International Law

Court Reverses Master’s Finding of “Special Circumstances” (But No Mention of s. 21(1) of Limitations Act, 2002)

Regular readers will remember numerous prior posts in which we have puzzled over the fact that despite the 2004 enactment of the Limitations Act, 2002, so many cases are still being argued on the basis of the common law power to add parties after the expiry of a limitation period, where ”special circumstances” are found to exist.

Ioannou v. Evans is another such case. Mr. Justice Paul Perell allowed an appeal from a decision of Master Birnbaum, in which the Master had granted leave to the plaintiffs, in October, 2007, to add Honda Canada as a defendant in an action arising out of a 1999 motor vehicle accident. Perell J. ruled that special circumstances were not present. But no reference was made, in either decision, to s. 21(1) of the Limitations Act, 2002, which says:

If a limitation period in respect of a claim against a person has expired, the claim shall not be pursued by adding the person as a party to any existing proceeding.

It has been held in several 2007 decisions, that s. 21(1) has done away with the former power to add defendants on the basis of “special circumstances”: see for example, our post here.

But there have also been a number of cases, of which Ioannou is one, in which the courts have assumed that the “special circumstances” power still exists. In virtually all of those decisions, no mention has been made of s. 21(1).

(Actually, the one decision of which that is not true, to our knowledge, is one of our own cases. In Clarke v. Reich, released November 2, 2007, Madam Justice Pardu said, “despite the apparently unequivocal language of s. 21(2) [sic, should read “s. 21(1)”] of the Limitations Act, 2002, I am not persuaded that it is ‘plain and obvious’ that there could never be a discretionary extension of the Trustee Act time limit because of special circumstances”. However, Justice Pardu also mentioned, in the course of argument, that it would be desirable that this issue be resolved by an appellate court. We have brought a motion for leave to appeal her decision to the Divisional Court. That motion is to be heard at the end of this month.)

But back to today’s ruling. The facts are not unusual. The action arose out of a 1999 motor vehicle accident. The police report incorrectly indicated that the defendant was the owner of the vehicle that he had been driving. In fact, the vehicle had been leased and was owned by Honda Canada Finance Inc.

In mistaken reliance upon the information in the police report, the plaintiffs’ solicitor did not name Honda as a defendant when commencing action on behalf of the plaintiffs. The plaintiffs later changed solicitors and the new lawyer discovered the error. An action was commenced against the original solicitor, for the failure to name Honda as a defendant within the limitation period and the plaintiffs moved to add Honda as a defendant.

Master Birnbaum held that special circumstances and an absence of prejudice warranted the addition of Honda as a defendant, despite the expiry of the limitation period. Of particular importance to her ruling was the fact that Honda had been made aware of the accident shortly afterwards. It was foreseeable to Honda, that a personal injury claim could result from the accident and had it chosen to do so, Honda could have investigated further.

On appeal to Justice Perell, His Honour took a more restrictive view of what constituted “special circumstances”. (He deferred to the Master’s decision, that there was an absence of prejudice, although Perell J. had some reservations about this issue.) But he held that “special circumstances” had not been shown and he allowed the appeal from Master Birnbaum’s decision.

The essence of Justice Perell’s analysis of “special circumstances” is found in the following excerpt:

If I am correct that special circumstances are those facts that make it in the interests of justice to displace the defendant?s entitlement to rely upon a limitation period defence, then, in my opinion, the meager facts in the case at bar that favour allowing the amendment are overmatched by other facts. Those facts include the circumstance that the rudimentary and handy step of a licence plate search was not performed and the plaintiffs? lawyer overlooked information disclosing Honda?s interest in the matter. Information identifying Honda was provided to the Plaintiffs? lawyer about 16 months after the commencement of the actions, but nothing was done until new lawyers became involved and they notified Honda of Ms. Ioannou?s and Mr. Landry?s actions. This notice came almost eight years after the accident and almost six years after the limitation period for their actions against Honda had expired. And there also is the circumstance that if a mistake was made in failing to join Honda at the outset or more promptly, then the plaintiffs have the resource of their negligence action against their lawyer.

How s. 21(1) of the Limitations Act, 2002 fits into this picture will have to be decided elsewhere.

Full post as published by Cavanagh Williams on January 10, 2008 (boomark / email).