While no one enjoys being involved in litigation, business owners will inevitably be forced to go to court to collect a debt or protect their rights or interests. Often, litigation will be commenced as soon as it becomes apparent that the dispute cannot be amicably resolved. Sometimes, however, people will delay the commencement of litigation. Reasons for doing so can include cost concerns, evidentiary problems or a lack of understanding of the severity or extent of the loss or damage. But there is a limit to how long you can wait to sue, and ignorance of a limitation period will not save your claim.

For a basic breach of contract action or tort claim (e.g. negligence or breach of fiduciary duty) you must start legal proceedings within two years of discovering the claim.

As with most legal issues, there are a myriad of exceptions and provisos which may affect the limitation period applicable to your case. Keep in mind:

• Generally, limitations periods start to run on the date that you become aware of the claim. You cannot, however, extend your limitation period by "turning a blind eye" and claiming to have only discovered the claim at a later point in time. Courts will consider whether a "reasonable person" ought to have known earlier that a claim existed.

• Different rules apply where the plaintiff is a minor or where the plaintiff is physically or mentally incapable.

• In certain circumstances, an acknowledgement of liability from the defendant (including partial payment of a debt) will "restart the clock" on your limitation period.

• Do not count on the fact that you have two years to start your claim. Certain types of claims have specific statutory limitation periods which oust the basic two year limitation period. A few examples include:
  i) Once you become aware of a libellous statement made about you in a newspaper or broadcast, you must give notice to the defendant within six weeks and start your claim within thre months;

  ii) Construction liens must be preserved within 45 days of the supply of goods or services or within 45 days of substantial completion;

  iii) A claim to set aside a sale in bulk for failure to comply with the Bulk Sales Act has a six-month limitation period; and

  iv) Dissenting shareholder claims under the Ontario Business Corporations Act must be pursued in court within time periods as short as 30 days.

• Other specific types of claims have no limitation period at all (for example, a claim by a creditor to realize on collateral in its possession).

• You cannot "contract out" of a limitation period, but it is possible to temporarily "stop the clock" if you and the defendant agree to do so and engage the services of an independent third party (such as a mediator) to help you resolve the dispute.

Given the wide array of limitation periods applicable to different types of claims and the sometimes complicated rules applicable to when limitation periods start to run, the question of how long you have to sue is not always an easy one to answer. The prudent course of action is to seek legal advice as soon as you are aware of a possible claim. Your lawyer will be able to determine if you are facing a limitation period about to expire and, if so, take appropriate steps to preserve your claim.

Trina Fraser is an associate with BrazeauSeller.LLP. Since joining BrazeauSeller.LLP in 1999, Trina's practice has focused on business and commercial law, Internet and e-commerce law, trademark law and civil and commercial litigation. Trina negotiates and drafts a wide range of business agreements, including agreements of purchase and sale, intellectual property licenses, commercial leases, franchise agreements, non-competition and non-disclosure agreements, web site development agreements and marketing/distribution agreements. She assists companies in conducting on-line contests and is also a registered trademark agent.

To contact Trina Fraser call 613-237-4000 ext. 232 or e-mail tfraser@brazeauseller.com.

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