Ontario: the limitation of unpaid invoice claims

In Newman Bros. v. Universal Resource Recovery Inc., the defendant ventured a dubious limitations defence based on the argument that a plaintiff who delivers multiple invoices has to commence a separate action in regards of those invoices.  The court rejected it:

[26]      The defendants submit that the limitation period begins to run under this particular contract 16 days after the delivery of each invoice, and therefore separate actions would have to be commenced at different times whenever there was a delay in the payment of a particular invoice. I reject such an argument as not commercially reasonable, unduly onerous on the parties, and a potential waste of judicial resources.

[27]     As was stated in 407 ETR at para. 39:

A civil action becomes appropriate when 407 ETR has reason to believe it will not otherwise be paid – in other words, when the usually effective license plate denial process has run its course. Thus the date when a vehicle permit expires for failure to pay a toll debt is the date a civil action is an appropriate means to recover a debt. This date starts the two-year limitation period.

 [28]      I accept the position of the plaintiff that it trusted the defendants, it did not want to jeopardize a long standing business relationship and it believed, from the promises made, that payment would be forthcoming and in fact some were. That in my view was a reasonable basis, and reasonable consideration to forebear on issuing the claim to see if further payments would be forth coming.

[29]       I conclude that I have not been persuaded by the defendants, based on the record before me, that the legally appropriate time to sue was two years after the August 2009 payment. Indeed, I find the argument of the plaintiff has merit. It was promised further funds, there were no objections to the invoices submitted or the work done, and it received further funds in May 2011after receiving such promises of payment.

[31]     Based on this record one would have difficulty thinking that the defendants thought the May 31, 2011 payment was all they potentially owed, or that, the plaintiff thought that that payment had satisfied the debt (see s. 13(1) of the Limitations Act, 2002; see also Buik Estate v. Canasia Power Corp., 2014 ONCA 2959 at paras. 13-15).

This seems like a sound analysis, and one which underscores that a plaintiff doesn’t necessarily discover a claim arising from unpaid invoices on the date the invoices become due and aren’t paid (though note that the impact of s. 13—an acknowledgment—is unrelated to discovery).