 |
The Perils of “Litigation Guardians” under the Limitations Act, 2002
By R. Lee Akazaki
Civil Litigation , OBA Civil Litigation Section, Vol. 15, No. 3, Spring, 2007
The day will come when Ontario’s civil litigators stop having to pull out their hair trying to make sense of the “transitional” operation of the Limitations Act, 2002, proclaimed in force on January 1, 2004 (the “Act”). Alas, not yet. According to a recent Ontario Superior Court decision, Montcalm v. Trillium Health Care Centre, [2006] O.J. No. 3872 (Ont. Master), the interaction of sections 7 and 24 of the Act has placed at risk the rights of some of the most vulnerable in our society, including minors and mental incompetents. The trap appears in instances where a self-appointed litigation guardian for a party under disability under Rule 7.02 of the Rules of Civil Procedure has already started an action against one tortfeasor prior to the effective date of January 1, 2004 (familiar to civil litigators as the “effective date”), and the involvement of another tortfeasor is discovered (or is capable of being discovered) after January 1, 2004.
Under the pre-2004 law, the newly discovered party could be added as a defendant by two well-known rules of judicial construction for limitations statutes, either through the “discoverability” doctrine or the “special circumstances” rule, or both. (Section 21 of the new Act has now codified and restricted the “special circumstances” rule to misnomers, i.e. the correction of the name or description a party already sued under an incorrect name or description.) Parties under legal disability did not need to rely on these rules because, under section 47 of the former Limitations Act, R.S.O. 1990, chap. L.15, limitation periods were automatically suspended during the period of disability. Now, however, the discovery of a claim against an unsued tortfeasor by a litigation guardian appointed prior to 2004 has the effect of crystallizing the claim as having occurred on January 1, 2004. Subsection 24(5) of the Act provides:
(5) If the former limitation period did not expire before the effective date and if a limitation period under this Act would apply were the claim based on an act or omission that took place on or after the effective date, the following rules apply:
1. If the claim was not discovered before the effective date, this Act applies as if the act or omission had taken place on the effective date.
2. If the claim was discovered before the effective date, the former limitation period applies.
(italics added)
The significance of the discovery of the claim by the litigation guardian (or his lawyer) after the effective date of January 1, 2004, soon becomes apparent on review of sections 7 and 8 of the Act, which provide:
7. (1) The limitation period established by section 4 does not run during any time in which the person with the claim,
(a) is incapable of commencing a proceeding in respect of the claim because of his or her physical, mental or psychological condition; and
(b) is not represented by a litigation guardian in relation to the claim.
8. If a person is represented by a litigation guardian in relation to the claim, section 5 applies as if the litigation guardian were the person with the claim.
(italics added)
The person under disability who is represented by a litigation guardian under the Act is deemed to have the latter’s legal capacity to “discover” a claim under the general discoverability provisions which appear in section 5. Further, under section 7, the two-year limitation period under section 4 does not run for a person under disability who is not represented by a litigation guardian in relation to the claim. The Act therefore created two classes of parties under legal disability, those with litigation guardians and those without. There is obviously the unseen hand of legislative policy at work here, and lawyers cannot quarrel with it.
In the instance of a litigation guardian with pre-2004 knowledge of the claim, it means that the claim was discoverable but the limitation period was tolled during the period of incapacity, under section 47 of the former Limitations Act.1 Those litigation guardians who effectively sat on their rights were rewarded for doing so, because the limitation period continued to be tolled under the former legislation. Sections 7 and 8 only become problematic if they are applied to self-appointed litigation guardians, especially those appointed under the pre-2004 regime, who discovered the claim, or ought to have discovered it, pursuant to subsection 5(2), on or after January 1, 2004. Under this construction of the statute, it is now possible for the rights of persons under legal incapacity to lose their rights by the inaction or negligence of litigation guardians appointed at a time when their inaction bore no consequence. (In contrast, the legal rights of such persons cannot be compromised by their litigation guardians on settlement without court approval.) This was precisely the fate of the presumed2 mentally incompetent plaintiff in Montcalm, in which the identity of the second tortfeasor was not discovered until January 2, 2004. At at paras. 15-17 of the decision, it was held:
15 … [E]ven if Mr. Montcalm has been operating under a legal disability throughout, the limitation period herein commenced on January 1/04 (with the coming into force of the Limitations Act, 2002). Taking the plaintiffs' case at its highest and assuming that the discoverability rule was not invoked here (as Mr. Munro [counsel for the plaintiff] argues), s. 24(5)(1) of the Limitations Act, 2002 provides that the act or omission of a doctor against whom malpractice is alleged is deemed to have taken place on the date that the Act came into force (here January 1/04).
16 Mr. Leonard [counsel for the defendant] submits, persuasively, that while he recognizes that the limitation period does not commence while a person with a claim is incapable of commencing a proceeding and is not represented by a litigation guardian in relation to the claim (this, pursuant to s. 7(1) of the Limitations Act, 2002), in the case at bar (even assuming lack of capacity on the part of Mr. Montcalm), Mary Beth Montcalm's guardianship of Mr. Montcalm began at least as early as December 3/03. Though identified in the claim as "attorney" to Mr. Montcalm, it is acknowledged on the part of the plaintiffs that Ms. Montcalm was intended to be and conducted herself throughout as Mr. Montcalm's litigation guardian. "Attorney" was simply a misnomer.
17 That being so, under the Limitations Act, 2002, the plaintiffs had two years from January 1/04 to commence their action against Dr. Chung. Even on this theory of the case, the motion to add Dr. Chung has been brought after the expiry of the relevant limitation period.
This treatment of the issue in Montcalm amounts to a most sharp-edged construction of the statute. The reasons are three-fold:
- Although changes to the length or operation of statutes of limitation, as procedural enactments, tend to have retrospective effect on unexpired prescription periods, the court failed to recognize that the revision in question was an exception to this rule. The retrospective application of the phrase “litigation guardian” under the Act to traditional guardians ad litem under the rules of court was prejudicial beyond the mere loss of time left to sue.
- There is, in the case law for this young statute, already precedent for construing a word or phrase in the Act differently than in the Rules of Civil Procedure.
- The Montcalm ruling on this issue offends to the modern rules of statutory interpretation. It departs from the remainder of the Act, in which provision for the reasonable protection of vulnerable litigants is a trade-off for constriction of the law of limitations in favour of potential defendants.
1. Does the Montcalm ruling offend the rule against retroactivity?
According to Montcalm, parties under legal disability represented by litigation guardians self-appointed under the Rules prior to 2004, in respect of an action commenced against one alleged tortfeasor, are then burdened with the running of a limitation period against a second, yet unsued, tortfeasor. The construction imposes a new substantive responsibility (the burden of discovery of a claim under section 5) on a relationship historically intended as a procedural convenience and a protection of legally incapable persons. The appointment of the guardian prior to 2004 would have been made at a time when any limitation period would have been tolled during the period of incapacity. Since the construction affords neither the litigation guardian nor the party under disability any opportunity to undo the post-2004 legal implication of the pre-2004 appointment, it offends natural justice and the basic rules against retroactivity of status-altering statutes.3
Legislation amending unexpired limitation periods is generally considered procedural and retrospective, the rationale for this characterization is that a new limitation period merely shortens or lengthens unexpired time. However, where “more than time is at stake,” the amendment is considered substantive, and the rule against retroactivity applies.4 In the case of litigation guardians self-appointed after 2004, in respect of a pre-2004 claim, the change in the incapable party’s status is not retrospective by automatic operation of the Act but by a step taken under the Act. In contrast, the “grandfathering” of pre-2004 litigation guardians under the Rules transmutes overnight the incapable person’s legal persona to that of the guardian, without any step taken by the party or the guardian, to accept or affirm the responsibility that the new status entails.
The change in status implied by the construction in Montcalm is undeniable. Prior to 2004, the self-appointment of litigation guardians under the Rules of Civil Procedure did not affect the rights of legally disabled persons from having limitation periods tolled by reason of their legal disability.5Montcalm effectively grandfathered pre-2004 self-appointed litigation guardians under the Rules of Civil Procedure to the status of post-2004 litigation guardians under the Act. The unfairness and disparity of this result may not be obvious, but this does not mean that they do not exist. The plaintiff whose guardians commenced an action in time against one tortfeasor is out of time to sue another. The plaintiff who has not sued and has no litigation guardian is not out of time. For litigation guardians self-appointed after 2004, the unfairness is mitigated by the fact that the potential prejudice to the plaintiff is part of the bundle of obligations with respect to which the plaintiff’s lawyer must provide initial advice to the proposed litigation guardian. Lawyers acting for under-age plaintiffs, or those suffering from acquired brain injury or psychiatric disorders, must now take into account the triggering of the limitation period against all others, when filing suit on behalf of a party represented by a litigation guardian. Although some may argue that this is a harsh imposition, usually on the parents of injury victims, others might also urge that there should be a check on such victims when their interests are being represented by legally-represented competent adults. This political debate has been settled by the legislature. Litigation guardians appointed after January 1, 2004, are able to delay their appointment until they (or their lawyers) are satisfied that all known potential defendants have been sued. There is, however, no remedy for the “grandfathered” group to defeat the retrospective application of the Act in respect of a pre-2004 appointment. The treatment of “litigation guardians” in Montcalm should fail on this ground alone. The analysis does not end there, however.
2. Precedent for reading the Act and the Rules differently
The Act’s use of the phrase, “litigation guardian,” appears to include self-appointed litigation guardians under the Rules, if only because of the use of the same words.6 However, terminology under the Rules has been interpreted with a prospective meaning for the purposes of the Act, insofar as the use is consistent with the scheme of the new legislation. This approach, employed by the court in Pallotta v. Marks, elegantly protects parties against the retrospective equation of the adopted terminology:6
[22] In General Electric Capital Canada Inc. v. Deloitte & Touche LLP, 7[2004] O.J. No. 4683 (Sup. Ct.), the assignor of a contract sought to be added as a second plaintiff after the Act had come into effect. The assignee of the contract in issue had sued the defendants before the Act came into effect, in essence asserting the claim of the assignor. The defendants argued that a “proceeding” had therefore been commenced for the purpose of section 24(2) and that the assignor could not avail itself of the transitional provisions in section 24(5). Master MacLeod, held, at paragraph 9, that, “…the purpose of the transitional provisions is generally speaking to preserve the benefit of the longer limitation period for causes of action arising before the effective date. This is consistent with the general principle that [a] statute should not be interpreted to limit or extinguish a right unless it clearly and unambiguously intends to do so.” Master MacLeod concluded that a “proceeding” had not been brought within the meaning of the Act.
[23] The transitional rule that, in this instance, is relevant, and the Defendant Doctors say should apply, is in section 24(5): if the claim was discovered before the effective date, the former limitation period applies. In my view, the word “proceeding” should be interpreted harmoniously with the object of the transitional provisions, as gleaned from section 24(5), and as described in General Electric Capital Canada Inc., and not given a technical interpretation by reference to the Rules. I also note that pursuant to section 5(1) of the Act, one of the matters that a claimant must know before a claim is discovered for the purpose of the Act is that the act or omission was that “of the person against whom the claim is made.” It seems to me inconsistent with the scheme of the Act for “proceeding” in section 24(2) to be interpreted without reference to the person against whom the proceeding is made, as Sick Kids submits should be done. Given these conclusions, it follows that the construction that Sick Kids urges upon me is in my view not expressly or by necessary implication required by the Act.
In Pallotta, the court rightly did not see any inconsistency in construing the word “proceeding” differently under the new Act from its use under the Rules prior to 2004.8 Indeed, harmony with the scheme of the Act necessitates the distinction. So, too, does the Act create a regime for litigation guardians appointed after 2004 which is different from the one governing such guardians prior to 2004. There is likewise no conceptual obstacle to an interpretation of the phrase “litigation guardian” under the Act which departs from the use under the Rules prior to 2004.
3. Offence to the “harmonious” reading of the Act
The prevailing approach to statutory interpretation is to read the words of a statute “in their entire context and in their grammatical and ordinary sense harmonious with the scheme of the Act, the object of the Act, and the intention of Parliament.”9 There is written all over the text of the new Act the intent to break with the arcane past law of limitations. Despite criticism of its drafting, there can be no doubt that the legislative intent was to codify the law of limitations (and thus take it out of the hands of judge-made law) and to balance the needs of potential defendants to freedom from stale claims with those of plaintiffs to due process before being deprived of the right to sue. In this regard, construction of the phrase “litigation guardian” in the new Act must also be subject to section 10 of the Interpretation Act, R.S.O. 1990, chap. I.11:
10. Every Act shall be deemed to be remedial, whether its immediate purport is to direct the doing of any thing that the Legislature deems to be for the public good or to prevent or punish the doing of any thing that it deems to be contrary to the public good, and shall accordingly receive such fair, large and liberal construction and interpretation as will best ensure the attainment of the object of the Act according to its true intent, meaning and spirit.
When one reads sections 7, 8 and 9 of the Act fairly and contextually, it is undeniably the intent of the legislature to protect vulnerable persons from having their claims barred by the passage of time, while they are under a legal disability. On the other hand, as a concession to potential defendants (and their insurers), section 9 offers a mechanism for such potential defendants to establish a degree of certainty in their personal or commercial affairs. They may apply for a court-appointed litigation guardian in order to start or resume the running of the clock. Recognizing the potential for serious prejudice to legally disabled persons, section 9 slavishly protects the privileged status of the legally disabled person under section 7. Under section 9, the onus is on the potential defendant seeking the running of a limitation period against a legally disabled person to ensure that the person cannot be deprived of the status without the exercise of natural justice and the operation of the judicial parens patriae role of the court.
In contrast, self-appointed litigation guardians under the Rules of Civil Procedure do not enjoy the status of judicial appointment and are not required to demonstrate prior understanding of the operation of “matters referred to in clause 5 (1) (a)” of the Limitations Act, 2002. Although there is no specific provision requiring post-2004 self-appointed litigation guardians to have this understanding, the burden appears to be implied in the operation of sections 7 and 8. These provisions serve to stop the tolling of limitation periods under the Act for minors and mentally incapable persons represented by litigation guardians. (In other words, the limitation periods resume operation.) Although self-appointed litigation guardians under the new Act are not anointed with prior court approval, the lack of section 9’s safeguards may be attributable to the fact that self-appointed litigation guardians do not serve at the instance of an adverse party’s motion. The application of sections 7 and 8 to pre-2004 self-appointed litigation guardians is a different story. It would be wrong to assume that they would have knowledge of “matters referred to in clause 5(1)(a)” relating to the consequences of discovery of a claim. It is also wrong to assume that such “grandfathered” litigation guardians are prepared to assume this responsibility. (There is no mechanism for pre-2004 appointments to opt out of the consequences of being litigation guardians under the new Act.)
The absence of checks and balances for the protection of parties under legal disability therefore distinguishes pre-2004 self-appointed litigation guardians under the Rules from “litigation guardians” for the purposes of sections 7, 8 and 9 of the Limitations Act, 2002.
Conclusion
For civil litigators, especially those practising personal injury law, the status of pre-2004 self-appointed litigation guardians under the new Limitations Act, 2002 is likely to crop up at least once in the next few years. Since the Montcalm decision, as of the time of writing, stands unchallenged, it will be left for counsel to argue that it was wrongly decided on this point. Aside from the arguments outlined above, any ambiguity in the operation of the Act to these holdovers must benefit from charitable judicial treatment, that the situations which they occupy “will run their course.”10 The usefulness of this analysis is therefore time-sensitive. (Dear reader, please forgive the pun!) Nevertheless, the problem in statutory interpretation in Montcalm exposes a cautionary tale. The law of limitations in Ontario will remain a minefield, at least for now.
2007 © R. Lee Akazaki, of the Ontario Bar, practices civil litigation with Gilbertson Davis Emerson LLP.
Endnotes
1. There was no conflict between legal incapacity (universal in application) and discoverability (dependent on the statute). A person under legal disability was capable of discovering the cause of action during the period of disability. See: Peixeiro v. Haberman, [1997] 3 S.C.R. 549, at para. 41; Snow (Guardian ad litem of) v. Kashyap, [1995] N.J. No. 15 (Nfld. C.A.), at paras 25-44. (For example, a 17-year-old minor was capable of discovering a cause of action in tort but remained under legal disability until age 18.)
2. Presumed for the purpose of this issue. The plaintiff’s mental status was questioned in other parts of the judgment.
3. A statute meant to have immediate effect can nevertheless contain retroactive provisions where such a construction is expressly or by necessary implication required by the language of the Act. The legislation is not to be construed to have greater retrospective operation than its language requires: Sullivan and Driedger on the Construction of Statutes, 4 th Edition (Markham: Butterworths, 2002), p. 554
4. Sullivan and Driedger on the Construction of Statutes, p. 585
5. Lawson v. Hospital for Sick Children (1990), 74 O.R. (2d) 11 (Div. Ct.); Martin v. Listowel Memorial Hospital (1992) 9 O.R. (3d) 65 (C.A.); Ulisch-Plunkett (Public Trustee of) v. Zwick Estate, [1995] O.J. No. 2620; Swain Estate v. Lake of the Woods Hospital (1992), 9 O.R. 3d) 74 (C.A.)
6. Sullivan and Driedger on the Construction of Statutes , p. 164
7. Pallotta v. Marks , 2005 CanLII 24756 (S.C.J.), at paras. 22-23
8. The discussion in Pallotta regarding the term“proceeding”concerned the operation of subsection 24(2) of the Act. The distinction was required in order to afford the plaintiff with the benefit of the transitional provisions.
9. The test, as most recently reaffirmed by the Court of Appeal for Onario (January 29, 2007) in York Condominium Corp. No. 382 v. Jay-M Holdings Ltd., [2007] O.J. No. 240 (C.A.), at para. 11.
10. Jay-M Holdings Ltd. , [2007] O.J. No. 240 (C.A.), at para. 24 |
