Ontario Court of Appeal Provides Strong Guidance on the Discoverability of a Claim under the Limitations Act

A recent decision by the Ontario Court of Appeal provides strong guidance on when a claim is discovered (and therefore when a limitation period is triggered) under the Ontario Limitations Act. In Zeppa v. Woodbridge Heating & Air-Conditioning Ltd., it was held that a limitation period begins to run when a party has sufficient grounds to infer that another party’s acts or omissions caused or contributed to their loss (and not when they know for certain that the other party’s acts or omission caused or contributed to their loss).

The Facts

Franca and Christopher Zeppa (collectively, the “Zeppas”) hired Woodbridge Heating and Air-Conditioning Ltd. (“Woodbridge”) to install an extensive heating, ventilating and air-conditioning (“HVAC”) system in their house. The installation was completed in late 2006.

According to the Zeppas, they began to experience problems with the HVAC system immediately after its installation. The Zeppas contacted Woodbridge, who contended that any issues were due to the Zeppas not maintaining the system and advised that if the Zeppas entered into a maintenance plan with Woodbridge, any current and future problems with the HVAC system would be fixed.

The Zeppas entered into a two-year maintenance contract with Woodbridge, commencing on June 1, 2007. They continued to have the same problems with the HVAC system. The Zeppas did not renew the maintenance contract when it ended in May 2009.

In the fall of 2009, the Zeppas consulted other HVAC service providers to address the continuing problems they were having with the HVAC system. They ultimately contacted the manufacturer of the HVAC system’s boilers, Quietside Corporation (“Quietside”).

In November 2010, Quietside told the Zeppas that it had received many phone calls regarding the installation of the very HVAC system that the Zeppas had installed. Quietside advised the Zeppas it had previously informed the installer (which it did not name) that it had not followed the manufacturer’s directions on the installation and application of the  HVAC system.

On February 21, 2012, the Zeppas issued a statement of claim against Woodbridge for damages resulting from Woodbridge’s failure to properly install the HVAC system.

The Zeppas argued that Woodbridge: (1) failed to install an HVAC system that worked; (2) misrepresented that it was qualified to install a Quietside heating system and that the problems were due to improper maintenance; and (3) withheld information that it had received from Quietside that the system was improperly installed.

Woodbridge brought a motion for summary judgment dismissing the claim, arguing that it was statute-barred under the Limitations Act. The Limitations Act states that “a proceeding shall not be commenced in respect of a claim after the second anniversary of the day on which the claim was discovered”.

The motion judge held that the Zeppas discovered their claim well before February of 2010. He pointed to the fact that the Zeppas began experiencing significant problems with the HVAC system almost immediately after it was installed and that it was clear that these problems were caused by acts or omissions of Woodbridge.

The motion judge granted summary judgment and dismissed the action on the basis that the Zeppas had issued their statement of claim outside of the two-year limitation period.

The Zeppas appealed the motion judge’s decision.  On appeal, the Zeppas argued that actual knowledge under the Limitations Act required something more than simply knowing the HVAC system wasn’t working properly. They argued that they couldn’t have known that they had a claim against Woodbridge until, at the earliest, November 2010.

The Court of Appeal held that the motion judge did not err in finding that the Zeppas discovered their claim well before February of 2010. It further held that it has been recognized that discoverability means knowledge of the facts that may give rise to the claim. The Court explained that a party need not be certain that another party’s act or omission caused or contributed to their loss in order for the limitation period to begin to run. The limitation period begins to run from when the party had, or ought to have had, sufficient facts to have prima facie grounds to infer that the other party’s acts or omissions caused or contributed to the loss.

The Court of Appeal concluded that the question to be posed in determining whether a party has discovered a claim is whether the party knows enough facts on which to base a legal allegation against the other party. It was held that the motion judge correctly applied these principles in finding that the Zeppas discovered the claim more than two years before issuing their statement of claim.

The Takeaway

This case clearly sets out when a limitation period begins to run under the Limitations Act. The Court of Appeal concluded that the clock starts when a party ought to know that an injury, loss or damage has occurred and could be caused by an act or omission of another party.