In Ontario, under s. 5(1)(a)(iv) of the Limitations Act, 2002, 5.0. 2002, c.24, Schedule B (the Act), the two­ year limitation period for most civil lawsuits starts when the plaintiff knows that an action would be an "appropriate means" to remedy their loss. 

Over the past seven years, Ontario courts have sought to define the meaning of "appropriate" under s. 5(1)(a)(iv). 

A recent decision of the Ontario Court of Appeal, Dass v. Kay, 2021 ONCA 565, addresses the issue of whether an action is "appropriate" where the plaintiff may or may not understand the likelihood of success. 

An action for reputational and commercial harm

Dass arose out of an action by the plaintiff for reputational and commercial harm caused by the defendant's allegedly unauthorized use of the plaintiff's personal information in a loan application. The loan application resulted in the plaintiff's commercial lender refusing to do business with him. 

In 2015, the defendant mortgage broker was asked by the plaintiff's brother (the brother) to secure financing for the $6 million purchase of a commercial property. The loan application listed the plaintiff and his company as guarantors. It was ultimately unsuccessful. In fact, the plaintiff knew nothing about the loan application. He never agreed to guarantee it and was in no way involved with the property's purchase. 
The plaintiff first learned of the unauthorized loan application in July 2015, when he sought financing for the purchase of a commercial property. That application was declined. 

On Aug. 21, 2015, after being rejected for his loan application, the plaintiff sent an e-mail to his lawyer, copying the defendant mortgage broker, and complaining that the previous unauthorized loan application by his brother harmed his reputation in the eyes of the lender. He expressed concern that he could lose business and he asked his lawyer if he could pursue criminal charges against his brother and the defendant broker. 

In January, 2018, after the plaintiff secured financing for his projects through other lenders at significantly higher interest rates, the plaintiff was advised by the lenders that he had been rejected by the lenders because of his brother's loan application. 

The plaintiff started his action against the defendants in April, 2018, a few months after the lenders advised him of his status with them, but more than two years after the plaintiff had sent the August, 2015 e-mail to his lawyers. 

The defendants brought a motion to have the plaintiff's claim dismissed on the basis that it was statute-barred. The motion judge dismissed the action, holding that the plaintiff learned of the unauthorized use of his information by August, 2015, as evidenced by his e-mail. The claim was not started until April 2018, and so was outside Ontario's two-year limitation period. 

On appeal to the Court of Appeal, the court affirmed the motion judge's order.

When is an action 'appropriate'? 

Under s. 5 of the Act, a plaintiff discovers a claim on the earlier of: 

(a) the day on which the person with the claim first knew,

(i) that the injury, loss or damage had occurred,
(ii) that the injury, loss or damage was caused by or contributed to by an act or omission,
(iii) that the act or omission was that of the person against whom the claim is made, and
(iv) that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it; and

(b) the day on which a reasonable person with the abilities and in the circumstances of the person with the claim first ought to have known of the matters referred to in clause (a).

The issue of whether an action is appropriate under ss. S(l)(a)(iv) depends on the "factual and statutory context" of each case: Sosnowski v. MacEwan Petroleum Inc. 2019 ONCA 1005. 

In previous caselaw, the Court of Appeal already recognized two situations in which the limitations clock is postponed because an action is not yet "appropriate": 

i. when the plaintiff relies on the defendant's superior knowledge and expertise, especially where the defendant tries to improve the plaintiff's loss; and
ii. where an alternative dispute resolution process offers an adequate remedy and is still ongoing: Sonowski, supra.

This list is not closed. 

In Dass, the plaintiff tried to create a third category under s.S(l)(a)(iv). 

The plaintiff argued that their action was not appropriate until 2018 because, among other things, it was not until then that he learned he was permanently rejected from the lender as a result of the unauthorized financial transaction. 

The prospect of success does not an appropriate action make 

The Court of Appeal rejected the plaintiff's position: 

The Appellants argue that the motion judge erred by rejecting the proposition that an assessment of the appropriateness of litigation, within the meaning of s.S(l)(a)(iv), includes an assessment of the prospect of the success of litigation, particularly where the party has relied on an assessment of merits by legal counsel. 

...

What the appellants have proposed is, in effect, an expansion of the class of matters under s.S(l)(a)(iv) [of the Act] to include any situation where plaintiffs know that they have been wronged or suffered damage at the hands of the defendants, but doubt they will be able to marshal the evidence to prove the claim and are unsure whether the scale of the eventual commercial loss will make an action remunerative.

This proposal has been considered and rejected by courts repeatedly ... 

Don't wait until action is remunerative

The decision in Dass forces plaintiffs to take decisive steps regarding their claim the moment they understand they have suffered loss or damage. 

The refusal in Dass to postpone the running of the limitations clock on the basis that the plaintiff is not yet sure of success at trial reflects an understanding that all litigation has an end-point. A plaintiff must not wait years to gather evidence and assess the merits of their case, in the hope that this will optimize their chances of success. 

While the court in Dass was certainly not encouraging frivolous lawsuits, it was also refusing to make a conceptual link between the ticking of the limitations clock and the prospect of the plaintiff's success.

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