



COURT OF APPEAL FOR ONTARIO

CITATION: Presley v. Van Dusen, 2019 ONCA 66

DATE: 20190130

DOCKET: C65573

Sharpe, Juriansz and Roberts JJ.A.

BETWEEN

Janice Presley and
    Robert Frederick

Plaintiffs (Appellants)

and

Jack Van
    Dusen a.k.a. Jack Van Dusen Excavating

Defendant (Respondent)

and

Leeds,
    Grenville and Lanark District Health Unit

Defendant (Respondent)

Jonathan Chen, for the appellants

Michael D. Swindley and Zach Flemming-Giannotti, for the
    respondent Jack Van Dusen a.k.a. Jack Van Dusen Excavating

Alex Robineau, for the respondent Leeds, Grenville and Lanark
    District Health Unit

Heard: January 14, 2019

On appeal from the
    order of Justice R. Ryan Bell of the Divisional Court, dated November 8, 2017,
    with reasons reported at 2017 ONSC 7816,
81 C.L.R. (4th)
    214, affirming the order of Deputy Judge Harry R. Preston of the Superior Court
    of Justice, Small Claims Court, dated February 2, 2017
.

Sharpe
    J.A.


[1]

This is an appeal, with leave, from the dismissal of an appeal from the
    dismissal of a Small Claims Court action for negligent design, installation,
    approval and inspection of a septic system. The trial judge dismissed the
    action on the ground that it was statute barred under the
Limitations Act,
2002
.
    S.O. 2002, c. 24, Sched. B. The central issue is whether the trial judge and
    the Divisional Court judge on appeal to failed to conduct a proper analysis
    under s. 5(1)(a)(iv) of the
Limitations Act
of when, having
    regard to the nature of the injury, loss or damage, the appellants knew or
    should have known that a legal proceeding would be an appropriate means to seek
    to remedy it.

FACTS

[2]

The appellant homeowners, Janice Presley and Robert Frederick, retained
    the respondent Jack Van Dusen to install a septic system in 2010. The
    respondent Leeds, Grenville and Lanark District Health Unit approved the
    proposed septic system that same year. There were initial problems with the
    operation of the system. When smell began to emanate from the system in the
    spring of 2011, the appellants called Van Dusen and he appeared to fix the
    problem by replacing a failed sewage pump. The appellants encountered further
    problems with smell in the spring of 2012. Van Dusen advised the appellants
    that the cause was an unusually wet year and that many property owners were
    having the same problem. In the spring of 2013 there was both smell and
    effluent from the system although it was otherwise functioning without issue.
    Van Dusen inspected the system and advised the appellants that the problem
    could be remedied by applying a load of sand to a portion of the septic bed. He
    assured them that he would return to perform that work.

[3]

The appellants had on-going discussions with Van Dusen regarding the
    sand. These discussions led them to believe that he would come with the sand to
    fix the problem. Van Dusen came with sand in the fall of 2013 but the
    appellants were not at home and he was unable to access the property to deposit
    the sand. The appellant Frederick testified that Van Dusen [kept] stating he
    will fix the issue. He failed to come again in the spring of 2014 because of
    excessive mud on the appellants property that made depositing the sand
    difficult. He did not come during the winter of 2014 although the appellants
    had several discussions with him about coming and plowed the snow to give him
    access to the property.

[4]

In April 2015 the appellant Frederick called the respondent Health Unit.
    This led to an inspection by the supplier of the septic system and Van Dusen. Van
    Dusen took samples of the effluent. Ultimately, on June 1, 2015, the Health
    Unit condemned the system and issued an Order to Comply requiring the
    appellants to replace it.

THE TRIAL JUDGES DECISION

[5]

The appellants commenced this Small Claims Court action against Van
    Dusen in August 2015. The appellants added the Health Unit as a defendant in
    January 2016. At trial, both appellants testified, documentary evidence was
    introduced and, by agreement, the trial judge determined the limitations issue
    on the basis of the record as it stood at that point.

[6]

The issue to be determined was when the appellants discovered their
    claims against Van Dusen and the Health Unit within the meaning of the
Limitations
    Act
.

[7]

The
Limitations Act
, s. 5 provides:

Discovery

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).


Presumption

(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.

[8]

The Small Claims Court trial judge found that by the spring of 2013 when
    there was smell and effluent coming from the septic system any reasonable
    thinking individual or homeowner would know from the smells and the lack of additional
    work byVan Dusen that (i) the injury, loss or damage had occurred; (ii) the
    injury, loss or damage was caused or contributed to by an act or omission; and
    (iii) the act or omission was that of Van Dusen and perhaps the Health Unit. The
    trial judge accordingly made a finding under s. 5(1)(b) that a reasonable
    person would have discovered the claim by spring 2013.

[9]

The trial judge did not consider the s. 5(1)(a)(iv) criterion as
    to when the appellants did know or should have known that a proceeding would be
    an appropriate means to remedy their claim.
He gave the following reason for not considering s. 5(1)(a)(iv): It is
    not necessary for me to make any determination under that subsection and I do
    not do so as I only have to find the earliest date and I have no difficulty, as
    I have said, in finding that that date was the spring of 2013.

[10]

The trial judge also found that there was insufficient evidence to
    rebut the presumption under s. 5(2) that the plaintiff knew all the matters
    referred to in s. 5(1)(a
), again without any consideration of s.
    5(1)(a)(iv).

THE DIVISIONAL COURTS DECISION

[11]

The Divisional Court judge upheld the trial judges decision. She
    rejected the contention that the trial judge erred by failing to consider s.
    5(1)(a)(iv). In her view, having made the determination under s. 5(1)(b) that a
    reasonable person ought to have known the matters set out in s. 5(1)(a) in the
    spring of 2013, there was no requirement for the [trial judge] to make an
    explicit finding as to what [the appellants] actually knew in relation to
    subsection 5(1)(a)(iv). The Divisional Court judge also concluded that the trial
    judge had correctly determined that the appellants had not rebutted the
    statutory presumption in s. 5(2).

ANALYSIS

(1)

Did the trial judge and the Divisional Court judge
    err in law by failing to conduct a proper analysis under s. 5(1)(a)(iv)?

[12]

The
    appellants do not appeal the trial judges findings that the elements of s.
    5(1)(a)(i), (ii) and (iii) were satisfied. Their appeal rests on the submission
    that both the trial judge and the Divisional Court judge erred in law by
    failing to conduct a proper analysis as required by s. 5(1)(a)(iv).

[13]

I
    agree with that submission.

[14]

The analysis of both the trial judge and the Divisional Court judge of
    ss. 5(1)(a)(iv), 5(1)(b) and s. 5(2) of the
Limitations Act

is flawed. The trial judge explicitly stated that he was not
    considering s. 5(1)(a)(iv)
.
A determination under s.
    5(1)(b) as to the date a reasonable person would have discovered the claim
    requires consideration of all four matters referred to in clause (a).
    Similarly, the finding that there was insufficient evidence to rebut the
    presumption under s. 5(2) that the plaintiff knew all the matters referred to
    in s. 5(1)(a
) cannot stand as there was no consideration of s.
    5(1)(a)(iv).

[15]

This
    court has repeatedly held that consideration of when a proceeding was an
    appropriate means to remedy a claim is an essential element in the
    discoverability analysis and that failure to consider s. 5(1)(a)(iv) is an
    error of law:
Gillham v. Lake of Bays (Township)
, 2018 ONCA 667, 425
    D.L.R. (4th) 178, at paras. 33-34;
Kudwah v. Centennial Apartments
,
    2012 ONCA 777, at paras. 1-2;
Har Jo Management Services Canada Ltd. v.
    York (Regional Municipality)
,
2018 ONCA 469, 91 R.P.R. (5th) 1, at
    paras. 21 and 35.

[16]

As
    neither the trial judge nor the Divisional Court judge considered the
    application of s. 5(1)(a)(iv), it is appropriate for this court to do so.

(2)

Was it appropriate for the appellants to delay bringing an action
    against the respondent Van Dusen?

[17]

Subsection
    5(1)(a)(iv) serves to deter needless litigation:
407 ETR Concession Co. v.
    Day
, 2016 ONCA 709, 133 O.R. (3d) 762, at para. 48, leave to appeal
    refused, [2016] S.C.C.A. No. 509. If a legal proceeding is inappropriate, the
    start date for the commencement of the limitation period is postponed beyond
    the date on which the constitutive elements of the claim are discovered:
Presidential
    MSH Corp. v. Marr, Foster & Co. LLP
, 2017 ONCA 325, 135 O.R. (3d) 321,
    at paras. 17-18.

[18]

In
Presidential MSH
, which I note, in fairness to the trial judge, was
    decided after the trial in this case, Pardu J.A. reviewed the jurisprudence and
    distilled and extracted two guiding principles on the effect of assistance by a
    defendant to eliminate the loss.

[19]

First,
    at para. 20:

[A] legal proceeding against an expert
    professional may not be appropriate if the claim arose out of the
    professionals alleged wrongdoing but may be resolved by the professional
    himself or herself without recourse to the courts, rendering the proceeding
    unnecessary.

[20]

Second, at para. 26:

Resort to legal action may be inappropriate in
    cases where the plaintiff is relying on the superior knowledge and expertise of
    the defendant, which often, although not exclusively, occurs in a professional
    relationship. Conversely, the mere existence of such a relationship may not be
    enough to render legal proceedings inappropriate, particularly where the
    defendant, to the knowledge of the plaintiff, is not engaged in good faith
    efforts to right the wrong it caused. The defendants ameliorative efforts and
    the plaintiffs reasonable reliance on such efforts to remedy its loss are what
    may render the proceeding premature.

[21]

These
    principles are applicable to the facts of this case. Van Dusen is licenced to
    install septic systems. The appellants contracted with him because of his
    special training and expertise. While the respondents argue he may not qualify
    as an expert professional, there can be no question he did have expertise
    upon which the appellants reasonably relied.

[22]

Moreover,
reliance on superior knowledge and expertise sufficient to delay
    commencing proceedings is not restricted to strictly professional
    relationships:
Presidential
, at para. 26.
I
    acknowledge that the previous cases where this court has made a finding that it
    was reasonable for the plaintiff to rely on the defendants superior knowledge
    and expertise have concerned defendants belonging to traditional expert
    professions. For instance,
Brown v. Baum
, 2016 ONCA 325, 397 D.L.R.
    (4th) 161, involved a physician,
Chelli-Greco v. Rizk
, 2016 ONCA 489,
    involved a dentist, and
Presidential MSH
involved an accountant.
    However, recent Superior Court decisions have applied the superior knowledge
    and expertise prong of
Presidential MSH

to persons who are
    members of non-traditional professions or who are not professionals at all. For
    instance, in
YESCO Franchising LLC v. 2261116 Ontario Inc.
,
2017 ONSC 4273,
the court found that s. 5(1)(a)(iv) applied in
    a franchisor-franchisee relationship where the franchisees relied on the
    franchisors superior knowledge and expertise, even though the franchisor was
    not a member of an expert profession. Similarly, in
Barrs v. Trapeze
    Capital Corp.
,

2017 ONSC 5466, affd 2019 ONSC 67
    (Div. Ct.)
, the Superior Court and the Divisional Court found that s.
    5(1)(a)(iv) applied to investors who relied on the superior knowledge and
    expertise of their investment portfolio managers.

[23]

Van
    Dusen initially attempted to fix the problem with the appellants septic system
    by replacing a pump. He then assured the appellants that the problem could be
    remedied with a load of sand. He also assured them that he would attend at
    their property to fix the problem. While the appellants might be criticized for
    not being more insistent that Van Dusen fulfill this assurance more promptly,
    the evidence establishes that they were engaged in ongoing discussions with him
    and took actions to enable him to access the property. He continued to assure
    them that the problem could be readily fixed and that he would fix it. The
    appellants reasonably relied on Van Dusens assurances.  These assurances led
    the appellants to the reasonable belief that the problem could and would be
    remedied without cost and without any need to have recourse to the courts. Section
    5(1)(b) is satisfied.

[24]

I
    do not agree with the contention that there was no evidence to rebut the
    presumption under s. 5(2). The threshold to displace the presumption in s. 5(2)
    is relatively low:
Miaskowski v. Persaud
, 2015 ONCA 758, 393 D.L.R.
    (4th) 237, at para. 28. The appellant Frederick testified as to what Van Dusen
    told him and that he relied on Van Dusens assurance that the problem with the
    septic system was readily fixable and that Van Dusen would fix it. The trial
    judge did not consider this evidence and did not consider the s. 5(1)(a)(iv)
    factor when applying the s. 5(2) presumption. As the evidence of the appellant
    Frederick was uncontradicted, I consider that it is sufficient to rebut the
    presumption under s. 5(2).

[25]

The
    situation here is distinguishable from that in
Sampson v. Empire (Binbrook
    Estates) Ltd
,
2016 ONSC 5730, where the court held that ongoing
    communications, investigations or negotiations do not postpone the commencement
    of the limitation period. That principle applies where it is known that legal
    proceedings are appropriate and the issue is whether or not the claim can be
    settled. In cases like this one that fall under s. 5(1)(a)(iv), the plaintiffs
    were making efforts not to settle a known claim but rather to remedy the
    problem so as to make a claim and litigation unnecessary. Moreover, I agree
    with the appellants that the statement in

Sampson
, at para. 44,
    that [t]he fact that a defendant assists in attempting to rectify a problem
    does not postpone the running of the limitation period must now be read in the
    light of
Presidential MSH
and the other cases I have discussed dealing
    with s. 5(1)(a)(iv).

[26]

In
    my view, the facts of this case bring it within the category of cases
    contemplated by s. 5(1)(a)(iv). I am satisfied that in the circumstances of
    this case, the appellants did not know, and that, as required under s. 5(1)(b),
    a person in their situation would not reasonably have known, that a proceeding
    would be an appropriate means to seek a remedy until, at the earliest, the winter
    of 2014. There is evidence they still reasonably expected Van Dusen to come up
    to this point. There were discussions in the spring of 2014 regarding excessive
    mud that prevented Van Dusen from doing the remedial work, and in the winter of
    2014 the appellants ploughed snow to give Van Dusen access.

[27]

As
    the action against Van Dusen was commenced in August 2015, it was well within
    the prescribed two-year period and was not statute barred.

(3)

Was it appropriate for the appellants to delay bringing an action against
    the respondent Health Unit?

[28]

The
    Heath Unit submits that, as the appellants had no communications with the
    Health Unit until the spring of 2015 and the Health Unit was not engaging in
    any ameliorative efforts, the s. 5(1)(a)(iv) analysis of the timing of a claim
    against Van Dusen has no application to the appellants claim against it. The
    Health Unit argues that
Presidential MSH
makes it clear that
    ameliorative efforts only delay the running of the limitation period against
    the potential wrongdoer who is performing them, not against other potential
    wrongdoers.

[29]

I
    disagree. Under the
Limitations Act
, the discoverability issue is
    decided on the basis of what the plaintiff knew or ought to have known. It is
    not decided on the basis of fault or who is responsible for any gap in the
    plaintiffs knowledge. I have found that the appellants did not know that a
    proceeding against Van Dusen was an appropriate remedy until the spring. If a
    proceeding against Van Dusen was not appropriate until the appellants realized
    that the problem with their septic system was more serious than Van Dusen had
    led them to believe and that he was unwilling or unable to fix it, I fail to
    see how they could have known that a proceeding was appropriate against the
    Health Unit at an earlier date.
Presidential MSH

does not
    assist the Health Unit because it concerned only a single potential wrongdoer
    who was performing ameliorative efforts. Pardu J.A. did not make any
    pronouncement about a situation involving multiple potential wrongdoers where
    only one of them was performing ameliorative efforts, as this situation was not
    before her.

[30]

This
    interpretation is consistent with the purpose of s. 5(1)(a)(iv) this court
    identified in
407 ETR
, at para. 48, namely to deter needless
    litigation. The interpretation the respondent Health Unit urges upon us would
    encourage needless litigation. On the Health Units interpretation, in order to
    avoid having their claim be limitations-barred, the appellants 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 Van Dusen was going to fix
    it.

[31]

The
    situation in this case is distinguishable from the case in which a plaintiff
    argues that an ongoing legal proceeding against one defendant for a particular
    wrong makes it inappropriate to commence a legal proceeding against another
    defendant for the same wrong. In
Tapak v. Non-Marine Underwriters, Lloyd's
    of London
, 2018 ONCA 168, 76 C.C.L.I. (5th) 197, leave to appeal refused,
    [2018] S.C.C.A. No. 157, this court held that s. 5(1)(a)(iv) is not intended
    to be used to parse claims as between different defendants and thus permit one
    defendant to be pursued before turning to another defendant: para. 13. In my
    view, the principle in
Tapak
does not apply here because the
    appellants do not assert that it was appropriate for them to delay an action
    against the respondent Health Unit until they pursued legal claims against the
    respondent Van Dusen. Instead, the appellants argue that it was appropriate for
    them to delay bringing a claim against the Health Unit until it became clear
    that Van Dusen would not fix a problem he described as readily fixable. Once it
    became clear that Van Dusen could not or would not fix the problem, it was
    appropriate for the appellants to bring a claim against both Van Dusen and the
    Health Unit. The appellants added the respondent Health Unit within the
    two-year period that I have found commenced in winter 2014. Accordingly, the
    claim against the Health Unit is not limitations barred.

CONCLUSION

[32]

Accordingly,
    I would allow the appeal and remit the matter to the Small Claims Court for
    determination on the merits against both respondents.

[33]

The
    appellants are entitled to their costs of the appeal fixed at $15,000 inclusive
    of disbursements and taxes. The Divisional Courts costs order in favour of the
    respondents should be set aside and the appellants are entitled to costs of
    that appeal in the same amount. The costs of the Small Claims Court trial should
    be reserved to the Small Claims Court on the new trial.

Released:

RJS                                                 Robert
    J. Sharpe J.A.

JAN 30 2019                                    I agree
    R.G. Juriansz J.A.

I
    agree L.B. Roberts J.A.


