The Gazette 1987

GAZETTE

SEPTEMBER 1987

also dismissed.

Without deciding

whether there was concurrent liabili-

ty, the Appeal Division held that the

action was statute-barred, whether

it was in contract or in tort. The

plaintiff thereupon appealed to the

Supreme Court of Canada.

The relevant dates were as

follows:

December 31, 1968

mortgage

executed and taken by defendants as

security for the loan;

January 17, 1969

certificate of title

stating that the mortgage formed a

first charge on the property given by

defendants;

April 21, 1977

validity of mortgage

challenged in the plaintiff's institution

of an action for foreclosure;

April 22, 1980

mortgage held to be

void by Supreme Court of Canada;

October 22, 1980

plaintiff's action

for negligence instituted.

The relevant limitation legislation

provided that such an action should

be commenced "within six years

after the cause of any such action

arose". The Appeal Division of the

Nova Scotia Supreme Court had

held the plaintiff's cause of action for

negligence arose when

the

negligence occurred and not when it

was discovered or ought to have

been discovered by the plaintiff with

the exercise of reasonable diligence.

As to when the damage occurred,

Jones J. A. said that it occurred on

January 17,1969, when the solicitor

gave the certificate of title. "(T)he

mortgage was void when it was

delivered. The loss at that point was

the face value of the defective

mortgage."

Le Dain J., like the

court below, rejected the submission

that the damage occurred when the

mortgage was declared void by the

Supreme Court of Canada. He was

of the opinion that the damage

occurred when the defendants took

the mortgage on December 31,

1968, because, as a result of it being

void

ab initio,

the company acquired

no interest in the property as security

for the loan.

Clearly therefore, if time began to

run from 1968 or 1969 the plaintiff's

action was statute barred after a

maximum of six years only if the

claim was based

contract.

However more and more superior

courts in common law jurisdictions,

including Ireland, have acknowledged

the "harshness" and "injustice" of

a rule that a cause of action for the

tort of negligence may arise for the

purpose of a statute of limitations

before the injured party has

discovered or could have discovered

the damage.

Carroll J., in

Morgan

-v- Park Developments Ltd

was

of the opinion that to bar a plaintiff's

action in tort before he knew he had

one was "indefensible" in the light

of the Constitution and said, albeit

obiter,

that s. 11 (2) of the Statute of

Limitations 1957, was to be inter-

preted as permitting the postpone-

ment of the running of time until

such time as the damage could be

discovered. In

City of Kamioops -v-

Nielson

Wilson J., speaking for the

majority of the Supreme Court of

Canada in the course of deciding a

claim against a municipality for

negligent failure to prevent the

construction of a house with

defective foundations, was of a

similar opinion.

Pafuse,

Le Dain J., was of the

view that the judgment of the

majority in

Kamioops

laid down a

general rule that a cause of action

arose for purposes of a limitation

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