T.R. Petroleum Ltd. - v. -, 2014 SKPC 51

IN THE PROVINCIAL COURT OF SASKATCHEWAN CIVIL DIVISION Citation: 2014 SKPC 051 Date: February 25, 2014 File: SC#57 of 2013 Location: Saskatoon _____________________________________________________________________________ Between: T.R. Petroleum Ltd. - and - Neil Fisher & McDougall Gauley LLP Mr. George Green For the Plaintiff Ms. Karen Prisciak, Q.C. For the Defendants _____________________________________________________________________________ JUDGMENT L.P.

DESHAYE, J _____________________________________________________________________________ Background [ 1 ] The plaintiff is a company which buys and sells petroleum products. Its principal shareholder and officer is Travis Gould. Mr. Gould also has principal ownership in other petroleum companies doing similar business. He has several years experience in the business. At the material times Mr. Gould was managing the petroleum business for the plaintiff.

[ 2 ] The defendant Neil Fisher, Q.C. is a lawyer in partnership with other lawyers, known collectively as McDougall Gauley LLP. Mr. Fisher maintains an office in Saskatoon, Saskatchewan, as do the other defendants. [ 3 ] In October, 2008, Mr. Gould contacted Mr. Fisher, who had done other legal work for TR Petroleum Ltd. (“TR”) and for other companies in which Mr. Gould had an interest. The purpose of this particular contact was to have the defendants collect an outstanding account due to TR from an enterprise known as White Buffalo Convenience Store and Gas Bar (“WB”).

WB operated a business at Cochin, Saskatchewan. Its business included the sale of fuel to retail customers. TR supplied fuel to WB on an ongoing basis. The account WB had with TR fell into arrears and by October, 2008, WB owed a substantial amount, apparently exceeding $20,000.00. [ 4 ] The recollection of the witnesses is that the first contact between Gould and Fisher was by telephone. Gould told Fisher TR had an account for collection. Fisher asked Gould to send the information by facsimile. In response Mr.

Gould drafted a letter to McDougall Gauley dated October 30, 2008, which was sent to and received by McDougall Gauley that day or the next. Accompanying the letter were copies of four invoices and a statement from TR Petroleum Ltd. addressed to “White Buffalo Convenience Store and Gas Bar, 150- 203 Packham Avenue, Saskatoon Sk, S4N 4K5”. [ 5 ] The invoices [P3] were numbered and dated and specified an amount of petroleum fuel purportedly delivered by TR to WB. Each invoice bears a notation “Net 10” under a heading marked “Terms”. [ 6 ] Other details of the invoices are as follows: 1.

Invoice 25570 dated 10/13/2006 [October 13, 2006] for $7,212.90 (reduced to an outstanding balance of $2,011.99 after partial payment); 2. Invoice 25743 dated 10/27/2006 for $1,182.39; 3. Invoice 25744 dated 10/27/2006 for $6,690.05; and 4. Invoice 25131 dated 8/8/2006 for $13,269.15 (reduced to an outstanding balance of $9,157.58 after partial payment). [ 7 ] Two of the invoices (#25570 and #25131) bear hand-written undated notations indicating partial payments.

These notations would have been made by TR before delivery of the copies to the defendants. [ 8 ] The statement (part of P3) is dated 2/29/2008 and itemizes the balances owing on certain specified invoices as follows: 1. Invoice #25570 - $ 2,011.99; 2. Invoice #25743 - $ 1.182.39; 3. Invoice #25744 - $ 6,690.05. [ 9 ] There is then a description on the statement adjacent to the date 11/30/2006 as follows: “GENJRNL Deposited chk#911 in error to White Buffalo s/b Montreal Lake” and in the “amount” column the figure $10,765.37 is noted. An explanation for this description was provided by Mr.

Gould, having to do with an erroneous deposit in relation to another account TR had with another customer (“Montreal Lake”). The cheque TR deposited was from an entity called “First People Management Group” (FPMG) which at times represented WB and other First Nation enterprises, including Montreal Lake Cree Nation. The figure $10,765.37 matches a payment noted on plaintiff’s exhibit P1 on October 13, 2006. Apparently the payment was credited to WB’s account when it should have been credited to Montreal Lake’s account with TR. Mr.

Gould said this was FPMG’s error and it was suggested that TR did not discover the error until the reversal was made on the account on November 30, 2006. [ 10 ] The hand-written notations on invoices #25570 and #25131 indicate that payments had been made on each of the invoices, but there is no evidence that Mr. Fisher inquired about that or discussed when the payments had been made. In his testimony Mr. Gould could not say when the payments were made or whether the amounts indicated were part of a larger payment.

If the payments had indeed been made sometime after the original invoices were prepared and later noted on copies of the invoices, this information would have been relevant to a determination of when the limitation period started to run because the notes would have raised a question about part payment. Apparently there was no discussion between Gould and Fisher about these details, nor about the effect of the erroneous

“Montreal Lake” payment. [ 11 ] Moreover, there does not appear to have been any discussion between Messrs. Fisher and Gould as to whether the discrepancy between the total of the outstanding balances on the four invoices [P3] ($19,042.01) and the amount claimed ($20,649.80) had any explanation. It now seems that the amount TR wanted to recover was the balance of the account as of January 18, 2008, which is the date of the last entry on the account statement P1. The invoices given to Mr.

Fisher in October, 2008, were only four of ten invoices which had issued on the account between August 8, 2006 and October 27, 2006. Over that same period there were payments made on the account and those payments continued until January 18, 2008. [ 12 ] October 30, 2008, was a Thursday. According to the exhibits filed by the defendants (D1, D2 and D3) on October 31, 2008, an internal search of the defendants’ data was done to see if the firm had any conflict with acting against WB. At this point a solicitor/client relationship had been established. According to Mr.

Fisher’s “Detailed Entry Report” (part of a system for tracking a lawyer’s activity on a client’s file) he reviewed the plaintiff’s invoices on November 3, 2008, and sent a demand letter on behalf of TR to WB at the Saskatoon address provided by Mr. Gould and contained on the various invoices. The letter demanded immediate payment of the amount specified - $20,649.80 “together with interest thereon”.

There is no notation on the “Detailed Entry Report” of a personal consultation with the client. [ 13 ] The action brought by TR against the defendants Fisher and McDougall Gauley LLP alleges negligence and breach of contract. In short the action alleges that Mr. Fisher was negligent in not starting an appropriate legal action against TR’s debtor within the two year limitation period stipulated in The Limitations Act , S.S. 2004, c. L-16.1. The defendants’ position is that the claim TR had against its debtor was already statute barred by time Mr. Fisher first received instructions.

The evidence informing these respective positions is in conflict. Analysis [ 14 ] Mr. Gould knew that White Buffalo Convenience Store and Gas Bar was a business related to a Saskatchewan First Nation. He also knew that orders on the account and payments on the account sometimes came from or through FPMG, which TR claims was acting as a manager for WB. TR’s letter of October 30, 2008, to the defendants provides no information other than the name “White Buffalo Convenience Store & Gas Bar” and copies of the invoices and statement referred to above. Mr. Gould testified that in his verbal instructions to Mr.

Fisher he never referred to “White Buffalo First Nation”, only that he told Fisher it was a First Nation account. He also claimed to have given Fisher an oral

summary of the account including information about First People Management and that TR had received post dated cheques on the account which ran out in January 2008. Mr. Fisher said there was no discussion about First People Management and that he did not know of their involvement in the matter. Mr. Gould did not tell Mr. Fisher that WB was related to Saulteaux First Nation until late January, 2009. [ 15 ] As part of the plaintiff’s case an 8 page statement dated October 31, 2013, was presented in evidence [P1].

This statement apparently represents the entire ongoing account WB held with TR and indicates that there were regular partial payments on the account up to January 18, 2008, when the payments ceased and the account balance is shown as $20,649.80. The information contained in this statement would have been in TR’s possession when the defendants became involved in October, 2008, but that statement was not provided to Fisher or McDougall Gauley. Mr. Fisher denies that he was ever told of the post-dated cheques or partial payments on the account. [ 16 ] From the documents Mr.

Fisher received at the end of October, 2008, it should have been apparent to him that two of the invoices were dated “10/27/2006”, and each bore the printed stipulation “Net 10”, which means payable in 10 days. With this information it should have been clear that the period of limitation would have extended to at least November 6, 2008 – still enough time for the defendants to have commenced an action within the statutory limitation period for at least part of the debt.

Indeed, with the jurisprudence holding that the limitation period runs for two years after the claim was “discovered”, it should have occurred to the defendants that the limitation period may have extended beyond November 6, 2008. Mr. Fisher might have turned his mind to the question of when does the debt actually become a “claim”. [ 17 ] Another factor which apparently influenced Mr. Fisher’s actions on the claim was that he did not initially know who bore the legal responsibility for the debt. Fisher assumed the debtor was a Saskatchewan First Nation band called White Buffalo First Nation.

This assumption was uninformed. A copy of an Internet search of Saskatchewan First Nations [D4] does not list a band name resembling “White Buffalo”. Plaintiff’s exhibit P10 is a copy of a Saskatchewan Corporate Registry Profile Report for a business name entity called “White Buffalo Gas & Confectionery Store” (Cochin, Saskatchewan) which was registered on December 15, 2004; the business name registration expired on June 6, 2008. This profile report identified Saulteaux First Nation (Cochin, Saskatchewan) as the owner of the business.

I heard no evidence as to whether a search for a business name “White Buffalo Convenience Store and Gas Bar” would have revealed the similar name “White Buffalo Gas & Confectionery Store”, but there is no evidence the defendants attempted a search of business names under “White Buffalo”. Mr. Fisher’s search was for an Indian band called “White Buffalo”. A business name search might well have provided more information as to the provenance of the business in question, and it is apparent the connection to

Saulteaux First Nation could have been easily established. [ 18 ] It is apparent Mr. Fisher initially assumed the debtor was a First Nation called “White Buffalo”. He also was acting under an erroneous assumption that the limitation period for starting an action had expired by time he received the documents contained in plaintiff’s exhibit P3. Mr. Fisher acted promptly when he wrote the initial demand letter on November 3, 2008. That letter was sent to the Saskatoon mailing address provided by Mr. Gould. To Mr. Fisher’s knowledge there was no response to this letter.

In fact there was further information which emerged. [ 19 ] On November 14, 2008, a letter was received at the McDougall Gauley office in Saskatoon. The letter was introduced in evidence as P5. It is unsigned and there is no letter head nor named addressee. I believe Mr. Fisher did not see this letter until the present proceedings were well underway. Nevertheless it is clear the letter was received by McDougall Gauley on November 14, 2008. I quote its contents in their entirety: November 12, 2008 Please take note that the address you have on file for White Buffalo – is no longer.

The address was formerly the home of First People Management Group, which did manage the White Buffalo Convenience Store for a time period, but that relationship ended December 2006. As far as TR Petroleum – All that can be said is that First People Management Group sent TR Petroleum 52 post dated cheques, each in the amount of 818.90 covering the period of February 2007 to January 2008 on behalf of White Buffalo Convenience Store regarding this matter. The total of all cheques, which cleared the bank came to $42,582.90.

Further correspondence in this matter or any other should go to the Band Office for White Buffalo because First People Management Group no longer manages them and they themselves are no longer in business. Thank you. [ 20 ] It is unknown what became of this letter, except that it was included in documents eventually turned over to the plaintiff’s present solicitors McKercher LLP, apparently from the defendants. At times Mr. Fisher had assistants and a junior lawyer, Mr. Mitchell, doing work on some of Gould’s company files. Though Mr.

Fisher did not personally have knowledge of this letter it is clear that it did come to the attention of McDougall Gauley LLP on November 14, 2008. The letter effectively alerted McDougall Gauley that the account between TR and WB was active until at least January 2008. Had Mr. Fisher known this it seems clear he could have pursued his client’s claim to greater effect. [ 21 ] As matters stood the file remained inactive in the defendants’ office until Mr. Fisher wrote to TR Petroleum Ltd. on January 22, 2009, advising Mr.

Gould that no record for White Buffalo First Nation was found and inquiring as to which Band ran the convenience store. Mr. Gould responded by email to Mr. Fisher on January 26, 2009, that “White Buffalo belongs to Saulteaux First Nation”. [ 22 ] By January 26, 2009, the defendant McDougall Gauley LLP, which includes Mr. Fisher, had notice of the legal debtor and also that there was evidence of acknowledgement of the debt as late as January 2008. There was still a year to run before the limitation period expired.

The defendants never did act to commence a legal action against Saulteaux First Nation, and the opportunity to do so has now expired. By failing to sue or seek specific instructions to sue the defendants acted negligently and in breach of their duty to their client. [ 23 ] There is a significant conflict in the accounts of Mr. Gould and Mr. Fisher. Gould said he would have told Fisher of the payments on the account by way of post dated cheques.

Fisher says he told Gould that the claim was beyond the two year limitation period and that TR had to secure an acknowledgment of the debt either by admission or part payment. Gould denies this. Fisher said he was not told of the post dated cheque payments. Apparently Mr. Fisher kept sparse, if any, notes of the various contacts he had with Mr. Gould or TR. Fisher does not recall when he told Gould that the claim required some acknowledgment but though it would have been sometime in 2009. Gould denies that he was given this information by Fisher or anyone at McDougall Gauley.

I am unprepared to say that either witness has been untruthful, nor to conclude with assurance that there is an element of confabulation. What is clear, however, is that there is sufficient information in the documents initially received by Mr. Fisher which should have been acted upon by him had he conducted himself with reasonable diligence. The receipt of the letter of November 12, 2008 [P5], at McDougall Gauley clearly placed an onus on the defendants to inquire and respond. Moreover, I do not think there is anything in evidence to corroborate Mr.

Fisher’s belief that he told Gould the limitation period had expired, and I am not satisfied Gould was ever given such information. Limitation Period on Plaintiff’s Debt

[ 24 ] The Limitations Act provides in

part 5 Unless otherwise provided in this Act, no proceedings shall be commenced with respect to a claim after two years from the day on which the claim is discovered. 11

(1) If a person acknowledges the existence of a claim for payment of a debt … the act or omission on which the claim is based is deemed to have taken place on the day on which the acknowledgment was made.

(3) In the case of a claim for payment of a debt, part payment of the debt by the person against whom the claim is made or by the person’s agent is deemed for the purposes of subsection (1) to be an acknowledgement. [ 25 ] The defendants argue by implication that the limitation period on each of TR’s invoices should be determined to begin 10 days after the date on each invoice.

For example, the defendants argue that the debt represented by invoice #25131 dated August 8, 2006, became actionable on August 18, 2006, and by October 31, 2008 would have been statute barred. [ 26 ] The defendants’ argument advances as a premise that each invoice represents a separate debt and should be viewed in isolation. Such an approach does not seem to be in accord with the way business was conducted between TR and WB. According to the testimony of Mr. Gould and the statement of account marked as P1 this was an ongoing charge account. Orders for fuel would be made and fuel delivered.

TR would then invoice for a certain amount of fuel delivered; whether the invoices were for individual deliveries or more than one delivery is not in evidence. Periodically payments would be made on the cumulative account. The payments that were made did not, for the most part, seem to be tied directly to any specific invoice amount. On the account evidenced by P1 none of the invoices were for round figure amounts, though payments frequently were ($5000.00, $12,000.00, etc.). It did not seem that the payments were separated according to invoice.

After invoice #25131 was issued on August 8, 2006, the total balance due on the account was $83,044.51. After that date there were several more charges and several more payments. The last invoice to issue on the account was #25744. [ 27 ] Given the activity on the account and the way it was operated I conclude that the debt accumulated as invoices were issued. As payments were received they were applied against the debt. It seems that this is the way TR and WB intended that the account should be administered. [ 28 ] Why Mr. Gould only provided four invoices to Mr. Fisher was not explained.

According to P1 there were several other invoices which had issued after August 8, 2006. Mr. Gould testified that as payments were received they were applied on the oldest invoices, and the account carried forward from there. If payments on the account had ceased as at the end of October, 2006, I conclude TR would have had a valid claim for the balance due at that time, and not been relegated to suing on the individual invoices making up the total. [ 29 ] After the last invoice on the account was issued on October 27, 2006, a $5000.00 payment was made on December 20, 2006.

Then, between February 8, 2007 and January 18, 2008, there were 52 periodic payments on the account, each in the amount of $818.90. Each of these payments could reasonably be seen as an “acknowledgment” within the meaning of s. 11 (3) of The Limitations Act provided they were made “by the person against whom the claim is made or by the person’s agent”. [ 30 ] Counsel for the defendants represents that the partial payments may have been made by someone who was not in an agency relationship with WB or Saulteaux First Nation. Mr.

Gould testified that TR sometimes dealt with First People Management Group in relation to WB’s account. There was little evidence presented as to the legal status of FPMG. Gould said sometimes orders for fuel were placed by FPMG and prices were agreed upon with FPMG. Gould also said that sometimes payments on the account came from FPMG and sometimes from WB. TR had no written contract with WB or FPMG. The factual statements contained in the letter P5 are not proof of the facts alleged in the letter.

We do not know whether the 52 post dated cheques were issued by WB, Saulteaux First Nation, FPMG or somebody else, nor from whom the funds to cover those cheques came. If the person who prepared P5 was connected to FPMG how would that person know that the cheques cleared the bank if they were not FPMG cheques? On the other hand, if the relationship between FPMG and WB did indeed end in December, 2006, why would FPMG continue to engage in banking transactions apparently benefiting WB?

The origin of the cheques is obscure, but it is eminently reasonable to conclude that the part payments were made by or on behalf of WB with WB’s funds. [ 31 ] It was clearly open to conclusion that the payments which were made on the account were made by WB or it’s agent for that purpose, and that therefore the limitation period did not start to run until January 18, 2008. Gould’s evidence concerning the involvement of FPMG with the WB account is suggestive of an agency relationship.

FPMG negotiated with TR on behalf of WB for prices on fuel, made fuel orders for WB, and also made or facilitated payments due from WB to TR. There is no basis to conclude anything other than the existence of an agency relationship, nor to conclude that the part payments were gratuitous.

[ 32 ] S. 6 of The Limitations Act provides that “a claim is discovered” when the claimant first knew that the injury, loss or damage had occurred. Stockman v. Hopkins , 2011 SKQB 133 , holds that there is a distinction between when a debt arises and when a claim arises. A debt may arise upon delivery of a benefit. A claim arises when the claimant knows or ought to have known when the injury, loss or damage had occurred.

In the present case the “injury, loss or damage” would be WB’s failure to pay the debt, and to cite Laing, C.J.Q.B. in Stockman , knowledge on the part of TR that the debts would not be paid in full. The relationship between the parties, including its nature, duration, history and peculiarities, would have to be examined to determine when the claimant ought to know that it would not be paid in full and that damage had actually occurred. A failure to pay within 10 days of an invoice may not be wholly determinative of that question.

The nature of the business and the practice between the particular parties will influence a reasonable determination of when knowledge of an “injury, loss or damage” should be assigned to a claimant. In the present case the account was chronically in arrears, with the balance fluctuating sometimes in excess of $80,000.00. And though there were regular periodic payments which ultimately reduced the balance to just over $20,000.00 it seems reasonable that knowledge of default should have occurred closer to 10 days than the 60 suggested in the plaintiff’s argument.

Careful consideration by a diligent lawyer would require some contemplation that the possibility for arguing an extended beginning to a limitation period was a live and triable issue. [ 33 ] Perhaps Mr. Fisher had a more decisive determination of when limitation periods start than the foregoing analysis would suggest, but I am not sure he even turned his mind to the concept of “discoverability”.

It seems to me that it would have been incumbent upon a diligent solicitor to inquire about the history of the claim when it should have been apparent from the documents that a limitation period was current, in order to evaluate whether there were factors which might have extended the commencement date of the limitation period. [ 34 ] Moreover, when McDougall Gauley received P5 in its office, whether or not the contents of the letter could be proven to be factual, it fell to the defendants to make further inquiries of its client to get clarification of the facts. Though I am not satisfied that Mr. Gould told Mr.

Fisher of the part payments, the emergence of P5 on the scene put an onus on the defendants to press the client for more explanation. Had the defendants done so they would have found it most likely that the plaintiff had a viable action with a high likelihood of obtaining a judgment. Limitation Period on Plaintiff’s Claim in this Action [ 35 ] This action was commenced February 5, 2013. The question is when should the plaintiff have known that it had a cause of action against the defendants for failing to act on the plaintiff’s behalf. [ 36 ] Mr.

Gould had some general knowledge of a two year limitation period and seemed to understand the effect of part payments. He knew also that part payments had been made up to January, 2008. When Mr. Gould spoke to Mr. Fisher on October 30, 2008, Mr. Gould would have known that there was still ample time to sue. He assumed the defendants would do what was necessary to pursue TR’s claim, including starting an action. [ 37 ] After the initial instructions TR had no contact with the defendants until Mr.

Fisher wrote to TR on January 22, 2009, indicating he could not find a record for White Buffalo First Nation, and asking which Band may have been involved in running the convenience store. Mr. Gould responded to that letter on January 26, 2009, by email to Mr. Fisher, informing him that WB belongs to Saulteaux First Nation. Mr. Fisher does not seem to have acted on this information, nor to have reported anything else to the plaintiff. It was not unreasonable for Mr. Gould to assume that Mr.

Fisher had all the information he needed in order to pursue the claim. [ 38 ] Nothing else happened in relation to the file until November 9, 2011, when Gould sent an email to Fisher asking for information as to what was happening on the WB account and others TR had given to McDougall Gauley for collection. Mr. Fisher did not respond. On December 16, 2011, Mr. Gould sent another email to Mr. Fisher asking for an update “ASAP on all the accounts you have been asked to collect for me…” The defendants did not respond. On June 4, 2012, Mr. Gould sent an email to Mr.

Fisher asking that all the “bad accounts” be sent to Mr. Green at the McKercher office. Mr. Green had not received the files by July 20, 2012, and spoke to Mr. Fisher by phone about TR’s accounts. About a month later the files were delivered to McKercher LLP. It was not until Mr. Gould met with Mr. Green in September, 2012, that he discovered that the defendants had not acted to have a Statement of Claim issued. [ 39 ] Mr. Fisher had given no report to his client after his letter of January 22, 2009, and did not reiterate his belief that the debt required an acknowledgement.

I have already concluded that I am satisfied Gould was not told until September, 2012, that the limitation period had expired to TR’s detriment.

[40] The plaintiff argues that Mr. Gould’s emails of November 9, 2011, and December 16, 2011, support an inference that TR had areasonably held belief that its claim against WB was being managed by the defendants. Counsel for the defendants argues that Gould,using a reasonable standard of diligence, should have been aware, i.e. ‘discovered’, (before February 5, 2011) that TR had an actionableclaim against the defendants but “slept” on its right to seek a remedy. [41] Mr. Gould knew the limitation period had not expired when he first instructed Mr. Fisher in October, 2008.

Gould was aware ofthe partial payments on account and had a general idea about actions being statute barred after two years. His awareness of the partpayments would have prompted some further discussion with Fisher had the defendants told him that the actionable period had expired. Gould knew the facts to be otherwise. I find Gould also believed he had told Fisher of the part payments, though I think the fact of himhaving said that to Fisher is in doubt.

Gould’s belief that he had told Fisher of the acknowledgement together with his actual knowledgeof the acknowledgment would have lead to a reasonable conclusion that he considered TR’s claim was well in hand with the defendants. This belief would have been reinforced by Fisher’s letter of January 22, 2009 [P6] which inquired as to the identity of the partyresponsible for the debt. [42] The matter lingered for more than 33 months (January 26, 2009 to November 9, 2011) before TR made any inquiry of thedefendants as to the status of the claim.

There is a paucity of evidence as to why TR waited so long without seeking an update. Gouldknew of the difficulty in collecting bad debts on First Nation accounts and said he would have had such discussions with Fisher, whichwas confirmed by Mr. Fisher in his evidence. Moreover, the defendants were also representing TR on defaulted accounts with other FirstNations. Mr. Gould was unsure when or if Statements of Claim had been issued on some or any of the accounts the defendants werehandling on TR’s behalf.

In 2011 TR Petroleum and another petroleum company controlled by Gould held about one million dollars inbad debt, of which the WB account (at just over $20,000.00) was a small fraction. That is not to say that the defendants were entrustedwith collecting all of TR’s debt, but perhaps the WB account would not have loomed large in Gould’s consciousness given themagnitude of the collective debt.

Gould relied on the competence of the defendants to pursue what he knew to be an actionable claimand he was not been told that the claim had not being acted upon until September, 2012. [43] The Saskatchewan Court of Appeal in Town of Langenburg v. Gamey, 2010 SKCA 11, stated at paragraph 28 of the decision: The starting point is the discoverability principle articulated by LeDain J. in Central Trust Co. v.

Rafuse, (SCC), [1986]2 S.C.R. 147 at 224I am thus of the view that the judgment … in Kamloops … laid down a general rule that a cause of action arises forpurposes of a limitation period when the material facts on which it is based have been discovered or ought to have been discovered by theplaintiff by the exercise of reasonable diligence … The phrase ‘by the exercise of reasonable diligence’ implicitly requires the party relying on the discoverability principle to demonstratethat he or she has observed a reasonable standard of diligence. [44] As I said previously in these reasons, the nature of the relationship between the parties is relevant to the question of whether areasonable standard of diligence was exercised by the party suffering the loss or damage.

As stated by Barrington-Foote J. in West DeeConstruction Ltd. v. T&B Electric Ltd., 2013 SKQB, the issue of whether discoverability has occurred turns on the facts. Here TR hadan established relationship with a firm of solicitors who acted for TR and other companies held by TR’s owner. Apparently thedefendants had given satisfactory service to this client in the past. The defendants are more than a business enterprise, but a group ofprofessional practitioners bounded by strict rules and well understood principles of competence and integrity.

Every client is entitled torely on the generally held perception that a senior lawyer in Saskatchewan will provide a reasonable level of competence. [45] I think TR waited a very long time to seek a report on its claim against WB, and a persistent inquiry by TR would surely haverevealed the fact that the defendants had not issued a claim in time. That is not the same thing as saying that TR ought to have knownthat the defendants had failed in their duty to their client. Other than the passage of time, there was no apparent jeopardy made known toTR by the defendants or by other circumstances.

In relying on the competence of the defendants the plaintiff acted reasonably. I do notconclude that relying on that competence in the circumstances of this case was less than reasonably diligent on TR’s part. [46] TR’s claim against the defendants was not out of time. The Value of the Plaintiff’s Claim Against the Defendants [47] Under this head it becomes incumbent, as much as possible, to separate inference from conjecture.

At the hearing there was novoir dire conducted to examine the viability of an action against Saulteaux First Nation, nor to determine the probability and extent ofrecovery of damages in the event of success.

[ 48 ] The defendants’ position is stated at paragraph 79 of Ms. Prisciak’s written argument: “Firstly, there is the potential that Saulteaux First Nation had a defense to the debt and TR Petroleum would not have recovered a judgment. Secondly, there is no evidence that Saulteaux First Nation was responsible or liable for the debt – there is no evidence of Saulteaux First Nation payments, invoices or contracts. Thirdly, there is no evidence that Saulteaux First Nation held any property off reserve or had any assets/accounts that could have been exigible. In

summary, there is no evidence as to the potential success of the lawsuit against Saulteaux First Nation or its ability to satisfy a judgment. [ 49 ] Counsel for the plaintiff prepared a thorough written argument in reply, and supplementary to oral argument at the hearing. Mr. Green argues that the plaintiff presented a strong prima facie case that the debt was owed by Saulteaux First Nation to the plaintiff. He then submits, on the authority of Kay, Kay & Riggins v.

Alberta (Workers Compensation Board), 1992 ABCA 263 (Can LII) , that though the plaintiff has the burden of proving collectibility, it need only be proved where the defendant has put collectibility in issue. Mr. Green submits that in the absence of some evidence to the contrary, there is a presumption that judgments are collectible.

Counsel specifically highlighted paragraph [26] of the Kay decision for authority that it must be “shown” that the successful plaintiff could collect only a portion of the damages, in order to assess a partial award. [ 50 ] There is a strong probability that had TR commenced an action against Saulteaux First Nation on its petroleum account debt it would have succeeded in obtaining a judgment in excess of $20,000.00. Mr. Gould testified that the account was for the supply of petroleum and all the fuel charged for was delivered to WB.

Documentary evidence was presented (P10) to show that White Buffalo Gas & Confectionary Store was a sole proprietorship owned by Saulteaux First Nation. It seems likely TR would have succeeded in such an action. [ 51 ] Both counsel have cited Fisher v. Knibbe , 1992 ABCA 121 , where the following statement of the law is given: After conducting the ‘trial within a trial’ to determine what damages, if any, a negligent solicitor is liable for missing a limitation period, three results are possible.

First, the trial judge could find that had the case gone to trial the plaintiff would have been successful and in such case 100% of the lost damages would be awarded against the solicitor. Second, the trial judge could find that the plaintiff would not have been successful therefore only nominal damages may be awarded against the solicitor. Finally, where time has passed to such an extent that a ‘trial within a trial’ would be impossible, then the court must to the best of its ability calculate the value of the opportunity lost to the plaintiff and award damages against the solicitor on that basis.

In my opinion it is necessary to parse the words ‘success’ and ‘lost damages’ and expand the context beyond merely whether the plaintiff would have obtained a judgment. Otherwise, to cite Kay (supra) at paragraph [24], it would be inequitable to make lawyers insurers of their clients’ affairs. It must be shown what the plaintiff has actually lost as a result of the lawyer’s negligence. [ 52 ] The Saskatchewan Court of appeal decision in Hagblom v. Henderson , 2003 SKCA 40 (Can LII) , was cited for consideration.

This was a complicated case involving an allegation of solicitor negligence over the way a civil dispute was handled at the trial of an action against Hagblom, a masonry contractor, for negligence. Henderson was found to be negligent in not calling expert testimony to properly defend the case. By the solicitor’s action the client lost a chance at success. It then fell to the Court of Appeal to place an evaluation on that “loss of chance”.

In obiter Jackson J.A. said at page 64 (para. 130) “In a missed limitation case, the court has no choice but to weigh the probability of success.” [ 53 ] The plaintiff had argued that the defendants Statement of Defence does not put the issue of collectibility of the judgment in issue. The suggestion has been made that therefore the Court should follow the guidance of Fisher v. Knibbe (supra) and award the plaintiff with 100% of its claim.

With respect, I do not think such an approach was favoured by the Saskatchewan Court of Appeal in Hagblom (see pp. 105-106 – paras. [205] – [207] ). [ 54 ] There is evidence in this case touching on collectibility of a judgment against Saulteaux First Nation had one been obtained. That evidence is sparse. Both Mr. Fisher and Mr. Gould spoke to the impossibility of seizing property on a First Nation reserve. Beyond that I would express a good deal of caution in accepting without reservation Mr.

Green’s assertion that large sums of money payable to Indian Bands (including Saulteaux) are frequently held in off-reserve bank accounts and are easily subject to garnishment. Indeed if such accounts are located in off-reserve banking institutions there may be other legal impediments or priorities which would hamper garnishee proceedings. [ 55 ] The thrust of the Hagblom case seems to impose a responsibility on this Court to evaluate TR’s missed opportunity to collect due to the defendants’ negligence.

There is barely any evidence to guide this process and here is where the chasm between inference and conjecture seems widest. What evidence there is on the difficulty of collectibility persuades me that the value of a judgment against Saulteaux would be less than 100 percent. Even though it may be presumed that the Saulteaux First Nation will endure for a long time into the future, a judgment against it could reasonably be discounted if the debtor refuses to pay.

[ 56 ] I intend to fix the value of TR’s potential judgment at 75 percent, and in doing so follow the guide offered in the Hagblom decision. [ 57 ] There will be judgment for the plaintiff for the sum of $15,000.00 together with interest under The Pre-judgment Interest Act . Interest will accrue from February 1, 2009, which is approximately the date when it would have been reasonable for the defendants to commence an action on TR’s behalf. The plaintiff will have costs of the Summons. __________________________ L.P. Deshaye, J