Limitation periods and discoverability are fundamental concepts in any litigation, including, commercial litigation and appellate litigation. What exactly are these legal principles and why are they so important? Read on for a helpful guide.
Limitation periods are timelines imposed by parliaments in Canada through legislation. They set out the maximum time in which a legal claim may be brought. They are also known as periods of prescription. They provide statutory defences to claims brought after the applicable limitation period.
Their purpose is to ensure a timely and fair adjudication of the dispute. A plaintiff should bring their claim forward with some diligence, a defendant should be able to marshal their evidence in response before memories and other evidence is lost, and old claims tend to produce bad results.
They are found in various statutes, with most contained in a Limitations Act. The periods can be very short, just a matter of days especially where a notice of the intention to commence a claim must be given. The most common time period in Ontario is two years. The maximum period is fifteen years.
The subject of limitation periods is often a distressful one. Many potential claimants are ignorant of their existence or length. They may also not be aware of the existence of a claim or even who the right defendants are until after the stated limitation period has expired. Lawyers struggle with these same issues and are always stressed by their applicability. Judges are sometimes reluctant to have them apply and look for ways to advance an otherwise meritorious claim.
They do not run against minors or person who are incapable while they remain in that capacity.
The legal concept of discoverability is potentially available to allow a claim to advance despite the expiry of a limitation period. In Ontario, there is a presumption that a plaintiff or applicant knew of their claim and the parties responsible, on the day the act or omission occurred, unless the contrary is proved. Proving the contrary is an exercise in determining when the limitation period actually began to run in law. The concept is now codified in the Ontario Limitations Act (OLA) in section five (5) as follows:
5 (1) 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).
In adjudicating an attempt to prove the contrary, a court must determine when the claimant knew or reasonably should have known, in exercising reasonable diligence, the material facts set out in s. 5 that give rise to their claim.
This includes the claimant’s knowledge of the identity of their potential defendant(s) although it is not necessary for them to know with certainty a potential defendant(s) responsibility for the act or omission complained about. Being able to draw an inference of responsibility is enough.
It also includes that the claimant knew that some material, non-trivial, loss had been suffered. A trivial loss does not trigger the running of a limitation period. They do not need to know the extent or type of loss that they suffered. Finally, they must know that a legal proceeding is the appropriate means to seek a remedy for their loss.
As was said in Fennell v Deol:
The date of discovery is the earlier of the two dates under s. 5(1) — when (a) the person with the claim had knowledge of, or (b) a reasonable person with the abilities and in the circumstances of the person with the claim first ought to have had knowledge of, the matters referred to in s. 5(1)(a)(i) to (iv).
All of the criteria in s.5 must be considered. This includes the knowledge that a legal proceeding is an appropriate means of dealing with the claim. This is a new requirement under the 2004 Act which was not present in the previous Act or the common law. The sub-section gives the court the power to determine whether it was reasonable for a claimant to wait and only bring their claim when the damage became more than trivial.
At Milosevic & Associates, we believe we are among the best litigation teams in Toronto. We are a small office that has handled large matters for our clients, involving tens of millions of dollars in dispute, and the future of our clients’ businesses. We are in court or in mediations almost every day and as a result, have become exceptionally adept at thinking on our feet and addressing the unexpected. Over the years we have seen it all and helped our corporate clients mitigate their legal and financial risks. Our impressive track record speaks for itself. Call us at 416-916-1387 or contact us online for a consultation.