Case Comment on Special Circumstances and Limitation Periods

Out with the Old: The Doctrine of Special Circumstances and the Limitations Act, 2002

By: Linda Rondinelli, B.A., LL.B.Project Manager, TVA The Legal Outsourcing Network

...Until the Ontario Court of Appeal’s recent decision in Joseph v. Paramount Canada’s Wonderland (2008), 90 O.R. (3d) 401 (C.A.), many lawyers in Ontario thought they could still rely on the common law doctrine of special circumstances, which gave the Court the discretion to extend a limitation period after its expiration, if special circumstances existed.

The doctrine, which originated with the Supreme Court of Canada’s 1972 decision in Basarsky v. Quinlan, [1972] S.C.R. 380 came to be increasingly applied to motions to add parties (Rule 5.04) and to amend pleadings (Rule 26.01). This allowed parties to argue on a motion that special circumstances existed which should allow the Courts to allow the amendments, add a party, or add a cause of action after the expiry of a limitation period where special circumstances existed, unless prejudice would result that could not be compensated for by costs or an adjournment.
The Court of Appeal in Joseph has unequivocally pronounced that the doctrine no longer applies under the new Limitations Act, 2002 S.O. 2002, c. 24, Sch. B.

The facts in Joseph are enough to send chills down the spine of any civil litigator. The plaintiff, Innez Joseph was injured at Canada’s Wonderland on September 5, 2004. There was no question that the limitation period began to run on that date, and there was also no question that the two year limitation period prescribed by the Limitations Act, 2002 applied. The defendant was notified of the claim less than 3 weeks after the incident, and also received several medical documents regarding the plaintiff’s injuries well within the two year period.

Mr. Joseph’s lawyer properly entered the matter in a “tickler” system, drafted the claim, and instructed his assistant to have the claim issued before September 5, 2006. The assistant was scheduled for vacation the week of September 4, 2006 and, believing the six-year period still applied, left for her vacation without issuing the claim.

When the plaintiff’s lawyer learned of the error, he sent the draft claim to the defendant on October 31, 2006, and issued the claim the same day. He sent a copy of the issued claim on November 28, 2006 and formally served it on January 30, 2007.

All told, the limitation period was missed by less then 2 months. The defendant moved under Rule 21.01 for a ruling on whether the action was statute-barred. The motions judge held that he had the discretion under the doctrine of special circumstances to extend the time to commence the action. The motions judge held that special circumstances existed, as there was inadvertence on the part of the lawyer and no prejudice to the defendant.

The defendant successfully appealed to the Court of Appeal, which held that the action was statute-barred.

The Court of Appeal interpreted the new Limitations Act strictly, and held that there no longer exists the common law discretion to extend limitation periods by applying the doctrine of special circumstances. Section 4 of the Act makes it clear that there is a two-year limitation period unless the Act provides otherwise. Thus, the Court held, it is bound strictly by the wording of the Act. The legislation could have incorporated the common law doctrine of special circumstances in the same way that it codified the discoverability principle, but it did not.

In a concurrent decision released the same day, the Court of Appeal held in Meady v. Greyhound Canada Transportation Corp. (2008), 90 O.R. (3d) 774 (C.A.) that the Courts do retain discretion under the transition provisions of the new Act to extend the former limitation period by applying the common law doctrine of special circumstances.

Master Glustein was the first to apply and follow the Joseph and Meady decisions in Thompson v. Zeldin [2008] O.J. No. 3591, a judgment released on September 17, 2008. In Thompson, the plaintiff’s counsel sought leave to amend the Claim to plead that the defendant failed to obtain informed consent prior to performing surgery, and as such committed battery.

Counsel for the plaintiff submitted that the court did not have to follow Joseph because in Joseph, the claim was brought after the expiry of the two-year limitation period under section 4 of the Limitations Act, whereas in the present case, Thompson sought to add a new claim to an existing action. Secondly, Thompson's counsel submitted that the Court of Appeal in Joseph suggested that the doctrine of special circumstances could apply when a party seeks to amend an existing claim.

Master Glustein rejected both arguments, holding that Joseph stands for the proposition that a new cause of action is to be governed by its own limitation period, and if that new cause of action is subject to the new Limitations Act, the doctrine of special circumstances cannot apply. Thus, the first question that must be answered when an amendment is sought is whether that amendment in fact raises a new cause of action. If it does, then the two-year limitation applies and, following Joseph, the doctrine of special circumstances cannot apply.

These decisions (Joseph in particular) are important for two reasons. Firstly, and most obvious, they are important because they have eliminated in most circumstances the application of a long-recognized and often crucial common law doctrine that has been applied consistently for over 30 years. Secondly, they remind us of the importance of communicating with all members of the firm, including non-lawyers, regarding important limitation periods and other changes in the law that could have an effect on how files are managed internally....

Created: October, 2008