COURT OF APPEAL FOR ONTARIO DATE: 20211006 DOCKET: C68594

Strathy C.J.O., Feldman and van Rensburg JJ.A.

BETWEEN

Gordon Dunk Farms Limited Plaintiff (Appellant)

and

HFH Inc., Franken Concrete Forming (2011), McNeil Engineering & Construction Inc. and Township of Guelph Eramosa Defendants (Respondents)

Counsel: Daniel Zacks and Gregory Brimblecombe, for the appellant Peter W. Kryworuk and Jacob R.W. Damstra, for the respondent HFH Inc. James A LeBer and Eric A.F. Grigg, for the respondent McNeil Engineering & Construction Inc. No one appearing for the respondent Franken Concrete Forming (2011)

Heard: May 21, 2021 by video conference

On appeal from the judgment of Justice Gordon D. Lemon of the Superior Court of Justice, dated July 21, 2020, with reasons at 2020 ONSC 4426.

Feldman J.A.:

A. Introduction

[1] The appellant, Gordon Dunk Farms Ltd., suffered a loss when its hog barn collapsed on May 6, 2014. The two principals of the appellant, Gordon Dunk and his son Floyd Dunk, are knowledgeable hog farmers, who had the barn constructed 1.5 years earlier by the three respondents. McNeil Engineering & Construction Inc. (“McNeil”) designed the barn, HFH Inc. (“HFH”) oversaw its construction, and Franken Concrete Forming (2011) (“Franken”) undertook the concrete work. Floyd Dunk’s son and brother were in the barn when it collapsed and were lucky to survive.

[2] The appellant had insurance that covered part, but not all, of the loss. The insurer paid the appellant for the covered loss and retained a lawyer to sue the respondents to pursue the subrogated claim. The same lawyer was also retained to recover the balance of the loss on behalf of the appellant directly. That lawyer did not commence the action until May 24, 2016.

[3] All parties brought motions for summary judgment to determine whether the action was brought within time or was statute barred. The issue before the motion judge was when the appellant knew or ought to have known that it had a claim against the respondents. Shortly after the barn collapsed, the insurance adjuster retained an expert to examine the barn and report on the cause of the collapse. The motion judge found that the principals knew they had a claim, within the meaning of the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B. (the “Act”), before they received the final expert report on May 21, 2014. [1] The action was therefore statute barred.

[4] For the reasons that follow, I would dismiss the appeal.

B. Background Facts

[5] In 2011, the appellant decided to build a new hog barn on its property. The principals engaged the respondent McNeil to prepare the design, and the respondent HFH as contractor to oversee the construction, based on the McNeil drawings. They also engaged the respondent Franken to do the concrete work. The barn was completed in 2013.

[6] The barn was a rectangular one-story building 300 feet long and 60 feet wide. The pigs lived on concrete floor panels above an eight-foot deep tank. Walls running the length of the tank supported the floor panels and formed channels referred to as “raceways”. The pigs’ manure fell through the floor panels and accumulated in the raceways. A propeller in the tank would agitate the manure and cause it to flow through the raceways toward an exit to be pumped out. During construction, Floyd Dunk, who is knowledgeable about barn construction, was aware that there was no lateral bracing between the raceway walls, but trusted the engineer with respect to what was required.

[7] When the barn collapsed, the appellant was aware that the raceway walls had collapsed. The insurance adjuster retained two engineering firms to prepare preliminary reports, R.J. Burnside & Associates Limited (“Burnside”) and Brown & Beattie Building Science Engineering (“Brown”). They both attended on May 8 and provided their preliminary reports that same day.

[8] Burnside provided a preliminary view on causation, which was that agitation of the manure moved one raceway wall over, which generated a manure surge that toppled the adjacent walls in a cascading effect. Burnside subsequently discovered a conflict of interest and had no further involvement. Brown did not provide a causation opinion until its final report, delivered on May 21. Its “preliminary conclusion” in the May 21 report, based on the information available, was that manure agitation and pumping caused different levels of manure on either side of the raceway walls, resulting in uneven force on the walls, causing them to collapse.

[9] In their cross-examinations, both Gordon and Floyd Dunk acknowledged that with their experience and understanding of barn construction and operation, they believed they understood or knew the cause of the barn collapse, but because they are not engineers, they were speculating regarding the cause of the collapse (my paraphrase). Floyd Dunk testified that he did not see Brown’s final report of May 21, 2014 until shortly before his cross-examination on February 26, 2019.

[10] The action was commenced on May 24, 2016. The respondents delivered their statements of defence that included a limitations defence, and moved for summary judgment. The appellant resisted the respondents’ motions and brought its own cross-motion for summary judgment to determine the timeliness of the action.

C. The Motion Judge’s findings

[11] The motion judge dismissed the respondents’ summary judgment motions based on the record before him. He found the limitation issue to be a triable issue that could not be determined on summary judgment. He then adjourned the appellant’s summary judgment motion pending cross-examinations or a mini-trial. In dismissing the respondents’ motions, he came to the following conclusions:

I cannot find that the plaintiff knew all of the facts and was attempting to extend the limitation period by relying on an expert report. Rather, the documents are consistent with the affidavit evidence that, prior to the May 21 report, the plaintiff was unable to determine what had occurred at the bottom of the various walls. As can be seen from the highlighted sections of the documents, the information to that point was uncertain. The fact that those observations confirmed what was already suspected does not move the limitation period backwards.

The documents support that the plaintiff had hired an independent witness to, literally and figuratively, get to the bottom of the cause. Until the debris from the collapse was removed, the walls were observed, and the report was provided, the time could not begin to run. Until then, it appears that the cause could not be confirmed. The short period of time between the collapse and the report was reasonable in the circumstances.

[12] Following the cross-examinations, the motion judge returned to consider whether he could now decide the limitation issue on the appellant’s motion. He found that he could, and that the additional evidence changed his mind about whether the Dunks knew the cause of the collapse before they received the May 21 Brown report.

[13] Gordon Dunk testified that one side of the barn collapsed first, and then the walls fell like dominos, which indicated that the raceway wall between the empty raceway and the full one on one side had collapsed causing the full collapse of the barn. Floyd Dunk agreed that it was “probably obvious” that the cause of the collapse was the lack of lateral supports, but he had no proof. In a statement he gave to the insurance adjuster on May 13, his opinion was that “[h]ad the configuration of the walls been different this collapse would not have occurred.”

[14] The motion judge rejected the position that the principals of the appellant were speculating about the cause of the barn collapse. He found that either they were not telling the truth now, or they ought to have known the cause at the time. They were experienced in the building of “exactly this kind of barn.” [2] Also, the barn was of simple construction, the collapse was not a complicated process, and the principals observed what occurred. Although they called it theories or speculation, “they certainly had all the information they needed to found their cause of action”, “the ‘what,’ the ‘who’ and the ‘how’ behind this claim.”

[15] The motion judge concluded that the directing minds of the appellant either ought to have known or did know the necessary facts by May 12, when they met with the insurance adjuster to discuss the situation. He also found that the May 21 Brown report contained no new information that the Dunks did not already know. Finally, he observed that while much time was spent on the knowledge of the appellant’s counsel, what the lawyer knew and when he knew it were not determinative; it is the knowledge of the appellant that is. The motion judge’s conclusion was that, by May 12, 2014, the appellant knew:

1. the barn collapsed with significant damage to it and the livestock;
2. the cause of the collapse was insufficient lateral bracing of the raceway walls;
3. the three respondents were responsible for the design and construction of the barn; and
4. the uninsured losses and subrogated claims would not be paid without legal action.

[16] Because the action was commenced on May 24, 2016, more than two years after the appellant knew about the claim within the meaning of the Act, the action was statute barred.

D. Issues

[17] The appellant raises two issues on this appeal:

1. Did the motion judge err by failing to treat each of the appellant’s 20 pleaded acts or omissions as separate claims, and conduct individual discoverability analyses for each?
2. Did the motion judge err by failing to rule on the appellant’s motion regarding the timeliness of its action as against the respondent, Franken, who did not defend the motion?

[18] The answer to both questions is “no”.

[19] I will also address a third issue that arises from the reasons of the motion judge regarding the proper interpretation of s. 14 of the Act.

E. Analysis

(1) Did the motion judge err by failing to treat each of the appellant’s 20 pleaded acts or omissions as separate claims, and conduct individual discoverability analyses for each?

a) The Appellant’s New Argument on Appeal

[20] The appellant pleaded that its damages were caused by the negligence or breach of contract of the respondents. It then pleaded nine specific failures by the respondent HFH, six specific failures by the respondent McNeil, and five specific failures by the respondent Franken. I will set out a few examples:

• HFH failed to construct the barn according to the design, failed to ensure the raceway walls were appropriately braced, and failed to ensure the barn was constructed to safely operate.
• McNeil failed to adequately design the barn, designed a manure storage system that it knew or ought to have known was unsafe, and failed to adequately inspect the ongoing construction.
• Franken failed to construct the concrete portions of the barn safely, failed to use proper construction practices, and failed to provide adequate lateral bracing for the raceway walls.

[21] The appellant concedes that some of the claims it alleges are statute barred because it was clear from the cross-examinations that Gordon Dunk knew about the deficient lateral bracing and inadequate design of the raceway system days after the collapse. However, the appellant alleges there is no evidence that its principals knew about other deficiencies in the design, construction, and inspection of the construction by the respondents before receiving the May 21 Brown report, and therefore, the claims based on those failures by the respondents are not statute barred.

[22] The appellant’s position is that the report identified causal findings for the first time, including an issue with the height of the raceway walls, the fact that the concrete floor panels did not include any mechanical anchorage to the raceway walls, and that the raceway walls failed at their connection to the concrete floor slab. These facts gave rise to a number of separate claims by the appellant not tethered to the failure to brace the walls. The motion judge did not separately consider whether those claims were also statute barred.

[23] To summarize, the appellant submits that it required the May 21 Brown report in order to discover a number of the acts or omissions that each of the respondents committed that caused or contributed to the collapse of the barn, and that each of these acts or omissions constitutes the basis for a separate claim that requires a separate discoverability analysis.

[24] This issue was not raised before the motion judge. He did not address it in his reasons. The respondents HFH and McNeil submit that the court should therefore not entertain the argument on the appeal. While the court will not, in most cases, entertain an argument on appeal that was not raised at the original hearing, it can do so where the record is sufficient and the issue is one of law: Becker v. Toronto (City), 2020 ONCA 607, 452 D.L.R. (4th) 679, at paras. 39-40; Svia Homes Limited v. Northbridge General Insurance Corporation, 2020 ONCA 684, 7 C.C.L.I. (6th) 1, at paras. 23-28. In this case, the issue is the proper interpretation and application of the Act, and the record below is complete. In these circumstances, in my view, it is appropriate to address the issue on this appeal.

b) Meaning of a “Claim”

[25] The context for the appellant’s argument is ss. 4, 5(1) and (2), and the definition of “claim” in s. 1 of the Act, which state:

1 In this Act, … “claim” means a claim to remedy an injury, loss or damage that occurred as a result of an act or omission;

4 Unless this Act provides otherwise, a proceeding shall not be commenced in respect of a claim after the second anniversary of the day on which the claim was discovered.

5 (1) A claim is discovered on the earlier of,

(a) the day on which the person with the claim first knew,

(i) that the injury, loss or damage had occurred,

(ii) that the injury, loss or damage was caused by or contributed to by an act or omission,

(iii) that the act or omission was that of the person against whom the claim is made, and

(iv) that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it; and

(b) the day on which a reasonable person with the abilities and in the circumstances of the person with the claim first ought to have known of the matters referred to in clause (a).

(2) A person with a claim shall be presumed to have known of the matters referred to in clause (1) (a) on the day the act or omission on which the claim is based took place, unless the contrary is proved.

[26] The meaning of “claim” in the Act was explained by this court in Kaynes v. BP p.l.c., 2021 ONCA 36, 456 D.L.R. (4th) 247, and confirmed most recently by the Supreme Court of Canada in Grant Thornton LLP v. New Brunswick, 2021 SCC 31, in respect of the New Brunswick Limitation of Actions Act, S.N.B. 2009, c. L-8.5 (the “N.B. Act”). In Kaynes, the court explained that while the Act no longer refers specifically to a cause of action, instead it sets out universal criteria for the commencement of the limitation period in respect of a claim: at paras. 50-58. A claim is pursued in a court proceeding to obtain a remedy for a loss that the defendant caused the plaintiff to suffer by its act or omission. To obtain a remedy in a court proceeding, a person must assert a cause of action.

[27] In Grant Thornton, Moldaver J. rejected the argument that there was a meaningful distinction between “claim” and “cause of action” in the context of the N.B. Act (which is similar but not identical to the Ontario Act), stating at para. 37:

I recognize that the distinction between “claim” and “cause of action” could be meaningful in some circumstances; but in my view, it is not so here. In fact, the LAA’s own wording shows that the use of “claim” does not rule out a shared meaning with “cause of action”. Section 1(1) defines a claim as a “claim to remedy the injury, loss or damage that occurred as a result of an act or omission”. In short, s. 1(1) indicates that the legislature’s use of the term “claim” focuses on a set of facts giving rise to a remedy, which is the same meaning that Grant Thornton attributes to the term “cause of action”.

c) Discoverability of a “Claim”

[28] Because a claim is for a legal remedy in a court proceeding, one can have a claim for the same remedy based on one or more acts or omissions that may have caused the loss. In pleading parlance, different acts or omissions may constitute particulars of the claim. However, the claim, as defined, is for the remedy itself – in this case, damages for negligence and breach of contract.

[29] As the Supreme Court of Canada released its decision in Grant Thornton following the oral argument of this appeal, the court sought and received further written submissions from the parties on the effect of that decision on the issues to be decided on this appeal.

[30] In Grant Thornton, the issue was whether a plaintiff with a negligence claim must have discovered every constituent element of that claim, including knowledge of a duty of care and a breach of the standard of care, before the limitation period would begin to run. In rejecting that position, Moldaver J. articulated the test for the degree of knowledge required under the N.B. Act to trigger the commencement of the limitation period, at para. 42:

[A] claim is discovered when a plaintiff has knowledge, actual or constructive, of the material facts upon which a plausible inference of liability on the defendant’s part can be drawn.

[31] Moldaver J. emphasized that the “plausible inference of liability” standard makes it clear that certainty is not required. Of course, one will not know for certain if a defendant is liable for a loss until the verdict is delivered following a trial or summary judgment motion.

[32] The issue that the appellant raises here is: what is the significance of the “act or omission” that is referred to in ss. 5(1)(a)(ii) and (iii) of the Act? Is the appellant correct that a separate limitation period begins to run in respect of each act or omission committed by the defendant as part of its negligent conduct contributing to the loss, thereby requiring a separate discoverability analysis for each such act or omission? Or does the plaintiff only have to know that the defendant’s involvement in the loss means that it must have committed one or more negligent acts or omissions that caused or contributed to the loss?

[33] In my view, the limitations jurisprudence of this court, effectively confirmed by the Supreme Court in Grant Thornton, establishes that the appellant’s position has been rejected: see, e.g., McSween v. Louis (2000), 132 O.R. (3d) 304 (C.A.); Lawless v. Anderson, 2011 ONCA 102, 276 O.A.C. 75; Dale v. Frank, 2017 ONCA 32, 136 O.R. (3d) 315, leave to appeal to S.C.C. refused, 37494 (October 12, 2017); and Morrison v. Barzo, 2018 ONCA 979, 144 O.R. (3d) 600.

[34] A plaintiff need not know the exact act or omission by the defendant that caused the loss in order to start the limitation period running. What it needs to know is that an incident occurred that resulted in a loss (s. 5(1)(a)(i)), that the defendant did or failed to do something to cause that loss (s. 5(1)(a)(ii) and (iii)), and that, having regard to the nature of the injury, loss, or damage, a court proceeding is an appropriate means to seek a remedy (s. 5(1)(a)(iv)).

[35] The damages and injury caused by a car accident provide an instructive example. The defendant’s car slams into the plaintiff’s car. The plaintiff knows the defendant was driving, but may not know whether the defendant fell asleep at the wheel, neglected to get the brakes of the car serviced, was distracted by a phone call, was drunk, or was just careless. The plaintiff will plead all of those allegations as part of its negligence claim. In discovery, the true facts will likely be disclosed. It is also possible that the actual cause or causes of the accident may not be revealed until trial. But the action must be commenced within two years of when the plaintiff knows or ought to know that the defendant committed some act or omission that caused the loss or damage.

[36] And what is meant by “knows” is that the plaintiff has the evidentiary basis to believe that the defendant did an act or made an omission that caused a loss for which a court proceeding is appropriate to obtain a remedy – the basis of a plausible inference of liability, in the words of Moldaver J. Of course, at trial, it may turn out that the defendant was not responsible for the loss, either because they owed no duty of care, they met the standard of care, or they did not commit the act or omission that was alleged.

[37] It is possible that there may be circumstances where a plaintiff learns later about another act or omission that was not apparent from the circumstances of the loss and that gives rise to a new claim. That is what occurred in Kaynes, where the investor knew early on that the company’s financial disclosure was misleading and negligent, and therefore had to commence its negligent misrepresentation action. But it only learned much later that the company had knowingly and fraudulently made the misleading claims, and therefore the investor had more time to allege fraud.

d) Application to this Case

[38] Applying these principles to the pleading and the appellant’s knowledge in this case, all of the allegations that are made as separate acts or omissions come under three categories: faulty design, faulty construction, and faulty inspection during construction. The pleading describes particulars or details of failures within each of those categories of responsibility. The motion judge found, based on the record, that Gordon and Floyd Dunk knew shortly after the collapse that the three respondents were responsible for these aspects of the development and delivery of the barn, and that the barn collapsed because of the failure of one or more of those aspects of the planning and erection of the barn. That finding is sufficient to meet the “plausible inference of liability” test for identifying the required acts or omissions of these respondents.

[39] The motion judge determined, based on the evidence from the appellant’s principals themselves, that they knew they had a claim for negligence and breach of contract by May 12, 2014, because they knew sufficient facts to be able to infer that negligent design, construction, and/or inspection during the construction of the barn were the cause of the collapse. I see no basis to interfere with his analysis or his conclusion.

[40] I would not give effect to this ground of appeal.

(2) Did the motion judge err by failing to rule on the appellant’s motion regarding the timeliness of its action as against the respondent, Franken, who did not defend the motion?

[41] The respondent Franken defended the appellant’s action but not the summary judgment motion. I am satisfied, based on the reasons of the motion judge, that his failure to find that the action is statute barred as against Franken as well as the other two respondents was an oversight on his part. At para. 6 of his reasons, the motion judge noted that Franken took no position on the motion “but all parties agreed that the result of this motion would likely be binding on Franken in any event.” That, of course, includes agreement by the appellant.

[42] The findings by the motion judge applied to the appellant’s knowledge with respect to the involvement of each of the three respondents. As a result, the action is statute barred against all three, including Franken.

(3) The motion judge’s error with respect to the meaning and effect of s. 14 of the Act

[43] Section 14 of the Act allows a person who is a potential defendant in an action to put the potential plaintiff on notice that the potential plaintiff may have a claim against the person, the potential defendant. The purpose is to give a potential defendant the ability to start the two-year limitation period running so that it can have certainty about when the action will become statute barred. It is not an admission of liability. The section allows the court to take the notice into account if a limitation issue arises in respect of an action after it is commenced. Section 14 reads:

14 (1) A person against whom another person may have a claim may serve a notice of possible claim on the other person.

(2) A notice of possible claim shall be in writing and signed by the person issuing it or that person’s lawyer, and shall,

(a) describe the injury, loss or damage that the issuing person suspects may have occurred;

(b) identify the act or omission giving rise to the injury, loss or damage;

(c) indicate the extent to which the issuing person suspects that the injury, loss or damage may have been caused by the issuing person;

(d) state that any claim that the other person has could be extinguished because of the expiry of a limitation period; and

(e) state the issuing person’s name and address for service.

(3) The fact that a notice of possible claim has been served on a person may be considered by a court in determining when the limitation period in respect of the person’s claim began to run.

(4) Subsection (3) does not apply to a person who is not represented by a litigation guardian in relation to the claim and who, when served with the notice,

(a) is a minor; or

(b) is incapable of commencing a proceeding because of his or her physical, mental or psychological condition.

(5) A notice of possible claim is not an acknowledgment for the purpose of section 13.

(6) A notice of possible claim is not an admission of the validity of the claim.

[44] In this case, the appellant’s insurance adjuster sent letters to the three respondents on behalf of the appellant, the potential plaintiff, to put them on notice of the barn collapse and of their potential liability as defendants, and recommended that they refer the letter to their liability insurers and have them contact the appellant’s adjuster for further details.

[45] The motion judge took these letters into account to support his finding that the appellant knew sufficient facts to commence the action when those letters were sent. While the motion judge was entitled to do that as a matter of inference, he was in error by referring to s. 14 and relying on s. 14(3) as his authority for doing so. Section 14 had no application to the facts of this case, where it was the potential plaintiff putting the potential defendants on notice and not the other way around.

[46] Although the motion judge erred in law by purporting to rely on the wrong section of the Act, it had no effect on the outcome of the motion because the motion judge was entitled to draw an inference, without any authority or direction from the Act, where the notice was from the potential plaintiff to the potential defendants.

F. Conclusion

[47] For the above reasons, I would dismiss the appeal with costs to the respondents HFH and McNeil in the agreed amount of $15,000 each, inclusive of disbursements and HST.

Released: October 6, 2021 “G.R.S.” “K. Feldman J.A.” “I agree. Strathy C.J.O.” “I agree. K. van Rensburg J.A.”

[1] The parties agreed that, in 2016, May 21-23 was a long weekend, and that if the limitation period commenced on May 21, 2014, the claim was issued in time. [2] The Dunks had a similar barn built in 1992, and Gordon Dunk confirmed “[s]o we had lots of experience with raceway barns.”