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Limitations Act - Contracting Out ('Tolling Agreement') [s.22]. Ontario (Transportation) v. J & P Leveque Bros. Haulage Ltd.
In Ontario (Transportation) v. J & P Leveque Bros. Haulage Ltd. (Ont CA, 2025) the Ontario Court of Appeal allowed an appeal, here from a decision granting summary judgment that held a 'tolling agreement' limitation [LA s.22] had expired.
Here the court dealt with a sophisticated government contract that set up a limitation 'tolling agreement' [allowed for in LA s.22] that, due to the facts of the case, was not triggered. Because of this 'non-triggering' the court held that the statutory Limitation Act held in the alternative:[29] These consequences are not merely unpalatable; they are contrary to common sense and lead to commercial absurdity. It is commercially absurd to require a party to protest a decision that has not yet been released, just as it is absurd to conclude that a decision rendered late is, for that reason alone, final and binding on the parties.
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(iv) The Limitation Period under the Limitations Act is not ousted where there is no decision
[30] The motion judge found that the contract “plainly and clearly” substituted its own limitation period for that prescribed by the Limitations Act. As he explained:Section 3.14.13.07.03 is a provision in a business agreement, and there is nothing unambiguous about its plain meaning. It plainly and clearly excludes and substitutes a limitation period for the limitation period prescribed by the Limitations Act, 2002. The plain meaning of s. GC 3.14.13.07.03 of the Construction Contract plainly works. That MTO finds itself offside from the plain meaning of its own Construction Contract has nothing to do with something nonsensical in the plain meaning. [31] For ease of reference, s. 22 of the Limitations Act is reproduced below:Limitation periods apply despite agreements
22 (1) A limitation period under this Act applies despite any agreement to vary or exclude it, subject only to the exceptions in subsections (2) to (6). 2006, c. 21, Sched. D, s. 2.
Exception
(2) A limitation period under this Act may be varied or excluded by an agreement made before January 1, 2004. 2006, c. 21, Sched. D, s. 2.
Same
(3) A limitation period under this Act, other than one established by section 15, may be suspended or extended by an agreement made on or after October 19, 2006. 2006, c. 21, Sched. D, s. 2; 2008, c. 19, Sched. L, s. 4 (1).
Same
(4) A limitation period established by section 15 may be suspended or extended by an agreement made on or after October 19, 2006, but only if the relevant claim has been discovered. 2006, c. 21, Sched. D, s. 2; 2008, c. 19, Sched. L, s. 4 (1).
Same
(5) The following exceptions apply only in respect of business agreements:
1. A limitation period under this Act, other than one established by section 15, may be varied or excluded by an agreement made on or after October 19, 2006.
2. A limitation period established by section 15 may be varied by an agreement made on or after October 19, 2006, except that it may be suspended or extended only in accordance with subsection (4). 2006, c. 21, Sched. D, s. 2; 2008, c. 19, Sched. L, s. 4 (1).
Definitions
(6) In this section,
“business agreement” means an agreement made by parties none of whom is a consumer as defined in the Consumer Protection Act, 2002; (“accord commercial”). [32] The contract in this case is a business agreement. For purposes of s. 22 of the Limitations Act, it may lengthen the limitation period beyond that set by statute. This is because the plain language of the contract postpones the resolution of disputes and does not start the clock until contract completion. If a contract takes five years to complete, the claims review process will not commence until the five-year mark, and then will allow two years for the steps to be completed. In that instance, the limitation period may well exceed the two years set by statute. The language of the contract explicitly authorizes this departure from the statutory limitation period.
[33] The general conditions do not, conversely, expressly authorize a reduction of the statutory period. Nor do they provide that a decision released outside of the two-year period is effectively immune from review. “A court faced with a contractual term that purports to shorten a statutory limitation period must consider whether that provision in ‘clear language’ describes a limitation period, identifies the scope of the application of that limitation period, and excludes the operation of other limitation periods”: Boyce v. The Co-Operators General Insurance Company, 2013 ONCA 298, at para. 20. No such clear language appears in the contract in this case. Nor, as in Boyce, can this be reasonably construed from the language that does appear.
[34] It follows that where a decision that is part of the claims review process is released outside of the two-year contractual period, that two-year period will no longer bind the parties. Instead, the statutory limitation period will apply.
D. Conclusion
[35] For the above reasons, I conclude that absent the release of the referee decision within two years of the date of contract completion, MTO was not required to file a notice of protest and seek ADR within two years of the date of contract completion. Logically, MTO could not be required to protest a decision that had not been released. This part of the claim review process did not apply in the circumstances of this case.
[36] As a result, the two-year contractual limitation period did not oust the two-year limitation period under s. 4 of the Limitations Act. Because it was commenced within two years of the referee decision, MTO’s claim against Leveque was therefore not statute-barred. . Lewis v. Lifetime Developments
In Lewis v. Lifetime Developments (Ont CA, 2023) the Court of Appeal considered a 'tolling agreement', which is a contract to vary the running of a limitation period:[13] First, the appellant submits that the motion judge erred in concluding that there was no tolling agreement that would suspend the running of the limitation period. He relies on his evidence that, after he made demands for payment, Mr. Herzog had given him assurances such that he thought he would be paid, and it would not be necessary to commence legal action.
[14] The motion judge accurately stated that “in order to establish a tolling agreement under s. 22 of the Limitations Act was in place, the agreement requires an express and bilateral agreement between the parties that contains a clear and unambiguous request by one party to toll a limitation period and an equally clear and unambiguous affirmative response by the other”.
[15] The appellant has not demonstrated an error in the motion judge’s conclusion that there was no tolling agreement. The motion judge correctly stated and then applied the legal test for a tolling agreement under s. 22 of the Limitations Act, as per this court’s decision in Hamilton (City) v. Metcalfe & Mansfield Capital Corp., 2012 ONCA 156, 347 D.L.R. (4th) 657, at para. 80. ... . Kassburg v. Sun Life Assurance Company of Canada
In the disability insurance case, Kassburg v. Sun Life Assurance Company of Canada (Ont CA, 2014), the Court of Appeal approved a motion judge's reasoning as follows on the circumstances required before a valid contracting out can be made of statutory limitation periods as is presently allowed for under the Limitations Act, 2002 with respect to some contracts [s.22(2) (pre-01 January 2004 contracts) and s.22(5) (some business contracts)]:[20] The motion judge then considered whether the appellant met the requirements set out at para. 20 of Boyce v. The Co-Operators General Insurance Co., 2013 ONCA 298 (CanLII), 116 O.R. (3d) 56, at para. 20, leave to appeal to S.C.C. refused, [2013] S.C.C.A. No. 296, that any contractual term purporting to shorten a statutory limitation period must “in ‘clear language’” describe the limitation period, identify the scope of its application, and exclude the operation of other limitation periods.
[21] The Contract Document provides for a one year limitation period from “the end of the time period in which proof of the claim is required”. The Booklet provides for a one year limitation period from “after the date [the insurer] must receive [the insured’s] claim forms”.
[22] After reviewing the language in the Contract Document and the Booklet together, the motion judge concluded that the contractual limitation period was not clear, and that the appellant had not effectively contracted out of the statutory limitation period.
[23] The Booklet tied the limitation period to receipt of “claim forms”, whereas the Contract Document tied the limitation period to receipt of “proof of claim”. It was unclear whether “claim forms” are the same thing as “proof of claim”. The motion judge noted that, reading the contract as a whole, it appears that “proof of claim” is broader than “claim forms”. “Proof of claim” is the entire process of providing information to the insurer to enable it to decide whether to pay benefits. As indicated by the language in the Booklet, filling out the “claim forms” is only one step in providing “proof of claim”.
[24] The motion judge stated, “it would not be unreasonable to interpret the limitation period in the contract as providing that the limitation period of one year begins to run once Sun Life receives sufficient proof of the claim, and not simply the claim forms.” He found that it would be reasonable to believe, as did the respondent, that the appeal procedure formed part of the application process. In support of his conclusion on ambiguity, he noted that the appeal procedure was confusing to the respondent’s representative, who had not received a response to her questions about the process.
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