Canada: Down The Path To The End Finality - A Case Study Of Gillham v. Lake Of Bays (Township)

Co-authored by Jessica Murphy, Law Student

In July 2018, the Ontario Court of Appeal handed down its decision in Gillham v Lake of Bays (Township) ("Gillham"),¹ wherein the Court of Appeal struggled with the issue of whether a claim made after the limitation period could be permitted. The crux of the issue was whether or not the appellants had received all of the material facts before their case became statute-barred as per section 5 of the Limitations Act.²

The Construction

By way of background, the appellants, Jack Gillham and Heather Gillham, had hired J.D. MacKay ("MacKay") to perform construction on their prefabricated cottage. As the Court noted, in May of 2006, MacKay proceeded to excavate the foundation, the pier footings of the deck, and construct and backfill a stacked rock retaining wall. The purpose of the retaining wall was to ensure the foundation of the cottage had the necessary depth of backfill to satisfy the requirements of frost protecting for a foundation wall as prescribed by Ontario's Building Code.

Royal Homes Limited ("Royal Homes") then constructed the footings and foundation for the cottage and deck and assembled the prefabricated cottage and deck. The work was completed in July of 2006.

First Notice of Issues

In the summer of 2009, the appellants first noticed that one of their deck piers has sunk, causing the deck post to pull away from the cottage. Upon noticing the issue, the appellants approached Royal Homes. They were advised that the problem had nothing to do with the construction of the cottage and, regardless, the issue was "not serious".³ Royal Homes suggested that it was MacKay's installation of the retaining wall which was likely at fault.

The appellants retained a structural engineering firm, Trow Associates Inc., to investigate. Trow did not suggest that there were construction issues with the stone retaining wall or the cottage foundation. Instead, Trow found that "the northeast corner of the deck [was] experiencing some settlement".⁴ The appellants then discussed these issues with MacKay who advised that the retaining wall was still settling and that the appellants should "wait and see"⁵ if the problem continued. Based on the above, the appellants took no further steps.

In 2012, the appellants, still experiencing issues, retained Fowler Construction Company Ltd. to inspect the property. Fowler discovered that the construction of the retaining wall and foundation had been constructed on loose soil.

The applicants commenced their action on October 21, 2013. They alleged that the foundation of their cottage was negligently constructed by MacKay and Royal Homes. They also alleged that the Corporation of the Township of Lake of Bays was negligent in its oversight and approval of same.

SummaryJudgment Motion

The matter went to summary judgment motion where the issue of discoverability was questioned and the action was dismissed. The motions judge found that the applicants should have known in 2009 that there were issues with the cottage's construction.

The Gillham's appealed.

Court of Appeal

On appeal was the issue of whether the claim was properly discoverable by the applicants.

In allowing the appeal, the Court engaged in a detailed discoverability analysis. With reference to the 2012 Ontario Court of Appeal case of Ferrara v. Lorenzetti, et. al.,⁶ Justice Roberts stated that the discoverability analysis in section 5 of the Limitations Act involves considering whether the claimant knew, or reasonably should have known, the material facts that give rise to a claim. It is not enough, under section 5(1) of the Act, that the appellants were aware of a problem.

Rather, as per section 5(1)(a)(iv), the limitations period does not start until a claimant is aware that, "having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it"⁷

Justice Roberts found that the motions judge had made palpable and overriding errors in his analysis of the evidence regarding discoverability. Not only did the motions judge misapprehend the Trow report's contents, but he also did not consider "the specific factual or statutory setting" before him; namely, that the applicants did not know the respondents were responsible for their cottage's issues until the Fowler investigation in 2012.

Take Away

In Gillham, the court appears to be pushing the discoverability concept of "appropriate means" under section 5 of the Limitations Act. As noted by Justice Roberts, "appropriate means" under section 5(1)(a)(iv) was added by the legislature to minimize needless litigation.

Accordingly, this case seems to suggest that courts are upholding the legislature's purpose by supporting claimants that do not commence an action until they have acquired material evidence that a defendant was involved in the loss. This is a shift away from strict observance of the two-year limitation period in favour of minimizing litigation.

One of the defining purposes of limitation periods is to provide a time when potential defendants are free of "ancient obligations" and the requirement to preserve evidence.⁸ The Gillham decision appears to have pushed the limits of finality. As for plaintiffs, given that the courts have emphasized that discoverability is a fact dependent analysis, future claimants would be well advised to continue to treat any future losses as though they must be brought within two-years of first discovery.

Footnotes

1. 2018 ONCA 667 ["Gillham"].

2. 2002, SO 2002, c. 24, Sched. B ["Limitations Act"].

3. Gillham, supra note 1 at para 8.

4. Ibid, at para 9.

5. Gillham, supra note 1 at para 11.

6. 2012 ONCA 85.

7. Limitations Act, supra note 2.

8. M (K) v M (H) (1992), 1992 CarswellOnt 841 (SCC), at para 22.

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