Canada: The Uncertainty Behind Ontario's Limitation Periods

The two-year limitations period under Ontario law has always contained a certain degree of variability because the two years is measured on the basis of discoverability. But a recent trend of case law from the Ontario Court of Appeal has infused uncertainty into the two-year claims bar, calling into question when two years really means two years.

Whether this trend is welcome news depends on where you are standing. For plaintiffs, it is a welcome development that potentially expands the time in which they must bring a claim. Defendants, on the other hand, now lack the certainty that after two years—even after the plaintiff knows about the events underlying a claim—a claim can no longer be brought.

What is driving the uncertainty?

The Limitations Act was introduced with the intention of promoting certainty for Ontarians. It provided a clear limitation period of two years after the plaintiff discovered the claim or should have discovered the claim. This 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 longer be filed against them.

However, this certainty has been turned on its head due to the Court's recent focus on a once dormant provision of the Limitations Act. Section 5(1)(a)(iv), known as the "appropriate means" doctrine, provides that the two-year limitations clock begins to run only when the plaintiff knows that (i) it has suffered a loss; and (ii) that litigation in court is an appropriate means by which to remedy that loss.

When will a limitation period be extended?

Recent decisions from the Court have provided some indication of when a limitation period may be extended by way of the appropriate means doctrine. While by no means exhaustive, the Court has seemingly created numerous exceptions to the straight-line application of the two-year discoverability rule.

When a plaintiff has relied on the superior knowledge and expertise of a defendant who indicated to the plaintiff that it was fixing the damage it had caused, the limitation period will effectively be tolled. For example, in Brown v. Baum 2016 ONCA 32, the limitation clock did not begin to run when the defendant, a medical doctor, continued to treat the patient to correct the original problems he had caused three years earlier. The Court came to the same conclusion in Chelli-Greco v. Rizk, 2016 ONCA 489, when a dentist told a patient that he would "endeavor to repair and remediate the problem."

Outside of the medical context, in a claim against an accountant in Presidential MSH Corporation v. Marr Foster & Co. LLP, 2017 ONCA 325, the limitation period was tolled when the accountant filed a corporation's tax returns after the deadline, which resulted in a significant fine, but continued to help resolve the issue outside of a court process.

While many of the cases from the Court involve professionals such as doctors and accountants, reliance on a defendant's expertise is not limited to "traditional expert professions." In Presley v. Van Dusen, 2019 ONCA 66, the decision of homeowners to rely on their septic installer's assurances and attempts to fix a faulty septic system, which he had negligently installed, tolled the limitation clock until a government agency advised them that the system could not be fixed and had to be replaced.

The limitation period will also not run when the plaintiff reasonably believes that another tribunal or venue has the exclusive jurisdiction to provide the remedy the plaintiff is seeking. In Har Jo Management Services v. York (Regional Municipality), 2018 ONCA 469, which involved a dispute between a property owner and a municipality, the Court found that a court proceeding was not the appropriate venue to resolve the dispute when the facts had indicated to the owner that the Ontario Municipal Board had exclusive jurisdiction over the claim. The court clarified that the limitation clock only began to run once facts emerged to suggest that the Superior Court may had jurisdiction over the claim.

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.

Appropriate meaning of "appropriate means"

While the Court has been willing to significantly expand the appropriate means doctrine in recent years, this expansion is not limitless. For example, "tactical reasons" for delaying a claim will not toll the limitation period, nor will the existence of settlement discussions. Parties with any concerns over whether a limitation clock is tolled therefore remain best served to enter into tolling agreements.

It remains to be seen whether the Court of Appeal will continue to expand this doctrine by adding to the growing list of reasons for tolling a claim, or whether it will limit the list to a few exclusive exceptions, and in doing so, reinfuse the limitations analysis with the certainty and foreseeability litigants expect. In the meantime, 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 appropriate means doctrine.

Originally published by The Lawyer's Daily.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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