Executive Summary: Key Legal and Evidentiary Issues

• Limitation period for a professional liability claim against a CPA was central, with the Court holding the three-year extinctive prescription had expired before the action was filed.
• Evidence from the plaintiff’s own pleadings, demand letters, refund application, and discovery testimony showed he had sufficient knowledge of the alleged error and resulting damages by September 4, 2020.
• Arguments that prescription was interrupted or suspended by formal demand letters and ongoing remedial steps with tax authorities were rejected as incompatible with Articles 2880, 2892 and 2925 C.C.Q. and the case law.
• The plaintiff’s reliance on the later expert work of an accountant (Lemieux) as the moment of discovery was dismissed, as the Court found the right of action had already arisen once fault, damage and causal link were reasonably certain.
• The Court applied Article 51 CCP to dismiss an action it deemed to have no reasonable chance of success because it was clearly prescribed, emphasizing judicial economy and the power to strike out manifestly unfounded claims at a preliminary stage.
• Resulting order dismissed the plaintiff’s claim for $158,792.77 in damages in its entirety, with costs awarded to the defendants, although no specific monetary figure for costs was stated.

Facts of the case

Bryan C. Sanctuary, the plaintiff, moved from Québec to Ontario in 2012 and acquired a home there. He then filed his 2012 provincial and federal income tax returns with the Canada Revenue Agency (CRA) as an Ontario resident. In August and October 2015, Revenu Québec contacted him to say he had not filed a 2012 Québec tax return and warned that penalties could be imposed if the outstanding balance remained unpaid. On January 13, 2016, Revenu Québec issued a Notice of Assessment for $448,365.89, composed of tax, penalties and interest. Sanctuary, through his Ontario tax accountant, Paul Lemieux, filed a Notice of Objection on February 10, 2016.

According to Sanctuary, he subsequently retained Mark Levy, a Québec Chartered Professional Accountant, and Mark Levy CPA Inc. to advise on the tax consequences of being treated as a resident of Québec instead of Ontario. In that context Levy prepared a calculation that purported to quantify the difference in provincial tax payable if Sanctuary were resident in Québec, referred to in the judgment as “the Calculation.” Relying on that Calculation, Sanctuary decided to pursue and eventually appeal the Revenu Québec assessment.

On May 12, 2020, the Quebec Court (Justice Stéphane Davignon) dismissed Sanctuary’s appeal of the Revenu Québec assessment. Following that loss, on June 6, 2020, Sanctuary filed an application with the CRA for a refund which, on its face, expressly referred to the Québec abatement tax credit. He received a refund from the CRA on September 4, 2020. The amount of the refund was significantly larger than he expected, given Levy’s calculations.

After receiving the refund, Sanctuary scrutinized his tax situation and concluded that Levy’s Calculation had failed to account for the Québec abatement credit. He later testified that within five to ten minutes of reviewing his tax documents he realized this error and that this discrepancy—about $50,000 to $60,000 more refund than anticipated—alerted him that Levy’s earlier work was wrong. He described the difference as obvious and “standing out like a sore thumb,” and said he himself identified the error, with Lemieux only subsequently confirming it.

On November 20, 2020, Lemieux wrote to Sanctuary confirming that Levy’s calculations regarding the tax impact of Ontario versus Québec residence contained an error. Sanctuary sent a formal demand letter to Levy on December 16, 2020, asserting professional fault. A second formal demand letter followed on January 27, 2023, in which his then lawyers expressly stated that on June 1, 2020 Sanctuary, “realizing that your calculation was incorrect,” had emailed Levy to request confirmation, and that on September 23, 2020 they retained Lemieux to assess the impact of Levy’s alleged mistake.

In October 2023, Sanctuary commenced an action in the Superior Court of Québec against Mark Levy CPA Inc., Mark Levy personally, and the Fonds d’assurance responsabilité professionnelle des CPA du Québec. He claimed $158,792.77 in damages, alleging that Levy’s erroneous Calculation induced him to pursue an appeal he would not otherwise have brought and caused him significant financial loss and inconvenience.

Nature of the claim and alleged damages

The action was framed as a professional liability (malpractice) claim against Levy as a CPA, with the Fonds named as the professional liability insurer. Sanctuary alleged Levy committed a professional fault by miscalculating the tax consequences of his residency status—specifically, by failing to properly account for the Québec abatement credit—and that this fault led him to continue litigating the Revenu Québec assessment and incur additional costs.

The claimed damages totaled $158,792.77, and were itemized as Levy’s professional fees, fees paid to tax lawyers, fees paid to Lemieux, travel expenses related to the tax appeal, interest paid to Revenu Québec on the amounts due (from the date of Levy’s Calculation), a small amount of penalties, and a substantial amount for trouble and inconvenience. Sanctuary’s theory was that if Levy had correctly calculated the tax difference between Québec and Ontario (which he now alleged was only about $17,000), he would not have pursued the appeal and would have avoided these expenses and losses.

Issues relating to prescription and procedural abuse

The defendants responded with an application to dismiss under Article 51 of the Code of Civil Procedure (CCP), arguing that Sanctuary’s action had no reasonable chance of success and was abusive because it was clearly prescribed. The parties agreed that a three-year extinctive prescription applied to this professional liability claim under Article 2925 of the Civil Code of Québec. The key dispute was the date on which the prescription began to run—i.e., when Sanctuary had sufficient knowledge of the alleged fault, the damage, and the causal link between them.

The Court summarized the governing principles of prescription in civil liability. In Québec law, extinctive prescription starts when the right of action arises, which in professional liability requires three elements: a fault, a damage, and a causal connection between them. The prescriptive period begins on the day when a reasonably prudent and informed person in the plaintiff’s position could be reasonably certain (not merely suspicious) of the existence of these elements. The Court’s analysis focused on whether, and when, Sanctuary met this threshold of “raisonnablement certain” knowledge that Levy’s Calculation was faulty and had caused him compensable loss.

On the procedural side, the Court also set out the principles for dismissing an action under Article 51 CCP. Courts may strike out applications that have no reasonable chance of success or that are abusive, including where a claim is clearly prescribed. This power serves judicial economy and allows courts to weed out hopeless cases at a preliminary stage, without waiting for a full trial, provided the situation is sufficiently clear based on the pleadings, exhibits and pre-trial discovery.

Assessment of when the plaintiff knew of the error

The central evidentiary question was when Sanctuary knew or ought to have known, with reasonable certainty, that Levy’s Calculation was erroneous and had caused him loss. The Court highlighted several key pieces of evidence.

First, Sanctuary’s own originating application alleged that by June 2020 he suspected an error by Levy and that the CRA refund made it “evident” that the difference between Ontario and Québec tax rates was much smaller than Levy’s Calculation suggested. Second, his lawyers’ 2023 demand letter said explicitly that on June 1, 2020, realizing the Calculation might be incorrect, Sanctuary wrote to Levy to seek confirmation, and that soon after (in September 2020) they hired Lemieux to quantify the impact of Levy’s alleged mistake. Third, the CRA refund application completed June 6, 2020, which explicitly referenced the abatement credit, demonstrated that Sanctuary was aware of that element of his tax position.

During his 2024 examination on discovery, Sanctuary gave detailed testimony confirming that, after he received the CRA refund on September 4, 2020, he personally identified Levy’s error within five to ten minutes by examining his tax documents and noticing that the Québec abatement credit had not been properly integrated into Levy’s Calculation. He also confirmed that the unexpectedly large refund—around $50,000 more than he anticipated—was the trigger that alerted him to the error, and that Lemieux’s subsequent work merely confirmed an error he had already discovered. The Court found this evidence decisive in fixing the latest possible date of knowledge as September 4, 2020.

Sanctuary argued that he only acquired the requisite knowledge when he later received Lemieux’s expert report. The Court rejected this argument, relying on established case law that the arrival of an expert opinion does not postpone the start of prescription if the factual elements necessary to ground the cause of action—fault, damage and causal link—were already known or reasonably knowable. Since Sanctuary admitted he himself identified the alleged error shortly after receiving the refund, prescription could not be pushed forward to the date of Lemieux’s report.

Arguments on interruption and suspension of prescription

Facing the prescription objection, Sanctuary contended that his formal demand letter of December 16, 2020, and his subsequent efforts with Revenu Québec between 2021 and 2022 had the effect of interrupting or suspending prescription. He invoked Article 2892 C.C.Q., which deals with interruption by a judicial application, and also put forward a practical “wait and see” rationale: that he was still trying in good faith to clarify the real fiscal impact before suing.

The Court dismissed these arguments. It emphasized that, as a matter of black-letter law and precedent, formal demand letters do not interrupt prescription in the manner of a judicial application and cannot be treated as suspensive events. Nor do remedial or administrative steps taken by a right-holder, such as continuing to engage with tax authorities to clarify or mitigate the consequences of an error, suspend the running of the limitation period. A claimant is not required to exhaust all other remedies before bringing a civil action; equally, choosing to “wait and see” does not stop prescription from running.

On this basis, the Court concluded that neither the December 2020 demand letter nor Sanctuary’s dealings with Revenu Québec and CRA from 2021–2022 had any legal effect on the three-year prescriptive clock. Since knowledge of the fault, damages, and causal link existed at least by September 4, 2020, prescription expired no later than September 4, 2023, regardless of these later activities.

Application of Article 51 CCP and final outcome

Having determined that Sanctuary had full knowledge of the fault, damage and causal link by September 4, 2020, the Court held that his action—instituted on October 23, 2023—was beyond the three-year limitation period. On a careful review of the entire file, including the pleadings, exhibits and Sanctuary’s own sworn discovery testimony, the Court found the prescription question to be clear and not dependent on contested factual issues requiring a trial.

The Court then applied Article 51 CCP, under which it may dismiss an action at a preliminary stage if it has no reasonable chance of success or is abusive. A claim that is clearly prescribed, and that cannot be salvaged by any credible argument on interruption or suspension, is considered to have no reasonable prospect of success. Exercising its “housekeeping” function to prevent wasted judicial resources and abusive litigation, the Court granted the defendants’ application to dismiss.

As a result, the Superior Court allowed the defendants’ demand to dismiss, rejected Sanctuary’s professional liability action in full, and ordered that this be done with costs. The successful parties were Mark Levy CPA Inc., Mark Levy, and the Fonds d’assurance responsabilité professionnelle des CPA du Québec. Sanctuary’s claimed damages of $158,792.77 were not awarded; instead, his action was dismissed as prescribed. The judgment grants the defendants their costs, but no specific monetary amount is set out for those costs, so the exact total ultimately payable to them cannot be determined from the text of the decision.