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Limitations - Fraudulent Concealment

. Zachariadis Estate v. Giannopoulos Estate

In Zachariadis Estate v. Giannopoulos Estate (Ont CA, 2021) the Court of Appeal considered the limitations doctrine of fraudulent concealment:
[34] The appellants argued before the motion judge, and again on appeal, that the equitable doctrine of fraudulent concealment ought to extend the limitation period at least to the moment the appellants became aware of the payment having been made.

[35] As La Forest J. explained in M.(K.) v. M.(H.), 1992 CanLII 31 (SCC), [1992] 3 S.C.R. 6, at pp. 58-59, the doctrine of fraudulent concealment exists to ensure that a limitation period does not “operate as an instrument of injustice”. In order to invoke the doctrine, plaintiffs have traditionally been required to establish: (1) that the plaintiff and defendant had a special relationship; (2) that the defendant’s conduct was unconscionable in light of the special relationship; and (3) that the defendant concealed the plaintiff’s right of action either actively or by wrongdoing.

[36] After the hearing of this appeal, counsel for the appellants drew the panel’s attention to this court’s recent decision in Beaudoin Estate v. Campbellford Memorial Hospital, 2021 ONCA 57, which draws upon Brown J.’s reasons in Pioneer Corp. v. Godfrey, 2019 SCC 42, 437 D.L.R. (4th) 383. In Pioneer Corp., the Supreme Court relaxed the requirement to establish the existence of a special relationship, stating at para. 54 that fraudulent concealment could apply if “it would be, for any reason, unconscionable for the defendant to rely on the advantage gained by having concealed the existence of a cause of action” (emphasis in original).
. Beaudoin Estate v. Campbellford Memorial Hospital

In Beaudoin Estate v. Campbellford Memorial Hospital (Ont CA, 2021) the Court of Appeal considers the limitations doctrine of fraudulent concealment:
(iv) The doctrine of fraudulent concealment

[19] The Supreme Court of Canada recently addressed the doctrine of fraudulent concealment in Pioneer Corp. v. Godfrey, 2019 SCC 42, 437 D.L.R. (4th) 383. Brown J. for the majority described fraudulent concealment as “an equitable doctrine that prevents limitation periods from being used ‘as an instrument of injustice’”: at para. 52, citing M. (K.) v. M. (H), 1992 CanLII 31 (SCC), [1992] 3 S.C.R. 6, at pp. 58-59. He stated that “[w]here the defendant fraudulently conceals the existence of a cause of action, the limitation period is suspended until the plaintiff discovers the fraud or ought reasonably to have discovered the fraud”, and noted that it is “a form of ‘equitable fraud’ … which is not confined to the parameters of the common law action for fraud”: at para. 52. See also M. (K.), at p. 56; Giroux Estate, at para. 28.

[20] Pioneer was released a few months after the motion judge’s decision here. The motion judge had cited Colin v. Tan, 2016 ONSC 1187, 81 C.P.C. (7th) 130, at para. 45, to suggest that fraudulent concealment has three “constitutive element[s]”:
(1) the defendant and plaintiff have a special relationship with one another; (2) given the special or confidential nature of the relationship, the defendant’s conduct is unconscionable; and (3) the defendant conceals the plaintiff’s right of action either actively or the right of action is concealed by the manner of the wrongdoing.
[21] In Pioneer, however, Brown J. explained that although fraudulent concealment can apply when there is a special relationship between the parties, a special relationship is not required: at para. 54. Instead, fraudulent concealment can apply whenever “it would be, for any reason, unconscionable for the defendant to rely on the advantage gained by having concealed the existence of a cause of action” (emphasis in original).

....

[48] This court applied the doctrine of fraudulent concealment where a defendant’s conduct was alleged to have been responsible for a plaintiff’s delay in filing a claim in Halloran v. Sargeant (2002), 2002 CanLII 45029 (ON CA), 163 O.A.C. 138 (C.A.). Mr. Halloran, who was terminated from his employment because of a corporate reorganization, took an unreduced early pension instead of a special severance package based on false information provided by his employer that the pension option exceeded his statutory entitlement. In 1994, a group of employees who had also chosen the pension option succeeded in a claim for severance pay in addition to a pension, a claim that the Divisional Court upheld in 1995. In 1995, Mr. Halloran learned about the court’s decision in a newspaper article, and in 1996, he sued for severance and termination pay. The referee dismissed the claim as statute-barred under s. 82 of the Employment Standards Act, R.S.O. 1990, c. E.14, which imposed a two‑year limitation period. Mr. Halloran’s application for judicial review was granted, and the employer’s appeal to this court was dismissed.

[49] Armstrong J.A. held that the referee erred in refusing to apply the doctrine of fraudulent concealment to toll the limitation period. He found that because the company made a misrepresentation that caused the employee to act to his detriment, it was unconscionable for it to invoke the limitation period when it was responsible for the delay in filing the claim. At para. 34, Armstrong J.A. concluded:
In my view, the limitation period in s. 82 (2) should not have commenced until Mr. Halloran became aware that severance money under the Act was due to him which was either December 2, 1995 [when he read a newspaper account about the court’s decision in favour of the employees] or perhaps earlier, on March 23, 1994 [when he read a newspaper account about the employees’ claim and learned that a pending decision was expected to go in favour of the employees]. Either of the aforementioned dates bring him within the time prescribed in s. 82 (2).
[50] Armstrong J.A. added, at para. 36, that “[t]he same conduct of the company that amounted to fraudulent concealment resulted in Mr. Halloran doing nothing. He had no apparent reason to consult a lawyer based upon what he was told by the company.”
. Pioneer Corp. v. Godfrey

In Pioneer Corp. v. Godfrey (SCC, 2019) the Supreme Court of Canada discusses 'fraudulent concealment':
(2) Fraudulent Concealment

[51] In light of my finding that discoverability applies to s. 36(4)(a)(i), it is, strictly speaking, unnecessary to consider the doctrine of fraudulent concealment. Given, however, the submissions and attention given to this issue at the courts below, I will comment briefly here on whether fraudulent concealment requires establishing a special relationship between the parties.

[52] Fraudulent concealment is an equitable doctrine that prevents limitation periods from being used “as an instrument of injustice” (M. (K.), at pp. 58-59). Where the defendant fraudulently conceals the existence of a cause of action, the limitation period is suspended until the plaintiff discovers the fraud or ought reasonably to have discovered the fraud (Guerin v. The Queen, 1984 CanLII 25 (SCC), [1984] 2 S.C.R. 335, at p. 390). It is a form of “equitable fraud” (Guerin, at p. 390; M. (K.), at pp. 56-57), which is not confined to the parameters of the common law action for fraud (M. (K.), at p. 57). As Lord Evershed, M.R. explained in Kitchen v. Royal Air Forces Association, [1958] 2 All E.R. 241 (C.A.), at p. 249, cited in M. (K.), at pp. 56-57:
It is now clear . . . that the word “fraud” in s. 26(b) of the Limitation Act, 1939, is by no means limited to common law fraud or deceit. Equally, it is clear, having regard to the decision in Beaman v. A.R.T.S., Ltd., [1949] 1 All E.R. 465, that no degree of moral turpitude is necessary to establish fraud within the section. What is covered by equitable fraud is a matter which Lord Hardwicke did not attempt to define two hundred years ago, and I certainly shall not attempt to do so now, but it is, I think, clear that the phrase covers conduct which, having regard to some special relationship between the two parties concerned, is an unconscionable thing for the one to do towards the other. [Emphasis added.]
[53] While it is therefore clear that equitable fraud can be established in cases where a special relationship subsists between the parties, Lord Evershed, M.R. did not limit its establishment to such circumstances, nor did he purport to define exhaustively the circumstances in which it would or would not apply (see T.P. v. A.P., 1988 ABCA 352, 92 A.R. 122, at para. 10). Indeed, he expressly refused to do so: “[w]hat is covered by equitable fraud is a matter which Lord Hardwicke did not attempt to define two hundred years ago, and I certainly shall not attempt to do so now” (Kitchen, at p. 249, emphasis added).

[54] When, then, does fraudulent concealment arise so as to delay the running of a limitation period? Recalling that it is a form of equitable fraud, it becomes readily apparent that what matters is not whether there is a special relationship between the parties, but whether it would be, for any reason, unconscionable for the defendant to rely on the advantage gained by having concealed the existence of a cause of action. This was the Court’s point in Performance Industries Ltd. v. Sylvan Lake Golf & Tennis Club Ltd., 2002 SCC 19, [2002] S.C.R. 678, at para. 39:
[Equitable fraud] “… refers to transactions falling short of deceit but where the Court is of the opinion that it is unconscientious for a person to avail himself of the advantage obtained” (p. 37). Fraud in the “wider sense” of a ground for equitable relief “is so infinite in its varieties that the Courts have not attempted to define it”, but “all kinds of unfair dealing and unconscionable conduct in matters of contract come within its ken” [Emphasis added.]
It follows that the concern which drives the application of the doctrine of equitable fraud is not limited to the unconscionability of taking advantage of a special relationship with the plaintiff. Nor is the doctrine’s application limited, as my colleague suggests, to cases where there is something “tantamount to or commensurate with” a special relationship between the plaintiff and the defendant (paras. 171 and 173-74). While a special relationship is a means by which a defendant might conceal the existence of a cause of action, equitable fraud may also be established by pointing to other forms of unconscionable behaviour, such as (for example) “some abuse of a confidential position, some intentional imposition, or some deliberate concealment of facts” (M. (K.), at p. 57, citing Halsbury’s Laws of England (4th ed. 1979), vol. 28, para. 919). In short, the inquiry is not into the relationship within which the conduct occurred, but into the unconscionability of the conduct itself.
. Rajmohan v Norman H. Solmon Family Trust

In (Ont CA, 2014) the Court of Appeal canvassed the law applicable to the extension of limitation periods where the defendant engaged in fraudulent concealment of the cause of action:
[3] The motion judge carefully considered the rationale and requirements of the doctrine of fraudulent concealment as set out by this court in Giroux Estate v. Trillium Health Centre 2005 CanLII 1488 (ON CA), (2005), 74 O.R. (3d) 341 (C.A.), aff’g 2004 CanLII 18056 (ON SC), (2004), 69 O.R. (3d) 689 (S.C.). Justice Moldaver stated, at para. 29, that the doctrine prevents “unscrupulous defendants who stand in a special relationship with the injured party from using a limitation provision as an instrument of fraud”. As the motion judge observed in Giroux, three elements must be established to make out the doctrine:
a) the defendant and plaintiff are engaged in a special relationship with one another;

b) given the special or confidential nature of the relationship, the defendant’s conduct amounts to an unconscionable thing for the one to do to the other; and

c) the defendant conceals the plaintiff’s right of action (either actively, or as a result of the manner in which the act that gave rise to the right of action is performed).



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