Ordinary limitation periods for suing usually start to run once the reasonableness of suing is discoverable. (Ultimate limitations periods do not require that, but are much longer.) Discoverability is not required by all limitations legislation; the Legislature can set a starting date or test not involving discovery or discoverability, if it wishes. The question then is interpreting the legislation. But discoverability is needed unless the legislation indicates otherwise. Whether the Act speaks of “cause of action” or “claim” does not indicate anything different.
The Supreme Court of Canada has now clarified what “discoverable” means for these purposes. It is actual or constructive knowledge of the material facts letting the plaintiff draw a plausible inference of this defendant’s liability.
In the case in question, by the relevant date the plaintiff knew or ought to have known that it had suffered a significant loss, and that at least part of the cause of the loss was conduct which the plaintiff’s auditor had been hired to detect. That was enough for discoverability, and so the suit was out of time.
What does “ought to have known” mean? It includes material facts which the plaintiff should have learned by exercising reasonable diligence. But learning facts obtainable only by disclosure (discovery from the defendant) is not necessary.
What facts is it, which learning starts the time running? Those facts which found a plausible inference of liability by this defendant. Neither certainty nor perfect knowledge is needed. Mere suspicion or speculation is not enough, however.
What must the facts be about, i.e. what are the relevant topics of the real or constructive notice? Three things. First, some injury or loss to the plaintiff. (Knowing the exact extent or type of the harm is unnecessary.) Second, partial contribution, or full causation, by an act or omission. Third, that was by this defendant. The plaintiff must actually or constructively know all three.
The Supreme Court confirms that what must have been discoverable are material facts, not law. It is not necessary that the plaintiff know (or should have discovered) that the defendant owed a duty of care, nor that the defendant’s conduct fell below the right standard.
The decision is Grant Thornton v. New Brunswick 2021 SCC 31.
– Hon. J.E. Côté
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