Court of Appeal for Ontario

Date: June 8, 2018 Docket: C64570 Judges: Brown, Huscroft and Trotter JJ.A.

Between

Eva Brozmanova Plaintiff (Appellant)

and

Lorne Marvin Tarshis and Jennifer Brown Defendants (Respondents)

Counsel:

• Richard Parker, for the appellant
• Andrew Kalamut, for the respondents

Heard: May 18, 2018

On appeal from: The order of Justice Patrick J. Monahan of the Superior Court of Justice, dated November 1, 2017, with reasons reported at 2017 ONSC 6559.

BROWN J.A.:

I. OVERVIEW

[1] The appellant, Eva Brozmanova, appeals from the order of the motion judge striking out her statement of claim, without leave to amend, on the basis that her action was commenced beyond the applicable limitation period and disclosed no reasonable cause of action.

[2] In her statement of claim, Ms. Brozmanova sought damages of $1.1 million from the respondents, Dr. Lorne Tarshis, a plastic surgeon, and Jennifer Brown, the daughter of Dr. Tarshis and an employee in his medical practice. Ms. Brozmanova had been employed for several years as a laser technician in Dr. Tarshis' practice.

[3] Ms. Brozmanova pleads that Dr. Tarshis performed surgical procedures on her, for which she paid him directly as the services fell outside of those covered by the Ontario Health Insurance Plan ("OHIP"). However, she alleges that in 2009 she learned Dr. Tarshis had submitted to OHIP charges for treating her for two conditions: ataxia and ptosis. Ms. Brozmanova pleads that she never suffered from those conditions and the claims submitted by Dr. Tarshis for them were fraudulent. She contends that she contacted OHIP in 2009 and was told the entries for those conditions would be removed from her medical record.

[4] According to the statement of claim, in April 2015 Ms. Brozmanova learned from OHIP that the two entries remained on her medical record. She pleads that as a result of Dr. Tarshis submitting these fraudulent claims sometime before 2010, she has not been able to obtain health insurance to travel outside of Canada. She seeks damages for the resulting pain and suffering and punitive damages. Further, she alleges Ms. Brown aided and abetted Dr. Tarshis in filing the fraudulent charges with OHIP.

[5] The respondents moved under rules 21.01(1)(a) and (b) to strike out the statement of claim. No evidence was filed on the motion.

[6] The motion judge granted the motion to strike on two grounds: (i) under rule 21.01(1)(a), on the basis that the action was commenced outside the applicable limitation period, which began to run in 2009, and therefore had no chance of success should it proceed to trial; and (ii) under rule 21.01(1)(b), on the basis that the claim disclosed no reasonable cause of action because Ms. Brozmanova had failed to plead a constituent element of the tort of civil fraud – i.e., that she had acted or failed to act on the basis of representations by Dr. Tarshis.

[7] Ms. Brozmanova appeals. She submits that the motion judge erred in his assessment of the law of limitations and the test for civil fraud.

[8] For the reasons that follow, I would dismiss the appeal.

II. THE PROCESS ADOPTED BY THE RESPONDENTS

[9] Before dealing with the merits of the appeal, some comments are in order about the procedure adopted by the respondents to strike out Ms. Brozmanova's claim under rules 21.01(1)(a) and (b).

[10] The Rules of Civil Procedure make available two sets of procedural devices by which a party can seek to dispose finally of a proceeding on a contested basis.

[11] One set is evidence-based, under which the parties adduce evidence by various means, on the basis of which the court decides whether to grant or dismiss a proceeding. The Rules permit or offer several standard evidence-based procedural devices by which to obtain such a final adjudication on the merits: (i) the conventional trial; (ii) the hybrid trial; (iii) two forms of summary judgment – rules 20.04(2)(a) and 20.04(2)(b); and (iv) a rule 38 application.

[12] The second set of procedural devices enables a party to ask the court to determine a question of law that may dispose of all or part of a proceeding. These law-based devices include: (i) a rule 22 special case; (ii) rule 21.01(1)(a), where a question of law is raised by a pleading; and (iii) rule 21.01(1)(b), where a pleading discloses "no reasonable cause of action or defence".

[13] The law-based character of the devices available under rules 21.01(1)(a) and (b) is reinforced by the limits placed on the use of evidence on motions brought under those rules. No evidence is admissible on a "no reasonable cause of action" motion; nor is evidence admissible on a "question of law" motion, except with leave of the judge or on consent of the parties: rule 21.01(2).

[14] The rationale for these prescriptions is a simple one: the allegations asserted in the pleading, which the court must accept as provable at trial, are sufficient to determine the question of law or whether the pleading discloses a cause of action or defence recognized by law: see Hunt v. Carey Canada Inc., [1990] 2 S.C.R. 959, at pp. 980, 988 and 990-991. No further facts are required to determine the legal sufficiency of the claim.

[15] In the present case, Dr. Tarshis was sued for conduct as a medical practitioner. He and Ms. Brown are represented by a law firm with long experience in representing medical practitioners. They sought to dismiss Ms. Brozmanova's action relying on two law-based rules: 21.01(1)(a) and (b).

The "question of law" under rule 21.01(1)(a)

[16] The "question of law" the respondents raise under rule 21.01(1)(a) is that Ms. Brozmanova commenced her action outside of the two-year limitation period.

[17] Relying on rule 21.01(1)(a) to advance a limitation period defence is a problematic use of the rule. Some decisions of this court characterize the issue of whether a plaintiff has commenced a proceeding within the limitation period as one involving a question of fact: Pepper v. Zellers Inc. (2006), 83 O.R. (3d) 648 (C.A.), at para. 19; and Arcari v. Dawson, 2016 ONCA 715, 134 O.R. (3d) 36, at para. 9, leave to appeal refused, [2016] S.C.C.A. No. 522. Others describe it as involving a question of mixed fact and law: Salewski v. Lalonde, 2017 ONCA 515, 137 O.R. (3d) 762, at para. 45; and Ridel v. Goldberg, 2017 ONCA 739, at para. 12. Regardless, it does not involve a question of law.

[18] In the basic case, the court must ascertain "the day on which the claim was discovered": Limitations Act, 2002, S.O. 2002, c. 24, Sched. B, s. 4 (the "Limitations Act"). This, in turn, requires making two findings of fact: (i) the day on which the person first knew of the four elements identified by s. 5(1)(a)(i)-(iv) of the Limitations Act; [1] and (ii) under s. 5(1)(b), "the day on which a reasonable person with the abilities and in the circumstances of the person with the claim first ought to have known of the matters referred to in" s. 5(1)(a). The earliest of the two dates is the date on which the claim is discovered: s. 5(1).

[19] The analysis required under s. 5(1) of the Limitations Act generally requires evidence and findings of fact to determine. It does not involve a "question of law" within the meaning of rule 21.01(1)(a).

[20] Yet, here the respondents invoked a law-based rule to establish a largely fact-based defence. I recognize, as respondents' counsel submits, that some jurisprudence exists that has allowed a defendant to resort to rule 21.01(1)(a) to determine its limitations defence "where it is plain and obvious from a review of a statement of claim that no additional facts could be asserted that would alter the conclusion that a limitation period had expired": see the commentary on rule 21.01(1)(a) in Todd. L. Archibald, Gordon Killeen & James C. Morton, Ontario Superior Court Practice, 2018 (Toronto: LexisNexis Canada, 2017), at p. 1128. See also Paul M. Perell & John W. Morden, The Law of Civil Procedure in Ontario, 3d ed. (Toronto: LexisNexis Canada, 2017), at p. 611.

[21] However, courts must always remember that permitting a defendant to move under 21.01(1)(a) to establish a limitations defence could prove unfair to a plaintiff, especially a self-represented one. By selecting rule 21.01(1)(a) as the procedural means to adjudicate its fact-based limitations defence, a defendant puts a plaintiff in the position where she cannot, as of right, file evidence to explain when she discovered her claim. Instead, she must seek leave of the court.

[22] A plaintiff who risks the dismissal of her action on the basis of a limitations defence should not have to ask a court for permission to file evidence on the issue of when she discovered her claim. She should be entitled to do so as of right. It is unfair for a defendant to attempt, tactically, to deprive her of that right and put her to the unnecessary expense (and risk) of asking permission to do so.

[23] Notwithstanding the jurisprudence that opens the rule 21.01(1)(a) door to some efforts to prove a limitations defence, in my respectful view such an approach risks working an unfairness to a responding plaintiff. Requiring a defendant to move under an evidence-based rule – either rule 20 (summary judgment) or rule 51.06(2) (concerning admissions of the truth of facts in a pleading) – avoids such potential unfairness and is to be preferred.

"No reasonable cause of action" under rule 21.01(1)(b)

[24] The respondents also invoked rule 21.01(1)(b) to dismiss Ms. Brozmanova's claim. As noted, the motion judge accepted their submission that Ms. Brozmanova had failed to plead a constituent element of the tort of civil fraud – i.e., that she had acted or failed to act on the basis of representations by Dr. Tarshis.

[25] Rule 21.01(1)(b) focuses on the legal sufficiency of a plaintiff's pleading. As described by Perell & Morden, at p. 614:

The focus of the motion is the substantive legal adequacy of the claim or defence. The essence of the motion is that the defendant's wrongdoing as described in the statement of claim is not a violation of the plaintiff's legal rights, with the result that the plaintiff is not entitled to a remedy even if he or she were able to prove all the material facts set out in the statement of claim. [Footnotes omitted.]

[26] Put another way, rule 21.01(1)(b) enables a defendant, before pleading over, to move to strike out a claim on the basis that it is plain and obvious that the plaintiff is not advancing a legally sufficient claim, even if all the facts she pleads can be proved at trial. As a result, the appropriate time for a defendant to move under the rule usually is before filing its statement of defence. That is because by filing a statement of defence, a defendant usually signals that the plaintiff has advanced a legally sufficient claim which the defendant intends to resist on the grounds set out in the statement of defence. [2]

[27] In the present case, the respondents delivered a statement of defence, to which Ms. Brozmanova replied. In their defence, the respondents denied, at some length and in considerable detail, Ms. Brozmanova's allegations of fraud.

[28] The respondents did not plead that Ms. Brozmanova had failed to allege a constituent element of the tort of civil fraud. On the contrary, in paras. 23 and 24 of the statement of defence, Dr. Tarshis denied that he made any representation to Ms. Brozmanova or that he intended for her to act upon or otherwise rely on any of the billing forms submitted to OHIP. That is to say, the respondents joined issue with Ms. Brozmanova on the allegations she asserted and denied them, as a matter of fact. Their statement of defence did not call into question the legal sufficiency of her pleading.

[29] In those circumstances, the respondents' reliance on rule 21.01(1)(b) was inappropriate – they were disputing the material facts alleged by Ms. Brozmanova, not the legal sufficiency of her claim.

III. ANALYSIS

[30] Given that the respondents joined issue with Ms. Brozmanova in their pleading and advanced fact-based, not law-based, arguments to dismiss her claim, their selection of rule 21.01(1) procedural devices was misplaced. The respondents were essentially seeking summary judgment dismissing the action without resorting to rule 20, which would have required them to file some evidence and allowed Ms. Brozmanova to file her own in response.

[31] That said, Ms. Brozmanova was represented by counsel on the motion. Although Ms. Brozmanova raises some concerns about the process below, she does not advance as a stand-alone ground of appeal any irregularity in the respondents' use of rule 21.01(1) to strike out her statement of claim. In those circumstances and given the content of her statement of claim, I see no substantial wrong or miscarriage of justice resulting from the respondents' reliance on rule 21.01(1) to challenge Ms. Brozmanova's claim.

[32] I reach that conclusion because in her statement of claim, Ms. Brozmanova pleaded, at paras. 8-9 and 15-16:

In 2009, as a result of a fractured ankle, the Plaintiff was contacted by her Insurance company who wanted her medical history.

Upon obtaining her medical history, she found that charges had been submitted to OHIP claiming that she had Ataxia and Ptosis and was treated for [same] by Tarshis.

When the Plaintiff's insurance company learned of these two conditions, they claimed that her broken ankle was caused due to her droopy eyes and inability to walk properly. This was not true.

The Plaintiff immediately contacted OHIP to complain to this and to ask that these conditions be removed from her record at which time that OHIP said that they would do so.

[33] In addition, she pleaded, at para. 12, that "[t]he Defendant Tarshis fraudulently submitted claims to OHIP for treating these conditions and was paid for same by OHIP while knowing that he was committing fraud by so doing."

[34] The material facts pleaded by Ms. Brozmanova at paras. 8-9 and 15-16 of her statement of claim were admissions of the truth of certain facts. She clearly pleaded that in 2009, as a result of dealing with an insurance company on a matter regarding her ankle injury, she discovered that her OHIP record contained entries for billings by Dr. Tarshis, which she alleges were fraudulent.

[35] Given the admissions in her pleading, it would have been open to the respondents to move on those admitted material facts to dismiss the claim on the basis that Ms. Brozmanova had discovered it in 2009 and therefore the action was statute-barred: rules 20 or 51.06(2). [3] In 2009, she knew that some "damage" had occurred within the meaning of s. 5(1)(a) of the Limitations Act because she knew that her actual position was worse than her position before: Hamilton (City) v. Metcalfe & Mansfield Capital Corporation, 2012 ONCA 156, 290 O.A.C. 42, at para. 42. That the "damage" she discovered in 2009 was not the same damage for which she sought recovery in her action – her alleged inability in 2015 to purchase travel insurance – does not matter. Knowledge of "some damage" is sufficient for the cause of action to accrue and to start the limitation period: Hamilton, at para. 61.

[36] In this regard, I see no error in the following conclusions of the motion judge expressed at paras. 13-14 of his reasons:

In my view, the Claim expressly pleads that Ms. Brozmanova was aware in 2009 of any alleged fraud committed by Dr. Tarshis. As the Claim states, she was made aware in 2009 that Dr. Tarshis had submitted claims to OHIP for reimbursement for procedures that had allegedly been performed for her benefit and that, as a result, certain medical conditions were identified on her medical record. She was further aware of the fact that the identification of these medical conditions on her record could impede her ability to obtain benefits or services, including insurance services. Indeed, the information regarding the claims submitted by Dr. Tarshis was brought to her attention in 2009 following an inquiry from her own insurance company. Thus, as Ms. Brozmanova pleads in her factum submitted on this motion, any fraud committed by Dr. Tarshis had 'crystallized' by 2009.

Nor can Ms. Brozmanova's reliance on OHIP's representations regarding the removal of the conditions, or OHIP's failure or inability to act on those representations, create, or recreate, a cause of action against Dr. Tarshis. Those representations were made by OHIP, not Dr. Tarshis. Nor does the timing of Ms. Brozmanova's application for travel insurance create, or recreate, a cause of action against Dr. Tarshis. As Ms. Brozmanova pleads in her factum, any 'loss' resulting from Dr. Tarshis' actions consisted of the listing of certain medical conditions on her medical history. This loss occurred at the time the claims for reimbursement were submitted to and paid by OHIP, and Ms. Brozmanova was aware of these facts in 2009.

[37] That was a sufficient basis to strike Ms. Brozmanova's statement of claim on the admitted facts contained in her pleading.

[38] Ms. Brozmanova submits that the motion judge erred in not permitting her to amend her statement of claim. I am not persuaded by her submission. Ms. Brozmanova does not argue that she was mistaken in pleading the facts contained in paras. 8-9 and 15-16 of her statement of claim. She does not seek to withdraw them. Instead, she argues the events in 2009 did not amount to knowledge by her of an "injury, loss or damage" within the meaning of s. 5(1)(a) of the Limitations Act. As noted, the motion judge rejected that submission and I see no error in him so doing. Consequently, no amendment to her pleading could cure that defect in the tenability of her action.

IV. DISPOSITION

[39] For the reasons set out above, I would dismiss the appeal.

[40] In accordance with the agreement of the parties on costs, the respondents are entitled to their costs of the appeal in the amount of $10,000, inclusive of disbursements and applicable taxes.

Released: June 8, 2018

"David Brown J.A." "I agree. Grant Huscroft J.A." "I agree. G.T. Trotter J.A."

Footnotes

[1] Section 5(1) states: A claim is discovered on the earlier of,

(a) The day on which the person with the claim first knew,

(i) that the injury, loss or damage had occurred,

(ii) that the injury, loss or damage was caused by or contributed to by an act or omission,

(iii) that the act or omission was that of the person against whom the claim is made, and

(iv) that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it; and

(b) the day on which a reasonable person with the abilities and in the circumstances of the person with the claim first ought to have known of the matters referred to in clause (a).

[2] See also rule 2.02(b), which states: "A motion to attack a proceeding or a step, document or order in a proceeding for irregularity shall not be made, except with leave of the court … (b) if the moving party has taken any further step in the proceeding after obtaining knowledge of the irregularity."

[3] Rule 51.06(2) states: "Where an admission of the truth of a fact or the authenticity of a document is made by a party in a pleading or is made or deemed to be made by a party in response to a request to admit, any party may make a motion in the same proceeding to a judge for such order as the party may be entitled to on the admission without waiting for the determination of any question between the parties, and the judge may make such order as is just."