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Limitations

Cleland Metal Products Ltd. v. Proctor 2017 Ont Div Ct

Corporation and principal entered into a settlement agreement by which the corporation agreed to pay the plaintiff $37,000 over time and the principal guaranteed those payments. The guarantee was not a demand guarantee; it was a guarantee of each payment as it arose. By 2007, all payments ought to have been made, but were not. The plaintiff commenced its action on April 22, 2010, after the expiry of the usual two-year limitation period. However, the limitation period commencement date against the corporation was extended to April 22, 2008, the last date that the corporation made a payment towards the debt. The action was therefore commenced within time against the corporation. The judge held that the payment by the corporation was not an acknowledgment in writing of the debt made by the guarantor and was not a payment made by the guarantor – as required under s.13 (10) and 13(11) of the Limitations Act, 2002. Accordingly, the action against the guarantor was statute barred.

Written by Jonathan Speigel Jonathan Speigel, the founding partner of Speigel Nichols Fox LLP, leads the litigation and construction practices.