Ian Landells First Plaintiff And: Lisa Landells Second Plaintiff And: Kean’s PUMP SHOP LIMITED First Defendant And: Aire SERVE HEATING & AIR CONDITIONING Second Defendant, 2021 NLSC 173

court crest IN THE SUPREME COURT OF NEWFOUNDLAND AND LABRADOR GENERAL DIVISION Citation : Landells v. Kean’s Pump Shop Limited , 2021 NLSC 173 Date : December 20, 2021 Docket : 201301G5340 Between: Ian Landells First Plaintiff And: Lisa Landells Second Plaintiff And: Kean’s PUMP SHOP LIMITED First Defendant And: Aire SERVE HEATING & AIR CONDITIONING Second Defendant Before: Justice Alphonsus E. Faour Place of Hearing: St. John’s, Newfoundland and Labrador Dates of Hearing: October 14 and 15, 2021

Summary: The Defendant sought dismissal of the action as being out of time pursuant to

section 5 (

b) of the Limitations Act . It argued that this was an action for damages arising from negligent misrepresentation and was covered by the two-year limitation period set out in the Act . The Plaintiffs submitted that this was simply an action claiming damages from breach of contract and therefore the residual provisions in

section 9 of the Act applied to set a six-year limitation period. The Court dismissed the application, finding that

section 5 (

b) did not apply as it required “injury” to property as a pre-condition. This action was, in essence, one for damages for failure to perform under a contract. Accordingly, the applicable limitation is six years. A pre-trial conference was ordered to determine next steps. Costs were awarded to the Plaintiffs on Column 3 set out in Rule 55.

Appearances: Philip J. Buckingham Appearing on behalf of the Plaintiffs F. Richard Gosse Appearing on behalf of the Defendants Authorities Cited: CASES CONSIDERED: Business Development Bank of Canada v. Noble , 2013 NLCA 63 ; Murray v. Walsh , 2005 NLCA 32 ; Butler v. Maritime Life Assurance Co. , 2003 NLSCTD 64 ; Harbour View Inn Inc. v. Ron Fougere Associates Limited , 2015 NLTD(G) 160 STATUTES CONSIDERED: Limitations Act , S.N.L. 1995, c. L-16.1 RULES CONSIDERED: Rules of the Supreme Court, 1986 , S.N.L. 1986, c. 42, Sch.

D REASONS FOR JUDGMENT Faour, J. : INTRODUCTION [ 1 ] Ian and Lisa Landells (the “Landells”) contracted with Kean’s Pump Shop Limited (“Kean’s”) to install a new heating system in their home as part of a major renovation. They brought this action claiming that Kean’s failed to live up to the terms of the contract between them. They allege the heating system did not function as they had been promised. They claim damages for breach of contract, negligence, and negligent misrepresentation. [ 2 ] Kean’s has defended the action and, among other grounds, pleaded the provisions of the Limitations Act , S.N.L. 1995, c.

L- 16.1 (the “ Act ”). This Application is by Kean’s for a

Summary Trial under Rule 17A of the Rules of the Supreme Court, 1986 , S.N.L. 1986, c. 42, Sch. D , seeking dismissal of the Statement of Claim on the basis that it is statute-barred having been filed after the time set by the Act . Kean’s submits that the action is subject to the two-year time limit set in

section 5 of the Act , and that it was filed outside that time. [ 3 ] The Landells have responded, arguing that the action is, instead, subject to the six-year limit set out in

section 9 of the Act . In any event, it submits that even with the two-year limit, the facts demonstrate that it was filed within the time set by the Act . Background [ 4 ] The Landells commenced renovation of their property in St. John’s in May, 2007. They intended to reside in the completed home as their principal residence. As part of the renovation they wished to have an environmentally friendly heating system, and obtained advice as to the type of system to install.

Based on this advice, they approached Kean’s to supply and install a heat pump system. [ 5 ] In their discussions with Kean’s, the Landells emphasized that cost was no object, that they wanted the “best system available that was both cost-efficient and environmentally friendly.” (Affidavit of Lisa (Landells) Baker, at para. 7). They were told that with the system to be provided, their electricity bills would be in the range of $350 per month. [ 6 ] Work commenced in the fall of 2007 and the system was installed in November of that year. The Landells moved into the house the following June.

During the fall of 2008 they reported problems with heating. These problems continued through the winter of 2009. In December 2009, the compressor on the heat pump failed and was replaced by Kean’s. (Baker Affidavit at para. 18; Affidavit of Matthew Hickman, president of Kean’s, paragraph 10). Throughout the winter of 2010 the system did not perform to the satisfaction of the Landells.

In March 2010 there was a second compressor failure and it was replaced by Kean’s (Baker Affidavit at para. 21; Hickman Affidavit at para. 15). [ 7 ] By this time the Landells were sufficiently frustrated with the performance of the system and they sought external advice. During the summer of 2010, they engaged an engineer to assess the system.

Although a written report was not obtained, they deposed that deficiencies were noted in the installation of the in-floor heating system and suggested that alternate approaches would have been preferable. [ 8 ] The Landells reported continuing problems with the system in November of 2010. They said that Kean’s were at their home

several times during that month (Baker Affidavit at para. 23). In January 2011, both parties report that the heat pump caught fire (Baker Affidavit at para. 24; Hickman Affidavit at para. 17). [ 9 ] Notwithstanding these difficulties, Kean’s continued to work with the Landells over the subsequent months. In May 2011 Kean’s addressed some venting issues related to the system (Hickman testimony). During the winter of 2012, Kean’s arranged for thermal imaging to confirm heat loss issues at the house (Hickman Affidavit at para. 20). [ 10 ] The relationship appears to have broken down in March 2012.

At that time the Landells demanded that Kean’s provide a solution to the problems (Baker Affidavit at para. 30). Kean’s response was contained in a letter of March 22, 2012, indicating “. . . our company is unable to proceed any further with your heating system given the challenges the insulation of parts of the home present.” Landells reported that until receipt of this letter they believed Kean’s would be able to provide a solution. [ 11 ] The action was commenced in November 2013. In this application Kean’s says the action is out of time, as it is covered by

section 5 of the Limitations Act . The Landells say that

section 5 does not apply and, even if it did, the action was filed within the time set out in

section 5 . Issues [ 12 ] Kean’s takes the view that this action is about injury to property, arising from the contract between the parties. It notes the references in the Statement of Claim to reliance on the expertise of the Defendants and the explicit pleading of negligent misrepresentation. It also notes the distinction between the two paragraphs in s. 5 of the Act : paragraph (

a) refers to loss arising from the injury; and paragraph (

b) refers to loss arising from negligent misrepresentation and professional negligence. Both paragraphs tie the loss to contract, among other causes. [ 13 ] The Landells say that it is not about injury to property, but is fundamentally about breach of contract. They argue that

section 5 is not applicable, since there was no injury to either a person or property, but is about deficiencies in work contracted for, completed, and paid for by the Plaintiffs. If

section 5 is not applicable, then they argue that this case is covered by

section 9 , which reads as follows: 9. An action for which a provision as to limitation is not made in sections 5 to 8 or in another Act shall not be brought after the expiration of 6 years after the date on which the cause of action arose. [ 14 ] Both sides agree that the Statement of Claim presents facts that could support three separate causes of action: breach of contract, negligence, and negligent misrepresentation. [ 15 ] The central issue is whether the Landells’ claim is one “for damages in respect of injury” to property and arise “from negligent misrepresentation and professional negligence.” If so, then Kean’s says a two-year limitation period applies pursuant to

section 5 (

b) of the Act . There would remain the issue of when the limitation period began to run. [ 16 ] Since this is an application for a

Summary Trial under Rule 17A , the first issue to be resolved is whether that procedure is suitable in these circumstances. After reviewing the submission of both sides, I believe there are two additional issues. Accordingly I will address the following issues: 1. Whether this matter is suitable or appropriate for a

Summary Trial; 2. Whether

section 5(

b) applies to set the limitation period for this matter; 3. Whatever the applicable limitation period, when did the time within which an action could be commenced start to run?

Summary Trial [ 17 ] Both sides agree that an application for a

Summary Trial under Rule 17A of the Rules of the Supreme Court, 1986 is appropriate for deciding the issue of whether the action is statute-barred. Notwithstanding their positions, the Court must still examine whether the case can be decided using this procedure. [ 18 ] Rule 17A sets out the requirements for a court to accept an application for a

Summary Trial. It reads as follows: 17A.03(1) Where the Court is satisfied that there is no genuine issue for trial with respect to a claim or defence, the Court shall grant

summary judgment accordingly. 17A.03

(2) Where the Court decides that there is a genuine issue with respect to a claim or defence, a judge may nevertheless grant judgment in favour of any party, either upon an issue or generally, unless (

a) the judge is unable on the whole of the evidence before the Court on the application to find the facts necessary to decide the questions of fact or law; or (

b) it would be unjust to decide the issues on the application.

. . . [ 19 ] To summarize the Rule, it provides that the court may determine the matter if certain criteria are met: 1. If the court determines there is no genuine issue for trial, then it may grant

summary judgment. 2. If it is found that a genuine issue does exist, judgment may be granted, unless the court determines that the evidential record is insufficient and a full trial is warranted. 3. If the only issue is a question of law, the court may determine the question. The Court of Appeal set out the legal test in Business Development Bank of Canada v. Noble , 2013 NLCA 63 . Justice White said: 36 … the Court may give judgment under rule 17A in two circumstances: (

i) where there is no "genuine issue for trial"; or (ii) where, even if there is a genuine issue, the court is able "to find the facts necessary" to decide the questions of fact or law and it would not be "unjust" to decide the issue on the application … [ 20 ] In this application the only issue relates to whether the action is out of time. I am not being asked to determine the merits of the overall claim, only the limitations issue. The only outcome of this proceeding is whether or not the matter should proceed to a trial on the merits. [ 21 ] On the narrow issue before me, I believe there is a genuine issue.

The evidential record in the form of the affidavits filed by both sides, and the viva voce testimony of each of the affiants, appears sufficient to determine the matter. The question for the

Summary Trial is a discrete one, and does not bear on the merits of the cause of action between the parties. The issue of the applicability of a limitation period is a question of law, and the evidence submitted, in my view, is sufficient to address the questions that will arise. [ 22 ] I conclude that the

summary trial process is appropriate. Accordingly, I will go on to address the substantive issues in this application. The Applicable Limitation Period [ 23 ] Kean’s has submitted that a two-year limitation period applies. It says that all of the facts underlying the action were well known to the Landells as early as the summer of 2010 when they engaged the services of an engineer to assess the system. If so, then the filing of the action in November 2013 was out of time, according to their argument that the shorter period applied. [ 24 ] Kean’s, as Applicant, is relying on

section 5 of the Act in arguing that a two-year limitation period applies, and not some longer period as submitted by the Landells. The relevant portions read as follows: 5. Following the expiration of 2 years after the date on which the right to do so arose, a person shall not bring an action (

a) for damages in respect of injury to a person or property, including economic loss arising from the injury whether based on contract, tort or statutory duty; (

b) for damages in respect of injury to person or property including economic loss arising from negligent misrepresentation and professional negligence whether based on contract, tort or statutory duty; … [ 25 ] There are several elements that arise in these provisions. Both sub-paragraphs of this

section make reference to claims for damages “in respect of injury.” But the two provisions, while similar, include different requirements for bringing the action under this provision. Paragraph (

a) is the simpler version. It merely states that the damages must arise “in respect of injury,” and then goes on to specifically include economic loss, which is consequent on the injury. Kean’s does not rely on paragraph (a). [ 26 ] Kean’s submits that paragraph (

b) applies. Its wording includes negligent misrepresentation and professional negligence as sources of damages. Kean’s submit that it applies in this action where the Landells relied on their representations as to the appropriate system to install. [ 27 ] While the opening words in both paragraphs are similar, there are differences. Paragraph (

b) does not include the

article “a” before the word person, and it does not have a comma after the word “property” before including economic loss from several sources. [ 28 ] While both paragraphs contain wording that is quite similar, it is not possible to simply say they are the same. There are differences, and Kean’s, as the Applicant, has focused on the differences, in particular with respect to the allegations of negligent misrepresentation and professional negligence. There are also syntactic differences, as discussed by our Court of Appeal in Murray v. Walsh , 2005 NLCA 32 . Justice Mercer, speaking for the Court, noted the differences,: 18 Though the language of s. 5 (

b) employs certain of the terminology of s. 5 (a), as noted by the trial judge, there are also differences in that:

- s. 5(

b) refers to "injury to person" rather than "injury to a person". - s. 5(

b) does not have a comma following the word "property". - in s. 5(

b) the referenced damages include "economic loss arising from negligent representation and professional negligence", whereas in s. 5(a), the damages include "economic loss arising from the injury". [ 29 ] In that case, dealing with an allegation of professional negligence in a solicitor-client relationship, the Trial Judge had found no difference between the two provisions, and determined that the provision did not apply as there was no injury arising from the relationship. When the solicitor appealed the finding, the court examined the wording, and decided that principles of statutory

interpretation required that the court ought to avoid a redundancy when determining the meaning of similar words. 20 The matter, however, does not rise or fall solely on the presence or absence of a comma. The words in s. 5(b) "arising from negligent representation and professional negligence" refer to causes of action. However, the trial judge's

interpretation directs the inquiry about the s. 5(

b) damages to the source of the damages, rather than to the cause of action. As such, that

interpretation does not place any weight upon the words "arising from negligent representation and professional negligence". Furthermore, the effect of holding that " ss. 5 (

a) and (

b) are in reality the same with 5(

b) duplicating the governing criteria in 5(a)", and that "if anything 5(

b) is for greater certainty", is to gloss over the differences in wording between the two sub-sections, and to render s. 5 (

b) redundant. That is contrary to the principle of statutory

interpretation known as the presumption against tautology. That presumption was explained by Ruth Sullivan in Sullivan and Driedger on the Construction of Statutes , 4th ed. (Toronto: Butterworths, 2002) at 158-9 as follows: It is presumed that the legislature avoids superfluous or meaningless words, that it does not pointlessly repeat itself or speak in vain. ... In Hill v. William Hill (Park Lane) Ltd. , [ [1949] A.C. 530 at 546 (H.L.) ] Viscount Simons wrote: ... though a Parliamentary enactment (like parliamentary eloquence) is capable of saying the same thing twice over without adding anything to what has already been said once, this repetition in the case of

an Act of Parliament is not to be assumed. ... … [ 30 ] Accepting that the two paragraphs must be distinct in

interpretation, both contain in their opening words a reference to “injury.” That provides a specific direction that the source of the damages must relate to an injury to a person or property. In examining the question of the source of the damages, Justice Orsborn dealt with interpreting this phrase in Butler v. Maritime Life Assurance Co. , 2003 NLSCTD 64 . He said: 10 Once it is determined that, as here, a plaintiff seeks damages, the inquiry is then - 'damages in respect of what?'. The inquiry is not into the cause of action - the legal framework upon which the claim is based. (I express no views on the relationship, if any, between subsections 5 (

a) and 5 (b).) Rather, the inquiry is a factual one which focuses on the cause or source of the damages claimed. It is a pre- condition to the application of subsection 5 (

a) that the damages sought must be "in respect of" an injury to a person or property. "In respect of" is a phrase of wide import, but in this context it suggests a causal or consequential link. The damages in question may be direct or indirect, but the foundation for the particular claim in question must be a factual connection between the damages and an "injury to a person or property". [ 31 ] While Justice Orsborn did not opine on the opening words of paragraph 5 (b), I note they are identical to the opening in paragraph 5 (a). In this case, the Defendant has focused on 5(

b) as it references negligent misrepresentation and professional negligence. In Butler the court found, in respect of paragraph 5 (a), that “… it is a pre-condition …” that there be a causal connection to an injury. Does the same apply to paragraph 5 (b)? [ 32 ] In Murray , the court decided that paragraph 5 (

b) carried a different meaning than that of paragraph 5 (a). In so doing, the court gave an extended meaning to the word “injury.” 21 Given the reference in s. 5(

b) to causes of action and having regard to the interpretative principle noted above, a plausible

interpretation of s. 5(

b) would be that it brings within the two year limitation period actions in which damages are claimed for economic loss arising from the specified causes of action. In that

interpretation the word "injury" in s. 5(

b) would mean a violation of rights, either personal or property rights. That is an accepted dictionary definition of injury — see for e.g. Katherine Barber, Canadian Oxford Dictionary - ed. (Oxford: Oxford University Press, 1998) S.V. "injury". [ 33 ] I accept that, unlike the position of the Trial Judge in Murray , that there is a difference between (

a) and (b). Notwithstanding the application of an extended meaning to “injury” in paragraph 5(b), the Court of Appeal did not disagree with the discussion in Butler that one must look to the source of the damages rather than focus on a cause of action. Given the opening words in both paragraphs, it would seem that one must look to an injury to property as the source of the damages. [ 34 ] More recently, Justice Burrage of this court addressed a similar question in Harbour View Inn Inc. v. Ron Fougere Associates

Limited, 2015 NLTD(G) 160. In that case the question was whether damage to a newly constructed building by water infiltration wascovered by

section 5 of the Act. The Court declined to determine the issue, and referred it to a full trial, but noted: 44 In Butler, Orsborn, J. observed that

section 5(

a) of the Act is "almost identical" to the wording used in British Columbia and therethe courts have consistently held that "injury" should be given its normal commonplace meaning. In the context of injury to a person, theterm "injury" equates to personal, or physical injury, regardless of how the cause of action is characterized. Orsborn, J. observed that as itrelates to "injury to property" the British Columbia courts have concluded that the phrase refers to direct damage caused by an externalact, rather than an inherent defect. 45 At the same time Orsborn, J. rejected any suggestion that the legal characterization of the claim (i.e. the cause of action) isrelevant for the purposes of

section 5(a). Relying on the Supreme Court of Canada decision in Arndt v. Smith, (SCC),[1997] 2 S.C.R. 539 (S.C.C.) he concluded that the inquiry must be directed to the cause or source of the damage claimed, rather than thelegal characterization of the claim: 10 Once it is determined that, as here, a plaintiff seeks damages, the inquiry is then - 'damages in respect of what?'. The inquiry is notinto the cause of action - the legal framework upon which the claim is based. (I express no views on the relationship, if any, betweensubsections 5(

a) and 5(b).) Rather, the inquiry is a factual one which focuses on the cause or source of the damages claimed. It is a pre-condition to the application of subsection 5(

a) that the damages sought must be "in respect of" an injury to a person or property. "Inrespect of" is a phrase of wide import, but in this context it suggests a causal or consequential link. The damages in question may bedirect or indirect, but the foundation for the particular claim in question must be a factual connection between the damages and an "injuryto a person or property". 46 I am satisfied that the approach in Butler is consistent with the British Columbia authorities.

In W.C.B., for example, McLachlin,J.A. observed that characterization of the cause of action, whether in contract or tort, is not the test. Damage is an essential element ineither event. The question in each case is therefore whether that damage falls within the phrase "injury to property". 47 In Murray v. Walsh, 2005 NLCA 32 (N.L. C.A.) our Court of Appeal observed that in Butler, Orsborn J. followed the BritishColumbia line of authorities in holding that the ambit of damages referenced in

section 5(

a) is determined by an inquiry into the cause orsource of the damage not the cause of action, and "injury" to property means direct damage (at paragraph 8). [35] I agree with this

interpretation of paragraphs (

a) and (

b) of

section 5. In attempting to avoid an

interpretation that would find aredundancy in the two provisions, the Court of Appeal in Murray focused on the source of the damages in paragraph (a), while findingthat paragraph (

b) seems to rely more on the cause of action pleaded. However, the introductory words of both sections are identical,and they tie any action caught by

section 5 to one for “damages in respect of injury.” The Court of Appeal in Murray did not disagreewith Justice Orsborn in Butler. that injury was a precondition. So my first question is whether there was “injury to … property …”forming the basis for the current action. [36] The inquiry then must be to the nature of the word “injury” in connection with the damages claimed by the Landells.

BothJustice Orsborn in Butler and Justice Burrage in Harbour View Inn Inc. followed the line of authorities in British Columbia that foundthat “injury” in the context of property refers to “direct damage caused by an external act, rather than an inherent defect.” In my view,the circumstances of this case would not fit within even the extended version of “injury” set out in Murray.

It would not be possible todraw an inference of a “violation of rights, either personal or property rights” from facts from which the Plaintiffs allege a breach of acontract for the installation of a heating system. [37] It would appear that all of the authorities tie

section 5 to some kind of violation against the person or property, notwithstandingthe cause of action pleaded. In this case, the claim is not based on anything resembling an injury to the property. It is, at its essence, aquestion of breach of contract. That will be defined by an examination of whether Kean’s fulfilled its side of the bargain with theLandells. [38] I believe that “injury” should take its normal meaning. The line of cases from British Columbia has been accepted in thisProvince. Accordingly, in my view, to bring this action under

section 5 of the Act the loss must relate to an “injury” to property, and arisefrom an external event. However, there were no facts that would imply an injury to property. I was not presented with facts that wouldsatisfy even the extended meaning of injury as opined by the Court of Appeal in Murray. [39] Kean’s has made the further argument that the claim in this case relates to professional negligence, or negligentmisrepresentation. They argue that the Landells’ claim arises from their reliance on the skill, judgment, and expertise of the Defendant,and therefore paragraph 5(

b) is applicable to limit the period within which an action may be commenced. The Landells draw adistinction between trades where no specialized training or certification is required, on the one hand, and professions that are regulatedunder a statutory regime. In this case, the advice and representation were not made by such a self-regulated profession. [40] It is interesting that one of the arguments made by Kean’s relies on the fact that the Landells did not ask them to recommend asystem. They did their own research with their own architect, and had already decided on a geothermal system for heating.

They onlyasked Kean’s to supply an appropriate system. This partly undermines their argument that the Landells relied on the Kean’s expertise. Ifthey had already decided, then there was minimal reliance on any representation, making it harder, in the context of Kean’s’ argument, tobring this action under

section 5(b).

[ 41 ] I do not believe that the Defendants can argue that breach of contract comes under the two-year limitation period in paragraph 5(

b) simply by saying there were representations involved. One has to look at the source of the damages claimed, and at its essence, the Plaintiffs are claiming that the Defendant failed to perform as contracted. [ 42 ] Finally, Kean’s submits that in addition to the existence of a claim for negligent misrepresentation there was the additional claim for professional negligence. This arises from the assertion that the Landells relied on the professional competence of Kean’s to install the system appropriately.

The Landells respond by saying that an action for professional negligence does not apply to unregulated workers, but only to professionals subject to statutory regimes and standards of practice. In any event, damages from breach of contract can arise by negligent performance. [ 43 ] I do not believe it is necessary to determine this question. Whether or not professional negligence has a broad meaning as submitted by Kean’s, paragraph 5(

b) requires damages “in respect of injury.” I have already discussed the meaning of “injury” in this context, and the authorities are fairly consistent in requiring that damages arise from an external event causing injury to bring the action under this provision. [ 44 ] In my view, this claim alleges a contract for a heating system that did not function as contracted. Kean’s promised to install a system containing certain features. The Statement of Claim contains statements that allege a failure to perform under that promise.

It also alleges that the work was done negligently, and that it failed to live up to the representations made. As the source of the damages claimed by the Landells, damages arising from a failure of performance under a contract do not come under paragraph 5(b). [ 45 ] The Landells and Kean’s were parties to a contract. It called for a heating system that was adequate to heat the home. The Statement of Claim alleges it did not perform. They contracted for a system that would limit their electricity bills to less than $350 per month. The Statement of Claim alleges that it did not perform on this item as well.

In addition to claiming for breach of contract, the Landells claim that the system was installed negligently, and that there was negligent misrepresentation on the part of Kean’s. [ 46 ] All of these facts do not support a claim for damages “in respect of injury to person or property” where injury, in its normal meaning, would arise from an external cause. They do claim damages from breach of the contract between the parties to supply a heating system with specified attributes. The fact that there were representations made does not change the source of the damages.

In Butler , Justice Orsborn summarized his finding that the residual provision of the Act would apply on the basis that the damages to the Plaintiff arose from the alleged breach of contract by the Defendant. He said: 27 Here Butler claims damages which are said to flow from Maritime's failure to honour its obligations under a contract of insurance. The damages claimed are in respect of, or caused by, Maritime's breach of contract. In this case, the breach of contract involves no physical, emotional or mental injury to Butler, nor any direct damage to her property.

Accordingly, Butler's claim for damages is not one "in respect of injury to a person or property" and it is not subject to the two year limitation period of subs. 5(

a) of the Act . There being no other specific limitation period, the applicable limitation period is the six year 'basket clause' found in s. 9 . [ 47 ] To accept the argument of the Defendants is to accept that the totality of the claim is negligent misrepresentation and to ignore the opening words of paragraph 5(b). Since they are identical to the opening words of paragraph 5(a), I am satisfied they should carry the same meaning. [ 48 ] Accordingly, I find that

section 5 of the Act does not apply to this action. Since there is no provision in the Act specifically referencing breach of contract, it would leave this matter to be covered by

section 9 , which provides a limitation period of six years. The Commencement of the Limitation Period [ 49 ] A finding that

section 9 applies to provide for a six-year limitation period should resolve the issue. Even if I accept Kean’s’ argument that the limitation period began to run when the work was completed in November 2007, the Statement of Claim was filed in the six-year period. However, as I was asked to make a finding on commencement of the limitation period, it will be useful to examine the series of events underlying this claim. [ 50 ] Sections 13 and 14(1) of the Act set out circumstances for the commencement of a limitation period.

Those provisions read as follows: 13(1) Except as otherwise provided in this Act , the common law rules respecting the time at which a cause of action arises continue to apply. 13(2) Where in an action for damages (

a) the claim is for the breach of a duty of care founded in contract, tort or statutory duty; and (

b) the damages claimed are in respect of personal injury or property damage including (

i) economic loss, (ii) negligent misrepresentation, or

(iii) professional negligence that cause of action is considered to arise and the limitation period commences to run on the date on which damage first occurs. 14(1) Notwithstanding

section 13, in an action (

a) for personal injury; (

b) property damage; (

c) professional negligence; (

d) for relief from the consequences of a mistake; (

e) under the Fatal Accidents Act ; and (

f) for a non-fraudulent breach of trust, the limitation period fixed by this Act does not begin to run against a person until he or she knows or, considering all circumstances of the matter, ought to know that he or she has a cause of action. [ 51 ] These two provisions provide that the critical times for commencement of a limitation period are, first, when the damage occurs, and second, when the claimant knows or ought to know that a cause of action exists. [ 52 ] When did the damage first occur? The Kean’s submit that the limitation period began to run at the time the work was done.

That was November 2007, six years before the filing of the Statement of Claim on November 7, 2013. There was no evidence as to the specific date the work was completed, but if that is the operative time, the filing of the Statement of Claim was likely in time. [ 53 ] Supporting its submission that the operative limitation period was two years, Kean’s submits that certain other milestones are relevant. The Landells moved into the house in June 2008, but it was only during the commencement of the heating season, in the fall of 2008, that they became aware that the system was not functioning properly.

Did they have a cause of action at this point? I suggest not, as the problems could be classed merely as deficiencies to be remedied under the contract. Kean’s made various attempts to remedy the problem in the coming months and years, leading to the assumption that both parties felt the contractual arrangement between them was still in force. [ 54 ] Over the next several years there were continual interactions between the parties in an attempt to make the system work.

Can it be said that there was a cause of action as long as both parties were working together to resolve the deficiencies identified? [ 55 ] The final interaction between them occurred in March of 2012. At that time, the Landells demanded a solution to the problem from Kean’s. The response was contained in a letter dated March 22, 2012 when Matthew Hickman wrote saying, in part: “… we have reached the point where our company can offer no further assistance in this matter.

We feel we have done all that can reasonably be expected of us, and then some.” [ 56 ] The Landells submit this is the operative time for commencement of the limitation period. That would bring it within the two- year period claimed by Kean’s and well within the six-year period, which they argue is applicable. Kean’s submits that the operative time was well before that, and invited the Court to consider 2010 when the Landells engaged an engineer to assess the system, or January 2011 when the heat pump burst into flames and was destroyed.

Any of those times would make the claim out of time. [ 57 ] After the January 2011 fire, as deposed by Matthew Hickman, Kean’s felt that the Landells would not accept any efforts by Kean’s to remediate the system. Notwithstanding this, the parties continued to work together to attempt to address the deficiencies in performance. It was not until the letter of March 22, 2012, that the relationship between them was irretrievably broken. [ 58 ] I am satisfied that until March of 2012 the Landells did not consider the problems to amount to a breach of contract.

While relations between them had become strained because of the continuing deficiencies in the system, it was the letter at that time that made them aware that they may have legal recourse. Lisa Baker said in her Affidavit, at paragraph 32: “THAT until March 22, 2012, Ian and I held the common opinion that Kean’s would be able to remedy the issues surrounding the geothermal heating system.” [ 59 ] I cannot accept the submission of Kean’s that the damage occurred, and hence the limitation period began to run, when the work was done in November 2007. At that time, there was no damage.

It would have been impossible to discover any deficiencies at that time for two reasons. First, the Landells did not move into the home until June 2008. Second, there was no indication of a problem until the heating season began in November 2008. Neither of these times could be considered the onset of damages. At most, the problems of heating in the winter season that year could be considered a deficiency, which Kean’s would remedy under the contract. [ 60 ] In this case, it is not an easy task to determine precisely when damages occurred.

Was it the time of installation of the system in November 2007 when, it could be presumed, there was a latent defect in the system and its installation? Or was it the following year when the Landells discovered that the system would not heat the house? Was it one of the various times when the equipment failed and was replaced by Kean’s? Or was it at the time of the letter of March 22, 2012, when Kean’s declined to have any further involvement in

the work. [ 61 ] In Grant Thornton LLP v. New Brunswick , 2021 SCC 31 the Supreme Court of Canada opined on the issue of discoverability of a cause of action: 42 . . . I propose the following approach instead: 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. This approach, in my view, remains faithful to the common law rule of discoverability set out in Rafuse and accords with s. 5 of the LAA . 43 By way of explanation, the material facts that must be actually or constructively known are generally set out in the limitation statute. Here, they are listed in s. 5(2)(

a) to (c). Pursuant to s. 5(2), a claim is discovered when the plaintiff has actual or constructive knowledge that: (

a) the injury, loss or damage occurred; (

b) the injury loss or damage was caused by or contributed to by

an act or omission; and (

c) the act or omission was that of the defendant. This list is cumulative, not disjunctive. For instance, knowledge of a loss, without more, is insufficient to trigger the limitation period. [ 62 ] This statement suggests that a limitation period does not begin to run immediately on disclosure of a potential loss. In any contractual arrangement, it is reasonable to assume that a deficiency in performance does not crystalize into a cause of action immediately, as the performing party should have an opportunity to correct the deficiency.

I suggest that in cases of breach of contract, there would need to be some indication that the relationship had broken down, and there was no ability to remedy the perceived deficiencies. [ 63 ] In this case, both parties knew there were problems shortly after the commencement of the heating season of November 2008. However, as noted above, they continued to work together until March 2012 to attempt to resolve the issues. In my view, the limitation period commenced to run at that time. The action may fall well within the 6–year limitation period that I have found was applicable.

It is also within the 2-year period claimed by Kean’s.

Summary and Conclusion [ 64 ] The parties entered into a contractual relationship to install a geothermal heating system. It did not work as anticipated. While representations were made as to the efficacy of the system they contracted to install, they were simply elements of the contract they entered into. Those representations, by themselves, cannot bring this action under

section 5 of the Act . [ 65 ] Both sides in this application had contrary views of its nature. Kean’s argued that the Landells were attempting to turn a misrepresentation action into one of breach of contract, thereby turning an action with a two-year limitation period into one with a six- year limitation. The Landells responded that Kean’s were taking a breach of contract action and turning it into a misrepresentation action, thereby doing the opposite, turning a six-year action into one with a two-year limitation. [ 66 ] As noted in the Butler case, one must look to the source of the damages claimed.

The damages did not arise from any representation by Kean’s. If proven, the damages arose from a deficiency in performance of the contract. That leads to an action in breach of contract, even if there are elements of negligent misrepresentation or simple negligence in performance. In my view, the appropriate limitation period arises under

section 9 . The Landells had six years to pursue their claim. [ 67 ] No matter which event marks the commencement of the limitation period, the Landells are within time. The work was completed six years to the month prior to the commencement of the action. But more importantly, all of the other milestones, the first knowledge of heating problems, the failure and replacement of various components of the system, or the final breakdown in the relationship in March 2012, bring the action within the six-year limitation period.

And if we accept the March 22, 2012, letter as the final breakdown in the contractual relationship, then the filing of the action fits well within even the two-year period claimed by Kean’s. [ 68 ] For the reasons foregoing, this action, where the damages have arisen from alleged failure of performance of a contract, is subject to a six-year limitation. In any event, I find that the time for commencement of the limitation period runs from the date of the letter of March 22, 2012, well within the limitation periods as argued by either party.

Costs [ 69 ] The Landells seek costs of this application on a solicitor-client basis. They submit that Rule 17A.05(2) applies: 17A.05(2) Where on an application for

summary trial under this rule, the applying party obtains no relief, the Court shall fix the opposite party's costs of the application on a solicitor and client basis and order the applying party to pay them forthwith unless the Court is satisfied that the bringing of the application, although unsuccessful, was nevertheless reasonable, in which case the costs may be assessed on a party and party or some other lesser basis, or not at all. [ 70 ] The question that arises from the Rule is whether bringing this application, even if unsuccessful, was reasonable. If so then I would impose costs on a lesser basis.

The Landells have submitted that while it may have been a legitimate attempt on the part of Kean’s to bring finality, this argument could have been made to the court at trial. Kean’s submit only that it was reasonable to enforce the provisions of the Act . [ 71 ] In my view there are two factors external to the parties and this action that bear on this issue. First, the case law is not so ambiguous that court intervention is required.

Second, the Act itself is not clear on its applicability to certain actions. [ 72 ] On the state of the law, several decisions in this province have held, or accepted, that the word “injury” in paragraphs 5 (

a) and (

b) is to be interpreted as physical injury or damage. Since the opening words of each paragraph include “injury” as a pre-condition, it would seem clear that one must find injury before applying the provision to a cause of action, which includes misrepresentation. This

interpretation would lead to a finding that bringing the application was not reasonable, since there was no “injury” as set out in the authorities: See Butler ; Harbourview ; and Murray . [ 73 ] On the other hand, the Act is quite ambiguous in its classification of causes of action or sources of damages for application of the paragraphs in

section 5 . It seems anomalous that the Act does not make reference to breach of contract, but leaves it to the residual provision in

section 9 . In addition, the syntactical issues noted by Justice Mercer in the Murray case leave one wondering if they were intended, or merely errors. The wording of sections 5 (

a) and (

b) led in that case to an extended

interpretation of “injury” to avoid a redundancy. (See para. 21 of Murray) . In my view, the Act should be reviewed for such issues. [ 74 ] In the meantime an ambiguous statute points to the reasonableness of bringing the application, since the Act itself can lead to differing

interpretations. Given that the imposition of solicitor-client costs is to be a rare event in our courts, I will instead impose the normal costs against the Applicant Kean’s, at Column 3 of the Scale of Costs set out in the Appendix to Rule 55 of the Rules of the Supreme Court, 1986 . . [ 75 ] In addition, the Landells seek an order that the matter be set over for trial. Kean’s submit that further time is required for production and discoveries. It is reasonable to set this over for an early pre-trial conference for consideration of the outstanding issues.

Disposition [ 76 ] For the reasons above, the application is dismissed. An order for costs in favour of the Respondents will issue at Column 3 of the Scale of Costs set out in the Appendix to Rule 55 of the Rules of the Supreme Court, 1986 . [ 77 ] The order will include a direction to the trial coordinator to set an early date for a pre-trial conference to consider next steps. _____________________________ Alphonsus E. Faour Justice