Thursday, March 3, 2016

When does a limitation period commence for a continuing breach of contract?

Pickering Square Inc. v. Trillium College Inc., 2016 ONCA 179:

[36]       I agree with the motion judge that the proper approach to the calculation of the limitation period in the context of a continuing breach is set out in H.G. Beale, ed., Chitty on Contracts, 29th edn. (London, UK: Sweet & Maxwell, 2004), at para. 28-035 (the position is unchanged in the 32nd edition):

[T]he breach may be a continuing one, e.g. of a covenant to keep in repair. In such a case the claimant will succeed in respect of so much of the series of breaches or the continuing breach as occurred within the [relevant limitation period] before action brought. If the breach consists in a failure to act, it may be held to continue die in diem until the obligation is performed or becomes impossible of performance or until the innocent part elects to treat the continued non-performance as a repudiation of the contract. … [Footnotes omitted.]

[37]       The accrual of fresh causes of action has consequences for the innocent party as well as the party in breach of the contract. It sets the clock running for a new two-year limitation period. Pickering's election to affirm rather than cancel the lease does not have the effect of postponing the date for discovery of the breach until expiry of the lease.

[38]       The limitation period in this case applied on a "rolling" basis, a concept discussed in Goorbarry v. Bank of Nova Scotia, 2011 ONCA 793 at paras. 11-13 and Wilson's Truck Lines Ltd. v. Pilot Insurance Co. (1996), 31 O.R. (3d) 127 (C.A.) at para 58. The two-year limitation period commenced each day a fresh cause of action accrued and ran two years from that date. Thus, Pickering was entitled to claim damages for breach of the covenant for the period going back two years from the commencement of its action on February 16, 2012 – the period that ran from February 16, 2010 until the lease expired on May 31, 2011.

Of the Law Societies of Upper Canada and Nunavut 

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