Tag: Effect of an expired limitation period

Ontario: Court of Appeal confirms an expired limitation period doesn’t extinguish debt

In Tega Homes (Attika) Inc. v. Spencedale Properties, the Court of Appeal makes the point that the expiry of a limitation period for an action to recover a debt doesn’t extinguish the debt, but the right to enforce it:

[52]     […] I do not accept the appellants’ submission that the passing of the applicable limitation period necessarily means those debts are no longer payable. The passing of any limitation period does not extinguish those debts but may affect the service providers’ ability to enforce them if they have not been acknowledged by the respondent […].

Ontario: is limitations law procedural in Ontario? (probably)

Lo Faso and Ferracuti contains the following statement on the substantive nature of limitation periods:

[17]          The defendants argue that the prejudice caused by the expiry of the limitation period makes the amendments untenable. The Supreme Court of Canada has held limitation periods are fundamentally substantive, and not procedural in nature. In para. 35 of Castillo v. Castillo, 2005 SCC 83 (CanLII), [2005] 3 S.C.R. 870, Justice Bastarache, in a separate yet concurring decision with the majority, held that “limitation periods have the effect of cancelling the substantive rights of plaintiffs, and of vesting a right in defendants not be sued in such cases…” Justice Bastarache referred also to the decision of Justice La Forest in Tolofson v. Jensen, [1994] 3 S.C.R. 1002 (SCC), where he stated that limitation periods are, by the very nature, substantive as they determine the rights of both of the parties in a cause of action. As Justice La Forest explained, “they destroy the right of the plaintiff to bring suit and vest a right in the defendant to be free from suit”.

I don’t think this is correct law in Ontario.  At common law, limitation periods are procedural so that the expiry of a limitation period is a procedural bar to asserting a cause of action, but doesn’t extinguish the cause of action.  The Limitations Act arguably recognises this implicitly:

Conflict of laws

23 For the purpose of applying the rules regarding conflict of laws, the limitations law of Ontario or any other jurisdiction is substantive law.

This provision is only necessary if the limitations law of Ontario is otherwise procedural.

To be fair, all of this is largely academic outside of conflicts .  I’ve been involved in just one case in the last five years where the impact of an expired limitation period mattered.