Patricia VircLimitations decision puts plaintiffs in ‘scary place’: Virc

January 2, 2020by Patricia Virc

An Ontario Court of Appeal decision strikes the wrong balance on limitations in the context of smaller claims, Toronto civil litigator Patricia Virc tells

The case revolved around a couple’s problems with their $60,000 HVAC system. After entering a service contract with the company that installed the system, the plaintiffs eventually determined that the defendants were responsible for the issues, but a motion judge dismissed their claim summarily after finding they waited too long to sue.

In its judgment, a panel of the province’s top court ruled by a 2-1 majority to uphold the motion judge’s decision, rejecting the plaintiffs’ arguments that the limitations period should have been extended further because they were still relying on the superior knowledge of the defendants.

“Limitation period cases are really difficult because you don’t know how a court is going to rule, and it’s a very scary place for plaintiffs,” says Virc, a lawyer with Steinberg Title Hope & Israel LLP. “It’s almost an access-to-justice issue with a small claim like this because I’m not sure we really want people sticking their necks out and suing someone before they’ve figured out who is responsible for the loss.”

Virc says plaintiffs with multimillion-dollar losses may be more inclined to sue early before the liability picture is clear, and potentially include innocent parties as defendants.

“Then you can absorb the hit for forcing someone into the litigation unnecessarily by paying for those costs out of the damages,” she explains. “But when you’ve got a smaller claim, you can’t afford to go around suing people without a good reason because those costs will envelop the entire claim.

“We have a legal system which at this very moment is hugely under-resourced and broken in terms of delay, so I don’t think we should be encouraging people to bring lawsuits before they know what’s going on,” Virc adds.

According to the decision, the couple had problems with the HVAC system almost immediately after its installation in 2006. After complaining to the defendant installer, it convinced the plaintiffs to enter a two-year maintenance program starting in June 2007, but the problems continued.

The maintenance contract expired in May 2009, but in late 2010, the plaintiffs received information from the system’s manufacturer suggesting the defendants had failed to install other customers’ products properly. They finally launched their claim in February 2012, just days after an environmental report pinpointed faulty HVAC installation as a possible reason for mould growth in their home.

A motion judge accepted that the limitation clock was stopped during the term of the maintenance contract under section 5(1)(a)(iv) of the Limitations Act because the plaintiffs were “relying on the superior knowledge and expertise” during that time, but still found the claim statute-barred after finding the plaintiffs should have known of their claim more than two years before February 2012.

A majority of the appeal court panel agreed with that assessment, though dissenting Justice Kathryn Feldman would have sided with the plaintiffs after noting inconsistencies in the motion judge’s decision that suggested the plaintiffs were still seeking help from the defendants as late as the fall of 2010.

Virc says the decision stands in stark contrast to another recent appeal court case, where a panel also including Feldman, set aside a settlement agreement between a university and a former executive who misappropriated more than $1 million from the facility, dismissing a strong limitations defence in the process.

“The court was very generous to the plaintiff university in terms of the discoverability of their claim,” Virc says. “But in the HVAC matter, there was little generosity for the plaintiffs, even though they were clearly trying to resolve the issue with the defendants instead of just suing them.

“That’s exactly the behaviour we would like to encourage — try to work with the other party until it seems futile or until you have a reasonable basis to think you’ve been hosed,” she adds.

Patricia Virc

Steinberg Title Hope & Israel LLPSteinberg Title Hope & Israel LLP

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