Last year, in Grant Thornton LLP v. New Brunswick, 2021 SCC 31, the Supreme Court of Canada clarified the law on discoverability of a civil claim under New Brunswick’s limitation legislation. This ruling has significant impacts on defining the start date of a limitation period in Alberta given some of the similarities between Alberta and New Brunswick’s statutes.
Background
The case stemmed from a dispute between the Province of New Brunswick and an auditor, Grant Thornton. Atcon, a construction and manufacturing company based in New Brunswick, needed a loan guarantee from the Province in order to receive a $50M loan from a bank. Grant Thornton provided a report to the Province showing Atcon’s finances to be satisfactory, and in reliance on the report, New Brunswick provided the guarantee. After Atcon ran out of working capital just four months later, the Province was required to pay out the loan. The Province then hired a second auditor, who delivered a draft report in February 2011 showing various errors in Atcon’s financial statements that were not identified in the Grant Thornton report. Upon receiving the finalized, second auditor’s report in December 2012, New Brunswick notified the Institute of Chartered Accountants that it was proceeding with a formal complaint against Grant Thornton. When the Province commenced legal action 18 months later, Grant Thornton argued the claim was statute-barred for being initiated outside of the limitation period.
The Limitations Legislation in Issue
Section 5(1) of the New Brunswick Limitations of Actions Act,[1] states that no claim shall be brought after two years from the day on which the claim is “discovered.” Section 5(2) provides as follows:[2]
- 5(2) A claim is discovered on the day on which the claimant first knew or ought reasonably to have known
- (a) that the injury, loss or damage had occurred,
- (b) that the injury, loss or damage was caused by or contributed to by an act or omission, and
- (c) that the act or omission was that of the defendant.
The Supreme Court’s Decision
In a unanimous decision, the Supreme Court ruled that the Province’s claim against Grant Thornton was indeed commenced outside of the two-year limitation period. The Court held that, like the legislation in other provinces, the New Brunswick Act codified the common law rule of discoverability. Importantly, the Court stated that “a claim is discovered when a plaintiff has the knowledge, actual or constructive, of the material facts upon which a plausible inference of liability on the defendant’s part can be drawn.”[3] Requiring a plausible inference of liability “ensures that the degree of knowledge needed to discover a claim is more than mere suspicion or speculation” but that “the standard does not rise so high as to require certainty of liability or ‘perfect knowledge.’”[4] Applying this test, the Court found that the Province had sufficient knowledge to draw a plausible inference that Grant Thornton had been negligent when they received the draft report from the second auditor, which was over two years prior to the commencement of its legal action.
Applicability of the Decision to Alberta
The Supreme Court noted that New Brunswick expressly modeled its Limitations of Actions Act on the legislation of other provinces such as Alberta, Ontario, and Saskatchewan.[5] While similar in many respects, the Alberta Limitations Act,[6] is importantly distinct from the New Brunswick Act. In particular, Section 3(1)(a) of the Alberta Act states:[7]
- 3(1) Subject to subsections (1.1) and (1.2) and sections 3.1 and 11, if a claimant does not seek a remedial order within
- (a) 2 years after the date on which the claimant first knew, or in the circumstances ought to have known,
- (i) that the injury for which the claimant seeks a remedial order had occurred,
- (ii) that the injury was attributable to conduct of the defendant, and
- (iii) that the injury, assuming liability on the part of the defendant, warrants bringing a proceeding,
- (a) 2 years after the date on which the claimant first knew, or in the circumstances ought to have known,
- […] on pleading this Act as a defence, is entitled to immunity from liability in respect of the claim. [Emphasis added]
Sections 3(1)(a)(i) and (ii) of the Alberta Act are virtually identical to the definition contained in Section 5(2) of the New Brunswick Act regarding when a claim is “discovered.”
However, Section 3(1)(a)(iii) of the Alberta Act provides an additional step to discoverability of a claim not found in Section 5(2) of the New Brunswick Act. Namely, in Alberta, a plaintiff must have knowledge or constructive knowledge that the injury “warrants bringing a proceeding.” This additional requirement found in the Alberta Act would seemingly alter the strict applicability of Grant Thornton to Alberta cases, at least insofar as that case does not address this third requirement of discoverability not contained in the New Brunswick Act. This begs the question: how has Grant Thornton been treated and discussed by Alberta Courts?
Many recent Alberta cases simply cite Grant Thornton for the proposition that a “plausible inference of liability” is what is required to discover a claim, without addressing the clear differences between the wording of the New Brunswick and Alberta Acts.[8]
In Aseniwuche Winewak Nation of Canada v. Ackroyd LLP, Madam Justice Fagnan took a sensible approach to the application of the principles in Grant Thornton to the distinct wording of the Alberta Act.[9] In her ruling, Fagnan J. identified the discrepancy between the provincial laws and applied Grant Thornton only to the relevant sections of the Alberta Act, separating the three parts of s. 3(1)(a) and analyzing them one-by-one. She applied the “plausible inference” principle to the first two provisions, which are effectively equivalent to the discoverability test of the New Brunswick Act.[10] For the third condition of s. 3(1)(a) (“warrants bringing a proceeding”), Fagnan J. relied on other case law for her analysis, avoiding application of Grant Thornton,[11] which, again, did not address this particular requirement of discoverability as it is not contained in New Brunswick’s Act.
Though Fagnan J.’s ruling provides a logical approach for applying Grant Thornton in Alberta, it is unclear if her approach will ultimately be adopted by Alberta’s highest court. The Alberta Court of Appeal decisions that cite Grant Thornton thus far do not address its specific applicability to s. 3(1)(a)(iii) of Alberta’s Act.
In Lafferty v. Co-operators General Insurance Co., the Court of Appeal stated that:[12]
[…] plaintiffs will have sufficient knowledge when they have some support for a suspicion that their injury is attributable to the conduct of the defendant, and assuming the defendant’s liability, that an action is warranted.
Put another way, the requisite knowledge exists 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”, Grant Thornton, paras 42, 45.
The Court in Guillevin International Co v. Barry likewise provided little guidance on this issue, holding that[13]:
The general limitation period under s. 3(1)(a) of the Limitations Act, RSA 2000, c. L–12, is two years after the plaintiff knew or ought to have known that it had a claim that warranted bringing a proceeding. Time starts to run 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.
While the Court of Appeal has clearly adopted the “plausible inference” ratio from Grant Thornton to determine discoverability under Section 3(1)(a)(i) and (ii), they have not directly addressed the issue of its applicability to s. 3(1)(a)(iii) of Alberta’s Act. We will have to wait and see if the Court of Appeal adopts Justice Fagnan’s approach when it eventually hears a case where the “warrants bringing a proceeding” provision is directly at issue.
Takeaways
Alberta courts have been consistent in applying the “plausible inference” principle from Grant Thornton, despite the discrepancy in the legislative wording between Alberta and New Brunswick. The additional requirement that the claim “warrants bringing a proceeding” seemingly introduces an extra step for determining the start date of a limitation period in Alberta; however, there has been little commentary on this particular criterion.
As it stands, if a plaintiff can draw a plausible inference of liability on the part of the defendant and the claim warrants bringing a proceeding (assuming the defendant’s liability), then the limitation clock starts running in Alberta. From this date, an Alberta plaintiff has two years to commence a claim before the limitation period expires.
The message for plaintiffs is simple: where possible, do not delay the commencement of an action. Such a delay can have disastrous consequences, as it did for the Province of New Brunswick. It is no longer permissible for a plaintiff to hold off litigation until it is “certain” or has “perfect knowledge” of the potential liability of a defendant – a “plausible inference” that the defendant is liable is all that is required to have the limitation period start to run.
Miller Thomson LLP is here to help with all of your business needs. If you have further questions about the Supreme Court of Canada’s decision in Grant Thornton LLP v. New Brunswick, its applicability to you and your claim, or any other matter, please contact a member of our Commercial Litigation team.
[1] Limitation of Actions Act, SNB 2009, c L-8.5 [the “New Brunswick Act”].
[2] Ibid.
[3] Grant Thornton LLP v. New Brunswick, 2021 SCC 31 at para 42 [Grant Thornton].
[4] Ibid at para 46.
[5] Ibid at para 35.
[6] Limitations Act, RSA 2000, c L-12 [the “Alberta Act”].
[7] Ibid.
[8] See Bourne v. Calgary (City), 2021 ABPC 278 at para 59. See also R&D Pilot Truck Ltd v. Vogstad, 2022 ABQB 225 at para 18, Vermillion Networks Inc v. Vermilion Energy Inc, 2022 ABQB 287 at paras 30-31, and Guillevin International Co v. Barry, 2022 ABCA 144 at para 68.
[9] Aseniwuche Winewak Nation of Canada v. Ackroyd LLP, 2021 ABQB 728 [Aseniwuche].
[10] Ibid at paras 46-52.
[11] Ibid at paras 53-72.
[12] Lafferty v. Co-operators General Insurance Co., 2021 ABCA 359 at paras 27-28.
[13] Guillevin International Co v. Barry, 2022 ABCA 144 at para 68.
