In Nimish and Manjeet Gupta v. Amrit Pal Singh and Coldwell Banker Sun Realty Brokerage(2026), the Small Claims Court dismissed a Defendant’s Claim as statute-barred, reaffirming the principle that discoverability under the Limitations Act (2002) turns on knowledge of material facts, not legal advice.

Olivia Polihronis of McCague Borlack LLP represented the successful Defendants to the Defendant’s Claim, Coldwell Banker Sun Realty Brokerage and Amrit Pal Singh.

In February 2021, the Guptas were sued by Homelife Miracle Realty Ltd. (“Homelife”), for purchasing a property through the Defendants while still bound by a Buyer Representation Agreement with Homelife Miracle Realty Ltd. The Guptas defended the claim but did not commence a Defendant’s Claim against the Defendants until June 2023.

A four-day trial took place between April 2025 and April 2026. The Defendants attempted to bring a preliminary motion to address the limitations issue, but the Court found it necessary to keep the Defendants in the action, in case any evidence arose throughout the trial of the main action that would dispute the Defendants’ submission of the discoverability date.

The Issue: When Does the Clock Start Running?

Under the Limitations Act (2002), a claim must be started within two years of when it is “discovered.” A claim is discovered when a party knows, or ought to know, the material facts giving rise to it and that a legal proceeding would be an appropriate means to seek a remedy.

The issue in this case was when the claim became discoverable. The Defendants argued that discoverability occurred in early 2019, when the Guptas first learned of their potential exposure by way of a demand letter. The Guptas, by contrast, argued that the claim was not discoverable until April 2023, when a deputy judge at a settlement conference suggested they may have a claim against the Defendants.

Findings: Demand Letter = Clock Starts Running

The Deputy Judge agreed with the Defendants and found that the limitation clock began running in February 2019 at the latest, when the Guptas received a demand letter from Homelife alleging their breach of the Buyer Representation Agreement and seeking payment of commission. The Guptas retained counsel to respond to the demand letter and were therefore, aware of the underlying transaction and understood their reliance on the Defendants, which was the basis for their Defendant’s Claim.

Essentially, at the time the Guptas received the demand letter, they knew enough to appreciate that they may have been exposed to liability and should have begun to investigate any potential claims arising from the situation. The Court referenced the case of Longo v. MacLaren Art Centre, 2014 ONCA 526 to emphasize this point, which confirmed that plaintiffs must satisfy due diligence in ascertaining whether they have a potential claim, and that a limitation period will not be tolled while a party “sits idle.”

Importantly, the Court noted that no new material facts arose after receipt of the demand letter, and everything the Guptas relied on in support of their claim was already known to them at the time they received it. Therefore, waiting until 2023 to advance the claim did not stop the limitation period from running.

The Court confirmed that a claim is discovered when a plaintiff has knowledge of the material facts, not when they fully understand the legal significance of those facts. The Guptas’ position improperly conflated knowledge of the facts with knowledge of the law, which is not the test for discoverability under the Limitations Act.

Court Orders Cannot Revive Expired Claims

The Court also rejected the Guptas’ reliance on the April 12, 2023, settlement conference endorsement, which granted them 60 days to commence a Defendant’s Claim and reaffirmed that a Small Claims Court Deputy Judge (or any judge, for that matter) does not have the power to unilaterally override the provisions of the Limitations Act.

Consistent with Baxter Student Housing Ltd. et al. v. College Housing Co-operative Ltd. et al., [1976] 2 S.C.R. 475, the Court accepted that while it has discretion to manage its own processes, that discretion does not extend to overriding substantive statutory law.

Costs Award

Following the dismissal of the Defendant’s Claim, the Court awarded costs to the Defendants, in the amount of $7,563.79. While costs in Small Claims Court are generally limited to 15% of the amount claimed, which would have been $3,139.99 in this case, the Court found that the Guptas had unreasonably prolonged the litigation by continuing to advance their Defendant's Claim, despite the clear limitation period issues that were raised throughout trial.

The Court noted that the Guptas ought to have reviewed the relevant case law and withdrawn their Defendant’s Claim prior to the later trial dates.

Takeaways

This case is an important reminder that limitation periods start running much earlier than parties often expect. The limitation clock does not wait for legal advice, certainty, or confirmation that a claim will succeed.

Once a party is aware of the facts giving rise to potential liability, particularly after receiving a demand and engaging counsel, they are expected to act. Failing to do so can result in a claim being lost entirely, regardless of its merits.

This case is also a reminder that parties who continue litigation in the face of a clear limitation issue, risk not only losing their claim, but also facing increased cost consequences.