A recent decision involving solicitor’s negligence, Rajmohan v. Norman H. Solmon Family Trust, 2014 ONCA 352, required the Ontario Court of Appeal to consider two of the murkier issues relevant to limitations analysis — namely, (1) the doctrine of “fraudulent concealment” and (2) the doctrine of “special circumstances.”
It was alleged that a solicitor had been negligent in representing his client in a mortgage transaction. Because of the client’s intervening death, the claim was brought by the client’s estate. For that reason, the claim was subject to the absolute two-year limitation period under s-s. 38(3) of the Ontario Trustee Act, rather than the discovery-based two-year limitation period under the Limitations Act, 2002.
The claim was brought more than two years after the client’s death, and was therefore statute-barred. The estate argued that the expiry of the two-year limitation period could be overcome — allowing the action to go forward — based on principles of “fraudulent concealment” and/or “special circumstances.”
The motions judge granted summary judgment rejecting both of these arguments. The Court of Appeal affirmed this ruling, and agreed that the claim was statute-barred.
Both fraudulent concealment and special circumstances represent exceptions to the usual application of limitations principles. Both doctrines are the source of some confusion.
Fraudulent concealment: This docrine applies in circumstances where some conduct of the defendant has prevented or delayed the plaintiff’s discovery of her claim. Despite its name, the doctrine of fraudulent concealment does not necessarily involve actual “fraud” committed by the defendant. As explained by the Court of Appeal, the doctrine applies if a plaintiff is able to establish three criteria:
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).
Because of the solicitor-client relationship that underlay the claim, the requisite “special relationship” was found to exist.
However, neither the motions judge nor the Court of Appeal was prepared to find that the solicitor had committed the sort of “unconscionable” conduct necessary to satisfy the second branch of the doctrine. At worst, the solicitor had been negligent, and mere negligence — even in the context of a fiduciary relationship — was not “unconscionable.”
The ONCA suggested that, it the solicitor had been shown to have breached his fiduciary duty — by representing both sides of the mortgage transaction without the client’s consent or by refusing to produce his records in a timely manner — this might have satisfied the requirement of unconscionable conduct. However, such conduct was not proven, and the doctrine of fraudulent concealment did not apply.
Special Circumstances: This doctrine is equally esoteric and prone to misinterpretation. This common law doctrine permits a party — who has already commenced a claim within the required limitation period — to add or substitute a party, or to add a cause of action, after the expiry of a limitation period. The court will only grant this indulgence where so-called “special circumstances” exist, and where no (non-compensable) prejudice will be suffered by the other side.
The Ontario Court of Appeal had previously ruled — in Joseph v. Paramount Canada’s Wonderland, 2008 ONCA 469 — that this doctrine has no application under the current general Limitations Act, 2002. One issue before the Court was whether the doctrine nevertheless applies to the limitation period imposed under the Trustee Act.
On the facts of the case before them, the ONCA refused to rule definitively on this issue:
The doctrine of special circumstances, if it applies [to the Trustee Act], does not allow a party to commence a…claim after the expiration of a limitation period.
As the Court explained, the doctrine had no application because this was not a case where a plaintiff sought to add a new party or a new cause of action. Instead, the client’s estate sought to commence an entirely new action (in this case, a third-party claim), beyond the applicable limitation period. This conclusion is consistent with the ONCA’s earlier ruling in Joseph v. Paramount Canada’s Wonderland, where it was noted that the special circumstances doctrine “contemplate[s] only the power to amend or add a claim or party to an existing action” and does “not give the court the authority to allow an action to be commenced after the expiry of a limitation period” [emphasis added].