Supreme Court of Canada determines that limitation period contained in s. 36(4)(a)(i) of the Competition Act is subject to discoverability

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In Pioneer Corp. v. Godfrey, 2019 SCC 42, an 8-1 majority of the Supreme Court of Canada determined that the discoverability rule applies to the limitation period in s. 36(4)(a)(i) of the Competition Act, such that it begins to run only when the material facts on which the plaintiff’s claim is based were discovered or ought to have been discovered by him or her by the exercise of reasonable diligence. 

In Godfrey, the plaintiff commenced the main action on September 27, 2010. The proposed class action was brought on behalf of all B.C. residents who purchased Optical Disc Drives or Optical Disc Drive Products between January 1, 2004 and January 1, 2010. Thus, according to the plaintiff, the conspiracy ended on January 1, 2010. The claim against the Pioneer Defendants (which was consolidated with the main action) was not commenced until August 16, 2013, more than 3.5 years after the end date of the class period. The Pioneer Defendants argued that the claim against them is statute-barred because it was commenced after the expiry of the two-year limitation period contained in s. 36(4) of the Competition Act.

Brown J., speaking on behalf of the majority, held that the judge-made discoverability rule will apply when the requisite limitation statute indicates that time starts to run from when the cause of action arose (or other wording to that effect). In the majority’s view, where the event triggering the limitation period is an element of the cause of action, the legislature has shown its intention that the limitation period be linked to the cause of action’s accrual, such that discoverability will apply. Conversely, discoverability does not apply where that triggering event does not depend on the plaintiff’s knowledge or is independent of the accrual of the cause of action.

The text of s. 36(4)(a)(i) provides that no action may be brought under s. 36(1)(a) after two years from a day “on which conduct contrary to Part VIoccurred. From this, Brown J. held that it is clear the event triggering this particular limitation period is an element of the underlying cause of action – specifically, conduct contrary to Part VI of the Competition Act. Given anti-competitive conduct is invariably conducted through secrecy and deception, he stated that it would be absurd and would render the cause of action granted by s. 36(1)(a) almost meaningless if discoverability did not apply. Such a result would mean that the plaintiff’s right of action would expire prior to his or her acquiring knowledge of the anti-competitive behavior.

In dissent, Justice Côté held that the wording of the limitation period set out in s. 36(4)(a)(i) provides ample support for the proposition that the two-year period commences independently of when the plaintiff first learns of the wrongdoing. Rather than having the limitation period commence upon the accrual of the cause of action, Parliament decided that it would instead commence on “a day on which the conduct was engaged in” – which contrary to the majority view, is not wording to the same effect as “accrual of the cause of action.” In Justice Côté’s view, there is simply no link between this triggering event and the plaintiff’s state of mind; rather, it is an event which occurs without regard to the insured party’s knowledge.

Accordingly, it is now settled law that discoverability applies to the limitation period contained in s. 36(4)(a)(i) of the Competition Act. By contrast, discoverability does not apply to the limitation period under s. 36(4)(a)(ii) – the disposition of criminal proceedings – because that event is not connected to a plaintiff’s cause of action or knowledge.