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“Special Circumstances” on the Way Out
Published in the July 2008 issue of Transportation Notes - View Article
The Ontario Court of Appeal has long been one of the foremost champions of judicial rules which have allowed relief from limitation periods. The Court’s conception of the “discoverability” rule (which has now been enshrined in statute law) was very vigorous and often employed to defeat a limitation defence.
Another doctrine which developed at common law, and which was expansively applied in Ontario, was the notorious “special circumstances” rule. As a result of two decisions of the Court of Appeal, released earlier this summer, the sphere of operation of this rule has been narrowed very significantly. Still it is too soon to celebrate its demise.
Before reviewing the two decisions, we begin with a brief description of the common law rule. In 1972, as a result of a decision of the Supreme Court of Canada, Canadian courts were given a discretionary power to allow the amendment of claims and the addition of parties to an existing action, even following the expiry of a limitation period. Some courts had gone so far as to allow the extension of a limitation period, even in the absence of an existing action, on the basis of special circumstances. What should reach the threshold for court intervention has never been very clear, but relief was often given in cases where a party failed to make a particular claim, or name a party, due to the negligence of his solicitors. As the Court of Appeal remarked in one of the recent cases to which we now turn, this led to uncertainty and complaints of unfairness.
The issues recently considered by the Court of Appeal arise because of a fundamental change in the legislation governing limitation periods in Ontario. On January 1, 2004, the Limitations Act came into effect. Previously, provincial limitation periods were prescribed in various Acts which followed no consistent set of rules. The 2004 legislation was intended to be a clean sweep (with some exceptions of course) of the old cobweb which was to be replaced with a single two year basic limitation period.
As is generally the case when a major change in the law occurs, it was necessary to deal with a transition period to allow the introduction of new rules without prejudicing those who might reasonably expect to rely on the old rules. These transition rules will figure in the discussion below.
In the two recent cases, the question was whether the common law doctrine of special circumstances can apply under the new limitations regime. The answer given by the Court is that it cannot, with one exception which relates to the transition rules.
Of the two cases, one arose in a transportation context and the other involved an accident at an amusement park. It will be easier to deal with that latter case first.
In Joseph v. Paramount, the Court was faced with the following scenario: Joseph was injured on September 5, 2004. Thus, the 2004 Act was already in effect. He retained a solicitor who promptly put the defendant on notice. A clerk in the solicitor’s office was instructed to have the action commenced before September 5, 2006, but failed to do so. When the solicitor learned of the error at the end of October, he had the claim issued promptly. However, the two year limitation period had expired. This was ultimately fatal to the claim, but before coming to that conclusion, the Court considered an issue of some subtlety: section 20 of the 2004 Act provides that it does not affect the extension of a limitation period “by or under another Act”. By way of example, the Solicitors Act allows a client to seek review of a lawyer’s bill within 12 months of delivery of the account. It also allows the 12 month period to be extended in “special circumstances”. The 12 month limitation period itself has now been superseded by the general 2 year limitation period of the 2004 Act. However, the statutory extension of the limitation period is preserved by s. 20 of the 2004 Act.
Can similar reasoning save Joseph’s proposed action against Paramount? The first problem is that Joseph cannot rely on a “special circumstances” rule found in a statute. He must rely on the common law. However, there is a possible shift. The common law rule itself was reflected in Rules of Court and these rules are promulgated “under” a statute (the Courts of Justice Act), so perhaps s. 20 of the 2004 Act saves the common law rule! The Court found it “would be extending the meaning of ‘under another Act’ too far to interpret it as including the application of common law principles used to apply the Rules”.
Thus, the outcome of Joseph is clear: if the matter complained of occurred on or after January 1, 2004, the provincial limitation period is two years. There can be no recourse to the general common law special circumstances rule to extend the period.
Although this was enough to determine the case, the Court also used the occasion to point out an error which a number of trial courts have made recently respecting the scope of the special circumstances rule. Properly understood, this rule never did allow the carte blanche extension of a limitation period. It could properly be employed only to allow amendments to an existing claim (including the addition of parties) after the expiry of a limitation period.
That the old common law rule is not dead is established by the second case: Meady v. Greyhound Canada Transportation Corp.
In Meady, a Greyhound bus was involved in an accident in December, 2000. This of course was before the 2004 Act came into effect. A two year limitation period applied and an action was commenced within those two years. Some 6 years later, the plaintiffs decided it would be best to add another defendant to the existing action. This is the classic case in which the common law “special circumstances” rule has been applied. Was it available, and if so should addition of the proposed party be allowed? The Court of Appeal held that the rule was available, but that in the circumstances no relief would be granted..
This result derives from the following considerations. The accident took place before the 2004 Act came into effect and no action had been commenced in which the proposed defendant was a named defendant. Under the transition rules, the result is that the cause of action is governed by the limitations statute in force at the time of the accident. That statute prescribed a two year limitation period, but this older statute was itself subject to the common law special circumstances rule. Accordingly, to determine whether the plaintiffs ought to be entitled to add a defendant at this late date, that rule should be considered. The judge at first instance had considered whether relief would be available under the rule and had determined there were no special circumstances. The Court of Appeal did not disturb this determination. Accordingly, the amendment was not allowed. However, the Court has opened the door to the reintroduction of the rule in another case based on similar facts. This, we believe, is unfortunate.
In the Joseph case, the Court of Appeal showed sensitivity to the purpose of the 2004 Act. It stated that to reintroduce the common law rule “would be contrary to the purpose of the new Act by removing the certainty of its limitation scheme”. With respect, it is submitted that the Court in Meady missed an opportunity to go further and announce the demise of the common law rule. The scope left for the rule is, we submit, unnecessary. The key provision interpreted by the Court is s. 24(3) of the 2004 Act which provides that if “the former limitation period expired before the effective date, no proceeding shall be commenced in respect of the claim”. The former limitation period had expired and no relief should have been allowed. Special circumstances does not prevent a limitation period from expiring, rather it gives relief from the consequences of expiry. Such relief is not consistent with the policy of the 2004 Act. It would have been better if the Court had said so.
Ontario C.A., Dockets C47671 and C47116