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Pleading Limitations Defence: Requires Advance Notice of Intent to Argue the Expiry of Claim Rights
Question: What must a Defendant include in their pleadings to assert a limitation defence in Ontario?
Answer: A Defendant in Ontario must specifically plead the expired limitation period, detailing the discovery of the cause of action and any applicable statutes, to effectively pursue a defence based on the Limitations Act, 2002. This is essential to avoid potential dismissal of their case as highlighted in Singh v. Trump, [2016 ONCA 747].
Defence Pleading Must Allege Expiry of Limitation Period
Generally, with some exceptions, the law in Ontario, being the Limitations Act, 2002, S.O. 2002, Chapter 24, Schedule B allows a Plaintiff to start a lawsuit within two years from the date that the alleged wrongdoing occurred or, if unnoticed or impossible to notice at the time of occurrence, was reasonable discovered. Accordingly, when a lawsuit is started too late, the Defendant, or Defendants, may attempt to argue that the case should be dismissed, meaning thrown out. However, when a Defendant attempts to argue that the case should be thrown out due to an expired limitation period, meaning that the case was too late, the Defendant is required to include statements within the court case documents wherein the Defendant alleges the expired limitation period and the intent to rely upon the Limitations Act, 2002 as a basis of the defence strategy.
The Law
The requirement that a Defendant plead an intent to rely upon a limitations defence was stated by the Court of Appeal in the case of Singh v. Trump, 2016 ONCA 747, which was a case involving multiple Plaintiffs alleging improprieties against Donald Trump (yes, the former President of the United States), among others, and involving transactions related to real estate dealings. Specifically, the Court of Appeal said:
[130] The motions judge found that Mrs. Lee’s negligent misrepresentation claim was barred by the Limitations Act. He did so despite the fact that the defendants had not pled the Limitations Act and had not sought to amend their pleading to include such a plea. Although they raised the issue in oral submissions, the defendants had not raised it in the factum filed on the summary judgment motions.
[131] In his reasons the motions judge neither refers to the fact that it was not pleaded nor does he explain why, in the absence of such a plea, he should nonetheless invoke the Act.
[132] This court has consistently held that “[t]he expiry of a limitation period is a defence to an action that must be pleaded in a statement of defence”: Collins v. Cortez, 2014 ONCA 685, [2014] O.J. No. 4753, at para. 10, per van Rensburg J.A. (citing S. (W.E.) v. P. (M.M.) (2000), 2000 CanLII 16831 (ON CA), 50 O.R. (3d) 70 (C.A.), at paras. 37-38, leave to appeal to S.C.C. refused, [2001] 149 O.A.C. 397). This requirement is embodied in rule 25.07(4) of the Rules of Civil Procedure, which Ontario courts have consistently held “applies to pleadings relating to limitations that might bar an action”: S. (W.E.) v. P. (M.M.), at para. 37. Rule 25.07(4) provides as follows:
In a defence, a party shall plead any matter on which the party intends to rely to defeat the claim of the opposite party and which, if not specifically pleaded, might take the opposite party by surprise or raise an issue that has not been raised in the opposite party’s pleading.
[133] Justice Cronk explained the rationale behind the requirement that a party specifically plead a limitation period defence in Hav-A-Kar Leasing Ltd. v. Vekselshtein, 2012 ONCA 826, 225 A.C.W.S. (3d) 237, at para. 69:
The failure to raise substantive responses to a plaintiff's claims until trial or, worse, until the close of trial, is contrary to the spirit and requirements of the Rules of Civil Procedure and the goal of fair contest that underlies those Rules. Such a failure also undermines the important principle that the parties to a civil lawsuit are entitled to have their differences resolved on the basis of the issues joined in the pleadings.
[134] In S. (W.E.) v. P. (M.M.), MacPherson J.A. confirmed that Ontario courts “have consistently held that rule 25.07(4) applies to pleadings relating to limitations that might bar an action”: at para. 37. He went on to explain that even though in that case the trial judge had given counsel time to prepare submissions on the issue after he raised it during closing arguments, it did not remove the potential prejudice to P:
If S had raised the issue in his pleadings, P might have tried to settle, or even have abandoned, her counterclaim. Either decision might have had costs consequences. Another potential source of prejudice arises from the fact that counsel for P might have adopted different tactics at trial. In particular, counsel might have called different or additional evidence to support an argument that the discoverability principle applied (at para. 38).
[135] MacPherson J.A. also noted that at no time during trial, including during closing arguments when the trial judge raised the limitation issue, did S seek to amend his pleadings. Nor did he seek such an amendment during the appeal hearing.
[136] In my view, the defendants’ failure, in this case, to plead a Limitations Act defence or even to seek an amendment to their pleading to do so is, as it was in S. (W.E.) v. P. (M.M.), fatal.
As clearly shown in Singh, a Defendant is required to plead a limitations defence by alleging the material facts regarding when the Plaintiff discovered the cause of action, when the Plaintiff was required to commence litigation, and the failure of the Plaintiff to do so in accordance to the Limitations Act, 2002, or other applicable limitations statute.
Conclusion
A Defendant seeking to rely upon a defence strategy that includes expiry of a limitation period is required to plead the relevant material facts such as discovery of the cause of action, expiry of the limitation period, and the statute within which the applicable limitation period may be found.