Joe Thorne¹ and Giles Ayers²

Limitation periods serve a critical function in the civil justice system. They promote the timely resolution of litigation on the basis of reliable evidence, and permit litigants to assess their legal exposure and to plan accordingly.

If a plaintiff seeks to depart from the strict application of a limitation period, he or she faces an uphill battle. However, a plaintiff may rely on certain exceptions. In Newfoundland and Labrador, one such exception is “confirmation” of the existence of a cause of action, by word or by deed.

In Tuck v. Supreme Holdings, the Newfoundland and Labrador Court of Appeal held that the circumstances in which a defendant may rely on confirmation to reset a limitation period should be interpreted narrowly.

This decision is of particular note for insurers, who should exercise caution when requesting and paying for information regarding a plaintiff’s damages.

Background

The appellant, Ms. Tuck, was involved in a car accident on December 28, 2009. She retained counsel shortly thereafter, but did not file a statement of claim until February 28, 2012 (2 years and 2 months after the accident).

The applicable limitation period in Newfoundland and Labrador for damages in respect of injury to person or property is two years.³

The respondents defended the claim, arguing that the applicable limitation period had expired. In response, Ms. Tuck applied to the Supreme Court of Newfoundland and Labrador, Trial Division, for a preliminary determination of law that the respondents had “confirmed” the cause of action.

In Newfoundland and Labrador, a cause of action may be “confirmed” and the applicable limitation period is reset where a person:

•  acknowledges that cause of action, right or title of another person (Limitations Act, s. 16(1)(a)); or
• makes a payment in respect of that cause of action, right or title of another (Limitations Act, s. 16(1)(b)).

Ms. Tuck argued before the applications judge that the respondents had confirmed her cause of action, per s. 16(1)(b), by exchange of correspondence culminating in payment for a medical report regarding her injuries on May 21, 2010. Ms. Tuck argued that such payment constituted “payment in respect of that cause of action”, sufficient to reset the limitation period and bring the appellant’s claim within the applicable period.

The applications judge disagreed, and dismissed Ms. Tuck’s application. The applications judge held that payment for a medical report did not constitute an admission of liability. Rather, such payments were construed as being made for “introductory or investigatory” purposes.

Therefore, the cause of action was not confirmed and the limitation period expired on December 28, 2011.

Decision of the Court of Appeal

The issue before the Court of Appeal was the correctness of the applications judge’s interpretation of s. 16(1)(b), in particular whether:

• Section 16(1)(b) required “an admission of liability”; and
• payment for a medical report constituted “a payment in respect of [her] cause of action”.

Does payment require an “admission of liability?

The Court of Appeal first considered the requirements for the two subsections set out in s. 16 of the Limitations Act.

The Court noted that the two routes for confirmation under s. 16 are worded differently, and, per the modern approach to statutory interpretation that different words have different meanings, must be read with that in mind.

In Ryan v. Moore⁴, the Supreme Court of Canada interpreted s. 16(1)(a) “acknowledgment” as requiring a written admission of liability.⁵  In the view of the Court of Appeal, therefore, a requirement that the respondents admit liability would render s. 16(1)(b) redundant. Unlike s. 16(1)(a), s. 16(1)(b) only requires “an action, the doing of which can constitute confirmation.”⁶  If an admission of liability is obtained, then a party would naturally proceed through 16(1)(a) – there would be no need for 16(1)(b). The Court of Appeal concluded:

…section 16(1)(b) permits an applicable limitation period to be reset by the making of a payment “in respect of that cause of action” in issue. If this is done, 16(1)(b) permits an inference that the person making the payment, presumably a potential defendant, is prepared to defer the commencement of the limitation period within which the person receiving the payment, presumably a potential plaintiff, can file suit. This interpretation is consistent with the overall scheme of the Act which is about limitation periods and not about legal liability for claims, and is in harmony with the other provisions of the Act, which address circumstances affecting when limitation periods begin to run. Accordingly, to the extent that the judge interpreted section 16(1)(b) as requiring an admission of liability in addition to a payment in respect of that cause of action, he erred.⁷

Was payment for the medical report “payment in respect of [her] cause of action”?

Turning to the nature of the payment necessary to confirm the cause of action, the appellant argued that “in respect of” admits of a broad definition that would include payment for a medical report. The appellant argued that but for the cause of action, there would be no medical report and no payment needed or made in respect of that report. On that interpretation, “in respect of” should be read as “in connection with”.⁸  The appellant added that the consequences of such payment could be mitigated by making the payment, or offer of payment, without prejudice.

The Court of Appeal disagreed with the appellant’s interpretation. The Court noted that the statutory language of a payment “in respect of” demands something more than mere connection between the payment and the claim. “In respect of” speaks to the specific cause of action at issue, which in this case meant Ms. Tuck’s claim for damages arising from the alleged negligence of the respondents.

The Court of Appeal noted that in Ryan, the Supreme Court of Canada held that the purpose of payment for medical reports in such cases is to “promote investigation and early resolution of certain aspects of a claim”,⁹  and is not made in respect of the plaintiff’s ultimate claim for damages:

The relationship between the payment and the debt, or cause of action, was clear; it had to be part payment of the debt. In my view, this requirement underscores the interpretation that any payment in respect of a cause of action must be a payment in respect of the specific debt or damages arising from the cause of action in issue. Accordingly, payment for a medical report respecting a potential plaintiff’s injuries respecting his or her cause of action is not a payment in respect of that cause of action.¹⁰

The Court of Appeal approved the applications judge’s finding that a payment made “in respect of that cause of action” is a payment made in respect of the damages claim, and not payment made in respect of associated legal expenses or costs.

Ms. Tuck had also argued that payments for lost wages or therapy might also serve as confirmation under s. 16(1)(b). The Court of Appeal declined to decide that issue, but cautioned insurers to be mindful of that argument and suggested that such payments might be best made without prejudice.¹¹

The Court dismissed Ms. Tuck’s appeal, and held that the limitation period had not been reset.

Conclusion

A missed limitation period is almost always the end of one’s claim, regardless of the reasons for allowing the period to expire. While there are some exceptions to the rigid application of statutory limitation periods, litigants must be aware of that final deadline for action.

In Newfoundland and Labrador, a defendant may “reset the clock” by confirming the plaintiff’s claim in writing or by advancing some payment on account of the claimed debt. However, the onus is on the plaintiff to establish such confirmation, and the Court of Appeal’s decision confirms (no pun intended) that the standard to do so is high.

Defendants who choose to request and pay for medical reports or other litigation expenses before a lawsuit is filed can take comfort from this decision that such payment will not reset the limitation period. However, any pre-claim payment on account of the loss claimed should be made without prejudice, and with caution.

¹ Joe Thorne is a Senior Associate with Stewart McKelvey’s St. John’s office. He may be reached at joethorne@stewartmckelvey.com.
² Giles Ayers is an articled clerk with Stewart McKelvey’s St. John’s office. He may be reached at gayers@stewartmckelvey.com.
³ Limitations Act, SNL 1995, c L-16.1, s. 5(a).
⁴ 2005 SCC 38.
⁵ Ibid at paras 44 – 46.
⁶ Tuck, para 28.
⁷ Tuck, para 33.
⁸ Tuck, para 35.
⁹ Tuck, para 38.
¹⁰ Tuck, para 40.
¹¹ Tuck, para 43.