Limitation Limbo: All Condominium Corporations Should Be Mindful of the Upcoming Ultimate Limitation Period!
To bring any type of legal action in Ontario, including claims made by condominium corporations, there are generally two relevant dates litigants should be aware of:
• the basic limitation period – two years from the date that you knew, or ought to have known, about the claim; and
• the ultimate limitation period – 15 years from the date on which the act or omission took place, regardless of whether the elements of the claim become known, or are discoverable, during that 15 year period.
The ultimate limitation period is increasingly becoming relevant for condominium corporations because after December 31, 2018 any condominium constructed prior to January 1, 2004, will lose all ability to bring a claim against the developer, or parties involved in the original construction, for defects in the original construction as a result of the ultimate limitation period.
In other words, if a condominium sustained damages as a result of an act or omission that occurred prior to January 1, 2004 – and this is the key point here: we’re only talking about acts or omissions that occurred prior to 2004 – the claim must be started on or before December 31, 2018. Otherwise, the claim will be out of time.
This is because when the current Limitations Act came into force on January 1, 2004, it started the clock running for the ultimate limitation period of 15 years. The Court of Appeal has confirmed that the ultimate limitation period applies to condominiums in the case of York Condominium Corp No. 382 v Jay-M Holdings Ltd. In May 2004, the condominium, in this case, discovered that certain walls had not been built in compliance with the Building Code. The condominium brought an action against the defendants for negligence in the construction and inspection of the building. The defendants argued that the claim was out of time given that the construction of the walls occurred more than 15 years before the claim was started. However, the Court of Appeal confirmed that if a claim is not discovered until after January 1, 2004, but the act or omission took place before that date, the ultimate limitation period of fifteen years starts to run as if the act or omission had taken place on January 1, 2004. So, in this particular case, the Court of Appeal allowed the condominium to bring its claim.
But practically speaking, what does this mean? It means that if your condominium was constructed prior to January 1, 2004, and you suspect there may be a construction defect (or some other basis for claim), then you need to investigate now on an urgent basis and bring your claim prior to December 31, 2018.
In our view, it would be advantageous for a condominium corporation to obtain a comprehensive performance audit as soon as possible to ensure that any possible claims (e.g. defects tracing back to the original construction) are discovered AND commenced by December 31, 2018. This allows action to be taken promptly against the appropriate parties.
The risk is that if a claim for an act or omission that occurred prior to January 1 ,2004 is not brought before December 31, 2018, then the claim will likely be too late (i.e. statute-barred for being brought out of time), and there may be no recourse against the party that caused the problem.
If your condominium is concerned about the ultimate limitation period, please feel welcome to contact our office to discuss your situation.
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