Jul 2, 2020

Uncertainty about the Right Legal Forum Creates a Pitfall under the Limitations Act

Beniuk v. Leamington (Municipality), 2020 ONCA 238 (CanLII)

In most types of cases, a legal claim for damages must be commenced within two years after the event. The Limitations Act, 2002 bars the commencement of any claim after that, but makes exceptions in some cases. Sometimes a plaintiff who depends on one of those exceptions will be disappointed.

That happened with the plaintiffs in this case. The Beniuks wanted to sue their town because truck traffic was causing damage to their house. The problem is that some kinds of claims have their own specialized tribunals. In this case, the plaintiffs operated under the belief that their claim belonged in front of the Ontario Municipal Board (“OMB”) rather than a regular court. It turns out that the OMB disagreed. Then, when they attempted to go to court, the judge told them that it was too late because the two-year limitation period had expired.

One of the exceptions to the general rule in the Limitations Act, 2002 is that the two-year period only starts on the date that a reasonable plaintiff could have discovered that a legal proceeding “would be an appropriate means to seek to remedy it.” The debate about the date when this was discoverable can create no end of problems.

The Court of Appeal has Become Stricter on Discoverability

In some cases a few years ago, the Ontario Court of Appeal took quite a lenient approach to that question in a situation where the plaintiff was waiting for another decision from a different adjudicator, before requiring the plaintiff to go to civil court. As I noted in a commentary on Sosnowski v. MacEwen Petroleum Inc., 2019 ONCA, more recent decisions are trending in the opposite direction.

In the Sosnowski case, the plaintiff had been fired from his job and charged with a criminal offence (theft from his employer). After he had successfully appealed against the criminal charge, he wanted to sue his former employer for wrongful dismissal. The Court of Appeal said that the limitation period had expired. He should have started his civil claim even before he knew the outcome of the criminal appeal.

In the Beniuk case under discussion here, the plaintiffs were concerned that the narrow rural road that ran beside their property, originally a farm track, was incapable of supporting the heavy truck traffic that was now using it. They believed that the vibrations from this traffic was damaging their house.

They wanted to sue the town for what is known as “injurious affection.” This is a legal principle that the government is liable if a public work causes damage that reduces the value of adjacent property. It is analogous to expropriation, but without actually buying the property. Ontario law is clear that injurious affection cases must go to a specialized tribunal rather than to court. At the relevant time, it was called the OMB (since then renamed as the LPAT).

The Beniuks’ legal advisers probably believed that the claim involved injurious affection. There is typically a legal grey area about such questions. The OMB/LPAT is also advantageous as it takes a generous approach to costs awards to plaintiffs, sometimes awarding them their legal costs even if their claim fails.

The defendant municipality disagreed, and said this fell outside the definition of injurious affection, and the OMB sided with the defendant. The OMB concluded that the claim for damage caused by traffic vibrations that took place long after the road’s construction could not constitute injurious affection. It was a claim about the use of the road, while the OMB took the view that only a complaint about the construction of the road could ground a claim for injurious affection.

The Defendant is Always Right?

Following their setback at the OMB, the Beniuks took a different tack and went to court to sue the town for damage from nuisance and negligence. The judge said they could not, because it was more than two years after the damage was discovered. Moreover, the judge noted that the defendants had warned the plaintiffs that they were going to the wrong forum in proceeding at the OMB, and so they could not argue that they had not discovered that they should go to court. On this issue, the Court of Appeal upheld the decision of the motion judge:

[63] The fact that a plaintiff chooses to pursue an alternative process does not in itself suspend the running of the limitation period under s. 5(1)(a)(iv). Whether an alternative process will have this effect will depend on the particular factual circumstances and the evidence before the court in determining the limitations issue. In this case, there was no evidence to explain why the appellants chose to pursue the OMB route rather than commencing both an OMB proceeding and a civil action.

[69] In the present case, counsel presumably thought that the appellants’ claim was a case for injurious affection and therefore pursued it before the OMB. However, the appellants were on notice that the Municipality challenged the jurisdiction of the OMB to determine their claim when, on January 5, 2010, they received the Municipality’s Reply pleading that this was not a claim for injurious affection.

The problem is that the court’s position in the latter paragraph creates a catch-22 problem for the plaintiff. The municipality said that the OMB was the wrong forum, but the municipality had a self-serving reason for saying that. The municipality might have been wrong. In this case, as it turned out, the municipality was right, as the OMB agreed with it. Nobody could predict that with certainty in advance. Nevertheless, from now on, in this type of situation, it appears that plaintiffs will have to act as if the defendant is always right.

The Court of Appeal’s Decision Will Increase Legal Costs

It appears that, in most situations where the defendant challenges the choice of forum, it puts the plaintiff on notice, and the limitation period will start to run. The plaintiff is not entitled to wait and see whether the defendant is right about its challenge or not. This issue can arise in many different places, as Ontario is replete with specialized tribunals. For example, in some types of claims where a union member claims damages against a union, he or she must go to the Ontario Labour Relations Board, while in other cases the claim would be heard in court. It is not always easy to decide where the claim belongs.

The plaintiff may genuinely believe that the specialized tribunal is the right one (and may prefer it because it is usually cheaper than going to court). However, prudence will require the plaintiff to incur the extra cost of filing a statement of claim in court at the same time, just in case it turns out that the board or tribunal rules that it lacks jurisdiction. Therefore, decisions such as the one in Beniuk will have the effect of increasing legal costs for people who face this type of uncertainty about what is the appropriate legal forum for their case.

This article is intended as general information, and may not be applicable to your particular case. Peter Spiro is principal of Spiro Law P.C., http://www.peterspiro.com/