Relying on a limitations argument? The Ontario Court of Appeal confirms that this is a defence reserved only for a defendant

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In Abrahamovitz v. Berens, 2018 ONCA 252the Court of Appeal for Ontario allowed a motion that added a party to an action where the limitation period under s.4 of the Limitations Act, 2002 had expired.

The plaintiffs were shareholders in a holding company that owned a commercial real estate property. In September 2011, they began an action to recover a portion of the property’s revenue held back by one of the defendants, Megapro Property Management Ltd. Megapro held back these revenues due to a claim by the estate of a deceased former property manager. The estate was initially not a party to the action. The estate based its claim on acknowledgements allegedly signed by the respondents that provided the property manager with an interest in a portion of the respondents’ annual income from the property. 

In June 2016, the defendants brought a motion for an order to add the estate as a party to the action so that it could assert an interest in the disputed funds. The plaintiffs argued that the estate’s claim crystalized in August 2010 when the estate first discovered its entitlement to a share of the respondent’s income, and therefore the defendant’s motion was statute barred. The Ontario Superior Court of Justice agreed and held that the estate’s claim was statute barred pursuant to s.4 of the Act. 

In allowing the appeal, Justice Feldman held that s.22 of the Act codifies that the choice to plead a limitations defence rests with the defendant. In this case, it was the plaintiffs, not the defendants, who had raised the limitations defence. Accordingly, the Court recognized that the defendants’ conduct in moving to add the estate to the action clearly was not indicative of relying on a limitations defence. The Court of Appeal reiterated the proposition that “the expiry of a limitation period does not render a cause of action a nullity; rather, it is a defence that must be pleaded”. Since the defendants had not pleaded a limitations defence, the estate’s claim to assert an interest in the funds had not expired.