D. Limitation of Actions

• Author: M.H. Ogilvie
• Profession: LSM, B.A., LL.B., M.A., D.Phil., D.D., F.R.S.C. Of the Bars of Ontario and Nova Scotia Chancellor's Professor and Professor of Law, Carleton University
• Pages: 232-233

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Whether either the bank or the customer is, respectively, a debtor depending on the balance in the account, any outstanding debt, as a contractual debt, is subject to the law relating to limitation of actions in relation to debt.⁴⁰

Actions in debt to enforce payment of the debt must be brought within a limited period of time from the day on which the debt is payable. At common law that period was six years, and statutory limitation periods in most Canadian jurisdictions have codified that six-year period.⁴¹

When a customer has a credit balance in an account, the debt becomes due when demand for all or part of the balance is made and not paid over by the bank, that is, the limitation period of (typically) six years runs from that day for the amount in the account requested by the customer.⁴²

If the customer makes a series of specific demands for payment, then each will be subject to its own limitation period, so a series of limitation periods would result.⁴³

The sole exception to the usual limitation period is for unclaimed balances transferred

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to the Bank of Canada in relation to which a customer may sue for their payment within ten years from the last transaction or requested statement of account or the day on which a fixed term deposit terminated.⁴⁴

When an account is in overdraft so that the customer is the debtor of the bank, the limitation period runs from the date of each advance, so that a series of limitation periods are created where there are multiple advances.⁴⁵

Although where an overdraft is contractually payable on demand, the limitation period runs from the time of the demand.⁴⁶

[40] Joachimson v. Swiss Bank Corp., [1921] 3 K.B. 110 at 130 (C.A.), Atkin J.A. [Joachimson]; National Bank of Commerce v. National Westminster Bank, [1990] 2 Lloyd’s Rep. 514.

[41] Ibid. Some provinces have reduced that time to a shorter period: see, for example, Limitation Act, S.O. 2002, c. 24. There is also an unresolved constitutional issue as to whether the federal or provincial limitation period would apply, although this is not a practical issue in provinces that have not abandoned the traditional six-year period.

[42] Joachimson, above note 40.

[43] Ibid. Compare Bank of Baroda v. ASAA Mahomed, [1999] Lloyd’s Rep. Bank 14 (C.A.).

[44] Bank Act, above note 1, s. 438. See Chapter 6, Section D(1).

[45] Parr’s Banking Co. v. Yates, [1898] 2 Q.B. 460 (C.A.).

[46] Bradford Old Bank Ltd. v. Sutcliffe, [1918] 2 K.B. 833 (C.A.).

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