In Psaila v Kapsalis, 2022 ONCA 37, the Ontario Court of Appeal delivered its decision dismissing an appeal from a successful summary judgment motion in which a claim against a municipality arising out of its duty as a road authority was dismissed due to the plaintiff’s failure to provide timely notice of the claim without a reasonable excuse.
Section 42(6) of the City of Toronto Act, 2006 states that no action shall be brought for recovery of damages against the City unless the claimant provides written notice of the claim to the city clerk within 10 days of the injury. However, section 42(8) contains the following “saving provision”: “Failure to give notice or insufficiency of the notice is not a bar to the action if a judge finds that there is reasonable excuse for the want or the insufficiency of the notice and that the City is not prejudiced in its defence.”
The Summary Judgment Motion Decision
The action in Psaila arose out of a motor vehicle accident that occurred on March 28th, 2015. The plaintiff commenced their lawsuit on December 2nd, 2015 and discoveries of the plaintiff and the defendant driver were completed in early 2017. The defendant driver served an expert engineering report on February 1st, 2018, blaming the plaintiff for the accident. The plaintiff retained an expert in late March who, on March 29th, advised the plaintiff to give the City notice of a claim “in an abundance of caution” as he suspected there might be an intersection design issue and an urgency to put the City on notice. The plaintiff provided the City with notice on April 2nd, 2018, and the City was added as a defendant by an Order dated March 29th, 2019, without prejudice to the City’s rights to assert any defences.
In cases where the defence of failing to give proper notice is raised by a municipality, a plaintiff bears the burden of satisfying the two-part test under section 42(8). That is, a plaintiff must establish a reasonable excuse for the lack of notice and must also demonstrate that the municipality is not prejudiced. With respect to the reasonable excuse, and as with any claim, a plaintiff must exercise due diligence in identifying and pursuing material facts upon which potential liability against a city or municipality may be based, and the obligation to provide written notice is triggered when a plaintiff has sufficient facts upon which to ground a potential claim.
In Psaila, the plaintiff argued that they could not have reasonably discovered the potential claim against the City until they retained their own expert and, further, that it was reasonable not to have retained an expert until after receiving the defendant driver’s expert report. However, even after applying a “broad and liberal interpretation” of reasonable excuse, Justice Vella rejected this argument. She reasoned that all of the sources of information that were relied on in the defendant’s expert report were in the possession of the plaintiff and his counsel in early 2017. These sources of information provided the plaintiff with knowledge of sufficient facts to identify a potential claim against the City based on a potential design defect with the intersection where the accident occurred. Having these facts “should have led a reasonably prudent plaintiff to investigate the Intersection and put the City on notice of a potential claim promptly.” Alternatively, Justice Vella held that the plaintiff ought to have provided the City with notice within 10 days of the receipt from the defendant’s February 1st, 2018 report “at the very latest.”
The Court of Appeal’s Decision
The Court of Appeal upheld Justice Vella’s decision to dismiss the plaintiff’s claim against the City, noting that no palpable and overriding errors were made and that her decision was reasonable and entitled to deference:
The appellant knew the location of the accident, knew of the City’s responsibility for designing and maintaining it, and knew that the defendants were blaming him for failing to avoid the collision. As the motion judge noted, the defendants’ allegation was premised on the assumption that the design and layout of the intersection permitted a reasonably prudent driver to have seen the defendants’ vehicle and take defensive action to avoid a collision. Her conclusion that this should have led the appellants to investigate the intersection and put the City on notice of a potential claim is reasonable. We note that the motion judge found, in the alternative, that at the very latest the appellant should have provided the City with notice within 10 days of receiving the Wilkinson Report, but did so only two months after receiving it.
Sections 42(6) and 42(8) of the City of Toronto Act, 2006 contain identical language to sections 44(10) and 44(12) of the Municipal Act, and the case law developed under each of the Acts is relevant to interpreting the other. As such, this case provides guidance to claimants broadly as well as other Ontario municipalities regarding when a plaintiff may be found to have sufficient knowledge of a potential claim such that they will be found not to have a reasonable excuse for failing to provide timely notice.
In this case, the court identified two bases upon which it could find that the plaintiff did not have a reasonable excuse for failing to provide notice of the claim within 10 days. It is interesting to consider whether the outcome of the case may have been different if the facts were somewhat different, i.e.: if notice had been given within 10 days of having received the defence expert report. In any event, the decision in Psaila acts as a reminder that municipalities have a legitimate interest in being able to promptly investigate claims made against them, and that plaintiffs who fail to consider the potential for a claim against a municipality early on face a serious risk of not being able to pursue that claim later in the litigation.
It is also interesting to note that, having found that the plaintiff had not established a reasonable excuse, Justice Vella nonetheless went on to consider whether it had been shown that the City would not suffer prejudice as a result of the lack of timely notice. In response to the plaintiff’s argument that there was no prejudice, the City adduced evidence of actual prejudice related to the destruction of certain records. However, on the motion, it could not be determined precisely when the records were destroyed and whether they would have been retained but for the delay in notice. As such, Justice Vella held that the second part of the test did raise a genuine issue for trial. This part of the decision was not addressed on appeal.