Pickering Square Inc. v. Trillium College Inc., 2016 ONCA 179

• Judge: Strathy, C.J.O., LaForme and Huscroft, JJ.A.
• Court: Court of Appeal (Ontario)
• Case Date: November 24, 2015
• Jurisdiction: Ontario
• Citations: 2016 ONCA 179;(2016), 347 O.A.C. 124 (CA)

Pickering Square v. Trillium College (2016), 347 O.A.C. 124 (CA)

MLB headnote and full text

Temp. Cite: [2016] O.A.C. TBEd. MR.004

Pickering Square Inc. (plaintiff/respondent by way of cross-appeal) v. Trillium College Inc. (defendant/appellant by way of cross-appeal)

(C58900; 2016 ONCA 179)

Indexed As: Pickering Square Inc. v. Trillium College Inc.

Ontario Court of Appeal

Strathy, C.J.O., LaForme and Huscroft, JJ.A.

March 3, 2016.

Summary:

Trillium College Inc. and Pickering Square Inc. were parties to a long-term commercial lease. Pickering brought a claim for damages for Trillium's breaches of its covenants to occupy the premises and operate its business continuously, and to restore the premises when the lease ended. Trillium moved for summary judgment, arguing that the claim was brought outside the two-year limitation period under s. 4 of the Limitations Act.

The Ontario Superior Court, in a decision cited as 2014 ONSC 2629, held that Trillium's breach of the covenant to occupy the premises and operate its business continuously was of a continuing nature, such that each day of the breach gave rise to a fresh cause of action. As a result, only a portion of the claim was barred by the Limitations Act. Pickering's claim for damages for breach of the covenant to restore the premises was not time barred because it concerned repairs at the end of the lease rather than during its term. Pickering did not pursue its appeal. Trillium cross-appealed the partial summary judgment.

The Ontario Court of Appeal dismissed Trillium's cross-appeal.

Landlord and Tenant - Topic 9361

Practice - Actions - General - [See third Limitation of Actions - Topic 15 ].

Limitation of Actions - Topic 15

General principles - Discoverability rule - Application of - The defendant tenant breached its covenant to operate its business continuously ("at all times") for the duration of the lease - The main question was: "When is a claim discovered for limitations purposes in the context of a continuing breach of contract?" - The Ontario Court of Appeal stated that "[i]n order to determine the discovery date for the claim, the nature of the breach must first be determined. Breaches of contract commonly involve a failure to perform a single obligation due at a specific time. This sort of breach is sometimes called a 'once-and-for-all' breach: it occurs once and ordinarily gives rise to a claim from the date of the breach - the date performance of the obligation was due. ... A second form of breach of contract involves a failure to perform an obligation scheduled to be performed periodically ... . A failure to perform any such obligation ordinarily gives rise to a breach and a claim as from the date of each individual breach ... . [T]his case falls into a third category of breach: breach of a continuing obligation under a contract." - See paragraphs 22 to 25.

Limitation of Actions - Topic 15

General principles - Discoverability rule - Application of - The defendant leased commercial space for a five-year term - It breached its covenant to operate its business continuously ("at all times") for the duration of the lease - The plaintiff elected not to cancel the lease following the breach, and affirmed the contract - The defendant chose not to resume its obligations at any point prior to the expiry of the lease - The motion judge found a continuing breach of the agreement giving rise to a new cause of action and a new limitation period each day that the defendant failed to carry on business at the leased premises - The Ontario Court of Appeal held that the motion judge properly concluded that a fresh cause of action accrued every day that the defendant failed to carry on its business in accordance with the covenant - "The accrual of fresh causes of action has consequences for the innocent party as well as the party in breach of the contract. It sets the clock running for a new two-year limitation period. [The defendant]'s election to affirm rather than cancel the lease does not have the effect of postponing the date for discovery of the breach until expiry of the lease. The limitation period in this case applied on a 'rolling' basis ... . The two-year limitation period commenced each day a fresh cause of action accrued and ran two years from that date." - See paragraphs 27 to 38.

Limitation of Actions - Topic 15

General principles - Discoverability rule - Application of - The plaintiff brought a claim for damages for the defendant's breaches of its covenants to occupy the leased premises and operate its business continuously - The defendant moved for summary judgment, arguing that the claim was brought outside the two-year limitation period - The plaintiff brought its action on February 16, 2012 - The motion judge found that the plaintiff discovered its claim once the defendant did not resume occupation of the leased premises on October 1, 2008 - Thus, well before the lease expired on May 31, 2011, the plaintiff knew that it had suffered damage - However, the motion judge also found that the defendant's failure to resume occupation and to carry on its business continuously from October 1, 2008, gave rise to a series of breaches - The plaintiff acquired a new cause of action every day the defendant failed to operate its business until expiration of the lease - The motion judge found that the claim for the period from October 1, 2008, to February 16, 2010, was statute-barred, but its claim for the period from February 16, 2010 to the expiry of the lease on May 31, 2011 was not - The defendant cross-appealed the partial summary judgment - The Ontario Court of Appeal dismissed the cross-appeal - In the context of a continuing breach of contract and an election by the innocent party to affirm the contract, the motion judge properly concluded that a fresh cause of action accrued every day that breach continued, i.e., every day that the defendant failed to carry on its business in accordance with the covenant - See paragraphs 18 to 38.

Limitation of Actions - Topic 17

General principles - Continuing acts and continuing losses - [See second and third Limitation of Actions - Topic 15 ].

Limitation of Actions - Topic 2023

Actions in contract - Actions for breach of contract - When time commences to run - [See first and second Limitation of Actions - Topic 15 ].

Limitation of Actions - Topic 2078

Actions in contract - Actions for damages - When time begins to run - [See first and second Limitation of Actions - Topic 15 ].

Limitation of Actions - Topic 9305

Postponement or suspension of statute - Discoverability rule - [See second Limitation of Actions - Topic 15 ].

Cases Noticed:

Hryniak v. Mauldin, [2014] 1 S.C.R. 87; 453 N.R. 51; 314 O.A.C. 1; 2014 SCC 7, refd to. [para. 12].

Creston Moly Corp. v. Sattva Capital Corp., [2014] 2 S.C.R. 633; 461 N.R. 335; 2014 SCC 53, refd to. [para. 17].

Smith v. Empire Life Insurance Co. (1996), 19 C.C.E.L.(2d) 171 (Ont. Gen. Div.), leave to appeal refused, [1996] O.J. No. 3113 (C.A.), refd to. [para. 24].

Larking v. Great Western (Nepean) Gravel Ltd. (in Liquidation) (1940), 64 C.L.R. 221 (H.C.A.), refd to. [para. 26].

Bridgesoft Systems Corp. v. British Columbia (2000), 137 B.C.A.C. 277; 223 W.A.C. 277; 2000 BCCA 313, refd to. [para. 26].

Highway Properties Ltd. v. Kelly, Douglas & Co., [1971] S.C.R. 562, refd to. [para. 27].

TNG Acquisition Inc. (Bankrupt), Re (2011), 283 O.A.C. 168; 107 O.R.(3d) 304; 2011 ONCA 535, refd to. [para. 27].

Guarantee Co. of North America v. Gordon Capital Corp., [1999] 3 S.C.R. 423; 247 N.R. 97; 126 O.A.C. 1, refd to. [para. 29].

Peixeiro v. Haberman, [1997] 3 S.C.R. 549; 217 N.R. 371; 103 O.A.C. 161, refd to. [para. 33].

Hamilton (City) v. Metcalfe & Mansfield Capital Corp. et al. (2012), 290 O.A.C. 42; 347 D.L.R.(4th) 657; 2012 ONCA 156, refd to. [para. 33].

Goorbarry v. Bank of Nova Scotia (2011), 286 O.A.C. 282; 2011 ONCA 793, refd to. [para. 38].

Wilson's Truck Lines Ltd. v. Pilot Insurance Co. (1996), 94 O.A.C. 321; 31 O.R.(3d) 127, (C.A.), refd to. [para. 38].

Statutes Noticed:

Limitations Act, S.O. 2002, c. 24, Schedule B, sect. 4 [para. 4]; sect. 5(1), sect. 5(2) [para. 21].

Counsel:

Courtney Raphael, for the appellant, Trillium College Inc.;

Alan B. Dryer and Orly Kahane-Rapport, for the respondent, Pickering Square Inc.

This cross-appeal was heard on November 24, 2015, before Strathy, C.J.O., LaForme and Huscroft, JJ.A., of the Ontario Court of Appeal. In reasons written by Huscroft, J.A., the Court delivered the following judgment, released on March 3, 2016.