



COURT OF APPEAL FOR ONTARIO

CITATION: Gordon Dunk Farms Limited v. HFH
    Inc., 2021 ONCA 681

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
)

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 Dunks 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 Browns 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 Judges 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 appellants 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 appellants 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 appellants counsel, what the
    lawyer knew and when he knew it were not determinative; it is the knowledge of
    the appellant that is. The motion judges 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 appellants 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 appellants 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 appellants 20 pleaded acts or omissions as separate claims, and conduct
    individual discoverability analyses for each?

a)

The Appellants 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 appellants 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 appellants 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 legislatures 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 defendants 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 defendants 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 appellants 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 defendants car slams into the plaintiffs
    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 companys 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 appellants 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 appellants 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 appellants motion regarding the timeliness of its action as against the respondent,
    Franken, who did not defend the motion?

[41]

The respondent Franken defended the appellants
    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
    appellants 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 judges 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 persons
    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
    persons 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 persons 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 appellants 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 appellants 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.


