Recovering a $145,000 Supply Debt Before the Clock Ran Out

The situation

Shira, a registered nurse, and Anita, an office manager, had built a small side business together over several years: supplying examination tables, sterilization units, and diagnostic equipment to independent clinics across northern Ontario. It was not their full-time work, but it had grown steadily, and by the time this story starts they were invoicing several clinics a month out of a modest warehouse space in Sudbury.

One of their longer-standing customers was a clinic run by Kavya. Over about eighteen months, the business supplied equipment on a running account, invoicing as orders went out and expecting payment within the terms printed on every invoice. For the first year, payments came in reasonably close to on time. Then they slowed. Then they became partial. Eventually they stopped altogether, leaving an outstanding balance of roughly $145,000 on an account that had, at its peak, run to about $340,000 in total invoices.

Shira and Anita did what most small business owners do first: they called. They emailed. They accepted a promise of a payment plan that produced one payment and then nothing further. Months went by this way, the two of them reluctant to involve a lawyer over what they hoped was a temporary cash-flow problem on Kavya's end rather than a refusal to pay.

The problem

What Shira and Anita did not fully appreciate, until it was almost too late, is that in Ontario the right to sue over an unpaid debt does not last indefinitely. Under the Limitations Act, 2002, most civil claims, including a claim for an unpaid account, must be started within two years of the date the claim was discovered — generally the point at which the person owed money knew, or reasonably ought to have known, that a claim had arisen, who owed it, and that a lawsuit was the appropriate response. After that two-year window closes, the debt does not disappear from the books, but the court will no longer enforce it. The claim becomes legally unrecoverable even if every dollar of it is genuine.

This was not an abstract risk to Shira and Anita. A few years earlier, a different clinic had stopped paying a smaller account, and the two of them had spent so long trying to resolve it informally, sending statements, making calls, extending goodwill, that by the time they consulted a lawyer about it, the two-year period had already run out. That claim, worth a modest amount, was lost outright. Not because the debt was disputed or the paperwork was missing, but because too much time had passed while they waited for a resolution that never came.

That earlier loss stayed with them. So when Kavya's account went quiet and the promised payment plan collapsed, they did not wait as long before seeking advice. Even so, by the time they reached out to Treadstone Law, close to a year and a half had passed since the last real payment, and the negotiations and broken promises in between had blurred the picture of exactly when the claim had been discovered. The clock was running, and it was not obvious from the invoices alone how much room was left.

Complicating matters, the account had not gone unpaid in one clean break. Kavya had made a handful of partial payments over the eighteen months, each one accompanied by a fresh assurance that the balance would be cleared once the clinic's own billing caught up. Each of those partial payments and promises was a potential factor in recalculating exactly when the debt should be treated as discovered, which meant the deadline was not a single fixed date so much as a moving target that needed to be pinned down carefully before anyone could say with confidence how much time was actually left.

What we did

1. Reconstructed the payment history to fix the discovery date. The team went through every invoice, partial payment, and communication on the account to establish, as precisely as the evidence allowed, when Shira and Anita first knew or ought to have known that Kavya was not going to pay in full. A partial payment or a genuine promise to pay can sometimes reset that clock, so this step mattered: it determined how much runway actually remained before the two-year period closed, rather than relying on guesswork.
2. Sent a formal demand letter with a clear deadline. Before filing anything in court, a written demand set out the balance owed, attached the supporting invoices, and gave a firm deadline for payment or a serious proposal. This step also created a clean, dated record that supported the discoverability analysis and removed any ambiguity about when the business had formally asserted its claim.
3. Filed a Statement of Claim in the Superior Court well ahead of the deadline. When the demand went unanswered, the team prepared and issued the claim promptly rather than allowing further negotiation to eat into the remaining time. Filing early, with a comfortable margin before the limitation period expired, meant there was no need to argue later about exactly which date the clock had started running from.
4. Served Kavya properly and tracked every procedural deadline. The claim was formally served, and the strict timelines that follow, for filing a defence, for responding to motions, were tracked closely. When no defence was filed within the required period, the file moved toward a default judgment rather than sitting exposed to a missed step.
5. Pursued the outstanding balance to judgment. With no defence filed and the debt well documented through invoices, delivery records, and the partial payment history, the team obtained judgment for the full outstanding balance of roughly $145,000, plus applicable interest and costs.

The outcome

The court granted judgment in Shira and Anita's favour for the outstanding account. Because the claim was filed with time to spare before the two-year limitation period expired, there was no argument to be had over whether the lawsuit itself was too late, the only real vulnerability that could have sunk the entire claim regardless of how strong the underlying debt was. Collection on a judgment is its own process, and the team advised Shira and Anita on the practical options for enforcing it, but the legal right to the money was secured, which is the part that cannot be recovered once lost.

The contrast with their earlier experience was not lost on either of them. The first unpaid account, the one they had let run past the two-year mark while hoping for an informal resolution, remains uncollectible to this day. The second, handled with the lesson from the first firmly in mind, ended in a clean recovery. Same kind of debt, same kind of customer relationship gone wrong, very different result, and the difference came down almost entirely to timing rather than the strength of the paperwork.

Shira and Anita have since changed how they run the business end of things. Any account that goes more than a few months without a real payment now triggers an internal review, rather than an open-ended wait-and-see approach. It is a small operational change, but it exists because of a two-year deadline that neither of them knew applied to their invoices until it had already cost them one claim outright.

What you can learn from this