The Ontario Superior Court recently confirmed the importance of the principle of “discoverability” when considering claims against potential defendants.
Generally speaking in Ontario, a court claim must be started within 2 years of the date that the claimant knew or ought to have known they had a claim. Whether or not a claimant ought to know about the claim requires that the claimant become aware, or “discover”, that the claim exists. Only when the claimant actually discovers the claim, does the 2-year limitation period begin.
The case of Carone v. Peel Condominium Corp. No. 766 dealt with the principle of discoverability in the context of a claim for damages related to a slip-and-fall accident that occurred as a result of the defendant’s alleged failure to properly clear snow and ice. The plaintiff filed her claim against the defendant condominium corporation within the 2-year limitation period. However, when she filed the claim, she was not aware that at the relevant time the condominium had a contract for snow removal with a third-party contractor. She discovered this fact more than 2 years after the accident, and then took steps to advance her claim against the contractor. The contractor resisted the claim on the basis that the plaintiff ought to have discovered her claim against the contractor sooner. They took the position that the plaintiff failed to make reasonable inquiries to confirm the existence and identity of the contractor involved in snow and ice removal. Had she done so sooner, she could have discovered the identity of the contractor more than 2 years before the claim against the contractor was advanced.
The Court agreed that where a party “fails to make inquiries about possible claims… by not asking any questions, that party might find herself outside a limitation period.” However, the Court ultimately found in this case that the plaintiff did take reasonable steps to determine whether or not a contractor was involved in snow maintenance on the property, and despite the fact that the defendant condominium corporation could have disclosed the identity of the contractor sooner, it failed to do so. The Court found that the plaintiff “should not be deprived of the opportunity to advance a claim” on the basis that the contractor’s identity was not disclosed to the plaintiff by the other defendants.
This case serves as a reminder of the importance of asking reasonable questions regarding the involvement of all possible parties, whenever someone considers making a claim. This of course is also true for a condominium corporation that is considering a claim. While you may not get the answers you are looking for, by asking questions you will ultimately be able to avoid any argument that you could have discovered your claim (and the responsible parties) sooner.
For more information about court claims and limitation periods, contact us.
Our readers may know that the limitation period for most types of claims in Ontario is two years. This means that the claim must be started (by court process) within two years from when the claimant discovers or ought to have discovered the basis for the claim. Otherwise, the right to assert the claim is likely lost.
However, for many insurance claims, the limitation period maybe shorter.
Condominium corporations are sometimes required to consider claims against their insurers. For instance:
(a) When damage is caused to the common elements or standard units, repairs may be covered by the corporation’s property insurance.
(b) When a claim is made against the condominium corporation and/or directors, the condominium’s insurer may have a duty to defend the claim (and may have a duty to pay any judgment).
In such cases, condominium corporations must be careful to preserve their claims. In particular:
- As a first step, the insurer must be given prompt notice of any such claim or potential claim against the insurer.
- In addition, if there is any doubt or possible doubt about the insurer’s acceptance of the claim, the condominium corporation must start the claim against the insurer (by court process) within the applicable limitation period. And, for purposes of this second step, here’s the key point: The limitation period for such insurance claims may be shorter than the typical two-year limitation period.
The Courts have said that the limitation period for insurance claims can be determined in the insurance contract/policy. For example, many insurance policies contain one-year limitation periods (from the date of a loss) for claims against the insurer. Some policies contain one-year limitation periods under both the property insurance coverage and the liability insurance coverage.
The bottom line is as follows: Whenever you are confronted with a claim or potential claim against your insurer, be sure to consider the two steps noted above, and also be sure to check the limitation period in the policy. Again, if a claim against the insurer is necessary, it must be started by court process within the limitation period noted in the policy.
To read more about condominium insurance, check out our previous blog post.
The Real Property Limitations Act (the “RPLA”) governs the limitation periods applicable to claims against real property. Generally speaking, this Act imposes a 10 year limitation period on claims against real property. In the condominium context, this 10 year limitation period is typically applicable to actions commenced to enforce condominium liens. [Condominiums effectively have 10 years from the date of default in which to enforce the lien (by way of Court action).]
While the application of the RPLA is relatively straightforward with respect to the enforcement of certain registered interests (such as condominium liens), it is not as straightforward when dealing with liens arising under certain agreements registered on title, for default in payments owing under such agreements (which liens are not specifically registered on title to the affected property).
In the recent case of Toronto Standard Condominium Corporation No. 1487 v. Market Lofts Inc., (“TSCC No. 1487 v. Market Lofts”), the Court found that the 10 year limitation period prescribed by the RPLA is applicable to actions by parties to a shared facilities agreement for any default in payment under that agreement. This is so, notwithstanding the fact that no separate lien is registered for such default (the lien simply arises and exists by virtue of the agreement on title). In the Market Lofts case, the shared facilities agreement specifically contemplated an unregistered lien arising in the event of default in payment of any amounts owing under the agreement. The agreement also confirmed that such a lien was enforceable in the same manner as a mortgage in default.
The provisions of the subject agreement in the Market Lofts case are similar to provisions that we typically see in most shared facilities agreements, or co-tenancy agreements. Accordingly, this case indicates that, generally speaking, enforcement of unregistered liens arising under such agreements may very well be subject to the 10 year limitation period prescribed by the RPLA.