{"id":977,"date":"2019-11-06T12:47:35","date_gmt":"2019-11-06T16:47:35","guid":{"rendered":"http:\/\/limitations.ca\/?p=977"},"modified":"2020-03-25T10:48:52","modified_gmt":"2020-03-25T14:48:52","slug":"the-supreme-court-on-the-application-of-common-law-discovery","status":"publish","type":"post","link":"http:\/\/limitations.ca\/?p=977","title":{"rendered":"The Supreme Court on the application of common law discovery"},"content":{"rendered":"

In Pioneer v. Godfrey<\/em><\/a>, the Supreme Court considered the application of common law discovery to statutory limitation periods.\u00a0 It is now the leading case on the subject.<\/p>\n

The Court held that the common law discovery rule applies only when a limitation period runs from the accrual of a cause of action, or \u201csome other event that can occur only when the plaintiff has knowledge of his or her injury\u201d.<\/p>\n

It doesn\u2019t apply when a statutory limitation period runs from an event unrelated to the accrual of the cause of action.\u00a0 This is because legislature displaces the discovery rule when linking the limitation period to an event unrelated to the plaintiff\u2019s cause of action.<\/p>\n

In determining whether a limitation period runs from the accrual of a cause of action, substance prevails.\u00a0 Even where a statute doesn\u2019t explicitly state that a limitation period runs from accrual, the discovery rule\u00a0applies\u00a0if the limitation period in substance commences on accrual .<\/p>\n

Thus s. 36(4) of the Competition Act<\/a>, which the appeal concerned, is subject to discoverability:<\/p>\n

\n

[<\/a>44]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0The text of\u00a0s. 36(4)<\/a>(a)(i) provides that no action may be brought under\u00a0s. 36(1)<\/a>(a) after two years from a day\u00a0on which conduct contrary to Part VI<\/i>\u00a0occurred. From this, it is clear that the event triggering this particular limitation period is an element of the underlying cause of action. That is, the limitation period in\u00a0s. 36(4)<\/a>(a)(i) is triggered by the occurrence of an element of the underlying cause of action \u2014 specifically, conduct contrary to Part VI of the\u00a0Competition Act<\/a><\/i>. Therefore, it is subject to discoverability (Fanshawe College of Applied Arts and Technology<\/i>\u00a0v. AU Optronics Corp.<\/i>,\u00a02016 ONCA 621 (CanLII)<\/span><\/a>,\u00a0<\/i>132 O.R. (3d) 81<\/span>, at para.\u00a018<\/a><\/span>).<\/p>\n<\/blockquote>\n

Justice C\u00f4t\u00e9 dissented.\u00a0 When a limitation period commences on the occurrence of an element of a cause of action rather than the cause of action’s accrual, it does not necessarily follow that the discovery rule applies.\u00a0 This is because the occurrence of the an element may not depend on the plaintiff\u2019s knowledge:<\/p>\n

\n

[151]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0\u00a0Conversely, \u201cthe occurrence of an element of the underlying cause of action\u201d (Brown J.\u2019s reasons, at para. 44) will not always fit within either category outlined above at para. 149. It may be that the occurrence of such an event does in fact depend on the state of the plaintiff\u2019s knowledge, but unlike the accrual of a cause of action, this does not invariably follow as a matter of logical necessity. In\u00a0Peixeiro<\/i>, for example, this Court held that the point at which damages are sustained\u00a0\u2014\u00a0a constituent element of (among other things) the tort of negligence\u00a0\u2014\u00a0depends on when the plaintiff actually has knowledge of his or her injury. Knowledge will not form part of every element of the cause of action in negligence, however. A breach of a standard of care, for example, may occur years or even decades before the plaintiff first learns about it. Although such a breach is a prerequisite to a successful claim in negligence, it is also something that takes place without any regard to the plaintiff\u2019s state of mind.<\/p>\n

[153]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0\u00a0With this in mind, I am respectfully of the view that my colleague\u2019s approach is undermined by the well-settled principle that the discoverability rule is fundamentally a rule of statutory interpretation. The fact that a limitation period begins running upon the\u00a0occurrence of an<\/i>element\u00a0<\/i>(and not upon the\u00a0accrual\u00a0<\/i>or\u00a0arising<\/i>) of the plaintiff\u2019s cause of action is not, on its own, indicative of any legislative intent regarding the applicability of the discoverability rule. As I have already indicated, my colleague\u2019s conclusion is the same as the one reached by the Court of Appeal in this case and by the Ontario Court of Appeal in\u00a0Fanshawe<\/i>: in such circumstances, according to him, discoverability applies automatically. This, however, creates an arbitrary distinction between triggering events that are related to the cause of action and those that are not, despite the fact that both may occur independently of the plaintiff\u2019s state of mind. How can it fairly be said that the legislature\u00a0intended<\/i>\u00a0the discoverability rule to apply to one and not the other? Although knowledge is necessary for a cause of action to fully accrue to the plaintiff, it does not follow that an element of the cause of action also occurs only when the plaintiff has knowledge thereof.<\/p>\n

[154]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0\u00a0A preferable approach is instead one that considers each statutory limitation clause on its own terms, recognizing that a triggering event that relates to a cause of action can,\u00a0but need not<\/i>, be dependent upon the plaintiff\u2019s state of mind. This approach is faithful to this Court\u2019s jurisprudence, and respectful of the notion of discoverability as an interpretative tool and not a general rule that allows clear statutory wording to be disregarded. For my part, I would reaffirm the approach laid out in\u00a0Fehr<\/i>\u00a0without any modification.<\/p>\n<\/blockquote>\n

Thus discoverability doesn\u2019t apply to the s. 36(4) limitation period:<\/p>\n

\n

[157]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0\u00a0The wording of the limitation period set out in\u00a0s. 36(4)<\/a>(a)(i) provides ample support for the proposition that the two-year period commences independently of when the plaintiff first learns of the wrongdoing. Rather than having the limitation period commence upon the accrual of the cause of action (as was the case in\u00a0Central Trust\u00a0<\/em>and\u00a0M. (K.)<\/em>), Parliament decided that it would instead commence on \u201ca day on which the conduct was engaged in\u201d\u00a0\u2014\u00a0which, contrary to the position taken by my colleague, is\u00a0not\u00a0<\/em>\u201cwording to [the same] effect\u201d as \u201caccrual of the cause of action\u201d (paras. 37 and 41). There is simply no link between this triggering event and the plaintiff\u2019s state of mind; it is, in short, an \u201cevent which clearly occurs without regard to the injured party\u2019s knowledge\u201d. The Certification Judge\u2019s reading of this provision led him to the same conclusion (para. 54 (CanLII)). It was the existence of conflicting jurisprudence on this point that caused him \u201cnot [to be] satisfied that it is plain and obvious that the discoverability principle can never apply to the limitation period in\u00a0s.\u00a036(4)<\/a>\u201d (para. 58).<\/p>\n

[158]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0\u00a0I acknowledge that the \u201cdiscoverability rule has been applied by this Court even to statutes of limitation in which plain construction of the language used would appear to exclude the operation of the rule\u201d (Peixeiro<\/em>, at para.\u00a038<\/a>). However, a consideration of the context surrounding\u00a0s. 36(4)<\/a>(a)(i) lends further support to the conclusion that the discoverability rule does not apply.<\/p>\n

[159]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0\u00a0First, the cause of action in\u00a0s. 36(1)<\/a>(a) is based on two essential elements: (i) the defendant engaging in conduct contrary to any provision of Part VI, and (ii) the plaintiff suffering loss or damage as a result of such conduct. It is only upon the occurrence of both events that the plaintiff can commence proceedings on the basis of this statutory cause of action. Cognizant of this, and of the fact that conspiracies of this nature take place in secret, Parliament decided that the limitation period would not begin when the plaintiff actually sustained loss or damage, but rather when the defendant engaged in the prohibited conduct. It is important to keep in mind that the point at which the conduct is engaged in necessarily precedes the point at which a claimant will suffer loss or damage as a result of such conduct. I would also note that the offence under\u00a0s. 45<\/a>\u00a0is complete as soon as an unlawful agreement is made, meaning that the \u201cconduct\u201d is \u201cengaged in\u201d even if the agreement is not actually implemented or prices do not actually increase. It follows as a direct consequence of this legislative choice that the limitation period can in fact expire before the plaintiff is in a position to commence proceedings under\u00a0s. 36(1)<\/a>(a).<\/p>\n

[160]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0\u00a0Second, s. 36(4)(a)(ii) provides a mechanism for the plaintiff to advance a claim that may be barred by s. 36(4)(a)(i): even if two years have expired from the day on which the prohibited conduct was engaged in, the limitation period will restart on the day on which criminal proceedings relating to the impugned conduct are finally disposed of. While s. 36(4)(a)(ii) applies only where the alleged conduct contrary to Part VI is the subject of criminal prosecution, it nevertheless provides an indication that Parliament was aware of the strictness of s.\u00a036(4)(a)(i) and chose to enact this provision as the\u00a0only\u00a0<\/em>means of relieving against it.<\/p>\n

[161]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0\u00a0Third, and unlike claims subject to the general limitation period in British Columbia\u2019s\u00a0Limitation Act<\/em>, S.B.C. 2012, c. 13, s. 21<\/a>, Parliament has not subjected claims under\u00a0s. 36(1)<\/a>(a) to any ultimate limitation period. Interpreting s. 36(4)(a)(i) as commencing only when the underlying conduct becomes discoverable will therefore have the effect of leaving defendants at risk of lawsuit indefinitely. As Paul-Erik Veel helpfully observes, the result would be that \u201ccompanies could face claims decades later, well after the employees involved in the alleged conspiracy may have left and documents lost, without any ability to defend themselves\u201d (Waiting forever for the axe to drop? Discoverability and the limitation period for Competition Act claims<\/em>,\u00a0Lenczner Slaght<\/em>, August 12, 2016 (online)). This runs contrary to the certainty and evidentiary rationales that underlie the law of limitations.<\/p>\n

[162]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0\u00a0Fourth, the two-year limitation period was enacted by Parliament at a time when limitation periods were comparatively much longer. For example, the provincial limitations statutes that were in force at the time in Ontario and British Columbia set out a general limitation period of six years (The Limitations Act<\/em>, R.S.O. 1970, c. 246, s. 45(1);\u00a0Statute of Limitations<\/em>, R.S.B.C. 1960, c. 370, s. 3). The relatively short limitation period at issue here, which commences even before the cause of action fully crystalizes, provides a further indication of the premium that Parliament placed on granting repose to defendants and encouraging diligence by potential plaintiffs.<\/p>\n<\/blockquote>\n

I find Justice C\u00f4t\u00e9\u2019s reasoning more persuasive.\u00a0 I say that with the qualification that I am not as conversant with common law discovery jurisprudence as I am with codified discovery jurisprudence.<\/p>\n

That said, I am sufficiently conversant to recognise a curious fiction that underlies the court\u2019s competing arguments.\u00a0 For the most part, courts apply common law discovery to limitation periods that predate the rule.<\/p>\n

Take for example the limitation period in s. 38(3) of the Trustee Act<\/em><\/a>, which commences on death.\u00a0 It predates the 1997 Supreme Court decision in Peixeiro <\/em><\/a>which determined that discoverability was of general application.\u00a0 Thus in 2000, the Court of Appeal in Waschkowski<\/a><\/em>\u00a0noted that \u201cUntil the later decision of the Supreme Court of Canada in\u00a0Peixeiro v. Haberman,\u00a01997 CanLII 325 (SCC)<\/a>,\u00a0[1997] 3 S.C.R. 549,\u00a0151 D.L.R. (4th) 429, it was not clear whether the discoverability rule applied to all limitation provisions, or whether its application depended on the actual wording of the statutory limitation\u201d<\/p>\n

Section 38(3) dates from 1990.\u00a0 It\u2019s possible, but doubtful, that the legislature drafted s. 38(3) as a response to, say, the early SCC discoverability decisions like 1986\u2019s Central Trust<\/em><\/a>.\u00a0 However, it’s beyond doubt that the Legislature did not draft the limitation periods in the former Limitations Act mindful of the discoverability rule.\u00a0 Some of those limitation periods were centuries old before discoverability was even a glimmer in the Legislature\u2019s eye.<\/p>\n

Similarly, it\u2019s not clear to me how Parliament could have intended discoverability to apply to s. 36 of the Competition Act <\/em>when that provision appears to have been enacted in 1985, a year before Central Trust<\/em>.<\/p>\n

So, the court really isn\u2019t arguing about what Parliament intended subjectively, because Parliament didn\u2019t know that discoverability was going to be a rule of general application.\u00a0 Instead, the court is trying to rationalise common law discovery with limitation periods drafted before the rule existed.\u00a0 I think Justice C\u00f4t\u00e9\u2019s approach is the soundest conceptually.<\/p>\n

In that regard, I note another problem with the majority\u2019s analysis.\u00a0 If a limitation period commences on the occurrence of an event that forms part of a cause of action, and if discoverability applies, it would be possible to discover the event before the cause of action accrues.\u00a0 The limitation period would commence before there is a legal basis for an action.\u00a0 This wouldn\u2019t happen with s. 36(4), but insofar as the majority is setting out a rule, it\u2019s one with problematic implications.<\/p>\n

There are two other noteworthy aspects of the decision:<\/p>\n

First, the decision includes what is now the leading consideration of fraudulent concealment.\u00a0 Importantly, the court clarifies that the doctrine does not require a \u201cspecial relationship between the parties\u201d as its conventional formulation suggests:<\/p>\n

\n

[<\/a>53]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0While it is therefore clear that equitable fraud\u00a0can<\/i>\u00a0be established in cases where a special relationship subsists between the parties, Lord Evershed, M.R. did not limit its establishment to such circumstances, nor did he purport to define exhaustively the circumstances in which it would or would not apply (see\u00a0T.P. v. A.P.<\/i>,\u00a0<\/i>1988 ABCA 352 (CanLII)<\/span><\/a>,\u00a092 A.R. 122<\/span>, at para.\u00a010<\/a><\/span>). Indeed, he expressly refused to do so: \u201c[w]hat is covered by equitable fraud is a matter which Lord Hardwicke did not attempt to define two hundred years ago, and\u00a0I certainly shall not attempt to do so now<\/u>\u201d (Kitchen<\/i>,\u00a0<\/i>at p. 249, emphasis added).<\/p>\n

[<\/a>54]\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0When, then, does fraudulent concealment arise so as to delay the running of a limitation period? Recalling that it is a form of\u00a0equitable<\/i>\u00a0fraud, it becomes readily apparent that what matters is\u00a0not<\/i>\u00a0whether there is a\u00a0special relationship<\/i>\u00a0between the parties, but whether it would be, for\u00a0any<\/i>\u00a0reason,\u00a0unconscionable\u00a0<\/i>for the defendant to rely on the advantage gained by having concealed the existence of a cause of action. This was the Court\u2019s point in\u00a0Performance Industries Ltd. v. Sylvan Lake Golf & Tennis Club Ltd.<\/i>,\u00a02002 SCC 19 (CanLII)<\/span><\/a>,\u00a0[2002] S.C.R. 678<\/span>, at para.\u00a039<\/a><\/span>:<\/p>\n

[Equitable fraud]\u00a0\u201c\u2026 refers to transactions falling short of deceit but\u00a0where the Court is of the opinion that it is unconscientious for a person to avail himself of the advantage obtained<\/u>\u201d (p. 37). Fraud in the \u201cwider sense\u201d of a ground for equitable relief \u201cis so infinite in its varieties that the Courts have not attempted to define it\u201d, but \u201call kinds of unfair dealing and unconscionable conduct in matters of contract come within its ken\u201d [Emphasis added.]<\/p>\n

It follows that the concern which drives the application of the doctrine of equitable fraud is not limited to the unconscionability of taking advantage of a special relationship with the plaintiff. Nor is the doctrine\u2019s application limited, as my colleague suggests, to cases where there is something \u201ctantamount to or commensurate with\u201d a special relationship between the plaintiff and the defendant (paras. 171 and 173-74). While a special relationship is\u00a0a<\/i>\u00a0means by which a defendant might conceal the existence of a cause of action, equitable fraud may also be established by pointing to other forms of unconscionable behaviour, such as (for example) \u201csome abuse of a confidential position, some intentional imposition, or some deliberate concealment of facts<\/span>\u201d (M.<\/i>\u00a0(K.)<\/i>,\u00a0<\/i>at p. 57, citing\u00a0Halsbury\u2019s Laws of England<\/i>\u00a0(4th ed. 1979), vol. 28, para. 919). In short, the inquiry is not into the\u00a0relationship<\/i>\u00a0within which the conduct occurred, but into the\u00a0unconscionability<\/i>\u00a0of the conduct itself.<\/p>\n<\/blockquote>\n

Second, the majority formulates discoverability as applying when \u201ca limitation period runs from the accrual of cause of action or knowledge of the injury\u201d.\u00a0 \u00a0The language \u201cknowledge of the injury\u201d comes from Peixero<\/em>, which takes it from the MB CA decision in Fehr<\/em><\/a>, where it appears without any explanation.\u00a0 I don\u2019t know what it means.\u00a0 Is it a reference to a circumstance where a wrong isn\u2019t actionable unless it causes an injury that rises above a threshold?\u00a0 I struggle to think of other scenarios where knowledge of an injury causes time to run, but knowledge of the cause of action wouldn’t.<\/p>\n

It\u2019s odd to me that the majority thought this would be so self-evident that no explanation was required.\u00a0 At risk of a little (inexcusable) immodesty, the majority and the dissent cite the my text book: this is good indication that if I don\u2019t know what it means, I\u2019m not sure the court could reasonably assume it’s common knowledge.<\/p>\n

 <\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

In Pioneer v. Godfrey, the Supreme Court considered the application of common law discovery to statutory limitation periods.\u00a0 It is now the leading case on the subject. The Court held that the common law discovery rule applies only when a limitation period runs from the accrual of a cause of action, or \u201csome other event … Continue reading The Supreme Court on the application of common law discovery<\/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":[178],"tags":[389,392,87,62,50,572,179],"class_list":["post-977","post","type-post","status-publish","format-standard","hentry","category-supreme-court","tag-cause-of-action","tag-common-law-principles","tag-discoverability","tag-discoverability-doctrine","tag-fraudulent-concealment","tag-inexcusable-immodesty","tag-supreme-court-of-canada"],"_links":{"self":[{"href":"http:\/\/limitations.ca\/index.php?rest_route=\/wp\/v2\/posts\/977","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=977"}],"version-history":[{"count":3,"href":"http:\/\/limitations.ca\/index.php?rest_route=\/wp\/v2\/posts\/977\/revisions"}],"predecessor-version":[{"id":980,"href":"http:\/\/limitations.ca\/index.php?rest_route=\/wp\/v2\/posts\/977\/revisions\/980"}],"wp:attachment":[{"href":"http:\/\/limitations.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=977"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/limitations.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=977"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/limitations.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=977"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}