Commercial Litigation and Dispute Resolution Blog

A recent decision from the Alberta Court of Queen’s Bench raises the issue of whether similar fact evidence may be useful in a limitations defence.

In Capital Power PPA Management Inc. v. TransAlta Corporation, 2018 ABQB 1036, Justice Rooke summarily dismissed Capital Power’s action on limitation grounds.

Capital Power and TransAlta were parties to the (now terminated) Sundance C Power Purchase Arrangement, a regulation under which TransAlta, the Owner, sells electricity that it generated from two generation units at the Sundance power plant to Capital Power, the Buyer. 

Capital Power’s claim arose from an allegation that TransAlta decided in 2010 and 2011 to take into account its overall portfolio position (as opposed to stand-alone single unit economics) when taking six forced plant outages. These plant outages were the subject of a two week hearing before the Alberta Utilities Commission (AUC) in December 2014. The AUC rendered its decision on July 27, 2015.

Capital Power filed a Statement of Claim commencing an Action against TransAlta on November 27, 2015—several months after the AUC decision was released. Capital Power claimed $12 million in damages and $5 million in punitive damages for TransAlta’s outage behaviour.

While the claim was started in 2015, it came almost five years after Capital Power:

• knew the plant outages took place, and
• made a complaint to the AUC.

Capital Power also participated in the AUC investigation by preparing a will say statement in the spring of 2012 (finalized and signed in 2014), in which, among other things, it described its alleged damages, and gave evidence at the AUC hearing.  

TransAlta filed an application to summarily dismiss the claim because it was barred by the limitations period, arguing that more than two years before filing its claim, Capital Power:

• knew of TransAlta’s outage behavior (which Capital Power thought improper),
• knew it had suffered immediate, substantial damages as a result,
• made significant changes to its own trading behaviour to react to TransAlta’s actions, and
• complained to the regulator about it.

Justice Rooke found that Capital Power knew of its claim by 2010 or the latest 2012 and dismissed the claim entirely on the basis that Capital Power filed its claim outside the limitation period.

Capital Power’s strategy to wait for the outcome of the regulatory hearing, and the need for “certainty about whether it would win” was detrimental to its claim.

Before the summary judgment application was heard, Capital Power tried, unsuccessfully, to block TransAlta from reliance on relevant evidence through various procedural applications that took two years to resolve.

One of the contested applications was for the use of similar fact evidence. The similar fact evidence was records that showed the steps and actions of another party to preserve its right by making a standstill agreement with TransAlta for a virtually identical claim. 

This other party was:

• sophisticated, like Capital Power
• bought electricity from TransAlta, like Capital Power,
• had access to information about TransAlta’s generation units, like Capital Power, and
• claimed to have suffered harm from the outage behaviour, like Capital Power.

Capital Power argued that no inference can be drawn from the steps taken by the other party because evidence of what one party did or did not do in terms of commencing an action against TransAlta is not relevant or material to either the subjective or objective element of the limitation test.

But the limitations test is clear. In determining whether the plaintiff “ought to have discovered”, the test is whether a reasonable person in the circumstances of the plaintiff would have known that the injuries occurred, were arguably attributable to the defendant, and warranted bringing a claim.

With respect to the similar fact evidence Justice Rooke commented that:

“…the evidence of what another party did may not be suggestive of Capital Power’s actual knowledge as an objective question, but it may demonstrate what a reasonable plaintiff would do (and did) in the circumstances at bar…the evidence in this regard is merely “icing on the cake…”[1]

The fact that the evidence was permitted in the action and mentioned in the decision merits some attention. While Justice Rooke did not have to make a determination on whether the similar fact evidence was sufficient for a limitations defence (since there was plenty already against Capital Power), his comments suggest that this type of evidence may support what a “reasonable person” in the same circumstances would have known. If another party in a similar situation knew, then Capital Power should have known too—or at minimum, exercised some due diligence to investigate the facts.

This decision shows that if a party has a suspicion of a potential claim, it should:

• exercise some reasonable diligence and investigate;
• not delay or wait for the outcome of any sort of parallel/related action or regulatory proceeding;
• enter into tolling agreements if necessary to preserve its rights; and
• recognize that what other parties do in similar circumstances, may influence what the court determines “ought to have” been discovered and when.

Lawson Lundell’s litigation team successfully represented TransAlta in having Capital Power’s claim dismissed. The decision has been appealed by Capital Power.  

[1] Paragraph 38 of the decision