Canada: The Limitation Clock: Which Way Is The Pendulum Swinging?

The Court of Appeal for Ontario recently released two decisions involving limitation period issues. In both Ali v O-Two Medical Technologies Inc1 and 948298 Ontario Inc v Penretail II Ltd and Bentall Retail Services LP2, the court overturned lower court decisions that found actions were commenced outside the two-year limitation period. Both cases turned on the issue of discoverability.

In Ali, the decision was based on well-established principles of contract law. However, in Penretail, the court seemed to depart from its earlier decision in Lawless v Anderson3 and its recent decision in Beaton v Scotia iTrade4 that a claim is discovered when a prospective plaintiff knows "enough facts" to assert a claim and that the extent of the loss need not be known.

Both of these decisions may be of great interest, as limitation period defenses are potentially robust tools in a defendant's arsenal.

Ali v O-Two Medical Technologies Inc.

The claim in Ali involved an employment relationship in which the plaintiff employee, Ali, brought a claim against his employer for unpaid commissions. In December 2006, Ali made a sale pursuant to his commission agreement, but one week later O-Two informed Ali that it was unilaterally changing the commission rate.

In November 2007, Ali became entitled to receive his commission but was paid the lower rate. Ali brought a claim against his employer in September 2009.

The lower court was asked to determine whether the limitation period commenced when the employer changed the contract, or when it actually paid the commission at the lower rate. The Ontario Superior Court of Justice dismissed Ali's claim at the summary judgment motion, finding that his claim was discovered when the agreement was unilaterally changed, or, at the very latest, early in 2007 when his employer told him he would be paid at the lower rate. Either way, the court found Ali commenced his action beyond the two-year limitation period. Ali's claim was dismissed.

The Court of Appeal reversed the lower court's decision and held that the limitation period did not begin until payment of the commission came due and the employer tendered payment at the lower rate. The court held that this was a case of anticipatory breach. In such cases, the innocent party has two options: (i) accept the anticipatory breach and sue for damages; or (ii) continue to press for performance.

In this case, Ali did not accept the breach. He pressed for performance. As a result, the claim was discoverable only when the contract was actually breached—in November 2007—when Ali was entitled to receive his commission but was paid the lower rate. The Court of Appeal found the action was commenced within the limitation period.

948298 Ontario Inc v Penretail II Ltd and Bentall Retail Services LP

In Penretail, the plaintiff, a restaurant owner, commenced a claim for breach of contract and negligence against its landlord and the property manager of the mall its restaurant was located in, alleging construction at the mall caused its business to fail.

Construction began at the mall in 2004, and the restaurant's business declined between 2004 and 2007. In 2006, the plaintiff wrote a letter to the defendants complaining the construction led to a 40% decline in sales. On cross examination, the plaintiff admitted by that time it knew its business was "sinking." The restaurant closed its doors in February 2007. The plaintiff issued a notice of action in late February 2009, but the lower court found that the claim was commenced out of time. It held that the plaintiff discovered its claim by July 2006 when it knew its business was sinking.

On appeal, the court framed the issue narrowly. The court asked when the plaintiff would have known that a proceeding was an appropriate means to seek to remedy its alleged loss: on the date the business closed, or when the plaintiff knew its business was sinking?

Justice Laskin held that this question required a trial, and reversed the motion judge's dismissal of the claim. Justice Laskin noted there is a difference between a business "sinking" and being "sunk," explaining that the fact the plaintiff "carried on business for another eight months is perhaps the most cogent evidence that he thought he could turn it around."5

However, the court did not consider its earlier decisions in which it expressly found that "the question to be posed is whether the prospective plaintiff knows enough facts on which to base an allegation of negligence against the defendant"6 and that the "extent" of the loss need not be known for the cause of action to accrue.7

In our view, it was reasonable for the trial judge to decide that the quantum of damages (i.e., a decrease in sales vs. the total loss of business) is not something that needed to be known to the plaintiff before the limitation period started running. The court's finding that the degree of loss in determining discoverability created a genuine issue requiring a trial may create some uncertainty on future motions of this kind.

The author wishes to thank Dana Carson, articling student, for her help in preparing this legal update.


1 2013 ONCA 733 [Ali].

2 2013 ONCA 718 [Penretail].

3 2011 ONCA 102 [Lawless].

4 2013 ONCA 554 [Scotia iTrade].

5 Penretail at para 24.

6 Lawless at para 23.

7 Beaton v Scotia iTrade, 2012 ONSC 7063 at para 13, aff'd 2013 ONCA 554.

Norton Rose Fulbright Canada LLP

Norton Rose Fulbright is a global legal practice. We provide the world's pre-eminent corporations and financial institutions with a full business law service. We have more than 3800 lawyers based in over 50 cities across Europe, the United States, Canada, Latin America, Asia, Australia, Africa, the Middle East and Central Asia.

Recognized for our industry focus, we are strong across all the key industry sectors: financial institutions; energy; infrastructure, mining and commodities; transport; technology and innovation; and life sciences and healthcare.

Wherever we are, we operate in accordance with our global business principles of quality, unity and integrity. We aim to provide the highest possible standard of legal service in each of our offices and to maintain that level of quality at every point of contact.

Norton Rose Fulbright LLP, Norton Rose Fulbright Australia, Norton Rose Fulbright Canada LLP, Norton Rose Fulbright South Africa (incorporated as Deneys Reitz Inc) and Fulbright & Jaworski LLP, each of which is a separate legal entity, are members ('the Norton Rose Fulbright members') of Norton Rose Fulbright Verein, a Swiss Verein. Norton Rose Fulbright Verein helps coordinate the activities of the Norton Rose Fulbright members but does not itself provide legal services to clients.

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.