There are many rules and procedures governing lawsuits in Ontario, but limitation periods are one of the most important to understand when considering your rights, and deciding whether to commence a lawsuit. In Ontario, most limitation periods1 are governed by the Limitations Act, 2002 (the “Limitations Act”)2. If a lawsuit is commenced and the limitation period has expired, the lawsuit will be dismissed by the court.
For this reason, it is important to understand any limitation periods that may apply to a claim that you may have, and to understand exactly when the time starts running on that limitation period. This can be a complicated question – while this article provides an overview of limitation periods in Ontario, if you think you may have a claim against someone, you should speak with a lawyer to understand the specific timelines applicable to your situation.
The Limitations Act provides that court proceedings in respect of a “claim” must be initiated within a certain period of time. A “claim” is defined as “a claim to remedy an injury, loss or damage that occurred as a result of an act or omission”. The Limitations Act sets out a basic limitation period of two years. This means that a lawsuit must be commenced in respect of a claim within two years of the day on which the claim was discovered.
While this sounds straight-forward, determining when a claim is discovered is not always black and white. The Limitations Act provides that,
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).
It is presumed that a person knows of the matters in clause (a) on the day that the act or omission giving rise to the claim took place3. Where this is not the case, the person bringing the claim must prove otherwise.
For example, assume that you hired someone to build a shed that was required to be water tight. In building the shed, the contractor failed to properly prepare and shingle the roof. Two and a half years after the shed was built, the roof began to leak. The Limitations Act provides that your claim is presumed to have been known on the day that the omission on which the claim is based took place, which would be the day that the roof was improperly shingled. Based on the presumption, your claim would be out of time.
It can be argued, however, that the claim was not discovered until the leak began. In this case, it is necessary to prove each of the elements that are listed in clause (a) above. If these elements are proved, the limitation period would be determined to run from the time the leak was first discovered.
It is always open to a court, however, to determine that a reasonable person ought to have discovered the claim sooner, and set an earlier date from which the limitation period commences. In our example, you may base your claim on the date on which you discovered the leak, but if there is evidence that it was obvious before that time that the roof was defective, it would be open to a court to find that you should have discovered the claim sooner. These are always questions of fact that are determined on the evidence that is before the court.
Given the discoverability rule, it is possible that a claim could be brought years after the act or omission on which it is based occurred. This creates a great deal of uncertainty and makes it difficult for a potential defendant to assess their current risk. Essentially, a potential defendant would never know what liability they may have. In order to address this, and to provide some finality in respect of potential claims, the Limitations Act includes an ultimate 15 year limitation period.
Section 15 of the Limitations Act provides that no lawsuit can be commenced in respect of any claim after the fifteenth anniversary of the day on which the act or omission on which the claim is based took place. For the purposes of the ultimate limitation period, it does not matter when you discover the injury, loss or damage. Using our example above, if the shed were to start leaking 15 years and 1 day after the roof was completed, no lawsuit could be commenced, even if it is clear that the cause of the leak was the improper installation of the roof.
Demand loans have received special attention under the Limitations Act. It is not uncommon in family situations or closely held corporations for loans to be made on demand. A demand loan is one where a sum of money is loaned, but there is no repayment schedule. For example, the loan is given on the basis that it will be repaid either when the debtor is able, or when the person advancing the loan demands payment. The Limitations Act specifically provides that the day on which the injury, loss or damage occurs is the first day on which there is a failure to repay, once a demand for payment is made. This means that the time starts to run as soon as a demand for payment is made.
The Limitations Act does provide that a limitation period can be varied or excluded by agreement in certain circumstances4. This is commonly done where parties to a dispute are attempting to resolve the dispute without resorting to litigation. If there is a risk that the limitation period is getting close, the parties often agree to enter into an agreement to stop the limitation period from running while they try to resolve the dispute. This preserves the rights of the person with the claim while ensuring that any efforts to resolve the dispute are not disrupted.
If you think that you may have suffered an injury, loss or damage as a result of the acts or omissions of someone else, it is important that you understand your legal rights. This includes understanding the time limits that are imposed on your right to start a lawsuit. Generally speaking, you can expect to have no more than two years to start a lawsuit after you discover that you have suffered an injury, loss or damage. To ensure that your rights are preserved, you should speak with a lawyer as soon as you suffer an injury, loss or damage to obtain advice on your rights, and the limitation period that will apply.
1. The Limitations Act is not the only legislation that governs limitation periods in Ontario. It is important to be aware that specific actions may be governed by other legislation as well. You should consult with a lawyer to ensure that any claim you may have is not governed by other legislation as well.
2. S.O. 2002, c. 24 Sched. B
3. See s. 5(2) of the Limitations Act.
4. See s. 22 of the Limitations Act.