{"id":1264,"date":"2024-02-06T11:22:15","date_gmt":"2024-02-06T15:22:15","guid":{"rendered":"http:\/\/limitations.ca\/?p=1264"},"modified":"2024-02-06T11:46:27","modified_gmt":"2024-02-06T15:46:27","slug":"ontario-court-of-appeal-on-the-knowledge-required-to-plausibly-infer-liability","status":"publish","type":"post","link":"http:\/\/limitations.ca\/?p=1264","title":{"rendered":"Ontario: Court of Appeal on the knowledge required to plausibly infer liability"},"content":{"rendered":"

The Court of Appeal decision in Di Filippo v. Bank of Nova Scotia <\/em><\/a>explains the degree of knowledge required to know the s. 5(1)(a)<\/a> discovery matters. This includes a clarification that the knowledge necessary to plausibly infer liability is not actual knowledge of the discovery matters. Actual knowledge requires knowledge of the material facts<\/em> upon which to plausibly infer liability.<\/p>\n

Perhaps like me you\u2019ll find this distinction somewhat obtuse. What\u2019s the difference between plausibly inferring liability per se <\/em>and plausibly inferring liability based on material facts? Practically speaking, I think the point the court is making is that if you plausibly infer liability per se <\/em>you have a suspicion of liability, but if you make that inference based on material facts, you have more than a suspicion. And so it\u2019s just a different way of formulating the \u201cmore than a suspicion, less than certainty\u201d standard that the court applied prior to Grant Thornton<\/em><\/a>.<\/p>\n

Here are the relevant paragraphs:<\/p>\n

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[<\/a>54]\u00a0\u00a0 \u00a0\u00a0 The court explained how to assess the plaintiff\u2019s knowledge at para. 44:<\/p>\n<\/blockquote>\n<\/div>\n

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In assessing the plaintiff\u2019s state of knowledge, both direct and circumstantial evidence can be used. Moreover, a plaintiff will have constructive knowledge when the evidence shows that the plaintiff ought to have discovered the material facts by exercising reasonable diligence. Suspicion may trigger that exercise. (Crombie Property Holdings Ltd. v. McColl-Frontenac Inc.<\/em>, 2017 ONCA 16<\/a>, 406 D.L.R. (4th) 252, at para. 42<\/a>).<\/p>\n

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[<\/a>55]\u00a0\u00a0 \u00a0\u00a0 This court explained in Crombie<\/em> that suspicion may trigger the due diligence obligation, but suspicion does not constitute actual knowledge. The full paragraph clearly explains the difference:<\/p>\n<\/div>\n

That the motion judge equated Crombie\u2019s knowledge of possible contamination with knowledge of actual contamination is apparent from her statement that \u201c[a]ll the testing that followed simply confirmed [Crombie\u2019s] suspicions about what had already been reported on\u201d (at para. 31). It was not sufficient that Crombie had suspicions or that there was possible contamination. The issue under s. 5(1)<\/a>(a) of the Limitations Act<\/a><\/em>, 2002<\/a> for when a claim is discovered, is the plaintiff\u2019s \u201cactual\u201d knowledge. The suspicion of certain facts or knowledge of a potential claim may be enough to put a plaintiff on inquiry and trigger a due diligence obligation, in which case the issue is whether a reasonable person with the abilities and in the circumstances of the plaintiff ought reasonably to have discovered the claim, under s.\u00a05(1)<\/a>(b). Here, while the suspicion of contamination was sufficient to give rise to a duty of inquiry, it was not sufficient to meet the requirement for actual knowledge. The subsurface testing, while confirmatory of the appellant\u2019s suspicions, was the mechanism by which the appellant acquired actual knowledge of the contamination.<\/p>\n

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[<\/a>56]\u00a0\u00a0 \u00a0\u00a0 Similarly, in Kaynes v. BP p.l.c.<\/em>, this court held that knowledge of allegations in pleadings does not, without more, constitute actual knowledge of one\u2019s claim. […]<\/p>\n

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[<\/a>59]\u00a0\u00a0 \u00a0\u00a0 These examples draw out an important distinction from Grant Thornton<\/em>: actual knowledge does not materialize when a party can make a \u201cplausible inference of liability.\u201d Rather, actual knowledge materializes when a party has \u201cthe material facts<\/span> upon which a plausible inference of liability on the defendant\u2019s part can be drawn\u201d [emphasis added]. While class counsel may have had reason to suspect that Bank of America, Merrill Lynch and Morgan Stanley were part of the conspiracy, that suspicion was not actual knowledge. The motion judge erred in law by finding actual knowledge.<\/p>\n

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[<\/a>64]\u00a0\u00a0 \u00a0\u00a0 The effect of s. 5(1)(b) is to impose an obligation of due diligence on those who have reason to suspect that they may have a claim, but who do not yet have actual knowledge of the material facts giving rise to that claim: Crombie<\/em>, at para.\u00a042. Where potential plaintiffs sit idle or fail to exercise due diligence, the limitation period will commence on the date that the claim would have been discoverable had reasonable investigatory steps been taken. In other words, it is the date when the potential plaintiffs have constructive, as opposed to actual knowledge of their claim: Grant Thornton<\/em>, at para. 44.<\/p>\n<\/div>\n

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[<\/a>65]\u00a0\u00a0 \u00a0\u00a0 A court determining this issue will require evidence of how the material facts could reasonably have been obtained more than two years before the motion to add was brought: Mancinelli<\/em>, at paras. 28, 31<\/a>; Morrison v. Barzo<\/em>, 2018 ONCA 979<\/a>, at paras. 61-62<\/a>.<\/p><\/blockquote>\n

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The decision also includes an interesting if somewhat esoteric addition to s. 5(1)(a)(iv) appropriateness jurisprudence. A proceeding can be an appropriate remedy only if the circumstances give rise to a legally recognised cause of action on which to base the proceeding:<\/p>\n

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[37]\u00a0\u00a0 \u00a0\u00a0 With respect to criterion (iv)[6]<\/a>, a proceeding would only be appropriate if the circumstances give rise to one or more legally recognized causes of action on which to base the proceeding. The wrong must have a legally recognized remedy. It is only in this sense \u2013 that legal recourse must be appropriate to address a loss caused by the proposed defendant\u2019s act or omission \u2013 that the term \u201cclaim\u201d has any legal specificity.<\/p>\n<\/blockquote>\n

I expect the court assumed this to be self-evident, and perhaps it is. But it has a curious implication. Because a novel cause of action is, by definition, not legally recognised, it follows that a claim based on a novel cause of action is never discoverable. If a claim isn\u2019t discoverable, the basic limitation period will never begin. Accordingly, only the ultimate limitation period could bar an action based on a novel claim.<\/p>\n

Lastly, the decision contains a comprehensive statement of the law of amending a pleading to advance a new claim after the expiry of the limitation period.<\/p>\n

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[<\/a>40]\u00a0\u00a0 \u00a0\u00a0 These cases make it clear that it is the pleading of the facts that is key. If a statement of claim pleads all the necessary facts to ground a claim on more than one legal basis, and the original statement of claim only asserts one of the legal bases \u2013 that is, one cause of action based on those facts \u2013 the statement of claim can be amended more than two years after the claim was discovered to assert another legal basis for a remedy arising out of the same facts \u2013 that is, another cause of action. This is because it is only the discovery of the claim, as defined in the Limitations Act<\/em> and the case law, that is time barred under s. 4, not the discovery of any particular legal basis for the proceeding.<\/p>\n<\/div>\n

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[<\/a>41]\u00a0\u00a0 \u00a0\u00a0 In the textbook The Law of Civil Procedure in Ontario<\/em>, Paul M. Perell & John W. Morden 4th ed. (Toronto: LexisNexis Canada, 2020), at pp. 220-21, the authors explain when an amendment will be allowed in the following passage:<\/p>\n<\/div>\n

A new cause of action is not asserted if the amendment pleads an alternative claim for relief out of the same facts previously pleaded and no new facts are relied upon, or amount simply to different legal conclusions drawn from the same set of facts, or simply provide particulars of an allegation already pled or additional facts upon which the original right of action is based\u2026 Thus, where a limitation period has run its course, allowing or disallowing the amendment depends upon whether the allegations of the proposed amendment arise out of the already pleaded facts, in which case the amendment will be allowed, but if they do not the amendment will be refused. An amendment of a statement of claim to assert an alternative theory of liability or an additional remedy based on facts that have already been pleaded in the statement of claim does not assert a new claim for the purposes of s. 4 of the Limitations Act<\/em>. [Citations omitted.]<\/p>\n

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[<\/a>42]\u00a0\u00a0 \u00a0\u00a0 In Klassen v. Beausoleil<\/em>, 2019 ONCA 407<\/a> at para. 30<\/a>, this court instructed that the application of this test should not be stringent or overly technical:<\/p>\n<\/div>\n

In the course of this exercise, it is important to bear in mind the general principle that, on this type of pleadings motion, it is necessary to read the original Statement of Claim generously and with some allowance for drafting deficiencies.<\/p>\n<\/blockquote>\n","protected":false},"excerpt":{"rendered":"

The Court of Appeal decision in Di Filippo v. Bank of Nova Scotia explains the degree of knowledge required to know the s. 5(1)(a) discovery matters. This includes a clarification that the knowledge necessary to plausibly infer liability is not actual knowledge of the discovery matters. Actual knowledge requires knowledge of the material facts upon … Continue reading Ontario: Court of Appeal on the knowledge required to plausibly infer liability<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[297,170,85,87,9,649,223,45,43],"class_list":["post-1264","post","type-post","status-publish","format-standard","hentry","category-ontario","tag-adding-a-claim","tag-amendments","tag-appropriateness","tag-discoverability","tag-discovery","tag-novel-causes-of-action","tag-ontario-act-s-51a","tag-ontario-act-s-51aiv","tag-ontario-court-of-appeal"],"_links":{"self":[{"href":"http:\/\/limitations.ca\/index.php?rest_route=\/wp\/v2\/posts\/1264","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/limitations.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/limitations.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/limitations.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/limitations.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1264"}],"version-history":[{"count":3,"href":"http:\/\/limitations.ca\/index.php?rest_route=\/wp\/v2\/posts\/1264\/revisions"}],"predecessor-version":[{"id":1267,"href":"http:\/\/limitations.ca\/index.php?rest_route=\/wp\/v2\/posts\/1264\/revisions\/1267"}],"wp:attachment":[{"href":"http:\/\/limitations.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1264"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/limitations.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1264"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/limitations.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1264"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}