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Limitations - Where Leave Required to Commence Action

. 1159337 Ontario Ltd. v. Saplys

In 1159337 Ontario Ltd. v. Saplys (Div Ct, 2021) the Divisional Court considered the running of a limitation where leave is required to commence the proceeding:
[12] Where leave is required to commence a proceeding, leave must be sought prior to the expiry of a limitation period. The Supreme Court of Canada specifically addressed this in Canadian Imperial Bank of Commerce v. Green, 2015 SCC 60, [2015] 3 S.C.R. 801. That case considered three appeals where class action plaintiffs claimed damages for negligent misrepresentation and sought to claim damages for the statutory cause of action set out in s. 138.3 of the Securities Act, R.S.O. 1990, c. S.5. None of the plaintiffs obtained leave to commence the statutory action, required under the Securities Act, before the expiry of the limitation period.

[13] Côté J. held at paras. 91-93 of Green:
[91] Returning to the issue in the cases at bar, there are two schools of thought in the jurisprudence on whether a failure to obtain leave within a specified limitation period results in the nullity of the action or is merely a procedural irregularity. According to one view, a failure to do so results in the nullity of the action, which cannot be remedied by a nunc pro tunc order, and is therefore an “insurmountable obstacle”: Holst v. Grenier (1987), 1987 CanLII 4512 (SK QB), 65 Sask. R. 257 (Q.B.), at para. 10. According to the second view, such a failure is merely a procedural irregularity that can be corrected by a nunc pro tunc order: see, e.g., CIBC Mortgage Corp. v. Manson (1984), 1984 CanLII 2587 (SK CA), 32 Sask. R. 303 (C.A.), at paras. 8-11 and 33; McKenna, at para. 22.

[92] In my opinion, van Rensburg J. correctly stated the law on this point in IMAX. She noted that the courts have been willing to grant nunc pro tunc orders where leave is sought within the limitation period but not obtained until after the period expires (as in Montego Forest Products). She also noted that, in the cases suggesting that an action commenced without leave was a nullity, the applicable limitation periods had expired before the application for leave was brought. A nunc pro tunc order in such cases would be of no use to the plaintiff, as it would be retroactive to a date after the expiry of the limitation period.

[93] Thus, subject to the equitable factors mentioned above, an order granting leave to proceed with an action can theoretically be made nunc pro tunc where leave is sought prior to the expiry of the limitation period. One very important caveat, identified by Strathy J., is that a court should not exercise its inherent jurisdiction where this would undermine the purpose of the limitation period or the legislation at issue.
[14] The Court of Appeal has held that the court has no authority to grant an order nunc pro tunc validating and regularizing proceedings pursuant to subsection 187(9) of the Bankruptcy and Insolvency Act, R.S.C., 1985, c. B-3 after the expiration of the limitation period if the party did not seek the order before the expiry of the limitation period: Thistle v Schumilas, 2020 ONCA 88, 442 D.L.R. (4th) 339, at paras. 25 and 31.

[15] None of the cases relied on by the appellants deal with requests to regularize improper pleadings after the expiry of the limitation. 1159 relies on Bentivoglio v. Le Groupe Brigil Construction, 2016 ONSC 1237, 57 C.L.R. (4th) 82, aff’d 2017 ONCA 413, 64 C.L.R. (4th) 177. While the third party claim under the CLA in that case was similarly commenced without leave for more than just contribution and indemnity, the effect of the order in that case was that the third party claim had been converted to the regular civil track prior to the expiry of the limitation period. The motion judge found as a fact that the fourth party action was commenced within the limitation period even though leave was not sought until after the limitation period expired. The Court of Appeal held that since the third party claim had moved to the ordinary track at the time the fourth party proceedings were commenced (and before the limitation period had expired), leave was not required to commence the fourth party claim. That case is not authority for the proposition that after the expiry of a limitation period the court can convert a CLA proceeding brought without leave to the ordinary civil stream.


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