When Does A Limitation Period Start?

From time to time, potential clients will contact me about a possible lawsuit that is already statute-barred. In other words, the limitation period has already expired. When this happens, I explain to them that their options are very limited. This is because the expiration of the limitation period can be a complete defence to that lawsuit.

Here in Ontario, the Limitations Act, 2002 sets out most limitation periods. This legislation prescribes a basic limitation period of two years from the day when the claim was discovered. There are limitation periods prescribed in other legislation, such as those set out in the Construction Act pertaining to construction liens, and in the Family Law Act in relation to claims for equalization of net family properties, among others.

At the start of the COVID-19 pandemic in Ontario, the provincial government suspended limitation periods for twenty-six weeks from March 16, 2020 to September 13, 2020. With the suspension ending on September 14, 2020, any limitation period that began prior to March 16, 2020 was extended by a further twenty-six weeks.

Managing a limitation period starts with knowing when it starts to run. Section 5 of the Limitations Act, 2002 provides:

(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).

This concept of discoverability is often a major battleground in litigation involving a limitation period. In Grant Thornton LLP v. New Brunswick, the Supreme Court of Canada clarified this concept by examining when a claimant has the requisite degree of knowledge to discover a claim.

In this case, the Government of New Brunswick advanced a claim for negligence against its auditor. The auditor, in its defence, asserted that the applicable two-year limitation period expired and thus the claim was statute-barred under the province’s Limitations of Actions Act. This Act closely mirrors Ontario’s counterpart legislation.

Deciding the appeal in favour of the auditor, the Supreme Court of Canada, at paragraph 27, explained:

This case turns on the standard to be applied in determining whether and when a plaintiff has the requisite degree of knowledge to discover a claim under s. 5(2), thereby triggering the two-year limitation period under s. 5(1)(a). In order to properly set the standard, two distinct inquiries are required. First, in assessing if the limitation period in s. 5(1)(a) has been triggered, is the plaintiff’s state of knowledge to be assessed in the same manner as the common law rule of discoverability? Second, what is the particular degree of knowledge required to discover a claim under s. 5(2)?

The Supreme Court of Canada noted that the Limitations of Actions Act, like Ontario’s Limitations Act, 2002, does not oust or replace the application of the common law rule of discoverability. Instead, the legislation codifies this common rule.

Writing for the court, Justice Moldaver turned his attention to the question of how to ascertain the degree of knowledge required to discover a claim. At paragraph 42, Justice Moldaver wrote that “a claim is discovered when a plaintiff has knowledge, actual or constructive, of the material facts upon which a plausible inference of liability on the defendant’s part can be drawn.”

This standard is not one of certainty or perfect knowledge, nor is it one of mere speculation. Rather, as stated by Justice Moldaver at paragraph 47, it is “the equitable balance of interests that the common law rule of discoverability seeks to achieve.” A limitation period should not start to run against a claimant who could not have plausibly inferred from the facts that the other party was liable.

In carrying out this exercise, both direct and circumstantial evidence can be used. At paragraph 61, Justice Moldaver further explained “a plaintiff does not need knowledge of all the constituent elements of negligence to discover its claim.” A plaintiff will have constructive knowledge when the evidence shows that the plaintiff ought to have discovered the material facts by exercising reasonable diligence. Neither discovery evidence nor expert evidence is required.

Given the similarities between Ontario’s and New Brunswick’s legislation, I expect that the approach set out in this decision will be the leading case in determining limitation period defences in Ontario going forward.

This article is intended only to provide general information and does not constitute legal advice. Should you require advice specific to your situation, please feel free to contact me to discuss the matter further.