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Limitations Act - Discoverability - Presumption [s.5(2)]

. Gordon Dunk Farms Limited v. HFH Inc.

In Gordon Dunk Farms Limited v. HFH Inc. (Ont CA, 2021) the Court of Appeal (following the SCC in Grant Thornton) held that the degree of certainty of facts required to trigger discoverability is 'plausibility' [SS: locate this under s.5(2) 'Presumption']:
b) Meaning of a “Claim”

[25] The context for the appellant’s argument is ss. 4, 5(1) and (2), and the definition of “claim” in s. 1 of the Act, which state:
1 In this Act, … “claim” means a claim to remedy an injury, loss or damage that occurred as a result of an act or omission;



4 Unless this Act provides otherwise, a proceeding shall not be commenced in respect of a claim after the second anniversary of the day on which the claim was discovered.

5 (1) A claim is discovered on the earlier of,

(a) the day on which the person with the claim first knew,

(i) that the injury, loss or damage had occurred,

(ii) that the injury, loss or damage was caused by or contributed to by an act or omission,

(iii) that the act or omission was that of the person against whom the claim is made, and

(iv) that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it; and

(b) the day on which a reasonable person with the abilities and in the circumstances of the person with the claim first ought to have known of the matters referred to in clause (a).

(2) A person with a claim shall be presumed to have known of the matters referred to in clause (1) (a) on the day the act or omission on which the claim is based took place, unless the contrary is proved.
[26] The meaning of “claim” in the Act was explained by this court in Kaynes v. BP p.l.c., 2021 ONCA 36, 456 D.L.R. (4th) 247, and confirmed most recently by the Supreme Court of Canada in Grant Thornton LLP v. New Brunswick, 2021 SCC 31, in respect of the New Brunswick Limitation of Actions Act, S.N.B. 2009, c. L-8.5 (the “N.B. Act”). In Kaynes, the court explained that while the Act no longer refers specifically to a cause of action, instead it sets out universal criteria for the commencement of the limitation period in respect of a claim: at paras. 50-58. A claim is pursued in a court proceeding to obtain a remedy for a loss that the defendant caused the plaintiff to suffer by its act or omission. To obtain a remedy in a court proceeding, a person must assert a cause of action.

[27] In Grant Thornton, Moldaver J. rejected the argument that there was a meaningful distinction between “claim” and “cause of action” in the context of the N.B. Act (which is similar but not identical to the Ontario Act), stating at para. 37:
I recognize that the distinction between “claim” and “cause of action” could be meaningful in some circumstances; but in my view, it is not so here. In fact, the LAA’s own wording shows that the use of “claim” does not rule out a shared meaning with “cause of action”. Section 1(1) defines a claim as a “claim to remedy the injury, loss or damage that occurred as a result of an act or omission”. In short, s. 1(1) indicates that the legislature’s use of the term “claim” focuses on a set of facts giving rise to a remedy, which is the same meaning that Grant Thornton attributes to the term “cause of action”.
c) Discoverability of a “Claim”

[28] Because a claim is for a legal remedy in a court proceeding, one can have a claim for the same remedy based on one or more acts or omissions that may have caused the loss. In pleading parlance, different acts or omissions may constitute particulars of the claim. However, the claim, as defined, is for the remedy itself – in this case, damages for negligence and breach of contract.

[29] As the Supreme Court of Canada released its decision in Grant Thornton following the oral argument of this appeal, the court sought and received further written submissions from the parties on the effect of that decision on the issues to be decided on this appeal.

[30] In Grant Thornton, the issue was whether a plaintiff with a negligence claim must have discovered every constituent element of that claim, including knowledge of a duty of care and a breach of the standard of care, before the limitation period would begin to run. In rejecting that position, Moldaver J. articulated the test for the degree of knowledge required under the N.B. Act to trigger the commencement of the limitation period, at para. 42:
[A] claim is discovered when a plaintiff has knowledge, actual or constructive, of the material facts upon which a plausible inference of liability on the defendant’s part can be drawn.
[31] Moldaver J. emphasized that the “plausible inference of liability” standard makes it clear that certainty is not required. Of course, one will not know for certain if a defendant is liable for a loss until the verdict is delivered following a trial or summary judgment motion.

[32] The issue that the appellant raises here is: what is the significance of the “act or omission” that is referred to in ss. 5(1)(a)(ii) and (iii) of the Act? Is the appellant correct that a separate limitation period begins to run in respect of each act or omission committed by the defendant as part of its negligent conduct contributing to the loss, thereby requiring a separate discoverability analysis for each such act or omission? Or does the plaintiff only have to know that the defendant’s involvement in the loss means that it must have committed one or more negligent acts or omissions that caused or contributed to the loss?

[33] In my view, the limitations jurisprudence of this court, effectively confirmed by the Supreme Court in Grant Thornton, establishes that the appellant’s position has been rejected: see, e.g., McSween v. Louis (2000), 2000 CanLII 5744 (ON CA), 132 O.R. (3d) 304 (C.A.); Lawless v. Anderson, 2011 ONCA 102, 276 O.A.C. 75; Dale v. Frank, 2017 ONCA 32, 136 O.R. (3d) 315, leave to appeal to S.C.C. refused, 37494 (October 12, 2017); and Morrison v. Barzo, 2018 ONCA 979, 144 O.R. (3d) 600.

[34] A plaintiff need not know the exact act or omission by the defendant that caused the loss in order to start the limitation period running. What it needs to know is that an incident occurred that resulted in a loss (s. 5(1)(a)(i)), that the defendant did or failed to do something to cause that loss (s. 5(1)(a)(ii) and (iii)), and that, having regard to the nature of the injury, loss, or damage, a court proceeding is an appropriate means to seek a remedy (s. 5(1)(a)(iv)).

[35] The damages and injury caused by a car accident provide an instructive example. The defendant’s car slams into the plaintiff’s car. The plaintiff knows the defendant was driving, but may not know whether the defendant fell asleep at the wheel, neglected to get the brakes of the car serviced, was distracted by a phone call, was drunk, or was just careless. The plaintiff will plead all of those allegations as part of its negligence claim. In discovery, the true facts will likely be disclosed. It is also possible that the actual cause or causes of the accident may not be revealed until trial. But the action must be commenced within two years of when the plaintiff knows or ought to know that the defendant committed some act or omission that caused the loss or damage.

[36] And what is meant by “knows” is that the plaintiff has the evidentiary basis to believe that the defendant did an act or made an omission that caused a loss for which a court proceeding is appropriate to obtain a remedy – the basis of a plausible inference of liability, in the words of Moldaver J. Of course, at trial, it may turn out that the defendant was not responsible for the loss, either because they owed no duty of care, they met the standard of care, or they did not commit the act or omission that was alleged.

[37] It is possible that there may be circumstances where a plaintiff learns later about another act or omission that was not apparent from the circumstances of the loss and that gives rise to a new claim. That is what occurred in Kaynes, where the investor knew early on that the company’s financial disclosure was misleading and negligent, and therefore had to commence its negligent misrepresentation action. But it only learned much later that the company had knowingly and fraudulently made the misleading claims, and therefore the investor had more time to allege fraud.
. Grant Thornton LLP v. New Brunswick

In Grant Thornton LLP v. New Brunswick (SCC, 2021) the Supreme Court of Canada considered the degree of collective knowledge of all the discoverability elements that's required to trigger discoverability (here under New Brunswick statutory limitations, which it held to be the same as common law discoverability):
(2) The Requisite Degree of Knowledge

[41] As noted, the Court of Appeal disagreed with the motions judge on the extent of knowledge required to discover a claim under s. 5. The motions judge held that a plaintiff needs to know only enough facts to have prima facie grounds to infer the existence of a potential claim. The Court of Appeal, on the other hand, held that discovery of a claim requires actual or constructive knowledge of facts that confer a legally enforceable right to a judicial remedy, which includes knowledge of every constituent element of the cause of action being pled. Thus, on the Court of Appeal’s interpretation, in addition to knowledge of a loss and causation, a claim in negligence would include knowledge of a duty of care as well as knowledge of a breach of the standard of care.

[42] In my respectful view, neither approach accurately describes the degree of knowledge required under s. 5(2) to discover a claim and trigger the limitation period in s. 5(1)(a). I propose the following approach instead: a claim is discovered when a plaintiff has knowledge, actual or constructive, of the material facts upon which a plausible inference of liability on the defendant’s part can be drawn. This approach, in my view, remains faithful to the common law rule of discoverability set out in Rafuse and accords with s. 5 of the LAA.

[43] By way of explanation, the material facts that must be actually or constructively known are generally set out in the limitation statute. Here, they are listed in s. 5(2)(a) to (c). Pursuant to s. 5(2), a claim is discovered when the plaintiff has actual or constructive knowledge that: (a) the injury, loss or damage occurred; (b) the injury loss or damage was caused by or contributed to by an act or omission; and (c) the act or omission was that of the defendant. This list is cumulative, not disjunctive. For instance, knowledge of a loss, without more, is insufficient to trigger the limitation period.

[44] In assessing the plaintiff’s state of knowledge, both direct and circumstantial evidence can be used. Moreover, a plaintiff will have constructive knowledge when the evidence shows that the plaintiff ought to have discovered the material facts by exercising reasonable diligence. Suspicion may trigger that exercise (Crombie Property Holdings Ltd. v. McColl-Frontenac Inc., 2017 ONCA 16, 406 D.L.R. (4th) 252, at para. 42).

[45] Finally, the governing standard requires the plaintiff to be able to draw a plausible inference of liability on the part of the defendant from the material facts that are actually or constructively known. In this particular context, determining whether a plausible inference of liability can be drawn from the material facts that are known is the same assessment as determining whether a plaintiff “had all of the material facts necessary to determine that [it] had prima facie grounds for inferring [liability on the part of the defendant]” (Brown v. Wahl, 2015 ONCA 778, 128 O.R. (3d) 583, at para. 7; see also para. 8, quoting Lawless v. Anderson, 2011 ONCA 102, 276 O.A.C. 75, at para. 30). Although the question in both circumstances is whether the plaintiff’s knowledge of the material facts gives rise to an inference that the defendant is liable, I prefer to use the term plausible inference because in civil litigation, there does not appear to be a universal definition of what qualifies as prima facie grounds. As the British Columbia Court of Appeal observed in Insurance Corporation of British Columbia v. Mehat, 2018 BCCA 242, 11 B.C.L.R. (6th) 217, at para. 77:
As noted in Sopinka, Lederman & Bryant: The Law of Evidence in Canada, some cases equate prima facie proof to a situation where the evidence gives rise to a permissible fact inference; others equate prima facie proof to a case where the evidence gives rise to a compelled fact determination, absent evidence to the contrary. [Citation omitted.]
Since the term prima facie can carry different meanings, using plausible inference in the present context ensures consistency. A plausible inference is one which gives rise to a “permissible fact inference”.

[46] The plausible inference of liability requirement ensures that the degree of knowledge needed to discover a claim is more than mere suspicion or speculation. This accords with the principles underlying the discoverability rule, which recognize that it is unfair to deprive a plaintiff from bringing a claim before it can reasonably be expected to know the claim exists. At the same time, requiring a plausible inference of liability ensures the standard does not rise so high as to require certainty of liability (Kowal v. Shyiak, 2012 ONCA 512, 296 O.A.C. 352) or “perfect knowledge” (De Shazo, at para. 31; see also the concept of “perfect certainty” in Hill v. South Alberta Land Registration District (1993), 1993 ABCA 75 (CanLII), 8 Alta. L.R. (3d) 379, at para. 8). Indeed, it is well established that a plaintiff does not need to know the exact extent or type of harm it has suffered, or the precise cause of its injury, in order for a limitation period to run (HOOPP Realty Inc. v. Emery Jamieson LLP, 2018 ABQB 276, 27 C.P.C. (8th) 83, at para. 213, citing Peixeiro, at para. 18).

[47] In my respectful view, endorsing the Court of Appeal’s approach that to discover a claim, a plaintiff needs knowledge of facts that confer a legally enforceable right to a judicial remedy, including knowledge of the constituent elements of a claim, would move the needle too close to certainty. A plausible inference of liability is enough; it strikes the equitable balance of interests that the common law rule of discoverability seeks to achieve.

[48] It follows that in a claim alleging negligence, a plaintiff does not need knowledge that the defendant owed it a duty of care or that the defendant’s act or omission breached the applicable standard of care. Finding otherwise could have the unintended consequence of indefinitely postponing the limitation period. After all, knowledge that the defendant breached the standard of care is often only discernable through the document discovery process or the exchange of expert reports, both of which typically occur after the plaintiff has commenced a claim. As the Court stated in K.L.B. v. British Columbia, 2003 SCC 51, [2003] 2 S.C.R. 403, at para. 55:
Since the purpose of the rule of reasonable discoverability is to ensure that plaintiffs have sufficient awareness of the facts to be able to bring an action, the relevant type of awareness cannot be one that it is possible to lack even after one has brought an action. [Emphasis added.]
Although the Court in K.L.B. was dealing with discoverability in a different context, the basic principle is relevant here. The standard cannot be so high as to make it possible for a plaintiff to acquire the requisite knowledge only through discovery or experts. And yet, that is precisely the standard endorsed by the Court of Appeal in the instant case. With respect, that standard sets the bar too high. By the same token, the standard is not as low as the standard needed to ward off an application to strike a claim. What is required is actual or constructive knowledge of the material facts from which a plausible inference can be made that the defendant acted negligently.




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