Source: https://www.hughesamys.com/blawg/blawg-post/blog/2019/01/31/ont.-c.a.-allows-appeal-from-ont.-div'l.-ct.-judge-and-finds-action-not-limitation-barred-based-on-the-question-of-whether-a-legal-proceeding-was-an-appropriate-remedy
Timestamp: 2019-04-19 14:20:25+00:00

Document:
Further to the previous Blawg post, pasted below, the Ontario Court of Appeal, in the now-titled Presley v. Van Dusen, a decision released on January 30th, 2019, set aside the finding that this action for negligent design, installation, approval and inspection of a septic system was limitation-barred. The Court found the lower courts erred in not considering whether an action was an appropriate remedy, and then went on to find that it was appropriate for the plaintiff to have delayed bringing a proceeding, holding that "reliance on superior knowledge and expertise sufficient to delay commencing proceedings is not restricted to strictly professional relationships", and remitted the matter to the Small Claims Court for determination on the merits against both defendants.
The Court noted that the central issue before it was "whether the trial judge and the Divisional Court judge on appeal... failed to conduct a proper analysis under s. 5(1)(a)(iv) of the Limitations Act of when, having regard to the nature of the injury, loss or damage, the appellants knew or should have known that a legal proceeding would be an appropriate means to seek to remedy it".
 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).
 This court has repeatedly held that consideration of when a proceeding was an appropriate means to remedy a claim is an essential element in the discoverability analysis and that failure to consider s. 5(1)(a)(iv) is an error of law: Gillham v. Lake of Bays (Township), 2018 ONCA 667, 425 D.L.R. (4th) 178, at paras. 33-34; Kudwah v. Centennial Apartments, 2012 ONCA 777, at paras. 1-2; Har Jo Management Services Canada Ltd. v. York (Regional Municipality), 2018 ONCA 469, 91 R.P.R. (5th) 1, at paras. 21 and 35.
 As neither the trial judge nor the Divisional Court judge considered the application of s. 5(1)(a)(iv), it is appropriate for this court to do so.
(2) Was it appropriate for the appellants to delay bringing an action against the respondent Van Dusen?
 Subsection 5(1)(a)(iv) serves to deter needless litigation: 407 ETR Concession Co. v. Day, 2016 ONCA 709, 133 O.R. (3d) 762, at para. 48, leave to appeal refused,  S.C.C.A. No. 509. If a legal proceeding is inappropriate, the start date for the commencement of the limitation period is postponed beyond the date on which the constitutive elements of the claim are discovered: Presidential MSH Corp. v. Marr, Foster & Co. LLP, 2017 ONCA 325, 135 O.R. (3d) 321, at paras. 17-18.
 In Presidential MSH, which I note, in fairness to the trial judge, was decided after the trial in this case, Pardu J.A. reviewed the jurisprudence and distilled and extracted two guiding principles on the effect of assistance by a defendant to eliminate the loss.
[A] legal proceeding against an expert professional may not be appropriate if the claim arose out of the professional’s alleged wrongdoing but may be resolved by the professional himself or herself without recourse to the courts, rendering the proceeding unnecessary.
Resort to legal action may be “inappropriate” in cases where the plaintiff is relying on the superior knowledge and expertise of the defendant, which often, although not exclusively, occurs in a professional relationship. Conversely, the mere existence of such a relationship may not be enough to render legal proceedings inappropriate, particularly where the defendant, to the knowledge of the plaintiff, is not engaged in good faith efforts to right the wrong it caused. The defendant’s ameliorative efforts and the plaintiff’s reasonable reliance on such efforts to remedy its loss are what may render the proceeding premature.
 These principles are applicable to the facts of this case. Van Dusen is licenced to install septic systems. The appellants contracted with him because of his special training and expertise. While the respondents argue he may not qualify as “an expert professional”, there can be no question he did have expertise upon which the appellants reasonably relied.
 Moreover, reliance on superior knowledge and expertise sufficient to delay commencing proceedings is not restricted to strictly professional relationships: Presidential, at para. 26. I acknowledge that the previous cases where this court has made a finding that it was reasonable for the plaintiff to rely on the defendant’s superior knowledge and expertise have concerned defendants belonging to traditional expert professions. For instance, Brown v. Baum, 2016 ONCA 325, 397 D.L.R. (4th) 161, involved a physician, Chelli-Greco v. Rizk, 2016 ONCA 489, involved a dentist, and Presidential MSH involved an accountant. However, recent Superior Court decisions have applied the superior knowledge and expertise prong of Presidential MSH to persons who are members of non-traditional professions or who are not professionals at all. For instance, in YESCO Franchising LLC v. 2261116 Ontario Inc., 2017 ONSC 4273, the court found that s. 5(1)(a)(iv) applied in a franchisor-franchisee relationship where the franchisees relied on the franchisor’s superior knowledge and expertise, even though the franchisor was not a member of an expert profession. Similarly, in Barrs v. Trapeze Capital Corp., 2017 ONSC 5466, aff’d 2019 ONSC 67 (Div. Ct.), the Superior Court and the Divisional Court found that s. 5(1)(a)(iv) applied to investors who relied on the superior knowledge and expertise of their investment portfolio managers.
 Van Dusen initially attempted to fix the problem with the appellants’ septic system by replacing a pump. He then assured the appellants that the problem could be remedied with a load of sand. He also assured them that he would attend at their property to fix the problem. While the appellants might be criticized for not being more insistent that Van Dusen fulfill this assurance more promptly, the evidence establishes 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 Van Dusen’s assurances. These assurances 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. Section 5(1)(b) is satisfied.
 I do not agree with the contention that there was no evidence to rebut the presumption under s. 5(2). The threshold to displace the presumption in s. 5(2) is relatively low: Miaskowski v. Persaud, 2015 ONCA 758, 393 D.L.R. (4th) 237, at para. 28. The appellant Frederick testified as to what Van Dusen told him and that he relied on Van Dusen’s assurance that the problem with the septic system was readily fixable and that Van Dusen would fix it. The trial judge did not consider this evidence and did not consider the s. 5(1)(a)(iv) factor when applying the s. 5(2) presumption. As the evidence of the appellant Frederick was uncontradicted, I consider that it is sufficient to rebut the presumption under s. 5(2).
 The situation here is distinguishable from that in Sampson v. Empire (Binbrook Estates) Ltd, 2016 ONSC 5730, where the court held that ongoing communications, investigations or negotiations do not postpone the commencement of the limitation period. That principle applies where it is known that legal proceedings are appropriate and the issue is whether or not the claim can be settled. In cases like this one that fall under s. 5(1)(a)(iv), the plaintiffs were making efforts not to settle a known claim but rather to remedy the problem so as to make a claim and litigation unnecessary. Moreover, I agree with the appellants that the statement in Sampson, at para. 44, that “[t]he fact that a defendant assists in attempting to rectify a problem does not postpone the running of the limitation period” must now be read in the light of Presidential MSH and the other cases I have discussed dealing with s. 5(1)(a)(iv).
 In my view, the facts of this case bring it within the category of cases contemplated by s. 5(1)(a)(iv). I am satisfied that in the circumstances of this case, the appellants did not know, and that, as required under s. 5(1)(b), a person in their situation would not reasonably have known, that a proceeding would be an appropriate means to seek a remedy until, at the earliest, the winter of 2014. There is evidence they still reasonably expected Van Dusen to come up to this point. There were discussions in the spring of 2014 regarding excessive mud that prevented Van Dusen from doing the remedial work, and in the winter of 2014 the appellants ploughed snow to give Van Dusen access.
 As the action against Van Dusen was commenced in August 2015, it was well within the prescribed two-year period and was not statute barred.
(3) Was it appropriate for the appellants to delay bringing an action against the respondent Health Unit?
 The Heath Unit submits that, as the appellants had no communications with the Health Unit until the spring of 2015 and the Health Unit was not engaging in any ameliorative efforts, the s. 5(1)(a)(iv) analysis of the timing of a claim against Van Dusen has no application to the appellants’ claim against it. The Health Unit argues that Presidential MSH makes it clear that ameliorative efforts only delay the running of the limitation period against the potential wrongdoer who is performing them, not against other potential wrongdoers.
 I disagree. Under the Limitations Act, the discoverability issue is decided on the basis of what the plaintiff knew or ought to have known. It is not decided on the basis of fault or who is responsible for any gap in the plaintiff’s knowledge. I have found that the appellants did not know that a proceeding against Van Dusen was an appropriate remedy until the spring. If a proceeding against Van Dusen was not appropriate until the appellants realized that the problem with their septic system was more serious than Van Dusen had led them to believe and that he was unwilling or unable to fix it, I fail to see how they could have known that a proceeding was appropriate against the Health Unit at an earlier date. Presidential MSH does not assist the Health Unit because it concerned only a single potential wrongdoer who was performing ameliorative efforts. Pardu J.A. did not make any pronouncement about a situation involving multiple potential wrongdoers where only one of them was performing ameliorative efforts, as this situation was not before her.
 This interpretation is consistent with the purpose of s. 5(1)(a)(iv) this court identified in 407 ETR, at para. 48, namely to deter needless litigation. The interpretation the respondent Health Unit urges upon us would encourage needless litigation. On the Health Unit’s interpretation, in order to avoid having their claim be limitations-barred, the appellants would have had to commence a claim against the Health Unit at a time when they reasonably believed that the problem was readily fixable and Van Dusen was going to fix it.
 The situation in this case is distinguishable from the case in which a plaintiff argues that an ongoing legal proceeding against one defendant for a particular wrong makes it inappropriate to commence a legal proceeding against another defendant for the same wrong. In Tapak v. Non-Marine Underwriters, Lloyd's of London, 2018 ONCA 168, 76 C.C.L.I. (5th) 197, leave to appeal refused,  S.C.C.A. No. 157, this court held that “s. 5(1)(a)(iv) is not intended to be used to parse claims as between different defendants and thus permit one defendant to be pursued before turning to another defendant”: para. 13. In my view, the principle in Tapak does not apply here because the appellants do not assert that it was appropriate for them to delay an action against the respondent Health Unit until they pursued legal claims against the respondent Van Dusen. Instead, the appellants argue that it was appropriate for them to delay bringing a claim against the Health Unit until it became clear that Van Dusen would not fix a problem he described as readily fixable. Once it became clear that Van Dusen could not or would not fix the problem, it was appropriate for the appellants to bring a claim against both Van Dusen and the Health Unit. The appellants added the respondent Health Unit within the two-year period that I have found commenced in winter 2014. Accordingly, the claim against the Health Unit is not limitations barred.
In Frederick v. Van Dusen, a claim against the installer and the Leeds, Grenville and Lanark District Health Unit for the alleged premature failure of the plaintiffs' residential septic system, Ontario Superior Court Justice Bell, sitting as a single judge of the Divisional Court, upheld the dismissal of this Small Claims Court action as limitation-barred.
Her Honour held that since the Deputy Judge found the plaintiffs knew they had a claim in the Spring of 2013, it was not necessary for the judge to make an explicit finding whether a proceeding was an appropriate remedy.
Her Honour also refused leave to appeal from the costs order.
 The Deputy Judge found that the cause of action was discoverable in the spring of 2013. Relying on subsections 5(2) and 5(1)(b) of the Act, the Deputy Judge dismissed Mr. Frederick’s and Ms. Presley’s claim. Costs were awarded to Mr. Van Dusen and the Health Unit.
 The issue on the appeal is whether the Deputy Judge erred in not making an explicit finding pursuant to subsection 5(1)(a)(iv) of the Act as to whether a proceeding was an appropriate remedy in the spring of 2013. Mr. Frederick and Ms. Presley have not appealed the finding by the Deputy Judge that they were aware a loss had occurred in the spring of 2013.
 Mr. Van Dusen seeks leave to appeal the costs award against Mr. Frederick and Ms. Presley. The motion for leave and the merits of the proposed cross-appeal were argued together.
 For the following reasons, I find that the Deputy Judge applied the correct legal principles in determining that the claim is statute-barred. I also find that the test for granting leave to appeal the award of costs has not been met in this case.
 Subsection 5(1) provides that a claim is discovered on the earlier of the day on which the plaintiff first knew of the matters set out in subsection 5(1)(a) and the day on which a reasonable person with the abilities and in the circumstances of the plaintiff ought to have known of the matters referred to in subsection 5(1)(a). The Deputy Judge found that the date on which the reasonable person with the abilities and in the circumstances of Mr. Frederick ought to have known of the matters set out in subsection 5(1)(a) was the spring of 2013. Having made this determination under subsection 5(1)(b) of the Act, there was no requirement for the Deputy Judge to make an explicit finding as to what Mr. Frederick and Ms. Presley actually knew in relation to subsection 5(1)(a)(iv).
 In determining that the date under subsection 5(1)(b) of the Act was the spring of 2013, the Deputy Judge considered Mr. Frederick’s and Ms. Presley’s circumstances. The Deputy Judge noted that “the onus in this case is on the plaintiff to establish his reasonableness.… It is not up to the defendants to raise the extent of his knowledge rather it is up to the plaintiffs to have established the requirements under Section 5.” Apart from “some general knowledge” as to the reasonableness of Mr. Frederick’s actions, there was no evidence as to what his circumstances were in terms of the extent of his knowledge. I find no error by the Deputy Judge in this regard.
 The Deputy Judge also considered and applied subsection 5(2) of the Act. The presumption in subsection 5(2) provides that a person with a claim shall be presumed to have known of the matters referred to in subsection 5(1)(a) on the day the act or omission on which the claim is based took place, unless the contrary is proved. Mr. Frederick and Ms. Presley bore the onus of leading evidence to displace the statutory presumption of the date on which they discovered their claim against Mr. Van Dusen and the Health Unit.
 The threshold to displace the statutory presumption in subsection 5(2) is relatively low; in this case, Mr. Frederick and Ms. Presley were required to show that they could not, through reasonable diligence, have discovered their claim on the day the act or omission on which the claim is based took place (Miaskowski (Litigation guardian of) v. Persaud, 2015 ONCA 758, at paras. 27-28).
 The Deputy Judge considered the statutory presumption and determined that Mr. Frederick and Ms. Presley had not produced sufficient evidence to satisfy the court that the presumption did not apply. In light of this determination, the Deputy Judge concluded that in the spring of 2013, “the plaintiff in this case is presumed to have known of all those matters referred to [in subsection] 5(1)(a).” In my view, the Deputy Judge’s decision in relation to subsection 5(2) is also correct.
 Although three expert reports were prepared, none were tendered at trial and they were not used on the motion.
 The Deputy Judge concluded that $750 is a fair and reasonable amount for a representation fee payable by the plaintiff to each of the defendants. The Deputy Judge then considered the offers of settlement and doubled the representation fee for each defendant to $1,500.
 The Deputy Judge allowed only a partial recovery of the experts’ reports, finding that only 25 per cent of the reports were used in relation to the defence of the claim. With respect to the expert report obtained by Mr. Van Dusen, the Deputy Judge allowed the amount of $1,410.
 Awards of costs, while a matter of judicial discretion, can be reviewed by an appellate court on the basis that the award is made on a wrong principle, on a misapprehension of significant facts, or in a non-judicial manner. The party seeking leave to appeal an order for costs faces a heavy onus requiring strong grounds. Leave to appeal will be granted if (a) the discretion is not exercised on the facts of the case; (b) the discretion is exercised on facts wholly unconnected with the cause of action; or (c) the judgment has proceeded on some erroneous principle (Johanns v. Fulford, 2011 ONSC 5268, at para. 2, citing Children’s Aid Society of Niagara Region v. D.(W.) (2005), 15 R.F.L. (6th) 117 (Ont. Div. Ct.), at para. 12).
 Leave to appeal a costs order should be granted sparingly. In addition to an error in principle or an award that is clearly wrong, the proposed appeal should raise an issue of some importance to the administration of justice that goes beyond the interests of the parties (Bougadis Chang LLP v. 1231238 Ontario Inc., 2012 ONSC 6409, at para. 2).
appeal does not raise an issue of importance to the administration of justice that goes beyond the interests of the parties.
 The appeal is dismissed. The motion by Mr. Van Dusen for leave to appeal the costs award is also dismissed.

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