Since 2002 when the (then new) Limitations Act 2002 (the “Act”) came into being, there was a section looming, spoken of in only hushed tones by members of the bar: The Ultimate Limitation Period. By operation of a combination of provisions within the Act, this 15-year bar on claims would only become applicable as of 2019, at the earliest. Indeed, the Ontario Court of Appeal explicitly overturned a lower court decision to the contrary soon after the enactment of the Act.¹

And so, lawyers sat and waited to see what the courts would say once this section would begin to be tested and claims became barred under it. They waited 15+ years...

This brings us to the recently decided case of Huether v. Sharpe which, while by no means the first decision on the ultimate limitation period, provides some interesting insight and clarification on when it applies.

The Statutory Scheme

Section 4 of the Act sets out a “basic” limitation period of two years after discovery of a claim. However, this basic limitation period is subject to both discoverability (in simple terms when the plaintiff actually knew or ought to have known of a potential claim) and the “ultimate limitation period” set out in s. 15(2), which provides that:

No proceeding shall be commenced in respect of any claim after the 15th anniversary of the day on which the act or omission on which the claim is based took place.

These provisions in concert mean that even though there's a two-year deadline to file a lawsuit, a plaintiff is still able to take legal action within 15 years from when the underlying act or omission leading to the loss happened, as long as they discover it before the 15-year period expires.

Background: The Summary Judgment Motion

In October 2021, the Respondents (the “Huethers”) purchased a property and discovered defects in the property’s foundation. In 2022, the Huethers commenced an action against the Township alleging negligence in supervising the property’s construction and their failure to inspect the property.

The Township moved for summary judgment to dismiss the action and noted that the permits for construction were issued in 1986 so any negligence on its part occurred more than three decades prior; therefore, the ultimate 15-year limitation period had run out. In contrast, the Huethers argued that the Township was negligent for never closing the permit, and its negligence was ‘ongoing and continuous’, therefore, the ultimate limitation period had not yet expired.

The motion judge agreed with the Huethers, dismissed the summary judgment motion, and found the Township had a duty to continuously monitor its open permit file, which meant the ultimate limitation period had not yet expired.

Issues at the Court of Appeal

The issue at the Court of Appeal was whether the motions judge erred in her decision to dismiss the summary judgment motion and consider what constitutes a ‘continuous act or omission’ for the purposes of the 15-year ultimate limitation period.

Decision and Rationale

The Appeal was allowed and the motion judge’s decision set aside. The ultimate limitation period was held to have expired in 2019, as the alleged negligence by the Township did not constitute a continuous act or omission. The Huethers' action against the Township was dismissed as statute barred.

The Analysis of the Court of Appeal

The alleged negligence of the Township was not a continuous act or omission. Since the original inspection obligations arose in the 1980s, they were deemed to have occurred on January 1, 2004, under the Act and the limitation period therefore expired on January 1, 2019.

In its analysis, the Court of Appeal confirmed that the term ‘continuous act or omission’ refers to causes of action that arise from repeated instances of actionable conduct. The Court also emphasized that continuing causes of action are rare, and that conduct does not become continuous simply because it can be remedied or because the resulting harm persists or is delayed. Rather, a continuous act or omission requires repeated occurrences of the same type of conduct. In this case, the Huethers had not pleaded or otherwise identified any successive or repetitive conduct by the Township.

With respect to the Township’s duty of care in monitoring permits, the motion judge also erred in finding that the Township owed a duty of care to monitor open building permit files without conducting a necessary duty of care analysis. The motion judge did not consider the established factors under the duty of care framework. Notably, the Court explicitly mentioned that this did not mean that no such duty existed, but rather that the lower court in failing to conduct the requisite analysis, erred and the decision ought to be set aside.

Conclusion/Takeaways

Significantly, this case stands as a cautionary tale for property owners of older buildings who may be precluded from pursuing legal action against a tortfeasor for issues pertaining to original design, construction, or inspection items. For homeowners or insurers acting under rights of subrogation, this can impact the ability to pursue claims arising from work done 15 years or more before the claim is issued. Municipalities in particular will be more insulated from claims alleging negligence in their inspection obligations on older buildings, even where permits are not yet closed.

It also serves as a reminder to homeowners to ensure that aged fixtures, equipment, utilities, and other components of many homes prone to failure are inspected and replaced and that their insurance coverage is comprehensive and up to date, as they may have limited recourse in the event of structural or other issues arising from the property’s original construction.

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1. York Condominium Corporation No. 382 v. Jay-M Holdings Limited, 2007 ONCA 49 (CanLII)