The appellant auditors sought to have the respondent province's negligence claim dismissed as statute-barred under a two-year limitation period.
The province had paid out $50 million in loan guarantees in reliance on the appellants' audit report, and later received a second firm's draft report revealing material misstatements in the audited financial statements.
The Court established that a claim is discovered when the plaintiff has actual or constructive knowledge of the material facts upon which a plausible inference of liability on the defendant's part can be drawn.
Applying this standard, the Court found the province discovered its claim when it received the draft report from the second firm, more than two years before commencing its action.
The appeals were allowed and the motions judge's summary judgment dismissing the province's claim as statute-barred was restored.
