Missing Firearms Start the Limitations Clock

While many cases deal with potential limitations arguments that are destined to be determined at trial, in 2024, an Alberta Applications Judge dismissed the entirety of a claim brought by purchasers of a firearm and outdoor supplies retail store due to a limitations issue in Big Country Outdoor Superstore Inc v Robertson, 2024 ABKB 181.

While many cases deal with potential limitations arguments that are destined to be determined at trial, in 2024, an Alberta Applications Judge dismissed the entirety of a claim brought by purchasers of a firearm and outdoor supplies retail store due to a limitations issue in 2024 ABKB 181 (CanLII) | Big Country Outdoor Superstore Inc v Robertson | CanLII. 

In March 2016, Big Country Superstore was sold to the Plaintiff for $4.4 million of which $3.6 million of the sale price was comprised of inventory. Of the inventory, over half of it consisted of rifles, shotguns and handguns. 

Following the sale, there were apparent issues with the inventory and by the end of August 2016, the store was forced to cancel 80% to 90% of web sales due to inventory issues. Over a year later, in September 2017, the Plaintiff commissioned an audit of the inventory which was completed between December 2017 and January 2018. This audit revealed an inventory overstatement of $600,000. 

On September 23, 2019, the Plaintiff filed a Statement of Claim against the sellers of the business and their accountants for misrepresentation and breach of duties in relation to the inventory.

The main issue in this Summary Dismissal Application brought by the Defendants was whether the purchasers were out of time to commence this action. In Alberta, the two-year limitations clock starts to run when a plaintiff knows or ought to have known about an injury or loss.  

The Defendants argued that upon learning that there were clear inventory issues in August 2016, the Plaintiff purchasers knew, or ought to have known that it suffered an injury which was potentially attributable to the conduct of the Defendants and that the injury warranted filing a lawsuit. The Defendants further argued that the evidence clearly demonstrated that the Plaintiff purchaser ought to have discovered material facts by exercising reasonable diligence.

The Plaintiff argued that it did not know that the injury warranted a proceeding until it completed an inventory audit through a third party throughout September 2017 through December 2017, at which point it learned about the extent of the damages it alleged were the result of misrepresentations and breaches by the Defendants.  

In making his decision, the Applications Judge was cognizant of the fact that the unaccounted-for inventory consisted of firearms which distinguished this Action from others given that firearms are a highly regulated product in Canada. Given the rules and regulations pertaining to these dangerous goods, an extraordinary level of care and diligence would be expected of the Plaintiffs.

Ultimately, it was determined by the Court that the Plaintiffs had clear actual knowledge of inventory problems in the late summer of 2016 and they ought to have exercised the required due diligence given the context of the inventory in September 2016 when these problems had emerged, rather than waiting a year before fully investigating the source of the problem.  The Statement of Claim was not filed within two years of that date and so the Action was dismissed as a result of being filed out of time and contrary to the provision of the Limitations Act. 

Should you have any questions or need further information on this insight or on related Commercial Litigation matters, please contact Don Dear, K.C., or Kass Freeman in our Calgary office who can help you understand how they or other colleagues at Clyde & Co can help.