The limits of limitation periods

It is important to understand the nuances of the Limitations Act

The limits of limitation periods

Imagine you become aware of a potential claim that an employee may have against your company. More than two years have passed and you haven’t heard anything. Does this mean that the time limit for the claim has expired? The short answer is: not necessarily.

Section 4 of the Limitations Act, 2002 provides for a basic limitation period of two years, which applies to most claims in Ontario. Specifically, “a proceeding shall not be commenced in respect of a claim after the second anniversary of the day on which the claim was discovered.”

However, there are several reasons why there could still be a viable claim even if the defendant has not received notice more than two years after the events giving rise to the claim.

Time to serve the lcaim

First of all, a claim may have been commenced without your knowledge. Rule 14.08 of the Rules of Civil Procedure provides that a statement of claim shall be served within six months after it is issued by the court. This time limit can be extended by court order, even after it has expired. While a statement of claim is usually served quickly after it is issued, there is no requirement for a plaintiff to give the defendant notice of the claim, other than the six-month limit for service.

Sometimes, this extra time is used by a plaintiff who is approaching the expiry of the limitation period, but is still not sure if they want to proceed with their claim. If the plaintiff decides, within the six-month limit, not to proceed with the claim, they may discontinue the action on a without costs basis before serving the statement of claim.

If you are concerned that a claim may have been commenced without your knowledge, you or your lawyer can search the Court’s Online Database to see the list of active cases that have been commenced against your company.

Suspension of limitation periods due to COVID-19

At the beginning of the COVID-19 pandemic, the Ontario government enacted O. Reg. 73/20, which suspended all limitation periods from March 16, 2020 until it was repealed on Sept. 14, 2020. In the case of McAuley v. Canada Post Corporation, 2021 ONSC 4528, the court clarified that the effect of this regulation was to extend any running limitation period by 183 days (roughly six months). You can read more about that decision here.

As we are still less than two years from Sept. 14, 2020, the extension of the limitation period can still have an impact on potential claims. For example, a claim that arose in February 2020 could still be commenced as of the date of this article without being out of time.

Discoverability

Finally, there is the issue of discoverability. The two-year limitation period does not begin to run until “the claim was discovered”.

Section 5 of the Limitations Act, 2002 provides the following definition of “discovered”:

“A claim is discovered on the earlier of,

(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).”

This means that even if more than two years have passed since the events giving rise to the claim, the deadline can be extended if the employee was not initially aware of the claim and the court agrees that it was reasonable for the employee not to be aware of it.

In the case of Fernandes v Goveas, 2016 ONSC 1992, a live-in caregiver and housekeeper was awarded damages for underpayment of her salary and overtime for the entirety of her nine years of employment. The defendant argued that the employee’s claims were discoverable at least seven years before her claim was commenced, and were therefore out of time.

However, the court found that it was reasonable for the employee to not have discovered her claim until after her employment ended, relying upon her minimal English skills, her moderate education, her medical diagnoses, and the trust she placed in her employers, who were family members.

Conclusion

It is important to understand the nuances of the Limitations Act. Just because you haven’t received notice of a claim within two years, it does not mean that any claim would be out of time.

The two-year limitation period has limits, which may mean that a potential claim can exist more than two years after the events giving rise to it.

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