Ontario’s Limitations Act generally allows claimants two years from the day they “discover” that a wrong occurred to start a lawsuit.[1] There are some exceptions to this two-year rule, such as when a creditor wants to sue to take and realize on collateral for their loan, or when the claim is about sexual assault, but the general limitation period in Ontario is two years.
The Limitations Act states that a claimant “discovers” their claim on the earlier of:
- the day they knew that an injury occurred, it was caused by or contributed to by the act or omission of the person they are claiming against, and a legal proceeding was an appropriate way to remedy the injury; or
(2) the day they ought to have known the foregoing.[2]
A claimant is presumed to know about the matters described in paragraph (1) on the day the act or omission took place, unless they can prove otherwise.[3]
The consequences of missing a limitation period are dire. If a person misses the deadlines set out by the Limitations Act, or another statute setting out limitation periods, they can no longer sue to enforce their rights, even if they have a strong claim. The Court will not prevent one from filing a lawsuit in Court, however if the other side asserts that the time to sue has passed, it is very likely a judge will “throw out” the lawsuit.
Because missing a limitations period can end your lawsuit, litigants should consult with professional commercial dispute lawyers if they’re concerned that they are running up against a limitation period.
What Are Rolling Limitation Periods?
Sometimes, instead of a wrongdoing only having one “limitation period,” Ontario courts will apply a “rolling limitation period.” A “rolling limitation period” happens when a person engages in more than one wrongful act, such as a series of breaches of a contract. When this happens, each instance of wrongdoing constitutes a new “cause of action,” or claim, and sets the limitations clock running anew for the two-year limitation period.
When do Rolling Limitation Periods Apply?
The 2022 Ontario Court of Appeal (“ONCA”) case Karkhanechi v Connor, Clark & Lenn Financial Group Ltd outlines when a rolling limitation period applies.[4]
The ONCA in Karkhanechi stated that the question of whether a rolling limitation period applies is not determined by “whether the plaintiff is continuing to suffer a loss […] but whether the defendant has engaged in another breach of contract beyond the original breach by failing to comply with an ongoing obligation” (emphasis added).[5]
Karkhanechi involved a breach of contract claim, regarding the entitlement of a retiree (“Retiree”) to post-retirement compensation. The retiree had a contract with his former employer (“Employer”) which entitled him to periodic post-retirement payments (“Contract”).[6] When the Retiree received his first post-retirement payment, he discovered that the payment was determined using a methodology the Retiree thought was inconsistent with the Contract.[7] Subsequent payments followed the same allegedly incorrect methodology. However, the Retiree did not bring a claim against the Employer until after two years had passed from when he received the first payment.[8] The ONCA decided that a rolling limitations period did not apply, and that the Retiree’s claim was time-barred.[9]
The ONCA applied the same principles in Karkhanechi to other areas of law, including tort law.
In Jakubov v. Sun Life Assurance Company of Canada, a health services practitioner (“Practitioner”) sued Sun Life Assurance Company of Canada (“Sun Life”) for, among other things, “intentional infliction of economic harm” and “interference with economic relations.”[10] Sun Life suspected that the Practitioner engaged in fraudulent billing practices, and notified the Practitioner that Sun Life would delist it from the healthcare practitioners for whose services Sun Life reimbursed its health benefit plan members. The Practitioner sued Sun Life more than two years after this notice. The ONCA agreed with the lower court’s decision that although the Practitioner may have suffered continual damages from the original delisting decision, this did not entitle her to a “rolling” limitations period, and as such her claim was time-barred.[11]
This article illustrates the importance of understanding the deadlines to sue for your rights. If you believe that you or your business have suffered a harm and that a lawsuit is an appropriate way to address your losses, the commercial litigation lawyers at Walker Law can help you assess the merits of your claim and whether you are within the time limit to begin a lawsuit.
If you have been sued, you should also take care to understand if the Limitations Act could apply to the lawsuit. A missed limitation period can be a full defence against a claim, so if you are facing a lawsuit, please consult a civil litigation lawyer to see if you have a potential limitations defence.
[1] Limitations Act, 2002, S.O. 2002, c. 24, Sched. B (“Limitations Act”), Section 4.
[2] Limitations Act, Section 5 (1).
[3] Limitations Act, Section 5 (2).
[4] Karkhanechi v Connor, Clark & Lenn Financial Group Ltd, 2022 ONCA 518, (“Karkhanechi”), at para 27.
[5] Karkhanechi, at para 27.
[6] Karkhanechi, at para 5.
[7] Karkhanechi, at para 9.
[8] Karkhanechi, at para 10.
[9] Karkhanechi, at paras 34-35.
[10] Jakubov v Sun Life Assurance Company of Canada, 2024 ONCA 16 (“Jakubov”), at paras 5-6, 9.
[11] Jakubov, at paras 6-9.