In Ontario, generally speaking, a party has two years to sue from the date they discovered a wrong. This is called a claim. A claim is considered discovered, for the purposes of starting a lawsuit, on the day on which the person knew that: (1) An injury or damages occurred (2) it was caused by an act or omission (3) of the person against who the party wants to start a lawsuit; and, (4) starting a lawsuit would be appropriate to remedy the loss.
Normally, the limitation period starts on the day that the person knew about the act or omission which caused the loss. However, this is not always the case, which can be seen from the case Thermal Exchange Service Inc. v. Metropolitan Toronto Condominium Corporation No. 1289, 2022 ONCA 186.
Thermal Exchange provided HVAC service to the units of the Condo Corporation. Thermal Exchange thought that it was contracting with the Condo Corporation. The Condo Corporation, however, was operating on the understanding that it was only obligated to pay if it was able to collect payment from the unit owner.
Between 2002 and 2015, Thermal Exchange did work, and provided invoices to the Condo Corporation. The invoices provided that payment was due within 30 days, however, payment was often more than 300 days late. When Thermal Exchange received payment, it was credited to the account. The Court decided that Thermal Exchange was operating on the basis that the Condo Corporation had a running account.
Thermal Exchange followed up several times with the Condo Corporation regarding unpaid invoices. The Condo Corporation assured them that the matter would be attended to and that they were “working on it”.
On November 4, 2016, for the first time, the Condo Corporation informed Thermal Exchange that it was not responsible for paying the invoices, and the invoices are charge-backs to the unit owners. Prior to this date, Thermal Exchange reasonably believed that payment was a matter of following up with the Condo Corporation as there had been no refusal to pay or suggestion of an inability to pay.
The central issue in this matter was when Thermal Exchange first determined that a court proceeding would be an appropriate means to remedy its loss. The Court of Appeal stated that the actions of the Condo Corporation affected the ability of Thermal Exchange to determine whether a court proceeding was appropriate. The Court of Appeal decided that the limitation period did not begin to run until November 4, 2016 when the Condo Corporation first communicated that it was not obligated to pay.
In some circumstances where a debtor promises to pay, and leads the creditor to the conclusion that payment is coming and legal action is not required, it can pause the limitation period. Determination of when the limitation period begins to run is a fact specific analysis. If you are in need of a litigation lawyer to start a civil action for the collection of a debt or other contract dispute, contact Walker Law.