Ontario: the criteria for an enforceable tolling agreement

The decision in Markplan Inc. et al. v. Osman et al. provides a helpful discussion of what is necessary to make a tolling agreement enforceable:

[10]           It is asserted that there was a tolling agreement between the parties. Between December 2014 and February 2015, there were communications between counsel arising from the motion to dismiss the Alberta action. This included a forbearance by the plaintiffs in requiring a defence to this action, and an agreement “freezing any further steps” in all the actions “to facilitate discussions regarding potential for resolution.” Those discussions foundered not long after, in early 2015. There was no discussion of tolling of limitation periods, or of forbearance respecting any counterclaim. Indeed, to the extent that limitation periods were addressed at all in the correspondence, it was by the defendants, whose counsel noted that if the Alberta action was dismissed then an action would be commenced in Texas where “the relevant limitation period…is four years.”

 [11]           The law is clear that an enforceable tolling agreement under s. 22 of the Limitations Act must be “an express and bilateral agreement between the parties that contains a clear and unambiguous request by one party to toll a limitation period and an equally clear and unambiguous affirmative response by the other”: see PQ Licensing S.A. v. LPQ Central Canada Inc., 2018 ONCA 331 at para. 40.  The Court of Appeal has also held that “a mere promise to forbear does not suspend a limitation period”: Hamilton (City) v. Metcalfe & Mansfield Capital Corp.2012 ONCA 156 at para. 80.
 [12]           The correspondence between counsel in this case does not meet the threshold of certainty required for a tolling agreement.  It never mentions tolling the Ontario limitation period, or the possibility of a counterclaim, and the “freezing” point is about all the actions pending settlement discussions which did not last.  Further, the defendants were alive to the concerns about limitations by referring to the Texas limitation period, but did not address the Ontario limitation period.
 [13]           If there was any doubt about a lack of agreement, it was later reflected in a submission made by the plaintiffs in the Alberta proceeding in which plaintiffs’ counsel, in addressing the loss of juridical advantage issue, noted that “Mr Osman was advised in August of 2013 of the Defendants’ [plaintiffs in this proceeding] intention to challenge the appropriateness of the forum of Alberta, yet he took no steps to either commence an action in an alternative jurisdiction in order to protect  his rights or seek to negotiate a tolling agreement.” This submission was made in a brief served on June 30, 2016. If Mr. Osman and the defendants thought before then that they had a tolling agreement, they ought to have raised it at that time. They did not, and instead waited an additional two years and three months before serving the impugned defence and counterclaim in this action.
 [14]           In sum, there was no agreement to toll the Ontario proceeding and any possible counterclaim.