Court of Appeal Decision of the Week

Loose Soil & Discoverability

Case: Gillham v. Lake of Bays (Township), 2018 ONCA 667 (CanLII)

Keywords: Cottage; Limitations Act, 2002, S.O. 2002, c. 24, Sched. B

Synopsis:

The Appellants build a cottage in 2006. Three years later, in the summer of 2009, the Appellants notice a wee problem. One of their deck piers sinks about 1 ¼ inches, pulling deck posts away from the cottage structure. The Appellants approach the Respondent company who constructed the footings and foundation for the cottage. They say issues not serious. Appellants told “wait and see”. They wait. See problems continue. The Appellants obtain a soil study in July, 2012. Remedial work is recommended. Upon commencement of remedial work in 2013, the Appellants discover the cottage foundation and footings are constructed on loose soil. The Appellants commence an action October 21, 2013.

The Respondent brings a motion for summary judgment dismissing the Appellants’ action as statute barred. The Motion Judge concludes the Appellants knew or ought to have known there was a problem in 2009. The Motion Judge finds the action statute barred on the basis the applicable two-year limitation period under s. 4 of the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B, had expired. The Court of Appeal disagrees. The Appellants might have known there was an issue, but that is “…not the end of the analysis under s. 5(1) of the Act”.

Importance:

Section 5(1)(a) of the Limitations Act provides as follows:

(1) A claim is discovered 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

The Court of Appeal noted that here the Respondents initially dismissed the Appellants’ concerns as not serious, a consequence of settling which would resolve itself. As such, it was not until receipt of the soil study, in July 2012, that the Appellants had the requisite knowledge that:

  • their loss was not trivial and possibly arose from the acts and omissions of the respondents; and
  • that it was appropriate to pursue their claim in a court proceeding. (See para. 32).

Citing Kudwah v. Centennial Apartments, 2012 ONCA 777 (CanLII) at para. 2, the Court of Appeal confirmed that, under s. 5(1)(a)(iv) of the Limitations Act, a motion judge must consider not just whether the Appellants have a cause of action, but also whether they knew or should have known that a proceeding would be an appropriate means. As per Har Jo Management Services Canada Ltd. v. York (Regional Municipality), 2018 ONCA 469 (CanLII), at paras. 21 and 35, the failure to do so is an error of law. (See para. 34).

The Court of Appeal determined the Motion Judge made errors material to the conclusion that the Appellants knew or ought to have known the material facts giving rise to all of their claims by 2009:

Here, the motion judge failed to consider “the specific factual or statutory setting” of the case before him and determine whether it was reasonable for the appellants not to immediately commence litigation but to “wait and see” if the 1 ¼ inch sinking of the deck pier observed in 2009 would worsen over time or if the issue would resolve once the stone retaining wall had settled, as had been suggested to the appellants by Mr. MacKay. Neither Royal Homes nor Mr. MacKay believed the problem was serious, or due to the manner of construction. This evidence does not support the conclusion that the appellants knew or ought to have known in 2009 that their loss was not trivial and initiating legal proceedings was the appropriate means to remedy their loss.

The Court of Appeal accordingly allowed the appeal and set aside the Motion Judge’s decision. The Appellants’ claims are not statute barred.

Counsel for the Appellants: David Morin (Will Davidson LLP, Hunstville)

Counsel for the Respondent, The Corporation of the Township of Lake of Bays: Stuart Zacharias (Lerners LLP, Toronto)

Counsel for the Respondent, Royal Homes Limited: David Thompson (Scarfone Hawkins LLP, Hamilton)

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Posted: Tuesday, July 31, 2018