Supreme Court Of Canada Clarifies The Limits Of The Discoverability Rule

• Published date: 13 August 2021
• Subject Matter: Litigation, Mediation & Arbitration, Disclosure & Electronic Discovery & Privilege, Trials & Appeals & Compensation, Professional Negligence
• Law Firm: Gowling WLG
• Author: Ms Jacqueline Armstrong Gates, Sean M. Sullivan and Erica Johnston

In Grant Thornton LLP v New Brunswick¹, the Supreme Court of Canada (SCC) overturned the decision of the New Brunswick Court of Appeal² (Court of Appeal) and clarified the test for determining when a claim is discoverable. For limitation periods subject to the common law discoverability rule, the clock starts to run when the plaintiff has actual or constructive knowledge of material facts upon which it may make a plausible inference of the defendant's liability. The SCC found that this standard properly balances the policy objectives of the discoverability rule: it avoids unfairly depriving a plaintiff from bringing a claim before it can be reasonably expected to know the claim exists, while allowing for reasonable certainty and finality for defendants

Background

In 2009, the province of New Brunswick (the Province) guaranteed loans totalling over $50 million for the Atcon Group of Companies (Atcon), conditional on an external review of Atcon's assets. Grant Thornton LLP (Grant Thornton) conducted the review and delivered a satisfactory opinion, including a statement that Atcon's 2009 financial statements had been prepared in conformity with Generally Accepted Accounting Principles (GAAP).

In 2010, the Province was required to pay out the loan guarantees after Atcon defaulted on the loans. The Province then retained RSM Richter Inc. (Richter) to review Atcon's financial position in 2009. The Richter delivered a draft report in February 2011, which was identical in all material aspects to the final report delivered in November 2012. In each version, Richter reported that Atcon's 2009 financial statements had not been prepared in accordance with GAAP, in contradiction to the opinion delivered by Grant Thornton.

In June 2014, the Province filed a statement of claim against Grant Thornton seeking damages for negligence. Grant Thornton successfully moved for summary judgement to dismiss the claim as barred by New Brunswick's Limitations of Actions Act³ (LAA). The LAA provided that no claim shall be brought more than "two years from the day on which the claim is discovered", and defines the time of discovery as the day when the claimant first had constructive or actual knowledge that it suffered injury, loss or damage that was caused or contributed to by an act or omission of the defendant.⁴ Many jurisdictions across Canada have limitations statutes with similar language.⁵

The Province appealed the motion judge's decision, and the dismissal order was set aside...