Limitation Periods

The Limitations Act, 2002 came into force on January 1, 2004. This Act completely changes what was formerly a patchwork quilt of limitation periods. A limitation period is a deadline by which certain actions must be started. Prior to the new Act, limitation periods depended on the particular type of occurrence. For example, the limitation period for a breach of contract or a tort action was six years within the date the cause of action arose. An action against a municipality for damages arising from disrepair of a road must have been started within three months of the cause of action arising. An action in negligence against a hospital had to have been commenced no later than two years after a patient discharge.

The whole purpose of a limitation period is to ensure that lawsuits are brought within a reasonable period of time. The underlying principle is that without a limitation period, an individual or company could be under threat indefinitely of being sued. Even worse, the passage of time brings with it a real possibility of deterioration of evidence. Witnesses die, disappear or lose an accurate recollection of the facts. Documents disappear or the parties lose control over them. In short, a limitation period is a proper component of litigation.

As of January 1, 2004, the previous limitation periods pertaining to trusts and personal actions were repealed. Also, the part of the previous legislation dealing with real property matters was renamed Real Property Limitations Act. The result is that there are now two limitation statutes in Ontario.

Section 2 of the Limitations Act, 2002 states that it applies to claims pursued in court proceedings other than those specified in that section. Your lawyer should review that section to determine if your action is exempt from this Act.

The most important thing to know is that the Act imposes a two-year limitation period commencing from the discovery of the claim. This new and shorter limitation period replaces many of the limitation periods set out in the previous legislation and found in numerous other Ontario statutes. This "two-year discoverability rule" will apply to all claims unless explicitly excluded. Thus, the six-year limitation period relating to contract and tort claims is now shortened to two years.

Section 5 of the Limitations Act, 2002 defines how a claim is "discovered". "Discovery" of a claim occurs the day on which the person with the claim knows or ought to have known that: injury, loss or damage had occurred; knows the identity of the person who caused that injury, loss or damage; and that, having regard to the nature of the injury, loss or damage, a legal proceeding would be an appropriate remedy to it.

If you have a potential action of any kind, you are well advised to consult a litigation lawyer as soon as possible after the occurrence for advice.