BETTER SUE ON TIME

In general if you have a claim against someone for payment you don't have an unlimited period of time in which to commence a legal proceeding to collect that payment.

The Ontario Limitations Act requires that you shall not commence a proceeding to recover that money after the second anniversary of the day on which the claim was discovered.

Claim

A claim means a claim to remedy an injury, loss or damage that occurred as a result of an act or omission.

Generally speaking, if someone has a duty, and they breached that duty to you and you incur damage, then you have a claim against them.

When is a Claim Discovered

The Limitations Act says that a claim is discovered as soon as the injury, loss or damage in question has occurred, as a result of the act or omission of the person you are making a claim against, and a proceeding would be an appropriate means to seek to remedy it.

Objective Test 

The test is not a subjective one however. Because even if you say that you weren't aware of these factors, the Act stipulates that the time will start to run when a reasonable person, knowing of the circumstances, ought to have known that these things had occurred.

So, if someone owes you money and it is due on the 1st of June in 2020, then you have until the 1st June of 2022 to commence an action against them if they haven't paid.

There are a number of cases interpreting when someone may have known that a particular action for damages may have occurred. But in the case of an unpaid debt it ss fairly clear if the due date for payment comes and goes and no payment is made.

The last factor, knowing that a proceeding would be an appropriate means to seek to remedy the default, can come into play when the person tells you that they are seeking to remedy the default and they simply need more time to do so.  A reasonable person would make efforts to solve the problem without recourse to a lawsuit in the circumstances, and the time will not start to run.

Acknowledgment of Liability 

In the case of a debt, if the debtor acknowledges liability in respect of the claim for payment, then the clock will be reset and the two years will start to run at the date of that acknowledgement.

However, the acknowledgement must be clear and in writing and signed by the person making it, or that person's agent to have this result.

As well, the acknowledgement must have been given within two years of when the clock originally started to run. Otherwise, the claim would have been statute barred, and cannot be revived by a written acknowledgement of debt given after the two years had elapsed.

As well, the courts have acknowledged, however, that in today's day and age an email from a debtor acknowledging the debt will suffice as a "signed acknowledgement".