On January 30, 2019, the Ontario Court of Appeal released another decision on when a proceeding becomes “appropriate” for the purposes of the Limitations Act.
Presley v. Van Dusen, 2019 ONCA 66 concerned the improper installation of a septic system on the plaintiffs’ property. The system was installed in 2010. Problems arose a year later when smell began to emanate from the system. The defendant replaced a pump, which initially appeared to fix the problem. Another year later, in 2012, the smells were back, but the defendant assured the owners that they were the result of unusually wet weather and that many people were having the same problem. In 2013, the system still smelled and had also started leaking. The defendant told the owners that the problem could be remedied with a load of sand added to the septic bed and assured them that he would be back to do that work. He actually attended at the property with the sand in 2013, but the owners were not home and he could not access the property. In the spring of 2014, the property was too muddy to enter. However, the defendant kept assuring the owners that he would come back and fix the problems. In 2015, the owners called the municipal health unit, which had approved the system. After inspecting the system, the health unit condemned the system and ordered the owners to replace it. Later in 2015, the owners commenced a Small Claims Court action against the defendant contractor and the health unit.
Section 5 of the Limitations Act provides as follows:
(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.
The Small Claims Court judge held 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 by the contractor 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 the contractor and perhaps the Health Unit. In light of that finding, the judge declined to consider s. 5(1)(a)(iv) of the Limitations Act, holding that “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.” A judge of the Divisional Court upheld that decision, agreeing that “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 Court of Appeal held that both courts below erred in law by failing to conduct a proper analysis under s. 5(1)(a)(iv):
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).
Based on two recent Court of Appeal decisions, 407 ETR Concession Co. v. Day, 2016 ONCA 709 and Presidential MSH Corp. v. Marr, Foster & Co. LLP, 2017 ONCA 325 (which Kaleigh Du Vernet summarized in the Fall 2017 issue of our newsletter), the court held that legal proceeding against an expert professional were not appropriate if the claim arose out of the professional’s alleged wrongdoing but could be resolved by the professional himself or herself without recourse to the courts, rendering the proceeding unnecessary. Importantly for construction cases, the court clarified that that principle applies not only to traditional expert professionals such as doctors, accountants or engineers, but to anyone with special training or expertise, such as a contractor specializing in septic systems in this case.
The court held that while the appellants could be criticized for not being more insistent that the contractor fulfill this assurance more promptly, the evidence established 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 those assurances, which 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. The evidence showed that the owners still thought the contractor would fix the system in the winter of 2014, so that that the action commenced in 2015 was well within the limitation period.
Since the owners did not know that a proceeding against the contractor was appropriate until that time, the court held that it followed that they could not know that a proceeding was appropriate against the health unit until then either.