Limitations and Discoverability Principles - Update

Chuang v. Fogler Rubinoff LLP, [2022] O.J. No. 2528

Discoverability - When time starts to run - Section 5 Limitation Act, RSO, 2002

This case settles a gap in the case law when dealing with procedural steps in a litigation and when the time starts to run for a cause of action against the potential negligence of a lawyer.

In this case, the respondent discovered that it had a potential claim against its lawyers when leave to appeal was refused by the Supreme Court of Canada. The Appeal court ruled that the respondent could not have known of potential damages prior to that point in time, as it relied upon the advice of its counsel. Given the delays often experienced in the procedural system and the limiting two year limitation period to bring forward a claim, it would be unreasonable for a party - reliant upon counsel’s professional legal opinion - to be barred from bringing a claim against their counsel until such time as their legal recourse - procedurally- was exhausted.

This case highlights two things: firstly, counsel may not rely on a rigid two year limitation period to shield themselves from claims by their clients, or others on the basis of delays in the procedural system; and secondly, the clock must only start to run when there is in fact knowledge of potential damages, injury or loss is known to the party. While this rationale is in line with the discoverability principles, it must be noted that there have been cases wherein the courts have determined that parties were statute barred from asserting claims against their counsel or other parties, while they navigated the court process and appeals process, on the basis that the judges ruled that the date of the primary loss, injury or damage of the content of the original claim was the threshold to determine the limitation period, and not the question of whether advice from counsel triggered the loss or damage.

The takeaway here is that if the client is undergoing a procedural step in the court system on a question of law, they will not be barred from bringing forward a claim against counsel, despite the time that has passed from the original date of loss, until they have exhausted all levels of court, to determine if in fact there is loss or damage experienced. It is only at that time that the clock starts to run.