In Georgian Properties Corporation v. Robins Appleby LLP, 2022 ONCA 245, the Court of Appeal for Ontario confirmed that in a solicitor’s negligence claim involving the preparation of legal documents, a plaintiff’s knowledge of injury, loss, or damage under section 5(1)(a)(i) of the Limitations Act, 2002, SO 2002, c 24, Sch B (the “Limitations Act”) “will not generally turn on compliance by third parties with their obligations under documents or instruments prepared by the solicitor.” Rather, in such a case, “the question of whether injury, loss or damage has occurred must turn on matters such as the validity and enforceability of the documents and instruments that were prepared.”
The defendant lawyers were retained by a developer to prepare various disclosure documents in respect of a condominium project. When the condominium was turned over to the unit holders in April 2010, the condominium corporation refused to pay the two mortgages and the promissory note. In 2011, the condominium corporation commenced an action against the developer and alleged, among other things, that the debt instruments were null and void as they were oppressive and did not comply with the Condominium Act, 1998, SO 1998, c 19 (the “Condominium Act”).
The condominium corporation challenged the adequacy of the disclosure documents in a factum delivered in June 2017. Justice Akbarali refused to strike those portions of the factum on July 7, 2017. In May 2018, Justice Akbarali determined that the disclosure documents were inadequate, that the two mortgages and the promissory note were oppressive, and that the promissory note also breached the Condominium Act.
By statement of claim issued on November 19, 2019, Georgian Properties Corporation (“Georgian Properties”), as the successor to the developer, sued the lawyers for negligence in the preparation of the disclosure documents. Justice Dow summarily dismissed the action as statute barred under the Limitations Act. According to the motion judge, Georgian Properties knew that it had suffered a loss in April 2010 when the condominium corporation refused to pay the debt instruments and knew no later than July 7, 2017 that it had a claim against the lawyers for which a proceeding was the appropriate remedy.
The Court of Appeal overturned the motion judge’s decision on the basis that his erroneous finding that Georgian Properties was suffering a loss when the condominium corporation failed to pay the debt instruments “skewed his analysis of when Georgian Properties ought to have discovered its injury, loss or damage.”
The allegations of solicitor’s negligence were first made in a factum delivered several years after the action had been started. Yet, the mere allegation of solicitor’s negligence is not enough to automatically start the clock under section 5(1) of the Limitations Act. The analysis must be more nuanced. As the Court of Appeal recognized, “[f]urther investigation and assessment may be required. To hold otherwise could lead to costly and unnecessary litigation.” In the result, the Court of Appeal held that it was unreasonable for Georgian Properties to draw a plausible inference of liability against the lawyers before November 19, 2017.
