In Ontario the Limitations Act Statute of Ontario 2002 (which came into force on January 1, 2004) set a general limitation period of two years. This is the amount of time a person has to bring an action for damages after they discover the facts that would support the lawsuit.
Subsequently, the statute was amended so that parties to a “business agreement” could change the two-year limitation.
The business agreement is normally between commercial entities or corporate associations and they often occur in an insurance policy. Instead of two years to sue the insurance company, the limitation period is by agreement normally lowered to one year.
However, a recent case (Kassburg v. Sun Life Assurance Company of Canada, 2014 ONSC 1523) laid down the following conditions:
a) the change must describe the limitation period in “clear language”;
b) the change must identify the scope of when the limitation period will apply;
c) the new limitation period must exclude the operation of any other limitation periods.
Without the strict compliance in this case, the attempt to change the limitation period to one year was not successful.
In two other Ontario cases, the limitation period was applied in different ways. In the first case, the plaintiff negotiated a sale and the defendant unilaterally changed the commission in December 2006. In November 2007, the defendant paid the lower rate of commission and within two years of that date the plaintiff sued for breach of contract.
The court determined that the limitation period would start to run at the time the contract was breached. However, the defendant’s change in commission was not accepted by the plaintiff. The plaintiff therefore did not know whether he would suffer damage until the payment of commissions became due in 2007. That being the case, when the payments were not made when due, the two-year limitation period then ran from 2007 rather than when the notice was given in 2006.
In the second case, a condominium corporation sought a declaration that a contract was invalid.
A member of the property management company entered the contract with a natural gas supplier “without authority”. The Board of Directors discussed the contract in 2009 and sent a letter to the gas supplier in 2010, but didn’t start an action for an invalid contract until 2012. In this instance the action was barred because the date on which the damage was discovered was in the board meeting of 2009, where the board discussed the invalid contract (as alleged). Two years from then would have been 2011 but the action was brought in 2012 and therefore was past the two-year limitation period. (York Condominium Corporation No. 62 v. Superior Energy Management Gas L.P., 2013 ONCA 789)
In a recent British Columbia case it was confirmed that a limitation period could not commence to run until discovery of alleged facts, by which the claimant then commenced litigation.
The plaintiff owned some land. In 2010 an appraiser for the city determined that the plaintiff’s property line was in the middle of a road. It led to the plaintiff and the city disputing ownership for part of the road, leading to an action to determine whether the land was a highway or not.
One of the defences of the city was that there was lack of notice and the limitation period had expired.
The court recognized that prior to October 2010, both the plaintiff and the city had no knowledge that the property line was in the middle of the road. Therefore, the plaintiff could not possibly have given the notice required before that date, nor could it have had commenced an action before that knowledge came into its possession (discovery). (452195 B.C. Ltd. v. Abbotsford [City], 2013 BCSC 2055)
Donald Lapowich, Q.C. is a partner at the law firm of Koskie, Minsky in Toronto, where he practices civil litigation, with a particular emphasis on real estate litigation and mediation, acting for builders, real estate agents and lawyers.
