Contracting parties are typically bound by a two-year limitation period that starts to run when an invoice goes unpaid. But in this interesting case, the type of relationship between the contracting parties allowed the start of the limitation period clock to be significantly delayed. Indeed, because of a running tab, some unpaid accounts were theoretically over a decade old (2002) and were permitted to be pursued. How did this happen?
The answer lies in the following factors that were present in this case:
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- The plaintiff provided heating, ventilation and cooling services to a Condo Corp. for decades;
- The parties basically had a rolling account over those years. As bills would be paid, the account would be credited;
- The court accepted that the plaintiff was correct in assuming that the Condo Corp was working hard on paying the arrears, year after year, given the assurances from the Condo Corp that they were “working on” getting payments to the Plaintiff;
- The court also accepted that the Plaintiff’s understanding for why the payments were delayed all changed on November 4, 2016, when the plaintiff heard, for the first time from the Condo Corp, that the unpaid invoices were unpaid because the Condo Corp wouldn’t pay these invoices until the unit holders first paid the Condo Corp for the work the Plaintiff did on the respective owner units. To the court, this changed everything, because the Plaintiff now, for the first time, realized that there was a previously undisclosed third-party payment ritual in play between the Condo Corp. and the condo unit owners that prevented the plaintiff’s invoices from being paid;
- Because of this “newly discovered” behind the scenes third-party payment arrangement being followed by the defendant Condo Corp., the court invoked section 5(1)(a)(iv) of the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B which defines the day a claim is first “discovered” to include a reference to the day the plaintiff learned that “a proceeding would be an appropriate means to seek to remedy ..(the loss).”
As such, when the claim was started in August 2017, it was deemed to be brought within the two-year limitation period commencing November 2016, resulting in a judgment for over $86,000.00 in unpaid invoices against the defendant Condo Corp.
Thermal Exchange Service Inc. v. Metropolitan Toronto Condominium Corporation No. 1289, 2022 ONCA 186
https://www.canlii.org/en/on/onca/doc/2022/2022onca186/2022onca186.html