Saturday, January 17, 2009

limitation periods and discoverability

"...While at common law ignorance of or mistake as to the extent of damages does not delay time under a limitation period, under Ontario’s no‑fault insurance scheme at the time of the accident the starting point is when the damages are known to comprise “permanent serious impairment” within the meaning of s. 266(1) of the Insurance Act. Section 266 effectively bars actions for recovery in tort unless a certain level of physical injury, permanent in nature and entailing serious impairment of an important bodily function, is met. The right of action referred to in s. 206(1) of the Highway Traffic Act must mean an action that is not excluded by s. 266(1) of the Insurance Act. This view is strengthened by s. 266(3), which allows for a pre‑trial motion on the issue of the existence of a cause of action. Under s. 206(1) of the Highway Traffic Act, there is no cause of action until the injury meets the statutory exceptions to liability immunity. The discoverability principle applies to avoid the injustice of precluding an action before the person is able to sue. Time under s. 206(1) does not begin to run until it is reasonably discoverable that the injury meets the threshold of s. 266(1). While the respondents knew of some injury, they did not know prior to June 1993 that the damage MP sustained as a result of the first accident was a herniated disc, and it cannot be said that they ought to have discovered the serious nature of the damage earlier. As the action was started within two years of the time when they first learned that they had a cause of action, it is not statute‑barred...."

"...15 There is one issue in this appeal. The question is whether the discoverability rule applies to the limitation period in s. 206(1) HTA. Included in a consideration of this question are issues related to the implementation of the province of Ontario’s no-fault insurance scheme and rationales behind limitation periods such as s. 206(1) HTA as it existed in 1990...."

"...34 Short limitation periods indicate that the legislature put a premium on their function as a statute of repose. This is one of the three rationales which serve society and the courts’ continued interest in maintaining the respect of these statutes. Whatever interest a defendant may have in the universal application of a limitation period must be balanced against the concerns of fairness to the plaintiff who was unaware that his injuries met the conditions precedent to commencing an action: Murphy v. Welsh, supra; M. (K.) v. M. (H.), 1992 CanLII 31 (S.C.C.), [1992] 3 S.C.R. 6. All the rationales were set out in M. (K.) v. M. (H.), where this Court considered the Limitations Act, R.S.O. 1980, c. 240 (now R.S.O. 1990, c. L.15), in order to determine the time of accrual of the cause of action in a manner consistent with its purposes (at pp. 29-30):

There are three, and they may be described as the certainty, evidentiary, and diligence rationales. . . .

Statutes of limitations have long been said to be statutes of repose. . . . The reasoning is straightforward enough. There comes a time, it is said, when a potential defendant should be secure in his reasonable expectation that he will not be held to account for ancient obligations. . . .

The second rationale is evidentiary and concerns the desire to foreclose claims based on stale evidence. Once the limitation period has lapsed, the potential defendant should no longer be concerned about the preservation of evidence relevant to the claim. . . .

Finally, plaintiffs are expected to act diligently and not “sleep on their rights”; statutes of limitation are an incentive for plaintiffs to bring suit in a timely fashion...."

"...37 In this regard, I adopt Twaddle J.A.’s statement in Fehr v. Jacob (1993), 14 C.C.L.T. (2d) 200 (Man. C.A.), at p. 206, that the discoverability rule is an interpretive tool for the construing of limitations statutes which ought to be considered each time a limitations provision is in issue:

In my opinion, the judge-made discoverability rule is nothing more than a rule of construction. Whenever a statute requires an action to be commenced within a specified time from the happening of a specific event, the statutory language must be construed. When time runs from “the accrual of the cause of action” or from some other event which can be construed as occurring only when the injured party has knowledge of the injury sustained, the judge-made discoverability rule applies. But, when time runs from an event which clearly occurs without regard to the injured party’s knowledge, the judge-made discoverability rule may not extend the period the legislature has prescribed..."

"...43 As a matter of law, I do not think that the existence of a cause of action was reasonably discoverable until the respondents learned that Mr. Peixeiro had a herniated disc. Therefore, the respondents’ action is not statute-barred, as it was started within two years of the time when they first learned that they had a cause of action...."

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