Ontario case law pushes the limits of provincial limitation period

Torys Quarterly: Think fast

When can two years take more than 24 months? In Ontario, in the limitations context, a two-year limitation period is not always two years.

The Limitations Act has governed limitation periods in Ontario since 2002. It was intended to promote certainty for Ontarians by creating a limitation period of two years after the plaintiff discovered the claim or should have discovered the claim. It allowed plaintiffs to know by which date their claim must be filed, while providing defendants with the certainty that after two years, a claim can no longer be filed against them.

However, a trend of case law from the Ontario Court of Appeal has turned this certainty on its head by effectively creating a variety of exceptions to the two-year limitation period.

This uncertainty is driven by section 5(1)(a)(iv) of the Limitations Act. This section, known as the “appropriate means” doctrine, says the two-year limitations clock begins to run only when the plaintiff knows a) it has suffered a loss; and (b) litigation in court is an appropriate means to remedy that loss.

What does this mean? For plaintiffs it means added flexibility in bringing its claim, but for defendants, it means the certainty of the two-year bar may not provide the finality they have come to expect.

When is a limitation period extended?

The Court has provided some guidance to explain when the appropriate means doctrine would apply. While by no means exhaustive, two quintessential examples have emerged from case law as to when a court proceeding is not the appropriate means by which to resolve a dispute.

Reliance on the expertise of a defendant

A limitation period will be tolled when a plaintiff has relied on the superior knowledge and expertise of a defendant who indicated to the plaintiff that it was addressing the damage it had caused.

This has been the case in claims against professionals, such as doctors and accountants. In one example, a limitation period for a claim against an accountant did not start when the accountant filed a corporation’s tax returns after the deadline, resulting in a significant fine, but continued to help resolve the issue outside of a court process.

Reliance on the defendant is also not limited to “traditional expert professions.” In a very recent case, homeowners relied on a septic installer’s assurances and attempts to fix a faulty septic system he had negligently installed. The limitation period did not begin until a government agency told the plaintiff that the septic system could not be fixed and had to be replaced.

Another venue has the power to order a remedy

When another venue has the exclusive jurisdiction to potentially provide the remedy the plaintiff is seeking, the limitation period will not start.

For instance, the Court found that a civil proceeding was not the appropriate means by which to resolve a dispute between a property owner and a municipality, when all of the facts indicated to the property owner that the Ontario Municipal Board had exclusive jurisdiction over the claim. Only when facts emerged that suggested that the Ontario Municipal Board did not have jurisdiction did the limitation period commence.

Similarly, the Court has ruled that a limitation period will not commence in a claim to enforce a foreign judgment, when the time to appeal the judgement in the foreign jurisdiction has not yet expired.

The appropriate means doctrine is not limitless

While the above cases indicate the Court’s willingness to expand the appropriate means doctrine, this expansion is not completely unrestricted.

For example, a limitation period will not be tolled for a party’s own “tactical reasons” for delaying the commencement of legal proceedings. A former partner of a partnership could not commence the start of a limitation period when he delayed bringing a claim against the partnership because he knew it did not currently have the funds to pay him.

It is equally important to note that participation in settlement discussions will not toll the limitation period. The Court does not want to be forced to assess the “tone and tenor” of settlement discussions to determine whether they are fruitful or no longer useful and a claim is therefore appropriate. Parties are therefore best served to enter into tolling agreements when choosing to partake in settlement discussions.

Takeaways

Going forward, parties should keep the appropriate means doctrine in mind when calculating limitation periods and continue to watch for jurisprudence from the courts as they continue to grapple with and define the scope of this evolving doctrine.

For defendants, the growth of this doctrine has led to an expansion of the period in which a plaintiff must bring a claim. This may result in uncertainty as to when the assertion of a limitations defence will be successful.

For plaintiffs, this is a potential lifeline to expand time to launch an action. Plaintiffs may not need to commence a claim while they rely on professionals to fix a claim or determine whether or not another tribunal has exclusive jurisdiction. That said, the appropriate means doctrine is by no means limitless, and plaintiffs are still best served to obtain a tolling agreement to avoid a fight over limitation periods.

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