York Condominium Corporation No. 382 v. Jay-M Holdings Ltd.

Ontario’s new Limitation Act came into force on January 1, 2004.  In addition to broadly revising the law of limitations in Ontario (the new limitation period for most claims is now two years from the date the claim is discovered or ought to be discovered), the new Limitations Act also introduced a fifteen-year “ultimate limitation” provision.  Under this provision, “no proceeding shall be commenced in respect of any claim after the fifteenth anniversary of the date on which the act or omission on which the claim is based took place.”

 So, for instance, this means that claims with respect to building defects must be commenced within fifteen years from the date of the design/construction of the building.  However, the key question is as follows:  How does this new “15-year ultimate limitation” apply to buildings built (i.e. mistakes made) prior to the arrival of the new Limitations Act?   In the case of York Condominium Corporation No. 382 v. Jay-M Holdings Ltd., the Court was asked to decide this question.  In that case, the condominium building was constructed in 1977-78.  In May of 2004, the condominium corporation discovered that the demising walls were not fire rated.  The condominium corporation commenced an action against the builder and the municipality in 2005.   

The Court found that the claim was barred because of the fifteen-year ultimate limitation.  In other words, the Court found that the ultimate limitation period applied and had expired fifteen years after the date of construction of the building. 

Editorial comment:  In my view, respectfully expressed, this case was wrongly decided.  [Hopefully this decision will be overturned by the Court of Appeal.] 

In my view, the transition provisions contained in Section 24(5) of the new Limitations Act confirm that the ultimate limitation does not apply in the manner indicated by this decision.  Section 24(5) of the new Limitations Act states as follows: 

“(5)  If the former limitation period did not expire before the effective date and if a
        limitation period under this Act would apply were the claim based on an act or
        omission that took place on or after the effective date, the following rules apply: 

1.   If the claim was not discovered before the effective date, this Act applies as if the act or omission had taken place on the effective date.  (emphasis added) 

2.   If the claim was discovered before the effective date, the former limitation period applies.” 

Therefore, I believe that the result is as follows.  If the claim was discovered before the arrival of the new Act (the “effective date”), the new 15-year ultimate limitation period does not apply.  If the claim was discovered after the arrival of the new Act, the date of the act or omission is deemed to be January 1, 2004 – so that the 15-year ultimate limitation period runs from January 1, 2004. 

In my view, the transition provisions are designed to preserve existing rights while phasing in the introduction of the new regime to ensure that plaintiffs don’t suddenly lose rights (on January 1, 2004) that they previously enjoyed.