



COURT OF APPEAL FOR ONTARIO

CITATION: Clarke v. Faust, 2016 ONCA 223

DATE: 20160322

DOCKET: C60208

Feldman, Juriansz and Brown JJ.A.

BETWEEN

Andrew Clarke and Gavin Clarke

Respondents (Appellants)

and

Joseph F. Faust

Moving party (Respondent)

Edward Goldentuler, for the appellants

Kerri P. Knudsen and Nicole A. Dowling, for the
    respondent

Heard: September 29, 2015

On appeal from the order of Justice Anne Mullins of the
    Superior Court of Justice, dated February 23, 2015.

Juriansz J.A.:

[1]

The appellants action against their former solicitor for professional
    negligence was dismissed on summary judgment motion brought by the respondent. The
    motion judge found there was no genuine issue requiring a trial on whether the
    action was statute-barred. She found that it was. The appellants appeal to this
    court.

A.

Background

[2]

The appellants were injured in a motor vehicle collision on April 7,
    2006. They retained the respondent, Joseph Faust, to represent them on their
    claims for accident benefits and tort damages. The respondent issued a
    statement of claim in respect of the collision on June 17, 2008, some nine
    weeks after the second anniversary of the collision.

[3]

Prior to the filing of the statement of claim, the appellants had
    retained new counsel. After obtaining the file from the respondent, the new solicitor
    told the appellants that the statement of claim had not been issued within two
    years of the accident. However, he advised them this was not necessarily fatal
    to their claim because under the doctrine of discoverability, the claim might
    not have been commenced beyond the limitation period. He further advised that out
    of an abundance of caution the respondent should put his liability insurer on
    notice. Accordingly, he wrote to the respondent on July 2, 2008, putting him on
    notice of the missed limitation period. The respondent wrote back on July 14,
    2008, taking the position that no limitation period had been missed because of
    the doctrine of discoverability.

[4]

The appellants new solicitor passed away suddenly. Another solicitor from
    his firm (the appellants current lawyer) took over the file. This solicitor
    advised the appellants he was not concerned with the missed limitation period
    because the doctrine of discoverability would extend the period. The solicitor spoke
    with defence counsel in the motor vehicle action, taking the position that the
    doctrine of discoverability would apply to the motor vehicle claim as both
    plaintiffs had suffered soft tissue injuries and until they had obtained
    medical documentation, they could not have known whether their injuries met the
    threshold of serious and permanent impairment.

[5]

The solicitor believed he had convinced defence counsel of this, and
    informed the appellants. He further informed them that the defendants
    statement of defence filed February 5, 2009 did not plead the missed limitation
    period as a defence. However, the defendants amended their statement of defence
    on March 18, 2009 to plead the missed limitation period.

[6]

The plaintiffs commenced their professional negligence action against
    the respondent on December 22, 2010. The respondent pleaded the appellants
    professional negligence action against him was statute-barred because it was
    commenced more than two years after they knew or ought to have known they had a
    cause of action against him. The respondent moved for summary judgment
    dismissing the appellants claim against him.

B.

Proceedings below

[7]

Before the motion judge, the respondent argued the appellants should be
    presumed to have known of his negligence on April 7, 2008, the two-year
    anniversary of the motor vehicle accident. They ought to have commenced the
    claim within two years of that date. He submitted in the alternative that the
    appellants ought to have known of their loss on July 2, 2008, when their then
    solicitor alleged in writing that the respondent had missed the limitation
    period to issue the appellants motor vehicle claim.

[8]

The appellants took the position they suffered no damage until March 18,
    2009, when the defendants in the motor vehicle claim first pleaded the defence
    of a missed limitation period. Until then it was not apparent that the
    defendants would raise a limitation defence. The motion judge summarized their
    argument:

The essence of the argument advanced on behalf of Messrs.
    Clarke is that, until the defendants in the tort action pleaded a limitations
    defence, no damage had been caused to them as a result of his failure to have
    instituted the action within the two year period following the event of the
    collision. However much a wrong may have been committed, they contend, no
    damages could be said to flow. By this logic, the right to the claim was not
    discovered until the pleading was amended on March 18, 2009.

[9]

The motion judge rejected the appellants position. On her reading of
    the
Limitations Act, 2002,
S.O. 2002, c.24, Sch. B, a limitation
    period could begin to run before the person with the claim sustained any
    damages. She commented: The provisions of the [
Limitations Act
,
2002
] to the extent the terms injury, loss or damage are used, cannot be
    taken to mean that damages in law must have been sustained to the knowledge of
    the claimant. She adopted this view, pointing out that the phrase injury,
    loss or damage in s. 5(1) of the Act was disjunctive. Consequently, she
    concluded the appellants were injured by the respondents failure to commence
    the motor vehicle accident action within two years, though they may not have
    suffered any damage from that injury until the motor vehicle defendant
    pleaded the limitation defence. The motion judge granted the respondents
    motion for summary judgment.

C.

Analysis

[10]

The
    appellants main ground of appeal is that the motion judge erred in finding that
    the limitation period began to run before March 18, 2009 when the appellants say
    they first knew they had suffered some damages from the respondents act or
    omission.  They also appeal the motion judges finding that discoverability
    had not been pleaded in the appellants statement of claim for the professional
    negligence action.

(1)

When was the claim against the respondent discovered?

[11]

The
    motion judge was mistaken in her understanding of the Act. She failed to consider
    the requirement of s. 5(1)(a)(iv) that a person with a claim know that a
    proceeding would be an appropriate means to seek to remedy the injury, loss or
    damage having regard to its nature. That provision requires, in my view, a
    person to have good reason to believe he or she has a legal claim for damages
    before knowing that commencing a proceeding would be an appropriate means to
    seek to remedy the injury, loss or damage.

[12]

Since
    the motion judge proceeded on an incorrect understanding of the Act, it falls
    to this court to determine when the appellants first discovered they had a
    claim against the respondent.

[13]

Section
    4 of the Act provides: Unless this Act provides otherwise, a proceeding shall
    not be commenced in respect of a claim after the second anniversary of the day
    on which the claim was discovered. A claim is defined to mean a claim to
    remedy an injury, loss or damage that occurred as a result of an act or
    omission.

[14]

Section
    5 sets out the criteria that define the day on which 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]

Section
    5(1)(a) sets out a subjective test addressing the knowledge of the person with
    a claim. Section 5(1)(b) sets out a modified objective test by addressing the knowledge
    of a reasonable person in the shoes of the appellants. A claim is discovered on
    the earlier of the date when the person subjectively knew of the matters set
    out in s. 5(1)(a) and the date a reasonable person would have known of them.
    Section 5(2) stipulates the presumption the person with the claim knew of the
    matters in s. 5(1)(a) on the day of the act or omission giving rise to the
    claim unless the contrary is proved.

[16]

This
    case turns on the application of s. 5(1)(a)(iv). I will address the appellants
    subjective knowledge first. The question is when they would have first known
    that commencing a proceeding would be an appropriate means of seeking a remedy
    for their claim against the respondent considering the nature of the injury,
    loss or damage.

[17]

Here,
    the appellants second solicitor informed them that their first solicitor had
    not initiated an action by the second anniversary of the motor vehicle
    accident. However, he advised them there may be no problem, but that he should
    write to the first solicitor notifying him of the potential limitation problem
    out of an abundance of caution. The appellants first solicitor, the
    respondent, in repeated correspondence, took the position he had not missed any
    limitation period. Then the appellants second solicitor passed away, and their
    third solicitor took over the file. He, too, advised them that the doctrine of
    discoverability applied in the motor vehicle action. Their third solicitor also
    advised them he believed he had persuaded the solicitor for the defendants in
    the motor vehicle action that this was the case. The defendants statement of
    defence filed February 5, 2009 did not plead any limitation defence.

[18]

At
    that point the appellants knew that three lawyers were of the opinion that the
    doctrine of discoverability applied to their motor vehicle action. Their lawyer
    had advised that the defendants were persuaded of this and they had good reason
    to believe that was the case because the statement of defence did not plead the
    limitation defence.

[19]

The
    amendment of the statement of defence on March 18, 2009 changed the situation.
    The defendants in the motor vehicle action, for the first time, took the
    position the limitation period had been missed.

[20]

On
    these facts, I am satisfied the appellants had no reason to know that commencing
    a legal proceeding was appropriate before the amendment of the statement of
    defence.

[21]

I
    am also satisfied the objective test in s. 5 (1)(b) is met. A reasonable person
    with the abilities and in the circumstances of the appellants would not have
    known it was appropriate to commence a legal proceeding before the amendment of
    the statement of defence in the motor vehicle action.

[22]

Furthermore,
    the foregoing analysis is sufficient to displace the presumption in s. 5(2).

[23]

On
    this analysis, the statement of claim in the professional negligence action,
    dated December 22, 2010, was filed well before the expiry of the limitation
    period and summary judgment should not have been granted.

[24]

Before
    leaving the matter, I make two additional observations.

[25]

First,
    it still has not been determined whether the appellants motor vehicle action is
    statute-barred. The doctrine of discoverability may well permit the motor
    vehicle tort action to proceed. If that is the case, the professional
    negligence action may in fact be premature. The circumstances are similar to those
    in
Ferrara v. Lorenzetti, Wolfe Barristers and Solicitors
, 2012 ONCA 851, 113 O.R. (3d) 401. In that case,
    Laskin J.A., for the majority, concluded that the appellants had not discovered
    their claim for damages against their former lawyer for professional negligence
    until the judgment in the underlying action was rendered.

[26]

In
    this case, the appellants pleaded in the professional negligence action that
    they in fact have suffered some damages because their bargaining position in
    their efforts to settle the motor vehicle action has been compromised. I find
    this argument difficult to accept. If the respondent did not miss the
    limitation period in the motor vehicle action, he would not be responsible for
    any damages, whatever their nature. It may be that the limitation period in the
    professional negligence action will not begin to run until it is determined
    that the respondent missed the limitation period in the motor vehicle action.
    This is not a matter that we need to decide on this appeal of the motion
    judges decision granting summary judgment. If the limitation period for the
    professional negligence action has not yet begun to run, the motion judge
    should not have granted summary judgment.

[27]

Second,
    the appellants might well have been able to establish that the respondent was estopped
    from pleading a limitation defence in the professional negligence action. It
    seems likely that the appellants, in failing to commence the professional
    negligence action within two years of the second anniversary of the motor
    vehicle accident, relied on the respondents expressed initial position that he
    had not missed the limitation period in the motor vehicle action. However, the
    appellants did not raise this issue and it is unnecessary to deal with it.

[28]

In
    any event, on the analysis above, I conclude that the appellants claim against
    the respondent was not discovered before March 18, 2009, if at all.

(2)

Was discoverability pleaded in the statement of claim?

[29]

The
    motion judge set out an additional basis for granting the summary judgment
    motion. She found the appellants had not pleaded discoverability in their action
    against the respondent. However, I am of the view the statement of claim set out
    the material facts to support the application of the doctrine.

D.

Disposition

[30]

I
    would allow the appeal, set aside the motion judges judgment, and replace it
    with an order dismissing the respondents summary judgment motion.

[31]

The
    appellants are entitled to costs of the motion and of the appeal. If the
    parties are unable to agree on those costs, they may file written submissions,
    not to exceed five typewritten pages, and no later than fifteen days following
    the release of these reasons.

Released: March 22, 2016 (KF)

R.G.
    Juriansz J.A.

I
    agree K. Feldman J.A.

I
    agree David Brown J.A.


