Each and every day that a party remains in breach of a
continuing obligation in a contract, a new cause of action and
limitation period arises, the Court of Appeal recently
In Pickering Square
Inc. v. Trillium College Inc., Trillium was a tenant at a
shopping centre owned by Pickering Square. As part of the long-term
lease it had entered into with Pickering Square, Trillium had
agreed to operate its school continuously on the premises. Trillium
breached this covenant, as well as other obligations under
the lease. Pickering Square commenced an action for damages.
Trillium brought a summary judgment motion and argued that
Pickering Square was time-barred under the Limitations Act
because it had not commenced its claim within two years of
discovering Trillium had breached the obligation to operate its
school on a continuous basis on the property, which was October 1,
2008. The motion judge held that while Pickering Square discovered
Trillium's breach on October 1, 2008 the breach was continuous
and each day of the breach was a fresh cause of action. As such,
only a part of Pickering Square's claim was time-barred.
The Court of Appeal noted three forms of a breach of
a failure to perform one obligation due at a particular point
a failure to perform an obligation due on a periodic basis
a breach of a continuing obligation under a contract
In this case, Trillium's failure to operate its business
continuously for the duration of the lease gave rise to the third
form of breach of contract. In the face of the breach Pickering
Square could have either elected to cancel the lease or affirm it.
Pickering Square affirmed the lease and as such Trillium was
required to perform its obligations under the lease until it
A fresh cause of action accrued each day Trillium failed to
operate its business under the terms of the lease, the court held,
triggering a fresh two-year limitation period each day. Pickering
Square was entitled to claim damages for the period that ran from
two years prior to the commencement of its action up to the date
the lease expired.
This decision makes clear that a breach of contract always
starts a limitation period, even if the innocent party elects to
treat the contract as continuing in force. However, where the
breach is a breach of an obligation to perform the contract on a
periodic basis, each failure to perform will give rise to a fresh
cause of action and corresponding limitation period. Similarly, a
breach of a continuing obligation (such as obligation to maintain a
continuous state of affairs) will give rise to a fresh cause of
action, and corresponding limitation period, on each and every day
that the breach continues. The limitation period works on a rolling
basis in these cases. Thus the innocent party will begin to lose at
least some rights on the second anniversary of the breach,
regardless of the nature of the breach.
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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