In Amelin Engineering Ltd. v Blower Engineering Inc.[1], the Ontario Court of Appeal clarified that although ameliorative efforts may toll a limitation period, the “modified objective test” under section 5(1)(b) of the Limitations Act, 2002[2] (the “Limitations Act”) continues to apply. Thus, even where a potential defendant is attempting to remedy a situation, discoverability remains subject to the consideration of what a reasonable person with the abilities and in the circumstances of the claimant ought to have known.[3]
Background:
Beginning in 1995 and over the course of a ten year period, the plaintiffs purchased a number of steam generators from the defendants.[4] The plaintiffs encountered issues with the equipment mere days after beginning operations.[5] Both the plaintiffs and defendants attempted to repair the machinery throughout this period.
In April 2003, the plaintiffs retained an independent firm to carry out tests on one of the generators at issue. A corresponding report was produced and delivered to the defendants on April 16, 2003 which described the plaintiffs’ difficulties with the generators. The defendants demanded outstanding payments on November 26, 2003 and terminated the agreement on January 12, 2004.[6]
The plaintiffs started an action for negligent representation on April 3, 2009, just under six years after receiving the independent report.
Trial:
As a preliminary issue, the Court first considered the applicable limitation period. Since the statement of claim was issued after January 1, 2004 for a cause of action discovered before January 1, 2004, the former six year limitation period applied.[7]
The plaintiffs argued that the statement of claim was issued within the six year period, and that in any event, the discoverability principles under section 5(1) of the Limitations Act extended the limitation period, as the cause of action was not discoverable before the six year statutory period expired.[8]
The Court dismissed this argument as the plaintiffs knew or ought to have known of the claim for negligent misrepresentation prior to the expiration of the limitation period. In the statement of claim, the plaintiffs pled that within days of beginning operations, the generators could not attain the specified output and BTU promised by the defendants. Moreover, the plaintiffs pled that in 1998, they were aware that the generators were unable to operate at their rated BTU, and that in 2002 that CO and NO/NOx emissions were in excess of permitted levels. As a result, the plaintiffs knew or ought to have known in 1998, and certainly by 2002 that the generators were not able to function as rated.[9] Thus, the action was statute-barred.
The plaintiffs appealed.
Appeal:
On appeal, the appellants argued that they reasonably relied on the superior expertise of the respondent’s president and engineer, and on their proposed remedies which delayed discoverability of the claim until May 2003 when repair efforts concluded, or alternatively, until April 2003 when the investigative report was delivered.[10] Thus, the appellants argued that a legal proceeding was not an “appropriate means” to remedy the loss until these efforts were concluded.
To this end, the Court held that although it may be appropriate to delay the start of a limitation period where a plaintiff relies on a defendant’s superior knowledge and expertise, discovery cannot be delayed indefinitely.[11]
The discoverability test under section 5(1)(b) of the Limitations Act requires a consideration of what a reasonable person with the abilities and in the circumstances of the claimant ought to have known. The Court held that the Plaintiff’s principal was a professional engineer and was equipped with sufficient knowledge to reasonably have known that he had suffered damage and that a proceeding was an appropriate means to remedy the loss while ameliorative efforts were ongoing. The claim was therefore statute barred.
Conclusions:
This case underscores that parties are expected to act diligently, even in the face ongoing ameliorative efforts. Where a party has the knowledge and expertise to know that it suffered damages, it is inappropriate to wait on an expert report to confirm what the claimant ought to have reasonably known.
[1] 2022 ONCA 785 [Amelin ONCA].
[2] S.O. 2002, c. 24, Sched. B.
[3] Amelin ONCA, supra note 1 at para 11.
[4] Amelin Engineering v Steam-Eng Inc., 2021 ONSC 5799 at para 2 [Amelin ONSC].
[5] Ibid at para 3.
[6] Ibid at paras 41-42.
[7] Ibid at paras 7 and 92.
[8] Amelin ONCA, supra note 1 at para 8.
[9] Amelin ONSC, supra note 4 at paras 109-121.
[10]Amelin ONCA, supra note 1 at para 8.
[11]Ibid at para 11.
