When to Sue: No need to wait till your damages are quantified. In fact, you’ll be too late!

by Catherine McKenzie
Irving Mitchell Kalichman s.e.n.c.r.l.

On November 6, 2014, the Court of Appeal re-affirmed an important point with regards to when prescription begins to run. In Rosenberg v. Canada (Procureur général) (2014 QCCA 2041), the Court made it clear that it is not necessary for a party to know the quantum of their damages for them to be in a position to sue. Rather, the mere fact of knowing that they have suffered a damage which may be the result of a fault of another party is sufficient for prescription to begin running.

 

The case involved a Motion to Dismiss based on articles 54.1 and 165(4) CCP. The facts underlying the case related to a commercial lease between the Appellant and the Department of Public Works. The Department of Public Works had leased spaced in Appellant’s building and had declined to renew its lease despite offers by the Appellant to upgrade the facilities. The trial judge set out the particular facts of the claim as follows:

[9] The facts underlying the prescription issue are not contested: 

● The Plaintiffs bought the Building in 1998, and the Department of Public Works was then the tenant of the Building with leases expiring in 2004; 

● In early 2004, the Department of Public Works advised the Plaintiffs that it intended to vacate the Building when the leases expired in November 2004, and it did in fact vacate the Building in November 2004; 

● The Plaintiffs made various proposals to upgrade the Building and lease it to the Department of Public Works between 2004 and 2006, but those proposals were either refused or ignored; 

● The Plaintiff Michael Rosenberg was approached in the spring of 2005 by a friend of his, Alex Wertzberger, who told him that he had been approached by representatives of the Department of Public Works who asked him to get control of the Building because they would be interested to do a lease with Mr. Wertzberger but not with Mr. Rosenberg. The Plaintiffs gave Mr. Wertzberger an option to buy the Building but the deal did not close; 

● The Plaintiff Michael Rosenberg was approached by Richard Hylands later in 2005 who said “I’d like to buy this building. I can do something with this building.” Mr. Rosenberg’s assumption was that he was trying to bring the Department of Public Works in as a tenant; 

● On March 29, 2006, the Plaintiffs sold the Building to 4345177 Canada Inc. (the company for which Mr. Hylands was acting) for $15 million; 

● In May 2007, 4345177 Canada Inc. delivered a signed lease to the Department of Public Works which the Department formally accepted in September 2007. Mr. Rosenberg admitted in his examination out of Court that he knew on May 30, 2007 that the government was leasing the Building; 

● In January 2011, 4345177 Canada Inc. (then known as 200 Sacré-Coeur Holdings Inc.) was trying to sell the Building. In the marketing materials put together by the broker, there are details of the work done by 4345177 Canada Inc. to renovate the Building for the Department of Public Works and details of the lease with the Department of Public Works; 

● On April 11, 2011, 200 Sacré-Coeur Holdings Inc. sold the Building to a third party for $51.3 million; 

● On November 7, 2011, the Plaintiffs sued the Attorney General for $21,833,000.

The Court of Appeal noted that:

[10] Établir le point de départ de la prescription c'est se prononcer sur une question de fait ou sur une question mixte de fait et de droit de sorte que la Cour ne peut intervenir qu'en présence d'une erreur manifeste et déterminante.

It then reiterated the following conclusions of the trial judge and dismissed the appeal:

[20] Counsel for the Attorney General argued that everything in the Plaintiffs’ introductory Motion for Damages dated November 9, 2011 was known to the Plaintiffs on May 30, 2007, except for the paragraphs 35 and 49 […]. 

[21] The principal relevance of those paragraphs relates to the quantum of damages, in that the Plaintiffs use the 2011 sale price as evidence of the value of the Building with the Department of Public Works as tenant. The fact that the Plaintiffs did not have that element of proof in May 2007 did not prevent them from suing. It is sufficient that they knew that they had suffered damages. The amount of the damages need not be known with precision and can be amended later based on the evidence and expert reports as the case progresses. 

[22] The other relevance of the 2011 sale is the details disclosed in the broker’s information package with respect to the lease between the purchaser and the Department of Public Works. The Plaintiffs argue that these details confirmed their suspicions and allowed them to sue. In my view, the Plaintiffs has sufficient knowledge in May 2007 to sue, in that they knew that the Department of Public Works had leased the building from the purchaser. It was not necessary to know the exact terms and conditions of the lease before instituting proceedings.  

[23] In fact, not only in my view did the Plaintiffs have sufficient basis for a suit by May 2007, but also they could not have had the reasonable expectation that they would obtain any further information. In other words, the Plaintiffs had, as of May 2007, the only information they were likely to ever have about this potential claim. They chose not to sue at that time and as a result the claim was prescribed in May 2010. The fact that they fortuitously obtained further information in 2011 about the lease and the sale of the building does not revive their claim. [Nos soulignements.]

 

Clearly, he who hesitates loses.

 

Reference : [2014] ABD 457