Nunc Pro Tunc Orders – When Can a Court Back-Date the Issuance of a Claim?

July 10, 2024

In a recent decision of the Ontario Court of Appeal, Norman Towing (7344508 Canada Inc.) v. Riordan Leasing Inc., 2024 ONCA 518, the Court of Appeal outlined the relevant factors courts must consider when granting a nunc pro tunc order.

Nunc pro tunc (latin for “now for then”) orders allows the courts to give an action retroactive legal effect as though it had been performed at an earlier date. Nunc pro tunc orders are commonly used to address administrative failures or procedural defects.

In this case, the Court of Appeal considered whether a nunc pro tunc order from the Superior Court of Justice, which allowed a Statement of Defence and Counterclaim to be deemed issued prior to the expiration of the limitation period, was appropriately ordered.

Background

In 2017, the appellant (Norman Towing), entered into five vehicle leases with the respondent (Riordan Leasing Inc.). The respondent seized and sold the vehicles in August 2020 and later claimed deficiency, following defaults on the leases during the COVID pandemic. In February 2021, Norman Towing filed a Statement of Claim against Riordan Leasing Inc. for damages arising from improper seizure and sale of the vehicles.

Riordan Leasing Inc. filed a statement of defence and counterclaim against Norman Towing in May 2021. The statement of defence and counterclaim was served and filed, but not issued before the expiration of the limitation period on September 14, 2022. Norman Towing denied receiving the statement of defence and counterclaim, however the motion judge later found that it had been properly served. Despite this, on June 21, 2021, Riordan Leasing Inc.’s counsel again emailed the statement of defence and counterclaim to opposing counsel, reiterating the request for service acceptance.

In June 2021, Riordan Leasing Inc. filed the statement of defence and counterclaim with proof of service. The court sent written confirmation of the filing; however, the counterclaim was not issued – which as an administrative oversight. As such, the claim was not issued until after the limitation period had expired.

On July 21, 2021, Riordan Leasing Inc. noted Norman Towing in default. On January 6, 2022, default judgment was granted against Norman Towing. Norman Towing sought to set aside this judgment, leading to a motion where the respondent requested a nunc pro tunc order deeming the statement of defence and counterclaim issued on the date of filing.

Motion Judge’s Decision

As Norman Towing’s motion to set aside the default judgement was unopposed, the motion judge was satisfied that the criteria for setting aside the default judgement was met.

However, the motion judge granted the nunc pro tunc order and deemed the statement of defence and counterclaim as issued on June 18, 2021 (the date of filing). Given the fact that the parties had been working collaboratively and had been waiving timelines for the delivery of their pleadings, the motion judge held that back-dating the issuance of the counterclaim was appropriate in the circumstances.

The motion judge further held that Norman Towing did have notice of the counterclaim within the limitation period and the failure of the issuance of the claim was an administrative error. He also emphasized that by not granting the order, the claim would be statute-barred due to the expiry of the limitation period.

Court of Appeal Analysis

On appeal, Norman Towing argued that the motion judge erred in granting the nunc pro tunc order, relying on case law to submit that the matter was a substantive issue where leave of the court was required and, as such, it was not open for the motion judge to grant the order. Riordan Leasing Inc. argued that the motion judge’s decision was correct, as the oversight was simply a procedural irregularity.

The Court of Appeal upheld the motion judge’s decision and affirmed the granting of the nunc pro tunc order.

The Court made reference to Rule 2.01 of the Rules of Civil Procedure, which provides that a failure to comply with the Rules is an irregularity and does not render a proceeding a nullity. Furthermore, it provides that a court may grant relief to secure the just determination of the real matters in dispute. The Court found that in this matter, the lack of issuance of the counter claim constituted an irregularity. Particularly, the Court of Appeal held:

[27]… Rule 2.01 contemplates a failure to comply with the Rules and that this amounts to an irregularity and does not render a proceeding a nullity. This makes sense as the law and justice should run in parallel, not in opposition. Reflective of that reality, r. 2.01 goes on to say that a court may grant relief to secure the just determination of the real matters in dispute.

Despite the fact that the statement of defence and counterclaim was filed but not issued, it was unquestionable that counsel was aware of the counterclaim well before the expiry of the limitation period. In April 2021, counsel for the appellant was advised that there would be a counterclaim and it was sent to him on May 31, 2021.

The Court of Appeal also affirmed that nunc pro tunc orders can be appropriate, provided that they do not undermine the legislative purpose of limitation periods. The Court made reference to the Supreme Court decision of Canadian Imperial Bank of Commerce v. Green, 2015 SCC 60, and reaffirmed that courts still have inherent jurisdiction to issue nunc pro tunc orders, particularly where the error is procedural and the purposes of limitation periods are not compromised, which was outlined by the Supreme Court as:

[57] Limitation periods serve “(1) to promote accuracy and certainty in the adjudication of claims; (2) to provide fairness to persons who might be required to defend against claims based on stale evidence; and (3) to prompt persons who might wish to commence claims to be diligent in pursuing them in a timely fashion”

Furthermore, the Court of Appeal noted that the cases relied upon by Norman Towing involved substantive requirements, such as obtaining leave to commence an action, which were not applicable here. Instead, this case involved a procedural misstep that did not prejudice the parties, as counsel had actual notice of the counterclaim.

Consequently, the Court of Appeal found that it was open to the motion judge to grant a nunc pro tunc order in this case and dismissed the appeal.

Takeaways

This decision outlines the courts flexibility in dealing with procedural irregularities in litigation in order to ensure fairness and just determinations of actions. However, this decision also serves as a reminder that relief such as nunc pro tunc orders will likely not be successful in circumstances where the certainty, evidentiary, and diligence purposes of limitation periods may be undermined.