GRAHAM-LOCKERBIE STANLEY JV, A JOINT VENTURE COMPRISED OF LOCKERBIE STANLEY INC. v. GRAHAM INFRASTRUCTURE LP, 2023 SKKB 63

KING’S BENCH FOR SASKATCHEWAN Citation: 2023 SKKB 63 Date: 2023 03 23 Docket: QBG-SA-01762-2019 Judicial Centre: Saskatoon BETWEEN: GRAHAM-LOCKERBIE STANLEY JV, A JOINT VENTURE COMPRISED OF LOCKERBIE STANLEY INC. AND GRAHAM INFRASTRUCTURE LP PLAINTIFF/RESPONDENT - and - OVIVO INC.; OVIVO USA, LLC; TODD GNEITING; MARK MADSEN DEFENDANTS/APPLICANTS Counsel: Lawrence G. Theall for the plaintiff/respondent Jared D. Epp for the plaintiff/respondent Deron A. Kuski, K.C. and Milad Alishahi for the defendants/applicants ___________________________________________________________________________ JUDGMENT CLACKSON J.

March 23, 2023 ___________________________________________________________________________ INTRODUCTION [ 1 ] In July 2014 the City of Regina [City] engaged Epcor Water Prairies Inc. [Epcor] to design, build, finance, operate, and maintain an expansion and upgrade to the wastewater treatment plant in Regina, Saskatchewan [Plant]. The Plant treats wastewater by passing it through four phases: preliminary treatment, primary treatment, secondary treatment, and disinfection. After disinfection the wastewater is discharged into the environment.

In the secondary treatment phase, wastewater passes first through bioreactors and then through secondary clarifiers. The secondary clarifiers promote additional settlement of solids out of the wastewater. [ 2 ] Epcor subcontracted the design and construction of the Plant [Project] to the plaintiff, Graham-Lockerbie Stanley JV [GLS].

Stantec Consulting Ltd. [Stantec] was engaged by GLS as the lead consultant on the Project with responsibility to coordinate and integrate the design of the Project, including the designs prepared by subcontractors. [ 3 ] In early 2015 Ovivo Inc. agreed, as part of the Project, to manufacture, supply, and install three clarifier mechanisms [Mechanisms] in the secondary clarifiers [Purchase Contract]. The defendants, Todd Gneiting [Gneiting] and Mark Madsen [Madsen], are engineers employed by Ovivo USA, LLC.

It is alleged that they signed and/or stamped the engineered drawings for the Mechanisms. [ 4 ] On November 29, 2019, GLS issued a statement of claim against Ovivo Inc., Ovivo USA, LLC, collectively

[Ovivo], Gneiting, and Madsen, alleging negligent design and manufacture of the Mechanisms and breach of the contractual warranties of fitness as set out in the purchase contract between Ovivo Inc. and GLS.

In the statement of claim, GLS alleges that it suffered loss and damage because of the defendants’ breaches, which loss and damage includes the cost to diagnose the cause of the Plant’s poor performance, the cost of making modifications to the secondary clarifiers, and “any amounts found owing to Epcor and/or Stantec.” [ 5 ] In their defence, the defendants allege, among other things, that GLS’s claims are barred by s. 5 of The Limitations Act , SS 2004, c L-16.1 [ Act ], and cannot be maintained. [ 6 ] The defendants now apply under Rule 7-1 of The Queen’s Bench Rules to strike out or dismiss the statement of claim on the basis that the claims set out therein are barred by the provisions of the Act . [ 7 ] The defendants, Gneiting and Madsen, also seek

summary dismissal of GLS’s claims against them under Rule 7-2, or to strike out the statement of claim under Rule 7-9(2)(

a) as disclosing no reasonable cause of action. By agreement, the application for this relief is adjourned sine die pending a determination of the limitation period issues. [ 8 ] With respect to GLS’s claims in negligence and breach of contract, including breach of warranty, I find that by January 16, 2017 GLS knew it had suffered a loss that was caused or contributed to by

an act or omission of Ovivo and that a legal proceeding would be legally appropriate to recover its loss. The two-year limitation period with respect to these claims, therefore, commenced on January 16, 2017.

As the statement of claim was issued on November 29, 2019, these claims were barred by the provisions of s. 5 of the Act and cannot be maintained. [ 9 ] I further conclude that GLS’s claims for contribution and indemnity from Ovivo for claims to be advanced against GLS by Epcor and/or Stantec have yet to be discovered and thus the limitation period with respect to those claims has not commenced. [ 10 ] These are my reasons. ADJUDICATIVE FRAMEWORK [ 11 ] Ovivo’s application sought relief under Rule 7-1 and Rule 7-2.

Consequently, it was case-managed pursuant to Practice Directive GA-PD No. 9 and came before me in chambers for a preliminary determination of whether a hearing of the limitation period issue should be ordered pursuant to Rule 7-1(1). I concluded that a hearing under Rule 7-1(3) was appropriate and in preparation for that hearing granted the parties leave to cross-examine on the affidavits previously filed in the application for

summary judgment. [ 12 ] At the hearing under Rule 7-1(3) transcripts of the cross-examinations were available to the Court and each party filed additional briefs addressing the limitation period issue on its merits under Rule 7-1. On the hearing of the limitation period issue, the Court had before it the affidavits filed with respect to the application for

summary judgment, the transcripts from cross- examination on those affidavits, the briefs filed on the

summary judgment application, and the briefs filed on the hearing under Rule 7- 1(3). [ 13 ] I acknowledge GLS’s argument that the Court is not granted enhanced fact-finding powers under Rule 7-1 and therefore a determination under Rule 7-1 can only occur where the facts are not in dispute.

This very point is made by Kalamakoff J. (as he then was) in Fibabanka A.S. v Arslan , 2019 SKQB 94 , [2020] 2 WWR 131 , where he stated at para. 56, “An application to dismiss an action on the basis of a limitation period, generally speaking, will only fall within the scope of Rule 7-1 where the relevant facts are not in dispute.” Contrasting that statement with the observation of Popescul C.J. in Reed v Dobson , 2017 SKQB 273 , that Rule 7-1 has thrown off the shackles of its predecessor rule and does not require undisputable facts, suggests that GLS’s argument on this point is not free from doubt. [ 14 ] In any event, in the matter before me the facts material to a determination under s. 6 of the Act are contained in the written communications passing among the parties at the time the claims arose and before the statement of claim was issued.

There is no dispute about the sequencing of events, the actions of the parties, or what they said. Neither party asserts that the record of communications exhibited to the affidavits is incomplete. On behalf of GLS, Mr. Abernethy’s affidavit offers argument and opinion interpreting the events and communications in a manner most favourable to GLS but does not raise conflicting facts material to the application of s. 6 of the Act . [ 15 ] In these circumstances, it is my view that there is no serious controversy on the facts relevant to the analysis under s. 6 of the Act .

GENERAL LAW RELATING TO LIMITATION PERIODS [ 16 ] The Limitations Act applies to claims pursued in court proceedings that are commenced by statement of claim (s. 3(1)(a)).

Section 5 of the Act provides that a proceeding may not be commenced unless it is commenced within two years of the date upon which the claim is discovered. According to s. 6(1) “a claim is discovered on the day the claimant first knew or in the circumstances reasonably should have known: (

a) that the injury, loss or damage had occurred; (

b) that the injury, loss or damage appeared to have been caused by or contributed to by

an act or omission that is the subject of the claim; (

c) that the act or omission that is the subject of the claim appeared to be that of the person against whom the claim is made; and (

d) that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it.

[ 17 ] Discovery of a claim does not require that the claimant be certain of the defendant’s potential liability for the act that caused the claimant’s loss. “[T]he governing standard requires the plaintiff to be able to draw a plausible inference of liability on the part of the defendant from the material facts that are actually or constructively known.” ( Grant Thornton LLP v New Brunswick , 2021 SCC 31 at para 45 , 461 DLR (4th) 613 [ Grant Thornton ] ). [ 18 ] The “material facts” are those set out in s. 6(1) (

a) to (

d) of the Act .: Grant Thornton at para 43 . The claimant is presumed to know these material facts on the day the act or omission on which the claim is based occurred unless the contrary is proved (s. 6(2)). The claimant bears the burden of disproving this presumption (s.18). [ 19 ] Whether the claim is framed in tort or contract, the limitation period does not commence until the material facts set out in s. 6(1) (

a) to (

d) are actually or constructively known to the claimant. ( Saskatchewan (Highways and Infrastructure) v Venture Construction Inc. 2020 SKCA 39 at paras 44 - 46 , 447 DLR (4th) 316 [ Venture ] ). [ 20 ] The possibility that the loss may be remedied subsequent to the defendant’s act or omission may impact upon whether a proceeding is an appropriate means to seek a remedy, but the possibility of remediation does not negate the claimant’s knowledge with respect to the material facts in s. 6(1)(

a) to (c) ( Venture at para 42 ). [ 21 ] A plaintiff will be found to have constructive knowledge of the material facts if the evidence demonstrates that, with the exercise of reasonable diligence, the plaintiff could have learned those facts: Grant Thornton at para 44 .

However, given the presumption on s. 6(2), the onus is on the claimant to demonstrate that it could not have discovered the claim before the limitation period expired. [ 22 ] Mere suspicion or speculation as to the material facts will be insufficient to raise a plausible inference of liability, although suspicion as to the facts may, as a matter of reasonable diligence, attract an obligation to investigate the material facts: Grant Thornton at paras 44 and 46 . [ 23 ] On the other hand, “it is well established that a plaintiff does not need to know the exact extent or type of harm it has suffered, or the precise cause of its injury, in order for a limitation period to run”: Grant Thornton at para 46 .

ISSUES [ 24 ] The length of the limitation period applicable to the GLS’s claims is two years from the date each claim was discovered. The statement of claim was issued on November 29, 2019. The overarching issue is therefore whether GLS discovered, or with the exercise of reasonable diligence, could have discovered any of the claims alleged in the statement of claim before November 29, 2017. If so, the plaintiff is barred from commencing an action with respect to that claim. [ 25 ] GLS’s claims are grounded in the following causes of action: 1.

Ovivo negligently designed and manufactured the Mechanisms that were installed in the secondary clarifiers; 2. Ovivo provided negligent advice with respect to the design of the secondary clarifiers; 3. Ovivo breached the terms of the Purchase Contract by supplying Mechanisms that did not comply with the specifications and performance criteria set out in the Purchase Contract; and 4.

Ovivo further breached the express and implied warranties of fitness for purpose and merchantability contained in the Purchase Contract. [ 26 ] A s a consequence of these breaches of duty, GLS seeks damages for: 1. the expense incurred in investigating and diagnosing the cause of the deficiencies in the secondary clarifiers; 2. the expense incurred modifying the secondary clarifiers and Mechanisms; and 3. “any amounts found owing to Epcor and/or Stantec.” [ 27 ] While a cause of action in negligence and for breach of contract against the same defendant could be discovered on different dates, in this case the action in negligence rests on the same facts as the action for breach of contract.

Thus, GLS discovers both claims at the same time. There is therefore no need to separately analyze these claims in the context of s. 6 of the Act . [ 28 ] GLS argues that the limitation period with respect to its claim for breach of warranty commences at a different time than the claims for breach of contract and negligence.

Accordingly, the claim for breach of warranty must be separately addressed in the context of s. 6 of the Act . [ 29 ] Notwithstanding the lack of any factual foundation in the statement of claim for the claim for “any amounts found owing to Epcor and/or Stantec”, the parties addressed this statement of damages as a claim for contribution or indemnity. There are specific provisions in the Act with respect to the commencement of a limitation period for such claims.

Accordingly, the claim for contribution and indemnity will also be separately addressed in the context of s. 6 of the Act . [ 30 ] Whether, in negligence, breach of contract, breach of warranty, or for contribution and indemnity, the following three issues must be resolved to determine whether any of the claims are barred under the Act : 1. When did GLS have actual or constructive knowledge that a loss had occurred? 2. When did GLS have actual or constructive knowledge that the loss was caused or contributed to by the act or omission of Ovivo?

3. When did GLS have actual or constructive knowledge that, having regard to the nature of the loss, a proceeding would be an appropriate means to seek to remedy it? ANALYSIS Claim for breach of contract and negligence When did GLS have actual or constructive knowledge that a loss had occurred? [ 31 ] Under the terms of a Purchase Contract with GLS, signed by Ovivo Inc. on January 29, 2015, Ovivo Inc. agreed to manufacture and install the Mechanisms in the secondary clarifiers.

The Mechanisms were installed in the first half of 2016 and by July 27, 2016, the secondary clarifiers were in operation. [ 32 ] The substantial completion date for the Project was December 31, 2016. Epcor was contractually obligated to complete a successful 30-day performance test of the Plant [30DPT] before the substantial completion date.

If a 30DPT was not completed by December 31, 2016, the City was entitled to withhold $25,000,000 from the payment due to Epcor upon substantial completion of the Project. [ 33 ] A 30DPT was commenced on October 6, 2016, but was aborted due to issues with Plant operations, including problems with the operation of the bioreactors in the secondary treatment phase of the Plant. [ 34 ] On December 16, 2016, Epcor, on the advice of GLS, sought and received the City’s approval to defer completing a 30DPT until an unspecified date in 2017. [ 35 ] On December 21, 2016, GLS formally notified Stantec that it would seek to recover “all of GLS costs and expenses associated with the non-achievement of the 30 Day Performance Test and any other costs and expenses which EPCOR seek to recover from GLS.” [ 36 ] In a document entitled Notice of Additional Cost dated April 12, 2017, GLS formally notified Stantec of expenses in relation to the failure to complete a 30DPT by December 31, 2016, which GLS had incurred since the fall of 2016. [ 37 ] GLS concedes that for the purposes of the limitation period analysis, “it knew it had suffered a loss when Plant performance issues began”.

When did GLS have actual or constructive knowledge that the loss was caused or contributed to by the act or omission of Ovivo? [ 38 ] Assessing the state of GLS’s knowledge requires a review of the communications between GLS, Stantec, and Ovivo with respect to the operation of the secondary clarifiers. [ 39 ] On December 22, 2016, Stantec requested that GLS obtain performance calculations of the Mechanisms from Ovivo.

On the same date GLS sent an email to Ovivo requesting that information and stating, “… we have been having issues with the operation of the clarifiers, specifically keeping the sludge blankets down.” [ 40 ] On December 28, 2016, Stantec advised GLS that the difficulty with keeping the sludge blankets down was due to the design of the Mechanisms, in particular, the rotation speed of the Mechanisms.

GLS responded to Stantec that it would “continue to push [Ovivo]”. [ 41 ] On January 4, 2017, Stantec sent an email to GLS advising: Jamie as requested attached are the secondary clarifier drive calculations at different tip speeds. It is clear from the calculations that your vendor has an issue with their mechanism design. This issue needs to be addressed immediately and is just as important as the baffles [in the bioreactors] in terms of getting ready for a successful 30 day performance test.

We will not pass the clarifier solids loading test with the clarifiers as is. … Just to be clear on this, we consider this to be a vendor design deficiency and they need to sort it out.

They will also have to review their structural calculations to ensure they can handle the increase torque from the higher tip speed. [Emphasis added] [ 42 ] Between January 3 and January 9, 2017, GLS and Ovivo exchanged emails regarding the performance calculations Stantec was seeking in its email to GLS of January 4, 2017. [ 43 ] In a document entitled Notice of Concern [NOC] #33 dated January 9, 2017, GLS gave Ovivo formal notice of GLS’s concerns with respect to the secondary clarifiers. NOC#33 expressed the subject of the concern to be “Secondary Clarifier Sludge Transport Inefficiency”.

In NOC#33 GLS expressed the view that the secondary clarifiers “have not been furnished in strict accordance with the Purchase Contract.” The NOC goes on to advise: In response to the Secondary Clarifier loading calculations provided by Ovivo on January 5, 2017 … and discussions with Stantec Consulting there appears to be an issue with the design of your clarifier mechanism for [the Plant], which is further supported by the performance data collected to date…. GLS require (sic) a solution to the aforementioned issue no later than January 12, 2017.

[ 44 ] Ovivo responded to NOC #33 in a letter dated January 11, 2017 expressing the view that the high sludge blankets were due to operational issues of the Plant and characteristics of the sludge itself. [ 45 ] GLS passed Ovivo’s response on to Stantec for comment on January 13, 2017 and received Stantec’s reply on January 16, 2017. Stantec disagreed with Ovivo’s conclusions and attributed the secondary clarifier sludge transportation inefficiency to the rotation speed of the Mechanisms and the depth of the blades on the Mechanisms.

Stantec’s letter concludes: Based on this data and the Ovivo sludge transport calculations, we still maintain that the mechanism is not adequately designed to meet the conditions now or during process performance testing. We look to Ovivo to provide a recommendation for mitigation as the mechanism design resides with Ovivo. We note that it is imperative that the fix to the clarifiers be undertaken prior to commencement of the 30 day performance test.

We would request that Ovivo address their design issue with the clarifier mechanisms immediately. [Emphasis added] [ 46 ] On January 16, 2017, GLS sent NOC #34 to Ovivo addressing the same subject matter as NOC #33 and advising Ovivo that: This letter serves as notice in respect of the Secondary Clarifiers which have not been furnished in strict accordance with the Purchase Contract and further in response to the Ovivo provided letter … Stantec has reviewed the Ovivo findings and maintain that the Secondary Clarifiers have not been adequately designed to meet the Specifications, and as such require a definitive solution.

GLS require a solution to the aforementioned issue no later than January 19, 2017 and will advise you regarding any cost impact when we are better able to assess the full effect of this occurrence. [Emphasis added] [ 47 ] In his affidavit sworn October 8, 2021, Jamie Abernethy argued that, notwithstanding the rather pointed accusations in NOC #33 and #34, GLS did not and could not accept Stantec’s opinions at face value “like it might with an independent expert”, because previous advice from Stantec regarding another design issue, this time in the bioreactors, did not solve the problems in the secondary treatment process.

He further explains that these communications were nothing more than GLS parroting what it had been told by Stantec and that GLS had no real knowledge of its own identifying the cause of the problems with the secondary clarifiers. Mr. Abernethy’s rationalizations are not apparent on the face of the communications between GLS, Stantec, and Ovivo. The rationalizations are inconsistent with the tenor of those communications and the relationship between the parties. Stantec was the prime engineering consultant on the Project responsible for the overall design of the Plant and its components.

By its own admission GLS “… relies on the expertise of engineering firms like Stantec to design the facility and diagnose and fix any problems with that design.” Also, by its own admission GLS has no expertise in designing facilities and lacked the expertise needed to form an opinion concerning the cause of the poor performance. GLS had no competing opinion on the question of causation nor had it engaged any other expert either to vet Stantec’s opinion or determine the cause of the poor performance on the secondary clarifiers.

GLS was not just parroting Stantec’s opinion on the matter while reserving its own opinion; it had no opinion independent of Stantec’s opinion and NOC #33 and #34 make that abundantly clear. [ 48 ] Even if I were to accept Mr. Abernethy’s argument that, notwithstanding Stantec’s clear opinion on the matter, GLS had no actual knowledge of the cause of the poor performance of the secondary clarifiers, I do not accept that GLS could not have acquired that knowledge with the exercise of reasonable diligence.

GLS repeatedly argues that it could not have discovered the causal connection between its losses and Ovivo’s negligence or breach of contract without engaging expert assistance. Yet, GLS did not engage experts to identify the cause of the poor performance until almost two years after Stantec identified the performance issues to be related to the design of the Mechanisms. [ 49 ] GLS acknowledges that between December 2016 and November 29, 2017 it may have suspected Ovivo’s acts or omissions contributed to its losses, but argues that mere suspicion does not lead to a plausible inference of liability against Ovivo.

In my view, NOC #33 and #34 are explicit: by January 16, 2017 GLS had knowledge that defects in the design of the Mechanisms were causing the poor performance of the secondary clarifiers contributing to the continued deferral of a 30DPT and GLS’s mounting losses.

There is no indication in either document that GLS was simply conveying the opinion of Stantec, with which it disagreed, or that it doubted that the Mechanisms were contributing to the losses it was sustaining. [ 50 ] NOC #33 and #34 indicate that Stantec’s opinion raised more than a suspicion as to the causal connection between Ovivo’s acts or omissions and GLS’s mounting losses. To resolve the issues with the secondary clarifiers, GLS demanded that Ovivo bring the Mechanisms in compliance with the Purchase Contract.

That demand is wholly inconsistent with the suggestion that GLS had only a mere suspicion of the causal connection between the performance issues and Ovivo’s acts or omissions. [ 51 ] Even if I am wrong in that conclusion, GLS’s suspicion of a causal connection was at least sufficient to trigger a need to investigate further [ Grant Thornton at para 44] , which GLS did not do until almost two years later. [ 52 ] It is GLS’s onus to demonstrate that with the exercise of reasonable diligence, it could not have discovered its claim within the limitation period. (See Fibabanka A.S. v Arslan , 2023 SKCA 13 at para 62 ).

GLS enlisted other experts in late 2018 and on the strength of those investigations it commenced this action alleging defective design of the Mechanisms. Mr. Abernethy’s affidavit does not explain why those investigations were not undertaken in 2017. [ 53 ] I am satisfied that by January 16, 2017 GLS had actual knowledge that it had suffered and continued to suffer a loss, which it believed was caused by or contributed to by Ovivo’s breach of the Purchase Contract, in particular, the negligent design or manufacture of the Mechanisms.

When did GLS have actual or constructive knowledge that, having regard to the nature of the loss, a proceeding would be an appropriate

means to seek to remedy it? [ 54 ] On January 31, 2017, Ovivo responded to NOC#34 maintaining that the rotation speed of the Mechanisms conformed to the agreed specifications, but “to show good faith” agreed to supply new sprockets for each of the Mechanisms to achieve the rotation speed suggested by Stantec.

This modification was completed by the end of February 2017. [ 55 ] In March 2017 GLS advised Ovivo that it continued to experience problems with the secondary clarifiers which were not resolved by changing the sprockets. [ 56 ] On April 6, 2017, Epcor advised GLS by letter that it would be seeking indemnity from GLS for the ongoing penalties and costs incurred as a result of the continued deferral of a 30DPT. Epcor estimated the penalties and costs would be approximately $2,100,000 by June 30, 2017.

GLS forwarded this notice to Stantec stating, “This letter services (sic) as notice regarding the additional costs incurred by GLS for damages resulting from design errors and omissions, the costs provided are not exhaustive and GLS reserves the right to pursue further costs incurred.

Further details can be found in the attached documents.” The attached documents set out GLS’s position that the delay to complete a 30DPT commenced on September 16, 2016. [ 57 ] No further communications occurred between the parties regarding problems with the operation of the secondary clarifiers until Stantec’s email to Ovivo on July 25, 2017. In this email Stantec advised that the secondary clarifiers had failed a loading test and renewed its suggestion that the depth of the scraper blades on the Mechanism was the cause.

According to an email from GLS to Ovivo the following day, the depth of the sludge blankets in the secondary clarifiers continued to be a problem. [ 58 ] In a letter addressed to GLS dated August 1, 2017, Ovivo provided GLS with its views concerning the reasons for the failed loading test.

Subsequently, Stantec provided GLS with a critique of Ovivo’s views and expressed the opinion that the sludge transportation capacity of the Mechanisms was inadequate to meet the loading rate specified in the Purchase Contract with Ovivo. [ 59 ] In an email of August 15, 2017, Stantec again expressed to GLS its opinion that the sludge transportation system was undersized “and a combination of the sludge scraper depth and rotation speed will have to be increased to meet the peak loading design”. [ 60 ] On August 17, 2017, Stantec distributed its spreadsheet calculations among a number of email participants, including GLS, and opined that its calculations demonstrated that, if no modification was made to the Mechanisms, the sludge depth in the secondary clarifiers would exceed the depth of the scraper blades.

In a second spreadsheet Stantec calculated the minimum scraper blade depth needed to achieve sufficient sludge transportation. [ 61 ] In a letter to GLS dated August 25, 2017, Ovivo acknowledged that, assuming the Purchase Contract required the Mechanisms be designed to handle the loading rate used by Stantec in its calculations, then Stantec’s calculations were accurate and taller scraper blades were required to achieve those loading rates.

Ovivo agreed to supply the taller scraper blades referenced in Stantec’s calculations. [ 62 ] In an email to GLS dated September 6, 2017, Stantec advised that, “We fully anticipate that this modification [to the scraper blades] as proposed by Ovivo will meet the [solids loading rate] requirements of the contract….” [ 63 ] Ovivo’s redesign of the scraper blades was approved by Stantec in September of 2017 and Ovivo committed to shipment of the revised scraper blades by September 29, 2017.

On September 12, 2017, GLS responded to Ovivo’s proposed shipping date in part as follows: … GLS hereby requests that Ovivo review its submittal dated September 11, 2017 which advises, "Ovivo will ship blades and associated hardware on September 29, 2017", and instructs Ovivo to take all necessary actions, which may include but may not be limited to, overtime, double-shifting and expedited transport, to accelerate the fabrication of these materials to achieve the September 25, 2017 shipping date per Ovivo's submittal of September 1, 2017: Your utmost attention to this critical item is requested to negate further financial implications for loss of time. [ 64 ] The revised scraper blades were installed on or about September 27, 2017. [ 65 ] GLS entered into tolling agreements with Stantec and Epcor effective October 1, 2017 and October 12, 2017, respectively.

The tolling agreements suspended the operation of The Limitations Act with respect to claims among Epcor, Stantec, and GLS arising out of the Project. The tolling agreements remain in effect. No legal action has been commenced against GLS by either of Epcor or Stantec. [ 66 ] A 30DPT of the Plant was successfully completed on December 17, 2017. [ 67 ] The secondary clarifiers continued to perform poorly after the 30DPT and were unable to achieve the effluent parameters specified in the agreement between Epcor and the City. [ 68 ] Again, s. 6(1)(

d) of the Act provides as follows: 6(1) … a claim is discovered on the day on which the claimant first knew or in the circumstances ought to have known: … (

d) that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it.

[ 69 ] In Venture the Court of Appeal discusses the purpose underlying s. 6(1)(

d) of the Act and the principles to be applied in assessing when a claimant has actual or constructive knowledge that a proceeding is an appropriate means to seek to remedy its loss: 64 One of the purposes underlying provisions like s. 6(1)(

d) is to encourage parties to discuss and negotiate claims rather than rush into needless litigation: [citations omitted]. For that reason, it may, in some circumstances, be appropriate for a plaintiff to delay bringing a claim when there is a chance the dispute can be resolved without resort to litigation: see, for example, Presidential MSH Corp. v. Marr, Foster & Co. LLP , 2017 ONCA 325 (Ont. C.A.) at paras 26-27 , (2017), 135 O.R. (3d) 321 (Ont. C.A.) [ Presidential ]. 65 In Sosnowski v. MacEwen Petroleum Inc. , 2019 ONCA 1005 , 441 D.L.R. (4th) 393 (Ont.

C.A.) [ Sosnowski ] , the Ontario Court of Appeal summarized the principles to be applied in assessing when a party knows or ought to know that it is appropriate to commence a legal proceeding. In that regard, Hourigan J.A. wrote: [16] First, the determination of whether a proceeding is an appropriate means to seek to remedy an injury, loss, or damage depends upon the specific factual and/or statutory setting of each case: Nasr Hospitality Services Inc. v.

Intact Insurance , 2018 ONCA 725 , 142 O.R. (3d) 561 , at para. 46 . [17] Second, this court has observed that two circumstances most often delay the date on which a claim is discovered under this subsection. The first is when the plaintiff relied on the defendant's superior knowledge and expertise, especially where the defendant took steps to ameliorate the loss. The other situation is where an alternative dispute resolution process offers an adequate remedy, and it has not been completed: Nasr , at para. 50. [18] Third, Sharpe J.A. in Markel Insurance Company of Canada v.

ING Insurance Company of Canada, 2012 ONCA 218 , 109 O.R. (3d) 652 , at para. 34 , provided ... guidance concerning the meaning of the term appropriate: [text omitted] [19] ... appropriate means whether it is legally appropriate to bring an action. Appropriate does not include an evaluation of whether a civil proceeding will succeed. 66 This is, in my view, a helpful

summary of the law. Speaking to the first of the circumstances noted in paragraph 17 of Sosnowski , namely reliance on ameliorative efforts by a defendant with superior knowledge or expertise, it has been held, for example, that it may be appropriate to delay bringing a claim for malpractice against an expert professional where that professional is taking steps to remedy the wrongdoing, which, if successful, would make a civil action unnecessary: see, for example, Brown [2016 ONCA 325 , 397 DLR (4th) 161 ]; Presidential at para 20; Chelli-Greco v. Rizk , 2016 ONCA 489 (Ont. C.A.) .

A limitation period may also toll where the plaintiff delays in bringing an action because he or she relies on the defendant's superior knowledge and expertise in a non-professional discipline or trade as being capable of remedying the loss: see, for example, Zeppa v. Woodbridge Heating & Air-Conditioning Ltd. , 2019 ONCA 47 , 144 O.R. (3d) 385 (Ont.

C.A.) , or because the plaintiff is waiting to see if the losses he or she has actually suffered are non-trivial: see Gillham . [ 70 ] GLS contends that it did not and could not know before November 27, 2017 that a proceeding was an appropriate means to seek to remedy its loss.

This contention is premised on the assertion that Ovivo possessed superior knowledge and expertise to that of GLS and between January 16, 2017 and November 27, 2017 Ovivo was working to change the operation and design of the Mechanisms, the intent of which was to reduce or eliminate any future loss to GLS arising from poor performance of the secondary clarifiers. GLS says that in these circumstances commencing a legal action would not be appropriate. [ 71 ] In reply, Ovivo argues that the modifications to the Mechanisms were made at the insistence of GLS’s design expert, Stantec.

As Stantec was GLS’s engineering professional responsible for the overall design of the Plant, it was GLS who possessed the superior knowledge and expertise in the circumstances. Ovivo further argues that GLS knew the modifications requested by Stantec would not eliminate the significant losses that had already accrued to GLS before the modifications were made. GLS therefore knew that even if the modifications were successful, and ultimately they were not, the modifications would not have eliminated the need to commence a proceeding to recover the losses incurred before the modifications were made.

Consequently, GLS discovered that a proceeding was an appropriate means to remedy its losses when it knew that Ovivo’s alleged acts or omissions caused or contributed to those losses. [ 72 ] I find Ovivo’s arguments compelling. [ 73 ] Clearly, when it comes to the design and manufacture of the Mechanisms, Ovivo possesses superior knowledge and expertise to that of GLS. The question, however, is whether GLS relied on Ovivo’s superior knowledge and expertise with respect to remediation of GLS’s loss ( see Venture at para 66 ).

That is, did GLS rely on Ovivo’s superior knowledge and expertise to diagnose and fix the problem with the secondary clarifiers? In my view, it did not. The evidentiary record reveals that Stantec, GLS’s design expert, was the driving force behind both modifications to the Mechanisms. Increasing the rotation speed of the scraper blades to reduce the depth of the sludge blankets was Stantec’s idea. Ovivo expressed doubt about the efficacy of that modification but agreed to change the sprockets as a “show of good faith”.

The modification of the scraper blades was also made at Stantec’s insistence, based on its own calculations on what was needed to address poor performance of the secondary clarifiers. Ovivo disputed that the Purchase Contract obligated Ovivo to design the scraper blades to meet the loading requirements Stantec used in its calculations but agreed that if the loading specifications were correct then Stantec’s calculations were accurate. In both instances, GLS was relying on Stantec’s expertise to craft a solution to the ongoing performance issues, not Ovivo’s.

Stantec was driving the bus and Ovivo was a reluctant passenger. [ 74 ] With respect to the issue of the impact of the modification on GLS’s losses, the evidence establishes that GLS’s losses commenced in January 2017 and continued to mount throughout 2017. The accrued losses would persist even if modifications to the Mechanisms succeeded in avoiding additional loss. GLS admits as much at paragraph 126 of its brief. At best, modifications to the Mechanisms could only potentially prevent GLS’s losses from mounting further.

GLS argues that it is sufficient that Ovivo’s ameliorative efforts could potentially reduce GLS’s losses, “[w]hen a defendant’s corrective actions minimize a plaintiff’s damages, an action may become unnecessary (i.e. inappropriate)”. In support of this proposition GLS relies on the decision in Brown v Baum , 2016 ONCA 325 , 397 DLR (4th) 161 [ Brown ] . I do not read the Brown decision in that way. When discussing the motion judge’s

interpretation of s. 5(1) (a)(iv) of the Ontario Limitations Act , 2002, SO 2002, c 24 Sch B , which is worded in a very similar fashion to s. 6(1) (

d) of the Act , Feldman J.A. stated at para. 18: 18 The motion judge's application of the subsection to the facts on this record was particularly apt: he concluded that because the doctor was continuing to treat his patient to try to fix the problems that arose from the initial surgery, that is, to eliminate her damage, it would not have been appropriate for the patient to sue the doctor then, because he might well have been successful in correcting the complications and improving the outcome of the original surgery. [Emphasis added] [ 75 ] GLS further cites the decision in Presidential MSH Corp. v Marr, Foster & Co.

LLP , 2017 ONCA 325 , 413 DLR (4th) 391 [ Presidential ] , as additional authority for its proposition. In Presidential , the plaintiff commenced an action against his accountant in negligence for late filing of corporate tax returns, which resulted in the plaintiff being denied certain tax credits by Canada Revenue Agency. The accountant recommended that the plaintiff retain a tax lawyer to appeal and apply for relief from the Agency’s decision.

The accountant assisted the plaintiff and his lawyer in preparing that application for relief and the appeal as well as providing any additional help when and as required by the plaintiff or his lawyer. The Court of Appeal found that the action against the accountant was not time barred and allowed the appeal.

GLS argues that the Court applied the principles in Brown “even though the accountant could never eliminate the plaintiff’s losses entirely as part of those losses included amounts paid to counsel on the appeal.” At para. 52 of the Presidential decision, Pardu J.A. states: 52 Had [the accountant], together with the tax lawyer that he advised the appellant to enlist in aid, prosecuted the CRA appeal successfully, the appellant's loss would have been substantially eliminated, and it would have been unnecessary to resort to court proceedings to remedy it.

The fact that the appellant would have been unable to recover the fees it paid the tax lawyer, except through litigation, is in my view inconsequential. It is the claim that is discoverable, not the full extent of damages the plaintiff may be able to recover.

It would not have been appropriate under s. 5(1) (a)(iv) of the Act for the appellant to commence a proceeding until [the accountant’s] ameliorative efforts concluded. [Emphasis added] [ 76 ] In both Brown and Presidential a finding that it was inappropriate to commence a legal proceeding was predicated on the finding that the defendant’s efforts had the potential to eliminate or substantially eliminate the plaintiff’s loss thus making a civil action unnecessary.

This is the very point addressed by Kalmakoff J.A. at para. 66 of the decision in Venture : “… it may be appropriate to delay bringing a claim for malpractice against an expert professional where that professional is taking steps to remedy the wrongdoing, which, if successful, would make a civil action unnecessary …” [ 77 ] The defendant’s ameliorative efforts must carry with them the potential to eliminate or substantially eliminate the entirety of the plaintiff’s claim.

Were it otherwise any remediation by a defendant, regardless of how little impact it would have on the plaintiff’s losses, would make commencing a legal action inappropriate. Defendants would avoid engaging in resolution outside of the context of a legal proceeding for fear of inadvertently extending far into the future the date when an action becomes appropriate.

If any amount of remediation makes a legal action inappropriate the guarantee of repose, which is the promise of limitation statutes, is eliminated. [ 78 ] In my view, by January 16, 2017, GLS knew it had suffered and would continue to suffer significant loss, which appeared to be caused or contributed to by the acts or omissions of Ovivo. On that date GLS knew its losses, which were continuing to mount, would not be eliminated or substantially eliminated even if the secondary clarifiers achieved the performance metrics set out in Epcor’s agreement with the City.

Consequently, I conclude that GLS discovered its claim in negligence in breach of contract against Ovivo on January 16, 2017. Claim for breach of warranty [ 79 ] It is GLS’s position that according to the terms of the Purchase Contract, Ovivo warrantied the Mechanisms against defects in materials and workmanship. This contractual term entitled GLS to call upon Ovivo during the warranty period to correct those defects.

The Purchase Contract further provides that if Ovivo fails to correct the defects, then GLS may do so at Ovivo’s expense provided that GLS gives Ovivo 48 hours’ notice of its intention to do so. [ 80 ] The terms of the Purchase Contract upon which GLS relies are: 9. WARRANTY.

Seller warrants that the goods furnished will be in full conformity with any specifications, drawings, and performance data provided by Buyer, Seller’s samples, and all other requirements specified by the terms and conditions of this Purchase Contract, including such terms and conditions as are incorporated by reference in this Purchase Contract, and that the goods furnished will be of merchantable quality and fit for the uses intended by Buyer.

Seller further grants to Buyer the identical guarantees and warranties which Buyer is required to provide to the owner of the project for which the goods are purchased, and if Buyer’s contract is not directly with the Owner, also grants to Buyer the identical guarantees and warranties which Buyer is required to provide to the contractor with whom Buyer contracts and the owner of the project. Seller’s warranties and guarantees hereunder shall be in addition to any additional warranties and guarantees provided to Buyer by Seller. [Warranties] … 19. TAKEOVER.

If in the opinion of the Buyer, Seller shall at any time … (4) fail to correct or replace any damaged or defective materials, (5) fail to

comply with all provisions of the Purchase Contract or the Prime Contract Documents, …. then, Buyer may take the following actions. Buyer, at its option and in addition to and without prejudice to any other rights afforded by this Purchase Contract or by law, and without notice to the sureties, may (

i) take such steps as are necessary to overcome the condition, in which case the Seller shall be liable to Buyer for the cost of doing so; (ii) terminate the Purchase Contract for default, or (iii) seek specific performance of Seller’s obligations under the Purchase Contract, it being agreed by Seller that specific performance may be necessary to avoid irreparable harm to Buyer and/or Owner.

Before taking any of the above actions, the Buyer must first give Seller forty-eight (48) hours written notice transmitted by facsimile or otherwise, and the condition specified in such notice shall not have been eliminated within the forty-eight (48) hours. … [Takeover Notice] [ 81 ] Given these terms, GLS’s argument proceeds on this basis: As a Takeover Notice to Ovivo is “a condition precedent to GLS suing for breach of warranty under sections 9 and 19” of the Purchase Contract, until the condition is satisfied, GLS would have no actual or constructive knowledge that a legal action for breach of the warranty would be appropriate.

The Takeover Notice was sent to Ovivo on February 25, 2019. [ 82 ] I am not persuaded by this argument. [ 83 ] Clause 19 of the Purchase Contract does not create a condition that must be satisfied before a claim may be made for breach of the warranty provisions. This is apparent from the wording of the clause itself: [GLS], at its option and in addition to and without prejudice to any other rights afforded by this Purchase Contract or by law , …, may (

i) take such steps as are necessary to overcome the condition, in which case [Ovivo] shall be liable to [GLS] for the cost of doing so; … Before taking … the above actions, [GLS] must first give [Ovivo] forty-eight (48) hours written notice …, and the condition specified in such notice shall not have been eliminated within the forty-eight (48) hours. … [ 84 ] Clause 19 does not create a hurdle that GLS must jump before it can assert a breach of warranty claim. The clause cannot be invoked unless there has been a breach affecting the condition of Ovivo’s work.

In that instance, clause 19 reserves to GLS its right to pursue any and all remedies available to it under the Purchase Contract or at law and, in addition , to correct Ovivo’s defective work at Ovivo’s expense provided the proper notice is given before doing so.

There is nothing in the clause that suggests GLS agreed to suspend its contractual or legal rights with respect to a breach of the warranty provisions until it provided Takeover Notice to Ovivo. [ 85 ] I conclude that clause 19 does not create “… a condition precedent to GLS suing for breach of warranty under sections 9…” of the Purchase Contract and thus the lack of a notice under clause 19 does not impede GLS’s actual or constructive knowledge that a proceeding is an appropriate means to seek to remedy the loss it suffered as a consequence of Ovivo’s act or omission. [ 86 ] GLS’s claim for breach of the warranty provisions of the Purchase Contract is predicated upon the same factual circumstances as its claims in negligence and breach of contract generally.

The losses claimed are the same, the alleged acts or omissions are the same, and the defendants are the same. For the same reasons expressed earlier in this decision with regard to the causes of action grounded in negligence and breach of contract I conclude that by January 16, 2017 GLS knew it had suffered a loss that appeared to be caused or contributed to by Ovivo’s alleged failure to provide properly designed and manufactured Mechanisms in accordance with the terms of the Purchase Contract. The claim for breach of warranty under the Purchase Contract was therefore discovered on January 16, 2017.

Claim for contribution and indemnity [ 87 ] This is a curious claim. The affidavit evidence establishes that GLS entered into tolling agreements with both Epcor and Stantec effective October 12, 2017 and October 1, 2017, respectively. The tolling agreements suspended the limitation period with respect to any claims among GLS, Epcor, and Stantec. The tolling agreements remain in place and neither Epcor nor Stantec have commenced an action against GLS. Consequently, while GLS might at some point in the future be placed in jeopardy of a judgment in favour of Epcor or Stantec, it is not currently so.

Therein lies the curiosity: GLS seeks contribution and indemnity from Ovivo for losses suffered by Epcor and/or Stantec notwithstanding that GLS itself is not currently in jeopardy of a judgment obligating it to make good on those losses. [ 88 ] This curiosity creates a conundrum.

Section 14 of the Act addresses limitation periods in the context of claims for contribution and indemnity among wrongdoers, thus: 14(1) In the case of a claim by one alleged wrongdoer against another for contribution and indemnity, the day on which the first alleged wrongdoer was served with the claim with respect to which contribution and indemnity is sought is deemed to be the day on which the act or omission on which that alleged wrongdoer’s claim is based took place. (2) Subsection (1) applies whether the right to contribution and indemnity arises with respect to a tort or otherwise. [ 89 ] When read in conjunction with the presumption of discovery set out in s. 6(2), the result is that, unless the contrary is proved, a claimant seeking contribution and indemnity from another wrongdoer is presumed to have discovered the circumstances in s. 6(1) (

a) to (

d) on the date the claimant is “served with the claim with respect to which contribution and indemnity is sought”. [ 90 ] GLS’s approach to the question of when the limitation period commences is a simple one. It submits that the date of the act or omission upon which its claim for contribution and indemnity is based is deemed to be the date of service of the claim

for which contribution and indemnity is sought. As no such claim has been served, the date of the act or omission upon which its claim for contribution and indemnity is based has yet to occur.

Thus, GLS argues, the limitation clock with respect to its claim for contribution and indemnity from Ovivo has not yet begun to tick. [ 91 ] Ovivo contests this submission on three bases: 1. the date deemed in s. 14 to be the date of the act or omission upon which GLS’s claim for contribution and indemnity is based is rebuttable and the evidence discloses that GLS was aware of the claims by Epcor by at least January 16, 2017; 2. even if the date deemed in s. 14 is not rebuttable, “claim” as used in s. 14 has a broader meaning than “statement of claim” and thus Epcor’s letter of April 6, 2017 to GLS is notice of its claim sufficient for the purposes of s. 14 of the Act ; and 3.

Ovivo’s third argument is really an argument in favour of either or both of its first two arguments. In that respect Ovivo argues that s. 14 cannot be interpreted in the manner advocated by GLS because doing so works a serious prejudice to GLS. Is the deemed date of the act or omission prescribed by

section 14 rebuttable? [ 92 ] Ovivo argues that s. 6(2) presumes a claim is discovered on the day the act or omission occurred (Ovivo labels this the Presumptive Discovery Date), unless the contrary is proved, which Ovivo labels as the Factual Discovery Date. With respect to claims for contribution and indemnity, the Presumptive Discovery Date is deemed to be the date of service of the claim for which contribution and indemnity is sought (Service Discovery Date).

Ovivo argues: Effectively, the Service Discovery Date replaces/substitutes the Presumptive Discovery Date for claims for contribution or indemnity by presuming discovery at the time of service rather than the date of the act or omission. This means that it can be rebutted in the same way that the Presumptive Discovery Date can be - by the Factual Discovery Date. Because the Presumptive Discovery Date in section 6(2) is substituted by the Service Discovery Date, the Service Discovery Date is only presumptive for the purposes of that

section (i.e. section 6(2)), meaning that it can be rebutted in the same way the Presumptive Discovery Date can be. As a result, discovery of a contribution and indemnity claim presumptively occurs on the Service Discovery Date (sections 14(1), 6(2)), unless it is demonstrated that discovery occurred at a different time - by way of the Factual Discovery Date (section 6(2)).

Or, put another way - the Service Discovery Date is presumptive only, and can be rebutted by proving discovery occurred at a different time. [ 93 ] Ovivo’s argument proceeds on the premise that s. 6(2) of the Act creates a rebuttable presumption with respect to the date upon which the act or omission on which the claim is based occurred. In my view, that premise is incorrect. Section 6(2) of the Act does not create a presumption with respect to the date upon which the act or omission occurred, only what the claimant is presumed to know on the date the act or omission occurred.

It is that presumption of knowledge that can be displaced by proof to the contrary. The date of the act or omission serves only as a starting point from which to ascertain the state of the claimant’s knowledge. The date of the act or omission upon which the claim is based is immutable. There may be debate about what constitutes the act or omission upon which a claim is based but once that debate is resolved there can be no debate about the date of that act or omission. The date of the act or omission does not change over time, nor does it depend on the knowledge of the parties. [ 94 ]

Section 14 of the Act establishes a starting date for assessing the state of the claimant’s knowledge – the date of service of the claim for which the claimant seeks contribution and indemnity. On that date, the claimant is presumed to know the material facts in s. 6(1) and thus to have discovered its claim.

It is open to the claimant to prove that it did not have actual or constructive knowledge of the material facts in s. 6(1) on the day it was served with the claim, but the day it is served with the claim is the immutable starting point for that assessment. [ 95 ] This point was addressed by Elson J. in Case v Rotelik , 2018 SKQB 242 [ Case ] , albeit parenthetically. In that case, the defendants sought leave to add parties to the action by way of third-party proceedings seeking contribution and indemnity from the proposed third parties.

In the application the parties argued about the applicability of The Limitations Act and whether the proposed proceedings were doomed to fail given the expiration of the limitation period.

Ultimately, Justice Elson determined that the limitation period question was not properly determined on an application to join a third party but observed that the date of the act or omission, deemed by s. 14 of the Act to be the date of service of the claim, applied even though the claimant was aware of its potential claim for contribution or indemnity before it was served with the claim. [ 96 ] While no analysis was made of the interaction between s. 6(2) and s. 14 in the Case decision, Justice Elson’s observation accords with the purpose discoverability serves in the context of limitation statutes.

Discoverability seeks to balance the defendant’s interest in being able to conduct its affairs free of ancient obligations; the desire to foreclose litigation on stale evidence; incentivizing the timely commencement of claims; and the need to avoid the injustice of precluding a claim before the claimant has knowledge of its existence. [ 97 ] If the date GLS became aware of Epcor’s demand for indemnification is the date of the act or omission upon which GLS’s claim for contribution from Ovivo is based, then there is a very real possibility, even without the intervention of the tolling agreements, that the limitation period would expire before GLS was in a legal position to claim contribution from Ovivo, i.e., in jeopardy of a judgment in favour of Epcor or Stantec.

It is also questionable that GLS would, before Epcor commenced an action, have actual or constructive knowledge of the circumstances in s. 6(1) (

d) given that it has no legal basis to claim contribution from Ovivo when GLS is not itself in jeopardy of a judgment in favour of Epcor. [ 98 ] Ovivo’s argument on this point cannot succeed.

What is the meaning of “claim” as used in

section 14 of the Act ? [ 99 ] Ovivo argues that the term “claim” as used in s. 14 of the Act has a broader meaning than “statement of claim” and Epcor’s notifications to GLS on December 19, 2016 and April 6, 2017 of Epcor’s intention to hold GLS to account for the losses arising from deferral of a 30DPT is a notification of a “claim” sufficient to start the limitation clock. [ 100 ] Ovivo argues that “statement of claim” is used elsewhere in the Act and as only “claim” is used in s. 14 it must have a broader meaning than simply statement of claim.

As the argument goes, if the Legislature had intended s. 14 to mean “statement of claim” it would have used that phrase and not the more generic term “claim” [ 101 ] I am not convinced by this argument. A “claim” with respect to which contribution and indemnity is sought can take a number of forms; statements of claim; counterclaims; cross-claims; and third party claims.

The use of the general term “claim” in s. 14 accounts for the variety of ways in which a “claim” may result in a further claim for contribution and indemnity. [ 102 ] The term “claim” must also be considered in the context in which it appears, “…the day on which the first alleged wrongdoer was served with the claim with respect to which contribution and indemnity is sought…” The use of the term “served” connotes the formal notification process engaged in legal proceedings.

When used in conjunction with the term “claim”, it is clear that the drafters of the legislation intended that the date of the act or omission is the date on which the first alleged wrongdoer is provided with formal notice of the legal proceedings for which it seeks contribution or indemnity. [ 103 ] In these circumstances, I am not convinced that the Legislature intended “claim” to have broader meaning than a formal legal proceeding. I therefore conclude that letter from Epcor to GLS notifying GLS of Epcor’s intention to seek recovery of its losses from GLS is not a claim within the meaning of s. 14 of the Act .

Serious prejudice to Ovivo? [ 104 ] Ovivo argues that if the date of the act or omission is the date when GLS is formally served with legal process, then an imbalance among the interests underlying the principle of discoverability is created. That is, given the effect of tolling agreements and the lack of a legal action against GLS by Epcor or Stantec, Ovivo will be in jeopardy of a claim by GLS for contribution and indemnity for many years. In my view, that result does not flow from the provisions of the Act .

Ovivo’s long-tail exposure to a claim for contribution and indemnity derives from the terms of the tolling agreements. Yet, even in such circumstances, the Act maintains the balance struck by the principle of discoverability by the implementation of an ultimate limitation period as set out in s. 7. [ 105 ] Ovivo also argues that if the date of the act or omission is the date GLS is served with legal process by Epcor, then, at least in this case, an absurdity is created.

That is, GLS does not discover its claim for contribution and indemnity against Ovivo until it is served with a statement of claim by Epcor or Stantec, yet GLS has already clearly discovered its claim for contribution and indemnity because it included that claim in its statement of claim against Ovivo. In my view, the absurdity does not arise from the proper application of the Act but from GLS advancing a claim for contribution and indemnity from Ovivo even though GLS itself is not in jeopardy of a judgment in favour of Epcor or Stantec.

Whether such an action is legally maintainable is a matter for another time. [ 106 ] Again, Ovivo’s dilemma derives not from the proper application of the Act but from the suspension of the Act arising from the tolling agreements to which it is not a party. [ 107 ] I conclude that the limitation period with respect to GLS’s claim for contribution and indemnity for losses suffered by Epcor and Stantec had not commenced when GLS issued its claim on November 29, 2017. II.

CONCLUSION [ 108 ] With respect to the GLS’s claims in negligence and breach of contract, including breach of warranty, I find that by January 16, 2017 GLS knew it had suffered a loss that was caused or contributed to by

an act or omission of Ovivo and that a proceeding to recover its loss would be legally appropriate. The two-year limitation period with respect to these claims therefore commenced on January 16, 2017.

As the statement of claim was issued on November 29, 2019, these claims were barred by the provisions of s. 5 of the Act and in accordance with s. 19 of the Act cannot be maintained. [ 109 ] I further conclude that GLS’s claims for contribution and indemnity from Ovivo for losses suffered by Epcor and/or Stantec were not discovered within the meaning of s. 6(1) of the Act before November 29, 2017 and are therefore not barred by s. 5 of the Act . [ 110 ] As there was mixed success on this application costs shall be in the cause. J. C.D. CLACKSON