Noteworthy Decisions on Ontario Limitation Periods
In York Condominium Corporation v. Jay-M Holdings Limited and The City of Toronto, 2007 ONCA 49 the Court of Appeal held that Ontario's 15-year 'ultimate' limitation period did not bar a 27 year-old claim.
In May, 2004 the plaintiff discovered that its condominium building's demising walls were not fire-rated in accordance with the Building Code. In June, 2005, it brought an action against the condominium developer and the City, alleging the developer was negligent in the construction of the building and the City was negligent in inspecting the building. It was agreed that, the last act by the City had taken place in February, 1978 - 27 years before the lawsuit was commenced.
Pursuant to Ontario's Limitations Act which came into force on January 1, 2004, the plaintiff was required to bring its action within two years from the day on which the claim was discovered, which it did. However, the Limitations Act also contains a 15 -year 'ultimate limitation period'. The City argued that, because its alleged negligence occurred in February, 1978 (more than 15 years before the action was commenced), the plaintiff's claim was time-barred by the 'ultimate' limitation period.
The City successfully brought a motion to obtain an order dismissing the plaintiff's action against it as statute-barred. The plaintiff appealed to the Court of Appeal which reversed the motions judge.
The Court of Appeal held that the 'ultimate' limitation period must be read in light of the Limitations Act's transition provisions, one of which is that if a claim has not been discovered before the January 1, 2004 effective date of the Act, the limitation period starts to run as of the effective date. Therefore, the plaintiff's 'ultimate limitation period' would begin to run on January 1, 2004 and would not run out until 2019 - some 41 years after the alleged negligence took place!
In CAA Insurance Company v. Botsis, 2006 CanLII 28552 (ON S.C.D.C.) the plaintiff was involved in a motor vehicle accident which occurred on February 27, 2002. Her vehicle was a 'write-off'. She was insured under a policy issued by the defendant, CAA. Following the accident, some negotiations took place between the parties concerning the insurance claim. The insurer's final communication to the plaintiff occurred on May 28, 2002.
The plaintiff commenced an action against the insurer in the Small Claims Court on February 26, 2004. At trial, the insurer argued that the plaintiff had missed the one-year limitation period in her auto policy and her claim was therefore time-barred. The plaintiff argued that (i) the insurer should have notified her of the limitation period, and (ii) ongoing negotiations, or at least the invitation for ongoing negotiations, disentitled the insurer from relying on the expiry of the limitation period.
The trial judge accepted the insured's arguments and held that the insurer had waived the limitation period based on an invitation for further negotiations. The insurer appealed to the Divisional Court, which reversed the trial judge's decision, for the following reasons:
- There is no duty upon an insurer to advise its insured of the limitation period contained in an insurance policy. Failure to inform an insured of a limitation period will not prevent the insurer from relying on a limitation period.
- There was no representation made by the insurer that it would not rely on the limitation period. Negotiations do not constitute a waiver of a limitation period when they are no more than normal dealings between parties trying to resolve an insurance claim.
- The plaintiff was not aware of the limitation period, so she could not have relied on any representation made by the insurer that it would not rely on the limitation period, even if such a representation had been made.
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