{"id":253409,"date":"2021-08-30T16:00:45","date_gmt":"2021-08-30T10:30:45","guid":{"rendered":"https:\/\/www.scconline.com\/blog\/?p=253409"},"modified":"2021-08-30T14:03:16","modified_gmt":"2021-08-30T08:33:16","slug":"statute-of-limitation","status":"publish","type":"post","link":"https:\/\/www.scconline.com\/blog\/post\/2021\/08\/30\/statute-of-limitation\/","title":{"rendered":"Supreme Court of Canada clarifies statute of limitation; explains the standard of plausible inference"},"content":{"rendered":"

Supreme Court of Canada: <\/strong>The 7-Judges Bench comprising of Moldaver, Karakatsanis, C\u00f4t\u00e9, Brown, Rowe, Martin and Kasirer, JJ., clarified the law related to limitation. The Bench, while addressing the standard to be applied in determining whether and when a plaintiff has the requisite degree of knowledge to discover a claim, thereby triggering the limitation period, stated,<\/p>\n

\n

\u201cA 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\u2019s part can be drawn. This approach remains faithful to the common law rule of discoverability, which recognizes that it is unfair to deprive a plaintiff from bringing a claim before it can reasonably be expected to know the claim exists.\u201d\u00a0 <\/span><\/p>\n<\/blockquote>\n

Background<\/strong><\/span><\/h3>\n

In 2008, a New Brunswick-based company sought loans from a bank, but it needed loan guarantees from the province. The province agreed to $50 million in loan guarantees, conditional upon the company subjecting itself to an external review of its assets by its auditor. Consequently, the province agreed to take the guarantee of loan for the company. When the company ran out of working capital four months after receiving the loan guarantees from the province, the bank called on the province to pay out the loan guarantees, which it did on March 18, 2010.<\/p>\n

It was only when the province retained another accounting and auditing firm to review the company\u2019s financial position, it came to know that the company\u2019s financial statements had not been prepared in conformity with generally accepted accounting principles and that the other firm had overstated the company\u2019s assets and net earnings by a material amount.<\/p>\n

Findings of Lower Courts<\/strong><\/span><\/h3>\n

\u00a0<\/strong>On 23-06-2014, the province commenced a claim against the auditor, alleging negligence. The auditor moved for summary judgment to have the claim dismissed as statute-barred by virtue of the limitation period under Section 5(1)(a) of the provincial Limitation of Actions Act, <\/em>which provides that no claim shall be brought after two years from the day on which the claim was discovered. The Motion Court struck the province\u2019s action, finding that the province had the requisite knowledge by 18-03-2010, more than two years before it commenced its claim.<\/p>\n

On appeal, the Court of Appeal allowed the province\u2019s appeal and set aside the motion judge\u2019s judgment stating that the governing standard was whether a plaintiff knows or ought reasonably to have known facts that confer a legally enforceable right to a remedy, which the Appellate Court found can only exist if the plaintiff had knowledge of each constituent element of the claim. Applying that standard, it found that the limitation period had not been triggered because the province had not yet discovered its claim.<\/p>\n

Issues before the Court<\/strong><\/span><\/h3>\n
    \n
  1. The first question before the Bench was what is the standard to be applied in determining whether a plaintiff has the requisite degree of knowledge to discover a claim under s. 5(2), so as to trigger the limitation period in Section5(1)(a)?<\/li>\n
  2. The second question related to the particular degree of knowledge required to discover a claim.<\/li>\n<\/ol>\n

    Observation and Analysis <\/strong><\/span><\/h3>\n
      \n
    • The Requisite Degree of Knowledge<\/em><\/strong><\/li>\n<\/ul>\n

      \u00a0<\/em><\/strong>Answering the first question, the Supreme Court stated that the standard to be applied in determining whether a plaintiff had the requisite degree of knowledge to discover a claim under Section 5(2) of the LAA<\/em>, thereby triggering the two-year limitation period in Section 5(1)(a), is whether the plaintiff had knowledge, actual or constructive, of the material facts upon which a plausible inference of liability on the defendant\u2019s part could be drawn.<\/p>\n

      The Court opined that in a negligence claim, a plaintiff does not need knowledge that the defendant owed it a duty of care or that the defendant\u2019s act or omission breached the applicable standard of care. All that is required is actual or constructive knowledge of the material facts from which a plausible inference can be made that the defendant acted negligently. Noticing that the province had actual or constructive knowledge of the material facts \u2014 namely, that a loss occurred and that the loss was caused or contributed to by an act or omission of the auditor \u2014 when it received the draft report from the other firm on 04-02-2011, and that the said act or omission caused or contributed to the province\u2019s loss, the Bench stated that nothing more was needed to draw a plausible inference of negligence. Ensuring that the standard does not rise so high as to require certainty of liability or perfect knowledge, the Bench held,<\/p>\n

      \n

      \u201cA plausible inference of liability is enough; it strikes the equitable balance of interests that the common law rule of discoverability seeks to achieve.\u201d <\/span><\/p>\n<\/blockquote>\n

        \n
      • The Common Law Rule of Discoverability<\/em><\/strong><\/li>\n<\/ul>\n

        \u00a0<\/strong>Rejecting the contention of the province that the Common Law rule of Discoverability is not applicable on Canadian Law, the Bench stated that as evidenced by the words of the provision, there is no clear legislative language ousting or limiting the common law rule; in fact, quite the opposite. The event triggering the limitation period in s. 5(1)(a) is linked to the state of the plaintiff\u2019s knowledge in the same manner as the common law rule. The Bench expressed,<\/p>\n

        \n

        \u201cSection 5(1) (a) and (2) of the LAA does not contain any language ousting or limiting the common law rule; rather, it codifies it.\u201d<\/span><\/p>\n<\/blockquote>\n

        \u00a0<\/em><\/strong>As per Sections 5(2)(a) to (c) of LAA, a claim is discovered when the plaintiff has actual or constructive knowledge that:<\/p>\n

        (a) the injury, loss or damage occurred; <\/em><\/p>\n

        (b) the injury loss or damage was caused by or contributed to by an act or omission; and <\/em><\/p>\n

        (c) the act or omission was that of the defendant. <\/em><\/p>\n

        Thus, as established by the rule of discoverability and the LAA<\/em>, the limitation period is triggered when the plaintiff discovers or ought to have discovered, through the exercise of reasonable diligence, the material facts on which the claim is based. The Bench explained, 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\u2019s part can be drawn and this approach remains faithful to the common law rule of discoverability and accords with Section 5 of the LAA<\/em>.<\/p>\n

        Findings of the Court <\/strong><\/span><\/h3>\n

        Opining that endorsing the Court of Appeal\u2019s 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, the Bench opined 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\u2019s act or omission breached the applicable standard of care.<\/p>\n

        \n

        \u201cThe standard cannot be so high as to make it possible for a plaintiff to acquire the requisite knowledge only through discovery or experts.\u201d <\/span><\/p>\n<\/blockquote>\n

        Hence, considering that the Province discovered its claim on 04-02-2011, when it received the draft Richter Report (second auditor) and that at that point, the Province had actual or constructive knowledge of the material facts \u2014 namely, that a loss occurred and that the loss was caused or contributed to by an act or omission of Grant Thornton, the Bench opined that nothing more was needed to draw a plausible inference of negligence.<\/p>\n

        Verdict<\/span> \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/h3>\n

        In conclusion, considering that the Province discovered its claim on 04-02-2011, more than two years before commencing it on 23-06-2014 and had sufficient knowledge to draw a plausible inference that Grant Thornton had been negligent, the Bench held that its claim was statute-barred by Section 5(1)(a) of the LAA.<\/p>\n

        Accordingly, the judgment of the Court of Appeal was set aside and the decision of the motions judge was restored.[Grant Thornton LLP v. Province of New Brunswick, 2021 SCC 31, decided on 29-07-2021]<\/p>\n

        \n

        Kamini Sharma, Editorial Assistant has reported this brief.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

        Supreme Court of Canada: The 7-Judges Bench comprising of Moldaver, Karakatsanis, C\u00f4t\u00e9, Brown, Rowe, Martin and Kasirer, JJ., clarified the law related <\/p>\n","protected":false},"author":67011,"featured_media":32072,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[3,12],"tags":[46858,29785,32488,6911],"class_list":["post-253409","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-casebriefs","category-foreigncourts","tag-grant-thornton","tag-law","tag-negligent","tag-supreme-court-of-canada"],"yoast_head":"\nSupreme Court of Canada clarifies statute of limitation; explains the standard of plausible inference | SCC Times<\/title>\n<meta name=\"description\" content=\"Statute of limitation\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.scconline.com\/blog\/post\/2021\/08\/30\/statute-of-limitation\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Supreme Court of Canada clarifies statute of limitation; 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Singh, J., rejected the counter claim filed by the defendant holding it to be barred by limitation under Section 55 of Limitation Act. The Plaintiff had filed a recovery suit against the defendants for non-payment of dues on completion\u2026","rel":"","context":"In "Case Briefs"","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":295762,"url":"https:\/\/www.scconline.com\/blog\/post\/2023\/07\/01\/not-entitled-to-any-exclusion-of-time-under-s14or-s15-limitationact1908-claim-for-rusum-i-deskmukhi\/","url_meta":{"origin":253409,"position":1},"title":"Never Reported Judgment| Supreme Court on Valuation of Fee\/Perquisites vis-\u00e0-vis exclusion of time under Section 14 or 15 of the Limitation Act [1950 SCC 1034]","author":"Simranjeet","date":"July 1, 2023","format":false,"excerpt":"This report covers the Supreme Court's Never Reported Judgment dating back to the year 1950 on Hyderabad Limitation Act, 1322 Fasli and Sections 14 and 15 of the Limitation Act, 1908.","rel":"","context":"In "Cases Reported"","block_context":{"text":"Cases Reported","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casesreported\/"},"img":{"alt_text":"limitation","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2023\/07\/limitation.webp?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2023\/07\/limitation.webp?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2023\/07\/limitation.webp?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2023\/07\/limitation.webp?resize=700%2C400&ssl=1 2x"},"classes":[]},{"id":338700,"url":"https:\/\/www.scconline.com\/blog\/post\/2025\/01\/09\/period-of-limitation-to-regain-title-of-property-by-setting-aside-sale-deed-is-3-yrs-sc\/","url_meta":{"origin":253409,"position":2},"title":"3 years or 12 years? Supreme Court clarifies the period of limitation to regain title and recover possession of suit property by setting aside the sale deed","author":"Editor","date":"January 9, 2025","format":false,"excerpt":"\u201cWhen the suit is based on the title for possession, once the title is established on the basis of relevant documents and other evidence unless the defendant proves adverse possession for the prescriptive period, the plaintiff cannot be non-suited.\u201d","rel":"","context":"In "Case Briefs"","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"Limitation for title of property","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2025\/01\/Limitation-for-title-of-property.webp?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2025\/01\/Limitation-for-title-of-property.webp?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2025\/01\/Limitation-for-title-of-property.webp?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2025\/01\/Limitation-for-title-of-property.webp?resize=700%2C400&ssl=1 2x"},"classes":[]},{"id":196151,"url":"https:\/\/www.scconline.com\/blog\/post\/2018\/05\/19\/failure-of-petitioner-to-stand-on-his-own-legs-gives-rise-to-adverse-inference\/","url_meta":{"origin":253409,"position":3},"title":"Failure of petitioner to \u2018stand on his own legs\u2019 gives rise to adverse inference","author":"Saba","date":"May 19, 2018","format":false,"excerpt":"Punjab and Haryana High Court: On failure of the plaintiff to appear in the witness box and produce the record, a Single Judge Bench comprising of Anil Kshetrapal, J. dismissed his claim for recovery of money from the defendants by setting aside the judgment and order of the Courts below\u2026","rel":"","context":"In "Case Briefs"","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":339130,"url":"https:\/\/www.scconline.com\/blog\/post\/2025\/01\/16\/subsequent-suit-for-same-cause-of-action-filed-after-3-yr-rejection-of-earlier-plaint-barred-by-limitation-sc\/","url_meta":{"origin":253409,"position":4},"title":"SC discusses limitation on subsequent suit for same cause of action if filed after 3 years of rejection of earlier plaint & when right to sue accrues","author":"Editor","date":"January 16, 2025","format":false,"excerpt":"\u201cThe right to sue under Article 113 of the Limitation Act accrues when there is an accrual of rights asserted in the suit and an unequivocal threat by the defendant to infringe the right asserted by the plaintiff in the suit.\u201d","rel":"","context":"In "Case Briefs"","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"3 yrs limitation on suit of same cause","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2025\/01\/blog-2025-01-15T182846.975.webp?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2025\/01\/blog-2025-01-15T182846.975.webp?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2025\/01\/blog-2025-01-15T182846.975.webp?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2025\/01\/blog-2025-01-15T182846.975.webp?resize=700%2C400&ssl=1 2x"},"classes":[]},{"id":365240,"url":"https:\/\/www.scconline.com\/blog\/post\/2025\/10\/30\/limitation-begins-when-continuous-breach-of-contract-ceases-ker-hc\/","url_meta":{"origin":253409,"position":5},"title":"‘When breach of contract is continuous, limitation runs from date of cessation of breach’; Kerala HC upholds dismissal of suit for damages","author":"Editor","date":"October 30, 2025","format":false,"excerpt":"\u201cThe breach continued only during the period of the contract and not upon its expiry. The Court observed that the breach was continuous, but only during the subsistence of the contract. Once the contractual period fixed by the parties had expired, the breach could no longer be considered ongoing.\u201d","rel":"","context":"In "Case Briefs"","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"Limitation begins when continuous breach of contract ceases","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2025\/10\/Doctrine-of-Merger.webp?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2025\/10\/Doctrine-of-Merger.webp?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2025\/10\/Doctrine-of-Merger.webp?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2025\/10\/Doctrine-of-Merger.webp?resize=700%2C400&ssl=1 2x"},"classes":[]}],"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/posts\/253409","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/users\/67011"}],"replies":[{"embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/comments?post=253409"}],"version-history":[{"count":0,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/posts\/253409\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/media\/32072"}],"wp:attachment":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/media?parent=253409"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/categories?post=253409"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/tags?post=253409"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}