A recent Ontario Court of Appeal case deliberated over the issue of a limitation period in regards to damage to a cottage foundation. The town at issue was being sued by a cottage owner for negligence in the construction of the cottage owner’s dock.

What was the issue?

In the case at hand, the appellants (the cottage owners) discovered, three years after purchasing their cottage, that one of their decks was sinking by approximately an inch, and it was pulling the foundation away from the cottage structure.

When the appellants approached the construction company with their concern, they were met with the following response:

[The construction company] recommended several expensive investigative and remedial steps, including the removal of the stone retaining wall and the reconstruction of the deck pier foundations.  With the removal of the stone retaining wall, the grade against a portion of the foundation would be lowered and, because of frost, the underpinning of a portion of the dwelling foundation at a lower elevation would be required.  They also recommended further slope stability investigation. However, it cautioned that undertaking these steps “will not guarantee that there will not be any further movement of the slopes in this area” [emphasis added] but that “it should significantly slow the progress of any movement”. Trow did not suggest that the stone retaining wall constructed by Mr. MacKay was failing nor that there were any construction issues with the stone retaining wall or the cottage foundation.

As above, the appellants had contacted the construction company that built the footings. The construction company had further advised them the problem was not that serious and they should “wait and see”.

The appellants waited for three years and found that the problem persisted. At that point, they initiated a soil study which led them to do remedial work on the deck. Within a year, the remedial work revealed that the deck structure had been built on loose soil. Shortly after, the appellants initiated legal action against the township.

The Trial

At trial, the township held that the two-year limitation period had expired, and the appellants should have initiated the action when they first discovered there was a problem.

Limitations Act

In Ontario law, most civil trials are held to certain provisions under The Limitations Act, which prevents a wronged party from initiating an action against a potential defendant after a certain length of time has passed, usually beginning around the time it would be likely known by the wronged party that taking legal action would be warranted.

The Trial Decision

The motion judge issued a summary judgment ruling in favour of the township, finding that the action was barred under the two-year limitation period, which was deemed to have commenced at the initial discovery of the sinking deck.

The Appeal Decision

The cottage owners appealed. The appeal judge said discovery of the problem was not the end of the issue and cited the specific provisions of the Limitations Act that outlined the initiation of the two-year period:

The appeal judge said that at the time of the initial discovery, the appellants had believed the problem was not serious enough to initiate further action and were going to just “keep an eye on it”. He said it was only after the soil study was performed, that the appellants had the knowledge to conclude:

• their loss was not trivial and possibly arose from the acts and omissions of the respondents; and
• that it was appropriate to pursue their claim in a court proceeding.

The appeal judge, citing a previous case, found that the motion judge should have known that the issue was not simply the discovery of a problem, but rather, the discovery that the problem was sufficiently serious enough to warrant knowing taking legal action was an appropriate means to address the problem. He stated:

Here, the motion judge failed to consider “the specific factual or statutory setting” of the case before him and determine whether it was reasonable for the appellants not to immediately commence litigation but to “wait and see” if the 1 ¼ inch sinking of the deck pier observed in 2009 would worsen over time or if the issue would resolve once the stone retaining wall had settled, as had been suggested to the appellants by Mr. MacKay. Neither Royal Homes nor Mr. MacKay believed the problem was serious, or due to the manner of construction. This evidence does not support the conclusion that the appellants knew or ought to have known in 2009 that their loss was not trivial and initiating legal proceedings was the appropriate means to remedy their loss.

There was also the issue of blame and, specifically, whether the appellants ought to have known they had a case against the township at the initial discovery of the problem. The appeal judge found it was only after the remedial work that the appellants could have reasonably known where the blame for their problem lay, and would not have reasonably known the township was at fault before this time:

Finally, the motion judge erred by failing to consider whether the appellants knew or reasonably could have known the material facts giving rise to their claim against the Township more than two years prior to the commencement of their action. After the Terraprobe report, the appellants learned from the structural engineer retained by Fowler as part of the remediation that the Township should have required engineering drawings of the stone retaining wall. When Fowler started remedial work in 2013, it uncovered the foundation wall that had been approved by the Township and discovered that the cottage footings and foundation were also negligently placed on the same loose soil and organic materials as were under the stone retaining wall. There is no evidence that these material facts informing a claim against the Township were known to or reasonably discoverable by the appellants in 2009.

The Significance

Limitation periods immediately bar a trial from proceeding, so the case at hand could only proceed if the limitation period was found not to have been breached. It is important to consider the facts in a situation where a claim might be warranted and to act appropriately. Seeking legal counsel is important as soon as a reason warrants it, if only to determine the remedies available and the feasibility of a legal action.

However, having failed to initiate an action at the first cause of concern does not invalidate a claim based on time passing automatically, as this case shows. If a problem does not appear serious after reasonable steps have been taken to investigate it and/or no culprit is evident, and later evidence shows the problem to be of serious enough concern to initiate a legal action, the limitation period may not actually begin to come into play until the problem is discovered as serious enough to warrant legal action and/or until a claim against a party becomes apparent.

For Help

The knowledgeable team at Campbell Litigation serve Waterloo, Kitchener and the Surrounding Area. We are experienced trial lawyers in areas such as construction litigation. For decades, we have acted for a variety of clients including planners, builders, developers, property owners, and financial institutions. If you are involved in a construction dispute Call us at 519-886-1204 or contact us online to speak with a member of our firm.