Avoiding Limitation Period Pitfalls

• Author: Dan Pinnington
• Date: May 16, 2017

This article is by Jordan Nichols, claims counsel at LAWPRO.

It is one of a lawyer’s worst nightmares: missing a limitation period. It can be a very easy mistake to make and yet the consequences can be enormous.

There are numerous “pitfalls” that can lead to missed limitation periods and other limitation period problems. Some of these pitfalls are relatively easy to avoid whereas others can trip up even the most skilled and careful of lawyers.

The following is an overview of some of the more common limitation period pitfalls that lawyers encounter and some tips on how to avoid these pitfalls. Some of these pitfalls should be fairly obvious (but still need to be mentioned) whereas others may not be so obvious. While this article is primarily intended for litigators, some of the pitfalls that are discussed can be encountered by non-litigators.

1. Overlooking limitation periods outside of the Limitations Act, 2002

While the Limitations Act, 2002 applies to most Ontario causes of action, it is but one of over 40 Ontario statutes that impose limitation periods. Less common limitation periods can be easily overlooked since some lawyers can go many years without encountering them.

Some of the more frequently overlooked (and therefore dangerous) limitation periods include: i) the limitation period set out in section 38(3) of the Trustee Act which applies to certain claims brought by or against the estate of a deceased person; ii) the 6 month limitation period for dependent’s relief claims that is set out in section 61 of the Succession Law Reform Act; and iii) the one year limitation period set out in section 259.1 of the Insurance Act, which applies to “a proceeding against an insurer under a contract in respect of loss or damage to an automobile or its contents”.

Most Ontario limitation periods are listed in the schedule to the Limitations Act, 2002. Litigators should familiarize themselves with this schedule. Significantly, the schedule does not include limitation periods imposed pursuant to federal statutes and also does not include limitation periods arising from the statutes that are referred to in section 2(1) of the Limitations Act, 2002.

Lawyers also need to watch out for limitation periods imposed by contracts. Such limitation periods tend to be fairly prevalent in standard form contracts including insurance policies and retainer agreements used by some professional firms (ie: large accounting firms). Contractually imposed limitation periods are also common in arbitration agreements. Notably, not all contractual limitation periods are enforceable (see Section 22 of the Limitations Act, 2002).

2. Inappropriately relying on discoverability

It can be dangerous for lawyers to rely on discoverability when determining when to issue a claim. Discoverability is a deceptively complicated concept that is not always treated consistently by the courts. There are often multiple valid arguments that can be made regarding when a claim was discovered or ought to have been discovered, and not all of these arguments may be immediately apparent.

Significantly, there are some limitation periods that are not subject to discoverability. One notable example of this is section 38(3) of the Trustee Act, which runs from the date of death of the relevant deceased person, regardless of discoverability (Waschkowski v. Hopkinson Estate, (2000) 47 O.R. (3d) 370 (Ont.C.A.)). Discoverability may also not apply to some contractually imposed limitation periods, depending on how they are worded. Further, there are cases in which courts have held that discoverability does not apply to claims for contribution and indemnity although the law on this issue is in flux (see Miaskowski v. Persaud, 2015 ONSC 1654, but see Demide v. AG of Canada, 2015 ONSC 3000).

It is not always clear whether a particular limitation period is subject to discoverability. If a limitation period provision provides that the limitation period starts running when the cause of action or damages occurred, or specifically refers to discoverability, then discoverability may well apply whereas if the provision provides that the limitation period starts to run at some other point such as the date of a death, discoverability may not apply (see Ryan v. Moore, [2005] 2 S.C.R. 53, 2005 SCC 38).

Being that discoverability is a complicated concept, and that some limitation periods are not subject to discoverability, the safest course of action is to issue lawsuits early enough that there is no need to rely on discoverability.

3. Assuming that the limitation period for a wrongful dismissal claim starts running as of the date that the employment ended

In Jones v. Friedman 2006, CanLII 580, the Ontario Court of Appeal considered the limitation period for wrongful dismissal claims. This case involved an employee who had been notified on December 12, 1994 that his employment would be terminated as of January 31, 1995. The Court of Appeal held that the limitation period started to run when the employee received the notice of termination (December 12, 1994) and not as of the date that the employee’s employment ended (January 31, 1995).

Jones v. Friedman has tripped up many lawyers, as some lawyers assume that the limitation period does not start to run until the effective date of the termination rather than on the date that notice of termination was given. Fortunately, this problematic assumption may not always be fatal. Rather, Jones v. Friedman (which was decided under the former Limitations Act) may be distinguishable in some cases in light of Webster v. Almore Trading & Manufacturing Co, 2010 ONSC 3854, where Justice Pitt held:

Wrongful dismissal, in my view, raises a particularly difficult issue in the limitation context since it is not a dismissal per se that...