SCC ruling sets a new standard for limitations rules on lawsuits

August 19, 2021

The Supreme Court of Canada’s ruling in Grant Thornton LLP v. New Brunswick will have a significant impact on limitations rules on lawsuits in all provinces moving forward.

Litigation associate Winston Gee told Canadian Underwriter that “a Supreme Court of Canada ruling against the New Brunswick provincial government means it is now easier in some cases for defendants across Canada to argue lawsuits against them should be thrown out of court because they are time-barred.”

He added that the plaintiff does not need certainty of liability nor does the plaintiff need knowledge of each element of the cause of action before the limitations clock starts running.

“This is an important case. Limitations periods are really important because they can put an end to substantial litigation,” Winston said.

Acting as an external auditor for a loan agreement in 2009 between the New Brunswick Government and the Atcon Group of Companies, Grant Thornton incorrectly reported that Atcon’s financial statements were indicative of the company’s actual financial position.

After Atcon ran out of money, a second accounting firm confirmed that Atcon’s financial statements were inaccurate and inflated their actual assets by at least CA $28 million.

When the province challenged Grant Thornton in the New Brunswick Court of Queen’s Bench, Grant Thornton argued that the lawsuit was time-barred. In the end, the Supreme Court of Canada’s ruling upheld this defence.

Winston explained that “there is also a common-law rule, Canada-wide, that says the limitations clock begins to run when the material facts on which the claim is based have been discovered, or ought to have been discovered, by reasonable diligence on the part of the plaintiff.”

“The Supreme Court of Canada, in Grant Thornton, clarified that this common law rule can be modified by provincial legislation,” he added, recognizing that the New Brunswick Limitations Act says a plaintiff cannot bring a claim against a defendant more than two years after the claim is discovered.

He also noted that most provinces have the same language in their limitations acts as the New Brunswick legislation that was dealt with by the Supreme Court in this case.

“Because of that, this decision would have an impact beyond New Brunswick – and extend to all other provinces where the [limitations rules on lawsuits] contains similar language which has neither modified nor ousted the common law rule,” Winston said.

Winston mentioned that in the past, some courts were requiring a stricter standard than the standard outlined in the Grant Thornton ruling, as to when plaintiff discovered the claim.

“The Supreme Court has clarified that the standard is lower,” he said.

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