At our weekly meeting, Michael Kryworuk discussed the Court of Appeal’s decision in Gordon Dunk Farms Limited v HFH Inc, 2021 ONCA 681, dealing with discoverability and the commencement of a limitation period.
History of the Litigation
This appeal arises from an action commenced by the appellant, Gordon Dunk Farms, against the respondents, who were responsible for the design and construction of a barn for the appellants. This barn collapsed suddenly on May 6, 2014.
Following the loss, an engineering firm was retained on behalf of the Appellant to investigate the cause of the collapse. The report from this expert was received on May 21, 2014.
However, the action was not commenced against the respondents until May 24, 2016 (because of an intervening long weekend, if the claim was not discovered until May 21, 2014, it would have been issued in time).
A number of motions for summary judgment were brought to determine whether the action was statute-barred.
The key question in this case was when the claim against the respondents was discoverable by the appellants.
The position of the appellant was that they could not have fully discovered their claims until after they received the May 21st engineering report.
The respondents argued that the appellants were aware that they likely had a claim as early as May 12, 2014, prior to the delivery of the expert report and, therefore, their claim issued on May 24, 2016 was statute-barred.
On the summary judgment motions, Lemon J held in favour of the respondents, and rejected the position of the appellant. Justice Lemon concluded that the appellants ought to have known or did know the necessary facts by May 12. The May 21 expert report contained no new information that the appellants did not already know.
On appeal, the appellants raised two principal issues:
- Did the motion judge err by failing to treat each of the appellant’s 20 pleaded acts and omissions as separate claims, and conduct individual discoverability analyses for each?
- Did the motion judge err by failing to rule on the appellant’s motion regarding timelines of its action against the respondent, Franken, who did not defend the original motion?
The Court of Appeal also addressed a third issue regarding the proper application of Section 14 of the Limitations Act 2002, S.O. 2002, c. 24 (the Limitations Act) that was not raised by any of the parties.
The Legal Test:
Sections 4 and 5(1) and (2) of the Limitations Act set out the two-year limitation period to bring an action, and when a claim is considered “discoverable”.
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.
The Supreme Court of Canada released its decision in Grant Thornton LLP v. New Brunswick, 2021 SCC 31 following the oral argument of this appeal.
The Court of Appeal sought and received further submissions from the parties on the effect of that decision on the present appeal.
In Grant Thornton, Justice Moldaver rejected the position that a plaintiff must have discovered every constituent element of a negligence claim, including knowledge of a duty of care and a breach of the standard of care, before the limitation period would begin to run.
Instead, Moldaver J articulated the test for the degree of knowledge required under the NB Act to trigger the commencement of the limitation period as when the
“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.”
Citing Grant Thornton, Justice Feldman, writing on behalf of the Court, found that a plaintiff does not need to know the exact act or omission by the defendant that caused the loss in order to start the limitation period from running. What a plaintiff needs to know to begin the limitation period is:
- That an incident occurred that resulted in a loss
- That the defendant did or failed to do something that caused that loss
- And that having regard to the nature of the injury, loss, or damage, a court proceeding is an appropriate means to see a remedy.
Applying these principles to the matter and considering the record, Feldman JA found that the appellants knew shortly after the collapse that the three respondents were responsible for the construction of the barn and that the barn collapsed due to a failure of one or more of them in the design or construction.
Justice Feldman saw no basis to interfere with the motion judge’s initial analysis or conclusion, and so denied the first ground of appeal.
Feldman JA also found against the appellants on their second ground of appeal. The fact that the respondent, Feldman Concrete Forming, did not respond in either the lower court motion or the appeal did not negate the Appellant’s claim against Franken from being found statute-barred by the motion judge.
Justice Feldman noted that the parties, including the appellants, had agreed in advance that the decision of the motion judge would be binding on all defendants in the original claim, which included Franken.
After dealing with the two stated grounds of appeal, Feldman JA also provided some obiter direction on the correct operation of Section 14 of the Limitations Act.
Section 14 of the Limitations Act, 2002, sets out the process by which a potential defendant can put the potential plaintiff on notice that the potential plaintiff may have a claim against them, in order to start the two-year limitation period from running.
14 (1) A person against whom another person may have a claim may serve a notice of possible claim on the other person.
(2) A notice of possible claim shall be in writing and signed by the person issuing it or that person’s lawyer, and shall,
(a) describe the injury, loss or damage that the issuing person suspects may have occurred;
(b) identify the act or omission giving rise to the injury, loss or damage;
(c) indicate the extent to which the issuing person suspects that the injury, loss or damage may have been caused by the issuing person;
(d) state that any claim that the other person has could be extinguished because of the expiry of a limitation period; and
(e) state the issuing person’s name and address for service.
(3) The fact that a notice of possible claim has been served on a person may be considered by a court in determining when the limitation period in respect of the person’s claim began to run.
(4) Subsection (3) does not apply to a person who is not represented by a litigation guardian in relation to the claim and who, when served with the notice,
(a) is a minor; or
(b) is incapable of commencing a proceeding because of his or her physical, mental or psychological condition.
(5) A notice of possible claim is not an acknowledgment for the purpose of section 13.
(6) A notice of possible claim is not an admission of the validity of the claim.
Justice Feldman held that the motion judge erred when they pointed to the fact the appellant’s adjuster sent letters to the three respondents to put them on notice of their potential liability as defendants as evidence that the appellants had sufficient knowledge to commence the action once those letters were sent. 
Feldman JA held that Section 14 had no application here given that it was the plaintiff who had put the defendants on notice and not the opposite, which is what Section 14 captured.
While this was an error in law, Justice Feldman found that it had no effect on the outcome of the motion, as the motions judge was entitled to draw an inference without any authority or direction from the Act.
The Court of Appeal dismissed the appeal with costs.
In conclusion, the appeal was entirely unsuccessful. This was the first time the ONCA considered and applied the decision of Grant Thornton v. New Brunswick regarding discoverability of claims.
The Court upheld the principle that the threshold for a plaintiff knowing when they can bring a claim is one of “plausible inference” and not certainty. A plaintiff need not be certain or know all of the constituent elements of a claim in order to proceed with the claim and begin the limitation period.
Furthermore, each claim for a specific act or omission does not require a separate discoverability analysis when part of a larger claim against a party.
In addition, the Court of Appeal clarified the correct operation of Section 14 of the Limitations Act. While a potential defendant may give notice to a potential plaintiff to start the plaintiff’s limitation period, Section 14 has no application to the inverse situation, where a plaintiff puts a potential defendant on notice of a potential claim.
 Limitations Act, 2002, S.O. 2002, c. 24, s4-5.
 Grant Thornton LLP v New Brunswick, 2021 SCC 31, at para 42.
 Gordon Dunk Farms Limited v HFH Inc, 2021 ONCA 681, at paras 33-34
 Ibid, at paras 38-39.
 Ibid, at pars 41-42.
 Ibid, s 14.
 Ibid, at paras 44-46.