In a recent decision, the Court of Appeal for Ontario once again applied a liberal approach to the interpretation of s. 5(1)(a)(iv) of the Limitations Act, 2002, SO 2002, c. 24, Sched. B (the “Act”), which provides that the basic two year limitation period does not begin to run until the person determines that “having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it.”
Thermal Exchange Service Inc. v. Metropolitan Toronto Condominium Corporation No. 1289, 2022 ONCA 186 concerned a contract under which an HVAC contractor (Thermal) provided services to the Condominium Corporation between 2002 and 2015. Thermal tendered invoices which stated that payment was due in 30 days. However, the Condominium Corporation typically made payment much later and, in fact, many invoices remained unpaid dating back to 2008. However, it was not until October 2015 that Thermal instructed its solicitor to send a demand letter which threatened legal action with respect to the outstanding amounts. In November 2016, the Condominium Corporation’s property manager responded, for the first time, expressing the view that no amounts were owing on the basis that the Condominium Corporation was obligated to pay only if and when it was able to collect payment from the unit owners on whose behalf the work was done.
Thermal brought action in August 2017 and was successful in obtaining judgment for the full amount outstanding, including for invoices dating back to 2008. The trial judge held that the claim in that respect was not out of time, as the limitation period did not start running until October 2015 when Thermal made its demand and it became clear that it would have to sue the Condominium Corporation to recover the debt. The trial judge also found that Thermal was operating on the basis that the Condominium Corporation had “one running account, and whenever funds were received, they were credited to that one account” so that, accordingly, the limitation period did not run after the issuance of each invoice, even though that was the basis on which the Condominium Corporation had paid in the past.
The Court of Appeal dismissed the Condominium Corporation’s appeal, taking an even more expansive approach to s. 5(1)(a)(iv) of the Act, holding that the limitation period did not begin to run until November 2016. Thermal had rebutted the statutory presumption in s. 5(2) of the Act, which provides that a claim is discovered on the date the act or omission on which the claim is based occurred. In this case, the Condominium Corporation had created the problem with respect to payment, which was beyond Thermal’s ability to resolve, leading Thermal to rely on the Condominium Corporation for a remedy. The property manager’s assurances that she was “working on” the invoices led Thermal “to the reasonable belief that [its] problem could and would be remedied without the need to have recourse to the courts.” Prior to the November 2016 response, Thermal reasonably believed that payment was more or less a matter of encouraging the property manager to do her job and complete whatever paperwork was needed at her end. Up to that point, there had been no refusal to pay and no suggestion of an inability to pay. Further, the trial judge’s finding that there was a running account was supported by the evidence. In the result, the appeal was dismissed.
This case is another example in which a plaintiff obtained the benefit of the application of the “appropriate means” aspect of the Act. In particular, it allowed a creditor to rely on mere assurances of payment by a debtor, notwithstanding that s. 13 of Act specifically provides for the circumstances in which a limitation period can be tolled, which requires written acknowledgement of the debt within the limitation period. Ultimately, the plaintiff was able to collect on debts some 10 years after they were incurred, an unusual result given the legislative policy behind the Act, which revamped previous limitations legislation to shorten the basic limitation period with the objective of encouraging the more timely resolution of disputes.