York Condominium Corporation No. 382 v. Jay-M Holdings Ltd. et al. is the first case that we have seen that has interpreted the 15 year “absolute” limitation period found in s. 15 of the Limitations Act, 2002. There was no corresponding provision in Ontario law prior to the new Act coming into force on January 1, 2004.
Superior Court Justice John Ground held that s. 15 barred a claim against the City of Toronto that arose from alleged negligence in issuing a building permit in 1978. The decision clarifies the relationship between the discoverability principle and the “absolute” limitation period.
York Condominium Corporation No. 382 (“YCC”) owned a building whose demising walls were not fire-rated. The building was erected in 1977 and 1978. YCC did not discover the fact that the walls were not fire-rated until May, 2004. In June, 2005, it sued the builder and the City of Toronto. The claim against the City was that it had not properly inspected the building during construction and that it had been negligent in issuing a building permit.
The City moved to dismiss the action, based on the limitation period in s. 15 of the Act. That section reads as follows:
15. (1) Even if the limitation period established by any other section of this Act in respect of a claim has not expired, no proceeding shall be commenced in respect of the claim after the expiry of a limitation period established by this section.
(2) No proceeding shall be commenced in respect of any claim after the 15th anniversary of the day on which the act or omission on which the claim is based took place. (Emphasis added.)
Thus, the City argued that the 15 year limitation period had expired by 1993 (15 years after the alleged negligence on the part of City officials).
YCC, on the other hand, relied upon another provision in the Limitations Act, 2002. Because the Act effected such a significant change to limitation periods in Ontario, the legislature enacted some “transitional provisions”, to deal with situations which straddled the new and old regimes. These transitional provisions are contained in s. 24 of the Act. The part of that section that figured most prominently in this case is s. 24(5):
(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.
So, YCC argued that since its claim was not discovered until May, 2004, the effect of s. 24(5) was that the Act applied as if the act or omission had taken place on the “effective date”, January 1, 2004. That interpretation would have meant that the limitation period only started to run on January 1, 2004 and that therefore, the action (brought in June, 2005) was commenced within the two year limitation period provided for in the new Act.
Justice Ground wrestled with the problem of reconciling ss. 15 and 24, since they led to such dramatically different results. Ultimately, he decided that even though YCC had sued within two years of the date on which the claim was discovered, s. 15 nevertheless barred its action against the City. He concluded that the 15 year “absolute limitation” contained in s. 15 overrode the transitional provisions of s. 24. He noted that ” to interpret the transitional provisions as submitted by YCC, could lead to an absurd result in that a proceeding based on an act which occurred in 1978 where the claim was discovered in 2003 could not proceed whereas a proceeding based on the same 1978 act where the claim was discovered in 2018 could proceed.”
In arriving at his decision though, Mr. Justice Ground remarked on the ambiguities of the new Act. So, we will probably see this question litigated again.