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Limitations Act - No Limitations (2)

. Hazout v. The Attorney General of Ontario

In Hazout v. The Attorney General of Ontario (Div Court, 2023) the Divisional Court considers whether Ontario, which is not normally subject to a limitation period [under s.16(1)(j) and s.16(2) Limitations Act] nonetheless is subject to the standard s.4 two-year limitation where it takes assignment or has direct standing as a guarantor (which was also found) of a debt:
[4] Mr. Hazout submits that Ontario was not a party to the loan agreement and only gained its standing to bring the action as an assignee. He emphasizes that an assignee to an agreement stands in the shoes of an assignor and is subject to the benefits and burdens of the underlying agreement. In his submission, this means that, on assigning the loan, Ontario remained subject to the burden of the two-year limitation period that would have applied to the bank.

[5] I do not accept these submissions. At the outset, I have some concern about addressing these arguments on appeal. They were not directly raised before the Deputy Judge. The Deputy Judge found that Ontario was exempt from a statutory limitation period, but Mr. Hazout did not specifically argue that Ontario was bringing the action as an assignee. Therefore, the Deputy Judge did not have an opportunity to rule on the nature of Ontario’s standing to bring the action.

[6] If it is appropriate to reach a determination on this point by review of the documents, I would dismiss Mr. Hazout’s arguments. By way of background, Ontario is not subject to the general two-year limitation period set out in s.4 of the Limitations Act, 2002, S.O. 2002, c. 24, Schedule B (the “Act”). Paragraph 16(1)(j) of the Act, read together with s. 16(2), provide that “[t]here is no limitation period in respect of” a proceeding brought by the Crown in respect of claims relating to “the administration of social, health or economic programs.” There is no dispute that the New Ventures Program constitutes such a program.

[7] Contrary to Mr. Hazout’s submission, Ontario was not limited to starting the action as an assignee of the loan agreement. Instead, Ontario was also a guarantor of the loan. Section 4 of the loan agreement, signed by Mr. Hazout, provides that the loan is guaranteed by the Province of Ontario. In consideration of that guarantee, Mr. Hazout agreed “to indemnify the Province of Ontario upon demand for all payments made by the Province of Ontario pursuant to the Guarantee.”

[8] As a guarantor, Ontario had an independent right to be indemnified for the loan. As Hunt J.A. explained (in concurring reasons) in Canada (A.G.) v. Becker, 1998 ABCA 283, 223 AR 59, at paras. 32-39, the right to indemnity is different from a subrogated in that it permits the guarantor to sue in its own name. See also Ormston v. Manchester, 2019 ONSC 6529, at para. 14.
. Bank of Montreal v. Iskenderov

In Bank of Montreal v. Iskenderov (Ont CA, 2023) the Court of Appeal, after allowing a preliminary limitations appeal issue that the Limitations Act (LA) applied to a fraudulent conveyance declaration rather than the RPLA, considered whether s.16 LA ["No limitation period"] applied on the argument that this "a proceeding for a declaration if no consequential relief is sought" [LA 16(1)(a)]:
The two-year limitation period in the Limitations Act, 2002 applies to this action

[57] There are two provisions of the new Act that could apply to a fraudulent conveyance action, s. 16(1)(a) where there is no limitation period, and s. 4 which provides the two-year limitation period subject to discoverability.

[58] Section 16(1)(a) provides:
(1) There is no limitation period in respect of,

(a) a proceeding for a declaration if no consequential relief is sought;
[59] In paragraph 2 of the Statement of Claim, the respondent Bank asks for three orders: a declaration that the transfer of the subject property was a fraudulent conveyance, an order setting aside the conveyance and a certificate of pending litigation.

[60] In Perry, Farley & Onyschuk, this court stated that the FCA “provides for a declaratory type proceeding”: at para. 30. However, the declaration is only part of the remedy the court orders. First, the court must determine whether the transfer was fraudulent, that is, made by the debtor-transferor with the intent to defraud its creditors by putting the property into another person’s hands and beyond the creditors’ reach. The finding of fraudulent intent is made on evidence after a trial. As Newbury J.A. stated in Guthrie, the impugned transfer is actually “voidable”: at para. 19. It is declared void as against creditors based on findings of fact made by the court on disputed evidence. It is not a declaration of rights based on, for example, the meaning of words in a statute or bylaw.

[61] If the finding of fraud is made, the transfer becomes void and is so declared. Then there is an order to set aside the transfer as it affects creditors or others. As in this case, the declaration is just part of the required relief for the creditor to be able to obtain access to the property for execution purposes: see McGuire v. Ottawa Wine Vaults Co. (1913), 1913 CanLII 7 (SCC), 48 S.C.R. 44, at p. 56.

[62] In his text, The Law of Declaratory Judgments, 4th ed. (Toronto: Thomson Reuters, 2016), Professor Lazar Sarna explains the distinction between a remedial judgment and a declaration at p. 54:
A distinction is made between a remedial judgment and a declaration. In those provinces where declaratory orders are excluded from limitations statutes or the purview of juries, the distinction is crucial. A remedial judgment carries within its own terms a solution for the cure of a dispute, be that an order to do or not to do, or more specifically, to pay, deliver over, seize, sell, dissolve, remove, or refrain. It is self-executing in the sense that the parties and the executing officer need no further direction or authorization that that contained in the judgment. A declaration confirms or denies the existence of a right, as if bearing witness to what has always been the legal relationship between the disputing parties. Put that way, it is an existential judgment that considers rights to be or not to be.
[63] A fraudulent conveyance judgment is remedial. While it includes a declaration that a transfer is void, it also includes the consequence of that declaration, the remedy of setting aside the transfer as against creditors. Because the Bank seeks consequential relief, s. 16(1)(a) is not applicable.[7]

[64] That leaves the general two-year limitation period in s. 4 to bring a proceeding in respect of a claim, which is defined in s. 1 as “a claim to remedy an injury, loss or damage that occurred as a result of an act or omission”. Section 4 provides:
Unless this Act provides otherwise, a proceeding shall not be commenced in respect of a claim after the second anniversary of the day on which the claim was discovered.
[65] In a fraudulent conveyance action under the Fraudulent Conveyances Act, the loss is the loss of the property that was transferred as an exigible asset available to the creditor. The impugned act is the transfer with fraudulent intent. The remedy is the declaration that the transfer is void against creditors and the consequential setting aside of the conveyance as against the creditors.

[66] I conclude that the two-year limitation period applies, subject to discoverability.
. Lacey v. Kakabeka Falls Flying Inc.

In Lacey v. Kakabeka Falls Flying Inc. (Ont CA, 2023) the Court of Appeal upheld an application judge's decision that Limitations Act s.16(1) ['No Limitation Period - Declaration Where No Consequential Relief Sought'] did not apply since the applicant sought a declaration and "a writ of possession, and other relief":
[7] We also agree with the application judge that the appellants cannot avoid the application of the two-year limitation period through reliance on s. 16(1)(a) of the Limitations Act, 2002 since the appellants’ application was not limited to seeking a declaration alone. While it was not argued before us during the oral hearing, we also do not see any error in the application judge’s conclusion that the 10-year limitation period in the Real Property Limitations Act, R.S.O. 1990, c. L.15 does not apply to this case.
SS: This case raises the interesting point of whether, with only a declaration, the landlord could have sought self-help.

. Deluca v. Bucciarelli

In Deluca v. Bucciarelli (Ont CA, 2022) the Court of Appeal considered a s.16(1)(h.2)(i) argument [no limitation where assault in intimidate relationship] under the Limitations Act:
[9] The appellant does not dispute that she was aware that the conduct she alleged in her statement of claim occurred more than two years before she issued her statement of claim. However, she relies on ss. 5(1)(a)(iv) and 16(1)(h.2)(i) of the Act to assert that there is a genuine issue for trial concerning whether she was prevented from discovering her claim within the two-year period because of her fear of the respondent (s. 5(1)(a)(iv)) or whether her claim falls within the exception to the two-year period because her proceeding is based, at least in part, on an assault that occurred in an intimate relationship (s.16(1)(h.2)(i)).[1]

....

[15] Second, the appellant raised a variety of arguments asserting that the motion judge erred in appreciating the scope of s. 16(1)(h.2)(i) of the Act or in articulating or applying the elements of the tort of assault.

[16] The motion judge relied on Bruce v. Dyer, 1966 CanLII 191 (ON SC), [1966] 2 O.R. 705 (H.C.) aff’d 1967 CanLII 653 (ON CA), [1970] 1 O.R. 482 (C.A.), for a description of the elements of the tort of assault. The motion judge said, “[t]he [appellant] must prove on a balance of probabilities that she had reasonable grounds to believe that she was in danger of violence from [the respondent], that she feared imminent harmful or offensive contact (emphasis in the original).” The motion judge was not satisfied the appellant had adduced evidence that could meet this standard.

[17] The appellant submitted that, particularly when viewed in the context of an evolving understanding of domestic violence and controlling behaviour, in assessing her evidence, the motion judge took too narrow a view of “imminence” and of the scope of “an assault” as that term appears in s. 16(1)(h.2)(i) of the Act. The appellant pointed to Warman v. Grosvenor (2008), 2008 CanLII 57728 (ON SC), 92 O.R. (3d) 663 (S.C.) and Dunne v. Gauthier, 2000 BCSC 1603, as examples of cases that illustrate that imminence can mean different things in different contexts. The appellant also argued that the motion judge erred in failing to recognize that the term “assault”, as it appears in s. 16(1)(h.2)(i), can and should be interpreted broadly, so as to encompass threatening and harassing behaviour giving rise to fear of harm at some future unspecified point in time.

[18] We do not accept these submissions. Section 16(1)(h.2)(i) of the Act provides that there is no limitation period in respect of “a proceeding based on an assault” where at the time of the assault the parties “had an intimate relationship.” In our view, the appellant’s arguments are foreclosed by this court’s recent decision in Barker v. Barker, 2022 ONCA 567, [2022] O.J. No. 3526 (C.A.), in which this court considered the scope of the tort of assault. At paras. 137-138, this court explained that a tortious assault “involves intentionally causing another to fear imminent contact of a harmful or offensive nature (citations omitted, emphasis added).” At para. 171 of Barker, this court confirmed that “imminence is a critical component of the tort of assault.”

[19] This court went on in Barker to consider the decisions in both Warman and Dunne on which the appellant relied.

[20] At para. 173 of Barker, this court described the conduct in Warman, which the trial judge found amounted to an assault, as involving a relentless, two-year campaign of harassment involving internet postings and email. The communications were homophobic and anti-Semitic. Among other things, the defendant’s internet posts referred to the victim as a “dead [] walking”, shared his address including a map of his residence, and urged readers to “pay him a visit” and let him “meet his fate – execution at the hands of a people’s government”. One post concluded, “I have a Ruger P-90 and its bullets have your name on them”.

[21] At para. 174 of Barker, this court emphasized that the Warman trial judge recognized that damages are recoverable for assault “by someone who is made apprehensive of immediate physical contact” (emphasis in the original). Significantly, the Warman trial judge stated: “Frightening or threatening someone, however, does not constitute an assault unless the event feared is imminent….”

[22] At para. 176 of Barker, this court described Dunne as a case that involved a conditional threat to cause harm if the plaintiff school bus driver ever drove on the defendant’s laneway again. Significantly, in Dunne, the conditional threat was made immediately after the defendant finished physically battering the school bus driver. Moreover, the victim was aware that the defendant drove a large tractor trailer unit that could “take out” the victim and his bus.

[23] At para. 176 of Barker, this court agreed with comments of the Saskatchewan Court of Appeal that “[b]oth Dunne and Warman are useful examples of how imminence might be understood, but they do not attenuate the fundamental requirements of the tort of civil assault.”

[24] Given this court’s decision in Barker, we see no error in the motion judge’s appreciation of the scope of s. 16(1)(h.2)(i) of the Act or in her articulation or application of the elements of the tort of assault. The motion judge’s articulation of the elements of assault is consistent with Barker. Based on the evidence adduced by the appellant, the motion judge concluded that the appellant had not adduced evidence capable of demonstrating a genuine issue for trial concerning whether the respondent’s alleged conduct met the threshold of “an assault”. In general, she assessed the appellant’s evidence as lacking in particulars and unpersuasive. Concerning the police occurrence reports on which the appellant relied, the motion judge noted that they contained a comment that the appellant did not fear for her safety. The facts of both Warman and Dunne are distinguishable from the facts of this case. The Warman trial judge was satisfied based on the specific facts of that case that the plaintiff was “reasonably apprehensive of imminent physical contact”. The physical battering that preceded the conditional threat in Dunne and the victim’s knowledge of the appellant’s capabilities were specific circumstances creating support for the finding of an assault. Here, the appellant’s allegations and evidence did not rise to a similar level. We see no basis on which to interfere with the motion judge’s findings and conclusions.
. Karkhanechi v. Connor, Clark & Lunn Financial Group Ltd.

In Karkhanechi v. Connor, Clark & Lunn Financial Group Ltd. (Ont CA, 2022) the Court of Appeal considered the 'no limitation period' applicable to "proceeding for a declaration if no consequential relief is sought" [Limitation Act s.16(1)(a)]:
B. Did the motion judge err by finding that the request for declaratory relief was statute barred, contrary to s. 16(1)(a) of the Limitations Act, 2002?

[36] I am not persuaded that the motion judge erred in finding that the appellants’ request for a declaration is statute barred. In arguing that the motion judge did err, the appellants rely on s. 16(1)(a) of the Limitations Act, 2002, reproduced above in paragraph 16. They argue that in applying s. 16(1)(a), the motion judge mistakenly followed the concurring decision instead of the majority decision in Kyle v. Atwill, 2020 ONCA 476, 152 O.R. (3d) 59, which they interpret as holding unequivocally that no limitation periods apply to declarations, such that where a party seeks both consequential and declaratory relief, the consequential relief is subject to the Limitations Act, 2002 but the declaratory relief is not.

[37] With respect, the appellants overread the majority decision in Kyle. Both the majority and concurring decisions in that case agree that if a pleaded claim for a declaration is, in substance, a request for a remedy against the other party and not really a request for declaratory relief, s. 16(1)(a) will not operate and a limitation period will apply. It is therefore necessary to look at the substance rather than the form of the claim so that plaintiffs cannot circumvent a limitation period by joining a statute-barred remedial claim with a declaration claim that has no legitimate declaratory purpose beyond attempting to circumvent the expiry of a limitation period. In Kyle, the majority and concurring judgments simply disagreed on whether the declaratory relief requested in that case was, in substance, a compensatory claim or not. The motion judge therefore correctly stated the principles that he was to apply.

[38] Nor can I find any error in their application. The motion judge correctly noted that declaratory relief should be narrowly construed to ensure that s. 16(1)(a) is not used as a means to circumvent limitation periods, a proposition that finds support in Alguire v. The Manufacturers Life Insurance Company (Manulife Financial), 2018 ONCA 202, 140 O.R. (3d) 1, at para 28. By parallel thinking, courts should be vigilant when examining the substance of a declaratory request where an associated compensatory claim may be statute barred, to ensure that the declaration is not being requested to subvert a limitation period. Having found that the compensatory claim the appellants were advancing was statute barred, the motion judge was correct in closely examining whether the related request for declaratory relief was added in an attempt to avoid that limitation period.

[39] In this regard, the motion judge considered the nature and apparent purpose of the declaratory relief that was requested. This is an important inquiry in considering the substance of the claim. This is because “[a] declaratory judgment is a ‘formal statement by a court pronouncing upon the existence or non-existence of a legal state of affairs – it is restricted to a declaration of the parties’ rights and does not order any party to do anything’”: Kyle, at para. 48. If securing a declaration about a legal state of affairs has no apparent purpose in the circumstances of the case other than to be used to ground a statute-barred attempt to secure compensation, the declaration is, in substance, a request for compensatory relief.

[40] In Kyle, the majority found that the husband’s request for a declaration that the prenuptial agreement was invalid served a legitimate function in the litigation. It was being sought not to establish a right upon which the compensatory claim would be based, but rather to resolve whether the prenuptial agreement that the wife was relying upon as an obstacle to the husband’s equalization and spousal support claims was valid. In contrast, the motion judge could see no legitimate utility in the request for a declaration in this case, other than to secure a declaration of right upon which future compensation claims could be launched.

[41] I see no error in the motion judge’s conclusion. The suggestion made before us that a declaration could inspire the respondents to make a voluntary payment lacks an air of reality, particularly in the context of this hard-fought litigation. Indeed, I agree with the respondents that a hypothetical relied on by the appellants in their factum reveals that they do in fact believe that the declaration they are seeking can be used as a vehicle for a future action to continue their claim for compensation. Since it is not appropriate to use a declaration as a mechanism for obtaining compensatory relief, the declaration sought does not benefit from s. 16(1)(a) of the Limitations Act, 2002.

[42] In my view, there is no basis to interfere with the motion judge’s finding that s. 16(1)(a) does not apply and that the request for a declaration is statute barred.
.X.H. v. Cota

In X.H. v. Cota (Ont CA, 2022) the Court of Appeal held that the abolition of limitations for sexual misconduct claims [Limitations Act s.16(1)(h-h.1)] did not only apply to third parties:
[5] .... First, he argues that s. 16(1.3) applies only to claims against third parties. We disagree.

[6] This argument proceeds from a misreading of the decision in Jane Doe v. Weinstein, 2018 ONSC 1126 and of s. 16(1.3), which provides:
(1.3) For greater certainty, clauses (1)(h), (h.1) and (h.2) are not limited in any way with respect to the claims that may be made in the proceeding in relation to the applicable act, which may include claims for negligence, for breach of fiduciary or any other duty or for vicarious liability.
[7] This section makes plain that no limitation period applies to any claim in relation to the sexual misconduct. Jane Doe applied but did not limit the application of the s. 16(1.3) to third parties. It applies to claims against the perpetrator of the sexual misconduct as well as third parties.




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Last modified: 03-10-23
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