended by Festival Halls expert. Nor did either party in this
    court.

[12]

The motion judge did not err by finding that Ms. Galotas claim against
    Festival Hall was not discoverable until November 11, 2009. I would dismiss the
    appeal.

B.

The Issues

(1)

Did the motion judge err by finding that Ms. Galota did not show a want
    of diligence?

(a)

The
    Limitations Act, 2002

[13]

In most Ontario cases, including this one, an action must be started
    within two years of the day on which the claim was discovered. If it is not,
    the claim is barred by the statute:
Limitations Act, 2002
, s. 4.

[14]

Sections 5(1) and (2) set out the statutory scheme for determining when
    a claim is discovered:

5. (1) A claim is discovered on the earlier of,

(a) the day on which the person with the claim first
    knew,

(i) that the injury, loss or damage had occurred,

(ii) that the injury, loss or damage was caused by
    or contributed to by an act or omission,

(iii) that the act or omission was that of the
    person against whom the claim is made, and

(iv) that, having regard to the nature of the
    injury, loss or damage, a proceeding would be an appropriate means to seek to
    remedy it; and

(b) the day on which a reasonable person with the
    abilities and in the circumstances of the person with the claim first ought to
    have known of the matters referred to in clause (a).

(2) A person with a claim shall be presumed to have
    known of the matters referred to in clause (1) (a) on the day the act or
    omission on which the claim is based took place, unless the contrary is proved.

[15]

Three points about these provisions are relevant to the submissions on
    appeal:

·

Section 5(1)(b) codifies the common law rule of discoverability.
    If s. 5(1)(b) applies, the two year limitation period will run from a date
    later than the date the plaintiff was injured.

·

Under s. 5(1)(b), a plaintiff first ought to have known of the
    claim when the plaintiff has enough evidence or information to support an
    allegation of negligence, including facts about an act or omission that may
    give rise to a cause of action against a possible tortfeasor:
Zapfe v.
    Barns
(2003)
, 66 O.R. (3d)
    397 (C.A.), at paras. 32-33;
Burtch v. Barnes Estate
(2006), 80 O.R.
    (3d) 365, at para. 24. The plaintiff cannot delay the start of the limitation
    period until he or she knows with certainty that a defendants act or omission
    caused the injury or damage:
Longo v. MacLaren Art Centre Inc.
, 2014
    ONCA 526, 323 O.A.C. 246, at para. 44.

·

The rebuttable presumption in s. 5(2) means that a plaintiff has
    the onus of showing that the rule of discoverability in s. 5(1)(b) applies:
Fennell
    v. Deol
, 2016 ONCA 249, at para. 26.

(b)

The motion judges
    reasons

[16]

The motion judge found that Ms. Galota knew the matters specified in
    s. 5(1)(a)(i),(ii) and (iv) on the date of the accident or shortly after
    it occurred. She knew then that she was injured, that the design and construction
    of the elevated dance floor may have caused or contributed to her injury, and
    that an action for damages was an appropriate way to remedy her injury.

[17]

Thus the motion judge found that Ms. Galotas claim against Festival
    Hall turned on s. 5(1)(a)(iii) and s. 5(1)(b): when Ms. Galota first ought to
    have known that an act or omission by Festival Hall caused her injury. He
    correctly framed the issue he had to decide at para. 16 of his reasons:

So the limitations issue turns on factor iii): when did the plaintiff
    know, or when should she have known, that the hazardous condition of the
    elevated dance floor was a result of an act or omission by Festival Hall?

[18]

The motion judge resolved this issue at para. 23 of his reasons. He held
    that Ms. Galota did not know about Festival Halls involvement with the design
    and construction of the dance floor until her lawyer examined a representative
    of Republik for discovery on November 11, 2009.

I accept that the plaintiff did not know the terms of the lease
    or of any involvement by the landlord with the design and construction of the
    elevated dance floor before the examination for discovery of Republik in 2009.

[19]

The motion judge then considered s. 5(1)(b). He found that Ms. Galota
    first ought to have known Festival Halls act or omission caused or contributed
    to her injury on the date of the examination for discovery. Her claim against
    Festival Hall was therefore discoverable on November 11, 2009. Thus, the motion
    judge found Ms. Galota had rebutted the presumption in s. 5(2) of the Act.

I conclude that the plaintiff was not put on notice of, and did
    not show a want of diligence in investigating the potential involvement of, the
    landlord in the design and construction of the elevated dance floor. Thus I
    find that the plaintiff has defeated the presumption established in s. 5(2) in
    respect to factor iii), and thus that the limitations period as against
    Festival Hall began to run upon discovery of the tenant in 2009. It follows
    that the claims against Festival Hall, commenced less than two years later in
    2011, are not out of time. The motion for judgment is dismissed and it is
    ordered, on a final basis, that the plaintiffs claims against the defendant
    Festival Hall are not precluded by the
Limitations Act
.

(c)

Analysis

[20]

Festival Hall accepts that the motion judge correctly stated the test
    for determining when Ms. Galotas claim against Festival Hall was discoverable
    under s. 5(1)(b). It challenges his application of the test. Its simple
    submission is that the motion judge erred by finding Ms. Galota showed no want
    of diligence because she did nothing to investigate a claim against Festival
    Hall for at least three and half years after she was injured.

[21]

Festival Hall points out that in several cases this court has held that
    a plaintiff relying on s. 5(1)(b) has a positive duty to exercise reasonable
    diligence in investigating a claim of negligence against a defendant. That duty
    cannot be met, Festival Hall contends, when a plaintiff takes no steps at all. Had
    Ms. Galota acted with reasonable diligence she would have discovered her claim
    against Festival Hall well before November 2009. See, for example:
Zapfe; Soper
    v. Southcott
, [1998] O.J. No. 2799 (C.A.); and
Pepper v. Zellers Inc.
    (c.o.b. Zellers Pharmacy)
, [2006] O.J. No. 5042 (C.A.).

[22]

The motion judge accepted that as Ms. Galota was relying on s. 5(1)(b),
    she was obliged to investigate on a reasonable basis a claim against Festival
    Hall. He said at para. 17 of his reasons:

I agree with the plaintiff that it would be inappropriate to
    name landlords as defendants in every case of an occupiers liability claim
    against a tenant. On the other hand, to satisfy the third branch of the test
    under s. 5(1)(a), for the purposes of s. 5(1)(b) of the
Limitations
    Act
, the plaintiff must investigate on a reasonable basis with a view to
    determining the proper defendants to the claim. In this case, this would mean
    identifying the condition of the elevated dance floor as a basis for alleged
    liability and the persons apparently responsible for it. This requires a
    plaintiff to make reasonable investigation of her claim. It does not, however,
    require a pre-discovery discovery of an adverse party.

[23]

But the important point, implicit in this paragraph and expressly made
    by my colleague van Rensburg J.A. in
Fennell,

is that a plaintiffs failure to take
    reasonable steps to investigate a claim is not a stand-alone or independent
    ground to find a claim out of time. Instead, the reasonable steps a plaintiff
    ought to take is a relevant consideration in deciding when a claim is discoverable
    under s. 5(1)(b). Justice van Rensburg made this point at paras. 18 and 24 of
    her reasons in
Fennell
:

[18]    While due diligence is a factor that informs the
    analysis of when a claim ought to have reasonably been discovered, lack of due
    diligence is not a separate and independent reason for dismissing a plaintiffs
    claim as statute-barred.



[24]    Due diligence is part of the evaluation of s. 5(1)(b).
    In deciding when a person in the plaintiffs circumstances and with his
    abilities ought reasonably to have discovered the elements of the claim, it is
    relevant to consider what reasonable steps the plaintiff ought to have taken.
    Again, whether a party acts with due diligence is a relevant consideration, but
    it is not a separate basis for determining whether a limitation period has
    expired.

[24]

In substance, the motion judge found that there were no steps Ms. Galota
    reasonably ought to have taken that would have enabled her to discover her
    claim against Festival Hall before her lawyer examined a representative of
    Republik in November 2009. Some may view the motion judges finding to be
    questionable. But all these cases are very fact-specific. And the motion
    judges finding is a finding of fact, which in my opinion is well supported by
    the record, and therefore to which we should defer:
Burtch
, at para.
    22;
Longo
, at para. 38.

[25]

Together the following four considerations support the motion judges
    finding:

·

Ms. Galota sued the party occupying the premises and her claim
    was an insured claim.

·

No one alleged any other party was potentially liable.

·

Festival Halls potential liability as owner and landlord was not
    obvious.

·

The steps suggested by Festival Halls expert would not have
    alerted Ms. Galota to a claim.

(1)

Ms. Galota sued the party occupying the premises and her claim was an
    insured claim

[26]

First, Ms. Galota sued the tenant, the party in physical possession of
    and carrying on business at the premises where she fell and was injured.
    Republik was unquestionably an occupier under the
Occupiers Liability
    Act
. Moreover, Ms. Galotas claim was an insured claim. Republiks insurer
    responded to the claim and appointed an adjuster to investigate it. Ms. Galota
    and her lawyer had every reason to believe the insurer would settle her claim
    or pay any judgment she obtained after a trial. In this case, the need to
    pursue another party would hardly have seemed reasonable. Neither Ms. Galota
    nor her lawyer could be expected to foresee the rare occurrence of an insurance
    company becoming insolvent.

(2)

No one alleged any other party was potentially liable

[27]

Second, the insurers adjuster never suggested that Festival Hall or any
    other party was potentially liable for Ms. Galotas injury. Similarly, in its
    statement of defence, Republik did not allege Festival Hall bore any
    responsibility and Republik did not take third party proceedings against
    Festival Hall or anyone else. Indeed, before the examinations for discovery
    neither the adjuster nor Republik ever suggested there had been extensive
    renovations of the nightclub or that Festival Hall was involved in those
    renovations. I do not suggest either the insurer or Republik had any obligation
    to notify Ms. Galota about the potential liability of Festival Hall, but their
    failure to do so is a practical consideration supporting the motion judges
    finding. As Lauwers J. (as he was then) said in
Madrid v. Ivanhoe
,
    2010 ONSC 2235, 101 O.R. (3d) 553, at para. 17:

If Ivanhoe's insurance adjuster had advised the plaintiff that
    liability was being denied because another party was liable, then the
    plaintiff's duty to make further inquiries would have been triggered. But, on
    the actual facts of this case, a naked denial of liability should not trigger a
    duty on the plaintiff to make further inquiries.

(3)

Festival Halls potential liability as owner and landlord was not
    obvious

[28]

Third, Festival Hall was not an occupier of the premises it leased to
    Republik simply because it was the landlord and owner:
Musselman v. 875667
    Ontario Inc. (c.o.b. Cities Bistro)
, 2010 ONSC 3177, 93 C.L.R. (3d) 58,
    affd 2012 ONCA 41, 8 C.L.R. (4th) 163. Thus, Ms. Galota cannot be faulted for
    not having joined Festival Hall in her initial claim. On the day of the
    accident, Ms. Galota could not have known that an act or omission of Festival
    Hall caused or contributed to her injuries.

[29]

In oral argument, Festival Hall conceded that in an occupiers liability
    claim, a plaintiff is not always obliged to sue the landlord from the outset. Festival
    Hall argues, however, that Ms. Galota should have taken steps to investigate a
    possible claim against Festival Hall. But what steps? Festival Hall suggests
    two in particular: do a search of title to find out the owner of the building
    and obtain a copy of the lease.

[30]

Ms. Galotas lawyer did not search the title until long after it issued
    a claim against Republik. Perhaps he should have done so earlier. But learning
    that Festival Hall owned the building would not have alerted him to a potential
    claim against Festival Hall. As I have just said, Festival Hall did not become
    an occupier simply because it was the landlord and owner.

[31]

The lease between Republik and Festival Hall is undoubtedly an important
    document for determining whether Festival Hall was potentially liable as an
    occupier for Ms. Galotas injuries. Under ss. 1(a) and (b) of the
Occupiers
    Liability Act
, an occupier is either:

(a) a person who is in physical possession of
    premises, or

(b) a person who has responsibility for and control
    over the condition of premises or the activities there carried on, or control
    over persons allowed to enter the premises,

despite the fact that there is more than one
    occupier of the same premises; (occupant)

[32]

Festival Hall was not in physical possession of the premises it leased
    to Republik. Whether it had responsibility for and control over the condition
    of the premises depends on the terms of the lease.

[33]

Or, Festival Hall may have owed a duty to Ms. Galota under s. 8(1) of
    the statute, which specifically addresses a landlords obligation:

8. (1) Where premises are occupied or used by virtue
    of a tenancy under which the landlord is responsible for the maintenance or
    repair of the premises, it is the duty of the landlord to show towards any
    person or the property brought on the premises by those persons, the same duty
    of care in respect of dangers arising from any failure on the landlords part
    in carrying out the landlords responsibility as is required by this Act to be
    shown by an occupier of the premises.

[34]

Again, whether Festival Hall was responsible for the maintenance and
    repair of the leased premises depends on the terms of the lease. The lease,
    however, was not a public document. And Ms. Galota had no automatic ability to
    require Festival Hall to produce a copy of the lease before suing Festival
    Hall.

[35]

Ms. Galota could have obtained a copy of the lease from Republik as part
    of documentary production. Presumably, she and her lawyer could have obtained
    the lease before the examination for discovery of Republiks representative.
    But in 2011, Republiks former lawyer said he would not be providing a copy of
    the lease or anything else from the file because Republik was no longer a
    client. Ms. Galotas lawyer followed up with Festival Hall about his
    request for the lease in October 2013. Festival Hall did not deliver a copy of
    the lease until March 2014.

[36]

But even had Ms. Galota obtained the lease earlier, she could not
    reasonably have known she had a claim against Festival Hall until she married
    the terms of the lease to the facts that Republik extensively renovated the
    nightclub and dance floor before opening, that the renovations may not have
    complied with the
Building Code
, and that Festival Hall may have had
    some involvement in the renovations. These three facts, according to the sworn
    testimony of Ms. Galotas lawyer, which the motion judge was entitled to
    accept, she only learned on the discovery of Republiks representative.

[37]

As it turned out, the lease is a net lease, which means that Republik
    had the primary obligation to repair and maintain the leased premises. Whether
    Festival Hall had any obligation triggering its potential liability to Ms.
    Galota can only be decided at the trial of this action.

(4)

The steps suggested by Festival Halls expert would not have alerted Ms.
    Galota to a claim

[38]

Fourth, although the discoverability standard under s. 5(1)(b) is an
    objective standard  when ought the plaintiff have known  and although
    Festival Halls expert said a reasonably competent lawyer would have undertaken
    investigations Ms. Galotas lawyer did not undertake, the motion judge found,
    and was entitled to find, that these investigations would not have alerted
    Ms. Galota to a possible claim against Festival Hall.

[39]

The motion judge used the expanded powers available to a motion judge
    hearing a motion for summary judgment and ordered each side to provide expert
    evidence on the standard of care of a reasonably competent solicitor in occupiers
    liability claims. The motion judges order is a separate ground of appeal,
    which I will deal with shortly. James Regan gave expert opinion evidence for
    Ms. Galota and Richard Shekter gave expert opinion evidence for Festival Hall.
    Both are well-regarded and experienced advocates, with expertise in occupiers
    liability claims.

[40]

The motion judge did not mention Mr. Regans opinion evidence. He did,
    however, address Mr. Shekters opinion. Mr. Shekter said that a competent
    solicitor would have done five things, none of which Ms. Galotas lawyer did:

·

either attend or arrange for someone to attend at the nightclub
    to examine the premises generally or the elevated dance floor in particular

·

arrange for measurements or photographs of the scene in general
    or the dance floor in particular

·

retain the services of an engineer, building inspector, or
    contractor to determine if there were any
Building
    Code
or by-law restrictions or infractions relevant to the incident

·

request a copy of the lease

·

request information concerning the person(s) responsible for
    constructing the elevated dance floor

[41]

I have already dealt with the fourth item on Mr. Shekters list,
    requesting a copy of the lease. On the fifth item, I agree with the motion
    judge that those inquiries could only have been made of potential adverse
    parties.

[42]

The motion judge agreed, however, that a wise solicitor would have
    undertaken the first three items on the list to preserve evidence relevant to
    the claim. But he found that those investigations would not have disclosed the
    claim against Festival Hall. He wrote, at para. 20:

Preserving evidence of the condition of the elevated dance
    floor would not, itself, lead to discovery of information about the involvement
    of Festival Hall.  Only by inquiries of the tenant, or Festival Hall itself,
    could this information have come to light.

I see no basis to interfere with this finding. The
    motion judge made no palpable and overriding error.

[43]

For the four considerations I have discussed, I would not give effect to
    Festival Halls main submission on appeal.

(2)

Did the motion
    judge err in ordering expert evidence on the standard of care of a reasonably
    competent solicitor in an occupiers liability case?

[44]

Festival Hall submits that the motion judge erred in making this order
    because expert evidence is not needed to decide discoverability under s.
    5(1)(b) of the
Limitations Act, 2002,
and because the relevant date is
    when the plaintiff, not her solicitor, first ought to have known of a claim.

[45]

I agree expert evidence is not needed to decide when a claim is
    discoverable under s. 5(1)(b). Still, I find Festival Halls submission to be
    odd. It did not object to the motion judges order, the motion judge did not
    rely on Mr. Regans opinion, and Festival Hall sought to buttress its
    position on appeal by relying on Mr. Shekters opinion.

[46]

Nothing turns on the expert evidence. The motion judge did not rely on
    it for his decision, and nor do I. I would not give effect to Festival Halls
    submission.

C.

Conclusion

[47]

The motion judge did not err by finding that Ms. Galotas claim against
    Festival Hall was not discoverable under s. 5(1)(b) of the
Limitations Act,
    2002
until November 11, 2009, and that she had rebutted the presumption in
    s. 5(2). I would dismiss Festival Halls appeal with costs in the agreed on
    amount of $10,000 inclusive of disbursements and applicable taxes.

Released: (E.E.G.) July 21, 2016

John Laskin J.A.

I agree E.E. Gillese
    J.A.

I agree L.B. Roberts
    J.A.


