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Limitations - Statutory Limitation - Discoverability

Fanshawe College of Applied Arts and Technology v. AU Optronics Corporation (Ont CA, 2016)

In this case the Court of Appeal held that a statutory limitation period which commenced running on "a day on which the conduct was engaged in", was subject to the discoverability principle despite the absence of it's adoption in the statute:
(ii) Did the motion judge err in finding that the discoverability principle applies to the limitation period found in s. 36(4)(a)(i) of the Competition Act?

No. Subsection 36(4)(a)(i) is subject to the discoverability principle. A statutory limitation period will generally be subject to the discoverability principle when the running of the limitation period is linked either to the plaintiff’s knowledge about an event or to an event related to the plaintiff’s cause of action. The limitation period in s. 36(4)(a)(i) is triggered by an event related to the underlying cause of action – specifically, conduct contrary to Part VI of the Competition Act. Therefore, it is subject to discoverability.

.....

[32] The discoverability principle is a common law rule providing that “a cause of action arises for purposes of a limitation period when the material facts on which it is based have been discovered or ought to have been discovered by the plaintiff by the exercise of reasonable diligence”: Central Trust Co. v. Rafuse, 1986 CanLII 29 (SCC), [1986] 2 S.C.R. 147, at p. 224; see also Graeme Mew, Debra Rolph & Daniel Zacks, The Law of Limitations, 3rd ed. (Toronto: LexisNexis Canada Inc., 2016), at p. 75.

[33] Discoverability is also an interpretive rule relevant to the construction of limitation statutes: Ryan v. Moore, 2005 SCC 38 (CanLII), [2005] 2 S.C.R. 53, at para. 23. As explained below, it provides certain presumptions for courts interpreting statutory limitation periods.

[34] The approach for determining whether a particular statutory limitation period is subject to the discoverability principle was discussed by Twaddle J.A. in Fehr v. Jacob (1993), 1993 CanLII 4407 (MB CA), 14 C.C.L.T. (2d) 200 (Man. C.A.), at p. 206:
[T]he judge-made discoverability rule is nothing more than a rule of construction. Whenever a statute requires an action to be commenced within a specified time from the happening of a specific event, the statutory language must be construed. When time runs from "the accrual of the cause of action" or from some other event which can be construed as occurring only when the injured party has knowledge of the injury sustained, the judge-made discoverability rule applies. But, when time runs from an event which clearly occurs without regard to the injured party's knowledge, the judge-made discoverability rule may not extend the period the legislature has prescribed.
The Supreme Court of Canada has endorsed this passage in Peixeiro v. Haberman, 1997 CanLII 325 (SCC), [1997] 3 S.C.R. 549, at para. 37, and in Ryan, at para. 23.

[35] Ryan is the latest statement from the Supreme Court of Canada on this issue. In that decision, at para. 24, Bastarache J. concluded as follows:
Thus, the Court of Appeal of Newfoundland and Labrador is correct in stating that the rule is “generally” applicable where the commencement of the limitation period is related by the legislation to the arising or accrual of the cause of action. The law does not permit resort to the judge-made discoverability rule when the limitation period is explicitly linked by the governing legislation to a fixed event unrelated to the injured party’s knowledge or the basis of the cause of action.
[36] The applicability of discoverability is a matter of statutory construction. The jurisprudence noted above only provides presumptions and, in Ryan, at para. 23, Bastarache J. cautioned against applying the principle automatically or “systematically without a thorough balancing of competing interests”.

[37] With these general principles in mind, I turn to a consideration of the limitation period in s. 36(4)(a)(i), which provides the following:
(4) No action may be brought under subsection (1),

(a) in the case of an action based on conduct that is contrary to any provision of Part VI, after two years from

(i) a day on which the conduct was engaged in, or

(ii) the day on which any criminal proceedings relating thereto were finally disposed of,

whichever is the later…
[38] I begin by discussing Ryan and Waschkowski v. Hopkinson Estate (2000), 2000 CanLII 5646 (ON CA), 47 O.R. (3d) 370 (C.A.), both relied upon by HannStar, where courts found that the limitation period in issue was not subject to discoverability.

[39] Ryan considered the limitation period in s. 5 of the Survival of Actions Act, R.S.N.L. 1990, c. S-32, which linked the limitation period to the granting of letters of probate or the death of a defendant. In Waschkowski, this court considered s. 38(3) of the Trustee Act, R.S.O. 1990, c. T.23, which linked the limitation period to the death of a deceased.

[40] In both cases, the courts noted that the event that triggered the running of the limitation period at issue – the issuing of letters probate or the death of the defendant – did not affect the plaintiff’s cause of action and the plaintiff’s knowledge of the event at issue was irrelevant to their cause of action: Ryan, at para. 32; Waschkowski, at para. 8. In contrast, the “conduct” mentioned in s. 36(4)(a)(i) is not unrelated to the claimant’s cause of action; rather, it is the basis for the plaintiff’s claim.

[41] I turn now to a consideration of Peixeiro and of Grenier v. Canadian General Insurance Company (1999), 1999 CanLII 2156 (ON CA), 43 O.R. (3d) 715 (C.A.), two cases where courts found that the limitation period in issue was subject to discoverability.

[42] In Peixeiro, the limitation period is similar to the one at issue in the present case. There, the Supreme Court considered what was s. 206(1) of the Highway Traffic Act, R.S.O. 1990, c. H.8, which provided that any action for damages caused by a motor vehicle accident had to be brought within “two years from the time when the damages were sustained.” The court concluded that the discoverability principle applied. Major J.’s comments, at para. 38, are instructive:
The appellant submitted here that the general rule of discoverability was ousted because the legislature used the words “damages were sustained”, rather than the date “when the cause of action arose”. It is unlikely that by using the words “damages were sustained”, the legislature intended that the determination of the starting point of the limitation period should take place without regard to the injured party’s knowledge. It would require clearer language to displace the general rule of discoverability. The use of the phrase “damages were sustained” rather than “cause of action arose”, in the context of the HTA, is a distinction without a difference. The discoverability 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. Kamloops, supra, dealt in part with s. 739 of the Municipal Act, R.S.B.C. 1960, c. 255, which required that notice should be given within two months “from and after the date on which [the] damage was sustained”. However, this Court applied the discoverability rule even with respect to this section. [Citation omitted.]
[43] Subsection 36(4)(a)(i) links the limitation period to conduct that gives rise to any damage or loss. In that way, it is similar to the former s. 206 of the Highway Traffic Act, which linked the limitation period to damages caused by a motor vehicle accident.

[44] Also instructive is this court’s decision in Grenier in which the issue was whether the discoverability principle applied to the old s. 258(2) of the Insurance Act, R.S.O. 1990, c. I.8, which provided as follows: “No action shall be brought against an insurer under subsection (1) after the expiration of one year from the final determination of the action against the insured, including appeals if any.” At p. 722, Morden A.C.J.O. concluded that the discoverability principle applied:
With respect, I do not think that the triggering event in s. 258(2) of the Insurance Act – the final determination of the action against the insured – is the same as that in Fehr. It is a constituent element of the cause of action which is created by s. 258(1) – a judgment against a person insured by a motor vehicle liability policy. Under the discoverability rule this triggering event does not come into existence until the plaintiff has, or reasonably should have, knowledge not only that he or she has a judgment but, also, that it is a judgment against an insured person. [Emphasis in original.]
[45] Similarly, in this case, the term “conduct” in s. 36(4)(a)(i) of the Competition Act refers to the conduct giving rise to damages mentioned in s. 36(1) and is, therefore, also a constituent element of the cause of action subject to the limitation period. To use Bastarache J.’s language from Ryan, quoted above, the triggering event is related to the accrual of the cause of action. Applying the rationale from Grenier, s. 36(4)(a)(i) too is subject to the discoverability principle.

[46] Also, in Peixeiro, at para. 39, Major J. stated the following:
In balancing the defendant’s legitimate interest in respecting limitations periods and the interest of the plaintiffs, the fundamental unfairness of requiring a plaintiff to bring a cause of action before he could reasonably have discovered that he had a cause of action is a compelling consideration.
In my view, that applies in the present case as well, particularly given that secrecy and deception are invariably elements of anti-competition agreements.

[47] I note that s. 36(4)(a)(ii) provides an alternative date for the limitation period (i.e. the day on which any criminal proceedings relating to the conduct at issue were disposed of). That alternate event is arguably not connected to a plaintiff’s cause of action or knowledge – at the very least it is clearly not a constituent element of the cause of action provided in s. 36 of the Competition Act. As such, it imposes a limitation period that is probably not subject to discoverability. One could argue that this produces an anomalous result in that the discoverability principle would apply to s. 36(4)(a)(i) but not to s. 36(4)(a)(ii). However, I do not think such an outcome would be anomalous. There is no rule that suggests that both limitation periods in s. 36(4)(a) must operate in the same way.

[48] I agree with the statements of Sharpe J. in Chadha v. Bayer Inc. (1998), 1998 CanLII 14791 (ON SC), 82 C.P.R. (3d) 202 (Ont. Gen. Div.) about s. 36(4)(a)(i) and (ii). In concluding that it was not beyond doubt that the discoverability principle did not apply to s. 36(4)(a)(i), he noted, at p. 206, that “Parliament has hardly provided potential defendants with an iron-clad assurance that they may not be sued more [than] two years after the cessation of their conduct as the limitation period could start to run again in the event of criminal proceedings.”

[49] I also agree with the submission of Fanshawe that any other interpretation has the potential to render the remedy nugatory by depriving victims of the chance to make a claim when the conspirators’ concealment has been particularly effective.


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