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Limitations - Discoverability - "Appropriate Means"

407 ETR Concession Company Limited v. Day (Ont CA, 2016)

In this case the Court of Appeal discusses the discoverability issue of when an action is the 'appropriate means' of seeking remedy in a situation where other statutory remedies are also available. The court decided, on the facts of this case, that the limitation period only commenced when another statutory route (here, a 'license plate denial process' for non-payment of road tolls) was exhausted:
[30] Assuming the 15-year limitation period in Mr. Day’s transponder lease agreement does not apply, 407 ETR’s claim is subject to the basic two-year limitation period in s. 4 of the Limitations Act, 2002. Under s. 4, “a proceeding shall not be commenced in respect of a claim after the second anniversary of the day on which the claim was discovered” (emphasis added).

[31] The day on which 407 ETR’s claim was discovered is the day on which 407 ETR knew or ought to have known the four matters set out in s. 5(1)(a) of the Act:
5. (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; 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).
[32] Obviously, 407 ETR knew the first three matters in s. 5(1)(a) as early as the delivery of its s. 16 notice in March 2011. It knew by then it had suffered a loss; it knew the loss was caused by the failure to pay an invoice that was due and payable; and it knew that Mr. Day had failed to pay it. This first issue on the appeal turns on s. 5(1)(a)(iv): when should 407 ETR have known that a civil action against Mr. Day was an “appropriate means” to recover its loss?

[33] The appropriateness of bringing an action was not an element of the former limitations statute or the common law discoverability rule. This added element can have the effect – as it does in this case – of postponing the start date of the two-year limitation period beyond the date when a plaintiff knows it has incurred a loss because of the defendant’s actions.

[34] Also, when an action is “appropriate” depends on the specific factual or statutory setting of each individual case: see Brown v. Baum, 2016 ONCA 325 (CanLII), 397 D.L.R. (4th) 161, at para. 21. Case law applying s. 5(1)(a)(iv) of the Limitations Act, 2002 is of limited assistance because each case will turn on its own facts.

[35] In the case before us, the date when a civil action would be an “appropriate means” for 407 ETR to recover its loss must be assessed not only in the context of the purpose of that element of s. 5(1)(a) and the words that qualify it, but also in the context of the statutory regime under which 407 ETR operates.

[36] Under the Highway 407 Act, 1998, five options for the start date of the two-year period are available to choose from:
1. The date 407 ETR sends an invoice to the vehicle permit-holder, which is the date the debt becomes due and payable.

2. Thirty-five days after the invoice is sent, which is the date the toll debt becomes delinquent and entitles 407 ETR to send the vehicle permit-holder a notice of failure to pay under s. 16.

3. Ninety days after a notice of failure to pay is sent, which is the date 407 ETR can ask the Registrar to put the vehicle permit-holder into licence plate denial under s. 22.

4. The date 407 ETR actually sends a s. 22 notice asking the Registrar to put the vehicle permit-holder into licence plate denial.

5. The date the vehicle permit expires for non-payment of the debt.
[37] I would immediately eliminate options one and two from consideration. Neither of these first two options is tied to the licence plate denial process. And to give effect to the legislature’s intent, it seems to me that the start date of the limitation period must be tied to that process. The legislature enacted that process for a reason: it was not content to force 407 ETR to sue in the courts for unpaid toll debts. I fully agree with the Divisional Court that licence plate denial is an effective, necessary and indeed integral feature of an open access toll highway. Tying the start date of the limitation period to the licence plate denial process acknowledges the significance the legislature attached to that process for the collection of unpaid tolls. In this court, Mr. Manes on behalf of Mr. Day fairly did not urge us to adopt option one or two. The start date of the two-year period then turns on whether we should adopt on the one hand option three or four, or on the other hand option five.

[38] The motion judge’s reasons and order were a source of some confusion to the parties. His formal order adopts option three (the date 407 ETR could have asked the Registrar to put Mr. Day into licence plate denial), but parts of his reasons may be read as adopting option four (the date 407 ETR actually did send notice to the Registrar to put Mr. Day into licence plate denial). Nothing turns on this apparent confusion, as I would adopt option five.

[39] A civil action only becomes appropriate when 407 ETR has reason to believe it will not otherwise be paid – in other words, when the usually effective licence plate denial process has run its course. Thus, the date when a vehicle permit expires for the failure to pay a toll debt is the date a civil action is an appropriate means to recover that debt. This date starts the two-year limitation period. For Mr. Day, this date is December 31, 2011. I say this for four reasons.

[40] First, under s. 5(1)(a)(iv) of the Limitations Act, 2002, the date a proceeding would be an appropriate means to recover a loss must have “regard to the nature of the ... loss”. So, in fixing the appropriate date, it may not be enough that the loss exists and the claim is actionable. If the claim is the kind of claim that can be remedied by another and more effective method provided for in the statute, then a civil action will not be appropriate until that other method has been used. Here, a claim will not be appropriate until 407 ETR has used that other method, without success.

[41] As the Divisional Court recognized it its 2005 decision, and the motion judge recognized in this case, the other method for toll collection provided for in the Highway 407 Act, 1998 – licence plate denial – is far more effective than a civil action. By providing for licence plate denial, the legislature must be taken to have recognized its effectiveness. People who cannot renew their vehicle permits until they deal with their toll debts have a powerful incentive to pay.

[42] The statistical evidence bears out the effectiveness of licence plate denial. 407 ETR issues over one million invoices a month. Nearly 70 per cent of those invoices are paid within one month, which means just over 30 per cent are not. Significantly, about 75 per cent of permit holders in default pay their toll debts after being advised the Registrar has sent a s. 22 notice. Of those, just over one half pay before or on the date their vehicle permits have to be renewed; the remainder pay after their vehicle permits have expired.

[43] These statistics show that the motion judge’s start date – the delivery of a s. 22 notice to the Registrar – is too early in the process. It comes at the beginning of the process instead of where I think it should come, at the end. The licence plate denial process should be allowed to run its course. As the statistics show, most people, fearing the consequences, eventually pay after receiving a s. 22 notice. Only if the process fails to prompt payment does litigation become an appropriate means to recover the debt.

[44] Second, in determining when a claim ought to have been discovered, s. 5(1)(b) of the Limitations Act, 2002 requires the court to take account of “the circumstances of the person with the claim”. 407 ETR’s “circumstances” differ from those of many other creditors. Highway 407 itself is enormously busy: 380,000 trips on an average workday. As a consequence, 407 ETR must process an enormous number of invoices, almost all for amounts of no more than a few hundred dollars apiece. And unlike, for example a credit card company, which can cancel a customer’s credit card for non-payment of a debt, 407 ETR cannot bar a defaulting debtor’s access to the highway.

[45] 407 ETR’s “circumstances” strongly suggest that requiring it to sue before finding out whether licence plate denial has achieved its purpose would be inappropriate. An important case on the significance of a plaintiff’s “circumstances” is the majority judgment in Novak v. Bond, 1999 CanLII 685 (SCC), [1999] 1 S.C.R. 808. In that case, McLachlin J. considered s. 6(4)(b) of British Columbia’s Limitations Act, R.S.B.C. 1996, c. 266, which provided that time did not begin to run against a plaintiff until “the person whose means of knowledge is in question ought, in the person’s own interests and taking the person’s circumstances into account, to be able to bring an action” (emphasis added). At para. 85 of her reasons, McLachlin J. discussed “interests and circumstances” and cautioned against the potential unfairness of requiring a plaintiff to bring an action at the time a claim first materializes:
Litigation is never a process to be embarked upon casually and sometimes a plaintiff’s individual circumstances and interests may mean that he or she cannot reasonably bring an action at the time it first materializes. This approach makes good policy sense. To force a plaintiff to sue without having regard to his or her own circumstances may be unfair to the plaintiff and may also disserve the defendant by forcing him or her to meet an action pressed into court prematurely. [Emphasis added; footnotes omitted.]
[46] Similarly here, holding that time begins to run against 407 ETR before it knows whether licence plate denial has prompted payment would be unfair, or to use the word of our statute, would not be “appropriate”.

[47] Holding that the two-year period begins after the licence plate denial process fails to prompt payment does not raise the concern Sharpe J.A. referred to in Markel Insurance Co. of Canada v. ING Insurance Co. of Canada, 2012 ONCA 218 (CanLII), 109 O.R. (3d) 652, at para. 34. There, he said that “appropriate” must mean “legally appropriate”. By using that phrase he signified that a plaintiff could not claim it was appropriate to delay the start of the limitation period for tactical reasons, or in circumstances that would later require the court to decide when settlement discussions had become fruitless. In this case, however, 407 ETR seeks to delay the start of the limitation period for a legally appropriate reason: waiting until a statutorily authorized process has been completed.

[48] A third consideration is what I take to be an important purpose of s. 5(1)(a)(iv). The overall purposes of limitation statutes are well-established and well-known: certainty, finality and the unfairness of subjecting defendants to the threat of a lawsuit beyond a reasonable period of time. But it seems to me one reason why the legislature added “appropriate means” as an element of discoverability was to enable courts to function more efficiently by deterring needless litigation. As my colleague Juriansz J.A. noted in his dissenting reasons in Hare v. Hare (2006), 2006 CanLII 41650 (ON CA), 83 O.R. (3d) 766 (C.A.), at para. 87, courts take a dim view of unnecessary litigation.

[49] If the limitation period runs concurrently with the licence plate denial process, as would be the case under the motion judge’s start date, then there would be the real possibility of numerous Small Claims Court claims. And these claims would be needless because the vast majority of defendants would likely pay their debts to avoid having their vehicle permits expire. The evidence in the record shows that as of June 2014, for invoices outstanding for 23-24 months, 10,144 separate court actions would be required. The average amount of each claim would be $497. Only one to two per cent of claims would exceed $5,000.

[50] I acknowledge Mr. Day’s argument that if the motion judge’s start date is used, 407 ETR could in almost every case still bring any necessary actions within the two-year period, because vehicle permits have to be renewed every two years. But imposing a burden on 407 ETR to keep track of two concurrent proceedings – licence plate denial and the running of the two-year limitation period – is impractical and unnecessary. Such a burden does not provide an effective method of toll collection. A far simpler and more appropriate solution is to delay the start of the limitation period until the licence plate denial process has ended.

[51] Finally, although 407 ETR has discretion when and even whether to send a s. 22 notice to the Registrar, that discretion does not detract from the appropriateness of using the end of the licence plate denial process as the start of the two-year limitation period. In theory, I suppose, as Mr. Day contends, 407 ETR could use its discretion to manipulate the start date. But why, one may ask rhetorically, would it do so? Its commercial interests dictate otherwise.

[52] In this case, we have no evidence 407 ETR manipulated the date for sending Mr. Day a s. 16 notice or the Registrar a s. 22 notice. A short delay occurred between the date it could have given these notices under the statute and the dates it actually gave these notices. The short delay was presumably attributable to the necessity of accessing the relevant databases and other administrative matters.

[53] Also, even accepting that 407 ETR has discretion when to send the s. 16 and s. 22 notices, the end date of the licence plate denial process is a date that is certain and easily ascertainable. It is the date when the holder’s vehicle permit comes up for renewal. If the holder’s debt has not been paid by this date, then an action becomes an appropriate means to recover the debt and the two-year limitation period begins to run.

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