COURT OF APPEAL FOR BRITISH COLUMBIA
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Citation: |
Sun-Rype Products Ltd. v. Archer Daniels Midland Company, |
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2008 BCCA 278 |
Date: 20080710
Dockets: CA035109, CA035114
CA035126, CA035133
Between:
Sun-Rype Products Ltd. and Wendy Weberg
Respondents
(Plaintiffs)
And
Archer Daniels Midland Company, Tate & Lyle Ingredients Americas, Inc.
formerly known as A.E. Stanley Manufacturing Company,
Cargill, Incorporated,
Cerestar USA, Inc. formerly known as American Maize-Products Company, Corn Products International, Inc.,
Bestfoods, Inc. formerly known as CPC
International, Inc., ADM Agri-Industries Company, Cargill Limited,
Casco Inc., and Unilever PLC doing business as Unilever
Bestfoods North America
Appellants
(Defendants)
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Before: |
The Honourable Madam Justice Prowse |
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The Honourable Madam Justice Huddart |
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The Honourable Madam Justice Levine |
| S. Schachter, Q.C. G.B. Gomery |
Counsel for the Appellants Corn Products International, Inc., Bestfoods, Inc., Casco Inc., and Unilever PLC |
| J.K. McEwan, Q.C. |
Counsel for the Appellants Cargill, Incorporated, Cargill Limited and Cerestar USA, Inc. |
| K.I. Chalmers |
Counsel for the Appellant Tate & Lyle Ingredients Americas, Inc. |
| G.J. Nash D. Duncan M. Brown |
Counsel for the Appellants Archer Daniels Midland Company and ADM Agri-Industries Company |
| J.J. Camp, Q.C. R. Mogerman |
Counsel for the Respondents Sun-Rype Products Ltd. and W. Weberg |
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Place and Date of Hearing: |
Vancouver, British Columbia |
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April 8, 9, 10, 2008 |
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Place and Date of Judgment: |
Vancouver, British Columbia |
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July 10, 2008 |
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Written Reasons of the Court |
Reasons for Judgment by the Court:
INTRODUCTION
[1] The central issues on this appeal are whether the definition of “trust” in s. 1 of the Limitation Act, R.S.B.C. 1996, c. 266 (the “Act”), includes a remedial constructive trust, and, if so, whether the ten-year limitation period set forth in s. 3(3) of the Act applies to a claim for a remedial constructive trust. More specifically, the issue is whether the trial judge erred in finding that those provisions may apply to the remedial constructive trust claimed in this case so as to entitle the plaintiffs/respondents to a ten-year limitation period. Similar issues involving the interpretation of s. 3(3) and the definition of “trust” in s. 1 of the Act are raised in the companion appeal released with these reasons: Smith v. Vancouver City Savings Credit Union, 2008 BCCA 279. There are also issues raised in the cross-appeal concerning the pleadings and the postponement provisions of the Act.
[2] As a matter of convenience, we will refer to the appellants collectively as the “defendants” and to Sun-Rype and Wendy Weberg collectively as the “plaintiffs”.
[3] The appeals are from the order of a trial judge, made May 10, 2007, dismissing the defendants’ applications pursuant to Rule 18A of the Rules of Court, B.C. Reg. 221/90, to strike the plaintiffs’ claims. The defendants argued, unsuccessfully, that the plaintiffs’ claims for a remedial constructive trust and other relief in relation to “overcharges” paid by them pursuant to an alleged price-fixing scheme involving the defendants were statute-barred. The trial judge found that, insofar as the plaintiffs’ claims were based on a remedial constructive trust, those claims could proceed, subject to the judge at trial determining whether a remedial constructive trust was the appropriate remedy.
[4] The effect of the order is to allow the plaintiffs’ claims to proceed solely on the basis of their claim for a remedial constructive trust, subject to their action being dismissed as statute-barred if the trial judge determines that a remedial constructive trust is not an appropriate remedy.
[5] The reasons for judgment of the trial judge may be found at 2007 BCSC 640, 72 B.C.L.R. (4th) 163.
ISSUES ON APPEAL AND CROSS-APPEAL
[6] The defendants claim that the trial judge erred in his interpretation of s. 3(3) and the definition of “trust” in s. 1 of the Act, with the result that he erroneously found that the plaintiffs were entitled to a ten-year limitation period if they could persuade the court at trial that a remedial constructive trust was the appropriate remedy.
[7] In their cross-appeals, the plaintiffs claim that the trial judge erred in finding that they had not met the burden of establishing that their claims were postponed and in finding that their Amended Statement of Claim did not disclose a claim in equitable fraud.
CONCLUSION
[8] In our view, the trial judge did not err in finding that the definition of “trust” in s. 1 of the Act includes a remedial constructive trust, and in finding that s. 3(3) of the Act applies to provide a ten-year limitation period for the plaintiffs’ claim for a remedial constructive trust (assuming the plaintiffs are able to establish at trial that a remedial constructive trust is the appropriate remedy in all the circumstances).
[9] We are persuaded, however, that the trial judge erred in finding that the pleadings did not disclose a cause of action in equitable fraud.
[10] We also find that the trial judge erred in his analysis of Ms. Weberg’s claim for postponement of the limitation periods under the Act and under the Competition Act, R.S.C. 1985, c. C-34.
[11] We are not persuaded that the trial judge erred in his analysis of Sun-Rype’s claim for postponement.
[12] In the result, we would dismiss the defendants’ appeal. We would allow the plaintiffs’ cross-appeal with respect to the pleadings issue and Ms. Weberg’s cross-appeal with respect to postponement.
BACKGROUND
[13] The plaintiffs’ action is a proposed class action brought on behalf of the plaintiffs and all persons resident in British Columbia and elsewhere in Canada who purchased high fructose corn syrup (“HFCS”) manufactured by the defendants, their affiliates or parents, from 1988 to June 1995 (the “Class Period”). HFCS is a natural sweetener marketed and consumed widely in Canada and in the U.S.A. Sun-Rype is a commercial purchaser of HFCS; Ms. Weberg purchased at the retail level.
[14] The plaintiffs allege that senior executives and employees of the defendants, acting in their capacity as agents of the defendants, conspired with each other to illegally fix and maintain the price of HFCS sold in British Columbia and Canada, as a result of which the plaintiffs paid an “artificially induced overcharge” for HFCS (the “overcharge”) during the Class Period. In their Amended Statement of Claim, the plaintiffs seek, inter alia:
(b) general damages for civil conspiracy and/or tortious interference with economic interests;
(c) general damages and investigative costs for conduct contrary to Part VI of the Competition Act, R.S. 1985, c. 19 (2nd Suppl.);
(d) a declaration that the defendants have been unjustly enriched at the expense of the plaintiffs and the other Class Members by their receipt of the ill-gotten overcharge;
(e) a declaration that the defendants hold the ill-gotten overcharge in a constructive trust for the benefit of the plaintiffs and the other Class Members;
(f) an order directing the defendants to disgorge their ill-gotten overcharge;
(g) punitive damages;
[Emphasis added.]
[15] The plaintiffs commenced their action by Writ of Summons filed June 14, 2005, which was over six years, but just short of ten years, after the conclusion of the alleged conspiracy. The Canadian defendants were added to the action several months later by way of an Amended Writ of Summons and Statement of Claim filed March 16, 2006.
[16] The defendants pleaded that the plaintiffs’ action was statute-barred by the six-year limitation period under the Act for unjust enrichment (and for civil conspiracy and tortious interference with economic interests), and by the two-year limitation period in the Competition Act. They applied to dismiss the action before certification by way of summary trial under Rule 18A. They also sought to strike the plaintiffs’ pleading in para. 5 of each Reply that the defendants’ conduct amounted to fraud and fraudulent breach of trust. Finally, they sought an order that the plaintiffs were not entitled to the benefit of the postponement provisions of the Act.
DECISION UNDER APPEAL
[17] The trial judge found that the plaintiffs’ claim for a remedial constructive trust could proceed, but struck para. 5 of each of the Replies and found that the postponement provisions of the Act were not available to the plaintiffs on the facts.
[18] In addressing the question of statutory interpretation, the trial judge summarized the positions of the parties and commenced his analysis of the issue at paras. 61-64 of his decision:
The plaintiffs contend that remedial constructive trusts qualify for the ten-year limitation period in s. 3(3). They point to the definition of “trust” in s. 1 of the Limitation Act, which specifically provides as follows:
“trust” includes an express, an implied and a constructive trust, whether or not the trustee has a beneficial interest in the trust property, and whether or not the trust arises only because of a transaction impeached, and includes the duties incident to the office of personal representative, but does not include the duties incident to the estate or interest of a secured party in collateral.
The defendants do not question the court’s jurisdiction to impose a constructive trust to protect a restitutionary award. They argue, however, that in order for a trust to come under the purview of s. 3(3) of the Limitation Act, a pre-existing trust or fiduciary relationship between the parties is required. A remedial constructive trust does not possess these characteristics. The defendants submit that the courts should restrict the application of s. 3(3), and the ten-year limitation, to substantive and not remedial trusts.
In support of their position that there is a distinction between substantive and remedial trusts, the defendants rely on Pettkus v. Becker, [1980] 2 S.C.R. 834, 117 D.L.R. (3d) 257, and Soulos v. Korkontzilas, [1997] 2 S.C.R. 217, 146 D.L.R. (4th) 214, where the Supreme Court of Canada determined that a constructive trust remedy is not restricted to an unjust enrichment. In other words, it is not part of the substance of the claim, but rather a remedy that may be applied in diverse situations.
In seeking to establish an exclusion of remedial constructive trusts from the definition in s. 1 of the Limitation Act, the defendants are confronted with its plain meaning, which to my mind, provides that all constructive trusts fall within the definition of “trust”, including remedial constructive trusts, and that is how they must be construed unless there is clear authority otherwise.
[19] The trial judge went on to refer to the legislative history of the provisions at para. 65 of his reasons:
The definition of constructive trust in a Limitation Act was first introduced in 1975 based on a 1967 report of the Law Reform Commission of New South Wales. The first report on Limitation of Actions 1967 at p. 103. [sic] Also, in 1974 the British Columbia Law Reform Commission recommended in a report (at p. 43) that: “[n]o distinction be made between express trusts and other kinds of trusts for the purpose of limitation periods”. The drafters of the Limitation Act may well have not conceived of a remedial constructive trust at the time. Pettkus v. Becker was not decided until 1980. That does not mean, however, that that definition should be narrowed so as to exclude the remedial constructive trust. The Interpretation Act, R.S.B.C. 1996, c. 238, s. 7, provides that words of an enactment are to be read as if always speaking.
[20] The trial judge then considered the various authorities provided by the parties and concluded (at para. 74) that: “The weight of authority isn’t clear.”
[21] In the result, the trial judge resolved the interpretation issue in favour of the plaintiffs and expressed his conclusion on this point at paras. 77-79 of his reasons:
In the circumstances, I am obliged to construe “constructive” according to its plain meaning, which, as I have already said, embraces the remedial constructive trust as well as the substantive. Indeed, there may be something to be said for the convenience, and even the protection, of lumping all constructive trusts together for limitation purposes. Not many lay persons, and not all professional advisors, are likely to appreciate the distinction of a remedial constructive trust. The harsh consequences of missing a limitation date because of that are alleviated by having one general category.
Accordingly, the plaintiffs are entitled to proceed with their claim for a remedial constructive trust for the time being, thereby possibly entitling them to a ten-year limitation period. On the evidence, it seems that they managed to bring their claim within ten years, albeit with not much time to spare. It is, however, not incumbent on me to decide that issue at this time.
If a limitation period of ten years is available to the plaintiffs pursuant to s. 3(3) of the Limitation Act, that does not answer the question as to whether it is in fact appropriate to impose a remedial constructive trust. Again, I am not called upon to make that determination in this hearing.
[22] Thus, the question of whether the plaintiffs’ claims were statute-barred was not finally determined on the R. 18A application but was left to be resolved at trial depending on whether the court found in favour of the plaintiffs on the liability issue, and on whether it concluded that a remedial constructive trust was the appropriate remedy.
[23] In dealing with the pleadings issue, the trial judge found (at para. 46) that the Amended Statement of Claim “does not properly disclose any claim for fraud, whether in the nature of common law fraud or equitable fraud.” He agreed with the defendants that fraud must be expressly alleged and accompanied by particulars. He also found that it was evident that fraud had not been pleaded in the Amended Statement of Claim “because it was included afterward in the reply documents” and that “new allegations of fraud should not be included in the reply.” (paras. 46 and 47). For that reason, he struck para. 5 of the Reply of each of the defendants.
[24] With respect to the postponement issue under the Act and the Competition Act, the trial judge found that the plaintiffs had not met the onus of establishing that they were entitled to a postponement of the limitation periods. In that regard, he emphasized the considerable publicity in both the United States and Canada surrounding the investigation into price-fixing relating to HFCS, lysine and citric acid in the United States in the 1990s involving the defendant Archer Daniels Midland Company and other defendants, and the related lawsuits commenced in the United States concerning lysine and citric acid. In his view, the well-publicized investigation and lawsuits should have sparked further inquiry by the plaintiffs. The trial judge found that “a bare minimum of enquiry then would have led them much earlier to learn what they say they first learned in 2004” (para. 57).
DISCUSSION
(1) Statutory Interpretation
(a) Standard of Review
[25] It is not disputed that the proper interpretation of s. 1 and s. 3(3) of the Act is a question of law for which the applicable standard of review is one of correctness. (See Kerr v. Danier Leather Inc. (2005), 77 O.R. (3d) 321 (C.A.) at para. 81, and Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235 at para. 8.)
(b) Basic Principles of Statutory Interpretation
[26] It is settled law that “the words of an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act and the intention of Parliament”. (See Bell ExpressVu Limited Partnership v. Rex, 2002 SCC 42, [2002] 2 S.C.R. 559 at para. 26.)
(c) The Provisions of the Act In Issue
[27] The key provisions of the Act in issue are the definition of “trust” in s. 1 and the limitation provision in s. 3(3) which provide, in part, as follows:
1. “trust” includes an express, an implied and a constructive trust, whether or not the trustee has a beneficial interest in the trust property, and whether or not the trust arises only because of a transaction impeached, ...
3(3). After the expiration of 10 years after the date on which the right to do so arose a person may not bring any of the following actions:
...
(b) against a trustee in respect of any fraud or fraudulent breach of trust to which the trustee was party or privy;
(c) against a trustee for the conversion of trust property to the trustee’s own use;
(d) to recover trust property or property into which trust property can be traced against a trustee or any other person; …
[Emphasis added.]
[28] The “catch-all” provision which applies where a specific limitation period is not provided in the Act, and which the defendants submit applies to the plaintiffs’ claims, is s. 3(5), which provides:
(5) Any other action not specifically provided for in this Act or any other Act may not be brought after the expiration of 6 years after the date on which the right to do so arose.
(d) The Position of the Parties
[29] The defendants submit that, when the principles of statutory interpretation are properly applied, it is apparent that the words “trust”, “constructive trust”, “trustee” and “trust property” in s. 1 and s. 3(3) of the Act apply only to express trusts or substantive constructive trusts involving a pre-existing trust or trust-like relationship. They contrast the substantive or institutional constructive trust (which terms they use interchangeably) with the remedial constructive trust which does not arise out of a previous trust or trust-like relationship, but is a discretionary remedy imposed by the court for unjust enrichment or other wrongs. They submit that it is only the former type of trust which attracts the ten-year limitation period in s. 3(3) of the Act. In support of this submission, they place considerable reliance on the decision of the English Court of Appeal in Paragon Finance plc v. D.B. Thakerar & Co (a firm), [1999] 1 All E.R. 400 (C.A.).
[30] The defendants also submit that s. 3(3) and the other limitation periods under the Act should be interpreted as applying only to causes of action, without regard to the remedy claimed. They submit that an interpretation of the Act which permits the limitation period to be determined by the remedy sought, and not by the cause of action, gives rise to uncertainty in the law and unfairness to defendants. They suggest that such an interpretation encourages an abuse of the system by inviting plaintiffs to seek a remedial constructive trust solely for the purpose of avoiding or extending the limitation periods which would otherwise apply. They submit that the plaintiffs’ claim for a remedial constructive trust is a thinly disguised attempt to “side-step” the six-year limitation period for what the defendants submit is essentially a claim for unjust enrichment. They note that there is no pleading or suggestion of a trust or trust-like relationship between the parties, other than in the proposed remedy, and that the only other causes of action which the trial judge found were disclosed by the pleadings – civil conspiracy to fix prices, tortious interference with economic interest, and breach of Part 6 of the Competition Act – are governed by limitation periods of six years, six years, and two years, respectively.
[31] The defendants submit that the trial judge erred in relying on a “literal” interpretation of the words “constructive trust” in the definition of “trust” in s. 1 of the Act, and in finding that a ten-year limitation period applied to the plaintiffs’ claims for a remedial constructive trust under s. 3(3). They submit that this interpretation does not reflect a principled approach to the interpretation of these provisions.
[32] The plaintiffs submit that the trial judge was correct in finding that a remedial constructive trust is a constructive trust within the definition of “trust” under s. 1 of the Act and in finding that s. 3(3) of the Act applied to claims for a remedial constructive trust. They submit that his interpretation is supported not only by a plain reading of the provisions, but by the legislative history of the Act and by Canadian authorities which have continued to develop the concept of the remedial constructive trust beyond its origins in Pettkus v. Becker, [1980] 2 S.C.R. 834, 117 D.L.R. (3d) 257. They submit that the defendants are advocating a definition of constructive trust which ignores the development and significance of the remedial constructive trust in Canada, and which relies on English authority which does not recognize the remedial constructive trust. They submit that the trial judge properly rejected the static approach to statutory interpretation by applying s. 7(1) of the Interpretation Act, R.S.B.C. 1996, c. 238, which provides that “every enactment must be construed as always speaking.”
[33] The plaintiffs submit that a claim based in unjust enrichment does not necessarily fall under the “catch-all” provision of the Act and attract a six-year limitation period, but that where the court determines that the appropriate relief for unjust enrichment is a remedial constructive trust, a ten-year limitation period will apply. They also submit that their claim for a remedial constructive trust is not based solely in unjust enrichment, but is also based on the wrongful acts of the defendants particularized in the pleadings. They say that, in claims based on unjust enrichment or other wrongful act, as here, the remedy of a remedial constructive trust cannot be separated from the cause of action and that, to the extent they claim a remedial constructive trust as a remedy for the defendants’ wrongdoing, their action sounds in trust. They emphasize that the effect of the imposition of a remedial constructive trust is to make the wrongdoer a “trustee” of “trust property” in situations where there was no prior trust or trust-like relationship between the parties, and that there is no principled basis for excluding plaintiffs who obtain a constructive trust remedy from the ten-year limitation period available to plaintiffs where a prior trust or trust-like relationship exists. They say that it is not necessary to fall back on the “catch-all” provision in s. 3(5) of the Act since s. 3(3) of the Act clearly applies where the court declares a remedial constructive trust.
(e) Analysis
(i) Introduction
[34] It is important to note at the outset of this analysis that the trial judge did not decide, nor is this Court asked to decide, whether the plaintiffs’ claim for a constructive trust is bound to fail. The merits of the claim were not the subject of the application to dismiss the action under Rule 18A and are not before us on this appeal.
(ii) The Plain Meaning of Sections 1 and 3(3)
[35] The first step in this analysis is to consider the definition of “trust” in s. 1 of the Act. “Trust” is defined to include a “constructive trust, whether or not ... the trust arises only because of a transaction impeached.” On the face of it (based on what the defendants refer to as a “literal” interpretation, and what the plaintiffs refer to as the “plain meaning”), this definition would include all remedial constructive trusts, including one imposed as a result of an impeached transaction.
[36] Continuing with that analysis, if a constructive trust in s. 1 includes a remedial constructive trust, then there is little doubt that the words “trustee” and “trust property” in s. 3(3) of the Act could apply to the defendants and to property made subject to a remedial constructive trust in favour of the plaintiffs, with the result that a ten-year limitation period could apply. For example, s. 3(3)(d) could apply on the basis that this is an action “to recover trust property or property into which trust property can be traced against a trustee or any other person.”
[37] The nature of the plain meaning rule as a principle of statutory interpretation is described in the text by Ruth Sullivan, Statutory Interpretation, 2d ed. (Toronto: Irwin Law, 2007), where the author refers to “the plain meaning rule” at p. 57, as follows:
When judges are satisfied that the ordinary meaning of legislation is the meaning that should be adopted, they sometimes invoke the plain meaning rule. This rule originated in a passage from the judgment of Lord Tindal in the Sussex Peerage case [(1844), 11 Cl. & Fin. 85 at 143, 8 E.R. 1034 at 1057]. He wrote:
If the words of the statute are in themselves precise and unambiguous, then no more can be necessary than to expound those words in their natural and ordinary sense. The words themselves alone do, in such case, best declare the intention of the lawgiver. But if any doubt arises from the terms employed by the legislature, it has always been held a safe means of collecting the intention, to call in aid the ground and cause of making the statute, and to have recourse to the preamble... and “the mischiefs which [the makers of the Act] intended to redress.” [Emphasis added by R. Sullivan.]
[38] The author then goes on to address some of the limitations in relying entirely on the plain meaning rule which we need not recite here. Suffice it to say that the trial judge did not consider it appropriate to begin and end his analysis with the plain meaning rule in this case, but went on to consider other factors, including the purpose of limitations legislation, the legislative history of the provisions, and the authorities referred to by counsel.
[39] We agree with the approach taken by the trial judge to the interpretation of s. 1 and s. 3(3). This was not a case in which the plain meaning rule could be relied upon to definitively determine the intention of the legislature, as will become evident when we refer to the legislative history of these provisions.
(iii) The Purpose of Limitations Legislation
[40] The defendants submit that the purpose of limitation periods generally is to favour defendants over plaintiffs and that this is consistent with an interpretation of s. 1 and s. 3(3) which excludes the remedial constructive trust. In particular, they submit that statutes of limitation are statutes of repose, intended to provide peace to defendants after a stipulated period of time, and that they should not be interpreted in such a way that the correct limitation period can only be determined at the end of the trial.
[41] In our view, the purpose of limitations legislation is not as one-sided as the defendants suggest. In Novak v. Bond, [1999] 1 S.C.R. 808, 172 D.L.R. (4th) 385, Madam Justice McLachlin, speaking for the majority, sums up the contemporary view of limitation periods at para. 67 of her reasons as follows:
The result of this legislative and interpretive evolution is that most limitations statutes may now be said to possess four characteristics. They are intended to: (1) define a time at which potential defendants may be free of ancient obligations, (2) prevent the bringing of claims where the evidence may have been lost to the passage of time, (3) provide an incentive for plaintiffs to bring suits in a timely fashion, and (4) account for the plaintiff’s own circumstances, as assessed through a subjective/objective lens, when assessing whether a claim should be barred by the passage of time. To the extent they are reflected in the particular words and structure of the statute in question, the best interpretation of a limitations statute seeks to give effect to each of these characteristics.
[42] In the more recent decision of Canada (Attorney General) v. Lameman, 2008 SCC 14, the court states (at para. 13) that:
The policy behind limitation periods is to strike a balance between protecting the defendant’s entitlement, after a time, to organize his affairs without fearing a suit, and treating the plaintiff fairly with regard to his circumstances.
[43] In Lameman, the court also notes that a further purpose served by limitation periods is to permit defendants to extricate themselves from litigation commenced outside the limitation period which, in clear cases, can be done at an early stage of the proceedings with considerable savings in time and expense.
[44] The passages to which we have referred make it clear that the general purposes of limitations legislation is not to favour defendants over plaintiffs, but to strike a balance between fairness to plaintiffs and fairness to defendants. While early resolution of litigation is an important goal, there are many cases in which a limitation defence cannot be resolved before substantial evidence is heard. Not all limitation issues lend themselves to a R. 18A application early in the litigation, and claims involving a remedial constructive trust may well fall into that category.
[45] In the result, we do not find any of the general purposes of limitations legislation to be of particular assistance in determining whether s. 1 and s. 3(3) of the Act apply to the plaintiffs’ claim for a remedial constructive trust. In answering this specific question, it is more useful to have regard to the legislative history of the specific provisions of the Act dealing with trusts. Before turning to that legislative history, however, we will address the defendants’ submissions regarding the scheme of the Act.
(iv) The Scheme of the Act
[46] The defendants submit that the concept of the “cause of action” is central to identifying the applicable limitation period under the Act. Thus, in applying the Act, one first identifies the cause of action and then turns to the Act to determine the limitation period that applies to the cause of action identified. Where the Act is silent as to the applicable limitation period, the catch-all six-year limitation period applies. We do not take issue with these statements as generally reflecting the underlying scheme of the Act.
[47] Critical to the defendants’ view of the scheme of the Act, however, is the further proposition that, in determining the cause of action and the applicable limitation period, the remedy claimed is never relevant and cannot be taken into account. The defendants say that this submission is supported by the legislative history of the Act and by the words of Lord Justice Millett in Paragon, who states (at p. 414), that “any principled system of limitation should be based on the cause of action and not the remedy.”
[48] In the context of this case, the defendants say that, to the extent the plaintiffs’ claim is framed in unjust enrichment (or wrongful act), it falls under the catch-all provision of the Act and attracts a six-year limitation period. This is so whether the remedy claimed is restitution by way of a monetary award, or a constructive trust seeking return of the very property in dispute.
[49] We do not read the Act as being as absolute as the defendants suggest in terms of excluding the remedy claimed as a relevant factor in determining the applicable limitation period. That is the very issue at the heart of this appeal. The question is whether, in circumstances where a plaintiff ultimately succeeds in a claim for a constructive trust and obtains a proprietary remedy (whether the underlying claim is framed in unjust enrichment, breach of confidence, or other wrongful act (as discussed in Soulos v. Korkontzilas, [1997] 2 S.C.R. 217, 146 D.L.R. (4th) 214), the action can be said to sound in trust so as to attract a ten-year limitation period under s. 3(3) of the Act. The trial judge found that the answer to this question is “yes”. In our view, and in the absence of authority, it is not an answer to this question to simply state that the remedy claimed is irrelevant to this analysis. This is particularly so given the history and development of the remedial constructive trust in Canada and the history of limitation periods in relation to trusts. In short, we do not read the Act as supporting the proposition that the remedy claimed can never be taken into account in determining the appropriate limitation period, at least in circumstances where the remedy claimed is a remedial constructive trust.
[50] While in most cases the applicable limitation period can be readily ascertained from the pleaded facts giving rise to a cause of action without regard to the remedy claimed, a claim for the imposition of a remedial constructive trust is different. The parties’ relationship may permit or require the imposition of a remedial constructive trust over property with retroactive effect: see Rawluk v. Rawluk, [1990] 1 S.C.R. 70. Only when the remedy is granted can it be said with confidence that the relationship between the parties carried the “trust-like” obligation to return the property subject to the imposition of the trust.
[51] In summary, while we do not quarrel with the defendants’ proposition that limitation periods are generally determined by reference to the underlying cause or causes of action, without regard to the remedy claimed, we do not accept that this is a universal truth brooking no exceptions, or that the Act compels such an inflexible approach.
[52] In our view, the legislative history of the Act supports this conclusion.
(v) Legislative History
[53] The legislative history of these provisions is developed at length by the B.C. Law Reform Commission (the “BCLRC”) in its Report on Limitations: Part 2 – General (Victoria: Ministry of the Attorney General, 1974). That report relied heavily on the earlier Report of the Ontario Law Reform Commission on Limitation of Actions (Toronto: Department of the Attorney General, 1969) and New South Wales’ Report of the Law Reform Commission: Being the First Report on the Limitation of Actions, L.R.C. 3 (Sydney: New South Wales Government Printer, October 1967). The authors of these reports noted that, historically, there had been no limitation period barring beneficiaries from suing their trustee for breach of an express trust on the basis that the property held by the trustee was always regarded as belonging to the beneficiary. Limitation periods with respect to “non-express” trustees (including constructive trustees) were less clear, and many were subject to various statutory provisions which we need not review here. Ultimately, the BCLRC (following the lead of Ontario) determined that all claims for breach of trust should be subject to limitation periods and, more importantly for our purposes, that the distinction between express trusts and constructive trusts for limitations purposes should be abolished.
[54] Having determined that limitation periods should apply to all types of trusts, the BCLRC then considered the appropriate length of the limitation period which should apply, and canvassed various options.
[55] With respect to breach of trust, the BCLRC noted that the English legislation continued to deny the protection of limitation periods to the fraudulent trustee and to the trustee still in possession of the trust property or proceeds thereof. The New South Wales report concluded that a 12-year limitation period should apply; the Ontario report recommended a ten-year limitation period.
[56] The BCLRC preferred the Ontario approach, and recommended the adoption of a ten-year limitation period for all “serious breaches” of trust. The specific recommendation with respect to limitation periods for what the report referred to as claims for “serious breaches” of trust (which are reproduced in s. 3(3)(a) to (e) of the Act) is as follows:
4. The following actions be subject to a 10-year limitation period:
(a) Actions against the personal representatives of a deceased person for a share of the estate:
(b) Actions in respect of any fraud or fraudulent breach of trust to which the trustee was party or privy:
(c) Actions against a trustee for the conversion of trust property to his own use:
(d) Actions to recover trust property or property into which trust property can be traced against a trustee or any other person:
(e) [A]ctions to recover money on account of a wrongful distribution of trust property against the person to whom the property is distributed, or his successor.
[57] For what were considered less serious breaches of trust, the BCLRC recommended that:
5. All other actions brought in respect of a breach of trust for which a limitation period is not prescribed by some other provision of the proposed statute be subject to a six-year limitation period.
[58] The BCLRC expressed the view that the six-year “catch-all” provision should govern “most actions”.
[59] The trial judge recounted this legislative history and observed that these recommendations, which were adopted in the Act of 1975, predated the decision in Pettkus v. Becker, supra, which was the first judicial recognition of the remedial constructive trust in Canada. Thus, the recommendation of the BCLRC that the distinction between express and constructive trusts be abolished for limitation purposes cannot be said to have taken into account the remedial constructive trust. As the trial judge noted, however, s. 7(1) of the Interpretation Act provides that the meaning of the words of an enactment are not frozen at a particular moment in time, but that an enactment is always speaking. In our view, this principle, although not determinative, tends to support the plaintiffs’ view that the words “constructive trust” in the definition of “trust” in s. 1 of the Act should be read to include remedial constructive trusts.
[60] It does not, however, resolve the question of whether s. 3(3) of the Act applies in this case since the legislative history of these provisions indicates that the ten-year limitation period was intended to apply only to the “serious breaches” of trust set out therein, with a six-year limitation period to apply to lesser breaches.
(vi) Substantive vs Remedial Constructive Trusts
[61] As we understand their submission, the defendants accept that s. 3(3) of the Act is intended to deal with only serious breaches of trust. They say that, historically, only breaches of express trusts and other pre-existing trust-like relationships fell into the category of serious breaches of trust based, in large part, on the inherent vulnerability of the beneficiaries of such trusts. They contrast these “real” or “true” trusts, with remedial constructive trusts. They submit that the latter are trusts in name only, without the incidents of real trust or trust-like relationships; they are simply remedial tools employed by the courts in a variety of situations to provide a proprietary remedy in circumstances where there is no pre-existing trust or trust-like relationship, and where the deemed trustee has no other trust duties to fulfill beyond return of the properties.
[62] The defendants state that the distinction between remedial constructive trusts and express or substantive constructive trusts justifies departing from a plain reading of the definition of “trust” in s. 1 and in refusing to bring remedial constructive trusts within the ambit of s. 3(3) of the Act with its ten-year limitation period.
[63] In support of this submission, the defendants rely on the distinction between substantive and remedial constructive trusts described by Mr. Justice Lambert, speaking for the majority, in Atlas Cabinets and Furniture Ltd. v. National Trust Co. (1990), 45 B.C.L.R. (2d) 99 (C.A.), at p. 108:
A substantive constructive trust must be distinguished from a remedial constructive trust. In a substantive constructive trust, the acts of the parties in relation to some property are such that those acts are later declared by a court to have given rise to a substantive constructive trust and to have done so at the time when the acts of the parties brought the trust into being. The difference between a substantive constructive trust and a resulting trust may, in cases where the property reverts to the settlor, be no more than a matter of terminological preference. In a remedial constructive trust, on the other hand, the acts of the parties are such that a wrong is done by one of them to another so that, while no substantive trust relationship is then and there brought into being by those acts, nonetheless a remedy is required in relation to property and the court grants that remedy in the form of a declaration which, when the order is made, creates a constructive trust by one of the parties in favour of another party. The remedial constructive trust so created would have effect from the date of the court order unless there was some provision in the order to the contrary. But, of course, the order itself could give the remedial constructive trust a retroactive or prospective effect in an appropriate case. See Rawluk v. Rawluk, S.C.C., No. 20736, 25th January 1990 [now reported 23 R.F.L. (3d) 337, 65 D.L.R. (4th) 161, per Cory J. at p. 21 [p. 364 R.F.L.]].
[64] The defendants also rely on the following passage from Waters, Gillen and Smith, Waters’ Law of Trusts in Canada, 3d ed. (Toronto: Thomson, 2005) at p. 473, under the heading “The Way Forward”:
This topic naturally leads us to the question of what it is that, in terms of doctrine, the Pettkus v. Becker majority opinion has achieved – that is, what difference does it make that the constructive trust is now clearly recognised as a remedy? The answer to that question is well set out in the American literature. The remedial constructive trust has as much association with the law of express trusts as quasi-contract has with the law of contract. As Professor Scott has said, [footnote omitted], “One would hardly say where a quasi-contractual obligation is imposed the court converts the defendant into a contractor, or converts the obligation into a contract.” In the same way an unjustly enriched person, or a defendant holding a wrongful profit, does not “become a trustee”, as we understand that term in the law of express trusts. He will be required to hold the property in question for another, as an express trustee, too, must do. But chalk and cheese are not the same substance, even thought they may happen to have the same colour. The similarities are truly accidental. To follow this further, an express trustee must recognise the claims of others, as indeed he must discharge a number of duties in his role of managing property on behalf of others. The constructive trustee is required to make specific restitution of that which he ought to restore to another. We may call this the duty to admit another’s claim, if we will, provided we understand we are merely describing the effect of imposing upon him the obligation to restore what he should not have, and enforcing that obligation through the availability of a restitutionary remedy. The constructive trustee does not owe the fiduciary obligations of loyalty, which are always undertaken voluntarily.
Professor Scott puts the difference between the institution and the remedy into a nutshell when he says, [footnote omitted], [The defendant] is not compelled to convey the property because he is a constructive trustee; it is because he can be compelled to convey it that he is a constructive trustee.”...
[Emphasis added.]
[65] The defendants rely on the emphasized portions of this passage. It is important to note, however, that the distinction drawn in this passage is between express trusts and remedial constructive trusts. It does not address the distinction drawn by the defendants here between substantive constructive trusts and remedial constructive trusts. Further, immediately following this passage, Dr. Waters states that “‘remedy’ does not tell the whole story” of the remedial constructive trust, and that the constructive trust remedy “is inseparably interwoven” with the plaintiff’s right to have the unjustly enriched party (or wrongdoer acting against conscience) surrender his gain (p. 474). We interpret this caveat as supportive of the proposition that a remedial constructive trust should not be treated “merely” as a remedy.
[66] The defendants also place significant reliance on the reasoning of Lord Justice Millett in Paragon in support of the distinction they seek to maintain for limitation purposes between express and substantive constructive trusts, on the one hand, and remedial constructive trusts, on the other.
[67] In Paragon, the defendant solicitors acted for both the plaintiff mortgage lenders and the borrowers in relation to the purchase and mortgage of a number of flats. None of the borrowers made any payments on their mortgages and the plaintiffs suffered substantial losses. The plaintiffs sued the defendants in 1994, basing their claims on breach of contract, breach of a duty of care and breach of fiduciary duty. After 1997, it became apparent to them that, in the absence of a plea of fraud, they could not recover their total loss. Consequently, they applied to amend their pleadings to allege fraud, conspiracy to defraud, fraudulent breach of trust and intentional breach of fiduciary duty. Whether those claims could be added turned, in part, on whether they were made outside the applicable limitation period. Cognizant of the fact that no limitation period applied to fraudulent breaches of trust, the plaintiffs pleaded that the defendants obtained mortgage advances which they knew to have been based on dishonest statements and that, as a consequence, the defendants held those funds pursuant to a constructive trust requiring them to return the funds to the plaintiffs immediately upon receipt. The plaintiffs submitted that it was irrelevant that the constructive trust in question had no existence independent of the fraudulent transaction impeached, and further submitted that any prior distinction between express and constructive trusts had been extinguished by the enactment of the Limitations Act, 1939 (U.K.), 2 & 3 Geo. 4, c. 21.
[68] Lord Justice Millett rejected the plaintiffs’ submissions on this point. In so doing, he noted (at para. 408) that, historically, a claim for breach of an express trust was never barred by lapse of time and that this rule had been applied to “trustees de son tort and to directors and other fiduciaries who, though not strictly trustees, were in an analogous position and who abused the trust and confidence reposed in them to obtain their principal’s property for themselves. Such persons are properly described as constructive trustees”. Millett L.J. then distinguished between two different categories of constructive trustees (which conforms to the distinction the defendants seek to draw for limitation purposes between the substantive constructive trustee and the remedial constructive trustee). In his view, the distinction was critical for limitation purposes since it was only the express trustee and the substantive constructive trustee who were not subject to any limitation period. His discussion in that regard commences at p. 408 of the decision. We will set it out in some detail as the defendants place considerable weight on it in asking this Court to find that a remedial constructive trust does not fall within the definition of “trust” in s. 1 of the Act or attract the ten-year limitation period set out in s. 3(3):
Regrettably, however, the expressions ‘constructive trust’ and ‘constructive trustee’ have been used by equity lawyers to describe two entirely different situations. The first covers those cases already mentioned, where the defendant, though not expressly appointed as trustee, has assumed the duties of a trustee by a lawful transaction which was independent of and preceded the breach of trust and is not impeached by the plaintiff. The second covers those cases where the trust obligation arises as a direct consequence of the unlawful transaction which is impeached by the plaintiff.
A constructive trust arises by operation of law whenever the circumstances are such that it would be unconscionable for the owner of property (usually but not necessarily the legal estate) to assert his own beneficial interest in the property and deny the beneficial interest of another. In the first class of case, however, the constructive trustee really is a trustee. He does not receive the trust property in his own right but by a transaction by which both parties intend to create a trust from the outset and which is not impugned by the plaintiff. His possession of the property is coloured from the first by the trust and confidence by means of which he obtained it, and his subsequent appropriation of the property to his own use is a breach of that trust. [Examples omitted.] In these cases the plaintiff does not impugn the transaction by which the defendant obtained control of the property. He alleges that the circumstances in which the defendant obtained control make it unconscionable for him thereafter to assert a beneficial interest in the property.
The second class of case is different. It arises when the defendant is implicated in a fraud. Equity has always given relief against fraud by making any person sufficiently implicated in the fraud accountable in equity. In such a case he is traditionally though I think unfortunately described as a constructive trustee and said to be ‘liable to account as constructive trustee’. Such a person is not in fact a trustee at all, even though he may be liable to account as if he were. He never assumes the position of a trustee, and if he receives the trust property at all it is adversely to the plaintiff by an unlawful transaction which is impugned by the plaintiff. In such a case the expressions ‘constructive trust’ and ‘constructive trustee’ are misleading, for there is no trust and usually no possibility of a proprietary remedy; they are ‘nothing more than a formula for equitable relief’: [citation omitted].
[Emphasis added.]
[69] After noting that the plaintiffs in that case were seeking a constructive trust of the second kind arising solely on the basis of the impugned transaction, Lord Justice Millett went on to discuss the limitations consequences of the distinction between the two types of constructive trusts under English law (at pp. 409-410):
The importance of the distinction between the two categories of constructive trust lies in the application of the statutes of limitation. Before 1890 constructive trusts of the first kind were treated in the same way as express trusts and were often confusingly described as such; claims against the trustee were not barred by the passage of time. Constructive trusts of the second kind however were treated differently. They were not in reality trusts at all, but merely a remedial mechanism by which equity gave relief for fraud. The Court of Chancery, which applied the statutes of limitation by analogy, was not misled by its own terminology; it gave effect to the reality of the situation by applying the statute [of limitations] to the fraud which gave rise to the defendant’s liability.
[70] Lord Justice Millett then considered whether this analysis had been altered by the introduction of the Trustee Act 1888 which defined “trustee” as including “a trustee whose trust arises by construction or implication of law as well as an express trustee.” (This definition was materially the same as that in the 1925 legislation which was incorporated into the Limitation Act 1939.) Millett L.J. acknowledged that this provision, read literally, could be interpreted as having abolished the distinction between the two categories of constructive trustees. In finding that the distinction had not been abolished, he relied on the decision of the Privy Council in Taylor v. Davies (1919), 51 D.L.R. 75 (P.C.), on appeal from a similar provision in Ontario legislation. The Privy Council held that constructive trustees of the second kind did not fall within the meaning of the definition of “trustee”, but could rely on the statutes of limitation by analogy. In other words, unlike trustees of the first kind, trustees of the second kind received some protection against stale claims in equity by analogy with limitations provided under the Act.
[71] Despite views to the contrary, including Barlow Clowes International Ltd. v. Eurotrust International Ltd. (1998), 2 OFLR (ITELR) 42 (High Court of Justice of the Isle of Man, Staff of Government Division), and the views of the English law reform commissioners, Lord Justice Millett found that this distinction survived the passage of the 1939 Act. In his view, the distinction between the two categories of constructive trusts was the distinction between a trust and a “catch-phrase”.
[72] It is equally apparent that Millett L.J. was of the view that the difference between the two categories of constructive trusts justified a difference in their treatment for limitation purposes. At p. 414 of the decision, he stated:
… Although the 1939 and 1980 Acts are perhaps not wholly consistent in this respect, any principled system of limitation should be based on the cause of action and not the remedy. There is a case for treating fraudulent breach of trust differently from other frauds, but only if what is involved really is a breach of trust. There is no case for distinguishing between an action for damages for fraud at common law and its counterpart in equity based on the same facts merely because equity employs the formula of constructive trust to justify the exercise of the equitable jurisdiction.
…
… I question whether so many different remedies should continue to be available for the same misapplication of property. They make proceedings of the present kind unnecessarily complex. But whatever the answer to this question, the present problem is a semantic one. The defendants cannot sensibly be described as constructive trustees at all. The expression is used in its remedial sense, though not in the sense in which it is used in the United States and Canada, where it is the basis of a discretionary proprietary remedy; in cases like the present a plaintiff is necessarily confined to a personal remedy. Before the Supreme Court of Judicature Act 1873 the expression was a catch-phrase which was employed by the Court of Chancery to justify the exercise of equity’s concurrent jurisdiction in cases of fraud. 125 years later it is surely time to discard it. If we cannot bring ourselves to discard it, at least we can resolve not to take it literally.
[Emphasis added.]
[73] Lord Justice Millett took up this theme again in the later decision of Dubai Aluminium Company Limited v. Salaam, [2002] UKHL 48, at para. 142 where he referred to the second class of constructive trustee as follows:
In this second class of case the expressions “constructive trust” and “constructive trustee” create a trap. As the Court of Appeal recently observed in Coulthard v. Disco Mix Club Ltd. [2000] 1 WLR 707, 731 this “type of trust is merely the creation by the court … to meet the wrongdoing alleged: there is no real trust and usually no chance of a proprietary remedy.” The expressions are “nothing more than a formula for equitable relief”: [citation omitted]. I think that we should now discard the words “accountable as a constructive trustee” in this context and substitute the words “accountable in equity”.
[Emphasis added.]
[74] It is apparent, therefore, that Millett L.J. was firmly convinced that there should be a real distinction for limitation purposes between constructive trusts which arise by virtue of a pre-existing trust or trust-like relationship (substantive constructive trusts) and trusts which arise only by virtue of a transaction impeached in the absence of a pre-existing trust or trust-like relationship, where the trust is imposed as a purely remedial tool to right a wrong. The defendants invite this Court to adopt Lord Justice Millett’s approach in interpreting s. 1 and s. 3(3) of the Act by finding that only the former category of trusts falls under the definition of “trust” in s. 1 and attracts the ten-year limitation period under s. 3(3).
[75] The difficulty inherent in the defendants’ submission is that, apart from differences in the wording of the legislation, Canadian law, unlike English law, recognizes a remedial constructive trust as a form of trust, albeit distinguishable from an express or substantive constructive trust. Our courts have not sought to distance themselves from the language of trusts in imposing the incidents of a trust on defendants who were not otherwise in a trust or trust-like relationship with the plaintiff, and solely as a result of a transaction impeached in appropriate circumstances. The circumstances in which a remedial constructive trust has been imposed range from family relationships (Pettkus, supra; Peter v. Beblow, [1993] 1 S.C.R. 980, 101 D.L.R. (4th) 621), to agency relationships (Soulos, supra), to purely commercial relationships (Lac Minerals Ltd. v. International Corona Resources Ltd., [1989] 2 S.C.R. 574; Minera Aquiline Argentina SA v. IMA Exploration Inc., 2006 BCSC 1102, 58 B.C.L.R. (4th) 217, aff’d 2007 BCCA 319, [2007] 10 W.W.R. 648). They also extend beyond claims based in unjust enrichment, to include claims based on other wrongful conduct. In each case, the defendant is made a “trustee” of “trust property” for the purpose of ensuring that the “trust property” is returned to the plaintiff where no other remedy will do justice between the parties.
[76] In Soulos, Chief Justice McLachlin describes the unifying principle underlying both substantive and remedial constructive trusts as being “the broad umbrella of good conscience”. At paras. 34 and 43 of the decision, she states:
It thus emerges that a constructive trust may be imposed where good conscience so requires. The inquiry into good conscience is informed by the situations where constructive trusts have been recognized in the past. It is also informed by the dual reasons for which constructive trusts have traditionally been imposed: to do justice between the parties and to maintain the integrity of institutions dependent on trust-like relationships. Finally, it is informed by the absence of an indication that a constructive trust would have an unfair or unjust effect on the defendant or third parties, matters which equity has always taken into account. Equitable remedies are flexible; their award is based on what is just in all the circumstances of the case.
...
I conclude that in Canada, under the broad umbrella of good conscience, constructive trusts are recognized both for wrongful acts like fraud and breach of duty of loyalty, as well as to remedy unjust enrichment and corresponding deprivation. While cases often involve both a wrongful act and unjust enrichment, constructive trusts may be imposed on either ground: where there is a wrongful act but no unjust enrichment and corresponding deprivation; or where there is an unconscionable unjust enrichment in the absence of a wrongful act, as in Pettkus v. Becker, supra. Within these two broad categories, there is room for the law of constructive trust to develop and for greater precision to be attained, as time and experience may dictate.
[Emphasis added.]
[77] In Soulos, there was arguably a “trust-like” relationship between the real estate agent who took advantage of an opportunity which had been available to his client by transferring the property in question into his wife’s name. But there was a purely commercial relationship between the parties in Lac Minerals and Minera where the remedy of a constructive trust was imposed for a breach of confidence. Although limitation issues were not raised in those cases, the courts clearly treated the breaches of confidence involved as serious and as justifying the imposition of a constructive trust and a proprietary remedy.
[78] In the passage we have quoted from Paragon at para. 69, supra, Lord Justice Millett appeared to be of the view that the second category of constructive trust he described as not being a trust at all was different from the remedial constructive trust imposed in the United States and Canada which recognizes the “proprietary” nature of the remedy. To the extent he viewed the second category of constructive trust under English law as providing only a personal remedy, that, in itself is a basis for distinguishing it from the proprietary remedy recognized by Canadian courts and from the remedy the plaintiffs are seeking in this case. The plaintiffs deny that their claim is simply for a monetary remedy without regard to the source of the funds; they say that they are seeking the return of the monies taken from them by way of equitable tracing. This Court is not asked to determine whether a tracing remedy is, or could be, available to them in the circumstances; that issue remains to be determined.
[79] Further, there is little doubt from reviewing the legislative history of the Act that British Columbia has rejected the Taylor v. Davies distinction between trusts which was approved by Lord Justice Millett in Paragon.
[80] As earlier stated, the Law Reform Commissions of New South Wales, Ontario and British Columbia responded to the confusing and unsatisfactory state of the law by recommending that all distinctions between express trusts and constructive trusts be abolished for limitation purposes. This was accomplished in British Columbia principally through the definition of trust in s. 1 of the Act whereby trust “includes an express, an implied and a constructive trust ... whether or not the trust arises only because of a transaction impeached.” In Paragon, Lord Justice Millett was not prepared to find that similar wording had the same effect in relation to the second category of constructive trustee.
[81] In discussing the reform of the law of limitations in relation to trusts, Dr. Waters observes that the law in British Columbia represents a considerable departure from the historic English position. At p. 1251, he states:
In 1975, adopting the report of the provincial Law Reform Commission, British Columbia adopted a Limitation Act which constituted a completely new statement of limitation legislation provisions. The position of trustees and trust beneficiaries is crisply and comprehensively set out. However, there is another important feature associated with this Act. It represents a departure from the historic rule in England and the other Canadian common law jurisdictions; the Act gives “trustees” of every description, whatever the nature of the breach of trust, the protection of a limitation period. Whether the trustee is alleged to have committed a fraudulent breach of trust or any act of fraud, or to have converted trust property to his own use, the right of action against him is extinguished ten years after it arises. A person in possession of trust property wrongly distributed to him, and a person into whose lands trust property can be traced are also given the ten-year protection, as is the personal representative when the claim is for a share of the estate ...
[82] Earlier in his discussion (at p. 1249-50), in distinguishing the Canadian position from the historic position in England, and after observing that the earlier authorities were difficult to reconcile, Dr. Waters states:
... In Canada, following Becker v. Pettkus, we would no longer draw a distinction between constructive trusts arising from a pre-existing fiduciary relationship, or from the wrongful act itself. We would not even require a fiduciary relationship; unjust enrichment alone is enough to justify the court in dubbing the enriched party a constructive trustee. ...
[83] In attempting to support their respective positions in relation to the proper interpretation of s. 1 and s. 3(3) of the Act, counsel referred to several other authorities. We agree with the trial judge that those authorities are inconclusive and we do not find them helpful in this analysis. For example, although the recent decision of the Ontario Court of Appeal in Hartman Estate v. Hartfam Holdings Ltd. (2006), 263 D.L.R. (4th) 640, held that a remedial constructive trust imposed by the court was not subject to a limitation period, and distinguished Taylor v. Davies in so doing, the court was not presented with the arguments raised on this appeal. That is also true of the other authorities referred to by counsel.
[84] Given the departure between the English and Canadian authorities in dealing with limitation periods in relation to trusts and trustees, and the decision of the legislature to accept the recommendation of the BCLRC to abolish the distinctions between different types of trusts and trustees for the purposes of limitation periods, we are not persuaded that the reasoning of the court in Paragon should govern the analysis of the limitation issue in this case. The Legislature in British Columbia accepted that it was preferable to remove the distinctions between different types of trusts for limitation purposes rather than to preserve the historic, confusing, and sometimes inconsistent application of the law of limitations in relation to trusts reflected in the earlier authorities. It was apparently felt that the law of limitations could be simplified by so doing. The question of whether that goal has been achieved is not the subject of this appeal.
(vii) Side-Stepping the Limitation Period
[85] The defendants also submit that the plaintiffs’ claim for a constructive trust is simply an attempt to “piggy-back” a claim in equity (for a remedial constructive trust) on common law claims based on the same underlying facts for the sole purpose of taking the benefit of the extended limitation period that applies to breaches of trust under s. 3(3) of the Act. The defendants submit that the court should not countenance this thinly disguised attempt to “side-step” the limitation periods in the Act. They say that, historically, such side-stepping was not permitted and they refer to an article by W.J. Swadling, “Limitation”, in Birks and Pretto, eds., Breach of Trust (Oxford: Hart Publishing, 2002), at 323-34 in that regard.
[86] It does not appear that the side-stepping argument was raised before the trial judge. In our view, it is simply a reformulation of the defendants’ argument that the plaintiffs’ claim in this case does not sound in trust and, thus, does not fall under s. 1 and s. 3(3) of the Act. We have already dealt with that submission at length.
[87] To the extent that the side-stepping argument is directed at the potential for plaintiffs to make a claim for a remedial constructive trust as a ruse to avoid a limitation period which would otherwise be applicable under the Act, it is open to defendants to apply to strike the action under Rule 18A on that basis, to strike the pleadings under Rule 19(24) or to request the trial judge to deny a remedial constructive trust at the conclusion of the trial on the basis that it is not the appropriate remedy.
(viii) Section 3(3) – Serious Breaches of Trust
[88] Having found that the definition of “trust” in s. 1 of the Act includes remedial constructive trusts, we return to the question of whether the breaches alleged in the pleadings are the type of serious breaches contemplated by s. 3(3) of the Act.
[89] As earlier stated, the defendants submit that breaches of express trusts and other pre-existing trust-like relationships were historically regarded as serious breaches, in large part because of the vulnerability of the beneficiaries of the trust. They say that it is only breaches of these types of relationships which are covered under s. 3(3) of the Act. It follows from our earlier analysis that we reject the defendants’ submission that serious breaches under s. 3(3) of the Act are confined to breaches involving a prior trust or trust-like relationship between the parties.
[90] In this case, the factual allegations are serious. As we find at para. 100, infra, they constitute an allegation of equitable fraud; that the defendants wrongfully obtained the plaintiffs’ money through a sophisticated, international price-fixing conspiracy for the purpose of making substantial profits at the expense of these and other plaintiffs. Similar allegations led to criminal charges against defendants in the United States with respect to related products. If proven and found to give rise to the imposition of a constructive trust, such conduct may also be found to come within s. 3(3) of the Act.
(ix) Statutory Interpretation – Conclusion
[91] In summary, we conclude that the trial judge was correct in interpreting s. 1 of the Act to include remedial constructive trusts and in finding that the ten-year limitation period under s. 3(3) of the Act applies to the plaintiffs’ claims, assuming they are able to establish their claims at trial and that a remedial constructive trust is the appropriate remedy.
[92] We now turn to the cross-appeal. We will begin with the cross-appeal relating to the pleadings.
(2) The Pleadings
[93] In their factum on the cross-appeal, the plaintiffs submit that the trial judge erred in finding that their Amended Statement of Claim did not disclose a pleading in equitable fraud. The plaintiffs submit that paragraphs 18-22 of their Amended Statement of Claim are sufficient in that regard. Those paragraphs provide:
18. Senior executives and employees of the defendants, acting in their capacities as agents for the defendants, conspired with each other to illegally fix the prices of HFCS sold in British Columbia and in Canada. In furtherance of the conspiracy, such persons engaged in communications, conversations and attended meetings with each other in which these persons unlawfully agreed to:
(a) fix, increase and maintain at artificially high levels the prices at which the defendants would sell HFCS in British Columbia and in Canada; and
(b) exchange information in order to monitor and enforce adherence to the agreed-upon prices for HFCS.
19. During the Class Period, at times and places some of which are unknown to the plaintiffs, the defendants wrongfully, unlawfully, maliciously and lacking in bona fides conspired and agreed together, the one with the other or others of them and with their servants and agents:
(a) to suppress and eliminate competition in the sale of HFCS in British Columbia, Canada and elsewhere, by fixing the price of HFCS at artificially high levels;
(b) to prevent or lessen, unduly, competition in the manufacture, sale and distribution of HFCS in British Columbia, Canada and elsewhere by reducing the supply of HFCS;
(c) to allocate among themselves the customers for HFCS in British Columbia and in Canada;
(d) to allocate among themselves and others market shares of HFCS in British Columbia and in Canada;
(e) to allocate among themselves and others all or part of certain contracts to supply HFCS in British Columbia and in Canada;
(f) to refrain from submitting truly competitive bids for HFCS in British Columbia and in Canada; and
(g) to submit collusive, non-competitive and rigged bids for HFCS in British Columbia and in Canada.
20. The defendants were motived [sic] to conspire and their predominant purposes and predominant concerns were:
(a) to harm the plaintiffs and other Class Members by requiring them to pay artificially high prices for HFCS and for products containing HFCS; and
(b) to illegally increase their profits on the sale of HFCS.
21. In furtherance of the conspiracy, during the Class Period, the following acts were done by the defendants, their servants and agents:
(a) they agreed to fix, increase and maintain at artificially high levels the price of HFCS and to coordinate price increases for the sale of HFCS;
(b) they agreed to allocate the volumes of sales of, and customers and markets for HFCS among themselves;
(c) they agreed to reduce the supply of HFCS;
(d) they met secretly to discuss prices and volumes of sales of HFCS;
(e) they exchanged information regarding the prices and volumes of sales of HFCS for the purposes of monitoring and enforcing adherence to the agreed-upon prices, volumes of sales and markets;
(f) they instructed members of the conspiracy at meetings not to divulge the existence of the conspiracy; and
(g) they disciplined any corporation which failed to comply with the conspiracy.
[94] In support of their submission that these pleadings clearly disclose a claim in equitable fraud, the plaintiffs rely on Performance Industries Ltd. v. Sylvan Lake Golf & Tennis Club, 2002 SCC 19, [2002] 1 S.C.R. 678. There the court considered the issue of rectification of a contract to remedy misconduct equivalent to fraud on the part of the defendant in the context of a commercial transaction. The plaintiffs place particular emphasis on para. 39 of the decision where Mr. Justice Binnie, speaking for the majority, describes the breadth of the concept of equitable fraud as follows:
What amounts to “fraud or the equivalent of fraud” is, of course, a crucial question. In First City Capital Ltd. v. British Columbia Building Corp., (1989), 43 B.L.R. 29 (B.C.S.C.), McLachlin C.J.S.C. (as she then was) observed that “in this context ‘fraud or the equivalent of fraud’ refers not to the tort of deceit or strict fraud in the legal sense, but rather to the broader category of equitable fraud or constructive fraud... Fraud in this wider sense refers to transactions falling short of deceit but where the Court is of the opinion that it is unconscientious for a person to avail himself of the advantage obtained” (p. 37). Fraud in the “wider sense” of a ground for equitable relief “is so infinite in its varieties that the Courts have not attempted to define it”, but “all kinds of unfair dealing and unconscionable conduct in matters of contract come within its ken”: [citations omitted].
[95] The defendants submit that a pleading of fraud must be clear on the face of the pleadings and that, although the word “fraud” need not necessarily be used, the material facts on which the plaintiffs rely to plead fraud must clearly refer to a claim in fraud so that the defendants will know the case they have to meet. Further, the defendants submit that a pleading in equitable fraud must include a plea of a special relationship between the parties and that the Amended Statement of Claim is silent in that regard. It is the latter omission in the Amended Statement of Claim which the defendants say is fatal to the plaintiffs’ pleading.
[96] Although it is not entirely clear from his reasons, the trial judge appears to have accepted that the plaintiffs’ Amended Statement of Claim was deficient in failing to plead a special relationship. He also appears to have found that the specificity of the pleading of fraud in para. 5 of the Reply was a basis for finding that the provisions of the Amended Statement of Claim to which we have referred were deficient. Paragraph 5 of the Reply states:
5. In the alternative, the [defendants’] conduct constitutes fraud and fraudulent breach of trust and the claims are not barred by the passage of time because Plaintiffs and the other class members did not become fully aware of the fraud, fraudulent breach of trust, conversion or other act of the trustee on which this action is based until after June 15, 2003. The Plaintiffs rely on ss. 6(1) and 6(2) of the Limitation Act, R.S.B.C. 1996, c. 266.
[97] We note that the defendants did not apply to strike paras. 3 and 4 of the Reply which provide as follows:
3. In answer to the portions of the Statement of Defence that allege that the claims are barred by the passage of time through the application of: the Limitation Act, R.S.B.C. 1996, c. 266; the Competition Act, R.S., 1985, c. C-34; or the equitable doctrines of laches and acquiescence, the Plaintiffs deny that the claims are statute barred and say that throughout the Class Period and continuing to the present, the [defendants], and each of them deliberately and intentionally:
(a) concealed their wrongful conduct;
(b) destroyed documents and other evidence for the purpose of avoiding detection by, among others, the Plaintiffs;
(c) met secretly for the purpose of avoiding detection by, among others, the Plaintiffs;
(d) instructed members of the conspiracy at meetings not to divulge the existence of the conspiracy for the purpose of avoiding detection by, among others, the Plaintiffs
4. Taken by itself, the [defendants’] conduct set out in the Amended Statement of Claim and paragraph 3 of this Reply constitutes equitable fraud and the [defendants] are estopped from asserting that the claims are barred because of the passage of time.
[98] It does not appear that the trial judge was requested to consider these provisions in determining whether the plaintiffs had put forward a claim in equitable fraud.
[99] In our view, paras. 18-22 of the Amended Statement of Claim are sufficient, in themselves, to disclose a claim in equitable fraud, which is further particularized in paras. 3 and 4 of the Reply. We are not persuaded that a plea in equitable fraud necessarily requires a plea that there is a special relationship between the parties. In that regard, we note that there was a purely commercial relationship between the parties in the Performance Industries decision, and that the need for such a special relationship as a prerequisite to a finding of equitable fraud was questioned by Mr. Justice Lowry in Bayerische Hypotheken-Und Wechsel-Bank Aktiengesellschaft v. Rieder, 2003 BCSC 1031.
[100] In the result on this point, we disagree with the trial judge’s statement at para. 46 of his reasons that “the statement of claim does not properly disclose any claim in the nature of equitable fraud.” We would, therefore, allow the cross-appeal on this point.
(3) Postponement
[101] The plaintiffs also claim in their cross-appeal that the trial judge erred in concluding that the relevant limitation periods were not postponed.
(a) Relevant Limitation Periods
[102] It is common ground that the conspiracy alleged ended June 29, 1995, when the U.S. undercover investigation of the price-fixing conspiracy in respect of HFCS, lysine and citric acid became public knowledge. The trial judge found that the limitation period commenced on that date, or perhaps on July 2, 1995. The plaintiffs commenced the class action on June 14, 2005, almost ten years after the commencement of the limitation period.
[103] The trial judge summarized the plaintiffs’ claims (at para. 8):
(a) conspiracy to fix prices, causing damage;
(b) Tortious interference with economic interest;
(c) unjust enrichment founding a claim for restitution giving rise to a constructive trust;
(d) Breach of Part 6 of the Competition Act.
[104] In addition, the plaintiffs’ claims for equitable fraud and fraudulent breach of trust, which were struck out at trial, are by these reasons for judgment found to be valid claims.
[105] The limitation periods for the various causes of action are:
(a) conspiracy to fix prices, causing damage: six years (Limitation Act, s. 3(5))
(b) tortious interference with economic interest: six years (Limitation Act, s. 3(5))
(c) unjust enrichment founding a claim for restitution giving rise to a constructive trust: ten years (Limitation Act, s. 1, s. 3(3)(c) and (d))
(d) breach of Part 6 of the Competition Act: two years (Competition Act, s. 36(4))
(e) equitable fraud and fraudulent breach of trust: ten years (Limitation Act, s. 3(3)(b))
[106] Thus, the claims for a constructive trust as a remedy for unjust enrichment, if granted, and for equitable fraud and fraudulent breach of trust, are not statute-barred if the action was commenced within the ten-year limitation period. (Nothing was said on appeal about the defendants who were added after the ten-year period.)
[107] The other claims, and the claim for unjust enrichment if a constructive trust is not granted as a remedy, are, however, statute-barred, unless the postponement provisions apply.
(b) Statutory Postponement Provisions
[108] The postponement provisions are in s. 6 of the Act:
6 (1) The running of time with respect to the limitation period set by this Act for an action
(a) based on fraud or fraudulent breach of trust to which a trustee was a party or privy, or
(b) to recover from a trustee trust property, or the proceeds from it, in the possession of the trustee or previously received by the trustee and converted to the trustee's own use,
is postponed and does not begin to run against a beneficiary until that beneficiary becomes fully aware of the fraud, fraudulent breach of trust, conversion or other act of the trustee on which the action is based.
(2) For the purposes of subsection (1), the burden of proving that time has begun to run so as to bar an action rests on the trustee.
(3) The running of time with respect to the limitation periods set by this Act for any of the following actions is postponed as provided in subsection (4):
(a) for personal injury;
(b) for damage to property;
(c) for professional negligence;
(d) based on fraud or deceit;
(e) in which material facts relating to the cause of action have been wilfully concealed;
(f) for relief from the consequences of a mistake;
(g) brought under the Family Compensation Act;
(h) for breach of trust not within subsection (1).
(4) Time does not begin to run against a plaintiff with respect to an action referred to in subsection (3) until the identity of the defendant is known to the plaintiff and those facts within the plaintiff's means of knowledge are such that a reasonable person, knowing those facts and having taken the appropriate advice a reasonable person would seek on those facts, would regard those facts as showing that
(a) an action on the cause of action would, apart from the effect of the expiration of a limitation period, have a reasonable prospect of success, and
(b) the person whose means of knowledge is in question ought, in the person's own interests and taking the person's circumstances into account, to be able to bring an action.
(5) For the purpose of subsection (4),
(a) "appropriate advice", in relation to facts, means the advice of competent persons, qualified in their respective fields, to advise on the medical, legal and other aspects of the facts, as the case may require,
(b) "facts" include
(i) the existence of a duty owed to the plaintiff by the defendant, and
(ii) that a breach of a duty caused injury, damage or loss to the plaintiff,
(c) if a person claims through a predecessor in right, title or interest, the knowledge or means of knowledge of the predecessor before the right, title or interest passed is that of the first mentioned person, and
(d) if a question arises about the knowledge or means of knowledge of a deceased person, the court may have regard to the conduct and statements of the deceased person.
(6) The burden of proving that the running of time has been postponed under subsections (3) and (4) is on the person claiming the benefit of the postponement.
[109] The plaintiffs refer in their factum to ss. 6(1) and (2) in relation to the claims for equitable fraud, fraudulent breach of trust, and to recover trust property. If these claims were not brought within the ten-year limitation period, those parts of s. 6 would apply. (We note again that no submissions were made in relation to the defendants who were added after the ten-year period.)
[110] The arguments of all parties on appeal, however, focused on ss. 6(3) and (4), which apply to the postponement of the six-year limitation period for claims for damages for conspiracy and tortious interference with economic interests, restitution, and the claim for unjust enrichment if a constructive trust is not granted as a remedy. The parties agree that the common law discoverability principle applies to the two-year statutory limitation period under the Competition Act, and that the common law test for postponement is the same as that under s. 6(4) of the Act.
(c) Postponement – Legal Principles
[111] In considering s. 6(4) of the Act, the trial judge cited (at para. 49) the summary of the requirements for a plaintiff to be granted postponement of a limitation period from Ounjian v. St. Paul’s Hospital, 2002 BCSC 104 at para. 21:
a. The defendants' identity was not known to them;
b. they did not have sufficient facts within their means of knowledge;
c. a reasonable person, knowing the facts and having taken the appropriate advice a reasonable person would seek on those facts, would not regard the facts as showing that an action would have a reasonable prospect of success; or
d. a reasonable person, knowing the facts and having taken the appropriate advice a reasonable person would seek on those facts, would not regard the facts as showing that the plaintiffs ought, in their own interests and taking its circumstances into account, to be able to bring an action.
[112] None of the parties disagrees with this summary of what is required to establish postponement under s. 6(4) of the Act. The plaintiffs claim that the trial judge erred in his analysis of the first two conditions and by failing to consider the third and fourth conditions. From their argument however, it is clear that the issue in this case relates only to the second condition: whether the plaintiffs had “sufficient facts within their means of knowledge”.
[113] The test for determining whether a plaintiff has “facts within [his or her] means of knowledge” has been considered by this Court in a number of leading cases, including Karsanjii Estate v. Roque (1990), 43 B.C.L.R. (2d) 234, Krusel v. Firth (1991), 58 B.C.L.R. (2d) 145, and Levitt v. Carr (1992), 66 B.C.L.R. (2d) 58.
[114] In Karsanjii Estate, Taylor J.A. wrote (with McEachern C.J.B.C. concurring on this point), that the test under what is now s. 6(4) is neither completely objective nor completely subjective (at 261-62):
The test under s. 6(3)(i) is neither entirely “objective” nor entirely “subjective”. But it is subjective at least to this extent: (i) the information must have been available to Mr. Karsanjii; and (ii) it must have been information which a reasonable person in his position had reason to seek, whether or not such a person would have done so. It would not be enough that the information was available, unless Mr. Karsanjii was among those to whom it would be made available on reasonable inquiry. Nor would it, in my view, be enough that it was available to Mr. Karsanjii if he had no reason to seek it.
[115] In Krusel, Taylor J.A. confirmed, citing Karanjii Estate, that the test for determining both the identity of the defendant and when the facts from which it could be concluded that a successful action could be brought were first within the plaintiff’s means of knowledge includes a “due diligence” requirement (at 149, 155). He noted (at 150) the policy concern that if a due diligence requirement is not imposed, a plaintiff could sleep on his or her rights by inaction, gaining an indefinite extension of the limitation period to the “ultimate” limitation period.
[116] The question of when facts are within a plaintiff’s “means of knowledge” was again addressed in Levitt. After citing Karanjii Estate, the Court said (at para. 38):
Having regard to the purpose of s. 6(3) and to the relevant language, we conclude the facts falling within the plaintiff’s means of knowledge are, firstly, those actually known, and secondly, those which would become known if he took such steps as would have been reasonable for him to take in his circumstances.
(d) Application to this Case
[117] The plaintiffs say that they first became aware that they had a cause of action in October 2004, when they received a telephone call from counsel. They say that is the time when the facts were within their means of knowledge, and before that, they had no reason to take any steps to make inquiries about bringing an action in respect of the price-fixing conspiracy for HFCS.
[118] The trial judge found that both plaintiffs should have become aware of and inquired into the facts before the limitation period expired (i.e. before July 2, 2001, if the limitation period is six years, and July 2, 1997, for a two-year limitation period). He found (at para. 58) that neither had met the onus on them to establish that they could not have reasonably known the material facts on which their claims were based before the applicable limitation periods expired.
[119] He described the public notoriety of the U.S. investigation and subsequent civil class actions (at paras. 24-26):
The U.S. Grand Jury Investigation and the subsequent civil proceedings in respect of the alleged price fixing conspiracies received considerable attention in the mainstream media in the United States and Canada. Numerous Canadian publications provided coverage of the alleged conspiracy amongst the Defendants relating to the sale of HFCS, citric acid and lysine, including, but not limited to, The Globe and Mail, the Financial Post, the Vancouver Sun, the Montreal Gazette and Maclean’s Magazine.
The Globe and Mail, for example, reported on December 20, 1995 that:
[c]ivil antitrust lawsuits against Archer-Daniels-Midland Co. and other makers of corn-derived products were assigned to federal courts in Chicago, San Francisco and Peoria, Ill. The 37 federal cases, arising from a federal price-fixing investigation of Archer-Daniels and the corn-processing industry, deal with three corn-derived products – high-fructose corn syrup, citric acid and the livestock-feed supplement lysine.
In addition to the Canadian newspaper coverage, the alleged conspiracy received even greater scrutiny in the American press. More than 600 articles appeared in major U.S. publications between 1995 and 1999 including, but not limited to, The Wall Street Journal, The New York Times and Time Magazine. These reports detailed developments in the U.S. investigations and related U.S. civil claims against manufacturers of HFCS. Those investigations and the subsequent class action proceedings were disclosed from mid-1995 in the public filings and annual reports of those defendants whose shares were publicly traded in North America.
[120] There were also class actions started in Ontario (October 1999) and British Columbia (November 2000) relating to the price-fixing of citric acid, and in Ontario (February 1999) and British Columbia (August 2002) relating to the price-fixing of lysine. (Lysine and citric acid are related products to HFCS, all being additives used in the manufacture of food products).
[121] Sun-Rype was the class plaintiff in the B.C. citric acid class action in 2000.
[122] In 2000, Ms. Weberg retained the law firm which acts for the plaintiffs in this case (and which acted for Sun-Rype in the B.C. citric acid class action) to represent her as the class plaintiff in five class actions alleging “price-fixing and market allocation” with respect to various vitamins that were fed to animals from which meat, poultry and dairy products were produced, and included in cereal products.
[123] The trial judge referred (in para. 57) to both plaintiffs having sued “in respect of citric acid and lysine”. This was in error, contradicting the facts he had correctly stated earlier (at paras. 23, 29).
[124] The defendants argued before the trial judge that he should infer that counsel common to the Sun-Rype citric acid class action and the Weberg vitamin class action had the means of knowledge to know of the HFCS cause of action within the limitation period, and that means of knowledge should be imputed to both plaintiffs. The plaintiffs say that the trial judge erred in imputing counsel’s knowledge to them. The trial judge summarized these arguments in his reasons (at paras. 30, 31), but in concluding (at paras. 57, 58) that the plaintiffs had not established that they did not have the means of knowledge within the limitation period, did not specifically refer to the arguments, and does not appear to have adopted or relied on them. He therefore did not err as alleged.
(i) Sun-Rype
[125] The trial judge found that the evidence with respect to Sun-Rype’s means of knowledge was less than satisfactory.
[126] The Chief Financial Officer and Vice-President of Finance at the material time, Mr. McGowan, deposed that he first became aware of price-fixing of HFCS in Canada in October 2004, and would have known about it if there had been a conspiracy in Canada in the 1980s and 1990s. He stated that there was knowledge at a senior level of the company of “questionable business practices” by one of the defendants in the U.S. but no knowledge of a price-fixing conspiracy regarding HFCS in Canada. Sun-Rype employees had access to at least the Globe and Mail, to which Sun-Rype subscribed in the 1990s.
[127] On cross-examination, Mr. McGowan’s evidence was that he did not know anything about Sun-Rype’s purchase of HFCS during the relevant time, although the evidence showed that Sun-Rype purchased hundreds of tonnes of HFCS, valued at in excess of $500,000 in 1995 and $350,000 in the first six months of 1996. Employees in the purchasing department of Sun-Rype claimed they never learned about the price-fixing conspiracy in Canada until after the action was started.
[128] No other senior executives of Sun-Rype at the material time gave evidence of why, despite wide publicity of the price-fixing allegations in the U.S. in a product purchased in a global market that was significant to Sun-Rype’s production in both quantity and value, they had no reason to inquire whether the prices they were paying could be affected.
[129] On the basis of the evidence, properly applying the legal principles, the trial judge made no error in finding that reasonable people in the positions of responsibility at Sun-Rype had the “means of knowledge” to know about the price-fixing conspiracy in HFCS within the limitation periods. The information in the public record, their admitted knowledge of allegations of misconduct of the major supplier of food additives in the U.S., and their position as a class plaintiff in an action concerning a related food product “should have sparked some curiosity and further inquiry” (at para. 57). In effect, he did not accept the evidence of the Sun-Rype representatives that they did not know, and had no reason to inquire into, facts about price fixing in a product they bought in large quantities throughout the material period. It strains credulity to find that those purchasing several hundreds of thousands of dollars worth of a product annually would not make it their business to know all of the sources of supply and how the prices were determined.
[130] We would uphold the trial judge’s conclusion on postponement relating to Sun-Rype.
(ii) Ms. Weberg
[131] The trial judge also found Ms. Weberg’s reasons for her “prior lack of knowledge” to be unsatisfactory. The plaintiffs claim that he erred in his findings of fact in relation to Ms. Weberg, and in applying to Ms. Weberg his reasons for concluding that Sun-Rype had not established it was entitled to postponement.
[132] Ms. Weberg deposed that she first learned “about an alleged price fixing conspiracy in the High Fructose Corn Syrup market in October of 2004 through a phone call with” the lawyer she retained in the vitamin class litigation, and did not know anything about “the alleged price-fixing conspiracy that is the focus of this case” before that. She was not cross-examined on her affidavit.
[133] In his reasons (at para. 57) for finding the plaintiffs’ reasons for their lack of knowledge to be unsatisfactory, the trial judge referred to the plaintiffs collectively. The only reason he cited that pertained specifically to Ms. Weberg was her earlier participation as a class plaintiff in litigation involving another consumer product, vitamins (which he mistakenly referred to in this paragraph as citric acid and lysine).
[134] The bare fact that Ms. Weberg was a class plaintiff in a consumer products class action during the material time is, however, insufficient to lead to the conclusion that a reasonable person in her position would have reason to seek out facts concerning other potential class litigation.
[135] Ms. Weberg was not in the food manufacturing industry. She is a consumer of products that contain HFCS. Although she was not a stranger to class litigation in consumer products that contain certain additives, there is no evidence that she read any newspaper reports of the HFCS conspiracy in the U.S. during the material time. If she had, she would have to be an extraordinarily aware consumer to link the newspaper reports about business and legal matters in the U.S. involving food additives to her personal position and the potential to bring an action.
[136] The concern expressed by Taylor J.A. in Krusel that if a plaintiff is not required to exercise due diligence in making reasonable inquiries about relevant facts the limitation period will not start to run while she “sleeps” on her rights is of relevance here. The postponement provisions may be open to potential abuse if a class plaintiff merely has to deny personal knowledge of the potential for a claim in a consumer product to delay a limitation period indefinitely. Nonetheless, it cannot be said that a reasonable person acting as a plaintiff in one case would have reason, on that basis, to take steps to seek out information on other potential claims.
[137] Based on the agreement of the parties that the common law test for postponement applicable to the Competition Act is the same as that under the Act, no separate analysis is necessary with respect to the two-year Competition Act limitation period.
[138] We would allow the appeal from the order dismissing the plaintiffs’ claims for postponement with respect to Ms. Weberg, set aside that part of the order, and order that Ms. Weberg is entitled to postponement of the limitation period under s. 6(4) of the Act and the common law with respect to s. 36(4) of the Competition Act to the date in October 2004 that she received the telephone call from her lawyer advising her of the proposed class action.
RESOLUTION
[139] We would dismiss the defendants’ appeal. We would allow the cross appeal with respect to the pleadings issue and Ms. Weberg’s cross-appeal with respect to postponement.
“The Honourable Madam Justice Prowse”
“The Honourable Madam Justice Huddart”
“The Honourable Madam Justice Levine”