When it comes to running a business, time is at a premium. The day to day operational concerns often monopolize the working hours and dealing with potential legal claims may fall down the priority list. Both businesses and individuals should be aware, however, that there are typically strict time limits for commencing a legal proceeding.
These time limits are known as limitation periods. A limitation period is the amount of time a person or legal entity has to commence a legal proceeding. If the limitation period has passed, the claim generally cannot be brought forward, and the claimant may have permanently lost its right to be compensated for a wrongdoing.
In Ontario, the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B, applies to claims pursued in court proceedings, subject to certain exceptions1. The Limitations Act sets out a basic time limit of two years for bringing a claim from the date the claim is discovered. The Limitations Act sets out when a claim is “discovered”:
5(1) (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)2.
The discoverability principle is designed to try and ensure that the limitation period begins once the potential claimant is both aware of the harm and that the other party’s (or parties’) act(s) caused the harm.
That said, the Limitations Act also legislates a presumption that the potential claimant knew it had a claim on the day the act or omission took place3. The burden is on the party advancing the claim to establish that the limitation period did not begin until he/she actually “discovered” the claim.
“Discoverability” can be a complicated issue depending on the facts of a specific case – particularly when the loss suffered by the claimant is not evident until a significant amount of time has passed, or when an omission is uncovered years later. If you’re unsure about when the limitation period begins and ends for your potential claim, it would be best to consult with a lawyer.
The basic two-year limitation period is subject to exceptions and limitations.
For instance, to provide closure, claims cannot be brought forward more than 15 years after the wrongful act occurred, regardless of when the claim was actually discovered. However, there are exceptions to this provision – some claims have no limitation period under the current legislation. These include proceedings based on a sexual assault, or undiscovered environmental claims. The Limitations Act also contains special provisions with respect to minors, and individuals who are incapable of commencing a proceeding due to a physical, mental or psychological condition.
If you or your business has a potential claim, contact a lawyer as soon as possible to ensure that your rights are preserved.
Calina N. Ritchie is a partner with Conway Baxter Wilson LLP, a law firm practicing exclusively civil litigation and advocacy. Conway Baxter Wilson LLP also provides its clients with advice on litigation avoidance strategies. Calina has a bilingual practice with an emphasis on corporate commercial litigation, employment litigation, and estate litigation.
1 For example, exceptions include appeals, as well as proceedings to which certain other statutes such as the Real Property Limitations Act, the Judicial Review Procedure Act, the Provincial Offences Act, and others apply.
2 s. 5(1).
3 s. 5(2) reads: A person with a claim shall be presumed to have known of the matters referred to in clause (1) (a) on the day the act or omission on which the claim is based took place, unless the contrary is proved.