Catching a Two-Year Deadline Just in Time in Kingston

The situation

Carlos and Fernanda co-owned a mid-sized distribution business in Kingston, supplying commercial clients across eastern Ontario. Carlos ran operations and sales; Fernanda, an accountant by training, kept the books and managed the company's financial reporting. Their sales director, Kajan, had been with the company for several years, held one of the highest-trust roles in the business, and managed relationships with a number of the company's largest accounts before resigning to start a competing venture.

At the time Kajan left, nothing looked unusual. A departure in sales is common, and a handful of clients following a well-liked rep to a new supplier is treated as an accepted cost of doing business. Carlos and Fernanda offered the usual exit interview, wished him well, and moved on to redistributing his accounts among the rest of the sales team. Almost two years passed before anything changed.

What neither of them appreciated at the time was how much runway a departing employee can have to prepare a competing venture while still drawing a salary and holding a position of trust. Sales directors typically see pricing structures, margin data and client relationships that rank-and-file staff never touch, and that access does not disappear the moment someone starts planning their exit.

What the review found

Fernanda ran a routine year-end review of margins across the company's top accounts and noticed something odd: several of the largest clients that had left with Kajan had been quoted unusually thin pricing in the year before his departure, well below what the company normally charged comparable accounts of similar size. On its own, a single underpriced account might be explained by a difficult negotiation or a valued long-term client. A pattern across several of the accounts that later followed Kajan out the door was harder to explain that way.

Digging into the correspondence files, Fernanda found emails showing Kajan had been quietly steering pricing and terms to make his own future venture more attractive to those clients, months before he actually resigned — effectively subsidizing the relationships he intended to take with him, at the company's expense, while still collecting a salary and commission from the company he was preparing to leave.

That was a problem beyond an employee simply leaving with contacts, which the law generally tolerates. Directing business away from an employer while still owed a duty of loyalty, and using confidential pricing and client information to set up a competing venture, can amount to a breach of fiduciary duty and misappropriation of a corporate opportunity — legal claims a business can pursue against a former employee who crossed that line. But by the time Fernanda pieced the pattern together from old invoices and email threads, roughly twenty months had passed since the underpricing began and about eight months since Kajan's actual resignation.

Carlos and Fernanda came to Treadstone Law worried they had already missed their window entirely. Ontario's Limitations Act, 2002 sets a basic limitation period of two years for most civil claims, and their instinct was to count from when the underpricing started — which, on their own math, would have left almost no time at all to bring a claim.

What we did

1. Identified the correct starting point for the clock. The two-year period under the Limitations Act, 2002 does not run from the date the wrongful conduct occurred — it runs from the date the claim was discovered, meaning the date a reasonable person in the client's position first knew, or ought to have known, that they had a claim worth pursuing. Carlos and Fernanda had no reason to suspect anything was wrong until Fernanda's review turned up the pricing pattern. That review, not the underpricing itself, was the discovery date that mattered.
2. Built a timeline to support that discovery date. A claimed discovery date only helps if it can be supported with evidence. We worked with Fernanda to document exactly when the irregular margins were first noticed, when the supporting emails were located, and what steps followed immediately afterward — creating a clear record that the delay before the review was not carelessness but a genuine absence of any reason to look.
3. Moved quickly once the file was in hand. Even with a strong discovery-date argument, we treated the file as time-sensitive. Waiting to build a perfect case risked eroding the argument that the claim had been pursued diligently once discovered. We prepared and issued a statement of claim in the Superior Court within weeks, naming breach of fiduciary duty and misappropriation of confidential business information.
4. Quantified the loss with Fernanda's records. Using margin data and account histories, Fernanda's own bookkeeping became the strongest evidence in the case, showing the gap between normal pricing and what those clients had actually been charged, multiplied across the accounts that ultimately left. The resulting figure — company losses estimated at roughly $650,000 over the affected period — anchored the claim.
5. Anticipated the limitation defence. We expected Kajan's side to argue the claim was filed too late, and prepared the discovery-date evidence to meet that argument directly rather than reactively, once pleadings closed and the parties exchanged their positions on when the clock should have started.

The outcome

As expected, the defence raised the limitation period early, arguing the claim should be measured from when the underpricing began rather than when it was discovered. This is one of the most common defences raised in cases involving conduct that unfolded gradually and was only noticed later — and it is exactly why establishing the discovery date carefully at the outset mattered so much. The court record and correspondence timeline we had built supported the later discovery date: nothing in the evidence suggested Carlos or Fernanda had any reason to suspect wrongdoing before Fernanda's margin review, and they had acted promptly once they did. The argument that the claim was out of time did not hold up, and with the limitation defence off the table, the case proceeded on its merits.

Facing a well-documented claim backed by Fernanda's own margin records and the email trail showing deliberate underpricing, Kajan's side began serious settlement discussions rather than pushing the matter toward trial. Litigation of this kind, involving detailed financial reconstruction and competing accounts of intent, can take well over a year to reach trial in the Superior Court, and both sides had an incentive to avoid that cost and delay. The parties reached a negotiated settlement of roughly $480,000, along with confirmation that Kajan would not solicit the company's remaining accounts going forward.

The settlement fell short of the full $650,000 in estimated losses that Fernanda's records supported, which is typical of negotiated outcomes — a settlement reflects not only the strength of the claim but the cost, delay and residual uncertainty of proving every dollar at trial. Still, it represented a strong recovery given how close the entire claim had come to being barred at the outset by the limitation period alone, and it closed the matter well short of the time and legal cost a full trial would have required.

For Carlos and Fernanda, the case underscored how close they had come to losing the right to recover anything at all, simply by assuming — reasonably, but incorrectly — that the clock had started running the moment the underpricing began rather than the moment they actually found out about it.

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