In Galota v. Festival Hall Developments Ltd. et al., 2015 ONSC 6177 (“Galota”), the Ontario Superior Court of Justice pushed the boundaries of discoverability in the context of limitation periods. While the case addresses a personal injury claim, the implications of the decision may be more far-reaching.

The purpose of the limitation period is to provide certainty, to preserve evidence and to ensure that plaintiffs bring a lawsuit in a timely fashion. The Limitations Act, 2002, S.O. 2002, c. 24, Sched. B (“Limitations Act”) sets out the period of time by which a party must bring a claim in Ontario.

Section 4 of the Limitations Act stipulates that a proceeding shall not be commenced more than two years after the day the claim was discovered. Section 5 defines discoverability as the following:

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).

In personal injury actions, the interpretation of discoverability principles have on occasion strayed from the two-year deadline, particularly in the motor vehicle accident context due to the threshold requirement of a permanent and serious impairment under the Insurance Act, R.S.O. 1990, c. I. 8. However, Galota did not involve a motor vehicle accident.

In Galota, the defendant, Festival Hall Developments Limited (“Festival Hall”), brought a motion for summary judgment based on a limitation issue. In dismissing the motion, the Court held that a landlord could be claimed against in an occupier’s liability personal injury action five years after the date of loss.

On May 13, 2006, the plaintiff fell while at Republik nightclub. Republik was a tenant of the premises. Festival Hall was the landlord. The statement of claim was issued against Republik within two years of the fall. It did not name Festival Hall as a defendant.

On November 9, 2009, the examination for discovery of Republik occurred. During the examination for discovery, plaintiff’s counsel advised that he “learned” that Festival Hall was involved with the construction of the elevated dance floor where the fall occurred. The dance floor was constructed without permits, perhaps in violation of the Building Code Act, 1992, S.O. 1992, c. 23. Republik closed and the insurer became insolvent.

In 2011, the plaintiff commenced an action against Festival Hall. Festival Hall brought a motion for summary judgment to have the action against it dismissed for failure to comply with the two-year limitation period pursuant to the Limitations Act.

In holding that the relief would not be granted, the Court analyzed the discoverability criteria in section 5 of the Limitations Act. The crux of the analysis rested on subsection 5(1)(a)(iii), which focuses on an act or omission by a tortfeasor.

The Court found that the plaintiff reasonably investigated the claim and was not required to seek information from adverse parties prior to discovery when there was no legal obligation for an adverse party to provide any information. Therefore, the claim was properly commenced within two years of the date of the examination for discovery of Republik in November of 2009.

Competing experts on occupiers’ liability issues were retained and provided evidence supporting each parties’ position for the motion. The Court agreed with the plaintiff’s submissions that it would be inappropriate to name landlords as defendants in every case of an occupier’s liability claim against a tenant.

Festival Hall’s expert noted that the plaintiff did not do the following from the outset of the claim:

  • attend or have someone attend the location of the fall to examine the elevated dance floor (by the time a structural engineer was retained, the nightclub was closed);
  • arrange for measurements or photographs of the dance floor;
  • retain an expert to determine if there were any Building Code Act infractions related to the incident;
  • request a copy of the lease; or
  • request information concerning the party responsible for constructing the elevated dance floor.

The Court emphasized that the plaintiff did not know the terms of the lease or about the involvement of the landlord in the design until the examinations for discovery. The judgment makes no mention of when the plaintiff received a copy of the lease.

One of the fundamental purposes of the Limitations Act is to ensure that potential defendants are not exposed to indeterminate periods of potential liability. The five year period between the date of loss and issuing the claim against the landlord is an inordinately long period of time.

If a landlord is sued and is not liable for an incident, it can promptly produce evidence supporting its position. Usually the terms of a lease will spell out the responsibilities for leasehold improvements as between a tenant and landlord.

The Court made the unorthodox recommendation that the appeal from this decision be delayed until after the trial “so that all appeal issues can be presented in a single appeal.” Despite this recommendation, the defendant is appealing the decision before the trial.

If this decision is upheld, claims against landlords and other potential tortfeasors may be subject to a limitation period commencing on the date of examinations for discovery or the date of receipt of certain productions rather than the date of loss.

We will be keeping our eyes open for the results of the appeal.