Exploring the Limits

The decision in Farhat v. Monteanu, a ruling this April by Ontario’s Superior Court of Justice, is an important one for defence counsel in motor vehicle accident litigation and serves as a reminder that the application of the province’s Limitations Act, 2002 is not straightforward when it comes to claims for both pecuniary and non-pecuniary damages.

THE ACCIDENT

In Farhat, the plaintiff was injured when his vehicle was rear-ended by the defendant’s vehicle on May 18, 2006. Within a few weeks of the accident, the plaintiff’s lawyer put the defendant on notice of the plaintiff’s potential claim, advising that the plaintiff had sustained “serious injuries” as a result of the accident.

Nine months after the accident, the plaintiff was diagnosed with a non-dermatoromal sensory deficit in his left upper and lower extremities. This diagnosis, ultimately, formed the basis of a chronic pain claim.

THE ACTION AND THE SUMMARY JUDGMENT MOTION

Two years and 32 days after the accident (on June 19, 2008), the plaintiff commenced a personal injury action against the defendant. The plaintiff’s claim was limited to non-pecuniary damages (for example, pain and suffering, which cannot be measured in money, but nevertheless is compensated for with money). As in all motor vehicle accident litigation, to recover non-pecuniary damages from the defendant, the plaintiff had to satisfy the pre-conditions of Section 267.5(5) of Ontario’s Insurance Act. Referred to as the “threshold,” the section requires demonstration of either a “permanent serious disfigurement” or a “permanent serious impairment of an important physical, mental or psychological function” for non-pecuniary damages.

The defendant moved for summary judgment, dismissing the plaintiff’s claim as statute-barred since it was brought outside of the applicable limitation period. The plaintiff also sought partial summary judgment in order to defeat the defendant’s limitation period defence.

THE COURT REJECTS THE LIMITATIONS ACT DEFENCE

The defendant argued that pursuant to Section 5(2) of Ontario’s Limitations Act, 2002, there is a presumption that a motor vehicle accident claim is discovered on the date the accident occurred. The defendant suggested the plaintiff must provide evidence that the issuance of the claim was delayed because of the need to obtain medical confirmation that the plaintiff’s serious injury was a permanent injury and, thus, met the “threshold.” The defendant submitted that in failing to put evidence before the court in this respect, the presumption raised by the application of Section 5(2) was not rebutted by the plaintiff.

In Farhat, Justice Paul Perell confirmed that on such motions, the onus is on the plaintiff to persuade the court of the following:

(a) the seriousness of his injury was not discoverable within the applicable limitation period; and

(b) he acted with due diligence to discovery if there was a cause of action.

Justice Perell then went on to cite the 2010 decision of the Court of Appeal for Ontario, Everding v. Skrijel, in which it was held that a plaintiff will not have discovered his or her claim before he or she knows he or she has a substantial chance to succeed in recovering a judgment for damages.

Referring to the 2011 decision by Ontario’s Superior Court of Justice, Hoffman v. Jekel, Justice Perell stated the following:

“[a] person cannot be expected to commence an action before he or she knows that the necessary elements as set out in the legislation can be established on the evidence.” [Emphasis added]

Significantly, Justice Perell found that Section 267.5(5) of the Insurance Act had the effect of protecting minor personal injury claims from the running of a limitation period for “a period of time commensurate with how long it would take a reasonable person with the abilities and in the circumstances of the plaintiff to have discovered that the threshold for a claim had been surpassed.” In his ruling, Justice Perell stated the following:

Much to the dismay of insurance companies of defendants, almost invariably, it will take several months to determine whether ongoing pain suffered as a result of an accident is a permanent serious impairment. It will typically, almost invariably, be the case that a plaintiff with only a chronic pain claim will not know that the claim surpasses the Insurance Act threshold until sometime after the date of the accident. [Emphasis added]

Justice Perell found the plaintiff need only show that he could not have discovered his chronic pain claim between the date of the accident and June 18, 2006 (two years before the date the action was commenced). He was satisfied the plaintiff had done so. Ultimately, the defendant’s motion for summary judgment was dismissed and the plaintiff’s partial summary judgment motion was granted.

THE DECISION’S IMPLICATIONS

The decision in Farhat suggests that the discovery of a non-pecuniary claim in connection with a motor vehicle accident is highly dependent on the availability of credible evidence to establish the seriousness of the plaintiff’s injuries.

While arguably reasonable in the context of a claim involving non-pecuniary damages only, where a motor vehicle accident claim involves both non-pecuniary and pecuniary damages, it seems inevitable that an inconsistent application of the provisions of the Limitations Act, 2002 will occur as only non-pecuniary damages are subject to the “threshold” provisions.

Importantly, Ontario courts have previously resolved this inconsistency in favour of plaintiffs. In fact, Justice Perell in Ng v. Beline, released in 2008, found that a non-pecuniary claim could “shelter” claims for pecuniary damages that might otherwise be out of time, so long as the non-pecuniary claims are not statute-barred:

In my opinion… with respect to the operation of limitation provisions, a plaintiff with an automobile accident claim should receive the most favourable treatment possible, and this means that the measure of whether he or she has a claim is governed by the discoverability of the claim for non-pecuniary damages, which is the claim that is subject to the threshold test… In practical terms, the pecuniary claims may shelter under the limitation period for the non-pecuniary claims if those claims are not statute-barred. [Emphasis added]

More recently, the court in Pereira v. Contardo last year confirmed that the delayed discovery of a valid non-pecuniary claim could effectively cure a statute-barred pecuniary claim, as each cause of action does not receive an independent limitation period. In that case, Justice Perell stated the following:

In Ng v. Beline, I accepted that an effect of the Chenderovitch judgment is that it recognized that there are separate causes of action for pecuniary and non-pecuniary losses under the Insurance Act scheme for automobile accident claims. However, in my opinion, it did not follow from the Chenderovitch judgment that each cause of action receives an independent limitation period analysis. I held that if the threshold claim is not timely, then all the claims should be statute-barred and conversely if the threshold claim is timely, then it is just that all claims should go forward. [Emphasis added]

Respectfully, the precedent set by decisions like that in Farhat appear to unnecessarily complicate the general rule set out in Section 5(1) of the Limitations Act, 2002. The language of the section is clear: a claim is discovered on the earlier of the day on which the person with the claim first knew “that the injury, loss or damage occurred.” However, notwithstanding the potential discovery of a pecuniary claim on the date of the accident, the decision in Farhat confirms that defendants remain potentially exposed to liability for both non-pecuniary and pecuniary damages arising out of a motor vehicle accident for extended periods of time, and possibly until the expiry of the 15-year ultimate limitation period set out in the Limitations Act, 2002 – an arguably unjust result.

Although supported by previous jurisprudence, decisions like that in Farhat do not seem to accord with the underlying rationales for the implementation of limitation periods, namely the desire to provide finality to potential defendants and to encourage plaintiffs to bring actions in a timely fashion.