By Ian Carruthers and Noel Harper
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At issue this week is a tenant’s application for summary dismissal of their landlord’s rent arrears claim. If you haven’t familiarized yourself with the timeline of events in this case, be sure to read Monday’s post first <link>.
In 926 Capital Corp. v. Petro River Oil Corp., 2016 ABQB 194, the plaintiff’s appeal of the defendant’s application was dismissed, and the answer to this week’s question is b) a separate limitation period arose on the first day of each month that the defendant missed its rent payment.
As the Limitations Act states:
3(1) Subject to subsections (1.1) and (1.2) and sections 3.1 and 11, if a claimant does not seek a remedial order within, if a claimant does not seek a remedial order within
(a) 2 years after the date on which the claimant first knew, or in the circumstances ought to have known,
(i) that the injury for which the claimant seeks a remedial order had occurred,
(ii) that the injury was attributable to conduct of the defendant, and
(iii) that the injury, assuming liability on the part of the defendant, warrants bringing a proceeding, or
(b) 10 years after the claim arose,
whichever period expires first, the defendant, on pleading this Act as a defence, is entitled to immunity from liability in respect of the claim.
Let’s take apart the term “injury” from this paragraph. It refers to any personal injury in the traditional sense, as well as property damage, economic loss, failure to fulfill an obligation, or any breach of sworn duty. According to the decision of Justice J. Strekaf, “the injury, being the failure to pay rent, arose when the rent was due on the 1st day of each month … which in each case was more than two years prior to the issuance of the Statement of Claim.”
Recall that the defendant, then known as MegaWest Energy Corp., ceased paying rent in February of 2010, but it was not until January 2014 that the plaintiff proceeded with an action. According to the plaintiff, this was because the legal dispute would be unnecessarily expensive, and any potential recovery would be negligible due to MegaWest’s financial status. Once MegaWest took over Petro River Oil, LLC, and the two companies merged, it became more viable in the eyes of the plaintiff to recover their missing rent.
The plaintiff argued that the court should take this discrepancy into consideration upon calculating when it was warranted to issue a statement of claim. However, the aforementioned definition of “injury” from the Limitations Act “focuses on the nature of the injury to the plaintiff, rather than the likelihood of obtaining judgment against the defendant or the prospect of collecting on a judgment.”
In other words, the injury itself is the critical factor, not the defendant’s ability to make good on the claim, and the plaintiff’s choice to wait until the defendant was in a better financial situation had no bearing on the decision.
Here is a review of the possible answers to this week’s question:
a) February 1, 2010
This date was the start of the first limitation period for this case, but in the years between the defendant’s first missed rent payment and the plaintiff filing a statement of claim, there would be many more to come.
b) A separate limitation period arose on the first day of each month that the defendant missed its rent payment
The plaintiff experienced a new “injury” at the start of each month that they did not receive a rent payment, and a new limitation clock began to run.
c) June 7, 2010
On this date, the plaintiff served the defendant with a notice of default but failed to pursue any further action at this time. Given that the plaintiff’s injury occurred when each rent payment was missed, the limitation period was not governed by the contractual notice period.
d) April 23, 2013
On this date, MegaWest Energy Corp. merged with Petro River Oil, LLC to become Petro River Oil Corp., sending them into the black and theoretically making them more likely to comply with the landlord’s notice. However, the likelihood of judgment enforcement is not relevant to whether a proceeding is warranted under the Limitations Act.
Legal Malpractice
As seen in this case, expired limitation periods are one of the many types of risks in civil litigation. While most unsuccessful cases or applications occur despite a civil litigator’s reasonable efforts or for reasons beyond the lawyer’s control, they occasionally result from legal malpractice.
Have you or someone you know possibly suffered a loss due to the negligence of a lawyer or former lawyer? Carruthers Law can help you identify how to repair the damage or, alternatively, help you determine whether you should pursue a professional malpractice claim. Contact us for a complimentary consultation to discuss your situation.