Legal Blog

Limitations with Multiple Invoices

Newman Bros. Ltd. v. Universal Resource Recovery Inc. 2018 Ont SCJ

Owner and contractor entered into an oral cost plus construction contract. Payments were due 16 days after the delivery of each invoice. The contract was substantially performed on November 24, 2008. After that, the contractor did further work. The owner claimed that this further work was a maintenance contract and not the construction contract and that the last payment on the construction contract, not the maintenance contract, was made August 13, 2009; the contractor claimed that it was all one contract and that the last payment was made May 31, 2011 (and it was). The action was commenced December 27, 2012. Unfortunately, the reasons did not set out the dates of the invoices. In any case, the judge decided, even if the contractor knew or reasonably ought to have known of its cause of action, it was not appropriate that the contractor commence an action 2 years after the date of each invoice. This would not be commercially reasonable, would be unduly onerous on the parties, and would be a potential waste of judicial resources. The judge accepted the argument that, based on the promises made in writing, the contractor believed that payment would ultimately be forthcoming and, in some cases, were forthcoming. The judge held that it was a reasonable consideration to forbear on issuing the claim to see if further payments would be made. The judge dismissed the owner’s summary judgment motion. There were genuine issues for trial.

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