Can a single act of negligence lead to multiple claims with differing limitation period cutoffs because discoverability applies differently to the differing claims?
Yes.
Today’s Court of Appeal decision in Grey Condominium Corporation No. 27 v. Blue Mountain Resorts Limited, 2008 ONCA 384 provides:
[35] The central issue is whether the plaintiff can advance more than one claim in relation to the Town’s negligence in not identifying the design and construction deficiencies in the Grey Condo buildings. If that question is answered affirmatively, then, based on the trial judge’s finding that Grey Condo could not, with reasonable diligence, have discovered the existence of the interior defects before 1996, the appeal ought to be dismissed.
…
(ii) Application of the Discoverability Rule in Construction Defect Cases – Multiple Claims arising out of One act of Negligence
[49] In construction deficiency cases allowing multiple claims that arise out of one act of negligence is not without precedent.
[50] In Carleton Condominium, due to obvious problems with the brick cladding discovered in 1986, on a building constructed in 1972, the owners sued the builder/developer for negligent design and construction. The matter was settled in 1987. Subsequently, the plaintiff determined that there was a deficiency in the block wall. The defendants claimed that the claim was res judicata and statute barred.
[51] In addressing these defences, the trial judge’s decision was based primarily on issues pertaining to estoppel. In particular, the trial judge cited the rule in Henderson v. Henderson (1843), 3 Hare 100 aff’d in Doering v. Grandview (Town), [1976] 2 S.C.R. 621: the plea of res judicata applies, except in special cases, not only to points upon which the Court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time. She then found that the defects in the block wall could not reasonably have been discovered with due diligence and hence the plaintiff was not estopped from raising the claim.
[52] However, the trial judge still had to consider whether the claim was statute barred. In this regard she re-emphasized that the claim could not have been discovered before 1993, and, since the second action was commenced in 1995, it was brought in time. She held that it would be impractical, when dealing with a matter as complex as the construction of an apartment building, to expect the owner to be able to identify all latent deficiencies at any given point in time just because one patent deficiency had been identified.
[53] In a brief judgment, this court affirmed the trial judge’s reasons, thereby sanctioning multiple causes of action arising out of one act of negligence.
[54] The Town, relying on Cahoon, supra and Peixeiro, supra, submits that Carleton Condominium was wrongly decided. While this panel is not in a position to consider this issue, it is important to address the Town’s concerns about the principles established in Cahoon and Peixeiro.
[55] In Cahoon at p. 459, the Supreme Court accepted that a “single cause of action cannot be split to be made the subject of several causes of action”. While this decision addressed whether a party could amend a pleading and remains accepted law, it was decided well before the discovery principle became part of Canadian jurisprudence.
[56] In Peixeiro, the Supreme Court held at para. 18, “[o]nce the plaintiff knows that some damage has occurred and has identified the tortfeasor, the cause of action has accrued. Neither the extent of damage nor the type of damage need be known. To hold otherwise would inject too much uncertainty into cases where the full scope of the damages may not be ascertained for an extended time beyond the general limitation period.” [Citations omitted.]
[57] The Town’s position is that this statement is unequivocal – once damage, any damage, is discovered or reasonably could have been discovered, the cause of action has accrued.
[58] I disagree for two reasons.
[59] First, the Supreme Court has flexibly defined causes of action to respond, in certain circumstances, to access to justice concerns. Second, allowing a second claim is consistent with the principles the Supreme Court has identified in addressing claims for pure economic loss in the construction industry.
[60] I start with an example of the first, M.(K.) v. M.(H.), supra where the Supreme Court altered the contours of the cause of action in battery for reasons relating to access to justice.
[61] In M.(K.) v. M.(H.), the discoverability principle was, arguably, extended to define the elements of the cause of action in a way that allowed an incest victim to bring her claim. The issue arose after the plaintiff advanced a claim of assault, battery and breach of fiduciary duty on the basis of having been a childhood victim of incest by her father. The plaintiff did not commence her action until after entering therapy late in her twenties. At trial, the jury awarded the plaintiff $50,000 in damages, but the judge held that the claim was statute barred. According to the trial judge, the plaintiff had discovered that she had been wronged and suffered adverse effects when she was sixteen.
[62] The Supreme Court, however, took a functional approach and identified a presumption that it is only through therapy that certain incest victims discover the necessary connection between their injuries and the wrong done to them. According to the court at pp. 45-47:
Battery consists of wrongful touching, and it is the wrongfulness of the contact and its consequential effects that are the material facts the plaintiff must discover before her cause of action accrues….
…
It is clear from the evidence and the scientific literature that a misapplied sense of responsibility is instrumental in conditioning the child victim to submit silently to the abuse, while at the same time serving as the catalyst for much of the consequential psychological and emotional damages that emerge over time. More importantly, though, it is the redirection of responsibility for the abuse to whom it properly belongs that initiates the therapeutic process, such that the victim becomes aware of the causal connection between her childhood history and resulting injuries.
…
The close connection between therapy and the shifting of responsibility is typical in incest cases. In my view, this observed phenomenon is sufficient to create a presumption that certain incest victims only discover the necessary connection between their injuries and the wrong done to them (thus discovering their cause of action) during some form of psychotherapy.
[63] The Supreme Court held that even if the plaintiff was generally aware, while a teenager, that she wanted the abuse to stop, it was only once she had a “substantial awareness” of the wrong committed that her cause of action had accrued, and that this level of awareness presumptively arose during therapy. The Supreme Court adopted this approach even after considering the purposes of statutes of limitations: repose, finality and freshness of evidence.
[64] The Supreme Court used the discoverability rule to modify the tort of battery – specifically, the awareness component. This modification affected the time when the cause of action could be said to have accrued. In this fashion, the Supreme Court provided an incest victim the opportunity to redress damages that otherwise would have been statute barred because of her prior, though limited, awareness of wrongdoing and its negative effects.
[65] This takes me to Winnipeg Condominium, supra, where the owner/developer of an apartment building sold it to a purchaser who had no privity of contract with the contractor who built the building. Later, the purchaser had to incur substantial repair costs after a large slab fell from the building. The purchaser sued the contractor in negligence, claiming economic loss for the repairs. The Manitoba Court of Appeal struck the claim as disclosing no cause of action.
[66] The Supreme Court, in allowing the appeal, held that individuals who negligently design and construct buildings can be held liable for the costs of repairing dangerous defects. In reaching this conclusion, the Supreme Court reasoned that individuals should be liable for these costs because the defects in question could, if not repaired, harm persons or property, which would result in other causes of action (at paras. 35-43).
[67] It is clear that the analysis in Winnipeg Condominium was focused on the problems of recovery for pure economic loss and the various conceptual arguments that might take a case out of the pure economic loss category and put it into the direct physical injury category. However, it is equally clear that, in this decision, the Supreme Court expressed an intention to open up avenues of redress in construction cases involving defects that pose a substantial danger to the health and safety of occupants.
[68] I agree with the trial judge that the “single cause of action” theory upon which the Town relies in this appeal is contrary to the underlying principle established in Winnipeg Condominium as it would allow builders and other individuals involved in the construction industry to avoid liability for subsequently discovered dangerous defects.
[69] What makes the argument that the single cause of action paradigm should not be applied to construction deficiency cases particularly compelling is that it does not violate the important principles underlying statutes of limitation.
[70] While it is clear that repose is best served by accepting the Town’s position, the evidentiary objective is different. Key issues to be litigated in latent deficiency cases are the existence of the deficiency, its proximate cause and the resultant damage. Evidence relating to these issues tends to develop, rather than disappear, over time. The diligence factor does not enter into the equation at all since diligence obligations cannot reasonably be imposed on a plaintiff who is blamelessly ignorant due to the inherently undiscoverable nature of the injury.
[71] In my view therefore, given the inherently latent nature of construction defects, and given that they will often be discovered over a period of time, it is neither logical nor fair to deny innocent victims an opportunity to seek redress for the wrongs done to them, based solely on the single cause of action paradigm.
[72] That said, trial judges must be careful to ensure that the deficiencies in question are clearly independently discoverable. Failure to do so could undermine the need for finality in litigation. As Doherty J.A. expressed it in Tsaoussis (Litigation Guardian of) v. Baetz (1998), 41 O.R. (3d) 257 ( C.A. ) at para. 14:
Finality is an important feature of our justice system, both to the parties involved in any specific litigation and on an institutional level to the community at large. For the parties, it is an economic and psychological necessity. For the community, it places some limitation on the economic burden each legal dispute imposes on the system and it gives decisions produced by the system an authority which they could not hope to have if they were subject to constant reassessment and variation.”
[73] A party should not be allowed to pursue a claim, in a separate action, for damages based on a construction defect arising from the same act of negligence, where the damages sought are simply an attempt to litigate an issue that could have been previously pu
