Does the limitation period pause while a defendant is outside Ontario and can't be served?

Not automatically, and this is a common misunderstanding. A defendant being outside Ontario, or genuinely hard to locate and serve, doesn't itself pause or extend the underlying limitation period the way legal incapacity can. The claimant still generally needs to start the lawsuit, meaning issue the claim, within the applicable limitation period, even if actually serving the defendant afterward takes longer because they're abroad or difficult to find. Ontario's rules do generally give a defendant served outside Ontario more time to file a response than one served locally, but that's a separate service deadline, not an extension of the limitation period itself for starting the claim.

This distinction matters considerably in practice: a claimant who delays starting a lawsuit simply because they know the defendant is out of the country, assuming this buys extra time, can find the underlying claim has become time-barred regardless of the defendant's location. The practical response to an elusive out-of-province or foreign defendant is generally to issue the claim promptly, well within the limitation period, and then deal with the separate, genuinely different challenge of actually serving that defendant afterward, rather than treating the two issues as the same problem.