The Supreme Court of Canada’s new “plausible inference” test: When is a construction deficiency discovered for the purposes of a limitation period?

By September 28, 2021news

In July of this year the Supreme Court of Canada, in Grant Thornton LLP v. New Brunswick, 2021 SCC 31, introduced a new test for the commencement of limitations periods in Canada.  It held that the clock starts ticking on a limitation period when a “plausible inference” of liability arises on facts that are, or ought to be, known through the exercise of reasonable diligence.  The Court also addressed the extent to which a party might need an expert’s report before such an inference arises.

The decision may have significant consequences for the construction industry.  This, because the “discoverability” of construction defects has always been difficult to assess.  Consider, for example, cracks which appear in a newly poured foundation.  These might be attributable to shrinkage, not a deficiency.  They might also not be worth suing over.  Has the owner, upon noticing the cracks, “discovered” a claim against the contractor, concrete supplier, geotechnical engineer, structural engineer and architect simply because a “plausible inference” can be drawn that the cracks might be attributable to something any one of them might be responsible for?  Can the owner take a ‘wait-and-see’ approach, or must it investigate the cause of the cracking in an effort to figure out what is going on (and who might be responsible)?

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