Tag: limitation period

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Commercial Leases Litigation Real Estate Law

Anticipatory Breach of Contract & Limitation Periods

We have previously provided a general overview with respect to limitation periods in litigation. It is well established that the general limitation period extends for two years once a claim has been discovered, but when does the limitation period begin to run on a claim for anticipatory breach of contract? When does the clock start to run if there is no breach, but the Plaintiff has been made aware that a breach is imminent? This question was addressed by an Ontario court in a recent decision.

Changes to Commercial Property Impacted Plaintiff’s Business

The Plaintiff owned a commercial car wash operation in London, Ontario, and leased the property where the car wash was located from the Defendant. In addition to the car wash, the property contained other businesses including a gas station, a convenience store and a coin-operated car wash facility (this was separate from the Plaintiff’s business, which provided an automatic wash as well as interior car detailing services). The Defendant began to redevelop the land surrounding the car wash and demolished the gas bar, coin-op car wash and the convenience store. The Defendant also obtained site plan approval from the city to construct commercial buildings on the property to house various retail businesses.

The construction of one building on the property, as well as the addition of garbage dumpsters in front of the car wash, had reduced the visibility of the car wash from the main road.

The lease between the Plaintiff and the Defendant contained the following clause:

… the Lessor shall have the right to alter or modify the parking lot or the means of ingress or egress thereto provided that such alteration or modification shall not impede or limit any access to or from the leased premises nor will it divide or separate in any way the leased premises from any part of the Lessor’s lands, and further provided that any such alteration or modification shall not affect the marketability or potential marketability of the Lessee’s product from the leased premises in any adverse way; [Emphasis added]

The Plaintiff alleged that there had been a drop in the number of cars at the car wash, and largely attributed the change to the modifications made by the Defendant. In particular, the Plaintiff said that the reduced visibility of the car wash from the road had negatively impacted the number of cars the business had been servicing in the years following the changes.

Plaintiff Discovered the Potential Breach More Than 2 Years Before Bringing Action

The Plaintiff was made aware of the Defendant’s plan to construct a new building on the property in 2013. In response, the Plaintiff wrote a letter to the Defendant saying that this would block visibility of the car wash from the road and requested that the plans for the building be abandoned. The Defendant responded in early 2014, saying that they would be going ahead with their plans for construction. In addition to the planned buildings, the Defendant installed two garbage dumpsters in front of the entrance to the car wash in 2014 and constructed a concrete pad adjacent to the car wash in the same year. This also had the effect of reducing the visibility of the car wash from the main road.

The Plaintiff sought damages for the reduction in car count at their business owing to the loss of visibility and the Defendant defended on the grounds that the action was statute-barred. The discovery of the planned construction occurred in 2013, and the other incidents had taken place throughout 2014. The Plaintiff brought the action in February of 2016. The Defendant claimed this was outside of the 2-year limitation period.

The Defendant specifically claimed that the letter from the Defendant’s lawyer, dated January of 2014, constituted an anticipatory breach of the commercial lease and therefore the clock started to run on that date. However, the court held that:

[A] claim is not necessarily discovered when a party commits an anticipatory breach of contract as the innocent party may choose to treat the contract at an end and sue for damages, or it may treat the contract as subsisting and continue to press for performance of the contract and bring an action once the promised performance fails to materialize

In the case at hand, the Plaintiff chose to treat the contract as not yet breached and continued to perform its duties under the contract while pressing the Defendant to abandon the plans that would negatively impact the Plaintiff’s business. Given that, the complaint didn’t arise until the Plaintiff had experienced the reduction in car count, somewhere within the two-year limitation period.

This case should be of some comfort to parties concerned that advance knowledge of a potential breach may preclude them from seeking damages in court. However, it is always best to speak with an experienced lawyer as soon as possible to properly ascertain your position with respect to litigation and ensure that you are fully aware of any time limitations you may face when it comes to commencing an action. While limitation periods may seem cut and dry, as evidenced by this case, they can actually be quite complex depending on the specific circumstances involved.

At Baker & Company, our Toronto commercial real estate and litigation lawyers take the time to meet with you and understand your unique needs in order to guide you through your real estate matter, whether commercial or residential.  We rely on our broad base of experience and expertise to provide exceptional legal advice and risk management in a variety of transactions, or through litigation. Call us at 416-777-0100 or contact us online for a consultation.

Categories
Litigation Probate & Estate Administration Wills & Estates

Declaratory Relief and Limitation Periods

We have posted previously on the topic of limitation periods as they pertain to civil litigation in Ontario, however, we did not discuss the specific instance of an action seeking declaratory, rather than consequential, relief. A recent Ontario decision was faced with the question of whether an application was outside the limitation period, and whether the relief the applicant sought was purely declaratory.

What is the Difference Between Declaratory and Consequential Relief?

Consequential relief is what an applicant is generally seeking when bringing an action in court. They seek an order that something will happen; payment of damages, an injunction being granted, or an award of support. They have brought the action in an effort to bring about a certain consequence.

Declaratory relief is when an applicant presents a legal question to the court seeking only a declaration with respect to the parties’ rights. There is no consequence sought beyond the court’s opinion on the matter.

A Recent Decision

Limitation periods, typically a two-year period in Ontario for most civil actions, do not apply to matters that seek a purely declaratory order. This is not controversial. A recent decision, Piekut v. Romoli, required the court to make a determination as to whether an action was statute-barred due to being outside the limitation period. The sole basis for this determination was whether the relief sought was consequential or solely declaratory.

The case involved two of the three daughters of a deceased man. Each of the man’s daughters had been appointed as Estate Trustees under their father’s Will. Each of the daughters was also a beneficiary under the Will, which had stated that the residue of the estate was to be divided equally among the deceased’s three daughters, one of whom was not a party to this action.

However, after the death of her father, the respondent daughter presented a codicil which she claimed her father had executed two years before his death. In this codicil, the father gifted two of his properties to the respondent daughter alone.

The plaintiff daughter and the third sister were unsure how to handle the codicil, which they felt was not valid. Due to the disagreement between the daughters, they did not attempt to probate the Will for several years after their father had passed. Eventually, the plaintiff brought an application seeking an order as the validity of the codicil so that she could carry out the administration of the estate. The respondent sought to dismiss her sister’s application as it had been brought outside the two-year limitation period.

The Court’s Findings

The key issue in the case became the determination of whether the relief sought was purely declaratory or if it involved a degree of consequential relief. The court noted that no action had ever been brought to prove the validity of the codicil one way or the other. Had the respondent brought an action to prove the validity of the codicil and the plaintiff had challenged it, the relief sought would have been consequential, with each party seeking a specific outcome from the court. In that case, the limitation period would have applied.

However, in the case at hand, the applicant did not seek that the court award the properties in question to anyone in particular. She simply sought a declaration as to the validity of the codicil. Once a declaration was made, she would move on to the administration of the estate in accordance with the court’s determination. While there was no question that consequences would flow from the declaration of the court, the plaintiff did not seek one consequence over another. This was the key distinction for the court.

The two-year limitation period will still apply to most civil actions, however, it is important to understand the difference between the types of relief that may be sought. Seeking a declaration rather than an outcome could be a way to resolve an ongoing matter than has progressed beyond the statutory limitation period.

At Baker & Company, our Toronto estates and litigation lawyers can help you establish an estate plan tailored to your needs, or bring or defend a challenge in court. We have extensive experience and expertise in providing you with estate planning advice and implementing your desired plan. We also rely on our broad base of experience and expertise to provide you with exceptional legal guidance in any litigation matter when necessary. Call us at 416-777-0100 or contact us online for a consultation.

Categories
Litigation

Limitation Periods & Civil Litigation: An Overview

A key factor to consider before initiating a civil claim in an Ontario court is whether the limitation period for the claim may have expired. Limitation periods are governed by the provincial Limitations Act, 2002 (the “Act”), which came into force in 2004. The Act attempts to bring consistency to limitation periods for all civil claims in the province, however certain exceptions and other factors do still allow for a degree of uncertainty. For the purposes of the Act, a “claim” is defined as “a claim to remedy an injury, loss or damage that occurred as a result of an act or omission”.

The Basic Limitation Period

In Ontario, the basic limitation period for a civil claim is two years from the time the damage or loss was discovered by the plaintiff. However, determining the date the period begins to run is not as simple as it sounds. The day a claim is discovered is the earliest of the following occurrences:

(a) the day on which the person with the claim first knew,

(i) that the injury, loss or damage had occurred,

(ii) that the injury, loss or damage was caused by or contributed to by an act or omission,

(iii) that the act or omission was that of the person against whom the claim is made, and

(iv) that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it; and

(b) the day on which a reasonable person with the abilities and in the circumstances of the person with the claim first ought to have known of the matters referred to in clause (a).

It is not enough to simply say that two years have passed since the act or omission that caused the loss or injury occurred. It must be two years from the date that the injured party became aware of the loss, the act or omission that caused it, and the person or entity responsible. The court also has the discretion to find that a reasonable person would have become aware sooner, given the same circumstances. If this is the case, the court will find that the two-year limitation period began to run on the date a reasonable person would have known.

The Ultimate Limitation Period

Considering the fact that the clock does not begin to run on the basic limitation period until the basis of the claim is discovered, this could leave defendants vulnerable to litigation indefinitely in some cases. In order to provide some certainty in this area, the Act also includes a provision establishing an ultimate limitation period of 15 years from the date that the act or omission occurred, after which period a claimant is barred from bringing an action in court. Discoverability is not a factor for this period – the clock begins to run at the time of the act or omission responsible for the loss or injury.

Exceptions to the Limitation Period

There are a few exceptions to the Ontario civil limitation periods. Specifically, limitation periods can be extended in cases where:

  • The claimant in an action is under the age of majority at the time of the act or omission, or when it is discovered; and
  • When the claim is against a municipality in Ontario or against the provincial government.

If you believe that you have a claim against another party, it’s important to speak to a knowledgable lawyer as soon as possible, in order to protect your right to bring an action within the time periods established under the Act.

At Baker & Company, we take the time to meet with you and understand your unique needs in order to offer solutions to the diverse problems you are facing. We rely on our broad base of experience and expertise to provide you with exceptional legal guidance in any litigation matter. Call us at 416-777-0100 or contact us online for a consultation.