Thursday, January 22, 2009

Limitation Period: Special Circumstances

"...[2] Through inadvertence, plaintiff’s counsel failed to issue a statement of claim
within the limitation period provided under the new Act. On a motion to determine as a
question of law whether the claim was statute-barred, the motion judge applied the
common law doctrine of special circumstances, and to exercise his discretion to extend
the limitation period. The issue raised by this appeal is whether that doctrine continues to
apply under the new Act.

[4] The plaintiff’s lawyer used a tickler system to record upcoming limitation periods
and correctly diarized this action. The lawyer drafted the claim and left instructions for
his assistant to have the claim issued before September 5, 2006. The assistant was away
on vacation the week of September 4, 2006. The lawyer believed the claim had been
issued, but the assistant, believing the six-year limitation period prescribed by the former
Limitations Act, R.S.O. 1990, c. L.15 (the “former Act”), continued to apply, did not
issue the claim before going on vacation.

[5] When the lawyer later learned of the error, he forwarded the draft claim to the
defendant on October 31, 2006 and issued the claim the same day. He advised the
defendant on November 2, 2006 that, through inadvertence, the claim had not been issued
until October 31, 2006. A copy of the issued claim was sent to the defendant on
November 28, 2006 and formally served on January 30, 2007.

The motion judge found that special circumstances existed where there was inadvertence
on the part of the plaintiff’s lawyer and no prejudice to the defendant.

1 These cases are: St Denis v. TD Insurance Home and Auto liberty Insurance Co of Canada (2005), 80 O.R. (3d) 76
(S.C.J.); Doyley v. York Condominium Corp. No. 487 (2006), 82 O.R. (3d) 629 (S.C.J.); Munshaw v. Economical
Mutual Insurance Co. (2007), 84 O.R. (3d) 785 (S.C.J.).


[7] The issue raised by this appeal is whether courts continue to have a discretion
under the new Act to extend a limitation period and allow a claim to be commenced afterthe period has expired by applying the doctrine of special circumstances.

[12] ...following the line of cases that began with Basarsky v. Quinlan, these rules have been interpreted to allow a court to add or substitute a party or to add a cause of action after the expiry of a limitation period where special circumstances exist, unless the change would cause prejudice that could not be compensated for with either costs or an adjournment: see e.g. Mazzuca v. Silvercreek Pharmacy Ltd. (2001), 56 O.R. (3d) 768 (C.A.).

[21] Turning to the interpretation of s. 20 in the context of the common law doctrine of
special circumstances, the requirement in s. 20 that the extension must be “by or under
another Act” clearly precludes any extension that may be granted at common law as
opposed to statute.

[22] However, the extension need not be provided only “by” an Act but can also be
provided “under” an Act. The Rules of Civil Procedure are enacted by the Civil Rules
Committee under the authority of s. 66 of the Courts of Justice Act, R.S.O. 1990, c. C.43.
Although the Rules are permitted to alter the substantive law in matters relating to
practice and procedure, s. 66(3) provides that the Rules may not conflict with an Act.

[23] In accordance with s. 66(3), rules 5.04 and 26.01 must not conflict with the new
Act, or with the former Act. These rules apply to the amendment of pleadings and the
addition of parties at any stage of proceedings. They do not by their terms apply to extend
the statutory limitation periods provided in the new Act, nor could they. But they have
been used for that purpose through the application of the common law doctrine of special

[27] I conclude that s. 20 does not refer to the extension of a limitation period under the
new Act through the application of the common law doctrine of special circumstances to
the Rules of Civil Procedure. Rules 5.04(2) and 26.01 must now be applied giving effect
to the new Act.

[28] In that regard, I add for the sake of completeness that the decision of the motion
judge, which followed a line of cases in the Superior Court where extensions were
granted that did not involve any amendment of or addition to an existing action, was an
error of law even had the doctrine of special circumstances applied. Both the common
law doctrine from Basarsky v. Quinlan and the Rules of Civil Procedure contemplate
only the power to amend or add a claim or party to an existing action. They did not give
the court the authority to allow an action to be commenced after the expiry of a limitation

[29] For these reasons, I would allow the appeal and make an order declaring the action
statute barred, with costs of the motion and of the appeal to the appellant, fixed in the
amount of $5,000, inclusive of G.S.T. and disbursements..."

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