Law Times

May 8, 2017

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Law Times • may 8, 2017 Page 3 Ruling will affect professional negligence claims Decision brings clarity to Limitations Act BY ALEX ROBINSON Law Times L awyers say a recent On- tario Court of Appeal de- cision shows that courts are not going to take a rigid view of when litigation is an appropriate means to remedy an injury or loss in professional negligence cases. In Presidential MSH Cor- poration v. Marr Foster & Co. LLP, the court allowed a client's lawsuit against an accounting firm to continue, despite the fact that the two-year limitation pe- riod had expired before the ac- tion was filed. "Cases should not be dis- missed as they may otherwise have been because of the allega- tion that they're statute-barred," says Allan Sternberg, one of the lawyers representing the plain- tiffs in the case. "It gives plaintiffs more in their arsenal to resist a motion to dismiss because the case is stat- ute-barred." Presidential MSH Corpora- tion launched the action against its accountant Larry Himmel- farb and his firm, Marr Foster & Co. LLP, after he filed its corpo- rate tax returns late. As the returns were not filed by the due date, Presidential was not able to take advantage of certain tax credits, resulting in $550,000 in unpaid taxes, fines and interest owed to the Canada Revenue Agency. Presidential filed its claim against the accountant more than two years after the CRA originally denied the tax credits but within two years of when the agency ultimately refused to change its assessments in re- sponse to a notice of objection sent by a lawyer retained by the company. While a motion judge had dismissed Presidential's lawsuit on summary judgment as the limitation period had expired, the Court of Appeal reversed that decision, finding the ac- countant's attempts to mitigate the client's damages in the year after receiving the fines tolled the limitation period. "This is not a case where the claimant sought to toll the op- eration of the limitation period by relying on the continuation of an alternative process whose end date was uncertain or not reasonably ascertainable," Jus- tice Gladys Pardu wrote in the decision. The decision turned on the application of a section of the Limitations Act, 2002, that de- fines discoverability. The act came into effect in 2004 and decreased the limita- tions period to two years, re- stricting the time plaintiffs have to bring a claim. Tom Curry, a partner with Lenczner Slaght Royce Smith Griffin LLP, who was not in- volved in the case, says that when the Limitations Act was first passed, some struggled to understand what the section meant and that decisions like this clarify how it works. "For people concerned with professional liability issues, this adds another important element as to when it is legally appropri- ate to launch a claim," he says of the Presidential decision. "Here the court allowed the client to have the benefit of hav- ing every effort made to avoid needless litigation by working through the possible remedy through the CRA process." Presidential had argued to the motion judge that a lawsuit would not have been appropri- ate before August 2010, as no one had advised them of the possibility of a claim, the ac- countant was actively helping them in efforts to rectify the problem and the CRA assess- ments were not confirmed until July 2011. The motion judge found that these did not hide the fact from Presidential that legal action would be an appropriate way to seek remedy for such a loss. The judge also found that a lawsuit could have been launched during the CRA pro- ceedings. The Court of Appeal deter- mined that the motion judge erred in finding Presidential knew or should have known that a lawsuit was an appropriate remedy when it first received the CRA's notice in 2010. Daniella Murynka, one of the lawyers representing Presiden- tial, says the decision has taken a number of cases that dealt with the same section of the Limita- tions Act that have been very fact-specific and has distilled them into a useful set of general principles. "Whether or not a plain- tiff is statute-barred is a very fact-specific analysis and judges often write that other case laws have limited assistance because the analysis is so fact-specific, but in our case we had a rec- ognition of the fact that it's a fact-specific analysis but also that prior case law can be dis- tilled into certain general princi- ples, which is going to be really helpful in developing this area of law further," she says. The decision was released shortly after the Supreme Court of Canada refused to hear an- other case that dealt with similar issues in 407 ETR Concession Company Limited v. Day. Curry, who represented the plaintiff in that case, says this means that even if leave is sought in the Presidential MSH case, it is unlikely the Supreme Court will hear it. Michael Girard, the lawyer representing Himmelfarb and the accounting firm, declined to comment. LT NEWS Tom Curry says that when the Limitations Act was first passed, some lawyers strug- gled to understand what a section that defines discoverability meant. GPLLM Global Professional Master of Laws [Get a Master of Laws] Because business issues are legal issues. So if you want to get ahead in business, get the degree that gets you there faster. ONE YEAR – PART - TIME – NO THESIS – FOR L AWYERS AND NON - LAWYERS Untitled-8 1 2015-03-02 11:15 AM

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