That the courts discourage officers of the courts from immediately commencing litigation is a proper factor in a limitations analysis.
In Salewski Inc. v. BDO Canada Ltd., the defendant moved for summary judgment on a limitations defence. The defendant was retained by a creditor to assign its debtor into bankruptcy. The court appointed the defendant trustee in bankruptcy. Friction developed between the defendant and the bankrupt’s interim receiver, the plaintiff. The plaintiff claimed against the defendant for breach of fiduciary duty. The defendant pleaded the expiry of the limitation period.
In denying the defendant’s motion, Justice Garson made some helpful observations about the effect of a trustee’s behavior on the commencement of the limitation period:
[77] In my view, it is inappropriate to start the limitations clock while good faith efforts are ongoing to achieve a remedy.
[78] Officers of the court should be discouraged from immediately commencing litigation and encouraged to discuss and negotiate differences.
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[80] The obstacles and delays erected by BDO throughout these proceedings have impeded the exercise of reasonable diligence on the part of DSI to discover the cause of action in this matter. These obstacles are also sufficient to impact the start of the limitations clock.
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[91] It would be both unfair and improper for DSI to have been required to commence a legal action any earlier than 2009. Both parties are officers of the court and should be discouraged from pursuing adversarial proceedings against each other until reasonable efforts to resolve the matter have been addressed.
[92] To determine otherwise on the facts before me would send the wrong message regarding the duties of a trustee to act fairly and impartially to all creditors, even those opposing its SRD’s. BDO should not benefit from their prior misconduct.
[93] This court has and will continue to expect the highest standard of conduct on the part of trustees in the discharge of their duties to the court and the Estate: see Murphy v. Sally Creek Environs Corporation, supra, at paras. 139, 151 and 155.
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[96] BDO’s behavior in withholding or not distributing pertinent and relevant information to DSI prevented DSI from discovering the material facts upon which this claim is based.
[97] Although DSI was suspicious in 2006 and 2007 that BDO had (i) made false statements and omitted relevant facts in an affidavit; (ii) was pursuing a commercially unreasonable course of action; (iii) had made serious allegations about the behavior of DSI, and (iv) was being influenced by Unique, these suspicions were unsupported by material facts.