When contemplating litigation, one of the most important issues to determine is the limitation period of the potential action. No matter how sound a case may be, missing a key date can derail a claim before it even begins. In Ontario, there are two limitation periods which must be observed, depending on the type of action. Further, it is important to understand when the limitation period begins, setting the countdown clock into motion. Below, we will discuss the key limitation periods in the province, potential exceptions to those periods, and how to determine when a limitation period begins.
What are the key limitation periods in Ontario?
The relevant limitation periods in Ontario are set out in the provincial Limitations Act. Limitation periods essentially place restrictions on the amount of time a party has to initiate a claim against a potential defendant. If the claim is brought after the period expires, the defendant can use the passing of the period as a complete defence to the claim. This helps to ensure claims are brought in a timely matter when relevant evidence and witnesses are available to assist with the court’s determination of the claim.
In Ontario, there are two main limitation periods: the basic limitation period and the ultimate limitation period.
Under section 4 of the Limitations Act, the basic limitation period is two years from the date the claim was discovered. Section 5 of the Act provides guidance on when a claim can be said to have been discovered, as follows:
A claim is discovered on the earlier of,
(a) the day on which the person with the claim first knew,
(i) that the injury, loss or damage had occurred,
(ii) that the injury, loss or damage was caused by or contributed to by an act or omission,
(iii) that the act or omission was that of the person against whom the claim is made, and
(iv) that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it; and
(b) the day on which a reasonable person with the abilities and in the circumstances of the person with the claim first ought to have known of the matters referred to in clause (a).
For further clarity, the Act provides that a court will presume a claimant first knew about the potential claim on the date that the act or omission upon which the claim is based took place unless proven otherwise. Therefore, a claimant who wishes to start the limitation period after that date will have an onus to demonstrate why they did not become aware of the issue until later on.
Despite the two-year limitation period set out in s. 4 of the Limitations Act, there may still be a great deal of uncertainty for the parties, given that the time does not begin to run until the potential claim is discovered. To address this, the province created an ultimate limitation period, set out in section 15 of the Limitations Act. Under this section, no person may bring a claim for damages after the 15th anniversary of the act or omission upon which the claim is based took place, regardless of when the claim was discovered.
Demand obligations, which can be common in corporate settings, are loans created with no specific repayment plan. Instead, the loan amount will become due upon demand by the lender. For the purpose of a demand obligation, a limitation period will not begin to run until the first day there is a failure to perform an obligation once a demand for repayment has been made.
Exceptions to the Statutory Limitation Periods
Despite the limitation periods discussed above, there are exceptions in certain circumstances.
If the potential claimant was a minor under the age of 18 at the time the act or omission took place, the limitation period will not begin to run until the claimant has reached the age of majority.
Under s. 44(10) of the provincial Municipal Act, no claim may be brought against a municipality within the province for damages suffered due to improper maintenance of roads or bridges, unless the claimant provides notice to the municipality within 10 days of the injury.
Contracting Out of a Limitation Period
In some cases, parties to a contract may wish to reserve the option to pause a limitation period in order to try to resolve a dispute without resorting to litigation. In other cases, the parties to a contract may wish to further restrict the time in which a claim can be brought, for greater certainty between the parties. Under s. 22 of the Limitations Act, parties may amend limitation periods in certain circumstances. Concerning business agreements specifically, parties may vary or exclude a limitation period in an agreement made after October 19, 2006.
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