Is There a Time Limit For Starting a Lawsuit?
In Ontario, Two Years Is the General Time Limit For Starting a Lawsuit. Depending On the Type of Lawsuit, Different Time Limits May Apply. When the Time Clock Specifically Starts Is Based On the 'Discovery Principle'.
Understanding That Statutory Limitation Periods for Starting a Lawsuit Are Deadlines After Which Rights Expire
What are known as limitation periods are merely the time limits that restrict when legal proceedings may be commenced. Wait too long and the right to start a lawsuit is lost. In Ontario, the Limitations Act, 2002, S.O. 2002, Chapter 24, Schedule B, provides a general limitation period of two (2) years, with some exceptions, after which a right of action, meaning the legal right to sue, will expire and be lost forever. The Limitations Act, as a general statute, may be superseded by other Acts directly addressing certain types of matters and where limitation periods specific to those matters are defined. The primary purpose of limitation periods is to provide peace to potential defendants whereby upon expiry of the time limit, a potential defendant may rest knowing the risk of lawsuit no longer exists and any right of action has become stale or lapsed. Accordingly, the need to hang onto potential evidence is relieved, and a retained lawyer or paralegal may be discharged. Essentially, the potential defendant is relieved of further worry or concern whereas once a limitation period has expired, the right to bring legal action is statute barred, meaning forbidden. If a legal action is commenced outside this period, then the action will likely be struck down as there are few exceptions to limitations rules.
A common limitation rule involves the discovery principle whereby the limitation clock begins to run only when the cause of action (incident giving rise to a right of action) becomes known to the potential plaintiff or should be known to the potential plaintiff through reasonable diligence. Essentially, the discovery principle provides that a limitation period may begin, and thus expire, only when a potential plaintiff has failed, with knowledge, or by constructive knowledge, to pursue a right of action. What is meant by constructive knowledge is that a reasonable opportunity was available to obtain actual knowledge was untaken without a properly diligent effort or as said, "... When a plaintiff fails to exercise the diligence a reasonable person would, the claim is potentially discoverable earlier than the date the plaintiffs had actual knowledge of the claim ..."; Beniuk v. Leamington (Municipality), 2019 ONSC 1830 at paragraph 26. In the recent case of Bielak v. Marilyn Dadouch, Firm Capital, 2020 ONSC 855, the discovery principle was defined as:
 Justice Perell in Nicholas v McCarthy Tetrault,  O.J. No. 4258 (S.C.J), affirmed, 2009 ONCA 692 (CanLII),  O.J. No. 4061 (C.A.), leave to appeal to the S.C.C. refused,  S.C.C.A. No. 476 at para 26 states:
The discoverability principle governs the commencement of a limitation period and stipulates that a limitation period begins to run only after the plaintiff has the knowledge, or the means of acquiring the knowledge, of the existence of the facts that would support a claim for relief: Kamloops v Nielson (1984), 1984 CanLII 21 (SCC), 10 D.L.R. (4th) 641 (S.C.C.); Central Trust Co. v Rafuse (1986), 1986 CanLII 29 (SCC), 31 DLR (4th) 481 (S.C.C.); Peixeiro v Haberman, 1997 CanLII 325 (SCC),  3 S.C.R. 549. Thus a limitation period commences when the plaintiff discovers the underlying material facts or, alternatively, when the plaintiff ought to have discovered those facts by the exercise of reasonable diligence.
In contract law matters, the discovery date is generally the date in which a contract is breached. For example, if a contract involving a debt exists, and where there is a schedule for payments, or a specific date, the limitation period begins on the date the contract is breached by a failure to make proper payments. If the contract is a demand loan, the limitation period begins upon demand of repayment. In this example, if there is a breach, the right of action to collect the debt will exist for only two years, albeit with a few exceptions.
In tort law matters, the discovery date is generally the date in which the incident giving rise to a cause of action occurred unless the incident occurrence is unknown to the potential plaintiff. If the incident occurrence is unknown, the limitation period is suspended. Only when the potential plaintiff learns of the cause of action or should have learned of the cause of action by reasonable diligence, does the limitation period begin.
It is also important to appreciate that reasonable diligence requires an reasonable effort towards discovery. As said in at Laurent-Hippolyte v. Blasse et al., 2018 ONSC 940 at paragraph 26, "Due diligence is not about information arriving on one's doorstep - it is about actively taking steps outside the door."
Of course, it is also important to bear in mind that when a cause of action is "discovered" is somewhat objective. There is a considerable volume of case law that helps to define what "discovered" actually means including the case of Consumers Glass Co. v. Foundation Co. of Canada Ltd., 51 O.R. (2d) 385 which suggests that more than just some knowledge of the wrong and harm is required before the limitation clock starts ticking; instead, the plaintiff must have sufficient knowledge to bring litigation. While this makes sense in that it appears reasonably fair that the limitation period clock should start only when the plaintiff could begin litigation, the ambiguity in when the plaintiff has 'enough' to begin litigation can be very frustrating to a defendant. This concept whereby the clock begins only when the plaintiff obtains 'enough' to begin litigation follows the decision in Sparham-Souter et al. v. Town & Country Developments (Essex) Ltd. et al.,  2 All E.R. 65 wherein Lord Denning stated at page 68:
A statute of limitations cannot begin to run unless there are two things present: "A party capable of suing and a party liable to be sued." It was so stated by Vaughan Williams LJ in Thompson v Lord Clanmorris,  1 Ch 718 at 729, [1900-03] All ER Rep 804 at 809], and there is good sense in it. It would be unjust that time should run against a plaintiff when there is no possibility of bringing an action to enforce it.
Accordingly, the operative key phrase from the decision of Lord Denning is, "... capable of suing ...". Again, the mere knowledge of a wrong and harm may be insufficient to bring an action. It would seem that once a plaintiff has knowledge of a wrong and harm, the Plaintiff may also still have time to gather, subject to reasonable diligence, the necessary evidence.
With all the above said, it remains possible that 'discovery' will be deemed as a date other than the first moment of awareness of the wrongdoing and instead allow a reasonable time for a Plaintiff to carefully review the appropriateness of commencing litigation. In this respect it was said by the Supreme Court in Novak v. Bond,  1 S.C.R. 808 at paragraph 85:
…Litigation is never a process to be embarked upon casually and sometimes a plaintiff’s individual circumstances and interests may mean that he or she cannot reasonably bring an action at the time it first materializes. This approach makes good policy sense. To force a plaintiff to sue without having regard to his or her own circumstances may be unfair to the plaintiff and may also disserve the defendant by forcing him or her to meet an action pressed into court prematurely.
Regardless of the above, it remains important that a potential Plaintiff act promptly upon becoming aware of wrongdoing and the corresponding harm, or potential for harm. Often, a potential Plaintiff will engage in discussions with a potential Defendant with the hope of resolving a matter without taking legal action. Unfortunately, many potential Plaintiffs will let the clock run out during resolution discussions. The potential Plaintiff will then attempt to argue that the clock runs from the time the potential Defendant failed to remedy the issue in dispute rather than when the issue in dispute was initially discovered. This argument will fail in law; Reynolds v. Harwood Plumbing, 2017 ONSC 4899.
Suspension by Concealment
Generally, where a potential defendant wrongfully conceals facts that would reveal a cause of action to a potential plaintiff, the running of the limitation period is suspended. Similar to the rule in the discovery principle, if the potential plaintiff is unaware that a cause of action exists, the limitation period clock waits or is "tolled". However, the key difference between the Suspension by Concealment rule and the Discovery Principle rule is that where a potential plaintiff becomes somewhat aware that a cause of action has occurred yet is impaired by the potential defendant's concealment from fully gathering the facts necessary to commence legal proceedings, all applicable limitation periods are suspended. The reason for this rule is simply to prevent a potential defendant from using unjust concealment tactics to avoid, and eventually void, legal actions.
Cause of Action, continuing
In various types of tort claims, causes of action may accrue or 'roll over'. For example, in a trespass claim, such as where a potential defendant neighbour has parked an 'eyesore' of an automobile on the potential plaintiff neighbour's property, the cause of action accrues each day in which the automobile remains in trespass. The cause of action is continually reborn until the trespass ends at which time the limitation period will begin. Similarly, where a cause of action involves a continuous course of conduct or series of acts, the cause of action accrues and the limitation period begins upon the final act rather than the first. Accordingly, each individual but related incident becomes part of a collective incident whereby the right of action for all involved incidents expires only when the limitation period has passed when calculated from the final act. The continuing cause of action was defined in the case of Hole v. Chard Union,  1 Ch. 293 at p. 296 as "a cause of action which arises from the repetition of acts or omissions of the same kind as that for which the action was brought." Although this issue is uncommon, a good number of cases cite Hole including Georgian Glen Developments Ltd. v. Barrie (City), 2005 CanLII 31997 wherein it was said :
 Several authorities indicate that in the case of deliberate torts of a continuing nature where the issues are contested, the trial judge should rule on the limitation issue. One, a case in this court, held that the limitation period should be calculated from the end of the continuing conduct. Starline Entertainment Centre Inc. v. Ciccarrelli 1995 CanLII 7132 (ON SC),  O.J. No. 2494 (Gen.Div.) In that case Epstein J. held that a continuing tort can be explained as the continuance of the act which caused the damage. See Ihnat v Jenkins (1972) 3 O.R. (629) (Ont.C.A.); Carey v Bermondsey Borough Council (1903), 67 J.P. 447 (C.A.). Epstein J. went on to say:
What then is a “continuing cause of action”? It was described in Hole v. Chard Union  1 Ch. 293 at p. 296 … (C.A.) as:
a cause of action which arises from the repetition of acts or omissions of the same kind as that for which the action was brought.
In that case, the defendants had polluted a stream by pouring in sewage and refuse. It was held that this was nuisance, and a continuing cause of action. At p. 296, A.L. Smith L.J. stated:
[The series of acts] were repeated in succession, and became a continuing cause of action. They were an assertion of the same claim – namely, a claim to pour sewage into the stream, and a continuance of the same alleged right.
Do the plaintiffs’ claims stand up to this test? They allege that a continuing cause of action exists here because of Mrs. Palmer’s chronic injuries. However, the actions of Mr. Major against them regarding the bingo licence ended around the end of October. On October 28, 1993 the Ministry informed Starline that its licence had already ceased to be valid. The moratorium had been lifted the day before. These were the last acts taken by the defendants, so the six-month period therefore ended in late April 1994.
Recently, in Torres v. Export Packers, 2018 ONSC 726, while citing the Court of Appeal case of Bailey v. Milo-Food & Agricultural Infrastructure & Services Inc., 2017 ONCA 1004, further analysis to expand on what constitutes as a continuing cause of action were discussed including that the factual issues will often need determination at Trial before the legal issue of continuing cause of action can be evaluated. Specifically, it was said in Torres:
 If the Limitation Act applies, it is true that a cause of action cannot be brought after two years from the date the cause of action arose. However, that does not dispose of the matter. The Plaintiff relies on the allegations of "continuous misconduct" that gives rise to the claim. It will then depend on whether the facts result in a finding of an ongoing and continuous cause of action rather than a series of independent torts. This factual determination cannot be made on the allegations in the pleading.
 Bailey v. Milo-Food & Agricultural Infrastructure & Services Inc., 2017 ONCA 1004 was released on the day this motion was argued. Both parties, having only dealt with the motions judge's decision, were given an opportunity to make further submissions on the Court of Appeal's decision. It is clear that, some of the factual allegations (commencing March 7, 2013) in Bailey pre-dated the 2 year limitation period from December 21, 2015. While the Court of Appeal was dealing with a Rule 21.01(1)(b) motion, the court stated:
The claims arguably arise from a continuing cause of action that predates the notice of termination, rather than a series of independent torts. We are of the view that the motion judge was correct to dismiss the motion to strike these claims, since they were “entangled with factual issues.”
 The Defence argues, in its supplementary submissions, that in Bailey, the acts were continuously complained of and repeated amounting to a possible continuing cause of action. The Defence submits that such cannot be said of the allegations in this case. I fail to see the distinction with the alleged facts in this case. Even if this court could see the distinction urged by the Defence, this court should read the Amended Statements of Claim generously and that drafting deficiencies and a failure to plead with precision and clarity are not fatal if the necessary material facts are pleaded. See R. v. Imperial Tobacco Canada Ltd., 2011 SCC 42 (CanLII),  3 S.C.R. 45, at paras. 17, 21-22; and Paton Estate v. Ontario Lottery and Gaming Corporation, 2016 ONCA 458 (CanLII), 349 O.A.C. 106, at paras. 4-5, 11-14.
 In my view, it is not plain and obvious whether the impugned paragraphs refer to a series of independent torts or to a continuous cause of action.
 It will be for the trial judge to decide whether there is a continuing cause of action or a single cause of action arising from the termination limiting the damages to the events in the prior two years (if the Limitation Act applies).
Another restriction to the running of a limitation period involves promises made during settlement negotiations whereas the agreement, usually a promise of payment, causes a 'promissory estoppel'. The doctrine of promissory estoppel, as applied to limitation expiry concerns, prevents potential defendants from entering into settlement negotiations in bad faith with the ulterior motive of delaying the potential plaintiff from commencing legal proceedings and then subsequently attempting to plead that the limitation period expired. Simply stated, if the defendant reneges on promises made during settlement negotiations, and the promises were reasonably relied upon by the defendant who then delayed bringing legal action based on the promises, the limitation period may run from the date the defendant reneged on the subsequent promise rather than the date of the original wrongdoing. This viewpoint is found in Danby v. Michaud, 2014 CanLII 12060. However, appeariing to the contrary is the viewpoint found in Bryenton v 7017103 Canada Inc., 2014 CanLII 100257 where it is stated:
 Further, I should note that in this case all the defects that are now subject to this lawsuit were discovered and identified by the plaintiff prior to closing on August 8, 2012. The action was commenced on October 28, 2014, more than two years after the defects were first discovered. While I recognize and accept that there were discussion between the plaintiff and the defendant seeking to remedy the problems including the several e mail exchanges and in particular the e mail dated June 8, 2013 where the defendant appears to accept responsibility at least for some of the defects, I am not of the view that these discussions tolled the limitation period. In Toronto Standard Condominium Corp. No. 1789 v. Tip Top Lofts Development Inc., 2011 ONSC 7181 (CanLII) DM.R. Dambrot J. who held that absent a contractual obligation post discovery discussion of remediation does not toll the limitation period. I also rely on the judgement of the Supreme Court of Canada in Marchischuk v. Dominion Industrial Supplies Ltd., 1991 CanLII 59 (SCC) ,  2 SCR 61, for the proposition that unless I can conclude that there is evidence from which a promise not to rely on the limitation period could be inferred, the Limitation period should not be extended. I cannot reach that conclusion and therefore, I find that and claim based on the negligence of the defendant numbered company is statute barred.
With the principles applicable to limitation periods, the safest way to bring litigation is to avoid dancing with the limitations date. By bringing litigation forward as diligently as possible; however, without such haste as to fail in preparation, the risk of losing a right of action is greatly reduced.